Ulferts International Limited — Proxy Solicitation & Information Statement 2008

Sep 2, 2008

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 licensed securities dealer, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Shougang Concord Grand (Group) Limited, you should at once hand this circular 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.

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

首長四方（集團）有限公司 * SHOUGANG CONCORD GRAND (GROUP) LIMITED

(Incorporated in Bermuda with limited liability)

(Stock Code: 730)

(1) DISCLOSEABLE TRANSACTION IN RELATION TO THE CO-OPERATION AGREEMENT AND

(2) DISCLOSEABLE AND CONNECTED TRANSACTION IN RELATION TO THE SHARE TRANSFER AGREEMENT

Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders in respect of the discloseable and connected transaction

A letter from the Board is set out on pages 4 to 11 of this circular and a letter from the Independent Board Committee in respect of the discloseable and connected transaction is set out on page 12 of this circular. A letter from Guangdong Securities, the Independent Financial Adviser, containing its advice to the Independent Board Committee and the Independent Shareholders in respect of the discloseable and connected transaction is set out on pages 13 to 21 of this circular.

* For identification purposes only

3 Septemebr 2008

CONTENTS

	Page
Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Letter from Independent Board Committee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
Letter from Guangdong Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
Appendix – General Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	22

DEFINITIONS

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

• “Acquisition”

the acquisition by Capital Steel of the 20% equity interest in the registered capital of South China Leasing from Shenzhen Jiayinda pursuant to the terms of the Share Transfer Agreement;

• “associate(s)” has the meaning ascribed to it under the Listing Rules; “Beihai Investment” 天津渤海灣投資管理有限公司 (Tianjin Beihai Bay Investment Management Company Limited), a limited liability company established in the PRC and a 95% owned subsidiary of China Everbright;

• “Board” the board of Directors; “Business Day” a day, excluding Saturday, Sunday or statutory holiday in the PRC;

• “Capital Steel” 首方投資管理(深圳)有限公司 (Capital Steel Investment (China) Ltd.), a wholly foreign owned enterprise established in the PRC and an indirect wholly-owned subsidiary of the Company;

• “China Everbright” 中國光大投資管理公司 (China Everbright Investment Management Corporation), a company established in the PRC;

• “Company” Shougang Concord Grand (Group) Limited, a company incorporated in Bermuda, the securities of which are listed on the main board of the Stock Exchange;

• “connected person” has the meaning ascribed to it under the Listing Rules; “Co-operation Agreement” the co-operation agreement dated 12 August 2008 entered into between the Company and China Everbright;

• “Director(s)” the director(s) of the Company; “Group” the Company and its subsidiaries; “Guangdong Securities” or Guangdong Securities Limited, a licensed corporation to carry out “Independent Financial Adviser” type 1 (dealing in securities), type 4 (advising on securities), type 6 (advising on corporate finance) and type 9 (asset management) regulated activities as defined under the SFO, the independent financial adviser to the Independent Board Committee and the Independent Shareholders in relation to the Acquisition;

1

DEFINITIONS

the Hong Kong Special Administrative Region of the PRC;

• “Hong Kong” the Hong Kong Special Administrative Region of the PRC; “HK$” Hong Kong dollar, the lawful currency of Hong Kong; “Independent Board Committee” an independent committee of the Board, comprising the independent non-executive Directors, established to advise the Independent Shareholders in respect of the terms of the Share Transfer Agreement;

• “Independent Shareholders” the Shareholders which are independent of and not related to the Acquisition, i.e. the Shareholders;

• “Jeckman Holdings” Jeckman Holdings Limited, a company incorporated in the British Virgin Islands with limited liability, a 60% shareholder of South China Leasing and an indirect wholly-owned subsidiary of the Company;

• “Joint Venture” 天津首方投資管理有限公司 (Tianjin Capital Steel Investment Management Company Limited), a limited liability company to be established by Capital Steel and Beihai Investment in Tianjin, the PRC;

• “Latest Practicable Date” 29 August 2008, being the latest practicable date prior to the printing of this circular for the purpose of ascertaining certain information contained herein;

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

• “Max Same” Max Same Investment Limited, a company incorporated in Hong Kong which is a wholly-owned subsidiary of Cheung Kong (Holdings) Limited and owned 91,491,193 Shares as at the Latest Practicable Date;

• “PRC” the People’s Republic of China;

• “RMB” Renminbi, the lawful 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$0.01 each in the share capital of the Company;

• “Shareholder(s)” holder(s) of Shares;

2

DEFINITIONS

“Share Transfer Agreement” the agreement dated 20 August 2008 between Capital Steel and Shenzhen Jiayinda pursuant to which Shenzhen Jiayinda will transfer its 20% equity interest in the registered capital of South China Leasing to Capital Steel; “Shenzhen Jiayinda” 深圳市嘉殷達投資有限公司 (Shenzhen Jiayinda Investment Company Limited), a limited liability company established in the PRC, a 20% shareholder of South China Leasing; “Shougang Holding” Shougang Holding (Hong Kong) Limited, a company incorporated in Hong Kong, a controlling shareholder of the Company holding 489,450,710 Shares as at the Latest Practicable Date; “South China Leasing” South China International Leasing Company Limited, a sinoforeign equity joint venture established in the PRC, which is 60% owned by Jeckman Holdings, 20% owned by Valuework and 20% owned by Shenzhen Jiayinda; “Stock Exchange” The Stock Exchange of Hong Kong Limited; “substantial shareholder” has the meaning ascribed to it under the Listing Rules; “Valuework” Valuework Investment Holdings Limited, a company incorporated in the British Virgin Islands, a 20% shareholder of South China Leasing and an indirect wholly-owned subsidiary of the Company; “%” per cent.

For illustration purposes, amounts in RMB in this circular have been translated into HK$ at RMB1 = HK$1.137.

3

LETTER FROM THE BOARD

首長四方（集團）有限公司 * SHOUGANG CONCORD GRAND (GROUP) LIMITED

(Incorporated in Bermuda with limited liability)

(Stock Code: 730)

Directors:

Wang Qinghai (Chairman) Cao Zhong (Vice Chairman and Managing Director) Chen Zheng (Managing Director of Operations) Wang Tian (Deputy Managing Director) Yuan Wenxin (Deputy Managing Director) Leung Shun Sang, Tony (Non-executive Director) Tam King Ching, Kenny (Independent Non-executive Director) Zhou Jianhong (Independent Non-executive Director) Yip Kin Man, Raymond (Independent Non-executive Director)

Registered Office: Canon’s Court 22 Victoria Street Hamilton HM12 Bermuda

Principal Office in Hong Kong: Rooms 1101-4, 11th Floor Harcourt House 39 Gloucester Road Wanchai Hong Kong 3 September 2008

To the Shareholders

Dear Sir or Madam,

(1) DISCLOSEABLE TRANSACTION IN RELATION TO THE CO-OPERATION AGREEMENT AND

(2) DISCLOSEABLE AND CONNECTED TRANSACTION IN RELATION TO THE SHARE TRANSFER AGREEMENT

INTRODUCTION

Discloseable Transaction

Reference is made to the announcement of the Company dated 12 June 2008 relating to the development of finance and assets investment and management businesses between the Company and China Everbright in the PRC on a mutual cooperation basis, and the announcement of the Company dated 14 August 2008 concerning the Co-operation Agreement between the Company and China Everbright on the establishment of a joint venture company in Tianjin, the PRC to engage in the acquisition and management of non-performing assets in the PRC.

4

LETTER FROM THE BOARD

Discloseable and Connected Transaction

Reference is made to the announcement of the Company dated 21 August 2008 concerning the Share Transfer Agreement between Capital Steel and Shenzhen Jiayinda pursuant to which Shenzhen Jiayinda agreed to transfer its 20% equity interest in the registered capital of South China Leasing to Capital Steel for a consideration of RMB31,755,150 (equivalent to approximately HK$36,106,000).

The Independent Board Committee comprising the independent non-executive Directors has been appointed to consider the terms of the Share Transfer Agreement. Guangdong Securities has been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders on the fairness and reasonableness of the terms of the Share Transfer Agreement.

The purposes of this circular are:

• (i) to provide the Shareholders with information on the Co-operation Agreement and the Share Transfer Agreement and further information of the Company;

• (ii) to set out recommendation of the Independent Board Committee in respect of the terms of the Share Transfer Agreement; and

• (iii) to set out the letter of advice from Guangdong Securities to the Independent Board Committee and the Independent Shareholders in respect of the fairness and reasonableness of the terms of the Share Transfer Agreement.

THE CO-OPERATION AGREEMENT

Date of the agreement

12 August 2008

Parties to the agreement

• (1) The Company; and

• (2) China Everbright

China Everbright is a wholly-owned subsidiary of the China Everbright Group Limited, a major state-owned enterprise operating under the supervision of the State Council of the PRC. The principal activities of China Everbright are investment management and assets management businesses. To the best of the Directors’ knowledge, information and belief, having made all reasonable enquiry, China Everbright and Beihai Investment and their respective ultimate beneficial owners are third parties independent of and not connected with the Company or its connected persons.

5

LETTER FROM THE BOARD

Co-operation

Pursuant to the Co-operation Agreement, the Company and China Everbright agreed to procure Capital Steel and Beihai Investment, respectively, to establish the Joint Venture in Tianjin, the PRC to engage in the acquisition and management of non-performing assets in the PRC. Beihai Investment is a 95% owned subsidiary of China Everbright and is principally engaged in the business of acquisition and management of assets.

The Joint Venture has a term of 5 years and its establishment is subject to, among others, all necessary approvals from the relevant PRC authorities for the establishment of the Joint Venture.

Capital commitments

The registered capital of the Joint Venture will be RMB130,000,000 (equivalent to approximately HK$147,810,000) and will be contributed as to RMB117,000,000 (equivalent to approximately HK$133,029,000) in cash, representing 90% of the registered capital of the Joint Venture, by Capital Steel, and as to RMB13,000,000 (equivalent to approximately HK$14,781,000) in cash, representing 10% of the registered capital of the Joint Venture, by Beihai Investment.

The Company’s capital contributions to the Joint Venture will be financed by the Group’s internal resources and/or bank borrowings.

The capital commitments were agreed after arm’s length negotiations between the parties based on the estimated capital requirements of the Joint Venture and will be contributed by the parties within 10 Business Days after the Joint Venture is qualified for capital verification. If it is so required by the Joint Venture, the parties agreed to contribute further capital to the Joint Venture on a pro-rata basis in accordance with the fund requirements of the Joint Venture. As at the Latest Practicable Date, the parties had no concrete plan or timetable for contributing additional funds to the Joint Venture. If and when the Company is required to make further capital contribution to the Joint Venture, the Company will make further announcement and seek Shareholders’ approval (if required) in accordance with the requirements of the Listing Rules.

Pursuant to the terms of the Co-operation Agreement, Beihai Investment shall be responsible for sourcing and identifying potential investment projects, conducting due diligence, initiating preliminary negotiations and determining a suitable acquisition or investment structure for proposed acquisitions of the Joint Venture. Capital Steel and Beihai Investment shall share the profits of the Joint Venture on the basis of 85% and 15%, which allows Beihai Investment a higher profit-sharing ratio than its capital contribution to the Joint Venture to compensate it for the extra work performed.

Board composition of the Joint Venture

The board of the Joint Venture shall comprise 3 directors, of which 2 will be appointed by Capital Steel and 1 will be appointed by Beihai Investment.

6

LETTER FROM THE BOARD

Reasons for the establishment of the Joint Venture

The Board believes that assets management is an area that has good development potential in the PRC and the establishment of the Joint Venture will present the Company with a suitable platform to enter this market. The Directors (including the independent non-executive Directors) consider that the establishment of the Joint Venture has been made on normal commercial terms, the transaction is fair and reasonable and is in the interest of the Company and the Shareholders as a whole.

Financial effects of the establishment of the Joint Venture

Upon its establishment, the Joint Venture will be accounted for as a 90% indirectly owned subsidiary of the Company.

The results of the Joint Venture will be consolidated into the accounts of the Group. It is expected that the Joint Venture will broaden the revenue base of the Group when it commences operation and the formation of the Joint Venture itself will have no material adverse financial effects on the earnings, assets and liabilities of the Group.

THE SHARE TRANSFER AGREEMENT

Date of the agreement

20 August 2008

Parties to the agreement

• (1) Capital Steel; and

• (2) Shenzhen Jiayinda

Shenzhen Jiayinda is principally engaged in investment holdings. Shenzhen Jiayinda owns 20% of the registered capital of South China Leasing, a non-wholly owned subsidiary of the Company, and is therefore a connected person of the Company.

Interest to be acquired

20% of the registered capital of South China Leasing, which to the best knowledge of the Company was purchased by Shenzhen Jiayinda from an independent third party in 2005 for RMB1,520,799.04. In addition, Shenzhen Jiayinda contributed further capital of RMB4,662,643 in July 2005 and RMB24,600,000 in July 2007 to South China Leasing.

7

LETTER FROM THE BOARD

Consideration

The consideration for the Acquisition is RMB31,755,150 (equivalent to approximately HK$36,106,000) and will be payable in cash in accordance with the following schedule:

• (a) an initial deposit of RMB23,000,000 (equivalent to approximately HK$26,151,000) would be payable within 7 days from the signing of the Share Transfer Agreement;

• (b) the balance of RMB8,755,150 (equivalent to approximately HK$9,955,000) will be payable within 7 days from the satisfaction of the conditions precedent set out below.

The consideration was determined after arm’s length negotiation between the parties on normal commercial terms, and represents a premium of approximately 16% over the net assets attributable to the interest to be acquired in South China Leasing as at 31 December 2007.

The consideration for the Acquisition would be financed by the Group’s internal resources.

As at the Latest Practicable Date, the initial deposit of RMB23,000,000 (equivalent to approximately HK$26,151,000) has already been paid pursuant to the Share Transfer Agreement.

Conditions

Completion of the Acquisition is conditional upon fulfilment of the following conditions:

• (1) the approval of the Acquisition by the Independent Shareholders, or the Company having received a written approval in respect of the Acquisition from Shareholders holding more than 50% of the issued share capital of the Company and the Stock Exchange having accepted the written approval issued by such Shareholder(s) in lieu of a resolution to be passed at a special general meeting of the Company to approve the Acquisition; and

• (2) the approval by the authority in the PRC of the Acquisition and South China Leasing having received its new business license.

If the above conditions cannot be fulfilled by 30 June 2009 or such other date as may be agreed between the parties, the Share Transfer Agreement will be terminated and Shenzhen Jiayinda will refund the deposit received plus interest thereon calculated at an interest rate of 6% per annum to Capital Steel.

As at the Latest Practicable Date, the above-mentioned condition (1) has been fufilled.

South China Leasing

South China Leasing is a sino-foreign equity joint venture established in the PRC on 20 May 1989 with an operation term of 40 years expiring in 2029. It is principally engaged in the provision of finance leasing, including the leasing of machinery, equipment, electrical equipment, meters, aircrafts, motor vehicles and the leasing of immovable properties in the PRC.

8

LETTER FROM THE BOARD

The Company is currently indirectly interested in 80% of the registered capital of South China Leasing. The unaudited net assets of South China Leasing as at 31 December 2007 was approximately RMB136,478,000 (equivalent to approximately HK$155,175,000). The unaudited financial results of South China Leasing for the two years ended 31 December 2007 and 2006 are as follows:

Profit (loss) before taxation and extraordinary items Profit (loss) after taxation and extraordinary items	Year ended 31 December 2007 RMB 17,121,000 (equivalent to approximately HK$19,467,000) 16,191,000 (equivalent to approximately HK$18,409,000)	Year ended 31 December 2006 RMB (8,467,000) (equivalent to approximately (HK$9,627,000)) (8,467,000) (equivalent to approximately (HK$9,627,000))

Change in the shareholding structure of South China Leasing

The shareholding structure of South China Leasing before and after completion of the Acquisition are as follows:

Before completion of the Acquisition

==> picture [340 x 130] intentionally omitted <==

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

The Company
100% 100%
Jeckman Holdings Valuework Shenzhen Jiayinda
60% 20% 20%
South China Leasing
----- End of picture text -----

9

LETTER FROM THE BOARD

After completion of the Acquisition

==> picture [339 x 130] intentionally omitted <==

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

The Company
100%
100% 100%
Jeckman Holdings Valuework Capital Steel
60% 20% 20%
South China Leasing
----- End of picture text -----

Upon completion of the Acquisition, South China Leasing will become an indirect wholly-owned subsidiary of the Company.

Reasons for the Acquisition

Taking into account of the prospects of the finance leasing market in the PRC, it is the intention of the Group to increase its participation in this market and further develop the business of South China Leasing. The Directors consider that the acquisition of the minority interest of South China Leasing from Shenzhen Jiayinda would enable the Group to further develop the business of South China Leasing and seize the opportunities presented in the finance leasing market in the PRC without the hindrances of the involvement of a minority shareholder.

The Share Transfer Agreement is entered into under normal commercial terms with the consideration determined on the basis of the registered capital contributed by Shenzhen Jiayinda. The Directors consider that the Acquisition is fair and reasonable and is in the interest of the Company and the Shareholders as a whole.

Financial effects of the Acquisition

Upon completion of the Acquisition, South China Leasing will become an indirect wholly-owned subsidiary of the Company.

The accounts of South China Leasing will continuously be consolidated in the consolidated financial statements of the Group. It is not expected that completion of the Acquisition will have any material effect on the earnings and assets and liabilities of the Group.

10

LETTER FROM THE BOARD

GENERAL

The Company is an investment holding company and its subsidiaries are principally engaged in provision and distribution of cultural recreations content, provision of financial services and property investment and management.

The establishment of the Joint Venture constitutes a discloseable transaction for the Company under Rule 14.06 of the Listing Rules.

Shenzhen Jiayinda is a substantial shareholder of South China Leasing, a non-wholly owned subsidiary of the Company. Accordingly, the Acquisition constitutes a connected transaction for the Company which is subject to independent shareholders’ approval requirements under Chapter 14A of the Listing Rules.

Your attention is drawn to the letter from the Independent Board Committee set out on page 12 of this circular which contains its recommendation to the Independent Shareholders on the Acquisition. Your attention is also drawn to the letter of advice from Guangdong Securities which contains its advice to the Independent Board Committee and the Independent Shareholders in relation to the Acquisition. The letter from Guangdong Securities is set out on pages 13 to 21 of this circular.

The Directors consider that the Acquisition is fair and reasonable and is in the interest of the Company and the Shareholders as a whole. Accordingly, the Directors recommend the Independent Shareholders to vote in favour of a resolution relating to the Share Transfer Agreement if a special general meeting of the Company is to be held to approve the Acquisition.

As Shenzhen Jiayinda is not interested in any Shares, and no Shareholders is interested in the transaction and is required to abstain from voting for the resolution to approve the Acquisition, Shougang Holding (through its wholly-owned subsidiaries) and Max Same which are interested in 489,450,710 Shares and 91,491,193 Shares respectively, representing respectively 42.51% and 7.94% of the issued share capital of the Company and an aggregate of approximately 50.45% of the issued share capital of the Company, have approved the Acquisition by written shareholders’ approvals in accordance with Rule 14A.43 of the Listing Rules based on the recommendation of the Independent Board Committee and Guangdong Securities. The Company has applied to the Stock Exchange for a waiver of the requirement to hold a general meeting in accordance with Rule 14A.43 of the Listing Rules on the basis of the written approval from Shougang Holding and Max Same and such waiver has been granted to the Company by the Stock Exchange.

FURTHER INFORMATION

You attention is also drawn to the general information set out in the appendix to this circular.

Yours faithfully, For and on behalf of the Board

Shougang Concord Grand (Group) Limited Cao Zhong

Vice Chairman and Managing Director

* For identification purposes only

11

LETTER FROM INDEPENDENT BOARD COMMITTEE

首長四方（集團）有限公司 * SHOUGANG CONCORD GRAND (GROUP) LIMITED

(Incorporated in Bermuda with limited liability)

(Stock Code: 730)

3 September 2008

To the Independent Shareholders

Dear Sir or Madam,

DISCLOSEABLE AND CONNECTED TRANSACTION IN RELATION TO THE SHARE TRANSFER AGREEMENT

We refer to this circular dated 3 September 2008 issued by the Company to its Shareholders, of which this letter forms part. Unless the context otherwise requires, terms defined in this circular shall have the same meanings when used in this letter.

As the Independent Board Committee, we have been appointed to advise the Independent Shareholders as to whether, in our opinion, the entering into the Share Transfer Agreement is in the interests of the Company and the Shareholders as a whole and the terms of which are fair and reasonable so far as the Shareholders are concerned. None of the members of the Independent Board Committee have any direct or indirect interest in the Acquisition. In addition, Guangdong Securities has been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the Acquisition.

We wish to draw your attention to (i) the letter of advice from Guangdong Securities as set out on pages 13 to 21 of this circular; and (ii) the letter from the Board as set out on pages 4 to 11 of this circular, which set out information relating to, and the reasons for the Acquisition.

As the Company’s independent directors, we have discussed with the management of the Company the reasons for and benefits of the Acquisition and the basis upon which their terms have been determined. We have considered the factors and reasons considered by, and the opinions and recommendations of Guangdong Securities as set out on pages 13 to 21 of this circular. We concur with the view of Guangdong Securities that the entering into of the Share Transfer Agreement and the Acquisition are in the interests of the Company and the Shareholders as a whole and the terms of which are fair and reasonable so far as the Independent Shareholders are concerned. Accordingly, we recommend the Independent Shareholders to vote in favour of a resolution relating to the Share Transfer Agreement if a special general meeting of the Company is to be held to approve the Acquisition.

Yours faithfully, Independent Board Committee Shougang Concord Grand (Group) Limited Tam King Ching, Kenny Zhou Jianhong Yip Kin Man, Raymond

* For identification purposes only

12

LETTER FROM GUANGDONG SECURITIES

Set out below is the text of a letter received from Guangdong Securities, the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders regarding the Share Transfer Agreement and the transactions contemplated thereunder for the purpose of inclusion in this circular.

==> picture [222 x 39] intentionally omitted <==

Units 2505-06, 25/F. Low Block of Grand Millennium Plaza 181 Queen’s Road Central Hong Kong

3 September 2008

To: The independent board committee and the independent shareholders

of Shougang Concord Grand (Group) Limited

Dear Sirs,

DISCLOSEABLE AND CONNECTED TRANSACTION

INTRODUCTION

We refer to our appointment as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in relation to the Share Transfer Agreement and the transactions contemplated thereunder, details of which are set out in the letter from the Board (the “ Board Letter ”) contained in the circular dated 3 September 2008 issued by the Company to the Shareholders (the “ Circular ”), of which this letter forms part. Terms used in this letter shall have the same meanings as defined in the Circular unless the context requires otherwise.

On 20 August 2008, Capital Steel, an indirect wholly-owned subsidiary of the Company, entered into the Share Transfer Agreement with Shenzhen Jiayinda pursuant to which Capital Steel conditionally agreed to acquire and Shenzhen Jiayinda conditionally agreed to dispose of its 20% equity interest in the registered capital of South China Leasing at a cash consideration of RMB31,755,150 (equivalent to approximately HK$36,106,000) (the “ Consideration ”). The Company confirmed that the entire Consideration shall be settled by the Group’s internal resources.

Pursuant to Rule 14.08 of the Listing Rules, as the applicable percentage ratio(s) of the Acquisition exceed 5% but are not more than 25%, the Acquisition constitutes a discloseable transaction for the Company under Chapter 14 of the Listing Rules. As Shenzhen Jiayinda is a substantial shareholder of South China Leasing (an indirect non wholly-owned subsidiary of the Company as at the date of the Share Transfer Agreement) and hence a connected person, the Acquisition also constitutes a connected transaction for the Company under Chapter 14A of the Listing Rules. Accordingly, the entering into of the Share Transfer Agreement is subject to the reporting, announcement and independent shareholders’ approval requirements under the Listing Rules.

13

LETTER FROM GUANGDONG SECURITIES

As stated in the Board Letter, since (i) Shenzhen Jiayinda is not interested in any Share(s); and (ii) no Shareholder(s) has any interest in the Acquisition, none of the Shareholders is required to abstain from voting at the general meeting in relation to the Share Transfer Agreement and the transactions contemplated thereunder. In addition, both Shougang Holding and Max Same (Shareholders which were interested in an aggregate of approximately 50.45% of the Company’s total issued share capital as at the date of the Share Transfer Agreement) have given consents in writing to approve the Share Transfer Agreement and the transactions contemplated thereunder. As such, pursuant to Rule 14A.43 of the Listing Rules, the Company has applied to the Stock Exchange for a waiver from strict compliance to accept written approvals from Shougang Holding and Max Same in lieu of holding a general meeting of the Company and such waiver has been granted to the Company by the Stock Exchange.

An Independent Board Committee comprising Mr. Tam King Ching, Kenny, Ms. Zhou Jianhong and Mr. Yip Kin Man, Raymond (all being independent non-executive Directors) has been formed to advise the Independent Shareholders on (i) whether the terms of the Share Transfer Agreement are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned; and (ii) whether the Acquisition is conducted in the ordinary and usual course of business of the Company and is in the interests of the Company and the Shareholders as a whole. We, Guangdong Securities Limited, have been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in this respect.

BASIS OF OUR OPINION

In formulating our opinion to the Independent Board Committee and the Independent Shareholders, we have relied on the statements, information, opinions and representations contained or referred to in the Circular and the information and representations as provided to us by the Directors. We have assumed that all information and representations that have been provided by the Directors, for which they are solely and wholly responsible, are true and accurate at the time when they were made and continue to be so as at the date hereof. We have also assumed that all statements of belief, opinion, expectation and intention made by the Directors in the Circular were reasonably made after due enquiry and careful consideration. We have no reason to suspect that any material facts or information have been withheld or to doubt the truth, accuracy and completeness of the information and facts contained in the Circular, or the reasonableness of the opinions expressed by the Company, its advisers and/or the Directors, which have been provided to us. We consider that we have taken sufficient and necessary steps on which to form a reasonable basis and an informed view for our opinion in compliance with Rule 13.80 of the Listing Rules.

The Directors have collectively and individually accepted full responsibility for the accuracy of the information contained in the Circular and have confirmed, having made all reasonable enquiries, which to the best of their knowledge and belief, there are no other facts the omission of which would make any statement in the Circular misleading.

14

LETTER FROM GUANGDONG SECURITIES

We consider that we have been provided with sufficient information to reach an informed view and to provide a reasonable basis for our opinion. We have not, however, conducted any independent in-depth investigation into the business and affairs of the Company, Capital Steel, Shenzhen Jiayinda, South China Leasing or their respective subsidiaries or associates, nor have we considered the taxation implication on the Group or the Shareholders as a result of the Acquisition. In addition, we have no obligation to update this opinion to take into account events occurring after the issue of this letter. Nothing contained in this letter should be construed as a recommendation to hold, sell or buy any Shares or any other securities of the Company.

Lastly, where information in this letter has been extracted from published or otherwise publicly available sources, the sole responsibility of Guangdong Securities has been to ensure that such information has been correctly extracted from the relevant sources.

PRINCIPAL FACTORS AND REASONS CONSIDERED

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

(1) The Share Transfer Agreement

On 20 August 2008, Capital Steel, an indirect wholly-owned subsidiary of the Company, entered into the Share Transfer Agreement with Shenzhen Jiayinda pursuant to which Capital Steel conditionally agreed to acquire and Shenzhen Jiayinda conditionally agreed to dispose of its 20% equity interest in the registered capital of South China Leasing at the Consideration of RMB31,755,150 (equivalent to approximately HK$36,106,000) in cash. As stated in the Board Letter, the initial deposit of RMB23 million had been paid by Capital Steel to Shenzhen Jiayinda pursuant to the Share Transfer Agreement.

Completion of the Share Transfer Agreement is conditional upon the fulfilment of certain conditions precedent (details of which are contained under the paragraph headed “Conditions” of the Board Letter) on or before 30 June 2009 (or such other date as the parties to the Share Transfer Agreement may agree in writing) (the “ Completion ”).

As advised by the Directors, the terms of the Share Transfer Agreement were negotiated and entered into on arm’s length basis between the parties thereto and the Directors are of the view that the terms and conditions of the Share Transfer Agreement are on normal commercial terms, fair and reasonable so far as the Independent Shareholders are concerned and are in the interests of the Company and the Shareholders as a whole.

15

LETTER FROM GUANGDONG SECURITIES

(2) Background of the Acquisition

Information on the Group

The Company is an investment holding company and its subsidiaries are principally engaged in the provision and distribution of cultural recreations content, provision of financial services and property investment and management. According to the annual report of the Company for the year ended 31 December 2007 (the “ 2007 Annual Report ”), provision of finance leasing is one of the revenue sources of the Group and it contributed approximately 6% of the Group’s revenue for the year ended 31 December 2007.

As referred to in the circular of the Company dated 11 October 2007 (the “ Jeckman Circular ”), the Company, through one of its indirect wholly-owned subsidiaries, entered into an agreement with Shougang Holding on 14 August 2007 regarding the acquisition of the remaining 50% of the issued share capital of Jeckman Holdings and the assignment of the HK$22.8 million shareholders’ loan by Shougang Holding to Jeckman Holdings (the “ Jeckman Acquisition ”). The consideration for the Jeckman Acquisition was HK$52 million. Since Jeckman Holdings was interested in 60% of the registered capital of South China Leasing, the Company’s aggregate effective equity interest in South China Leasing was increased from 50% to 80% upon completion of the Jeckman Acquisition.

Information on South China Leasing

South China Leasing is a sino-foreign equity joint venture company established in the PRC in May 1989. It is principally engaged in the provision of finance leasing, including the leasing of machinery, equipment, electrical equipment, meters, aircrafts, motor vehicles and the leasing of immovable properties in the PRC.

As set out in the Board Letter, the Company is currently indirectly interested in 80% of the registered capital of South China Leasing. Upon Completion, South China Leasing will become an indirect wholly-owned subsidiary of the Company. According to the information provided by the Company, South China Leasing recorded an unaudited loss of approximately RMB8,467,000 (equivalent to approximately HK$9,627,000) for the year ended 31 December 2006. Nevertheless, it was able to turnaround its loss making position in the following financial year. The unaudited profit of South China Leasing for the year ended 31 December 2007 was approximately RMB16,191,000 (equivalent to approximately HK$18,409,000). We understand from the Company that the improved financial performance of South China Leasing was due to the fact that South China Leasing had been successful in procuring more finance leasing contracts with its customers and the aggregate transaction amounts involved had also expanded. Furthermore, South China Leasing also achieved extraordinary gains on changes in fair value of held-for-trading investments (i.e. equity securities listed in the PRC) and better cost control. Based on the information provided by the Company, South China Leasing entered into 24 finance leasing contracts as at 31 December 2007, representing a jump of approximately 60% as compared to the prior year. Moreover, the finance lease income arising from the leasing of machinery, equipment, electrical equipment, meters, aircrafts and motor vehicles in the PRC had also been rising from approximately RMB57,163,000 (equivalent to approximately HK$64,994,000) to RMB114,200,000 (equivalent to approximately HK$129,845,000) during the same year under review.

16

LETTER FROM GUANGDONG SECURITIES

With the expected blooming economic development and the dynamic market opportunities and economic environment in the PRC, the Directors expected that the demand for finance leasing services will enhance in tandem. Although the Directors are of the view that greater competition has been brought by both local financial institutions and foreign companies, it is the business strategy of the Group to improve its service as well as its competitiveness in the market, proactively explore new business opportunities in order to broaden the Group’s portfolio of finance leasing services and expand its customer base.

Shareholding structure of South China Leasing

The simplified shareholding structure of South China Leasing as at the Latest Practicable Date and immediately following the Completion are as follows:

• (a) Simplified shareholding structure of South China Leasing as at the Latest Practicable Date:

==> picture [340 x 130] intentionally omitted <==

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

The Company
100% 100%
Jeckman Holdings Valuework Shenzhen Jiayinda
60% 20% 20%
South China Leasing
----- End of picture text -----

• (b) Simplified shareholding structure of South China Leasing immediately following the Completion:

==> picture [339 x 131] intentionally omitted <==

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

The Company
100%
100% 100%
Jeckman Holdings Valuework Capital Steel
60% 20% 20%
South China Leasing
----- End of picture text -----

17

LETTER FROM GUANGDONG SECURITIES

(3) Reasons for the Acquisition

From the Board Letter, we noted that the Company intended to increase its participation in the finance leasing market in the PRC and further develop the business of South China Leasing. As aforementioned, South China Leasing will be indirectly wholly-owned by the Company upon Completion. As also outlined under the paragraph headed “Information on South China Leasing” of this letter, it is the business strategy of the Group to proactively explore new business opportunities in order to broaden its portfolio of finance leasing services and to expand its customer base. Given the foregoing, we consider that the Acquisition aligns with the business development strategy of the Group and hence is conducted in the ordinary and usual course of business of the Company.

According to our research and our discussions with the management of the Company, we noted that finance leasing is one of the effective financial tools which offers leveraging effects and may stimulate growth with relatively small amounts of initial capital investment. The lease provider supplies the lessee with necessary equipment and allows the lessee to use the equipment in exchange for fixed instalments payment. As the industry matures, more diversified leasing products will be created. As advised by the Company, the penetration of the finance leasing market in the PRC was relatively low as compared to developed countries such as the U.S. and there would be enormous room for the finance leasing market in the PRC to grow before it reaches parity with other developed leasing markets, such as the U.S..

Having considered (i) the improvement in financial performance of South China Leasing for the year ended 31 December 2007; (ii) the Acquisition being in alignment with the business development strategy of the Group; and (iii) the potential growth of the finance leasing market in the PRC, we concur with the Directors that the Acquisition is in the interests of the Company and the Shareholders as a whole.

(4) Principal terms of the Share Transfer Agreement

Basis of the Consideration

As confirmed by the Directors, the Consideration of RMB31,755,150 was determined after arm’s length negotiations between the parties to the Share Transfer Agreement and it represented a premium of approximately 16% over the unaudited net assets attributable to the interest to be acquired in South China Leasing as at 31 December 2007.

Payment of the Consideration

Pursuant to the Share Transfer Agreement, an initial deposit of RMB23,000,000 (equivalent to approximately HK$26,151,000) will be payable by the Company in cash within seven days from the signing of the Share Transfer Agreement; while the remaining balance of RMB8,755,150 (equivalent to approximately HK$9,955,000) will be payable by the Company in cash within seven days from the satisfaction of the conditions precedent to the Share Transfer Agreement. As further confirmed by the Company, the entire Consideration shall be settled by the Group’s internal resources.

18

LETTER FROM GUANGDONG SECURITIES

Comparison with the Jeckman Acquisition and other market comparable

To assess the fairness and reasonableness of the Consideration, we have compared the implied price to book ratio (“ P/B ”) of the Acquisition with the implied P/B of the Jeckman Acquisition. As referred to in the Jeckman Circular, the implied P/B of the Jeckman Acquisition was approximately 8.41 times (for details of the calculation, please refer to the Jeckman Circular). As for the Acquisition, the implied P/B (being calculated as the Consideration divided by “20% of the unaudited net assets of South China Leasing as at 31 December 2007” of approximately RMB27.30 million) is approximately 1.16 times. In view of that the implied P/B of the Acquisition is lower than that of the Jeckman Acquisition, we are of the view that the Consideration is justifiable.

Apart from the P/B analysis, we have also attempted to compare the price to earnings ratio (“ P/E ”) of the Jeckman Acquisition and the Acquisition; however, we noted that at the time of the Jeckman Acquisition, South China Leasing had not yet recorded any profit, the P/E analysis is hence not applicable.

It should be noted that there is a significant time gap of nearly one year between the Jeckman Acquisition and the Acquisition and thus the aforesaid ratio analysis is only used for illustrative purpose.

In addition to the above, we have researched for companies which are listed on the Stock Exchange and are in similar lines of business as South China Leasing (i.e. having businesses relating to the provision of finance leasing service) and excluded companies which recorded losses and net liabilities during their latest financial year as per their respective published financial information. Furthermore, we have also attempted to select companies with market capitalization being comparable to South China Leasing. However, to the best of our knowledge and as far as we are aware of, there is only one company which met our selection criteria (the “ Comparable Company ”) and therefore we had not excluded any comparable companies for our analysis purpose.

The following table sets out the implied P/B and P/E of the Comparable Company based on (i) its closing price as at 20 August 2008, being the date of the Share Transfer Agreement; and (ii) the publicly available financial information for its latest financial year:

Company name
(Stock code)	Principal business	Year end date	P/B	P/E
China Financial Leasing	Principally engaged in	31/12/2007	1.25	2.44
Group Limited	investment with a
(2312)	focus on investing in
	the financing leasing
	market in the PRC
The Acquisition			1.16	9.81

Source: the Stock Exchange web-site (www.hkex.com.hk)

19

LETTER FROM GUANGDONG SECURITIES

As shown by the above table, the Comparable Company was trading at implied P/B and P/E of approximately 1.25 times and 2.44 times respectively; whereas the implied P/B and P/E of the Acquisition are approximately 1.16 times and 9.81 times respectively. The implied P/E of the Acquisition is calculated as the Consideration divided by “20% of the unaudited profit of South China Leasing for the year ended 31 December 2007” of approximately RMB3.24 million.

We noted that the implied P/B of the Acquisition is lower than the implied P/B of the Comparable Company; whereas the implied P/E of the Acquisition is above the implied P/E of the Comparable Company. Nevertheless, taking into account (i) the improvement in financial performance of South China Leasing for the year ended 31 December 2007; and (ii) the potential growth of the finance leasing market in the PRC, we consider that the implied P/E of the Acquisition is acceptable.

It should be noted that the businesses, operations and prospects of South China Leasing are not the same as the Comparable Company and we have not conducted any in-depth investigation into the businesses and operations of the Comparable Company. Accordingly, the Comparable Company is only used for illustrative purpose.

In addition, we have also reviewed other major terms of the Share Transfer Agreement and are not aware of any terms which are unusual. Based on the above, we are of the view that the terms of the Share Transfer Agreement are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned.

(5) Financial effects of the Acquisition

Effect on net asset value

As extracted from the 2007 Annual Report, the audited net assets of the Group was approximately HK$968.36 million. Upon Completion, the net assets of the Group would be reduced by the difference between the Consideration and the goodwill arising from the Acquisition.

Effect on earnings

Upon Completion, South China Leasing will become an indirect wholly-owned subsidiary of the Company and its financial results will be fully consolidated into the Group’s financial accounts. In light of the improvement in financial performance of South China Leasing for the year ended 31 December 2007 and the potential growth of the finance leasing market in the PRC, the Company expected that the Acquisition would likely to have a positive impact on the earnings position of the Group in the future.

Effects on gearing and working capital

According to the 2007 Annual Report, the Group’s gearing level (being calculated as borrowings less bank balances and cash, restricted bank deposits and pledged bank deposits divided by total equity of the Group) was approximately 90%. Upon Completion, based on the information provided by the Company, the Group’s gearing level would be increased. In this respect, we also noted that the Group’s total borrowings are mainly composed of bank borrowings from South China Leasing. We have enquired into and the Company advised us that companies providing finance leasing services in the PRC would usually require heavy bank borrowings to finance the leasing to the leasee.

20

LETTER FROM GUANGDONG SECURITIES

Lastly, as the Consideration shall be satisfied entirely by the internal resources of the Group, the Company expected that the working capital of the Group would be reduced by the Consideration following the stipulated payment schedule.

It should be noted that the aforementioned analyses are for illustrative purpose only and does not purport to represent how the financial position of the Group will be upon Completion.

RECOMMENDATION

Having taken into consideration the above factors and reasons, we are of the opinion that (i) the terms of the Share Transfer Agreement are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned; and (ii) the Acquisition is in the ordinary and usual course of business of the Company and is in the interests of the Company and the Shareholders as a whole. If a general meeting of the Independent Shareholders was to be held for the purpose of considering and, if thought fit, approving the Share Transfer Agreement and the transactions contemplated thereunder, we would advise the Independent Board Committee to recommend the Independent Shareholders, as well as the Independent Shareholders, to vote in favour of the ordinary resolution(s) in this regard.

Yours faithfully, For and on behalf of Guangdong Securities Limited Graham Lam Managing Director

21

GENERAL INFORMATION

APPENDIX

1. RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors collectively and individually accept full responsibility for the accuracy of the information contained in this circular and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, there are no other facts the omission of which would make any statement herein misleading.

2. DISCLOSURE OF INTERESTS

(a) Interests and short positions of the Directors in shares and underlying shares of the Company and its associated corporations

As at the Latest Practicable Date, the interests and short positions of the Directors and the chief executive of the Company in the shares, underlying shares 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 (including interests and short positions which they were taken or deemed to have under such provisions of the SFO); or (b) were required, pursuant to section 352 of the SFO, to be entered in the register of the Company referred to therein; or (c) were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers (the “ Model Code ”) contained in the Listing Rules, to be notified to the Company and the Stock Exchange were as follows:

• (i) Long positions in shares and underlying shares of the Company

Capacity in which Name of interests are Director held	Percentage of total Number of shares/underlying shares held interest as in the Company to the issued share Interests capital of Interests in under equity Total the shares derivatives interests Company* – 11,368,000 11,368,000 0.99% – 22,868,000 22,868,000 1.99% – 18,368,000 18,368,000 1.60% 4,000,000 11,094,000 15,094,000 1.31% 4,000,000 15,094,000 19,094,000 1.66%
Wang Qinghai Beneficial owner Cao Zhong Beneficial owner Chen Zheng Beneficial owner Wang Tian Beneficial owner Yuan Wenxin Beneficial owner

22

APPENDIX

GENERAL INFORMATION

Capacity in which Name of interests are Director held	Percentage of total Number of shares/underlying shares held interest as in the Company to the issued share Interests capital of Interests in under equity Total the shares derivatives interests Company* 8,278,000 19,368,679 27,646,679 2.40% – 2,286,000 2,286,000 0.20% – 2,286,000 2,286,000 0.20% – 2,286,000 2,286,000 0.20%
Leung Shun Sang, Tony Beneficial owner Tam King Ching, Kenny Beneficial owner Zhou Jianhong Beneficial owner Yip Kin Man, Raymond Beneficial owner

• The relevant interests are unlisted physically settled options granted pursuant to the Company’s share option scheme adopted on 7 June 2002 (the “ Scheme ”). Upon exercise of the share options in accordance with the Scheme, ordinary shares of HK$0.01 each in the share capital of the Company are issuable. The share options are personal to the respective Directors.

• (ii) Long positions in shares and underlying shares of Global Digital Creations Holdings Limited (“ GDC ”), an associated corporation of the Company

Capacity in which Name of interests are Director held	Percentage Number of shares/underlying shares of total held in GDC interest as to the issued Interests share Interests in under equity Total capital of shares derivatives interests GDC* 8,008,200 4,900,000 12,908,200 1.00% 8,718,200 4,900,000 13,618,200 1.05% 820 – 820 0.00% 10,008,200 4,900,000 14,908,200 1.15% 500,615 – 500,615 0.04%
Cao Zhong Beneficial owner Chen Zheng Beneficial owner Wang Tian Beneficial owner Leung Shun Sang, Tony Beneficial owner Zhou Jianhong Beneficial owner

• The relevant interests are unlisted physically settled options granted pursuant to GDC’s share option scheme adopted on 18 July 2003 (the “ GDC Scheme ”). Upon exercise of the share options in accordance with the GDC Scheme, ordinary shares of HK$0.01 each in the share capital of GDC are issuable. The share options are personal to the respective Directors.

23

GENERAL INFORMATION

APPENDIX

• (iii) Long positions in shares and underlying shares of GDC Technology Limited (“ GDC Tech ”), an associated corporation of the Company

Capacity in which Name of interests are Director held	Percentage Number of shares/underlying shares of total held in GDC Tech interest as to the issued Interests share Interests in under equity Total capital of shares derivatives interests GDC Tech*
Cao Zhong Beneficial owner Chen Zheng Beneficial owner Leung Shun Sang, Tony Beneficial owner	8,533,334 1,650,000 10,183,334 4.38% 8,533,334 1,650,000 10,183,334 4.38% 2,130,000 1,653,333 3,783,333 1.63%

• The relevant interests are unlisted physically settled options granted pursuant to GDC Tech’s share option scheme adopted on 19 September 2006 (the “ GDC Tech Scheme ”). Upon exercise of the share options in accordance with the GDC Tech Scheme, ordinary shares of HK$0.1 each in the share capital of GDC Tech are issuable. The share options are personal to the respective Directors.

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

Save as disclosed in this circular, none of the Directors or proposed Director is a director or employee of a company which has an interest in the shares and underlying shares of the Company which would fall to be disclosed under the provisions of Divisions 2 and 3 of Part XV of the SFO.

(b) Directors’ service contracts

As at the Latest Practicable Date, none of the Directors had any existing or proposed service contracts with any member of the Group or any associated company of the Company (excluding contracts expiring or determinable within one year without payment of compensation other than statutory compensation).

24

GENERAL INFORMATION

APPENDIX

(c) As at the Latest Practicable Date:

• (i) none of the Directors had any direct or indirect interest in any assets which have been, since the date to which the latest published audited accounts of the Group were made up, acquired or disposed of by, or leased to the Company or any of its subsidiaries, or are proposed to be acquired or disposed of by, or leased to, the Company or any of its subsidiaries; and

• (ii) none of the Directors is materially interested in any contract or arrangement entered into by the Company or any of its subsidiaries which contract or arrangement is subsisting at the date of this circular and which is significant in relation to the business of the Group.

(d) Directors’ interests in competing businesses

As at the Latest Practicable Date, the interests of the Directors in the businesses (other than those businesses where the Directors were appointed as directors to represent the interests of the Company and/ or any member of the Group) which were considered to compete or were likely to compete, either directly or indirectly, with the businesses of the Group were as follows:

	Name of entity whose		Description of businesses
	businesses were considered		of the entity which were	Nature of
	to compete or likely to		considered to compete or	interest of
Name of	compete with the		likely to compete with the	the Director
Director	businesses of the Group		businesses of the Group	in the entity
Wang Qinghai	Shougang Corporation #		Property investment	Director
Cao Zhong	China Shougang		Property investment	Director
	International Trade and
	Engineering Corporation	#
	Shougang Holding #		Property investment	Director

Such businesses may be carried out through its subsidiaries or associates or by way of other forms of investments.

The Board is independent from the boards of the above-mentioned entities and is accountable to the Shareholders. Coupled with the diligence of its independent non-executive Directors whose views carry significant weight in the Board’s decisions, the Group is capable of carrying on its businesses independently of, and at arm’s length from, the businesses of these entities.

Save as disclosed above, as at the Latest Practicable Date, in so far as the Directors were aware, none of the Directors or their respective associates had any interest in a business that competed or was likely to compete with the business of the Group.

25

GENERAL INFORMATION

APPENDIX

3. SUBSTANTIAL SHAREHOLDERS

• (a) As at the Latest Practicable Date, according to the register kept by the Company pursuant to Section 336 of SFO, the following persons and companies (other than the Directors or chief executive of the Company) had an interest or short position in the shares and the 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 the SFO:

Long positions in the shares of the Company

			Percentage of
			interest as to the
	Capacity in	Number of	issued share
	which interests	shares held in	capital of the
Name of Shareholder	are held	the Company	Company	Note(s)
Shougang Holding	Interests of controlled	489,450,710	42.51%	1
	corporations
Wheeling Holdings	Beneficial owner	430,491,315	37.39%	1
Limited (“Wheeling”)
Prime Success	Beneficial owner	58,959,395	5.12%	1
Investments Limited
(“Prime Success”)
Cheung Kong (Holdings)	Interests of controlled	133,048,717	11.56%	2, 3
Limited (“Cheung Kong”)	corporations
Max Same Investment	Beneficial owner	91,491,193	7.95%	2
Limited (“Max Same”)
Li Ka-shing	Interests of controlled	133,048,717	11.56%	3
	corporations, founder
	of discretionary trusts
Li Ka-Shing Unity Trustee	Trustee	133,048,717	11.56%	3
Company Limited (“TUT1”)
Li Ka-Shing Unity Trustee	Trustee, beneficiary	133,048,717	11.56%	3
Corporation Limited (“TDT1”)	of a trust
Li Ka-Shing Unity Trustcorp	Trustee, beneficiary	133,048,717	11.56%	3
Limited (“TDT2”)	of a trust

26

GENERAL INFORMATION

APPENDIX

Notes:

1. Shougang Holding indicated in its disclosure form dated 28 September 2007 (being the latest disclosure form filed up to the Latest Practicable Date) that as at 25 September 2007, its interests included 430,491,315 and 58,959,395 Shares held by Wheeling and Prime Success respectively, both were wholly-owned subsidiaries of Shougang Holding.

2. Cheung Kong indicated in its disclosure form dated 26 February 2005 (being the latest disclosure form filed up to the Latest Practicable Date) that as at 23 February 2005, its interests included 91,491,193 Shares held by Max Same, a wholly-owned subsidiary of Cheung Kong.

3. Li Ka-Shing Unity Holdings Limited (“ Unity Holdco ”), of which each of Mr. Li Ka-shing, Mr. Li Tzar Kuoi, Victor and Mr. Li Tzar Kai, Richard was interested in one-third of the entire issued share capital, owned the entire issued share capital of TUT1. TUT1 as trustee of The Li Ka-Shing Unity Trust (“ UT1 ”), together with certain companies which TUT1 as trustee of UT1 was entitled to exercise or control the exercise of more than one-third of the voting power at their general meetings, held more than one-third of the issued share capital of Cheung Kong.

   • In addition, Unity Holdco also owned the entire issued share capital of TDT1 as trustee of The Li Ka-Shing Unity Discretionary Trust (“ DT1 ”) and TDT2 as trustee of another discretionary trust (“ DT2 ”). Each of TDT1 and TDT2 held units in UT1.

   • By virtue of the SFO, each of Mr. Li Ka-shing, being the settlor and may being regarded as a founder of each of DT1 and DT2 for the purpose of the SFO, TUT1, TDT1 and TDT2 was deemed to be interested in the same block of Shares in which Cheung Kong was interested under the SFO.

4. (b) As at the Latest Practicable Date, so far as is known to any Director, the following persons and companies were, 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 any member of the Group or had any option in respect of such capital:

Name of registered	Name of	Name of member	% of attributable
shareholder	beneficial owner	of the Group	interest
Zhou Lin	Zhou Lin	四方源創國際影視文化	20.00%
		傳播（北京）有限公司
		(Concord Creation
		International (Beijing)
		Company Limited #)
		(“Concord Creation”)
Yang Yong	Yang Yong	廣東四方源創動畫製作	20.00%
		有限公司
		(Concord Creation Animation
		Production Guangdong
		Company Limited #)
		(“Guangdong Creation”)
Concord Creation	Zhou Lin	Guangdong Creation	16.00%
			(Note 1)

27

APPENDIX

GENERAL INFORMATION

Name of registered	Name of	Name of member	% of attributable	% of attributable	% of attributable
shareholder	beneficial owner	of the Group			interest
Concord Creation	Zhou Lin	東陽市四方源創影視製作			20.00%
		有限公司			(Note 2)
		(Dongyang Concord Creation
		Film@TV Company Limited		#)
		(“Dongyang Creation”)
Guangdong Creation	Zhou Lin	杭州四方源創動畫製作			16.00%
and Chen Zheng		有限公司			(Note 3)
		(Concord Creation Animation
		Production Hangzhou
		Company Limited #)
		(“Hangzhou Creation”)
Guangdong Creation	Yang Yong	Hangzhou Creation			20.00%
and Chen Zheng					(Note 4)
Greater Appeal	Greater Appeal	GDC Tech			22.52%
Investments Limited
(“Greater Appeal”)
GDC Tech	Greater Appeal	GDC Technology Pte Ltd			22.52%
					(Note 5)
GDC Tech	Greater Appeal	GDC Technology China Limited			22.52%
					(Note 5)
GDC Tech	Greater Appeal	GDC Technology			22.52%
		(Hong Kong) Limited			(Note 5)
GDC Tech	Greater Appeal	GDC Technology (USA), LLC			22.52%
					(Note 5)
GDC Tech	Greater Appeal	深圳市環球數碼			22.52%
		科技有限公司			(Note 5)
		(“Shenzhen GDC Tech”)
Shenzhen GDC Tech	Greater Appeal	北京科創環球數碼			22.52%
		技術有限公司			(Note 5)
深圳市嘉殷達投資	Shenzhen Jiayinda	南方國際租賃有限公司			20.00%
有限公司		(South China International
(Shenzhen Jiayinda		Leasing Company Limited)
Investment
Company Limited_#_)
(“Shenzhen
Jiayinda”)

# For identification purpose only

28

GENERAL INFORMATION

APPENDIX

Notes:

1. Guangdong Creation was held as to 80.00% by Concord Creation. As Concord Creation was beneficially held as to 20.00% by Zhou Lin, Guangdong Creation was deemed to be held as to 16.00% by Zhou Lin.

2. Dongyang Creation was held as to 90.00% by Concord Creation. As Concord Creation was beneficially held as to 20.00% by Zhou Lin, Dongyang Creation was deemed to be held as to 18.00% by Zhou Lin. Together with Zhou Lin’s beneficial interest of 2.00% held in Dongyang Creation through another nominee, Zhou Lin has an aggregate interest of 20.00% in Dongyang Creation.

3. Hangzhou Creation was beneficially held as to 100.00% by Guangdong Creation which included its beneficial interest of 10.00% held in Hangzhou Creation through its nominee, Chen Zheng. As Guangdong Creation was deemed to be beneficially held as to 16.00% by Zhou Lin, Hangzhou Creation was deemed to be held as to 16.00% by Zhou Lin.

4. Hangzhou Creation was beneficially held as to 100.00% by Guangdong Creation which included its beneficial interest of 10.00% held in Hangzhou Creation through its nominee, Chen Zheng. As Guangdong Creation was held as to 20.00% by Yang Yong, Hangzhou Creation was deemed to be held as to 20.00% by Yang Yong.

5. Each of GDC Technology Pte Ltd, GDC Technology China Limited, GDC Technology (Hong Kong) Limited, GDC Technology (USA), LLC, Shenzhen GDC Tech and 北京科創環球數碼技術 有限公司 was directly or indirectly held as to 100% by GDC Tech. As GDC Tech was held as to 22.52% by Greater Appeal, each of GDC Technology Pte Ltd, GDC Technology China Limited, GDC Technology (Hong Kong) Limited, GDC Technology (USA), LLC, Shenzhen GDC Tech and 北京科創環球數碼技術有限公司 was deemed to be held as to 22.52% by Greater Appeal.

Save as disclosed above, the Directors and chief executive of the Company were not aware of any person who has an interest or short position in the shares or underlying shares of the Company 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 was 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 any other member of the Group.

4. LITIGATION

As at the Latest Practicable Date, the Group was engaged in the following litigation or arbitration of material importance:

On 14 May 2003, GDC Entertainment Limited (“ GDC Entertainment ”), a subsidiary of the Company, entered into a co-production agreement (the “ Co-production Agreement ”) with Westwood Audiovisual and Multimedia Consultants, Inc. (“ WAMC ”) and Production and Partners Multimedia, SAS (“ P&PM ”) in relation to an animated television series.

In about November 2004, P&PM and WAMC commenced proceedings against GDC Entertainment in the Court of Commerce of Angouleme (France) alleging breaches on the part of GDC Entertainment of the Co-production Agreement.

In relation to the French proceedings, the Group’s French legal advisers had advised that the enforcement of P&PM’s and WAMC’s claims should only be limited to the assets of GDC Entertainment.

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Further, arbitration proceedings were commenced by GDC Entertainment against P&PM and WAMC in Hong Kong by way of a notice of arbitration dated 16 June 2005 issued pursuant to the Coproduction Agreement. In the arbitration, issues had been raised by GDC Entertainment as to whether P&PM and/or WAMC was in repudiatory breach of the Co-production Agreement which entitled GDC Entertainment to terminate the same claim of damages from P&PM and WAMC. Pleadings have not yet been exchanged in the arbitration. P&PM and WAMC have applied to the arbitrator for the determination of a preliminary issue as to whether the arbitrator has jurisdiction to hear the dispute which GDC Entertainment will refer to the arbitrator in the arbitration. The hearing of the application was held on 20 January 2006. Award of the arbitrator was published on the Issue of Jurisdiction on 23 March 2006 dismissing the application, and made an order for costs in GDC Entertainment’s favour in respect of the application. Since then, there has been no further step taken by the parties. GDC Entertainment has written to the arbitrator seeking directions for the further conduct of the arbitration, including the service of pleadings in the arbitration. GDC Entertainment is still waiting to hear from the arbitrator as to how she would like to proceed with the arbitration.

Effective from 1 May 2008, GDC Entertainment has been struck off and can be restored at any time up to ten years after the strike off date.

In April 2008, a former employee of the Company filed a claim to the District Court of Hong Kong (the “ District Court ”) against the Company for an alleged disability discrimination to him and claimed for a compensation of approximately HK$6,659,000. In May 2008, the Company filed a defence to the District Court.

The legal adviser of the Company to the above District Court’s case advised that the Company has an arguable defence to his claim and the Directors are of the opinion that settlement of the claim is remote.

Save as disclosed above, neither the Company nor any other members of the Group was engaged in any litigation or arbitration of material importance and no litigation, arbitration or claim of material importance was known to the Directors to be pending or threatened against any member of the Group as at the Latest Practicable Date.

5. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors were not aware of any material adverse change in the financial or trading position of the Group since 31 December 2007, the date to which the latest published audited accounts of the Company were made up. Attention is also drawn to the published announcement of the Company dated 25 August 2008 which reported that the Group recorded a loss for the six months ended 30 June 2008. Details of the Group’s interim results will be disclosed and released in the interim results announcement of the Company on 1 September 2008.

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6. EXPERT’S QUALIFICATION AND CONSENT

Guangdong Securities has given and has not withdrawn its written consent to the issue of this circular with the inclusion of its letter and references to its name in the form and context in which it appears.

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

Name Qualification

Guangdong Securities

a licensed corporation to carry out type 1 (dealing in securities), type 4 (advising on securities), type 6 (advising on corporate finance) and type 9 (asset management) regulated activities as defined under the SFO.

As at the Latest Practicable Date, Guangdong Securities did not have any direct or indirect interest in any asset which had been acquired, disposed of by, or leased to any member of the Group, or was proposed to be acquired, or disposed of by, or leased to any member of the Group, since 31 December 2007, the date to which the latest audited financial statements of the Group was made up; and was not beneficially interested in the share capital of any member of the Group and did not have any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

7. GENERAL

• (a) The registered office of the Company is at Canon’s Court, 22 Victoria Street, Hamilton HM12, Bermuda and the principal place of business of the Company in Hong Kong is at Rooms 1101-4, 11th Floor, Harcourt House, 39 Gloucester Road, Wanchai, Hong Kong.

• (b) The Company’s Hong Kong branch share registrars and transfer office is Tricor Tengis Limited, 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong.

• (c) The company secretary of the Company is Ms. Cheng Man Ching, a fellow member of each of The Institute of Chartered Secretaries and Administrators and The Hong Kong Institute of Chartered Secretaries and an associate member of the Hong Kong Institute of Bankers. She holds a master degree in business administration and a master degree in arts.

• (d) The qualified accountant of the Company is Mr. Chiu Ming Kin who is a fellow member of The Association of Chartered Certified Accountants and an associate member of The Hong Kong Institute of Certified Public Accountants, and holds a bachelor degree of business administration with honor.

• (e) The English text of this circular shall prevail over the Chinese text.

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8. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection at the Company’s principal place of business in Hong Kong at Rooms 1101-4, 11th Floor, Harcourt House, 39 Gloucester Road, Wanchai, Hong Kong during normal business hours from the date of this circular up to and including 19 September 2008:

• (a) the letter from the Independent Board Committee to the Independent Shareholders, the text of which is set out on page 12 of this circular;

• (b) the letter from Guangdong Securities to the Independent Board Committee and the Independent Shareholders, the text of which is set out on pages 13 to 21 of this circular;

• (c) the written consent from Guangdong Securities referred to in the paragraph headed “Expert’s Qualification and Consent” in this Appendix; and

• (d) the Share Transfer Agreement.

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