Long Investment Corp — Proxy Solicitation & Information Statement 2014

Sep 24, 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 or other registered institution in securities, bank manager, solicitor, professional accountant or other professional adviser for independent advice.

If you have sold or transferred all your shares in SOCAM Development Limited, you should at once hand this circular and the accompanying form of proxy to the purchaser(s) or transferee(s) or to the bank, licensed securities dealer or registered institution in securities or other agent through whom the sale or transfer was effected for transmission to the purchaser(s) or 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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瑞安建業有限公司[*] SOCAM Development Limited

(Incorporated in Bermuda with limited liability)

(Stock Code: 983)

DISCLOSEABLE AND CONNECTED TRANSACTIONS

DISPOSAL OF ENTIRE INTERESTS IN SHUI ON GRANPEX LIMITED PAT DAVIE (CHINA) LIMITED AND FAMOUS SCENE HOLDINGS LIMITED

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

Anglo Chinese Corporate Finance, Limited

A letter from the Board is set out on pages 8 to 18 of this circular. A letter from the Independent Board Committee containing its recommendation is set out on pages 19 and 20 of this circular. A letter from Anglo Chinese, the Independent Financial Adviser, containing its advice and recommendation to the Independent Board Committee and the Independent Shareholders, is set out on pages 21 to 44 of this circular.

A notice convening the special general meeting of the Company to be held at Room 103, 1st Floor, Shui On Centre, 6-8 Harbour Road, Hong Kong on Thursday, 16 October 2014 at 11:30 a.m. is set out on pages 50 and 51 of this circular. A form of proxy for the meeting is enclosed. Whether or not you are able to attend the meeting, you are requested to complete the enclosed form of proxy in accordance with the instructions printed thereon and return the same to the head office of the Company at 34th Floor, Shui On Centre, 6-8 Harbour Road, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for holding the meeting or any adjournment thereof (as the case may be). Completion and return of the form of proxy will not preclude you from attending and voting in person at the meeting and any adjournment thereof (as the case may be), should you so wish.

• For identification purpose only

Hong Kong, 25 September 2014

CONTENTS

	Page
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
LETTER FROM THE INDEPENDENT BOARD COMMITTEE . . . . . . . . . . . . . . . . . . . . .	19
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER . . . . . . . . . . . . . . . . . . . . .	21
APPENDIX — GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	45
NOTICE OF SPECIAL GENERAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	50

DEFINITIONS

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

• “associates”, “connected person(s)” and “subsidiary(ies)”

each shall have the meaning ascribed to it under the Listing Rules

• “Anglo Chinese” or

• “Independent Financial Adviser”

Anglo Chinese Corporate Finance, Limited, the independent financial adviser appointed by the Company to advise the Independent Board Committee and the Independent Shareholders in relation to the Disposals

• “Board”

• the board of Directors

• “Business Day”

• a day (other than a Saturday or Sunday) on which banks are open in Hong Kong and the PRC to the general public for business

• “Company”

• SOCAM Development Limited, a company incorporated in Bermuda with limited liability, whose shares are listed on the main board of the Stock Exchange (stock code: 983)

• “Completion Accounts”

• collectively, the Famous Scene Completion Accounts, the PD (China) Completion Accounts and the SO Granpex Completion Accounts

• “Condition(s)”

• the conditions precedent to Share Completion and Debt Completion as set out in the SP Agreements or one of such conditions

• “Debt Completion”

• collectively, Famous Scene Debt Completion, PD (China) Debt Completion and SO Granpex Debt Completion

• “Director(s)” director(s) of the Company

• “Disposals”

• collectively, the Famous Scene Disposal, the PD (China) Disposal and the SO Granpex Disposal

• “Famous Scene”

Famous Scene Holdings Limited, a company incorporated in the British Virgin Islands with limited liability, which is a direct wholly-owned subsidiary of the Company and indirectly holds 15% equity interest in SOCM at the date of this circular

— 1 —

DEFINITIONS

• “Famous Scene Adjusted NAV”

the net asset value of the Famous Scene Group as shown in the Famous Scene Completion Accounts multiplied by an agreed price-to-book ratio of 0.81 pursuant to the terms of the Famous Scene SP Agreement

• “Famous Scene Completion Accounts”

the completion accounts of the Famous Scene Group as of the date of Famous Scene Share Completion to be prepared in accordance with the terms of the Famous Scene SP Agreement

• “Famous Scene Consideration”

• the total consideration for the Famous Scene Disposal, being approximately HK$106.6 million, subject to adjustment in accordance with the terms of the Famous Scene SP Agreement

• “Famous Scene Debt Completion” completion of the assignment of the Seller C’s Debt in accordance with the terms of the Famous Scene SP Agreement

• “Famous Scene Disposal”

the disposal by the Company of the Famous Scene Sale Share, together with the assignment of the Seller C’s Debt, to Purchaser C pursuant to the Famous Scene SP Agreement and other transactions contemplated thereunder

• “Famous Scene Group” Famous Scene and its subsidiaries

• “Famous Scene Retained Payables”

• the interest-free outstanding sums, which are non-trading in nature, owing to any member of the Group (excluding the Target Group) by any member of the Famous Scene Group at Famous Scene Share Completion

• “Famous Scene Sale Share” one issued ordinary share of Famous Scene, representing the entire issued share capital of Famous Scene

• “Famous Scene Share Completion”

• completion of the disposal of the Famous Scene Sale Share in accordance with the terms of the Famous Scene SP Agreement

• “Famous Scene SP Agreement”

the sale and purchase agreement dated 21 August 2014 entered into between the Company, Purchaser C and SOL in relation to the Famous Scene Disposal

• “Group” the Company and its subsidiaries

• “HK$”

• “Hong Kong”

• Hong Kong dollars, the lawful currency of Hong Kong the Hong Kong Special Administrative Region of the PRC

— 2 —

DEFINITIONS

• “Independent Board Committee”

the committee of the Board comprising Mr. Gerrit Jan de Nys, Ms. Li Hoi Lun, Helen and Mr. Chan Kay Cheung, all being the independent non-executive Directors, formed to advise the Independent Shareholders in respect of the Disposals

• “Independent Shareholders”

the Shareholders, other than Mr. Vincent Lo and his associates

• “Latest Practicable Date”

• 19 September 2014, being the latest practicable date for ascertaining certain information referred to in this circular prior to its printing

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

• “Longstop Date”

the last day for satisfaction (or waiver, if applicable) of the Conditions, which is 31 December 2014 (or such later date as the parties to the relevant SP Agreements may agree in writing in accordance with the terms of the relevant SP Agreements)

• “Mr. Frankie Wong”

• Mr. Wong Yuet Leung, Frankie

• “Mr. Philip Wong”

• Mr. Wong Kun To, Philip

• “Mr. Vincent Lo”

• Mr. Lo Hong Sui, Vincent

• “PD (China)”

• Pat Davie (China) Limited, a company incorporated in Hong Kong with limited liability, which is an indirect non-wholly owned subsidiary of the Company and, at the date of this circular, directly or indirectly holds the entire equity interests in 上海德建裝飾工程有限公司 (Shanghai Pat Davie Limited), 上海德基諮詢有限公司 (Shanghai Pat Davie (Consultancy) Limited) and 上海衡景貿易有限公司 (Shanghai Hengjing Trading Co., Limited) as well as 50% equity interest in 大連億達德基裝飾工程有限公司 (Dalian Yida Deji Renovation Works Co., Ltd.), all being companies established in the PRC

• “PD (China) Adjusted NAV”

• the net asset value of the PD (China) Group as shown in the PD (China) Completion Accounts multiplied by an agreed price-to-book ratio of 0.81 pursuant to the terms of the PD (China) SP Agreement

• “PD (China) Completion Accounts”

• the completion accounts of the PD (China) Group as of the date of PD (China) Share Completion to be prepared in accordance with the terms of the PD (China) SP Agreement

— 3 —

DEFINITIONS

• “PD (China) Consideration” the total consideration for the PD (China) Disposal, being approximately HK$112.5 million, subject to adjustment in accordance with the terms of the PD (China) SP Agreement

• “PD (China) Debt Completion” completion of the assignment of the Seller B’s Debt in accordance with the terms of the PD (China) SP Agreement

• “PD (China) Disposal” the disposal by Seller B of the PD (China) Sale Shares, together with the assignment of the Seller B’s Debt, to Purchaser B pursuant to the PD (China) SP Agreement and other transactions contemplated thereunder

• “PD (China) Group” PD (China) and its subsidiaries “PD (China) Retained Payables” the interest-free outstanding sums, which are non-trading in nature, owing to any member of the Group (excluding the Target Group) by any member of the PD (China) Group at PD (China) Share Completion

• “PD (China) Sale Shares” two issued ordinary shares of PD (China), representing the entire issued share capital of PD (China)

• “PD (China) Share Completion” completion of the disposal of the PD (China) Sale Shares in accordance with the terms of the PD (China) SP Agreement

• “PD (China) SP Agreement” the sale and purchase agreement dated 21 August 2014 entered into between Seller B, Purchaser B, the Company and SOL in relation to the PD (China) Disposal

• “PRC” the People’s Republic of China (for the purpose of this circular, excluding Hong Kong, Taiwan and the Macao Special Administrative Region of the PRC)

• “Purchaser A” Sino Atrium Global Limited, a company incorporated in the British Virgin Islands with limited liability, which is an indirect wholly-owned subsidiary of SOL

• “Purchaser B” Sino Gate Developments Limited, a company incorporated in the British Virgin Islands with limited liability, which is an indirect wholly-owned subsidiary of SOL

• “Purchaser C” Sino Luck International Limited, a company incorporated in the British Virgin Islands with limited liability, which is an indirect wholly-owned subsidiary of SOL

— 4 —

DEFINITIONS

“Purchasers”	collectively, Purchaser A, Purchaser B and Purchaser C
“Retained Payables”	collectively, the SO Granpex Retained Payables, the PD
	(China) Retained Payables and the Famous Scene Retained
	Payables
“Resolution”	the ordinary resolution to be proposed at the SGM as set out
	in the notice of the SGM on page 50 of this circular
“RMB”	Renminbi, the lawful currency of the PRC
“Seller A”	Shui On Contractors Limited, a company incorporated in the
	British Virgin Islands with limited liability, which is a direct
	wholly-owned subsidiary of the Company
“Seller A’s Debt”	the unsecured interest-free amount due from SO Granpex to
	Seller A at SO Granpex Share Completion, the outstanding
	amount of which was approximately HK$78.1 million at the
	date of the SO Granpex SP Agreement
“Seller B”	Pat Davie Limited, a company incorporated in Hong Kong
	with limited liability, which is an indirect non-wholly owned
	subsidiary of the Company
“Seller B’s Debt”	the unsecured interest-free amount due from PD (China) to
	Seller B at PD (China) Share Completion, the outstanding
	amount of which was approximately HK$106.0 million at the
	date of the PD (China) SP Agreement
“Seller C’s Debt”	the unsecured interest-free amount due from Famous Scene to
	the Company at Famous Scene Share Completion, the
	outstanding amount of which was approximately HK$77.8
	million at the date of the Famous Scene SP Agreement
“Sellers”	collectively, Seller A, Seller B and the Company
“SFO”	the Securities and Futures Ordinance (Chapter 571 of the
	Laws of Hong Kong)
“SGM”	the special general meeting of the Company to be held for
	considering and, if appropriate, approving the SP Agreements
	and the Disposals contemplated thereunder

— 5 —

DEFINITIONS

• “Share Completion”

collectively, SO Granpex Share Completion, PD (China) Share Completion and Famous Scene Share Completion, which shall take place simultaneously

• “Shareholders” holders of the ordinary shares in the issued share capital of the Company

• “SO Granpex”

• Shui On Granpex Limited, a company incorporated in Hong Kong with limited liability, which is an indirect wholly-owned subsidiary of the Company and directly holds 70% equity interest in SOCM at the date of this circular

• “SO Granpex Adjusted NAV”

• the net asset value of the SO Granpex Group as shown in the SO Granpex Completion Accounts multiplied by an agreed price-to-book ratio of 0.81 pursuant to the terms of the SO Granpex SP Agreement

• “SO Granpex Completion Accounts”

• the completion accounts of the SO Granpex Group as of the date of SO Granpex Share Completion to be prepared in accordance with the terms of the SO Granpex SP Agreement

• “SO Granpex Consideration”

• the total consideration for the SO Granpex Disposal, being approximately HK$120.6 million, subject to adjustment in accordance with the terms of the SO Granpex SP Agreement

• “SO Granpex Debt Completion”

• completion of the assignment of the Seller A’s Debt and the SOCAM’s Debt in accordance with the terms of the SO Granpex SP Agreement

• “SO Granpex Disposal”

the disposal by Seller A of the SO Granpex Sale Shares, together with the assignment of the Seller A’s Debt and SOCAM’s Debt, to Purchaser A pursuant to the SO Granpex SP Agreement and other transactions contemplated thereunder

• “SO Granpex Group”

SO Granpex and SOCM

• “SO Granpex Retained Payables”

• an outstanding sum of RMB10 million (equivalent to approximately HK$12.6 million) bearing interest at the rate of approximately 6% per annum and other interest-free outstanding sums, all of which are non-trading in nature, owing to any member of the Group (excluding the Target Group) by any member of the SO Granpex Group at SO Granpex Share Completion

• “SO Granpex Sale Shares”

two issued ordinary shares of SO Granpex, representing the entire issued share capital of SO Granpex

— 6 —

DEFINITIONS

“SO Granpex Share Completion”	completion of the disposal of the SO Granpex Sale Shares in
	accordance with the terms of the SO Granpex SP Agreement
“SO Granpex SP Agreement”	the sale and purchase agreement dated 21 August 2014
	entered into between Seller A, the Company, Purchaser A and
	SOL in relation to the SO Granpex Disposal
“SOCAM’s Debt”	the unsecured interest-free amount due from SO Granpex to
	the Company at SO Granpex Share Completion, the
	outstanding amount of which was approximately HK$24.8
	million at the date of the SO Granpex SP Agreement
“SOCM”	瑞安建築有限公司(Shui On Construction Co., Ltd.*), a
	company established in the PRC with limited liability, which
	is indirectly owned as to 85% by the Company at the date of
	this circular
“SOL”	Shui On Land Limited, a company incorporated in the
	Cayman Islands with limited liability, whose shares are listed
	on the main board of the Stock Exchange (stock code: 272)
“SOL Group”	SOL and its subsidiaries
“SOL Independent Shareholders”	shareholders of SOL, other than Mr. Vincent Lo and his
	associates
“SP Agreements”	collectively, the SO Granpex SP Agreement, the PD (China)
	SP Agreement and the Famous Scene SP Agreement
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Target Group”	collectively, the SO Granpex Group, the PD (China) Group
	and the Famous Scene Group
“%”	per cent

For the purpose of this circular and for illustrative purpose only, RMB is converted into HK$ at the rate of RMB1 : HK$1.26. No representation is made that any amounts in RMB has been or could be converted at the above rate or at any other rates.

• For identification purpose only

— 7 —

LETTER FROM THE BOARD

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瑞安建業有限公司[*] SOCAM Development Limited

(Incorporated in Bermuda with limited liability)

(Stock Code: 983)

Executive Directors:

Mr. Lo Hong Sui, Vincent Mr. Choi Yuk Keung, Lawrence Mr. Wong Fook Lam, Raymond

Registered Office: Clarendon House 2 Church Street Hamilton HM 11 Bermuda

Non-executive Directors:

Mr. Wong Kun To, Philip Mr. Tsang Kwok Tai, Moses

Independent Non-executive Directors: Mr. Gerrit Jan de Nys Ms. Li Hoi Lun, Helen Mr. Chan Kay Cheung

Head Office and Principal Place of Business in Hong Kong: 34th Floor Shui On Centre 6-8 Harbour Road Hong Kong

25 September 2014

To the Shareholders

Dear Sir or Madam,

DISCLOSEABLE AND CONNECTED TRANSACTIONS

DISPOSAL OF ENTIRE INTERESTS IN SHUI ON GRANPEX LIMITED PAT DAVIE (CHINA) LIMITED AND FAMOUS SCENE HOLDINGS LIMITED

INTRODUCTION

Reference is made to the announcement of the Company dated 21 August 2014 in relation to the disposal of the entire interests in SO Granpex, PD (China) and Famous Scene and the assignment of the related debts.

* For identification purpose only

— 8 —

LETTER FROM THE BOARD

The purpose of this circular is to provide you with, among other things, (i) further particulars of the Disposals; (ii) the letter from the Independent Board Committee with its recommendation to the Independent Shareholders; (iii) the letter from the Independent Financial Adviser with its advice and recommendation to the Independent Board Committee and the Independent Shareholders; and (iv) a notice of the SGM.

THE SP AGREEMENTS

Date

21 August 2014

Parties

I. The SO Granpex SP Agreement

• (1) Seller A, a direct wholly-owned subsidiary of the Company, as seller of the SO Granpex Sale Shares and the Seller A’s Debt

• (2) the Company, as seller of the SOCAM’s Debt and guarantor of Seller A

• (3) Purchaser A, an indirect wholly-owned subsidiary of SOL, as purchaser of the SO Granpex Sale Shares, the Seller A’s Debt and the SOCAM’s Debt

• (4) SOL, as guarantor of Purchaser A

II. The PD (China) SP Agreement

• (1) Seller B, an indirect non-wholly owned subsidiary of the Company, as seller of the PD (China) Sale Shares and the Seller B’s Debt

• (2) Purchaser B, an indirect wholly-owned subsidiary of SOL, as purchaser of the PD (China) Sale Shares and the Seller B’s Debt

• (3) the Company, as guarantor of Seller B

• (4) SOL, as guarantor of Purchaser B

— 9 —

LETTER FROM THE BOARD

III. The Famous Scene SP Agreement

• (1) the Company, as seller of the Famous Scene Sale Share and the Seller C’s Debt

• (2) Purchaser C, an indirect wholly-owned subsidiary of SOL, as purchaser of the Famous Scene Sale Share and the Seller C’s Debt

• (3) SOL, as guarantor of Purchaser C

Consideration and payment terms

I. The SO Granpex SP Agreement

Subject to adjustment, the SO Granpex Consideration is approximately HK$120.6 million, which comprises:

• (1) an amount of approximately HK$17.7 million for the SO Granpex Sale Shares;

• (2) an amount of approximately HK$78.1 million for the Seller A’s Debt; and

• (3) an amount of approximately HK$24.8 million for the SOCAM’s Debt.

The SO Granpex Consideration prior to adjustment as stipulated in the SO Granpex SP Agreement was determined after arm’s length negotiations between the Company and SOL with reference to (i) the dollar amounts of the Seller A’s Debt and the SOCAM’s Debt; and (ii) the net asset value of the SO Granpex Group at 31 March 2014 (after deduction of a proposed dividend declared after 31 March 2014). The SO Granpex Consideration shall be increased or reduced in accordance with the terms of the SO Granpex SP Agreement based on the SO Granpex Adjusted NAV and the amounts of the Seller’s A Debt and the SOCAM’s Debt as shown in the SO Granpex Completion Accounts, provided that the adjusted SO Granpex Consideration shall not exceed HK$133 million or fall below HK$108 million.

The SO Granpex Consideration shall be satisfied in cash in the following manner:

• (a) a total amount of approximately HK$24.1 million, representing 20% of the SO Granpex Consideration prior to adjustment, shall be payable by Purchaser A to Seller A and the Company as deposit upon the signing of the SO Granpex SP Agreement;

• (b) the balance of the SO Granpex Consideration prior to adjustment, i.e. a total amount of approximately HK$96.5 million, shall be payable by Purchaser A to Seller A and the Company at SO Granpex Share Completion; and

— 10 —

LETTER FROM THE BOARD

• (c) any shortfall in the SO Granpex Consideration after adjustment shall be payable by Purchaser A to Seller A and/or the Company or, where appropriate, Seller A and/or the Company shall refund any excess amount of the SO Granpex Consideration after adjustment to Purchaser A, on the fifth (5th) Business Day after agreement or determination of the SO Granpex Completion Accounts (which shall be reviewed by an independent auditor appointed by Seller A and Purchaser A) and simultaneously at SO Granpex Debt Completion.

II. The PD (China) SP Agreement

Subject to adjustment, the PD (China) Consideration is approximately HK$112.5 million, which comprises:

• (1) an amount of approximately HK$6.5 million for the PD (China) Sale Shares; and

• (2) an amount of approximately HK$106.0 million for the Seller B’s Debt.

The PD (China) Consideration prior to adjustment as stipulated in the PD (China) SP Agreement was determined after arm’s length negotiations between the Company and SOL with reference to (i) the dollar amount of the Seller B’s Debt; and (ii) the net asset value of the PD (China) Group at 31 March 2014 (after deduction of a proposed dividend declared after 31 March 2014). The PD (China) Consideration shall be increased or reduced in accordance with the terms of the PD (China) SP Agreement based on the PD (China) Adjusted NAV and the amount of the Seller B’s Debt as shown in the PD (China) Completion Accounts, provided that the adjusted PD (China) Consideration shall not exceed HK$124 million or fall below HK$101 million.

The PD (China) Consideration shall be satisfied in cash in the following manner:

• (a) an amount of approximately HK$22.5 million, representing 20% of the PD (China) Consideration prior to adjustment, shall be payable by Purchaser B to Seller B as deposit upon the signing of the PD (China) SP Agreement;

• (b) the balance of the PD (China) Consideration prior to adjustment, i.e. an amount of approximately HK$90.0 million, shall be payable by Purchaser B to Seller B at PD (China) Share Completion; and

• (c) any shortfall in the PD (China) Consideration after adjustment shall be payable by Purchaser B to Seller B or, where appropriate, Seller B shall refund any excess amount of the PD (China) Consideration after adjustment to Purchaser B, on the fifth (5th) Business Day after agreement or determination of the PD (China) Completion Accounts (which shall be reviewed by an independent auditor appointed by Seller B and Purchaser B) and simultaneously at PD (China) Debt Completion.

— 11 —

LETTER FROM THE BOARD

III. The Famous Scene SP Agreement

Subject to adjustment, the Famous Scene Consideration is approximately HK$106.6 million, which comprises:

• (1) an amount of approximately HK$28.8 million for the Famous Scene Sale Share; and

• (2) an amount of approximately HK$77.8 million for the Seller C’s Debt.

The Famous Scene Consideration prior to adjustment as stipulated in the Famous Scene SP Agreement was determined after arm’s length negotiations between the Company and SOL with reference to (i) the dollar amount of the Seller C’s Debt; and (ii) the net asset value of the Famous Scene Group at 31 March 2014. The Famous Scene Consideration shall be increased or reduced in accordance with the terms of the Famous Scene SP Agreement based on the Famous Scene Adjusted NAV and the amount of the Seller C’s Debt as shown in the Famous Scene Completion Accounts, provided that the adjusted Famous Scene Consideration shall not exceed HK$117 million or fall below HK$96 million.

The Famous Scene Consideration shall be satisfied in cash in the following manner:

• (a) an amount of approximately HK$21.3 million, representing 20% of the Famous Scene Consideration prior to adjustment, shall be payable by Purchaser C to the Company as deposit upon the signing of the Famous Scene SP Agreement;

• (b) the balance of the Famous Scene Consideration prior to adjustment, i.e. an amount of approximately HK$85.3 million, shall be payable by Purchaser C to the Company at Famous Scene Share Completion; and

• (c) any shortfall in the Famous Scene Consideration after adjustment shall be payable by Purchaser C to the Company or, where appropriate, the Company shall refund any excess amount of the Famous Scene Consideration after adjustment to Purchaser C, on the fifth (5th) Business Day after agreement or determination of the Famous Scene Completion Accounts (which shall be reviewed by an independent auditor appointed by the Company and Purchaser C) and simultaneously at Famous Scene Debt Completion.

Reasons for adjustment to consideration

Since the initial consideration payable under the SP Agreements was determined based on the net asset value of the Target Group at 31 March 2014, an adjustment mechanism to adjust the consideration with reference to the net asset value of the Target Group at Share Completion was included to reflect changes in the net asset value of the Target Group during the period from 1 April 2014 up to Share Completion. In addition, the consideration shall be further adjusted by a mutually agreed price-to-book ratio of 0.81, which was arrived at after arm’s length negotiations with SOL based on an independent study of comparable companies commissioned by SOL, to reflect the valuation of the business.

— 12 —

LETTER FROM THE BOARD

The independent study was conducted based on the market approach, where the value of a business or a company was arrived at by reference to a comparison of the valuation of comparable publicly traded companies and transactions in a similar field of business. With reference to the businesses engaged in by the Target Group, key value indicators, such as price-to-book multiple, were adopted in the study. This is consistent with management’s understanding of the generally accepted pricing strategy for listed companies engaged in general construction and maintenance services.

In the study, a total of six Hong Kong and PRC listed companies engaged in similar businesses as the Target Group was selected, which management considers could be regarded as close representatives. Taking into account the control premium, the business strategy of the Company going forward, the limited customer base of the Target Group, the liquidity of the shares of the Target Group and the likely synergy effect to the SOL Group, and after negotiations with SOL, a price-to-book ratio of 0.81 was agreed. The Directors noted that the observable price-to-book ratios of relevant listed peers engaged in similar businesses were generally below 0.81 and considered that the agreed price-to-book ratio of 0.81 was fair and reasonable. In addition, the Independent Financial Adviser has also formed the view that the consideration, as adjusted by this price-to-book ratio, is fair and reasonable according to its review and analysis. Please refer to the letter from the Independent Financial Adviser set out on pages 21 to 44 of this circular for further details.

Conditions and completion

Completion of the Disposals (including Share Completion and Debt Completion) is conditional upon the satisfaction of the following Conditions on or before the Longstop Date:

• (a) the Independent Shareholders’ approval having been obtained in respect of the SP Agreements and the Disposals contemplated thereunder pursuant to the Listing Rules;

• (b) the SOL Independent Shareholders’ approval having been obtained in respect of the SP Agreements and the Disposals contemplated thereunder pursuant to the Listing Rules;

• (c) each of the SP Agreements having become unconditional; and

• (d) the Purchasers being reasonably satisfied that there is no breach of the warranties that is material to the Disposals contemplated under the corresponding SP Agreements.

Share Completion shall take place on the tenth (10th) Business Day after all of the Conditions are satisfied (or, in respect of the Condition set out in paragraph (d) above, waived by the relevant Purchasers), or on such other date as agreed between the parties to the relevant SP Agreements.

Following Share Completion, the Company will no longer hold any interest in members of the Target Group which will cease to be subsidiaries of the Company.

Debt Completion shall take place on the fifth (5th) Business Day after agreement or determination of the Completion Accounts in accordance with the terms of the relevant SP Agreements, or on such other date as agreed between the parties to the relevant SP Agreements.

— 13 —

LETTER FROM THE BOARD

The Company’s guarantees in relation to the SO Granpex SP Agreement and the PD (China) SP Agreement

The Company has unconditionally and irrevocably guaranteed to Purchaser A and Purchaser B the due and punctual performance by Seller A and Seller B of all their respective obligations under the SO Granpex SP Agreement and the PD (China) SP Agreement, and other transaction documents in relation thereto.

The Purchasers’ undertakings and SOL’s guarantees

The Purchasers have undertaken to the Sellers under the SP Agreements that they will procure that the Retained Payables be settled in full in RMB in the PRC and/or in HK$ in Hong Kong by the relevant members of the Target Group within 12 months from the date of Share Completion. To the best estimation of the Company, the aggregate amount of the Retained Payables in the currencies of RMB and HK$ shall not exceed RMB250 million (equivalent to approximately HK$315 million) and HK$4 million respectively. In addition, SOL has unconditionally and irrevocably guaranteed to the Sellers the due and punctual performance by the Purchasers of their respective obligations under the SP Agreements in relation to the relevant Retained Payables.

INFORMATION ON THE TARGET GROUP

Background

SO Granpex and Famous Scene are investment holding companies holding directly or indirectly equity interests in SOCM, an operating company established in the PRC which principally engages in building construction and maintenance in the PRC.

PD (China) is an investment holding company holding directly or indirectly equity interests in various operating companies established in the PRC. These operating companies principally engage in the provision of construction management consultancy services, fitting-out works and trading of fitting-out materials in the PRC.

The major customers of the Target Group are members of the Group and the SOL Group. Together, the Target Group holds the entire construction business of the Group in the PRC and is essentially the in-house construction arm serving pre-dominantly members of the Group and the SOL Group in the PRC.

— 14 —

LETTER FROM THE BOARD

Financial information

Set out below are summaries of certain unaudited consolidated financial information of the Target Group for the two financial years ended 31 December 2012 and 31 December 2013:

I. SO Granpex Group

	2013	2012
	(HK$ million)	(HK$ million)
Net profit (before taxation and extraordinary items)	19.4	61.0
Net profit (after taxation and extraordinary items)	12.9	43.1
The unaudited consolidated net asset value of SO	Granpex at 31 December 2013 was
approximately HK$92.7 million.

II. PD (China) Group

	2013	2012
	(HK$ million)	(HK$ million)
Net profit (before taxation and extraordinary items)	10.6	48.3
Net profit (after taxation and extraordinary items)	6.2	38.1
The unaudited consolidated net asset value of PD (China) at 31 December 2013 was
approximately HK$49.0 million.

III. Famous Scene Group

	2013	2012
	(HK$ million)	(HK$ million)
Net loss (both before and after taxation and
extraordinary items)	(4.4)	(0.2)

The unaudited consolidated net asset value of Famous Scene at 31 December 2013 was approximately HK$16.3 million.

— 15 —

LETTER FROM THE BOARD

FINANCIAL IMPACT ON THE GROUP AND USE OF PROCEEDS

The Group expects that there will be no material gain or loss arising from the Disposals, being calculated by reference to the estimated carrying value of the Target Group in the consolidated financial statements of the Group and the total consideration receivable as well as related transaction costs and expenses. For the financial year ended 31 December 2013, the unaudited consolidated turnover and net profit of the Target Group attributable to the Group were approximately HK$1,767 million and HK$12 million, respectively, representing approximately 22% of the Group’s turnover and comparing to HK$889 million net loss of the Group for the same year, respectively. Therefore, the Company expects that there will be a significant decrease in the Group’s turnover after completion of the Disposals. Save as aforesaid, the Company believes that the Disposals will not have any significant impact on the overall financial position of the Group but will generate proceeds of approximately HK$340 million to the Group. The net proceeds from the Disposals after deducting the transaction costs and expenses will be used by the Group for general working capital purpose and reducing the Group’s bank borrowings and finance costs.

REASONS FOR AND BENEFITS OF THE DISPOSALS

The Target Group holds the entire construction business of the Group in the PRC and is essentially the in-house construction arm serving pre-dominantly members of the Group and the SOL Group in the PRC. Following completion of the strategic monetisation plan to divest the Group’s property projects and inventories in the PRC in the next few years, the Group may not focus on property business in the PRC, hence the existing synergy of having the Target Group serving as the in-house construction arm for the Group’s property business in the PRC will then cease to exist.

In addition, as noted in the above section headed “Financial Impact on the Group and Use of Proceeds”, the net profit of the Target Group attributable to the Group for the financial year ended 31 December 2013 amounted to HK$12 million, which is not significant. The Disposals will however make a positive contribution to the cash flow of the Company and help reduce the Group’s bank borrowings and finance costs.

In light of the above, after consideration, the Directors are of the view that the Disposals contemplated under the SP Agreements form part of the Company’s overall monetisation strategy and is in the interests of the Company and the Shareholders as a whole.

Following completion of the Disposals, the Company will continue to implement its strategic monetisation plan to divest the Group’s property assets, inventories and cement investments, and focus on its existing construction business primarily in Hong Kong (the “Hong Kong Construction Business”). Leveraging on its experience and capabilities in timely and quality delivery, the Group has firmly established itself in the Hong Kong Construction Business over the years. The Company is well poised to capture thriving market opportunities for the construction industry in Hong Kong and to take on an increasing number of construction contracts when public works are being actively launched by the government of Hong Kong. The Directors believe that, after completion of the monetisation plan, including the Disposals, the Group will focus its management and financial resources on further developing the Hong Kong Construction Business.

— 16 —

LETTER FROM THE BOARD

GENERAL INFORMATION

The Group principally engages in property development and investment, asset management, construction and investment in cement operations in Hong Kong and the PRC.

Seller A is an investment holding company. Seller B principally engages in interior decoration, fitting-out, design and contracting in Hong Kong.

The SOL Group is one of the leading property developers in the PRC. It principally engages in the development, sale, leasing, management and long-term ownership of high-quality residential, office, retail, entertainment and cultural properties in the PRC.

Purchaser A, Purchaser B and Purchaser C are all investment holding companies.

LISTING RULES IMPLICATIONS

As the applicable percentage ratios calculated pursuant to Rule 14.07 of the Listing Rules in respect of the Disposals exceed 5% but are less than 25%, the Disposals constitute discloseable transactions and are subject to the reporting and announcement requirements but exempt from the Shareholders’ approval requirement under Chapter 14 of the Listing Rules.

Mr. Vincent Lo, who is the Chairman of the Company, and his associates are together entitled to control the exercise of more than 30% of the voting power at general meetings of the Company. Accordingly, Mr. Vincent Lo is a connected person of the Company. Mr. Vincent Lo, who is also the Chairman of SOL, and his associates are together entitled to control the exercise of more than 30% of the voting power at general meetings of SOL. Therefore, SOL and the Purchasers, all being subsidiaries of SOL, are associates of a connected person of the Company, and thus are connected persons of the Company under Chapter 14A of the Listing Rules. As such, the entering into of the SP Agreements and the Disposals contemplated thereunder also constitute connected transactions of the Company. As the applicable percentage ratios calculated pursuant to Rule 14.07 of the Listing Rules in respect of the Disposals exceeds 5%, the Disposals are, in addition to the reporting and announcement requirements, subject to the Independent Shareholders’ approval requirement under Chapter 14A of the Listing Rules.

As (i) Mr. Vincent Lo has a material interest in the Disposals given his interest in the Purchasers; and (ii) Mr. Frankie Wong (then being a Director) and Mr. Philip Wong are directors of SOL, they have abstained from voting on the resolutions passed by the Board approving the SP Agreements and the Disposals contemplated thereunder.

In view of the material interest of Mr. Vincent Lo in the Disposals, he and his associates shall abstain from voting on the Resoluton at the SGM in accordance with the Listing Rules. At the Latest Practicable Date, to the best knowledge of the Company having made all reasonable enquires, Mr. Vincent Lo and his associates were together entitled to exercise control over the voting rights in respect of 234,979,300 shares (including shares held by other family members of Mr. Vincent Lo in addition to those disclosed on page 45 of this circular) in the Company, representing approximately 48.5% of the total issued share capital of the Company.

— 17 —

LETTER FROM THE BOARD

SPECIAL GENERAL MEETING

A notice convening the SGM to be held at Room 103, 1st Floor, Shui On Centre, 6-8 Harbour Road, Hong Kong on Thursday, 16 October 2014 at 11:30 a.m. is set out on pages 50 and 51 of this circular. At the SGM, the Resolution will be proposed to approve, among others, the SP Agreements and the Disposals.

A form of proxy for the SGM is enclosed. Whether or not you are able to attend the SGM, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon and return the same to the head office and principal place of business of the Company at 34th Floor, Shui On Centre, 6-8 Harbour Road, Hong Kong as soon as possible and in any event no later than 48 hours before the time appointed for the holding of the SGM or any adjournment thereof (as the case may be). Completion and return of the form of proxy will not preclude you from attending and voting in person at the SGM and any adjournment thereof (as the case may be) if you so wish.

In accordance with Rule 13.39(4) of the Listing Rules, the chairman of the SGM will demand a poll for the Resolution. An announcement of the voting results will be made after the SGM in accordance with the Listing Rules.

RECOMMENDATION

The Directors (including the independent non-executive Directors) consider that the SP Agreements and the Disposals are on normal commercial terms, which are fair and reasonable and in the interests of the Company and the Shareholders as a whole. Accordingly, the Directors recommend the Independent Shareholders to vote in favour of the Resolution at the SGM.

ADDITIONAL INFORMATION

Your attention is drawn to (i) the letter from the Independent Board Committee set out on pages 19 and 20 of this circular which contains its recommendation to the Independent Shareholders; (ii) the letter from the Independent Financial Adviser, Anglo Chinese, set out on pages 21 to 44 of this circular which contains its advice and recommendation to the Independent Board Committee and the Independent Shareholders; and (iii) the additional information set out in the appendix to this circular.

Yours faithfully, For and on behalf of the Board Choi Yuk Keung, Lawrence

Vice Chairman and Managing Director

— 18 —

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

The following is the full text of the letter of recommendation from the Independent Board Committee which was prepared for the purpose of inclusion in this circular.

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瑞安建業有限公司[*] SOCAM Development Limited

(Incorporated in Bermuda with limited liability)

(Stock Code: 983)

25 September 2014

To the Independent Shareholders

Dear Sir or Madam,

DISCLOSEABLE AND CONNECTED TRANSACTIONS

DISPOSAL OF ENTIRE INTERESTS IN SHUI ON GRANPEX LIMITED PAT DAVIE (CHINA) LIMITED AND FAMOUS SCENE HOLDINGS LIMITED

We refer to the circular dated 25 September 2014 (the “Circular”) issued by the Company to the Shareholders of which this letter forms part. Terms defined in the Circular shall have the same meanings herein unless the context otherwise requires.

We have been appointed by the Board to form the Independent Board Committee to advise the Independent Shareholders in relation to the SP Agreements and the Disposals, taking into account the recommendation of the Independent Financial Adviser. Anglo Chinese has been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in the same regard.

We wish to draw your attention to the letter from the Board set out on pages 8 to 18 of the Circular, which contains the information about the SP Agreements and the Disposals, and the letter from the Independent Financial Adviser, Anglo Chinese, set out on pages 21 to 44 of the Circular, which contains its advice and recommendation in the same regard.

* For identification purpose only

— 19 —

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

Having considered the terms of the SP Agreements, the advice of Anglo Chinese and the relevant information contained in the letter from the Board, we are of the opinion that the SP Agreements and the Disposals are entered into in the ordinary and usual course of business of the Group and upon normal commercial terms, which are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

Accordingly, we recommend the Independent Shareholders to vote in favour of the Resolution at the SGM.

Yours faithfully, For and on behalf of Independent Board Committee Chan Kay Cheung Independent Non-executive Director

— 20 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Set out below is the full text of the letter of advice from Anglo Chinese to the Independent Board Committee and the Independent Shareholders in relation to the Disposals prepared for inclusion in this circular.

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25th September, 2014

The Independent Board Committee and the Independent Shareholders SOCAM Development Limited 34/F, Shui On Centre 6-8 Harbour Road Hong Kong

Dear Sirs,

Discloseable and connected transactions - disposal of the entire interests in Shui On Granpex Limited, Pat Davie (China) Limited and Famous Scene Holdings Limited

INTRODUCTION

We refer to our appointment as the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders in relation to the Disposals. The details of which are contained in the circular from the Company dated 25th September, 2014 (the “Circular”) of which this letter forms a part.

Expressions used in this letter have the same meanings as defined in the Circular unless the context requires otherwise.

The Disposals give rise to connected and discloseable transactions for SOL and the Company under Chapters 14A and 14 of the Listing Rules and the Disposals are therefore subject to the reporting and announcement requirements set out therein, as well as the approval of the Independent Shareholders and the approval of SOL Independent Shareholders in the prescribed manner.

The connected transactions for the Company arise because Mr. Vincent Lo is the Chairman of the Company and a Shareholder who is entitled to exercise more than 30 per cent of the votes at a general meeting of the Company and the Purchasers are wholly owned subsidiaries of SOL of which Mr. Vincent Lo is also the Chairman and a shareholder of SOL where he is also entitled to exercise more than 30 per cent of the votes at a general meeting of SOL. Thus, the Purchasers are connected persons of the Company under Chapter 14A of the Listing Rules and the Disposals are subject to the approval of Independent Shareholders and SOL Independent Shareholders.

— 21 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The Independent Board Committee comprising Mr. Gerrit Jan de Nys, Ms. Li Hoi Lun, Helen and Mr. Chan Kay Cheung has been formed to consider whether the Disposals are on normal commercial terms, in the ordinary and usual course of business and are fair and reasonable and in the interests of the Company and its Shareholders as a whole. We have been appointed to advise the Independent Board Committee and Independent Shareholders in respect of the Disposals.

In formulating our opinion and recommendation, we have relied on the information and facts supplied to us by the Company and the opinions expressed by its Directors. We have assumed that the information and representations contained or referred to in the Circular were true and accurate at the time they were made and continued to be so at the date of the despatch of the Circular. We have no reason to doubt the truth, accuracy and completeness of the information and representations provided to us by the Directors. We have also been advised by the Directors that and believe that no material facts have been omitted from the Circular. We have not conducted an independent investigation into the affairs of the Company and its subsidiaries (the “SOCAM Group”) or verified any of the information that we have considered or that has been provided to us and we have not made any physical inspection of the Target Group or any aspect of it.

We consider we have reviewed sufficient information to reach an informed view to justify reliance on the accuracy of the information contained in the Circular and to provide a reasonable basis for our recommendation.

Apart from normal professional fees for our services to the Company in connection with this appointment, no arrangement exists whereby Anglo Chinese will receive any benefits from the Company or any of its associates.

Mr. Christopher J. Howe, the author of this letter, has over 30 years of experience with clients in investment banking. He graduated from Oxford University in 1977 and obtained a MSc from the City University Business School, London. In 1982 he returned to Hong Kong and spent six years in corporate finance, first with Wardley Limited and then with Citicorp International Limited, where he was a director. Since then he has also been active in a wider range of corporate finance activities, particularly mergers and acquisitions and company sales. He served as a member of the Dual Filing Advisory Group of the Securities and Futures Commission in Hong Kong. During the past two years, we did not act for the Company.

PRINCIPAL FACTORS TO CONSIDER IN ASSESSING THE MERITS OF THE DISPOSALS

We have set out below the principal factors that we have taken into account in arriving at our advice to the Independent Board Committee and the Independent Shareholders. In summary the principal factors are:

• the share price performance of the Company’s shares (the “Shares”) so as to analyse how the stock market values the Shares and thereby, the SOCAM Group;

• the background and the makeup of the SOCAM Group so as to analyse the impact of the Disposals on the prospects and future operation of the rest of the SOCAM Group;

— 22 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

• the market valuations on any comparable companies or comparable company transactions in Hong Kong or the PRC;

• the important terms of the SP Agreements so as to assess whether we consider these to be fair and reasonable and on normal commercial terms and whether completion risk exists or not. In making this analysis we have looked at the valuation of the securities to be sold, the valuation methodology, the payment terms, conditionality, and undertakings given by SOL in respect of the Retained Payables and the composition of the SP Agreements, taken as a whole;

• the reasons for the Disposals and how that fits with the strategy of the Company as that has been communicated to the market in the past; and

• risk factors facing the Company in selling the Target Group.

An analysis of the price performance of the Shares

Set out below in Table 1 is a chart showing the price performance of the Shares relative to the movements in the Hang Seng Index and the Shares traded and set out below in Table 2 is a chart showing movements in the price of the Shares and in Table 3, the resulting price to book ratio, all on a weekly basis so as to illustrate how the stock market values the Shares and thereby the Company.

Table 1 — Share price performance versus movements in the Hang Seng Index and volume of Shares traded on a weekly basis for the last three years ended 31st December, 2013 and the year to date.

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

Index (January,
Volume (million)
2011 = 100)
Volume of the Shares traded The Shares Hang Seng Index
----- End of picture text -----

Source: Bloomberg

The Shares have underperformed the Hang Seng Index for much of 2014. This performance reflects challenging conditions for the SOCAM Group’s business in the PRC which the Company described as “unprecedented challenges” in its results announcement for the half year ended 30th June, 2014.

— 23 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Table 2 — Share price on a weekly basis for the last three years ended 31st December, 2013 and the year to date.

Source: Bloomberg

This share price chart illustrates the poor market sentiment that currently surrounds the Shares that recovered in early 2014 when it was announced in between 31st March and 30th June, 2014 that Shui On Company Limited was negotiating to sell a controlling shareholding in the Company in terms of the Hong Kong Codes on Takeovers and Mergers and Share Buy-backs. On 30th July, 2014, it was announced that discussions of such a transaction had ceased and the price of the Shares fell back to around HK$7 per Share, where the price was in late 2011. Since 31st December, 2011 the price of the Shares has decreased by 7.9 per cent and the level of the Hang Seng Index has risen by some 28.8 per cent as at the Latest Practicable Date.

Table 3 — Price to book ratio on a weekly basis for the last three years ended 31st December, 2013 and the year to date.

Source: Bloomberg

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This table shows that the price of the Shares consistently sits at a level substantially below 0.81 times its book value, the ratio used in part to establish the price elements of the consideration for the Disposals which we discuss fully on page 35.

— 24 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Background and the make up of the SOCAM Group

The Company describes the business of the SOCAM Group in its corporate profile set out in its last audited report and accounts for the year ended 31st December, 2013 in the manner extracted by us below.

The Company’s primary business interests encompass three main areas:

• Niche property development operations in the PRC that leverage on specialist knowledge in the fast turnaround of projects from acquisition, development and market positioning, to disposal. The Company also has close involvement in an integrated knowledge community project in Dalian.

• Burgeoning construction business in Hong Kong with a strong track record of quality, site safety and environmental performance.

• Cement operations through the Lafarge Shui On Cement joint venture, a major cement manufacturer in southwest China.

THE COMPANY

• PROPERTY CONSTRUCTION CEMENT

• • Special Situation • Public Housing • Lafarge Shui On Projects • Commercial Cement

• • Knowledge Residential and Community Institutional Project Buildings

• • Private Equity • Interior Fitting Property Fund Out and Building Renovation

• • Maintenance

Source: 2013 annual report of the Company

— 25 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Profit and loss for the SOCAM Group

As mentioned earlier, the Company characterised trading conditions for the first half of the year ended 30th June, 2014 as “unprecedented challenges in its operating market environment due to the restricted mortgage policy for residential purchases and the austerity measures in the Chinese Mainland.”

Operating profits of the SOCAM Group for the three years ended 31st December, 2013 and interim to 30th June, 2014:

				For the
				six months
				ended 30th
	**For the year **	**ended 31st **	December,	June,
HK$ million	2011	2012	2013	2014
Operating profit/(loss) (Note)	281	211	211	(25)
Net profit/(loss) attributable to Shareholders	910	459	(889)	(573)

Source: Financial reports of the Company

Note: Operating profit is calculated as SOCAM Group turnover minus cost of sales (including changes in inventories of finished goods, work in progress, contract work in progress and cost of properties sold and raw materials and consumables used) plus other income minus operating expenses (including staff costs, depreciation and amortisation expenses and subcontracting, external labour costs and other expenses).

These conditions have resulted in two profit warnings issued by the Company on 15th January, 2014 and 14th July, 2014 and have been aggravated by the problem of major over-capacity in the cement industry in the PRC and the reported determination of the Board to dispose of its investment in Lafarge Shui On Cement Limited (“LSOC”) which has been a disappointment in terms of profitability and tying up unproductively of some HK$3,327 million of Company’s capital as at 30th June, 2014 in this investment and at the carrying value in the books of account of the Company at 30th June, 2014, which is equivalent to some 16.4 per cent of total assets and 34.8 per cent of non-current assets as at that date. The Company’s corporate strategy as announced on 27th March, 2013 is to dispose of this investment as part of a wider announced strategy of a “strategic monetisation plan to divest property assets in an orderly manner and unlock the asset values” reinforced in the financial report and accounts of the SOCAM Group for the year ended 31st December, 2013 and subsequently.

— 26 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The Company agreed with the other shareholder of LSOC an “exit road map for SOCAM’s divestment” but it was announced on 5th December, 2013 that Lafarge had unilaterally terminated certain provisions in the agreed exit road map and accordingly a timetable for this divestment may be uncertain. In these circumstances, where challenging market conditions slow down other asset realisations, the Disposals are a source of cash flow for the SOCAM Group, taken in the context of an attributable loss for shareholders of HK$889 million for the year ended 31st December, 2013 and of HK$573 million for the half year ended 30th June, 2014, equivalent to HK$1.18 per Share. These losses arose from a substantial drop in profit contribution from the property segment and an increase in losses from LSOC and other joint ventures and associates.

The SOCAM Group’s assets

As at 30th June, 2014, capital was deployed in the SOCAM Group’s assets by business segments with property in the PRC representing by far the greater portion of the assets of the SOCAM Group as follows:

Total SOCAM Group’s assets by business segments as at 30th June, 2014

HK$ million Property 13,177 Cement 3,780 Construction 2,127 Others 1,184 20,268	% 65 19 10 6
	100

Because of the importance of property to the SOCAM Group and because of its substantial links with SOL, we have set out below Tables 4, 5, 6 and 7 demonstrating the performance of the shares of SOL (“SOL Shares”) over the last three years ended 31st December, 2013 and the year to date and these charts show that challenging trading conditions are affecting the market valuation of the SOL Shares, which have substantially underperformed the Hang Seng Index over the period and the price performance of the SOL Shares.

— 27 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Table 4 — SOL Shares price performance versus movements in the Hang Seng Index and volume of SOL Shares traded on a weekly basis for the last three years ended 31st December, 2013 and the year to date.

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

Index (January,
Volume (million)
2011 = 100)
Volume of SOL Shares traded SOL Shares Hang Seng Index
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Source: Bloomberg

Table 5 — SOL Share price on a weekly basis for the last three years ended 31st December, 2013 and the year to date.

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Source: Bloomberg

— 28 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Table 6 — Price to book ratio on a weekly basis for the last three years ended 31st December, 2013 and the year to date.

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Source: Bloomberg

Table 7 — Relative share price performance of the Company versus SOL on a weekly basis for the last three years ended 31st December, 2013 and the year to date.

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

Index (January,
2011 = 100)
SOL the Company
----- End of picture text -----

Source: Bloomberg

As at 30th June, 2014 the SOCAM Groups’ contracts on hand had a gross value of HK$19.3 billion of which the Target Group accounted for HK$3.6 billion and the outstanding portion to be completed was HK$14.4 billion of which the Target Group accounted for HK$1.9 billion.

— 29 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The SOCAM Group’s consolidated statement of financial position

The consolidated statement of financial position of the SOCAM Group as at 31st December, 2013 and as at 30th June, 2014 has not changed materially save for asset realisations in the year ended 31st December, 2013 and for the erosion of Shareholder’s equity from increasing losses. The SOCAM Group is connected with the operations of SOL in the PRC with HK$1,224 million of non-current assets due from or invested in associates out of a total of HK$9,568 million as at 30th June, 2014. In current assets, a further HK$589 million due from associates or related companies out of a total of HK$8,487 million as at 30th June, 2014. That is HK$1,813 million connected with SOL out of total assets of HK$20,268 million including HK$2,213 million classified as held for disposal. These assets connected with SOL represent solely SOCAM Group’s investment in Dalian Tiandi, a property development project owned by the Company as to 22 per cent, SOL as to 48 per cent and Yida Group as to 30 per cent.

Total liabilities to shareholders funds and minority interests shows leverage of about 1.34 times as at 30th June, 2014, which in the context of the current trading conditions is moderate, in our opinion.

We regard this ratio as a more important measure of overall leverage than “gearing”, being simply borrowed funds to shareholder funds and minority interests.

The Company’s investment in LSOC

The investment in LSOC is now accounted for under the equity method.

In view of the importance of this asset to the SOCAM Group, the Company has clarified further the change in accounting method below. According to the Company, the accounting treatment of this asset was changed during the year ended 31st December, 2012 when in December, 2012 an agreement was reached with the other shareholder of LSOC for the exit of the SOCAM Group from this joint venture. The Directors were of the view that it would be highly probable that the exit would take place by the end of 2013. Therefore the SOCAM Group’s interest in LSOC of HK$4,060 million at 31st December, 2012 had been accounted for as “Assets classified as held for disposal” in the consolidated statement of financial position as at 31st December, 2012, and the SOCAM Group’s cement operations through LSOC had been classified as discontinued operations for the year ended 31st December, 2012. The prior year figures had been re-presented for conformity with the presentation in the 2012 annual report of the SOCAM Group. Subsequently in 2013 and during the half year ended 30th June, 2014, the divestment of the investment in LSOC did not take place and the investment in LSOC was re-classified as a joint venture and accounted for under the equity method.

More details on the make up of the SOCAM Group’s assets are set out below.

The make up of the SOCAM Group’s assets and their contribution to the SOCAM Group

Assets and their contribution to the SOCAM Group

Set out below in Table 8 is a bar chart showing the revenue of the SOCAM Group by geographical segment and in Table 9, revenue by business segment and in Table 10, results (operating profit) by business segment and, in Tables 11 and 12, the make up of total assets of the SOCAM Group by business segment and for non-current assets as to where they are situated as between the PRC and Hong Kong.

— 30 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Table 8 — Revenue from external customers by geographical segment for the last three years ended 31st December, 2013.

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The PRC
The PRC
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Source: Financial reports of the Company

Table 9 — Revenue by business segment for the last three years ended 31st December, 2013 and the half year ended 30th June, 2014.

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Sources: Financial reports and the interim results announcement for the half year ended 30th June, 2014 of the Company

— 31 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Table 10 — Segment results by business segment for the last three years ended 31st December, 2013 and the half year ended 30th June, 2014.

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

118 256 120 47
-53 -360 -286 -132
1,246 1,208 447 -240
106 -40 -135 -16
1,417 1,064 146 -341
----- End of picture text -----

Sources: Financial reports and the interim results announcement for the half year ended 30th June, 2014 of the Company

Table 11 — The make up of total assets by business segment for the last three years ended 31st December, 2013 and the half year ended 30th June, 2014.

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Sources: Financial reports and the interim results announcement for the half year ended 30th June, 2014 of the Company

— 32 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Table 12 — The make up of non-current assets by geographical segment for the last three years ended 31st December, 2013.

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The PRC
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----- Start of picture text -----

The PRC
----- End of picture text -----

Source: Financial reports of the Company

The tables illustrate the concentration of the SOCAM Group activities and assets in the PRC and the exposure to challenging trading conditions there as mentioned earlier on page 27 of our letter. Although leveraged as described above, the SOCAM Group remained apparently liquid with cash and cash equivalents reported at HK$2,562 million and a satisfactory liquidity ratio of 1.14 as at 30th June, 2014.

— 33 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The make up of the assets of the Target Group and the financial effects of the Disposals for the SOCAM Group

Independent Shareholders should study the corporate charts of how the Target Group is held set out below.

The chart below shows the existing simplified shareholding structure of the Target Group:

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

SOCAM / Seller C
(Bermuda)
100%
Seller A
(British Virgin Islands)
92%
Seller B
(Hong Kong)
100% 100%
100%
Famous Scene SO Granpex PD (China)
(British Virgin Islands) (Hong Kong) (Hong Kong)
Other shareholder Other shareholder
(PRC) (PRC)
15% 15% 70%
100% 50% 50%
SOCM
Dalian Yida Deji
(PRC)
3 subsidiaries Renovation
(PRC) Works Co., Ltd
(PRC)
----- End of picture text -----

The chart below shows the simplified shareholding structure of the Target Group immediately after the completion of the Disposals:

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

SOL
(Cayman Islands)
100% 100% 100%
Purchaser C Purchaser A Purchaser B
(British Virgin Islands) (British Virgin Islands) (British Virgin Islands)
100% 100% 100%
Famous Scene SO Granpex PD (China)
(British Virgin Islands) (Hong Kong) (Hong Kong)
Other shareholder Other shareholder
(PRC) (PRC)
15% 15% 70%
100% 50% 50%
SOCM
(PRC) Dalian Yida Deji
3 subsidiaries Renovation
(PRC) Works Co., Ltd
(PRC)
----- End of picture text -----

— 34 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Net assets sold in the Disposals

Under the SP Agreements, the consideration is calculated in part by reference to the net asset value of the respective shares sold and acquired under the respective SP Agreements by reference to the carrying values in the books of account of the respective companies as at 31st March, 2014 as adjusted in terms of the SP Agreements. This date arose since that was the closest reference point for the Directors when negotiations with SOL began.

Adjusted net asset values under the respective SP Agreements refer to adjustments made by multiplying the net asset value of the respective shares to be sold and purchased by 0.81. We are informed by the Company that this adjustment was made in negotiation with SOL which based its position on an independent study of comparable companies commissioned by SOL. Our own research set out below concurs that such an adjustment, representing a discount of HK$12.4 million (or a discount of 19 per cent on the unaudited aggregate net asset values of shares disposed under the SP Agreements of HK$65.4 million prevailing as at 31st March, 2014), is reasonable in terms of market comparisons.

The elements of the consideration to which the 0.81 NAV Adjustment is applied are:

			HK$ million
-	the	SO Granpex Sale Shares	17.7
-	the	PD (China) Sale Shares	6.5
-	the	Famous Scene Sale Share	28.8
			53.0

At full carrying value, the aggregate consideration would have been HK$65.4 million.

— 35 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

As at that date, the unaudited, adjusted, proforma net asset value of the Target Group have been summarised for us by the Company as follows.

The net assets disposed of in the transaction are as follows:

	At 31st March, 2014
	HK$ million
Property, plant and equipment	4.8
Interests in joint ventures	6.3
Debtors, deposits and prepayments	206.6
Inventories	0.1
Amounts due from customers for contract work	87.4
Amounts due from joint ventures	203.2
Amounts due from associates	10.6
Amounts due from related companies	382.1
Bank balances, deposits and cash	121.0
Creditors and accrued charges	(399.0)
Amounts due to joint ventures	(39.0)
Amounts due to associates	(0.2)
Amounts due to Group companies	(190.7)
Taxation payable	(19.2)
Non-controlling interests	(21.9)
Shareholders’ loans	(286.7)
Net assets disposed of	65.4

Source: The Company

The SOCAM Group expects that there will be no material gain or loss arising from the Disposals, being calculated by reference to the estimated carrying value of the Target Group in the consolidated financial statements of the SOCAM Group and the total consideration receivable as well as related transaction costs and expenses. For the financial year ended 31st December, 2013, the unaudited consolidated turnover and net profit of the Target Group attributable to the SOCAM Group were approximately HK$1,767 million and HK$12 million, respectively, representing approximately 22 per cent of the SOCAM Group’s turnover and comparing to HK$889 million net loss of the SOCAM Group for the same year, respectively. Therefore, the Company expects that there will be a significant decrease in the SOCAM Group’s turnover after completion of the Disposals. Save as aforesaid, the Company believes that the Disposals will not have any significant impact on the overall financial position of the SOCAM Group but will generate proceeds of approximately HK$340 million to the SOCAM Group. The net proceeds from the Disposals after deducting the transaction costs and expenses will be used by the SOCAM Group for general working capital purposes and reducing the SOCAM Group’s bank borrowings and finance costs.

— 36 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Earnings

We have not been provided with unaudited proforma consolidated income statement of the Target Group for the three months ended 31st March, 2014 but that for the half year to 30th June, 2014 show pre-tax profits of HK$18.0 million and net profit attributable to the Company of HK$15.4 million.

Comparable companies and comparable company transactions in Hong Kong or the PRC

Set out below is data on companies which we find comparable to some degree. We have divided this information into four sectors: three that comprise the make up of the SOCAM Group’s business of property development, construction and building maintenance and cement in the PRC and one comprising smaller conglomerates, publicly traded in Hong Kong and of a comparable size and scope. In selecting these companies we have had regard for size and lines of business and the geography of them but the comparisons are not and cannot be exact due to variations in year end dates, different locations of assets or businesses and a different mix of holding structures for assets, different levels of financial leverage and of risks.

Table 13 — Comparable analysis of the property development sector

		Market	P/E trailing	Price/	EV/		Net	Dividend		Current	Net debt
Ticker	Company	cap	12 months	book	EBITDA	Sales	income	yield	ROE	Ratio	to Equity
		(HK$m)	(x)	(x)	(x)	(HK$m)	(HK$m)	(%)	(%)	(%)	(%)
1918	Sunac China Holdings Ltd	19,921	4.8	1.1	5.3	38,907	4,010	4.0	27.5	1.7	85.6
272	Shui On Land Ltd	15,523	6.7	0.3	8.5	12,400	2,681	3.2	6.3	2.0	76.6
1628	Yuzhou Properties Co Ltd	6,048	2.5	0.6	4.1	9,426	1,856	8.6	22.0	1.9	83.0
2868	Beijing Capital Land Ltd	5,663	2.7	0.5	6.7	12,935	1,920	10.0	18.6	1.8	54.0
1777	Fantasia Holdings Group Co Ltd	5,067	3.7	0.5	4.7	9,185	1,533	7.6	17.5	1.8	117.8
1966	China SCE Property Holdings Ltd	5,375	7.1	0.7	5.7	8,312	1,120	3.2	16.8	1.5	75.3
1238	Powerlong Real Estate Holdings Ltd	4,317	2.4	0.2	7.2	9,156	1,771	N/A	8.5	1.6	68.9
337	Greenland Hong Kong Holdings Ltd	3,770	N/A	0.5	8.5	6,873	44	1.5	0.7	1.1	113.4
3883	China Aoyuan Property Group Ltd	3,619	4.1	0.4	6.0	7,229	928	7.7	10.4	1.8	89.2
983	SOCAM	3,163	N/A	0.4	N/A	7,952	(889)	N/A	(9.1)	1.2	58.0
2118	Tian Shan Development Holding Ltd	3,230	8.2	1.5	9.3	3,486	327	1.1	15.9	1.5	93.0
672	Zhong An Real Estate Ltd	2,628	4.2	0.3	7.5	3,076	531	2.0	7.5	1.3	68.2
	Minimum	2,628	2.4	0.2	4.1	3,076	(889)	1.1	(9.1)	1.1	54.0
	Average	6,527	4.6	0.6	6.7	10,745	1,319	4.9	11.9	1.6	81.9
	Median	4,692	4.1	0.5	6.7	8,734	1,327	3.6	13.1	1.6	79.8
	Maximum	19,921	8.2	1.5	9.3	38,907	4,010	10.0	27.5	2.0	117.8

Sources: Bloomberg and financial reports of the corresponding corporate companies

— 37 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Table 14 — Comparable analysis of the construction and building maintenance sector

		Market	P/E trailing	Price/	EV/		Net	Dividend		Current	Net debt
**Ticker **	Company	cap	12 months	book	EBITDA	Sales	income	yield	ROE	Ratio	to Equity
		(HK$m)	(x)	(x)	(x)	(HK$m)	(HK$m)	(%)	(%)	(%)	(%)
983	SOCAM	3,163	N/A	0.4	N/A	7,952	(889)	N/A	(9.1)	1.2	58.0
2355	Baoye Group Co Ltd	3,096	3.8	0.4	1.1	17,553	663	2.5	12.6	1.3	(21.3)
404	Hsin Chong Construction Group Ltd	2,887	13.9	0.7	14.8	11,506	185	3.0	5.9	1.6	37.7
687	Tysan Holdings Ltd	2,484	9.2	1.0	2.8	3,504	270	3.5	11.2	1.8	(35.5)
610	Wai Kee Holdings Ltd	1,864	4.1	0.4	3.8	2,546	440	5.6	8.8	1.1	(3.1)
711	Chun Wo Development Holdings Ltd	1,103	11.2	0.7	12.6	6,551	93	1.7	5.9	1.3	99.6
15	Vantage International Holdings Ltd	1,048	8.9	0.5	9.6	3,380	115	1.7	6.7	1.2	18.5
896	Hanison Construction Holdings Ltd	595	3.8	0.4	5.0	1,627	156	4.5	12.1	1.3	27.7
	Minimum	595	3.8	0.4	1.1	1,627	(889)	1.7	(9.1)	1.1	(35.5)
	Average	2,030	7.8	0.6	7.1	6,827	129	3.2	6.8	1.3	22.7
	Median	2,174	8.9	0.5	5.0	5,028	171	3.0	7.8	1.3	23.1
	Maximum	3,163	13.9	1.0	14.8	17,553	663	5.6	12.6	1.8	99.6

Sources: Bloomberg and financial reports of the corresponding corporate companies

Table 15 — Comparable analysis of the cement sector

		Market	P/E trailing	Price/	EV/		Net	Dividend		Current	Net debt
Ticker	Company	cap	12 months	book	EBITDA	Sales	income	yield	ROE	Ratio	to Equity
		(HK$m)	(x)	(x)	(x)	(HK$m)	(HK$m)	(%)	(%)	(%)	(%)
1136	TCC International Holdings Ltd	11,337	5.3	0.7	5.8	12,971	1,675	4.2	10.1	1.1	54.5
743	Asia Cement China Holdings Corp	8,273	6.9	0.7	5.9	9,249	1,038	3.5	9.2	1.4	51.7
691	China Shanshui Cement Group Ltd	8,786	8.2	0.8	6.2	20,863	1,283	2.9	11.4	0.6	153.0
983	SOCAM	3,163	N/A	0.4	N/A	7,952	(889)	N/A	(9.1)	1.2	58.0
	Minimum	3,163	5.3	0.4	5.8	7,952	(889)	2.9	(9.1)	0.6	51.7
	Average	7,890	6.8	0.6	6.0	12,759	777	3.6	5.4	1.1	79.3
	Median	8,529	6.9	0.7	5.9	11,110	1,161	3.5	9.7	1.1	56.3
	Maximum	11,337	8.2	0.8	6.2	20,863	1,675	4.2	11.4	1.4	153.0

Sources: Bloomberg and financial reports of the corresponding corporate companies

— 38 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Table 16 — Comparable analysis of the small cap conglomerates sector

		Market	P/E trailing	Price/	EV/		Net	Dividend		Current	Net debt
Ticker	Company	cap	12 months	book	EBITDA	Sales	income	yield	ROE	Ratio	to Equity
		(HK$m)	(x)	(x)	(x)	(HK$m)	(HK$m)	(%)	(%)	(%)	(%)
200	Melco International Development Ltd	30,620	15.6	2.4	19.0	183	1,597	0.6	15.2	12.3	(2.8)
604	Shenzhen Investment Ltd	15,708	6.5	0.5	6.8	9,779	2,738	6.4	12.8	1.6	80.7
882	Tianjin Development Hldgs Ltd	7,675	8.4	0.7	5.9	4,952	704	0.6	6.7	1.6	(35.8)
480	HKR International Ltd	5,023	5.2	0.3	5.3	4,125	835	3.2	5.3	2.4	6.0
25	Chevalier International Holdings Ltd	3,667	7.6	0.6	8.4	4,113	470	6.8	7.6	1.3	36.0
983	SOCAM	3,163	N/A	0.4	N/A	7,952	(889)	N/A	(9.1)	1.2	58.0
258	Tomson Group Ltd	3,296	9.4	0.3	6.5	921	298	5.6	2.7	2.2	14.9
230	Minmetals Land Ltd	3,071	6.0	0.4	9.3	5,906	477	1.6	6.5	2.9	35.7
617	Paliburg Holdings Ltd	2,920	9.4	0.2	16.1	3,604	323	4.4	2.8	5.1	39.1
2355	Baoye Group Co Ltd	3,096	3.8	0.4	1.1	22,147	837	2.5	12.6	1.3	(21.3)
404	Hsin Chong Construction Group Ltd	2,887	13.9	0.7	14.8	11,506	185	3.0	5.9	1.6	37.7
129	Asia Standard International Group Ltd	2,535	1.8	0.2	4.3	1,220	1,400	2.0	10.5	7.4	(6.5)
687	Tysan Holdings Ltd	2,484	9.2	1.0	2.8	3,504	270	3.5	11.2	1.8	(35.5)
190	HKC Holdings Ltd	2,383	N/A	0.2	13.6	1,441	73	N/A	0.6	1.8	13.5
610	Wai Kee Holdings Ltd	1,864	4.1	0.4	3.8	2,546	440	5.6	8.8	1.1	(3.1)
292	Asia Standard Hotel Group Ltd	1,736	5.0	0.5	7.2	651	349	1.6	11.4	2.6	2.8
234	New Century Group Hong Kong Ltd	952	31.9	0.7	10.3	88	30	4.5	2.1	7.6	(63.6)
216	Chinney Investments Ltd	717	2.8	0.2	9.8	496	256	3.8	7.7	1.4	67.4
758	Junefield Department Store Group Ltd	256	N/A	0.4	4.3	157	40	3.2	6.3	1.5	(8.1)
	Minimum	256	1.8	0.2	1.1	88	(889)	0.6	(9.1)	1.1	(63.6)
	Average	4,950	8.8	0.5	8.3	4,489	549	3.5	6.7	3.1	11.3
	Median	2,920	7.1	0.4	7.0	3,504	349	3.2	6.7	1.8	6.0
	Maximum	30,620	31.9	2.4	19.0	22,147	2,738	6.8	15.2	12.3	80.7

Sources: Bloomberg and financial reports of the corresponding corporate companies

These tables show that most but not all companies that make up this data trade at share prices significantly below 0.81 times book value and those more comparable in our view in the property development and construction sectors do.

— 39 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Comparable company transactions

Having made enquiry we have not identified transactions of a type and in a period that we consider usefully comparable to some degree, notwithstanding the qualifications as to comparability set out above that in our opinion would assist us in advising the Independent Board Committee on the terms of the Disposals.

Key considerations in considering the terms of the Disposals

The SP Agreements as a whole

The descriptions of the principal elements of the SP Agreements comprising:

• the SO Granpex SP Agreement;

• the PD (China) SP Agreement; and

• the Famous Scene SP Agreement

are set on pages 9 to 14 of the Circular and Independent Shareholders should read these pages carefully because they describe the parties, the consideration and payment terms, the conditions and the completion arrangements.

Conditionality

Independent Shareholders should note that taken together, the SP Agreements comprise the terms of the Disposals and the SP Agreements are inter-conditional, meaning that all three of the SP Agreements must become unconditional and binding for the Target Group to be sold and taken together, the Target Group comprises the entire PRC construction business of the SOCAM Group which after the Disposals will only remain engaged in these activities in Hong Kong and Macau.

Other important conditions include the approval of Independent Shareholders at the SGM and the approval of SOL Independent Shareholders at the extraordinary general meeting of SOL each in terms of the Listing Rules and the Purchasers confirming they are satisfied that there is no breach of the warranties that is material to the Disposals and each of the SP Agreements having become unconditional as stated above.

The SOL guarantee and Retained Payables

It is important for Independent Shareholders to note that SOL has guaranteed the payment of the Retained Payables in full in RMB in the PRC and, or, in HK$ in Hong Kong. These amounts are estimated by the Company as being unlikely to exceed RMB250 million, equivalent to approximately HK$315 million and HK$4 million respectively.

— 40 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Consideration

The consideration under the SP Agreements:

• the SO Granpex Consideration is HK$120.6 million, subject to adjustment

• the PD (China) Consideration is HK$112.5 million, subject to adjustment

• the Famous Scene Consideration is HK$106.6 million, subject to adjustment

Valuation methodology

In the SP Agreements, consideration was determined after arms length negotiation between the Company and SOL with reference to the dollar amount of the relevant Seller’s debt, where applicable, the net asset value at 31st March, 2014 and the Adjusted NAV in accordance with the terms of the relevant SP Agreement which is explained on page 35 above.

Under the SP Agreements therefore, the actual aggregate consideration which will be received by the SOCAM Group cannot be determined now but the SP Agreements provide that for:

• the SO Granpex SP Agreement, the SO Granpex Consideration shall not exceed HK$133 million or fall below HK$108 million;

• the PD (China) SP Agreement, the PD (China) Consideration shall not exceed HK$124 million or fall below HK$101 million; and

• the Famous Scene SP Agreement, the Famous Scene Consideration shall not exceed HK$117 million or fall below HK$96 million

Payment terms

Payment of all consideration arising under the SP Agreements is to be made as to 20 per cent upon the signing of the respective agreements with the balance payable at the respective completions of the respective agreements with any adjustment to be made and paid or reimbursed by the parties on the fifth Business Day after the relevant determination of the respective Completion Accounts and simultaneously at the relevant Debt Completion.

— 41 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Valuations of the securities to be sold

The table below shows the unaudited consolidated income statement of the Target Group for each of the two years ended 31st December, 2012 and 2013 and the first half of 2014.

			**For the **	six
	**For the **	year ended	months ended
	31st December,		30th June,
	2012	2013	2014
	HK$ million	HK$ million	HK$ million
Turnover	2,226	1,767		835
Other income	2	4		1
Changes in contract work in progress and cost
of properties sold	(191)	116		(38)
Raw materials and consumables used	(584)	(626)		(182)
Staff costs	(57)	(63)		(32)
Depreciation and amortisation expenses	(1)	(1)		(1)
Subcontracting, external labour costs and other
expenses	(1,284)	(1,170)		(564)
Finance costs	(2)	(1)		(1)
Profit before taxation	109	26		18
Taxation	(28)	(11)		(2)
Profit after taxation	81	15		16
Non-controlling interests	(7)	(3)		(1)
Net profit attributable to the Company	74	12		15

On the basis of the net profit attributable to the Company of the Target Group in 2013, the aggregate consideration for shares acquired under the SP Agreements of HK$53.0 million implied a price earnings multiple of 4.42 times, which is in line with comparable companies in the property development sector selected by us but is lower than the median price earnings multiple for comparable companies in the construction and building maintenance sector, cement sector and small cap conglomerates sector shown in Tables 13 to 16 above. On its own, we do not find the price earnings multiple to be a reliable valuation tool because reported earnings are subject to many variables which are often not obvious or transparent for investors.

— 42 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

REASONS FOR THE DISPOSALS

The Target Group holds the entire construction business of the SOCAM Group in the PRC and is essentially the in-house construction arm serving predominantly members of the SOCAM Group and the SOL Group in the PRC. Following completion of the strategic monetisation plan to divest the SOCAM Group’s property projects and inventories in the PRC in the next few years, the SOCAM Group will lessen its focus on property business in the PRC and shift its focus on developing its existing construction business primarily in Hong Kong where the Company is poised to take an increasing number of construction contracts in the public sector. In light of the above and, after due consideration, the Directors are of the view that the Disposals contemplated under the SP Agreements form part of the Company’s overall monetisation strategy, which, whilst neutral in terms of any increase or decrease in net asset value, will make a positive contribution to the cash flow of the Company and is in the interests of the Company, Independent Shareholders and Shareholders as a whole.

RISK FACTORS

Independent Shareholders should take note that the SP Agreements are conditional and are inter-conditional and the conditions set out above and in the SP Agreements must all be satisfied or the Disposals will not take place.

RECOMMENDATION

Having considered the principal factors and reasons for the Disposals as summarised below:

• The Shares have underperformed the Hang Seng Index for much of 2014. This performance reflects challenging conditions for the SOCAM Group’s business in the PRC. The share price performance of the Shares in the last three years illustrates the poor market sentiment that currently surrounds the Shares;

• The trading price of the Shares consistently sits at a level substantially below 0.81 times its book value, the ratio used in part to establish the price elements of the consideration for the Disposals;

• The makeup of the SOCAM Group by business and geographical segments shows that the concentration of the SOCAM Group activities and assets in the PRC and their exposure to challenging trading conditions there due to restricted mortgage policy for residential purchases and the austerity measures in the PRC;

• In circumstances where challenging market conditions slow down other asset realisations, the Disposals are a source of cash flow for the SOCAM Group, taken in the context of an attributable loss for shareholders of HK$889 million for the financial year ended 31st December, 2013 and of HK$573 million for the half year ended 30th June, 2014 arising from substantial drop in profit contribution from property segment and an increase in losses from LSOC and other joint ventures and associates;

— 43 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

• The consideration under the SP Agreements calculated in part by reference to adjusted NAVs to be reasonable in terms of market comparisons;

• The SOCAM Group expects that there will be no material gain or loss arising from the Disposals;

• Other than the expected significant decrease in the SOCAM Group’s turnover after completion of the Disposals, the Company believes that the Disposals will not have any significant impact on the overall financial position of the SOCAM Group but will generate proceeds of some HK$340 million to the SOCAM Group;

• The Disposals form part of the Company’s overall monetisation plan to divest the SOCAM Group’s property projects and inventories in the PRC in the next few years, and shift its focus to developing its construction business primarily in Hong Kong; and

• The Disposals whilst neutral in terms of any increase or decrease in net asset value, will make a positive contribution to the cash flow of the Company,

we consider that the SP Agreements have been made on normal commercial terms, in the ordinary and usual course of business and are fair and reasonable and in the interests of the Independent Shareholders and Shareholders as a whole. Accordingly, we recommend that Independent Shareholders vote in favour of the ordinary resolution to be proposed at the SGM to approve the SP Agreements and that the Independent Board Committee advises the Independent Shareholders accordingly.

Yours faithfully, For and on behalf of Anglo Chinese Corporate Finance, Limited Christopher J. Howe Managing Director

— 44 —

GENERAL INFORMATION

APPENDIX

1. RESPONSIBILITY STATEMENT

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

2. DISCLOSURE OF INTERESTS OF DIRECTORS AND CHIEF EXECUTIVES

At the Latest Practicable Date, the interests and short positions of the Directors and chief executives of the Company in the shares and underlying shares of the Company which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which were taken or deemed to have been taken under such provisions of the SFO) or the Model Code for Securities Transactions by Directors of Listed Issuers (the “Model Code”) or which were required to be entered in the register required to be kept under section 352 of the SFO were as follows:

(a) Long position in the shares of the Company

Name of Director Mr. Lo Hong Sui, Vincent Mr. Choi Yuk Keung, Lawrence Mr. Wong Fook Lam, Raymond	Number of ordinary shares in the Company Approximate percentage of the issued share capital of the Company Personal interests Family interests Other interests Total � 312,000 (Note 1) 234,381,000 (Note 2) 234,693,000 48.44% 540,000 � � 540,000 0.11% 32,000 � � 32,000 0.01%

Notes:

• (1) These shares were beneficially owned by Ms. Loletta Chu (“Mrs. Lo”), the spouse of Mr. Vincent Lo. Under the SFO, Mr. Vincent Lo was deemed to be interested in such shares and both Mr. Vincent Lo and Mrs. Lo were also deemed to be interested in 234,381,000 shares mentioned in note (2) below.

• (2) These shares were beneficially owned by Shui On Company Limited (“SOCL”). Of these 234,381,000 shares beneficially owned by SOCL, 220,148,000 shares were held by SOCL itself and 14,233,000 shares were held by Shui On Finance Company Limited (“SOFCL”), a wholly-owned subsidiary of SOCL. SOCL was owned by the Bosrich Unit Trust, the trustee of which was Bosrich Holdings (PTC) Inc. (“Bosrich”). The units of the Bosrich Unit Trust were the property of a discretionary trust, of which Mr. Vincent Lo was one of the discretionary beneficiaries and HSBC International Trustee Limited (“HSBC Trustee”) was the trustee. Accordingly, Mr. Vincent Lo, Mrs. Lo, HSBC Trustee and Bosrich were deemed to be interested in such shares under the SFO.

— 45 —

GENERAL INFORMATION

APPENDIX

(b) Share options of the Company

At the Latest Practicable Date, the following Directors had interests in the share options granted by the Company under the share option scheme adopted by the Company on 27 August 2002:

				Number of
			Period during which	shares
		Subscription	share options	subject to the
	Date of	price per	outstanding are	share options
Name of Director	grant	share	exercisable	outstanding
		HK$
Mr. Choi Yuk Keung,	9-4-2009	7.63	9-4-2012 to 8-4-2019	380,000
Lawrence	12-4-2010	12.22	12-10-2010 to 11-4-2015	250,000
	12-4-2010	12.22	12-4-2013 to 11-4-2020	700,000
	23-6-2011	10.90	23-12-2011 to 22-6-2016	250,000
Mr. Wong Fook Lam,	12-4-2010	12.22	12-10-2010 to 11-4-2015	200,000
Raymond	12-4-2010	12.22	12-4-2013 to 11-4-2020	700,000
	23-6-2011	10.90	23-12-2011 to 22-6-2016	250,000
Mr. Wong Kun To,	12-4-2010	12.22	12-10-2010 to 11-4-2015	350,000
Philip	12-4-2010	12.22	12-4-2013 to 11-4-2020	1,050,000
	23-6-2011	10.90	23-12-2011 to 22-6-2016	400,000

Note: The vesting of all share options granted to the above Directors is subject to the vesting schedules and/or performance conditions as set out in their respective offer letters.

Save as disclosed above, at the Latest Practicable Date, none of the Directors or chief executives of the Company had any interests or short positions in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which were taken or deemed to have been taken under such provisions of the SFO) or the Model Code or which were required to be entered in the register required to be kept under section 352 of the SFO.

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GENERAL INFORMATION

APPENDIX

Save as disclosed in the circular of the Company dated 3 January 2012 in respect of the construction services framework agreement entered into between SOL and Shui On Contractors Limited (i.e. Seller A), a wholly-owned subsidiary of the Company, at the Latest Practicable Date, there was no contract or arrangement subsisting in which any of the Directors was materially interested and which was significant in relation to the business of the Group.

Since 31 December 2013 (being the date to which the latest published audited consolidated financial statements of the Group were made up), certain tenancy agreements subsist between certain members of the Group as lessees and certain subsidiaries of SOCL (a company controlled by Mr. Vincent Lo) as lessors in respect of the leasing of certain office premises owned by the group companies of SOCL in Hong Kong and the PRC, the aggregate amount of the rental and management fees of which was approximately HK$1.1 million for the six months ended 30 June 2014. Save as disclosed above, none of the Directors had any direct or indirect interest in any assets which had since 31 December 2013 been acquired or disposed of by or leased to any member of the Group, or were proposed to be acquired or disposed of by or leased to any member of the Group.

At the Latest Practicable Date, save as disclosed below, none of the Directors was a director or an employee of a company which had an interest or short position 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:

	Names of companies which had
	such discloseable interest or	Position within
Name of Director	short position	such companies
Mr. Lo Hong Sui, Vincent	SOCL and SOFCL	director
Mr. Choi Yuk Keung, Lawrence	SOCL and SOFCL	director
Mr. Wong Fook Lam, Raymond	SOFCL	director

3. SERVICE CONTRACTS

At the Latest Practicable Date, none of the Directors had entered or proposed to enter into, with any member of the Group, a service contract which is not expiring or determinable by the employer within one year without payment of compensation (other than statutory compensation).

4. COMPETING BUSINESS INTERESTS OF DIRECTORS

At the Latest Practicable Date, the following Directors were considered to have interests in the businesses, which competed or were likely to compete, either directly or indirectly, with the businesses of the Group pursuant to Rule 8.10 of the Listing Rules as set out below:

• (a) Mr. Vincent Lo is a director and the controlling shareholder of SOCL which, through its subsidiaries, including (among others) SOL, principally engages in property development and investment in the PRC.

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GENERAL INFORMATION

APPENDIX

• (b) Mr. Vincent Lo is a director of Great Eagle Holdings Limited which, through its subsidiaries, engages in (among others) property development and investment, trading of building materials and provision of maintenance services in Hong Kong and the PRC.

• (c) Mr. Choi Yuk Keung, Lawrence is a director of SOCL which, through its subsidiaries, including (among others) SOL, principally engages in property development and investment in the PRC.

• (d) Mr. Philip Wong is a director of SOL which, through its subsidiaries, principally engages in property development and investment in the PRC.

• (e) Mr. Tsang Kwok Tai, Moses is a director of China Xintiandi Limited which is a wholly-owned subsidiary of SOL. China Xintiandi Limited, through its subsidiaries, principally engages in investing, operating and managing premium commercial properties in the PRC.

As the Board is independent from the boards of directors of the aforesaid companies and the above Directors are unable to control the Board, the Group is capable of carrying on its businesses independently.

Save as disclosed above, at the Latest Practicable Date, none of the Directors or their respective close associates (as defined in the Listing Rules) had any interests in the businesses, which competed or were likely to compete, either directly or indirectly, with the businesses of the Group (as would be required to be disclosed under Rule 8.10 of the Listing Rules if each of them was a controlling shareholder).

5. EXPERT AND CONSENT

The following is the qualification of the expert who has given its opinion or advice, which is contained in this circular:

Name Qualifications Anglo Chinese A corporation licensed under the SFO to conduct Type 1 (dealing in securities), Type 4 (advising on securities), Type 6 (advising on corporate finance) and Type 9 (asset management) of regulated activities

Anglo Chinese has given and has not withdrawn its written consent to the issue of this circular with the inclusion of its letter, report and/or summary of its opinion (as the case may be) and references to its name in the form and context in which it appears herein.

Anglo Chinese has confirmed that, at the Latest Practicable Date:

• (a) it did not have any shareholding, directly or indirectly, in any member of the Group or any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group;

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GENERAL INFORMATION

APPENDIX

• (b) it did not have any direct or indirect interest in any assets which had since 31 December 2013 (being the date to which the latest published audited consolidated financial statements of the Group were made up) been acquired or disposed of by or leased to any member of the Group, or were proposed to be acquired or disposed of by or leased to any member of the Group; and

• (c) the letter of Anglo Chinese is given as of the date of this circular for incorporation herein.

6. MATERIAL ADVERSE CHANGE

Save as disclosed in the interim results announcement of the Company dated 22 August 2014, the Directors are not aware of any material adverse change in the financial or trading position of the Group since 31 December 2013, being the date to which the latest published audited consolidated financial statements of the Group were made up.

7. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection during business hours at the head office of the Company at 34th Floor, Shui On Centre, 6-8 Harbour Road, Hong Kong from the date of this circular up to and including 16 October 2014:

• (a) the SO Granpex SP Agreement;

• (b) the PD (China) SP Agreement; and

• (c) the Famous Scene SP Agreement.

8. MISCELLANEOUS

The English text of this circular shall prevail over the Chinese text.

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NOTICE OF SPECIAL GENERAL MEETING

==> picture [176 x 59] intentionally omitted <==

瑞安建業有限公司[*]

SOCAM Development Limited

(Incorporated in Bermuda with limited liability)

(Stock Code: 983)

NOTICE IS HEREBY GIVEN that a special general meeting of SOCAM Development Limited (the “Company”) will be held at Room 103, 1st Floor, Shui On Centre, 6-8 Harbour Road, Hong Kong on Thursday, 16 October 2014 at 11:30 a.m. for the purpose of considering and, if thought fit, passing (with or without amendments) the following resolution as an ordinary resolution of the Company:

ORDINARY RESOLUTION

“ THAT :

• (a) the entering into of the SP Agreements (as defined in the circular of the Company dated 25 September 2014 (the “Circular”), copies of which are tabled at the meeting and marked “A” and signed by the chairman of the meeting for identification purpose) and the Disposals (as defined in the Circular) be hereby approved, ratified and confirmed; and

• (b) the directors of the Company be hereby authorised for and on behalf of the Company to execute any such documents, instruments and agreements and to do any such acts or things as may be deemed by such directors at their absolute discretion to be incidental to, ancillary to or in connection with the SP Agreements and the Disposals.”

By Order of the Board Ng Lai Tan, Melanie Company Secretary

Hong Kong, 25 September 2014

• For identification purpose only

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NOTICE OF SPECIAL GENERAL MEETING

Notes:

• (1) Any member entitled to attend and vote at the above meeting is entitled to appoint one or more proxies to attend and, on a poll, vote in his/her stead. A proxy need not be a member of the Company.

• (2) To be valid, a form of proxy, together with the power of attorney or other authority (if any) under which it is signed, or a certified copy thereof, must be lodged with the head office of the Company at 34th Floor, Shui On Centre, 6-8 Harbour Road, Hong Kong not less than 48 hours before the time appointed for holding the meeting or any adjournment thereof (as the case may be). Completion and return of the proxy form will not preclude a member from attending and voting in person at the meeting or any adjournment thereof (as the case may be) should he/she so wish.

• (3) The ordinary resolution as set out above will be voted by way of poll.

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