SHUN TAK HOLDINGS LIMITED

Transcription

1 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 registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser (2)(b) 14A.58(3)(b) 14.63(1) 14.63(2)(b) If you have sold or transferred all your shares in Shun Tak Holdings Limited, you should at once hand this circular and the accompanying 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 the transferee. The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this circular, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular (1) 14A.59(1) SHUN TAK HOLDINGS LIMITED Appendix 1B(1) (Incorporated in Hong Kong with limited liability) (Stock code: 242) Website: A VERY SUBSTANTIAL ACQUISITION AND CONNECTED TRANSACTION IN RELATION TO THE HHL ACQUISITION AND 14.63(1) MAJOR AND CONNECTED TRANSACTION IN RELATION TO THE STDM ACQUISITION Financial adviser to Shun Tak Holdings Limited Independent financial adviser to the independent board committee and the independent shareholders of Shun Tak Holdings Limited A letter from the Board is set out on pages 6 to 26 of this circular. A letter from the Independent Board Committee is set out on page 27 of this circular. A letter from CLSA containing its advice and recommendations to the Independent Board Committee and the Independent Shareholders is set out on pages 28 to 47 of this circular (2)(a) 14A.58(3)(a) A notice convening the EGM to be held at the Golden Restaurant, Macau Jockey Club (HK) Club House, 1st Floor, China Merchants Tower, Shun Tak Centre, 200 Connaught Road Central, Hong Kong on 21 August 2007 at 12:00 noon is set out on pages 312 and 313 of this circular. Whether or not you are able to attend the EGM, please complete and return to the registered office of the Company at Penthouse, 39th Floor, West Tower, Shun Tak Centre, 200 Connaught Road Central, Hong Kong the enclosed form of proxy in accordance with the instructions printed thereon as soon as possible and in any event by no later than 48 hours before the time appointed for the holding of the EGM. Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM or any adjourned meeting should you so wish. 6 August 2007

2 CONTENTS Definitions... 1 Letter from the Board... 6 Letter from the Independent Board Committee Letter from CLSA Appendix I Accountants report on Nomusa Appendix II Financial information on NTU Appendix III Financial information on NCPM Appendix IV Financial information on NTGPM Appendix V Financial information on the Group Appendix VI Unaudited pro forma financial information of the Enlarged Group Appendix VII Property valuation report on the property interests of the Enlarged Group Appendix VIII General information Notice of EGM i

3 DEFINITIONS In this circular, the following expressions have the following meanings unless the context requires otherwise: Acquisitions Announcement Articles of Association Board Business Day CLSA Companies Ordinance Company the HHL Acquisition and the STDM Acquisition the press announcement dated 26 June 2007 made by the Company in relation to the Acquisitions articles of association of the Company the board of Directors a day on which licensed banks in Hong Kong and Macau are generally open for business (other than a Saturday, a Sunday or a public holiday) CLSA Equity Capital Markets Limited, a corporation licensed to conduct Type 4 (advising on securities) and Type 6 (advising on corporate finance) regulated activities under the SFO, being the independent financial adviser to the Independent Board Committee and the Independent Shareholders in respect of the Acquisitions the Companies Ordinance (Chapter 32 of the Laws of Hong Kong) Shun Tak Holdings Limited, a company incorporated in Hong Kong with limited liability, the Shares of which are listed on the Stock Exchange Completion completion of the HHL Acquisition and/or the STDM Acquisition (as the case may be) Conditions Development Director(s) conditions precedent to Completion as set out in the HHL Agreement and STDM Agreement and summarised in the paragraphs headed HHL Agreement dated 25 June 2007 Conditions precedent and STDM Agreement dated 26 June 2007 Conditions precedent in the Letter from the Board in this circular a mixed used development erected or to be erected on various land parcels at Taipa, Macau now known as Nova Taipa Gardens and Nova City I, II, III, IV and V the director(s) of the Company 1

4 DEFINITIONS EGM Enlarged Group Fast Shift Fast Shift-NTU Loans Group H.C. Watt HHL HHL Acquisition HHL Agreement HHL Consideration HHL Group HHL-NCPM Sale Share the extraordinary general meeting of the Shareholders to be held at the Golden Restaurant, Macau Jockey Club (HK) Club House, 1st Floor, China Merchants Tower, Shun Tak Centre, 200 Connaught Road Central, Hong Kong on 21 August 2007 at 12:00 noon to consider and, if thought fit, approve the Acquisitions the Group after completion of the Acquisitions (as the case may be) Fast Shift Investments Limited, a company incorporated in the British Virgin Islands and an indirect wholly owned subsidiary of STDM the aggregate amount of the loans (including principal and outstanding interest accrued but unpaid) owed by NTU to Fast Shift and outstanding from time to time the Company and its subsidiaries H.C. Watt & Company Limited, the auditors of the Company and the reporting accountants of each of Nomusa, NTU, NCPM and NTGPM Hopewell Holdings Limited, a company incorporated in Hong Kong with limited liability, the shares of which are listed on the Stock Exchange the proposed acquisition of the HHL-Nomusa Sale Share, the HHL-NCPM Sale Share and the HHL-NTGPM Sale Share by the Purchaser from HPL or HPMCL (as the case may be) in accordance with the terms and conditions as set out in the HHL Agreement the conditional agreement for the sale and purchase of the HHL-Nomusa Sale Share, the HHL-NCPM Sale Share and the HHL-NTGPM Sale Share dated 25 June 2007 entered into between the Purchaser (as buyer), HPL (as seller), HHL (as guarantor of HPL) and the Company (as guarantor of the Purchaser) the aggregate consideration for the HHL Acquisition HHL and its subsidiaries one share of MOP12,500 in NCPM, representing 50% of the issued share capital of NCPM as at the Latest Practicable Date and as at Completion 14A.59(2)(d) 2

5 DEFINITIONS HHL-Nomusa Sale Share HHL-NTGPM Sale Share HKFRSs Hong Kong one share of US$1 in Nomusa, representing the entire issued share capital of Nomusa as at the Latest Practicable Date and as at Completion one share of MOP5,000 in NTGPM, representing 50% of the issued share capital of NTGPM as at the Latest Practicable Date and as at Completion Hong Kong Financial Reporting Standards issued by the Hong Kong Institute of Certified Public Accountants in Hong Kong the Hong Kong Special Administrative Region of the PRC HPL Hopewell Properties (B.V.I.) Limited, a company incorporated in the British Virgin Islands and a wholly owned subsidiary of HHL HPMCL Hopewell Property Management Company Limited, a company incorporated in Hong Kong and a wholly owned subsidiary of HHL Independent Board Committee Independent Shareholders Latest Practicable Date Listing Rules Macau the independent committee of the Directors comprising Sir Roger Lobo, Mr. Norman Ho, Mr. Charles Ho and Mr. Yeh V-Nee established to advise the Independent Shareholders in respect of the Acquisitions Shareholders who are not required to abstain from voting at the EGM approving the respective Acquisitions under the Listing Rules 1 August 2007, being the latest practicable date prior to the printing of this circular for ascertaining certain information for inclusion in this circular the Rules Governing the Listing of Securities on the Stock Exchange the Macau Special Administrative Region of the PRC NCPM Nova City Property Management Limited, a company incorporated in Macau and indirectly owned as to 50% by the Company and 50% by HHL Nomusa Nomusa-NTU Loans Nomusa Limited, a company incorporated in the British Virgin Islands and an indirect wholly owned subsidiary of HHL the aggregate amount of the loans (including principal and outstanding interest accrued but unpaid) owed by NTU to Nomusa and outstanding from time to time 3

6 DEFINITIONS NTGPM Nova Taipa Gardens Property Management Limited, a company incorporated in Macau and indirectly owned as to 50% by the Company and 50% by HHL NTU PRC Purchaser Rapid Success Rothschild New Taipa-Urbanizations Limited (Portuguese name: Nova Taipa-Urbanizações, Limitada), a company incorporated in Macau and indirectly owned as to 25% by the Company, 25% by STDM and 50% by HHL the People s Republic of China Ace Wonder Limited, a company incorporated in the British Virgin Islands and an indirect wholly owned subsidiary of the Company Rapid Success Investments Limited, a company incorporated in the British Virgin Islands and a wholly owned subsidiary of STDM N M Rothschild & Sons (Hong Kong) Limited, a licensed corporation under the SFO, to carry out Type 1 (dealing in securities), Type 4 (advising on securities) and Type 6 (advising on corporate finance) regulated activities under the SFO, being the financial adviser to the Company in respect of the Acquisitions Savills Savills Valuation and Professional Services Limited, an independent professional property valuer SFO Shareholder(s) Shares sq.ft. sq.m. STDM STDM Acquisition the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) the shareholder(s) of the Company shares of HK$0.25 each in the capital of the Company square feet square metres Sociedade de Turismo e Diversões de Macau, S.A., a company incorporated in Macau and a substantial Shareholder the proposed acquisition of the STDM-Fast Shift Sale Share and the STDM-Fast Shift Loans by the Purchaser or its nominee from Rapid Success in accordance with the terms and conditions as set out in the STDM Agreement 14A.59(2)(d) 4

7 DEFINITIONS STDM Agreement STDM Consideration STDM-Fast Shift Loans STDM-Fast Shift Sale Share STDM Group Stock Exchange Track Record Period HK$ MOP RMB US$ the conditional agreement for the sale and purchase of the STDM-Fast Shift Sale Share and the STDM-Fast Shift Loans dated 26 June 2007 entered into between the Purchaser (as buyer), Rapid Success (as seller), STDM (as guarantor of Rapid Success) and the Company (as guarantor of the Purchaser) the aggregate consideration for the STDM Acquisition the aggregate amount of the loans (including principal and outstanding interest accrued but unpaid) owed by Fast Shift to Rapid Success and outstanding from time to time one share of US$1 in Fast Shift, representing the entire issued share capital of Fast Shift as at the Latest Practicable Date and as at Completion STDM and its subsidiaries The Stock Exchange of Hong Kong Limited the period comprising the three years ended 31 December 2006 and the three months ended 31 March 2007 Hong Kong dollars, the lawful currency of Hong Kong Patacas, the lawful currency of Macau Renminbi, the lawful currency of the PRC United States dollars, the lawful currency of the United States of America Exchange rate conversion Solely for convenience and except as otherwise noted, this circular contains translations of MOP amounts into Hong Kong dollars at a rate of MOP1 = HK$1, US$ amounts into Hong Kong dollars at a rate of US$1 = HK$7.8, and RMB amounts into Hong Kong dollars at a rate of RMB1 = HK$

8 LETTER FROM THE BOARD SHUN TAK HOLDINGS LIMITED (Incorporated in Hong Kong with limited liability) (Stock code: 242) Website: Directors: Dr. Stanley Ho (Group Executive Chairman) Sir Roger Lobo ** Mr. Norman Ho ** Mr. Charles Ho ** Mr. Yeh V-Nee ** Dato Dr. Cheng Yu Tung * Mrs. Mok Ho Yuen Wing, Louise * Ms. Pansy Ho (Managing Director) Ms. Daisy Ho (Deputy Managing Director) Dr. Ambrose So Mr. Patrick Huen Mr. Anthony Chan Ms. Maisy Ho Mr. David Shum Registered office and head office: Penthouse 39th Floor, West Tower Shun Tak Centre 200 Connaught Road Central, Hong Kong 2.14 Appendix 1B(36) * ** Non-Executive Directors Independent Non-Executive Directors 6 August 2007 To the Shareholders Dear Sir or Madam, VERY SUBSTANTIAL ACQUISITION AND CONNECTED TRANSACTION IN RELATION TO THE HHL ACQUISITION AND MAJOR AND CONNECTED TRANSACTION IN RELATION TO THE STDM ACQUISITION 1. INTRODUCTION 14A.58(1) It was announced, on 26 June 2007, that the Purchaser (an indirect wholly owned subsidiary of the Company) (as buyer) has (a) on 25 June 2007 entered into the HHL Agreement with HPL (as seller), HHL (as guarantor of HPL) and the Company (as guarantor of the Purchaser) for the 14.60(1) 6

9 LETTER FROM THE BOARD acquisition of the HHL-Nomusa Sale Share, the HHL-NCPM Sale Share and the HHL-NTGPM Sale Share, and (b) on 26 June 2007 entered into the STDM Agreement with Rapid Success (as seller), STDM (as guarantor of Rapid Success) and the Company (as guarantor of the Purchaser) for the acquisition of the STDM-Fast Shift Sale Share and the STDM-Fast Shift Loans. The HHL Acquisition constitutes a very substantial acquisition for the Company under Chapter 14 of the Listing Rules and a connected transaction for the Company under Chapter 14A of the Listing Rules by virtue of STDM s 25% equity interest in NTU. Accordingly, it is subject to the approval of the Independent Shareholders at the EGM to be conducted by way of poll. HHL has confirmed that none of HHL or its associates had any shareholding interest in the Company as at the Latest Practicable Date and that if they have any shareholding interest in the Company as at the date of the EGM, they will abstain from voting in respect of the HHL Agreement at the EGM (2)(d) 14A.59(2)(d) 14A.59(5) The STDM Acquisition constitutes a major transaction for the Company under Chapter 14 of the Listing Rules. As at the Latest Practicable Date, STDM owned approximately 12.08% of the issued share capital of the Company and, accordingly, is a connected person of the Company. As such, the STDM Acquisition also constitutes a connected transaction for the Company under Chapter 14A of the Listing Rules and is therefore subject to the approval of the Independent Shareholders at the EGM to be conducted by way of poll. Dr. Stanley Ho, STDM and their respective associates who are interested in the STDM Agreement (together holding approximately 55.5% of the issued share capital of the Company as at the Latest Practicable Date) will abstain from voting in respect of the STDM Agreement at the EGM. 2.17(1) 14A.59(2)(d) 14.63(2)(d) 14A.59(5) The purpose of this circular is to provide you with further information on the Acquisitions and to give notice to the Shareholders of the EGM at which ordinary resolutions will be proposed to approve the Acquisitions (2)(a) 14A.58(3)(a) 2. HHL AGREEMENT DATED 25 JUNE (3,9) 14A.59(2)(a) Parties Buyer: Seller: the Purchaser and/or its nominee(s). HPL, a wholly owned subsidiary of HHL. Guarantors: (a) HHL, as guarantor of HPL to guarantee the performance by HPL of its obligations under the HHL Agreement; and 14A.59(12) (b) the Company, as guarantor of the Purchaser to guarantee the performance by the Purchaser of its obligations under the HHL Agreement. Assets to be acquired 14.60(2) (a) The HHL-Nomusa Sale Share, representing 100% of the issued share capital of Nomusa as at the Latest Practicable Date and as at Completion. The principal assets of Nomusa consist of a 50% equity interest in NTU and the Nomusa-NTU Loans. 14A.59(2)(f) 7

10 LETTER FROM THE BOARD (b) (c) The HHL-NCPM Sale Share, representing 50% of the issued share capital of NCPM as at the Latest Practicable Date and as at Completion. The HHL-NTGPM Sale Share, representing 50% of the issued share capital of NTGPM as at the Latest Practicable Date and as at Completion. Pursuant to the HHL Agreement, HPL will procure HPMCL to sell the HHL-NCPM Sale Share and the HHL-NTGPM Sale Share to the Purchaser. Please refer to the paragraph headed Information on Nomusa, Fast Shift, NTU, NCPM and NTGPM for further details. Consideration 14.58(4) HK$4,580 million in aggregate and shall be apportioned: (a) (b) (c) as to HK$12,500, as consideration for the HHL-NCPM Sale Share; as to HK$5,000, as consideration for the HHL-NTGPM Sale Share; and as to the balance of approximately HK$4,580 million, as consideration for the HHL- Nomusa Sale Share. The HHL Consideration was determined following commercial negotiations between the parties on arm s length basis and with reference to various factors including, but not limited to, (a) the preliminary valuation of the unsold properties and undeveloped land held by NTU of approximately HK$7,391 million as at 23 June 2007 based on the direct comparison method prepared by an independent property appraiser appointed by the Company, (b) the earnings potential of NTU, (c) the future prospect of the Macau property market, (d) the general market conditions, and (e) the financial position of NTU with NTU holding, among other things, the following assets: 14.58(5) (i) (ii) cash on hand and accounts receivable from the sale of residential units and car parking spaces in Nova City I, II and III; 237 unsold residential units (with available marketable gross floor area of approximately 371,000 sq.ft.) and 860 unsold car parking spaces in Nova City I, II and III; (iii) approximately 50,000 sq.ft. of commercial area in the Development held for leasing; and (iv) anticipated approximately 3.88 million sq.ft. of marketable retail and residential area and approximately 2,100 car parking spaces in Nova City IV and V to be developed. The HHL Consideration is determined on the same basis as the STDM Consideration. The HHL Consideration will be settled in full by the Purchaser in cash from internal resources and bank financing. 8

11 LETTER FROM THE BOARD Payment terms 14A.59(2)(c) The HHL Consideration shall be payable by the Purchaser to HPL or HPMCL (as the case may be) in the following manner: (a) (b) HK$458 million as initial deposit within two Business Days after the date of the HHL Agreement; and the balance of HK$4,122 million upon Completion. Conditions precedent Completion of the HHL Agreement is conditional upon the following conditions having been fulfilled in accordance with the HHL Agreement on or before 25 September 2007: (a) (b) the shareholders of HHL passing at an extraordinary general meeting of HHL of ordinary resolution(s) approving the HHL Agreement and the transactions contemplated by the HHL Agreement if so required under the Listing Rules; and the Independent Shareholders passing at the EGM of ordinary resolution(s) approving the HHL Agreement and the transactions contemplated by the HHL Agreement as may be required under the Listing Rules. If the conditions of the HHL Agreement are not fulfilled on or before 25 September 2007 (or such other date as may be agreed between the parties to the HHL Agreement), the HHL Acquisition will lapse and HPL or HPMCL (as the case may be) shall within five Business Days refund to the Purchaser the initial deposit with interest accrued thereon. According to the shareholders circular of HHL dated 13 July 2007 in relation to the HHL Agreement, the passing of an ordinary resolution to approve the HHL Agreement and the transactions contemplated thereunder by the shareholders of HHL at an extraordinary general meeting is not required under the Listing Rules. Completion Completion of the HHL Agreement will take place on the seventh Business Day after the date of fulfilment of the last of the conditions (or such other date as may be agreed between the parties to the HHL Agreement). 3. STDM AGREEMENT DATED 26 JUNE (3,9) 14A.59(2)(a) Parties Buyer: Seller: the Purchaser or its nominee. Rapid Success, a wholly owned subsidiary of STDM. Guarantors: (a) STDM, as guarantor of Rapid Success to guarantee the performance by Rapid Success of its obligations under the STDM Agreement; and 14A.59(12) 9

12 LETTER FROM THE BOARD (b) the Company, as guarantor of the Purchaser to guarantee the performance by the Purchaser of its obligations under the STDM Agreement. Assets to be acquired 14.60(2) The STDM-Fast Shift Sale Share, representing 100% of the issued share capital of Fast Shift as at the Latest Practicable Date and as at Completion and the STDM-Fast Shift Loans. The principal assets of Fast Shift consist of a 25% equity interest in NTU and the Fast Shift-NTU Loans. Please refer to the paragraph headed Information on Nomusa, Fast Shift, NTU, NCPM and NTGPM below for further details. 14A.59(2)(f) Consideration 14.58(4,5) HK$2,290 million (including the STDM-Fast Shift Loans as at Completion). The STDM Consideration was determined following commercial negotiation between the parties on arm s length basis and with reference to various factors including, but not limited to, (a) the preliminary valuation of the unsold properties and undeveloped land held by NTU of approximately HK$7,391 million as at 23 June 2007 based on the direct comparison method prepared by an independent property appraiser appointed by the Company, (b) the earnings potential of NTU, (c) the future prospect of the Macau property market, (d) the general market conditions, and (e) the financial position of NTU with NTU holding, among other things, the following assets: (i) (ii) cash on hand and accounts receivable from the sale of residential units and car parking spaces in Nova City I, II and III; 237 unsold residential units (with available marketable gross floor area of approximately 371,000 sq.ft.) and 860 unsold car parking spaces in Nova City I, II and III; (iii) approximately 50,000 sq.ft. of commercial area in the Development held for leasing; and (iv) anticipated approximately 3.88 million sq.ft. of marketable retail and residential area and approximately 2,100 car parking spaces in Nova City IV and V to be developed. The STDM Consideration is determined on the same basis as the HHL Consideration. The STDM Consideration will be settled in full by the Purchaser in cash from internal resources and bank financing. Payment terms 14A.59(2)(c) The STDM Consideration shall be payable by the Purchaser to STDM in the following manner: (a) (b) HK$229 million as initial deposit within two Business Days after the date of the STDM Agreement; and the balance of HK$2,061 million upon Completion. 10

13 LETTER FROM THE BOARD Conditions precedent Completion of the STDM Agreement is conditional upon the following conditions having been fulfilled or waived in accordance with the STDM Agreement on or before 25 September 2007: (a) the Independent Shareholders passing at the EGM of ordinary resolution(s) approving the STDM Agreement and the transactions contemplated by the STDM Agreement as may be required under the Listing Rules; and (b) the shareholders of STDM passing at an extraordinary general meeting of STDM of ordinary resolution(s) approving the STDM Agreement and the transactions contemplated by the STDM Agreement. If the conditions of the STDM Agreement are not fulfilled on or before 25 September 2007 (or such other date as the Purchaser may extend but in any event not later than 25 March 2008), the STDM Acquisition will lapse and STDM shall within five Business Days refund to the Purchaser the initial deposit with interest accrued thereon. Completion Completion of the STDM Agreement will take place on the seventh Business Day after the date of fulfilment of the last of the conditions (or such other date as may be agreed between parties to the STDM Agreement). 4. BASIS OF CONSIDERATION The Company will (through the Acquisitions) acquire a 75% indirect equity interest in NTU, 50% indirect equity interest in each of NCPM and NTGPM, the Nomusa-NTU Loans and the Fast Shift-NTU Loans for an aggregate consideration of HK$6,870 million (the Consideration ). The Consideration was determined following commercial negotiation between the relevant parties on arm s length basis and with reference to a number of factors as discussed above. The table below sets out a breakdown of the Consideration. Consideration (HK$) Remarks HHL-NCPM Sale Share 12,500 Equivalent to the par value of the HHL-NCPM Sale Share HHL-NTGPM Sale Share 5,000 Equivalent to the par value of the HHL-NTGPM Sale Share HHL-Nomusa Sale Share 4,579,982,500 STDM-Fast Shift Sale Share and the STDM-Fast Shift Loans 2,290,000,000 6,870,000,000 11

14 LETTER FROM THE BOARD The aggregate consideration for the HHL-Nomusa Sale Share and the STDM-Fast Shift Sale Share together with the STDM-Fast Shift Loans is approximately HK$6,870 million, representing the amount for the acquisition of 75% indirect equity interest in NTU (the NTU Consideration ). The principal assets of NTU comprise unsold properties and undeveloped land, and certain accounts receivable and cash received from the sale of residential units and car parking spaces in Nova City I, II and III. The table below summarises the valuation of the unsold properties and undeveloped land held by NTU ( Property Assets ) as at 30 June 2007 as derived from the Property valuation report on the property interests of the Enlarged Group set out in Appendix VII to this circular (the Valuation Report ) which is similar to the preliminary valuation of approximately HK$7,391 million as at 23 June A.59(2)(b) Capital value in existing state as at 30 June 2007 (note 1) (HK$ million) Reference in the Valuation Report Remarks 237 unsold residential units (with available marketable gross floor area of approximately 371,000 sq.ft.) and 856 unsold car parking spaces in Nova City I, II and III (note 2) Approximately 50,000 sq.ft. of commercial area in the Development held for leasing 1,326 3 and 4 The aggregate capital value of approximately HK$3,928 million as disclosed in properties numbered 3 and 4 in the Valuation Report comprised all the unsold and contracted to be sold residential units (1,034 units), two retail shops and 1,127 car parking spaces in Nova City I, II and III as at 30 June As at 30 June 2007, 797 residential units and 271 car parking spaces were contracted to be sold but the transfer of ownership has not yet been completed. The 237 unsold residential units and the 856 unsold car parking spaces in Nova City I, II and III were valued at approximately HK$1,103 million and HK$223 million, respectively, as at 30 June , 5 and 6 This value is derived from the aggregate capital value of the four retail shops in Nova City I, II and III in properties numbered 3 and 6 and 24 retail shops in Nova Taipa Gardens in property numbered 5 in the Valuation Report. The four retail shops in Nova City I and III and the 24 retail shops in Nova Taipa Gardens were valued at HK$42 million and HK$112 million, respectively, as at 30 June

15 LETTER FROM THE BOARD Capital value in existing state as at 30 June 2007 (note 1) (HK$ million) Reference in the Valuation Report Remarks Approximately 3.88 million sq.ft. of marketable retail and residential area and approximately 2,100 car parking spaces in Nova City IV and V to be developed 5,910 1 and 2 7,390 75% attributable interests of the Property Assets is equivalent to approximately HK$5,543 million Notes: 1. Before deducting construction costs to be incurred for completion of Nova City III. 2. During the period between 24 June 2007 and 25 June 2007, sale of three car parking spaces in Nova City I, II and III were recorded by NTU. As such, the number of unsold car parking spaces in Nova City I, II and III as at 25 June 2007 was reduced by three units to 857 units as compared to 860 units as at 23 June 2007 (being the date of the preliminary valuation as disclosed in the Announcement). During the period between 26 June 2007 and 30 June 2007, sale of one additional car parking space in Nova City I, II and III was recorded by NTU. As such, the number of unsold car parking spaces in Nova City I, II and III was reduced by another unit to 856 units as compared to 857 units as at 25 June 2007 (being the date of the HHL Agreement). The capital value (before deducting construction costs) of the Property Assets as at 30 June 2007 has reduced to approximately HK$7,390 million to reflect the sale of the car parking spaces during the period from 24 June 2007 to 30 June Apart from the Property Assets, the unaudited principal assets and liabilities of NTU as at 25 June 2007, comprised cash on hand and accounts receivable from the sale of residential units and car parking spaces in Nova City I, II and III of approximately HK$2,995 million (note) and accounts payables, outstanding construction costs to completion of Nova City I, II and III, taxation and other liabilities in respect of NTU s operations totalling HK$1,122 million, resulting in a net cash on hand and accounts receivable of approximately HK$1,873 million (the Accounting Net Assets ). The NTU Consideration represents a discount of approximately 1.1% to 75% of the combined valuation of the Property Assets as at 30 June 2007 and the Accounting Net Assets of approximately HK$6,947 million. The NTU Consideration (net of 75% of the Accounting Net Assets) represents a discount of approximately 1.4% to 75% of the combined valuation of the Property Assets as at 30 June 2007 of approximately HK$5,543 million. The consideration for each of the HHL-NCPM Sale Share and the HHL-NTGPM Sale Share represents a significant discount to the respective net asset value of NCPM and NTGPM as at 31 March Note: The proceeds from the sale of the three car parking spaces between 24 June 2007 and 25 June 2007 have been included in the cash on hand and accounts receivable from the sale of residential units and car parking spaces in Nova City I, II and III sold as at 25 June

16 LETTER FROM THE BOARD 5. SIMPLIFIED SHAREHOLDING STRUCTURE 14A.59(2)(a) As at the Latest Practicable Date 2.17(1) 14A.59(2)(f) 15.8% (consolidated interest) HHL % STDM The Company 1 100% Rapid Success 100% 100% Fast Shift HPL 100% Nomusa 50% NTU 25% 25% (indirect) 100% 50% NCPM 50% (indirect) HPMCL 50% NTGPM 50% (indirect) Effective shareholding immediately after completion of the HHL Acquisition and the STDM Acquisition 14.64(6a) The Company 1 100% (indirect) 100% (indirect) 100% (indirect) NTU NCPM NTGPM Effective shareholding immediately after completion of the HHL Acquisition but not the STDM Acquisition 15.8% (consolidated interest) 100% 12.08% STDM The Company 1 Rapid Success 100% Fast Shift 25% 75% (indirect) 100% (indirect) 100% (indirect) NTU NCPM NTGPM 14

17 LETTER FROM THE BOARD Effective shareholding immediately after completion of the STDM Acquisition but not the HHL Acquisition 15.8% (consolidated interest) HHL % STDM The Company 1 50% (indirect) 100% HPL 100% Nomusa 50% NTU 50% NCPM 50% (indirect) 100% HPMCL 50% 50% NTGPM (indirect) Note 1: Listed on the main board of the Stock Exchange. 6. INFORMATION ON HHL, HPL AND HPMCL 14.58(2) (a) HHL 14A.59(2)(a) HHL is a company incorporated in Hong Kong with limited liability whose shares are listed on the main board of the Stock Exchange. The HHL Group is principally engaged in the development, investment and operation of properties and hotels and infrastructure projects in Hong Kong and other parts of the PRC. (b) HPL As at the Latest Practicable Date, HPL (a wholly owned subsidiary of HHL) owned 100% of the issued share capital of Nomusa which in turn owned 50% of the issued share capital of NTU. HPL is an investment holding company. (c) HPMCL As at the Latest Practicable Date, HPMCL (a wholly owned subsidiary of HHL) owned 50% of the respective issued share capital of NCPM and NTGPM. HPMCL is engaged in the management of buildings and carparks. 15

18 LETTER FROM THE BOARD Each of HHL, HPL and HPMCL is an independent third party not connected to any of the Directors, chief executives or substantial Shareholders of the Company or its subsidiaries or associates of any of them (3) 7. INFORMATION ON STDM AND RAPID SUCCESS 14.58(2) (a) STDM STDM is a company incorporated in Macau. Its diverse business interest includes entertainment, leisure, sports, tourism and realty, predominantly in Macau. STDM holds 99.99% of the issued share capital of Investimentos-STDM, Lda ( I-STDM Lda ). I-STDM Lda holds 80% of the issued share capital of Sociedade de Jogos de Macau, S.A., which is one of the few companies licensed by the Macau Government to operate casinos in Macau. STDM has been a major driving force behind Macau s dynamic economic development for decades. The Group had a 15.8% consolidated interest in STDM as at the Latest Practicable Date. In respect of the STDM-Fast Shift Sale Share, STDM contributed MOP2.5 million (equivalent to approximately HK$2.5 million) upon formation of NTU in (b) Rapid Success As at Latest Practicable Date, Rapid Success (a wholly owned subsidiary of STDM) owned 100% of the issued share capital of Fast Shift which in turn owned 25% of the issued share capital of NTU. Rapid Success is an investment holding company. 8. INFORMATION ON NOMUSA, FAST SHIFT, NTU, NCPM AND NTGPM 14.60(2) (a) Nomusa Nomusa is an investment holding company incorporated in the British Virgin Islands and its principal assets consist of a 50% equity interest in NTU and the Nomusa-NTU Loans. As disclosed in the Announcement, the accounts of the companies in the HHL Group are consolidated at the HHL holding level and Nomusa, being an intermediary company in the HHL Group, is not required to consolidate or equity account for its holding of 50% equity interest in NTU. Accordingly, Nomusa s investment in 50% equity interest in NTU is stated at cost and is recognised as a jointly controlled entity. Interest from NTU is recognised on a time basis by reference to the principal outstanding and at the interest rate applicable. Dividends from NTU are recognised when Nomusa s rights to receive payment have been established. For the purpose of this circular, Nomusa s investment in 50% equity interest in NTU is accounted for using the equity method in the accountants report on Nomusa as set out in Appendix I to this circular. As such, the financial results of Nomusa as disclosed in this circular are different from those disclosed in the Announcement and no management discussion and analysis of the financial results of Nomusa has been prepared. However, the financial results and performance of Nomusa can be deductively referred from the paragraph headed Management discussion and analysis of the financial results of NTU as set out in Appendix II to this circular. 16

19 LETTER FROM THE BOARD The following table sets out a summary of the audited financial results of Nomusa prepared in accordance with HKFRSs for the three years ended 30 June 2006 and the nine months ended 31 March 2007 as extracted from Appendix I to this circular: Nine months ended Year ended 30 June 31 March (HK$ 000) (HK$ 000) (HK$ 000) (HK$ 000) (unaudited) (HK$ 000) 14.58(6,7) Revenue 24,706 14,768 12,316 9,502 37,021 Profit before tax 47,764 75,603 30,925 1, ,367 Profit/(Loss) after tax 40,417 71,780 26,755 (1,163) 643,374 As at As at 30 June 31 March (HK$ 000) (HK$ 000) (HK$ 000) (HK$ 000) Net asset value/(net liabilities) (22,649) 71,685 98, ,406 (b) Fast Shift Fast Shift is a company incorporated in the British Virgin Islands on 29 May Fast Shift has no business operation other than its holding of 25% equity interest in NTU and the Fast Shift-NTU Loans. The Fast Shift-NTU Loans amounted to approximately HK$266.6 million as at 30 June (c) NTU NTU is a company incorporated in Macau. It is a property development company and its principal asset is the Development located at the northern part of Taipa, Macau. The Development has two main parts, namely Nova Taipa Gardens and Nova City, and provides a maximum marketable gross floor area of approximately 10.1 million sq.ft. of retail and residential area. Nova Taipa Gardens is a residential project completed in All of the residential units and car parking spaces are sold and approximately 37,000 sq.ft. of commercial area are retained by NTU as investment properties. Nova Taipa Gardens is managed by NTGPM. Nova City is one of the largest luxurious residential developments (with marketable gross floor area of approximately 7 million sq.ft.) in Macau. Nova City is currently being developed in five phases. Pre-sale of Nova City I, II and III commenced by stages since 2005 and have been well received by the market. As at the Latest Practicable Date, construction for Nova City I and II has been completed and hand-over of units to purchasers has commenced since September 2006 for Nova City I and June 2007 for Nova City II. Superstructure works for Nova City III commenced in 2006 with completion scheduled for NTU is currently planning for Nova City IV and V which will comprise residential units, a large shopping mall (expected to be the largest in Taipa on completion) 17

20 LETTER FROM THE BOARD and approximately 2,100 car parking spaces. Nova City I, II and III will comprise, at completion, 13 high-rise towers with a total of 1,932 units (with marketable gross floor area of approximately 3.1 million sq.ft.), a clubhouse and podium garden spanning a combined gross floor area of approximately 214,000 sq.ft. and approximately 13,000 sq.ft. of commercial area. Of the 1,932 residential units in Nova City I, II and III, 237 residential units with marketable gross floor area of approximately 371,000 sq.ft. were unsold as at 25 June 2007, being the date of the HHL Agreement. The following table sets out a summary of the audited financial results of NTU prepared in accordance with HKFRSs for the Track Record Period as extracted from Appendix II to this circular: Three months ended Year ended 31 December 31 March (HK$ 000) (HK$ 000) (HK$ 000) (HK$ 000) (HK$ 000) (unaudited) 14.58(6,7) Revenue 21,418 6,404 2,239, ,714 Profit/(Loss) before tax 143,405 (28,252) 1,412,375 (844) 32,551 Profit/(Loss) after tax 127,984 (21,064) 1,242,907 (1,106) 28,786 As at As at 31 December 31 March (HK$ 000) (HK$ 000) (HK$ 000) (HK$ 000) Net asset value 67,532 91,574 18,481 47,268 (d) NCPM NCPM is a company incorporated in Macau. It is the property management company for Nova City. As at the Latest Practicable Date, NCPM was indirectly owned as to 50% by the Company and HHL respectively. The following table sets out a summary of the audited financial results of NCPM prepared in accordance with HKFRSs for the Track Record Period as extracted from Appendix III to this circular: 21 June 2006 (date of incorporation) to 31 December 2006 Three months ended 31 March 2007 (MOP 000) (HK$ 000) (MOP 000) (HK$ 000) 14.58(6,7) Revenue Profit before tax Profit after tax

21 LETTER FROM THE BOARD As at 31 December As at 31 March (MOP 000) (HK$ 000) (MOP 000) (HK$ 000) Net asset value (e) NTGPM NTGPM is a company incorporated in Macau. It is the property management company for Nova Taipa Gardens. As at the Latest Practicable Date, NTGPM was indirectly owned as to 50% by the Company and HHL respectively. The following table sets out a summary of the audited financial results of NTGPM prepared in accordance with HKFRSs for the Track Record Period as extracted from Appendix IV to this circular: Year ended 31 December Three months ended 31 March (MOP 000) (HK$ 000) (MOP 000) (HK$ 000) (MOP 000) (HK$ 000) (MOP 000) (HK$ 000) (MOP 000) (HK$ 000) (unaudited) (unaudited) 14.58(6,7) Revenue 1,452 1,452 1,566 1,566 1,619 1, Profit before tax 1,447 1,447 1,561 1,561 1,614 1, Profit after tax 1,219 1,219 1,462 1,462 1,438 1, As at 31 December As at 31 March (MOP 000) (HK$ 000) (MOP 000) (HK$ 000) (MOP 000) (HK$ 000) (MOP 000) (HK$ 000) Net asset value ,182 1, BACKGROUND TO, AND REASONS FOR, THE ACQUISITIONS The Company operates a number of businesses principally consisting of transportation, property, hospitality and investment in Macau and the adjacent areas. Rated by the World Tourism Organisation as one of the world s top tourism destinations, Macau has witnessed tremendous growth in its tourism industry with 22.0 million visitors in 2006 as compared to 9.1 million visitors in 2000 (representing a compound annual growth rate of approximately 15.8%). The city has also seen large sums of foreign capital being invested into the rapidly expanding gaming and leisure industries, drawing substantial attention from the rest of the world. Macau s dynamic transformation into a regional entertainment and business destination and its growth of the overall economy has resulted in a 23% growth in the gross domestic product in 2006 and unemployment rate has dropped to a record low of 3.2% in the first quarter of The strong economy, together with the improved affluence of the local residents and the growing leasing demand attributable to the rapidly expanding expatriate community, have stimulated the need for quality housing in prime and convenient locations. 14A.58(1) 14A.59(13) 14.58(2) 19

22 LETTER FROM THE BOARD NTU brings to the Group a unique portfolio of prime properties in Taipa, Macau. For the financial year ended 31 December 2006, the Company recognised a profit of approximately HK$328 million from the completion of Nova City I. The pre-sale of Nova City II and III in May 2006 and December 2006 respectively was extremely well received. Nova City IV and V, with additional features such as the largest shopping mall in Taipa, are currently being planned. With the recent and continued development of the nearby Cotai area as the next entertainment centre in Macau, overall housing demand and tourist traffic will increase in the area and Nova City and the accompanying shopping mall will be well situated to offer residential accommodations as well as leisure amenities to local residents and the increasing number of visitors to Macau (8) The Group, being an established leader in the transportation and hospitality businesses in Macau, also has a prominent and successful track record in the property markets in Macau and Hong Kong. The Acquisitions will allow the Group to further consolidate the Company s market position as a leading developer and increase the Group s landbank in Macau to approximately 11.1 million sq.ft. (effective interest) (an increase by approximately 35%). The Directors believe these Acquisitions will provide an excellent opportunity for the Group to further strengthen its interest in the Development. The Directors also believe that the Acquisitions will demonstrate the Group s commitment in the property business, leveraging from the overall economic growth of Macau and thus complementing and enhancing the Group s core transportation and hospitality businesses in Macau. Currently, NTU, NCPM and NTGPM are accounted for using the equity method in the consolidated financial statements of the Company. Upon Completion, each of NTU, NCPM and NTGPM will become an indirect wholly owned subsidiary of the Company and their financials will be fully consolidated into the Group. The Acquisitions would enable the Group to have more flexibility in future development designs and management plans of the Development. 10. FINANCIAL EFFECTS OF THE ACQUISITIONS ON THE COMPANY 14A.58(2) 14.64(5) Completion of the HHL Acquisition and the STDM Acquisition are subject to conditions as mentioned in the paragraphs headed HHL Agreement dated 25 June 2007 Conditions precedent and STDM Agreement dated 26 June 2007 Conditions precedent. Since the transactions contemplated under the HHL Agreement and STDM Agreement respectively are independent of each other, there are a number of possible outcomes. The financial effects of the Acquisitions on the Company under various scenarios are set out below. (a) Scenario A Completion of both the HHL Acquisition and the STDM Acquisition On completion of the HHL Acquisition and the STDM Acquisition, each of Nomusa, Fast Shift, NTU, NCPM and NTGPM will become a wholly owned subsidiary of the Company and their financials will be fully consolidated into the Enlarged Group. 20

23 LETTER FROM THE BOARD The following table sets out, for illustrative purposes only, the key financials of the Group and the unaudited pro forma financials of the Enlarged Group for the year ended 31 December 2006 and as at 31 December 2006, assuming the HHL Acquisition and the STDM Acquisition had taken place on 1 January 2006 and 31 December The unaudited pro forma consolidated profit and loss account and the unaudited pro forma consolidated balance sheet of the Enlarged Group, respectively, are extracted from Appendix VI to this circular: For the financial year ended 31 December 2006: Group Enlarged Group % change Turnover (HK$ 000) 2,508,804 4,745, % Net profit attributable to the Shareholders (HK$ 000) 663,916 1,601, % As at 31 December 2006: Group Enlarged Group % change Net asset value attributable to the Shareholders (HK$ 000) 8,753,138 10,715, % Net tangible asset value attributable to the Shareholders 2 (HK$ 000) 8,748,673 10,488, % Net debt 3 to equity ratio (%) Net cash 38.0 n.m. Interest coverage ratio 4 (x) % (b) Scenario B Completion of the HHL Acquisition but not the STDM Acquisition On completion of the HHL Acquisition but not the STDM Acquisition, each of Nomusa, NCPM and NTGPM will become a wholly owned subsidiary of the Company and NTU will become a 75% owned subsidiary of the Company, their financials will be fully consolidated into the Enlarged Group. The following table sets out, for illustrative purposes only, the key financials of the Group and the unaudited pro forma financials of the Enlarged Group for the year ended 31 December 2006 and as at 31 December 2006, assuming the HHL Acquisition had taken place on 1 January 2006 and 31 December The unaudited pro forma consolidated profit and loss account and the unaudited pro forma consolidated balance sheet of the Enlarged Group, respectively, are extracted from Appendix VI to this circular: For the financial year ended 31 December 2006: Group Enlarged Group % change Turnover (HK$ 000) 2,508,804 4,745, % Net profit attributable to the Shareholders (HK$ 000) 663,916 1,281, % As at 31 December 2006: Group Enlarged Group % change Net asset value attributable to the Shareholders (HK$ 000) 8,753,138 10,715, % Net tangible asset value attributable to the Shareholders 2 (HK$ 000) 8,748,673 10,560, % Net debt 3 to equity ratio (%) Net cash 16.6 n.m. Interest coverage ratio 4 (x) % 21

24 LETTER FROM THE BOARD (c) Scenario C Completion of the STDM Acquisition but not the HHL Acquisition On completion of the STDM Acquisition but not the HHL Acquisition, NTU will become a 50% owned company of the Company, its financials will be accounted for in the Enlarged Group using the equity method. The following table sets out, for illustrative purposes only, the key financials of the Group and the unaudited pro forma financials of the Enlarged Group for the year ended 31 December 2006 and as at 31 December 2006, assuming the STDM Acquisition had taken place on 1 January 2006 and 31 December The unaudited pro forma consolidated profit and loss account and the unaudited pro forma consolidated balance sheet of the Enlarged Group, respectively, are extracted from Appendix VI to this circular: For the financial year ended 31 December 2006: Group Enlarged Group % change Turnover (HK$ 000) 2,508,804 2,508,804 Net profit attributable to the Shareholders (HK$ 000) 663, , % As at 31 December 2006: Group Enlarged Group % change Net asset value attributable to the Shareholders (HK$ 000) 8,753,138 8,753,138 Net tangible asset value attributable to the Shareholders 2 (HK$ 000) 8,748,673 8,667, % Net debt 3 to equity ratio (%) Net cash Net cash Interest coverage ratio 4 (x) Notes: 1. The above should be read in conjunction with the assumptions set out in Appendix VI to this circular. 2. Net tangible asset value attributable to the Shareholders is calculated by deducting intangible assets from the net asset value attributable to the Shareholders. 3. Net debt is calculated by deducting cash and cash equivalents (including pledged bank deposits) from total bank borrowings. 4. Interest coverage ratio is calculated by dividing operating profit with finance costs. 5. Not meaningful is denoted as n.m.. (d) Scenario D Neither of the HHL Acquisition and the STDM Acquisition was completed There will be no financial effects on the Group (other than costs incurred for the Acquisitions) if neither of the HHL Acquisition and the STDM Acquisition was completed. 22

25 LETTER FROM THE BOARD 11. TRENDS OF THE BUSINESS OF THE GROUP AND TRADING PROSPECTS OF THE ENLARGED GROUP 14.69(6) Appendix 1B (29)(1)(b) The Group is a leading listed conglomerate with core businesses in the transportation, property, hospitality and investment sectors. The Group has a strong presence in Macau. Tracing its origin back to the inauguration of a ferry service between Hong Kong and Macau in 1961, the Group s ferry business operating under the name of TurboJET now boasts one of the largest fleets of high-speed passenger ferries (with 32 vessels) in Asia serving Hong Kong, Macau and the Pearl River Delta area in the PRC. The Group also operates coach services in Macau and cross-boundary coach services between cities in the Guangdong province and Macau. In January 2006, the Group entered into an agreement with Air Macau Company Limited and China National Aviation Company Limited to form a new Macau-based, low-cost airline, called Macau Asia Express Limited, which will serve destinations in mainland China and other parts of Asia. With an aim to grow into a leading regional focused transportation company through its international multi-modal transportation network providing sea, land and air transport, the transportation segment will continue to be one of the main focus of the Enlarged Group. The Group has a prominent and successful track record in both the Macau and Hong Kong property markets. With one of the largest land banks in Macau among the Hong Kong-listed companies, it is well positioned to capitalise on the growth in demand for housing in Macau. The Acquisitions will allow the Group to further consolidate its interest in one of the prime property development located in Taipa, Macau and its position as a leading player in the Macau property sector. The Group has various interests in hotels and golf club in Macau and Hong Kong. With expected growth in the hospitality industry in both Macau and Hong Kong, the Group s hospitality division anticipates that the performance will further improve. It is anticipated that the Group s 15.8% consolidated interest in STDM will continue to generate substantial dividend income for the Group. Meanwhile, the Group will continue to look for attractive investments to enhance return to the Shareholders. The Group s objective is to enhance its shareholders value through further expansion of its existing businesses by leveraging on its market position. It is the management s intention to have transportation, property, hospitality and investment remain as its four core businesses going forward. 12. IMPLICATIONS UNDER THE LISTING RULES Very substantial acquisition and connected transaction the HHL Acquisition The HHL Acquisition constitutes a very substantial acquisition for the Company under Chapter 14 of the Listing Rules and a connected transaction for the Company under Chapter 14A of the Listing Rules by virtue of STDM s 25% equity interest in NTU. Accordingly, it is subject to the approval of the Independent Shareholders at the EGM to be conducted by way of poll. HHL has confirmed that none of HHL or its associates had any shareholding interest in the Company as at the Latest Practicable Date and that if they have any shareholding interest in the Company as at the date of the EGM, they will abstain from voting in respect of the HHL Agreement at the EGM (2)(d) 23