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In accordance with Rule 14A.37 of the Listing Rules, the Directors (including the Independent Non-executive Directors) of the Company have reviewed the Continuing Connection Transactions for the year ended 31 December 2010 and confirmed they have been entered into:

      • (1)

        in the ordinary and usual course of business of the Company;

      • (2)

        on normal commercial terms; and

      • (3)

        in accordance with the relevant agreement governing them on terms that are fair and reasonable and in the interests of the shareholders of the Company as a whole. The Companys auditor was engaged to report on the Groups above Continuing Connected Transactions in accordance with Hong Kong Standard on Assurance Engagements 3000 Assurance Engagements Other Than Audits or Reviews of Historical Financial Informationand with reference to Practice Note 740 Auditors Letter on Continuing Connected Transactions under the Hong Kong Listing Rulesissued by the Hong Kong Institute of Certified Public Accountants. The auditor has issued his unqualified letter containing his findings and conclusions in respect of the Continuing Connected Transactions disclosed above by the Group in accordance with Rule 14A.38 of the Listing Rules. A copy of the auditors letter has been provided by the Company to The Stock Exchange of Hong Kong Limited.

  • (b)

    On 1 April 2010, the following agreements in relation to the acquisition of one-third interests in a hotel erected on Lot 108 in the Luwan District, Shanghai (Hotel 108) were entered into:

    • (i)

      Sale and Purchase Agreement (the “Acquisition”) Under the Sale and Purchase Agreement, (a) G.E. Hotel (Xintiandi) Limited, a wholly-owned subsidiary of the Group (the Purchaser) at the consideration of approximately US$24,118,000 (equivalent to approximately HK$188,120,000), acquired from Shui On Investment Company Limited (the Seller) 1 share (the Sale Share) of US$1.00 each in Magic Garden Investments Limited (MGIL) representing one-third of the entire issued share capital of MGIL and the benefit of the unsecured interest free loan (the Shareholders Loan) in the principal amount of approximately US$24,118,000 representing one-third of the entire ShareholdersLoan extended by the Seller to the MGIL Group on a dollar for dollar basis; (b) the Purchaser paid to Dr. Lo Ka Shui a sum equivalent to the interest on approximately US$24,118,000 (equivalent to approximately HK$188,120,000) calculated at an interest rate of 1.5% per annum from and including 21 December 2009 up to completion of the sale and purchase of the Sale Share and Shareholders Loan (the Payment); and (c) the Group provided a corporate guarantee (the Corporate Guarantee) and a charge over the Sale Share (the Share Mortgage) to secure the Purchasers proportional share of the US$117 million (equivalent to approximately HK$912.6 million) existing banking facilities made available to Shanghai Li Xing Hotel Co., Ltd. (the Project Company), i.e., US$19.5 million (equivalent to approximately HK$152.1 million). Prior to the completion of the Acquisition, these banking facilities were secured by, among other things, a share mortgage over the Sellers entire interest in the share capital of MGIL and a corporate guarantee from Shui On Company Limited, the indirect holding company of the Seller, in favour of the relevant lending banks. The Project Company is the owner of, among other things, the Hotel 108;

Annual Report 2010

57

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