THIS CONVOCATION NOTICE IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubts to any aspect of this convocation notice or as to the action to be taken, you should consult your licensed securities dealer, registered institution in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in 株式会社ダイナムジャパンホールディングス DYNAM JAPAN HOLDINGS Co., Ltd.*, you should at once hand this convocation notice to the purchaser or the transferee or to the bank, licensed securities dealer, registered institution in securities or other agent through whom the sales or transfer was effected for transmission to the purchaser or the transferee.

Hong Kong Exchanges and Clearing Limited and the Stock Exchange take no responsibility for the contents of this convocation notice, 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 convocation notice.

This document was prepared in accordance with the requirements under the Companies Act and the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.

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株式会社ダイナムジャパンホールディングス DYNAM JAPAN HOLDINGS Co., Ltd.*

(incorporated in Japan with limited liability)

(Stock Code: 06889)

(1) CONVOCATION NOTICE OF EGM;

(2) DISCLOSEABLE AND CONNECTED TRANSACTION: PROPOSED ACQUISITION OF HUMAP AND BUSINESS PARTNERS; AND (3) PROPOSED PARTIAL AMENDMENTS TO THE ARTICLES OF INCORPORATION

Independent financial adviser to the Independent Board Committee and the Independent Shareholders

C A P I T A L

A letter from the Board is set out on pages 8 to 21 of this convocation notice. A letter from the Independent Board Committee is set out on page 22 of this convocation notice. A letter from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders is set out on pages 23 to 36 of this convocation notice.

The EGM of the Company will be held at 2-27-5 Nishinippori, Arakawa-ku, Tokyo, Japan on Tuesday, 10 September 2013 at 10:00 a.m. (Japan time) for the purpose of considering, and if thought fit, approving the Acquisition and the proposed partial amendments to the Articles of Incorporation.

A proxy form for use at the EGM is enclosed hereto and is also published on the website of the Stock Exchange (www.hkexnews.hk). Shareholders who intend to appoint a proxy to attend and vote on behalf on them at the EGM shall complete and return the enclosed proxy form in accordance with the instructions printed thereon. Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM, should you so wish.

As at the date of this convocation notice, the executive Director is Mr. Yoji SATO, the non-executive Director is Mr. Noriaki USHIJIMA, and the independent non-executive Directors are Mr. Katushide HORIBA, Mr. Ichiro TAKANO, Mr. Yukio YOSHIDA, Mr. Mitsutoshi KATO and Mr. Thomas Chun Kee YIP.

For identification purposes only

14 August 2013

CONTENTS

	Page
CONVOCATION NOTICE OF EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
LETTER FROM THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
LETTER FROM THE INDEPENDENT BOARD COMMITTEE . . . . . . . . . . . . . . . . . . . . . .	22
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER . . . . . . . . . . . . . . . . . . . . .	23
APPENDIX I — GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	37
APPENDIX II — DETAILS OF PROPOSED PARTIAL AMENDMENTS
TO THE ARTICLES OF INCORPORATION . . . . . . . . . . . . . . . . . . . .	43
APPENDIX III— GUIDE MAP OF EGM VENUE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	55

– i –

CONVOCATION NOTICE OF EGM

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株式会社ダイナムジャパンホールディングス DYNAM JAPAN HOLDINGS Co., Ltd.* (incorporated in Japan with limited liability)

(Stock Code: 06889)

14 August 2013

Yoji Sato, chairman of the Board and executive Director 株式会社ダイナムジャパンホールディングス DYNAM JAPAN HOLDINGS Co., Ltd.*

2-25-1-702 Nishinippori, Arakawa-ku, Tokyo, Japan

CONVOCATION NOTICE OF THE EGM

Dear Shareholders:

NOTICE IS HEREBY GIVEN THAT the EGM of 株式会社ダイナムジャパンホールディングス DYNAM JAPAN HOLDINGS Co., Ltd.* (the ‘‘Company’’) will be held as detailed hereinafter, and your attendance is cordially requested.

Date and time: Tuesday, 10 September 2013 at 10:00 a.m., Japan time (Reception starts at 9:30 a.m.)
Location: Head Office Building, DYNAM Co., Ltd., 2-27-5 Nishinippori, Arakawa-ku, Tokyo, Japan

3. Agenda of the EGM:

Resolutions

First Resolution Proposed Acquisition of 株式会社日本ヒュウマップ HUMAP Japan Co., Ltd. and 株式会社ビジネスパートナーズ Business Partners Co., Ltd. (as an ordinary resolution) Second Resolution Proposed Partial Amendments to the Articles of Incorporation (as a special resolution)

For identification purposes only

– 1 –

CONVOCATION NOTICE OF EGM

4. Arrangements on attendance and proxy

(1) Shareholders attending the EGM in person
. Shareholders will be requested to confirm their identity at the reception. Identities of Shareholders will be confirmed by verifying the Shareholder’s signature against the specimen signature registered with the Company. Please also bring along identification document such as passport or driver’s license.
(2) Appointment of proxies other than the chairman of the EGM
. Please complete and sign the proxy form enclosed hereto. The signature on the proxy form will be verified against the specimen signature registered with the Company.
. Completed and signed proxy forms should be returned to the reception desk of the EGM.
. Identity of proxies will be verified at the EGM. Please bring along identification document such as passport or driver’s license.
(3) Appointing the chairman of the EGM as proxy
. Please complete and sign the proxy form enclosed hereto. The signature on the proxy form will be verified against the specimen signature registered with the Company.
. Completed and signed proxy forms should be returned by mail to (i) the location of the EGM; or (ii) the Company’s share registrar, Computershare Hong Kong Investors Services Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong not less than 48 hours before the time appointed for holding the EGM.
(1) All resolutions set out in this convocation notice will be decided by poll at the EGM in accordance with Rule 13.39(4) of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the ‘‘Listing Rules’’).
(2) Shareholders whose names appear on the Company’s share register as at 9 August 2013 shall be deemed to be Shareholders permitted to attend and vote at the EGM.
(3) Shareholders who intend to cast their votes in different ways (i.e. partly for and partly against a resolution) are requested to notify the Company in writing of their intention to do so and the reason therefor no later than 3 days before the EGM.
(4) Beneficial owners of the Shares who hold pecuniary interests and voting rights in the Company with respect to the Shares deposited into CCASS and registered in the name of HKSCC Nominees Limited (‘‘HKSCC Nominees’’) (the ‘‘CCASS Beneficial Owners’’) are not recognised as Shareholders under Japanese law. HKSCC Nominees will exercise the entitled voting rights of the CCASS Beneficial Owners in accordance with the predetermined arrangements between HKSCC Nominees and the CCASS Beneficial Owners and the general operational rules of CCASS.

– 2 –

CONVOCATION NOTICE OF EGM

An announcement and/or supplemental circular will be issued in accordance with the Listing Rules and a notice will be posted on the Company’s website on the Internet in accordance with the Companies Act and the Articles of Incorporation should there be any material changes to the contents and information contained in this convocation notice.

– 3 –

DEFINITIONS

In this convocation notice, unless the context otherwise requires, the following terms have the meanings set out adjacent thereto:

‘‘Acquisition’’ the proposed acquisition of the Relevant Shares by the Company from the Vendor pursuant to the Equity Transfer Agreements
‘‘Articles’’ or ‘‘Articles of the articles of incorporation of the Company, as Incorporation’’ amended and supplemented from time to time
‘‘associate’’ has the meaning prescribed thereto under the Listing Rules
‘‘Board’’ the board of Directors
‘‘Business Partners’’ Business Partners Co., Ltd.* (株式会社ビジネスパートナーズ), a stock company (kabushiki-gaisha 株式会社) incorporated in Japan with limited liability under the Companies Act on 11 January 2011 (registration number 0118-01-024446). Business Partners is a wholly-owned subsidiary of DYH
‘‘CCASS’’ Central Clearing and Settlement System
‘‘Companies Act’’ the Companies Act of Japan* (kaisha hou 会社法) (Act No.86 of 2005), as amended
‘‘Company’’ DYNAM JAPAN HOLDINGS Co., Ltd.* (株式会社ダイナムジャパンホールディングス ), a stock company (kabushiki-gaisha 株式会社) incorporated in Japan with limited liability under the Companies Act on 20 September 2011 (registration number 0115-01-017114), the shares of which are listed on the Main Board of the Stock Exchange (stock code: 06889)
‘‘connected person(s)’’ has the meaning ascribed to it under the Listing Rules
‘‘Director(s)’’ the director(s) of the Company or any one of them
‘‘DYH’’
DYNAM Holdings Co., Ltd.* (株式会社ダイナムホールディングス), a stock company (kabushiki-gaisha 株式会社) incorporated in Japan with limited liability under the Companies Act on 15 December 1987 (registration number 0115-01-010630). As at the Latest Practicable Date, DYH was owned as to approximately 48.91% collectively by Mr. Sato, Mrs. Sato and Rich-O

– 4 –

DEFINITIONS

‘‘Dynam Investment’’
Dynam Investment Co., Ltd.* (株式会社ダイナム綜合投資), a stock company (kabushiki-gaisha 株式会社) incorporated in Japan with limited liability under the Companies Act on 9 April 2003 (registration number 0115-01-010317). Dynam Investment had been merged as the non-surviving entity with Humap
‘‘EGM’’
an extraordinary general meeting of the Company to be convened for the purpose of considering, and if thought fit, approving the Equity Transfer Agreements and the transactions contemplated thereunder and the proposed partial amendments to the Articles of Incorporation
‘‘Equity Transfer Agreements’’ the conditional equity transfer agreements dated 25 July 2013 entered into between the Company and the Vendor in relation to the Acquisition
‘‘Genghis Khan’’
Genghis Khan Travel Co., Ltd.* (株式会社チンギスハーン旅行), a stock company (kabushiki-gaisha 株式会社) incorporated in Japan with limited liability under the Companies Act on 13 November 2003 (registration number 0115-01-010593). Genghis Khan is a whollyowned subsidiary of Humap
‘‘Group’’ the Company and its subsidiaries
‘‘HK$’’ Hong Kong dollars, the lawful currency of Hong Kong
‘‘Hong Kong’’
the Hong Kong Special Administrative Region of the PRC
‘‘Humap’’ HUMAP Japan Co., Ltd.* (株式会社日本ヒユウマツプ), a stock company (kabushiki-gaisha 株式会社 ) incorporated in Japan with limited liability under the Companies Act on 1 November 1982 (registration number 0115-01-008097). Humap is a wholly-owned subsidiary of DYH
‘‘Independent Board Committee’’

the independent board committee of the Company comprising all the independent non-executive Directors of the Company to advise the Independent Shareholders of the Company in respect of the Acquisition

– 5 –

DEFINITIONS

‘‘Independent Financial Adviser’’ or ‘‘Quam Capital’’

Quam Capital Limited, a licensed corporation under the Securities and Futures Ordinance to carry on type 6 (advising on corporate finance) of the regulated activities, the independent financial adviser to the Independent Board Committee and the Independent Shareholders in respect of the Acquisition

‘‘Independent Shareholders’’
Shareholders other than those Shareholders who have a material interest in the Acquisition
‘‘independent third party(ies)’’
has the meaning ascribed to it under the Listing Rules
‘‘Japanese yen’’, ‘‘¥’’ or ‘‘yen’’ Japanese yen, the lawful currency of Japan
‘‘JGAAP’’
Japanese Generally Accepted Accounting Principles
‘‘Latest Practicable Date’’
12 August 2013, being the latest practicable date prior to the printing of this convocation notice for ascertaining certain information contained therein
‘‘Listing Rules’’ Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited
‘‘Mr. Sato’’
Mr. Yoji SATO (佐藤洋治), an executive Director and the chairman of the Board
‘‘Mrs. Sato’’ Mrs. Keiko SATO (佐藤恵子), the wife of Mr. Sato
‘‘P Insurance’’ P Insurance Co., Ltd.* (株式会社ピーインシユアランス), a stock company (kabushiki-gaisha 株式会社 ) incorporated in Japan with limited liability under the Companies Act on 28 January 2005 (registration number 0115-01-013256). P Insurance is a whollyowned subsidiary of Humap
‘‘P Leasing’’ Pachinko Leasing Co. Ltd* (株式会社パチンコリース), a stock company (kabushiki-gaisha 株式会社 ) incorporated in Japan with limited liability under the Companies Act on 31 October 2003 (registration number 0115-01-010574). P Leasing has been merged with Humap as the non-surviving entity
‘‘PRC’’
The People’s Republic of China
‘‘Purchaser’’ The Company

– 6 –

DEFINITIONS

‘‘Relevant Share(s)’’ all issued share(s) of Humap and Business Partners, collectively, representing the entire issued share capital of Humap and Business Partners
‘‘Rich-O’’ Rich-O Co., Ltd.* (リツチオ株式会社), a stock company (kabushiki-gaisha 株式会社) incorporated in Japan with limited liability on 1 August 2006 under the Companies Act (registration number 0115-01-011944). Rich-O is owned as to 99.9% by Mr. Sato
‘‘SFO’’ the Securities and Future Ordinance (Chapter 571 of the Laws of Hong Kong)
‘‘Share(s)’’ ordinary share(s) of nil par value of the Company ‘‘Shareholder(s)’’ holder(s) of the Shares and, for the purpose of this convocation notice, CCASS Beneficial Owners
‘‘Stock Exchange’’ The Stock Exchange of Hong Kong Limited ‘‘Vendor’’ DYH ‘‘%’’ per cent.
Translated English names of Japanese natural persons, legal persons, government authorities, institutions or other entities for which no official English translation exist are unofficial translations for identification purpose only.

For the purpose of illustration only and unless otherwise specified in this convocation notice, certain amounts denominated in Japanese yen are translated into Hong Kong dollars at the rate of ¥12.41 to HK$1.00 which was the exchange rate prevailing on the Latest Practicable Date.

– 7 –

LETTER FROM THE BOARD

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株式会社ダイナムジャパンホールディングス DYNAM JAPAN HOLDINGS Co., Ltd.*

(incorporated in Japan with limited liability)

(Stock Code: 06889)

Executive Director: Mr. Yoji SATO (Chairman)

Non-executive Director:

Mr. Noriaki USHIJIMA

Registered office and headquarters: 2-25-1-702 Nishi-Nippori Arakawa-ku Tokyo, 116-0013 Japan

Independent non-executive Directors:

Mr. Katsuhide HORIBA Mr. Ichiro TAKANO Mr. Yukio YOSHIDA

Mr. Mitsutoshi KATO

Mr. Thomas Chun Kee YIP

Principal place of business in Hong Kong: Unit A1, 32nd Floor United Centre 95 Queensway Admiralty Hong Kong

14 August 2013

To: the Shareholders

Dear Sir or Madam

(1) CONVOCATION NOTICE OF EGM; (2) DISCLOSEABLE AND CONNECTED TRANSACTION: PROPOSED ACQUISITION OF HUMAP AND BUSINESS PARTNERS; AND (3) PROPOSED PARTIAL AMENDMENTS TO THE ARTICLES OF INCORPORATION

Reference is made to the announcements made by the Company on 25 July 2013 in relation to (1) the proposed Acquisition by the Company of the entire equity interests of Humap and Business Partners, which would constitute a discloseable and connected transaction of the Company; and (2) certain proposed partial amendments to the Articles of Incorporation.

The purpose of this convocation notice is to provide you with (1) further information on the Acquisition; (2) a letter from the Independent Board Committee containing its opinion and recommendation to the Independent Shareholders in respect of the

For identification purposes only

– 8 –

LETTER FROM THE BOARD

Acquisition and the transactions contemplated under the Equity Transfer Agreements; (3) a letter of advice from the Independent Financial Adviser to the Independent Board Committee and Independent Shareholders containing its opinion in respect of the Acquisition and the transactions contemplated under the Equity Transfer Agreements; (4) details of the proposed partial amendments to the Articles of Incorporation; and (5) other general information required under the Listing Rules and the Companies Act.

A. DISCLOSEABLE AND CONNECTED TRANSACTION: PROPOSED ACQUISITIONS OF HUMAP AND BUSINESS PARTNERS

BACKGROUND

On 25 July 2013, the Company entered into the Equity Transfer Agreements with the Vendor, pursuant to which the Company agreed to acquire, and the Vendor agreed to dispose of, the Relevant Shares, being the entire issued share capital of Humap and Business Partners, which are wholly-owned subsidiaries of the Vendor, on the terms and subject to the conditions set out in the Equity Transfer Agreements, at a consideration of ¥3,830 million (equivalent to approximately HK$309 million).

Upon completion of the Acquisition, Humap and Business Partners will become wholly-owned subsidiaries of the Company and members of the Group.

EQUITY TRANSFER AGREEMENTS

Date

25 July 2013

Parties

(1) Purchaser: the Company
(2) Vendor: the Vendor

Assets to be acquired

The Company agreed to acquire, and the Vendor agreed to dispose of, the Relevant Shares (together with all rights attached thereto free of any encumbrance from the date of the Equity Transfer Agreements), being the entire issued share capital of Humap and Business Partners, both of which being wholly-owned subsidiaries of the Vendor. The Company does not have any intention or plan to acquire any other business or entity from the Vendor.

Consideration

The total consideration payable by the Company to the Vendor for the Acquisition is ¥3,830 million (equivalent to approximately HK$309 million), which will be paid in a lump sum in cash by the Company to the Vendor within 10 days of the date when the register of shareholders of Humap and Business Partners have been updated. The

– 9 –

LETTER FROM THE BOARD

considerations for the acquisition of Humap and Business Partners are ¥3,792 million (equivalent to approximately HK$306 million) and ¥38 million (equivalent to approximately HK$3 million) respectively.

The consideration has been determined after arm’s length negotiations between the parties taking into account the net asset value of Humap and Business Partners as at 30 April 2013 which has been evaluated by a firm of independent certified public accountants in Japan. The Directors (excluding the independent non-executive Directors who has provided their view on the Acquisition taking into account the advice to be provided by the Independent Financial Adviser in its letter to the Independent Shareholders set out on pages 23 to 36 of this convocation notice) consider that the terms and conditions of the Equity Transfer Agreements are fair and reasonable and the Acquisition is in the interests of the Company and the Shareholders as a whole.

The unaudited net asset values of Humap and Business Partners as at 30 April 2013 are set out as follows:

		Net asset	Equivalent
		value	HK$ amount
		(¥ million)	(HK$ million)
Humap		3,792	306
Business	Partners	38	3

The net asset value of Humap set out above has been adjusted with the net asset values of P Leasing, Dynam Investment, P Insurance and Genghis Khan (each of the former two having been merged with Humap as non-surviving entities and each being a subsidiary of Humap).

The Company will finance the consideration in respect of the Acquisition by the internal resources of the Group. The Company will not use any of net proceeds from IPO for the Acquisition. As stated in the Company’s prospectus dated 24 July 2012 (the ‘‘Prospectus’’), the Company is using net proceeds from IPO only for the opening of new halls as stated in the Prospectus.

The circumstances of the Company’s net proceeds from IPO are as follows:

. Use of IPO net proceeds described in the Prospectus consists of the set-up of new halls (75% of net proceeds), acquisition (10%), upgrading systems (5%) and working capital (10%); and
. Actual use of IPO proceeds as at the Latest Practicable Date is approximately 5.2 billion yen, as intended, for the set-up of new halls and upgrading systems, or one third of total IPO net proceeds of 15.8 billion yen.

The Company plans to use the rest of IPO proceeds mainly for the future set-up of new Yuttari Kan halls.

– 10 –

LETTER FROM THE BOARD

Also for the Acquisition, the Company will use its own cash accumulated by receiving dividends from the subsidiary DYNAM Co., Ltd.

Condition precedents

Completion of the Equity Transfer Agreements is conditional upon (i) the Company having complied with the relevant requirements under the Listing Rules in respect of the Acquisition, which include but not limited to the reporting, announcement and independent shareholders’ approval requirements under Chapter 14A of the Listing Rules and/or any other specific requirement imposed by the Stock Exchange from time to time; and (ii) the Board having passed a resolution after the EGM confirming the independent shareholders’ approval requirements under Rule 14A.48 of the Listing Rules have been complied with.

Completion

Completion of the Acquisition is expected to take place on 1 October 2013 provided that the condition precedents of the Equity Transfer Agreements have been fulfilled. These condition precedents are expected to be fulfilled on the date of the EGM (which is currently scheduled on 10 September 2013). The procedure for the Acquisition itself will end on 10 September 2013, but the Company set the effective date of the Acquisition as 1 October 2013 because 1 October is the beginning date of the 2nd half of the fiscal year. The difference of such two dates is commonly accepted in Japanese business practice.

As at the Latest Practicable Date, Humap and Business Partners are wholly-owned subsidiaries of the Vendor. Upon completion of the Acquisition, Humap and Business Partners will become wholly-owned subsidiaries of the Company and members of the Group.

REASONS FOR AND BENEFIT OF ENTERING INTO THE EQUITY TRANSFER AGREEMENTS

Humap is a company primarily engaged in cleaning services for the Group’s pachinko halls and food and beverage services for customers who visit such halls. Humap was previously a member of the Group but was spinned off to be a subsidiary of the Vendor as a result of a company split performed in September 2011 in preparation of the listing of the Company’s shares on the Stock Exchange.

After the occurrence of the great east Japan earthquake (the ‘‘Earthquake’’) in March 2011, the Group needed to concentrate its resources and capabilities on its restoration from the Earthquake and were forced to minimise the opening of new halls. Further, for securing the success with more certainty after the opening of such new halls, it has been moving forward with tasks such as review of the criteria for opening new halls, establishing the new model for human resource allocation and management indexes relating to hall operations.

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LETTER FROM THE BOARD

Upon the restoration from the Earthquake and since the new criteria for opening new halls and the standard model of management indexes were almost completed, the Group has decided to gradually accelerate the pace of opening new halls from the second half of the financial year ending 31 March 2014 and has established the objective of attaining 1,000 halls in 31 March 2023 (the ‘‘Plan’’).

As stated above, Humap is principally engaged in, among others, operation and management of food and beverage retail outlets and the provision of cleaning services at the Group’s pachinko halls. The food and beverage retail outlets operated by Humap are principally located next to the sites of the Group’s pachinko halls, targeted at the Group’s customers. Through the Acquisition, the Company considered that it can strengthen pachinko hall operation as the core business of the Group and also expand its revenue base and customer base by leveraging on Humap’s food and beverage business, which is consistent with the core business strategies of the Group. In addition, the Company considered that in order for having new food and beverage retail outlets as supplemental services mainly located next to the sites of the Group’s pachinko halls following the Plan, it will also have to secure talented personnel and establish a system for providing training to such personnel. As such, it is beneficial for the Group to directly put Humap under its control and advance daily management advisory services to the business administration of Humap.

The Company did not intend to engage in the business of Humap previously. The Group disclosed the plan to open 75 new halls within 3 years in the Prospectus, but the Plan shows the Group will attain 1,000 pachinko halls in 31 March 2023, which means the Group will newly open more than 600 pachinko halls in 10 years. At the issuance of the Prospectus, the Company considered it could attain the plan therein without incorporating Humap into the Group, but has come to the conclusion it is essential the Group should directly put Humap under its control and advance daily management advisory services to and the business administration of Humap. This is the main purpose of the acquisition of Humap by the Company. The Board considers the acquisition of Humap is in the interests of the Company and its shareholders.

Incidentally, P Insurance is taking care of liability insurance and life insurance for employees of the Group’s halls. In addition to travel agent business between Japan and Mongolia, Genghis Khan Travel is providing ticketing services for our employees business trips. Further, at the point of acquisition by Humap, Dynam Investment was holding the building where Humap was located and other training facility in Japan. We only take these for additional factors in the course of acquisition, but still amplify the merit of this acquisition.

Business Partners employs labour force with different degree of physical disability. The acquisition of Business Partners is in line with the Group’s corporate social responsibilities strategies. The Company did not intend to engage in the business of Business Partners previously. However, for the purpose of fulfilling corporate social responsibilities, we will acquire shares of Business Partners. The Board considers the acquisition of Business Partners is in the interests of the Company and its shareholders.

– 12 –

LETTER FROM THE BOARD

Given the business relationship between the Group, Humap and Business Partners, the Acquisition would reduce the number of connected transactions between the Group and the Company’s controlling shareholders (and their respective associates) and strengthen the independence of the Group’s operations.

In light of the above, the Directors (excluding the independent non-executive Directors who will provide their view on the Acquisition taking into account the advice to be provided by the Independent Financial Adviser) consider that the terms of the Equity Transfer Agreements, which were reached based on arm’s length negotiations between the parties thereto, are on normal commercial terms, fair and reasonable and in the interest of the Group and the shareholders of the Company as a whole. Notwithstanding the Acquisition, the Company does not have any intention or plan in changing its principal business and will continue pachinko hall operation through its subsidiaries as its principal business.

INFORMATION ABOUT HUMAP AND BUSINESS PARTNERS

General

Humap

Humap was incorporated under the Companies Act in Japan on 1 November 1982. As at the Latest Practicable Date, Humap is a wholly-owned subsidiary of the Vendor and is principally engaged in four business segments, namely (i) operation and management of food and beverage retail outlets located next to the Group’s pachiko halls; (ii) provision of cleaning services at the Group’s pachinko halls; (iii) provision of accounting and payroll services; and (iv) a chain of spaghetti restaurants under the brand Old Spaghetti Factory, which is operated through franchise agreements with independent third parties. On 1 April 2013, Humap has merged with P Leasing, a previously wholly-owned subsidiary of the Vendor, as the surviving entity and began to provide instalment sales services of new pachinko and pachislot game machines. Its business model involves Humap purchasing new game machines selected by its customers who, in turn, purchase such machines from Humap through instalment payments. Machines are purchased directly by Humap from manufacturers and the legal ownership of the machines rest with the customers commencing from the settlement of the last instalment payment. On the same day, Humap also merged with Dynam Investment, a previously wholly-owned subsidiary of the Vendor, as the surviving entity and began to provide property leasing services.

Humap is the holding company of two wholly-owned subsidiaries, namely P Insurance (which was previously held by P Leasing and acquired by Humap through its merger with the same on 1 April 2013) and Genghis Khan (which was acquired by Humap on 31 March 2013). P Insurance, which was incorporated in Japan, provides life and non-life insurance services. Genghis Khan was incorporated in Japan and is principally engaged in the provision of travel services. It has a scalable operation in Japan with a primary focus on the provision of travels to and from Mongolia.

– 13 –

LETTER FROM THE BOARD

Business Partners

Business Partners was incorporated under the Companies Act in Japan on 11 January 2011. As at the Latest Practicable Date, Business Partners is principally engaged in (i) the provision of cleaning services; and (ii) the manufacture and sales of household supplies. Business Partners recruit a team of temporary employees with disability.

Upon the completion of the Acquisition, Humap (together with P Insurance and Genghis Khan) and Business Partners will become (directly or indirectly) wholly-owned subsidiaries of the Company and will be consolidated into the financial statements of the Group.

Financial information

Humap

Set out below is a summary of the key financial data of Humap based on the unaudited management accounts of Humap for the years ended 31 March 2012 and 2013 as provided by the Vendor, which was prepared in accordance with JGAAP:

		For the year		For the year
		ended		ended
	31 March 2012		31 March 2013
		(¥ million/		(¥ million/
		HK$ million)		HK$ million)
		(unaudited)		(unaudited)
Turnover		7,601/612		7,774/626
Net profit before tax (or loss)		451/36		312/25
Net profit after tax (or loss)		204/16		130/10

The unaudited net asset value and the unaudited total asset value of Humap as at 31 March 2013 amounted to approximately ¥628 million (equivalent to approximately HK$51 million) and approximately ¥1,704 million (equivalent to approximately HK$137 million) respectively.

Further, the key financial data of entities which were merged with and acquired by Humap on 31 March 2013 and 1 April 2013 are as follows.

– 14 –

LETTER FROM THE BOARD

P Leasing

Set out below is a summary of the key financial data of P Leasing based on the unaudited management accounts of P Leasing for the years ended 31 March 2012 and 2013 as provided by the Vendor, which was prepared in accordance with JGAAP:

			For the year	For the year
			ended	ended
			31 March 2012	31 March 2013
			(¥ million/	(¥ million/
			HK$ million)	HK$ million)
			(unaudited)	(unaudited)
Net	profit	before tax (or loss)	(44)/(4)	(46)/(4)
Net	profit	after tax (or loss)	(114)/(9)	(46)/(4)

P Leasing was merged with Humap as the non-surviving entity on 1 April 2013.

Dynam Investment

Set out below is a summary of the key financial data of Dynam Investment based on the unaudited management accounts of Dynam Investment for the years ended 31 March 2012 and 2013 as provided by the Vendor, which was prepared in accordance with JGAAP:

			For the year	For the year
			ended	ended
			31 March 2012	31 March 2013
			(¥ million/	(¥ million/
			HK$ million)	HK$ million)
			(unaudited)	(unaudited)
Net	profit	before tax (or loss)	77/6	(781)/(63)
Net	profit	after tax (or loss)	95/8	(811)/(65)

Dynam Investment was merged with Humap as the non-surviving entity on 1 April 2013.

– 15 –

LETTER FROM THE BOARD

P Insurance

Set out below is a summary of the key financial data of P Insurance based on the unaudited management accounts of P Insurance for the years ended 31 March 2012 and 2013 as provided by the Vendor, which was prepared in accordance with JGAAP:

			For the year	For the year
			ended	ended
			31 March 2012	31 March 2013
			(¥ million/	(¥ million/
			HK$ million)	HK$ million)
			(unaudited)	(unaudited)
Net	profit	before tax (or loss)	(14)/(1)	4/0
Net	profit	after tax (or loss)	(14)/(1)	11/1

P Insurance is a subsidiary of Humap and will become a member of the Group as a result of the Acquisitions.

Genghis Khan

Set out below is a summary of the key financial data of Genghis Khan based on the unaudited management accounts of Genghis Khan for the years ended 31 March 2012 and 2013 as provided by the Vendor, which was prepared in accordance with JGAAP:

			For the year	For the year
			ended	ended
			31 March 2012	31 March 2013
			(¥ million/	(¥ million/
			HK$ million)	HK$ million)
			(unaudited)	(unaudited)
Net	profit	before tax (or loss)	47/4	21/2
Net	profit	after tax (or loss)	27/2	13/1

Genghis Khan is a subsidiary of Humap and will become a member of the Group as a result of the Acquisitions.

– 16 –

LETTER FROM THE BOARD

Business Partners

Set out below is a summary of the key financial data of Business Partners based on the unaudited management accounts of Business Partners for the years ended 31 March 2012 and 2013 as provided by the Vendor, which was prepared in accordance with JGAAP:

		For the year		For the year
		ended		ended
	31 March 2012		31 March 2013
		(¥ million/		(¥ million/
		HK$ million)		HK$ million)
		(unaudited)		(unaudited)
Turnover		56/5		33/3
Net profit before tax (or loss)		1/0		29/2
Net profit after tax (or loss)		1/0		28/2

The unaudited net asset value and the unaudited total asset value of Business Partners as at 31 March 2013 amounted to approximately ¥42 million (equivalent to approximately HK$3 million) and approximately ¥56 million (equivalent to approximately HK$5 million) respectively.

INFORMATION ABOUT THE COMPANY AND THE GROUP

The Company, operating through its subsidiaries, is the second largest pachinko hall operator in Japan based on the total value of pachinko balls and pachislot tokens rented in the year of 2012. As stated in the page 13, the Company does not have any intention or plan in changing its principal business.

INFORMATION ABOUT THE VENDOR

The Vendor is an investment holding company.

IMPLICATIONS UNDER THE LISTING RULES

Given that certain percentage ratio calculated in accordance with Rule 14.07 of the Listing Rules in respect of the Acquisition exceeds 5% but are less than 25%, the Acquisition constitutes a discloseable transaction of the Company and is subject to the announcement requirement under Chapter 14 of the Listing Rules.

In addition, as the Vendor is owned as to approximately 48.91% collectively by Mr. Sato (a connected person of the Company), Mrs. Sato and Rich-O (each being an associate of Mr. Sato), the Vendor is an associate of a connected person of the Company under the Listing Rules. Accordingly, the Vendor is a connected person of the Company and the Acquisition also constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules. As certain percentage ratio (other than profits ratio) calculated in accordance with Rule 14.07 of the Listing Rules in respect of the

– 17 –

LETTER FROM THE BOARD

Acquisition exceeds 5% and the total consideration exceeds HK$10,000,000, the Acquisition is subject to the reporting, announcement and independent shareholders’ approval requirements under Chapter 14A of the Listing Rules.

Mr. Sato, who has a material interest in the Acquisition, has abstained from voting on the Board’s resolution approving the entering into of the Equity Transfer Agreements.

INDEPENDENT BOARD COMMITTEE AND INDEPENDENT FINANCIAL ADVISER

The Independent Board Committee comprising all independent non-executive Directors has been formed by the Board to advise the Independent Shareholders as to (i) whether the Equity Transfer Agreements have been entered into on normal commercial terms; and (ii) whether the terms of the Equity Transfer Agreements and the transactions contemplated thereunder are fair and reasonable and are in the interests of the Company and the Shareholders as a whole. Your attention is drawn to a letter from the Independent Board Committee containing its opinion and recommendation to the Independent Shareholders in respect of the Acquisition and the transactions contemplated under the Equity Transfer Agreements (as set out on page 22 of this convocation notice).

Quam Capital has been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders as to (i) whether the Equity Transfer Agreements have been entered into on normal commercial terms; and (ii) whether the terms of the Equity Transfer Agreements and the transactions contemplated thereunder are fair and reasonable (so far as the Independent Shareholders are concerned) and are in the interests of the Company and the Shareholders as a whole. The text of a letter of advice from the Independent Financial Adviser to the Independent Board Committee and Independent Shareholders containing its opinion in respect of the Acquisition and the transactions contemplated under the Equity Transfer Agreements is set out on pages 23 to 36 of this convocation notice.

EGM

An EGM will be held at 2-27-5 Nishinippori, Arakawa-ku, Tokyo, Japan on Tuesday, 10 September 2013 at 10:00 a.m. (Japan time) for the purpose of considering, and if thought fit, approving the Equity Transfer Agreements and the proposed partial amendments to the Articles of Incorporation.

– 18 –

LETTER FROM THE BOARD

VOTING ARRANGEMENTS AT THE EGM

Mr. Sato and his associates are connected persons of the Company and have a material interest in the Equity Transfer Agreements. Accordingly, they are required to abstain from voting at the EGM on the proposed ordinary resolution in relation to the Acquisition pursuant to the Equity Transfer Agreements under Rule 14A.54 of the Listing Rules.

Nevertheless, the Companies Act prohibits a Japan-incorporated company from restraining or restricting its shareholders to vote on a shareholders’ resolution.

Accordingly, the Company would, in accordance with the Articles of Incorporation, count the votes twice to ensure that the requirements under the Companies Act and Rule 14A.54 of the Listing Rules are satisfied. The Directors would first count the number of Shareholders’ approval in accordance with the quorum and resolution ratio requirements under the Companies Act, followed by a second counting in accordance with Rule 14A.54 of the Listing Rules (where the votes cast by Mr. Sato and his associates will be disregarded). If either of the requisite requirements are not satisfied, the proposed ordinary resolution in relation to the Acquisition pursuant to the Equity Transfer Agreements would be taken not to have been approved at the EGM.

As a further medium to protect the interests of the Independent Shareholders, the completion of the Acquisition is subject to the Board or any committee thereof passing a resolution after the EGM confirming that all relevant requirements under the Listing Rules have been duly compiled with.

To the best knowledge of the Directors and having made all reasonable enquiries, apart from Mr. Sato and his associates, no other Shareholder has a material interest in the Acquisition pursuant to the Equity Transfer Agreements and therefore no Shareholder is required to abstain from voting on the proposed ordinary resolution in relation to the Acquisition pursuant to the Equity Transfer Agreements at the EGM.

Pursuant to Rule 13.39(4) of the Listing Rules, all votes at the EGM will be taken by poll. The Company will announce the results of the poll in accordance with the Listing Rules following the conclusion of the EGM.

GENERAL INFORMATION

Additional general information on the Company and the Acquisition required to be disclosed under the Listing Rules is set out in Appendix I to this convocation notice.

RECOMMENDATION

The Directors and the Independent Board Committee, having taken into account the advice of the Independent Financial Adviser, consider that the terms and conditions of the Equity Transfer Agreements and the connected transactions constituted thereunder are conducted on normal commercial terms, fair and reasonable and in the

– 19 –

LETTER FROM THE BOARD

interests of the Company and the Shareholders as a whole. Accordingly, the Directors and Independent Board Committee recommend the Independent Shareholders to vote in favour of the proposed ordinary resolution at the EGM.

B. PROPOSED PARTIAL AMENDMENTS TO THE ARTICLES OF INCORPORATION

The Directors consider that it is in the interests of the Company and the Shareholders to make certain amendments to the Articles of Incorporation to provide certainty, improve administrative efficiency and comply with the relevant laws and regulations. Details of such amendments are set out in Appendix II — Details of Proposed Partial Amendments to the Articles of Incorporation.

REASONS FOR AND THE RATIONALE OF THE PROPOSED PARTIAL AMENDMENTS

(1) Amendments to Article 2 of the Articles are made to include the business scope of Humap, Business Partners, Genghis Khan and P Insurance in Article 2 of the Articles in the event that the Acquisition pursuant to the Equity Transfer Agreements have been approved at the EGM.
(2) Amendments to Article 17 of the Articles allow the record date for exercising voting rights at a Shareholders’ general meeting to be set from time to time (instead of 31 March of each year). This would give the Company a higher degree of flexibility in determining the record date for voting right entitlements.
(3) Amendments to Article 20 of the Articles allow the convocator and chairman of a Shareholders’ general meeting to be any Director appointed by the Board (instead of a Director who concurrently serves as the president and executive officer of the Company). This would allow the Company a higher degree of flexibility in case the Director who concurrently serves as the president and executive officer of the Company is absent from any particular Shareholders’ general meeting. The chairman of a Shareholders’ general meeting must, under the proposed partial amendments, ensure that the Shareholders’ general meeting is proceeded in a fair and efficient manner as required under the Companies Act.
(4) Other proposed partial amendments are minor linguistic and stylistic changes to ensure consistency.

EFFECTIVE DATE OF THE PROPOSED CHANGES

The proposed partial amendments to the Articles of Incorporation are subject to the approval by the Shareholders by way of a special resolution to be considered and, if thought fit, passed at the EGM. The amendments, if approved by the Shareholders, will take immediate effect at the close of the EGM.

– 20 –

LETTER FROM THE BOARD

COMPLIANCE WITH JAPANESE LAW

Soga Law Office, the Japan legal adviser to the Company, has confirmed that all proposed partial amendments comply with the requirements under Japanese laws.

RECOMMENDATION

The Directors (including the independent non-executive Directors) are of the view that the proposed partial amendments to the Articles of Incorporation are in the interests of the Company and the Shareholders as a whole. Accordingly, the Directors (including the independent non-executive Directors) recommend that you should vote in favour of the proposed special resolution on the proposed partial amendments to the Articles of Incorporation at the EGM.

Yours faithfully On behalf of the Board 株式会社ダイナムジャパンホールディングス (DYNAM JAPAN HOLDINGS Co., Ltd.*) Yoji SATO Chairman

For identification purposes only

– 21 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

==> picture [50 x 50] intentionally omitted <==

株式会社ダイナムジャパンホールディングス DYNAM JAPAN HOLDINGS Co., Ltd.* (incorporated in Japan with limited liability)

(Stock Code: 06889)

14 August 2013

To the Independent Shareholders

Dear Sir or Madam,

DISCLOSEABLE AND CONNECTED TRANSACTIONS

We have been appointed as members of the Independent Board Committee to give our advice on the Equity Transfer Agreements and the transactions contemplated thereunder, details of which are set out in the letter from the Board included in the convocation notice to the Shareholders dated 14 August 2013 (the ‘‘Convocation Notice’’), of which this letter forms a part. Terms used herein shall have the same meanings as those defined in the Convocation Notice unless the context otherwise requires.

Quam Capital Limited has been appointed as the Independent Financial Adviser to advise us on the Equity Transfer Agreements and the transactions contemplated thereunder. The letter from Quam Capital Limited is set out on pages 23 to 36 of the Convocation Notice.

Having considered the terms and conditions of the Equity Transfer Agreements, the advice given by Quam Capital Limited and the principal factors and reasons taken into consideration by them in arriving at their advice, we are of the opinion that the Equity Transfer Agreements and the transactions contemplated thereunder are in the interests of the Independent Shareholders as a whole, and the terms and conditions of the Equity Transfer Agreements are fair and reasonable so far as the Independent Shareholders as a whole are concerned. Accordingly, we recommend the Independent Shareholders to vote in favour of the proposed ordinary resolution at the EGM approving the Equity Transfer Agreements and the transactions contemplated thereunder.

		Yours faithfully,
	Independent Board Committee
Mr. Katsuhide	Mr. Ichiro	Mr. Yukio	Mr. Mitsutoshi	Mr. Thomas
HORIBA	TAKANO	YOSHIDA	KATO	Chun Kee YIP
Independent	Independent	Independent	Independent	Independent
non-executive	non-executive	non-executive	non-executive	non-executive
Director	Director	Director	Director	Director

Note: This is a translation from the Japanese letter from the Independent Board Committee.

for identification purposes only

– 22 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The following is the full text of a letter of advice from Quam Capital, the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders, which has been prepared for the purpose of incorporation into this convocation notice of the EGM, setting out its advice to the Independent Board Committee and the Independent Shareholders in respect of the Acquisition.

14 August 2013

To the Independent Board Committee and the Independent Shareholders

株式会社ダイナムジャパンホールディングス

DYNAM JAPAN HOLDINGS Co., Ltd.* 2-25-1-702 Nishi-Nippori Arakawa-ku Tokyo, 116-0013 Japan

Dear Sir or Madam,

DISCLOSEABLE AND CONNECTED TRANSACTION PROPOSED ACQUISITION OF HUMAP AND BUSINESS PARTNERS

INTRODUCTION

We refer to our appointment as the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders in respect of the Acquisition, details of which are set out in the convocation notice of the EGM issued by the Company to its Shareholders dated 14 August 2013 (the ‘‘Convocation Notice’’), of which this letter forms part. Capitalised terms used in this letter shall have the same meanings as defined in the Convocation Notice unless the context otherwise requires.

Pursuant to the Equity Transfer Agreements, the Company agreed to acquire, and the Vendor agreed to dispose of the Relevant Shares, being the entire issued share capital of Humap and Business Partners, which are wholly-owned subsidiaries of the Vendor, on the terms and subject to the conditions set out in the Equity Transfer Agreements at a total consideration of ¥3,830 million (equivalent to approximately HK$309 million) (the ‘‘Consideration’’). As the Vendor is owned as to approximately 48.91% collectively by Mr. Sato (a connected person of the Company), Mrs. Sato and Rich-O (each being an associate of Mr. Sato), the Vendor is a connected person of the Company under the Listing Rules. Accordingly, the Acquisition constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules. As one of the percentage ratios (other than the profit ratio) in respect of the Acquisition exceeds 5%

– 23 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

and the Consideration exceeds HK$10,000,000, the Acquisition is subject to the reporting, announcement and independent shareholders’ approval requirements under Chapter 14A of the Listing Rules.

Mr. Katsuhide Horiba, Mr. Ichiro Takano, Mr. Yukio Yoshida, Mr. Mitsutoshi Kato and Mr. Thomas Chun Kee Yip, the independent non-executive Directors, have been appointed as members of the Independent Board Committee to advise the Independent Shareholders as to whether the Acquisition is on normal commercial terms, fair and reasonable, and in the interests of the Company and the Shareholders as a whole; and to advise the Independent Shareholders whether to vote in favour of the Acquisition. As the Independent Financial Adviser, our role is to give an independent opinion to the Independent Board Committee and the Independent Shareholders in such regard.

Quam Capital Limited is independent of and not connected with any members of the Group or any of their substantial shareholders, directors or chief executives, or any of their respective associates, and is accordingly qualified to give independent advice in respect of the Acquisition.

BASIS OF OUR RECOMMENDATION

In formulating our recommendation, we have relied on (i) the information supplied by the Company and its advisers; (ii) the opinions expressed by and the representations of the Directors and management of the Group; (iii) the information and facts contained or referred to in the Convocation Notice; and (iv) our review of the relevant public information. We have assumed that all the information provided, representations and opinions expressed to us or contained or referred to in the Convocation Notice were true, accurate and complete in all respects at the time they were made and continued to be so up to the time of the EGM and may be relied upon. We have no reason to doubt the truth, accuracy and completeness of such information and representations provided to us by the Directors, the management of the Group and the advisers of the Company. We have also sought and received confirmation from the Directors that no material facts has been withheld or omitted from the information provided and referred to in the Convocation Notice and that all information or representations regarding the Company and the Acquisition provided to us by the Directors, the management of the Group and the advisers of the Company are true, accurate, complete and not misleading in all respects at the time they were made and continued to be so up to the time of the EGM.

We consider that we have reviewed relevant information currently available to reach an informed view and to justify our reliance on the accuracy of the information contained in the Convocation Notice and information or representations regarding the Company and the Acquisition provided to us by the Directors, the management of the Group and the advisers of the Company so as to provide a reasonable basis for our recommendation. We have not, however, carried out any independent verification of the information, nor have we conducted any form of in-depth investigation into the business, affairs, operations, financial position or future prospects of the Company, Humap, Business Partners, or any of their respective subsidiaries and associates.

– 24 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our recommendation in respect of the Acquisition, we have taken into consideration the following principal factors and reasons:

1. Background of and reasons for the Acquisition

(a) Background and financial information of the Group

As set out in the Convocation Notice, the Company, operating through its subsidiaries, is the second largest pachinko hall operator in Japan based on the total value of pachinko balls and pachislot tokens rented in the year of 2012. Set out below is a summary of the consolidated financial results of the Company for each of the two years ended 31 March 2012 and 2013 as extracted from the annual report of the Company for the year ended 31 March 2013 (the ‘‘2013 Annual Report’’):

			(Audited)	(Audited)
		Year ended 31 March
	2012			2013
	¥ million	HK$ million		¥ million	HK$	million
Turnover	165,078		15,515	163,961		13,517
Profit attributable to the
equity holders of the
Company	15,898		1,497	20,925		1,726
			As at 31 March
	2012			2013
	¥ million	HK$ million		¥ million	HK$	million
Total Equity	93,474		8,786	125,827		10,373

As illustrated in the table above, the turnover of the Group decreased slightly from approximately ¥165,078 million (equivalent to approximately HK$15,515 million) for the year ended 31 March 2012 to approximately ¥163,961 million (equivalent to approximately HK$13,517 million) for the year ended 31 March 2013, the fluctuation was mainly attributable to the fluctuation on the utilisation rates of the Group’s high playing cost machines during the relevant fiscal year. It is further noted that the Group recorded profit attributable to the equity holders of the Company of approximately ¥15,898 million (equivalent to approximately HK$1,497 million) and ¥20,925 million (equivalent to approximately HK$1,726 million) for each of the two years ended 31 March 2012 and 2013, which was mainly attributable to the decrease in hall operating expenses such as pachinko and pachislot machine expenses, advertising expenses and the loss on earthquake.

– 25 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

(b) Background and financial information of Humap and Business Partners

As at the Latest Practicable Date, Humap and Business Partners are the wholly-owned subsidiaries of the Vendor. Humap was incorporated in Japan with limited liability under the Companies Act on 1 November 1982. Business Partners was incorporated in Japan with limited liability under the Companies Act on 11 January 2011. On 1 April 2013, Humap has merged with P Leasing, a previously wholly-owned subsidiary of the Vendor, as the surviving entity. Humap is the holding company of two wholly-owned subsidiaries, namely P Insurance (which was previously held by P Leasing and acquired by Humap through its merger with the same on 1 April 2013) and Genghis Khan (which was acquired by Humap on 31 March 2013) (together with Humap, the ‘‘Humap Group’’). P Insurance and Genghis Khan were incorporated in Japan with limited liability under the Company Act on 28 January 2005 and 13 November 2003, respectively.

Upon completion of the Acquisition, Humap (together with P Insurance and Genghis Khan) and Business Partners will become (directly or indirectly) wholly-owned subsidiaries of the Company and will be consolidated into the financial statements of the Group.

Humap Group

As set out in the Convocation Notice, Humap is principally engaged in four business segments, namely (i) operation and management of food and beverage retail outlets located next to the Group’s pachinko halls; (ii) provision of cleaning services at the Group’s pachinko halls; (iii) provision of accounting and payroll services; and (iv) a chain of spaghetti restaurants under the brand Old Spaghetti Factory, which is operated through franchise agreements with independent third parties. On 1 April 2013, through the merge with P Leasing, Humap began to provide instalment sales services of new pachinko and pachislot game machines. Its business model involves Humap purchasing new game machines selected by its customers who, in turn, purchase such machines from Humap through instalment payments. Machines are purchased directly by Humap from manufacturers and the legal ownership of the machines rest with the customers commencing from the settlement of the last instalment payment. On the same day, Humap also merged with Dynam Investment, a previously wholly-owned subsidiary of the Vendor, as the surviving entity. Through the merge with Dynam Investment, Humap began to provide property leasing services.

– 26 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Humap is the holding company of two wholly-owned subsidiaries, namely P Insurance and Genghis Khan. P Insurance provides life and non-life insurance services. Genghis Khan is principally engaged in the provision of travel services. It has a scalable operation in Japan with a primary focus on the provision of travels to and from Mongolia.

Set out below is a summary of the key financial data of Humap Group based on the unaudited management accounts of Humap Group for the years ended 31 March 2012 and 2013 as provided by the Vendor, which was prepared in accordance with JGAAP:

	For the year	For the year
	ended	ended
	31 March	31 March
	2012	2013
	(¥ million/	(¥ million/
	HK$ million)	HK$ million)
	(unaudited)	(unaudited)
Humap
Turnover	7,601/612	7,774/626
Net profit before tax (or loss)	451/36	312/25
Net profit after tax (or loss)	204/16	130/10
Humap Group (including financial
data of Humap, P Leasing,
Dynam Investment, P Insurance
and Genghis Khan on a
combine basis)
Turnover	10,234/825	10,619/856
Net profit before tax (or loss)	517/42	(490)/(39)
Net profit after tax (or loss)	198/16	(703)/(57)

The unaudited total turnover of the Humap Group, on a combine basis, was approximately ¥10,234 million (equivalent to approximately HK$825 million) and approximately ¥10,619 million (equivalent to approximately HK$856 million) for the two years ended 31 March 2013. Humap Group turned from an unaudited net profit after tax, on a combine basis, of approximately ¥198 million (equivalent to approximately HK$16 million) for the year ended 31 March 2012 to a net loss after tax of approximately ¥703 million (equivalent to approximately HK$57 million) for the year ended 31 March 2013, which was mainly attributable to impairment loss and loss from discontinued operation on hot stone sauna business previously operated by Dynam Investment. Excluding such loss from the discontinued operation without taking into account any tax effect, Humap Group would record net profit after tax of approximately ¥124 million (equivalent to approximately HK$10 million). The unaudited net

– 27 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

asset value of Humap Group, on a combine basis, as at 31 March 2013 was approximately ¥3,948 million (equivalent to approximately HK$318 million). The unaudited total assets of Humap Group, on a combine basis, as at 31 March 2013 of approximately ¥5,163 million (equivalent to approximately HK$416 million) mainly comprised of property, plant and equipment, trade receivable and cash.

For the years ended 31 March 2012 and 2013, the Group and Humap Group has undertaken a number of transactions, including but not limited to (i) provision of pachinko hall cleaning and ancillary services by Humap Group to the Group amounting to approximately ¥4,254 million (equivalent to approximately HK$342 million) and ¥4,366 million (equivalent to approximately HK$352 million) respectively; (ii) lease of food and beverages retail outlets by Humap Group from the Group amounting to approximately ¥165 million (equivalent to approximately HK$13 million) and ¥168 million (equivalent to approximately HK$14 million) respectively; (iii) supply of coffee, pastry and tobacco products as general prizes in the pachinko halls to the Group amounting to approximately ¥518 million (equivalent to approximately HK$42 million) and ¥468 million (equivalent to approximately HK$38 million) respectively; and (iv) other miscellaneous services such as, among others, staff cafeteria service and sharing of utilities charges between the Group and Humap Group amounting to approximately ¥343 million (equivalent to approximately HK$28 million) and ¥333 million (equivalent to approximately HK$27 million) on a net basis. As advised by the Company, the revenue of Humap Group generated from the Group for each of the two years ended 31 March 2012 and 2013 as compared with the total revenue of Humap Group, on a combine basis, during the same periods was approximately 51.7%, and 49.6%, respectively.

Business Partners

As set out in the Convocation Notice, Business Partners is principally engaged in (i) the provision of cleaning services; and (ii) the manufacture and sales of household supplies. Business Partners recruit a team of temporary employees with disability.

– 28 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

	For the year	For the year
	ended	ended
	31 March	31 March
	2012	2013
	(¥ million/	(¥ million/
	HK$ million)	HK$ million)
	(unaudited)	(unaudited)
Turnover	56/5	33/3
Net profit before tax (or loss)	1/0	29/2
Net profit after tax (or loss)	1/0	28/2

The turnover of Business Partners decreased from approximately ¥56 million (equivalent to approximately HK$5 million) for the year ended 31 March 2012 to ¥33 million (equivalent to approximately HK$3 million) for the year ended 31 March 2013, which was mainly attributable to reduction in cleaning contract sum with the Group for the year ended 31 March 2013. The net profit after tax of Business Partners increased from approximately ¥1 million (equivalent to approximately HK$0 million) for the year ended 31 March 2012 to net profit of approximately ¥28 million (equivalent to approximately HK$2 million) for the year ended 31 March 2013, which was mainly attributable to the receipt of Japanese government subsidy and the gain from the waive of amount due to the Vendor during the year ended 31 March 2013. The net asset value of Business Partners as at 31 March 2013 was approximately ¥42 million (equivalent to approximately HK$3 million). The total assets of Business Partners as at 31 March 2013 of approximately ¥56 million (equivalent to approximately HK$5 million) mainly comprised of cash.

For the years ended 31 March 2012 and 2013, the Group and Business Partners has undertaken a number of transactions, including but not limited to (i) provision of office cleaning and ancillary services by Business Partners to the Group amounting to approximately ¥9 million (equivalent to approximately HK$1 million) and ¥14 million (equivalent to approximately HK$1 million) respectively; and (ii) lease of office building by Business Partners from the Group amounting to approximately ¥5 million (equivalent to approximately HK$0 million) and ¥4 million (equivalent to approximately HK$0 million) respectively. As advised by the Company, the revenue of Business Partners generated from the Group for each of the two years ended 31 March 2012 and 2013 as compared with the total revenue of Business Partners during the same periods was approximately 69.6%, and 42.4%, respectively.

– 29 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

(c) Reasons for and benefits of the Acquisition

As stated in the 2013 Annual Report, it is the Group’s stated strategies to, among others, (i) maintain the growth of its pachinko business in Japan by increasing its market share to approximately 10% and achieving the milestone of 1,000 pachinko halls; and (ii) pursue other business opportunities and diversify its business profile within Asia which may have synergy effect with the Group’s domestic pachinko hall operation. As further stated in the Convocation Notice, upon the restoration from the Earthquake and since the new criteria for opening new halls and the standard model of management indexes were almost completed, the Group has decided to gradually accelerate the pace of opening new halls from the second half of the financial year ending 31 March 2014 and has established the objective of attaining 1,000 halls in 31 March 2023 (the ‘‘Plan’’).

As discussed in section (1)(b) above, Humap Group is principally engaged in, among others, operation and management of food and beverage retail outlets and the provision of cleaning services at the Group’s pachinko halls. The food and beverage retail outlets operated by Humap are principally located next to the sites of the Group’s pachinko halls, targeted at the Group’s customers. Humap currently operates approximately 330 food and beverages retail outlets on premises next to the pachinko halls of the Group and providing food and beverage services to the customers of the Group. Humap also conducted sales of coffee via vending machines and coffee wagon services at the pachinko halls of the Group. In addition to the food and beverage services targeting on the customers of the Group, Humap also operates a chain of spaghetti restaurants under the brand Old Spaghetti Factory, which is operated through franchise agreements with Independent Third Parties. These restaurants are located in Kobe (神戶市) and Nagoya (名古屋市). Through the acquisition of the entire issued share capital of Humap, the Company considered that it can strengthen its pachinko hall operation as the core business of the Group and also expand its revenue base and customer base by leveraging on Humap Group’s food and beverage business, which is consistent with the core business strategies of the Group. In addition, the Company considered that in order for having new food and beverage retail outlets as supplemental services mainly located next to the sites of the Group’s pachinko halls following the Plan, it will also have to secure talented personnel and establish a system for providing training to such personnel. As such, it is beneficial for the Group to directly put Humap Group under its control and advance daily management advisory services to the business administration of Humap Group.

As advised by the Company, Business Partners employs a team of temporary employees with disability. The Company aims to fulfill its corporate social responsibility by acquiring 100% of the shares of Business Partners, which actively promotes the employment of people with disability in conducting its business. The Company further advised that the statutory rate of employment of handicapped people was 1.8% for the year ended 31 March 2013, and the Company has satisfied such requirement with a rate of employment of handicapped people of approximately 1.96% for the year

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

ended 31 March 2013. With effect from 1 April 2013, the aforesaid statutory rate was increased to 2%. As such, through the acquisition of the entire share capital of Business Partners, the Company can secure the employment opportunity for people with disability with an aim to continually attain the statutory rate of employment of handicapped people, and support handicapped people in working in society.

In addition, as discussed in section (1)(b) above, the Group and Humap Group and Business Partners have been undertaking a number of transactions including, among others, pachinko hall and office cleaning and ancillary services and supply of general prizes for pachinko hall operation. As advised by the Company, the revenue of Humap Group generated from the Group for each of the two years ended 31 March 2012 and 2013 as compared with the total revenue of Humap Group, on a combine basis, during the same periods was approximately 51.7%, and 49.6%, respectively while the percentage of the revenue of Business Partners generated from the Group was approximately 69.6% and 42.4%, respectively. In aggregate, the total revenue of Humap Group and Business Partners generated from the Group for the two years ended 31 March 2012 and 2013 as compared with the sum of their respective unaudited total revenue, on a combine basis, was approximately 51.8% and 49.5%, respectively. As such, the Acquisition is expected to have synergy effect with the Group in terms of the integration of services supplemental to the pachinko halls operation of the Group, including but not limited to the food and beverage outlets operated by Humap Group principally located next to the sites of the pachinko halls of the Group and the cleaning services provided by Humap Group and Business Partners at the Group’s pachinko halls and offices, and by which the Group can streamline its operation and reduce its operating costs by proactive cost control.

As stated in the 2013 Annual Report, it is one of the business objectives of the Group to shift the image of pachinko from gaming to entertainment and leisure activities and the Group focuses on improving the overall quality of the customer experience in their pachinko halls. The Company further advised that the majority of the revenue of Humap Group for the year ended 31 March 2013 on a combine basis, were derived from the cleaning of pachinko halls of the Group and provision of food and beverage services to the customers of the Group, which are located next to the pachinko halls of the Group. Notwithstanding that the principal business of Humap Group and the Group are different, in particular that the principal business of P Leasing, Dynam Investment, P Insurance and Genghis Khan have limited relationship with the pachinko halls operation, having considered that (i) each of the revenue generated by P Leasing, Dynam Investment, P Insurance and Genghis Khan is considered to be not material to the total revenue of Humap Group for the year ended 31 March 2013; (ii) the cleaning services provided by Humap Group to the pachinko halls of the Group is essential for the Group to maintain a clean and pleasant environment in the pachinko halls for its customers; (iii) approximately 330 food and beverages retail outlets of Humap Group are operated on premises next to the pachinko halls of the Group and targeting to provide food and beverage services to the customers of the Group; (iv) the majority of the revenue of the Humap Group for the year ended 31 March

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

2013, on a combine basis, were derived from the cleaning and food and beverage business in relation to the pachinko hall business of the Group; and (v) the principal business of Business Partners is the cleaning services of offices of the Group, the acquisition of which can reduce its operating costs on office cleaning by proactive cost control, and also can procure the Group to meet the new statutory rate of the employment of disable employees without requiring the Group to put additional effort to solicit suitable disable candidates for its operation to meet the new statutory rate, we are of the view that the integration of principal businesses of Humap Group and Business Partners, which is considered to be periphery and supplemental for the Group to enhance the overall quality of entertainment and leisure experience for its customers can strengthen pachinko hall operation as the core business of the Group, and thus the Acquisition, in general, is expected to have synergy effect with the Group’s existing pachinko halls operation.

2. Principal terms of the Share Purchase Agreements

(a) Basis of the Consideration

The total Consideration of the Acquisition is ¥3,830 million (equivalent to approximately HK$309 million), which will be paid in a lump sum in cash by the Company to the Vendor within 10 days of the date when the register of shareholders of Humap and Business Partners have been updated. The Company will finance the Consideration by the internal resources of the Group.

As stated in the Convocation Notice, the Consideration has been determined after arm’s length negotiations between the parties to the Equity Transfer Agreements after taking into account the unaudited net asset value of the aggregate of Humap Group and Business Partners as at 30 April 2013. As advised by the Company, there is no material intercompany transaction among Humap Group and Business Partners since their incorporation and up to the Latest Practicable Date. The Consideration represents a price to net asset value ratio (the ‘‘P/NAV Ratio’’) of about 1.0 times of the unaudited net asset value of both Humap Group (on a combine basis) and Business Partners as at 30 April 2013.

(b) Comparable analysis

In order to assess the fairness and reasonableness of the Consideration, we have attempted to compare it with the valuation multiples of other companies listed on the Stock Exchange or the Tokyo Stock Exchange with principal activities similar to those of Humap Group and Business Partners, i.e. (i) the cleaning business; and (ii) the food and beverage business, which collectively contributed over 70% of the total revenue of Humap Group and Business Partners, on a combine basis, for the year ended 31 March 2013 and thus is considered to be representative to the principal business of Humap Group and Business Partners. However, we are unable to identify any direct comparable companies principally engaged in all the principal businesses of Humap Group and Business Partners. As an alternative, based on the publicly available information, we have identified and made references to, so far as we are aware, the P/NAV Ratios and price to earnings ratios (the ‘‘P/E Ratios’’) of

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

those companies listed on the Stock Exchange or the Tokyo Stock Exchange as at the Latest Practicable Date which are principally engaged in one or more of the following businesses in Japan, namely cleaning and/or catering (chain restaurant of noodles and western cuisine), which are in line with the major principal businesses of Humap Group and Business Partners as described above (the ‘‘Comparable Companies’’). Details of the comparison with the Comparable Companies are set out in the table below. It should, however, be noted that the Comparable Companies, in terms of principal activities, the product portfolio, scale of operations, the size of the profitability and asset base, the market and future prospects may not be directly comparable to Humap Group and Business Partners and hence the result of our comparison below should not be used in isolation as the sole determining factor in deciding whether or not the Consideration is fair and reasonable.

Stock			P/B	P/E
Code	Company name	Principal business	Ratio	Ratio
Cleaning industry
08201.HK	PPS International	Providing a comprehensive	49.8	24.7
	(Holdings)	range of cleaning and related
	Limited	services.
9787.JP	Aeon Delight Co.	Providing services such as	1.5	12.8
	Ltd.	cleaning, security, and
		equipment management for
		buildings.
Catering industry
00538.HK	Ajisen (China)	Operation of restaurants and	2.8	55.5
	Holdings	the manufacture and sales of
	Limited	noodle and related products.
00341.HK	Cafe de Coral	Operation of quick service	4.2	27.1
	Holdings	restaurants, fast casual
	Limited	dining, institutional catering
		and specialty restaurant
		chains, and the food
		processing and distribution
		business.
00052.HK	Fairwood	Operation of fast food	3.9	14.6
	Holdings Ltd.	restaurants and property
		investments.
9850.JP	Gourmet Kineya	Operation of Japanese noodles	1.1	8.2
	Co. Ltd.	restaurants and western-style
		restaurants.
9936.JP	Ohsho Food	Operation of restaurants mainly	2.2	17.4
	Service Corp	sell ramen noodles and
		dumplings.
7554.JP	Kourakuen Corp	Operation of restaurants	2.1	305.4
		specialize in ramen noodles
		and dumplings.
8200.JP	Ringer Hut Co.	Operation of chain noodle	3.2	51.5
	Ltd.	shops.
7611.JP	Hiday Hidaka	Operation of restaurants	2.1	14.2
	Corp	specialize in noodles, soup,
		and dumplings.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Stock				P/B	P/E
Code	Company name	Principal business		Ratio	Ratio
3097.JP	Monogatari Corp.	Operation of Japanese	style	3.1	16.7
		restaurant chain.
	Humap Group			1.0	N/A
	Business Partners			1.0	1.4
06889.HK	Company	Operation of pachinko	hall in	1.1	6.5
		Japan.
			Average	2.6*	24.3**
			Maximum	4.2*	55.5**
			Minimum	1.1	8.2

Source: the Stock Exchange, the Tokyo Stock Exchange and Bloomberg

Excluding PPS International (Holdings) Limited which has a P/NAV Ratio of 49.8, and was considered to be an outlier.
** Excluding Kourakuen Corp which has a P/E Ratio of 305.4, and was considered to be an outlier.

Each of the respective Consideration of Humap Group and Business Partners represents a P/NAV Ratio of approximately 1.0 time based on the unaudited net asset value of Humap Group and Business Partners as at 30 April 2013. As shown in the table above, it is noted that each of the P/NAV Ratio of Humap Group and Business Partners as implied under the corresponding Consideration is (i) below the P/NAV Ratios of the Comparables Companies ranging between approximately 1.1 times and 4.2 times (excluding the outlier); and (ii) lower than the P/NAV Ratio of the Company and the average of the P/NAV Ratios of the Comparable Companies in each of the industry sectors. We also noted that Humap Group recorded a net loss for the year ended 31 March 2013 and the P/E Ratios of Business Partners as implied under the corresponding Consideration is below the range of the P/E Ratios of the Comparables Companies from approximately 8.2 times to 55.5 times (excluding the outlier).

Given the foregoing and in particular, that (i) the Consideration is equivalent to the unaudited net asset value of Humap Group and Business Partners; (ii) the P/NAV Ratio of Humap Group and Business Partners are below the range of the P/NAV Ratios of the Comparables Companies in each of the industry sectors and is below the averages; (iii) the Company is of the view and we concurs that the Acquisition, in general, is expected to have synergy effect with the Group and can streamline its operation and reduce its operating costs by proactive cost control; and (iv) the Acquisition will not have any material adverse impact on the Group’s financial position upon completion

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

of the Acquisition as discussed below, we are of the opinion that the Consideration (including the basis of determination) is fair and reasonable and is in the interest of the Company and the Shareholders as a whole.

3. Financial effects of the Acquisition to the Group

Upon completion of the Acquisition, Humap Group and Business Partners will become wholly owned subsidiaries of the Company and the financial results of Humap Group and Business Partners will be consolidated in the accounts of the Group. As discussed in section (1)(c) above, the Company expects that, upon completion of the Acquisition, the operation cost will be reduced and the revenue base and asset base attributable to the Shareholders will be enhanced.

According to the 2013 Annual Report, the Group’s total equity was approximately ¥125,827 million (equivalent to approximately HK$10,373 million) as at 31 March 2013. As stated in the Convocation Notice, the total unaudited net asset value of Humap Group and Business Partners was approximately ¥3,830 million (equivalent to approximately HK$309 million) as at 30 April 2013 and the Consideration is ¥3,830 million (equivalent to approximately HK$309 million). Given that (i) the Considerations will be settled by internal resources; and (ii) the current capital structure of the Group and Humap Group and Business Partners, the Directors expect that the consolidated net asset value and liquidity of the Group would not have any material adverse change after completion of the Acquisition.

According to the 2013 Annual Report, the Group had cash and cash equivalents of approximately ¥41,466 million (equivalent to approximately HK$3,419 million) as at 31 March 2013. In addition, net cash inflow from operating activities amounted to approximately ¥28,330 million (equivalent to approximately HK$2,336 million) for the year ended 31 March 2013. Having considered (i) the historical track record and cash flow position of the Group; (ii) the present internal financial resources and banking facilities available to the Group; and (iii) the potential operating cost reduction upon completion of the Acquisition, the Directors expect that the Acquisition will not have a material adverse impact on the working capital position of the Group.

In view of the foregoing, we are of the opinion that the Acquisition will not have any material adverse impact on the Group’s financial position upon completion of the Acquisition in this regard.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

RECOMMENDATION

Having taken into account the above principal factors and reasons discussed above and in particular the following (which should be read in conjunction with and interpreted in the full context of this letter):

. the existing principal business of the Group, Humap Group and Business Partners and the reasons for and benefits of the Acquisition as discussed in section (1) above;
. that the Considerations (including the basis of determination) are fair and reasonable as discussed in section (2) above; and
. that there will be no material adverse impact on the financial position of the Group as a result of the Acquisition,

we are of the opinion that the terms of the Equity Transfer Agreements are on normal commercial terms, fair and reasonable so far as the Independent Shareholders are concerned and the Acquisition is in the interests of the Company and the Shareholders as a whole.

Accordingly, we advise the Independent Shareholders, and the Independent Board Committee to recommend the Independent Shareholders, to vote in favour of the ordinary resolution(s) to be proposed at the EGM for approving the Acquisition pursuant to the Equity Transfer Agreements.

Yours faithfully, For and on behalf of Quam Capital Limited Gary Mui Managing Director

– 36 –

GENERAL INFORMATION

APPENDIX I

1. RESPONSIBILITY STATEMENT

This convocation notice, for which 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 convocation notice is accurate and complete in all material aspects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this convocation notice misleading.

2. DISCLOSURE OF INTEREST

(a) Directors’ and Chief Executives’ Interests and Short Positions in Shares, Underlying Shares and Debentures of the Company or its Associated Corporation

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

(i) Interests in the Company

			Approximate
Name of Directors/		Number of	percentage of
Chief executive		Shares of	interest in
officers	Nature of Interest	the Company(1)	the Company(2)
Mr. Sato	Beneficial owner(3)	162,522,560
	Interest in controlled
	corporation(3)	95,810,000
	Interest in spouse(3)	760
	Other(5)	248,335,800
		506,669,120	68.206%
Mr. Noriaki USHIJIMA	Beneficial owner	838,000	0.113%
Mr. Ichiro TAKANO	Beneficial owner	20,000	0.003%

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GENERAL INFORMATION

APPENDIX I

			Approximate
Name of Directors/		Number of	percentage of
Chief executive		Shares of	interest in
officers	Nature of Interest	the Company(1)	the Company(2)
Mr. Yukio YOSHIDA	Beneficial owner	140,000	0.019%
Mr. Kohei SATO	Beneficial owner(4)	55,139,680
	Other(5)	451,529,440
		506,669,120	68.206%

Notes:

(1) All interests stated are long positions.
(2) There were 742,850,360 Shares in issue as at the Latest Practicable Date.
(3) Mr. Sato is beneficially interested in 162,522,560 Shares. Mrs. Keiko SATO, his wife, is beneficially interested in 760 Shares, and such interests are deemed to be Mr. Sato’s interests under the SFO. Rich-O Co., Ltd. (‘‘Rich-O’’), which owns 95,810,000 Shares is a company owned as to 99.9% and controlled by Mr. Sato.
(4) Mr. Kohei SATO, one of the Sato Family Members (as hereinafter defined), was appointed as an additional chief executive officer in January 2013. He is beneficially interested in 55,139,680 Shares.
(5) The Sato family members (‘‘Sato Family Members’’) consist of Mrs. Keiko SATO (wife of Mr. Sato), Mrs. Yaeko NISHIWAKI (sister of Mr. Sato), Mr. Masahiro SATO (brother of Mr. Sato), Mr. Shigehiro SATO (brother of Mr. Sato), Mr. Kohei SATO (brother of Mr. Sato), and Mr. Kiyotaka SATO (uncle of Mr. Sato). The Sato Family Members are the beneficial owners of 248,336,560 Shares. Each of the Sato Family Members is a family member of Mr. Sato and of each other, and is therefore deemed to be interested in the Shares in the Company in which Mr. Sato is interested, and Mr. Sato is deemed to be interested in the Shares in the Company in which each of the Sato Family Members is interested.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors and the chief executives of the Company had or was deemed to have any interest or short position in the Shares, underlying Shares or debentures of the Company or its associated corporations (within the meaning of Part XV of the SFO) that was required to be recorded in the register of the Company required to be kept under Section 352 of the SFO, or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code.

(ii) Interest in the associated corporation

None of our Directors or chief executive of the Company has any interests or short positions in the shares or underlying shares or debentures of any associated corporation of the Company.

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GENERAL INFORMATION

APPENDIX I

(b) Interest and Short Positions in the Shares and Underlying Shares of Substantial Shareholders

As at the Latest Practicable Date, to the best knowledge of the Directors, the following persons (not being a Director or chief executive of the Company) had interests or short positions in the Shares or underlying Shares which fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO as recorded in the register required to be kept by the Company pursuant to section 336 of the SFO:

			Approximate
Name of Substantial	Nature of Interest/	Number of	percentage of
Shareholders	Capacity	Shares(1)	Shareholding(2)
Rich-O	Beneficial owner(3)	95,810,000	12.898%
One Asia Foundation
(‘‘One Asia’’)	Beneficial owner(4)	80,000,000	10.769%
Mrs. Keiko SATO	Beneficial owner(5)	760
	Interest of spouse(5)	162,522,560
	Other(6)	344,145,800
		506,669,120	68.206%
Mr. Kiyotaka SATO	Beneficial owner	20,400,000
	Other(6)	486,269,120
		506,669,120	68.206%
Mr. Masahiro SATO	Beneficial owner	55,259,680
	Other(6)	451,409,440
		506,669,120	68.206%
Mr. Shigehiro SATO	Beneficial owner	55,139,680
	Other(6)	451,529,440
		506,669,120	68.206%
Mrs. Yaeko NISHIWAKI	Beneficial owner	62,396,760
	Other(6)	444,272,360
		506,669,120	68.206%

– 39 –

GENERAL INFORMATION

APPENDIX I

Notes:

(1) All interests stated are long positions.
(2) There were 742,850,360 Shares in issue as at the Latest Practicable Date.
(3) Rich-O is a company owned as to approximately 99.9% and controlled by Mr. Sato. Hence, Mr. Sato is deemed to be interested in the Shares held by Rich-O by virtue of Rich-O being controlled by Mr. Sato.
(4) One Asia is a general incorporated foundation (ippan shadan houjin 一般社団法人). The operation and management of One Asia is independent from the Controlling Shareholders and the Controlling Shareholders have no discretion in exercising One Asia’s voting rights in the Company. The Shares held by One Asia are not counted as public Shares.
(5) Mr. Sato is the beneficial owner of 162,522,560 Shares. Mrs. Keiko SATO, his wife, is beneficially interested in 760 Shares, and such interests are deemed to be Mr. Sato’s interests under the SFO.
(6) The Sato Family Members consist of Mrs. Keiko SATO (wife of Mr. Sato), Mrs. Yaeko NISHIWAKI (sister of Mr. Sato), Mr. Masahiro SATO (brother of Mr. Sato), Mr. Shigehiro SATO (brother of Mr. Sato), Mr. Kohei SATO (brother of Mr. Sato), and Mr. Kiyotaka SATO (uncle of Mr. Sato). The Sato Family Members are the beneficial owners of 248,336,560 Shares. Each of the Sato Family Members is a family member of Mr. Sato and of each other, and is therefore deemed to be interested in the Shares in which Mr. Sato is interested, and Mr. Sato is deemed to be interested in the Shares in which each of the Sato Family Members is interested.

Save as disclosed above, and as at the Latest Practicable Date, the Directors were not aware of any persons (who were not Directors or chief executives of the Company) who had an interest or short position in the Shares or underlying Shares of the Company which would fall to be disclosed under Divisions 2 and 3 of Part XV of the SFO, or which would be required, pursuant to Section 336 of the SFO, to be entered in the register referred to therein.

3. DIRECTORS’ SERVICE CONTRACTS

As at the Latest Practicable Date, none of Directors has entered into any unexpired service contract with the Company which shall not be terminated by the Company within one year without payment of compensation (other than statutory compensation).

4. DIRECTORS’ INTERESTS IN ASSETS AND/OR CONTRACTS AND OTHER INTERESTS

As at the Latest Practicable Date, none of Directors had any direct or indirect interest in any asset which had been, since 31 March 2013, being the date to which the latest published audited accounts of the Company were made up, acquired or disposed of by or leased to, or were proposed to be acquired or disposed of by or leased to, any member of the Group.

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GENERAL INFORMATION

APPENDIX I

As at the Latest Practicable Date, none of Directors except for Mr. Sato was materially interested in any contract or arrangement entered into by any member of the Group which was subsisting as at the Latest Practicable Date and which was significant in relation to the business of the Group.

5. CONSENT AND QUALIFICATION OF EXPERTS

The following are the qualifications of the professional adviser who has given the Company an opinion or provided advice referred to or contained in this convocation notice:

Name Qualifications Quam Capital a licensed corporation under the Securities and Futures Ordinance to carry on type 6 (advising on corporate finance) of the regulated activities, acting as the independent financial adviser to the Independent Board Committee and the Independent Shareholders in respect of the Acquisition

As at the Latest Practicable Date, Quam Capital did not have shareholding interest in any member of the Group or any right to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

As at the Latest Practicable Date, Quam Capital did not have any direct or indirect interest in any assets which has been, since 31 March 2013, being the date to which the latest published audited accounts of the Company were made up, acquired or disposed of by or leased to, or were proposed to be acquired or disposed of by or leased to, any member of the Group.

Quam Capital has given and has not withdrawn its written consent to the issue of this convocation notice with the inclusion of its letter, report and references to its name included in this convocation notice in the form and context in which it is included.

6. COMPETING INTERESTS

As at the Latest Practicable Date, none of Directors and their respective associates has any interests in a business which competes or may compete with the business of the Group.

7. NO MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors are of the opinion that since 31 March 2013, being the date to which the latest published audited accounts of the Group were made up, there have been no material adverse changes in the financial or trading position of the Group.

– 41 –

GENERAL INFORMATION

APPENDIX I

8. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection during normal business hours at the principal place of business in Hong Kong of the Company on any weekdays, except public holidays, from the date of this convocation notice up to and including 28 August 2013:

(a) the letter dated 14 August 2013 from the Independent Board Committee to the Independent Shareholders, the text of which is set out on page 22 of this convocation notice;
(b) the letter of advice dated 14 August 2013 from Quam Capital to the Independent Board Committee and the Independent Shareholders, the text of which is set out on pages 23 to 36 of this convocation notice;
(c) the written consent of Quam Capital referred to in paragraph 5 of this Appendix; and
(d) the Equity Transfer Agreements.

– 42 –

DETAILS OF PROPOSED PARTIAL AMENDMENTS TO THE ARTICLES OF INCORPORATION

APPENDIX II

Details of proposed partial amendments are shown as below (The underlined sections show parts to be amended).

Existing AOI

Proposed Amendment

The AOI

Chapter 1 General Provisions

The AOI

Chapter 1 General Provisions

Article 2 (Purpose)

The purpose of the Company shall be to own controlling interests in companies engaged in the following lines of business, and thereby control and manage the businesses activities of such companies:

(1) Operation of recreation halls and similar recreational facilities;
(1) Operation of recreation halls and similar recreational facilities, and provision of consulting services related thereto;

(2) Planning, development, sale and purchase, lease, rent, installment sale, transportation, storage, installation, maintenance, and evaluation of performance of game machines, peripheral equipment and other movables of various kinds, and brokerage, agency, research and consulting services related thereto;

(2) Planning, development, sale and purchase, maintenance, and evaluation of performance of game machines, peripheral equipment and related equipment, and brokerage, agency, research and consulting services related thereto;
(3)

Planning relating to measures to prevent illegal usage of game machines and manufacturing, sales, installation work, and maintenance of components for such measures;

(Addition)

(3) Development, operation and maintenance of (4) management systems for game machines, and provision of system services as well as brokerage, agency, research and consulting services related to such systems;

Development, operation and maintenance of management systems for game machines, and provision of system services as well as brokerage, agency, research and consulting services related to such systems;

(4) Preparing and filing applications for the moving of game machines, and brokerage, agency, research and consulting services related thereto;
(5)

Preparing and filing applications for the moving of game machines, and brokerage, agency, research and consulting services related thereto;

Manufacturing, processing, and sale of goods that are offered as prises in gaming places, and provision of brokerage, agency, research and consulting services related thereto;

(Addition)

(5) Planning, development, manufacturing, sale, (7) installation, maintenance, lease and import and export of amusement machines, software, contents, amusement facility system and peripheral equipment;

Planning, development, manufacturing, sale, installation, maintenance, lease and import and export of amusement machines, software, contents, amusement facility system and peripheral equipment;

(6) Planning and management of restaurants (8) and providing consulting services thereto;
Planning and management of restaurants and providing consulting services thereto;

– 43 –

DETAILS OF PROPOSED PARTIAL AMENDMENTS TO THE ARTICLES OF INCORPORATION

APPENDIX II

Existing AOI

Proposed Amendment
(9) Operation of, and provision of consulting services regarding, golf simulation facilities;
(10) Import, sale, and lease of golf simulation equipment and its peripheral equipment;
(11) Operation of golf schools; (12) Operation of offline or online golf lesson systems;

(Addition)

(13) Planning and operation of golf-related events and operation of websites related to golf, etc.;
(14) Planning and sale of golf goods and equipment;
(15) Operation of tennis clubs;
(16) Operation of hotels;
(17) Operation of health facilities such as bedrock bathing facilities, lava stone bathing facilities, bath/warm bath facilities, sauna, aromatherapy, reflexology, massage, beauty treatment;
(7) Manufacturing, processing, sale and import and export of coffee, timbers, food and any other goods;

(Addition)

(8) Cargo transportation and packaging services and warehousing and agent services;
(9) Brokerage and referrals of International cargo transportation;
(10) Trading;
(11) Customs clearance and bureau thereof;
(12) Businesses relating to temporary staffing, personnel placement and fee-based employment referrals;
(13) Language and conversation skill instruction, development and training of language teachers and development and sale of language teaching materials;
(14) Overseas school placement, and study abroad services, and agency services related thereto;
(15) Sale and purchase, brokerage, renting, management and evaluation of real estate and consulting services related thereto;
(16) Planning and designing and execution and supervision of construction works of buildings, interior and exterior design;
(17) Repair, cleaning, maintenance and management of buildings;
(18) Manufacturing, processing, purchasing, sale and import and export of construction materials;
(18) Manufacturing, processing, sale, import and export of confectionery, coffee, foods, daily goods, timbers, and other goods;
(19) Manufacturing and sale of drinking water such as mineral water, and soft drinks;
(20) Sale, import and export of lighting apparatus and kitchen instrument;
(21) Sale of tobaccos and alchoholic beverages; (22) Cargo transportation and packaging services and warehousing and agent services;
(23) Brokerage and referrals of International cargo transportation;
(24) Trading;
(25) Customs clearance and bureau thereof; (26) Businesses relating to temporary staffing, personnel placement and fee-based employment referrals;
(27) Language and conversation skill instruction, development and training of language teachers and development and sale of language teaching materials;
(28) Overseas school placement, and study abroad services, and agency services related thereto;
(29) Sale and purchase, brokerage, renting, management and evaluation of real estate and consulting services related thereto;
(30) Planning and designing and execution and supervision of construction works of buildings, interior and exterior design;
(31) Repair, cleaning, maintenance and management of the inside and the outside of buildings and their parking lots;
(32) Manufacturing, processing, purchasing, sale and import and export of construction materials;

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DETAILS OF PROPOSED PARTIAL AMENDMENTS TO THE ARTICLES OF INCORPORATION

APPENDIX II

Existing AOI

(Addition)

(19) Translation and interpretation services; (20) Moving service referrals;

Proposed Amendment

(33) Travel agent business or travel sub-agent business under the Travel Agency Law;
(34) Translation and interpretation services; (35) Moving service referrals;
(36) Dealing in used articles and provision of consulting services related thereto;
(37) Leasing, rent, sale and purchase, installment sale, and maintenance of cars, used cars, motorcycles, and motorbikes, and various components and goods relating thereto;

(Addition)

(38) Collection, transportation, and disposal of, and provision of consulting services regarding general waste and industrial waste;
(39) Money lending, sale and purchase of various receivables, guaranty or assumption of liabilities, and other financial businesses, as well as brokerage, agency, research and consulting services related thereto;
(21) Nonlife insurance agency;
(22) Life insurance agency;
(23) Insurance agency under the Automobile Liability Security Act;
(24) Data processing services, information services, and unified information management as well as brokerage, agency, research and consulting services related thereto;

(Addition)

(40) Nonlife insurance agency;
(41) Life insurance agency;
(42) Insurance agency under the Automobile Liability Security Act;
(43) Data processing services, information services, and unified information management as well as brokerage, agency, research and consulting services related thereto;
(44) Contract work of preparing, printing, giving and receiving, and transporting documents, and other general affairs of enterprises, or acceptance of orders for such work;
(45) Services of storing and dispatching materials or leaflets;
(46) Taking care of data input services;
(25) Advertisement agency;
(26) Accounting, taxation, payroll calculation, labor management and similar processing services;
(27) Development, installation, operation and maintenance of computer systems; and
(28) Offering loans to, making investments in and providing management advisory services to overseas and domestic entities.

(Addition)

(47) Advertisement agency;
(48) Accounting, taxation, payroll calculation, labor management and similar processing services;
(49) Planning, development, sale, installation, maintenance, operation, and import and export of computer systems and software;
(50) Offering loans to, making investments in and providing management advisory services to overseas and domestic entities; and
(51) Consulting services relating to management of companies.

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DETAILS OF PROPOSED PARTIAL AMENDMENTS TO THE ARTICLES OF INCORPORATION

APPENDIX II

Existing AOI

Proposed Amendment

Chapter 2 Shares

Article 7 (Class of Shares)
Subject to the Companies Act, if the Company issues more than one class of shares, including preferred shares, different voting rights may be attach to different share classes.
Article 7 (Class of Shares)
Subject to the provisions of the Companies Act, if the Company issues more than one class of shares, including preferred shares, different voting rights may be attach to different share classes.
Article 9 (Acquisition of Treasury Shares)
The Company shall without delay cancel treasury shares acquired by the Company through the resolution of the board of directors or decision of executive officer(s) authorized by the board, if such cancellation is required under the Listing Rules.
Article 9 (Acquisition of Treasury Shares) 2. The Company shall without delay cancel treasury shares acquired by the Company through the resolution of the board of directors or decision of executive officer(s) authorized by the board, if such cancellation is required under the rules (the ‘‘Listing Rules’’) of the stock exchange (the ‘‘Stock Exchange’’) on which the securities of the Company are listed.
Article 12 (Registration of Share Transfers)
Article 12 (Registration of Share Transfers) 1. Transfer of shares or creation of pledge on shares shall not be perfected against the Company and other third parties unless the name and address of the person who acquires those shares or the pledgee of such shares is stated or recorded in the shareholder registry.
1. The statement and recording in the shareholder registry provided for in the immediately preceding paragraph shall be subject to a fee which is determined in accordance with the prevailing market rates but shall in any event not exceed the maximum fees prescribed by the Listing Rules.
Transfer of shares or creation of pledge on shares shall not be perfected against the Company and other third parties unless the name and address of the person who acquires those shares or pledge is stated or recorded in the shareholder registry.
The statement and recording in the 2. shareholder registry provided for in the immediately preceding paragraph shall be subject to a fee which is determined in accordance with the prevailing market rates but shall in any event not exceed the maximum fees prescribed by the rules of the stock exchange on which the securities of ‘‘ ’’

the Company are listed (the Listing Rules ).

Any person who seeks to have his/her name 3. recorded as a shareholder in the shareholder registry needs to present share transfer forms duly executed by the relevant transferor and transferee (including, where the transferor or transferee is a clearing house, execution by hand or machineimprinted signature) and other prescribed application documents (if applicable) in compliance with the Listing Rules, and the laws of place where the Company is listed, except where otherwise provided under the laws of Japan.
Any person who seeks to have his/her name recorded as a shareholder in the shareholder registry needs to present share transfer forms duly executed by the relevant transferor and transferee and other prescribed application documents (if applicable) in compliance with the Listing Rules, and the laws of place where the Company is listed, except where otherwise provided under the laws of Japan.

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DETAILS OF PROPOSED PARTIAL AMENDMENTS TO THE ARTICLES OF INCORPORATION

APPENDIX II

Existing AOI

Article 17. (Record Date)

Shareholders of the Company having voting rights recorded in the most recent shareholder registry as of 31 March of each year shall be deemed to be shareholders permitted to exercise their rights at the annual shareholders meeting held in respect of such business year.
In addition to the foregoing, when necessary, the Company may, following the giving of advance public notice and pursuant to resolution of the board of directors, designate the shareholders or registered pledgees appearing in the final shareholder registry as of a specific date as shareholders or registered pledgees who are permitted to exercise voting rights.

(Addition)

Proposed Amendment

Article 17 (Record Date to Determine Voting Rights Holders)
The Company may, by specifying the record date, designate shareholders whose names appear on the shareholder registry as at such record date as those who are entitled to exercise their voting rights at a relevant shareholders meeting.
Where the Company specifies the record date as described in the preceding paragraph, the Company shall give public notice of such record date and the fact that those shareholders whose names appear on the shareholder registry as at such record date are entitled to exercise their voting rights at a relevant shareholders meeting no less than 2 weeks prior to such record date.
Where the Company specifies the record date as described in the paragraph 1, the Company shall publish such record date on the websites of both the Stock Exchange and the Company no later than 10 business days prior to such record date.
The business day as in the preceding paragraph shall mean business day in Hong Kong.

Article 18 (Limitation on power to sell shares of untraceable shareholders)

Where power is exercised to sell the shares of a member who is untraceable under the Companies Act, the Company shall not exercise such power unless:

(a) during a period of 12 years at least three dividends in respect of the shares in question have become payable and no dividend during that period has been received; and
(b) on expiry of the 12 years the Company notifies any stock exchange on which the Company is listed of such intention and gives notice of its intention to sell the shares by way of an advertisement published in a newspaper in both Japan and the place of the stock exchange on which its shares are listed.

Article 18 (Limitation on power to sell shares of untraceable shareholders)

Where power is exercised to sell the shares of a member who is untraceable under the provisions of the Companies Act, the Company shall not exercise such power unless each item set forth below has been satisfied:

(a) during a period of 12 years at least three dividends in respect of the shares in question have become payable and no dividend during that period has been received; and
(b) on expiry of the 12 years the Company notifies the Stock Exchange of such intention and gives notice of its intention to sell the shares by way of an advertisement published in newspapers in both Japan and the place of the Stock Exchange.

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DETAILS OF PROPOSED PARTIAL AMENDMENTS TO THE ARTICLES OF INCORPORATION

APPENDIX II

Existing AOI

Proposed Amendment

Chapter 3 Shareholders Meeting

Article 19 (Convocation of Shareholders Meetings)

The Company shall announce the date on which an annual shareholders meeting is planned to be held no less than 10 weeks prior to such date on the Company’s website or the website of the stock exchange on which the Company is listed.

Article 19 (Convocation of Shareholders Meetings)

The Company shall announce the date on which an annual shareholders meeting is planned to be held no less than 10 weeks prior to such date on the Company’s website and the website of the Stock Exchange.

Article 20. (Persons Authorized to Convene Meetings; Chairman of Shareholders Meetings)

Article 20 (Persons Authorized to Convene Meetings; Chairman of Shareholders Meetings) 1. Shareholders meetings shall be convened by a director who is determined in advance by the board of directors unless otherwise provided by laws or regulations. If such director is unable to so act or is absent, then another director shall convene the shareholders meeting in accordance with the order of priority predetermined by the board of directors.
Shareholders meetings shall be convened by the director who is also the president and the executive officer, who shall act as the chairman of such meetings pursuant to resolution of the board of directors unless otherwise provided by law or regulation.
A director or executive officer who is determined in advance by the board of directors shall act as the chairperson at the shareholders meeting. If such director or executive officer is unable to so act or is absent, then another director or executive officer shall act as the chairperson at the meeting in accordance with the order of priority predetermined by the board of directors.

(Addition)

The six (6) months’ requirements provided 3. for in Articles 297 (right to request convocation of shareholders meeting), 303 (right to request for addition of agenda) and 305 (right to request notification of a proposal) shall be reduced to the time of request.
The six (6) months’ requirements provided for in Articles 297 (right to request convocation of shareholders meeting), 303 (right to request for addition of agenda) and 305 (right to request notification of a proposal) shall be reduced to the time of request.
In cases where a director who is also the president and the executive officer is unable to so act, the next director in line according to the order of succession stipulated in advance by resolution of the board of directors shall convene the shareholders meeting and act as its chairman.

(Deleted)

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DETAILS OF PROPOSED PARTIAL AMENDMENTS TO THE ARTICLES OF INCORPORATION

APPENDIX II

Existing AOI

Proposed Amendment

Article 21. (Notice to Shareholders)
Article 21. (Notice to Shareholders)
The Company shall give notice sufficient to enable members, whose registered addresses are in the place of the stock exchange on which the Company is listed, to exercise their rights or comply with the terms of the notice. The Company shall not be released from its obligation under the Companies Act or any other applicable laws and regulations to give notice to any shareholder for the reason that such shareholder’s registered address is outside the place of the stock exchange on which the Company is listed.
In the case of the preceding paragraph, the Company shall give notice sufficient to enable members, whose registered addresses are in the place of the Stock Exchange, to exercise their rights or comply with the terms of the notice. The Company shall not be released from its obligation under the Companies Act or any other applicable laws and regulations to give notice to any shareholder for the reason that such shareholder’s registered address is outside the place of the Stock Exchange.
In cases where notices or demands from the 5. Company do not reach a shareholder for five consecutive years or more, the Company shall no longer be required to give notices or issue demands to such shareholder under the Companies Act, provided that where a notice or demand from the Company is returned undelivered, the Company shall thereafter no longer be required to give notices or issue demands to such shareholder under the Companies Act.
In cases where notices or demands from the Company do not reach a shareholder for five consecutive years or more, the Company shall no longer be required to give notices or issue demands to such shareholder under the provisions of the Companies Act, provided that where a notice or demand from the Company is returned undelivered, the Company shall thereafter no longer be required to give notices or issue demands to such shareholder under the provisions of the Companies Act.
Article 23. (Voting by Proxy)
A shareholder may exercise voting rights through a proxy appointed by such shareholder. A shareholder who is the holder of two or more shares may appoint more than one proxy to represent him and vote on his/her behalf at a shareholders meeting. A proxy need not be a shareholder. A proxy or proxies representing either a shareholder who is an individual or a shareholder which is a corporation shall be entitled to exercise the same powers on behalf of the shareholder which he/she or they represent as such shareholder could exercise.
Article 23 (Voting by Proxy)
A shareholder may exercise voting rights through a proxy appointed by such shareholder. In this case, a shareholder who is the holder of two or more shares may appoint more than one proxy to represent him and vote on his/her behalf at a shareholders meeting.
A proxy shall not be required to be a shareholder, and regardless of whether they represent an individual or corporate shareholder, may exercise the same powers as the shareholder they represent could exercise.

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DETAILS OF PROPOSED PARTIAL AMENDMENTS TO THE ARTICLES OF INCORPORATION

APPENDIX II

Existing AOI

Proposed Amendment

If that shareholder provided for in the 3. If a shareholder is a recognised clearing immediately preceding paragraph is a house as defined under the laws or recognised clearing house as defined under regulations of the place of the Stock the laws of place where the Company is Exchange or its nominee(s), it may listed or its nominee(s), it may authorise authorise such person or persons as it such person or persons as it thinks fit to act thinks fit to act as its representative(s) or as its representative(s) or proxy(ies) at any proxy(ies) at any shareholders’ meetings; shareholders’ meetings; provided that, if provided that, if more than one person is so more than one person is so authorised, the authorised, the authorisation or proxy form authorisation or proxy form must specify the must specify the number and class of number and class of shares in respect of shares in respect of which each such which each such person is so authorised. person is so authorised. In this case, the The person so authorised will be deemed to person so authorised will be deemed to have been duly authorised without the need have been duly authorised without the need of producing any share certificates, of producing any share certificates, notarised authorisation and/or further notarised authorisation and/or further evidence for substantiating the facts that it evidence for substantiating the facts that it is duly authorised and will be entitled to is duly authorised and will be entitled to exercise the same power on behalf of the exercise the same power on behalf of the recognised clearing house as that clearing recognised clearing house as that clearing house or its nominee(s) could exercise if it house or its nominee(s) could exercise if it were an individual shareholder of the were an individual shareholder of the Company. Company.
In the case described in the preceding two 4. In the case described in the preceding three paragraphs, a document evidencing paragraphs, a document evidencing authority to act as a proxy shall be authority to act as a proxy shall be submitted to the Company at each relevant submitted to the Company at each relevant shareholders meeting by the relevant shareholders meeting by the relevant shareholder or proxy. shareholder or proxy.
Where the Company issues form of proxy 5. Where the Company issues form of proxy for a shareholders’ meeting, such instrument for a shareholders’ meeting, such instrument may be in any usual or common form or in may be in any usual or common form or in any other form which the Board may any other form which the Board may approve, provided that this shall not approve, provided that this shall not preclude the use of the two-way form, and preclude the use of the two-way form, and shall be expressed to be valid for a shall be expressed to be valid for a particular meeting or generally until revoked particular shareholders’ meeting or generally and a space for voting ‘‘yes’’ or ‘‘no’’ with until the intention to appoint a relevant respect to each resolution shall be set out proxy(ies) is revoked and a space for voting for each agenda for such meeting. ‘‘yes’’ or ‘‘no’’ with respect to each resolution shall be set out for each agenda for such meeting.

The instrument appointing a proxy shall be 6. In the case of the preceding paragraph, the in writing under the hand of the appointor or instrument appointing a proxy shall be in of his/her attorney duly authorised in writing, writing under the hand of the appointor or of or, if the appointor is a corporation, either his/her attorney duly authorised in writing, under seal, or under the hand of an officer or, if the appointor is a corporation, either or attorney duly authorised. under seal, or under the hand of an officer or attorney duly authorised.

Article 25. (Addition to the matters required to be resolved by shareholders’ meeting) Any matters that are required to be resolved by shareholders’ meeting under the rules of the stock exchange on which the shares of the Company are listed shall be resolved by the shareholders meeting.

Article 25 (Addition to the matters required to be resolved by shareholders’ meeting) Any matters that are required to be resolved by shareholders’ meeting under the Listing Rules shall be resolved by the shareholders meeting.

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DETAILS OF PROPOSED PARTIAL AMENDMENTS TO THE ARTICLES OF INCORPORATION

APPENDIX II

Existing AOI

Proposed Amendment

Article 26. (Quorum of meeting of class of shares) Article 26 (Quorum of meeting of class of shares) In case the Company issues more than one class In case the Company issues more than one class of shares, the quorum for a separate class of shares, the quorum for a separate class meeting to consider a variation of the rights of meeting to consider a variation of the rights of that class of shares shall be the holders of that class of shares shall be the holders of majority of the issued shares of that class in majority of the issued shares of that class in accordance with the Companies Act, unless accordance with the Companies Act, unless higher amount is required under the Companies higher amount is required under the Companies Act, the Listing Rules or the code on takeovers Act, the Listing Rules or the code on takeovers and mergers and share repurchases of the and mergers and share repurchases of the place jurisdiction in which the securities of the Company of the Stock Exchange (the ‘‘TakeoversTakeovers Code’’).’’).). are listed (the ‘‘Takeovers Code’’).

In case the Company issues more than one class of shares, the quorum for a separate class meeting to consider a variation of the rights of that class of shares shall be the holders of majority of the issued shares of that class in accordance with the Companies Act, unless higher amount is required under the Companies Act, the Listing Rules or the code on takeovers and mergers and share repurchases of the place of the Stock Exchange (the ‘‘TakeoversTakeovers Code’’).’’).).

Article 27. (Requirements of Voting Rights to Satisfy Quorum and Determine Matters)

In circumstances where the Listing Rules or Takeovers Code (as the case may be) require any transaction between the Company and any party, any action by the Company, or any matter to be subject to a shareholders’ resolution, the shareholders’ resolution relevant to such transaction, action or matter shall not be taken to have been be passed unless the quorum and resolution ratio requirements prescribed by both the Companies Act, and the Listing Rules or Takeovers Code (as the case may be) are satisfied, including any requirements for approval by independent shareholders. Where any Shareholder is, under the Listing Rules or Takeovers Code (as the case may be), required to abstain from voting on any particular resolution or restricted to vote only for or against any particular resolution, then such resolution must be carried by such number of votes that would have satisfied both the quorum and resolution ratio requirements under the Companies Act and the independent shareholders’ approval requirements under the Listing Rules or Takeovers Code (as the case may be), provided that, for the purpose of satisfying the independent Shareholders’ approval requirements under the Listing Rules or Takeovers Code (as the case may be), the number of votes that should be counted shall be in accordance with the relevant requirements set forth in the Listing Rules or the Takeovers Code (as the case may be).

Article 27 (Requirements of Voting Rights to Satisfy Quorum and Determine matters)

In circumstances where the Listing Rules or Takeovers Code (as the case may be) require any transaction between the Company and any party, any action by the Company, or any matter to be subject to a shareholders’ resolution, the shareholders’ resolution relevant to such transaction, action or matter shall not be taken to have been be passed unless the quorum and resolution ratio requirements prescribed by both the Companies Act, and the Listing Rules or Takeovers Code (as the case may be) are satisfied, including any requirements for approval by independent shareholders. Where any Shareholder is, under the Listing Rules or Takeovers Code (as the case may be), required to abstain from voting on any particular resolution or restricted to vote only for or against any particular resolution, then such resolution must be carried by such number of votes that would have satisfied both the quorum and resolution ratio requirements under the Companies Act and the independent shareholders’ approval requirements under the Listing Rules or Takeovers Code (as the case may be). In this case, for the purpose of satisfying the independent Shareholders’ approval requirements under the Listing Rules or Takeovers Code (as the case may be), the number of votes that should be counted shall be in accordance with the relevant requirements set forth in the Listing Rules or the Takeovers Code (as the case may be).

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APPENDIX II

DETAILS OF PROPOSED PARTIAL AMENDMENTS TO THE ARTICLES OF INCORPORATION

Existing AOI

Where any transaction is required to be subject to a resolution Shareholder’s resolution under the Listing Rules or Takeovers Code (as the case may be), the completion of such transaction shall not take place unless the board of directors or its relevant committee passes a resolution after the shareholders’ meeting to confirm that the requisite shareholders’ approval requirement under the Listing Rules or Takeovers Code (as the case may be) has been obtained. The provisions of this Article shall be made known, by a director or executive officer, to the counter party(ies) in, and be made a condition precedent of, such transaction prior to entering into any binding agreement.

Proposed Amendment

Where any transaction is required to be subject to a resolution Shareholder’s resolution under the Listing Rules or Takeovers Code (as the case may be), the completion of such transaction shall not take place unless the board of directors or its relevant committee passes a resolution after the shareholders’ meeting to confirm that the requisite shareholders’ approval requirement under the Listing Rules or Takeovers Code (as the case may be) has been obtained. In this case, it shall be made known, by a director or executive officer, to the counter party(ies) in, and be made a condition precedent of, such transaction prior to entering into any binding agreement.

Chapter 4 Directors and the Board of Directors

Article 29. (Election of Directors)

The Company shall, with each director, enter into a written service contract approved by a shareholders meeting. The contents of such service contract shall include the compensation in case of dismissal of the director pursuant to the immediately preceding paragraph.
Except as permitted under both the Companies Act and the company laws of the jurisdiction in which the Company is listed (if the Company were a public company incorporated in such jurisdiction), the Company shall not directly or indirectly:
(i) make a loan to a director or a director of any holding company of the Company or to any of their respective associates (as defined by the Listing Rules);
(ii) enter into any guarantee or provide any security in connection with a loan made by any person to such a director; or
(iii) if any one or more of the directors hold (jointly or severally or directly or indirectly) a controlling interest in another company, make a loan to such company or enter into any guarantee or provide any security for such company.

Article 29. (Election of Directors)

(Deleted)

Except as permitted under both the Companies Act and the laws and regulations of the place of the Stock Exchange (the provisions which would be applicable if the Company were a public company incorporated in such place), the Company shall not directly or indirectly:
(i) make a loan to a director or a director of any holding company of the Company or to any of their respective associates (as defined by the Listing Rules);
(ii) enter into any guarantee or provide any security in connection with a loan made by any person to a director in the preceding item; or
(iii) if any one or more of the directors hold (jointly or severally or directly or indirectly) a controlling interest in another company, make a loan to such company or enter into any guarantee or provide any security for such company.

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DETAILS OF PROPOSED PARTIAL AMENDMENTS TO THE ARTICLES OF INCORPORATION

APPENDIX II

Existing AOI

Subject to compliance with both the Companies Act and the company laws of the jurisdiction in which the Company is listed (if the Company were a public company incorporated in such jurisdiction), the Company may give financial assistance for the purpose of or in connection with a purchase made or to be made by any person of any shares in the Company.

Article 31. (Powers of the Board of Directors) The board of directors shall be composed of directors and shall make decisions relating to important matters in connection with the execution of business operations in addition to matters prescribed by applicable laws and regulations or by these Articles of Incorporation, as well as supervise directors and executive officers in the performance of their duties.

Article 32. (Persons Authorized to Convene Board Meetings; Chairman of the Board)

Notwithstanding the provisions of the preceding two paragraphs, the directors constituting the nomination committee, the audit committee and the remuneration committee who are appointed to do so by each committee may convene the meetings of the board of directors.
Notwithstanding the provisions of the preceding three paragraphs, executive officers may convene the meetings of the board of directors where permitted to do so pursuant to applicable laws and regulations.

Article 34. (Chairman of the Board) Description omitted

Article 36. (Minutes)

A summary of, and description of the outcome of, the proceedings of each meeting of the board of directors and other matters prescribed by applicable laws and regulations shall be stated or recorded in the minutes, which shall be signed and sealed, or electronically signed, by all directors present.

Proposed Amendment

Subject to compliance with both the Companies Act and the laws and regulations of the place of the Stock Exchange (the provisions which would be applicable if the Company were a listed company incorporated in such place), the Company may give financial assistance for the purpose of or in connection with a purchase made or to be made by any person of any shares in the Company.

Article 32. (Persons Authorized to Convene Board Meetings; Chairman of the Board)

Notwithstanding the provisions of the preceding two paragraphs, the directors constituting the nomination committee, the audit committee and the remuneration committee who are selected to do so by each committee may convene the meetings of the board of directors.
Notwithstanding the provisions of each of the preceding three paragraphs, executive officers may convene the meetings of the board of directors where permitted to do so pursuant to applicable laws and regulations.

(Deleted)

Article 35. (Minutes)

A summary of, and description of the outcome of, the proceedings of each meeting of the board of directors and other matters prescribed by applicable laws and regulations shall be stated or recorded in the minutes, to which all directors present shall affix their signature, or name and seal, or electronic signature.

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DETAILS OF PROPOSED PARTIAL AMENDMENTS TO THE ARTICLES OF INCORPORATION

APPENDIX II

Existing AOI

CHAPTER 5 NOMINATION COMMITTEE, AUDIT COMMITTEE AND REMUNERATION COMMITTEE

Article 41. (Minutes)

A summary of, and description of the outcome of, the proceedings of each meeting of each Committee and other matters prescribed by applicable laws and regulations shall be stated or recorded in minutes, which shall be signed and sealed, or electronically signed, by all committee members present.

Article 45. (Election, Powers and Division of Duties of Chief Executive Officer and Executive Officers)

Article 55. (Record Date for Dividends Payable out of Surplus)

Where the Company specifies the record date in the case of the Paragraph 1, the Company shall disclose such record date and the date of a meeting of the board of directors on the website of the Stock Exchange no later than 10 business days prior to such record date and no later than 7 business days prior to the date of such meeting of the board of directors to which dividends paid out of surplus are recommended.

Proposed Amendment

CHAPTER 5 NOMINATION COMMITTEE, AUDIT COMMITTEE AND REMUNERATION COMMITTEE

Article 40. (Minutes)

A summary of, and description of the outcome of, the proceedings of each meeting of each Committee and other matters prescribed by applicable laws and regulations shall be stated or recorded in minutes, to which all committee members present shall affix their signature, or name and seal, or electronic signature.

Article 44. (Election of Chief Executive Officer and Executive Officers with Corporate Titles, and Powers and Division of Duties)

Article 54. (Record Date for Dividends Payable out of Surplus)

Where the Company specifies the record date in the case of the Paragraph 1, the Company shall disclose such record date and the date of a meeting of the board of directors on the website of the Stock Exchange no later than 10 business days prior to such record date and no later than 7 clear business days prior to the date of such meeting of the board of directors to which dividends paid out of surplus are recommended.

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GUIDE MAP OF EGM VENUE

APPENDIX III

Location 2-27-5 Nishinippori, Arakawa-ku, Tokyo, Japan DYNAM Headquarter

Tel. 03-5850-3660

Access JR Yamanote Line, Keihin Tohoku Line, Joban Line ‘‘Nippori Station’’

==> picture [434 x 363] intentionally omitted <==

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

Higurashi
Elementary
School
DYNAM
Convenience
RESONA Sumitomo
Headquarter Store Bank Mitsui Bank
FamilyMart signal
signal
Ogubashi-Dori Str.
Nippori-Toneri Liner
signal signal
noodle
restaurant
Convenience
Store Sunkus
STATION GARDEN TOWER
STATION PLAZA TOWER
McDonald’s
Convenience Post Nippori- Bus
Store 7-11 Office Toneri Stop
STATION PORT TOWER Liner
NipporiStation Station Rotary
(East Exit)
JR Nippori Station
To Nishinippori Station To Ueno Station
----- End of picture text -----

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AI assistant

DYNAM JAPAN HOLDINGS Co., Ltd. — Proxy Solicitation & Information Statement 2013

51076_rns_2013-08-14_1d5a32bb-1806-4c2e-8eba-c5af507462e0.pdf

株式会社ダイナムジャパンホールディングス DYNAM JAPAN HOLDINGS Co., Ltd.*

(1) CONVOCATION NOTICE OF EGM;

(2) DISCLOSEABLE AND CONNECTED TRANSACTION: PROPOSED ACQUISITION OF HUMAP AND BUSINESS PARTNERS; AND (3) PROPOSED PARTIAL AMENDMENTS TO THE ARTICLES OF INCORPORATION

株式会社ダイナムジャパンホールディングス DYNAM JAPAN HOLDINGS Co., Ltd.* (incorporated in Japan with limited liability)

CONVOCATION NOTICE OF THE EGM

3. Agenda of the EGM:

4. Arrangements on attendance and proxy

DEFINITIONS

DEFINITIONS

株式会社ダイナムジャパンホールディングス DYNAM JAPAN HOLDINGS Co., Ltd.*

(Stock Code: 06889)

(1) CONVOCATION NOTICE OF EGM; (2) DISCLOSEABLE AND CONNECTED TRANSACTION: PROPOSED ACQUISITION OF HUMAP AND BUSINESS PARTNERS; AND (3) PROPOSED PARTIAL AMENDMENTS TO THE ARTICLES OF INCORPORATION

A. DISCLOSEABLE AND CONNECTED TRANSACTION: PROPOSED ACQUISITIONS OF HUMAP AND BUSINESS PARTNERS

BACKGROUND

EQUITY TRANSFER AGREEMENTS

Date

Parties

Assets to be acquired

Consideration

Condition precedents

Completion

REASONS FOR AND BENEFIT OF ENTERING INTO THE EQUITY TRANSFER AGREEMENTS

INFORMATION ABOUT HUMAP AND BUSINESS PARTNERS

General

Humap

Business Partners

Financial information

Humap

LETTER FROM THE BOARD

P Leasing

Dynam Investment

LETTER FROM THE BOARD

P Insurance

Genghis Khan

LETTER FROM THE BOARD

Business Partners

INFORMATION ABOUT THE COMPANY AND THE GROUP

INFORMATION ABOUT THE VENDOR

IMPLICATIONS UNDER THE LISTING RULES

INDEPENDENT BOARD COMMITTEE AND INDEPENDENT FINANCIAL ADVISER

EGM

VOTING ARRANGEMENTS AT THE EGM

GENERAL INFORMATION

RECOMMENDATION

B. PROPOSED PARTIAL AMENDMENTS TO THE ARTICLES OF INCORPORATION

REASONS FOR AND THE RATIONALE OF THE PROPOSED PARTIAL AMENDMENTS

EFFECTIVE DATE OF THE PROPOSED CHANGES

COMPLIANCE WITH JAPANESE LAW

RECOMMENDATION

株式会社ダイナムジャパンホールディングス DYNAM JAPAN HOLDINGS Co., Ltd.* (incorporated in Japan with limited liability)

(Stock Code: 06889)

To the Independent Shareholders

DISCLOSEABLE AND CONNECTED TRANSACTIONS

DISCLOSEABLE AND CONNECTED TRANSACTION PROPOSED ACQUISITION OF HUMAP AND BUSINESS PARTNERS

INTRODUCTION

BASIS OF OUR RECOMMENDATION

PRINCIPAL FACTORS AND REASONS CONSIDERED

1. Background of and reasons for the Acquisition

(a) Background and financial information of the Group

(b) Background and financial information of Humap and Business Partners

Humap Group

Business Partners

(c) Reasons for and benefits of the Acquisition

2. Principal terms of the Share Purchase Agreements

(a) Basis of the Consideration

(b) Comparable analysis

3. Financial effects of the Acquisition to the Group

RECOMMENDATION

1. RESPONSIBILITY STATEMENT

2. DISCLOSURE OF INTEREST

(a) Directors’ and Chief Executives’ Interests and Short Positions in Shares, Underlying Shares and Debentures of the Company or its Associated Corporation

(i) Interests in the Company

(ii) Interest in the associated corporation

(b) Interest and Short Positions in the Shares and Underlying Shares of Substantial Shareholders

3. DIRECTORS’ SERVICE CONTRACTS

4. DIRECTORS’ INTERESTS IN ASSETS AND/OR CONTRACTS AND OTHER INTERESTS

5. CONSENT AND QUALIFICATION OF EXPERTS

DYNAM JAPAN HOLDINGS Co., Ltd. Proxy Solicitation & Information Statement 2013