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Notice of Meeting and Information Booklet relating to a Scheme of Arrangement4 June 2014

Millennium & Copthorne Hotels New Zealand Limited – Notice of Meeting and Information Booklet • Page B

Artist’s impression of the Millennium Waterfront Chengdu Hotel and surrounding areas.

Artist’s impression of the Millennium Waterfront project, Wenjiang District, Chengdu City, Sichuan Province, China.

The completed M Hotel Chengdu and Cityspring Chengdu residential development, Chengdu City, Sichuan Province, China.

Millennium & Copthorne Hotels New Zealand Limited – Notice of Meeting and Information Booklet • Page 1

Important information

The information in this section is required under the Securities Act (Millennium & Copthorne Hotels New Zealand Limited and First Sponsor Group Limited) Exemption Notice 2014 (the Exemption Notice).

Investment decisions are very important. They often have long-term consequences. Read all documents carefully. Ask questions. Seek advice before committing yourself.

The Financial Markets Authority regulates conduct in financial markets

The Financial Markets Authority regulates conduct in New Zealand’s financial markets. The Financial Markets Authority’s main objective is to promote and facilitate the development of fair, efficient, and transparent financial markets. For more information about investing, go to http://www.fma.govt.nz.

Financial advisers can help you make investment decisions

Using a financial adviser cannot prevent you from losing money, but it should be able to help you make better investment decisions.

Financial advisers are regulated by the Financial Markets Authority to varying levels, depending on the type of adviser and the nature of the services they provide. Some financial advisers are only allowed to provide advice on a limited range of products. When seeking or receiving financial advice, you should check –

• the type of adviser you are dealing with;

• the services the adviser can provide you with; and

• the products the adviser can advise you on.

A financial adviser who provides you with personalised financial adviser services may be required to give you a disclosure statement covering these and other matters. You should ask your adviser about how he or she is paid and any conflicts of interest he or she may have.

Financial advisers must have a complaints process in place and they, or the financial services provider they work for, must belong to a dispute resolution scheme if they provide services to retail clients. So if there is a dispute over an investment, you can ask someone independent to resolve it.

Most financial advisers, or the financial services provider they work for, must also be registered on the financial service providers register. You can search for information about registered financial service providers at http://www.fspr.govt.nz.

You can also complain to the Financial Markets Authority if you have concerns about the behaviour of a financial adviser.

This is an important document and requires your immediate attention. You should read this document and the accompanying FSGL Preliminary Prospectus in their entirety before deciding whether or not to vote in favour of the Scheme.

If you have sold all your shares in MCK you should immediately hand this Booklet and the accompanying documentation to the purchaser, or to the person authorised to undertake trading activities on NZX or other agent through whom the sale was made, to be passed on to the purchaser.

If the Scheme is approved by the requisite majority of Shareholders then, subject to all conditions to the implementation of the Scheme being satisfied, and subject to the High Court granting the Final Court Orders, the Scheme will be implemented and binding on all Shareholders, including those who did not vote or who voted against the Scheme.

This Booklet has been prepared in accordance with the Exemption Notice. This Booklet is not a prospectus or investment statement and has not been filed, registered with or approved by any New Zealand regulatory authority under or in accordance with the Securities Act or any other New Zealand laws. This Booklet does not contain all the information that a prospectus or investment statement under New Zealand law is required to contain.

Securities Act (Millennium & Copthorne Hotels New Zealand Limited and First Sponsor Group Limited) Exemption Notice 2014

The transfer of shares in FSGL to Shareholders under the Scheme constitutes “an offer of securities to the public” under the Securities Act 1978 (the Securities Act) as a result of the exceptions to the previously allotted securities rules. Under these rules both MCK and FSGL would be deemed “issuers” of the shares in FSGL. However, each of MCK and FSGL have been granted, subject to conditions, exemptions from sections 37, 37A, 38A and 51 to 54 of the Securities Act and regulations 25 to 28, 30, 35, 38 and 39 of the Securities Regulations 2009 pursuant to the Exemption Notice. It is not a condition of the Exemption Notice that FSGL be listed on an NZX market. As FSGL will not be listed on an NZX market (it is proposed to be listed on the Singapore Exchange), New Zealand resident investors may not have access to information concerning FSGL in


Important information (continued)

the same way as they would in relation to an issuer listed on an NZX market.

Restrictions on distribution

This Booklet and the accompanying FSGL Preliminary Prospectus have been distributed by MCK to Shareholders only. The information contained in these materials is provided solely to enable you to determine whether to approve the Scheme. These materials should not be distributed by you to any other person (other than in connection with the Scheme).

FSGL Preliminary Prospectus

Although a copy of the FSGL Preliminary Prospectus which accompanies this Booklet, and other documents, have been received by the Registrar of Financial Service Providers, the FSGL Preliminary Prospectus has not been registered in New Zealand under New Zealand law and may not contain all the information that a New Zealand registered prospectus is required to contain.

No guarantee

Neither we, our Directors or any of our other agents or any other person (including any Shareholder named in this Booklet), guarantees that either the Scheme or the proposed FSGL IPO will be successfully completed within the timeframe specified in this Booklet, or at all.

Privacy Act Notice

Any personal information provided by Shareholders will be held by us or the Registrar at the addresses shown in the Directory at the end of this Booklet or such other place as is notified upon request. This information will be used for purposes relating to the Scheme. Under the Privacy Act 1993, you have the right to access and correct any personal information held about you.

Governing law

This Booklet is governed by the laws of New Zealand. Each Shareholder submits to the exclusive jurisdiction of the courts of New Zealand.

Disclaimer

No person is authorised to give any information, or

to make any representation, in connection with the Scheme which is not contained in this Booklet or the FSGL Preliminary Prospectus. Any information or representation in connection with the Scheme not contained in this Booklet or the FSGL Preliminary Prospectus may not be relied upon as having been authorised by MCK or any of its Directors, officers, or employees.

Definitions

Capitalised terms used in this Booklet have defined meanings which appear in the Glossary section or within the relevant section of this Booklet in which the term is used.

All references to “$” or “dollars” in this Booklet are to New Zealand dollars unless specified otherwise, and all references to dates and times are to New Zealand dates and times.

Enquiries

Enquiries about the Scheme should be directed to an NZX Primary Market Participant or your sharebroker, accountant or other professional adviser.


Contents

Notice of Meeting 4

Key dates 5

Chairman’s letter 6

1. Questions and answers 9

2. Details of the Scheme 18

3. Overview of FSGL 29

4. Key risks of the Scheme 32

5. Tax implications of the Scheme 34

6. Shareholder approvals 35

7. Glossary 37

Annexure A: Independent Adviser’s Report 39

Annexure B: Scheme Plan

Annexure C: Court Orders

Directory


Notice is hereby given that a Special Meeting of Shareholders will be held on Thursday, 19 June 2014 at 2.30pm at the Copthorne Hotel Auckland City, 150 Anzac Avenue, Auckland.

Items of business

A The Chairman’s introduction.

B Address to Shareholders.

C Shareholder discussion.

D Scheme Resolution.

Ordinary Shareholders

Note: only holders of Ordinary Shares are eligible to vote on this resolution.

To consider and, if thought fit, to pass the following resolution as a special resolution of holders of Ordinary Shares:

That the Scheme Plan (as defined in this Booklet) be and is hereby approved.

Preference Shareholders

Note: only holders of Preference Shares are eligible to vote on this resolution.

To consider and, if thought fit, to pass the following resolution as a special resolution of holders of Preference Shares:

That the Scheme Plan (as defined in this Booklet) be and is hereby approved.

By Order of the MCK Board.

Hong Ren WongChairman

4 June 2014

Notes

The Booklet that follows this Notice of Meeting forms part of this Notice of Meeting and provides information in relation to the Scheme Resolution and the Scheme, how MCK will implement the Scheme and the reasons for proposing the Scheme. In particular, section 6 of the Booklet (Shareholder approvals) contains details about the Special Meeting and how to vote or appoint a proxy. The Voting/Proxy Form accompanies this Notice of Meeting.

Capitalised terms used in this Notice of Meeting have the meaning given to them in section 7 of the Booklet (Glossary).

Notice of Meeting


Key dates

Date (2014)* Event

Friday, 13 June First date MCK Shares trade on the NZX Main Board without an entitlement to vote at the Special Meeting

2.30pm Tuesday, 17 June Voting/Proxy Forms for the Special Meeting must be received by the Registrar

5.00pm Tuesday, 17 June Record date for determining who may vote at the Special Meeting

2.30pm Thursday, 19 June Special Meeting of Shareholders to be held at the Copthorne Hotel Auckland City, 150 Anzac Avenue, Auckland

4.00pm Thursday, 26 June Last day for affected or interested persons to file and serve notice of opposition or appearance with the High Court in Auckland

Wednesday, 9 July Final price expected to be set for the proposed FSGL IPO

Thursday, 10 July • Final Court Hearing to approve the Scheme

• Final Prospectus relating to the proposed FSGL IPO expected to be registered with the Monetary Authority of Singapore

Tuesday, 15 July First date MCK Shares trade on the NZX Main Board without an entitlement to participate in the Scheme

6.00pm Thursday, 17 July Expected Record/Effective Date for the Scheme

Tuesday, 22 July • FSGL expected to list on the Singapore Exchange

• Expected date that Shareholders will be able to trade their FSGL shares on the Singapore Exchange (subject to providing the required information set out in the Election Form accompanying this Booklet)

* These dates are indicative only and MCK has the right to vary these times and dates. Any variations will be announced to NZX. Certain times and dates, and the occurrence of certain events, are conditional on MCK Shareholder, regulatory or Court approval.

Expected timeline for the Scheme and the proposed FSGL IPO

* Subject to providing the required information set out in the Election Form accompanying this Booklet.

FSGL IPO

Voting/Proxy Forms must be

received by the Registrar

by 2.30pm

17 June

Special Meeting of

Shareholders

19 June

Last day for a�ected or

interestedpersons to �le

notice of opposition

26 June

Commence management

roadshow and book-building

30 June

Final price set

9 July

Final Prospectus expected to be registered with

MAS

10 July

Opening of public o�er

11 July

Close of public o�er

17 July

FSGL expected to list on

Singapore Exchange

22 July

Final Court Hearing

10 July

Record/E�ectiveDate

17 July

Shareholders can trade FSGL shares on Singapore Exchange*

22 July

Scheme

* Subject to providing the required information set out in the Election Form accompanying this Booklet.

July August


Chairman’s letter

Dear Shareholder,

In the offer document for our recent rights offer of preference shares, I mentioned that First Sponsor Capital Limited (First Sponsor) was considering undertaking an initial public offering and listing on the Singapore Exchange of its principal operating subsidiary, First Sponsor Group Limited (FSGL).

In connection with that proposed listing, I mentioned in the offer document that the Board was considering undertaking a return of capital whereby our investment in FSGL would be distributed to our shareholders.

Since then, considerable work has been undertaken by First Sponsor in relation to the possible listing of FSGL and by us in relation to the possible return of capital.

On behalf of your Board, I am pleased to write to you with the detailed proposal for the capital return. The capital return, which will be undertaken by way of a scheme of arrangement under Part 15 of the Companies Act (the Scheme), will involve:

(a) the cancellation of approximately 70% of MCK’s Ordinary Shares and approximately 70% of MCK’s Preference Shares; and

(b) the distribution of substantially all of our shares in FSGL1 to the holders of MCK Ordinary Shares and MCK Preference Shares.

Implications for Shareholders

If the Scheme is approved, some of your Shares in MCK will be cancelled and you will receive some FSGL shares in connection with that cancellation.

The cancellation and distribution ratios are the same for both Ordinary Shares and Preference Shares. They are:

(a) in relation to Ordinary Shares, for every 1,000 Ordinary Shares you hold, 698 will be cancelled and you will receive 327 FSGL shares; and

(b) in relation to Preference Shares, for every 1,000 Preference Shares you hold, 698 will be cancelled and you will receive 327 FSGL shares.

Any fractional entitlements to MCK Shares or FSGL shares after applying the cancellation and distribution ratios will be rounded down to the nearest whole number.

Subject to the various conditions of the Scheme (set out in section 2.16 of this Booklet) being satisfied, the Scheme is expected to become effective at 6.00pm on 17 July 2014.

Background to our investment in First Sponsor

We were a founding shareholder in First Sponsor when it was established in 2007. Our rationale for investing in First Sponsor at that time was to diversify our asset portfolio and to take advantage of investment opportunities in China.

When we initially invested in First Sponsor, its business strategy was to develop properties in second-tier cities in China, with a focus on medium-scale residential and some commercial developments. In 2010, First Sponsor changed its business focus to concentrate on medium to large scale residential, small office – home office (SOHO) and commercial developments, such as hotels.

This change in First Sponsor’s business focus increased its capital requirements significantly. Since 2007, we have invested approximately $222 million in First Sponsor – with approximately $141 million being invested since 2010. In the last twelve months alone, we have invested approximately $101 million in First Sponsor.

Immediately before the exchange of FSGL shares described below, we had an interest in First Sponsor of approximately 33%. Our percentage holding in First Sponsor has remained relatively stable at around this level since 2007.

First Sponsor Share Exchange

Prior to 31 March 2014, First Sponsor owned approximately 98.7% of the shares in FSGL.

On 31 March 2014, First Sponsor repurchased or redeemed all of the ordinary shares and preference shares in First Sponsor held by certain shareholders of the M&C plc group (including MCK), partly for cash and partly for shares in FSGL held by First Sponsor (the First Sponsor Share Exchange).

Following the completion of the First Sponsor Share Exchange, MCK now owns 31.4% of the shares in FSGL. Substantially all of these FSGL shares will be distributed to Shareholders if the Scheme is implemented.

1 The application of the distribution ratio for the Scheme (discussed under the heading “Implications for Shareholders”) means that we will retain a small holding of FSGL shares (expected to be approximately 245,000 FSGL shares) after the Scheme is implemented.


Rationale for the Scheme

The Board believes that the proposed FSGL IPO is a logical time to evaluate our holding in FSGL. We are particularly conscious of the likely future capital demands of FSGL as it continues to grow.

After careful consideration, the Board believes that the best option in the circumstances is to give you direct control over your economic interest in FSGL by distributing that interest to you. You will then be able to decide for yourself whether or not you wish to retain your interest in FSGL and, if you decide to retain your interest in FSGL, decide whether or not you wish to participate in any future rights offers by FSGL.

Benefits of the Scheme

The principal benefits of the Scheme are:

(a) we believe that to date the market has not adequately priced the value of our investment in FSGL. We believe that distributing FSGL shares to our Shareholders will help to “unlock” that value;

(b) the proposed distribution of FSGL shares under the Scheme is expected to be a tax-free return of capital to New Zealand tax resident Shareholders (based on a non-binding ruling from the IRD);

(c) you will obtain a direct rather than indirect interest in FSGL. This will give you the ability to decide whether or not to sell your interest in FSGL and, if you decide to retain your interest in FSGL, decide whether or not you wish to participate in any future rights offers by FSGL;

(d) we will be able to focus on our core New Zealand activities, allowing us to better pursue our New Zealand strategic goals. For example, we are conscious that the impact of the Canterbury earthquakes of 2010 and 2011 continues to affect our core New Zealand activities. In addition, we are undertaking a thorough refurbishment of the Copthorne Hotel Auckland Harbourcity. If the Scheme is implemented, we will be able to prioritise our focus and resources on our New Zealand hotel and land developments;

(e) we will not be subject to further capital calls from FSGL after the Scheme (other than in relation to any immaterial holding of FSGL shares we retain after the Scheme is implemented due to the application of the distribution ratio). This will alleviate pressure on

our financial resources and allow us to pursue other investment and growth opportunities; and

(f) we would cease to be subject to foreign tax exposure relating to profit contributions from FSGL (other than in relation to any immaterial holding of FSGL shares we retain after the Scheme is implemented due to the application of the distribution ratio).

Proposed FSGL IPO

The Scheme is being conducted in parallel with the proposed FSGL IPO. If the Scheme and the proposed FSGL IPO are completed, you will receive FSGL shares which will be listed on the Singapore Exchange.

Accompanying this Booklet is a preliminary prospectus relating to the proposed FSGL IPO (the FSGL Preliminary Prospectus). The FSGL Preliminary Prospectus is your primary source of information relating to First Sponsor, FSGL and the proposed FSGL IPO. We recommend that you read the FSGL Preliminary Prospectus in full.

Block sale facility

We recognise that not all Shareholders will want to retain some or all of their FSGL shares after completion of the Scheme. For those Shareholders who wish to sell some or all of their FSGL shares, we have put in place a facility to allow you to do so upon FSGL’s listing on the Singapore Exchange. Details of the facility are set out in section 2.13 of this Booklet.

Shareholders wishing to sell their FSGL shares will also need to consider the taxation implications related to selling foreign shares, which are summarised in section 5 of this Booklet.

Independent Adviser’s Report

We have engaged Grant Samuel to prepare an independent report in relation to whether, in its opinion, the Scheme is in the best interests of Shareholders. Grant Samuel’s full report is set out in Annexure A of this Booklet. Grant Samuel has determined that the Scheme is in the best interests of Shareholders. We recommend you read the Independent Adviser’s Report in full.

Special Meeting of Shareholders

The Scheme is conditional upon Shareholder approval.


A Special Meeting of Shareholders will therefore be held to consider the Scheme at 2.30pm on Thursday 19 June 2014 at the Copthorne Hotel Auckland City. If you are unable to attend the Special Meeting, we encourage you to vote online, submit a postal vote or appoint a proxy to attend the Special Meeting.

Board Recommendation

The Board unanimously recommends the Scheme and encourages all Shareholders to vote in favour of the Scheme Resolution.

M&C plc, through its subsidiary CDLHHNZL, had an interest in 70.22% of our Ordinary Shares and 85.18% of our Preference Shares as at 29 May 2014. CDLHHNZL has advised the Directors that it intends to vote all of its Ordinary Shares and Preference Shares in favour of the Scheme Resolution.

On behalf of the Board, I thank you for your continued support of MCK.

Yours faithfully,

Hong Ren WongChairman


1. Questions and answers

1.1 Details of the Scheme

Question Answer Where in this Booklet to find more information (page)

What is the Scheme?

The Scheme is a scheme of arrangement under Part 15 of the Companies Act. It involves:

(a) the cancellation of approximately 70% of the Ordinary Shares and approximately 70% of the Preference Shares; and

(b) the distribution by MCK of substantially all of our shares in FSGL to the holders of Ordinary Shares and Preference Shares.

18

How will the Scheme impact you?

If the Scheme is implemented, some of your Shares will be cancelled and you will receive some FSGL shares. As a result, you will hold fewer Shares and acquire a direct shareholding in FSGL.

18

What is the cancellation and distribution ratio?

The cancellation and distribution ratios are the same for both Ordinary Shares and Preference Shares. They are:

(a) in relation to Ordinary Shares, for every 1,000 Ordinary Shares you hold, 698 will be cancelled and you will receive 327 FSGL shares; and

(b) in relation to Preference Shares, for every 1,000 Preference Shares you hold, 698 will be cancelled and you will receive 327 FSGL shares.

Any fractional entitlements to MCK Shares or FSGL shares after applying the cancellation and distribution ratios will be rounded down to the nearest whole number. Where MCK Shares are not held in a multiple of one thousand, the distribution and cancellation ratios will be applied on a pro rata basis.

18

Who does the Scheme apply to?

If the Scheme is approved, it will apply to you if you hold Ordinary Shares or Preference Shares at the Record/Effective Date, expected to be 6.00pm on 17 July 2014.

Do the Directors recommend that I vote in favour of the Scheme Resolution?

The Directors unanimously recommend that you vote in favour of the Scheme Resolution.

21

How will M&C plc vote on the Scheme Resolution?

M&C plc, through its subsidiary CDLHHNZL, held 70.22% of our Ordinary Shares and 85.18% of our Preference Shares as at 29 May 2014. CDLHHNZL has advised the Directors that it intends to vote all of its Ordinary Shares and Preference Shares in favour of the Scheme Resolution.

21

Whose approval is required for the Scheme to proceed?

The Scheme must be approved by:

(a) holders of Ordinary Shares and holders of Preference Shares by separate special resolutions (each voting as a separate class) at the Special Meeting; and

(b) the Court at the Final Court Hearing.

If the Scheme is approved, it is expected to be implemented at 6.00pm on 17 July 2014.

25-26


1. Questions and answers (continued)

Do I have to pay any cash consideration as part of the Scheme?

No. Shareholders are not required to pay any cash consideration in connection with the Scheme.

18

What is the conclusion of the Independent Adviser?

The Independent Adviser, Grant Samuel, has concluded that the Scheme is in the best interests of Shareholders. We recommend that you read the Independent Adviser’s Report in full (set out in Annexure A of this Booklet).

39

What are the benefits of the Scheme to MCK and its Shareholders?


(a) we believe that to date the market has not adequately priced the value of our investment in FSGL. We believe that distributing FSGL shares to our Shareholders will help to “unlock” that value;

(b) the proposed distribution of FSGL shares under the Scheme will likely be a tax-free return of capital to New Zealand tax resident Shareholders (based on a non-binding ruling from the IRD);

(c) you will obtain a direct rather than indirect interest in FSGL. This will give you the ability to decide whether or not to sell your interest in FSGL and, if you decide to retain your interest in FSGL, decide whether or not you wish to participate in any future rights offers by FSGL;

(d) we will be able to focus on our core New Zealand activities, allowing us to better pursue our New Zealand strategic goals. For example, we are conscious that the impact of the Canterbury earthquakes of 2010 and 2011 continues to affect our core New Zealand activities. In addition, we are undertaking a thorough refurbishment of the Copthorne Hotel Auckland Harbourcity. If the Scheme is implemented, we will be able to prioritise our focus and resources on our New Zealand hotel and land developments;

(e) we will not be subject to further capital calls from FSGL after the Scheme (other than in relation to any immaterial holding of FSGL shares we retain after the Scheme is implemented due to the application of the distribution ratio). This will alleviate pressure on our financial resources and allow us to pursue other investment and growth opportunities; and

(f) we would cease to be subject to foreign tax exposure relating to profit contributions from FSGL (other than in relation to any immaterial holding of FSGL shares we retain after the Scheme is implemented due to the application of the distribution ratio).

21-22

Will my interest as a Shareholder change if the Scheme is implemented?

If the Scheme is implemented, the makeup of your current investment in MCK would change. You would hold fewer Shares in MCK and would acquire a direct shareholding in FSGL (as opposed to your current interest in FSGL, which arises indirectly as a result of your shareholding in MCK). However, because the Ordinary Shares and Preference Shares are being cancelled on a pro rata basis, your proportionate shareholding in MCK will be the same immediately before and after the Scheme is implemented.

18


Why are so many Shares being cancelled?

The Scheme involves an exchange of value - MCK will cancel approximately $1 worth of its Shares for each $1 of FSGL shares that it distributes to Shareholders.

Because MCK is distributing FSGL shares that are expected to have a total aggregate value of approximately $248 million,2 it is cancelling approximately the same aggregate value of Ordinary Shares and Preference Shares. This represented approximately 70% of the aggregate market capitalisation3 of the Ordinary Shares and Preference Shares as at 29 May 2014 (being the latest practicable date prior to the despatch of this Booklet). As a result, approximately 70% of the Ordinary Shares and Preference Shares are being cancelled.

How was the cancellation ratio calculated?

The cancellation ratio has been calculated on the following basis:

(a) the FSGL shares being worth S$1.55 per share. This is the midpoint of the price range set out in the FSGL Preliminary Prospectus;

(b) a Singapore dollar/New Zealand dollar exchange rate of 1.07 (NZ$1.00 = S$1.07);

(c) MCK’s Ordinary Shares being worth $0.68 per share, which was the 20 day volume weighted average price at which Ordinary Shares traded on the NZX Main Board up until and including 29 May 2014, and

(d) the need to treat Ordinary Shares and Preference Shares equally in respect of all distributions.

How was the FSGL share distribution ratio determined?

The FSGL share distribution ratio has been determined by value. As a result, MCK will cancel approximately $1 worth of its Shares for each $1 of FSGL shares that it distributes to Shareholders.

Why is MCK retaining some FSGL shares?

The application of the distribution ratio means that we will retain a small holding of FSGL shares – expected to be approximately 245,000 FSGL shares. As part of FSGL’s listing arrangements, MCK (as a subsidiary of M&C plc, who will be a major shareholder of FSGL upon listing), will be subject to a moratorium under which it will not be able to sell its residual holding of FSGL shares until 6 months after the date on which FSGL is listed on the Singapore Exchange.

2 Based on a price of S$1.55 per FSGL share, being the midpoint of the price range set out in the FSGL Preliminary Prospectus.3 Based on the 20 day volume weighted average price at which Ordinary Shares traded on the NZX Main Board up until and including 29 May 2014, of $0.68 per share.


What alternatives to the Scheme were considered by the Directors?

The principal alternatives to the Scheme that our Board considered were:

(a) selling all or part of our FSGL shares to the existing shareholders of FSGL or to another party; and

(b) retaining our interest in FSGL over the medium term.

However, the Board considers that it is preferable in the circumstances to divest our interest in FSGL directly to Shareholders. In order to be tax efficient for New Zealand Shareholders, a divestment of our interest in FSGL directly to Shareholders could be effected by either a:

(a) share buyback; or

(b) scheme of arrangement.

A scheme of arrangement was preferred as it will enable MCK to dispose of substantially all of its FSGL shares (which is unlikely to be the case under a share buyback).

21

What is the financial impact of the Scheme on MCK?

The principal financial effects of the Scheme will be:

(a) the MCK Group will cease to have a material investment in FSGL;

(b) the MCK Group will cease to receive profit contributions from FSGL going forward (other than in relation to any immaterial holding of FSGL shares we retain after the Scheme is implemented due to the application of the distribution ratio);

(c) there will be a reduction in MCK’s shareholders’ equity due to the cancellation of Shares under the Scheme; and

(d) the number of Shares on issue will reduce, and so any metrics calculated on a per share basis, such as NAV and EPS, will reflect the reduced number of Shares on issue.

Section 2.17 of this Booklet describes the financial impact of the Scheme in more detail.

26-27

What are the tax implications of the Scheme?

MCK has obtained a non-binding ruling from the IRD that the proposed distribution of FSGL shares under the Scheme will be a tax-free return of capital to Shareholders for New Zealand tax purposes. However, depending on your individual circumstances, the cancellation of your Ordinary Shares and Preference Shares (as applicable) could have other tax implications. Following the Scheme, Shareholders will hold foreign shares (namely, FSGL shares), the taxation of which can differ compared to New Zealand shares. We therefore recommend you seek tax advice on your personal circumstances, including foreign tax implications (if any) if you are not a New Zealand tax resident Shareholder.

34



What are the disadvantages of the Scheme?

The principal disadvantages of the Scheme are:

(a) you will receive FSGL shares which will be listed on the Singapore Exchange. As a result, access to information about your investment in FSGL may be more limited, and the procedural steps required to sell your FSGL shares may be more involved, than if the FSGL shares were listed on an NZX market;

(b) if you are a New Zealand resident Shareholder, the value of your interest in FSGL will also be subject to fluctuations in the Singapore dollar/New Zealand dollar exchange rate, as the FSGL shares will be quoted and traded on the Singapore Exchange in Singapore dollars;

(c) our property portfolio would become less diversified as we would no longer have an interest in FSGL (and as a result, would no longer have an interest in the property market in China). As a consequence, we would be more exposed to New Zealand and Australian market conditions;

(d) we would no longer receive any financial benefits from our investment in FSGL (other than in relation to any immaterial holding of FSGL shares we retain after the Scheme is implemented due to the application of the distribution ratio); and

(e) if you are a New Zealand tax resident Shareholder, by holding FSGL shares, you may be subject to New Zealand’s Foreign Investment Fund (FIF) taxation regime (as FSGL is a non-resident company for New Zealand tax purposes).

Our Board believes that the advantages of the Scheme together outweigh these disadvantages of the Scheme.

22

Can Shareholders object to the Scheme?

If you do not support the Scheme, you can vote against the Scheme Resolution at the Special Meeting. As a Shareholder, you also have the right to appear and be heard at the hearing of the application for Final Court Orders if you satisfy the requirements set out in section 2.14 of this Booklet.

There are no other dissent or buyout rights for Shareholders who do not support the Scheme.

If you do not want to participate in the Scheme, you are free to sell your Shares at any time up to and including 14 July 2014 (in order not to be registered as a Shareholder on the Record/Effective Date).

25

What are the implications if the Scheme is not implemented?

If the Scheme is not implemented, the benefits of the Scheme identified by our Board (set out above) will not be realised. In particular, you will retain all your Shares in MCK and you will not receive any shares in FSGL. Other potential consequences are set out in section 2.15 of this Booklet. Apart from these consequences, MCK and its businesses would continue as they exist at the date of this Booklet.

25


What are the overall costs of the Scheme?

The overall costs of the Scheme are expected to be approximately $800,000, the majority of which have been incurred to date and will be paid whether the Scheme is implemented or not.

1.2 Special Meeting


When and where is the Special Meeting?

The Special Meeting will be held at 2.30pm on Thursday, 19 June 2014 at the Copthorne Hotel Auckland City, 150 Anzac Avenue, Auckland.

4

What resolution will be considered at the Special Meeting?

The resolution that will be put to the vote at the Special Meeting (to be voted on by the holders of Ordinary Shares and the holders of Preference Shares, each as a separate class) is the resolution to approve the Scheme set out in the Notice of Meeting (the Scheme Resolution).

4

What is the voting threshold?

For the Scheme to be approved, the holders of Ordinary Shares and the holders of Preference Shares (each voting as a separate class) must approve the Scheme Resolution by a majority of 75% or more of the eligible votes cast.

35

If I hold Ordinary Shares and Preference Shares, can I vote differently on each resolution?

Yes. However, in order for the Scheme to be approved, the Scheme Resolution must be approved by the requisite majority of both the holders of Ordinary Shares and the holders of Preference Shares (each voting as a separate class).

If you hold only Ordinary Shares or Preference Shares, you are only entitled to vote with the relevant class of Shareholders.

35

Who can vote? If you hold Ordinary Shares or Preference Shares at 5.00pm on 17 June 2014, you will be entitled to attend and vote at the Special Meeting.

35

Can I submit a postal vote?

Yes. Further details in relation to postal voting are set out in section 6 of this Booklet and on the Voting/Proxy Form.

35

Where and when do I send my Voting/Proxy Form?

If you wish to submit a postal vote or appoint a proxy in respect of the Special Meeting, you must complete the Voting/Proxy Form and return it to, or lodge it with, the Registrar in accordance with the directions on page 35 of this Booklet. The Voting/Proxy Form must be received by the Registrar no later than 2.30pm on 17 June 2014. If you appoint a proxy, this will not preclude you from attending the Special Meeting in person, revoking that proxy, or voting at the Special Meeting in person.

35

When will the results of the Special Meeting be known?

We will announce the results of the Special Meeting to NZX once the results have been finalised (which we expect will be on the day of the Special Meeting).



1.3 Proposed FSGL IPO


Who is FSGL? FSGL is a Cayman Islands company which develops and owns residential and commercial properties in China. It also provides financing services. We acquired our initial stake in FSGL’s parent company, First Sponsor, in 2007.

29

Why is First Sponsor undertaking the FSGL IPO?

FSGL’s directors consider that the FSGL IPO, if completed, will enhance FSGL’s public image in Singapore and internationally, and will give it better access to further capital to fund its business growth. Listing on the Singapore Exchange will also provide members of the public, FSGL’s employees, FSGL’s business associates and others who have contributed to the success of the First Sponsor group with an opportunity to participate in the equity of FSGL, resulting in, among other things, alignment of employee interests.

29

Why is the Scheme being implemented at the same time as the proposed FSGL IPO?

Our Board believes that implementing the Scheme at the same time as the proposed FSGL IPO is beneficial for Shareholders and the logical time to conduct the Scheme. Assuming the proposed FSGL IPO goes ahead as planned, Shareholders will receive Shares in a Singapore Exchange listed company. This will allow Shareholders to, among other things, buy and sell FSGL shares as they see fit, receive annual reports and other shareholder materials from FSGL and participate in annual meetings of FSGL shareholders. Had the distribution proceeded before the proposed FSGL IPO, MCK Shareholders would have received shares in an unlisted, closely held company.

As part of the Scheme and the proposed FSGL IPO process, MCK Shareholders will also have the advantage of receiving the FSGL Preliminary Prospectus, which contains in-depth information on FSGL, its business operations, financial position and future prospects. Shareholders have previously had to rely on information contained in our annual and half-yearly reports, as well as information disclosed at our annual meetings.

Is First Sponsor or FSGL proposed to be listed on the Singapore Exchange?

First Sponsor’s principal operating subsidiary, FSGL, is the entity that is proposed to be listed on the Singapore Exchange. If the Scheme is implemented and the proposed FSGL IPO proceeds, you will hold FSGL shares which would be listed on the Singapore Exchange.

29

How is it that FSGL is being listed on the Singapore Exchange and not First Sponsor?

Under the First Sponsor Share Exchange, on 31 March 2014 First Sponsor repurchased or redeemed all of the ordinary shares and preference shares in First Sponsor held by certain shareholders of the M&C plc group (including MCK), partly for cash and partly for shares in FSGL held by First Sponsor.

As a result, FSGL shares rather than First Sponsor shares will be listed on the Singapore Exchange if the proposed FSGL IPO proceeds.

6


Will FSGL shares be tradeable on the Singapore Exchange?

Yes. If the Scheme is implemented and the proposed FSGL IPO proceeds, you will be distributed (and will hold) FSGL shares which will be tradeable on the Singapore Exchange.

23

When will I be able to sell my FSGL shares?

You will be able to sell your FSGL shares on the day they are first listed on the Singapore Exchange (expected to be Tuesday, 22 July 2014) unless you elect to receive your FSGL shares as a physical share certificate (in which case you will need to wait until the share certificate is received before you are able to sell your FSGL shares).

23

How can FSGL shares be sold on the Singapore Exchange?

You will be able to sell FSGL shares as follows:

(a) you can elect to sell some or all of your FSGL shares via the Block Sale Facility (as further described in section 2.13 of this Booklet). This is a one-off sale facility, rather than a continuing facility;

(b) if you have an account with an NZX or ASX Member Firm that has a partner firm in Singapore, then you will be able to sell your FSGL shares by instructing that NZX or ASX Member Firm to sell your FSGL shares (and they will in turn instruct their partner firm in Singapore to sell your FSGL shares on the Singapore Exchange); or

(c) if you have an account with a Singapore Exchange Member Firm, you will be able to sell your FSGL shares by instructing that Singapore Exchange Member Firm to sell your FSGL shares.

If you do not elect to participate in the Block Sale Facility and you do not have an account with an NZX or ASX Market Participant that has a partner firm in Singapore or with a Singapore Exchange Member Firm, you will need to set up an account with one of those firms in order to trade your FSGL shares. You will be required to provide certain information to the relevant firm as part of their standard account opening procedures (including satisfying any applicable anti-money laundering requirements).

23-24

When will the final price for the proposed FSGL IPO be set?

We expect the final price for the proposed FSGL IPO to be set on or about 9 July 2014. We expect the final price to be within the range set out in the FSGL Preliminary Prospectus. However, it is possible that, due to the demand for the FSGL shares under the bookbuild process for the proposed FSGL IPO and/or equity market conditions at the relevant time, the final price could be outside of that range.

Will the final price have a material impact on me?

The value of the FSGL shares you are distributed will be approximately the same as the value of your Shares that are cancelled. As a result, the final price for the proposed FSGL IPO should not materially impact you.

What price will I be able to sell my FSGL shares for?

If the proposed FSGL IPO proceeds and you subsequently decide to sell your FSGL shares, the price you receive for those shares will be the market price of those shares at the time of sale (less any transaction costs or foreign exchange conversion costs). This price could be less than, equal to, or more than the final price set for the proposed FSGL IPO.



Could the Scheme be implemented but the proposed FSGL IPO not proceed?

Yes, although the Board believes that this is unlikely. If the Scheme were to proceed but the proposed FSGL IPO was subsequently withdrawn or not completed, you would be distributed shares in FSGL which are not listed on the Singapore Exchange. In such circumstances, there is no guarantee that a market would develop or exist for the FSGL shares, and it may be difficult for you to sell or realise any value for your FSGL shares.

MCK has endeavoured to structure the Scheme in a manner which minimises the chance of the Scheme being implemented but the proposed FSGL IPO not being completed – although it is not possible to eliminate that risk entirely.

32

How can I find out more about First Sponsor, FSGL and the proposed FSGL IPO?

The FSGL Preliminary Prospectus accompanying this Booklet is your primary source of information relating to First Sponsor, FSGL and the proposed FSGL IPO. Some additional information is contained in this Booklet. We recommend that you read this Booklet and the FSGL Preliminary Prospectus in full.

29-31

Why have I been provided with the FSGL Preliminary Prospectus rather than the Final Prospectus?

You have been provided with a preliminary prospectus rather than the final prospectus for the proposed FSGL IPO (the Final Prospectus) due to certain timing constraints arising from the need to implement the Scheme in parallel with the proposed FSGL IPO.

As a result of these timing constraints, it is not possible to provide you with a copy of the Final Prospectus. There is not expected to be any material difference between the FSGL Preliminary Prospectus and the Final Prospectus (other than for information related to the final price for the proposed FSGL IPO).4 Accordingly, our Board does not consider that there is any material disadvantage to you receiving the FSGL Preliminary Prospectus rather than the Final Prospectus.

Will I be notified of any changes between the FSGL Preliminary Prospectus and the Final Prospectus?

You will only be notified of any changes between the FSGL Preliminary Prospectus and the Final Prospectus if the Board considers those changes are material in the context of the Scheme. Details of any changes will be notified by an announcement to NZX.

4 During the period between lodgement of the FSGL Preliminary Prospectus and the registration of the Final Prospectus by the Monetary Authority of Singapore, comments may be received by the Monetary Authority of Singapore necessitating amendments to the FSGL Preliminary Prospectus.


2. Details of the Scheme

This section contains more detailed information on the Scheme. For an overview of the Scheme, the Directors’ recommendation and a summary of the key benefits, risks, disadvantages and tax implications associated with the Scheme, please see section 1 of this Booklet.

2.1 Nature of the Scheme

The Scheme is to be implemented by a scheme of arrangement under Part 15 of the Companies Act. It involves:

(a) the cancellation of approximately 70% of the Ordinary Shares and approximately 70% of the Preference Shares; and

(b) the distribution by MCK of substantially all of our shares in FSGL to the holders of Ordinary Shares and Preference Shares.

2.2 Impact of the Scheme

Impact on Shareholders

If the Scheme is implemented, some of your Shares will be cancelled and you will receive some FSGL shares. As a result, you will hold fewer Shares in MCK (although your percentage shareholding in MCK will not change) and will acquire a direct shareholding in FSGL.

The relevant cancellation and distribution ratios are the same for both Ordinary Shares and Preference Shares.

They are:

• in relation to Ordinary Shares, for every 1,000 Ordinary Shares you hold, 698 will be cancelled and you will receive 327 FSGL shares; and

• in relation to Preference Shares, for every 1,000 Preference Shares you hold, 698 will be cancelled and you will receive 327 FSGL shares.

Any fractional entitlements to MCK Shares or FSGL shares after applying the cancellation and distribution ratios will be rounded down to the nearest whole number. Where MCK Shares are not held in a multiple of one thousand, the distribution and cancellation ratios will be applied on a pro rata basis.

There are no charges or subscription monies payable by Shareholders in connection with the Scheme. If you participate in the Block Sale Facility, certain selling costs will be deducted from the proceeds received from the sale of your relevant FSGL shares. Further details in relation to these selling costs are set out in section 2.13 of this Booklet and in the Election Form.

In terms of value, the Scheme is not intended to have a material effect on the value of your current investment in MCK. In other words, if the Scheme is implemented, the value of your investment should not materially change, however the makeup of that investment would change. This is illustrated in the following examples:5

5 The market prices for MCK Shares and FSGL shares used in the examples are hypothetical. Actual market prices may be higher or lower than those used in the examples.

Holders of Ordinary Shares

Before implementation of the Scheme On implementation of the Scheme

Makeup of investment Value Makeup of investment Value

1,000 Ordinary Shares @ $0.68 per share

$680 302 Ordinary Shares @ $0.68 per share

$205

327 FSGL shares @ S$1.55 per share (assuming a NZ$/S$ exchange rate of 1.07)

$474

Total investment $680 Total investment $679*

As set out in the above table, if you were to hold 1,000 Ordinary Shares at a price of $0.68 per share, then your investment immediately before the implementation of the Scheme would be worth $680, made up entirely of Ordinary Shares. In contrast, on the implementation of the Scheme you would hold 302 Ordinary Shares at $0.68 per share and 327 FSGL shares at S$1.55 per share (or approximately NZ$1.45 per share). Your investment would therefore be worth $679 (assuming a NZ$/S$ exchange rate of 1.07).

* The difference between the total investment before and on implementation of the Scheme is due to rounding.


As set out in the above table, if you were to hold 1,000 Preference Shares at a price of $0.68 per share, then your investment immediately before the implementation of the Scheme would be worth $680, made up entirely of Preference Shares. In contrast, on the implementation of the Scheme you would hold 302 Preference Shares at $0.68 per share and 327 FSGL Shares at S$1.55 per share (or approximately NZ$1.45 per share). Your investment would therefore be worth $679 (assuming a NZ$/S$ exchange rate of 1.07).

Because the Ordinary Shares and Preference Shares are being cancelled on a pro rata basis, your proportionate shareholding in MCK will be the same immediately before and after the Scheme is implemented.

Holders of Preference Shares

Before implementation of the Scheme On implementation of the Scheme

Makeup of investment Value Makeup of investment Value

1,000 Preference Shares @ $0.68 per share

$680 302 Preference Shares @ $0.68 per share

$205

327 FSGL shares @ S$1.55 per share (assuming a NZ$/S$ exchange rate of 1.07)

$474

Total investment $680 Total investment $679*

* The difference between the total investment before and on implementation of the Scheme is due to rounding.


2. Details of the Scheme (continued)

Impact on structure and ownership

Simplified group structure before the Scheme and proposed FSGL IPO

The operating structure and ownership of MCK prior to the Scheme is summarised in the diagram below:

Simplified group structure immediately after the Scheme and proposed FSGL IPO

The impact of the Scheme on the operating structure and ownership of MCK is shown below:

# Interest held through various intermediary companies.* The percentage listed is in respect of FSGL’s economic rights (not FSGL shares).^ Percentages are in respect of MCK Ordinary Shares.

- The percentages in respect of FSGL are approximates only. The final percentages will depend on the number of FSGL shares offered under the FSGL IPO.

# Interest held through various intermediary companies.* The percentage listed is in respect of FSGL’s economic rights (not FSGL shares).^ Percentages in respect of MCK Ordinary Shares.


2.3 Alternatives to the Scheme

The principal alternatives to the Scheme that our Board considered were:

(a) selling all or part of our FSGL shares to the existing shareholders of FSGL or to another party. However, the terms of the indicative proposals we received were not acceptable to the MCK Board (because they would not have created or unlocked value for MCK or Shareholders) and therefore none of those indicative proposals proceeded to formal negotiations; and

(b) retaining our interest in FSGL over the medium term. However, for the reasons outlined in section 2.5 of this Booklet, the Board considers that it is preferable in the circumstances to divest our interest in FSGL directly to Shareholders.

In order to be tax efficient for New Zealand Shareholders, a divestment of our interest in FSGL directly to Shareholders could be effected by either a share buyback or a scheme of arrangement. The reason that our Board preferred a scheme of arrangement rather than a share buyback is that a scheme has only two possible outcomes - that is, it will either be approved or not approved (and if approved, all Shareholders will be bound by it). By contrast, a share buyback will not produce an all or nothing outcome. Commercially, we believe that it is preferable that we dispose of substantially all of our interest in FSGL (i.e. not be left with a material residual interest in FSGL).

2.4 Directors’ recommendation

Our Board unanimously recommends the Scheme and encourages all Shareholders to vote in favour of the Scheme Resolution.

M&C plc, through its subsidiary CDLHHNZL, held 70.22% of our Ordinary Shares and 85.18% of our Preference Shares as at 29 May 2014. CDLHHNZL has advised the Directors that it intends to vote all of its Ordinary Shares and Preference Shares in favour of the Scheme Resolution.

2.5 Rationale for the Scheme

The Board believes that the proposed FSGL IPO is a logical time to evaluate our holding in FSGL. We

are particularly conscious of the likely future capital demands of FSGL as it continues to grow.

After careful consideration, the Board considers that the best option in the circumstances is to give you direct control over your economic interest in First Sponsor by distributing that interest to you. You will then be able to decide for yourself whether or not you wish to retain your interest in FSGL and, if you decide to retain your interest in FSGL, decide whether or not you wish to participate in any future rights offers by FSGL.

Our Board and management are therefore of the opinion that the Scheme is in the best interests of MCK and all Shareholders as a whole.

2.6 Benefits of the Scheme


(a) The Scheme may help “unlock” the value of our investment in FSGL

We believe that to date the market has not adequately priced the value of our investment in FSGL into our Share price. We believe that distributing FSGL shares to our Shareholders will help to “unlock” that value for Shareholders.

(b) The distribution of FSGL shares is likely to be tax free

The proposed distribution of FSGL shares under the Scheme will likely be a tax-free return of capital to New Zealand tax resident Shareholders (based on a non-binding ruling from the IRD).6

(c) You will have a direct rather than indirect interest in FSGL

If the Scheme is implemented and the proposed FSGL IPO proceeds, you will receive FSGL shares which are listed on the Singapore Exchange. Accordingly, you will hold a direct rather than indirect interest in FSGL. This will give you the ability to decide whether or not to sell your interest in FSGL and, if you decide to retain your interest in FSGL, decide whether or not you wish to participate in any future rights offers by FSGL.

(d) We will be able to focus on our core New Zealand activities

If the Scheme is implemented, it will allow us to better focus on our core New Zealand activities. For

6 The tax implications of the Scheme will vary depending on your particular circumstances. You should consult your own tax adviser as to the tax consequences for you, including tax return reporting requirements, applicable tax laws and the effect of any proposed changes in tax laws. Please refer to section 5 of this Booklet for more information.


Millennium Hotel, Rotorua.

example, we are conscious that the impact of the Canterbury earthquakes of 2010 and 2011 continues to affect our core New Zealand activities. In addition, we are undertaking a thorough refurbishment of the Copthorne Hotel Auckland Harbourcity. If the Scheme is implemented, we will be able to prioritise our focus and resources on our New Zealand hotel and land developments. As a result, our Board believes that the Scheme gives us the best opportunity to enhance Shareholder value over time.

(e) We will not be subject to further capital calls from FSGL after the Scheme

If the Scheme is implemented, we would not be subject to further capital calls from FSGL (other than in relation to any immaterial holding of FSGL shares we retain after the Scheme is implemented due to the application of the distribution ratio). This will alleviate pressure on our financial resources and allow us to pursue other investment and growth opportunities.

(f) Our foreign tax exposure would substantially decrease

If the Scheme is implemented, we would cease to be subject to foreign income tax liabilities related to profit contributions and other income from FSGL (other than in relation to any immaterial holding of FSGL shares we retain after the Scheme is implemented due to the application of the distribution ratio). Since 2007, this tax liability has averaged approximately $374,000 per year.

2.7 Disadvantages of the Scheme

The principal disadvantages of the Scheme are:

(a) Your FSGL shares will be listed on a foreign exchange

If the Scheme is implemented and the proposed FSGL IPO proceeds, you will receive FSGL shares which will be listed on the Singapore Exchange. As a result, access to information about your investment in FSGL may be more limited, and the procedural steps required to sell your FSGL shares may be more involved, than if the FSGL shares were listed on an NZX market.

If you are a New Zealand tax resident Shareholder, the value of your interest in FSGL would also be subject to fluctuations in the Singapore dollar/New Zealand dollar exchange rate, as FSGL shares will be quoted and traded on the Singapore Exchange in Singapore dollars.

(b) Our property portfolio will become less diversified

If the Scheme is implemented, our property portfolio will become less diversified as we would no longer have an interest in FSGL (and as a result, will no longer have an interest in the property market in China). As a consequence, we will be more exposed to New Zealand and Australian market conditions.

(c) We will no longer receive any financial benefits from FSGL

If the Scheme is implemented, we will not continue to receive profit contributions and other income from FSGL (other than in relation to any immaterial holding of FSGL shares we retain after the Scheme is implemented due to the application of the distribution ratio). Since 2007, First Sponsor has paid us profit contributions totalling $26 million. We will also lose the ability to share in any further capital growth of FSGL.

(d) You may be subject to New Zealand’s Foreign Investment Fund taxation regime

If the Scheme proceeds, as FSGL is a non-resident company for New Zealand tax purposes, New Zealand investors’ shareholdings in FSGL may be subject to New Zealand’s FIF taxation regime. Depending on your personal circumstances, the Fair Dividend Rate (FDR) method under the FIF regime (discussed further in section 5 of this Booklet) may be applicable to the FSGL shares. This and/or any other taxation liabilities could negatively affect any returns from holding shares in FSGL directly. Investors should seek their own tax advice about the tax treatment of their shareholding in FSGL, if the Scheme proceeds.

You will need to carefully consider how any of the above disadvantages may affect your particular circumstances.

Our Board believes the advantages of the Scheme together outweigh the disadvantages of the Scheme.

2.8 Steps involved in implementing the Scheme

The Scheme is to be implemented by a scheme of arrangement under Part 15 of the Companies Act.

On 19 December 2013, we obtained Initial Court Orders that specify the steps that need to be taken before the High Court will consider whether it will make the Final Court Orders approving the Scheme. The Initial Court Orders are set out in Annexure C of this Booklet.

If the Scheme is approved by Shareholders at the Special Meeting, we will proceed with the application to the High Court for the Final Court Orders. We



Millennium Hotel, Rotorua.

have filed an originating application in the Auckland Registry of the High Court for Final Court Orders approving the Scheme. If the Final Court Orders are granted, the Scheme will be binding on us and all of our Shareholders. In that case, you will be bound by the Scheme whether or not you voted in favour of the Scheme Resolution.

We anticipate the Final Court Orders being obtained on or about 10 July 2014, with the Scheme expected to be implemented on 17 July 2014. Key dates relating to the Scheme are set out on page 5 of this Booklet.

If either holders of Ordinary Shares or holders of Preference Shares (each voting as a separate class) do not approve the Scheme Resolution by the requisite majority, the Scheme will not proceed and we will discontinue the application to the High Court for the Final Court Orders.

2.9 Independent Adviser’s Report

The Independent Adviser, Grant Samuel, has concluded that the Scheme is in the best interests of Shareholders. We recommend that you read the Independent Adviser’s Report in full. The Independent Adviser’s Report is set out in Annexure A of this Booklet.

2.10 Key risks of the Scheme

There are various risks associated with the Scheme.

It is important that, before making any decision on how to vote on the Scheme Resolution, you give consideration to the suitability of the Scheme in light of your investment needs, objectives and financial circumstances. We recommend that you read this Booklet and the FSGL Preliminary Prospectus in their entirety and, if you have any questions in relation to either of those documents or the Scheme generally, consult your NZX Primary Market Participant or sharebroker, accountant or other professional adviser before deciding how to vote on the Scheme Resolution at the Special Meeting.

A description of the key risks of the Scheme is set out in section 4 of this Booklet. In addition, the FSGL Preliminary Prospectus sets out the risks associated with holding shares in FSGL.

2.11 Factors that Shareholders should consider

The factors you should consider in relation to the Scheme include:

• the content of the FSGL Preliminary Prospectus accompanying this Booklet;

• the benefits of the Scheme for you and MCK;

• the disadvantages of the Scheme for you and MCK;

• the implications of the Scheme not going ahead;

• the taxation implications of the Scheme; and

• the key risks associated with the Scheme.

You should also refer to the Independent Adviser’s Report set out in Annexure A of this Booklet.

2.12 Trading of MCK Shares prior to implementation of the Scheme

MCK Shares will continue to trade on the NZX Main Board prior to, during, and after the Scheme is implemented. You will be able to trade Shares in the normal way at any time during this process (unless NZX grants any trading halts in connection with the Scheme process).

An application has been made to NZX for the Ordinary Shares and Preference Shares to move to temporary tickers from the “ex-date” (Tuesday, 15 July 2014) until market close on the Record/Effective Date (Thursday, 17 July 2014). If temporary tickers are approved by NZX, the Ordinary Shares and the Preference Shares will resume under their standard tickers at the opening of trading on Friday, 18 July 2014.

2.13 Trading FSGL shares on the Singapore Exchange

FSGL shares are expected to begin trading on the Singapore Exchange from 1.00pm (9.00am Singapore time) on Tuesday, 22 July 2014.

Accompanying this Booklet is an Election Form which allows you to choose how you wish to treat the FSGL shares you will be distributed if the Scheme is implemented. You will need to complete and sign the form and provide all of the information set out in the Election Form to ensure that your election is valid. You have four options to choose between which are described below:

1 If you have a direct CDP securities account or a sub-securities account with a Singapore Exchange Member Firm, you can have your FSGL shares deposited into that account

Your FSGL shares will be deposited into your direct CDP securities account with the CDP or your sub-securities account held with a Singapore Exchange Member Firm (a sharebroker who is a member of the Singapore


Exchange). You will be able to trade your FSGL shares by instructing your Singapore Exchange Member Firm. You will need to fill in the Election Form with the details of your direct CDP account with the CDP or your sub-securities account with a Singapore Exchange Member Firm.

2 If you have an account with an NZX or ASX Member Firm, you can have your FSGL shares transferred into custody with them

Your FSGL shares will be transferred into custody with your NZX and/or ASX Member Firm. You should be able to trade your FSGL shares by instructing that sharebroker, who will in turn pass your instructions on to a partner firm who is a Singapore Exchange Member Firm and who will execute the trade on your behalf. Any such trade is likely to involve paying brokerage fees to both your NZX or ASX Member Firm as well as their partner firm who is a Singapore Exchange Member Firm.

3 You can receive a physical share certificate for your FSGL shares

You will be posted a share certificate, issued in your name, for your FSGL shares. You can take this share certificate to any sharebroker and they will be able to record these FSGL shares to your account. However, given that the share certificates will be printed no earlier than Tuesday, 22 July 2014, you will not be able to trade your FSGL shares when they are first listed on the Singapore Exchange on that day (due to postage and processing times).

If we do not receive a properly completed Election Form from you before 5.00pm, Thursday 10 July 2014, you will be posted a physical share certificate.

4 You can use the Block Sale Facility whereby your FSGL shares will be sold on the Singapore Exchange once FSGL is listed and the sale proceeds (net of expenses) will be returned to you

You can choose to have some or all of your FSGL shares sold on your behalf through the Block Sale Facility. The aggregate amount of FSGL shares of those Shareholders choosing to use the Block Sale Facility will be sold once FSGL is listed on the Singapore Exchange.

The Block Sale Facility is being administered by Trustees Executors, who is a statutory

trustee company registered with the New Zealand Financial Markets Authority. Trustees Executors will hold your shares in custody as your agent and will sell your relevant FSGL shares on your behalf and will instruct various Singapore Exchange Member Firms to sell the aggregate pool of FSGL shares on behalf of those Shareholders who choose to take up the Block Sale Facility.

If you choose to take up the Block Sale Facility you will pay a total cost of $20 plus 1% of the gross sale proceeds from the sale of your FSGL shares under the Block Sale Facility. This cost is for Trustees Executors’ services, sharebroking, custodial and distribution services. This cost is likely to be lower than your trading costs would be if you sold your individual parcel of FSGL shares through a sharebroker.

In order to minimise undue impact on the FSGL share price, Trustees Executors are allowing up to six weeks for the Block Sale Facility to be completed following FSGL’s shares being listed on the Singapore Exchange. As a result, the Block Sale Facility may run until early September.

All participants in the Block Sale Facility will receive, as the gross sale proceeds, the same price per FSGL share for every share sold under the Block Sale Facility (i.e. the average sale price across all FSGL shares sold under the Block Sale Facility).

Once the Block Sale Facility is complete, your share of the net sale proceeds (the gross sale proceeds less expenses) will be deposited into the bank or brokerage account you have nominated for the payment of dividends in relation to your Ordinary Shares and/or Preference Shares.

Participation in the Block Sale Facility may have New Zealand tax consequences. If the FSGL shares are subject to New Zealand’s FIF taxation regime, a tax liability may arise under the ‘quick sale’ rules in the FDR method on sale of the FSGL shares. If the FIF taxation regime does not apply, gains from sale of the FSGL shares will be taxable if the shares are held on revenue account. Investors should therefore seek their own tax advice about the treatment of their shareholding in FSGL and participation in the Block Sale Facility.



2.14 Shareholder objection rights

If you do not support the Scheme you can vote against the Scheme Resolution at the Special Meeting.

In addition, if you are a Shareholder you may appear and be heard at the application for Final Court Orders, which is expected to occur on 10 July 2014 at the Auckland Registry of the High Court. To do so, you must file a notice of appearance or a notice of opposition (both containing an address for service) and any affidavits or memoranda of submissions on which you intend to rely by 4.00pm on 26 June 2014, and serve a copy on MCK at our address for service as set out at the end of this Booklet. We will serve you at your address for service a copy of the affidavits in support of the application for Final Court Orders by 4.00pm on 3 July 2014.

Any creditor of MCK and any other person claiming to have a proper interest in the Scheme who wishes to appear and be heard on the application for Final Court Orders must file an application for leave to be heard, a notice of opposition (both containing an address for service), any affidavits, and a memorandum of submissions upon which such person intends to rely, by 4.00pm on 26 June 2014 and serve a copy on MCK at our address for service. MCK will serve upon that person at their address for service a copy of the affidavits in support of the application for Final Court Orders by 4.00pm on 3 July 2014.

If the application for Scheme approval is opposed, oppositions will be heard by the High Court on 10 July 2014 unless the Final Court Hearing is adjourned to a later date to be fixed by the High Court.

You may only appear and be heard at the hearing of the application for Final Court Orders if you are:

• a Shareholder who files a notice of appearance or a notice of opposition to the application for Final Court Orders within the required timeframes (set out above); or

• a creditor, other relevant MCK equity security holder or any other person who claims to have an interest in the Scheme who files an application for leave to be heard and a notice of opposition to the application for Final Court Orders within the required timeframes (set out above), and who is subsequently granted leave to appear and be heard at the hearing of the application for Final Court Orders.

There are no other dissent or buyout rights for Shareholders who do not support the Scheme.

If you do not want to participate in the Scheme, you are free to sell your Shares at any time up to and including 14 July 2014 on the NZX Main Board (in order not to be registered as a Shareholder on the Record/Effective Date).

2.15 Implications of the Scheme not proceeding

If the Scheme is not implemented, then the benefits identified by our Board in section 2.6 of this Booklet will not be realised. In particular:

• you will retain all your Shares in MCK and you will not receive any shares in FSGL;

• we will retain our interest in FSGL;

• our foreign tax exposure will remain (since 2007, this tax liability has averaged approximately $374,000 per year);

• our brands may be affected by the uncertainty caused by the Scheme not proceeding;

• our share price may decrease if Shareholders had perceived greater value through implementation of the Scheme and, as a result, sell their Shares; and

• we will have incurred costs, currently expected to be approximately $800,000, without receiving any of the benefits of the Scheme.

Apart from those consequences, MCK and its businesses will continue as they exist at the date of this Booklet.

2.16 Conditions to the implementation of the Scheme

The Scheme is conditional on:

(a) obtaining the requisite approval of the holders of Ordinary Shares and the holders of Preference Shares at the Special Meeting (each voting as a separate class);

(b) the High Court making the Final Court Orders approving the Scheme; and

(c) pursuant to the Initial Court Orders, at or prior to 5.59pm on the Record/Effective Date:

(i) the Board not ceasing to be satisfied that MCK will, immediately after implementation of the Scheme, continue to satisfy the solvency test prescribed by section 4 of the Companies Act 1993 as modified by section 52(4) of the Companies Act 1993;


(ii) FSGL having received a letter of eligibility from the Singapore Exchange for the listing and quotation of the Shares on the Singapore Exchange, and:

A. all conditions imposed by the Singapore Exchange in granting its letter of eligibility having been satisfied or waived by the Singapore Exchange; or

B. to the extent any such condition has not been satisfied or waived by the Singapore Exchange prior to 5.59pm on the Record/Effective Date, FSGL being satisfied that such condition will be satisfied or waived by the Singapore Exchange on or before the date of admission of FSGL on the Singapore Exchange, other than for any conditions that relate to compliance by FSGL with the continuous listing requirements of the Singapore Exchange;

(iii) FSGL having entered into a management and underwriting agreement in respect of the FSGL IPO and such agreement having not been terminated or revoked; and

(iv) there being no stop order in respect of the Final Prospectus issued by the Monetary Authority of Singapore.

If any of these conditions are not satisfied, the Scheme will not proceed.

Shareholder approval

The Initial Court Orders require that, among other things, we obtain approval of the Scheme from holders of Ordinary Shares and holders of Preference Shares (each voting as a separate class) at the Special Meeting.

Shareholder approval is also required under the NZX Main Board Listing Rule 9.1.1 because the Scheme is a major transaction under the NZX Main Board Listing Rules. If the Scheme Resolution is approved by holders of Ordinary Shares, that approval will also constitute approval of the Scheme for the purposes of the NZX Main Board Listing Rule 9.1.1.

The Scheme may also constitute a “major transaction” for the purposes of section 129 of the Companies Act. If the Scheme Resolution is approved by holders of Ordinary

Shares, that approval will also constitute approval of the Scheme for the purposes of section 129 of the Companies Act (to the extent that such approval is required).

The Shareholder approval required in respect of the Scheme is set out in detail in section 6 of this Booklet.

High Court approval

Subject to receiving the required Shareholder approval, the Final Court Hearing to consider the Final Court Orders is scheduled to occur on 10 July 2014 at the High Court in Auckland (unless the hearing is adjourned to a later date fixed by the High Court).

At that time the High Court will decide whether to make the Final Court Orders making the Scheme binding on MCK and all Shareholders.

Assuming the Final Court Orders are granted, implementation of the Scheme is expected to occur at 6.00pm on 17 July 2014, provided that the conditions of the Scheme described above are satisfied.

Regulatory consents

The implementation of the Scheme is not itself conditional on any regulatory approvals – although the proposed FSGL IPO is subject to certain regulatory approvals in Singapore.

2.17 Financial impact of the Scheme

The Scheme will have a financial impact on the MCK Group.

(a) Principal financial effects

The principal financial effects of the Scheme will be:

(i) the MCK Group will cease to have a material investment in FSGL;

(ii) the MCK Group will cease to receive profit contributions from FSGL going forward (other than in relation to any immaterial holding of FSGL shares we retain after the Scheme is implemented due to the application of the distribution ratio);

(iii) there will be a reduction in MCK’s shareholders’ equity due to the cancellation of Shares under the Scheme; and

(iv) the number of Shares on issue will reduce, and so any metrics calculated on a per share basis, such as NAV and EPS,



will reflect the reduced number of shares on issue.

(b) Illustrative impact

For illustrative purposes only, if:

(i) the Scheme had been implemented on 31 December 2013 (but FSGL’s profit contribution to the MCK Group for the financial year ended 31 December 2013 was excluded); and

(ii) our recent rights issue had been concluded, and certain uses of the proceeds from that rights issue applied, on 31 December 2013 (as discussed further in section 2.17(c) below),

then:

(iii) our total assets as at 31 December 2013 would have decreased by $148.5 million, from $719.1 million to $570.6 million. The Scheme by itself would have decreased our total net assets as at that date by $240.3 million;7

(iv) our shareholders’ equity as at 31 December 2013 would have decreased by $128.5 million, from $466.4 million to $337.9 million. The Scheme by itself would have decreased our shareholders’ equity as at that date by $240.3 million;8

(v) our Net Asset Value (NAV)9 backing per share as at 31 December 2013 would have increased by 79.40 cents per share, from 133.42 cents per share to 212.82 cents per share;

(vi) our Net Profit after Tax and Non-controlling Interests for the financial year ended 31 December 2013 would have decreased by $9.2 million, from $27.1 million to $17.9 million; and

(vii) our Earnings per Share (EPS)10 for the financial year ended 31 December 2013 would have increased by 3.53 cents per

Share, from 7.76 cents per Ordinary Share to 11.29 cents per Share.

(c) Assumptions

The financial information set out in section 2.17(b) above is based on the following assumptions:

(i) MCK’s financial position as at, and for the financial year ended, 31 December 2013 has been adjusted for the following events which have occurred after 31 December 2013:

(A) the $111.8 million raised under MCK’s recent rights issue, which was completed on 24 March 2014. 174,634,366 Preference Shares were issued under that rights issue;

(B) MCK invested $59.3 million in First Sponsor on 26 March 2014 in relation to its most recent capital call. MCK was issued with 50,134,440 preference shares in First Sponsor under that capital call. The transaction involved the conversion of the relevant funds from New Zealand dollars into Singapore dollars using a New Zealand dollar/Singapore dollar exchange rate of approximately 1.07;

(C) $20.0 million of the remaining proceeds from MCK’s rights issue were used to repay some of MCK’s bank debt on 27 March 2014; and

(D) the remaining proceeds from the rights issue (net of transaction costs) were placed on term deposit on 27 March 2014, pending application for repayment of further bank debt and for MCK’s hotel refurbishment programme; and

(ii) The distribution of the FSGL shares is assumed to occur at a New Zealand dollar/Singapore dollar exchange rate of 1.07, a

7 The $148.5 million decrease in total assets is made up of the proceeds from issuing the Preference Shares of $111.8 million less repayment of bank debt of $20.0 million and less distributions of $240.3 million under the Scheme.

8 The $128.5 million decrease in shareholders’ equity is made up of the proceeds from issuing the Preference Shares of $111.8 million less distributions of $240.3 million under the Scheme.

9 NAV is computed for MCK shareholders and excludes non-controlling interests.10EPS is computed for MCK shareholders and excludes non-controlling interests.


FSGL price at S$1.55 per share, and the cancellation of the MCK Shares at $0.68 per Share.

(d) Further analysis by the Independent Adviser

Further analysis of the likely financial impacts of the Scheme is included in the Independent Adviser’s Report set out in Annexure A of this Booklet. That analysis includes Grant Samuel’s assessment of the likely impact of the Scheme on MCK’s EPS and NAV.

2.18 Tax implications of the Scheme

The tax implications of the Scheme will vary depending on your particular circumstances. We have sought, and received, confirmation from the IRD that the Scheme will not result in a taxable dividend to New Zealand tax resident Shareholders, on distribution of the FSGL shares. However, this view is non-binding on the New Zealand Commissioner and Shareholders’ personal circumstances could also ultimately impact on the tax treatment.

You should consult your own tax adviser as to the tax consequences for you, including tax return reporting requirements, applicable tax laws and the effect of any proposed changes in tax laws. A general summary of the tax implications of the Scheme is set out in section 5 of this Booklet.

2.19 Residual holding of FSGL shares and moratorium

The application of the distribution ratio means that we will retain a small holding of FSGL shares – expected to be approximately 245,000 FSGL shares. As part of FSGL’s listing arrangements, MCK (as a subsidiary of M&C plc, a major shareholder of FSGL upon listing), will be subject to a moratorium under which it will not be able to sell its residual holding of FSGL shares until 6 months after the date on which FSGL is listed on the Singapore Exchange.

2.20 Share transfer authorisation

Under the terms of the Scheme, if the Scheme is approved, each Shareholder will be deemed to have authorised MCK, FSGL, their respective directors, and any other person nominated by either MCK or FSGL, on that Shareholder’s behalf, to complete and execute any instrument of transfer, and take all other actions which are reasonably necessary, to transfer the FSGL shares to that Shareholder and effect the distribution of FSGL shares under the Scheme.



The FSGL Preliminary Prospectus accompanying this Booklet is your primary source of information relating to First Sponsor, FSGL and the proposed FSGL IPO. Some additional information relating to First Sponsor, FSGL and the proposed FSGL IPO is contained in this Booklet and therefore we recommend that you read this Booklet and the FSGL Preliminary Prospectus in full.

3.1 Background

FSGL is a property development company that has built up a strong track record in Southern and Western China. We hold 31.4% of the shares in FSGL as at the date of this Booklet.

FSGL is incorporated in the Cayman Islands. It is led by an experienced management team that has a proven track record in growing and expanding its business and operations. Under its management team, FSGL has progressed to undertake property development projects on a larger scale. Its management team has also successfully expanded the scope of FSGL’s business from property development to include property holding and property financing.

FSGL aims to maintain a balanced portfolio of residential and commercial properties under development which it markets for sale, as it grows its portfolio of income-producing properties and its property financing business to provide income stability. Its current property portfolio comprises primarily residential and commercial developments in tier-two cities in China, namely, Chengdu (in Sichuan Province, Western China) and Dongguan (in Guangdong Province, Southern Eastern China).

FSGL’s future plans are to continue to grow its property development business in Chengdu and Dongguan, which are both expected to benefit from the Chinese government’s urbanisation drive. FSGL will continue to seek opportunities to acquire new sites for development in both Chengdu and Dongguan to provide a gradually growing development pipeline for its property development business. FSGL intends to continue searching for additional sites for development so that it will be well placed and ready to capitalise on suitable development opportunities.

3.2 FSGL IPO

FSGL’s directors consider that the FSGL IPO, if completed, will enhance FSGL’s public image in Singapore and internationally, and will give it better access to further capital to fund its business growth. Listing on the Singapore Exchange will also provide members of the public, FSGL’s employees, FSGL’s business associates and others who have contributed to the success of the First Sponsor group with an opportunity to participate in the equity of FSGL, resulting in, among other things, alignment of employee interests.

3.3 FSGL at a glance

The following table sets out certain key information about FSGL.

Key information

Incorporation date 24 September 2007

Registered address Clifton House 75 Fort Street George Town PO Box 1350 Grand Cayman KY1-1108

Principal place of operations Singapore

Principal business Property development, property holding and property financing.

Principal place of property holdings Chengdu, Sichuan Province, Western China and Dongguan, Guangdong Province, Southern China.

3. Overview of FSGL


Key information

Directors • Mr Wong Hong Ren• Mr Ho Han Leong Calvin• Mr Ho Han Khoon Alvin (alternate director to

Mr Ho Han Leong Calvin)• Mr Neo Teck Pheng• Ms Ting Ping Ee, Joan Maria• Mr Yee Chia Hsing• Mr Hwang Han-Lung Basil

Major shareholding interests FSGL Immediately prior to the Scheme and the proposed FSGL IPO• Tai Tak group (approximately 47.7% of FSGL’s

economic rights)• M&C plc (14.8% of the FSGL shares)• MCK (31.4% of the FSGL shares)

Immediately after the Scheme and proposed FSGL IPO• Tai Tak group (approximately 42.7% of FSGL’s

economic rights)• M&C plc (34.4% of the FSGL shares)Further details in relation to these shareholding interests are set out on page 143 of the FSGL Preliminary Prospectus.

Dividend policy Intended total dividend to shareholders of S$10.0 million, adjusted on a pro rata basis, for the period from FSGL’s listing to 31 December 2014. Thereafter FSGL intends to maintain a stable payout of S$10.0 million per financial year, with a steady growth when appropriate, subject to the successful implementation of its strategy and prevailing financial, competitive, regulatory, general economic conditions and other factors, including applicable laws and regulations, that may be specific to FSGL or specific to its industry.

Proposed listing date 1.00pm on 22 July 2014 (being 9.00am Singapore time)

Total equity S$455,880,000 (as at 31 December 2013)

Adjusted appraised net asset value S$1,209,704,000 (immediately after the proposed FSGL IPO is completed)

Consolidated profit for the year ended 31 December 2013 S$47,631,000 (net of non-controlling interest)

3. Overview of FSGL (continued)


3.4 Where can I find more information on First Sponsor, FSGL and the proposed FSGL IPO?

The FSGL Preliminary Prospectus accompanying this Booklet is your primary source of information relating to First Sponsor, FSGL and the proposed FSGL IPO. The following table sets out where certain relevant information can be found in the FSGL Preliminary Prospectus.

Section Page number in the FSGL Preliminary Prospectus

Details of the listing of FSGL Page 28

General summary of FSGL, its business, financial position, strengths, strategies and contact details

Page 35

Risk factors Page 49

Use of proceeds and issue expenses Page 91

Selected consolidated financial information Page 95

Dividend policy Page 137

General information on the FSGL group Page 140

Industry overview Page 159

History of FSGL and its business Page 191

Directors, management and staff Page 264

Interested person transactions and conflicts of interest Page 303

General and statutory information Page 317

3.5 Financial Statements

If the Scheme and the proposed FSGL IPO are completed, you will receive FSGL shares which will be listed on the Singapore Exchange. It is important to note that the financial reporting requirements applying in New Zealand and those applying to FSGL in Singapore may be different and the financial statements of FSGL may not be compatible in all respects with financial statements prepared in accordance with New Zealand law. In addition, FSGL may not be subject in all respects to New Zealand law.


4.1 Introduction

There are various risks associated with the Scheme.

The summary of risks presented below is not exhaustive. This Booklet does not take account of your personal circumstances, financial position or investment requirements. It is important that, before making any investment decision, you give consideration to the implications of the Scheme on you in light of your investment needs, objectives and financial circumstances. You should read this Booklet and the FSGL Preliminary Prospectus (particularly the section entitled “Risk Factors”) in their entirety and, if you have any questions relating to this Booklet or the Scheme generally, consult your NZX Primary Market Participant or sharebroker, accountant or other professional adviser.

The FSGL Preliminary Prospectus sets out the risks associated with the proposed FSGL IPO and holding FSGL shares.

4.2 Key risks under the Scheme

(a) The proposed FSGL IPO may not proceed

While we expect the proposed FSGL IPO to proceed and that FSGL will be listed on the Singapore Exchange, there is a risk that the proposed FSGL IPO is withdrawn or not completed. For example, Singapore securities laws provide that under certain circumstances, the Monetary Authority of Singapore may direct a company which has registered its prospectus for a public offering of its shares not to allot, issue or sell such shares. If FSGL were to receive such a direction, it would have an adverse effect on the viability of the proposed FSGL IPO and may lead to the proposed FSGL IPO being substantially delayed or not proceeding at all. If the Scheme proceeds but the proposed FSGL IPO is subsequently withdrawn or not completed, you may be distributed shares in FSGL which are not listed on the Singapore Exchange. In such circumstances there is no guarantee that a market would develop or exist for the FSGL shares or their value, and it may be difficult for you to sell or realise any value for your shares in FSGL.

Whether equity market conditions will be suitable for the proposed FSGL IPO to occur within the targeted timeframe, and whether the FSGL IPO will be able to be completed at a value that is acceptable to its shareholders, are other factors which may impact on the proposed FSGL IPO and these factors are outside of our control (and FSGL’s control). The completion of a successful FSGL IPO will depend upon (among other

things) equity market conditions at the relevant time, the progress FSGL has made in the implementation of its business plan and investor interest in, and demand for, shares in FSGL.

(b) New Zealand taxation risks

The tax implications of the Scheme will vary depending on your particular circumstances. While we have sought, and received, confirmation from IRD that the distribution of FSGL shares under the Scheme will not result in a taxable dividend to New Zealand tax resident Shareholders, this view is non-binding on the New Zealand Commissioner. Your personal circumstances could also ultimately impact on the tax treatment of any FSGL shares held by you.

If the Scheme proceeds, as FSGL is a non-resident company for New Zealand tax purposes, New Zealand investors’ shareholdings in FSGL may be subject to New Zealand’s FIF taxation regime. Depending on your personal circumstances, the FDR method under the FIF regime may be applicable to the FSGL shares. This and/or any other taxation liabilities could negatively affect any returns from holding shares in FSGL directly. Investors should seek their own tax advice about the tax treatment of their shareholding in FSGL, if the Scheme proceeds.

(c) FSGL shares may decrease in value following the proposed FSGL IPO

If the proposed FSGL IPO and Scheme are completed, you will receive shares in FSGL. There is, however, a risk that you may be unable to realise value from a shareholding in FSGL. This could happen for a number of reasons, including:

• the price at which a FSGL share can be sold being less than the initial value of the FSGL share at the time of its distribution under the Scheme;

• if for any reason you are unable to trade your FSGL shareholding on the Singapore Exchange (for example if you are unable to open the relevant securities account and/or trading account);

• the market for FSGL shares being illiquid or ceasing to exist;

• unfavourable changes to the exchange rate between your local currency and the Singapore dollar. As the FSGL shares are proposed to be listed and traded on the Singapore Exchange in Singapore dollars, the value of your investment

4. Key risks of the Scheme


in FSGL shares may be affected by any movement in the cross exchange rate between the Singapore dollar and your local currency; or

• FSGL’s business circumstances changing significantly, such that you could receive none, or only some, of the initial value of your shareholding in FSGL.

Further, you will continue to be exposed to risks associated with the trading performance of the FSGL business, albeit that your exposure will be a direct exposure rather than indirectly through your investment in MCK. Those risks are set out in the FSGL Preliminary Prospectus.


5.1 Introduction

The information set out in this section is not tax advice in relation to any Shareholder’s specific circumstances. The summaries below are intended as a general guide only and do not represent a complete analysis of all potential tax implications. The tax implications of the Scheme will vary depending on your particular circumstances. You should consult your own tax adviser as to the tax consequences for you, including tax return reporting requirements, applicable tax laws and the effect of any proposed changes in tax laws.

5.2 General

This section gives you a guide to the general tax position of Shareholders in relation to the Scheme based on legislation current at the date of this Booklet. The commentary is only a summary of certain tax consequences based on current law and practice of New Zealand. This Booklet does not contain a discussion of the possible tax implications of the Scheme for Shareholders who are tax residents of any jurisdiction other than New Zealand.

5.3 Treatment of the cancellation of your Shares

If the Scheme is implemented, some of your Shares will be cancelled. You will receive shares in FSGL from MCK in consideration for that cancellation.

No part of the transfer of FSGL shares affected under the Scheme is expected to be regarded as a dividend for New Zealand tax purposes. We have applied to the Commissioner of the Inland Revenue Department (New Zealand Commissioner) for, and received, confirmation that the FSGL shares transferred as part of the Scheme will not be viewed as being in lieu of a dividend. While this view is not binding on the New Zealand Commissioner, it should mean the distribution of FSGL shares does not give rise to a taxable dividend for New Zealand tax resident Shareholders.

New Zealand does not have a general purpose capital gains tax. However, the cancellation of shares by a company can give rise to a taxable event if, a shareholder who is in the business of dealing in shares, acquired the shares for the purpose of resale, or as part of a scheme or arrangement to derive a profit.

If you fall within any of the above “revenue account” categories, the value of the FSGL shares you receive may need to be included in your annual tax return as gross income. If the value of the FSGL shares you receive is treated as gross income, a deduction should be available for the proportionate cost to you of acquiring the cancelled Shares.

5.4 Treatment of the distribution of shares in FSGL

As noted above, MCK has received a non-binding view from the New Zealand Commissioner that the distribution of FSGL shares will not be a dividend for New Zealand tax purposes. However, if the cancelled shares are held on revenue account by an investor, there may be taxable income (or a loss) which needs to be returned.

5.5 New Zealand tax consequences of holding and trading shares on the Singapore Exchange

Shareholdings in FSGL held by New Zealand tax residents may be subject to New Zealand’s FIF taxation regime, as FSGL is a foreign company. If the FIF taxation regime applies, depending on your personal circumstances, the FDR method under the FIF regime may be applicable to the FSGL shares. If the FDR method applies, your New Zealand taxable income from the FSGL shares will be equal to a tax of 5% of the market value of the FSGL shares, each year. Dividends and capital gains are not separately taxable if the FDR method applies. For New Zealand investors that are individuals, or who hold the FSGL shares through a family trust, the New Zealand taxable income under the FIF taxation regime will be the lesser of income calculated under the FDR method (see above) and the actual return on the FSGL shares during the year (being any distributions received and the movement in the value of the shares).

If the FIF taxation regime does not apply, shareholders will be taxable on dividends and (if the FSGL shares are held on revenue account) gains from selling or otherwise disposing of the FSGL shares. The FIF taxation regime will not be applicable to you if you are an individual investor and the total cost of all your offshore share investments, including the FSGL shares, is NZ$50,000 or less (unless you have elected for the FIF taxation rules to apply to those investments).

Investors who sell the FSGL shares in the year in which they acquire those shares under the Scheme (e.g. under the Block Sale Facility) may have a tax liability under the FIF rules – i.e. under the ‘quick sale’ rules in the FDR method – or, if the FIF taxation regime does not apply, any gains from the sale of the FSGL shares will be taxable if the shares are held on revenue account.

Investors should seek their own tax advice about the tax treatment of their shareholding in FSGL if the Scheme proceeds.

5. Tax implications of the Scheme


6. Shareholder approvals

6.1 Required approvals

Pursuant to the Initial Court Orders, at the Special Meeting, holders of Ordinary Shares and holders of Preference Shares (each as a separate class) will be asked to vote to approve the Scheme Resolution. In order to approve the Scheme, the Scheme Resolution must be approved by 75% or more of the votes cast by both holders of Ordinary Shares and holders of Preference Shares (each voting as a separate class) eligible to vote and voting.

Shareholder approval is also required under NZX Main Board Listing Rule 9.1.1 because the Scheme is a major transaction under the NZX Main Board Listing Rules. If the Scheme Resolution is approved by holders of Ordinary Shares, that approval will also constitute approval of the Scheme for the purposes of NZX Main Board Listing Rule 9.1.1.

The Scheme may also constitute a “major transaction” for the purposes of section 129 of the Companies Act. If the Scheme Resolution is approved by holders of Ordinary Shares, that approval will also constitute approval of the Scheme for the purposes of section 129 of the Companies Act (to the extent that such approval is required).

We will not implement the Scheme unless the Scheme Resolution is approved by the requisite majority of both holders of Ordinary Shares and holders of Preference Shares.

6.2 Entitlement to vote

If you are recorded on our register of Shareholders at 5.00pm on 17 June 2014, you will be entitled to attend and vote at the Special Meeting.

You do not have to vote, but our Board believes that the Scheme is important to all Shareholders, and encourages you to vote. If the Scheme is approved, it will be implemented and will apply to you even if you do not vote, or if you vote against the Scheme.

6.3 Voting

If you wish to vote at the Special Meeting, you may vote:

• in person;

• by proxy;

• by casting a postal vote; or

• if you are a corporate shareholder, by corporate representative.

Voting in person

If you wish to vote in person, you should attend the Special Meeting and bring the Voting/Proxy Form to facilitate admission to, and voting at, the Special Meeting.

Voting by proxy

If you wish to appoint a proxy in respect of the Special Meeting, you must complete and sign the Voting/Proxy Form and send it to the Registrar in accordance with the directions below.

If you appoint a proxy you may either direct your proxy how to vote for you or you may give the proxy discretion to vote as he or she sees fit. If you wish to give your proxy discretion, then you must mark the appropriate box or boxes on the Voting/Proxy Form to grant your proxy that discretion.

The appointment of a proxy will not preclude you from attending in person, revoking a proxy, or voting at the Special Meeting in person. A proxy does not have to be a Shareholder. You may appoint the Chairman of the Special Meeting, or any other person, to act as a proxy.

Casting a postal vote

If you wish to cast a postal vote, you should indicate how you wish to vote on the Scheme Resolution in the “Voting” section of the Voting/Proxy Form and sign the Voting/Proxy Form before sending it to the Registrar in accordance with the directions below.

Voting by corporate representative

If you are a company and wish to appoint a representative to attend the Special Meeting on your behalf, you must appoint a corporate representative in the same manner as appointing a proxy (as set out above).

Lodging your Voting/Proxy Form

The Voting/Proxy Form accompanies this Booklet.

If you do not propose to attend the Special Meeting but wish to be represented by proxy or cast a postal vote, complete and sign the Voting/Proxy Form and do one of the following:

• return the Voting/Proxy Form by mail to the Registrar, Computershare Investor Services Limited, Private Bag 92119, Auckland 1142, using the freepost envelope enclosed;

• lodge your postal vote or proxy appointment online at www.investorvote.co.nz. You will be required to enter the control number, and then


your CSN/security holder number and postcode or country of residence (if outside New Zealand) and follow the instructions on the website. Please note that there is a separate control number for voting in relation to Ordinary Shares and voting in relation to Preference Shares.

• or fax the Voting/Proxy Form to 09 488 8787 (within New Zealand) or +64 9 488 8787 (international).

The completed Voting/Proxy Form must be received by the Registrar no later than 2.30pm on 17 June 2014.

A proxy granted by a company must be signed by a duly authorised officer or attorney. Persons who sign on behalf of a company must be acting with that company’s express or implied authority.

When the Voting/Proxy Form is signed by an attorney, the power of attorney under which it is signed, if not previously provided to MCK, and a completed certificate of non-revocation of authority must accompany the signed Voting/Proxy Form.

6.4 Opposition to the Scheme

If you do not support the Scheme you can vote against the Scheme at the Special Meeting. As a Shareholder you also have the right to appear and be heard at the Final Court Hearing. See section 2.14 of this Booklet for further details.

You have no other dissent or buy-out rights if you do not support the Scheme.

If you do not want to participate in the Scheme, you are free to sell your Shares at any time up to and including 14 July 2014 (in order not to be registered as a Shareholder on the Record/Effective Date).

6. Shareholder Approvals (continued)


7. Glossary

A reference in this Booklet to “we”, “us” or “our” is a reference to Millennium & Copthorne Hotels New Zealand Limited, or to the MCK Group, as the context requires.

The following definitions apply throughout this Booklet unless the context requires otherwise:

Block Sale Facility the block sale facility administered by Trustees Executors described in section 2.13 of this Booklet.

Booklet this notice of meeting and information booklet dated 4 June 2014.

Board or Directors the board of directors of MCK.

CDLHHNZL CDL Hotels Holdings New Zealand Limited.

CDP The Central Depository (Pte) Limited (of Singapore).

China The People’s Republic of China.

Companies Act the Companies Act 1993 (NZ).

Election Form the form accompanying this Booklet which allows Shareholders to choose how they wish to treat their FSGL shares distributed to them under the Scheme.

FDR the Fair Dividend Rate method under New Zealand FIF rules.

FIF New Zealand’s Foreign Investment Fund taxation regime for foreign shares.

Final Court Hearing the final hearing of the High Court in respect of the Scheme, which is expected to take place on 10 July 2014.

Final Court Orders the final orders of the High Court in respect of the Scheme made under Part 15 of the Companies Act 1993.

Final Prospectus the final prospectus that is to be registered with the Monetary Authority of Singapore under which the proposed FSGL IPO is made.

First Sponsor First Sponsor Capital Limited.

First Sponsor Share Exchange the selective share repurchase and redemption exercise completed by First Sponsor as described on page 6 of this Booklet.

FSGL First Sponsor Group Limited.

FSGL Preliminary Prospectus the preliminary prospectus accompanying this Booklet relating to the proposed FSGL IPO.

FSGL IPO the proposed IPO and listing of FSGL on the Singapore Exchange.

Independent Adviser Grant Samuel & Associates Limited.

Independent Adviser’s Report the independent report prepared by Grant Samuel set out in Annexure A of this Booklet.

Initial Court Orders the initial orders of the High Court relating to the Scheme dated 19 December 2013, as set out in Annexure C of this Booklet.

IPO initial public offering.

IRD the New Zealand Inland Revenue Department.

MCK or the Company Millennium & Copthorne Hotels New Zealand Limited.

MCK Group MCK and its subsidiaries from time to time.

M&C plc Millennium & Copthorne Hotels plc.

Notice of Meeting the notice of the Special Meeting set out on page 4 of this Booklet.

New Zealand Commissioner the Commissioner of the IRD.


NZX Main Board the main board equity security market operated by NZX.

NZX Main Board Listing Rules the listing rules of the NZX Main Board.

NZX NZX Limited.

NZX Market Participant any person designated as a primary market participant by NZX.

Ordinary Shares the fully paid ordinary shares in MCK.

Preference Shares the fully paid redeemable preference shares in MCK.

Record/Effective Date the date fixed for determining participation in the Scheme and when the Scheme takes effect, expected to be 6:00 p.m. on 17 July 2014.

Registrar Computershare Investor Services Limited.

Scheme the scheme of arrangement described in section 2 of this Booklet, and the key elements of which are described in the Scheme Plan.

Scheme Plan the plan for the Scheme contained in Annexure B of this Booklet, subject to any amendments or variations made in accordance with the Initial Court Orders, the Final Court Orders, and/or required by the High Court.

Scheme Resolution the resolution to approve the Scheme to be considered by each of the holders of Ordinary Shares and the holders of Preference Shares (each as a separate class) at the Special Meeting, as set out in the Notice of Meeting.

Securities Act the Securities Act 1978 (NZ).

Securities Regulations the Securities Regulations 2009 (NZ) made pursuant to the Securities Act.

Share an Ordinary Share or a Preference Share (as the context requires).

Shareholder a holder of Ordinary Shares and/or Preference Shares in MCK (as the context requires).

Singapore Exchange Singapore Exchange Securities Trading Limited.

Singapore Exchange Member Firm a sharebroking firm in Singapore that is a member of the Singapore Exchange.

Special Meeting the special meeting of Shareholders (and any adjournment of that meeting) held pursuant to an order of the High Court to consider, and if thought fit, approve the Scheme Resolution.

Tai Tak Tai Tak Estates Sendirian Berhad.

Trustees Executors Trustees Executors Limited.

Voting/Proxy Form the postal voting and proxy form for the Special Meeting which accompanies this Booklet.

S$ Singapore Dollars, being the lawful currency of Singapore.

US$ US Dollars, being the lawful currency of the United States of America.

$ New Zealand Dollars, being the lawful currency of New Zealand.

7. Glossary (continued)

Annexure A: Independent Adviser’s Report

Millennium & Copthorne Hotels New Zealand Limited

Independent Report in relation to the proposed

in-specie distribution of its interest in First Sponsor

Group Limited

May 2014

LEVEL 31, VERO CENTRE, 48 SHORTLAND STREET, PO BOX 4306, AUCKLAND 1140

T: +64 9 912 7777 F: +64 9 912 7788

WWW.GRANTSAMUEL.CO.NZ

MILLENNIUM & COPTHORNE

INDEPENDENT REPORT

1

Table of Contents

1. Details of the Proposed Capital Return 3

1.1 Background 3 1.2 Details of the Proposed Capital Return 4

2. Scope of the Report 5

2.1 Purpose of the Report 5 2.2 Basis of Evaluation 5

3. Profile of MCK 6

3.1 Background 6 3.2 Operations 6 3.3 Capital Requirements 7 3.4 Financial Performance 8 3.5 Financial Position 9 3.6 Cash Flows 10 3.7 Capital Structure and Ownership 11 3.8 Share Price Performance 12

4. Profile of First Sponsor and FSGL 13

4.1 Background 13 4.2 Financial Performance 14 4.3 Financial Position 15 4.4 Initial Public Offering 16

5. Impact of the Proposed Capital Return 17

5.1 Impact on Structure and Ownership 17 5.2 MCK 18 5.3 First Sponsor Group Limited 20

6. Evaluation of the Proposed Capital Return 21

6.1 Overview of the Proposed Capital Return 21 6.2 Overview of MCK and FSGL 22 6.3 Effects of the Proposed Capital Return 22 6.4 Benefits of the Proposed Capital Return 25 6.5 Disadvantages of the Proposed Capital Return 26 6.6 Voting for or against the Proposed Capital Return 26

Appendix A – Qualifications, Declarations and Consents 27


INDEPENDENT REPORT

2

Glossary

Term Definition

Aberdeen Aberdeen Asset Management Asia Limited

Block Sale Facility The block sale facility administered by Trustees Executors Limited described in section

2.13 of MCK scheme booklet in relation to the Proposed Capital Return

CDL Investments CDL Investments New Zealand Ltd, an NZX listed entity

CDLHHNZL CDL Hotels Holdings New Zealand Ltd, the subsidiary of M&C plc that owns the 70.22%

shareholding in MCK.

EBIT Earnings before interest and tax

EBITDA Earnings before interest, tax, depreciation and amortisation

FIF Foreign Investment Fund regime

First Sponsor First Sponsor Capital Limited

FSGL First Sponsor Group Limited

FSGL IPO Initial Public Offering of FSGL

Grant Samuel Grant Samuel & Associates Limited

IPO Initial Public Offering

Kingsgate International Kingsgate International Corporation

M&C plc Millennium & Copthorne plc, a London Stock Exchange listed entity

MCK Millennium & Copthorne Hotels New Zealand Limited, an NZX listed entity

MCHNZ Investments MCHNZ Investments Limited

NAV Net Asset Value

NZX New Zealand Stock Exchange

Proposed Capital Return The proposed in-specie distribution of shares in First Sponsor Group Limited to MCK

shareholders.

SGX Singapore Stock Exchange


INDEPENDENT REPORT

3

1. Details of the Proposed Capital Return

1.1 Background

Millennium & Copthorne Hotels New Zealand Limited (MCK or the Company) is a major hotel owner and operator

based in New Zealand that is listed on the New Zealand Stock Exchange (NZX). The Company owns, leases and

franchises 23 hotels across New Zealand trading under the Millennium, Copthorne and Kingsgate brands. In

addition to the hotel portfolio, MCK has property interests in China through a 31.4% shareholding in First Sponsor

Group Limited (FSGL), a property development company that operates and undertakes property development in

Southern and Western China. MCK also owns a 67% shareholding in CDL Investments Ltd (CDL Investments), a

company listed on the NZX that focuses on residential land development. MCK also has minor property interests in

Australia.

A number of interlinked initiatives and events are occurring within MCK and its associated companies. The primary

initiatives are:

MCK recently completed a renounceable rights issue of redeemable non-voting preference shares to its ordinary

shareholders which has raised the maximum NZ$111.8 million. The issue of redeemable non-voting preference

shares to eligible MCK shareholders was effected by offering shareholders 1 MCK preference share for every 2

MCK ordinary shares held;

First Sponsor Capital Limited (First Sponsor) recently undertook a capital raising for approximately $NZ177

million of which approximately NZ$60 million has been contributed by MCK as one of the major shareholders;

On 31 March 2014, First Sponsor undertook a corporate reorganisation under which some of the shareholdings

in First Sponsor were exchanged for shareholdings in FSGL (the First Sponsor Share Exchange). As part of

that reorganisation, all of the shares in First Sponsor held by MCK were exchanged for shares in FSGL, the

principal operating subsidiary of First Sponsor. In addition, 25.9 million new First Sponsor shares were issued to

certain First Sponsor management to enable those individuals to have equity participation in FSGL. Following

the First Sponsor Share Exchange, the dilutionary impact of the issue of new FSGL shares to First Sponsor

management and the IPO means that MCK expects to hold approximately 28.1% of the shares in FSGL;

First Sponsor is planning to undertake an initial public offering (IPO) of FSGL on the Singapore Stock Exchange

(SGX) in mid 2014. First Sponsor has a 98.7% shareholding in FSGL; and

MCK is proposing to undertake a return of capital whereby substantially all of MCK’s investment in FSGL would

be distributed to MCK’s shareholders (including holders of any newly issued preference shares) under a

Proposed Capital Return. The Proposed Capital Return would not involve a cash component and will take

place prior to the FSGL IPO. MCK intends to distribute its holding of shares in FSGL to its shareholders on a

pro-rata basis in exchange for cancellation of a given number of its issued Ordinary Shares and Preference

Shares in MCK. On completion of the Proposed Capital Return, MCK Group would not have a material

shareholding in either First Sponsor or FSGL.

The above events are interlinked. The issue of redeemable preference shares by MCK was undertaken primarily to

raise funds to allow MCK to participate in the First Sponsor capital raising. The exchange of shares in First Sponsor

for shares in FSGL was to enable MCK’s ownership in FSGL to be distributed to MCK shareholders. Collectively, if

implemented as planned, the transactions have the effect of establishing MCK as a dedicated owner, lessor and

operator of hotels in New Zealand, with a majority shareholding in CDL Investments. The Chinese property

development activities would be separated and would be undertaken by FSGL which is to be listed on the SGX as a

separate company.

MCK’s intention is that the timetable for the Proposed Capital Return would be aligned with the timetable for the

Proposed FSGL IPO, with both implemented in mid-2014. MCK’s intention is that the Proposed Capital Return

would proceed when the Proposed FSGL IPO has reached a stage where there is a high probability that it would be

successfully implemented, to lessen any risk that MCK shareholders are distributed shares in an unlisted company

(although as the Proposed Capital Return will occur a short time prior to the Proposed FSGL IPO, it will not be

possible to avoid this risk entirely).


INDEPENDENT REPORT

4

The Proposed Capital Return is subject to various conditions, including Court and shareholder approval, which may

or may not be satisfied. Further, the process for a Court-approved scheme of arrangement allows the opportunity for

shareholders who file a notice of appearance or a notice of opposition by 4.00pm on 26 June 2014 to be heard at

the Court on or about Thursday 10 July 2014.

1.2 Details of the Proposed Capital Return

MCK will own a 31.4% shareholding in FSGL immediately prior to the Proposed Capital Return. Substantially all of

MCK’s shares in FSGL will be distributed to MCK shareholders if the Proposed Capital Return is implemented.

Immediately following the FSGL IPO, MCK shareholders would collectively own a reduced 28.1% of the FSGL shares

because of the dilutionary impact of issuing 63.8 million new shares in FSGL by way of a placement (40 million

shares), public offer (5 million shares) and to Cornerstone Investors (18.8 million shares). A shareholder holding 1000

shares in MCK will own 302 shares in MCK and 327 shares in FSGL at the completion of the Proposed Capital

Return. The overall impact of the Proposed Capital Return is summarised in the following table:

Effects of Proposed Capital Return

Ordinary

(millions)

Preference

(millions)

Number of shares on issue as at 29 May 2014 349.3 174.6

MCK shares cancelled in exchange for shares in FSGL 243.7 121.8

Closing shares in MCK 105.6 52.8

FSGL shares distributed to MCK shareholders 114.4 57.2

Each shareholder’s relative percentage ownership in MCK will remain unchanged, and each shareholder will own

proportionally the same amount of the distributed MCK shareholding in FSGL.

The Proposed Capital Return requires various approvals and authorities before it can proceed including:

Court approval as to the scheme of arrangement and capital reduction under the Companies Act;

shareholder approval by holders of MCK’s ordinary shares and preference shares (as separate classes), in each

case by 75% or more of the votes cast by the holders of the relevant class of shares eligible to vote and voting

on the resolution to consider the Proposed Capital Return; and

FSGL having entered into an underwriting agreement in relation to the FSGL IPO and such agreement having not

been terminated or revoked.

All of the above must be obtained for the Proposed Capital Return to proceed. Completing the FSGL IPO is not a

condition of the Proposed Capital Return proceeding.

The Court has made an order directing that a shareholders’ meeting be held to consider and, if appropriate, approve

the Proposed Capital Return by way of a special resolution which to be passed requires approval of 75% or more of

the votes cast by each class of shareholders entitled to vote and voting on the resolution. The Court has already

determined that there are two classes of shareholders for voting purposes - the holders of the ordinary and the

holders of the preference shares. As M&C plc (through CDLHHNZL) holds 70.22% of the ordinary shares and 85.2%

of the preference shares, it is almost certain that the votes from these shareholdings alone will be sufficient to

approve the resolution considering the Proposed Capital Return.


INDEPENDENT REPORT

5

2. Scope of the Report

2.1 Purpose of the Report

The Independent Directors of MCK have engaged Grant Samuel & Associates Limited (Grant Samuel) to prepare an

Independent Report stating whether, in its opinion, the Proposed Capital Return is in the best interests of MCK

shareholders. Grant Samuel is independent of MCK, First Sponsor and FSGL and has no involvement with, or

interest in, the outcome of the Proposed Capital Return.

A copy of this report will be sent to all MCK shareholders. This report is for the benefit of the shareholders of MCK.

The report should not be used for any other purpose. In particular, it is not intended that this report should be used

or relied on for any purpose other than as the expression of Grant Samuel’s opinion as to whether the Proposed

Capital Return is in the best interests of MCK shareholders. This report should not be used as a basis for acquiring

or disposing of shares in MCK or FSGL. This report should be read in conjunction with the Qualifications,

Declarations and Consents outlined at Appendix A.

2.2 Basis of Evaluation

There is no legal definition of expression “in the best interests”. In Grant Samuel’s opinion, “in the best interests”

must be capable of a broad interpretation to meet the particular circumstances of a transaction. This involves a

judgement on the part of the expert as to the overall commercial effect of the transaction, the circumstances that

have led to the proposal and the alternatives available. The expert must weigh up the advantages and disadvantages

of the proposal and form an overall view as to whether the shareholders are likely to be better off if the proposal is

implemented than if it is not.

In Grant Samuel’s opinion, the most appropriate basis on which to evaluate the Proposed Capital Return is to assess

its overall impact on the shareholders of MCK and to form a judgement as to whether the expected benefits to the

shareholders outweigh any disadvantages that might result. The Proposed Capital Return is one of the steps of a

capital restructuring initiative that is occurring within M&C plc, MCK and First Sponsor. It is not meaningful to

evaluate each element of the wider capital restructuring initiative in isolation. Ultimately, the capital restructuring

initiative is being driven by the controlling shareholder of MCK’s parent company, M&C plc.

The following factors, inter alia, have been considered in determining whether the Proposed Capital Return is in the

best interests of MCK shareholders:

the impact on the business operations of MCK if the Proposed Capital Return proceeds;

the effect on earnings and dividends attributable to existing shareholders;

the effect of Proposed Capital Return on the financial position of MCK;

the likely impact on the share price of MCK;

the advantages and disadvantages of owning shares in FSGL;

the impact on shareholders if FSGL is not listed as intended;

the impact on ownership and control;

any other benefits or disadvantages of the Proposed Capital Return; and

the rights of MCK shareholders who object to the Proposed Capital Return.


INDEPENDENT REPORT

6

3. Profile of MCK

3.1 Background

MCK is a significant hotel owner-operator based in New Zealand and listed on the NZX. MCK operates 23 owned,

leased and franchised hotels across New Zealand trading under the Millennium, Copthorne and Kingsgate brands.

MCK is a 70.22% subsidiary of London Stock Exchange listed M&C plc. M&C plc is also an owner-operator of

branded hotels in diverse locations attractive to business and leisure customers, with a particular focus on significant

gateway cities and Asian emerging markets. The largest shareholder of M&C plc is City Developments Limited (City

Developments), with a shareholding of 59.4%. Ultimately, City Developments is controlled by Hong Leong

Investment Holding Pte Limited (Hong Leong).

In addition to the hotel portfolio, MCK has other investments including:

property interests in China, held through a 31.4% shareholding in FSGL. FSGL was established with the

principal objectives of:

− acquiring, developing and selling real estate in China, focussing on residential and commercial

developments (which may comprise a hospitality component); and

− the ownership and/or operation of commercial real estate and the provision of real estate related financing

services in China.

a 67% interest in CDL Investments. CDL Investments is primarily focussed on developing and selling residential

sections; and

property interests in Australia (through subsidiary companies including ownership of an apartment complex,

Zenith Residences in Sydney).

MCK has been listed on the NZX since 9 August 1985 and today has approximately 1,782 shareholders. The

company had a market capitalisation of approximately $355 million as at 29 May 20141.

3.2 Operations

MCK’s business model is focused on maximising long term total returns to shareholders through aligned hotel

operating and asset management strategies, led by a management team with experience in both disciplines. Each of

the brands in MCK’s hotel portfolio is positioned differently and offers selective facilities and services locally:

Millennium. Millennium Hotels are focused on the premium traveller and are situated in three prime locations in

New Zealand (Queenstown, Rotorua and Taupo);

Copthorne. Copthorne Hotels are situated in regional business centres or resort locations across New Zealand;

and

Kingsgate. Kingsgate Hotels are focused on providing business, leisure and family travellers with a consistent

level of accommodation and New Zealand hospitality and are located across New Zealand.

As at February 2014, MCK had a total of 2,842 rooms in 23 hotels spread across 17 New Zealand locations.

1 Includes preference shares.


INDEPENDENT REPORT

7

A diagram showing MCK’s hotel ownership and operational structure is set out below:

Hotel Ownership and Operational Structure

3.3 Capital Requirements

MCK has recently issued new preference shares raising NZ$111.8 million. The funds raised have been used in part

to meet the commitment required to participate in the First Sponsor capital raising (approximately NZ$60 million).

MCK plans to use the remaining proceeds to:

reduce the company’s debt by approximately NZ$20m; and

assist with the funding of the progressive refurbishment of the MCK hotel portfolio including the Copthorne Hotel

Auckland Harbourcity and the Kingsgate Hotel in Palmerston North which has recently been completed.

QUANTUM LIMITED!

!

HOSPITALITY SERVICES LIMITED!

MILLENNIUM & COPTHORNE HOTELS NEW ZEALAND LIMITED!

Owned!

!  Millennium Hotel Rotorua!

!  Copthorne Hotel & Resort Bay of

Islands (49%)!

!  Copthorne Hotel Auckland

Harbourcity!

!  Coprthorne Hotel & Resort

Queenstown Lakefront!

!  Kingsgate Hotel Greymouth!

!  Kingsgate Hotel Te Anau!

!

Leased!

!  Millennium Hotel Christchurch

(closed)!

!

Owned!

!  Millennium Hotel Queenstown!

!  Copthorne Hotel Auckland City!

!  Copthorne Hotel Rotorua!

!  Coprthorne Hotel Oriental Bay Wellington!

!  Copthorne Hotel & Apartments Queenstown Lakeview!

!  Kingsgate Hotel Palmerston North!

!  Kingsgate Hotel Dunedin!

!

Franchised!

!  Millennium Hotel & Resort Manuels Taupo!

!  Copthorne Hotel & Resort Hokianga!

!  Copthorne Hotel Grand Central New

Plymouth!

!  Copthorne Hotel & Resort Solway Park Wairarapa!

!  Copthorne Hotel Commodore

Christchurch Airport!

!  Kingsgate Hotel Autolodge Paihia!

!  Kingsgate Hotel Whangarei!

!  Kingsgate Hotel The Avenue Wanganui!

!  Kingsgate Hotel Wellington!

Managed/Franchised!

!  Kingsgate Hotel Hamilton!

!

70.00%!

100.00%!


INDEPENDENT REPORT

8

3.4 Financial Performance

The financial performance of MCK for the years ended 31 December 2010, 2011, 2012 and 2013 are shown in the

table below:

MCK Financial Performance (NZ$ millions)

Year ended 31 December 2010 2011 2012 2013

Hotel revenue 102.2 85.0 75.8 78.0

Rental income 2.9 3.1 2.9 2.9

Property sales 9.4 11.4 26.5 38.4

Total revenue 114.5 99.5 105.2 119.2

Cost of sales (49.8) (42.8) (46.2) (53.2)

Gross profit 64.7 56.7 59.0 66.0

Administration and operating expenses (44.3) (39.2) (32.8) (33.8)

Business interruption insurance income 1.4 12.4 11.3 4.2

EBITDA before one off earthquake impacts 21.8 29.9 37.5 36.5

Gain on disposal of damaged property - 5.5 18.4 -

EBITDA 21.8 35.4 55.9 36.5

Depreciation and Amortisation (7.2) (7.6) (6.6) (6.5)

EBIT 14.6 27.8 49.4 30.0

Net finance income 0.3 1.1 0.1 1.4

Share of profit of associate (0.3) 4.6 10.1 9.8

Profit before income tax 14.6 33.5 59.6 41.1

Income tax (27.2) (8.5) (8.8) (8.9)

Profit after tax (12.6) 25.0 50.7 32.2

The following points should be taken into consideration when reviewing the table above:

MCK received one off gains on property from the settlement of the material damage insurance claims for

Copthorne Hotel Christchurch City of NZ$5.5 million in FY11 and Copthorne Hotel Christchurch Central of

NZ$18.4 million in FY12;

the share of profit of associate related to MCK’s minority holding in First Sponsor;

hotel revenue increased by 3% in FY13 to NZ$78 million, but continues to remain significantly below historical

levels, primarily due to the sustained impact of the Canterbury earthquakes in 2011. Increased tourism as a

result of the Rugby World Cup partially offset the adverse impact of the earthquake in FY11; and

property sales increased from NZ$9.4 million in FY10 to NZ$38.4 million in FY13 due to an increase in section

sales within CDL Investments, reflecting a more positive real estate market. CDL Investments increased its

operating profit after tax for the year ended 31 December 2013 to NZ$13.4 million, up from NZ$9.3 million in the

previous year.


INDEPENDENT REPORT

9

3.5 Financial Position

The financial position of MCK as at 31 December 2010, 2011, 2012 and 2013 is outlined in the table below:

MCK – Financial Position (NZ$ millions)

As at 31 December 2010 2011 2012 2013

Cash and cash equivalents 38.4 36.3 109.5 82.1

Trade and other receivables 18.2 18.2 15.4 13.5

Development properties 4.7 8.5 20.2 33.2

Other 1.9 1.5 1.5 2.5

Current assets 63.2 64.6 146.5 131.2

Property, plant and equipment 332.7 324.5 284.5 293.7

Development properties 146.7 143.0 124.2 106.0

Investments in associates 84.9 125.0 128.1 185.3

Other 3.3 3.3 2.8 2.8

Non current assets 567.6 595.8 539.6 587.9

Total assets 630.8 660.3 686.1 719.2

Borrowings (47.9) - - -

Trade and other payables (14.1) (14.5) (23.6) (14.5)

Loans due to related parties (3.5) (7.2) (9.5) (9.5)

Provisions (4.9) (4.2) (2.2) (2.2)

Other (0.4) (2.2) (1.6) (0.5)

Current liabilities (70.8) (28.1) (36.9) (26.8)

Borrowings - (63.3) (65.6) (80.9)

Provision for deferred taxation (48.6) (49.0) (41.2) (43.6)

Provisions (0.6) (0.4) (0.7) (0.7)

Non current liabilities (49.1) (112.7) (107.4) (125.2)

Total liabilities (119.9) (140.8) (144.3) (152.0)

Net assets 510.9 519.5 541.8 567.2

Net debt 13.0 34.2 (34.4) 8.3

NAV per share (cents) before distributions 118.0 119.9 126.8 133.4

The following points are relevant when considering the above table:

cash and cash equivalents increased from $36.3 million to $109.5 million in FY12, primarily due to MCK

receiving $57.1 million from the settlement of the material damage insurance and business interruption claims

relating to the Christchurch earthquake;

development properties includes development land and the Zenith Residences in Sydney. The balance of

development properties included in current assets represents property that is expected to settle within one year;

property, plant and equipment is primarily comprised of MCK’s hotel assets which are subject to external

valuation. During 2013, seven of MCK’s freehold properties were revalued to their fair value, resulting in a $10.3

million increase in their carrying value. The decrease in property, plant and equipment in FY12 is largely due to

the effects of the Christchurch earthquake and impairment of property, plant and equipment not subject to

external valuation;

investment in associates primarily represented MCK’s share of First Sponsor’s net assets. By 31 December

2013 MCK had invested approximately $162 million in First Sponsor. In March 2014, MCK received a capital

call from First Sponsor and subsequently raised NZ$111.8 million through an issue of redeemable preference

shares, of which approximately NZ$60 million has been invested in First Sponsor. This increased MCK’s total

cash outlay in First Sponsor to approximately NZ$222 million; and


INDEPENDENT REPORT

10

Loans due to related parties are from CDL Hotels Holdings New Zealand Limited (a wholly owned subsidiary of

M&C plc). The loans incurs interest (3.1% in FY13) and are repayable on demand.

3.6 Cash Flows

The cash flows for MCK for the years ended 31 December 2010, 2011, 2012 and 2013 are shown in the table

below:

MCK – Cash Flows (NZ$ millions)

Year ended 31 December 2010 2011 2012 2013

EBITDA before one off earthquake impacts 21.8 29.9 37.5 36.5

Movement in working capital 15.2 (1.8) 17.6 (7.8)

Net Interest expense (1.5) (0.8) (2.4) (1.3)

Income tax paid (5.2) (5.4) (10.4) (10.5)

Other 0.5 - (0.1) -

Cash from operating activities 30.8 21.9 42.2 16.9

Receipts from insurers from disposal of property, plant and

equipment - - 37.6 -

Proceeds from the disposal of property, plant and equipment - 7.1 - -

Purchase of property, plant and equipment (4.8) (5.1) (4.8) (5.4)

Investment in associate (10.6) (39.7) - (40.3)

Cash from investing activities (15.4) (37.7) 32.8 (45.7)

Net borrowing movements (4.8) 15.4 2.3 15.3

Loans from parent company - 3.7 2.3 -

Dividends paid to shareholders of Millennium & Copthorne

Hotels New Zealand Ltd (4.2) (4.2) (4.2) (8.4)

Dividends paid to non-controlling shareholders (0.4) (0.4) (1.8) (1.9)

Cash from financing activities (9.4) 14.5 (1.4) 5.0

Net cash flow 6.0 (1.3) 73.6 (23.8)


INDEPENDENT REPORT

11

3.7 Capital Structure and Ownership

As of 31 March 2014, MCK had 349,268,439 ordinary shares on issue (excluding 329,627 shares held as Treasury

stock) held by approximately 1,776 shareholders. The company also had 174,634,366 preference shares on issue

held by 207 shareholders. The company’s top 10 shareholders are shown in the table below:

MCK – Top 10 Shareholders as at 31 March 2014

Shareholder Ordinary

Shares (000s)

% Preference

Shares (000s)

%

M&C plc (via CDLHHNZL) 245,494 70.2% 148,749 85.2%

BNP Paribas Nominees (NZ) Limited - NZCSD 20,072 5.7% 10,096 5.8%

HSBC Nominees (New Zealand) Limited - NZCSD 12,674 3.6% 4,342 2.5%

National Nominees Ltd - Auckland Branch - NZCSD 12,429 3.6% - -

Custodial Services Limited (A/C 12) 8,943 2.6% - -

Accident Compensation Corporation - NZCSD 7,962 2.3% 6,412 3.7%

Custodial Services Limited (A/C 6) 5,427 1.6% - -

Citibank Nominees (New Zealand) Ltd - NZCSD 4,572 1.3% 40 -

Leng Beng Kwek 3,000 0.9% 1,500 0.9%

Amalgamated Dairies Limited 2,268 0.6% - -

Top 10 Shareholders 322,841 92.4% 171,138 98.0%

Other Shareholders 26,427 7.6% 3,496 2.0%

Total 349,268 100.0% 174,634 100.0%

MCK is a relatively closely held company, with the top 10 shareholders holding 92.3% of the ordinary shares on

issue. As at 31 March 2014, MCK’s UK based parent company M&C plc held 70.22% through CDL Hotels Holdings

New Zealand Limited (CDLHHNZL). The other substantial interest is held by Aberdeen Asset Management Asia

Limited (Aberdeen), which has a relevant interest of 6.3%. Aberdeen has investments in other Group companies

and has been deemed a related party of the Group by the SGX for the purposes of determining “public” shareholders

in the forthcoming FSGL IPO.

Of the approximately 1,830 shareholders on the register at the time of the RPS issue in February 2014, only 207

shareholders took up their rights to acquire the RPS. The vast majority of the shortfall was taken up by M&C plc

which acquired an additional 15% of the total RPS being offered.


INDEPENDENT REPORT

12

3.8 Share Price Performance

The share price and trading volume history of MCK ordinary shares is depicted graphically below.

MCK – Share price performance and volumes over the last two years

MCK’s ordinary share price against the NZX50 capital index is shown in the graph below:

MCK – Share price performance against the NZX50 capital index over the last two years

MCK has performed relatively well against the NZX capital index over the last two years, outperforming the index by

22%. Volume in MCK ordinary shares is always limited as a consequence of the single largest shareholder owning

70.22%.

- !

1,000 !

2,000 !

3,000 !

4,000 !

5,000 !

6,000 !

$- !

$0.10 !

$0.20 !

$0.30 !

$0.40 !

$0.50 !

$0.60 !

$0.70 !

$0.80 !

Jun 12! Sep 12! Dec 12! Mar 13! Jun 13! Sep 13! Dec 13! Mar 14!

Monthly Volume (000)!Share Price !

-20%!

-10%!

0%!

10%!

20%!

30%!

40%!

50%!

60%!

Jun 12! Sep 12! Dec 12! Mar 13! Jun 13! Sep 13! Dec 13! Mar 14!

Relative Over/Under Performance!


INDEPENDENT REPORT

13

4. Profile of First Sponsor and FSGL

4.1 Background

MCK has had an investment in First Sponsor since 2007. First Sponsor is incorporated in the British Virgin Islands,

and its principal operating subsidiary, FSGL, is incorporated in the Cayman Islands. First Sponsor was initially

established in 2007 to be a joint venture partner with a property group in Guangdong Province, Southeast China.

After termination of the joint venture in 2010, First Sponsor refocussed the business on property developments in

Chengdu, Sichuan Province, China. Since 2007 MCK has invested approximately NZ$221 million into First Sponsor.

MCK has an indirect influence over First Sponsor by having the same Chairman - Mr Wong Hong Ren. However,

FSGL is run as a separate business.

FSGL derives earnings from three operating segments exclusively in China:

property development;

property ownership, comprising hotel operations and rental properties; and

property financing.

FSGL commenced operations in 2007 with the acquisition of a 70% interest in a mixed use residential and

commercial property in Guangdong Province. In 2008 land was acquired for a residential development also in

Guangdong. Interests in both of these developments were sold in 2013. In 2008 FSGL acquired the land use rights

to a substantial plot of land in Chengdu Province and successfully converted the land use rights to permit

development of residential and commercial properties. This development named Chengdu Cityspring comprises six

residential buildings with 726 residential units, 1,272 carparks and four commercial buildings (two 29 story buildings,

one three story building, a four story hotel with several commercial units and 709 SOHO units). As at 31 December

2013, 98.8% of the residential units, 94% of the SOHO units and 34% of the carparks had been sold. In addition,

96.3% of the lettable space had been rented.

In November 2011, a 27 hectare site in Chengdu was acquired to develop a very substantial mixed use residential

and commercial development known as the Millennium Waterfront. The pre-sales of residential apartments at the

Millennium Waterfront commenced in 2012. Chengdu is the capital city of Sichuan province in South West China

with a population of more than 14 million inhabitants. Chengdu’s GDP of nearly US$150 billion ranks it as the 8th

largest city by GDP in China.

In April, FSGL acquired land use rights for a new site in Dongguan for a mixed residential and commercial

development. Dongguan is a city of 8.3 million people located in Guangdong province in South East China.

In November 2011, a wholly owned subsidiary, Shanghai Sigma, was established to focus on property financing.

Banking regulations in China are generally regarded as complex and restrictive. To meet the demand for property

financing in particular, a secondary finance market has evolved. Shanghai Sigma is not permitted to loan directly to

a borrower but effectively does so through a third party Trust – An Entrusted Loan Arrangement. The risk of default

remains with Shanghai Sigma. To date RMB753.5 million (approximately NZ$140 million) has been advanced on

property loans at interest rates ranging from 16.5% to 24.0% per annum. The majority of loans have to date been of

a short-term nature. Currently there are five loans outstanding, all with a duration of approximately 12 months

totalling RMB575million (NZ$108 million).

As at 31 December 2013 the market value of the FSGL property portfolio was approximately NZ$800 million (as

assessed by an independent valuation) as outlined in the table below:


INDEPENDENT REPORT

14

FSGL Property Portfolio (RMB millions)

31 December 2013

Completed properties held for investment 383.8

Chengdu Cityspring held for sale 221.0

Chengdu Cityspring Hotel 254.5

Millennium Waterfront under development 3,367.0

Property portfolio valuation (RMB) RMB 4,226.3

Equivalent Singapore dollar value S$856.4

Equivalent NZ dollar value NZ$792.92

The property market in China has been weakening over the past 6 months with increasing levels of unsold properties

and signs of discounting. FSGL is a relatively small player in a highly competitive market. The major competitors are

domestically owned, very well resourced and have strong local connections when it comes to both buying land for

development and selling developed properties. A prolonged downturn in the property market will have a negative

impact on the performance of FSGL.

4.2 Financial Performance

The financial performance of First Sponsor for the years ended 31 December 2012 and 2013 is shown in the table

below:

First Sponsor - Financial Performance (S$ millions)

Year ended 31 December 2012 2013

Revenue 148.0 157.5

Cost of sales (83.0) (111.0)

Gross profit 65.0 46.5

Administration expenses (10.3) (13.0)

Selling expenses (2.2) (3.9)

Other income/ (expenses) (5.4) 3.7

Other gains (losses) 0.3 6.3

Operating income 47.4 39.6

Net finance costs 1.4 1.8

Profit (loss) before income tax 48.8 41.4

Tax expense (20.9) (11.8)

Profit for the year from continuing operations 27.9 29.6

Profit from discontinued operations (net of tax) 1.4 -

Profit for the year 29.3 29.6


other gains in 2013 arise from the sale of certain subsidiaries relating to First Sponsor’s original investment in

Guangdong; and

the lower tax paid in 2013 is due primarily to the lower income of S$2.3 million, lower level of land appreciation

tax of S$4.9 million and various timing differences.

2 Converted at NZD:SGD 1.08 and NZD:RMB 5.33.


INDEPENDENT REPORT

15

4.3 Financial Position

The financial position of First Sponsor as at 31 December 2012 and 2013 is shown in the table below:

First Sponsor – Financial Position (S$ millions)

Year ended 31 December 2012 2013

Cash and cash equivalents 97.7 311.2

Development properties 324.7 339.1

Trade and other receivables 94.4 128.1

Other 1.5 0.1

Current assets 518.3 778.5

Property, plant and equipment 7.7 82.0

Investment properties 120.9 80.1

Lease prepayments 71.9 3.0

Other receivables 34.4 8.0

Deferred tax 5.6 10.3

Non current assets 240.5 183.4

Total assets 758.8 961.9

Trade and other payables (113.9) (198.1)

Borrowings (37.2) -

Tax payable (27.0) (27.3)

Current liabilities (178.1) (225.4)

Borrowings (167.2) (153.1)

Deferred tax (22.1) (12.2)

Non-current liabilities (189.3) (165.3)

Total liabilities (367.4) (390.7)

Net assets 391.4 571.2


During the 2013 year First Sponsor raised a further S$124 million equity through the issue of 100 million

redeemable preference shares at US$1 per share;

The increase in cash and cash equivalents in the 2013 year was principally a result of the capital raising and

deposits and instalments from property sales;

During the 2013 financial year S$76.8 million of properties, primarily the M Hotel Chengdu, were re-classified as

property, plant and equipment from Investment properties and Development properties;

First Sponsor has never paid a dividend despite strong earnings in the last two financial years; and

Its rapid growth and commitment to the very large Millennium Waterfront development has meant that it has

repeatedly sought new investment from its three shareholders which has required MCK to invest a total of

NZ$222 million (32% of its total assets). The removal of the requirement to make further investment will enable

MCK to focus on its core New Zealand hotel business.


INDEPENDENT REPORT

16

4.4 Initial Public Offering

The proposed IPO of FSGL is scheduled for 22 July 2014 on the Singapore Stock Exchange. FSGL is proposing to

make a placement of 63.8 million shares all at a price of between S$1.50 and S$1.60. Contemporaneously, FSGL is

seeking permission for quotation of all existing and the new 63.8 million shares on the SGX.

The expected timetable for the proposed quotation on the SGX and issue of 63.8 million new shares is:

Date (2014) #* Event

23 May Lodgement of preliminary prospectus with the Monetary Authority of Singapore (MAS)

4 June Relevant documentation relating to the Extraordinary General Meeting distributed to shareholders

19 June Extraordinary General Meeting to approve the Proposed Capital Return

30 June Roadshow for the FSGL IPO commences

30 June - 9 July IPO book building for the public offer

10 July Registration of final prospectus with MAS

10 July Court Hearing to approve the Proposed Capital Return

11 July - 17 July Offer open to the public in Singapore

14 July Last day of MCK trading with the inclusion of an entitlement to participate in the Proposed Capital Return

17 July The effective date for the Proposed Capital Return

22 July Listing and trading of FSGL on the Singapore Stock Exchange

*These dates are indicative and may be varied.

MCK has advised Grant Samuel that it expects the FSGL IPO to occur on 22 July 2014 barring any major market

disruption or other adverse event. However, there is no absolute certainty of the FSGL IPO proceeding. As the

Proposed Capital Return occurs shortly prior to the proposed FSGL IPO but after the close of the IPO offer period,

shareholders in MCK could potentially be distributed shares in what will be an unlisted entity, although MCK

considers this risk to be very low.


INDEPENDENT REPORT

17

5. Impact of the Proposed Capital Return

5.1 Impact on Structure and Ownership

The operating structure and ownership of MCK prior to the Proposed Capital Return is summarised in the chart

below:

Simplified group Structure immediately before the Scheme and proposed FSGL IPO

The effect of the Proposed Capital Return on the operating structure and ownership is shown below:

Simplified group structure immediately after the Scheme and proposed FSGL IPO

M&C plc#!

MCK!

CDL Investments!Australia!Property!

Hotel Assets! FSGL!

70.2%^!

31.4%!

29.8%^!

Other Shareholders!

14.8%!

Tai Tak Group#!

47.7%*!

67.0%!

# Interest held through various intermediary companies.!

* The percentage listed is in respect of FSGL’s economic rights (not FSGL shares).!^ Percentages are in respect of MCK Ordinary Shares.!

!

M&C plc#!

MCK!

CDL Investments!Australia!Property!

Hotel Assets!

70.2%^!

7.0%!

FSGL!

Tai Tak Group#!

42.7%*!

34.4%!

Other MCK Shareholders!

29.8%^!

67.0%!

•! The percentages in respect of FSGL are approximates only. The final percentages will depend on the number of FSGL shares offered under the FSGL IPO.!

!

# Interest held through various intermediary companies.!

* The percentage listed is in respect of FSGL’s economic rights (not FSGL shares).!^ Percentages are in respect of MCK Ordinary Shares.!

!


INDEPENDENT REPORT

18

The relative ownership interest held by each MCK shareholder in MCK before and immediately after the Proposed

Capital Return will be the same. The relative ownership interest held by each MCK shareholder in FSGL immediately

after the Proposed Capital Return will be equal to the relative indirect ownership each MCK shareholder had through

MCK’s investment in FSGL.

5.2 MCK

5.2.1 Impact on Operations

If the Proposed Capital Return is implemented, MCK will be primarily a hotel owner and operator in New Zealand with

a 67% investment in New Zealand based residential developer CDL Investments. No changes will occur to the

operating structure or head office functionality. As the Proposed Capital Return is being effected in the form of an in-

specie distribution, no new financing is required in MCK to facilitate the Proposed Capital Return.

At an operating and governance level, MCK will remain substantially unchanged:

the Board of MCK will remain unchanged; and

the management of MCK will remain unchanged.

5.2.2 Earnings and Dividends

A summary of the pro-forma financial operating performance of MCK for 2012 and 2013 as if MCK did not hold an

investment in First Sponsor (and therefore FSGL) is set out in the table below:

MCK - Pro-forma Financial Performance (NZ$ millions)

Year ended 31 December

MCK Group

2012

First

Sponsor

adjustments

MCK

Pro-forma

2012

MCK Group

2013

First

Sponsor

adjustments

MCK

Pro-forma

2013

Revenue 105.2 - 105.2 119.2 - 119.2

Cost of sales (46.2) - (46.1) (53.2) - (53.2)

Gross profit 59.0 - 59.0 66.0 - 66.0

Other income 29.7 - 29.7 4.2 - 4.2

Administrative expenses (20.7) - (20.7) (21.3) - (21.3)

Other operating expenses (18.6) 0.3 (18.3) (19.0) 0.3 (18.7)

Operating profit 49.4 0.3 49.7 29.9 0.3 30.2

Net finance costs 0.1 - 0.1 1.4 0.3 1.7

Share of profit (loss) of associate 10.1 (10.1) - 9.8 (9.8) 0.0

Profit before income tax 59.5 (9.8) 49.7 41.1 (9.2) 31.9

Income tax (8.8) (0.6) (9.4) (8.9) (0.1) (9.0)

Profit after tax 50.7 (10.4) 40.3 32.2 (9.3) 22.9

Non-controlling interests (4.6) (0.2) (4.4) (5.1) (0.1) (5.0)

Profit attributable to owners

of the parent 46.1 (10.2) 35.9 27.1 (9.2) 17.9

EPS (cents) 13.2 - 34.0 7.8 - 16.9

The pro-forma earnings performance for MCK has been prepared on the basis that the Proposed Capital Return was

effective from 31 December 2012 and 2013, the date of the audited financial statements for those two financial

years. The pro-forma EPS are based on a reduced number of ordinary shares as a result of the Proposed Capital

Return.


INDEPENDENT REPORT

19

5.2.3 Financial Position

The pro-forma balance sheet for MCK as at 31 December 2013 as if MCK did not own an investment in First

Sponsor (and therefore FSGL) is outlined in the table below:

MCK – Pro-forma Financial Position (NZ$ millions)

As at 31 December 2013 Adjustments Pro-forma 2013

Cash and cash equivalents 82.1 36.8 118.9

Trade and other receivables 13.5 - 13.5

Development properties 33.2 - 33.2

Other 2.5 - 2.5

Current assets 131.2 36.8 168.1

Property, plant and equipment 293.7 - 293.7

Development properties 106.0 - 106.0

Investments in associates 185.3 (185.3) -

Other 2.8 - 2.8

Non current assets 587.9 (185.3) 402.5

Total assets 719.1 (148.5) 570.6

Borrowings - - -

Trade and other payables (14.5) - (14.5)

Loans due to related parties (9.5) - (9.5)

Provisions (2.2) - (2.2)

Other (0.5) - (0.5)

Current liabilities (26.8) - (26.8)

Borrowings (80.9) 20.0 (60.9)

Provision for deferred taxation (43.6) - (43.6)

Provisions (0.7) - (0.7)

Non current liabilities (125.2) 20.0 (105.2)

Total liabilities (152.0) 20.0 (132.0)

Net assets 567.2 (128.5) 438.7

The pro-forma financial position of MCK has been provided by MCK management. A summary of the pro-forma

adjustments is as follows:

the increase in cash and cash equivalents is a result of the redeemable preference shares issue (NZ$111.8

million), the subsequent additional investment in FSGL (NZ$59.3 million), the receipt of the cash payment from

First Sponsor as part of the First Sponsor Share Exchange (NZ$4.3 million) and the repayment of bank debt of

NZ$20.0 million;

investment in associates represents the investment in First Sponsor prior to the March rights issue (see above)

and is eliminated upon the Proposed Capital Return;

the reduction in net assets comprises:

NZ $million

Net assets at 31 December 2013 567.2

Redeemable Preference Shares 111.8

Cancellation of Ordinary and RPS shares (248.5)

Gain arising from conversion of First Sponsor shares to FSGL shares 8.2

Pro-forma net assets following distribution 438.7


INDEPENDENT REPORT

20

the gain is the difference between the book value of First Sponsor in the accounts of MCK and the value of the

shares in FSGL plus the cash of NZ$4.3 million provided in connection with the exchange for MCK’s

shareholding in First Sponsor into FSGL shares.

5.3 First Sponsor Group Limited

5.3.1 FSGL

If the FSGL IPO occurs as planned, FSGL will become an independent company listed on the SGX with its business

operations based solely in China. Shareholders should read the FSGL Prospectus which contains significant details

on the business, management and board of the Company.

5.3.2 Financial Position

FSGL has not provided forecasts for 2014. The pro-forma balance sheet for FSGL as at 31 December 2013

assuming the FSGL IPO had taken place (and with the investment in development properties recorded at the values

determined by the independent valuer), is outlined in the table below:

FSGL – Pro-forma Financial Position (S$ millions)

Year ended 31 December 2013 Adjustments Pro-forma 2013

Cash and cash equivalents 311.2 152.8 464.0

Development properties 333.8 319.5 653.3

Trade and other receivables 128.1 - 128.1

Other 0.1 - 0.1

Current assets 773.2 472.3 1,245.5

Property, plant and equipment 81.0 9.4 90.4

Investment properties 80.1 9.2 89.3

Lease prepayments 3.0 - 3.0

Other receivables 8.0 - 8.0

Deferred tax 10.3 - 10.3

Other - - 0.0

Non current assets 182.5 18.6 201.1

Total assets 955.7 490.9 1,446.6

Trade and other payables (460.3) (262.9) (197.4)

Borrowings - - 0.0

Tax payable (27.3) - (27.3)

Current liabilities (487.6) (262.9) (224.7)

Borrowings - - 0.0

Deferred tax (12.2) - (12.2)

Non-current liabilities (12.2) - (12.2)

Total liabilities (499.8) (262.9) (236.9)

Net assets 455.9 753.8 1,209.7

Net assets value per share S$1.98

The following comments are relevant to an analysis of the statement of pro-forma Financial Position:

the reduction in trade and other payables is due to the capitalisation of advances from First Sponsor to FSGL;

the increase in Development properties is a result of the revaluation of the property portfolio; and

the increase in cash is from the issue of new shares to existing shareholders, management of FSGL, and the

IPO.


INDEPENDENT REPORT

21

6. Evaluation of the Proposed Capital Return

In Grant Samuel’s opinion, the Proposed Capital Return is in the best interests of MCK shareholders. The

combined market value, provided FSGL is listed as planned, of the shares in MCK and FSGL held by a

MCK shareholder after the Proposed Capital Return should in time exceed the current market price of

MCK shares held by the MCK shareholder before the Proposed Capital Return. The rationale for this

conclusion is:

investors generally prefer focused investment vehicles so that they can manage the diversification of

their own portfolios. MCK and FSGL operate in different markets and geographies and have very

different risk and earnings profiles. Accordingly, the two separated companies may attract greater

interest than MCK alone, potentially resulting in an uplift in value; and

the market arguably does not fully value MCK’s shareholding in First Sponsor because of the limited

financial and operational detail available on this business. MCK’s investment in First Sponsor is

significant relative to the size of MCK. The total assets of FSGL are approximately NZ$1.36 billion, of

which MCK holds, prior to the FSGL IPO, an effective interest of 31.4%.

The immediate impact of the Proposed Capital Return on MCK shareholders is theoretically neutral. The pro-rata

distribution of FSGL shares to MCK shareholders will mean that shareholders are initially in a position that is

comparable to their position immediately prior to the Proposed Capital Return. Whether or not shareholders will be

better or worse off will depend on whether FSGL is listed and the price of the FSGL shares after the planned listing

on the SGX.

Shareholders will have the choice of retaining the same effective interest in MCK’s assets that they currently hold by

retaining both the FSGL shares and their remaining MCK shares or selling one or both of the shareholdings.

6.1 Overview of the Proposed Capital Return

In Grant Samuel’s opinion, the Proposed Capital Return is, on balance, in the interests of the MCK shareholders,

provided that the FSGL IPO proceeds as envisaged. If the FSGL IPO does not proceed but the Proposed Capital

Return has been completed, MCK shareholders will be left holding small parcels of shares in FSGL that will be illiquid

and accordingly will be likely to be unsaleable except to one of the two major shareholders. The current proposal is

for the Proposed Capital Return to take place shortly prior to the listing of FSGL on the SGX. The Proposed Capital

Return has been structured in a manner which makes the risk of MCK shareholders holding shares in an unlisted

FSGL very low.

The rationale for the Proposed Capital Return is sound:

MCK’s core business is the ownership and operation of a chain of hotels in New Zealand. The investment in

First Sponsor started as an investment in a joint venture property development in China. After the joint venture

was terminated, First Sponsor continued to invest heavily in Chinese property, with MCK contributing in total

$222 million. At the time of the Proposed Capital Return FSGL will have assets of approximately NZ$1.35 billion;

the ultimate controlling shareholder of M&C plc has signalled through the First Sponsor capital raising that it

wishes that entity to continue expanding. This is likely to result in future capital calls by FSGL for MCK; and

MCK has therefore elected to distribute its FSGL investment to its shareholders on a pro-rata basis and transfer

the decision to invest further monies into property development in China to individual investors. This must be

tempered by the observation that it is likely that a number of minority investors will not have the necessary skills

to assess the merits of a stand alone investment in property development in China.

The Proposed Capital Return is the last of a series of interrelated capital restructuring transactions ultimately initiated

by M&C plc. The direct effect of the Proposed Capital Return is that MCK shareholders will be distributed shares in

FSGL. Of critical importance will be the ability of MCK minority shareholders to readily realise their investment in

FSGL should they choose to do so. It is currently proposed that FSGL’s shares will commence trading on the SGX

on 22 July 2014.


INDEPENDENT REPORT

22

MCK’s shareholders will be required to choose how they wish to manage the FSGL shares they will receive if the

Proposed Capital Return is implemented. The options include:

(a) depositing the FSGL shares into a Singapore Exchange Member Firm brokerage account;

(b) depositing the FSGL shares into a NZX or ASX sharebroker account;

(c) receive a physical share certificate for the FSGL shares, which can be deposited with any sharebroker; or

(d) using the Block Sale Facility which will sell the shares on the SGX once FSGL is listed. The net proceeds

(less the sale proceeds less commission and costs) limited, the sale agent from the sale will be returned to

the MCK shareholder. The sell down of shares included in the Block Sale Facility will take place over

approximately a six week period.

Immediately following the FSGL IPO, MCK shareholders will collectively hold 28.1% of the expanded capital of

FSGL. A shareholding of this size would in most circumstances command a higher price per share than the

relatively very small parcels of shares in FSGL which will eventually be held by MCK minority shareholders;

the decision to list FSGL was taken by the major shareholders of FSGL, one of whom also controls MCK - Hong

Leong Group; and

the decision to distribute the shares in FSGL to the shareholders of MCK is also a decision of Hong Leong.

M&C plc, as the 70.2% of MCK’s ordinary shares and 85.2% of MCK’s preference shares, has indicated to MCK

that it intends to vote in favour of the resolutions and accordingly the resolutions to approve the Proposed

Capital Return are likely to be approved. Minority shareholders effectively have no say on what is a major

transaction for MCK. It does not mean that the majority shareholder has not considered them or acted in a way

that is oppressive. Rather, it has simply exercised its rights as majority shareholder to ensure FSGL is

successfully listed on the SGX. Following the distribution, M&C plc and its ultimate shareholder Hong Leong

Group will hold 130.5 million (76.1%) of the 171.6 million FSGL shares being distributed to MCK shareholders

and will give the wider Hong Leong Group a 41.4% shareholding in FSGL following the IPO.

6.2 Overview of MCK and FSGL

MCK has its origins as an owner, operator and franchisor of hotels. The investment in First Sponsor commenced in

2007 and since the termination of the initial joint venture in Guangdong has progressively grown into a substantial

asset in its own right. Following the last capital contribution of approximately NZ$60 million, MCK’s total cash

investment in its First Sponsor shareholding is NZ$222 million.

The two investments in hotels and in First Sponsor are substantially different. They have differing cash flow attributes

and risk and return characteristics. The hotel business is New Zealand centric and is dependent on the tourism

market, weather, currency and state of the economy. The First Sponsor business is a developer of residential,

commercial and hotel properties primarily in Western China and exposed to the vagaries of the Chinese residential

property market and the demand for office space in the locations in which it operates.

MCK’s investment in FSGL represents approximately 35% of MCK’s total assets, excluding cash, as at 31 March

2014, although the investment has not contributed to the operating earnings of the company. MCK’s share of First

Sponsor’s earnings are reported in the income statement as Share of Profit of Associates. There is no access to

these earnings as First Sponsor has not paid dividends.

6.3 Effects of the Proposed Capital Return

MCK is currently trading at an approximate 53% discount to NTA. The current share price reflects a PE ratio of

approximately 8.1x historic earnings. The distribution of the FSGL shares has the potential to unlock value for

MCK shareholders as the current share price does not, in Grant Samuel’s opinion, recognise the value of MCK’s

substantial investment in FSGL. An issue for shareholders will be realising their shares in FSGL following the

distribution, should they choose to do so;

Provided the FSGL IPO proceeds, FSGL will be listed on the SGX. FSGL will have a very small free float and

accordingly will be unlikely, at least initially, to attract any significant interest from institutional investors. Of the

approximately 171.6 million FSGL shares to be issued to MCK shareholders, 75% will be issued to entities

associated with Hong Leong Group and a further 7% to associated parties, leaving only approximately 34.0


INDEPENDENT REPORT

23

million shares in the hands of minorities. These shares, along with the 63.8 million being made available to the

public are likely to comprise the “free float”. Accordingly, the free float will likely only be 98 million shares out of a

total of 610 million or 16%;

If MCK minority shareholders wish to sell their FSGL shares, there is no certainty as to the price that will be

obtained. China based property development companies listed on SGX trade at an average discount to NTA of

approximately 48%. The adjusted NTA based on the valuations prepared by DTZ Debenham Tie Leung Limited

is S$1.98, implying a discount to adjusted NTA of 21.7% at the midpoint of the price range set out in the

preliminary prospectus for the FSGL IPO of S$1.55 per share. On listing FSGL will have cash of approximately

S$464 million and property assets of approximately S$833 million;

Shareholders of MCK already have an indirect shareholding in FSGL. A direct holding will give them the

opportunity to choose to either hold or sell all or part of their shareholding in FSGL;

Both MCK and FSGL will be ultimately controlled by Hong Leong and its associates which is no change from the

current situation. Hong Leong Group itself has an extraordinarily complex ownership structure which is

ultimately controlled by Kwek Leng Beng and his family interests;

FSGL’s gross margin and net profit margin are consistent with other listed China property companies. All other

listed companies have debt whereas on listing FSGL will have 50% of its assets in cash;

In the absence of the Block Sale Facility, whereby the shareholdings in FSGL held by small shareholders in MCK

will be aggregated and offered to the market, it maybe very difficult for minority shareholders to realise their

investment in FSGL;

To date, MCK has not received any distribution from its investment in First Sponsor. It has reported significant

earnings as a result of treating First Sponsor as an associate but it has had to fund the investment, which now

totals NZ$221.7 million, from cash flow and increased debt. The Proposed Capital Return raises the prospect of

MCK shareholders being able to recognise a return on their substantial investment in First Sponsor;

In a letter seeking confirmation from the SGX that the IPO Public Float Requirements would be satisfied through

the Proposed Capital Return, DBS Bank (the Issue Manager) stated that the distribution of FSGL shares to MCK

shareholders will only take place after the close of the FSGL IPO offer period and prior to its listing and that the

MCK public shareholders will therefore only receive their FSGL shares immediately prior to, or just a few days

prior to the listing of FSGL. This undertaking to the SGX provides a high level of comfort that the shares in FSGL

being received by MCK shareholders will be able to be traded on the SGX. If FSGL is not listed the ability of

MCK shareholders to realise their investment in FSGL at fair value would be extremely limited;

The Proposed Capital Return is not intended to be taxable in the hands of New Zealand tax resident

shareholders. MCK has sought a non-binding ruling on the Proposed Capital Return from the IRD. Whilst not

providing a guarantee that the distribution would not be assessable, MCK’s advisers believe there is a very low

risk of the return being subsequently deemed assessable;

New Zealand investors’ shareholdings in FSGL may be subject to the foreign investment fund (FIF) regime. The

regime provides shareholders with a number of options for taxing foreign investments. For an individual investor

if the total cost of all foreign investments does not exceed $50,000 at any time during the tax year then the

regime does not apply. The default option for taxing foreign investments is the Fair Dividend Rate method which

calculates taxable income from a FIF as 5% of the market value of a New Zealand resident offshore share held at

1 April each year. Shares acquired during the year are not taxed, but shares sold during the year are taxed at

the full 5% rate regardless of the date sold. Dividends received and capital gains on foreign shares are not

taxable and foreign withholding tax deducted from these dividends is available for a foreign tax credit. The FIF

regime does not apply to non-resident shareholders;

MCK currently holds shares in FSGL with a book value in the MCK accounts of $244.6 million and a total cash

investment of NZ$221.7 million, the difference being MCK’s share of earnings of First Sponsor reported in the

income of MCK. FSGL has estimated its adjusted net asset value to be S$1,209.7 million at completion of the

IPO at S$1.98 per share, as set out in the table below:


INDEPENDENT REPORT

24

Net Assets of FSGL (S$ millions)

At completion of

the FSGL IPO

Net assets at 31 December 2013 455.9

Capitalisation of loans from FSGL and issue of new shares 322.5

IPO capital raised 93.0

Revaluation of property portfolio 338.3

Adjusted net assets 1,209.7

Net assets value per share (cents) (609.8 million shares) 198.4

The FSGL IPO is expected to raise, net of issue costs of S$9.0 million, S$93.0 million through the issue of 63.8

million new shares in FSGL, based on the midpoint of the price range set out in the preliminary prospectus for

the FSGL IPO of S$1.55 per share or approximately NZ$1.453. If that issue price is used to value the 171.2

million FSGL shares to be distributed to MCK shareholders a value of approximately NZ$252.8 million (including

the NZ$4.3 million to be paid to MCK by First Sponsor) is derived which is above the current carrying value of

the investment is $244.6 million (MCK has invested $221.7 million in cash to date). It is not possible to estimate

with any degree of certainty the share price of FSGL following the IPO;

The investment in FSGL has been an underperforming investment from MCK’s perspective. The midpoint of the

price range set out in the preliminary prospectus for the FSGL IPO of S$1.55 per share represents a 21.9%

discount to the NAV of FSGL. The book value of MCK’s investment in FSGL after the March 2014 capital raising

by First Sponsor is NZ$244.6 million, comprising $221.7 million of cash outlaid and $22.9 million of equity

accounted profits. In return for its investment in First Sponsor MCK was issued with 171.6 million shares in

FSGL and $NZ4.3 million in cash under the First Sponsor Share Exchange:

Investment in First Sponsor (NZ$ millions)

Cash Outlay 221.7

Equity amounted earnings 22.9

244.6

Shares in FSGL4 248.5

Cash 4.3

Theoretical gain based on an FSGL share price of S$1.55 (8.2)

244.6

This calculation assumes the S$1.55 price is a fair reflection of the value of a share in FSGL. The total return on

MCK’s investment in First Sponsor is only $31.1 million which equates to a return on investment over the seven

years since the first $42.5 million investment in 2007 of 3.8% which is below MCK’s cost of debt. There remains

the potential for upside, but giving the deteriorating outlook for property development and investment in China,

exiting the investment could to be the best course of action. The two major shareholders in FSGL are large and

very successful investment conglomerates who will be committed to the success of FSGL, and their experience

and reputation is likely to attract investors to FSGL;

At the time of writing this report the issue price has not been finalised. The exchange ratio has been set at an

assumed IPO price of S$1.55 and will not be changed if the eventual issue price is different;

The impact of the capital repayment is to approximately double the pro-forma earnings per ordinary share. The

2013 pro-forma earnings (i.e removing earnings from First Sponsor and minority members in CDL Investments)

was $17.9 million or 16.9 cents per share based on the reduced number of ordinary shares. Actual earnings per

share in 2013 were 7.76 cents. The NAV per ordinary share rises from $1.34 to $2.72. Provided MCK’s New

Zealand businesses perform at or above the levels prevailing in 2013 there is likely to be a rerating of the MCK

share price from 70 cents if the Proposed Capital Return proceeds;

3 Converted at NZD:SGD 1.07.

4 171.6 million shares at S$1.55 converted at NZ$1 = S$1.07.


INDEPENDENT REPORT

25

The number of Preference Shares on issue has declined by the same percentage as the ordinary shares (i.e.

75%). The Preference Shares can be redeemed in part or in full at any time provided 75% or more of the

Preference Shareholders vote in favour. M&C plc hold in excess of 85% of the Preference Shares and will

control when and if the Preference Shares are to be mandatorily repaid. The redemption payment is the higher

of the 20-day volume weighted average price or 64 cents. The capital repayment is, in Grant Samuel’s opinion,

unlikely to have as significant an impact on the price at which the Preference Shares will trade as it will on the

ordinary shares as there is always the potential for the company to redeem the RPS. The Preference Shares are

entitled to receive the same dividend as ordinary shares. MCK is paying a fully imputed dividend of 1.2 cents per

share in respect of the 2013 financial year which, given the reduced number of shares on issue, can be expected

to increase;

Shareholders of MCK already have an exposure to the China property market through the substantial investment

in First Sponsor. Recent market commentaries are suggesting a weakening in the market:

UBS May 2014

“We are increasingly worried about a property downturn in China. To some extent, the visible

slowdown of property activity in recent months was expected after a strong rebound in 2012 and

2013. However, property supply has been growing faster than underlying demand, while investment

demand is being eroded and inventories are building up.”

Bloomberg May 2014

“New home sales fell 47 percent over the May 1-3 holidays to the lowest level in four years in 54 cities,

Centaline Group said in a reported dated yesterday. The value of China’s residential sales slumped

7.7 percent in the first quarter after money supply grew at the slowest pace on record in March amid

an economic slowdown.

Developers have cut prices, and discounts have spread from smaller cities with “a massive”

oversupply to big cities including Shanghai and Guangzhou where demand remains strong according

to an April 28 report by China Real Estate Information Corp, a property data and consulting firm.”

CSFB May 2014

“We believe that China’s real estate boom of recent years is largely over. Real estate activity has

deteriorated sharply in 2014, and we think China is approaching the start of a multi-month property

slowdown. Developments over the past few years such as credit tightening, tougher regulations on

house purchase and slowing GDP growth are driving the activity slowdown.”

FSGL will have exposure primarily to Chengdu City, Sichuan Province in Western China where the oversupply may

not be as prevalent. Any change in sentiment towards residential property is likely to reduce demand and put

pressure on prices across all markets albeit to different degrees.

6.4 Benefits of the Proposed Capital Return

6.5.1 Shareholders will have flexibility to manage their investment exposure

Initially, MCK shareholders will retain their existing economic exposure to both the hotels business and the China

property development business through MCK shares and shares in FSGL. To this extent the Proposed Capital

Return is essentially neutral. MCK shareholders will have their investment split into two parts.

From that point on however, and provided the FSGL IPO proceeds as planned, shareholders will have greater

flexibility in managing their investment exposure. The risk/return profile of the hotels business is quite different from

that of the China property development business. This flexibility should be attractive to investors who wish to base

their investment decisions, at least in part, on specific industry and/or geographical exposures.


INDEPENDENT REPORT

26

6.5.2 Additional investor interest in MCK is likely to be encouraged

MCK is generally regarded as a New Zealand hotels business. Given the progressively increasing size of the

investment in the China property development company, potential investors in MCK who otherwise might be

attracted to the hotels business currently must accept significant and growing exposure to the China property

development sector while MCK retains its interest in First Sponsor.

The repositioning of MCK as a dedicated hotel business may well attract investors who seek exposure to that sector.

If MCK was not owned 70.22% by M&C plc, the effective separation of the hotels business as a consequence of the

Proposed Capital Return would make it more attractive as a potential takeover target.

6.5.3 The format of the Proposed Capital Return is fair

The Proposed Capital Return is being undertaken by way of an in-specie distribution of MCK’s shareholding in FSGL.

The shares are being distributed pro-rata to all holders of ordinary and preference shares in MCK. For every 100

shares (ordinary or preference) held, 68 will be cancelled for which shareholders will receive approximately 33 FSGL

shares, retaining 32 shares in MCK. All shareholders are being treated equally as they will be distributed exactly the

same proportional ownership of MCK’s interest in First Sponsor as those shareholders already hold in MCK.

6.5.4 MCK will be released from further funding commitments to First Sponsor

If the Proposed Capital Return is completed, MCK will be released from further funding commitments to First

Sponsor. This option will transfer to the individual shareholders in MCK to whom the FSGL shares are being

distributed. There is no certainty that any future capital calls will be made to FSGL shareholders.

6.5.6 The Proposed Capital Return may lead to greater management and board focus at MCK

As the investment in First Sponsor has grown, it has consumed more management and Board focus at MCK. If the

Proposed Capital Return is completed, the Board and Management of MCK will be able to concentrate on the hotels

business in New Zealand.

6.5 Disadvantages of the Proposed Capital Return

There is no absolute certainty that FSGL shares will be listed

First Sponsor is currently working with its advisers with a view to implementing the FSGL IPO in mid 2014. There is

no certainty that the Proposed FSGL IPO will be successfully implemented, either in 2014 or subsequently. The

immediate implication of this timing is that there will be no certainty that the FSGL shares will eventually be listed.

6.6 Voting for or against the Proposed Capital Return

A decision to vote for or against the Proposed Capital Return is a matter for individual shareholders based on their

own view as to value and future market conditions, risk profile, liquidity preference, portfolio strategy, tax position and

other factors. In particular, taxation consequences will vary widely across shareholders. Shareholders will need to

consider these consequences and, if appropriate, consult their own professional adviser(s).

GRANT SAMUEL & ASSOCIATES LIMITED

MAY 2014


INDEPENDENT REPORT

27

Appendix A – Qualifications, Declarations and Consents

1. Qualifications

The Grant Samuel group of companies provides corporate advisory services in relation to mergers and acquisitions,

capital raisings, corporate restructuring and financial matters generally. One of the primary activities of Grant Samuel

is the preparation of corporate and business valuations and the provision of independent advice and expert’s reports

in connection with mergers and acquisitions, takeovers and capital reconstructions. Since inception in 1988, Grant

Samuel and its related companies have prepared more than 400 public expert and appraisal reports.

The persons responsible for preparing this report on behalf of Grant Samuel are Michael Lorimer, BCA and Simon

Cotter, BCom, MAppFin, F Fin. Each has a significant number of years of experience in relevant corporate advisory

matters.

2. Limitations and Reliance on Information

Grant Samuel’s opinion is based on economic, market and other conditions prevailing at the date of this report.

Such conditions can change significantly over relatively short periods of time. The report is based upon financial and

other information provided by the directors, management and advisers of MCK. Grant Samuel has considered and

relied upon this information. Grant Samuel believes that the information provided was reliable, complete and not

misleading and has no reason to believe that any material facts have been withheld.

The information provided has been evaluated through analysis, enquiry, and review for the purposes of forming an

opinion as to the underlying value of MCK. However in such assignments time is limited and Grant Samuel does not

warrant that these inquiries have identified or verified all of the matters which an audit, extensive examination or “due

diligence” investigation might disclose.

The time constraints for preparing an independent report are tight. This timeframe restricts the ability to undertake a

detailed investigation of MCK. In any event, an analysis of the merits of the proposal is in the nature of an overall

opinion rather than an audit or detailed investigation. Grant Samuel has not undertaken a due diligence investigation

of MCK. In addition, preparation of this report does not imply that Grant Samuel has audited in any way the

management accounts or other records of MCK. It is understood that, where appropriate, the accounting

information provided to Grant Samuel was prepared in accordance with generally accepted accounting practice and

in a manner consistent with methods of accounting used in previous years.

An important part of the information base used in forming an opinion of the kind expressed in this report is the

opinions and judgement of the management of the relevant enterprise. That information was also evaluated through

analysis, enquiry and review to the extent practicable. However, it must be recognised that such information is not

always capable of external verification or validation.

To the extent that there are legal issues relating to assets, properties, or business interests or issues relating to

compliance with applicable laws, regulations, and policies, Grant Samuel assumes no responsibility and offers no

legal opinion or interpretation on any issue. In forming its opinion, Grant Samuel has assumed, except as specifically

advised to it, that:

the title to all such assets, properties, or business interests purportedly owned by MCK is good and marketable

in all material respects, and there are no material adverse interests, encumbrances, engineering, environmental,

zoning, planning or related issues associated with these interests, and that the subject assets, properties, or

business interests are free and clear of any and all material liens, encumbrances or encroachments;

there is compliance in all material respects with all applicable national and local regulations and laws, as well as

the policies of all applicable regulators other than as publicly disclosed, and that all required licences, rights,

consents, or legislative or administrative authorities from any government, private entity, regulatory agency or

organisation have been or can be obtained or renewed for the operation of the business of MCK, other than as

publicly disclosed;


INDEPENDENT REPORT

28

various contracts in place and their respective contractual terms will continue and will not be materially and

adversely influenced by potential changes in control; and

there are no material legal proceedings regarding the business, assets or affairs of MCK, other than as publicly

disclosed.

3. Disclaimers

It is not intended that this report should be used or relied upon for any purpose other than as an expression of Grant

Samuel’s opinion as to the merits of the Proposed Capital Return. Grant Samuel expressly disclaims any liability to

any MCK security holder who relies or purports to rely on the report for any other purpose and to any other party

who relies or purports to rely on the report for any purpose whatsoever.

This report has been prepared by Grant Samuel with care and diligence and the statements and opinions given by

Grant Samuel in this report are given in good faith and in the belief on reasonable grounds that such statements and

opinions are correct and not misleading. However, no responsibility is accepted by Grant Samuel or any of its

officers or employees for errors or omissions however arising in the preparation of this report, provided that this shall

not absolve Grant Samuel from liability arising from an opinion expressed recklessly or in bad faith.

Grant Samuel has had no involvement in the preparation of the Notice of Meeting issued by MCK and has not verified

or approved any of the contents of the Notice of Meeting. Grant Samuel does not accept any responsibility for the

contents of the Notice of Meeting (except for this report).

4. Independence

Grant Samuel and its related entities do not have any shareholding in or other relationship or conflict of interest with

MCK or First Sponsor that could affect its ability to provide an unbiased opinion in relation to the Proposed Capital

Return. Grant Samuel had no part in the formulation of the Proposed Capital Return. Its only role has been the

preparation of this report. Grant Samuel will receive a fixed fee for the preparation of this report. This fee is not

contingent on the outcome of the Proposed Capital Return.

5. Information

Grant Samuel has obtained, with one exception, all the information that it believes is desirable for the purposes of

preparing this report, including all relevant information which is or should have been known to any Director of MCK

and made available to the Directors. Grant Samuel confirms that in its opinion the information provided by MCK and

contained within this report is sufficient to enable MCK security holders to understand all relevant factors and make

an informed decision in respect of the Proposed Capital Return. The following information was used and relied upon

in preparing this report:

5.1 Publicly Available Information

MCK Annual Reports for the years ending 31 December 2011, 2012 and 2013;

MCK offer document in relation to issue of redeemable preference shares dated February 2014;

MCK’s NZX announcements;

NZX Company Research; and

Capital IQ

5.2 Non Public Information

Copies of MCK Board Papers;

Draft documentation (including copies of Prospectus) in relation to the Proposed FSGL IPO;

Annual Accounts for First Sponsor Capital Limited for the years ending 31 December 2011, 2012 and 2013;

Annual Accounts for First Sponsor Group Limited for the years ending 31 December 2011, 2012 and 2013;


INDEPENDENT REPORT

29

Draft Property Valuations prepared by DTZ;

Presentation to IRD on Proposed Capital Return prepared by KPMG; and

Correspondence between DBS and Singapore Exchange Securities Trading Limited.

6. Declarations

MCK has agreed that it will indemnify Grant Samuel and its employees and officers in respect of any liability suffered

or incurred as a result of or in connection with the preparation of the report. This indemnity will not apply in respect

of the proportion of any liability found by a Court to be primarily caused by any conduct involving gross negligence or

wilful misconduct by Grant Samuel. MCK has also agreed to indemnify Grant Samuel and its employees and officers

for time spent and reasonable legal costs and expenses incurred in relation to any inquiry or proceeding initiated by

any person. Where Grant Samuel or its employees and officers are found to have been grossly negligent or engaged

in wilful misconduct Grant Samuel shall bear the proportion of such costs caused by its action. Any claims by MCK

are limited to an amount equal to the fees paid to Grant Samuel.

Advance drafts of this report were provided to the directors and executive management of MCK. Certain changes

were made to the drafting of the report as a result of the circulation of the draft report. There was no alteration to the

methodology, evaluation or conclusions as a result of issuing the drafts.

7. Consents

Grant Samuel consents to the issuing of this report in the form and context in which it is to be included in the Notice

of Meeting to be sent to security holders of MCK. Neither the whole nor any part of this report nor any reference

thereto may be included in any other document without the prior written consent of Grant Samuel as to the form and

context in which it appears.

Annexure B: Scheme Plan

Scheme of arrangement pursuant to Part 15 of the Companies Act 1993 between Millennium & Copthorne Hotels New Zealand Limited and the holders of its shares.

Interpretation

1. In this document, unless the context otherwise requires:

Company means Millennium & Copthorne Hotels New Zealand Limited;

Conditions means the conditions to the Scheme set out in clause 6;

First Sponsor means First Sponsor Group Limited, a duly incorporated company having its registered office in the Cayman Islands;

First Sponsor Share means an ordinary share in First Sponsor;

First Sponsor Underwriting Agreement means the management and underwriting agreement to be entered into between First Sponsor and DBS Bank Ltd in connection with the IPO;

IPO means the proposed initial public offering to list First Sponsor on the SGX;

Ordinary Share means an ordinary share in the Company;

Preference Share means a preference share in the Company;

Record Date for the Scheme means Thursday, 17 July 2014, at 6.00pm or other date or time that the Company’s Board approves if an event occurs that makes it impractical or more desirable in the interests of the Company and all shareholders as a whole to proceed with the Scheme at that different time or date;

Scheme means the scheme of arrangement described in this document;

Share means an Ordinary Share or a Preference Share, as the context requires;

Shareholder means each person who is registered in the share register of the Company as the holder of a Share on the Record Date; and

SGX means the stock exchange operated by Singapore Exchange Securities Trading Limited.

Cancellation

2. Subject to the prior satisfaction of the Conditions, at 6.00pm on the Record Date:

(a) 698 out of every 1,000 Ordinary Shares registered in the name of each Shareholder will be cancelled, with any share fractions rounded down to the nearest whole number; and

(b) 698 out of every 1,000 Preference Shares registered in the name of each Shareholder will be cancelled, with any share fractions rounded down to the nearest whole number.

Where Shares are not held in a multiple of 1,000, the cancellation ratios above will be applied on a pro rata basis.

Distribution


(a) 327 First Sponsor Shares for every 1,000 Ordinary Shares registered in the name of each Shareholder (immediately prior to the cancellation of Ordinary Shares in accordance with clause 2(a) of this Scheme) will be distributed to Ordinary Share Shareholders, with any fractional entitlements rounded down to the nearest whole number; and

(b) 327 First Sponsor Shares for every 1,000 Preference Shares registered in the name of each Shareholder (immediately prior to the cancellation of Preference Shares in accordance with clause 2(b) of this Scheme) will be distributed to Preference Share Shareholders, with any fractional entitlements rounded down to the nearest whole number.

Where Shares are not held in a multiple of 1,000, the distribution ratios above will be applied on a pro rata basis.

Share Transfer Authorisation

4. Each Shareholder is deemed to have authorised the Company, First Sponsor, their respective directors, and any other person nominated by either the Company or First Sponsor, on that Shareholder’s behalf, to complete and execute any instrument of transfer, and take all other actions which are reasonably necessary, to transfer the relevant First Sponsor Shares to be distributed to that Shareholder under the Scheme from the Company to that Shareholder, following which the Shareholder shall be registered as the holder of the relevant First Sponsor Shares.

Scheme approval as major transaction approval if such approval required

5. If the Scheme ultimately constitutes a “major transaction” under section 129 of the Companies Act 1993, approval of the Scheme by special resolution of the holders of Ordinary Shares at the special meeting convened by the Company in relation to the Scheme is also approval of the Scheme as a major transaction for the purposes of section 129 of the Companies Act 1993.

Conditions

6. Completion of the Scheme is in all respects conditional on, at or before 5.59pm on the Record Date:

(a) the Company’s Board not ceasing to be satisfied that the Company will, immediately after implementation of the Scheme, continue to satisfy the solvency test prescribed by section 4 of the Companies Act 1993 as modified by section 52(4) of the Companies Act 1993;

(b) First Sponsor having received a letter of eligibility from the SGX for the listing and quotation of its shares on SGX, and:

(i) all conditions imposed by SGX in granting its letter of eligibility having been satisfied or waived by SGX; or

(ii) to the extent that any such condition has not been satisfied or waived by SGX before 5.59 pm on the Record Date, First Sponsor being satisfied that such condition will be satisfied or waived by SGX on or before the date of admission of First Sponsor on SGX, other than for any conditions that relate to compliance by First Sponsor with the continuous listing requirements of SGX;

(c) First Sponsor having entered into the Underwriting Agreement and such agreement having not been terminated or revoked; and

(d) there being no stop order in respect of the final prospectus in relation to the IPO to be lodged with the Monetary Authority of Singapore for registration, issued by the Monetary Authority of Singapore.

Annexure C: Court Orders

IN THE HIGH COURT OF NEW ZEALAND

AUCKLAND REGISTRY CIV 2013-404-5181

UNDER the Companies Act 1993 and Part 7 and Part 19 of the High Court Rules

IN THE MATTER OF a scheme of arrangement under Part 15 of the Companies Act 1993

AND

IN THE MATTER OF MILLENNIUM & COPTHORNE HOTELS NEW ZEALAND LTD

Applicant

INITIAL ORDERS OF THE HONOURABLE JUSTICE VENNING AS TO SERVICE, REPRESENTATION AND DIRECTIONS

19 DECEMBER 2013

INITIAL ORDERS OF THE HONOURABLE JUSTICE VENNING AS TO SERVICE, REPRESENTATION AND DIRECTIONS

TO: the applicant

AND TO: parties directed to be served in these orders

I. The ex parte interlocutory application made by the applicant, Millennium & Copthorne Hotels New Zealand Ltd (MCK), on 16 December 2013 seeking initial orders pursuant to s 236(2) of the Companies Act 1993 to convene shareholders’ meetings (Scheme Meetings) to consider a proposed scheme of arrangement (Scheme) was determined by the Honourable Justice Venning on 19 December 2013.

II. The determination was made with a Chambers hearing. The Court heard from Ms Rose and Mr Ladd, counsel for the applicant.

III. The following orders were made:

Timetable

1. confirming that:

(a) this matter is allocated to a specific Judge who will hear:

(a) this ex parte interlocutory application for initial orders relating to an originating application for approval of a scheme of arrangement under Part 15 of the Companies Act 1993 (the Application for Initial Orders);

(b) any other interlocutory application for initial orders;

(c) the originating application for orders approving a scheme of arrangement under Part 15 of the Companies Act 1993 (the Application for Final Orders); and

(d) any other related application; and

(b) unless otherwise advised by the Court, the second and third hearings in this proceeding will occur on:

(a) Wednesday, 16 April 2014, at 9am (Second Hearing); and

(b) Friday, 30 May 2014, at 9am;

Service orders

2. dispensing with the usual requirement that this Interlocutory Application for Initial Orders be served on all affected persons;

3. directing that, except as provided in these orders:

(a) MCK is not required to serve any other documents on the persons specified in these orders; and

(b) if hearing of the Application for Final Orders is adjourned for any reason, MCK is required only to serve those persons who are entitled to appear and be heard under para 21 below with notice of the new hearing date;

Confidentiality & orders that court file not be searched

4. directing that the originating application, all interlocutory applications, and all documents related to approval of the proposed scheme of arrangement (the Scheme) shall not be searched, inspected or copied:

(a) until such time as the Shareholders’ Packs (as defined at para 15 below) have been distributed to MCK shareholders in accordance with the orders at paras 12 to 18 below; and

(b) without leave of the court at any time thereafter;

Scheme Meetings

5. directing MCK to:

(a) hold an extraordinary general meeting of each class of MCK shareholders (the Scheme Meetings) on Thursday, 8 May 2014 at a time and venue to be confirmed at the Second Hearing;

(b) seek approval of the Scheme (or Scheme as amended by MCK before the Scheme Meetings in a manner consistent with these orders) by way of special resolution from each class of MCK shareholders (the Resolutions). Current drafts of the Scheme and the Resolutions are respectively contained at Schedules 1 and 2 of the Application for Final Orders; and

(c) conduct the Scheme Meetings contemporaneously;

6. directing that, subject only to further court order and the orders at paras 28 – 29, the two classes of MCK shareholders are:

(a) MCK ordinary shareholders; and

(b) MCK Preference Share shareholders;

7. directing that only holders of MCK ordinary shares and MCK Preference Shares whose names appear in the register of shareholders as at:

(a) 5.00pm on Thursday, 17 April 2014 (Shareholders’ Pack Record Date) are entitled to receive a Shareholders’ Pack; and

(b) 12.00pm on or around Tuesday, 6 May 2014 (Shareholder Voting Record Date) are entitled to be represented and vote at the Scheme Meetings or any adjournment or postponement thereof;

8. directing that:

(a) the Resolutions shall be approved if 75% or more of the votes cast by those shareholders in each class entitled to vote at the Scheme Meetings (whether in person, by proxy, or post) vote in favour of the Resolutions; and

Annexure C: Court Orders (continued)

(b) voting by each shareholder class is to be by way of a poll, rather than by a show of hands;

9. directing that MCK’s chairman – Mr Hong Ren Wong – or his nominee act as the chairperson of the Scheme Meetings;

10. requiring that, subject to any order made following hearing of this Application for Initial Orders or the Second Hearing, the Scheme Meetings are to be conducted in accordance with MCK’s Constitution and Schedule 1 and ss 121 – 125 of the Companies Act 1993;

Notice of Scheme Meetings & content of Shareholders’ Packs

11. requiring MCK to advertise the Scheme Meetings at least 10 working days before the Scheme Meetings. The content of the advertisement and major daily newspapers in which the advertisement is to run are to be approved by the Court at the Second Hearing;

Use of a Preliminary Prospectus

12. permitting MCK to:

(a) distribute a Preliminary Prospectus in relation to First Sponsor Group Ltd (FS) to its shareholders as part of the Shareholders’ Pack;

(b) include only a price range in the Preliminary Prospectus in relation to the price of FS’s shares; and

(c) update MCK shareholders via NZX announcement during the Announcement Window (as defined at para 16 below) on any material comments relevant to their Scheme voting decisions that the SGX, Monetary Authority of Singapore (MAS) or other person may have in respect of the Preliminary Prospectus distributed as part of the Shareholders’ Pack;

Shareholders’ Pack

13. requiring MCK to:

(a) distribute a Shareholders’ Pack at least 10 working days before the Scheme Meetings to:

(a) all MCK directors;

(b) MCK’s auditors;

(c) all MCK ordinary share shareholders listed on MCK’s share register as at the Shareholders’ Pack Record Date; and

(d) all MCK Preference Share shareholders listed on MCK’s share register as at the Shareholders’ Pack Record Date,

subject to the proviso that where a shareholder holds both ordinary shares and MCK Preference Shares, distribution of only one Shareholders’ Pack is required; and

(b) provide on request a copy of the Shareholders’ Pack to any other person who becomes a MCK shareholder and entitled to vote on the Resolutions after the Shareholders’ Pack Record Date;

14. directing that the Shareholders’ Pack is to be:

(a) approved by the court at the Second Hearing (or other date advised by the court);

(b) made available publicly on MCK’s website from a date set by the court at the Second Hearing;

(c) mailed by ordinary mail to shareholders’ addresses as recorded on MCK’s share register at 5.00pm on the Shareholders’ Pack Record Date in:

(a) electronic format to all shareholders who have elected to receive all Scheme-related documents in electronic form only; and

(b) hardcopy format to all other shareholders; and

(d) made available for collection in hard copy form from a physical address and date set by the court at the Second Hearing;

15. directing that for the purposes of the order at para 14 above, the Shareholders’ Pack is to include (but its content is not limited to) the following materials:

(a) a cover letter;

(b) a guide to the Shareholders’ Pack materials;

(c) the formal notice of the Scheme Meetings, including the Resolutions and explanatory notes for the Resolutions;

(d) a voting/proxy form for voting on the Resolutions;

(e) a copy of the Scheme plan;

(f) an Explanatory Statement summarising the reason for and effect of the Scheme. The Explanatory Statement will also include a notice to MCK shareholders of their rights to appear and be heard on the Application for Final Orders in accordance with order 20 below;

(g) a copy of an independent report on the Scheme addressed to MCK shareholders – see also para 27 below;

(h) a Pathfinder Prospectus for FS – see also paras 12 and 16 above and below respectively;

(i) a copy of the Application for Final Orders; and

(j) copies of any sealed orders made by the court following hearing of this Application for Initial Orders and the Second Hearing,

in substantially the same form as the drafts approved by the court at the Second Hearing, with such amendment as MCK considers necessary or desirable, provided that any such amendment is consistent with the terms of these orders;

16. directing that MCK may make such amendments to materials contained in the Shareholders’ Pack as it may determine are in its best interests or the best interests of its shareholders, creditors or other affected or properly interested persons. Where possible, any such amendments to materials in the Shareholders’ Pack will be:

(a) made before MCK distributes the Shareholders’ Pack to shareholders and any other person identified in para 13 or directed to be served with this application; but

(b) if any material amendment of the Pathfinder Prospectus or any other document contained in the Shareholders’ Pack is made not less than 72 hours before the Scheme Meetings but after the Shareholders’ Pack is distributed to MCK shareholders and any other person directed to be served with this application (Announcement Window), MCK will notify those persons of such amendment by NZX announcement or other means that it considers will ensure timely notification receipt;

17. granting MCK leave to send a Shareholders’ Pack to persons outside the jurisdiction of this Court in the manner prescribed at paras 13 to 16 above;

18. directing that if MCK accidentally fails or omits to send a Shareholders’ Pack to any person specified in para 13 above or the Shareholders’ Pack is not received by any such person:

(a) any such failure or omission does not constitute a breach of the orders made in relation to the Scheme or invalidate any Resolutions passed or proceedings taken at the Scheme Meetings; but

(b) where any such failure or omission is brought to MCK’s attention, MCK shall endeavour to rectify it by the method and in the time most reasonably practicable in the circumstances;


Reporting of the results of the Scheme Meetings

19. requiring MCK, prior to the court’s consideration of the Application for Final Orders, to cause to be filed with the court, and served on any party who has filed a notice or an application for leave under order 20 or 21 (as applicable) at the relevant address for service, an affidavit or affidavits:

(a) verifying compliance with the requirements of the orders made following hearing of this Application for Initial Orders and the Second Hearing; and

(b) including confirmation of:

(a) the specific Resolutions voted on at the Scheme Meetings; and

(b) the number of shareholders voting in favour and against the Resolutions;

Rights of opposition of shareholders, creditors & other persons

20. directing that any shareholder who wishes to appear and be heard on the Application for Final Orders must:

(a) file a notice of appearance (containing an address for service); or

(b) file notice of opposition (containing an address for service); and

(c) by 4pm on Friday, 16 May 2014 if they oppose the Application for Final Orders:

(a) file a memorandum of submissions on which they intend to rely, together with any affidavit ; and

(b) serve a copy on MCK at its address for service;

21. directing that the only persons entitled to appear and be heard at the Application for Final Orders are:

(a) MCK;

(b) those persons who file a notice of appearance or opposition in accordance with para 20 above; and

(c) any creditor or other person who considers that they have a proper interest in the Scheme who:

(a) by 4pm on Friday, 16 May 2014, files:

(A) an application for leave to be heard; and

(B) a notice of opposition to the Application for Final Orders; and

(b) subsequently is granted leave to appear and be heard at the hearing of the Application for Final Orders;

22. requiring MCK to publish an advertisement which refers to the rights of all persons entitled under para 21 above to appear and be heard at the Application for Final Orders. The advertisement is to be published:

(a) not more than 20 working days before the last day as identified at paras 20 and 21 above for filing of notices of opposition to the Application for Final Orders; and

(b) in major daily newspapers to be confirmed at the Second Hearing and published;

23. requiring MCK by 4pm on Friday, 23 May 2014 to serve (at the stated address for service) a copy of any affidavit in support of the Application for Final Orders upon any person entitled under para 21 above to appear and be heard at the Application for Final Orders;

24. requiring MCK to notify the outcome of the Scheme Meetings by:

(a) NZX announcement – to be made as soon as practicable after voting at the Scheme Meetings is complete; and

(b) serving written notice on persons entitled under para 21 above to appear and be heard at the hearing of the Application for Final Orders. Such notice is to be served as soon as is practicable after voting at the Scheme Meetings is complete;

Requests for information

25. requiring MCK to respond to any written requests for further information regarding the Scheme;

26. reserving leave to all persons entitled under para 21 above to seek any further and additional information about the Scheme. Any such request for further and additional information is to be made to MCK through Bell Gully by the dates approved at the Second Hearing. Likewise, any request for further and additional information is to be responded to by MCK through Bell Gully within the timeframes approved at the Second Hearing;

Copy of independent report to be filed with court

27. requiring MCK to file with the court before the Second Hearing, a copy of an independent report addressed to MCK shareholders and prepared by an appropriate person to be confirmed by MCK and approved by the court at the Second Hearing;

Voting by two classes

28. approving the appropriateness of voting on the Scheme by all eligible:

(a) MCK ordinary share shareholders as a single class; and

(b) MCK Preference Share shareholders as a single class;

29. requiring any person who wishes to pursue any issue about whether it is appropriate for voting to be by way of the two above-identified classes to advise the court and MCK by way of memorandum. The relevant memorandum is to be filed and served by Friday, 16 May 2014. MCK is to file a response, again by memorandum, by Friday, 23 May 2014; and

Leave to return to court at short notice

30. granting leave to MCK or any other person entitled under para 21 above to appear and be heard at the Application for Final Orders to apply on 24 hours’ notice to:

(a) vary any order made following the:

(a) hearing of the Application for Initial Orders; or

(b) Second Hearing; and

(b) apply for any further order or hearing as may be appropriate.

Dated: 19 December 2013

K. Tauhinu

_________________________

Deputy Registrar


I. The ex parte interlocutory application made by the applicant, Millennium & Copthorne Hotels New Zealand Ltd (MCK) on 30 April 2014 seeking a further initial order pursuant to s 236 of the Companies Act 1993 about major transactions and minority buy-out rights was determined by the Honourable Justice Venning on 1 May 2014.

II. The determination was made without a hearing, by way of Minute/Order dated 1 May 2014.

III. The following interim order was made:

MCK is not required to include minority buy-out rights for any shareholder opposed to the Scheme even if the Scheme constitutes a “major transaction” under s 129 of the Companies Act 1993.

Dated: 1 May 2014

M. Libre

_________________________

Deputy Registrar





AND


Applicant

FURTHER INITIAL ORDER OF THE HONOURABLE JUSTICE VENNING AS TO MAJOR TRANSACTIONS AND MINORITY BUY-OUT RIGHTS

1 MAY 2014

FURTHER INITIAL ORDER OF THE HONOURABLE JUSTICE VENNING AS TO MAJOR TRANSACTIONS & MINORITY BUY-OUT RIGHTS

TO: the applicant

AND TO: parties directed to be served in these orders


I. The ex parte interlocutory application made by the applicant, Millennium & Copthorne Hotels New Zealand Ltd (MCK), on 30 May 2014 seeking Second Hearing Initial Orders pursuant to s 236(2) of the Companies Act 1993 to convene shareholders’ meetings (Scheme Meetings) to consider a proposed scheme of arrangement (Scheme) was determined by the Honourable Justice Venning on 30 May 2014.

II. The determination was made with a Chambers hearing. The Court heard from Ms Rose and Mr Ladd, counsel for the applicant.

III. Further to the Initial Orders of 19 December 2013 and the Further Initial Order of 1 May 2014, the following orders were made:

Scheme Meetings

1. directing MCK to hold the Scheme Meetings ordered at para 5(a) of the Court’s Initial Orders of 19 December 2013 (Initial Orders):

(a) on Thursday, 19 June 2014, at 2.30pm;

(b) at the Copthorne Hotel Auckland City, 150 Anzac Avenue, Auckland;





AND


Applicant

SECOND HEARING INITIAL ORDERS OF THE HONOURABLE JUSTICE VENNING AS TO SCHEME MEETINGS, INDEPENDENT REPORT, SHAREHOLDERS’ PACK AND ANCILLARY MATTERS

30 MAY 2014

SECOND HEARING INITIAL ORDERS OF THE HONOURABLE JUSTICE VENNING AS TO SCHEME MEETINGS, INDEPENDENT REPORT, SHAREHOLDERS’ PACK AND ANCILLARY MATTERS

TO: the applicant

AND TO: parties directed to be served

Voting

2. directing that:

(a) the Voting Form annexed as BKC 59 to Mr Chiu’s Second Affidavit in support of the Second Hearing Initial Orders, sworn 23 May 2014 (Second Affidavit) be approved and directed to be included in the Shareholders’ Pack;

(b) to be valid, all proxy and postal votes need to be by 2.30pm on 17 June 2014 (Proxy and Postal Voting Deadline):

(a) received by the Registrar, Computershare Investor Services Ltd, Private Bag 92119, Auckland 1142;

(b) lodged online at www.investorvote.co.nz; or

(c) faxed to 09 488 8787 (in New Zealand) or +64 9 488 8787 (from an international number);

(c) MCK is entitled to disregard any Voting Form received after the Proxy & Postal Voting Deadline; but

(d) MCK may waive, in its absolute discretion, the Proxy & Postal Voting Deadline if it deems such waiver to be in its best interests and in the best interests of MCK shareholders as a whole;

Updated Resolutions & Scheme Plan

3. approving – further to para 5(b) of the Initial Orders – the updated Resolutions and draft Scheme Plan annexed as BKC 30 and BKC 31 to Mr Chiu’s Second Affidavit for inclusion in the Shareholders’ Pack and directing that both documents so be included;

Independent Report

4. approving Grant Samuel as provider of the independent report addressed to MCK’s shareholders regarding the Scheme (Independent Report) – see para 27 of the Initial Orders;

5. directing that the Independent Report dated 23 May 2014 has been prepared by an appropriate person and is to be distributed to shareholders as part of the Shareholders’ Pack – see para 15(g) of the Initial Orders and para 6 below re Shareholders’ Pack;

Shareholders’ Packs

6. approving – further to paras 14 and 15 of the Initial Orders – the:

(a) following draft documents which form part of the Shareholders’ Pack:

(a) Notice of Meeting and Information Booklet relating to a scheme of arrangement, dated 4 June 2014;

(b) Preliminary Prospectus for FS;

(c) Voting Form, for voting on the Resolutions by proxy or postal voting; and

(d) election form for, among other things, opting in to the post-Scheme Block Sale Facility that MCK has arranged to allow shareholders who do not wish to hold FS shares after the Scheme is implemented to trade those shares in a straightforward and cost effective fashion; and

(b) draft Shareholders’ Pack as a whole;

7. directing – further to para 14 of the Initial Orders – that:

(a) MCK distribute the Shareholders’ Packs by ordinary mail on or before Wednesday, 4 June 2014;

(b) the approved Shareholders’ Pack be made available on NZX’s website as soon as practicable after lodgement of the Shareholders’ Pack by MCK with NZX; and

(c) hard copies of the approved Shareholders’ Pack be made available to MCK shareholders for inspection and removal from MCK’s offices at Level 13, 280 Centre, 280 Queen Street, Auckland 1010 from 2.30pm on Wednesday, 4 June 2014.

Advertising of Scheme Meetings & rights of opposition

8. approving the draft advertisement regarding the Scheme Meetings and shareholders’ and others’ rights of opposition to the Scheme annexed as BKC 37 to Mr Chiu’s Second Affidavit (Approved Advertisement);

9. directing MCK – further to paras 11 and 22 of the Initial Orders – to:

(a) advertise the Scheme and available rights of opposition to the Scheme in the same or substantially the same format as the Approved Advertisement; and

(b) run the Approved Advertisement in the following major daily newspapers:

(a) New Zealand Herald;

(b) Waikato Times;

(c) Dominion Post;

(d) Christchurch Press;

(e) Otago Daily Times;

(f) Taranaki Daily News; and

(g) The Southland Times.

Further information requests

10. directing – further to paras 25 and 26 of the Initial Orders – that MCK is to respond to any further and additional information request within:

(a) 48 hours of receipt of the request; unless

(b) provision of a response within 48 hours is impracticable or unreasonable, in which case MCK is to notify the person requesting further or additional information of the expected timing for a response;

11. The contact telephone number for MCK is +64 9 353 5058. Written requests for further or additional information are to be sent to MCK at Level 13, 280 Centre, 280 Queen Street, Auckland;

Timetable updates

12. directing that relevant dates for matters approved in the Initial Orders are as set out in the updated timetable annexed as BKC 32 to Mr Chiu’s Second Affidavit (Revised Timetable). For convenience, relevant dates included in the Revised Timetable but not otherwise noted in relation to the orders sought above are:

(a) Record Date for distribution of Shareholders’ Packs = Friday, 30 May 2014, at 5.00pm;

(b) Record Date for determining shareholders entitled to vote at Scheme Meetings = Tuesday, 17 June 2014, at 5.00pm;

(c) last day for affected or interested persons to file and serve notice of opposition or appearance with the High Court at Auckland = Thursday, 26 June 2014, at 4.00pm;

(d) last day for MCK to file any reply and affidavit to any notice of opposition filed and served = Thursday, 3 July 2014, at 4.00pm; and

(e) expected Record Date and Effective Date for Scheme = Thursday, 17 July 2014, at 6.00pm or other date/time that the MCK Board approves if an event occurs that makes it impractical or more desirable in the interests of MCK and all shareholders to proceed with the Scheme at that different date/time;


Authority to make amendments

13. directing – further to para 16 of the Initial Orders – that, provided any amendment of an approved document is consistent with the terms of these or any earlier interlocutory order (Interlocutory Orders) and the Scheme’s spirit, MCK may amend before distribution of the Shareholders’ Packs:

(a) any document approved for inclusion in the Shareholders’ Pack; and

(b) the Approved Advertisement;

14. for the avoidance of doubt, amendment consistent with the terms of the Interlocutory Orders includes (but is not limited to):

(a) typographical errors;

(b) obvious inconsistencies between and within documents comprising the Shareholders’ Pack and the Approved Advertisement; and

(c) the addition of any material information (whether due to oversight or changed circumstances) required to be disclosed or included in the Shareholders’ Pack as part of MCK’s wider regulatory obligations.

Dated: 30 May 2014

K. Wysoczanski_________________________

Deputy Registrar


This document notifies you that –

1. The applicant, Millennium & Copthorne Hotels New Zealand Ltd (MCK), will at 9.00 am on 10 July 2014 apply to the Court for orders that:

(a) the proposed scheme of arrangement between MCK and its shareholders as described in the Scheme Plan located at Schedule 1 of this originating application (the Scheme) is approved and binding upon MCK and its creditors and shareholders in accordance with its terms with effect from the Record Date defined in the Scheme; and

(b) MCK is granted leave to apply to the Court at short notice if any amendment of the Scheme or further orders or directions are required.

2. The grounds on which each of the above orders is sought are:

(a) section 236(1) of the Companies Act 1993 provides jurisdiction for the Court to make orders that the Scheme is binding on MCK, its creditors, shareholders, and other persons as the Court may specify and upon such terms and conditions as the Court thinks fit;

(b) section 237(1) of the Companies Act 1993 gives jurisdiction to the Court to make additional orders to give effect to the Scheme;



UNDER the Companies Act 1993 and Part 19 of the High Court Rules


AND

IN THE MATTER OF MILLENNIUM & COPTHORNE HOTELS NEW ZEALAND LTD, a duly incorporated company listed on the New Zealand Stock Exchange, having its registered office at Level 13, 280 Queen Street, Auckland, and carrying on business as a hotel chain

Applicant

AMENDED ORIGINATING APPLICATION FOR ORDERS APPROVING A SCHEME OF ARRANGEMENT UNDER PART 15 OF THE COMPANIES ACT 1993

30 MAY 2014

Before: Venning J

Next Event Date: Hearing, 10 July 2014, at 9am

AMENDED ORIGINATING APPLICATION FOR ORDERS APPROVING A SCHEME OF ARRANGEMENT UNDER PART 15 OF THE COMPANIES ACT 1993

TO: The Registrar of the High Court at Auckland

AND TO: Persons directed to be served in the Initial Orders dated 19 December 2013

(c) by the date on which this application is determined, MCK will have complied with:

(i) the Initial Orders made by this Court following hearings at 9.00 am on each of 19 December 2013 and 30 May 2014;

(ii) the Further Initial Order made by this Court without a hearing on 1 May 2014; and

(iii) Part 15 of the Companies Act 1993;

(d) the Scheme is such that an intelligent and honest person of business acting in respect of his or her own interest would reasonably approve it;

(e) consent to be bound by the Scheme has been given to the court by MCK’s shareholders;

(f) the necessary approvals, exemptions and rulings have been received by relevant regulators; and

(g) the evidence filed in support of this application as set out in the affidavits of Mr Boo Keng Chiu, sworn on:

(i) 16 December 2013;

(ii) 23 May 2014; and

(iii) 28 May 2014;

(h) the evidence filed in support of this application as set out in the affidavits of Mr Takeshi Ito, sworn on:

(i) 29 April 2014; and

(ii) 30 May 2014; and

(i) the evidence filed in support of this application as set out in the affidavit of Mr Michael John Lorimer, sworn on 23 May 2014.

3. This application is made in reliance on:

(a) Part 15 of the Companies Act 1993;

(b) Part 19 of the High Court Rules;

(c) the memorandum of counsel filed in support of the Application for:

(i) Initial Orders;

(ii) Further Initial Order; and

(iii) Second Hearing Initial Orders;

(d) any further affidavit filed by the applicant before the hearing of this originating application; and

(e) further memoranda of counsel to be filed before the hearing of this originating application.

Dated: 30 May 2014

Simon Ladd_________________________

SJP Ladd

Solicitor for the applicant

This document is filed by Simon John Peter Ladd, solicitor for the applicant, of the firm Bell Gully. The address for service of the Plaintiff is at the offices of Bell Gully, Level 22, Vero Centre, 48 Shortland Street, Auckland.

Documents for service on the applicant may be delivered to that address or may be:

(a) posted to the solicitor at PO Box 4199, Auckland; or

(b) left for the solicitor at a document exchange for direction to DX CP20509, Auckland; or

(c) transmitted to the solicitor by facsimile to facsimile number +64 9 916 8801.

Schedule 1 – Scheme Plan

Scheme of arrangement pursuant to Part 15 of the Companies Act 1993 between Millennium & Copthorne Hotels New Zealand Limited and the holders of its shares.

Interpretation

1. In this document, unless the context otherwise requires:

Company means Millennium & Copthorne Hotels New Zealand Limited;

Conditions means the conditions to the Scheme set out in clause 6;

First Sponsor means First Sponsor Group Limited, a duly incorporated company having its registered office in the Cayman Islands;

First Sponsor Share means an ordinary share in First Sponsor;

First Sponsor Underwriting Agreement means the management and underwriting agreement to be entered into between First Sponsor and DBS Bank Ltd in connection with the IPO;

IPO means the proposed initial public offering to list First Sponsor on the SGX;

Ordinary Share means an ordinary share in the Company;

Preference Share means a preference share in the Company;

Record Date for the Scheme means Thursday, 17 July 2014, at 6.00pm or other date or time that the Company’s Board approves if an event occurs that makes it impractical or more desirable in the interests of the Company and all shareholders as a whole to proceed with the Scheme at that different time or date;

Scheme means the scheme of arrangement described in this document;

Share means an Ordinary Share or a Preference Share, as the context requires;

Shareholder means each person who is registered in the share register of the Company as the holder of a Share on the Record Date; and

SGX means the stock exchange operated by Singapore Exchange Securities Trading Limited.

Cancellation


(a) 698 out of every 1,000 Ordinary Shares registered in the name of each Shareholder will be cancelled, with any share fractions rounded down to the nearest whole number; and

(b) 698 out of every 1,000 Preference Shares registered in the name of each Shareholder will be cancelled, with any share fractions rounded down to the nearest whole number.

Where Shares are not held in a multiple of 1,000, the cancellation ratios above will be applied on a pro rata basis.


Distribution


(a) 327 First Sponsor Shares for every 1,000 Ordinary Shares registered in the name of each Shareholder (immediately prior to the cancellation of Ordinary Shares in accordance with clause 2(a) of this Scheme) will be distributed to Ordinary Share Shareholders, with any fractional entitlements rounded down to the nearest whole number; and

(b) 327 First Sponsor Shares for every 1,000 Preference Shares registered in the name of each Shareholder (immediately prior to the cancellation of Preference Shares in accordance with clause 2(b) of this Scheme) will be distributed to Preference Share Shareholders, with any fractional entitlements rounded down to the nearest whole number.

Where Shares are not held in a multiple of 1,000, the distribution ratios above will be applied on a pro rata basis.

Share Transfer Authorisation

4. Each Shareholder is deemed to have authorised the Company, First Sponsor, their respective directors, and any other person nominated by either the Company or First Sponsor, on that Shareholder’s behalf, to complete and execute any instrument of transfer, and take all other actions which are reasonably necessary, to transfer the relevant First Sponsor Shares to be distributed to that Shareholder under the Scheme from the Company to that Shareholder, following which the Shareholder shall be registered as the holder of the relevant First Sponsor Shares.

Scheme approval as major transaction approval if such approval required

5. If the Scheme ultimately constitutes a “major transaction” under section 129 of the Companies Act 1993, approval of the Scheme by special resolution of the holders of Ordinary Shares at the special meeting convened by the Company in relation to the Scheme is also approval of the Scheme as a major transaction for the purposes of section 129 of the Companies Act 1993.

Conditions

6. Completion of the Scheme is in all respects conditional on, at or before 5.59pm on the Record Date:

(a) the Company’s Board not ceasing to be satisfied that the Company will, immediately after implementation of the Scheme, continue to satisfy the solvency test prescribed by section 4 of the Companies Act 1993 as modified by section 52(4) of the Companies Act 1993;

(b) First Sponsor having received a letter of eligibility from the SGX for the listing and quotation of its shares on SGX, and:

(i) all conditions imposed by SGX in granting its letter of eligibility having been satisfied or waived by SGX; or

(ii) to the extent that any such condition has not been satisfied or waived by SGX before 5.59pm on the Record Date, First Sponsor being satisfied that such condition will be satisfied or waived by SGX on or before the date of admission of First Sponsor on SGX, other than for any conditions that relate to compliance by First Sponsor with the continuous listing requirements of SGX;

(c) First Sponsor having entered into the Underwriting Agreement and such agreement having not been terminated or revoked; and

(d) there being no stop order in respect of the final prospectus in relation to the IPO to be lodged with the Monetary Authority of Singapore for registration, issued by the Monetary Authority of Singapore.

The following Resolutions are to be voted on at the Scheme Meetings to be held on Thursday, 19 June 2014 at 2.30pm at the Copthorne Hotel Auckland City, 150 Anzac Avenue, Auckland.

MCK Ordinary Shareholders

Note: only holders of Ordinary Shares are eligible to vote on this resolution.

To consider and, if thought fit, to pass the following Resolution as a special resolution of holders of MCK’s Ordinary Shares:

That the Scheme Plan (as defined in the Scheme Booklet) be and is hereby approved.

MCK Preference Shareholders

Note: only holders of Preference Shares are eligible to vote on this resolution.

To consider and, if thought fit, to pass the following Resolution as a special resolution of holders of the MCK Preference Shares:

That the Scheme Plan (as defined in the Scheme Booklet) be and is hereby approved.

Schedule 2 – Resolutions to be voted on at Scheme Meetings

Registered Office of Millennium & Copthorne Hotels New Zealand Limited

Level 13, 280 Centre, 280 Queen Street, Auckland, New ZealandTelephone: 64 9 353 5010Facsimile: 64 9 309 3244

Registrar

Computershare Investor Services LimitedLevel 2, 159 Hurstmere RoadTakapuna, AucklandPrivate Bag 92119Auckland 1142, New Zealand

Facsimile: 64 9 488 8787

Investor Enquiries: 64 9 488 8777

Email: [email protected]

Auditors

KPMG18 Viaduct Harbour Avenue,PO Box 1584Auckland 1140, New Zealand

Independent Adviser

Grant SamuelVero Centre, 48 Shortland StreetAuckland 1140, New Zealand

Directory

Directors of Millennium & Copthorne Hotels New Zealand Limited

Richard BobbBoo Keng ChiuGraham Andrew McKenzieHong Ren WongVincent Yeo

Solicitors

Bell GullyVero Centre, 48 Shortland Street,PO Box 4199Auckland 1140, New Zealand

Financial Adviser

Woodward PartnersLevel 10, Legal House101 Lambton QuayWellington, 6011, New Zealand

I N T E R I M R E P O R T 2 0 1 3

CDL Half Year Report Cover Page 2013.indd 1 21/08/13 9:09:45 a.m.

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I N T E R I M R E P O R T 2 0 1 3


I N T E R I M R E P O R T 2 0 1 3


Artist’s impression of Stonebrook subdivision in Rolleston, Canterbury.


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