LIPPO LIMITED 力寶有限公司

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, other licensed corporation, bank manager, solicitor, professional accountant or other

professional adviser.

If you have sold or transferred all your shares in Lippo Limited, you should at once hand this circular and the

accompanying 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.

This circular is being provided to you solely for the purpose of considering the resolution to be voted upon at the

extraordinary general meeting of Lippo Limited. This circular is for information purposes only and does not constitute

and is not an offer to sell or the solicitation of an offer to buy any securities in the United States or elsewhere. The

securities have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the

‘‘U.S. Securities Act’’) and may not be offered or sold in the United States absent registration under the U.S. Securities

Act or an exemption from registration. There will be no public offering of any of these securities in the United States.

LIPPO LIMITED

力寶有限公司(Incorporated in Hong Kong with limited liability)

(Stock Code: 226)

VERY SUBSTANTIAL DISPOSAL

PROPOSED DISPOSAL OF THE

ENTIRE ISSUED SHARE CAPITAL OF TECWELL LIMITED

AND

NOTICE OF EXTRAORDINARY GENERAL MEETING

A letter from the Board is set out on pages 5 to 15 of this circular. A notice convening the extraordinary general

meeting of Lippo Limited to be held at Harcourt Room, Lower Lobby, Conrad Hong Kong, Pacific Place,

88 Queensway, Hong Kong on Tuesday, 3rd December, 2013 at 11 : 00 a.m. (or so soon thereafter as the

extraordinary general meeting of Lippo China Resources Limited convened for 10 : 45 a.m. on the same date shall

have been concluded or adjourned) or any adjourned meeting thereof to approve matters referred to in this circular

is set out on pages 85 and 86 of this circular.

A form of proxy for use at the extraordinary general meeting is accompanied herewith. Whether or not you are able

or intend to attend the extraordinary general meeting, you are requested to complete and return the accompanying

form of proxy in accordance with the instructions printed thereon to the registered office of Lippo Limited at

24th Floor, Tower One, Lippo Centre, 89 Queensway, Hong Kong as soon as possible but in any event not less than

48 hours before the time appointed for the holding of the extraordinary general meeting or any adjourned meeting

thereof. Completion and return of the form of proxy shall not preclude shareholders from attending and voting in

person at the extraordinary general meeting or any adjourned meeting thereof should they so desire.

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

18th November, 2013

Page

Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Appendix I — Financial information of the Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Appendix II — Financial information of the Tecwell Group . . . . . . . . . . . . . . . . . . . . 40

Appendix III— Unaudited pro forma financial information

of the Remaining Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

Appendix IV — Property valuation report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65

Appendix V — General information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71

Notice of Extraordinary General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85

CONTENTS

In this circular, unless the context requires otherwise, the following terms and

expressions shall have the following meanings:

‘‘Announcement’’ the joint announcement of the Company and LCR dated

16th October, 2013 in relation to the Disposal;

‘‘associates’’ has the same meaning as defined in the Listing Rules;

‘‘Board’’ the board of Directors;

‘‘Business Day’’ a day (other than Saturday, Sunday or any day during which

typhoon no. 8 signal (or above) or black rainstorm warning is

hoisted and not lowered by 12 : 00 noon on that day) on which

commercial banks in Hong Kong and Singapore are open for the

transaction of general banking business by members of the

public;

‘‘Company’’ Lippo Limited 力寶有限公司, a company incorporated in Hong

Kong with limited liability whose shares are listed on the Main

Board of the Stock Exchange;

‘‘Completion’’ completion of the Disposal subject to and pursuant to the terms

and conditions of the Disposal Agreement;

‘‘Completion Date’’ the date of Completion, which shall be the Listing Date;

‘‘Conditional Special

Dividend’’

subject to, among others, Completion, the cash dividend of

HK3.5 cents per share of LCR to be approved and paid by LCR

to LCR’s shareholders following Completion;

‘‘Conditions Precedent’’ the conditions precedent to the completion of the Disposal

Agreement;

‘‘connected person(s)’’ has the meaning ascribed to such term under the Listing Rules;

‘‘Consideration’’ the consideration for the sale and purchase of the Sale Shares;

‘‘Directors’’ directors of the Company;

‘‘Disposal’’ the disposal of the Sale Shares, representing the entire issued

share capital of Tecwell, pursuant to the Disposal Agreement;

‘‘Disposal Agreement’’ the agreement dated 16th October, 2013 entered into by LCR and

the Purchaser in respect of the Disposal;

‘‘EGM’’ an extraordinary general meeting of the Company to be

convened on Tuesday, 3rd December, 2013 to consider and, if

thought fit, to approve the Disposal Agreement and the

Disposal;

DEFINITIONS

– 1 –

‘‘Extended Long Stop

Date’’

a date no later than 30th June, 2014 or such later date as the

parties may mutually agree in writing;

‘‘Group’’ the Company and its subsidiaries;

‘‘HKC’’ Hongkong Chinese Limited (香港華人有限公司*), a company

incorporated in Bermuda whose shares are listed on the Main

Board of the Stock Exchange and an approximately 56.12%

subsidiary of the Company;

‘‘HKFRS’’ the Hong Kong Financial Reporting Standards;

‘‘Hong Kong’’ the Hong Kong Special Administrative Region of the PRC;

‘‘Joint Venture’’ Lippo ASM Asia Property Limited, which is jointly controlled by

an indirect wholly-owned subsidiary of HKC and Admiralty

Station Management Limited;

‘‘Lanius’’ Lanius Limited;

‘‘Latest Practicable

Date’’

15th November, 2013, being the latest practicable date prior to

the printing of this circular for ascertaining certain information

contained in this circular;

‘‘LCR’’ Lippo China Resources Limited 力寶華潤有限公司, a company

incorporated in Hong Kong with limited liability whose shares

are listed on the Main Board of the Stock Exchange and an

approximately 71.24% indirect subsidiary of the Company;

‘‘LCR Group’’ LCR and its subsidiaries;

‘‘Lippo Capital’’ Lippo Capital Limited;

‘‘Listing Date’’ the date on which the units of OUE Commercial Trust are listed

and commence trading on the SGX-ST;

‘‘Listing Rules’’ or

‘‘Rule’’

the Rules Governing the Listing of Securities on the Stock

Exchange;

‘‘Long Stop Date’’ 28th February, 2014;

‘‘LRSL’’ 力寶置業（上海）有限公司 (Lippo Realty (Shanghai) Limited), a

company established under the laws of the PRC which is wholly

owned by Tecwell, an indirect wholly-owned subsidiary of LCR;

‘‘Model Code’’ Model Code for Securities Transactions by Directors of Listed

Issuers, as set out in Appendix 10 to the Listing Rules;

DEFINITIONS

– 2 –

‘‘NAV’’ net asset value, computed based on total assets less total

liabilities, which shall exclude any amount due from/to the

shareholders;

‘‘OUE’’ OUE Limited (formerly known as Overseas Union Enterprise

Limited), a company incorporated in the Republic of Singapore

with limited liability and listed on the Main Board of the

SGX-ST, which is a joint venture of HKC;

‘‘OUE Commercial

Trust’’

OUE Commercial Trust constituted under the laws of the Republic

of Singapore which shall invest mainly in commercial properties

and which units are proposed to be listed on the SGX-ST;

‘‘PRC’’ the People’s Republic of China;

‘‘Property’’ collectively, the 36-storey commercial building named as ‘‘Lippo

Plaza’’ located at No. 222 Huaihai Zhong Road, Huangpu

District, Shanghai, the PRC, excluding Unit 2 on Basement 1,

12th, 13th, 15th and 16th Floors and 4 car parking spaces Nos.

15, 16, 17 and 26, with a total gross floor area of approximately

58,521.54 square metres;

‘‘Purchaser’’ OUE Eastern Limited, a company incorporated in the British

Virgin Islands with limited liability, which is a wholly-owned

subsidiary of OUE Commercial Trust;

‘‘RHL’’ RHL Appraisal Limited, an independent valuer;

‘‘Remaining Group’’ the Group other than the Tecwell Group immediately after

Completion;

‘‘Sale Shares’’ 100 ordinary shares of US$1.00 each in, representing the entire

issued share capital of, Tecwell;

‘‘SFO’’ Securities and Futures Ordinance, Chapter 571 of the Laws of

Hong Kong;

‘‘SGX-ST’’ Singapore Exchange Securities Trading Limited;

‘‘Share(s)’’ ordinary share(s) of HK$0.10 each in the issued share capital of

the Company;

‘‘Shareholder(s)’’ holder(s) of the Share(s);

‘‘Stock Exchange’’ The Stock Exchange of Hong Kong Limited;

DEFINITIONS

– 3 –

‘‘Tecwell’’ Tecwell Limited, a company incorporated in the British Virgin

Islands with limited liability and an indirect wholly-owned

subsidiary of LCR;

‘‘Tecwell Group’’ Tecwell and its subsidiary, namely, LRSL;

‘‘A$’’ Australia dollars, the lawful currency of Australia;

‘‘C$’’ Canadian dollars, the lawful currency of Canada;

‘‘HK$’’ Hong Kong dollars, the lawful currency of Hong Kong;

‘‘RMB’’ Renminbi, the lawful currency of the PRC;

‘‘Rp’’ Indonesian rupiahs, the lawful currency of the Republic of

Indonesia;

‘‘S$’’ Singapore dollars, the lawful currency of the Republic of

Singapore;

‘‘THB’’ Thai Baht, the lawful currency of Thailand;

‘‘US$’’ United States dollars, the lawful currency of the United States of

America; and

‘‘%’’ per cent.

* for identification purpose

Note: (1) For use in this circular and for illustration purposes only, conversion of RMB into HK$ is based on

an approximate exchange rate of RMB1.00 to HK$1.26124. No representation is made that any

amount in RMB to HK$ could be converted at such rate or any other rates.

(2) If there is any inconsistency between the Chinese name of the PRC entities mentioned in this circular

and its English translation, the Chinese version shall prevail.

DEFINITIONS

– 4 –

LIPPO LIMITED


(Stock Code: 226)

Executive Directors:

Mr. Stephen Riady (Chairman)

Mr. John Luen Wai Lee, BBS, JP

(Managing Director and Chief Executive Officer)

Mr. Jark Pui Lee, SBS, OBE, JP

Non-executive Director:

Mr. Leon Nim Leung Chan

Independent Non-executive Directors:

Mr. Edwin Neo

Mr. Victor Ha Kuk Yung

Mr. King Fai Tsui

Registered Office:

24th Floor

Tower One

Lippo Centre

89 Queensway

Hong Kong

18th November, 2013

To the Shareholders

Dear Sir or Madam,

VERY SUBSTANTIAL DISPOSAL

PROPOSED DISPOSAL OF THE

ENTIRE ISSUED SHARE CAPITAL OF TECWELL LIMITED

AND


INTRODUCTION

Reference is made to (i) the Announcement; and (ii) the announcement of the

Company dated 4th November, 2013 in relation to the change in use of proceeds from the

Disposal. On 16th October, 2013, the Company announced that, LCR and the Purchaser

entered into the Disposal Agreement, pursuant to which LCR conditionally agreed to

procure the sale of, and the Purchaser conditionally agreed to purchase, the Sale Shares,

LETTER FROM THE BOARD

– 5 –

representing the entire issued share capital of Tecwell, for the Consideration of

approximately HK$843.5 million (subject to adjustment, if any), which shall be satisfied

in cash on the Completion Date.

Tecwell is an indirect wholly-owned subsidiary of LCR which in turn is an indirect

subsidiary of the Company. LRSL, being the owner of the Property, is a wholly-owned

subsidiary of Tecwell.

As one or more of the applicable percentage ratios in respect of the Disposal as

calculated under Rule 14.07 of the Listing Rules exceeds 75%, the Disposal constitutes a

very substantial disposal for the Company under the Listing Rules which is subject to the

reporting, announcement and shareholders’ approval requirements.

The purpose of this circular is to provide, among other things, (i) the details of the

Disposal; (ii) financial information of the Group; (iii) financial information of the Tecwell

Group; (iv) unaudited pro forma financial information of the Remaining Group; (v) the

valuation report of the Property; and (vi) a notice of the EGM.

THE DISPOSAL AGREEMENT

Date: 16th October, 2013

Parties: (1) LCR, a subsidiary of the Company (as vendor)

(2) The Purchaser (as purchaser)

The Purchaser is a wholly-owned subsidiary of OUE Commercial Trust. As at the

Latest Practicable Date, OUE is the sponsor of OUE Commercial Trust and currently holds

the only unit in OUE Commercial Trust. It is currently anticipated that OUE will be

interested in up to 50% of the issued units of OUE Commercial Trust upon the listing of

OUE Commercial Trust. The Joint Venture, being a principal joint venture of HKC, is

interested in approximately 68.02% of the issued share capital of OUE (excluding treasury

shares) as at the Latest Practicable Date. As OUE, being a joint venture of HKC, is

regarded as an associate (as defined in the Listing Rules) of the Company (being the

substantial shareholder of LCR), the Purchaser is therefore deemed to be a connected

person of LCR under the Listing Rules.

The Disposal

Subject to the terms and conditions of the Disposal Agreement, LCR has conditionally

agreed to procure the sale of, and the Purchaser has conditionally agreed to acquire, the

Sale Shares (representing the entire issued share capital of Tecwell), free from all liens,

charges, encumbrances and third party rights and together with all rights attaching thereto

as at the Completion Date.

Tecwell is an indirect wholly-owned subsidiary of LCR which in turn is an indirect

subsidiary of the Company. LRSL, being the owner of the Property, is a wholly-owned

subsidiary of Tecwell.


– 6 –

Consideration

The consideration for the Sale Shares shall be the Consideration of approximately

HK$843.5 million (subject to adjustment, if any) and is payable in full by the Purchaser in

cash at Completion. The Consideration may be adjusted upwards or downwards based on

the increase or decrease in NAV of the Tecwell Group (other than the movement of the

value of the Property as it was agreed between the parties as a commercial decision to

include an agreed valuation for the Property to limit exposure to market risks so that any

changes in the value of the Property will not be adjusted) as of the Completion Date when

compared to that of 30th June, 2013. Any adjustment in the Consideration upwards or

downwards post-Completion shall be settled by the Purchaser or LCR (as the case may be)

in cash within 5 Business Days after agreement of such adjustment. For the purpose of

calculating the adjustment amount, the NAV (excluding the value of the Property) based on

the unaudited consolidated management accounts of the Tecwell Group prepared in

accordance with HKFRS as of the Completion Date will be compared against the NAV

(excluding the value of the Property) based on the unaudited consolidated management

accounts of the Tecwell Group prepared in accordance with HKFRS as of 30th June, 2013,

any increase or decrease in the NAV will form the basis of the adjustment amount.

The Consideration was determined after arm’s length negotiations between LCR and

the Purchaser by reference to:

(i) the unaudited NAV of the Tecwell Group in the amount of approximately

HK$849.9 million as at 30th June, 2013;

(ii) a valuation of the Property by RHL of approximately RMB2,030 million

(equivalent to approximately HK$2,560.3 million) as at 30th September, 2013;

and

(iii) the book value of the Property as at 30th June, 2013 of approximately

HK$2,548.5 million.

Based on the unaudited accounts of the Tecwell Group as of 30th June, 2013, the book

value of the Property amounted to approximately HK$2,548.5 million, which is comparable

to the valuation made by RHL of approximately HK$2,560.3 million as at 30th September,

2013. The NAV of approximately HK$849.9 million was arrived at based on the above book

value of the Property of approximately HK$2,548.5 million, the other assets of

approximately HK$129.9 million and other liabilities of HK$1,828.5 million of the

Tecwell Group as of 30th June, 2013 with details set out in the unaudited consolidated

statement of financial position of the Tecwell Group on pages 43 and 44 of this circular.

These assets and liabilities will be disposed of under the Disposal. Accordingly, the

Directors are of the view that there is no significant premium in the value of the Property

when compared with the Consideration, which was derived from the NAV.

The valuation in item (ii) above refers to the valuation of the Property in its existing

state as at 30th September, 2013 prepared by RHL using the direct comparison approach.

Given the Disposal is a disposal of the entire issued share capital of Tecwell, the


– 7 –

consideration for the Disposal also takes into consideration other assets and liabilities on

the books of the Tecwell Group which include cash balances, rental deposits received, bank

loans and tax liabilities.

Conditions Precedent of the Disposal Agreement

Completion of the Disposal Agreement shall be conditional upon:

(i) the approvals of the independent shareholders of LCR and the Shareholders for

the entering into by LCR of the Disposal Agreement and the Disposal having been

obtained in accordance with the requirements of the Listing Rules or any other

applicable laws or regulations, if so required;

(ii) the obligations of the underwriters under the underwriting agreement to be

entered into between, among others, OUE Commercial Trust and the underwriters

in respect of the offering and listing on the SGX-ST of the units of OUE

Commercial Trust becoming unconditional in all respects (including, if relevant,

as a result of the waiver of any condition(s) by or on behalf of the underwriters)

and the underwriting agreement not being terminated in accordance with its terms

or otherwise, on or before the dates and times to be specified therein;

(iii) all necessary consents as required by LCR, the Purchaser and/or their respective

holding companies to complete the Disposal Agreement and the Disposal being

obtained; and

(iv) no event or circumstance shall have occurred in respect of or in connection with

the affairs of Tecwell, LRSL and/or the Property which has or will have a material

adverse effect.

If the Conditions Precedent were not fulfilled on or before the Long Stop Date, LCR

may serve a written notice to extend the Long Stop Date to the Extended Long Stop Date.

If the Conditions Precedent are still not fulfilled by the Extended Long Stop Date, the

Disposal Agreement will be terminated and cease to be of effect and none of the parties

shall have any rights against any other party except for (where applicable) liability for any

antecedent breach of its obligations under the Disposal Agreement.

Completion

Subject to the satisfaction of the Conditions Precedent and other terms and conditions

of the Disposal Agreement, Completion of the Disposal Agreement shall take place on the

Listing Date. At the request of the Purchaser, LCR has agreed to the Condition Precedent

that Completion is conditional on the underwriting agreement in respect of the offering and

listing of the units of OUE Commercial Trust on the SGX-ST becoming unconditional and

for the Completion to take place on the Listing Date as a commercial decision as the

Purchaser will be utilising the proceeds from the initial public offering of the units of OUE

Commercial Trust to, amongst other things, pay the Consideration in cash.


– 8 –

Upon Completion, the Tecwell Group will cease to be subsidiaries of each of LCR and

the Company and the results, assets and liabilities of the Tecwell Group will cease to be

consolidated into the accounts of each of LCR and the Company.

At Completion, the Purchaser will deliver a deed of undertakings to be entered on the

Completion Date duly executed by the Purchaser and LRSL in favour of LCR (‘‘Deed of

Undertakings’’) pursuant to which each of the Purchaser and LRSL undertakes that it shall,

and shall procure its successors and permitted assigns, to use its best endeavours and

exercise all rights within its power to prevent the change of name of Lippo Plaza, and not to

exercise, or take any action to change the name of Lippo Plaza, without the prior written

consent of LCR or its assignee.

It is currently anticipated that none of LCR, the Company or HKC will subscribe for

any units in OUE Commercial Trust upon its listing on the SGX-ST.

INFORMATION ON THE TECWELL GROUP

Tecwell, an indirect wholly-owned subsidiary of LCR, is a limited liability company

incorporated in the British Virgin Islands. It is an investment holding company which

wholly owns LRSL. The Property was developed by LRSL and has been held for rental

purpose since its completion in 1999. The principal activities of the Tecwell Group are

property investment and leasing.

Set out below is the audited consolidated financial information of the Tecwell Group

for the twelve months ended 31st December, 2011 and 31st December, 2012, and the

unaudited consolidated financial information of the Tecwell Group for the fifteen months

ended 31st March, 2013, respectively, prepared under the HKFRS:

For the twelve

months ended

31st December,

2011

For the twelve

months ended

31st December,

2012

For the fifteen

months ended

31st March,

2013

HK$’000 HK$’000 HK$’000

Net profit before taxation 179,275 429,391 474,672

Net profit after taxation 133,674 311,255 340,298

Net profit after taxation

(excluding net fair value gain

on investment property) 70,458 32,625 31,956

INFORMATION ON THE PURCHASER

The Purchaser is a company incorporated in the British Virgin Islands as an investment

holding company. It is a wholly-owned subsidiary of OUE Commercial Trust.

As disclosed in the announcements of OUE dated 25th September, 2013 and

16th October, 2013, OUE Commercial Trust, which units are proposed to be listed on

the SGX-ST, shall invest mainly in commercial properties with the expected initial portfolio


– 9 –

to include OUE Bayfront, being an 18-storey office building located at 50 Collyer Quay,

Singapore 049321, together with its ancillary properties comprising a conserved tower

building used for a food and beverage outlet and a link bridge with retail shops as well as

the Property. As such, it is expected that the Property will not be the only asset or property

in the initial portfolio of OUE Commercial Trust.

REASONS FOR THE DISPOSAL

The principal activity of the Company is investment holding. The principal activities of

the subsidiaries, associated companies and joint ventures of the Company are investment

holding, property investment, property development, hotel operation, food business,

property management, project management, mineral exploration, extraction and

processing, fund management, underwriting, corporate finance, securities broking,

securities investment, treasury investment, money lending, banking and other related

financial services.

The principal business activity of LCR is investment holding. The principal activities

of the subsidiaries and associated companies of LCR include investment holding, property

investment, property development, food business, property management, mineral

exploration, extraction and processing, securities investment, treasury investment and

money lending.

The respective Boards of LCR and the Company undertake strategic reviews of their

respective assets from time to time with a view to maximizing returns to their respective

shareholders, which may include a possible sale of certain properties held for investment

purposes. The Disposal will enable the LCR Group to unlock the value of the Property

which is held by the LCR Group for investment purposes and the proceeds can be used by

the LCR Group to (i) pursue other growth opportunities, (ii) fund its future business plans

and capital expenditure, and/or (iii) enable it to reduce its existing borrowings. As at the

Latest Practicable Date, the LCR Group did not have any plan nor has entered into any

agreement on any acquisition and/or investment in new business and/or material assets.

However, the LCR Group will be in a stronger cash position after the Disposal and will be

well prepared and readily able to take on any new investment opportunities with a long

term growth potential should such opportunities arise in the near future. In addition, the

LCR Group can focus its resources on its existing property development projects which

have started and would take years to complete. Moreover, the excess cash could be applied

to reduce the LCR Group’s borrowings in order to save some finance costs.

The Property was developed by the LCR Group and has been held by the LCR Group

since completion of the development in 1999. The Property is a mature asset, which whilst

providing stable rental income, does not have the growth in terms of earnings expected by

the Board of LCR. LCR wishes to realize full value of the Property. The Disposal enables

the LCR Group to recycle capital into future investment opportunities. The Disposal is also

in line with LCR’s policy of realising profit at appropriate time as LCR also disposed of a

number of investment properties during the previous accounting period for an aggregate

consideration of HK$622 million. In light of pronouncements from the government of the

PRC, the Board of LCR foresees relatively stable and moderate growth in the PRC


– 10 –

economy in the short to medium term, as the country enters into a more mature growth

phase. In view of that, the Directors (including the independent non-executive Directors)

agree with the directors of LCR and are of the view that the Disposal represents a good

opportunity to realize its investment in the Tecwell Group and to recycle capital into future

investment opportunities.

The Company, being interested in approximately 71.24% of the issued share capital of

LCR as at the Latest Practicable Date, will also benefit from the Disposal, through

receiving a special dividend to be approved by LCR. Such funds received from LCR as

dividend will also be used to (i) fund its future business plans and capital expenditure,

and/or (ii) reduce its existing borrowings.

While it is noted from the unaudited pro forma financial information that the loss of

the Group for the fifteen months ended 31st March, 2013 would be increased assuming the

Disposal had taken place on 1st January, 2012, the Directors are of the view that the terms

of the Disposal Agreement are fair and reasonable and in the interests of the Shareholders

as a whole due to the following reasons:

(a) the pro forma financial information was prepared for illustrative purposes only.

As such, given its nature, it may not give a true picture of the Group’s financial

position or results. For example, such pro forma financial results have not taken

into account the income derived from the proceeds of the Disposal; and

(b) the Directors also considered a number of factors, including but not limited to,

financial impact, business prospects, market factors, etc., as a whole when

undertaking the strategic review of the Group’s assets/business from time to time

in order to make any business decision.

In view of the above, the basis of determination of the Consideration (including NAV

of the Tecwell Group and the valuation of the Property) and the expected gain from the

Disposal as stated below, the Directors (including the independent non-executive Directors,

but excluding Mr. Stephen Riady who has abstained from voting on the relevant Board

resolution due to his deemed interest in the Disposal Agreement) are of the view that the

terms of the Disposal Agreement (including the Consideration) are fair and reasonable and

the Disposal is in the interests of the Company and the Shareholders as a whole.

None of the Directors has a material interest in the Disposal Agreement and the

Disposal save for Mr. Stephen Riady (being a director of each of the Company and LCR)

who has a deemed interest in Lippo Capital. As at the Latest Practicable Date, the

Company is owned as to approximately 64.75% by Lippo Capital which in turn is wholly

owned by Lanius. Lanius is a trustee of a discretionary trust, of which the beneficiaries

include, inter alia, Mr. Stephen Riady and other members of his family. Accordingly,

Mr. Stephen Riady is deemed to have a material interest in the Disposal Agreement due to

his deemed interests in LCR and the Company through Lippo Capital, and had abstained

from voting on the relevant Board resolutions in respect of the resolutions approving the

Disposal Agreement and the Disposal.


– 11 –

As at the Latest Practicable Date, neither the LCR Group nor the Group have any

plan nor have entered into any agreement, arrangement, understanding, intention or

negotiation on (i) any disposal, termination and/or scaling-down of the existing business

(including the Group’s property investments) and major assets; and/or (ii) any acquisition

and/or investment in new business and/or material assets. The Company will comply with

the relevant requirements under the Listing Rules in the event of any of such transactions

are entered into.

USE OF PROCEEDS

With reference to the announcement of the Company dated 4th November, 2013,

having analysed the cash requirements of the LCR Group and distributable reserve position

of LCR after the Disposal Agreement was entered into and the Announcement was

published, the Board of LCR proposed to change the use of proceeds as disclosed in the

Announcement and approved the payment of the Conditional Special Dividend on

4th November, 2013 to distribute the excess cash as a return to the shareholders of LCR.

The net proceeds from the Disposal, after deducting expenses and related taxes attributable

to the Disposal, are estimated to be approximately HK$755.3 million (subject to adjustment

and audit), which are currently expected to be applied by LCR as to (i) approximately

HK$433.8 million for general corporate purposes of the LCR Group, including investments

(such as new or additional existing investments which may include short term and long term

investments, capital or trading in nature, property-related or financial investments) and

capital expenditure (such as expenditure which is capital in nature including but not limited

to development costs, renovation costs and capital injection); and (ii) subject to, among

others, the Completion, approximately HK$321.5 million for payment of the Conditional

Special Dividend to the shareholders of LCR to distribute the excess cash as a return to

them.

FINANCIAL EFFECTS OF THE DISPOSAL

According to the unaudited accounts of the Tecwell Group, the NAV of the Tecwell

Group was approximately HK$849.9 million as at 30th June, 2013.

The Disposal is expected to give rise to a net gain attributable to the Group of

approximately HK$81.2 million (subject to adjustment and audit).

The gain on Disposal attributable to the Group is calculated based on the difference

between the Consideration and the NAV of the Tecwell Group attributable to the Group as

of 30th June, 2013, net of relevant tax and expenses and release of exchange equalisation

reserve.

Shareholders should note that the exact amount of the gain on the Disposal to the

Group would be calculated by reference to the NAV of the Tecwell Group as at Completion

and therefore may be different from the amount mentioned above.


– 12 –

Based on the unaudited pro forma financial information of the Remaining Group as

set out in the Appendix III to this circular, the financial effects of the Disposal on the

Group are summarised as follows:

(i) the Group’s total assets would decrease from approximately HK$22,768 million

to HK$20,551 million, and the Group’s total liabilities would decrease from

approximately HK$7,815 million to approximately HK$5,957 million assuming

the Disposal had been completed on 31st March, 2013; and

(ii) the Group’s loss attributable to equity holders of the Company for the fifteen

months ended 31st March, 2013 would change from approximately HK$10 million

to approximately HK$190 million, which is calculated based on the assumption

that the Disposal had been completed on 1st January, 2012.

It should be noted that the aforementioned estimations are for illustrative purpose

only and do not purport to represent how the financial position and performance of the

Remaining Group will be upon Completion.

Shareholders and potential investors should note that the Disposal may or may not

proceed, as it is subject to a number of conditions, which may or may not be fulfilled.

Shareholders and potential investors are reminded to exercise caution when dealing in the

Shares.

IMPLICATION OF THE LISTING RULES

As one or more of the applicable percentage ratios in respect of the Disposal as

calculated under Rule 14.07 of the Listing Rules exceeds 75%, the Disposal constitutes a

very substantial disposal for the Company under the Listing Rules which is subject to the

reporting, announcement and shareholders’ approval requirements.

The Purchaser is a wholly-owned subsidiary of OUE Commercial Trust. Subject to,

inter alia, the authorisation of OUE Commercial Trust and the registration of the

prospectus in relation to the establishment and listing of OUE Commercial Trust by the

Monetary Authority of Singapore, and such terms and conditions which may be imposed by

the SGX-ST for such listing, units in OUE Commercial Trust will be listed on the SGX-ST.

As at the Latest Practicable Date, OUE is the sponsor of OUE Commercial Trust and

holds the only unit in OUE Commercial Trust. It is currently anticipated that OUE will be


OUE Commercial Trust. The Joint Venture, being a principal joint venture of HKC, is

interested in approximately 68.02% of the issued share capital of OUE (excluding treasury

shares) as at the Latest Practicable Date. Accordingly, OUE is a joint venture of HKC. As

at the Latest Practicable Date, HKC is a subsidiary owned as to approximately 56.12% by

the Company. The Company is a controlling shareholder of LCR and is interested in

approximately 71.24% of the issued share capital of LCR. Accordingly, the Purchaser is

regarded as a connected person of LCR under the Listing Rules.


– 13 –

In view of the above, the Disposal is not a connected transaction for the Company, but

a very substantial disposal for the Company under Chapter 14 of the Listing Rules, which is

subject to the approval of the Shareholders at the EGM by way of poll. To the best of the

knowledge, information and belief of the Directors, having made all reasonable enquiries,

no Shareholders are required to abstain from voting to approve the resolution in respect of

the Disposal Agreement and the Disposal at the EGM.

The Joint Venture was set up to hold real estate investments and/or hospitality related

investments in the East Asia Region, including but not limited to income producing real

estate projects including commercial and residential projects, direct investments in high

potential properties and green field development projects as well as listed and/or unlisted

equity, bonds and/or equity equivalent securities of companies predominantly engaged in

real estate, hotel operations and/or hotel management. The Board of the Joint Venture

comprises two directors, who are nominated by each of HKC and Admiralty Station

Management Limited. The Joint Venture and its subsidiaries (including OUE, the Purchaser

and the OUE Commercial Trust) have not been and will not be consolidated as subsidiaries

in the financial statements of the Company or HKC after taking into account the effect of

adopting HKFRS 10 because neither the Company nor HKC has power to control over the

Joint Venture, OUE, the Purchaser and the manager of OUE Commercial Trust. As (i) none

of the Purchaser, the OUE Commercial Trust or OUE is a subsidiary of HKC; and

(ii) neither HKC nor its subsidiary is a party to the Disposal Agreement, the Disposal will

not constitute a notifiable and connected transaction to HKC under Chapters 14 and 14A

of the Listing Rules.

EGM

The notice convening the EGM to be held at Harcourt Room, Lower Lobby, Conrad

Hong Kong, Pacific Place, 88 Queensway, Hong Kong on Tuesday, 3rd December, 2013 at

11 : 00 a.m. (or so soon thereafter as the extraordinary general meeting of LCR convened for

10 : 45 a.m. on the same date shall have been concluded or adjourned) at which an ordinary

resolution will be proposed to approve the Disposal Agreement and the Disposal as set out

on pages 85 and 86 of this circular.

A form of proxy for use at the EGM is enclosed. Whether or not you are able or intend

to attend the EGM, you are requested to complete and return the accompanying form of

proxy in accordance with the instructions printed thereon to the registered office of the

Company at 24th Floor, Tower One, Lippo Centre, 89 Queensway, Hong Kong as soon as

possible but in any event not less than 48 hours before the time appointed for the holding of

the EGM or any adjourned meeting thereof. Completion and return of the form of proxy

shall not preclude you from attending and voting in person at the EGM or any adjourned

meeting (as the case may be) should you so wish.


– 14 –

VOTING BY POLL AT GENERAL MEETINGS

Pursuant to the requirements under the Listing Rules, any votes of shareholders at a

general meeting must be taken by poll. Therefore, the chairman of the EGM will exercise his

power under the articles of association of the Company to demand a poll for the relevant

resolution put forward at the EGM. The Company will appoint scrutineers to handle

vote-taking procedures at the EGM. The results of the poll will be published on the

Stock Exchange’s website at www.hkexnews.hk and the Company’s website at

www.lippoltd.com.hk as soon as possible after the conclusion of the EGM.

RECOMMENDATION

The Directors (including the independent non-executive Directors but excluding

Mr. Stephen Riady who has abstained from voting on the relevant Board resolution due to

his deemed interest in the Disposal Agreement) believe that the terms of the Disposal

Agreement are on normal commercial terms, in the ordinary and usual course of business

and are fair and reasonable and are in the interests of the Company and the Shareholders as

a whole. Accordingly, the Directors recommend the Shareholders to vote in favour of the

ordinary resolution approving the Disposal Agreement and the Disposal at the EGM.

ADDITIONAL INFORMATION

Your attention is also drawn to the additional information set out in the appendices to

this circular.

Yours faithfully,

By Order of the Board

LIPPO LIMITED

John Luen Wai Lee

Managing Director and Chief Executive Officer


– 15 –

1. FINANCIAL INFORMATION OF THE GROUP

Details of the published financial information of the Group for each of the three

years/period ended 31st December, 2010, 31st December, 2011 and 31st March, 2013 are

disclosed in the annual reports of the Company for the year/period ended 31st December,

2010, 31st December, 2011 and 31st March, 2013 respectively. Details of these financial

statements have been published on the websites of the Stock Exchange at www.hkexnews.hk

and the Company at www.lippoltd.com.hk:

. annual report of the Company for the year ended 31st December, 2010 (pages 36

to 144);

. annual report of the Company for the year ended 31st December, 2011 (pages 38

to 141); and

. annual report of the Company for the fifteen months ended 31st March, 2013

(pages 40 to 150).

2. INDEBTEDNESS STATEMENT

As at 30th September, 2013, being the latest practicable date for the purpose of

this indebtedness statement prior to the printing of this circular, the Group had

outstanding indebtedness of approximately HK$3,032 million, comprising secured

bank loans of approximately HK$2,483 million, unsecured bank loans of

approximately HK$143 million, secured obligations under finance leases for certain

plant and equipment of approximately HK$1 million, secured bankers’ guarantees of

approximately HK$37 million, unsecured bankers’ guarantees of approximately

HK$7 million, deposits from customers, banks and other financial institutions of

approximately HK$331 million arisen from the normal course of business of The

Macau Chinese Bank Limited (‘‘MCB’’), a banking subsidiary of the Company, and

contingent liabilities of MCB of approximately HK$30 million, comprising guarantees

and other endorsements of approximately HK$17 million and liabilities under letters

of credit on behalf of customers of approximately HK$13 million.

The bank loans were secured by shares in certain listed subsidiaries of the Group,

first legal mortgages over certain investment properties, leasehold land and buildings

and properties under development, and certain bank deposits of the Group. The

obligation under finance leases are secured by the rights to the leased plant and

equipment. The bankers’ guarantees are secured by certain bank deposits of the

Group.

Save as aforesaid and apart from intra-group liabilities, the Group did not, as at

30th September, 2013, have any outstanding debt securities, whether issued and

outstanding, authorised or otherwise created but unissued, term loans, whether

guaranteed, unguaranteed, secured (whether the security is provided by the issuer or by

third parties) or unsecured, other borrowings or indebtedness in the nature of

borrowing including bank overdrafts and liabilities under acceptances (other than

APPENDIX I FINANCIAL INFORMATION OF THE GROUP

– 16 –

normal trade bills) or acceptance credits or hire purchase commitments, whether

guaranteed, unguaranteed, secured or unsecured borrowings or debt, mortgages,

charges, guarantees or other material contingent liabilities.

The Directors confirms that, save as disclosed above, there are no material

changes in the indebtedness and contingent liabilities of the Group since

30th September, 2013.

It should be noted that following the adoption of HKFRS 10 ‘‘Consolidated

Financial Statements’’ from 1st April, 2013 onwards, Auric and some other associates

are treated as subsidiaries of the Group since 1st April, 2013, and the indebtedness

statement is prepared on the basis to include any indebtedness of those new

subsidiaries.

3. WORKING CAPITAL

The Directors are of the opinion that, after taking into account (i) the internal

resources available to the Remaining Group; (ii) the presently available banking facilities;

and (iii) the estimated net proceeds from the Disposal, and in the absence of unforeseeable

circumstances, the Remaining Group will have sufficient working capital for its present

requirement for at least the next twelve months from the date of this circular.

4. 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 31st March, 2013, being the

date to which the latest published audited financial statements of the Group were made up.

5. FINANCIAL AND TRADING PROSPECTS OF THE REMAINING GROUP

The global economic environment has stabilised since last year but it is still

overshadowed by a considerable number of unknown factors. The Group is seeking to

streamline and strengthen its existing business to meet the challenges ahead as stated in the

annual report for the fifteen months ended 31st March, 2013. The Disposal will enable the

Group to realise the value of its investment at an opportune time and partly share the

rewards of this investment with its shareholders. The remaining proceeds will partly be used

to finance the investment and capital expenditure required by the Group’s existing principal

businesses, including property investment, property development, securities and treasury

investments, corporate finance and securities broking and banking business. Following the

Disposal, the properties at Lippo Centre in Hong Kong will form a major part of the

Group’s current investment property portfolio and continue to provide the stable and

recurring revenue to the Group. The Group has started its property development projects in

Huai An and Taizhou City, both located in Jiangsu Province, mainland China. The Huai

An project will be developed into an integrated residential, commercial and retail complex

with a total gross floor area of approximately 245,391 square metres whereas the Taizhou

City project will be developed into townhouses and residential towers with a total gross

floor area of approximately 217,146 square metres. In addition, in relation to the ‘‘securities

and treasury investment’’ segment, with the increase in working capital after the Disposal,


– 17 –

the Group will continue to cautiously manage its investment portfolio in view of the market

conditions and its business needs with a view to maximizing returns to the Shareholders.

With respect to the banking business, following the capital injection late last year, the

Group has been seeking new business opportunities and remains positive to enhance its

competitiveness in the Macau banking sector. Amid the volatile market conditions, the

Group adopts a cautious and prudent approach in conducting its corporate finance and

securities broking business.

6. MANAGEMENT DISCUSSION AND ANALYSIS OF THE REMAINING GROUP

(a) Business review for the fifteen months ended 31st March, 2013

Operating results

The Company’s financial year end date was changed from 31st December to

31st March. The financial period covered a fifteen-month period from

1st January, 2012 to 31st March, 2013. For the fifteen months ended

31st March, 2013, the revenue of the Remaining Group was approximately

HK$348 million. The significant increase in revenue as compared to the revenue

of the Remaining Group of approximately HK$201 million in 2011 was mainly

due to the disposal of a held-for-sale property in Singapore at approximately

HK$78 million in 2012/13.

The Group’s performance was affected by the weak property sector in certain

key markets. During the year ended 31st December, 2011, the Remaining Group’s

share of results of associates was approximately HK$1,126 million which was

mainly attributable to the fair value gain of a property held by an associate which

was completed in that year and the share of profit recognised from the sale of

properties by another associate. However, during the fifteen months ended

31st March, 2013, neither the Remaining Group nor its associates had any fair

value gain arisen from completion of their property projects, and less profit was

recognised from the sale of properties and high finance costs were incurred by the

associates. Against this backdrop, the Remaining Group recorded a consolidated

loss attributable to shareholders of approximately HK$252 million for the fifteen

months ended 31st March, 2013, as compared to a consolidated profit of

approximately HK$605 million for the year ended 31st December, 2011.

Business review

For the fifteen months ended 31st March, 2013, the Remaining Group was

principally engaged in (i) property investment including letting and resale of

properties; (ii) property development including development and sale of

properties; (iii) treasury investment including investments in cash and bond

markets; (iv) securities investment including dealings in securities and disposals of

investments; (v) the corporate finance and securities broking which provide

securities and futures brokerage, investment banking, underwriting and other

related advisory services; (vi) banking business which engages in the provision of

commercial and retail banking services; and (vii) other businesses comprise


– 18 –

principally mineral exploration, extraction and processing, food business, the

development of computer hardware and software, money lending and the

provision of property, project and fund management and investment advisory

services. The performance analysis of these business segments is shown as follows:

(i) Property investment

Property investment business continued to provide stable and recurring

rental income to the Remaining Group. Total revenue from the property

investment business for the fifteen months ended 31st March, 2013 amounted

to approximately HK$108 million, an increase of approximately 21% as

compared to approximately HK$89 million in 2011. Lippo Centre in Hong

Kong, being the landmark of the Remaining Group in Hong Kong,

continued to contribute significant results to the Remaining Group. Given

the quality and strategic location of the investment properties, the Remaining

Group recorded revaluation gains on its investment properties of a total of

approximately HK$125 million for the period as compared to approximately

HK$271 million in 2011.

For the fifteen months ended 31st March, 2013, the Remaining Group

completed the disposal of a number of residential units in Hong Kong at an

aggregate consideration of approximately HK$622 million and recognised a

gain of approximately HK$68 million. The disposals represented an

opportunity for the Remaining Group to realise a good profit at

appropriate time. As a result of such disposals as well as the above

mentioned revaluation gains, the Remaining Group’s investment properties

were reduced from approximately HK$2.3 billion as at 31st December, 2011

to approximately HK$1.9 billion as that as at 31st March, 2013.

During the fifteen months ended 31st March, 2013, as part of an internal

group restructuring, Lippo ASM Asia Property Limited (‘‘LAAPL’’), a joint

venture, was set up by Lippo ASM Asia Property LP to hold the controlling

stake in OUE, a listed company in Singapore principally engaged in property

investment and development and hotel operation. The Remaining Group’s

economic interest in OUE remains unchanged after the above group

restructuring. The hotels managed by OUE, including Mandarin Orchard

Singapore and the Crowne Plaza Changi Airport, are strategically located in

various well known tourist destinations of Singapore, Malaysia and

mainland China. The investment property portfolio in Singapore, which

includes OUE Bayfront, a Grade A office building near Marina Bay, OUE

Downtown (formerly known as 6 Shenton Way Towers One and Two or

DBS Building Towers One and Two) and Mandarin Gallery at Orchard

Road, provided a strong recurring source of revenue to OUE. Plans are

underway to convert the podium of 6 Shenton Way Towers One and Two

into a retail space with a wide range of options including retail, food and

beverage and a supermarket. Subsequent to the period end, OUE disposed of

its interest in Mandarin Orchard Singapore and Mandarin Gallery to a real


– 19 –

estate investment trust known as OUE Hospitality Real Estate Investment

Trust at a consideration of approximately S$1,705 million (the ‘‘Properties

Disposal’’). OUE maintained the ability to operate Mandarin Orchard and

manage Mandarin Gallery. The consideration for the Properties Disposal

was paid in combination of cash and stapled securities in

OUE Hospitality Trust (the ‘‘OUE H-REIT’’). The Properties Disposal was

approved by the shareholders of OUE in June 2013 and the Properties

Disposal was completed on 25th July, 2013, when the listing and

commencement of trading of the stapled securities in the OUE H-REIT

took place on the SGX-ST.

OUE also holds interests in One Raffles Place (comprising Tower One

and the newly-completed Tower Two) which is located at the central financial

and business district of Singapore. The retail mall at One Raffles Place is

under refurbishment which is expected to be completed in early 2014. Pre-sale

of a residential property development project, named as Twin Peaks, at

33 Leonie Hill Road in Singapore is still in progress. The Remaining Group

registered a share of loss of approximately HK$272 million from the

investment during the fifteen months ended 31st March, 2013 (as compared

to a share of profit of approximately HK$855 million in 2011). The change

was mainly due to the absence of the significant fair value gain recognised

upon completion of any investment property and the higher finance costs

incurred during the period. As a result of the share buy-back by OUE during

the period, the fund’s interest in OUE increased from approximately 65.55%

as at 31st December, 2011 to approximately 68.02% as at 31st March, 2013

and recorded a net increase of share of equity interest of approximately

HK$193 million. Together with the share of other reserves and taking into

account the above share of loss, the Remaining Group’s interest in the

investment increased to approximately HK$8.2 billion (as compared to

HK$7.8 billion as at 31st December, 2011).

(ii) Property development

The Remaining Group has participated in a number of well-located

property development projects in mainland China, Macau, Singapore and

other areas of the Asia Pacific region.

Total revenue from the property development business for the fifteen

months ended 31st March, 2013 amounted to approximately HK$78 million

due to the sale of a held-for-sale property in Singapore and a gain of

approximately HK$16 million was recognised.

In mainland China, construction of an integrated residential,

commercial and retail complex at the Beijing Economic-Technological

Development Area (the ‘‘BDA Project’’) was progressing well. Pre-sale has

been launched since July 2011. A substantial part of the residential units,

office blocks and the retail mall have been sold out. Approximately 82% of


– 20 –

the total saleable area had been pre-sold up to 31st March, 2013 at a total

consideration of approximately RMB3.1 billion. This project was expected to

be completed later in 2013 and construction works had been substantially

finished as at 31st March, 2013. The Remaining Group also participated in

other development projects in Huai An City (the ‘‘Huai An Project’’) and

Taizhou City (the ‘‘Taizhou Project’’), both in the Jiangsu Province. Huai An

Project will be developed into an integrated residential, commercial and retail

complex whereas Taizhou Project is a residential project comprising

townhouses and residential apartments. Both projects were under planning

and design stage. Constructions were expected to be commenced later in

2013.

In Macau, main contract works of ‘‘M Residences’’, a property

development project, have commenced and are expected to be completed in

2014. Pre-sale has been launched since November 2011 and has received

satisfactory response. About 92% of the saleable area of the residential units

have been pre-sold as at 31st March, 2013 at a total consideration of

approximately HK$1.1 billion.

The revenue and the profit arising from the above property development

projects will be reflected in the Remaining Group’s results in the respective

year of completion. The segment loss for the period was mainly due to

marketing and selling expenses incurred for the pre-sale activities and certain

pre-operating costs charged to the income statement during the period. As a

result of the project cost incurred during the period, the Remaining Group’s

property under development increased to approximately HK$2.7 billion as at

31st March, 2013 (as compared to HK$1.5 billion as at 31st December, 2011).

The Remaining Group has interests in ‘‘Marina Collection’’ in Sentosa

Cove, Singapore, a joint venture development project completed in April

2011. For the fifteen months ended 31st March, 2013, a further share of

profit of approximately HK$125 million (as compared to approximately

HK$264 million in year 2011) was recorded from this project, mainly arising

from the sale of properties during the period. All the units of Centennia

Suites, another joint venture property development project at Kim Seng

Road, Singapore, had been sold out during the pre-sale in 2010. Profit arising

therefrom is expected to be recognised upon completion of the development

in the second half of 2013.

The Remaining Group is interested in a development project at

326 Woonbook-dong, Jung-gu, Incheon, Korea (the ‘‘MIDAN City

Project’’). The MIDAN City Project is a comprehensive property project to

be developed into a self-contained community with an approved total gross

floor area of approximately three million square metres. In order to

strengthen the working capital, capital injection was made by one of the

existing shareholders in April 2012. As a result, the Remaining Group’s


– 21 –

interest in the MIDAN City Project was reduced from 47.9% to 38.5% and

recorded a gain on deemed disposal of approximately HK$24 million for the

period. The marketing of the project is in progress.

(iii) Treasury investment and securities investment

The investment market continued to be challenging and full of

uncertainties. The Remaining Group cautiously managed its investment

portfolio and looked for opportunities to realise its profit. For the fifteen

months ended 31st March, 2013 :

(a) revenue for treasury investment of approximately HK$19 million

was recorded, representing an increase of approximately 149% as

compared to approximately HK$8 million in 2011; and

(b) revenue for securities investment of approximately HK$32 million,

or an increase of approximately 76% as compared to

approximately HK$18 million in 2011, was recorded from the

disposal of the Remaining Group’s financial assets held for trading

and dividend income and interest income received from the

investment portfolio. At the same time, the Remaining Group

recognised a total net gain of approximately HK$89 million (as

compared to approximately HK$5 million in 2011) from the

realisation of available-for-sale financial assets through the sale

of a subsidiary which owned the financial assets and direct disposal

in the market.

In the highly volatile investment markets, the performance of the

securities investments was diverse and an unrealised fair value loss was

recorded. The treasury and securities investments business attained a net

profit of approximately HK$66 million for the fifteen months ended

31st March, 2013, (as compared to a net loss of approximately

HK$2 million in 2011) after including the provision of approximately

HK$23 million made for some investments.

(iv) Corporate finance and securities broking

During the fifteen months ended 31st March, 2013, the sentiments in the

investment markets were affected by uncertainties resulting from unresolved

eurozone sovereign debt crisis and threat of China economic slowdown.

Investors remained selective and vigilant in the highly volatile markets. The

Remaining Group’s corporate finance and securities broking business was

adversely affected. It registered a turnover of approximately HK$42 million

for the fifteen months ended 31st March, 2013 (as compared to

HK$44 million in 2011) and a loss of approximately HK$15 million was

derived from this segment (as compared to approximately HK$21 million in

2011).


– 22 –

(v) Banking business

MCB, a licensed bank in Macau, is a wholly-owned subsidiary of HKC.

The operating environment was still challenging because of strong

competition, high operating costs and subdued global economic activities.

Nevertheless, MCB remained positive to the development and growth in the

region, continued to focus on customers need, and seeked opportunities to

launch new products and services to enlarge its customer base. In this regard,

the Remaining Group injected approximately HK$78 million capital into

MCB to strengthen its financial position during the fifteen months ended

31st March, 2013.

(vi) Other businesses

Other businesses mainly comprised mineral exploration, extraction and

processing, food business, the development of computer hardware and

software, money lending and the provision of property, project and fund

management and investment advisory services. The growth and recovery of

the Remaining Group’s various investments was hindered by the external

uncertainties of the developed economies. Moreover, some of the investments

concentrate on new products which are at the early development stage.

Total revenue from other businesses for the fifteen months ended

31st March, 2013 was approximately HK$50 million, representing an

increase of approximately 65% from approximately HK$30 million in 2011.

However, market acceptance and competitions from other competitors

were uncertain and provision of approximately HK$37 million was made for

the fifteen months ended 31st March, 2013 (as compared to approximately

HK$0.4 million in 2011). As a result, the other businesses segment recorded a

loss of approximately HK$47 million (as compared to approximately

HK$22 million in 2011).

Liquidity, financial resources and charge on assets

The Remaining Group financed its liquidity requirements through a

combination of cash flow generated from operations and bank borrowings. As

at 31st March, 2013, the Remaining Group had cash and bank balances of

approximately HK$2.1 billion (as compared to approximately HK$1.1 billion in

2011). As at 31st March, 2013, the bank loans of the Remaining Group decreased

to approximately HK$1.8 billion (as compared to approximately HK$2.2 billion

in 2011). The bank loans were denominated in Hong Kong dollars and Renminbi

and were secured by certain properties, shares in certain subsidiaries of the

Remaining Group and certain bank deposits. As at 31st March, 2013, the bank

loans carried interest at floating rates and approximately 33% (as compared to

11% as at 31st December, 2011) of the bank loans were repayable within one year.


– 23 –

As at 31st March, 2013, gearing ratio (measured as total borrowings, net of

non-controlling interests, to shareholders’ funds of the Remaining Group) was

16.8% (as compared to 20.1% as at 31st December, 2011).

Capital Structure and foreign exchange risk

During the fifteen months ended 31st March, 2013, the Company

repurchased 7,282,000 Shares at a total consideration of approximately

HK$22.6 million.

Besides, HKC repurchased 8,816,000 shares and LCR repurchased 6,640,000

shares at a total consideration of approximately HK$10.8 million and

HK$1.2 million respectively. In December 2012, HKC and LCR issued

3,881,000 shares and 2,300,000 shares respectively upon the exercise of share

options by the option holders and received a total cash consideration of

approximately HK$5 million. As a consequence, the Remaining Group’s

interest in HKC slightly increased from approximately 56.0% as at

31st December, 2011 to approximately 56.1% as at 31st March, 2013 and the

Remaining Group’s interest in LCR slightly increased from approximately

71.21% as at 31st December, 2011 to approximately 71.24% as at 31st March,

2013.

Save for the aforesaid, there was no change in the Remaining Group’s capital

structure.

The Remaining Group monitored the relative foreign exchange position of its

assets and liabilities to minimise foreign currency risk. During the fifteen months

ended 31st March, 2013, the Remaining Group had entered into forward contract

to manage exposures to fluctuations of foreign exchange rates. When appropriate,

additional hedging instruments including forward contracts, swap and currency

loans would be used to manage the foreign exchange exposure.

Contingent liabilities and capital commitment

As at 31st March, 2013, the Remaining Group had contingent liabilities

relating to its banking subsidiary of approximately HK$21 million comprising

guarantees and other endorsements of approximately HK$15 million and

liabilities under letters of credit on behalf of customers of approximately

HK$6 million. Aside from those arising from the normal course of the

Remaining Group’s banking operation as aforementioned, the Remaining

Group provided guarantees in respect of banking facilities granted to Tecwell

Group amounted to approximately HK$1,168 million, which were utilized to an

extent of approximately HK$1,127 million as at 31st March, 2013.

As at 31st March, 2013, the Remaining Group’s total commitment amounted

to approximately HK$897 million, a decrease of approximately 4% from

approximately HK$939 million as at 31st December, 2011, which was mainly


– 24 –

related to the property development projects held by the Remaining Group. The

investments or capital assets will be financed by the Remaining Group’s internal

resources and/or external bank financing, as appropriate.

Significant investments, material acquisitions and disposals

Apart from the abovementioned significant transactions under the ‘‘Business

review’’ section, the Remaining Group had the following significant investments,

material acquisitions and disposals.

During the fifteen months ended 31st March, 2013, the Remaining Group

further increased its interest in Skye Mineral Partners, LLC (‘‘Skye’’) for a total

consideration of US$11.2 million. As a result, the Remaining Group had an

effective interest of 8,649 Class A units in Skye, representing approximately

17.3% of the total issued and outstanding Class A units in Skye and

approximately 16.5% of the total issued and outstanding units in Skye.

Through CS Mining, LLC (‘‘CS Mining’’), its majority owned subsidiary, Skye

owns and controls a number of copper ore deposits located in the Milford Mineral

Belt in Beaver County, State of Utah in the U.S., and is engaged in the business of

mining and processing primarily copper, with additional recoveries of silver, gold

and iron ore. CS Mining obtained all its required operating permits for mining

and flotation processing and had started commercial operation. In order to

maximise the recovery of its copper resource, CS Mining plans to set up a leaching

facility.

In March 2012, the Remaining Group entered into a subscription agreement

with Haranga Resources Limited (‘‘Haranga’’) for the subscription of 15,000,000

new ordinary shares in Haranga at an aggregate subscription price of A$6 million.

Together with additional shares acquired by the Remaining Group from the

market, the Remaining Group is interested in a total of 32,470,000 shares in,

representing approximately 13.43% of, the existing issued share capital of

Haranga. Haranga had reported that its drilling programmes have identified a

significant increase in JORC Code (Code for Reporting of Exploration Results,

Mineral Resources and Ore Reserves) compliant resource in its Selenge iron ore

project in Mongolia. Haranga expected that further drilling can expand the

resource base in the above project, and is currently in the process of applying for a

mining licence. Haranga is listed on the Australian Securities Exchange and is

primarily engaged in the acquisition, exploration and development of iron ore

projects in Mongolia, and owns a controlling interest in four separate iron ore

projects in Mongolia.

In August 2012, Lippo Investments Management Limited (‘‘LIM’’), a

wholly-owned subsidiary of the Company, successfully launched the Lippo

Select HK & Mainland Property Index. Such index adopts fundamental indexing

with a free-float adjusted market capitalisation-weighted methodology and

comprises property related securities listed on the Main Board of the Stock

Exchange, including property stocks and real estate investment trusts from Hong


– 25 –

Kong and the mainland China region. In September 2012, Lippo Select HK &

Mainland Property ETF (the ‘‘ETF’’) (stock code: 2824), an exchange traded fund

managed by LIM, was successfully launched and listed on the Stock Exchange. In

September 2012, the Remaining Group acquired units in the ETF for a total

consideration of approximately HK$78 million.

In December 2012, the Remaining Group completed the disposal of a

property located at 259 Ocean Drive, Sentosa Cove in Sentosa Island, Singapore

for a consideration of S$22 million.

In January 2013, the Remaining Group together with other joint venture

partners (the ‘‘Consortium’’), including Caesars Entertainment Corporation

(‘‘Caesars’’), a company listed on the NASDAQ Stock Market, entered into

various agreements which established the terms on which the parties agreed to

seek preliminary governmental approval (the ‘‘Preliminary Review Application’’)

that would allow the parties to design, develop, construct and own an integrated

resort located in Incheon, Korea which will include, inter alia, hotels and service

apartments (the ‘‘IR Project’’). The joint venture entity is intended to be owned by

the Remaining Group as to 20% and by Caesars as to 40%. In the event the series

of transactions related to the IR Project are concluded, it is intended that Caesars

or its affiliate(s) would construct and operate an integrated hotel-casino. The

Remaining Group will not participate or engage in any gaming business in the

IR Project. In June 2013, the Remaining Group was notified that the Preliminary

Review Application submitted by the Consortium was declined by the Ministry of

Culture, Sports and Tourism of the Republic of Korea (‘‘MCST’’). The

Consortium has been in discussions with the relevant governmental bodies in

Korea with a view to resolving the issues which lead to the Preliminary Review

Application being declined and has been considering its position. If the issues

which lead to the Preliminary Review Application being declined can be resolved,

the Consortium will consider submitting a new application to MCST.

In February 2013, the Remaining Group entered into a conditional

subscription agreement in relation to the subscription of 184,653,669 new shares

in GSH Corporation Limited (‘‘GSH’’) for an aggregate subscription price of

approximately S$17.5 million under a private placement. GSH is listed on the

Main Board of the SGX-ST, and is primarily engaged in the business of

distribution of IT, photographic and timepiece products and is looking to

diversify into the real estate business.

In June 2013, Auric Pacific Group Limited (‘‘Auric’’, together with its

subsidiaries, the ‘‘APG Group’’), a listed company in Singapore in which the

Remaining Group was interested in approximately 49.3% of its issued share

capital, announced that its wholly-owned subsidiary would make a voluntary

unconditional cash offer to acquire all the issued and paid up ordinary shares in

the capital of Food Junction Holdings Limited (‘‘Food Junction’’), a listed

company in Singapore, other than treasury shares and those already owned,

controlled or agreed to be acquired by Auric and its subsidiaries, at an offer price


– 26 –

of S$0.255 in cash for each share (the ‘‘Offer’’). Immediately before the Offer, the

APG Group was interested in approximately 61.4% of the issued share capital of

Food Junction (excluding treasury shares). Auric was of the view that the Offer

represented an opportunity for Auric to acquire an increased stake in Food

Junction as part of its strategic investments. Auric believed that there were

synergistic benefits to be obtained by increasing its stake in Food Junction, whose

current portfolio of food courts and restaurants would complement Auric’s

existing portfolio, and the increase in the sharing of resources relating to

marketing and operations between both Auric and Food Junction would

contribute to the growth of both companies. The Offer was closed on 14th

August, 2013 and APG Group held 93.13% of all the shares in Food Junction

immediately after the Offer. Following which, Food Junction had applied to the

SGX-ST for its delisting from the SGX-ST and SGX-ST had on 18th September,

2013 stated, inter alia, that it had no objection to the proposed delisting of Food

Junction.

The Remaining Group also owns interests in Asia Now Resources Corp.

(‘‘Asia Now’’), a listed company in Canada and is primarily engaged in the

business of exploration of mineral deposits in Yunnan Province, mainland China.

During the fifteen months ended 31st March, 2013, Asia Now reviewed the results

of its exploration activities on each of the exploration site. Due to a lack of

exploration prospects, Asia Now decided to discontinue further exploration

activities on some of the sites in Beiya, Yunnan Province and a write-down of

C$3.4 million was made. For the site at Habo, Yunnan Province, an impairment

of C$3.5 million was made. Asia Now is currently focusing on the exploration of

the site at Ma Touwan in Beiya.

Auric, Food Junction and Asia Now were regarded as associates of the

Remaining Group before 1st April, 2013. Following the adoption of HKFRS 10

‘‘Consolidated Financial Statements’’ from 1st April, 2013 onwards, Auric, Food

Junction and Asia Now are treated as subsidiaries of the Remaining Group and

retrospective adjustments are required.

The Remaining Group made an initial investment in Export and Industry

Bank, Inc. (‘‘EIB’’), a commercial bank incorporated in the Philippines, in 1996

but over the years the investment in EIB was fully written down. During the

fifteen months ended 31st March, 2013, the Bangko Sentral ng Pilipinas issued a

resolution placing EIB under receivership and Philippine Deposit Insurance

Corporation took over EIB to implement this. As such, all the investments in EIB

are derecognised and a loss on derecognition of associate of HK$61 million was

recorded, which represented the related cumulative foreign exchange translation

loss transferred from the equity to the income statement.


– 27 –

Employee and remuneration policies

The Remaining Group had 425 employees as at 31st March, 2013, as

compared to 403 employees as at 31st December, 2011. Staff costs (including

directors’ emoluments) charged to the income statement during the period

amounted to approximately HK$215 million, as compared to approximately

HK$155 million in 2011. The Remaining Group ensured that its employees were

offered competitive remuneration packages. Certain employees of the Remaining

Group were granted options in prior years under share option scheme of the

Company. All outstanding options which remained unexercised by the expiry date

in December 2012 lapsed accordingly.

Future plans for material investments and acquisition of capital assets

There was no specific plan for material investments and acquisition of capital

assets as at 31st March, 2013.

(b) Business review for the year ended 31st December, 2011

Operating Results

For the year ended 31st December, 2011, the revenue of the Remaining

Group was approximately HK$201 million, which was decreased by 31% as

compared with revenue in 2010 of approximately HK$290 million due to the

absence of revenue generated by a Chinese restaurant in Hong Kong which was

disposed of in 2010 and the drop in revenue generated from the project

management business as most of the property development projects managed

were either completed or nearing the completion stage in 2011.

Benefiting from steady economic growth in the Asia region in which the

Remaining Group had operations, the Remaining Group recorded a profit

attributable to shareholders of HK$605 million (as compared to

HK$1,512 million in 2010 when profit from discontinued operation was

excluded). The profit was mainly attributable to the fair value gain of

investment properties of the Remaining Group’s subsidiaries and associates and

the share of profit from the sale of certain residential units upon completion of

property development projects in Singapore during 2011.

Business review

For the year ended 31st December, 2011, the Remaining Group was





investments; (v) corporate finance and securities broking which provide securities

and futures brokerage, investment banking, underwriting and other related

advisory services; (vi) the banking business which engages in the provision of


– 28 –

commercial and retail banking services; and (vii) other businesses including food

business, development of computer hardware and software, money lending and

the provision of property, project and fund management and investment advisory

services. The performance analysis of these business segments is shown as follows:


Property investment business continued to provide stable and recurring

revenue to the Remaining Group. Total revenue from the property

investment business for the year ended 31st December, 2011 amounted to

approximately HK$89 million (as compared to approximately HK$97 million

in 2010).

Given the quality and strategic location of the investment properties, the

Remaining Group recorded revaluation gains on its investment properties of

a total of approximately HK$271 million during the year ended

31st December, 2011 as compared to approximately HK$238 million in 2010.

The Remaining Group has invested in a property fund, Lippo ASM Asia

Property LP (together with its subsidiaries, the ‘‘LAAP Group’’), which has

indirect interests in OUE, a listed company in Singapore principally engaged

in property investment and development and hospitality business. The hotels

managed by OUE, including Mandarin Orchard Singapore and the Crowne

Plaza Changi Airport Hotel acquired in 2011, are strategically located in

various well known tourist destinations of Singapore, Malaysia and

mainland China. OUE Bayfront, a prime office building near Marina Bay,

obtained the temporary occupation permit in January 2011 and started to

generate rental income. Together with DBS Building Towers One and Two

acquired in September 2010 and Mandarin Gallery, a premier luxury retail

mall at Orchard Road, Singapore, the investment property portfolio

provided a higher and recurring source of revenue to OUE. OUE also

holds interests in One Raffles Place near Marina Bay, the central financial

and business district of Singapore. One Raffles Place Tower Two, a 38-storey

Grade A office building adjoining One Raffles Place Tower One, is expected

to commence leasing in 2012. Pre-sale of a residential property development

project, namely Twin Peaks, at 33 Leonie Hill Road in Singapore has started.

The Remaining Group registered a share of profit of approximately

HK$855 million from the LAAP Group during the year ended

31st December, 2011 (as compared to approximately HK$2,649 million in

2010). The profit was mainly attributable to the fair value gain on OUE

Bayfront and higher income from the hospitality division and property

investment division. LAAP’s controlling stake in OUE decreased from

approximately 67.1% as at 31st December, 2010 to approximately 65.6% as

at 31st December, 2011. During the year, a net increase of the share of equity

interest of HK$78 million was recorded directly in the reserves of the LAAP

Group, mainly due to the share buy-back by OUE.


– 29 –

The Remaining Group continued to look for opportunities to realise the

increase in value of its property assets. During the year ended 31st December,

2011, the Remaining Group completed the disposal of several office units in

Beijing and a residential unit in Hong Kong at an aggregate consideration of

approximately HK$157 million. The disposals represented a good

opportunity for the Remaining Group to realise the profits.


The Remaining Group has participated in a number of well-located

property development projects in mainland China, Macau, Singapore and

Thailand.

In Singapore, Marina Collection and The Holland Collection, joint

venture development projects in Sentosa Cove and Holland Road

respectively, were completed in 2011. Profits arising from the sold units

have been recognised and the Remaining Group recorded share of profit of

approximately HK$282 million from these projects during the year. Pre-sale

of Centennia Suites, another property development project at Kim Seng

Road, was launched and all units were sold out in 2010. Centennia Suites is

scheduled to be completed in 2013, and profit arising therefrom will be

recognised upon completion of the development.

In mainland China, construction of an integrated residential,


Development Area is progressing well and is expected to be completed in

2013. With the pre-sale permit obtained in July 2011, pre-sale has been

launched. In June 2011, the Remaining Group successfully won the bid for

the land use right of a piece of land with a site area of approximately 80,615

square metres in Taizhou City, Jiangsu Province for a consideration of

RMB145 million, which is a residential development project comprising

townhouses and residential towers. The Remaining Group also participated

in another development project in Huai An, Jiangsu Province with a site area

of approximately 41,087 square metres, which will be developed into an

integrated residential, commercial and retail complex and is currently in

planning and design stage. The Remaining Group remained cautious in light

of the changing market conditions and would timely adjust its development

strategies accordingly.

Foundation work of ‘‘M Residences’’, a property development project in

Macau, also commenced in 2011. Pre-sale has been launched since November

2011 and has received satisfactory response. M Residences is expected to be

completed in 2014.


– 30 –

The Remaining Group was interested in approximately 47.9% of the

MIDAN City Project. The MIDAN City Project is a comprehensive property

project to be developed into a self-contained community with an approved

total gross floor area of approximately three million square metres.

Marketing of the project is in progress.


For the year ended 31st December, 2011, treasury and securities

investments business recorded a total revenue of approximately

HK$26 million (as compared to approximately HK$33 million in 2010),

with a net loss of approximately HK$2 million (as compared to a net profit of

approximately HK$26 million in 2010). The drop was mainly attributable to

the fair value loss on security investments. The global investment market is

challenging and full of uncertainties. Anticipating future volatility, the

Remaining Group cautiously managed its investment portfolio with a

continuing focus on improving the overall asset quality.


In 2011, market sentiments were adversely affected by uncertainties

resulting from the post-earthquake recession in Japan, Eurozone financial

crisis and inflation pressures. Investors have become cautious in the highly

volatile markets. The Remaining Group’s corporate finance and securities

broking business was also affected, recording a turnover of approximately

HK$44 million in 2011 (as compared to approximately HK$49 million in

2010) and a loss of approximately HK$21 million (as compared to

approximately HK$2 million in 2010).


MCB, a licensed bank in Macau, is a wholly-owned subsidiary of HKC.

Although the Macau economy has rebounded since 2010, the operating

environment has been tough because of increasing operating costs and

inflation pressure. MCB managed to maintain the quality of its client and

loan portfolio, and management continued to lend conservatively and seek

growth in areas where appropriate. The banking business recorded a

turnover of approximately HK$11 million (as compared to approximately

HK$14 million in 2010), and contributed profit to the Remaining Group.


Total revenue from other businesses for the year ended 31st December,

2011 was approximately HK$30 million, representing a decrease of

approximately 69% from approximately HK$97 million in 2010. The

decrease was mainly attributable to the disposal of a Chinese restaurant in

Hong Kong to an associate in November 2010 and the lower revenue

generated from the project management business as mentioned above.


– 31 –

In January 2011, the Remaining Group acquired the interest of

Pantogon Holdings Pte Ltd from Jeremiah Holdings Limited, a 60%

subsidiary of the LCR. Following the completion of the transaction, the

Remaining Group increased its effective interest in Auric, a listed company in

Singapore, from approximately 19.9% to approximately 28.1%. Auric is

mainly engaged in food manufacturing, wholesale and distribution, food

retail and food court operation as well as property and securities investment.

The Remaining Group recorded a share of profit of approximately

HK$26 million during the year ended 31st December 2011, as compared to

approximately HK$18 million in 2010.

Liquidity, financial resources and charge of assets



at 31st December, 2011, the Remaining Group had cash and bank balances of

approximately HK$1.1 billion (as compared to approximately HK$0.9 billion in

2010). As at 31st December, 2011, bank loans of the Remaining Group increased

to approximately HK$2.2 billion, as compared to approximately HK$1.7 billion

in 2010. The bank loans were secured by certain properties, shares in certain

subsidiaries and certain bank deposits of the Remaining Group and denominated

in Hong Kong dollars and Renminbi (as compared to Hong Kong dollars,

Renminbi and United States dollars in 2010). All the bank loans carried interest at

floating rates. Approximately 11% (as compared to 32% in 2010) of the bank

loans were repayable within one year. As at 31st December, 2011, the gearing

ratio (measured as total borrowings, net of non-controlling interests, to

shareholders’ funds of the Remaining Group) was 20.1% (as compared to

17.2% as at 31st December, 2010).


In April 2011, the Remaining Group exercised the warrants issued by HKC

(the ‘‘HKC Warrants’’) to subscribe for a total of 106,764,864 shares of HKC with

a total consideration of HK$133 million. This subscription enabled the Remaining

Group to maintain its percentage interest in HKC. Since some of the warrant

holders did not exercise the warrants, the Remaining Group’s interest in HKC

increased from approximately 55.8% as at 31st December, 2010 to approximately

56.0% as at 31st December, 2011. On 4th July, 2011, the subscription rights under

the HKC Warrants and the Company’s warrants expired and their listing status

were also withdrawn on the same date.

Save for the aforesaid, there was no change in the Remaining Group’s capital

structure.


– 32 –

During the year ended 31st December, 2011, the Remaining Group

monitored the relative foreign exchange position of its assets and liabilities to

minimise foreign currency risk. When appropriate, hedging instruments including

forward contracts, swap and currency loans would be used to manage foreign

exchange exposure.


As at 31st December, 2011, the Remaining Group had contingent liabilities

relating to its banking subsidiary of approximately HK$25 million, comprising




Remaining Group’s banking operation, the Remaining Group had no material

contingent liabilities outstanding.

As at 31st December, 2011, the Remaining Group’s total capital commitment

increased by 37% to approximately HK$939 million from approximately

HK$683 million in 2010, mainly attributable to the property development

projects held by the Remaining Group. The investments or capital assets will be

financed by the Remaining Group’s internal resources and/or external bank

financing, as appropriate.




material acquisitions and disposals for the year ended 31st December, 2011.

The Remaining Group also owns approximately 49.9% interest in Asia Now,

a company whose shares are listed on the TSX Venture Exchange of Canada and

is primarily engaged in the business of exploration of mineral deposits in

mainland China. Asia Now was focus on the exploration of the site at Beiya in

Yunnan Province and an independent technical report prepared in accordance

with the National Instrument 43-101 and the Canadian Institute of Mining,

Metallurgy and Petroleum Standard Definitions for Mineral Projects on the initial

mineral resource estimate for the deposit was released in January 2012.

In November 2011, the Remaining Group entered into an agreement for the

disposal of the entire issued share capital of Winnery Limited (‘‘Winnery’’) for a

consideration of Rp240 billion. An initial payment of Rp24 billion had been

received by the Remaining Group and the balance of the consideration was

received in the final completion date in late 2012. Winnery held 480 million shares

in PT Lippo Karawaci Tbk, a company incorporated in Indonesia and whose

shares are listed on the Indonesia Stock Exchange. The above disposal represented

a good opportunity for the Remaining Group to realise a gain from its

investments and enable the Company to have additional capital and to, in the

future, consider suitable investment opportunities if and when presented to it.


– 33 –

In December 2011, the Remaining Group had acquired 14,470,000 ordinary

shares in, representing approximately 7.35% of the then issued share capital of,

Haranga for an aggregate consideration of approximately A$4 million. Haranga is

listed on the Australian Securities Exchange and is primarily engaged in the

acquisition, exploration and development of iron ore projects in Mongolia and

owns a controlling interest in four separate iron ore projects in Mongolia. In

addition, the Remaining Group acquired in November 2011 an attributable

interest of 8% of the total issued and outstanding Class A units in Skye for a

consideration of US$4.88 million. Skye, through its majority owned subsidiary,

CS Mining, owns and controls a few copper ore deposits located in the Milford

Mineral Belt in Beaver County, State of Utah in the United States of America,

and is expected to engage in the business of mining and processing copper and

possibly other minerals following receipt of the appropriate permits. The above

acquisitions had provided another opportunity for the Remaining Group to invest

in the promising mineral resource industry.


The Remaining Group had 403 employees as at 31st December, 2011, as

compared to 341 employees as at 31st December, 2010. The increase in the number

of employees was mainly due to the expansion of the property development team

in mainland China. Staff costs (including directors’ emoluments) charged to the

income statement during the year ended 31st December, 2011 amounted to

approximately HK$155 million, as compared to approximately HK$217 million in

2010. The Remaining Group ensured that its employees were offered competitive

remuneration packages. Certain employees of the Remaining Group were granted

options under the share option scheme of the Company.


There was no specific plan for material investments and acquisition of capital

assets as at 31st December, 2011.

(c) Business review for the year ended 31st December, 2010

Operating Results

For the year ended 31st December, 2010, the revenue of the Remaining

Group was approximately HK$290 million and the Remaining Group recorded a

profit attributable to its shareholders of approximately HK$1,690 million, which

was mainly contributed by the property valuation gain and the disposal of the

retail business, as well as the fair value gains on investment properties and

write-back of impairment loss made for a property project under the Remaining

Group’s associates.


– 34 –

Business review

For the year ended 31st December, 2010, the Remaining Group was





investments; (v) corporate finance and securities broking which provide securities

and futures brokerage, investment banking, underwriting and other related

advisory services; (vi) the banking business which engages in the provision of

commercial and retail banking services; (vii) other businesses including food

business, development of computer hardware and software, money lending and

the provision of property, project and fund management and investment advisory

services; and (viii) retail business engaged in the operation of department stores.

The performance analysis of these business segments is shown as follows:


Property investment business generated revenue of approximately

HK$97 million for the year ended 31st December, 2010. Lippo Centre in

Hong Kong, being the landmark of the Remaining Group in Hong Kong,

continued to achieve satisfactory occupancy rates and registered an increase

of rental income in 2010. Given the quality and strategic location of the

investment properties, the Remaining Group recorded a total revaluation

gain on investment properties of HK$238 million. As a result, the profit

generated from the property investment sector increased to approximately

HK$351 million in 2010.

The Remaining Group had invested in a property fund, Lippo ASM

Asia Property LP (‘‘LAAP’’), which had indirect interests in OUE, a listed

company in Singapore principally engaged in property investment and

development and hotel operations. The hotels managed by OUE, including

Mandarin Orchard Singapore, are strategically located in various well known

tourist destinations of Singapore, Malaysia and mainland China. Mandarin

Gallery, a premier luxury retail mall at Orchard Road, Singapore commenced

operation in the fourth quarter of 2009. Together with the DBS Building

Towers One and Two acquired in September 2010, the investment property

portfolio provided a recurrent source of revenue to OUE during the year

ended 31st December, 2010. OUE also holds interests in prime office

buildings, such as One Raffles Place and OUE Bayfront near Marina Bay, in

the central financial and business district of Singapore. OUE has participated

in a residential property development project, named as Twin Peaks at

25 Leonie Hill Road in Singapore. In 2010, the Remaining Group registered a

share of profit of approximately HK$2,649 million from the investment. The

profit was mainly attributable to the fair value gains on investment

properties and write-back of impairment loss made for the property under

development. The remarkable results were also contributed by the improved


– 35 –

performance of the hospitality business which benefited from the substantial

increase in tourist arrivals in Singapore and the new rental income from

Mandarin Gallery and DBS Building Towers One and Two.

In March 2010, LAAP, through its subsidiary, acquired the direct and

indirect interest in OUE held by a joint venture partner, which increased its

controlling stake in OUE to approximately 88.52% and resulted in a gain

recorded in the reserves. Subsequently, two placement of shares of OUE to

third parties had been completed in June and October 2010, which decreased

its controlling stake in OUE to approximately 67.07% and reduced the

amount of the reserves. These transactions had no impact on the Remaining

Group’s profit for the year.


The Remaining Group participated in a number of well-located property

development projects in mainland China, Macau, Singapore and Thailand.

TOP of the Marina Collection, a joint venture development in Sentosa Cove,

in which HKC, a listed subsidiary of the Company has a 50% interest, was

obtained in March 2011. Pre-sale has been launched and income thereon

would be recognised accordingly. Other projects in Singapore include

Centennia Suites, and The Holland Collection, development at Kim Seng

Road and Holland Road, respectively. Pre-sale of both projects was launched

and all units have been sold out. Centennia Suites and The Holland

Collection are scheduled to be completed in 2013 and end of 2011

respectively. Revenue thereon will be recognised upon completion.

In mainland China, the construction works of an integrated residential,


Development Area, have commenced in 2010 and were expected to be

completed by end of 2012. In August 2010, the Remaining Group had

successfully won the bid for a piece of land in Huai An City in mainland

China for the development of an integrated residential, commercial and retail

complex.

The Group was interested in approximately 47.9% of the MIDAN City

Project. This was a comprehensive property project to be developed into a

self-contained community with an approved total gross floor area of

approximately three million square metres. The marketing of the project is

in progress.


Due to the uncertainty around the global economy, the financial market

remains volatile. The Remaining Group cautiously looked for opportunities

to realise its profit in the investment portfolio. For the year ended


– 36 –

31st December, 2010, treasury and securities investments business recorded a

total revenue of approximately HK$33 million, with a profit of

approximately HK$26 million.


Despite global economy gradually recovering, participation from retail

investors remained cautious in this highly volatile market. The Remaining

Group’s corporate finance and securities broking business was affected. It

registered a decrease in turnover in 2010 to approximately HK$49 million

and a loss of approximately HK$2 million.


MCB is a wholly-owned subsidiary of HKC. Although the Macau

economy has rebounded during the year, the operating environment is still

tough. MCB managed to maintain the quality of its client and loan portfolio.

Management continued to lend conservatively and seek growth in areas

where appropriate in a selective manner. The banking business recorded a

turnover of approximately HK$14 million for the year, and delivered a profit

to the Group.


Total revenue from other businesses for the year ended 31st December,

2010 was approximately HK$97 million, mainly contributed from a Chinese

restaurant in Hong Kong which was disposed in November 2010 and the

revenue generated from property project management in Singapore.

(vii)Retail business

In August 2010, the Remaining Group entered into an agreement to sell

the retail business in mainland China under the trade name of ‘‘Robbinz’’,

comprising the existing two stores in Tianjin and Chengdu as well as a new

store in Yangzhou, to a subsidiary of PT Multipolar Tbk (‘‘Multipolar’’) for

an aggregate cash consideration of HK$345 million and an option for three

years to buy back 20% interest therein (the ‘‘Sale’’), resulting in a gain on

disposal of HK$341 million. The retail business had been loss making,

contributing turnover of approximately HK$126 million to the Remaining

Group with net operating loss of approximately HK$92 million for 2010. The

Sale could facilitate Robbinz to leverage on Multipolar’s significant interests

and expertise in the retail sector to achieve necessary economies of scale and

improve its performance where the Remaining Group held an option to buy

back 20% interest therein. The Sale was completed on 15th October, 2010.

Following the Sale, the Remaining Group ceased to engage in the retail

business. The turnover and the results of the retail business up to the date of

completion are presented separately as discontinued operation in the

financial statements.


– 37 –

Liquidity, financial resources and charge of assets



at 31st December, 2010, the Remaining Group had cash and bank balances of

approximately HK$0.9 billion. As at 31st December, 2010, bank loans of the

Remaining Group amounted to approximately HK$1.7 billion. The bank loans

were secured by certain properties, shares in certain subsidiaries and certain fixed

deposits of the Remaining Group and were denominated in Hong Kong dollars,

United States dollars and Renminbi. All the bank loans carried interest at floating

rates and 32% of the bank loans were repayable within one year. As at

31st December, 2010, gearing ratio (measured as total borrowings, net of

non-controlling interests, to shareholders’ funds of the Remaining Group) was

approximately 17.2%.


During the year ended 31st December, 2010, there was no change in the

Remaining Group’s capital structure.

During the year ended 31st December, 2010, the Remaining Group

monitored the relative foreign exchange position of its assets and liabilities to

minimise foreign currency risk. When appropriate, hedging instruments including

forward contracts, swap and currency loans would be used to manage foreign

exchange exposure.


As at 31st December, 2010, the Remaining Group had contingent liabilities

relating to its banking subsidiary of approximately HK$18 million, comprising




Remaining Group’s banking operation, the Remaining Group had no material

contingent liabilities outstanding.

As at 31st December, 2010, the Remaining Group’s total capital commitment

was approximately HK$683 million as a result of the property development

projects held by the Remaining Group. The investments or capital assets will be

financed by the Remaining Group’s internal resources and/or external bank

financing, as appropriate.




material acquisitions and disposals for the year ended 31st December, 2010.


– 38 –

In September 2010, the Remaining Group entered into a conditionalagreement with a wholly-owned subsidiary of Food Junction for the disposal ofits entire interest in All Around Limited for a cash consideration of approximatelyHK$31 million. The material assets of All Around Limited were 90% interest inthe share capital of LCR Catering Services Limited which was engaged in theoperation of a Chinese restaurant in Hong Kong. The above disposal wascompleted in November 2010.

The Remaining Group entered into a conditional subscription agreement inSeptember 2010 with Asia Now, a company listed on the TSX Venture Exchangeof Canada for the subscription by the Remaining Group of 42,400,000 newcommon shares in Asia Now (the ‘‘Asia Now Shares’’) for an aggregateconsideration of approximately C$12.7 million (the ‘‘Subscription’’). TheSubscription was completed in November 2010, after which the RemainingGroup was interested in an aggregate of 55,429,908 Asia Now Shares,representing approximately 49.9%, on a non-diluted basis (and approximately47.5%, on a fully diluted basis) of the issued and outstanding Asia Now Shares.Asia Now is a company primarily engaged in the business of exploration ofmineral deposits in the mainland China. The Subscription represented a strategicinvestment of the Remaining Group in the promising mineral resource industry.


The Remaining Group had 341 employees as at 31st December, 2010. Totalstaff costs (including directors’ emoluments) charged to the income statementduring the year ended 31st December, 2010 amounted to approximatelyHK$217 million. The Remaining Group ensured that its employees were offeredcompetitive remuneration packages. Certain employees of the Remaining Groupwere granted options under share option scheme of the Company.


There was no specific plan for material investments and acquisition of capitalassets as at 31st December, 2010.

7. RECONCILIATION OF VALUATION OF THE PROPERTY

RHL Appraisal Limited, an independent property valuer, has valued the Property as at30th September, 2013. Details of the valuation report are set out in Appendix IV to thiscircular. As required under Rule 5.07 of the Listing Rules, the reconciliation betweenvaluation of the Property as at 30th September, 2013 and the book value of the Property asat 30th June, 2013 is as follows:

HK$’000

Book value as at 30th June, 2013(as extracted from Appendix II to this circular) 2,548,482

Additions 15,573Changes with valuation (15,573)Exchange realignment 11,835

Valuation as at 30th September, 2013(as extracted from Appendix IV to this circular) 2,560,317


– 39 –

Set out below are the unaudited consolidated statement of financial position of the

Tecwell Group as at 31st December, 2010, 31st December, 2011, 31st March, 2013 and

30th June, 2013 and the unaudited consolidated income statements, consolidated statements

of comprehensive income, consolidated statements of changes in equity and consolidated

statements of cash flows for each of the years ended 31st December, 2010 and

31st December, 2011, the fifteen months ended 31st March, 2013 and the three months

ended 30th June, 2013 (collectively, the ‘‘Unaudited Consolidated Financial Information of

the Tecwell Group’’), which have been prepared in accordance with Rule 14.68(2)(a)(i)(A)

of the Listing Rules.

The auditors of the Company, Ernst & Young, have reviewed the Unaudited

Consolidated Financial Information of the Tecwell Group in accordance with Hong

Kong Standard on Review Engagements 2410, ‘‘Review of Interim Financial Information

Performed by the Independent Auditor of the Entity’’ issued by the Hong Kong Institute of

Certified Public Accountants and concluded that nothing has come to their attention that

causes them to believe that the Unaudited Consolidated Financial Information of the

Tecwell Group is not prepared, in all material respects, in accordance with the basis of

preparation set out in note 2 to the Unaudited Consolidated Financial Information of the

Tecwell Group.

APPENDIX II FINANCIAL INFORMATION OF THE TECWELL GROUP

– 40 –

UNAUDITED CONSOLIDATED INCOME STATEMENTS

For each of the years ended 31st December, 2010 and 31st December, 2011, the fifteen months

ended 31st March, 2013 and three months ended 30th June, 2013

For the year

ended 31st

December,

2010

For the year

ended 31st

December,

2011

For the fifteen

months ended

31st March,

2013

For the three

months ended

30th June,

2013

HK$’000 HK$’000 HK$’000 HK$’000

Revenue 107,818 137,264 180,050 37,952

Cost of sales (3,897) (3,110) (4,830) (1,640)

Gross profit 103,921 134,154 175,220 36,312

Administrative expenses (3,786) (3,853) (4,956) (1,017)

Other operating expenses (21,970) (25,284) (36,371) (4,447)

Fair value gain/(loss) on

investment properties 423,358 97,671 429,553 (355,538)

Net fair value gain/(loss) on

financial instruments

at fair value through

profit or loss — — (33,020) 2,520

Finance costs (21,944) (23,413) (55,754) (19,062)

Profit/(loss) before tax 479,579 179,275 474,672 (341,232)

Income tax (120,966) (45,601) (134,374) 83,374

Profit/(loss) for the year/period 358,613 133,674 340,298 (257,858)

Attributable to:

Equity holders of the

Company 340,590 131,182 340,298 (257,858)

Non-controlling interests 18,023 2,492 — —

358,613 133,674 340,298 (257,858)


– 41 –

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


ended 31st March, 2013 and three months ended 30th June, 2013

For the year

ended 31st

December,

2010

For the year

ended 31st

December,

2011

For the fifteen

months ended

31st March,

2013

For the three

months ended

30th June,

2013

HK$’000 HK$’000 HK$’000 HK$’000

Profit/(loss) for the year/period 358,613 133,674 340,298 (257,858)

Other comprehensive income

Exchange differences on

translation of foreign

operations 38,107 74,089 8,623 24,061

Other comprehensive

income for the

year/period, net of tax 38,107 74,089 8,623 24,061

Total comprehensive

income/(loss) for the

year/period 396,720 207,763 348,921 (233,797)

Attributable to:

Equity holders of the

Company 378,970 204,627 348,921 (233,797)

Non-controlling interests 17,750 3,136 — —

396,720 207,763 348,921 (233,797)


– 42 –

UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

As at 31st December, 2010 and 2011, 31st March, 2013 and 30th June, 2013

31st December,

2010

31st December,

2011

31st March,

2013

30th June,

2013

HK$’000 HK$’000 HK$’000 HK$’000

NON-CURRENT ASSETS

Fixed assets 635 626 690 689

Prepayments — — 5,001 4,750

Investment properties 2,196,430 2,421,361 2,864,142 2,548,482

Other financial asset — — — 2,432

Total non-current assets 2,197,065 2,421,987 2,869,833 2,556,353

CURRENT ASSETS

Debtors, prepayments and

deposits 2,898 2,767 5,626 6,348

Amount due from the immediate

holding company — — 226,981 219,530

Restricted cash — — 32,989 33,639

Cash and bank balances 58,680 25,010 45,346 82,075

Total current assets 61,578 27,777 310,942 341,592

CURRENT LIABILITIES

Amounts due to fellow

subsidiaries 29 73,395 46,438 47,080

Amount due to a shareholder 21,747 21,982 — —

Other payables, accruals and

deposits received 89,924 94,850 94,618 94,686

Bank loans 47,008 49,340 8,668 8,788

Tax payable 19,135 22,076 15,872 16,395

Total current liabilities 177,843 261,643 165,596 166,949

NET CURRENT ASSETS/

(LIABILITIES) (116,265) (233,866) 145,346 174,643

TOTAL ASSETS LESS

CURRENT LIABILITIES 2,080,800 2,188,121 3,015,179 2,730,996


– 43 –

31st December,

2010

31st December,

2011

31st March,

2013

30th June,

2013

HK$’000 HK$’000 HK$’000 HK$’000

NON-CURRENT LIABILITIES

Amounts due to shareholders 467,130 466,637 — —

Bank loans 333,737 300,956 1,088,772 1,115,415

Other financial liabilities — — 32,440 32,023

Deferred tax liabilities 405,375 466,243 590,761 514,149

Total non-current liabilities 1,206,242 1,233,836 1,711,973 1,661,587

NET ASSETS 874,558 954,285 1,303,206 1,069,409

CAPITAL AND RESERVES

Share capital 1 1 1 1

Reserves 805,302 954,284 1,303,205 1,069,408

805,303 954,285 1,303,206 1,069,409

Non-controlling interests 69,255 — — —

TOTAL EQUITY 874,558 954,285 1,303,206 1,069,409


– 44 –

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY


ended 31st March, 2013 and the three months ended 30th June, 2013

Attributable to equity holders of the Company

Issued

capital

Exchanges

equalisation

reserve

Retained

profits Total

Non-

controlling

interests

Total

equity

HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

At 1st January, 2010 1 98,561 327,771 426,333 51,505 477,838

Profit for the year — — 340,590 340,590 18,023 358,613

Other comprehensive income for the year:

Exchange differences on translation of

foreign operations — 38,380 — 38,380 (273) 38,107

Total comprehensive income for the year — 38,380 340,590 378,970 17,750 396,720

At 31st December, 2010 and

at 1st January, 2011 1 136,941 668,361 805,303 69,255 874,558

Profit for the year — — 131,182 131,182 2,492 133,674

Other comprehensive income for the year:


foreign operations — 73,445 — 73,445 644 74,089

Total comprehensive income for the year — 73,445 131,182 204,627 3,136 207,763

Changes in non-controlling interest without

change in control — — (55,645) (55,645) (69,757) (125,402)

Dividend paid to non-controlling

shareholder of the Company — — — — (2,634) (2,634)

At 31st December, 2011 and

at 1st January, 2012 1 210,386 743,898 954,285 — 954,285

Profit for the period — — 340,298 340,298 — 340,298

Other comprehensive income for the period:


foreign operations — 8,623 — 8,623 — 8,623

Total comprehensive income for the period — 8,623 340,298 348,921 — 348,921

At 31st March, 2013 and at 1st April, 2013 1 219,009 1,084,196 1,303,206 — 1,303,206

Loss for the period — — (257,858) (257,858) — (257,858)

Other comprehensive income for the period:


foreign operations — 24,061 — 24,061 — 24,061

Total comprehensive income/(loss)

for the period — 24,061 (257,858) (233,797) — (233,797)

At 30th June, 2013 1 243,070 826,338 1,069,409 — 1,069,409


– 45 –

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS



For the

year ended

31st December,

2010

For the

year ended

31st December,

2011

For the fifteen

months ended

31st March,

2013

For the three

months ended

30th June,

2013

HK$’000 HK$’000 HK$’000 HK$’000

Cash flows from operating

activities

Profit/(loss) before tax 479,579 179,275 474,672 (341,232)

Adjustments for:

Loss on disposal of fixed

assets — — 61 —

Net fair value (gain)/loss on

investment properties (423,358) (97,671) (429,553) 355,538

Net fair value (gain)/loss on

financial instruments at

fair value through profit

or loss — — 33,020 (2,520)

Finance costs 21,944 23,413 55,754 19,062

Interest income (832) (502) (906) (83)

Depreciation 321 39 49 11

77,654 104,554 133,097 30,776

Decrease/(increase) in

debtors, prepayments and

deposits (1,812) 131 (7,860) (728)

Increase/(decrease) in other

payables, accruals and

deposits received 14,235 11,670 (2,308) (2,422)

Cash generated from

operations 90,077 116,355 122,929 27,626

Interest received 832 502 906 83

Overseas tax paid (7,413) (10,470) (19,453) (2,840)

Net cash flows from operating

activities 83,496 106,387 104,382 24,869


– 46 –

For the

year ended

31st December,

2010

For the

year ended

31st December,

2011

For the fifteen

months ended

31st March,

2013

For the three

months ended

30th June,

2013

HK$’000 HK$’000 HK$’000 HK$’000

Cash flows from investing

activities

Additions to investment

properties (40,086) (16,475) — —

Payments to acquire

fixed assets (22) — (172) —

Net cash flows used in

investing activities (40,108) (16,475) (172) —

Cash flows from financing

activities

Drawdown of bank loans — — 1,128,842 21,034

Repayments of bank loans (45,908) (48,211) (353,820) (2,197)

Finance costs paid (21,997) (23,355) (83,446) (15,964)

Movements of balances

between the

Tecwell Group and the

Remaining Group 1,423 73,109 (742,558) 8,805

Payment relating to change in

non-controlling interests — (125,402) — —

Dividends paid to

non-controlling shareholder

of the subsidiary — (2,634) — —

Increase in restricted cash — — (32,989) (445)

Net cash flows from/(used in)

financing activities (66,482) (126,493) (83,971) 11,233

Net increase/(decrease) in cash

and cash equivalents (23,094) (36,581) 20,239 36,102

Cash and cash equivalents at

beginning of year/period 79,030 58,680 25,010 45,346

Exchange realignments 2,744 2,911 97 627

Cash and cash equivalents

at end of year/period 58,680 25,010 45,346 82,075

ANALYSIS OF BALANCES

OF

CASH AND CASH

EQUIVALENTS

Cash and bank balances 58,680 25,010 45,346 82,075


– 47 –

NOTES TO THE FINANCIAL INFORMATION OF THE TECWELL GROUP



1. GENERAL INFORMATION

On 16th October, 2013, LCR and the Purchaser entered into the Disposal Agreement,

pursuant to which, LCR conditionally agreed to procure the sale of, and the Purchaser

conditionally agreed to purchase the Sale Shares, representing the entire issued share capital

of Tecwell, for the Consideration of approximately HK$843.5 million (subject to

adjustment, if any), which shall be satisfied in cash on the Completion Date. Upon

Completion, the Tecwell Group will cease to be the subsidiaries of the Company.

2. BASIS OF PREPARATION

The Unaudited Consolidated Financial Information of the Tecwell Group has been

prepared in accordance with Rule 14.68(2)(a)(i) of the Listing Rules, and solely for the

purposes of inclusion in the circular in connection with the proposed transaction.

The Unaudited Financial Information of the Tecwell Group has been prepared on the

historical cost basis, except for investment properties and certain financial instruments

which have been measured at fair value. The Unaudited Financial Information of the

Tecwell Group has been prepared using the same accounting policies as those adopted by

the Group in the preparation of the consolidated financial statements of the Group for the

fifteen months ended 31st March, 2013, which conform with HKFRSs (which include all

Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards (‘‘HKASs’’)

and Interpretations) issued by the Hong Kong Institute of Certified Public Accountants

(‘‘HKICPA’’).

The Unaudited Financial Information of the Tecwell Group does not contain sufficient

information to constitute a complete set of financial statements as defined in Hong Kong

Accounting Standard 1 (Revised) ‘‘Presentation of Financial Statements’’ issued by the

HKICPA or a set of condensed financial statements as defined in Hong Kong Accounting

Standard 34 ‘‘Interim Financial Reporting’’.


– 48 –

1. UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING

GROUP

(a) Basis of preparation of the unaudited pro forma financial information of the

Remaining Group

The unaudited pro forma financial information of the Remaining Group (the

‘‘Unaudited Pro Forma Financial Information’’) which has been prepared on the basis

of the notes set out below is presented to illustrate the effect of the Disposal on (a) the

financial position of the Remaining Group as if it had taken place on 31st March,

2013; and (b) the financial performance and cash flows of the Remaining Group for the

fifteen months ended 31st March, 2013 as if it had taken place on 1st January, 2012.

This Unaudited Pro Forma Financial Information has been prepared by the

Directors of the Company in accordance with paragraph 4.29 of the Listing Rules for

illustrative purposes only, based on their judgments, estimations and assumptions, and

because of its hypothetical nature, it may not give a true picture of the financial

position of the Remaining Group as at 31st March, 2013 or at any future date or of the

financial performance and cash flows of the Remaining Group for the fifteen months

ended 31st March, 2013 or for any future period.

The Unaudited Pro Forma Financial Information should be read in conjunction

with the audited consolidated financial statements of the Group for the fifteen months

ended 31st March, 2013 as set out in the annual report of the Company for the fifteen

months ended 31st March, 2013 and other financial information included elsewhere in

this circular.

The Unaudited Pro Forma Financial Information is prepared based on the

audited consolidated statement of financial position of the Group as at 31st March,

2013, and the audited consolidated income statement, the audited consolidated

statement of comprehensive income and the audited consolidated statement of cash

flows of the Group for the fifteen months ended 31st March, 2013 extracted from the

audited consolidated financial statements of the Group for the fifteen months ended

31st March, 2013 as set out in the annual report of the Company for the fifteen months

ended 31st March, 2013, after making pro forma adjustments relating to the Disposal

as described in the notes set out below that are (i) directly attributable to the Disposal

and not relating to any future events or decisions; (ii) factually supportable; and

(iii) considered to be integral to the Disposal.

APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATIONOF THE REMAINING GROUP

– 49 –

(b) Unaudited pro forma consolidated statement of financial position

Consolidated

statement of

financial

position of

the Group as at

31st March, 2013 Pro forma adjustments

Unaudited

pro forma

of the

Remaining

Group

HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

(Note i) (Note ii(a)) (Note iii) (Note iv(a)) (Note vi(a))

NON-CURRENT ASSETS

Goodwill 71,485 71,485

Fixed assets 150,647 (689) 149,958

Investment properties 4,721,327 (2,548,482) (315,660) 1,857,185

Interests in associates 9,877,290 (24,584) 9,852,706

Interests in jointed controlled

entities 99,553 99,553

Available-for-sale financial

assets 344,198 344,198

Loans and advances 65,321 65,321

Other financial asset 17,639 (2,432) 15,207

15,347,460 12,455,613

CURRENT ASSETS

Properties held for sale 23,033 23,033

Properties under development 2,724,676 2,724,676

Loans and advances 267,160 267,160

Debtors, prepayments and

deposits 457,837 35,982 493,819

Financial assets at fair value

through profit or loss 359,546 359,546

Other financial asset 7,275 7,275

Client trust bank balances 356,002 356,002

Restricted cash 1,087,363 (33,639) 650 1,054,374

Treasury bills 9,700 9,700

Cash and bank balances 2,127,509 (82,075) (650) 755,262 2,800,046

7,420,101 8,095,631

CURRENT LIABILITIES

Bank loans 617,583 (8,788) 608,795

Creditors, accruals and

deposits received 3,778,437 (94,686) 3,683,751

Amount due to the Tecwell

Group — 219,530 (219,530)

Current, fixed, savings and

other deposits of customers 266,786 266,786

Other financial liabilities 35,713 35,713

Tax payable 48,657 (16,395) 32,262

4,747,176 4,627,307

NET CURRENT ASSETS 2,672,925 3,468,324

TOTAL ASSETS LESS

CURRENT LIABILITIES 18,020,385 15,923,937


– 50 –

Consolidated

statement of

financial

position of

the Group as at

31st March, 2013 Pro forma adjustments

Unaudited

pro forma

of the

Remaining

Group

HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

(Note i) (Note ii(a)) (Note iii) (Note iv(a)) (Note vi(a))

NON CURRENT

LIABILITIES

Bank loans 2,328,354 (1,115,415) 1,212,939

Other financial liabilities 32,440 (32,023) 417

Deferred tax liabilities 707,059 (514,149) (76,612) 116,298

3,067,853 1,329,654

NET ASSETS 14,952,532 14,594,283

CAPITAL AND RESERVES

Share capital 49,316 49,316

Reserves 8,799,246 (173,163) (170,298) 81,174 8,536,959

8,848,562 8,586,275

Non-controlling interests 6,103,970 (69,907) (68,750) 42,695 6,008,008

TOTAL EQUITY 14,952,532 14,594,283


– 51 –

(c) Unaudited pro forma consolidated income statement

Consolidated

income statement

of the Group

for the fifteen

months ended

31st March,

2013 Pro forma adjustments

Unaudited

pro forma

of the

Remaining

Group

HK$’000 HK$’000 HK$’000 HK$’000 HK$’000(Note i) (Note ii(b)) (Note iv(b)) (Note v)

Revenue 528,221 (180,050) 348,171Cost of sales (108,471) 4,830 (103,641)

Gross profit 419,750 244,530

Administrative expenses (276,093) 4,956 (271,137)Other operating expenses (254,438) 36,310 (218,128)Fair value gain on investment

properties 554,728 (429,553) 125,175Gain on disposal of

investment properties 68,282 68,282

Gain on disposal of fixedassets 8,539 61 8,600

Gain on disposal of

subsidiaries 69,491 9,481 78,972Gain on disposal of available-

for-sale financial assets 19,531 19,531Gain on deemed disposal of

an associate 24,065 24,065Loss on derecognition of

associates (61,528) (61,528)

Net fair value loss onfinancial instruments at fairvalue through profit or loss (59,667) 33,020 (26,647)

Provision for impairmentlosses:Associates (36,771) (36,771)Available for sales financial

assets (23,251) (23,251)Properties under development (156) (156)

Finance costs (108,438) 55,754 (52,684)

Share of results of associates (204,546) 100,422 (104,124)Share of result of jointly

controlled entities (299) (299)

Profit/(Loss) before tax 139,199 (225,570)Income tax (158,889) 134,374 (24,515)

Loss for the period (19,690) (250,085)

Attributable to:

Equity holders of theCompany (10,002) (242,428) 6,213 56,357 (189,860)

Non-controlling interests (9,688) (97,870) 3,268 44,065 (60,225)

(19,690) (250,085)


– 52 –

(d) Unaudited pro forma consolidated statement of comprehensive income

Consolidated

statement of

comprehensive

income of

the Group for the

fifteen months

ended 31st March,


Unaudited

pro forma

of the

Remaining

Group

HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

(Note i) (Note ii(b)) (Note iv(b)) (Note v)

Loss for the period (19,690) (340,298) 9,481 100,422 (250,085)

Other comprehensive income/(loss)

Available-for-sale financial assets:

Changes in fair value 87,256 87,256

Reclassification adjustments for disposal (14,893) (14,893)

Reclassification adjustment relating to

disposal of a subsidiary (78,020) (78,020)

Income tax effect (1,635) (1,635)

(7,292) (7,292)

Surplus on revaluation of leasehold

land and buildings 8,885 8,885

Income tax effect (1,066) (1,066)

7,819 7,819

Share of other comprehensive loss of

associates

Share of changes in fair value of

available-for-sale financial assets 105,638 105,638

Share of effective portion of changes in fair

value of cash flow hedges of an associates 4,336 4,336

Share of exchange differences on translation

of foreign operations 295,085 2,545 297,630

405,059 407,604


foreign operations 61,409 (8,623) 52,786


deemed disposal of a foreign associate 10,504 10,504


derecognition of a foreign associate 61,365 61,365


disposal of foreign operations — (210,386) (210,386)

Other comprehensive income for the period,

net of tax 538,864 322,400

Total comprehensive income

for the period 519,174 72,315

Attributable to:

Equity holders of the Company 303,691 (248,571) (143,666) 57,785 (30,761)

Non-controlling interests 215,483 (100,350) (57,239) 45,182 103,076

519,174 72,315


– 53 –

(e) Unaudited pro forma consolidated statement of cash flows

Consolidated

statement of

cash flow

of the Group for

the fifteen months

ended 31st March,


Unaudited

pro forma of

the

Remaining

Group

HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

(Note i) (Note ii(c)) (Note iv(b), (c)) (Note v) (Note vi(b))

Cash flows from operating

activities

Profit/(Loss) before tax 139,199 (474,672) 9,481 100,422 (225,570)

Adjustments for:

Share of results of associates 204,546 (100,422) 104,124

Share of results of jointly

controlled entities 299 299

Loss/(Gain) on disposal of:

Fixed assets (8,539) (61) (8,600)

Investment properties (68,282) (68,282)

Held-to-maturity financial

assets (570) (570)

Subsidiaries (69,491) (9,481) (78,972)

A jointly controlled entity (310) (310)

Available-for-sale

financial assets (19,531) (19,531)

Gain on deemed disposal of

an associate (24,065) (24,065)

Loss on derecognition of an

associate 61,528 61,528

Provisions for impairment losses:

Associates 36,771 36,771

A jointly controlled entity 2,219 2,219

Available-for-sale

financial assets 23,251 23,251

Properties held for sale (465) (465)

Properties under development 156 156

Net fair value loss on

financial instruments at

fair value through profit

or loss 59,667 (33,020) 26,647

Write-back of allowance for

bad and doubtful debts (5,328) (5,328)

Fair value gains on

investment properties (554,728) 429,553 (125,175)

Finance costs 108,438 (55,754) 52,684

Interest income (41,555) 906 (40,649)

Dividend income (6,701) (6,701)

Depreciation 16,467 (49) 16,418

(147,024) (280,121)


– 54 –

Consolidated

statement of

cash flow

of the Group for

the fifteen months

ended 31st March,


Unaudited

pro forma of

the

Remaining

Group

HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000


Decrease in properties held for

sale 61,915 61,915

Increase in properties under

development (948,994) (948,994)

Increase in deposits paid for

properties under development (121,650) (121,650)

Increase in financial instruments

at fair value through profit

or loss (128,832) (128,832)

Decrease in loans and advances (85,567) (85,567)

Increase in debtors, prepayments

and deposits (266,555) 7,860 (258,695)

Decrease in client trust bank

balances 194,345 194,345

Increase in restricted cash (580,034) (580,034)

Increase in creditors, accruals

and deposits received 2,079,807 2,308 2,082,115

Increase in current, fixed,

savings and other deposits of

customers 146,561 146,561

Cash generated from operations 203,972 81,043

Interest received 41,525 (906) 40,619

Dividends received from:

An associate 11,522 11,522

A jointly controlled entity 3,165 3,165

Listed investments 3,017 3,017

Unlisted investments 3,459 3,459

Tax paid:

Hong Kong (2,327) (2,327)

Overseas (25,315) 19,453 (5,862)

Net cash flows from operating

activities 239,018 134,636


– 55 –

Consolidated

statement of

cash flow

of the Group for

the fifteen months

ended 31st March,


Unaudited

pro forma of

the

Remaining

Group

HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000


Cash flows from investing

activities

Proceeds from disposal of:

Fixed assets 136,876 136,876

Investment properties 617,816 617,816


assets 17,686 17,686


assets 45,062 45,062

Payments to acquire:

Fixed assets (22,054) 172 (21,882)


assets (18,418) (18,418)


assets (127,771) (127,771)

Increase in interests in associates (49,816) (49,816)

Advance to associates (94,518) (94,518)

Investment in a jointly

controlled entity (79,066) (79,066)

Decrease in interests in a jointly

controlled entity 2,400 2,400

Repayment from jointly

controlled entities 184,104 184,104

Disposal of subsidiaries, net of

cash and cash equivalents

disposed of 173,976 755,262 929,238

Increase in time deposits with

original maturity of more

than three months (200,988) (200,988)

Net cash flows from investing

activities 585,289 1,340,723


– 56 –

Consolidated

statement of

cash flow

of the Group for

the fifteen months

ended 31st March,


Unaudited

pro forma of

the

Remaining

Group

HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000


Cash flows from financing

activities

Interest paid (128,702) 83,446 (45,256)

Drawdown of bank loans (Note) 1,479,422 (1,128,842) 350,580

Repayments of bank and other

borrowings (Note) (1,101,061) 353,820 (747,241)

Movement of balances between

the Tecwell Group and the

Remaining Group — 742,558 (226,981) 515,577

Repurchases of shares (22,563) (22,563)

Repurchases of shares by

subsidiaries (11,998) (11,998)

Exercise of share options by

option holders of subsidiaries 5,039 5,039

Repayment to non-controlling

shareholders of subsidiaries (20,146) (20,146)

Dividends paid to shareholders

of the Company (49,770) (49,770)

Dividends and distributions paid

to non-controlling

shareholders of subsidiaries (87,209) (87,209)

Increase in pledged bank

deposits (39,498) 32,989 (6,509)

Net cash flows from/(used in)

financing activities 23,514 (119,496)

Net increase in cash and cash

equivalents 847,821 1,355,863

Cash and cash equivalents at

beginning of period 1,085,542 (25,010) 1,060,532

Exchange realignments 2,858 (97) 2,761

Cash and cash equivalents at end

of period 1,936,221 2,419,156

Analysis of balances of cash and

cash equivalents:

Cash and bank balances 2,127,509 (45,346) 755,262 (226,981) 2,610,444

Treasury bills 9,700 9,700

Time deposits with original

maturity of more than

three months (200,988) (200,988)

1,936,221 2,419,156

Note: The amounts exclude bank loans drawn down by the Group for lending to its margin clients

in respect of the initial public offerings. All such bank loans were fully repaid during the

period.


– 57 –

(f) Notes to the Unaudited Pro Forma Financial Information

(i) The figures are extracted from the audited consolidated financial statements

of the Group for the fifteen months ended 31st March, 2013 as set out in

annual report of the Company for the fifteen months ended 31st March,

2013.

(ii) The adjustments represent:

(a) the exclusion of the assets, liabilities and exchange equalisation reserve

of the Tecwell Group as at 30th June, 2013, as extracted from the

unaudited consolidated statement of financial position of the Tecwell

Group as at 30th June, 2013 as set out in Appendix II of this circular, as

if the Disposal had taken place on 31st March, 2013.

(b) the exclusion of the results and other comprehensive income of the

Tecwell Group for the fifteen months ended 31st March, 2013, as

extracted from the unaudited consolidated income statement and the

unaudited consolidated statement of comprehensive income of the

Tecwell Group for the fifteen months ended 31st March, 2013 as set out

in Appendix II of this circular, as if the Disposal had taken place on

1st January, 2012.

(c) the exclusion of cash flows of the Tecwell Group for the fifteen months

ended 31st March, 2013, as extracted from the unaudited consolidated

statement of cash flows of the Tecwell Group for the fifteen months

ended 31st March, 2013 as set out in Appendix II of this circular, as if

the Disposal had taken place on 1st January, 2012.

(iii) To better reflect the position of the Company, the gain on the Disposal for

the purpose of unaudited pro forma consolidated statement of financial

position as explained in note (iv)(a) below is arrived at by reference to the net

asset value of the Tecwell Group as at 30th June, 2013. Hence, the

adjustments were made to reflect the movement of the key items,

comprising the fair value change in investment properties held by the

Tecwell Group of approximately HK$315,660,000 for the period from 1st

April, 2013 to 30th June, 2013, as well as the related deferred tax and changes

in restricted cash balance over the period.


– 58 –

(iv) The adjustments reflect the recognition of the net cash consideration and the

gain on the Disposal. The gain on the Disposal is subject to change upon

Completion of the Disposal depending on the then net assets value of the

Tecwell Group.

(a) For the purpose of the unaudited pro forma consolidated statement of

financial position, the gain on Disposal is arrived at as if the Disposal

had taken place on 31st March, 2013 and is calculated as follows:

HK$’000

Cash consideration 843,537

Estimated professional fees, other expenses and taxes

in relation to the Disposal (Note 1) (88,275)

Net assets of the Tecwell Group disposed of

as at 30th June, 2013 (Note 2) (849,879)

Release of cumulative exchange differences on

translation of foreign operations as at 30th June,

2013 (Note 3) 243,070

Elimination of unrealised gain (Note 4) (24,584)

Gain on the Disposal 123,869

Attributable to:

Equity holders of the Company 81,174

Non-controlling interests 42,695

123,869

Note 1 : These professional fees, expenses and taxes are estimates only and are expected to beincurred as a result of the Disposal.

Note 2 : The amount represents net asset value of the Tecwell Group excluding the amount due

from Reiley Inc., the immediate holding company of Tecwell of HK$219,530,000 as at30th June, 2013, as extracted from the unaudited consolidated statement of financialposition of the Tecwell Group as at 30th June, 2013 as set out in Appendix II of this

circular. The amount due from the immediate holding company will be settled oreliminated before the Completion Date.

Note 3 : The amount represents the carrying amount of exchange equalisation reserve as at

30th June, 2013, as extracted from the unaudited consolidated statement of changes ofequity of the Tecwell Group as at 30th June, 2013 as set out in Appendix II of thiscircular.

Note 4 : The amount represents the elimination of the unrealised gain on the Disposal attributableto the equity holders of Lippo assuming OUE will be interested in 50% of the issued unitsof OUE Commercial Trust at the date of the Completion. The Purchaser is a wholly-

owned subsidiary of OUE Commercial Trust and it is currently anticipated that OUE willbe interested in up to 50% of the issued units of OUE Commercial Trust upon the listingof OUE Commercial Trust. As OUE is an associate of HKC and the Company as at

31st March, 2013 per HKFRS applicable to the fifteen months ended 31st March, 2013,the Purchaser will also be regarded as an associate of the Company. Elimination of theunrealised gain on Disposal of Lippo’s attributable interests in OUE Commercial Trust is

required.


– 59 –

(b) For the purposes of unaudited pro forma consolidated income

statement, unaudited pro forma consolidated statement of

comprehensive income and unaudited pro forma consolidated

statement of cash flows, the gain on Disposal is arrived at as if the

Disposal had taken place on 1st January, 2012 and is calculated as

follows:

HK$’000


Estimated professional fees, other expenses and taxes

in relation to the Disposal (Note 1) (88,275)

Net assets of the Tecwell Group disposed of

as at 1st January, 2012 (Note 2) (954,285)

Release of cumulative exchange differences on

translation of foreign operations as at 1st January,

2012 (Note 3) 210,386

Elimination of unrealised gain (Note 4) (1,882)

Gain on the Disposal 9,481

Attributable to:

Equity holders of the Company 6,213

Non-controlling interests 3,268

9,481

Note 1 : These professional fees, expenses and taxes are estimates only and are expected to be

incurred as a result of the Disposal.

Note 2 : The amount represents net asset value of the Tecwell Group as at 1st January, 2012, as

extracted from the unaudited consolidated statement of financial position of the Tecwell

Group as at 31st December, 2011 as set out in Appendix II of this circular.

Note 3 : The amount represents the carrying amount of exchange equalisation reserve as at

1st January, 2012, as extracted from the unaudited consolidated statement of changes of

equity of the Tecwell Group as at 31st December, 2011 as set out in Appendix II of this

circular.

Note 4 : The amount represents the elimination of the unrealised gain on the Disposal attributable

to equity holders of Lippo assuming OUE will be interested in 50% of the issued units of

OUE Commercial Trust at the date of the Completion. The Purchaser is a wholly-owned

subsidiary of OUE Commercial Trust and it is currently anticipated that OUE will be


OUE Commercial Trust. As OUE is an associate of HKC and the Company as at 1st

January, 2012 as per HKFRS applicable to the fifteen months ended 31st March, 2013,

the Purchaser will also be regarded as an associate of the Company. Elimination of the

unrealised gain on Disposal of Lippo’s attributable interests in OUE Commercial Trust is

required.


– 60 –

(c) For the purpose of the unaudited pro forma consolidated statement of

cash flows, the net proceeds from the Disposal is arrived at as if the

Disposal had taken place on 1st January, 2012 and is calculated as

follows:

HK$’000


Less: Estimated professional fees, other expenses and

taxes in relation to the Disposal (Note 1) (88,275)

Net proceeds from the Disposal 755,262

Note 1 : These professional fees, expenses and taxes are estimates only and are expected

to be incurred as a result of the Disposal.

(v) The adjustments represent the share of results and other comprehensive

income of the Tecwell Group for the fifteen months ended 31st March, 2013,

as if the Disposal had taken place on 1st January, 2012.

(vi) The adjustment represents:

(a) the reinstatement of the amount due from the Remaining Group to the

Tecwell Group. The amount will be settled or eliminated before the

Completion Date.

(b) the exclusion of cash inflow to the Remaining Group in relation to the

amount due to the Tecwell Group during the fifteen months ended

31st March, 2013 assuming that no funding would have occurred had

the Completion Date taken place on 1st January, 2012.

(vii) All the above pro forma adjustments are not expected to have a continuing

effect on the Remaining Group.


– 61 –

2. REPORT OF THE UNAUDITED PRO FORMA FINANCIAL INFORMATION

The following is the text of a report, prepared for the sole purpose of incorporation in

this circular, received from Messrs. Ernst & Young, Certified Public Accountants, Hong

Kong.

INDEPENDENT REPORTING ACCOUNTANT’S ASSURANCE REPORT ON

THE COMPILATION OF PRO FORMA FINANCIAL INFORMATION INCLUDED

IN AN INVESTMENT CIRCULAR

To the Directors of Lippo Limited

We have completed our assurance engagement to report on the compilation of pro

forma financial information of Lippo Limited (the ‘‘Company’’) and its subsidiaries

(hereinafter collectively referred to as the ‘‘Group’’) by the directors of the Company (the

‘‘Directors’’) for illustrative purposes only. The pro forma financial information consists of

the pro forma consolidated statement of financial position as at 31st March, 2013, and the

pro forma consolidated income statement, the pro forma statement of comprehensive

income and the pro forma statement of cash flows for the fifteen months ended 31st March,

2013, and related notes (the ‘‘Pro Forma Financial Information’’) as set out on pages 49 to

61 of a circular dated 18th November, 2013 (the ‘‘Circular’’) issued by the Company. The

applicable criteria on the basis of which the Directors have compiled the Pro Forma

Financial Information are described in page 49 of the Circular.

The Pro Forma Financial Information has been compiled by the Directors to illustrate

the impact of the very substantial disposal (the ‘‘Disposal’’) of the Tecwell Group (as

defined in the Circular) on the Group’s financial position as at 31st March, 2013 as if the

transaction had taken place at 31st March, 2013, and of the Group’s financial performance

and cash flows for the fifteen months ended 31st March, 2013 as if the transaction had

taken place at 1st January, 2012. As part of this process, information about the Group’s

financial position, financial performance and cash flows has been extracted by the Directors

from the Group’s consolidated financial statements for the fifteen months ended

31st March, 2013, on which an audit report has been published.


– 62 –

DIRECTORS’ RESPONSIBILITY FOR THE PRO FORMA FINANCIAL

INFORMATION

The Directors are responsible for compiling the Pro Forma Financial Information in

accordance with paragraph 4.29 of the Rules Governing the Listing of Securities on The

Stock Exchange of Hong Kong Limited (the ‘‘Listing Rules’’) and with reference to

Accounting Guideline 7 ‘‘Preparation of Pro Forma Financial Information for Inclusion in

Investment Circulars’’ issued by the Hong Kong Institute of Certified Public Accountants

(the ‘‘HKICPA’’).

REPORTING ACCOUNTANT’S RESPONSIBILITIES

Our responsibility is to express an opinion, as required by paragraph 4.29(7) of the

Listing Rules, on the Pro Forma Financial Information and to report our opinion to you.

We do not accept any responsibility for any reports previously given by us on any financial

information used in the compilation of the Pro Forma Financial Information beyond that

owed to those to whom those reports were addressed by us at the dates of their issue.

We conducted our engagement in accordance with Hong Kong Standard on Assurance

Engagements 3420 ‘‘Assurance Engagements to Report on the Compilation of Pro Forma

Financial Information Included in a Prospectus’’ issued by the HKICPA. This standard

requires that the reporting accountant comply with ethical requirements and plan and

perform procedures to obtain reasonable assurance about whether the Directors have

compiled the Pro Forma Financial Information, in accordance with paragraph 4.29 of the

Listing Rules and with reference to AG7 ‘‘Preparation of Pro Forma Financial Information

for Inclusion in Investment Circulars’’ issued by HKICPA.

For purposes of this engagement, we are not responsible for updating or reissuing any

reports or opinions on any historical financial information used in compiling the Pro Forma

Financial Information, nor have we, in the course of this engagement, performed an audit

or review of the financial information used in compiling the Pro Forma Financial

Information.

The purpose of Pro Forma Financial Information included in the Circular is solely to

illustrate the impact of the effect of the Disposal on the unadjusted financial information of

the Remaining Group (as defined in the Circular) as if the transaction had been undertaken

at an earlier date selected for purposes of the illustration. Accordingly, we do not provide

any assurance that the actual outcome of the transaction would have been as presented.


– 63 –

A reasonable assurance engagement to report on whether the Pro Forma Financial

Information has been properly compiled on the basis of the applicable criteria involves

performing procedures to assess whether the applicable criteria used by the Directors in the

compilation of the Pro Forma Financial Information provide a reasonable basis for

presenting the significant effects directly attributable to the transaction, and to obtain

sufficient appropriate evidence about whether:

. The related pro forma adjustments give appropriate effect to those criteria; and

. The Pro Forma Financial Information reflects the proper application of those

adjustments to the unadjusted financial information.

The procedures selected depend on the reporting accountant’s judgment, having regard

to the reporting accountant’s understanding of the nature of the Group, the transaction in

respect of which the Pro Forma Financial Information has been compiled, and other

relevant engagement circumstances.

The engagement also involves evaluating the overall presentation of the Pro Forma

Financial Information.

We believe that the evidence we have obtained is sufficient and appropriate to provide

a basis for our opinion.

OPINION

In our opinion:

(a) the Pro Forma Financial Information has been properly compiled on the basis

stated;

(b) such basis is consistent with the accounting policies of the Group; and

(c) the adjustments are appropriate for the purpose of the Pro Forma Financial

Information as disclosed pursuant to paragraph 4.29(1) of the Listing Rules.

Ernst & Young

Certified Public Accountants

22/F CITIC Tower

1 Tim Mei Avenue

Central, Hong Kong

18th November 2013


– 64 –

The following is the text of a letter and valuation certificate, prepared for the purpose

of incorporation in this circular received from RHL Appraisal Limited, an independent

valuer, in connection with its valuation as at 30th September, 2013 of the Property held by

LRSL.

永利行評值顧問有限公司RHL Appraisal Limited

Corporate Valuation & Advisory

T +852 2730 6212F +852 2736 9284

Room 1010, 10/F, Star House,Tsimshatsui, Hong Kong

18th November, 2013

The Board of Directors

Lippo Limited

24th Floor, Tower One,

Lippo Centre,

No. 89 Queensway,

Hong Kong

Dear Sirs/Madam,

INSTRUCTIONS

We refer to your instruction for us to value the property held by 力寶置業（上海）有限

公司 (Lippo Realty (Shanghai) Limited) (‘‘LRSL’’), a subsidiary of Lippo Limited (the

‘‘Company’’) (the Company and its subsidiaries are referred to as the ‘‘Group’’) located in

the People’s Republic of China (the ‘‘PRC’’). We confirm that we have carried out property

inspection, made relevant enquiries and obtained such further information as we consider

necessary for the purpose of providing you with our opinion of the market value of the

property interest as at 30th September, 2013 (the ‘‘Valuation Date’’).

This letter which forms part of our valuation report explains the basis and

methodologies of valuation, clarifying assumptions, valuation considerations, title

investigations and limiting conditions of this valuation.

APPENDIX IV PROPERTY VALUATION REPORT

– 65 –

BASIS OF VALUATION

The valuation is our opinion of the market value (‘‘Market Value’’) which we would

define as intended to mean the estimated amount for which an asset or liability should

exchange on the valuation date between a willing buyer and a willing seller in an

arm’s-length transaction after proper marketing wherein the parties had each acted

knowledgeably prudently and without compulsion.

Market Value is understood as the value of an asset or liability estimated without

regard to costs of sale or purchase and without offset for any associated taxes or potential

taxes.

The market value is the best price reasonably obtainable in the market by the seller and

the most advantageous price reasonably obtainable in the market by the buyer. This

estimate specifically excludes an estimated price inflated or deflated by special terms or

circumstances such as atypical financing, sale and leaseback arrangements, joint ventures,

management agreements, special considerations or concessions granted by anyone

associated with the sale, or any element of special value.

VALUATION METHODOLOGY

We have valued the property interest by using the Direct Comparison Approach based

on the principle of substitution, where comparison based on prices realized on actual sales

and/or asking prices of comparable properties is made. Comparable properties of similar

sizes, scales, natures, characters and locations are analyzed and carefully weighed against

all the respective advantages and disadvantages of each property in order to arrive at fair

comparisons of market value.

VALUATION CONSIDERATIONS

In valuing the property interest, we have complied with all the requirements contained

in Chapter 5 and Practice Note 12 to the Rules Governing the Listing of Securities issued by

The Stock Exchange of Hong Kong Limited and the HKIS Valuation Standards 2012

Edition.

VALUATION ASSUMPTION

In our valuation, unless otherwise stated, we have assumed that:

a. transferable land use rights in respect of the Property for specific terms at nominal

annual land use fees have been granted and that any premium payable has already

been fully paid;

b. the owner of the Property have enforceable title to the Property and has free and

uninterrupted right to use, occupy or assign the Property for the whole of the

respective unexpired terms as granted;


– 66 –

c. no deleterious or hazardous materials or techniques have been used in the

construction of the Property;

d. the Property is connected to main services and sewers which are available on

normal terms; and

e. the owner sells the Property on the open market without the benefit of a deferred

terms contract, leaseback, joint venture, management agreement or any similar

arrangement which would serve to affect the property value.

TITLE INVESTIGATION

We have been shown copies of various documents relating to the property interest.

However, we have not examined the original documents to verify the existing titles to the

property interest or any amendment which does not appear on the copies handed to us. We

have relied considerably on the information given by the Group’s PRC legal advisers,

AllBright Law Offices, concerning the validity of the titles to the property interest.

LIMITING CONDITIONS

We have inspected the Property. During the course of our inspection, we did not note

any serious defects. However, no structural survey has been made and we are therefore

unable to report whether the Property is free from rot infestation or any other defects. No

tests were carried out on any of the services.

We have not carried out detailed on-site measurement to verify the correctness of the

areas in respect of the property but have assumed that the areas shown on the documents

handed to us are correct. All dimensions, measurements and areas are approximate.

We have relied to a considerable extent on information provided by the Group and

accepted advices given to us on such matters, in particular, but not limited to tenure,

planning approvals, statutory notices, easements, particulars of occupancy, size and floor

areas and all other relevant matters in the identification of the Property.

We have had no reason to doubt the truth and accuracy of the information provided to

us by the Group. We have also been advised by the Group that no material fact has been

omitted from the information supplied. We consider that we have been provided with

sufficient information to reach an informed view, and we have no reason to suspect that any

material information has been withheld.

No allowance has been made in our report for any charges, mortgages or amounts

owing on the property interest valued nor for any expenses or taxation which may be

incurred in effecting a sale. Unless otherwise stated, it is assumed that the property interest

is free from encumbrances, restrictions and outgoings of an onerous nature, which could

affect its values.


– 67 –

REMARKS

We have valued the property in Renminbi (RMB) and in Hong Kong Dollars (HKD)

at the exchange rate of RMB1.00 to HK$1.26124.

We have conducted on-site inspection to the property in October 2013 by our

Ms. Michelle X. L. Zhang (MRICS, Msc, BA).

Our valuation certificate is herewith attached.

Yours faithfully,

For and on behalf of

RHL Appraisal Limited

Peggy Y. Y. Lai

MHKIS, MRICS, RPS(GP), BSC

Senior Associate Director

Ms. Peggy Y.Y. Lai is a Registered Professional Surveyor (GP) with over 18 years’

experience in valuation of properties in HKSAR, Macau SAR, United Kingdom, Canada,

mainland China and the Asia Pacific Region. Ms. Lai is a Professional Member of The

Royal Institution of Chartered Surveyors, a Member of The Hong Kong Institute of

Surveyors as well as a Member of China Institute of Real Estate Appraisers and Agents in

the PRC.


– 68 –

VALUATION CERTIFICATE

Property Description and tenure

Particulars of

occupancy

Market Value in

existing state as at

30 September 2013

RMB

Lippo Plaza

(excluding Unit 2

on basement level

1, levels 12, 13, 15

& 16 and Car-

parking Space

Nos. 15, 16, 17

and 26 on

basement level 2

which have been

sold), No. 222

Huai Hai Zhong

Road,

Huangpu District,

Shanghai,

the PRC (the

‘‘Property’’)

Lippo Plaza (the ‘‘Development’’) is a 36-

storey commercial development with 3

basement levels completed in about 1999.

As advised, portion of

the Property with a

floor area of

approximately 31,000

square meters (333,684

square feet) are subject

to various tenancy

agreements at a total

monthly rental of

approximately

RMB9,900,000 with

various terms of which

the latest one expiring

on 27th April, 2018

whilst the remaining

portions are vacant or

occupied by the owner

with a total floor area

of approximately

7,000.00 square meters

and 1,100.00 square

meters respectively.

2,030,000,000

(RENMINBI TWO

BILLION AND

THIRTY

MILLION)

HKD2,560,317,200

(HONG KONG

DOLLARS TWO

BILLION FIVE

HUNDRED AND

SIXTY MILLION

THREE

HUNDRED

SEVENTEEN

THOUSAND AND

TWO HUNDRED)

The Development consists of a 4-storey

retail podium from levels 1 to 3 and

basement level 1, a 30-storey office tower

from levels 5 to 39 (levels 14, 24 and 34

omitted, levels 20 and 35 are designated for

refuge floors whilst level 4, penthouse 1 and

penthouse 2 are designated for E&M

Floors) and 2 basement levels for car-

parking uses with a total of 172 car-parking

spaces.

The Property comprises approximately 29

retail units on basement level 1, levels 1-3

and approximately 269 office units on levels

5-19, levels 21-33 and levels 36-39 with a

total gross floor area of approximately

42,775.80 square meters (460,439 square

feet).

The Property also comprises 168 car-

parking spaces on basement levels 2 to 3 of

the Development with a total gross floor

area of approximately 8,552.88 square

meters (92,063 square feet).

The land use rights of the Property were

granted for a term expiring on 1st July, 2044

for composite uses.

Notes:

1. Pursuant to a Shanghai Certificate of Real Estate Ownership - Hu Fang Di Lu Zi (2011) Di No. 001727

(滬房地盧字（2011）第001727號) dated 23rd August, 2011, the building ownership of the Property with a

total gross floor area of approximately 58,521.54 square meters, is vested in LRSL. The land use rights of

the Property were granted to LRSL for a term expiring on 1st July, 2044 for composite uses.

2. As advised, as at the Valuation Date, the Property is subject to a mortgage in favour of Standard

Chartered Bank (China) Limited, Shanghai Branch to secure the due and punctual payment of the secured

obligations under the loan in the original aggregate principal amount of up to RMB 320,000,000 since

19th September, 2012 and until the full repayment of such loan. However, in the course of our valuation,

we have not taken into account of such mortgage.


– 69 –

3. The Property is situated at No. 222 Huai Hai Zhong Road. This locality is a composite area predominated

by high rise commercial development and residential development. Public means of transportation

available for the subject property and its vicinity includes buses, metro and taxies.

4. We have been provided with a legal opinion by the Group’s PRC legal adviser, AllBright Law Offices,

regarding the legal title of the Property, which contains, inter alia, the following:

i. Land Use Right Grant Contract shall take effect upon its execution and is legally binding and

enforceable;

ii. the Property is legally held by LRSL;

iii. the Property is subject to a mortgage in favour of Standard Chartered Bank (China) Limited,

Shanghai Branch and is free from any other mortgage or third parties’ encumbrance;

iv. the Property can be freely transferred, leased and mortgaged;

v. all land premium of the Property has been fully settled by LRSL; and

vi. LRSL has obtained all the necessary permits/approvals for the construction works of the property

from relevant urban planning authorities.


– 70 –

1. RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full

responsibility, includes particulars given in compliance with the Listing Rules for the

purpose of giving information with regard to the Company. The Directors, having made all

reasonable enquiries, confirm that to the best of their knowledge and belief, the information

contained in this circular is accurate and complete in all material respects and not

misleading or deceptive, and there are no other matters the omission of which would make

any statement herein or this circular misleading.

2. DISCLOSURE OF INTERESTS

As at the Latest Practicable Date, the interests or short positions of the Directors and

chief executive of the Company in the shares, underlying shares and debentures of the

Company or any of its associated corporations (within the meaning of Part XV of the SFO)

which were 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 which were required, pursuant to

Section 352 of the SFO, to be entered in the register referred to therein, or which were

required, pursuant to the Model Code, to be notified to the Company and the Stock

Exchange, were as follows:

Directors’ and chief executive’s interests and short positions in shares and underlying

shares of the Company and associated corporations

Name of Director

Personal interests(held as beneficial

owner)

Family interests(interest of

spouse) Other interests Total interests

Approximatepercentage of

total interests inthe issued share

capital

Number of ordinary shares of HK$0.10 each in the Company

Stephen Riady — — 319,322,219Note(i)

319,322,219 64.75

Jark Pui Lee — 60 — 60 0.00John Luen Wai Lee 1,031,250 — — 1,031,250 0.21

Number of ordinary shares of HK$0.10 each in LCR

Stephen Riady — — 6,544,696,389Notes (i) and (ii)

6,544,696,389 71.24

Number of ordinary shares of HK$1.00 each in HKC

Stephen Riady — — 1,121,517,842Notes (i) and (iii)

1,121,517,842 56.12

Jark Pui Lee 469 469 — 938 0.00John Luen Wai Lee 2,000,270 270 — 2,000,540 0.10King Fai Tsui 600,000 75,000 — 675,000 0.03

Note:

(i) As at the Latest Practicable Date, Lippo Capital, an associated corporation (within the meaning of

Part XV of the SFO) of the Company, and through its wholly-owned subsidiary, J & S Company

Limited, was directly and indirectly interested in an aggregate of 319,322,219 Shares in, representing

approximately 64.75% of the issued share capital of the Company. Lanius, an associated

corporation (within the meaning of Part XV of the SFO) of the Company, is the holder of

705,690,001 ordinary shares of HK$1.00 each in, representing the entire issued share capital of,

APPENDIX V GENERAL INFORMATION

– 71 –

Lippo Capital. Lanius is the trustee of a discretionary trust which was founded by Dr. Mochtar

Riady, who does not have any interest in the share capital of Lanius. The beneficiaries of the trust

included, inter alia, Mr. Stephen Riady and other members of the family. Mr. Stephen Riady was

taken to be interested in Lippo Capital under the provisions of the SFO.

(ii) As at the Latest Practicable Date, the Company was indirectly interested in 6,544,696,389 ordinary

shares of HK$0.10 each in, representing approximately 71.24% of the issued share capital of, LCR.

(iii) As at the Latest Practicable Date, the Company was indirectly interested in 1,121,517,842 ordinary

shares of HK$1.00 each in, representing approximately 56.12% of the issued share capital of, HKC.

As at the Latest Practicable Date, Mr. Stephen Riady, as a beneficiary of the

aforesaid discretionary trust, through his deemed interest in Lippo Capital as

mentioned in Note (i) above, was also taken to be interested in the share capital of

the following associated corporations (within the meaning of Part XV of the SFO) of

the Company:

Name of associated corporation Class of shares

Number of

shares

interested

Approximate

percentage

of interest

in the issued

share capital

Abital Trading Pte. Limited Ordinary shares 2 100Blue Regent Limited Ordinary shares 100 100Boudry Limited Ordinary shares 10 100

Non-votingdeferred shares

1,000 100

Broadwell Overseas Holdings Limited Ordinary shares 1 100Grand Peak Investment Limited Ordinary shares 2 100Great Honor Investments Limited Ordinary shares 1 100Greenorth Holdings Limited Ordinary shares 1 100Honix Holdings Limited Ordinary shares 1 100J & S Company Limited Ordinary shares 1 100Kingaroy Limited Ordinary shares 1 100Lippo Assets (International) Limited Ordinary shares


115,999,999

100100

Lippo Finance Limited Ordinary shares 6,176,470 82.35Lippo Investments Limited Ordinary shares 2 100Lippo Realty Limited Ordinary shares 2 100Multi-World Builders & Development

CorporationOrdinary shares 4,080 51

The HCB General Investment (Singapore)Pte Ltd.

Ordinary shares 100,000 100

Times Grand Limited Ordinary shares 1 100Valencia Development Limited Ordinary shares


800,000200,000

100100

Winroot Holdings Limited Ordinary shares 1 100

As at the Latest Practicable Date, Mr. Stephen Riady, as beneficial owner and

through his nominee, was interested in 5 ordinary shares of HK$1.00 each in,

representing approximately 16.67% of the issued share capital of, Lanius, which is the

holder of the entire issued share capital of Lippo Capital. Lanius is the trustee of a


– 72 –

discretionary trust which was founded by Dr. Mochtar Riady (father of Mr. Stephen

Riady), who does not have any interest in the share capital of Lanius. The beneficiaries

of the trust included, inter alia, Mr. Stephen Riady and other members of the family.

As at the Latest Practicable Date, Mr. Stephen Riady was interested in 27,493,311

ordinary shares in Auric Pacific Group Limited (‘‘Auric’’), a subsidiary of the

Company, held by Goldstream Capital Limited, which in turn is a wholly-owned

subsidiary of Bravado International Ltd. (‘‘Bravado’’). Mr. Stephen Riady is the

beneficial owner of the entire issued capital of Bravado. For the reasons mentioned

above, through his deemed interest in Lippo Capital, Mr. Stephen Riady was also

taken to be interested in 61,927,335 ordinary shares in Auric. Accordingly,

Mr. Stephen Riady was interested and taken to be interested in an aggregate of

89,420,646 ordinary shares in, representing approximately 71.16% of the issued share

capital of, Auric.

As at the Latest Practicable Date, none of the Directors or chief executive of the

Company had any interests in the underlying shares in respect of physically settled,

cash settled or other equity derivatives of the Company or any of its associated

corporations (within the meaning of Part XV of the SFO).

All the interests stated above represent long positions. Save as disclosed herein, as

at the Latest Practicable Date, to the knowledge of the Company:

(1) none of the Directors and chief executive of the Company had or was deemed

to have any interests or short positions in the shares, underlying shares and

debentures of the Company or any of its associated corporations (within the

meaning of Part XV of the SFO) (a) which were required to be notified to the

Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV

of the SFO (including interests or short positions which the Directors and the

chief executive of the Company were taken or deemed to have under such

provisions of the SFO); or (b) which were required to be entered in the

register kept by the Company under Section 352 of the SFO; or (c) which

were required to be notified to the Company and the Stock Exchange

pursuant to the Model Code; and

(2) none of the Directors and chief executive of the Company nor their spouses

or minor children (natural or adopted) were granted or had exercised any

rights to subscribe for any equity or debt securities of the Company or any of

its associated corporations (within the meaning of Part XV of the SFO).

Mr. Stephen Riady is also a director of each of Lanius and Lippo Capital. Save as

disclosed herein, none of the Directors holds any directorship or employment in a

company which has an interest or short position in the Shares and underlying Shares

which would fall to be disclosed to the Company under the provisions of Divisions 2

and 3 of Part XV of the SFO.


– 73 –

3. INTERESTS AND SHORT POSITIONS OF SUBSTANTIAL SHAREHOLDERS

AND OTHER PERSONS

So far as is known to the Directors or chief executive of the Company, as at the Latest

Practicable Date, the persons (other than the Directors or chief executive of the Company)

who had interests or short positions in the Shares and underlying Shares which would fall to

be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the

SFO as recorded in the register required to be kept by the Company pursuant to Section 336

of the SFO or who 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 other members of the Group were as follows:

(a) The Company

Name Number of SharesApproximate

percentage

Lippo Capital 319,322,219 64.75Lanius 319,322,219 64.75Dr. Mochtar Riady 319,322,219 64.75Madam Lidya Suryawaty 319,322,219 64.75

Note (a):

1. Lippo Capital, through its wholly-owned subsidiary, J & S Company Limited, was indirectlyinterested in 14,699,997 Shares. Together with 304,622,222 Shares owned by Lippo Capitaldirectly as beneficial owner, Lippo Capital was interested in an aggregate of 319,322,219

Shares in, representing approximately 64.75% of the issued share capital of, the Company.

2. Lanius is the holder of the entire issued share capital of Lippo Capital and is the trustee of adiscretionary trust which was founded by Dr. Mochtar Riady, who does not have any interestin the share capital of Lanius. Dr. Mochtar Riady and his wife Madam Lidya Suryawaty were

taken to be interested in the shares of the Company under the provisions of the SFO.

3. Lippo Capital’s interests in the Shares were recorded as the interests of Lanius, Dr. MochtarRiady and Madam Lidya Suryawaty. The above 319,322,219 Shares related to the same blockof Shares that Mr. Stephen Riady was interested, details of which are disclosed in the

paragraph ‘‘Disclosure of Interests — Directors’ and chief executive’s interests and shortpositions in shares and underlying shares of the Company and associated corporations’’ in thisappendix.

(b) Chung Po Investment Holding Co., Ltd.

NameNumber of ordinary shares

of HK$1.00 each Percentage

Lippo Realty (China) Limited(‘‘LRCL’’)

1,200,000 60

China Travel BuildingContractors Hong KongLimited

800,000 40

Note (b): LRCL is a wholly-owned subsidiary of the Company. See also (a) above in respect of the

substantial shareholders of the Company.


– 74 –

(c) LCR


of HK$0.10 eachApproximate

percentage

Skyscraper Realty Limited(‘‘Skyscraper’’)

6,544,696,389 71.24

Note (c): Skyscraper is indirectly wholly-owned by the Company through its wholly-owned

subsidiary, First Tower Corporation. See also (a) above in respect of the substantial

shareholders of the Company.

(d) Jeremiah Holdings Limited (‘‘Jeremiah’’)


of S$1.00 each Percentage

Dragon Board Holdings Limited(‘‘Dragon Board’’)

779,187 60

Mrs. Endang Utari Mokodompit 519,458 40

Note (d): Dragon Board is a wholly-owned subsidiary of LCR. See also (c) above in respect of the

substantial shareholders of LCR.

(e) Nine Heritage Pte Ltd (‘‘Nine Heritage’’)



Jeremiah 800,000 80SouthQuay Capital Asia Limited 200,000 20

Note(e): See also (d) above in respect of the substantial shareholders of Jeremiah.

(f) Proton Power Asia Limited


of HK$1.00 eachApproximate

percentage

Apex Tier Limited (‘‘Apex Tier’’) 60 66.66Proton Power, Inc. 30 33.33

Note (f): Apex Tier is a wholly-owned subsidiary of LCR. See also (c) above in respect of the


(g) Lippo Select HK & Mainland Property ETF

Name Number of unitsApproximate

percentage

World Grand Holding Limited(‘‘World Grand’’)

1,841,500 81

Note (g): World Grand is a wholly-owned subsidiary of LCR. See also (c) above in respect of the



– 75 –

(h) HKC

Name

Number of ordinary shares

of HK$1.00 each

Approximate

percentage

Hennessy Holdings Limited

(‘‘Hennessy’’)

1,121,517,842 56.12

Note (h): Hennessy is indirectly wholly owned by the Company through its wholly-owned

subsidiary, Prime Success Limited. See also (a) above in respect of the substantial

shareholders of the Company.

(i) TechnoSolve Limited

Name


of HK$1.00 each

Approximate

percentage

HKCL Investments Limited

(‘‘HKCL Investments’’)

18,053,500 68.65

Note (i): HKCL Investments is a wholly-owned subsidiary of HKC. See also (h) above in respect

of the substantial shareholders of HKC.

(j) Kingtek Limited


of US$1.00 each Percentage

Masuda Limited (‘‘Masuda’’) 60 60Mezquita Incorporated 40 40

Note (j): Masuda is a wholly-owned subsidiary of HKC. See also (h) above in respect of the

substantial shareholders of HKC.

(k) 北京力寶世紀置業有限公司 (Beijing Lippo Century Realty Co., Ltd.)

Name

Amount of paid up

registered capital

Approximate

percentage of

profit sharing

Uchida Limited (‘‘Uchida’’) US$28,800,000 64Wealtop Limited (‘‘Wealtop’’) US$7,200,000 16北京經濟技術投資開發總公司(Beijing Economic & TechnologicalInvestment Development Corp.)

N/A 20

Note (k): Uchida and Wealtop are both wholly-owned subsidiaries of HKC. See also (h) above in

respect of the substantial shareholders of HKC.


– 76 –

(l) Auric


of S$0.50 eachApproximate

percentage

Jeremiah 4,999,283 3.98Nine Heritage 20,004,000 15.92Pantogon Holdings Pte Ltd(‘‘Pantogon’’)

36,165,052 28.78

Goldstream Capital Limited 27,493,311 21.88

Note (l): Nine Heritage is a subsidiary of Jeremiah and Pantogon is a wholly-owned subsidiary of

LCR. See also (d) above in respect of the substantial shareholders of Jeremiah and

(c) above in respect of the substantial shareholders of LCR.

(m) Delifrance Singapore Wholesale Pte. Ltd.



Delifrance Asia Ltd.(‘‘Delifrance Asia’’)

392,000 49

Delifrance S.A. 408,000 51

Note (m): Delifrance Asia is a wholly-owned subsidiary of Auric. See also (l) above in respect of

the substantial shareholders of Auric.

(n) Mequestic Investments Limited

Name


of US$1.00 each Percentage

Charm Fit Pte Ltd (‘‘Charm Fit’’) 6 60

Aaron Group Limited 4 40

Note (n): Charm Fit is a wholly-owned subsidiary of Auric. See also (l) above in respect of the

substantial shareholders of Auric.

(o) Foshan Ausoon Dairy Co., Ltd

Name

Amount of paid up

registered capital Percentage

Auric Pacific Dairy (Foshan) Limited

(‘‘Auric Foshan’’)

US$4,464,000 75

廣東新盈科技創業投資有限公司

(Foshan XinYing Science Technology

Venture Capital Co., Ltd)

US$1,488,000 25

Note (o): Auric Foshan is a wholly-owned subsidiary of Auric. See also (l) above in respect of the

substantial shareholders of Auric.


– 77 –

(p) DLF (Thailand) Ltd

Name


of THB100.00 each

Approximate

percentage

K. Somchai Krunthong 25,500 preference shares 51

Delifrance Asia 24,495 48.9

Edmontor Investments Pte Ltd

(‘‘Edmontor’’)

5 0.1

Note (p): Delifrance Asia and Edmontor are wholly-owned subsidiaries of Auric. See also (l)

above in respect of the substantial shareholders of Auric.

(q) LCR Catering Services Limited

Name


of HK$1.00 each Percentage

All Around Limited

(‘‘All Around’’)

8,100,000 90

Note (q): All Around is a subsidiary of Auric. See also (l) above in respect of the substantial

shareholders of Auric.

(r) Asia Now Resources Corp. (‘‘Asia Now’’)

Name Number of ordinary shares

Approximate

percentage

China Gold Pte. Limited

(‘‘China Gold’’)

55,429,908 49.93

Note (r): China Gold is a wholly-owned subsidiary of LCR. See also (c) above in respect of the


All the interests stated above represent long positions. Save as disclosed herein, as at

the Latest Practicable Date, none of the substantial shareholders (as defined under the

Listing Rules) or other persons (other than the Directors or chief executive of the

Company) had any interests or short positions in the Shares and underlying Shares as

recorded in the register required to be kept by the Company under Section 336 of the SFO.

Save as disclosed herein, as at the Latest Practicable Date, so far as was known to the

Directors or chief executive of the Company, there was no person, other than a Director or

chief executive of the Company, who had an interest or short position in the Shares and

underlying Shares 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 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 other member of the Group.


– 78 –

4. DIRECTORS’ SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had entered or was proposing

to enter into any service contract with the Company or any other member of the Group

(excluding contracts expiring or determinable by the employer within one year without

payment of compensation (other than statutory compensation)).

5. COMPETING INTERESTS OF DIRECTORS AND ASSOCIATES

The Lippo Group (a general reference to the companies in which Mr. Stephen Riady

and his family members have a direct or indirect interest) is not a legal entity and does not

operate as one. Each of the companies in the Lippo Group operates within its own legal,

corporate and financial framework. As at the Latest Practicable Date, the Lippo Group

might have had or developed interests in business in Hong Kong and other parts in Asia

similar to those of the Group and there was a chance that such businesses might have

competed with the businesses of the Group.

The Directors are fully aware of, and have been discharging, their fiduciary duty to the

Company. The Company and the Directors would comply with the relevant requirements of

the Company’s articles of association and the Listing Rules whenever a Director has any

conflict of interest in the transaction(s) with the Company.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors and

their respective associates were considered to have interest in any business which competes

or is likely to compete, either directly or indirectly, with the businesses of the Group or have

or may have any other conflicts of interest with the Group pursuant to the Listing Rules.

6. DIRECTORS’ INTERESTS IN ASSETS/CONTRACTS AND OTHER INTERESTS

Save for Mr. Stephen Riady who is deemed to be interested in the Disposal Agreement

and the transactions stated below, none of the Directors was materially interested in any

contract or arrangement which was entered into by any member of the Group and

subsisting at the Latest Practicable Date which was significant in relation to the business of

the Group:

(a) (i) the restaurant management agreement dated 10th October, 2013 entered into

between OUE Restaurants Pte. Ltd. (‘‘OUE Restaurants’’), a wholly-owned

subsidiary of OUE, and Zutis Pte. Ltd., an indirect subsidiary of Auric, in respect

of the management of the business and operations of a high-end restaurant of

OUE Restaurants in Singapore serving French, Japanese and Chinese cuisine (the

‘‘Restaurant’’); (ii) the restaurant operator agreement dated 10th October, 2013

entered into between OUE Restaurants and LP-Tetsu Pte. Ltd. (‘‘LP-Tetsu’’), an

indirect subsidiary of Auric, in respect of the operation of the French cuisine

segment in the Restaurant; and (iii) the restaurant operator agreement dated

10th October, 2013 entered into between OUE Restaurants and LP-Tetsu in

respect of the operation of the Japanese cuisine segment in the Restaurant, each

for a term of three years from 1st April, 2013 to 31st March 2016; and


– 79 –

(b) the supply agreement dated 31st October, 2013 entered into between Auric Pacific

Marketing Pte. Ltd. (‘‘APM’’), a wholly-owned subsidiary of Auric, and OUE in

respect of the supply of food and beverage products by APM to OUE for a term of

three years from 31st October, 2013 to 30th October, 2016.

As at the Latest Practicable Date, the following were particulars of assets acquired or

disposed of by or leased to members of the Group since 31st March, 2013, being the date to

which the latest published audited consolidated financial statements of the Company were

made up, in which Mr. Stephen Riady had a direct or indirect interest:

(a) (i) On 1st April, 2013, a tenancy agreement was entered into between West

Tower Holding Limited (‘‘WTHL’’), a wholly-owned subsidiary of LCR, and

LCR Catering Services Limited (‘‘LCR Catering’’), a non-wholly owned

subsidiary of Auric which in turn is a subsidiary of LCR, pursuant to which

LCR Catering agreed to lease from WTHL Unit 4, Ground Floor, Lippo

Centre, 89 Queensway, Hong Kong (‘‘Lippo Centre’’) for a term of three

years from 1st April, 2013 to 31st March, 2016, both days inclusive, at a

monthly rental of HK$364,550, exclusive of rates, service charge and all

other outgoings, for use as a restaurant. The service charge of HK$65,040 per

month (subject to adjustment) shall be payable by LCR Catering to WTHL

and such service charge shall not exceed HK$78,000 per month; and

(ii) On 1st April, 2013, a licence agreement was entered into between WTHL, as

licensor, and LCR Catering, as licensee, in respect of four night car parking

spaces in the first basement of Lippo Centre. A licence fee of HK$5,300 per

month (subject to adjustment) shall be payable by LCR Catering to WTHL.

The term of the licence agreement shall be three years from 1st April, 2013 to

31st March, 2016, both days inclusive;

(b) On 10th October, 2013, a lease agreement was entered into between Auric, a

subsidiary of LCR, and Clifford Development Pte. Ltd. (‘‘CDPL’’), a

wholly-owned subsidiary of OUE, which is a joint venture of HKC, which in

turn is a subsidiary of the Company, pursuant to which Auric agreed to lease from

CDPL Unit #06-03, 50 Collyer Quay, Singapore for a term of three years from

15th July, 2013 to 14th July, 2016, both days inclusive, at a monthly rental of

(i) S$40,613.90 from 15th July, 2013 to 31 December, 2013 (both dates inclusive);

and (ii) S$46,057.00 from 1st January, 2014 to 14th July, 2016 (both dates

inclusive), exclusive of service charge, for use as an office. The service charge of

S$5,443.10 per month shall be payable by Auric to CDPL on a monthly basis; and

(c) the Disposal Agreement.

Save as disclosed herein, as at the Latest Practicable Date, none of the Directors had

any direct or indirect interest in any assets which had been acquired or disposed of by or

leased to any member of the Group or were proposed to be acquired or disposed of by or

leased to any member of the Group since 31st March, 2013, being the date to which the

latest published audited consolidated financial statements of the Company were made up.


– 80 –

7. LITIGATION

So far as the Directors are aware, no member of the Group was engaged in any

litigation or arbitration of material importance and no litigation or arbitration of material

importance was pending or threatened against any member of the Group as at the Latest

Practicable Date.

8. MATERIAL CONTRACTS

The following contracts (not being contracts entered into in the ordinary course of

business) have been entered into by the members of the Group within the two years

immediately preceding the Latest Practicable Date and which are, or may be, material to the

Group:

(a) the agreement dated 25th November, 2011 entered into between Tamsett Holdings

Limited (a wholly-owned subsidiary of LCR) as vendor, and Vantro Investment

Ltd as purchaser, relating to the disposal of one share of US$1.00 in, representing

the entire issued share capital of, Winnery Limited (‘‘Winnery’’) for the

consideration of Rp240,000,000,000. Winnery held 480 million shares in

PT Lippo Karawaci Tbk, a company incorporated in Indonesia and whose

shares are listed on the Indonesia Stock Exchange;

(b) the membership unit purchase agreement dated 27th February, 2012 (the

‘‘February 2012 Purchase Agreement’’) entered into among Skye Mineral

Investors, LLC (‘‘Skye Mineral’’) and Clarity Copper, LLC (‘‘Clarity Copper’’)

as sellers, and PacNet Capital (U.S.) Limited (‘‘Pacnet’’) (an indirect

wholly-owned subsidiary of LCR) as buyer, relating to the sale and purchase of

a total of 3,600 Class A units (‘‘Class A Units’’) in Skye Mineral Partners, LLC

(the ‘‘Project Company’’) for a total consideration of US$8,000,000.

On 3rd August, 2012, another membership unit purchase agreement was entered

into between PacNet, the Project Company and Skye Mineral for the subscription

of 1,674 Class A Units and 1,026 Class A Units by each of PacNet and Skye

Mineral, respectively, for a consideration of US$3,720,000 and US$2,280,000

respectively and on the same date, an amendment to the February 2012 Purchase

Agreement was entered into between PacNet, Skye Mineral and Clarity Copper

pursuant to which, PacNet agreed to reduce its purchase from Clarity Copper and

Clarity Copper agreed to reduce its sale to PacNet Capital from 1,700 Class A

Units to 782 Class A Units, with consideration payable by PacNet Capital at the

Second Closing (as defined in the February 2012 Purchase Agreement) reducing

from US$3,777,777.78 to US$1,737,777.78.

The Project Company, through its majority owned subsidiary, CS Mining LLC,

owns and controls a number of copper ore deposits located in the Milford Mineral

Belt in Beaver County, State of Utah in the United States of America;


– 81 –

(c) the subscription agreement dated 13th March 2012 entered into between Golden

Rain Holdings Limited (‘‘Golden Rain’’) (a wholly-owned subsidiary of LCR) and

Haranga Resources Limited (‘‘Haranga’’), a public company listed on the

Australian Securities Exchange, relating to the subscription by Golden Rain of

15,000,000 new ordinary shares in the capital of Haranga for the total

subscription price of A$6,000,000 under a private placement;

(d) the provisional agreements dated 30th April, 2012 entered into between Writring

Investments Limited (a wholly-owned subsidiary of LCR) as seller, and (i) Great

International Development Company Limited, as buyer, for the sale and purchase

of Unit B on the 19th Floor and car parking space no. L35 on the Lower Ground

Floor and car parking space no. G53 on the Ground Floor, Celestial Garden, No.

5 Repulse Bay Road, Hong Kong at the consideration of HK$62,000,000; and

(ii) Oasis Management Limited, as buyer, for the sale and purchase of Unit B on

the 20th Floor, Celestial Garden, No. 5 Repulse Bay Road, Hong Kong at the

consideration of HK$60,000,000, respectively;

(e) the option letter dated 7th September, 2012 entered into between Lippo (S) Pte. Ltd.

(‘‘Lippo (S)’’) (an indirect wholly-owned subsidiary of HKC) as the vendor, and

Mr. Thio Gim Hock (‘‘Mr. Thio’’), pursuant to which Lippo (S) had offered

Mr. Thio an option to purchase at the sale price of S$22,000,000 the whole of Lots

1342L and 1343C both of Mukim 34 containing an area of approximately

684.9 square metres and approximately 715.2 square metres respectively and

comprising the property known as 259 Ocean Drive, located at Sentosa Cove,

Singapore in consideration of an option money in the amount of S$220,000 (being

part of the sale price). The above option was accepted and exercised by Mr. Thio

on 14th September, 2012;

(f) the loan agreement dated 30th November, 2012 entered into between Skyblue

International Limited (an indirect wholly-owned subsidiary of HKC) as lender

and Seeger Worldwide Limited, as the borrower, for a loan facility of up to

HK$125,000,000 (the ‘‘Loan’’) at an interest rate of 6% per annum. Subsequently,

the borrower did not drawdown the Loan and the Loan was cancelled

accordingly;

(g) the subscription agreement dated 20th February, 2013 entered into between

GSH Corporation Limited (‘‘GSH’’), a company listed on the SGX-ST and

Golden Super Holdings Limited (‘‘Golden Super’’) (a wholly-owned subsidiary of

LCR) for the subscription by Golden Super of 184,653,669 new ordinary shares in

the capital of GSH at an aggregate subscription price of S$17,542,098.56 and

GSH is primarily engaged in the business of distribution of IT, photographic and

timepiece products with distribution networks spanning many emerging markets

in Asia, the Middle East and Central Asia;

(h) the share purchase agreement dated 1st March, 2013 entered into between Charm

Fit Pte. Ltd. (‘‘Charm Fit’’) (a wholly-owned subsidiary of Auric) and Asian Hotel

& Resort Group Limited (‘‘Asian Hotel’’) for the sale of all of Charm Fit’s


– 82 –

redeemable preference shares of S$0.10 each in the share capital of Auric Pacific

Real Estate Fund (the ‘‘Fund’’), representing 60% of the issued and outstanding

redeemable preference shares of the Fund. The sole ordinary share of the Fund

held by AP Fund Management Pte. Ltd (a wholly-owned subsidiary of Auric) was

also sold to Asian Hotel. The total consideration for the sale of the above shares

in the Fund amounted to HK$130,752,647.08; and

(i) the Disposal Agreement.

9. QUALIFICATIONS AND CONSENTS OF EXPERTS

The qualification of the experts, who have given opinion or advice contained in this

circular are set out as follows:

Name Qualification

Messrs. Ernst & Young Certified Public Accountants

RHL Property valuer

As at the Latest Practicable Date, none of the above experts had any shareholding in

any member of the Group or any right (whether legally enforceable or not) to subscribe for

or to nominate persons to subscribe for securities in any member of the Group, nor did it

has any interest, direct or indirect, in any assets which had, since 31st March, 2013, being

the date to which the latest published audited consolidated financial statements of the

Company were made up, been acquired or disposed of by or leased to any member of the

Group, or were proposed to be acquired or disposed of by or leased to any member of the

Group.

As at the date of this circular, each of the above experts has given and has not

withdrawn its written consent to the issue of this circular with the inclusion of its report(s),

letter(s) and reference(s) to its name(s) and opinion(s) in the form and context in which they

appear in this circular.

10. MISCELLANEOUS

(a) The Secretary of the Company is Mr. Davy Kwok Fai Lee, an associate member

of the Chartered Institute of Bankers, and a fellow member of each of the Institute

of Chartered Secretaries and Administrators and the Hong Kong Institute of

Chartered Secretaries.

(b) The registered office of the Company is situated at 24th Floor, Tower One, Lippo

Centre, 89 Queensway, Hong Kong.

(c) The transfer office of the Company is situated at the office of its registrars, Tricor

Progressive Limited, at 26th Floor, Tesbury Centre, 28 Queen’s Road East,

Wanchai, Hong Kong.


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11. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection during normal

business hours on any weekday (Saturday, Sunday and public holidays excluded) at the

registered office of the Company which is situate at 24th Floor, Tower One, Lippo Centre,

89 Queensway, Hong Kong from the date of this circular and up to the date of the EGM:

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

(b) copies of the material contracts referred to under the paragraph headed ‘‘Material

contracts’’ in this appendix;

(c) the report on the unaudited pro forma financial information of the Remaining

Group, the text of which is set out in Appendix III to this circular;

(d) the property valuation report prepared by RHL, the text of which is set out in

Appendix IV to this circular;

(e) the written consents from the experts referred to in paragraph headed

‘‘Qualification and consents of experts’’ in this appendix;

(f) the published audited consolidated financial statements of the Company for the

financial year ended 31st December, 2011 and the fifteen months ended

31st March, 2013;

(g) the Disposal Agreement; and

(h) this circular.

12. LANGUAGE

In the event of inconsistency, the English texts of this circular and form of proxy shall

prevail over the Chinese texts.

Note: Certain English translations of Chinese names or words used in this appendix are included for

information purpose only and should not be relied upon as the official translation of such Chinese

names or words.


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LIPPO LIMITED


(Stock Code: 226)

NOTICE IS HEREBY GIVEN that an extraordinary general meeting of Lippo Limited(the ‘‘Company’’) will be held at Harcourt Room, Lower Lobby, Conrad Hong Kong,Pacific Place, 88 Queensway, Hong Kong on Tuesday, 3rd December, 2013 at11 : 00 a.m. (or so soon thereafter as the extraordinary general meeting of Lippo ChinaResources Limited convened for 10 : 45 a.m. on the same date shall have been concluded oradjourned) for the purpose of considering and, if thought fit, passing, with or withoutmodifications, the following resolution as an ordinary resolution of the Company:

ORDINARY RESOLUTION

‘‘THAT,

(a) the disposal by Lippo China Resources Limited (‘‘LCR’’), a subsidiary of theCompany, of the entire issued share capital of Tecwell Limited (the ‘‘Disposal’’) ata consideration of approximately HK$843.5 million (subject to adjustment, if any)to OUE Eastern Limited (the ‘‘Purchaser’’) pursuant to the sale and purchaseagreement dated 16th October, 2013 between LCR and the Purchaser (the‘‘Disposal Agreement’’, a copy of which has been produced to the meeting andmarked ‘‘A’’ and signed by the chairman of the meeting for identificationpurposes) and all transactions contemplated under the Disposal Agreement(including, without limitation, the execution of the Deed of Undertakings, asreferred to in the Disposal Agreement, which is annexed in the DisposalAgreement) be and are hereby approved; and

(b) the directors of the Company be and are hereby authorised to do all such actsand/or things and/or execute all such documents incidental to, ancillary to or inconnection with matters contemplated in or relating to the Disposal Agreement asthey may in their absolute discretion consider necessary, desirable or expedient togive effect to the Disposal and the Disposal Agreement and the implementation ofall transactions contemplated thereby and thereunder and to agree to suchvariation, amendment or waiver as are, in the opinion of the directors of theCompany, in the interest of the Company.’’

By Order of the BoardLIPPO LIMITED

Davy Lee

Secretary

Hong Kong, 18th November, 2013


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Registered Office:

24th Floor

Tower One

Lippo Centre

89 Queensway

Hong Kong

Note:

1. Any member entitled to attend and vote at the meeting is entitled to appoint more than one proxy to

attend and vote instead of him. A proxy need not be a member of the Company.

2. To be valid, a form of proxy together with the power of attorney or other authority (if any) under which it

is signed (or a notarially certified true copy thereof) must be deposited at the Company’s registered office

at 24th Floor, Tower One, Lippo Centre, 89 Queensway, Hong Kong not less than 48 hours before the

time appointed for the holding of the meeting or any adjourned meeting thereof. Completion and return of

the form of proxy will not preclude members from attending and voting in person at the meeting or any

adjourned meeting thereof should they so desire.

3. The register of members of the Company will be closed on Tuesday, 3rd December, 2013 during which

no transfer of share will be registered. In order to be entitled to attend and vote at the meeting, all

transfers of shares accompanied by the relevant share certificates and transfer forms must be lodged with

the Company’s registrars, Tricor Progressive Limited, 26th Floor, Tesbury Centre, 28 Queen’s Road East,

Wanchai, Hong Kong not later than 4 : 30 p.m. on Monday, 2nd December, 2013.

4. At the meeting, the chairman of the meeting will exercise his power under article 86(i) of the articles of

association of the Company to put the above resolution to the vote by way of a poll as required under the

Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.

5. Should there be any discrepancies between the English and the Chinese versions, the English version shall

prevail.


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LIPPO LIMITED 力寶有限公司

Documents

Transcript of LIPPO LIMITED 力寶有限公司

LIPPO LIMITED 力 寶 有 限 公 司

Documents

Transcript of LIPPO LIMITED 力 寶 有 限 公 司

LIPPO LIMITED 力寶有限公司

Transcript of LIPPO LIMITED 力寶有限公司