Asiasec Properties Limited - Proxy Solicitation & Information Statement 2005

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular, you should consult your stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Lippo China Resources Limited (the “Company”), you should at once hand this circular to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

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

LIPPO CHINA RESOURCES LIMITED 力寶華潤有限公司

(Incorporated in Hong Kong with limited liability)

(Stock Code: 156)

CONTINUING CONNECTED TRANSACTIONS

AND

DISCLOSEABLE TRANSACTION

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

Hantec Capital Limited

A letter from Hantec Capital Limited to the Independent Board Committee and the Independent Shareholders in respect of continuing connected transactions is set out on pages 37 to 58.

15th April, 2005

CONTENTS

		Page
Definitions	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from	the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
I.	Continuing Connected Transactions
	Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
	Connected transactions only between the Completion Date
	and 30th March, 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
	Connected transactions only between the Completion Date
	and the Changed Shareholding Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
	Connected transactions from the Completion Date until
	31st December, 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	17
	Listing Rules implications of transactions in aggregate . . . . . . . . . . . . . . . .	26
	Shareholders’ approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	27
	Particulars of the Back to Back Arrangements . . . . . . . . . . . . . . . . . . . . . . . .	29
	Reasons for and benefits of entering into
	the Aggregate Connected Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	29
	General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	30
II.	Discloseable Transaction
	Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	30
	Principal terms of the Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	31
	Information on the Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	31
	Listing Rules implications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	32
	Financial effects of the transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	32
	Reasons for and benefits of entering into the Agreement . . . . . . . . . . . . . .	32
	Procedures for demanding a poll at general meetings . . . . . . . . . . . . . . . . .	33
Information on the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		33
Information on the Auric Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		34
Information on the CYT Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		34
Information on the Seller. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		34
Further information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		34
Appendix I	– Letter from the Independent Board Committee . . . . . . . . . . . . . .	35
Appendix II – Letter from the Independent Financial Adviser . . . . . . . . . . . . . .		37
Appendix III – General information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		59

DEFINITIONS

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

“Acquisitions” the sale and purchase of the Malaysian Shares and the Singaporean Shares pursuant to the terms set out in the Malaysian Agreement and the Singaporean Agreement respectively; “ACY” Auric Chun Yip Sdn. Bhd. (formerly known as Elegant Logistics Sdn. Bhd.), a company incorporated in Malaysia with limited liability for the purposes of facilitating the purchase of the Malaysian Shares by APM pursuant to the Malaysian Agreement; “Aggregate Connected the Chunex Arrangements, the Trading Arrangements, Transactions” the Distribution Agreement, the Manufacturing Agreement and the Continuing Transactions; “Agreement” the agreement of sale and purchase of the Property between the Purchaser and the Seller dated 21st January, 2005; “APF” APG Foods Pte. Limited, a company incorporated in Singapore with limited liability, a wholly-owned subsidiary of APG which in turn is an indirect subsidiary of Lippo and the Company respectively; “APFP” Auric Pacific Food Processing Sdn. Bhd. (formerly known as Starry Delight Sdn. Bhd.), a company incorporated in Malaysia with limited liability for the purposes of facilitating the purchase of the Malaysian Shares by APM pursuant to the Malaysian Agreement; “APG” Auric Pacific Group Limited, a company incorporated in Singapore with limited liability whose shares are listed on Singapore Exchange Securities Trading Limited and an approximately 51.2 per cent. indirect subsidiary of the Company; “APM” Auric Pacific (M) Sdn. Bhd., a company incorporated in Malaysia with limited liability, a wholly-owned subsidiary of APG which in turn is an indirect subsidiary of Lippo and the Company respectively; “APM(S)” Auric Pacific Marketing Pte. Ltd., a company incorporated in Singapore with limited liability and a wholly-owned subsidiary of APF;

“associates” has the meaning ascribed to it under the Listing Rules;

– 1 –

DEFINITIONS

“Auric Changed Shareholding”	the reduction of SFSB’s shareholding interests in each
	of ACY and APFP from 30 per cent. to 25 per cent. on
	the Changed Shareholding Date, reference of which is
	made to Lippo and the Company’s announcement
	dated 7th December, 2004;
“Auric Group”	APG and its subsidiaries;
“Back to Back Arrangements”	the anticipated sales from, and to, ACY and Chunex
	of certain of their respective products to, and from
	CYT and Chunex for onward sales to customers, and
	from suppliers, of ACY and Chunex pursuant to
	Clauses 6A of the Malaysian Agreement and the
	Singaporean Agreement;
“Board”	the board of directors of the Company;
“Changed Shareholding Date”	7th December, 2004, being the date on which the Auric
	Changed Shareholding shall have become effective and
	been completed;
“Chun Yip Realty”	Chun Yip Realty Sdn. Bhd., a company incorporated
	in Malaysia with limited liability and a subsidiary of
	CYT, whose issued and paid up capital is owned as to
	99.9 per cent. by CYT;
“Chunex”	Chunex Pte. Ltd., a company incorporated in Singapore
	with limited liability for the purposes of facilitating
	the purchase of the Singaporean Shares by APF
	pursuant to the Singaporean Agreement;
“Chunex Arrangements”	the trading arrangements between Chunex and APM(S)
	as detailed in the paragraph headed “Particulars of
	the Chunex Arrangements” in the “Letter from the
	Board” contained in this circular;
“Company”	Lippo China Resources Limited力寶華潤有限公司, a
	company incorporated in Hong Kong with limited
	liability, the shares of which are listed on the Stock
	Exchange and being a 71.13 per cent. owned subsidiary
	of Lippo;
“Completion”	completion of the Acquisitions which took place on
	the Completion Date;
“Completion Date”	1st December, 2003, being the date on which
	completion of the sale and purchase of the Malaysian
	Shares and the Singaporean Shares shall have taken
	place in accordance with the terms of the Malaysian
	Agreement and the Singaporean Agreement
	respectively;

– 2 –

DEFINITIONS

“Consultancy Arrangements”

the transactions contemplated under a consultancy agreement dated 4th November, 2003 entered into between ACY and SFSB in respect of the non-exclusive provision of consultancy services by SFSB to ACY and a trust and confidence agreement dated 4th November, 2003 entered into between ACY and Mr. Wong Senior in respect of the non disclosure and non compete obligations of Mr. Wong Senior as a result of the provision of consultancy services by Mr. Wong Senior as SFSB’s designated consultant under the aforementioned consultancy agreement to ACY;

“Continuing Transactions”

the transactions contemplated under the Tenancy Agreements, the Ongoing Arrangements and the Consultancy Arrangements;

“controlling shareholder” “CTC”

has the meaning ascribed to it under the Listing Rules;

Les Fromage Pte. Ltd. (formerly known as Chunex Trading Company Pte. Ltd.), a company incorporated in Singapore with limited liability, being the vendor of the Singaporean Shares pursuant to the Singaporean Agreement and beneficially owned as to 92 per cent., 3.2 per cent. and 4.4 per cent. of its issued and paid-up capital by Mr. Sean Wong, Mr. Wong Senior and other members of their family respectively;

“CYBM” Chun Yip Bakery Mart Sdn. Bhd., a company incorporated in Malaysia with limited liability and a subsidiary of CYT whose issued and paid-up capital is owned as to 99.9 per cent. by CYT;

“CYT” Chun Yip Trading Sdn. Bhd., a company incorporated in Malaysia with limited liability, being a vendor of the Malaysian Shares pursuant to the Malaysian Agreement and beneficially owned as to more than 51 per cent. of its issued and paid-up capital by Mr. Wong Senior, the father of Mr. Sean Wong;
“CYT Group” CYT and CTC, their respective subsidiaries and associates;
“Directors” the directors of the Company;

“Distribution Agreement” the distribution agreement entered into on 17th January, 2005 between APM and ACY in relation to the appointment of ACY as the distributor of APM with respect to certain of its products in Malaysia;

– 3 –

DEFINITIONS

“EGM”	the extraordinary general meeting of the Company to
	be held (if required) for the purpose of approving the
	Aggregate Connected Transactions;
“Group”	the Company and its subsidiaries;
“HCL”	Hongkong Chinese Limited (香港華人有限公司*), a
	company incorporated in Bermuda with limited
	liability, the shares of which are listed on the Stock
	Exchange and whose shares are owned as to
	approximately 72.26 per cent. by the Company;
“Hong Kong”	the Hong Kong Special Administrative Region of the
	PRC;
“HSB”	Hamildon Sdn. Bhd., a company incorporated in
	Malaysia with limited liability and a subsidiary of CYT
	whose issued and paid-up capital is owned as to 99.9
	per cent. by CYT;
“Independent Board Committee”	the committee of the Board comprising Mr. Edwin Neo,
	Mr. Victor Ha Kuk Yung and Mr. King Fai Tsui, being
	the independent non-executive Directors;
“Independent Financial Adviser”	Hantec Capital Limited, being the independent
	financial adviser appointed by the Company to advise
	the Independent Board Committee and the
	Independent Shareholders in respect of the Aggregate
	Connected Transactions;
“Independent Shareholders”	the independent shareholders of the Company that are
	not required to abstain from voting at the EGM were
	the Company to convene an EGM to approve the
	Aggregate Connected Transactions;
“KPL”	Kungsing Pte. Ltd., a company incorporated in
	Singapore and 27 per cent. and approximately 15.65
	per cent. beneficially owned by CTC and Mr. Wong
	Senior respectively;
“Land”	the land located at 83 Estrada de Cacilhas, Macau;
“Latest Practicable Date”	12th April, 2005, being the latest practicable date prior
	to the printing of this circular for ascertaining certain
	information contained herein;

* For identification purpose only

– 4 –

DEFINITIONS

“Lippo” Lippo Limited 力寶有限公司, a company incorporated in Hong Kong with limited liability, the shares of which are listed on the Stock Exchange and being the holding company of the Company;
“Lippo Cayman” Lippo Cayman Limited, a company incorporated in the Cayman Islands with limited liability and wholly owned by Lanius Limited which is the trustee of a trust, the beneficiaries of which include Dr. Mochtar Riady, Mr. James Riady, Mr. Stephen Riady and their respective family members;
“Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange as effective on the date of this circular;
“Macau” the Macao Special Administrative Region of the PRC;
“Malaysian Agreement” the sale and purchase agreement entered into between the Malaysian Vendors and APM on 4th November, 2003 in relation to the sale and purchase of the Malaysian Shares from the Malaysian Vendors to APM on the terms set out therein;
“Malaysian Shares” the number of ordinary shares of RM1.00 each in the share capital of each of ACY and APFP, representing 70 per cent. of the total issued and paid-up capital of each of ACY and APFP as at the Completion Date;
“Malaysian Vendors” CYT and SFSB, both being vendors of the Malaysian Shares pursuant to the Malaysian Agreement and beneficially owned as to more than 51 per cent. of their respective issued and paid-up capitals by Mr. Wong Senior, the father of Mr. Sean Wong;
“Manufacturing Agreement” the manufacturing agreement entered into on 17th January, 2005 between APM and APFP in relation to the manufacture and supply of dairy products by APFP to APM;
“Model Code” the Model Code for Securities Transactions by Directors of Listed Issuers under the Listing Rules;
“Mr. Sean Wong” Mr. Wong Tziak Yoong also known as Wang Tziak Yoong, a director of ACY and APFP, indirect subsidiaries of the Company and Lippo after the Completion Date, the controlling shareholder of CTC and whose father, Mr. Wong Senior is the controlling shareholder of CYT;

– 5 –

DEFINITIONS

“Mr. Wong Senior”	Mr. Wong Ah Kwong also known as Wong Choon
	Kong, the father of Mr. Sean Wong and the controlling
	shareholder of CYT and its subsidiaries;
“Ongoing Arrangements”	the ongoing trading arrangements between members
	of the Auric Group and the CYT Group as detailed in
	the paragraph headed “Particulars of the Ongoing
	Arrangements” in the “Letter from the Board”
	contained in this circular;
“PRC”, “China” or “Mainland”	the People’s Republic of China (but, for the purpose
	of this circular, excluding Hong Kong, Macau and
	Taiwan);
“Previous Rules”	the Rules Governing the Listing of Securities on the
	Stock Exchange prior to the changes to such rules
	announced by the Stock Exchange on 30th January,
	2004 becoming effective on 31st March, 2004;
“Property”	the Land together with the buildings constructed
	thereon;
“Purchaser”	Allyield Limited, a company incorporated in the
	British Virgin Islands with limited liability and being
	a wholly-owned subsidiary of HCL;
“Seller”	Kuoc Hou – Fomento Predial Limitada, a company
	incorporated in Macau;
“Shares”	shares of HK$0.10 each in the Company;
“SFO”	the Securities and Futures Ordinance (Chapter 571 of
	the Laws of Hong Kong);
“SFSB”	Sunbeam Food Sdn. Bhd., a company incorporated in
	Malaysia with limited liability, being a vendor of the
	Malaysian Shares pursuant to the Malaysian
	Agreement and a subsidiary of CYT whose issued and
	paid up capital is wholly beneficially owned by CYT;
“Singaporean Agreement”	the sale and purchase agreement entered into between
	CTC and APF on 4th November, 2003 in relation to
	the sale and purchase of the Singaporean Shares from
	CTC to APF on the terms set out therein;
“Singaporean Shares”	the number of ordinary shares of S$1.00 each in the
	share capital of Chunex, representing 75 per cent. of
	the total issued and paid up capital of Chunex as at
	the Completion Date;

– 6 –

DEFINITIONS

“Stock Exchange”	The Stock Exchange of Hong Kong Limited;
“SWIPL”	SW Investments Holding Pte. Ltd., a company
	incorporated in Singapore, of which Mr. Sean Wong is
	the trustee and which owns the remaining 25 per cent.
	of the total issued and paid up capital of Chunex as at
	the Completion Date;
“Tenancy Agreements”	the three tenancy agreements entered into between
	(i) ACY and APFP as tenants and (ii) each of Mr. Wong
	Senior, Chun Yip Realty and HSB as landlords, all on
	4th November, 2003, in relation to certain properties
	in Malaysia required for the business operations of
	ACY and APFP after the Completion Date;
“Trading Arrangements”	the trading arrangements between ACY, APFP and
	Chunex as detailed in the paragraph headed
	“Particulars of the Trading Arrangements” in the
	“Letter from the Board” contained in this circular;
“WKREL”	Wai & Ko Real Estate Ltd., an independent property
	valuer;
“BGN”	Bulgarian leva, the lawful currency of the Republic of
	Bulgaria;
“HK$”	Hong Kong dollar, the lawful currency of Hong Kong;
“MOP”	Macau pataca, the lawful currency of Macau;
“Peso”	Philippine peso, the lawful currency of the Republic
	of Philippines;
“RM”	Malaysian Ringgit, the lawful currency of Malaysia;
“RMB”	Renminbi, the lawful currency of the PRC;
“S$”	Singapore dollar, the lawful currency of Singapore;
	and
“US$”	United States dollar, the lawful currency of the United
	States of America.

For use in this circular and for illustration purposes only, conversion of Malaysian Ringgit into Hong Kong dollar is based on the approximate exchange rate of RM1 to HK$2.00 as at 15th January, 2005 and conversion of Singapore dollar into Hong Kong dollar is based on the approximate exchange rate of S$1 to HK$4.73 as at 15th January, 2005. No representation is made that any amount in Hong Kong dollar, Malaysian Ringgit and Singapore dollar could be converted at such rates or any other rates.

– 7 –

LETTER FROM THE BOARD

LIPPO CHINA RESOURCES LIMITED 力寶華潤有限公司

(Incorporated in Hong Kong with limited liability)

(Stock Code: 156)

Non-executive Directors: Dr. Mochtar Riady (Honorary Chairman) Mr. Ning Gaoning Mr. Leon Nim Leung Chan

Executive Directors: Mr. James Riady (Chairman) Mr. Stephen Riady (Deputy Chairman and Managing Director) Mr. John Luen Wai Lee, J.P.

Registered Office: Room 2301, 23rd Floor Tower One Lippo Centre 89 Queensway Hong Kong

Independent Non-executive Directors: Mr. Edwin Neo Mr. Victor Ha Kuk Yung Mr. King Fai Tsui

15th April, 2005

To the shareholders of the Company

Dear Sir or Madam,

CONTINUING CONNECTED TRANSACTIONS AND DISCLOSEABLE TRANSACTION

Reference is made to the joint announcement of the Company and Lippo dated 25th January, 2005 in relation to the entering into of the continuing connected transactions by and within the Auric Group and with the CYT Group.

Reference is also made to the joint announcement of the Company, Lippo and HCL dated 27th January, 2005 in relation to the acquisition of land located at 83 Estrada de Cacilhas, Macau together with the buildings constructed thereon by a wholly-owned subsidiary of HCL.

– 8 –

LETTER FROM THE BOARD

I. CONTINUING CONNECTED TRANSACTIONS

INTRODUCTION

On 25th January, 2005, the respective boards of directors of Lippo and the Company had jointly announced that as a result of the Acquisitions and Completion (reference is also made to the joint announcements made by Lippo and the Company on 4th November, 2003 and 1st December, 2003 respectively), the Tenancy Agreements, the Consultancy Arrangements, the Back to Back Arrangements, the Distribution Agreement and the Manufacturing Agreement were entered into by the Auric Group. In addition, the Chunex Arrangements, the Trading Arrangements and the Ongoing Arrangements comprising of recurring trading arrangements, have been entered into from time to time within the Auric Group and with the CYT Group.

APG is a company incorporated in Singapore with limited liability whose shares are listed on Singapore Exchange Securities Trading Limited. As at the date of this circular, the Company is indirectly interested in approximately 51.2 per cent. of the issued share capital of APG. Accordingly, it is an indirect subsidiary of the Company.

The shareholding structures of the Company and the Auric Group as at the Latest Practicable Date, as relevant in this instance, is as follows:

==> picture [405 x 296] intentionally omitted <==

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

Lippo Mr. Sean Wong
(Indirect) 15.65%
71.13% KPL M r. Wong Senior
The Company 92% 3.2% >51%
27%
(Indirect) CYT
51.2%
APG CTC
100%
100% 99.9% 99.9% 99.9%
100% Chun HSB CYBM
APM APF SFSB
Yip
58.33% Realty
75% 100%
ACY APFP APM(S) Chunex
SWIPL
25% 25%
(Note 1) (Note 1) 25% (Note 2)
----- End of picture text -----

– 9 –

LETTER FROM THE BOARD

Notes:

Reference is made to the Company’s and Lippo’s general disclosure announcement dated 7th December, 2004 in respect of the Auric Changed Shareholding published on the Stock Exchange’s website. After the Changed Shareholding Date, SFSB’s shareholding interests in each of ACY and APFP was changed from 30 per cent. to 25 per cent.
Mr. Sean Wong holds shares in SWIPL as a trustee for and on behalf of SFSB.

As at the date of this circular, APG is an indirect subsidiary of the Company.

Although none of Mr. Wong Senior, Mr. Sean Wong nor their respective associates was a connected person (within the meaning set out in the Listing Rules) of the Company prior to the Completion Date, being simply third party suppliers and customers of the Auric Group, they became connected persons of the Company after the Completion Date by virtue of Mr. Wong Senior being a substantial shareholder, and Mr. Sean Wong being a director, of ACY, APFP and Chunex, all indirect subsidiaries of the Company after the Completion Date. Please refer to the paragraphs below headed “Listing Rules implications of the Chunex Arrangements”, “Listing Rules implications of the Trading Arrangements, the Distribution Agreement and the Manufacturing Agreement” and “Listing Rules implications of the Tenancy Agreements, the Ongoing Arrangements and the Consultancy Arrangements” for details of such relationships with the Company.

As a result of the Acquisitions and Completion, the Tenancy Agreements, the Consultancy Arrangements, the Back to Back Arrangements, the Distribution Agreement and the Manufacturing Agreement were entered into by the Auric Group. In addition, the Trading Arrangements, the Chunex Arrangements and the Ongoing Arrangements, comprising of recurring trading arrangements, have been entered into from time to time within the Auric Group and with the CYT Group. Furthermore, Completion has resulted in ACY, APFP and Chunex (whose shares were acquired by subsidiaries of APG pursuant to the terms of the Acquisitions) becoming indirect subsidiaries of the Company. The transactions contemplated under the Aggregate Connected Transactions allow the Auric Group to continue to perform its ordinary businesses subsequent to the Completion.

The Auric Group has confirmed that such transactions do not constitute “interested person transactions” as defined under the Listing Manual of Singapore Exchange Securities Trading Limited. Prior to Completion, the Chunex Arrangements, the Trading Arrangements and the Continuing Transactions did not constitute connected transactions for the Company under the Previous Rules in Hong Kong.

CONNECTED TRANSACTIONS ONLY BETWEEN THE COMPLETION DATE AND 30TH MARCH, 2004

– 10 –

LETTER FROM THE BOARD

Particulars of the Chunex Arrangements

After Completion, Chunex was a party to a number of trading arrangements with APM(S). The Chunex Arrangements were entered into on normal commercial terms from time to time as follows (including terms as regards the payment method and credit periods for the relevant products) and such terms were on substantially similar terms to those detailed in the paragraph of this letter below headed “Particulars of the Ongoing Arrangements”:

	Parties	Parties
Nos.	Buyer	Seller	Description of Transactions	Products
1	Chunex	APM(S)	Chunex buys from APM(S)	General foodstuff
			from time to time to resell,	including jam
			hence helping to enlarge
			the distribution of APM(S)
			products and strengthen
			Chunex’s offerings to
			customers with wider
			range
2	APM(S)	Chunex	Chunex may sell to APM(S)	General foodstuff
			when need arises

Caps of the Chunex Arrangements

The transactions entered into under the Chunex Arrangements between the Completion Date and 30th March, 2004, amounted to approximately S$6,000 (equivalent to approximately HK$28,000) and for the period from 1st January, 2004 to 30th March, 2004 as included in the financial year ended 31st December, 2004 amounted to approximately S$3,600 (equivalent to approximately HK$17,000). The percentage ratios (as defined under the Listing Rules) for the financial year ended 31st December, 2004 as regards the Chunex Arrangements are as follows:

	For the year ended
Percentage ratios	31st December, 2004
Assets ratio	0.0002%
Revenue ratio	0.0009%
Consideration ratio	0.0010%

– 11 –

LETTER FROM THE BOARD

Listing Rules implications of the Chunex Arrangements

After Completion, the Chunex Arrangements constituted connected transactions under rule 14.23(1)(a) of the Previous Rules by virtue of:

(i) Chunex being an indirect non wholly-owned subsidiary of the Company and Mr. Wong Senior continues to hold, after Completion and through SWIPL (a company of which Mr. Sean Wong, his son, is the trustee and a wholly-owned subsidiary of SFSB), the remaining 25 per cent. of the total issued and paid-up capital of Chunex;
(ii) Mr. Wong Senior is the controlling shareholder of the Malaysian Vendors, namely CYT and SFSB which after Completion until the Changed Shareholding Date, held the remaining 30 per cent. of the total issued and paid-up capital of ACY and APFP; and
(iii) Mr. Wong Senior is the father of Mr. Sean Wong who in turn holds the directorships in ACY, APFP and Chunex.

Accordingly, such Chunex Arrangements were subject to the disclosure requirements of the Previous Rules as part of the Aggregate Connected Transactions, further details of which are set out below.

The Chunex Arrangements however ceased to constitute connected transactions on 31st March, 2004, being the date on which the Previous Rules ceased to be effective and rule 14A.11(5) of the Listing Rules came into effect resulting in Chunex no longer constituting a connected person of the Company as a non wholly-owned subsidiary of the Company as only 25 per cent. of the total issued and paid-up capital of Chunex is held by Mr. Wong Senior through his associate, SWIPL and each of Mr. Wong Senior and Mr. Sean Wong is only a connected person of the Company at the level of its subsidiaries.

CONNECTED TRANSACTIONS ONLY BETWEEN THE COMPLETION DATE AND THE CHANGED SHAREHOLDING DATE

Particulars of the Trading Arrangements

After Completion, ACY and APFP were parties to a number of trading arrangements with each other and Chunex. The Trading Arrangements were entered into on normal commercial terms from time to time as follows (including terms as regards the payment method and credit periods for the relevant products) and such terms were on substantially similar terms to those detailed in the paragraph of this letter below headed “Particulars of the Ongoing Arrangements”:

– 12 –

LETTER FROM THE BOARD

Parties

Nos.	Buyer	Seller	Description of Transactions	Products
1	ACY	APFP	APFP sells to ACY for resale	Margarine and
				butter products
2	APFP	ACY	ACY sells to APFP for resale	ACY imports
				raw ingredients
				and sells to
				APFP including
				anhydrous milk
				fat, milk
				powder, etc.
3	Chunex	ACY	Chunex may buy from ACY	General foodstuff
			from time to time, usually
			when Chunex is facing
			stock-out and needs to
			replenish stock from ACY
			or when Chunex does not
			carry certain products
			customers require
4	ACY	Chunex	ACY buys from Chunex	General foodstuff
			from time to time usually
			when ACY is out of stock
			and needs to replenish
			stock from Chunex

Caps for the Trading Arrangements

The transactions entered into under the Trading Arrangements between the Completion Date to 30th March, 2004 amounted to approximately HK$1,894,000 whilst those between the Completion Date and the Changed Shareholding Date amounted to approximately HK$4,748,000 and for the period from 1st January, 2004 to the Changed Shareholding Date as included in the financial year ended 31st December, 2004 amounted to approximately HK$3,922,000. The percentage ratios (as defined under the Listing Rules) for the financial year ended 31st December, 2004 as regards the Trading Arrangements are as follows:

	For the year ended
Percentage ratios	31st December, 2004
Assets ratio	0.05%
Revenue ratio	0.22%
Consideration ratio	0.24%

– 13 –

LETTER FROM THE BOARD

The values set out in this letter as regards the Trading Arrangements represent the combined values of the transactions entered into under such arrangements which were entered into by each of the entities detailed above in their respective local currencies of RM and S$.

Particulars of the Distribution Agreement

The Distribution Agreement was entered into on 17th January, 2005 between APM as the principal and ACY as the distributor and relates to the appointment of ACY as a distributor of APM for the resale of certain of its food products in Malaysia, for a term of three years with effect from the Completion Date unless terminated by APM. Upon the expiry of such agreement, the parties may extend the Distribution Agreement for such period and on such terms as the parties may mutually agree in writing provided that ACY has not committed any material breach of such agreement. Each purchase order from ACY will be made with the price determined by APM’s price list in respect of the relevant products from time to time on normal commercial terms. There is no other fee payable to ACY as regard its appointment as APM’s distributor. The terms of the Distribution Agreement have been arrived at between parties after arms length negotiations and the transactions contemplated therein (including terms as regards the payment method and credit periods for the relevant products) have been, and will be, conducted on normal commercial terms.

Caps for the Distribution Agreement

ACY’s purchases under the Distribution Agreement between the period after Completion to 30th March, 2004 amounted to approximately RM2,760,000 (equivalent to approximately HK$5,520,000), representing 0.13 per cent. of the net tangible assets of the Company based on the then latest published audited accounts for information purposes under the Previous Rules. ACY’s purchases under the Distribution Agreement between the period after Completion to the Auric Changed Shareholding amounted to approximately RM14,341,000 (equivalent to approximately HK$28,682,000) and for the period from 1st January, 2004 to the Changed Shareholding Date as included in the financial year ended 31st December, 2004 amounted to approximately RM13,820,000 (equivalent to approximately HK$27,640,000) for information purposes under the Listing Rules. The percentage ratios (as defined under the Listing Rules) for the financial year ended 31st December, 2004 as regards the proposed caps for the Distribution Agreement are as follows:

	For the year ended
Percentage ratios	31st December, 2004
Assets ratio	0.34%
Revenue ratio	1.53%
Consideration ratio	1.69%

– 14 –

LETTER FROM THE BOARD

Particulars of the Manufacturing Agreement

The Manufacturing Agreement was entered into on 17th January, 2005 between APM and APM(S) as the purchaser and APFP as the manufacturer and relates to the appointment of APFP to manufacture, pack and deliver certain dairy spread products for APM and APM(S), for a term of three years with effect from the Completion Date unless terminated by APM and APM(S). Upon the expiry of such agreement, the parties may extend the Manufacturing Agreement for such period and on such terms as the parties may mutually agree in writing provided that APFP has not committed any material breach of such agreement. The price for the products manufactured and supplied to APM and APM(S) will be calculated based on a formula referring to the cost of materials and contract manufacturing fee, such formulae may be varied on a quarterly basis to be agreed between parties. The terms of the Manufacturing Agreement have been arrived at between parties after arms length negotiations and the transactions contemplated therein (including terms as regards the payment method and credit periods for the relevant products) have been, and will be, conducted on normal commercial terms.

Caps for the Manufacturing Agreement

The transactions entered into pursuant to the Manufacturing Agreement between the period after Completion to 30th March, 2004 amounted to approximately HK$2,865,000, representing 0.07 per cent. of the net tangible assets of the Company based on the then latest published audited accounts for information purposes under the Previous Rules. The transactions entered between the period after Completion and the Changed Shareholding Date amounted to approximately HK$15,607,000 and for the period from 1st January, 2004 to the Changed Shareholding Date as included in the financial year ended 31st December, 2004 amounted to approximately HK$14,863,000 for information purposes under the Listing Rules. The percentage ratios (as defined under the Listing Rules) for the financial year ended 31st December, 2004 as regards the proposed caps for the Manufacturing Agreement are as follows:

	For the year ended
Percentage ratios	31st December, 2004
Assets ratio	0.18%
Revenue ratio	0.82%
Consideration ratio	0.91%

The values set out in this letter as regards the Manufacturing Agreement represents the combined projected values of the transactions contemplated under such manufacturing agreement which have been entered into by APM in its local currency of RM and by APM(S) in its local currency of S$.

– 15 –

LETTER FROM THE BOARD

Listing Rules implications of the Trading Arrangements, the Distribution Agreement and the Manufacturing Agreement

The Trading Arrangements, the Distribution Agreement and the Manufacturing Agreement constituted connected transactions under rule 14.23(1)(a) of the Previous Rules and under rule 14A.14 of the Listing Rules after Completion up to the Changed Shareholding Date by virtue of the counterparties to the Trading Arrangements (namely ACY and APFP), the Distribution Agreement and the Manufacturing Agreement being associates of Mr. Wong Senior and Mr. Sean Wong (as applicable) under the Listing Rules as:

(i) ACY, APFP and Chunex became indirect non wholly-owned subsidiaries of the Company after Completion;
(ii) Mr. Wong Senior is the controlling shareholder of the Malaysian Vendors which after Completion until the Changed Shareholding Date, held the remaining 30 per cent. of the total issued and paid up capital of ACY and APFP. Shareholders of the Company should however note that after the Changed Shareholding Date, the Malaysian Vendors’ shareholding interests in each of ACY and APFP has been reduced to 25 per cent. of their respective total issued share capital which resulted in ACY and APFP ceasing to be an associate of a connected person of the Company (as such terms are defined in the Listing Rules) and therefore ceased to constitute a connected person;
(iii) Mr. Wong Senior continues to hold, after Completion and through SWIPL (a company of which Mr. Sean Wong, his son, is the trustee and a whollyowned subsidiary of SFSB), the remaining 25 per cent. of the total issued and paid up capital of Chunex; and
(iv) Mr. Sean Wong was appointed a director of ACY, APFP and Chunex after Completion, and he in turn is the trustee of SWIPL which is interested in the remaining 25 per cent. of the total issued and paid up capital of Chunex and Mr. Wong Senior is the father of Mr. Sean Wong and therefore, would also be considered as an associate of a connected person of the Company under rule 14A.11(4)(b) of the Listing Rules.

Under the Previous Rules and the Listing Rules, the transactions contemplated under the Trading Arrangements, the Distribution Agreement and the Manufacturing Agreement constituted non-exempt connected transactions and therefore, subject to the disclosure and shareholders’ approval requirements as part of the Aggregate Connected Transactions. However, after the Changed Shareholding Date and upon completion of the Auric Changed Shareholding whereby SFSB’s shareholding interest in each of ACY and APFP shall have decreased from 30 per cent. to 25 per cent., neither of ACY nor APFP constituted associates of a connected person of the Company under the Listing Rules as a result of the Auric Changed Shareholding. Accordingly, such transactions entered into pursuant to the Trading Arrangements, the Distribution

– 16 –

LETTER FROM THE BOARD

Agreement and the Manufacturing Agreement ceased to constitute connected transactions under the Listing Rules.

CONNECTED TRANSACTIONS FROM THE COMPLETION DATE UNTIL 31ST DECEMBER, 2006

Particulars of the Tenancy Agreements

(i) two Tenancy Agreements were entered into between ACY as the tenant and each of Mr. Wong Senior and Chun Yip Realty as the respective landlords on 4th November, 2003 in relation to certain properties which are located at 21 Jalan Mutiara Emas 7/2, Taman Mount Austin, 81100 Johor Bahru, Johor and lot 35, Jalan Delima 1/3, Subang Hi-Tech Industrial Park, Batu Tiga, 40000 Shah Alam Selangor, Malaysia to be used as warehouse and a factory with office premises with gross floor areas of approximately 2,400 and 33,867 square feet respectively and which are required for the business operations of ACY after the Completion Date, in each instance, for a period of three years commencing from 1st December, 2003 at monthly rentals of RM2,800 (equivalent to approximately HK$5,600), and RM37,253.70 (equivalent to approximately HK$74,507) respectively. The relevant Tenancy Agreements also contain options for the tenant, that is, ACY to renew the period of the relevant lease for a further three years after expiry of the initial three year term subject to rent payable at the prevailing market value of similar properties which shall not exceed 10 per cent. over and above the existing rent.
(ii) a Tenancy Agreement was entered into between APFP as the tenant and HSB as the landlord on 4th November, 2003 in relation to a property located at 6 Lorong SS 13/3F, Off Jalan SS 13/3, 47500 Subang Jaya, Selangor, Malaysia to be used as a factory with gross floor area of 8,221 square feet and which is required for the business operations of APFP after the Completion Date for a period of two years commencing from 1st December, 2003 at a monthly rental of RM6,165.75 (equivalent to approximately HK$12,332). The relevant Tenancy Agreement contains an option for the tenant, that is, APFP to renew the period of such lease for a further two years after expiry of the initial two year term subject to rent payable at the prevailing market value of similar properties which shall not exceed 10 per cent. over and above the existing rent.

The monthly rentals payable under the Tenancy Agreements were arrived at after arm’s length negotiations between the relevant parties on normal commercial terms and was determined by reference to such negotiations and prevailing market rents in respect of similar properties in similar locations and uses as provided by independent property valuers. The Directors are informed by the Auric Group that the entering into of the Tenancy Agreements upon completion of the Acquisitions would enable the acquired entities to conduct their respective businesses at the relevant premises at which such businesses are currently carried out and to avoid any disruption to their businesses after the Completion Date.

– 17 –

LETTER FROM THE BOARD

Caps for the Tenancy Agreements

The annual rentals paid and payable under the Tenancy Agreements for each of the three years ending 31st December, 2006 are as follows (on the basis that the relevant Tenancy Agreements with Chun Yip Realty and Mr. Wong Senior are not renewed for a further three years and the relevant Tenancy Agreement with HSB is not renewed for a further two years):

	For the year ended	For the year ending	For the year ending
	31st December, 2004	31st December, 2005	31st December, 2006
	(’000)	(’000)	(’000)
	(RM)	(RM)	(RM)
Annual rentals	555	549	441
	(equivalent to	(equivalent to	(equivalent to
	approximately	approximately	approximately
	HK$1,110)*	HK$1,098)	HK$882)

* This amount is equal to the actual payment made for the year ended 31st December, 2004.

The caps on the aggregate amounts payable by the Auric Group to the CYT Group in respect of the Tenancy Agreements over the three financial years ending 31st December, 2006 are proposed to be set on the basis of rentals payable in each year set out above with the relevant percentage ratios (as defined in the Listing Rules) as follows:

	For the year ended	For the year ending	For the year ending
Percentage ratios	31st December, 2004	31st December, 2005	31st December, 2006
Assets ratio	0.01%	0.01%	0.01%
Revenue ratio	0.06%	0.06%	0.05%
Consideration ratio	0.07%	0.07%	0.05%

In the event that amounts payable by the Auric Group in respect of the Tenancy Agreements exceed the proposed caps in the relevant year as set out above or in case the Tenancy Agreements are renewed upon their expiry on 30th November, 2005 and 30th November, 2006 (as the case may be), the transactions and the cap would be subject to review and the Company shall comply with the relevant provisions of the Listing Rules (where applicable).

Particulars of the Ongoing Arrangements

Prior to Completion, the Auric Group (excluding ACY, APFP and Chunex which were acquired on the Completion Date) had participated in various trading arrangements with the CYT Group from time to time. The Auric Group expects the relevant trading arrangements, as disclosed in the tables below, with the CYT Group, where applicable, to continue from time to time in accordance with market demands

– 18 –

LETTER FROM THE BOARD

for the relevant products. Accordingly, the Ongoing Arrangements comprise subsisting trading arrangements forming an enlarged distribution network for the products of the Auric Group between members of the Auric Group and the CYT Group on normal commercial terms (including terms as regards the payment method and credit periods for the relevant products) which may occur from time to time as follows:

Ongoing Arrangements where members of the Auric Group are buyers:

Parties Nos. Buyer Seller Description of Transactions Products 1 ACY HSB ACY buys from HSB and Cake casesresells to customers packaging for cake and pastry items 2 ACY KPL KPL sells to ACY for resale General foodstuff, mainly baking ingredients

Ongoing Arrangements where members of the Auric Group are sellers:

Parties Nos. Buyer Seller Description of Transactions Products 1 CYBM ACY ACY sells a range of bakery Comprehensive ingredients to CYBM, a range of baking retailer in baking ingredients ingredients to including cake housewives and petty traders mixes, sultanas, flavour and colours, dairy products, yeast and baking powder 2 KPL ACY ACY sells to KPL for resale General foodstuff, mainly baking ingredients

– 19 –

LETTER FROM THE BOARD

Parties

Nos. Buyer Seller Description of Transactions Products 3 KPL Chunex Chunex sells to KPL as it General foodstuff uses the latter as a including wholesaler for its baking powder, ingredient business dried fruits, cherries and dairy products 4 KPL APM(S) APM(S) sells to KPL as it General foodstuff uses the latter as a including wholesaler for its baking powder, ingredient business dried fruits, cherries and dairy products

Accordingly, a standard supply agreement has been entered into on 17th January, 2005 between each of the buying and selling parties set out above in relation to the Ongoing Arrangements for a fixed period of three years commencing on 1st December, 2003, unless terminated by the relevant parties by giving written notice to the other of the relevant agreement with varying written notice periods as regards each relevant supply agreement. The relevant buyer may provide the relevant seller with forecasts for a fixed period as to its requirements for each of the products specified under the relevant supply agreement on its date of commencement and on each anniversary of such date for information purposes only, where required to do so by the relevant seller. The relevant parties may by agreement in writing vary the products and its specifications under the standard supply agreement. Orders for the products will be placed on as “as needed” basis on standard terms and conditions of sale.

The price of the products are specified in each standard supply agreement and determined by reference to the quantity, price and specifications of the relevant products from time to time but may be changed upon mutual agreement between the relevant parties. In addition to termination by prior notice, each standard supply agreement may be terminated, inter alia, in the event of liquidation or insolvency of either party, any assignment or attempted assignment of the relevant agreement and the relevant seller being substantially unable to fulfil its obligations to supply the relevant products to its buyer and such relevant seller not having remedied the same within 30 days of notice to do so by the relevant buyer.

– 20 –

LETTER FROM THE BOARD

Caps for the Ongoing Arrangements

The following are the aggregate values of transactions entered into and likely to be entered into by them in respect of the Ongoing Arrangements over the three financial years ending 31st December, 2006 (on the basis of their previous dealings in this regard which had taken place between the relevant entities):

Ongoing Arrangements where members of the Auric Group are buyers:

	For the year ended	For the year ending	For the year ending
	31st December, 2004	31st December, 2005	31st December, 2006
	(’000)	(’000)	(’000)
Actual (unaudited)/	equivalent to	equivalent to	equivalent to
estimated values	approximately	approximately	approximately
(as appropriate)	HK$413	HK$2,295	HK$2,515

Ongoing Arrangements where members of the Auric Group are sellers:

	For the year ended	For the year ending	For the year ending
	31st December, 2004	31st December, 2005	31st December, 2006
	(’000)	(’000)	(’000)
Actual (unaudited)/	equivalent to	equivalent to	equivalent to
estimated values	approximately	approximately	approximately
(as appropriate)	HK$4,412 *	HK$6,581	HK$7,234

The actual transaction value was below the proposed cap for the year ended 31st December, 2004. The reason was that ACY increased the selling prices of its products due to the increase in the purchase prices of the raw materials at the end of 2004. As a result, the products became less competitive and sales volume dropped unexpectedly at the end of 2004. The proposed cap is set based on the transaction values of the transactions for the three years ended 31st December, 2003 and the actual figures for the year ended 31st December, 2004 were not available as at the date of the publication of the joint announcement of the Company and Lippo dated 25th January, 2005. It is currently intended that ACY may adjust its pricing strategies, if necessary, to maintain the sales volume in the years to come.

In each of the previous three financial years ended 31st December, 2003, such transactions had amounted to the following, by reference to the management financial results of the relevant members of the Auric Group and the CYT Group in each of the previous three financial years ended 31st December, 2003:

Ongoing Arrangements where members of the Auric Group are buyers:

	For the year ended	For the year ended	For the year ended
	31st December, 2001	31st December, 2002	31st December, 2003
	(’000)	(’000)	(’000)
Previous values	equivalent to	equivalent to	equivalent to
	approximately	approximately	approximately
	HK$2,033	HK$1,665	HK$1,276

– 21 –

LETTER FROM THE BOARD

Ongoing Arrangements where members of the Auric Group are sellers:

	For the year ended	For the year ended	For the year ended
	31st December, 2001	31st December, 2002	31st December, 2003
	(’000)	(’000)	(’000)
Previous values	equivalent to	equivalent to	equivalent to
	approximately	approximately	approximately
	HK$5,262	HK$6,519	HK$5,802

The proposed caps on the aggregate values in respect of the transactions contemplated under the Ongoing Arrangements over the three financial years ending 31st December, 2006 are proposed to be set as follows (on the basis of the existing terms contained in the Ongoing Arrangements):

Ongoing Arrangements where members of the Auric Group are buyers:

	For the year ended	For the year ending	For the year ending
	31st December, 2004	31st December, 2005	31st December, 2006
	(’000)	(’000)	(’000)
Proposed caps	equivalent to	equivalent to	equivalent to
	approximately	approximately	approximately
	HK$600*	HK$2,400	HK$2,700

The proposed cap for the Ongoing Arrangements for the year ended 31st December, 2004 has been adjusted downward from HK$2,200,000 (as referred to in the joint announcement of the Company and Lippo dated 25th January, 2005) to HK$600,000 due to some production problems at HSB that could not be able to fulfil the purchase requirements of ACY. The production problems have been sorted out recently. Such proposed cap is set based on the transaction values of the transactions for the three years ended 31st December, 2003 and the actual figures for the year ended 31st December, 2004 were not available as at the date of the publication of the above announcement.

The percentage ratios (as defined under the Listing Rules) for each of the three financial years ending 31st December, 2006 as regards the proposed caps for the Ongoing Arrangements where members of the Auric Group are buyers are as follows:

	For the year ended	For the year ending	For the year ending
Percentage ratios	31st December, 2004	31st December, 2005	31st December, 2006
Assets ratio	0.01%	0.03%	0.03%
Revenue ratio	0.03%	0.13%	0.15%
Consideration ratio	0.04%	0.15%	0.17%

– 22 –

LETTER FROM THE BOARD

Ongoing Arrangements where members of the Auric Group are sellers:

	For the year ended	For the year ending	For the year ending
	31st December, 2004	31st December, 2005	31st December, 2006
	(’000)	(’000)	(’000)
Proposed caps	equivalent to	equivalent to	equivalent to
	approximately	approximately	approximately
	HK$6,200	HK$6,700	HK$7,400

	For the year ended	For the year ending	For the year ending
Percentage ratios	31st December, 2004	31st December, 2005	31st December, 2006
Assets ratio	0.08%	0.08%	0.09%
Revenue ratio	0.34%	0.37%	0.41%
Consideration ratio	0.38%	0.41%	0.45%

The proposed caps set out above were determined by references to the previous transactions entered into between the relevant parties and the anticipated annual growth rates resulting from the relevant products which was based on the Auric Group’s knowledge and experience.

In the event that aggregate amounts in respect of the Ongoing Arrangements exceed the proposed caps in the relevant year as set out above, the transactions and the cap would be subject to review and the Company shall comply with the relevant provisions of the Listing Rules (where applicable).

Shareholders should note that whilst the Ongoing Arrangements represent trading arrangements currently in place, individual transactions under such arrangements may ultimately not materialise. In particular, the relevant transactions under the Ongoing Arrangements may not arise, for example, because the relevant parties within the Auric Group may elect to enter into alternative trading arrangements with other parties.

The values set out in this letter as regards the Ongoing Arrangements represent the combined projected values of the transactions contemplated under such arrangements which may be entered into by each of the entities detailed above in their respective local currencies of RM and S$.

– 23 –

LETTER FROM THE BOARD

Particulars of the Consultancy Arrangements

Pursuant to the Consultancy Arrangements, a consultancy agreement was entered into between ACY and SFSB on 4th November, 2003 in respect of the non exclusive provision of consultancy services by Mr. Wong Senior as the designated consultant of SFSB to ACY for a period from 1st December, 2003 to 31st December, 2005 at a monthly fee of RM26,300 (equivalent to approximately HK$52,600) together with any incidental expenses incurred for example travel or entertainment expenses. The Consultancy Arrangements may be terminated by either party giving three months written notice.

The monthly consultancy fees payable by ACY were arrived at after arm’s length negotiations between ACY and SFSB on commercial terms by reference to the services to be provided by SFSB to ACY to facilitate the smooth transition of the businesses transferred to the Auric Group from the CYT Group after the Completion Date and to tap the experience with which SFSB has had in the business of ACY, APFP and Chunex to assist the Auric Group in its future growth and business developments.

In addition, as a result of the entering into of the aforementioned consultancy agreement, ACY and Mr. Wong Senior had entered into a trust and confidence agreement on 4th November, 2003 whereby any inventions created by Mr. Wong Senior and all intellectual rights in such invention shall belong to ACY. Mr. Wong Senior will be subject to non-competition provisions during the term of the aforementioned consultancy agreement. Non-solicitation and non-competition provisions will also be applicable at any time after termination of such agreement in any place within Malaysia, Singapore or any other country in which the Auric Group has operations from time to time. However, such non-competition provisions may not apply if ACY’s prior written consent have been obtained to waive such provisions and the relevant country is not Malaysia or Singapore. Furthermore, the term of such trust and confidence agreement shall remain effective for the duration of the consultancy agreement and until the expiry of two years after the date on which SFSB shall cease to be engaged as a consultant to ACY under such consultancy agreement.

Caps for the Consultancy Arrangements

The annual consultancy fees paid and payable under the Consultancy Arrangements for each of the three financial years ending 31st December, 2006 are as follows:

	For the year ended	For the year ending	For the year ending
	31st December, 2004	31st December, 2005	31st December, 2006
	(’000)	(’000)	(’000)
	(RM)	(RM)	(RM)
Actual (unaudited)/	316	316	Nil
estimated annual	(equivalent to	(equivalent to
consultancy fees	approximately	approximately
(as appropriate)	HK$632)	HK$632)

– 24 –

LETTER FROM THE BOARD

The caps on the aggregate amount of consultancy fees payable by ACY to SFSB in respect of the Consultancy Arrangements over the three financial years ending 31st December, 2006 are proposed to be set on the basis of the consultancy fees to be paid in each such financial year based on the fees set out in the Consultancy Agreement and the percentage ratios (as defined under the Listing Rules) are as follows:

	For the year ended	For the year ending	For the year ending
	31st December, 2004	31st December, 2005	31st December, 2006
	(’000)	(’000)	(’000)
	(RM)	(RM)	(RM)
Proposed caps	350	350	Nil
	(equivalent to	(equivalent to
	approximately	approximately
	HK$700)	HK$700)
	For the year ended	For the year ending	For the year ending
Percentage ratios	31st December, 2004	31st December, 2005	31st December, 2006
Assets ratio	0.01%	0.01%	N/A
Revenue ratio	0.04%	0.04%	N/A
Consideration ratio	0.04%	0.04%	N/A

In the event that aggregate amounts of consultancy fees in respect of the Consultancy Arrangements exceed the proposed caps as set out above in the relevant year, the transactions and the caps would be subject to review and the Company shall comply with the relevant provisions of the Listing Rules (where applicable).

Listing Rules implications of the Tenancy Agreements, the Ongoing Arrangements and the Consultancy Arrangements

The Tenancy Agreements, the Ongoing Arrangements and the Consultancy Arrangements, collectively being the Continuing Transactions, constituted connected transactions under rule 14A.23(1)(a) of the Previous Rules and under rule 14A.14 of the Listing Rules after Completion for the same reasons as set out in paragraphs (i) to (v) of the section of this letter headed “Listing Rules implications of the Trading Arrangements, the Distribution Agreement and the Manufacturing Agreement” above. In addition, the counterparties to certain of the Ongoing Arrangements constitute associates of Mr. Wong Senior and Mr. Sean Wong (as applicable) under the Listing Rules by virtue of the following:

(i) SFSB, Chun Yip Realty, HSB and CYBM are subsidiaries of CYT and are therefore associates of Mr. Wong Senior; and
(ii) Mr. Sean Wong is the controlling shareholder of CTC and Mr. Wong Senior owns 3.2 per cent. of CTC. CTC and Mr. Wong Senior are interested in 27 per cent. and approximately 15.65 per cent. of the issued and paid-up share capital of KPL respectively which therefore constitutes an associate of Mr. Sean Wong.

– 25 –

LETTER FROM THE BOARD

LISTING RULES IMPLICATIONS OF TRANSACTIONS IN AGGREGATE

For reasons set out in this letter above, the Aggregate Connected Transactions have been, and the Continuing Transactions will continue to be, entered into on a recurring basis since Completion and on normal commercial terms in the ordinary and usual course of business of the Auric Group. For information purposes under the Previous Rules, the Aggregate Connected Transactions for the period between the Completion Date and 30th March, 2004 amounted to approximately HK$13,140,000, representing 0.32 per cent. of the net tangible assets of the Company based on the then latest published audited accounts under the Previous Rules and the Aggregate Connected Transactions amounted in aggregate to HK$53,009,000 for the financial year ended 31st December, 2004, being more than 0.3 per cent. and less than 3 per cent. of the net tangible assets of the Company as disclosed in its latest published audited accounts, and the cap amount in such year was HK$55,052,000. The Aggregate Connected Transactions were subject to the disclosure requirements under rule 14.25(1)(a) of the Previous Rules and no independent shareholders’ approvals were required or intended to be sought under the Previous Rules.

As a result of the changes to the Previous Rules announced by the Stock Exchange on 30th January, 2004 and which became effective from 31st March, 2004, the Chunex Arrangements no longer constitute connected transactions whilst the Trading Arrangements, the Distribution Agreement, the Manufacturing Agreement and the Continuing Transactions remained so connected until the Changed Shareholding Date. Upon completion of the Auric Changed Shareholding, the Distribution Agreement, the Manufacturing Agreement and the Trading Arrangements ceased to be so connected and only the Continuing Transactions would continue to constitute non-exempt continuing connected transactions under rule 14A.14 of the Listing Rules after the Changed Shareholding Date.

For information purposes under the Listing Rules, each of consideration and revenue ratios (as defined in the Listing Rules) on an annual basis for the financial year ended 31st December, 2004 in respect of the Aggregate Connected Transactions is expected to equal more than 2.5 per cent. and the assets ratio is below 2.5 per cent. with the profits and equity capital ratios not being applicable. However, the percentage ratios in respect of the Continuing Transactions for the two financial years ending 31st December, 2006 are expected to equal less than 2.5 per cent (since the Chunex Arrangements, the Trading Arrangements, the Distribution Agreement and the Manufacturing Agreement no longer constituted connected transactions after the Changed Shareholding Date). Accordingly, the Aggregate Connected Transactions for the financial year ended 31st December, 2004 was subject to the disclosure, reporting and shareholders’ requirements under rule 14A.35 of the Listing Rules.

Shareholders should note that the Continuing Transactions for the two financial years ended 31st December, 2006 are subject to only disclosure and reporting requirements under rule 14A.34 of the Listing Rules but no shareholders’ approvals is required or intended to be sought under the Listing Rules.

– 26 –

LETTER FROM THE BOARD

For information purposes only, the following tables 1 and 2 set out the caps for the aggregate values and the percentage ratios (as defined in the Listing Rules) in respect of the transactions contemplated under the Aggregate Connected Transactions for the year ended 31st December, 2004 and the Continuing Transactions over the two financial years ending 31st December, 2006:

Table 1

	For the year ended	For the year ending	For the year ending
	31st December, 2004	31st December, 2005	31st December, 2006
	(’000)	(’000)	(’000)
Proposed caps	(equivalent to	(equivalent to	(equivalent to
	approximately	approximately	approximately
	HK$55,052)	HK$10,898)	HK$10,982)
Table 2
	For the year ended	For the year ending	For the year ending
Percentage ratios	31st December, 2004	31st December, 2005	31st December, 2006
Assets ratio	0.67%	0.13%	0.13%
Revenue ratio	3.04%	0.60%	0.61%
Consideration ratio	3.37%	0.67%	0.67%

The Directors, including the independent non-executive Directors, consider that the Aggregate Connected Transactions have been entered into (to the extent that such transactions have been entered into as at the date of this letter) on normal commercial terms of the Auric Group and on no less favourable terms to the Company or its subsidiaries, that such terms are fair and reasonable and that they are in the best interest of the Company and its shareholders.

SHAREHOLDERS’ APPROVALS

As noted above, it is expected that the aggregate values of the transactions carried out under the Aggregate Connected Transactions in each of the three financial years ending 31st December, 2006 will not exceed the caps proposed for each Aggregate Connected Transaction in the relevant year as set out in each category above. Transactions contemplated under the Aggregate Connected Transactions will take place from time to time on a recurring basis.

The respective boards of directors of Lippo and the Company jointly announced on 25th January, 2005 that in order to reduce administrative expenses and costs, Lippo and the Company have submitted a joint application to the Stock Exchange for a waiver from the requirements to hold extraordinary general meetings of Lippo and the Company under rule 14A.35(4) of the Listing Rules to approve the Continuing Transactions, the Chunex Arrangements, the Distribution Agreement, the

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LETTER FROM THE BOARD

Manufacturing Agreement and the Trading Arrangements for the financial year ended 31st December, 2004 on the basis that both Lippo Cayman and Lippo, being the respective indirect majority shareholders of Lippo and the Company, constitute independent shareholders of Lippo and the Company respectively for the purposes of voting on resolutions to be proposed at such extraordinary general meetings to approve the Aggregate Connected Transactions as none of Lippo Cayman, Lippo nor the Company nor any of their respective subsidiaries and associates has any interest in such transactions which is different from that of any other shareholder of Lippo or the Company save for (i) Lippo and the Company’s shareholding interests in APG; and (ii) Lippo Cayman and Lippo’s shareholding interests in Lippo and the Company respectively. Accordingly, Lippo need not abstain from such voting process were the Company to convene an EGM to approve the Aggregate Connected Transactions.

To the best of the Directors’ knowledge, information and belief and having made reasonable enquiry, Mr. Wong Senior, Mr. Sean Wong, members of the CYT Group (including the respective counterparties to the Aggregate Connected Transactions) and their respective ultimate beneficial owners and associates do not hold any shareholding interests or directorships in the Company.

As at the date of this circular, Lippo Cayman is interested in 248,697,776 shares of HK$0.10 each in Lippo, representing approximately 57.34 per cent. of the issued share capital of Lippo giving the right to attend and vote at the relevant extraordinary general meeting of Lippo for approval of the Aggregate Connected Transactions whilst Lippo is interested in 6,544,696,389 Shares, representing approximately 71.13 per cent. of the issued share capital of the Company giving the right to attend and vote at the relevant EGM for approval of the Aggregate Connected Transactions were the Company to convene an EGM to approve such transactions. To the best knowledge, information and belief of the Directors, having made all reasonable enquiries, no other shareholder of the Company nor its associates have any interest in the Aggregate Connected Transactions which is different from other shareholders of the Company and none therefore needs to abstain from the voting process as regards the Aggregate Connected Transactions were the Company to convene an EGM to approve such transactions. On 25th January, 2005, such approvals were received by each of Lippo and the Company from Lippo Cayman and Lippo respectively thereby providing Lippo and the Company with the requisite majority shareholders’ approvals of the Aggregate Connected Transactions without the unnecessary costs of extraordinary general meetings being incurred.

The approvals of such shareholders of each of Lippo and the Company for the Aggregate Connected Transactions are subject to the conditions that the requirements as regards annual review (including, without limitation, by the auditors of the Company) of the Aggregate Connected Transactions under rules 14A.37 to 14A.40 of the Listing Rules will be complied with by Lippo and the Company; and that details of the Aggregate Connected Transactions, together with statements of opinion from the independent non-executive Directors will be disclosed in the annual report of the Company for each of the three financial years ending 31st December, 2006 (including the details required under rules 14A.45 and 14A.46 of the Listing Rules).

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LETTER FROM THE BOARD

As a result of having obtained the requisite approvals from a majority of the shareholders of the Company for the Aggregate Connected Transactions on 25th January, 2005, (i) no EGM is proposed to be held to approve the Aggregate Connected Transactions and (ii) members of the Auric Group may from time to time during the three financial years ending 31st December, 2006 enter into the individual transactions contemplated under the Continuing Transactions pursuant to the terms of the relevant agreements subject to compliance with the terms of such approvals.

PARTICULARS OF THE BACK TO BACK ARRANGEMENTS

In addition to the Aggregate Connected Transactions, under clauses 6A of each of the Malaysian Agreement and the Singaporean Agreement, the parties thereto had agreed that should administrative procedures not be completed to transfer the relevant trading accounts from certain independent third parties to ACY, APFP and Chunex by the Completion Date as a result of the Acquisitions, the Auric Group will sell and/or purchase its products to, and from, (as applicable) the Malaysian Vendors and CTC, as appropriate, which will in turn fulfil any sales and/or purchase orders received from such customers and/or suppliers and all related matters for the benefit of the Auric Group with monies received from such customers and/or payable to such suppliers.

In addition, during the six months period after the Completion Date, the Auric Group assisted the Malaysian Vendors and CTC (at no cost) in collecting, on behalf of each of CTC and the Malaysian Vendors, their outstanding normal trade accounts receivables (as at the Completion Date) and deposit the amounts received into such bank account of Malaysian Vendors and CTC shall specify.

No fee or profit was generated in respect of such transactions. The Back to Back Arrangements were entered into to facilitate a smooth transition of, and reduce any disruption to, the Auric Group’s businesses as a result of the Acquisitions. As (i) the value of transactions carried out under the Back to Back Arrangements decreased with time, (ii) such arrangements expired after 1st June, 2004, being the six months period after the Completion Date and (iii) no payment was actually received or paid by or to the Auric Group, such Back to Back Arrangements do not constitute part of the Aggregate Connected Transactions and therefore should not be aggregated with or treated as part of the Aggregate Connected Transactions. Details of the Back to Back Arrangements are set out herein for information purposes only.

REASONS FOR AND BENEFITS OF ENTERING INTO THE AGGREGATE CONNECTED TRANSACTIONS

The Aggregate Connected Transactions mainly relate to the businesses of wholesaling, distribution and manufacturing of food products carried out by the Auric Group. The entering into of the Aggregate Connected Transactions has enabled and will enable the Auric Group to continue to perform its ordinary businesses subsequent to Completion.

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LETTER FROM THE BOARD

GENERAL

Set out below are the actual values (unaudited) incurred for the transactions comprising the Aggregate Connected Transactions for the year ended 31st December, 2004:

Chunex Arrangements S$3,600 (equivalent to approximately HK$17,000) Trading Arrangements approximately HK$3,922,000 Distribution Agreement RM13,820,000 (equivalent to approximately HK$27,640,000) Manufacturing Agreement approximately HK$14,863,000 Tenancy Agreements RM555,000 (equivalent to approximately HK$1,110,000)

Ongoing Arrangements where members of the Auric Group are buyers approximately HK$413,000 Ongoing Arrangements where members of the Auric Group are sellers approximately HK$4,412,000 Consultancy Arrangements RM316,000 (equivalent to approximately HK$632,000)

As set out above, the caps amounts for each of the transactions contemplated under the Aggregate Connected Transactions have not been exceeded.

Details of the Aggregate Connected Transactions and all transactions carried out thereunder (as applicable) will be included in the published annual reports of the Company for each of the three financial years ending 31st December, 2006. The requirements as regards annual review of the Continuing Transactions under rules 14A.37 to 14A.40 of the Listing Rules will be complied with.

In the event that any of the caps in respect of the Continuing Transactions is exceeded or any agreement in respect of the Continuing Transactions is renewed or there is a material change to the terms of the relevant agreements in respect of the Continuing Transactions or any of the Continuing Transactions are carried out or proposed to be carried out otherwise than in full compliance with the conditions set out in the section headed “Shareholders’ Approvals” of this letter, the Company will comply with the provisions of Chapter 14A of the Listing Rules, as applicable.

II. DISCLOSEABLE TRANSACTION

INTRODUCTION

On 27th January, 2005, the respective boards of directors of the Company, Lippo and HCL jointly announced that the Purchaser entered into the Agreement with the Seller on 21st January, 2005 for acquiring the land located at 83 Estrada de Cacilhas, Macau together with the buildings constructed thereon.

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LETTER FROM THE BOARD

PRINCIPAL TERMS OF THE AGREEMENT

Purchaser: Allyield Limited Seller: Kuoc Hou – Fomento Predial Limitada Date of Agreement: 21st January, 2005

Property to be acquired: the land located at 83 Estrada de Cacilhas, Macau together with the buildings constructed thereon Consideration:

HK$238,000,000, which is payable in cash as follows:

(i) HK$71,400,000 shall be and has been paid on signing of the Agreement and was held in escrow. Such sum has been released to the Seller and a promissory agreement of sale and purchase has been signed between the Seller and a nominee of the Purchaser on 31st January, 2005 after the Purchaser was satisfied with the results of its due diligence on the Property and the Seller; and
(ii) HK$166,600,000 shall be paid to the Seller on or before 28th April, 2005, being the date of completion of the Agreement.

Completion:

Completion shall take place on or before 28th April, 2005. Upon completion of the Agreement, the Purchaser’s nominee will take vacant possession of the Property.

INFORMATION ON THE PROPERTY

The total site area of the Land is approximately 3,623 square metres. The Property comprises four old buildings which are currently vacant. The Land can be used for residential and/or commercial purpose, but shall not be used for any industrial purpose. To the best knowledge, information and belief of the Directors, having made reasonable enquires with the Seller, the Property had been vacant and no income was generated from the Property and there were no financial statements nor valuations for the Property for three financial years preceding the Purchaser entering into of the Agreement up to the Latest Practicable Date. The Property will be sold with vacant possession on Completion. The Property, though no definitive plan has been adopted, is proposed to be acquired for redevelopment purpose for residential and/or commercial use, mainly for resale, by demolishing the existing buildings and constructing new buildings on the relevant site.

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LETTER FROM THE BOARD

LISTING RULES IMPLICATIONS

The Purchaser is a wholly-owned subsidiary of HCL. The Company is the controlling shareholder of HCL as to approximately 72.26 per cent. of HCL’s entire issued share capital as at the date of this circular. Since the applicable percentage ratios for the purchase consideration payable by the Purchaser for acquiring the Property represent 5 per cent. or more but less than 25 per cent. for the Company, the entering into of the Agreement constitutes a discloseable transaction for the Company under Chapter 14 of the Listing Rules.

The Board confirms that, to the best of its knowledge, information and belief and having made all reasonable enquiries, the Seller and its ultimate beneficial owners are third parties independent of the Company and its connected persons (as defined in the Listing Rules).

FINANCIAL EFFECTS OF THE TRANSACTION

The consideration for acquiring the Property will be funded from the internal resources and no borrowing has been and will be made for paying such consideration. Accordingly, the current assets of the Group will be reduced by HK$238 million while the properties under development which are grouped under non-current assets would be increased by the same amount immediately upon the completion of the acquisition of the Property. Taking into account of the Group’s revenue streams, credit requirements and banking facilities available, the Company considers that the Group has sufficient working capital to meet its ongoing business requirements. The income to be generated from the Property is anticipated to be derived from income from disposal of residential and/or commercial buildings after the completion of the proposed redevelopment of the Property although as at the Latest Practicable Date, no concrete plans have been made in respect of the Property.

REASONS FOR AND BENEFITS OF ENTERING INTO THE AGREEMENT

To broaden its asset portfolio, HCL has been exploring opportunities of acquiring quality property interests in Hong Kong and elsewhere in Asia. In view of the close proximity of Macau to the Pearl River Delta and the recent economic growth of Macau, the Board considers it to be beneficial to acquire the Property so as to capitalise on the current favourable situation in Macau. It has been planned that the Property will be used for principally residential redevelopment purposes by demolishing the buildings currently on the relevant site and constructing new buildings thereon, but no final decision has been made in this regard.

By reference to the valuation report made by WKREL, an independent valuer in Macau, the open market value of the Property as at 21st January, 2005 was approximately HK$242,000,000. The Board, including independent non-executive Directors, considers the terms of the Agreement have been negotiated and arrived at after arm’s length negotiations with reference to the valuation report prepared by

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LETTER FROM THE BOARD

the valuer and the prevailing property market conditions in Macau and the negotiations have been conducted on normal commercial terms, and that such terms are fair and reasonable and in the interests of the Company and its shareholders as a whole. The consideration for acquiring the Property has been and will be funded from internal resources and no borrowing has been made by the Purchaser for paying such consideration. Currently, the Purchaser is not arranging for any borrowing, nor does the Purchaser have any current intention to arrange for any borrowing, for paying such consideration. The Board considers that the acquisition of the Property does not have any significant impact on the liquidity position of the Company and its subsidiaries as a whole as the consideration for acquiring the Property is not significant as compared to the Group’s financing resources.

PROCEDURES FOR DEMANDING A POLL AT GENERAL MEETINGS

Under the Articles of Association of the Company, at any general meeting of the members, a resolution shall be decided on a show of hands unless a poll is (before or on the declaration of the result of the show of hands) demanded by:

(1) the chairman of the meeting; or
(2) at least five members present in person or by proxy for the time being entitled to vote at the general meeting; or
(3) any member or members present in person or by proxy and representing not less than one-tenth of the total voting rights of all the members having the right to vote at the general meeting; or
(4) a member or members present in person or by proxy and holding Shares conferring a right to vote at the general meeting being Shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all the Shares conferring that right.

Pursuant to rule 14A.52 of the Listing Rules, the approval to be sought from the Independent Shareholders at the extraordinary general meeting must be taken by poll at the extraordinary general meeting.

INFORMATION ON THE COMPANY

The principal business activity of the Company is investment holding. The principal activities of its subsidiaries are investment holding, property investment and development, food businesses, property management, fund management, underwriting, insurance, corporate finance, securities broking, securities investment, treasury investment, money lending, commercial banking and other financial services.

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LETTER FROM THE BOARD

INFORMATION ON THE AURIC GROUP

The principal business activities of APG is investment holding. The principal activities of the subsidiaries of APG are food wholesaling, distribution and manufacturing.

The principal business activities of APM are marketing and distribution of food products. The principal business activities of APFP are the manufacture of and dealer in butter, margarine and related confectionary products. The principal business activities of Chunex are that of importers, exporters, distributors and merchants in foodstuff, confectionary products, dairy products, preserved fruits and other bakery related products. The principal business activity of ACY is the supply of bakery and confectionery materials. The principal business activities of APM(S) are wholesale distribution of food and allied fast-moving consumer products.

INFORMATION ON THE CYT GROUP

CYT is principally engaged in business as a supplier of bakery and confectionery materials. The principal business activities of its subsidiaries (including SFSB, CYBM, HSB and Chun Yip Realty) are manufacturing of and dealing in butter, margarine and related confectionery products, supply of bakery and confectionery machinery, property investment and letting of premises, retail of bakery and confectionery materials, manufacturing confectionery paper products and repacking and processing of baking powder, mixed fruits, flavouring essences and food colours. The principal business activities of KPL are importing, exporting and distributing confectionery, bakery and other related products. The principal business activities of CTC are that of importers, exporters, distributors and merchants in foodstuff, confectionary products, dairy products, preserved fruits and other bakery related products.

INFORMATION ON THE SELLER

So far as the Board is aware after having made all reasonable enquiries, the principal activity of the Seller is property investment.

FURTHER INFORMATION

Your attention is drawn to the information set out in the Appendices to this circular.

Yours faithfully, By Order of the Board LIPPO CHINA RESOURCES LIMITED Stephen Riady

Deputy Chairman and Managing Director

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APPENDIX I LETTER FROM THE INDEPENDENT BOARD COMMITTEE

The following is the text of the letter to the Independent Shareholders from the Independent Board Committee prepared for the purpose of incorporation into this circular:

LIPPO CHINA RESOURCES LIMITED 力寶華潤有限公司

(Incorporated in Hong Kong with limited liability)

(Stock Code: 156)

15th April, 2005

To the Independent Shareholders

of Lippo China Resources Limited

Dear Sir or Madam,

AGGREGATE CONNECTED TRANSACTIONS

We have been appointed as members of the Independent Board Committee to advise the Independent Shareholders of Lippo China Resources Limited (the “Company”) in respect of the Aggregate Connected Transactions, details of which are set out in the “Letter from the Board” contained in the circular of the Company (the “Circular”) of which this letter forms part. Unless the context otherwise requires, terms defined in the Circular shall have the same meanings when used in this letter.

Your attention is drawn to the “Letter from the Board”, the advice of Independent Financial Adviser in its capacity as the independent financial adviser to the Independent Shareholders and the Independent Board Committee in respect of the Aggregate Connected Transactions as set out in the “Letter from the Independent Financial Adviser” as well as other additional information set out in other parts of the Circular.

We understand that no shareholder of the Company nor its associates have any interest in the Aggregate Connected Transactions which is different from other Shareholders of the Company and none therefore needs to abstain from the voting process as regards the Aggregate Connected Transactions were the Company to convene an EGM to approve such transactions.

We have also been informed that, on 25th January, 2005, such approvals were received by the Company from Lippo Limited thereby providing the Company with the requisite majority shareholders’ approvals of the Aggregate Connected Transactions without the unnecessary costs of extraordinary general meeting being incurred.

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APPENDIX I LETTER FROM THE INDEPENDENT BOARD COMMITTEE

We acknowledge that the Company has applied for a waiver under rule 14A.43 from the requirements to hold extraordinary general meetings of the Company under rule 14A.35(4) of the Listing Rules to approve the Continuing Transactions, the Chunex Arrangements, the Distribution Agreement, the Manufacturing Agreement and the Trading Arrangements and the relevant caps amounts for the financial year ended 31st December, 2004 for reasons already set out in the Letter from the Board.

Having taken into account the advice of, and the principal factors and reasons considered by the Independent Financial Adviser in relation thereto as stated in its letter, we consider the Aggregate Connected Transactions to be fair and reasonable so far as the interests of the shareholders of the Company as a whole are concerned.

Yours faithfully,

The Independent Board Committee Mr. Edwin Neo Mr. Victor Ha Kuk Yung Mr. King Fai Tsui Independent non-executive Directors

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APPENDIX II LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The following is the text of a letter of advice to the Independent Board Committee and the Independent Shareholders received from the Independent Financial Adviser in respect of the Aggregate Connected Transactions, which has been prepared for the purpose of inclusion in this circular:

==> picture [38 x 42] intentionally omitted <==

Hantec Capital Limited 45th Floor, COSCO Tower 183 Queen’s Road Central Hong Kong

15th April, 2005

To the Independent Board Committee and the Independent Shareholders

Dear Sirs,

AGGREGATE CONNECTED TRANSACTIONS

INTRODUCTION

We refer to our engagement to advise the Independent Board Committee and the Independent Shareholders in respect of the terms of the Aggregated Connected Transactions, particulars of which are set out in this circular (the “Circular”) to the Shareholders dated 15th April, 2005 and in which this letter is reproduced. Unless the context requires otherwise, capitalised terms used in this letter shall have the same meanings as ascribed to them under the section headed “Definitions” in the Circular.

As set out in the letter from the Board in the Circular (the “Letter from the Board”), the respective board of the Company and Lippo jointly announced on 25th January, 2005 that as a result of the Acquisitions and Completion, the Tenancy Agreements, the Consultancy Arrangements, the Back to Back Arrangements, the Distribution Agreement and the Manufacturing Agreement were entered into by the Auric Group. In addition, the Chunex Arrangements, the Trading Arrangements and the Ongoing Arrangements comprising of recurring trading arrangements, have been entered into from time to time within the Auric Group and with the CYT Group. Details of the terms of each of the Aggregated Connected Transactions are set out in the Letter from the Board.

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APPENDIX II LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

director, of ACY, APFP and Chunex, all indirect subsidiaries of the Company after the Completion Date. For details of such relationships with the Company, please refer to the paragraphs headed “Listing Rules implications of the Chunex Arrangements”, “Listing Rules implications of the Trading Arrangements, the Distribution Agreement and the Manufacturing Agreement” and “Listing Rules implications of the Tenancy Agreements, the Ongoing Arrangements and the Consultancy Arrangements” as set out in the Letter from the Board.

As a result of the changes to the Previous Rules announced by the Stock Exchange on 30th January, 2004 and which became effective from 31st March, 2004, the Chunex Arrangements no longer constitute connected transactions whilst the Trading Arrangements, the Distribution Agreement, the Manufacturing Agreement and the Continuing Transactions remained so connected until the Changed Shareholding Date. In addition, upon completion of the Auric Changed Shareholding, the Distribution Agreement, the Manufacturing Agreement and the Trading Arrangements ceased to be so connected and only the Continuing Transactions would continue to constitute non-exempt continuing connected transactions under Rule 14A.14 of the Listing Rules after the Changed Shareholding Date. In summary, the following transactions constituted connected transactions for the periods set out below after Completion:

Transactions	Period	Relevant Rules
The Chunex Arrangements	Completion Date to	Rule 14.23(1) of the
	30th March, 2004	Previous Rules
The Trading Arrangements,	Completion Date to the	Rule 14.23(1) of the
the Distribution Agreement	Changed Shareholding Date	Previous Rules and
and the Manufacturing		Rule 14A.14 of the
Agreement		Listing Rules
The Tenancy Agreements,	Completion Date to	Rule 14.23(1) of the
the Ongoing Arrangements	31st December, 2006	Previous Rules and
and the Consultancy		Rule 14A.14 of the
Arrangements		Listing Rules

We have been appointed as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders as to whether the Aggregated Connected Transactions are (i) carried out in the ordinary and usual course of business of the Company; (ii) based on normal commercial terms and are fair and reasonable; and (iii) in the interests of the Company and the shareholders of the Company (the “Shareholders”) as a whole.

In formulating our opinion, we have relied on the accuracy of the information and representations contained in the Circular and have assumed that all information and representations made or referred to in the Circular as provided by the Directors were true at the time they were made and continue to be true as at the date of the Circular, and there has been no material change thereof. We have also relied on our discussion with the

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APPENDIX II

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Directors and the management of the Company regarding the information and representations contained in the Circular. We have also assumed that all statements of belief, opinion and intention made by the Directors and the management of the Company in the Circular were reasonably made after due enquiry and careful consideration. We consider that we have reviewed sufficient information to reach an informed view, to justify our reliance on the accuracy of the information contained in the Circular and to provide a reasonable basis for our advice. We have no reason to suspect that any material facts have been omitted or withheld from the information contained or opinions expressed in the Circular nor to doubt the truth, accuracy and completeness of the information and representations provided to us by the Directors and the management of the Company. The Directors jointly and severally accept full responsibility for the accuracy of the information contained in the Circular and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, opinions expressed 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 such statement contained in the Circular misleading. We have not, however, conducted an independent in-depth investigation into the business and affairs of the Company, the Group, Lippo, the Auric Group and the CYT Group and their respective associates nor have we carried out any independent verification of the information supplied.

I. INFORMATION ABOUT THE COMPANY, AURIC GROUP AND CYT GROUP

(A) INFORMATION ON THE COMPANY

The principal business activity of the Company is investment holding. The principal activities of the subsidiaries of the Company are investment holding, property investment and development, food businesses, property management, fund management, underwriting, insurance, corporate finance, securities broking, securities investment, treasury investment, money lending, commercial banking and other financial services.

(B) INFORMATION ON THE AURIC GROUP

The Auric Group includes APG and its subsidiaries. APG is an approximately 51.2 per cent. subsidiary of the Company. Prior to the Completion, Auric Group comprise APG as the holding company with subsidiaries of APF (excluding Chunex which was acquired on the Completion Date) and APM (excluding ACY and APFP which were acquired on the Completion Date).

Upon Completion, the Auric Group comprise APG as the holding company with subsidiaries of APF (including Chunex and APM(S)) and APM (including ACY and APFP). The principal business activity of APG is investment holding. The principal activities of the subsidiaries of APG are food wholesaling, distribution and manufacturing.

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APPENDIX II LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

activities of Chunex are that of importers, exporters, distributors and merchants in foodstuff, confectionary products, diary products, preserved fruits and other bakery related products. The principal business activity of ACY is the supply of bakery and confectionery materials. The principal business activities of APM(S) are wholesale distribution of food and allied fast-moving consumer products.

(C) INFORMATION ON THE CYT GROUP

The CYT Group includes CYT and CTC. CYT is principally engaged in business as a supplier of bakery and confectionery materials. The principal business activities of its subsidiaries (including SFSB, CYBM, HSB and Chun Yip Realty) are manufacturing of and dealing in butter, margarine and related confectionery products, supply of bakery and confectionery machinery, property investment and letting of premises, retail of bakery and confectionery materials, manufacturing confectionery paper products and repacking and processing of baking powder, mixed fruits, flavouring essences and food colours. The principal business activities of KPL are importing, exporting and distributing confectionery, bakery and other related products. The principal business activities of CTC are that of importers, exporters, distributors and merchants in foodstuff, confectionary products, dairy products, preserved fruits and other bakery related products.

Please refer to the Letter from the Board for the shareholding structure of Lippo, the Company and the Auric Group as at the Latest Practicable Date.

II. REASONS FOR AND BENEFITS OF ENTERING INTO THE AGGREGATE CONNECTED TRANSACTIONS

The Aggregate Connected Transactions mainly relate to the businesses of wholesaling, distribution and manufacturing of food products carried out by the Auric Group. The Directors consider that the entering into of the Aggregate Connected Transactions has enabled and will enable the Auric Group to continue to perform its ordinary businesses subsequent to Completion. Based on the nature and reasons of entering into the Aggregate Connected Transactions, we concur with the Directors that these transactions are in line with the business of the Group and the entering into the Aggregate Connected Transactions are in the interests of the Company and the Shareholders as a whole.

III. CONNECTED TRANSACTIONS BETWEEN THE COMPLETION DATE AND 30TH MARCH, 2004

As a result of Completion, many of the trading arrangements which took place between the Auric Group and the CYT Group prior to Completion instead took place within the Auric Group, between its subsidiaries which were already party to such arrangements as at the Completion Date and the newly acquired non-wholly owned entities. Such trading arrangements includes (i) the Chunex Arrangements; (ii) the Trading Arrangements; and (iii) the Ongoing Arrangements. Details of each of such trading arrangements are set out in the paragraphs headed “Chunex Arrangements”, “Trading Arrangements” and “Ongoing Arrangements” below.

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APPENDIX II LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

(A) CHUNEX ARRANGEMENTS

1. Description of the Chunex Arrangements

After Completion, Chunex was a party to a number of trading arrangements with APM(S). As advised by the Directors, the Chunex Arrangements were entered into on normal commercial terms from time to time (including terms as regards the payment method and credit periods for the relevant products) and such terms were on substantially similar terms to those detailed in the paragraph headed “Particulars of the Ongoing Arrangements” in the Letter from the Board. We summarise the transactions of the Chunex Arrangements as follows:

Parties

Buyer	Seller	Description of transactions	Products
Chunex	APM(S)	Chunex buys from APM(S) from	General foodstuff
		time to time to resell, hence helping	including jam
		to enlarge the distribution of
		APM(S) products and strengthen
		Chunex’s offerings to customers
		with wider range
APM(S)	Chunex	Chunex may sell to APM(S)	General foodstuff
		when need arises

As advised by the Directors, the transactions entered into under the Chunex Arrangements between the Completion Date and 30th March, 2004, amounted to approximately S$6,000 (equivalent to approximately HK$28,000) and for the period from 1st January, 2004 to 30th March, 2004 as included in the financial year ended 31st December, 2004 amounted to approximately S$3,600 (equivalent to approximately HK$17,000).

From our discussions with the management of the Company, we understand that the Chunex Arrangements have been carried out prior to the Completion Date as part of the principal business of Chunex, in order to maintain a smooth transfer of the business of the Group after the Completion Date and to achieve operational synergies, we consider that the entering into the Chunex Arrangements is in the interests of the Company and the Shareholders as a whole.

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APPENDIX II

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

2. Factors considered

Being a wholesale distributor of food and allied fast-moving consumer products of APM(S) and a importer, exporter, distributor and merchant in foodstuff, confectionary products, dairy products, preserved fruits and other bakery related products of Chunex, the Directors consider that transactions contemplated under the Chunex Arrangements are carried out in their usual and ordinary course of businesses. Given the principal activities of each of APM(S) and Chunex and the nature of the transactions contemplated under the Chunex Arrangements, we concur with the Directors that the Chunex Arrangements fall within the principal business of each of APM(S) and Chunex and the Chunex Arrangements were carried out in their usual and ordinary course of business.

In order to assess whether the Chunex Arrangements are fair and reasonable, we have reviewed:

(a) the two supply agreements entered into (i) between Chunex as buyer and APM(S) as seller for purchase of general foodstuff products; and (ii) between APM(S) as buyer and Chunex as seller for purchase of general foodstuff products;
(b) copies of invoices in 2004 entered into between (i) Chunex as buyer and APM(S) as seller; and (ii) Chunex as seller and APM(S) as buyer; and
(c) copies of invoices entered into between (i) APM(S) and its independent customers for general foodstuff such as dairy spread; and (ii) APM(S) and its independent suppliers for purchases of general foodstuff such as yogurt and cheese.

We noted that the major terms, including price and payment terms, of the transactions contemplated under the Chunex Arrangements fall within the range of the comparable transactions. Having considered that (i) the Chunex Arrangements were entered into on normal commercial terms and in the ordinary course of business of both APM(S) and Chunex; (ii) the major terms of the transactions contemplated under the Chunex Arrangements fall within the range of comparable transactions, we therefore concur with the Directors that the Chunex Arrangements are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

– 42 –

APPENDIX II LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

IV. CONNECTED TRANSACTIONS ONLY BETWEEN THE COMPLETION DATE AND THE CHANGED SHAREHOLDING DATE

(A) TRADING ARRANGEMENTS

1. Description of the Trading Arrangements

After Completion, ACY and APFP were parties to a number of trading arrangements with each other and Chunex. As advised by the Directors, the Trading Arrangements were entered into on normal commercial terms from time to time as follows (including terms as regards the payment method and credit periods for the relevant products) and such terms were on substantially similar terms to those detailed in the paragraph headed “Particulars of the Ongoing Arrangements” in the Letter from the Board. We summarise the transactions of the Trading Arrangements as follows:

Parties

	Buyer	Seller	Description of Transactions	Products
(1)	ACY	APFP	APFP sells to ACY for resale	Margarine and
				butter products
(2)	APFP	ACY	ACY sells to APFP products	ACY imports raw
			for resale	ingredients and sells to
				APFP including
				anhydrous milk fat,
				milk powder, etc.
(3)	Chunex	ACY	Chunex may buy from ACY from	General foodstuff
			time to time, usually when
			Chunex is facing stock-out and
			needs to replenish stock from
			ACY or when Chunex does
			not carry certain products
			customers require
(4)	ACY	Chunex	ACY buys from Chunex from	General foodstuff
			time to time usually when ACY
			is out of stock and needs to
			replenish stock from Chunex

– 43 –

APPENDIX II

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

We understand that ACY, APFP and Chunex are non-wholly owned subsidiaries of the Company after Completion and engaging in the supply, manufacture, import, export and distribution of foodstuff, confectionery materials or related products. In order to achieve operational synergies, we consider that the entering into the Trading Arrangements is in the interests of the Company and the Shareholders as a whole.

2. Factors considered

Being a supplier of bakery and confectionery materials of ACY, a manufacturer of and dealer in butter, margarine and related confectionary products of APFP and a importer, exporter, distributor and merchant in foodstuff, confectionary products, dairy products, preserved fruits and other bakery related products of Chunex, the Directors consider that transactions contemplated under the Trading Arrangements for selling and purchasing of general foodstuff and related products are carried out in their usual and ordinary course of businesses. Given the principal activities of each of ACY, APFP and Chunex and the nature of the Trading Arrangements, we concur with the Directors that the Trading Arrangements fall within the principal business of each of ACY, APFP and Chunex and the Trading Arrangements were carried out in their usual and ordinary course of businesses.

In order to assess whether the Trading Arrangements are fair and reasonable, we have obtained and reviewed:

(a) a supply agreement entered into between ACY as buyer and APFP as seller for the purchase of margarine products, copy of invoice issued by APFP to ACY and copy of invoice issued by ACY to its independent customer for reselling such margarine product;
(b) a supply agreement entered into between APFP as buyer and ACY as seller for the purchase of raw ingredients, copy of invoice issued by ACY to AFPF and copy of invoice of similar transaction issued by ACY to its independent customer;
(c) a supply agreement entered into between Chunex as buyer and ACY as seller for the purchase of general foodstuff, copies of invoices issued by ACY to Chunex and copies of invoices of similar transactions issued by ACY to its independent customers; and
(d) a supply agreement entered into between ACY as buyer and Chunex as seller for the purchase of general foodstuff, copies of invoices issued by Chunex to ACY and copies of invoices of similar transactions issued by independent suppliers to ACY.

– 44 –

APPENDIX II

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

For transactions between ACY as buyer and APFP as seller contemplated under the Trading Arrangements above, as confirmed by the Directors, the content and formulation of the margarine product that purchased by ACY from APFP is different compared to other margarine product which ACY purchased from other suppliers and such product is not available for sale at retail stores. As advised by the Directors, ACY is the sole customer of APFP for such margarine product and due to the exclusivity of the product, there is no similar transaction available for us to assess whether the prices offered by APFP is not less favourable than it offered to other independent third parties. However, as advised by the Directors and after reviewed the invoice that ACY charged to its independent customers for reselling such margarine product, we are given to understand that ACY resells these margarine product based on the price it payable to APFP plus a certain percentage of mark-up where a gross profit are attained by ACY. The Directors also confirm to us that the terms of these transactions were arrived at after arm’s length negotiation.

For transactions (2), (3) and (4) above under the Trading Arrangements, after reviewed copies of invoices of similar transactions with other independent third parties, we found that the major terms, including price and payment terms, of transactions under the Trading Arrangements fall within the range of the terms of comparable transactions. We therefore consider that these transactions under Trading Arrangements were carried out on normal commercial terms and the price is no less favourable than ACY or APFP or Chunex can obtain from or given to independent third parties.

Taking into account that (i) the Trading Arrangements were entered into on normal commercial terms and in the ordinary course of business of each of ACY, APFP and Chunex; (ii) ACY records a gross profit for reselling the margarine product to its customers; and (iii) the major terms, including price and payment terms, of the transactions (2), (3) and (4) above under the Trading Arrangements fall within the range of the comparable transactions, we therefore consider that the Trading Arrangements are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

(B) DISTRIBUTION AGREEMENT

1. Background of the Distribution Agreement

On 17th January, 2005, the Distribution Agreement was entered into between APM as the principal and ACY as the distributor and relates to the appointment of ACY as a distributor of APM for the resale of certain of its food products in Malaysia.

– 45 –

APPENDIX II LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Changed Shareholding amounted to approximately RM14,341,000 (equivalent to approximately HK$28,682,000) and for the period from 1st January, 2004 to the Changed Shareholding Date as included in the financial year ended 31st December, 2004 amounted to approximately RM13,820,000 (equivalent to approximately HK$27,640,000).

The principal business activities of APM are marketing and distribution of food products and ACY is principally engaged in the supply of bakery and confectionery materials. By entering into the Distribution Agreement, the Directors consider that ACY will be benefited from having a reliable source of supply of food products and by engaging ACY as the distributor, APM will be able to gain advantage to the sales network of ACY and hence expand its market coverage. To this end, we concur with the Directors that the reasons for entering into the Distribution Agreement is reasonable and taking into consideration that supply and distribution of foodstuff products is part of the principal business of the APM. As such, we consider that the Distribution Agreement is in the interests to the Company and the Shareholders as a whole.

2. Factors considered

The Distribution Agreement was entered into for a term of three years with effect from the Completion Date unless terminated by APM. Each purchase order from ACY will be made with the price determined by APM’s price list in respect of the relevant products from time to time on normal commercial terms. There is no other fee payable to ACY as regard its appointment as APM’s distributor. The Directors consider that the terms of the Distribution Agreement have been arrived at between parties after arm’s length negotiations and the transactions contemplated therein (including terms as regards the payment method and credit periods for the relevant products) have been, and will be, conducted on normal commercial terms.

We are confirmed by the management of the Company that, currently, ACY is the sole distributor of APM in Malaysia. As such, there is no similar transaction for us to assess whether the terms offered by APM is not less favorable than it offered to other independent third parties. However, we have obtained another distribution agreement entered into between APM and an independent third party in October 1999 and noted that the major terms, including price, payment terms and terms of purchase, offered by APM to ACY under the Distribution Agreement are similar to those under the agreement entered in October 1999. We consider that the Distribution Agreement is carried out on normal commercial terms and the price and payment terms are no less favourable than APM can obtain from independent third parties. We are therefore of the view that the terms of the Distribution Agreement are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

– 46 –

APPENDIX II LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

(C) MANUFACTURING AGREEMENT

1. Description of the Manufacturing Agreement

On 17th January, 2005, the Manufacturing Agreement was entered into between APM and APM(S) as the purchasers and APFP as the manufacturer and relates to the appointment of APFP to manufacture, pack and deliver certain dairy spread products for APM and APM(S).

The transactions entered into pursuant to the Manufacturing Agreement between the period after Completion to 30th March, 2004 amounted to approximately HK$2,865,000. The transactions entered between the period after Completion and the Changed Shareholding Date amounted to approximately HK$15,607,000 and for the period from 1st January, 2004 to the Changed Shareholding Date as included in the financial year ended 31st December, 2004 amounted to approximately HK$14,863,000.

In the view that food business is the core business of the Auric Group, the directors of the Auric Group consider that it is of utmost importance for the Group to maintain its capacity in response to the ever-changing market demand by appointing a manufacturer to manufacture, pack and deliver certain dairy spread products for APM and APM(S). Taking into consideration that the Manufacturing Agreement may, to certain extent, secures the supply of the foodstuff products for APM and APM(S) and allows the Auric Group to achieve operation synergies, we concur with the Directors that the Manufacturing Agreement was entered in their ordinary and usual course of business of APM and APM(S) and APFP and the entering into the Manufacturing Agreement is in the interests of the Company and the Shareholders as a whole.

2. Factors considered

The Manufacturing Agreement was for a term of three years with effect from the Completion Date unless terminated by APM and APM(S). Upon the expiry of such agreement, the parties may extend the Manufacturing Agreement for such period and on such terms as the parties may mutually agree in writing provided that APFP has not committed any material breach of such agreement. The price for the products manufactured and supplied to APM and APM(S) will be calculated based on a formula referring to the cost of materials and contract manufacturing fee, such formulae may be varied on a quarterly basis to be agreed between parties. The Directors are of the view that the terms of the Manufacturing Agreement have been arrived at between parties after arm’s length negotiations and the transactions contemplated therein (including terms as regards the payment method and credit periods for the relevant products) have been, and will be, conducted on normal commercial terms.

– 47 –

APPENDIX II

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

As confirmed by the Directors, the dairy products that currently purchased by APM and APM(S) from APFP under the Manufacturing Agreement are different from other dairy product which APM and APM(S) purchased from other suppliers and APFP only provides such products to APM and APM(S). As such, there is no similar transaction for us to assess whether the terms offered by APFP is not less favorable than it offered to other independent third parties. However, we have obtained another contract manufacturing agreement entered into between APM and an independent third party in October 1999. We noted that the major terms, including price, payment terms and delivery schedule, offered by APM and APM(S) to APFP under the Manufacturing Agreement are similar to those under the agreement entered in October 1999. We consider that the Manufacturing Agreement is carried out on normal commercial terms and the price and payment terms are no less favourable than APM and APM(S) can obtain from independent third parties. As such, we are of the view that the terms of the Manufacturing Agreement are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

V. CONNECTED TRANSACTIONS FROM THE COMPLETION DATE UNTIL 31ST DECEMBER, 2006

(A) TENANCY AGREEMENTS

1. Description of the Tenancy Agreements

As mentioned in the Letter from the Board, the following tenancy agreements were entered and form part of the Continuing Transactions:

					Location and
	Tenancy	Parties			gross floor
	Agreements	involved	Usage	Monthly rental	area	Remarks
(a)	Tenancy	ACY as the	Warehouse	RM2,800	Malaysia	contain options
	Agreement	tenant and		(excluding tax,	2,400 square feet	for the tenant,
	dated 4th	Mr. Wong Senior		rates and		that is, ACY to
	November,	as the landlord		management		renew the period
	2003			fee) (equivalent		of the relevant
	(“Wong			to approximately		lease for a
	Senior			HK$5,600) i.e.		further three
	Property”)			about RM1.17		years after
				per square feet		expiry of the
						initial three year
						term subject to
						rent payable at
						the prevailing
						market value of
						similar
						properties which
						shall not exceed
						10 per cent. over
						and above the
						existing rent.

– 48 –

APPENDIX II

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

					Location and
	Tenancy	Parties			gross floor
	Agreements	involved	Usage	Monthly rental	area	Remarks
(b)	Tenancy	ACY as the	Factory with	RM37,253.70	Malaysia	same as above
	Agreement	tenant and Chun	office premises	(excluding tax,	33,867 square
	dated 4th	Yip Realty as the		rates and	feet
	November,	landlord		management
	2003 (“Chun			fee) (equivalent
	Yip Realty			to approximately
	Property”)			HK$74,507) i.e.
				RM1.10 per
				square feet
(c)	Tenancy	APFP as the	Factory	RM6,165.75	Malaysia	contain an
	Agreement	tenant and HSB		(excluding tax,	8,221 square feet	option for the
	dated 4th	as the landlord		rates and		tenant, that is,
	November,			management		APFP to renew
	2003			fee) (equivalent		the period of
	(“HSB			to approximately		such lease for a
	Property”)			HK$12,332) i.e.		further two
				RM0.75 per		years after
				square feet		expiry of the
						initial two year
						term subject to
						rent payable at
						the prevailing
						market value of
						similar
						properties which
						shall not exceed
						10 per cent. over
						and above the
						existing rent.

The Directors are informed by the Auric Group that the entering into of the Tenancy Agreements upon completion of the Acquisitions would enable the acquired entities to conduct their respective businesses at the relevant premises at which such businesses are currently carried out and to avoid any disruption to their businesses after the Completion Date. Having considered that the properties leased under the Tenancy Agreements are required for the business operations of ACY and APFP and the continuous leasing of the premises concerned avoids unnecessary disruption to the operations of the respective tenants under the Tenancy Agreements, we consider that the Tenancy Agreements were carried out in ordinary and usual course of their business and the entering into the Tenancy Agreements is in the interests of the Company and the Shareholders as a whole.

– 49 –

APPENDIX II LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

2. Factors considered

As advised by the Directors, the monthly rentals payable under the Tenancy Agreements were arrived at after arm’s length negotiations between the relevant parties on normal commercial terms and were determined by reference to such negotiations and prevailing market rents in respect of similar properties in similar locations and uses as provided by independent property valuers.

Rahim & Co Chartered Surveyors Sdn. Bhd. (the “Valuer”), a real estate consultancy firm in Malaysia, has been engaged by APG to carried out independent property valuation for the Chun Yip Realty Property and HSB Property. To the best of the Directors’ knowledge, information and belief having made all reasonable enquires, the Valuer is independent of the Company and its connected persons (as defined in the Listing Rules). In assessing the rental and fairness of the Tenancy Agreements, we have reviewed the property valuations carried out by the Valuer.

We noted from the valuation report that the market rental of two properties in similar locations of Chun Yip Realty Property ranged from RM0.80 to RM1.06 per square feet. The monthly rental of RM1.10 per square feet payable by ACY for the Chun Yip Realty Property then represents a slight premium of approximately 4 per cent. as compared to the upper range of the market comparable as quoted in the valuation report. Save as the valuation report disclosed above, no other information was obtained from the Company. Taking into consideration that the tenancy arrangement for the Chun Yip Realty Property would enable ACY to conduct its business at the premise which is currently carried out and to avoid any disruption to its business after the Completion Date, we consider that a slight premium of the monthly rental to the market comparable is acceptable and the terms of the tenancy agreement for the Chun Yip Realty Property are of normal commercial terms and are fair and reasonable so far as the Shareholders are concerned.

We noted from the valuation report that the market rental of four properties in similar locations of the HSB Property ranged from RM0.80 to RM1.05 per square feet. The monthly rental of RM0.75 per square feet payable by APFP for the HSB Property represents a slight discount to the market comparable as quoted in the valuation report. Given the slight discount as compared to the market comparable, we consider that the terms, including the monthly rental, of the tenancy agreement for the HSB Property are of normal commercial terms and are fair and reasonable so far as the Shareholders are concerned.

– 50 –

APPENDIX II

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

As informed by the management of the Company, no independent valuation has been conducted for the Wong Senior Property as the management of the Auric Group considered that the monthly rental of RM2,800 (equivalent to approximately HK$5,600) is not material. Although no market comparable could be obtained and reviewed, the Directors confirmed that the terms of this tenancy agreement was arrived at after arm’s length negotiations. Having considered the annual rental value of leasing the Wong Senior Property is merely RM33,600 (equivalent to approximately HK$67,200), representing approximately 0.0008 per cent. and 0.004 per cent. of consolidated total assets of the Company as at 31 December, 2003 and total revenue of the Company for the year ended 31 December, 2003 respectively and the continuing leasing of the Wong Senior Property avoids needless disturbances on operations of ACY, we are of the view that the monthly rental value and terms of tenancy agreement for the Wong Senior Property is acceptable and the terms of the tenancy agreement for the Wong Senior Property are of normal commercial terms and are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

3. Proposed annual cap amounts

As mentioned in the Letter from the Board, the annual rentals paid and payable under the Tenancy Agreements for each of the three years ending 31st December, 2006 are as follows (on the basis that the tenancy agreements as to the Wong Senior Property and the Chun Yip Realty Property are not renewed for a further three years and the tenancy agreement as to the HSB Property is not renewed for a further two years):

	For the year ended	For the year ending	For the year ending
	31st December, 2004	31st December, 2005	31st December, 2006
	(’000)	(’000)	(’000)
Annual rentals	RM555	RM549	RM441
	(equivalent to	(equivalent to	(equivalent to
	approximately	approximately	approximately
	HK$1,110)*	HK$1,098)	HK$882)

* This amount is equal to the actual payment made for the year ended 31st December, 2004.

Considering that the above annual cap amounts for each of the three years ending 31st December, 2006 are determined on the basis of the monthly rental paid and to be paid in each such financial year based on the rental charges set out in the Tenancy Agreements (on the basis that the tenancy agreements as to the Wong Senior Property and the Chun Yip Realty Property are not renewed for a further three years and the tenancy agreement as to the HSB Property is not renewed for a further two years), we are of the view that the proposed annual caps amount for each of the three years ending 31st December, 2006 under the Tenancy Agreements are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

– 51 –

APPENDIX II LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

(B) ONGOING ARRANGEMENTS

1. Description of the Ongoing Arrangements

Prior to Completion, the Auric Group (excluding ACY, APFP and Chunex which were acquired on the Completion Date) had participated in various trading arrangements with the CYT Group from time to time. The Auric Group expects the relevant trading arrangements with the CYT Group, where applicable, to continue from time to time in accordance with market demands for the relevant products. The relevant trading transactions under the Ongoing Arrangements are summarised as follows:

Ongoing Arrangements where members of the Auric Group are buyers:

	Parties	Parties
Nos.	Buyer	Seller	Description of transactions	Products
(1)	ACY	HSB	ACY buys from HSB and resells	Cake cases-packaging for
			to customers	cake and pastry items
(2)	ACY	KPL	KPL sells to ACY for resale	General foodstuff,
				mainly baking ingredients

Ongoing Arrangements where members of the Auric Group are sellers:

	Parties	Parties
Nos.	Buyer	Seller	Description of transactions	Products
(3)	CYBM	ACY	ACY sells a range of bakery	Comprehensive range of
			ingredients to CYBM, a retailer	baking ingredients
			in baking ingredients to	including cake mixes,
			housewives and petty traders	sultanas, flavour and
				colours, dairy products,
				yeast and baking powder
(4)	KPL	ACY	ACY sells to KPL for resale	General foodstuff,
				mainly baking ingredients
(5)	KPL	Chunex	Chunex sells to KPL as it uses the	General foodstuff including
			latter as a wholesaler for its	baking powder,
			ingredient business	dried fruits, cherries and
				dairy products
(6)	KPL	APM(S)	APM(S) sells to KPL as it uses the	General foodstuff including
			latter as a wholesaler for its	baking powder,
			ingredient business	dried fruits, cherries and
				dairy products

– 52 –

APPENDIX II LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The Auric Group anticipates that the transactions contemplated under the Ongoing Arrangements will continue after the Completion Date on terms similar to those trading arrangements carried out previously and on normal commercial practices. Accordingly, six standard supply agreements in relation to the Ongoing Arrangements have been entered into between (i) ACY as buyer and HSB as seller; (ii) ACY as buyer and KPL as seller; (iii) CYBM as buyer and ACY as seller; (iv) KPL as buyer and ACY as seller; (v) KPL as buyer and Chunex as seller; and (vi) KPL as buyer and APM(S) as seller respectively.

Taking into consideration that i) the nature of each of the transactions contemplated under the Ongoing Arrangements were in line with the business activities of each of the respective buyer and seller and ii) the Ongoing Arrangements comprise of subsisting trading arrangements forming an enlarged distribution network for the products of the Auric Group between members of the Auric Group and the CYT Group on normal commercial terms, we concur with the Directors that the Ongoing Arrangements were carried out in ordinary and usual course of businesses of the respective entities and the entering into the Ongoing Arrangements is in the interests of the Company and the Shareholders as a whole.

2. Factors considered

The term for each of the standard supply agreements was fixed for a period of three years commencing on 1st December, 2003, unless terminated by the relevant parties by giving written notice to the other of the relevant agreement with varying written notice periods as regards each relevant supply agreement. The relevant parties may by agreement in writing vary the products and its specifications under the standard supply agreement. Orders for the products will be placed on as “as needed” basis on standard terms and conditions of sale.

– 53 –

APPENDIX II LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

In order to assess whether the terms of the transactions contemplated under the Ongoing Arrangements are fair and reasonable, we have obtained and reviewed:

(a) a standard supply agreement entered into between ACY as buyer and HSB as seller for purchase of cake cases-packaging for cake and pastry items, copies of invoices issued by HSB to ACY and independent supplier to ACY for similar transactions;
(b) a standard supply agreement entered into between ACY as buyer and KPL as seller for purchase of general foodstuff, copies of purchase orders made by ACY to KPL and ACY to its independent supplier for similar transactions;
(c) a standard supply agreement entered into between CYBM as buyer and ACY as seller for purchase of baking ingredients, copies of invoices issued by ACY to CYBM and ACY to its independent customers for similar transactions;
(d) a standard supply agreement entered into between KPL as buyer and ACY as seller for purchase of general foodstuff, mainly baking ingredients, copies of invoices issued by ACY to KPL and ACY to its independent customers for similar transactions;
(e) a standard supply agreement entered into between KPL as buyer and Chunex as seller for purchase of general foodstuff, including baking powder, dried fruits, cherries and dairy products, copies of invoices issued by Chunex to KPL and Chunex to its independent customer for similar transactions; and
(f) a standard supply agreement entered into between KPL as buyer and APM(S) as seller for purchase of general foodstuff, including baking powder, dried fruits, cherries and dairy products, copies of invoices made by APM(S) to KPL and APM(S) to its independent customer for similar transactions.

After reviewed the above, we noted that the major terms, including price and payment terms, of these transactions contemplated under the Ongoing Arrangements fall within the range of the comparable transactions and the price offered by HSB or KPL to ACY is not less favourable than ACY can obtain from independent third suppliers as well as the price offered by Auric Group to CYBM or KPL is not less favourable to the Group than those offered by Auric Group to independent customers.

– 54 –

APPENDIX II

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Taking into account that (i) the Ongoing Arrangements were and will be entered into on normal commercial terms and in their ordinary course of businesses; and (ii) the major terms, including price and payment terms, of the transactions contemplated under the Ongoing Arrangements fall within the range of the comparable transactions, we therefore consider that the Ongoing Arrangements are carried out on normal commercial terms and fair and reasonable and in the interests of the Company and the Shareholders as a whole.

3. Proposed annual cap amounts

The annual caps on the aggregate values in respect of the transactions contemplated under the Ongoing Arrangements over the three financial years ending 31st December, 2006 are proposed to be set as follows (on the basis of the existing terms contained in the Ongoing Arrangements):

Proposed cap amounts under the Ongoing Arrangements:

	For the year ended	For the year ending	For the year ending
	31st December, 2004	31st December, 2005	31st December, 2006
	(’000)	(’000)	(’000)
Ongoing Arrangements	equivalent to	equivalent to	equivalent to
where members of the	approximately	approximately	approximately
Auric Group are buyers	HK$600 *	HK$2,400	HK$2,700
Ongoing Arrangements	equivalent to	equivalent to	equivalent to
where members of the	approximately	approximately	approximately
Auric Group are sellers	HK$6,200	HK$6,700	HK$7,400

* The proposed cap for the Ongoing Arrangements for the year ended 31st December, 2004 has been adjusted downward from HK$2,200,000 (as referred to in the joint announcement of the Company and Lippo dated 25th January, 2005) to HK$600,000 due to some production problems at HSB that could not be able to fulfil the purchase requirements of ACY. Such proposed cap is set based on the transaction values of the transactions for the three years ended 31st December, 2003 and the actual figures for the year ended 31st December, 2004 were not available as at the date of the publication of the above announcement.

As discussed with the Directors, the Directors confirmed that the basis of the proposed caps set out above were determined by references to the previous transactions entered into between the relevant parties as following table and the anticipated annual growth rates resulting from the relevant products which was based on the Auric Group’s knowledge and experience.

– 55 –

APPENDIX II

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Previous values of the transactions under the Ongoing Arrangements:

	For the year ended	For the year ended	For the year ended
	31st December, 2001	31st December, 2002	31st December, 2003
	(’000)	(’000)	(’000)
Ongoing Arrangements	equivalent to	equivalent to	equivalent to
where members of the	approximately	approximately	approximately
Auric Group are buyers	HK$2,033	HK$1,665	HK$1,276
Ongoing Arrangements	equivalent to	equivalent to	equivalent to
where members of the	approximately	approximately	approximately
Auric Group are sellers	HK$5,262	HK$6,519	HK$5,802

In assessing the reasonableness of the annual caps, we have discussed with the management of the Company on the underlying basis in estimation of the annual caps. We noted that the proposed caps are determined with reference to the previous values of transactions entered into between the relevant parties and the anticipated annual growth rates of the business which was based on the knowledge and experience of the management of Auric Group in the foodstuff industry, we concur with the Directors’ view that their estimation of the cap amounts for the three years ending 31st December, 2006 provides a reasonable buffer for future business development of respective companies and are fair and reasonable so far as the Shareholders are concerned.

(C) CONSULTANCY ARRANGEMENTS

1. Description of the Consultancy Arrangements

On 4th November, 2003, a consultancy agreement was entered into between ACY and SFSB in respect of the non exclusive provision of consultancy services by Mr. Wong Senior as the designated consultant of SFSB to ACY for a period from 1st December, 2003 to 31st December, 2005. Although the consultancy agreement entered into between ACY and SFSB is non exclusive in nature, ACY and Mr. Wong Senior had entered into a trust and confidence agreement on 4th November, 2003 whereby any inventions created by Mr. Wong Senior and all intellectual rights in such invention shall belong to ACY. Mr. Wong Senior will be subject to non-competition provisions during the term of the aforementioned consultancy agreement. Non-solicitation and non-competition provisions will also be applicable at any time after termination of such agreement in any place within Malaysia, Singapore or any other country

– 56 –

APPENDIX II LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

in which the Auric Group has operations from time to time. However, such non-competition provisions may not apply if ACY’s prior written consent have been obtained to waive such provisions and the relevant country is not Malaysia or Singapore. Furthermore, the term of such trust and confidence agreement shall remain effective for the duration of the consultancy agreement and until the expiry of two years after the date on which SFSB shall cease to be engaged as a consultant to ACY under such consultancy agreement.

The Directors are of the view that by entering into the Consultancy Arrangements, it allows ACY to tap the experience with which SFSB has had in the business of ACY, APFP and Chunex to assist the Auric Group in its future growth and business developments. To this end, we concur with the Directors that the entering into the Consultancy Arrangements is in the interests of the Company and the Shareholders as a whole.

2. Factors considered

We are advised by the Directors that Mr. Wong Senior has over 30 years’ experience in the bakery, ice-cream, biscuit, sugar, confectionery, chocolate and chocolate products industries. Pursuant to the aforesaid consultancy agreement, ACY is subject to pay to SFSB a monthly fee of RM26,300 (equivalent to approximately HK$52,600) together with any incidental expenses incurred for example travel or entertainment expenses. As advised by the Directors, the monthly consultancy fees payable by ACY were arrived at after arm’s length negotiations between ACY and SFSB on commercial terms by reference to the services to be provided by SFSB to ACY to facilitate the smooth transition of the businesses transferred to the Auric Group from the CYT Group after the Completion Date and to tap the experience with which SFSB has had in the business of ACY, APFP and Chunex to assist the Auric Group in its future growth and business developments. The Consultancy Arrangements may be terminated by either party giving three months written notice.

Taking into consideration of (i) the experience and contribution of Mr. Wong Senior to ACY’s business; (ii) the entering into a trust and confidence agreement which could safeguard the interests of ACY; and (iii) the appointment of SFSB and Mr. Wong Senior being the designated consultant would facilitate the smooth operation of ACY, we consider that the entering into the Consultancy Arrangements is beneficial to ACY and the terms of the Consultancy Arrangements are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

3. Caps for the Consultancy Arrangements

As mentioned in the Letter from the Board, the estimated annual consultancy fees payable pursuant to the consultancy agreement dated 4th November, 2003 for each of the three financial years ending 31st December, 2006 is approximately RM316,000 (equivalent to approximately HK$632,000), RM316,000 (equivalent to approximately HK$632,000) and nil.

– 57 –

APPENDIX II

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

As discussed with the Directors and set out in the Letter from the Board, the caps on the aggregate amount of consultancy fees payable by ACY to SFSB in respect of the Consultancy Arrangements over the three financial years ending 31st December, 2006 as set out below are determined on the basis of the consultancy fees to be paid in each such financial year based on the fees set out in the consultancy agreement dated 4th November, 2003:

	For the year ended	For the year ending	For the year ending
	31st December, 2004	31st December, 2005	31st December, 2006
	(’000)	(’000)	(’000)
	(RM)	(RM)	(RM)
Proposed caps	350	350	Nil
	(equivalent to	(equivalent to
	approximately	approximately
	HK$700)	HK$700)

Given that the above cap amounts over the three financial years ending 31st December, 2006 in respect of the Consultancy Arrangements are determined by reference to (i) the consultancy fees to be paid in each such financial year based on the fees set out in the consultancy agreement; and (ii) a reasonable buffer has been set in for reimbursement of incidental expenses, if any, we consider that the proposed cap amounts for the three years ending 31st December, 2006 are fair and reasonable so far as the Shareholders are concerned.

RECOMMENDATIONS

Having considered the factors set out above, we consider that terms of each of the Aggregate Connected Transactions, namely the Chunex Arrangements, the Trading Arrangements, the Distribution Agreement, the Manufacturing Agreement and the Continuing Transactions are on normal commercial terms and are fair and reasonable and in the interest of the Company and the Shareholders as a whole. In addition, the cap amounts that determined for each of the Continuing Transactions, namely the Tenancy Agreements, Ongoing Arrangements and the Consultancy Arrangements are fair and reasonable so far as the Shareholders are concerned.

Yours faithfully, For and on behalf of

Hantec Capital Limited Kinson Li Director

– 58 –

APPENDIX III

GENERAL INFORMATION

1. RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors collectively and individually accept full responsibility for the accuracy of the information contained in this circular and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, there are no other facts, the omission of which would make any statement in this circular misleading.

2. DISCLOSURE OF INTERESTS

As at the Latest Practicable Date, the interests or short positions of the Directors and chief executive of the Company in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which were notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO), or which were required, pursuant to Section 352 of the SFO, to be entered in the register referred to therein, or which were required, pursuant to the Model Code, to be notified to the Company and the Stock Exchange, were as follows:

Directors’ and chief executive’s interests and short positions in shares and underlying shares of the Company and associated corporations

(a) Interests in shares of the Company and associated corporations

	Personal				Approximate
	interests	Family			percentage of
	(held as	interests			total interests
	beneficial	(interest of	Other	Total	in the issued
Name of Director	owner)	spouse)	interests	interests	share capital
Number of ordinary	Shares
in the Company
Mochtar Riady	–	–	6,544,696,389	6,544,696,389	71.13
			Notes (i) and (ii)
James Riady	–	–	6,544,696,389	6,544,696,389	71.13
			Notes (i) and (ii)
Stephen Riady	–	–	6,544,696,389	6,544,696,389	71.13
			Notes (i) and (ii)

– 59 –

APPENDIX III

GENERAL INFORMATION

	Personal	Personal				Approximate
	interests		Family			percentage of
	(held as		interests			total interests
	beneficial		(interest of	Other	Total	in the issued
Name of Director	owner)		spouse)	interests	interests	share capital
Number of ordinary shares of
HK$0.10 each in Lippo
Mochtar Riady		–	–	248,697,776	248,697,776	57.34
				Note (i)
James Riady		–	–	248,697,776	248,697,776	57.34
				Note (i)
Stephen Riady		–	–	248,697,776	248,697,776	57.34
				Note (i)
John Luen Wai Lee	825,000		–	–	825,000	0.19
Number of ordinary shares of
HK$1.00 each in HCL
Mochtar Riady		–	–	973,240,440	973,240,440	72.26
				Notes (i), (ii)
				and (iii)
James Riady		–	–	973,240,440	973,240,440	72.26
				Notes (i), (ii)
				and (iii)
Stephen Riady		–	–	973,240,440	973,240,440	72.26
				Notes (i), (ii)
				and (iii)
John Luen Wai Lee		200	200	–	400	0.00
King Fai Tsui		–	50,000	–	50,000	0.00

Note:

(i) As at the Latest Practicable Date, Lippo Cayman, an associated corporation (within the meaning of Part XV of the SFO) of the Company, and through its wholly-owned subsidiaries, Lippo Capital Limited, J & S Company Limited and Huge Returns Limited, was directly and indirectly interested in an aggregate of 248,697,776 ordinary shares of HK$0.10 each in, representing approximately 57.34 per cent. of, the issued share capital of Lippo. Lanius Limited (“Lanius”), an associated corporation (within the meaning of Part XV of the SFO) of the Company, was the registered shareholder of 10,000,000 ordinary shares of US$1.00 each in, representing 100 per cent. of, the issued share capital of Lippo Cayman. Lanius was the trustee of a discretionary trust, of which Dr. Mochtar Riady is the founder and in accordance with whose instructions Lanius was accustomed to act. Dr. Mochtar Riady did not have any interests in the share capital of Lanius. The beneficiaries of the trust included Dr. Mochtar Riady, Mr. James Riady, Mr. Stephen Riady and their respective family members including, inter alia, the minor children of each of Messrs. James Riady and Stephen Riady. Dr. Mochtar Riady as the founder and beneficiary of the trust and Messrs. James Riady and Stephen Riady (together with their minor children) as beneficiaries of the trust were taken to be interested in Lippo Cayman under the SFO.

– 60 –

APPENDIX III

GENERAL INFORMATION

(ii) As at the Latest Practicable Date, Lippo was indirectly interested in 6,544,696,389 ordinary Shares in, representing approximately 71.13 per cent. of, the issued share capital of the Company.
(iii) As at the Latest Practicable Date, the Company was directly and indirectly interested in an aggregate of 973,240,440 ordinary shares of HK$1.00 each in, representing approximately 72.26 per cent. of, the issued share capital of HCL.

As at the Latest Practicable Date, Dr. Mochtar Riady, as founder and beneficiary of the aforesaid discretionary trust, and Messrs. James Riady and Stephen Riady (together with their minor children), as beneficiaries of the aforesaid discretionary trust, through their interests in Lippo Cayman as mentioned in Note (i) above, were also taken to be interested in the share capital of the following associated corporations (within the meaning of Part XV of the SFO) of the Company:

			Approximate
			percentage
		Number of	of interest in
Name of		shares	the issued
associated corporation	Class of shares	interested	share capital
Abital Trading Pte. Limited	Ordinary shares	2	100
AcrossAsia Multimedia	Ordinary shares	3,669,576,788	72.45
Limited (now known as		(Note a)
AcrossAsia Limited)
Actfield Limited	Ordinary shares	1	100
Boudry Limited	Ordinary shares	1,000	100
Congrad Holdings Limited	Ordinary shares	1	100
Cyport Limited	Ordinary shares	1	100
East Winds Food Pte Ltd.	Ordinary shares	400,000	88.88
		(Note b)
First Bond Holdings Limited	Ordinary shares	1	100
First Tower Corporation	Ordinary shares	1	100
		(Note c)
Glory Power Worldwide Limited	Ordinary shares	1	100
Grandhill Asia Limited	Ordinary shares	1	100
Grand Peak Investment Limited	Ordinary shares	2	100
Honix Holdings Limited	Ordinary shares	1	100
Huge Returns Limited	Ordinary shares	1	100
J & S Company Limited	Ordinary shares	1	100
Lippo Assets (International) Limited	Ordinary shares	1,000,000	100
	Non-voting	15,000,000	100
	deferred shares
Lippo Capital Limited	Ordinary shares	705,690,000	100
Lippo Energy Company N.V.	Ordinary shares	6,000	100

– 61 –

APPENDIX III

GENERAL INFORMATION

			Approximate
			percentage
		Number of	of interest in
Name of		shares	the issued
associated corporation	Class of shares	interested	share capital
Lippo Finance Limited	Ordinary shares	6,176,470	82.35
Lippo Holding America Inc.	Ordinary shares	1	100
Lippo Holding Company Limited	Ordinary shares	2,500,000	100
	Non-voting	7,500,000	100
	deferred shares
Lippo Investments Limited	Ordinary shares	2	100
Lippo Leisure Holdings Limited	Ordinary shares	2	100
Lippo Realty Limited	Ordinary shares	2	100
Multi-World Builders &	Ordinary shares	4,080	51
Development Corporation
Nelton Limited	Ordinary shares	10,000	100
Pointbest Limited	Ordinary shares	1	100
SCR Ltd.	Ordinary shares	1	100
Sinotrend Global Holdings Limited	Ordinary shares	1	100
Skyscraper Realty Limited	Ordinary shares	10	100
		(Note d)
The HCB General Investment	Ordinary shares	70,000	70
(Singapore) Pte Ltd.
(“HCB General”)
The Hong Kong Building and	Ordinary shares	168,313,038	74.80
Loan Agency Limited		(Note e)
Valencia Development Limited	Ordinary shares	800,000	100
	Non-voting	200,000	100
	deferred shares
Welux Limited	Ordinary shares	1	100

Note:

a. The interests included 219,600,000 ordinary shares held by Mideast Pacific Strategic Holdings Limited in which Lippo Cayman controlled a 30 per cent. interest.
b. The interests were held by HCB General, a 70 per cent. owned subsidiary of Lippo Cayman.
c. The interest was held by Lippo, a 57.34 per cent. owned subsidiary of Lippo Cayman.
d. The interests were held through Lippo, a 57.34 per cent. owned subsidiary of Lippo Cayman.
e. The interests were held through the Company, a 71.13 per cent. owned subsidiary of Lippo which in turn was a 57.34 per cent. owned subsidiary of Lippo Cayman.

– 62 –

APPENDIX III

GENERAL INFORMATION

As at the Latest Practicable Date, each of Messrs. James Riady and Stephen Riady, as beneficial owner, through their respective nominees, was interested in 5 ordinary shares of HK$1.00 each in, representing 25 per cent. of, the issued share capital of Lanius which was the registered shareholder of 10,000,000 ordinary shares of US$1.00 each in, representing 100 per cent. of, the issued share capital of Lippo Cayman. Lanius was the trustee of a discretionary trust, of which Dr. Mochtar Riady is the founder and beneficiary. The beneficiaries of the trust also include, inter alia, Messrs. James Riady and Stephen Riady and their minor children. Dr. Mochtar Riady did not have any interests in the share capital of Lanius but the shareholders of Lanius were accustomed to act in accordance with his instructions.

As at the Latest Practicable Date, Mr. John Luen Wai Lee, as beneficial owner, was also interested in 230,000 ordinary shares of HK$0.10 each in, representing approximately 0.0045 per cent. of, the issued share capital of AcrossAsia Multimedia Limited (now known as AcrossAsia Limited), an associated corporation (within the meaning of Part XV of the SFO) of the Company.

(b) Interests in underlying shares of the Company

		Number of
		underlying Shares	Approximate
		in respect of	percentage
	Capacity and	which options	of the issued
Name of Director	nature of interest	have been granted*	share capital
John Luen Wai Lee	Personal (held as	9,000,000	0.09
	beneficial owner)

The options were granted on 23rd June, 1997 at a consideration of HK$1.00 per grantee under the Share Option Scheme for Employees adopted by the Company (the “Share Option Scheme”). Such options vested after two months from the date when the options were deemed to be granted and accepted and are exercisable from 23rd August, 1997 to 23rd June, 2007 in accordance with the rules of the Share Option Scheme to subscribe for ordinary Shares at an initial exercise price of HK$5.30 per Share (subject to adjustment). Pursuant to the bonus issue of new shares in the ratio of one for one in October 1997, the rights issue of new shares in July 1999 on the basis of one rights share for every one share held and the rights issue of new shares in November 2000 on the basis of one rights share for every two shares held, the holder of each option is entitled to subscribe for six ordinary Shares at an exercise price of HK$0.883 per Share (subject to adjustment). None of the options were exercised by the above Director since they were granted.

The above interest in the underlying Shares was held pursuant to unlisted physically settled equity derivatives. As at the Latest Practicable Date, none of the Directors or chief executive of the Company had any interests in the underlying shares in respect of cash settled or other equity derivatives of the Company or any of its associated corporations (within the meaning of Part XV of the SFO).

– 63 –

APPENDIX III

GENERAL INFORMATION

Certain Directors have non-beneficial personal equity interests in certain subsidiaries of the Company held for the benefit of the Group solely for the purpose of holding the requisite qualifying shares.

All the interests stated above represent long positions. Save as disclosed above, as at the Latest Practicable Date, to the knowledge of the Company:

(1) none of the Directors or chief executive of the Company had or was deemed to have any interests or short positions in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) (a) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which the Directors and the chief executive of the Company were taken or deemed to have under such provisions of the SFO); or (b) which were required to be entered in the register kept by the Company under Section 352 of the SFO; or (c) which were required to be notified to the Company and the Stock Exchange pursuant to the Model Code; and
(2) none of the Directors or chief executive of the Company nor their spouses or minor children (natural or adopted) were granted or had exercised any rights to subscribe for any equity or debt securities of the Company or any of its associated corporations (within the meaning of Part XV of the SFO).

Dr. Mochtar Riady is also a director of Lippo Cayman. Mr. Stephen Riady is also a director of Lanius, Lippo Cayman and Lippo. Save as disclosed herein, none of the Directors holds any directorship or employment in a company which has an interest or short position in the Shares and underlying Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO.

3. INTERESTS AND SHORT POSITIONS OF SHAREHOLDERS

So far as is known to the Directors or chief executive of the Company, as at the Latest Practicable Date, the persons (other than the Directors or chief executive of the Company) who had interests or short positions in the Shares and underlying Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO or who were, directly or indirectly, interested in 10 per cent. or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other members of the Group are as follows:

– 64 –

APPENDIX III

GENERAL INFORMATION

(i) The Company

		Approximate
		percentage of
		the issued
Name	No. of ordinary Shares	share capital
Lippo	6,544,696,389	71.13
Lippo Cayman	6,544,696,389	71.13
Lanius	6,544,696,389	71.13
Madam Lidya Suryawaty	6,544,696,389	71.13

Note (i):

(a) 6,544,696,389 ordinary Shares were held by Skyscraper Realty Limited directly as beneficial owner which in turn was a wholly-owned subsidiary of First Tower Corporation (“First Tower”). First Tower was a wholly-owned subsidiary of Lippo. Lippo Cayman, and through its wholly-owned subsidiaries, Lippo Capital Limited (which owned approximately 50.47 per cent. interest of the issued share capital of Lippo), J & S Company Limited and Huge Returns Limited, was directly and indirectly interested in approximately 57.34 per cent. of the issued share capital of Lippo.
(b) Lanius was the registered shareholder of the entire issued share capital of Lippo Cayman and was the trustee of a discretionary trust, of which Dr. Mochtar Riady is the founder and in accordance with whose instructions Lanius was accustomed to act. The beneficiaries of the trust included Dr. Mochtar Riady and his family members. Madam Lidya Suryawaty is the spouse of Dr. Mochtar Riady. Dr. Mochtar Riady was not the registered holder of any shares in the issued share capital of Lanius.
(c) Lippo’s interests in the ordinary Shares were recorded as the interests of Lippo Cayman, Lanius and Madam Lidya Suryawaty. The above ordinary Shares related to the same block of shares that Dr. Mochtar Riady, Messrs. James Riady and Stephen Riady were interested, details of which were disclosed in the above section headed “Directors’ and chief executive’s interests and short positions in shares and underlying shares of the Company and associated corporations”.
(d) All the interests stated above represent long positions.

(ii) Hassell Holdings Limited (“Hassell”)

	No. of ordinary shares
Name	of US$0.01 each	Percentage
Binsak Holdings Limited (“Binsak”)	5,500	55
Hackney Investments Limited	2,500	25
Fullway Properties Limited	1,000	10
Portland Limited	1,000	10

Note (ii): Binsak is a wholly-owned subsidiary of the Company. See also (i) above in respect of the substantial shareholders of the Company.

– 65 –

APPENDIX III

GENERAL INFORMATION

(iii) Firstrate Development Limited

	No. of ordinary shares
Name	of HK$1.00 each	Percentage
Hassell	4,000	40
First Dragon Limited	3,500	35
Sinofix Limited (“Sinofix”)	1,500	15

Note (iii): Hassell is a subsidiary of Binsak which in turn is a wholly-owned subsidiary of the Company and Sinofix is also a wholly-owned subsidiary of the Company. See also (i) above in respect of the substantial shareholders of the Company.

(iv) Tecwell Limited

	No. of ordinary shares
Name	of US$1.00 each	Percentage
Reiley Inc. (“Reiley”)	70	70
Itochu Corporation	30	30

Note (iv): Reiley is a wholly-owned subsidiary of the Company. See also (i) above in respect of the substantial shareholders of the Company.

(v) MEDCO Holdings, Inc. (“MEDCO”)

	No. of ordinary shares	Approximate
Name	of Peso 1.00 each	percentage
Citivest Asia Limited
(“Citivest Asia”)	494,814,901	70.70

Note (v): Citivest Asia is a wholly-owned subsidiary of the Company. See also (i) above in respect of the substantial shareholders of the Company.

(vi) MEDCO Asia Investment Corporation

	No. of ordinary shares	Approximate
Name	of Pesos 10.00 each	percentage
MEDCO	17,378,498	64.54
Classic Premium Limited
(“Classic Premium”)	3,721,000	13.82

Note (vi): Classic Premium is a wholly-owned subsidiary of the Company. See also (i) above in respect of the substantial shareholders of the Company and (v) above in respect of the substantial shareholders of MEDCO.

– 66 –

APPENDIX III

GENERAL INFORMATION

(vii) Zhuhai Chung Po House Property Development Company Limited

		Approximate
		percentage of
	Amount of paid up	development
Name	registered capital	right
Chung Po Investment and
Development Company
Limited (“CPID”)	RMB150,000,000	77.15
廣東省拱北中旅集團有限公司	Nil	22.85

Note (vii): CPID is a wholly-owned subsidiary of Reiley which in turn is a wholly-owned subsidiary of the Company. See also (i) above in respect of the substantial shareholders of the Company.

(viii) Jeremiah Holdings Limited (“Jeremiah”)

	No. of ordinary shares
Name	of S$1.00 each	Percentage
Dragon Board Holdings
Limited (“Dragon Board”)	779,187	60
Mrs. Endang Utari Mokodompit	519,458	40

Note (viii): Dragon Board is a wholly-owned subsidiary of the Company. See also (i) above in respect of the substantial shareholders of the Company.

(ix) Nine Heritage Pte Ltd (“Nine Heritage”)

No. of ordinary shares

Name	of S$1.00 each	Percentage
Jeremiah	800,000	80
SouthQuay Capital Asia Limited	200,000	20

Note (ix): See also (viii) above in respect of the substantial shareholders of Jeremiah.

– 67 –

APPENDIX III

GENERAL INFORMATION

(x) APG

	No. of ordinary shares	Approximate
Name	of S$0.50 each	percentage
Jeremiah	28,078,930	22.34
Nine Heritage	22,384,000	17.81
Pantogon Holdings Pte Ltd
(“Pantogon”)	13,085,405	10.41
Westront Pte Ltd	27,493,311	21.88

Note (x): Nine Heritage is a subsidiary of Jeremiah and Pantogon is a wholly-owned subsidiary of Jeremiah. See also (viii) above in respect of the substantial shareholders of Jeremiah. As at the Latest Practicable Date, Hongkong China Treasury Limited and Apexwin Limited, both being wholly-owned subsidiaries of the Company, were also interested in an aggregate of 759,000 ordinary shares of S$0.50 each in APG.

(xi) ACY

	No. of ordinary shares	Approximate
Name	of RM1.00 each	percentage
APM	7,000,000	58.33
SFSB	3,000,000	25
Abdul Razak Bin Mohd Karim	2,000,000	16.67

Note (xi): APM is a wholly-owned subsidiary of APG. See also (x) above in respect of the substantial shareholders of APG.

(xii) APFP

	No. of ordinary shares	Approximate
Name	of RM1.00 each	percentage
APM	700,000	58.33
SFSB	300,000	25
Abdul Razak Bin Mohd Karim	200,000	16.67

Note (xii): APM is a wholly-owned subsidiary of APG. See also (x) above in respect of the substantial shareholders of APG.

(xiii) Chunex

	No. of ordinary shares
Name	of S$1.00 each	Percentage
APF	2,250,000	75
SWIPL	750,000	25

Note (xiii): APF is a wholly-owned subsidiary of APG. See also (x) above in respect of the substantial shareholders of APG.

– 68 –

APPENDIX III

GENERAL INFORMATION

(xiv) Classic Aspire Sdn Bhd

	No. of ordinary shares
Name	of RM1.00 each	Percentage
APG	40,000	40
Zaidaton Akmah Binti Yeop	43,000	43
Yeap Kok Leong	17,000	17

Note (xiv): See also (x) above in respect of the substantial shareholders of APG.

(xv) Foshan Ausoon Dairy Co., Ltd

	Amount of paid up
Name	registered capital	Percentage
Auric Pacific Dairy (Foshan)
Limited (“Auric Foshan”)	US$4,464,000	75
廣東新盈科技創業投資有限公司
(Guangdong Xinying Science
and Technology Venture
Investments Co., Ltd)	US$1,488,000	25

Note (xv): Auric Foshan is a wholly-owned subsidiary of APG. See also (x) above in respect of the substantial shareholders of APG.

(xvi) The Hong Kong Building and Loan Agency Limited

	No. of ordinary shares	Approximate
Name	of HK$1.00 each	percentage
HKCB Corporation Limited
(“HKCB Corporation”)	168,313,038	74.80

Note (xvi): HKCB Corporation is a wholly-owned subsidiary of No. 1 Dragon Ltd. which in turn is a wholly-owned subsidiary of the Company. See also (i) above in respect of the substantial shareholders of the Company.

(xvii) HCL

	No. of ordinary shares	Approximate
Name	of HK$1.00 each	percentage
HKCL Holdings Limited
(“HKCL”)	806,656,440	59.89
The Company	166,584,000	12.37

Note (xvii): HKCL is a wholly-owned subsidiary of the Company. See also (i) above in respect of the substantial shareholders of the Company.

– 69 –

APPENDIX III

GENERAL INFORMATION

(xviii) Four Prosperity Holdings Limited

	No. of ordinary shares
Name	of US$1.00 each	Percentage
Tiger Square Ltd. (“Tiger Square”)	10,408 “A” shares	51
	10,408 “B” shares	51

Note (xviii): Tiger Square is a wholly-owned subsidiary of HCL. See also (xvii) above in respect of the substantial shareholders of HCL.

(xix) Goldfix Pacific Ltd. (“Goldfix”)

		No. of ordinary shares	Approximate
Name		of US$0.01 each	percentage
Sinopro	Limited (“Sinopro”)	600,000	86.62
Note (xix):	Sinopro is a wholly-owned subsidiary of HCL. See also (xvii) above		in respect of the
	substantial shareholders of HCL.

(xx) TechnoSolve Limited

	No. of ordinary shares	Approximate
Name	of HK$1.00 each	percentage
HKCL Investments Limited
(“HKCL Investments”) 18,053,500		86.03
Note (xx):	HKCL Investments is a wholly-owned subsidiary of HCL. See	also (xvii) above in
	respect of the substantial shareholders of HCL.

(xxi) The Macau Chinese Bank Limited

	No. of ordinary shares
Name	of MOP100 each	Percentage
Winwise Holdings Limited
(“Winwise”)	1,530,000	85
Wong Kon Kei	270,000	15

Note (xxi): Winwise is a wholly-owned subsidiary of HCL. See also (xvii) above in respect of the substantial shareholders of HCL.

– 70 –

APPENDIX III

GENERAL INFORMATION

(xxii) Akarie Resources Limited OOD

	No. of ordinary shares	Approximate
Name	of BGN50 each	percentage
Goldfix	10,000	99

Note (xxii): Goldfix is a subsidiary of HCL. See also (xvii) above in respect of the substantial shareholders of HCL.

All the interests stated above represent long positions. Save as disclosed herein, as at the Latest Practicable Date, none of the substantial shareholders (as defined under the Listing Rules) or other persons (other than the Directors or chief executive of the Company) had any interests or short positions in the Shares and underlying Shares as recorded in the register required to be kept by the Company under Section 336 of the SFO.

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

4. DIRECTORS’ SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had entered or was proposing to enter into a service contract with any member of the Group (excluding contracts expiring or determinable by the employer within one year without payment of compensation (other than statutory compensation)).

5. LITIGATION

As at the Latest Practicable Date, so far as was known to the Directors, there were no litigation or claims of material importance pending or threatened 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 Company since 31st December, 2003, the date to which the latest published audited consolidated financial statements of the Group were made up.

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APPENDIX III

GENERAL INFORMATION

7. EXPERTS

(a) The qualification of each of the experts who have given opinion or advice which are contained in this circular is as follows:

Name Qualification Hantec Capital Limited Licensed corporation under the SFO for types 1 (dealing in securities) and 6 (advising on corporate finance) regulated activities (as defined in the SFO) Wai & Ko Real Estate Ltd. Registered Professional Surveyor

Rahim & Co Chartered Chartered Surveyors Surveyors Sdn. Bhd. (“Rahim”)

(b) As at the Latest Practicable Date, none of the Independent Financial Adviser, WKREL and Rahim had any shareholding in the Group or any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in the Group, nor did they have any interest, direct or indirect, in any assets which had, since 31st December, 2003, being the date to which the latest published audited financial statements of the Group were made up, been acquired or disposed of by or leased to the Group, or were proposed to be acquired or disposed of by or leased to the Group.
(c) Each of the Independent Financial Adviser, WKREL and Rahim has given and has not withdrawn its written consent to the issue of this circular with the inclusion herein of their letters and references to their names in the form and context in which they appear.

8. COMPETING INTERESTS OF DIRECTORS AND ASSOCIATES

As at the Latest Practicable Date, none of the Directors and their respective associates were considered to have interests in any business which competes or is likely to compete, either directly or indirectly, with the business of the Group or have any other conflicts of interest with the Group pursuant to the Listing Rules.

9. DIRECTORS’ INTERESTS IN ASSETS/CONTRACTS AND OTHER INTERESTS

None of the Directors is materially interested in any contract or arrangement entered into by any member of the Group subsisting at the date of this circular which is significant in relation to the business of the Group.

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APPENDIX III

GENERAL INFORMATION

As at the Latest Practicable Date, the followings were particulars of assets acquired or disposed of by, or leased to, members of the Group since 31st December, 2003, being the date to which the latest published audited consolidated financial statements of the Group were made up, in which any Director had a direct or indirect interest:

(a) (i) In June 2002, a tenancy agreement was entered into between Shanghai Lippo Fuxing Real Estate Limited (“Shanghai Lippo Fuxing”), a subsidiary of the Company, and AcrossAsia Limited (“AAL”, formerly known as AcrossAsia Multimedia Limited), pursuant to which AAL agreed to lease Rooms 1106-07 of Lippo Plaza, 222 Huihai Zhong Road, Shanghai, the PRC (“Lippo Plaza”) with a gross floor area of approximately 97.9 square metres for a period of two years from 1st July, 2002 to 30th June, 2004 at a monthly rental of US$1,786.68, exclusive of service charges and outgoings. In March 2004, Shanghai Lippo Fuxing and AAL entered into an agreement pursuant to which both parties agreed to early terminate the above tenancy agreement on 31st March, 2004.
(ii) In March 2004, a tenancy agreement was entered into between Shanghai Lippo Fuxing and AAL pursuant to which AAL agreed to lease Room R1, 39th Floor of Lippo Plaza (“Room R1”) with a net floor area of approximately 29.9 square metres for a period of one year from 1st April, 2004 to 31st March, 2005 at a monthly rental of US$2,465, exclusive of service charges and outgoings.

In March 2005, a new tenancy agreement was entered into between Shanghai Lippo Fuxing and AAL pursuant to which AAL agreed to lease Room R1 for a period of six months from 1st April, 2005 to 30th September, 2005 at a monthly rental of US$2,300, exclusive of service charges and outgoings.

(iii) In July 2004, a tenancy agreement was entered into between Shanghai Lippo Fuxing and AAL pursuant to which AAL agreed to lease Room R2, 39th Floor of Lippo Plaza with a net floor area of approximately 24.5 square metres for a period of six months from 1st July, 2004 to 31st December, 2004 at a monthly rental of US$2,000, exclusive of service charges and outgoings. In September 2004, Shanghai Lippo Fuxing and AAL entered into an agreement pursuant to which both parties agreed to early terminate the above tenancy agreement on 30th September, 2004.

AAL is a subsidiary of Lippo Cayman which in turn is wholly owned by Lanius, the trustee of a trust, the beneficiaries of which include Dr. Mochtar Riady, Mr. James Riady and Mr. Stephen Riady and their respective family members.

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APPENDIX III

GENERAL INFORMATION

(b) On 10th January, 2005, a tenancy agreement was entered into between Lippo and Superform Investment Limited (“Superform”), a wholly-owned subsidiary of the Company, pursuant to which Lippo agreed to lease from Superform portion of 24th Floor, Tower One, Lippo Centre, 89 Queensway, Hong Kong with a gross floor area of approximately 11,028 square feet for a period of two years from 1st January, 2005 at a monthly rental of HK$248,100, exclusive of rates, service charges and all other outgoings.

Save as disclosed herein, as at the Latest Practicable Date, none of the Directors had any direct or indirect interest in any assets which had been acquired or disposed of by or leased to any member of the Group or were proposed to be acquired or disposed of by or leased to any member of the Group since 31st December, 2003, being the date to which the latest published audited financial statements of the Group were made up.

10. MISCELLANEOUS

(a) The Secretary of the Company is Ms. Millie Yuen Fun Luk, a fellow member of both the Institute of Chartered Secretaries and Administrators and the Hong Kong Institute of Company Secretaries.
(b) The qualified accountant of the Company is Mr. Alex Shiu Leung Au, an associate member of both The Institute of Chartered Accountants in England and Wales and Hong Kong Institute of Certified Public Accountants.
(c) The registered office of the Company is situate at Room 2301, 23rd Floor, Tower One, Lippo Centre, 89 Queensway, Hong Kong.
(d) The transfer office of the Company is situate at the office of its registrars, Tengis Limited at G/F., Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong.
(e) In case of inconsistency, the English text of this circular shall prevail over the Chinese text.

11. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection during normal business hours at the office of Richards Butler situated at 20th Floor, Alexandra House, 16-20 Chater Road, Central, Hong Kong, for a period of 14 days from the date of this circular:

(a) the Distribution Agreement;
(b) the Manufacturing Agreement;
(c) the Tenancy Agreements;

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APPENDIX III

GENERAL INFORMATION

(d) the consultancy agreement dated 4th November, 2003 entered into between ACY and SFSB and the trust and confidence agreement dated 4th November, 2003 entered into between ACY and Mr. Wong Senior pursuant to the Consultancy Arrangements;
(e) the Malaysian Agreement;
(f) the Singaporean Agreement;
(g) the standard supply agreements dated 17th January, 2005 entered into between the various parties in relation to the Ongoing Arrangements;
(h) the contracts dated 17th January, 2005 entered into between the various parties in relation the Chunex Arrangements;
(i) the contracts dated 17th January, 2005 entered into between the various parties in relation to the Trading Arrangements;
(j) the letter from the Independent Financial Adviser as set out in Appendix II of this circular;
(k) the written consent from each of the Independent Financial Adviser, WKREL and Rahim referred to in the section headed “Experts” in this Appendix; and
(l) the letter from the Independent Board Committee, the text of which is set out in Appendix I of this circular.

– 75 –

AI assistant

Asiasec Properties Limited — Proxy Solicitation & Information Statement 2005

49086_rns_2005-04-18_b37d7c8a-1990-4ea6-9c84-84929378c322.pdf

LIPPO CHINA RESOURCES LIMITED 力寶華潤有限公司

CONTINUING CONNECTED TRANSACTIONS

AND

DISCLOSEABLE TRANSACTION

Hantec Capital Limited

DEFINITIONS

DEFINITIONS

DEFINITIONS

LIPPO CHINA RESOURCES LIMITED 力寶華潤有限公司

CONTINUING CONNECTED TRANSACTIONS AND DISCLOSEABLE TRANSACTION

I. CONTINUING CONNECTED TRANSACTIONS

INTRODUCTION

CONNECTED TRANSACTIONS ONLY BETWEEN THE COMPLETION DATE AND 30TH MARCH, 2004

Particulars of the Chunex Arrangements

Caps of the Chunex Arrangements

Listing Rules implications of the Chunex Arrangements

CONNECTED TRANSACTIONS ONLY BETWEEN THE COMPLETION DATE AND THE CHANGED SHAREHOLDING DATE

Particulars of the Trading Arrangements

Parties

Caps for the Trading Arrangements

Particulars of the Distribution Agreement

Caps for the Distribution Agreement

Particulars of the Manufacturing Agreement

Caps for the Manufacturing Agreement

CONNECTED TRANSACTIONS FROM THE COMPLETION DATE UNTIL 31ST DECEMBER, 2006

Particulars of the Tenancy Agreements

Caps for the Tenancy Agreements

Particulars of the Ongoing Arrangements

LETTER FROM THE BOARD

Parties

Caps for the Ongoing Arrangements

Particulars of the Consultancy Arrangements

Caps for the Consultancy Arrangements

Listing Rules implications of the Tenancy Agreements, the Ongoing Arrangements and the Consultancy Arrangements

LISTING RULES IMPLICATIONS OF TRANSACTIONS IN AGGREGATE

SHAREHOLDERS’ APPROVALS

PARTICULARS OF THE BACK TO BACK ARRANGEMENTS

REASONS FOR AND BENEFITS OF ENTERING INTO THE AGGREGATE CONNECTED TRANSACTIONS

GENERAL

II. DISCLOSEABLE TRANSACTION

INTRODUCTION

PRINCIPAL TERMS OF THE AGREEMENT

INFORMATION ON THE PROPERTY

LISTING RULES IMPLICATIONS

FINANCIAL EFFECTS OF THE TRANSACTION

REASONS FOR AND BENEFITS OF ENTERING INTO THE AGREEMENT

PROCEDURES FOR DEMANDING A POLL AT GENERAL MEETINGS

INFORMATION ON THE COMPANY

INFORMATION ON THE AURIC GROUP

INFORMATION ON THE CYT GROUP

INFORMATION ON THE SELLER

FURTHER INFORMATION

LIPPO CHINA RESOURCES LIMITED 力寶華潤有限公司

AGGREGATE CONNECTED TRANSACTIONS

AGGREGATE CONNECTED TRANSACTIONS

INTRODUCTION

I. INFORMATION ABOUT THE COMPANY, AURIC GROUP AND CYT GROUP

(A) INFORMATION ON THE COMPANY

(B) INFORMATION ON THE AURIC GROUP

(C) INFORMATION ON THE CYT GROUP

II. REASONS FOR AND BENEFITS OF ENTERING INTO THE AGGREGATE CONNECTED TRANSACTIONS

III. CONNECTED TRANSACTIONS BETWEEN THE COMPLETION DATE AND 30TH MARCH, 2004

(A) CHUNEX ARRANGEMENTS

Parties

2. Factors considered

IV. CONNECTED TRANSACTIONS ONLY BETWEEN THE COMPLETION DATE AND THE CHANGED SHAREHOLDING DATE

(A) TRADING ARRANGEMENTS

2. Factors considered

(B) DISTRIBUTION AGREEMENT

1. Background of the Distribution Agreement

2. Factors considered

(C) MANUFACTURING AGREEMENT

2. Factors considered

V. CONNECTED TRANSACTIONS FROM THE COMPLETION DATE UNTIL 31ST DECEMBER, 2006

(A) TENANCY AGREEMENTS

2. Factors considered

3. Proposed annual cap amounts

Asiasec Properties Limited Proxy Solicitation & Information Statement 2005