Changyou International Group Limited - Proxy Solicitation & Information Statement 2012

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult a licensed securities dealer, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in See Corporation Limited, you should at once hand this circular together with the enclosed form of proxy to the purchaser or transferee or to the bank, licensed securities dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

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

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(Incorporated in Bermuda with limited liability)

(Stock Code: 491)

VERY SUBSTANTIAL DISPOSAL RELATING TO THE PROPOSED DISPOSAL OF 13% EQUITY INTEREST IN TVBP AND NOTICE OF SPECIAL GENERAL MEETING

A notice convening the special general meeting of See Corporation Limited to be held at 2:30 p.m. on Friday, 11 May 2012 at Function Room 4, 3/F., The Mira Hong Kong, 118 Nathan Road, Tsimshatsui, Kowloon, Hong Kong or any adjournment thereof, is set out on pages SGM-1 to SGM-2 of this circular. Whether or not you intend to attend such meeting, please complete the enclosed form of proxy in accordance with the instructions printed thereon and return it to the branch share registrar of See Corporation Limited in Hong Kong, Tricor Tengis Limited, at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong, as soon as possible and in any event not less than 48 hours before the time appointed for holding such meeting. Completion and return of the form of proxy will not preclude you from attending and voting in present at the meeting or any adjourned meeting if you so wish.

20 April 2012

For identification purpose only

	Page
Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Appendix I – Financial information of the Group. . . . . . . . . . . . . . . . . . . . . . . . . . .	I-1
Appendix II – Unaudited pro forma financial information of
the Remaining Group. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	II-1
Appendix III – General information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	III-1
Notice of SGM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	SGM-1

– i –

DEFINITIONS

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

“Agreement”	the conditional sale and purchase agreement dated 20 March
	2012 entered into between the Seller and the Purchaser
	relating to the sale and purchase of the Sale Shares
“associates”	has the meaning ascribed to it under the Listing Rules
“BA Approved Completion	18 March 2012, the original deadline for implementing the
Deadline”	proposed shareholding structure of Pay Vision immediately
	after Completion
“Broadcasting Authority”	the Hong Kong Broadcasting Authority
“Company”	See Corporation Limited, a company incorporated in
	Bermuda with limited liability and the Shares of which
	are listed on the Main Board of the Stock Exchange (stock
	code: 491)
“Completion”	completion of the Disposal pursuant to the terms of the
	Agreement
“connected persons”	has the meaning ascribed to it under the Listing Rules
“Consideration”	the consideration of approximately HK$89.2 million for
	the sale of the Sale Shares payable by the Purchaser to the
	Seller under the terms of the Agreement
“Directors”	directors of the Company
“Disposal”	the disposal of the Sale Shares by the Seller to the
	Purchaser pursuant to terms and conditions of the
	Agreement

– 1 –

DEFINITIONS

“Firewall Provisions”	certain provisions to safeguard the unfair competition and
	market dominance by TVB Group and to ensure a level-
	playing field for the television market in Hong Kong
	imposed on Pay Vision in its application for television
	broadcasting licence in 2000, which provisions had ceased
	to have effect in 2008, subject to the conditions that TVB
	and Pay Vision shall be bound by the undertakings of TVB
	that it would not hold more than 15% of the voting shares
	of Pay Vision and would not appoint directors to Pay Vision
“Group”	the Company and its subsidiaries
“Latest Practicable Date”	17 April 2012, being the latest practicable date prior to the
	printing of this circular for ascertaining certain information
	contained in this circular
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange
“Long Stop Date”	30 June 2012, or such later date as the Seller and the
	Purchaser may agree in writing
“Pay Vision”	TVB Pay Vision Limited, a company incorporated in Hong
	Kong with limited liability and a wholly-owned subsidiary
	of TVBP
“PRC”	the People’s Republic of China, excluding Hong Kong,
	Macau Special Administrative Region and Taiwan for the
	purpose of this circular
“Purchaser”	TVB Satellite TV Holdings Limited, a company
	incorporated in Bermuda with limited liability and a
	wholly-owned subsidiary of TVB
“Remaining Group”	the Company and its subsidiaries immediately after
	Completion

– 2 –

DEFINITIONS

“Sale Shares”	141,162,808 issued and fully paid up non-voting preferred
	shares of HK$1 each in the capital of TVBP, representing
	13% equity interest in the entire issued share capital of
	TVBP
“Seller”	Enjoy Profits Limited, a company incorporated in the
	British Virgin Islands and a wholly-owned subsidiary of the
	Company
“SFO”	the Securities and Futures Ordinance (Chapter 571 of the
	Laws of Hong Kong)
“SGM”	the special general meeting of the Company convened
	to be held at 2:30 p.m. on Friday, 11 May 2012 for the
	Shareholders to consider and, if thought fit, approve the
	Agreement and the transactions contemplated thereunder
“Shareholder(s)”	holder(s) of the Shares
“Shareholders’ Agreement”	the new shareholders’ agreement to be entered into among
	the Purchaser, the Seller, Gemstone Pacific Limited
	and TVBP upon Completion governing the rights and
	obligations of the shareholders of TVBP
“Shares”	ordinary shares of HK$0.01 each in the capital of the
	Company
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Teleport Business”	the teleport business of Pay Vision including the owning
	and operating of telecommunications teleport and hub
	facilities in Hong Kong
“TVB”	Television Broadcasts Limited, a company incorporated in
	Hong Kong with limited liability and the shares of which
	are listed on the Main Board of the Stock Exchange (stock
	code: 511)

– 3 –

DEFINITIONS

“TVB Group” TVB and its subsidiaries “TVBP” TVB Pay Vision Holdings Limited, a company incorporated under the laws of Hong Kong with limited liability “TVBP Board” the board of directors of TVBP from time to time “TVBP Group” TVBP and Pay Vision “TVBP Share(s)” ordinary share(s) and non-voting preferred share(s) of HK$1.00 each in the share capital of TVBP “HK$” Hong Kong dollars “%” per cent.

Certain English translations of Chinese names or words in this circular are included for identification purpose only and should not be regarded as the official English translation of such Chinese names or words.

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LETTER FROM THE BOARD

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(Incorporated in Bermuda with limited liability)

(Stock Code: 491)

Executive Directors:

Dr. Ma Ho Man, Hoffman (Chairman) Mr. Wong Kui Shing, Danny (Managing Director) Mr. Wong Chi Chiu Ms. Ng Yuk Yee, Feona

Registered Office: Clarendon House Church Street Hamilton HM 11 Bermuda

Independent Non-executive Directors: Mr. Li Fui Lung, Danny Mr. Ng Hoi Yue, Herman Mr. Heung Pik Lun

Head office and principal place of business: Office D & E 20th Floor, EGL Tower No. 83 Hung To Road Kwun Tong, Kowloon Hong Kong

20 April 2012

To the Shareholders

Dear Sir or Madam,

VERY SUBSTANTIAL DISPOSAL RELATING TO THE PROPOSED DISPOSAL OF 13% EQUITY INTEREST IN TVBP

INTRODUCTION

On 22 March 2012, the Directors announced that the Seller and the Purchaser entered into the Agreement after the Stock Exchange trading hours on 20 March 2012, pursuant to which the Seller has agreed to sell, and the Purchaser has agreed to purchase, the Sale Shares at a cash consideration of approximately HK$89.2 million. The Sale Shares (being the 141,162,808 issued and fully paid up non-voting preferred shares of TVBP) represent 13% equity interest in the entire issued share capital of TVBP. The TVBP Group is principally engaged in pay-television business in Hong Kong and the Teleport Business.

For identification purpose only

– 5 –

LETTER FROM THE BOARD

The Disposal constitutes a very substantial disposal for the Company under Chapter 14 of the Listing Rules and is therefore subject to the approval by the Shareholders at the SGM. As the Purchaser is a third party independent of the Company and its connected persons and no Shareholder has a material interest in the Disposal which is different from other Shareholders, no Shareholder is required to abstain from voting in respect of the proposed ordinary resolution to approve the Disposal at the SGM.

The purpose of this circular is to give you, among other things, (i) details of the Disposal; (ii) the financial information of the Group; (iii) the unaudited pro forma financial information of the Remaining Group; and (iv) notice of the SGM.

THE AGREEMENT

Date:

20 March 2012

Parties:

Seller: Enjoy Profits Limited, a wholly-owned subsidiary of the Company Purchaser: TVB Satellite TV Holdings Limited

To the best of the knowledge, information and belief of the Directors having made all reasonable enquiries, the Purchaser is principally engaged in investment holding. To the best of the knowledge, information and belief of the Directors, save for being a co-shareholder of TVBP, the Purchaser and its ultimate beneficial owners are otherwise third parties independent of the Company and its connected persons.

Asset to be disposed of:

The Sale Shares, being the 141,162,808 issued and fully paid up non-voting preferred shares of TVBP, representing 13% equity interest in the entire issued share capital of TVBP and approximately 14.733% of all the non-voting preferred shares of TVBP as at the date of the Agreement.

– 6 –

LETTER FROM THE BOARD

As at the date of the Agreement, the issued share capital of TVBP comprised both ordinary shares and non-voting preferred shares, and was held as to 18% by the Seller (such TVBP Shares comprising approximately 42.505% of all the ordinary shares and approximately 14.733% of all the non-voting preferred shares); 77% by the Purchaser (such TVBP Shares comprising approximately 14.990% of all the ordinary shares and approximately 85.267% of all the non-voting preferred shares); and 5% by Gemstone Pacific Limited, a company which is wholly owned by Ms. Leong On Kei Angela (all such TVBP Shares comprising approximately 42.505% of all the ordinary shares). The existing total issued share capital of TVBP is HK$1,085,867,759 consisting of 127,734,121 ordinary shares of HK$1 each and 958,133,638 non-voting preferred shares of HK$1 each. The non-voting preferred shares of TVBP rank pari passu in all respects with the ordinary shares of TVBP including but not limited to the rights to distribution and dividends, except for voting rights and liquidation preference. Holders of the non-voting preferred shares of TVBP have (i) the right to attend but do not have any voting rights at any general meeting of TVBP; and (ii) preference in the distribution priority on a return of assets of TVBP upon its liquidation.

Pay Vision, a wholly-owned subsidiary of TVBP, holds a domestic pay television programme service licence and a non-domestic television programme service licence granted under the Broadcasting Ordinance (Chapter 562 of the Laws of Hong Kong).

Consideration:

The Consideration for the sale of the Sale Shares pursuant to the Agreement is approximately HK$89.2 million, which shall be settled in cash by the Purchaser at Completion.

On 12 August 2005, the Group acquired a total of 49% equity interest in the entire issued share capital of TVBP from the Purchaser at a total cost of approximately HK$336.3 million (the “ 2005 Acquisition ”). Details of the 2005 Acquisition were set out in the announcement and circular of the Company dated 29 April 2005 and 2 June 2005 respectively. Subsequently, on 30 June 2009, the Group disposed of a 31% equity interest in the entire issued share capital of TVBP to the Purchaser at a consideration of approximately HK$212.7 million (the “ 2009 Disposal ”). The Group’s interest in the entire issued share capital of TVBP has reduced to 18% upon completion of the 2009 Disposal. Details of the 2009 Disposal were set out in the announcement and circular of the Company dated 6 July 2009 and 23 October 2009 respectively.

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LETTER FROM THE BOARD

The Consideration was determined after arm’s length negotiations based on the proportionate share of the acquisition costs for the 49% equity interest in the entire issued share capital of TVBP under the 2005 Acquisition. Taking into account the unaudited carrying value of the Sale Shares of approximately HK$19.2 million as at 31 December 2011 and the expected gain on the Disposal of approximately HK$68.6 million, the Directors consider that the Consideration is fair and reasonable.

Conditions precedent:

Completion of the Agreement is conditional upon:

(i) the approval of the Shareholders in accordance with the Listing Rules, and, if applicable, the approval of the Stock Exchange and/or the Securities and Futures Commission;
(ii) up to the date of Completion, the non-withdrawal of the approval of the Broadcasting Authority for implementing the proposed change in the indirect shareholding structure of Pay Vision as a result of, among other matters, the transfer of the Sale Shares as contemplated under the Agreement and the extension of the BA Approved Completion Deadline; and
(iii) up to the date of Completion, no Firewall Provisions will be reinstated in any of the licences granted to Pay Vision or TVB.

The above conditions are not capable of being waived. If any of the conditions has not been satisfied on or before the Long Stop Date, the Agreement shall cease and determine and none of the parties to the Agreement shall have any obligations and liabilities thereunder save for any prior breaches of the representations and warranties of the Agreement.

On 19 December 2011, the Broadcasting Authority approved the proposed change in the indirect shareholding structure of Pay Vision as a result of, among other matters, the transfer of the Sale Shares as contemplated under the Agreement to be completed no later than the BA Approved Completion Deadline, i.e., 18 March 2012. On 16 March 2012, the Broadcasting Authority approved the extension of the BA Approved Completion Deadline to 30 June 2012.

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LETTER FROM THE BOARD

Completion:

Completion of the Disposal shall take place on the seventh business day after the fulfillment of the conditions precedent referred to above or at such other time and place as may be agreed in writing by the Seller and the Purchaser but in any event shall not be later than 30 June 2012.

Shareholders’ Agreement:

At Completion, the shareholders of TVBP, together with TVBP, will execute the Shareholders’ Agreement relating to TVBP. The Shareholders’ Agreement supersedes and cancels the previous shareholders’ agreement of TVBP which shall be deemed to have no further force or effect upon execution of the Shareholders’ Agreement. The principal terms of the Shareholders’ Agreement are summarised as follows:

Further funding

If further funding is required by TVBP, the shareholders of TVBP will first seek funding by way of borrowing credit facilities from external sources, failing which they will agree other means of contribution by way of additional capital or shareholders’ loan or otherwise on a pro-rata basis on terms to be agreed.

Board of directors of the TVBP

The TVBP Board shall consist of not less than two members and each of the shareholders of TVBP will be entitled to nominate one director to the TVBP Board. The Purchaser shall be entitled to nominate its said nominee as the chairman of the TVBP Board who will have a casting vote at any meeting of the TVBP Board.

Officers

The Purchaser shall have the right to recommend for the TVBP Board’s approval on the nomination, appointment and removal of the chief executive officer and chief financial officer of the TVBP Group.

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LETTER FROM THE BOARD

Transfer of TVBP Shares

The shareholders of TVBP (other than the Purchaser or its affiliates) shall not dispose of any TVBP Shares before 30 June 2013 (the “ Lock-in Period ”) without the consent of the other shareholders of TVBP and any disposal, if consented to by the other shareholders of TVBP, shall be subject to the first right of refusal of the Purchaser.

After the expiry of the Lock-in Period, any shareholder (other than the Purchaser or its affiliates) who wishes to sell TVBP Shares to any third party must first offer the TVBP Shares to the Purchaser who shall have the right to purchase such TVBP Shares by itself or through its nominee only provided that the Purchaser remains as a shareholder of TVBP holding not less than 15% of all the issued TVBP Shares. If the Purchaser declines to take up all such TVBP Shares, the selling shareholder shall offer those TVBP Shares to the other shareholders of TVBP in accordance with the terms of the Shareholders’ Agreement.

Teleport Business

If Pay Vision proposes to sell the Teleport Business, Pay Vision shall first offer the sale of the Teleport Business to the Purchaser for so long as the Purchaser remains a shareholder of TVBP. The Purchaser and Pay Vision shall have 30 Business Days to negotiate for the price of the Teleport Business. If the Purchaser and Pay Vision fail to agree the terms of the sale and purchase or fail to complete the transaction within 30 Business Days after agreement of the price, Pay Vision may then negotiate with a bona fide independent third party for the sale of the Teleport Business provided that Pay Vision shall make a final offer (the “ Final Offer ”) specifying the price agreed between Pay Vision and such third party purchaser to the Purchaser. The Purchaser shall then have 15 Business Days to accept the Final Offer.

INFORMATION ON THE TVBP GROUP

TVBP is a company incorporated in Hong Kong with limited liability on 12 February 2003. It holds all the issued shares of Pay Vision. The TVBP Group is principally engaged in pay-television business in Hong Kong and the Teleport Business. The major assets of the TVBP Group are the satellite antenna structure and broadcasting and transmitting equipment. Pay Vision currently holds a domestic pay television programme service licence and a non-domestic television programme service licence granted under the Broadcasting Ordinance (Chapter 562 of the Laws of Hong Kong).

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LETTER FROM THE BOARD

The audited consolidated financial information of the TVBP Group for the year ended 31 December 2010 and the unaudited consolidated financial information of the TVBP Group for the year ended 31 December 2011 are as follows:

	Year ended	Year ended
	31 December	31 December
	2010	2011
	(HK$ million)	(HK$ million)
	(audited)	(unaudited)
Turnover	263.4	236.3
Loss before taxation	162.6	94.0
Loss after taxation	162.6	94.0

The unaudited consolidated net liabilities of the TVBP Group as at 31 December 2011 were approximately HK$948.0 million.

EFFECTS ON SHAREHOLDING STRUCTURE OF TVBP

Set out below is a table showing the shareholding of TVBP (i) as at the Latest Practicable Date; and (ii) immediately after the completion of the Disposal assuming no other changes to the share capital of TVBP and shareholding of the other shareholders of TVBP between the Latest Practicable Date and the date of Completion:

Seller Purchaser Gemstone Pacific Limited (Note 3) Total	As at the Latest Practicable Date Ordinary shares TVBP Shares Non-voting preferred shares Total 54,293,388 141,162,808 195,456,196 (Note 1) 19,147,345 816,970,830 836,118,175 (Note 2) 54,293,388 – 54,293,388 127,734,121 958,133,638 1,085,867,759	% 18.00 77.00 5.00 100	Immediately after Completion Ordinary shares TVBP Shares Non-voting preferred shares Total 54,293,388 – 54,293,388 19,147,345 958,133,638 977,280,983 54,293,388 – 54,293,388 127,734,121 958,133,638 1,085,867,759	% 5.00 90.00 5.00
				100

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LETTER FROM THE BOARD

Notes:

As at the Latest Practicable Date, the 195,456,196 TVBP Shares were held by the Seller, Enjoy Profits Limited, a wholly-owned subsidiary of the Company (such TVBP Shares comprising approximately 42.505% of all the ordinary shares and approximately 14.733% of all the non-voting preferred shares).
As at the Latest Practicable Date, the 836,118,175 TVBP Shares were held by the Purchaser, TVB Satellite TV Holdings Limited (such TVBP Shares comprising approximately 14.990% of all the ordinary shares and approximately 85.267% of all the non-voting preferred shares).
Gemstone Pacific Limited, a company which is wholly owned by Ms. Leong On Kei Angela.

REASONS FOR THE DISPOSAL

The Group is principally engaged in (i) film and TV programme production; (ii) event production; (iii) artiste and model management; (iv) music production; (v) investment in a pay TV operation; and (vi) investment in securities.

Since the 2005 Acquisition, the TVBP Group has recorded losses before and after taxation in every financial year including and prior to the year ended 31 December 2011. During the two years ended 31 December 2010 and 2011, the TVBP Group recorded net loss after taxation of approximately HK$162.6 million and HK$94.0 million, respectively. In light of the unsatisfactory financial performance of the TVBP Group, the Disposal will enable the Group to realise part of its long term investment in TVBP and to preserve more financial resources for the development of the Group’s principal businesses in film and TV programme production. In addition, the Company expects that it would record a gain on the Disposal of approximately HK$68.6 million which is calculated by reference to the difference between the carrying value of the interest of TVBP subject to the Disposal and the Consideration, net of the estimated related expenses for the Disposal. The actual gain or loss to be recorded by the Group in connection with the Disposal is subject to finalisation of the Group’s audited financial statements for the year ending 30 June 2012. The net proceeds from the Disposal are estimated to be approximately HK$87.8 million, of which approximately HK$60.0 million shall be used for investing in the Group’s film and TV programme production business and approximately HK$27.8 million shall be applied for general working capital purpose of the Group. In view of the above, the Directors are of the view that the Disposal is fair and reasonable and is in the interests of the Company and the Shareholders as a whole.

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LETTER FROM THE BOARD

FINANCIAL EFFECT OF THE DISPOSAL

Since the 2005 Acquisition, TVBP has been accounted for as an associated company in the Group’s financial statements. After the 2009 Disposal, TVBP continues to be accounted for as an associated company of the Group. Upon Completion, the Group will be interested in 5% equity interest in the entire issued share capital of TVBP (all such TVBP Shares are ordinary shares) which consists of 54,293,388 ordinary shares of TVBP, representing approximately 42.505% of the issued ordinary shares of TVBP. Taking account of the voting rights attached to the 42.505% ordinary shares currently held by the Group and continued to be held by the Group upon Completion and the rights to nominate one director to the TVBP Board under the Shareholders’ Agreement, the Group will continue to have significant influence over the TVBP Group. The TVBP Group will therefore continue to be accounted for as associates of the Group upon Completion in accordance with the accounting policies of the Group.

Set out in Appendix II to this circular is the unaudited pro forma financial information of the Remaining Group which illustrates the financial impact of the Disposal on the assets and liabilities, results and cash flows of the Remaining Group.

Based on the unaudited pro forma combined balance sheet as set out in Appendix II to this circular, the net assets value of the Remaining Group would increase by approximately HK$68.6 million mainly as a result of the recognition of a gain on the Disposal of approximately HK$68.6 million. The expected gain on the Disposal to the Remaining Group of approximately HK$68.6 million represents the difference between (i) the Consideration of approximately HK$89.2 million; and (ii) the estimated cost directly attributable to the Disposal of approximately HK$1.4 million and the carrying value of the Sale Shares of approximately HK$19.2 million as at 31 December 2011. The Directors consider that the net assets of the Remaining Group will improve as a result of the Disposal and the Disposal will not have any material adverse effect on the turnover, profitability and the business operation of the Remaining Group.

FINANCIAL AND TRADING PROSPECTS OF THE REMAINING GROUP

The Group has dedicated its efforts on strengthening and opening up distribution channels for its film and TV production in the PRC in recent years. Given the continuous opening up and expansion of the film and TV production market as well as the continuous growth in the box office in the PRC, the Board believes that there is a great potential for the distribution of the Remaining Group’s film and TV production in the PRC.

– 13 –

LETTER FROM THE BOARD

In light of the current global economic uncertainties caused by the volatile financial markets and uncertain recovery trends in the world’s major economies, the Remaining Group will be cautious in the selection of stories and scripts for the production of our films and TV programs. Stringent measures will be adopted in the cost control and risk management for the Remaining Group’s film and TV projects. The Remaining Group will continue to produce high quality films and TV programs for the distribution primarily to the PRC, Hong Kong and Taiwan markets. The Board intends to continue the existing businesses of the Remaining Group and the Company has no present intention about any disposal, termination or scaling down of the Remaining Group’s business.

Upon Completion, the Remaining Group will remain interested in 5% of the total issued share capital of TVBP which consist of 54,293,388 ordinary shares of TVBP.

LISTING RULES IMPLICATIONS

THE SGM

Set out on pages SGM-1 to SGM-2 of this circular is a notice convening the SGM to be held at 2:30 p.m. on Friday, 11 May 2012 at Function Room 4, 3/F., The Mira Hong Kong, 118 Nathan Road, Tsimshatsui, Kowloon, Hong Kong at which an ordinary resolution will be proposed to the Shareholders to consider and, if thought fit, approve the Agreement and the transactions contemplated thereunder which shall be voted by way of poll.

A form of proxy for use at the SGM is also enclosed with this circular. Whether or not you are able to attend the SGM, you are requested to complete the enclosed form of proxy in accordance with the instructions printed thereon and return the same to the Company’s branch share registrar in Hong Kong, Tricor Tengis Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong, as soon as possible and in any event not less than 48 hours before the time appointed for holding the SGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the SGM or any adjournment thereof should you so wish.

– 14 –

LETTER FROM THE BOARD

VOTING BY POLL

Pursuant to Rule 13.39 of the Listing Rules, any votes of the Shareholders at a general meeting must be taken by poll. Therefore, the chairman of the SGM will demand a poll for the resolution to be put forward at the SGM pursuant to the Bye-Law 66 of the Company. The Company will appoint scrutineers to handle vote-taking procedures at the SGM. The results of the poll will be published on the websites of the Stock Exchange and the Company as soon as possible after the SGM in accordance with Rule 13.39 of the Listing Rules.

RECOMMENDATION

The Directors consider the terms of the Agreement are fair and reasonable and the Disposal is in the interests of the Group and the Shareholders as a whole. Accordingly, the Directors recommend the Shareholders to vote for the ordinary resolution to be proposed at the SGM to approve the Agreement and the transactions contemplated thereunder.

GENERAL

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

In the event of inconsistency, the English text of this circular and the accompanying form of proxy shall prevail over the Chinese text thereof.

Yours faithfully,

By order of the Board See Corporation Limited Dr. Ma Ho Man, Hoffman Chairman

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

1. FINANCIAL INFORMATION OF THE GROUP

Set out below are consolidated statement of comprehensive income, consolidated statement of financial position, consolidated statement of changes in equity, and consolidated statement of cash flows of the Group for the year ended 30 June 2009, 2010 and 2011 and for the six months ended 31 December 2010 and 2011 under the Listing Rules 14.68(2)(a)(i)(B), which have been reviewed by the Group’s auditor, HLB Hodgson Impey Cheng, in accordance with Hong Kong Standard on Review Engagements 2410 “Review of Interim Financial Information Performed by the Independent Auditor of the Entity”, issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”). Capitalised terms used herein have the same meaning as those defined in this circular unless the context otherwise requires.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Turnover Cost of sales Gross profit Other revenue Distribution costs Administrative expenses Other operating expenses Change in fair value of financial assets at fair value through profit or loss Loss from operations Finance costs Gain on partial disposal of associates (Loss)/profit before taxation Taxation (Loss)/profit for the year/period Other comprehensive (loss)/income for the year/period, net of tax Total comprehensive (loss)/income for the year/period	Year ended 30 June 2009 2010 2011 HK$’000 HK$’000 HK$’000 55,455 72,669 30,003 (44,486) (45,975) (19,140) 10,969 26,694 10,863 1,306 422 884 (9,240) (11,962) (3,762) (37,333) (31,542) (32,880) (28,608) (41,714) (27,355) (201,088) (1,136) (3,798) (263,994) (59,238) (56,048) (20,479) (18,155) (2,291) – 165,864 – (284,473) 88,471 (58,339) – – – (284,473) 88,471 (58,339) – – – (284,473) 88,471 (58,339)	Six months ended 31 December 2010 2011 HK$’000 HK$’000 19,613 23,499 (10,857) (15,095) 8,756 8,404 492 136 (2,755) (4,602) (16,282) (17,160) (10,667) (9,537) (3,337) (2,095) (23,793) (24,854) (1,950) (306) – – (25,743) (25,160) – – (25,743) (25,160) – – (25,743) (25,160)

I – 1

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

(Loss)/profit for the year/period attributable to: Owners of the Company Non-controlling interests Total comprehensive (loss)/income attributable to: Owners of the Company Non-controlling interests (Loss)/earnings per share attributable to the owners of the Company – Basic and diluted	(284,473) 95,585 (52,362) – (7,114) (5,977) (284,473) 88,471 (58,339) (284,473) 95,585 (52,362) – (7,114) (5,977) (284,473) 88,471 (58,339) (Restated) HK$(2.07) HK$0.24 HK$(0.05) Year ended 30 June 2009 2010 2011 HK$’000 HK$’000 HK$’000	(23,160) (23,031) (2,583) (2,129) (25,743) (25,160) (23,160) (23,031) (2,583) (2,129) (25,743) (25,160) HK$(0.02) HK$(0.02) Six months ended 31 December 2010 2011 HK$’000 HK$’000

I – 2

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

Non-current assets Intangible assets Property, plant and equipment Interests in associates Loan receivable Current assets Film rights Film production in progress Music production in progress Inventories Trade and other receivables, deposits and prepayments Financial assets at fair value through profit or loss Cash and bank balances Assets held for sale Current liabilities Trade and other payables Bank overdraft – secured Convertible note Net current assets Total assets less current liabilities	2009 HK$’000 (Restated) 33 23,751 26,583 – 50,367 31,986 119,465 370 224 13,691 54,929 31,547 252,212 45,782 297,994 64,881 9,995 99,325 174,201 123,793 174,160	At 30 June 2010 HK$’000 (Restated) 17 22,675 26,583 10,000 59,275 41,282 101,534 556 4 11,486 5,964 300,134 460,960 – 460,960 36,131 9,978 185,386 231,495 229,465 288,740	2011 HK$’000 – 21,603 26,583 10,000 58,186 25,735 129,414 1,465 55 9,249 5,716 102,994 274,628 – 274,628 57,221 9,953 – 67,174 207,454 265,640	At 31 December 2010 2011 HK$’000 HK$’000 9 – 22,066 21,332 26,583 26,583 10,000 10,000 58,658 57,915 36,355 17,342 131,436 139,869 972 1,081 69 116 14,528 8,811 6,177 3,621 97,868 74,215 287,405 245,055 – – 287,405 245,055 37,867 52,542 9,960 9,948 – – 47,827 62,490 239,578 182,565 298,236 240,480	At 31 December 2010 2011 HK$’000 HK$’000 9 – 22,066 21,332 26,583 26,583 10,000 10,000 58,658 57,915 36,355 17,342 131,436 139,869 972 1,081 69 116 14,528 8,811 6,177 3,621 97,868 74,215 287,405 245,055 – – 287,405 245,055 37,867 52,542 9,960 9,948 – – 47,827 62,490 239,578 182,565 298,236 240,480
					57,915
					17,342 139,869 1,081 116 8,811 3,621 74,215
					245,055 –
					245,055
					52,542 9,948 –
					62,490
					182,565
					240,480

I – 3

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Non-current liabilities Convertible note Net assets Equity Capital and reserves attributable to the owners of the Company Share capital Reserves Non-controlling interests	170,784 3,376 19,388 (16,012) 3,376 – 3,376 2009 HK$’000 (Restated)	– 288,740 10,435 285,419 295,854 (7,114) 288,740 At 30 June 2010 HK$’000 (Restated)	– 265,640 12,455 266,276 278,731 (13,091) 265,640 2011 HK$’000	– – 298,236 240,480 12,455 12,455 295,478 243,245 307,933 255,700 (9,697) (15,220) 298,236 240,480 At 31 December 2010 2011 HK$’000 HK$’000

I – 4

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

		Attributable to the owners of the Company	Attributable to the owners of the Company	Attributable to the owners of the Company	Total HK$’000 287,849 (284,473)
Share capital HK$’000 19,388 – 19,388 – 3,800 – – – (22,028) – 9,275 – – – 10,435 – – – (50) – 2,070 – – –	Share premium HK$’000 500,040 – 500,040 – – 13,300 (804) – – – – 176,229 (4,830) – 683,935 – – – (848) (50) – 35,190 (1,200) –	Contributed surplus HK$’000 – – – – – – – – 22,028 (22,028) – – – – – – – – – – – – – –	Capital redemption reserve HK$’000 – – – – – – – – – – – – – – – – – – – 50 – – – –	Convertible note reserves Accumulated losses HK$’000 HK$’000 55,978 (287,557) – (284,473) 55,978 (572,030) – 95,585 – – – – – – (10,058) 10,058 – – – 22,028 – – – – – – – (77) 45,920 (444,436) – (52,362) – – – (52,362) – 77 – – – – – – – – (45,920) 45,920
					3,376 88,471 3,800 13,300 (804) – – – 9,275 176,229 (4,830) (77)
					288,740 (58,339) –
					(58,339) (821) – 2,070 35,190 (1,200) –

I – 5

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

		Attributable to the owners of the Company	Attributable to the owners of the Company	Attributable to the owners of the Company		Total HK$’000 265,640 (25,160) –
Share capital HK$’000 12,455 – – – 12,455 10,435 – – – (50) – 2,070 – – – 12,455	Share premium HK$’000 717,027 – – – 717,027 683,935 – – – (848) (50) – 35,190 (1,200) – 717,027	Contributed surplus HK$’000 – – – – – – – – – – – – – – – –	Capital redemption reserve HK$’000 50 – – – 50 – – – – – 50 – – – – 50	Convertible note reserves HK$’000 – – – – – 45,920 – – – – – – – – (45,920) –	Accumulated losses HK$’000 (450,801) (23,031) – (23,031) (473,832) (444,436) (23,160) – (23,160) 77 – – – – 45,920 (421,599)
						(25,160)
						240,480

						288,740 (25,743) –
						(25,743)
						(821) – 2,070 35,190 (1,200) –
						298,236

I – 6

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

CONSOLIDATED STATEMENT OF CASH FLOWS

Cash flows from operating activities (Loss)/profit before taxation Adjustments for: Gain on partial disposal of associates Impairment loss recognised in respect of: – trade and other receivables, deposits and prepayments – film rights – film production in progress Write down on inventories Interest income Interest expenses Change in fair value of financial assets at fair value through profit or loss Depreciation of property, plant and equipment Amortisation of intangible assets Amortisation of film rights Loss on disposal of property, plant and equipment Operating cash flows before working capital changes Increase in film rights (Increase)/decrease in film production in progress Decrease/(increase) in music production in progress (Increase)/decrease in inventories Decrease/(increase) in trade and other receivables, deposits and prepayments Decrease/(increase) in financial assets at fair value through profit or loss Increase/(decrease) in trade and other payables Cash used in operations Income tax paid Net cash used in operating activities	Year ended 30 June 2009 2010 2011 HK$’000 HK$’000 HK$’000 (Restated) (Restated) (284,473) 88,471 (58,339) – (165,864) – 8,209 7,005 4,888 19,868 30,364 22,466 – 4,126 – 531 219 1 (2) (202) (427) 20,433 18,155 2,291 201,088 1,136 3,798 1,144 1,152 890 16 16 17 36,540 38,340 11,081 1,137 – 613 4,491 22,918 (12,721) (74,500) (78,000) (18,000) (13,316) 13,805 (27,880) 306 (186) (909) (355) 1 (52) 28,813 (4,693) (2,557) – 47,829 (3,550) 47,215 (28,881) 21,167 (7,346) (27,207) (44,502) – – – (7,346) (27,207) (44,502)	Six months ended 31 December 2010 2011 HK$’000 HK$’000 (25,743) (25,160) – – 44 1,718 10,623 7,785 – – – 34 (269) (49) 1,950 306 3,337 2,095 510 306 8 – 7,304 11,608 410 1 (1,826) (1,356) (13,000) (11,000) (29,902) (10,455) (416) 384 (65) (95) (3,039) (1,231) (3,550) – 1,736 (4,727) (50,062) (28,480) – – (50,062) (28,480)

I – 7

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Cash flows from investing activities Interest income received Purchase of property, plant and equipment Proceeds from partial disposal of associates Cost of partial disposal of associates Net cash (used in)/generated from investing activities Cash flows from financing activities Proceeds from rights issue Share issue expenses on rights issue Proceeds from placing of shares Share issue expenses on placing of shares Payment for repurchase of shares Redemption of convertible note Increase in loan receivable Decrease in short-term loan Interest expense paid Net cash (used in)/generated from financing activities Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at the beginning of the year/period Cash and cash equivalents at the end of the year/period Analysis of the balances of cash and cash equivalents Cash and bank balances Bank overdraft – secured	Year ended 30 June 2009 2010 2011 HK$’000 HK$’000 HK$’000 (Restated) (Restated) 2 96 239 (1,523) (76) (431) – 212,745 – – (1,099) – (1,521) 211,666 (192) – 185,504 – – (4,830) – – 17,100 37,260 – (804) (1,200) – – (898) – (102,000) (187,000) – (10,000) – (5,742) – – (832) (825) (583) (6,574) 84,145 (152,421) (15,441) 268,604 (197,115) 36,993 21,552 290,156 21,552 290,156 93,041 31,547 300,134 102,994 (9,995) (9,978) (9,953) 21,552 290,156 93,041	Six months ended 31 December 2010 2011 HK$’000 HK$’000 222 – (311) (36) – – – – (89) (36) – – – – 37,260 – (1,200) – (821) – (187,000) – – – – – (336) (258) (152,097) (258) (202,248) (28,774) 290,156 93,041 87,908 64,267 97,868 74,215 (9,960) (9,948) 87,908 64,267

I – 8

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

NOTES TO THE FINANCIAL INFORMATION

1. BASIS OF PREPARATION OF THE FINANCIAL INFORMATION

The financial information of the Group has been prepared in accordance with paragraph 68(2)(a)(i) of Chapter 14 of The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, and solely for the purpose of inclusion in the circular to be issued by the Company in connection with the Disposal. The amounts included in the financial information for each of the years ended 30 June 2009, 2010 and 2011, and the six months ended 31 December 2010 and 2011 have been recognised and measured in accordance with the relevant accounting policies of the Group adopted in the preparation of its consolidated financial statements, which conform with the Hong Kong Financial Reporting Standards issued by the HKICPA.

The financial information does not contain sufficient information to constitute a complete set of financial statements as defined in Hong Kong Accounting Standard 1 “Presentation of Financial Statements” or a set of condensed financial statements as defined in Hong Kong Accounting Standard 34 “Interim Financial Reporting”.

The consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows of the Group for each of the three years ended 30 June 2009, 2010 and 2011 and the six months ended 31 December 2010 and 2011 include the results, changes in equity and cash flows of the Group throughout the three years ended 30 June 2009, 2010 and 2011 and the six months ended 31 December 2010 and 2011.

The consolidated statement of financial position of the Group at 30 June 2009, 2010 and 2011, and 31 December 2010 and 2011 include assets, liabilities and equity of the Group which were in existence on those dates.

I – 9

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

2. EVENTS AFTER THE REPORTING PERIOD

On 20 March 2012, the Group entered into a conditional sale and purchase agreement for disposal of 13% equity interest in the entire issued ordinary share capital of TVBP at a cash consideration of approximately HK$89.2 million.

The transaction constitutes a very substantial disposal for the Company under Chapter 14 of the Listing Rules and the completion of the Disposal is conditional upon:

(i) the approval of the Shareholders in accordance with the Listing Rules, and, if applicable, the approval of the Stock Exchange and/or the Securities and Futures Commission;
(ii) up to the date of Completion, the non-withdrawal of the approval of the Broadcasting Authority for implementing the proposed change in the indirect shareholding structure of Pay Vision as a result of, among other matters, the transfer of the Sale Shares as contemplated under the Agreement and the extension of the BA Approved Completion Deadline; and
(iii) up to the date of Completion, no Firewall Provisions will be reinstated in any of the licences granted to Pay Vision or TVB.

The disposal of the Sale Shares has not yet been completed at the date of this report and is subject to, among other things, the shareholders’ approval after the reporting date.

I – 10

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Included in the consolidated statement of comprehensive income of the Group are the following results attributable to the Sale Shares for each of the reporting period:

				Six months	ended
	Year	ended 30 June		31 December
	2009	2010	2011	2010	2011
	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
Share of results
of associates	–	–	–	–	–

Included in the consolidated statement of financial position of the Group are the following assets and liabilities attributable to the Sale Shares at the end of each reporting period:

		At 30 June		At 31 December	At 31 December
	2009	2010	2011	2010	2011
	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
Non-current assets
Interests in associates	19,199	19,199	19,199	19,199	19,199

Included in the consolidated statement of cash flows of the Group are the following statement of cash flows items attributable to the Sale Shares for each of the reporting period:

			Six months	ended
Year	ended 30 June		31 December
2009	2010	2011	2010	2011
HK$’000	HK$’000	HK$’000	HK$’000	HK$’000

Cash flows from operating activities

Adjustments for: Share of results of associates Net cash used in operating activities Net decrease in cash and cash equivalents	– – –	– – –	– – –	– – –	–

					–

					–

I – 11

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

2. STATEMENT OF INDEBTEDNESS

Indebtedness of the Group

As at the close of business on 29 February 2012, being the latest practicable date for the purpose of this statement of indebtedness prior to the printing of this circular, the Group had outstanding borrowings and commitments of approximately HK$9,941,000 and approximately HK$1,277,000 respectively, details of which are as follows:

Borrowings

As at 29 February 2012, the Group had outstanding bank overdraft of approximately HK$9,941,000, which was secured by the Group’s land and building in Hong Kong with carrying amounts at 29 February 2012 of approximately HK$20,423,000, chargeable with interest at the lending bank’s prime rate per annum or 1% per annum over Hong Kong Interbank Offer Rate (“HIBOR”), whichever is higher, and repayable on demand.

Contingent liabilities

The contingent liabilities of the Group as at 29 February 2012 are as follows:

(i) As at 30 June 2004, the Company provided corporate guarantees amounting to approximately HK$24 million to a financial institution in respect of banking facilities granted to Welback International Investments Limited and its subsidiaries (the “ WIIL group ”), approximately HK$5.5 million of which was utilised by members of the WIIL group and such amount was claimed by the financial institution as disclosed in point (iii) below.
(ii) The Company and its ex-subsidiary, P.N. Electronic Ltd. (“ PNE ”) have been involved in arbitration proceeding with North American Foreign Trading Corporation (“ NAFT ”) in respect of a gross receivable of HK$18 million and related damages from various parties for goods shipped by PNE and NAFT in 1996. The arbitration proceedings were initiated by NAFT against the Company and PNE claiming for alleged damages in New York, USA. The Company has upon legal advice, vigorously contested the alleged claims and has counterclaimed the said sum of HK$18 million as well as other damages. The Company has not received any documents in relation to the arbitration proceedings for a substantial period of time and insofar as the Company is aware, the proceedings remain dormant.

I – 12

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

(iii) On 13 October 2003, a Writ of Summons and Statement of Claim was issued by BII Finance Company Limited (“ BII Finance ”) against the Company under a guarantee allegedly given by the Company in favour of BII Finance in respect of certain liabilities of Welback Enterprises Limited, a former subsidiary of the Company. The claim is for a sum of approximately HK$3,583,000 and US$248,000 (approximately HK$1,936,000), together with interest.

The Company has issued Third Party proceedings against Mr. Lee Chun Kwok and Mr. Fong Wing Seng, former directors of the Company, seeking a contribution to the extent of 49% of BII Finance’s claim in the event that the Company is found liable to BII Finance (which is denied).

BII Finance has not taken any steps to progress with the action since June 2006. The Company is prepared and ready to continue to defend BII Finance’s claim, and will also continue to pursue the Third Party proceedings against Mr. Lee Chun Kwok and Mr. Fong Wing Seng.

Save as disclosed above, no member of the Group was engaged in any litigation or claims of material importance and no litigation or claims of material importance was known to the directors of the Company to be pending or threatened by or against any member of the Group as at 29 February 2012.

Commitments

As at 29 February 2012, the Group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, in respect of land and building of approximately HK$1,277,000.

Disclaimer

Save as disclosed above and apart from intra-group liabilities, the Group did not have, as at 29 February 2012, any loan capital issued and outstanding or agreed to be issued, any loan capital, bank overdrafts and liabilities under acceptances (other than normal trade bills) or other similar indebtedness, debentures, mortgages, charges or loans or acceptances credits or hire purchase commitments, capital commitments, guarantees or other material contingent liabilities as at the close of business on 29 February 2012. The Directors confirmed that there had been no material change in the indebtedness and contingent liabilities of the Group since 29 February 2012 up to and including the Latest Practicable Date.

I – 13

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

3. WORKING CAPITAL

The Directors, after due and careful enquiry, are of the opinion that, in the absence of unforeseeable circumstances and after taking into account of (i) the Group’s presently available internal resources; (ii) the estimated net proceeds from the Disposal; and (iii) the Group’s present bank facilities, the Group has sufficient working capital for at least the next 12 months from the date of this circular.

4. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors were not aware of any material adverse change in the financial or trading position of the Group since 30 June 2011, being the date to which the latest published audited consolidated financial statements of the Company had been made up.

5. MANAGEMENT DISCUSSION AND ANALYSIS OF THE REMAINING GROUP

Results for the six months ended 31 December 2011

For the six months ended 31 December 2011, the Remaining Group recorded a consolidated turnover of approximately HK$23.5 million, representing an increase of approximately 19.9% as compared to approximately HK$19.6 million for the corresponding period in 2010. Such increase was mainly due to the fact that more film and TV programme licence fee contracts were concluded during the period than that of the last corresponding period.

The Remaining Group recorded a loss attributable to the owners of the Company of approximately HK$23.0 million for the period as compared to a loss of approximately HK$23.2 million for the corresponding period in 2010. The loss from operations for the period was approximately HK$24.9 million as compared to approximately HK$23.8 million in previous period. The write down of film rights for the period and change in fair value loss in the Remaining Group’s financial assets for the period was approximately HK$7.8 million and approximately HK$2.1 million respectively compared to approximately HK$10.6 million and approximately HK$3.3 million respectively in the corresponding period of last year. Basic and diluted loss per share for the period was HK$0.02 which was the same as that for the last corresponding period.

I – 14

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Review of operations

During the period, the Remaining Group was principally engaged in (i) film and TV programme production; (ii) music production; (iii) event production; (iv) artiste and model management; (v) investment in a pay TV operation; and (vi) investment in securities.

Film and TV programme production

During the period under review, turnover derived from the Remaining Group’s film and TV programme production business was approximately HK$18.1 million, representing an increase of approximately 27.5% as compared to the last corresponding period of approximately HK$14.2 million. The Remaining Group recorded a gross profit of approximately HK$6.5 million from the film and TV programme production business in the current period.

The total net book value of the Remaining Group’s film rights stood at approximately HK$17.3 million as at 31 December 2011, and the write down on film rights during the period amounted to approximately HK$7.8 million which was reflected in the condensed consolidated statement of comprehensive income. As at 31 December 2011, the Remaining Group’s total investment in film and TV programme production that were in progress amounted to approximately HK$139.9 million.

Music production

Turnover from music production for the period amounted to approximately HK$0.1 million as compared to approximately HK$0.5 million for the last corresponding period. Although the turnover from the segment was not significant, it served to enhance the image and exposure of the Remaining Group’s artistes to the market.

Event production

During the period, the Remaining Group has recorded turnover of approximately HK$0.3 million from event productions as compared to approximately HK$0.4 million for the last corresponding period.

I – 15

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Artiste and model management

The Remaining Group continued to manage a number of famous Hong Kong artistes and models during the period. For the period ended 31 December 2011, the turnover derived from the business of artiste and model management was approximately HK$5.1 million, representing an increase of approximately 10.9% as compared to approximately HK$4.6 million for the corresponding period in 2010. Such increase in turnover during the period was mainly driven by the new models and artistes recently signed by the Remaining Group. The Remaining Group recorded a gross profit of approximately HK$1.7 million from artistes and model management in the current period.

Investment in a pay TV operation

Taking account of the Disposal, the Remaining Group was interested in 5% equity interest in the entire issued share capital of TVBP (all such TVBP Shares are ordinary shares) which consists of 54,293,388 ordinary shares of TVBP, representing approximately 42.505% of the issued ordinary shares of TVBP. The TVBP Group continued to be accounted for as associates of the Remaining Group in accordance with the accounting policies of the Remaining Group upon Completion.

Investment in securities

During the period, no turnover was recorded under in the investment in securities operation (2010:Nil). The carrying value of the segment assets of the investment in securities operation as of 31 December 2011 and 30 June 2011 were approximately HK$3.6 million and approximately HK$5.7 million, respectively. The decrease in the carrying value mainly represented the decrease in fair value of financial assets at fair value through profit or loss during the period which amounted to approximately HK$2.1 million.

Geographical review

During the period under review, the Remaining Group’s revenue was mainly derived from Hong Kong and the PRC market which accounted for approximately 90% of the Remaining Group’s total turnover.

I – 16

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Future business prospects and plans

The Remaining Group has dedicated its efforts in strengthening and opening up distribution channels for its film and TV production in the PRC. Given the continued opening and expansion of the film and TV production market as well as the continuous growth in the box office in the PRC, the Remaining Group strongly believe that there is a great potential for the distribution of its film and TV production in the PRC.

Neither the Remaining Group has any future plans for material investments or capital assets and their expected sources of funding in the coming year nor the Remaining Group has introduced or announced any new business including new products and services during the period.

The Remaining Group is facing a challenging year ahead with the volatile financial markets and uncertain recovery trends in the world’s major economies. The Remaining Group is cautiously optimistic in respect to the prospects of the film and TV production industry in Hong Kong. The Remaining Group will be cautious in the selection of stories and scripts for the production of its films and TV programmes. Stringent measures will be adopted in the cost control and risk management for the Remaining Group’s film and TV projects.

Financial review and liquidity

As at 31 December 2011, the Remaining Group’s net assets amounted to approximately HK$240.5 million, as compared with approximately HK$265.6 million as of 30 June 2011. The current ratio, representing current assets divided by current liabilities, was 3.92.

At the end of the reporting period, the Remaining Group had short-term bank overdraft of approximately HK$9.9 million which bears interest at the lending bank’s prime rate per annum or 1% per annum over HIBOR, whichever is higher, and is repayable on demand. The cash and bank balances of the Remaining Group at the end of the reporting period amounted to approximately HK$74.2 million. The gearing ratio, as a ratio of total borrowings over total assets was 0.03. The aforesaid 18% equity interest of TVBP has not been taken into account of the assumed completion of the Disposal.

I – 17

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The Remaining Group had contingent liabilities of HK$24.0 million at the end of the reporting period, mainly as a result of a corporate guarantee provided to a financial institution in respect of banking facilities granted to former subsidiaries. Approximately HK$5.5 million of the banking facilities were utilised by those former subsidiaries and this amount was subject to a claim by the financial institution concerned.

Foreign exchange exposure and treasury policies

Most of the Remaining Group’s cash balances, income and expenditure are primarily denominated in Hong Kong dollars and Renminbi. As the exchange rate between Hong Kong dollars and Renminbi is relatively stable, no hedging or other alternatives have been implemented for managing the exchange rate risk. The Remaining Group has not experienced any material difficulty or effect on its operations of liquidity as result of fluctuations in currency exchange rates. As at 31 December 2011, the Remaining Group did not have outstanding hedging instruments.

Employee schemes

As at 31 December 2011, the Remaining Group had 42 Hong Kong based employees. The remuneration policy and package of the Remaining Group’s employees are periodically reviewed and approved by the executive directors. Apart from provident fund scheme and in-house training programmes, medical insurance scheme, discretionary bonuses and share options may also be awarded to employees according to individual performance.

Pledge of assets

As at 31 December 2011, certain assets of the Remaining Group with aggregate carrying value of approximately HK$20.5 million (30 June 2011: HK$20.6 million) were pledged to secure the bank overdraft granted to the Remaining Group.

Significant investments

As at 31 December 2011 and taking account of the Completion, the principal investment of the Remaining Group was the investment in 5% equity interest of TVBP.

Material acquisitions and disposals of subsidiaries and associated companies

There were no material acquisitions and disposals of subsidiaries and associated companies of the Remaining Group for the period ended 31 December 2011.

I – 18

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Future plans for material investments or capital assets

The Remaining Group did not have any future plans for material investments or capital assets.

Major litigation and arbitration proceedings

The Company and its ex-subsidiary, PNE have been involved in arbitration proceedings with NAFT in respect of a gross receivable of HK$18 million and related damages from various parties for goods shipped by PNE and NAFT in 1996. The arbitration proceedings were initiated by NAFT against the Company and PNE claiming for alleged damages in New York, USA. The Company has upon legal advice, vigorously contested the alleged claims and has counterclaimed the said sum of HK$18 million as well as other damages. The Company has not received any documents in relation to the arbitration proceedings for a substantial period of time and insofar as the Company is aware, the proceedings remain dormant.
On 13 October 2003, a Writ of Summons and Statement of Claim was issued by BII Finance against the Company under a guarantee allegedly given by the Company in favour of BII Finance in respect of certain liabilities of Welback Enterprises Limited, a former subsidiary of the Company. The claim is for a sum of approximately HK$3,583,000 and US$248,000 (approximately HK$1,936,000), together with interest.

Bll Finance has not taken any steps to progress with the action since June 2006. The Company is prepared and ready to continue to defend Bll Finance’s claim, and also continue to pursue the Third Party proceedings against Mr. Lee Chun Kwok and Mr. Fong Wing Seng.

Save as disclosed above, no member of the Remaining Group is engaged in any litigation or claims of material importance and no litigation or claims of material importance is known to the directors to be pending or threatened by or against any member of the Remaining Group.

I – 19

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Results for the year ended 30 June 2011

The Remaining Group’s total turnover during the year ended 30 June 2011 was approximately HK$30.0 million, representing a decrease of approximately 58.7% from approximately HK$72.7 million for the year ended 30 June 2010. The Remaining Group’s gross profit for the year was approximately HK$10.9 million, representing a decrease of approximately 59.2% from approximately HK$26.7 million in the previous year. The decrease in turnover was mainly attributable to fewer blockbuster films were released during the year and the significant decrease in investment income during the year comparing to the fiscal year ended 30 June 2010. Net gains from the sale of investments at fair value through profit or loss in the fiscal year ended 30 June 2010 was approximately HK$9.9 million. The Remaining Group did not record any investment income during the year.

Meanwhile, the Remaining Group recorded a loss from operations for the year of approximately HK$56.0 million, compared with approximately HK$59.2 million in the previous year. Such decrease in the loss from operations was mainly attributable to the decrease in the impairment of loss in film rights from approximately HK$30.4 million in the fiscal year ended 30 June 2010 to approximately HK$22.5 million in the fiscal year ended 30 June 2011. The Remaining Group recorded a loss approximately HK$58.3 million for the year as compared with a profit of approximately HK$88.5 million in the fiscal year ended 30 June 2010. Such decline is mainly attributable to the absence of an one-off gain of approximately HK$165.9 million on partial disposal of associates in the fiscal year ended 30 June 2010.

Other operating expenses for the year decreased to approximately HK$27.4 million from approximately HK$41.7 million in the previous year. Such decrease was mainly contributed by the decrease in impairment loss recognised in respect of film rights during the year.

The loss attributable to owners for the year was approximately HK$52.4 million, compared with a profit of approximately HK$95.6 million in the previous year. The loss per share for the year ended 30 June 2011 was HK$0.05 compared with the earnings per share of HK$0.24 for the year ended 30 June 2010.

I – 20

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Review of operations

The Remaining Group was principally engaged (i) film and TV programme production; (ii) music production; (iii) event production; (iv) artiste and model management; (v) investment in a pay TV operation; and (vi) investment in securities.

Film and TV programme production

The Remaining Group generated turnover of approximately HK$17.6 million from film and TV programme production activities for the year ended 30 June 2011, representing a decrease of approximately 67.3% from approximately HK$53.8 million in the previous year. The gross profit derived from these activities was approximately HK$6.5 million, compared with approximately HK$13.3 million in the fiscal year ended 30 June 2010. Turnover of this segment for the year was mainly contributed by six films and one TV programme released during the fiscal year ended 30 June 2010 and the fiscal year ended 30 June 2011, namely “All About Love”, “Marriage With A Liar”, “MicroSex Office”, “The Future X-cops”, “To Live And Die in Mongkok” and “Black Ransom”, respectively for films and “The Dragon Gate” for TV programme.

As of 30 June 2011, the total net book value of the Remaining Group’s film rights stood at approximately HK$25.7 million. The impairment loss recognised in respect of film rights during the year amounted to approximately HK$22.5 million. The Remaining Group’s total film and TV programme production in progress as of 30 June 2011 amounted to approximately HK$129.4 million.

Music production

The turnover of the Remaining Group’s music album production business during the year was approximately HK$0.5 million, compared with approximately HK$0.3 million in the fiscal year ended 30 June 2010.

Although music production only accounts for a small portion of the Remaining Group’s total earnings, the Remaining Group will continue to produce music albums for its artistes to boost the popularity of its artistes as well as the Remaining Group’s image.

I – 21

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Event production

The Remaining Group organised a number of events during the year. These mainly included promotional activities and live music shows featured with the Remaining Group’s artistes or models. Turnover from the event production for the year was approximately HK$0.7 million compared with approximately HK$2.0 million in the previous year.

Artiste and model management

The Remaining Group continued to manage a group of popular artistes and models including 謝婷婷(Jennifer Tse[#] ), JJ賈曉晨(JJ Jia Xiao Chen[#] ), 莊思敏(Jacquelin Ch’ng[#] ), 趙彤(Yedda Chao[#] ), 伍允龍(Philip Ng[#] ), Yellow, EO2 and 狄易達(Det Dik[#] ).

Turnover and gross profit of the artiste and model management operation for the year were approximately HK$11.2 million and HK$3.7 million respectively, compared with approximately HK$6.7 million and HK$2.5 million respectively in the previous year.

Investment in a pay TV operation

Taking account of the Disposal, the Remaining Group was interested in 5% equity interest in the entire issued share capital of TVBP (all such TVBP Shares are ordinary shares) which consists of 54,293,388 ordinary shares of TVBP, representing approximately 42.505% of the issued ordinary shares of TVBP. The TVBP Group continued to be accounted for as associates of the Remaining Group upon Completion in accordance with the accounting policies of the Remaining Group.

Investment in securities

No turnover has been recorded in the investment in securities operation during the year compared with approximately HK$9.9 million in the previous year. The carrying value of the total segment assets of the investment in securities operation as of 30 June 2011 and 30 June 2010 were approximately HK$5.7 million and HK$6.0 million, respectively. The decrease in the carrying value mainly represented the loss in change in fair value of financial assets at fair value through profit or loss during the year.

I – 22

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Geographical review

During the year under review, the Remaining Group continued to focus on the Hong Kong’s and the PRC’s markets. The revenue derived from Hong Kong and the PRC amounted to approximately HK$22.6 million and HK$2.4 million, respectively, representing approximately 75.3% and 8.0% of the total turnover of the Remaining Group, respectively.

Future business prospects and plans

The Remaining Group has dedicated its efforts in strengthening and opening up distribution channels for their film and TV production in the PRC. Given the continued opening and expansion of the film and TV production market as well as the continuous growth in the box office in the PRC, the Remaining Group strongly believe that there is a great potential for the distribution of its film and TV production in the PRC.

The Remaining Group is facing a challenging year ahead with the volatile financial markets and uncertain recovery trends in the world’s major economies. The Remaining Group is cautiously optimistic in respect to the prospects of the film and TV production industry in Hong Kong. The Remaining Group will be cautious in the selection of stories and scripts for the production of our films and TV programmes. Stringent measures will be adopted in the cost control and risk management for the Remaining Group’s film and TV projects.

Financial review and liquidity

As at 30 June 2011, the Remaining Group’s net assets amounted to approximately HK$265.6 million, compared with approximately HK$288.7 million as at 30 June 2010. The current ratio, representing current assets divided by current liabilities was 4.09.

During the year, the Company raised approximately HK$37.3 million before expenses by way of placing of new shares pursuant to a general mandate granted by way of an ordinary resolution passed by the shareholders of the Company at the annual general meeting on 3 December 2010, issuing 207,000,000 ordinary shares at the subscription price of HK$0.18 per ordinary share.

I – 23

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The net proceeds from the placing of new shares were approximately HK$36.1 million which was planned to be retained at the bank and be used for the general working capital of the Remaining Group.

At the end of the reporting period, the Remaining Group had a short-term bank overdraft of approximately HK$10.0 million which bears interest at the lending bank’s prime rate per annum or 1% per annum over HIBOR, whichever is higher, and is repayable on demand. The zero-coupon convertible note issued in August 2005 with face value of HK$170.0 million was redeemed fully at the date of its maturity during the year at 110% of the principal amount of the convertible note. The cash and bank balances of the Remaining Group were amounted to approximately HK$103.0 million. The gearing ratio, as a ratio of total borrowings over total assets, was 0.03.

The Remaining Group had contingent liabilities of approximately HK$24.0 million at the end of the reporting period, mainly as a result of a corporate guarantee provided to a financial institution in respect of banking facilities granted to former subsidiaries. Approximately HK$5.5 million of the banking facilities were utilised by those former subsidiaries and this amount was subject to a claim by the financial institution concerned.

Exposure to fluctuation in exchange rates and related hedges

During the year, the revenue and cost for film and TV programme production, music album production, event production, artiste and model management and investment in securities were mainly dominated in Renminbi and Hong Kong dollars. Borrowings in terms of loans and convertible note were denominated in Hong Kong dollars. As the exchange rates of Hong Kong dollars against Renminbi were relatively stable during the year, the Remaining Group’s exposure to fluctuations in exchange rates was minimal. The Remaining Group will closely monitor the foreign currency exposure and to arrange for hedging facilities when necessary.

I – 24

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Employee schemes

As at 30 June 2011, the Remaining Group had 42 employees (all based in Hong Kong). The remuneration policy and package of the Remaining Group’s employees are periodically reviewed and approved by the executive directors. Apart from provident fund scheme and in-house training programmes, medical insurance scheme, discretionary bonuses and share options may also be awarded to employees according to the assessment of individual performances.

Pledge of assets

As at 30 June 2011, certain assets of the Remaining Group with aggregate carrying value of approximately HK$20.6 million (2010: HK$20.8 million) were pledged to secure banking facilities granted to the Company.

Significant investments

Taking account of the Completion, as at 30 June 2011, the principal investment of the Remaining Group was the investment in 5% equity interest of TVBP.

Material acquisitions and disposals of subsidiaries and associated companies

There were no material acquisitions and disposals of subsidiaries and associated companies of the Remaining Group.

Future plans for material investments or capital assets

The Remaining Group did not have any future plans for material investments or capital assets.

I – 25

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Major litigation and arbitration proceedings

The Company and its ex-subsidiary, PNE have been involved in arbitration proceedings with NAFT in respect of a gross receivable of HK$18 million and related damages from various parties for goods shipped by PNE and NAFT in 1996. The arbitration proceedings were initiated by NAFT against the Company and PNE claiming for alleged damages in New York, USA. The Company has upon legal advice, vigorously contested the alleged claims and has counterclaimed the said sum of HK$18 million as well as other damages. The Company has not received any documents in relation to the arbitration proceedings for a substantial period of time and insofar as the Company is aware, the proceedings remain dormant.
On 13 October 2003, a Writ of Summons and Statement of Claim was issued by BII Finance against the Company under a guarantee allegedly given by the Company in favour of BII Finance in respect of certain liabilities of Welback Enterprises Limited, a former subsidiary of the Company. The claim is for a sum of approximately HK$3,583,000 and US$248,000 (approximately HK$1,936,000), together with interest.

I – 26

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Results for the year ended 30 June 2010

The Remaining Group’s total turnover during the year ended 30 June 2010 was approximately HK$72.7 million, representing an increase of approximately 31.0% from approximately HK$55.5 million for the year ended 30 June 2009. The Remaining Group’s gross profit was approximately HK$26.7 million, representing an increase of approximately 142.7% from approximately HK$11.0 million in the previous year. The increase in turnover was mainly attributable to the net gains from the sale of investments at fair value through profit or loss for the year of approximately HK$9.9 million. The Remaining Group did not record such gains in the previous year.

Meanwhile, the Remaining Group recorded a loss from operations for the year of approximately HK$59.2 million, compared with approximately HK$264.0 million in the previous year. Such significant decrease in the loss from operations was mainly attributable to the decrease in loss on fair value of the Remaining Group’s investments in listed equity securities from approximately HK$201.1 million in 2009 to approximately HK$1.1 million in 2010. As a result of the recognition of the one-off gain on partial disposal of associates of approximately HK$165.9 million in 2010, the profit for the year of the Remaining Group increased significantly to approximately HK$88.5 million from the loss of approximately HK$284.5 million in 2009.

Other operating expenses for the year increased to approximately HK$41.7 million from HK$28.6 million in the previous year. Such increase was mainly contributed by the increase in the impairment of loss in film rights during the year.

The profit attributable to owners for the year was approximately HK$95.6 million, compared with a loss of approximately HK$284.5 million in the previous year. The earnings per share for the year ended 30 June 2010 was HK$0.24 compared with the adjusted loss per share of HK$2.07 for the year ended 30 June 2009.

I – 27

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Review of operations

The Remaining Group was principally engaged in (i) film and TV programme production; (ii) music production; (iii) event production; (iv) artiste and model management; (v) investment in a pay TV operation and (vi) investment in securities.

Film and TV programme production

The Remaining Group generated turnover of approximately HK$53.8 million from film and TV programme production activities for the year ended 30 June 2010, representing an increase of approximately 21.2% from approximately HK$44.4 million in the previous year. The gross profit derived from these activities was approximately HK$13.3 million, compared with approximately HK$7.7 million in fiscal year 2009. Turnover of this segment for the year was mainly contributed by five films and two TV programmes released during the year, namely “On His Majesty’s Secret Service”, “The Future X-cops”, “The Underdog Knight”, “To Live And Die in Mongkok” and “Black Ransom”, respectively for films, “Rough Justice” and “The Dragon Gate” for TV programmes.

As of 30 June 2010, the total net book value of the Remaining Group’s film rights stood at approximately HK$41.3 million. The impairment loss recognised in respect of film rights during the year amounted to approximately HK$30.4 million. The Remaining Group’s total film and TV programme production in progress as of 30 June 2010 amounted to approximately HK$101.5 million.

Music production

The turnover of the Remaining Group’s music album production business during the year was approximately HK$0.3 million, compared with approximately HK$1.1 million in fiscal year 2009.

I – 28

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Event production

The Remaining Group organised a number of events during the year. These mainly included promotional activities, live music shows and fashion shows featured with the Remaining Group’s artistes and models. Turnover from the event production for the year was approximately HK$2.0 million compared with approximately HK$1.3 million in the previous year.

Artiste and model management

The Remaining Group continued to manage a group of popular artistes and models including 謝婷婷(Jennifer Tse[#] ), JJ賈曉晨(JJ Jia Xiao Chen[#] ), 高皓正(Zac Koo[#] ), 趙彤 (Yedda Chao[#] ), Yellow, EO2, 狄易達(Det Dik[#] ) and a Korean female group Y.E.S.

Turnover and gross profit of the artiste and model management operation for the year were approximately HK$6.7 million and HK$2.5 million respectively, compared with approximately HK$8.7 million and HK$3.1 million respectively in the previous year.

Investment in a pay TV operation

The 2009 Disposal was completed during the year and recorded a gain on the 2009 Disposal of approximately HK$165.9 million in the consolidated statement of comprehensive income. Details of the 2009 Disposal were set out in the Company’s announcement and circular dated 6 July 2009 and 23 October 2009 respectively. Upon completion of the 2009 Disposal and taking into account of the Disposal, the Remaining Group was interested in 5% equity interest in the entire issued share capital of TVBP (all such TVBP Shares are ordinary shares) which consists of 54,293,388 ordinary shares of TVBP, representing approximately 42.505% of the issued ordinary shares of TVBP. The TVBP Group continued to be accounted for as associates of the Remaining Group upon Completion in accordance with the accounting policies of the Remaining Group.

Investment in securities

Turnover of the investment in securities operation for the year was approximately HK$9.9 million compared with nil in fiscal 2009. The carrying value of the total segment assets of the investment in securities operation as of 30 June 2010 and 30 June 2009 were approximately HK$6.0 million and HK$54.9 million, respectively. The decrease in the carrying value mainly represented the cost of investment in securities disposed and the loss in change in fair value of financial assets at fair value through profit or loss during the year amounted to approximately HK$47.8 million and HK$1.1 million, respectively.

I – 29

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Geographical review

During the year under review, the Remaining Group continued to focus on the Hong Kong’s and the PRC’s markets. The revenue derived from Hong Kong and the PRC amounted to approximately HK$44.5 million and HK$23.2 million, respectively, representing approximately 61.3% and 31.9% of our total turnover.

Future business prospects and plans

The Remaining Group is facing a challenging year ahead with the current global economic uncertainties caused by the global financial turmoil. The Remaining Group is cautiously optimistic in respect to the prospects of the film and TV production industry in Hong Kong. The Remaining Group will be cautious in the selection of stories and scripts for the production of its films and TV programmes. Stringent measures will be adopted in the cost control and risk management for the Remaining Group’s film and TV projects.

Financial review and liquidity

As at 30 June 2010, the Remaining Group’s net assets amounted to approximately HK$288.7 million, compared with approximately HK$3.4 million on the same date last year. The current ratio, representing current assets divided by current liabilities was 1.99.

During the year, the Company raised approximately HK$185.5 million before expenses by way of the rights issue, issuing 927,520,792 ordinary shares at the subscription price of HK$0.20 per rights share on the basis of eight rights shares for every one ordinary share held on the record date of the rights issue.

I – 30

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The net proceeds from the rights issue were approximately HK$180.7 million and HK$150.0 million of which was planned to be retained at the bank and be used for repayment of the convertible note when it became due in August 2010, while the remaining balance of approximately HK$30.7 million will be used for the general working capital of the Remaining Group.

At the end of the reporting period, the Remaining Group had (i) a short-term bank overdraft of approximately HK$10.0 million which bears interest at the lending bank’s prime rate per annum or 1% per annum over HIBOR, whichever is higher, and is repayable on demand and (ii) a zero-coupon convertible note issued in August 2005 which is due within one year with principal amount, carrying value and fair value of approximately HK$170.0 million, HK$185.4 million and HK$185 million, respectively. Unless previously converted by the note holder, the convertible note is redeemable on the date of maturity at 110% of the principal amount of the convertible note then outstanding. The convertible note was redeemed at the maturity date by the Company in August 2010. The cash and bank balances of the Remaining Group were amounted to approximately HK$300.1 million. The gearing ratio, as a ratio of total borrowings over total assets, was 0.38.

Exposure to fluctuation in exchange rates and related hedges

I – 31

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Employee schemes

As at 30 June 2010, the Remaining Group had 53 employees (all based in Hong Kong). The remuneration policy and package of the Remaining Group’s employees are periodically reviewed and approved by the executive directors. Apart from provident fund scheme and in-house training programmes, medical insurance scheme, discretionary bonuses and share options may also be awarded to employees according to the assessment of individual performances.

Pledge of assets

As at 30 June 2010, certain assets of the Remaining Group with aggregate carrying value of approximately HK$20.8 million (2009: HK$21.0 million) were pledged to secure banking facilities granted to the Company.

Significant investments

Taking into account of the 2009 Disposal and Completion, as at 30 June 2010, the principal investment of the Remaining Group was the investment in 5% equity interest of TVBP.

Material acquisitions and disposals of subsidiaries and associated companies

Apart from the 2009 Disposal, there were no material acquisitions and disposals of subsidiaries and associated companies of the Remaining Group for the period ended 30 June 2010.

Future plans for material investments or capital assets

The Remaining Group did not have any future plans for material investments or capital assets.

I – 32

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Major litigation and arbitration proceedings

The Company and its ex-subsidiary, PNE have been involved in arbitration proceedings with NAFT in respect of a gross receivable of HK$18 million and related damages from various parties for goods shipped by PNE and NAFT in 1996. The arbitration proceedings were initiated by NAFT against the Company and PNE claiming for alleged damages in New York, USA. The Company has upon legal advice, vigorously contested the allege claims and has counterclaimed the said sum of HK$18 million as well as other damages. The Company has not received any documents in relation to the arbitration proceedings for a substantial period of time and insofar as the Company is aware, the proceedings remain dormant.
On 13 October 2003, a Writ of Summons and Statement of Claim was issued by BII Finance against the Company under a guarantee allegedly given by the Company in favour of BII Finance in respect of certain liabilities of Welback Enterprises Limited, a former subsidiary of the Company. The claim is for a sum of approximately HK$3,583,000 and US$248,000 (approximately HK$1,936,000), together with interest.

The Company will continue to defend BII Finance’s claim, and will also continue to pursue the Third Party proceedings against Mr. Lee Chun Kwok and Mr. Fong Wing Seng. BII Finance has not taken any steps to progress with the action since June 2006.

I – 33

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Results for the year ended 30 June 2009

The Remaining Group’s total turnover during the year ended 30 June 2009 was HK$55.5 million, an increase of 37 percent on the figure of HK$40.5 million for the financial year in 2008. The Remaining Group’s gross profit was HK$11.0 million, compared with HK$13.7 million in the previous year. The increase in turnover was mainly due to more films were released during the year than that of last year.

Meanwhile, the Remaining Group recorded a loss from operations of approximately HK$264.0 million during the year under review, compared with the profit from operations of approximately HK$12.3 million in the previous year. The significant increase in the loss from operations was mainly contributed by the substantial decrease in fair value of the Remaining Group’s investments in listed equity securities due to downturn of the financial market. As a result, the loss for the year of the Remaining Group increased significantly to HK$284.5 million from the 2008 figure of HK$7.2 million.

The loss attributable to equity holders was HK$284.5 million, compared with the HK$7.2 million loss in previous year. The loss per share for the year ended 30 June 2009 was HK$0.15, compared with HK$0.01 in fiscal year 2008.

Review of operations

I – 34

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Film and TV programme production

The Remaining Group derived a turnover of HK$44.4 million from film and TV programme production activities during the year ended 30 June 2009, a 80 percent increase on the figure of HK$24.7 million for the previous year. The gross profit derived from these activities was HK$7.7 million, compared with HK$7.9 million in fiscal year 2008. Turnover of this segment for the year was mainly contributed by the six films and one TV programme released during the year, namely “The Way We Are”, “The Forbidden Legend: Sex & Chopsticks”, “The Vampire Who Admires Me”, “The Forbidden Legend: Sex & Chopsticks II”, “I Corrupt All Cops” and “Night and Fog”, respectively for films and “The Kung Fu Master Huang Fei Hong” for TV programme.

As of 30 June 2009, the total net book value of the Remaining Group’s film rights stood at HK$32.0 million. The write down on film rights during the year amounted to HK$19.9 million. The Remaining Group’s total film and TV programme production in progress as of 30 June 2009 were amounted to HK$119.5 million. Films, including “On His Majesty’s Secret Service” and “The Future X-cop” will be released in the second half of 2009. Other films and TV programmes including “Colour of Justice” and “The Underdog Knight” for films, “Rough Justice” and “The Dragon Gate” for TV programmes are expected to be released in 2010.

Music production

The Remaining Group released seven new music albums during the year, namely “Jin Tian Jiang Lai” by JJ賈曉晨(JJ Jia Xiao Chen[#] ), “真心唱歌(Zhen Xin Chang Ge[#] )” by 高皓正(Zac Koo[#] ), “Ladies Nite” by EO2, “Just Go” by 狄易達(Det Dik[#] ), “海盜啤(Hai Dao Pi[#] )” by 葉文輝(Barry Ip[#] ), “少女大帝(Shao Nu Da Di[#] )” and “Bear label kids’ songs Vol.1” by various artistes.

The turnover of the Remaining Group’s music album production business during the year was HK$1.1 million, compared with HK$0.4 million in fiscal year 2008.

Although music production only accounts for a small portion of the Remaining Group’s total earnings, the Remaining Group will continue to produce music albums for its artistes as it will boost the popularity of its artistes as well as the Remaining Group’s image.

I – 35

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Event production

The Remaining Group organised a number of events during the year. These mainly included promotional activities, live music shows and fashion shows featured with the Remaining Group’s artistes and models. Turnover from the event production for the year were HK$1.3 million compared with the previous year’s figure of HK$0.5 million.

Artiste and model management

The Remaining Group continued to manage a group of popular artistes and models including 孟瑤(Meng Yao[#] ), JJ賈曉晨(JJ Jia Xiao Chen[#] ), 高皓正(Zac Koo[#] ), 文頌嫻(Annie Man[#] ), 趙彤(Yedda Chao[#] ), EO2 and 狄易達(Det Dik[#] ).

Turnover and gross profit of the artiste and model management operation for the year were HK$8.7 million and HK$3.1 million respectively, compared with the previous year’s figures of HK$12.5 million and HK$3.0 million.

Investment in a pay TV operation

Taking account of the 2009 Disposal and Completion, the Remaining Group was interested in 5% equity interest in the entire issued share capital of TVBP (all such TVBP Shares are ordinary shares) which consists of 54,293,388 ordinary shares of TVBP, representing approximately 42.505% of the issued ordinary shares of TVBP. The TVBP Group continued to be accounted for as associates of the Remaining Group upon Completion in accordance with the accounting policies of the Remaining Group.

Investment in securities

Turnover of the investment in securities operation for the year were nil compared with HK$2.4 million in fiscal 2008. The carrying value of the total segment assets of the investment in securities operation as at 30 June 2009 and 2008 were HK$54.9 million and HK$256.0 million, respectively.

I – 36

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Geographical review

During the year under review, the Remaining Group continued to focus on the Hong Kong’s and the PRC’s markets. The revenue derived from Hong Kong and the PRC amounted to HK$23.1 million and HK$30.0 million, respectively, representing 42 percent and 54 percent of our total turnover.

Future business prospects and plans

The Remaining Group has dedicated its efforts in strengthening and opening up distribution channels for its film and TV production in the PRC. Given the continuous opening up and expansion of the film and TV production market as well as the continuous growth in the box office in the PRC, we strongly believe that there is a great potential for the distribution of its film and TV production in the PRC.

Financial review and liquidity

As at 30 June 2009, the Remaining Group’s net assets amounted to HK$3.4 million, compared with HK$287.8 million on the same date last year. The current ratio, representing current assets divided by current liabilities was 1.7. The Remaining Group’s cash and bank balances amounted to HK$31.5 million on the balance sheet date. The Remaining Group issued convertible notes for principal amounts of HK$170 million and HK$100 million in August 2005 and in December 2007, respectively. On 30 June 2009, the fair value of the liability component of these convertible notes was approximately HK$249.9 million. At the balance sheet date, the Remaining Group had a short-term bank borrowing of approximately HK$10.0 million. The gearing ratio, as a ratio of total borrowings over total assets was 0.8.

I – 37

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

In the event that the Remaining Group requires additional funds for further development of the Remaining Group’s existing business/new investments when suitable opportunities arise/repayment of its future financial obligations, the Board will consider to carry out equity fund raising activities and/or dispose of the Remaining Group’s existing assets. In particular, the Remaining Group may consider to dispose of its remaining equity interests in TVBP and/or its existing investments in listed securities when favorable market conditions arise.

The Remaining Group had contingent liabilities of HK$24 million on the balance sheet date, mainly as a result of a corporate guarantee provided to a financial institution in respect of banking facilities granted to former subsidiaries. HK$5.5 million of the banking facilities were utilised by those former subsidiaries and this amount was subject to a claim by the financial institution concerned.

Exposure to fluctuation in exchange rates and related hedges

During the year, the revenue and cost for film and TV programme production, music album production, event production, artiste and model management services and investment in securities were mainly dominated in Renminbi and Hong Kong dollars. Borrowings in terms of loans and convertible notes were denominated in Hong Kong dollars. As the exchange rates of Hong Kong dollars against Renminbi were relatively stable during the year, the Remaining Group’s exposure to fluctuations in exchange rates was minimal. The Remaining Group will closely monitor the foreign currency exposure and to arrange for hedging facilities when necessary.

Employee schemes

As at 30 June 2009, the Remaining Group has 53 employees (all based in Hong Kong). The remuneration policy and package of the Remaining Group’s employees are periodically reviewed and approved by the executive directors. Apart from provident fund scheme and in-house training programmes, medical insurance scheme, discretionary bonuses and share options may also be awarded to employees according to the assessment of individual performances.

Pledge of assets

As at 30 June 2009, certain assets of the Remaining Group with aggregate carrying value of HK$21 million (2008: HK$21 million) were pledged to secure banking facilities granted to the Company.

I – 38

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Significant investments

Taking account of the 2009 Disposal and Completion, as at 30 June 2009, the principal investment of the Remaining Group was the investment in 5% equity interest of TVBP.

Material acquisitions and disposals of subsidiaries and associated companies

Apart from entering into the conditional sale and purchase agreement of the 2009 Disposal on 30 June 2009, there were no material acquisitions and disposals of subsidiaries and associated companies of the Remaining Group for the period ended 30 June 2009.

Future plans for material investments or capital assets

The Remaining Group did not have any future plans for material investments or capital assets.

Major litigation and arbitration proceedings

The Company and its ex-subsidiary, PNE have been involved in arbitration proceedings with NAFT in respect of a gross receivable of HK$18 million and related damages from various parties for goods shipped by PNE and NAFT in 1996. The arbitration proceedings were initiated by NAFT against the Company and PNE claiming for alleged damages in New York, USA. The Company has upon legal advice, vigorously contested the alleged claims and has counterclaimed the said sum of HK$18 million as well as other damages. The arbitration proceedings have been dormant for a substantial period of time.
On 13 October 2003, a Writ of Summons and Statement of Claim was issued by BII Finance against the Company under a guarantee allegedly given by the Company in favour of BII Finance in respect of certain liabilities of Welback Enterprises Limited. The claim is for a sum of approximately HK$3,583,000 and US$248,000 (approximately HK$1,936,000), together with interest.

I – 39

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

I – 40

APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

The following is the text of a report, prepared for the purpose of incorporation in this circular, received from the independent reporting accountants, HLB Hodgson Impey Cheng, Chartered Accountants, Certified Public Accountants, Hong Kong.

==> picture [231 x 95] intentionally omitted <==

31/F, Gloucester Tower Th eLandmark 1 1Pedde rSrtete Cenrtla Hon gKong

20 April 2012

The Board of Directors See Corporation Limited Office D & E, 20th Floor, EGL Tower, No. 83 Hung To Road, Kwun Tong, Kowloon, Hong Kong

Dear Sirs,

We report on the unaudited pro forma financial information of See Corporation Limited (the “Company”) and its subsidiaries (hereinafter collectively referred to as the “Group”), set out on pages II-4 to II-12 under the headings of “Unaudited Pro Forma Financial Information of the Remaining Group” (the “Unaudited Pro Forma Financial Information”) in Appendix II of the Company’s circular dated 20 April 2012 (the “Circular”) in connection with the proposed disposal of 13% interest in TVB Pay Vision Holdings Limited (“TVBP”) by the Group (the “Disposal”). The Unaudited Pro Forma Financial Information has been prepared by the directors of the Company, for illustrative purposes only, to provide information about how the Disposal might have affected the relevant financial information presented, for inclusion in Appendix II of the Circular. The basis of preparation of the Unaudited Pro Forma Financial Information is set out on page II-4 of the Circular.

II – 1

APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

Respective responsibilities of directors of the Company and Reporting Accountants

It is the responsibility solely of the directors of the Company to prepare the Unaudited Pro Forma Financial Information in accordance with paragraph 4.29 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”) and with reference to Accounting Guideline 7 “Preparation of Pro Forma Financial Information for Inclusion in Investment Circulars” issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”).

It is our responsibility to form an opinion, as required by paragraph 4.29(7) of the Listing Rules, on the Unaudited Pro Forma Financial Information and to report our opinion solely to you. We do not accept any responsibility for any reports previously given by us on any financial information used in the compilation of the Unaudited Pro Forma Financial Information beyond that owed to those to whom those reports were addressed by us at the dates of their issue.

Basis of opinion

We conducted our engagement in accordance with Hong Kong Standard on Investment Circular Reporting Engagements 300 “Accountants’ Reports on Pro Forma Financial Information in Investment Circulars” issued by the HKICPA. Our work consisted primarily of comparing the unadjusted financial information with the source documents, considering the evidence supporting the adjustments and discussing the Unaudited Pro Forma Financial Information with the directors of the Company. This engagement did not involve independent examination of any of the underlying financial information.

We planned and performed our work so as to obtain the information and explanations we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the Unaudited Pro Forma Financial Information has been properly compiled by the directors of the Company on the basis stated, that such basis is consistent with the accounting policies of the Group and that the adjustments are appropriate for the purposes of the Unaudited Pro Forma Financial Information as disclosed pursuant to paragraph 4.29(1) of the Listing Rules.

II – 2

APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

The Unaudited Pro Forma Financial Information is for illustrative purposes only, based on the judgments and assumptions of the directors of the Company, and because of its hypothetical nature, it does not provide any assurance or indication that any event will take place in the future and may not be indicative of:

the financial position of the Remaining Group (the Group after the Disposal) as at 31 December 2011 or any future date; or
the results and cash flows of the Remaining Group for the year ended 30 June 2011 or any future periods.

Opinion

In our opinion:

(a) the Unaudited Pro Forma Financial Information has been properly compiled by the directors of the Company on the basis stated;
(b) such basis is consistent with the accounting policies of the Group; and
(c) the adjustments are appropriate for the purpose of the Unaudited Pro Forma Financial Information as disclosed pursuant to paragraph 4.29(1) of the Listing Rules.

Yours faithfully, HLB Hodgson Impey Cheng Chartered Accountants Certified Public Accountants Hong Kong

II – 3

APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

INTRODUCTION TO THE UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

The unaudited pro forma financial information of the Remaining Group has been prepared to illustrate the effect of the Disposal. Capitalised terms used herein have the same meaning as those defined in this circular unless the context otherwise requires.

The following is the unaudited pro forma financial information of the Remaining Group as if the Disposal had taken place on 31 December 2011 for the unaudited pro forma consolidated statement of financial position and on 1 July 2010 for the unaudited pro forma consolidated statement of comprehensive income and the unaudited pro forma consolidated statement of cash flows.

The unaudited pro forma financial information of the Remaining Group should be read in conjunction with the historical financial information of the Group as set out in Appendix I to this circular and other financial information included elsewhere in this circular.

The accompanying unaudited pro forma financial information of the Remaining Group is based on certain assumptions, estimates, uncertainties and other currently available financial information, and is provided for illustrative purposes only because of its hypothetical nature, it may not give a true picture of the actual financial position and financial results of the Remaining Group’s operations that would have been attained had the Disposal actually occurred and completed on the dates indicated herein. Further, the accompanying unaudited pro forma financial information of the Remaining Group does not purport to predict the Remaining Group’s future financial position or results of operations.

II – 4

APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

(i) Unaudited Pro Forma Consolidated Statement of Financial Position of the Remaining Group

The following is the unaudited pro forma consolidated statement of financial position of the Remaining Group, assuming that the Disposal had been completed on 31 December 2011. The unaudited pro forma consolidated statement of financial position is based on the unaudited consolidated statement of financial position of the Group as at 31 December 2011 as set out in Appendix I to this circular. Such information is adjusted to reflect the effect of the Disposal.

As the unaudited pro forma consolidated statement of financial position of the Remaining Group has been prepared for illustrative purpose only and because of its hypothetical nature, it may not give a true picture of the financial position of the Remaining Group as at the date to which it is made up to or at any future date.

Non-current assets Property, plant and equipment Interests in associates Loan receivable Current assets Film rights Film production in progress Music production in progress Inventories Trade and other receivables, deposits and prepayments Financial assets at fair value through profit or loss Cash and bank balances	The Group as at 31 December 2011 Pro forma adjustments HK$’000 HK$’000 Notes 21,332 26,583 (19,199) 1(a), 2 10,000 57,915 17,342 139,869 1,081 116 8,811 3,621 74,215 87,816 1(b) 245,055	The Remaining Group as at 31 December 2011 HK$’000 21,332 7,384 10,000 38,716 17,342 139,869 1,081 116 8,811 3,621 162,031 332,871

II – 5

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX II

Current liabilities Trade and other payables Bank overdraft – secured Net current assets Total assets less current liabilities Net assets Equity Capital and reserves attributable to the owners of the Company Share capital Reserves Non-controlling interests	The Group as at 31 December 2011 Pro forma adjustments HK$’000 HK$’000 Notes 52,542 9,948 62,490 182,565 240,480 240,480 12,455 243,245 68,617 1(c) 255,700 (15,220) 240,480	The Remaining Group as at 31 December 2011 HK$’000 52,542 9,948 62,490 270,381 309,097 309,097 12,455 311,862 324,317 (15,220) 309,097

II – 6

APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

Notes to the Unaudited Pro Forma Financial Information of the Remaining Group:

(a) The pro forma adjustment on interests in associates represented the exclusion of the carrying amount of 13% equity interest in TVBP of approximately HK$19,199,000, assuming the Disposal had been completed on 31 December 2011.
(b) The pro forma adjustment on cash and bank balances represented the net cash inflow from the Disposal, which was calculated based on the gross cash proceeds from the Disposal of approximately HK$89,216,000 less the estimated transaction cost directly attributable to the Disposal of approximately HK$1,400,000, assuming the Disposal had been completed on 31 December 2011.
(c) The pro forma adjustment represented the gain on the Disposal, which was calculated as the difference between the gross proceeds of approximately HK$89,216,000, less the estimated transaction cost directly attributable to the Disposal of approximately HK$1,400,000 and the carrying amount of 13% equity interest in TVBP of approximately HK$19,199,000, assuming the Disposal had been completed on 31 December 2011.
Following completion of the Disposal, the Remaining Group is interested in 5% equity interest in the entire issued share capital of TVBP (all such TVBP Shares are ordinary shares) which consists of 54,293,388 ordinary shares of TVBP, representing approximately 42.505% of the issued ordinary shares of TVBP. Taking into account of the voting rights attaching to the 42.505% ordinary shares held by the Remaining Group upon Completion and the rights to nominate one director to the TVBP Board under the Shareholders’ Agreement, the Remaining Group will continue to have significant influence over the TVBP Group. The TVBP Group will therefore continue to be accounted for as associates of the Remaining Group upon Completion in accordance with the accounting policies of the Remaining Group.

II – 7

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX II

(ii) Unaudited Pro Forma Consolidated Statement of Comprehensive Income of the Remaining Group

The following is the unaudited pro forma consolidated statement of comprehensive income of the Remaining Group, assuming that the Disposal had been completed on 1 July 2010. The unaudited pro forma consolidated statement of comprehensive income is based on the unaudited consolidated statement of comprehensive income of the Group for the year ended 30 June 2011 as set out in Appendix I to this circular. Such information is adjusted to reflect the effect of the Disposal.

As the unaudited pro forma consolidated statement of comprehensive income of the Remaining Group has been prepared for illustrative purpose only and because of its hypothetical nature, it may not give a true picture of the results of the Remaining Group after completion of the Disposal for the year ended 30 June 2011 to which it is made up to or for any future period.

Turnover Cost of sales Gross profit Other revenue Distribution costs Administrative expenses Other operating expenses Change in fair value of financial assets at fair value through profit or loss Loss from operations Finance costs Gain on partial disposal of associates (Loss)/profit before taxation Taxation (Loss)/profit for the year Other comprehensive income for the year, net of tax Total comprehensive (loss)/income for the year (Loss)/profit for the year attributable to: Owners of the Company Non-controlling Interests Total comprehensive (loss)/income attributable to: Owners of the Company Non-controlling Interests	The Group for the year ended 30 June 2011 Pro forma adjustments HK$’000 HK$’000 Notes 30,003 (19,140) 10,863 884 (3,762) (32,880) (27,355) (3,798) (56,048) (2,291) – 68,617 3(a) (58,339) – (58,339) – (58,339) (52,362) 68,617 3(a) (5,977) (58,339) (52,362) 68,617 3(a) (5,977) (58,339)	The Remaining Group for the year ended 30 June 2011 HK$’000 30,003 (19,140)
		10,863 884 (3,762) (32,880) (27,355) (3,798)
		(56,048) (2,291) 68,617
		10,278 –
		10,278 –
		10,278

		16,255 (5,977)
		10,278

		16,255 (5,977)
		10,278

II – 8

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX II

(iii) Unaudited Pro Forma Consolidated Statement of Cash Flows of the Remaining Group

The following is the unaudited pro forma consolidated statement of cash flows of the Remaining Group, assuming that the Disposal had been completed on 1 July 2010. The unaudited pro forma consolidated statement of cash flows is based on the unaudited consolidated statement of cash flows of the Group for the year ended 30 June 2011 as set out in Appendix I to the Circular. Such information is adjusted to reflect the effect of the Disposal.

As the unaudited pro forma consolidated statement of cash flows of the Remaining Group has been prepared for illustrative purpose only and because of its hypothetical nature, it may not give a true picture of the cash flow of the Remaining Group after completion of the Disposal for the year ended 30 June 2011 to which it is made up to or for any future period.

				The
				Remaining
	The Group			Group
	for the			for the
	year ended			year ended
	30 June	Pro forma		30 June
	2011	adjustments		2011
	HK$’000	HK$’000	Notes	HK$’000
Cash flows from
operating activities
(Loss)/profit before taxation	(58,339)	68,617	3(a)	10,278
Adjustments for:
Gain on partial disposal
of associates	–	(68,617)	3(a)	(68,617)
Impairment loss recognised in
respect of:
– trade and other receivables,
deposits and prepayments	4,888			4,888
– film rights	22,466			22,466
Write down on inventories	1			1
Interest income	(427)			(427)
Interest expenses	2,291			2,291
Change in fair value
of financial assets
at fair value through
profit or loss	3,798			3,798
Depreciation of property, plant
and equipment	890			890
Amortisation of intangible assets	17			17
Amortisation of film rights	11,081			11,081
Loss on disposal of property,
plant and equipment	613			613

II – 9

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX II

Operating cash flows before working capital changes Increase in film rights Increase in film production in progress Increase in music production in progress Increase in inventories Increase in trade and other receivables, deposits and prepayments Increase in financial assets at fair value through profit or loss Increase in trade and other payables Cash used in operations Income tax paid Net cash used in operating activities Cash flows from investing activities Interest income received Purchase of property, plant and equipment Proceeds from partial disposal of associates Transaction cost on partial disposal of associates Net cash (used in)/generated from investing activities	(12,721) (18,000) (27,880) (909) (52) (2,557) (3,550) 21,167 (44,502) – (44,502) 239 (431) – 89,216 3(b) – (1,400) 3(c) (192) The Group for the year ended 30 June 2011 Pro forma adjustments HK$’000 HK$’000 Notes	(12,721) (18,000) (27,880) (909) (52) (2,557) (3,550) 21,167 (44,502) – (44,502) 239 (431) 89,216 (1,400) 87,624 The Remaining Group for the year ended 30 June 2011 HK$’000

II – 10

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX II

Cash flows from financing activities Proceeds from placing of shares Share issue expenses on placing of shares Payment for repurchase of shares Redemption of convertible note Interest expense paid Net cash used in financing activities Net decrease in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year Analysis of the balances of cash and cash equivalents Cash and bank balances Bank overdraft – secured	37,260 (1,200) (898) (187,000) (583) (152,421) (197,115) 290,156 93,041 102,994 87,816 3(d) (9,953) 93,041 The Group for the year ended 30 June 2011 Pro forma adjustments HK$’000 HK$’000 Notes	37,260 (1,200) (898) (187,000) (583) (152,421) (109,299) 290,156 180,857 190,810 (9,953) 180,857 The Remaining Group for the year ended 30 June 2011 HK$’000

II – 11

APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

Notes to the Unaudited Pro Forma Financial Information of the Remaining Group:

(a) The pro forma adjustment represented the gain on the Disposal of approximately HK$68,617,000, which was calculated as the difference between the gross cash proceeds from the Disposal of approximately HK$89,216,000 less the estimated transaction cost directly attributable to the Disposal of approximately HK$1,400,000 and the carrying amount of 13% interest in TVBP of approximately HK$19,199,000, assuming the Disposal had been completed on 1 July 2010.
(b) The pro forma adjustment represented the consideration of the Disposal of approximately HK$89,216,000, assuming the Disposal had been completed on 1 July 2010.
(c) The pro forma adjustment represented the estimated transaction costs directly attributable to the Disposal of approximately HK$1,400,000, assuming the Disposal had been completed on 1 July 2010.
(d) The pro forma adjustment represented the net cash inflow from the Disposal of approximately HK$87,816,000, which was calculated based on the gross cash proceeds from the Disposal of approximately HK$89,216,000 less the estimated transaction costs directly attributable to the Disposal of approximately HK$1,400,000, assuming the Disposal had been completed on 1 July 2010.

II – 12

GENERAL INFORMATION

APPENDIX III

1. RESPONSIBILITY STATEMENT

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

2. DISCLOSURE OF INTERESTS

(a) Directors’ and chief executive’s interests and short positions in shares, underlying shares and debentures of the Company or any of its associated corporations

As at the Latest Practicable Date, the interests and short positions of the Directors and chief executive of the Company in the shares, underlying shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which (i) were required to be notified by the respective Directors and chief executive 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 (ii) were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (iii) were required to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers (the “Model Code”) contained in the Listing Rules were as follows:

Long position

Directors’ interests in the issued Shares

			Approximate
			percentage of
			the total issued
		Number of	share capital of
Name of Director	Capacity	Shares held	the Company
		(Note)	(Note)
Dr. Ma Ho Man, Hoffman	Beneficial owner	236,042,361	18.95%
Note:

The number of Shares and the percentage were solely extracted from the latest disclosure of interest notice of the Director, which was filed at the Stock Exchange on 22 December 2010.

III – 1

APPENDIX III

GENERAL INFORMATION

Save as disclosed above, as at the Latest Practicable Date, none of the Directors or chief executive of the Company had any interests or short positions in the shares, underlying shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which (i) 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 chief executive were taken or deemed to have under the provisions of the SFO); or (ii) were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (iii) were required to be notified to the Company and the Stock Exchange pursuant to the Model Code contained in the Listing Rules.

(b) Substantial shareholders’ interests and short positions in shares and underlying shares of the Company

As at the Latest Practicable Date, the Company had been notified of the following interests or short positions of each person other than a Director or chief executive of the Company in shares or underlying shares of the Company which would fall to be disclosed to the Company pursuant to Divisions 2 and 3 of Part XV of the SFO as recorded in the register required to be kept under section 336 of the SFO, or who is, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group:

Long position in the Company

			Approximate
			percentage of
			the total issued
		Number of	share capital of
Name of Shareholder	Capacity	Shares held	the Company
		(Note)	(Note)
高榮顧問有限公司	Beneficial owner	72,000,000	6.90%
Note:

The number of Shares and the percentage were solely extracted from the latest disclosure of interest notice of the Shareholder, which was filed at the Stock Exchange on 10 March 2010.

III – 2

GENERAL INFORMATION

APPENDIX III

3. DIRECTORS’ INTERESTS IN COMPETING BUSINESS

Interests of Directors in competing businesses required to be disclosed pursuant to Rule 14.66(8) of the Listing Rules are as follows:

Nature of Name of Director Name of company competing business Nature of interest Mr. Wong Kui Shing, Danny SMI Corporation Limited Movie and TV series Acting as an (stock code: 198) production executive director

Save as disclosed above, as at the Latest Practicable Date, none of the Directors and their respective associates were considered to have interests in businesses apart from the Group’s businesses which compete, or are likely to compete, either directly or indirectly, with the businesses of the Group pursuant to Rule 8.10 of the Listing Rules.

4. DIRECTORS’ INTERESTS IN CONTRACTS

As at the Latest Practicable Date, none of the Directors was materially interested in any contract or arrangement subsisting and which was significant in relation to the business of the Group.

5. DIRECTORS’ INTERESTS IN ASSETS OF THE GROUP

As at the Latest Practicable Date, none of the Directors had any interest, direct or indirect, 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 30 June 2011, the date to which the latest published audited consolidated financial statements of the Company were made up.

6. SERVICE CONTRACTS

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

III – 3

GENERAL INFORMATION

APPENDIX III

7. MATERIAL CONTRACTS

Set out below are the material contracts (not being contracts entered into in the ordinary course of business) entered into by any member of the Group within the two years immediately preceding the Latest Practicable Date:

(a) the non-legally binding memorandum of understanding dated 7 December 2010 entered into between Trueworthy Limited and Morning Sky International Ltd. in relation to the proposed acquisition of the entire issued share capital of Green Global Bioenergy Limited;
(b) the conditional placing agreement dated 8 December 2010 entered into between the Company and Kingston Securities Limited in relation to the placing of a maximum of 207,000,000 Shares at a placing price of HK$0.18 per Share;
(c) the sale and purchase agreement dated 6 January 2011 entered into between Morning Sky International Ltd., Trueworthy Limited and Mr. Wong Kui Shing, Danny in relation to the proposed acquisition of 80% equity interest in Green Global Bioenergy Limited;
(d) the termination deed dated 21 March 2011 entered into between Morning Sky International Ltd., Trueworthy Limited and Mr. Wong Kui Shing, Danny in relation to the termination of the proposed acquisition of 80% equity interest in Green Global Bioenergy Limited; and
(e) the Agreement.

8. LITIGATION

The Company and its ex-subsidiary, P.N. Electronic Limited (“PNE”) have been involved in arbitration proceedings with North American Foreign Trading Corporation (“NAFT”) in respect of a gross receivable of HK$18 million and related damages from various parties for goods shipped by PNE and NAFT in 1996. The arbitration proceedings were initiated by NAFT against the Company and PNE claiming for alleged damages in New York, USA. The Company has upon legal advice, vigorously contested the alleged claims and has counterclaimed the said sum of HK$18 million as well as other damages. The Company has not received any documents in relation to the arbitration proceedings for a substantial period of time and insofar as the Company is aware, the proceedings remain dormant.

III – 4

APPENDIX III

GENERAL INFORMATION

On 13 October 2003, a Writ of Summons and Statement of Claim was issued by BII Finance Company Limited (“BII Finance”) against the Company under a guarantee allegedly given by the Company in favour of BII Finance in respect of certain liabilities of Welback Enterprises Limited, a former subsidiary of the Company. The claim is for a sum of approximately HK$3,583,000 and US$248,000 (approximately HK$1,936,000), together with interest.

BII Finance has not taken any steps to progress with the action since June 2006. The Company is prepared and ready to continue to defend BII Finance’s claim, and also continue to pursue the Third Party proceedings against Mr. Lee Chun Kwok and Mr. Fong Wing Seng.

Save as disclosed above, as at the Latest Practicable Date, no member of the Group was engaged in any litigation or arbitration of material importance and no litigation or claim of material importance is known to the Directors to be pending or threatened by or against any member of the Group.

9. EXPERT AND CONSENT

The qualification of the expert who has provided its advice which is contained in this circular is set out as follows:

Name	Qualification
HLB Hodgson Impey Cheng	Chartered Accountants
(“HLB”)	Certified Public Accountants

HLB has given and has not withdrawn its written consent to the issue of this circular with the inclusion herein of its letter and report and references to its name, in the form and context in which they appear.

As at the Latest Practicable Date, HLB did not have any direct or indirect shareholding in any member of the Group or any right, whether legally enforceable or not, to subscribe for or to nominate persons to subscribe for any securities in any member of the Group.

III – 5

GENERAL INFORMATION

APPENDIX III

As at the Latest Practicable Date, HLB did not have any direct or indirect interest in any assets which have been since 30 June 2011 (the date to which the latest published audited consolidated accounts of the Group were made up), acquired or disposed of by, or leased to any member of the Group, or are proposed to be acquired or disposed of by, or leased to any member of the Group.

10. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection during normal business hours at the head office and principal place of business of the Company in Hong Kong at Office D & E, 20th Floor, EGL Tower, No. 83 Hung To Road, Kwun Tong, Kowloon, Hong Kong up to and including 11 May 2012:

(a) the memorandum of association and bye-laws of the Company;
(b) the annual reports of the Company for the financial years ended 30 June 2010 and 2011;
(c) the interim report of the Company for the six months ended 31 December 2011;
(d) the review report issued by HLB on the financial information of the Group for the three years ended 30 June 2009, 2010 and 2011, and six months ended 31 December 2010 and 2011, the text of which is set out in Appendix I to this circular;
(e) the report issued by HLB in connection with the unaudited pro forma financial information of the Remaining Group, the text of which is set out in Appendix II to this circular;
(f) the consent letter issued by HLB referred to in the paragraph headed “Expert and consent” in this appendix;
(g) a copy of each of the material contracts referred to in the paragraph headed “Material contracts” in this appendix; and
(h) this circular.

III – 6

GENERAL INFORMATION

APPENDIX III

11. MISCELLANEOUS

(a) The company secretary of the Company is Ms. Ng Yuk Yee, Feona, who is a Solicitor of Hong Kong.
(b) The registered office of the Company is situated at Clarendon House, Church Street, Hamilton HM 11, Bermuda and the head office and principal place of business of the Company in Hong Kong is situated at Office D & E, 20th Floor, EGL Tower, No. 83 Hung To Road, Kwun Tong, Kowloon, Hong Kong.
(c) The Company’s branch share registrar in Hong Kong is Tricor Tengis Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong.

III – 7

NOTICE OF SGM

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(Incorporated in Bermuda with limited liability)

(Stock Code: 491)

NOTICE OF SPECIAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that a special general meeting of See Corporation Limited (“ Company ”) will be held at Function Room 4, 3/F., The Mira Hong Kong, 118 Nathan Road, Tsimshatsui, Kowloon, Hong Kong at 2:30 p.m. on Friday, 11 May 2012 for the purpose of considering and, if thought fit, with or without modifications, passing the following resolution as an ordinary resolution of the Company:

ORDINARY RESOLUTION

“ THAT the conditional sale and purchase agreement (“ Agreement ”) dated 20 March 2012 entered into between Enjoy Profits Limited, a wholly-owned subsidiary of the Company, as seller and TVB Satellite TV Holdings Limited as purchaser, in connection with the sale and purchase of the 141,162,808 issued and fully paid up non-voting preferred shares of HK$1 each of TVB Pay Vision Holdings Limited and the transactions contemplated by the Agreement be and are hereby approved and that the directors of the Company (“ Directors ”) be and are hereby authorised to do all such acts and things, to sign and execute such documents or agreements or deeds on behalf of the Company and to do such other things and to take all such actions as they consider necessary, appropriate, desirable or expedient for the purposes of giving effect to or in connection with the Agreement and all transactions contemplated thereunder, and to agree to such variation, amendments or waiver or matters relating thereto (including any variation, amendments or waiver of such documents, which are not fundamentally different from those as provided in the Agreement) as are, in the opinion of the Directors, in the interest of the Company and its shareholders as a whole.”

By order of the Board

See Corporation Limited Dr. Ma Ho Man, Hoffman Chairman

Hong Kong, 20 April 2012

For identification purpose only

SGM-1

NOTICE OF SGM

As at the date of this notice, the Directors are as follows:

Executive Directors:

Dr. Ma Ho Man, Hoffman (Chairman)

Mr. Wong Kui Shing, Danny (Managing Director)

Mr. Wong Chi Chiu

Ms. Ng Yuk Yee, Feona

Independent Non-executive Directors:

Mr. Li Fui Lung, Danny Mr. Ng Hoi Yue, Herman Mr. Heung Pik Lun

Notes:

A form of proxy is enclosed.
The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing or, if the appointor is a corporation, either under its seal or under the hand of an officer, attorney or other person duly authorised to sign the same.
Any member, whether an individual or a corporation, entitled to attend and vote at a meeting of the Company or a meeting of the holders of any class of shares in the Company shall be entitled to appoint another person as his proxy to attend and vote instead of him. A member who is the holder of two or more shares may appoint more than one proxy to attend and vote on the same occasion, provided that if more than one proxy is appointed, the appointment shall specify the number and class of shares in respect of which each such proxy is so appointed. A proxy need not be a member. In addition, each proxy appointed shall be entitled to exercise the same powers as if such proxy was the registered holder of the shares of the Company held by the member appointing him, including, but not limited to, the right to vote individually on a show of hands.
The instrument appointing a proxy and (if required by the board of directors of the Company) the power of attorney or other authority (if any) under which it is signed, or a certified copy of such power or authority, shall be delivered to the Company’s branch share registrar in Hong Kong, Tricor Tengis Limited, at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong, not less than 48 hours before the time appointed for holding the meeting (or any adjournment thereof) at which the person named in the instrument proposes to vote.
Delivery of an instrument appointing a proxy shall not preclude a member from attending and voting in person at the meeting convened if you so wish, and in such event the form of proxy shall be deemed to be revoked.
In the case of joint holders of any share, if more than one of such joint holders be present at any meeting, the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders, and for this purpose seniority shall be determined by the order in which the names stand in the register of members in respect of the joint holding.
Any corporation which is a member of the Company may by resolutions of its directors or other governing body authorise such person as it thinks fit to act as its representative at any meeting of the Company or of any class of members of the Company. The person so authorised shall be entitled to exercise the same powers on behalf of the corporation as the corporation could exercise if it were an individual member of the Company and such corporation shall be deemed to be present in person at any such meeting if a person so authorised is present thereat.

SGM-2

AI assistant

Changyou International Group Limited — Proxy Solicitation & Information Statement 2012

49641_rns_2012-04-19_4fcee437-3040-4483-abb9-49a4394d0735.pdf

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

(Stock Code: 491)

VERY SUBSTANTIAL DISPOSAL RELATING TO THE PROPOSED DISPOSAL OF 13% EQUITY INTEREST IN TVBP AND NOTICE OF SPECIAL GENERAL MEETING

CONTENTS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

Certain English translations of Chinese names or words in this circular are included for identification purpose only and should not be regarded as the official English translation of such Chinese names or words.

LETTER FROM THE BOARD

(Stock Code: 491)

VERY SUBSTANTIAL DISPOSAL RELATING TO THE PROPOSED DISPOSAL OF 13% EQUITY INTEREST IN TVBP

INTRODUCTION

LETTER FROM THE BOARD

THE AGREEMENT

Date:

Parties:

Asset to be disposed of:

LETTER FROM THE BOARD

Consideration:

LETTER FROM THE BOARD

Conditions precedent:

LETTER FROM THE BOARD

Completion:

Shareholders’ Agreement:

Further funding

Board of directors of the TVBP

Officers

LETTER FROM THE BOARD

Transfer of TVBP Shares

Teleport Business

INFORMATION ON THE TVBP GROUP

LETTER FROM THE BOARD

EFFECTS ON SHAREHOLDING STRUCTURE OF TVBP

LETTER FROM THE BOARD

REASONS FOR THE DISPOSAL

LETTER FROM THE BOARD

FINANCIAL EFFECT OF THE DISPOSAL

FINANCIAL AND TRADING PROSPECTS OF THE REMAINING GROUP

LETTER FROM THE BOARD

LISTING RULES IMPLICATIONS

THE SGM

LETTER FROM THE BOARD

VOTING BY POLL

RECOMMENDATION

GENERAL

Yours faithfully,

APPENDIX I

1. FINANCIAL INFORMATION OF THE GROUP

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

CONSOLIDATED STATEMENT OF CASH FLOWS

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

NOTES TO THE FINANCIAL INFORMATION

1. BASIS OF PREPARATION OF THE FINANCIAL INFORMATION

2. EVENTS AFTER THE REPORTING PERIOD

APPENDIX I

Cash flows from operating activities

2. STATEMENT OF INDEBTEDNESS

Indebtedness of the Group

Borrowings

Contingent liabilities

APPENDIX I

Commitments

Disclaimer

3. WORKING CAPITAL

4. MATERIAL ADVERSE CHANGE

5. MANAGEMENT DISCUSSION AND ANALYSIS OF THE REMAINING GROUP

Changyou International Group Limited Proxy Solicitation & Information Statement 2012