First Pacific Company Limited - Proxy Solicitation & Information Statement 2008

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your securities in Sun Hung Kai & Co. Limited, you should at once hand this circular together with the enclosed form of proxy to the purchaser or transferee, or to the bank, licensed securities dealer or registered institution in securities or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

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

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(Incorporated in Hong Kong with limited liability) (Stock Code: 86)

DISCLOSEABLE TRANSACTION AND CONNECTED TRANSACTION

CONDITIONAL SALE AND PURCHASE OF THE ENTIRE ISSUED SHARE CAPITAL OF WAH CHEONG DEVELOPMENT (B.V.I.) LIMITED WHICH HOLDS APPROXIMATELY 51.15% OF THE ISSUED SHARE CAPITAL OF QUALITY HEALTHCARE ASIA LIMITED

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

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A letter from the Board is set out on pages 5 to 16 of this circular. A letter from the Independent Board Committee is set out on page 17 of this circular. A letter from Wallbanck Brothers Securities (Hong Kong) Limited containing its advice to the Independent Board Committee and the Independent Shareholders is set out on pages 18 to 34 of this circular.

A notice convening the extraordinary general meeting of Sun Hung Kai & Co. Limited to be held at Plaza V, Lower Lobby, Novotel Century Hong Kong, 238 Jaffe Road, Wanchai, Hong Kong on Monday, 23rd June, 2008 at 10:00 a.m. is set out on pages 46 to 47 of this circular. Whether or not you are able to attend the meeting, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon and return it to the Company’s registrar, Tricor Secretaries Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for holding the meeting or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the meeting or any adjournment thereof if you so wish.

4th June, 2008

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
The Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Information about AGL, APL, the Company, Wah Cheong, Famestep and QHA.	10
Summary of Financial Results of Wah Cheong and QHA. . . . . . . . . . . . . . . . . .	12
Reasons for and Benefits of the Sale and Purchase of the Sale Shares. . . . . . . .	13
Listing Rules Implications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	15
EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	15
Procedures for Demanding a Poll. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	15
Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	16
Additional Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	16
Letter from the Independent Board Committee. . . . . . . . . . . . . . . . . . . . . . . . . . .	17
Letter from Wallbanck Brothers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	18
Appendix – General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	35
Notice of EGM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	46

– i –

DEFINITIONS

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

“AGL”	Allied Group Limited, a company incorporated in Hong
	Kong with limited liability, with its shares listed on the
	Main Board of the Stock Exchange
“AGL Group”	AGL and its subsidiaries
“Agreement”	the sale and purchase agreement dated 7th May, 2008
	made between the Company, Famestep and APL, relating
	to the conditional sale and purchase of the Sale Shares
	and the assignment of the Loan
“APL”	Allied Properties (H.K.) Limited, a company
	incorporated in Hong Kong with limited liability, with its
	securities listed on the Main Board of the Stock
	Exchange, and a non wholly-owned subsidiary of AGL
“associates”	having the meaning ascribed to it under the Listing Rules
“Board”	board of Directors
“B.V.I.”	British Virgin Islands
“Code”	The Hong Kong Code on Takeovers and Mergers
“Company”	Sun Hung Kai & Co. Limited, a company incorporated in
	Hong Kong with limited liability, with its securities listed
	on the Main Board of the Stock Exchange, and an indirect
	non wholly-owned subsidiary of APL
“Completion”	completion of the sale and purchase of all the Sale Shares
	and the assignment of the Loan pursuant to the
	Agreement
“connected person”	having the meaning ascribed to it under the Listing Rules
“Directors”	the directors of the Company
“EGM”	extraordinary general meeting of the Company to be
	convened for the purpose of considering and, if thought
	fit, approving, the Agreement and the transactions
	contemplated therein

– 1 –

DEFINITIONS

“Executive”	the Executive Director of the Corporate Finance Division
	of the SFC or any delegate of the Executive Director (in
	each case acting in the capacity of “Executive” under the
	Code)
“Famestep”	Famestep Investments Limited, a company incorporated
	in the B.V.I. with limited liability and a direct wholly-
	owned subsidiary of APL
“Group”	the Company and its subsidiaries
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong
“HKGAAP”	the Hong Kong Generally Accepted Accounting Practice
“Hong Kong”	Hong Kong Special Administrative Region of the
	People’s Republic of China
“Independent Board Committee”	the committee comprising Mr. Carlisle Caldow Procter
	and Mr. Peter Wong Man Kong being the two
	independent non-executive Directors appointed by the
	Board under the Listing Rules to advise the Independent
	Shareholders in respect of the terms of the Agreement
“Independent Shareholders”	Shareholders (other than APL and its associates) who are
	not required under the Listing Rules to abstain from
	voting at the EGM to approve the transactions
	contemplated under the Agreement
“Joint Announcement”	the joint announcement of AGL, APL and the Company
	dated 14th May, 2008 in relation to the conditional sale
	and purchase of the entire issued share capital of Wah
	Cheong which holds approximately 51.15% of the issued
	share capital of QHA
“Latest Practicable Date”	29th May, 2008, being the latest practicable date prior to
	the printing of this circular for the purpose of
	ascertaining certain information contained in this circular
“Listing Rules”	Rules Governing the Listing of Securities on The Stock
	Exchange of Hong Kong Limited

“Loan” the shareholder’s loan in the amount of HK$271,391,445 due by Wah Cheong to the Company

– 2 –

DEFINITIONS

“QHA”	Quality HealthCare Asia Limited, a company
	incorporated in Bermuda with limited liability, with its
	shares listed on the Main Board of the Stock Exchange
	and a non wholly-owned subsidiary of Wah Cheong
“QHA Dividends”	the dividends of approximately HK$24,015,007 (being
	the final dividend of HK5.25 cents and the special
	dividend of HK14.4 cents per ordinary share of QHA) for
	the QHA Shares for the year ended 31st December, 2007
	to be declared at the annual general meeting of QHA to be
	held on 4th June, 2008 and payable on 18th June, 2008
“QHA Shares”	122,213,776 shares of HK$0.10 each representing
	approximately 51.15% of the entire issued share capital
	of QHA
“Sale Shares”	2,675,400 shares of US$1.00 each representing the entire
	issued share capital of Wah Cheong
“SFC”	The Securities and Futures Commission of Hong Kong
“SFO”	Securities and Futures Ordinance (Chapter 571 of the
	Laws of Hong Kong)
“Share(s)”	ordinary share(s) of HK$0.20 each in the issued share
	capital of the Company
“Shareholder(s)”	holder(s) of the Share(s)
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“substantial shareholder”	having the meaning ascribed to it under the Listing Rules
“US$”	United States Dollars
“Wah Cheong”	Wah Cheong Development (B.V.I.) Limited, a company
	incorporated in the B.V.I. with limited liability, and a
	direct wholly-owned subsidiary of the Company
“Wah Cheong Dividends”	the dividends to be declared and paid by Wah Cheong to
	the Company, upon the receipt of the QHA Dividends by
	Wah Cheong before Completion, the amount being equal
	to the QHA Dividends

– 3 –

DEFINITIONS

“Waiver”

“Wallbanck Brothers” or “Independent Financial Adviser”

“%”

a waiver from the obligation of Famestep, its holding companies, or parties acting in concert with any one of them (if any) to make a mandatory unconditional general offer for all the issued shares of QHA pursuant to Rule 26 of the Code as a result of the acquisition of the QHA Shares by Famestep through its acquisition of the Sale Shares

Wallbanck Brothers Securities (Hong Kong) Limited, a licensed corporation for carrying out types 4, 6 and 9 regulated activities (advising on securities, advising on corporate finance and asset management) under the SFO and the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the transactions contemplated in the Agreement

per cent.

– 4 –

LETTER FROM THE BOARD

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(Incorporated in Hong Kong with limited liability) (Stock Code: 86)

Executive Directors: Lee Seng Huang (Chairman) Joseph Tong Tang

Non-executive Directors: Abdulhakeem Abdulhussain Ali Kamkar

Registered Office: Units 1201-10 & 14-16 12th Floor, CITIC Tower 1 Tim Mei Avenue Central Hong Kong

Amin Rafie Bin Othman (also as alternate to Mr. Abdulhakeem Abdulhussain Ali Kamkar)

Patrick Lee Seng Wei

Independent non-executive Directors:

David Craig Bartlett Alan Stephen Jones Carlisle Caldow Procter Peter Wong Man Kong

4th June, 2008

To the Shareholders and, for information only, the holders of warrants of the Company

Dear Sir or Madam,

DISCLOSEABLE TRANSACTION AND CONNECTED TRANSACTION

INTRODUCTION

Reference is made to the Joint Announcement in which AGL, APL and the Company jointly announced that, on 7th May, 2008, the Company as the vendor, Famestep (a direct wholly-owned subsidiary of APL) as the purchaser, and APL as the purchaser’s guarantor entered into the Agreement, pursuant to which the Company has conditionally agreed to sell the

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LETTER FROM THE BOARD

Sale Shares and assign the Loan, and Famestep has conditionally agreed to purchase the Sale Shares and accept the assignment of the Loan, at an aggregate consideration of HK$470,690,000.

An initial deposit of HK$47,069,000 was paid in cash by Famestep to the Company upon the signing of the Agreement. The balance of the aggregate consideration in the sum of HK$423,621,000 will be settled in cash upon Completion.

Completion is conditional upon fulfillment of a number of conditions, including the granting of the Waiver by the Executive to Famestep.

The transactions contemplated in the Agreement constitute a discloseable transaction for the Company under Rule 14.06(2) of the Listing Rules, on the basis that the calculation of the relevant percentage ratios are within the range of 5% and 25%.

The transactions contemplated in the Agreement also constitute a connected transaction for the Company, on the basis that Famestep is a direct wholly-owned subsidiary of APL (which is a substantial shareholder of the Company) and hence a connected person of the Company. Since the calculation of the relevant percentage ratios are more than 2.5% but under 25% and the total consideration is more than HK$10,000,000, pursuant to Rule 14A.17 of the Listing Rules, the transactions contemplated under the Agreement are subject to the reporting, announcement and independent shareholders’ approval requirements under the Listing Rules. APL and its associates will abstain from voting on the resolution for approving the Agreement at the EGM to be held by the Company.

The Independent Board Committee has been constituted to consider the terms of the Agreement and to make recommendations to the Independent Shareholders as to how to vote at the EGM on the ordinary resolution regarding the Agreement. Mr. David Craig Bartlett, an independent non-executive Director, is also an independent non-executive director of AGL. Mr. Alan Stephen Jones, an independent non-executive Director, is also an independent non-executive director of both AGL and APL. They were thus not appointed as members of the Independent Board Committee. Mr. Carlisle Caldow Procter and Mr. Peter Wong Man Kong, being the other two independent non-executive Directors, have been appointed by the Board to form the Independent Board Committee.

Wallbanck Brothers has been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders on the fairness and reasonableness of the transactions contemplated in the Agreement.

The purpose of this circular is (i) to provide the Shareholders with details of the terms of the Agreement; (ii) to set out the advice of Wallbanck Brothers and the recommendation of the Independent Board Committee; and (iii) to give the Shareholders notice of the EGM and other information in accordance with the requirements of the Listing Rules.

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LETTER FROM THE BOARD

THE AGREEMENT

Date

7th May, 2008

Parties

(1) The Company as vendor
(2) Famestep as purchaser
(3) APL as purchaser’s guarantor

The Sale Shares and the Assignment of the Loan

The Sale Shares represent the entire issued share capital of Wah Cheong as at the Latest Practicable Date.

Wah Cheong is the beneficial owner of the QHA Shares (being 122,213,776 shares of QHA representing approximately 51.15% of the entire issued share capital of QHA). Other than its investment in the QHA Shares, the only asset held by Wah Cheong is the bank balances of approximately HK$167,000 as at 31st December, 2007, 7th May, 2008 and the Latest Practicable Date.

The sale and purchase of the Sale Shares are conducted on an ex-dividend basis under the Agreement, pursuant to which the Company is entitled to the Wah Cheong Dividends before Completion.

The Sale Shares and the QHA Shares will be acquired free from any encumbrance as of Completion and there will be no restrictions which apply to the subsequent sale of the Sale Shares.

The Loan will be assigned by the Company to Famestep free from any encumbrance as of Completion.

Consideration

The aggregate consideration for the sale and purchase of the Sale Shares and the assignment of the Loan shall be HK$470,690,000 (or effectively the equivalent of approximately HK$3.85 per QHA Share). The aggregate consideration was arrived at after arm’s length negotiations between the Company and Famestep, having regard to the carrying values of Wah Cheong and QHA in the consolidated financial statements of the Company as at 31st December, 2007, the actual amount of the Loan owed by Wah Cheong to the Company and the market value of the QHA Shares.

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LETTER FROM THE BOARD

In particular, the consideration for the Sale Shares and the assignment of the Loan are HK$199,298,555 and HK$271,391,445 respectively. The consideration for the Sale Shares is determined with reference to the carrying values of Wah Cheong and QHA in the consolidated financial statements of the Company, and represents a disposal at a premium to the Company.

The consideration for the assignment of the Loan represents the actual amount of the Loan owed by Wah Cheong to the Company.

In effect, the aggregate consideration represents:

(i) a premium of approximately 30.51% to the closing price of HK$2.95 per share of QHA as quoted on the Stock Exchange on the last trading day of the shares of QHA immediately before the date of the Joint Announcement;
(ii) a premium of approximately 29.19% to the average closing price of approximately HK$2.98 per share of QHA as quoted on the Stock Exchange for the last five trading days of the shares of QHA immediately before the date of the Joint Announcement;
(iii) a premium of approximately 29.63% to the average closing price of approximately HK$2.97 per share of QHA as quoted on the Stock Exchange for the last ten trading days of the shares of QHA immediately before the date of the Joint Announcement;
(iv) a premium of approximately 29.63% to the average closing price of approximately HK$2.97 per share of QHA as quoted on the Stock Exchange for the last one month of the shares of QHA immediately before the date of the Joint Announcement; and
(v) a premium of approximately 30.95% to the closing price of HK$2.94 per share of QHA as quoted on the Stock Exchange as at the Latest Practicable Date.

Conditions

Completion is conditional upon the fulfillment of a number of conditions, including:

(i) the Sale Shares, the QHA Shares and the Loan being free from any encumbrance as of Completion;
(ii) the warranties as contained in the Agreement remaining true and accurate and not misleading in any material respect as given as of the date of the Agreement and as of Completion, and as given at all times between the date of the Agreement and Completion;
(iii) the Company having complied in full with the obligations under the Agreement and otherwise having duly performed and observed all of the obligations, undertakings and covenants required to be performed and observed by them under the Agreement on or prior to Completion;

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LETTER FROM THE BOARD

(iv) all approvals, authorisations, consents, licences, certificates, permits, concessions, agreements or other permissions of any kind of, from or by any governmental authority, regulatory body or any other third party necessary or desirable for the consummation of the transactions contemplated in the Agreement having been obtained by the Company and Wah Cheong and remaining in full force and effect;
(v) the granting of the Waiver by the Executive and such Waiver not having been revoked;
(vi) no matter, event, circumstance or change having occurred which has caused, causes or is likely to cause any material adverse effect on:
(a) the business, operations, prospects or financial condition, or a material portion of the properties or assets, of Wah Cheong or of its subsidiaries including any licensing issues; or
(b) the ability of the Company to perform or observe any of its obligations, undertakings or covenants under the Agreement;
(vii) there being no applicable law which prohibits, restricts or imposes conditions or limitations on, or is reasonably expected to operate to prohibit, restrict or impose conditions or limitations on, the consummation of any of the transactions contemplated in the Agreement;
(viii)there being no bona fide proceedings in effect, pending or genuinely threatened as of Completion before any court, tribunal or arbitrator of a competent jurisdiction or by any governmental authority which seek to prohibit, restrict, impose condition or limitation on or otherwise challenge any of the transactions contemplated in the Agreement;
(ix) QHA retaining its listed status, with the trading in the shares of QHA not having been suspended from listing, other than for suspensions of a routine nature, including (without limitation) any suspension relating to the transactions and matters contemplated referred to in the Agreement;
(x) compliance by AGL, APL and the Company with all applicable disclosure and independent shareholders’ approval requirements under the Listing Rules, as the case may be;
(xi) Wah Cheong having paid the Wah Cheong Dividends to the Company; and
(xii) the Loan being assigned by the Company to Famestep.

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LETTER FROM THE BOARD

The Company will use its best endeavours to procure the fulfillment of all the conditions. If any of the conditions as set out in the Agreement is not fulfilled (or waived by Famestep, except conditions (v), (ix), (x) and (xii) which cannot be waived and except condition (xi) which can only be waived by the Company) on or before 31st July, 2008 (or such later date as may be agreed by the Company and Famestep in writing), no party will be obliged to proceed to Completion, and the Company shall forthwith refund to Famestep the full amount of the deposit previously received by it.

Completion

Subject to the fulfillment of the conditions set out in the Agreement, Completion will take place on the third business day after the day on which the last of the conditions is fulfilled (or otherwise waived) (or such other date as may be agreed by the Company and Famestep in writing) outside Hong Kong (or at a place agreed by the Company and Famestep in writing).

On Completion, the remaining balance of the consideration in the total sum of HK$423,621,000 will be paid by Famestep to the Company in cash.

Waiver

Immediately upon Completion, Famestep, its holding companies, and parties acting in concert with any one of them (if any) will be interested in the QHA Shares. Accordingly, Famestep has made an application to the Executive for the Waiver from its obligations under the Code to make a mandatory unconditional general offer for all the issued shares of QHA (other than those already owned or agreed to be acquired by Famestep, its holding companies, or parties acting in concert with any one of them) (if any). On 14th May, 2008, the Waiver was granted by the Executive.

INFORMATION ABOUT AGL, APL, THE COMPANY, WAH CHEONG, FAMESTEP AND QHA

AGL

AGL is a company incorporated in Hong Kong with limited liability. Its shares are listed on the Main Board of the Stock Exchange.

The principal business activity of AGL is investment holding. The principal business activities of its major subsidiaries are property investment and development, hospitality related activities and the provision of financial services.

APL

APL is a company incorporated in Hong Kong with limited liability. Its securities are listed on the Main Board of the Stock Exchange.

The principal business activity of APL is investment holding. The principal business activities of its major subsidiaries are property investment and development, hospitality related activities and the provision of financial services.

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LETTER FROM THE BOARD

As at the Latest Practicable Date, APL was beneficially owned as to approximately 73.79% by AGL.

The Company

The Company is incorporated in Hong Kong with limited liability. Its securities are listed on the Main Board of the Stock Exchange.

The principal business activity of the Company is investment holding. The principal business activities of its major subsidiaries are wealth management and brokerage, asset management, corporate finance, consumer finance as well as principal investments.

As at the Latest Practicable Date, the Company was beneficially owned as to approximately 58.65% by APL.

Wah Cheong

Wah Cheong is a company incorporated in the B.V.I. with limited liability. It is a direct wholly-owned subsidiary of the Company, and is the beneficial owner of the QHA Shares.

The principal business activity of Wah Cheong is investment holding.

Other than its investment in the QHA Shares, the only asset held by Wah Cheong is the bank balances of approximately HK$167,000 as at 31st December, 2007, 7th May, 2008 and the Latest Practicable Date.

Famestep

Famestep is a company incorporated in the B.V.I. with limited liability. It is a direct wholly-owned subsidiary of APL.

The principal business activity of Famestep is investment holding.

QHA

QHA is a company incorporated in Bermuda with limited liability. Its shares are listed on the Main Board of the Stock Exchange.

The principal business activities of QHA are health administration, medical scheme administration and the provision of healthcare services.

As at the Latest Practicable Date, QHA was beneficially owned as to approximately 51.15% by Wah Cheong.

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LETTER FROM THE BOARD

SUMMARY OF FINANCIAL RESULTS OF WAH CHEONG AND QHA

A summary of the audited results of Wah Cheong for the two financial years ended 31st December, 2007 is as follows:

	Year ended 31st	December,
	2006	2007
	HK$’000	HK$’000
Revenue	5,957	33,150
Profit before tax	15,231	32,913
Profit after tax	15,231	32,913
Profit attributable to the equity holders of Wah Cheong	15,231	32,913

The audited net asset value of Wah Cheong as at 31st December, 2007 was approximately HK$62,654,000.

A summary of the audited consolidated results of QHA for the two financial years ended 31st December, 2007 is as follows:

	Year ended 31st	December,
	2006	2007
	HK$’000	HK$’000
Revenue	893,698	947,701
Profit before tax	78,300	71,593
Profit after tax	65,149	63,233
Profit attributable to the equity holders of QHA	65,149	63,233

The audited consolidated net asset value of QHA as at 31st December, 2007 was approximately HK$307,412,000.

The accounts summarised above have been prepared in accordance with the HKGAAP.

Prior to Completion, Wah Cheong and QHA are subsidiaries of the Company and in turn subsidiaries of APL and AGL. Upon Completion, the Company will deconsolidate Wah Cheong and QHA. Wah Cheong and QHA shall remain as subsidiaries of APL and AGL upon Completion. Therefore, the results, assets and liabilities of Wah Cheong and QHA, which have already been consolidated by AGL and APL prior to Completion, will continue to be consolidated in the consolidated financial statements of AGL and APL.

– 12 –

LETTER FROM THE BOARD

REASONS FOR AND BENEFITS OF THE SALE AND PURCHASE OF THE SALE SHARES

The principal business activities of QHA and its subsidiaries are health administration, medical scheme administration and the provision of healthcare services. A plan has been formulated to effect an overall reorganisation of the businesses of the AGL Group. This involves the sale and purchase of the Sale Shares (currently held by the Company), which is intended to consolidate the healthcare services businesses of QHA into APL within the AGL Group.

Over the recent years, the Company has been crystallizing the gain in some parts of its principal investment portfolio to allow redeployment of capital. The disposal of the Sale Shares will realise the capital investment of the Company in QHA.

It is estimated that, as a result of the transaction, the Company will recognise a gain on the disposal of the Sale Shares of approximately HK$170,897,000, which will be reflected in the consolidated income statement of the Company for the year ending 31st December, 2008. The transaction will generate net sale proceeds (before expenses) of HK$470,690,000 for the Company which will be applied as working capital for its core business activities. The carrying values of the total assets and total liabilities of Wah Cheong and QHA as at 31st March, 2008 in the consolidated financial statements of the Company were approximately HK$883,140,000 and HK$450,356,000 respectively. After Completion, the assets and liabilities of Wah Cheong and QHA will be deconsolidated in the consolidated financial statements of the Company. The gain of approximately HK$170,897,000 represents the sum of the aggregate consideration and Wah Cheong Dividends less (i) the carrying values of Wah Cheong and QHA in the consolidated financial statements of the Company as at 31st March, 2008; (ii) the Loan; and (iii) estimated expenses on disposal of Wah Cheong.

Since the carrying values of Wah Cheong and QHA in the consolidated financial statements of the Company may change from the date of the Joint Announcement to the date of Completion, the gain on disposal of Wah Cheong to be recognised in the Company’s consolidated income statement may be different as a result of the change in the carrying values of Wah Cheong and QHA during the period.

The consideration for the Sale Shares (i.e. HK$199,298,555) represents approximately 37% premium over the carrying values of Wah Cheong and QHA in the consolidated financial statements of the Company as at 31st March, 2008, whilst the aggregate consideration represents a premium of approximately 13% over the carrying values of Wah Cheong and QHA in the consolidated financial statements of the Company as at 31st March, 2008 when the Loan (being part of the Agreement) has been taken into consideration in the calculation of the percentage premium to the Company.

As at the Latest Practicable Date, APL is indirectly interested in approximately 58.65% of the issued share capital of the Company which, through its wholly-owned subsidiary, Wah Cheong, indirectly holds approximately 51.15% of the issued share capital of QHA. Immediately following Completion, Famestep, a direct wholly-owned subsidiary of APL, will be directly interested in approximately 51.15% of the issued share capital of QHA. Upon Completion, the effective interest of APL in QHA will increase by approximately 21.15% from approximately 30.00% to approximately 51.15% of the entire issued share capital of QHA.

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LETTER FROM THE BOARD

Upon Completion, the effective interest of AGL in QHA will increase by approximately 15.60% from approximately 22.14% to approximately 37.74% of the entire issued share capital of QHA.

Having regard to the nature of and the benefits resulting from such reorganisation, the Directors believe that the terms of the transactions contemplated under the Agreement are fair and reasonable and in the interests of the Shareholders taken as a whole.

Unaudited consolidated net profits attributable to the Sale Shares for the two financial years ended 31st December, 2007 were:

(i) a profit of approximately HK$49,592,000 (before taxation) or a profit of approximately HK$46,717,000 (after taxation) for the financial year ended 31st December, 2006; and
(ii) a profit of approximately HK$50,425,000 (before taxation) or a profit of approximately HK$45,737,000 (after taxation) for the financial year ended 31st December, 2007.

Immediately following Completion, the Company will cease to hold any interests in Wah Cheong and QHA. The change in shareholding structure of the AGL Group as at the Latest Practicable Date and after the Completion is as follows:

As at the Latest Practicable Date:

Immediately following the Completion:

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– 14 –

LETTER FROM THE BOARD

LISTING RULES IMPLICATIONS

EGM

A notice convening the EGM is set out on pages 46 and 47 of this circular. An ordinary resolution in respect of the Agreement will be proposed at the EGM.

A form of proxy for use at the EGM is enclosed with this circular. Whether or not you are able to attend the EGM, you are requested to complete the form of proxy in accordance with the instructions printed thereon and return it to the Company’s registrar, Tricor Secretaries Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong as soon as possible and in any event not later than 48 hours before the time appointed for holding the EGM or any adjournment thereof. Completion and return of the form of proxy shall not preclude you from attending and voting in person at the EGM or any adjournment thereof should you so wish.

PROCEDURES FOR DEMANDING A POLL

Pursuant to Article 73 of the Articles of Association of the Company, at any general meeting a resolution put to the vote of the meeting shall be decided on a show of hands unless (before or on the declaration of the result of the show of hands) a poll is demanded:

(a) by the chairman of the meeting; or
(b) by at least three registered Shareholders present in person or by proxy for the time being entitled to vote at the meeting; or
(c) by any registered Shareholder or Shareholders present in person or by proxy and representing not less than one-tenth of the total voting rights of all the registered Shareholders having the right to vote at the meeting; or

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LETTER FROM THE BOARD

(d) by any registered Shareholder or Shareholders present in person or by proxy and holding shares in the Company conferring a right to vote at the meeting being shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all shares conferring that right.

Under the Listing Rules, the ordinary resolution to be proposed at the EGM to approve the Agreement is required to be voted on by poll. APL and its associates will abstain from voting on the resolution at the EGM.

RECOMMENDATION

The Directors consider that the Agreement is in the interests of the Company and the Shareholders as a whole and the terms of which are fair and reasonable so far as the Independent Shareholders are concerned. Accordingly, the Directors recommend all the Independent Shareholders to vote in favour of the ordinary resolution set out in the notice of the EGM.

ADDITIONAL INFORMATION

Your attention is also drawn to the letter from the Independent Board Committee, the letter from Wallbanck Brothers and the additional information set out in the Appendix to this circular.

Yours faithfully, On behalf of the Board Sun Hung Kai & Co. Limited Joseph Tong Tang Executive Director

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

The following is the text of a letter from the Independent Board Committee to the Independent Shareholders in connection with the Agreement for inclusion in the circular.

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(Incorporated in Hong Kong with limited liability) (Stock Code: 86)

4th June, 2008

To the Independent Shareholders

Dear Sir or Madam,

DISCLOSEABLE TRANSACTION AND CONNECTED TRANSACTION

CONDITIONAL SALE AND PURCHASE OF THE ENTIRE ISSUED SHARE CAPITAL OF WAH CHEONG DEVELOPMENT (B.V.I.) LIMITED WHICH HOLDS APPROXIMATELY 51.15% OF THE ISSUED SHARE CAPITAL OF QUALITY HEALTHCARE ASIA LIMITED

We have been appointed to form this Independent Board Committee to consider and advise you on the terms of the Agreement, details of which are set out in the circular issued by the Company to the Shareholders dated 4th June, 2008 (the “Circular”), of which this letter forms part. Terms defined in the Circular will have the same meanings when used herein unless the context otherwise requires.

We wish to draw your attention to the letter from the Board and letter of advice from Wallbanck Brothers set out on pages 5 to 16 and pages 18 to 34 of the Circular respectively.

Having taken into account the principal factors and reasons considered by Wallbanck Brothers, its conclusion and advice, we concur with the view of Wallbanck Brothers and consider that the terms of the Agreement are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

Accordingly, we recommend you to vote in favour of the ordinary resolution to be proposed at the EGM to approve the Agreement and the transactions contemplated in it.

Yours faithfully, For and on behalf of Independent Board Committee

Carlisle Caldow Procter Peter Wong Man Kong Independent non-executive Director Independent non-executive Director

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LETTER FROM WALLBANCK BROTHERS

The following is the full text of a letter of advice from Wallbanck Brothers, the independent financial adviser to the Independent Board Committee and the Independent Shareholders regarding the Agreement, for the purpose of incorporation into this circular.

==> picture [175 x 81] intentionally omitted <==

1005B, Tower 1, Lippo Centre, 89 Queensway, Central, Hong Kong

4 June 2008

To the independent board committee and the independent shareholders of Sun Hung Kai & Co. Limited

Dear Sirs,

DISCLOSEABLE TRANSACTION AND CONNECTED TRANSACTION

CONDITIONAL SALE AND PURCHASE OF THE ENTIRE ISSUED SHARE CAPITAL OF WAH CHEONG DEVELOPMENT (B.V.I.) LIMITED WHICH HOLDS APPROXIMATELY 51.15% OF THE ISSUED SHARE CAPITAL OF QUALITY HEALTHCARE ASIA LIMITED

INTRODUCTION

We refer to our appointment as independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the Agreement, details of which are set out in the letter from the Board (the “Letter from the Board”) contained in the circular to the Shareholders dated 4 June 2008 (the “Circular”), of which this letter forms part. Terms used in this letter shall have the same meanings as those defined in the Circular unless the context requires the otherwise.

It was announced on 14 May 2008 that the Company as the vendor, Famestep (a direct wholly-owned subsidiary of APL) as the purchaser, and APL as the purchaser’s guarantor entered into the Agreement, pursuant to which the Company has conditionally agreed to sell the Sale Shares and assign the Loan, and Famestep has conditionally agreed to purchase the Sale Shares and accept the assignment of the Loan, at an aggregate consideration of HK$470,690,000.

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LETTER FROM WALLBANCK BROTHERS

Completion is conditional upon fulfilment of a number of conditions, including the granting of the Waiver by the Executive to Famestep.

An Independent Board Committee comprising Messrs. Carlisle Caldow Procter and Peter Wong Man Kong (both being independent non-executive Directors) has been formed to advise the Independent Shareholders on (i) whether the terms of the Agreement are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned; and (ii) whether the transactions contemplated in the Agreement are in the interests of the Company and the Shareholders as a whole. Mr. David Craig Bartlett, an independent non-executive Director, is also an independent non-executive director of AGL. Mr. Alan Stephen Jones, an independent non-executive Director, is also an independent non-executive director of both AGL and APL. They were thus not appointed as members of the Independent Board Committee. We, Wallbanck Brothers, have been appointed as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in this respect.

BASIS OF OUR OPINION

In formulating our opinion and recommendations, we have relied on the accuracy of the information, opinions and representations provided to us by the Directors and management of the Company, and have assumed that all information, opinions and representations contained or referred to in this circular were true and accurate at the time when they were made and will continue to be accurate at the Latest Practicable Date. We have also assumed that all statements of belief, opinion and intention made by the Directors in this circular were reasonably made after due enquiry. We have no reasons to doubt that any relevant information has been withheld, nor are we aware of any fact or circumstance which would render the information provided and representations and opinions made to us untrue, inaccurate or misleading. We consider that we

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LETTER FROM WALLBANCK BROTHERS

have received sufficient information to enable us to reach an informed view and to justify reliance on the accuracy of the information contained in this circular to provide a reasonable basis for our opinions and recommendations. Having made all reasonable enquiries, the Directors have further confirmed that, to the best of their knowledge, they believe there are no other facts or representations the omission of which would make any statement in this circular, including this letter, misleading. We have not, however, carried out any independent verification of the information provided by the Directors and management of the Company, nor have we conducted an independent investigation into the business and affairs of the Company.

In formulating our opinion, we have relied on the financial information provided by the Company, particularly, on the accuracy and reliability of financial statements and other financial data of the Company. We have not audited, compiled nor reviewed the said financial statements and financial data. We shall not express any opinion or any form of assurance on them. We have had no reason to doubt the truth and accuracy of the information provided to us by the Company. The Directors have also advised us that no material facts have been omitted from the information to reach an informed view, and we have no reason to suspect that any material information has been withheld. We have not carried out any feasibility study on any past, and forthcoming investment decision, opportunity or project undertaken or be undertaken by the Company. Our opinion has been formed on the assumption that any analysis, estimation, forecast, anticipation, condition and assumption provided by the Company are valid and sustainable. Our opinions shall not be constructed as to give any indication to the validity, sustainability and feasibility of any past, existing and forthcoming investment decision, opportunity or project undertaken or to be undertaken by the Company.

In formulating our opinion, we have not considered the taxation implications on the Independent Shareholders arising from the Agreement as these are particular to the individual circumstances of each Shareholder. It is emphasized that we will not accept responsibility for any tax effect on or liability of any person resulting from his or her decision to the Agreement. In particular, the Independent Shareholders who are overseas residents or are subject to overseas taxation or Hong Kong taxation on securities dealings should consult their own tax positions, and if in any doubt, should consult their own professional advisers.

Our opinions are necessarily based upon the financial, economic, market, regulatory and other conditions as they existed on, and the facts, information, representations, and opinions made available to us as of, the Latest Practicable Date.

We disclaim any undertaking or obligation to advise any person of any change in any fact or matter affecting the opinion expressed herein which may come or be brought to our attention before and after the EGM.

Our opinions are formulated only and exclusively for the purpose of the Agreement and shall not be used for any other purpose in any circumstance nor for any comparable purpose with any other opinions.

We take no responsibility for the contents of the Letter from the Board, make no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this letter.

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LETTER FROM WALLBANCK BROTHERS

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our opinion to the Independent Board Committee in respect of the Agreement, we have taken into consideration the following principal factors and reasons:

1. The Agreement

A) Date

7 May 2008

B) Parties

(1) Vendor: the Company
(2) Purchaser: Famestep
(3) Purchaser’s guarantor: APL

C) The Sale Shares and the assignment of the Loan

The Sale Shares represent the entire issued share capital of Wah Cheong as at the Latest Practicable Date.

The sale and purchase of the Sale Shares are conducted on an ex-dividend basis under the Agreement, pursuant to which the Company is entitled to the Wah Cheong Dividends before Completion.

The Sale Shares and the QHA Shares will be acquired free from any encumbrance as of Completion and there will be no restrictions which apply to the subsequent sale of the Sale Shares.

The Loan will be assigned by the Company to Famestep free from any encumbrance as of Completion.

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LETTER FROM WALLBANCK BROTHERS

D) Consideration

As stated in the Letter from the Board, the aggregate consideration for the sale of the Sale Shares and the assignment of the Loan shall be HK$470,690,000 (or effectively the equivalent of approximately HK$3.85 per QHA Share). The aggregate consideration was arrived at after arm’s length negotiations between the Company and Famestep, having regard to the carrying values of Wah Cheong and QHA in the consolidated financial statements of the Company as at 31 December 2007, the actual amount of the Loan owed by Wah Cheong to the Company and the market value of the QHA Shares.

The consideration for the assignment of the Loan represents the actual amount of the Loan owed by Wah Cheong to the Company.

In effect, the aggregate consideration represents:

(i) a premium of approximately 30.51% over the closing price of HK$2.95 per share of QHA Share as quoted on the Stock Exchange on the last trading day of the shares of QHA immediately before the date of the Joint Announcement;
(ii) a premium of approximately 29.19% over the average closing price of approximately HK$2.98 per share of QHA Share as quoted on the Stock Exchange for the last five trading days of the shares of QHA immediately before the date of the Joint Announcement;
(iii) a premium of approximately 29.63% over the average closing price of approximately HK$2.97 per share of QHA as quoted on the Stock Exchange for the last ten trading days of the shares of QHA immediately before the date of the Joint Announcement;
(iv) a premium of approximately 29.63% over the average closing price of approximately HK$2.97 per share of QHA as quoted on the Stock Exchange for the last one month of the shares of QHA Shares immediately before the date of the Joint Announcement; and
(v) a premium of approximately 30.95% over the closing price of HK$2.94 per share of QHA as quoted on the Stock Exchange on the Latest Practicable Date.

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LETTER FROM WALLBANCK BROTHERS

E) Conditions precedent

As stated in the Letter from the Board, Completion is conditional upon the fulfillment of a number of conditions, including:

(i) the Sale Shares, the QHA Shares and the Loan being free from any encumbrance as of Completion;
(ii) the warranties as contained in the Agreement remaining true and accurate and not misleading in any material respect as given as of the date of the Agreement and as of Completion, and as given at all times between the date of the Agreement and Completion;
(iii) the Company having complied in full with the obligations under the Agreement and otherwise having duly performed and observed all of the obligations, undertakings and covenants required to be performed and observed by them under the Agreement on or prior to Completion;
(iv) all approvals, authorisations, consents, licences, certificates, permits, concessions, agreements or other permissions of any kind of, from or by any governmental authority, regulatory body or any other third party necessary or desirable for the consummation of the transactions contemplated in the Agreement having been obtained by the Company and Wah Cheong and remaining in full force and effect;
(v) the granting of the Waiver by the Executive and such Waiver not having been revoked;
(vi) no matter, event, circumstance or change having occurred which has caused, causes or is likely to cause any material adverse effect on:
(a) the business, operations, prospects or financial condition, or a material portion of the properties or assets, of Wah Cheong or of its subsidiaries including any licensing issues; or
(b) the ability of the Company to perform or observe any of its obligations, undertakings or covenants under the Agreement;
(vii) there being no applicable law which prohibits, restricts or imposes conditions or limitations on, or is reasonably expected to operate to prohibit, restrict or impose conditions or limitations on, the consummation of any of the transactions contemplated in the Agreement;

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LETTER FROM WALLBANCK BROTHERS

(viii)there being no bona fide proceedings in effect, pending or genuinely threatened as of Completion before any court, tribunal or arbitrator of a competent jurisdiction or by any governmental authority which seek to prohibit, restrict, impose condition or limitation on or otherwise challenge any of the transactions contemplated in the Agreement;
(ix) QHA retaining its listed status, with the trading in the shares of QHA not having been suspended from listing, other than for suspensions of a routine nature, including (without limitation) any suspension relating to the transactions and matters contemplated referred to in the Agreement;
(x) compliance by AGL, APL and the Company with all applicable disclosure and independent shareholders’ approval requirements under the Listing Rules, as the case may be;
(xi) Wah Cheong having paid the Wah Cheong Dividends to the Company; and
(xii) the Loan being assigned by the Company to Famestep.

The Company will use its best endeavours to procure the fulfillment of all the conditions. If any of the conditions as set out in the Agreement is not fulfilled (or waived by Famestep, except conditions (v), (ix), (x) and (xii) which cannot be waived and except condition (xi) which can only be waived by the Company) on or before 31 July 2008 (or such later date as may be agreed by the Company and Famestep in writing), no party will be obliged to proceed to Completion, and the Company shall forthwith refund to Famestep the full amount of the deposit previously received by it.

F) Completion

As stated in the Letter from the Board, subject to the fulfillment of the conditions set out in the Agreement, Completion will take place on the third business day after the day on which the last of the conditions is fulfilled (or otherwise waived) (or such other date as may be agreed by the Company and Famestep in writing) outside Hong Kong (or at a place agreed by the Company and Famestep in writing).

On Completion, the remaining balance of the consideration in the total sum of HK$423,621,000 will be paid by Famestep to the Company in cash.

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LETTER FROM WALLBANCK BROTHERS

2. Reasons for and benefits of the sale of Sale Shares

As stated in the Letter from the Board, the principal business activities of QHA and its subsidiaries are health administration, medical scheme administration and the provision of healthcare services. A plan has been formulated to effect an overall reorganisation of the businesses of the AGL Group. This involves the sale and purchase of the Sale Shares (currently held by the Company), which is intended to consolidate the healthcare services businesses of QHA into APL within the AGL Group.

It is estimated that, as a result of the transaction, the Company will recognise a gain on the disposal of the Sale Shares of approximately HK$170,897,000, which will be reflected in the consolidated income statement of the Company for the year ending 31 December 2008. The transaction will generate net sale proceeds (before expenses) of HK$470,690,000 for the Company which will be applied as working capital for its core business activities. The carrying values of the total assets and total liabilities of Wah Cheong and QHA as at 31 March 2008 in the consolidated financial statements of the Company were approximately HK$883,140,000 and HK$450,356,000 respectively. After Completion, the assets and liabilities of Wah Cheong and QHA will be deconsolidated in the consolidated financial statements of the Company. The gain of approximately HK$170,897,000 represents the sum of the aggregate consideration and Wah Cheong Dividends less (i) the carrying values of Wah Cheong and QHA in the consolidated financial statements of the Company as at 31 March 2008; (ii) the Loan; and (iii) estimated expenses on disposal of Wah Cheong.

The consideration for the Sale Shares (i.e. HK$199,298,555) represents approximately 37% premium over the carrying values of Wah Cheong and QHA in the consolidated financial statements of the Company as at 31 March, 2008, whilst the aggregate consideration represents a premium of approximately 13% over the carrying values of Wah Cheong and QHA in the consolidated financial statements of the Company as at 31 March, 2008 when the Loan (being part of the Agreement) has been taken into consideration in the calculation of the percentage premium to the Company.

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LETTER FROM WALLBANCK BROTHERS

3. Business review of the QHA Group

The following are summaries of the audited consolidated financial information of QHA and its subsidiaries (the “QHA Group”) for the three years ended 31 December 2007:

Table 1: Financial performance of QHA Group

	For the year ended 31 December	For the year ended 31 December	For the year ended 31 December
	2007	2006	2005
	(HK$’000)	(HK$’000)	(HK$’000)
	(Audited)	(Audited)	(Audited)
Revenue	947,701	893,698	822,844
Profit before taxation	71,593	78,300	66,440
Profit after taxation	63,233	65,149	56,140
	As at 31 December
	2007	2006	2005
	(HK$’000)	(HK$’000)	(HK$’000)
	(Audited)	(Audited)	(Audited)
Bank balances and cash	240,063	177,283	116,640
Net assets	307,412	238,692	150,287
Gearing ratio (net debt to equity)	N/A	N/A	N/A

Source: QHA’s annual reports for the two years ended 31 December 2007

From the above table, QHA Group recorded consolidated revenue of approximately HK$893.698 million for the financial year ended 31 December 2006 (“2006”), representing an increase of approximately 8.61% from approximately HK$822.844 million for the financial year ended 31 December 2005 (“2005”). Profit after taxation increased by approximately 16.05% from approximately HK$56.140 million in 2005 to approximately HK$65.149 million in 2006.

According to the annual report for the year ended 31 December 2006 (the “2006 Annual Report”), all of three core businesses demonstrated a steady improvement in operating profit in 2006 compared to 2005. Quality HealthCare Medical Services (“QHMS”) delivered divisional profit growth of 8.2% reaching HK$66.8 million in 2006, and Quality HealthCare Services (“QHS”) delivered divisional profit growth of 10.7% reaching HK$8.4 million. Divisional profit for Quality HealthCare Elderly Services (“QHES”) was HK$8.0 million, a significant increase of 81.7% compared to 2005.

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LETTER FROM WALLBANCK BROTHERS

The net assets of QHA Group as at 31 December 2006 valued at approximately HK$238.692 million (2005: approximately HK$150.287 million), representing an increase of approximately 58.82% as compared with those as at 31 December 2005. In 2006, QHA Group’s bank balances and cash totalled approximately HK$177.283 million (2005: approximately HK$116.640 million), representing an increase of approximately 51.99% against the balance in 2005. Since the Group was in a positive net cash position (cash and bank balances available were in excess of borrowings), gearing ratio comparing net debt (borrowings net of cash and bank balances available) to equity was not applicable in 2006 and 2005.

For the financial year ended 31 December 2007 (“2007”), QHA Group recorded consolidated revenue of approximately HK$947.701 million in 2007, representing an increase of approximately 6.04% from HK$893.698 million in 2006. Profit after taxation decreased by approximately 2.94% from approximately HK$65.149 million in 2006 to approximately HK$63.233 million in 2007.

The net assets of QHA Group as at 31 December 2007 valued at HK$307.412 million (2006: HK$238.692 million), representing an increase of 28.79% as compared with those as at 31 December 2006. As at 31 December 2007, QHA Group’s bank balances and cash totalled approximately HK$240.063 million (2006: HK$177.283 million), representing an increase of 35.41% against the balance as at 31 December 2006. Since the Group was in a positive net cash position (cash and bank balances available were in excess of borrowings), gearing ratio comparing net debt (borrowings net of cash and bank balances available) to equity was not applicable in 2007 and 2006.

According to annual report for the year ended 31 December 2007 (the “2007 Annual Report”), profit before tax was HK$71.6 million in 2007 compared to HK$78.3 million in 2006. Quality HealthCare Medical Services (“QHMS”) delivered divisional profit of HK$54.9 million in 2007 (2006:HK$66.8 million), and Quality HealthCare Services (“QHS”) delivered divisional profit of HK$6.7 million (2006: HK$8.4 million). Divisional profit for Quality HealthCare Elderly Services (“QHES”) was HK$7.9 million (2006: HK$8.0 million). The decrease in profits for each division is mainly attributable to the increase in rental expenses and staff remuneration.

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LETTER FROM WALLBANCK BROTHERS

4. Review on share price performance of QHA

Chart 1 below shows the sale price per QHA Share and the historical closing prices of the shares of QHA as quoted on the Stock Exchange during the period commencing from 1 May 2007 up to and including the Latest Practicable Date (the “Review Period”):

Chart 1: Historical share price performance of QHA

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

4.500
4.300
4.100 sale price per QHA Share
3.900
3.700
3.500
3.300
3.100
2.900
2.700
2.500
Date
share price of QHA (HK$)
2-May-07 2-Jun-07 2-Jul-07 2-Aug-07 2-Sep-07 2-Oct-07 2-Nov-07 2-Dec-07 2-Jan-08 2-Feb-08 2-Mar-08 2-Apr-08 2-May-08
----- End of picture text -----

Source: Stock Exchange website

Note:

Trading in the shares of QHA was suspended from 8 May 2008 to 14 May 2008, pending the release of the Joint Announcement.
On market days when the shares of QHA were not traded, the closing price equals to that of the preceding trading days.

The closing price of QHA was generally declining for the whole Review Period. The share price was fluctuated in the range of HK$2.75 on 22 January 2008 and 23 January 2008 to HK$4.30 on 29 May 2007 and 30 May 2007.

Shares of QHA had been traded below the sale price of HK$3.85 per QHA Share from the end of June 2007. The closing price of QHA continuously dropped to HK$2.75 on 22 January 2008 and 23 January 2008 which was the lowest closing price during the Review Period and the sale price of approximately HK$3.85 per QHA Share represented a substantial premium of approximately 40.00% over this lowest closing price. Thereafter, it climbed back to HK$3.30 on 21 February 2008 and closed at HK$2.94 on the Latest Practicable Date. The sale price of approximately HK$3.85 per QHA Share represents a premium of approximately 30.95% over the closing price on the Latest Practicable Date.

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LETTER FROM WALLBANCK BROTHERS

In view of the fact that the shares of QHA had been traded below the sale price per QHA Share for the period beginning from the end of June 2007 up to and including the Latest Practicable Date, it is reasonable to infer that the sale price of HK$3.85 per QHA Share is not unfair and unreasonable.

5. Review on trading liquidity of shares of QHA

Table 2 below sets out the average daily turnover for each month of the Review Period and the respective percentages of the shares’ average daily turnover as compared to the total number of shares of QHA in issue as at the Latest Practicable Date and the total number of shares of QHA held by the public shareholders of QHA as at the Latest Practicable Date during the Review Period:

Table 2: Trading liquidity of shares of QHA

			Percentage of	Percentage of	Percentage of
		Percentage of	average daily
		average daily	turnover to
		turnover to	total number of
		total number of	shares of		QHA
	Average daily	shares of QHA	held	by the
Month	turnover	in issue		public
		(Note 1)	(Note 2)
	(in number of
	Shares)	(%)			(%)
2007
May	708,496	0.297			0.937
June	361,730	0.151			0.478
July	251,256	0.105			0.332
August	258,663	0.108			0.342
September	204,467	0.086			0.270
October	152,170	0.064			0.201
November	83,873	0.035			0.111
December	112,397	0.047			0.149
2008
January	33,636	0.014			0.044
February	110,060	0.046			0.146
March	364,061	0.152			0.481
April	122,238	0.051			0.162
May (up to and
including the Latest
Practicable Date)	232,501	0.097			0.307

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LETTER FROM WALLBANCK BROTHERS

Notes:

Based on 238,937,348 total issued shares of QHA as at the Latest Practicable Date.
Based on the total number of shares held by the public of 75,623,573 shares of QHA as at the Latest Practicable Date.
Trading in shares of QHA was suspended from 8 May 2008 to 14 May 2008, pending the release of the Joint Announcement.
Source: the Stock Exchange website

The trading volume was in general thin. The shares of QHA were traded well below 0.3% and 1% of the total issued shares of QHA and shares held by the public of QHA respectively for the whole Review Period. The maximum daily trading occurred on 3 March 2008, with a trading volume of 5,532,000 shares of QHA and accounted for approximately 2.32% and 7.32% of the total issued shares of QHA and shares held by the public of QHA respectively.

The aggregate amount of shares of QHA owned by the public as at the Latest Practicable Date represents approximately 326 times of the average daily trading volume for the Review Period. Based on the above, we consider that the trading of shares of QHA was relatively thin and inactive during the Review Period.

6. Comparable companies of QHA

In order to assess the fairness and reasonableness of the transactions, we have conducted a trading multiples analysis which includes the price to earnings ratio (“PER”) and the price to book ratio (“PBR”). We have searched for companies listed on the Main Board and GEM Board of the Stock Exchange which are in similar lines of business to the Company, i.e. healthcare services (the “Market Comparables”). To the best of our effort, knowledge, endeavor and as far as we are aware of, there are three companies which met this criteria. Set out below are the PERs and PBRs of the Market Comparables based on the closing prices of their shares as at 7 May 2008, being the last

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LETTER FROM WALLBANCK BROTHERS

trading day prior to the release of the Joint Announcement, and their latest published financial information:

Table 3: Comparable companies of QHA

Company name
(Stock code)	Principal business	PBR	PER
Town Health International	Management service provider for private	2.97	10.36
Holdings Company	medical and dental practices and a one
Limited (8138)	stop shop integrated healthcare service to
	the public in Hong Kong.
Hong Kong Health Check	Provision of healthcare and medical	1.20	N/A
and Laboratory Holdings	checks services, manufacturing and sales		(Note 1)
Company Limited (397)	of garment, trading of securities.
Hua Xia Healthcare	Provision of general hospital services and	0.59	15.49
Holdings Limited (8143)	healthcare and hospital management
	services in the PRC.
	Maximum	2.97	15.49
	Minimum	0.59	10.36
	Average	1.59	12.92
QHA (593)	Provision of a wide range of integrated	2.99	14.34
	healthcare services.	(Note 2)	(Note 3)

Source: the Stock Exchange website

Notes:

Hong Kong Health Check and Laboratory Holdings Company Limited recorded a loss for the year ended 31 March 2007.
The PBR of QHA is calculated based on the sale price of HK$3.85 per QHA Share.
The PER of QHA is calculated based on the sale price of HK$3.85 per QHA Share.

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LETTER FROM WALLBANCK BROTHERS

From the above table, we noted that the average PBR as represented by the Market Comparables was approximately 1.59 times with a range of approximately 0.59 times to 2.97 times. Since the sale price of HK$3.85 per QHA Share is approximately 2.99 times to the net asset value per share of QHA as at 31 December 2007, it is above the range of PBRs of the Market Comparables. The disposal of QHA Shares at a higher PBR than that of the Market Comparables is not unfair and unreasonable.

Also, we noted that the average PER as represented by the Market Comparables was approximately 12.92 times with a range of approximately 10.36 times to 15.49 times. Since the sale price of HK$3.85 per QHA Share is approximately 14.34 times to the earnings per share of QHA for the year ended 31 December 2007, it falls within the range and is above the average of the PERs of the Market Comparables.

7. Financial effects of the sale of QHA Shares on the Group

A) Net asset value

According to the 2007 Annual Report, the net asset value (“NAV”) of the Group as at 31 December 2007 was approximately HK$12,192 million (net of minority interest).

As stated in the Letter from the Board, the consideration for the Sale Shares of HK$199,298,555 represents approximately 37% premium over the carrying values of Wah Cheong and QHA in the consolidated financial statements of the Company as at 31 March 2008, whilst the aggregate consideration represents a premium of approximately 13% over the carrying values of Wah Cheong and QHA in the consolidated financial statements of the Company as at 31 March 2008 when the Loan (being part of the Agreement) has been taken into consideration in the calculation of the percentage premium to the Company. The NAV of the Group will be increased due to the sale of Sale Shares at a premium and the receipt of Wah Cheong Dividends.

B) Earnings

According to the 2007 Annual Report, the profit attributable to the shareholders of the Company was approximately HK$1,897.62 million.

As stated in the Letter from the Board, on the basis that the Sale Shares are disposed of at a premium to the carrying values of Wah Cheong and QHA in the consolidated financial statements of the Company, the Directors expect a gain of approximately HK$170,897,000 from the disposal, which will be applied as working capital for its core business activities. The gain of approximately HK$170,897,000 represents the sum of the aggregate consideration and Wah Cheong Dividends less (i) the carrying values of Wah Cheong and QHA in the consolidated financial statements of the Company as at 31 March, 2008; (ii) the Loan; and (iii) estimated expenses on disposal of Wah Cheong.

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LETTER FROM WALLBANCK BROTHERS

Therefore, the Group would recognize a one-off gain of approximately HK$170,897,000 upon Completion. After Completion, the earnings of Wah Cheong and QHA will be deconsolidated from the financial statements of the Company.

C) Working capital and gearing

The working capital of the Group as at 31 December 2007 was approximately HK$7,958.76 million.

Upon Completion, the Company will receive the aggregate consideration from the sale of Sale Shares of approximately HK$470.69 million and the Company will cease to hold any interest in Wah Cheong and QHA. Accordingly, the Company will not consolidate any borrowings of QHA after Completion. Furthermore, the Group’s cash level would increase as a result of the receipt of the aggregate consideration and the Wah Cheong Dividends. As a result, Group’s cash position and working capital as well as gearing will be improved.

RECOMMENDATION

Having considered the principal factors and reasons as discussed above and as summarized below:

(i) the sale price of HK$3.85 per QHA Share represents substantial premiums over the closing price of the shares of QHA on the last trading day, the average closing prices for the last five trading days, last ten trading days and last one month of the shares of QHA immediately before the date of the Joint Announcement and the closing price of the shares of QHA on the Latest Practicable Date;
(ii) the shares of QHA were traded well below HK$3.85 for approximately 11 months from the end of June 2007 to the Latest Practicable Date;
(iii) the very thin trading liquidity of QHA;
(iv) the sale price of HK$3.85 per QHA Share is approximately 2.99 times to the NAV per share of QHA as at 31 December 2007 and the disposal of QHA Shares represents a higher PBR than the PBRs of the Market Comparables;
(v) the sale price of HK$3.85 per QHA Share is approximately 14.34 times to the earnings per share of QHA for the year ended 31 December 2007. It falls within the range and is above the average of the PERs of the Market Comparables; and
(vi) the sale of Sale Shares has positive financial impacts to the Group.

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LETTER FROM WALLBANCK BROTHERS

Having considered the above factors and reasons and Directors’ representations, on balance, we are of opinion that in such circumstances of the Group, the terms of the Agreement are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned and the sale of Sale Shares, even though may not be in the ordinary and usual course of business of the Company, is in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Board Committee to advise the Independent Shareholders to vote in favour of the ordinary resolutions to be proposed at the forthcoming EGM to approve the Agreement and the transactions contemplated therein and we recommend the Independent Shareholders to vote in favour of the resolutions in this regard.

Yours faithfully, For and on behalf of WALLBANCK BROTHERS Securities (Hong Kong) Limited Phil Chan Chief Executive Officer

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GENERAL INFORMATION

APPENDIX

1. RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors collectively and individually accept full responsibility for the accuracy of the information contained in this circular as far as the Company is concerned, and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, opinions expressed in this circular in connection with the Company have been arrived at after due and careful consideration, and there are no other facts in connection with the Company the omission of which would make any statement in this circular misleading.

2. DISCLOSURE OF INTERESTS

(a) Directors’ Interests

Save as disclosed below, as at the Latest Practicable Date, none of the Directors and the chief executive of the Company had any interest or short position in the shares, underlying shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO), which (i) were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions, if any, which they were taken or deemed to have under such provisions of the SFO); (ii) were required, pursuant to Section 352 of the SFO, to be entered in the register referred to in such provisions of the SFO; or (iii) were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 of the Listing Rules to be notified to the Company and the Stock Exchange:

(i) Interests in the Shares and underlying Shares

	Number of	Approximate
	Shares and	percentage of
	underlying	the issued	Nature of
Name of Director	Shares	share capital	interests
Lee Seng Huang	1,175,956,725	70.00%	Interests of
	(Note 1)		controlled
			corporation
			(Note 2)

Notes:

These include (i) an interest in 985,303,892 Shares; and (ii) an interest in listed physically settled warrants of the Company in an amount of HK$1,121,038,658.04, giving rise to an interest in 190,652,833 underlying Shares. The warrants of the Company entitle the holders thereof to subscribe at any time during the period from 1st June, 2006 to 31st May, 2009 (both days inclusive) for the fully paid Shares at an initial subscription price of HK$6.00 per Share which was adjusted to HK$5.88 per Share (subject to further adjustments) effective on 20th September, 2006 (the “2009 Warrants”).
Mr. Lee Seng Huang is a trustee of Lee and Lee Trust, being a discretionary trust which indirectly owned approximately 42.95% interest in the issued share capital of AGL and was therefore deemed to have interests in the Shares and underlying Shares in which AGL was interested.
All interests stated above represent long positions.

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GENERAL INFORMATION

APPENDIX

(ii) Interests in the shares, underlying shares and debentures of associated corporations

			Approximate
		Number of	percentage of
		shares and	the relevant
	Name of associated	underlying	issued share	Amount of
Name of Director	corporations	shares	capital	debentures	Nature of interests
Lee Seng Huang	AGL	104,876,492	42.95%		Trustee (other than a
(Note 1)					bare trustee) (Note 2)
	APL	4,831,580,650	85.50%		Interests of controlled
		(Note 3)			corporation (Note 4)
	QHA	122,213,776	51.14%		Interests of controlled
					corporation (Note 5)
	Tian An China	639,682,041	42.33%		Interests of controlled
	Investments				corporation (Note 5)
	Company Limited
	(“Tian An”)
	Swan Islands Limited			HK$1,400,000,000	Interests of controlled
					corporation (Note 6)
Patrick Lee	AGL	550,000	0.22%		Beneficial owner
Seng Wei		(Note 7)
	APL	3,240,000	0.05%		Beneficial owner
		(Note 8)

Notes:

Mr. Lee Seng Huang, by virtue of his interests in AGL and APL, was deemed to be interested in the shares of the subsidiaries of AGL and APL, which are associated corporations of the Company as defined under the SFO. A waiver application was submitted to the Stock Exchange for exemption from disclosure of his deemed interests in the shares of such associated corporations of the Company in this circular, and a waiver has been granted by the Stock Exchange.
Mr. Lee Seng Huang is a trustee of Lee and Lee Trust, being a discretionary trust which owned 104,876,492 shares of AGL.
These include (i) an interest in 4,169,916,590 shares of APL; and (ii) an interest in listed physically settled warrants of APL in an amount of HK$661,664,060, giving rise to an interest in 661,664,060 underlying shares of APL. The warrants of APL entitle the holders thereof to subscribe at any time during the period from 7th June, 2006 to 6th June, 2009 (both days inclusive) for fully paid shares of APL at an adjusted subscription price of HK$1.00 per share (subject to further adjustments) (the “APL Warrants”).
These refer to the same interests held directly and indirectly by AGL in APL.
These refer to the same interests held directly and indirectly by the Company in the shares of the listed associated corporations.
These are the bonds issued by Swan Islands Limited, a wholly-owned subsidiary of the Company, to AG Capital Holding Limited, which is a wholly-owned subsidiary of AGL, to partially settle the consideration for the acquisition of UAF Holdings Limited as disclosed in the circular of the Company dated 30th June, 2006.
This represents an interest in 550,000 shares of AGL.
These include (i) an interest in 2,700,000 shares of APL; and (ii) an interest in APL Warrants in an amount of HK$540,000, giving rise to an interest in 540,000 underlying shares of APL.

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GENERAL INFORMATION

APPENDIX

(b) Substantial Shareholders’ and Other Persons’ Interests

Save as disclosed below, so far as was known to the Directors, there was no other person who, as at the Latest Practicable Date, had an interest or short position in the shares, underlying shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which would fall to be disclosed under provisions of Divisions 2 and 3 of Part XV of the SFO, or who, as at the Latest Practicable Date, was directly and 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 the Group.

(i) Interest in the Shares and the underlying Shares as recorded in the register required to be kept by the Company pursuant to Section 336 of the SFO

	Number of	Approximate
	Shares and	percentage of
	underlying	the issued
Name of Shareholder	Shares	share capital	Nature of interests
APL	1,175,956,725	70.00%	Interests of controlled
	(Note 1)		corporation (Note 2)
AGL	1,175,956,725	70.00%	Interests of controlled
	(Note 3)		corporation (Note 4)
Lee and Lee Trust	1,175,956,725	70.00%	Interests of controlled
	(Note 3)		corporation (Note 5)
Dubai Ventures L.L.C	166,000,000	9.88%	Beneficial owner
(“Dubai Ventures”)	(Note 6)
Dubai Investment	166,000,000	9.88%	Interests of controlled
Group (L.L.C)	(Note 7)		corporation (Note 8)
Dubai Group (L.L.C)	166,000,000	9.88%	Interests of controlled
(“Dubai Group”)	(Note 7)		corporation (Note 9)
Dubai Holding	166,000,000	9.88%	Interests of controlled
Investments Group	(Note 7)		corporation (Note 10)
LLC (“DHIG”)
Dubai Holding (L.L.C)	166,000,000	9.88%	Interests of controlled
(“Dubai Holding”)	(Note 7)		corporation (Note 11)

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GENERAL INFORMATION

APPENDIX

	Number of	Approximate
	Shares and	percentage of
	underlying	the issued
Name of Shareholder	Shares	share capital	Nature of interests
Dubai Investment	168,042,000	10.00%	Interests of controlled
Group Limited	(Note 12)		corporation and
(“DIGL”)			beneficial owner
			(Note 13)
Dubai Group Limited	166,920,000	9.94%	Interests of controlled
(“DGL”)	(Note 14)		corporation (Note 15)
Bin Rashid Al	166,920,000	9.94%	Interests of controlled
Maktoum	(Note 14)		corporation (Note 16)
Mohammed
Penta Investment	184,987,349	11.01%	Investment manager
Advisers Limited	(Note 17)
(“Penta”)
John Zwaanstra	184,987,349	11.01%	Interests of controlled
	(Note 18)		corporation (Note 19)
Penta Asia Fund, Ltd.	84,170,699	5.01%	Interests of controlled
(“Penta Asia”)	(Note 20)		corporation (Note 21)
Todd Zwaanstra	84,170,699	5.01%	Trustee (other than a
	(Note 20)		bare trustee) (Note 21)
Mercurius GP LLC	84,170,699	5.01%	Founder of a
(“Mercurius”)	(Note 20)		discretionary trust
			(Note 22)
COL Capital Limited	104,507,469	6.22%	Interests of controlled
(“COL”)	(Note 23)		corporation (Note 24)
Vigor Online Offshore	104,507,469	6.22%	Interests of controlled
Limited (“Vigor	(Note 25)		corporation (Note 26)
Online”)
China Spirit Limited	104,507,469	6.22%	Interests of controlled
(“China Spirit”)	(Note 25)		corporation (Note 27)
Chong Sok Un	105,732,469	6.29%	Interests of controlled
	(Note 28)		corporation (Note 29)

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GENERAL INFORMATION

APPENDIX

Notes:

These include (i) an interest in 985,303,892 Shares; and (ii) an interest in the 2009 Warrants in an amount of HK$1,121,038,658.04, giving rise to an interest in 190,652,833 underlying Shares (at the adjusted subscription price of the 2009 Warrants of HK$5.88 per Share).
The interests were held by AP Emerald Limited (“AP Emerald”), a wholly-owned subsidiary of AP Jade Limited which in turn was a wholly-owned subsidiary of APL. APL was therefore deemed to have interests in the Shares and underlying Shares in which AP Emerald was interested.
These refer to the same interests in 985,303,892 Shares and 190,652,833 underlying Shares held by AP Emerald.
AGL owned approximately 73.79% interest in the issued share capital of APL and was therefore deemed to have interests in the Shares and underlying Shares in which APL was interested.
Mr. Lee Seng Hui, Ms. Lee Su Hwei and Mr. Lee Seng Huang, a Director, are the trustees of Lee and Lee Trust, being a discretionary trust. They together owned approximately 42.96% interest in the issued share capital of AGL and were therefore deemed to have interests in the Shares and underlying Shares in which AGL was interested.
This represents an interest in 166,000,000 Shares.
This refers to the same interest in 166,000,000 Shares held by Dubai Ventures.
Dubai Investment Group (L.L.C) owned 99% interest in the issued share capital of Dubai Ventures and was therefore deemed to have an interest in the Shares in which Dubai Ventures was interested.
Dubai Group owned 51% interest in the issued share capital of Dubai Investment Group (L.L.C) and was therefore deemed to have an interest in the Shares in which Dubai Investment Group (L.L.C) was interested.
DHIG owned 51% interest in the issued share capital of Dubai Group and was therefore deemed to have an interest in the Shares in which Dubai Group was interested.
Dubai Holding owned approximately 99.66% interest in the issued share capital of DHIG and was therefore deemed to have an interest in the Shares in which DHIG was interested.
These include (i) an interest in 166,000,000 Shares held by Dubai Ventures; (ii) an interest in 1,372,000 Shares held by Dubai Ventures Limited (“DVL”); and (iii) an interest in 670,000 Shares held by DIGL.
DIGL owned 49% interest in the issued share capital of Dubai Investment Group (L.L.C) and was therefore deemed to have an interest in the Shares in which Dubai Investment Group (L.L.C) was interested. Additionally, DIGL was deemed to have an interest in the Shares held by DVL, a wholly-owned subsidiary of DIGL. DIGL also owned an interest in 670,000 Shares.
These refer to the interests held by Dubai Ventures, DVL and DIGL as set out in note 12.
DGL owned 100% interest in the issued share capital of DIGL and 49% interest in the issued share capital of Dubai Group. DGL was therefore deemed to have interests in the Shares in which DIGL and Dubai Group were interested.
Mr. Bin Rashid Al Maktoum Mohammed owned approximately 97.40% interest in the issued share capital of Dubai Holding and 100% interest in the issued share capital of DGL. Mr. Bin Rashid Al Maktoum Mohammed was therefore deemed to have interests in the Shares in which Dubai Holding and DGL were interested.
These include (i) an interest in 141,643,352 Shares; (ii) an interest in the 2009 Warrants, giving rise to an interest in 127,500 underlying Shares; and (iii) an interest in unlisted cash settled derivatives of the Company, giving rise to an interest in 43,216,497 underlying Shares.

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GENERAL INFORMATION

APPENDIX

These refer to the same interests in 141,643,352 Shares and a total of 43,343,997 underlying Shares held by Penta.
Mr. John Zwaanstra was deemed to have interests in the Shares and underlying Shares through his 100% interest in Penta. Mr. John Zwaanstra was also deemed to have interests in the Shares and underlying Shares in which Penta Asia and Mercurius were interested through his control of more than one-third of the voting power of Penta Asia and Mercurius.
These duplicated parts of the interests of Penta and Mr. John Zwannstra, and include (i) an interest in 57,752,534 Shares; (ii) an interest in the 2009 Warrants, giving rise to an interest in 87,674 underlying Shares; and (iii) an interest in unlisted cash settled derivatives of the Company, giving rise to an interest in 26,330,491 underlying Shares.
These interests were held by Penta Master Fund, Ltd. (“Penta Master”), a wholly-owned subsidiary of Penta Asia. Mr. Todd Zwaanstra was deemed to have interests in the Shares and underlying Shares in which Penta Master was interested pursuant to his control of more than one-third of the voting power of Penta Asia as trustee of the Mercurius Partners Trust (“Mercurius Trust”), being a discretionary trust.
Mercurius was the founder of the Mercurius Trust and was therefore deemed to have interests in the Shares and underlying Shares in which Mr. Todd Zwaanstra and Mercurius Trust were interested.
These include (i) an interest in 91,834,000 Shares; and (ii) an interest in the 2009 Warrants in an amount of HK$74,520,000, giving rise to an interest in 12,673,469 underlying Shares (at the adjusted subscription price of the 2009 Warrants of HK$5.88 per Share).
These interests were held by Honest Opportunity Limited (“Honest Opportunity”), Sparkling Summer Limited (“Sparkling Summer”) and Gold Chopsticks Limited (“Gold Chopsticks”). Honest Opportunity and Sparkling Summer were wholly-owned subsidiaries of Classic Fortune Limited (“Classic Fortune”) while Gold Chopsticks was a whollyowned subsidiary of Besford International Limited (“Besford”). Classic Fortune and Besford were in turn wholly-owned subsidiaries of COL. COL was therefore deemed to have interests in the Shares and underlying Shares in which Honest Opportunity, Sparkling Summer and Gold Chopsticks were interested.
These refer to the same interests in 91,834,000 Shares and 12,673,469 underlying Shares held by Honest Opportunity, Sparkling Summer and Gold Chopsticks.
Vigor Online owned approximately 38.56% interest in the issued share capital of COL and was therefore deemed to have interests in the Shares and underlying Shares in which COL was interested.
China Spirit owned 100% interest in the issued share capital of Vigor Online and was therefore deemed to have interests in the Shares and underlying Shares in which Vigor Online was interested.
These include (i) an interest in 91,834,000 Shares and 12,673,469 underlying Shares held by Honest Opportunity, Sparkling Summer and Gold Chopsticks; and (ii) an interest in 1,225,000 Shares held by Bilistyle Investments Limited (“Bilistyle”).
Ms. Chong Sok Un owned 100% interest in the issued share capital of China Spirit and was therefore deemed to have interests in the Shares and underlying Shares in which China Spirit was interested. Additionally, Ms. Chong Sok Un was deemed to have an interest in the Shares held by Bilistyle through her 100% interest in Bilistyle.
All interests stated above represent long positions. As at the Latest Practicable Date, no short positions were recorded in the register required to be kept under Section 336 of the SFO.

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GENERAL INFORMATION

APPENDIX

(ii) Interests in the shares of other members of the Group

			Approximate
			percentage of
Name of non			the relevant
wholly-owned subsidiaries	Name of	Number of	issued share
of the Company	shareholder	shares held	capital
Best Decision Investments	Christophe Lee Kin	17,500	35.00%
Limited	Ping
SHK Financial Data	Unison Information	49	49.00%
Limited	Limited
United Asia Finance	ITOCHU Hong Kong	25,625,000	18.64%
Limited	Limited

3. SERVICE CONTRACTS OF THE DIRECTORS

As at the Latest Practicable Date, none of the Directors had any existing or proposed service contract with any member of the Group which does not expire or is not terminable by such member of the Group within one year without payment of compensation (other than statutory compensation).

4. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors were not aware of any material adverse change in the financial or trading position of the Group since 31st December, 2007, being the date to which the latest published audited financial statements of the Group were made up.

5. DIRECTORS’ INTERESTS IN COMPETING BUSINESSES

Save as disclosed below, as at the Latest Practicable Date, none of the Directors (not being the independent non-executive Directors) nor their respective associates were considered to have interests in the businesses which compete or are likely to compete with the businesses of the Group pursuant to the Listing Rules:

(a) Mr. Lee Seng Huang is a trustee of Lee and Lee Trust which is a deemed substantial shareholder of each of AGL, APL and Tian An which, through their subsidiaries, are partly engaged in the businesses as follows:
AGL, through certain of its subsidiaries, is partly engaged in the businesses of money lending, provision of financial services and property investment;
APL, through certain of its subsidiaries, is partly engaged in the businesses of money lending and property investment; and

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GENERAL INFORMATION

APPENDIX

Tian An, through certain of its subsidiaries, is partly engaged in the businesses of money lending and property investment.
(b) Mr. Patrick Lee Seng Wei is a director of APL and Tian An. APL and Tian An, through certain of their subsidiaries, are partly engaged in the businesses of money lending and property investment.

As the Board is independent from the boards of the abovementioned companies and none of the above Directors can control the Board, the Group is capable of carrying on its businesses independently of, and at arm’s length from, the businesses of such companies.

6. LITIGATION

Save as disclosed below, as at the Latest Practicable Date, no member of the Group was engaged in any litigation or claims of material importance and no litigation or claim of material importance was known to the Directors to be pending or threatened against any member of the Group:

(a) On 10th July, 2006, the Court of Final Appeal upheld the judgment (as amended by the Court of Appeal) of the Hong Kong Court of First Instance of 1st April, 2004, that Sun Hung Kai Securities Limited (“SHKS”), a wholly-owned subsidiary of the Company, holds a 12.5% interest in a 50/50 joint venture entered into between New World Development Company Limited (“NWDC”) and IGB Corporation Berhad to purchase land and build two international hotels plus a 200-unit serviced apartment complex in Kuala Lumpur, Malaysia (the “Joint Venture”), and that accordingly SHKS was liable to pay to NWDC the sums which NWDC had advanced to the joint venture company Great Union Properties Sdn. Bhd (“GUP”) on behalf of SHKS, together with interest on such monies (the “Judgment Sum”) and costs of the First Instance hearing and of the two appeals (the “Costs Order”). SHKS had previously paid to NWDC the Judgment Sum and more recently a sum in satisfaction of the Costs Order. Other claims from NWDC for amounts advanced to GUP on behalf of SHKS with respect to the Joint Venture had been paid previously by SHKS. SHKS is presently seeking the assistance of NWDC and Stapleton Developments Limited (“Stapleton”) to ensure that the legal interest of the issued shares of GUP which Stapleton holds on trust for SHKS be transferred to SHKS, and that GUP acknowledges and records in its accounts in the name of SHKS the amount of the shareholders’ loans made on behalf of SHKS to it.

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GENERAL INFORMATION

APPENDIX

(b) By Notice dated 6th June, 2007 the Financial Secretary required the Market Misconduct Tribunal (“MMT”) (i) to conduct proceedings, and (ii) to hear and determine matters arising out of dealings in the securities of QPL International Holdings Limited in May and June 2003. The Company’s indirect wholly-owned subsidiaries, Sun Hung Kai Investment Services Limited and Cheeroll Limited (now known as Sun Hung Kai Strategic Capital Limited) were specified in the Notice with two Group employees. Procedural determinations made by the MMT are to be the subject of judicial review, the hearing of which is set down to commence on 17th June, 2008.
(c) In 2001 an order was made by the Hubei Province Higher People’s Court in China (the “2001 Order”) enforcing a CIETAC award of 19th July, 2000 (the “Award”) by which SHKS was required to pay US$3,000,000 to Chang Zhou Power Development Company Limited (the “JVC”), a mainland PRC joint venture. SHKS had disposed of all of its beneficial interest in the JVC to SHKS’ listed associate, Tian An, in 1998 and disposed of any and all interest it might hold in the registered capital of the JVC (the “Interest”) to Long Prosperity Industrial Limited (“LPI”) in October 2001. Subsequent to those disposals, SHKS’ registered interest in the JVC in the amount of US$3,000,000 was frozen further to the 2001 Order. The Company has recently become aware of the following:
(i) On 29th February, 2008, a writ of summons with general indorsement of claim was issued by Global Bridge Assets Limited (“GBA”), LPI and Walton Enterprises Limited (“WE”) (the “2008 Writ”) in the High Court of Hong Kong against SHKS (“HCA 317/2008”). In the 2008 Writ, (a) GBA claims against SHKS for damages for alleged breaches of a guarantee, alleged breaches of a collateral contract, for a collateral warranty, and for negligent and/or reckless and/or fraudulent misrepresentation; (b) LPI claims against SHKS damages for alleged breaches of a contract dated 12th October, 2001; and (c) WE claims against SHKS for the sum of US$3,000,000 under a shareholders agreement and/or pursuant to the Award and damages for alleged wrongful breach of a shareholders agreement. GBA, LPI and WE also claim against SHKS interest on any sums or damages payable, costs, and such other relief as the Court may think fit. On the Latest Practicable Date, the 2008 Writ was served on SHKS. SHKS is preparing to vigorously defend the proceedings. Among other things, pursuant to a 2001 deed of waiver and indemnification, LPI waived and released SHKS from any claims including any claims relating to or arising from the Interest, the JVC or any transaction related thereto, covenanted not to sue, and assumed liability for and agreed to indemnify SHKS from any and all damages, losses and expenses arising from any claims by any entity or party arising in connection with the Interest, the JVC or any transaction related thereto.

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GENERAL INFORMATION

APPENDIX

(ii) On 20th December, 2007, a writ (the “Mainland Writ”) was issued by against Tian An and SHKS and was accepted by a mainland PRC court, ((2008) ), claiming the transfer of a 28% shareholding in the JVC, and RMB19,040,000 plus interest thereon for the period from January 1999 to end 2007 together with related costs and expenses. As at the Latest Practicable Date, the Company is preparing to vigorously defend proceedings commenced by the issuance of the Mainland Writ.

7. DIRECTORS’ INTERESTS IN CONTRACTS AND ASSETS

As at the Latest Practicable Date, Mr. Lee Seng Huang, being a Director and a trustee of Lee and Lee Trust, a discretionary trust which indirectly owned approximately 73.79% interest in the issued share capital of APL which in turn owned 100% interest in Famestep, was considered to be materially interested in the Agreement.

Save as disclosed above, there was no contract or arrangement subsisting in which any Director was materially interested and which was significant in relation to the business of the Group.

As at the Latest Practicable Date, none of the Directors had any direct or indirect interest in any asset which have been, since 31st December, 2007, (being the date to which the latest published audited financial statements of the Group were made up), (i) acquired or disposed of by; or (ii) leased to; or (iii) proposed to be acquired or disposed of by; or (iv) proposed to be leased to, any member of the Group.

8. EXPERT AND CONSENT

The following is the qualification of the expert who has given opinion or advice which is contained in this circular:

Name

Qualification

Wallbanck Brothers

a corporation licensed to carry on Type 4 (advising on securities), Type 6 (advising on corporate finance) and Type 9 (asset management) regulated activities under the SFO

As at the Latest Practicable Date, Wallbanck Brothers did not have:

(a) any direct or indirect interest in any assets which have since 31st December, 2007, (being the date to which the latest published audited financial statements of the Group were made up) been 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; and

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GENERAL INFORMATION

APPENDIX

(b) any shareholding in any member of the Group or the right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

Wallbanck Brothers has given and has not withdrawn its written consent to the issue of this circular with the inclusion herein of its letter, and reference to its name in the form and context in which it appears.

9. GENERAL INFORMATION

(a) The registered office of the Company is Units 1201-10 & 14-16, 12th Floor, CITIC Tower, 1 Tim Mei Avenue, Central, Hong Kong.
(b) The company secretary of the Company is Ms. Hester Wong Lam Chun. She is a fellow member of both the Institute of Chartered Secretaries and Administrators and the Hong Kong Institute of Chartered Secretaries.
(c) The qualified accountant of the Company is Mr. Patrick Poon Mo Yiu. He is a fellow member of both the Association of Chartered Certified Accountants and the Hong Kong Institute of Certified Public Accountants.
(d) The registrar of the Company is Tricor Secretaries Limited of 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong.
(e) This circular is prepared in both English and Chinese. In the event of inconsistency, the English text shall prevail.

10. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection at the office of P. C. Woo & Co. at 12th Floor, Prince’s Building, 10 Chater Road, Central, Hong Kong during normal office business hours on any business day from the date of this circular up to and including the date of the EGM:

(a) the memorandum and articles of association of the Company;
(b) the Agreement;
(c) the letter of advice from Wallbanck Brothers, the text of which is set out in pages 18 to 34 of this circular; and
(d) the consent letter from Wallbanck Brothers referred to in the paragraph headed “Expert and Consent” in this appendix.

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NOTICE OF EGM

==> picture [298 x 44] intentionally omitted <==

(Incorporated in Hong Kong with limited liability) (Stock Code: 86)

NOTICE IS HEREBY GIVEN that an extraordinary general meeting (the “Meeting”) of Sun Hung Kai & Co. Limited (the “Company”) will be held at Plaza V, Lower Lobby, Novotel Century Hong Kong, 238 Jaffe Road, Wanchai, Hong Kong on Monday, 23rd June, 2008 at 10:00 a.m. for the purpose of considering and, if thought fit, with or without modifications, passing the following resolution as an ordinary resolution:

ORDINARY RESOLUTION

“ THAT

(a) the sale and purchase agreement dated 7th May, 2008 (the “Agreement”) entered into between the Company as the vendor, Famestep Investments Limited (“Famestep”) as the purchaser and Allied Properties (Hong Kong) Limited as the purchaser’s guarantor, for (i) the sale and purchase of 2,675,400 shares of US$1.00 each, representing the entire issued share capital of Wah Cheong Development (B.V.I.) Limited (“Wah Cheong”); (ii) the assignment by the Company to Famestep of a shareholder’s loan in the amount of HK$271,391,445 owed by Wah Cheong to the Company; and (iii) all other transactions contemplated in the Agreement (a copy of which has been produced to the Meeting marked “A” and signed by the Chairman of the Meeting for the purpose of identification), be and are hereby approved, ratified and confirmed; and
(b) any director of the Company be and is hereby authorised for and on behalf of the Company, amongst other matters, to sign, execute, perfect, deliver or to authorise signing, executing, perfecting and delivering all such documents, deeds, and to do or authorising doing all such acts, matters, and things as he may in his discretion consider necessary, expedient or desirable to give effect to and implement the terms of the Agreement.”

By Order of the Board Hester Wong Lam Chun

Company Secretary

Hong Kong, 4th June, 2008

– 46 –

NOTICE OF EGM

Registered Office: Units 1201-10 & 14-16 12th Floor, CITIC Tower 1 Tim Mei Avenue

Central Hong Kong

Notes:

A member entitled to attend and vote at the Meeting may appoint one or more proxies to attend and, on a poll, to vote in his stead. A proxy need not be a member of the Company but must be present in person to represent the member.
Where there are joint registered holders of any shares, any one of such persons may attend and vote at the Meeting, either personally or by proxy, in respect of such shares as if he were solely entitled thereto; but if more than one of such joint holders be present at the meeting personally or by proxy, that one of the said persons so present whose name stands first on the register of the members of the Company in respect of such shares shall alone be entitled to vote in respect thereof.
In order to be valid, the form of proxy duly completed and signed in accordance with the instructions printed on it together with the power of attorney or other authority, if any, under which it is signed, or a notarially certified copy of it must be deposited at the office of the Company’s registrar, Tricor Secretaries Limited, at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong not less than 48 hours before the time appointed for holding of the Meeting or any adjournment thereof. The completion and delivery of the form of proxy will not preclude you from attending and voting in person at the Meeting or any adjournment thereof if you so wish.

– 47 –

AI assistant

First Pacific Company Limited — Proxy Solicitation & Information Statement 2008

48980_rns_2008-06-03_b87ffa10-cd30-45c1-abd3-c3be3ca6722d.pdf

DISCLOSEABLE TRANSACTION AND CONNECTED TRANSACTION

CONTENTS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DISCLOSEABLE TRANSACTION AND CONNECTED TRANSACTION

INTRODUCTION

LETTER FROM THE BOARD

THE AGREEMENT

Date

Parties

The Sale Shares and the Assignment of the Loan

Consideration

LETTER FROM THE BOARD

Conditions

LETTER FROM THE BOARD

LETTER FROM THE BOARD

Completion

Waiver

INFORMATION ABOUT AGL, APL, THE COMPANY, WAH CHEONG, FAMESTEP AND QHA

AGL

APL

The Company

Wah Cheong

Famestep

QHA

SUMMARY OF FINANCIAL RESULTS OF WAH CHEONG AND QHA

REASONS FOR AND BENEFITS OF THE SALE AND PURCHASE OF THE SALE SHARES

LETTER FROM THE BOARD

LISTING RULES IMPLICATIONS

EGM

PROCEDURES FOR DEMANDING A POLL

RECOMMENDATION

ADDITIONAL INFORMATION

DISCLOSEABLE TRANSACTION AND CONNECTED TRANSACTION

CONDITIONAL SALE AND PURCHASE OF THE ENTIRE ISSUED SHARE CAPITAL OF WAH CHEONG DEVELOPMENT (B.V.I.) LIMITED WHICH HOLDS APPROXIMATELY 51.15% OF THE ISSUED SHARE CAPITAL OF QUALITY HEALTHCARE ASIA LIMITED

DISCLOSEABLE TRANSACTION AND CONNECTED TRANSACTION

CONDITIONAL SALE AND PURCHASE OF THE ENTIRE ISSUED SHARE CAPITAL OF WAH CHEONG DEVELOPMENT (B.V.I.) LIMITED WHICH HOLDS APPROXIMATELY 51.15% OF THE ISSUED SHARE CAPITAL OF QUALITY HEALTHCARE ASIA LIMITED

INTRODUCTION

LETTER FROM WALLBANCK BROTHERS

BASIS OF OUR OPINION

LETTER FROM WALLBANCK BROTHERS

PRINCIPAL FACTORS AND REASONS CONSIDERED

1. The Agreement

A) Date

B) Parties

C) The Sale Shares and the assignment of the Loan

D) Consideration

E) Conditions precedent

LETTER FROM WALLBANCK BROTHERS

F) Completion

2. Reasons for and benefits of the sale of Sale Shares

3. Business review of the QHA Group

Table 1: Financial performance of QHA Group

LETTER FROM WALLBANCK BROTHERS

4. Review on share price performance of QHA

5. Review on trading liquidity of shares of QHA

LETTER FROM WALLBANCK BROTHERS

6. Comparable companies of QHA

Table 3: Comparable companies of QHA

LETTER FROM WALLBANCK BROTHERS

7. Financial effects of the sale of QHA Shares on the Group

B) Earnings

LETTER FROM WALLBANCK BROTHERS

RECOMMENDATION

LETTER FROM WALLBANCK BROTHERS

1. RESPONSIBILITY STATEMENT

2. DISCLOSURE OF INTERESTS

(a) Directors’ Interests

(b) Substantial Shareholders’ and Other Persons’ Interests

3. SERVICE CONTRACTS OF THE DIRECTORS

4. MATERIAL ADVERSE CHANGE

5. DIRECTORS’ INTERESTS IN COMPETING BUSINESSES

6. LITIGATION

7. DIRECTORS’ INTERESTS IN CONTRACTS AND ASSETS

8. EXPERT AND CONSENT

First Pacific Company Limited Proxy Solicitation & Information Statement 2008