00E1008089 Cir.Indb

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult your stockbroker or other licensed securities dealer, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in eSun Holdings Limited, you should at once hand this circular and the accompanying form of proxy to the purchaser or the transferee or to the bank, stockbroker or other licensed securities dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser or the 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.

(Stock Code: 571)

VERY SUBSTANTIAL ACQUISITION, VERY SUBSTANTIAL DISPOSAL AND CONNECTED TRANSACTIONS

REORGANISATION INVOLVING SHARES IN THE CAPITAL OF LAI FUNG HOLDINGS LIMITED AND LAI SUN DEVELOPMENT COMPANY LIMITED

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

A letter from the Board (as defined herein) is set out on pages 6 to 19 of this circular. A letter from the Independent Board Committee (as defined herein) containing its recommendation is set out on pages 20 to 21 of this circular. A letter from the Independent Financial Adviser (as defined herein) containing its advice to the Independent Board Committee (as defined herein) and the Independent Shareholders (as defined herein) is set out on pages 22 to 49 of this circular.

A notice convening the SGM (as defined herein) to be held at 10:30 a.m. on Monday, 20 September 2010 at Salon 1-3, JW Marriott Ballroom, Level 3, JW Marriott Hotel Hong Kong, Pacific Place, 88 Queensway, Hong Kong is set out on pages 293 to 295 of this circular. A form of proxy for use at the SGM is enclosed. Whether or not you intend to be present at the SGM, you are requested to complete and return the enclosed form of proxy in accordance with the instructions printed thereon and return it to the Company’s (as defined herein) share registrar in Hong Kong, Tricor Tengis Limited, at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong as soon as possible and in any event, not less than 48 hours before the time appointed for holding the SGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the SGM or any adjourned meeting thereof should you so wish.

30 August 2010 CONTENTS

Page

DEFINITIONS ...... 1

LETTER FROM THE BOARD

Introduction ...... 6

Shares Swap Agreement...... 7

Shareholding Structure ...... 11

Reasons for and benefits of the Transactions ...... 12

Principal business activities of LSG, eSun, LSD and Lai Fung ...... 13

Financial information of Lai Fung ...... 14

Financial information of LSD ...... 14

Financial effects to the Group in relation to the Transactions ...... 15

Listing Rules implications of the Reorganisation ...... 16

Waiver in relation to Rule 14.68(2)(a)(i) of the Listing Rules ...... 17

Takeovers Code waivers...... 18

SGM ...... 18

Recommendations ...... 19

Additional information...... 19

LETTER FROM THE INDEPENDENT BOARD COMMITTEE ...... 20

LETTER FROM PLATINUM SECURITIES...... 22

— i — CONTENTS

Page

APPENDIX I — FINANCIAL INFORMATION ON THE GROUP, THE LSD GROUP AND THE LAI FUNG GROUP . . . . 50

APPENDIX II — UNAUDITED PRO FORMA FINANCIAL INFORMATION ...... 55

APPENDIX III — MANAGEMENT DISCUSSIONS AND ANALYSES ON THE GROUP AND THE LAI FUNG GROUP . . . . . 70

APPENDIX IV — PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE GROUP...... 163

APPENDIX V — PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LAI FUNG GROUP ...... 177

APPENDIX VI — PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LSD GROUP ...... 238

APPENDIX VII — GENERAL INFORMATION ...... 279

NOTICE OF SGM ...... 293

— ii — DEFINITIONS

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

“associate” has the meaning ascribed to it under the Listing Rules;

“Board” the board of Directors;

“Business Day” means a day on which licensed banks are generally open for business in Hong Kong (excluding Saturdays);

“Completion” completion of the Transactions in accordance with the terms of the Shares Swap Agreement;

“Completion Date” means the date when Completion shall take place, being the seventh Business Day after satisfaction or waiver of the last of the conditions precedent or such other date as may be agreed between the parties to the Shares Swap Agreement;

“connected person” has the meaning ascribed to it under the Listing Rules;

“controlling shareholder” has the meaning ascribed to it under the Listing Rules;

“Directors” the directors of the Company;

“eSun” or the “Company” eSun Holdings Limited, a company incorporated in Bermuda, the shares of which are listed on the Stock Exchange (Stock Code: 571);

“eSun Group” or the “Group” the Company and its subsidiaries;

“Executive” the executive director of the corporate finance division of the Securities and Futures Commission or any delegate of the executive director;

“HK$” Hong Kong dollars, the lawful currency of Hong Kong;

— 1 — DEFINITIONS

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

“Independent Board Committee” the independent board committee of the Company comprising all the independent non-executive Directors, namely Dr. Ng Lai Man, Carmen, Mr. Tong Ka Wing, Carl and Mr. Alfred Donald Yap, which has been established for the purpose of advising the Independent Shareholders as to whether the terms of the Shares Swap Agreement are fair and reasonable and whether the Shares Swap Agreement and the Transactions are in the interests of the Company and its shareholders as a whole;

“Independent Financial Adviser” Platinum Securities Company Limited, a licensed or “Platinum Securities” corporation under the SFO licensed to carry out Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities under the SFO, being the independent financial adviser appointed to advise the Independent Board Committee and the Independent Shareholders in respect of the Shares Swap Agreement and the Transactions;

“Independent Shareholders” shareholders of the Company excluding all members of the Lam Family and LSD and its associates;

“Knight Frank” Knight Frank Petty Limited, an independent property valuer jointly appointed by LSG and eSun for valuation of the landed property interests of the Lai Fung Group;

“Lai Fung” Lai Fung Holdings Limited, a company incorporated in the Cayman Islands, the shares of which are listed on the Stock Exchange (Stock Code: 1125);

— 2 — DEFINITIONS

“Lai Fung Adjusted Net Asset consolidated net asset value attributable to the Value” shareholders of Lai Fung as set out in the published interim report of Lai Fung for the six months ended 31 January 2010 and adjusted to reflect the fair market value of all the landed property and related interests (after taking into account the estimated corresponding effects on the deferred tax liabilities) of Lai Fung as at 31 May 2010;

“Lai Fung Group” Lai Fung and its subsidiaries;

“Lai Fung Transaction” the sale, by LSG, and the purchase by the Company, of LSG’s direct and indirect interests in 3,265,688,037 shares in the capital of Lai Fung pursuant to the terms of the Shares Swap Agreement;

“Lam Family” Mr. Lam, Madam U Po Chu (being the mother of Mr. Lam), Mr. Lam Kin Ming (being a brother of Mr. Lam), Mr. Lam Kin Hong, Matthew (being a brother of Mr. Lam) and Mr. Lam Hau Yin, Lester (being a son of Mr. Lam) together with their respective associates;

“Latest Practicable Date” 24 August 2010, being the latest practicable date prior to the printing of this circular for the purpose of ascertaining certain information contained in this circular;

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

“Long Stop Date” means 30 September 2010 or such later date as may be agreed between the parties to the Shares Swap Agreement;

“LSD” Lai Sun Development Company Limited, a company incorporated in Hong Kong, the shares of which are listed on the Stock Exchange (Stock Code: 488);

— 3 — DEFINITIONS

“LSD Adjusted Net Asset Value” consolidated net asset value attributable to the shareholders of LSD as set out in the published interim report of LSD for the six months ended 31 January 2010 and adjusted to reflect (i) the fair market values of all the landed property and related interests (after taking into account the estimated corresponding effects on the deferred tax liabilities and the corresponding financial effects related to the cross- shareholding between LSD and the Company) of LSD and the Company as at 31 May 2010, and (ii) the fair value of a tax indemnity given by LSD to Lai Fung as at 31 May 2010 pursuant to an indemnity deed dated 12 November 1997 entered into between LSD and Lai Fung (after taking into account the financial effects related to the cross-shareholding between LSD and the Company);

“LSD Group” LSD and its subsidiaries;

“LSD Transaction” the sale, by the Company, and the purchase, by LSG, of the Company’s indirect interests in 5,200,000,000 shares in the capital of LSD pursuant to the terms of the Shares Swap Agreement;

“LSG” Lai Sun Garment (International) Limited, a company incorporated in Hong Kong, the shares of which are listed on the Stock Exchange (Stock Code: 191);

“LSG Group” LSG and its subsidiaries;

“LSG Independent Shareholders” shareholders of LSG excluding all members of the Lam Family;

“Mr. Lam” Mr. Lam Kin Ngok, Peter, a member of the Lam Family and a director of each of LSG, LSD, the Company and Lai Fung;

— 4 — DEFINITIONS

“Percentage Ratios” percentage ratios as set out in Rule 14.07 of the Listing Rules to be applied for determining the classification of a transaction;

“PRC” The People’s Republic of China;

“Reorganisation” the reorganisation of the ownership structure of LSD, the Company and Lai Fung to be effected as a result of the Shares Swap Agreement;

“Savills” Savills Valuation and Professional Services Limited, an independent property valuer jointly appointed by the Company and LSG for valuation of the landed property interests of the Group and the LSD Group;

“SFO” the Securities and Futures Ordinance, Cap. 571 of the Laws of Hong Kong as amended, supplemented or otherwise modified from time to time;

“SGM” the special general meeting of the Company to be convened and held at 10:30 a.m. on Monday, 20 September 2010 at Salon 1-3, JW Marriott Ballroom, Level 3, JW Marriott Hotel Hong Kong, Pacific Place, 88 Queensway, Hong Kong to consider and, if thought fit, to approve the Transactions, notice of which is set out on pages 293 to 295 of this circular;

“Shares Swap Agreement” the shares swap agreement dated 26 July 2010 between LSG and the Company setting out the terms and conditions of the Transactions;

“Stock Exchange” The Stock Exchange of Hong Kong Limited;

“Takeovers Code” the Hong Kong Code on Takeovers and Mergers;

“Transactions” the Lai Fung Transaction and the LSD Transaction;

“%” per cent;

“sq ft” square foot; and

“sq m” square metre.

— 5 — LETTER FROM THE BOARD

(Stock Code: 571)

Executive Directors: Registered Office: Mr. Lam Kin Ngok, Peter Clarendon House Ms. Leung Churk Yin, Jeanny (Chief Executive Officer) 2 Church Street Mr. Cheung Wing Sum, Ambrose Hamilton HM 11 Mr. Lui Siu Tsuen, Richard Bermuda

Non-executive Directors: Head Office and Principal Place Mr. Low Chee Keong (Chairman) of Business: Madam U Po Chu 11th Floor Mr. Lo Kwok Kwei, David Lai Sun Commercial Centre Mr. Albert Thomas da Rosa, Junior 680 Cheung Sha Wan Road Kowloon Independent Non-executive Directors: Hong Kong Dr. Ng Lai Man, Carmen Mr. Tong Ka Wing, Carl (Deputy Chairman) Mr. Alfred Donald Yap

30 August 2010

To the Shareholders

Dear Sir or Madam,

VERY SUBSTANTIAL ACQUISITION, VERY SUBSTANTIAL DISPOSAL AND CONNECTED TRANSACTIONS

REORGANISATION INVOLVING SHARES IN THE CAPITAL OF LAI FUNG HOLDINGS LIMITED AND LAI SUN DEVELOPMENT COMPANY LIMITED

INTRODUCTION

Reference is made to the joint announcement of the Company and LSG dated 26 July 2010 in which the respective boards of directors of the Company and LSG jointly announced

— 6 — LETTER FROM THE BOARD that the Company and LSG entered into the conditional Shares Swap Agreement pursuant to which:

(a) LSG has agreed to transfer or procure the transfer of, and the Company has agreed to accept the transfer of, LSG’s direct and indirect interests in 3,265,688,037 shares in the capital of Lai Fung, representing approximately 40.58% of the existing issued share capital of Lai Fung and LSG’s entire shareholding interest in Lai Fung; and

(b) the Company has agreed to procure the transfer of, and LSG has agreed to accept the transfer of, the Company’s indirect interest in 5,200,000,000 shares in the capital of LSD, representing approximately 36.72% of the existing issued share capital of LSD and the Company’s entire shareholding interest in LSD.

The purpose of this circular is to provide you, among other things, (i) details of the Shares Swap Agreement and the Transactions; (ii) the recommendation from the Independent Board Committee in respect of the Shares Swap Agreement and the Transactions; (iii) a letter of advice from the Independent Financial Adviser in respect of the Shares Swap Agreement and the Transactions; (iv) other information as required under the Listing Rules and (v) the notice of SGM.

SHARES SWAP AGREEMENT

Date

26 July 2010

Parties

1. LSG; and

2. the Company.

The Lai Fung Transaction

— 7 — LETTER FROM THE BOARD subsidiary, Silver Glory Securities Limited, a company which, in turn, holds 1,396,481,675 Lai Fung shares as its only asset as at the date of the Shares Swap Agreement. The aggregate consideration for the Lai Fung Transaction is approximately HK$3,883.2 million (being based on 40.58% of the Lai Fung Adjusted Net Asset Value as described under the section headed “Valuations for the purposes of the Transactions” below), and is to be settled by (i) the transfer to LSG of the Company’s entire shareholding interest in LSD pursuant to the LSD Transaction; and (ii) as to the balance (approximately HK$178.4 million) by the payment of cash to LSG (HK$100 million to be paid on the Completion Date, and approximately HK$78.4 million to be paid, without interest, six months after the Completion Date). The consideration for the Lai Fung Transaction was determined by reference to the respective values of Lai Fung and LSD, as described further below.

The consideration for the Lai Fung Transaction translates into approximately HK$1.19 per Lai Fung share payable by the Company and this represents a premium of approximately 358% to the closing market price of a Lai Fung share of HK$0.26 on 23 July 2010 (being the last trading day preceding the date of the Shares Swap Agreement); a premium of approximately 363% to the average closing market price of a Lai Fung share of approximately HK$0.257 for the 10 trading days ended on 23 July 2010; a premium of approximately 358% to the closing market price of a Lai Fung share of HK$0.26 on the Latest Practicable Date; and a premium of approximately 352% to the average closing market price of a Lai Fung share of approximately HK$0.263 for the 10 trading days ended on the Latest Practicable Date.

The LSD Transaction

Subject to the terms and conditions of the Shares Swap Agreement, the Company has agreed to procure the transfer of, and LSG has agreed to accept the transfer of, all legal and beneficial title in and to 5,200,000,000 shares in the capital of LSD, representing approximately 36.72% of the existing issued share capital of LSD and the Company’s entire shareholding interest in LSD. This will be effected via an indirect transfer, structured as a transfer by the Group of its shares in, and shareholder’s loans to, its wholly-owned subsidiary, Zimba International Limited, a company which, in turn, holds 5,200,000,000 LSD shares as its only asset as at the date of the Shares Swap Agreement. The aggregate consideration for the LSD Transaction is approximately HK$3,704.8 million (being based on 36.72% of the LSD Adjusted Net Asset Value as described under the section headed “Valuations for the purposes of the Transactions” below), and is to be settled by the transfer of LSG’s entire shareholding interest in Lai Fung pursuant to the Lai Fung Transaction. The consideration for the LSD Transaction was determined by reference to the respective values of LSD and Lai Fung, as described below.

— 8 — LETTER FROM THE BOARD

The consideration for the LSD Transaction translates into approximately HK$0.71 per LSD share payable by LSG and this represents a premium of approximately 383% to the closing market price of a LSD share of HK$0.147 on 23 July 2010 (being the last trading day preceding the date of the Shares Swap Agreement); a premium of approximately 390% to the average closing market price of a LSD share of approximately HK$0.145 for the 10 trading days ended on 23 July 2010; a premium of approximately 355% to the closing market price of a LSD share of HK$0.156 on the Latest Practicable Date; and a premium of approximately 352% to the average closing market price of a LSD share of approximately HK$0.157 for the 10 trading days ended on the Latest Practicable Date.

Valuations for the purposes of the Transactions

For the purposes of both the Lai Fung Transaction and LSD Transaction:

(a) the shares of Lai Fung have been valued on the basis of its unaudited consolidated net assets of Lai Fung of approximately HK$7,555.4 million, determined by reference to its interim report for the six months ended 31 January 2010, adjusted to reflect the increase in the fair market value of the landed property and related interests (after taking into account the estimated corresponding effects on the deferred tax liabilities) of Lai Fung, as at 31 May 2010 of approximately HK$2,013.8 million. The fair market value of the landed property interests of the Lai Fung Group has been determined by Knight Frank. The Lai Fung Adjusted Net Asset Value is approximately HK$9,569.2 million; and

(b) the shares of LSD have been valued on the basis of its unaudited consolidated net assets of approximately HK$8,572.7 million, determined by reference to its interim report for the six months ended 31 January 2010, adjusted to reflect (i) the increase in the fair market values of the landed property and related interests (after taking into account the estimated corresponding effects on the deferred tax liabilities and the corresponding financial effects related to the cross-shareholding between LSD and the Company) of LSD and the Company, as at 31 May 2010 of approximately HK$1,786.9 million; and (ii) the fair value of a historic tax indemnity given by LSD to Lai Fung as at 31 May 2010 pursuant to an indemnity deed dated 12 November 1997 entered into between LSD and Lai Fung (after taking into account the financial effects related to the cross-shareholding between LSD and the Company) which would result in a decrease in the LSD Adjusted Net Asset Value of approximately HK$270.2 million. The fair market value of the landed property interests of the LSD Group has been determined by Savills. The LSD Adjusted Net Asset Value is approximately HK$10,089.4 million.

— 9 — LETTER FROM THE BOARD

Given that the agreed aggregate value of the Lai Fung shares being transferred pursuant to the Lai Fung Transaction exceeds the agreed aggregate value of the LSD shares being transferred pursuant to the LSD Transaction by a total amount of approximately HK$178.4 million, the Company has agreed to make up the difference by making a cash payment to LSG in the amount of approximately HK$178.4 million (HK$100 million to be paid on the Completion Date, and approximately HK$78.4 million to be paid, without interest, six months after the Completion Date).

Property valuation reports in relation to the landed property interests of the Group, the Lai Fung Group and the LSD Group prepared by the independent valuers, are set out in Appendices IV to VI to this circular.

Completion and conditions precedent

Completion will take place on the Completion Date and completion of the Lai Fung Transaction and the LSD Transaction shall occur at the same time and place and no party shall be obliged to complete such transactions unless they are completed at the same time and place (unless otherwise mutually agreed upon by the parties). Completion is conditional upon the following conditions being satisfied or waived pursuant to the terms of the Shares Swap Agreement on or before the Long Stop Date:

(a) the passing of a resolution at an extraordinary general meeting of LSG by the LSG Independent Shareholders to approve the Shares Swap Agreement and the transactions contemplated thereunder;

(b) the passing of a resolution at a special general meeting of the Company by the Independent Shareholders to approve the Shares Swap Agreement and the transactions contemplated thereunder;

(c) the general offer waivers (as described further below) remaining valid and in full force and not having been withdrawn, cancelled or revoked by the Executive;

(d) the Lai Fung shares remaining listed on the Stock Exchange;

(e) the LSD shares remaining listed on the Stock Exchange;

(f) all relevant bank and other third party consents, approvals or waivers necessary for the Transactions having been obtained (and not revoked);

(g) the warranties given by LSG pursuant to the Shares Swap Agreement remaining true, accurate and not misleading in all material respects; and

— 10 — LETTER FROM THE BOARD

(h) the warranties given by the Company pursuant to the Shares Swap Agreement remaining true, accurate and not misleading in all material respects.

In the event that not all the conditions have been fulfilled or waived pursuant to the terms of the Shares Swap Agreement (as the case may be) on or before the Long Stop Date, the Shares Swap Agreement shall lapse and be of no further effect and no party shall have any claim against or liability or obligation to the other party save in respect of any antecedent breach.

SHAREHOLDING STRUCTURE

Based upon the shares in issue for each of the companies identified below, as at the Latest Practicable Date (and assuming no changes to such issued share capitals prior to Completion), the simplified shareholding structure of the relevant companies before and after the Reorganisation will be as follows:

Before the Reorganisation

The following reflects the simplified shareholding structure of the relevant companies as at the Latest Practicable Date.

The Lam Family

42.02%

LSG

11.25% 40.58%

LSD Lai Fung

36.08% 36.72%

eSun

— 11 — LETTER FROM THE BOARD

After the Reorganisation

The following reflects the simplified shareholding structure of the relevant companies upon Completion (assuming no changes in the issued share capital of any of the companies prior to Completion).

The Lam Family

42.02%

LSG

47.97%

LSD

36.08%

eSun

40.58%

Lai Fung

REASONS FOR AND BENEFITS OF THE TRANSACTIONS

The Directors believe that the terms of the Transactions are fair and reasonable and in the interests of the shareholders of the Company as a whole. As a result of the Lai Fung Transaction, the Company will become the controlling shareholder of Lai Fung with a well-established portfolio of property interests in the PRC and will share the operating profit of Lai Fung which is an associate (as that expression is used in the context of the Hong Kong Financial Reporting Standards) of the Company. Upon completion of the LSD Transaction, the Company anticipates booking a gain in its consolidated income statement as set out in more detail in the section headed “Financial effects to the Group in relation to the Transactions” below.

In addition, by virtue of the LSD Transaction, the Company and LSD will dismantle the cross-holding structure that has existed since 2004, by virtue of which the Company has been the controlling shareholder of LSD and, in turn, LSD has been the controlling shareholder of the Company. This cross-holding arose as a result of a debt restructuring exercise effected by LSD, which saw LSD allotting shares to its principal creditors, including the Company, to capitalise part of the debts owed by LSD to those creditors. The Transactions will enable the entire Lai Sun group to simplify the ownership structure of the Company (and LSD) and eliminate the circular effect of the accounting treatment of

— 12 — LETTER FROM THE BOARD the cross-holdings. Historically, where both the Company and LSD have recorded losses, each of the Company and LSD has had to account for its share of losses in LSD and the Company, respectively, as an associate. By unlocking this structure, the magnifying effect of the cross-held interests will be eliminated. More importantly, the directors of each of the Company and LSG believe that the simplified shareholding structure will provide greater clarity to shareholders of the respective companies and the market with regard to the core business of each of the companies, and will potentially enhance investors’ interest in investing in LSG, LSD and the Company, and as a result, improve liquidity in the shares of the respective companies. This will directly benefit the Company as LSD will become an associate (as that expression is used in the context of the Hong Kong Financial Reporting Standards) of LSG upon completion of the Transactions.

The Directors see the Transactions as a fair exchange because the property values of Lai Fung and LSD, which constitute the majority of the assets of the respective companies, have been determined by independent valuers. The Directors believe that the valuation methodology used in the Shares Swap Agreement more closely replicates the true underlying value of the respective companies, as opposed to the value derived from multiplying the total issued share capital of the respective companies by their current market price, this is because the current market price of the shares of LSD and Lai Fung are trading at a substantial discount to the underlying book value per share of each company.

The total cash amount, of approximately HK$178.4 million, payable by the Company as part of the Transactions will be funded from the Group’s internal resources.

PRINCIPAL BUSINESS ACTIVITIES OF LSG, eSUN, LSD AND LAI FUNG

The principal business activities of the LSG Group include property development and investment in Hong Kong and investment holding.

The principal business activities of the eSun Group comprise the development and operation of, and investment in, media and entertainment, production and distribution of music and films and video format products, the provision of advertising agency services and the development of Macao Studio City, an integrated leisure resort comprising theatre, concert and live entertainment, retail and gaming facilities and hotels in Cotai, Macau Special Administrative Region of the PRC.

The principal business activities of the LSD Group include property development for sale and investment purpose and property investment in Hong Kong, investment in and the operation of hotels and restaurants and investment holding.

— 13 — LETTER FROM THE BOARD

The principal business activities of the Lai Fung Group include property development for sale and property investment in the PRC.

FINANCIAL INFORMATION OF LAI FUNG

The audited consolidated net profit (before taxation and extraordinary items) and audited consolidated net profit (after taxation and extraordinary items) of the Lai Fung Group for the financial year ended 31 July 2009, were approximately HK$767.7 million and HK$406.9 million respectively. The audited consolidated net profit (before taxation and extraordinary items) and audited consolidated net profit (after taxation and extraordinary items) of the Lai Fung Group for the financial year ended 31 July 2008, were approximately HK$625.2 million and HK$206.0 million respectively. The unaudited consolidated net assets of the Lai Fung Group as at 31 January 2010 was approximately HK$7,555.4 million.

The aggregate original purchase cost of the 3,265,688,037 shares in Lai Fung held by the LSG Group was approximately HK$731.4 million.

FINANCIAL INFORMATION OF LSD

The audited consolidated net loss (before taxation and extraordinary items) and audited consolidated net loss (after taxation and extraordinary items) of the LSD Group for the financial year ended 31 July 2009, were approximately HK$179.6 million and HK$221.0 million respectively. The audited consolidated net profit (before taxation and extraordinary items) and audited consolidated net profit (after taxation and extraordinary items) of the LSD Group for the financial year ended 31 July 2008, were approximately HK$1,176.6 million and HK$1,013.3 million respectively. The unaudited consolidated net assets of the LSD Group as at 31 January 2010 were approximately HK$8,572.7 million.

The Group acquired its interest in LSD in 2004, when it was allotted a total of 5,200,000,000 new ordinary shares of LSD pursuant to a debt restructuring exercise of LSD, which saw LSD in settlement of a debt due to the Group in the amount of approximately HK$1,500 million via (i) a cash repayment of HK$20 million; (ii) a five year interest-bearing term loan in the principal amount of HK$225 million; and (iii) an allotment of 5,200,000,000 new LSD shares having a par value of HK$0.50 per share. As such, the cost to the Company of acquiring the 5,200,000,000 LSD Shares is taken to be HK$1,255 million. LSD subsequently (in 2006) implemented a capital reduction exercise by which paid-up capital was cancelled to the extent of HK$0.49 per share, thereby reducing the nominal value of each share to HK$0.01.

— 14 — LETTER FROM THE BOARD

FINANCIAL EFFECTS TO THE GROUP IN RELATION TO THE TRANSACTIONS

LSD Transaction

The consideration to be received by the Group for the disposal of its 36.72% equity interest in LSD is determined by reference to the LSD Adjusted Net Asset Value. Since the Lai Fung Adjusted Net Asset Value pertaining to the 40.58% equity interest in Lai Fung of approximately HK$3,883.2 million is higher than the LSD Adjusted Net Asset Value pertaining to the 36.72% equity interest in LSD of approximately HK$3,704.8 million, the consideration to be received by the Group would be settled by a transfer of LSG’s 40.58% equity interest in Lai Fung to the Group with the balance of the surplus to be settled by a cash transfer of approximately HK$178.4 million by the Company to LSG.

As at 31 December 2009, the Group’s 36.72% share of net assets of the LSD Group as included in interests in associates of the audited consolidated financial statements of the Group for the year ended 31 December 2009 was approximately HK$3,153.2 million.

Taking into account the estimated consideration to be received by the Group of approximately HK$3,704.8 million for the disposal of 36.72% equity interest in LSD and the Group’s share of net assets of the LSD Group as at 31 December 2009 of approximately HK$3,153.2 million, an estimated gain on disposal before expenses (before release of reserves) to be recognised by the Group in its consolidated income statement is approximately HK$551.6 million. The consolidated net assets of the Group would increase accordingly by approximately HK$551.6 million before expenses. After taking into account the release of reserves shared by the Group of approximately HK$232.6 million upon Completion, the overall estimated gain on disposal before expenses to be recognised in the consolidated income statement would further increase from approximately HK$551.6 million to approximately HK$784.2 million. Such release of reserves would not have any impact on the consolidated net assets of the Group.

The financial effects and the related accounting treatments have been reviewed by the auditors of the Company. For accounting purpose, the Group will continue to share the results of the LSD Group under the equity method of accounting, including the cross- holding effects between the Group and the LSD Group, up to the Completion Date. The results of the LSD Group will include, inter-alia, the operating results of the LSD Group and the gain or loss (net of the related tax impact) arising from the change in fair values of the investment properties interests held by the LSD Group. This will affect the actual carrying amount of the Group’s 36.72% share of net assets of the LSD Group as at the Completion Date. Upon Completion, the actual financial effects for accounting purposes will need to be recalculated based on the actual carrying amount of the Group’s 36.72% share of net assets of the LSD Group as at the Completion Date and the fair value of the net assets of the LSD Group as at the Completion Date; the actual financial effects are expected to be different from the amounts disclosed above.

— 15 — LETTER FROM THE BOARD

Upon Completion, LSD will cease to be an associate of the Group and the results and net assets of the LSD Group will no longer be equity accounted for as an associate in the consolidated financial statements of the Group.

Lai Fung Transaction

The consideration to be given by the Group for the acquisition of 40.58% equity interest in Lai Fung is determined by reference to the Lai Fung Adjusted Net Asset Value. Since the Lai Fung Adjusted Net Asset Value pertaining to the 40.58% equity interest in Lai Fung of approximately HK$3,883.2 million is higher than the LSD Adjusted Net Asset Value pertaining to the 36.72% equity interest in LSD of approximately HK$3,704.8 million, the consideration to be given by the Group would be settled by the Company transferring its 36.72% of equity interest in LSD to the LSG Group plus a cash consideration of approximately HK$178.4 million. As the estimated consideration to be given by the Group to acquire the 40.58% equity interest in Lai Fung (being the Group’s 36.72% share in the LSD Adjusted Net Asset Value to be disposed of plus the cash consideration to be paid) is same as the Group’s 40.58% share in the Lai Fung Adjusted Net Asset Value to be acquired, the Lai Fung Transaction would have no material financial impact on the consolidated net assets of the Group.

The financial effects and the related accounting treatments have been reviewed by the auditors of the Company. Upon Completion, for accounting purpose and in accordance with the prevailing accounting standards, the actual amount of the Group’s 36.72% share of the fair value of the net assets of the LSD Group and the Group’s 40.58% share of the fair value of the net assets of the Lai Fung Group will need to be remeasured. Any difference between the consideration given for accounting purposes (being the Group’s 36.72% share of the fair value of the net assets of the LSD Group plus the cash consideration to be paid by the Group) and the Group’s 40.58% share of the fair value of the net assets of the Lai Fung Group will be treated as a goodwill or discount on acquisition in the Group’s consolidated financial statements in accordance with its accounting policy.

Upon Completion, Lai Fung will become a 40.58%-owned associate of the Group and the results and net assets of the Lai Fung Group will be equity accounted for in the consolidated financial statements of the Group.

LISTING RULES IMPLICATIONS OF THE REORGANISATION

The Lai Fung Transaction constitutes a very substantial acquisition and connected transaction for the Company under the Listing Rules on the basis that (i) one or more of the relevant Percentage Ratios applicable to the Company is above 100%; and (ii) Mr. Lam

— 16 — LETTER FROM THE BOARD

(together with his associates) owns a controlling interest (approximately 42.02% as at the Latest Practicable Date) in LSG, making LSG his associate and a connected person of the Company.

The LSD Transaction constitutes a very substantial disposal and connected transaction for the Company under the Listing Rules on the basis that (i) one or more of the relevant Percentage Ratios applicable to the Company is above 75%; and (ii) as noted above, Mr. Lam (together with his associates) owns a controlling interest in LSG, making LSG his associate and a connected person of the Company.

Accordingly, the Transactions, which are inter-conditional, are subject to the reporting, announcement and Independent Shareholders’ approval requirements of the Listing Rules. In this regard, at the SGM to be convened for the purpose of approving the Transactions, each of LSD, its associates and all members of the Lam Family (in each case as may hold shares in the Company) will abstain from voting on the relevant resolution. LSD held 447,604,186 shares of the Company (approximately 36.08%) as at the Latest Practicable Date. Mr. Lam and Mr. Lam Hau Yin, Lester, who are members of the Lam Family, each held 2,794,443 shares of the Company (approximately 0.225% each) as at the Latest Practicable Date. Save for the Directors who are members of the Lam Family, none of the other Directors have any material interests in each of the LSD Transaction and the Lai Fung Transaction. Accordingly, none of the other Directors were obliged to abstain from voting on the board resolution.

The Independent Board Committee has been constituted to make recommendation to the Independent Shareholders, in respect of the resolution to approve the Shares Swap Agreement and the Transactions. Platinum Securities has been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders as to whether the terms of the Shares Swap Agreement and the Transactions are on normal commercial terms and fair and reasonable so far as the shareholders of the Company are concerned and in the interests of such shareholders.

WAIVER IN RELATION TO RULE 14.68(2)(a)(i) OF THE LISTING RULES

Pursuant to Rule 14.68(2)(a)(i) of the Listing Rules, it is required that financial information on (a) LSD; or (b) the Group with LSD being shown separately, be included in a circular issued in relation to a very substantial disposal, subject to Note 2 to Rule 14.68(2)(a) that the Stock Exchange may relax such financial disclosure requirement if the assets of LSD are not consolidated in the Company’s accounts before the disposal.

The Company has applied to the Stock Exchange for a waiver in relation to Rule 14.68(2)(a)(i) of the Listing Rules by reason of the fact that, amongst others, the accounts

— 17 — LETTER FROM THE BOARD of LSD are not and will not be consolidated into the accounts of the Company before and after the Transactions; a substantial part of the relevant financial information required under Rule 14.68(2)(a)(i) has already been disclosed in the published audited annual financial reports of LSD (for the financial years ended 31 July 2007, 2008 and 2009) and the six months period from 1 August 2009 up to 31 January 2010.

The Stock Exchange has granted a waiver to the Company to waive the requirements under Rule 14.68(2)(a)(i) of the Listing Rules in this circular.

For information purposes, the published audited financial reports of LSD for the respective years ended 31 July 2007, 2008 and 2009 and its interim financial report which covered the six months period from 1 August 2009 up to 31 January 2010 are available on the website of the Stock Exchange (http://www.hkexnews.hk) and the website of LSD (http://www.laisun.com).

TAKEOVERS CODE WAIVERS

Notwithstanding the fact that, on Completion, the Company acquires a shareholding in Lai Fung an excess of the 30% mandatory offer threshold prescribed by Rule 26 of the Takeovers Code, no mandatory offer will be made by the Company to the independent shareholders of Lai Fung. The Executive has granted a waiver to the Company from the obligation to make a mandatory general offer, on the basis of Note 6 to Rule 26.1 of the Takeovers Code. The Executive has granted a similar waiver to LSG waiving the obligation on LSG to make a mandatory general offer to the independent shareholders of LSD otherwise arising on Completion when LSG increases its shareholding in LSD to above the 30% mandatory offer threshold.

Completion of the Shares Swap Agreement is subject to the satisfaction and/or waiver of the conditions precedent therein and therefore, may or may not proceed. Shareholders of the Company and potential investors are advised to exercise caution when dealing in the shares of the Company.

SGM

A notice convening the SGM to be held at 10:30 a.m. on Monday, 20 September 2010 at Salon 1-3, JW Marriott Ballroom, Level 3, JW Marriott Hotel Hong Kong, Pacific Place, 88 Queensway, Hong Kong is set out on pages 293 to 295 of this circular. A form of proxy for use at the SGM is enclosed. Whether or not you intend to be present at the SGM, you are requested to complete and return the enclosed proxy form in accordance with the instructions printed thereon and return it to the Company’s share registrar in Hong Kong, Tricor Tengis Limited, at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong as soon as possible and in any event, not less than 48 hours before the time

— 18 — LETTER FROM THE BOARD appointed for holding the SGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the SGM or any adjourned meeting thereof should you so wish.

Pursuant to Rule 13.39(4) of the Listing Rules, all votes of the shareholders of the Company at the SGM will be taken by poll. Each of LSD, its associates and all members of the Lam Family (in each case as may hold shares in the Company) will abstain from voting on the resolution to be proposed for approval of the Shares Swap Agreement at the SGM.

RECOMMENDATIONS

Your attention is drawn to (i) the letter from the Independent Board Committee contained in this circular which contains its recommendation to the Independent Shareholders as regards the Shares Swap Agreement and the Transactions; and (ii) the letter from Platinum Securities contained in this circular.

The Independent Shareholders are advised to read the aforesaid letters before deciding as to how to vote at the SGM.

The Directors consider that the terms of the Shares Swap Agreement and the Transactions are on normal commercial terms and are fair and reasonable and in the interests of the Company and its shareholders as a whole. Further, the Directors see the Transactions as a fair exchange because the property values of Lai Fung and LSD, which constitute the majority of the assets of the respective companies, have been determined by independent valuers. The Directors believe that the valuation methodology used in the Shares Swap Agreement more closely replicates the true underlying value of the respective companies, as opposed to the value derived from multiplying the total issued share capital of the respective companies by their current market price, this is because the current market price of the shares of LSD and Lai Fung are trading at a substantial discount to the underlying book value per share of each company. Accordingly, the Directors recommend the shareholders to vote in favour of the ordinary resolution to be proposed at the SGM.

ADDITIONAL INFORMATION

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

Yours faithf ully, For and on behalf of the Board of eSun Holdings Limited Low Chee Keong Chairman

— 19 — LETTER FROM THE INDEPENDENT BOARD COMMITTEE

(Stock Code: 571)

30 August 2010

To the Independent Shareholders

Dear Sir or Madam,

VERY SUBSTANTIAL ACQUISITION, VERY SUBSTANTIAL DISPOSAL AND CONNECTED TRANSACTIONS

REORGANISATION INVOLVING SHARES IN THE CAPITAL OF LAI FUNG HOLDINGS LIMITED AND LAI SUN DEVELOPMENT COMPANY LIMITED

We refer to the circular of the Company dated 30 August 2010 (the “Circular”) to the shareholders of the Company, of which this letter forms part. Terms defined in the Circular shall have the same meanings in this letter unless the context requires otherwise.

As the Independent Board Committee, we have been appointed to advise the Independent Shareholders as to whether, in our opinion, the terms of the Shares Swap Agreement and the Transactions, details of which are set out in the letter from the Board contained in the Circular, are fair and reasonable so far as the Independent Shareholders are concerned and in the interests of the Company and its shareholders as a whole. Platinum Securities has been appointed as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the Shares Swap Agreement and the Transactions.

We wish to draw your attention to the letter of advice of Platinum Securities containing their recommendation and the principal factors they have taken into account in arriving at their recommendation as set out on pages 22 to 49 of the Circular, and the letter

— 20 — LETTER FROM THE INDEPENDENT BOARD COMMITTEE from the Board as set out on pages 6 to 19 of the Circular. Independent Shareholders are recommended to read the letter of advice from Platinum Securities, the letter from the Board contained in the Circular as well as the additional information set out in the appendices to the Circular.

Having considered the terms of the Shares Swap Agreement and the Transactions, the contents of the letter from the Board and the principal factors and reasons considered and the recommendation given by Platinum Securities, we are of the opinion that the terms of the Shares Swap Agreement are fair and reasonable so far as the Independent Shareholders are concerned and are on normal commercial terms and in the interests of the Company and its shareholders as a whole. Accordingly, we recommend the Independent Shareholders to vote in favour of the ordinary resolution in respect of the Shares Swap Agreement to be proposed at the SGM.

Yours faithf ully, For and on behalf of the Independent Board Committee of eSun Holdings Limited Dr. Ng Lai Man, Carmen Tong Ka Wing, Carl Alfred Donald Yap Independent Non-Executive Directors

— 21 — LETTER FROM PLATINUM SECURITIES

The following is the text of the letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders which has been prepared for the purpose of incorporation into this circular.

PLATINUM Securities Company Limited

22/F Standard Chartered Bank Building 4 Des Voeux Road Central Hong Kong Telephone (852) 2841 7000 Facsimile (852) 2522 2700 Website www.platinum-asia.com

30 August 2010

To the Independent Board Committee and the Independent Shareholders

Dear Sir or Madam,

VERY SUBSTANTIAL ACQUISITION, VERY SUBSTANTIAL DISPOSAL AND CONNECTED TRANSACTIONS

REORGANISATION INVOLVING SHARES IN THE CAPITAL OF LAI FUNG HOLDINGS LIMITED AND LAI SUN DEVELOPMENT COMPANY LIMITED

INTRODUCTION

We refer to the joint announcement of the Company and LSG dated 26 July 2010 (the “Announcement”). On 30 August 2010, the Company dispatched a circular (the “Circular”) to the Independent Shareholders. Details of the Reorganisation are contained in the letter from the Board in the Circular. You should read the Circular, including the letter from the Board, carefully.

We refer to our engagement as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders as to whether the terms of the Shares Swap Agreement and the Transactions are on normal commercial terms, in the ordinary and usual course of business of the Group, fair and reasonable and in the interests of the Company and its shareholders (the “Shareholders”) as a whole, and as to whether the Independent Shareholders should vote in favour of the Shares Swap Agreement and the Transactions at the SGM. Terms used in this letter shall have the same meanings as defined in the Circular unless the context requires otherwise.

— 22 — LETTER FROM PLATINUM SECURITIES

We are independent from, and are not connected with the Company, any other party to the Shares Swap Agreement or the Transactions or any of their respective associates, connected persons or parties acting in concert with any of them and accordingly, we are considered eligible to give independent advice to the Independent Board Committee and the Independent Shareholders.

We will receive a fee from the Company for our role as the independent financial adviser to the Independent Board Committee and the Independent Shareholders in relation to the Shares Swap Agreement and the Transactions. Apart from this normal professional fee payable to us in connection with this appointment, no arrangements exist whereby we will receive any fees or benefits from the Company or any other party to the Shares Swap Agreement or the Transactions or any of their respective associates, connected persons or parties acting in concert with any of them.

In formulating our opinion, we have relied on the information and facts supplied to us by the Company. We have reviewed, among other things: the annual report of the Group for the financial year ended 31 December 2009 (the “Group 2009 Annual Report”); the interim report of the LSD Group for the six months ended 31 January 2010 (the “LSD 2010 Interim Report”); the annual report of the LSD Group for the financial year ended 31 July 2009; the interim report of the Lai Fung Group for the six months ended 31 January 2010 (the “Lai Fung 2010 Interim Report”); the annual report of the Lai Fung Group for the financial year ended 31 July 2009; the property valuation report in relation to the landed property interests of the Lai Fung Group dated 30 August 2010 prepared by Knight Frank, an independent property valuer, as set out in Appendix V to the Circular; the property valuation report (the “Savills Valuation Report”) in relation to the landed property interests of the LSD Group dated 30 August 2010 prepared by Savills, an independent property valuer, as set out in Appendix VI to the Circular; and the announcements published by the Company since 1 January 2010 to the Latest Practicable Date.

We have assumed that all information, facts, opinions and representations contained in the Circular are true, complete and accurate in all material respects and we have relied on the same. The Directors have confirmed that they take full responsibility for the contents of the Circular, and have made all reasonable inquiries that no material facts have been omitted from the information supplied to us.

— 23 — LETTER FROM PLATINUM SECURITIES

We have no reason to suspect that any material facts or information have been withheld or to doubt the truth, accuracy or completeness of the information of all facts as set out in the Circular and of the information and representations provided to us by the Company. Furthermore, we have no reason to suspect the reasonableness of the opinions and representations expressed by the Company and/or the Directors which have been provided to us. In line with normal practice, we have not, however, conducted a verification process of the information supplied to us, nor have we conducted any independent in- depth investigation into the business and affairs of the Company. We consider that we have reviewed sufficient information to enable us to reach an informed view and to provide a reasonable basis for our opinion regarding the Shares Swap Agreement and the Transactions.

The Independent Board Committee, comprising all of the independent non-executive Directors, namely, Dr. Ng Lai Man, Carmen, Mr. Tong Ka Wing, Carl and Mr. Alfred Donald Yap, has been established to advise the Independent Shareholders in relation to the Shares Swap Agreement and the Transactions.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In formulating our opinion in relation to the Shares Swap Agreement and the Transactions, and giving our independent financial advice to the Independent Board Committee and the Independent Shareholders, we have considered the following principal factors and reasons:

1. Background of the Transactions

On 26 July 2010, the respective boards of directors of the Company and LSG jointly announced that the Company and LSG entered into the conditional Shares Swap Agreement pursuant to which:

(i) LSG has agreed to transfer or procure the transfer of, and the Company has agreed to accept the transfer of, LSG’s direct and indirect interests in 3,265,688,037 shares in the capital of Lai Fung, representing approximately 40.58% of the existing issued share capital of Lai Fung and LSG’s entire shareholding interest in Lai Fung; and

(ii) the Company has agreed to procure the transfer of, and LSG has agreed to accept the transfer of, the Company’s indirect interest in 5,200,000,000 shares in the capital of LSD, representing approximately 36.72% of the existing issued share capital of LSD and the Company’s entire shareholding interest in LSD.

— 24 — LETTER FROM PLATINUM SECURITIES

Shareholding structure

Before the Reorganisation

The following reflects the simplified shareholding structure of the relevant companies as at the Latest Practicable Date.

The Lam Family

42.02%

LSG

11.25% 40.58%

LSD Lai Fung

36.08% 36.72%

eSun

— 25 — LETTER FROM PLATINUM SECURITIES

After the Reorganisation

The following reflects the simplified shareholding structure of the relevant companies upon Completion (assuming no changes in the issued share capital of any of the companies prior to Completion).

The Lam Family

42.02%

LSG

47.97%

LSD

36.08%

eSun

40.58%

Lai Fung

Considerations for the Transactions are based on the respective net asset values (“NAV”) of Lai Fung and LSD with adjustments to reflect the increase in fair market values of the relevant landed property and related interests as well as the fair value of a tax indemnity (in the case of the LSD Transaction). Please refer to the section below headed “Basis of consideration” for details.

2. Principal terms of the Transactions

Shares Swap Agreement

Date

26 July 2010

Parties

(i) LSG; and

(ii) the Company.

— 26 — LETTER FROM PLATINUM SECURITIES

The Lai Fung Transaction

Subject to the terms and conditions of the Shares Swap Agreement, LSG has agreed to transfer or procure the transfer of, and the Company has agreed to accept the transfer of, all legal and beneficial title in and to 3,265,688,037 shares in the capital of Lai Fung, representing approximately 40.58% of the existing issued share capital of Lai Fung and LSG’s entire shareholding interest in Lai Fung. This will be effected via (i) a direct transfer by LSG of 1,869,206,362 Lai Fung shares; and (ii) an indirect transfer, structured as a transfer by LSG of its shares in, and shareholder’s loans to, its wholly-owned subsidiary, Silver Glory Securities Limited, a company which, in turn, holds 1,396,481,675 Lai Fung shares as its only asset as at the date of the Shares Swap Agreement. The aggregate consideration for the Lai Fung Transaction is approximately HK$3,883.2 million (being based on 40.58% of the Lai Fung Adjusted Net Asset Value) (the “Lai Fung Consideration”), and is to be settled by (i) the transfer to LSG of the Company’s entire shareholding interest in LSD pursuant to the LSD Transaction; and (ii) as to the balance (approximately HK$178.4 million) by the payment of cash to LSG (HK$100 million to be paid on the Completion Date, and approximately HK$78.4 million to be paid, without interest, six months after the Completion Date).

The LSD Transaction

Subject to the terms and conditions of the Shares Swap Agreement, the Company has agreed to procure the transfer of, and LSG has agreed to accept the transfer of, all legal and beneficial title in and to 5,200,000,000 shares in the capital of LSD, representing approximately 36.72% of the existing issued share capital of LSD and the Company’s entire shareholding interest in LSD. This will be effected via an indirect transfer, structured as a transfer by the Group of its shares in, and shareholder’s loans to, its wholly-owned subsidiary, Zimba International Limited, a company which, in turn, holds 5,200,000,000 LSD shares as its only asset as at the date of the Shares Swap Agreement. The aggregate consideration for the LSD Transaction is approximately HK$3,704.8 million (being based on 36.72% of the LSD Adjusted Net Asset Value) (the “LSD Consideration”), and is to be settled by the transfer of LSG’s entire shareholding interest in Lai Fung pursuant to the Lai Fung Transaction.

We note that the Completion is subject to a number of conditions precedent. In particular, the Independent Shareholders should note that completion of the Lai Fung Transaction and the LSD Transaction shall occur at the same time and place and neither LSG nor the Company shall be obliged to complete any of the Lai Fung Transaction and the LSD Transaction unless they are completed at the same time and place (unless otherwise agreed upon by LSG and the Company). Please refer to the letter from the Board in the Circular for detailed terms of the Transactions.

— 27 — LETTER FROM PLATINUM SECURITIES

3. Information on LSD and Lai Fung

As the Transactions involve a significant change in the geographical exposure of the Group, whereby the Group is swapping its exposure in the business of LSD, which focuses on the Hong Kong property market, in exchange for an exposure in the business of Lai Fung, which focuses on the PRC property market, we set out below our analysis of the historical financial performances and the outlook of the main market segments of LSD and Lai Fung, respectively.

(i) LSD

(a) Background

According to the LSD 2010 Interim Report and information provided by the Company, the LSD Group holds interests in five development properties in Hong Kong (i.e. Oakhill, Emerald 28, Yau Tong Project, Tai Hang Road Project and Ki Lung Street Project) and most of these projects are slated for residential use. It also wholly owns three major investment properties for rental purposes (i.e. Causeway Bay Plaza 2, Cheung Sha Wan Plaza and Lai Sun Commercial Centre), all of which are located in Hong Kong. We note from the Savills Valuation Report that these investment properties consist mainly of office space, with some commercial/retail space. As for the hotel and restaurant operations segment, this mainly represents the Caravelle Hotel in Ho Chi Minh City, Vietnam, in which the Group has an effective attributable interest of approximately 26% and various restaurant operations located in Hong Kong and Shanghai. Please refer to the Savills Valuation Report on details of LSD’s development properties and investment properties.

Shareholders should note that the financial performance of LSD would also be influenced by the financial performance of the Company itself due to the cross-shareholding between LSD and the Company.

— 28 — LETTER FROM PLATINUM SECURITIES

(b) Financial performance of LSD

The following tables show a summary of the recent financial performance of LSD as well as its revenue breakdown by business segments.

Table 1: Recent financial performance of LSD

For the financial year For the six months ended 31 July ended 31 January 2009 2008 2007 2010 2009 HK$’000 HK$’000 HK$’000 HK’000 HK$’000 (Audited) (Audited) (Audited) (Unaudited) (Unaudited)

Turnover 649,742 826,506 908,906 341,933 326,726 Gross profit 454,536 564,885 592,188 230,628 231,263 Gross profit margin 70% 68% 65% 67% 71%

(Loss)/profit attributable to shareholders (220,985) 1,013,333 1,495,091 1,308,667 (328,235)

Adjustments: Fair value (loss)/gain on investment properties (145,748) 721,604 468,758 782,772 (356,448) Reversal of provision/(provision) for tax indemnity 11,936 (464,632) — (34,352) 72,668 Gain on disposal of subsidiaries — 699,036 2,431 — — Loss on deemed disposal of interest in an associate — (2,664) (713) — — Discount on acquisition of additional interests in an associate —22,761———

Underlying (loss)/profit (87,173) 37,228 1,024,615 560,247 (44,455)

Note: Underlying (loss)/profit is calculated as (loss)/profit attributable to shareholders excluding fair value (loss)/gain on investment properties, reversal of provision/ (provision) for tax indemnity, gain on disposal of subsidiaries, loss on deemed disposal of interest in an associate and discount on acquisition of additional interests in an associate (the “LSD Adjustments”) . Deferred tax and non- controlling interests in relation to the LSD Adjustments have not been adjusted.

Sources: Consolidated financial statements of LSD.

— 29 — LETTER FROM PLATINUM SECURITIES

Table 2: LSD breakdown of revenue by business segments

Segment revenue Property development and sales —659——— Property investment 340,980 333,450 299,886 169,984 171,066 Hotel and restaurant operations 284,335 469,979 576,796 162,286 143,738 Others 24,427 22,418 32,224 9,663 11,922

Sources: Consolidated financial statements of LSD.

Revenue

As shown in the two tables above, property investment and hotel and restaurant operations segments had been the main revenue contributor in recent financial years, with the hotel and restaurant operations segment decreasing in importance after the closure of the former The Ritz- Carlton Hong Kong in February 2008 for redevelopment into an office/ commercial building. The decreasing contribution from the hotel and restaurant operations segment also led to a decrease in total revenue in the last two financial years. We note that the property development and sales segment had not had any revenue at all in the last three financial years, apart from a small revenue contribution for the financial year ended 31 July 2008.

— 30 — LETTER FROM PLATINUM SECURITIES

Profitability

Profit attributable to shareholders of LSD dropped from approximately HK$1,495.1 million to approximately HK$1,013.3 million in the financial year ended 31 July 2008 and turned into a loss for the financial year ended 31 July 2009. The drop in profit in 2008 was mainly due to exceptional items, including a provision for tax indemnity granted by LSD to Lai Fung in 1997 as well as a substantial decrease in share of profits from associates, which recorded a significant LSD’s share of non-recurring gains in the financial year before; whilst the loss in 2009 was mainly due to a decline in total revenue, a share of losses of associates and a fair value loss on investment properties amid the financial crisis. LSD returned to profit in the six months ended 31 January 2010, after posting a loss in the same period the year before, mainly due to a fair value gain on investment properties and an increase in share of profits of associates due to its associates recording a fair value gain on properties. Underlying profit of LSD observed a similar trend.

Financial position

As at 31 January 2010, LSD had outstanding secured bank borrowing of approximately HK$2,595 million. Gearing ratio (defined as total debt as a percentage of NAV attributable to shareholders) was approximately 30%.

General economic outlook

According to preliminary data released by the Hong Kong Census and Statistics Department (the “CSD”), gross domestic product (the “GDP”) of Hong Kong increased by approximately 8.0% year-on-year in real terms in the first quarter of 2010 and by approximately 6.5% in real terms in the second quarter of 2010, compared with an increase of approximately 2.5% in the fourth quarter of 2009, contributed by the rebound of external trade from the exceptionally low base in 2008 due to the financial crisis, a pick-up in global trade flows and the buoyant financial market and commercial activities in Hong Kong.

— 31 — LETTER FROM PLATINUM SECURITIES

Residential sales market

Chart 1 below shows that prices of residential properties in Hong Kong have continued to be on an uptrend, after a short-lived decline in late 2008 as a result of the global financial crisis. At the same time, transaction volume has also rebounded, though with signs that it has started to decline recently along with the escalating prices.

Chart 1: Price index of Hong Kong residential properties

Hong Kong Property Market

16,000 160.0

150.0 12,000 140.0

8,000 130.0

120.0 No. of Transactions 4,000 110.0 Price Index (Base Year 1999 =100) 0 100.0 9 08 09 10 010 010

Jul 2008 Jul 2009 Jan 2008 Jan 2009 Sep 2009 Jan 2 Mar 2008 May 20 Sep 2008 Nov 2008 Mar 2009 May 20 Nov 200 Mar 2 May 20 Jun 2010 No. of Transactions (LHS) Price (RHS)

Source: Hong Kong Rating and Valuation Department (the “RVD”)

We note that the Government has introduced various measures in early 2010 relating to the property market such as increasing the stamp duty on luxury properties and released further measures in August 2010 to ease soaring property prices, including putting a ban on resale of new flats before the initial transaction is completed. Nevertheless, residential property prices in Hong Kong continued to hold up in recent months despite the announcement of these measures. Based on information provided by Savills, we understand that the overall sentiment in the property market remains positive, fuelled by the better than expected Government land auction results in June and August 2010 as well as the current low interest rate environment, and that the primary residential market is likely to remain active with a number of new projects being launched, thereby creating a spillover positive effect on the secondary market. Therefore, we believe that the outlook of the Hong Kong residential sales market is likely to remain positive in the medium term, which is positive to LSD’s property development and sales segment.

— 32 — LETTER FROM PLATINUM SECURITIES

Office and retail leasing market

As shown in Chart 2 below, office rents in Hong Kong has continued to pick up steadily since the end of second quarter of 2009 after being hit by the financial crisis in the first half of 2009.

Chart 2: Rental index of Hong Kong office properties

Hong Kong Office (All Grades) — Rental Price

170

160

150

140

130

120

110

Rental Indices (Based Year 1999 = 100) 100 8 9 08 09 10 008 008 009 009 009 010

Jul 2 Jul 2 Jan 2008 Jan 2 Sep 2009 Jan 2010 Mar 2 May 20 Sep 2008 Nov 200 Mar 2 May 20 Nov 200 Mar 2010 May 20 Jun 2

Source: RVD

Based on information provided by Savills, the Hong Kong office leasing market continues to recover in terms of both leasing activity and rental levels. These coupled with the improvement in the Hong Kong economy lead us to believe that the outlook of the Hong Kong office leasing market is likely to remain positive in the medium term.

As for the retail property sector, provisional data from the CSD shows that the value index for Hong Kong retail sales in June 2010 increased by 15.3% year-on-year in real terms, as a result of firm local consumer sentiment and the rapid expansion of inbound tourism. According to the CSD and the Hong Kong Tourism Board (the “HKTB”), tourist retail spending has increased in importance over the past decade and represented around 23% of total retail sales in 2009. Furthermore, figures released by the HKTB show a record 16.9 million of visitor arrivals to Hong Kong in the first six months of 2010, which not only represents a year-on-year increase of approximately 23.1%, but is also the highest half-yearly figure ever recorded. The strong retail market in Hong Kong has lent support to retail rents in Hong Kong, which continue to move up beyond the pre-crisis level, as the following chart shows.

— 33 — LETTER FROM PLATINUM SECURITIES

Chart 3: Rental index of Hong Kong retail properties

Hong Kong Retail — Rental Price

125

120

115

110

105

Rental Indices (Based Year 1999 = 100) 100 8 9 08 09 10 008 008 009 009 009 010

Jul 2 Jul 2 Jan 2008 Jan 2 Sep 2009 Jan 2010 Mar 2 May 20 Sep 2008 Nov 200 Mar 2 May 20 Nov 200 Mar 2010 May 20 Jun 2

Source: RVD

In particular, based on information provided by Savills, prime tourist locations such as Causeway Bay saw strong retailer interest despite escalating rents. Based on the foregoing, we are of the view that the retail leasing market is likely to remain positive in the medium term. As both the outlook of the office leasing and retail leasing market is positive, and we further note that the overall occupancy rate of LSD’s investment properties remained high at 96% as at 31 January 2010, we are of the view that the outlook of its property investment segment remains positive in the medium term.

Outlook of the Vietnam market

According to the General Statistics Office of Vietnam, the number of international visitors to Vietnam has increased sharply by 34.9% in the first seven months of 2010. However, in light of the mediocre occupancy rate at the Caravelle Hotel (58% for the six months ended 31 January 2010) and its falling average daily room rate, we are of the view that the outlook of LSD’s hotel and restaurant operations segment is likely to be neutral in the medium term.

— 34 — LETTER FROM PLATINUM SECURITIES

(ii) Lai Fung

(a) Background

The principal business activities of the Lai Fung Group include property development for sale and investment holding and property investment in the PRC. As stated in the Lai Fung 2010 Interim Report, Lai Fung has a number of residential, office and retail development projects and investment properties in Shanghai and Guangzhou, as well as a residential development project in Zhongshan.

(b) Financial performance of Lai Fung

The following tables show a summary of the recent financial performance of Lai Fung as well as its revenue breakdown by business segments.

Table 3: Recent financial performance of Lai Fung

Turnover 937,380 868,001 792,420 877,341 148,092 Gross profit 632,436 622,837 425,309 639,112 109,488 Gross profit margin 67% 72% 54% 73% 74%

Profit attributable to shareholders 406,888 206,005 470,351 356,678 140,716

Adjustments Fair value gain/(loss) on investment properties 143,127 398,515 193,837 275,915 (64,278) Exchange loss on cross currency swaps — (160,102) (31,079) — — Gain on termination of cross currency swaps 256,311 — — — 256,311

Underlying profit/(loss) 7,450 (32,408) 307,593 80,763 (51,317)

— 35 — LETTER FROM PLATINUM SECURITIES

Note: Underlying profit/(loss) is calculated as profit attributable to shareholders excluding fair value gain/(loss) on investment properties, exchange loss on cross currency swaps and gain on termination of cross currency swaps (the “Lai Fung Adjustments”). Deferred tax and non-controlling interests in relation to the Lai Fung Adjustments have not been adjusted.

Sources: Consolidated financial statements of Lai Fung.

Table 4: Lai Fung breakdown of revenue by business segments

For the financial year For the six months ended 31 July ended 31 January 2009 2008 2007 2010 2009 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 (Audited) (Audited) (Audited) (Unaudited) (Unaudited) Segment revenue Property development 718,855 613,841 571,347 799,050 27,945 Property investment 218,525 254,160 221,073 78,291 120,147

Sources: Consolidated financial statements of Lai Fung.

Revenue

Revenue of Lai Fung had grown steadily in the last two financial years ended 31 July 2009 and recorded a substantial increase in the six months ended 31 January 2010, mainly as a result of the sales of residential units at Shanghai Regents Park Phase II. Over 70% of total revenue was from property development in the last three financial years; whilst revenue contribution from property investment had been on the decline since the financial year ended 31 July 2009 due to renovation work being carried out at the Shanghai Hong Kong Plaza.

Profitability

Profit attributable to shareholders dropped from approximately HK$470.4 million to approximately HK$206.0 million in the financial year ended 31 July 2008, before rebounding to approximately HK$406.9 million in the latest financial year. A substantial increase in profit was also recorded in the six months ended 31 January 2010. As shown in Table 3 above, a substantial part of the profit in the last few financial

— 36 — LETTER FROM PLATINUM SECURITIES

years had been contributed by exceptional items, including fair value gain on investment properties and gain on termination of cross currency swaps. If these were excluded, Lai Fung would record an underlying loss in the financial year ended 31 July 2008; whilst underlying profit for the financial years ended 31 July 2007 and 2009 would be much lower than profit attributable to shareholders. The underlying loss in 2008 was mainly caused by an exchange loss arising from a cross currency swap on its US$200 million senior notes issued in 2007, higher finance costs, higher provision for corporate income tax and land appreciation tax as a result of selling Shanghai Regents Park Phase II; whilst there was a relatively higher underlying profit in 2007 due to a write back of provision on deferred corporate income tax as a result of income tax changes in the PRC due to a decrease in PRC corporate income tax rate from 33% to 25%. With more recognition of sales of Shanghai Regents Park Phase II, underlying profit further improved to approximately HK$80.8 million for the six months ended 31 January 2010.

Financial position

As at 31 January 2010, Lai Fung had outstanding borrowings of approximately HK$2,800 million. Gearing ratio (defined as total debt as a percentage of NAV attributable to shareholders) was approximately 37%.

General economic outlook

According to the National Bureau of Statistics of China, the PRC continues to be one of the fastest growing major economies in the world, with GDP having grown by approximately 9.1% in 2009 and staying above 10% for both the first and second quarters of 2010. Per capita disposable income of urban households has also increased substantially as a result of the high economic growth, increasing from RMB11,759 per annum in 2006 to RMB17,175 per annum in 2009, representing a compound annual growth rate of approximately 13.5%.

Residential sales market

Chart 4 below shows the price trend of residential property prices in Shanghai, Guangzhou as well as nationwide across the PRC.

— 37 — LETTER FROM PLATINUM SECURITIES

Chart 4: Shanghai, Guangzhou and national residential prices price index

Previous Month=100 102

101

100

Rental Indices (Based Year 1999 = 100) 97

Jan 2008 Jan 2009 Jan 2010 Apr 2008 July 2008 Oct 2008 Apr 2009 July 2009 Oct 2009 Apr 2010 July 2010

National Shanghai Guangzhou

Source: National Bureau of Statistics of China.

According to information provided by Savills, record high residential prices in the first quarter have forced the Government to release a series of policies and credit tightening to curb speculative demand; these measures have casted a cooling effect on both price growth and transaction volume nationwide. As the above chart shows, residential prices in Shanghai have dropped sharply in recent months whilst residential prices in Guangzhou have also declined though by a lesser extent. According to information provided by Savills, transaction volumes in both Shanghai and Guangzhou have slowed down in the second quarter of 2010 in response to the new Government policies, indicating a wait-and-see attitude which currently pervades the market. However, we believe that these Government measures and credit tightening are mainly aimed at curbing speculative demand. In addition, we note that most of Lai Fung’s properties are located in Guangzhou and Shanghai, both of which are first-tier cities of the country where economic growth is higher than the national average and where the supply of land is more limited than other parts of the country. Taking into account the high growth of the PRC economy and increasing disposable income, and in the absence of further severe austerity measures from the Government, we believe that although the property market in the PRC may remain under pressure for the near term, the property market of prime cities such as Guangzhou and Shanghai are likely to be positive in the medium to longer term. Hence, outlook of Lai Fung’s property development segment is likely to be positive in the medium to longer term.

— 38 — LETTER FROM PLATINUM SECURITIES

Office leasing market

According to information provided by Savills, office leasing market in Shanghai is believed to be close to bottoming out, as strong leasing demand has resulted in a drop in vacancy rates and slowed rental decline. Although office rents in Shanghai fell 2.9% in the first quarter of 2010, still down 26.5% from its peak in 2008, vacancy rates fell 2.7% to 14% over the same period. The improving economy in the second half of 2009 combined with significantly reduced rents have led to a wide variety of companies to renew their expansion plans in the latter half of 2009 through into 2010, resulting in a robust take-up. Similar trends were observed in Guangzhou where Grade A office rents rose 2.2% in the second quarter of 2010; whilst vacancy rate fell 2.0% to 8.3%. Demand is expected to remain strong in both cities as a result of the improving economy and the falling vacancy rates are likely to exert an upward pressure on rents. Furthermore, office leasing demand is likely to be higher in first-tier cities such as Shanghai and Guangzhou. As such, we are of the view that the outlook of the office leasing markets in both Shanghai and Guangzhou are likely to be positive in the medium term, which is positive to Lai Fung’s property investment segment.

4. Reasons for and benefit of the Transactions

We note that the Shares Swap Agreement and the Transactions are not in the ordinary and usual course of business of the Company. However, we see a number of benefits to the Independent Shareholders from the Shares Swap Agreement and the Transactions.

As disclosed in the letter from the Board in the Circular, as a result of the Lai Fung Transaction, the Company will become the controlling shareholder of Lai Fung and will share the operating profit of Lai Fung which is an associate (as that expression is used in the context of the Hong Kong Financial Reporting Standards (the “HKFRS”)) of the Company; whilst the Company will cease to have any shareholding in LSD. As discussed in the above section headed “Information on LSD and Lai Fung”, LSD is primarily exposed to the Hong Kong property market with a substantial portion of its revenue being generated from property investments in Hong Kong; whilst Lai Fung is purely exposed to the PRC property market, particularly in the first-tier cities, and a substantial portion of its revenue has been generated from property development rather than from property investments. Although as a result of the Transactions, the Company will lose its exposure to the

— 39 — LETTER FROM PLATINUM SECURITIES

Hong Kong property market where the outlook is positive in the near term, to swap for an exposure to the PRC property market which has recently been dampened by Government policies and credit tightening, we believe that the outlook of the PRC property market, especially the first-tier cities where most of Lai Fung’s properties are located, is likely to be positive in the medium to longer term.

Secondly, upon completion of the LSD Transaction, the Company anticipates booking a gain of approximately HK$784.2 million in its consolidated income statement. For details of the gain, please refer to the section headed “Financial impact” below and the unaudited pro forma financial information as set out in Appendix II to the Circular.

Thirdly, as discussed above in the section headed “Background of the Transactions”, there is currently a cross-shareholding structure between LSD and the Company. By virtue of the LSD Transaction, the Company and LSD will dismantle the cross- shareholding structure between the two companies, as well as enable the entire Lai Sun group to simplify the ownership structure of the Company (and LSD) and eliminate the circular effect of the accounting treatment of the cross-shareholding. Historically, where both the Company and LSD have recorded losses, each of the Company and LSD has had to account for its share of losses in LSD and the Company, respectively, as an associate. By unlocking this structure, the magnifying effect of the cross-held interests will be eliminated.

Fourthly, the simplified shareholding structure will provide greater clarity to shareholders of the respective companies and the market with regard to the core business of each of the companies, and will potentially enhance investors’ interest in investing in LSG, LSD and the Company, and as a result, improve liquidity in the shares of the respective companies.

Fifthly, we note that LSD had not declared any dividend in its last three financial years; whilst Lai Fung had consistently declared annual dividends ranging from approximately HK$32.2 million to approximately HK$40.2 million in its last three financial years. As such, the Transactions will enable the Company to swap an investment which had not paid any dividend in recent years, for an investment which had historically had a stable trend of paying dividends.

Last but not least, we note that the LSD Consideration of approximately HK$3,704.8 million is significantly higher than the cost at which the Company had obtained its current shareholding in LSD of approximately HK$686 million in 2004.

— 40 — LETTER FROM PLATINUM SECURITIES

Therefore, we are of the view that the Shares Swap Agreement and the Transactions are fair and reasonable and are in the interests of the Company and the Shareholders as a whole.

5. Basis of consideration

(i) Valuation for the purposes of the Transactions

The Lai Fung Consideration and the LSD Consideration have been determined on the following basis:

(a) the shares of Lai Fung have been valued on the basis of the unaudited consolidated NAV of Lai Fung of approximately HK$7,555.4 million, determined by reference to the Lai Fung 2010 Interim Report, adjusted to reflect the increase in the fair market value of the landed property and related interests (after taking into account the estimated corresponding effects on the deferred tax liabilities) of Lai Fung, as at 31 May 2010 of approximately HK$2,013.8 million. The fair market value of the landed property interests of the Lai Fung Group has been determined by Knight Frank, an independent valuer jointly appointed by LSG and the Company. The Lai Fung Adjusted Net Asset Value is approximately HK$9,569.2 million; and

(b) the shares of LSD have been valued on the basis of the unaudited consolidated NAV of LSD of approximately HK$8,572.7 million, determined by reference to the LSD 2010 Interim Report, adjusted to reflect (i) the increase in the fair market values of the landed property and related interests (after taking into account the estimated corresponding effects on the deferred tax liabilities and the corresponding financial effects related to the cross-shareholding between LSD and the Company) of LSD and the Company, as at 31 May 2010 of approximately HK$1,786.9 million; and (ii) the fair value of a historic tax indemnity (the “Tax Indemnity”) given by LSD to Lai Fung as at 31 May 2010 pursuant to an indemnity deed dated 12 November 1997 entered into between LSD and Lai Fung (after taking into account the financial effects related to the cross-shareholding between LSD and the Company) which would result in a decrease in the LSD Adjusted Net Asset Value of approximately HK$270.2 million. The fair market value of the landed property interests of the LSD Group has been determined by Savills, another independent valuer jointly appointed by LSG and the Company. The LSD Adjusted Net Asset Value is approximately HK$10,089.4 million. — 41 — LETTER FROM PLATINUM SECURITIES

(ii) Consideration on a per share basis

Lai Fung Consideration

As stated in the letter from the Board in the Circular, the Lai Fung Consideration translates into approximately HK$1.19 per Lai Fung share (the “Lai Fung Consideration Price”) payable by the Company, which represents:

(a) a premium of approximately 358% over the closing price of HK$0.26 per Lai Fung share as quoted on the Stock Exchange on the Latest Practicable Date;

(b) a premium of approximately 358% over the closing price of HK$0.26 per Lai Fung share as quoted on the Stock Exchange on 26 July 2010, being the last trading date of the shares of Lai Fung and the shares of LSD prior to the publication of the Announcement (the “Last Trading Date”);

(c) a premium of approximately 363% over the average closing price of approximately HK$0.257 per Lai Fung share as quoted on the Stock Exchange for the last 5 trading days up to and including the Last Trading Date;

(d) a premium of approximately 363% over the average closing price of approximately HK$0.257 per Lai Fung share as quoted on the Stock Exchange for the last 10 trading days up to and including the Last Trading Date.

(e) a premium of approximately 27% over Lai Fung’s NAV per share of approximately HK$0.94 as at 31 January 2010.

— 42 — LETTER FROM PLATINUM SECURITIES

LSD Consideration

As stated in the letter from the Board in the Circular, the LSD Consideration translates into approximately HK$0.71 per LSD share (the “LSD Consideration Price”) payable by LSG, which represents:

(a) a premium of approximately 355% over the closing price of HK$0.156 per LSD share as quoted on the Stock Exchange on the Latest Practicable Date;

(b) a premium of approximately 373% over the closing price of HK$0.15 per LSD share as quoted on the Stock Exchange on the Last Trading Date;

(c) a premium of approximately 383% over the average closing price of approximately HK$0.147 per LSD share as quoted on the Stock Exchange for the last 5 trading days up to and including the Last Trading Date;

(d) a premium of approximately 386% over the average closing price of approximately HK$0.146 per LSD share as quoted on the Stock Exchange for the last 10 trading days up to and including the Last Trading Date; and

(e) a premium of approximately 16% over LSD’s NAV per share of approximately HK$0.61 as at 31 January 2010.

As discussed in the above section headed “Information on LSD and Lai Fung”, LSD and Lai Fung are both primarily engaged in property development and property investment businesses. We note that properties constitute the majority of assets of both companies. In determining the valuation of companies with substantial property assets, we are of the opinion that it is appropriate to take into consideration the fair value of such property assets. As both the LSD Consideration and the Lai Fung Consideration have been determined based on the NAV of the respective companies with an adjustment to reflect the fair market values of both companies’ respective property interests assessed by independent valuers, namely, Savills and Knight Frank (collectively, the “Valuers”), we are of the view that the basis of consideration of both the LSD Consideration and the Lai Fung Consideration is appropriate. In this regard, we note that as the NAVs of LSD and Lai Fung as stated in their respective latest financial statements have not incorporated the current fair market value of their property assets, we are of the view that they are less meaningful as a valuation benchmark as compared to an NAV which has been adjusted for the fair market values of properties. — 43 — LETTER FROM PLATINUM SECURITIES

We have also considered the LSD Consideration and the Lai Fung Consideration on a per share basis in comparison to their respective historical share prices, as shown above, both the LSD Consideration and the Lai Fung Consideration on a per share basis are at a substantial premium to the respective historical closing prices of LSD and Lai Fung but the level of the respective premiums are at a similar level.

Furthermore, we have reviewed the basis and methodology of the valuations adopted by the Valuers, and we note that the methodologies they have adopted in the valuation reports are similar and in accordance with the HKIS Valuation Standards on Properties of the Hong Kong Institute of Surveyors. Based on our discussion with the Valuers as well as information provided by them, we understand that the Valuers have valued the properties based on current market information by making reference to the relevant comparable transactions evident on the market, such as recent sales and leasing transactions in the subject property being valued or in surrounding properties, the assumptions derived from such transactions, as well as current market conditions. We understand that certain adjustments have also been made to reflect the specific aspects of the subject property being valued, which is in line with the industry practice. As such, we are of the view that the basis and methodology of the valuations adopted by the Valuers, including the basis of the assumptions underlying the valuations, are appropriate.

In addition, based on our discussion with the management of the Company, we understand that the LSD Consideration has been adjusted to reflect the fair value of the Tax Indemnity in accordance with the HKFRS.

Moreover, although we note that the Company has net cash of approximately HK$1,154.6 million as at 31 December 2009, based on our discussion with the management of the Company, we understand that the Company intends to maintain financial flexibility in order to fund its Macao Studio City project, which is expected to require a substantial amount of financing, as well as for general working capital purposes. We are of the view that by settling the Lai Fung Consideration with the Group’s interest in LSD and a cash sum of approximately HK$178.4 million, the Group would be able to achieve its aim of maintaining financial flexibility by reserving its cash balance.

Based on the foregoing, we are of the view that the basis for determining the LSD Consideration and the Lai Fung Consideration is fair and reasonable and are in the interests of the Company and the Shareholders as a whole.

— 44 — LETTER FROM PLATINUM SECURITIES

6. Financial impact

Shareholders should note that the following financial effects and the related accounting treatments have been reviewed by the auditors of the Company. For accounting purpose, the Group will continue to share the results of the LSD Group under the equity method of accounting, including the cross-shareholding effects between the Group and the LSD Group, up to the Completion Date. The results of the LSD Group will include, inter-alia, the operating results of the LSD Group and the gain or loss (net of the related tax impact) arising from the change in fair values of the investment properties interests held by the LSD Group. This will affect the actual carrying amount of the Group’s 36.72% share of the NAV of the LSD Group as at the Completion Date. Upon Completion, for accounting purposes and in accordance with the prevailing accounting standards, the actual amount of the Group’s 36.72% share of the fair value of the NAV of the LSD Group and the Group’s 40.58% share of the fair value of the NAV of the Lai Fung Group will need to be remeasured.

(i) Effect on NAV

(a) LSD Transaction

As stated in the letter from the Board in the Circular, the consideration to be received by the Group for the disposal of its 36.72% equity interest in LSD is determined by reference to the LSD Adjusted Net Asset Value. Since the Lai Fung Adjusted Net Asset Value pertaining to the 40.58% equity interest in Lai Fung of approximately HK$3,883.2 million is higher than the LSD Adjusted Net Asset Value pertaining to the 36.72% equity interest in LSD of approximately HK$3,704.8 million, the consideration to be received by the Group would be settled by a transfer of LSG’s 40.58% equity interest in Lai Fung to the Group with the balance of the surplus to be settled by a cash transfer of approximately HK$178.4 million by the Company to LSG. Taking into account the estimated consideration to be received by the Group of approximately HK$3,704.8 million for the disposal of 36.72% equity interest in LSD and the Group’s share of the NAV of the LSD Group as at 31 December 2009 of approximately HK$3,153.2 million, the consolidated NAV of the Group would increase accordingly by approximately HK$551.6 million before expenses.

— 45 — LETTER FROM PLATINUM SECURITIES

(b) Lai Fung Transaction

As stated in the letter from the Board in the Circular, the consideration to be given by the Group for the acquisition of 40.58% equity interest in Lai Fung is determined by reference to the Lai Fung Adjusted Net Asset Value. Since the Lai Fung Adjusted Net Asset Value pertaining to the 40.58% equity interest in Lai Fung of approximately HK$3,883.2 million is higher than the LSD Adjusted Net Asset Value pertaining to the 36.72% equity interest in LSD of approximately HK$3,704.8 million, the consideration to be given by the Group would be settled by the Company transferring its 36.72% of equity interest in LSD to the LSG Group plus a cash consideration of approximately HK$178.4 million. As the estimated consideration to be given by the Group to acquire the 40.58% equity interest in Lai Fung (being the Group’s 36.72% share in the LSD Adjusted Net Asset Value to be disposed of plus the cash consideration to be paid) is same as the Group’s 40.58% share in the Lai Fung Adjusted Net Asset Value to be acquired, the Lai Fung Transaction would have no material financial impact on the consolidated NAV of the Group.

According to the Group 2009 Annual Report, the NAV of the Group was approximately HK$5,490.7 million as at 31 December 2009. As set out in the unaudited pro forma financial information as set out in Appendix II to the Circular, upon Completion, taking into account the financial impact from both the Lai Fung Transaction and LSD Transaction, the NAV of the Group would increase to approximately HK$6,042.3 million. As such, we are of the view that the Shares Swap Agreement and the Transactions would have a positive impact on the NAV of the Group.

(ii) Effect on earnings

(a) LSD Transaction

As stated in the letter from the Board in the Circular, taking into account the estimated consideration to be received by the Group of approximately HK$3,704.8 million for the disposal of 36.72% equity interest in LSD and the Group’s share of the NAV of the LSD Group as at 31 December 2009 of approximately HK$3,153.2 million, an estimated gain on disposal before expenses (before release of reserves)

— 46 — LETTER FROM PLATINUM SECURITIES

to be recognised by the Group in its consolidated income statement is approximately HK$551.6 million. After taking into account the release of LSD’s reserves shared by the Group of approximately HK$232.6 million upon Completion, the overall estimated gain on disposal before expenses to be recognised in the consolidated income statement would be approximately HK$784.2 million.

(b) Lai Fung Transaction

Based on information provided by the Company, we note that the Lai Fung Transaction would have no material impact on the Company’s profit attributable to shareholders.

As stated in the letter from the Board of the Circular, upon Completion, for accounting purposes and in accordance with the prevailing accounting standards, the actual amount of the Group’s 36.72% share of the fair value of the NAV of the LSD Group and the Group’s 40.58% share of the fair value of the NAV of the Lai Fung Group will need to be remeasured. Any difference between the consideration given for accounting purposes (being the Group’s 36.72% share of the fair value of the NAV of the LSD Group plus the cash consideration to be paid by the Group) and the Group’s 40.58% share of the fair value of the NAV of the Lai Fung Group will be treated as a goodwill or discount on acquisition in the Group’s consolidated financial statements in accordance with its accounting policy.

According to the Group 2009 Annual Report, the Company’s profit attributable to shareholders was approximately HK$68.6 million for the financial year ended 31 December 2009. As set out in the unaudited pro forma financial information as set out in Appendix II to the Circular, the Company’s profit attributable to shareholders would decrease by approximately HK$367.4 million, assuming the Completion had taken place at the beginning of the year ended 31 December 2009, and such decrease has not taken into account the impact of the estimated gain on disposal before expenses in relation to the LSD Transaction of approximately HK$784.2 million. Taking into account such estimated gain on disposal before expenses, we are of the view that the Shares Swap Agreement and the Transactions would have a positive impact on the earnings of the Group.

— 47 — LETTER FROM PLATINUM SECURITIES

(iii) Effect on cash position

According to the Group 2009 Annual Report, as at 31 December 2009, the Group had net cash of approximately HK$1,154.6 million. As stated in the letter from the Board in the Circular, since the Lai Fung Adjusted Net Asset Value pertaining to the 40.58% equity interest in Lai Fung of approximately HK$3,883.2 million is higher than the LSD Adjusted Net Asset Value pertaining to the 36.72% equity interest in LSD of approximately HK$3,704.8 million, the consideration to be given by the Group would be settled by the Company transferring its 36.72% of equity interest in LSD to the LSG Group plus a cash consideration of approximately HK$178.4 million. As set out in the unaudited pro forma financial information as set out in Appendix II to the Circular, upon Completion, cash level of the Group would decrease by approximately HK$178.4 million but the Group would nevertheless still be in a net cash position.

In light of the above, in particular, that the Shares Swap Agreement and the Transactions:

(i) would have a positive impact on the NAV of the Group;

(ii) would have a positive impact on the earnings of the Group; and

(iii) would decrease the cash level of the Group but the Group would nevertheless still be in a net cash position,

we are of the view that, on an overall basis, the Shares Swap Agreement and the Transactions would have a positive financial impact on the Group.

RECOMMENDATION

Having considered the above, we are of the view that the terms of the Shares Swap Agreement and the Transactions are on normal commercial terms, fair and reasonable and in the interests of the Company and the Shareholders as a whole.

— 48 — LETTER FROM PLATINUM SECURITIES

However, we would like to draw to the attention of the Independent Shareholders that the Shares Swap Agreement and the Transactions involve a significant change in the Company’s geographical exposure, namely, from holding an associate (i.e. LSD) which is primarily exposed to the Hong Kong property market, to holding an associate (i.e. Lai Fung) which is primarily exposed to the PRC property market. Therefore, the Independent Shareholders should carefully consider the implications of such change to them as an investor.

Accordingly, we recommend the Independent Board Committee to advise the Independent Shareholders and we recommend the Independent Shareholders to vote in favour of the ordinary resolution in respect of the Shares Swap Agreement to be proposed at the SGM.

Yours faithf ully, For and on behalf of

Platinum Securities Company Limited

Ian Ramsay Lenny Li Director and Head of Corporate Finance Director of Corporate Finance

— 49 — APPENDIX I FINANCIAL INFORMATION ON THE GROUP, THE LSD GROUP AND THE LAI FUNG GROUP

A. FINANCIAL INFORMATION ON THE GROUP

1. Financial reports

Audited consolidated financial statements and the independent auditors’ report of the Group (i) for the year ended 31 December 2009 are disclosed in the annual report 2009 of eSun published on 16 April 2010, from pages 46 to 145; (ii) for the year ended 31 December 2008 are disclosed in the annual report 2008 of eSun published on 9 April 2009, from pages 46 to 142; and (iii) for the year ended 31 December 2007 are disclosed in the annual report 2007 of eSun published on 11 April 2008, from pages 47 to 137. All of these financial statements have been published on the website of the Stock Exchange (http:// www.hkexnews.hk) and the website of eSun (http://www.esun.com).

2. Indebtedness

As at 31 July 2010, the Group had outstanding total borrowings, including accrued interest, of approximately HK$515.9 million, comprising secured and unguaranteed bank borrowings of approximately HK$11.6 million, and unsecured and unguaranteed promissory note payable of approximately HK$32.9 million, unsecured and unguaranteed other borrowings from a former shareholder of the Company of approximately HK$159.0 million, unsecured and unguaranteed amount due to a minority shareholder of a non- wholly-owned subsidiary of approximately HK$311.9 million and unsecured and unguaranteed finance lease payables of approximately HK$0.5 million.

In addition, as at 31 July 2010, Cyber One Agents Limited (“Cyber One”) and its subsidiaries (collectively “Cyber One Group”), was held as to a 60% equity interest by East Asia Satellite Television (Holdings) Limited (“EAST (Holdings)”), an indirect 66.67%-owned subsidiary of eSun. The Cyber One Group are deemed to be subsidiaries of the Company under the Listing Rules. As at 31 July 2010, the Cyber One Group had received an aggregate amount of approximately HK$312.0 million from a 40% shareholder of Cyber One (other than EAST (Holdings)) for the subscription of equity in Cyber One.

As at 31 July 2010, the secured bank borrowings of the Group were secured by bank deposits of the Group of approximately HK$12.6 million.

— 50 — APPENDIX I FINANCIAL INFORMATION ON THE GROUP, THE LSD GROUP AND THE LAI FUNG GROUP

In addition, as at 31 July 2010, a revolving term loan facility in the amount of HK$60 million was granted by a bank to the Group. The said loan facility is subject to annual review and is secured by a pledge of the Group’s land and buildings with a carrying amount of approximately HK$57.4 million as at 31 July 2010. Such bank loan facility had not been utilised by the Group as at 31 July 2010.

Save as aforesaid and apart from intra-group liabilities, the Group did not, as at 31 July 2010, have any material outstanding (i) debt securities, whether issued and outstanding, authorised or otherwise created but unissued or term loans, whether guaranteed, unguaranteed, secured (whether the security is provided by the Company or by third parties) or unsecured; (ii) other borrowings or indebtedness in the nature of borrowings including bank overdrafts and liabilities under acceptances (other than normal trade bills) or acceptance credits or hire purchase commitments, whether guaranteed, unguaranteed, secured or unsecured; (iii) mortgage or charges; or (iv) guarantees or other contingent liabilities.

3. Material adverse change

As at the Latest Practicable Date, the Directors are not aware of any material adverse change in the financial or trading positions of the Group since 31 December 2009, being the date to which the latest published audited consolidated financial statements of the Group were made up.

4. Working capital

In 2008, the Company completed a rights issue to enable the Group to fund the Macao Studio City project (the “MSC Project”) as it evolves and otherwise for its general working capital purposes. The MSC Project is discussed further in Appendix III below.

— 51 — APPENDIX I FINANCIAL INFORMATION ON THE GROUP, THE LSD GROUP AND THE LAI FUNG GROUP

On 29 October 2009, EAST (Holdings), a non-wholly owned subsidiary, commenced legal proceedings in the Hong Kong SAR against New Cotai, LLC, a joint venture partner of the MSC Project, and parties interested in the MSC Project. The proceedings are being pursued in the context of a desire on the part of the Company to protect EAST (Holdings)’s interests in the development and to progress the MSC Project. However, the timing and outcome of all litigation is inherently uncertain and, in this case, is being contested and/or may prompt claims or counterclaims on the part of New Cotai, LLC or others. In view of such uncertainty, the Directors are of view that, on a conservative basis, at least a substantial portion of the proceeds of the rights issue will not be required for the MSC Project within the next twelve months.

In addition, in assessing the Company’s working capital requirements for the next twelve months, the Directors have given due consideration to, and made certain assumptions about the Put Option as defined in note 36 to the financial statements of the Group for the year ended 31 December 2009 and as set out below.

In connection with the disposal of one-third of the equity interest in EAST (Holdings) by the Group to CapitaLand Integrated Resorts Pte. Ltd. (“CapitaLand”), an independent third party, for a cash consideration of HK$658,757,000 on 12 March 2007 (the “CapitaLand Transaction”), the Group granted CapitaLand a right (but not the obligation) at nil consideration, to sell or put back (the “Put Option”) to the Group all (and not some) of the shares of EAST (Holdings) then held by CapitaLand at that time, in exchange for the return of:

(i) the purchase consideration paid for such shares; and

(ii) any associated joint venture capital contributions made up to that time, net of any benefits had or received by CapitaLand in respect of such shareholding.

The principal asset of EAST (Holdings) is its investment in Cyber One, which through its direct and indirect interests in East Asia-Televisão Por Satélite, Limitada, holds a piece of land in Macau proposed to be developed into the MSC Project.

— 52 — APPENDIX I FINANCIAL INFORMATION ON THE GROUP, THE LSD GROUP AND THE LAI FUNG GROUP

Up to 31 December 2009, CapitaLand has made an aggregate capital contribution of approximately HK$312 million to EAST (Holdings), which is proportional to its effective interest of 20% in Cyber One.

The Put Option is only exercisable under certain discrete circumstances; including failure to obtain certain documents such as the occupation permit of Macao Studio City solely due to failure in obtaining a land grant modification within 54 months after completion of the CapitaLand Transaction, i.e. by 11 September 2011. Further details of the Put Option are set out in the Company’s circular dated 1 February 2007. The land grant modification is being sought for an increase in the developable gross floor area from the original gazetted area.

As the Put Option is potentially exercisable in September 2011, the Company is considering the likelihood of exercise and a number of prospective outcomes. However, given the current uncertainties surrounding the MSC Project, the Directors believe that it will only be feasible to accurately assess the likely working capital implications of the Put Option once the prospects of any solution to the impasse in respect of the development of the MSC Project has been more fully explored over the coming twelve months.

The Directors are of the opinion that, after taking into account the aforesaid, the internal resources, the available banking facilities of the Group (assuming the completion of the Transactions) and in the absence of unforeseen circumstances, the Group will have sufficient working capital for its present requirements for the next twelve months from the date of this circular.

5. Financial and trading prospects

Macao Studio City project

The Company continues to believe that the Macao Studio City project will eventually become one of the region’s major entertainment destinations and will be an important platform for the Group to expand and monetise its entertainment and media expertise. The Group remains firmly committed, with or without the participation of its US project partners, to the project.

— 53 — APPENDIX I FINANCIAL INFORMATION ON THE GROUP, THE LSD GROUP AND THE LAI FUNG GROUP

Media and entertainment operations

In 2010, the Group has operated this business unit as planned and will continue to manage this operation on a prudent basis, with the objective of expanding market coverage and enhance market position for future growth.

B. FINANCIAL INFORMATION ON THE LSD GROUP

Audited consolidated financial statements and the independent auditors’ report of the LSD Group (i) for the year ended 31 July 2009 are disclosed in the annual report 2008-2009 of LSD published on 6 November 2009, from pages 40 to 120; (ii) for the year ended 31 July 2008 are disclosed in the annual report 2007-2008 of LSD published on 7 November 2008, from pages 39 to 127; and (iii) for the year ended 31 July 2007 are disclosed in the annual report 2006-2007 of LSD published on 9 November 2007, from pages 36 to 111. The unaudited condensed consolidated financial statements of the LSD Group for the six months ended 31 January 2010 are disclosed in the interim report 2009-2010 of LSD published on 16 April 2010, from pages 2 to 16. All of these financial statements have been published on the website of the Stock Exchange (http://www.hkexnews.hk) and the website of LSD (http:// www.laisun.com).

C. FINANCIAL INFORMATION ON THE LAI FUNG GROUP

Audited consolidated financial statements and the independent auditors’ report of the Lai Fung Group (i) for the year ended 31 July 2009 are disclosed in the annual report 2008-2009 of Lai Fung published on 6 November 2009, from pages 45 to 128; (ii) for the year ended 31 July 2008 are disclosed in the annual report 2007-2008 of Lai Fung published on 7 November 2008, from pages 40 to 129; and (iii) for the year ended 31 July 2007 are disclosed in the annual report 2006-2007 of Lai Fung published on 9 November 2007, from pages 42 to 121. The unaudited condensed consolidated financial statements of the Lai Fung Group for the six months ended 31 January 2010 are disclosed in the interim report 2009-2010 of Lai Fung published on 16 April 2010, from pages 2 to 14. All of these financial statements have been published on the website of the Stock Exchange (http://www.hkexnews.hk) and the website of Lai Fung (http://www.laisun.com/laifung).

— 54 — APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION

A. INTRODUCTION OF THE UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE eSUN GROUP

The accompanying unaudited pro forma financial information of the eSun Group has been prepared to illustrate the effects of the Transactions. Upon Completion, LSG is to transfer or procure the transfer of 3,265,688,037 shares of Lai Fung at par value of HK$0.10 per share to eSun and the Consideration is satisfied by the following components:

(i) the eSun Group to transfer to LSG, 5,200 million shares of LSD at par value of HK$0.01 per share; and

(ii) the eSun Group to make a cash payment of HK$178,353,000 to LSG;

Upon Completion, LSD will cease to be an associate of the eSun Group and the results and net assets of the LSD Group will no longer be equity accounted for as an associate in the consolidated financial statements of the eSun Group, whereas Lai Fung will become a 40.58%-owned associate of the eSun Group and the results and net assets of the Lai Fung Group will be equity accounted for in the consolidated financial statements of the eSun Group.

The accompanying unaudited pro forma consolidated statement of financial position of the eSun Group as at 31 December 2009 gives effect to the Completion as if the completion had been consummated on 31 December 2009. The accompanying unaudited pro forma consolidated income statement and unaudited pro forma consolidated statement of cash flows for the year ended 31 December 2009 of the eSun Group give effect to the Completion as if the Completion had taken place at the beginning of the year ended 31 December 2009.

The accompanying unaudited pro forma consolidated income statement and unaudited pro forma consolidated statement of cash flows of the eSun Group as set out on pages 59 to 63 in this Appendix are based upon (i) the audited consolidated income statement and the audited consolidated statement of cash flows of the eSun Group for the financial year ended 31 December 2009 and (ii) the audited consolidated income statement of the Lai Fung Group for the financial year ended 31 July 2009, as adjusted for the change in results of the Lai Fung Group due to the adjustments to reflect the fair market value of all the landed property and related interests (after taking into account the estimated corresponding effects on the deferred tax liabilities) of the Lai Fung Group as at 31 May 2010. The unaudited pro forma consolidated statement of financial position of the eSun Group as set

— 55 — APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION

out on pages 57 to 58 in this Appendix is based upon (i) the audited consolidated statement of financial position of the eSun Group as at 31 December 2009 and (ii) the unaudited consolidated statement of financial position of the Lai Fung Group as at 31 January 2010, as adjusted to reflect the fair market value of all the landed property and related interests (after taking into account the estimated corresponding effects on the deferred tax liabilities) of the Lai Fung Group as at 31 May 2010. Narrative descriptions of the pro forma adjustments to illustrate the effects of the Completion that are (i) directly attributable to the transactions; (ii) expected to have a continuing impact on the eSun Group; and (iii) factually supportable, are summarised in the below notes to the unaudited pro forma financial information.

The accompanying unaudited pro forma financial information of the eSun Group, which is based on currently available information and on the assumptions that (i) Completion had taken place on 31 December 2009 (in respect of the unaudited pro forma consolidated statement of financial position of the eSun Group as at 31 December 2009) and at the beginning of the year ended 31 December 2009 (in respect of the unaudited pro forma consolidated income statement and unaudited pro forma consolidated statement of cash flows of the eSun Group for the year ended 31 December 2009); and (ii) that the eSun Group has paid the cash payment of HK$178,353,000 upon Completion, is provided for illustrative purposes. As a result of these assumptions, the accompanying unaudited pro forma financial information of the eSun Group does not purport to describe the actual financial position or results of the eSun Group’s operations that would have been attained had the Completion been taken place at the dates indicated herein. Further, the accompanying unaudited pro forma financial information of the eSun Group does not purport to predict the eSun Group’s future financial position, results of operations or cash flows.

The unaudited pro forma financial information of the eSun Group should be read in conjunction with the financial information on the Lai Fung Group as set out in Appendix I, the financial information on the eSun Group as set out in Appendix I and other financial information included elsewhere in this circular.

— 56 — APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION

Unaudited Pro Forma Consolidated Statement of Financial Position of the eSun Group

eSun Group Note 1 Note 2 Pro Forma As at Pro Forma Pro Forma Adjustments Pro Forma 31 December Adjustment Adjustment Total eSun Group 2009 (Audited*) (Unaudited) (Unaudited) (Unaudited) (Unaudited) HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

NON-CURRENT ASSETS Property, plant and equipment 84,761 84,761 Film rights 72,568 72,568 Film products 68,538 68,538 Music catalogs 115,249 115,249 Interests in jointly-controlled entities 1,044,869 1,044,869 Interests in associates 3,152,538 (3,153,224) 3,883,183 (a) 729,959 3,882,497 Available-for-sale investments 90,338 90,338 Deposits, prepayments and other receivables 102,362 102,362 Deferred tax assets 423 423

Total non-current assets 4,731,646 5,461,605

CURRENT ASSETS Due from a jointly-controlled entity 1,844 1,844 Loan receivable 11,000 11,000 Inventories 3,769 3,769 Equity investments at fair value through profit or loss 2,809 2,809 Held-to-maturity debt investments 120,724 120,724 Films under production 130,823 130,823 Debtors 89,096 89,096 Deposits, prepayments and other receivables 103,286 103,286 Pledged deposit 12,600 12,600 Cash and cash equivalents 1,341,437 (178,353) (b) (178,353) 1,163,084

Total current assets 1,817,388 1,639,035

— 57 — APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION

CURRENT LIABILITIES Creditors and accruals 411,683 411,683 Tax payable 2,434 2,434 Finance lease payables 92 92 Promissory notes 32,319 32,319 Interest-bearing bank borrowings 11,418 11,418 Interest-bearing other borrowings 155,673 155,673

Total current liabilities 613,619 613,619

NET CURRENT ASSETS 1,203,769 1,025,416

TOTAL ASSETS LESS CURRENT LIABILITIES 5,935,415 6,487,021

NON-CURRENT LIABILITIES Finance lease payables (196) (196) Put option (118,328) (118,328)

Total non-current liabilities (118,524) (118,524)

Net assets 5,816,891 6,368,497

EQUITY Equity attributable to owners of the parent Issued capital 620,366 620,366 Reserves 4,870,296 551,606 (c) 551,606 5,421,902

5,490,662 6,042,268 Minority interests 326,229 326,229

Total equity 5,816,891 6,368,497

TOTAL NUMBER OF SHARES OUTSTANDING (in ’000) 1,240,732 1,240,732

NET ASSET VALUE PER SHARE (HK$) 4.4 4.9

* Financial information extracted from the audited consolidated financial statements of the eSun Group for the year ended 31 December 2009

— 58 — APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION

Unaudited Pro Forma Consolidated Income Statement of the eSun Group

eSun Group for the Note 3 Note 4 Note 5 Pro Forma year ended 31 Pro Forma Pro Forma Pro Forma Adjustments Pro Forma December Adjustment Adjustment Adjustment Total eSun Group 2009 (Audited*) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

CONTINUING OPERATIONS TURNOVER 359,455 359,455

Cost of sales (237,513) (237,513)

Gross profit 121,942 121,942

Other revenue 24,461 24,461 Marketing expenses (92,274) (92,274) Administrative expenses (233,421) (233,421) Other operating gains 16,060 16,060 Other operating expenses (140,453) (140,453) Fair value loss on a put option (118,328) (118,328)

LOSS FROM OPERATING ACTIVITIES (422,013) (422,013)

Finance costs (6,758) (6,758) Share of profits and losses of jointly- controlled entities (43,313) (43,313) Share of profits and losses of associates 521,276 (522,104) 165,115 (10,423) (367,412) 153,864

PROFIT/(LOSS) BEFORE TAX FROM CONTINUING OPERATIONS 49,192 (318,220)

Income tax (154) (154)

PROFIT/(LOSS) FOR THE YEAR FROM CONTINUING OPERATIONS 49,038 (318,374)

DISCONTINUED OPERATION Loss for the year from a discontinued operation — —

PROFIT/(LOSS) FOR THE YEAR 49,038 (318,374)

Attributable to: Owners of the parent 68,553 (298,859) Minority interests (19,515) (19,515)

49,038 (318,374)

EARNINGS/(LOSS) PER SHARE ATTRIBUTABLE TO OWNERS OF THE PARENT HK$0.06 (HK$0.24)

* Financial information extracted from the audited consolidated financial statements of the eSun Group for the year ended 31 December 2009

— 59 — APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION

Unaudited Pro Forma Consolidated Statement of Cash Flows of the eSun Group

eSun Group for the year ended 31 Note 2(b) Note 3 Note 4 Note 5 Note 6 Pro Forma December Pro Forma Pro Forma Pro Forma Pro Forma Pro Forma Adjustments Pro Forma 2009 Adjustment Adjustment Adjustment Adjustment Adjustment Total eSun Group (Audited*) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

CASH FLOWS FROM OPERATING ACTIVITIES Profit/(loss) before tax: 49,192 (522,104) 165,115 (10,423) (367,412) (318,220) Adjustments for: Finance costs 6,758 6,758 Share of profits and losses of jointly- controlled entities 43,313 43,313 Share of profits and losses of associates (521,276) 522,104 (165,115) 10,423 367,412 (153,864) Interest income (11,275) (11,275) Distribution income from unlisted available-for-sale investments (4,873) (4,873) Dividend income from listed investments (237) (237) Fair value gains on realised equity investments at fair value through profit or loss (13,154) (13,154) Fair value losses on unrealised equity investments at fair value through profit or loss 433 433 Fair value loss on a put option 118,328 118,328 Depreciation 7,956 7,956 Amortisation of film rights 5,526 5,526 Amortisation of film products 77,626 77,626 Amortisation of music catalogs 4,507 4,507 Impairment of film rights 39,628 39,628 Impairment of films under production 779 779 Impairment of goodwill arising from acquisition of subsidiaries 35,202 35,202 Loss on disposal of items of property, plant and equipment 65 65

— 60 — APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION

Loss on disposal of an available-for-sale investment 234 234 Write-off of bad debts 3 3 Recovery of bad debts (168) (168) Provision for doubtful debts 71 71 Provision for advances to artistes 597 597 Reversal of provision for doubtful debts (2) (2) Reversal of provision for other receivables (182) (182) Reversal of provision for advances to artistes (273) (273) Provision for inventories 889 889 Equity-settled share option expense 3,694 3,694

(156,639) (156,639) Decrease in inventories 35 35 Additions of films under production (122,427) (122,427) Increase in debtors (24,721) (24,721) Decrease in deposits, prepayments and other receivables 48,219 48,219 Increase in creditors and accruals 11,130 11,130 Additions of films products (1,195) (1,195)

Cash used in operations (245,598) (245,598) Overseas taxes paid (589) (589)

Net cash flows used in operating activities (246,187) (246,187)

— 61 — APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION

CASH FLOWS FROM INVESTING ACTIVITIES Interest received 3,918 3,918 Additions to film rights (6,788) (6,788) Proceeds from redemption of held- to-maturity debt investments 125,452 125,452 Proceeds from the sale of equity investment at fair value through profit or loss 43,406 43,406 Dividend received from an associate — 13,063 13,063 13,063 Distribution income from unlisted available-for- sale investments 4,873 4,873 Dividend income from listed investments 237 237 Proceeds from disposal of items of property, plant and equipment 327 327 Purchases of items of property, plant and equipment (11,537) (11,537) Purchases of held- to-maturity debt investments (241,578) (241,578) Purchase of equity investments at fair value through profit or loss (23,902) (23,902) Proceeds from disposal of an available-for-sale investment 762 762 Capital injection to a jointly-controlled entity (4,538) (4,538) Advances to jointly- controlled entities (9,105) (9,105) Repayment from jointly- controlled entities 4,033 4,033 Advances to associates (1,936) (1,936) Repayment from associates 525 525 Repayment of loan receivables 73,260 73,260 Additions to available- for-sale investments (973) (973) Increase in pledged deposit (12,600) (12,600)

Net cash flows used in investing activities (56,164) (43,101)

— 62 — APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION

CASH FLOWS FROM FINANCING ACTIVITIES New bank borrowings 11,361 11,361 Repayment of shareholder’s loan from a minority shareholder (38) (38) Repayment of a promissory note (20,000) (20,000) Capital element of finance lease rental payments (261) (261) Interest paid (5) (5)

Net cash flows used in financing activities (8,943) (8,943)

NET DECREASE IN CASH AND CASH EQUIVALENTS (311,294) (298,231)

Cash and cash equivalents at beginning of year 1,652,980 (178,353) (178,353) 1,474,627 Effect of foreign exchange rate changes, net (249) (249)

CASH AND CASH EQUIVALENTS AT END OF YEAR 1,341,437 1,176,147

ANALYSIS OF BALANCES OF CASH AND CASH EQUIVALENTS Cash and cash equivalents 1,341,437 (178,353) — — — 13,063 (165,290) 1,176,147

* Financial information extracted from the audited consolidated financial statements of the eSun Group for the year ended 31 December 2009

— 63 — APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION

B. NOTES TO THE PRO FORMA FINANCIAL INFORMATION OF THE eSUN GROUP

(1) The adjustment represents the exclusion of the share of net assets of the LSD Group as at 31 December 2009 under the equity method of accounting and taking into account of the cross-holding effect of the eSun Group and the LSD Group as included in the audited consolidated statement of financial position of the eSun Group as at 31 December 2009.

(2) The adjustment represents the acquisition of the Lai Fung Group, cash consideration paid and the gain from the LSD Transaction to be recognised by the eSun Group upon Completion:

HK$’000

(a) Interests in associates: represented by a 40.58% share of the Lai Fung Adjusted Net Asset Value upon Completion*

Lai Fung Adjusted Net Asset Value 9,569,203 Equity interest of Lai Fung to be received 40.58% 40.58% of the Lai Fung Adjusted Net Asset Value 3,883,183

(b) Cash consideration to be paid by the eSun Group 178,353

(c) Gain from the LSD Transaction to be recognised by the eSun Group: Total consideration to be received by the eSun Group 3,704,830 Less: Share of net assets of the LSD Group as at 31 December 2009 (3,153,224)

Gain to be recognised before release of reserves 551,606 Add: Release of the LSD Group’s reserves shared by the eSun Group:

(i) Investment revaluation reserve 231,285 (ii) Exchange reserve 1,276

232,561

Gain from the LSD Transaction to be recognised by the eSun Group 784,167

— 64 — APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION

The consolidated net assets of the eSun Group would increase accordingly by approximately HK$551,606,000 before expenses. After taking into account the release of the LSD Group’s reserves shared by the eSun Group of approximately HK$232,561,000 upon Completion, the overall estimated gain before expenses to be recognised in the consolidated income statement would further increase from approximately HK$551,606,000 to approximately HK$784,167,000. The release of the LSD Group’s reserves would not have any impact on the consolidated net assets of the eSun Group.

* 5,200 million LSD shares of HK$0.01 each currently held by the eSun Group will be exchanged for 3,265,688,037 Lai Fung shares of HK$0.10 each being held by the LSG Group upon Completion.

(3) The adjustment represents the reversal of the 36.72% share of profits of the LSD Group under the equity method of accounting (after taking into account of the cross-holding effect of the eSun Group and the LSD Group) as included in the consolidated income statement of the eSun Group for the year ended 31 December 2009.

(4) The adjustments represent eSun’s 40.58% share of the pro forma profit of HK$406,888,000 of the Lai Fung Group under the equity method of accounting. The share of the pro forma results of the Lai Fung Group is based on the audited consolidated profit attributable to equity holders of the Lai Fung Group for the year ended 31 July 2009 as extracted from the audited financial statements of the Lai Fung Group for the year ended 31 July 2009, as if the Completion had taken place at the beginning of the financial year, i.e. 1 August 2008.

(5) The adjustment represents the decrease in the share of the pro forma profit of the Lai Fung Group due to the additional depreciation charges, as a result of the fair market value adjustments made for certain landed properties classified as property, plant and equipment of the Lai Fung Group as at 31 May 2010.

(6) The adjustment represents the dividend that would have been received by the eSun Group from Lai Fung during the year ended 31 July 2009 based on the pro forma results of the Lai Fung Group as extracted from the audited financial statements of the Lai Fung Group for the year ended 31 July 2009, as if the Completion had taken place at the beginning of the financial year, i.e. 1 August 2008.

— 65 — APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION

(7) Pro forma adjustments as described in notes 4 and 5 above are expected to have continuing effect on the consolidated income statement of the eSun Group while the pro forma adjustment as described in note 3 above is not expected to have continuing effect on the consolidated income statement of the eSun Group.

(8) Pro forma adjustments as described in notes 4, 5 and 6 above are expected to have continuing effect on the consolidated statement of cash flows of the eSun Group while the pro forma adjustments as described in notes 2(b) and 3 above are not expected to have continuing effect on the consolidated statement of cash flows of the eSun Group.

— 66 — APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION

C. LETTER FROM THE REPORTING ACCOUNTANTS ON THE UNAUDITED PRO FORMA FINANICAL INFORMATION

The following is the text of the report dated 30 August 2010 prepared by Ernst & Young on the unaudited pro forma information of the Group which has been prepared for incorporation into this circular.

18th Floor Two International Finance Centre 8 Finance Street, Central Hong Kong

30 August 2010

The Board of Directors eSun Holdings Limited 11th Floor Lai Sun Commercial Centre 680 Cheung Sha Wan Road Kowloon Hong Kong

Dear Sirs,

eSun Holdings Limited (the “Company”) and its subsidiaries (collectively, the “Group”)

Report on the review of the unaudited pro forma financial information regarding the proposed purchase of an approximately 40.58% shareholding interest in Lai Fung Holdings Limited from Lai Sun Garment (International) Limited by the Company in exchange for an approximately 36.72% shareholding interest in Lai Sun Development Company Limited held by the Company (collectively, the “Transactions”)

We report on the unaudited pro forma financial information of the Group upon the completion of the Transactions (the “Unaudited Pro Forma Financial Information”), which has been prepared by the directors of the Company for illustrative purposes only, to provide information about how the Transactions might have affected the

— 67 — APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION

historical financial information in respect of the Group as at 31 December 2009, for inclusion in Appendix II to the circular dated 30 August 2010 (the “Circular”) issued by the Company. The basis of preparation of the Unaudited Pro Forma Financial Information is set out on pages 55 and 66 to the Circular.

Respective Responsibilities of Directors of the Company and the Reporting Accountants

It is the responsibility solely of the directors of the Company to prepare the Unaudited Pro Forma Financial Information in accordance with Rule 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”).

It is our responsibility to form an opinion, as required by Rule 4.29(7) of the Listing Rules, on the Unaudited 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 Unaudited Pro Forma Financial Information beyond that owed to those to whom those reports were addressed by us at the dates of their issue.

Basis of opinion

We conducted our work in accordance with Hong Kong Standard on Investment Circular Reporting Engagements 300 “Accountants’ Report on Pro Forma Financial Information in Investment Circulars” issued by the HKICPA. Our work consisted primarily of comparing the unadjusted financial information with the source documents, considering the evidence supporting the adjustments and discussing the Unaudited Pro Forma Financial Information with the directors of the Company. This engagement did not involve independent examination of any of the underlying financial information.

Our work did not constitute an audit or a review made in accordance with Hong Kong Standards on Auditing, Hong Kong Standards on Review Engagements or Hong Kong Standards on Assurance Engagements issued by the HKICPA, and accordingly, we do not express any such audit or review assurance on the Unaudited Pro Forma Financial Information.

— 68 — APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION

We planned and performed our work so as to obtain the information and explanations we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the Unaudited Pro Forma Financial Information has been properly compiled by the directors of the Company on the basis stated, that such basis is consistent with the accounting policies of the Group and that the adjustments are appropriate for the purposes of the Unaudited Pro Forma Financial Information as disclosed pursuant to Rule 4.29(1) of the Listing Rules.

The Unaudited Pro Forma Financial Information is for illustrative purposes only, based on the judgements and assumptions of the directors of the Company, and, because of its hypothetical nature, it does not provide any assurance or indication that any event will take place in the future and may not be indicative of the financial position or results of

— the Group had the transactions actually occurred as at the dates indicated therein; or

— the Group at any future date or for any future periods.

Opinion

In our opinion:

(a) the accompanying Unaudited Pro Forma Financial Information has been properly compiled by the directors of the Company on the basis stated;

(b) such basis is consistent with the accounting policies of the Group; and

(c) the adjustments are appropriate for the purposes of the Unaudited Pro Forma Financial Information as disclosed pursuant to Rule 4.29(1) of the Listing Rules.

Yours faithf ully, Ernst & Young Certified Public Accountants Hong Kong

— 69 — APPENDIX III MANAGEMENT DISCUSSIONS AND ANALYSES ON THE GROUP AND THE LAI FUNG GROUP

A. MANAGEMENT DISCUSSION AND ANALYSIS ON THE GROUP

Set out below are the management discussion and analysis of the Group as extracted from the annual reports of the Company for each of the three years ended 31 December 2009 (the “Management Discussion and Analysis”). Terms used below shall have the same meanings as those defined in the Management Discussion and Analysis. During the above periods covered by such annual reports, as (i) LSD was an associate of the Group and the consolidated results and net assets of LSD was equity accounted for as an associate in the consolidated financial statements of the Group; and (ii) LSD constituted a significant investment of the Group, the management discussion and analysis in the abovementioned annual reports includes in certain parts discussion and analysis of the results and prospects of the LSD Group. As upon Completion, LSD will cease to be an associate of the Group and the consolidated results and net assets of LSD will no longer be equity accounted for as an associate in the consolidated financial statements of the Group.

1. For the year ended 31 December 2009

OVERVIEW OF RESULTS

For the year ended 31 December 2009, the Group recorded a turnover of HK$359,455,000 (2008: HK$270,131,000), representing an increase of approximately 33% from the previous year. For the year 2009, there were increases in revenue with respect to certain business operations (namely film production and distribution, music production and distribution and live entertainment), but off-set by a reduction in revenue from other business operations (namely sale of products, artiste management, film library licensing and advertising). The year-on-year increase in revenue for film production and distribution was largely due to the successful release of several films in 2009 as compared to a backlog created by, and as a result of the limited time slot suitable and/or available for any film promotional campaigns prior to, the Beijing 2008 Olympic Games in August 2008. The year-on-year increase in revenue for music production and distribution was largely due to the expansion into new media distribution and karaoke income. The year-on-year increase in revenue for live entertainment was mainly due to the re-opening after renovation of the Hong Kong Coliseum, a major local pop concert venue in Hong Kong, in early 2009 after its renovation since late 2008 which allowed

— 70 — APPENDIX III MANAGEMENT DISCUSSIONS AND ANALYSES ON THE GROUP AND THE LAI FUNG GROUP

the Group to produce larger scale live entertainment events as compared to those produced in other venues in 2008 when the Hong Kong Coliseum was under renovation.

For the year ended 31 December 2009, the Group recorded a loss from operating activities of HK$422,013,000 (2008: HK$233,574,000). The increase in loss from operating activities was mainly due to the increase in other operating expenses by approximately 63% to HK$140,453,000. Such increase related principally to the impairment of goodwill arising out of the acquisition of Media Asia Entertainment Group Limited, which was completed in 2007, and the increase in the impairment of film rights of the Group’s film library. In addition, marketing expenses increased to HK$92,274,000 in conjunction with the increase in revenue from certain business operations, in particular, the film production and distribution operations. In addition, the Group recognised a fair value loss on a put option of HK$118,328,000 in 2009 (further details of the put option are set out in the below Business Review under the heading of “EAST (Holdings)’s option”).

The Group recorded a share of profits of associates of HK$521,276,000 as compared to a share of losses of associates of HK$71,256,000 for the previous year. The share of profits of associates was mainly attributable to Lai Sun Development Company Limited (“LSD”), an associate of the Company. The Group currently holds a 36.72% interest in LSD, which in turn holds a 36.08% interest in the Group. The Group’s share of the losses of jointly- controlled entities, at HK$43,313,000, was significantly lower than the loss of HK$92,308,000 for the previous year. The principal explanation for this is that (i) no provision was made in 2009 for the film production and distribution business undertaken by a jointly-controlled entity (as contrasted with 2008) and (ii) there was a substantial increase in profit arising out of the investment in television drama and content production business of a jointly-controlled entity.

For the year ended 31 December 2009, the Group recorded a consolidated profit attributable to owners of the parent of HK$68,553,000 (2008: loss of HK$385,476,000). The changes in the results in 2009 were largely due to the reasons explained above.

Shareholders’ equity as at 31 December 2009 amounted to HK$5,490,662,000, as compared to HK$5,321,231,000 as at 31 December 2008. Net asset value

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per share as at 31 December 2009 was HK$4.43, as compared to HK$4.29 as at 31 December 2008.

BUSINESS REVIEW

Macao Studio City

The Company’s ambition remains to build Macao Studio City into one of Asia’s leading integrated leisure resorts combining theatre/concert venues, live entertainment facilities, Studio RetailTM (a destination retail complex), Las Vegas-style gaming facilities and world-class hotels. The site of the project is strategically located “Where Cotai BeginsTM”, next to the Lotus Bridge immigration checkpoint, linking the complex directly to Zhuhai’s Hengqin Island.

Project progress

The Macao Studio City project has not progressed over the year under review, essentially because of the continuing dispute between East Asia Satellite Television (Holdings) Limited (“EAST (Holdings)”) and New Cotai, LLC (“New Cotai”).

EAST (Holdings) is the holding company of a 60% interest in Cyber One Agents Limited (“Cyber One”), of which 66.7% is held indirectly by the Company and 33.3% is held by CapitaLand Integrated Resorts Pte. Ltd. (“CapitaLand”), a wholly-owned subsidiary of CapitaLand Limited (one of the largest listed real estate companies in Asia). New Cotai is the US joint venture partner holding a 40% interest in Cyber One.

Cyber One, the jointly-controlled joint venture company responsible for the project, has yet to receive approval from the Macau government in relation to its application for a land grant modification on land use and to increase the developable gross floor area of the site from the original gazetted area to approximately 6,000,000 square feet. In connection with that application, the Macau government requested, and has repeated its request for, further particulars from the joint venture concerning plans for the project, in respect of which EAST (Holdings) and New Cotai have yet to formulate an agreed response.

Notwithstanding that Macau has suffered from significant economic volatility since the original project plan was developed in 2006/2007, the Group is confident that the Macao Studio City project is still an attractive business

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proposition with considerable potential for long-term returns. The Group firmly believes that Cyber One is ready and able to present updated proposals on prospective financing and construction to the Macau government, despite the Group’s view that New Cotai has, for its own reasons, refused to approve or allow Cyber One to make any substantive response to the Macau government’s request for further particulars required to date.

On 29 October 2009, EAST (Holdings) commenced legal proceedings in the Hong Kong SAR against New Cotai and parties interested in that company, including David Friedman, Silver Point Capital L.P. and Oaktree Capital Management L.P., and others. Amongst other things, EAST (Holdings) is claiming damages of approximately HK$689 million for breach or inducing breaches of contract and, by way of derivative action on behalf of members of the Cyber One group, damages of approximately US$2.385 billion (approximately HK$18.6 billion) for, amongst other things, breaches of fiduciary duties and dishonestly assisting breaches of fiduciary duties owed to such members of the Cyber One group. On 3 February 2010, EAST (Holdings) filed its Statement of Claim with the High Court in Hong Kong SAR setting out the particulars of its claims. The proceedings are being pursued in the context of a desire on the part of the Company to protect EAST (Holdings)’s interests in the development and progress the Macao Studio City project. However, the timing and outcome of all litigation is inherently uncertain and, in this case, is being contested and/or may prompt claims or counterclaims on the part of New Cotai or others. Further, in the event of prolonged delays to the recommencement of the project, it is uncertain as to whether and how the Macau government would exercise its rights, including but not limited to its rights to re-possess the plot of land.

Cyber One has not appointed a general contractor and has not, to date, progressed the building works beyond foundations for the superstructure. Cyber One presently has only a minimal staff base, so as to contain overheads and expenses.

Cyber One will need to revisit its plans for the retail and entertainment component of the project. As announced by the Company on 21 August 2009, the various arrangements with Taubman Centres, Inc and its subsidiaries (“Taubman”), which would have seen Taubman take an equity stake in the retail component and take the lead in managing it, have now lapsed. The Company is aware that the retail element of the Macao Studio City will be one

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of the key components of the project and it is keen to explore, together with the other stakeholders and Taubman, whether it might be possible to revive or reconfigure the arrangements with Taubman in due course. In addition, as announced by the Company on 19 November 2009, the various arrangements with Playboy Enterprises International, Inc. and its subsidiaries in relation to the development of a multi-use entertainment venue on site have also terminated.

Financing

To date, the parties have contributed a total of US$200 million capital to the project (the Company’s attributable share being US$80 million). However, Cyber One has yet to secure the necessary project finance for the development. The Directors believe that this will be more readily achievable once consensus is reached between the joint venture partners or the current differences are resolved. The Company continues to hold net proceeds of approximately HK$1,015 million from its rights issue of 2008, substantially all of which was, and is, intended for investment in the project. Indeed, it is ultimately anticipated that, when the project does resume, there will be a requirement for further equity investment in excess of these proceeds.

EAST (Holdings)’s option

Although the Company and CapitaLand have been in consistent agreement on the development of Macao Studio City, it should be noted that, in the event the land grant modification for the first phase of the project has not been published by the Macau government and the occupation permit for Macao Studio City (in effect, signifying completion of the first phase of the project) is not issued solely due to the failure of the Macau government to publish in its gazette the land grant modification for the first phase of the project, in each case, within 54 months of completion of CapitaLand’s investment (i.e. by mid September 2011), then CapitaLand would, subject to the terms and conditions in the sale and purchase agreement, have an option to put back its holding of shares in EAST (Holdings) to the Company. The consideration payable for the shares would be equal to the purchase price paid by CapitaLand for the shares (being approximately HK$659 million to date) and any further sums invested by it (being US$40 million to date, as its project funding contribution) net of any returns or dividends received by CapitaLand. Were the put to become exercisable and be exercised and completed, the Company’s attributable interest in Macao Studio City would increase to 60%.

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Media and entertainment

Film production and distribution — Media Asia Entertainment Group Limited (“MAEG”)

During the year ended 31 December 2009, MAEG has completed the principal photography of 7 films with 10 films still in the pipeline of production or under development. There were 6 films released in 2009, namely “Look For A Star” in January, “The Sniper” in April, “City Of Life And Death” in May, “Vengeance” in August, “Ac c i d e n t” in September and “The Founding of a Republic” in October as compared to 4 films released in 2008, namely “If You Are The One”, “Lady Cop & Papa Crook”, “Marriage Trap” and “Set-Off”. Such difference was largely due to a backlog created by, and as a result of the limited time slot suitable and/or available for any film promotional campaigns prior to the Beijing 2008 Olympic Games in August 2008.

In 2009, various MAEG’s films have achieved remarkable results. The “Founding of a Republic” is a film made to mark the 60th anniversary of the establishment of the People’s Republic of China (the “PRC”) with a cast of over 100 stars in the PRC, Hong Kong and Taiwan, and has recorded box- office receipts of over RMB410 million. “If You Are The One” is a romantic comedy directed by Feng Xiaogang and featured by Ge You and Shu Qi, and the film has broken the box-office record of Chinese language movie with the box-office receipts reached RMB325 million in the PRC. In 2009, MAEG films have recorded a total box-office receipts of over HK$1.26 billion in Asia.

MAEG’s films also continue to receive industry recognitions in local and international film festivals in 2009. “City Of Life And Death” was awarded the Best Picture at the San Sebastian Film Festival, the Best Director at the Asia Pacific Screen Awards, and the Best Cinematography at the 46th Golden Horse Awards. In addition, Mr. Lam Kin Ngok, Peter, Chairman of MAEG, was awarded “Producer of the Year” at the CineAsia 2009.

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Live entertainment

For the year ended 31 December 2009, the Group’s live entertainment division produced and participated in 97 (2008: 146) concerts and entertainment events by popular local, Asian and internationally renowned artistes including Andy Lau, Leon Lai, Sammi Cheng, Denise Ho, Alan Tam, Hacken Lee, Super Band, Kay Tse, Ekin Cheng, Liu Chia Chang, At 17 and George Lam, in Hong Kong, the Mainland of China and Macau. The re-opening after renovation of the Hong Kong Coliseum, a major local pop concert venue in Hong Kong, in early 2009 has allowed the Group to produce larger scale live entertainment events as compared to those produced in other venues in 2008 when the Hong Kong Coliseum was under renovation and hence, revenue generated from live entertainment division in 2009 increased (despite a lower overall number of events produced in 2009 as compared with 2008).

With the addition of new venues including the Venetian and the City of Dreams, the Group’s live entertainment division has expanded its coverage in Macau. In 2009, the Group has produced 1 pop concert in Macau performed by popular artiste Andy Lau. In addition, the Group has continued to participate and organise concert tours in the PRC and the rest of the world.

Music production, distribution and publishing

For the year ended 31 December 2009, the Group’s music production, distribution and publishing division released 52 albums (2008: 56), including titles by Andy Lau, Sammi Cheng, Miriam Yeung, Andy Hui, Denise Ho, Richie Jen, Ivana Wong, Janice M. Vidal, Bosco Wong, Chet Lam, At 17 and Pong Nan. In 2009, the Group gradually expanded into Mandarin albums with various artistes commencing and/or increasing publication of Mandarin songs during the year. Following the acquisition of music libraries containing over 3,000 songs and 400 music videos in 2007 and 2008, the Group has, by expanding its content offering, enhanced its position to expand into the new media distribution business. During the year under review, the Group steadily grew its position in the market for music publishing and generated a stable and recurring cash flow.

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Television drama and content production

The Group has expanded its entertainment offerings to include TV drama business. During the year under review, the Group has made investments, via renowned television dramas and content directors, producers and artistes from the Mainland of China, to produce television dramas and content. For the year ended 31 December 2009, the Group has invested in the production of approximately 150 hours of television dramas and content. Through co- operations with well-known artistes in the PRC, the television dramas which the Group invested in had effectively secured prime broadcasting time via distribution deals with major television networks in the PRC and worldwide. This mode of operation was proven to be successful by the elevated distribution income. During the year under review, the Group also reactivated its distribution network with the intention to expand this part of the operation.

New media

In view of the rising popularity of the new media, the Group has decided to tap into this business segment to enhance our entertainment platform and to extend the consumer reach of our entertainment products. In the second half of 2009, the Group has launched an artiste driven entertainment community — www.goyeah.com (“Goyeah”) in Hong Kong. The Goyeah community is an entertainment platform offering free and legal contents including video, online artiste community and artiste-driven online games. As of 31 December 2009, Goyeah has secured the exclusive online and mobile rights of over 20 leading artistes and models. By the end of 2009, Goyeah has achieved web traffic of over 2 million page views per month.

Lai Sun Development Company Limited (“LSD”)

For the year ended 31 December 2009, LSD’s results as attributable to the Group were significantly improved by, amongst other things, a gain on fair value change in LSD’s investment properties as compared to a loss on fair value change in LSD’s investment properties in the previous year.

For the year under review, the Group reported an operating loss (before taking into account the Group’s share of LSD’s profit) of approximately HK$453,551,000 (2008: HK$314,227,000). Since LSD holds a 36.08% equity interest in the Company, LSD is required to equity account for the operating

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loss of the Group. As the Group also holds a 36.72% equity interest in LSD, the Group is required to further take up LSD’s share of the Group’s operating results. The effect of such recurring process leads to the Group taking up a further loss of HK$69,265,000 (2008: HK$46,702,000) and such amount is included in the Group’s share of profits and losses of associates. Taking into account the cross-holdings between the Group and LSD, the Group’s share of LSD’s profits included within the Group’s share of profits and losses of associates for the year ended 31 December 2009 was HK$522,104,000 (2008: loss of HK$71,249,000).

OUTLOOK

Macao Studio City

The Company continues to believe that the Macao Studio City will eventually become one of the region’s major entertainment destinations and will be an important platform for the Group to expand and monetise its entertainment and media expertise. The Group remains firmly committed, with or without the participation of its US project partners, to the project.

Media and entertainment

Film production and distribution

The success in our various film projects in 2009 reaffirms our beliefs in Chinese language films, MAEG scheduled to release no less than 6 films in 2010 including “Love in A Puff”, “Fire of Conscience”, “Frozen”, “Legend of the Fist: The Return of Chen Zhen” and “Once A Gangster”.

In light of the enormous yet continuously growing PRC market, MAEG will continue to co-produce films with the leading/renowned PRC companies, producers, directors as well as artistes to enhance our film revenue and expand our market share in the PRC. In addition, the Group has established a film production joint venture with Shanghai Film and “Beijing Guoli Chang Shing Film and TV Cultural Promotion Company Limited”（北京國立常升影視文化傳播有限公司） , a company managed by Mr. Zhang Guoli, a well-known artiste in the PRC. Leveraging on the market expertise and recognitions of our joint venture partners, the Group would through this joint venture increase its participation in film projects in the PRC with an aim to strengthen our market position in the PRC.

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Live entertainment

For 2010, the live entertainment division of the Group has already scheduled its own production of 6 titled concerts and entertainment events by popular local artistes and participation in the production of no less than 6 other titled events by other promoters, including overseas concert tours already involving some 80 shows in total.

With the increasing venues for performance in Macau, the Group will continue to expand the coverage of its live entertainment business in Macau. In addition, the Group will continue to expand into live entertainment promotions in the Mainland of China and Taiwan.

Music production, distribution and publishing

The traditional physical music record market has been dwindling over the last few years. Confronted with the changing consumers’ pattern from physical to digital music sales, the Group will continue to explore new sales channel for our music products.

With the successful debut of East Asia Music’s expansion into Mandarin albums and the positive contribution from the exploitation of the music library through new media distribution, the Group will continue its efforts to expand its presence in the Mainland of China.

Television drama and content production, and distribution

In view of the steady returns generated from investments in television drama and other television content, the Group will continue to look for business opportunities in this area in order to boost the quantity of television drama as well as to broaden the television contents to be produced. Given the success of our operation mode, the Group will continue to work with well-known artistes in the PRC to secure broadcasting time via distribution deals with major television networks in the PRC and worldwide so as to enhance the distribution income.

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New media

The Group has successfully secured new investors’ funds in March 2010 for further development of Goyeah. The Group will continue to enrich the contents of Goyeah with the goal of attracting more netizen and escalating page views. Leveraging on the Group’s strong support from various aspects of media and entertainment businesses, and supplemented by the comprehensive entertainment contents, the Group will expand this business to the PRC. We expect that the Goyeah community will be a new revenue stream for the Group.

The PRC artiste management

The PRC entertainment market is enormous with a wealth source of new talents and rising stars. In addition, various well-known PRC artistes have been gaining increasing fame and popularity in Asia and the rest of the world. Riding on the fast growing PRC entertainment industry, the Group intends to expand its business to the PRC artiste management. This new division could provide us with a fresh supply of artistes for entertainment projects to be organised and/or promoted and/or produced by the Group and hence, we expect that this new area of business will complement our other media and entertainment businesses.

LSD

According to LSD, it will target to maintain high occupancy rates and rental cashflows from its investment properties. It is further understood that LSD will monitor the local property market closely and will adopt a balanced approach towards its property development business.

Other matters relating to the Company

Update in relation to Passport Special Opportunities Master Fund, LP and Passport Global Master Fund SPC Limited (“Passport”)

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the enlarged issued share capital of the Company (and the shares issued on the full exercise of the warrants would have represented approximately 8.10% of the further enlarged issued share capital of the Company). The placing, which was primarily intended to finance the Group’s media and entertainment businesses and otherwise for general working capital purposes, did not ultimately proceed in light of the fact that Passport, a substantial shareholder of the Company, obtained an ex-parte injunction temporarily restraining the Company from proceeding with the placing. Although the long-stop date for the placing was extended once, with the injunction order remaining in place and the conditions to the placing remaining unfulfilled, the placing agreement lapsed on 9 January 2009.

In essence, Passport alleges that the Company had no good commercial reason for the placement and that its sole or primary purpose was to dilute Passport’s shareholding. Whether or not the injunction was validly obtained by Passport remains the subject of on-going legal proceedings in respect of which the Company and its directors are vigorously defending Passport’s claims, and are pursuing their own remedies against Passport. The Court granted leave to the placing agent and certain of the placees to join the legal proceedings, as parties who were adversely affected by Passport’s injunction. The Court required Passport to put up a bank guarantee in the sum of HK$120 million to fortify its undertaking as to damages. Passport also put up security for the Company’s costs. The trial commenced in November 2009 and concluded in January 2010. The judge reserved his decision after the conclusion of the trial and judgement will be handed down in due course.

LIQUIDITY, FINANCIAL RESOURCES, CHARGE ON ASSETS, GEARING AND CAPITAL COMMITMENTS

As at 31 December 2009, cash and cash equivalents held by the Group amounted to HK$1,341,437,000 of which over 96% were denominated in Hong Kong dollar currency.

In order to optimise the Group’s liquidity and to enhance the yield of the Group’s available cash, the Group also invested in short-term bond investments with investment grade rating and short-term securities investments. As at 31 December 2009, the carrying amount of such bond investments and securities investment held by the Group amounted to HK$120,724,000 and HK$2,809,000, respectively.

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As at 31 December 2009, the Group has unsecured promissory notes payable of HK$30,000,000 falling due within one year. The promissory notes payable bears interest at 3.5% per annum, and the Group recorded interest accruals of HK$2,319,000. As at 31 December 2009, there existed unsecured other borrowings from a former shareholder of the Company in the principal amount of HK$112,938,000 which is interest-bearing at the HSBC prime rate per annum and is repayable on demand. The Group recorded interest accruals of HK$42,735,000 for the other borrowings as at 31 December 2009. As at 31 December 2009, the Group has secured bank borrowings in China of RMB10,000,000 (or HK$11,361,000) falling due within one year which was secured by pledged deposit of HK$12,600,000. The secured bank borrowings bear interest with reference to the People’s Bank of China Base Interest Rate. The Group recorded interest accruals of HK$57,000 for the secured bank borrowings as at 31 December 2009. In addition, certain land and buildings of the Group with a carrying amount of HK$58,551,000 were pledged to a bank to secure general banking facilities granted to the Group which were not utilised by the Group as at 31 December 2009. Also, the Group had finance lease payables of HK$92,000 falling due within one year, HK$73,000 falling due within the second year and HK$123,000 falling due within the third to fifth years, as at 31 December 2009.

The Group’s debt to equity ratio, expressed as a percentage of total borrowings to total net assets, remained low at approximately 3% as at 31 December 2009. All of the Group’s borrowings, except for the secured bank borrowings of HK$11,418,000 which are denominated in Renminbi, are denominated in Hong Kong dollars and the majority of which are floating rate debts. No financial instruments for hedging purposes were employed by the Group during the year under review.

CONTINGENT LIABILITIES

Details of contingent liabilities of the Company as at the end of the reporting periods are set out in note 44 to the financial statements.

EMPLOYEES AND REMUNERATION POLICIES

The Group employed a total of approximately 230 employees as at 31 December 2009. Pay rates for employees are maintained at competitive levels, salary and bonuses are rewarded on a performance-related basis. Other staff

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benefits include free hospitalisation insurance plan, subsidised medical care and subsidies for external educational and training programmes. The Company also adopted a share option scheme for its directors and employees on 23 December 2005.

2. For the year ended 31 December 2008

BUSINESS REVIEW

Overview of results

For the year ended 31 December 2008, the Group recorded a turnover from continuing operations of HK$270,131,000 (2007: HK$289,780,000), representing a decrease of approximately 7% from the previous year. The decrease was largely due to lower entertainment event income as a result of the temporary closure for renovation of a major pop concert venue in Hong Kong, Hong Kong Coliseum, between July 2008 and January 2009.

For the year ended 31 December 2008, the Group recorded a loss from operating activities of HK$233,574,000 versus a profit from operating activities of HK$324,189,000 in the previous year. The substantial deviation between the two financial years was mainly due to the one-off gain of approximately HK$499,969,000 recorded in the year ended 31 December 2007 on the sale of a 20% effective interest in the Macao Studio City project to CapitaLand Integrated Resorts Pte. Limited (“CapitaLand Integrated Resorts”). In addition, other revenue (mainly interest income) reduced by approximately 46% to HK$33,602,000 due to lower interest rate; while administrative expenses were up by approximately 22% to HK$203,768,000. Such increase was related to the consolidation of the expenses of Media Asia Entertainment Group Limited (“MAEG”) for a full year in the current year and the organic expansion of the various business operations of the Group as well as the establishment of several new offices in the Mainland of China and Taiwan to cope with our expanding geographic coverage of our business operations.

For the year ended 31 December 2008, the Group recorded a loss after tax from continuing operations of HK$403,761,000 as compared to a profit after tax from continuing operations of HK$924,351,000 in the previous year. In 2007, the Group discontinued its satellite television operations.

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During 2008, the Group has shared the losses of jointly-controlled entities of approximately HK$92,308,000, an increase from HK$32,147,000 recorded in the previous year. This related principally to the film production and distribution business engaged by a jointly-controlled entity, and also due to the cost incurred to set up the team to manage the Macao Studio City project and to commence building the foundation of Macao Studio City. Also the Group recorded a share of losses of associates of HK$71,256,000 for the year ended 31 December 2008 versus a share of profits of associates of HK$642,044,000 in the previous year. The share of profits and losses of associates is mainly attributable to Lai Sun Development Company Limited (“LSD”), an associated company of the Company. The Group currently holds a 36.72% interest in LSD, which in turn holds a 36.08% interest in the Group. Such cross-holdings between the Group and LSD lead to a further loss to the Group due to eSun’s further share of LSD’s loss arising from LSD’s share of the results of the Group.

For the year ended 31 December 2008, the Group recorded a consolidated loss attributable to equity holders of the Company of HK$385,476,000 versus a profit of HK$895,710,000 in the previous year.

Shareholders’ equity as at 31 December 2008 amounted to HK$5,321,231,000, up from HK$4,669,218,000 as at 31 December 2007. Net asset value per share as at 31 December 2008 was HK$4.29, as compared to HK$5.64 as at 31 December 2007.

OPERATIONS REVIEW

Macao Studio City

Macao Studio City is expected to be one of Asia’s leading integrated leisure resorts combining theatre/concert venues, live entertainment facilities, Studio Retail™ (a destination retail complex), Las Vegas style gaming facilities and world class hotels. The project will be developed on a site strategically located “Where Cotai Begins™”, next to the Lotus Bridge immigration checkpoint, linking the complex directly to Zhuhai’s Hengqin Island.

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Joint venture arrangements

Macao Studio City joint venture

In December 2006, the Group completed the sale of a 40% interest in Cyber One Agents Limited (“Cyber One” or “Macao Studio City JV”), the investment holding company of the Macao Studio City project, to US joint venture partner, New Cotai, LLC (“New Cotai”).

In March 2007, the Group further completed the sale of a 33.3% interest in East Asia Satellite Television (Holdings) Limited (“East Asia”), the holding company of the 60% interest in Cyber One, to CapitaLand Integrated Resorts. CapitaLand Integrated Resorts is a wholly-owned subsidiary of CapitaLand Limited, one of the largest listed real estate companies in Asia.

Following the completion of the disposal of a 40% and a 20% effective interest in the Macao Studio City project to New Cotai and CapitaLand Integrated Resorts, respectively, the current simplified shareholding structure of Macao Studio City project is as follows:

CapitaLand The Company Integrated Resorts

66.7% 33.3%

New Cotai East Asia

40% 60%

Macao Studio City JV

100%

Macao Studio City project

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Joint venture in respect of the retail component of Macao Studio City

On 29 January 2008, members of the Cyber One group entered into certain agreements in respect of a joint venture to be established for the purposes of owning, developing and operating the proposed retail component within Phase I of the Macao Studio City project anticipated to comprise retail space of approximately 904,000 square feet of gross floor area or 615,000 square feet of gross leaseable area (“Phase I Retail Component”) and to document a right of first offer in respect of the retail component of the second phase of the project proposed to be developed. The various transaction agreements comprise the Equity Participation Agreement, the Joint Venture Agreement, the Agreement for Lease, the Development Services Agreement and the Management and Leasing Agreement (together the “Transaction Agreements”).

Under these Transaction Agreements, Cyber One has agreed to sell to Taubman Centers, Inc. a 25% equity participation interest in Phase I Retail Component for an up-front cash consideration of approximately HK$376.80 million and the reimbursement of 25% of the development cost incurred up to January 2008.

Progress on the retail component is dependent on the development of the project as a whole, which has slowed down in light of the global financial and economic downturn in 2008.

Project progress

Gross Floor Areas

In November 2007, Macao Studio City JV submitted a land grant modification on land uses and to increase the developable gross floor area of the site to 6,000,000 square feet. Macao Studio City JV has yet to receive formal approval to the same from the Macau government.

Construction-in-progress

Foundations work for Phase I of the project has been completed. Construction on the superstructure of Phase I of the project will commence once the debt financing exercise is finalised. Construction schedule and formal opening of Phase I will now depend on the timing of the conclusion of the debt financing exercise.

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Financing

Macao Studio City JV has no debt and is well-positioned to be flexible in the current environment. Accordingly, the Group is still targeting to have Macao Studio City JV completing the debt financing exercise as soon as practicable.

On 9 November 2007, shareholders of Cyber One entered into a Memorandum of Understanding (the “MOU”). The MOU recognised New Cotai Entertainment LLC’s exercise of a lease option as valid, conditionally amended certain provisions of the governing lease documents, and provided the mechanism by which the amendments would become effective. The MOU also conditionally provided for the increase of each shareholder’s proportional contribution to the Macao Studio City project, on a several basis, from US$200 million to US$500 million, subject to the approval of the shareholders of the Company and further negotiation of the definitive documents to reflect and expand upon matters agreed in the MOU.

On 17 October 2008, New Cotai issued a notice of termination of the MOU to the respective parties of the MOU in accordance with the provisions thereof, the definitive documents not having been settled within the prescribed time limit. However, certain provisions of the MOU remain valid and binding on the parties. As at the date of this report, the Cyber One shareholders have only advanced US$200 million in accordance with the terms of the original Cyber One joint venture agreement of 6 December 2006. The Company’s contribution has been US$80 million, which is proportional to its effective interest of 40%.

Despite termination of the MOU, the Company remains firmly committed to the Macao Studio City project. With the completion of the rights issue in May 2008 raising net proceeds of approximately HK$1,015 million, the Group is prepared to further fund the Macao Studio City project however it evolves (and whether on terms envisaged by the MOU or otherwise) and to use the proceeds otherwise for its general working capital purposes.

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Media and entertainment

Film production and distribution — MAEG

During the year ended 31 December 2008, MAEG completed principal photography on 6 films, with 7 other films in the production or development pipeline.

In 2008, MAEG released 4 films — If You Are The One, Lady Cop & Papa Crook, Marriage Trap and Set-Off. Since the release of The Warlords and Assembly between December 2007 and January 2008, due to limited time slots suitable and/or available for any film promotional campaigns prior to the Beijing 2008 Olympic Games in August 2008, newly produced films of MAEG (like many other films) had seen their respective launch campaigns and dates rescheduled or delayed. For the year ended 31 December 2008, the MAEG Group contributed a turnover of HK$95,325,000 and a gross profit of HK$33,688,000 to the Group’s consolidated results.

The Warlords was a mega-budget film directed by Peter Chan and featured top Asian actors — Jet Li, Andy Lau, Takeshi Kaneshiro, and Assembly was a Chinese war drama directed by Feng Xiaogang. The box-office receipts of The Warlords and Assembly placed them both in the top three movies in the Mainland of China in 2007. In 2008, MAEG’s films continued to receive industry recognitions in local and international film festivals.

Film production joint venture

On 8 August 2008, a joint venture agreement was entered into between Media Asia (MAX) Limited (an indirect wholly-owned subsidiary of the Company), Avex Entertainment Inc. and Avex Hong Kong Limited (formerly known as Avex Asia Limited) to establish a joint venture company, PAMIEM Film Fund Limited (the “JV Company”), as a vehicle for producing films targeted at the Asia markets.

The JV Company is beneficially owned as to 50% by MAEG, 40% by Avex Entertainment Inc., and 10% by Avex Hong Kong Limited. After the approval of each proposed film project by the board of directors of the JV Company, each shareholder may be required to contribute to a project fund, with such contributions to be provided on a standby-basis. The total amount of film

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funding has been agreed at no more than US$50 million over five years from the date of the joint venture agreement.

During the year under review, no film projects were identified or produced under this joint venture.

Film library

As at 31 December 2008, the film rights and film products of the Group constituted all rights, titles and interests in an aggregate of 166 films with an aggregate carrying value of approximately HK$171 million (2007: HK$199 million).

Live entertainment

For the year ended 31 December 2008, the Group’s live entertainment division produced and participated in 146 concerts, theatre and entertainment events by popular local, Asian and internationally renowned artistes including Jay Chou, Richie Jen, Jan Lamb, Ivana Wong, Harry Connick Jr., Maroon 5 and Ayumi Hamasaki in Hong Kong, the Mainland, Macau and South East Asia.

Hong Kong Coliseum, a major pop concert venue in Hong Kong was temporarily closed for renovation between July 2008 and January 2009. During that temporary closure period, the Group continued to organise and/or participate in the promotion of various pop concerts and entertainment events in other venues in Hong Kong with the objective of maintaining its market leading position in Hong Kong.

Music production, distribution and publishing

For the year ended 31 December 2008, the Group’s music production, distribution and publishing division released 56 albums, including titles by Andy Lau, Denise Ho, Andy Hui, Leon Lai, Janice M. Vidal, Miriam Yeung, Fama, Ivana Wong, Chet Lam, Wilfred Lau, At 17, Richie Jen, Bosco Wong, Cherry Wong and Pong Nan.

During the year, the Group also recruited several new singers (some of whom were top performers in a singing/performance contest organised by, inter alia, Macao Studio City and East Asia Music in Macau in November 2007), as well as renowned composers and lyricists.

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Following the acquisition of music libraries containing over 3,000 songs and 400 music videos in late 2007 and in 2008, the Group has, during the year under review, greatly enhanced its position to expand into the new media distribution business. During the year under review, the Group steadily grew its position in the market for music publishing and generated a stable and recurring cash flow.

Television drama and content production, and distribution

As part of the Group’s effort to build a comprehensive entertainment platform with an extensive Chinese language content in Greater China, the Group has decided to expand its entertainment offerings to include TV drama business. During the year, the Group has either continued discussions or commenced co-operation with renowned television dramas and content directors, producers and artistes in the Mainland of China to produce television dramas and content. In addition, the Group reactivated its distribution network with the intention to expand this part of the operation.

LSD

For the year ended 31 December 2008, LSD’s results as attributable to the Group were adversely affected by, among other things, a loss on fair value change in the LSD’s investment properties due to the recent downturn in the property market, as compared to a significant gain on fair value change in LSD’s investment properties in the previous year and from its further share of the results of the Group as a result of the cross-holdings between LSD and the Company.

In July 2007, LSD completed the disposal of its 50% interest in Majestic Hotel and Majestic Centre, Kowloon, Hong Kong. In December 2007 and March 2008, LSD completed respective sales of a 16.57% and a 10% interests in a former subsidiary which owned the property on which The Ritz-Carlton Hong Kong was formerly located. For the year under review, LSD made a provision for tax indemnity granted by it to Lai Fung Holdings Limited (“Lai Fung”) in November 1997 at the time of effecting the separate listing of Lai Fung on The Stock Exchange of Hong Kong Limited.

For the year under review, the Group reported an operating loss (before taking into account the Group’s share of LSD’s loss as mentioned above) of

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approximately HK$314,227,000 (2007: profit of HK$248,427,000). Since LSD holds a 36.08% equity interest in the Company, LSD is required to equity account for the operating loss of the Group. As the Group also holds a 36.72% equity interest in LSD, the Group is required to further take up LSD’s share of the Group’s operating results. The effect of such recurring process leads to the Group taking up a further loss of HK$46,702,000 (2007: profit of HK$36,482,000) and such amount is included in the Group’s share of profits and losses of associates.

As a result of the abovementioned factors, the Group’s share of LSD’s losses included within the Group’s share of profits and losses of associates, after taking into account the cross-holdings between the Group and LSD, for the year ended 31 December 2008 was HK$71,249,000 (2007: profit of HK$647,283,000).

Development properties

3 Connaught Road Central Project (Redevelopment of the former The Ritz- Carlton Hong Kong site)

This joint redevelopment project is a 50:50 joint venture between LSD and a wholly-owned subsidiary of China Construction Bank Corporation (“CCB”). The buildable GFA for the redevelopment is approximately 225,000 square feet. The redeveloped office tower will become a landmark property in Central, Hong Kong. Part of the redeveloped property, upon its completion, will be used by CCB as offices of its Hong Kong operations.

Demolition work of the former The Ritz-Carlton Hong Kong hotel property started in April 2008 and was completed in January 2009. Foundation work is now in progress. The entire redevelopment work is now expected to be completed by the end of 2011.

Wood Road Project, Wanchai

This joint residential development project is a 50:50 joint venture between LSD and a unit of AIG Global Real Estate Investment (Asia) LLC. The development has a planned total gross floor area of approximately 140,000 square feet and total development cost is now estimated to be about HK$1.3 billion.

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Foundation work started in November 2007 and was completed in September 2008. Above-ground construction work is scheduled for completion by 2011.

Tai Po Road Project

LSD owns 100% of this development project. The development has a planned total gross floor area of over 60,000 square feet mainly for residential use and the total development cost is now estimated to be about HK$500 million.

Foundation work started in mid April 2008 and was completed in September 2008. Superstructure work is scheduled for completion by 2010.

Yau Tong Project

LSD completed the purchase of a site located at No. 4 Shung Shun Street, Yau Tong, Kowloon, Hong Kong in September 2008. The consideration for the purchase was HK$188 million.

The site, which covers an area of approximately 17,760 square feet, is currently used as an open-air carpark. Subject to approval of lease modification of the site to non-industrial use and payment of the relevant land premium, LSD intends to develop the site into a residential-cum-commercial property with a total gross floor area of about 106,000 square feet.

Other matters relating to the Company

Planned share placement

On 11 December 2008, the Company announced a proposed placement of shares (the “Placing”) representing approximately 8.82% of the Company’s issued share capital (the “Placing Shares”) as enlarged by the Placing Shares, at the subscription price of HK$0.50 per Placing Share, together with unlisted bonus warrants on a 1-for-1 basis in respect of each Placing Share, with each warrant entitling the holder to subscribe for one new share (the “Warrant Shares”) at an exercise price of HK$0.50 per Warrant Share at any time from the date of issue until December 2011. If allotted and issued in full, the Warrant Shares would have represented approximately 8.10% of the Company’s total issued share capital as enlarged by the issue of the Warrant Shares. The Placing was scheduled to have completed on 24 December 2008.

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The proceeds were intended to be used to finance the Group’s media and entertainment businesses and otherwise for general working capital purposes.

On 22 December 2008, Passport Special Opportunities Master Fund, LP and Passport Global Master Fund SPC Limited (together defined as “Passport”) obtained an ex parte injunction temporarily restraining the Company from proceeding with the Placing. In light of this, the Company agreed with Chung Nam Securities Limited (the “Placing Agent”) to extend the longstop date for completion of the Placing agreement to 9 January 2009 to accommodate an interpartes hearing on 6 January 2009 concerning the Placing, which transpired to be procedural, rather than substantive, in nature. A further hearing was set down for 22 January 2009, pending which the injunction remained in place. The Court also ordered Passport to fortify its undertaking in damages by the provision of a bank guarantee in the sum of HK$120 million to compensate any loss to the Company and any other party affected.

Given the increase in the Company’s share prices during the intervening period between 11 December 2008 and 9 January 2009 and the uncertainty resulting from the continuation of the interim injunction, the board of directors of the Company determined not to agree to a further extension of the Placing agreement, which terminated without completing on 9 January 2009.

Further developments since January 2009 are set out in the section headed “Funding needs and outstanding litigation with Passport”.

OUTLOOK

Macao Studio City

In view of its planned scale, unique positioning in Macau and combination of proposed facilities within it, we firmly believe Macao Studio City will, in due course, become one of the region’s major entertainment destinations and will be an important platform for the Group to expand and monetise its entertainment and media expertise. Accordingly, the Group remains firmly committed to this project.

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Media and entertainment

Film production and distribution

MAEG will continue to explore and/or consider various film projects in the coming years with the objectives of (1) building momentum by steadily increasing the number of films produced per annum, with the aim of expanding market share as well as diversifying earnings risk as a result of over reliance on a small number of films produced per annum; (2) fully exploiting our relationships with leading/renowned studios, directors and producers (including China Film, Shanghai Film, Avex Film, Mr. Feng Xiaogang, Mr. Johnnie To and Mr. Andrew Lau) to increase the number of quality films produced; and (3) expanding our film revenue base in other places by entering into relationships with leading studios beyond Greater China.

Film production joint venture

MAEG intends to increase its yearly total investment in film production by financing it from internal resources and, as appropriate, with external support, such as via co-production (as is the case with PAMIEM Film Fund Limited mentioned above).

Live entertainment

The Group has diversified, and will continue to diversify, its performance events from major pop concerts to various miniconcerts in different venues and/or participation in other types of shows, including but not limited to, musical performances and dramas. However, the contributions to be generated from such kinds of relatively small scale performance (in terms of seating and show days) may not be significant as compared to contributions from major venues, such as the re-opened Hong Kong Coliseum.

On the other hand, the Group is increasing its efforts to expand into live entertainment promotions in the Mainland of China. With the successful completion of the Beijing 2008 Olympic Games and the upcoming Shanghai 2010 Expo, the Group expects a lot more venues to be available for performances in the Mainland, which in turn increase our business opportunities. However, due to the keen domestic competition and various

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regulatory compliance matters in the Mainland, the development of this business is likely to require patience and commitment.

In 2009, the live entertainment division of the Group has already scheduled its own production of around 10 concerts and entertainment events by popular local artistes and participation in the productions of around 10 other concerts by other promoters, already involving around 70 shows in total.

Music production, distribution and publishing

As regards music production and distribution, the main objectives include (1) to increase our market share in Hong Kong with the goal of greatly enhancing the brand presence of East Asia Music, Capital Artists, Amusic, and CMD in Southern China; and (2) to debut East Asia Music’s expansion into Mandarin album releases targeting the Greater China market.

Despite the continuing challenge of dwindling physical music sales, the Group’s outlook is cautiously optimistic given (1) that the shift in consumers’ pattern from physical to digital music sales offers unique opportunities to derive new revenue streams from digital sales; and (2) the longer term prospects for the digital music market in the Mainland.

Television drama and content production, and distribution

The Group has identified three distinct positives to be exploited in respect of TV drama business in the Mainland, namely (1) that it offers stable recurring cash flow; (2) that premium quality TV drama offer very stable margins and (3) that it offers the Group a window/opportunity to expand and develop its artiste management business in the Mainland. Accordingly, the Group intends to continue its efforts to develop and groom this business.

LSD

Crashes in financial markets and global economic recession have created enormous uncertainties and risks. As one of the most open economies in the world, Hong Kong has inevitably experienced a slowdown in economic activity. With continuous improvement of LSD’s operations and with the timely disposal of assets in the past few years, LSD has a healthy balance sheet with reasonable leverage.

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Investment properties

With current high occupancy in LSD’s investment properties, LSD has in the past economic cycle successfully strengthened its tenant and trade mix, which well prepares LSD to operate through difficult economic environment ahead. In the coming year, it is understood that LSD will take a defensive approach as regards its rental policies, with the objectives of maintaining occupancy rates and rental cashflows from its investment properties.

Development properties

In anticipation of a possible sharp downturn in the local economy and negative market sentiment generally, prices of residential properties in Hong Kong have fallen since September 2008. In recent months, the Hong Kong residential market has shown early signs of stabilisation after price rationalisations in respect of newly launched projects and the easing in mortgage availability. In the long run, strong affordability, low interest rates and tight supply in the pipeline should benefit the Hong Kong property market.

LSD currently holds a few residential projects under development in Hong Kong. As two of LSD’s development properties, the Wood Road project, Wanchai and the Tai Po Road project, are both in early development phase, LSD’s development and realisation plan are not severely affected by the market at the moment. Given the shortage in supply in core city areas in Hong Kong, LSD is understood to be cautiously optimistic on the Hong Kong residential properties in the longer term. It is further understood that LSD will monitor the local property market closely and will adopt a prudent approach towards acquiring new development projects in future.

Other matters relating to the Company

Funding needs and outstanding litigation with Passport

The Company believes that the reasons for the Placing (as described above), being to strengthen the capital base of the Company’s media and entertainment business and otherwise the general working capital of the Company, remain valid and that there is a continued need to raise such funds to develop that business. The Company will consider and, if appropriate, pursue plans for a placing or other funding options in due course. Meanwhile, the Board

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continues to be satisfied that the termination of the Placing agreement (as mentioned above) will not have any immediate material adverse financial impact on the current operations.

At the Court hearing on 22 January 2009, the injunction obtained by Passport on 22 December 2008 was discharged on the basis that the Placing agreement between the Company and the Placing Agent lapsed on 9 January 2009. The Court gave further procedural directions for, and relating to, the setting down of a trial, scheduled to take place in November 2009, to determine among other things, whether or not the injunction was validly obtained in the first place. The Company and its Directors intend vigorously to defend Passport’s claims and pursue their own rights against Passport. The Court granted leave to the Placing Agent and certain of the placees to join the legal proceedings as parties who were adversely affected by Passport’s injunction so that they too might pursue their rights and remedies. Passport’s obligation to put up a bank guarantee in the sum of HK$120 million to fortify its undertaking in damages remains in place and is required to be extended to all interveners.

LIQUIDITY, FINANCIAL RESOURCES, CHARGE ON ASSETS, GEARING AND CAPITAL COMMITMENTS

As at 31 December 2008, cash and cash equivalents held by the Group amounted to HK$1,652,980,000 of which over 95% were denominated in Hong Kong dollars.

As at 31 December 2008, the Group had unsecured promissory notes payables of HK$20,000,000 falling due within one year and HK$31,269,000 falling due within the second year. The promissory notes payables are interest-free, except for an amount of HK$30,000,000 which bears interest at 3.5% per annum. As at 31 December 2008, there existed unsecured other borrowings from a former shareholder of the Company in the principal amount of HK$112,938,000 which is interest-bearing at the HSBC prime rate per annum and is not repayable within one year. The Group recorded interest accruals of HK$37,089,000 for the other borrowings as at 31 December 2008. In addition, certain land and buildings of the Group with a carrying amount of HK$60,487,000 were pledged to a bank to secure general banking facilities granted to the Group which were not utilised by the Group as at 31 December 2008. Also, the Group had finance lease payables of HK$92,000 falling due within one year, HK$87,000 falling due within the second year and HK$131,000 falling due within the third to fifth years, as at 31 December 2008.

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The Group’s debt to equity ratio, expressed as a percentage of total borrowings to total net assets, remained low at approximately 4% as at 31 December 2008. All of the Group’s borrowings are denominated in Hong Kong dollars, the majority of which are floating rate debts. No financial instruments for hedging purposes were employed by the Group during the year under review.

CONTINGENT LIABILITIES

Details of contingent liabilities of the Company as at the balance sheet date are set out in note 41 to the financial statements.

EMPLOYEES AND REMUNERATION POLICIES

The Group employed a total of approximately 275 employees as at 31 December 2008. Total staff costs including share-based payment and pension contributions for the year ended 31 December 2008 were approximately HK$116,669,000. Pay rates for employees are maintained at competitive levels, salary and bonuses are rewarded on a performance-related basis. Other staff benefits include free hospitalisation insurance plan, subsidised medical care and subsidies for external educational and training programmes. The Company adopted a share option scheme for its Directors and employees on 23 December 2005.

3. For the year ended 31 December 2007

BUSINESS REVIEW

Overview of results

For the year ended 31st December, 2007, the Group recorded a turnover from continuing operations of HK$289,780,000 (2006: HK$148,938,000), representing an increase of approximately 94.6% from the previous year. The increase was largely due to higher entertainment event income and the consolidation of the financial results of Media Asia Entertainment Group Limited (“MAEG”) following the completion of the privatisation and delisting of MAEG on the Singapore Stock Exchange in August 2007.

For the year under review, the Group recorded a profit from operating activities of HK$324,189,000 (2006: HK$857,066,000), representing a decrease of approximately 62.2% from the previous year.

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The decrease in profit from operating activities as compared to the previous year was mainly due to: (i) the amount of a gain on sale of a 20% effective interest in Macao Studio City to CapitaLand Integrated Resorts Pte. Limited (“CapitaLand Integrated Resorts”) of HK$499,969,000 versus a gain on sale of a 40% effective interest in Macao Studio City project to New Cotai, LLC (“New Cotai”) of HK$974,556,000 in the previous year, (ii) the increase in total expenses (marketing, administrative and other operating) for the year ended 31st December, 2007 of HK$276,390,000 (2006: HK$193,461,000), exceeded the amount of increase in other revenue (mainly interest income) and other operating gains for the year ended 31st December, 2007 of HK$62,758,000 (2006: HK$18,628,000) and HK$4,751,000 (2006: HK$24,280,000) respectively. The increase in total expenses was attributed to the increase in headcount of executives and staff to oversee the various business operations of the Group and the joint venture development of Macao Studio City project, as well as the consolidation of the expenses related to MAEG.

For the year ended 31st December, 2007, the Group recorded a profit after tax from continuing operations of HK$924,351,000 (2006: HK$1,180,992,000). During the year, the Group discontinued its satellite television operations and such discontinued operation incurred a loss of HK$35,827,000 (2006: a loss of HK$30,924,000).

For the year ended 31st December, 2007, the Group achieved a consolidated profit attributable to equity holders of the Company of HK$895,710,000 (2006: HK$1,150,068,000), representing a reduction by approximately 22.1% as compared to the previous year. Share of profits of associates (in this case, mainly Lai Sun Development Company Limited (“LSD”)) of HK$642,044,000 was up by approximately 87.0% from HK$343,360,000 of the previous year. The amount of the share of losses of jointly-controlled entities (in this case, mainly Macao Studio City joint venture) of HK$32,147,000 was up by approximately 284.4% from HK$8,363,000 of the previous year.

Shareholders’ equity as at 31st December, 2007 amounted to HK$4,669,218,000, up from HK$3,624,693,000 as at 31st December, 2006. Net asset value per share as at 31st December, 2007 was HK$5.64, as compared to HK$4.42 as at 31st December, 2006.

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Macao Studio City

Macao Studio City will be one of Asia’s leading integrated leisure resort combining theatre/concert, live entertainment facilities, Studio RetailTM (a destination retail complex), Las Vegas style gaming facilities and world class hotels. The project will be developed on a site strategically located “Where Cotai BeginsTM”, next to the new Lotus Bridge immigration checkpoint, linking the complex directly to Zhuhai’s Hengqin Island.

Joint venture arrangements

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Following the completion of the disposal of a 40% and a 20% effective interest in the Macao Studio City project to New Cotai and CapitaLand Integrated Resorts respectively, the current simplified shareholding structure of Macao Studio City project is as follows:

CapitaLand The Company Integrated Resorts

66.7% 33.3%

New Cotai East Asia

40% 60%

Macao Studio City JV

100%

Macao Studio City project

Following completion of the sale of effective interests in Macao Studio City project, the Group received the initial sale considerations of HK$1,317,513,600 and HK$658,756,800 respectively from New Cotai in December 2006 and CapitaLand Integrated Resorts in March 2007, based on the currently approved gross floor area (“GFA”) of 3,659,760 square feet for Phase I of the project and based on HK$900 per square foot of GFA approved.

During the year, Macao Studio City JV submitted land grant modifications on land uses and to increase the developable gross floor area of the site to approximately 6,000,000 square feet. Macao Studio City JV has yet to receive formal approval to the same from the Macau government. Upon approval and satisfaction of other terms the Group should receive further sale considerations from New Cotai and CapitaLand Integrated Resorts.

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Hotel partnerships

During the year, Macao Studio City JV executed various agreements or memoranda of understanding regarding hotel components of the project. Phase I of Macao Studio City will involve the building of a luxury Ritz-Carlton Hotel (256 rooms) and W Hotel (563 rooms), a first-class Marriott Hotel (965 rooms) and a new super-luxury boutique hotel under the brand “The Tang Hotel” (118 rooms). These four world-class hotel partners of the Macao Studio City project will add over 1,900 hotel rooms to the Cotai area.

Retail partnership

On 29th January, 2008, Macao Studio City JV entered into certain agreements with a subsidiary of Taubman Centers, Inc. (“Taubman”) in respect of a joint venture to be established for the purpose of owning, developing and operating of retail shopping arcade in Phase I of Macao Studio City (“Phase I Retail Component”) and to document a right of first offer in respect of the retail component of Phase II of Macao Studio City.

Taubman is a global leader of the shopping center industry. Phase I Retail Component comprises retail space of approximately 904,000 square feet of GFA. Macao Studio City JV, which retains a 75% interest in the Phase I Retail Component, will develop the Phase I Retail Component in a joint venture with Taubman.

Under these agreements, Macao Studio City JV has sold to Taubman a 25% equity participation interest in the Phase I Retail Component for an initial cash consideration of approximately HK$376.80 million and re-imbursement of 25% of the development costs. Macao Studio City JV will further receive additional consideration, depending upon performance, of the Phase I Retail Component over time. The initial cash consideration of approximately HK$376.80 million has been calculated on the estimated value of 25% of the GFA of the Phase I Retail Component, determined at HK$1,667 per square foot.

Independent shareholders of the Company have also approved the relevant agreements in respect of the joint venture with Taubman at a special general meeting of the Company held on 18th March, 2008.

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Playboy Mansion Macao

In September 2007, the Company announced that Macao Studio City JV entered into agreements with a wholly-owned subsidiary of Playboy Enterprises International, Inc. (“Playboy”) to develop “Playboy Mansion Macao” in Phase I of Macao Studio City project. Playboy Mansion Macao will be a Playboy-inspired multi-use entertainment venue of approximately 30,000 to 40,000 square feet.

Financing

According to the latest development plan of Macao Studio City project, Phase I of the project will require a development cost of approximately US$1.7 billion (including, but not limited to, hard construction costs, fixtures and equipment, soft and consultancy costs, contingency, interest coverage and pre- opening expenses, but excluding land value).

As the sub-prime mortgage crisis in the US emerged in 2007, the widespread dispersion of credit risk caused financial institutions to reduce lending activity or to make loans at higher interest rates. The deteriorating global credit and bond markets negatively affected and delayed the anticipated debt fundraising exercise of Macao Studio City. As of the date of this report, Macao Studio City JV is still working with banks on the debt financing element of the project.

In view of the difficult credit market conditions, shareholders of Macao Studio City JV entered into a memorandum of understanding on 9th November, 2007 that, amongst other things, called for the proposed injection of additional capital into the joint venture and the granting of other financial support by its shareholders. As envisaged by such Memorandum of Understanding, shareholders of Macao Studio City JV agreed to increase shareholders’ contribution to Macao Studio City project, on a several basis, to US$500 million, subject to the approval of eSun shareholders and further negotiation of definitive documents to reflect and expand upon matters agreed in the Memorandum of Understanding. As at date of this report, the shareholders of Macao Studio City JV have already contributed capital of US$200 million.

Assuming the definitive documents are settled and entered into, and the relevant terms are approved by eSun shareholders, eSun’s outstanding funding

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commitment to Macao Studio City JV will be US$120 million (equivalent to approximately HK$936 million), being 40% of the additional capital of US$300 million.

The current situation is that the parties have yet to finalise the long term definitive documentation envisaged by the Memorandum of Understanding. However, eSun remains committed to negotiating in good faith with a view to concluding the definitive documents. Given the delay in agreeing the definitive documentation, it is now permissible for any party to terminate the Memorandum of Understanding. As at the date of this report, no party has taken this step.

Until the definitive documents can be agreed, the obligation on the Company’s subsidiary, East Asia, to make the additional funding contributions of US$180 million (i.e. 60% of the US$300 million) to the Macao Studio City JV as envisaged by the Memorandum of Understanding, has yet to become legally-binding. As such, the obligation on the Company to make its pro-rata contribution towards this US$180 million sum (i.e. US$120 million, being two-thirds thereof) has also yet to become legally-binding.

Although, the longer timeframe required to finalise the definitive documents may prolong the time needed to settle the overall funding plan for the Macao Studio City project, the Company remains firmly committed to the Macao Studio City project and is determined to proceed with its rights issue, as announced in March 2008. The rights issue is not and has never been conditional upon finalising the definitive documents and, as previously announced, the Company wishes to have sufficient capital available for the Macao Studio City project, however the project evolves, and otherwise for its general working capital purposes.

Construction

The ground breaking ceremony of Macao Studio City project was held in January 2007. Foundation work for Phase I of the project has been completed. We anticipate the construction work for Phase I would commence upon finalisation of the loan financing element of the project.

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Media and entertainment

Film production and distribution — MAEG

Following the closing of the voluntary cash offer on 11th June, 2007, the Group held a 98.44% interest in MAEG. The financial results of MAEG had since then been consolidated into the Group. In August 2007, the Group completed the privatisation and delisting of MAEG on the Singapore Stock Exchange and MAEG became a wholly-owned subsidiary of the Group.

After completion of the privatisation, the Group would be able to enjoy greater autonomy over MAEG’s business direction and better control over deployment and utilisation of resources. The increase in the Group’s interest in MAEG will enhance the Group’s media and entertainment business portfolio and promote synergies with other business units of the Group. For the year ended 31st December, 2007, the MAEG Group contributed a turnover of HK$84,088,000 and a gross profit of HK$15,830,000 to the Group’s consolidated results.

In 2007, MAEG released 5 films – Hooked On You, Triangle, Wedding, The Warlords and Assembly. Among these films, The Warlords, a mega-budget film directed by Peter Chan and featuring Asia’ top actors – Jet Li, Andy Lau, Takeshi Kaneshiro, and Assembly, a Chinese war drama directed by Feng Xiaogang. The box-office receipt of The Warlords and Assembly are among the top three movies in the Mainland of China last year.

In 2007, MAEG’s films released last year continued to receive industry recognitions in local and international film festivals. The Banquet won the Best Supporting Actress at The 26th Hong Kong Film Awards, and the Best Supporting Actress, the Best Art Direction and the Best Original Theme Song at The 12th Golden Bauhinia. Confession of Pain won the Best Cinematography and the Best Sound Effect at The 12th Golden Bauhinia, and the Best Cinematography at The 26th Hong Kong Film Awards. Exiled won the Best Picture, the Best Director and the Top Ten Film of the Year at The 12th Golden Bauhinia. In the upcoming 27th Hong Kong film award, The Warlords received 13 nominations including Best Film, Best Director, Best Actors, Best Acting and Best Cinematography.

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Film library

As at 31st December, 2007, the film rights and film products of the Group represented mainly all rights, titles and interests in an aggregate of 161 films, of which 130 film rights are beneficially owned by the Group (excluding the MAEG Group) and the remaining 31 film products are beneficially owned by the MAEG Group with an aggregate carrying value of approximately HK$199 million (2006: HK$134 million).

Live entertainment

In 2007, the Group’s live entertainment division maintained its dominant market share position in Hong Kong, and produced and participated in aggregate 154 concerts and entertainment events by popular local and Asian artistes including: Andy Lau, Sammi Cheng, Denise Ho, Ayumi Hamasaki, in cooperation with leading Japan music label, Avex Group, and Tsai Chin as well as produced highly acclaimed theater musicals such as Once in a Life Time.

Music production and distribution

In 2007, the Group’s music production and distribution divisions released 42 albums, including titles for “Everyone is No. 1” for Andy Lau, “This Is Mi” for Sammi Cheng, “We Stand As One and Live In Unity 2006 演唱會” for Denise Ho, “4 In Love” for Leon Lai, “空前絕後” for Andy Hui, “Meridian” for Miriam Yeung, “Once in a Life Time” and “東亞萬歲”.

In 2007, the Group successfully concluded contracts with Andy Lau and released his “Everyone is No. 1” album. In addition, under the same deal, the Group acquired a music library containing over 600 songs and 250 MVs with the intention to expand its new media distribution business.

In the same year, the Group has also obtained the administrative rights of a number of composers/lyricists including Peter Kam, Chan Siu Kei, Mini Choi Min Lai and Nan Yik Pong.

— 106 — APPENDIX III MANAGEMENT DISCUSSIONS AND ANALYSES ON THE GROUP AND THE LAI FUNG GROUP

Satellite television

Taking into account the current business environment and conditions and the expected pattern of inflow of economic benefits, the Group decided to focus its resources on media and entertainment contents production. Accordingly, the satellite television division ceased its broadcast in the Mainland and Hong Kong from January 2008 and April 2008 respectively.

Television drama and content production

As part of the Group’s effort to become a comprehensive entertainment Chinese language content platform in Greater China, the Group has decided to expand its entertainment offerings to include TV drama business. During the year, the Group has commenced discussions with renowned directors/ producers and artists in Mainland China to produce television dramas and contents.

LSD

For the year ended 31st December, 2007, LSD continued to benefit from the continued rental reversion from its investment properties, from the increase in average daily room rate of its hotel operations, from its disposal of hotel assets and from its share of profits of the Group as a result of the cross- holding shareholdings between LSD and the Company.

Property Development — Wanchai Wood Road Project

This joint residential development project is a 50:50 joint venture between LSD and a unit of AIG Global Real Estate Investment (Asia) LLC. The development has a planned total gross floor area of approximately 140,000 square feet and a total development cost is now estimated to be about HK$1 billion.

Foundation work started in November 2007 and is expected to be completed by September 2008. Construction will start thereafter and is scheduled for completion by 2011.

— 107 — APPENDIX III MANAGEMENT DISCUSSIONS AND ANALYSES ON THE GROUP AND THE LAI FUNG GROUP

Property Development — Tai Po Road Project

In August 2007, LSD completed the acquisition of a site situated at Nos. 20, 22, 24, 26 and 28 Tai Po Road, Kowloon, Hong Kong for a consideration of HK$303 million. LSD owns 100% of this development project. The development has a planned total gross floor area of over 60,000 square feet mainly for residential use and a total development cost is now estimated to be about HK$450 million.

Foundation work is expected to be started in mid April 2008 and completed by September 2008. Construction will start thereafter and is scheduled for completion by 2010.

Disposal of 50% interest in Majestic Hotel and Majestic Centre

In July 2007, LSD completed the disposal of its 50% interest in Majestic Hotel and Majestic Centre, Kowloon, Hong Kong. LSD received its share of the sale proceeds, after repayment of the bank loan secured by the subject property, of approximately HK$600 million.

Redevelopment of The Ritz-Carlton Hong Kong site

In December 2007, LSD together with the other three remaining shareholders of Diamond String Limited (the company which owns the property of The Ritz-Carlton Hong Kong) (“Diamond String”) completed the sale of a total of 40% interest in Diamond String to CCB International Group Holdings Limited (“CCB International”), a wholly-owned subsidiary of China Construction Bank Corporation (“CCB”). Out of the aforesaid 40% interest, LSD sold 16.57% interest in Diamond String and received a sale consideration of approximately HK$567 million (subject to adjustment). The hotel operation of The Ritz- Carlton Hong Kong was terminated on 1st February, 2008.

Immediately following this disposal, LSD and CCB International held 60% and 40% interest in Diamond String respectively. Both parties, through Diamond String, will invest in the redevelopment of the site of The Ritz- Carlton Hong Kong into a Grade-A office tower.

— 108 — APPENDIX III MANAGEMENT DISCUSSIONS AND ANALYSES ON THE GROUP AND THE LAI FUNG GROUP

PROSPECTS

Overall

Macao Studio City project will dramatically transform the Group’s businesses. Given its mega-scale and its unique positioning in Macau  a new integrated leisure, convention and retail centre in Asia, we expect Macao Studio City will stand as one of the major entertainment destinations for visitors from Greater China and other parts of the world. It will become an important platform for the Group to expand and monetarise its entertainment and media expertise. The Group’s current prime objective is to ensure smooth execution of Phase I of Macao Studio City.

Macao Studio City

The joint venture shareholders and component partners provide the project with world-class expertise in different areas and complement the Group’s strong position in the media and entertainment sector.

As mentioned above, the Company remains firmly committed to the Macao Studio City project and is determined to proceed with its fully-underwritten 1-for-2 rights issue to raise net proceeds of around HK$1 billion as announced in March 2008. The rights issue is conditional upon LSD shareholders passing a resolution to permit LSD to participate in the rights issue but is not and has never been conditional upon finalising the definitive documents. As previously announced, the Company wishes to have sufficient capital available for the Macao Studio City project, however the project evolves, and otherwise for its general working capital purposes. With the increase in shareholders’ contribution, Macao Studio City JV will have a very substantial equity base comprising shareholders contribution and the land value. Even though the global credit market still remains unstable, Macao Studio City JV targets to complete the debt financing exercise within this year in order to finance the development of Phase I of the project.

Construction for super-structure work of Phase I of the project will commence once the debt financing exercise is finalised. Construction schedule and formal opening of Phase I will now depend on timing of the conclusion of the debt financing exercise. The Group however targets completion of Phase I in 2010, subject to financing.

— 109 — APPENDIX III MANAGEMENT DISCUSSIONS AND ANALYSES ON THE GROUP AND THE LAI FUNG GROUP

Media and entertainment

The Group’s vision is to become the top five Chinese language content entertainment company in Greater China. Key initiatives in 2008 include 1) expand the Group’s footprint into the Mainland (the “PRC”) in all segments of our entertainment offering; 2) initiate/source TV drama production/co- production opportunities in the PRC; and 3) engage in music publishing business.

Film production and distribution

After privatising MAEG in 2007, the film production and distribution division initiatives in 2008 include 1) continued building momentum of the Group by steadily increasing the number of films produced per annum with the aim of expanding market share as well as diversifying earnings risk as a result of over reliant on small number of films produced per annum; 2) fully deploy our relationships with leading/reknown director and producer that MAEG has co-operated with in the past including Mr. Johnnie To and Mr. Andrew Lau to increase the number of quality films produced; 3) expand film revenue base in multiple geographies by engaging into relationships with leading studios beyond Greater China.

MAEG is also planning a number of big budget films in the coming years. It intends to increase its yearly total investments in film production with its internal resources and other external sources, including but not limited to, jointly produced with independent film funds.

Live entertainment

Live Entertainment division sees great opportunity in expanding footprints in multiple geographies. 2008 initiatives include 1) maintain our live entertainment dominant market leadership position in Hong Kong; 2) expand into live entertainment promotion business in the PRC; 3) make our debut into the live entertainment promotion business into Macao; 4) strategically develop long run live entertainment projects; and 5) source/train more talent new singers/composers/lyric writers.

In 2008, the live entertainment division of the Group has already scheduled its own production of 22 concerts and entertainment events by popular local artistes and participation in the other promoters production of 11 other concerts, already involving around 46 shows in total.

— 110 — APPENDIX III MANAGEMENT DISCUSSIONS AND ANALYSES ON THE GROUP AND THE LAI FUNG GROUP

Music production, distribution and publishing

Music production and distribution main objectives include 1) increase our market share in Hong Kong with the goals of greatly enhancing East Asia Music, Amusic, and Clot Music brand presence in Southern China; and 2) debut East Asia Music expansion into Mandarin album release targeting the PRC market.

Despite continued challenge in dwindling physical music sales, the Group is cautiously optimistic with the outlook as 1) the shift in consumers pattern from physical to digital music sales offer unique opportunities to extract new revenue streams from digital sales; and 2) the indication over the longer term prospect of the digital music market in the PRC.

The Group entered into music publishing business in late 2007 through establishing East Asia Music Publishing. Music publishing is highly attractive 1) as evidenced by global music labels, music publishing offers recurring and stable cash flows; and 2) revenue streams are ever expanding as new digital media platform emerges globally, and particularly in the PRC, which slowly emerges to offer means to collect publishing fees.

Television drama

There are three distinct advantages to TV drama business in the PRC, namely 1) it offers stable recurring cash flow; 2) premium quality TV drama offers very stable margin and 3) it also offers the Group a window/opportunity to expand and develop our artiste management business in the PRC. Accordingly, the management intends to place more focus to develop and groom this business in the near future.

LSD

Property investment and development

LSD continues to improve its tenant mix in its investment properties so as to strengthen its rental income base. Other than its current development projects, LSD is also actively looking for new development projects in Hong Kong and overseas which offer good investment returns.

— 111 — APPENDIX III MANAGEMENT DISCUSSIONS AND ANALYSES ON THE GROUP AND THE LAI FUNG GROUP

Redevelopment of The Ritz-Carlton Hong Kong site

On 31st March, 2008, LSD completed the sale of a further 10% stake in Diamond String to CCB International for a total consideration of approximately HK$417 million (subject to adjustment). Immediately after the completion, LSD and CCB International own this redevelopment project on a 50:50 basis.

The buildable GFA for the redevelopment is approximately 225,000 square feet. Demolition work will start by end of April 2008. The redevelopment is expected to be completed in 2011.

The redeveloped office tower will become a landmark property in Central, Hong Kong. Part of the redeveloped property, upon its completion, will be used by CCB as offices of its Hong Kong operations. The Group is very excited to partner with CCB for the redevelopment of The Ritz-Carlton Hong Kong. The partnership with CCB marks a vital move for the future development of the Company.

LIQUIDITY, FINANCIAL RESOURCES, CHARGE ON ASSETS, GEARING AND CAPITAL COMMITMENTS

As at 31st December, 2007, cash and cash equivalents held by the Group amounted to HK$1,126,017,000 of which over 88% were denominated in Hong Kong dollar currency.

As at 31st December, 2007, the Group has unsecured promissory notes payables of HK$10,000,000 falling due within one year, HK$20,000,000 falling due within the second year and HK$30,219,000 falling due within the third to fifth years, respectively. The promissory notes payables are interest- free except for an amount of HK$30,000,000 which bears interest at 3.5% per annum. As at 31st December, 2007, the unsecured other borrowings from a former shareholder of the Company with the principal amount of HK$112,938,000 is interest-bearing at the HSBC prime rate per annum and is not repayable within one year. The Group recorded interest accruals of HK31,001,000 for the other borrowings as at 31st December, 2007. In addition, certain land and buildings of the Group with a carrying amount of HK$62,422,000 were pledged to a bank to secure general banking facilities granted to the Group. As at 31st December, 2007, the general banking

— 112 — APPENDIX III MANAGEMENT DISCUSSIONS AND ANALYSES ON THE GROUP AND THE LAI FUNG GROUP

facilities were not utilised by the Group. Also, the Group has finance lease payables of HK$65,000 falling due within one year, HK$68,000 falling due within the second year and HK$126,000 falling due within the third to fifth years, as at 31st December, 2007.

The Group’s debt to equity ratio, expressed as a percentage of total borrowings to total net assets, remained low at approximately 4% as at 31st December, 2007. All of the Group’s borrowings are denominated in Hong Kong dollars and the majority of which are floating rate debts. No financial instruments for hedging purposes were employed by the Group during the year under review.

The Group believes that its cash holdings and the available banking facilities will be sufficient to fund its working capital requirements.

CONTINGENT LIABILITIES

Details of contingent liabilities of the Group at the balance sheet date are set out in note 41 to the financial statements.

EMPLOYEES AND REMUNERATION POLICIES

The Group employed a total of approximately 280 employees as at 31st December, 2007. The total staff costs including share-based payment and pension contributions for the year ended 31st December, 2007 were approximately HK$121,936,000. Pay rates for employees are maintained at competitive level, salary and bonuses are rewarded on a performance related basis. Other staff benefits include free hospitalisation insurance plan, subsidised medical care and subsidies for external educational and training programmes. The Company adopted a share option scheme for its directors and employees on 23rd December, 2005.

— 113 — APPENDIX III MANAGEMENT DISCUSSIONS AND ANALYSES ON THE GROUP AND THE LAI FUNG GROUP

B. MANAGEMENT DISCUSSION AND ANALYSIS ON THE LAI FUNG GROUP

Set out below is the management discussion and analysis on the Lai Fung Group as extracted from the annual reports of Lai Fung for each of the three years ended 31 July 2009 and the interim report for the six months ended 31 January 2010 (the “Lai Fung Management Discussion and Analysis”). Terms used below shall have the same meanings as those defined in the Lai Fung Management Discussion and Analysis.

1. For the six months ended 31 January 2010

OVERVIEW OF INTERIM RESULTS

For the six months ended 31 January 2010, the Group recorded a turnover of HK$877,341,000 (2009: HK$148,092,000) and a gross profit of HK$639,112,000 (2009: HK$109,488,000), representing an increase of approximately 492.4% and 483.7% respectively from the previous corresponding period.

Out of the total turnover, gross rental income decreased by 34.8% from HK$120,147,000 to HK$78,291,000, which was mainly due to closure and renovation of the shopping arcades and serviced apartments portions of Shanghai Hong Kong Plaza. Owing to further contribution from the sales of residential units of Shanghai Regents Park Phase II during the six months ended 31 January 2010, turnover from sales of properties increased substantially from HK$27,945,000 to HK$799,050,000. Gross profit margin remained stable at 72.8%, compared to 73.9% in the previous corresponding period.

During the period, the Group recorded the following major non-operating income/expenses items:

— a provision for impairment loss on certain properties under development of HK$35,375,000 (2009: a provision of HK$62,668,000);

— a fair value gain on its completed investment properties of HK$151,074,000 (2009: a loss of HK$64,278,000); and

— 114 — APPENDIX III MANAGEMENT DISCUSSIONS AND ANALYSES ON THE GROUP AND THE LAI FUNG GROUP

— a fair value gain on its investment properties under construction of HK$124,841,000 (2009: Nil) due to the Group’s adoption of HKAS 40 Amendment. Prior to the adoption of Amendment to HKAS 40, the Group’s investment properties under construction were carried at cost until the construction is completed, at which time it will be fair valued. As a result of the HKAS 40 Amendment, such investment properties under construction will be carried at fair value when the fair value first becomes reliably measurable. Any gain or loss will be recognised in profit or loss, consistent with the policy adopted for all other investment properties carried at fair value.

During the previous corresponding period of the six months ended 31 January 2009, the Group recorded a gain of HK$256,311,000 on the termination of all cross currency swaps. As these cross currency swaps were fully terminated during the previous corresponding period, no such gain was recorded again during the six months ended 31 January 2010.

Finance costs expensed during the period reduced to HK$44,187,000 (2009: HK$66,539,000), after finance costs of HK$47,149,000 (2009: HK$34,765,000) had been capitalised in properties under development, investment properties and property, plant and equipment during the period.

For the six months ended 31 January 2010, profit from operating activities was HK$815,233,000 (2009: HK$203,389,000) and profit attributable to equity holders of the Company was HK$356,678,000 (2009: HK$140,716,000), representing an increase of approximately 300.8% and 153.5% respectively from the previous corresponding period.

Basic earnings per share was HK4.43 cents for the six months ended 31 January 2010 compared to HK1.75 cents for the previous corresponding period.

Shareholders’ equity as at 31 January 2010 amounted to HK$7,555,401,000, up from HK$7,210,784,000 as at 31 July 2009. Net asset value per share attributable to equity holders of the Company was HK$0.94 as at 31 January 2010, as compared to HK$0.90 as at 31 July 2009.

— 115 — APPENDIX III MANAGEMENT DISCUSSIONS AND ANALYSES ON THE GROUP AND THE LAI FUNG GROUP

BUSINESS REVIEW

Investment properties

Property rental results

During the six months ended 31 January 2010, the Group recorded a turnover of HK$78,291,000 from rental income. Breakdown of turnover from rental income is as follows:

Six months ended 31 January 2010 2009 Change HK$ HK$ %

Shanghai Hong Kong Plaza 32,044,000 76,491,000 (58.1)

Shanghai Regents Park (commercial podium and carparking spaces) 3,491,000 3,294,000 6.0

Shanghai Northgate Plaza I 9,632,000 10,263,000 (6.1)

Guangzhou May Flower Plaza 32,630,000 30,099,000 8.4

Others 494,000 —n/a

Total 78,291,000 120,147,000 (34.8)

During the period, the decrease in rental income from Shanghai Hong Kong Plaza was mainly due to closure of its shopping arcades and serviced apartments portions for renovation work. As the Group is now considering renovation plan and new trade-mix for Shanghai Northgate Plaza I, rental income for this property also recorded negative growth as some of the previous tenants opted to move out of the property.

On the other hand, rental income from Guangzhou May Flower Plaza recorded a healthy growth for the period under review.

— 116 — APPENDIX III MANAGEMENT DISCUSSIONS AND ANALYSES ON THE GROUP AND THE LAI FUNG GROUP

Development properties

Contracted sales of development properties

During the six months ended Cumulative unrecorded contracted sales 31 January 2010 as at 31 January 2010 Approximate Approximate average Total average Cumulative Contracted contracted contracted Contracted contracted contracted sales area selling price sales amount sales area selling price sales amount sq.m. HK$/sq.m. HK$ sq.m. HK$/sq.m. HK$

Shanghai Regents Park, Phase II 19,330 43,500 841,548,000 — — —

Guangzhou West Point Residential Units 574 17,400 10,002,000 21,986 15,000 329,748,000 Office Units 6,787 14,500 98,332,000 6,787 14,500 98,332,000

Total 26,691 949,882,000 28,773 428,080,000

Sales of development properties recorded

During the six months ended 31 January 2010 Approximate average Total Recorded recorded recorded sales sales area selling price amount* sq.m. HK$/sq.m. HK$

Shanghai Regents Park, Phase II 19,330 43,500 799,050,000

* After business tax

During the period, the Group concluded total contracted sales area of approximately 26,691 sq.m. which are residential units of Shanghai Regents Park Phase II and residential and office units of Guangzhou West Point.

— 117 — APPENDIX III MANAGEMENT DISCUSSIONS AND ANALYSES ON THE GROUP AND THE LAI FUNG GROUP

During the period, the Group recorded turnover from sales of the residential units at Shanghai Regents Park Phase II during the six months ended 31 January 2010. Contracted sales of residential and office units at Guangzhou West Point during the six months ended 31 January 2010 and during earlier periods will be recorded in the second half of this financial year ending 31 July 2010.

MARKET OVERVIEW AND OPERATING ENVIRONMENT

The Group is principally engaged in property development for sale and property investment for rental purposes in the Mainland of China (“China”). The Group currently has property projects in Shanghai, Guangzhou and Zhongshan.

During the period under review, China’s property market experienced more- than-expected surges in transaction volume and total investment. Such bullish sentiment was inevitably a result of the massive economic stimulus packages and quantitative credit easing policies implemented by the Central Government since the beginning of 2009. There are now varying views in the market on whether and how the Central Government should retract those previously imposed stimulus policies, including monetary easing and support measures for China’s real estate sector. The market now further anticipates fine tuning on existing policies such as bank credit control and further adjustment in property-related tax policies, in order to keep the surging housing prices at a reasonable level and suppress speculative demand.

Overall, the Group is cautiously optimistic about the China property market and will continue its construction and property sales schedule plan according to market developments.

REVIEW OF MAJOR PROPERTY PROJECTS

Shanghai

Shanghai Hong Kong Plaza

Shanghai Hong Kong Plaza is a twin-tower prime property located at Huaihaizhong Road, Luwan District, Shanghai comprising office, shopping arcades and serviced apartments. The property is directly above Huangpi

— 118 — APPENDIX III MANAGEMENT DISCUSSIONS AND ANALYSES ON THE GROUP AND THE LAI FUNG GROUP

South Road Metro Station and is within walking distance of Xintiandi. Rental income for the six months ended 31 January 2010 amounted to HK$32,044,000, down by 58.1% from HK$76,491,000 in the previous corresponding period. Such decrease in rental income was mainly due to closure of its shopping arcades and serviced apartments portions for renovation work.

Landlord’s renovation work on the shopping arcades under both towers have been substantially completed. At present, about 70% of the leasable areas of the shopping arcades portion have been pre-leased. In the past months, the Group has successfully secured The Apple Store, Cartier, Coach and Tiffany as anchor tenants which will open flagship stores in Shanghai Hong Kong Plaza’s shopping arcades. Other signed tenants include well-known luxury brands and high-end restaurants. Tenant’s renovation works are now in active progress. Shanghai Hong Kong Plaza’s shopping arcades are now expected to re-open in mid-2010 in line with Shanghai Expo 2010. Upon its re-opening, Shanghai Hong Kong Plaza’s shopping arcades will be one of the most visible high-end retail venues for global luxury brands in Huaihaizhong Road area.

The serviced apartments portion of Shanghai Hong Kong Plaza under the Group was vacated for full renovation since August 2009 to upgrade the quality of the rooms and the services. The Group has engaged the Ascott Group to manage the serviced apartments portion, and hopes this will enable the Group to leverage on the Ascott Group’s extensive experience and expertise in operating serviced apartments and to establish a high-end brand image. Soft-opening of the re-branded serviced apartments of Hong Kong Plaza is expected to take place in mid-2010.

Renovation of common areas and lift lobbies of the office tower was completed at the end of 2009. As at 31 January 2010, the office tower was about 80% leased. As renovation of the entire Shanghai Hong Kong Plaza will be completed in the second half of 2010, the Group is confident that occupancy rate at the office tower will improve in future.

The rental income of Hong Kong Plaza is expected to be substantially improved from its current level upon its re-opening after the renovation. However, before its completion, the rental income will be further affected by the renovation for the rest of the financial year ending 31 July 2010.

— 119 — APPENDIX III MANAGEMENT DISCUSSIONS AND ANALYSES ON THE GROUP AND THE LAI FUNG GROUP

Shanghai Regents Park Phase II

Regents Park is a major residential project located in the Zhongshan Park Commercial Area of the prestigious Changning District, Shanghai with a total saleable gross floor area (“GFA”) of approximately 154,000 square metres (“sq.m.”) (GFA attributable to the Group of approximately 146,000 sq.m.). The Group has an effective 95% interest in the project.

Phase II of the project comprises 6 residential towers with 455 units (total saleable GFA of approximately 62,845 sq.m. and GFA attributable to the Group of approximately 59,700 sq.m.). Phase II was completed in December 2008.

Up to 31 January 2010, the Group sold a total of 442 units with a total saleable GFA of 58,877 sq.m. at an average price of RMB33,900 per sq.m. As at 31 January 2010, the Group only had 13 units with a total saleable GFA of 3,969 sq.m. remaining in this project. The Group targets to maximise the sales proceeds for the remaining units.

Shanghai May Flower Plaza

Shanghai May Flower Plaza is a mixed-use project located at the junction of Da Tong Road and Zhi Jiang Xi Road in Su Jia Xiang in the Zhabei District in Shanghai. This project is situated near the Zhongshan Road North Metro Station. The Group has an effective 95% interest in the project.

The project has a total GFA of approximately 114,500 sq.m. (GFA attributable to the Group of approximately 109,000 sq.m.), comprising residential and office apartments, and commercial spaces. In addition, there will be approximately 33,000 sq.m. for carparks and ancillary facilities. Construction work is scheduled for completion in mid-2011. Pre-sale of the residential units is expected to start by the third quarter of 2010.

Shanghai Northgate Plaza

Shanghai Northgate Plaza I is a block of office units with retail podium located on Tian Mu Road West in the Zhabei District of Shanghai near the Shanghai Railway Terminal. Shanghai Northgate Plaza I has a total GFA of approximately 36,500 sq.m. including carparks. The Group is now considering renovation plan and new trade-mix for Shanghai Northgate Plaza I.

— 120 — APPENDIX III MANAGEMENT DISCUSSIONS AND ANALYSES ON THE GROUP AND THE LAI FUNG GROUP

The Group plans to develop Northgate Plaza II on the vacant site located adjacent to Phase I. The Group has 99.0% interest in Phase II. Phase II development will have a total GFA of approximately 28,800 sq.m. comprising serviced apartments with retail podium and carparking spaces. Foundation work was completed in August 2009.

The Group has re-submitted the design of Northgate Plaza II for government approval. Above-ground construction work is now expected to commence in the second half of 2010.

Guangzhou and Zhongshan

Guangzhou May Flower Plaza

Guangzhou May Flower Plaza is a prime property situated at Zhongshanwu Road, Yuexiu District directly above the Gongyuanqian Metro Station in Guangzhou, the interchange station of Guangzhou Subway Lines No. 1 and 2. The Group has an effective 77.5% interest in this property.

This 13-storey complex has a total GFA of approximately 51,000 sq.m. (GFA attributable to the Group of approximately 39,000 sq.m.) comprising retail spaces, restaurants and fast food outlets, cinema and office units. The property is fully leased to various tenants that are well-known corporations, consumer brands, cinemas and restaurants. Rental income from May Flower Plaza was HK$32,630,000 for the six months ended 31 January 2010, representing an healthy growth of approximately 8.4% from the previous corresponding period.

Guangzhou Eastern Place

Guangzhou Eastern Place is a multi-phase project located in Dongfeng East Road, Yuexiu District, Guangzhou.

The current Phase V development will have a total GFA attributable to the Group of approximately 101,000 sq.m. comprising residential blocks, a block of office or serviced apartments, and ancillary retail spaces. Construction work has commenced. Residential blocks are scheduled to be completed by the end of 2011 and the office/serviced apartment block is scheduled to be completed by mid-2012. Pre-sale of the residential units is now expected to start at the end of 2010 or in early 2011.

— 121 — APPENDIX III MANAGEMENT DISCUSSIONS AND ANALYSES ON THE GROUP AND THE LAI FUNG GROUP

Guangzhou West Point

Guangzhou West Point is located on Zhongshan Qi Road and is within walking distance from the Ximenkou Subway Station. The project has a total GFA of approximately 64,000 sq.m., comprising 243 residential units, 244 office units and commercial spaces. In addition, there will be approximately 10,000 sq.m. for carparks and ancillary facilities.

Completion certificate of the residential blocks of the project was delayed for issuance but was finally obtained in February 2010. The Group started the delivery of the pre-sold residential units to purchasers in March 2010. Up to 31 January 2010, the Group sold a total of 218 units with a total saleable GFA of 21,986 sq.m. at an average price of RMB13,200 per sq.m. As at 31 January 2010, the Group only has 25 residential units with a total saleable GFA of 2,278 sq.m. remaining in this project. The Group targets to sell the remaining units after completion of the project.

Completion certificate of the office block and the retail podium is expected to be issued in mid-2010. As at 31 January 2010, the Group sold 83 office units with a total saleable GFA of 6,787 sq.m. at an average price of RMB12,800 per sq.m..

Pre-leasing of the commercial spaces in this project progressed well and a number of anchor tenants including restaurants and retail brands have committed to establish outlets in Guangzhou West Point. The Group expects that the retail podium of the Guangzhou West Point will be open for business in mid-2010.

Guangzhou Jinshazhou Project

Guangzhou Jinshazhou project is a 50:50 joint venture with CapitaLand China Holdings Pte. Ltd. This proposed development in Hengsha, Baiyuan District, Guangzhou has a total GFA of approximately 369,000 sq.m. (GFA attributable to the Group of approximately 184,500 sq.m.), comprising low-rise and high- rise residential units with ancillary facilities including carparks and shopping amenities.

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The development plan of the project has been finalised. The project will be divided into four phases of similar sizes for development. It is now expected that construction of Phase I will commence in the second quarter of 2010 and pre-sale of Phase I residential units will commence by mid-2011. Completion of Phase I is expected to take place around the end of 2012.

Guangzhou Haizhu Plaza

Guangzhou Haizhu Plaza is located on Chang Di Main Road in Yuexiu District, Guangzhou along the Pearl River. The Group owns the entire interest in this project.

The proposed development has a GFA of approximately 103,000 sq.m., and is intended to be developed into a grade-A office tower, a serviced apartment tower, retail podium, carparks and ancillary facilities.

The project is currently in the final stage of resettlement work of original occupants, which is expected to be completed by the end of 2010.

Guangzhou Donghua Dong Road Project

The site is located on Donghua Dong Road in Yuexiu District. The permitted GFA is approximately 10,000 sq.m.. The project is intended to be developed into a residential tower, carparks and ancillary facilities. Construction is expected to start this year.

Guangzhou Da Sha Tou Road/Yuan Jiang Dong Road Project

The site is located at the junction of Da Sha Tou Road and Yuan Jiang Dong Road in Yuexiu District. The permitted GFA is approximately 8,000 sq.m.. The project is intended to be developed into a serviced apartment tower, carparks and ancillary facilities. Construction is expected to start this year.

Guangzhou Guan Lu Road Project

The site is located on Guan Lu Road in Yuexiu District. The permitted GFA is approximately 14,000 sq.m. The project is intended to be developed into a residential tower, carparks and ancillary facilities. Construction is expected to start this year.

— 123 — APPENDIX III MANAGEMENT DISCUSSIONS AND ANALYSES ON THE GROUP AND THE LAI FUNG GROUP

Zhongshan Palm Springs

The project is located in Caihong Planning Area, West District of Zhongshan. Having taken into account the prevailing market conditions after late 2008 and the expected supply from other developers in this area, the Group has revised the development plan and reduced the total GFA of Zhongshan Palm Spring project to approximately 406,000 sq.m. The Group believes that the lower density of the revised development plan will enhance the competitiveness of the products in today’s Zhongshan’s property market.

It is now planned that Phase I of the project will comprise high-rise residential towers with a total saleable GFA of approximately 44,000 sq.m., commercial areas with a total GFA of approximately 16,000 sq.m. and low-rise townhouses and semi-detached villas with a total saleable GFA of approximately 27,000 sq.m.. Construction of Phase I development has commenced and is now expected to complete in the first half of 2012. Pre-sale of residential units will start in early 2011.

CAPITAL STRUCTURE, LIQUIDITY AND DEBT MATURITY PROFILE

As at 31 January 2010, the Group had total borrowings in the amount of HK$2,800 million (as at 31 July 2009: HK$2,674 million), representing an increase of HK$126 million. The consolidated net assets attributable to the equity holders of the Company amounted to HK$7,555 million (as at 31 July 2009: HK$7,211 million). The total debt to equity ratio was 37% (as at 31 July 2009: 37%) and the total debt to total capitalisation (long-term debt + equity) ratio was 29% (as at 31 July 2009: 29%). The maturity profile of the Group’s borrowings of HK$2,800 million was spread with HK$628 million repayable within 1 year, HK$157 million repayable in the second year, HK$2,012 million repayable in the third to fifth years and HK$3 million repayable beyond 5 years.

Approximately 51% and 47% of the Group’s borrowings were on a fixed rate basis and floating rate basis respectively, and the remaining 2% of the Group’s borrowings were interest free.

Apart from the fixed rate senior notes, the Group’s other borrowings of HK$1,382 million were 43% denominated in Renminbi (“RMB”), 13% in Hong Kong dollars (“HKD”) and 44% in United States Dollars (“USD”). The Group’s cash and bank balances of HK$2,490 million were 67% denominated in RMB, 15% in HKD and 18% in USD. — 124 — APPENDIX III MANAGEMENT DISCUSSIONS AND ANALYSES ON THE GROUP AND THE LAI FUNG GROUP

The Group’s reporting currency is denominated in HKD. The Group’s monetary assets, liabilities and transactions are principally denominated in RMB, USD and HKD. The Group is exposed to foreign currency risk arising from the exposure of HKD against USD and RMB, respectively. Considering that HKD is pegged against USD, the Group believes that the corresponding exposure to USD exchange rate fluctuation is nominal. However, the Group has a net exchange exposure to RMB as the Group’s assets are principally located in China and the revenues are in RMB.

Certain assets of the Group have been pledged to secure financing, including investment properties with carrying value of approximately HK$4,929 million, serviced apartments with carrying value of approximately HK$607 million, a property with carrying value of approximately HK$42 million and bank balances of approximately HK$245 million.

Under a litigation in a district court in China, the Group, as the claimant, claimed for a total of RMB17 million from one of the Group’s contractors. As a measure to preserve the payment ability of the defendant, the Group applied to the local court to freeze certain assets of the defendant. In return, the Group pledged certain leasehold building with a carrying value of approximately HK$45 million to the court as collateral.

Taking into account cash held as at the end of the reporting period, available banking facilities and the recurring cashflows from the Group’s operating activities, the Group believes it has sufficient liquidity to finance its existing property development and investment projects.

CONTINGENT LIABILITIES

There is no material change in contingent liabilities of the Group since 31 July 2009.

EMPLOYEE AND REMUNERATION POLICIES

As at 31 January 2010, the Group employed a total of around 1,100 staff. The Group recognises the importance of maintaining a stable staff force in its continued success. Under the Group’s existing policies, employee pay rates are maintained at competitive levels, whilst promotion and salary increments are

— 125 — APPENDIX III MANAGEMENT DISCUSSIONS AND ANALYSES ON THE GROUP AND THE LAI FUNG GROUP

assessed on a performance-related basis. Discretionary bonuses are granted to certain employees on a merit basis and in accordance with industry practice. Other staff benefits include a share option scheme, mandatory provident fund scheme for all eligible employees, free hospitalisation insurance plan, subsidised medical care and subsidies for external education and training programmes.

PROSPECTS

Since early 2009, the abundance of liquidity with a low bank lending rate, plus the relaxation of control measures, encouraged the resurfacing of housing demand in China. Starting from the second quarter of 2009, there has been a broad-based significant surge in property transaction volume and selling prices across China.

However, certain risks within today’s China’s property market should not be neglected. Government policy is still a key to market development. Due to the faster-than-expected surges in property prices in certain cities, especially the first-tier cities in China, it would not be surprising to see further implementation of government policies on curbing market irregularities and misbehavior as well as suppressing speculative demand in housing. These government measures, if they turn out to be drastic, could cause short term fluctuation in China’s property market.

In the medium and long term, ongoing urbanisation and demand for living improvement will foster healthy growth of the real estate market in China. Overall, the Group is still cautiously optimistic about the China property market and believes that we are well positioned for growth in the coming years. The Group’s net gearing level was low by industry standard. In addition, the Group will keep its construction schedules of its existing development projects to fuel growth in turnover and profits for future financial years. Furthermore, the Group will continue to grow its recurrent income base through upgrade of existing rental properties and addition of new venues through completion of commercial property portions of the new development projects.

— 126 — APPENDIX III MANAGEMENT DISCUSSIONS AND ANALYSES ON THE GROUP AND THE LAI FUNG GROUP

With the macro-economic condition as mentioned above, the Group will monitor the market closely and expand its landbank at appropriate time should there be a correction in land prices.

2. For the year ended 31 July 2009

RESULTS

For the year ended 31 July 2009, the Group recorded a turnover of HK$937,380,000 (2008: HK$868,001,000) and a gross profit of HK$632,436,000 (2008: HK$622,837,000), representing an increase of approximately 8.0% and 1.5% respectively from the previous year.

Out of the total turnover, rental income decreased by 14.0% from HK$254,160,000 to HK$218,525,000, which was mainly due to the adverse impact of renovation work on Shanghai Hong Kong Plaza. Owing to the contribution from sales of residential units of Shanghai Regents Park Phase II during the year ended 31 July 2009, turnover from sales of properties increased by 17.1% from HK$613,841,000 to HK$718,855,000. Mainly as a result of lower proportion of rental income compared to sales of development properties, gross profit margin decreased slightly to 67.5%, from 71.8% in the previous year.

During the year, the Group recorded the following major other operating income/expenses items:

— a gain of HK$256,311,000 on the termination of all cross currency swaps in October 2008. These cross currency swaps with an aggregate notional amount of US$200,000,000 (same amount as the 7-year maturity 9.125% fixed rate senior notes issued by the Company in April 2007 (the “Senior Notes”)) were intended to enable the Group to make interest and principal repayments of the Senior Notes at a fixed interest rate and at a contracted exchange rate of Renminbi (“RMB”) against United States dollars (“USD”);

— an exchange loss of HK$2,540,000 on a USD denominated bank loan (2008: a net exchange loss of HK$114,081,000 on a USD denominated bank loan and the cross currency swaps);

— 127 — APPENDIX III MANAGEMENT DISCUSSIONS AND ANALYSES ON THE GROUP AND THE LAI FUNG GROUP

— a gain of HK$29,579,000 on repurchase of certain Senior Notes. During the year, the Group repurchased Senior Notes amounting to an aggregate principal value of US$14,253,000;

— a fair value gain on its investment properties of HK$143,127,000 (2008: HK$398,515,000); and

— an impairment loss on certain properties under development of HK$60,680,000 (2008: HK$99,561,000).

Finance costs expensed during the year reduced to HK$118,588,000 (2008: HK$151,911,000), after an amount of HK$77,030,000 (2008: HK$54,130,000) had been capitalised in properties under development during the year.

For the year ended 31 July 2009, profit from operating activities was HK$886,631,000 (2008: HK$761,532,000) and profit attributable to equity holders of the Company was HK$406,888,000 (2008: HK$206,005,000), representing an increase of approximately 16.4% and 97.5% respectively from the previous year. The increase in profit from operating activities was mainly due to lower other operating expenses, net (as detailed above). Other than the increase in profit from operating activities, profit attributable to equity holders of the Company increased, partly due to lower finance costs expensed.

Basic earnings per share was HK5.06 cents for the year ended 31 July 2009 compared to HK2.56 cents for the previous year.

Shareholders’ equity as at 31 July 2009 amounted to HK$7,210,784,000, up from HK$6,909,222,000 as at 31 July 2008. Net asset value per share attributable to equity holders of the Company was HK$0.90 as at 31 July 2009, as compared to HK$0.86 as at 31 July 2008.

FINAL DIVIDEND

The Board of Directors has recommended a final dividend of HK0.5 cent per share for the year ended 31 July 2009 (2008: HK0.4 cent per share), payable to shareholders whose names appear on the register of members of the Company as at the close of business on 23 December 2009. Subject to the approval of shareholders at the forthcoming annual general meeting of the Company, the dividend will be payable on 6 January 2010.

— 128 — APPENDIX III MANAGEMENT DISCUSSIONS AND ANALYSES ON THE GROUP AND THE LAI FUNG GROUP

BUSINESS REVIEW

Investment properties

Property rental results

During the year ended 31 July 2009, the Group recorded a turnover of HK$218,525,000 from rental income. Breakdown of turnover from rental income is as follows:

Year ended 31 July 2009 2008 Change HK$ HK$ %

Shanghai Hong Kong Plaza 128,520,000 181,437,000 (29.2)

Shanghai Regents Park (commercial podium and carparking spaces) 7,332,000 6,028,000 21.6

Shanghai Northgate Plaza I 20,811,000 9,797,000 112.4

Guangzhou May Flower Plaza 61,214,000 56,898,000 7.6

Others 648,000 —n/a

Total 218,525,000 254,160,000 (14.0)

During the year, rental income from Shanghai Hong Kong Plaza recorded a decrease of 29.2% to HK$128,520,000, which was mainly due to closure of its shopping arcades for renovation work and a decrease in occupancy rate of the serviced apartments.

The Group’s share of rental income for Shanghai Northgate Plaza I for the previous year had been recorded under “Share of profits of associates” before the Group acquired the remaining interests in January 2008.

Rental income from Guangzhou May Flower Plaza recorded an increase of 7.6% to HK$61,214,000 for the year under review.

— 129 — APPENDIX III MANAGEMENT DISCUSSIONS AND ANALYSES ON THE GROUP AND THE LAI FUNG GROUP

Development properties

Contracted sales of development properties

Approximate Total average contracted Contracted contracted sales sales area selling price amount sq.m. HK$/sq.m. HK$

Shanghai Regents Park, Phase II 21,592 35,100 757,088,000

Guangzhou West Point, Residential Units 15,242 15,100 230,527,000

Total 36,834 987,615,000

Sales of development properties recorded

Approximate average Total Recorded recorded recorded sales sales area selling price amount* sq.m. HK$/sq.m. HK$

Shanghai Regents Park, Phase II 21,592 35,100 718,855,000

* After business tax

During the year, the Group concluded total contracted sales area of approximately 36,834 sq.m., which are residential units of Shanghai Regents Park Phase II and Guangzhou West Point.

The Group recorded the contracted sales of residential units at Shanghai Regents Park Phase II concluded during the year ended 31 July 2009 for the year under review. Contracted pre-sales of residential units at Guangzhou

— 130 — APPENDIX III MANAGEMENT DISCUSSIONS AND ANALYSES ON THE GROUP AND THE LAI FUNG GROUP

West Point during the years ended 31 July 2008 and 2009 will be recorded in the next financial year ending 31 July 2010 upon substantial completion of construction of the project.

MARKET OVERVIEW AND OPERATING ENVIRONMENT

During the year under review, China’s property market experienced great volatility. The austerity measures previously implemented by the Central Government in 2008 and the global financial turmoil in the fourth quarter of 2008 adversely affected market sentiment and volume of transactions of China’s real estate market and of the Group’s development properties available for sale in the whole of 2008. In response to the unfavourable market sentiment during this period, the Group rescheduled the construction program of some of its new development projects, and adjusted its sales programme in the first half of the year ended 31 July 2009.

Since the beginning of 2009, with the implementation of massive economic stimulating packages and relaxation of credit control by the Central Government and its central bank, China’s real estate market started to show strong recovery. Up to July 2009, primary transactions of residential sales at core city areas in Shanghai and Guangzhou have almost recovered to pre- financial crisis level in early 2008 in terms of both transaction volume and average selling prices. Such recovery was generally stronger than most of the market expectations. Utilising such prime opportunity, the Group, since the first quarter of 2009, geared up its marketing effort for its development properties available for sale and quickly achieved impressive sales results for Shanghai Regents Park Phase II and Guangzhou West Point. Despite the slow-down in the first half of the year under review, the Group concluded the financial year ended 31 July 2009 with sales targets and turnover well exceeding expectations.

— 131 — APPENDIX III MANAGEMENT DISCUSSIONS AND ANALYSES ON THE GROUP AND THE LAI FUNG GROUP

REVIEW OF MAJOR PROPERTY PROJECTS

Shanghai

Shanghai Hong Kong Plaza

Hong Kong Plaza is a twin-tower prime property located at Huaihaizhong Road, Luwan District, Shanghai comprising office, shopping arcades and serviced apartments. The property is directly above Huangpi South Road Metro Station and is within walking distance of Xintiandi. Rental income for the year ended 31 July 2009 amounted to HK$128,520,000, down by 29.2% from HK$181,437,000 in the previous year. Such decrease in rental income was mainly due to closure of shopping arcades at Hong Kong Plaza for renovation work.

Renovation work on the shopping arcades under the serviced apartment tower commenced in July 2008. The renovation of the shopping arcades under the office tower also commenced in March 2009. The Group is now negotiating with various potential tenants for the renovated shopping arcades, and expects to re-open both shopping arcades in mid-2010. Upon completion, Hong Kong Plaza’s shopping arcades will be one of the most visible high-end retail venues for global luxury brands in the Huaihaizhong Road area.

Common areas and lift lobbies of the office tower were being renovated during the year and such renovation will be completed by the end of 2009. In addition, the serviced apartment portion of Hong Kong Plaza under the Group was vacated for full renovation at the end of July 2009 to upgrade the quality of the rooms and the services. The Group has engaged the Ascott Group to manage the serviced apartment portion, and hopes this will enable the Group to leverage on the Ascott Group’s extensive experience and expertise in operating serviced apartments and to establish a high-end brand image. Soft-opening of the re-branded serviced apartments of Hong Kong Plaza is expected to take place in mid-2010.

The rental income of Hong Kong Plaza is expected to be substantially improved from its current level upon completion of renovation. However, before its completion, rental income will be further affected by the renovation for the next financial year ending 31 July 2010.

— 132 — APPENDIX III MANAGEMENT DISCUSSIONS AND ANALYSES ON THE GROUP AND THE LAI FUNG GROUP

Shanghai Regents Park Phase II

Regents Park is a major residential project located in the Zhongshan Park Commercial Area at the prestigious Changning District, Shanghai with a total saleable gross floor area (“GFA”) of approximately 154,000 square metres (“sq.m.”) (GFA attributable to the Group of approximately 146,000 sq.m.). The Group has an effective 95% interest in the project.

Pre-sale of the Phase II residential units was launched in April 2008. Up to 31 July 2009, the Group sold a total of 299 units with a total saleable GFA of 39,547 sq.m. at an average price of RMB31,700 per sq.m.. As such, the Group recorded the relevant consideration (after business tax) of approximately HK$718,855,000 (2008: HK$602,699,000) as turnover for the year ended 31 July 2009.

Since July 2009 and up to 31 October 2009, the Group sold a further 129 units with a total saleable GFA of 17,013 sq.m. at an average price of RMB38,000 per sq.m.. Such consideration (after business tax) of approximately HK$696,991,000 will be recognised as turnover in the next financial year ending 31 July 2010.

As at 31 October 2009, the Group only has 27 units with a total saleable GFA of 6,285 sq.m. remaining in this project. The Group targets to maximise the sales proceeds for the remaining units.

Shanghai May Flower Plaza

— 133 — APPENDIX III MANAGEMENT DISCUSSIONS AND ANALYSES ON THE GROUP AND THE LAI FUNG GROUP

approximately 33,000 sq.m. for carparks and ancillary facilities. Construction work commenced in October 2007 and is scheduled for completion in mid-2011. Pre-sale of the residential units is expected to start by the third quarter of 2010.

Shanghai Northgate Plaza

Northgate Plaza I is a block of office units with retail podium located on Tian Mu Road West in the Zhabei District of Shanghai near the Shanghai Railway Terminal. Northgate Plaza I has a total GFA of approximately 36,500 sq.m. including carparks.

The Group plans to develop Northgate Plaza II on the vacant site adjacent to Phase I. The Group has a 99.0% interest in Phase II. Phase II development will have a total GFA of approximately 28,800 sq.m. comprising serviced apartments with retail podium and carparking spaces. Foundation work was substantially completed in August 2009.

The Group is adjusting the design of Northgate Plaza II and will re-submit the new development plan for government approval. Superstructure work is expected to commence in 2010.

Guangzhou and Zhongshan

Guangzhou May Flower Plaza

This 13-storey complex has a total GFA of approximately 51,000 sq.m. (GFA attributable to the Group of approximately 39,000 sq.m.) comprising retail spaces, restaurants and fast food outlets, cinema and office units. The property is fully let to various tenants that are well-known corporations, consumer brands, cinemas and restaurants. Rental income from Guangzhou May Flower Plaza was HK$61,214,000 for the year ended 31 July 2009, representing an increase of approximately 7.6% from the previous year.

— 134 — APPENDIX III MANAGEMENT DISCUSSIONS AND ANALYSES ON THE GROUP AND THE LAI FUNG GROUP

Guangzhou Eastern Place

Eastern Place is a multi-phase project located in Dongfeng East Road, Yuexiu District, Guangzhou.

The current Phase V development will have a total GFA attributable to the Group of approximately 101,000 sq.m. comprising residential blocks, a block of office or serviced apartments, and ancillary retail spaces. Construction work has commenced. Residential blocks are scheduled to be completed by the end of 2011 and the office/serviced apartment block is scheduled to be completed by the middle of 2012. Pre-sale of the residential units is now expected to start at the end of 2010 or in early 2011.

Guangzhou West Point

West Point is located on Zhongshan Qi Road and is within walking distance from the Ximenkou Subway Station. The project has a total GFA of approximately 64,000 sq.m., comprising 243 residential units, 244 office units and commercial spaces. In addition, there will be approximately 10,000 sq.m. for carparks and ancillary facilities. The project is scheduled for completion by the end of 2009.

Pre-sale of residential units was started in July 2008. Up to 31 July 2009, the Group sold a total of 214 units with a total saleable GFA of 21,413 sq.m. at an average price of RMB13,200 per sq.m.. As such, the Group will record the relevant consideration (after business tax) of approximately HK$303,196,000 as turnover in the next financial year ending 31 July 2010. As at 31 October 2009, the Group only has 25 residential units with a total saleable GFA of 2,278 sq.m. remaining in this project. The Group targets to sell the remaining units after completion of the project.

Pre-sale of office units was started in September 2009. Since the launch of the pre-sale and up to 31 October 2009, the Group sold 35 office units with a total saleable GFA of 2,524 sq.m. at an average price of RMB12,700 per sq.m.. Such consideration (after business tax) of approximately HK$34,490,000 will be recognised as turnover in the next financial year ending 31 July 2010.

Pre-leasing of the commercial spaces in this project progressed well during the year and a number of anchor tenants including retail brands and restaurants have committed to establish outlets in West Point.

— 135 — APPENDIX III MANAGEMENT DISCUSSIONS AND ANALYSES ON THE GROUP AND THE LAI FUNG GROUP

Guangzhou Jinshazhou Project

The Jinshazhou project is a 50:50 joint venture with CapitaLand China Holdings Pte. Ltd. This proposed development in Hengsha, Baiyuan District, Guangzhou has a total GFA of approximately 369,000 sq.m. (GFA attributable to the Group of approximately 184,500 sq.m.), comprising low-rise and high- rise residential units with ancillary facilities including carparks and shopping amenities.

The development plan of the project has been finalised. The project will be divided into four phases of similar scale for development. It is now expected that construction of Phase I will commence in the second quarter of 2010 and pre-sale of Phase I residential units will commence by mid-2011. Completion of Phase I is expected to take place around or at the end of 2012.

Guangzhou Haizhu Plaza

Haizhu Plaza is located on Chang Di Main Road in Yuexiu District, Guangzhou along the Pearl River. The Group owns the entire interest in this project.

The project is currently in the process of resettlement, which is expected to be completed next year.

Guangzhou Donghua Dong Road Project

The site is located in Donghua Dong Road in Yuexiu District. The permitted GFA is approximately 10,000 sq.m. The project is currently at the planning stage and is intended to be developed into a residential tower, carparks and ancillary facilities. The project is now expected to be completed in 2012.

Guangzhou Da Sha Tou Road/Yuan Jiang Dong Road Project

The site is located at the junction of Da Sha Tou Road and Yuan Jiang Dong Road in Yuexiu District. The permitted GFA is approximately 8,000 sq.m..

— 136 — APPENDIX III MANAGEMENT DISCUSSIONS AND ANALYSES ON THE GROUP AND THE LAI FUNG GROUP

The project is currently at the planning stage and is intended to be developed into a serviced apartment tower, carparks and ancillary facilities. The project is now expected to be completed in 2012.

Guangzhou Guan Lu Road Project

The site is located in Guan Lu Road in Yuexiu District. The permitted GFA is approximately 14,000 sq.m.. The project is currently at the planning stage and is intended to be developed into a residential tower, carparks and ancillary facilities. The project is now expected to be completed in 2012.

Zhongshan Palm Springs

The project is located in Caihong Planning Area, West District of Zhongshan. Having taken into account the prevailing market condition after late 2008 and the expected supply from other developers in this area, the Group has revised the development plan and reduced the total GFA of Palm Springs project to approximately 406,000 sq.m.. The Group believes that the lower density of the revised development plan will enhance the competitiveness of the products in Zhongshan’s current property market.

It is now planned that Phase I of the project will comprise high-rise residential towers with a total saleable GFA of approximately 44,000 sq.m., commercial areas with a total GFA of approximately 16,000 sq.m. and low-rise townhouses and semi-detached villas with a total saleable GFA of approximately 27,000 sq.m.. Construction of Phase I development is expected to commence in the first quarter of 2010 and is expected to complete by the first half of 2012. Pre-sale of residential units will start in early 2011.

CAPITAL STRUCTURE, LIQUIDITY AND DEBT MATURITY PROFILE

As at 31 July 2009, the Group had total borrowings in the amount of HK$2,674 million (2008: HK$2,872 million), representing a decrease of HK$198 million. The consolidated net assets attributable to the equity holders of the Company amounted to HK$7,211 million (2008: HK$6,909 million). The total debt to equity ratio was 37% (2008: 42%) and the total debt to total capitalisation (long-term debt + equity) ratio was 29% (2008: 31%). The maturity profile of the Group’s borrowings of HK$2,674 million was spread with HK$582 million repayable within 1 year, HK$70 million repayable in the

— 137 — APPENDIX III MANAGEMENT DISCUSSIONS AND ANALYSES ON THE GROUP AND THE LAI FUNG GROUP

second year, HK$2,018 million repayable in the third to fifth years and HK$4 million repayable beyond 5 years.

Approximately 53% and 45% of the Group’s borrowings were on a fixed rate basis and floating rate basis respectively, and the remaining 2% of the Group’s borrowings were interest free.

Apart from the Senior Notes, the Group’s other borrowings of HK$1,259 million were 37% denominated in RMB, 15% in Hong Kong dollars (“HKD”) and 48% in USD. The Group’s cash and bank balances of HK$2,023 million were 44% denominated in RMB, 21% in HKD and 35% in USD.

In October 2008, the Group terminated the cross currency swap agreements and recorded a gain of HK$256,311,000. After the termination of the cross currency swap agreements, the Group does not have any derivative financial instruments or hedging instruments outstanding. The Group will constantly review the economic situation and its foreign currency risk profile, and will consider appropriate hedging measures in future as may be necessary.

Certain assets of the Group have been pledged to secure financing, including investment properties with carrying value of approximately HK$4,515 million, serviced apartments with carrying value of approximately HK$540 million, properties under development with carrying value of approximately HK$153 million, a property with carrying value of approximately HK$43 million and bank balances of approximately HK$190 million.

— 138 — APPENDIX III MANAGEMENT DISCUSSIONS AND ANALYSES ON THE GROUP AND THE LAI FUNG GROUP

the Group pledged certain leasehold building with a carrying value of approximately HK$46 million to the court as collateral.

Taking into account cash held as at the balance sheet date, available banking facilities and the recurring cashflows from the Group’s operating activities, the Group believes it has sufficient liquidity to finance its existing property development and investment projects.

CONTINGENT LIABILITIES

Details of contingent liabilities of the Group as at the balance sheet date are set out in note 35 to the financial statements.

EMPLOYEES AND REMUNERATION POLICIES

As at 31 July 2009, the Group employed a total of around 1,200 staff. The Group recognises the importance of maintaining a stable staff force in its continued success. Under the Group’s existing policies, employee pay rates are maintained at competitive levels, whilst promotion and salary increments are assessed on a performance-related basis. Discretionary bonuses are granted to certain employees on a merit basis and in accordance with industry practice. Other staff benefits include a share option scheme, mandatory provident fund scheme for all eligible employees, free hospitalisation insurance plan, subsidised medical care and subsidies for external education and training programmes.

PROSPECTS

In the past years, the real estate industry in China has been characterised by strong growth in housing demand and fluctuating government policies. In 2007, China’s property market experienced rapid development nationwide. In late 2007 and 2008, austerity measures by the Central Government triggered corrections of the overall property markets in China. In late 2008, the global financial turmoil further deteriorated the sentiment of China’s property market. In early 2009, abundant funds at a reasonable bank lending rate, plus the relaxation of control measures, encouraged the resurfacing of housing demand. Starting in the second quarter of 2009, there has been a broad-based market rebound with significant increase in property transaction volume and selling prices across China.

— 139 — APPENDIX III MANAGEMENT DISCUSSIONS AND ANALYSES ON THE GROUP AND THE LAI FUNG GROUP

The faster-than-expected market recovery in the second quarter of 2009 induced supply shortage in certain cities, especially the first-tier cities in China. As the new supply could not keep pace with the fast growing demand, in the short-term, it is widely expected that there will be a contraction in property transaction volume but steady price increase.

In the medium and long term, ongoing urbanisation and demand for living improvement will foster healthy growth of the real estate market in China. Since the outbreak of the global financial turmoil in 2008, the Central Government has placed significant emphasis on domestic consumption to fuel economic growth. Real estate as an important segment of domestic consumption will be a key beneficiary. It is widely expected that the Central Government would not easily make a drastic shift from its current favourable policies towards real estate. However, there would be adjustment policies to pace the property market and economic rhythm. By then, this could cause short-term fluctuation in the property market in China.

Overall, the Group is cautiously optimistic about China’s property market and believes that we are well positioned for growth in the coming years. The Group’s net gearing level was low by industry standard. Owing to its strong sales performance for Shanghai Regents Park Phase II and Guangzhou West Point, the Group has locked in substantial sales revenue for the next financial year. In addition, the Group has re-accelerated the construction schedules of other development projects to fuel growth in turnover and profits for the financial years beyond next year.

With the macro-economic condition as mentioned above, the Group will monitor the market closely and expand its landbank at the appropriate time. Furthermore, the Group will continue to grow its recurrent income base through upgrading of existing rental properties and addition of new ones upon completion of commercial property portions of the new development projects.

— 140 — APPENDIX III MANAGEMENT DISCUSSIONS AND ANALYSES ON THE GROUP AND THE LAI FUNG GROUP

3. For the year ended 31 July 2008

RESULTS

For the year ended 31 July 2008, the Group recorded a turnover of HK$868,001,000 (2007: HK$792,420,000) and a gross profit of HK$622,837,000 (2007: HK$425,309,000), representing an increase of approximately 10% and 46% respectively from previous year. Profit from operating activities was HK$761,532,000 (2007: HK$585,752,000) and profit attributable to equity holders of the Company was HK$206,005,000 (2007: HK$470,351,000), representing an increase of approximately 30% and a decrease of approximately 56% respectively from previous year.

The increase in profit from operating activities was mainly attributable to higher turnover, higher gross profit margin and higher revaluation gain on investment properties of the Group, despite an exchange loss of HK$160,102,000 (2007: HK$31,079,000) arising from the cross currency swap on the US$200 million senior notes issued in April 2007, which has been included in other operating expenses, net. The decrease in profit attributable to equity holders of the Company was mainly due to higher finance costs which included full-year interest expenses on the US$200 million senior notes and higher provision for corporate income tax and land appreciation tax as a result of sales of Regents Park Phase II. In addition, the deferred tax for the year ended 31 July 2008 also increased as a result of the increase in value of the Group’s investment properties while there were certain write-back of provisions on deferred tax as a result of adjustment in the corporate income tax rate in China for the year ended 31 July 2007.

Basic earnings per share was 2.56 HK cents for the year ended 31 July 2008 compared to 5.84 HK cents for the previous year.

Shareholders’ equity as at 31 July 2008 amounted to HK$6,909,222,000, up from HK$5,955,983,000 as at 31 July 2007. Net asset value per share attributable to equity holders of the Company was HK$0.86 as at 31 July 2008, as compared to HK$0.74 as at 31 July 2007.

— 141 — APPENDIX III MANAGEMENT DISCUSSIONS AND ANALYSES ON THE GROUP AND THE LAI FUNG GROUP

FINAL DIVIDEND

The Board of Directors has recommended a final dividend of 0.4 HK cent per share for the year ended 31 July 2008 (2007: 0.4 HK cent per share) payable to shareholders whose names appear on the Register of Members of the Company as at the close of business on 23 December 2008. Subject to the approval of the shareholders at the forthcoming Annual General Meeting of the Company, the dividend will be payable on 20 January 2009.

BUSINESS REVIEW

Investment properties

Property rental results

During the year ended 31 July 2008, the Group recorded a turnover of HK$254,160,000 from rental income. Breakdown of turnover from rental income is as follows:

Year ended 31 July 2008 2007 Change HK$ HK$ %

Shanghai Hong Kong Plaza 181,437,000 174,456,000 4 Regents Park (commercial podium) 6,028,000 —n/a Northgate Plaza I 9,797,000 —n/a

Guangzhou May Flower Plaza 56,898,000 46,617,000 22

Total 254,160,000 221.073.000 15

— 142 — APPENDIX III MANAGEMENT DISCUSSIONS AND ANALYSES ON THE GROUP AND THE LAI FUNG GROUP

Development properties

Property sales results

Approximate Approximate Approximate average contracted contracted contracted total sales sales area selling price amount* sq.m. HK$/sq.m. HK$

Shanghai Regents Park, Phase II 17,900 35,500 602,699,000

Guangzhou Eastern Place 11,142,000

Total 613,841,000

* After business tax

During the year ended 31 July 2008, the Group concluded total contracted sales area of approximately 17,900 sq.m. on Regents Park Phase II. Certain remaining residential units and car parks of Eastern Place were sold in this financial year.

MARKET OVERVIEW AND OPERATING ENVIRONMENT

In 2008, the austerity measures implemented by the Central Government which were aimed at preventing the economy from overheating and ensuring a more stable and healthy real estate market had impacted property prices in some regions. In addition, the snowstorm, the Sichuan earthquake and the significant adjustment in China’s stock market also affected market sentiment and the volume of transactions in China’s real estate market.

— 143 — APPENDIX III MANAGEMENT DISCUSSIONS AND ANALYSES ON THE GROUP AND THE LAI FUNG GROUP

The fallout from U.S. subprime predicament and the credit crunch created a lot of uncertainties. The global economic outlook will continue to be unstable. While China’s economic growth has shown signs of easing in the short term, its long term economic prospect remains positive and optimistic. China’s property market is still at the early stage of development. Ongoing urbanisation and demand for living improvement are expected to continue to hold firm. We believe that the efforts of the government to protect the real estate industry will ensure healthy development in the long term, although the global economic environment will be unstable, which may have some impact on China’s economy and may affect the real estate industry in the short term.

REVIEW OF MAJOR PROPERTY PROJECTS

Shanghai

Shanghai Hong Kong Plaza

Hong Kong Plaza is a twin-tower prime property located at Huaihaizhong Road, Luwan District, Shanghai comprising office, shopping arcades and serviced apartments. The property is directly above Huangpi Road South Metro Station and is within walking distance of Xintiandi. Rental income for the year ended 31 July 2008 amounted to HK$181,437,000, up from HK$174,456,000 in the previous year.

The planned renovation work on the shopping arcades under the serviced apartment tower has commenced in July this year. It is expected that the renovation will be completed in the second half of 2009. The renovation of the shopping arcades under the office tower will commence as soon as the existing tenants have moved out from the premises. The Group is currently negotiating with the existing tenants in this regard. The Group is also considering to renovate the whole serviced apartment tower to upgrade the quality of the rooms and the services. In addition, the common areas of the office tower and the lift lobbies for both office tower and serviced apartment tower will be renovated. It is estimated that full renovation works of Hong Kong Plaza will be completed in 2010. The rental income of Hong Kong Plaza is expected to be substantially improved from its current level upon completion of renovation. In the meantime, the rental income will be affected during the renovation period.

— 144 — APPENDIX III MANAGEMENT DISCUSSIONS AND ANALYSES ON THE GROUP AND THE LAI FUNG GROUP

Shanghai Regents Park

Regents Park is a major residential project located in the Zhongshan Park Commercial Area of the prestigious Changning District, Shanghai with a total saleable gross floor area (“GFA”) of approximately 154,000 sq.m. (GFA attributable to the Group of approximately 146,000 sq.m.).

Phase II of the project comprises 6 residential towers with 455 units (GFA attributable to the Group of approximately 59,000 sq.m.). Pre-sale of 3 residential towers in Phase II started in April 2008 and a total of 142 units were sold with a contracted value of approximately HK$635 million. The Group will closely monitor the market conditions and adjust our marketing strategy.

Shanghai May Flower Plaza

The project has a total GFA of approximately 114,500 sq.m. (GFA attributable to the Group of approximately 109,000 sq.m.), comprising residential and office apartments and commercial spaces. In addition, there will be approximately 33,000 sq.m. for carparks and ancillary facilities. Construction work has already commenced since October 2007 and is scheduled to be completed in 2010.

Shanghai Northgate Plaza

Northgate Plaza I is a block of office units with retail podium located in Tian Mu Road West in the Zhabei District of Shanghai near the Shanghai Railway Terminal. The Group has a 96.6% interest in this property. The property has a total GFA of approximately 36,500 sq.m. including carparks.

The Group plans to develop Northgate Plaza II on the vacant site located adjacent to Phase I. The Group has a 99.0% interest in Phase II.

— 145 — APPENDIX III MANAGEMENT DISCUSSIONS AND ANALYSES ON THE GROUP AND THE LAI FUNG GROUP

The Phase II development will have a total GFA of approximately 28,800 sq.m. comprising serviced apartments with retail podium. In addition, there will be some car parks. Construction work has commenced earlier this year and is scheduled to be completed in 2011.

Guangzhou and Zhongshan

Guangzhou May Flower Plaza

This 13-storey complex has a total GFA of approximately 51,000 sq.m. (GFA attributable to the Group of approximately 39,000 sq.m.) comprising retail spaces, restaurants and fast food outlets, cinema and office units. The property is fully leased to various tenants that are well known corporations, consumer brands, cinemas and restaurants. Rental income from May Flower Plaza was HK$56,898,000 for the year ended 31 July 2008, representing an increase of approximately 22% from previous year.

Guangzhou Eastern Place

Eastern Place is a multi-phase project located in Dongfeng East Road, Yuexiu District, Guangzhou.

The Phase V development will have a total GFA attributable to the Group of approximately 101,000 sq.m. comprising residential blocks, serviced apartments, offices and retail spaces. Construction work has commenced and is scheduled to be completed in 2011.

Guangzhou West Point

West Point is located in Zhongshan Qi Road and is within walking distance from the Ximenkou Subway Station. The project has a total GFA of approximately 64,000 sq.m., comprising 243 residential units, serviced apartments and commercial spaces. In addition, there will be approximately

— 146 — APPENDIX III MANAGEMENT DISCUSSIONS AND ANALYSES ON THE GROUP AND THE LAI FUNG GROUP

10,000 sq.m. for carparks and ancillary facilities. Pre-sale of residential units has been started in July this year and a total of 60 units were sold with a contracted value of HK$89 million as at 31 July 2008. Subsequent to 31 July 2008, an additional 54 units have been sold.

Guangzhou Jinshazhou Project

Jinshazhou project is a 50:50 joint venture with CapitaLand China Holdings Pte. Ltd. This proposed development in Hengsha, Baiyuan District, Guangzhou has a total GFA of approximately 369,000 sq.m. (GFA attributable to the Group of approximately 184,500 sq.m.), comprising low-rise and high- rise residential units with ancillary facilities including carparks and shopping amenities.

The project is currently at the planning stage. According to current development schedule, the project will be completed in phases from 2010 to 2012.

Guangzhou Hai Zhu Plaza

Hai Zhu Plaza is located in Chang Di Main Road in Yuexiu District, Guangzhou along the Pearl River. The Group owns the entire interest in this project.

The project is currently in the process of resettlement of original occupants and the development is expected to be completed in 2012.

Guangzhou Donghua Dong Road Project

— 147 — APPENDIX III MANAGEMENT DISCUSSIONS AND ANALYSES ON THE GROUP AND THE LAI FUNG GROUP

Guangzhou Da Sha Tou Road/Yuan Jiang Dong Road Project

The site is located at the junction of Da Sha Tou Road and Yuan Jiang Dong Road in Yuexiu District. The permitted GFA is approximately 8,000 sq.m.. The project is currently at the planning stage and is intended to be developed into a serviced apartment tower, carparks and ancillary facilities. The project is expected to be completed in 2011.

Guangzhou Guan Lu Road Project

Zhongshan Palm Springs

The project is located in Caihong Planning Area, West District of Zhongshan and has a total GFA of approximately 500,000 sq.m.. Phase I of the project will comprise 27 blocks of residential towers with a total GFA of approximately 138,000 sq.m.. Construction work has commenced since February this year and is expected to be completed in 2010. Other phases of the project are expected to be completed between 2011 and 2013.

CAPITAL STRUCTURE, LIQUIDITY AND DEBT MATURITY PROFILE

As at 31 July 2008, the Group had total borrowings in the amount of HK$2,872 million (2007: HK$2,746 million), representing an increase of HK$126 million. The consolidated net assets attributable to the equity holders of the Company amounted to HK$6,909 million (2007: HK$5,956 million). The total debt to equity ratio was 42% (2007: 46%) and the total debt to total capitalisation (long-term debt + equity) ratio was 31% (2007: 35%).

Approximately 53% and 45% of the Group’s borrowings were on a fixed rate basis and floating rate basis respectively, while the remaining 2% of the Group’s borrowings were interest-free.

— 148 — APPENDIX III MANAGEMENT DISCUSSIONS AND ANALYSES ON THE GROUP AND THE LAI FUNG GROUP

Apart from the senior notes, the Group’s other borrowings of HK$1,354 million were 41% denominated in Renminbi (“RMB”), 14% in Hong Kong dollars (“HKD”) and 45% in United States dollars (“USD”).

In order to match its USD exposure on the senior notes with its revenues, which are mainly denominated in RMB, the Group has hedged its USD exposure on the senior notes into RMB. Apart from this hedge, the Group does not hedge its other exposures in RMB and USD.

During the recent financial turmoil, USD has strengthened against RMB. However, we believe that this may be a short term phenomenon and RMB may continue to appreciate against USD when the financial market stabilises. In view of this, on 28 October 2008, the Company has taken the opportunity to terminate the cross currency swap agreements with financial institutions and received approximately HK$65,130,000 as proceeds. Together with the reversal of fair value loss on the cash flow hedges arising from the cross currency swap agreements and the balance of related hedge reserve as at 31 July 2008, total gains of approximately HK$256,311,000 are expected to be recognised in the consolidated income statement for the six months ending 31 January 2009. The above accounting treatments are subject to review and confirmation by the auditors for the audit of the final results of the Group for the year ending 31 July 2009. After the termination of the cross currency swap agreements, the Group does not have any derivative financial instruments or hedging instruments outstanding.

As at 31 July 2008, the Group’s bank borrowings were spread over a period of eight years, with approximately 45.0% repayable within one year, 54.4% repayable between two to five years and 0.6% repayable over five years. The term loans of the Group have amortisation throughout the tenure.

Certain assets of the Group have been pledged to secure financing, including investment properties with carrying value of approximately HK$4,313 million, serviced apartments with carrying value of approximately HK$554 million, properties under development with carrying value of approximately HK$601 million, completed properties for sale with carrying value of approximately HK$502 million, a property with carrying value of approximately HK$44 million and bank balances of approximately HK$213 million.

— 149 — APPENDIX III MANAGEMENT DISCUSSIONS AND ANALYSES ON THE GROUP AND THE LAI FUNG GROUP

Taking into account cash held as at the balance sheet date, available banking facilities and the recurring cashflow from the Group’s operating activities, the Group believes it has sufficient liquidity to finance its existing property development and investment projects.

CONTINGENT LIABILITIES

According to a practice common among banks in China when providing mortgage financing to property buyers, the bank will require a property developer to provide a buy-back guarantee to secure the due performance of borrowers. The Group is currently providing a number of buy-back guarantees to banks that have granted mortgage loans to buyers of office space and residential units in Hong Kong Plaza, Phase I of Regents Park and Phases I to IV of Eastern Place. The Group’s contingent liabilities under these obligations have been gradually relinquished along with the settlement of the mortgage loans granted by the bank to the end-buyers.

EMPLOYEES AND REMUNERATION POLICIES

As at 31 July 2008, the Group employed a total of around 1,000 staff. The Group recognises the importance of maintaining a stable staff force in its continued success. Under the Group’s existing policies, employee pay rates are maintained at competitive levels, whilst promotion and salary increments are assessed on a performance-related basis. Discretionary bonuses are granted to certain employees on a merit basis and in accordance with industry practice. Other staff benefits include share option scheme, mandatory provident fund, free hospitalisation insurance plan, subsidised medical care and subsidies for external education and training programmes.

PROSPECTS

In order to cope with the risks and uncertainties associated with the current economic environment, the Group will continue its prudent approach in acquisition strategy and in managing our business in China. In the next few months, we will focus on the sale of Regents Park Phase II in Shanghai and pre-sale of West Point in Guangzhou. We will closely monitor the market condition and adjust our marketing strategy accordingly.

— 150 — APPENDIX III MANAGEMENT DISCUSSIONS AND ANALYSES ON THE GROUP AND THE LAI FUNG GROUP

The Group will also focus on the construction progress of our existing projects and the renovation work of Hong Kong Plaza. Initial discussions have already been commenced with potential tenants for Hong Kong Plaza. Marketing programme is expected to commence soon for the retail podium in West Point.

The Group is cautiously optimistic in China’s real estate market in the medium to long term.

4. For the year ended 31 July 2007

RESULTS

For the year ended 31 July 2007, the Group recorded a turnover of HK$792,420,000 (2006: HK$703,352,000) and a gross profit of HK$425,309,000 (2006 (restated): HK$374,737,000), representing an increase of approximately 13% and 13% respectively from previous year. The Group achieved a profit from operating activities of HK$585,752,000 (2006 (restated): HK$360,596,000) and a profit attributable to equity holders of the Company of HK$470,351,000 (2006: HK$132,745,000), representing an increase of approximately 62% and 254% respectively from previous year.

The increase in profit from operating activities and profit attributable to equity holders of the Company was mainly attributable to higher turnover, higher revaluation gain on investment properties of the Group and in associated companies, and write back of provision on deferred corporate income tax as a result of adjustment in the corporate income tax rate in the Mainland of China (“China”).

Basic earnings per share were 5.84 HK cents for the year ended 31 July 2007 compared to 2.15 HK cents for the previous year.

Shareholders’ equity as at 31 July 2007 amounted to HK$5,955,983,000 up from HK$5,245,835,000 as at 31 July 2006. Net asset value per share attributable to equity holders of the Company was HK$0.74 as at 31 July 2007, as compared to HK$0.65 as at 31 July 2006.

— 151 — APPENDIX III MANAGEMENT DISCUSSIONS AND ANALYSES ON THE GROUP AND THE LAI FUNG GROUP

FINAL DIVIDEND

The Board of Directors has recommended the payment of a final dividend of 0.4 HK cent per ordinary share for the year ended 31 July 2007 (2006: 0.1 HK cent). If approved at the Annual General Meeting of the Company, the dividend will be payable on 7 January 2008.

BUSINESS REVIEW

Investment properties

Property rental results

During the year ended 31 July 2007, the Group recorded a turnover of HK$221,073,000 from rental income. Breakdown of turnover from rental income is as follows:

Year ended 31 July 2007 2006 Change HK$ HK$

Shanghai Hong Kong Plaza 174,456,000 157,876,000 +11%

Guangzhou May Flower Plaza 46,617,000 39,745,000 +17%

Total 221,073,000 197,621,000 +12%

— 152 — APPENDIX III MANAGEMENT DISCUSSIONS AND ANALYSES ON THE GROUP AND THE LAI FUNG GROUP

Development properties

Property sales results

Approximate Approximate Approximate average contracted contracted contracted total sales area selling price* sales amount* sq.m. HK$/sq.m. HK$

Shanghai Regents Park, Phase I 5,400 17,900 96,840,000

Guangzhou Eastern Place, Phase IV 36,900 10,700 393,481,000

Eastern Place, Phases I, II and III 6,905,000

Eastern Place car parks 74,121,000

Total 571,347,000

* After business tax

During the year ended 31 July 2007, the Group concluded total contracted sales area of approximately 5,400 sq.m. on the remaining units of Regents Park Phase I. In addition, the Group sold 291 car parks in Eastern Place at an average price (before business tax) of RMB268,000 per car park. The units in Eastern Place Phase IV were sold in 2006 and the revenue and profit were recognised in this financial year.

MARKET OVERVIEW AND OPERATING ENVIRONMENT

The Group is principally engaged in property development for sale and property investment for rental purposes in China. The Group currently has property projects in Shanghai, Guangzhou and Zhongshan.

— 153 — APPENDIX III MANAGEMENT DISCUSSIONS AND ANALYSES ON THE GROUP AND THE LAI FUNG GROUP

China’s economy continued its rapid growth and achieved a GDP growth of 10.7% in 2006 and is broadly expected to achieve GDP growth of around 10% in 2007. The resilient economic growth, stable increase in average income per capita and the expectation of Renminbi appreciation would support the growth of urban property market in China.

In the past two years, the central and local governments of China strengthened control over the property sector. These measures are expected to (i) tighten property financing, impose stringent land management controls, stabilise property prices, rationalise property supply structure and tighten credit supply; (ii) reinforce tax management, in particular, the central government announced the measures to strictly enforce the collection and settlement of land appreciation tax; and (iii) regulate and tighten the approval of foreign investment in real estate sector in China.

The Group believes that these measures are aimed at curbing speculation, stabilising property prices and rationalising the property market, which will not restrict the long term development of the property sector in China.

Despite a new series of macroeconomic control measures in China, continuous economic growth and robust end-user demand continue to lend support to quality development projects in Shanghai and Guangzhou.

REVIEW OF MAJOR PROPERTY PROJECTS

Shanghai

Shanghai Hong Kong Plaza

Shanghai Hong Kong Plaza is a twin-tower prime property located at Huaihaizhong Road, Luwan District, Shanghai with a gross floor area (“GFA”) attributable to the Group of approximately 120,000 sq.m. comprising office, shopping arcades and service apartments. Rental income from Shanghai Hong Kong Plaza for the year ended 31 July 2007 amounted to HK$174,456,000, up from HK$157,876,000 in the previous year.

— 154 — APPENDIX III MANAGEMENT DISCUSSIONS AND ANALYSES ON THE GROUP AND THE LAI FUNG GROUP

In line with the positioning of Huaihaizhong Road as a prime and high- end shopping district in Shanghai Puxi area, the Group plans to upgrade and renovate the shopping arcades over the next two years by phases, which will target high-end retail brands to open their flagship stores in Shanghai Hong Kong Plaza. It is expected that the rental yield would improve upon completion of the upgrade and renovation.

The Group also plans to upgrade the quality of the service apartments in order to improve its competitiveness and the image. The whole programme is expected to be completed in the next two years.

Shanghai Regents Park

Shanghai Regents Park is a major residential project located in the Zhongshan Park Commercial Area at the prestigious Changning District, Shanghai with a total saleable GFA of approximately 154,000 sq.m. (GFA attributable to the Group of approximately 146,000 sq.m.). During the year under review, the Group has sold all the remaining units in Phase I (equivalent to GFA attributable to the Group of approximately 5,200 sq.m.) for HK$96,840,000.

Phase II of the project will comprise six residential towers with approximately 460 units (GFA attributable to the Group of approximately 59,000 sq.m.). Pre-sale of Phase II is expected to start in November 2007. Given the recent strong demand in residential units in Shanghai, we expect the pre-sale would achieve satisfactory results.

Shanghai May Flower Plaza

Shanghai May Flower Plaza is a mixed-use project located at the junction of Da Tong Road and Zhi Jiang Xi Road in Su Jia Xiang in the Zhabei District in Shanghai. This project is situated near the Zhongshan Road North Subway Station. The Group has an effective 95% interest in the project.

The project has a total GFA of approximately 147,900 sq.m. (GFA attributable to the Group of approximately 140,500 sq.m.), comprising residential and office apartments, commercial spaces, carparks and ancillary facilities. Construction work has already been commenced in October 2007 and is scheduled to be completed at the end of 2009 or in early 2010.

— 155 — APPENDIX III MANAGEMENT DISCUSSIONS AND ANALYSES ON THE GROUP AND THE LAI FUNG GROUP

Shanghai Northgate Plaza (also known as Zhabei Plaza)

Shanghai Northgate Plaza Phase I is a block of office units with retail podium located on Tian Mu Road West in the Zhabei District of Shanghai near the Shanghai Railway Terminal. The Group has an effective 48.3% interest in Phase I.

The Phase I complex has a total GFA of approximately 36,500 sq.m. comprising office units, retail spaces and car parks.

The Group plans to develop Shanghai Northgate Plaza II on the vacant site located adjacent to Phase I. The Group has an effective 49.5% interest in Phase II.

The Phase II development will have a total GFA of approximately 34,400 sq.m. comprising service/office apartments with retail podium and car parks. Construction of Phase II is expected to commence in 2008 and is scheduled to be completed in 2010.

On 30 October 2007, the Group announced that it will acquire the remaining 50% interest in the holding company which indirectly holds Shanghai Northgate Plaza I and Shanghai Northgate Plaza II. The total consideration for such acquisition is HK$424,000,000. Upon completion of the acquisition, the Group’s interest in Shanghai Northgate Plaza I and Shanghai Northgate Plaza II will increase to approximately 96.6% and 99.0% respectively.

Guangzhou and Zhongshan

Guangzhou May Flower Plaza

Guangzhou May Flower Plaza is a prime property situated at Zhongshanwu Road, Yuexiu District directly above the Gongyuanqian Subway Station in Guangzhou, interchange station of Guangzhou Subway Lines No. 1 and 2. The Group has an effective 77.5% interest in this property.

— 156 — APPENDIX III MANAGEMENT DISCUSSIONS AND ANALYSES ON THE GROUP AND THE LAI FUNG GROUP

are well known corporations and/or consumer brands. Rental income from Guangzhou May Flower Plaza amounted to HK$46,617,000 for the year ended 31 July 2007, representing an increase of approximately 17% from previous year.

Guangzhou Eastern Place

Guangzhou Eastern Place is a multi-phase residential project located at Dongfeng East Road, Yuexiu District, Guangzhou. Phases I to III, which comprise six residential towers and the residents’ clubhouse, had been completed in years between 1997 and 2004. The resident clubhouse houses an Olympic size swimming pool, fitness facilities, convenience store as well as a restaurant.

Phase IV, which comprises two residential towers, was completed in December 2006. Most of the units in Phase IV were pre-sold in 2006 and the sales revenue and profit were recognised in this year.

The Phase V development will have an intended total GFA attributable to the Group of approximately 130,700 sq.m. comprising residential blocks, a grade-A office building and retail spaces. In view of the strong demand for service apartments in Guangzhou, the plan has been revised to include two residential blocks, a service apartment block, a grade-A office building and retail spaces. Construction work has been commenced and is now scheduled to be completed in 2010.

Guangzhou West Point

Guangzhou West Point is located at Zhongshan Qi Road, Liwan District and is within walking distance from the Ximenkou Subway Station. The Group completed the acquisition of 100% interest in this project in February 2007.

The project has a total GFA of approximately 72,000 sq.m., comprising residential, office units, commercial spaces, carparks and ancillary facilities. The exterior and interior fitting of the project is scheduled to be completed in the first half of 2008. Pre-sale is expected to start before the end of this year.

— 157 — APPENDIX III MANAGEMENT DISCUSSIONS AND ANALYSES ON THE GROUP AND THE LAI FUNG GROUP

Guangzhou Jinshazhou Project

Guangzhou Jinshazhou project is a 50:50 joint venture with CapitaLand China Holdings Pte. Ltd. This proposed development in Jinshazhou, Hengsha, Baiyuan District, Guangzhou has a total GFA of approximately 340,000 sq.m. (GFA attributable to the Group of approximately 170,000 sq.m.), comprising low-rise residential units with ancillary facilities including carparks and shopping amenities.

The project is currently in the planning stage. According to current development schedule, the project will be completed in phases from 2009 to 2011.

Guangzhou Hai Zhu Plaza

Guangzhou Hai Zhu Plaza is located at Chang Di Main Road in Yuexiu District, Guangzhou along the Pearl River. The Group effectively owns the entire interest in this project.

The proposed development has a GFA of approximately 113,000 sq.m., and is intended to be developed into a grade-A office tower, a service apartment tower, a retail podium, carparks as well as ancillary facilities.

The project is currently in the process of resettlement of original occupants which is expected to be completed in 2008. The development is expected to be completed in 2010.

Guangzhou Donghua Dong Road Project

The site was acquired by the Group in a public auction in July 2007. It is located at Donghua Dong Road in Yuexiu District. The permitted GFA is approximately 10,600 sq.m.. The project is currently in the planning stage and is intended to be developed into a residential tower. The project is expected to be completed in 2011.

Guangzhou Da Sha Tou Road/Yuan Jiang Dong Road Project

The site was acquired by the Group in a public auction in July 2007. It is located at the junction of Da Sha Tou Road and Yuan Jiang Dong Road in

— 158 — APPENDIX III MANAGEMENT DISCUSSIONS AND ANALYSES ON THE GROUP AND THE LAI FUNG GROUP

Yuexiu District. The permitted GFA is approximately 8,800 sq.m.. The project is currently in the planning stage and is intended to be developed into a service apartment tower. The project is expected to be completed in 2011.

Guangzhou Guan Lu Road Project

The site was acquired by the Group in a public auction in July 2007. It is located at Guan Lu Road in Yuexiu District. The permitted GFA is approximately 14,000 sq.m.. The project is currently in the planning stage and is intended to be developed into a residential tower. The project is expected to be completed in 2011.

Zhongshan Project

The Group wholly owns a project located in Caihong Planning Area, West District of Zhongshan with a site area of approximately 236,600 sq.m.. The Group plans to apply for a higher plot ratio of this project to increase its approximate total planned GFA from the original 350,000 sq.m. to over 500,000 sq.m., comprising mainly residential units with commercial spaces and ancillary facilities.

Phase I of the project will comprise 28 blocks of residential towers and service apartments with a total GFA of around 138,000 sq.m.. Construction work of Phase I is expected to be commenced in early 2008 and is expected to be completed by the end of 2009. Other phases of the project is expected to be completed from 2010 to 2011.

CAPITAL STRUCTURE, LIQUIDITY AND DEBT MATURITY PROFILE

In March 2007, the Group successfully issued the 9.125% senior notes due 2014 (the “Senior Notes”) and raised US$200,000,000 before expenses. The proceeds are intended to be used to finance acquisition of land and property projects, project development, renovation of investment properties and for working capital purposes. Part of the proceeds from the issue of Senior Notes have been used to acquire the three new projects in Guangzhou in July 2007.

Apart from the proceeds from the issue of Senior Notes, the Group has diverse sources of financing comprising internal funds generated from the Group’s business operations, bank borrowings on project basis and general bank loan facilities on secured basis.

— 159 — APPENDIX III MANAGEMENT DISCUSSIONS AND ANALYSES ON THE GROUP AND THE LAI FUNG GROUP

As at 31 July 2007, the Group had total borrowings in the amount of HK$2,746 million (2006: HK$1,056 million), representing an increase of HK$1,690 million from that as at the preceding financial year end, mainly as a result of the issue of US$200,000,000 Senior Notes. The consolidated net assets attributable to the equity holders of the Company amounted to HK$5,956 million (2006: HK$5,246 million). The total debt to equity ratio was 46% (2006: 20%) and the total debt to total capitalisation (long-term debt + equity) ratio was 35% (2006: 17%).

As at 31 July 2007, approximately 55% and 43% of the Group’s borrowings were on a fixed rate basis and floating rate basis respectively, with the remaining 2% of the Group’s borrowings were interest free.

Apart from the Senior Notes, the Group’s other borrowings of HK$1,233 million were 35% denominated in Renminbi (“RMB”), 15% in Hong Kong dollars (“HKD”) and 50% in United States dollars (“USD”).

In order to match its USD exposure on the Senior Notes with its revenue, which are mainly denominated in RMB, the Group has hedged its USD exposure on the Senior Notes into RMB. Apart from this hedge, the Group does not hedge its other exposures in RMB and USD.

The maturity profile of the Group’s bank borrowings as at 31 July 2007 was spread over a period of 9 years, with approximately 88% repayable within one year, 11% repayable between two to five years and 1% repayable over five years. The term loans of the Group have amortisation throughout the tenure. The Group is constantly negotiating with the relevant bank in refinancing and/or rescheduling the principal amortisation schedule where necessary. For HK$781,575,000 outstanding bank loans which are secured by the Group’s properties at Shanghai Hong Kong Plaza and Guangzhou May Flower Plaza, the Group has obtained offers from the relevant bank for refinancing of such loans for a period of five years.

Certain assets of the Group have been pledged to secure financing, including investment properties with carrying value amounting to approximately HK$3,551 million, service apartments with carrying value of approximately HK$550 million, properties under development with carrying value amounting to approximately HK$858 million, a property with carrying value amounting to approximately HK$45 million, and bank balances amounting to approximately HK$145 million as at the balance sheet date.

— 160 — APPENDIX III MANAGEMENT DISCUSSIONS AND ANALYSES ON THE GROUP AND THE LAI FUNG GROUP

Taking into account cash held as at the balance sheet date, available banking facilities, loan refinancing and the recurring cashflow from the Group’s operating activities, the Group believes it has sufficient liquidity to finance its existing property developments and investment projects.

CONTINGENT LIABILITIES

According to a common practice among banks in China when providing mortgage financing to property buyers, the bank will require property developer to provide a buy-back guarantee to secure the due performance of borrowers. The Group is currently providing a number of buy-back guarantees to banks that have granted mortgage loans to buyers of office space and residential units in Shanghai Hong Kong Plaza, Phase I of Shanghai Regents Park, and Phases I to IV of Guangzhou Eastern Place. The Group’s contingent liabilities under these obligations have been gradually relinquished along with the settlement of the mortgage loans granted by the bank to the end-buyers. As China’s property market is currently stable, the management does not expect such contingent liabilities to crystallise to a material extent in the near term.

EMPLOYEES AND REMUNERATION POLICIES

As at 31 July 2007, the Group employed a total of around 920 staff. The Group recognises the importance of maintaining a stable staff force in its continued success. Under the Group’s existing policies, employee pay rates are maintained at competitive levels, whilst promotion and salary increments are assessed on a performance-related basis. Discretionary bonuses are granted to certain employees on a merit basis and in accordance with industry practice. Other staff benefits include a share option scheme, a mandatory provident fund, a free hospitalisation insurance plan, subsidised medical care and subsidies for external education and training programmes.

PROSPECTS

The Group principally focuses on property development projects located in prime areas in core cities in China including Shanghai, Guangzhou and Zhongshan.

— 161 — APPENDIX III MANAGEMENT DISCUSSIONS AND ANALYSES ON THE GROUP AND THE LAI FUNG GROUP

For our development properties, the Group will accelerate its development schedule whenever possible and to increase its completion volume in the next few years. Apart from the recent acquisitions of three new sites in Guangzhou and additional interest in Shanghai Northgate Plazas I and II, the Group is also looking into investment opportunities in other key cities.

For our investment properties, given the tremendous potential in rental rates in Shanghai and Guangzhou due to strong consumer spending and office demand, the Group will strive to improve the rental income through major renovations and improvement in tenant mix.

— 162 — APPENDIX IV PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE GROUP

The following is the text of the letter from Savills dated 30 August 2010 prepared for the purpose of incorporation in this circular:

The Directors eSun Holdings Limited Lai Sun Garment (International) Limited 11th Floor Lai Sun Commercial Centre 680 Cheung Sha Wan Road Kowloon Hong Kong

30 August 2010

Dear Sirs,

In accordance with your instructions for us to value various property interests held by eSun Holdings Limited (hereinafter known as “eSun”) and its subsidiaries (hereinafter together known as the “eSun Group”) in Hong Kong and Macau, we confirm that we have carried out inspections, made relevant enquiries and searches and obtained such further information as we consider necessary for the purpose of providing you with our opinion of the market values of these property interests as at 31 May 2010 (the “Date of Valuation”) for public circular purpose.

— 163 — APPENDIX IV PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE GROUP

Our valuation of each of the property interests is our opinion of its market value which we would define as intended to mean “the estimated amount for which a Property should exchange on the Date of Valuation between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion”.

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. The market value of a property is also estimated without regard to costs of sale and purchase, and without offset for any associated taxes.

Our valuation is prepared in accordance with The HKIS Valuation Standards on Properties (1st Edition 2005) published by The Hong Kong Institute of Surveyors and in compliance with the requirements of Chapter 5 of the Rules Governing the Listing of Securities published by The Stock Exchange of Hong Kong Limited.

In arriving at our opinion of values, we have valued all the property interests by making reference to sales evidence as available on the market assuming that vacant possession of the properties would be readily available upon completion of a sale. In respect of Group IV property interest in Macau, we have valued the property interest on the basis that it will be developed in accordance with the basic terms as stated in the letter from DSSOPT dated 22 November 2006. We have assumed that all necessary approvals for the proposal have been obtained from the relevant government authorities without onerous conditions or restrictions. In arriving at our opinion of value, we have adopted the direct comparison method by making reference to the comparable transactions as available in the market and have taken into account the construction costs that will be expended to complete the proposed development to reflect the intended quality of the project.

— 164 — APPENDIX IV PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE GROUP

We have not been provided with any title documents relating to the property interests but we have caused searches to be made at the Land Registry of Hong Kong for Groups I and II properties and Conservatória do Registo Predial of Macau for Groups III and IV properties. However, we have not searched the original documents to verify ownership or to ascertain the existence of any subsequent amendments which do not appear on the copies obtained from the Land Registry of Hong Kong and Conservatória do Registo Predial of Macau. We do not accept a liability for any interpretation which we have placed on such information which is more properly the sphere of your legal advisers.

In valuing the Groups III and IV property interests in Macau, we have assumed that the owners of the property interests have free and uninterrupted rights to use and assign the property interest during the whole of the respective unexpired terms granted. Upon the expiration of the term, the Government Lease can be renewed upon application for another 10 years upon payment of a fixed premium equivalent to 10 times the prevailing Government rent provided that the grantee has (a) compiled with the Government Lease and (b) settled the annual Government Rent. The term of the grant can be renewed until 19 December 2049.

We have relied to a very considerable extent on information given by the eSun Group. We have no reason to doubt the truth and accuracy of the information provided to us by the eSun Group which is material to the valuation and have accepted advice given to us on such matters as planning approvals or statutory notices, easements, tenure, particulars of occupancy, development proposal, site and floor areas and all other relevant matters. We have not verified the truth and accuracy of the information and we have relied on the eSun Group’s confirmation that no material facts have been omitted from the information so supplied. We consider that we have been provided with sufficient information to reach an informed view. Dimensions, measurements and areas included in the valuation certificate are based on information contained in the documents and leases provided to us and are therefore only approximations.

— 165 — APPENDIX IV PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE GROUP

We have inspected the exterior of the properties in Groups I, II, III and IV, where possible, we have also inspected the interior of the premises. However, no structural survey has been made, but in the course of our inspection, we did not note any serious defects. We are not, however, able to report that the properties are free from rot, infestation or any other structural defects. No tests were carried out on any of the services. For Group IV property, we have not carried out investigations on site to determine the suitability of the ground conditions and services etc for the proposed development. Our valuation is prepared on the assumption that these aspects are satisfactory and that no extraordinary expenses or delays will be incurred during construction period. We have not carried out on-site measurements to verify the correctness of the site area of the property in Group IV and we have assumed that the site area shown on the documents handed to us is correct.

No allowance has been made in our report for any charges, mortgages or amounts owing on any properties. Unless otherwise stated, it is assumed that all property interests are free from encumbrances, restrictions and outgoings of an onerous nature which could affect their values.

Unless otherwise stated, all money amounts stated herein are in Hong Kong Dollars (“HK$”). The exchange rate adopted in this report is HK$1 to MOP1.03 which is prevailing as of the Date of Valuation.

Our summary of values and valuation certificate are attached.

Yours faithf ully For and on behalf of Savills Valuation and Professional Services Limited Charles C K Chan MSc FRICS FHKIS MCIArb RPS(GP) Managing Director

* Mr. Charles C K Chan, chartered estate surveyor, MSc, FRICS, FHKIS, MCIArb, RPS(GP), has been a qualified valuer since June 1987 and has about 25 years experience in the valuation of properties in Hong Kong and has about 20 years experience in the valuation of properties in Macau.

— 166 — APPENDIX IV PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE GROUP

SUMMARY OF VALUES

Capital value in existing Capital value Interest state as at in existing attributable 31 May 2010 state as at to the attributable to Property 31 May 2010 eSun Group the eSun Group

Group I – Property interest held by the eSun Group in Hong Kong for self-occupation

1. 4th, 5th Floors and Roof, HK$70,000,000 100% HK$70,000,000 East Commercial Block of South Horizons, 18A South Horizon Drive, Ap Lei Chau, Hong Kong

Sub-total HK$70,000,000 HK$70,000,000

Group II – Property interests held by the eSun Group in Hong Kong for sale

2. Car Park Nos. 7, 8 and 9 No commercial value 100% No commercial value on Ground Floor, Forda Industrial Building, 16 Wang Chau Road, Yuen Long, New Territories, Hong Kong

3. Store Room on 10th Floor, HK$25,000 100% HK$25,000 Forda Industrial Building, 16 Wang Chau Road, Yuen Long, New Territories, Hong Kong

4. Common Areas on 10th Floor, No commercial value 100% No commercial value Forda Industrial Building, 16 Wang Chau Road, Yuen Long, New Territories, Hong Kong

Sub-total HK$25,000 HK$25,000

— 167 — APPENDIX IV PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE GROUP

Capital value in existing Capital value Interest state as at in existing attributable 31 May 2010 state as at to the attributable to Property 31 May 2010 eSun Group the eSun Group

Group III — Property interest held by the eSun Group in Macau for self-occupation

5. Em Macau, Avenida Dr. HK$20,400,000 100% HK$20,400,000 Sun Yat-Sen N° S/N, Edf. Complexo “Iat Hou Kuong Cheong” (One Central) - 25° Andar – T3/B

Sub-total HK$20,400,000 HK$20,400,000

Group IV — Property interest held by the eSun Group in Macau for future development

6. Lotes G300, G310 e G400 (Cotai), Zona de Aterro entre as llhas Taipa e Coloane, Macao HK$3,779,000,000 40% HK$1,511,600,000

Sub-total HK$3,779,000,000 HK$1,511,600,000

Grand Total HK$3,869,425,000 HK$1,602,025,000

— 168 — APPENDIX IV PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE GROUP

VALUATION CERTIFICATE

Group I – Property interest held by the eSun Group in Hong Kong for self-occupation

Capital value in Particulars of existing state as at Property Description and tenure occupancy 31 May 2010

1. 4th, 5th Floors South Horizons is a large-scale The property is HK$70,000,000 and Roof, East residential development comprising vacant. (100% interest) Commercial Block a total of 34 residential blocks with of South Horizons, ancillary commercial and carparking HK$70,000,000 18A South Horizon facilities. (100% interest Drive, Ap Lei attributable to the Chau, Hong Kong East Commercial Block of South eSun Group) Horizons is a 6-storey shopping/ 202/168,000th recreational complex surmounting a shares of and in 2-level carparking basement completed The Remaining in about 1994. Portion of Aplichau Inland Lot No. 121. The property mainly comprises function rooms on the 4th and 5th Floors with a total saleable area of approximately 2,016.54 sq m (21,706 sq ft) and flat roofs and roofs area of approximately 1,077.02 sq m (11,593 sq ft).

Aplichau Inland Lot No. 121 is held from the Government under Conditions of Exchange No. 11998 for a term commencing from 28 January 1988 and expiring on 31 March 2040. The annual rent payable for the lot from 1 July 1997 is an amount equal to 3% of the rateable value for the time being of the lot.

Notes: (1) The registered owner of the property is Kaleidoscope International Limited, in which eSun has a 100% interest.

(2) The property is subject to a mortgage to secure general banking facilities in favour of DBS Bank (Hong Kong) Limited.

(3) The property is currently lies within an area zoned “Commercial” under Aberdeen & Ap Lei Chau Outline Zoning Plan.

— 169 — APPENDIX IV PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE GROUP

Group II – Property interests held by the eSun Group in Hong Kong for sale

Capital value in Particulars of existing state as at Property Description and tenure occupancy 31 May 2010

2. Car Park Nos. 7, 8 Forda Industrial Building is a 14-storey The property is No commercial and 9 on Ground industrial building completed in 1978. vacant. value Floor, Forda (100% interest) Industrial Building, The property comprises 3 carparking 16 Wang Chau spaces on Ground Floor of the No commercial Road, Yuen Long, development. value New Territories, (100% interest Hong Kong Yuen Long Town Lot No. 221 is held attributable to the from the Government under New Grant eSun Group) 3/1,188th shares of No. 2326 for a term which expired on and in Yuen Long 27 June 1997 and had been extended Town Lot No. 221. upon expiry until 30 June 2047 without premium but at a revised annual rent at 3% of the rateable value for the time being of the lot from the date of extension.

Notes: (1) The registered owner of the property is Active Light Limited, in which eSun has a 100% interest.

(2) The property currently lies within an area zoned “Residential (Group E)” under Yuen Long Outline Zoning Plan.

(3) Pursuant to the Supplemental Deed of Mutual Covenant registered on 21 June 1985, the property is designated for common parking use.

— 170 — APPENDIX IV PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE GROUP

Capital value in Particulars of existing state as at Property Description and tenure occupancy 31 May 2010

3. Store Room on Forda Industrial Building is a 14-storey The property is HK$25,000 10th Floor, Forda industrial building completed in 1978. vacant. (100% interest) Industrial Building, 16 Wang Chau The property comprises a storeroom on HK$25,000 Road, Yuen Long, the 10th Floor of the building with a (100% interest New Territories, saleable area of approximately 7.62 sq m attributable to the Hong Kong (82 sq ft). eSun Group)

1/60th shares of and Yuen Long Town Lot No. 221 is held in 60/1,188th shares from the Government under New Grant of and in Yuen No. 2326 for a term which expired on Long Town Lot No. 27 June 1997 and had been extended 221. upon expiry until 30 June 2047 without premium but at a revised annual rent at 3% of the rateable value for the time being of the lot from the date of extension.

Notes: (1) The registered owner of the property is Active Light Limited, in which eSun has a 100% interest.

(2) The property currently lies within an area zoned “Residential (Group E)” under Yuen Long Outline Zoning Plan.

— 171 — APPENDIX IV PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE GROUP

Capital value in Particulars of existing state as at Property Description and tenure occupancy 31 May 2010

4. Common Areas on Forda Industrial Building is a 14-storey The property is No commercial 10th Floor, Forda industrial building completed in 1978. vacant. value Industrial Building, (100% interest) 16 Wang Chau The property comprises various Road, Yuen Long, common areas on the 10th Floor of the No commercial New Territories, building with a total saleable area of value Hong Kong approximately 123.56 sq m (1,330 sq ft). (100% interest attributable to the 1/60th shares of and Yuen Long Town Lot No. 221 is held eSun Group) in 60/1,188th shares from the Government under New Grant of and in Yuen No. 2326 for a term which expired on Long Town Lot No. 27 June 1997 and had been extended 221. upon expiry until 30 June 2047 without premium but at a revised annual rent at 3% of the rateable value for the time being of the lot from the date of extension.

Notes: (1) The registered owner of the property is Active Light Limited, in which eSun has a 100% interest.

(2) The property currently lies within an area zoned “Residential (Group E)” under Yuen Long Outline Zoning Plan.

— 172 — APPENDIX IV PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE GROUP

Group III – Property interest held by the eSun Group in Macau for self-occupation

Capital value in Particulars of existing state as at Property Description and tenure occupancy 31 May 2010

5. Em Macau, Avenida The property comprises a residential The property is HK$20,400,000 Dr. Sun Yat- unit on the 25th floor in Tower 3 of One vacant. (100% interest) Sen N° S/N, Edf. Central Residences. The property was Complexo “Iat Hou completed in late of 2009. HK$20,400,000 Kuong Cheong” (100% interest (One Central) - 25° The gross floor area of the property is attributable to the Andar – T3/B approximately 279.26 sq m (3,006 sq ft). eSun Group)

The property is held under Concessão Por Arrendamento（政府租賃批地）for a term of 25 years commencing on 7 June 2006 and is renewable for further terms until 19 December 2049.

Notes: (1) Upon our recent title search, the current registered owner of the property is Propriedades Sub F, S.A. The property is subject to a sale and purchase agreement dated 30th November 2006 and the purchaser of the property is Grandeur Limited, in which eSun has a 100% interest.

(2) According to the information provided by the eSun Group, the purchase price of the property was fully paid by eSun in August 2009 and the assignment of property is now in process.

(3) At the time of our recent title search, we noted that there is no material encumbrance registered against the property.

— 173 — APPENDIX IV PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE GROUP

Group IV – Property interest held by the eSun Group in Macau for future development

Capital value in Particulars of existing state as at Property Description and tenure occupancy 31 May 2010

6. Lotes G300, G310 e The property comprises a piece of land The property HK$3,779,000,000 G400 (Cotai), in a newly reclaimed area in Cotai, is currently (100% interest) Zona de Aterro Macau. It has a developable site area of vacant. entre as llhas Taipa 130,789 sq m (1,407,813 sq ft). HK$1,511,600,000 e Coloane, Macao. (40% interest According to a letter dated 22 November attributable to the 2006 from DSSOPT of the Macau eSun Group) Government, the property is planned to be developed into a comprehensive entertainment development comprising a 5-star hotel, a 3-star apartment-like hotel, a studio city (film production facility) with various ancillary facilities. The breakdown gross floor area is as follows:

Gross Floor Uses Area (sq m)

5-star Hotel 80,000 3-star apartment-like Hotel 180,000 Studio City (Film Production Facility) 80,000

Sub-total 340,000

Carpark (5-star hotel) 6,821 Carpark (3-star apartment- like hotel) 12,814 Carpark (Studio City (Film Production Facility)) 29,756 Open Area (5-star hotel) 12,085 Open Area (3-star apartment- like hotel) 16,094 Open Area (Studio City (Film Production Facility)) 26,773

The property is held under a Concessão Por Arrendamento（政府租賃批地） for a term of 25 years commencing on 17 October 2001 and is renewable for further terms until 19 December 2049.

— 174 — APPENDIX IV PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE GROUP

Notes: (1) The registered owner of the property is East Asia – Televisão Por Satélite, Limitada, in which eSun has a 40% effective interest.

(2) At the time of our recent title search, we noted that there is no material encumbrance registered against the property.

(3) In accordance with the Government Gazette No. 100/2001 dated 17 October 2001, the property can be developed into a studio city (film production facility) with tourist and entertainment facilities. It has a total gross floor area of about 144,650 sq m (1,557,013 sq ft).

(4) According to a letter dated 22 November 2006 from DSSOPT of the Macau Government offering basic terms in respect of the lease modification for the property, the proposed development was permitted by the said lease modification, subject to payment of premium to the Macau Government. The offer was accepted and applicable premium paid, although the modification was not formally gazetted, in light of the further application discussed in note 5 below. The development and uses of the property are stated in the 22 November 2006 letter as follows:

Site Area : 130,789 sq m

Uses : A complex development comprising a block of a 5-star hotel, a block of 3-star apartment-like hotels, a studio city (film production facility) and a tourist entertainment with ancillary facilities

Gross Floor Area : 5-star hotel 80,000 sq m 3-star apartment-like hotel 180,000 sq m Studio City (Film Production Facility) 80,000 sq m

Sub-total 340,000 sq m

Carpark (5-star hotel) 6,821 sq m Carpark (3-star apartment-like hotel) 12,814 sq m Carpark (Studio city (Film Production Facility)) 29,756 sq m Open Area (5-star hotel) 12,085 sq m Open Area (3-star apartment-like hotel) 16,094 sq m Open Area (Studio city (Film Production 26,773 sq m Facility))

Annual Rent : During construction period: MOP2,615,780.00 MOP20.00 per sq m

Upon completion of construction: MOP4,225,044.00

5-star hotel MOP15.00 per sq m 3-star apartment-like hotel MOP10.00 per sq m Studio City (Film Production Facility) MOP6.00 per sq m Carpark (5-star hotel) MOP10.00 per sq m Carpark (3-star apartment-like hotel) MOP7.50 per sq m Carpark (Studio city (Film Production Facility)) MOP6.00 per sq m Open Area (5-star hotel) MOP10.00 per sq m Open Area (3-star apartment-like hotel) MOP7.50 per sq m Open Area (Studio city (Film Production MOP6.00 per sq m Facility))

Building Covenant : 4 years commencing on 17 April 2007

— 175 — APPENDIX IV PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE GROUP

(5) According to information provided by eSun, in March 2007, a new application was made for a land grant modification involving an increase in the approved gross floor area to 560,000 sq m (approximately 6,027,840 sq ft), in respect of which the Macau Government ultimately issued, in September 2008, an indicative offer of modification indicating that it would be prepared to permit construction of a development of 560,000 sq m. The indicative offer was accepted in October 2008, but the modification has yet to be the subject of a formal offer, capable of being accepted and in due course gazetted. In January 2009, the Macau Government wrote to the property owner requesting further information concerning the wider project development, a request to which, according to eSun, no substantive response has, to date, been given, although eSun’s subsidiary and its joint venture partner made separate submissions in May 2010 in response to the Macau Government. In October 2009, a subsidiary of eSun commenced litigation against its joint venture partner, New Cotai, LLC and other persons under various grounds, including causing obstruction and delay in the property owner’s land grant modification application. In light of these matters, and the inherent uncertainties associated with the litigation in particular, we consider that the 22 November 2006 letter from the Macau Government referred to in note 4 above is the more appropriate and prudent basis for a valuation of the property.

(6) According to the information provided by eSun, a total construction cost of HK$577,000,000 has been incurred for the foundation work and related expenses of the property as at the Date of Valuation.

(7) In the course of our valuation, we assumed that the proposed development of the property has complied with the existing Government lease and any amendments thereof as well as all other statutory requirements and all the premium (if any) have been duly paid to Macau Government.

— 176 — APPENDIX V PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LAI FUNG GROUP

The following is the text of the letter from Knight Frank dated 30 August 2010 prepared for the purpose of incorporation in this circular:

4/F Shui On Centre, 6-8 Harbour Road Wanchai, Hong Kong 香港灣仔港灣道6-8號瑞安中心4字樓 +852 2840 1177 tel +852 2840 0600 fax

www.knightfrank.com.hk

30 August 2010

Board of Directors eSun Holdings Limited Lai Sun Garment (International) Limited 11th Floor Lai Sun Commercial Centre 680 Cheung Sha Wan Road Kowloon

Dear Sirs,

VALUATION OF VARIOUS PROPERTY INTERESTS IN THE PEOPLE’S REPUBLIC OF CHINA AND HONG KONG

In accordance with your instructions for us to value the property interests held by Lai Fung Holdings Limited (“Lai Fung”) or its subsidiaries, associates or jointly-controlled entities (hereinafter together referred to as the “Lai Fung Group”) in the People’s Republic of China (the “PRC”) and Hong Kong, we confirm that we have carried out inspections, made relevant enquiries and obtained such further information as we consider necessary for the purpose of providing you with our opinion of the market value of the property interests as at 31 May 2010.

— 177 — APPENDIX V PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LAI FUNG GROUP

BASIS OF VALUATION

Our valuation is our opinion of the market value of the properties which we would define as intended to mean “the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.”

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, special considerations or concessions granted by anyone associated with the sale, or any element of special value. The market value of a property is also estimated without regard to costs of sale and purchase, and without offset for any associated taxes.

VALUATION METHODOLOGY

In forming our opinion of the values of the property interests in Group I which are held by the Lai Fung Group in the PRC for investment purpose, we have valued the properties by reference to sales evidence as available on the market, and where appropriate, on the basis of capitalisation of the rental incomes as shown on the documents handed to us by the Lai Fung Group. We have allowed for outgoings, and where appropriate, made provisions for reversionary income potential.

We have valued the property interests in Groups II and IV which are held by the Lai Fung Group in the PRC for sale purpose and held by the Lai Fung Group in Hong Kong for owner occupation purpose respectively by using “Direct Comparison Approach” whenever market comparable transactions are available and assumed sale of property interests with the benefit of vacant possession.

In valuing the property interests in Group III which are held under development by the Lai Fung Group in the PRC, we have valued the property interests on the basis that the properties will be developed and completed in accordance with the Lai Fung Group’s latest development proposals provided to us. We have assumed that approvals for the proposals have been obtained without any onerous condition which would affect the values of the property interests. In arriving at our opinion of values, we have made reference to comparable transactions in the locality and also taken into account the construction costs that will be expended to reflect the quality of the completed developments.

— 178 — APPENDIX V PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LAI FUNG GROUP

TITLE DOCUMENTS AND ENCUMBRANCES

We have caused search to be made at the Land Registry for the Hong Kong property valued and have been provided with extracts of title documents in respect of the property interests in the PRC. However, we have not inspected the original documents to ascertain any amendments which may not appear on the copies handed to us. In the course of our valuation, we have relied on the information given by the Lai Fung Group and the legal opinions both dated 26 August 2010 of the PRC legal advisers of eSun Holdings Limited and Lai Sun Garment (International) Limited, Commerce and Finance Law Offices and 上海錦天城律師事務所 (AllBright Law Offices), regarding the title and other legal matters relating to the properties in the PRC.

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

SOURCE OF INFORMATION

We have relied to a considerable extent on the information given by the Lai Fung Group. We have no reason to doubt the truth and accuracy of the information provided to us by the Lai Fung Group which is material to the valuation. We have accepted advice given by the Lai Fung Group on such matters as planning approvals or statutory notices, easements, tenure, completion date of buildings, particulars of occupancy, tenancy summaries, joint- venture agreements, development schemes, construction costs, sites and floor areas. Dimension, measurements and areas included in the valuation report attached are based on information provided to us and are therefore only approximations. We have not been able to carry out on-site measurements to verify the correctness of the site and floor areas of the properties and we have assumed that the site and the floor areas shown on the documents handed to us are correct. We were also advised by the Lai Fung Group that no material facts have been omitted from the information provided.

— 179 — APPENDIX V PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LAI FUNG GROUP

INSPECTION AND STRUCTURAL CONDITION

We have inspected the exterior and, where possible, the interior of the properties. However, we have not carried out investigations on site to determine the suitability of the ground conditions and the services, etc for any future development. Our valuations are prepared on the assumption that these aspects are satisfactory. Moreover, no structural survey has been made, but in the course of our inspection, we did not note any serious defects. We are not, however, able to report that the properties are free from rot, infestation or any other structural defects, nor were any tests carried out to any of the services.

REMARKS

In preparing our valuation report, we have complied with the requirements contained within relevant provisions of Chapter 5 and Practice Note 12 of the Rules Governing the Listing of Securities issued by The Stock Exchange of Hong Kong Limited and the First Edition 2005 of The HKIS Valuation Standards on Properties published by the Hong Kong Institute of Surveyors.

CURRENCY

Unless otherwise stated, all sums stated in our valuation reports are in Hong Kong dollars. The exchange rate adopted for conversion is HK$1 = RMB0.8766 as at the date of valuation.

Our summary of values and valuation reports are attached.

Yours faithf ully For and on behalf of Knight Frank Petty Limited Alex S L Ng MRICS MHKIS RPS (GP) Executive Director

Note: Mr. Alex S L Ng, MRICS, MHKIS, RPS(GP), has been a qualified valuer with Knight Frank Petty Limited since November 1995 and has 24 years’ experience in valuation of properties in Hong Kong and has been involved in valuation of properties in the People’s Republic of China and Asia Pacific region since 1988.

— 180 — APPENDIX V PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LAI FUNG GROUP

SUMMARY OF VALUES

Market value in existing state Interest attributable Market value attributable to the Lai Fung in existing state to the Lai Fung Group Property as at 31 May 2010 Group as at 31 May 2010

Group I — Property interests held by the Lai Fung Group in the PRC for investment purpose

1. Northgate Plaza I HK$652,000,000 97% HK$632,440,000 and portion of Hui Gong Tower Tian Mu Road West Zhabei District Shanghai The PRC

2. Hong Kong Plaza HK$3,812,000,000 95% HK$3,621,400,000 282 & 283 Huaihaizhong Road Luwan District Shanghai The PRC

3. Various serviced apartment units HK$832,000,000 100% HK$832,000,000 in North Tower Hong Kong Plaza 282 Huaihaizhong Road Luwan District Shanghai The PRC

4. B3 Hui Yi Garden HK$30,800,000 100% HK$30,800,000 No. 18 of Alley 905 Huashan Road Xuhui District Shanghai The PRC

— 181 — APPENDIX V PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LAI FUNG GROUP

Market value in existing state Interest attributable Market value attributable to the Lai Fung in existing state to the Lai Fung Group Property as at 31 May 2010 Group as at 31 May 2010

5. Commercial portion of Regents Park HK$122,800,000 95% HK$116,660,000 88 Huichuan Road Changning District Shanghai The PRC

6. May Flower Plaza HK$1,578,000,000 77.5% HK$1,222,950,000 68 Zhongshanwu Road Yuexiu District, Guangzhou Guangdong Province The PRC

Sub-total: HK$7,027,600,000 HK$6,456,250,000

— 182 — APPENDIX V PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LAI FUNG GROUP

Market value in existing state Interest attributable Market value attributable to the Lai Fung in existing state to the Lai Fung Group Property as at 31 May 2010 Group as at 31 May 2010

Group II — Property interests held by the Lai Fung Group in the PRC for sale purpose

7. Unsold residential units and HK$314,300,000 95% HK$298,585,000 car parking spaces of Regents Park 88 Huichuan Road Changning District Shanghai The PRC

8. Unsold residential units and HK$20,500,000 100% HK$20,500,000 car parking spaces of Eastern Place 787 Dongfeng East Road Yuexiu District, Guangzhou Guangdong Province The PRC

9. Unsold residential units of West Point HK$43,000,000 100% HK$43,000,000 the junction of Zhongshan Qi Road and Guangfu Road Liwan District, Guangzhou Guangdong Province The PRC

Sub-total: HK$377,800,000 HK$362,085,000

Group III — Property interests held under development by the Lai Fung Group in the PRC

10. Northgate Plaza II HK$367,000,000 99% HK$363,330,000 Tian Mu Road West Zhabei District Shanghai The PRC

— 183 — APPENDIX V PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LAI FUNG GROUP

Market value in existing state Interest attributable Market value attributable to the Lai Fung in existing state to the Lai Fung Group Property as at 31 May 2010 Group as at 31 May 2010

11. Shanghai May Flower Plaza HK$1,449,000,000 95% HK$1,376,550,000 the junction of Da Tong Road and Zhi Jiang Xi Road, Sujiaxiang Zhabei District Shanghai The PRC

12. Phase V of Eastern Place HK$1,065,000,000 100% HK$1,065,000,000 787 Dongfeng East Road Yuexiu District, Guangzhou Guangdong Province The PRC

13. Hai Zhu Plaza HK$994,000,000 100% HK$994,000,000 Chang Di Main Road Yuexiu District, Guangzhou Guangdong Province The PRC

14. Various portions of West Point HK$484,000,000 100% HK$484,000,000 the junction of Zhongshan Qi Road and Guangfu Road Liwan District, Guangzhou Guangdong Province The PRC

— 184 — APPENDIX V PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LAI FUNG GROUP

Market value in existing state Interest attributable Market value attributable to the Lai Fung in existing state to the Lai Fung Group Property as at 31 May 2010 Group as at 31 May 2010

15. A parcel of land HK$105,000,000 100% HK$105,000,000 located at 558-596 Donghua Dong Road Yuexiu District, Guangzhou Guangdong Province The PRC

16. A parcel of land HK$109,000,000 100% HK$109,000,000 located at the junction of Da Sha Tou Road and Yan Jiang Dong Road Yuexiu District, Guangzhou Guangdong Province The PRC

17. A parcel of land HK$113,000,000 100% HK$113,000,000 located at 22-28 Guan Lu Road Yuexiu District, Guangzhou Guangdong Province The PRC

18. A parcel of land in HK$1,427,000,000 50% HK$713,500,000 Jinshazhou Heng Sha Guangzhou Guangdong Province The PRC

— 185 — APPENDIX V PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LAI FUNG GROUP

Market value in existing state Interest attributable Market value attributable to the Lai Fung in existing state to the Lai Fung Group Property as at 31 May 2010 Group as at 31 May 2010

19. Palm Springs HK$511,300,000 100% HK$511,300,000 Caihong Planning Area West District Zhongshan Guangdong Province The PRC

Sub-total: HK$6,624,300,000 HK$5,834,680,000

Group IV — Property interest held by the Lai Fung Group in Hong Kong for owner occupation purpose

20. 20th Floor of May Tower II HK$80,000,000 100% HK$80,000,000 and Car Parking Space No. 57 on Ground Floor of May Towers I and II Nos. 5 and 7 May Road Mid-Levels Hong Kong

Sub-total: HK$80,000,000 HK$80,000,000

Grand Total: HK$14,109,700,000 HK$12,733,015,000

— 186 — APPENDIX V PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LAI FUNG GROUP

VA LUATION R EPORT

Group I — Property interests held by the Lai Fung Group in the PRC for investment purpose

Market value Particulars of in existing state Property Description and tenure occupancy as at 31 May 2010

1. Northgate Plaza I and Northgate Plaza I is a 22-storey According to HK$652,000,000 portion of Hui Gong commercial/office building whilst the information Tower Hui Gong Tower is a 11-storey provided, office (97% interest Tian Mu Road West commercial/office building. They and retail portion attributable Zhabei District share a common podium (Levels 1 of the property to the Lai Fung Shanghai to 6) plus two levels of basement with a total gross Group: The PRC underneath, all completed in about floor area of HK$632,440,000) 2001. approximately 25,671 sq m is (please see note 7) The total gross floor area of let under various Northgate Plaza I is 23,304.54 sq tenancies, m and the total gross floor area yielding a total of portion (Levels B2 to 5) of monthly rental Hui Gong Tower owned by Lai of approximately Fung Group is 13,220.44 sq m. RMB1,534,000 The corresponding site area of the with last tenancy property is approximately 4,665.28 expiring on 31 sq m (50,217 sq ft). The gross August 2013 whilst floor area details of the property the remaining are listed as follows: portion of the property is vacant or self-use.

Floor Use Gross Floor Area sq m sq ft

B1* Car park 2,999.53 32,287 B2* Car park 3,353.29 36,095 L1 Other 203.68 2,192 L1* Retail 2,565.77 27,618 L2* Retail 3,459.76 37,241 L3* Retail 3,459.76 37,241 L4* Retail 3,459.76 37,241 L5* Retail 3,459.76 37,241 L6 Retail 1,464.74 15,766 8-22 Office 12,098.93 130,233

Total: 36,524.98 393,155

* The gross floor area of portion of Hui Gong Tower is also included.

The land use rights of the property have been granted for a term of 50 years from 15 June 1993.

— 187 — APPENDIX V PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LAI FUNG GROUP

Notes: (1) Pursuant to the State-owned Land Use Right Certificate No. Hu Guo Yong (Pi) Zi Di 000554 issued by the Shanghai Land Administrative Bureau dated 19 January 1994, the land use rights of a site with site area of approximately 3,261 sq m, have been granted to Shanghai Hankey Real Estate Development Co Ltd, a 97% owned subsidiary of Lai Fung, (“Shanghai Hankey”) for a term of 50 years from 15 June 1993 to 14 June 2043 for composite use (arcade shops/ restaurant/entertainment/office).

(2) Pursuant to the Real Estate Title Certificate No. Hu Fang Di Zi (2003) Di 004171 issued by the Shanghai Real Estate and Land Resources Administrative Bureau dated 10 April 2003, the land use rights of a site with site area of approximately 3,222 sq m and a gross floor area of approximately 20,519.16 sq m, have been granted to Shanghai Hankey for a term of 50 years from 15 June 1993 to 14 June 2043 for composite use (arcade shops/restaurant/entertainment/ office).

(3) Pursuant to the Real Estate Title Certificate No. Hu Fang Di Zha Zi (2004) Di 013357 issued by the Shanghai Real Estate and Land Resources Administrative Bureau dated 16 June 2004 and the Contract for Grant of State-owned Land Use Right entered into between the Shanghai Zhabei District Real Estate and Land Administration Bureau and Shanghai Hankey on 5 December 2003, the land use rights of a site comprising an area of approximately 1,443.28 sq m and a gross floor area of approximately 13,220.44 sq m, have been granted to Shanghai Hankey for a term of 40 years from 22 February 2004 to 21 February 2044 for commercial use.

(4) Pursuant to the Equity Joint Venture Contract and Supplemental Contract both entered into between Huigong Economic Development (Shanghai) Corporation (“Party A”), Shanggong Culture & Sports Development Corporation (“Party B”), Zhabei District Urban Construction & Development Corporation (“Party C”) and Hankey Development Limited (“Party D”) dated 5 September 1993 and 15 July 1997 respectively, all parties agreed to establish a joint venture company named Shanghai Hankey Real Estate Development Co Ltd. The said contract contains, inter-alia, the following salient conditions:

(i) Total investment amount : US$26,550,000

(ii) Registered capital : US$10,800,000 Party A: 1% Party B: 0.4051% Party C: 2% Party D: 96.5949%

(iii) Period of operation : 50 years from the date of issue of business licence

(iv) Profit sharing/risk bearing ratio : According to the respective shares of each party in the registered capital

(5) Pursuant to the Agreement for Share Transfer, Party B agreed to sell its entire interest in Shanghai Hankey to Party D. Consequently, the interest of Party D in Shanghai Hankey is 97%.

(6) Pursuant to the Business Licence No. Qi He Hu Zong Zi Di 004870 (Zhabei) dated 13 June 2007, the operation period of Shanghai Hankey is from 25 October 1993 to 24 October 2043.

(7) As advised by Lai Fung, the property is planned to be refurbished by phases. In the course of our valuation, we have taken into account the aforesaid refurbishment scheme.

— 188 — APPENDIX V PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LAI FUNG GROUP

(8) We have been provided with the opinions of the PRC legal advisers of eSun Holdings Limited and Lai Sun Garment (International) Limited, which inter-alia, contains the following:

(i) Shanghai Hankey has legally obtained the building ownership of the property and can use, transfer, let, mortgage or grant the land use rights and buildings of the property within the land use rights term according to relevant laws and regulations; and

(ii) The property has no mortgage.

— 189 — APPENDIX V PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LAI FUNG GROUP

Market value Particulars of in existing state Property Description and tenure occupancy as at 31 May 2010

2. Hong Kong Plaza Hong Kong Plaza is a composite According to HK$3,812,000,000 282 & 283 development comprising a the information Huaihaizhong Road 32-storey office tower (known provided, office and (Portion A: Luwan District as South Tower) and a 32-storey commercial portion HK$3,221,000,000 Shanghai serviced apartment tower of the property The PRC (known as North Tower), each with a total gross Portion B: surmounting a 7-level (including floor area of HK$591,000,000) 3 basement levels) commercial/car approximately parking podium. The property was 26,425 sq m and a (please see note 7) completed in October 1997. total leasable area of approximately (95% interest The property comprises the 20,205 sq m attributable following accommodations within respectively is to the Lai Fung the development: let under various Group: tenancies yielding a HK$3,621,400,000) South Tower total monthly rental of approximately Approximate RMB12,518,000 Use Floor gross floor area with last tenancy sq m sq ft expiring on 14 March 2021 whilst Commercial B1 3,275.25 35,255 the remaining 14,174.8544,938portion of the 24,098.9044,120property is vacant. 34,702.1550,614In addition, the 44,812.5151,802serviced apartment Office 6-38 33,377.66 359,277 portion of the property is let Total: 54,441.32 586,006 under various short term tenancies. North Tower As at the date of valuation, portion of the Approximate property was under Use Floor gross floor area refurbishment. sq m sq ft

Commercial B1 2,958.93 31,850 13,952.4742,545 23,970.7642,741 34,636.3049,905 44,622.0049,751 Club House/ 6-7 Restaurant 2,314.46 24,913 Serviced 8-38 Apartment 12,843.01 138,242

Total: 35,297.93 379,947

The property also comprises a total of 350 car parking spaces in B1 to B3 levels of the podium and various advertising boards.

The land use rights of the property have been granted for a term from 16 September 1992 to 15 September 2042.

— 190 — APPENDIX V PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LAI FUNG GROUP

Notes: (1) Pursuant to two State-owned Land Use Right Certificates Nos. 001161 and 001162 both issued by the Shanghai Real Estate Administration Bureau and dated 17 July 1995, the titles to two plots of land of the property with a total site area of 14,645 sq m, are both held by Shanghai Li Xing Real Estate Development Co Ltd, a 95% owned subsidiary of Lai Fung, (“Shanghai Li Xing”) for a common term commencing from 16 September 1992 to 15 September 2042 for commercial and office uses.

(2) Pursuant to the Real Estate Title Certificate No. Hu Fang Di Shi Zi (1998) Di 002601 issued by the Shanghai Real Estate Administration Bureau dated 25 June 1998, the title to portion of the property with a total gross floor area of 69,731.66 sq m is held by Shanghai Li Xing for composite use (refer to whole South Tower of the property including basement).

(3) Pursuant to the Real Estate Title Certificate No. Hu Fang Di Shi Zi (1998) Di 100386 issued by the Shanghai Real Estate Administration Bureau dated 12 October 1998, the title to portion of the property with a total gross floor area of 69,538.47 sq m is held by Shanghai Li Xing for apartment use (refer to whole North Tower of the property including basement).

(4) Pursuant to the Real Estate Title Certificate No. Hu Fang Di Shi Zi (2001) Di 007656 issued by the Shanghai Real Estate Administration Bureau dated 10 October 2001, the title to portion of the property with a total gross floor area of 1,211.83 sq m is held by Shanghai Li Xing for office use (refer to units 1601-1608 of South Tower of the property).

(5) Pursuant to the Equity Joint Venture Contract and Supplemental Contracts all entered into among Shanghai Central City Enterprises (Group) Real Estate Company Limited (“Party A”), Sunlite Investment Ltd (“Party B”), Shanghai Grand Development Co Ltd (“Party C”) and Tai Hong Company Limited (“Party D”) dated 26 October 1992, 31 May 1995, 18 March 2000 and 8 August 2001 respectively, all parties agreed to establish a joint-venture company named Shanghai Li Xing Real Estate Development Co Ltd. The salient conditions stipulated in the Joint Venture Contract and consequential amended by the Supplemental Contracts are, inter alia, listed as follows:

(i) Total investment amount : US$105,000,000 (ii) Registered Capital : US$36,000,000 (iii) Period of operation : 50 years as the same as the land grant period (iv) Profit-sharing/risk-bearing : According to the respective shares of each party in ratio the registered capital

(6) Pursuant to the Business Licence No. Qi He Hu Zong Zi Di 004011 (Shiju) dated 25 May 2007, Shanghai Li Xing was established with an operation period from 28 April 1993 to 27 April 2043.

— 191 — APPENDIX V PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LAI FUNG GROUP

(7) According to your specific terms of instruction to provide the breakdown of the market value of property, they are listed as follows:

Market value in existing state as at Portion Property 31 May 2010

A. Commercial and office portion in South Tower, HK$3,221,000,000 Commercial portion in North Tower, 350 car parking spaces in B1 to B3 levels of the podium and advertising boards

B. Club house, restaurant and serviced apartment portion HK$591,000,000 in 6/F to 38/F of North Tower

HK$3,812,000,000

(8) We have been provided with the opinions of the PRC legal advisers of eSun Holdings Limited and Lai Sun Garment (International) Limited, which inter-alia, contains the following:

(i) Shanghai Li Xing has legally obtained the building ownership of the property and can use, transfer, let, mortgage or grant the property according to relevant laws and regulations; and

(ii) Portion of the property is subject to mortgages and the mortgages are valid and enforceable and such portion can be sold, let, transferred, granted or handled in other ways subject to approval from the mortgagee.

— 192 — APPENDIX V PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LAI FUNG GROUP

Market value Particulars of in existing state Property Description and tenure occupancy as at 31 May 2010

3. Various serviced Hong Kong Plaza is a composite According to HK$832,000,000 apartment units in development comprising a the information North Tower 32-storey office tower (known provided, portion (100% interest Hong Kong Plaza as South Tower) and a 32-storey of the property attributable 282 Huaihaizhong serviced apartment tower (known is let under to the Lai Fung Road as North Tower), surmounting various short term Group: Luwan District a common 7-level (including 3 tenancies. As at the HK$832,000,000) Shanghai basement levels) commercial/car date of valuation, The PRC parking podium completed in portion of the October 1997. property was under (please see note 2 refurbishment. for details) The property comprises various serviced apartment units in the North Tower with a total gross floor area of 19,672.77 sq m (211,758 sq ft). The gross floor area of each unit ranges from 60.70 sq m (653 sq ft) to 276.98 sq m (2,981 sq ft).

The land use rights of the property have been granted for a term commencing from 3 January 2000 to 15 September 2042.

Notes: (1) Pursuant to 181 Real Estate Title Certificates Nos. Hu Fang Di Shi Zi (2000) Di 000372-000395, 000410-000451, 000454-000458, 000485-000507, 000510-000569, 000572-000597 and 000640 all issued by the Shanghai Real Estate and Land Administration Bureau, the property with a total gross floor area of 19,672.77 sq m is held by Good Strategy Limited, a 100% owned subsidiary of Lai Fung, for composite use.

(2) The property comprises Unit Nos. 1 to 13 on each of 15th to 21st and Unit Nos. 1 to 6 on each of 34th to 36th floors, Unit Nos. 3, 6, 7 and 10 on 22nd floor, Unit Nos. 3, 7, 10 and 11 on 23rd floor, Unit Nos. 3, 6, 7 and 11 on 25th floor, Unit Nos. 2, 3, 6, 7, 10 and 11 on 26th, Unit Nos. 2, 3, 6, 7, 10 and 11 on 27th floors, Unit Nos. 2, 3, and 6 on 28th floor, Unit Nos. 2, 3, 6, 7, 10 and 11 on 29th floor, Unit Nos. 2, 3, 6 and 11 on 30th floor, Unit Nos. 2, 3, 4, 6, 9, 10, 11 and 12 on 31st floor, Unit Nos. 1, 2, 3, 4, 8, 10, 11 and 12 on 32nd floor and Unit Nos. 1, 2, 3, 4, 9, 10, 11 and 12 on 33rd floor.

— 193 — APPENDIX V PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LAI FUNG GROUP

(3) We have been provided with the opinions of the PRC legal advisers of eSun Holdings Limited and Lai Sun Garment (International) Limited, which inter-alia, contains the following:

(i) Good Strategy Limited has legally obtained the building ownership and the respective land use rights of the property; and

(ii) The property is subject to a mortgage and the mortgage is valid and enforceable. The property can be sold, let, transferred, granted or handled in other ways subject to approval from the mortgagee.

— 194 — APPENDIX V PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LAI FUNG GROUP

Market value in existing state Particulars of as at Property Description and tenure occupancy 31 May 2010

4. B3 Hui Yi Garden The property comprises a 3-storey As advised, HK$30,800,000 No. 18 of Alley 905 detached house, a garden and a the property is Huashan Road car parking lot all standing on a currently vacant. (100% interest Xuhui District levelled site with an area of 415.98 attributable Shanghai sq m (4,478 sq ft). to the Lai Fung The PRC Group: The 3-storey detached house is of HK$30,800,000) brick/reinforced concrete structure completed in 1993 with a total gross floor area of 317.80 sq m (3,421 sq ft) and the site area of the garden is approximately 179 sq m (1,927 sq ft).

The land use rights of the property have been granted for unspecified term (please see note (2) below for details).

Notes: (1) Pursuant to the Real Estate Title Certificate No. Hu Fang Di Shi Zi (2002) Di 010907 dated 30 October 2002 issued by the Shanghai Real Estate and Land Resources Administration Bureau, the title to the land with a common area of approximately 415.98 sq m and the 3-storey building with a gross floor area of approximately 317.80 sq m is vested in Canvex Limited, a 100% owned subsidiary of Lai Fung, for residential use for unspecified term.

(2) As advised by Lai Fung, land use rights of the property will be granted for a land use right term of 70 years for residential use subject to a land premium of approximately RMB3,000,000. In the course of our valuation, we have assumed that the aforesaid land premium has been fully settled.

(3) We have been provided with the opinions of the PRC legal advisers of eSun Holdings Limited and Lai Sun Garment (International) Limited, which inter-alia, contains the following:

(i) Canvex Limited has legally obtained the building ownership of the property and can use, transfer, let, mortgage or grant the property according to relevant laws and regulations; and

(ii) The property has no mortgage.

— 195 — APPENDIX V PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LAI FUNG GROUP

Market value in existing state Particulars of as at Property Description and tenure occupancy 31 May 2010

5. Commercial portion of Regents Park (the “Development”) According to HK$122,800,000 Regents Park is a large-scale residential/ the information 88 Huichuan Road commercial composite provided, portion of (95% interest Changning District development developed into two the property with attributable Shanghai phases. a gross floor area to the Lai Fung The PRC of approximately Group The property comprises 5,564, sq m is HK$116,660,000) commercial portion of the subject to various Development with a total gross tenancies yielding a floor area of approximately total monthly rental 7,623.79 sq m (82,062 sq ft) of approximately completed in 2006. RMB464,000 with last tenancy The land use rights of the expiring on Development have been granted 15 December for a term of 70 years commencing 2016 whilst the from 4 May 1996 for residential remaining portion use. is vacant.

Notes: (1) Pursuant to the Shanghai Real Estate Title Certificate No. Hu Fang Di Chang Zi (2006) Di 010832 issued by the Shanghai Housing and Land Resources Administration Bureau on 10 June 2006, the title to the Development (Phase I and basement car park) with a total gross floor area of 114,009.40 sq m is held by Shanghai Wa Yee Real Estate Development Co., Limited, a 95% owned subsidiary of Lai Fung, (“Shanghai Wa Yee”) for a land use term of 70 years from 4 May 1996 to 3 May 2066 for residential use. As advised by Lai Fung, portion of the property under this Title Certificate has been sold.

(2) Pursuant to the Equity Joint Venture Contract entered into between Kingscord Investment Limited, interest held in trust for the Lai Fung Group, (“Party A”), Wide Angle Development Limited, an indirectly wholly owned subsidiary of the Lai Fung Group, (“Party B”) and 上海長寧房地產（集團）公司 (Shanghai Changning Real Estate (Group) Company) (“Party C”) on 1 March 1996, all parties agreed to establish a joint-venture company named Shanghai Wa Yee Real Estate Development Co., Limited. The said contract contains, inter-alia, the following salient conditions:

(i) Total investment amount : US$25,000,000

(ii) Registered capital : US$10,000,000 Party A: 70% Party B: 25% Party C: 5%

(iii) Period of operation : 70 years from the date of issue of business licence

(3) Pursuant to the Business Licence No. Qi He Hu Zong Zi Di 023968 (Changning) dated 11 July 2007, Shanghai Wa Yee was established with an operation period from 3 September 1997 to 19 August 2067.

— 196 — APPENDIX V PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LAI FUNG GROUP

(4) We have been provided with the opinions of the PRC legal advisers of eSun Holdings Limited and Lai Sun Garment (International) Limited, which inter-alia, contains the following:

(i) Shanghai Wa Yee has legally obtained the building ownership of the property and can use, transfer, let, mortgage or grant the land use rights and building of the property according to relevant laws and regulations within the land use rights term of the property; and

(ii) The property has no mortgage.

— 197 — APPENDIX V PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LAI FUNG GROUP

Market value Particulars of in existing state Property Description and tenure occupancy as at 31 May 2010

6. May Flower Plaza The property comprises an According to HK$1,578,000,000 68 Zhongshanwu irregular-shaped site with an area the information Road of approximately 3,912.27 sq m provided, office (77.5% interest Yuexiu District (42,112 sq ft). and retail portion attributable Guangzhou of the property to the Lai Fung Guangdong The property comprises a with a total gross Group: Province 13-storey office and commercial floor area of HK$1,222,950,000) The PRC tower erected over four basement approximately levels with approximate gross 39,944 sq m is floor areas (excluding public subject to various ancillary facilities area of about tenancies yielding a 1,037.04 sq m) listed as follows: total monthly rental of approximately Approximate RMB5,054.000 Use Floor Gross Floor Area with last tenancy sq m sq ft expiring on 27 February Car park B4 3,864.36 41,596 2019 whilst the Car park B3 3,677.21 39,581 remaining portion Retail/ B2 3,430.31 36,924 is vacant or Car park self-use. Retail/ B1 2,544.93 27,394 Car park Retail L1 2,288.93 24,638 Retail L2 4,245.21 45,695 Retail L3 4,103.83 44,174 Retail L4 3,978.91 42,829 Retail L5 3,406.65 36,669 Cinema L6 3,310.88 35,638 Cinema/ L7 1,732.82 18,652 Office Retail L8 3,363.03 36,200 Office L9 2,140.67 23,042 Office L10 2,079.35 22,382 Office L11 1,760.05 18,945 Office L12 1,769.96 19,052 Office L13 1,769.96 19,052

Total: 49,467.06 532,463

The basement level of the property accommodates a total of approximately 136 car parking spaces and the property also comprises various advertising boards.

The land use rights of the property have been granted for term of 40 years for commercial use and 50 years for other uses commencing from 14 October 1997.

— 198 — APPENDIX V PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LAI FUNG GROUP

Notes: (1) Pursuant to nineteen Guangzhou Real Estate Title Certificates Nos. Yue Fang Di Quan Zheng Sui Zi Di 0140064423 to 0140064441 all issued by the Guangzhou Land Resources and Real Estate Administration Bureau, the title to the property with a total gross floor area of 49,467.05 sq m is vested in Guangzhou Jieli Real Estate Development Co Ltd, a 77.5% owned subsidiary of Lai Fung, (“Guangzhou Jieli”) for land use rights term of 40 years for commercial use and 50 years for other uses commencing from 14 October 1997. The details of which are listed as follows:

Gross Certificate No. Level Use Floor Area

1. Yue Fang Di Quan Zheng Sui Zi Di 0140064424 Basement 4 Car park 3,864.36 sq m 2. Yue Fang Di Quan Zheng Sui Zi Di 0140064425 Basement 3 Car park 3,677.21 sq m 3. Yue Fang Di Quan Zheng Sui Zi Di 0140064426 Basement 2 Commercial and catering 2,707.16 sq m 4. Yue Fang Di Quan Zheng Sui Zi Di 0140064427 Basement 2 Car park 723.16 sq m 5. Yue Fang Di Quan Zheng Sui Zi Di 0140064428 Basement 1 Commercial and catering 1,927.46 sq m 6. Yue Fang Di Quan Zheng Sui Zi Di 0140064429 Basement 1 Car park 617.47 sq m 7. Yue Fang Di Quan Zheng Sui Zi Di 0140064430 Level 1 Commercial 2,288.92 sq m 8. Yue Fang Di Quan Zheng Sui Zi Di 0140064431 Level 2 Commercial and catering 4,245.21 sq m 9. Yue Fang Di Quan Zheng Sui Zi Di 0140064432 Level 3 Commercial and catering 4,103.83 sq m 10. Yue Fang Di Quan Zheng Sui Zi Di 0140064433 Level 4 Commercial 3,978.91 sq m 11. Yue Fang Di Quan Zheng Sui Zi Di 0140064434 Level 5 Catering 3,406.65 sq m 12 Yue Fang Di Quan Zheng Sui Zi Di 0140064423 Level 6 Cinema 3,310.88 sq m 13. Yue Fang Di Quan Zheng Sui Zi Di 0140064435 Level 7 Cinema 1,732.81 sq m 14. Yue Fang Di Quan Zheng Sui Zi Di 0140064436 Level 8 Catering 3,363.03 sq m 15. Yue Fang Di Quan Zheng Sui Zi Di 0140064437 Level 9 Catering 2,140.67 sq m 16. Yue Fang Di Quan Zheng Sui Zi Di 0140064438 Level 10 Office 2,079.35 sq m 17. Yue Fang Di Quan Zheng Sui Zi Di 0140064439 Level 11 Office 1,760.05 sq m 18. Yue Fang Di Quan Zheng Sui Zi Di 0140064440 Level 12 Office 1,769.96 sq m 19. Yue Fang Di Quan Zheng Sui Zi Di 0140064441 Level 13 Office 1,769.96 sq m

Total: 49,467.05 sq m

(2) Pursuant to the State-owned Land Use Right Certificate No. Sui Fu Guo Yong (1997) Zi Di Te 028 issued by the People’s Government of Guangzhou dated 14 October 1997, the title to the land with a site area of approximately 5,782 sq m is held by Guangzhou Jieli for a land use term of 70 years for residential use, 40 years for commercial uses and 50 years for other uses.

(3) Pursuant to the approval letter No. Sui Wai Jing Mao Zi Pi (2010) 453 issued by the Bureau of Foreign Trade and Economic Co-operation of Guangzhou dated 13 June 2010, the name of Guangzhou Jieli was allowed to be changed to 廣州捷麗置業有限公司 (Guangzhou Jieli Real Estate Co Ltd) with term of operation of 40 years.

(4) Pursuant to the Business Licence No. 440101400015962 dated 22 June 2010, Guangzhou Jieli was established with an operation period from 31 December 1993 to 31 December 2033.

— 199 — APPENDIX V PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LAI FUNG GROUP

(5) We have been provided with the opinions of the PRC legal advisers of eSun Holdings Limited and Lai Sun Garment (International) Limited, which inter-alia, contains the following:

(i) Guangzhou Jieli has legally obtained the building ownership of the property and can use, transfer, let, mortgage or grant the property according to relevant laws and regulations; and

— 200 — APPENDIX V PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LAI FUNG GROUP

Group II — Property interests held by the Lai Fung Group in the PRC for sale purpose

Market value Particulars of in existing state Property Description and tenure occupancy as at 31 May 2010

7. Unsold residential units Regents Park (the “Development”) As advised, the HK$314,300,000 and car parking spaces is a large-scale residential/ residential units of of Regents Park commercial composite the property are (95% interest 88 Huichuan Road development developed into two currently vacant attributable Changning District phases. whilst the car to the Lai Fung Shanghai parking spaces are Group The PRC The property comprises 11 subject to various HK$298,585,000) residential units in Towers 8, 9, licences with terms 10, 12 and 13 of the Development ranging from 1 (please see note 6) with a total gross floor area of month to 1 year. 3,401.86 sq m (36,618 sq ft) and 406 basement car parking spaces with a total gross floor area of 13,085.38 sq m (140,851 sq ft) completed in 2006.

The land use rights of the Development have been granted for a term of 70 years commencing from 4 May 1996 for residential use.

Notes: (1) Pursuant to the Shanghai Real Estate Title Certificate No. Hu Fang Di Chang Zi (2009) Di 008239 issued by the Shanghai Housing and Land Resources Administration Bureau on 12 June 2009, the title to the Development (Phase II — Towers 8, 10 to 13) with a total gross floor area of 54,656.03 sq m is held by Shanghai Wa Yee Real Estate Development Co., Limited, a 95% owned subsidiary of Lai Fung, (“Shanghai Wa Yee”) for a land use term of 70 years from 4 May 1996 to 3 May 2066 for residential use. As advised by Lai Fung, portion of the property under this Title Certificate has been sold.

(2) Pursuant to the Shanghai Real Estate Title Certificate No. Hu Fang Di Chang Zi (2009) Di 025156 issued by the Shanghai Housing and Land Resources Administration Bureau on 30 December 2009, the title to the Development (Phase II — Tower 9) with a total gross floor area of 12,322.59 sq m is held by Shanghai Wa Yee for a land use term of 70 years from 4 May 1996 to 3 May 2066 for residential use. As advised by Lai Fung, portion of the property under this Title Certificate has been sold.

(3) Pursuant to the Shanghai Real Estate Title Certificate No. Hu Fang Di Chang Zi (2009) Di 003008 issued by the Shanghai Housing and Land Resources Administration Bureau on 20 March 2009, the title to the Development (406 basement car park) with a total gross floor area of 13,085.38 sq m is held by Shanghai Wa Yee for a land use term of 70 years from 4 May 1996 to 3 May 2066 for residential use.

— 201 — APPENDIX V PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LAI FUNG GROUP

(4) Pursuant to the Equity Joint Venture Contract entered into between Kingscord Investment Limited, interest held in trust for the Lai Fung Group, (“Party A”), Wide Angle Development Limited, an indirectly wholly owned subsidiary of the Lai Fung Group, (“Party B”) and 上海長寧房地產（集團）公司 (Shanghai Changning Real Estate (Group) Company) (“Party C”) on 1 March 1996, all parties agreed to establish a joint-venture company named Shanghai Wa Yee Real Estate Development Co., Limited. The said contract contains, inter-alia, the following salient conditions:

(i) Total investment amount : US$25,000,000

(ii) Registered capital : US$10,000,000 Party A: 70% Party B: 25% Party C: 5%

(iii) Period of operation : 70 years from the date of issue of business licence

(5) Pursuant to the Business Licence No. Qi He Hu Zong Zi Di 023968 (Changning) dated 11 May 2007, Shanghai Wa Yee was established with an operation period from 3 September 1997 to 19 August 2067.

(6) As advised by the Lai Fung Group, two residential units of the property with a total gross floor area of 449.82 sq m have been sold at a total consideration of RMB19,998,770 in June 2010. According to the Lai Fung Group’s instruction, the aforesaid sold portion is included in this valuation. We have also made reference to the contracted consideration in the course of our valuation.

(7) We have been provided with the opinions of the PRC legal advisers of eSun Holdings Limited and Lai Sun Garment (International) Limited, which inter-alia, contains the following:

(i) Shanghai Wa Yee has legally obtained the building ownership of the property and can use, transfer, let, mortgage or grant the land use rights and buildings of the property according to relevant laws and regulations within the land use rights term of the property; and

(ii) The property has no mortgage.

— 202 — APPENDIX V PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LAI FUNG GROUP

Market value in existing state Particulars of as at Property Description and tenure occupancy 31 May 2010

8. Unsold residential Eastern Place (the “Development”) As advised, HK$20,500,000 units and car parking is a large-scale commercial/ the property is spaces residential composite development currently vacant. (100% interest of Eastern Place planned to be developed by attributable 787 Dongfeng East phases. to the Lai Fung Road Group: Yuexiu District The property comprises 2 HK$20,500,000) Guangzhou residential units in Towers 1 and Guangdong Province 8 of the Development with a total The PRC gross floor area of 173.93 sq m (1,872 sq ft) and 41 basement car parking spaces with a total gross floor area of 474.96 sq m (5,112 sq ft) completed in 2000 and 2006.

The land use rights of the property have been granted for a term of 70 years commencing from 30 September 1997 for business, office and commercial/residential uses.

Notes: (1) Pursuant to the Guangzhou Real Estate Title Proof No. 0108100 issued by the Guangzhou Real Estate Administration Bureau dated 20 March 2001, the title of the Development (Towers 1, 2, basement car park and other) with a total gross floor area of 47,492.78 sq m is vested in Guangzhou Grand Wealth Properties Ltd, a 100% owned subsidiary of Lai Fung. (“Guangzhou Grand Wealth”). As advised by Lai Fung, portion of the property under this Title Proof has been sold.

(2) Pursuant to the Guangzhou Real Estate Title Proof No. B0001446 issued by the Guangzhou Land Resources and Real Estate Administration Bureau in November 2007, the title of the Development (Towers 7 and 8) with a total gross floor area of 40,761.94 sq m is vested in Guangzhou Grand Wealth for a term of 70 years commencing from 30 September 1997 for business, office and commercial/residential uses. As advised by Lai Fung, portion of the property under this Title Proof has been sold.

(3) Pursuant to the Guangzhou Real Estate Registration Notice No. 10 Deng Ji 01356145 dated 30 June 2010, the title of 41 basement car parking spaces of the property with a total gross floor area of 474.96 sq m is vested in Guangzhou Grand Wealth.

— 203 — APPENDIX V PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LAI FUNG GROUP

(4) Pursuant to the Co-operative Joint Venture Contract and five Supplemental Contracts all entered into between Guangzhou Light Industry Real Estate Development Company (formerly known as Guangzhou Yuexing Real Estate Development Company) (“Party A”) and Grand Wealth Ltd (“Party B”) on 23 November 1993, 3 June 1996, 31 December 1996, 3 May 1997, 5 August 1997 and 10 July 2008 respectively, both parties agreed to established a joint venture company named Guangzhou Grand Wealth Properties Ltd. The said contracts contain, inter- alia, the following conditions:

(i) Total investment amount : HK$560,000,000

(ii) Registered capital : HK$280,000,000

(iii) Period of operation : 15 years from the date of issue of business licence

(iv) Party B shall be responsible for the total investment amount as stipulated in the contract

(v) Party A shall be entitled to share 19,500 sq m gross floor area of the development whilst Party B shall be entitled to the remaining floor area of the development and sale proceeds derived therefrom

(5) Pursuant to the Business Licence No. 440101400003975 dated 24 June 2010, Guangzhou Grand Wealth was established with an operation period from 15 June 1994 to 15 June 2014.

(6) We have been provided with the opinions of the PRC legal advisers of eSun Holdings Limited and Lai Sun Garment (International) Limited, which inter-alia, contains the following:

(i) Guangzhou Grand Wealth has legally obtained the building ownership of the property;

(ii) Guangzhou Grand Wealth has no legal obstacles in obtaining Real Estate Title Certificate;

(iii) Guangzhou Grand Wealth can use, transfer, let, mortgage or grant the land use rights and buildings of the property within the land use rights terms of the property after obtaining Real Estate Title Certificate; and

(iv) The property has no mortgage.

— 204 — APPENDIX V PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LAI FUNG GROUP

Market value in existing state Particulars of as at Property Description and tenure occupancy 31 May 2010

9. Unsold residential West Point (the “Development”) As advised, HK$43,000,000 units of West Point is a composite development the property is situated at the comprising a residential tower currently vacant. (100% interest junction of Zhongshan and an office tower both erected attributable Qi Road and Guangfu on a 4-level commercial podium to the Lai Fung Road and a 2-level basement car park Group Liwan District completed in about 2010. HK$43,000,000) Guangzhou Guangdong Province The property comprises 25 unsold The PRC residential units of the Development with a total gross floor area of approximately 2,278.14 sq m (24,522 sq ft).

The land use rights of the Development have been granted for a term of 70 years for residential use, 40 years for business, tourism and entertainment uses and 50 years for other use.

Notes: (1) Pursuant to the State-owned Land Use Right Certificate No. Sui Guo Yong (2005) Di 348 issued by the People’s Government of Guangzhou dated 11 January 2006, the title to the property with a site area of approximately 6,003 sq m is held by Guangzhou Honghui Real Estate Development Co., Ltd., a 100% owned subsidiary of Lai Fung, (“Guangzhou Honghui”) for a land use term of 70 years for residential use, 40 years for business, tourism and entertainment uses and 50 years for other use.

(2) Pursuant to the Contract for Grant of State-owned Land Use Right No. Sui Jian Kai He (1992) 122 entered into between the Guangzhou Urban and Rural Construction Committee and Guangzhou Honghui on 27 November 1992, the former party agreed to grant the land with an area of approximately 7,471 sq m to the latter party at a consideration of RMB15,000,000 for a land use term of 70 years for residential use, 40 years for business, tourism and entertainment uses and 50 years for other use.

(3) Pursuant to the Supplementary Contract for Grant of State-owned Land Use Right No. Sui Jian Kai He (1992) 122 entered into between the Guangzhou Land Bureau and Guangzhou Honghui on 25 April 1996, both parties agreed to amend the contract as stated in note (2) above. The total permitted gross floor area was amended to 71,733 sq m (13,950 sq m for commercial use, 39,489 sq m for office use, 8,205 sq m for residential use and 10,080 sq m for other use) with an additional land grant fee of RMB9,416,948.

— 205 — APPENDIX V PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LAI FUNG GROUP

(4) Pursuant to the Modified Agreement of Contract for Grant of State-owned Land Use Right No. Sui Jian Kai He (1992) 122 entered into between the Guangzhou Land Resources and Buildings Administration Bureau and Guangzhou Honghui on 22 November 2005, both parties agreed to amend the contracts as stated in note (2) and (3) above. The total permitted gross floor area was amended to 72,256 sq m (17,095 sq m for commercial use, 20,286 sq m for office use, 22,167 for residential use and 10,000 for basement and 2,708 for other use) with an additional land grant fee of RMB4,968,601.

(5) Pursuant to three Supplementary Agreement of Co-operative Joint Venture Contracts all entered into between 廣州市白雲城市建設開發有限公司 (Guangzhou Bai Yun City Construction Development Co Ltd) (“Party A”) and Frank Light Development Limited (“Party B”) on 29 September 1998, 4 February 2008 and 8 April 2010, Guangzhou Honghui is established by Party A and Party B with a total investment amount of RMB182,510,000 and registered capital of RMB79,720,000 which is fully paid by Party B and Party A is entitled to receive an amount of RMB35,866,500 from Party B as fixed profit. As advised by Lai Fung, portion of the aforesaid fixed profit (RMB16,500,000) had been settled as at the valuation date.

(6) Pursuant to the Business Licence No. Qi Zuo Yue Sui Zong Zi Di 003563 dated 3 April 2008, Guangzhou Honghui was established with an operation period from 11 February 1993 to 11 February 2013.

(7) Pursuant to the Construction Land Use Planning Permit No. Sui Gui Di Huan Zheng Zi (1999) Di 50 issued by the Guangzhou Urban Planning Bureau on 4 May 1999, the land with site area of approximately 7,471 sq m was permitted to be developed.

(8) Pursuant to the Construction Engineering Planning Permit No. (93) Sui Cheng Gui Bei Pian Jian Zi Di 520 issued by the Guangzhou Urban Planning Bureau on 8 September 1995, the construction of portion of the property with a total gross floor area of approximately 34,400 sq m (24,320 sq m above ground and 10,080 sq m below ground) is permitted to be constructed.

(9) Pursuant to the Construction Engineering Planning Permit No. (94) Sui Cheng Gui Bei Pian Jian Zi Di 283 issued by the Guangzhou Urban Planning Bureau on 8 September 1995, the construction of portion of the property with a total gross floor area of approximately 37,333 sq m is permitted to be constructed.

(10) Pursuant to the Construction Engineering Planning Permit No. Sui Gui Jian Zheng (2002) 1844 issued by Guangzhou Urban Planning Bureau on 16 January 2003, the construction of portion of the property with a total gross floor area of approximately 47,330 sq m is permitted to be constructed.

(11) Pursuant to the Construction Work Commencing Permit No. Sui Jian (Shi) Zheng Zi (95) Di 226 dated 30 May 1995, the construction work of portion of the proposed development is permitted to be commenced.

(12) Pursuant to the Construction Work Commencing Permit No. Sui Jian (Shi) Zheng Zi (96) Di 030 dated 25 March 1996, the construction work of portion of the proposed development is permitted to be commenced.

(13) Pursuant to the Construction Work Commencing Permit No. 440103200505260101 dated 26 May 2005, the construction work of portion of the proposed development is permitted to be commenced.

— 206 — APPENDIX V PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LAI FUNG GROUP

(14) Pursuant to the Guangzhou Commodity Housing Pre-sale Permit No. Sui Fang Yu (Wang) Zi Di 20080244-2 issued by the Guangzhou State Land Resources and Building Administration Bureau dated 20 August 2009, portion of the Development with a total gross floor area of 42,435.39 sq m was permitted to be pre-sold.

(15) We have been provided with the opinions of the PRC legal advisers of eSun Holdings Limited and Lai Sun Garment (International) Limited, which inter-alia, contains the following:

(i) Guangzhou Honghui has legally obtained the land use rights of the property and can develop, use and operate within the land of the property according to relevant laws and regulations;

(ii) Guangzhou Honghui has the right to pre-sell the property; and

(iii) The property has no mortgage.

— 207 — APPENDIX V PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LAI FUNG GROUP

Group III — Property interests held under development by the Lai Fung Group in the PRC

Market value in existing state Particulars of as at Property Description and tenure occupancy 31 May 2010

10. Northgate Plaza II The property comprises an Foundation work HK$367,000,000 Tian Mu Road West irregular-shaped site with an of the property has Zhabei District area of approximately 4,115 sq m been completed (99% interest Shanghai (44,294 sq ft). 2009 whilst the attributable The PRC superstructure to the Lai Fung The property is planned to be work is pending Group developed into a 25-storey office/ for approval of HK$363,330,000) apartment building erected upon revised design plan. a 4-level commercial podium and As advised by Lai (please see notes three levels of car park basement Fung, the proposed 8, 9 and 10) with a total gross floor area development of of approximately 34,839 sq m the property is (375,007 sq ft). The area details is scheduled to be listed as follows: completed in 2013.

Approximate Use Gross Floor Area sq m sq ft

Office/ apartment 18,352 197,541 Retail 5,794 62,367 Club house 761 8,191 Other 112 1,206 Car park (basement) 9,820 105,702

Total: 34,839 375,007

The land use rights of the property have been granted for a term of 50 years from 15 November 1993 to 14 November 2043 for composite use.

Notes: (1) Pursuant to the State-owned Land Use Right Certificate No. Hu Guo Yong (Pi) Zi Di 001442 issued by the Shanghai Land Administration Bureau dated 18 October 1995, the land use rights of Lot No. 130-5 with a site area of approximately 4,115 sq m, have been granted to Shanghai Zhabei Plaza Real Estate Development Co. Ltd, a 99% owned subsidiary of Lai Fung, (“Shanghai Zhabei”) for a term of 50 years from 15 November 1993 to 14 November 2043 for composite use (commercial/office/entertainment).

— 208 — APPENDIX V PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LAI FUNG GROUP

(2) Pursuant to the Contract for Grant of State-owned Land Use Right No. Hu Tu (1993) Chu Rang He Tong Di 129 entered into between the Shanghai Land Administration Bureau (“Party A”) and Hankey Development Limited and Beichen Industry & Commerce (Shanghai) Company (collectively referred to as “Party B”) on 8 September 1993, Party A agreed to grant the land use rights of Lot No. 130-5 to Party B for a term of 50 years. The said contract contains, inter- alia, the following salient conditions:

(i) Site area : 4,115 sq m

(ii) Use : Composite use (commercial/office/entertainment)

(iii) Plot ratio : Not exceeding 7 (total gross floor area not exceeding 28,805 sq m)

(iv) Site coverage : Not exceeding 50%

(v) Building height : Not exceeding 120 m

(vi) Green area ratio : Not less than 10% of site area

(vii) Land grant fee : US$1,857,923

(viii) Party B shall complete construction works of superstructure erected on the land by not less than 60% of the total gross floor area before 30 September 1996 and the whole construction works before 31 December 1997.

(3) Pursuant to the Equity Joint Venture Contract entered into between Beichen Industry & Commerce (Shanghai) Company (“Party C”) and Hankey Development Ltd (“Party D”) on 25 November 1993, both parties agreed to establish a joint venture company named Shanghai Zhabei Plaza Real Estate Development Co Ltd. The said contract contains, inter-alia, the following salient conditions:

(i) Total investment amount : US$36,000,000

(ii) Registered capital : US$12,000,000 Party C: 1% Party D: 99%

(iii) Period of operation : 50 years from the date of issue of business licence

(iv) Profit sharing/risk bearing ratio : According to the respective shares of each party in the registered capital

(4) Pursuant to the Business Licence No. 310000400093403 (Shiju) dated 10 April 2009, the operation period of Shanghai Zhabei was established with an operation period from 12 September 1994 to 11 September 2044.

— 209 — APPENDIX V PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LAI FUNG GROUP

(5) Pursuant to the Approval for Design Amendment No. Hu Zha Fang (2007) 08070821D01878 issued by the Zhabei Urban Planning Administration Bureau dated 21 August 2007, the design of the proposed development was approved which contains, inter-alia, the following salient conditions:

(i) Site area : 4,115 sq m

(ii) Total gross floor area : 34,409 sq m (24,760 sq m for above ground and 9,649 sq m for below ground and only 24,648 sq m above ground area is countable for plot ratio calculation)

(iii) Plot ratio : 5.99

(iv) Site coverage : 50%

(v) Green area ratio : 16.8%

(6) Pursuant to the Construction Land Use Planning Permit No. Hu Zha Di (2008) 08080116E00049 issued by the Zhabei District Urban Planning Administrative Bureau on 16 January 2008, the land with a site area of approximately 4,115 sq m was permitted to be developed.

(7) Pursuant to the Construction Work Commencing Permit No. 9302ZB7002D01 dated 24 November 2008, the construction work (piling) of the property is permitted to be commenced.

(8) According to the specific terms of instructions of Lai Fung, we have assumed that the condition stated in note (2) (viii) above has been waived in the course of our valuation and no adverse action will be taken against the property.

(9) As advised by Lai Fung, the construction cost incurred (excluding professional fee and finance cost) of the property as at the date of valuation was approximately RMB36,500,000. In addition, the outstanding ancillary facilities cost of the property was approximately RMB16,000,000 as at the date of valuation. Accordingly, we have taken into account the said costs in our valuation. In our opinion, the market value of the property assuming they were completed as at the valuation date was estimated approximately as RMB795,000,000.

(10) In the course of our valuation, we have assumed that relevant laws, regulations and all relevant requirements stipulated in the land grant contract have been complied with. The land use rights of the property can be freely transferred, let or mortgaged in the market.

(11) We have been provided with the opinions of the PRC legal advisers of eSun Holdings Limited and Lai Sun Garment (International) Limited, which inter-alia, contains the following:

(i) Shanghai Zhabei has legally obtained the land use rights of the property;

(ii) As Shanghai Zhabei has not yet commenced superstructure work in accordance with the original terms of the land grant, it stands exposed to the risk of being assessed a monetary fine or forfeiture of the land use rights of the property and structures erected thereon. We understand from Shanghai Zhabei management however that the project remains active and has already received approval for its architectural design plans from the local governmental in November 2008, and based on such approval foundation works of the project have already been completed. Shanghai Zhabei management further confirmed that in accordance with a local government directive, all companies are asked to suspend construction work whilst the 2010 Shanghai Expo is in progress; accordingly they could not apply for a construction work permit with the relevant governmental departments until the Expo event is completed. In addition, we also noted in the opinions of the PRC legal advisers of eSun Holdings Limited and Lai Sun Garment (International) Limited, that Shanghai Zhabei has confirmed that it has not received any letter to date from the Zhabei authorities concerning possible penalty assessment or resumption of the subject property. In addition, Shanghai Zhabei has carried out a search of the website of the Shanghai Municipal Bureau of Planning and Land Resources and no notice of resumption has been published in respect of the property; and

(iii) The property has no mortgage.

— 210 — APPENDIX V PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LAI FUNG GROUP

Market value in existing state Particulars of as at Property Description and tenure occupancy 31 May 2010

11. Shanghai May The property comprises a plot The property is HK$1,449,000,000 Flower Plaza of land with a site area of currently under the junction of approximately 19,742.00 sq m construction and (95% interest Da Tong Road and (212,503 sq ft). scheduled to be attributable Zhi Jiang Xi Road, completed in 2nd to the Lai Fung Sujiaxiang The property is planned to be quarter of 2011. Group Zhabei District developed into a composite HK$1,376,550,000) Shanghai development with residential and The PRC office apartment towers erected (please see note 10) on a commercial podium. The proposed development will also comprise a 3-storey basement for car park use.

Upon completion, the property will have a total gross floor area of approximately 147,924 sq m (1,592,254 sq ft) with detail gross floor areas listed as follows:

Approximate Use Gross Floor Area sq m sq ft

Residential 59,925 645,033 Commercial 16,776 180,577 Commercial (basement) 15,162 163,204 Office Apartment 20,134 216,722 Club house 3,440 37,028 Car park (basement) 26,669 287,065 Other (basement) 5,818 62,625

Total: 147,924 1,592,254

The land use rights of the property have been granted for terms of 70 years for residential use, 40 years for commercial use and 50 years for office use commencing from 5 February 2007.

— 211 — APPENDIX V PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LAI FUNG GROUP

Notes: (1) Pursuant to the Shanghai Certificate of Real Estate Ownership Hu Fang Di Zha Zi No. (2007) 017286 issued by the Shanghai Housing and Land Resources Administration Bureau on 12 November 2007, the land use rights of the property, having a site area of 19,742 sq m, is vested in Shanghai Hu Xin Real Estate Development Co., Ltd, a 95% owned subsidiary of Lai Fung, (“Shanghai Hu Xin”) for terms of 70 years for residential use, 40 years for commercial use and 50 years for office use commencing from 5 February 2007.

(2) Pursuant to the Contract for Grant of State-owned Land Use No. Right Hu Fang Di (1995) Chu Rang He Tong Wai Zi Di 001 entered into between the Shanghai Housing and Land Administrative Bureau (“Party A”) and Kingscord Investment Limited and 上海和田城市建設開發公司 (Shanghai He Tian City Construction Development Co) (collectively referred to as “Party B”) on 1 March 1995, Party A agreed to grant a land with an area of approximately 22,036 sq m to Party B at a consideration of RMB13,744,955 for a land use term of 70 years for residential use.

(3) Pursuant to the Supplementary Contract for Grant of State-owned Land Use Right No. Hu Zha Fang Di (2006) Chu Rang He Tong Bu Zi Di 13 entered into between Party A and Shanghai Hu Xin on 29 November 2006, both parties agreed to amend the Contract for Grant of State-owned Land Use Right and the salient conditions are summarized as follow:

(i) Site area : 19,741.70 sq m

(ii) Use : Residential, commercial and office

(iii) Land use term : 70 years for residential use, 40 years for commercial use and 50 years for office use

(iv) Total gross floor area : 100,275 sq m (60,115 sq m for residential use, 21,220 sq m for commercial use, 18,940 sq m for office use)

(v) Land grant fee : RMB42,263,169

(4) Pursuant to the Equity Joint Venture Contract entered into between 上海和田城市建設開發公司 (Shanghai He Tian City Construction Development Co) (“Party C”), Kingscord Investment Limited (“Party D”) and Fore Bright Limited (“Party E”), all parties agreed to establish a joint venture company named Shanghai Hu Xin Real Estate Development Co., Ltd. The said contract contains, inter-alia, the following salient conditions:

(i) Total investment amount : US$80,000,000

(ii) Registered capital : US$40,000,000 Party C: 5% Party D: 55% Party E: 40%

(iii) Period of operation : 70 years from the date of issue of business licence

(iv) Profit sharing/risk bearing ratio : According to the respective shares of each party in the registered capital

— 212 — APPENDIX V PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LAI FUNG GROUP

(5) Pursuant to the Business Licence No. 310000400112263 (Shiju) dated 23 April 2009, Shanghai Hu Xin was established with an operation period from 23 April 1995 to 22 April 2065.

(6) Pursuant to the Construction Land Use Planning Permit No. Hu Zha Di (2005) 08051130E01800 issued by the Zhabei District Urban Planning Administrative Bureau on 30 November 2005, the land with a site area of approximately 19,900 sq m was permitted to be developed.

(7) Pursuant to the approval of the design of the proposed development No. Hu Zha Fang (2007) 08070129D00238 issued by the Zhabei District Urban Planning Administrative Bureau on 29 January 2007, the development proposal of the property has been approved with salient conditions summarized as follow:

(i) Net Site Area : 19,742 sq m

(ii) Use : Residential and ancillary facilities

(iii) Gross Floor Area : 100,275 sq m above ground level (59,749 sq m for residential use, 16,652 sq m for commercial use, 19,581 sq m for office use and 4,293 sq m for ancillary facilities use); 47,649 sq m for basement

(iv) Plot Ratio : 4.55

(v) Site Coverage : 45%

(vi) Green Area Ratio : 19.31%

(vii) Maximum Height : 100 m for high-rise buildings; 24 m for low-rise buildings

(8) Pursuant to the Construction Engineering Planning Permit No. Hu Zha Jian (2008) 08080313F00559 issued by the Zhabei District Urban Planning Administrative Bureau on 13 March 2008, the construction of the property with a total gross floor area of approximately 147,923 sq m (including basement area of 47,648 sq m) is permitted to be constructed.

(9) Pursuant to the Construction Work Commencing Permit No. 0201ZB0739D02 dated 24 September 2008, the construction work of the property with a total gross floor area of 147,923 sq m is permitted to be commenced.

(10) As advised by Lai Fung, the outstanding construction cost (including professional fee and finance cost) and outstanding ancillary facilities cost of the property was approximately RMB777,200,000 and RMB77,800,000 respectively as at the date of valuation. Accordingly, we have taken into account the said costs in our valuation. In our opinion, the market value of the property assuming they were completed as at the valuation date was estimated approximately as RMB2,609,000,000.

(11) As advised by Lai Fung, the retail portion of the property from Basement 1 to Level 5 with a total gross floor area of approximately 31,938 sq m is for investment purpose. As per your specific terms of instruction to provide the breakdown of market value for the aforesaid portion for investment purpose, the apportioned value of the said portion as at the valuation date was approximately HK$279,000,000.

— 213 — APPENDIX V PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LAI FUNG GROUP

(12) We have been provided with the opinions of the PRC legal advisers of eSun Holdings Limited and Lai Sun Garment (International) Limited, which inter-alia, contains the following:

(i) Shanghai Hu Xin has legally obtained the land use rights of the property and can use, transfer, let or mortgage the property according to relevant laws and regulations; and

(ii) The land use rights and construction works of the property is subject to a mortgage and the mortgage is legal and valid. The property can be legally transferred, let and handled in other ways subject to approval from the mortgagee.

— 214 — APPENDIX V PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LAI FUNG GROUP

Market value in existing state Particulars of as at Property Description and tenure occupancy 31 May 2010

12. Phase V of Eastern Eastern Place is a large-scale The property is HK$1,065,000,000 Place commercial/residential composite currently under 787 Dongfeng East development planned to be construction and (100% interest Road developed by phases. scheduled to be attributable Yuexiu District completed in 3rd to the Lai Fung Guangzhou The property comprises remaining quarter 2012. Group Guangdong Province portion (Phase V) of Eastern Place HK$1,065,000,000) The PRC with a site area of approximately 17,293 sq m (186,142 sq ft). (please see notes Upon completion, the property 5, 6 and 7) will comprise two residential towers and a serviced apartment tower with a total gross floor area approximately 123,828 sq m (1,332,885 sq ft). The area details is listed as follows:

Approximate Use Gross Floor Area sq ft sq m

Residential 31,064 334,373 Serviced apartment 59,678 642,374 Retail 3,570 38,428 Club house 2,291 24,660 Car park 22,550 242,728 Other 4,675 50,322

Total: 123,828 1,332,885

The land use rights of the property have been granted for terms of 70 years for residential use, 40 years for business, tourism and entertainment uses and 50 years for other use.

Notes: (1) Pursuant to the State-owned Land Use Right Certificate No. Sui Fu Guo Yong (2003) Di 309 issued by the People’s Government of Guangzhou dated 30 October 2003, the title to the land portion of the subject development with an area of approximately 17,293.00 sq m is held by Guangzhou Grand Wealth Properties Ltd, a 100% owned subsidiary of Lai Fung, (“Guangzhou Grand Wealth”) for terms of 70 years for residential use, 40 years for business, tourism and entertainment uses and 50 years for other use.

— 215 — APPENDIX V PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LAI FUNG GROUP

(2) Pursuant to the Contract for Grant of State-owned Land Use Right No. Sui Guo Di Chu He (1997) 359 and its supplemental contracts all entered into between Guangzhou State Land Bureau (“Party A”) and Guangzhou Grand Wealth (“Party B”) on 30 September 1997, 1 November 2000 and 8 August 2008 respectively, Party A agreed to grant the land use rights of portion of the land, comprising a site area of approximately 43,161 sq m to Party B. The said contract contains, inter-alia, the following salient conditions:

(i) Use : Office, residential and commercial

(ii) Land use term : 70 years for residential, 40 years of commercial, tourism and entertainment, 50 years for office

(iii) Total gross floor area : 243,924.62 sq m

(iv) Maximum height : 36 storeys

(v) Land grant fee : RMB143,033,310

(3) Pursuant to the Co-operative Joint Venture Contract and five Supplemental Contracts all entered into between Guangzhou Light Industry Real Estate Development Company (formerly known as Guangzhou Yuexing Real Estate Development Company) (“Party C”) and Grand Wealth Ltd (“Party D”) on 23 November 1993, 3 June 1996, 31 December 1996, 3 May 1997, 5 August 1997, 10 July 2008 respectively, both parties agreed to established a joint venture company named Guangzhou Grand Wealth Properties Ltd. The said contracts contain, inter- alia, the following conditions:

(i) Total investment amount : HK$560,000,000

(ii) Registered capital : HK$280,000,000

(iii) Period of operation : 15 years from the date of issue of business licence

(iv) Party D shall be responsible for the total investment amount as stipulated in the contract

(v) Party C shall be entitled to share 19,500 sq m gross floor area of the development whilst Party D shall be entitled to the remaining floor area of the development and sale proceeds derived therefrom

(4) Pursuant to the Business Licence No. 440101400003975 dated 24 June 2010, Guangzhou Grand Wealth was established with an operation period from 15 June 1994 to 15 June 2014.

(5) According to the information provided, a total gross floor area of approximately 8,845 sq m will be allocated to the domestic co-operating party in developing the property as profit sharing. During the course of our valuation, we have excluded the aforesaid area allocation.

(6) As advised by Lai Fung, the construction cost incurred (including professional fee) of the property was approximately RMB115,000,000 as at the date of valuation. In addition, the outstanding demolition cost and ancillary facilities cost of the property was approximately RMB44,200,000 as at the date of valuation. Accordingly, we have taken into account the said costs in our valuation. In our opinion, the market value of the property assuming they were completed as at the valuation date was estimated approximately as RMB2,296,000,000 (excluding the allocated portion to the domestic co-operating party mentioned in note (5) above).

— 216 — APPENDIX V PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LAI FUNG GROUP

(7) In the course of our valuation, we have assumed that relevant laws, regulations and all relevant requirements stipulated in the land grant contract have been complied with. The land use rights of the property can be freely transferred, let or mortgaged in the market.

(8) We have been provided with the opinions of the PRC legal advisers of eSun Holdings Limited and Lai Sun Garment (International) Limited, which inter-alia, contains the following:

(i) Guangzhou Grand Wealth has legally obtained the land use rights of the property and can develop, use and operate within the land of the property according to relevant laws and regulations; and

(ii) The property has no mortgage.

— 217 — APPENDIX V PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LAI FUNG GROUP

Market value in existing state Particulars of as at Property Description and tenure occupancy 31 May 2010

13. Hai Zhu Plaza The property comprises an The property is HK$994,000,000 Chang Di Main Road irregular-shaped site with a site being occupied Yuexiu District area of approximately 8,427 sq m by dilapidated (100% interest Guangzhou (90,708 sq ft). buildings due to attributable Guangdong Province be demolished. to the Lai Fung The PRC The property is planned to be As advised by Lai Group developed into a office/apartment Fung, the proposed HK$994,000,000) development with approximate development of gross floor areas listed as follows: the property is (please see notes scheduled to be 6 and 7) Approximate completed in 2015. Use Gross Floor Area sq m sq ft

Office Apartment 35,963 387,106 Office 54,380 585,346 Retail 13,179 141,859 Club house & restaurant 868 9,343 Car park 23,862 256,851

Total: 128,252 1,380,505

The land use rights of the property have been granted for terms of 40 years for commercial, tourism and entertainment uses and 50 years for other use.

Notes: (1) Pursuant to the State-owned Land Use Right Certificate No. Sui Fu Guo Yong (1997) Zi Di 030 issued by the People’s Government of Guangzhou dated 14 October 1997, the title to the land, having a site area of 8,427 sq m, is held by Guangzhou Guang Bird Property Development Ltd, a 100% owned subsidiary of Lai Fung, (“Guangzhou Guang Bird”) for land use terms of 40 years for business, tourism & entertainment uses and 50 years for other use.

— 218 — APPENDIX V PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LAI FUNG GROUP

(2) Pursuant to the Contract for Grant of State-owned Land Use Right No. Sui Guo Di Chu He (97) 155 entered into between Guangzhou State Land Bureau (“Party A”) and Guangzhou Guang Bird (“Party B”) on 29 April 1997, Party A agreed to grant the land use rights of the land to Party B. The said contract contains, inter-alia, the following salient conditions:

(i) Site area : 8,427 sq m

(ii) Use : Commercial

(iii) Land use term : 40 years for commercial, tourism and entertainment uses and 50 years for others use

(iv) Plot ratio : 12.46

(v) Total gross floor area : 104,500 sq m (6,650 sq m for commercial use, 96,650 sq m for office use and 1,200 sq m for club house)

(vi) Maximum/average height : 38 storeys

(vii) Land grant fee : RMB56,108,811

(3) Pursuant to the Co-operative Joint Venture Contract and three Amendment Contracts all entered into between Guang Yuan Industry & Commerce Company Limited (“Party C”) and Nicebird Co., Ltd (“Party D”) on 8 December 1992, 3 September 1996, 18 May 1997 and 29 April 2008 respectively and an approval letter No. Sui Wai Jing Mao Zi Pi (2008) 177 dated 4 June 2008, both parties agreed to establish a joint venture company named Guangzhou Guang Bird Property Development Ltd. The salient conditions stipulated in the contract as amended by the Amendment Contracts are, inter-alia, as follows:

(i) Total investment amount : US$92,000,000

(ii) Registered capital : US$46,000,000

(iii) Period of operation : 20 years from the date of issue of business licence

(iv) Party C shall provide the land use rights of a plot of land with a site area of approximately 8,000 sq m whilst Party D shall contribute the entire amount of development fund including the land grant fee.

(v) Party C shall complete the demolition, resettlement, compensation and site leveling works before the end of March 1998.

(vi) After deducting the development costs, taxes and Party C’s investment capital and interest, the remaining profit will be distributed as to 20% for Party C and as to 80% for Party D.

— 219 — APPENDIX V PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LAI FUNG GROUP

(4) Pursuant to two Amendment Contracts and a Resolution Agreement all entered into between Party C and Party D on 22 January 2000, the salient conditions stipulated in the contracts and agreement are, inter-alia, as follows:

(i) Party C shall assist Guangzhou Guang Bird to resume the planned land use of the proposed development to commercial and high-end residential uses.

(ii) Party C shall assist Guangzhou Guang Bird to apply to relative authority for reduce or exempt from the public facilities construction levy and composite development levy.

(iii) The completed building of the proposed development will be sold to domestic and overseas purchasers in the ratio of 80% and 20%. The board of directors can apply to the relative authority to adjust this ratio according to the market condition.

(iv) The income of Guangzhou Guang Bird for selling the building will be primarily to settle the investment costs and interests and any taxes and levy. All remained after- taxes profit will be distributed to Party D.

(5) Pursuant to the Business Licence No. 440101400032504 dated 28 May 2010, Guangzhou Guang Bird was established with an operation period from 18 September 1993 to 18 September 2013.

(6) As advised by Lai Fung, the outstanding relocation cost and ancillary facilities cost of the property was approximately RMB58,300,000 as at the date of valuation. Accordingly, we have taken into account the said costs in our valuation. In our opinion, the market value of the property assuming they were completed as at the valuation date was estimated approximately as RMB2,617,000,000.

(8) We have been provided with the opinions of the PRC legal advisers of eSun Holdings Limited and Lai Sun Garment (International) Limited, which inter-alia, contains the following:

(i) Guangzhou Guang Bird has legally obtained the land use rights of the property; and

(ii) The property has no mortgage.

— 220 — APPENDIX V PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LAI FUNG GROUP

Market value in existing state Particulars of as at Property Description and tenure occupancy 31 May 2010

14. Various portions West Point (the “Development”) The construction HK$484,000,000 of West Point is a composite development work of the situated at the comprising a residential tower property has been (100% interest junction of Zhongshan and an office tower both erected completed. attributable Qi Road and Guangfu on a 4-level commercial podium to the Lai Fung Road and a 2-level basement car park Group Liwan District completed in about 2010. HK$484,000,000) Guangzhou Guangdong Province The property comprises various (please see notes The PRC portions of the Development 15 and 16) having a total gross floor area of approximately 51,543.00 sq m (554,809 sq ft) with detail gross floor areas listed as follows:

Approximate Use Gross Floor Area sq m sq ft

Office 21,477.54 231,184 Retail 16,559.23 178,244 Car park (Basement) 7,817.00 84,142 M&E (Basement) 3,616.00 38,923 Others 2,073.23 22,316

Total: 51,543.00 554,809

The land use rights of the Development have been granted for terms of 70 years for residential use, 40 years for business, tourism and entertainment uses and 50 years for other use.

Notes: (1) Pursuant to the State-owned Land Use Right Certificate No. Sui Guo Yong (2005) Di 348 issued by the People’s Government of Guangzhou dated 11 January 2006, the title to the property with a site area of approximately 6,003 sq m is held by Guangzhou Honghui Real Estate Development Co., Ltd., a 100% owned subsidiary of Lai Fung, (“Guangzhou Honghui”) for land use terms of 70 years for residential use, 40 years for business, tourism and entertainment uses and 50 years for other use.

— 221 — APPENDIX V PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LAI FUNG GROUP

(6) Pursuant to the Business Licence No. Qi Zuo Yue Sui Zong Zi Di 003563 dated 3 April 2008, Guangzhou Honghui was established with an operation period from 11 February 1993 to 11 February 2013.

(9) Pursuant to the Construction Engineering Planning Permit No. (94) Sui Cheng Gui Bei Pian Jian Zi Di 283 issued by the Guangzhou Urban Planning Bureau on 8 September 1995, the construction of portion of the land use rights of the property with a total gross floor area of approximately 37,333 sq m is permitted to be constructed.

(10) Pursuant to the Construction Engineering Planning Permit No. Sui Gui Jian Zheng (2002) 1844 issued by the Guangzhou Urban Planning Bureau on 16 January 2003, the construction of portion of the property with a total gross floor area of approximately 47,330 sq m is permitted to be constructed.

— 222 — APPENDIX V PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LAI FUNG GROUP

(13) Pursuant to the Construction Work Commencing Permit No. 440103200505260101 dated 26 May 2005, the construction work of portion of the proposed development is permitted to be commenced.

(15) As advised by the Lai Fung Group, office portion of the property with a total gross floor area of 10,001.29 sq m have been pre-sold at a total consideration of RMB131,143,000 as at the date of valuation. According to the Lai Fung Group’s instruction, the pre-sold portion is included in this valuation. We have also made reference to the contracted consideration in the course of our valuation.

(16) As advised by Lai Fung, the outstanding construction cost (including professional fee and finance cost) of the property was approximately RMB87,700,000 as at the date of valuation. Accordingly, we have taken into account the said cost in our valuation. In our opinion, the market value of the property assuming they were completed as at the valuation date was estimated approximately as RMB564,000,000.

(17) As advised by Lai Fung, the retail portion of the property from Level 1 to Level 4 with a total gross floor area of approximately 16,559.23 sq m is for investment purpose. As per your specific terms of instruction to provide the breakdown of market value for the aforesaid portions for investment purpose, the apportioned value of the said portions as at the valuation date was approximately HK$201,000,000.

(18) We have been provided with the opinions of the PRC legal advisers of eSun Holdings Limited and Lai Sun Garment (International) Limited, which inter-alia, contains the following:

(i) Guangzhou Honghui has legally obtained the land use rights of the property and can develop, use and operate within the land of the property according to relevant laws and regulations;

(ii) Guangzhou Honghui has the right to pre-sell portion of the property; and

(iii) Portion of the property is subject to a mortgage and the mortgage is valid and enforceable and such portion can be sold, let, transferred, granted or handled in other ways subject to approval from the mortgagee.

— 223 — APPENDIX V PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LAI FUNG GROUP

Market value in existing state Particulars of as at Property Description and tenure occupancy 31 May 2010

15. A parcel of land The property comprises a roughly The property is HK$105,000,000 located at 558-596 rectangular-shaped site with a currently a vacant Donghua Dong Road total site area of approximately site. As advised (100% interest Yuexiu District 3,263.00 sq m (35,123 sq ft). by Lai Fung, attributable Guangzhou the proposed to the Lai Fung Guangdong Province The property is planned to be development of Group The PRC developed into a residential the property is HK$105,000,000) development erected on a scheduled to be basement car park level. completed in 4th (please see notes quarter of 2011. 4 and 5) Upon completion, the property will have a total gross floor area of approximately 13,396 sq m (144,195 sq ft) with detailed gross floor areas as follows:

Approximate Use Gross Floor Area sq m sq ft

Residential 8,475 91,225 Retail 377 4,058 Other 1,464 15,759 Car park (Basement) 3,080 33,153

Total: 13,396 144,195

The land use rights of the property will be granted for terms of 70 years for residential use, 40 years for commercial, tourism and entertainment uses and 50 years for composite and other uses.

Notes: (1) Pursuant to the Contract for Grant of State-owned Land Use Right No. Sui Guo Di Chu He 440104-2008-000002 entered into between Guangzhou State Land Bureau (“Party A”) and Guangzhou Gentle Real Estate Co Ltd, a 100% owned subsidiary of Lai Fung, (“Guangzhou Gentle”) (“Party B”) on 1 April 2008, Party A agreed to grant the land use rights of the land to Party B by way of auction. The said contract contains, inter-alia, the following salient conditions:

— 224 — APPENDIX V PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LAI FUNG GROUP

(i) Total site area : 3,263 sq m (of which 2,405 sq m for granted area)

(ii) Use : Composite

(iii) Land use term : 70 years for residential use, 40 years for commercial, tourism and entertainment uses and 50 years for composite and other uses

(iv) Total gross floor area : 10,582 sq m (9,620 sq m for residential and 962 sq m for basement)

(v) No. of storey : 10 storeys

(vi) Building covenant : Party B should commence the construction works within 15 months from the date of signing this contract

(vii) Consideration : RMB83,604,740

(2) Pursuant to the Construction Land Use Planning Permit No. Sui Gui Di Zheng (2008) 298 issued by the Guangzhou Urban Planning Bureau on 3 June 2008, the land with site area of approximately 3,263 sq m (of which 2,405 sq m for net site area and 858 sq m for road area) was permitted to be developed.

(3) Pursuant to the Business Licence No. 440101400032537 dated 12 February 2010, Guangzhou Gentle was established with an operation period from 15 June 2007 to 15 June 2027.

(4) As advised by Lai Fung, the professional fee incurred of the property was approximately RMB2,300,000 as at the date of valuation. In addition, the outstanding ancillary facilities cost of the property was approximately RMB1,700,000 as at the date of valuation. Accordingly, we have taken into account the said costs in our valuation. In our opinion, the market value of the property assuming they were completed as at the valuation date was estimated approximately as RMB192,000,000.

(5) In the course of our valuation, we have assumed that relevant laws, regulations and all relevant requirements stipulated in the land grant contract have been complied with and land use rights certificate has been obtained. The land use right of the property can be freely transferred, let or mortgaged in the market.

(6) We have been provided with the opinions of the PRC legal advisers of eSun Holdings Limited and Lai Sun Garment (International) Limited, which inter-alia, contains the following:

(i) The Contract for Grant of State-owned Land Use Right is legal, valid and enforceable;

(ii) Guangzhou Gentle has no legal obstacles in obtaining State-owned Land Use Right Certificate with compliance of related legal procedures; and

(iii) The property has no mortgage.

— 225 — APPENDIX V PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LAI FUNG GROUP

Market value in existing state Particulars of as at Property Description and tenure occupancy 31 May 2010

16. A parcel of land The property comprises a roughly The property is HK$109,000,000 located at the junction rectangular-shaped site with a currently a vacant of Da Sha Tou Road total site area of approximately site. As advised (100% interest and Yan Jiang Dong 2,210.00 sq m (23,788 sq ft). by Lai Fung, attributable Road the proposed to the Lai Fung Yuexiu District The property is planned to development of Group Guangzhou be developed into a serviced the property is HK$109,000,000) Guangdong Province apartment erected on a basement scheduled to be The PRC car park level. completed by the (please see notes end of 2011. 6 and 7) Upon completion, the property will have a total gross floor area of approximately 12,200 sq m (131,321 sq ft) with detailed gross floor areas as follows:

Approximate Use Gross Floor Area sq m sq ft

Serviced apartment 7,033 75,703 Retail 509 5,479 Other 1,238 13,326 Car park (Basement) 3,420 36,813

Total: 12,200 131,321

The land use rights of the property have been granted for terms of 70 years for residential use, 40 years for business, tourism & entertainment uses and 50 years for other use.

Notes: (1) Pursuant to the State-owned Land Use Right Certificate No. Sui Fu Guo Yong (2008) Di 01100217 issued by the People’s Government of Guangzhou dated 31 December 2008, the title to the land, having a site area of 1,622 sq m, is held by Guangzhou Gentle Code Real Estate Co Ltd, a 100% owned subsidiary of Lai Fung, (“Guangzhou Gentle Code”) for land use terms of 70 years for residential use, 40 years for business, tourism & entertainment uses and 50 years for other use.

— 226 — APPENDIX V PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LAI FUNG GROUP

(2) Pursuant to the Contract for Grant of State-owned Land Use Right No. Sui Guo Di Chu He 440104-2008-000003 entered into between Guangzhou State Land Bureau (“Party A”) and Guangzhou Gentle Code (“Party B”) on 1 April 2008, Party A agreed to grant the land use rights of the land to Party B by way of auction. The said contract contains, inter-alia, the following salient conditions:

(i) Total site area : 2,210 sq m (of which 1,622 sq m for granted area)

(ii) Use : Commercial and finance

(iii) Land use term : 70 years for residential use, 40 years for commercial, tourism and entertainment uses and 50 years for composite and other uses

(iv) Total gross floor area : 8,807.40 sq m (2,270.80 sq m for commercial use, 5,401.20 sq m for office use and 1,135.40 sq m for basement)

(v) No. of storey : 14 storeys

(vi) Building covenant : Party B should commence the construction works within 15 months from the date of signing this contract

(vii) Consideration : RMB144,878,420

(3) Pursuant to the Construction Land Use Planning Permit No. Sui Gui Di Zheng (2008) 290 issued by the Guangzhou Urban Planning Bureau on 26 May 2008, the land with site area of approximately 2,210 sq m (of which 1,622 sq m for net site area and 588 sq m for road area) was permitted to be developed.

(4) Pursuant to the Construction Engineering Planning Permit No. Sui Gui Jian Zheng (2010) 1540 issued by the Guangzhou Urban Planning Bureau on 3 June 2010, the construction of the property with a total gross floor area of 8,630 sq m (above ground) and 3,422 sq m (below ground) is permitted to be constructed.

(5) Pursuant to the Business Licence No. 440101400032529 dated 12 February 2010, Guangzhou Gentle Code was established with an operation period from 18 June 2007 to 18 June 2027.

(6) As advised by Lai Fung, the professional fee incurred of the property was approximately RMB1,400,000 as at the date of valuation. In addition, the outstanding relocation cost and ancillary facilities cost of the property was approximately RMB17,700,000 as at the date of valuation. Accordingly, we have taken into account the said costs in our valuation. In our opinion, the market value of the property assuming they were completed as at the valuation date was estimated approximately as RMB218,000,000.

(8) We have been provided with the opinions of the PRC legal advisers of eSun Holdings Limited and Lai Sun Garment (International) Limited, which inter-alia, contains the following:

(i) Guangzhou Gentle Code has legally obtained the land use rights of the property;

(ii) Guangzhou Gentle Code can develop, use and operate within the land of the property according to relevant laws and regulations; and

(iii) The property has no mortgage.

— 227 — APPENDIX V PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LAI FUNG GROUP

Market value in existing state Particulars of as at Property Description and tenure occupancy 31 May 2010

17. A parcel of land The property comprises a roughly The property is HK$113,000,000 located at 22-28 rectangular-shaped site with a being occupied Guan Lu Road total site area of approximately by dilapidated (100% interest Yuexiu District 2,432.00 sq m (26,178 sq ft). buildings due to attributable Guangzhou be demolished. to the Lai Fung Guangdong Province The property is planned to be As advised by Lai Group The PRC developed into a residential Fung, the proposed HK$113,000,000) development erected on a development of basement car park level. the property is (please see notes scheduled to be 4 and 5) Upon completion, the property completed in 3rd will have a total gross floor area quarter in 2012. of approximately 20,132 sq m (216,701 sq ft) with detailed gross floor areas as follows:

Approximate Use Gross Floor Area sq m sq ft

Residential 12,727 136,993 Retail 1,135 12,217 Other 675 7,266 Car park (Basement) 5,595 60,225

Total: 20,132 216,701

The land use rights of the property will be granted for terms of 70 years for residential use, 40 years for commercial, tourism and entertainment uses and 50 years for composite and other uses.

Notes: (1) Pursuant to the Contract for Grant of State-owned Land Use Right No. Sui Guo Di Chu He 440104-2008-000001 entered into between Guangzhou State Land Bureau (“Party A”) and Guangzhou Jadepress Real Estate Co Ltd, a 100% owned subsidiary of Lai Fung, (“Guangzhou Jadepress”) (“Party B”) on 1 April 2008, Party A agreed to grant the land use rights of the land to Party B by way of auction. The said contract contains, inter-alia, the following salient conditions:

(i) Total site area : 2,432 sq m (of which 1,908 sq m for granted area)

(ii) Use : Commercial and residential

— 228 — APPENDIX V PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LAI FUNG GROUP

(iii) Land use term : 70 years for residential use, 40 years for commercial, tourism and entertainment uses and 50 years for composite and other uses

(iv) Plot ratio : ≤ 7.35

(v) No. of storey : ≤ 21 storeys

(vi) Building covenant : Party B should commence the construction works within 15 months from the date of signing this contract

(vii) Consideration : RMB87,516,840

(2) Pursuant to the Construction Land Use Planning Permit No. Sui Gui Di Zheng (2008) 289 issued by the Guangzhou Urban Planning Bureau on 26 May 2008, the land with site area of approximately 2,430 sq m (of which 2,031 sq m for net site area and 399 sq m for road area) was permitted to be developed.

(3) Pursuant to the Business Licence No. 440101400032512 dated 12 February 2010, Guangzhou Jadepress was established with an operation period from 18 June 2007 to 18 June 2027.

(4) As advised by Lai Fung, the professional fee incurred of the property was approximately RMB1,400,000 as at the date of valuation. In addition, the outstanding relocation cost and ancillary facilities cost of the property was approximately RMB31,400,000 as at the date of valuation. Accordingly, we have taken into account the said costs in our valuation. In our opinion, the market value of the property assuming they were completed as at the valuation date was estimated approximately as RMB286,000,000.

(6) We have been provided with the opinions of the PRC legal advisers of eSun Holdings Limited and Lai Sun Garment (International) Limited, which inter-alia, contains the following:

(i) The Contract for Grant of State-owned Land Use Right is legal, valid and enforceable;

(ii) Guangzhou Jadepress has no legal obstacles in obtaining State-owned Land Use Right Certificate with compliance of related legal procedures; and

(iii) The property has no mortgage.

— 229 — APPENDIX V PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LAI FUNG GROUP

Market value in existing state Particulars of as at Property Description and tenure occupancy 31 May 2010

18. A parcel of land in The property comprises an Phase I of the HK$1,427,000,000 Jinshazhou irregular-shaped site with an area property is Heng Sha of approximately 298,938 sq m currently under (50% interest Guangzhou (3,217,769 sq ft). construction and attributable Guangdong Province scheduled to be to the Lai Fung The PRC The property is planned to be completed in 4th Group developed into a residential quarter of 2013. HK$713,500,000) development by two phases with a total gross floor area (please see notes of approximately 475,424 sq m 14, 15 and 16) (5,117,464 sq ft). The proposed development will comprise medium to high-rise apartments, terraced houses, semi-detached houses, commercial, club house and car parking spaces. The area details is listed as follows:

Phase I

Approximate Use Gross Floor Area sq m sq ft

Residential 163,102 1,755,630 Commercial 4,800 51,667 Club house 1,770 19,052 Landscape and stab-block 25,886 278,637 Other facilities 16,524 177,865

Sub-total: 212,082 2,282,851

Car park (Basement) 27,500 296,010

Total: 239,5822,578,861

— 230 — APPENDIX V PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LAI FUNG GROUP

Market value in existing state Particulars of as at Property Description and tenure occupancy 31 May 2010

Phase II

Approximate Use Gross Floor Area sq m sq ft

Residential 182,236 1,961,588 Landscape and stab-block 25,886 278,637 Other facilities 220 2,368

Sub-total: 208,342 2,242,593

Car park (Basement) 27,500 296,010

Total: 235,842 2,538,603

The land use rights of the property have been granted for terms of 70 years for residential use, 40 years for commercial, tourist and entertainment uses and 50 years for other use commencing from 14 October 2008.

Notes: (1) Pursuant to the State-owned Land Use Right Certificate No. Sui Fu Guo Yong (2008) Di 01100190 issued by the People’s Government of Guangzhou dated 17 October 2008, the title to the land, having a site area of 226,912.48 sq m, is held by Guangzhou Beautiwin Real Estate Development Co., Ltd., a 50% owned associate of Lai Fung, (“Guangzhou Beautiwin”, a subsidiary of Beautiwin Limited) for land use terms of 70 years for residential use, 40 years for commercial, tourist and entertainment uses and 50 years for other use commencing from 14 October 2008.

(2) Pursuant to the Contract for Grant of State-owned Land Use Right No. Sui Guo Di Chu He (97) 314 entered into between the Guangzhou State Land Bureau (“Party A”) and Beautiwin Limited (“Beautiwin”) on 30 September 1997, Party A agreed to grant the land use rights of the land to Beautiwin. The said contract contains, inter-alia, the following salient conditions:

(i) Site area : 297,186.39 sq m

(ii) Use : residential

(iii) Land use term : 70 years

(iv) Plot ratio : 1.2

(v) Total gross floor area : 356,623.07 sq m

(vi) Land grant fee : RMB67,874,083

— 231 — APPENDIX V PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LAI FUNG GROUP

(3) Pursuant to the Land Development Agreement entered into between the Guangzhou Land Development Centre (“Party B”) and Beautiwin on 29 September 1997, both parties have agreed on the development of the property which contains, inter-alia, the following salient conditions:

(i) Party B agreed to bear the responsibility for the land development (land acquisition, resettlement, etc.) according to the Contract for Grant of State-owned Land Use Right No. Sui Guo Di Chu He (97) 314.

(ii) Beautiwin agreed to pay Party B a comprehensive development fee of RMB371,575,000 which contains land acquisition compensation fee and tax, resettlement compensation fee and constructions for arteries within the district, bridges and main drainage.

(4) Pursuant to the Agreement for Amendment of Contract for Grant of State-owned Land Use Right No. 1 entered into between Party A, Party B, Beautiwin and Guangzhou Beautiwin in 2007, the grantee of the Land Grant Contract No. Sui Guo Di Chu He (97) 314 and Land Development Agreement as mentioned in notes (2) and (3) above was changed from Beautiwin to Guangzhou Beautiwin with an additional land grant fee of RMB37,035,758. Guangzhou Beautiwin should commence the construction work within 12 months from the date of signing this agreement, otherwise, penalty will be imposed.

(5) Pursuant to the Agreement for Amendment of Contract for Grant of State-owned Land Use Right No. 2 entered into between Party A and Guangzhou Beautiwin on 3 February 2008, the total gross floor area of the property was permitted to be increased to 369,800 sq m (including 16,474 sq m for schools and public facilities). Guangzhou Beautiwin need to pay an additional land grant fee of RMB9,437,247 for the aforesaid gross floor area increment.

(6) Pursuant to the Agreement for Amendment of Contract for Grant of State-owned Land Use Right No. 3 entered into between Party A and Guangzhou Beautiwin on 26 April 2008, the total site area of the property was changed to 298,938 sq m. Party A will handover the land to Party B by three phases. (Phase 1: before 30 April 2008, Phase 2: before 31 July 2008, Phase 3: 31 August 2008). Party B should commence to develop the land within 12 months after handover of Phase 3 of the land and complete the construction works within 36 months after handover of Phase 3 of the land.

(7) Pursuant to the Construction Land Use Planning Permit No. Sui Gui Di Zheng (2007) 1115 issued by the Guangzhou Urban Planning Bureau on 29 August 2007, the land with a total site area of 298,938 sq m (of which 226,912 sq m for net site area) was permitted to be developed.

(8) Pursuant to two Construction Engineering Planning Permits Nos. Sui Gui Jian Zheng (2008) 4453 and 4454 both issued by the Guangzhou Urban Planning Bureau on 18 December 2008, the construction of portion of the property with a total gross floor area of approximately 30,976.60 sq m is permitted to be constructed.

(9) Pursuant to the Construction Engineering Planning Permit No. Sui Gui Jian Zheng (2009) 3508 issued by the Guangzhou Urban Planning Bureau on 16 November 2009, the construction of portion of the property with a total gross floor area of approximately 26,004.30 sq m is permitted to be constructed.

(10) Pursuant to three Construction Engineering Planning Permits Nos. Sui Gui Jian Zheng (2009) 3642, 3645 and 3651 all issued by the Guangzhou Urban Planning Bureau on 27 November 2009, the construction of portion of the property with a total gross floor area of approximately 98,633.90 sq m is permitted to be constructed.

— 232 — APPENDIX V PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LAI FUNG GROUP

(11) Pursuant to three Construction Work Commencing Permits Nos. 440111201001080101, 440111201001080201 and 440111201001080301 all issued by the Guangzhou Construction Committee and dated 8 January 2010, the construction work of portion of the property with a total gross floor area of approximately 98,632 sq m is permitted to be commenced.

(12) Pursuant to the Construction Work Commencing Permit No. 440111201003200201 issued by the Guangzhou Construction Committee and dated 20 March 2010, the construction work of portion of the property with a total gross floor area of approximately 26,004 sq m is permitted to be commenced.

(13) Pursuant to the Business Licence No. Qi Du Yue Sui Zong Zi Di 005428 dated 10 October 2008, Guangzhou Beautiwin was established with an operation period from 31 July 1998 to 31 July 2028.

(14) As advised by Lai Fung, the land grant fee, comprehensive development fee and additional land grant fee as mentioned in notes (2) to (5) have been fully settled.

(15) As advised by Lai Fung, the construction cost incurred (including professional fee) of the property was approximately RMB45,200,000 as at the date of valuation. In addition, the outstanding ancillary facilities cost and government charge of the property was approximately RMB81,600,000 as at the date of valuation. Accordingly, we have taken into account the said costs in our valuation. In our opinion, the market value of the property assuming they were completed as at the valuation date was estimated approximately as RMB4,580,000,000.

(16) In the course of our valuation, we have assumed that relevant laws, regulations and all relevant requirements stipulated in the land grant contract have been complied with. The land use rights of the property can be freely transferred, let or mortgaged in the market.

(17) We have been provided with the opinions of the PRC legal advisers of eSun Holdings Limited and Lai Sun Garment (International) Limited, which inter-alia, contains the following:

(i) Guangzhou Beautiwin has legally obtained the land use rights of the property;

(ii) Guangzhou Beautiwin can develop, use and construct within the land of the property according to relevant laws and regulations; and

(iii) The land use rights of the property is subject to a mortgage and the mortgage is legal and valid.

— 233 — APPENDIX V PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LAI FUNG GROUP

Market value in existing state Particulars of as at Property Description and tenure occupancy 31 May 2010

19. Palm Springs The property comprises four Phase I of the HK$511,300,000 Caihong Planning roughly rectangular-shaped sites property is Area (namely plot A, B, C and D) with currently under (100% interest West District a total area of approximately construction and attributable Zhongshan 236,648.50 sq m (2,547,284 sq ft). scheduled to be to the Lai Fung Guangdong Province completed in 4th Group The PRC The property is planned to be quarter of 2011. HK$511,300,000) developed into a residential development by two phases (please see notes with a total gross floor area 16, 17 and 18) of approximately 506,735 sq m (5,454,496 sq ft). The area details is listed as follows:

Phase I

Use Gross Floor Area sq m sq ft

Residential (apartment) 43,993 473,541 Residential (villa) 27,425 295,203 Commercial 16,611 178,801 Other 587 6,318 Car park (basement) 23,167 249,369

Total: 111,783 1,203,232

Phase II

Use Gross Floor Area sq m sq ft

Residential (apartment) 264,731 2,849,564 Residential (hotel apartment) 14,090 151,665 Residential (villa) 33,820 364,039 Commercial 9,280 99,890 Car park (basement) 73,031 786,105

Total: 394,952 4,251,263

The land use rights of the property have been granted for various terms with the latest expiring on 30 March 2075 for commercial/ residential uses.

— 234 — APPENDIX V PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LAI FUNG GROUP

Notes: (1) Pursuant to two State-owned Land Use Right Certificates Nos. Zhong Fu Guo Yong (2004) Di 201622 and Zhong Fu Guo Yong (2004) Di 201623 both issued by the People’s Government of Zhongshan, the title to the property with a site area of approximately 27,485.90 sq m and 28,067.40 sq m respectively (collectively named as plot A) is both held by 中山市寶麗房地產發展有限公司 (Zhongshan Bao Li Properties Development Co. Ltd., a 100% owned subsidiary of Lai Fung, (“Zhongshan Bao Li”) for a common term expiring on 23 October 2073 for commercial/residential uses.

(2) Pursuant to the State-owned Land Use Right Certificate No. Zhong Fu Guo Yong (2004) Di 201494 issued by the People’s Government of Zhongshan, the title to the property with a site area of approximately 10,679.70 sq m (named as plot B) is held by Zhongshan Bao Li for a term expiring on 17 May 2074 for commercial/residential uses.

(3) Pursuant to three State-owned Land Use Right Certificates Nos. Zhong Fu Guo Yong (2005) Di 200204, Zhong Fu Guo Yong (2005) Di 200205 and Zhong Fu Guo Yong (2005) Di 200206 all issued by the People’s Government of Zhongshan, the title to the property with a site area of approximately 55,434.00 sq m and 44,517.60 sq m (collectively named as plot D) and 70,463.9 sq m (named as plot C) respectively is all held by Zhongshan Bao Li for a common term expiring on 30 March 2075 for commercial/residential uses.

(4) Pursuant to the Contract for Grant of State-owned Land Use Right No. Zhong Guo Tu Chu Rang Zi (2004) Di G20-04-0047 entered into between the Zhongshan Land Resources Administration Bureau (“Party A”) and Zhongshan Bao Li (“Party B”) on 18 May 2004, Party A agreed to grant the land with an area of approximately 10,679.70 sq m (named as plot B) to Party B at a consideration of RMB7,206,570 for a term expiring on 17 May 2074 for commercial/residential uses.

(5) Pursuant to the Contract for Grant of State-owned Land Use Right No. Zhong Guo Tu Chu Rang Zi (2004) Di G20-04-0100 entered into between Party A and Party B on 30 September 2004, Party A agreed to grant the land with an area of approximately 70,463.90 sq m (named as plot C) to Party B at a consideration of RMB47,563,110 for a term expiring on 29 September 2074 for commercial/residential uses.

(6) Pursuant to the Contract for Grant of State-owned Land Use Right No. Zhong Guo Tu Chu Rang Zi (2004) Di G20-04-0101 entered into between Party A and Party B on 6 December 2004, Party A agreed to grant the land with an area of approximately 99,951.60 sq m (named as plot D) to Party B at a consideration of RMB64,468,782 for a term expiring on 5 December 2074 for commercial/residential uses.

(7) Pursuant to the Construction Land Use Planning Permit No. De Zi Di 281222010030039(Bu) issued by the Zhongshan Planning Bureau on 7 April 2010, portion of the property with a site area of approximately 55,553.30 sq m was permitted to be developed.

(8) Pursuant to the Construction Land Use Planning Permit No. De Zi Di 281222010030037(Bu) issued by the Zhongshan Planning Bureau on 7 April 2010, portion of the property with a site area of approximately 181,095.20 sq m was permitted to be developed.

(9) Pursuant to the Construction Engineering Planning Permit No. 280042007120056 issued by the Zhongshan Urban Planning Bureau on 3 January 2008, the construction of portion of the property with a total gross floor area of 155,772.00 sq m is permitted to be constructed.

(10) Pursuant to the Construction Engineering Planning Permit No. 281042009110058 issued by the Zhongshan Urban Planning Bureau on 16 December 2009, the construction of portion of the property with a total gross floor area of 16,610.83 sq m is permitted to be constructed.

— 235 — APPENDIX V PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LAI FUNG GROUP

(11) Pursuant to the Construction Engineering Planning Permit No. 281042010050019 issued by the Zhongshan Urban and Rural Planning Bureau on 7 June 2010, the construction of portion of the property with a total gross floor area of 51,569.00 sq m is permitted to be constructed.

(12) Pursuant to the Construction Work Commencing Permit No. 442000201001270053ZX0298 issued by the Zhongshan Construction Bureau dated 27 January 2010, the construction work of portion of the property with a total gross floor area of 16,610.83 sq m is permitted to be commenced.

(13) Pursuant to the Construction Work Commencing Permit No. 442000201003040113ZX0709 issued by the Zhongshan Construction Bureau dated 4 March 2010, the construction work of portion of the property with a total gross floor area of 44,012.00 sq m is permitted to be commenced.

(14) Pursuant to the approval for the construction design issued by the Zhongshan Planning Bureau dated 30 April 2007, the plot ratio for plot A of the property is 2.5.

(15) Pursuant to the Business Licence No. 442000400013543 dated 27 October 2008, Zhongshan Bao Li was established with an operation period from 17 April 2003 to 16 April 2053.

(16) As advised by Lai Fung, the property is proposed to be developed into a large-scale residential development including apartment, villa and hotel apartment. As per your specific terms of instruction, in the course of our valuation, we have assumed that all relevant approvals for Phase II of the property will be obtained for the aforesaid development.

(17) As advised by Lai Fung, the construction cost incurred (including professional fee) of the proposed development (Phase I) was approximately RMB41,300,000 as at the date of valuation. Accordingly, we have taken into account the said cost in our valuation. In our opinion, the market value of the property assuming they were completed as at the valuation date was estimated approximately as RMB2,573,000,000.

(18) In the course of our valuation, we have assumed that relevant laws, regulations and all relevant requirements stipulated in the land grant contract have been complied with. The land use rights of the property can be freely transferred, let or mortgaged in the market.

(19) We have been provided with the opinions of the PRC legal advisers of eSun Holdings Limited and Lai Sun Garment (International) Limited, which inter-alia, contains the following:

(i) Zhongshan Bao Li has legally obtained the land use rights of the property and can develop, use and operate within the land of the property according to relevant laws and regulations; and

(ii) The property has no mortgage.

— 236 — APPENDIX V PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LAI FUNG GROUP

Group IV — Property interest held by the Lai Fung Group in Hong Kong for owner occupation purpose

Market value in existing state Particulars of as at Property Description and tenure occupancy 31 May 2010

20. 20th Floor of May May Tower II is a 26-storey As advised, HK$80,000,000 Tower II centrally air-conditioned the property is and Car Parking apartment building surmounting currently self- (100% interest Space No. 57 on a 3-storey carparking/recreational occupied. attributable Ground Floor of May podium completed in 1992. to the Lai Fung Towers I and II Group Nos. 5 and 7 May The property comprises an HK$80,000,000) Road apartment unit with a gross floor Mid-Levels area of 315.22 sq m (3,393 sq ft). Hong Kong The property also comprises a 35/2,480th shares of covered car parking space on and in Inland Lot Ground Floor. No. 1772 and the Extension thereto The property is held from the Government under a Government Lease for a term of 75 years commencing from 8 April 1907 renewable for a further term of 75 years. The Government Rent payable for the lot is HK$140,400 per annum.

Notes: (1) The registered owner of the property is South Hill Limited, a 100% owned subsidiary of Lai Fung.

(2) The property is subject to a Mortgage in favour of Liu Chong Hing Bank Limited to secure general banking facilities to such extents as the lender may from time to time agree to extend without limitation as to amount to be granted to the borrower vide memorial no. 06012700580030 dated 23 January 2006.

(3) The property lies within an area zoned “Residential (Group B)” under Mid-Levels West Outline Zoning Plan No. S/H11/15.

— 237 — APPENDIX VI PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LSD GROUP

The following is the text of the letter from Savills dated 30 August 2010 prepared for the purpose of incorporation in this circular:

The Directors eSun Holdings Limited Lai Sun Garment (International) Limited 11th Floor Lai Sun Commercial Centre 680 Cheung Sha Wan Road Kowloon Hong Kong

30 August 2010

Dear Sirs,

RE: VALUATION OF VARIOUS PROPERTY INTERESTS IN HONG KONG AND VIETNAM

In accordance with your instructions for us to value various property interests held by Lai Sun Development Company Limited (hereinafter known as “LSD”) and its subsidiaries, associate companies and investee companies (hereinafter together known as the “LSD Group”) located in Hong Kong and Vietnam, we confirm that we have carried out inspections, made relevant searches and enquiries and obtained such further information as we consider necessary for the purpose of providing you with our opinion of the values of these property interests as at 31 May 2010 (the “Date of Valuation”) for public circular purposes.

— 238 — APPENDIX VI PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LSD GROUP

Our valuation is our opinion of the market values of each of the properties concerned which we would define as intended to mean “the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion”.

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. The market value of a property interest is also estimated without regard to costs of sale and purchase, and without offset for any associated taxes.

Our valuation is prepared in accordance with The HKIS Valuation Standards on Properties (1st Edition 2005) published by The Hong Kong Institute of Surveyors and in compliance with the requirements of Chapter 5 and Practice Note 12 of the Rules Governing the Listing of Securities published by The Stock Exchange of Hong Kong Limited.

In respect of the properties in Groups I, II, VI and VII which are held by the LSD Group for investment, sale or owner operation, we have valued the property interests by making reference to sales evidence as available in the market and where appropriate on the basis of capitalization of the net rental income shown on schedules handed to us. We have allowed for outgoings and in appropriate cases made provisions for reversionary income potential. The properties in Group V which are for owner occupation have been valued by making reference to sales evidence as available in the market assuming sale with vacant possession.

We have valued the properties in Group III, which are held by the LSD Group for development, by making reference to sales evidence as available in the market.

In undertaking our valuation of the properties in Group IV which are held under development, we have made reference to sales evidence as available in the market and have taken into account the construction costs that will be expended to complete the proposed developments.

— 239 — APPENDIX VI PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LSD GROUP

We have not been provided with any title documents relating to the properties in Hong Kong but we have caused searches to be made at the Land Registry. We have not, however, searched the original documents to verify ownership or to ascertain the existence of any amendment which does not appear on the copies obtained by us. We do not accept a liability for any interpretation which we have placed on such information which is more properly the sphere of your legal advisers. In respect of the property interest in Vietnam in Group VII, we have relied on the information given by the LSD Group and its Vietnam legal advisor, Hogan Lovells International LLP, regarding the titles to the property.

We have relied to a very considerable extent on information given by the LSD Group and have accepted advice given to us on such matters as planning approvals or statutory notices, easements, tenure, letting, site and floor areas, development proposals, development costs and all other relevant matters. We have not verified the truth and accuracy of the information and have relied on the LSD Group’s confirmation that no material facts have been omitted from the information so supplied. Dimensions, measurements and areas included in the valuation certificate are based on information contained in the documents and leases provided to us and are therefore only approximations.

We have inspected the exterior of the properties valued and, where possible, we have also inspected the interior of the premises. However, no structural survey has been made but, in the course of our inspection, we did not note any serious defect. We are not, however, able to report that the properties are free from rot, infestation or any other structural defect. No tests were carried out to any of the services. For the properties in Groups III and IV, we have not carried out investigations on site to determine the suitability of the ground conditions and services etc for the future or proposed developments. Our valuation is prepared on the assumption that these aspects are satisfactory and that no extraordinary expenses or delays will be incurred during construction periods. In addition, we have not carried out on-site measurements to verify the correctness of the site areas and have assumed that the site areas shown on the documents handed to us are correct.

No allowance has been made in our report for any charge, mortgage or amount owing on any of the properties. Unless otherwise stated, it is assumed that the properties are free from encumbrances, restrictions, and outgoings of an onerous nature which could affect their values.

Unless otherwise stated, all money amounts stated herein are in Hong Kong Dollars (“HK$”). The exchange rate adopted for conversion is US$1 to HK$7.80.

— 240 — APPENDIX VI PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LSD GROUP

We enclose herewith a summary of values and our valuation certificate.

Yours faithf ully For and on behalf of Savills Valuation and Professional Services Limited Charles C K Chan MSc FRICS FHKIS MCIArb RPS(GP) Managing Director

Note: Mr. Charles C K Chan, chartered estate surveyor, MSc, FRICS, FHKIS, MCIArb, RPS(GP), has been a qualified valuer since June 1987. Mr. Charles C K Chan has about 25 years of experience in the valuation of properties in Hong Kong and extensive experience in the valuation of properties in Vietnam.

— 241 — APPENDIX VI PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LSD GROUP

SUMMARY OF VALUES

Capital value in Interest existing state as Capital value in attributable at 31 May 2010 existing state as at to the attributable to the No. Property 31 May 2010 LSD Group LSD Group

Group I — Property interests held by the LSD Group for investment in Hong Kong

1. Cheung Sha Wan Plaza HK$3,480,000,000 100% HK$3,480,000,000 (except Station Complex and Government Accommodation), 833 Cheung Sha Wan Road, Cheung Sha Wan, Kowloon, Hong Kong

2. Causeway Bay Plaza 2, 463-483 HK$2,200,000,000 100% HK$2,200,000,000 Lockhart Road, Causeway Bay, Hong Kong

3. Lai Sun Commercial Centre, HK$755,000,000 100% HK755,000,000 680 Cheung Sha Wan Road, Cheung Sha Wan, Kowloon, Hong Kong

4. Factory Units A and B on 10th HK$8,200,000 100% HK$8,200,000 Floor and Car Park Spaces Nos. 1, 2, 13 and 14 on Ground Floor, Metropolitan Factory and Warehouse Building, 30-32 Chai Wan Kok Street, Tsuen Wan, New Territories, Hong Kong

— 242 — APPENDIX VI PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LSD GROUP

Capital value in Interest existing state as Capital value in attributable at 31 May 2010 existing state as at to the attributable to the No. Property 31 May 2010 LSD Group LSD Group

5. Shop No. G20A on Ground HK$1,730,000 100% HK$1,730,000 Floor and Shop Nos. 337, 344, 358 and 359 on 3rd Floor, East Commercial Block of South Horizons, 18A South Horizon Drive, Ap Lei Chau, Hong Kong

6. Roof of Tower A, New HK$500,000 100% HK$500,000 Mandarin Plaza, 14 Science Museum Road, Tsim Sha Tsui, Kowloon, Hong Kong

7. AIA Central, 1 Connaught Road HK$10,900,000,000 10% HK$1,090,000,000 Central, Central, Hong Kong

8. Ground and Mezzanine HK$14,000,000 100% HK$14,000,000 Floors, 58-60 Ki Lung Street, Mongkok, Kowloon, Hong Kong

Sub-total HK$17,359,430,000 HK$7,549,430,000

— 243 — APPENDIX VI PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LSD GROUP

Capital value in Interest existing state as Capital value in attributable at 31 May 2010 existing state as at to the attributable to the No. Property 31 May 2010 LSD Group LSD Group

Group II — Property interests held by the LSD Group for sale in Hong Kong

9. Portions of Emerald 28, 20-28 HK$602,000,000 100% HK$602,000,000 Tai Po Road, Sham Shui Po, Kowloon, Hong Kong

10. Lots Nos. 553 and 1186 in HK$2,200,000 100% HK$2,200,000 Demarcation District No. 244, Ho Chung, Sai Kung, New Territories, Hong Kong

11. Units Nos. 3 and 4 on the HK$600,000 100% HK$600,000 Roof Floor, Lai Cheong Factory Building, 479-479A Castle Peak Road, Cheung Sha Wan, Kowloon, Hong Kong

12. Flat Roof B immediately HK$90,000 100% HK$90,000 thereabove Flat B on 28th Floor, The Eastborne, 51 Shau Kei Wan Main Street East, Shau Kei Wan, Hong Kong

13. Flat Roof on Roof, Parc 22, HK$600,000 100% HK$600,000 22 Sung Wong Toi Road, Tokwawan, Kowloon, Hong Kong

14. Flat Roofs on Top Roof and HK$140,000 100% HK$140,000 Satellite TV Plant Room on 30th Floor, Well-Found Building, 488 Jaffe Road, Causeway Bay, Hong Kong

— 244 — APPENDIX VI PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LSD GROUP

Capital value in Interest existing state as Capital value in attributable at 31 May 2010 existing state as at to the attributable to the No. Property 31 May 2010 LSD Group LSD Group

15. Lorry Car Parking Space No. HK$5,000,000 100% HK$5,000,000 6, Container Car Parking Space No. 7 and Private Car Parking Spaces Nos. 8, 9, 10, 11, 12 and 13 on Ground Floor, Park Fook Industrial Building, 615-617 Tai Nan West Street, Cheung Sha Wan, Kowloon, Hong Kong

16. Car Parking Spaces Nos. HK$2,300,000 50% HK$1,150,000 1 and 6 on 2nd Floor, Car Parking Spaces Nos. 1 and 6 on 3rd Floor, Car Parking Spaces Nos. 1, 10, 11 and 15 on 4th Floor of the Car Parking Portion, The Panorama, 520 Castle Peak Road, Tsuen Wan, New Territories, Hong Kong

17. Open Car Parks Nos. P1, P2 HK$300,000 50% HK$150,000 and P3, Rolling Hills, 8 Hung Fa Hom Road, Yuen Long, New Territories, Hong Kong

18. 32 Car Parking Spaces on HK$4,500,000 40% HK$1,800,000 Basement, Tai Po Garden, 1 Mui Shu Hang Road, Tai Po, New Territories, Hong Kong

Sub-total HK$617,730,000 HK$613,730,000

— 245 — APPENDIX VI PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LSD GROUP

Capital value in Interest existing state as Capital value in attributable at 31 May 2010 existing state as at to the attributable to the No. Property 31 May 2010 LSD Group LSD Group

Group III — Property interests held by the LSD Group for development in Hong Kong

19. 48-52 Ki Lung Street, HK$114,000,000 100% HK$114,000,000 Mongkok, Kowloon, Hong Kong

20. Ngan Kee Building (except HK$45,000,000 100% HK$45,000,000 Shop A on Ground Floor), 54-56 Ki Lung Street, Mongkok, Kowloon, Hong Kong

21. 335-339 Tai Hang Road, HK$376,000,000 100% HK$376,000,000 Wong Nai Chung, Hong Kong

Sub-total HK$535,000,000 HK$535,000,000

Group IV — Property interests held by the LSD Group under development in Hong Kong

22. 4 Shung Shun Street, HK$416,000,000 100% HK$416,000,000 Yau Tong, Kowloon, Hong Kong

23. 28 Wood Road (formerly HK$1,560,000,000 50% HK$780,000,000 known as 16-34 Wood Road), Wanchai, Hong Kong

24. 3 Connaught Road Central, HK$3,430,000,000 50% HK$1,715,000,000 Central, Hong Kong

Sub-total HK$5,406,000,000 HK$2,911,000,000

— 246 — APPENDIX VI PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LSD GROUP

Capital value in Interest existing state as Capital value in attributable at 31 May 2010 existing state as at to the attributable to the No. Property 31 May 2010 LSD Group LSD Group

Group V — Property interests held by the LSD Group for self-occupation in Hong Kong

25. 18th and 19th Floors of May HK$157,000,000 100% HK$157,000,000 Tower II and Car Parking Spaces Nos. 60 and 67 on Ground Floor of May Towers I and II, 5 and 7 May Road, Mid-levels, Hong Kong

26. 2nd Floor, Mau Lam Building, HK$3,100,000 100% HK$3,100,000 16-18 Mau Lam Street, Yau Ma Tei, Kowloon, Hong Kong

27. Flat O on 1st Floor (including HK$2,600,000 100% HK$2,600,000 Portion of Flat Roof on 1st Floor), Sun On Building, 490 Queen’s Road West, Kennedy Town, Hong Kong

Sub-total HK$162,700,000 HK$162,700,000

Group VI — Property interest held by the LSD Group for self-operation in Hong Kong

28. Club House of 37 no commercial value 100% no commercial value Repulse Bay Road, Repulse Bay, Hong Kong

Sub-total no commercial value no commercial value

Group VII — Property interest held by the LSD Group for self-operation in Vietnam

29. Caravelle Hotel, 19 Lam Son HK$522,600,000 26.01% HK$135,928,260 Square, District 1, Ho Chi Minh City, Vietnam

Sub-total HK$522,600,000 HK$135,928,260

Grand Total HK$24,603,460,000 HK$11,907,788,260

— 247 — APPENDIX VI PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LSD GROUP

VALUATION CERTIFICATE

Group I – Property interests held by the LSD Group for investment in Hong Kong

Capital value in existing state as at Property Description and tenure Particulars of occupancy 31 May 2010 1. Cheung Sha Wan The property comprises an Except for approximately HK$3,480,000,000 Plaza (except 8-storey and a 7-storey office 1,350.89 sq m (14,541 sq ft) (100% interest) Station Complex towers erected over a 7-storey which are vacant, the shops and Government (including a basement and and restaurants are let under HK$3,480,000,000 Accommodation), a mezzanine floor) podium various tenancies or licences (100% interest 833 Cheung Sha Wan providing commercial, mostly for terms of two to attributable to the Road, Cheung Sha carparking, loading and three years with the last LSD Group) Wan, Kowloon, Hong unloading and mechanical expiring in February 2013 at a Kong facilities. The property was total monthly rental or licence completed in 1989 and erected income of approximately 710,760/744,000th on a rectangular site with an HK$7,300,000 mostly shares of and in New area of approximately 6,675 exclusive of management fees, Kowloon Inland Lot sq m (71,850 sq ft). rates and Government rent. No. 5955. The Ground, Mezzanine, 1st, Except for approximately 2nd and portion of 3rd Floors 2,456.34 sq m (26,440 sq ft) are designated as shops and which are vacant, the office restaurants with a total gross is let under various tenancies floor area of approximately mainly for terms of two or 20,843.27 sq m (224,357 sq ft). three years with the last expiring in May 2013 at a The 5th to 11th Floors of total monthly rental income of Tower 1 and the 5th to 12th approximately HK$5,500,000 Floors of Tower 2 are planned exclusive of management fees, as office use with a total gross rates and Government rent. floor area of approximately 43,828.41 sq m (471,769 sq ft). The carparking spaces are operated as a fee-paying The property also comprises a public carpark yielding an total of 355 carparking spaces average monthly income of on the Basement, portion approximately HK$820,000 of the 3rd Floor and the from January 2010 to May whole of the 4th Floor of the 2010. development. Base Stations on 1st to New Kowloon Inland Lot 4th Floors and an advertising No. 5955 is held from the space on the external wall Government under Conditions are let under four licences of Sale No. 11878 for a term with the last one expiring in commencing from 4 April August 2011 at a total monthly 1986 and expiring on 30 June licence fee of approximately 2047 at an annual Government HK$110,000 exclusive of rent of 3% of the rateable management fees, rates and value for the time being of the Government rent. lot.

Notes: (1) The registered owner of the property is Lai Sun Development Company Limited.

(2) The property is subject to a Legal Charge dated 23 December 2009 in favour of Citicorp International Limited (as agent).

(3) The property lies within an area zoned “Commercial (4)” under Cheung Sha Wan Outline Zoning Plan.

— 248 — APPENDIX VI PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LSD GROUP

Capital value in existing state as a Property Description and tenure Particulars of occupancy 31 May 2010

2. Causeway Bay Plaza The property comprises a The retail shops and HK$2,200,000,000 2, 463-483 Lockhart 28-storey (including three restaurant/Spa are let under (100% interest) Road, Causeway Bay, basement floors) commercial/ various tenancies mainly for Hong Kong office building with car terms of three years with the HK$2,200,000,000 parking facilities at basement last expiring in May 2013 (100% interest Section J of Inland levels. The property was at a total monthly rent of attributable to the Lot No. 2833, The completed in 1992 and erected approximately HK$4,500,000 LSD Group) Remaining Portions on a rectangular site with an exclusive of rates and of Sections D, E, G, area of approximately 1,280.19 management fees. H, K, L, M and O of sq m (13,780 sq ft). Inland Lot No. 2833, Except for approximately Sub-section 4 of The gross floor areas 290.69 sq m (3,129 sq ft) Section H of Inland of the development are which are vacant, the office Lot No. 2833 and The approximately as follows: is let under various tenancies Remaining Portion of mainly for terms of two to Inland Lot No. 2833. Retail Shops: three years with the last 3,114.92 sq m (33,529 sq ft) on expiring in December 2012 Basement 1, portion of Ground at a total monthly rent of Floor and 1st Floors. approximately HK$2,400,000 exclusive of rates and Restaurants and Spa: management fees. 7,279.36 sq m (78,355 sq ft) on portion of Ground Floor, 2nd Various signages, light boxes, Floor, 3rd Floor and 5th to base stations and antennae are 11th Floors. let under various tenancies or licences at a total monthly Offices: income of approximately 9,044.50 sq m (97,355 sq ft) on HK$124,000. 12th to 24th Floors. The carpark is operated as The total gross floor area of a public fee-paying carpark the property is approximately at an average gross monthly 19,438.78 sq m (209,239 sq ft). income of approximately HK$339,000 from January The property also comprises 2010 to May 2010. 59 car parking spaces at the two basement levels.

Inland Lot No. 2833 is held from the Government under a Government lease for a term of 99 years commencing from 15 April 1929 renewable for a further term of 99 years at an annual Government rent of HK$75.

Notes: (1) The registered owner of the property is Gilroy Company Limited, in which LSD has a 100 per cent attributable interest.

(2) The property is subject to a mortgage dated 29 April 2005 in favour of Hang Seng Bank Limited.

(3) The property lies within an area zoned “Commercial/Residential” under Causeway Bay Outline Zoning Plan.

— 249 — APPENDIX VI PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LSD GROUP

Capital value in existing state as at Property Description and tenure Particulars of occupancy 31 May 2010

3. Lai Sun Commercial The property comprises a Except for approximately HK$755,000,000 Centre, 680 Cheung 13-storey commercial/carpark 611.11 sq m (6,578 sq ft) which (100% interest) Sha Wan Road, complex completed in 1987 are occupied by the LSD Cheung Sha Wan, and erected on a site with an Group and 965.63 sq m HK$755,000,000 Kowloon, Hong Kong area of approximately 3,120.96 (10,394 sq ft) which are (100% interest sq m (33,594 sq ft). vacant, the offices are let attributable to the New Kowloon Inland under various tenancies mainly LSD Group) Lot No. 5984. The gross floor areas of the for terms of two years with property are approximately as the last expiring in April follows: 2012 at a total monthly rent of approximately HK$716,000 Shops/restaurants: exclusive of rates and 9,770.25 sq m (105,167 sq ft) management fees. on Basement, Ground and 1st Floors. Except for approximately 84.26 sq m (907 sq ft) Offices: which are occupied by the 7,745.54 sq m (83,373 sq ft) on LSD Group, the shops and 9th to 11th Floors. restaurants are let under various tenancies and licences The total gross floor area of mainly for terms of two to the property is approximately three years with the last one 17,515.79 sq m (188,540 sq ft). expiring in October 2012 at a total monthly rent of The property also comprises approximately HK$1,760,000 450 private car parking spaces exclusive of rates and and 71 lorry parking spaces management fees. on 2nd to 8th Floors. The carpark is operated as New Kowloon Inland Lot a public fee-paying carpark No. 5984 is held from the at an average gross monthly Government under Conditions income of approximately of Sale No. 11748 for a term HK$729,000 from January which expired on 27 June 2010 to May 2010. 1997 and had been extended upon expiry until 30 June Spaces for antennae and 2047 without premium but at advertising banners are let a revised annual Government under various tenancies or rent at 3% of the rateable licences for terms of two value for the time being of the years with the last one lot. expiring in October 2012 at a total monthly income of approximately HK$68,000 exclusive of rates and management fees.

Notes: (1) The registered owner of the property is Lai Sun Development Company Limited.

(2) The property is subject to a mortgage dated 29 April 2005 in favour of Hang Seng Bank Limited.

(3) The property lies within an area zoned “Commercial (3)” under Cheung Sha Wan Outline Zoning Plan.

— 250 — APPENDIX VI PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LSD GROUP

Capital value in existing state as at Property Description and tenure Particulars of occupancy 31 May 2010

4. Factory Units A and Metropolitan Factory and Except for approximately HK$8,200,000 B on 10th Floor and Warehouse Building is a 528.15 sq m (5,685 sq ft) (100% interest) Car Park Spaces 14-storey industrial building which are vacant, the factory Nos. 1, 2, 13 and 14 with loading/unloading and units are let under 2 licences HK$8,200,000 on Ground Floor, car parking facilities on with the last expiring in June (100% interest Metropolitan Factory the Ground floor and was 2011 at a total monthly licence attributable to the and Warehouse completed in 1978. fee of HK$4,550 inclusive of LSD Group) Building, 30-32 Chai management fees, rates and Wan Kok Street, The property comprises two Government rent. Tsuen Wan, New factory units on the 10th Territories, Hong Floor of the building with Two car parking spaces are Kong a total gross floor area of vacant and two car parking approximately 1,056.30 sq m spaces are under a monthly 28/380th shares of (11,370 sq ft). licence at a monthly licence and in Section B of fee of HK$4,000 inclusive of Tsuen Wan Inland The property also comprises management fees, rates and Lot No. 34. two covered private car Government rent. parking spaces and two covered lorry spaces on Ground Floor of the building.

Tsuen Wan Inland Lot No. 34 is held from the Government under Conditions of Sale No. 5136 for a term which expired on 27 June 1997 and had been extended upon expiry until 30 June 2047 without premium but at a revised annual Government rent at 3% of the rateable value for the time being of the lot.

Notes: (1) The registered owner of the property is Lai Sun Development Company Limited.

(2) The property lies within an area zoned “Other Specified Uses (Business)” under Tsuen Wan Outline Zoning Plan.

— 251 — APPENDIX VI PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LSD GROUP

Capital value in existing state as at Property. Description and tenure Particulars of occupancy 31 May 2010

5. Shop No. G20A South Horizons is a large- The property is vacant. HK$1,730,000 on Ground Floor scale residential development (100% interest) and Shop Nos. 337, comprising a total of 34 344, 358 and 359 residential blocks with HK$1,730,000 on 3rd Floor, East ancillary commercial and (100% interest Commercial Block of carparking facilities. attributable to the South Horizons, 18A LSD Group) South Horizon Drive, East Commercial Block of Ap Lei Chau, Hong South Horizons is a 5-storey Kong shopping/recreational complex surmounting a 9/168,000th shares 2-level carparking basement of and in The completed in 1994. The Remaining Portion of property comprises a shop Aplichau Inland Lot unit on Ground Floor and 4 No. 121. shop units on 3rd Floor of the building with a total gross floor area of approximately 26.94 sq m (290 sq ft).

Aplichau Inland Lot No. 121 is held from the Government under Conditions of Exchange No. 11998 for a term commencing on 28 January 1988 and expiring on 31 March 2040 at an annual Government rent of 3% of the rateable value for the time being of the lot.

Notes: (1) The registered owner of the property is Profit Winner Investment Limited, in which LSD has a 100 per cent attributable interest.

(2) The property lies within an area zoned “Commercial” under Aberdeen & Ap Lei Chau Outline Zoning Plan.

— 252 — APPENDIX VI PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LSD GROUP

Capital value in existing state as at Property Description and tenure Particulars of occupancy 31 May 2010

6. Roof of Tower A, New Mandarin Plaza is a The property is vacant. HK$500,000 New Mandarin Plaza, commercial development (100% interest) 14 Science Museum comprising two office Road, Tsim Sha Tsui, buildings erected over HK$500,000 Kowloon, Hong Kong a 6-level (including two (100% interest basement floors) commercial/ attributable to the 100/30,000th shares carparking podium completed LSD Group) of and in Kowloon in 1982. Inland Lot No. 10599. The property comprises the roof of Tower A of New Mandarin Plaza with an area of approximately 1,540.04 sq m (16,577 sq ft).

Kowloon Inland Lot No. 10599 is held from the Government under Conditions of Sale No. 11333 for a term of 75 years commencing from 18 June 1979 renewable for a further term of 75 years at an annual Government rent of HK$1,000.

Notes: (1) The registered owner of the property is Franklin Development Limited, in which LSD has a 100 per cent attributable interest.

(2) The property lies within an area zoned “Commercial” under Tsim Sha Tsui Outline Zoning Plan.

— 253 — APPENDIX VI PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LSD GROUP

Capital value in existing state as at Property Description and tenure Particulars of occupancy 31 May 2010

7. AIA Central, 1 The property comprises a The office of the property is HK$10,900,000,000 Connaught Road 39-storey (including 4 storeys let under various tenancies (100% interest) Central, Central, of refuge or mechanical for various terms with the Hong Kong floor) office building with latest expiring in August HK$1,090,000,000 ancillary car parking facilities 2017 at a total monthly rental (10% interest Marine Lot No. 275, on a 2-storey basement. The income of approximately attributable to the Section A and The property was completed HK$28,400,000 exclusive of LSD Group) Remaining Portion of in 2005 and erected on a rates, management and air- Marine Lot No. 278. rectangular site with and area conditioning charges. of approximately 2,269.34 sq m (24,427 sq ft). The carparking spaces of the property are let under various The basement of the building licenses at a total monthly is designated for car parking license fee of approximately purposes accommodating a HK$220,000. total of 69 car parking spaces and 8 motorcycle parking Various mobile equipment spaces. The Ground to 2nd plants and chiller plant are Floors are the main lift lobby let under various licenses at and circulation spaces. a total monthly license fee of approximately HK$50,000. The remaining upper floors of the building are designed for office use with 4 storeys of refuge or mechanical floor.

The total gross floor area of the property is approximately 34,008.92 sq m (366,072 sq ft).

Marine Lot No. 275 is held from the Government under a Government lease for a term of 999 years commencing from 9 September 1895 at an annual Government rent of HK$294.

Marine Lot No. 278 is held from the Government under a Government lease commencing from 12 October 1896 at an annual Government rent of HK$155.

Notes: (1) The registered owner of the property is Bayshore Development Group Limited, in which LSD has a 10 per cent attributable interest.

(2) The property is subject to a Fixed and Floating Security Document including Legal Charge of Hong Kong Property dated 30 November 2007 in favour of Bank of China (Hong Kong) Limited (as agent).

(3) The property lies within an area zoned “Commercial” under Central Outline Zoning Plan.

— 254 — APPENDIX VI PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LSD GROUP

Capital value in existing state as at Property Description and tenure Particulars of occupancy 31 May 2010

8. Ground and The property comprises the The property is vacant. HK$14,000,000 Mezzanine Floors, two shop units on the Ground (100% interest) 58-60 Ki Lung Street, Floor each with a storage Mongkok, Kowloon, space on the Mezzanine HK$14,000,000 Hong Kong Floor of a 9-storey composite (100% interest commercial/residential attributable to the 2/10th shares of and building completed in 1965. LSD Group) in The Remaining Portion of Kowloon The total saleable area of Inland Lot No. the shops on Ground Floor 3370 and 2/10th is approximately 146.88 shares of and in The sq m (1,581 sq ft) together Remaining Portion of with a total yard area of Kowloon Inland Lot approximately 12.82 sq m (138 No. 3371. sq ft). The total saleable area of the spaces on Mezzanine Floor is approximately 90.67 sq m (976 sq ft).

Kowloon Inland Lots Nos. 3370 and 3371 are each held from the Government under a Government lease for a term of 75 years commencing from 20 July 1931 renewable for a further term of 75 years. The total annual Government rent payable for the subject sections of the lots is HK$13,590.

Notes: (1) The registered owner of the property is Dayflow Limited, in which LSD has a 100 per cent attributable interest.

(2) The property lies within an area zoned “Residential (Group A)” under Mong Kok Outline Zoning Plan.

— 255 — APPENDIX VI PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LSD GROUP

Group II — Property interests held by the LSD Group for sale in Hong Kong

Capital value in existing state as at Property Description and tenure Particulars of occupancy 31 May 2010

9. Portions of Emerald The property is a 29-storey The property is vacant. HK$602,000,000 28, 20-28 Tai Po residential block (including (100% interest) Road, Sham Shui Po, a mechanical floor and a Kowloon, Hong Kong refuge floor) over a 4-storey HK$602,000,000 commercial/recreational (100% interest 4,750/5,031st shares podium. The property was attributable to the of and in New completed in February LSD Group) Kowloon Inland 2010 and erected on a Lot No. 2771, Sub- rectangular site with an area section 1 and The of approximately 664.44 sq m Remaining Portion (7,152 sq ft). of Section A of New Kowloon Inland Lot The property comprises the No. 2610, Sub-section entire whole block of the 1 and The Remaining building except Flats A and Portion of Section B on 6th Floor and Duplex B of New Kowloon Flat B on 37th and 38th Floors Inland Lot No. 2610 with a total gross floor area of and The Remaining approximately 6,091.79 sq m Portion of New (65,572 sq ft). Kowloon Inland Lot No. 2610. The Ground Floor and the 1st Floor are planned as shops with a total gross floor area of approximately 797.10 sq m (8,580 sq ft).

The 2nd and 3rd Floors are planned as club house and sky garden respectively. The property comprises 49 domestic flats and 1 duplex flat on the remaining upper floors with a total gross floor area of approximately 5,297.69 sq m (56,992 sq ft) together a mechanical floor and a refuge floor.

— 256 — APPENDIX VI PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LSD GROUP

Capital value in existing state as at Property Description and tenure Particulars of occupancy 31 May 2010

New Kowloon Inland Lot No. 2610 and New Kowloon Inland Lot No. 2771 are each held from the Government under a Government lease for a term which expired on 27 June 1997 but had been extended until 30 June 2047 without premium but at a revised annual Government rent at 3% of the rateable value for the time being of the lot.

Notes: (1) The registered owner of the property is Goldmay Development Limited, in which LSD has a 100 per cent attributable interest.

(2) The property is subject to debenture dated 30 August 2007 in favour of Oversea-Chinese Banking Corporation Limited, Hong Kong Branch.

(3) Flat A on 18th Floor together with the Balcony and Utility Platform thereof of the property is subject to an Agreement for Sale and Purchase dated 8 January 2010 at a consideration of HK$10,721,700.

(4) Flat B on 18th Floor together with the Balcony and Utility Platform thereof of the property is subject to an Agreement for Sale and Purchase dated 8 January 2010 at a consideration of HK$10,742,490.

(5) The property lies within an area zone Residential (Group A) under Cheung Sha Wan Outline Zoning Plan.

— 257 — APPENDIX VI PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LSD GROUP

Capital value in existing state as at Property Description and tenure Particulars of occupancy 31 May 2010

10. Lots Nos. 553 and The property comprises two The property is vacant. HK$2,200,000 1186 in Demarcation pieces of scattered agricultural (100% interest) District No. 244, land with a total site area of Ho Chung, Sai Kung, approximately 445.19 sq m HK$2,200,000 New Territories, (4,792 sq ft). (100% interest Hong Kong attributable to the The property is mainly LSD Group) derelict with wild vegetation.

Lots Nos. 553 and 1186 in Demarcation District No. 244 are held from the Government under a Block Government lease for a term which expired on 27 June 1997 and had been extended upon expiry to 30 June 2047 without premium but at a revised annual Government rent at 3% of the rateable value for the time being of the lot.

Notes: (1) The registered owner of the property is Regent Success Development Limited, in which LSD has a 100 per cent attributable interest.

(2) The property lies within areas zoned “Agriculture” and “Village Type Development” under Ho Chung Outline Zoning Plan.

— 258 — APPENDIX VI PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LSD GROUP

Capital value in existing state as at Property Description and tenure Particulars of occupancy 31 May 2010

11. Units Nos. 3 and 4 on Lai Cheong Factory Building The property is vacant. HK$600,000 the Roof Floor, is a 9-storey industrial (100% interest) Lai Cheong Factory building completed in 1961. Building, HK$600,000 479-479A Castle Peak The property comprises a (100% interest Road, portion of the Roof of the attributable to the Cheung Sha Wan, building with an area of LSD Group) Kowloon, approximately 1,207.73 sq m Hong Kong (13,000 sq ft).

2/40th shares of and New Kowloon Inland Lot in The Remaining No. 3516 is held from the Portion of Section Government under Conditions A of New Kowloon of Sale no. 4268 for a term Inland Lot No. 3516. which expired on 27 June 1997 and had been extended upon expiry to 30 June 2047 without premium but at a revised annual Government rent at 3% of the rateable value for the time being of the lot.

Notes: (1) The registered owner of the property is Leading Delight Limited, in which LSD has a 100 per cent attributable interest.

(2) The property lies within an area zoned “Other Specified Uses (Business)” under Cheung Sha Wan Outline Zoning Plan.

— 259 — APPENDIX VI PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LSD GROUP

Capital value in existing state as at Property Description and tenure Particulars of occupancy 31 May 2010

12. Flat Roof B The Eastborne is a 23-storey The property is vacant. HK$90,000 immediately residential building built (100% interest) thereabove Flat B over a 2-storey commercial/ on 28th Floor, The recreational podium completed HK$90,000 Eastborne, 51 Shau in 1999. (100% interest Kei Wan Main Street attributable to the East, Shau Kei Wan, The property comprises a flat LSD Group) Hong Kong roof above the 28th Floor of the building with an area of 2/3,408th shares approximately 15.70 sq m (169 of and in The sq ft). Remaining Portion of Section A of Shaukiwan Lot No. 52 is held Shaukiwan Lot No. from the Government under a 52, The Remaining Government lease for a term Portion of Sub- of 999 years commencing section 1 of Section from 3 January 1860 at an A of Shaukiwan annual Government rent of Lot No. 52, The HK$9.2. Remaining Portion of Section B of Shaukiwan Lot No. 52, The Remaining Portion of Sub- section 1 of Section F of Shaukiwan Lot No. 52, The Remaining Portion of Section E of Shaukiwan Lot No. 52 and The Remaining Portion of Section D of Shaukiwan Lot No. 52.

Notes: (1) The registered owner of the property is Leading Delight Limited, in which LSD has a 100 per cent attributable interest.

(2) The property lies within an area zoned “Residential (Group A)” under Shau Kei Wan Outline Zoning Plan.

— 260 — APPENDIX VI PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LSD GROUP

Capital value in existing state as at Property Description and tenure Particulars of occupancy 31 May 2010

13. Flat Roof on Roof, Parc 22 is an 11-storey The property is vacant. HK$600,000 Parc 22, 22 Sung residential building built (100% interest) Wong Toi Road, over a storey of shops and 2 Tokwawan, Kowloon, storeys of carparking spaces HK$600,000 Hong Kong completed in 1998. (100% interest attributable to the 2/274th shares of and The property comprises a LSD Group) in Sub-sections 3, 4 flat roof on the Roof of the and 5 of Section A of building with an area of Kowloon Inland Lot approximately 120.96 sq m No. 2304 and The (1,302 sq ft). Remaining Portion of Kowloon Inland Lot Kowloon Inland Lot No. 2304 No. 2304. is held from the Government under a Government lease for a term of 75 years commencing from 25 January 1930 renewable for a further term of 75 years at an annual Government rent of HK$468 for the subject sections of the lot.

Notes: (1) The registered owner of the property is Leading Delight Limited, in which LSD has a 100 per cent attributable interest.

(2) The property lies within an area zoned “Residential (Group A)” under Ma Tau Kok Outline Zoning Plan.

— 261 — APPENDIX VI PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LSD GROUP

Capital value in existing state as at Property Description and tenure Particulars of occupancy 31 May 2010

14. Flat Roofs on Top Well-Found Building is a The property is vacant. HK$140,000 Roof and Satellite TV 27-storey commercial/office (100% interest) Plant Room on 30th composite building completed Floor, Well-Found in 2001. HK$140,000 Building, 488 Jaffe (100% interest Road, Causeway Bay, The property comprises a attributable to the Hong Kong satellite TV plant room on LSD Group) the 30th Floor of the building 1/2nd of 1/1,003rd with an area of approximately share of and in The 2.32 sq m (25 sq ft) and 2 flat Remaining Portion of roofs on the Top Roof with Sub-sections 20 and a total area of approximately 23 of Section A of 18.30 sq m (197 sq ft). Inland Lot No. 2836. Inland Lot No. 2836 is held from the Government under a Government lease for a term of 99 years commencing from 30 September 1929 renewable for a further term of 99 years at an annual Government rent of HK$28 for the subject sections of the lot.

Notes: (1) The registered owner of the property is Leading Delight Limited, in which LSD has a 100 per cent attributable interest.

(2) The property lies within an area zoned “Commercial/Residential” under Causeway Bay Outline Zoning Plan.

— 262 — APPENDIX VI PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LSD GROUP

Capital value in existing state as at Property Description and tenure Particulars of occupancy 31 May 2010

15. Lorry Car Parking Park Fook Industrial Building Four private car parking HK$5,000,000 Space No. 6, is an 11-storey industrial spaces are let under various (100% interest) Container Car building with loading/ monthly licences at a total Parking Space No. unloading and car parking monthly licence fee of HK$5,000,000 7 and Private Car facilities on the Ground Floor HK$18,900 mostly inclusive (100% interest Parking Spaces Nos. and was completed in 1978. of management fees, rates attributable to the 8, 9, 10, 11, 12 and and Government rent. The LSD Group) 13 on Ground Floor, The property comprises remainder of the property is Park Fook Industrial a lorry parking space, a vacant. Building, container parking space and 615-617 Tai Nan West 6 private car parking spaces Street, on the Ground Floor of the Cheung Sha Wan, building. Kowloon, Hong Kong New Kowloon Inland Lot No. 5605 is held from the 20/1,110th shares of Government under Conditions and in New Kowloon of Exchange No. 10771 for a Inland Lot No. 5605. term which expired on 27 June 1997 and had been extended upon expiry to 30 June 2047 without premium but at a revised annual Government rent at 3% of the rateable value for the time being of the lot.

Notes: (1) The registered owner of the property is Winfield Properties Limited, in which LSD has a 100 per cent attributable interest.

(2) The property lies within an area zoned “Other Specified Use (Business)” under Cheung Sha Wan Outline Zoning Plan.

— 263 — APPENDIX VI PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LSD GROUP

Capital value in existing state as at Property Description and tenure Particulars of occupancy 31 May 2010

16. Car Parking Spaces The Panorama is a 43-storey The property is let on hourly HK$2,300,000 Nos. 1 and 6 on 2nd private residential building basis yielding a monthly (100% interest) Floor, Car Parking over a 5-storey commercial/ income of approximately Spaces Nos. 1 and carparking podium completed HK$11,700 in April 2010 HK$1,150,000 6 on 3rd Floor, Car in 1998. inclusive of management fees, (50% interest Parking Spaces Nos. rates and Government rent. attributable to the 1, 10, 11 and 15 on The property comprises a total LSD Group) 4th Floor of the Car of 8 private car parking spaces Parking Portion, on the 2nd, 3rd and 4th Floors The Panorama, 520 of the development. Castle Peak Road, Tsuen Wan, New Lot No. 327 in Demarcation Territories, Hong District No. 355 is held from Kong the Government under New Grant No. 3822 for a term 104/30,110th shares which expired on 27 June of and in Lot No. 1997 and had been extended 327 in Demarcation upon expiry to 30 June 2047 District No. 355 and without premium but at a Section A of Tsun revised annual Government Wan Inland Lot rent at 3% of the rateable No.16. value for the time being of the lot.

Tsun Wan Inland Lot No. 16 is held from the Government under a Government lease for a term which expired on 27 June 1997 and had been extended upon expiry to 30 June 2047 without premium but at a revised annual Government rent at 3% of the rateable value for the time being of the lot.

Notes: (1) The registered owner of the property is Giant Riches Limited, in which LSD has a 50 per cent attributable interest.

(2) The property lies within an area zoned “Residential (Group A) 5” under Tsuen Wan Outline Zoning Plan.

— 264 — APPENDIX VI PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LSD GROUP

Capital value in existing state as at Property Description and tenure Particulars of occupancy 31 May 2010

17. Open Car Parks Rolling Hills is a private The property is vacant. HK$300,000 Nos. P1, P2 and P3, residential development (100% interest) Rolling Hills, comprising a total of 16 8 Hung Fa Hom 2-storey detached terrace HK$150,000 Road, Yuen Long, houses completed in 1999. (50% interest New Territories, attributable to the Hong Kong The property comprises 3 LSD Group) open private car parking 37.5/4,121st shares spaces on the lower ground of and in Lot No. floor of the development. 2087 in Demarcation District No. 105. Lot No. 2087 in Demarcation District No. 105 is held from the Government under New Grant No. 4302 for a term commencing on 22 August 1996 and expiring on 30 Jun 2047 at an annual Government rent of 3% of the rateable value for the time being of the lot.

Notes: (1) The registered owner of the property is Kippford Enterprises Limited, in which LSD has a 50 per cent attributable interest.

(2) The property lies within an area zoned “Residential (Group C)” under Ngau Tam Mei Outline Zoning Plan.

— 265 — APPENDIX VI PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LSD GROUP

Capital value in existing state as at Property Description and tenure Particulars of occupancy 31 May 2010

18. 32 Car Parking Tai Po Garden is a private The property is let on hourly HK$4,500,000 Spaces on Basement, residential development basis yielding a total monthly (100% interest) Tai Po Garden, 1 Mui comprising 14 blocks of income of HK$5,250 in April Shu Hang Road, Tai 5-storey apartment buildings 2010 inclusive of management HK$1,800,000 Po, New Territories, with ancillary recreational fees, rates and Government (40% interest Hong Kong and carparking facilities rent. attributable to the completed in 1989. LSD Group) 140/23,300th shares of and in Tai Po The property comprises 32 Town Lot No. 60 private car parking spaces on the Basement of the development.

Tai Po Town Lot No. 60 is held from the Government under New Grant No. 12227 for a term which expired on 27 June 1997 and had been extended upon expiry to 30 June 2047 without premium but at a revised annual Government rent at 3% of the rateable value for the time being of the lot.

Notes: (1) The property comprises Car Parking Spaces Nos. 5, 13, 14, 16, 19, 69, 95, 97, 101-104, 107-110, 180, 188, 212, 219, 254, 257-260, 264, 266, 269-271 and 277-278 on the Basement of the development.

(2) The registered owner of the property is Mandy Investment Company Limited, in which LSD has a 40 per cent attributable interest.

(3) The property lies within an area zoned “Residential (Group B)” under Tai Po Outline Zoning Plan.

— 266 — APPENDIX VI PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LSD GROUP

Group III — Property interests held by the LSD Group for development in Hong Kong

Capital value in existing state as at Property Description and tenure Particulars of occupancy 31 May 2010

19. 48-52 Ki Lung Street, The property comprises a The property is currently HK$114,000,000 Mongkok, Kowloon, rectangular site with an area occupied as an open carpark (100% interest) Hong Kong of approximately 287.90 sq m at an average gross monthly (3,099 sq ft). income of approximately HK$114,000,000 Kowloon Inland Lots HK$41,000 from January 2010 (100% interest Nos. 2455, 2456 and Kowloon Inland Lots Nos. to May 2010. attributable to the 3070. 2455, 2456 and 3070 are each LSD Group) held from the Government under a Government lease for a term of 75 years commencing from 21 March 1931 renewable for a further term of 75 years at a total annual Government rent of HK$20,286.

Notes: (1) The registered owner of the property is Milirich Investment Limited, in which LSD has a 100 per cent attributable interest.

(2) The property lies within an area zoned “Residential (Group A)” under Mong Kok Outline Zoning Plan.

— 267 — APPENDIX VI PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LSD GROUP

Capital value in existing state as at Property Description and tenure Particulars of occupancy 31 May 2010

20. Ngan Kee Building The property comprises one of The property is vacant. HK$45,000,000 (except Shop A on the two shops on the Ground (100% interest) Ground Floor), 54-56 Floor and all the 15 residential Ki Lung Street, units on the 1st to 5th Floors HK$45,000,000 Mongkok, Kowloon, of a 6-storey composite (100% interest Hong Kong commercial/residential attributable to the building. The building was LSD Group) 18/21st shares of and completed in 1976 and erected in Kowloon Inland on a rectangular site with a Lots Nos. 2547 and site area of approximately 3372. 192.96 sq ft (2,077 sq ft).

The shop on Ground Floor has a saleable area of approximately 86.50 sq m (931 sq ft) and the residential units have a total saleable area of approximately 556.50 sq m (5,990 sq ft).

Kowloon Inland Lots Nos. 2547 and 3372 are each held from the Government under a Government lease for a term of 75 years commencing from 20 July 1931 renewable for a further term of 75 years at a total annual Government rent of HK$24,876.

Notes: (1) The registered owner of the property is Milirich Investment Limited, in which LSD has a 100 per cent attributable interest.

(2) The property lies within an area zoned “Residential (Group A)” under Mong Kok Outline Zoning Plan.

— 268 — APPENDIX VI PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LSD GROUP

Capital value in existing state as at Property Description and tenure Particulars of occupancy 31 May 2010

21. 335-339 Tai Hang The property comprises a The property is undergoing HK$376,000,000 Road, Wong Nai roughly trapezium site with an demolition work. (100% interest) Chung, Hong Kong area approximately 1,282.05 sq m (13,800 sq ft). HK$376,000,000 Inland Lot No. 7735. (100% interest Currently standing on the attributable to the site is a 4-storey residential LSD Group) building with car parking facilities completed in 1964. The total saleable area of the property is approximately 1,784.28 sq m (19,206 sq ft). Inland Lot No. 7735 is held from the Government under a Government lease for a term of 75 years commencing from 19 June 1961 renewable for a further term of 75 years at an annual Government rent of HK$316.

Notes: (1) The registered owner of the property is Bushell Limited, in which LSD has a 100 per cent attributable interest.

(2) The property lies within an area zoned “Residential (Group C) 9” under Wong Nai Chung Outline Zoning Plan.

— 269 — APPENDIX VI PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LSD GROUP

Group IV — Property interests held by the LSD Group under development in Hong Kong

Capital value in existing state as at Property Description and tenure Particulars of occupancy 31 May 2010 22. 4 Shung Shun Street, The property comprises a The property is undergoing HK$416,000,000 Yau Tong, Kowloon, rectangular site with an area foundation works. (100% interest) Hong Kong of approximately 1,649.94 sq m (17,760 sq ft). HK$416,000,000 Yau Tong Inland Lot (100% interest No. 20 The property is proposed to attributable to the be developed into a 24-storey LSD Group) residential building providing 120 flats over a 5-storey commercial/ recreational/ carparking podium which is scheduled to be completed in the 2nd quarter of 2013. The gross floor area of the shops of the proposed development is approximately 1,649.11 sq m (17,751 sq ft) whereas the gross floor area of the residential units is 7,996.35 sq m (86,073 sq ft). The proposed development will accommodate 27 private car parking spaces, 3 motorcycle parking spaces and 3 loading/unloading bays. Yau Tong Inland Lot No. 20 is held from the Government under Conditions of Sale No. 10765 for a term which expired on 27 June 1997 and had been extended upon expiry until 30 June 2047 without premium but at a revised annual Government rent at 3% of the rateable value for the time being of the lot.

Notes: (1) The registered owner of the property is Oriental Style Limited, in which LSD has a 100 per cent attributable interest.

(2) The property is subject to a debenture and mortgage dated 13 July 2010 in favour of The Hongkong and Shanghai Banking Corporation Limited.

(3) The estimated gross development value of the proposed development of the property as at 31 May 2010 assuming it is fully completed is approximately HK$819,000,000.

(4) As advised by the LSD Group, the total construction cost of the proposed development is approximately HK$248,000,000 and the total outstanding construction cost as at the date of valuation is approximately HK$243,500,000.

(5) The property lies within an area zoned “Residential (Group E)” under Cha Kwo Ling, Yau Tong & Lei Yue Mun Outline Zoning Plan.

— 270 — APPENDIX VI PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LSD GROUP

Capital value in existing state as at Property Description and tenure Particulars of occupancy 31 May 2010

23. 28 Wood Road The property comprises a The property is undergoing HK$1,560,000,000 (formerly known as roughly trapezium site with an superstructure works. (100% interest) 16-34 Wood Road), area of approximately 1,235.80 Wanchai, sq m (13,302 sq ft). HK$780,000,000 Hong Kong (50% interest The property is proposed to be attributable to the Sub-sections 1, 2, developed into a commercial/ LSD Group) 3, 4, 5, 6 and The residential composite building Remaining Portion of with a total gross floor area of Section A of Inland approximately 13,292.34 sq m Lot No. 1337, Sub- (143,079 sq ft). The proposed section 1 and The development is scheduled Remaining Portion of to be completed in the 3rd Section B of Inland quarter of 2011. Lot No. 1337 and Section E and The Inland Lot No. 1337 is held Remaining Portion of from the Government under a Inland Lot No. 1337. Government lease for a term of 999 years commencing from 1 January 1894 at an annual Government rent HK$156 for the lot.

Notes: (1) The registered owner of the property is Brilliant Pearl Limited in which LSD has a 50 per cent attributable interest.

(2) 20-34 Wood Road of the property is subject to a debenture and mortgage dated 27 December 2006 in favour of Sumitomo Mitsui Banking Corporation (as agent).

(3) 20-34 Wood Road of the property is subject to a supplement to debenture and mortgage dated 21 September 2007 in favour of Sumitomo Mitsui Banking Corporation (as agent).

(4) Except for the 4th Floor of 18 Wood Road, 16 and 18 Wood Road of the property is subject to a mortgage dated 28 September 2007 in favour of Sumitomo Mitsui Banking Corporation (as agent).

(5) The 4th Floor of 18 Wood Road is subject to a mortgage dated 23 March 2009 in favour of Sumitomo Mitsui Banking Corporation (as agent).

(6) The estimated gross development value of the proposed development of the property as at 30 May 2010 assuming it is fully completed is approximately HK$2,180,000,000.

(7) As advised by the LSD Group, the total development cost of the proposed development is approximately HK$365,000,000 and the total outstanding construction cost as at the date of valuation is approximately HK$231,000,000.

(8) The property lies within an area zoned “Commercial/Residential” under Wan Chai Outline Zoning Plan.

— 271 — APPENDIX VI PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LSD GROUP

Capital value in existing state as at Property Description and tenure Particulars of occupancy 31 May 2010

24. 3 Connaught Road The property comprises a The property is undergoing HK$3,430,000,000 Central, Central, rectangular site with an area superstructure works. (100% interest) Hong Kong of approximately 1,390 sq m (14,962 sq ft). HK$1,715,000,000 Inland Lot No. 8736 (50% interest The property is proposed to attributable to the be developed into a 27-storey LSD Group) building of office and bank hall erected over a 4-storey basement providing 39 car parking spaces and mechanical facilities. The proposed development is scheduled to be completed in the 1st quarter of 2012.

The total gross floor area of the proposed development, excluding car parking spaces, is approximately 21,290.79 sq m (229,174 sq ft).

The property is held from the Government under Conditions of Exchange No.UB12058 for a term commencing on 28 June 1989 and expiring on 30 June 2047 at an annual Government rent of 3% of the rateable value for the time being of the lot.

Notes: (1) The registered owner of the property is Diamond String Limited, in which LSD has a 50% attributable interest.

(2) The property is subject to a mortgage dated 10 December 2009 in favour of China Construction Bank Corporation, Hong Kong Branch.

(3) The estimated gross development value of the proposed development of the property as at 31 May 2010 assuming it is fully completed is approximately HK$5,190,000,000.

(4) As advised by the LSD Group, the total development cost of the proposed development is approximately HK$991,000,000 and the total outstanding construction cost as at the date of valuation is approximately HK$816,000,000.

(5) The property lies within an area zoned “Commercial” under Central District Outline Zoning Plan.

— 272 — APPENDIX VI PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LSD GROUP

Group V — Property interests held by the LSD Group for self-occupation in Hong Kong

Capital value in existing state as at Property Description and tenure Particulars of occupancy 31 May 2010

25. 18th and 19th Floors May Tower II is a 27-storey The property is occupied by HK$157,000,000 of May Tower II and centrally air-conditioned the LSD Group. (100% interest) Car Parking Spaces apartment building over Nos. 60 and 67 on a 3-storey carparking/ HK$157,000,000 Ground Floor of May recreational podium completed (100% interest Towers I and II, 5 in 1992. attributable to the and 7 May Road, LSD Group) Mid-levels, Hong The property comprises two Kong apartment units each on the 18th and 19th Floors of the 70/2,480th shares of building with a total gross and in Inland Lot floor area of approximately No. 1772 and the 630.43 sq m (6,786 sq ft). Extension thereto. The property also comprises two private car parking spaces on the Ground Floor of the development.

Inland Lot No. 1772 and the Extension thereto are held from the Government under a Government lease and Conditions of Extension No. 6018 respectively for a term of 75 years commencing on 8 April 1907 renewable for a further term of 75 years at an annual Government rent of HK$140,400 for the lot.

Notes: (1) The registered owner of the property is Hong Kong Hill Limited, in which LSD has a 100 per cent attributable interest.

(2) The property lies within an area zoned “Residential (Group B)” under Mid-Levels West Outline Zoning Plan.

— 273 — APPENDIX VI PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LSD GROUP

Capital value in existing state as at Property Description and tenure Particulars of occupancy 31 May 2010

26. 2nd Floor, Mau Lam Mau Lam Building is a The property is occupied by HK$3,100,000 Building, 16-18 Mau 13-storey (including a the LSD Group. (100% interest) Lam Street, Yau Ma Mezzanine Floor) composite Tei, Kowloon, Hong commercial/office building HK$3,100,000 Kong completed in 1987. (100% interest attributable to the 18/216th shares of The property comprises the LSD Group) and in Kowloon office on the 2nd Floor of the Inland Lot No. 8892. building with a saleable area of approximately 100.24 sq m (1,079 sq ft).

Kowloon Inland Lot No. 8892 is held from the Government under a Government lease for a term of 150 years commencing from 25 December 1888 at an annual Government rent of HK$126 for the lot.

Notes: (1) The registered owner of the property is Furama Hotel Enterprises Limited, in which LSD has a 100 per cent attributable interest.

(2) The property lies within an area zoned “Commercial” under Yau Ma Tei Outline Zoning Plan.

— 274 — APPENDIX VI PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LSD GROUP

Capital value in existing state as at Property Description and tenure Particulars of occupancy 31 May 2010

27. Flat O on 1st Floor Sun On Building is a The property is occupied by HK$2,600,000 (including Portion 14-storey composite the LSD Group. (100% interest) of Flat Roof on commercial/residential 1st Floor), Sun building completed in 1965. HK$2,600,000 On Building, 490 (100% interest Queen’s Road West, The property comprises attributable to the Kennedy Town, a residential unit on the LSD Group) Hong Kong 1st Floor of the building with a saleable area of 1/237th share of and approximately 48.31 sq m in The Remaining (520 sq ft) together with Portion of Sub- a flat roof with an area of section 2 of Section approximately 4.83 sq m (52 B of Inland Lot No. sq ft). 834. Inland Lot No. 834 is held from the Government under a Government lease for a term of 986 years commencing from 26 December 1864 at an annual Government rent of HK$38 for the lot.

Notes: (1) The registered owner of the property is Furama Hotel Enterprises Limited, in which LSD has a 100 per cent attributable interest.

(2) The property lies within an area zoned “Residential (Group A) 7” under Sai Ying Pun & Sheung Wan Outline Zoning Plan.

— 275 — APPENDIX VI PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LSD GROUP

Group VI — Property interest held by the LSD Group for self-operation in Hong Kong

Capital value in existing state as at Property Description and tenure Particulars of occupancy 31 May 2010

28. Club House of 37 “37 Repulse Bay Road” The property is used by the No commercial value Repulse Bay Road, is a luxury residential residents of the development. (100% interest) Repulse Bay, development comprising 3 Hong Kong blocks of residential towers No commercial value with ancillary carparking (100% interest 20/2,667th shares of and recreational facilities attributable to the and in Rural Building completed in 1994. LSD Group) Lot No. 410. The property comprises the club house situated on 5 levels of the podium of the development. The property mainly accommodates 2 squash courts, a billiard room, 2 children’s play rooms, a fitness machine room, a function room, 2 changing rooms and ancillary lavatories and stores.

The saleable area of the property is approximately 1,800 sq m (19,375 sq ft) plus a roof garden of approximately 200 sq m (2,153 sq ft).

The property also comprises a tennis court and a swimming pool on the Podium deck level with a total area of approximately 1,364.83 sq m (14,691 sq ft).

Rural Building Lot No. 410 is held from the Government under a Government lease for a term of 75 years commencing from 20 Jun 1938 renewable for a further term of 75 years at an annual Government rent of HK$766 for the lot.

Notes: (1) The registered owner of the property is Leading Delight Limited, in which LSD has a 100 per cent interest.

(2) The property lies within an area zoned “Residential (Group B)” under Shouson Hill & Repulse Bay Outline Zoning Plan.

— 276 — APPENDIX VI PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LSD GROUP

Group VII — Property interest held by the LSD Group for self-operation in Vietnam

Capital value inexisting state as at Property Description and tenure Particulars of occupancy 31 May 2010

29. Caravelle Hotel, 19 The property comprises a The property is operated as a HK$522,600,000 Lam Son Square, level corner site situated hotel. (100% interest) District 1, Ho Chi within the downtown area of Minh City, Ho Chi Minh City. It has an HK$135,928,260 Vietnam area of approximately 2,612.00 (26.01% interest sq m (28,116 sq ft). Currently attributable to the standing on the property are 2 LSD Group) hotel buildings – the original Caravelle Hotel and a more recently constructed hotel.

The original Caravelle Hotel is a 10-storey hotel completed in 1959. It was refurbished and converted to provide 24 serviced apartment units, 8 suite units, executive offices, restaurants and entertainment facilities. It has a gross floor area of approximately 8,436.00 sq m (90,805 sq ft).

The more recently constructed hotel is a 24-storey hotel completed in 1998 providing 303 guest rooms with restaurants, recreational and back-of-house facilities and function rooms. It has a gross floor area of approximately 26,702.00 sq m (287,420 sq ft).

The property is held under a land use right due to expire on 8 October 2040.

— 277 — APPENDIX VI PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LSD GROUP

Notes: (1) We have been provided with a legal opinion issued by Hogan Lovells International LLP, a foreign law firm licensed to operate in Vietnam. The legal opinion, inter alia, stipulates the followings:

(a) The rights to use the land of the property is held by Chains Caravelle Hotel Joint Venture Company Limited (“Caravelle”) under a Land Use Right Certificate dated 28 July 1998 for a term of 48 years from 8 October 1992 to 8 October 2040. The structures of the property are owned by Caravelle.

(b) Caravelle is a joint venture company pursuant to Investment Licence No. 433/GP dated 8 October 1992 and is 51% owned by Glynhill Investments (Vietnam) Pte Ltd (“GIV”) and 49% owned by Saigon Tourist Corporation (“Saigon”), a Vietnamese owner.

(c) Under the Joint Venture Contract dated 25 March 1992, the duration of operation of Caravelle is 48 years from the date of issuance of the Investment Licence No. 433/GP dated 8 October 1992.

(d) All of the fixed assets of Caravelle shall be transferred without compensation to Saigon after 8 October 2040, the expiry date of the duration of operation under the Joint Venture Contract.

(e) The Land Use Right and the property have been pledged by Caravelle to Bank for Investment and Development of Vietnam – Transaction Centre II under contract No. 16070 dated 28 June 2005.

(2) LSD has a 51% interest in GIV.

(3) In accordance with the specific instructions of the Company and LSG, we have prepared our valuation of the property on the assumption that the property can be freely disposed of in the market and the ownership can be transferred to other parties.

— 278 — APPENDIX VII GENERAL INFORMATION

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

(a) Directors’ interests

As at the Latest Practicable Date, the following directors and chief executive of the Company were interested, or were deemed to be interested in the following long and short positions in the shares, underlying shares of equity derivatives and debentures of the Company or any of its associated corporation (within the meaning of the Securities and Futures Ordinance (the “SFO”)) which (i) were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO; or (ii) were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein (the “Register”); or (iii) were required, pursuant to the Code of Practice for Securities Transactions by Directors and Designated Employees adopted by the Company, to be notified to the Company and the Stock Exchange:

(1) The Company

Long position in the shares of the Company Percentage of issued Personal Family Corporate Other share Name of Director Capacity interests interests interests interests Total capital Lam Kin Ngok, Peter Beneficial owner/ 2,794,443 Nil 447,604,186 1,889,507 452,288,136 36.45% Owner of (Note 1) (Note 2) controlled corporation Cheung Wing Sum, Ambrose Beneficial owner 2,194,443 Nil Nil 1,889,507 4,083,950 0.33% (Note 2) Leung Churk Yin, Jeanny Beneficial owner Nil Nil Nil 2,535,620 2,535,620 0.20% (Note 2)

— 279 — APPENDIX VII GENERAL INFORMATION

Notes:

1. LSG and its wholly-owned subsidiary beneficially owned 1,592,869,192 shares in LSD representing approximately 11.25% in the issued share capital of LSD. Pursuant to the Shares Swap Agreement, LSG has agreed to accept the transfer of the Company’s indirect interest in 5,200,000,000 shares in the issued share capital of LSD, thereby increasing LSG’s interest in LSD from 1,592,869,192 shares (approximately 11.25%) to 6,792,869,192 shares (approximately 47.97%). As LSD was interested in 447,604,186 shares (approximately 36.08%) in the issued share capital of the Company, LSG was deemed to be interested in such shares by virtue of its interest in approximately 47.97% of the issued share capital of LSD pursuant to the Shares Swap Agreement.

As such, Mr. Lam was deemed to be interested in 36.08% in the issued share capital of the Company by virtue of his interest in the issued share capital of LSG and LSD.

2. An employee share option scheme was adopted by the Company on 23 December 2005 and became effective on 5 January 2006. It will remain in force for a period of 10 years from the effective date. Details of the share options granted to the Directors and remained outstanding as at the Latest Practicable Date are set out below:

Number of share options Date of grant granted as Exercise of share at the Latest price per options Practicable share Name of Director (Note 1) Date Exercise period (Note 2)

Lam Kin Ngok, Peter 24/02/2006 1,889,507 01/01/2010 – 31/12/2010 HK$4.68

Cheung Wing Sum, Ambrose 24/02/2006 1,889,507 01/01/2010 – 31/12/2010 HK$4.68

Leung Churk Yin, Jeanny 20/02/2008 1,267,810 01/01/2010 – 31/12/2010 HK$6.18 20/02/2008 1,267,810 01/01/2011 – 31/12/2011 HK$6.52

2,535,620

Notes:

1. The vesting period of the share options is from the date of grant until the commencement of the exercise period.

2. The exercise price of the share options is subject to adjustment in the case of rights or bonus issues, or other specific changes in the Company’s share capital.

— 280 — APPENDIX VII GENERAL INFORMATION

(2) Associated corporations

(i) Lai Sun Development Company Limited (“LSD”)

Long position in the shares of LSD Percentage of issued Personal Family Corporate share Name of Director Capacity interests interests interests Total capital

U Po Chu Beneficial 633,400 Nil Nil 633,400 0.004% owner

Lam Kin Ngok, Peter Beneficial 10,099,585 Nil 6,792,869,192 6,802,968,777 48.04% owner/Owner (Note) of controlled corporation

Note: LSG and its wholly-owned subsidiary beneficially owned 1,592,869,192 shares (approximately 11.25%) in the issued share capital of LSD. Pursuant to the Shares Swap Agreement, LSG has agreed to accept the transfer of the Company’s indirect interest in 5,200,000,000 shares in the issued share capital of LSD, thereby increasing LSG’s interest in LSD from 1,592,869,192 shares (approximately 11.25%) to 6,792,869,192 shares (approximately 47.97%). Mr. Lam was deemed to be interested in such shares by virtue of his interest in approximately 37.69% of the issued share capital of LSG.

(ii) Lai Fung Holdings Limited (“Lai Fung”)

Long position in the shares of Lai Fung Percentage of issued Personal Family Corporate share Name of Director Capacity interests interests interests Total capital

Lam Kin Ngok, Peter Owner of Nil Nil 3,265,688,037 3,265,688,037 40.58% controlled (Note) corporation

Note: Pursuant to the Shares Swap Agreement, the Company has agreed to accept the transfer of LSG’s direct and indirect interests in 3,265,688,037 shares (approximately 40.58%) in the issued share capital of Lai Fung, thereby making Lai Fung an associated corporation of the Company. Mr. Lam was deemed to be interested in 36.08% in the issued share capital of the Company by virtue of his interest in the issued share capital of LSG and LSD (please refer to Note 1 under Directors’ interests in the Company set out in item (1) above). As such, Mr. Lam was deemed to be interested in the Company’s 40.58% interest in the issued share capital of Lai Fung pursuant to the Shares Swap Agreement.

— 281 — APPENDIX VII GENERAL INFORMATION

Save as disclosed above, as at the Latest Practicable Date, none of the directors or chief executive of the Company was interested, or was deemed to be interested in the long and short positions in the shares, underlying shares of equity derivatives and debentures of the Company or any of its associated corporation which were required to be notified to the Company and the Stock Exchange or recorded in the Register as aforesaid.

(b) Substantial shareholders’ and other persons’ interests

As at the Latest Practicable Date, so far as is known to the Directors, the following persons had interests in the following long positions in the shares and underlying shares of equity derivatives of the Company as recorded in the register required to be kept under Section 336 of the SFO:

Long position in the shares of the Company Percentage of Number of issued share Name Capacity Nature shares capital

LSD Owner of controlled Corporate interest 447,604,186 36.08% (Note 1) corporation (Note 3)

LSG Owner of controlled Corporate interest 447,604,186 36.08% (Note 2) corporation (Note 3)

Notes:

1. Mr. Lam Kin Ngok, Peter, Ms. Leung Churk Yin, Jeanny and Mr. Cheung Wing Sum, Ambrose, all executive directors of the Company, are also executive directors of LSD. Madam U Po Chu, a non-executive director of the Company, is also a non-executive director of LSD.

2. Mr. Lam Kin Ngok, Peter and Ms. Leung Churk Yin, Jeanny, both executive directors of the Company, are also executive directors of LSG. Madam U Po Chu, a non-executive director of the Company, is also a non-executive director of LSG.

3. Please refer to Note 1 under Directors’ interests in the Company set out in item (1) above.

Save as disclosed above, no other person was recorded in the register required to be kept under the provisions of Divisions 2 and 3 of Part XV of the SFO as having an interest or short position in the shares and underlying shares of equity derivatives and debentures of the Company as at the Latest Practicable Date.

— 282 — APPENDIX VII GENERAL INFORMATION

As at the Latest Practicable Date, so far as was known to the directors and the chief executive of the Company, the following parties (other than the directors or the chief executive of the Company) were, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital (including any options in respect of such capital) carrying rights to vote in all circumstances at general meetings of any other member of the Group:

Percentage of issued share Name of members of the Group Name of shareholder capital held

中影寰亞音像制品有限公司中影音像出版社 30% (China Film Media Asia Audio (China Film Audio Video Video Distribution Company Publishing House) Limited)

Cyber One Agents Limited (Note) New Cotai, LLC 40%

East Asia Satellite Television CapitaLand Integrated 33.33% (Holdings) Limited Resorts Pte. Ltd.

Mountain Entertainment Limited Ko Shang Min 20% Wang Hui Chung 10% Chang Po Yu 10%

Rich & Famous Film & TV Wong Yat Cheung 25% Production Limited

Rich & Famous Talent Wong Yat Cheung 25% Management Group Limited

麗星（廣州）廣告有限公司廣州市廣告有限公司 10% (Vision Communications (GZ) (Guangzhou City Limited) Advertising Company Limited)

Note: Cyber One Agents Limited is treated as a jointly-controlled entity for accounting purposes.

— 283 — APPENDIX VII GENERAL INFORMATION

Save as disclosed above, as at the Latest Practicable Date, none of the directors or chief executive of the Company was aware of any other persons, who had an interest or short position in the shares or underlying shares of equity derivatives and debentures of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who was, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital (including any options in respect of such capital) carrying rights to vote in all circumstances at general meetings of any other member of the Group.

3. DIRECTORS’ INTERESTS

(a) Service Contracts

As at the Latest Practicable Date, none of the Directors had any existing or proposed service contract with any member of the Group which was not expiring or determinable by the employer within one year without payment of compensation, other than statutory compensation.

(b) Assets of the Group

Save as regards Mr. Lam’s shareholding interests in LSG and, accordingly, his indirect interest in the Transactions, as at the Latest Practicable Date, none of the Directors had any interest, direct or indirect, in any assets which have, since 31 December 2009 (being the date to which the latest published audited consolidated financial statements of the Company were made up), been acquired or disposed of by, or leased to, the Company or any member of the Group, or were proposed to be acquired or disposed of by, or leased to, the Company or any member of the Group.

Save as regards Mr. Lam’s shareholding interests in LSG and, accordingly, his indirect interest in the Transactions, as at the Latest Practicable Date, none of the Directors was materially interested in any contract or arrangement entered into by any member of the Group subsisting at such date and which is significant in relation to the businesses of the Group.

4. DIRECTORS’ INTERESTS IN COMPETING BUSINESS

As at the Latest Practicable Date, none of the Directors and their respective associates had any interest in a business which competes or is likely to compete, either directly or indirectly, with the businesses of the Group pursuant to the Listing Rules.

— 284 — APPENDIX VII GENERAL INFORMATION

5. LITIGATIONS

As at the Latest Practicable Date, save as disclosed below, no member of Group was engaged in any litigation or claims of material importance known to the Directors to be pending or threatened against any member of the Group.

(a) Litigation with Passport

In December 2008, the Company had sought to raise approximately HK$60 million through a share placement exercise (with the prospect of raising an additional HK$60 million if the placees exercised the accompanying warrants in full). The placing shares would have represented approximately 8.82% of the enlarged issued share capital of the Company (and the shares issued on the full exercise of the warrants would have represented approximately 8.10% of the further enlarged issued share capital of the Company). The placing, which was primarily intended to finance the Group’s media and entertainment businesses and otherwise for general working capital purposes, did not ultimately proceed in light of the fact that Passport Special Opportunities Master Fund, LP and Passport Global Master Fund SPC Limited (“Passport”), who was then a substantial shareholder of the Company, obtained an ex- parte injunction temporarily restraining the Company from proceeding with the placing (Passport and its affiliates disposed their entire shareholdings in the Company on 30 April 2010). Although the long-stop date for the placing was extended once, with the injunction order remaining in place and the conditions to the placing remaining unfulfilled, the placing agreement lapsed on 9 January 2009.

In essence, Passport alleges that the Company had no good commercial reason for the placement and that its sole or primary purpose was to dilute Passport’s shareholding. Whether or not the injunction was validly obtained by Passport remains the subject of on-going legal proceedings in respect of which the Company and the Directors are vigorously defending Passport’s claims, and are pursuing their own remedies against Passport. The Court granted leave to the placing agent and certain of the placees to join the legal proceedings, as parties who were adversely affected by Passport injunction. The Court required Passport to put up a bank guarantee in the sum of HK$120 million to fortify its undertaking as to damages. Passport also put up security for the Company’s costs. The trial commenced in November 2009 and concluded in January 2010. The judge reserved his decision after the conclusion of the trial and it is expected judgement will be handed down in the fourth quarter of 2010.

— 285 — APPENDIX VII GENERAL INFORMATION

(b) Litigation with New Cotai

The Group holds an effective 40% economic interest in Cyber One Agents Limited (“Cyber One”). Cyber One, owned as to 60% by East Asia Satellite Television (Holdings) Limited (“EAST (Holdings)”) and 40% by New Cotai, LLC (“New Cotai”), is the jointly-controlled entity responsible for the proposed development of the Macao Studio City project, which has, in effect, stalled on account of a dispute between the parties, including as regards the submission to the Macau government of further particulars in relation to Cyber One’s application to increase the developable gross floor area of the site from the original gazetted area to approximately 6,000,000 square feet. In connection with that application, the Macau government requested, and has repeated its request for, further particulars from the joint venture concerning plans for the project, in respect of which EAST (Holdings) and New Cotai have yet to formulate an agreed response.

On 29 October 2009, EAST (Holdings) commenced legal proceedings in Hong Kong against New Cotai and parties interested in that company (“New Cotai Parties”). Amongst other things, EAST (Holdings) is claiming damages of approximately HK$689 million for breach or inducing breaches of contract and, by way of derivative action on behalf of members of the Cyber One group, damages of approximately US$2.385 billion (approximately HK$18.6 billion) for, amongst other things, breaches of fiduciary duties and dishonestly assisting breaches of fiduciary duties owed to such members of the Cyber One group. EAST (Holdings) is also seeking orders requiring New Cotai to transfer its interests in the Cyber One group to EAST (Holdings). The proceedings are being pursued in the context of a desire on the part of the Company to protect EAST (Holdings)’s interests in the development and to progress the Macao Studio City project.

The New Cotai Parties made several interlocutory applications to the Court to challenge certain of these claims. By the Court’s judgment dated 16 July 2010, it has struck out certain claims, including the derivative claims by eSun made on behalf of members of the Cyber One group. The aforesaid judgment, if not overturned on appeal, would have the effect of preventing EAST (Holdings) from proceeding with the derivative claims in Hong Kong. However, EAST (Holdings) may consider proceeding with the derivative

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claims in the jurisdictions of incorporation of the relevant members of the Cyber One group. EAST (Holdings) might also procure the relevant members of the Cyber One group to proceed with the claims in Hong Kong directly in the event EAST (Holdings) was successful in securing control of the Cyber One group through the litigation. On 30 July 2010, EAST (Holdings) obtained leave to appeal the aforesaid judgment and will pursue the appeal vigorously. It is noted that no challenge was made in these applications with regard to the claim for damages of approximately HK$689 million for breach of contract by the New Cotai Parties.

With the litigation continuing, it should be noted that its timing and outcome remain inherently uncertain. It appears that it will continue to be contested by New Cotai and others and may yet prompt claims or counterclaims against EAST (Holdings) or others, although the Directors do not believe that any such claims or counterclaims are likely to have merit. The Directors have given due consideration to these risks and have chosen to accept those risks, because they consider that EAST (Holdings)’s core claims are well-founded and the litigation is necessary in order to protect the interest of all of the Company’s shareholders and, ultimately, to preserve the potential of the Macao Studio City project. Further, in the event of prolonged delays to the recommencement of the project, it is uncertain as to whether and how the Macau government would exercise its rights, including but not limited to its rights to re-possess the plot of land.

6. MATERIAL CONTRACTS

The following contracts (not being contracts in the ordinary course of business) have been entered into by the Company or any of its subsidiaries within the two years immediately preceding the Latest Practicable Date and are or may be material:

(i) a placing agreement dated 10 December 2008 between eSun and Chung Nam Securities Limited in relation to the placing of 120,000,000 new shares of the Company with warrants at a subscription price of HK$0.50 per placing share; and

(ii) the Shares Swap Agreement.

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7． MISCELLANEOUS

(a) Mr. Goh Soon Khian (“Mr. Goh”) is the secretary of the Company. Mr. Goh qualified as an advocate and a solicitor in Singapore in May 1997, and was admitted as a solicitor in Hong Kong in April 2000 and in England and Wales in July 2000. He holds a current practising certificate in Hong Kong.

(b) The Company’s registered office is situated at Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda.

(c) The Company’s head office and principal place of business is situated at 11th Floor, Lai Sun Commercial Centre, 680 Cheung Sha Wan Road, Kowloon, Hong Kong.

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

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8. QUALIFICATIONS OF EXPERTS

The following are the qualifications of the experts who have given an opinion or advice which is contained in the circular (“Experts”):

Name Qualification

Ernst & Young Certified Public Accountants

Platinum Securities A licensed corporation under the SFO licensed to carry out Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities under the SFO

Knight Frank Independent property valuer

Savills Independent property valuer

AllBright Law Offices PRC legal adviser

Commerce and Finance Law Offices PRC legal adviser

Hogan Lovells International LLP Vietnam legal adviser

9. EXPERTS’ INTERESTS IN ASSETS

Each of the Experts except for Platinum Securities has confirmed that as at the Latest Practicable Date it does not have 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 any securities in any member of the Group.

Platinum Securities has confirmed that as at the Latest Practicable Date, apart from 2,172,671 shares of the Company, it does not have 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 any securities in any member of the Group.

Each of the Experts has further confirmed that as at the Latest Practicable Date, it does not have any direct or indirect interests in any assets or any securities of any member of the Group which have since 31 December 2009 (being the date of which the latest published audited accounts of the Company were made up) been acquired or disposed of by, or leased to, the Company or any member of the Group, or which are proposed to be acquired or disposed of by, or leased to, the Company or any member of the Group.

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10. CONSENTS OF EXPERTS

Each of the Experts has given and has not withdrawn its written consent to the issue of this circular with the inclusion herein of its letter and/or references to its name in the form and context in which it appears.

11. VOTING AT THE SGM

In compliance with Rule 13.39(4) of the Listing Rules, voting on resolutions put to the vote of a meeting will be decided by way of a poll. In accordance with the Company’s Bye-laws, unless a poll is required by the Listing Rules or any other applicable laws, at any general meeting of members of the Company, a resolution shall be decided on a show of hands unless a poll is (before or on the declaration of the result of the show of hands or on the withdrawal of any other demand for a poll) demanded by:

(i) the chairman of the meeting; or

(ii) at least three members present in person or by proxy for the time being entitled to vote at the meeting; or

(iii) any member or members present in person or by proxy and representing not less than one-tenth of the total voting rights of all the members having the right to vote at the meeting; or

(iv) a member or members present in person or by proxy and holding shares in the Company conferring a right to vote at the meeting being shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all the shares conferring that right.

A demand by a person as proxy for a member or in the case of a member being a corporation by its duly authorised representatives shall be deemed to be the same as a demand by a member.

On a poll every member present in person or by proxy or, in the case of a member being a corporation, by its duly authorised representative shall have one vote for every fully paid share of which he/she is the holder.

An announcement will be issued by the Company to inform its shareholders of the results of the poll.

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12. GENERAL

In case of discrepancy or differences in interpretation, the English text of this circular prevails over the Chinese text.

13. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection during the normal business hours at 11th Floor, Lai Sun Commercial Centre, 680 Cheung Sha Wan Road, Kowloon, Hong Kong on any weekday, except public holidays, from the date of this circular until the day of the SGM:

(a) this circular;

(b) the Shares Swap Agreement;

(d) the letter from the Independent Board Committee, the text of which is set out on pages 20 to 21 of this circular;

(e) the letter from Platinum Securities, the text of which is set out on pages 22 to 49 of this circular;

(f) the report on the unaudited pro forma financial information signed by Ernst & Young dated 30 August 2010, the text of which is set out on Appendix II to this circular;

(g) the valuation reports from Savills and Knight Frank, the text of which is set out on Appendices IV to VI to this circular;

(h) the annual reports of the Company for the two years ended 31 December 2008 and 31 December 2009;

(i) the material contracts referred to in the section headed “Material contracts” in this Appendix;

(j) the written consents from each of the Experts referred to in the section “Consents of experts” in this Appendix;

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(k) the legal opinion dated 26 August 2010 of AllBright Law Offices in relation to certain landed property interests of the Lai Fung Group in the PRC;

(l) the legal opinion dated 26 August 2010 of Commerce and Finance Law Offices in relation to certain landed property interests of the Lai Fung Group in the PRC; and

(m) the legal opinion dated 25 August 2010 of Hogan Lovells International LLP in relation to the landed property interests of the LSD Group in Vietnam.

— 292 — NOTICE OF SPECIAL GENERAL MEETING

(Stock Code: 571)

NOTICE IS HEREBY GIVEN that a Special General Meeting of eSun Holdings Limited (the “Company”) will be held at Salon 1-3, JW Marriott Ballroom, Level 3, JW Marriott Hotel Hong Kong, Pacific Place, 88 Queensway, Hong Kong at 10:30 a.m. on Monday, 20 September 2010 (or any adjournment thereof) for the purpose of considering and, if thought fit, passing the following resolution, with or without modification where permissible:

AS AN ORDINARY RESOLUTION

(1) “THAT:

(i) the shares swap agreement dated 26 July 2010 (the “Shares Swap Agreement”) (a copy of which is produced in the meeting and marked “A” and initialled by the chairman of the meeting for identification purpose) entered into between the Company and Lai Sun Garment (International) Limited in relation to the LSD Transaction and the Lai Fung Transaction (as defined in the circular to the shareholders of the Company dated 30 August 2010 of which this notice forms part), and the transactions contemplated under the Shares Swap Agreement and the execution, performance and implementation thereof and ancillary matters contemplated thereunder be and are hereby confirmed, approved and ratified; and

(ii) any one director of the Company be and is hereby authorised for and on behalf of the Company to exercise, perfect and deliver all such documents and do all such acts or things and any two directors or any director and the company secretary of the Company be and are hereby authorised to affix the Company’s seal to all such documents and deliver the same as deeds of the Company, in any such case as may be necessary or desirable to implement or give effect to the terms of the Shares Swap Agreement, the transactions, any ancillary agreements or documents contemplated thereunder (including without limitation, the execution of any deeds and/or documents and the

— 293 — NOTICE OF SPECIAL GENERAL MEETING

exercise or enforcement of any right thereunder) and to make and agree such variations to the terms of the Shares Swap Agreement and ancillary agreements or documents contemplated thereunder as he, in his absolute discretion, may consider to be desirable, appropriate or necessary and in the interests of the Company.”

By Order of the Board eSun Holdings Limited Goh Soon Khian Company Secretary

Hong Kong, 30 August 2010

Registered Office: Clarendon House 2 Church Street Hamilton HM 11 Bermuda

Head office and principal place of business: 11th Floor Lai Sun Commercial Centre 680 Cheung Sha Wan Road Kowloon Hong Kong

Notes:

(a) A member of the Company entitled to attend and vote at the SGM is entitled to appoint one or more proxies to attend and, on a poll, vote in his stead in accordance with the Company’s bye-laws. A proxy need not be a member of the Company.

(b) To be valid, the form of proxy, together with the power of attorney or other authority (if any) under which it is signed, or a notarially certified copy of such power of attorney, must be lodged with the share registrar of the Company in Hong Kong, Tricor Tengis Limited, at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong not less than 48 hours before the time appointed for holding the SGM or adjourned meeting (as the case may be) and in default the proxy shall not be treated as valid. Completion and return of the form of proxy shall not preclude members from attending and voting in person at the SGM or at any of its adjourned meeting should they so wish.

(c) Where there are joint registered holders of any shares in the Company, any one of such joint holders may attend and vote at the SGM, either in person or be proxy, in respect of such shares as if he/she was solely entitled thereto, but if more than one of such joint holders be present at the SGM, personally or by proxy, that one of such holders so present whose name stands first in the register of members of the Company in respect of such share shall alone be entitled to vote in respect thereof.

— 294 — NOTICE OF SPECIAL GENERAL MEETING

(d) In compliance with Rule 13.39(4) of the Listing Rules, voting on resolution in respect of the above matters set out in this Notice will be decided by way of a poll. In accordance with the Company’s Bye-laws, unless a poll is required by the Listing Rules or any other applicable laws, at any general meeting of members of the Company, a resolution shall be decided on a show of hands unless a poll is (before or on the declaration of the result of the show of hands or on the withdrawal of any other demand for a poll) demanded by:

(i) the chairman of the meeting; or

(ii) at least three members present in person or by proxy for the time being entitled to vote at the meeting; or

(iii) any member or members present in person or by proxy and representing not less than one-tenth of the total voting rights of all the members having the right to vote at the meeting; or

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