IRC Limited — Proxy Solicitation & Information Statement 2014

Jul 18, 2014

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION.

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

If you have sold or transferred all your shares in Lai Sun Development Company Limited , you should at once hand this circular to the purchaser(s) or transferee(s), or to the licensed securities dealer, registered institutions in securities, bank or other agent through whom the sale or transfer was effected for transmission to the purchaser(s) or the transferee(s).

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

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MAJOR TRANSACTIONS IN RELATION TO THE (1) PROVISION OF GUARANTEE (2) PROVISION OF SHARE CHARGE AND ASSIGNMENT OF SHAREHOLDER’S LOAN AND

(3) GRANT OF OPTIONS

A letter from the Board is set out on pages 7 to 17 of this circular.

21 July 2014

CONTENTS

	Page
Definitions.................................................................................................................................	1
Letter from the Board.............................................................................................................	7
Appendix I – Financial information of the Group..................................................	18
Appendix II – General information............................................................................	22

This circular in both English and Chinese is available in printed form and published on the respective websites of the Company at “http://www.laisun.com” and Hong Kong Exchanges and Clearing Limited at “http://www.hkexnews.hk”. The English version will prevail in case of any inconsistency between the English and the Chinese versions of this circular.

– i –

DEFINITIONS

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

• “Announcement”

• the joint announcement issued by LSG and the Company dated 27 June 2014;

• “Assignment of Shareholder’s Loan”

• the agreement on the assignment of the shareholder’s loan owed to Baicross by Diamond Path entered into between Baicross as assignor and Dragon Dynasty as assignee dated 27 June 2014;

• “Baicross”

• Baicross Limited, a company incorporated under the laws of the British Virgin Islands with limited liability, a wholly-owned subsidiary of the Company;

• “Baicross Call Option”

• has the meaning as defined under the paragraph headed “Shareholders’ Agreement, Dragon Dynasty Call Option and Dragon Dynasty Capitalisation Right” in the section headed “Letter from the Board” in this circular;

• “Baicross Capitalisation Right”

• has the meaning as defined under the paragraph headed “Shareholders’ Agreement, Dragon Dynasty Call Option and Dragon Dynasty Capitalisation Right” in the section headed “Letter from the Board” in this circular;

• “Bank Guarantee”

• the guarantee given by the Company under the Facility Agreement;

• “Bank Loan”

• the term loan facility in the principal amount of up to HK$1,940,000,000 to be granted by the Lenders to Strongly under the Facility Agreement;

• “Bilateral Facility Agreement”

• the facility agreement dated 27 June 2014 made between Strongly as borrower, Dragon Dynasty as guarantor, the Bilateral Lender and Hang Seng as facility agent and security agent in respect of the Bilateral Loan;

• “Bilateral Lender”

China Construction Bank (Asia) Corporation Limited;

– 1 –

DEFINITIONS

• “Bilateral Loan” the HK$1,940,000,000 uncommitted term loan facility to be made available to Strongly by the Bilateral Lender under the Bilateral Facility Agreement. The Bilateral Loan bears interest at a rate equal to the basic interest rate of 1.7% plus HIBOR per annum, and is to be repaid in full in one lump sum on the date falling 48 months from the date of the Bilateral Facility Agreement or six months after the issuance of certificate of compliance pertaining to the Project, whichever is earlier;

• “Board” the board of Directors;

• “close associate(s)” has the meaning ascribed thereto in Rule 1.01 of the Listing Rules;

• “Company” Lai Sun Development Company Limited (麗新發展有限公司), a company incorporated in Hong Kong with limited liability, the issued shares of which are listed and traded on the Main Board of the Stock Exchange (Stock Code: 488);

• “connected person(s)” has the meaning ascribed thereto in Rule 1.01 of the Listing Rules;

• “control” a person shall be deemed to “control” another person if such first person possesses, directly or indirectly, the power to direct, or cause the direction of, the management and policies of such other person, whether through the ownership of voting securities, by contract or otherwise, and “controlled” shall be interpreted accordingly;

• “controlling shareholder” has the meaning ascribed thereto in Rule 1.01 of the Listing Rules;

• “Diamond Path”

• Diamond Path Limited, a company incorporated under the laws of the British Virgin Islands with limited liability, which is owned as to 50% by Baicross and 50% by Dragon Dynasty respectively and is accounted for as a joint venture of the Group;

• “Diamond Path Share(s)”

• ordinary share(s) of US$1.00 each in the share capital of Diamond Path;

• “Director(s)”

director(s) of the Company;

– 2 –

DEFINITIONS

• “Dragon Dynasty”

Dragon Dynasty Worldwide Limited, a company incorporated under the laws of the British Virgin Islands with limited liability;

• “Dragon Dynasty Call Option”

• has the meaning as defined under the paragraph headed “Shareholders’ Agreement, Dragon Dynasty Call Option and Dragon Dynasty Capitalisation Right” in the section headed “Letter from the Board” in this circular;

• “Dragon Dynasty Capitalisation Right”

• has the meaning as defined under the paragraph headed “Shareholders’ Agreement, Dragon Dynasty Call Option and Dragon Dynasty Capitalisation Right” in the section headed “Letter from the Board” in this circular;

• “Facility Agreement” the term loan agreement entered into between Strongly as borrower, the Company as guarantor, the Lenders as original lenders and Hang Seng as facility agent and security agent on 27 June 2014 in respect of the loan facility in the principal amount of up to HK$1,940,000,000;

• “Finance Parties” the Lenders and Hang Seng;

• “Group” the Company and its subsidiaries;

• “Hang Seng”

• Hang Seng Bank Limited, a Lender, the facility agent and security agent of the loan facility granted under the Facility Agreement, and/or, as the context may require, the facility agent and the security agent under the Bilateral Loan;

• “HIBOR” shall be the rate appearing on Reuters page “HKABHIBOR” as being the rate per annum at which Hong Kong Dollar deposits are being offered in the Hong Kong interbank market for a period equal or approximately equal to the interest periods at about 11:00 a.m. (Hong Kong time) on the first day of each interest period;

• “HK$” Hong Kong dollars, the lawful currency of Hong Kong;

• “Hong Kong” the Hong Kong Special Administrative Region of the People’s Republic of China;

– 3 –

DEFINITIONS

• “Intercreditors Deed”

• an intercreditors deed entered into among the Lenders, the Bilateral Lender, the Company, Strongly, Dragon Dynasty and Hang Seng on 27 June 2014 to regulate the respective rights of the Lenders and the Bilateral Lender under the Bank Loan and the Bilateral Loan;

• “Latest Practicable Date”

• 17 July 2014, being the latest practicable date prior to the printing of this circular for the purpose of ascertaining information contained herein;

• “Lenders” (or each a “Lender”) Hang Seng, The Bank of East Asia, Limited, Shanghai Pudong Development Bank Co., Ltd, Hong Kong Branch, Australia and New Zealand Banking Group Limited, DBS Bank Ltd., Hong Kong Branch and Shanghai Commercial Bank Limited, all of which are licensed banks in Hong Kong;

• “Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange;

• “LSG” Lai Sun Garment (International) Limited (麗新製衣國際有限 公司), a company incorporated in Hong Kong with limited liability, the issued shares of which are listed and traded on the Main Board of the Stock Exchange (Stock Code: 191);

• “LSG EGM” an extraordinary general meeting of LSG to be convened and held for approving, among other things, the Bank Guarantee, the Share Charge, the Assignment of Shareholder’s Loan, the Dragon Dynasty Call Option and the Dragon Dynasty Capitalisation Right;

• “LSG Group” LSG and its subsidiaries, including the Group;

• “LSG Shareholder(s)”

• holder(s) of share(s) in the issued share capital of LSG;

• “Project”

• the development of the Property for non-industrial purposes, comprising certain residential area, commercial area and car parking spaces of a gross floor area of approximately 573,000 square feet;

• “Property”

the land lot known as Tseung Kwan O Town Lot No. 95;

– 4 –

DEFINITIONS

“Relevant Price”

in relation to any Diamond Path Share, the amount which represents 70% of the adjusted value of Diamond Path attributable to its shareholders (including shareholders’ loans advanced), divided by the total number of Diamond Path Shares in issue after applying the following adjustments:

• 1) (where appropriate) adjust the net asset value of Diamond Path based on the latest audited accounts by the latest available management accounts;

• 2) subtract the book value of the Property and the buildings erected thereon and in the case when units or parts of such buildings have been sold at the time when such valuation takes place, the remaining units and parts thereof;

• 3) add the current market value of the Property and the buildings erected thereon and in the case when units or parts of such buildings have been sold at the time when such valuation takes place, the remaining units and parts thereof (“ Current Market Value ”); and

• 4) add total outstanding shareholders’ loans made by the shareholders of Diamond Path pursuant to the Shareholders’ Agreement,

as determined by the auditors of Diamond Path and its subsidiaries from time to time with reference to an opinion of an independent firm of surveyors of international repute specialising in non-industrial property in Hong Kong in determining the Current Market Value;

“SFO”

“Share(s)”

“Share Charge”

“Shareholder(s)”

the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong);

share(s) in the issued share capital of the Company;

the charge created by Baicross as chargor in favour of Dragon Dynasty as chargee over one Diamond Path Share, representing 50% of the issued share capital of Diamond Path, held by Baicross and dated 27 June 2014;

holder(s) of Share(s);

– 5 –

DEFINITIONS

“Shareholders’ Agreement” the shareholders’ agreement entered into between Baicross, Dragon Dynasty and Diamond Path on 27 June 2014 to regulate the shareholders’ rights and obligations concerning Diamond Path; “Stock Exchange” The Stock Exchange of Hong Kong Limited; “Strongly” Strongly Limited (卓剛有限公司), a company incorporated in Hong Kong with limited liability and a 50%-owned joint venture of the Company through Baicross; “US$” United States dollars, the lawful currency of the United States of America; and “%” per cent.

In this circular, unless the context otherwise requires, any reference to the singular includes the plural and vice versa and any reference to a gender includes a reference to the other gender and the neuter.

– 6 –

LETTER FROM THE BOARD

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Executive Directors: Registered office: Dr. Lam Kin Ngok, Peter (Chairman) 11th Floor Mr. Chew Fook Aun (Deputy Chairman) Lai Sun Commercial Centre Mr. Lau Shu Yan, Julius (Chief Executive Officer) 680 Cheung Sha Wan Road Mr. Lam Hau Yin, Lester Kowloon Hong Kong

Non-executive Directors: Dr. Lam Kin Ming Madam U Po Chu

Independent Non-executive Directors: Mr. Ip Shu Kwan, Stephen Mr. Lam Bing Kwan Mr. Leung Shu Yin, William

21 July 2014

To the Shareholders

Dear Sir or Madam,

MAJOR TRANSACTIONS IN RELATION TO THE

(1) PROVISION OF GUARANTEE

(2) PROVISION OF SHARE CHARGE AND ASSIGNMENT OF SHAREHOLDER’S LOAN

AND

(3) GRANT OF OPTIONS

INTRODUCTION

Reference is made to the Announcement in relation to, among other matters, the (i) provision of Bank Guarantee; (ii) provision of Share Charge; (iii) Assignment of Shareholder’s Loan; (iv) Dragon Dynasty Call Option; and (v) Dragon Dynasty Capitalisation Right.

– 7 –

LETTER FROM THE BOARD

The purpose of this circular is to provide you with, among other things, further details of the (i) provision of Bank Guarantee; (ii) provision of Share Charge; (iii) Assignment of Shareholder’s Loan; (iv) Dragon Dynasty Call Option; (v) Dragon Dynasty Capitalisation Right; and (vi) financial and other information of the Group as required under the Listing Rules.

HK$1,940,000,000 TERM LOAN FACILITY

1. THE PROVISION OF GUARANTEE FOR THE BANK LOAN GRANTED TO STRONGLY

On 27 June 2014, the Company as guarantor provided the Bank Guarantee in favour of the Finance Parties to secure the repayment obligations of the Bank Loan granted to Strongly by the Lenders under the Facility Agreement.

(a) Bank Guarantee

(i) Date: 27 June 2014

(ii) Borrower: Strongly

• (iii) Lenders:

The financial institutions listed in the definition of the “Lenders” in the section headed “Definitions” in this circular.

• (iv) Guarantor: The Company

• (v) Guarantee:

The Company has provided a guarantee in favour of the Finance Parties to secure the repayment obligations of Strongly under the Facility Agreement. The scope of the guarantee includes the principal amount of the Bank Loan and interests, and all others payable by Strongly in respect of the underlying Bank Loan.

• (vi) Bank Loan:

A term loan facility in the principal amount of up to HK$1,940,000,000 granted by the Lenders to Strongly at an interest rate equal to the basic interest rate of 1.7% plus HIBOR per annum.

• (vii) Term:

The guarantee is a continuing guarantee without a fixed term and will extend to the ultimate balance of sums payable by Strongly under the security documents of the Facility Agreement, regardless of any intermediate payment or discharge in whole or in part.

• (viii) Repayment:

The loan under Facility Agreement shall be repaid in full in one lump sum on the Final Maturity Date.

• (ix) Final Maturity Date:

48 months from the date of the Facility Agreement or six months after the issuance of certificate of compliance pertaining to the Project, whichever is earlier.

– 8 –

LETTER FROM THE BOARD

(b) Others

• (i) Under the Facility Agreement, the Company has provided a funding guarantee, pursuant to which and to the extent not having been financed by drawdown made under the Bank Loan, it will, among other things, fund Strongly 50% of all outstanding construction costs (including cost overrun) of the Project and 50% of all costs (including professional fees) required to complete the Project without interruption or delay. Dragon Dynasty has also undertaken to fund Strongly in relation to the remaining 50% of all costs mentioned above.

• (ii) During the tenure of the Facility Agreement, the Company undertakes to maintain consolidated tangible net worth (excluding non-controlling interests) of not less than HK$5,000,000,000 or its equivalent.

The consolidated tangible net worth (excluding non-controlling interests) of the Company was HK$19,943,289,000 as at 31 January 2014.

• (iii) The Lenders, the Bilateral Lender, the Company, Strongly, Dragon Dynasty and Hang Seng have entered into the Intercreditors Deed, among other things, on the same date to regulate the respective rights of the Lenders and the Bilateral Lender under the Bank Loan and the Bilateral Loan, respectively. According to the terms of the Intercreditors Deed, the Bank Loan ranks in priority to the Bilateral Loan in respect of the secured debts and the common security created thereunder.

The Bank Guarantee will become effective upon LSG and the Company obtaining the approval of their respective shareholders to the guarantee contemplated under the Bank Guarantee.

2. THE PROVISION OF SHARE CHARGE AND ASSIGNMENT OF SHAREHOLDER’S LOAN

In order to provide security against any loss which Dragon Dynasty may suffer as a result of its ownership in Diamond Path in the event that Strongly fails to comply with its obligations under the Facility Agreement:

• (a) Baicross, as chargor, and Dragon Dynasty, as chargee, entered into the Share Charge on the same date whereby Baicross has agreed to charge its entire interests, constituting 50% of the issued share capital of Diamond Path, in favour of Dragon Dynasty. Under the Share Charge, Dragon Dynasty shall have the rights, among other things, to enforce all or any part of such security (at the times, in the manner and on the terms it thinks fit) and take possession of and hold or dispose of all or any of the charged shares upon the occurrence of the enforcement of any of the security under the Facility Agreement which is not capable of being remedied after such enforcement; and

– 9 –

LETTER FROM THE BOARD

• (b) Baicross, as assignor, and Dragon Dynasty, as assignee, entered into the Assignment of Shareholder’s Loan on the same date whereby Baicross has assigned, by way of security and Dragon Dynasty has accepted Baicross’s rights and entitlements, present and future, in the shareholder’s loans advanced by Baicross, as lender, to Diamond Path, as borrower, and all indebtedness from time to time owing by Diamond Path to Baicross, including, without limitation, all present and future claims, causes of action, payments and proceeds in respect thereof. Under the Assignment of Shareholder’s Loan, Dragon Dynasty shall have the rights, among other things, to enforce all or any part of such security (at the times, in the manner and on the terms it thinks fit) and take possession of all or any of the assigned loan or otherwise exercise in relation to all or any of the assigned loan all of the rights of an absolute owner upon the occurrence of the enforcement of any of the security under the Facility Agreement which is not capable of being remedied after such enforcement. As at the Latest Practicable Date, the total amount of shareholder’s loan advanced by Baicross to Diamond Path was approximately HK$1,480,500,000.

The secured obligations under each of the Share Charge and the Assignment of Shareholder’s Loan are any loss which Dragon Dynasty may incur or suffer as a result of its ownership of Diamond Path in the event that Strongly fails to comply with its obligations under the Facility Agreement, provided that the aggregate amount of (i) the loss in respect of which the Share Charge is given as security; (ii) the loss in respect of which the Assignment of Shareholder’s Loan is given as security; and (iii) the amount that may be claimed under the Bank Guarantee, shall not exceed the total amount guaranteed by the Company under the Facility Agreement.

The Share Charge and the Assignment of Shareholder’s Loan will become effective upon LSG and the Company obtaining the approval of their respective shareholders to the transactions contemplated under the Share Charge and the Assignment of Shareholder’s Loan.

3. SHAREHOLDERS’ AGREEMENT, DRAGON DYNASTY CALL OPTION AND DRAGON DYNASTY CAPITALISATION RIGHT

On the same date, Baicross, Diamond Path and Dragon Dynasty entered into the Shareholders’ Agreement to, among other things, regulate the rights and obligations of Baicross and Dragon Dynasty as shareholders of Diamond Path. The Shareholders’ Agreement and the transactions contemplated thereunder will come into effect upon obtaining of the shareholders’ approval of each of LSG and the Company.

(a) Baicross Call Option and Dragon Dynasty Call Option

Pursuant to the Shareholders’ Agreement, in the event that:

• a shareholder of Diamond Path commits a breach of any material term of the Shareholders’ Agreement (and where such breach is capable of remedy, such shareholder shall fail to remedy the same to the reasonable satisfaction of the other shareholder within 30 days after being notified in writing by any other shareholder); or

– 10 –

LETTER FROM THE BOARD

• a shareholder of Diamond Path (I) is unable to pay its debts as they fall due; (II) stops, suspends or threatens to stop or suspend payment of a material part of its debts; (III) begins negotiations or takes any proceeding or other step with a view to the readjustment, rescheduling or deferral of all of its indebtedness (or of any part of its indebtedness which it will or might otherwise be unable to pay when due); (IV) proposes or makes a general assignment or arrangement or composition with or for the benefit of its creditors generally or any group or class thereof; (V) ceases or threatens to cease to carry on all or a material part of the business carried on by it; or (VI) files a petition for suspension of payments or other relief of debtors or a moratorium is agreed or declared in respect of or affecting all or any part of its indebtedness; or

• a shareholder of Diamond Path has a petition presented or an order made or a resolution passed or any other action taken by or against it for its dissolution or reorganisation (other than a solvent reorganisation) and, in the case of any such petition presented or other action taken otherwise than by or at the instigation of the defaulting shareholder, the same is not discharged, withdrawn or discontinued within 30 days; or

• a shareholder of Diamond Path has a receiver, administrator, trustee, custodian or similar officer appointed over it or all or a material part of its business, assets or undertakings; or

• a shareholder of Diamond Path has all or a material part of its business, assets or undertakings seized, expropriated, nationalised or resumed or becoming the subject of compulsory acquisition (whether subject to compensation or not); or

• it is or becomes unlawful for shareholder to perform all or any of its material obligations under the Shareholders’ Agreement or any material provisions thereof at any time for any reason cease to be binding or are repudiated or its validity or legality is contested by such shareholder; or

• Baicross shall (or permits Strongly to) commit a breach of the terms or conditions of the Facility Agreement and related documentations or any of the security documents to the Facility Agreement which leads to the occurrence of an event of default thereunder; or

• Dragon Dynasty shall (or permits Strongly to) commit a breach of the terms and conditions of the Bilateral Facility Agreement and related documentations or any of the security documents to the Bilateral Facility Agreement which leads to the occurrence of an event of default thereunder,

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LETTER FROM THE BOARD

the non-defaulting shareholder shall have the right (but have no obligation) so long as the above event of default continues, exercisable by notice in writing to the defaulting shareholder to require the defaulting shareholder to offer to sell all its shares and assign all its shareholder’s loans to Diamond Path to the non-defaulting shareholder at the Relevant Price (for each Diamond Path Share it owned) and to pay all costs and expenses thereof and damages (whether foreseeable by the defaulting shareholder or not) incurred or suffered by the non-defaulting shareholder.

As such, Dragon Dynasty has granted an option to Baicross, in the event that Dragon Dynasty becomes a defaulting shareholder, to require Dragon Dynasty to sell all its Diamond Path Shares to Baicross (“ Baicross Call Option ”) at the Relevant Price.

On the other hand, Baicross has granted an option to Dragon Dynasty, in the event that Baicross becomes a defaulting shareholder, to require Baicross to sell all its Diamond Path Shares to Dragon Dynasty (“ Dragon Dynasty Call Option ”) at the Relevant Price.

(b) Baicross Capitalisation Right and Dragon Dynasty Capitalisation Right

The Shareholders’ Agreement also provides that so long as an event of default continues and the defaulting shareholder does not meet its funding obligations, the non-defaulting shareholder can require Diamond Path to capitalise such portion of the shareholder’s loan (“ Funding Loan ”) made by the non-defaulting shareholder to meet the above funding obligations together with (if any) such portion of the uncontributed portion (“ Uncontributed Portion ”) of the loan the defaulting shareholder is obliged to make that has actually been advanced by the non-defaulting shareholder and accrued interest (“ Interest ”) on the Funding Loan and the Uncontributed Portion, to the extent it has not been repaid, as to be determined in the manner described below. The total of the Funding Loan, the Uncontributed Portion (if any) and the Interest is referred to as the “ Default Amount ”.

Upon exercise of the above capitalisation right (i.e. the Baicross Capitalisation Right or the Dragon Dynasty Capitalisation Right, both as defined below), Diamond Path shall, among other things, issue new Diamond Path Shares to the non-defaulting shareholder. The number of such new Diamond Path Shares to be issued shall be such which equals to: “Default Amount” ÷ “the Relevant Price”, with each such new Diamond Path Share to be issued at its nominal value of US$1.00. The amount thus credited towards the subscription of such new Diamond Path Shares to the non-defaulting shareholder shall be applied and debited against the Default Amount, and the remaining balance of the Default Amount not so capitalised shall be retained by Diamond Path and remain as shareholder’s loan by the non-defaulting shareholder.

As such, if Dragon Dynasty becomes the defaulting shareholder, Baicross shall have the right to require Diamond Path to capitalise such portion of the Default Amount under the Shareholders’ Agreement as determined in the manner abovementioned (“ Baicross Capitalisation Right ”).

– 12 –

LETTER FROM THE BOARD

If Baicross becomes the defaulting shareholder, Dragon Dynasty shall have the right to require Diamond Path to capitalise such portion of the Default Amount under the Shareholders’ Agreement as determined in the manner abovementioned (“ Dragon Dynasty Capitalisation Right ”).

INFORMATION OF LSG, THE COMPANY, BAICROSS, DIAMOND PATH, STRONGLY AND DRAGON DYNASTY

LSG

LSG is a company incorporated in Hong Kong with limited liability, the issued shares of which are listed and traded on the Main Board of the Stock Exchange. The principal activities of the LSG Group include property investment, property development, investment in and operation of hotels and restaurants and investment holding. LSG owned approximately 51.97% of the total issued shares of the Company as at the Latest Practicable Date.

COMPANY

The Company is a company incorporated in Hong Kong with limited liability, the issued shares of which are listed and traded on the Main Board of the Stock Exchange. The principal activities of the Group include property investment, property development, investment in and operation of hotels and restaurants and investment holding.

BAICROSS

Baicross is a company incorporated under the laws of the British Virgin Islands with limited liability. It is a wholly-owned subsidiary of the Company.

DIAMOND PATH

Diamond Path is a company incorporated under the laws of the British Virgin Islands with limited liability. It is owned as to 50% by Baicross and 50% by Dragon Dynasty respectively, and is accounted for as a joint venture of the Group.

STRONGLY

Strongly is a company incorporated in Hong Kong with limited liability. It is a wholly-owned subsidiary of Diamond Path.

DRAGON DYNASTY

Dragon Dynasty is a company incorporated under the laws of the British Virgin Islands with limited liability. The principal business of Dragon Dynasty is investment holding in and the development of the Project.

To the best of the knowledge, information and belief of the Directors having made all reasonable enquiry, Dragon Dynasty and its ultimate beneficial owner (being an individual) are third parties independent of the Company and its connected persons.

– 13 –

LETTER FROM THE BOARD

The Property located at Area 68A2, Tseung Kwan O, New Territories, Hong Kong has an area of approximately 229,000 square feet with a permitted total gross floor area of approximately 573,000 square feet split into approximately 458,000 square feet for residential use and approximately 115,000 square feet for non-industrial use. It is the current intention of Strongly to develop the Property primarily into a residential project for sale, comprising residential towers as well as houses. The Project is expected to be completed in 2017.

REASONS FOR AND BENEFITS OF PROVIDING THE BANK GUARANTEE, THE SHARE CHARGE AND THE ASSIGNMENT OF SHAREHOLDER’S LOAN, GRANTING OF THE DRAGON DYNASTY CALL OPTION AND THE DRAGON DYNASTY CAPITALISATION RIGHT AND THE ACQUISITION OF THE BAICROSS CALL OPTION AND THE BAICROSS CAPITALISATION RIGHT

The development of the Project, which is to be carried out through Strongly in the ordinary and normal course of business of the LSG Group and the Group, will when completed generate revenue to both the LSG Group and the Group. In order to finance the development of the Project, Strongly has obtained the Bank Loan and the Bilateral Loan. Pursuant to the Facility Agreement, the Company, as an indirect shareholder of Strongly, is required to provide the Bank Guarantee for the due and punctual performance of all obligations of Strongly under the Facility Agreement.

The transactions contemplated under the Bank Guarantee, the Share Charge, the Assignment of Shareholder’s Loan, the Dragon Dynasty Call Option and the Dragon Dynasty Capitalisation Right are not expected to have any material impact on the assets and liabilities in the Group’s consolidated statement of financial position since (a) the Bank Guarantee will be disclosed as a contingent liability after it is approved by the LSG Shareholders; (b) the various options have minimal value and therefore have no material impact on the Group’s assets and liabilities; (c) the net effect on the assets and liabilities of the Group will not be material when the Bank Loan is drawn. Although the transactions will facilitate the provision of part of the finance for the development of the Property, they are not expected to have a significant impact to the earnings of the Group since funding cost will be incurred in any event for the development of the Property.

After considering that (a) the Company indirectly holds 50% interests of Strongly and LSG holds 51.97% interests of the Company; (b) Dragon Dynasty has procured the Bilateral Loan secured by, among other things, a corporate guarantee provided by Dragon Dynasty, which demonstrates the same degree of commitment in procuring financing and providing security for the implementation of the Project by Baicross under the Bank Loan and the Bank Guarantee and by Dragon Dynasty under the Bilateral Loan and the corporate guarantee it provided; (c) the reason for the provision of the Bank Guarantee as mentioned above; and (d) the terms of the Facility Agreement and the Bank Guarantee were negotiated on an arm’s length basis, the Directors are of the view that the terms of the Facility Agreement and the Bank Guarantee are on normal commercial terms which are fair and reasonable and the entering into of the Facility Agreement and the provision of the Bank Guarantee are in the interests of the Company (as the case may be) and the Shareholders as a whole. In addition, given that the terms of the Bank Loan (including the interest rate) were arrived at after arm’s length negotiations between the Lenders and Strongly and are customary for and comparable to bank loans of similar nature, the Directors are of the view that the terms of the Bank Loan (including the interest rate) are normal commercial terms which are fair and reasonable.

– 14 –

LETTER FROM THE BOARD

According to the terms of the Intercreditors Deed, the Bank Loan ranks in priority to the Bilateral Loan in respect of the secured debts and the common security created thereunder. As mentioned above, Dragon Dynasty has provided a corporate guarantee as security for the Bilateral Loan. In the event of a default under the Bilateral Loan, or in the event of a default under the Bank Loan which will result in a default under the Bilateral Loan as the Bank Loan and the Bilateral Loan are subject to a reciprocal cross default provision, the common security will be used to satisfy the Bank Loan first since it ranks senior to the Bilateral Loan. In that case, Dragon Dynasty will have the obligation under the said corporate guarantee to repay the Bilateral Loan and related costs for its recovery that are not recovered by the Bilateral Lender. However, the Group will not be exposed to similar extent of obligation as Dragon Dynasty will be, because the Lenders will be able to enforce the common security for recovering the Bank Loan, thus reducing the Company’s exposure under the Bank Guarantee. Therefore, the Share Charge and the Assignment of Shareholder’s Loan are given as a measure intended to balance the seniority of the Bank Loan over the Bilateral Loan. Since the exposure of the Group under the Bank Guarantee, the Share Charge and the Assignment of Shareholder’s Loan will not exceed the total amount guaranteed by the Company under the Bank Guarantee, the Group will not take up additional liability (actual or contingent) by providing the Share Charge and the Assignment of Shareholder’s Loan in favour of Dragon Dynasty. The Directors therefore are of the view that the Share Charge and the Assignment of Shareholder’s Loan are on normal commercial terms which are fair and reasonable and the provision of the Share Charge and the Assignment of Shareholder’s Loan are in the interests of the Company and the Shareholders as a whole.

As mentioned in the paragraph headed “Shareholders’ Agreement, Dragon Dynasty Call Option and Dragon Dynasty Capitalisation Right” above, the Shareholders’ Agreement has been entered into for the regulation of the rights and obligations of Baicross and Dragon Dynasty as shareholders of Diamond Path. The Baicross Call Option, the Dragon Dynasty Call Option, the Baicross Capitalisation Right and the Dragon Dynasty Capitalisation Right as provided under the Shareholders’ Agreement are remedial measures available to Baicross or Dragon Dynasty (as the case may be) in the event that any of them commits any of the specified breaches contemplated under the Shareholders’ Agreement and such remedial measures are mutual and reciprocal as between Baicross and Dragon Dynasty. The Directors therefore are of the view that the Baicross Call Option, the Dragon Dynasty Call Option, the Baicross Capitalisation Right and the Dragon Dynasty Capitalisation Right are on normal commercial terms which are fair and reasonable (including the Relevant Price which was reached after arm’s length commercial discussion between Baicross and Dragon Dynasty) and the granting of the Dragon Dynasty Call Option and the Dragon Dynasty Capitalisation Right and the acquisition of the Baicross Call Option and the Baicross Capitalisation Right are in the interests of the Company and the Shareholders as a whole.

– 15 –

LETTER FROM THE BOARD

IMPLICATIONS UNDER THE LISTING RULES

As one or more of the applicable percentage ratios in respect of the provision of the Bank Guarantee, the Share Charge and the Assignment of Shareholder’s Loan is 25% or more but less than 100% (having regard to the fact that the exposure of the Group under the Bank Guarantee, the Share Charge and the Assignment of Shareholder’s Loan will not exceed the total amount guaranteed by the Company under the Bank Guarantee), each of the provision of the Bank Guarantee, the Share Charge and the Assignment of Shareholder’s Loan constitutes a major transaction for the Company under Chapter 14 of the Listing Rules. Therefore, each of the provision of the Bank Guarantee, the Share Charge and the Assignment of Shareholder’s Loan is subject to the notification, announcement, circular and shareholders’ approval requirements under Chapter 14 of the Listing Rules.

As the exercise of each of the Baicross Call Option and the Baicross Capitalisation Right is at Baicross’s discretion and there is no premium involved in their acquisition, none of the applicable percentage ratios in respect of the acquisition of the Baicross Call Option and the Baicross Capitalisation Right exceeds 5%. Therefore, the acquisition by Baicross of the Baicross Call Option and the Baicross Capitalisation Right is not subject to the requirements under Chapter 14 of the Listing Rules. However, the Company (where necessary) will comply with the relevant requirements under Chapter 14 of the Listing Rules in relation to the exercise of the Baicross Call Option and/or the Baicross Capitalisation Right when required.

The exercise of each of the Dragon Dynasty Call Option and the Dragon Dynasty Capitalisation Right is at Dragon Dynasty’s discretion and the Company was unable to determine the highest possible monetary value of the exercise price of the Dragon Dynasty Call Option and the Dragon Dynasty Capitalisation Right as at the Latest Practicable Date. Therefore, pursuant to Rule 14.76(1) of the Listing Rules, the granting of the Dragon Dynasty Call Option and the Dragon Dynasty Capitalisation Right will constitute at least a major transaction for the Company and is subject to the notification, announcement, circular and shareholders’ approval requirements under Chapter 14 of the Listing Rules.

The provision of the Bank Guarantee, the Share Charge and the Assignment of Shareholder’s Loan, the granting of the Dragon Dynasty Call Option and the Dragon Dynasty Capitalisation Right are therefore subject to the approval of the LSG Shareholders at the LSG EGM by way of poll.

To the best of the knowledge, information and belief of the Directors having made all necessary enquiries, no Shareholders or any of their respective close associates have any material interest in the provision of the Bank Guarantee, the Share Charge and the Assignment of Shareholder’s Loan, the granting of the Dragon Dynasty Call Option and the Dragon Dynasty Capitalisation Right. Therefore, no Shareholders would be required to abstain from voting under the Listing Rules if the Company were to convene a general meeting for obtaining shareholders’ approval for the matters abovementioned.

– 16 –

LETTER FROM THE BOARD

As at the Latest Practicable Date and the date of the Announcement, LSG directly held 2,031,178,594 Shares and also, through Joy Mind Limited and Zimba International Limited, both of which were LSG’s direct wholly-owned subsidiaries, held 1,027,854,093 Shares and 7,366,666,666 Shares respectively. In total, LSG whether directly or indirectly held 10,425,699,353 Shares, representing approximately 51.97% of the entire issued share capital of the Company as at the Latest Practicable Date. Pursuant to Rule 14.44 of the Listing Rules, each of LSG, Joy Mind Limited and Zimba International Limited has issued a written shareholder’s approval for the provision of the Bank Guarantee, the Share Charge and the Assignment of Shareholder’s Loan, the granting of the Dragon Dynasty Call Option and the Dragon Dynasty Capitalisation Right, which is conditional upon LSG having obtained its shareholders’ approval for these transactions. Accordingly, no extraordinary general meeting will be convened by the Company to approve these transactions.

None of the Directors has any material interest in the transactions contemplated under the Bank Guarantee, the Share Charge and the Assignment of Shareholder’s Loan, the granting of the Dragon Dynasty Call Option and the Dragon Dynasty Capitalisation Right and thus none of them is required to abstain from voting on the relevant Board resolutions approving such transactions.

ADDITIONAL INFORMATION

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

Yours faithfully, For and on behalf of the Board of Lai Sun Development Company Limited Lam Kin Ngok, Peter Executive Director and Chairman

– 17 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

1. SUMMARY OF FINANCIAL RESULTS AND CONDITIONS OF THE GROUP

Financial information of the Group for each of the three years ended 31 July 2011, 2012 and 2013 are disclosed in the following documents which have been published on the websites of the Stock Exchange at http://www.hkexnews.hk and the Company at http://www.laisun.com:

• annual report of the Company for the year ended 31 July 2011 published on 21 November 2011 (pages 45 to 121);

• annual report of the Company for the year ended 31 July 2012 published on 16 November 2012 (pages 55 to 156); and

• annual report of the Company for the year ended 31 July 2013 published on 23 October 2013 (pages 57 to 147).

2. INDEBTEDNESS

As at 30 June 2014, the Group had bank borrowings of approximately HK$2,773.2 million and guaranteed notes of approximately HK$2,698.5 million.

As at 30 June 2014, certain investment properties with carrying amounts of approximately HK$11,075.3 million (being their carrying amounts as at 31 January 2014 as disclosed in the interim report of the Company for the six months ended 31 January 2014) and certain bank balances and time deposits with a bank of approximately HK$160.9 million were pledged to banks to secure banking facilities granted to the Group. In addition, the shares in a subsidiary held by the Group were also pledged to a bank to secure loan facilities granted to the Group. The shares of a joint venture held by the Group were pledged to a bank to secure a loan facility granted to a joint venture of the Group. The shares of an investee company held by the Group were pledged to a bank to secure a loan facility granted to this investee company. The Group’s secured bank borrowings were also secured by floating charges over certain assets held by the Group.

As at 30 June 2014, the Group had the following material contingent liabilities:

• (a) In connection with the disposal (“ Disposal ”) of 100% interests in Majestic Hotel and Majestic Centre, Kowloon, Hong Kong by Taiwa Land Investment Company, Limited (“ Taiwa ”), an indirect 50%-owned associate of the Group, Taiwa, the Company, and the other 50% beneficial shareholder of Taiwa (collectively “ Covenantors ”) entered into a tax deed (“ Tax Deed ”) with the purchaser of the Disposal, and Majestic Hotel Enterprises Holding Limited and Majestic Centre Holding Limited and their subsidiaries (collectively “ Properties Holding Companies ”) on 17 July 2007. Pursuant to the Tax Deed, the Covenantors severally agreed to indemnify the Properties Holding Companies against any taxation on profits levied by relevant tax authority in Hong Kong resulting from events which happened prior to the completion of the Disposal for a maximum amount of HK$30 million. As such, the maximum liability of the Company under the Tax Deed is HK$15 million. The Tax Deed is valid for a period of 7 years from the date of its execution.

– 18 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

• (b) Pursuant to an indemnity deed (“ Lai Fung Tax Indemnity Deed ”) dated 12 November 1997 entered into between the Company and Lai Fung Holdings Limited (“ Lai Fung ”), the Company has undertaken to indemnify Lai Fung in respect of certain potential income tax and land appreciation tax (“ LAT ”) of the People’s Republic of China (“ PRC ”) payable or shared by Lai Fung in consequence of the disposal of any of the property interests attributable to Lai Fung through its subsidiaries and its associates as at 31 October 1997 (“ Property Interests ”). These tax indemnities given by the Company apply in so far as such tax is applicable to the difference between (i) the value of the Property Interests in the valuation thereon by Chesterton Petty Limited (currently known as “ Knight Frank Petty Limited ”), independent chartered surveyors, as at 31 October 1997 (“ Valuation ”); and (ii) the aggregate costs of such Property Interests incurred up to 31 October 1997, together with the amount of unpaid land costs, unpaid land premium and unpaid costs of resettlement, demolition and public utilities and other deductible costs in respect of the Property Interests. The Lai Fung Tax Indemnity Deed assumes that the Property Interests are disposed of at the values attributed to them in the Valuation, computed by reference to the rates and legislation governing PRC income tax and LAT prevailing at the time of the Valuation.

The indemnities given by the Company do not cover (i) new properties acquired by Lai Fung subsequent to the listing of the shares of Lai Fung on the Stock Exchange (“ Listing ”); (ii) any increase in the relevant tax which arises due to an increase in tax rates or changes to the legislation prevailing at the time of the Listing; and (iii) any claim to the extent that provision for deferred tax on the revaluation surplus has been made in the calculation of the adjusted net tangible asset value of Lai Fung as set out in Lai Fung’s prospectus dated 18 November 1997.

After taking into account the Property Interests currently held by Lai Fung as at 30 June 2014 which are covered under the Lai Fung Tax Indemnity Deed and the prevailing tax rates and legislation governing PRC income tax and LAT, the total amount of tax indemnity given by the Company is estimated to be approximately HK$1,350.0 million.

As at 30 June 2014, the Directors, after taking into account the plan and status of the Property Interests and the prevailing tax rates and legislation governing PRC income tax and LAT, considered it is probable that an estimated amount of HK$729.4 million of the abovementioned tax indemnity given by the Company would be crystallised.

3. MATERIAL ADVERSE CHANGE

Based on the announcement of the Company dated 14 March 2014 and the interim report of the Company for the six months ended 31 January 2014, for the six months ended 31 January 2014, the profit attributable to owners of the Company amounted to approximately HK$622.0 million (2013: approximately HK$1,964.7 million), representing a significant decrease of approximately 68% over the same period of last year, which was mainly due to a significantly lower revaluation gain arising in the revaluation of the Group’s investment properties for the six months ended 31 January 2014 as compared to the same period last year.

– 19 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Save for the abovementioned, as at the Latest Practicable Date, the Directors confirmed that there had been no material adverse change in the financial or trading position or prospects of the Group since 31 July 2013, the date to which the latest published audited financial statements of the Group were made up.

4. WORKING CAPITAL

The Directors are of the opinion that, in the absence of any unforeseen circumstances and after taking into account the internal resources and the presently available banking facilities, the Group has sufficient working capital for its requirements for at least 12 months from the date of this circular.

5. FINANCIAL AND TRADING PROSPECTS OF THE GROUP

The Group is engaged in property investment, property development, investment in and operation of hotels and restaurants and investment holding.

The global economy is on a delicate recovery path with the United States leading the way through improving economic and employment conditions. However, a number of factors still shroud the horizon: the weak euro zone economy, adjustments to the macroeconomic policies of major economies, and geopolitical tensions. As a global financial centre, Hong Kong’s economic performance is clearly not immune from the challenges faced by the major economies around the world.

The property sector in Hong Kong could be described as a tale of two cities: retail market well supported by low unemployment and robust visitors trend with the office leasing market stabilizing with some improvements, but the residential market continues to be quiet since the introduction of control measures in late 2012 and early 2013. It is very likely that these control measures, barring any unforeseen circumstances, are here to stay until land supply has caught up; which is likely to take some years notwithstanding the government’s emphasis and effort. Labour supply shortage in the construction industry drove wage inflation and continues to pose a challenge on the cost management side of the picture. The Group performed admirably against this challenging environment.

Property Investment

The Group’s rental portfolio of approximately 1.5 million square feet generated steady rental income at high occupancy rates. During the six months ended 31 January 2014, the Group’s rental operations recorded a turnover of HK$237.0 million (2013: HK$214.8 million), representing a 10% increase over the same period last year. Rental income increased through tenant mix adjustments, rental reversion and addition of the CCB Tower that is fully leased subsequent to the period end, rental proceeds of which was recognised as contributions from joint venture. The acquisition of a freehold commercial property in London in April 2014 added an attributable rental gross floor area (“ GFA ”) of approximately 106,100 square feet to the Group’s rental portfolio.

– 20 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Property Development

For the six months ended 31 January 2014, recognised turnover from sales of properties was HK$722.7 million (2013: HK$1.2 million), representing a significant increase over the same period last year. The exceptional performance was due to the sale of residential units in Ocean One. Sale of Ocean One is substantially completed at the intended average selling price and boosted the revenue and profit of the Group compared to the same period last year. The management believes it is paramount to prepare the Group for the challenges and opportunities ahead.

Further to securing the Property in the same period last year, the Group participated in a number of government tenders to grow the pipeline. Other than the Ocean Park Hotel project, the Group won the development of San Shan Road/Pau Chung Street project of Urban Renewal Authority, Hong Kong in Ma Tau Kok, Kowloon, Hong Kong in April 2014, which will provide residential/ commercial GFA of approximately 113,400 square feet. The completion of the Observatory Road project will add an attributable rental GFA of approximately 82,600 square feet in the prime Tsim Sha Tsui area of Hong Kong when it is completed in the third quarter of 2015. The Tai Hang Road project, with 9 luxury units located at one of the most sought after addresses in Hong Kong with attributable GFA of approximately 30,400 square feet, was completed in January 2014 and the Group is preparing for its sale currently. Construction of the Property has commenced and is on-track for completion in 2017.

The Group completed a series of corporate activities as part of the new strategy to improve funding sources, execution capabilities and overall coordination with the wider Lai Sun Group. Subsequent to the period end, the Group announced proposed capital reduction on 20 May 2014 that would put the Company in a position to legally pay dividends, subject to the Company’s performance and when the Board considers that it is appropriate in the future and/ or undertake any corporate exercise which requires the use of distributable reserves.

The Group’s strong cash position of HK$3,469.3 million of cash on hand with a net debt to equity ratio of 11% as at 31 January 2014 provides the Group full confidence and the means to review opportunities more actively. However, the Group will continue its prudent and flexible approach in growing the landbank and managing its financial position.

– 21 –

GENERAL INFORMATION

APPENDIX II

1. RESPONSIBILITY STATEMENT

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

2. DISCLOSURE OF INTERESTS

Directors’ and chief executive’s interests and short positions in the Shares, underlying Shares and debentures of the Company or its associated corporations

As at the Latest Practicable Date, the interests and short positions of the Directors and the chief executive of the Company in the Shares, underlying Shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which were required to be (i) notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions, if any, which they were taken or deemed to have under such provisions of the SFO); or (ii) as recorded in the register required to be kept by the Company pursuant to Section 352 of the SFO; or (iii) as otherwise notified to the Company and the Stock Exchange pursuant to the Code of Practice for Securities Transactions by Directors and Designated Employees adopted by the Company (“ Securities Code ”) were as follows:

(a) The Company

Long positions in the Shares and the underlying Shares of the Company

							Approximate
							% of total
							interests to
Name of		Personal	Family	Corporate	Other	Total	total issued
Director	Capacity	interests	interests	interests	interests	interests	Shares
Lam Kin Ngok, Peter	Beneficial owner/	14,307,745	Nil	10,425,699,353	20,062,893	10,460,069,991	52.14%
	Owner of			(Note 1)	(Note 3)
	controlled
	corporations
Chew Fook Aun	Beneficial owner	Nil	Nil	Nil	200,628,932	200,628,932	1.00%
					(Note 3)
Lau Shu Yan, Julius	Beneficial owner	8,783,333	Nil	Nil	100,314,466	109,097,799	0.544%
					(Note 3)
Lam Hau Yin, Lester	Beneficial owner	Nil	Nil	Nil	200,628,932	200,628,932	1.00%
					(Note 3)
U Po Chu	Beneficial owner	897,316	Nil	Nil	Nil	897,316	0.004%
(Note 2)

– 22 –

GENERAL INFORMATION

APPENDIX II

Notes:

• (1) LSG and two of its wholly-owned subsidiaries, namely Zimba International Limited and Joy Mind Limited, beneficially owned a total of 10,425,699,353 Shares, representing approximately 51.97% of the issued share capital of the Company. Dr. Lam Kin Ngok, Peter was deemed to be interested in the same 10,425,699,353 Shares by virtue of, in aggregate, his personal and deemed interests of approximately 42.74% in the issued share capital of LSG. LSG is approximately 12.75% owned by Dr. Lam Kin Ngok, Peter and is approximately 29.99% owned by Wisdoman Limited which is in turn 100% beneficially owned by Dr. Lam Kin Ngok, Peter.

• (2) Madam U Po Chu is the widow of the late Mr. Lim Por Yen whose estate includes an interest of 197,859,550 Shares, representing approximately 0.99% of the issued share capital of the Company.

• (3) A share option scheme was adopted by the Company on 22 December 2006 and commenced with effect from 29 December 2006. A share option was granted to each of Dr. Lam Kin Ngok, Peter, Mr. Chew Fook Aun, Mr. Lau Shu Yan, Julius and Mr. Lam Hau Yin, Lester, particulars of which are set out below:

		Number of
		underlying
		Shares
	Date of	comprised in
Registered Name	grant	the option	Option period	Subscription price
Lam Kin Ngok, Peter	18/01/2013	20,062,893	18/01/2013-17/01/2023	HK$0.335 per Share
Chew Fook Aun	05/06/2012	200,628,932	05/06/2012-04/06/2022	HK$0.112 per Share
Lau Shu Yan, Julius	18/01/2013	100,314,466	18/01/2013-17/01/2023	HK$0.335 per Share
Lam Hau Yin, Lester	18/01/2013	200,628,932	18/01/2013-17/01/2023	HK$0.335 per Share

(b) Associated Corporations

• (i) LSG – the ultimate holding company of the Company

Long positions in the ordinary shares and the underlying shares in LSG

							Approximate
							% of total
							interests to
		Personal	Family	Corporate	Other	Total	total issued
Name of Director	Capacity	interests	interests	interests	interests	interests	shares
Lam Kin Ngok, Peter	Beneficial owner/	237,464,979	Nil	562,590,430	1,876,211	801,931,620	42.74%
	Owner of			(Note1)	(Note 2)
	controlled
	corporations
Chew Fook Aun	Beneficial owner	Nil	Nil	Nil	18,762,111	18,762,111	1.00%
					(Note 2)
Lam Hau Yin, Lester	Beneficial owner	60,623,968	Nil	Nil	18,762,111	79,386,079	4.23%
					(Note 2)
Lam Kin Ming	Beneficial owner	5,008,263	Nil	Nil	Nil	5,008,263	0.27%
U Po Chu	Beneficial owner	4,127,625	Nil	Nil	Nil	4,127,625	0.22%

– 23 –

GENERAL INFORMATION

APPENDIX II

Notes:

• (1) Dr. Lam Kin Ngok, Peter was deemed to be interested in 562,590,430 shares (representing approximately 29.99% of LSG’s issued share capital enlarged by the Rights Issue) by virtue of his 100% interests in the issued share capital of Wisdoman Limited.

• (2) A share option scheme was adopted by LSG on 22 December 2006 and commenced with effect from 29 December 2006. A share option was granted by LSG to each of Dr. Lam Kin Ngok, Peter, Mr. Chew Fook Aun and Mr. Lam Hau Yin, Lester, particulars of which are set out below (on 7 February 2014, the subscription price and the number of underlying shares comprised in the option have been adjusted following the completion of rights issue of LSG (“ Rights Issue ”)):

		Number of	Number of
		underlying	underlying
		shares	shares
		comprised in	comprised in		Subscription	Subscription
	Date of	the option before	the option after	Option	price before	price after
Registered Name	grant	the Rights Issue	the Rights Issue	period	the Rights Issue the Rights Issue
Lam Kin Ngok, Peter	18/01/2013	1,617,423	1,876,211	18/01/2013-	HK$1.41	HK$1.21
				17/01/2023	per share	per share
Chew Fook Aun	05/06/2012	16,174,234	18,762,111	05/06/2012-	HK$0.582	HK$0.501
				04/06/2022	per share	per share
Lam Hau Yin, Lester	18/01/2013	16,174,234	18,762,111	18/01/2013-	HK$1.41	HK$1.21
				17/01/2023	per share	per share

• (ii) eSun Holdings Limited (“ eSun ”) — an associate of the Company

Long position in the ordinary shares and the underlying shares in eSun

							Approximate
							% of total
							interests to
		Personal	Family	Corporate	Other	Total	total issued
Name of Director	Capacity	interests	interests	interests	interests	interests	shares
Lam Kin Ngok, Peter	Beneficial	2,794,443	Nil	521,204,186	1,243,212	525,241,841	42.25%
	owner/			(Note1)	(Note 2)
	Owner of
	controlled
	corporations
Chew Fook Aun	Beneficial owner	Nil	Nil	Nil	6,216,060	6,216,060	0.50%
					(Note 2)
Lam Hau Yin, Lester	Beneficial owner	2,794,443	Nil	Nil	12,432,121	15,226,564	1.22%
					(Note 2)

– 24 –

GENERAL INFORMATION

APPENDIX II

Notes:

• (1) LSG was interested in 10,425,699,353 Shares in the Company, representing approximately 51.97% of the issued share capital of the Company. Transtrend Holdings Limited, a whollyowned subsidiary of the Company, was interested in 521,204,186 shares in eSun, representing approximately 41.92% of the issued share capital of eSun. As such, Dr. Lam Kin Ngok, Peter was deemed to be interested in the same 521,204,186 shares in eSun (representing approximately 41.92% of eSun’s issued share capital) by virtue of, in aggregate, his personal and deemed interests of approximately 42.74% and 52.14% in the issued share capital of LSG and the Company, respectively.

• (2) A share option scheme was adopted by eSun on 23 December 2005 and commenced with effect from 5 January 2006. A share option was granted to each of Dr. Lam Kin Ngok, Peter, Mr. Chew Fook Aun and Mr. Lam Hau Yin, Lester, particulars of which are set out below:

		Number of
		underlying
		shares
	Date of	comprised in
Registered Name	grant	the option	Option period	Subscription price
Lam Kin Ngok, Peter	18/01/2013	1,243,212	18/01/2013-17/01/2023	HK$1.612 per share
Chew Fook Aun	05/06/2012	6,216,060	05/06/2012-04/06/2022	HK$0.92 per share
Lam Hau Yin, Lester	18/01/2013	12,432,121	18/01/2013-17/01/2023	HK$1.612 per share

• (iii) Lai Fung Holdings Limited (“ Lai Fung ”) – a subsidiary of eSun

Long positions in the ordinary shares and the underlying shares in Lai Fung

							Approximate
							% of total
							interests to
Name of		Personal	Family	Corporate	Other	Total	total issued
Director	Capacity	interests	interests	interests	interests	interests	shares
Lam Kin Ngok, Peter	Beneficial	Nil	Nil	8,274,270,422	16,095,912	8,290,366,334	51.49%
	owner/			(Note 1)	(Note 2)
	Owner of
	controlled
	corporations
Chew Fook Aun	Beneficial	Nil	Nil	Nil	80,479,564	80,479,564	0.50%
	owner				(Note 2)
Lau Shu Yan, Julius	Beneficial	12,917,658	Nil	Nil	48,287,738	61,205,396	0.38%
	owner				(Note 2)
Lam Hau Yin, Lester	Beneficial	Nil	Nil	Nil	160,959,129	160,959,129	1.00%
	owner				(Note 2)

– 25 –

GENERAL INFORMATION

APPENDIX II

Notes:

• (1) eSun was interested in 8,274,270,422 shares in Lai Fung, representing approximately 51.39% of the issued share capital of Lai Fung. As such, Dr. Lam Kin Ngok, Peter was deemed to be interested in the same 8,274,270,422 issued shares in Lai Fung by virtue of, in aggregate, his personal and deemed shareholding interests of approximately 42.25% in the issued share capital of eSun.

• (2) A share option scheme was adopted by Lai Fung on 21 August 2003 and commenced with effect from 28 August 2003 (“ Old Scheme ”). A new share option scheme was adopted by Lai Fung on 18 December 2012 and commenced with effect from 20 December 2012 (“ New Scheme ”). A share option was granted to Mr. Chew Fook Aun under the Old Scheme and remains exercisable though the Old Scheme was terminated on 20 December 2012 when the New Scheme became effective. A share option was also granted to each of Dr. Lam Kin Ngok, Peter, Mr. Lau Shu Yan, Julius and Mr. Lam Hau Yin, Lester under the New Scheme. Particulars of the share options granted in the above schemes are set out below:

		Number of
		underlying
		shares
	Date of	comprised in
Registered Name	grant	the option	Option period	Subscription price
Lam Kin Ngok, Peter	18/01/2013	16,095,912	18/01/2013-17/01/2023	HK$0.228 per share
Chew Fook Aun	12/06/2012	80,479,564	12/06/2012-11/06/2020	HK$0.133 per share
Lau Shu Yan, Julius	18/01/2013	48,287,738	18/01/2013-17/01/2023	HK$0.228 per share
Lam Hau Yin, Lester	18/01/2013	160,959,129	18/01/2013-17/01/2023	HK$0.228 per share

• (iv) Media Asia Group Holdings Limited (“ MAGHL ”) – a subsidiary of eSun

Long positions in the ordinary shares and underlying shares in MAGHL

					Total
					number of
					issued
					shares and
					underlying
					shares and
				Deemed	deemed	Approximate
				interest	interest	% of total
		Number of	Number of	pursuant to	pursuant to	interests to
Name of		ordinary	underlying	Section 317	Section 317	total	issued
Director	Capacity	shares held	shares held	of the SFO	of the SFO		shares
Lam Kin Ngok, Peter	Owner of	842,675,225	79,596,050	252,250,000	1,174,521,275	87.66%
	controlled	(Note 1)	(Note 2)	(Note 3)
	corporations

– 26 –

GENERAL INFORMATION

APPENDIX II

Note:

1. As at the Latest Practicable Date, these interests in MAGHL represented the shares beneficially owned by Perfect Sky Holdings Limited (“ Perfect Sky ”), a wholly-owned subsidiary of eSun, representing approximately 62.89% of the issued share capital of MAGHL. eSun is owned as to approximately 41.92% by the Company which in turn is owned as to approximately 51.97% by LSG. As LSG is approximately 12.75% owned by Dr. Lam Kin Ngok, Peter and approximately 29.99% owned by Wisdoman Limited which is in turn 100% beneficially owned by Dr. Lam Kin Ngok, Peter, he was deemed to be interested in the said 842,675,225 shares in MAGHL.

2. By virtue of Dr. Lam Kin Ngok, Peter’s interests through the controlled corporations described in Note (1) above, he was also deemed to be interested in the 79,596,050 underlying shares of MAGHL comprised in the convertible notes issued to Perfect Sky by MAGHL on 9 June 2012 (“ Second Completion Convertible Notes ”).

3. These shares (132,250,000 shares and 120,000,000 underlying shares comprised in the Second Completion Convertible Notes) are held by concert parties of Perfect Sky. Dr. Lam Kin Ngok, Peter was deemed to be interested in the shares and underlying shares of MAGHL pursuant to Section 317 of the SFO.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors or the chief executive of the Company was interested or was deemed to be interested in the long and short positions in the shares, underlying shares and/or debentures of the Company or any of its associated corporations, which were required to be notified to the Company and the Stock Exchange under the SFO, recorded in the Register of Directors and Chief Executive or notified under the Securities Code or otherwise known by the Directors.

Substantial Shareholders’ and other persons’ interests

As at the Latest Practicable Date, so far as was known by or otherwise notified by any Director and chief executive of the Company, the particulars of the corporations or individuals (are being a Director), who had 5% or more interests in the following long positions in the Shares and underlying Shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or which were recorded in the register required to be kept under Section 336 of the SFO (“ Register of Shareholders ”) or were entitled to exercise, or control the exercise of, 10% or more of the voting power at any general meeting of the Company (“ Voting Entitlements ”) (i.e. within the meaning of Substantial Shareholders of the Listing Rules) were as follows:

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GENERAL INFORMATION

APPENDIX II

Long positions in the Shares and the underlying Shares of the Company

		Nature of	Number of	Approximate %
Name	Capacity	interests	Shares	of Shares in issue
LSG_(Note)_	Beneficial owner	Corporate	10,425,699,353	51.97%
Lam Kin Ngok, Peter	Beneficial	Personal and	10,460,069,991	52.14%
	owner/	corporate
	Owner of
	controlled
	corporations

Note:

LSG and two of its wholly-owned subsidiaries, namely Zimba International Limited and Joy Mind Limited, beneficially owned 10,425,699,353 Shares, representing approximately 51.97% of the issued share capital of the Company. Dr. Lam Kin Ngok, Peter was deemed to be interested in the same 10,425,699,353 Shares by virtue of, in aggregate, his personal and deemed interests of approximately 42.74% in the issued share capital of LSG. Dr. Lam Kin Ngok, Peter is an executive director of LSG.

Save as disclosed above, the Directors are not aware of any other corporation or individual (other than a Director or the chief executive of the Company) who, as at the Latest Practicable Date, had the Voting Entitlements or 5% or more interests or short positions in the Shares or underlying Shares of the Company recorded in the Register of Shareholders.

3. DIRECTORS’ SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had any existing or proposed service contract with any member of the Group which will not expire or be determinable by the relevant member of the Group within one year without payment of compensation (other than the statutory compensation).

4. COMPETING INTERESTS

As at the Latest Practicable Date, the following Directors are considered to have interests in businesses which compete or may compete with the businesses of the Group (which would be required to be disclosed under Rule 8.10 of the Listing Rules if each of them was a controlling shareholder of the Company):

Dr. Lam Kin Ngok, Peter, Dr. Lam Kin Ming, Madam U Po Chu and Mr. Lam Hau Yin, Lester (together, “ Interested Directors ”) held shareholding interests and/or directorships in companies/ entities engaged in the businesses of property investment and development in Hong Kong including Crocodile Garments Limited (“ CGL ”).

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GENERAL INFORMATION

APPENDIX II

Dr. Lam Kin Ngok, Peter held shareholding or other interests and/or directorships in companies or entities engaged in the business of investment in and operation of restaurants in Hong Kong.

Dr. Lam Kin Ming held shareholding or other interests and/or directorships in companies or entities engaged in the production of pop concerts, music production and distribution and management of artistes.

The Directors do not consider the interests held by the Interested Directors to be competing in practice with the relevant business of the Group in view of:

• (1) different locations and different uses of the properties owned by the above companies and those of the Group; and

• (2) different target customers of the restaurant operations as well as the concerts and albums of the above companies and those of the Group.

However, the Board is independent from the boards of directors/governing committees of the aforesaid companies/entities and none of the Interested Directors can personally control the Board. Further, each of the Interested Directors is fully aware of, and has been discharging his/ her fiduciary duty to the Company and has acted and will continue to act in the best interest of the Company and its shareholders as a whole. Therefore, the Group is capable of carrying on its businesses independently of, and at arm’s length from, the businesses of such companies/ entities.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors and their respective close associates had any interest in a business which competes or may compete with the businesses of the Group (which would be required to be disclosed under Rule 8.10 of the Listing Rules if each of them was a controlling shareholder of the Company).

5. INTEREST IN ASSETS AND CONTRACTS

Save for the interest of Dr. Lam Kin Ming, a non-executive Director, in CGL as set out below, as at the Latest Practicable Date, none of the Directors had any interest, direct or indirect, in any assets which have been, since 31 July 2013 (being the date to which the latest published audited financial statements of the Group were made up), acquired or disposed of by or leased to any member of the Group, or are proposed to be acquired or disposed of by or leased to any member of the Group:

On 30 November 2013, Winfield Properties Limited (“ Winfield ”) as tenant entered into an Offer to Lease with Mass Energy Limited (“ Mass Energy ”) as landlord, pursuant to which Mass Energy agreed to lease to Winfield the Carpark of Crocodile Center, 79 Hoi Yuen Road, Kwun Tong, Kowloon, Hong Kong consisting of all the car parking spaces thereof for a term of two years from 1 December 2013 to 30 November 2015 at a basic monthly rent of HK$140,000 or 52% of the gross monthly revenue of the tenant’s business carried on at the above premises, whichever is higher.

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GENERAL INFORMATION

APPENDIX II

Winfield is a wholly-owned subsidiary of the Company and Mass Energy is owned as to 50% each by LSG and CGL, which is owned as to approximately 50.90% by Dr. Lam Kin Ming, a non-executive Director. Details of the transaction are set out in the joint announcement of the Company and LSG dated 2 December 2013.

Save as disclosed above, there is no contract or arrangement subsisting as at the Latest Practicable Date, in which any of the Directors are materially interested and which is significant to the business of the Group.

6. LITIGATION

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

7. MATERIAL CONTRACT

The following contract (being contract entered into outside the ordinary course of business carried on by the Group) has been entered into by members of the Group within the two years immediately preceding the date of this circular:

• (a) a subscription agreement entered into between the Company, Lai Sun International Finance (2012) Limited (a wholly-owned subsidiary of the Company) as issuer and BNP Paribas, Hong Kong Branch, The Hongkong and Shanghai Banking Corporation Limited and Standard Chartered Bank as joint lead managers dated 11 January 2013, pursuant to which the joint lead managers agreed to subscribe or procure subscribers to subscribe the guaranteed notes in principal amount of US$350,000,000 with a maturity of five years due in 2018 bearing a fixed interest rate of 5.70% per annum issued by issuer.

8. GENERAL

• (a) The address of the registered office of the Company is 11th Floor, Lai Sun Commercial Centre, 680 Cheung Sha Wan Road, Kowloon, Hong Kong.

• (b) Mr. Chow Kwok Wor is the company secretary of the Company. He is a fellow member of The Institute of Chartered Secretaries and Administrators, The Hong Kong Institute of Chartered Secretaries and The Hong Kong Institute of Certified Public Accountants.

• (c) The share registrar of the Company is Tricor Tengis Limited at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong.

• (d) In case of inconsistency, the English text of this circular shall prevail over the Chinese text.

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GENERAL INFORMATION

APPENDIX II

9. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection during the following 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 (i) a tropical cyclone warning signal number 8 or above is hoisted; or (ii) a black rainstorm warning signal is issued at 11th Floor, Lai Sun Commercial Centre, 680 Cheung Sha Wan Road, Kowloon, Hong Kong for 14 days from the date of this circular:

• (a) the Articles of Association of the Company;

• (b) the material contract referred to under the paragraph headed “Material Contract” in this Appendix II;

• (c) the annual reports of the Company for the two years ended 31 July 2012 and 31 July 2013; and

• (d) this circular.

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