Ulferts International Limited — Proxy Solicitation & Information Statement 2010

Jan 12, 2010

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult your licensed securities dealer, 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 accompanying with the form of proxy to the purchaser or transferee, or to the bank, licensed securities dealer 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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首長四方（集團）有限公司[*] SHOUGANG CONCORD GRAND (GROUP) LIMITED (Incorporated in Bermuda with limited liability)

(Stock Code: 730)

CONTINUING CONNECTED TRANSACTIONS

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

Mitsubishi UFJ Securities

Mitsubishi UFJ Securities (HK) Capital, Limited

A letter from the Board is set out on pages 4 to 8 of this circular and a letter from the Independent Board Committee is set out on page 9 of this circular. A letter from the Independent Financial Adviser containing its advice to the Independent Board Committee and the Independent Shareholders is set out on pages 10 to 18 of this circular.

A notice convening a Special General Meeting to be held at 10:30 a.m. on Friday, 29 January 2010 at Rooms 1101-4, 11th Floor, Harcourt House, 39 Gloucester Road, Wanchai, Hong Kong is set out on pages 30 to 31 of this circular. Whether or not you are able to attend the Special General Meeting in person, please complete the accompanying form of proxy in accordance with the instructions printed thereon and return the same to the Company’s Hong Kong branch share registrars and transfer office, Tricor Tengis Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong as soon as practicable but in any event not less than 48 hours before the time appointed for holding the Special General Meeting or any adjourned meeting thereof (as the case may be). Completion and return of the accompanying form of proxy will not preclude you from attending and voting in person at the Special General Meeting or any adjourned meeting thereof (as the case may be) should you so wish.

13 January 2010

* For identification purpose only

CONTENTS

	Page
Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Letter from the Independent Board Committee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
Letter from the Independent Financial Adviser. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
Appendix – General information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	19
Notice of Special General Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	30

• i -

DEFINITIONS

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

• “associate(s)” has the same meaning ascribed to it under the Listing Rules; “Board” the board of Directors;

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

• “Continuing Connected the transactions contemplated under the Master Supply Transactions” Agreement;

• “Director(s)” the director(s) of the Company; “GDC” Global Digital Creations Holdings Limited, a company incorporated in Bermuda with limited liability whose securities are listed on the Growth Enterprise Market of the Stock Exchange and is a non-wholly owned subsidiary of the Company, and is held as to approximately 52.57% by the Company as at the Latest Practicable Date;

• “GDC Holdings”

• GDC Holdings Limited, a company incorporated in the British Virgin Islands, a wholly-owned subsidiary of GDC;

• “GDC Tech” GDC Technology Limited, a company incorporated in the British Virgin Islands, which is owned as to approximately 61.81% by GDC, as to approximately 22.48% by Greater Appeal and as to approximately 15.71% by the directors and management of GDC Tech and/or GDC;

• “Greater Appeal” Greater Appeal Investments Limited, a company incorporated in the British Virgin Islands and is ultimately beneficially wholly-owned by Mr. Li Ka-shing;

• “Group” the Company and its subsidiaries;

• “HK$”

Hong Kong dollar, the lawful currency of Hong Kong;

• “Hong Kong” the Hong Kong Special Administrative Region of the PRC;

• 1 -

DEFINITIONS

• “Independent Board Committee”

The independent committee of the Board, comprising Mr. Tam King Ching, Kenny, Ms. Zhou Jianhong and Mr. Yip Kin Man, Raymond, being the independent non-executive Directors, formed to advise the Independent Shareholders in respect of the Master Supply Agreement and the relevant cap amounts in relation to the Continuing Connected Transactions;

• “Independent Financial Adviser” or “MUHKC”

• Mitsubishi UFJ Securities (HK) Capital, Limited, a registered institution to carry out Type 1 (dealing in securities), Type 4 (advising on securities) and Type 6 (advising on corporate finance) of the regulated activities under the SFO, and the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the Master Supply Agreement and the relevant cap amounts in relation to the Continuing Connected Transactions;

• “Independent Shareholders”

the Shareholders other than Mr. Li Ka-shing and his associates and other minority shareholders of GDC Tech who also hold shares in the Company;

• “Latest Practicable Date”

• 8 January 2010, being the latest practicable date prior to the printing of this circular for the purpose of ascertaining certain information contained in this circular;

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

• “Master Supply Agreement” the master supply agreement entered into between GDC Holdings and GDC Tech on 21 December 2009;

• “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 issued share capital of the Company;

• “Shareholders” the holders of the Shares;

• 2 -

DEFINITIONS

“Special General Meeting” the special general meeting of the Company to be convened at 10:30 a.m. on Friday, 29 January 2010 at Rooms 1101-4, 11th Floor, Harcourt House, 39 Gloucester Road, Wanchai, Hong Kong for the Independent Shareholders to consider and if thought fit, approve the Master Supply Agreement and the relevant cap amounts in relation to the Continuing Connected Transactions or any adjournment thereof; “Stock Exchange” The Stock Exchange of Hong Kong Limited; “US$” United States dollar, the lawful currency of the United States of America; and “%” per cent.

Unless otherwise specified in this circular, translations of RMB into HK$ are made in this circular for illustration only, at the rate of HK$1.00 to RMB0.88. No representation is made that any amounts in RMB or HK$ could have been or could be converted at that rate or at any other rates or at all.

• 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 HM 12 Bermuda

Principal Place of Business in Hong Kong: Rooms 1101-4, 11th Floor Harcourt House 39 Gloucester Road Wanchai Hong Kong

13 January 2010

To the Shareholders

Dear Sir or Madam,

CONTINUING CONNECTED TRANSACTIONS

INTRODUCTION

The Board refers to the announcement of the Company dated 23 December 2009 in relation to the Continuing Connected Transactions.

On 21 December 2009, GDC Holdings and GDC Tech entered into the Master Supply Agreement pursuant to which GDC Tech has agreed to supply digital cinema equipment and related equipment to any subsidiaries and associates of GDC Holdings, a wholly-owned subsidiary of GDC, a subsidiary of the Company.

GDC Tech is an indirect non-wholly owned subsidiary of the Company in which Greater Appeal is interested as to approximately 22.48% in the issued share capital of GDC Tech. As Greater Appeal

• For identification purpose only

• 4 -

LETTER FROM THE BOARD

is ultimately beneficially wholly-owned by Mr. Li Ka-shing, who, together with his associates, is interested as to approximately 11.56% in the issued share capital of the Company, transactions between GDC Tech and GDC Holdings constitute connected transactions for the Company under the Listing Rules.

As the annual amount of the Continuing Connected Transactions is expected to exceed the thresholds provided in Rule 14A.34(1) and (2) of the Listing Rules, the Continuing Connected Transactions will be subject to the reporting, announcement and Independent Shareholders’ approval requirements under Rule 14A.35 of the Listing Rules. Mr. Li Ka-shing and his associates, together with the other minority shareholders of GDC Tech who also hold shares in the Company, will abstain from voting in the Special General Meeting to be convened for the approval of the Continuing Connected Transactions.

The Independent Board Committee, comprising the independent non-executive Directors, has been formed to advise the Independent Shareholders on the terms of the Master Supply Agreement. MUHKC has been appointed as the Independent Financial Adviser to advise the Independent Board Committee on the terms of the Master Supply Agreement and the relevant cap amounts in relation to the Continuing Connected Transactions.

The purposes of this circular are:

• (i) to provide the Shareholders with details of the Master Supply Agreement and the relevant cap amounts in respect of the Master Supply Agreement;

• (ii) to set out the opinion of the Independent Financial Adviser in respect of the Master Supply Agreement and the relevant cap amounts in relation to the Master Supply Agreement;

• (iii) to set out the recommendation of the Independent Board Committee in respect of the Master Supply Agreement and the relevant cap amounts in relation to the Master Supply Agreement; and

• (iv) to give notice of the Special General Meeting to consider and, if thought fit, to approve the Master Supply Agreement and the relevant cap amounts in respect of the Master Supply Agreement.

THE MASTER SUPPLY AGREEMENT

Date: 21 December 2009 Parties: GDC Holdings, a wholly-owned subsidiary of GDC, a subsidiary of the Company; and

GDC Tech, an indirect non-wholly owned subsidiary of both GDC and the Company and a connected person of the Company under the Listing Rules.

• 5 -

LETTER FROM THE BOARD

Subject:

Pursuant to the Master Supply Agreement, GDC Tech will supply digital cinema equipment and related equipment to any subsidiaries and associates of GDC Holdings.

Condition:

The Master Supply Agreement is subject to approval by the Independent Shareholders.

Term:

The Master Supply Agreement has a term expiring on 31 December 2012.

Price: The basis of determining the prices for the Continuing Connected Transactions will be in accordance with: (1) a comparable market price; or (2) by agreement between the parties on an arm’s length basis, if no comparable market price can be taken as a reference.

Payment: Payments for the Continuing Connected Transactions shall be on credit terms to be agreed between the parties in accordance with the normal term of supplies GDC Tech offered to third parties; or such other methods as may be reasonably requested by GDC Tech.

The Directors propose that the cap amounts of the Continuing Connected Transactions under the Master Supply Agreement for each of the three financial years ending 31 December 2012 will not exceed the following cap amounts:

		For the		For the		For the
	financial year		financial year		financial year
		ending		ending		ending
	31 December		31 December		31 December
		2010		2011		2012
		US$’000		US$’000		US$’000
Proposed cap amounts for the
Continuing Connected Transactions		106,424		110,448		86,671

GDC has been engaging in the deployment of digital cinema equipment in the PRC and has sourced products from GDC Tech for that deployment. There has been no previous transaction up to 30 June 2009 with GDC Tech with respect to sales of digital cinema equipment for deployment in Asia (ex PRC).

GDC has reached non-exclusive virtual print fee agreements with five of the six major Hollywood studios for the deployment of digital cinema networks in Asia (ex PRC), and it is anticipated that GDC will be able to deploy approximately 1,250 and 1,450 digital cinema systems for the two years ending 31 December 2011. After the initial period of deployment, it is expected that the pace of the deployment will gradually slow down in 2012. The cap amounts are determined with reference to the anticipated sales volume of digital cinema equipment from GDC Tech to GDC Holdings and/or its subsidiaries and associates for the three financial years ending 31 December 2012.

• 6 -

LETTER FROM THE BOARD

REASONS FOR THE CONTINUING CONNECTED TRANSACTIONS

GDC has reached non-exclusive virtual print fee agreements with five of the six major Hollywood studios for the deployment of digital cinema networks in Asia (ex PRC), of which these studios are committed to supply Asian exhibitors with feature film contents digitally, as well as to make financial contributions towards the hardware cost of digital cinema initiative (“ DCI ”) compliant digital cinema equipment deployed. GDC Tech is principally engaged in the provision of computing solutions for digital content distribution and exhibitions, and the digital cinema equipment it produces are advanced in design and technology and reaches the DCI specifications. The Directors are of the view that it is in the interests of the Company and the Shareholders as a whole to enter into the Master Supply Agreement for GDC Holdings and/or its subsidiaries and associates to purchase digital cinema equipment from GDC Tech for the deployment of the digital cinema networks in Asia (ex PRC).

LISTING RULES IMPLICATIONS

The Directors consider that the Continuing Connected Transactions are of the types that are entered into in the ordinary and usual course of business of the Company on a frequent and regular basis. Therefore, the Directors consider that it would be: (i) impracticable to negotiate for numerous agreements with GDC Tech for the Continuing Connected Transactions; and (ii) too costly and impractical to make regular disclosure of each of the relevant transactions and obtain the prior approval from the Independent Shareholders, as required by the Listing Rules. The Directors (including the independent non-executive Directors) consider the Continuing Connected Transactions will be entered into under normal commercial terms and are fair and reasonable and in the interests of the Group and the Independent Shareholders as a whole.

GDC Tech is owned as to approximately 61.81% by GDC which in turn is a non-wholly owned subsidiary of the Company, as to approximately 22.48% by Greater Appeal and as to approximately 15.71% by the directors and management of GDC Tech and/or GDC. Greater Appeal is ultimately beneficially wholly-owned by Mr. Li Ka-shing, who, together with his associates, is interested as to approximately 11.56% in the issued share capital of the Company. Accordingly, GDC Tech is a connected person of the Company and the abovementioned transactions between GDC Tech and GDC Holdings and/or its subsidiaries and associates constitute continuing connected transactions for the Company under the Listing Rules.

As the annual amount of the Continuing Connected Transactions is expected to exceed the thresholds provided in Rule 14A.34(1) and (2) of the Listing Rules, the Continuing Connected Transactions will be subject to the reporting, announcement and Independent Shareholders’ approval requirements pursuant to Rule 14A.35 of the Listing Rules. The Company will seek approval from the Independent Shareholders of the Master Supply Agreement and the proposed cap amounts in relation to the Continuing Connected Transactions for a term ending on 31 December 2012 on terms in compliance with Rules 14A.37 to 14A.41 of the Listing Rules. Mr. Li Ka-shing and his associates, together with the other minority shareholders of GDC Tech who also hold shares in the Company, will abstain from voting in the Special General Meeting to be convened for the approval of the proposed cap amounts in relation to the Continuing Connected Transactions.

• 7 -

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.

SPECIAL GENERAL MEETING

A notice convening the Special General Meeting is set out on pages 30 to 31 of this circular. The resolutions to be proposed at the Special General Meeting for approving the Master Supply Agreement and the relevant cap amounts in relation to the Continuing Connected Transactions will be taken by poll where Mr. Li Ka-shing and his associates, together with the other minority shareholders of GDC Tech who also hold shares in the Company, are interested in a total of 141,326,717 Shares, representing approximately 12.27% of the issued share capital of the Company as at the Latest Practicable Date, will abstain from voting at the Special General Meeting.

A form of proxy for the Special General Meeting is enclosed herewith. Whether or not you are able to attend the Special General Meeting in person, you are requested to complete the form of proxy and return it to the Company’s Hong Kong branch share registrars and transfer office, Tricor Tengis Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong in accordance with the instructions printed thereon as soon as practicable but in any event no later than 48 hours before the time appointed for holding the Special General Meeting or any adjourned meetings thereof (as the case may be). Completion of the form of proxy will not preclude you from attending and voting at the Special General Meeting or any adjourned meetings thereof (as the case may be) in person should you so wish.

RECOMMENDATION

Your attention is drawn to the letter from the Independent Board Committee set out on page 9 of this circular which contains its recommendation to the Independent Shareholders on the Master Supply Agreement and the relevant cap amounts in relation to the Continuing Connected Transactions. Your attention is also drawn to the letter of advice from the Independent Financial Adviser as set out on pages 10 to 18 of this circular which contains, amongst other matters, its advice to the Independent Board Committee and the Independent Shareholders in relation to the Master Supply Agreement and the relevant cap amounts in relation to the Continuing Connected Transactions. Based on the advice from the Independent Financial Adviser and the Independent Board Committee, the Directors recommend the Independent Shareholders to vote in favor of the relevant resolutions to be proposed at the Special General Meeting.

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

Yours faithfully,

By Order of the Board

Shougang Concord Grand (Group) Limited Cao Zhong

Vice Chairman and Managing Director

• 8 -

LETTER FROM THE 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)

13 January 2010

To the Independent Shareholders

Dear Sir or Madam,

CONTINUING CONNECTED TRANSACTIONS

We refer to the circular of the Company to the Shareholders dated 13 January 2010 (the “ Circular ”), in which this letter forms a part. Unless the context requires otherwise, capitalised terms used in this letter will have the same meanings as defined in the Circular.

We have been appointed by the Board as the Independent Board Committee to advise the Independent Shareholders on whether the terms of the Master Supply Agreement and the relevant cap amounts in relation to the Continuing Connected Transactions are fair and reasonable so far as the Independent Shareholders are concerned and in the interests of the Group and the Shareholders as a whole.

We wish to draw your attention to the letter of advice from Mitsubishi UFJ Securities (HK) Capital, Limited (“ MUHKC ”), the Independent Financial Adviser appointed to advise the Independent Board Committee and the Independent Shareholders on the Master Supply Agreement and the relevant cap amounts in relation to the Continuing Connected Transactions as set out on pages 10 to 18 of the Circular and the letter from the Board as set out on pages 4 to 8 of the Circular.

Having considered, among other things, the factors and reasons considered by, and the opinion of MUHKC as stated in its letter of advice, we consider that the terms of the Master Supply Agreement and the relevant cap amounts in relation to the Continuing Connected Transactions, are entered into on an arm’s length basis and are fair and reasonable so far as the Independent Shareholders are concerned and in the interests of the Group and the Shareholders as a whole. Accordingly, we recommend the Independent Shareholders to vote in favour of the resolutions in relation to the Master Supply Agreement and the relevant cap amounts in relation to the Continuing Connected Transactions to be proposed at the Special General Meeting.

Yours faithfully,

For and on behalf of the Independent Board Committee

Shougang Concord Grand (Group) Limited

Tam King Ching, Kenny

Independent Non-executive Director Zhou Jianhong Yip Kin Man, Raymond Independent Non-executive Director Independent Non-executive Director

* For identification purpose only

• 9 -

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Mitsubishi UFJ Securities

Mitsubishi UFJ Securities (HK) Capital, Limited

13 January 2010

To the Independent Board Committee and the Independent Shareholders

Dear Sirs,

CONTINUING CONNECTED TRANSACTIONS

INTRODUCTION

We refer to our engagement as independent financial adviser to advise the Independent Board Committee and the Independent Shareholders of the Company in respect of the terms of the Master Supply Agreement and the relevant cap amounts in relation to the Continuing Connected Transactions for the three years ending 31 December 2010, 2011 and 2012, particulars of which are set out in the circular (the “ Circular ”) of the Company dated 13 January 2010 and in which this letter is reproduced. Unless the context requires otherwise, capitalised terms used in this letter shall have the same meanings as ascribed to them under the section headed “Definitions” in the Circular.

As set out in the letter from the Board in the Circular (the “ Letter from the Board ”), GDC Holdings and GDC Tech entered into the Master Supply Agreement on 21 December 2009, pursuant to which GDC Tech has agreed to supply digital cinema equipment and related equipment to any subsidiaries and associates of GDC Holdings, a wholly-owned subsidiary of GDC, a subsidiary of the Company. GDC Tech is held as to approximately 22.48% (in terms of the issued share capital) by Greater Appeal, which in turn is ultimately beneficially wholly-owned by Mr. Li Ka-shing, who, together with his associates, is interested as to approximately 11.56% in the issued share capital of the Company. Accordingly, transactions between GDC Tech and GDC Holdings constitute connected transactions for the Company under the Listing Rules. The Continuing Connected Transactions under the Master Supply Agreement will be subject to (amongst others) Independent Shareholders’ approval.

In formulating our opinion, we have relied on the accuracy of the information and representations contained in the Circular and have assumed that all information and representations made or referred to in the Circular were true at the time they were made and continue to be true as at the date of the Circular. We have also relied on our discussion with the management of the Company regarding the Group and the Master Supply Agreement (including the relevant cap amounts), including the information and representations contained in the Circular. We have also assumed that all statements of belief, opinion and intention made by the Directors and the Company in the Circular were reasonably made after due enquiry. We consider that we have reviewed sufficient information to reach an informed view, to justify our reliance on the accuracy of the information contained in the Circular and to provide a reasonable basis for our advice. We have no reason to suspect that any material facts have been omitted or withheld from the information contained or opinions expressed in the Circular nor to doubt

• 10 -

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

the truth, accuracy and completeness of the information and representations provided to us by the Directors. We have not, however, conducted an independent in-depth investigation into the business and affairs of the Group and their respective associates nor have we carried out any independent verification of the information supplied.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our opinion regarding the terms of the Master Supply Agreement (including the relevant cap amounts), we have considered the following principal factors and reasons:

1. Background of, and reasons for, entering into the Master Supply Agreement

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. Upon reviewing the relevant annual reports of the Company, we note that “provision and distribution of cultural recreations content” accounted for approximately 91% and 56% of the total revenue of the Group for the year ended 31 December 2007 and 31 December 2008 respectively.

GDC Tech is principally engaged in the provision of computing solutions for digital content distribution and exhibitions, and the digital cinema equipment it produces are advanced in design and technology and reaches the digital cinema initiative (“ DCI ”) specifications. We summarise below the simplified shareholding structure of GDC Tech:

==> picture [332 x 232] intentionally omitted <==

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

Mr. Li Ka-shing (& his associates)
11.56% 100%
The Company
52.57%
GDC Greater Appeal
100% 61.81% 22.48 %
GDC Holdings GDC Tech
----- End of picture text -----

Master Supply Agreement

• 11 -

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Upon our due diligence review, we note that GDC (through its wholly-owned subsidiaries) has been engaging in the deployment of digital cinema equipment in the PRC pursuant to the co-operation with China Film Group Corporation (“ CFGC ”), and has actually sourced digital cinema equipment from GDC Tech for that deployment. To this end, it comes to our attention that:

• (a) the Company announced earlier on 4 April 2007 that the Group (excluding GDC Tech) purchased four units of digital cinema integrated projection system from GDC Tech for deployment in the PRC pursuant to the co-operation with CFGC (as an one-off connected transaction of the Company); and

• (b) the Company announced earlier on 12 April 2007 that GDC Tech agreed to supply the Company and/or its associates with digital cinema equipment and network management and other related equipment and services under the prior master supply agreement dated 11 April 2007 for the three years ended 31 December 2009 mainly for deployment in the PRC pursuant to the co-operation with CFGC (as the then non-exempt continuing connected transactions of the Company which has now become expired).

In spite of the actual sourcing of digital cinema equipment from GDC Tech for deployment in the PRC since 2007, the Group (excluding GDC Tech) had never sourced any digital cinema equipment from GDC Tech for deployment in Asia (ex PRC) up to 30 June 2009. During late 2008 to 2009, GDC (through its wholly-owned subsidiary) has reached non-exclusive virtual print fee agreements with five of the six major Hollywood studios for the deployment of digital cinema networks in Asia (ex PRC) (together with the satisfaction of relevant condition precedents where applicable). The Group’s (excluding GDC Tech) purchase of digital cinema equipment from GDC Tech under the Master Supply Agreement is intended to fulfill the said deployment purpose.

We have enquired the Company on the availability of any alternative source of digital cinema equipment to the Group (other than from GDC Tech). In response, the Company replied that at present there are only a few key market players in the world which are recognised as being capable of producing digital cinema equipment up to the DCI specifications, and GDC Tech is one of them. As the other key market players are mostly based outside Asia (e.g. in the United States), the pricings of comparable digital cinema equipment produced thereby are expected to be more expensive than those of GDC Tech which is based in Shenzhen and Hong Kong (due to differential in costs such as labour cost in developing vs. developed countries).

We have further enquired the Company on the reason for GDC Tech to supply the digital cinema equipment to the Group (excluding GDC Tech) before onward selling to customers, rather than GDC Tech to sell directly to customers. In response, the Company replied that those multinational giant partners (i.e. Hollywood studios) prefer to sign legal contracts with a listed company or its wholly-owned subsidiary (such as GDC Holdings) rather than with a non-wholly-owned subsidiary of a listed company (such as GDC Tech).

• 12 -

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Given the years’ of historical track record of the purchase transactions from GDC Tech for deployment in the PRC since 2007, we consider that entering into of the Master Supply Agreement can be regarded as a natural extension of the past continuing connected transactions under the prior master supply agreement dated 11 April 2007 for facilitating the Group (excluding GDC Tech) to source competitively-priced supply of digital cinema equipment for deployment (this time in Asia (ex PRC)). We further understand that it is the Group’s (excluding GDC Tech) practice not to initiate purchasing any digital cinema equipment from GDC Tech unless and until any ultimate customer of the Group (namely, those cinemas with contents to be distributed by the Hollywood studios) actually places a concrete sales order to the Group (excluding GDC Tech) on a back-to-back basis. Against the background as stated above, we consider that there is an acceptable rationale for the Group to carry out the Continuing Connected Transactions for the three years ending 31 December 2010, 2011 and 2012.

2. Key terms of the Master Supply Agreement

(i) Pricing and settlement

Pursuant to the Master Supply Agreement,

• (a) the basis of determining the prices for the Continuing Connected Transactions will be in accordance with: (1) a comparable market price; or (2) by agreement between the parties on an arm’s length basis, if no comparable market price can be taken as a reference; and

• (b) payments for the Continuing Connected Transactions shall be on credit terms to be agreed between the parties in accordance with the normal term of supplies GDC Tech offered to third parties; or such other methods as may be reasonably requested by GDC Tech.

Upon our enquiry, we understand from the Company that the Group (excluding GDC Tech) has so far never sourced any digital cinema equipment from independent third party suppliers (other than from GDC Tech). Hence, no invoices for the Group’s (excluding GDC Tech) purchase of digital cinema equipment from independent third party suppliers are made available to us for our comparison.

In this connection, we have resorted to review a total of (i) 2 and (ii) 13 invoices/ contracts for the sale by GDC Tech to (i) the Group (excluding GDC Tech) and (ii) the independent third party customers for the similar digital cinema equipment for the eleven months ended 30 November 2009 (which are considered as representative and reliable samples given the total amounts under those invoices/contracts being reviewed already represent over (i) 75% and (ii) 50% of the total contract sums under all invoices for sale of the similar digital cinema equipment during the same period). Those invoices being reviewed were for sale to (end-)customers located in (i) Hong Kong (2 invoices) and (ii) Taiwan (8 invoices), the PRC (4 contracts) and Russia (1 invoice) and, hence, are comparable geographically as they are mostly within Asia. We have independently compared (a) the

• 13 -

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

unit price levels (such as on a lump-sum basis or on a monthly instalment basis) charged by, and (b) the settlement terms (such as on a 50% upfront deposit basis or on a 100% cash on delivery basis) required by, GDC Tech to (i) the Group (excluding GDC Tech) and to (ii) the independent third party customers. We have also discussed with the Company and obtained confirmation therefrom as to any differential in the length of warranty period imposed by GDC Tech on the digital cinema projector equipment sold to (i) the Group (excluding GDC Tech) and to (ii) the independent third party customers. We have obtained supporting document from the Company on the market rate of annual warranty charged on the digital cinema projector imposed by independent service providers.

According to the relevant invoices/contracts, we note that and have further been reaffirmed by the Company that (a) the unit price levels charged by, and (b) the settlement terms required by, GDC Tech to the Group (excluding GDC Tech) were generally no less favourable to the Company than those offered to independent third party customers (after adjustment for annual warranty charge due to differential in the length of warranty period).

(ii) Annual caps

As set out in the Letter from the Board, we summarise the proposed cap amounts of the Continuing Connected Transactions under the Master Supply Agreement (together with the then cap amounts under the prior master supply agreement dated 11 April 2007) in the table below:

			For the
			eleven
			months
	For the	year ended	ended 30	For the year ending
	31 December		November		31 December
(US$’000)	2007	2008	2009	2010	2011		2012
Proposed cap amounts for purchase
of digital cinema equipment
from GDC Tech	103,0001	104,5001	106,0001	106,4242	110,4482	86,6712
Actual purchase of digital cinema
equipment from GDC Tech	4,5403	03	1,3203
Growth %				+0.4%	+3.8%	–21.5%

• 14 -

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Note:

1. Intended for deployment in the PRC under the prior master supply agreement dated 11 April 2007 pursuant to the co-operation with CFGC.

2. For deployment in Asia (ex PRC) under the Master Supply Agreement dated 21 December 2009 pursuant to the co-operation with major Hollywood studios.

3. Representing the actual historical amount. We note that the actual historical amount was much lower than the then cap amounts under the prior master supply agreement dated 11 April 2007. We understand from the Company it was attributable to a change in the mode of co-operation between CFGC and the Group since late 2007, and GDC Tech turned out to sell the digital cinema equipment directly to cinemas in the PRC which co-operated with CFGC, rather than supplying to the Group (excluding GDC Tech) for deployment in the PRC as originally intended.

For the purpose of assessing whether the proposed cap amounts for the three years ending 31 December 2012 are justifiable, we analyse the basis of arriving at the same in terms of two constituting components, namely “quantity” x “price”:

� Quantity

As set out in the Letter from the Board, the cap amounts are determined with reference to the anticipated sales volume of digital cinema equipment from GDC Tech to GDC Holdings and/or its subsidiaries and associates for the three financial years ending 31 December 2012. Upon our enquiry, we understand from the Company that such anticipated sales volume is derived on a back-to-back basis in accordance with the maximum roll-out number of projection systems of approximately 5,200 units as signed under the virtual print fee agreements with the five major Hollywood studios for the Group’s deployment of digital cinema networks in Asia (ex PRC). The said 5,200 units as signed are not exclusive for the Group. Notwithstanding that, we understand from the Company such number of units are negotiated based on the existing number of cinemas in Asia (ex PRC) and are realistic target agreed by the five major Hollywood studios, which in turn are independent third parties of the Group.

As set out in the Letter from the Board, it is anticipated that GDC will be able to deploy approximately 1,250 and 1,450 digital cinema systems for the two years ending 31 December 2011. We understand from the Company that such anticipated annual level is roughly derived from the total maximum roll-out number of projection systems of approximately 5,200 units as divided by a total duration of five years (which duration was explicitly signed under the virtual print fee agreements with the major Hollywood studios). After the initial period of deployment, it is expected that the pace of the deployment will gradually slow down in 2012. We understand from the Company that GDC is anticipated to deploy approximately 1,130 digital cinema systems for the year ending 31 December 2012.

• 15 -

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

We have enquired the Company on the production capacity constraint (in terms of production line capacity, number of headcounts, research and development resource, etc) for GDC Tech to fulfill its projected output of 1,250, 1,450 and 1,130 digital cinema systems for the three years ending 31 December 2010, 2011 and 2012. We understand from the Company that the said projected output is within the existing production capacity of GDC Tech, let alone the planned expansion of office of GDC Tech both in Hong Kong and Shenzhen in 2010. For comparison purpose, we understand from the Company that GDC Tech has managed to actually produce and sell for more than 1,000 digital cinema equipment for the ten months ended 31 October 2009.

As far as industry overview on digital cinema market is concerned, we note that according to researchandmarkets.com (being an international market researcher based in Ireland) and our discussion with the Company:

• (a) More than 17,000 d-cinema screens is forecast in the world by 2010;

• (b) North America is the leading region for d-cinema screens, followed by Europe and Asia; and

• (c) Hollywood would drive the market forward and the key factors in the switch to digital cinema are cost savings to distributors, the economic imperative of controlling piracy and the need to maintain the experience gap with regard to home cinema and HDTV.

• Price

We have reviewed invoices/contracts for the sale by GDC Tech to (i) the Group (excluding GDC Tech) and (ii) the independent third party customers for the similar digital cinema equipment in 2009. According to the relevant invoices/contracts, we note that and have further been reaffirmed by the Company that the anticipated unit price levels to be charged by GDC Tech to the Group (excluding GDC Tech) for the purpose of arriving at the annual cap amounts under the Continuing Connected Transactions were generally no less favourable to the Company than those actually offered to independent third party customers (after adjustment for annual warranty charge due to differential in the length of warranty period).

We further note that the anticipated unit price levels to be charged by GDC Tech to the Group (excluding GDC Tech) for the same purpose have been allowed for a year-on-year reduction of about 10% for the year ending 31 December 2011, which serves as a buffer for reduction of hardware costs of the digital cinema equipment. We understand that no similar allowance has been assigned for the year ending 31 December 2012 because the pricing of the digital cinema equipment concerned is expected to be stabilised after 2011 (as such equipment is expectedly enjoying a temporarily higher pricing in 2010 due to the recent launch of its new model in the market).

• 16 -

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Based on the foregoing, we consider that the proposed cap amounts (based on “quantity” x “price”) under the Continuing Connected Transactions have been arrived at on an acceptable and pre-determined basis.

We note that each of the proposed cap amounts under the Continuing Connected Transactions for the three years ending 31 December 2012 represents approximately 269%, 280% and 219% of the total revenue of the Group for the latest financial year ended 31 December 2008 respectively. Despite the significant size of such proposed cap amount, we envisage that

• (a) the proposed cap amounts under the Continuing Connected Transactions was passively dictated and derived on a back-to-back basis from the agreements signed with the five major Hollywood studios, which in turn are independent third parties of the Group; and

• (b) the proposed Continuing Connected Transactions between GDC Holdings and GDC Tech represent an intra-group transaction with a non-wholly-owned subsidiary of the Group, which can be eliminated upon consolidation on group basis (subject to minority interests).

3. Conditions

Pursuant to the Listing Rules, the Company will seek the approval by the Independent Shareholders of the Master Supply Agreement for the three years ending 31 December 2012 subject to the following conditions:

• (a) The transactions contemplated under the Master Supply Agreement will be:

• (1) entered into in the ordinary and usual course of the business of the Group;

• (2) conducted on normal commercial terms or, if there are no sufficient comparable transactions to judge whether they are on normal commercial terms, on terms no less favourable to the Company than terms available from independent third parties; and

• (3) entered into in accordance with the terms of the Master Supply Agreement that are fair and reasonable and in the interests of the Shareholders as a whole;

• (b) The transacted amount of the transactions under the Master Supply Agreement shall not exceed the relevant cap amounts; and

• (c) The Company will comply with all other relevant requirements under the Listing Rules.

• 17 -

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Taking into account of the conditions attached to the Master Supply Agreement, in particular, (i) the ways of setting the relevant annual caps; and (ii) the compliance with all other relevant requirements under the Listing Rules (which include the annual review and/or confirmation by the independent non-executive Directors and auditors of the Company on the actual execution of the continuing connected transactions pursuant to Rule 14A.37 and Rule 14A.38 of the Listing Rules), we consider that the Company has taken appropriate measures to govern the Company in carrying out the Continuing Connected Transactions, with a view to safeguarding the interests of the Shareholders thereunder.

RECOMMENDATION

Having considered the principal factors and reasons, we are of the opinion that the terms of the Master Supply Agreement (including the relevant cap amounts) are on normal commercial terms, in the ordinary course of business of the Group, fair and reasonable and in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Shareholders, and we recommend the Independent Board Committee to advise the Independent Shareholders, to vote in favour of the ordinary resolutions to be proposed at the Special General Meeting for approving the Master Supply Agreement (including the relevant cap amounts).

Yours faithfully, For and on behalf of

Mitsubishi UFJ Securities (HK) Capital, Limited Harry Yu Executive Director

• 18 -

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 the shares and underlying shares of the Company

Capacity in which interests Name of Director are held	Percentage of total interests Number of shares/underlying as to the shares held in the Company issued share Interests capital Interests under equity Total of the in shares derivatives interests Company*
Wang Qinghai Beneficial owner Cao Zhong Beneficial owner Chen Zheng Beneficial owner Wang Tian Beneficial owner Yuan Wenxin Beneficial owner Leung Shun Sang, Tony Beneficial owner Tam King Ching, Kenny Beneficial owner Zhou Jianhong Beneficial owner Yip Kin Man, Raymond Beneficial owner	– 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% 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%

• 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, Shares are issuable. The share options are personal to the respective Directors.

• 19 -

GENERAL INFORMATION

APPENDIX

• (ii) Long positions in the shares and underlying shares of GDC, an associated corporation of the Company

Capacity in which interests Name of Director are held	Percentage of Number of shares/underlying total interests shares held in GDC as to the Interests issued share Interests under equity Total capital in shares derivatives interests of GDC*
Cao Zhong Beneficial owner 26,942,200 4,900,000 31,842,200 2.46% Chen Zheng Beneficial owner 8,718,200 4,900,000 13,618,200 1.05% Wang Tian Beneficial owner 820 – 820 0.00% Leung Shun Sang, Tony Beneficial owner 20,008,200 4,900,000 24,908,200 1.92% Zhou Jianhong Beneficial owner 500,615 – 500,615 0.04%

• 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.

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

Capacity in which interests Name of Director are held	Percentage of Number of shares/underlying total interests shares held in GDC Tech as to the Interests issued share Interests under equity Total capital of in 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 4.36% 8,533,334 1,650,000 10,183,334 4.36% 2,130,000 1,650,000 3,780,000 1.62%

• 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$0.10 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 of the Company referred to therein; or (c) pursuant to the Model Code, to be notified to the Company and the Stock Exchange.

• 20 -

GENERAL INFORMATION

APPENDIX

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).

(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 of
	businesses were considered to	the entity which were
	compete or likely to	considered to compete or	Nature of interest
	compete with the	likely to compete with the	of the Director
Name of 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 (Hong Kong)	Property investment	Director
	Limited (“Shougang Holding”)#

• Such businesses may be carried out through the subsidiaries or associates of the entity concerned or by way of other forms of investments.

• 21 -

GENERAL INFORMATION

APPENDIX

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.

3. SUBSTANTIAL SHAREHOLDERS

• (a) As at the Latest Practicable Date, according to the register kept by the Company pursuant to Section 336 of the 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

			Percentage of
			interests as to
		Number of	the issued share
	Capacity in which	shares held in	capital of
Name of Shareholder	interests are held	the Company	the Company	Note(s)
Shougang Holding	Interests of controlled	489,450,710	42.50%	1
	corporations
Wheeling Holdings Limited	Beneficial owner	430,491,315	37.38%	1
(“Wheeling”)
Prime Success	Beneficial owner	58,959,395	5.12%	1
Investments Limited
(“Prime Success”)
Cheung Kong (Holdings)	Interests of controlled	133,048,717	11.55%	2, 3
Limited (“Cheung Kong”)	corporations
Max Same Investment	Beneficial owner	91,491,193	7.94%	2
Limited (“Max Same”)
Li Ka-shing	Interests of controlled	133,048,717	11.55%	3
	corporations, founder of
	discretionary trusts
Li Ka-Shing Unity	Trustee	133,048,717	11.55%	3
Trustee Company Limited
(“TUT1”)
Li Ka-Shing Unity	Trustee, beneficiary	133,048,717	11.55%	3
Trustee Corporation	of a trust
Limited (“TDT1”)
Li Ka-Shing Unity	Trustee, beneficiary	133,048,717	11.55%	3
Trustcorp Limited	of a trust
(“TDT2”)

• 22 -

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 KaShing 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.

• (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:

			% of
Name of registered	Name of	Name of member	attributable
shareholder(s)	beneficial owner	of the Group	interest
Zhou Lin	Zhou Lin	四方源創國際影視文化傳播(北京)有限公司	20.00%
		(Concord Creation International (Beijing)
		Company Limited) (“Concord Creation*”)
Yang Yong	Yang Yong	廣東四方源創動畫製作有限公司	20.00%
		(Concord Creation Animation Production
		Guangdong Company Limited*)
		(“Guangdong Creation”)
Concord Creation	Zhou Lin	Guangdong Creation	16.00%
			(Note 1)
Concord Creation	Zhou Lin	東陽市四方源創影視製作有限公司	20.00%
		(Dongyang Concord Creation	(Note 2)
		Film@TV Company Limited*)
		(“Dongyang Concord Creation”)

* For identification purpose only

• 23 -

GENERAL INFORMATION

APPENDIX

			% of
Name of registered	Name of	Name of member	attributable
shareholder(s)	beneficial owner	of the Group	interest
Cao Zhong and Zhou Lin	Zhou Lin	東陽方源影視製作有限公司	20.00%
		(Dongyang Creation	(Note 3)
		Film@TV Company Limited*)
		(“Dongyang Creation”)
Guangdong Creation and	Zhou Lin	杭州四方源創動畫製作有限公司	16.00%
Chen Zheng		(Concord Creation Animation Production	(Note 4)
		Hangzhou Company Limited*)
		(“Hangzhou Creation”)
Guangdong Creation and	Yang Yong	Hangzhou Creation	20.00%
Chen Zheng			(Note 5)
Greater Appeal	Greater Appeal	GDC Tech	22.47%
GDC Tech	Greater Appeal	GDC Technology Pte Ltd	22.47%
			(Note 6)
GDC Tech	Greater Appeal	GDC Technology China Limited	22.47%
			(Note 6)
GDC Tech	Greater Appeal	GDC Technology (Hong Kong) Limited	22.47%
			(Note 6)
GDC Tech	Greater Appeal	GDC Technology (USA), LLC	22.47%
			(Note 6)
Chen Zheng and	Greater Appeal	深圳市環球數碼科技有限公司	22.47%
環球數碼媒體		(“Shenzhen GDC Tech”)	(Note 7)
科技研究(深圳)有限公司
(Institute of Digital
Media Technology
(Shenzhen) Limited*)
(“Shenzhen IDMT”)
Shenzhen GDC Tech	Greater Appeal	北京科創環球數碼技術有限公司	22.47%
		(“Beijing GDC Tech”)	(Note 8)
天津渤海灣投資管理	Beihai Investment	天津首方投資管理有限公司	10.00%
有限公司		(Tianjin Capital Steel
(Tianjin Beihai Bay		Investment Management
Investment Management		Company Limited*)
Company Limited*)
(“Beihai Investment”)

• For identification purpose only

• 24 -

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 Concord Creation was held as to 90.00% by Concord Creation. As Concord Creation was beneficially held as to 20.00% by Zhou Lin, Dongyang Concord 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 Concord Creation through another nominee, Zhou Lin has an aggregate interest of 20.00% in Dongyang Concord Creation.

3. Dongyang Creation was beneficially held as to 100.00% by Concord Creation which included its beneficial interests of 80.00% and 20.00% held in Dongyang Creation through its nominees, Cao Zhong and Zhou Lin, respectively. As Concord Creation was beneficially held as to 20.00% by Zhou Lin, Dongyang Creation was deemed to be held as to 20.00% 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 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.

5. 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.

6. Each of GDC Technology Pte Ltd, GDC Technology China Limited, GDC Technology (Hong Kong) Limited and GDC Technology (USA), LLC was held as to 100.00% by GDC Tech. As GDC Tech was held as to 22.47% by Greater Appeal, each of GDC Technology Pte Ltd, GDC Technology China Limited, GDC Technology (Hong Kong) Limited and GDC Technology (USA), LLC was deemed to be held as to 22.47% by Greater Appeal.

7. Shenzhen GDC Tech was beneficially held as to 100.00% by GDC Tech which included its beneficial interests of 51.00% and 49.00% held in Shenzhen GDC Tech through its nominees, Chen Zheng and Shenzhen IDMT, respectively. As GDC Tech was held as to 22.47% by Greater Appeal, Shenzhen GDC Tech was deemed to be held as to 22.47% by Greater Appeal.

8. Beijing GDC Tech was beneficially held as to 100.00% by Shenzhen GDC Tech. As Shenzhen GDC Tech was deemed to be beneficially held as to 22.47% by Greater Appeal, Beijing GDC Tech was deemed to be held as to 22.47% by Greater Appeal.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors nor the chief executive of the Company was aware of any other person or corporation who had an interest or short position in the shares or underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who/which 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, or any options in respect of such capital.

• 25 -

GENERAL INFORMATION

APPENDIX

4. MATERIAL CONTRACTS

The following material contracts (not being contracts entered into in the ordinary course of business) had been entered into by the Group within the two years preceding the date of this circular and up to the Latest Practicable Date:

• (i) the agreement dated 30 January 2009 entered into between 天津首方投資管理有限公司 (Tianjin Capital Steel Investment Management Company Limited) (“ Tianjin Capital Steel ”, a 90% indirect subsidiary of the Company) and 中國東方資產管理公司石家莊辦事 處 (China Orient Asset Management Corporation Shijiazhuang Branch) (the “ Vendor ”) in relation to the acquisition by Tianjin Capital Steel of non-performing loans extended to 河北長天集團有限公司 (Hebei Chang Tian Group Limited) (“ Chang Tian* ”) and interests accrued thereon with a carrying amount of approximately RMB41.5 million (equivalent to approximately HK$47.1 million) for a consideration of RMB9 million (equivalent to approximately HK$10.2 million);

• (ii) the agreement dated 30 January 2009 entered into between Tianjin Capital Steel and the Vendor in relation to the acquisition by Tianjin Capital Steel of the non-performing loans extended to 河北劉伶醉酒廠 (Hebei Liu Ling Zui Distillery*), an enterprise established in the PRC and a wholly-owned subsidiary of Chang Tian, and interests accrued thereon with a carrying amount of approximately RMB66.5 million (equivalent to approximately HK$75.6 million) for a consideration of RMB19 million (equivalent to approximately HK$21.6 million);

• (iii) the agreement dated 9 January 2009 entered into between Shenzhen IDMT, a wholly foreign owned enterprise established in the PRC and an indirect non-wholly owned subsidiary of the Company, and 中國電影集團公司 (China Film Group Corporation) (“ China Film ”) in relation to the disposal of 445 units of digital cinema equipments by Shenzhen IDMT to China Film for cash at a total consideration of RMB223,791,600 (equivalent to approximately HK$254 million);

• (iv) the agreement dated 23 December 2008 entered into between GDC Holdings, an indirect non-wholly owned subsidiary of the Company, Southern International Limited (“ Southern International ”) and Keen Front Group Limited in relation to the granting of the facility of RMB100 million (equivalent to approximately HK$113.6 million) by GDC Holdings and/or its designated company to Southern International, and the granting of call options by Southern International to GDC Holdings and/or its designated company;

• (v) the supplemental agreement dated 22 September 2008 entered into between Shougang GDC Media Holding Limited, an indirect non-wholly owned subsidiary of the Company, and China Film, in relation to the sale of digital cinema equipments to 中影首鋼環球數 碼數字影院建設(北京)有限公司 (CFGDC Digital Cinema Company Limited), which was subsequently agreed to be terminated by both parties on 28 November 2008;

• For identification purpose only

• 26 -

GENERAL INFORMATION

APPENDIX

• (vi) the share transfer agreement dated 20 August 2008 entered into between 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, and 深 圳市嘉殷達投資有限公司 (Shenzhen Jiayinda Investment Company Limited) (“ Shenzhen Jiayinda ”), in respect of the transfer of 20% equity interest in the registered capital of South China International Leasing Co., Ltd. from Shenzhen Jiayinda to Capital Steel Investment (China) Ltd. at a consideration of RMB31,755,150 (equivalent to approximately HK$36.1 million); and

• (vii) the co-operation agreement dated 12 August 2008 entered into between the Company and 中國光大投資管理公司 (China Everbright Investment Management Corporation) for 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.

Save as disclosed above, the Company has not entered into any material contracts (not being contracts entered into in the ordinary course of business) within the two years immediately preceding the date of this circular which are or may be material.

5. 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 ”), an indirect non-wholly owned 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.

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, and claim 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.

• For identification purpose only

• 27 -

GENERAL INFORMATION

APPENDIX

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

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.

6. EXPERT AND CONSENT

Name

Qualification

MUHKC

registered institution to carry out Type 1 (dealing in securities), Type 4 (advising on securities) and Type 6 (advising on corporate finance) of the regulated activities under the SFO

MUHKC 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.

As at the Latest Practicable Date, MUHKC 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 2008, 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. MATERIAL ADVERSE CHANGE

The Directors are not aware of any material adverse changes in the financial or trading position or prospects of the Group since 31 December 2008, being the date to which the latest published audited accounts of the Group were made up.

8. MISCELLANEOUS

• (a) The registered office of the Company is at Canon’s Court, 22 Victoria Street, Hamilton HM 12, 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, who is 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 English text of this circular shall prevail over the Chinese text.

• 28 -

GENERAL INFORMATION

APPENDIX

9. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection during normal business hours 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 from the date of this circular up to and including 29 January 2010:

• (a) the bye-laws of the Company;

• (b) the material contracts referred to under the section headed “Material Contracts” in this appendix;

• (c) the written consent referred to under the section headed “Expert and Consent” in this appendix;

• (d) the annual reports of the Company for years ended 31 December 2007 and 31 December 2008 and the interim report of the Company for the six months ended 30 June 2009;

• (e) the Master Supply Agreement;

• (f) the circulars of the Company dated:

• (i) 23 January 2009 in relation to the granting of the facility, the cap amount for the exercise of the call option and the disposal of the disposal equipment by Shenzhen IDMT to China Film;

• (ii) 24 April 2009 in relation to the cap amount for the construction of the building;

• (iii) 17 September 2009 in relation to the finance lease arrangement; and

• (iv) 6 November 2009 in relation to the aircrafts finance lease arrangement; and

• (g) this circular.

• 29 -

NOTICE OF SPECIAL GENERAL MEETING

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

(Incorporated in Bermuda with limited liability)

(Stock Code: 730)

NOTICE IS HEREBY GIVEN that a special general meeting of Shougang Concord Grand (Group) Limited (the “ Company ”) will be held at 10:30 a.m. on Friday, 29 January 2010 at Rooms 1101-4, 11th Floor, Harcourt House, 39 Gloucester Road, Wanchai, Hong Kong for the purpose of considering and, if thought fit, passing with or without amendments, the following resolutions as ordinary resolutions of the Company:

ORDINARY RESOLUTIONS

“ THAT

• (a) the master supply agreement dated 21 December 2009 (the “ Master Supply Agreement ”) entered into between GDC Holdings Limited (“ GDC Holdings ”) and GDC Technology Limited (“ GDC Tech ”), pursuant to which GDC Tech has agreed to supply digital cinema equipment and related equipment to any subsidiaries and associates of GDC Holdings, a wholly-owned subsidiary of GDC, a subsidiary of the Company, a copy of the Master Supply Agreement is tabled at the meeting and marked “ A ” and initialled by the chairman of the meeting for identification purpose, be and is hereby confirmed, approved and ratified;

• (b) the cap amounts in respect of the Master Supply Agreement as set out in the circular of the Company dated 13 January 2010 for each of the three financial years ending 31 December 2012 be and are hereby confirmed and approved; and

• (c) any one director of the Company, or any two directors of the Company if the affixation of the common seal is necessary and if and where required, be and is/are hereby authorised for and on behalf of the Company to execute all such other documents, instruments and agreements and to do all such acts or things deemed by him/her/them to be incidental to, ancillary to or in connection with the transactions contemplated in the Master Supply Agreement and to give effect to the Master Supply Agreement.”

By Order of the Board

Shougang Concord Grand (Group) Limited Cao Zhong

Vice Chairman and Managing Director

Hong Kong, 13 January 2010

• For identification purpose only

• 30 -

NOTICE OF SPECIAL GENERAL MEETING

Notes:

1. Any member entitled to attend and vote at the meeting is entitled to appoint one or more proxies to attend and vote instead of him. Only a member of the Company may be appointed to act as a proxy.

2. The instrument appointing a proxy shall be in writing under the hand of the appointer or his/her attorney duly authorised in writing or, if the appointer is a corporation, either under its common seal or under the hand of any officer or attorney duly authorised to sign the same.

3. In order to be valid, a form of proxy together with the power of attorney or other authority (if any) under which it is signed or a notarially certified copy of that power or authority must be deposited with the Company’s Hong Kong branch share registrars and transfer office, Tricor Tengis Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong, not less than 48 hours before the time fixed for holding the meeting or any adjourned meeting thereof (as the case may be).

4. Completion and return of the form of proxy will not preclude a member from attending and voting in person at the meeting or any adjourned meeting thereof (as the case may be) should they so wish, and in such event, the form of proxy shall be deemed to be revoked.

5. Where there are joint registered holders of any share, any one of such joint holders may vote at the meeting, either in person or by proxy, in respect of such shares as if he/she was solely entitled thereto, but if more than one of such joint holders are present at the meeting, whether in person or by proxy, that one of the said persons so present whose name stands first on the register of members in respect of such shares shall be accepted to the exclusion of the votes of the other registered holders.

6. 31 -