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, a licensed dealer in securities, bank manager, solicitor, professional accountant or other professional adviser. If you have sold or transferred all your shares in Hong Kong Life Group Holdings Limited (the “Company”), you should at once hand this circular with the enclosed form of proxy to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale was effected for transmission to the purchaser or transferee. Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular. HONG KONG LIFE GROUP HOLDINGS LIMITED 香港生命集團控股有限公司 (Incorporated in the Cayman Islands with limited liability) (Stock Code: 8212) MAJOR TRANSACTION IN RELATION TO THE ACQUISITION OF THE 49% OF THE TOTAL ISSUED SHARE CAPITAL OF BARON’S SCHOOL OF MUSIC LIMITED AND NOTICE OF EXTRAORDINARY GENERAL MEETING A notice convening an extraordinary general meeting of the Company to be held at 9:30 a.m. on 29 August, 2012 at The Boardroom, Basement 2, The Wharney Guangdong Hotel Hong Kong, 57-73 Lockhart Road, Wanchai, Hong Kong is set out on pages 135 to 137 of this circular. A form of proxy is enclosed. Whether or not you are able to attend the extraordinary general meeting, you are requested to complete the enclosed form of proxy in accordance with the instructions printed thereon and return it to the Company’s share registrar in Hong Kong, Tricor Tengis Limited at 26/F., Tesbury Centre, 28 Queen’s Road East, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for holding the extraordinary general meeting. Completion and return of the form of proxy will not preclude you from attending and voting at the extraordinary general meeting or any adjournment thereof should you so wish. This circular will remain on the GEM website at www.hkgem.com on the “Latest Company Announcements” page for at least 7 days from the date of its posting and on the website of the Company at www.hk-lifegroup.com. 9 August 2012 CHARACTERISTICS OF THE GROWTH ENTERPRISE MARKET (“GEM”) OF THE STOCK EXCHANGE OF HONG KONG LIMITED (THE “EXCHANGE”) GEM has been positioned as a market designed to accommodate companies to which a high investment risk may be attached than other companies Listed on the Stock Exchange. Prospective investors should be aware of the potential risks of investing in such companies and should make the decision to invest only after due and careful consideration. The greater risk profile and other characteristics of GEM mean that it is a market more suited to professional and other sophisticated investors. Given the emerging nature of companies listed on GEM, there is a risk that securities traded on GEM may be more susceptible to high market volatility than securities traded on the Main Board and no assurance is given that there will be a liquid market in the securities traded on GEM. i TABLE OF CONTENTS Page DEFINITIONS ................................................................ 1 LETTER FROM THE BOARD ................................................... 4 Introduction .............................................................. 4 The Agreement ........................................................... 5 Principal business activities of the Company ..................................... 10 Information of the Target Company ............................................ 11 Business Plan of the Target Company . 21 Valuation of the Target Company .............................................. 30 Risk Factor of the Target Company . 33 Reason for the Acquisition ................................................... 37 Financial effects of the Acquisition ............................................ 41 GEM Listing Rules implication ............................................... 41 The EGM ................................................................ 41 Recommendation .......................................................... 41 Additional Information ..................................................... 42 APPENDIX I – FINANCIAL INFORMATION OF THE GROUP . 43 APPENDIX II – FINANCIAL INFORMATION OF THE TARGET COMPANY .......... 48 APPENDIX III – UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP ................................... 88 APPENDIX IV – VALUATION REPORT OF THE TARGET COMPANY ................ 96 APPENDIX V – LETTERS ON PROFIT FORECAST ............................... 124 APPENDIX VI – GENERAL INFORMATION ..................................... 128 NOTICE OF EGM ............................................................. 135 ii DEFINITIONS In this circular, unless the context otherwise requires, the following expressions shall have the following meanings: “Acquisition” the proposed acquisition of the Sale Shares pursuant to the Agreement “Agreement” the agreement dated 28 February 2012 made between the Vendor and the Purchaser in relation to the Acquisition “associates” has the same meaning ascribed to it under the GEM Listing Rules “Board” the board of Directors “Business Day” a day (other than a Saturday, Sunday or a public holiday) on which licensed banks are generally open for business in Hong Kong throughout their normal business hours “BVI” British Virgin Islands “Closing” completion of the sale and purchase of the Sale Shares in accordance with the Agreement “Closing Date” the date Closing shall take place falling within 5 Business Days after all the conditions precedent of the Agreement have been fulfilled or waived (as the case may be) or such other date as the Vendor and the Purchaser may agree in writing) “Company” Hong Kong Life Group Holdings Limited, a company incorporated in the Cayman Islands with limited liability and the shares of which are listed on the GEM “connected person(s)” has the meaning ascribed to it under the GEM Listing Rules “Consideration” consideration payable for the Acquisition “Deposit” a sum of HK$2.04 million payable by the Company to the Vendor or its nominee on signing of the Agreement “Director(s)” directors of the Company “EGM” the extraordinary general meeting of the Company to be convened to consider and, if thought fit, approve the Agreement and the transactions contemplated thereunder “Enlarged Group” the Group immediately after completion of the Acquisition “GEM” The Growth Enterprise Market of the Stock Exchange 1 DEFINITIONS “GEM Listing Rules” The Rules Governing the Listing of Securities on GEM “Group” the Company and its subsidiaries “HK$” Hong Kong dollars, the lawful currency of Hong Kong “HKFRSs” Hong Kong Financial Reporting Standards issued by the Hong Kong Institute of Certifies Public Accountants “Hong Kong” The Hong Kong Special Administrative Region of the PRC “Independent Third Party(ies)” an independent third party, to the best of the Directors’ knowledge, information and belief having made all reasonable enquiry, who is not connected with the Company and its connected persons (as defined under the GEM Listing Rules) “Latest Practicable Date” 6 August 2012, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained herein “Long Stop Date” 31 August 2012 or such other date as may be agreed by the Purchaser and the Vendor “PRC” The People’s Republic of China and, for the purpose of this circular, excluding Hong Kong, Macau Special Administrative Region of the People’s Republic of China and Taiwan “Purchaser” Superb Luck Limited, a company incorporated in the British Virgin Islands and a wholly owned subsidiary of the Company “Promissory Note” a promissory note in the principal amount of HK$45 million with interest at 6% per annum due on the day following the expiry of 2 years after the Closing Date to be issued by the Company to the Vendor at Closing for the purpose of settlement of part of the Consideration “Relevant Parties” the Target Company, the Vendor, United Value, the Purchaser and Ronald Ng “Relevant Period” the period commencing from 1 January 2009 and ending 31 May 2012 “Rights Issue” the proposed rights issue on the basis of five (5) rights shares for every one (1) existing share in issue at HK$0.138 per rights share 2 DEFINITIONS “Ronald Ng” Ng Lok Shing Ronald the sole director and shareholder of United Value “Sale Shares” 490 ordinary shares of HK$1.00 in the issued share capital of the Target Company, representing 49% of the entire issued share capital of the Target Company “Second Supplemental Agreement” the second supplemental agreement dated 24 May 2012 made between the Vendor and the Purchaser to extend the Long Stop Date to 20 July 2012 “Share(s)” ordinary share(s) of HK$0.0001 each in the share capital of the Company “Shareholder(s)” holder(s) of the Shares “Shareholders’ Agreement” a conditional shareholders’ agreement to be entered by the Relevant Parties in relation to the affairs, business and management of the Target Company to be taken effect simultaneously at Closing “Star Dragon” 廣州市星龍文化藝術有限公司 (Guangzhou Star Dragon Culture & Art Company Limited), a company incorporated in PRC “Stock Exchange” The Stock Exchange of Hong Kong Limited “Supplemental