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THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of the Lai Fung Offers, this Lai Fung Composite Document and/or the accompanying Lai Fung Form(s) of Acceptance or as to the action to be taken, you should consult a licensed securities dealer or registered institution in securities, a bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or otherwise transferred all your securities in Lai Fung Holdings Limited, you should at once hand this Lai Fung Composite Document and the accompanying Lai Fung Form(s) of Acceptance to the purchaser(s) or transferee(s), licensed securities dealer or registered institution in securities, bank or other agent through whom the sale or transfer was effected for transmission to the purchaser(s) or transferee(s).

This Lai Fung Composite Document should be read in conjunction with the accompanying Lai Fung Form(s) of Acceptance, the contents of which form part of the terms and conditions of the Lai Fung Offers. This Lai Fung Composite Document is not for release, publication or distribution in or into any jurisdiction where to do so would constitute a violation of the relevant laws of such jurisdiction.

Hong Kong Exchanges and Clearing Limited, The Stock Exchange of Hong Kong Limited and Hong Kong Securities Clearing Company Limited take no responsibility for the contents of this Lai Fung Composite Document and the accompanying Lai Fung Form(s) of Acceptance, make no representation as to their 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 Lai Fung Composite Document and the accompanying Lai Fung Form(s) of Acceptance.

The Lai Fung Offers are being made for the securities of a company incorporated in the Cayman Islands and while the Lai Fung Offers are subject to Hong Kong disclosure and procedural requirements, investors should be aware that these requirements are different from those of the U.S. The financial statements included herein have been prepared in accordance with Hong Kong Financial Reporting Standards and thus may not be comparable to financial statements of U.S. companies.

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Transtrend Holdings Limited

(Incorporated in Hong Kong with limited liability)

COMPOSITE OFFER AND RESPONSE DOCUMENT

UNCONDITIONAL MANDATORY GENERAL CASH OFFER BY HSBC ON BEHALF OF THE OFFEROR, A WHOLLY-OWNED SUBSIDIARY OF LSD, TO ACQUIRE ALL OF THE ISSUED SHARES OF LAI FUNG (OTHER THAN THOSE ALREADY OWNED OR AGREED TO BE ACQUIRED BY LSD, THE OFFEROR, eSUN OR THEIR RESPECTIVE SUBSIDIARIES) AND TO CANCEL ALL THE OUTSTANDING SHARE OPTIONS OF LAI FUNG

Financial Adviser to LSD and the Offeror

Independent Financial Adviser to the Lai Fung Independent Board Committee

Unless the context otherwise requires, capitalised terms used in this Lai Fung Composite Document (including this cover page) have the same meanings as those defined in the section headed “Definitions” in this Lai Fung Composite Document.

A “Letter from HSBC” containing, among other things, the details of the terms and conditions of the Lai Fung Offers are set out on pages 9 to 23 of this Lai Fung Composite Document. A “Letter from the Lai Fung Board” is set out on pages 24 to 28 of this Lai Fung Composite Document. A “Letter from the Lai Fung Independent Board Committee” containing its recommendations to the Disinterested Lai Fung Shareholders and the Lai Fung Optionholders in respect of the Lai Fung Offers is set out on pages 29 to 31 of this Lai Fung Composite Document. A “Letter from the Lai Fung Independent Financial Adviser” containing its advice and recommendations to the Lai Fung Independent Board Committee in respect of the Lai Fung Offers is set out on pages 32 to 43 of this Lai Fung Composite Document.

The procedures for acceptance and settlement of the Lai Fung Offers are set out in “Appendix I – Further Terms of the Lai Fung Offers” to this Lai Fung Composite Document and in the accompanying Lai Fung Form(s) of Acceptance. Acceptance of the Lai Fung Share Offer should be received by the Registrar and acceptance of the Lai Fung Option Offer should be received by the company secretary of Lai Fung by no later than 4:00 p.m. on Thursday, 13 September 2018 or such later time(s) and/or date(s) as the Offeror may determine and announce, in accordance with the Takeovers Code. The Lai Fung Offer Shareholders and the Lai Fung Optionholders should inform themselves of and observe any applicable legal, tax or regulatory requirements. See “Important Notices” on pages v and vi of this Lai Fung Composite Document.

Any persons including, without limitation, custodians, nominees and trustees, who would, or otherwise intend to, forward this Lai Fung Composite Document and/or the accompanying Lai Fung Form(s) of Acceptance to any jurisdiction outside of Hong Kong should read the details in this regard which are contained in section 13 “ Overseas Lai Fung Shareholders and Lai Fung Optionholders ” in the “Letter from HSBC” in this Lai Fung Composite Document before taking any action. It is the responsibility of any overseas Lai Fung Offer Shareholders and overseas Lai Fung Optionholders wishing to take any action in relation to the Lai Fung Share Offer and the Lai Fung Option Offer, respectively, to satisfy themselves as to the full observance of the laws and regulations of the relevant jurisdictions in connection therewith, including obtaining all governmental, exchange control or other consents which may be required and compliance with all necessary formalities or legal requirements and the payment of any issue, transfer or other taxes payable by such overseas Lai Fung Offer Shareholders or overseas Lai Fung Optionholders in respect of the acceptance of the Lai Fung Offers (as applicable) in such jurisdiction. The overseas Lai Fung Offer Shareholders and the overseas Lai Fung Optionholders are advised to seek professional advice on deciding whether to accept the Lai Fung Offers (as applicable).

This Lai Fung Composite Document is issued jointly by LSD, the Offeror and Lai Fung. The English texts of this Lai Fung Composite Document and the accompanying Lai Fung Form(s) of Acceptance shall prevail over their respective Chinese texts for the purpose of interpretation.

15 August 2018

	Page
Important Notices to all Lai Fung Offer Shareholders and Lai Fung Optionholders ........................... ii
Expected Timetable .............................................................................................................................iii
Important Notices ................................................................................................................................. v
Defnitions ............................................................................................................................................ 1
Letter from HSBC ................................................................................................................................ 9
Letter from the	Lai Fung Board ......................................................................................................... 24
Letter from the	Lai Fung Independent Board Committee .................................................................. 29
Letter from the	Lai Fung Independent Financial Adviser .................................................................. 32
Appendix I	— Further Terms of the Lai Fung Offers .................................................................I-1
Appendix II	— Financial Information of the Lai Fung Group ................................................... II-1
Appendix III	— Property Valuation of the Lai Fung Group ......................................................III-1
Appendix IV	— General Information of LSD and the Offeror ..................................................IV-1
Appendix V	— General Information of Lai Fung ...................................................................... V-1
Appendix VI	— Form of Lai Fung Option Offer Letter .............................................................VI-1

– i –

IMPORTANT NOTICES TO ALL LAI FUNG OFFER SHAREHOLDERS AND LAI FUNG OPTIONHOLDERS

The following information is important for all Lai Fung Offer Shareholders and Lai Fung Optionholders.

You are urged to read this entire Lai Fung Composite Document, including the appendices, and the Lai Fung Form(s) of Acceptance carefully.

Lai Fung Share Offer Price: HK$5.22 in cash per Lai Fung Offer Share.
Lai Fung Option Offer Price: Please refer to section 5 “The Lai Fung Option Offer and the Lai Fung Option Offer Price” in the “Letter from HSBC” in this Lai Fung Composite Document.
How to accept the Lai Fung Offers: Please return the duly completed and signed WHITE Form of Lai Fung Share Offer Acceptance and the relevant documents to the Registrar (for the Lai Fung Share Offer) and/or the PINK Form of Lai Fung Option Offer Acceptance and the relevant documents to the company secretary of Lai Fung (for the Lai Fung Option Offer).
Deadline for acceptance: The Lai Fung Offers will close for acceptance at 4:00 p.m. on Thursday, 13 September 2018 (the first Lai Fung Share Offer Closing Date), unless otherwise revised or extended.

For details, please refer to “Appendix I — Further Terms of the Lai Fung Offers” to this Lai Fung Composite Document.

Settlement: Payments in cash will be made within seven (7) Business Days of the date of receipt of your valid acceptance.

NEED HELP?

Please call the customer service hotline of the Registrar, Tricor Tengis Limited, at (852) 2980 1333 between 9:00 a.m. and 5:00 p.m. on Mondays to Fridays, excluding Hong Kong public holidays, if you have any enquiries concerning administrative matters, such as dates, documentation and procedures relating to the Lai Fung Share Offer.

The hotline cannot and will not provide advice on the merits of the Lai Fung Offers or give financial or legal advice. If you are in any doubt as to any aspect of this Lai Fung Composite Document or as to the action to be taken, you should consult a licensed securities dealer or registered institution in securities, a bank manager, solicitor, professional accountant or other professional adviser.

– ii –

EXPECTED TIMETABLE

The timetable set out below is indicative only and may be subject to change. Further announcement(s) will be made in the event that there is any change to the following timetable.

Event

Hong Kong Time

Despatch date of this Lai Fung Composite Document and the accompanying Lai Fung Form(s) of Acceptance ............................Wednesday, 15 August 2018

Opening date of the Lai Fung Offers .........................................................Wednesday, 15 August 2018

First Lai Fung Share Offer Closing Date (Note 1) ..................................Thursday, 13 September 2018

Latest time for acceptance of the Lai Fung Offers on the first Lai Fung Share Offer Closing Date (Note 2) ....................................................................... 4:00 p.m. on Thursday, 13 September 2018

Announcement of the results of the Lai Fung Offers as at the first Lai Fung Share Offer Closing Date on the website of the Stock Exchange .....................................................................................no later than 7:00 p.m. on Thursday, 13 September 2018

Latest date for despatch of cheques for payment

of the amounts due under the Lai Fung Offers in respect of valid acceptances received on the first Lai Fung Share Offer Closing Date (Note 3) ...................... Monday, 24 September 2018

Notes:

(1) The Lai Fung Offers, which are unconditional in all respects, will close for acceptances at 4:00 p.m. on Thursday, 13 September 2018 unless the Offeror revises or extends the Lai Fung Offers in accordance with the Takeovers Code. The Offeror has the right under the Takeovers Code to extend the Lai Fung Offers until such date as it may determine subject to compliance with the Takeovers Code (or as permitted by the Executive in accordance with the Takeovers Code). If the Lai Fung Offers are extended or revised, the announcement of such extension or revision will state the next Lai Fung Share Offer Closing Date. Any revised Lai Fung Offers must be kept open for at least fourteen (14) days or, if longer and to the extent required by applicable U.S. regulations (including where there is a change in the Lai Fung Share Offer Price), at least ten (10) U.S. Business Days following the date on which the revised Lai Fung Composite Document is posted, and shall not be closed earlier than Thursday, 13 September 2018.

– iii –

EXPECTED TIMETABLE

(2) If you wish to accept the Lai Fung Offers, you should ensure your duly completed and signed Lai Fung Form(s) of Acceptance and the relevant documents arrive at the Registrar (for the Lai Fung Share Offer) or the company secretary of Lai Fung (for the Lai Fung Option Offer) not later than the prescribed time. If you choose to deliver the documents by post, you should consider the timing requirements for postage.

Beneficial owners of the Lai Fung Offer Shares who hold their Lai Fung Offer Shares in CCASS directly as an investor participant or indirectly via a broker or custodian participant should note the timing requirements for causing instructions to be made to CCASS in accordance with the General Rules of CCASS and CCASS Operational Procedures.

All acceptances, instructions, authorisations and undertakings given by the Lai Fung Offer Shareholders in the WHITE Form of Lai Fung Share Offer Acceptance and by the Lai Fung Optionholders in the PINK Form of Lai Fung Option Offer Acceptance shall be irrevocable except as permitted under the Takeovers Code.

(3) Payment of the consideration (after deducting the seller’s ad valorem stamp duty) for the Lai Fung Offer Shares tendered for acceptance under the Lai Fung Share Offer will be posted by ordinary post to the Lai Fung Offer Shareholders who accept the Lai Fung Share Offer at their own risk, and payment of the consideration for the Lai Fung Options surrendered for cancellation under the Lai Fung Option Offer will be delivered to the office of Lai Fung in Hong Kong at 11th Floor, Lai Sun Commercial Centre, 680 Cheung Sha Wan Road, Kowloon, Hong Kong for collection by the Lai Fung Optionholders. Payment will be made as soon as possible, but in any event within seven (7) Business Days of the date of receipt by the Registrar (in respect of the Lai Fung Share Offer) or the company secretary of Lai Fung (in respect of the Lai Fung Option Offer) of all the relevant documents to render each acceptance under the relevant Lai Fung Offers complete and valid in accordance with the Takeovers Code, this Lai Fung Composite Document and the relevant accompanying Lai Fung Form(s) of Acceptance.

Effect of bad weather on the latest time for acceptance of the Lai Fung Offers and/or the latest date for despatch of cheques

If there is a tropical cyclone warning signal number 8 or above, or a black rainstorm warning in force, in Hong Kong:

(a) at any time before 12:00 noon but no longer in force at or after 12:00 noon on the latest date for acceptance of the Lai Fung Offers and/or the latest date for despatch of cheques for the amounts due under the Lai Fung Offers in respect of valid acceptances (as the case may be), the latest time for acceptance of the Lai Fung Offers will remain at 4:00 p.m. on the same Business Day and/or the latest date for despatch of cheques will remain on the same Business Day; or
(b) at any time between 12:00 noon and 4:00 p.m. on the latest date for acceptance of the Lai Fung Offers and/or the latest date for despatch of cheques for the amounts due under the Lai Fung Offers in respect of valid acceptances (as the case may be), the latest time for acceptance of the Lai Fung Offers will be rescheduled to 4:00 p.m. on the following Business Day and/or the latest date for despatch of cheques will be rescheduled to the following Business Day.

– iv –

IMPORTANT NOTICES

NOTICE TO U.S. HOLDERS OF LAI FUNG SHARES AND/OR LAI FUNG OPTIONS

The Lai Fung Offers are being made for the securities of a company incorporated in the Cayman Islands with limited liability and are subject to Hong Kong disclosure and other procedural requirements, which are different from those of the USA. The financial information included in this Lai Fung Composite Document has been prepared in accordance with Hong Kong Financial Reporting Standards and thus may not be comparable to financial information of U.S. companies or companies whose financial statements are prepared in accordance with generally accepted accounting principles in the USA. The Lai Fung Offers will be made in the USA pursuant to the applicable U.S. tender offer rules or certain available exemptions or exceptions therefrom and otherwise in accordance with the requirements of the SFO. Accordingly, the Lai Fung Offers will be subject to disclosure and other procedural requirements, including with respect to withdrawal rights, offer timetable, settlement procedures and timing of payments that are different from those applicable under U.S. domestic tender offer procedures and law.

The receipt of cash pursuant to the Lai Fung Offers by a U.S. holder of Lai Fung Shares and/or Lai Fung Options, respectively, may be a taxable transaction for U.S. federal income tax purposes and under applicable state and local, as well as foreign and other tax laws. Each holder of Lai Fung Shares and/or Lai Fung Options is urged to consult his/her/its independent professional adviser immediately regarding the tax consequences of acceptance of the Lai Fung Offers.

U.S. holders of Lai Fung Shares and Lai Fung Options may encounter difficulty enforcing their rights and any claims arising out of the U.S. federal securities laws, as each of the Offeror and Lai Fung is located in a country outside the USA and some or all of their respective officers and directors may be residents of a country other than the United States. U.S. holders of Lai Fung Shares and Lai Fung Options may not be able to sue a non-U.S. company or its officers or directors in a non-U.S. court for violations of U.S. securities laws. Further, U.S. holders of Lai Fung Shares and Lai Fung Options may encounter difficulty compelling a non-U.S. company and its affiliates to subject themselves to a U.S. court’s judgment.

In accordance with normal Hong Kong practice and pursuant to Rule 14e-5(b) of the U.S. Exchange Act, the Offeror hereby discloses that it or its affiliates, or its nominees, or its brokers (acting as agents) may from time to time make certain purchases of, or arrangements to purchase, Lai Fung Shares outside of the United States, other than pursuant to the Lai Fung Share Offer, before or during the period in which the Lai Fung Share Offer remains open for acceptance. In accordance with the Takeovers Code and Rule 14e-5(b) of the U.S. Exchange Act, HSBC and its affiliates may continue to act as exempt principal traders (where such statuses are granted to the relevant HSBC entities) in the Lai Fung Shares on the Stock Exchange. These purchases may occur either in the open market at prevailing prices or in private transactions at negotiated prices, provided that (i) any such purchase or arrangement complies with applicable law and is made outside the United States; and (ii) if applicable and required under the relevant exemption or exception (or the Takeovers Code), the Lai Fung Share Offer Price is increased to match any consideration paid in any such purchase or arrangement. Any information about such purchases will be reported to the SFC and, to the extent made public by the SFC, will be available on the website of the SFC at http://www.sfc.hk. To the extent that such information is required to be publicly disclosed in Hong Kong in accordance with applicable regulatory requirements, this information will, as applicable, also be publicly disclosed in the United States, by publishing it on the website of LSD at www.laisun.com.

– v –

IMPORTANT NOTICES

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Lai Fung Composite Document includes certain “forward-looking statements”. These statements are based on the current expectations of the management of the Offeror, LSD and/or Lai Fung (as the case may be) and are naturally subject to uncertainty and changes in circumstances.

Forward-looking statements include, without limitation, statements typically containing words such as “intends”, “expects”, “anticipates”, “targets”, “estimates”, “envisages” and words of similar import. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by such forward-looking statements. These factors include, but are not limited to, general, social, economic and political conditions in the countries in which the LSD Group and/or the Lai Fung Group operate or other countries which have an impact on the LSD Group and/or the Lai Fung Group’s business activities or investments, interest rates, the monetary and interest rate policies of the countries in which the LSD Group and/or the Lai Fung Group operate, inflation or deflation, foreign exchange rates, the performance of the financial markets in the countries in which the LSD Group and/or the Lai Fung Group operate and globally, changes in domestic and foreign laws, regulations and taxes, changes in competition and the pricing environments in the countries in which the LSD Group and/or the Lai Fung Group operate and regional or general changes in asset valuations. Other unknown or unpredictable factors could cause actual results to differ materially from those in the forward-looking statements.

Subject to the requirement of applicable laws, rules and regulations, including the Takeovers Code, all written and oral forward-looking statements attributable to the Offeror, LSD, Lai Fung or persons acting on behalf of any of them are expressly qualified in their entirety by the cautionary statements above. The forward-looking statements included herein are made only as of the Latest Practicable Date. Subject to the requirement of applicable laws, rules and regulations, including the Takeovers Code, none of LSD, Lai Fung or the Offeror assumes any obligation to correct or update the forwardlooking statements or opinions contained in this Lai Fung Composite Document.

– vi –

DEFINITIONS

In this Lai Fung Composite Document, the following expressions have the meanings set out below unless the context requires otherwise.

“Announcement Date”
means 27 May 2018, being the date of the Joint Announcement;
“associate” has the meaning ascribed to it under the Takeovers Code;
“Business Day” means a day on which the Stock Exchange is open for the transaction of business;
“CCASS” means the Central Clearing and Settlement System established and operated by HKSCC;
“Companies Ordinance” means the Companies Ordinance (Chapter 622 of the Laws of Hong Kong);
“disclosures of interests” means disclosures of interests pursuant to Part XV of the SFO and the disclosure of dealings pursuant to Rule 22 of the Takeovers Code;
“Disinterested Lai Fung means the holders of the Disinterested Lai Fung Shares. For Shareholders” the avoidance of doubt, the Disinterested Lai Fung Shareholders include (1) any member of the HSBC Group in respect of Lai Fung Shares of its non-discretionary investment clients where such client (a) has control over whether to tender acceptances to the Lai Fung Share Offer in respect of those Lai Fung Shares, (b) if acceptances of the Lai Fung Share Offer in respect of those Lai Fung Shares are to be tendered, gives instructions to tender them, and (c) is not the Offeror, LSD or any of the other Offeror Concert Parties and (2) the Yu Shareholders;
“Disinterested Lai Fung Shares” means the Lai Fung Shares other than those owned by the Offeror or any of the Offeror Concert Parties;
“Dr. Peter Lam”
means Dr. Lam Kin Ngok, Peter, an Offeror Director, a deputy chairman and an executive director of LSG, the chairman and an executive director of LSD and the ultimate controlling shareholder of LSG, LSD and the Offeror;
“Encumbrance”
means any mortgage, charge, pledge, lien, equities, hypothecation or other encumbrance, priority or security interest, deferred purchase, title retention, leasing, sale-andrepurchase or sale-and-leaseback arrangement, rights of preemption or any other third party rights of any nature or any agreement for any of the same;

– 1 –

DEFINITIONS

“eSun” means eSun Holdings Limited (豐德麗控股有限公司), a company incorporated in Bermuda with limited liability, the issued shares of which are listed and traded on the Main Board of the Stock Exchange (Stock Code: 571);
“eSun Composite Document” means the composite offer and response document dated 23 July 2018 issued by LSD, the Offeror and eSun to the eSun Shareholders and the eSun Optionholders in accordance with the Takeovers Code in relation to the eSun Offers;
“eSun Directors” means the directors of eSun; “eSun Offer Shares” means the eSun Shares which are subject to the eSun Share Offer;
“eSun Offers” means the eSun Share Offer and the eSun Option Offer; “eSun Option Offer” means the offer by HSBC on behalf of the Offeror to the eSun Optionholders in compliance with Rule 13 of the Takeovers Code to cancel all the eSun Options;
“eSun Optionholders” means the holders of the eSun Options; “eSun Options” means the share options, each relating to one eSun Share, granted and outstanding under the eSun Share Option Schemes from time to time, whether such options are vested or not;
“eSun Share Offer Price” means HK$1.30 per eSun Offer Share;
“eSun Share Offer” means the voluntary general cash offer by HSBC on behalf of the Offeror to acquire all of the issued eSun Shares (other than those already owned or agreed to be acquired by LSD, the Offeror or their respective subsidiaries);
“eSun Share Option Schemes” means the share option schemes adopted by eSun on 23 December 2005 and 11 December 2015, respectively;
“eSun Shareholders” means the holders of the eSun Shares; “eSun Shares” means the shares in the capital of eSun; “Executive” means the Executive Director of the Corporate Finance Division of the SFC or any delegate of the Executive Director;

– 2 –

DEFINITIONS

“Form of Lai Fung Option means the PINK form of acceptance and cancellation in Offer Acceptance” respect of the Lai Fung Option Offer accompanying this Lai Fung Composite Document;
“Form of Lai Fung Share means the WHITE form of acceptance and transfer in respect Offer Acceptance” of the Lai Fung Share Offer accompanying this Lai Fung Composite Document;
“HK$” means Hong Kong dollars, the lawful currency of Hong Kong;
“HKSCC” means Hong Kong Securities Clearing Company Limited;
“Hong Kong” means the Hong Kong Special Administrative Region of the PRC;
“HSBC” means The Hongkong and Shanghai Banking Corporation Limited, being the financial adviser to LSD and the Offeror in relation to the Offers, a registered institution under the SFO, registered to carry on Type 1 (dealing in securities), Type 2 (dealing in futures contracts), Type 4 (advising on securities), Type 5 (advising on futures contracts), Type 6 (advising on corporate finance) and Type 9 (asset management) regulated activities under the SFO and a licensed bank under the Banking Ordinance (Chapter 155 of the Laws of Hong Kong);
“HSBC Group” means HSBC and persons controlling, controlled by or under the same control as HSBC;
“Joint Announcement” means the announcement dated 27 May 2018 jointly made by LSG, LSD, the Offeror, eSun and Lai Fung in relation to the Offers;
“Knight Frank” means Knight Frank Petty Limited, the independent property valuer appointed by Lai Fung;
“Lai Fung” means Lai Fung Holdings Limited (麗豐控股有限公司), a company incorporated in the Cayman Islands with limited liability, the issued shares of which are listed and traded on the Main Board of the Stock Exchange (Stock Code: 1125);
“Lai Fung Board” means the board of Lai Fung Directors;

– 3 –

DEFINITIONS

“Lai Fung Composite
Document”

means this composite offer and response document dated 15 August 2018 issued by LSD, the Offeror and Lai Fung to the Lai Fung Shareholders and the Lai Fung Optionholders in accordance with the Takeovers Code in relation to the Lai Fung Offers;

“Lai Fung Directors”
means the directors of Lai Fung;
“Lai Fung Form(s) of Acceptance” means collectively, the Form of Lai Fung Share Offer Acceptance and the Form of Lai Fung Option Offer Acceptance, and “ Lai Fung Form of Acceptance ” shall mean either one of them;
“Lai Fung Group” means Lai Fung and its subsidiaries;
“Lai Fung Independent Board Committee”
means the independent board committee of Lai Fung established by the Lai Fung Board and comprising Mr. Lucas Ignatius Loh Jen Yuh, Mr. Puah Tze Shyang, Mr. Ku Moon Lun, Mr. Law Kin Ho, Mr. Mak Wing Sum, Alvin and Mr. Shek Lai Him, Abraham to make a recommendation to the Disinterested Lai Fung Shareholders and the Lai Fung Optionholders in respect of the Lai Fung Share Offer and the Lai Fung Option Offer, respectively;
“Lai Fung Independent Financial Adviser” or “Gram Capital”
means Gram Capital Limited, a licensed corporation to carry out Type 6 (advising on corporate finance) regulated activity under the SFO and being the independent financial adviser to the Lai Fung Independent Board Committee in connection with the Lai Fung Offers;
“Lai Fung Offer Period”
has the meaning ascribed to it in the Takeovers Code which commenced on 27 May 2018, being the Announcement Date, and which will end on the date on which the Lai Fung Offers close for acceptances;
“Lai Fung Offer Shareholders”
means the holders of the Lai Fung Offer Shares;
“Lai Fung Offer Shares”
means the Lai Fung Shares which are subject to the Lai Fung Share Offer;
“Lai Fung Offers”
means the Lai Fung Share Offer and the Lai Fung Option Offer;
“Lai Fung Option Offer”

means the offer by HSBC on behalf of the Offeror to the Lai Fung Optionholders in compliance with Rule 13 of the Takeovers Code to cancel all the Lai Fung Options;

– 4 –

DEFINITIONS

“Lai Fung Option Offer Letter”
“Lai Fung Option Offer Price”
“Lai Fung Optionholders”
“Lai Fung Options”
“Lai Fung Share Consolidation”
“Lai Fung Share Offer Closing Date”
“Lai Fung Share Offer Price”
“Lai Fung Share Offer”
“Lai Fung Share Option Schemes”
“Lai Fung Shareholders”
“Lai Fung Shares”
means the letter dated 15 August 2018 issued by HSBC on behalf of the Offeror to the Lai Fung Optionholders in accordance with the Takeovers Code in relation to the Lai Fung Option Offer in the form set out in Appendix VI to this Lai Fung Composite Document;
means, in relation to any Lai Fung Option, the price at which the Lai Fung Option Offer is made;

means the holders of the Lai Fung Options;

means the share options, each relating to one Lai Fung Share, granted and outstanding under the Lai Fung Share Option Schemes from time to time, whether such options are vested or not;

means the share consolidation of Lai Fung Shares approved by the Lai Fung Shareholders at the extraordinary general meeting of Lai Fung held on 14 August 2017 and effective on 15 August 2017 that every fifty (50) issued and unissued ordinary shares of HK$0.10 each in the share capital of Lai Fung be consolidated into one (1) ordinary share of HK$5.00 each in the share capital of Lai Fung;
means Thursday, 13 September 2018, being the first offer closing date of the Lai Fung Share Offer or any subsequent offer closing date in the event that the Lai Fung Share Offer is extended or revised in accordance with the Takeovers Code;

means HK$5.22 per Lai Fung Offer Share;

means the unconditional mandatory general cash offer by HSBC on behalf of the Offeror to acquire all of the Lai Fung Shares (other than those already owned or agreed to be acquired by LSD, the Offeror, eSun or their respective subsidiaries);

means the share option schemes adopted by Lai Fung on 21 August 2003 (as amended on 8 August 2018) and 18 December 2012, respectively;

means the holders of the Lai Fung Shares;

means the shares in the capital of Lai Fung;

– 5 –

DEFINITIONS

“Last Trading Date”
means 25 May 2018, being the last trading day prior to the publication of the Joint Announcement;
“Latest Practicable Date”
means 10 August 2018, being the latest practicable date prior to the printing of this Lai Fung Composite Document for ascertaining certain information for inclusion in this Lai Fung Composite Document;
“Listing Rules” means the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited;
“LSD” means Lai Sun Development Company Limited (麗新發展有限公司), a company incorporated in Hong Kong with limited liability under the Companies Ordinance, the issued shares of which are listed and traded on the Main Board of the Stock Exchange (Stock Code: 488);
“LSD Board” means the board of LSD Directors;
“LSD Directors” means the directors of LSD;
“LSD Group” means LSD and its subsidiaries;
“LSG”
means Lai Sun Garment (International) Limited (麗新製衣國際有限公司), a company incorporated in Hong Kong with limited liability under the Companies Ordinance, the issued shares of which are listed and traded on the Main Board of the Stock Exchange (Stock Code: 191);
“Mr. FA Chew”
means Mr. Chew Fook Aun, an Offeror Director, a deputy chairman and an executive director of LSG, the deputy chairman and an executive director of LSD, an executive director of eSun and an executive director and the chairman of Lai Fung;
“Mr. Julius Lau”
means Mr. Lau Shu Yan, Julius, an Offeror Director and the chief executive officer and an executive director of LSD;
“Mr. Lam Bing Kwan”
means Mr. Lam Bing Kwan, an independent non-executive director of LSG, LSD and Lai Fung;
“Mr. Lester Lam”
means Mr. Lam Hau Yin, Lester, an Offeror Director, an executive director of LSG, an executive director of LSD, an executive director of eSun and the chief executive officer and an executive director of Lai Fung;

– 6 –

DEFINITIONS

“Offeror”	means Transtrend Holdings Limited, a company incorporated
	in Hong Kong with limited liability, being a wholly-owned
	subsidiary of LSD;
“Offeror Board”	means the board of Offeror Directors;
“Offeror Concert Parties”	means the parties acting in concert with the Offeror, as
	determined in accordance with the Takeovers Code (except
	for members of the HSBC Group which are exempt principal
	traders and/or exempt fund managers in their capacity as
	such, in each case recognised by the Executive as such for the
	purposes of the Takeovers Code), including, for the avoidance
	of doubt, (a) LSD, being the sole shareholder of the Offeror, (b)
	LSG, being a holding company of LSD, and (c) Dr. Peter Lam,
	being their ultimate controlling shareholder;
“Offeror Directors”	means the directors of the Offeror;
“Offers”	means the eSun Offers and the Lai Fung Offers;
“PRC”	means the People’s Republic of China (for the purpose of this
	Lai Fung Composite Document, excluding Hong Kong, the
	Macao Special Administrative Region and Taiwan);
“public”	has the meaning ascribed to it under the Listing Rules;
“Registrar”	means Tricor Tengis Limited at Level 22, Hopewell Centre,
	183 Queen’s Road East, Hong Kong, the Hong Kong branch
	share registrar of the Lai Fung Shares;
“Relevant Period”	means the period from 27 November 2017, being the date six
	months before the Announcement Date, up to and including
	the Latest Practicable Date;
“SFC”	means the Securities and Futures Commission;
“SFO”	means the Securities and Futures Ordinance (Chapter 571 of
	the laws of Hong Kong);
“Stock Exchange”	means The Stock Exchange of Hong Kong Limited;
“subsidiaries”	has the meaning ascribed to it under the Listing Rules;
“Takeovers Code”	means the Hong Kong Code on Takeovers and Mergers;

– 7 –

DEFINITIONS

“United States”, “U.S.”

or “USA”

means the United States of America, its territories and possessions, any State of the United States and the District of Columbia;

“U.S. Business Day”

means any day, other than Saturday, Sunday or a U.S. federal holiday, and consists of the time period from 12:01 a.m. through 12:00 midnight Eastern time;

“U.S. Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended;

“Yu Shareholders”

means Mr. Yu Cheuk Yi and Ms. Yu Siu Yuk; and

“%” means per cent.

Except as otherwise specified, all times and dates contained in this Lai Fung Composite Document and the accompanying Lai Fung Form(s) of Acceptance refer to Hong Kong times and dates.
Certain amounts and percentage figures in this Lai Fung Composite Document have been subject to rounding adjustments.
Certain English translations of Chinese names or words or Chinese translations of English names or words in this Lai Fung Composite Document are included for information and identification purposes only and should not be regarded as the official English translation of such Chinese names or words or Chinese translation of such English names or words, respectively.
The singular includes the plural and vice versa, unless the context otherwise requires.
References to any appendix, paragraph and sub-paragraph are references to the appendices to, and paragraphs of, this Lai Fung Composite Document and any sub-paragraphs of them, respectively.
References to any statute or statutory provision include a statute or statutory provision which amends, consolidates or replaces the same whether before or after the date of this Lai Fung Composite Document.
Reference to one gender is a reference to all or any genders.
The English texts of this Lai Fung Composite Document and the accompanying Lai Fung Form(s) of Acceptance shall prevail over their respective Chinese texts for the purpose of interpretation.

– 8 –

LETTER FROM HSBC

==> picture [123 x 37] intentionally omitted <==

15 August 2018

To the Lai Fung Offer Shareholders and the Lai Fung Optionholders

Dear Sir or Madam,

UNCONDITIONAL MANDATORY GENERAL CASH OFFER BY HSBC ON BEHALF OF THE OFFEROR, A WHOLLY-OWNED SUBSIDIARY OF LSD, TO ACQUIRE ALL OF THE ISSUED SHARES OF LAI FUNG (OTHER THAN THOSE ALREADY OWNED OR AGREED TO BE ACQUIRED BY LSD, THE OFFEROR, eSUN OR THEIR RESPECTIVE SUBSIDIARIES) AND TO CANCEL ALL THE OUTSTANDING SHARE OPTIONS OF LAI FUNG

Reference is made to (i) the Joint Announcement dated 27 May 2018 published by LSG, LSD, the Offeror, eSun and Lai Fung in respect of, among others, (1) a conditional voluntary general cash offer by HSBC on behalf of the Offeror, a wholly-owned subsidiary of LSD, to acquire all of the issued shares of eSun (other than those already owned or agreed to be acquired by LSD, the Offeror or their respective subsidiaries) and to cancel all the outstanding share options of eSun and (2) the possible unconditional mandatory general cash offer by HSBC on behalf of the Offeror, a wholly-owned subsidiary of LSD, to acquire all of the issued shares of Lai Fung (other than those already owned or agreed to be acquired by LSD, the Offeror, eSun or their respective subsidiaries) and to cancel all the outstanding share options of Lai Fung; (ii) the eSun Composite Document jointly issued by LSD, the Offeror and eSun dated 23 July 2018; and (iii) the announcement dated 8 August 2018 jointly issued by LSG, LSD, the Offeror, eSun and Lai Fung in respect of, among other things, the eSun Offers having become unconditional in all respects and the satisfaction of the pre-condition to the Lai Fung Offers.

This letter sets out, among other things, details of the terms of the Lai Fung Offers, the reason for the Lai Fung Offers, the intention of LSD with regard to the Lai Fung Group and information on LSD and the Offeror. Further details of the terms of the Lai Fung Offers are set out in “Appendix I — Further Terms of the Lai Fung Offers” to the Lai Fung Composite Document of which this letter forms part, and in the accompanying Lai Fung Form(s) of Acceptance. Terms used in this letter shall have the same meanings as those defined in the Lai Fung Composite Document unless the context otherwise requires.

The Lai Fung Offer Shareholders and the Lai Fung Optionholders are strongly advised to consider carefully the information contained in the “Letter from the Lai Fung Board”, the “Letter from the Lai Fung Independent Board Committee” and the “Letter from the Lai Fung Independent Financial Adviser”, the Lai Fung Option Offer Letter, the form of which is set out in the “Form of Lai Fung Option Offer Letter”, the accompanying Lai Fung Form(s) of Acceptance and the appendices which form part of the Lai Fung Composite Document.

– 9 –

LETTER FROM HSBC

1. INTRODUCTION TO THE LAI FUNG OFFERS

The eSun Share Offer became unconditional in all respects on 8 August 2018. LSD, the Offeror and their respective subsidiaries will together hold more than 50% of the voting rights in eSun as a result of the eSun Share Offer. Therefore, pursuant to the chain principle in Note 8 to Rule 26.1 of the Takeovers Code, HSBC, on behalf of the Offeror, hereby makes an unconditional mandatory general cash offer to acquire all of the Lai Fung Shares not already owned or agreed to be acquired by LSD, the Offeror, eSun or their respective subsidiaries.

For the avoidance of doubt, the Lai Fung Offer Shares include Lai Fung Shares which are owned by the Offeror Concert Parties (other than those already owned or agreed to be acquired by LSD, the Offeror, eSun or their respective subsidiaries).

2. THE LAI FUNG SHARE OFFER

The Lai Fung Share Offer is made by HSBC on behalf of the Offeror in compliance with the Takeovers Code on the basis set out below.

For each Lai Fung Offer Share ...........................................................................HK$5.22 in cash

The Lai Fung Share Offer Price was determined after taking into account (i) the eSun Share Offer Price of HK$1.30; (ii) the unaudited consolidated total net asset values of eSun and Lai Fung as at 31 January 2018, being approximately HK$18,608.9 million and HK$16,387.4 million, respectively; (iii) the total number of eSun Shares and Lai Fung Shares as at the Announcement Date, being 1,491,854,598 and 327,044,134, respectively; and (iv) the fact that eSun held 165,485,406 Lai Fung Shares (representing a 50.60% interest in Lai Fung) as at the Announcement Date.

3. THE LAI FUNG SHARE OFFER PRICE

The Lai Fung Share Offer Price of HK$5.22 per Lai Fung Offer Share under the Lai Fung Share Offer represents:

(a) a discount of approximately 58.2% to the closing price of HK$12.50 per Lai Fung Share as quoted on the Stock Exchange on the Last Trading Date;
(b) a discount of approximately 58.5% to the average closing price of HK$12.58 per Lai Fung Share, being the average closing price of Lai Fung Shares as quoted on the Stock Exchange for the 5 trading days immediately prior to and including the Last Trading Date;
(c) a discount of approximately 57.9% to the average closing price of HK$12.40 per Lai Fung Share, being the average closing price of Lai Fung Shares as quoted on the Stock Exchange for the 10 trading days immediately prior to and including the Last Trading Date;

– 10 –

LETTER FROM HSBC

(d) a discount of approximately 55.9% over the average closing price of HK$11.85 per Lai Fung Share, being the average closing price of Lai Fung Shares as quoted on the Stock Exchange for the 30 trading days immediately prior to and including the Last Trading Date;
(e) a discount of approximately 57.1% over the average closing price of HK$12.17 per Lai Fung Share, being the average closing price of Lai Fung Shares as quoted on the Stock Exchange for the 60 trading days immediately prior to and including the Last Trading Date;
(f) a discount of approximately 58.9% to the average closing price of HK$12.70 per Lai Fung Share, being the average closing price of Lai Fung Shares as quoted on the Stock Exchange for the 180 trading days immediately prior to and including the Last Trading Date;
(g) a discount of approximately 49.4% to the closing price of HK$10.32 per Lai Fung Share as quoted on the Stock Exchange on the Latest Practicable Date;
(h) a discount of approximately 88.3% to the audited consolidated net asset value attributable to owners per Lai Fung Share of approximately HK$44.78 as at 31 July 2017, based on the total number of issued Lai Fung Shares as at 31 July 2017 (as adjusted for the share consolidation of Lai Fung Shares which took effect on 15 August 2017 (as disclosed in the announcements of Lai Fung dated 18 July 2017 and 14 August 2017)); and
(i) a discount of approximately 89.4% to the unaudited consolidated net asset value attributable to owners per Lai Fung Share of approximately HK$49.32 as at 31 January 2018, based on the total number of issued Lai Fung Shares as at 31 January 2018.

As shown in the audited consolidated statement of financial position as at 31 July 2017 and the unaudited consolidated statement of financial position as at 31 January 2018 of Lai Fung, a significant portion of Lai Fung’s assets consisted of property, plant and equipment, properties under development, investment properties and completed properties for sale. A valuation report on the property interests of the Lai Fung Group is in “Appendix III — Property Valuation of the Lai Fung Group” to this Lai Fung Composite Document pursuant to Rule 11 of the Takeovers Code. The value of those assets as stated in such consolidated statements of financial position or such property valuation report may or may not reflect their market value as at the date of this Lai Fung Composite Document.

4. HIGHEST AND LOWEST CLOSING PRICES OF LAI FUNG SHARES

During the six-month period ended the Last Trading Date, the highest closing price of Lai Fung Shares as quoted on the Stock Exchange was HK$13.68 per Lai Fung Share on 26 January 2018 and the lowest closing price of Lai Fung Shares as quoted on the Stock Exchange was HK$11.02 per Lai Fung Share on 24 April 2018 and 23 April 2018.

– 11 –

LETTER FROM HSBC

5. THE LAI FUNG OPTION OFFER AND THE LAI FUNG OPTION OFFER PRICE

As at the Latest Practicable Date, there were 10,234,117 Lai Fung Options (all of which vested on their respective dates of grant), each giving the Lai Fung Optionholder the right to subscribe for one new Lai Fung Share. The exercise of such Lai Fung Options in full would result in the issue of 10,234,117 new Lai Fung Shares, representing approximately 3.13% of the issued share capital of Lai Fung as at the Latest Practicable Date and approximately 3.03% of the issued share capital of Lai Fung as enlarged by the issue of such new Lai Fung Shares.

In accordance with Rule 13 of the Takeovers Code, the Offeror will make (or procure to be made on its behalf) an appropriate offer to all the Lai Fung Optionholders for the cancellation of every Lai Fung Option, whether vested or unvested, by way of the Lai Fung Option Offer.

Under the Lai Fung Option Offer, the Offeror will, in accordance with Rule 13 of the Takeovers Code, offer the Lai Fung Optionholders the Lai Fung Option Offer Price (which is the “see-through” price, being the Lai Fung Share Offer Price minus the exercise price of the relevant Lai Fung Option) in cash for the cancellation of each Lai Fung Option they hold, whether vested or unvested, provided that if the exercise price of any Lai Fung Option is equal to or greater than the Lai Fung Share Offer Price (such that the “see-through” price is zero or negative), the Lai Fung Option Offer Price will be a nominal amount of HK$0.01 for every 100 Lai Fung Options (or, if lesser, any part thereof).

		Number of
		Lai Fung Options
	Lai Fung	as at the Latest
	Option Offer	Practicable Date
	Price per Lai Fung	(each carrying the
	Share (unless	right to subscribe	Exercise
Lai Fung Option exercise	otherwise	for one new	period of
price per Lai Fung Share	indicated)	Lai Fung Share)	the Lai Fung Options
(HK$)	(HK$)		(dd/mm/yyyy)
6.650	0.01 for every 100	1,009,591	12/06/2012
	Lai Fung Options		to 11/06/2020
	(or, if lesser, any
	part thereof)
8.000	0.01 for every 100	180,000	16/01/2015 to
	Lai Fung Options		15/01/2025
	(or, if lesser, any
	part thereof)

– 12 –

LETTER FROM HSBC

		Number of
		Lai Fung Options
	Lai Fung	as at the Latest
	Option Offer	Practicable Date
	Price per Lai Fung	(each carrying the
	Share (unless	right to subscribe	Exercise
Lai Fung Option exercise	otherwise	for one new	period of
price per Lai Fung Share	indicated)	Lai Fung Share)	the Lai Fung Options
(HK$)	(HK$)		(dd/mm/yyyy)
9.500	0.01 for every 100	220,000	26/07/2013 to
	Lai Fung Options		25/07/2023
	(or, if lesser, any
	part thereof)
11.400	0.01 for every 100	8,374,526	18/01/2013 to
	Lai Fung Options		17/01/2023
	(or, if lesser, any
	part thereof)
13.520	0.01 for every 100	450,000	19/01/2018 to
	Lai Fung Options		18/01/2028
	(or, if lesser, any
	part thereof)

Further information on the Lai Fung Option Offer has been set out in the Lai Fung Option Offer Letter to the Lai Fung Optionholders, which is despatched on the same date as the despatch of this Lai Fung Composite Document.

If any Lai Fung Option is exercised in accordance with the terms of the relevant Lai Fung Share Option Scheme prior to the close of the Lai Fung Share Offer, any Lai Fung Shares issued as a result of such exercise will be subject to the Lai Fung Share Offer.

Pursuant to the terms of the Lai Fung Share Option Scheme adopted by Lai Fung on 21 August 2003 (as amended on 8 August 2018) and the Lai Fung Share Option Scheme adopted by Lai Fung on 18 December 2012, all Lai Fung Options shall remain valid and exercisable during their respective option periods in accordance with the terms of the relevant Lai Fung Share Option Scheme notwithstanding the Lai Fung Share Offer.

6. UNCONDITIONAL LAI FUNG OFFERS

The pre-condition to the Lai Fung Offers, being the eSun Share Offer becoming or being declared unconditional in all respects, was fulfilled on 8 August 2018. The Lai Fung Offers are unconditional in all respects and are not conditional upon any minimum level of acceptances being received.

– 13 –

LETTER FROM HSBC

7. VALUE OF THE LAI FUNG OFFERS

As at the Latest Practicable Date, there were (i) 327,044,134 Lai Fung Shares in issue, of which 165,485,406 Lai Fung Shares are held by eSun, (ii) 161,558,728 Lai Fung Offer Shares and (iii) 10,234,117 Lai Fung Options (all of which vested on their respective dates of grant) entitling the Lai Fung Optionholders to subscribe for an aggregate of 10,234,117 Lai Fung Shares at an exercise price ranging from HK$6.650 to HK$13.520 per Lai Fung Share.

On the assumption that the number of Lai Fung Shares will not change (whether by way of any exercise of the Lai Fung Options or otherwise) and the number of Lai Fung Options will not change, the value of the Lai Fung Share Offer is approximately HK$843.3 million and the total amount required to satisfy the cancellation of all Lai Fung Options is approximately HK$1,023.4. On this basis, in aggregate, the Lai Fung Offers are valued at approximately HK$843.3 million.

On the assumption that no further Lai Fung Options will be granted and all of the Lai Fung Options will be exercised before the close of the Lai Fung Share Offer, Lai Fung will have to issue 10,234,117 new Lai Fung Shares, representing approximately 3.03% of the enlarged issued share capital of Lai Fung, upon the exercise of the Lai Fung Options. On this basis, there will be 171,792,845 Lai Fung Offer Shares (including the new Lai Fung Shares issued as a result of the exercise of the Lai Fung Options) and the value of the Lai Fung Share Offer will be approximately HK$896.8 million. In this case, no amount will be payable by the Offeror under the Lai Fung Option Offer.

8. PUBLIC FLOAT OF LAI FUNG

There is a possibility that the public will hold less than 25% of the Lai Fung Shares upon closing of the Lai Fung Offers depending on the level of acceptances. In that case, the Offeror and Lai Fung intend to take appropriate steps to restore the public float in compliance with the Listing Rules.

The Offeror intends to maintain the listing of the Lai Fung Shares on the Stock Exchange following closing of the Lai Fung Offers. The Offeror does not intend to exercise any rights to acquire any Lai Fung Shares in respect of which the Lai Fung Share Offer is not accepted.

The Stock Exchange has stated that if, upon the close of the Lai Fung Share Offer, less than the minimum prescribed percentage applicable to Lai Fung, being 25% of the issued Lai Fung Shares, are held by the public, or if the Stock Exchange believes that:

a false market exists or may exist in the trading of the Lai Fung Shares; or
that there are insufficient Lai Fung Shares in public hands to maintain an orderly market,

– 14 –

LETTER FROM HSBC

then the Stock Exchange will consider exercising its discretion to suspend dealings in the Lai Fung Shares. The Offeror Directors have jointly and severally undertaken to the Stock Exchange to take appropriate steps to ensure that sufficient public float exists in the Lai Fung Shares after the close of the Lai Fung Offers as long as Lai Fung remains listed on the Stock Exchange.

9. LAI FUNG INDEPENDENT BOARD COMMITTEE AND LAI FUNG INDEPENDENT FINANCIAL ADVISER

The Lai Fung Board has established the Lai Fung Independent Board Committee, comprising Mr. Lucas Ignatius Loh Jen Yuh, Mr. Puah Tze Shyang, Mr. Ku Moon Lun, Mr. Law Kin Ho, Mr. Mak Wing Sum, Alvin and Mr. Shek Lai Him, Abraham, to make a recommendation to the Disinterested Lai Fung Shareholders and the Lai Fung Optionholders as to whether the Lai Fung Offers are, or are not, fair and reasonable and as to acceptance.

Pursuant to Rule 2.8 of the Takeovers Code, the Lai Fung Independent Board Committee comprises all the non-executive Lai Fung Directors who have no direct or indirect interest in the Offers other than as holders of the Lai Fung Shares and/or the Lai Fung Options. Mr. Lam Bing Kwan, an independent non-executive Lai Fung Director, is also an independent non-executive director of LSG and LSD, both of which are holding companies of the Offeror. Accordingly, he is regarded as being interested in the Lai Fung Offers for the purposes of Rule 2.8 of the Takeovers Code and is not a member of the Lai Fung Independent Board Committee. All of the other non-executive Lai Fung Directors are members of the Lai Fung Independent Board Committee.

Gram Capital, with the approval of the Lai Fung Independent Board Committee, has been appointed as the Lai Fung Independent Financial Adviser to advise the Lai Fung Independent Board Committee in connection with the Lai Fung Offers.

10. SHAREHOLDING STRUCTURE OF LAI FUNG

As at the Latest Practicable Date, the authorised share capital of Lai Fung was HK$2,000,000,000 divided into 400,000,000 Lai Fung Shares and the issued share capital of Lai Fung was HK$1,635,220,670 divided into 327,044,134 Lai Fung Shares. There were no other classes of shares of Lai Fung in issue.

– 15 –

LETTER FROM HSBC

The following is a simplified structure chart summarising the shareholding relationship among LSG, LSD, the Offeror, eSun and Lai Fung as at the Latest Practicable Date:

==> picture [139 x 339] intentionally omitted <==

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

LSG
56.10%
LSD
100%
The Offeror
36.94%
eSun
50.60%
Lai Fung
----- End of picture text -----

– 16 –

LETTER FROM HSBC

The table below sets out the shareholding structure of Lai Fung as at the Latest Practicable Date:

		*As a percentage*
	*No. of*	*of the issued*
	*Lai Fung*	*share capital of*
	*Shares*	*Lai Fung*
Offeror	0	0%
eSun	165,485,406	50.60%
Other Offeror Concert Parties, whose Lai Fung Shares
form part of the Lai Fung Offer Shares and do not
form part of the Disinterested Lai Fung Shares:
— Dr. Peter Lam_(Note 1)_	0	0%
— Mr. Lester Lam_(Note 2)_	0	0%
— Mr. FA Chew_(Note 3)_	600,000	0.18%
— Mr. Julius Lau_(Note 4)_	235	0.00%
— HSBC_(Note 5)_	0	0%
Aggregate number of Lai Fung Shares held by
the Offeror and the Offeror Concert Parties	166,085,641	50.78%
Holders of Disinterested Lai Fung Shares(Note 6)
— Yu Shareholders	26,595,837	8.13%
— Other holders of Disinterested Lai Fung Shares	134,362,656	41.09%
Total number of Lai Fung Shares	327,044,134	100%
Total number of Lai Fung Offer Shares	161,558,728	49.40%

Notes:

Dr. Peter Lam, who is an Offeror Director, a deputy chairman and an executive director of LSG, the chairman and an executive director of LSD and the ultimate controlling shareholder of LSG, LSD and the Offeror, is acting in concert with the Offeror. As at the Latest Practicable Date, Dr. Peter Lam was not interested in any Lai Fung Shares and was interested in 321,918 Lai Fung Options (other than through his interests in LSG, LSD and eSun) with the exercise price of HK$11.40 per Lai Fung Share and the exercise period from 18 January 2013 to 17 January 2023.
Mr. Lester Lam, who is an Offeror Director and an executive director of LSG and LSD, is acting in concert with the Offeror. As at the Latest Practicable Date, Mr. Lester Lam was not interested in any Lai Fung Shares and was interested in 3,219,182 Lai Fung Options (other than through his interests in LSG, LSD and eSun) with the exercise price of HK$11.40 per Lai Fung Share and the exercise period from 18 January 2013 to 17 January 2023.

– 17 –

LETTER FROM HSBC

Mr. FA Chew, who is an Offeror Director, a deputy chairman and an executive director of LSG and the deputy chairman and an executive director of LSD, is acting in concert with the Offeror. As at the Latest Practicable Date, Mr. FA Chew was interested in 600,000 Lai Fung Shares and 1,009,591 Lai Fung Options (other than through his interests in LSG and LSD) with the exercise price of HK$6.65 per Lai Fung Share and the exercise period from 12 June 2012 to 11 June 2020.
Mr. Julius Lau, who is an Offeror Director and the chief executive officer and an executive director of LSD, is acting in concert with the Offeror. As at the Latest Practicable Date, Mr. Julius Lau was interested in 235 Lai Fung Shares and 965,754 Lai Fung Options (other than through his interests in LSD) with the exercise price of HK$11.40 per Lai Fung Share and the exercise period from 18 January 2013 to 17 January 2023.
HSBC is the financial adviser to LSD and the Offeror in respect of the Offers. Accordingly, HSBC and relevant members of the HSBC Group which hold Lai Fung Shares on an own account or discretionary managed basis are presumed to be acting in concert with the Offeror in relation to Lai Fung in accordance with class 5 of the definition of “acting in concert” under the Takeovers Code (except in respect of Lai Fung Shares held by exempt principal traders or exempt fund managers, in each case recognised by the Executive as such for the purpose of the Takeovers Code).
Based on the relevant Lai Fung Shareholders’ disclosures of interests in Lai Fung as at the Latest Practicable Date.

11. EFFECT OF ACCEPTING THE LAI FUNG SHARE OFFER

The Lai Fung Share Offer will be subject to the term that acceptance of the Lai Fung Share Offer by any person will constitute a warranty by such person to the Offeror that the Lai Fung Shares sold by such person under the Lai Fung Share Offer are sold free from all Encumbrances and together with all rights attaching to them as at the Lai Fung Share Offer Closing Date or subsequently becoming attached to them, including the right to receive all dividends and distributions, if any, declared, made or paid on or after the date of the Lai Fung Share Offer Closing Date.

12. HONG KONG STAMP DUTY

Seller’s ad valorem stamp duty at a rate of 0.1% of the market value of the Lai Fung Offer Shares or consideration payable by the Offeror in respect of the relevant acceptances of the Lai Fung Share Offer, whichever is higher (rounded up to the nearest HK$1.00), will be deducted from the amount payable to the relevant Lai Fung Offer Shareholder on acceptance of the Lai Fung Share Offer. The Offeror will bear its own portion of buyer’s ad valorem stamp duty at the rate of 0.1% of the market value of the Lai Fung Offer Shares or consideration payable by the Offeror in respect of the relevant acceptances of the Lai Fung Share Offer, whichever is higher (rounded up to the nearest HK$1.00) and will be responsible to account to the Stamp Office of Hong Kong for all the stamp duty payable for the sale and purchase of the Lai Fung Shares which are validly tendered for acceptance under the Lai Fung Share Offer.

No stamp duty is payable on the cancellation of any Lai Fung Option.

– 18 –

LETTER FROM HSBC

13. OVERSEAS LAI FUNG SHAREHOLDERS AND LAI FUNG OPTIONHOLDERS

The making of the Lai Fung Offers to Lai Fung Shareholders or, as the case may be, Lai Fung Optionholders who, in either case, are citizens, residents or nationals of jurisdictions outside Hong Kong may be subject to the laws or regulations of the relevant jurisdictions. The making of the Lai Fung Offers to such Lai Fung Shareholders and Lai Fung Optionholders and their acceptances of the Lai Fung Offers may be prohibited or affected by the laws or regulations of the relevant jurisdictions and it is the responsibility of each of such Lai Fung Shareholders and Lai Fung Optionholders who wishes to accept the Lai Fung Offers to satisfy himself/ herself/itself as to the full observance of the laws and regulations of the relevant jurisdiction in connection therewith, including any requirement for any governmental, exchange control or other consents, any filing and registration requirements, any necessary formalities, any legal or regulatory requirements and any requirement for the payment by the accepting Lai Fung Shareholders or, as the case may be, Lai Fung Optionholders of any transfer or other taxes in respect of their acceptances.

Any acceptance of the Lai Fung Offers by any Lai Fung Shareholder or Lai Fung Optionholder will be deemed to constitute a representation and warranty from such Lai Fung Shareholder or, as the case may be, Lai Fung Optionholder to the Offeror and Lai Fung that all the laws and regulations of the relevant jurisdictions have been complied with and that the Lai Fung Share Offer can be accepted by such Lai Fung Shareholder, or, as the case may be, the Lai Fung Option Offer can be accepted by such Lai Fung Optionholder, lawfully under the laws and regulations of the relevant jurisdictions. Lai Fung Shareholders and Lai Fung Optionholders should consult their professional advisers if in doubt.

14. SETTLEMENT OF CONSIDERATION

Settlement of the consideration in respect of an acceptance of the Lai Fung Offers will be made as soon as possible and in any event within seven (7) Business Days of the date of receipt of the complete and valid acceptance.

15. DEALINGS AND INTERESTS IN LAI FUNG SHARES AND DERIVATIVES OF LAI FUNG

As at the Latest Practicable Date, the Offeror and the Offeror Concert Parties held 166,085,641 Lai Fung Shares in aggregate, representing approximately 50.78% of the total issued share capital of Lai Fung. (Please refer to section 10 “Shareholding structure of Lai Fung” in this “Letter from HSBC”.)

– 19 –

LETTER FROM HSBC

As at the Latest Practicable Date, the following Offeror Concert Parties held Lai Fung Options:

Name	Relationship with the Offeror Number of Lai Fung Options	Relationship with the Offeror Number of Lai Fung Options
Dr. Peter Lam	Offeror Director, a deputy chairman	321,918
	and an executive director of LSG,
	the chairman and an executive director
	of LSD and the ultimate controlling shareholder
	of LSG, LSD and the Offeror
Mr. Lester Lam	Offeror Director, an executive director	3,219,182
	of LSG and LSD and Dr. Peter Lam’s son
Mr. FA Chew	Offeror Director, a deputy chairman and an	1,009,591
	executive director of LSG and the deputy
	chairman and an executive director of LSD
Mr. Julius Lau	Offeror Director and the chief executive offcer	965,754
	and an executive director of LSD

Save as aforesaid, as at the Latest Practicable Date, none of the Offeror or the Offeror Concert Parties held, controlled or had direction over any Lai Fung Shares or held any convertible securities, warrants, options or derivatives in respect of the Lai Fung Shares.

16. INFORMATION ON LSD AND THE OFFEROR

The Offeror is a company incorporated in Hong Kong with limited liability and is a whollyowned subsidiary of LSD. The Offeror is engaged in investment holding.

As at the Latest Practicable Date, (i) LSG was interested in 56.10% of the issued share capital of LSD and (ii) Dr. Peter Lam was interested in 41.87% of the issued share capital of LSG.

17. REASON FOR THE LAI FUNG OFFERS

As disclosed in the eSun Composite Document, the primary purpose of the eSun Offers is to increase the Offeror’s shareholding in eSun in order for LSD to consolidate the financial results of the eSun Group. The eSun Share Offer became unconditional in all respects on 8 August 2018. LSD, the Offeror and their respective subsidiaries will together hold more than 50% of the voting rights in eSun as a result of the eSun Share Offer. Accordingly, pursuant to the chain principle in Note 8 to Rule 26.1 of the Takeovers Code, the Offeror is required to make (or procure to be made on its behalf) the Lai Fung Share Offer.

– 20 –

LETTER FROM HSBC

18. INTENTIONS OF LSD WITH REGARD TO THE LAI FUNG GROUP

LSD intends to continue with the existing businesses of the Lai Fung Group upon completion of the Offers. LSD also intends to continue with Lai Fung’s regional focus and rental-led strategy and to focus on property projects in Shanghai, Guangzhou, Zhongshan and Hengqin. Subject to market conditions, LSD may potentially explore various opportunities to further develop the existing businesses of the Lai Fung Group. LSD may also from time to time consider the need to fund such further development by debt and/or equity financing by the Lai Fung Group, subject to the Lai Fung Group’s business needs and prevailing market conditions. LSD does not currently intend to introduce major changes to the business of Lai Fung (including any redeployment of the fixed assets of Lai Fung) save for those changes which LSD may from time to time implement following the review of its strategic options relating to the business, structure and/or direction of the Lai Fung Group.

It is also the current intention of LSD that the employment of the existing employees of the Lai Fung Group and the directorship of the existing directors of the Lai Fung Group will be continued following completion of the Offers except for changes which may occur in the ordinary course of business.

19. CONFIRMATION OF FINANCIAL RESOURCES

The Offeror intends to finance the cash required for the Lai Fung Offers from existing internal cash resources and/or external debt financing (being facilities (i) arranged by Australia and New Zealand Banking Group Limited, Bank of China (Hong Kong) Limited, Bank of Communications Co., Ltd. Hong Kong Branch, Bank of East Asia, BNP Paribas, Cathay United Bank Company Limited, Hong Kong Branch, China Construction Bank (Asia) Corporation Limited, Chiyu Banking Corporation Limited, DBS Bank Ltd., Fubon Financial Holding Co., Ltd., Hang Seng Bank Limited, The Hongkong and Shanghai Banking Corporation Limited, Industrial and Commercial Bank of China (Asia) Limited, Nanyang Commercial Bank, Limited, Oversea-Chinese Banking Corporation Limited, Shanghai Commercial Bank Ltd., Shanghai Pudong Development Bank Co., Ltd., Hong Kong Branch, Standard Chartered Bank (Hong Kong) Limited and United Overseas Bank Limited and (ii) granted by Hang Seng Bank Limited) of the LSD Group.

The Offeror and LSD do not intend that the payment of interest on, repayment of or security for any liability (contingent or otherwise) under such external debt financing will depend to any significant extent on the business of the Lai Fung Group.

HSBC, being the financial adviser to LSD and the Offeror in respect of the Lai Fung Offers, is satisfied that sufficient financial resources are available to the Offeror to satisfy full acceptance of the Lai Fung Offers in accordance with their respective terms.

– 21 –

LETTER FROM HSBC

20. TAXATION AND INDEPENDENT ADVICE

Lai Fung Shareholders and Lai Fung Optionholders are recommended to consult their own professional advisers if they are in any doubt as to the taxation implications of accepting the Lai Fung Offers. It is emphasised that none of LSG, LSD, the Offeror, eSun, Lai Fung or HSBC, nor any of their respective directors, officers or associates or any other person involved in the Lai Fung Offers, accepts responsibility for any taxation effects on, or liabilities of, any persons as a result of their accepting or not accepting the Lai Fung Offers.

21. FURTHER TERMS OF THE LAI FUNG OFFERS

Please see “Appendix I — Further Terms of the Lai Fung Offers” to this Lai Fung Composite Document for further terms of the Lai Fung Offers.

22. GENERAL

To ensure equality of treatment of all Lai Fung Offer Shareholders, those Lai Fung Offer Shareholders who hold the Lai Fung Offer Shares as nominees for more than one beneficial owner should, as far as practicable, treat the holding of each beneficial owner separately. In order for the beneficial owners of the Lai Fung Offer Shares whose investments are registered in nominee names to accept the Lai Fung Share Offer, it is essential that they provide instructions of their intentions with regard to the Lai Fung Share Offer to their nominees.

All documents and cheques for payment to the Lai Fung Offer Shareholders who accept the Lai Fung Share Offer will be sent to them by ordinary post at their own risk to their addresses as they appear in the register of members of Lai Fung or, in the case of joint Lai Fung Offer Shareholders, to the Lai Fung Offer Shareholder whose name appears first in the register of members of Lai Fung, as applicable.

All documents to the Lai Fung Optionholders and cheques for payment in respect of the Lai Fung Options surrendered for cancellation will be delivered to the office of Lai Fung in Hong Kong at 11th Floor, Lai Sun Commercial Centre, 680 Cheung Sha Wan Road, Kowloon, Hong Kong for collection by the Lai Fung Optionholders. None of LSG, LSD, the Offeror, eSun, Lai Fung, HSBC or any of their respective directors or any other person involved in the Lai Fung Offers will be responsible for any loss or delay in transmission or any other liabilities that may arise as a result thereof.

– 22 –

LETTER FROM HSBC

23. ADDITIONAL INFORMATION

Your attention is drawn to the “Letter from the Lai Fung Board”, the “Letter from the Lai Fung Independent Board Committee”, the “Letter from Lai Fung Independent Financial Adviser”, the accompanying Lai Fung Form(s) of Acceptance and the additional information set out in the appendices which form part of this Lai Fung Composite Document.

Yours faithfully, For and on behalf of The Hongkong and Shanghai Banking Corporation Limited Che Ning Liu Co-Head of Global Banking, Asia-Pacific

– 23 –

LETTER FROM THE LAI FUNG BOARD

==> picture [219 x 127] intentionally omitted <==

Executive Directors:

Mr. Chew Fook Aun (Chairman) Dr. Lam Kin Ming (Deputy Chairman) Mr. Lam Kin Hong, Matthew (Executive Deputy Chairman) Mr. Lam Hau Yin, Lester (Chief Executive Officer) Mr. Cheng Shin How Mr. Lee Tze Yan, Ernest Madam U Po Chu

Non-executive Directors: Mr. Lucas Ignatius Loh Jen Yuh Mr. Puah Tze Shyang (also alternate to Mr. Lucas Ignatius Loh Jen Yuh)

Registered Office: P.O. Box 309 Ugland House Grand Cayman KY1-1104 Cayman Islands

Head Office and Principal Place

of Business: 11th Floor Lai Sun Commercial Centre 680 Cheung Sha Wan Road Kowloon Hong Kong

Independent Non-executive Directors:

Mr. Ku Moon Lun Mr. Lam Bing Kwan Mr. Law Kin Ho Mr. Mak Wing Sum, Alvin Mr. Shek Lai Him, Abraham

15 August 2018

To the Lai Fung Shareholders and the Lai Fung Optionholders

Dear Sir or Madam,

– 24 –

LETTER FROM THE LAI FUNG BOARD

1. INTRODUCTION

The purpose of this Lai Fung Composite Document (of which this letter forms part) is to provide you with, among other things: (i) information relating to the Lai Fung Group, LSG, LSD, the Offeror and the Lai Fung Offers; (ii) a letter from HSBC containing, among other things, details of the Lai Fung Offers; (iii) a letter from the Lai Fung Independent Board Committee containing its recommendations to the Disinterested Lai Fung Shareholders and the Lai Fung Optionholders in relation to the Lai Fung Offers; and (iv) a letter from the Lai Fung Independent Financial Adviser containing its advice and recommendations to the Lai Fung Independent Board Committee in relation to the Lai Fung Offers.

2. LAI FUNG INDEPENDENT BOARD COMMITTEE AND LAI FUNG INDEPENDENT FINANCIAL ADVISER

The Lai Fung Board has established the Lai Fung Independent Board Committee, comprising of the Non-executive Lai Fung Directors Mr. Lucas Ignatius Loh Jen Yuh and Mr. Puah Tze Shyang, and the Independent Non-executive Lai Fung Directors Mr. Ku Moon Lun, Mr. Law Kin Ho, Mr. Mak Wing Sum, Alvin and Mr. Shek Lai Him, Abraham, to make a recommendation to the Disinterested Lai Fung Shareholders and the Lai Fung Optionholders as to whether the Lai Fung Offers are, or are not, fair and reasonable and as to acceptance.

Pursuant to Rule 2.8 of the Takeovers Code, the Lai Fung Independent Board Committee comprises all the non-executive Lai Fung Directors who have no direct or indirect interest in the Lai Fung Offers other than as holders of the Lai Fung Shares and/or the Lai Fung Options. Mr. Lam Bing Kwan, an independent non-executive Lai Fung Director, is also an independent non-executive director of LSG and LSD, both of which are holding companies of the Offeror. Accordingly, he is regarded as being interested in the Lai Fung Offers for the purposes of Rule 2.8 of the Takeovers Code and is not a member of the Lai Fung Independent Board Committee. All of the other non-executive Lai Fung Directors are members of the Lai Fung Independent Board Committee.

– 25 –

LETTER FROM THE LAI FUNG BOARD

3. THE LAI FUNG OFFERS

As disclosed in the “Letter from HSBC” in this Lai Fung Composite Document, HSBC, on behalf of the Offeror, is making the Lai Fung Offers on the following basis:

Lai Fung Share Offer:

For each Lai Fung Offer Share .......................................................................... HK$5.22 in cash

Lai Fung Option Offer:

		Number of Lai Fung Options
		as at the Latest Practicable
	Lai Fung Option Offer	Date (each carrying the
Lai Fung Option exercise	Price per Lai Fung Share	right to subscribe for	Exercise period of
price per Lai Fung Share	(unless otherwise indicated)	one new Lai Fung Share)	Lai Fung Options
(HK$)	(HK$)		(dd/mm/yyyy)
6.650	0.01 for every 100 Lai Fung Options	1,009,591	12/06/2012 to
	(or, if lesser, any part thereof)		11/06/2020
8.000	0.01 for every 100 Lai Fung Options	180,000	16/01/2015 to
	(or, if lesser, any part thereof)		15/01/2025
9.500	0.01 for every 100 Lai Fung Options	220,000	26/07/2013 to
	(or, if lesser, any part thereof)		25/07/2023
11.400	0.01 for every 100 Lai Fung Options	8,374,526	18/01/2013 to
	(or, if lesser, any part thereof)		17/01/2023
13.520	0.01 for every 100 Lai Fung Options	450,000	19/01/2018 to
	(or, if lesser, any part thereof)		18/01/2028

Further details of the Lai Fung Offers can be found in the “Letter from HSBC” and “Appendix I — Further Terms of the Lai Fung Offers” to this Lai Fung Composite Document and the accompanying Lai Fung Form(s) of Acceptance, which together set out the terms and conditions of the Lai Fung Offers and certain related information.

– 26 –

LETTER FROM THE LAI FUNG BOARD

4. VALUE OF THE LAI FUNG OFFERS

Your attention is drawn to the section headed “Value of the Lai Fung Offers” in the “Letter from HSBC” in this Lai Fung Composite Document which sets out the value of the Lai Fung Offers.

5. REASON FOR THE LAI FUNG OFFERS

Your attention is drawn to the section headed “Reason for the Lai Fung Offers” in the “Letter from HSBC” in this Lai Fung Composite Document which sets out the reason for the Lai Fung Offers.

6. INTENTIONS OF LSD WITH REGARD TO THE LAI FUNG GROUP

Your attention is drawn to the section headed “Intentions of LSD with regard to the Lai Fung Group” in the “Letter from HSBC” in this Lai Fung Composite Document which sets out the intentions of LSD with regard to the Lai Fung Group.

The Lai Fung Board is aware of and welcomes LSD’s intentions as set out in the section headed “Intentions of LSD with regard to the Lai Fung Group” in the “Letter from HSBC” in this Lai Fung Composite Document LSD that, among others, (i) the existing businesses of the Lai Fung Group shall be continued upon completion of the Lai Fung Offers; and (ii) the employment of the existing employees of the Lai Fung Group and the directorship of the existing directors of the Lai Fung Group will be continued following completion of the Lai Fung Offers except for changes which may occur in the ordinary course of business, and is willing to render reasonable cooperation with the Offeror and will continue to act in the best interests of the Lai Fung Group and the Lai Fung Shareholders as a whole.

7. INFORMATION ON LSD AND THE OFFEROR

Your attention is drawn to the sections headed “Information on LSD and the Offeror” in the “Letter from HSBC” in this Lai Fung Composite Document for information on LSD and the Offeror.

8. INFORMATION ON THE LAI FUNG GROUP

Lai Fung is a company incorporated in the Cayman Islands with limited liability. The Lai Fung Group is principally engaged in property development for sale and property investment for rental purposes, and development and operation of and investment in cultural, leisure, entertainment and related facilities.

Your attention is also drawn to the financial information of the Lai Fung Group set out in “Appendix II — Financial Information of the Lai Fung Group”, the property valuation of the Lai Fung Group set out in “Appendix III — Property Valuation of the Lai Fung Group” and general information of Lai Fung set out in “Appendix V — General Information of Lai Fung” to this Lai Fung Composite Document.

– 27 –

LETTER FROM THE LAI FUNG BOARD

9. PUBLIC FLOAT OF LAI FUNG

10. ADDITIONAL INFORMATION

You are advised to read the “Letter from HSBC”, “Appendix I — Further Terms of the Lai Fung Offers” to this Lai Fung Composite Document and the accompanying Lai Fung Form(s) of Acceptance for information relating to the Lai Fung Offers, the acceptance and settlement procedures of the Lai Fung Offers, the making of the Lai Fung Offers to the overseas Lai Fung Offer Shareholders and the overseas Lai Fung Optionholders and taxation. Your attention is also drawn to the additional information contained in the appendices to this Lai Fung Composite Document.

11. RECOMMENDATIONS

Your attention is also drawn to the letter from the Lai Fung Independent Board Committee addressed to the Disinterested Lai Fung Shareholders and the Lai Fung Optionholders, the full text of which is set out on pages 29 to 31 of this Lai Fung Composite Document, and the letter from the Lai Fung Independent Financial Adviser addressed to the Lai Fung Independent Board Committee, the full text of which is set out on pages 32 to 43 of this Lai Fung Composite Document. You are advised to read both letters and the other information contained in this Lai Fung Composite Document carefully before taking any action in respect of the Lai Fung Offers.

The Lai Fung Offer Shareholders and the Lai Fung Optionholders are recommended to consult their own professional advisers as to the tax implications that may arise from accepting the Lai Fung Offers.

Yours faithfully, For and on behalf of the Board of Lai Fung Holdings Limited Cheng Shin How Executive Director

– 28 –

LETTER FROM THE LAI FUNG INDEPENDENT BOARD COMMITTEE

==> picture [219 x 127] intentionally omitted <==

15 August 2018

To the Disinterested Lai Fung Shareholders and the Lai Fung Optionholders

Dear Sir or Madam,

INTRODUCTION

We refer to the Lai Fung Composite Document dated 15 August 2018 issued jointly by LSD, the Offeror and Lai Fung of which this letter forms part. Unless the context requires otherwise, terms used in this letter shall have the same meaning as those defined in the Lai Fung Composite Document.

We have been appointed by the Lai Fung Board to form the Lai Fung Independent Board Committee to make recommendations to you as to whether, in our opinion, the terms of the Lai Fung Offers are fair and reasonable so far as the Disinterested Lai Fung Shareholders and the Lai Fung Optionholders are concerned and as to acceptances of the Lai Fung Offers.

– 29 –

LETTER FROM THE LAI FUNG INDEPENDENT BOARD COMMITTEE

We, being the members of the Lai Fung Independent Board Committee, have declared that we are independent and do not have any conflict of interest in respect of the Lai Fung Offers and are therefore able to consider the terms of the Lai Fung Offers and to make recommendations to the Disinterested Lai Fung Shareholders and the Lai Fung Optionholders. Pursuant to Rule 2.8 of the Takeovers Code, the Lai Fung Independent Board Committee comprises all the non-executive Lai Fung Directors who have no direct or indirect interest in the Offers other than as holders of the Lai Fung Shares and/or the Lai Fung Options. Mr. Lam Bing Kwan, an independent non-executive Lai Fung Director, is also an independent non-executive director of LSG and LSD, both of which are holding companies of the Offeror. Accordingly, he is regarded as being interested in the Lai Fung Offers for the purposes of Rule 2.8 of the Takeovers Code and is not a member of the Lai Fung Independent Board Committee.

Gram Capital has been appointed, with our approval, as the Lai Fung Independent Financial Adviser to advise and make recommendations to us as to the terms and conditions of the Lai Fung Offers and as to acceptances of the Lai Fung Offers. The details of its advice and recommendations and the principal factors taken into consideration in arriving at its recommendations are set out in the “Letter from the Lai Fung Independent Financial Adviser” set out in the Lai Fung Composite Document.

We also wish to draw your attention to the “Letter from HSBC”, the “Letter from the Lai Fung Board” and the additional information set out in this Lai Fung Composite Document, including the appendices to the Lai Fung Composite Document and the accompanying Lai Fung Form(s) of Acceptance.

RECOMMENDATIONS

Having taken into account the advice and recommendations of the Lai Fung Independent Financial Adviser, in particular the factors, reasons and recommendations as set out in the “Letter from the Lai Fung Independent Financial Adviser”, we concur with the view of the Lai Fung Independent Financial Adviser and consider that:

(a) the terms of the Lai Fung Share Offer are not fair and reasonable so far as the Disinterested Lai Fung Shareholders are concerned, and recommend the Disinterested Lai Fung Shareholders not to accept the Lai Fung Share Offer; and
(b) the terms of the Lai Fung Option Offer are not fair and reasonable so far as the Lai Fung Optionholders are concerned, and recommend the Lai Fung Optionholders not to accept the Lai Fung Option Offer.

– 30 –

LETTER FROM THE LAI FUNG INDEPENDENT BOARD COMMITTEE

Notwithstanding our recommendations, the Disinterested Lai Fung Shareholders and the Lai Fung Optionholders are strongly advised to monitor the trading price and liquidity of the Lai Fung Shares during the period of the Lai Fung Offers and that their decision to realise or to hold their investment in Lai Fung depends on their own individual circumstances and investment objectives. If in any doubt, the Disinterested Lai Fung Shareholders and the Lai Fung Optionholders should consult their own professional advisers for professional advice.

Yours faithfully, The Lai Fung Independent Board Committee Lai Fung Holdings Limited

Lucas Ignatius Loh Jen Yuh Non-executive Director

Ku Moon Lun

Independent Non-executive Director

Puah Tze Shyang Non-executive Director

Law Kin Ho Independent Non-executive Director

Mak Wing Sum, Alvin Independent Non-executive Director

Shek Lai Him, Abraham Independent Non-executive Director

– 31 –

LETTER FROM THE LAI FUNG INDEPENDENT FINANCIAL ADVISER

Set out below is the text of a letter received from Gram Capital, the independent financial adviser to the Lai Fung Independent Board Committee in respect of the Lai Fung Offers for the purpose of inclusion in this Lai Fung Composite Document.

==> picture [169 x 32] intentionally omitted <==

Room 1209, 12/F. Nan Fung Tower 88 Connaught Road Central/ 173 Des Voeux Road Central Hong Kong 15 August 2018

To: The independent board committee of Lai Fung Holdings Limited

Dear Sirs,

UNCONDITIONAL MANDATORY GENERAL CASH OFFER BY HSBC ON BEHALF OF THE OFFEROR

TO ACQUIRE ALL OF THE ISSUED SHARES OF LAI FUNG (OTHER THAN THOSE ALREADY OWNED OR AGREED TO BE ACQUIRED BY LSD, THE OFFEROR, eSUN OR THEIR RESPECTIVE SUBSIDIARIES) AND TO CANCEL ALL THE OUTSTANDING SHARE OPTIONS OF LAI FUNG

INTRODUCTION

We refer to our appointment as the Lai Fung Independent Financial Adviser to advise the Lai Fung Independent Board Committee in respect of the Lai Fung Offers, details of which are set out in the Lai Fung Composite Document dated 15 August 2018 jointly issued by Lai Fung and the Offeror to the Lai Fung Shareholders, of which this letter forms part. Terms used in this letter shall have the same meanings as defined in the Lai Fung Composite Document unless the context requires otherwise.

Reference is made to (i) the Joint Announcement dated 27 May 2018 in respect of, among others, (1) a conditional voluntary general cash offer by HSBC on behalf of the Offeror, a wholly-owned subsidiary of LSD, to acquire all of the issued shares of eSun (other than those already owned or agreed to be acquired by LSD, the Offeror or their respective subsidiaries) and to cancel all the outstanding share options of eSun and (2) the possible unconditional mandatory general cash offer by HSBC on behalf of the Offeror, a wholly-owned subsidiary of LSD, to acquire all of the issued shares of Lai Fung (other than those already owned or agreed to be acquired by LSD, the Offeror, eSun or their respective subsidiaries) and to cancel all the outstanding share options of Lai Fung; (ii) the eSun Composite Document dated 23 July 2018; and (iii) the announcement dated 8 August 2018 jointly issued by LSG, LSD, the Offeror, eSun and Lai Fung in respect of, among other things, the eSun Offers having become unconditional in all respects and the satisfaction of the pre-condition to the Lai Fung Offers.

– 32 –

LETTER FROM THE LAI FUNG INDEPENDENT FINANCIAL ADVISER

The eSun Share Offer became unconditional in all respects on 8 August 2018. LSD, the Offeror and their respective subsidiaries together hold more than 50% of the voting rights in eSun as a result of the eSun Share Offer and as at the Latest Practicable Date. Pursuant to the chain principle in Note 8 to Rule 26.1 of the Takeovers Code, the Offeror is required to make (or procure to be made on its behalf) an unconditional mandatory general cash offer to acquire all of the Lai Fung Shares not already owned or agreed to be acquired by LSD, the Offeror, eSun or their respective subsidiaries. For the avoidance of doubt, the Lai Fung Offer Shares include Lai Fung Shares which are owned by the Offeror Concert Parties (other than those already owned or agreed to be acquired by LSD, the Offeror, eSun or their respective subsidiaries).

The Lai Fung Independent Board Committee comprising the non-executive Directors Messrs. Lucas Ignatius Loh Jen Yuh and Puah Tze Shyang and the independent non-executive Directors Messrs. Ku Moon Lun, Law Kin Ho, Mak Wing Sum, Alvin and Shek Lai Him, Abraham, has been formed to advise the Disinterested Lai Fung Shareholders and the Lai Fung Optionholders on whether the terms of the Lai Fung Offers are fair and reasonable and as to the acceptance of the Lai Fung Offers. We, Gram Capital Limited, have been appointed as the Lai Fung Independent Financial Adviser to advise the Lai Fung Independent Board Committee in this respect, and our opinion herein is solely for the assistance of the Lai Fung Independent Board Committee in connection with its consideration of the Lai Fung Offers pursuant to Rule 2.1 of the Takeovers Code. The appointment of Gram Capital as the Lai Fung Independent Financial Adviser has been approved by the Lai Fung Independent Board Committee.

BASIS OF OUR OPINION

In formulating our opinion to the Lai Fung Independent Board Committee, we have relied on the statements, information, opinions and representations contained or referred to in the Lai Fung Composite Document and the information and representations as provided to us by the Lai Fung Directors and the Offeror (where applicable). We have assumed that all information and representations that have been provided by the Lai Fung Directors and the Offeror (where applicable), for which they are solely and wholly responsible, are true and accurate at the time when they were made and continue to be so as at the Latest Practicable Date, and should there be any material changes to our opinion after the Latest Practicable Date, Lai Fung Shareholders would be notified as soon as possible. We have also assumed that all statements of belief, opinion, expectation and intention made by the Lai Fung Directors and the Offeror (where applicable) in the Lai Fung Composite Document were reasonably made after due enquiry and careful consideration. We have no reason to suspect that any material facts or information have been withheld or to doubt the truth, accuracy and completeness of the information and facts contained in the Lai Fung Composite Document, or the reasonableness of the opinions expressed by Lai Fung, its advisers and/or the Lai Fung Directors and the Offeror (where applicable), which have been provided to us. Our opinion is based on the Lai Fung Directors’ and the Offeror’s representation and confirmation that there is no undisclosed private agreement/arrangement or implied understanding with anyone concerning the Lai Fung Offers. We consider that we have taken sufficient and necessary steps on which to form a reasonable basis and an informed view for our opinion in compliance with Rule 13.80 of the Listing Rules and Rule 2 of the Takeovers Code.

– 33 –

LETTER FROM THE LAI FUNG INDEPENDENT FINANCIAL ADVISER

Your attention is drawn to the responsibility statements as set out in the section headed “RESPONSIBILITY STATEMENT” of Appendix IV to the Lai Fung Composite Document. We, as the Lai Fung Independent Financial Adviser, take no responsibility for the contents of any part of the Lai Fung Composite Document, save and except for this letter of advice.

We consider that we have been provided with sufficient information to reach an informed view and to provide a reasonable basis for our opinion. We have not, however, conducted any independent in-depth investigation into the business and affairs of Lai Fung, the Offeror or their respective subsidiaries or associates (if applicable), nor have we considered the taxation implication on the Lai Fung Group or the Lai Fung Shareholders as a result of the Lai Fung Offers. Lai Fung has been separately advised by its own professional advisers with respect to the Lai Fung Offer and the preparation of the Lai Fung Composite Document (other than this letter).

We have assumed that the Lai Fung Offers will be consummated in accordance with the terms and conditions set forth in the Lai Fung Composite Document without any waiver, amendment, addition or delay of any terms or conditions. We have assumed that in connection with the receipt of all the necessary governmental, regulatory or other approvals and consents as required for the Lai Fung Offers, no delay, limitation, condition or restriction will be imposed that would have a material adverse effect on the contemplated benefits expected to be derived from the Lai Fung Offers. In addition, our opinion is necessarily based on the financial, market, economic, industry-specific and other conditions as they existed on, and the information made available to us as at the Latest Practicable Date. The Disinterested Lai Fung Shareholders and the Lai Fung Optionholders will be notified of any material changes as soon as possible in accordance with Rule 9.1 of the Takeovers Code.

Lastly, where information in this letter has been extracted from published or otherwise publicly available sources, it is the responsibility of Gram Capital to ensure that such information has been correctly and fairly extracted, reproduced or presented from the relevant sources while we are not obligated to conduct any independent in-depth investigation into the accuracy and completeness of those information.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our opinion in respect of the Lai Fung Offers, we have taken into consideration the following principal factors and reasons:

(1) Background and terms of the Lai Fung Offers

The Lai Fung Share Offer

The Lai Fung Share Offer is being made by HSBC on behalf of the Offeror in compliance with the Takeovers Code on the basis set out below.

For each Lai Fung Offer Share ...................................................................... HK$5.22 in cash

– 34 –

LETTER FROM THE LAI FUNG INDEPENDENT FINANCIAL ADVISER

As at the Latest Practicable Date, there were 161,558,728 Lai Fung Offer Shares. On this basis, the value of the Lai Fung Share Offer is approximately HK$843.3 million.

Further details of the Lai Fung Share Offer are set out in Appendix I to the Lai Fung Composite Document and the Form of Lai Fung Share Offer Acceptance.

The Lai Fung Option Offer

As at the Latest Practicable Date, there were 10,234,117 Lai Fung Options (all of which vested on their respective dates of grant), each giving the Lai Fung Optionholders the right to subscribe for one new Lai Fung Share. The exercise of such Lai Fung Options in full would result in the issue of 10,234,117 new Lai Fung Shares, representing approximately 3.13% of the issued share capital of Lai Fung as at the Latest Practicable Date and approximately 3.03% of the issued share capital of Lai Fung as enlarged by the issue of such new Lai Fung Shares. In accordance with Rule 13 of the Takeovers Code, when the Lai Fung Share Offer is made, the Offeror is required to make (or procure to be made on its behalf) an appropriate offer to all the Lai Fung Optionholders for the cancellation of every Lai Fung Option, whether vested or unvested, by way of the Lai Fung Option Offer.

Under the Lai Fung Option Offer, the Offeror is required to, in accordance with Rule 13 of the Takeovers Code, offer the Lai Fung Optionholders the Lai Fung Option Offer Price (which is the “see-through” price, being the Lai Fung Share Offer Price minus the exercise price of the relevant Lai Fung Option) in cash for the cancellation of each Lai Fung Option they hold, whether vested or unvested, provided that if the exercise price of any Lai Fung Option is equal to or greater than the Lai Fung Share Offer Price (such that the “see-through” price is zero or negative), the Lai Fung Option Offer Price will be a nominal amount of HK$0.01 for every 100 Lai Fung Options (or, if lesser, any part thereof).

As at the Latest Practicable Date, there are 10,234,117 Lai Fung Options (all of which vested on their respective dates of grant) entitling the Lai Fung Optionholders to subscribe for an aggregate of 10,234,117 Lai Fung Shares at an exercise price ranging from HK$6.650 to HK$13.520 per Lai Fung Share. On this basis, the total amount required to satisfy the cancellation of all Lai Fung Options is approximately HK$1,023.4.

Further details of the Lai Fung Option Offer are set out in Appendix I to the Lai Fung Composite Document and the Form of Lai Fung Option Offer Acceptance.

In aggregate, the Lai Fung Offers are valued at approximately HK$843.3 million.

– 35 –

LETTER FROM THE LAI FUNG INDEPENDENT FINANCIAL ADVISER

(2) Financial information on the Lai Fung Group

With reference to the Lai Fung Composite Document, Lai Fung is a company incorporated in the Cayman Islands with limited liability. The Lai Fung Group is principally engaged in property development for sale and property investment for rental purposes, and development and operation of and investment in cultural, leisure, entertainment and related facilities.

Set out below is a summary of the consolidated financial information on the Lai Fung Group (i) for each of the two years ended 31 July 2017 as extracted from the annual report of Lai Fung for the year ended 31 July 2017 (the “ Annual Report ”); and (ii) for the six months ended 31 January 2018 (with comparative figures) as extracted from the interim report of Lai Fung for the six months ended 31 January 2018 (the “ Interim Report ”):

	For the	For the
	year ended	year ended
	31 July 2017	31 July 2016	Change from
	(“FY2017”)	(“FY2016”)	2016 to 2017
	(audited)	(audited)
	HK$’000	HK$’000	%
Revenue	1,326,682	2,043,530	(35.08)
— Property development	624,592	1,414,160	(55.83)
— Property investment	702,090	629,370	11.55
Gross proft Proft for the year	664,244 1,590,584	1,088,806 897,422	(38.99) 77.24
	For six	For six
	months ended	months ended
	31 January 2018	31 January 2017	Change from
	(“HY2018”)	(“HY2017”)	2017 to 2018
	(unaudited)	(unaudited)
	HK$’000	HK$’000	%
Revenue	509,410	479,022	6.34
— Property development	129,883	133,192	(2.48)
— Property investment	379,527	345,830	9.74
Gross proft Proft for the period	345,727 400,232	340,405 346,616	1.56 15.47

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LETTER FROM THE LAI FUNG INDEPENDENT FINANCIAL ADVISER

As depicted from the table above, Lai Fung Group recorded revenue and profit of approximately HK$1.33 billion and HK$1.59 billion respectively for FY2017, representing a decrease of approximately 35.08% and an increase of 77.24% respectively as compared to those for FY2016. With reference to the Annual Report, the decrease in revenue was primarily due to projects such as Guangzhou Eastern Place Phase V, Guangzhou King’s Park and Shanghai May Flower Plaza having been sold and substantially recognised during FY2016 and fewer properties being available for sale during FY2017; while the increase in profit was mainly attributable to (a) increased profit contribution from a joint venture project, (b) a higher revaluation gain arising from the revaluation of Lai Fung Group’s investment properties, (c) the fair value gain arising on the cross currency swaps; and (d) tax indemnity amount received by Lai Fung Group from LSD, which outweighed the effect of lower operating profit due to lower recognised property sales from Lai Fung Group’s subsidiaries.

As also illustrated from the table above, Lai Fung Group recorded revenue and profit of approximately HK$509.41 million and HK$400.23 million respectively for HY2018, representing an increase of approximately 6.34% and 15.47% respectively as compared to those for HY2017. With reference to the Interim Report, the increase in profit was mainly attributable to a higher revaluation gain arising from the revaluation of Lai Fung Group’s investment properties.

As at 31 January 2018, Lai Fung Group had net assets of approximately HK$16.39 billion.

With reference to the Annual Report and Interim Report, Lai Fung operates its property development and property investment business in the PRC. According to the National Bureau of Statistics of the PRC, (i) the gross domestic product (GDP) of PRC amounted to RMB82,712.2 billion in 2017, representing a year-on-year growth of 6.9% as compared to that in 2016; (ii) real estate investment amount in PRC reached RMB10,979.9 billion in 2017, representing a year-on-year growth of 7.0% as compared to that in 2016; (iii) area of land acquisition in PRC amounted to approximately 255.08 million square meter in 2017, representing a year-on-year growth of 15.8% as compared to that in 2016; and (iv) area of commercialised buildings (including residential, office and commercial) sold in PRC amounted to approximately 1.69 billion square meter in 2017, representing a year-on-year growth of 7.7% as compared to that in 2016. The above figures on the PRC real estate industry are generally positive.

With reference to the Interim Report, Lai Fung Group had a number of projects in various stages of development in Shanghai, Guangzhou, Zhongshan and Hengqin. The rental portfolio was expected to increase from approximately 3.3 million square feet to approximately 6.6 million square feet through developing the existing projects on hand over the next few years.

– 37 –

LETTER FROM THE LAI FUNG INDEPENDENT FINANCIAL ADVISER

(3) Information on the Offeror and LSD

To provide the Lai Fung Shareholders and the Lai Fung Optionholders with basic information on the background of the Offeror and LSD, set out below is the key information on the Offeror and LSD as extracted from the “Letter from HSBC” of the Lai Fung Composite Document:

The Offeror is a company incorporated in Hong Kong with limited liability and is a whollyowned subsidiary of LSD. The Offeror is engaged in investment holding.

LSD is a company incorporated in Hong Kong with limited liability. The LSD Group is principally engaged in property investment, property development, investment in and operation of hotels and restaurants and investment holding. As at the Latest Practicable Date, (i) LSG was interested in 56.10% of the issued share capital of LSD; and (ii) Dr. Peter Lam was interested in 41.87% of the issued share capital of LSG.

(4) Intentions of LSD with regard to the Lai Fung Group

To provide the Disinterested Lai Fung Shareholders and the Lai Fung Optionholders with information on the intentions of LSD, set out below is LSD’s intentions on Lai Fung Group’s business as extracted from the “Letter from HSBC” of the Lai Fung Composite Document:

– 38 –

LETTER FROM THE LAI FUNG INDEPENDENT FINANCIAL ADVISER

(5) The Lai Fung Share Offer Price

Lai Fung Share Offer Price comparison

The Lai Fung Share Offer Price of HK$5.22 per Lai Fung Offer Share represents:

(i) a discount of approximately 49.42% to the closing price of HK$10.32 per Lai Fung Share as quoted on the Stock Exchange as at the Latest Practicable Date;
(ii) a discount of approximately 58.24% to the closing price of HK$12.50 per Lai Fung Share as quoted on the Stock Exchange as at the Last Trading Date;
(iii) a discount of approximately 58.51% to the average closing price of HK$12.58 per Lai Fung Share as quoted on the Stock Exchange for the five consecutive trading days immediately prior to and including the Last Trading Day;
(iv) a discount of approximately 57.90% to the average closing price of HK$12.40 per Lai Fung Share as quoted on the Stock Exchange for the 10 consecutive trading days immediately prior to and including the Last Trading Day;
(v) a discount of approximately 55.95% to the average closing price of HK$11.85 per Lai Fung Share as quoted on the Stock Exchange for the 30 consecutive trading days immediately prior to and including the Last Trading Day; and
(vi) a discount of approximately 89.42% to the unaudited consolidated net asset value attributable to owners per Lai Fung Share of approximately HK$49.32 as at 31 January 2018, based on the total number of issued Lai Fung Shares as at 31 January 2018.

– 39 –

LETTER FROM THE LAI FUNG INDEPENDENT FINANCIAL ADVISER

Historical price performance of the Lai Fung Shares

Set out below is a chart showing the movement of the closing prices of the Lai Fung Shares during the period from 1 June 2017 up to the Latest Practicable Date (the “ Review Period ”) to illustrate the general trend and level of movement of the closing prices of the Lai Fung Shares.

Historical daily closing price per Lai Fung Share

==> picture [421 x 214] intentionally omitted <==

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HK$
16
14
12
10
8
6
4
2
0
Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug
2017 2017 2017 2017 2017 2017 2017 2018 2018 2018 2018 2018 2018 2018 2018
Closing Price Lai Fung Share Offer Price
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Source: The Stock Exchange web-site (www.hkex.com.hk)

Note: The Lai Fung Share closing prices from 1 June 2017 to 14 August 2017 was adjusted taking into account the share consolidation of Lai Fung as disclosed in the announcements of Lai Fung dated 18 July 2017 and 14 August 2017.

During the Review Period, the lowest and highest closing prices of the Lai Fung Shares as quoted on the Stock Exchange were HK$10.32 per Lai Fung Share recorded on the Latest Practicable Date, and HK$13.68 recorded on 26 January 2018 respectively. The Lai Fung Share Offer Price was lower than the Lai Fung Share closing prices during the entire Review Period.

The closing price of the Lai Fung Shares was HK$10.9 on 1 June 2017. The closing prices of the Lai Fung Shares were on a general increasing trend from July 2017 to January 2018, reaching their peak at HK$13.68 on 26 January 2018. Since then, the closing prices of the Lai Fung Shares were on a general decreasing trend from February 2018 to April 2018, reaching HK$11.02 on 23 April 2018 and 24 April 2018. From May 2018 up to the Latest Practicable Date, the closing prices of the Lai Fung Shares ranged between HK$10.32 and HK$13.1.

– 40 –

LETTER FROM THE LAI FUNG INDEPENDENT FINANCIAL ADVISER

Taking into account the above, in particular, (i) the Lai Fung Share Offer Price was lower than the closing prices of the Lai Fung Shares during the entire Review Period; (ii) the Lai Fung Share Offer Price represents a deep discount to each of the Lai Fung Share closing prices as illustrated in the sub-section headed “Lai Fung Share Offer Price comparison” above; and (iii) the Lai Fung Share Offer Price represents a discount of approximately 89.42% to the unaudited consolidated net asset value attributable to owners per Lai Fung Share as at 31 January 2018 (based on the total number of issued Lai Fung Shares as at 31 January 2018), we are of the opinion that the Lai Fung Share Offer Price is unattractive and is not fair and reasonable so far as the Independent Shareholders are concerned.

In addition, the Disinterested Lai Fung Shareholders should closely monitor the market price and liquidity of the Lai Fung Shares during the Lai Fung Offer Period and carefully consider the relevant risks and uncertainties based on their individual risk preference and tolerance level. Those Disinterested Lai Fung Shareholders who decide to retain part or all of their investments in the Lai Fung Shares should also carefully monitor the financial performance of Lai Fung Group as well as the intention of LSD in relation to Lai Fung Group in the future, and the potential difficulties they may encounter in disposing of their investments in the Lai Fung Shares after the close of the Lai Fung Offer.

(6) The Lai Fung Option Offer Price

Set out below is a summary of the number Lai Fung Options and their respective exercise price as at the Latest Practicable Date as extract from the Lai Fung Composite Document.

	Number of Lai Fung Options
Lai Fung Option exercise price	(each carrying the right to subscribe
per Lai Fung Share	for one new Lai Fung Share)
HK$
6.65	1,009,591
8.00	180,000
9.50	220,000
11.40	8,374,526
13.52	450,000

The Lai Fung Option Offer Price to cancel all the Lai Fung Options is a nominal value of HK$0.01 for every 100 Lai Fung Options. Based on the closing price of the Lai Fung Shares of HK$10.32 as at the Latest Practicable Date, an aggregate of 1,409,591 Lai Fung Options (with exercise prices ranged from HK$6.65 to HK$9.50) were in-the-money (the “ In-the-money Lai Fung Options ”) and 8,824,526 Lai Fung Options (with exercise prices ranged from HK$11.40 to HK$13.52) were out-of-the-money (the “ Out-of-the-money Lai Fung Options ”).

– 41 –

LETTER FROM THE LAI FUNG INDEPENDENT FINANCIAL ADVISER

For the In-the-money Lai Fung Options as at the Latest Practicable Date, given that the differences between the closing price of the Lai Fung Shares and the exercise prices are higher than the Lai Fung Option Offer Price, we are of the opinion that the Lai Fung Option Offer Price is unattractive and is not fair and reasonable so far as the holders of the In-the-money Lai Fung Options (the “ In-the-money Optionholders ”) are concerned.

As for the Out-of-the-money Lai Fung Options, the holders of the Out-of-the-money Lai Fung Optionholders (the “ Out-of-the-money Optionholders ”) can only receive an aggregate amount of less than HK$900 for accepting the Lai Fung Option Offer (the “ Acceptance Consideration ”). Although the Out-of-the-money Lai Fung Options were out-of-the-money as their exercise prices are higher than the closing price of the Lai Fung Shares as at the Latest Practicable Date, we consider the Acceptance Consideration to be immaterial and unattractive to the Out-of-the-money Optionholders.

Although it is difficult to predict the future performance of the Lai Fung Share prices, it is reasonable for the Out-of-the-money Optionholders to preserve their opportunities for capturing the benefit of the possible increase in the Lai Fung Share prices (which may cause the Out-of-the-money Lai Fung Options to be “in-the-money”) in future, instead of accepting the Lai Fung Option Offer for an immaterial and unattractive Acceptance Consideration of less than HK$900. Accordingly, we are also of the opinion that the Lai Fung Option Offer Price is unattractive and is not fair and reasonable so far as the Out-of-the-money Optionholders are concerned.

Nevertheless, if the Out-of-the-money Optionholders are pessimistic about the future financial performance of the Lai Fung Group after the Lai Fung Offers, may, having regard to their own circumstances, consider accepting the Lai Fung Option Offer in respect of all or any part of their Lai Fung Options.

RECOMMENDATION

Having considered the principal factors and reasons as discussed above, in particular:

(i) the Lai Fung Share Offer Price of HK$5.22 is lower than the closing prices of the Lai Fung Shares as quoted on the Stock Exchange during the Review Period;
(ii) the Lai Fung Share Offer Price of HK$5.22 represents a deep discount to the closing prices of the Lai Fung Shares respectively as at the Last Trading Day and as at the Latest Practicable Date; and
(iii) the Lai Fung Share Offer Price represents a discount of approximately 89.42% to the unaudited consolidated net asset value attributable to owners per Lai Fung Share as at 31 January 2018 (based on the total number of issued Lai Fung Shares as at 31 January 2018),

we consider that the terms of the Lai Fung Share Offer are not fair and reasonable. Accordingly, we recommend the Lai Fung Independent Board Committee to advise the Disinterested Lai Fung Shareholders not to accept the Lai Fung Share Offer.

– 42 –

LETTER FROM THE LAI FUNG INDEPENDENT FINANCIAL ADVISER

As the exercise prices of the In-the-money Lai Fung Options are higher than the Lai Fung Share Offer Price, the In-the-money Optionholders could only receive a nominal amount of HK$0.01 for every 100 Lai Fung Options for accepting the Lai Fung Option Offer. For the Out-of-the-money Lai Fung Options, it is reasonable for the Lai Fung Out-of-the-money Optionholders to preserve their opportunities for capturing the benefit of the possible increase in the Lai Fung Share prices (which may cause the Out-of-the-money Lai Fung Options to be “in-the-money”) in future, instead of accepting the Lai Fung Option Offer for an immaterial and unattractive Acceptance Consideration of less than HK$900.

Accordingly, we are of the opinion that the terms of the Lai Fung Option Offer are unattractive and are not fair and reasonable so far as the Lai Fung Optionholders are concerned. Based on the foregoing, we recommend the Lai Fung Independent Board Committee to advise the Lai Fung Optionholders not to accept the Lai Fung Option Offer.

Those Disinterested Lai Fung Shareholders/Lai Fung Optionholders who decide to retain part or all of their investments in the Lai Fung Shares/Lai Fung Options should carefully monitor the intention of LSD in relation to Lai Fung in the future and the potential difficulties they may encounter in realising their investments after the close of the Lai Fung Offers. Further terms and conditions of the Lai Fung Offers are set out in the “Letter from HSBC” of and Appendix I to the Lai Fung Composite Document.

As different Lai Fung Shareholders/Lai Fung Optionholders would have different investment criteria, objectives and/or circumstances, we would recommend any Lai Fung Shareholders/ Lai Fung Optionholders who may require advice in relation to any aspect of the Lai Fung Composite Document, or as to the action to be taken, to consult a licensed securities dealer, bank manager, solicitor, professional accountant, tax adviser or other professional adviser.

Yours faithfully, For and on behalf of Gram Capital Limited Graham Lam Managing Director

– 43 –

FURTHER TERMS OF THE LAI FUNG OFFERS

APPENDIX I

1. PROCEDURES FOR ACCEPTANCE

To accept any of the Lai Fung Offers, you should duly complete and sign the relevant accompanying Lai Fung Form(s) of Acceptance in accordance with the instructions printed thereon, which instructions form part of the terms of the relevant Lai Fung Offers.

1.1. The Lai Fung Share Offer

(a) If the share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) in respect of your Lai Fung Offer Shares is/are in your name, and you wish to accept the Lai Fung Share Offer in respect of your Lai Fung Offer Shares (whether in full or in part), you must deliver the duly completed and signed WHITE Form of Lai Fung Share Offer Acceptance together with the relevant share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) in respect of the number of Lai Fung Offer Shares for which you intend to accept the Lai Fung Share Offer, by post or by hand, to the Registrar, Tricor Tengis Limited at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong marked “Lai Fung Holdings Limited — Lai Fung Share Offer” on the envelope so as to reach the Registrar as soon as possible but in any event by no later than 4:00 p.m. on the Lai Fung Share Offer Closing Date or such later time(s) and/or date(s) as the Offeror may determine and announce in accordance with the Takeovers Code.
(b) If the share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) in respect of your Lai Fung Offer Shares is/are in the name of a nominee company or a name other than your own, and you wish to accept the Lai Fung Share Offer in respect of your Lai Fung Offer Shares (whether in full or in part), you must either:
(i) lodge your share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) in respect of the number of Lai Fung Offer Shares for which you intend to accept the Lai Fung Share Offer with the nominee company, or other nominee, and with instructions authorising it to accept the Lai Fung Share Offer on your behalf and requesting it to deliver the WHITE Form of Lai Fung Share Offer Acceptance duly completed and signed together with the relevant share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) in respect of your Lai Fung Offer Shares to the Registrar; or

– I-1 –

FURTHER TERMS OF THE LAI FUNG OFFERS

APPENDIX I

(ii) arrange for the Lai Fung Offer Shares to be registered in your name by Lai Fung through the Registrar, and deliver the duly completed and signed WHITE Form of Lai Fung Share Offer Acceptance together with the relevant share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) in respect of the number of Lai Fung Offer Shares for which you intend to accept the Lai Fung Share Offer to the Registrar; or
(iii) if your Lai Fung Offer Shares have been lodged with your licensed securities dealer/registered institution in securities/custodian bank through CCASS, instruct your licensed securities dealer/registered institution in securities/custodian bank to authorise HKSCC Nominees Limited to accept the Lai Fung Share Offer on your behalf on or before the deadline set by HKSCC Nominees Limited. In order to meet the deadline set by HKSCC Nominees Limited, you should check with your licensed securities dealer/ registered institution in securities/ custodian bank for the timing on the processing of your instruction, and submit your instruction to your licensed securities dealer/registered institution in securities/custodian bank as required by them; or
(iv) if your Lai Fung Offer Shares have been lodged with your investor participant’s account maintained with CCASS, give your instruction via the CCASS Phone System or the CCASS Internet System on or before the deadline set by HKSCC Nominees Limited.
(c) If you have lodged transfer(s) of any of your Lai Fung Offer Shares for registration in your name or if you have exercised your Lai Fung Options and have not yet received your share certificate(s), and you wish to accept the Lai Fung Share Offer in respect of those Lai Fung Offer Shares, you should nevertheless duly complete and sign the WHITE Form of Lai Fung Share Offer Acceptance and deliver it to the Registrar together with the transfer receipt(s), if any, duly signed by yourself and/or other document(s) of title or entitlement in respect of the Lai Fung Options (as the case may be). Such action will constitute an irrevocable authority to the Offeror and/or HSBC and/or their respective agent(s) to collect from Lai Fung or the Registrar on your behalf the relevant share certificate(s) when issued and to deliver such share certificate(s) to the Registrar on your behalf and to authorise and instruct the Registrar to hold such share certificate(s), subject to the terms and conditions of the Lai Fung Share Offer, as if it was/they were delivered to the Registrar with the WHITE Form of Lai Fung Share Offer Acceptance.

– I-2 –

APPENDIX I

FURTHER TERMS OF THE LAI FUNG OFFERS

(d) If the share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title in respect of your Lai Fung Offer Shares is/are not readily available and/ or is/are lost, as the case may be, and you wish to accept the Lai Fung Share Offer in respect of any of your Lai Fung Offer Shares, the WHITE Form of Lai Fung Share Offer Acceptance should nevertheless be duly completed, signed and delivered to the Registrar together with a letter stating that you have lost one or more of your share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title in respect of your Lai Fung Offer Shares or that it is/they are not readily available. If you subsequently find such document(s) or if it/they become(s) available, the relevant share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title should be forwarded to the Registrar as soon as possible thereafter. If you have lost the share certificate(s) and/or transfer receipt(s) and/or other document(s) of title in respect of your Lai Fung Offer Shares, you should also write to the Registrar for a form of letter of indemnity which, when completed and signed in accordance with the instructions given, should be provided to the Registrar. The Offeror has absolute discretion to decide whether any Lai Fung Offer Shares in respect of which the share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title is/are not readily available and/or is/are lost will be taken up by the Offeror.
(e) Acceptance of the Lai Fung Share Offer will be treated as valid only if the duly completed and signed WHITE Form of Lai Fung Share Offer Acceptance is received by the Registrar on or before the latest time for acceptance of the Lai Fung Share Offer and is:
(i) accompanied by the relevant share certificate(s) and/or transfer receipt(s) and/ or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) in respect of the number of Lai Fung Offer Shares for which you intend to accept the Lai Fung Share Offer and, if that/those share certificate(s) and/or any other document(s) of title is/ are not in your name, such other document(s) (e.g. a duly stamped transfer of the relevant Lai Fung Share(s) in blank or in favour of the acceptor executed by the registered holder) in order to establish your right to become the registered holder of the relevant Lai Fung Offer Shares; or
(ii) from a registered Lai Fung Offer Shareholder or his/her personal representative (but only up to the amount of the registered holding and only to the extent that the acceptance relates to the Lai Fung Offer Shares which are not taken into account under another sub-paragraph of this paragraph (e)); or
(iii) certified by the Registrar or the Stock Exchange,

and the Registrar has recorded that the acceptance and any relevant documents required by Note 1 to Rule 30.2 of the Takeovers Code have been so received.

– I-3 –

FURTHER TERMS OF THE LAI FUNG OFFERS

APPENDIX I

(f) If the WHITE Form of Lai Fung Share Offer Acceptance is executed by a person other than the registered Lai Fung Offer Shareholder, appropriate documentary evidence of authority (e.g. grant of probate or certified copy of a power of attorney) to the satisfaction of the Registrar must be produced.
(g) If the Lai Fung Share Offer is invalid, withdrawn or lapses, the Offeror shall, as soon as possible but in any event within ten (10) days thereof, return by ordinary post at your own risk the share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) in respect of the Lai Fung Offer Shares tendered for acceptance together with the duly cancelled WHITE Form of Lai Fung Share Offer Acceptance to the relevant Lai Fung Offer Shareholder(s).
(h) No acknowledgement of receipt of any WHITE Form of Lai Fung Share Offer Acceptance and/or share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) in respect of your Lai Fung Offer Shares tendered for acceptance will be given.

1.2. The Lai Fung Option Offer

(a) If you are a Lai Fung Optionholder and you wish to accept the Lai Fung Option Offer in respect of your Lai Fung Options, you must deliver the duly completed and signed PINK Form of Lai Fung Option Offer Acceptance together with the relevant certificate(s), document(s) of title or entitlement in respect of the Lai Fung Options and/or any other document(s) (if applicable) evidencing the grant of the Lai Fung Options to you (and/or any satisfactory indemnity or indemnities required in respect thereof) for your holding of the Lai Fung Options or if applicable, for not less than the number of the Lai Fung Options in respect of which you intend to accept the Lai Fung Option Offer, by post or by hand, to the company secretary of Lai Fung at 11th Floor, Lai Sun Commercial Centre, 680 Cheung Sha Wan Road, Kowloon, Hong Kong marked “Lai Fung Holdings Limited — Lai Fung Option Offer” on the envelope so as to reach the company secretary of Lai Fung as soon as possible but in any event by no later than 4:00 p.m. on the Lai Fung Share Offer Closing Date or such later time(s) and/ or date(s) as the Offeror may determine and announce in accordance with the Takeovers Code.
(b) If the PINK Form of Lai Fung Option Offer Acceptance is executed by a person other than the registered Lai Fung Optionholder, appropriate documentary evidence of authority (e.g. grant of probate or certified copy of a power of attorney) to the satisfaction of the company secretary of Lai Fung must be produced.

– I-4 –

FURTHER TERMS OF THE LAI FUNG OFFERS

APPENDIX I

(c) If the Lai Fung Option Offer is invalid, withdrawn or lapses, the Offeror shall, as soon as possible but in any event within ten (10) days thereof, return by delivering the relevant certificate(s), document(s) of title or entitlement in respect of the Lai Fung Options, and/or any other document(s) (if applicable) evidencing the grant of the Lai Fung Options to you (and/or any satisfactory indemnity or indemnities required in respect thereof) together with the duly cancelled PINK Form of Lai Fung Option Offer Acceptance to the office of Lai Fung in Hong Kong for collection by the relevant Lai Fung Optionholders.
(d) No acknowledgement of receipt of any PINK Form of Lai Fung Option Offer Acceptance and/or the relevant certificate(s), document(s) of title or entitlement in respect of your Lai Fung Options and/or any other document(s) (if applicable) evidencing the grant of the Lai Fung Options to you (and/or any satisfactory indemnity or indemnities required in respect thereof) will be given.

2. SETTLEMENT UNDER THE OFFERS

2.1 The Lai Fung Share Offer

Provided that a duly completed WHITE Form of Lai Fung Share Offer Acceptance and the relevant share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) in respect of the relevant Lai Fung Offer Shares as required by Note 1 to Rule 30.2 of the Takeovers Code are complete and in good order in all respects and have been received by the Registrar before the close of the Lai Fung Share Offer, a cheque for the amount due to each of the Lai Fung Offer Shareholders who accepts the Lai Fung Share Offer less seller’s ad valorem stamp duty in respect of the Lai Fung Offer Shares tendered by him under the Lai Fung Share Offer will be despatched to such Lai Fung Offer Shareholder by ordinary post at his own risk as soon as possible but in any event within seven (7) Business Days following the date of receipt of a duly completed WHITE Form of Lai Fung Share Offer Acceptance together with all of the relevant document(s) by the Registrar to render such acceptance under the Lai Fung Share Offer valid.

Settlement of the consideration to which any Lai Fung Offer Shareholder is entitled under the Lai Fung Share Offer will be implemented in full in accordance with its terms (save in respect of the payment of the seller’s ad valorem stamp duty) without regard to any lien, right of set-off, counterclaim or other analogous right to which the Offeror may otherwise be, or claim to be, entitled against such Lai Fung Offer Shareholder.

– I-5 –

FURTHER TERMS OF THE LAI FUNG OFFERS

APPENDIX I

No fraction of a cent will be payable and the amount of consideration payable to a Lai Fung Offer Shareholder who accepts the Lai Fung Share Offer will be rounded down to the nearest cent.

Cheque(s) not presented for payment within six months from the date of issue of the relevant cheque(s) will not be honoured and be of no further effect, and in such circumstances cheque holders should contact the Offeror for payment.

2.2 The Lai Fung Option Offer

Provided that a duly completed and signed PINK Form of Lai Fung Option Offer Acceptance and the relevant certificate(s), document(s) of title or entitlement in respect of the Lai Fung Options and/ or any other document(s) (if applicable) evidencing the grant of the Lai Fung Options to you (and/or any satisfactory indemnity or indemnities required in respect thereof) are complete and in good order in all respects and have been received by the company secretary of Lai Fung before the close of the Lai Fung Option Offer, a cheque for the amount due to each of the Lai Fung Optionholders who accepts the Lai Fung Option Offer in respect of the Lai Fung Options surrendered by him in acceptance of the Lai Fung Option Offer will be available for collection at the office of Lai Fung in Hong Kong at 11th Floor, Lai Sun Commercial Centre, 680 Cheung Sha Wan Road, Kowloon, Hong Kong within seven (7) Business Days of the date of receipt of a duly completed PINK Form of Lai Fung Option Offer Acceptance together with all the relevant document(s) by the company secretary of Lai Fung to render such acceptance, surrender and cancellation under the Lai Fung Option Offer valid.

Settlement of the consideration to which any Lai Fung Optionholder is entitled to under the Lai Fung Option Offer will be implemented in full in accordance with its terms, without regard to any lien, right of set-off, counterclaim or other analogous right to which the Offeror may otherwise be, or claim to be, entitled against such Lai Fung Optionholder.

No fraction of a cent will be payable and the amount of consideration payable to an Lai Fung Optionholder who accepts the Lai Fung Option Offer will be rounded down to the nearest cent.

– I-6 –

FURTHER TERMS OF THE LAI FUNG OFFERS

APPENDIX I

3. ACCEPTANCE PERIOD AND REVISIONS

Unless the Lai Fung Offers are revised or extended in accordance with the Takeovers Code, to be valid, the WHITE Form of Lai Fung Share Offer Acceptance must be received by the Registrar and the PINK Form of Lai Fung Option Offer Acceptance must be received by the company secretary of Lai Fung, in each case, in accordance with the instructions printed thereon and in this Lai Fung Composite Document by 4:00 p.m. on the Lai Fung Share Offer Closing Date.

If the Lai Fung Offers are revised or extended, the Offeror will issue an announcement in relation to such revision or extension of the Lai Fung Offers, which announcement will state the next Lai Fung Share Offer Closing Date. If, in the course of the Lai Fung Offers, the Offeror revises the terms of the Lai Fung Offers, all the Lai Fung Offer Shareholders and the Lai Fung Optionholders, whether or not they have already accepted the Lai Fung Offers, will be entitled to accept the revised Lai Fung Offers under the revised terms. Any revised Lai Fung Offers must be kept open for at least fourteen (14) days or, if longer and to the extent required by applicable U.S. regulations (including where there is a change in the Lai Fung Share Offer Price), at least 10 U.S. Business Days following the date on which the revised Lai Fung Composite Document is posted, and shall not be closed earlier than Thursday, 13 September 2018. In any case where the Lai Fung Offers are revised, and the consideration offered under each of the revised Lai Fung Offers does not represent on such date a reduction in the value of the Lai Fung Offers in its original or any previously revised form(s), the benefit of such revised Lai Fung Offers will be made available as set out herein to acceptors of the Lai Fung Offers in its original or any previously revised form(s) (hereinafter called “previous acceptor(s)”). The execution by, or on behalf of, a previous acceptor of any Lai Fung Form of Acceptance shall be deemed to constitute acceptance of the Lai Fung Offers as so revised.

If the Lai Fung Share Offer Closing Date is extended, any reference in this Lai Fung Composite Document and in the Lai Fung Form(s) of Acceptance to the Lai Fung Share Offer Closing Date shall, except where the context otherwise requires, be deemed to refer to the subsequent Lai Fung Share Offer Closing Date.

4. NOMINEE REGISTRATION

To ensure equality of treatment of all the Lai Fung Offer Shareholders, those Lai Fung Offer Shareholders who hold Lai Fung Offer Shares as nominee on behalf of more than one beneficial owner should, as far as practicable, treat the holding of each beneficial owner separately. It is essential for the beneficial owners of the Lai Fung Offer Shares whose investments are registered in the names of nominees to provide instructions to their nominees of their intentions with regard to the Lai Fung Offers. Acceptance of the Lai Fung Share Offer by any nominee will be deemed to constitute a warranty by such nominee to the Offeror that the number of Lai Fung Offer Shares it has indicated in the Form of Lai Fung Share Offer Acceptance is the aggregate number of Lai Fung Offer Shares for which such nominee has received authorisations from the beneficial owners to accept the Lai Fung Share Offer on their behalf.

– I-7 –

FURTHER TERMS OF THE LAI FUNG OFFERS

APPENDIX I

5. ANNOUNCEMENTS

By 6:00 p.m. on the Lai Fung Share Offer Closing Date (or such later time(s) and/or date(s) as the Executive may in exceptional circumstances permit), the Offeror must inform the Executive and the Stock Exchange of its decision in relation to the revision or extension of the Lai Fung Offers. The Offeror must publish an announcement in accordance with the Listing Rules on the Stock Exchange’s website by 7:00 p.m. on the Lai Fung Share Offer Closing Date stating the results of the Lai Fung Offers. The announcement will state the following:

(a) the total number of Lai Fung Offer Shares and Lai Fung Options for which acceptances of the Lai Fung Offers have been received;
(b) the total number of Lai Fung Offer Shares and Lai Fung Options held, controlled or directed by the Offeror and the Offeror Concert Parties before the Lai Fung Offer Period;
(c) the total number of Lai Fung Offer Shares and Lai Fung Options acquired or agreed to be acquired during the Lai Fung Offer Period by the Offeror and the Offeror Concert Parties; and
(d) details of any relevant securities (as defined in Note 4 to Rule 22 of the Takeovers Code) in Lai Fung which the Offeror and any of the Offeror Concert Parties have borrowed or lent, save for any borrowed Lai Fung Offer Shares which have been either on-lent or sold.

The announcement will specify the percentages of the issued share capital, and the percentages of voting rights, represented by these numbers of Lai Fung Offer Shares.

In computing the total number of Lai Fung Offer Shares and Lai Fung Options represented by acceptances, only valid acceptances that are complete, in good order and fulfil the conditions set out in this Appendix I, and which have been received by the Registrar or the company secretary of Lai Fung (as the case may be) by no later than 4:00 p.m. on the Lai Fung Share Offer Closing Date, being the latest time and date for acceptance of the Lai Fung Offers, shall be included.

As required under the Takeovers Code, all announcements in relation to the Lai Fung Offers will be made in accordance with the requirements of the Takeovers Code and the Listing Rules.

If any of the Offeror, the Offeror Concert Parties or their respective advisers make any statement during the Lai Fung Offer Period about the level of acceptances or the number or percentage of accepting Lai Fung Offer Shareholders or Lai Fung Optionholders, the Offeror must make an immediate announcement in compliance with Note 2 to Rule 19 of the Takeovers Code.

– I-8 –

FURTHER TERMS OF THE LAI FUNG OFFERS

APPENDIX I

6. RIGHT OF WITHDRAWAL

As the Lai Fung Offers are unconditional in all respects, acceptances of the Lai Fung Offers tendered by the Lai Fung Offer Shareholders and the Lai Fung Optionholders, respectively, shall be irrevocable and cannot be withdrawn, except in the circumstances set out in the paragraph below.

Under Rule 19.2 of the Takeovers Code, if the Offeror is unable to comply with the requirements set out in section 5 “Announcements” in this Appendix I above, the Executive may require that the holders of Lai Fung Offer Shares and Lai Fung Options who have tendered acceptances to the relevant Lai Fung Offers be granted a right of withdrawal on terms that are acceptable to the Executive until the requirements set out in that section are met.

7. HONG KONG STAMP DUTY

No stamp duty is payable in connection with the acceptances of the Lai Fung Option Offer and the cancellation of the Lai Fung Options.

8. GENERAL

(a) All communications, notices, Lai Fung Form(s) of Acceptance, share certificate(s), transfer receipt(s), document(s) of title or entitlement in respect of the Lai Fung Options and/or documentary evidence of authority (and/or any satisfactory indemnity or indemnities required in respect thereof) if delivered by or sent to or from the Lai Fung Offer Shareholders or the Lai Fung Optionholders or their designated agents by post, shall be posted at their own risk, and none of LSG, LSD, the Offeror, eSun, Lai Fung, HSBC or any of their respective directors, the Registrar or any other parties involved in the Lai Fung Offers and any of their respective agents accepts any liability for any loss or delay in postage or any other liabilities that may arise as a result thereof.
(b) The provisions set out in the Lai Fung Form(s) of Acceptance form part of the terms and conditions of the Lai Fung Offers.
(c) The accidental omission to despatch this Lai Fung Composite Document and/or Lai Fung Form(s) of Acceptance or any of them to any person to whom the Lai Fung Offers are made will not invalidate the Lai Fung Offers in any way.

– I-9 –

FURTHER TERMS OF THE LAI FUNG OFFERS

APPENDIX I

(d) The Lai Fung Offers are, and all acceptances will be, governed by and construed in accordance with the laws of Hong Kong. Execution of a Lai Fung Form of Acceptance by or on behalf of any person will constitute the agreement of such person that the courts of Hong Kong shall have exclusive jurisdiction to settle any dispute which may arise in connection with the Lai Fung Offers.
(e) Due execution of the Lai Fung Form(s) of Acceptance will constitute an authority to the Offeror, HSBC or such person or persons as the Offeror may direct to complete, amend and execute any document on behalf of the person or persons accepting the Lai Fung Offers and to do any other act that may be necessary or expedient for the purposes of vesting in the Offeror, or such person or persons as it may direct, the Lai Fung Offer Shares and/or cancelling the Lai Fung Options in respect of which such person or persons has/have accepted the Lai Fung Offers.
(f) Acceptance of the Lai Fung Offers by any person will be deemed to constitute a representation and warranty by such person or persons to:
(i) LSG, LSD, the Offeror, eSun, Lai Fung and HSBC, that the Lai Fung Offer Shares sold by such person or persons to the Offeror are free from all Encumbrances and are sold together with all rights attaching to them as at the Lai Fung Share Offer Closing Date or subsequently becoming attached to them, including the right to receive all dividends and distributions, if any, declared, made or paid on or after the Lai Fung Share Offer Closing Date; and
(ii) LSG, LSD, the Offeror, eSun, Lai Fung and their respective advisers, including HSBC, the financial adviser to LSD and the Offeror in respect of the Lai Fung Offers, that if such Lai Fung Offer Shareholder/Lai Fung Optionholder accepting the Lai Fung Share Offer/Lai Fung Option Offer is a citizen, resident or national of a jurisdiction outside Hong Kong, he/she has observed and is permitted under all applicable laws and regulations to which such overseas Lai Fung Offer Shareholder/Lai Fung Optionholder is subject to receive and accept the Lai Fung Share Offer/Lai Fung Option Offer and any revision thereof, and that he/she has obtained all requisite governmental, exchange control or other consents and made all registrations or filings required in compliance with all necessary formalities and regulatory or legal requirements, and all requirements for the payment by the accepting Lai Fung Shareholders or, as the case may be, Lai Fung Optionholders of any transfer or other taxes in respect of their acceptances, and that he/she has not taken or omitted to take any action which will or may result in LSG, LSD, the Offeror, eSun, Lai Fung or their respective advisers, including HSBC, the financial adviser to LSD and the Offeror, or any other person acting in breach of the legal or regulatory requirements of any jurisdiction in connection with the Lai Fung Offers or his/her acceptance thereof and such acceptance, surrender and/or cancellation shall be valid and binding in accordance with all applicable laws and regulations.

– I-10 –

FURTHER TERMS OF THE LAI FUNG OFFERS

APPENDIX I

(g) The acceptance of the Lai Fung Option Offer by a Lai Fung Optionholder will result in the cancellation of those relevant Lai Fung Options, together with all rights attaching thereto.
(h) Reference to any of the Lai Fung Offers in this Lai Fung Composite Document and in the Lai Fung Form(s) of Acceptance shall include any extension and/or revision thereof.
(i) In making their decisions with regard to the Lai Fung Offers, the Lai Fung Offer Shareholders and the Lai Fung Optionholders should rely on their own examination of LSD, the Offeror, the Lai Fung Group and the terms of the Lai Fung Offers, including the merits and risks involved. The contents of this Lai Fung Composite Document, including any general advice or recommendation contained herein, together with the Lai Fung Form(s) of Acceptance shall not be construed as any legal or business advice on the part of LSG, LSD, the Offeror, eSun, Lai Fung and/or HSBC. The Lai Fung Offer Shareholders and the Lai Fung Optionholders should consult their own professional advisers for professional advice.
(j) The English texts of this Lai Fung Composite Document and the accompanying Lai Fung Form(s) of Acceptance shall prevail over their respective Chinese texts for the purpose of interpretation.

– I-11 –

FINANCIAL INFORMATION OF THE LAI FUNG GROUP

APPENDIX II

I. FINANCIAL SUMMARY

The following summary financial information for each of the three financial years ended 31 July 2015, 31 July 2016 and 31 July 2017 and for the six months ended 31 January 2018 is extracted from the respective published audited consolidated financial statements of the Lai Fung Group as set forth in the annual reports for the years ended 31 July 2015, 31 July 2016 and 31 July 2017, respectively, and the interim report for the six months ended 31 January 2018 of the Lai Fung Group.

The auditors of Lai Fung did not issue any modified opinion nor any emphasis of matter or material uncertainty related to going concern contained in the auditors’ report of the Lai Fung Group for any of the three years ended 31 July 2015, 31 July 2016 and 31 July 2017. There are no exceptional items because of size, nature or incidence of the Lai Fung Group for each of the three years ended 31 July 2015, 31 July 2016 and 31 July 2017.

In this Appendix II, references to “the Company” shall mean Lai Fung.

Summary Consolidated Income Statement

	Six
months ended
	31 January		Year ended 31 July
	2018	2017	2016	2015
	HK$’000	HK$’000	HK$’000	HK$’000
	(Unaudited)	(Audited)	(Audited)	(Audited)
TURNOVER	509,410	1,326,682	2,043,530	1,901,394
PROFIT BEFORE TAX
AND TAX INDEMNITY	591,470	1,652,804	1,285,585	1,579,246
Tax	(191,238)	(556,156)	(388,163)	(571,197)
Tax indemnity	—	493,936	—	—
PROFIT FOR
THE YEAR/PERIOD	400,232	1,590,584	897,422	1,008,049
Attributable to:
Owners of the Company	358,911	1,477,452	873,527	1,004,901
Non-controlling interests	41,321	113,132	23,895	3,148
EARNINGS PER SHARE
ATTRIBUTABLE TO
OWNERS OF
THE COMPANY_(Note)_
Basic	HK$1.102	HK$4.547	HK$2.702	HK$3.118
Diluted	HK$1.096	HK$4.542	HK$2.702	HK$3.114
DIVIDEND	—	65,148	58,312	53,228
DIVIDEND PER SHARE_(Note)_	—	HK$0.200	HK$0.180	HK$0.165

Note:

The earnings per share and dividend per share amounts for the years ended 31 July 2016 and 2015 were adjusted to reflect the effect of the share consolidation (the “ Share Consolidation ”) under which every 50 issued and unissued ordinary shares of HK$0.10 each in the share capital of the Company are consolidated into 1 ordinary share of HK$5.00 each in the share capital of the Company. The Share Consolidation became effective on 15 August 2017.

– II-1 –

FINANCIAL INFORMATION OF THE LAI FUNG GROUP

APPENDIX II

Summary Consolidated Statement of Financial Position

Total assets Total liabilities Equity attributable to owners of the Company Issued capital Reserves Non-controlling interests	31 January 2018 HK$’000 (Unaudited) 30,582,392 (14,194,944) 16,387,448 1,635,221 14,495,195 257,032 16,387,448	2017 HK$’000 (Audited) 25,220,279 (10,450,915) 14,769,364 1,628,509 12,955,602 185,253 14,769,364	31 July 2016 HK$’000 (Audited) 23,899,602 (10,511,988) 13,387,614 1,619,770 11,694,997 72,847 13,387,614	2015 HK$’000 (Audited) 23,280,629 (9,735,401) 13,545,228 1,612,968 11,853,385 78,875 13,545,228

II. CONSOLIDATED FINANCIAL STATEMENTS

Lai Fung is required to set out or refer to in this Lai Fung Composite Document the consolidated statement of financial position, consolidated statement of cash flows and any other primary statement as shown in (i) the audited consolidated financial statements of the Lai Fung Group for the year ended 31 July 2017 (the “ 2017 Financial Statements ”) and (ii) the unaudited condensed consolidated interim financial statements of the Lai Fung Group for the six months ended 31 January 2018 (the “ 2018 Interim Financial Statements ”), together with the notes to the relevant published accounts which are of major relevance to the appreciation of the above financial information.

The 2017 Financial Statements are set out from page 95 to page 190 in the Annual Report 2017 of Lai Fung, which was published on 15 November 2017. The Annual Report 2017 is posted on Lai Fung’s website http://www.laisun.com/lai-fung-holdings/en-US/Pages/home. Please also see below a quick link to the Annual Report 2017:

http://www.laisun.com/files/E_1125_Annual_Report_2016-2017_20171115.pdf

The 2018 Interim Financial Statements are set out from page 2 to page 21 in the Interim Report 2018 of Lai Fung, which was published on 19 April 2018. The Interim Report 2018 is posted on Lai Fung’s website http://www.laisun.com/lai-fung-holdings/en-US/Pages/home. Please also see below a quick link to the Interim Report 2018:

http://www.laisun.com/files/E_1125_Interim%20Report_20180419.pdf

The 2017 Financial Statements and the 2018 Interim Financial Statements (but not any other part of the Annual Report 2017 and Interim Report 2018 in which they respectively appear) are incorporated by reference into this Lai Fung Composite Document and form part of this Lai Fung Composite Document.

– II-2 –

FINANCIAL INFORMATION OF THE LAI FUNG GROUP

APPENDIX II

III. INDEBTEDNESS, CONTINGENCIES AND COMMITMENTS

As at 30 June 2018, being the latest practicable date for ascertaining certain information relating to this indebtedness statement, the Lai Fung Group had outstanding consolidated total borrowings (after intra-group elimination) of approximately HK$7,221 million comprising bank loans of approximately HK$3,525 million, unsecured guaranteed notes of approximately HK$2,725 million, unsecured and unguaranteed advances from a former substantial shareholder of approximately HK$55 million, unsecured and unguaranteed loans from a joint venture of approximately HK$663 million and unsecured and unguaranteed loans from a fellow subsidiary of approximately HK$253 million.

As at 30 June 2018, the Lai Fung Group had bank loans of approximately HK$3,525 million in aggregate, of which approximately HK$3,284 million were secured while the remaining HK$241 million were unsecured. Certain properties (including investment properties, properties under development, serviced apartments (including related leasehold improvements) and construction in progress) and certain bank balances were pledged to banks to secure bank loan facilities granted to the Lai Fung Group. Equity interests in certain subsidiaries of Lai Fung were pledged to banks to secure certain bank loan facilities granted to the Lai Fung Group. In addition, eSun (the ultimate holding company of Lai Fung), Lai Fung and certain of its subsidiaries have also provided corporate guarantees in favour of the banks in respect of certain secured bank loan facilities granted to the Lai Fung Group.

The Lai Fung Group had provided guarantees to certain banks in respect of mortgage loan facilities granted by such banks to certain end-buyers of property units developed by the Lai Fung Group. Pursuant to the terms of the guarantees, upon default in mortgage payments by these end-buyers, the Lai Fung Group will be responsible to repay the outstanding mortgage loan principal amounts together with accrued interest owed by the end-buyers in default. The Lai Fung Group’s obligation in relation to such guarantees has been gradually relinquished along with the settlement of the mortgage loans granted by the banks to the end-buyers. Such obligation will also be relinquished when the property ownership certificates for the relevant properties are issued and/or the end-buyers have fully repaid the mortgage loans. As at 30 June 2018, in respect of these guarantees, the contingent liabilities of the Lai Fung Group are estimated to be approximately HK$552 million.

Save as aforesaid and apart from intra-group liabilities, the Lai Fung Group did not, as at 30 June 2018, have any material outstanding (i) debt securities, whether issued and outstanding, authorised or otherwise created but unissued, or term loans, whether guaranteed, unguaranteed, secured (whether the security is provided by the Lai Fung Group or by third parties) or unsecured; (ii) other borrowings or indebtedness in the nature of borrowings including bank overdrafts and liabilities under acceptances (other than normal trade bills) or acceptance credits or hire purchase commitments, whether guaranteed, unguaranteed, secured or unsecured; (iii) mortgage or charges; or (iv) guarantees or other contingent liabilities.

– II-3 –

FINANCIAL INFORMATION OF THE LAI FUNG GROUP

APPENDIX II

IV. MATERIAL CHANGES

The Lai Fung Directors confirm that save for the following matter, there has been no material change in the financial or trading position or outlook of the Lai Fung Group subsequent to 31 July 2017, the date to which the latest audited consolidated financial statements of Lai Fung were made up, up to and including the Latest Practicable Date:

(i) According to the Lai Fung’s interim report for the six months ended 31 January 2018, the Lai Fung Group recorded (a) substantial increase in profit from operating activities for the six months ended 31 January 2018 as compared to the six months ended 31 January 2017, mainly due to increase in fair value gains on investment properties; and (b) substantial decrease in share of profits of joint ventures for the six months ended 31 January 2018 as compared to the six months ended 31 January 2017, mainly due to the decreased profit contribution from the property sales of Guangzhou Dolce Vita, the joint venture project with CapitaLand China Holdings Pte Ltd, as the properties held under this project had been substantially sold.
(ii) On 18 January 2018, Lai Fung Bonds (2018) Limited, a wholly-owned subsidiary of Lai Fung issued US$350,000,000 of 5.65% fixed rate guaranteed notes, which will mature on 18 January 2023 for bullet repayment. One of the purposes of such issue was to finance the repayment of Lai Fung’s 6.875% fixed rate senior notes in the principal amount of RMB1,800,000,000 which matured on 25 April 2018.

V. PROPERTY INTERESTS AND PROPERTY VALUATION REPORT

Knight Frank, an independent valuer, has valued the property interests of the Lai Fung Group as at 31 May 2018. The text of the letter, summary of valuation and the valuation certificates are set out in Appendix III to this Lai Fung Composite Document.

The reconciliation between the carrying amount of the properties held by the Lai Fung Group as at 31 January 2018 and the valuation of such properties as at 31 May 2018 is as follows:—

Carrying amount of the properties held by the Lai Fung Group as at 31 January 2018 Net changes during the period from 31 January 2018 to 31 May 2018 Valuation surplus Total market value of the properties held by the Lai Fung Group as at 31 May 2018	HK$’000 23,217,978 452,759 6,664,763
	30,335,500

– II-4 –

APPENDIX III PROPERTY VALUATION OF THE LAI FUNG GROUP

The following is the full text of the letter and valuation report prepared for the purpose of incorporation into this Lai Fung Composite Document received from Knight Frank Petty Limited, an independent valuer, in connection with the valuation as at 31 May 2018 of the market values of the property interests of Lai Fung, its subsidiaries and associated companies which it has a direct or indirect interest of 30% or more of the voting rights.

==> picture [104 x 43] intentionally omitted <==

Knight Frank 4/F Shui On Centre 6-8 Harbour Road Wanchai Hong Kong

T +852 2840 1177 F +852 2840 0600 www.knightfrank.com.hk

Board of Directors Lai Fung Holdings Limited 11th Floor Lai Sun Commercial Centre 680 Cheung Sha Wan Road Hong Kong

15 August 2018

Dear Sirs

Valuation of Various Property Interests in the People’s Republic of China and Hong Kong

In accordance with your instructions for us to value the property interests held by Lai Fung Holdings Limited (“ Lai Fung ”), its subsidiaries and associated companies which it has a direct or indirect interest of 30% or more of the voting rights (hereinafter together referred to in this letter and the attached valuation reports as the “ Lai Fung Group ”) in the People’s Republic of China (the “ PRC ”) and Hong Kong, we confirm that we have carried out inspections, made relevant enquiries and obtained such further information as we consider necessary for the purpose of providing you with our opinion of the market values of the property interests as at 31 May 2018.

– III-1 –

PROPERTY VALUATION OF THE LAI FUNG GROUP

APPENDIX III

Basis of Valuation

Our valuation is our opinion of the market value of the property interest which we would define as “the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion.”

The market value is the best price reasonably obtainable by the seller and the most advantageous price reasonably obtainable by the buyer. This estimate specifically excludes an estimated price inflated or deflated by special terms or circumstances such as atypical financing, sale and leaseback arrangements, special considerations or concessions granted by anyone associated with the sale, or any element of value available only to a specific owner or purchaser. The market value of an asset or liability is also estimated without regard to costs of sale or purchase (or transaction) and without offset for any associated taxes or potential taxes.

In preparing our valuation report, we have complied with “The HKIS Valuation Standards 2017” published by the Hong Kong Institute of Surveyors, all requirements contained in the provision of Chapter 5 and Practice Note 12 of the Rules Governing the Listing of Securities issued by The Stock Exchange of Hong Kong Limited and Rule 11 of the Code on Takeovers and Mergers published by the Securities and Futures Commission.

Valuation Methodology

In forming our opinion of the values of the property interests in Groups I and III, we have valued the properties by using “Income Approach — term and reversion method” by capitalizing the net income shown on tenancy schedules handed to us by the Lai Fung Group and made provisions for reversionary income potential. We have also made reference to sales evidence as available in the market.

We have valued the property interests in Group II by using Market Approach whenever market comparable transactions are available and assumed sale of property interests with the benefit of vacant possession.

– III-2 –

APPENDIX III

PROPERTY VALUATION OF THE LAI FUNG GROUP

In valuing property interests in Group IV, we have valued the property interests on the basis that the properties will be developed and completed in accordance with the Lai Fung Group’s latest development proposals provided to us. We have assumed that approvals for the proposals have been obtained without any onerous condition which would affect the values of the property interests. In arriving at our opinion of values, we have made reference to comparable transactions in the locality and also taken into account the construction costs that will be expended to reflect the quality of the completed developments.

Due to the specific purpose for which the buildings and structures of the cultural attractions portion of property no 21 have been designed, there is no readily identifiable market comparable, we have thus valued the property by Cost Approach. Our valuation is based on an estimate of the market value for the existing use of the land, plus the current Gross Replacement Cost of the improvements, less allowances for physical deterioration and all relevant forms of obsolescence and optimization, if any. We would define “Gross Replacement Cost” as the estimated cost of erecting the building or a modern substitute building having the same area as the existing building at price levels as at the valuation date. The estimated building cost includes professional fees and finance charges payable during the construction period and other associated expenses directly related to the construction of the building. We must state that cessation of the existing business (if any) would have significant impact on the market value of the property as derived by the Cost Approach. While the cultural attractions portion was under construction as at the date of the valuation, we relied upon the information including but not limited to the profit forecast of the cultural attractions provided that revenue of the cultural attractions will be able to sustain the future on-going operation.

For the property interest in Group V, we have valued it by using Market Approach by making reference to sales evidence as available in the market.

Title Documents and Encumbrances

We have caused land searches to be made at the Land Registry for the Hong Kong properties valued and have been provided by the Lai Fung Group with extracts of title documents relating to the property interests in the PRC. However, we have not inspected the original documents to ascertain any amendments which may not appear on the copies handed to us by the Lai Fung Group. In the course of our valuations, we have relied on the information given by the Lai Fung Group and its PRC legal advisers, Allbright Law Offices, Guangda Law Firm and Guangdong G&Z Law Firm, regarding the title and other legal matters relating to the properties in the PRC.

No allowance has been made in our report for any charges, mortgages or amounts owing on the property interests nor for any expenses or taxation which may be incurred in affecting a sale. Unless otherwise stated, it is assumed that the properties are free from encumbrances, restrictions and outgoings of an onerous nature which could affect their values.

– III-3 –

PROPERTY VALUATION OF THE LAI FUNG GROUP

APPENDIX III

Source of Information

We have relied to a considerable extent on the information given to us by the Lai Fung Group and the legal opinion of the Lai Fung Group’s PRC legal advisers. We have no reason to doubt the truth and accuracy of the information provided to us by the Lai Fung Group and/or its PRC legal advisers which is material to the valuation. We have accepted advice given by the Lai Fung Group on such matters as planning approvals or statutory notices, easements, tenure, completion date of buildings, particulars of occupancy, tenancy summaries, joint-venture agreements, development schemes, construction costs, site and floor areas. Dimensions, measurements and areas included in the valuation reports attached are based on information provided to us and are therefore only approximations. We have not been able to carry out on-site measurements to verify the correctness of site and floor areas of the properties. We have exercised our due diligence in verifying the provided site and floor areas by checking against the relevant documents provided. Meanwhile, for the remaining portion of the properties without relevant supporting documents, we have further assumed that the site and floor areas shown on the documents handed to us are correct. We were also advised by the Lai Fung Group that no material facts have been omitted from the information provided.

Inspection and Structural Condition

We have inspected the exterior and, where possible, the interior of the properties. The inspection was carried out by our Ocean Ruan, Jun Wang and Beny Chan in June 2018. However, we have not carried out investigations on site to determine the suitability of the ground conditions and the services, etc for any future development. Our valuations are prepared on the assumption that these aspects are satisfactory. Moreover, no structural survey has been made, but in the course of our inspection, we did not note any serious defects. We are not, however, able to report that the properties are free from rot, infestation or any other structural defects, nor were any tests carried out to any of the services.

Identity of Property to be valued

We exercised reasonable care and skill (but will not have an absolute obligation to the Lai Fung Group) to ensure that the properties, identified by the property addresses in the instructions, are the properties inspected by us and contained within our valuation reports.

Environmental Issues

We are not environmental specialists and therefore we have not carried out any scientific investigations of sites or buildings to establish the existence or otherwise of any environmental contamination, nor have we undertaken searches of public archives to seek evidence of past activities that might identify potential for contamination. In the absence of appropriate investigations and where there is no apparent reason to suspect potential for contamination, our valuation is prepared on the assumption that the properties are unaffected. Where contamination is suspected or confirmed, but adequate investigation has not been carried out and made available to us, then the valuations will be qualified.

– III-4 –

PROPERTY VALUATION OF THE LAI FUNG GROUP

APPENDIX III

Compliance with Relevant Ordinances and Regulations

We have assumed that the properties have been constructed, occupied and used in full compliance with, and without contravention of any ordinances, statutory requirements and notices except only where otherwise stated. We have further assumed that, for any use of the properties upon which this report is based, any and all required licences, permits, certificates, consents, approvals and authorisation have been obtained, except only where otherwise stated.

Remarks

In our valuation, Knight Frank has prepared the valuation based on information and data available to us as at the valuation date. It must be recognised that the real estate market is subject to market fluctuations, while changes in policy direction and social environment could be immediate and have sweeping impact on the real estate market. It should therefore be noted that any market violation, policy and social changes or other unexpected incidents after the valuation date may affect the values of the properties.

According to the information provided by the Lai Fung Group, the potential tax liability which would arise on the disposal of property interest of Group V in Hong Kong is mainly stamp duty, normally borne by the purchaser and property interests of Groups I, II, III and IV in the PRC are mainly PRC land appreciation tax (at progressive rates from 30% to 60% on the appreciation amount) and PRC corporate income tax (at 25% on the gain).

– III-5 –

APPENDIX III PROPERTY VALUATION OF THE LAI FUNG GROUP

Currency

Unless otherwise stated, all sums stated in our valuation reports are in Hong Kong dollars. The exchange rate adopted for conversion is HK$1 = RMB0.8151 as at the date of valuation.

Our summary of values and valuation reports are attached.

Yours faithfully For and on behalf of Knight Frank Petty Limited

Clement Leung

Thomas Lam

MSC (FIN) MCIREA MRICS MHKIS RPS(GP) MCIREA FRICS FHKIS RPS(GP) RICS Registered Valuer RICS Registered Valuer Executive Director, Head of China Valuation Senior Director, Head of Valuation & Advisory

& Advisory

Notes: Clement Leung is a qualified valuer who has 25 years of experiences in property valuation and consultancy services in the PRC and Hong Kong.

Thomas Lam is a qualified valuer who has 18 years of extensive experiences in market research, valuation and consultancy in the PRC, Hong Kong, Macao and the Asia Pacific region.

– III-6 –

PROPERTY VALUATION OF THE LAI FUNG GROUP

APPENDIX III

SUMMARY OF VALUES

				Market value
				in existing state
		Market value in	Interest	attributable to
		existing state	attributable	the Lai Fung Group
		as at	to the	as at
	Property	31 May 2018	Lai Fung Group	31 May 2018
Group	I — Property interests held by the Lai Fung Group in the PRC for investment purpose
1.	Hong Kong Plaza	HK$7,566,000,000	100%	HK$7,566,000,000
	282 & 283 Huaihaizhong Road
	Huangpu District, Shanghai
	The PRC
	(portion owned by Shanghai Li Xing
	Real Estate Development Co Ltd)
2.	Various serviced apartment units in	HK$1,303,000,000	100%	HK$1,303,000,000
	North Tower
	Hong Kong Plaza
	282 Huaihaizhong Road
	Huangpu District, Shanghai
	The PRC
	(portion owned by Good Strategy Ltd)
3.	B3 Hui Yi Garden	HK$46,000,000	100%	HK$46,000,000
	No 18 of Alley 905, Huashan Road
	Xuhui District, Shanghai
	The PRC
4.	Commercial portion of Regents Park	HK$247,000,000	95%	HK$234,650,000
	88 Huichuan Road
	Changning District, Shanghai
	The PRC
5.	Various portions of	HK$1,304,000,000	100%	HK$1,304,000,000
	Shanghai May Flower Plaza
	the junction of Da Tong Road and
	Zhi Jiang Xi Road, Sujiaxiang
	Jing’an District, Shanghai
	The PRC

– III-7 –

PROPERTY VALUATION OF THE LAI FUNG GROUP

APPENDIX III

Market value in Interest existing state attributable as at to the Property 31 May 2018 Lai Fung Group 6. May Flower Plaza HK$2,254,000,000 100% 68 Zhongshanwu Road Yuexiu District, Guangzhou Guangdong Province The PRC 7. Commercial portion of West Point HK$335,300,000 100% the junction of Zhongshan Qi Road and Guangfu Road Liwan District, Guangzhou Guangdong Province The PRC 8. Various portions of HK$280,500,000 100% Stage I of Palm Spring Caihong Planning Area Western District, Zhongshan Guangdong Province The PRC 9. Lai Fung Tower HK$3,245,600,000 100% 787 Dongfeng East Road Yuexiu District, Guangzhou Guangdong Province The PRC Sub-total:HK$16,581,400,000 Group II — Property interests held by the Lai Fung Group in the PRC for sale purpose 10. Unsold car parking spaces of HK$249,000,000 95% Regents Park 88 Huichuan Road Changning District, Shanghai The PRC	Market value in existing state attributable to the Lai Fung Group as at 31 May 2018 HK$2,254,000,000 HK$335,300,000 HK$280,500,000 HK$3,245,600,000
	HK$16,569,050,000 HK$236,550,000

Market value in
Interest
existing state
attributable
as at
to the
Property
31 May 2018
Lai Fung Group
6.
May Flower Plaza
HK$2,254,000,000
100%
68 Zhongshanwu Road
Yuexiu District, Guangzhou
Guangdong Province
The PRC
7.
Commercial portion of West Point
HK$335,300,000
100%
the junction of Zhongshan Qi Road
and Guangfu Road
Liwan District, Guangzhou
Guangdong Province
The PRC
8.
Various portions of
HK$280,500,000
100%
Stage I of Palm Spring
Caihong Planning Area
Western District, Zhongshan
Guangdong Province
The PRC
9.
Lai Fung Tower
HK$3,245,600,000
100%
787 Dongfeng East Road
Yuexiu District, Guangzhou
Guangdong Province
The PRC
Sub-total:HK$16,581,400,000
Group II — Property interests held by the Lai Fung Group in the PRC for sale purpose
10.
Unsold car parking spaces of
HK$249,000,000
95%
Regents Park
88 Huichuan Road
Changning District, Shanghai
The PRC

Market value
in existing state
attributable to
the Lai Fung Group
as at
31 May 2018
HK$2,254,000,000
HK$335,300,000
HK$280,500,000
HK$3,245,600,000

HK$16,569,050,000
HK$236,550,000

– III-8 –

PROPERTY VALUATION OF THE LAI FUNG GROUP

APPENDIX III

				Market value
				in existing state
		Market value in	Interest	attributable to
		existing state	attributable	the Lai Fung Group
		as at	to the	as at
	Property	31 May 2018	Lai Fung Group	31 May 2018
11.	Unsold car parking spaces of	HK$168,600,000	100%	HK$168,600,000
	Shanghai May Flower Plaza
	the junction of Da Tong Road and
	Zhi Jiang Xi Road, Sujiaxiang
	Jing’an District, Shanghai
	The PRC
12.	Unsold car parking spaces of	HK$98,800,000	100%	HK$98,800,000
	West Point
	the junction of Zhongshan Qi Road
	and Guangfu Road
	Liwan District, Guangzhou
	Guangdong Province
	The PRC
13.	Unsold car parking spaces of	HK$12,000,000	100%	HK$12,000,000
	King’s Park
	Nos 558-596/1006-1044
	Donghua Dong Road
	Yuexiu District, Guangzhou
	Guangdong Province
	The PRC
14.	Unsold portions of Stage I and II of	HK$1,296,500,000	100%	HK$1,296,500,000
	Palm Spring
	Caihong Planning Area
	Western District, Zhongshan
	Guangdong Province
	The PRC

– III-9 –

PROPERTY VALUATION OF THE LAI FUNG GROUP

APPENDIX III

				Market value
				in existing state
		Market value in	Interest	attributable to
		existing state	attributable	the Lai Fung Group
		as at	to the	as at
	Property	31 May 2018	Lai Fung Group	31 May 2018
15.	Unsold portions of Dolce Vita	HK$73,200,000	47.5%	HK$34,770,000
	(Xunfeng Yujinsha Yuan)
	Jinshazhou, Heng Sha
	Baiyun District, Guangzhou
	Guangdong Province
	The PRC
16.	Unsold car parking spaces of Phase V of	HK$22,900,000	100%	HK$22,900,000
	Eastern Place
	787 Dongfeng East Road
	Yuexiu District, Guangzhou
	Guangdong Province
	The PRC
	Sub-total:	HK$1,921,000,000		HK$1,870,120,000
Group	III — Property interest held by the Lai Fung Group in the PRC for owner occupation purpose
17.	Commercial portion of	HK$55,000,000	100%	HK$55,000,000
	Eastern Place
	787 Dongfeng East Road
	Yuexiu District, Guangzhou
	Guangdong Province
	The PRC
	Sub-total:	HK$55,000,000		HK$55,000,000
Group	IV — Property interests held under development by the Lai Fung Group in the PRC
18.	A commercial development	HK$1,834,000,000	100%	HK$1,834,000,000
	located at Tian Mu Road West
	and Da Tong Road
	Jing’an District, Shanghai
	The PRC

– III-10 –

PROPERTY VALUATION OF THE LAI FUNG GROUP

APPENDIX III

				Market value
				in existing state
		Market value in	Interest	attributable to
		existing state	attributable	the Lai Fung Group
		as at	to the	as at
	Property	31 May 2018	Lai Fung Group	31 May 2018
19.	Haizhu Plaza	HK$1,540,000,000	100%	HK$1,540,000,000
	Chang Di Main Road
	Yuexiu District, Guangzhou
	Guangdong Province
	The PRC
20.	Remaining stage of Palm Spring	HK$1,540,300,000	100%	HK$1,540,300,000
	Caihong Planning Area
	Western District, Zhongshan
	Guangdong Province
	The PRC
21.	Two parcels of land located at the	HK$5,808,000,000	80%	HK$4,646,400,000
	east side of Yiwener Road
	south side of Caihong Road
	west side of Tianyu Road and
	north side of Hengqin Main Road
	Hengqin New Area, Zhuhai
	Guangdong Province
	The PRC
22.	A parcel of land located at	HK$1,014,000,000	100%	HK$1,014,000,000
	Wuliqiao Road 104 Jie Fang
	Huangpu District, Shanghai
	The PRC
	Sub-total:	HK$11,736,300,000		HK$10,574,700,000
Group	V — Property interest held by the Lai Fung Group in Hong Kong for		owner occupation purpose
23.	20th Floor of May Tower II and	HK$115,000,000	100%	HK$115,000,000
	Car Parking Space No 57 on
	Ground Floor of May Towers I and II
	Nos 5 and 7 May Road
	Mid-Levels
	Hong Kong
	Sub-total:	HK$115,000,000		HK$115,000,000
	Grand Total:	HK$30,408,700,000		HK$29,183,870,000

– III-11 –

PROPERTY VALUATION OF THE LAI FUNG GROUP

APPENDIX III

VALUATION REPORT

Group I — Property interests held by the Lai Fung Group in the PRC for investment purpose

Property

Description and tenure

Particulars of occupancy

Market Value in existing state as at 31 May 2018

1 Hong Kong Plaza Hong Kong Plaza is a composite 282 & 283 development comprising a 32-storey Huaihaizhong office tower (known as South Tower) Road and a 32-storey serviced apartment Huangpu District tower (known as North Tower), each Shanghai surmounting a 7-level (including 3 The PRC basement levels) commercial/car (portion owned by parking podium. The North Tower Shanghai Li Xing and South Tower are connected Real Estate together by a flyover. The property Development was completed in October 1997 and Co Ltd) refurbished in 2011.

The property comprises various portions of Hong Kong Plaza owned by Shanghai Li Xing Real Estate Development Co Ltd with gross floor areas as follows:

South Tower Use Floor Commercial B1 1 2 3 4 Offce 6-38 Total:	Approximate Gross Floor Area sq m sq ft 3,275.25 35,255 4,174.85 44,938 4,098.90 44,120 4,702.15 50,614 4,812.51 51,802 33,639.52 362,096 54,703.18 588,825	Approximate Gross Floor Area sq m sq ft 3,275.25 35,255 4,174.85 44,938 4,098.90 44,120 4,702.15 50,614 4,812.51 51,802 33,639.52 362,096 54,703.18 588,825
		588,825

According to the information HK$7,566,000,000 provided, office and (HONG KONG commercial portion of the DOLLARS property with a total gross SEVEN BILLION floor area of approximately FIVE HUNDRED 30,334 sq m and a total AND SIXTY SIX leasable area of approximately MILLION ONLY) 20,792 sq m respectively is let under various tenancies (100% interest yielding a total monthly attributable rental of approximately to the Lai Fung RMB20,990,000 with the Group: last tenancy expiring on 15 HK$7,566,000,000) November 2026 whilst the remaining portion of the (please see note 7) property is vacant or for selfuse.

In addition, the whole serviced apartment portion (including the subject serviced apartment portion and that stated in property no. 2 in this report) of the development is let under various short term tenancies and managed by Ascott Property Management (Shanghai) Co., Ltd. yielding an annual gross income of approximately RMB104,700,000.

– III-12 –

PROPERTY VALUATION OF THE LAI FUNG GROUP

APPENDIX III

Property

Description and tenure

Particulars of occupancy

Market Value in existing state as at 31 May 2018

North Tower Use Floor Commercial B1 1 2 3 4 Commercial/ Club House/ Restaurant 6-7 Serviced Apartment 8-38 Total:	Approximate Gross Floor Area sq m sq ft 2,958.93 31,850 3,952.47 42,544 3,970.76 42,741 4,636.30 49,905 4,622.00 49,751 2,314.46 24,913 13,332.28 143,509 35,787.20 385,213	Approximate Gross Floor Area sq m sq ft 2,958.93 31,850 3,952.47 42,544 3,970.76 42,741 4,636.30 49,905 4,622.00 49,751 2,314.46 24,913 13,332.28 143,509 35,787.20 385,213
		385,213

The property also comprises a total of 350 car parking spaces in B1 to B3 levels of the podium and various advertising boards.

The land use rights of the property have been granted for a term from 16 September 1992 to 15 September 2042.

– III-13 –

PROPERTY VALUATION OF THE LAI FUNG GROUP

APPENDIX III

Notes:

Pursuant to two State-owned Land Use Right Certificates Nos 001161 and 001162 both issued by the Shanghai Real Estate Administration Bureau and dated 17 July 1995, the titles to the property with a total site area of 14,645 sq m are both held by Shanghai Li Xing Real Estate Development Co Ltd (“ Shanghai Li Xing ”), a 100% owned subsidiary of Lai Fung, for a common term commencing from 16 September 1992 to 15 September 2042 for commercial and office uses.
Pursuant to five Real Estate Title Certificates Nos Hu Fang Di Shi Zi (1998) Di 002601, Hu Fang Di Shi Zi (2001) Di 007656, Hu Fang Di Lu Zi (2008) Di 002196, Hu Fang Di Lu Zi (2011) Di 000751 and Hu (2017) Huang Zi 001203 all issued by the Shanghai Real Estate Administration Bureau dated 25 June 1998, 10 October 2001, 31 August 2008, 29 March 2011 and 14 February 2017 respectively, the title to portion of the property with respective gross floor areas of 69,731.66 sq m, 1,211.83 sq m, 130.91 sq m, 130.91 sq m and 130.91 sq m is held by Shanghai Li Xing for composite use (refer to whole South Tower of the property including basement). As advised by Lai Fung, portion of the property under title certificate No. Hu Fang Di Shi Zi (1998) Di 002601 has been sold.
Pursuant to the Shanghai Certificate of Real Estate Ownership No Hu Fang Di Lu Zi (2011) Di 000021 issued by the Shanghai Planning, Land and Resources Administration Bureau dated 4 January 2011, the title to portion of the property with a total gross floor area of 44,132.55 sq m is held by Shanghai Li Xing for office, residential, commercial and others uses (refer to North Tower of the property including basement).
Pursuant to twenty three Shanghai Certificates of Real Estate Ownership all issued by the Shanghai Planning, Land and Resources Administration Bureau, the title to portion of the property with a total gross floor area of 2,192.45 sq m is held by Shanghai Li Xing for apartment use (refer to North Tower of the property). Details of which are as follows:

Certifcate No Tower Unit Use 1. Hu Fang Di Lu Zi (2008) Di 002406 North 2612 Apartment 2. Hu Fang Di Lu Zi (2009) Di 003023 North 2807 Apartment 3. Hu Fang Di Lu Zi (2009) Di 003102 North 2805 Apartment 4. Hu Fang Di Lu Zi (2009) Di 004295 North 2512 Apartment 5. Hu Fang Di Lu Zi (2009) Di 004300 North 2804 Apartment 6. Hu Fang Di Lu Zi (2009) Di 004466 North 3107 Apartment 7. Hu Fang Di Lu Zi (2010) Di 000094 North 2810 Apartment 8. Hu Fang Di Lu Zi (2010) Di 000479 North 2205 Apartment 9. Hu Fang Di Lu Zi (2010) Di 000489 North 2306 Apartment 10. Hu Fang Di Lu Zi (2010) Di 000574 North 2501 Apartment 11. Hu Fang Di Lu Zi (2010) Di 000609 North 2811 Apartment 12. Hu Fang Di Lu Zi (2010) Di 000675 North 2604 Apartment 13. Hu Fang Di Lu Zi (2010) Di 000797 North 2209 Apartment 14. Hu Fang Di Lu Zi (2010) Di 001134 North 2505 Apartment 15. Hu Fang Di Lu Zi (2010) Di 001310 North 2212 Apartment 16. Hu Fang Di Lu Zi (2010) Di 001348 North 2608 Apartment 17. Hu Fang Di Lu Zi (2010) Di 001349 North 2812 Apartment 18. Hu Fang Di Lu Zi (2010) Di 001350 North 2801 Apartment 19. Hu Fang Di Lu Zi (2010) Di 002334 North 2705 Apartment 20. Hu Fang Di Huang Zi (2012) Di 052466 North 2202 Apartment 21. Hu Fang Di Huang Zi (2013) Di 052704 North 2304 Apartment 22. Hu Fang Di Huang Zi (2014) Di 051673 North 2504 Apartment 23. Hu Fang Di Huang Zi (2016) Di 052998 North 2208 Apartment Total:	Gross Floor Area 64.92 sq m 127.41 sq m 97.33 sq m 64.92 sq m 98.39 sq m 127.41 sq m 133.96 sq m 95.45 sq m 131.19 sq m 64.92 sq m 116.25 sq m 98.39 sq m 95.21 sq m 97.33 sq m 62.93 sq m 97.33 sq m 64.92 sq m 64.92 sq m 97.33 sq m 99.71 sq m 98.39 sq m 98.39 sq m 95.45 sq m
	2,192.45 sq m

Certifcate No
Tower
Unit
Use
1.
Hu Fang Di Lu Zi (2008) Di 002406
North
2612
Apartment
2.
Hu Fang Di Lu Zi (2009) Di 003023
North
2807
Apartment
3.
Hu Fang Di Lu Zi (2009) Di 003102
North
2805
Apartment
4.
Hu Fang Di Lu Zi (2009) Di 004295
North
2512
Apartment
5.
Hu Fang Di Lu Zi (2009) Di 004300
North
2804
Apartment
6.
Hu Fang Di Lu Zi (2009) Di 004466
North
3107
Apartment
7.
Hu Fang Di Lu Zi (2010) Di 000094
North
2810
Apartment
8.
Hu Fang Di Lu Zi (2010) Di 000479
North
2205
Apartment
9.
Hu Fang Di Lu Zi (2010) Di 000489
North
2306
Apartment
10.
Hu Fang Di Lu Zi (2010) Di 000574
North
2501
Apartment
11.
Hu Fang Di Lu Zi (2010) Di 000609
North
2811
Apartment
12.
Hu Fang Di Lu Zi (2010) Di 000675
North
2604
Apartment
13.
Hu Fang Di Lu Zi (2010) Di 000797
North
2209
Apartment
14.
Hu Fang Di Lu Zi (2010) Di 001134
North
2505
Apartment
15.
Hu Fang Di Lu Zi (2010) Di 001310
North
2212
Apartment
16.
Hu Fang Di Lu Zi (2010) Di 001348
North
2608
Apartment
17.
Hu Fang Di Lu Zi (2010) Di 001349
North
2812
Apartment
18.
Hu Fang Di Lu Zi (2010) Di 001350
North
2801
Apartment
19.
Hu Fang Di Lu Zi (2010) Di 002334
North
2705
Apartment
20.
Hu Fang Di Huang Zi (2012) Di 052466
North
2202
Apartment
21.
Hu Fang Di Huang Zi (2013) Di 052704
North
2304
Apartment
22.
Hu Fang Di Huang Zi (2014) Di 051673
North
2504
Apartment
23.
Hu Fang Di Huang Zi (2016) Di 052998
North
2208
Apartment
Total:

Gross Floor Area
64.92 sq m
127.41 sq m
97.33 sq m
64.92 sq m
98.39 sq m
127.41 sq m
133.96 sq m
95.45 sq m
131.19 sq m
64.92 sq m
116.25 sq m
98.39 sq m
95.21 sq m
97.33 sq m
62.93 sq m
97.33 sq m
64.92 sq m
64.92 sq m
97.33 sq m
99.71 sq m
98.39 sq m
98.39 sq m
95.45 sq m

2,192.45 sq m

– III-14 –

APPENDIX III PROPERTY VALUATION OF THE LAI FUNG GROUP

Pursuant to the Equity Joint Venture Contract and Supplemental Contracts all entered into among Shanghai Central City Enterprises (Group) Real Estate Company Limited (“ Party A ”), Sunlite Investment Ltd (“ Party B ”), Shanghai Grand Development Co Ltd (“ Party C ”) and Tai Hong Company Limited (“ Party D ”) dated 26 October 1992, 31 May 1995, 18 March 2000 and 8 August 2001 respectively, all parties agreed to establish a joint-venture company named Shanghai Li Xing Real Estate Development Co Ltd. The salient conditions stipulated in the Joint Venture Contract and the Supplemental Contracts are, interalia, as follows:

(i) Total investment amount : US$105,000,000 (ii) Registered Capital : US$36,000,000 (iii) Period of operation : 50 years (iv) Profit-sharing/risk-bearing ratio : According to the respective shares of each party in the registered capital

Pursuant to the Business Licence with Unified Social Credit No 913100006072415998 dated 18 July 2017, Shanghai Li Xing was established with an operation period from 28 April 1993 to 27 April 2043.
Pursuant to the management agreement entered into between Shanghai Li Xing and Ascott Property Management (Shanghai) Co., Ltd. (“ Ascott ”) on 5 May 2009, Ascott agreed to provide certain management services to Shanghai Li Xing in relation to units of serviced apartments owned by the Lai Fung Group. The salient conditions stipulated in the management agreement are, inter-alia, as follows:
(i) Term : an initial term of 10 years commencing from the date when the official operations and leasing activity of the serviced apartments commence and renewable for two successive terms of five years at the option of Ascott and subject to the agreement of Shanghai Li Xing
(ii) Base management fee : 2% of total revenue + X% of gross operating profit (“ GOP ”) (X=4 if GOP margin is less than 50%; X=5 if GOP margin is less than 55% but more than or equal to 50%; X=5.5 if GOP margin is less than 60% but more than or equal to 55%; and X=6 if GOP margin is more than or equal to 60%)
(iii) Other service fee : — RMB160 per serviced apartment unit per month for provision of computer modular programs for use in connection with the management and operation of a serviced apartment
- RMB2,000,000 per annum adjusted annually from year 3 onwards in accordance with the Singapore Consumer Price Index subject to a cap of RMB2,500,000 per annum for global marketing services and use of the intellectual property rights of Ascott Group

In the course of our valuation, we have taken into account of the above-mentioned management agreement.

We have been provided with the Lai Fung Group’s PRC legal adviser’s opinion, which inter-alia, contains the following:
(i) Shanghai Li Xing legally owns the building ownership of the property;
(ii) Portion of the property is subject to mortgage and the mortgage is valid and enforceable;
(iii) Shanghai Li Xing can sell, lease, transfer or re-mortgage the property according to the relevant laws and regulations and subject to approval from the mortgagee; and
(iv) Except for the mortgage mentioned in note (8) (ii), the property is free from encumbrances.

– III-15 –

APPENDIX III

PROPERTY VALUATION OF THE LAI FUNG GROUP

Property

Description and tenure

Particulars of occupancy

Market Value in existing state as at 31 May 2018

2 Various serviced Hong Kong Plaza is a composite apartment units development comprising a 32-storey in North Tower office tower (known as South Hong Kong Plaza Tower) and a 32-storey serviced 282 Huaihaizhong apartment tower (known as North Road Tower), surmounting a common Huangpu District 7-level (including 3 basement levels) Shanghai commercial/car parking podium. The The PRC North Tower and South Tower are (portion owned by connected together by a flyover. The Good Strategy Ltd) property was completed in October 1997 and refurbished in 2011.

(please see note 2 for details)

The property comprises various serviced apartment units in the North Tower of Hong Kong Plaza owned by Good Strategy Ltd with a total gross floor area of approximately 19,672.77 sq m (211,758 sq ft). The gross floor area of each unit ranges from 60.70 sq m (653 sq ft) to 276.98 sq m (2,981 sq ft).

The whole serviced apartment HK$1,303,000,000 portion (including the subject (HONG KONG property and the serviced DOLLARS apartment portion stated in ONE BILLION property no. 1 in this report) THREE of the development is let HUNDRED AND under various short term THREE MILLION tenancies and managed by ONLY) Ascott Property Management (Shanghai) Co., Ltd. (100% interest yielding an annual gross attributable income of approximately to the Lai Fung RMB104,700,000. Group: HK$1,303,000,000)

(please see note 3)

The land use rights of the property have been granted for a term commencing from 3 January 2000 to 15 September 2042.

– III-16 –

PROPERTY VALUATION OF THE LAI FUNG GROUP

APPENDIX III

Notes:

Pursuant to 181 Real Estate Title Certificates Nos Hu Fang Di Shi Zi (2000) Di 000372-000395, 000410-000451, 000454-000458, 000485-000507, 000510-000569, 000572-000597 and 000640 all issued by the Shanghai Real Estate and Land Administration Bureau, the property with a total gross floor area of approximately 19,672.77 sq m is held by Good Strategy Limited, a 100% owned subsidiary of Lai Fung, for composite use.
The property comprises Unit Nos 1 to 13 on each of 15th to 21st floors and Unit Nos 1 to 6 on each of 34th to 36th floors, Unit Nos 3, 6, 7 and 10 on 22nd floor, Unit Nos 3, 7, 10 and 11 on 23rd floor, Unit Nos 3, 6, 7 and 11 on 25th floor, Unit Nos 2, 3, 6, 7, 10 and 11 on 26th floor, Unit Nos 2, 3, 6, 7, 10 and 11 on 27th floor, Unit Nos 2, 3, and 6 on 28th floor, Unit Nos 2, 3, 6, 7, 10 and 11 on 29th floor, Unit Nos 2, 3, 6 and 11 on 30th floor, Unit Nos 2, 3, 4, 6, 9, 10, 11 and 12 on 31st floor, Unit Nos 1, 2, 3, 4, 8, 10, 11 and 12 on 32nd floor and Unit Nos 1, 2, 3, 4, 9, 10, 11 and 12 on 33rd floor.
Pursuant to the management agreement entered into between Shanghai Li Xing Real Estate Development Co Ltd (“ Shanghai Li Xing ”) and Ascott Property Management (Shanghai) Co., Ltd. (“ Ascott ”) on 5 May 2009, Ascott agreed to provide certain management services to Shanghai Li Xing in relation to units of serviced apartments owned by the Lai Fung Group. The salient conditions stipulated in the management agreement are, inter-alia, as follows:
(i) Term : an initial term of 10 years commencing from the date when the official operations and leasing activity of the serviced apartments commence and renewable for two successive terms of five years at the option of Ascott and subject to the agreement of Shanghai Li Xing
(ii) Base management fee : 2% of total revenue + X% of gross operating profit (“ GOP ”) (X=4 if GOP margin is less than 50%; X=5 if GOP margin is less than 55% but more than or equal to 50%; X=5.5 if GOP margin is less than 60% but more than or equal to 55%; and X=6 if GOP margin is more than or equal to 60%)
(iii) Other service fee : — RMB160 per serviced apartment unit per month for provision of computer modular programs for use in connection with the management and operation of a serviced apartment
- RMB2,000,000 per annum adjusted annually from year 3 onwards in accordance with the Singapore Consumer Price Index subject to a cap of RMB2,500,000 per annum for global marketing services and use of the intellectual property rights of Ascott Group

In the course of our valuation, we have taken into account of the above-mentioned management agreement.

We have been provided with the Lai Fung Group’s PRC legal adviser’s opinion, which inter-alia, contains the following:
(i) Good Strategy Limited legally owns the building ownership of the property;
(ii) The property is subject to mortgage and the mortgage is valid and enforceable;
(iii) Good Strategy Limited can sell, lease, transfer or re-mortgage the property according to the relevant laws and regulations and subject to approval from the mortgagee; and
(iv) Except for the mortgage mentioned in note (4) (ii), the property is free from encumbrances.

– III-17 –

PROPERTY VALUATION OF THE LAI FUNG GROUP

APPENDIX III

Property

Description and tenure

Particulars of occupancy

Market Value in existing state as at 31 May 2018

3 B3 Hui Yi Garden The property comprises a 3-storey No 18 of detached house, a garden and a car Alley 905 parking lot all standing on a levelled Huashan Road site with an area of 415.98 sq m (4,478 Xuhui District sq ft). Shanghai The PRC The 3-storey detached house is of brick/reinforced concrete structure completed in 1993 with a total gross floor area of approximately 317.80 sq m (3,421 sq ft) and the site area of the garden is approximately 179 sq m (1,927 sq ft).

As advised, the property is HK$46,000,000 currently vacant. (HONG KONG DOLLARS FORTY SIX MILLION ONLY)

(100% interest attributable to the Lai Fung Group: HK$46,000,000)

(please see note 2)

The land use rights of the property have been granted for an unspecified term (please see note 2 below for details) .

Notes:

Pursuant to the Real Estate Title Certificate No Hu Fang Di Shi Zi (2002) Di 010907 dated 30 October 2002 issued by the Shanghai Real Estate and Land Resources Administration Bureau, the title to the property with a site area of approximately 415.98 sq m and the 3-storey building with a gross floor area of approximately 317.80 sq m is vested in Canvex Limited, a 100% owned subsidiary of Lai Fung, for residential use for an unspecified term.
As advised by Lai Fung, land use rights of the property will be granted for a land use right term of 70 years for residential use subject to a land premium of approximately RMB6,360,000 and we have deducted the aforesaid land premium in the course of our valuation.
We have been provided with the Lai Fung Group’s PRC legal adviser’s opinion, which inter-alia, contains the following:
(i) Canvex Limited legally owns the building ownership of the property;
(ii) Canvex Limited can sell, lease, transfer or mortgage the property according to the relevant laws and regulations; and
(iii) The property is free from mortgage and other encumbrances.

– III-18 –

APPENDIX III

PROPERTY VALUATION OF THE LAI FUNG GROUP

Property

Description and tenure

Market Value in existing state as at Particulars of occupancy 31 May 2018

4 Commercial Regents Park (the “ Development ”) is portion of a large-scale residential/commercial Regents Park composite development developed in 88 Huichuan two phases. Road Changning The property comprises commercial District portion of the Development with a Shanghai total gross floor area of approximately The PRC 7,623.79 sq m (82,062 sq ft) completed in 2006.

The land use rights of the Development have been granted for a term of 70 years commencing from 4 May 1996 for residential use.

According to the information HK$247,000,000 provided, the property (HONG KONG is fully leased subject to DOLLARS various tenancies yielding TWO HUNDRED a total monthly rental of AND FORTY approximately RMB1,430,000 SEVEN MILLION with the last tenancy expiring ONLY) on 15 March 2027.

(95% interest attributable to the Lai Fung Group: HK$234,650,000)

Notes:

Pursuant to the Shanghai Real Estate Title Certificate No Hu Fang Di Chang Zi (2006) Di 010832 issued by the Shanghai Housing and Land Resources Administration Bureau dated 10 June 2006, the title to portion of the Development (Phase I and basement car park) with a total gross floor area of 114,009.40 sq m is held by Shanghai Wa Yee Real Estate Development Co., Limited (“ Shanghai Wa Yee ”), a 95% owned subsidiary of Lai Fung, for a land use rights term of 70 years from 4 May 1996 to 3 May 2066 for residential use. As advised by Lai Fung, portion of the property under this Title Certificate has been sold.
Pursuant to the Equity Joint Venture Contract entered into between Kingscord Investment Limited, interest held in trust for Lai Fung, (“ Party A ”), Wide Angle Development Limited, (a 100% owned subsidiary of Lai Fung), (“ Party B ”) and 上海長寧房地產（集團）公司 (Shanghai Changning Real Estate (Group) Company) (“ Party C ”) on 1 March 1996, all parties agreed to establish a joint-venture company named Shanghai Wa Yee Real Estate Development Co., Limited. The said contract contains, inter-alia, the following salient conditions:

(i) Total investment amount : US$25,000,000 (ii) Registered capital : US$10,000,000 Party A : 70% Party B : 25% Party C : 5% (iii) Period of operation : 70 years

Pursuant to the Business Licence with Unified Social Credit No 9131000060737771XE dated 3 June 2016, Shanghai Wa Yee was established with an operation period from 3 September 1997 to 19 August 2067.
We have been provided with the Lai Fung Group’s PRC legal adviser’s opinion, which inter-alia, contains the following:
(i) Shanghai Wa Yee legally owns the building ownership of the property;
(ii) Shanghai Wa Yee can sell, lease, transfer or mortgage the property according to the relevant laws and regulations; and
(iii) The property is free from mortgage and other encumbrances.

– III-19 –

APPENDIX III

PROPERTY VALUATION OF THE LAI FUNG GROUP

Property

Description and tenure

Particulars of occupancy

Market Value in existing state as at 31 May 2018

5 Various portions Shanghai May Flower Plaza (the of Shanghai “ Development ”) is a composite May Flower Plaza development with residential and the junction of office apartment towers erected Da Tong Road on a commercial podium. The and Development also comprises a Zhi Jiang Xi Road 3-storey basement for car park use. Sujiaxiang Jing’an District The property comprises commercial Shanghai portion and 239 office apartment units The PRC in Tower 4 of the Development with a total gross floor area of approximately 29,757.87 sq m (320,314 sq ft) and 13,363.58 sq m (143,846 sq ft) respectively completed in 2011 with gross floor areas as follows:

Use/Level Commercial (Basement 1) Commercial (Level 1) Commercial (Level 2) Commercial (Level 3) Commercial (Level 4) Commercial (Level 5) Offce apartment Total:	Approximate Gross Floor Area sq m sq ft 11,961.06 128,749 6,413.88 69,039 7,260.09 78,148 1,541.54 16,593 1,639.54 17,648 941.76 10,137 13,363.58 143,846 43,121.45 464,160	Approximate Gross Floor Area sq m sq ft 11,961.06 128,749 6,413.88 69,039 7,260.09 78,148 1,541.54 16,593 1,639.54 17,648 941.76 10,137 13,363.58 143,846 43,121.45 464,160
		464,160

According to the information HK$1,304,000,000 provided, commercial portion (HONG KONG of the property with a total DOLLARS leasable area of approximately ONE BILLION 25,527 sq m is let under THREE various tenancies yielding HUNDRED AND a total monthly rental of FOUR MILLION approximately RMB2,440,000 ONLY) with the last tenancy expiring on 14 September 2027 whilst (100% interest the remaining commercial attributable portion of the property is to the Lai Fung vacant or for self-use. Group: HK$1,304,000,000)

The office apartment portion of the property is currently (please see note 7) operated as serviced apartment.

The land use rights of the property have been granted for terms of 70 years for residential use, 40 years for commercial use and 50 years for office use commencing from 5 February 2007.

– III-20 –

PROPERTY VALUATION OF THE LAI FUNG GROUP

APPENDIX III

Notes:

Pursuant to the Shanghai Certificate of Real Estate Ownership Hu Fang Di Zha Zi No (2007) 017286 issued by the Shanghai Housing and Land Resources Administration Bureau dated 12 November 2007, the land use rights of the property, having a site area of 19,742 sq m, is vested in Shanghai Hu Xin Real Estate Development Co., Ltd (“ Shanghai Hu Xin ”), a 100% owned subsidiary of Lai Fung, for land use rights terms of 70 years for residential use, 40 years for commercial use and 50 years for office use commencing from 5 February 2007.
Pursuant to the Shanghai Certificate of Real Estate Ownership No Hu Fang Di Zha Zi (2012) Di 006136 issued by the Shanghai Planning, Land and Resources Administration Bureau dated 30 June 2012, the title to the Development with a total gross floor area of 137,129.94 sq m is held by Shanghai Hu Xin.
Pursuant to the Equity Joint Venture Contract entered into between 上海和田城市建設開發公司 (Shanghai He Tian City Construction Development Co) (“ Party A ”), Kingscord Investment Limited (“ Party B ”) and Fore Bright Limited (“ Party C ”), all parties agreed to establish a joint venture company named Shanghai Hu Xin Real Estate Development Co., Ltd. Both Party B and Party C are 100% owned subsidiaries of Lai Fung. The said contract contains, inter-alia, the following salient conditions:

(i) Total investment amount : US$80,000,000 (ii) Registered capital : US$40,000,000 Party A : 5% Party B : 55% Party C : 40% (iii) Period of operation : 70 years (iv) Profit sharing/risk : According to the respective shares of each party in the registered capital bearing ratio

Pursuant to the Agreement for Share Transfer, Party A agreed to sell its entire interest in Shanghai Hu Xin to Party B. Consequently, the interest of Party B in Shanghai Hu Xin is 60%.
Pursuant to the Business Licence with Unified Social Credit No 91310000607350656K dated 4 March 2016, Shanghai Hu Xin was established with an operation period from 23 April 1995 to 22 April 2065.
Pursuant to the Construction Work Completion Recording Certificate No 2011SH0470 dated 13 December 2011, the construction work of the Development with a total gross floor area of 147,923 sq m was completed and recorded.
As per your specific terms of instruction, we have valued the office apartment portion of the property on vacant possession basis.
We have been provided with the Lai Fung Group’s PRC legal adviser’s opinion, which inter-alia, contains the following:
(i) Shanghai Hu Xin legally owns the building ownership of the property;
(ii) Shanghai Hu Xin can sell, lease, transfer or mortgage the property according to the relevant laws and regulations; and
(iii) The property is free from mortgage and other encumbrances.

– III-21 –

APPENDIX III

PROPERTY VALUATION OF THE LAI FUNG GROUP

Property

Description and tenure

Particulars of occupancy

Market Value in existing state as at 31 May 2018

6 May Flower Plaza May Flower Plaza is erected on an 68 Zhongshanwu irregular-shaped site with an area of Road approximately 3,912.27 sq m (42,112 Yuexiu District sq ft). Guangzhou Guangdong The property comprises the whole Province of May Flower Plaza including a The PRC 13-storey office and commercial tower erected over four basement levels completed in 2005 with approximate gross floor areas (excluding public ancillary facilities area of about 1,037.04 sq m) as follows:

Use Floor Car park B4 Car park B3 Retail/Car park B2 Retail/Car park B1 Retail L1 Retail L2 Retail L3 Retail L4 Retail L5 Cinema L6 Cinema/Offce L7 Retail L8 Retail L9 Offce L10 Offce L11 Offce L12 Offce L13 Total:	Approximate Gross Floor Area sq m sq ft 3,864.36 41,596 3,677.21 39,581 3,430.32 36,924 2,544.93 27,394 2,288.92 24,638 4,245.21 45,695 4,103.83 44,174 3,978.91 42,829 3,406.65 36,669 3,310.88 35,638 1,732.81 18,652 3,363.03 36,200 2,140.67 23,042 2,079.35 22,382 1,760.05 18,945 1,769.96 19,052 1,769.96 19,052 49,467.05 532,463	Approximate Gross Floor Area sq m sq ft 3,864.36 41,596 3,677.21 39,581 3,430.32 36,924 2,544.93 27,394 2,288.92 24,638 4,245.21 45,695 4,103.83 44,174 3,978.91 42,829 3,406.65 36,669 3,310.88 35,638 1,732.81 18,652 3,363.03 36,200 2,140.67 23,042 2,079.35 22,382 1,760.05 18,945 1,769.96 19,052 1,769.96 19,052 49,467.05 532,463
		532,463

According to the information HK$2,254,000,000 provided, office and retail (HONG KONG portion of the property DOLLARS (including cinema) with TWO BILLION a total gross floor area of TWO HUNDRED approximately 40,019 sq m is AND FIFTY FOUR subject to various tenancies MILLION ONLY) yielding a total monthly rental of approximately (100% interest RMB7,520,000 with the attributable last tenancy expiring on 31 to the Lai Fung October 2030 whilst the Group: remaining portion of the HK$2,254,000,000) property is vacant or for selfuse.

The basement level of the property accommodates a total of approximately 136 car parking spaces and the property also comprises various advertising boards.

The land use rights of the property have been granted for terms of 40 years for commercial use and 50 years for other uses commencing from 14 October 1997.

– III-22 –

PROPERTY VALUATION OF THE LAI FUNG GROUP

APPENDIX III

Notes:

Pursuant to nineteen Guangzhou Real Estate Title Certificates all issued by the Guangzhou Land Resources and Real Estate Administration Bureau in 2016, the title to the property with a total gross floor area of approximately 49,467.05 sq m is vested in Guangzhou Jieli Real Estate Co Ltd (“ Guangzhou Jieli ”), a 100% owned subsidiary of Lai Fung. Details of which are as follows:

Certificate No

Certifcate No Level Use 1. Yue (2016) Guangzhou Shi Bu Dong Chan Quan Di 00243486 Basement 4 Car park 2. Yue (2016) Guangzhou Shi Bu Dong Chan Quan Di 00243505 Basement 3 Car park 3. Yue (2016) Guangzhou Shi Bu Dong Chan Quan Di 00243488 Basement 2 Commercial and catering 4. Yue (2016) Guangzhou Shi Bu Dong Chan Quan Di 00243489 Basement 2 Car park 5. Yue (2016) Guangzhou Shi Bu Dong Chan Quan Di 00243490 Basement 1 Commercial and catering 6. Yue (2016) Guangzhou Shi Bu Dong Chan Quan Di 00243491 Basement 1 Car park 7. Yue (2016) Guangzhou Shi Bu Dong Chan Quan Di 00243492 Level 1 Commercial 8. Yue (2016) Guangzhou Shi Bu Dong Chan Quan Di 00243493 Level 2 Commercial and catering 9. Yue (2016) Guangzhou Shi Bu Dong Chan Quan Di 00243494 Level 3 Commercial and catering 10. Yue (2016) Guangzhou Shi Bu Dong Chan Quan Di 00243503 Level 4 Commercial 11. Yue (2016) Guangzhou Shi Bu Dong Chan Quan Di 00243495 Level 5 Catering 12. Yue (2016) Guangzhou Shi Bu Dong Chan Quan Di 00243496 Level 6 Cinema 13. Yue (2016) Guangzhou Shi Bu Dong Chan Quan Di 00243497 Level 7 Cinema 14. Yue (2016) Guangzhou Shi Bu Dong Chan Quan Di 00243498 Level 8 Catering 15. Yue (2016) Guangzhou Shi Bu Dong Chan Quan Di 00243487 Level 9 Catering 16. Yue (2016) Guangzhou Shi Bu Dong Chan Quan Di 00243499 Level 10 Offce 17. Yue (2016) Guangzhou Shi Bu Dong Chan Quan Di 00243500 Level 11 Offce 18. Yue (2016) Guangzhou Shi Bu Dong Chan Quan Di 00243501 Level 12 Offce 19. Yue (2016) Guangzhou Shi Bu Dong Chan Quan Di 00243502 Level 13 Offce Total:	Gross Floor Area sq m 3,864.36 3,677.21 2,707.16 723.16 1,927.46 617.47 2,288.92 4,245.21 4,103.83 3,978.91 3,406.65 3,310.88 1,732.81 3,363.03 2,140.67 2,079.35 1,760.05 1,769.96 1,769.96
	49,467.05

Certifcate No
Level
Use
1.
Yue (2016) Guangzhou Shi Bu Dong Chan Quan
Di 00243486
Basement 4
Car park
2.
Yue (2016) Guangzhou Shi Bu Dong Chan Quan
Di 00243505
Basement 3
Car park
3.
Yue (2016) Guangzhou Shi Bu Dong Chan Quan
Di 00243488
Basement 2
Commercial and catering
4.
Yue (2016) Guangzhou Shi Bu Dong Chan Quan
Di 00243489
Basement 2
Car park
5.
Yue (2016) Guangzhou Shi Bu Dong Chan Quan
Di 00243490
Basement 1
Commercial and catering
6.
Yue (2016) Guangzhou Shi Bu Dong Chan Quan
Di 00243491
Basement 1
Car park
7.
Yue (2016) Guangzhou Shi Bu Dong Chan Quan
Di 00243492
Level 1
Commercial
8.
Yue (2016) Guangzhou Shi Bu Dong Chan Quan
Di 00243493
Level 2
Commercial and catering
9.
Yue (2016) Guangzhou Shi Bu Dong Chan Quan
Di 00243494
Level 3
Commercial and catering
10.
Yue (2016) Guangzhou Shi Bu Dong Chan Quan
Di 00243503
Level 4
Commercial
11.
Yue (2016) Guangzhou Shi Bu Dong Chan Quan
Di 00243495
Level 5
Catering
12.
Yue (2016) Guangzhou Shi Bu Dong Chan Quan
Di 00243496
Level 6
Cinema
13.
Yue (2016) Guangzhou Shi Bu Dong Chan Quan
Di 00243497
Level 7
Cinema
14.
Yue (2016) Guangzhou Shi Bu Dong Chan Quan
Di 00243498
Level 8
Catering
15.
Yue (2016) Guangzhou Shi Bu Dong Chan Quan
Di 00243487
Level 9
Catering
16.
Yue (2016) Guangzhou Shi Bu Dong Chan Quan
Di 00243499
Level 10
Offce
17.
Yue (2016) Guangzhou Shi Bu Dong Chan Quan
Di 00243500
Level 11
Offce
18.
Yue (2016) Guangzhou Shi Bu Dong Chan Quan
Di 00243501
Level 12
Offce
19.
Yue (2016) Guangzhou Shi Bu Dong Chan Quan
Di 00243502
Level 13
Offce
Total:

Gross Floor Area
sq m
3,864.36
3,677.21
2,707.16
723.16
1,927.46
617.47
2,288.92
4,245.21
4,103.83
3,978.91
3,406.65
3,310.88
1,732.81
3,363.03
2,140.67
2,079.35
1,760.05
1,769.96
1,769.96

49,467.05

Pursuant to the State-owned Land Use Right Certificate No Sui Fu Guo Yong (1997) Zi Di Te 028 issued by the People’s Government of Guangzhou dated 14 October 1997, the title to the property with a site area of approximately 5,782 sq m is held by Guangzhou Jieli for land use rights terms of 70 years for residential use, 40 years for commercial uses and 50 years for other uses.
Pursuant to the Business Licence No Wai S0102014023301 dated 11 July 2016, Guangzhou Jieli was established with an operation period from 31 December 1993 to 31 December 2033.
We have been provided with the Lai Fung Group’s PRC legal adviser’s opinion, which inter-alia, contains the following:
(i) Guangzhou Jieli legally owns the property;
(ii) The property is subject to a mortgage and the mortgage is valid and enforceable;
(iii) Guangzhou Jieli can sell, lease or transfer the property according to the relevant laws and regulations and subject to approval from the mortgagee; and
(iv) Except for the mortgage mentioned in note (4) (ii), the property is free from encumbrances.

– III-23 –

PROPERTY VALUATION OF THE LAI FUNG GROUP

APPENDIX III

Description and tenure

Property

7 Commercial West Point (the “ Development ”) is a portion of composite development comprising a West Point residential tower and an office tower the junction of both erected on a 4-level commercial Zhongshan Qi podium and a 2-level basement car Road and park completed around 2010. Guangfu Road Liwan District The property comprises the Guangzhou commercial portion on Levels 1 to 4 of Guangdong the Development having a total gross Province floor area of approximately 16,940.18 The PRC sq m (182,344 sq ft) with gross floor areas as follows:

Use Level Retail Level 1 Retail Level 2 Retail Level 3 Retail Level 4 Sub-total: Clubhouse and kiosk Total:	Approximate Gross Floor Area sq m sq ft 3,158.96 34,003 4,384.20 47,192 4,546.58 48,939 3,886.49 41,834 15,976.23 171,968 963.95 10,376 16,940.18 182,344	Approximate Gross Floor Area sq m sq ft 3,158.96 34,003 4,384.20 47,192 4,546.58 48,939 3,886.49 41,834 15,976.23 171,968 963.95 10,376 16,940.18 182,344
		171,968 10,376
		182,344

Market Value in existing state as at 31 May 2018

Particulars of occupancy

According to the information HK$335,300,000 provided, portion of the (HONG KONG property with a total gross DOLLARS floor area of approximately THREE 15,976 sq m is subject to HUNDRED various tenancies yielding THIRTY FIVE a total monthly rental of MILLION approximately RMB1,190,000 AND THREE with last tenancy expiring on HUNDRED 30 April 2024 whilst the THOUSAND remaining portion is vacant ONLY) or for self-use.

(100% interest attributable to the Lai Fung Group: HK$335,300,000)

The land use rights of the Development have been granted for terms of 70 years for residential use, 40 years for commercial, tourism and entertainment uses and 50 years for other use.

– III-24 –

PROPERTY VALUATION OF THE LAI FUNG GROUP

APPENDIX III

Notes:

Pursuant to seven Guangzhou Real Estate Title Certificates Nos Yue Fang Di Quan Zheng Sui Zi Di 0120285921 to 0120285927 all issued by the Guangzhou Land Resources and Real Estate Administration Bureau dated 11 November 2011, the title to the property with a total gross floor area of approximately 16,940.18 sq m is vested in Guangzhou Honghui Real Estate Development Co., Ltd. (“ Guangzhou Honghui ”), a 100% owned subsidiary of Lai Fung.
Pursuant to the State-owned Land Use Right Certificate No Sui Guo Yong (2005) Di 348 issued by the People’s Government of Guangzhou dated 11 January 2006, the title to the Development with a site area of approximately 6,003 sq m is held by Guangzhou Honghui for land use rights terms of 70 years for residential use, 40 years for commercial, tourism and entertainment uses and 50 years for other use.
Pursuant to three Supplementary Agreements of Co-operative Joint Venture Contract all entered into between 廣州市白雲城市建設開發有限公司 (Guangzhou Bai Yun City Construction Development Co Ltd) (“ Party A ”) and Frank Light Development Limited (“ Party B ”) on 29 September 1998, 4 February 2008 and 8 April 2010, Guangzhou Honghui was established by Party A and Party B with a total investment amount of RMB182,510,000 and registered capital of RMB79,720,000 which is fully paid by Party B and Party A is entitled to receive an amount of RMB35,866,500 from Party B as fixed profit. As advised by Lai Fung, portion of the aforesaid fixed profit (RMB16,500,000) had been settled as at the valuation date.
Pursuant to the Business Licence No Wai S0102014021917 dated 11 November 2015, Guangzhou Honghui was established with an operation period from 11 February 1993 to 11 February 2019.
We have been provided with the Lai Fung Group’s PRC legal adviser’s opinion, which inter-alia, contains the following:
(i) Guangzhou Honghui legally owns the property;
(ii) Guangzhou Honghui can sell, lease or transfer the property according to the relevant laws and regulations; and
(iii) The property is free from mortgage and other encumbrances.

– III-25 –

APPENDIX III

PROPERTY VALUATION OF THE LAI FUNG GROUP

Property

Description and tenure

Particulars of occupancy

Market Value in existing state as at 31 May 2018

8 Various portions Palm Spring (the “ Development ”) of Stage I of is a large-scale residential Palm Spring development having a total site area Caihong Planning of approximately 236,649.80 sq m Area (2,547,298 sq ft). Western District Zhongshan The Development is planned to be Guangdong developed by various stages with a Province total gross floor area of approximately The PRC 564,388 sq m (6,075,072 sq ft).

The property comprises various units on Levels 1 to 3 of the commercial centre of Stage I of the Development with a total gross floor area of 11,880.70 sq m (127,884 sq ft) and serviced apartments with a total gross floor area of 9,156.10 sq m (98,556 sq ft) completed in 2012 with gross floor areas as follows:

According to the information HK$280,500,000 provided, commercial (HONG KONG portion of the property DOLLARS with a total gross floor area TWO HUNDRED of approximately 10,186 EIGHTY sq m is leased subject to MILLION AND various tenancies yielding FIVE HUNDRED a total monthly rental of THOUSAND approximately RMB293,000 ONLY) with last tenancy expiring on 31 October 2030 whilst the (100% interest remaining commercial portion attributable of the property is vacant. to the Lai Fung

31 October 2030 whilst the (100% interest remaining commercial portion attributable of the property is vacant. to the Lai Fung Group: The serviced apartments HK$280,500,000) portion of the property is currently operated. (please see note 5)

Use Commercial (Level 1) Commercial (Level 2) Commercial (Level 3) Serviced apartments Total:	Approximate Gross Floor Area sq m sq ft 3,391.74 36,509 4,266.74 45,927 4,222.22 45,448 9,156.10 98,556 21,036.80 226,440	Approximate Gross Floor Area sq m sq ft 3,391.74 36,509 4,266.74 45,927 4,222.22 45,448 9,156.10 98,556 21,036.80 226,440
		226,440

The land use rights of the property have been granted for various terms with the last term expiring on 30 March 2075 for commercial/ residential uses.

– III-26 –

PROPERTY VALUATION OF THE LAI FUNG GROUP

APPENDIX III

Notes:

Pursuant to two State-owned Land Use Right Certificates Nos Zhong Fu Guo Yong (2004) Di 201494 and (2011) Di 2000310 both issued by the People’s Government of Zhongshan, the title to portion of the Development with a site area of approximately 10,679.70 sq m and 12,902.60 sq m respectively are both held by 中山市寶麗房地產發展有限公司 (Zhongshan Bao Li Properties Development Co. Ltd.) (“ Zhongshan Bao Li ”), a 100% owned subsidiary of Lai Fung for various terms expiring on 17 May 2074 and 30 March 2075 respectively for commercial/residential uses.
Pursuant to the Real Estate Title Proof No 2013-011052 dated 27 August 2013, the title to the serviced apartment portion of the Development (Tower 8) with a total gross floor area of approximately 9,169.6 sq m is vested in Zhongshan Bao Li.
Pursuant to twenty seven Real Estate Title Certificates, the title to commercial portion of the Development with a total gross floor area of 16,875.23 sq m is vested in Zhongshan Bao Li.
Pursuant to the Business Licence with Unified Social Credit No 914420007480421393 dated 5 November 2015, Zhongshan Bao Li was established with an operation period from 17 April 2003 to 16 April 2053.
As per your specific terms of instruction, we have valued the serviced apartments portion of the property on vacant possession basis.
We have been provided with the Lai Fung Group’s PRC legal adviser’s opinion, which inter-alia, contains the following:
(i) Zhongshan Bao Li legally owns the property;
(ii) Zhongshan Bao Li can sell, lease or transfer the property according to the relevant laws and regulations; and
(iii) The property is free from mortgage and other encumbrances.

– III-27 –

PROPERTY VALUATION OF THE LAI FUNG GROUP

APPENDIX III

Description and tenure

Property

9 Lai Fung Tower Eastern Place is a large-scale 787 Dongfeng commercial/residential composite East Road development developed by phases. Yuexiu District Guangzhou The property comprises the whole Guangdong of Lai Fung Tower in Phase V of Province Eastern Place with a total gross floor The PRC area of approximately 65,579.11 sq m (705,894 sq ft) completed in 2015 and 313 basement car parking spaces (including 216 mechanical car parking spaces). Gross floor areas are as follows:

Use Level Retail L1 Retail L2 Retail L3&4 Offce L5-28 Total:	Approximate Gross Floor Area sq m sq ft 3,319.59 35,732 1,517.89 16,339 4,396.86 47,328 56,344.77 606,495 65,579.11 705,894	Approximate Gross Floor Area sq m sq ft 3,319.59 35,732 1,517.89 16,339 4,396.86 47,328 56,344.77 606,495 65,579.11 705,894
		705,894

Market Value in existing state as at 31 May 2018

Particulars of occupancy

According to the information HK$3,245,600,000 provided, the property with (HONG KONG a total gross floor area of DOLLARS approximately 65,387 sq m THREE BILLION is let under various tenancies TWO HUNDRED yielding a total monthly FORTY FIVE rental of approximately MILLION AND RMB7,520,000 with the SIX HUNDRED last tenancy expiring on THOUSAND 14 January 2027 whilst the ONLY) remaining portion of the property is vacant or for self(100% interest use. attributable to the Lai Fung Group: HK$3,245,600,000)

The land use rights of the property have been granted for terms of 70 years for residential use, 40 years for commercial, tourism and entertainment uses and 50 years for other use.

– III-28 –

PROPERTY VALUATION OF THE LAI FUNG GROUP

APPENDIX III

Notes:

Pursuant to the State-owned Land Use Right Certificate No Sui Fu Guo Yong (2003) Di 309 issued by the People’s Government of Guangzhou dated 30 October 2003, the title to the subject development with an area of approximately 17,293.00 sq m is held by Guangzhou Grand Wealth Properties Ltd (“ Guangzhou Grand Wealth ”), a 100% owned subsidiary of Lai Fung, for land use rights terms of 70 years for residential use, 40 years for commercial, tourism and entertainment uses and 50 years for other use.
Pursuant to the Construction Work Completion Recording Certificate No Sui Gui Yan Zheng (2015) 279 dated 2 June 2015, construction work of portion of Phase V of Eastern Place with a total gross floor area of 59,139 sq m is completed and recorded.
Pursuant to the Construction Work Completion Recording Certificate No Sui (Jian) Jian Yan Bei 2016-015 dated 30 June 2016, construction work of portion of Phase V of Eastern Place with a total gross floor area of 70,522 sq m is completed and recorded.
Pursuant to 310 Real Estate Title Certificates, the title to 310 car parking spaces of the property is vested in Guangzhou Grand Wealth.
Pursuant to the Co-operative Joint Venture Contract and eleven Supplemental Contracts all entered into between Guangzhou Light Industry Real Estate Development Company (formerly known as Guangzhou Yuexing Real Estate Development Company) (“ Party A ”) and Grand Wealth Ltd (“ Party B ”) dated 23 November 1993, 3 June 1996, 31 December 1996, 3 May 1997, 5 August 1997, 14 February 2006, 10 May 2006, 2 April 2007, 10 July 2008, 8 May 2009, 5 March 2014 and 15 January 2015 respectively, both parties agreed to establish a joint venture company named Guangzhou Grand Wealth Properties Limited. The said contracts contain, inter-alia, the following conditions:
(i) Total investment amount : HK$560,000,000

(ii) Registered capital : HK$280,000,000

(iii) Party B shall be responsible for the total investment amount as stipulated in the contract.
(iv) Party A shall be entitled to a gross floor area of 19,500 sq m whilst Party B shall be entitled to the remaining floor area of the Development and sale proceeds derived therefrom.
(v) The portion mentioned in 5 (iv) entitled by Party A comprises various units in Lai Fung Tower with a total gross floor area of approximately 7,539.4 sq m.
(vi) Both parties agreed that instead of the property mentioned in note 5 (v) above, Gangjing Shangwulou, Nos 407 and 409 Yan Jiang Dong Road, Yuexiu District, Guangzhou with a total gross floor area of approximately 12,395 sq m shall be allocated to Party A.
Pursuant to the Business Licence No Wai S0102014007787 dated 12 July 2016, Guangzhou Grand Wealth was established with an operation period from 15 June 1994 to 15 June 2019.
We have been provided with the Lai Fung Group’s PRC legal adviser’s opinion, which inter-alia, contains the following:
(i) Guangzhou Grand Wealth legally owns the property;
(ii) Portion of the property is subject to a mortgage and the mortgage is valid and enforceable;
(iii) Guangzhou Grand Wealth should hold the retail portion with a total gross floor area of 2,312.26 sq m and 216 mechanical car parking spaces of the property and has the right to lease such portions and to grant the lessee to sublease;
(iv) Save as abovementioned, Guangzhou Grand Wealth can sell, lease or transfer the property according to the relevant laws and regulations and subject to approval from the mortgagee; and
(v) Except for the mortgage mentioned in note (7) (ii), the property is free from encumbrances.

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PROPERTY VALUATION OF THE LAI FUNG GROUP

APPENDIX III

Group II — Property interests held by the Lai Fung Group in the PRC for sale purpose

Property Description and tenure
10 Unsold car Regents Park (the “ Development ”) is parking spaces of a large-scale residential/commercial Regents Park composite development developed in 88 Huichuan two phases. Road Changning The property comprises 406 District basement car parking spaces of the Shanghai Development with a total gross floor The PRC area of approximately 13,085.38 sq m (140,851 sq ft) completed in 2006.

The land use rights of the Development have been granted for a term of 70 years commencing from 4 May 1996 for residential use.

Market Value in existing state as at Particulars of occupancy 31 May 2018 As advised, the property is HK$249,000,000 currently subject to various (HONG KONG licences with terms ranging DOLLARS from 1 month to 1 year. TWO HUNDRED AND FORTY NINE MILLION ONLY) (95% interest attributable to the Lai Fung Group: HK$236,550,000)

Notes:

Pursuant to the Shanghai Real Estate Title Certificate No Hu Fang Di Chang Zi (2009) Di 003008 issued by the Shanghai Housing and Land Resources Administration Bureau dated 20 March 2009, the title to the property (406 basement car parking spaces) with a total gross floor area of 13,085.38 sq m is held by Shanghai Wa Yee Real Estate Development Co., Limited (“ Shanghai Wa Yee ”), a 95% owned subsidiary of Lai Fung for a land use rights term of 70 years from 4 May 1996 to 3 May 2066 for residential use.
Pursuant to the Equity Joint Venture Contract entered into between Kingscord Investment Limited, interest held in trust for Lai Fung, (“ Party A ”), Wide Angle Development Limited, (a 100% owned subsidiary of Lai Fung), (“ Party B ”) and 上海長寧房地產（集團）公司 (Shanghai Changning Real Estate (Group) Company) (“ Party C ”) on 1 March 1996, all parties agreed to establish a joint-venture company named Shanghai Wa Yee Real Estate Development Co., Limited. The said contract contains, inter-alia, the following salient conditions:

(i) Total investment amount : US$25,000,000 (ii) Registered capital : US$10,000,000 Party A : 70% Party B : 25% Party C : 5% (iii) Period of operation : 70 years

Pursuant to the Business Licence with Unified Social Credit No 9131000060737771XE dated 3 June 2016, Shanghai Wa Yee was established with an operation period from 3 September 1997 to 19 August 2067.
We have been provided with the Lai Fung Group’s PRC legal adviser’s opinion, which inter-alia, contains the following:
(i) Shanghai Wa Yee legally owns the property;
(ii) Shanghai Wa Yee can sell, lease, transfer or mortgage the property according to the relevant laws and regulations; and
(iii) The property is free from mortgage and other encumbrances.

– III-30 –

APPENDIX III

PROPERTY VALUATION OF THE LAI FUNG GROUP

Property

Description and tenure

Particulars of occupancy

Market Value in existing state as at 31 May 2018

11 Unsold car Shanghai May Flower Plaza (the parking spaces of “ Development ”) is a composite Shanghai development with residential and May Flower Plaza office apartment towers erected the junction of on a commercial podium. The Da Tong Road Development also comprises a and 3-storey basement for car park use. Zhi Jiang Xi Road Sujiaxiang The property comprises 458 basement Jing’an District car parking spaces of the Development Shanghai completed in 2011. The PRC

The land use rights of the Development have been granted for terms of 70 years for residential use, 40 years for commercial use and 50 years for office use commencing from 5 February 2007.

As advised, the property is HK$168,600,000 currently subject to various (HONG KONG licences with terms ranging DOLLARS from one month to one year. ONE HUNDRED SIXTY EIGHT MILLION AND SIX HUNDRED THOUSAND ONLY) (100% interest attributable to the Lai Fung Group: HK$168,600,000)

Notes:

Pursuant to the Shanghai Certificate of Real Estate Ownership No Hu Fang Di Zha Zi (2012) Di 006136 issued by the Shanghai Planning, Land and Resources Administration Bureau dated 30 June 2012, the title to the Development with a total gross floor area of 137,129.94 sq m is held by Shanghai Hu Xin Real Estate Development Co., Ltd (“ Shanghai Hu Xin ”), a 100% owned subsidiary of Lai Fung.
Pursuant to the Shanghai Certificate of Real Estate Ownership Hu Fang Di Zha Zi (2007) Di 017286 issued by the Shanghai Housing and Land Resources Administration Bureau dated 12 November 2007, the land use rights of the Development, having a site area of 19,742 sq m, is vested in Shanghai Hu Xin for land use rights terms of 70 years for residential use, 40 years for commercial use and 50 years for office use commencing from 5 February 2007.
Pursuant to the Equity Joint Venture Contract entered into between 上海和田城市建設開發公司 (Shanghai He Tian City Construction Development Co) (“ Party A ”), Kingscord Investment Limited (“ Party B ”) and Fore Bright Limited (“ Party C ”), all parties agreed to establish a joint venture company named Shanghai Hu Xin Real Estate Development Co., Ltd. Both Party B and Party C are 100% owned subsidiaries of Lai Fung. The said contract contains, inter-alia, the following salient conditions:

(i) Total investment amount : US$80,000,000 (ii) Registered capital : US$40,000,000 Party A : 5%

Party B : 55%
Party C : 40%
(iii) Period of operation : 70 years
(iv) Profit sharing/risk : According to the respective shares of each party in the registered capital bearing ratio

– III-31 –

APPENDIX III PROPERTY VALUATION OF THE LAI FUNG GROUP

Pursuant to the Agreement for Share Transfer, Party A agreed to sell its entire interest in Shanghai Hu Xin to Party B. Consequently, the interest of Party B in Shanghai Hu Xin is 60%.
Pursuant to the Business Licence with Unified Social Credit No 91310000607350656K dated 4 March 2016, Shanghai Hu Xin was established with an operation period from 23 April 1995 to 22 April 2065.
Pursuant to the Construction Work Completion Recording Certificate No 2011SH0470 dated 13 December 2011, construction work of the Development with a total gross floor area of 147,923 sq m is completed and recorded.
We have been provided with the Lai Fung Group’s PRC legal adviser’s opinion, which inter-alia, contains the following:
(i) Shanghai Hu Xin legally owns the property;
(ii) Shanghai Hu Xin can sell, lease, transfer or mortgage the property according to the relevant laws and regulations; and
(iii) The property is free from mortgage and other encumbrances.

– III-32 –

APPENDIX III

PROPERTY VALUATION OF THE LAI FUNG GROUP

Property Description and tenure
12 Unsold car West Point (the “ Development ”) is a parking spaces of composite development comprising a West Point residential tower and an office tower the junction of both erected on a 4-level commercial Zhongshan Qi podium and a 2-level basement car Road and park completed around 2010. Guangfu Road Liwan District The property comprises 127 Guangzhou basement car parking spaces of the Guangdong Development. Province The PRC The land use rights of the Development have been granted for terms of 70 years for residential use, 40 years for commercial, tourism and entertainment uses and 50 years for other use.

Market Value in existing state as at Particulars of occupancy 31 May 2018

As advised, the property is HK$98,800,000 currently let on hourly basis. (HONG KONG DOLLARS NINETY EIGHT MILLION AND EIGHT HUNDRED THOUSAND ONLY) (100% interest attributable to the Lai Fung Group: HK$98,800,000)

Notes:

Pursuant to 127 Guangzhou Real Estate Title Certificates Nos Yue Fang Di Quan Zheng Sui Zi Di 0120285929, 0120285935, 0120285939, 0120285941 to 0120285971, 0120285973 to 0120285977, 0120285979 to 0120285991, 0120285993 to 0120285994, 0120286000 to 0120286040 and 0120286043 to 0120286074 all issued by the Guangzhou Land Resources and Real Estate Administration Bureau dated 11 November 2011, the title to the property is held by Guangzhou Honghui Real Estate Development Co., Ltd. (“ Guangzhou Honghui ”), a 100% owned subsidiary of Lai Fung for car park use.
Pursuant to the State-owned Land Use Right Certificate No Sui Guo Yong (2005) Di 348 issued by the People’s Government of Guangzhou dated 11 January 2006, the title to the Development with a site area of approximately 6,003 sq m is held by Guangzhou Honghui for land use rights terms of 70 years for residential use, 40 years for commercial, tourism and entertainment uses and 50 years for other use.
Pursuant to three Supplementary Agreement of Co-operative Joint Venture Contracts all entered into between 廣州市白雲城市建設開發有限公司 (Guangzhou Bai Yun City Construction Development Co Ltd) (“ Party A ”) and Frank Light Development Limited (“ Party B ”) dated 29 September 1998, 4 February 2008 and 8 April 2010, Guangzhou Honghui was established by Party A and Party B with a total investment amount of RMB182,510,000 and registered capital of RMB79,720,000 which is fully paid by Party B and Party A is entitled to receive an amount of RMB35,866,500 from Party B as fixed profit. As advised by Lai Fung, portion of the aforesaid fixed profit (RMB16,500,000) had been settled as at the valuation date.
Pursuant to the Business Licence No Wai S0102014021917 dated 11 November 2015, Guangzhou Honghui was established with an operation period from 11 February 1993 to 11 February 2019.
We have been provided with the Lai Fung Group’s PRC legal adviser’s opinion, which inter-alia, contains the following:
(i) Guangzhou Honghui legally owns the property;
(ii) Guangzhou Honghui can sell, lease or transfer the property according to the relevant laws and regulations; and
(iii) The property is free from mortgage and other encumbrances.

– III-33 –

PROPERTY VALUATION OF THE LAI FUNG GROUP

APPENDIX III

Property

Description and tenure

Particulars of occupancy

Market Value in existing state as at 31 May 2018

13 Unsold car King’s Park (the “ Development ”) is a parking residential development erected on a spaces of roughly rectangular-shaped site with a King’s Park site area of approximately 2,405.00 Nos 558-596/ sq m (25,887 sq ft). 1006-1044 Donghua Dong The property comprises 15 basement Road car parking spaces of the Development Yuexiu District completed in 2013. Guangzhou Guangdong The land use rights of the Province Development will be granted for The PRC terms of 70 years for residential use, 40 years for commercial, tourism and entertainment uses and 50 years for other use.

As advised, the property is HK$12,000,000 currently vacant. (HONG KONG DOLLARS TWELVE MILLION ONLY)

(100% interest attributable to the Lai Fung Group: HK$12,000,000)

(please see note 4)

Notes:

Pursuant to the State-owned Land Use Right Certificate No Sui Fu Guo Yong (2012) Di 01100013 issued by the People’s Government of Guangzhou dated 6 April 2012, the title to the Development, having a site area of 2,405 sq m, is held by Guangzhou Gentle Real Estate Co Ltd (“ Guangzhou Gentle ”), a 100% owned subsidiary of Lai Fung, for land use rights terms of 70 years for residential use, 40 years for commercial, tourism & entertainment uses and 50 years for other use.
Pursuant to the Business Licence No Wai S0102014021483 dated 12 July 2016, Guangzhou Gentle was established with an operation period from 15 June 2007 to 15 June 2027.
Pursuant to fifteen Guangzhou Real Estate Title Certificates, the title to the property is vested in Guangzhou Gentle.
As advised by Lai Fung, 2 car parking spaces of the property have been sold at a total consideration of approximately RMB1,332,800 prior to the date of valuation. According to Lai Fung’s instruction, the title of the sold portion was still held by Guangzhou Gentle as at the date of valuation and was thus included in this valuation. We have also made reference to the contracted consideration in the course of our valuation.
We have been provided with the Lai Fung Group’s PRC legal adviser’s opinion, which inter-alia, contains the following:
(i) Guangzhou Gentle legally owns the property;
(ii) Except for the sold portion as mentioned in note(4), Guangzhou Gentle can sell, lease or transfer the property according to the relevant laws and regulations; and
(iii) The property is free from mortgage and other encumbrances.

– III-34 –

APPENDIX III

PROPERTY VALUATION OF THE LAI FUNG GROUP

Property

Description and tenure

Particulars of occupancy

Market Value in existing state as at 31 May 2018

14 Unsold portions of Palm Spring (the “ Development ”) Stage I and II of is a large-scale residential Palm Spring development having a total site area Caihong Planning of approximately 236,649.80 sq m Area (2,547,298 sq ft). Western District Zhongshan The Development is planned to be Guangdong developed by various stages with a Province total gross floor area of approximately The PRC 564,388 sq m (6,075,072 sq ft).

According to the information HK$1,296,500,000 provided, the property is either (HONG KONG vacant or for self-use. DOLLARS ONE BILLION TWO HUNDRED NINETY SIX MILLION AND FIVE HUNDRED THOUSAND ONLY)

The property comprises various unsold residential units and commercial centre of Stage I and II of the Development with a total gross floor area of 52,115.22 sq m (560,968 sq ft) together with 1,186 car parking spaces completed in 2012 and 2017 respectively. The area details are as follows:

(100% interest attributable to the Lai Fung Group: HK$1,296,500,000)

(please see note 14)

Use Residential (apartment) Residential (terrace house) Club house Commercial centre Total:	Approximate Gross Floor Area sq m sq ft 25,619.62 275,770 19,584.11 210,803 1,966.96 21,172 4,944.53 53,223 52,115.22 560,968	Approximate Gross Floor Area sq m sq ft 25,619.62 275,770 19,584.11 210,803 1,966.96 21,172 4,944.53 53,223 52,115.22 560,968
		560,968

In addition, the property also comprise 1,186 basement car parking spaces of the Development. (As advised by Lai Fung, 230 basement car parking spaces among the 1,186 car parking spaces cannot be sold and will be leased on long-term basis).

The land use rights of the property have been granted for various terms with the last term expiring on 30 March 2075 for commercial/ residential uses.

– III-35 –

PROPERTY VALUATION OF THE LAI FUNG GROUP

APPENDIX III

Notes:

Pursuant to three State-owned Land Use Right Certificates Nos Zhong Fu Guo Yong (2004) Di 201494, (2011) Di 2000310 and (2011) Di 2000745 all issued by the People’s Government of Zhongshan, the title to portions of the Development with site areas of approximately 10,679.70 sq m, 12,902.60 sq m and 16,608.00 sq m respectively are all held by 中山市寶麗房地產發展有限公司 (Zhongshan Bao Li Properties Development Co. Ltd.) (“ Zhongshan Bao Li ”), a 100% owned subsidiary of Lai Fung for various terms expiring on 17 May 2074, 30 March 2075 and 23 October 2073 respectively for commercial/residential uses.
Pursuant to the Real Estate Title Certificate No Yue (2017) Zhongshan Shi Bu Dong Chan Quan Di 0294136, the title to the club house portion of the Development with a total gross floor area of 1,966.96 sq m is vested in Zhongshan Bao Li.
Pursuant to twenty seven Real Estate Title Certificates, the title to commercial portion of the Development with a total gross floor area of 16,875.23 sq m is vested in Zhongshan Bao Li.
Pursuant to two Real Estate Title Certificates Nos Yue (2017) Zhongshan Shi Bu Dong Chan Quan Di 0294133 and 0294136, the title to the residential (apartment) portion of the Development with a total gross floor area of 25,635.74 sq m is vested in Zhongshan Bao Li.
Pursuant to fifteen Real Estate Title Certificates, the title to residential (terrace house) portion of the Development with a total gross floor area of 21,183.72 sq m is vested in Zhongshan Bao Li.
Pursuant to two Real Estate Title Proof Nos 2013-011237 and 2013-011239, the title to the residential (terrace house) portion of the Development with a total gross floor area of 792.11 sq m is vested in Zhongshan Bao Li.
Pursuant to two Real Estate Title Certificates Nos Yue (2017) Zhongshan Shi Bu Dong Chan Quan Di 0294244 and 0090718, the title to 1,052 car parking spaces of the Development is vested in Zhongshan Bao Li.
Pursuant to the Real Estate Title Proof No 2013-011235, the title to 55 car parking spaces of the Development is vested in Zhongshan Bao Li.
Pursuant to the Business Licence with Unified Social Credit No 914420007480421393 dated 5 November 2015, Zhongshan Bao Li was established with an operation period from 17 April 2003 to 16 April 2053.
Pursuant to the Construction Work Completion Recording No Zhong Jian Yan Zi 2017 Nian Di 720 and 1121 dated 17 March 2017 and 25 April 2017 issued by the Zhongshan Housing and Urban and Rural Construction Bureau, the construction work of portion of the Development with a total gross floor area of 175,327.06 sq m is completed and recorded.
Pursuant to two Zhongshan Commodity Housing Pre-sale Permits Nos Zhong Jian Fang (Yu) Zi Di 2011346 and 2011445 both issued by the Zhongshan Housing and Urban and Rural Construction Bureau, pre-sale of portion of the Development with a total gross floor area of 46,807.03 sq m is permitted.
Pursuant to four Zhongshan Commodity Housing Pre-sale Permits Nos Zhong Jian Fang (Yu) Zi Di 2011269, 2012024, 2012023 and 2012029 all issued by the Zhongshan Housing and Urban and Rural Construction Bureau, pre-sale of portion of the Development with a total gross floor area of 27,756.91 sq m is permitted.
Pursuant to four Zhongshan Commodity Housing Pre-sale Permits Nos Zhong Jian Fang (Yu) Zi Di 2015103, 2015115, 2015119 and 2016181 all issued by the Zhongshan Housing and Urban and Rural Construction Bureau, pre-sale of portion of the Development with a total gross floor area of 107,887.80 sq m is permitted.
As advised by Lai Fung, residential (apartment) portion of the property with a total gross floor area of 121.38 sq m have been sold at a total consideration of RMB1,408,008 prior to the date of valuation. According to Lai Fung’s instruction, the title of the sold portion was still held by Zhongshan Bao Li as at the date of valuation and was thus included in this valuation. We have also made reference to the contracted consideration in the course of our valuation.
We have been provided with the Lai Fung Group’s PRC legal adviser’s opinion, which inter-alia, contains the following:
(i) Zhongshan Bao Li legally owns the property;
(ii) Except for the sold portion as mentioned in note (14), Zhongshan Bao Li can sell, lease or transfer the property according to the relevant laws and regulations; and
(iii) The property is free from mortgage and other encumbrances.

– III-36 –

APPENDIX III

PROPERTY VALUATION OF THE LAI FUNG GROUP

Property

Description and tenure

Particulars of occupancy

Market Value in existing state as at 31 May 2018

15 Unsold portions Dolce Vita (the “ Development ”) of Dolce Vita comprises an irregular-shaped site (Xunfeng with an area of approximately 298,938 Yujinsha Yuan) sq m (3,217,769 sq ft). Jinshazhou
Heng Sha The Development is a residential Baiyun District development developed in five Guangzhou phases with a total gross floor area Guangdong of approximately 507,167 sq m Province (5,459,146 sq ft) and comprises The PRC medium to high-rise apartments, terraced houses, semi-detached houses, commercial, school, kindergarten and car parking spaces.

As advised, the property is HK$73,200,000 currently vacant. (HONG KONG DOLLARS SEVENTY THREE MILLION AND TWO HUNDRED THOUSAND ONLY)

(47.5% interest attributable to the Lai Fung Group: HK$34,770,000)

The property comprises various unsold retail units of the Development with a total gross floor area of 1,747 sq m (18,805 sq ft) together with 60 car parking spaces completed in 2014 to 2017.

(please see note 5)

The land use rights of the Development have been granted for terms of 70 years for residential use, 40 years for commercial, tourist and entertainment uses and 50 years for other use commencing from 14 October 2008.

– III-37 –

PROPERTY VALUATION OF THE LAI FUNG GROUP

APPENDIX III

Notes:

Pursuant to the State-owned Land Use Right Certificate No Sui Fu Guo Yong (2008) Di 01100190 issued by the People’s Government of Guangzhou dated 17 October 2008, the title to portion of the Development, having a site area of 226,912.48 sq m, is held by Guangzhou Beautiwin Real Estate Development Co., Ltd. (“ Guangzhou Beautiwin ”, a 95% owned subsidiary of Beautiwin Limited (“ Beautiwin ”, a 50% owned joint venture of Lai Fung)) for land use rights terms of 70 years for residential use, 40 years for commercial, tourist and entertainment uses and 50 years for other use commencing from 14 October 2008.
Pursuant to the Business Licence No 440101400026872 dated 16 August 2011, Guangzhou Beautiwin was established with an operation period from 31 July 1998 to 31 July 2028.
Pursuant to two Real Estate Certificates No Sui (2017) Guangzhou Shi Bu Dong Chan Quan Zheng Di 00066699 and 00066700 both issued by the Guangzhou Land Resources and Real Estate Administration Bureau, the title to the retail portion of the property with a total gross floor area of approximately 1,746.50 sq m is vested in Guangzhou Beautiwin.
Pursuant to sixty Guangzhou Real Estate Title Certificates all issued by the Guangzhou Land Resources and Real Estate Administration Bureau, the title to the car park potion of the property is vested in Guangzhou Beautiwin.
As advised by Lai Fung, 2 car parking spaces of the property have been sold at a total consideration of RMB616,479 prior to the date of valuation. According to Lai Fung’s instruction, the title of the sold portion was still held by Guangzhou Beautiwin as at the date of valuation and were thus included in this valuation. We have also made reference to the contracted consideration in the course of our valuation.
We have been provided with the Lai Fung Group’s PRC legal adviser’s opinion, which inter-alia, contains the following:
(i) Guangzhou Beautiwin legally owns the property;
(ii) Except for the sold portion as mentioned in note (5), Guangzhou Beautiwin can sell, lease or transfer the property according to the relevant laws and regulations; and
(iii) The property is free from mortgage and other encumbrances.

– III-38 –

PROPERTY VALUATION OF THE LAI FUNG GROUP

APPENDIX III

Market Value in existing state as at Property Description and tenure Particulars of occupancy 31 May 2018 16 Unsold car Eastern Place (the “ Development ”) is The property is currently HK$22,900,000 parking spaces a large-scale commercial/residential vacant. (HONG KONG of Phase V of composite development developed by DOLLARS Eastern Place phases. TWENTY TWO 787 Dongfeng MILLION AND East Road The property comprises 21 basement NINE HUNDRED Yuexiu District car parking spaces of Phase V of the THOUSAND Guangzhou Development completed in 2015. ONLY) Guangdong Province The land use rights of the (100% interest The PRC Development have been granted for attributable terms of 70 years for residential use, to the Lai Fung 40 years for commercial, tourism and Group: entertainment uses and 50 years for HK$22,900,000) other use.

(please see note 10)

Notes:

Pursuant to the State-owned Land Use Right Certificate No Sui Fu Guo Yong (2003) Di 309 issued by the People’s Government of Guangzhou dated 30 October 2003, the title to portion of the Development with a site area of approximately 17,293.00 sq m is held by Guangzhou Grand Wealth Properties Ltd (“ Guangzhou Grand Wealth ”), a 100% owned subsidiary of Lai Fung, for land use rights terms of 70 years for residential use, 40 years for commercial, tourism and entertainment uses and 50 years for other use.
Pursuant to 20 Real Estate Title Certificates, the title to 20 car parking spaces of the property is vested in Guangzhou Grand Wealth.
Pursuant to the Contract for Grant of State-owned Land Use Right No Sui Guo Di Chu He (1997) 359 and its supplemental contracts all entered into between Guangzhou State Land Bureau (“ Party A ”) and Guangzhou Grand Wealth (“ Party B ”) dated 30 September 1997, 1 November 2000, 8 August 2008, 28 November 2013 and 12 January 2017 respectively, Party A agreed to grant the land use rights of portion of the land, comprising a site area of approximately 43,161 sq m to Party B. The said contract contains, inter-alia, the following salient conditions:

(i)	Use	:	Offce, residential and commercial
(ii)	Land use term	:	70 years for residential, 40 years of commercial, tourism and entertainment, 50 years
			for offce
(iii)	Total gross foor area	:	236,698.97 sq m
(iv)	Maximum height	:	36 storeys
(v)	Land grant fee	:	RMB198,831,203

Pursuant to the Business Licence No Wai S0102014007787 dated 12 July 2016, Guangzhou Grand Wealth was established with an operation period from 15 June 1994 to 15 June 2019.
Pursuant to the Construction Engineering Planning Permit No Sui Gui Jian Zheng (2011) 1415 issued by the Guangzhou Urban Planning Bureau dated 11 July 2011, portion of the Development with a total gross floor area of 35,846 sq m (above ground) and 22,979 sq m (below ground) is permitted to be constructed.

– III-39 –

APPENDIX III PROPERTY VALUATION OF THE LAI FUNG GROUP

Pursuant to the Construction Engineering Planning Permit No Sui Gui Jian Zheng (2012) 1660 issued by the Guangzhou Urban Planning Bureau dated 12 September 2012, portion of the Development with a total gross floor area of 70,505.9 sq m is permitted to be constructed.
Pursuant to the Construction Work Commencing Permit No 440101201206150101 dated 15 June 2012, portion of the Development with a total gross floor area of 58,825 sq m is permitted to be commenced.
Pursuant to the Construction Work Commencing Permit No 440101201304190101 dated 19 April 2013, portion of the Development with a total gross floor area of 70,505.9 sq m is permitted to be commenced.
Pursuant to the Co-operative Joint Venture Contract and eleven Supplemental Contracts all entered into between Guangzhou Light Industry Real Estate Development Company (formerly known as Guangzhou Yuexing Real Estate Development Company) (“ Party C ”) and Grand Wealth Ltd (“ Party D ”) dated 23 November 1993, 3 June 1996, 31 December 1996, 3 May 1997, 5 August 1997, 14 February 2006, 10 May 2006, 2 April 2007, 10 July 2008, 8 May 2009, 5 March 2014 and 15 January 2015 respectively, both parties agreed to establish a joint venture company named Guangzhou Grand Wealth Properties Limited. The said contracts contain, inter-alia, the following conditions:
(i) Total investment amount : HK$560,000,000
(ii) Registered capital : HK$280,000,000
(iii) Party D shall be responsible for the total investment amount as stipulated in the contract.
(iv) Party C shall be entitled to a gross floor area of 19,500 sq m whilst Party D shall be entitled to the remaining floor area of the Development and sale proceeds derived therefrom.
(v) The portion mentioned in 9 (iv) entitled by Party C comprises various units in the office tower of Phase V of Eastern Place with a total gross floor area of approximately 7,539.4 sq m.
(vi) Both parties agreed that instead of the property mentioned in note 9 (v) above, Gangjing Shangwulou, Nos 407 and 409 Yan Jiang Dong Road, Yuexiu District, Guangzhou with a total gross floor area of approximately 12,395 sq m shall be allocated to Party C.
As advised by Lai Fung, a car parking space of the property has been sold at a consideration of RMB1,000,000 prior to the date of valuation. According to Lai Fung’s instruction, the title of the sold portion was still held by Guangzhou Grand Wealth as at the date of valuation and were thus included in this valuation. We have also made reference to the contracted consideration in the course of our valuation.
We have been provided with the Lai Fung Group’s PRC legal adviser’s opinion, which inter-alia, contains the following:
(i) Guangzhou Grand Wealth legally owns the property;
(ii) Except for the sold portion as mentioned in note (10), Guangzhou Grand Wealth can sell, lease or transfer the property according to the relevant laws and regulations; and
(iii) The property is free from mortgage and other encumbrances.

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APPENDIX III PROPERTY VALUATION OF THE LAI FUNG GROUP

Group III — Property interest held by the Lai Fung Group in the PRC for owner occupation purpose

Property

Description and tenure

Particulars of occupancy

Market Value in existing state as at 31 May 2018

17 Commercial Eastern Place (the “ Development ”) is portion of a large-scale commercial/residential Eastern Place composite development developed by 787 Dongfeng phases. East Road Yuexiu District The property comprises a 3-level Guangzhou commercial block of the Development Guangdong with a total gross floor area of 4,042 Province sq m (43,508 sq ft) completed in 2000. The PRC Details of gross floor area breakdown are as follows:

Use Floor Retail 1 Retail 2 Offce 2 Club house 1-2 Others 1-3 Total:	Approximate Gross Floor Area sq m sq ft 235 2,529 552 5,942 874 9,408 2,358 25,381 23 248 4,042 43,508	Approximate Gross Floor Area sq m sq ft 235 2,529 552 5,942 874 9,408 2,358 25,381 23 248 4,042 43,508
		43,508

According to the information HK$55,000,000 provided, portion of the (HONG KONG property with a total gross DOLLARS floor area of approximately FIFTY FIVE 3,145 sq m is let under MILLION ONLY) various tenancies yielding a total monthly rental of (100% interest approximately RMB103,000 attributable with the last tenancy expiring to the Lai Fung on 31 December 2021 whilst Group: the remaining portion of the HK$55,000,000) property is for self-use or operated by the Lai Fung Group as a club house.

The land use rights of the property have been granted for a term of 50 years commencing from 30 September 1997 for composite use.

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PROPERTY VALUATION OF THE LAI FUNG GROUP

APPENDIX III

Notes:

Pursuant to the Guangzhou Real Estate Title Proof No A0001036 issued by the Guangzhou Land Resources and Real Estate Administration Bureau dated 8 June 2007, the title of the club house and basement car park portion of the Development with a total gross floor area of 12,369.26 sq m is vested in Guangzhou Grand Wealth Properties Ltd (“ Guangzhou Grand Wealth ”), a 100% owned subsidiary of Lai Fung, for a term of 50 years commencing from 30 September 1997 for composite use.
Pursuant to the Co-operative Joint Venture Contract and eleven Supplemental Contracts all entered into between Guangzhou Light Industry Real Estate Development Company (formerly known as Guangzhou Yuexing Real Estate Development Company) (“ Party A ”) and Grand Wealth Ltd (“ Party B ”) dated 23 November 1993, 3 June 1996, 31 December 1996, 3 May 1997, 5 August 1997, 14 February 2006, 10 May 2006, 2 April 2007, 10 July 2008, 8 May 2009, 5 March 2014 and 15 January 2015 respectively, both parties agreed to establish a joint venture company named Guangzhou Grand Wealth Properties Limited. The said contracts contain, inter-alia, the following conditions:
(i) Total investment amount : HK$560,000,000 (ii) Registered capital : HK$280,000,000
(iii) Party B shall be responsible for the total investment amount as stipulated in the contract.
(iv) Party A shall be entitled to a gross floor area of 19,500 sq m whilst Party B shall be entitled to the remaining floor area of the Development and sale proceeds derived therefrom.
(v) The portion mentioned in 2 (iv) entitled by Party A comprises various units in the office tower of Phase V of Eastern Place with a total gross floor area of approximately 7,539.4 sq m.
(vi) Both parties agreed that instead of the property mentioned in note 2 (v) above, Gangjing Shangwulou, Nos 407 and 409 Yan Jiang Dong Road, Yuexiu District, Guangzhou with a total gross floor area of approximately 12,395 sq m shall be allocated to Party A.
Pursuant to the Business Licence No Wai S0102014007787 dated 12 July 2016, Guangzhou Grand Wealth was established with an operation period from 15 June 1994 to 15 June 2019.
We have been provided with the Lai Fung Group’s PRC legal adviser’s opinion, which inter-alia, contains the following:
(i) Guangzhou Grand Wealth legally owns the property;
(ii) Guangzhou Grand Wealth can transfer the property provided that, inter alia, 1) prior to title transfer, there is a 15-day public notice within the Development; 2) no individual owners of the Development raise objection in the period of 15-day public notice; and 3) the nature of the property for club house use would not change;
(iii) Save as abovementioned, Guangzhou Grand Wealth can sell, lease or transfer the property according to the relevant laws and regulations; and
(iv) The property is free from mortgage and other encumbrances.

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APPENDIX III PROPERTY VALUATION OF THE LAI FUNG GROUP

Group IV — Property interests held under development by the Lai Fung Group in the PRC

Property

Description and tenure

Particulars of occupancy

Market Value in existing state as at 31 May 2018

18 A commercial The property comprises a parcel of development land with a site area of 9,961 sq m located at (107,220 sq ft). Tian Mu Road West and The property is planned to be Da Tong Road developed into a 33-storey office Jing’an District building erected upon a 3-level Shanghai commercial podium and three levels The PRC of car park basement with a total gross floor area of approximately 100,255 sq m (1,079,145 sq ft). The area details are listed as follows:

Use Offce Offce (transfer to government) Retail Other Car park (basement) Total:	Approximate Gross Floor Area sq m sq ft 55,688 599,426 5,392 58,039 8,749 94,174 6,636 71,430 23,790 256,076 100,255 1,079,145	Approximate Gross Floor Area sq m sq ft 55,688 599,426 5,392 58,039 8,749 94,174 6,636 71,430 23,790 256,076 100,255 1,079,145
		1,079,145

Foundation work of the HK$1,834,000,000 property is in progress and (HONG KONG the construction work of the DOLLARS property is scheduled to be ONE BILLION completed in the fourth quarter EIGHT of 2021. HUNDRED AND THIRTY FOUR MILLION ONLY)

(100% interest attributable to the Lai Fung Group: HK$1,834,000,000)

(please see notes 1, 7 and 8)

The land use rights of the property have been granted for terms of 40 years and 50 years from 30 September 2016 for commercial use and office use respectively.

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PROPERTY VALUATION OF THE LAI FUNG GROUP

APPENDIX III

Notes:

Pursuant to the Contract for Grant of Shanghai State-owned Construction Land Use Right No Hu Jing Gui Tu (2016) Chu Rang He Tong Bu Zi Di 15 (the “ Land Grant Contract ”) entered into between the Shanghai Jingan Planning, Land and Resources Administrative Bureau (“ Party A ”), Shanghai Hankey Real Estate Development Co Ltd (“ Shanghai Hankey ”) and Shanghai Zhabei Plaza Real Estate Development Co. Ltd (“ Shanghai Zhabei ”), 100% owned subsidiaries of Lai Fung (collectively referred to as “ Party B ”) dated 30 September 2016, Party A agreed to grant the land use rights of a parcel of land to Party B. The said contract contains, inter-alia, the following salient conditions:
(i) Total site area : 9,961.30 sq m (ii) Use : Commercial and office (iii) Land use term : 40 years for commercial use and 50 years for office use commencing from 30 September 2016
(iv) Plot ratio : 7.1 (above ground) (v) Total gross floor area : 70,557 sq m (above ground) (commercial gross floor area ≤ 20% and office gross floor area ≥ 80%) and 23,790 sq m (below ground)
(vi) Building height : Not exceeding 180 m (vii) Green area ratio : Not less than 20% of site area (viii) Land grant fee : RMB91,114,703.98 (ix) Interest : Shanghai Hankey: 46% Shanghai Zhabei: 54%
(x) Building covenant : Construction works should be commenced on or before 30 September 2017 and construction works should be completed on or before 29 September 2021
(xi) Remarks: : — portion of the office portion of the property with a total gross floor area of 5,392 sq m will be transferred to the government at nil consideration upon completion.
- office and commercial portion of the property must be held by Party B for self-operation for not less than 20 years from the date of real estate title registration.
- 150 basement car parking spaces of the property, upon completion, will be used by the government at nil rent.
Pursuant to the Real Estate Certificate No Hu (2017) Jing Zi Bu Dong Chan Quan Di 016752 issued by the Shanghai Real Estate Registration Bureau dated 25 September 2017, the land use rights of a site with site area of approximately 9,961 sq m have been granted to Shanghai Hankey and Shanghai Zhabei for a term of 40 years for commercial use and 50 years for office use commencing from 30 September 2016. The office and commercial portion of the property must be held by Party B for selfoperation for not less than 20 years from the date of real estate title registration.
Pursuant to the Business Licences Nos 00000002201707270023 and 00000002201707270021 dated 27 July 2017, Shanghai Hankey and Shanghai Zhabei were established with operation periods from 25 October 1993 to 24 October 2066 and from 12 September 1994 to 11 September 2067, respectively.
Pursuant to the Construction Land Use Planning Permit No Hu Jing Di (2016) EA31010620165117 issued by the Shanghai Planning and Land Resources Administration Bureau dated 1 December 2016, the proposed development of the property with a site areas of 9,961.3 sq m and a total gross floor area of 70,557 sq m was permitted to be developed.

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APPENDIX III PROPERTY VALUATION OF THE LAI FUNG GROUP

Pursuant to the Construction Engineering Planning Permit No Hu Jing Jian (2017) FA31010620174768 issued by the Shanghai Jiangan District Planning and Land Administration Bureau dated 27 July 2017, the proposed development of the property was permitted to be constructed.
Pursuant to the Construction Work Commencement Permit No 1702JA0113D01 issued by the Shanghai Jiangan District Construction and Management Committee dated 26 September 2017, piling work of the proposed development of the property was permitted to be commenced.
According to note 1 (xi) as mentioned above, portion of the office portion of the property with a total gross floor area of 5,392 sq m will be transferred to the government at nil consideration upon completion. In addition, 150 basement car parking spaces of the property, upon completion, will be used by the government at nil rent. In the course of our valuation, we have not opined any market value to such portions.
As advised by Lai Fung, the outstanding construction costs (including professional fees) and outstanding ancillary facilities cost of the property were approximately RMB1,004,000,000 and RMB80,200,000 respectively as at the date of valuation. Accordingly, we have taken into account the said costs in our valuation. In our opinion, the gross development value of the proposed developments of the property, assuming it were complete as at the valuation date, was estimated approximately as RMB3,092,000,000.
We have been provided with the Lai Fung Group’s PRC legal adviser’s opinion, which inter-alia, contains the following:
(i) Shanghai Hankey and Shanghai Zhabei legally own the land use right and construction works of the property;
(ii) Shanghai Hankey and Shanghai Zhabei can transfer, lease or mortgage the land use right and construction works of the property subject to the compliance of the Contract for Grant of Shanghai State-owned Construction Land Use Right as mentioned in note (1); and
(iii) The property is free from mortgage and other encumbrances.

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APPENDIX III

PROPERTY VALUATION OF THE LAI FUNG GROUP

Property

Description and tenure

Particulars of occupancy

Market Value in existing state as at 31 May 2018

19 Haizhu Plaza The property comprises an Chang Di Main irregular-shaped site with a site area Road of approximately 8,427 sq m Yuexiu District (90,708 sq ft). Guangzhou Guangdong The property is planned to be Province developed into an office/apartment The PRC development with approximate gross floor areas listed as follows:

Use Offce Apartment Retail Historical building Car park & facilities Total:	Approximate Gross Floor Area sq m sq ft 47,460 510,860 8,540 91,925 1,990 21,420 17,448 187,810 75,438 812,015	Approximate Gross Floor Area sq m sq ft 47,460 510,860 8,540 91,925 1,990 21,420 17,448 187,810 75,438 812,015
		812,015

The property is being occupied HK$1,540,000,000 by dilapidated buildings due to (HONG KONG be demolished. DOLLARS ONE BILLION FIVE HUNDRED AND FORTY MILLION ONLY)

(100% interest attributable to the Lai Fung Group: HK$1,540,000,000)

(please see note 5)

The land use rights of the property have been granted for terms of 40 years for commercial, tourism and entertainment uses and 50 years for other use.

Notes:

Pursuant to the Contract for Grant of State-owned Land Use Right No Sui Guo Di Chu He (97) 155 entered into between Guangzhou State Land Bureau (“ Party A ”) and Guangzhou Guang Bird Property Development Ltd (“ Guangzhou Guang Bird ”), a 100% owned subsidiary of Lai Fung (“ Party B ”) dated 29 April 1997, Party A agreed to grant the land use rights of the land to Party B. The said contract contains, inter-alia, the following salient conditions:

(i) Site area : 8,427 sq m (ii) Use : Commercial (iii) Land use term : 40 years for commercial, tourism and entertainment uses and 50 years for others use (iv) Plot ratio : 12.46 (v) Total gross floor area : 104,500 sq m (6,650 sq m for commercial use, 96,650 sq m for office use and 1,200 sq m for club house) (vi) Maximum/average height : 38 storeys (vii) Land grant fee : RMB56,108,811

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APPENDIX III PROPERTY VALUATION OF THE LAI FUNG GROUP

Pursuant to the Co-operative Joint Venture Contract and three Amendment Contracts all entered into between Guang Yuan Industry & Commerce Company Limited (“ Party C ”) and Nicebird Co., Ltd (“ Party D ”) dated 8 December 1992, 3 September 1996, 18 May 1997 and 29 April 2008 respectively and an approval letter No Sui Wai Jing Mao Zi Pi (2008) 177 dated 4 June 2008, both parties agreed to establish a joint venture company named Guangzhou Guang Bird Property Development Ltd. The salient conditions stipulated in the contract as amended by the Amendment Contracts are, inter-alia, as follows:
(i) Total investment amount : US$92,000,000
(ii) Registered capital : US$46,000,000
(iii) Period of operation : 20 years from the date of issue of business licence
(iv) Party C shall provide the land use rights of a plot of land with a site area of approximately 8,000 sq m whilst Party D shall contribute the entire amount of development fund including the land grant fee.
(v) Party C shall complete the demolition, resettlement, compensation and site leveling works before the end of March 1998.
(vi) After deducting the development costs, taxes and Party C’s investment capital and interest, the remaining profit will be distributed as to 20% for Party C and as to 80% for Party D.
Pursuant to two Amendment Contracts and a Resolution Agreement all entered into between Party C and Party D dated 22 January 2000, the salient conditions stipulated in the contracts and agreement are, inter-alia, as follows:
(i) Party C shall assist Guangzhou Guang Bird to resume the planned land use of the proposed development to commercial and high-end residential uses.
(ii) Party C shall assist Guangzhou Guang Bird to apply to relevant authority to reduce or exempt from the public facilities construction levy and composite development levy.
(iii) The completed building of the proposed development will be sold to domestic and overseas purchasers in the ratio of 80% and 20%. The board of directors can apply to relevant authority to adjust this ratio according to the market condition.
(iv) The income of Guangzhou Guang Bird for selling the building will be primarily to settle the investment costs and interests and any tax and levy. All remaining after-tax profit will be distributed to Party D.
Pursuant to the Business Licence No Wai S0102014005781 dated 8 July 2016, Guangzhou Guang Bird was established with an operation period from 18 September 1993 to 18 September 2023.
As advised by Lai Fung, the outstanding relocation cost and ancillary facilities cost of the property was approximately RMB98,300,000 as at the date of valuation. Accordingly, we have taken into account the said costs in our valuation.
According to the information provided by Lai Fung, the development is in preliminary planning stage and no estimated completion date of the proposed development can be provided for the time being.
We have been provided with the Lai Fung Group’s PRC legal adviser’s opinion, which inter-alia, contains the following:
(i) The Contract for Grant of State-owned Land Use Right is valid;
(ii) Guangzhou Guang Bird has no legal obstacles to obtaining State-owned Land Use Right Certificate in compliance with related legal procedures;
(iii) After obtaining the State-owned Land Use Right Certificate, Guangzhou Guang Bird can sell, lease or transfer the property according to the relevant laws and regulations; and
(iv) The property is free from mortgage and other encumbrances.

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APPENDIX III

PROPERTY VALUATION OF THE LAI FUNG GROUP

Property

Description and tenure

Particulars of occupancy

Market Value in existing state as at 31 May 2018

20 Remaining stage Palm Spring (the “ Development ”) is of Palm Spring a large-scale residential development Caihong Planning comprising four roughly rectangularArea shaped sites (namely plot A, B, C and Western District D) with a total area of approximately Zhongshan 236,649.80 sq m (2,547,298 sq ft). Guangdong Province The Development is planned to be The PRC developed by various stages with a total gross floor area of approximately 564,388 sq m (6,075,072 sq ft).

The property comprises the remaining stage of the Development with a proposed total gross floor area of 257,255 sq m (2,769,093 sq ft). The area details are listed as follows:

The property is currently under HK$1,540,300,000 construction and scheduled to (HONG KONG be completed in between the DOLLARS third quarter of 2020 to the ONE BILLION third quarter of 2022. FIVE HUNDRED FORTY MILLION AND THREE HUNDRED THOUSAND ONLY)

(100% interest attributable to the Lai Fung Group: HK$1,540,300,000)

(please see note 6)

Use Residential (apartment) Commercial Others Car park (basement) Total:	Approximate Gross Floor Area sq m sq ft 182,801 1,967,670 12,216 131,493 4,280 46,070 57,958 623,860 257,255 2,769,093	Approximate Gross Floor Area sq m sq ft 182,801 1,967,670 12,216 131,493 4,280 46,070 57,958 623,860 257,255 2,769,093
		2,769,093

The land use rights of the property have been granted for a term expiring on 30 March 2075 for commercial/ residential uses.

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PROPERTY VALUATION OF THE LAI FUNG GROUP

APPENDIX III

Notes:

Pursuant to two State-owned Land Use Right Certificates Nos Zhong Fu Guo Yong (2005) Di 200204 and Zhong Fu Guo Yong (2011) Di 2000311 both issued by the People’s Government of Zhongshan, the titles to portion of the Development with a site area of approximately 55,434.0 sq m and 31,614.9 sq m respectively are both held by 中山市寶麗房地產發展有限公司 (Zhongshan Bao Li Properties Development Co. Ltd.) (“ Zhongshan Bao Li ”), a 100% owned subsidiary of Lai Fung for a common term expiring on 30 March 2075 for commercial/residential uses.
Pursuant to the Business Licence with Unified Social Credit No 914420007480421393 dated 5 November 2015, Zhongshan Bao Li was established with an operation period from 17 April 2003 to 16 April 2053.
Pursuant to the Construction Land Use Planning Permit No De Zi Di 281222010030037(Bu) issued by the Zhongshan Planning Bureau dated 7 April 2010, portion of the Development with a site area of approximately 181,095.20 sq m was permitted to be developed.
Pursuant to two Construction Engineering Planning Permit No Jian Zi Di 281212017010039 and 281212017010038 both issued by the Zhongshan Urban and Rural Planning Bureau dated 19 June 2017, portion of the Development with a total gross floor area of approximately 272,347.90 sq m is permitted to be constructed.
Pursuant to two Construction Work Commencing Permits Nos 442000201712012201 and 442000201712051801 both issued by the Zhongshan Housing, Urban and Rural Construction Bureau dated 1 December 2017 and 5 December 2017 respectively, portion of the Development with a total gross floor area of 272,347.90 sq m is permitted to be commenced.
As advised by Lai Fung, the outstanding construction cost (including professional fee) of the proposed development of the property was approximately RMB969,500,000 as at the date of valuation. Accordingly, we have taken into account the said cost in our valuation. In our opinion, the gross development value of the proposed developments of the property, assuming it were complete as at the valuation date, was estimated approximately as RMB3,265,000,000.
We have been provided with the Lai Fung Group’s PRC legal adviser’s opinion, which inter-alia, contains the following:
(i) Zhongshan Bao Li legally owns the property;
(ii) Zhongshan Bao Li can sell, lease or transfer the property according to the relevant laws and regulations; and
(iii) The property is free from mortgage and other encumbrances.

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APPENDIX III

PROPERTY VALUATION OF THE LAI FUNG GROUP

Property

Description and tenure

Particulars of occupancy

Market Value in existing state as at 31 May 2018

21 Two parcels of The property comprises two parcels land located at of adjacent land located at the east the east side of side of Yiwener Road, south side of Yiwener Road, Caihong Road, west side of Tianyu south side of Road and north side of Hengqin Main Caihong Road, Road in Hengqin New Area of Zhuhai. west side of The total site area is approximately Tianyu Road 130,173.16 sq m. and north side of Hengqin Main The property is located at Hengqin Road New Area which is situated at the Hengqin southern part of Zhuhai. The locality New Area is mainly construction sites and is Zhuhai planned to be a tourist and leisure Guangdong area. It takes about 30 minutes to drive Province to the city centre of Zhuhai. The PRC

The property is currently under HK$5,808,000,000 construction and scheduled (HONG KONG to be completed in the fourth DOLLARS quarter of 2018. FIVE BILLION EIGHT HUNDRED AND EIGHT MILLION ONLY)

(80% interest attributable to the Lai Fung Group: HK$4,646,400,000)

(please see notes 11 and 12)

The property is planned to be developed into a comprehensive development including commercial, office, hotel, cultural development with a total plot ratio gross floor area of approximately 260,342.92 sq m (2,802,331 sq ft).

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PROPERTY VALUATION OF THE LAI FUNG GROUP

APPENDIX III

Property

Description and tenure

Particulars of occupancy

Market Value in existing state as at 31 May 2018

The area details are listed as follows:

	Approximate	Approximate
	Gross Floor Area
Use	sq m	sq ft
Offce	50,394.55	542,447
Offce/serviced apartment
(cultural workshop)	39,914.65	429,641
Retail
(cultural/commercial area)	48,666.15	523,843
Cultural
(cultural attractions)	26,593.00	286,247
Cultural
(performance halls)	15,605.91	167,982
Villa (cultural studios)	22,755.14	244,936
Hotel
(cultural themed hotel)	55,437.33	596,727
Sub-total:	259,366.73	2,791,823
Car park (below ground)	40,165.70	432,344
Car park (above ground)	13,980.18	150,483
Others	78,485.38	844,817
Total:	391,997.99	4,219,467

The land use rights of the property have been granted for terms of 40 years for office, commercial and servicing, hotel uses and 50 years for other uses commencing from 31 December 2013.

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APPENDIX III

Notes:

Pursuant to two Guangdong Province Real Estate Title Certificates Nos Yue Fang Di Quan Zheng Zhu Zi Di 0100244267 and 0100244268 both issued by the Zhuhai Real Estate Registration Centre dated 27 May 2014, the title to the property, having a total site area of 130,173.16 sq m, is held by 珠海橫琴麗新文創天地有限公司 (“ 珠海橫琴 ”), an 80% owned subsidiary of Lai Fung for land use rights terms of 40 years for office, commercial and servicing, hotel uses and 50 years for other uses commencing from 31 December 2013.
Pursuant to the Contract for Grant of State-owned Construction Land Use Right No. 440401-2013-000023 (the “ Land Grant Contract ”) entered into between the Land and Resources Bureau of Zhuhai (“ Party A ”) and Winfield Concept Limited (永輝基業有限公司) (“ Party B ”) dated 27 September 2013, Party A agreed to grant the land use rights of two parcels of land to Party B. The said contract contains, inter-alia, the following salient conditions:
(i) Total site area : 130,173.16 sq m (Land parcel 1: 93,137.04 sq m, Land parcel 2: 37,036.12 sq m) (ii) Use : Cultural/creative and commercial/servicing
(iii) Land use term : 50 years for cultural and creative uses and 40 years for commercial, office and hotel uses
(iv) Plot ratio : Not exceeding 2.0
(v) Total gross floor area : Not exceeding 260,346.32 sq m (Land parcel 1: 186,274.08 sq m, Land parcel 2: 74,072.24 sq m)
(vi) Building height : Not exceeding 100 m
(vii) Green area ratio : Not less than 30% of site area
(viii) Land grant fee : RMB523,296,103.2
(ix) Building covenant : Construction works should be commenced within twelve months since the handover of the land and construction works should be completed within forty eight months since the handover of the land
(x) Remarks: : — Gross floor areas allocation for commercial use and hotel and office uses should not be greater than 10% and 20% respectively whilst that for cultural use should not be less than 70%.
- Saleable gross floor area is restricted to 50% of total countable plot ratio gross floor area of the property.
Advised by Lai Fung, Party B is an 80% owned subsidiary of Lai Fung.
After signing of the Land Grant Contract, Winfield Concept Limited has established 珠海橫琴 with Business Licence No 440003490000497 dated 3 January 2014 and 珠海橫琴 has obtained two Guangdong Province Real Estate Title Certificates as mentioned in note 1.
Pursuant to the Construction Land Use Planning Permit No Zhu Heng Xin Gui Tu (Di Gui) (2014) 13 issued by the Zhuhai Hengqin New District Management Committee — Land & Planning Bureau dated 11 March 2014, the property with a total site area of 130,173.16 sq m was permitted to be developed.
Pursuant to five Construction Engineering Planning Permits Nos Zhu Heng Xin Gui Tu (Jian) (2016) 008, 009, 085, 086 and 087 all issued by Zhuhai Hengqin New District Management Committee — Land & Planning Bureau in 2016, portion of the property with a total gross floor area of 392,050.93 sq m is permitted to be constructed.
Pursuant to the Construction Work Commencing Permit No 440405201510270101 dated 5 August 2016 issued by Zhuhai Hengqin New District Management Committee — Construction and Environmental Bureau, construction works of portion of the property with a total gross floor area of 340,862.50 sq m is permitted to be commenced.
Pursuant to four Construction Work Commencing Permit No 440405201605240101, 440410201611180101, 440410201611170101 and 440405201609300301 all issued by Zhuhai Hengqin New District Management Committee — Construction and Environmental Bureau in 2016, construction works of portion of the property with a total gross floor area of 381,055.03 sq m is permitted to be commenced.

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APPENDIX III PROPERTY VALUATION OF THE LAI FUNG GROUP

Pursuant to the Construction Work Commencing Permit No 440405201803090101 dated 9 March 2018 issued by Zhuhai Hengqin New District Management Committee — Construction and Environmental Bureau, construction works of portion of the property with a total gross floor area of 8,623.48 sq m is permitted to be commenced.
Pursuant to the Zhuhai Commodity Housing Pre-sale Permit No HQS2017009 dated 7 December 2017, pre-sale of portion of the property with a total gross floor area of 18,342.35 sq m was permitted.
As advised by Lai Fung, the outstanding construction cost (including professional fee) of the property (excluding the cultural attractions portion) was approximately RMB1,985,400,000 as at the date of valuation. Accordingly, we have taken into account the said costs in our valuation. In our opinion, the gross development value of the proposed developments of the property (excluding the cultural attractions portion), assuming it were complete as at the valuation date, was estimated approximately as RMB7,597,000,000.
Due to the specific purpose for which the buildings and structures of cultural attractions portion of property no 21 which is held by the Lai Fung Group under development have been designed, there is no readily identifiable market comparable, we have thus valued the property by using Cost Approach. Our valuation is based on an estimate of the market value for the existing use of the land, plus the current Gross Replacement Cost of the improvements, less allowances for physical deterioration and all relevant forms of obsolescence and optimization, if any. We would define “Gross Replacement Cost” as the estimated cost of erecting the building or a modern substitute building having the same area as the existing building at price levels as at the valuation date. The estimated building cost includes professional fees and finance charges payable during the construction period and other associated expenses directly related to the construction of the building. We must state that cessation of the existing business (if any) would have significant impact on the market value of the property as derived by the Cost Approach. While the cultural attractions portion was under construction as at the date of the valuation, we relied upon the information including but not limited to the profit forecast of the cultural attractions provided that revenue of the cultural attractions will be able to sustain the future on-going operation.
We have been provided with the Lai Fung Group’s PRC legal adviser’s opinion, which inter-alia, contains the following:
(i) 珠海橫琴 legally owns the property;
(ii) As mentioned in note (2) (x), 50% of the total countable plot ratio gross floor area of the property is restricted for sale at the moment. 珠海橫琴 should hold such portion and has the right to lease such portion and to grant the lessee to sublease;
(iii) Portion of the property (including land and construction work) is subject to a mortgage and the mortgage is valid and enforceable;
(iv) Save as abovementioned, 珠海橫琴 can sell, lease or transfer the property according to the relevant laws and regulations and subject to approval from the mortgagee; and
(v) Except for the mortgage mentioned in note (13) (iii), the property is free from encumbrances.

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APPENDIX III

PROPERTY VALUATION OF THE LAI FUNG GROUP

Property

Description and tenure

Particulars of occupancy

Market Value in existing state as at 31 May 2018

22 A parcel of land The property comprises a parcel of located at land roughly rectangular in shape Wuliqiao Road located at the Wuliqiao Road in 104 Jie Fang Huangpu District of Shanghai. The Huangpu District total site area is approximately Shanghai 6,885.20 sq m. The PRC

The property is planned to be developed into a residential development with a total gross floor area of approximately 15,798.04 sq m (170,050 sq ft). The area details are as follows:

Use Residential Residential (basement) Residential (Indemnifcatory apartment) Club house (basement) Car park (basement) Others Total:	Approximate Gross Floor Area sq m sq ft 6,579.05 70,817 1,196.55 12,880 2,785.00 29,978 434.74 4,679 4,368.71 47,025 433.99 4,671 15,798.04 170,050	Approximate Gross Floor Area sq m sq ft 6,579.05 70,817 1,196.55 12,880 2,785.00 29,978 434.74 4,679 4,368.71 47,025 433.99 4,671 15,798.04 170,050
		170,050

The property is currently under HK$1,014,000,000 construction and scheduled (HONG KONG to be completed in the first DOLLARS quarter of 2019. ONE BILLION AND FOURTEEN MILLION ONLY)

(100% interest attributable to the Lai Fung Group: HK$1,014,000,000)

(please see notes 8 and 9)

The land use rights of the property have been granted for terms of 70 years for residential use expiring on 24 March 2085.

– III-54 –

PROPERTY VALUATION OF THE LAI FUNG GROUP

APPENDIX III

Notes:

Pursuant to the Shanghai Certificate of Real Estate Ownership Hu Fang Di Huang Zi (2015) Di 053145 issued by the Shanghai Housing and Land Resources Administration Bureau dated 23 September 2015, the land use rights of the property, having a site area of 6,885.2 sq m, is vested in 上海麗星房地產發展有限公司 (“ 上海麗星 ”), a 100% owned subsidiary of Lai Fung, for a land use rights term of 70 years for residential use commencing from 25 March 2015 and expiring on 24 March 2085.
Pursuant to the Business Licence No 00000002201511090064 dated 9 November 2015, 上海麗星 was established with an operation period from 16 September 2014 to 15 September 2064.
Pursuant to the Construction Land Use Planning Permit No Hu Gui Di (2015) EA31000020154388 issued by the Shanghai Planning and Land Resources Administration Bureau dated 23 April 2015, the property with a total site area of 6,885.20 sq m was permitted to be developed.
Pursuant to the Construction Engineering Planning Permit No Hu Jing Jian (2017) FA31000020174306 issued by the Shanghai Planning and Land Administration Bureau dated 31 March 2017, piling work of the proposed development of the property was permitted to be constructed.
Pursuant to the Construction Engineering Planning Permit No Hu Jing Jian (2017) FA31000020174766 issued by the Shanghai Planning and Land Administration Bureau dated 24 July 2017, the proposed development of the property with a total gross floor area of 15,798.04 sq m was permitted to be constructed.
Pursuant to the Construction Work Commencement Permit No 1601HP0003D01 issued by the Shanghai Housing and Rural & Urban Construction Management Committee dated 14 April 2017, piling work of the proposed development of the property was permitted to be commenced.
Pursuant to the Construction Work Commencement Permit No 1601HP0003D02 issued by the Shanghai Housing and Rural & Urban Construction Management Committee dated 16 August 2017, construction work of the proposed development of the property with a total gross floor area of 15,798.04 sq m was permitted to be commenced.
As advised by Lai Fung, residential portion of the property with a total gross floor area of 2,785 sq m will be transferred to the government as indemnificatory apartment upon completion without consideration. Therefore, in the course of our valuation of the aforesaid portion, we have only taken into account the construction cost while no value was assigned.
As advised by Lai Fung, the outstanding construction cost (including professional fee) of the property was approximately RMB152,800,000 as at the date of valuation and the outstanding ancillary facilities cost of the property was approximately RMB950,000 as at the date of valuation. Accordingly, we have taken into account the said costs in our valuation. In our opinion, the gross development value of the proposed developments of the property, assuming it were complete as at the valuation date, was estimated approximately as RMB1,144,000,000.
We have been provided with the Lai Fung Group’s PRC legal adviser’s opinion, which inter-alia, contains the following:
(i) 上海麗星 legally owns the building ownership and construction works of the property;
(ii) The property is subject to a mortgage and the mortgage is valid and enforceable;
(iii) 上海麗星 can sell, lease or transfer the land use right and construction works of the property according to the relevant laws and regulations and subject to approval from the mortgagee; and
(iv) Except for the mortgage mentioned in note (10) (ii), the property is free from encumbrances.

– III-55 –

APPENDIX III PROPERTY VALUATION OF THE LAI FUNG GROUP

Group V — Property interest held by the Lai Fung Group in Hong Kong for owner occupation purpose

Property

Description and tenure

Particulars of occupancy

Market Value in existing state as at 31 May 2018

23 20th Floor of May Tower II is a 26-storey centrally May Tower II air-conditioned apartment building and Car Parking surmounting a 3-storey carparking/ Space recreational podium completed in No 57 on 1992.
Ground Floor of May Towers I The property comprises an apartment and II unit within May Tower II with a gross Nos 5 and 7 floor area of approximately 315.22 May Road sq m (3,393 sq ft). The property also Mid-Levels comprises a covered car parking space Hong Kong on Ground Floor.

As advised, the property is HK$115,000,000 currently owner-occupied. (HONG KONG DOLLARS ONE HUNDRED AND FIFTEEN MILLION ONLY)

(100% interest attributable to the Lai Fung Group: HK$115,000,000)

35/2,480th shares The property is held from the of and in Government under a Government Inland Lot Lease and Conditions of Extension No 1772 and the No 6018 for a term of 75 years Extension thereto commencing from 8 April 1907 renewable for a further term of 75 years. The Government Rent payable for the whole lot and the extension is HK$140,400 per annum.

Notes:

The registered owner of the property is South Hill Limited, a 100% owned subsidiary of Lai Fung.
The property lies within an area zoned “Residential (Group B)” under Mid-Levels West Outline Zoning Plan No S/H11/15 as at the date of valuation.
The property was subject to the following encumbrances:
i. Occupation Permit vide memorial no UB5225592 dated 12 March 1992.
ii. Deed of Mutual Covenant and Management Agreement in favour of Kerry Real Estate Agency Limited “The Manager” vide memorial no UB5247138 dated 30 March 1992.
iii. Permission Letter with plan (Re from District Lands Officer, Hong Kong West and South) vide memorial no 08042101880013 dated 19 March 2008.

– III-56 –

GENERAL INFORMATION OF LSD AND THE OFFEROR

APPENDIX IV

1. RESPONSIBILITY STATEMENT

The issue of this Lai Fung Composite Document has been approved by the LSD Directors, who jointly and severally accept full responsibility for the accuracy of the information contained in this Lai Fung Composite Document (other than that relating to the Lai Fung Group) and confirm, having made all reasonable enquiries, that to the best of their knowledge, opinions expressed in this Lai Fung Composite Document (other than those expressed by the Lai Fung Group or the Lai Fung Directors) have been arrived at after due and careful consideration and there are no other facts not contained in this Lai Fung Composite Document the omission of which would make any statement in this Lai Fung Composite Document misleading.

The issue of this Lai Fung Composite Document has been approved by the Offeror Directors, who jointly and severally accept full responsibility for the accuracy of the information contained in this Lai Fung Composite Document (other than that relating to the Lai Fung Group) and confirm, having made all reasonable enquiries, that to the best of their knowledge, opinions expressed in this Lai Fung Composite Document (other than those expressed by the Lai Fung Group or the Lai Fung Directors) have been arrived at after due and careful consideration and there are no other facts not contained in this Lai Fung Composite Document the omission of which would make any statement in this Lai Fung Composite Document misleading.

2. DISCLOSURES OF INTERESTS IN LAI FUNG’S SECURITIES

For the purpose of paragraphs 2 and 3 in this Appendix IV to this Lai Fung Composite Document, “interested” has the same meaning as ascribed to that term in Part XV of the SFO.

As at the Latest Practicable Date, save as disclosed in section 10 “Shareholding structure of Lai Fung” in the “Letter from HSBC” in this Lai Fung Composite Document:

(a) the Offeror did not own any Lai Fung Shares, Lai Fung Options or convertible securities, warrants, options or derivatives in respect of Lai Fung Shares;
(b) no Offeror Director was interested in any Lai Fung Shares, Lai Fung Options or convertible securities, warrants, options or derivatives in respect of Lai Fung Shares; and
(c) no Offeror Concert Party owned or controlled any Lai Fung Shares, Lai Fung Options or convertible securities, warrants, options or derivatives in respect of Lai Fung Shares.

3. DEALINGS IN LAI FUNG’S SECURITIES

During the Relevant Period, none of the Offeror, the Offeror Directors or the Offeror Concert Parties had dealt for value in any Lai Fung Shares, Lai Fung Options or convertible securities, warrants, options or derivatives in respect of Lai Fung Shares.

– IV-1 –

GENERAL INFORMATION OF LSD AND THE OFFEROR

APPENDIX IV

4. ARRANGEMENTS IN CONNECTION WITH THE OFFERS

As at the Latest Practicable Date,

(a) none of the Lai Fung Directors had been given any benefit as compensation for loss of office or otherwise in connection with the Lai Fung Offers;
(b) no agreement, arrangement or understanding (including any compensation arrangement) existed between the Offeror or any Offeror Concert Parties and any of the Lai Fung Directors or recent Lai Fung Directors, Lai Fung Shareholders or recent Lai Fung Shareholders having any connection with or was dependent upon the outcome of the Lai Fung Offers;
(c) no arrangement of the kind referred to in Note 8 to Rule 22 of the Takeovers Code had been entered into between the Offeror or any Offeror Concert Parties and any other person;
(d) no person who owned or controlled Lai Fung Shares, Lai Fung Options or convertible securities, warrants, options or derivatives in respect of Lai Fung Shares had irrevocably committed themselves to accept or reject the Lai Fung Offers;
(e) there were no Lai Fung Shares, Lai Fung Options or convertible securities, warrants, options or derivatives in respect of Lai Fung Shares which the Offeror or any Offeror Concert Parties had borrowed or lent, save for borrowed securities (if any) which have been either on-lent or sold; and
(f) Since the Lai Fung Offers are unconditional in all respects, there was no agreement or arrangement to which the Offeror was a party which related to the circumstances in which it might or might not invoke or seek to invoke a condition to the Lai Fung Offers; and
(g) the Offeror had no intention to transfer, charge or pledge any Lai Fung Shares acquired pursuant to the Lai Fung Offers to any other persons and had no agreement, arrangement or understanding with any third party to do so.

– IV-2 –

GENERAL INFORMATION OF LSD AND THE OFFEROR

APPENDIX IV

5. MISCELLANEOUS

(a) The Offeror is a company incorporated in Hong Kong with limited liability and is a wholly-owned subsidiary of LSD. The address of the registered office of the Offeror is 11/F., Lai Sun Commercial Centre, 680 Cheung Sha Wan Road, Kowloon, Hong Kong.
(b) The Offeror Board comprises four directors, namely Dr. Lam Kin Ngok, Peter and Messrs. Chew Fook Aun, Lau Shu Yan, Julius and Lam Hau Yin, Lester.
(c) LSD is a company incorporated in Hong Kong with limited liability. The address of the registered office of LSD is 11th Floor, Lai Sun Commercial Centre, 680 Cheung Sha Wan Road, Kowloon, Hong Kong.
(d) The LSD Board comprises four executive directors, namely Dr. Lam Kin Ngok, Peter (Chairman) and Messrs. Chew Fook Aun (Deputy Chairman), Lau Shu Yan, Julius (Chief Executive Officer) and Lam Hau Yin, Lester; two non-executive directors, namely Dr. Lam Kin Ming and Madam U Po Chu; and four independent non-executive directors, namely Messrs. Lam Bing Kwan, Leung Shu Yin, William, Ip Shu Kwan, Stephen and Leung Wang Ching, Clarence.
(e) The registered office of HSBC is situated at 1 Queen’s Road Central, Hong Kong.

– IV-3 –

GENERAL INFORMATION OF LAI FUNG

APPENDIX V

1. RESPONSIBILITY STATEMENT

This Lai Fung Composite Document includes particulars given in compliance with the Takeovers Code for the purpose of giving information with regard to the Lai Fung Group.

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

2. SHARE CAPITAL OF LAI FUNG

As at the Latest Practicable Date:

(a) the authorised share capital of Lai Fung was HK$2,000,000,000 divided into 400,000,000 Lai Fung Shares;
(b) the issued share capital of Lai Fung was approximately HK$1,635,220,670 divided into 327,044,134 Lai Fung Shares;
(c) A total of 1,342,400 Lai Fung Shares had been issued since 31 July 2017, being the end of the last financial year of Lai Fung;
(d) all of the Lai Fung Shares ranked pari passu in all respects as regards rights to capital, dividends and voting;
(e) there were 10,234,117 Lai Fung Options. As set out in the table setting out the exercise price applicable to each Lai Fung Option in the section headed “The Lai Fung Option Offer and the Lai Fung Option Offer Price” in the “Letter from HSBC” in this Lai Fung Composite Document, if any Lai Fung Option is vested and is exercised in accordance with the terms of the Lai Fung Share Option Schemes prior to the Lai Fung Share Offer Closing Date, any Lai Fung Shares issued as a result of the exercise of such Lai Fung Options prior to the Lai Fung Share Offer Closing Date will be subject to and eligible to participate in the Lai Fung Share Offer.

– V-1 –

GENERAL INFORMATION OF LAI FUNG

APPENDIX V

(f) other than the Lai Fung Options, there are no other options, derivatives, warrants or other securities convertible or exchangeable into Lai Fung Shares which were issued by LSD, the Offeror or Lai Fung.

3. MARKET PRICES

The table below sets out the closing price of the Lai Fung Shares on the Stock Exchange on (i) the last Business Day of each of the calendar months during the Relevant Period; (ii) the Last Trading Date; and (iii) the Latest Practicable Date:

	Closing price
Date	for each Lai Fung Share
	(HK$)
2017
30 November	12.82
29 December	13.10
2018
31 January	13.02
28 February	12.62
29 March	12.60
30 April	11.72
25 May (Last Trading Date)	12.50
31 May	13.10
29 June	12.22
31 July	10.94
10 August (Latest Practicable Date)	10.32

During the Relevant Period, the highest closing price of Lai Fung Shares as quoted on the Stock Exchange was HK$13.68 per Lai Fung Share on 26 January 2018 and the lowest closing price of Lai Fung Shares as quoted on the Stock Exchange was HK$10.32 per Lai Fung Share on 10 August 2018.

– V-2 –

GENERAL INFORMATION OF LAI FUNG

APPENDIX V

4. DISCLOSURES OF INTERESTS

For the purpose of this paragraph, “interested” and “interests” have the same meanings as ascribed to those terms in Part XV of the SFO.

(i) Interests and short positions in the securities of Lai Fung and its associated corporations of the directors and chief executive of Lai Fung

As at the Latest Practicable Date, the interests or short positions of the directors and the chief executives of Lai Fung in the shares, underlying shares and debentures of Lai Fung and its associated corporations (within the meaning of Part XV of the SFO) which are required (a) to be notified to Lai Fung and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO); (b) pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (c) pursuant to the Model Code for Securities Transactions by Directors of Listed Companies contained in the Listing Rules, to be notified to Lai Fung and the Stock Exchange, were as follows:

(A) Lai Fung

Long positions in Lai Fung Shares and underlying Lai Fung Shares

Name of director or chief executive of Lai Fung Capacity Mr. FA Chew Benefcial owner/ Owner of controlled corporation Mr. Lester Lam Benefcial owner Mr. Cheng Shin How Benefcial owner Mr. Lee Tze Yan, Ernest Benefcial owner	Number of Lai Fung Shares Personal Corporate interests interests Nil 600,000 (Note 3) Nil Nil Nil Nil Nil Nil	Number of underlying Approximate Lai Fung percentage of Shares total issued Personal Lai Fung interests Total Shares (Note 1) (Note 2) 1,009,591 1,609,591 0.49% (Note 4) 3,219,182 3,219,182 0.98% (Note 4) 643,836 643,836 0.20% (Note 4) 640,000 640,000 0.20% (Note 4)

Notes:

The number of underlying Lai Fung Shares comprised in and the exercise price of the outstanding Lai Fung Options have been adjusted as a result of the Lai Fung Share Consolidation.
The percentage has been compiled based on the total number of issued Lai Fung Shares as at the Latest Practicable Date (i.e. 327,044,134 Lai Fung Shares).
These Lai Fung Shares are held by The Orchid Growers Association Limited, the entire issued share capital of which was beneficially owned by Mr. FA Chew as at the Latest Practicable Date.

– V-3 –

GENERAL INFORMATION OF LAI FUNG

APPENDIX V

On 12 June 2012, Lai Fung granted under its share option scheme adopted on 21 August 2003 (as amended on 8 August 2018) an option of which 1,009,591 underlying Lai Fung Shares remained outstanding to Mr. FA Chew, an executive Lai Fung Director and the chairman of Lai Fung, at the exercise price of HK$6.65 per Lai Fung Share (subject to adjustments) with an exercise period from 12 June 2012 to 11 June 2020. On 18 January 2013, Lai Fung granted under its share option scheme adopted on 18 December 2012 (i) an option comprising 3,219,182 underlying Lai Fung Shares to Mr. Lester Lam, an executive Lai Fung Director and the chief executive officer of Lai Fung, at the exercise price of HK$11.40 per Lai Fung Share (subject to adjustments) with an exercise period from 18 January 2013 to 17 January 2023; (ii) an option comprising 643,836 underlying Lai Fung Shares to Mr. Cheng Shin How, an executive Lai Fung Director, at the exercise price of HK$11.40 per Lai Fung Share (subject to adjustments) with an exercise period from 18 January 2013 to 17 January 2023; and (iii) an option comprising 640,000 underlying Lai Fung Shares to Mr. Lee Tze Yan, Ernest, an executive Lai Fung Director, at the exercise price of HK$11.40 per Lai Fung Share (subject to adjustments) with an exercise period from 18 January 2013 to 17 January 2023.

(B) Lai Fung’s associated corporation — eSun

Long positions in eSun Shares and underlying eSun Shares

Name of director of Lai Fung Capacity Mr. Lester Lam Benefcial owner	Number of eSun Shares Personal interests 2,794,443	Number of underlying Approximate eSun Shares percentage of Personal total issued interests Total eSun Shares (Note 1) 12,432,121 15,226,564 1.02% (Note 2)

Notes:

The percentage has been compiled based on the total number of issued eSun Shares as at the Latest Practicable Date (i.e. 1,491,854,598 eSun Shares).
A share option was granted by eSun to Mr. Lester Lam on 18 January 2013 to subscribe for a total of 12,432,121 eSun Shares at an exercise price of HK$1.612 per eSun Share during the period from 18 January 2013 to 17 January 2023.

– V-4 –

GENERAL INFORMATION OF LAI FUNG

APPENDIX V

(ii) Interests of substantial shareholders of Lai Fung

As at the Latest Practicable Date, so far as it is known by or otherwise notified by any director or the chief executive of Lai Fung, the particulars of the corporations or individuals who had 5% or more interests in the following long positions in the shares and underlying shares of Lai Fung as recorded in the register required to be kept by Lai Fung pursuant to Section 336 of the SFO or were entitled to exercise, or control the exercise of, 10% or more of the voting power at any general meeting of Lai Fung (i.e. within the meaning of substantial shareholders of the Listing Rules) were as follows:

(A) Long position in the Lai Fung Shares

				Approximate
				percentage of
			Number of	total issued
		Nature of	Lai Fung	Lai Fung
Name	Capacity	interests	Shares	Shares
				(Note 1)
Substantial Shareholders
eSun	Owner of controlled	Corporate	165,485,406	50.60%
	corporations		(Note 2)
LSD	Owner of controlled	Corporate	165,485,406	50.60%
	corporations		(Note 2)
LSG	Owner of controlled	Corporate	165,485,406	50.60%
	corporations		(Note 2)
Lam Kin Ngok, Peter	Owner of controlled	Corporate	165,485,406	50.60%
	corporations		(Note 3)
Merit Worth Limited (“MWL”)	Benefcial owner and	Corporate	165,485,406	50.60%
	owner of controlled		(Note 4)
	corporation
Silver Glory Securities Limited	Benefcial owner	Corporate	77,780,773	23.78%
(“SGS”)			(Note 4)
CapitaLand China Holdings Pte Ltd	Owner of controlled	Corporate	64,400,000	19.69%
(“CapitaLand China”)	corporation		(Note 5)
CapitaLand China Investments Limited	Owner of controlled	Corporate	64,400,000	19.69%
(“CapitaLand Investments”)	corporations		(Note 5)

– V-5 –

GENERAL INFORMATION OF LAI FUNG

APPENDIX V

				Approximate
				percentage of
			Number of	total issued
		Nature of	Lai Fung	Lai Fung
Name	Capacity	interests	Shares	Shares
				(Note 1)
Substantial Shareholders
CapitaLand LF (Cayman) Holdings	Benefcial owner	Corporate	64,400,000	19.69%
Co., Ltd. (“CapitaLand Cayman”)
CapitaLand Limited	Owner of controlled	Corporate	64,400,000	19.69%
	corporations		(Note 5)
Temasek Holdings (Private) Limited	Owner of controlled	Corporate	64,400,000	19.69%
(“Temasek”)	corporations		(Note 5)
Other Persons
Third Avenue Management LLC	Investment manager	Corporate	23,941,600	7.32%
			(Note 6)
Third Avenue Management LLC,	Benefcial owner	Corporate	23,941,600	7.32%
on behalf of Whitman High			(Note 6)
Conviction Fund
Yu Cheuk Yi	Benefcial owner	Personal	26,595,837	8.1322%
			(Note 7)
Yu Siu Yuk	Benefcial owner	Personal	26,595,837	8.1322%
			(Note 7)

Notes:

The percentage has been compiled based on the total number of issued Lai Fung Shares as at the Latest Practicable Date (i.e. 327,044,134 Lai Fung Shares).
These interests in Lai Fung represented all the Lai Fung Shares beneficially owned by MWL (87,704,633 Lai Fung Shares or approximately 26.82% of the total issued Lai Fung Shares) and SGS (77,780,773 Lai Fung Shares or approximately 23.78% of the total issued Lai Fung Shares), both being wholly-owned subsidiaries of eSun as at the Latest Practicable Date. As at the Latest Practicable Date, eSun was owned as to approximately 36.94% by LSD which in turn was owned as to approximately 56.10% by LSG. As such, both LSD and LSG were deemed to be interested in the same 165,485,406 Lai Fung Shares held by eSun.
Dr. Lam Kin Ngok, Peter was deemed to be interested in the same 165,485,406 Lai Fung Shares held by eSun by virtue of his personal and deemed interests in approximately 41.87% (excluding share option) of the issued share capital of LSG.

– V-6 –

GENERAL INFORMATION OF LAI FUNG

APPENDIX V

As at the Latest Practicable Date, SGS was wholly owned by MWL which in turn was wholly owned by eSun. Therefore, MWL was deemed to be interested in the 77,780,773 Lai Fung Shares held by SGS and eSun was deemed to be interested in the 165,485,406 Lai Fung Shares held and deemed to be held by MWL.
These interests in Lai Fung represented the Lai Fung Shares beneficially owned by CapitaLand Cayman which was wholly owned by CapitaLand China which in turn was wholly owned by CapitaLand Investments while CapitaLand Investments was wholly owned by CapitaLand Limited, as at the Latest Practicable Date. Temasek was deemed to be interested in the same 64,400,000 Lai Fung Shares held by CapitaLand Cayman by virtue of its approximate 39.99% interest in the issued share capital of CapitaLand Limited.
Third Avenue Management LLC, on behalf of Whitman High Conviction Fund, held 23,941,600 Lai Fung Shares (after the effect of the Lai Fung Share Consolidation, as at the Latest Practicable Date).
Based on the public disclosure form filed with the SFC for an event on 29 June 2018, as at the Latest Practicable Date, Mr. Yu Cheuk Yi and Ms. Yu Siu Yuk were both taken to be interested in the same 26,595,837 Lai Fung Shares which were held jointly by them.

(B) Long position in the underlying Lai Fung Shares

			Approximate
		Number of	percentage of
		underlying	total issued
Name	Capacity	Lai Fung Shares	Lai Fung Shares
			(Note 1)
Lam Kin Ngok, Peter Benefcial Owner		321,918	0.10%
		(Note 2)

Notes:

The percentage has been compiled based on the total number of issued Lai Fung Shares as at the Latest Practicable Date (i.e. 327,044,134 Lai Fung Shares).
On 18 January 2013, Lai Fung granted under its share option scheme adopted on 18 December 2012 an option comprising 321,918 underlying Lai Fung Shares to Dr. Lam Kin Ngok, Peter at the exercise price of HK$11.40 per Lai Fung Share (subject to adjustments) with an exercise period from 18 January 2013 to 17 January 2023. The number of underlying Lai Fung Shares comprised in and the exercise price of the outstanding Lai Fung Option has been adjusted as a result of the Lai Fung Share Consolidation.

– V-7 –

GENERAL INFORMATION OF LAI FUNG

APPENDIX V

Confirmations

Except as disclosed in this section headed “Disclosures of Interests” in this Appendix V, as at the Latest Practicable Date:

(a) neither Lai Fung nor any of the Lai Fung Directors was interested in the shares of the Offeror or any convertible securities, warrants, options or derivatives in respect of the shares of the Offeror;
(b) none of the Lai Fung Directors was interested in any Lai Fung Shares or any convertible securities, warrants, options or derivatives in respect of Lai Fung Shares;
(c) no subsidiary of Lai Fung, or any pension fund of Lai Fung or of any other member of the Lai Fung Group or any person who is presumed to be acting in concert with Lai Fung by virtue of class (5) of the definition of “acting in concert” under the Takeovers Code or who was an associate of Lai Fung by virtue of class (2) of the definition of “associate” under the Takeovers Code (excluding exempt principal traders and exempt fund managers) owned or controlled any Lai Fung Shares or any convertible securities, warrants, options or derivatives in respect of Lai Fung Shares;
(d) neither Lai Fung nor any person who is presumed to be acting in concert with Lai Fung by virtue of classes (1), (2), (3) and (5) of the definition of “acting in concert” under the Takeovers Code or who was an associate of Lai Fung by virtue of classes (2), (3) and (4) of the definition of “associate” under the Takeovers Code had an arrangement of the kind referred to in Note 8 to Rule 22 of the Takeovers Code with any person;
(e) none of the non-exempt discretionary fund managers and principal traders connected with Lai Fung owned or controlled any Lai Fung Shares or any convertible securities, warrants, options or derivatives in respect of Lai Fung Shares;
(f) neither Lai Fung nor any of the Lai Fung Directors had borrowed or lent any Lai Fung Shares or any convertible securities, warrants, options or derivatives in respect of Lai Fung Shares;
(g) As at the Latest Practicable Date, save as disclosed in the paragraph headed “4. Disclosures of Interests — (i) Interests and short positions in the securities of Lai Fung and its associated corporations of the directors and chief executive of Lai Fung” above, none of the Lai Fung Directors held any beneficial shareholdings in Lai Fung which would otherwise entitle them to accept or reject the Lai Fung Share Offer or the Lai Fung Option Offer.

– V-8 –

GENERAL INFORMATION OF LAI FUNG

APPENDIX V

5. DEALINGS IN SHARES OF THE OFFEROR, LAI FUNG SHARES AND LAI FUNG OPTIONS

During the Relevant Period:

(a) neither Lai Fung nor any Lai Fung Director had dealt for value in any shares of the Offeror or any convertible securities, warrants, options or derivatives in respect of the shares of the Offeror; and
(b) none of the Lai Fung Directors had dealt for value in any Lai Fung Shares or any convertible securities, warrants, options or derivatives in respect of Lai Fung Shares.

During the Lai Fung Offer Period and up to the Latest Practicable Date:

(a) no subsidiary of Lai Fung, or any pension fund of Lai Fung or of any other member of the Lai Fung Group or any person who was presumed to be acting in concert with Lai Fung by virtue of class (5) of the definition of “acting in concert” under the Takeovers Code or who was an associate of Lai Fung by virtue of class (2) of the definition of “associate” under the Takeovers Code (excluding exempt principal traders and exempt fund managers) had dealt for value in any Lai Fung Shares or any convertible securities, warrants, options or derivatives in respect of Lai Fung Shares; and
(b) none of the non-exempt discretionary fund managers and principal traders connected with Lai Fung had dealt for value in any Lai Fung Shares or any convertible securities, warrants, options or derivatives in respect of Lai Fung Shares.

6. LAI FUNG DIRECTORS’ SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Lai Fung Directors had any existing or proposed service contract with Lai Fung or any of its subsidiaries or associated companies which (i) (including both continuous and fixed term contracts) had been entered into or amended within 6 months before the date of the commencement of the Lai Fung Offer Period; or (ii) was a continuous contract with a notice period of 12 months or more; or (iii) was a fixed term contract with more than 12 months to run irrespective of the notice period; or (iv) was not determinable by the employer within one year without payment of compensation (other than statutory compensation).

7. MATERIAL LITIGATION

As at the Latest Practicable Date, none of the members of the Lai Fung Group were engaged in any litigation, arbitration or claim of material importance, and no litigation, arbitration or claim of material importance is known to the Lai Fung Directors to be pending or threatened by or against any member of the Lai Fung Group.

– V-9 –

GENERAL INFORMATION OF LAI FUNG

APPENDIX V

8. MATERIAL CONTRACTS

The following material contracts (not being contracts entered into in the ordinary course of business) had been entered into by the Lai Fung Group after the date of two years before the Announcement Date and up to and including the Latest Practicable Date:

(a) a cooperation agreement dated 1 June 2017 entered into between Zhuhai Hengqin Laisun Creative Culture City Co. Ltd. (珠海橫琴麗新文創天地有限公司) (“ ZH ”) (a company owned as to 20% by eSun and 80% by Lai Fung) and Trans-Island Limousine Service Limited (環島旅運有限公司) (“ Trans-Island* ”) to develop cross-border bus services, whereby ZH shall lease a retail space with gross floor area of approximately 119.37 square metres in Phase I of the Novotown project at a monthly rental rate of RMB67 per square metre to Trans-Island as customer service centre together with six bus parking spaces for its provision of the aforementioned cross-border bus services, and Trans-Island shall provide the cross-border bus services and other tourist services as set out in the cooperation agreement;
(b) a licence agreement dated 30 June 2017 entered into between Fortunate Century Limited (“ Fortunate Century ”) (a wholly-owned subsidiary of Lai Fung) (as the licensee) and Real Madrid Club de Futbol (“ Real Madrid ”) (as the licensor) in relation to the development and operation of a location based entertainment centre (“ Real Madrid LBE ”) which is planned to be launched in Phase II of the Novotown project, subject to the successful acquisition of the relevant Phase II lands by Lai Fung for the Novotown project, whereby Real Madrid shall license its licensed intellectual property rights to Fortunate Century in return for payments, largely in the form of royalties against various revenue streams of the Real Madrid LBE payable on a yearly basis (subject to adjustments pursuant to the terms of the licence agreement);
(c) a cooperation agreement dated 22 November 2017 (as supplemented) entered into between Supreme Motion Limited (“ Supreme Motion ”) (a wholly-owned subsidiary of Lai Fung), Harrow International (China) Management Services Limited (“ HICMS ”) and ILA Holdings Limited (“ ILA ”) in relation to the setting up of the Innovation Leadership Academy Hengqin (“ School ”) in Phase II of the Novotown project, subject to, among other things, the successful acquisition of the relevant Phase II lands by Lai Fung for the Novotown project, whereby Supreme Motion shall acquire the relevant land use right and develop the relevant land for the setting up of the School (“ Development ”) and HICMS and ILA shall pay Supreme Motion the total costs and expenses incurred by it for the Development in annual instalment of 7% of the gross revenue of the School and/ or such other amounts as may be paid by HICMS and ILA pursuant to the cooperation agreement; and

* For identification purposes only

– V-10 –

GENERAL INFORMATION OF LAI FUNG

APPENDIX V

(d) a subscription agreement dated 10 January 2018 entered into between Lai Fung, Lai Fung Bonds (2018) Limited (a wholly-owned subsidiary of Lai Fung) (“ Lai Fung Bonds ”), LSD and the joint lead managers (being DBS Bank Ltd., The Hongkong and Shanghai Banking Corporation Limited, Oversea-Chinese Banking Corporation Limited and UBS AG Hong Kong Branch) in relation to the issue and distribution of the 5.65% guaranteed notes due 2023 in the principal amount of US$350,000,000 to be issued by Lai Fung Bonds.

9. QUALIFICATION OF EXPERTS

The following are the qualifications of each of the experts who have been named in this Lai Fung Composite Document or who have given their opinion or advice, which is contained in this Lai Fung Composite Document:

Name

Qualification

HSBC

a registered institution under the SFO, registered to carry on Type 1 (dealing in securities), Type 2 (dealing in futures contracts), Type 4 (advising on securities), Type 5 (advising on futures contracts), Type 6 (advising on corporate finance) and Type 9 (asset management) regulated activities under the SFO and a licensed bank under the Banking Ordinance (Chapter 155 of the Laws of Hong Kong)

Gram Capital a licensed corporation to carry out Type 6 (advising on corporate finance) regulated activity under the SFO

Knight Frank chartered surveyors and valuers

10. CONSENTS

Each of the experts named in the section headed “Qualifications of Experts” above has given and has not withdrawn its written consent to the issue of this Lai Fung Composite Document with the inclusion therein of the opinions, reports and/or letters and/or the references to its name and/or opinions, reports and/or letters in the form and context in which they respectively appear.

– V-11 –

GENERAL INFORMATION OF LAI FUNG

APPENDIX V

11. MISCELLANEOUS

(a) As at the Latest Practicable Date, none of the existing Lai Fung Directors had been given any benefit as compensation for loss of office or otherwise in connection with the Lai Fung Offers.
(b) As at the Latest Practicable Date, there was no agreement or arrangement between any Lai Fung Director and any other person which was conditional on or dependent upon the outcome of the Lai Fung Offers or otherwise connected with the Lai Fung Offers.
(c) As at the Latest Practicable Date, there was no material contract entered into by the Offeror or LSD in which any of the Lai Fung Directors has a material personal interest.
(d) The registered office of Lai Fung is P.O. Box 309, Ugland House, Grand Cayman, KY11104, Cayman Islands. The head office and principal place of business of Lai Fung in Hong Kong is 11th Floor, Lai Sun Commercial Centre, 680 Cheung Sha Wan Road, Kowloon, Hong Kong.
(e) The principal share registrar of Lai Fung is SMP Partners (Cayman) Limited, Royal Bank House – 3rd Floor, 24 Shedden Road, P.O. Box 1586, Grand Cayman, KY1-1110, Cayman Islands.
(f) The Hong Kong branch share registrar and transfer office of Lai Fung is Tricor Tengis Limited at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong.
(g) As at the Latest Practicable Date, the board of the Lai Fung comprised (a) seven executive directors, namely Mr. Chew Fook Aun (Chairman), Dr. Lam Kin Ming (Deputy Chairman), Mr. Lam Kin Hong, Matthew (Executive Deputy Chairman), Mr. Lam Hau Yin, Lester (Chief Executive Officer), Mr. Cheng Shin How, Mr. Lee Tze Yan, Ernest, and Madam U Po Chu, (b) two non-executive directors, namely, Mr. Lucas Ignatius Loh Jen Yuh and Mr. Puah Tze Shyang (also alternate to Mr. Lucas Ignatius Loh Jen Yuh), and (c) five independent non-executive directors, namely Mr. Ku Moon Lun, Mr. Lam Bing Kwan, Mr. Law Kin Ho, Mr. Mak Wing Sum, Alvin and Mr. Shek Lai Him, Abraham.
(h) The company secretary of Lai Fung is Ms. Yim Lai Wa, who is an associate member of The Hong Kong Institute of Chartered Secretaries and The Institute of Chartered Secretaries and Administrators.
(i) The principal place of business of Gram Capital is Room 1209, 12/F., Nan Fung Tower, 173 Des Voeux Road Central, Central, Hong Kong.

– V-12 –

GENERAL INFORMATION OF LAI FUNG

APPENDIX V

12. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection (i) at the office of Lai Fung located at 11th Floor, Lai Sun Commercial Centre, 680 Cheung Sha Wan Road, Kowloon, Hong Kong during the business hours (i.e. from 9:30 a.m. to 12:30 p.m. and from 2:30 p.m. to 5:30 p.m.) on any weekday (Saturdays and public holidays excepted) unless (a) a tropical cyclone warning signal number 8 or above is hoisted; or (b) a black rainstorm warning signal is issued, (ii) on the website of Lai Fung at www.laifung.com and (iii) the website of the SFC at www.sfc.hk from 15 August 2018 until the earlier of: (1) the Lai Fung Share Offer Closing Date; and (2) the date on which the Lai Fung Offers are withdrawn or lapse, whichever is the earliest:

(a) the memorandum and articles of association of the Offeror;
(b) the amended and restated memorandum and articles of association of Lai Fung;
(c) the annual report of Lai Fung for the year ended 31 July 2016;
(d) the annual report of Lai Fung for the year ended 31 July 2017;
(e) the interim report of Lai Fung for the six months ended 31 January 2018;
(f) the “Letter from HSBC”, the text of which is set out on pages 9 to 23 of this Lai Fung Composite Document;
(g) the Lai Fung Option Offer Letter, the text of which is set out on pages VI-1 to VI-6 of this Lai Fung Composite Document;
(h) the “Letter from the Lai Fung Board”, the text of which is set out on pages 24 to 28 of this Lai Fung Composite Document;
(i) the “Letter from the Lai Fung Independent Board Committee”, the text of which is set out on pages 29 and 31 of this Lai Fung Composite Document;
(j) the “Letter from the Lai Fung Independent Financial Adviser”, the text of which is set out on pages 32 to 43 of this Lai Fung Composite Document;
(k) the written consents referred to in the section headed “Consents” in this Appendix V to this Lai Fung Composite Document;
(l) the material contracts referred to in the section headed “Material Contracts” in this Appendix V to this Lai Fung Composite Document; and
(m) the property valuation report of the Lai Fung Group (including the valuation certificates) prepared by Knight Frank, which is set out in “Appendix III — Property Valuation of the Lai Fung Group” to this Lai Fung Composite Document.

– V-13 –

FORM OF LAI FUNG OPTION OFFER LETTER

APPENDIX VI

The following is the form of the Lai Fung Option Offer Letter being sent to the Lai Fung Optionholders in connection with the Lai Fung Option Offer.

==> picture [114 x 35] intentionally omitted <==

15 August 2018

To the Lai Fung Optionholders

Dear Sir or Madam,

OPTION OFFER

IN RELATION TO THE UNCONDITIONAL MANDATORY GENERAL CASH OFFER BY THE HONGKONG AND SHANGHAI BANKING CORPORATION LIMITED ON BEHALF OF THE OFFEROR, A WHOLLY-OWNED SUBSIDIARY OF LAI SUN DEVELOPMENT COMPANY LIMITED, TO ACQUIRE ALL OF THE ISSUED SHARES OF LAI FUNG HOLDINGS LIMITED (OTHER THAN THOSE ALREADY OWNED OR AGREED TO BE ACQUIRED BY LAI SUN DEVELOPMENT COMPANY LIMITED, THE OFFEROR, eSUN HOLDINGS LIMITED OR THEIR RESPECTIVE SUBSIDIARIES) AND TO CANCEL ALL THE OUTSTANDING SHARE OPTIONS OF LAI FUNG HOLDINGS LIMITED

A composite offer and response document dated the same date as this letter jointly issued by Lai Sun Development Company Limited (“ LSD ”), Transtrend Holdings Limited (the “ Offeror ”) and Lai Fung Holdings Limited (“ Lai Fung ”) (the “ Lai Fung Composite Document ”) is enclosed with this letter. Terms used but not defined in this letter shall have the same meanings and construction as in the Lai Fung Composite Document. This letter should be read in conjunction with the Lai Fung Composite Document and the PINK Form of Lai Fung Option Offer Acceptance.

LSG, LSD, the Offeror, eSun and Lai Fung issued a joint announcement dated 27 May 2018 (the “ Joint Announcement ”) which stated that, among others, HSBC, on behalf of the Offeror, a wholly owned subsidiary of LSD, intended to make a possible unconditional voluntary cash offer to acquire all of the Lai Fung Offer Shares. As stated in the Joint Announcement, as part of the Lai Fung Offers, the Offeror would make an appropriate offer, namely the Lai Fung Option Offer, to the Lai Fung Optionholders for the cancellation of all outstanding Lai Fung Options in accordance with Rule 13 of the Takeovers Code. The Lai Fung Offers, including the Lai Fung Option Offer, were subject to the pre-condition of the eSun Share Offer becoming or being declared unconditional in all respects. On 8 August 2018, the eSun Share Offer became unconditional in all respects. The Lai Fung Option Offer is now being made on the terms of this letter.

This letter explains the actions you may take in relation to your outstanding Lai Fung Options. You are advised to refer to the Lai Fung Composite Document and the PINK Form of Lai Fung Option Offer Acceptance when considering them.

Your attention is also drawn to the terms and conditions of the Lai Fung Share Option Schemes.

– VI-1 –

FORM OF LAI FUNG OPTION OFFER LETTER

APPENDIX VI

TERMS OF THE LAI FUNG OPTION OFFER

In accordance with Rule 13 of the Takeovers Code and on behalf of the Offeror, we are making the Lai Fung Option Offer to you at the Lai Fung Option Offer Price in cash for the cancellation of every Lai Fung Option, whether vested or unvested, pursuant to Rule 13 of the Takeovers Code.

The Lai Fung Option Offer Price represents the “see-through” price of the outstanding Lai Fung Options (being the Lai Fung Share Offer Price minus the exercise price of the relevant Lai Fung Option) for the cancellation of each Lai Fung Option, whether vested or unvested, provided that if the exercise price of any Lai Fung Option is equal to or greater than the Lai Fung Share Offer Price (such that the “see-through” price is zero or negative), the Lai Fung Option Offer Price will be a nominal amount of HK$0.01 for every 100 Lai Fung Options (or, if lesser, any part thereof).

		Number of Lai Fung Options as at
Lai Fung	Lai Fung Option Offer Price	the Latest Practicable Date
Option exercise price	per Lai Fung Share	(each carrying the right to	Exercise period of
per Lai Fung Share	(unless otherwise indicated)	subscribe for one new Lai Fung Share)	the Lai Fung Options
(HK$)	(HK$)		(dd/mm/yyyy)
6.650	0.01 for every 100 Lai Fung Options	1,009,591	12/06/2012 to
	(or, if lesser, any part thereof)		11/06/2020
8.000	0.01 for every 100 Lai Fung Options	180,000	16/01/2015 to
	(or, if lesser, any part thereof)		15/01/2025
9.500	0.01 for every 100 Lai Fung Options	220,000	26/07/2013 to
	(or, if lesser, any part thereof)		25/07/2023
11.400	0.01 for every 100 Lai Fung Options	8,374,526	18/01/2013 to
	(or, if lesser, any part thereof)		17/01/2023
13.520	0.01 for every 100 Lai Fung Options	450,000	19/01/2018 to
	(or, if lesser, any part thereof)		18/01/2028

– VI-2 –

FORM OF LAI FUNG OPTION OFFER LETTER

APPENDIX VI

As disclosed in the “Expected Timetable” in the Lai Fung Composite Document, the first possible Latest Lai Fung Option Exercise Date (being the first Lai Fung Share Offer Closing Date) is Thursday, 13 September 2018. Further announcement(s) will be made in the event that there is any change to the Latest Lai Fung Option Exercise Date.

All payments in respect of the Lai Fung Option Offer Price will be made by cheques in Hong Kong dollars (unless otherwise agreed between the Offeror and the relevant Lai Fung Optionholder(s)).

You are further advised to refer to section 13 “Overseas Lai Fung Shareholders and Lai Fung Optionholders” and section 20 “Taxation and independent advice” in the “Letter from HSBC” in the Lai Fung Composite Document, and section 4 “Nominee Registration” in “Appendix I — Further Terms of the Lai Fung Offers” to the Lai Fung Composite Document.

Your attention is drawn to the “Letter from the Lai Fung Independent Board Committee” to the Disinterested Lai Fung Shareholders and the Lai Fung Optionholders set out in the Lai Fung Composite Document and the “Letter from the Lai Fung Independent Financial Adviser” set out in the Lai Fung Composite Document, which contain the recommendations of the Lai Fung Independent Board Committee and of the Lai Fung Independent Financial Adviser, respectively, in relation to the Lai Fung Offers.

COURSES OF ACTION AVAILABLE TO THE LAI FUNG OPTIONHOLDERS

In summary, the choices available to you in respect of your outstanding Lai Fung Options are:

(a) to the extent any of your outstanding Lai Fung Options (whether vested or unvested) is not exercised on or prior to the Latest Lai Fung Option Exercise Date, you may accept the Lai Fung Option Offer in accordance with its terms (as set out in the Lai Fung Composite Document and the PINK Form of Lai Fung Option Offer Acceptance) and receive the Lai Fung Option Offer Price, by allowing such unexercised outstanding Lai Fung Options to remain unexercised on the Latest Lai Fung Option Exercise Date, and returning, duly completed and signed, the PINK Form of Lai Fung Option Offer Acceptance enclosed together with the relevant document(s) as soon as possible and in any event by no later than 4:00 p.m. (Hong Kong time) on the Lai Fung Share Offer Closing Date;
(b) you may in accordance with the terms of the Lai Fung Share Option Schemes exercise all of your outstanding vested Lai Fung Options (to the extent not already exercised) or only some of them to the extent specified in your notice of exercise, by submitting a notice of exercise of Lai Fung Options to the company secretary of Lai Fung at any time after the date of this letter (being 15 August 2018) and up to the Latest Lai Fung Option Exercise Date. Any Lai Fung Shares issued as a result of the exercise of such outstanding Lai Fung Options as mentioned above will be subject to and eligible to participate in the Lai Fung Share Offer. Please refer to the Lai Fung Composite Document for the details of the Lai Fung Offers in this regard; or

– VI-3 –

FORM OF LAI FUNG OPTION OFFER LETTER

APPENDIX VI

(c) do nothing, in which case your unexercised outstanding Lai Fung Options (whether vested or unvested) will remain valid and exercisable during their respective option periods in accordance with the terms of the relevant Lai Fung Share Option Scheme notwithstanding the Lai Fung Share Offer and you will not receive the Lai Fung Option Offer Price.

Each outstanding Lai Fung Option you hold is independent and you should make a separate decision for each one.

For further details, please refer to the remaining sections of this letter, the Lai Fung Composite Document, the PINK Form of Lai Fung Option Offer Acceptance and the terms and conditions of the Lai Fung Share Option Schemes.

LAPSED LAI FUNG OPTIONS

Please note that nothing in this letter or the Lai Fung Composite Document serves to extend the life of a Lai Fung Option which lapses, will lapse, or has already lapsed under the terms of the Lai Fung Share Option Schemes. You cannot exercise or accept the Lai Fung Option Offer in respect of a Lai Fung Option once it lapses in accordance with its terms.

PROFESSIONAL ADVICE

The information provided in this letter is intended to give you factual details on which to base your decision as to the action you wish to take.

If you are in any doubt as to any aspect of this letter, the Lai Fung Composite Document or as to the action to be taken, you should consult your licensed securities dealer or registered institution in securities, a bank manager, solicitor, professional accountant or other professional adviser.

GENERAL

(a) All communications, notices, the PINK Form of Lai Fung Option Offer Acceptance, cheques, certificates and other documents of any nature, if delivered by or sent to or from you as a Lai Fung Optionholder or your designated agents by post, shall be posted at your own risk, and none of LSG, LSD, the Offeror, eSun, Lai Fung or HSBC and any of their respective directors, the Registrar and other parties involved in the Lai Fung Offers and any of their respective agents accepts any liability for any loss or delay in postage or any other liabilities that may arise as a result thereof.
(b) The provisions set out in the Lai Fung Composite Document and the PINK Form of Lai Fung Option Offer Acceptance form part of the terms of the Lai Fung Option Offer.
(c) The Lai Fung Option Offer and all acceptances will be governed by and construed in accordance with the laws of Hong Kong.

– VI-4 –

FORM OF LAI FUNG OPTION OFFER LETTER

APPENDIX VI

(d) The due execution of a PINK Form of Lai Fung Option Offer Acceptance in respect of the Lai Fung Option Offer will constitute an authority to the Offeror, HSBC or such person(s) as any of them may direct (i) to complete on behalf of the accepting Lai Fung Optionholder the PINK Form of Lai Fung Option Offer Acceptance and any other document(s) and (ii) to do any other act that may be necessary or expedient for the purpose of cancelling all rights of the Lai Fung Optionholders in respect of the outstanding Lai Fung Options which are the subject of such acceptance.
(e) By completing the PINK Form of Lai Fung Option Offer Acceptance in respect of a particular outstanding Lai Fung Option, you irrevocably authorise the Offeror, HSBC and/or their respective agents to send a cheque for collection at the office of Lai Fung in Hong Kong specified in the Lai Fung Composite Document.

ACTIONS TO BE TAKEN FOR ACCEPTING THE LAI FUNG OPTION OFFER

In order to accept the Lai Fung Option Offer, you must deliver the duly completed and signed PINK Form of Lai Fung Option Offer Acceptance together with the relevant certificate(s), document(s) of title or entitlement in respect of the Lai Fung Options, and/or any other document(s) (if applicable) evidencing the grant of the Lai Fung Options to you (and/or any satisfactory indemnity or indemnities required in respect thereof) for your holding of Lai Fung Options (or if applicable, for not less than the number of Lai Fung Options in respect of which you intend to accept the Lai Fung Option Offer), by post or by hand, to the company secretary of Lai Fung at 11th Floor, Lai Sun Commercial Centre, 680 Cheung Sha Wan Road, Kowloon, Hong Kong marked “Lai Fung Holdings Limited — Lai Fung Option Offer” on the envelope so as to reach the company secretary of Lai Fung as soon as possible but in any event by no later than 4:00 p.m. (Hong Kong time) on the Lai Fung Share Offer Closing Date or such later time(s) and/or date(s) as the Offeror may determine and announce in accordance with the Takeovers Code.

Before delivering the PINK Form of Lai Fung Option Offer Acceptance to the company secretary of Lai Fung, please ensure that you have signed the PINK Form of Lai Fung Option Offer Acceptance and that your signature has been witnessed.

Payment of the Lai Fung Option Offer Price is expected to be made within seven (7) Business Days following the date of receipt of the duly completed PINK Form of Lai Fung Option Offer Acceptance and all relevant document(s) by the company secretary of Lai Fung to render such acceptance, surrender and cancellation under the Lai Fung Option Offer valid.

No acknowledgment of receipt of any PINK Form of Lai Fung Option Offer Acceptance and/or Lai Fung Options relevant certificate(s) (if applicable) and/or any other document(s) evidencing the grant of the outstanding Lai Fung Options and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) will be given.

– VI-5 –

FORM OF LAI FUNG OPTION OFFER LETTER

APPENDIX VI

RESPONSIBILITY STATEMENTS

The directors of LSD jointly and severally accept full responsibility for the accuracy of the information contained in this letter (other than that relating to the Lai Fung Group) and confirm, having made all reasonable enquiries, that to the best of their knowledge, opinions expressed in this letter (other than those expressed by the Lai Fung Group or the Lai Fung Directors) have been arrived at after due and careful consideration and there are no other facts not contained in this letter the omission of which would make any statement in this letter misleading.

The directors of the Offeror jointly and severally accept full responsibility for the accuracy of the information contained in this letter (other than that relating to the Lai Fung Group) and confirm, having made all reasonable enquiries, that to the best of their knowledge, opinions expressed in this letter (other than those expressed by the Lai Fung Group or the Lai Fung Directors) have been arrived at after due and careful consideration and there are no other facts not contained in this letter the omission of which would make any statement in this letter misleading.

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

Yours faithfully, For and on behalf of The Hongkong and Shanghai Banking Corporation Limited Che Ning Liu Co-Head of Global Banking, Asia-Pacific

The Hongkong and Shanghai Banking Corporation Limited is a registered institution under the SFO, registered to carry on Type 1 (dealing in securities), Type 2 (dealing in futures contracts), Type 4 (advising on securities), Type 5 (advising on futures contracts), Type 6 (advising on corporate finance) and Type 9 (asset management) regulated activities under the SFO and a licensed bank under the Banking Ordinance (Chapter 155 of the Laws of Hong Kong).

– VI-6 –

AI assistant

IRC Limited — M&A Activity 2018

49636_rns_2018-08-14_b22b8d15-70d1-4c08-bbc0-a3c0242656d6.pdf

Transtrend Holdings Limited

COMPOSITE OFFER AND RESPONSE DOCUMENT

Independent Financial Adviser to the Lai Fung Independent Board Committee

CONTENTS

NEED HELP?

EXPECTED TIMETABLE

Event

Hong Kong Time

Notes:

EXPECTED TIMETABLE

Effect of bad weather on the latest time for acceptance of the Lai Fung Offers and/or the latest date for despatch of cheques

NOTICE TO U.S. HOLDERS OF LAI FUNG SHARES AND/OR LAI FUNG OPTIONS

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

1. INTRODUCTION TO THE LAI FUNG OFFERS

2. THE LAI FUNG SHARE OFFER

3. THE LAI FUNG SHARE OFFER PRICE

LETTER FROM HSBC

4. HIGHEST AND LOWEST CLOSING PRICES OF LAI FUNG SHARES

5. THE LAI FUNG OPTION OFFER AND THE LAI FUNG OPTION OFFER PRICE

LETTER FROM HSBC

6. UNCONDITIONAL LAI FUNG OFFERS

7. VALUE OF THE LAI FUNG OFFERS

8. PUBLIC FLOAT OF LAI FUNG

9. LAI FUNG INDEPENDENT BOARD COMMITTEE AND LAI FUNG INDEPENDENT FINANCIAL ADVISER

10. SHAREHOLDING STRUCTURE OF LAI FUNG

LETTER FROM HSBC

LETTER FROM HSBC

LETTER FROM HSBC

11. EFFECT OF ACCEPTING THE LAI FUNG SHARE OFFER

12. HONG KONG STAMP DUTY

13. OVERSEAS LAI FUNG SHAREHOLDERS AND LAI FUNG OPTIONHOLDERS

14. SETTLEMENT OF CONSIDERATION

15. DEALINGS AND INTERESTS IN LAI FUNG SHARES AND DERIVATIVES OF LAI FUNG

16. INFORMATION ON LSD AND THE OFFEROR

17. REASON FOR THE LAI FUNG OFFERS

18. INTENTIONS OF LSD WITH REGARD TO THE LAI FUNG GROUP

19. CONFIRMATION OF FINANCIAL RESOURCES

20. TAXATION AND INDEPENDENT ADVICE

21. FURTHER TERMS OF THE LAI FUNG OFFERS

22. GENERAL

LETTER FROM HSBC

23. ADDITIONAL INFORMATION

1. INTRODUCTION

2. LAI FUNG INDEPENDENT BOARD COMMITTEE AND LAI FUNG INDEPENDENT FINANCIAL ADVISER

3. THE LAI FUNG OFFERS

Lai Fung Share Offer:

Lai Fung Option Offer:

4. VALUE OF THE LAI FUNG OFFERS

5. REASON FOR THE LAI FUNG OFFERS

6. INTENTIONS OF LSD WITH REGARD TO THE LAI FUNG GROUP

7. INFORMATION ON LSD AND THE OFFEROR

8. INFORMATION ON THE LAI FUNG GROUP

9. PUBLIC FLOAT OF LAI FUNG

10. ADDITIONAL INFORMATION

11. RECOMMENDATIONS

INTRODUCTION

RECOMMENDATIONS

Yours faithfully, The Lai Fung Independent Board Committee Lai Fung Holdings Limited

Ku Moon Lun

UNCONDITIONAL MANDATORY GENERAL CASH OFFER BY HSBC ON BEHALF OF THE OFFEROR

INTRODUCTION

BASIS OF OUR OPINION

PRINCIPAL FACTORS AND REASONS CONSIDERED

(1) Background and terms of the Lai Fung Offers

The Lai Fung Share Offer

The Lai Fung Option Offer

(2) Financial information on the Lai Fung Group

(3) Information on the Offeror and LSD

(4) Intentions of LSD with regard to the Lai Fung Group

IRC Limited M&A Activity 2018