Hi transsonic,
Unfortunately you are confusing LMT and Standard time. The departure time is given in LMT, to convert to UT use the arc to time tables. Thus your step 2 onwards should be:
2. Convert from LMT to UTC (departure airport) 1423 + 11:40 = 02:03 (8 Jan)
3. from UTC to ST (destination) 02:03 + 10 = 12:03
4. add trip time: 12:03 + 4:42 = 16:45 (8 Jan)