Tradelink Electronic Commerce Limited - Proxy Solicitation & Information Statement 2013

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 a stockbroker or other registered dealer in securities, a bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Kwoon Chung Bus Holdings Limited, you should at once hand this circular, together with the enclosed form of proxy, to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

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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KWOON CHUNG BUS HOLDINGS LIMITED 冠忠巴士集團有限公司[*] (Incorporated in Bermuda with limited liability) (Stock code: 306)

DISCLOSEABLE AND CONNECTED TRANSACTION DISPOSAL OF 60% EQUITY INTEREST IN CQ TOURISM COACH

Independent financial adviser to the Independent Board Committee

RaffAello Capital Limited

A letter from the Board is set out on pages 3 to 9 of this circular. A letter from the Independent Board Committee is set out on page 10 of this circular. A letter from RaffAello Capital Limited, the independent financial adviser, containing its advice to the Independent Board Committee is set out on pages 11 to 21 of this circular.

A notice convening an extraordinary general meeting of Kwoon Chung Bus Holdings Limited to be held at 3/F, 8 Chong Fu Road, Chai Wan, Hong Kong on Monday, 16 December 2013 at 2:30 p.m. is set out on pages 36 and 37 of this circular. A form of proxy for use at the extraordinary general meeting is also enclosed. Such form of proxy is also published on the websites of The Stock Exchange of Hong Kong Limited (www.hkexnews.hk) and the Company (www.kcbh.com.hk).

If you are not able to attend the extraordinary general meeting, please complete and sign the accompanying form of proxy in accordance with the instructions printed thereon and return it to the office of the Company’s share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong as soon as possible but in any event not less than 48 hours before the time appointed for the holding of the extraordinary general meeting or any adjournment thereof. Completion and return of the form of proxy will not preclude Shareholders from attending and voting in person at the meeting if they so wish.

For identification purposes only

28 November 2013

			Page
Responsibility statement . . . . . . . . . . . . .	. .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	ii
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . .	. .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board
Introduction . . . . . . . . . . . . . . . . . . . . .	. .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
Date of the Transaction . . . . . . . . . .	. .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Parties . . . . . . . . . . . . . . . . . . . . . . . . . .	. .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
General nature of the Transaction	. .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Asset to be disposed of . . . . . . . . . .	. .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Consideration receivable and the intended application of the sale proceeds . . . . . . . . .			5
Financial results of CQ Tourism Coach for the latest two financial years . . . . . . . . . .			7
Conditions precedent . . . . . . . . . . . .	. .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Reasons for entering into the Transaction and advantages/benefits expected to
accrue to the Company . . . . . . . .	. .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Disadvantages of the Transaction .	. .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
Connected relationship . . . . . . . . . . .	. .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
Directors’ interests in the Transaction		. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
EGM and proxy arrangement . . . . .	. .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
Recommendations . . . . . . . . . . . . . . .	. .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
Letter from the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .			10
Letter from RaffAello Capital Limited		. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
Valuation report . . . . . . . . . . . . . . . . . . . .	. .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	22
General information . . . . . . . . . . . . . . . . .	. .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	28
Notice of the extraordinary general meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .			36

– i –

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.

– ii –

DEFINITIONS

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

‘‘Board’’ the board of Directors; ‘‘Company’’ Kwoon Chung Bus Holdings Limited, a company incorporated in Bermuda with limited liability whose Shares are listed on the Stock Exchange;
‘‘Completion’’ the completion of the Transaction;
‘‘CQ Sunshine Travel’’ Chongqing Sunshine International Travel Service Co., Ltd, a state-owned enterprise in Chongqing incorporated in the PRC;
‘‘CQ Tourism Coach’’ Chongqing Tourism Coach Co., Ltd, an EJV incorporated in the PRC, which is directly 60% owned by KC Travel and directly 40% owned by CQ Sunshine Travel;
‘‘Directors’’ the directors of the Company;
‘‘EGM’’ an extraordinary general meeting of the Company to be held at 3/F, 8 Chong Fu Road, Chai Wan, Hong Kong on Monday, 16 December 2013 at 2:30 pm to consider and, if appropriate, to approve the resolution contained in the notice of the meeting which is set out on pages 36 and 37 of this circular, or any adjournment thereof;
‘‘EJV’’ equity joint venture;
‘‘Equity Transfer Agreement’’ the agreement in Chinese dated 26 September 2013 entered into between KC Travel as the vendor and CQ Sunshine Travel as the purchaser pursuant to which KC Travel agreed to sell all of its 60% equity interest in CQ Tourism Coach to CQ Sunshine Travel;
‘‘Group’’ the Company and its subsidiaries;
‘‘HK GAAP’’ Generally Accepted Accounting Principles adopted in Hong Kong;
‘‘HKD’’ Hong Kong dollar, the currency of Hong Kong;
‘‘Hong Kong’’ the Hong Kong Special Administrative Region of the PRC;
‘‘KC Travel’’ Kwoon Chung Travel Company Limited, an indirect wholly owned subsidiary of the Company incorporated in Hong Kong;

– 1 –

DEFINITIONS

‘‘Latest Practicable Date’’	25 November 2013, being the latest practicable date prior to	25 November 2013, being the latest practicable date prior to
	the printing of this circular	for ascertaining certain
	information in this circular;
‘‘Listing Rules’’	the Rules Governing the Listing	of Securities on the Stock
	Exchange;
‘‘Mainland China’’	The PRC excluding Hong Kong;
‘‘Model Code’’	Model Code for Securities Transactions by Directors of
	Listed Issuers;
‘‘PRC’’	the People’s Republic of China;
‘‘PRC GAAP’’	Generally Accepted Accounting	Principles adopted in the
	PRC;
‘‘RMB’’	Renminbi, the currency of the PRC;
‘‘SFO’’	the Securities and Futures Ordinance, Chapter 571 of the
	Laws of Hong Kong;
‘‘Share(s)’’	ordinary share(s) of HK$0.10 each in the share capital of
	the Company;
‘‘Shareholder(s)’’	holder(s) of the Share(s);
‘‘Stock Exchange’’	The Stock Exchange of Hong Kong Limited; and
‘‘Transaction’’	the transaction contemplated under the Equity Transfer
	Agreement.

In this circular, the exchange rate of RMB0.79 to HK$1 has been used for reference only.

– 2 –

LETTER FROM THE BOARD

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KWOON CHUNG BUS HOLDINGS LIMITED 冠忠巴士集團有限公司[*]

(Incorporated in Bermuda with limited liability)

(Stock code: 306)

Executive Directors: Wong Chung Pak, Thomas (Chairman) Wong Leung Pak, Matthew (Chief Executive Director and Managing Director) Wong Wing Pak (Senior Executive Director) Cheng Wai Po, Samuel Chung Chak Man, William

Independent Non-executive Directors: Chan Bing Woon, SBS, JP Sung Yuen Lam Lee Kwong Yin, Colin

Registered Office: Clarendon House Church Street Hamilton HM 11 Bermuda

Principal Place of Business: 3/F, 8 Chong Fu Road Chai Wan Hong Kong

28 November 2013

To the Shareholders

Dear Sir/Madam,

DISCLOSEABLE AND CONNECTED TRANSACTION DISPOSAL OF 60% EQUITY INTEREST IN CQ TOURISM COACH

INTRODUCTION

On 26 September 2013, the Company through KC Travel, its indirect 100% owned subsidiary, entered into an Equity Transfer Agreement with CQ Sunshine Travel, a connected person of the Company, pursuant to which KC Travel as the vendor agreed to sell all of its 60% equity interest in CQ Tourism Coach to CQ Sunshine Travel. The consideration is composed of (1) cash of RMB33,000,000 (equivalent to approximately HK$41,772,000) and (2) the assumption of all tax liabilities (including mainly income tax, related transfer duties/ charges, and etc) legally imposed on KC Travel whensoever arising from the Transaction by CQ Sunshine Travel on behalf of KC Travel. As represented by CQ Sunshine Travel and at the best of its knowledge, the total actual tax liabilities shall amount to approximately RMB3,670,000 (equivalent to approximately HK$4,646,000). Hence, the total consideration shall be approximately RMB36,670,000 (equivalent to approximately HK$46,418,000). On Completion, the Company will no more hold any equity interest in CQ Tourism Coach.

For identification purposes only

– 3 –

LETTER FROM THE BOARD

The Company mainly invests in transportation and tourism businesses in Hong Kong and Mainland China. The Transaction constitutes discloseable and connected transaction under Chapter 14 and 14A of the Listing Rules respectively. The Transaction is subject to, among other things, independent Shareholders’ approval at an EGM. The purpose of this circular is to provide the Shareholders with further information on the Transaction and seek your approval of the resolution set out in the notice of EGM on pages 36 and 37 of this circular. The recommendations of the Independent Board Committee to the independent Shareholders in relation to the Transaction are set out on page 10 of this circular. A copy of the letter from RaffAello Capital Limited to the Independent Board Committee containing its advice in relation to the terms of the Transaction is set out on pages 11 to 21 of this circular.

DATE OF THE TRANSACTION:

26 September 2013

PARTIES

Vendors:

KC Travel, an indirect 100% owned subsidiary of the Company principally engaged in the investment of tourism business in Mainland China

Purchaser: CQ Sunshine Travel, a state-owned enterprise in Chongqing, Mainland China principally engaged in tourism business in Chongqing

GENERAL NATURE OF THE TRANSACTION

The Group mainly invests in transportation and tourism businesses in Hong Kong and Mainland China. CQ Tourism Coach is an EJV incorporated in Mainland China and is principally engaged in tourist bus transport business in Chongqing. The only major asset of CQ Tourism Coach is a bus depot with an allocated land use right in Yubei District, Chongqing with net book values amounting to approximately RMB12,435,000 (under PRC GAAP as at 31 August 2013) and market value amounting to RMB12,100,000 (Please refer to the section headed “Valuation report” afterward for details of valuation). Other assets are cash and receivable balances with net book values amounting to approximately RMB4,000,000 (as at 31 August 2013), which are relatively insignificant and their market values are nearly their net book values. CQ Tourism Coach manages a fleet of tourist buses by affiliation from individual operators.

The Directors represent that the land use right has been recorded on the Company’s book as property held for sale (at its net book value at the date when the intention of disposal arose and it became so classified, less any impairment losses). The buildings erected on the land have been recorded on the Company’s book as leasehold buildings and are stated at valuation less accumulated depreciation and any impairment losses.

– 4 –

LETTER FROM THE BOARD

The Company through KC Travel, its indirect 100% owned subsidiary, entered into an Equity Transfer Agreement with CQ Sunshine Travel, a connected person of the Company, pursuant to which KC Travel agreed to sell all of its 60% equity interest in CQ Tourism Coach to CQ Sunshine Travel. On Completion, the Company will no more hold any equity interest in CQ Tourism Coach. After the Completion of the Transaction, CQ Tourism Coach will cease to be a subsidiary of the Company and its assets, liabilities and results will no more be consolidated into the Company’s books.

ASSET TO BE DISPOSED OF

The asset to be realized is all of the 60% equity interest in CQ Tourism Coach held by the Company via KC Travel.

CONSIDERATION RECEIVABLE AND THE INTENDED APPLICATION OF THE SALE PROCEEDS

The consideration is composed of (1) cash of RMB33,000,000 (equivalent to approximately HK$41,772,000) and (2) the assumption of all tax liabilities (including mainly income tax, related transfer duties/charges, and etc) legally imposed on KC Travel whensoever arising from the Transaction by CQ Sunshine Travel on behalf of KC Travel. As represented by CQ Sunshine Travel and at the best of its knowledge, the total actual tax liabilities shall amount to approximately RMB3,670,000 (equivalent to approximately HK$4,646,000). Hence, the total consideration shall be approximately RMB36,670,000 (equivalent to approximately HK$46,418,000). The consideration shall be settled by two installments. The first installment amounts to RMB23,000,000 (equivalent to approximately HK$29,114,000), which shall be satisfied in full by cash within 5 days after the local business administration bureau completes the registration of transfer of the equity interest. The second installment amounts to approximately RMB13,670,000 (equivalent to approximately HK$17,304,000), of which RMB10,000,000 (equivalent to approximately HK$12,658,000) shall be satisfied in full by cash within 60 days after the local business administration bureau completes the registration of transfer of the equity interest. The remaining amount, which represents all taxes payable under the Transaction amounting to approximately RMB3,670,000 (equivalent to approximately HK$4,646,000), will be withheld and paid directly to the relevant local tax bureau by CQ Sunshine Travel on behalf of CQ Tourism Coach within one month after the payment of the above-mentioned RMB10,000,000. The sale proceeds will be utilized by the Group as general working capital for other business development.

The Transaction is initiated by CQ Sunshine Travel. The consideration offered is determined mainly based on 60% share of the net liabilities value of CQ Tourism Coach under PRC GAAP as at 30 June 2013 amounting to approximately RMB1,152,000 with a premium. The consideration has been negotiated on an arm’s length basis and on normal commercial terms. The Directors consider the premium reasonable for the following reasons:

CQ Tourism Coach is in a continual loss and net liabilities position for at least four consecutive fiscal years (under PRC GAAP). It is unlikely to persistently turn around in performance in the long term. As such, no meaningful price to earnings or price to book ratio (under PRC GAAP) can be obtained to measure the premium; and

– 5 –

LETTER FROM THE BOARD

owing to the state-owned nature of CQ Sunshine Travel, it is willing to pay a higher premium to somehow compensate for the Company’s share of accumulated losses and contribution in developing the Chongqing tourist bus market for over more than ten years. Also, as a state-owned enterprise, CQ Sunshine Travel is more capable in exploring further development of the land than a Sino-foreign equity joint venture. The Directors believe that from CQ Sunshine Travel’s point of view, the intrinsic value of the land is higher than a fair market value.

In the Company’s books under HK GAAP, as at 31 August 2013, the unaudited net book value of the 60% equity interest in CQ Tourism Coach amounted to approximately RMB985,000 (equivalent to approximately HK$1,247,000) (Under HK GAAP, the net book value is positive mainly owing to a HK GAAP adjustment which has reversed the accumulated amortization of the land held for sale). As compared with the unaudited net book value, the consideration represents a premium of approximately RMB32,015,000 (equivalent to approximately HK$40,525,000) (disregarding all tax liabilities arising from the Transaction assumed by CQ Sunshine Travel on behalf of KC Travel).

As a result of the Transaction, gain on disposal (net of taxes) of approximately HK$40,846,000 (which is the sum of (1) the excess of the consideration over the net book value of 60% equity interest in CQ Tourism Coach as at the date of the Transaction, net of all relevant taxes payable; and (2) exchange equalization reserve released upon deconsolidation, which arises from the difference between the exchange rate used in translating the net assets of CQ Tourism Coach reported in RMB into HKD at the time of its original acquisition and that at the time of its disposal and amounts to approximately HK$321,000) is expected to accrue to KC Travel or the Company.

In view of the above, the Directors (excluding the independent non-executive Directors) consider the terms of the Transaction are fair and reasonable and in the interests of the Shareholders as a whole. The independent non-executive Directors will opine after the independent financial advisor of the Company gives its recommendations to the Independent Board Committee in respect of the Transaction in the circular to be dispatched to the Shareholders later.

– 6 –

LETTER FROM THE BOARD

FINANCIAL RESULTS OF CQ TOURISM COACH FOR THE LATEST TWO FINANCIAL YEARS

As the subject asset of the Transaction is 60% equity interest in CQ Tourism Coach owned by the Group, a summary of the 60% share of audited net loss (both before and after taxation and extraordinary items) of CQ Tourism Coach attributable to the Group under PRC GAAP for the two financial years immediately preceding the Transaction is shown as follows:

					For the year	ended
					31 December
					2012	2011
					(RMB’000)	(RMB’000)
Share	of	net	loss	before taxation and extraordinary items	186	131
Share	of	net	loss	after taxation and extraordinary items	186	131

CONDITIONS PRECEDENT

Completion of the Transaction is conditional upon fulfillment of the following conditions:

the Shareholder approval requirements as stipulated in the Listing Rules;
the obtaining of written shareholder and board approvals of CQ Sunshine Travel; and
the obtaining of all consents, authorizations, permits and approvals from the relevant Chongqing government authorities including but not limited to Chongqing Stateowned Assets Supervision and Administration Commission, Chongqing Foreign Trade and Economic Relations Commission, and Chongqing Administration for Industry and Commerce.

REASONS FOR ENTERING INTO THE TRANSACTION AND ADVANTAGES/ BENEFITS EXPECTED TO ACCRUE TO THE COMPANY

There are a few reasons for the Company to enter into the Transaction:

as mentioned above, the Transaction is initiated by the purchaser and the consideration offered is at a reasonable premium; and
tourist bus business in Chongqing faces severe competition. Chongqing government has been actively developing the subway and light rail transport systems, which have seriously affected the business environment of the tourist bus industry. There is pressure upon CQ Tourism Coach in keeping up its revenue. As mentioned above, CQ Tourism Coach has been in a continual loss and net liabilities position for at least four consecutive fiscal years under PRC GAAP and is unlikely to persistently turn around in performance in the long term.

– 7 –

LETTER FROM THE BOARD

In view of the above, the Company believes that it is the right time to retreat from the Chongqing tourist bus business, and the disposal will prevent the Group from sharing further losses and allow the Group to acquire more cash for development of other businesses.

DISADVANTAGES OF THE TRANSACTION

The Transaction may lead to a reduction of the Group’s market share in Mainland China’s tourism business, especially in Chongqing. Also, the total turnover of the Group may be temporarily reduced.

CONNECTED RELATIONSHIP

The purchaser, CQ Sunshine Travel, is a connected person of the Company under the Listing Rules by virtue of its being the substantial shareholder of CQ Tourism Coach. Therefore the entering into the Transaction constitutes connected transaction for the Company under Rule 14A.13 of the Listing Rules. As certain of the percentage ratios contemplated in the Transaction in aggregate as defined in the Listing Rules is more than 5% and the total consideration is not less than HK$10,000,000, the Transaction is subject to, among other things, independent Shareholders’ approval requirements.

As certain of the percentage ratios is more than 5% but all is less than 25%, the Transaction also constitutes discloseable transaction for the Company under chapter 14 of the Listing Rules.

Details of the Transaction will be included in the Company’s next published annual report and accounts.

DIRECTORS’ INTERESTS IN THE TRANSACTION

No director has a material interest in the Transaction nor needs to abstain from voting on the board resolution approving the Transaction.

EGM AND PROXY ARRANGEMENT

The notice of the EGM is set out on pages 36 and 37 of this circular. At the EGM, resolution will be proposed to approve the Transaction. No Shareholder needs to abstain from voting at the EGM.

Pursuant to Rule 13.39(4) of the Listing Rules, any vote of shareholders at a general meeting must be taken by poll. Accordingly, the resolution will be put to vote by way of poll at the EGM. An announcement on the poll vote results will be made by the Company after the EGM in the manner prescribed under Rule 13.39(5) of the Listing Rules.

A form of proxy for use at the EGM is enclosed with this circular and such form of proxy is also published on the websites of the Stock Exchange (www.hkexnews.hk) and the Company (www.kcbh.com.hk). To be valid, the form of proxy must be completed and signed in accordance with the instructions printed thereon and deposited, together with the power of attorney or other authority (if any) under which it is signed or a certified copy of that power of

– 8 –

LETTER FROM THE BOARD

attorney or authority at the office of the Company’s share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong, not less than 48 hours before the time appointed for holding the EGM or any adjournment thereof. Completion and delivery of the form of proxy will not preclude you from attending and voting at the EGM if you so wish.

RECOMMENDATIONS

Your attention is drawn to (i) the letter from the Independent Board Committee set out on page 10 of this circular which contains the recommendations of the Independent Board Committee to the independent Shareholders regarding the resolution to approve the Transaction and (ii) the letter from RaffAello Capital Limited set out on pages 11 to 21 of this circular which contains its recommendations to the Independent Board Committee in respect of the Transaction and the principal factors and reasons considered by RaffAello Capital Limited in arriving at its recommendations.

The Independent Board Committee, having taken into account the advice of RaffAello Capital Limited, considers that the terms of the Transaction are fair and reasonable so far as the independent Shareholders are concerned and that the Transaction is in the interests of the Company and the independent Shareholders as a whole. Accordingly, the Independent Board Committee recommends the independent Shareholders to vote in favour of the ordinary resolution to be proposed at the EGM to approve the Transaction.

Yours faithfully, By order of the Board Wong Chung Pak, Thomas Chairman

– 9 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

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KWOON CHUNG BUS HOLDINGS LIMITED 冠忠巴士集團有限公司[*]

(Incorporated in Bermuda with limited liability)

(Stock code: 306)

28 November 2013

To the independent Shareholders

Dear Sir/Madam,

DISCLOSEABLE AND CONNECTED TRANSACTION DISPOSAL OF 60% EQUITY INTEREST IN CQ TOURISM COACH

We have been appointed as members of the Independent Board Committee to advise the independent Shareholders in respect of the Transaction, details of which are set out in the letter from the Board in the circular dated 28 November 2013 (the ‘‘Circular’’) to the Shareholders. Unless the context otherwise requires, expressions defined in the Circular shall have the same meanings when used in this letter.

Having taken into account the advice of RaffAello Capital Limited, we consider the terms of the Transaction to be fair and reasonable so far as the interests of the independent Shareholders are concerned. Accordingly, we recommend the independent Shareholders to vote in favour of the ordinary resolution which will be proposed at the EGM to approve the Transaction.

Yours faithfully, Chan Bing Woon, SBS, JP Sung Yuen Lam Lee Kwong Yin, Colin Independent Board Committee

For identification purposes only

– 10 –

LETTER FROM RAFFAELLO CAPITAL LIMITED

The following is the letter of advice from RaffAello Capital Limited to the Independent Board Committee and the Independent Shareholders in respect of the Transaction and is prepared for the purpose of inclusion in this circular.

==> picture [114 x 39] intentionally omitted <==

RaffAello Capital Limited Rm 2002, Tower Two, Lippo Centre, 89 Queensway, Admiralty, Hong Kong.

28 November 2013

To the Independent Board Committee and the Independent Shareholders

Kwoon Chung Bus Holdings Limited

Dear Sirs,

DISCLOSEABLE AND CONNECTED TRANSACTION IN RELATION TO DISPOSAL OF 60% EQUITY INTEREST IN CQ TOURISM COACH

INTRODUCTION

We refer to our appointment to act as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the fairness and reasonableness of the terms of the Discloseable and Connected Transaction (the ‘‘Transaction’’), details of which are contained in this circular (the ‘‘Circular’’), of which this letter forms a part. Unless otherwise defined, terms used in this letter have the same meanings as defined in the Circular. The Independent Board Committee, comprising Mr. Chan Bing Woon, SBS, JP, Mr. Sung Yuen Lam and Mr. Lee Kwong Yin, Colin, all of whom are independent non-executive Directors, has been established to advise the Independent Shareholders as to whether the terms of the Transaction are fair and reasonable so far as the Independent Shareholders are concerned and in the interest of the Company and the Shareholders as a whole.

BASIS AND ASSUMPTIONS OF THE ADVICE

In formulating our opinion and advice, we have relied upon the accuracy of the information and representations contained in the Circular and information supplied, and opinions expressed, by the directors and management of the Company. We have assumed that all statements, information and representations provided whether or not in the Circular and opinion expressed to us are true, accurate and complete in all material aspects at the time they were made and remain true, accurate and complete as at the date thereof. We have also assumed that all statements of belief, opinion, expectations and intentions of the Company made by the directors and management of the Company in the Circular were reasonably made after due and careful enquiry and were based on honestly-held opinions.

– 11 –

LETTER FROM RAFFAELLO CAPITAL LIMITED

We have no reason to doubt on the truth, accuracy and completeness of the information and representations provided to us by the directors and management of the Company, and have been confirmed by the directors and management of the Company that no material facts and representations the omission of which would make any statement in the Circular, including this letter, misleading.

We have not, however, conducted any independent in-depth investigation into the business affairs, financial position or future prospects of the Group and CQ Tourism Coach, nor have we carried out any independent verification of the information provided by the directors and management of the Company. We consider that we have reviewed sufficient information to reach an informed view and to justify reliance on the accuracy of the information and representations contained in the Circular and to provide a reasonable basis for our recommendation regarding the Transaction.

PRINCIPAL FACTORS CONSIDERED

In giving our recommendation to the Independent Board Committee and the Independent Shareholders in respect of the fairness and reasonableness of the terms of the Transaction, we have taken into consideration of the following factors and reasons:

I. General nature of the Transaction and information of CQ Tourism Coach

The Group mainly invests in transportation and tourism business in Hong Kong and Mainland China. CQ Tourism Coach is an EJV incorporated in Mainland China and is principally engaged in tourist bus transport business in Chongqing. As at 31 August 2013, the only major asset of CQ Tourism Coach is a bus depot with an allocated land use right in Yubei District, Chongqing. Other assets are cash and receivable balances amounting to approximately RMB4,000,000. CQ Tourism Coach manages a fleet of tourist buses by affiliation from individual operators.

CQ Tourism Coach is directly 60% owned by KC Travel and directly 40% owned by CQ Sunshine Travel. Before the Transaction, the assets, liabilities and results of CQ Tourism Coach had been consolidated into the Company’s books. KC Travel is an indirect 100% owned subsidiary of the Company and thus the Group’s effective interest in CQ Tourism Coach is also 60%.

– 12 –

LETTER FROM RAFFAELLO CAPITAL LIMITED

The following is a simplified shareholding structure chart of CQ Tourism Coach as of the Latest Practicable Date:

==> picture [345 x 244] intentionally omitted <==

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

The Company
100%
Kwoon Chung Buses
Investment Limited
100%
Chongqing Sunshine
Kwoon Chung Travel
International Travel
Company Limited
Services Co. Ltd
(“KC Travel”)
(“CQ Sunshine Travel”)
60% 40%
Chongqing Tourism Coach Co. Ltd. (“CQ Tourism Coach”)
----- End of picture text -----

On 26 September 2013, the Company, through KC Travel, its indirect 100% owned subsidiary, entered into an Equity Transfer Agreement with CQ Sunshine Travel, a connected person of the Company, pursuant to which KC Travel as the vendor agreed to sell all of its 60% equity interest in CQ Tourism Coach to CQ Sunshine Travel. On completion, the Company will not hold any equity interest in CQ Tourism Coach. After the Transaction, CQ Tourism Coach will cease to be a subsidiary of the Company and its assets, liabilities and results will no longer be consolidated into the Company’s books.

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LETTER FROM RAFFAELLO CAPITAL LIMITED

(a) Financial results of CQ Tourism Coach

A summary of the 60% share of audited net loss (both before and after taxation and extraordinary items) and net liability value for the two financial years immediately preceding the Transaction; and the 60% share of unaudited net profit (both before and after taxation and extraordinary items) for the period from 1 January to 31 August 2013 and net liability value as at 31 August 2013 of CQ Tourism Coach attributable to the Group under PRC GAAP is shown as follows:

	For the year ended	For the year ended
	31 December
	2012	2011
	RMB’000	RMB’000
Share of net loss before taxation and extraordinary
items	186	131
Share of net loss after taxation and extraordinary items	186	131
	For the period
	from 1 January
		to 31 August
		2013
		RMB’000
Unaudited share of net profit before taxation
and extraordinary items		395
Unaudited share of net profit after taxation
and extraordinary items		395
	For the year ended
	31 December
	2012	2011
	RMB’000	RMB’000
Share of audited net liability value
under PRC GAAP	1,625	1,439
		As at
		31 August
		2013
		RMB’000
Share of unaudited net liability value under PRC GAAP		1,230

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LETTER FROM RAFFAELLO CAPITAL LIMITED

(b) Conditions Precedent

Completion of the Transaction is conditional upon fulfillment of the following conditions:

the Shareholder approval requirements as stipulated in the Listing Rules;
the obtaining of written shareholder and board approvals of CQ Sunshine Travel; and
the obtaining of all consents, authorizations, permits and approvals from the relevant Chongqing government authorities including but not limited to Chongqing State-owned Assets Supervision and Administration Commission, Chongqing Foreign Trade and Economic Relations Commission, and Chongqing Administration for Industry and Commerce.
(c) Reasons for entering into the Transaction and benefits expected to accrue to the Company

As set out in the Letter from the Board, there are several grounds for the Company to enter into the Transaction:

the Transaction is initiated by the purchaser and the consideration offered is at a reasonable premium;
tourist bus business in Chongqing faces severe competition. Chongqing government has been actively developing the subway and light rail transport systems, which have seriously affected the business environment of the tourist bus industry. There is pressure upon CQ Tourism Coach in keeping up its revenue. CQ Tourism Coach has been in a continual loss and net liabilities position for the previous four consecutive fiscal years under PRC GAAP and is unlikely to persistently turn around in performance in the long term. The operation of CQ Tourism Coach depends wholly on the financial support from the Company for years.

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LETTER FROM RAFFAELLO CAPITAL LIMITED

Public Transport

We find from both Xinhuanet and People.cn that on 30 October 2012, 14 cities, including Chongqing, became one of the first batch of testing points for the ‘‘Bus City’’ development project in China announced at the National Urban Public Transport Working Conference[1] . As part of the ‘‘Bus City’’ development strategy, Chongqing would undergo a rapid and massive reform on its public transportation industry to transform the city to a comprehensive passenger transport hub. The outcome may result in the further difficult operation environment to CQ Tourism Coach.

The three main forms of public transport in Chongqing are Chongqing Rail Transit (CRT) metro, intercity railway and the bus system. Modernizing the public transport system, especially railway transportation system, would also be the main focus of the development strategy.

According to the Chongqing Municipal Government’s ambitious plan in May 2007, Chongqing would invest RMB150 billion over 13 years to finish a system that combines underground metro lines with light rail. The CRT represents the backbone of public transportation system in Chongqing. As of 2012, three metro lines, the 14 km long CRT Line 1, a conventional subway, the 19 km long heavy monorail CRT Line 2 and Line 3, a new heavy monorail which connects the airport and the southern part of downtown, have already opened. In addition, the Wulidian-Kangzhuang section of Line 6 was put into operation in September 2012 with a total length of about 15.8 km with 10 stations.

By 2020 this network will consist of 6 straight lines and 1 circular line; Line 1 and Line 6 are underground subway while Lines 2 and 3 are high capacity monorail. These improvements will add 363.5 km of road and railway to the existing transportation infrastructure and 93 new train stations will be added to the 111 stations that are already in place. By 2050, Chongqing plans to have ten railway lines, totaling 513 km, with 270 stations.

With the gradual improvement and optimization of the railway network, Chongqing city has also enhanced 35 tracks with high repeated bus interchange rate. Besides, according to Chongqing Provincial Road Transport Authority, Chongqing city aimed to achieve every bus stop within 500 m walking distance and bus transfer time less than 5 minutes. Moreover, the ‘‘one-hour free public transit transfer’’ policy implemented in 2013 has provided incentives to use public transport.

The enhancement of the public transport system has increased the passengers’ convenience and stiffened the competitive environment for tourist bus business of the Company in Chongqing.

1 Xinhuanet, established on 7 November 1997 and sponsored by the Xinhua News Agency, is a central news service-oriented website and an online news provider of the Xinhua News Agency on the politics, economy, society, science and technology, education and culture in China. Source: 5http://news.xinhuanet.com/politics/2012-11/07/c_123922217.htm> People.cn, founded on 1 January 1997, is a leading key central news website in China and an extensive information interaction platform constructed by People Daily. Source: 5http://hn.people.com.cn/n/2012/1031/c195194-17655814.html>

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LETTER FROM RAFFAELLO CAPITAL LIMITED

Tourism Business

Over the past several years, the tourism business of Chongqing have been severely affected by natural disasters and central government policies. According to the Xinhuanet, the 2008 Sichuan Wenchuan Earthquake caused the Chongqing tourism industry a direct loss of RMB500 million by shattering some of the tourist infrastructure in the area[2] . The catastrophic earthquake had panicked both domestic and international tourists who subsequently cancelled their travel tour in Chongqing, leading to a significant loss of revenue to the local travel and hospitality business. Another strong earthquake that struck the southwestern Chinese province of Sichuan in April 2013 had killed many people and sent large number of victims to hospitals. The region also underwent a threatening shortage of drinking water. Although the epicenter of the devastating earthquake occurred in Ya’an, which is more than 300 km away from Chongqing, the series of aftershocks as strong as magnitude 5.1 were sufficient to deter tourists from visiting the nearby area.

Besides, for a corruption prosecution in Chongqing in 2012, a series of anticorruption campaigns were launched in China to discourage the culture of luxury travel and gift-giving. An example is a former head of the Bureau of Justice at Longgang District of Shenzhen City was removed from office after being found spending a hundred thousand Renminbi on luxury hotels and travel during a five-day inspection tour. Since then, different disciplinary departments have been urged to tighten supervision and enforcement to reduce corruption. Practices such as the use of public funds on gifts, banquets and extravagant travel have been strictly banned. The Group also reported in its Annual Report 2012/13 that the call for a clean party by a senior leader of the Central Commission for Discipline Inspection of Communist Party of China had caused immediate slow-down of the domestic activities of travel and restaurants related business. According to Xinhua, many travel agencies have reported a sales decline of up to 50 percent since the beginning of 2013. The central government measures to curb corruption have adversely affected the tourism business of Chongqing Tourism Group from December 2012 onwards.

Performance of CQ Tourism Coach

Until 31 December 2012, CQ Tourism Coach had reported an accumulated loss of approximately RMB20,222,200. As a result of the Transaction, a gain on disposal (net of taxes) of approximately RMB34,230,000 (equivalent to approximately HK$43,329,000) (which is the excess of the total considerations receivable over the unaudited negative net book value of 60% equity interest in CQ Tourism Coach under PRC GAAP as at 31 August 2013, net of all relevant taxes payable) is expected to accrue to KC Travel or the Company.

Considering that (i) the continual loss position of CQ Tourism Coach for years; and (ii) the risks of deteriorating financial results caused by the difficult business environment of CQ Tourism Coach as mentioned above in the foreseeable future including but not limited to the impact of Chongqing government’s active development in the subway and

2 Source: 5http://big5.xinhuanet.com/gate/big5/cq.xinhuanet.com/2008-06/18/content_13570038.htm>

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LETTER FROM RAFFAELLO CAPITAL LIMITED

light rail transport systems and other natural or policy factors on the tourism business in Chongqing, we concur with the Directors that the entering into the Transaction is in the interests of the Company and Independent Shareholders as a whole.

II. Basis of consideration

The consideration is composed of (1) cash of RMB33,000,000 (equivalent to approximately HK$41,772,000) and (2) the assumptions of all tax liabilities (including mainly income tax. related transfer duties/charges, and etc) on KC Travel whensoever arising from the Transaction by CQ Sunshine Travel on behalf of KC Travel. Thus, the total considerations receivable for the Transaction (including such tax liabilities estimated at the best of the Directors’ knowledge) shall be approximately RMB36,670,000 (equivalent to approximately HK$46,418,000). The considerations shall be settled by two installments. The first installment amounts to RMB23,000,000 (equivalent to approximately HK$29,114,000), which will be satisfied in full by cash within 5 days after the local business administration bureau completes the registration of transfer of the equity interest. The second installment amounts to RMB13,670,000 (equivalent to approximately HK$17,304,000), of which RMB10,000,000 (equivalent to approximately HK$12,658,000) will be satisfied in full by cash within 60 days after the local business administration bureau completes the registration of transfer of the equity interest. The remaining amount, which represents all taxes payable under the Transaction and is estimated to be approximately RMB3,670,000 (equivalent to approximately HK$4,646,000), will be withheld and paid directly to the relevant local tax bureau by CQ Sunshine Travel on behalf of CQ Tourism Coach within one month after the payment of the abovementioned RMB10,000,000. The sale proceeds will be utilized by the Group as general working capital for other existing business development.

As set out in the Letter from the Board, the Transaction is initiated by CQ Sunshine Travel and the consideration offered is determined mainly based on 60% share of the net liability value of CQ Tourism Coach under PRC GAAP as at 30 June 2013 amounting to approximately RMB1,152,000 with a premium. Since KC Travel and CQ Sunshine Travel wish to maintain a good business relationship in other three EJVs, namely Chongqing Everbright International Travel Service Co., Ltd., Chongqing Grand Hotel Co. Ltd. and Chongqing Pengshui Dongguaxi Hydropower Station Co., Ltd., after the Transaction, the terms and consideration of the Transaction are under friendly negotiation between the offeror and offeree rather than as a hostile takeover.

CQ Sunshine Travel holding a flexible financial budget intends to retain the long term business partnership, i.e. over 10 years, with the Company in Chongqing though in the down-running travel and transport rental services in recent years. The remaining three joint ventures by CQ Sunshine Travel with the Company being a listed group in Hong Kong will provide the possible favor to CQ Sunshine Travel in term of future government tenders, contracts, subsidies, permits or concessions. The PRC government always provides incentive to accelerate and maintain the overseas investment in China. On the contrary, after the buyout by CQ Sunshine Travel, the Company in travel transport business will forego totally all future opportunities or concessions to be granted by the local government. The Company will miss out the unexpected prosperous development in

– 18 –

LETTER FROM RAFFAELLO CAPITAL LIMITED

the coming decades after further capital investments or restructuring exercise in a booming business environment. The Company requires a justifiable compensation for leaving the business after the thirteen year establishment in Chongqing. The consideration has therefore been negotiated on indemnified and complimentary terms to the Company between KC Travel and CQ Sunshine Travel.

The Directors also consider the premium reasonable for the following reasons:

(1) the only major asset of CQ Tourism Coach is the bus depot with an allocated land use right. Other assets are cash and receivable balances amounting to approximately RMB4,000,000, which are relatively insignificant. Hence, disregarding the liabilities of CQ Tourism Coach, the consideration offered is still far above the 60% of net book value of its total assets;
(2) CQ Tourism Coach is in a continual loss and net liabilities position for the previous four consecutive fiscal years (under PRC GAAP). It is unlikely to persistently turn around in performance in the long term. As such, no meaningful price to earnings or price to book ratio (under PRC GAAP) can be obtained to measure the premium; and
(3) owing to the state-owned nature of CQ Sunshine Travel, it is willing to pay a higher premium to somehow compensate for the Company’s share of accumulated losses and contribution in developing the Chongqing tourist bus market for over more than ten years. Also, as a state-owned enterprise, CQ Sunshine Travel is more capable in exploring further development of the land than a Sino-foreign equity joint venture. The Directors believe that from CQ Sunshine Travel’s point of view, the intrinsic value of the land is higher than a fair market value.

Since the major asset of CQ Tourism Coach is the bus depot with an allocated land use right and the Directors represent that the land use right and the buildings erected on the land have been recorded on the Company’s book, an independent valuation of the land and the buildings erected on the land helps compare the market value of such properties of CQ Tourism Coach against its book value and therefore to assess the fairness of the consideration of the Transaction. As at 30 September 2013, valuation has been performed by an independent property valuer, Ascent Partners Valuation Service Limited, with the methodology of a combination of the open market and depreciated replacement cost approaches in assessing the land portions of the properties and the buildings and structures standing on the land, respectively, under the 60% equity interest of CQ Tourism Coach. We have reviewed the valuation report and made discussion with the independent property valuer. Although the independent property valuer assigns no commercial value to the property due to the nature of the allocated land, they opined that the reference market value of the land with an area of approximately 16,990 sq.m. together with the buildings with a total gross floor area of approximately 3,337 sq.m. in the existing states, assuming that the Group is entitled to freely dispose of the property in the market and the payment of the land premium has been fully settled, as at the Valuation Date, would be RMB12,100,000 (equivalent to approximately HK$15,316,000). As at 31 December 2012,

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LETTER FROM RAFFAELLO CAPITAL LIMITED

the audited net book value of the land use right and the buildings erected on the land amounted to approximately RMB12,743,000. As the audited net book value of the land and the buildings and structures standing on the land is higher than the appraised value, the 60% share of the net liability value of CQ Tourism Coach upon which the consideration of the Transaction is relied is not understated.

We note that on 23 May 2000, KC Travel entered into an Equity Transfer Agreement with Chongqing Municipal Tourism Administration Bureau, pursuant to which Chongqing Municipal Tourism Administration Bureau as the vendor agreed to sell and KC Travel as the purchaser agreed to buy its 60% equity interest in Chongqing Tourism (Group) Co. Ltd. which comprised of CQ Tourism Coach, Chongqing Everbright International Travel Service Co., Ltd., Chongqing Grand Hotel Co. Ltd. and Chongqing Pengshui Dongguaxi Hydropower Station Co., Ltd. for a total consideration of RMB34,000,000. At the date of acquisition, according to the Equity Transfer Agreement, the 60% share of the aggregate net asset value of the acquired companies amounted to approximately RMB42,121,000. Although there lacks sufficient information to delineate the fair value of the individual assets and liabilities of CQ Tourism Coach at the date of acquisition, we observe that the total considerations receivable from the Transaction which amounted to approximately RMB36,670,000 would return to the Group more than the past total considerations paid for the acquired companies including CQ Tourism Coach.

As abovementioned, as at 31 August 2013, the unaudited negative net book value of the 60% equity interest in CQ Tourism Coach in the Company’s books under PRC GAAP amounted to approximately RMB1,230,000 (equivalent to approximately HK$1,557,000). Hence, the total considerations receivable represents a premium of approximately RMB37,900,000 (equivalent to approximately HK$47,975,000) without applicable price/ earnings and price/book ratio.

Therefore, based on the past consideration paid for the acquisition of CQ Tourism Coach and the existing net liabilities position, we are of the opinion that the consideration for the Transaction is fair and reasonable so far as the Independent Shareholders are concerned.

RECOMMENDATION

Having considered the abovementioned principal factors and reasons, we would like to draw to your attention to the following factors in arriving at our recommendations:

(i) the continual loss position of CQ Tourism Coach for years;
(ii) the audited net liabilities position as at 31 December 2012;
(iii) the risks of deteriorating financial results caused by the difficult business environment of CQ Tourism Coach as mentioned above in the foreseeable future;
(iv) the Transaction can improve the cash flow, financial position and result of operation of the Group which will put the Group into a better position should other investment opportunities, if any, arise in the future; and

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LETTER FROM RAFFAELLO CAPITAL LIMITED

(v) the consideration for the Transaction is fair and reasonable as compared to the past consideration paid to acquire CQ Tourism Coach.

As a result, we are of the view that the Transaction is in the interest of the Company and Independent Shareholders as a whole and the terms of the Transaction are fair and reasonable so far as the Independent Shareholders are concerned. Accordingly, we recommend the Independent Shareholders to vote in favour of the resolutions in relation to the Transaction to be proposed at the EGM.

Yours faithfully, For and on behalf of RaffAello Capital Limited Sam Lum

Executive Director

– 21 –

VALUATION REPORT

The following is the text of a letter and valuation certificate prepared for the purpose of incorporation in this circular received from Ascent Partners Valuation Service Limited, an independent valuer, in connection with its valuation as at 30 September 2013 of the property interests to be disposed of by the Group.

==> picture [22 x 51] intentionally omitted <==

==> picture [79 x 31] intentionally omitted <==

Suite 2102, Hong Kong Trade Centre 161–167 Des Voeux Road Central Hong Kong Tel: 3679–3890 Fax: 3579–0884

28 November 2013

The Board of Directors Kwoon Chung Bus Holdings Limited 3/F., 8 Chong Fu Road Chai Wan, Hong Kong

Dear Sirs,

INSTRUCTIONS

In accordance with your instructions for us to value a property to be disposed of by Kwoon Chung Bus Holdings Limited (the ‘‘Company’’) and its subsidiaries (hereinafter together referred to as the ‘‘Group’’) in the People’s Republic of China (the ‘‘PRC’’), we confirm that we have carried out property inspections, made relevant enquiries and obtained such further information as we consider necessary for the purpose of providing you with our opinion of the market value of the property interests as at 30 September 2013 (referred to as the ‘‘Valuation Date’’).

This letter which forms part of our valuation report explains the basis and methodologies of valuation, clarifying assumptions, valuation considerations, title investigation and limiting conditions of this valuation.

BASIS OF VALUATION

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

– 22 –

VALUATION REPORT

VALUATION METHODOLOGY

In valuing the property interests of the property, we have adopted a combination of the open market and depreciated replacement cost approaches in assessing the land portions of the properties and the buildings and structures standing on the land respectively. Hence, the sum of the two results represents the value of the properties as a whole. In the valuation of the land portions, reference has been made to the comparables sales transactions as available in the subject localities as well as the relevant benchmark land prices.

As the nature of the buildings and structures cannot be valued on the basis of market value, they have therefore been valued on the basis of their depreciated replacement cost. The depreciated replacement cost approach considers the cost to reproduce or replace in new condition the property appraised in accordance with current construction costs for similar buildings and structures in the locality, with allowance for accrued depreciation as evidenced by observed condition or obsolescence present, whether arising from physical, functional or economic causes. The depreciated replacement cost approach generally furnished the most reliable indication of value for the property in the absence of a known market based on comparable sales. The approach is subject to adequate potential profitability of the business.

VALUATION CONSIDERATIONS

In valuing the property interests, we have complied with all the requirements contained in Chapter 5 and Practice Note 12 to the Rules Governing the Listing of Securities issued by The Stock Exchange of Hong Kong Limited and the HKIS Valuation Standards 2012 Edition published by The Hong Kong Institute of Surveyors.

VALUATION ASSUMPTIONS

Our valuations have been made on the assumption that the seller sells the property interests on the open market in their existing states without the benefit of a deferred term contracts, leasebacks, joint ventures, management agreements or any similar arrangements, which could serve to affect the values of the property interests.

In undertaking our valuation, we have assumed that, unless otherwise stated, transferable land use rights in respect of the property interests for specific terms at nominal annual land use fees have been granted and that any premium payable has already been fully paid. We have also assumed that the owners of the properties have enforceable titles to the properties and have free and uninterrupted rights to use, occupy or assign the properties for the whole of the respective unexpired terms as granted.

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

Other special assumptions of the property interests, if any, have been stated out in the footnotes of the valuation certificate attached herewith.

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VALUATION REPORT

TITLE INVESTIGATION

We have been, in some instances, shown copies of various title documents and other documents relating to the property interests and have made relevant enquiries. We have not examined the original documents to verify the existing title to the property interests and any material encumbrances that might be attached to the property interests or any lease amendments. However, we have relied considerably on the information given by the Company’s PRC legal adviser, Chongqing Shi Yu Jing Law Firm (重慶市渝經律師事務所), concerning the validity of the Group’s title to the property interests located in the PRC.

All legal documents provided by the Group have been used for reference only. No responsibility regarding legal title to the property interests is assumed in this valuation report.

LIMITING CONDITIONS

We have inspected the exterior, and wherever possible, the interior of the properties but no structural survey had been made. In the course of our inspection, we did not note any serious defects. We are not, however, able to report that the properties are free from rot, infestation or any other structural defects. Further, no test has been carried out on any of the building services. All dimensions, measurements and areas are only approximates. We have not been able to carry out detailed on-site measurements to verify the site and floor areas of the properties and we have assumed that the areas shown on the copies of documents handed to us are correct.

The site inspection of the property was carried out by Mr. Charles Choi, ASc (Estate Surveying) on 30 September 2013.

We have not carried out any soil investigations to determine the suitability of the soil conditions and the services etc. for any future development. Our valuations are prepared on the assumption that these aspects are satisfactory and that no extraordinary expenses or delays will be incurred during the construction period. We do not make any allowance for contamination or pollution of the land, if any, which may have been caused by past usage.

We have relied to a considerable extent on information provided by the Group and have accepted advice given to us on such matters, in particular, but not limited to, the sales records, tenure, planning approvals, statutory notices, easements, particulars of occupancy, site and floor areas and all other relevant matters in the identification of the property interests.

We have had no reason to doubt the truth and accuracy of the information provided to us by the Group. We have also been advised by the Group that no material factors have been omitted from the information supplied. We consider that we have been provided with sufficient information to reach an informed view, and we have no reason to suspect that any material information has been withheld.

Liability in connection with this valuation report is limited to the client to whom this report is addressed and for the purpose for which it is carried out only. We will accept no liability to any other parties or any other purposes.

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VALUATION REPORT

This report is to be used only for the purpose stated herein, any use or reliance for any other purpose, by you or third parties, is invalid. No reference to our name or our report in whole or in part, in any document you prepare and/or distribute to third parties may be made without written consent.

EXCHANGE RATE

Unless otherwise stated, all monetary amounts stated in this report are in Renminbi (RMB).

Our valuation certificate is herewith attached.

Yours faithfully,

For and on behalf of

Ascent Partners Valuation Service Limited Ian K. F. Ng MBA BSc(EstMan) BSc MHKIS MRICS RPS(GP) Principal

Mr. Ian K. F. Ng is a Registered Professional Surveyor with over 10 years’ experience in valuation of properties in HKSAR, Macau SAR and mainland China. Mr. Ng is a Professional Member of The Hong Kong Institute of Surveyors as well as a chartered surveyor of The Royal Institution of Chartered Surveyors.

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VALUATION REPORT

VALUATION CERTIFICATE

Property interests to be disposed of by the Group in the PRC

Market Value in Existing State Particular of as at Property Description and Tenure Occupancy 30 September 2013 Land and Buildings The property comprises a parcel of Portions of the property No Commercial Located at Zhaiziping, land with an area of approximately with a total site area of Value Longxi Town, 16,990 sq.m. erected upon various approximately 5,500 Yubei District, buildings and ancillary structures sq.m. are currently Chongqing completed in 1989. subject to a tenancy Municipality, agreement and a license the PRC The total gross floor area of the with the latest expiry buildings is approximately 3,337 date of 21 January 2014 (位於中華人民共和國 sq.m. and the buildings comprise a with a total monthly 重慶市渝北區龍溪鎮 6-storey office building, an 1-storey rental and license fee of 寨子坪之土地和房屋) canteen building and an 1-storey RMB10,500 for the garage. purpose of vehicle repair and logistics.

The ancillary structures mainly include boundary fences, boundary walls, temporary structures, sheds and gates.

The land use rights of the property were allocated for a term expiring on 8 June 2051 for transport use.

The remaining portion of the property is currently occupied by the Group for the purpose of bus depot.

Notes:

(1) Pursuant to a State-owned Land Use Rights Certificate — Yu Wai Guo Yong (2003) Zi Di No.047 issued by Chongqing Municipal Land Resources and Housing Administration Bureau dated 23 June 2003, the land use rights of a parcel of land with a site area of approximately 16,990 sq.m. were allocated to Chongqing Tourism Coach Co., Ltd. (重慶旅遊汽車有限公司), which is 60% interest-owned by the Group, for a term expiring on 8 June 2051 for transport use.
(2) Pursuant to 3 Building Ownership Certificates — Zi Di Nos. 23859–23861 issued by Chongqing Municipal Yubei District Real Estate Administration Bureau all dated 8 January 1996, the building ownership rights of 3 buildings with a total gross floor area of approximately 3,337 sq.m. are owned by Chongqing Shi Luyou Qiche Company (重慶市旅遊汽車公司).
(3) As advised by the Group, the name of Chongqing Shi Luyou Qiche Company (重慶市旅遊汽車公司) has been changed to Chongqing Tourism Coach Co., Ltd (重慶旅遊汽車有限公司).
(4) We have attributed no commercial value to the property because of the nature of the allocated land. For reference purpose, we are of the opinion that the market value of the land with an area of approximately 16,990 sq.m. together with the buildings with a total gross floor area of approximately 3,337 sq.m. in their existing states, assuming that the Group is entitled to freely dispose of the property in the market and the payment of the land premium has been fully settled, as at the Valuation Date, would be RMB12,100,000.
(5) As advised, a tenancy agreement dated 3 July 2013 was entered into between Chongqing Tourism Coach Co., Ltd. and Chongqing Zhoudong Logistics Limited (重慶周東物流有限公司), a third party, a portion of the property with a site area of approximately 3,000 sq.m. was leased to Chongqing Zhoudong Logistics Limited (重慶周東物流有限公司) for a term commencing on 1 July 2013 and expiring on 31 December 2013 at a monthly rental of RMB5,500 exclusive of waste disposal fee.

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VALUATION REPORT

(6) As advised, a license dated 22 January 2013 was entered into between Chongqing Tourism Coach Co., Ltd. and Zhang Wei (張偉), a third party, a portion of the property with a site area of approximately 2,500 sq.m. was licensed to 張偉 for a term commencing on 22 January 2013 and expiring on 21 January 2014 at a monthly license fee of RMB5,000.
(7) The major certificates of the property are summarized as follows:
(i) State-owned Land Use Rights Certificate Yes (ii) Building Ownership Certificate Yes
(8) We have been provided with a legal opinion regarding the property interests by the Company’s PRC legal adviser, which contains, inter alia, the following:
(i) Chongqing Tourism Coach Co., Ltd. legally owns the land use rights and building ownership rights of the property;
(ii) The tenancy agreement as mentioned on Note 5 above has not been registered. With reference to Section 1 of Article No. 14 of the Administration of the Leasing of Commodity Housing Procedures promulgated by the Ministry of Housing and Urban-Rural Development of the People’s Republic of China, the parties involved in the leasing of premises ought to register their tenancies within 30 days after the signing of the agreements to the local central-governed municipalities, municipalities and counties Real Estate Administration Departments. Article No. 19 also stipulates that the parties involved in the leasing of premises ought to alter, extend or withdraw the registration within 30 days in case their tenancies were altered, extended or withdrawn. Article No. 23 further stipulates that local centralgoverned municipalities, municipalities and counties Real Estate Administration Departments can demand the parties involved in the leasing of premises to rectify within a time limit in the event they are in breach of Section 1 of Article No. 14 of the Administration of the Leasing of Commodity Housing Procedures. In case the rectification is overdue, the parties involved in the leasing of premises are subject to a maximum penalty of RMB1,000 for individuals or RMB1,000 to RMB10,000 for organisations. However, according to the Explanatory Statement (1) about the Contract Law of the People’s Republic of China promulgated by the Supreme People’s Court of the People’s Republic of China, non-registration of the contracts as obliged by the relevant laws and administrative rules will not annul the validity of the contracts. As such, non-registration of the tenancy agreement with the government will not influence the validity of the tenancy agreement; and
(iii) The property is not subject to mortgage and other encumbrances.

– 27 –

GENERAL INFORMATION

1. DISCLOSURE OF INTERESTS

(i) Directors’ interests and short positions in the Shares, underlying Shares and debentures

As at the Latest Practicable Date, the interests and short positions of each Director in the Shares, underlying Shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which (a) were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO; or (b) were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (c) were required, pursuant to the Model Code to be notified to the Company and the Stock Exchange, were as follows:

(i) Long positions in ordinary Shares of the Company

		Number of	Shares held,		Percentage
		capacity and nature of interest			of the
		Directly	Through		Company’s
		beneficially	controlled		issued Share
Name	of Director	owned	corporation	Total	capital
Wong	Chung Pak, Thomas	1,217,665(1)	131,880,981(2)	133,098,646	31.66
Wong	Wing Pak	699,665(1)	131,880,981(2)	132,580,646	31.54
Wong	Leung Pak, Matthew	599,665(1)	131,880,981(2)	132,480,646	31.51

Notes:

(1) Mr. Wong Chung Pak, Thomas jointly holds 1,217,665 Shares with his spouse. Mr. Wong Wing Pak jointly holds 699,665 Shares with his spouse. Mr. Wong Leung Pak, Matthew jointly holds 599,665 Shares with his spouse.
(2) These Shares are held by Wong Family Holdings Limited (as trustee of The Wong Family Unit Trust), with each of Messrs. Wong Chung Pak, Thomas, Wong Wing Pak and Wong Leung Pak, Matthew holding one-third of the shares in issue in Wong Family Holdings Limited. The units of The Wong Family Unit Trust are held by the discretionary trusts established for the respective spouse and issues of each of Messrs. Wong Chung Pak, Thomas, Wong Wing Pak and Wong Leung Pak, Matthew.

– 28 –

GENERAL INFORMATION

(ii) Long positions in shares of associated corporations

Name of associated		Number of	Class of
Corporation	Name of Director	shares#	shares
Good Funds Services Limited*	Wong Chung Pak,	50,000	Non-voting
	Thomas		deferred
Good Funds Services Limited*	Wong Wing Pak	125,000	Non-voting
			deferred
Good Funds Services Limited*	Wong Leung Pak,	125,000	Non-voting
	Matthew		deferred
Kwoon Chung Motors Company,	Wong Chung Pak,	33,333	Non-voting
Limited*	Thomas		deferred
Kwoon Chung Motors Company,	Wong Wing Pak	33,333	Non-voting
Limited*			deferred
Kwoon Chung Motors Company,	Wong Leung Pak,	33,334	Non-voting
Limited*	Matthew		deferred

Subsidiaries of the Company

Directly beneficially owned

In addition, Mr. Wong Chung Pak, Thomas and Mr. Wong Leung Pak, Matthew have non-beneficial personal equity interests in certain subsidiaries of the Company held for the benefit of the Company.

– 29 –

GENERAL INFORMATION

(iii) Share options outstanding

Name of Director
Wong Chung Pak,
Thomas
Wong Wing Pak
Wong Leung Pak, Matthew
Chan Bing Woon,
SBS, JP
Sung Yuen Lam
Lee Kwong Yin, Colin

Price of the
Company’s
Shares
Number of
Share
options
Date of
grant of
Share options
Exercise period of
Share options
Exercise price
of Share
options
at grant
date of
options*
HK$ per Share
HK$ per Share
1,500,000
5 October 2004
21 September 2004 to
20 September 2014
1.1260
1.1600
4,000,000
30 November 2011
10 October 2011 to
9 October 2021
1.5220
1.4800
5,500,000
1,500,000
5 October 2004
21 September 2004 to
20 September 2014
1.1260
1.1600
4,000,000
30 November 2011
10 October 2011 to
9 October 2021
1.5220
1.4800
5,500,000
1,500,000
5 October 2004
21 September 2004 to
20 September 2014
1.1260
1.1600
4,000,000
30 November 2011
10 October 2011 to
9 October 2021
1.5220
1.4800
5,500,000
200,000
1 April 2011
21 March 2011 to
20 March 2021
1.9500
1.9000
300,000
30 November 2011
10 October 2011 to
9 October 2021
1.5220
1.4800
500,000
200,000
1 April 2011
21 March 2011 to
20 March 2021
1.9500
1.9000
300,000
30 November 2011
10 October 2011 to
9 October 2021
1.5220
1.4800
500,000
200,000
1 April 2011
21 March 2011 to
20 March 2021
1.9500
1.9000
300,000
30 November 2011
10 October 2011 to
9 October 2021
1.5220
1.4800
500,000
18,000,000

– 30 –

GENERAL INFORMATION

** The exercise price of the Share options is subject to adjustment in the case of rights or bonus issues, or other similar changes in the Company’s Share capital.
*** The price of the Company’s Shares disclosed as at the date of grant of the Share options is the Stock Exchange closing price on the trading day immediately prior to the date of grant of the options.

Save as disclosed in this circular, as at the Latest Practicable Date, none of the Directors had registered an interest or short position in the Shares, underlying Shares or debentures of the Company or any of its associated corporations that (a) were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO; or (b) were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (c) were required, pursuant to the Model Code to be notified to the Company and the Stock Exchange.

(ii) Persons who have interests or short positions which are discloseable under Divisions 2 and 3 of Part XV of the SFO

As at the Latest Practicable Date, so far as is known to the Directors, the following persons, had, or were deemed or taken to have interests or short positions in the Shares and underlying Shares which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who were, directly or indirectly, interested in 5% 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 Group:

				Interest in		Percentage
				underlying		of the
		Number of ordinary Shares		Shares		Company’s
		held and nature	of interest	pursuant to	Aggregate	issued Share
Name	Capacity	Personal	Corporate	Share options	interest	capital
Wong Chung Pak, Thomas	Joint interest	1,217,665	—	—	142,198,646	33.82%
	Founder of a	—	131,880,981(1)	2,400,000
	discretionary trust
	Beneficial owner	—	—	5,500,000
	Interest of spouse			1,200,000
Tso Anna	Joint interest	1,217,665	—	—	142,198,646	33.82%
	Beneficial owner	—	—	1,200,000
	Interest of spouse	—	131,880,981	7,900,000
Wong Leung Pak, Matthew	Joint interest	599,665	—	—	142,880,646	33.99%
	Founder of a	—	131,880,981(1)	2,400,000
	discretionary trust
	Beneficial owner	—	—	5,500,000
	Interest of spouse	—	—	2,500,000
Ng Lai Yee, Christina	Joint interest	599,665	—	—	142,880,646	33.99%
	Beneficial owner	300,000	—	2,200,000
	Interest of spouse	—	131,880,981	7,900,000
Wong Wing Pak	Joint interest	699,665	—	—	140,480,646	33.42%
	Founder of a	—	131,880,981(1)	2,400,000
	discretionary trust
	Beneficial owner	—	—	5,500,000

– 31 –

GENERAL INFORMATION

				Interest in		Percentage
				underlying		of the
		Number of ordinary Shares		Shares		Company’s
		held and nature	of interest	pursuant to	Aggregate	issued Share
Name	Capacity	Personal	Corporate	Share options	interest	capital
Tang Kit Ling, Louise	Joint interest	699,665	—	—	140,480,646	33.42%
	Interest of spouse	—	131,880,981	7,900,000
Equity Trustee Limited	Trustee	—	131,880,981	2,400,000	134,280,981	31.94%
Wong Family Holdings Limited	Beneficial owner	—	131,880,981(1)	2,400,000	134,280,981	31.94%
(‘‘WFHL’’)
New World First Holdings	Interest of a controlled	—	124,093,019(2)	—	124,093,019	29.52%
Limited (‘‘NWFH’’)	corporation
NWS Transport Services	Interest of a controlled	—	124,093,019(2)	—	124,093,019	29.52%
Limited (‘‘NWST’’)	corporation
NWS Service Management	Interest of a controlled	—	124,093,019(2)	—	124,093,019	29.52%
Limited (‘‘NWSSM-BVI’’)(3)	corporation
NWS Service Management	Interest of a controlled	—	124,093,019(2)	—	124,093,019	29.52%
Limited (‘‘NWSSM-	corporation
Cayman Islands’’)(3)
NWS Holdings Limited	Interest of a controlled	—	124,093,019(2)	—	124,093,019	29.52%
(‘‘NWSH’’)	corporation
New World Development	Interest of a controlled	—	124,093,019(2)	—	124,093,019	29.52%
Company Limited	corporation
(‘‘NWD’’)
Enrich Group Limited	Interest of a controlled	—	124,093,019(2)	—	124,093,019	29.52%
(‘‘EGL’’)	corporation
Chow Tai Fook Enterprises	Interest of a controlled	—	124,093,019(2)	—	124,093,019	29.52%
Limited (‘‘CTFEL’’)	corporation
Chow Tai Fook (Holding)	Interest of a controlled	—	124,093,019(2)	—	124,093,019	29.52%
Limited (‘‘CTFHL’’)	corporation
Chow Tai Fook Capital	Interest of a controlled	—	124,093,019(2)	—	124,093,019	29.52%
Limited (‘‘CTFCL’’)	corporation
Cheng Yu Tung Family	Interest of a controlled	—	124,093,019(2)	—	124,093,019	29.52%
(Holdings) Limited	corporation
(‘‘CYTFHL’’)
Cheng Yu Tung Family	Interest of a controlled	—	124,093,019(2)	—	124,093,019	29.52%
(Holdings II) Limited	corporation
(‘‘CYTFHL-II’’)
First Action Developments	Beneficial owner	—	121,593,019(2)	—	121,593,019	28.92%
Limited (‘‘First Action’’)
Cathay International	Beneficial owner	—	84,106,000	—	84,106,000	20.01%
Corporation

– 32 –

GENERAL INFORMATION

Notes:

(1) Each of Messrs. Wong Chung Pak, Thomas, Wong Wing Pak and Wong Leung Pak, Matthew holds one-third of the shares in WFHL and they are deemed to be interested in the 131,880,981 Shares which are directly held by WFHL. These 131,880,981 Shares represent approximately 31.37% of the issued Share capital of the Company.
(2) As at the Latest Practicable Date, First Action was a wholly-owned subsidiary of NWFH; NWFH was a wholly-owned subsidiary of NWST; the issued share capital of NWST was held directly by NWSSMBVI and EGL on a 50–50 basis; NWSSM-BVI was a wholly-owned subsidiary of NWSSM-Cayman Islands; NWSSM-Cayman Islands was a wholly-owned subsidiary of NWSH; EGL was a wholly-owned subsidiary of CTFEL; NWD owned approximately 61% equity shares in NWSH; CTFEL owned approximately 41% equity shares in NWD; CTFEL was a wholly-owned subsidiary of CTFHL; CTFHL was approximately 74% owned by CTFCL; and CTFCL was owned by CYTFHL as to approximately 49% and CYTFHL-II as to approximately 47%. Also, NWFH owned 100% equity shares in New World First Bus Services Limited (‘‘NWFB’’), which held 2,500,000 Shares of the Company. As at the Latest Practicable Date, each of NWFH, NWST, NWSSM-BVI, NWSSM-Cayman Islands, NWSH, NWD, EGL, CTFEL, CTFHL, CTFCL, CYTFHL and CYTFHL-II was deemed to be interested in the 124,093,019 Shares, which were held directly by First Action and NWFB as to 121,593,019 Shares and 2,500,000 Shares respectively. These 124,093,019 Shares represented approximately 29.52% of the issued Share capital of the Company.
(3) NWSSM-BVI was incorporated in the British Virgin Islands and NWSSM-Cayman Islands was incorporated in the Cayman Islands.

Save as disclosed in this circular, as at the Latest Practicable Date, so far as is known to the Directors, no other person has an interest or short position in the Shares, underlying Shares and debentures of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or, who is, directly or indirectly, interested in 5% 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 Group.

2. DIRECTORS’ INTERESTS IN COMPETING BUSINESS

None of the Directors of the Company was interested in any business which competes or is likely to compete, either directly or indirectly, with the businesses of the Group.

3. SERVICE CONTRACTS OF DIRECTORS

No Director has a service contract with the Company which is not determinable by the Company within one year without payment of compensation, other than statutory compensation.

4. MATERIAL ADVERSE CHANGE

So far as the Directors are aware, there is no material adverse change in the financial or trading position of the Group since 31 March 2013, being the date to which the latest published audited accounts of the Company were made up.

– 33 –

GENERAL INFORMATION

5. DIRECTORS’ AND EXPERTS’ INTERESTS IN ASSETS OF THE GROUP

No Director nor expert (as named in the paragraph headed ‘‘Experts’’ below) has a direct or indirect interest in any assets which have been, since 31 March 2013, being the date to which the latest published audited accounts of the Company were made up, acquired or disposed of by or leased to any member of the Group, or are proposed to be acquired or disposed of by or leased to any member of the Group.

6. DIRECTORS’ INTERESTS IN CONTRACTS

As at the Latest Practicable Date, no Director had a material interest, either directly or indirectly, in any contract of significance to the business of the Group to which the Company or any of its subsidiaries was a party.

7. EXPERTS

The following are the qualifications of the experts which have given opinions or advices which are contained in this circular:

Names Qualifications RaffAello Capital Limited, the A corporation licensed to carry out type 6 (advising on independent financial adviser corporate finance) regulated activity under the SFO Ascent Partners Transaction The independent qualified property valuers as defined Service Limited under Chapter 5 and Practice Note 12 of the Listing Rules

As at the Latest Practicable Date, the experts were not interested beneficially nor nonbeneficially in any shares in the Company or any of its subsidiaries nor any right or option (whether legally enforceable or not) to subscribe for or nominate persons to subscribe for securities in the Company or any of its subsidiaries.

The experts have given and have not withdrawn their written consents to the issue of this circular with the inclusion of the texts of their letters and reference to their names, in the form and context in which they are included. The letters from experts are made for incorporation in this circular.

8. DOCUMENTS FOR INSPECTION

Copies of the following documents will be available for inspection at the Company’s principal place of business in Hong Kong during normal business hours from 28 November 2013 to 16 December 2013:

(a) The directors’ service contracts disclosed in the paragraph headed ‘‘Service contracts of Directors’’ above; and
(b) the Equity Transfer Agreement.

– 34 –

GENERAL INFORMATION

9. GENERAL

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

– 35 –

NOTICE OF THE EXTRAORDINARY GENERAL MEETING

==> picture [65 x 66] intentionally omitted <==

KWOON CHUNG BUS HOLDINGS LIMITED 冠忠巴士集團有限公司*

(Incorporated in Bermuda with limited liability)

(Stock code: 306)

NOTICE IS HEREBY GIVEN that an extraordinary general meeting of Kwoon Chung Bus Holdings Limited (the ‘‘Company’’) will be held at 3/F, 8 Chong Fu Road, Chai Wan, Hong Kong on Monday, 16 December 2013 at 2:30 p.m. for the purpose of considering and, if thought fit, passing with or without amendments, the following resolution as an ordinary resolution:

‘‘THAT the agreement (the ‘‘Equity Transfer Agreement’’) in Chinese dated 26 September 2013 entered into between KC Travel as the vendor and CQ Sunshine Travel as the purchaser pursuant to which KC Travel agreed to sell all of its 60% equity interest in CQ Tourism Coach to CQ Sunshine Travel, a copy of which has been produced to this meeting, marked ‘‘A’’ and signed by the Chairman of this meeting for the purpose of identification and the details of which are set out in the circular of the Company dated 28 November 2013, and the transaction contemplated under the Equity Transfer Agreement, be and they are hereby approved, ratified, and confirmed and any Director of the Company be and is hereby authorized to take such action, do such things and execute such further documents or deeds as such Director may, in his opinion, deem necessary or desirable for the purpose of implementing the Equity Transfer Agreement.’’

By order of the Board Wong Chung Pak, Thomas Chairman

Hong Kong, 28 November 2013

Notes:

Any member of the Company entitled to attend and vote at the above meeting is entitled to appoint a proxy to attend and vote instead of him/her/it. A proxy need not be a member of the Company. A member who is the holder of two or more Shares of the Company may appoint more than one proxy to represent him/her/it to attend and vote on his/her/its behalf. If more than one proxy is so appointed, the appointment shall specify the number and class of Shares in respect of which each such proxy is so appointed.
To be effective, a form of proxy together with the power of attorney or other authority, if any, under which it is signed or a certified copy of that power or authority, must be deposited at the office of the Company’s share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong not less than 48 hours before the time appointed for the holding of the meeting or any adjournment thereof. Delivery of the form of proxy shall not preclude a member of the Company from attending and voting in person at the meeting and, in such event, the form of proxy shall be deemed to be revoked.
For identification purposes only

– 36 –

NOTICE OF THE EXTRAORDINARY GENERAL MEETING

For determining the entitlement to attend and vote at the above meeting, the register of members of the Company will be closed from Thursday, 12 December 2013 to Monday, 16 December 2013, both days inclusive, during which period no transfer of Shares of the Company will be registered. In order to be eligible to attend and vote at the above meeting, unregistered holders of Shares of the Company should ensure that all transfers of Shares accompanied by the relevant Share certificates and appropriate transfer forms must be lodged with the office of the Company’s share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited at Shops 1712–16, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong, for registration not later than 4:30 p.m. on Wednesday, 11 December 2013.

– 37 –

AI assistant

Tradelink Electronic Commerce Limited — Proxy Solicitation & Information Statement 2013

49280_rns_2013-11-27_1084d067-3c08-477f-b5d4-7ddec4eda61e.pdf

DISCLOSEABLE AND CONNECTED TRANSACTION DISPOSAL OF 60% EQUITY INTEREST IN CQ TOURISM COACH

Independent financial adviser to the Independent Board Committee

RaffAello Capital Limited

CONTENTS

RESPONSIBILITY STATEMENT

DEFINITIONS

KWOON CHUNG BUS HOLDINGS LIMITED 冠 忠 巴 士 集 團 有 限 公 司[*]

(Stock code: 306)

DISCLOSEABLE AND CONNECTED TRANSACTION DISPOSAL OF 60% EQUITY INTEREST IN CQ TOURISM COACH

INTRODUCTION

LETTER FROM THE BOARD

DATE OF THE TRANSACTION:

PARTIES

GENERAL NATURE OF THE TRANSACTION

LETTER FROM THE BOARD

ASSET TO BE DISPOSED OF

CONSIDERATION RECEIVABLE AND THE INTENDED APPLICATION OF THE SALE PROCEEDS

FINANCIAL RESULTS OF CQ TOURISM COACH FOR THE LATEST TWO FINANCIAL YEARS

CONDITIONS PRECEDENT

REASONS FOR ENTERING INTO THE TRANSACTION AND ADVANTAGES/ BENEFITS EXPECTED TO ACCRUE TO THE COMPANY

DISADVANTAGES OF THE TRANSACTION

CONNECTED RELATIONSHIP

DIRECTORS’ INTERESTS IN THE TRANSACTION

EGM AND PROXY ARRANGEMENT

LETTER FROM THE BOARD

RECOMMENDATIONS

KWOON CHUNG BUS HOLDINGS LIMITED 冠 忠 巴 士 集 團 有 限 公 司[*]

(Stock code: 306)

DISCLOSEABLE AND CONNECTED TRANSACTION DISPOSAL OF 60% EQUITY INTEREST IN CQ TOURISM COACH

DISCLOSEABLE AND CONNECTED TRANSACTION IN RELATION TO DISPOSAL OF 60% EQUITY INTEREST IN CQ TOURISM COACH

INTRODUCTION

BASIS AND ASSUMPTIONS OF THE ADVICE

PRINCIPAL FACTORS CONSIDERED

I. General nature of the Transaction and information of CQ Tourism Coach

(a) Financial results of CQ Tourism Coach

(b) Conditions Precedent

Public Transport

Tourism Business

Performance of CQ Tourism Coach

II. Basis of consideration

RECOMMENDATION

VALUATION REPORT

INSTRUCTIONS

BASIS OF VALUATION

VALUATION METHODOLOGY

VALUATION CONSIDERATIONS

VALUATION ASSUMPTIONS

TITLE INVESTIGATION

LIMITING CONDITIONS

VALUATION REPORT

EXCHANGE RATE

VALUATION CERTIFICATE

Property interests to be disposed of by the Group in the PRC

Notes:

VALUATION REPORT

1. DISCLOSURE OF INTERESTS

(ii) Long positions in shares of associated corporations

Directly beneficially owned

(iii) Share options outstanding

(ii) Persons who have interests or short positions which are discloseable under Divisions 2 and 3 of Part XV of the SFO

GENERAL INFORMATION

2. DIRECTORS’ INTERESTS IN COMPETING BUSINESS

3. SERVICE CONTRACTS OF DIRECTORS

4. MATERIAL ADVERSE CHANGE

5. DIRECTORS’ AND EXPERTS’ INTERESTS IN ASSETS OF THE GROUP

6. DIRECTORS’ INTERESTS IN CONTRACTS

7. EXPERTS

8. DOCUMENTS FOR INSPECTION

9. GENERAL

KWOON CHUNG BUS HOLDINGS LIMITED 冠 忠 巴 士 集 團 有 限 公 司*

(Stock code: 306)

Hong Kong, 28 November 2013

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Tradelink Electronic Commerce Limited Proxy Solicitation & Information Statement 2013

KWOON CHUNG BUS HOLDINGS LIMITED 冠忠巴士集團有限公司[*]

KWOON CHUNG BUS HOLDINGS LIMITED 冠忠巴士集團有限公司[*]

KWOON CHUNG BUS HOLDINGS LIMITED 冠忠巴士集團有限公司*