Build King Holdings Limited — Proxy Solicitation & Information Statement 2011

Jul 28, 2011

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult a licensed securities dealer, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Build King Holdings Limited, you should at once hand this circular to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

BUILD KING HOLDINGS LIMITED

(Incorporated in Bermuda with limited liability)

(Stock Code: 00240)

CONTINUING CONNECTED TRANSACTIONS AND NOTICE OF SPECIAL GENERAL MEETING

Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders

==> picture [94 x 34] intentionally omitted <==

A letter from the Board is set out on pages 3 to 6 of this circular. A letter of advice from the Independent Financial Adviser (as defi ned herein) to the Independent Board Committee (as defi ned herein) and the Independent Shareholders (as defi ned herein) is set out on pages 9 to 16 of this circular. A letter of the Independent Board Committee is set out on pages 7 to 8 of this circular.

A notice convening the special general meeting of Build King Holdings Limited to be held at Units 601-605A, 6th Floor, Tower B, Manulife Financial Centre, 223 Wai Yip Street, Kwun Tong, Kowloon, Hong Kong on Wednesday, 17 August 2011 at 10:00 a.m. is set out on Appendix II to this circular. Whether or not you intend to attend such meeting, please complete the enclosed form of proxy in accordance with the instructions printed thereon and return it to the branch share registrar of the Company in Hong Kong, Tricor Progressive Limited, at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for holding such meeting. Completion and return of the form of proxy will not preclude shareholders from attending and voting at the meeting or any adjourned meeting if they so wish.

29 July 2011

CONTENTS

	Page
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM THE BOARD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
LETTER FROM THE INDEPENDENT BOARD COMMITTEE . . . . . . . . . . . . . . . . . . . . . . . . . .	7
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER. . . . . . . . . . . . . . . . . . . . . . . . . .	9
APPENDIX I – GENERAL INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	17
APPENDIX II – NOTICE OF SPECIAL GENERAL MEETING. . . . . . . . . . . . . . . . . . . . . . . . . .	25

i

DEFINITIONS

In this circular, the following expressions have the following meanings unless the context requires otherwise:

the announcement of the Company dated 8 July 2011

“Announcement” the announcement of the Company dated 8 July 2011 “associate” has the meaning ascribed thereto under the Listing Rules “Board” the board of Directors

“Business Days” a day (other than a Saturday or a Sunday) on which banks generally are open for business in Hong Kong

“Company” Build King Holdings Limited, a company incorporated in Bermuda with limited liability whose shares are listed on the Stock Exchange

“Concrete” ready mixed concrete “Directors” the directors of the Company “Framework Agreement” the framework agreement between the Company and Wai Kee dated 8 July 2011 in respect of the continuing sale and purchase of Concrete

“Group” the Company and its subsidiaries

“HK$” Hong Kong dollars “Hong Kong” Hong Kong Special Administrative Region of the People’s Republic of China “Independent Board Committee” the board committee of the Company comprising all Independent Non-executive Directors, namely Dr. Chow Ming Kuen, Joseph, Mr. Ng Chi Ming, James and Mr. Ho Tai Wai, David, established to make recommendation to the Independent Shareholders in respect of the Framework Agreement, the transactions and the proposed annual caps thereunder

“Independent Financial Adviser” or CIMB Securities (HK) Limited, a corporation licensed to carry out “CIMB” type 1 (dealing in securities), type 4 (advising on securities) and type 6 (advising on corporate fi nance) regulated activities under the SFO and being the Independent Financial Adviser appointed by the Company to advise the Independent Board Committee and the Independent Shareholders in respect of the Framework Agreement, the transactions and the proposed annual caps thereunder

1

DEFINITIONS

“Independent Shareholders”	Shareholders other than Wai Kee and its associates
“Individual Agreements”	individual agreements, contracts or orders for individual
	transactions during the term of the Framework Agreement
“Latest Practicable Date”	25 July 2011, being the latest practicable date prior to the printing
	of this circular for ascertaining certain information contained in
	this circular
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange
“Party”	the Company or Wai Kee
“PRC”	the People’s Republic of China
“SFO”	the Securities and Futures Ordinance, Chapter 571 of the Laws of
	Hong Kong
“SGM”	the special general meeting of the Company to be convened
	on Wednesday, 17 August 2011 at 10:00 a.m for the purpose
	of considering, and if thought f t, approving the Framework
	Agreement, the transactions and the proposed annual caps
	thereunder
“Shares”	the ordinary share(s) of HK$0.10 each in the share capital of the
	Company
“Shareholders”	the shareholders of the Company
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Wai Kee”	Wai Kee Holdings Limited, a company incorporated in Bermuda
	with limited liability whose shares are listed on the Stock
	Exchange
“%”	per cent.

2

LETTER FROM THE BOARD

BUILD KING HOLDINGS LIMITED

(Incorporated in Bermuda with limited liability)

(Stock Code: 00240)

Directors: Mr. Zen Wei Peu, Derek (Chairman) Mr. Chang Kam Chuen, Desmond

Non-executive Directors:

Mr. David Howard Gem Dr. Cheng Chi Pang, Leslie Mr. Chan Chi Hung, Anthony

Independent Non-executive Directors:

Dr. Chow Ming Kuen, Joseph Mr. Ng Chi Ming, James Mr. Ho Tai Wai, David

Registered Offi ce: Clarendon House 2 Church Street Hamilton HM 11 Bermuda

Principal Place of Business in Hong Kong: Units 601-605A, 6th Floor Tower B, Manulife Financial Centre 223 Wai Yip Street Kwun Tong, Kowloon Hong Kong

29 July 2011

To the Shareholders

Dear Sir or Madam,

CONTINUING CONNECTED TRANSACTIONS AND NOTICE OF SPECIAL GENERAL MEETING

INTRODUCTION

Reference is made to the Announcement dated 8 July 2011.

The Company has entered into a Framework Agreement with Wai Kee for the purchase of Concrete from time to time for the period from 1 June 2011 to 31 December 2013, subject to the terms and conditions of the Framework Agreement.

3

LETTER FROM THE BOARD

The purpose of this circular is to provide the Shareholders with further information on the terms of the Framework Agreement and to convene the SGM to seek the approval of the Independent Shareholders with respect to the Framework Agreement.

THE FRAMEWORK AGREEMENT

On 8 July 2011, the Company entered into the Framework Agreement with Wai Kee, whereby the Company (by itself or through its subsidiaries) may, but is not obliged to, purchase Concrete from Wai Kee (or its subsidiaries and/or associates) from time to time during the period from 1 June 2011 to 31 December 2013 for the Group’s construction projects.

The Group and Wai Kee (or its subsidiaries and/or associates) will enter into Individual Agreements for individual transactions during the term of the Framework Agreement, which shall contain details of transactions including but not limited to the rights, assumption and obligations of the parties, fees and expenses, requirements of manufacture, payment, delivery and indemnities. The terms of the Individual Agreements shall not confl ict with the general principles set out in the Framework Agreement. Should there be any confl ict, the parties shall discuss and agree such adjustments to the Individual Agreements so that the general principles in the Framework Agreement should prevail.

The parties agreed that the price, fee or any other consideration shall be determined by reference to the relevant market price on a fair and reasonable basis, and where there is no relevant market price, the supplying cost plus reasonable profi t which is to be negotiated by the Group and Wai Kee.

The Framework Agreement may be terminated by either the Group or Wai Kee by giving prior written notice to the other party three (3) months in advance and the parties should decide on the terms and conditions of such termination by mutual agreement. Upon expiration and subject to the Group’s compliance with the Listing Rules, the Framework Agreement may be automatically renewed until such date to be agreed by the parties.

ANNUAL CAPS

Under the Framework Agreement, the Group and Wai Kee agreed that the maximum aggregate value of the contract sum in respect of the sale and purchase of Concrete for the periods concerned under the Framework Agreement shall not exceed the amounts set out below.

Period	Total value not exceeding
1 June 2011 – 31 December 2011	HK$10,000,000.00
1 January 2012 – 31 December 2012	HK$45,000,000.00
1 January 2013 – 31 December 2013	HK$55,000,000.00

The above annual caps are determined based on the Company’s expectation of its Concrete consumption during the corresponding periods, taking into account construction projects on hand, their construction and delivery schedules, new projects that the Company expects may or is likely to be awarded to the Group going forward and historical market prices of Concrete.

4

LETTER FROM THE BOARD

To the extent a joint venture (which is not a subsidiary of the Company) may be established between any Group member and an independent third party, and such joint venture purchases Concrete from Wai Kee from time to time, the amount of such purchases will not be included in the above annual caps as they will not constitute connected transactions for the Company under Chapter 14A of the Listing Rules.

Payments shall be made by the Group to Wai Kee (or its relevant subsidiary or associate) on a monthly basis within 30 days of receipt of invoice from Wai Kee (or its relevant subsidiary or associate) by cheque, bank draft or other method of bank transfer.

REASONS FOR AND BENEFITS OF THE CONTINUING CONNECTED TRANSACTION

A stable supply of Concrete is important to the Group’s construction projects. The Directors consider that by entering into the Framework Agreement, the Group will be able to secure a steady and reliable supply of Concrete at prices no less favourable than from other independent third parties.

The terms of the Framework Agreement were arrived at after arm’s length negotiations between the parties. The Directors (including the Independent Non-executive Directors) are of the view that the terms of the Framework Agreement are on normal commercial terms, and that the terms and annual caps set out above are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

None of the Directors has a material interest in the transactions contemplated under the Framework Agreement. However, Mr. Zen Wei Peu, Derek and Dr. Cheng Chi Pang, Leslie are common directors of the Company and Wai Kee and they have abstained from voting in the Board resolution approving the Framework Agreement, the transactions and the proposed annual caps thereunder. Further, Mr. Zen (who, as at the Latest Practicable Date, held 122,675,228 Shares (representing approximately 9.88% of the issued share capital of the Company) and 185,557,078 shares of Wai Kee (representing approximately 23.40% of the issued share capital of Wai Kee)) confi rmed to the Company that he will abstain from voting in the SGM.

LISTING RULES IMPLICATIONS

Wai Kee is a majority shareholder of the Company. As at the Latest Practicable Date, Wai Kee (through its subsidiaries) was interested in 635,415,033 Shares, representing approximately 51.17% of the Company’s issued share capital. Accordingly, Wai Kee is a substantial shareholder of the Company and therefore a connected person of the Company under the Listing Rules. Transactions under the Framework Agreement and the Individual Agreements constitute continuing connected transactions of the Company under the Listing Rules.

As the applicable percentage ratios (as defi ned in the Listing Rules) in respect of the transactions under the Framework Agreement exceed 5%, the Framework Agreement is subject to the reporting, annual review, announcement and Independent Shareholders’ approval requirements under Chapter 14A of the Listing Rules.

In light of Wai Kee’s involvement in the transactions contemplated under the Framework Agreement, Wai Kee and its associates will abstain from voting at the SGM on the resolution for approving the Framework Agreement, the transactions and the proposed annual caps thereunder.

5

LETTER FROM THE BOARD

SGM

It is proposed that the SGM be convened and held at Units 601-605A, 6th Floor, Tower B, Manulife Financial Centre, 223 Wai Yip Street, Kwun Tong, Kowloon, Hong Kong on Wednesday, 17 August 2011 at 10:00 a.m to consider and, if thought fi t, approve the Framework Agreement, the transactions and the annual caps set out thereunder. A notice of the SGM is set out on pages 25 to 26 of this circular.

INDEPENDENT BOARD COMMITTEE

The Independent Board Committee comprising Dr. Chow Ming Kuen, Joseph, Mr. Ng Chi Ming, James and Mr. Ho Tai Wai, David has been formed to advise the Independent Shareholders in respect of the transactions and annual caps pursuant to the Framework Agreement. CIMB has also been appointed as the Independent Financial Adviser for the purpose of advising the Independent Board Committee and the Independent Shareholders in respect of the above transactions and annual caps.

GENERAL

The Company is an investment holding company and its group companies are principally engaged in the undertaking of construction projects in Hong Kong, the PRC and the Middle East and is also engaged in environmental and waste management and marine engineering.

Wai Kee is an investment holding company and is principally engaged in civil engineering, highway and expressway operations, property development, construction materials and quarrying.

ADDITIONAL INFORMATION

Your attention is also drawn to the additional information set out in the appendices to this circular.

RECOMMENDATION

The Directors (including the Independent Non-executive Directors) consider that the terms of the transactions pursuant to the Framework Agreement and the annual caps to be fair and reasonable so far as the Independent Shareholders are concerned and in the interests of the Company and its shareholders as a whole. Accordingly, the Directors recommend that all Independent Shareholders to vote in favour of the ordinary resolution set out in the notice of the SGM.

Yours faithfully, By Order of the Board Build King Holdings Limited Chang Kam Chuen, Desmond

Company Secretary

6

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

The following is the text of a letter from the Independent Board Committee, which has been prepared for the purpose of incorporation into this circular, setting out its recommendation to the Independent Shareholders in relation to the Framework Agreement, the transactions and the proposed annual caps contemplated thereunder as set out in the Circular.

BUILD KING HOLDINGS LIMITED

(Incorporated in Bermuda with limited liability)

(Stock Code: 00240)

CONTINUING CONNECTED TRANSACTIONS

29 July 2011

To the Independent Shareholders

Dear Sir or Madam,

We refer to the circular issued by Company to the Shareholders dated 29 July 2011 (the “Circular”) of which this letter forms part. Terms defi ned in the Circular shall have the same meanings in this letter unless the context otherwise requires.

We have been appointed as the Independent Board Committee to consider and to advise you on the terms of the Framework Agreement, the transactions and the proposed annual caps contemplated thereunder as set out in the Circular as to the fairness and reasonableness and to recommend whether or not the Independent Shareholders should approve the Framework Agreement, the transactions and the proposed annual caps contemplated thereunder as set out in the Circular. CIMB has been appointed as the Independent Financial Adviser to advise you and us in this regard. Details of the independent advice of the Independent Financial Adviser, together with the principal factors and reasons the Independent Financial Adviser has taken into consideration, are set out on pages 9 to 16 of the Circular.

RECOMMENDATION

We wish to draw your attention to the letter from the Board and the letter from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders which contains its advice to us in relation to the Framework Agreement.

7

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

Having taken into account principal factors and reasons considered by and the opinion of the Independent Financial Adviser as stated in its letter of advice, we consider that the continuing connected transactions contemplated under the terms of the Framework Agreement (including the relevant annual caps) as set out in the Circular to be fair and reasonable so far as the interests of the Independent Shareholders are concerned and to be in the interests of the Company and the Shareholders as a whole. We therefore recommend the Independent Shareholders to support and to vote in favour of the resolution to approve the Framework Agreement, the transactions and the proposed annual caps thereunder.

Yours faithfully,

For and on behalf of Independent Board Committee of

Build King Holdings Limited Chow Ming Kuen, Joseph Ng Chi Ming, James Ho Tai Wai, David Independent Non-executive Directors

8

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The following is the full text of the letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders, which has been prepared for the purpose of incorporation into this circular, setting out its advice to the Independent Board Committee and the Independent Shareholders in respect of the terms of the Framework Agreement and the proposed annual caps contemplated thereunder.

==> picture [111 x 41] intentionally omitted <==

Units 7706-08, Level 77 International Commerce Centre 1 Austin Road West Kowloon, Hong Kong

29 July 2011

To the Independent Board Committee and

the Independent Shareholders of Build King Holdings Limited

Dear Sir or Madam

CONTINUING CONNECTED TRANSACTIONS

INTRODUCTION

We refer to our engagement as the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders in respect of the transactions and the proposed annual caps contemplated under the Framework Agreement, details of which are contained in a circular of the Company (the “Circular”) to the Shareholders dated 29 July 2011, of which this letter forms part. Capitalised terms used in this letter shall have the same meanings as those defi ned in the Circular unless the context otherwise requires.

On 8 July 2011, the Company entered into the Framework Agreement with Wai Kee for the purchase of Concrete from time to time for a period from 1 June 2011 to 31 December 2013. As at the Latest Practicable Date, Wai Kee (through its subsidiaries) was interested in 635,415,033 Shares, representing approximately 51.17% of the Company’s issued share capital. Accordingly, Wai Kee is a substantial shareholder of the Company and therefore a connected person of the Company under the Listing Rules. Transactions under the Framework Agreement constitute continuing connected transactions for the Company under the Listing Rules (the “Continuing Connected Transactions”).

9

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

None of the Directors has a material interest in the transactions contemplated under the Framework Agreement. However, Mr. Zen Wei Peu, Derek and Dr. Cheng Chi Pang, Leslie are common directors of the Company and Wai Kee and they have abstained from voting in the Board resolution approving the Framework Agreement, the transactions and the proposed annual caps thereunder. Further, Mr. Zen (who, as at the Latest Practicable Date, held 122,675,228 Shares (representing approximately 9.88% of the issued share capital of the Company) and 185,557,078 shares of Wai Kee (representing approximately 23.40% of the issued share capital of Wai Kee)) has confi rmed to the Company that he will abstain from voting at the SGM.

As the applicable percentage ratios (as defi ned in the Listing Rules) in respect of the Continuing Connected Transactions exceed 5%, the Framework Agreement is subject to the reporting, annual review, announcement and Independent Shareholders’ approval requirements under Chapter 14A of the Listing Rules. In light of Wai Kee’s involvement in the transactions contemplated under the Framework Agreement, Wai Kee and its associates will abstain from voting at the SGM on the resolution for approving the Framework Agreement, the transactions and the proposed annual caps thereunder.

The Independent Board Committee, comprising Dr. Chow Ming Kuen, Joseph, Mr. Ng Chi Ming, James and Mr. Ho Tai Wai, David, being all the Independent Non-executive Directors, has been formed to advise the Independent Shareholders in relation to the Framework Agreement, the transactions and the annual caps thereunder.

BASIS OF OUR OPINION

In formulating our recommendation, we consider that we have reviewed suffi cient and relevant information and documents and have taken reasonable steps as required under Rule 13.80 of the Listing Rules including the notes thereto to reach an informed view and to provide a reasonable basis for our recommendation. We have relied on the information and facts contained or referred to in the Circular, the information provided by the Company and our review of the relevant public information. We have also assumed that the information, facts and representations contained or referred to in the Circular were true and accurate at the time they were made and up to the date of the SGM. We have not, however, conducted an independent verifi cation of the information nor have we conducted any form of in-depth investigation into the businesses and affairs or the prospects of the Company, Wai Kee or any of their respective subsidiaries (as defi ned in the Listing Rules) or associates. We have no reason to doubt the truth, accuracy and completeness of the information, facts and representations provided and represented to us by the Company. We have also been advised by the Company and believe that no material facts have been omitted from the Circular.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our opinion in respect of the Framework Agreement, the transactions and the proposed annual caps thereunder, we have considered the following principal factors and reasons:

1. Background of the Framework Agreement

On 8 July 2011, the Company entered into the Framework Agreement with Wai Kee, whereby the Company (by itself or through its subsidiaries) may, but is not obliged to, purchase Concrete from Wai Kee (or its subsidiaries and/or associates) from time to time during the period from 1 June 2011 to 31 December 2013 for the Group’s construction projects.

10

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The Group and Wai Kee (or its subsidiaries and/or associates) will enter into Individual Agreements for individual transactions during the term of the Framework Agreement, which shall contain details of transactions including, but not limited to, the rights, assumption and obligations of the parties, fees and expenses, requirements of manufacture, payment, delivery and indemnities. The terms of the Individual Agreements shall not confl ict with the general principles set out in the Framework Agreement.

Details of the terms of the Framework Agreement are set out in the letter from the Board (the “Letter from the Board”) in the Circular.

2. Reasons for and benefi ts of entering into the Framework Agreement

The Company is an investment holding company and its group companies are principally engaged in the undertaking of construction projects in Hong Kong, the PRC and the Middle East. The Group is also engaged in environmental and waste management and marine engineering.

Wai Kee is an investment holding company and is principally engaged in civil engineering, highway and expressway operations, property development, construction materials and quarrying.

As set out in the Letter from the Board, a stable supply of Concrete is important to the Group’s construction projects. The Directors consider that by entering into the Framework Agreement, the Group will be able to secure a steady and reliable supply of Concrete at prices no less favourable than from other independent third parties. In its annual report for the year ended 31 December 2010, the Company stated that, in view of the increasing construction material costs, the Group tried to fi x the costs and aimed to form some alliances or strategic partnerships with suppliers.

Having considered the principal businesses of each of the Group and Wai Kee and the nature of the transactions contemplated under the Framework Agreement, we are of the view that the entering into the Framework Agreement falls within the ordinary and usual course of business of the Group.

3. Principal terms of the Framework Agreement

The Framework Agreement only sets out the general terms and conditions governing the purchase of Concrete from Wai Kee (or its subsidiaries and/or associates) by the Group from time to time during the period from 1 June 2011 to 31 December 2013. The Group and Wai Kee will enter into Individual Agreements for individual transactions during the term of the Framework Agreement, which contracts will set out the detail terms and conditions including, but not limited to, the rights, assumption and obligation of the parties, fees and expenses, requirements of manufacture, payment, delivery and indemnities. The terms of the Individual Agreements shall not confl ict with the general principles set out in the Framework Agreement. Should there be any confl ict, the parties shall discuss and agree such adjustments to the Individual Agreement so that the general principles in the Framework Agreement should prevail.

11

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Pursuant to the Framework Agreement, the parties agreed that the price, fee or any other consideration shall be determined by reference to (i) the relevant market price on a fair and reasonable basis; and (ii) where there is no relevant market price, the supplying cost plus reasonable profi t which is to be negotiated by the Group and Wai Kee. We understand from the management that, to determine the reasonable profi t, the Group and Wai Kee will make reference to the details of each project including, but not limited to, site location, types of Concrete required, payment terms, tender budget and supply duration for Concrete.

As set out in the Letter from the Board, payments shall be made by the Group to Wai Kee (or its relevant subsidiary or associate) on a monthly basis within 30 days of receipt of invoice from Wai Kee (or its relevant subsidiary or associate) by cheque, bank draft or other method of bank transfer. The Framework Agreement may be terminated by either the Group or Wai Kee by giving prior written notice to the other party three months in advance and the parties should decide on the terms and conditions of such termination by mutual agreement. Upon expiration and subject to the Group’s compliance with the Listing Rules, the Framework Agreement may be automatically renewed until such date to be agreed by the parties.

Based on the principal terms of the Framework Agreement, in particular the fact that (i) the Framework Agreement does not restrict the Group to purchase Concrete from other independent third parties; and (ii) the Concrete to be purchased by the Group from Wai Kee (or its subsidiaries and/or associates) will be determined with reference to the relevant market price and, where there is no relevant market price, the supply cost plus reasonable profi t which is to be negotiated by the Group and Wai Kee, together with our review of the Company’s other comparable invoices received from independent third parties, we concur with the view of the Directors that the terms of the Framework Agreement are fair and reasonable, on normal commercial terms and in the interest of the Group and the Shareholders as a whole.

4. Proposed Annual Caps

The following table sets out the proposed annual caps in respect of the sale and purchase of Concrete concerned under the Framework Agreement for the period from 1 June 2011 to 31 December 2011 and each of the two years ending 31 December 2013:

	For the period from	For the year	For the year
	1 June 2011 to	ending 31 December
	31 December 2011	2012	2013
	HK$’000	HK$’000	HK$’000
Proposed annual caps in respect of the
sale and purchase of Concrete under the
Framework Agreement	10,000	45,000	55,000

12

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

As set out in the Letter from the Board contained in the Circular, the proposed annual caps are determined based on the Company’s expectation of its Concrete consumption during the corresponding periods, taking into account construction projects on hand, their construction and delivery schedules, new projects that the Company expects may or is likely to be awarded to the Group going forward and historical market prices of Concrete. The Directors are of the opinion that the proposed annual caps set out above are fair and reasonable and in the interests of the Group and the Shareholders as a whole.

In assessing the reasonableness of the proposed annual caps, we have reviewed and discussed with the management of the Company the underlying calculation. Based on our review and discussion, we understand from the management of the Company that the Company has taken the following factors into account in determining the proposed annual caps:

• (i) historical revenue of the Company’s construction projects in Hong Kong;

• (ii) historical Concrete consumption in respect of the above said construction projects;

• (iii) construction projects on hand and their construction and delivery schedules;

• (iv) anticipated growth in revenue of the Company’s construction projects in Hong Kong market at an annual rate of 15%;

• (v) historical market price of Concrete purchased by the Group; and

• (vi) anticipated Concrete consumption based on the historical Concrete consumption rate, Concrete purchase contracts on hand and those in negotiation and the estimated demand on Concrete as a result of potential construction projects.

In accessing the fairness and reasonableness of the anticipated annual growth rate of 15% in revenue of the Company’s construction projects in Hong Kong market, we have conducted a research on the construction industry in Hong Kong. Based on the fi gures issued by the Census and Statistics Department of the Hong Kong Government dated 13 June 2011, the gross value (in nominal terms) of construction works performed by main contractors in public sector sites (the sites that the Group focuses on) increased at a compound annual growth rate of approximately 42.7% from approximately HK$15,339 million in 2008 to approximately HK$31,216 million in 2010.

According to the annual reports of the Company, the Group’s revenue generated in Hong Kong (excluding the share of revenue of jointly controlled entities) was approximately HK$709 million, HK$781 million and HK$649 million for the years ended 31 December 2008, 2009 and 2010 respectively. The Company explained that the revenue for the year ended 31 December 2010 decreased as the secured projects, which were generally in high contract value with longer contract periods, were at an early stage of construction during the year. Nevertheless, according to the 2011-12 budget speech of the Hong Kong Government, it is estimated that the capital works expenditure for 2011-12 will reach over approximately HK$58 billion, representing an increase of approximately 16.9% from the estimate of approximately HK$49.6 billion for 2010-11.

13

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

In respect of the historical Concrete price, management of the Company explained to us that the price of Concrete they purchased has generally increased from 2008 to 2010. Based on the fi gures issued by the Census and Statistics Department of the Hong Kong Government dated 30 June 2011, the cost of material index of portland cement has increased at a compound annual growth rate of approximately 6.8% from 98.5 in January 2008 to 119.9 in December 2010. In view of the above, the Directors consider that the average price of Concrete will continue to increase and it is relevant and justifi able for the Group to take the historical market prices of Concrete into account in determining the proposed annual caps.

In respect of the Concrete consumption, we have discussed with the management of the Company. We have also reviewed (i) the Group’s historical Concrete consumption for each of the three years ended 31 December 2010; (ii) the Group’s projects on hand; and (iii) the Group’s purchase orders for Concrete which are in negotiation and those which the Group has entered into.

Based on the various factors described above, we regard the basis of the proposed annual caps as fair and reasonable so far as the Group and the Shareholders are concerned. However, as the proposed annual caps relate to future events and are based upon assumptions that may or may not remain valid for the whole period up to 31 December 2013, we express no opinion as to how closely the actual volume of sale and purchase of Concrete pursuant to the Framework Agreement shall correspond to the proposed annual caps.

Moreover, as set out in the Letter from the Board, to the extent a joint venture (which is not a subsidiary of the Company) may be established between any Group member and an independent third party, and such joint venture purchases Concrete from Wai Kee from time to time, the amount of such purchases will not be included in the proposed annual caps as they will not constitute connected transactions for the Company under Chapter 14A of the Listing Rules.

5. Requirements by the Listing Rules regarding the Continuing Connected Transactions

Pursuant to Rules 14A.37 to 14A.40 of the Listing Rules, the Continuing Connected Transactions are subject to the following annual review requirements:

• (a) each year the Independent Non-executive Directors must review the Continuing Connected Transactions and confi rm in the annual report and accounts that the Continuing Connected Transactions have been entered into:

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

• either on normal commercial terms or, if there are not suffi cient comparable transactions to judge whether they are on normal commercial terms, on terms no less favourable to the Company than the terms available to or from (as appropriate) independent third parties; and

• in accordance with the relevant agreement governing them on terms that are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

14

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

• (b) each year the auditors of the Company must provide a letter to the Board (with a copy provided to the Stock Exchange at least 10 business days prior to the bulk printing of the Company’s annual report) confi rming that the Continuing Connected Transactions:

• have received the approval of the Board;

• are in accordance with the pricing policies of the Company if the transactions involve provision of goods or services by the Company;

• have been entered into in accordance with the terms of the relevant agreements governing the Continuing Connected Transactions; and

• have not exceeded the proposed annual caps.

• (c) the Company shall allow, and shall procure the relevant counter-parties to the Continuing Connected Transactions shall allow, the Company’s auditors suffi cient access to their records for the purpose of the reporting on the Continuing Connected Transactions. The Board must state in the annual report whether its auditors have confi rmed the matters stated in paragraph (b); and

• (d) the Company shall promptly notify the Stock Exchange and publish an announcement in accordance with the Listing Rules if it knows or has reason to believe that the Independent Non-executive Directors and/or auditors of the Company will not be able to confi rm the matters set out in paragraphs (a) and/or (b) respectively.

In light of the reporting requirements attached to the Continuing Connected Transactions, in particular, (i) the restriction of the value of the Continuing Connected Transactions by way of the proposed annual caps; and (ii) the ongoing review by the Independent Non-executive Directors and auditors of the Company on the terms of the Continuing Connected Transactions and the proposed annual caps not being exceeded, we are of the view that appropriate measures will be in place to govern the conduct of the Continuing Connected Transactions and safeguard the interests of the Independent Shareholders.

RECOMMENDATION

Having considered the principal factors and reasons referred to above, we are of the opinion that the Framework Agreement, the transactions and the proposed annual caps contemplated thereunder are on normal commercial terms, in the ordinary and usual course of business of the Group and in the interest of the Group and the Shareholders as a whole, and the terms thereof as well as the proposed annual caps are fair and reasonable so far as the Group and the Independent Shareholders are concerned.

15

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Accordingly, we advise the Independent Shareholders and the Independent Board Committee to recommend the Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the SGM to approve the Framework Agreement, the transactions and the proposed annual caps contemplated thereunder.

Yours faithfully, For and on behalf of CIMB Securities (HK) Limited Heidi Cheng Alvin Tsui Deputy Head Vice President Corporate Finance Corporate Finance

16

GENERAL INFORMATION

APPENDIX I

1. RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors having made all reasonable enquiries, confi rm that to the best of their knowledge and belief the information contained in this circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this circular misleading.

2. DISCLOSURE OF INTERESTS

(I) Directors’ Interests

As at the Latest Practicable Date, the Directors and the chief executive of the Company and their respective associates had the following interests and short positions in the shares, underlying shares and debentures of the Company and its associated corporation (within the meaning of Part XV of the SFO) which were required to be notifi ed to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which any such Director or, chief executive of the Company was taken or deemed to have under such provisions of the SFO) or which were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein or which were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers contained in the Listing Rules, to be notifi ed to the Company and the Stock Exchange:

(A) The Company

Interests in Shares

		Number of
		Ordinary Shares	held
	Capacity/Nature	Long	Short	Percentage of
Name of Director	of interest	position	position	shareholding
				(%)
Zen Wei Peu, Derek	Personal	122,675,228	–	9.88
		(Note)
Chang Kam Chuen,	Personal	1,000,000	–	0.08
Desmond		(Note)
David Howard Gem	Personal	500,000	–	0.04
		(Note)
Cheng Chi Pang,	Personal	1,170,000	–	0.09
Leslie		(Note)

Note:

Long position in the Shares (other than pursuant to equity derivatives such as share options, warrants to subscribe or convertible bonds).

17

GENERAL INFORMATION

APPENDIX I

(B) Associated corporations

Interests in shares

==> picture [367 x 205] intentionally omitted <==

----- Start of picture text -----

Capacity/ Number of ordinary
Nature of shares held Percentage of
Name of Director Name of company interest Long Position Short Position shareholding
(%)
Zen Wei Peu, Wai Kee Personal 185,557,078 – 23.40
Derek (Note)
Wai Kee (Zens) Personal 2,000,000 – 10.00
Construction & (Note)
Transportation
Company Limited
Wai Luen Stone Personal 30,000 – 37.50
Products Limited (Note)
----- End of picture text -----

Note:

Long position in the shares (other than pursuant to equity derivatives such as share options, warrants to subscribe or convertible bonds).

Save as disclosed above, as at the Latest Practicable Date, none of the Directors or the chief executive of the Company and their respective associates had any interests or short positions in the shares, underlying shares and/or debentures of the Company and its associated corporation (within the meaning of Part XV of the SFO) which were required to be notifi ed to the Company and the Stock Exchange pursuant to the Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which any such Director or chief executive of the Company was taken or deemed to have under such provisions of the SFO) or which were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein or which were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers contained in the Listing Rules, to be notifi ed to the Company and the Stock Exchange.

18

GENERAL INFORMATION

APPENDIX I

(II) Substantial Shareholders’ Interests

(A) Interests in the Company

As at the Latest Practicable Date, so far as was known to the Directors or chief executive of the Company, the following persons (“Substantial Shareholders”) (other than the Directors or the chief executive of the Company) who had an interest or short position in the Shares or underlying shares of the Company which would fall to be disclosed to the Company under the provision of Divisions 2 and 3 of Part XV of the SFO:

			Number of Shares held and	Number of Shares held and	Number of Shares held and
Name of substantial	Capacity/Nature		percentage of		shareholding
Shareholder	of interest	Long Position			Short Position
		Number of			Number of
		Shares		%	Shares	%
Top Horizon Holdings	Personal/	635,415,033		51.17	–	–
Limited (“Top Horizon”)	Benef ciary	(Note)
(Note (a))
Wai Kee (Zens) Holding	Corporate	635,415,033		51.17	–	–
Limited (“Wai Kee		(Note)
(Zens)”)(Note (b))
Wai Kee_(Note (c))_	Corporate	635,415,033		51.17	–	–
		(Note)
Vast Earn Group Limited	Personal/	67,404,052		5.43	–	–
(Note (d))	Benef ciary	(Note)
NWS Service Management	Corporate	67,404,052		5.43	–	–
Limited (incorporated in		(Note)
the British Virgin Islands)
(Note (e))
NWS Service Management	Corporate	67,404,052		5.43	–	–
Limited (incorporated in		(Note)
the Cayman Islands)
(Note (f))
NWS Holdings Limited	Corporate	67,404,052		5.43	–	–
(Note (g))		(Note)

19

GENERAL INFORMATION

APPENDIX I

(A) Interests in the Company (Continued)

			Number of Shares held and	Number of Shares held and
Name of substantial	Capacity/Nature		percentage of	shareholding
Shareholder	of interest	Long Position		Short Position
		Number of		Number of
		Shares	%	Shares	%
New World Development	Corporate	67,404,052	5.43	–	–
Company Limited		(Note)
(Note (h))
Chow Tai Fook Enterprises	Corporate	67,404,052	5.43	–	–
Limited_(Note (i))_		(Note)
Centennial Success Limited	Corporate	67,404,052	5.43	–	–
(Note (j))		(Note)
Cheng Yu Tung Family	Corporate	67,404,052	5.43	–	–
(Holdings) Limited		(Note)
(Note (k))
Notes:

Long position in the Shares

• (a) Top Horizon was a direct wholly owned subsidiary of Wai Kee (Zens).

• (b) Wai Kee (Zens) was deemed to be interested in the Shares through its interests in Top Horizon.

• (c) Wai Kee (Zens) was a direct wholly owned subsidiary of Wai Kee. Accordingly, Wai Kee was deemed to be interested in the Shares through its interests in its wholly owned subsidiaries, namely Wai Kee (Zens) and Top Horizon.

• (d) Vast Earn Group Limited was a wholly owned subsidiary of NWS Service Management Limited (incorporated in the British Virgin Islands).

• (e) NWS Service Management Limited (incorporated in the British Virgin Islands) was deemed to be interested in the Shares through its interests in its wholly owned subsidiary, namely Vast Earn Group Limited.

• (f) NWS Service Management Limited (incorporated in the Cayman Islands) was deemed to be interested in the Shares through its interests in its wholly owned subsidiary, namely NWS Service Management Limited (incorporated in the British Virgin Islands).

• (g) NWS Holdings Limited was deemed to be interested in the Shares through its interests in its wholly owned subsidiary, namely NWS Service Management Limited (incorporated in the Cayman Islands).

• (h) New World Development Company Limited was deemed to be interested in the Shares through its interests in its subsidiary, namely NWS Holdings Limited.

20

GENERAL INFORMATION

APPENDIX I

(A) Interests in the Company (Continued)

• (i) Chow Tai Fook Enterprises Limited was deemed to be interested in the Shares through its interests in more than one-third of the issued share capital of New World Development Company Limited.

• (j) Centennial Success Limited was deemed to be interested in the Shares through its interests in its wholly owned subsidiary, namely Chow Tai Fook Enterprises Limited.

• (k) Cheng Yu Tung Family (Holdings) Limited was deemed to be interested in the Shares through its interests in its subsidiary, namely Centennial Success Limited.

Save as disclosed below, as at the Latest Practicable Date, none of the Directors was a director or employee of a company which had an interest or a short position in the Shares and underlying shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO:

Name of company which had such discloseable Position within such Name of Director interest or short position company Zen Wei Peu, Derek Top Horizon Director Wai Kee (Zens) Director Wai Kee Vice Chairman and Executive Director

Cheng Chi Pang, Leslie Wai Kee

Non-executive Director

21

GENERAL INFORMATION

APPENDIX I

(B) Interests in other members of the Group

As at the Latest Practicable Date, so far as was known to any Director or chief executive of the Company and save as disclosed in this circular, the persons (other than a Director or chief executive of the Company or a member of the Group) who were directly or indirectly interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group were as follows:

Name of subsidiary	Name of shareholder	Percentage of interest held
		(%)
Champ Foundation	Talent Ground Limited	49
Limited
Cheuk Wah Construction	Goldky Industries Limited	40
Engineering Limited
Eastar Construction	Fulight Engineering Limited	20
Engineering Limited
Huge Host Engineering	Downer Mining (Asia)	30
Limited	Limited
W K Aviation Engineering	Kencana Capital Ventures	30
Company Limited	Sdn. Bhd.

Save as disclosed above, as at the Latest Practicable Date, the Directors and chief executive of the Company are not aware of any other persons (other than a Director or chief executive of the Company) who had an interest or short position in the Shares or underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who were, directly or indirectly interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group or had any options in respect of such capital.

3. DIRECTORS’ INTERESTS IN COMPETING BUSINESSES

As at Latest Practicable Date, none of the Directors and their respective associates had any interests in a business, which competed or might compete with the business of the Group.

22

GENERAL INFORMATION

APPENDIX I

4. DIRECTORS’ SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had any existing or proposed service contracts with any member of the Group which was not determinable by the Group within one year without payment of compensation (other than statutory compensation).

5. INTERESTS IN ASSETS AND/OR CONTRACTS AND OTHER INTERESTS

As at the Latest Practicable Date, none of the Directors nor the Independent Financial Adviser had any direct or indirect interest in any assets which had been, since 31 December 2010, being the date to which the latest published audited accounts of the Company were made up, acquired or disposed of by or leased to any member of the Group, or are proposed to be acquired or disposed of by or leased to any member of the Group.

As at the Latest Practicable Date, none of the Directors was materially interested in any contract or arrangement which is signifi cant in relation to the business of the Group.

6. MATERIAL ADVERSE CHANGES

The Directors are of the opinion that there has not been any material adverse change in the fi nancial or trading position of the Group since 31 December 2010, being the date to which the latest published audited accounts of the Group were made up.

7. EXPERT AND CONSENT

The following are the qualifi cations of the expert who has given opinions or advice which are contained in this circular:

Name Qualifi cation CIMB The Independent Financial Adviser is a corporation licensed to carry out type 1 (dealing in securities), type 4 (advising on securities) and type 6 (advising on corporate fi nance) regulated activities under the SFO

The Independent Financial Adviser has given and has not withdrawn its written consent to the issue of this circular, with the inclusion of its letter as set out in this circular and references to its name in the form and context in which they appear respectively.

As at the Latest Practicable Date, the Independent Financial Adviser was not benefi cially interested in the share capital of any member of the Group and did not have any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

23

GENERAL INFORMATION

APPENDIX I

8. MISCELLANEOUS

The English text of this circular shall prevail over the Chinese text in case of any inconsistency.

9. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection during normal business hours from 9:00 a.m. to 5:00 p.m. (other than Saturdays, Sundays and public holidays) at the principal place of business of the Company in Hong Kong from the date of this circular up to and including 17 August 2011:

• (a) the letter from the Independent Financial Adviser, the text of which is set out on pages 9 to 16 of this circular;

• (b) the letter from the Independent Board Committee, the text of which is set out on pages 7 to 8 of this circular;

• (c) the Framework Agreement; and

• (d) a copy of this circular.

24

NOTICE OF SPECIAL GENERAL MEETING

APPENDIX II

BUILD KING HOLDINGS LIMITED

(Incorporated in Bermuda with limited liability)

(Stock Code: 00240)

CONTINUING CONNECTED TRANSACTIONS

NOTICE IS HEREBY GIVEN that the Special General Meeting of Build King Holdings Limited (the “ Company ”) will be held at Units 601-605A, 6th Floor, Tower B, Manulife Financial Centre, 223 Wai Yip Street, Kwun Tong, Kowloon, Hong Kong on Wednesday, 17 August 2011 at 10:00 a.m to transact the following businesses:

ORDINARY RESOLUTION

“ THAT the framework agreement between Build King Holdings Limited (the “ Company ”) and Wai Kee Holdings Limited dated 8 July 2011 (“ Framework Agreement ”) in respect of the continuing sale and purchase of ready mixed concrete for the period commencing from 1 June 2011 and ending on 31 December 2013 and the proposed annual caps for such Continuing Connected Transactions contemplated thereunder, be and are hereby approved, confi rmed and ratifi ed; and the directors of the Company be and are hereby authorised to do all such things and exercise all powers which they consider necessary, desirable or expedient in connection with the Framework Agreement and otherwise in connection with the implementation of the transactions contemplated thereunder including without limitation to the execution, amendment, supplement, delivery, waiver, submission and implementation of any further documents or agreements.”

By Order of the Board Chang Kam Chuen, Desmond Company Secretary

Hong Kong, 29 July 2011

Registered offi ce:

Clarendon House 2 Church Street Hamilton HM 11 Bermuda

Principal place of business in Hong Kong:

Units 601-605A, 6th Floor Tower B, Manulife Financial Centre 223 Wai Yip Street Kwun Tong, Kowloon Hong Kong

25

NOTICE OF SPECIAL GENERAL MEETING

APPENDIX II

Notes:

1. Any member of the Company entitled to attend and vote at the meeting by the above notice shall be entitled to appoint another person as his/her proxy to attend and vote instead of such member. A proxy need not be a member of the Company.

2. The instrument appointing a proxy shall be in writing under the hand of the appointor or of his/her attorney duly authorised in writing or, if the appointor is a corporation, either under its seal or under the hand of an offi cer, attorney or other person authorised to sign the same.

3. The instrument appointing a proxy and (if required by the Board) the power of attorney or other authority (if any) under which it is signed, or a notarially certifi ed copy of such power or authority shall be delivered to the Company’s branch share registrar, Tricor Progressive Limited, at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Hong Kong or by way of notice to or in any document accompanying the notice convening the meeting not less than forty-eight (48) hours before the time appointed for holding the meeting or adjourned meeting at which the person named in the instrument proposed to vote and in default the instrument of proxy shall not be treated as valid.

4. Delivery of an instrument appointing a proxy shall not preclude a member of the Company from attending and voting in person at the meeting convened and in such event, the instrument appointing a proxy shall be deemed to be revoked.

5. In the case of joint holders of any share, if more than one of such joint holders be present at any meeting, the vote of the senior who tenders a vote, whether in person, or by proxy, shall be accepted to the exclusion of the votes of the other joint holders, and for this purpose seniority shall be determined by the order in which the names stand in the register in respect of the joint holding.

6. As at the date of this Notice, the Board comprises two Executive Directors, namely Mr. Zen Wei Peu, Derek and Mr. Chang Kam Chuen, Desmond, three Non-executive Directors, namely Mr. David Howard Gem, Dr. Cheng Chi Pang, Leslie and Mr. Chan Chi Hung, Anthony, and three Independent Non-executive Directors, namely Dr. Chow Ming Kuen, Joseph, Mr. Ng Chi Ming, James and Mr. Ho Tai Wai, David.

26