Symphony Holdings Limited — Proxy Solicitation & Information Statement 2011

Feb 11, 2011

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 you should take, you should consult your stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Symphony Holdings Limited, you should hand this circular to the purchaser(s) or the transferee(s) or to the bank, stockbroker or other registered dealer in securities, or other agent through whom the sale or transfer was effected for transmission to the purchaser(s) or the transferee(s).

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

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SYMPHONY HOLDINGS LIMITED 新灃集團有限公司 *

(Incorporated in Bermuda with limited liability)

(Stock code: 01223)

MAJOR TRANSACTION ACQUISITION OF LAND IN SHENYANG, PRC

* For identification purpose only

Hong Kong • 14 February 2011

CONTENTS

		Page
Definitions....................................................................................................................................		1
Letter from the	Board.................................................................................................................	3
Appendix I	Financial Information of the Group ...........................................................	9
Appendix II	Additional Financial Information of the Group........................................	17
Appendix III	Valuation Report...........................................................................................	18
Appendix IV	General Information.....................................................................................	22

– i –

DEFINITIONS

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

“Acquisition”	the acquisition of the Land by the Company pursuant to the
	Confirmation Agreement
“Ample Apex”	Ample Apex Limited, a company incorporated in Hong Kong
	with limited liability
“Announcement”	the announcement made by the Company dated 20 January
	2011 in respect of the Acquisition
“Board”	the board of directors of the Company
“Boom Origin”	Boom Origin Limited, a company incorporated in Hong Kong
	with limited liability
“Company”	Symphony Holdings Limited, a company incorporated in
	Bermuda with limited liability and the shares of which are listed
	on the Exchange (Stock Code: 01223)
“Confirmation Agreement(s)”	the confirmation agreement(s) dated 20 January 2011
	entered into between the Purchaser(s) and the Land Bureau
	confirming the Purchaser’s successful bid for the Land at
	RMB167,553,982.60
“Director(s)”	executive director(s), non-executive director and independent
	non-executive director(s) of the Company
“Exchange”	The Stock Exchange of Hong Kong Limited
“Frensham”	Frensham Investments Limited, a company incorporated in the
	British Virgin Islands, is directly interested in 4.82% Shares
“Group”	the Company and its subsidiaries
“Hong Kong”	Hong Kong Special Administrative Region of PRC
“Independent Third Party(ies)”	third party(ies) who to the best knowledge, information and belief
	of the Directors and having made all reasonable enquiry is
	independent of the Company and its connected persons (as
	defined in the Listing Rules)
“Land”	two parcels of land located at North Puhe Road (蒲河大道北側),
	Shenbei New District (瀋北新區), Shenyang, Liaoning Province,
	PRC

– 1 –

DEFINITIONS

“Land Bureau”	Shenyang Plan and Land Resources Bureau (瀋陽巿規劃和國
	土資源局)
“Land Exchange Center”	Shenyang Land Reserve and Exchange Center#(瀋陽巿土地
	儲備交易中心), an agent of the Land Bureau to conduct the
	Open Auction
“Latest Practicable Date”	10 February 2011, being the latest practicable date prior to the
	printing of this circular for ascertaining certain information herein
“Listing Rules”	Rules Governing the Listing of Securities on the Exchange
“Open Auction”	the open auction of the Land held by the Land Exchange Center
	on 20 January 2011
“PRC”	the People’s Republic of China
“Premium”	the land premium of RMB167,553,982.60 in aggregate for the
	Acquisition
“Purchaser(s)”	Ample Apex and Boom Origin
“Share(s)”	shares of HKD0.25 each in the share capital of the Company
“Shareholders”	holder(s) of the Shares
“Vendor”	Land Bureau
“Well Success”	Well Success Investment Limited, a company incorporated in
	the British Virgin Islands, is directly interested in 48.83% Shares
“HKD”	Hong Kong dollars, the lawful currency of Hong Kong
“RMB”	Renminbi, the lawful currency of PRC
”USD”	United States dollars, the lawful currency of United States of
	America
“%”	Per cent

For illustration purposes in this circular, the amounts in RMB and USD are translated into HKD at the rates of RMB0.848 = HKD1.000 = USD0.129. No representation is made that any amount in RMB or USD has been or could be converted at the above rates or at any other rates or at all.

# The unofficial English transliterations or translations are for identification purpose only.

– 2 –

LETTER FROM THE BOARD

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SYMPHONY HOLDINGS LIMITED 新灃集團有限公司 *

(Incorporated in Bermuda with limited liability)

(Stock code: 01223)

Executive Directors:

Mr. Chan Ting Chuen, Chairman Mr. Sze Sun Sun Tony, Deputy Chairman and Managing Director

Mr. Chang Tsung Yuan, Deputy Chairman

Mr. Chan Lu Min Ms. Chen Fang Mei Dr. Ho Ting Seng

Non-executive Director:

Mr. Li I Nan

Registered Office: Clarendon House 2 Church Street Hamilton HM11 Bermuda

Principal Place of Business in

Hong Kong: 10th Floor Island Place Tower 510 King’s Road North Point Hong Kong

Independent Non-executive Directors:

Mr. Cheng Kar Shing Mr. Feng Lei Ming Mr. Ho Shing Chak

Mr. Huang Shenglan

14 February 2011

To the Shareholders

Dear Sir or Madam,

MAJOR TRANSACTION ACQUISITION OF LAND IN SHENYANG, PRC

Reference is made to the Announcement dated 20 January 2011, in which Ample Apex and Boom Origin, the wholly-owned subsidiaries of the Company, were successful in bidding for the Land situated at North Puhe Road, Shenyang, Liaoning Province, PRC at an aggregate Premium of RMB167,553,982.60 (approximately HKD197,587,243.63) on 20 January 2011. On the same day, each of Ample Apex and Boom Origin entered into a Confirmation Agreement with the Land Bureau confirming the successful bid of Ample Apex and Boom Origin for the Land.

* For identification purpose only

– 3 –

LETTER FROM THE BOARD

On the basis that one of the applicable percentage ratios in respect of the Acquisition exceeds 25% but is less than 100%, the Acquisition constitutes a major transaction for the Company under Rule 14.06(3) of the Listing Rules.

Under the Listing Rules, the Acquisition is subject to the approval of Shareholders. Well Success and Frensham, a closely allied group of Shareholders, hold 851,685,958 Shares and 83,999,430 Shares respectively. Together, they hold approximately 53.65% interests in the issued share capital of the Company. Frensham holds more than one-third of the issued share capital of Well Success. Since none of the Shareholders is required to abstain from voting in respect of the Acquisition and written approval of Well Success and Frensham has been obtained for the purpose of approving the Acquisition, no physical Shareholders’ meeting will be convened as permitted under Rule 14.44 of the Listing Rules.

The purpose of this circular is to provide you with, among other things, further details in respect of the Acquisition as required under the Listing Rules.

1. INTRODUCTION

On 20 January 2011, Ample Apex and Boom Origin, the wholly-owned subsidiaries of the Company, were successful in bidding for the Land situated at North Puhe Road, Shenyang, Liaoning Province, PRC at a Premium of RMB167,553,982.60 (approximately HKD197,587,243.63). On 20 January 2011, each of Ample Apex and Boom Origin entered into a Confirmation Agreement with the Land Bureau confirming the successful bid of Ample Apex and Boom Origin for the Land.

2. DETAILS OF THE ACQUISITION

Tender Award Date : 20 January 2011 Type : Open Auction Parties : (a) the Land Bureau as the Vendor. The Company confirmed that the Land Bureau and its ultimate beneficial owner are Independent Third Parties; and (b) Ample Apex and Boom Origin as the successful Purchasers. Valuation : A valuation report on the Land as required under the Listing Rules by independent valuers is set out on pages 18 to 21 of this circular.

– 4 –

LETTER FROM THE BOARD

2. DETAILS OF THE ACQUISITION (Continued)

Confirmation Agreements

On 20 January 2011, Ample Apex and Boom Origin entered into the Confirmation Agreements with the Land Bureau confirming the successful bid of Ample Apex and Boom Origin for the Land. Pursuant to the Confirmation Agreements, the Acquisition is conditional upon (a) the development of the Land in line with the PRC Government relocation plan, (b) the payment of the Premium for the Land, and (c) signing of the contracts for the transfer of the land use right of State-owned land for construction[#] (國有建設用地使用權出讓合同) for the Land with the Land Bureau.

Premium and Payment Terms

The Premium for acquiring the land use rights of the Land is RMB167,553,982.60, equivalent to approximately HKD197,587,243.63, which is payable by cash. The Premium of the Land was derived from the Open Auction held by the Land Exchange Center on 20 January 2011 which is required to be conducted in accordance with the relevant PRC laws and regulations. The Premium was determined with reference to the average market price of similar plots of land in the proximity.

On 28 December 2010, the Purchasers remitted to the Land Exchange Center an amount of USD5,100,000.00, equivalent to approximately HKD39,525,000.00, as deposit for the Open Auction, which formed part of the Premium. Unless otherwise extended, the balance of the Premium will be payable within three months from the date on which the Confirmation Agreement is entered into with the Land Bureau.

Under the Confirmation Agreement, the Premium will be payable in cash as follows:

Date of Payment	Amount Payable
28 December 2010	Approximately RMB33,517,200.00
	(approximately HKD39,525,000.00), being deposit
	for the bidding
Balance of the Premium	Approximately RMB134,036,782.60
will be paid within three	(approximately HKD158,062,243.63)
months from the date of the
Confirmation Agreement

# The unofficial English transliterations or translations are for identification purpose only.

– 5 –

LETTER FROM THE BOARD

2. DETAILS OF THE ACQUISITION (Continued)

Completion

Completion of the Acquisition is expected to take place within three months from the date of the Confirmation Agreement. Under the terms of the Open Auction, each of the Purchasers will enter into a contract for the transfer of the land use right of State-owned land for construction[#] (國有建設用地使用權出讓合同) with the Vendor, and application for the issue of the new land use right certificate will take place after payment by each Purchaser of the consideration in full.

3. PARTICULARS OF THE LAND

The Land is located at North Puhe Road, Shenbei New District, Shenyang, Liaoning Province, PRC. Further details of the Acquisition are set out below:

Location	:	North Puhe Road, Shenbei New District, Shenyang,
		Liaoning Province, PRC
Site Area	:	Approximately 99,338 square metres
Maximum Permissible	:	Approximately 185,405 square metres
Gross Floor Area
Permitted Land Use	:	Commercial and residential
Term of Land Use Rights	:	Maximum 50 years

4. FINANCIAL EFFECTS OF THE ACQUISITIONS

The Premium for the Acquisition is RMB167,553,982.60, equivalent to approximately HKD197,587,243.63, for which the funding will be sourced by the Company from its internal cash resources. Upon Completion, the Land will result in an amount of approximately HKD197,587,243.63 (equivalent to RMB167,553,982.60) booked as investment properties in the Group’s consolidated non-current assets. The cash and bank balances have been reduced by approximately HKD39,525,000.00 (equivalent to USD5,100,000.00), representing the deposit for the Open Auction remitted on 28 December 2010. At Completion, the cash and bank balances in the Group’s consolidated current assets will be reduced by approximately HKD158,062,243.63 (equivalent to RMB134,036,782.60) for settlement of the balance of the Premium.

The funding requirement for the Acquisition is not expected to have any material impact on the Company. The Group plans to build a landmark urban commercial complex on the Land and it is anticipated that it will take few years to complete, hence no rental income will be generated from the Land. It is expected that the transaction will not have any direct material impact on the earnings of the Group in the short run. We would, however, wish to draw your attention to the long-term benefit of the transaction as explained under paragraph 5 “Reasons for and benefits of the Acquisition” below.

# The unofficial English transliterations or translations are for identification purpose only.

– 6 –

LETTER FROM THE BOARD

5. REASONS FOR AND BENEFITS OF THE ACQUISITION

The Land is located in proximity of the Group’s outlet mall development, with various surrounding ancillary facilities and thriving business atmosphere. The Company plans to build a landmark urban commercial complex in Shenbei New District on the Land, comprising commercial amenities and ancillary residential apartments. The Acquisition further complements the Group’s investment by enhancing its value and scale.

Directors believe that the development of the Land is a viable investment, which will broaden the asset and earnings base of the Group. The Acquisition will enrich the Company’s land bank and will bring forth business opportunities and economic benefits to the Group. The Acquisition will be beneficial to the Company and its shareholders as a whole. Directors also consider that the Premium of the Land and terms of the Confirmation Agreement are in the interests of the Company and its shareholders, and are fair and reasonable.

6. INFORMATION ON THE LAND BUREAU

The Land Bureau is a local government body of PRC and is in charge of planning, managing, administering and monitoring the land resources of Shenyang, Liaoning Province, PRC.

7. INFORMATION ON THE COMPANY

The Company is an investment holding company. The principal activities of the Company are footwear manufacturing and trading, property investment and investment holding in Hong Kong and PRC. The Company is a seasoned market player in brand development and retailing in the Greater China. It has under its brand development portfolio a number of famous and heritage brands. Managing more than 300 points-of-sale all over PRC, the Company owns an extensive network and brand marketing knowhow.

Ample Apex and Boom Origin are wholly-owned subsidiaries of the Company and whose principal business activities are investment holdings.

8. LISTING RULES IMPLICATIONS

Based on the calculation reckoned on 100% of the aggregate consideration of the transaction, the Acquisition if proceeded with will constitute a major transaction for the Company under Rule 14.06(3) of the Listing Rules.

Under the Listing Rules, the Acquisition is subject to the approval of Shareholders. As at the date of the Announcement, Well Success and Frensham, a closely allied group of Shareholders, holds 851,685,958 Shares and 83,999,430 Shares respectively. Together, they hold approximately 53.65% interests in the issued share capital of the Company. Frensham hold more than one-third of the issued share capital of Well Success. Since none of the Shareholders is required to abstain from voting in respect of the Acquisition and written approval of Well Success and Frensham has been obtained for the purpose of approving the Acquisition, no physical Shareholders’ meeting will be convened as permitted under Rule 14.44 of the Listing Rules.

– 7 –

LETTER FROM THE BOARD

8. LISTING RULES IMPLICATIONS (Continued)

The purpose of this circular is to provide you with, among other things, further details in respect of the Acquisition as required under the Listing Rules.

9. GENERAL

Directors consider that the terms of the Acquisition and the Confirmation Agreement are in the interests of the Company and its shareholders, and are fair and reasonable.

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

Yours faithfully, For and on behalf of Symphony Holdings Limited Chan Ting Chuen Chairman

– 8 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

1. FINANCIAL SUMMARY

(a) Audited Financial Statements

Set out below is a summary of the audited consolidated financial statements of the Group for the three years ended 31 December 2009.

(i) Consolidated Statement of Comprehensive Income

Year ended 31 December

Revenue Cost of sales Gross Profit Other income Distribution and selling expenses Administrative expenses Other expenses Net increase (decrease) in fair value of investment properties Gain on disposal of subsidiaries Impairment loss on goodwill Gain (Loss) on fair value changes of held-for-trading investments Share of results of jointly controlled entities Gain on disposal of available-for-sale investments Profit (Loss) before tax Taxation Profit (Loss) for the year	2009 HKD’000 1,784,907 (1,437,838) 347,069 34,427 (149,114) (195,347) (7,430) 57,750 — — 716 (58,498) — 29,573 (10,785) 18,788	2008 HKD’000 2,050,584 (1,768,865) 281,719 38,853 (127,843) (231,266) (3,360) (32,050) 13,586 (57,477) (11,998) (101,409) — (231,245) 1,554 (229,691)	2007 HKD’000 1,849,207 (1,531,487) 317,720 79,942 (76,852) (184,707) (3,392) 38,255 — — 7,177 (62,259) 368 116,252 (18,216) 98,036

– 9 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

1. FINANCIAL SUMMARY (Continued)

(a) Audited Financial Statements (Continued)

(i)	Consolidated Statement of Comprehensive Income	Consolidated Statement of Comprehensive Income	(Continued)
	Year ended 31 December
		2009	2008	2007
		HKD’000	HKD’000	HKD’000
	Other comprehensive income (expense)
	Surplus arising on re-classification
	from prepaid lease payments
	to investment properties	14,523	—	—
	Deferred tax on surplus arising
	on re-classification from prepaid
	lease payments to investment properties	(2,413)	—	—
	Surplus (deficit) arising
	on revaluation of properties	12,194	(2,605)	12,631
	Deferred tax (liability) asset arising
	on revaluation of properties	(3,145)	640	(1,857)
	Effect of changes in tax rates	—	253	—
	Fair value gain (loss)
	on available-for-sale investments	6,412	(6,899)	943
	Re-classification adjustment to profit
	or loss upon disposal of
	available-for-sale investments	(2)	—	—
	Exchange differences arising
	on translation of foreign operations	(2,968)	27,945	13,810
	Share of other comprehensive income of
	jointly controlled entities	5,320	(3,108)	2,072
	Other comprehensive income
	for the year (net of tax)	29,921	16,226	27,599
	Total comprehensive income
	and expense for the year	48,709	(213,465)	125,635
	Profit (Loss) for the year attributable to:
	Owners of the Company	19,008	(226,508)	94,929
	Non-controlling interests	(220)	(3,183)	3,107
		18,788	(229,691)	98,036
	Total comprehensive income
	and expense attributable to:
	Owners of the Company	48,920	(210,926)	121,994
	Non-controlling interests	(211)	(2,539)	3,641
		48,709	(213,465)	125,635
	Earnings (Loss) per share
	Basic and diluted (HK cents)	1.09	(12.99)	5.58

– 10 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

1. FINANCIAL SUMMARY (Continued)

(a) Audited Financial Statements (Continued)

(ii) Consolidated Statement of Financial Position

At 31 December

2009 HKD’000 Non-current assets Property, plant and equipment 242,532 Investment properties 331,040 Prepaid lease payments 38,604 Deposit paid for acquisition of a property — Goodwill — Interests in jointly controlled entities 56,778 Structured deposits — Advances to jointly controlled entities 171,110 Available-for-sale-investments 60,011 Deferred tax assets 13,127 Tax recoverable 17,214 Club debentures 2,003 932,419 Current assets Inventories 171,254 Amounts due from jointly controlled entities 25,664 Trade and other receivables 217,808 Prepaid lease payments 1,050 Held-for-trading investments 321 Bank balances and cash 399,184 815,281 Current liabilities Trade and other payables 311,305 Amounts due to jointly controlled entities 17,650 Tax payable 54,969 383,924 Net current assets 431,357	2008 HKD’000 282,741 112,450 50,203 — — 78,272 — 127,749 54,366 10,085 9,714 2,003 727,583 269,148 50,692 459,061 1,301 4,055 280,963 1,065,220 395,027 28,006 55,641 478,674 586,546	2007 HKD’000 260,660 144,500 48,155 9,200 57,477 221,133 62,240 28,062 23,085 11,326 — 2,003
		867,841
		277,719 32,710 358,317 1,206 428 519,494
		1,189,874
		421,041 8,792 53,419
		483,252
		706,622

– 11 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

1. FINANCIAL SUMMARY (Continued)

(a) Audited Financial Statements (Continued)

(ii) Consolidated Statement of Financial Position (Continued) At 31 December

Total assets less current liabilities Non-current liabilities Deferred tax liabilities Net assets Capital and reserves Share Capital Share premium and reserves Equity attributable to owners of the Company Non-controlling interests	2009 HKD’000 1,363,776 28,303 1,335,473 436,011 866,842 1,302,853 32,620 1,335,473	2008 HKD’000 1,314,129 9,925 1,304,204 436,011 835,362 1,271,373 32,831 1,304,204	2007 HKD’000 1,574,463 18,425
			1,556,038
			436,011 1,084,657
			1,520,668 35,370
			1,556,038

– 12 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

1. FINANCIAL SUMMARY (Continued)

(b) Unaudited Financial Statements

Set out below is a summary of the unaudited consolidated financial statements of the Group for the two interim periods ended 30 June 2010.

(i) Consolidated Statement of Comprehensive Income

Period ended 30 June

2010 HKD’000 Revenue 812,425 Cost of sales (656,842) Gross Profit 155,583 Other income 42,279 Distribution and selling expenses (81,240) Administrative expenses (89,415) Other expenses (1,755) Share of results of jointly controlled entities (19,909) Profit before tax 5,543 Taxation (1,501) Profit for the period 4,042 Other comprehensive income (expense) Exchange differences arising on translation of foreign operations 6,671 Fair value gain of available-for-sale investments 670 Re-classification adjustment to profit or loss upon disposal of available-for-sale investments (1,597) Reserve released upon deregistration of a subsidiary (2,254) Reversal of deferred tax liability arising on revaluation of properties (282) Share of other comprehensive (expense) income of jointly controlled entities (600) Surplus arising on revaluation of properties 39 Other comprehensive for the period (net of tax) 2,647 Total comprehensive income for the period 6,689

2009 HKD’000 886,637 (699,955) 186,682 20,855 (69,955) (103,016) (1,826) (24,876) 7,864 (1,782) 6,082 (1,198) 2,124 (28) — (60) 1,762 — 2,600 8,682

– 13 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

1. FINANCIAL SUMMARY (Continued)

(b) Unaudited Financial Statements (Continued)

(i) Consolidated Statement of Comprehensive Income (Continued)

Period ended 30 June

Profit for the period attributable to: Owners of the Company Non-controlling interests Total comprehensive income attributable to: Owners of the Company Non-controlling interests Earnings per share Basic and diluted (HK cents)	2010 HKD’000 3,975 67 4,042 6,548 141 6,689 0.23	2009 HKD’000 3,818 2,264
		6,082
		6,412 2,270
		8,682
		0.22

– 14 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

1. FINANCIAL SUMMARY (Continued)

(b) Unaudited Financial Statements (Continued)

(ii) Consolidated Statement of Financial Position

At 30 June

Non-current assets Property, plant and equipment Investment properties Prepaid lease payments Interests in jointly controlled entities Advances to jointly controlled entities Available-for-sale-investments Deferred tax assets Tax recoverable Club debentures Current assets Inventories Amounts due from jointly controlled entities Trade and other receivables Prepaid lease payments Held-for-trading investments Bank balances and cash Current liabilities Trade and other payables Amounts due to jointly controlled entities Dividend payable Tax payable Bank borrowing Net current assets	2010 HKD’000 230,661 341,061 38,315 73,082 171,681 28,136 13,495 23,214 2,003 921,648 311,368 20,489 398,599 1,055 — 180,051 911,652 372,824 12,256 22,673 40,099 60,000 507,852 403,710	2009 HKD’000 272,672 116,000 49,539 81,468 155,816 55,715 13,503 17,214 2,003
		763,930
		309,485 28,692 320,402 1,310 206 331,090
		991,185
		346,194 27,614 17,440 55,302 —
		446,550
		544,635

– 15 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

1. FINANCIAL SUMMARY (Continued)

(b) Unaudited Financial Statements (Continued)

(ii) Consolidated Statement of Financial Position (Continued)

At 30 June

Total assets less current liabilities Non-current liabilities Deferred tax liabilities Net assets Capital and reserves Share Capital Share premium and reserves Equity attributable to owners of the Company Non-controlling interests	2010 HKD’000 1,325,358 29,809 1,295,549 436,011 852,932 1,288,943 6,606 1,295,549	2009 HKD’000 1,308,565 13,119
		1,295,446
		436,011 824,334
		1,260,345 35,101
		1,295,446

2. AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR THE YEAR ENDED 31 DECEMBER 2009

The audited consolidated financial statements of the Group for the year ended 31 December 2009, together with the notes to the consolidated financial statements have been set out in the Annual Report 2009 of the Company which were posted on 22 April 2010 on the website of the Exchange (http://www.hkexnews.hk). Please also see below quick link to the Annual Report 2009:

http://www.hkexnews.hk/listedco/listconews/sehk/20100422/LTN20100422198.pdf

– 16 –

ADDITIONAL FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

1. WORKING CAPITAL STATEMENT

In the absence of unforeseen circumstances and taking into account the Land and financial resources available to the Group, Directors are of the opinion that the Group will have sufficient working capital for its present requirements for the next twelve months from the date of this circular.

2. INDEBTEDNESS STATEMENT

At the close of business on 31 December 2010, being the latest practicable date for the purpose of this statement of indebtedness prior to the printing of this circular, the Group had an aggregate outstanding borrowings of approximately HKD80,000,000.00 solely comprising secured bank borrowings. The Group had also executed continuing guarantee in favour of a bank in respect of facilities granted to a jointly controlled entity amounted at HKD50,000,000.00.

Save as aforesaid or as otherwise disclosed herein and apart from intra-group liabilities, at the close of business on 31 December 2010, the Group did not have any loan capital outstanding, issued or agreed to be issued, bank overdraft, loans, or other similar indebtedness, liabilities under acceptances or acceptances credits, debentures, mortgages, charges, finance lease or hire purchase commitments, guarantees or other material liabilities.

3. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, save for the Acquisition as disclosed in the Letter of the Board in this circular, Directors were not aware of any material adverse change in the financial or trading position of the Group since 31 December 2009, being the date to which the latest published audited consolidated financial statements of the Group were made up.

4. FINANCIAL AND TRADING PROSPECT OF THE GROUP

For the six months ended 30 June 2010, the Company maintained a solid revenue of HKD812,425,000.00. The improvement in business efficiency has further strengthened the profit attributable to owners of the Company to HKD3,975,000.00, representing a steady growth of 4.1% as compared to the corresponding period in 2009. Gross margin was slightly affected by the rise in operating cost, reflecting a decrease of 190 basis points to 19.2%.

It is anticipated that the global economy will improve gradually. Subsequent to the revival of economy, business of the Group is expected to be strengthened and perk up steadily. Given that the gearing up of the BRICs’ market, accompanied by moderate revitalisation of the US and Eurozone economies, the Group remains cautiously optimistic. With the aim of building an invigorated platform in this favourable leverage era, the Group allocates our resources strategically in order to maximise profitability. Through our entrepreneurial spirit and expertise, strong partnership network, accompanied by our committed team, we believe Symphony will build thriving businesses following the full recovery of global economy.

– 17 –

VALUATION REPORT

APPENDIX III

Set out below is the letter and the valuation report received from Prudential Surveyors (Hong Kong) Ltd, an independent property valuer, prepared for the purpose for incorporation in this circular in connection with their valuation of the property interest as at 21 January 2011.

26 January 2011

The Board of Directors Symphony Holdings Limited 10th Floor, Island Place Tower No.510 King’s Road North Point Hong Kong

Dear Sirs,

VALUATION OF TWO VACANT SITES NORTH OF PUHEDA ROAD, DAOYI DEVELOPMENT ZONE, SHENBEI NEW DISTRICT, SHENYANG, LIAONING PROVINCE, THE PEOPLE’S REPUBLIC OF CHINA.

In accordance with your instructions for us to value the property interests in the People’s Republic of China (the “ PRC ”). We confirm that we have made relevant enquiries and obtained such further information as we consider necessary for the purpose of providing you with our opinion of the market values of such property interests as at 21 January 2011 (the “ Date of Valuation ”).

Our valuation is our opinion of Market Value which is defined mean “the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s- length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion”.

Unless otherwise stated, our valuation is prepared in accordance with the “First Edition of The HKIS Valuation Standards on Properties” published by the Hong Kong Institute of Surveyors (“HKIS”). We have also complied with all requirements contained in Paragraph 34(2), (3) or Schedule 3 of the Companies Ordinance (Cap.32) and Chapter 5, Practice Note 12 and Practice Note 16 of the Rule Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (“the Listing Rules”).

Our valuation has been made on the assumption that the owner sells the properties on the open market without the benefit of a deferred term contract, leaseback, joint venture, management agreement or any similar arrangement, which would serve to affect the values of the property interests.

Unless otherwise stated, all the property interests are valued by the comparison method on the assumption that each property can be sold with the benefit of vacant possession. Comparison is based on prices realised on actual transactions or asking price of comparable properties. Comparable properties with similar sizes, characters and locations are analysed, and carefully weighted against all respective advantages and disadvantages of each property in order to arrive at a fair comparison of value.

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VALUATION REPORT

APPENDIX III

For the property interest which is to be acquired by the Group for future development in the PRC, as for which the Group has not yet obtained the State-owned Land Use Rights Certificates and/or the payment of the land premium has not yet been fully settled as at the date of valuation, we have ascribed no commercial value in the property interests.

In the course of our valuation for the property interests, we have relied on the legal opinion of the PRC legal advisor, Dacheng Law Offices (the “( PRC Legal Opinion )”). We have been provided with extracts from title documents relating to such property interests. We have not searched the original documents to verify ownership or existence of any amendment which does not appear on the copies handed to us. All documents have been used for reference only.

Under the current planning approval systems in the PRC, valuers are not able to undertake any planning approval verification freely and swiftly. We have relied, to a considerable extent, on information given by you, in particular, but not limited to, the sales records, planning approvals, statutory notices, easements, tenancies and floor areas. No on-site measurement has been taken. Dimensions, measurements and areas included in the valuation certificates are only approximations.

We have taken every reasonable care both during inspecting the information provided to us and in making relevant enquiries. We have no reason to doubt the truth and accuracy to the information provided to us by you, which is material to the valuation. We were also advised by you that no material facts have been omitted from the information provided to us.

We have inspected the properties for the purpose of this valuation. We have not carried out investigations on the site to determine the suitability of the ground conditions and the services etc. for any future development. Our valuation does not make any allowance for contamination of pollution of the land, if any, which may occurred as a result of past usage.

No allowance has been made in our valuation neither for any charges, mortgages or amounts owning on the property interests nor for any expenses or taxation which may be incurred in effecting a sale. Unless otherwise stated, its is assumed that the property interests are fee from encumbrances, restrictions and outgoing of an onerous nature which could affect their values.

Unless otherwise stated, all monetary amounts are stated in Renminbi or ¥.

We enclose herewith our valuation certificate.

Yours faithfully, For and on behalf of

PRUDENTIAL SURVEYORS (HONG KONG) LTD.

Brian K P Law

BSc MHKIS, MRICS RPS (GP) Executive Director

Note: Mr Law is a member of the Royal Institution of Chartered Surveyors and a member of the Hong Kong Institute of Surveyors. He has over 19 years’ valuation experience in Hong Kong and the PRC.

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VALUATION REPORT

APPENDIX III

VALUATION CERTIFICATE OF PROPERTIES INTERESTS OWNED BY THE SUBSIDIARY COMPANIES OF SYMPHONY HOLDINGS LIMITED

Property

Description

Market value in Particulars of existing state as at the sites 21 January 2011

Two vacant sites at North of Puheda Road, Daoyi Development Zone, Shenbei New District, Shenyang, Liaoning Province, The People’s Republic of China.

The sites named as Nos. 88 and 89 respectively are vacant and free of structures. The previous use was corn fields, fish ponds and village settlements. A major road of dual 3 (3 lanes for each traffic direction) has been built with pavement, side road, landscaping strip provided. Site No. 89 has one side of land boundary abuts onto the major road which is named as Puheda Road while the Site No. 88 is located at its further northeast with a new road to be built on its immediate north side. This site adjoins two plots of land already acquired by your another two subsidiary companies in 2009.

Portions of the No commercial properties are value occupied by few existing constructions, and the remaining portions are vacant

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APPENDIX III

VALUATION REPORT

Notes:

• (a) As advised, Ample Apex Limited and Boom Origin Limited entered into the Confirmation Agreements with Shenyang Plan and Land Resources Bureau confirming the successful bidding for the property at an auction on 20 January 2011. Ample Apex Limited and Boom Origin Limited, the subsidiaries of the Company, would be contracted to grant the following land parcels with a total site area of approximately 99,338 sq.m. and the maximum proposed gross floor area of approximately 185,405 sq.m. for a total consideration of RMB167,553,982.60.

Particulars of the Sites

Name	of Site	Site No. 88	Site No. 89	Total
(a)	Location	North of Puheda Road	North of Puheda Road
		Daoyi Development Zone	Daoyi Development Zone
(b)	Zoning	Commercial/Residential	Commercial
(c)	Site area	44,237 sq.m.	55,101 sq.m.	99,338 sq.m.
(d)	Development	(i) Plot ratio not to	(i) Plot ratio not to
	conditions	exceed 1.7	exceed 2
		(ii) Green/landscaping	(ii) Green/landscaping
		area should be	area should be
		greater than 30%	greater than 10%
(e)	Term of lease	40 years for commercial	40 years
		50 years for residential
(f)	Sale price	¥65,727,334.60	¥101,826,648.00	¥167,553,982.60

• (b) As advised by the Group, the Group has not obtained the State-owned Land Use Rights Certificate of the property. We have, therefore, ascribed “no commercial value” to the property. Had the Group obtained all the State-owned Land Use Rights Certificate of the property at the Date of Valuation, the market value of the property as at the Date of Valuation would be in the sum of RMB167,553,982.60.

• (c) We have been provided with a legal opinion on the property prepared by the Group’s PRC legal advisors, which contains, inter alia, the following information:

Under the condition that, the Group has paid the land premium in respect of the site in full and signed the State-owned Land Use Rights Grant Contract with the relevant authorities, the Group has no substantial legal obstacles on obtaining the land use rights of the property.

• (d) A summary of major certificates/approvals is shown as follows:

• i. State-owned Land Use Rights Grant Contract

• i. State-owned Land Use Rights Grant Contract Expected to be entered within three months from the date of the Confirmation Agreement

• ii. State-owned Land Use Rights Certificate Subject to application iii. Construction Land Use Planning Permit Subject to application iv. Construction Works Planning Permit Subject to application v. Construction Works Commencement Permit Subject to application vi. Pre-sale Permit Subject to application

vii. Construction Works Completion Certified Report Subject to application

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GENERAL INFORMATION

APPENDIX IV

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 document misleading.

2. DISCLOSURE OF INTERESTS

(a) Interests of Directors and Chief Executives

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

Long Positions

Ordinary shares of HKD0.25 each of the Company:

Director Notes Chan Ting Chuen 1,2 Chang Tsung Yuan 4 Sze Sun Sun Tony 1,3	Number of ordinary Total % in the shares held by number of issued share beneficial controlled ordinary capital of owner corporation shares the Company 5,000,000 851,685,958 856,685,958 49.12% 6,000,000 — 6,000,000 0.34% — 851,685,958 851,685,958 48.83%

Notes:

1. Well Success was directly interested in 851,685,958 Shares. First Dynamic International Limited (“ First Dynamic ”) held more than one-third of the issued share capital of Well Success. Each of Royal Pacific Limited (“ Royal Pacific ”) and Alexon International Limited (“ Alexon ”) held more than one-third of the issued share capital of First Dynamic. Accordingly, First Dynamic, Royal Pacific and Alexon were deemed to be interested in 851,685,958 Shares.

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GENERAL INFORMATION

APPENDIX IV

2. DISCLOSURE OF INTERESTS (Continued)

(a) Interests of Directors and Chief Executives (Continued) Long Positions (Continued)

Notes (Continued):

1. Mr. Chan Ting Chuen (“ Mr. Chan ”) had a direct interest in 5,000,000 Shares. Royal Pacific was wholly-owned by TC Chan Family Holdings Limited (“ TCCFHL ”), which in turn was wholly-owned by Mr. Chan. Accordingly, Mr. Chan was or deemed to be interested in 856,685,958 Shares.

2. Mr. Sze Sun Sun Tony (“ Mr. Sze ”) was interested in the entire issued share capital of Alexon and was therefore deemed to be interested in 851,685,958 Shares.

3. Mr. Chang Tsung Yuan was directly interested in 6,000,000 Shares. He was also a substantial shareholder of Well Success, in which he held 20% of its issued share capital.

Short Positions

As at the Latest Practicable Date, save as disclosed above, none of the Directors, chief executives nor their associates had any interest or short position in the Shares, underlying shares or debentures of the Company or any of its associated corporation which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO.

(b) Interests of Substantial Shareholders

As at the Latest Practicable Date, so far as is known to, or can be ascertained after reasonable enquiry by any Directors or chief executives of the Company, the following persons had interests or short positions in the Shares and underlying shares of the Company which would fall to be disclosed to the Company under the provisions of the Divisions 2 and 3 of Part XV of SFO, or, who were, directly or indirectly, deemed to be interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Company and the amount of each of such persons’ interests in such securities, together with particulars of any options in respect of such capital were as follows:

Long Positions

Shareholder Notes Capacity Well Success 1 Beneficial owner First Dynamic 1 Interest of controlled corporation Royal Pacific 1 Interest of controlled corporation TCCFHL 2 Interest of controlled corporation Mr. Chan 2 Beneficial owner and interest of controlled corporation	Number of % in the issued ordinary shares issued share Direct Deemed Total capital of interests interests interests the Company 851,685,958 — 851,685,958 48.83% — 851,685,958 851,685,958 48.83% — 851,685,958 851,685,958 48.83% — 851,685,958 851,685,958 48.83% 5,000,000 851,685,958 856,685,958 49.12%

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GENERAL INFORMATION

APPENDIX IV

2. DISCLOSURE OF INTERESTS (Continued)

(b) Interests of Substantial Shareholders (Continued)

Long Positions (Continued)

Shareholder Notes Capacity Ng Shuk Fong 2 Spouse (“Madam Ng”) Alexon 1 Interest of controlled corporation Mr. Sze 3 Interest of controlled corporation Lau Yuk Wah 3 Spouse (“Madam Lau”) Frensham 4 Beneficial owner and interest of controlled corporation Pou Yuen Industrial 4 Interest of controlled (Holdings) Limited corporation (“Pou Yuen”) Yue Yuen Industrial 4 Interest of controlled Limited (“Yue corporation Yuen Industrial”) Pou Hing Industrial 4 Interest of controlled Company Limited corporation (“Pou Hing”) Yue Yuen Industrial 4 Interest of controlled (Holdings) Limited corporation (“Yue Yuen”) Wealthplus Holdings 4 Interest of controlled Limited corporation (“Wealthplus”) Pou Chen 4 Interest of controlled Corporation corporation (“Pou Chen”) Shah Capital Beneficial owner Management

Number of % of the issued ordinary shares issued share Direct Deemed Total capital of interests interests interests the Company — 856,685,958 856,685,958 49.12% — 851,685,958 851,685,958 48.83% — 851,685,958 851,685,958 48.83% — 851,685,958 851,685,958 48.83% 83,999,430 851,685,958 935,685,388 53.65% — 935,685,388 935,685,388 53.65% — 935,685,388 935,685,388 53.65% — 935,685,388 935,685,388 53.65% — 935,685,388 935,685,388 53.65% — 935,685,388 935,685,388 53.65% — 935,685,388 935,685,388 53.65% 239,828,500 — 239,828,500 13.75%

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GENERAL INFORMATION

APPENDIX IV

2. DISCLOSURE OF INTERESTS (Continued)

(b) Interests of Substantial Shareholders (Continued)

Long Positions (Continued)

Notes:

1. As at Latest Practicable Date, Well Success was directly interested in 851,685,958 Shares. First Dynamic held more than one-third of the issued share capital of Well Success. Each of Royal Pacific and Alexon held more than one-third of the issued share capital of First Dynamic. Accordingly, First Dynamic, Royal Pacific and Alexon were deemed to be interested in 851,685,958 Shares.

2. Madam Ng is the wife of Mr. Chan, a director of the Company. Royal Pacific is whollyowned by TCCFHL, which in turn is wholly-owned by Mr. Chan. As at Latest Practicable Date, Royal Pacific was deemed to be interested in 851,685,958 Shares (see Note 1), therefore both Mr. Chan and Madam Ng were deemed to be interested in 851,685,958 Shares. Furthermore, Mr. Chan was directly interested in 5,000,000 Shares. Accordingly, Madam Ng was deemed to be interested in a total of 856,685,958 Shares.

3. Madam Lau is the wife of Mr. Sze, a director of the Company. As at Latest Practicable Date, Mr. Sze was interested in the entire issued share capital of Alexon, therefore he was deemed to be interested in 851,685,958 Shares (see Note 1). Accordingly, Madam Lau was deemed to be interested in a total of 851,685,958 Shares.

4. Frensham was a wholly-owned subsidiary of Pou Yuen which in turn was a wholly-owned subsidiary of Yue Yuen Industrial. Yue Yuen Industrial was a wholly-owned subsidiary of Pou Hing which in turn was a wholly-owned subsidiary of Yue Yuen. Wealthplus, a whollyowned subsidiary of Pou Chen, held over one-third of the entire issued share capital of Yue Yuen. As at Latest Practicable Date, Frensham held more than one-third of the issued share capital of Well Success and was therefore deemed to be interested in 851,685,958 Shares. In addition, Frensham had a direct interest in 83,999,430 Shares. Accordingly, all of Frensham, Pou Yuen, Yue Yuen Industrial, Pou Hing, Yue Yuen, Wealthplus and Pou Chen were or deemed to be interested in 935,685,388 Shares.

Save as disclosed above, as at the Latest Practicable Date, Directors were not aware of any other persons (other than the Directors and the chief executives of the Company) who had interests or short positions in the Shares or underlying shares (including any interests in options in respect of such capital), which would fall to be disclosed to the Company and the Exchange under the provisions of Divisions 2 and 3 of Part XV of SFO, or, who are, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of the Company.

Short Positions

As at the Latest Practicable Date, the Company has not been notified of any other relevant interests or short positions in the issued share capital of the Company.

(c) Share Options of the Company

The Company adopted a share option scheme on 22 October 2001 (“ 2001 Scheme ”).

As at the Latest Practicable Date, there is no share option being granted, outstanding, lapsed or cancelled by the Group pursuant to 2001 scheme.

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GENERAL INFORMATION

APPENDIX IV

3. COMPETING INTERESTS OF DIRECTORS AND ASSOCIATES

As at the Latest Practicable Date, none of the Directors or their respective associates was interested in any business (other than as an independent non-executive Director) which competes or is likely to compete, either directly or indirectly, with the business of the Group.

4. SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had a service contract with the Company which was not determinable by the Company within one year without payment of compensation, other than statutory compensation.

5. LITIGATION

As at the Latest Practicable Date, the Group was not engaged in any litigation or arbitration of material important and there was no litigation or claim of material importance known to the Directors to be pending or threatened by or against the Group.

6. EXPERTS AND CONSENTS

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

Name

Qualification

Prudential Surveyors (Hong Kong) Ltd (“ Prudential ”) Property valuer

Prudential has given and has not withdrawn their written consent to the issue of this circular with the inclusions of their respective letter and references to their names in the form and context in which they appear.

As at the Latest Practicable Date, Prudential:

• (a) was not interested, directly or indirectly, in any assets which have been acquired or disposed of by or leased to any member of the Group or are proposed to be acquired or disposed of by or leased to any member of the Group since 31 December 2009, being the date to which the latest published audited accounts of the Company were made up; and

• (b) did not have any shareholding interest in any member of the Group or any right (whether legally enforce able 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 IV

7. MATERIAL CONTACTS

The following contracts have been entered into by the Group (not being contracts entered into in the ordinary course of business) within two years immediately preceding the date of this circular and are or may be material:

• (a) a sale and purchase agreement dated 1 September 2010 between Great Pacific Investments Ltd. and Power Plus Limited, a wholly owned subsidiary of the Company, in respect of the disposal of 11.3% equity interests in Full Pearl International Limited; and

• (a) a contract for the transfer of the land use right of State-owned land for construction[#] (國 有建設用地使用權出讓合同) dated 11 November 2010 between Shenyang Real Estate Development Company Limited[#] (瀋陽房地產開發有限公司) and 瀋陽巿規劃和國土資 源局瀋北分局 (Shenyang Municipal Bureau of Planning and Land Resources Shenbei Branch)[#] in respect of the acquisition of land use right on 20 October 2009.

8. DIRECTORS’ INTERESTS IN ASSETS/CONTRACTS

As at the Latest Practicable Date:

• (a) none of the Directors had any direct or indirect interests in any assets which have since 31 December 2009 (being the date to which the latest published audited consolidated financial statements of the Company were made up) been acquired or disposed of by or leased to the Company, or are proposed to be acquired or disposed of by or leased to the Company; and

• (b) none of the Directors was materially interested in any contracts or arrangements entered into by the Company subsisting as at the Latest Practicable Date which is significant in the relation to the business of the Company.

9. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection during normal business hours (Saturdays and public holidays excepted) at 10th Floor, 510 King’s Road, North Point, Hong Kong from the date of this circular up to and including 11 March 2011:

• (a) the memorandum and articles of association of the Company;

• (b) the annual reports of the Company for the three financial years ended 31 December 2007, 2008 and 2009;

• (c) the unaudited interim report of the Company for the six months ended 30 June 2010;

• (d) the material contracts as referred to in the section headed “material contracts” in this appendix; and

• (e) the written consents referred to in the paragraph headed “Experts and Consents” in this appendix.

• # The unofficial English transliterations or translations are for identification purpose only.

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GENERAL INFORMATION

APPENDIX IV

10. GENERAL INFORMATION

• (a) The secretary of the Company is Ms. Chu Lai Shan Sammie, an associate member of The Hong Kong Institute of Chartered Secretaries and The Institute of Chartered Secretaries and Administrators.

• (b) The share registrar of the Company is Tricor Tengis Limited of 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong.

• (c) The English text of this circular shall prevail over the Chinese text in the case of inconsistency.

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