First Pacific Company Limited — Proxy Solicitation & Information Statement 2010

May 23, 2010

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

This circular is for information only and does not constitute an invitation or offer to acquire, purchase or subscribe for any securities.

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

If you have sold or transferred all your shares in Sun Hung Kai & Co. Limited, you should at once hand this document to the purchaser(s) or transferee(s) or to the bank, licensed securities dealer or registered institution in securities, or other agent through whom the sale or the transfer was effected for onward transmission to the purchaser(s) or transferee(s).

The Stock Exchange of Hong Kong Limited and Hong Kong Exchanges and Clearing Limited take no responsibility for the contents of this circular, 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 circular.

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(Incorporated in Hong Kong with limited liability)

(Stock code: 86)

(I) MAJOR AND CONNECTED TRANSACTION

RELATING TO PROPOSED DISPOSAL OF INTEREST IN TIAN AN CHINA INVESTMENTS COMPANY LIMITED TO ALLIED PROPERTIES (H.K.) LIMITED INVOLVING PROPOSED DISTRIBUTION IN SPECIE;

(II) PROPOSED ISSUE OF

HK$1,708,000,000 IN AGGREGATE PRINCIPAL AMOUNT OF 2% MANDATORY CONVERTIBLE NOTES DUE 2013 MANDATORILY CONVERTIBLE INTO ORDINARY SHARES OF THE COMPANY; AND

HK$427,000,000 IN FACE VALUE OF WARRANTS EXERCISABLE TO SUBSCRIBE FOR ORDINARY SHARES OF THE COMPANY;

• (III) PROPOSED APPOINTMENT OF TWO NON-EXECUTIVE DIRECTORS; AND

(IV) NOTICE OF EXTRAORDINARY GENERAL MEETING

Financial Adviser

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Independent Financial Adviser to Independent Board Committee and Independent Shareholders

Capitalised terms used on this cover page have the same meanings as those defined in this circular.

A letter from the Board is set out on pages 8 to 43 of this circular. A letter from the Independent Board Committee to the Independent Shareholders in relation to the Acquisition Agreement and transactions contemplated thereunder including the Proposed Distribution is set out on page 44 of this circular. A letter from Centurion containing its opinion and advice to the Independent Board Committee and the Independent Shareholders in relation to the Acquisition Agreement and transactions contemplated thereunder including the Proposed Distribution is set out on pages 45 to 71 of this circular. A notice convening the EGM to be held at Plaza 4, Lower Lobby, Novotel Century Hong Kong, 238 Jaffe Road, Wanchai, Hong Kong at 10:00 a.m. on Friday, 18th June, 2010 is set out on pages 109 to 112 of this circular.

A form of proxy for use at the EGM is enclosed herein. If you are not able to attend the EGM, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon and return it to the share registrar of the Company, Tricor Secretaries Limited at 26/F, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong as soon as practicable but, in any event, not less than 48 hours before the time appointed for holding the EGM or any adjourned meeting (as the case may be). Such form of proxy for use at the EGM is also published on the HKExnews website of the Stock Exchange (www.hkexnews.hk) and the website of the Company (www.shkf.com). Completion and return of the form of proxy will not preclude you from attending and voting at the EGM or at any adjourned meeting (as the case may be) in person should you so wish.

24th May, 2010

CONTENTS

				Page
Definitions	. . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from	the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
Letter from	the Independent Board Committee . . . . . .		. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	44
Letter from	Centurion . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	45
Appendix I	—	Financial information of the Group	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	72
Appendix II	—	Summary property valuation report	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	74
Appendix III —		Statutory and general information	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	96
Notice of EGM		. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	109

– i –

DEFINITIONS

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

• ‘‘2009 Warrants’’ warrants which entitled the holders to subscribe for SHK Shares at the adjusted subscription price of HK$5.88 per SHK Share and which expired on 31st May, 2009

• ‘‘Acquisition Agreement’’ the conditional Acquisition Agreement dated 19th April, 2010 entered into by the Purchaser, APL and the Company in relation to the Transaction

• ‘‘AGL’’ Allied Group Limited, a company incorporated in Hong Kong with limited liability, the shares of which are listed on the Main Board of the Stock Exchange (Stock Code: 373)

• ‘‘AGL EGM’’ an extraordinary general meeting of AGL

• ‘‘AGL Share(s)’’ share(s) of HK$2.00 each in the share capital of AGL

• ‘‘AGL Shareholder(s)’’ holder(s) of AGL Share(s)

• ‘‘Allotment Right’’ a right to the holder of the SEN to call for the issue by APL to it of a fixed number of fully paid APL Shares without having to make any payment

• ‘‘APL’’ Allied Properties (H.K.) Limited, a company incorporated in Hong Kong with limited liability, the shares of which are listed on the Main Board of the Stock Exchange (Stock Code: 56) and a non wholly-owned subsidiary of AGL, and the guarantor under the Acquisition Agreement

• ‘‘APL Board’’ the board of directors of APL

• ‘‘APL EGM’’ an extraordinary general meeting of APL to be convened to approve, inter alia, the issue of the SEN and the issue of the APL Shares falling to be issued under the SEN

• ‘‘APL Group’’ APL and its subsidiaries

• ‘‘APL Share(s)’’ share(s) of HK$0.20 each in the share capital of APL

• ‘‘APL Shareholder(s)’’ holder(s) of APL Share(s)

• ‘‘associate(s)’’ has the meaning ascribed to it under the Listing Rules

• ‘‘Board’’ the board of Directors

– 1 –

DEFINITIONS

• ‘‘Business Day(s)’’

• ‘‘Centurion’’

• ‘‘Closing Date’’

• ‘‘Company’’

• ‘‘Completion’’

• ‘‘Completion Date’’

• ‘‘Conditions’’

• ‘‘connected person(s)’’

• for the purpose of the Acquisition Agreement, means a day (excluding Saturdays, Sundays, public holidays and days on which a tropical cyclone warning no. 8 or above or a ‘‘black’’ rainstorm warning signal is hoisted in Hong Kong at any time between the hours of 9:00 a.m. and 5:00 p.m.), on which licensed banks are open for general business in Hong Kong; and for the purpose of the Subscription Agreement, means a day on which commercial banks and foreign exchange markets settle payments in Hong Kong and the Cayman Islands, excluding any day in Hong Kong on which a tropical cyclone warning no. 8 or above or a ‘‘black’’ rainstorm warning signal is hoisted

• Centurion Corporate Finance Limited, a licensed corporation to carry out regulated activities of type 1 (dealing in securities), type 4 (advising on securities), type 6 (advising on corporate finance) and type 9 (asset management) under the SFO, the independent financial adviser appointed to advise the Independent Board Committee and the Independent Shareholders in respect of the Transaction and the Proposed Distribution

• the date which is 21 days after and excluding the date upon which the last of the conditions precedent has been or remains satisfied or waived (as applicable) and if such day is not a Business Day on the next Business Day thereafter, provided that it shall be a date no later than 31st October, 2010, or such other time and/or date as the Company and the Investor may agree in writing in accordance with the Subscription Agreement

• Sun Hung Kai & Co. Limited, a company incorporated in Hong Kong with limited liability and the shares of which are listed on the Main Board of the Stock Exchange (Stock Code: 86), and an indirect non wholly-owned subsidiary of each of AGL and APL

• completion of the sale and purchase of the Tian An Interest in accordance with the terms of the Acquisition Agreement

• the date on which Completion takes place, being 10 Business Days after the fulfillment or waiver of the Conditions, or such other date as may be agreed between the parties to the Acquisition Agreement

• the conditions precedent to Completion, as more particularly set out under the section headed ‘‘Completion and Conditions of the Transaction’’ of this circular

• has the meaning ascribed to it under the Listing Rules

– 2 –

DEFINITIONS

• ‘‘Consolidated Net Income’’

the aggregate of the net income (or loss) after deducting any minority interests of the Group for such period, on a consolidated basis, determined in conformity with Hong Kong Financial Reporting Standards (‘‘HKFRS’’) but excluding the upward or downward impact from the Closing Date (if any) of any fair value adjustments made in accordance with HKFRS to the carrying cost of the Warrants and/or the Mandatory Convertible Notes in the accounts of the Company

• ‘‘controlling shareholder’’

has the meaning ascribed to it under the Listing Rules

• ‘‘CVC’’ CVC Capital Partners

• ‘‘CVC AP’’

• CVC Asia Pacific Ltd

• ‘‘Deeds of Covenant’’

• the deed of covenant constituting the Mandatory Convertible Notes and the deed of covenant constituting the Warrants

• ‘‘Director(s)’’ director(s) of the Company

• ‘‘EGM’’

• an extraordinary general meeting of the Company to be convened to approve, among other matters, (I) the Acquisition Agreement and the transactions contemplated thereunder including the Proposed Distribution; and (II) the Subscription Agreement and the Issue Documents and the transactions contemplated thereunder including the issue of the Mandatory Convertible Notes and the Warrants; and (III) the proposed appointment of two non-executive directors to the Board (conditional upon the approval of the Subscription Agreement and its completion)

• ‘‘Excluded Overseas Shareholders’’

• Overseas Shareholders to whom the Directors, having made enquiries regarding the legal restrictions under the laws of the relevant jurisdiction or the requirements of the relevant regulatory body or stock exchange in that jurisdiction, consider it necessary or expedient not to be allotted or issued APL Shares pursuant to the Proposed Distribution on account either of legal restrictions under the laws of the relevant jurisdiction or the requirements of the relevant regulatory body or stock exchange in that jurisdiction

• ‘‘Executive’’

• the Executive Director of the Corporate Finance Division of the SFC

– 3 –

DEFINITIONS

• ‘‘Gearing Ratio’’

the gearing ratio determined as follows:

A

B

where:

• A is the amount of financial indebtedness (excluding the Mandatory Convertible Notes and any back-to-back margin financing for an initial public offering or any other similar financing provided by any of the Company’s holding companies or any subsidiaries of the Company’s holding companies); and

• B is the amount of Total Equity (excluding the Mandatory Convertible Notes)

• ‘‘Group’’

the Company and its subsidiaries

• ‘‘HK$’’

Hong Kong dollars, the lawful currency of Hong Kong

• ‘‘Hong Kong’’

Hong Kong Special Administrative Region of the PRC

• ‘‘IndependentIndependent Board Committee’’’’

• ‘‘IndependentIndependent Board Committee’’’’ the independent board committee of the Company comprising Mr. Carlisle Caldow Procter and Mr. Peter Wong Man Kong to advise the Independent Shareholders in relation to the terms and conditions of the Transaction and the Proposed Distribution

• ‘‘Independent Shareholder(s)’’ SHK Shareholder(s) other than APL and its associates

• ‘‘Investment Funds’’

• means any funds managed by any member of the Group

• ‘‘Investor’’ Asia Financial Services Company Limited, a company incorporated under the laws of the Cayman Islands with limited liability

• ‘‘Issue Documents’’ the Mandatory Convertible Note terms and conditions, the Warrant terms and conditions and the Deeds of Covenant

• ‘‘Joint Announcement’’ the announcement jointly issued by AGL, APL, the Company and Tian An in relation to the Transaction and the Proposed Distribution dated 26th April, 2010

• ‘‘Latest Practicable Date’’ 17th May, 2010, being the latest practicable date prior to the printing of this circular for the purpose of ascertaining certain information contained herein

– 4 –

DEFINITIONS

• ‘‘Lee and Lee Trust’’ Lee and Lee Trust, a discretionary trust and is beneficially interested in 108,626,492 AGL Shares, representing approximately 52.39% of the issued share capital of AGL as at the Latest Practicable Date

• ‘‘Listing Rules’’ the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited

• ‘‘Main Board’’ the Main Board of the Stock Exchange

• ‘‘Mandatory Convertible Notes’’ HK$1,708,000,000 in aggregate principal amount of 2% mandatory convertible notes due 2013 mandatorily convertible into SHK Shares to be issued in accordance with the Subscription Agreement

• ‘‘Noteholder(s)’’ holder(s) of Mandatory Convertible Notes

• ‘‘Overseas Shareholder(s)’’ holder(s) of SHK Share(s) whose names appear on the register of members of the Company as holding SHK Shares on the record date for the Proposed Distribution whose address on such register is, on such record date, in a place outside Hong Kong and who the Board, after making enquiries regarding the legal restrictions under the laws of the relevant place or the requirements of the relevant regulatory body or stock exchange in that place where practicable, consider the exclusion of such holder from the distribution of APL Shares under the Proposed Distribution is necessary or expedient

• ‘‘Percentage Ratio(s)’’

• percentage ratio(s) as set out in Rule 14.07 of the Listing Rules to be applied for determining the classification of a transaction

• ‘‘Permitted Transferee(s)’’

means, as the case may be:

• (a) any affiliate of a holder of Mandatory Convertible Notes, from time to time and being a person with power and capacity to hold Mandatory Convertible Notes subject to and in accordance with the terms and conditions of the Mandatory Convertible Notes and (following conversion) SHK Shares; or

• (b) any affiliate of a holder of Warrants, from time to time and being a person with power and capacity to hold Warrants subject to and in accordance with the terms and conditions of the Warrants and (following exercise) SHK Shares

• ‘‘PRC’’

the People’s Republic of China (for the purpose of this circular, excluding Hong Kong, the Macao Special Administrative Region and Taiwan)

– 5 –

DEFINITIONS

• ‘‘Proposed Distribution’’ the proposed distribution of the SEN by the Company to the SHK Shareholders, upon Completion, of 1.309 APL Shares (based on 1,752,148,077 SHK Shares in issue as at the Latest Practicable Date) to be allotted under the SEN for each SHK Share

• ‘‘Purchaser’’ China Elite Holdings Limited, a company incorporated in the British Virgin Islands with limited liability, and a wholly-owned subsidiary of the SEN Issuer

• ‘‘Remaining Group’’ the Group other than the Tian An Group

• ‘‘SEN’’ the share entitlement note to be issued by the SEN Issuer (and guaranteed by APL) to the Company at Completion, which shall confer the right to call for the issue of a fixed number of fully paid APL Shares, including any share entitlement note resulting from any assignment of such share entitlement note

• ‘‘SEN Issuer’’ Joy Club Enterprises Limited, a company incorporated in the British Virgin Islands with limited liability, and a wholly-owned subsidiary of APL

• ‘‘SFC’’ the Securities and Futures Commission of Hong Kong ‘‘SFO’’ the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)

• ‘‘SHK Shareholder(s)’’ holder(s) of SHK Share(s) ‘‘SHK Share(s)’’ share(s) of HK$0.20 each in the share capital of the Company ‘‘SHKS’’ Sun Hung Kai Securities Limited, a company with limited liability incorporated under the laws of Hong Kong and a subsidiary of the Company

• ‘‘Stock Exchange’’ The Stock Exchange of Hong Kong Limited

• ‘‘Subscription’’ the subscription by the Investor for the Mandatory Convertible Notes and the Warrants contemplated under the Subscription Agreement

• ‘‘Subscription Agreement’’ the conditional subscription agreement dated 22nd April, 2010 entered into between the Company and the Investor in relation to the proposed issue and subscription of the Mandatory Convertible Notes and the Warrants to the Investor

• ‘‘Subsidiaries’’ the subsidiaries of the Company

• ‘‘Takeovers Code’’ the Hong Kong Code on Takeovers and Mergers

– 6 –

DEFINITIONS

• ‘‘Tian An’’

• ‘‘Tian An Board’’

• ‘‘Tian An Group’’

• ‘‘Tian An Interest’’

• ‘‘Tian An Restructuring’’

• ‘‘Tian An Share(s)’’

• ‘‘Total Equity’’

• ‘‘Transaction’’

• ‘‘UAF’’

• ‘‘Warrants’’

• ‘‘%’’

Tian An China Investments Company Limited, a company incorporated in Hong Kong with limited liability and the shares of which are listed on the Main Board of the Stock Exchange (Stock Code: 28)

the board of directors of Tian An

• Tian An and its subsidiaries

• the 573,589,096 Tian An Shares (representing approximately 38.06% of the total issued share capital of Tian An) being the entire shareholding held and to be sold by the Company to the Purchaser subject to the terms and conditions of the Acquisition Agreement

• the proposed acquisition by a wholly-owned subsidiary of APL of approximately 38.06% of the total issued share capital of Tian An from the Company in consideration of an issue of the SEN to the Company and the distribution of the SEN by the Company to SHK Shareholders by way of a distribution in specie, details of which are set out in this circular

• share(s) of HK$0.20 each in the share capital of Tian An

• means, at any time, the total equity of the Company as set out in the financial statements of the Company under the heading ‘‘Total equity’’ (or such other similar heading) excluding the upward or downward cumulative impact from the Closing Date (if any) of any fair value adjustments made in accordance with HKFRS to the carrying cost of the Warrants and/or the Mandatory Convertible Notes in the financial statements of the Company

• the acquisition by the Purchaser of the Tian An Interest from the Company pursuant to the Acquisition Agreement

• United Asia Finance Limited, a company incorporated under the laws of Hong Kong with limited liability and a non-wholly owned subsidiary of the Company

• HK$427,000,000 in face value of warrants exercisable to subscribe for SHK Shares to be issued in accordance with the Subscription Agreement

• per cent

– 7 –

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

Registered Office: 12th Floor, CITIC Tower 1 Tim Mei Avenue Central, Hong Kong

Non-Executive Directors: Goh Joo Chuan Fevzi Timucin Engin Josefh Kamal Eskandar (alternate to Mr. Fevzi Timucin Engin) Patrick Lee Seng Wei Ming Cheng

Independent Non-Executive Directors: David Craig Bartlett Alan Stephen Jones Carlisle Caldow Procter Peter Wong Man Kong

24th May, 2010

To the SHK Shareholders,

Dear Sir or Madam,

(I) MAJOR AND CONNECTED TRANSACTION

RELATING TO PROPOSED DISPOSAL OF INTEREST IN TIAN AN CHINA INVESTMENTS COMPANY LIMITED TO ALLIED PROPERTIES (H.K.) LIMITED INVOLVING PROPOSED DISTRIBUTION IN SPECIE;

(II) PROPOSED ISSUE OF

HK$1,708,000,000 IN AGGREGATE PRINCIPAL AMOUNT OF 2% MANDATORY CONVERTIBLE NOTES DUE 2013 MANDATORILY CONVERTIBLE INTO ORDINARY SHARES OF THE COMPANY; AND

HK$427,000,000 IN FACE VALUE OF WARRANTS EXERCISABLE TO SUBSCRIBE FOR ORDINARY SHARES OF THE COMPANY;

(III) PROPOSED APPOINTMENT OF TWO NON-EXECUTIVE DIRECTORS; AND

(IV) NOTICE OF EXTRAORDINARY GENERAL MEETING

INTRODUCTION

On 19th April, 2010, the Company (as vendor) entered into the Acquisition Agreement with the Purchaser (as purchaser), an indirect wholly-owned subsidiary of APL, and APL (as guarantor to the Purchaser) for the disposal of the Tian An Interest (representing approximately 38.06% of the total

– 8 –

LETTER FROM THE BOARD

issued share capital of Tian An) which represents the entire interest of the Company in Tian An. Upon Completion, (i) the Company will be more focused on its financial services business; (ii) the Independent Shareholders will receive APL Shares pursuant to the Proposed Distribution; and (iii) APL will hold approximately 38.06% equity interest in Tian An directly instead of holding through the Company, its 62.31% owned subsidiary.

The consideration of the Transaction is to be satisfied by the issuance of the SEN to the Company, which will confer the right to call for the issue of 2,293,561,833 fully paid APL Shares.

Since APL is the controlling shareholder of the Company, the Purchaser and the SEN Issuer are wholly-owned subsidiaries of APL, they are therefore connected persons of the Company. Accordingly, the Transaction constitutes a connected transaction of the Company under the Listing Rules. As one or more applicable Percentage Ratio(s) in respect of the Transaction is more than 25% but less than 75%, the Transaction also constitutes a major transaction of the Company under the Listing Rules.

On 22nd April, 2010, the Company as the issuer entered into a Subscription Agreement with the Investor pursuant to which the Company conditionally agreed to issue and the Investor conditionally agreed to subscribe for the HK$1,708,000,000 in aggregate principal amount of Mandatory Convertible Notes and HK$427,000,000 in face value of Warrants, subject to the fulfilment of the conditions precedent in the Subscription Agreement. Under Rule 13.36(1)(a) of the Listing Rules, allotment and issue of the Mandatory Convertible Notes and Warrants pursuant to the Subscription Agreement is conditional upon approval being obtained from SHK Shareholders.

The purpose of this circular is to provide you with, among other things, further details of (i) the Acquisition Agreement and transactions contemplated thereunder including the Proposed Distribution, (ii) the Subscription Agreement and transactions contemplated thereunder, (iii) financial information of the Group, (iv) the two non-executive Directors to be appointed (conditional upon the approval of the Subscription Agreement and its completion) and (v) notice of the EGM.

(I) THE ACQUISITION AGREEMENT

Date

19th April, 2010

Parties

Purchaser: the Purchaser, an indirect wholly-owned subsidiary of APL Vendor: the Company Guarantor: APL

The Transaction

Pursuant to the Acquisition Agreement, subject to the Conditions, the Purchaser has agreed, inter alia, to acquire, and the Company has agreed, inter alia, to sell, the Tian An Interest, being 573,589,096 Tian An Shares, representing approximately 38.06% of the existing total issued share capital of Tian An. APL has agreed to guarantee the performance of the obligations of the Purchaser under the Acquisition Agreement.

– 9 –

LETTER FROM THE BOARD

Consideration

The consideration of the Transaction is to be satisfied by the issuance of the SEN to the Company, which will confer the right to call for the issue of 2,293,561,833 fully paid APL Shares. Based on the closing price of APL Shares of HK$1.66 per APL Share on 16th April, 2010 (the last trading day prior to the date of the Acquisition Agreement), and 573,589,096 Tian An Shares held by the Company, Tian An Interest is valued at approximately HK$3,807.31 million. The consideration for the Transaction represents an exchange ratio of approximately 4 APL Shares for every 1 Tian An Share held by the Company.

The consideration for the Transaction values the Tian An Interest at approximately HK$6.64 per Tian An Share, which is determined after arm’s length negotiation between the contractual parties after taking into account, inter alia, (i) the carrying value of the Tian An Interest in the Company’s financial statements less its share of reserves of Tian An as at 31st December, 2009 of approximately HK$3,804.24 million; (ii) the closing price of the Tian An Shares of HK$5.10 per Tian An Share on 16th April, 2010; and (iii) the closing price of the APL Shares of HK$1.66 per APL Share on 16th April, 2010.

The premium of the consideration for the Transaction is determined and agreed upon by the contractual parties based on the ratio of approximate 4 APL Shares over 1 Tian An Share when comparing both their respective market value and audited consolidated net asset value as at 31st December, 2009 as follows:

	For Every Four	For Every
	APL Shares	Tian An Share	Premium
Market value as at 16th April, 2010	HK$6.64	HK$5.10	30.2%
Audited consolidated net asset value
as at 31st December, 2009	HK$8.32	HK$7.22	15.2%

The APL Board is optimistic about the long term prospects of the PRC property market, and considers a premium as necessary to be attractive enough for the Independent Shareholders to vote for the Transaction at the EGM, where APL and its associates will have to abstain from voting.

– 10 –

LETTER FROM THE BOARD

However, the actual value of the consideration for the Transaction, being 2,293,561,833 fully paid APL Shares to be issued under the SEN, will depend on the market price of APL Shares on the Completion Date, and may or may not represent a premium to the value of the Tian An Shares as at the Completion Date. Based on the above, the Directors are of the view that the consideration for the Transaction is fair and reasonable.

Dividends

Holders of APL Shares issued and allotted under the SEN will be entitled to dividends proposed or declared after Completion. For the avoidance of doubt, holders of the APL Shares (which would fall to be issued and allotted under the SEN) will not be entitled to the final dividend distribution of HK$0.015 per APL Share, which was proposed by APL Board on 1st April, 2010 for the financial year ended 31st December, 2009.

It is agreed that, prior to Completion, all rights and entitlements to dividends, distributions and return of capital declared, paid or made by Tian An accrued or accruing to the Tian An Interest, including but not limited to the final dividend of HK$0.07 per Tian An Share proposed by Tian An Board on 19th March, 2010 for the financial year ended 31st December, 2009, shall belong to the Company absolutely.

Completion and Conditions of the Transaction

Completion will take place on the Completion Date, subject to the fulfillment (or waiver, in certain cases as stated below) of the following Conditions:

• (a) the obtaining of all relevant third party consents or approvals by the Purchaser and APL as are necessary for the purpose of the Transaction;

• (b) the obtaining of all relevant third party consents or approvals by the Company and Tian An as are necessary for the purpose of the Transaction;

• (c) the obtaining of the approval by the Independent Shareholders in respect of the Acquisition Agreement and the transactions contemplated under the Acquisition Agreement and the Proposed Distribution at the EGM;

• (d) the obtaining of the approval by the APL Shareholders in respect of the Acquisition Agreement and the transactions contemplated under the Acquisition Agreement and the issue of the APL Shares pursuant to the SEN at the APL EGM;

• (e) the obtaining of the approval of the AGL Shareholders in respect of the Acquisition Agreement and the transactions contemplated thereunder at the AGL EGM, or, if permitted by the Listing Rules, by way of written resolution(s) of the AGL Shareholders holding more than 50% in nominal value of the issued share capital of AGL;

• (f) approval being granted or agreed to be granted by the Stock Exchange for the listing of, and permission to deal in, all APL Shares which would fall to be issued pursuant to the SEN on terms and conditions satisfactory to APL and the Company; and

– 11 –

LETTER FROM THE BOARD

• (g) confirmation and/or waiver pursuant to Note 6 to Rule 26.1 of the Takeovers Code being granted by the Executive to the effect that the consummation of the transactions contemplated under the Acquisition Agreement will not give rise to any general offer obligations by the Purchaser under the Takeovers Code for Tian An Shares (other than those Tian An Shares held by the Purchaser and the parties acting in concert with it) pursuant to Rule 26.1 of the Takeovers Code.

The Company may at any time waive in writing the Condition set out in (b) (in so far as consents and approvals in respect of the Company are concerned) above either in whole or in part and such waiver may be made subject to such terms and conditions as the Company may require. The Purchaser and APL may at any time waive in writing the Condition set out in (a) above in whole or in part and such waiver may be made subject to such terms and conditions as the Purchaser and/or APL may require. Parties to the Acquisition Agreement may together waive by agreement in writing the Condition set out in (b) (other than in relation to consents and approvals in respect of the Company) above either in whole or in part and such waiver may be made subject to such terms and conditions as they may agree. Condition (g) as set out above cannot be waived. Conditions (e) and (g) have been fulfilled as at the Latest Practicable Date.

If any Condition has not been fulfilled or waived on or before 31st July, 2010 (or such later date as is otherwise agreed between the parties in writing), the Acquisition Agreement shall terminate and be of no further effect, and no party shall be entitled to any rights or benefits or be under any obligation under or in respect of the Acquisition Agreement or have any liability to the other party, save in respect of any antecedent breach.

TERMS OF THE SEN

Issuer	:	SEN	Issuer
Guarantor	:	APL

Entitlement

The SEN confers on the holder the Allotment Right. The SEN to be issued to the Company at Completion will carry Allotment Right for 2,293,561,833 APL Shares.

Any APL Shares (to be issued pursuant to the SEN) will be issued and credited as fully paid and rank pari passu in all respects among themselves and with all other APL Shares outstanding as at the date of issue and be entitled to all dividends and other distributions on the record date of which falls on a date on or after the date of issue.

Rank for dividend

Holders of APL Shares issued and allotted under the SEN will be entitled to dividends declared after Completion. For the avoidance of doubt, holders of APL Shares (issued and allotted under the SEN) will not be entitled to the final dividend distribution of HK$0.015 per APL Share, which was proposed by APL Board on 1st April, 2010 for the financial year ended 31st December, 2009.

– 12 –

LETTER FROM THE BOARD

Transferability and Exercise

The SEN may be assigned once only under the Proposed Distribution and the Allotment Right thereunder is deemed to be automatically exercised upon such assignment, so that the relevant APL Shares will be automatically issued to the relevant SHK Shareholders. Accordingly, the SHK Shareholders will not receive the SEN, but will receive APL Shares directly, under the Proposed Distribution. However, any SEN assigned to APL or any of its subsidiaries will be automatically cancelled and the Allotment Right thereunder will be automatically extinguished, and therefore they will not receive any APL Shares under the Proposed Distribution. Any APL Shares to be issued pursuant to the SEN will be issued at an issue price which is equal to the closing price of the APL Shares as stated in the Stock Exchange’s daily quotation sheets on the Completion Date. For reference, the closing price of the APL Shares as stated in the Stock Exchange’s daily quotation sheets on 16th April, 2010 (the last trading day prior to the date of the Acquisition Agreement) was HK$1.66 per APL Share.

Validity period

The SEN remains valid until the Allotment Right is or is deemed to be exercised or cancelled.

Listing

No application will be made for the listing of the SEN. Application will be made by APL to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, any new APL Shares which may be issued pursuant to exercise of the Allotment Right under the SEN. No application will be made for the listing of any new APL Shares on any other stock exchange.

The issue of the APL Shares under the SEN will be subject to approval by the APL Shareholders at the APL EGM.

Subsequent Sale Restriction

Save for any restrictions on the subsequent sale of the APL Shares (which are to be issued and allotted under the SEN) which may be imposed on an Overseas Shareholder under any laws and/or regulations of the relevant overseas jurisdiction, there are no restrictions on the subsequent sale of the APL Shares (which are to be issued and allotted under the SEN). Such Overseas Shareholders are advised to seek independent legal advice on any applicable restriction which may be imposed on the subsequent sale of the APL Shares (which are to be issued and allotted under the SEN). Please also refer to the sections headed ‘‘Overseas Shareholders’’ and ‘‘Taxation’’ on pages 21 to 23 of this circular.

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LETTER FROM THE BOARD

PROPOSED DISTRIBUTION IN SPECIE

The Board proposes to recommend for approval by Independent Shareholders at the EGM, that upon Completion, for each SHK Share, 1.309 fully paid APL Shares be allotted under the SEN, on the basis of 1,752,148,077 SHK Shares issued and outstanding as at the Latest Practicable Date. Assuming that Completion takes place, the Proposed Distribution will take the following form:

Form of Distribution	Amount	Type of Distribution
Final dividend of HK$ 0.16 per SHK Share	Approximately	SEN
proposed by the Company for the year	HK$280 million
ended 31st December, 2009 (Note)
Special dividend	Value depends on the	SEN
	market price of each
	APL Share on the
	Completion Date

Note: The proposed final dividend has been calculated with reference to the number of SHK Shares in issue as at 29th March, 2010 (HK$0.16 x 1,752,148,077 issued SHK Shares at 29th March, 2010 = approximately HK$280 million).

A resolution will be proposed at the EGM to approve the Acquisition Agreement and the transactions contemplated thereunder including the Proposed Distribution. In the event that the Transaction is not approved by the Independent Shareholders at the EGM, or if the Transaction has been approved at the EGM but Completion does not take place, the final dividend of the Company of HK$0.16 per SHK Share may be paid in cash with a scrip alternative whereby SHK Shareholders may elect to receive the final dividend wholly or partly by the allotment of new SHK Shares in lieu of cash, in which case further details will be announced by the Company. Further, if such resolution is not passed at the EGM, approval will be sought by the Board from the SHK Shareholders for the declaration of the final dividend of the Company at the annual general meeting to be convened after the EGM.

Out of the total of 2,293,561,833 APL Shares falling to be issued under the SEN, APL or its subsidiaries would have an entitlement of 1,429,277,678 APL Shares, representing approximately 23.47% of the total issued share capital of APL (based on its current holding of 1,091,885,163 SHK Shares). Such entitlement will be cancelled upon distribution of the SEN to APL or its subsidiaries and the APL Shares relating thereto will not be allotted. Accordingly, only up to 864,284,155 APL Shares will be allotted to the Independent Shareholders. The 864,284,155 APL Shares represent approximately 14.19% of the existing issued share capital of APL, and approximately 12.43% of the issued share capital of APL as enlarged by the issue of such APL Shares under the SEN.

Tian An will continue to be equity accounted for in the consolidated financial statements of APL following Completion and there will be no change in the ultimate control of Tian An as a result of the Transaction. The Executive has granted a waiver to dispense with APL’s obligation to make a general offer for the Tian An Shares as a result of the Transaction pursuant to Note 6 to Rule 26.1 of the Takeovers Code.

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LETTER FROM THE BOARD

Fractional entitlements to the APL Shares will not be distributed under the Proposed Distribution to the SHK Shareholders, but will be converted into APL Shares and sold in the market for the benefit of the Company. Any APL Shares attributable to entitlements of the Excluded Overseas Shareholders (other than fractional entitlements) under the Proposed Distribution will be sold and the proceeds thereof (less expenses) will be paid in cash to them. For further information regarding the entitlements of Overseas Shareholders, please refer to the section headed “Overseas Shareholders” on pages 21 to 23 of this circular.

Expected Changes to Shareholding

The shareholding structure of AGL, APL, the Company and Tian An as at the Latest Practicable Date is as follows:

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LETTER FROM THE BOARD

Upon Completion but before the Proposed Distribution, APL would hold 38.06% interest in Tian An, and the Company would hold the SEN. The shareholding structure of AGL, APL, the Company and Tian An upon Completion but before the Proposed Distribution would be as follows:

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LETTER FROM THE BOARD

The following chart depicts the flow of the Transaction and the Proposed Distribution:

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LETTER FROM THE BOARD

The shareholding of the relevant companies after Completion and after the Proposed Distribution would be as follows:

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LETTER FROM THE BOARD

For illustration purpose, the changes in the interests in the APL Shares are shown below:

Beneficial Shareholders (Note 1) Lee and Lee Trust (Note 2) Penta Investment Advisers Limited (Note 3, 4 and 5) Ms. Chong Sok Un (Note 5) Mr. Patrick, Lee Seng Wei (Note 6) Public APL Shareholders Independent Shareholders (Note 3 & 4) Total Notes:	As at the Latest Practicable Date APL Shares (Note 1) % 4,528,120,310 74.36 306,798,000 5.04 375,082,000 6.16 2,700,000 0.04 876,132,120 14.40 — — 6,088,832,430 100.00	Upon distribution to Independent Shareholders and full conversion of SEN APL Shares % 4,528,120,310 65.12 512,937,733 7.38 375,082,000 5.40 2,700,000 0.04 876,132,120 12.60 658,144,422 9.46 6,953,116,585 100.00	Upon distribution to Independent Shareholders and full conversion of SEN APL Shares % 4,528,120,310 65.12 512,937,733 7.38 375,082,000 5.40 2,700,000 0.04 876,132,120 12.60 658,144,422 9.46 6,953,116,585 100.00
			100.00

1. The shareholding figures used herein are extracted from the latest forms of Disclosure of Interests filed by APL Shareholders pursuant to Part XV of the SFO on the website of the Stock Exchange and shareholders referred to herein are ultimate beneficial holders of relevant APL Shares.

2. The 4,528,120,310 APL Shares are held directly and indirectly by AGL, which is owned as to approximately 15.81% by Cashplus Management Limited, a wholly-owned subsidiary of Zealous Developments Limited (‘‘Zealous’’) and approximately 36.58% by Minty Hongkong Limited (‘‘Minty’’). Minty and Zealous are wholly-owned by the trustees of Lee and Lee Trust, being a discretionary trust, therefore, Lee and Lee Trust is deemed to have an interest in the APL Shares under Part XV of the SFO.

3. Penta Investment Advisers Limited, an Independent Shareholder, has an interest in 157,478,788 SHK Shares which represents approximately 8.99% of the total issued share capital of the Company. On this basis, Penta Investment Advisers Limited will receive 206,139,733 APL Shares to be allotted and issued under the SEN on a pro-rata basis in accordance with the Proposed Distribution. As a result, assuming its interest remains unchanged on the record date for the Proposed Distribution, Penta Investment Advisers Limited would hold 512,937,733 APL Shares upon Completion.

4. Taking into account the 206,139,733 APL Shares to be allotted and issued under the SEN to Penta Investment Advisers Limited as mentioned above, the total number of APL Shares to be allotted and issued under the SEN to the Independent Shareholders will be 864,284,155 APL Shares.

5. Save as disclosed herein, neither Penta Investment Advisers Limited, Ms. Chong Sok Un nor their respective associates have any other relationship with and are connected persons of APL.

6. Mr. Patrick Lee Seng Wei is the Chief Executive and an Executive Director of APL.

7. The public float of APL as at the Latest Practicable Date is and after completion of the Transaction and the Proposed Distribution is expected to be approximately 25.6% and 34.8% respectively.

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LETTER FROM THE BOARD

FINANCIAL INFORMATION ON TIAN AN

Based on the audited financial statements of Tian An as at 31st December, 2009, the revenue, net profit and net assets of Tian An are as follows:

	For the year ended 31st December	For the year ended 31st December
	2008	2009
	HK$’000	HK$’000
Revenue	473,329	1,083,528
Profit before taxation and extraordinary items	689,250	1,367,830
Profit after taxation and extraordinary items	689,307	1,082,993
Net assets	9,847,087	10,884,316

FINANCIAL IMPACT OF THE TRANSACTION

Following Completion, the Company will remain a listed company and the principal business of the Remaining Group is the provision of financial services.

According to the 2009 audited consolidated financial statements of the Company, the profit attributable to owners of the Company was approximately HK$1,258.4 million. The Board estimated that, upon Completion, the Group would recognize a gain on disposal of approximately HK$34.1 million, representing the difference between (i) the value of consideration based on the closing price of APL Share on 16th April, 2010 of HK$3,807.3 million plus the 2009 final dividend proposed by Tian An Board to be received by the Company of HK$40.1 million and (ii) the carrying amount of the Tian An Interest (after netting off the share of reserves of Tian An) as at 31st December, 2009 of HK$3,804.2 million plus estimated expense (including, but not limited to, stamp duty, fees for professional advisers for relevant documentation and execution for the Transaction) to be incurred of HK$9.1 million.

Such gain on disposal will be subject to changes depending on the share price movement of the APL Share and will be determined based on APL Share price on Completion Date and taking into account the change in the Group’s share of results of Tian An for the period from 1st January, 2010 to the Completion Date as required by applicable Hong Kong Financial Reporting Standards.

Upon completion of the Tian An Restructuring, the assets of the Group will be decreased by approximately HK$4,087.8 million and the liabilities of the Group will be increased by approximately HK$9.1 million.

REASONS FOR AND BENEFITS OF THE TRANSACTION

The principal business activity of the Purchaser is investment holding.

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, the provision of medical and healthcare services and the provision of financial services.

The principal business activities of the Group are wealth management, brokerage and margin finance, corporate finance, asset management, consumer finance, and provision of strategic investments and properties holding and rental through its interest in Tian An.

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LETTER FROM THE BOARD

The principal business activity of Tian An is investment holding. The Tian An Group is engaged principally in the development of high-end apartments, villas, office buildings and commercial properties, property investment, property management and hotel operation, as well as the manufacture and sale of construction materials in China.

Upon Completion, (i) the Company will be more focused on financial services business; (ii) the Independent Shareholders will receive APL Shares pursuant to the Proposed Distribution; and (iii) APL will hold approximately 38.06% equity interest in Tian An directly, instead of holding through the Company, its 62.31% owned subsidiary.

The Board takes the view that the Company should focus on its financial service businesses upon Completion and also believes that the Transaction will enable investors to compare the Company with other financial institutions, and hence would probably enhance value for SHK Shareholders through rerating of the SHK Shares as well as through the Proposed Distribution. The Board believes that the current market price of the SHK Shares does not fully reflect the value of its holding of the Tian An Interest due to its existing corporate structure and business mix of financial services business and property development business, the Transaction will unlock value for the SHK Shareholders and allow them to realise part of this value by way of holding the Tian An Interest through holding APL Shares after the Proposed Distribution upon Completion.

DESPATCH OF APL SHARE CERTIFICATES

Subject to Completion having occurred, the share certificates for the APL Shares representing the Proposed Distribution are currently expected to be despatched to the Independent Shareholders on or before Friday, 9th July, 2010.

In the absence of any specific instructions to the contrary received in writing by the share registrar of the Company before the register of members of the Company is closed for determination of entitlements to the Proposed Distribution, the share certificates for the APL Shares representing the Proposed Distribution will be sent by ordinary mail to the Independent Shareholders whose names appear on the register of members of the Company at the record date for the Proposed Distribution at their respective addresses or, in the case of joint holders, to the registered address of that joint holder whose name stands first on the register of members of the Company in respect of the joint holding. All such share certificates will be sent at the risk of the persons entitled thereto and neither the Company nor APL will be liable for any loss or delay in transmission.

OVERSEAS SHAREHOLDERS

The making of the Proposed Distribution to those SHK Shareholders not residing in Hong Kong may be subject to the laws and regulations of other jurisdictions. Such SHK Shareholders should observe and inform themselves of any applicable legal or regulatory requirements in their respective jurisdictions. It is the responsibility of such SHK Shareholders to satisfy themselves as to the full observance of the laws and regulatory requirements of the relevant jurisdictions in connection therewith, including the obtaining of any governmental or exchange control or other consents which may be required, or the compliance with other necessary formalities and the payment of any issue, transfer or other taxes due in such jurisdictions. No SHK Shareholders receiving a copy of this circular in any territory outside Hong Kong may treat the same as an invitation or offer to acquire, purchase or subscribe for any securities. Overseas Shareholders residing in a jurisdiction where it would be illegal

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LETTER FROM THE BOARD

for them to be allotted or issued the APL Shares under the SEN will be deemed to have received this circular for their information only. For avoidance of doubt, this circular is despatched to the Excluded Overseas Shareholders for information only.

Where the Board, after making enquiries regarding the legal restrictions under the laws of the relevant place or the requirements of the relevant regulatory body or stock exchange in that place where practicable, consider the exclusion of a SHK Shareholder whose addresses as shown on the register of members of the Company on the record date for the Proposed Distribution is in a place outside Hong Kong under the Proposed Distribution is necessary or expedient (e.g. where the Board has been advised that the allotment and issue of the APL Shares by APL to an Overseas Shareholder may be prohibited by any relevant law or so prohibited except after compliance with conditions or requirements which the Board regards as unduly onerous by reason of delay, expense or otherwise), the Board may assign the relevant entitlement (other than fractional entitlement) under the SEN to a person to be selected by the Directors, such that the relevant APL Shares will be issued to that person and that person will sell the same in the market as soon as reasonably practicable. The net proceeds of sale (less expenses) will be paid in cash to the relevant Overseas Shareholder in full satisfaction of his rights to the APL Shares to which he would have been entitled under the Proposed Distribution. The person to be selected by the Directors will sell the relevant APL Shares in the market as soon as reasonably practicable on or after the date on which the share certificates for APL Shares are despatched to the other SHK Shareholders (which date is currently expected to be Friday, 9th July, 2010) at such price(s) as may reasonably be obtained in the market. The net proceeds of sale, after deduction of expenses, will be sent by cheque via ordinary mail to the relevant Overseas Shareholder at his own risk within 14 days after any such sale but in any event within 28 days after the date of Completion. In the absence of bad faith or wilful default, none of the Company, APL, any person selected by the Company to effect such sale or any broker or agent of any of them shall have any liability for any loss arising as a result of the timing or terms of any such sale.

Based on legal advice received, the Board believes that it would be unduly onerous by reason of difficulty, delay, expense or otherwise to comply with the legal and regulatory requirements of Malaysia, Australia, the United Kingdom and the United States of America (including but not limited to the difficulty, delay and expense involved in ascertaining whether certain exemptions from compliance with the legal and regulatory requirements in relation to the SHK Shareholders in the relevant jurisdictions are applicable on a case by case basis) in order to distribute APL Shares to SHK Shareholders whose addresses as shown on the register of members of the Company on the record date for the Proposed Distribution are in Malaysia, Australia, the United Kingdom and the United States of America. The arrangement sets out in the preceding paragraph will therefore be applied to the SHK Shareholders with registered addresses in Malaysia, Australia, the United Kingdom and the United States of America. It is not presently expected that the matters stated in the preceding paragraph will apply to any other Overseas Shareholders based on their registered addresses as at the Latest Practicable Date.

Overseas Shareholders who are resident in the Canadian provinces of Ontario or Quebec (the ‘‘Canadian Jurisdictions’’) should note that, in respect of the distribution of the APL Shares to them under the SEN, an exemption from the prospectus requirement is being relied upon under the securities laws, instruments and rules of the Canadian Jurisdictions (the ‘‘Securities Laws’’) but that no confirmation has been obtained from the relevant provincial securities regulatory authorities in the Canadian Jurisdictions that the Proposed Distribution qualifies for such an exemption. Securities obtained by such Overseas Shareholders pursuant to the Proposed Distribution will be restricted

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LETTER FROM THE BOARD

securities in Canada under the Securities Laws. Accordingly, Overseas Shareholders resident in the Canadian Jurisdictions who intend to sell APL Shares acquired under the Proposed Distribution must: (i) effect the sale of such shares through an appropriately registered dealer or pursuant to an exemption from the registration requirement under the Securities Laws; and (ii) satisfy the prospectus requirements under the Securities Laws or rely on an exemption from the same. Overseas Shareholders who are resident in the Canadian Jurisdictions should seek legal advice before selling the APL Shares.

This circular will not be registered in Hong Kong or in any other jurisdiction.

TAXATION

SHK Shareholders, whether in Hong Kong or in other jurisdictions, are recommended to consult their professional advisers if they are in any doubt as to the taxation implications of the Transaction and, in particular, whether the receipt of the Proposed Distribution would make such SHK Shareholder liable to taxation in Hong Kong or in other jurisdictions.

(II) SUBSCRIPTION AGREEMENT

Issue of and subscription for the Mandatory Convertible Notes and Warrants

On 22nd April, 2010, the Company as issuer entered into a Subscription Agreement with the Investor pursuant to which the Company conditionally agreed to issue and the Investor conditionally agreed to subscribe for the HK$1,708,000,000 in aggregate principal amount of Mandatory Convertible Notes and HK$427,000,000 in face value of Warrants, subject to the fulfilment of the conditions precedent in the Subscription Agreement.

To the best of the knowledge, information and belief of the Directors, having made all reasonable enquiries and having relied on the confirmation of the Investor, the Investor and its ultimate beneficial owners are third parties independent of and not connected with AGL, APL and the Company and their respective connected persons.

Conditions precedent

Completion of the Subscription is subject to a number of conditions precedent, including:

• (a) the shareholders of the Company, AGL and APL (if applicable), respectively, passing a resolution at an extraordinary general meeting or by way of written resolution (if applicable), to approve the terms of, and the transactions contemplated by, the Subscription Agreement and the Issue Documents;

• (b) all necessary regulatory filings, notifications and approvals to the relevant authorities to enter into the Subscription Agreement and the Issue Documents and perform the Company’s obligations thereunder have been made and obtained, and such filings, notifications and approvals remain valid and effective;

• (c) all requisite consents and approvals in relation to the possible change in shareholding of the investment manager and/or investment advisor of each of the Investment Funds (to the extent that a member of the Group is appointed as the investment adviser to such Investment Funds)

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LETTER FROM THE BOARD

(on the basis that the Investor will hold the shares in the Company upon conversion of the Mandatory Convertible Notes and exercise of the Warrants) have been obtained in writing from any applicable regulators, including the SFC, the Mandatory Provident Fund Schemes Authority, the Stock Exchange, Hong Kong Futures Exchange Limited and the Hong Kong Confederation of Insurance Brokers;

• (d) the Stock Exchange having granted approval for the listing of, and a permission to deal in, the SHK Shares to be issued on conversion of the Mandatory Convertible Notes and upon exercise of the Warrants and such approval remains valid and effective; and

• (e) completion of the Tian An Restructuring substantially in accordance with its terms.

If all the conditions precedent are not either waived or satisfied, as the case may be, by 10:00 a.m. on 31st October, 2010 or such later date as may be agreed between the Company and the Investor, the Subscription Agreement shall automatically terminate.

Undertakings of the Company

The Company has given a number of undertakings to the Investor, including the following:

• (a) The Company confirms that if the Tian An Restructuring is approved and completed, apart from the Proposed Distribution in specie undertaken as part of the Tian An Restructuring and any dividend declared prior to 22nd April, 2010, no other distribution to its shareholders (whether in cash or otherwise) will be made for the financial year ended 31st December, 2009.

• (b) For so long as the Investor holds:

• (i) at least 15% of the issued SHK Shares, or SHK Shares and/or Mandatory Convertible Notes and/or Warrants which on an as converted or exercised basis in aggregate represent at least 15% of the issued SHK Shares, the Investor shall be entitled to: (A) nominate for appointment two individuals as non-executive directors on the Board; (B) from time to time recommend an individual as an independent non-executive director for consideration by the Board; and (C) nominate for appointment an individual as a non-executive director on the board of directors of each of UAF and SHKS, in each case provided such individual is fit and proper; and

• (ii) at least 7.5% but below 15% of the issued SHK Shares, or SHK Shares and/or Mandatory Convertible Notes and/or Warrants which on an as converted or exercised basis in aggregate represent at least 7.5% but below 15% of issued SHK Shares, the Investor shall be entitled to: (A) nominate for appointment one individual as a nonexecutive director on the Board; and (B) from time to time recommend an individual as an independent non-executive director for consideration by the Board.

As a separate undertaking, the Company shall put forward resolutions, for the appointment of the non-executive directors nominated by the Investor as described in paragraph (b)(i)(A) above to the Board at the EGM.

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LETTER FROM THE BOARD

The Mandatory Convertible Notes and the Warrants represent a significant investment in the Company. Upon full conversion of the Mandatory Convertible Notes and full exercise of the Warrants, the Investor would hold approximately 18.96% of the fully diluted share capital of the Company, making it the second largest shareholder in the Company after APL. In view of the Investor’s significant stake in the Company, the size of its investment and the expertise the Investor can bring to the Company, the Company agreed to grant the Investor a nomination right to the Board as one of the negotiated commercial terms of the Subscription.

It is important to note that the Investor only has the right to nominate (but not appoint) a person for election as a Director under the Subscription Agreement. All SHK Shareholders also have the right to nominate a person for election as a Director, but such right is granted under the articles of association of the Company. In addition, pursuant to section 113 of the Companies Ordinance (Chapter 32 of the Laws of Hong Kong), SHK Shareholder(s) who hold more than 5% of the voting shares of the Company may requisition an extraordinary general meeting to make proposals such as a director nomination, following which the Board is obliged to convene an extraordinary general meeting to consider such proposals. On the other hand, the Investor, in its capacity as a noteholder, has the director nomination right under the Subscription Agreement but not under the articles of association as the articles of association is a contract between the Company and the SHK Shareholders.

The Board considers that giving the Investor such nomination right is appropriate in the circumstances in view of the benefits of the Subscription, and the entry into the Subscription Agreement and performance of the obligations under it are in the interest of the Group.

SHK Share repurchase

Within three months from the Closing Date, if the price of the SHK Shares falls below HK$5.00 at any time during such period, within five Business Days of such date the Company shall use its best endeavours to repurchase SHK Shares subject to the terms of the existing share repurchase mandate, and provided that it is in the best interest of the SHK Shareholders as determined by the Board in its sole discretion to do so and subject to:

• (a) such repurchase not giving rise to an obligation on any person to make a general offer for the Company pursuant to The Codes on Takeovers and Mergers and Share Repurchases;

• (b) such repurchase not constituting a repurchase by way of general offer pursuant to The Codes on Takeovers and Mergers and Share Repurchases (if applicable); and

• (c) such repurchase not resulting in an insufficient public float for the purposes of the Listing Rules.

Restrictions on the issue of further securities

From 22nd April, 2010 to (and including) the Closing Date, neither the Company nor any person acting on its behalf will (without the prior written consent of the Investor) take, directly or indirectly, any action designed to or which would constitute or which might reasonably be expected to cause or result in an adjustment to the conversion price of the Mandatory Convertible Notes or the subscription price for SHK Shares on the exercise of the Warrants (and the circumstances where the conversion price and subscription price may be adjusted are summarised in the principal terms and conditions of the

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LETTER FROM THE BOARD

Mandatory Convertible Notes and Warrants below). The reason is that completion of the Subscription will only be after a few months, but the initial conversion price of the Mandatory Convertible Notes and the initial subscription price of the Warrants have already been fixed. Accordingly, the Investor’s interest would be adversely affected if the Company issues new SHK Shares below the initial conversion price or initial subscription price. This restriction falls away upon completion under the Subscription Agreement. Therefore, the Board is of the view that the temporary restriction is reasonable having regard to the benefits to the Group as a whole by virtue of the Investor’s substantial investment in and involvement with the Group.

Breach of the Subscription Agreement

The Subscription Agreement contains provisions relating to claims for breach of the Subscription Agreement, including the minimum and maximum amounts of a claim.

In addition, if the Investor, any Permitted Transferee or any of their affiliates makes a claim for a breach by the Company of the Subscription Agreement or the Issue Documents or otherwise arising from or relating to the transactions contemplated by those documents, the Company shall have a certain period to exercise its right to redeem all the Mandatory Convertible Notes and to cancel the Warrants held by the Investor, any Permitted Transferee or any of their affiliates (as the case may be) at a redemption price equal to (a) the principal amount of such Mandatory Convertible Notes, plus (b) any accrued but unpaid interest and any amounts owing pursuant to the terms and conditions of the Mandatory Convertible Notes, plus (c) an amount equal to 3% of the principal amount of the Mandatory Convertible Notes to be redeemed, and to the extent the Company does not exercise its rights within this period, the Investor, any Permitted Transferee or any of their affiliates shall be free to pursue remedies in accordance with the provisions of Subscription Agreement.

Termination of the Subscription Agreement

The Subscription Agreement shall terminate upon:

• (a) any funds managed by CVC AP (whether individually or together) ceasing to control the Investor or any of its affiliates which hold SHK Shares and/or Mandatory Convertible Notes and/or Warrants;

• (b) the Investor and any of its affiliates, in aggregate, ceasing to hold at least 15% of issued SHK Shares or SHK Shares and/or Mandatory Convertible Notes and/or Warrants which on an as converted or exercised basis (as applicable) in aggregate represent at least 15% of the issued SHK Shares (the ‘‘Investor Rights Threshold’’) on any date (the ‘‘Relevant Date’’), provided that if within 45 Business Days of the Relevant Date the Investor and any of its affiliates, in aggregate, hold, such amount of issued SHK Shares and/or Mandatory Convertible Notes and/or Warrants that exceeds the Investor Rights Threshold, the Subscription Agreement shall be reinstated from the day the Investor Rights Threshold is reached;

• (c) redemption of the Mandatory Convertible Notes for breach of the Subscription Agreement or the terms and conditions of the Mandatory Convertible Notes pursuant to which each Noteholder receives the full amount payable; or

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• (d) a conversion of all of the Mandatory Convertible Notes in accordance with the Mandatory Convertible Note terms and conditions.

If the Subscription Agreement is terminated by reason of paragraph (b) or (d) above, the right of the Investor to nominate individual(s) to the Board referred to above and to obtain certain information of the Group shall survive and shall terminate only in accordance with such relevant clause set out in the Subscription Agreement.

Undertaking by the Trustees of Lee and Lee Trust

As advised and confirmed by AGL, in connection with the Subscription, the trustees of Lee and Lee Trust have given undertakings on 22nd April, 2010 to the Investor on behalf of Lee and Lee Trust which are summarized as follows:

• (a) It will not, until the date immediately following the Closing Date, sell, transfer, charge, encumber, create or grant any option over or otherwise dispose of (or permit any such action to occur in respect of) all or any of its shares in AGL or any interest therein (or enter into any agreement, arrangement or incur any obligation to do so).

• (b) It undertakes in respect of its shares in AGL and any other shares in AGL which it is capable of exercising (or controlling the exercise of) the voting rights thereof, to vote (or procure to vote) in favour of any resolution in any general meeting of AGL convened and by way of written resolutions (if applicable), in each case after the date of the undertaking, to approve the transactions contemplated under the Subscription Agreement.

Undertaking by APL

As advised and confirmed by APL, in connection with the Subscription, APL has given undertakings on 22nd April, 2010 to the Investor which are summarized as follows:

• (a) Other than in respect of any renewal of existing facilities and related existing charges, APL will not, until the date immediately following the Closing Date, sell, transfer, charge, encumber, create or grant any option over or otherwise dispose of (collectively, ‘‘Transfer’’) all or any of its SHK Shares or any interest therein.

• (b) APL undertakes in respect of its SHK Shares and any other shares of the Company which APL is from time to time capable of exercising (or controlling the exercise of) the voting rights thereof, to vote (or procure to vote) in favour of any resolution in any general meeting of the Company convened, in each case after the date of the undertaking:

• (i) to approve the transactions contemplated under the Subscription Agreement; and

• (ii) to approve the appointments by the Investor of two non-executive directors to the Board pursuant to the Subscription Agreement.

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• (c) In the event that APL Transfers any of its SHK Shares after the Closing Date to a person controlled by APL, APL will use its best endeavours to procure the transferee of such SHK Shares to give an equivalent undertaking in respect of the matters stated in paragraph (b)(ii) above to the Investor.

PRINCIPAL TERMS AND CONDITIONS OF THE MANDATORY CONVERTIBLE NOTES

The terms and conditions of the Mandatory Convertible Notes were determined after arm’s length negotiations between the Company and the Investor. The principal terms and conditions of the Mandatory Convertible Notes, are summarised as follows:

Issuer: the Company

Issue: HK$1,708,000,000 in aggregate principal amount of 2% mandatory convertible notes due 2013 mandatorily convertible into SHK Shares.

Issue price: 100% of the principal amount of the Mandatory Convertible Notes. Ranking: The Mandatory Convertible Notes constitute direct, unguaranteed, unconditional and unsecured obligations of the Company and shall rank (a) senior to the share capital of the Company from time to time; and (b) at least pari passu with all other present and future unsecured and unsubordinated obligations of the Company.

Transferability: Unless a transfer of Mandatory Convertible Notes is to a Permitted Transferee, the Mandatory Convertible Notes may only be transferred provided certain requirements are met, including the prior written consent from the Company (which consent is to be considered at the sole discretion of the Company).

• Interest: The Mandatory Convertible Notes bear interest from the date of their issue pursuant to the Subscription Agreement at the rate of 2% per annum, payable in Hong Kong dollars semi-annually on each of 30th June and 31st December in each year in arrears.

Maturity date:

• The date which is three years after the issue date of the Mandatory Convertible Notes.

Conversion period: The period commencing on the Closing Date, and ending on the maturity date.

Conversion price: HK$5.00 per SHK Share (subject to adjustment under the terms and conditions of the Mandatory Convertible Notes).

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LETTER FROM THE BOARD

• Conversion price adjustments:

• Conversion right and mandatory conversion:

• Right to participate in distribution:

• SHK Shares to be issued:

• The conversion price will be subject to adjustment in certain circumstances, including adjustment from time to time on the occurrence of certain specified events that have a dilutive or concentrative effect on the value of the SHK Shares which include capitalisation of profits and reserves, sub-division, consolidation and reclassification of SHK Shares, rights issues, other issues of SHK Shares, issue of equity-related securities at a discount to the then market price, and modification of rights of conversion or exchange or subscription attached to options or warrants, provided that the new shares would be issued at less than the prevailing conversion price in the case of rights issue, other issues of SHK Shares or issue of equity-related securities.

• The Noteholders have the right to convert their Mandatory Convertible Notes into SHK Shares at any time during the conversion period. To the extent not previously so converted or redeemed, on the maturity date, the Noteholders shall be deemed to have exercised their right to convert all outstanding Mandatory Convertible Notes and such Mandatory Convertible Notes will automatically convert to SHK Shares.

• If the Company distributes more than 50% of its Consolidated Net Income in respect of any six month period beginning on the date immediately after the date of the last interest payment date to the last date of the following interest payment date (both dates inclusive) by way of distribution (whether in cash or scrip), the Noteholders shall be entitled to and receive an amount equal to such distribution on an as converted basis less the amount of interest received by the Noteholders in respect of such relevant period.

• The SHK Shares to be issued upon conversion will rank at least pari passu with all other SHK Shares then outstanding, free and clear of all liens, claims, charges, security, encumbrances or like interest.

• Fractions of SHK Shares will not be issued on conversion and no cash adjustments will be made in respect thereof.

Listing:

• No listing will be sought for the Mandatory Convertible Notes on the Stock Exchange or any other stock exchange.

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LETTER FROM THE BOARD

• Redemption for Event of Default:

• The Noteholders will have the right at their sole option, to require the Company to redeem all (but not some) of the Mandatory Convertible Notes on the redemption date at a redemption amount equal to the principal amount of the Mandatory Convertible Notes plus any accrued but unpaid interest on the redemption date (the ‘‘Redemption Amount’’), following the occurrence of any of the Events of Default (as defined in the Mandatory Convertible Notes terms and conditions).

If the Noteholders exercise their right to redeem the Mandatory Convertible Notes upon the occurrence of an Event of Default, all Noteholders will be deemed to have exercised the same rights in respect of all Mandatory Convertible Notes held by them and the Company will redeem all the Mandatory Convertible Notes by paying the relevant Redemption Amount to each Noteholder on the redemption date.

• Redemption for breach of Subscription Agreement or Issue Documents:

• The Company may redeem all (but not some) of the Mandatory Convertible Notes held by the Investor and any of its Permitted Transferees at a redemption price equal to (a) the principal amount of such Mandatory Convertible Notes, plus (b) any accrued but unpaid interest, plus (c) any distribution amounts owing to the Investor, plus (d) an amount equal to 3% of the principal amount of the Mandatory Convertible Notes to be redeemed.

General undertakings:

• The Company makes certain general undertakings to Noteholders. Certain undertakings are only in favour of the Investor and its Permitted Transferees if they hold at least 80% in aggregate principal amount of the Mandatory Convertible Notes which are issued to the Investor on the Closing Date, including:

• (a) it will not, and will procure that neither UAF and SHKS will not enter into any business that is unrelated to the general nature of its respective businesses as at 22nd April, 2010; and

• (b) it will procure that the Gearing Ratio remains below 100%.

Form and denomination:

The Mandatory Convertible Notes will be in registered form and in a minimum denomination of HK$1,000,000 each or integral multiples thereof.

As outlined above, the Investor would have a limited right to participate in a distribution by the Company. The reason is that convertible notes often include a provision for the adjustment of the conversion price following a distribution to shareholders. The terms of the Mandatory Convertible Notes do not include such a provision. Therefore, the Investor will not get the benefit of any distribution. Instead of a conversion price adjustment mechanism, the Company and the Investor agreed, as one of

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the negotiated commercial terms, that the Investor would have the right to participate in a distribution by the Company. This right to participate in a distribution is limited in that it only arises where the amount of distribution is more than 50% of the Consolidated Net Income of the Group.

PRINCIPAL TERMS AND CONDITIONS OF THE WARRANTS

The terms and conditions of the Warrants were determined after arm’s length negotiations between the Company and the Investor. The principal terms and conditions of the Warrants, are summarised as follows:

Issuer: the Company Issue size: HK$427,000,000 in face value Issue price: Nil Transferability: The Warrants may only be transferred with the prior consent from the Company (which consent is to be considered at the sole discretion of the Company) (unless the transfer is made to a Permitted Transferee) and upon the Warrant holder obtaining the requisite regulatory approvals and consents required.

Subscription right: The Warrant holders have the right to subscribe for SHK Shares at any time during the subscription period. On expiry of the subscription period, any Warrants which have not been exercised will lapse and cease to be valid for any purpose.

Expiration date: The date which is three years after the issue date of the Warrants. Subscription period: The period commencing on the Closing Date, and ending on the expiration date.

Subscription price: HK$6.25 per SHK Share (subject to adjustment under the terms and conditions of the Warrants).

• Subscription price adjustment:

The subscription price will be subject to adjustment in certain circumstances, including:

• (a) if and whenever the Company shall pay or make any distribution to the SHK Shareholders that is not in the ordinary course and in accordance with past practice (including but not limited to any distribution expressed by the Company or declared by the Board to be a capital distribution); and

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• (b) adjustment from time to time on the occurrence of certain specified events that have a dilutive or concentrative effect on the value of the SHK Shares which include capitalisation of profits and reserves, sub-division, consolidation and reclassification of SHK Shares, rights issues, other issues of SHK Shares, issue of equity-related securities at a discount to the then market price, and modification of rights of conversion or exchange or subscription attached to options or warrants, provided that the new shares would be issued at less than the prevailing warrant strike price in the case of rights issue, other issues of SHK Shares or issue of equity-related securities.

SHK Shares to be issued:

The SHK Shares to be issued upon exercise will rank at least pari passu with all other SHK Shares then outstanding, free and clear of all liens, claims, charges, security, encumbrances or like interest.

Fractions of SHK Shares will not be issued on exercise and no cash adjustments will be made in respect thereof.

Listing: No Listing will be sought for the Warrants on the Stock Exchange or any other stock exchange.

Form and denomination: The Warrants will be in registered form and in a minimum denomination of HK$20,000 each and integral multiples thereof.

There is no restriction to sell the new SHK Shares to be issued on conversion of the Mandatory Convertible Notes and upon exercise of the Warrants.

The Board considers that the terms of the proposed issue of the Mandatory Convertible Notes and the Warrants are fair and reasonable having considered the current market conditions and in the interests of the Company and the SHK Shareholders as a whole.

SHAREHOLDING STRUCTURE OF THE COMPANY

On conversion of the Mandatory Convertible Notes, based on the conversion price per SHK Share of HK$5.00, a maximum of 341,600,000 SHK Shares will be issued upon full conversion of the principal amount of the Mandatory Convertible Notes, representing 16.32% of issued shares of the Company as enlarged by the issue of such SHK Shares.

On the exercise of the Warrants, based on the subscription price of HK$6.25 per SHK Share, a maximum of 68,320,000 SHK Shares will be issued upon full exercise of the Warrants, representing 3.16% of the issued shares of the Company as enlarged by the issue of new SHK Shares upon full conversion of the Mandatory Convertible Notes and full exercise of the Warrants.

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LETTER FROM THE BOARD

The effects on the shareholding structure of the Company upon full conversion of the Mandatory Convertible Notes and the exercise of the Warrants are as follows:

Assuming that:

				Assuming that:	Assuming that:
SHK Shareholders (Note 1) APL Dubai Group Limited (Note 2) Penta Investment Advisers Limited (Note 2) Lee Mei Wan Betty (Note 2) Tong Tang Joseph, a Director Directors of Subsidiaries Public shareholders The Investor Total Notes:	As at the Latest Practicabl No. of SHK Shares 1,091,885,163 166,000,000 157,478,788 (Note 3) 113,085,000 77,000 2,706,010 220,916,116 0 1,752,148,077	e Date % 62.31 9.47 8.99 6.45 0.00 0.16 12.62 0.00 100.00	Assuming that the Mandatory Convertible Notes are fully converted into SHK Shares at the initial conversion price of HK$5.00 per SHK Share No. of SHK Shares % 1,091,885,163 52.15 166,000,000 7.93 157,478,788 7.52 (Note 3) 113,085,000 5.40 77,000 0.00 2,706,010 0.13 220,916,116 10.55 341,600,000 16.32 2,093,748,077 100.00	(a) the Mandatory Convertible Notes are fully converted into SHK Shares at the initial conversion price of HK$5.00 per SHK Share; and (b) the Warrants are fully exercised for SHK Shares at the initial subscription price of HK$6.25 per SHK Share No. of SHK Shares % 1,091,885,163 50.50 166,000,000 7.68 157,478,788 7.28 (Note 3) 113,085,000 5.23 77,000 0.00 2,706,010 0.13 220,916,116 10.22 409,920,000 18.96 2,162,068,077 100.00
					100.00

1. The interests of the SHK Shareholders are extracted from the register kept under section 336 of the SFO and/or the latest information available to the Company.

2. Each of Dubai Group Limited and Goldlex Limited (in which Lee Mei Wan Betty has a 100% interest) nominated Directors to the Board in their capacity as SHK Shareholders. Dubai Group Limited and Goldlex Limited are not associates of any of the Directors so nominated. A member company of Dubai Group Limited and Goldlex Limited also maintained securities accounts with a Subsidiary in its usual and ordinary course of business. Save as the shareholding interests and relationship as disclosed herein, so far as the Company is aware of, Dubai Group Limited, Penta Investment Advisers Limited (such shares were previously held by John Zwaanstra who ceased to hold such interest as from 29th April, 2010) and Lee Mei Wan Betty and their associates have no other relationship with the Group.

3. This includes interests in (i) 74,408,824 SHK Shares; and (ii) unlisted cash settled derivatives of the Company giving rise to an interest in 83,069,964 underlying SHK Shares.

4. The public float of the Company as at the Latest Practicable Date and after the full conversion of the Mandatory Convertible Notes and exercise of the Warrants is and will be not less than 25%.

REASONS FOR AND BENEFITS OF THE ISSUE OF THE MANDATORY CONVERTIBLE NOTES AND WARRANTS AND USE OF PROCEEDS

Since the Company is a 62.31% owned subsidiary of APL, which in turn is a 74.36% owned subsidiary of AGL as at the Latest Practicable Date, both APL and AGL are expected to benefit, through their respective shareholdings in the Company, from the additional financial resources made available to the Company through the Subscription. The Company is expected to benefit from the Subscription as it

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is anticipated that the proceeds will be used to facilitate the future development, distribution and/or provision of consumer finance services by the Group and in the interim for general working capital for the Group.

After arm’s length negotiations between the Company and Investor, the issue price of the Mandatory Convertible Notes was determined based on the face value of the Mandatory Convertible Notes and the Warrants were issued at nil consideration as part of the Subscription. The conversion price per SHK Share upon the conversion of the Mandatory Convertible Notes and the subscription price per SHK Share upon the exercise of the Warrants were determined after arm’s length negotiations between the Company and the Investor with reference to the market price of the SHK Shares as well as the Proposed Distribution under the Tian An Restructuring. The conversion price of the Mandatory Convertible Notes and the subscription price of the Warrants above are considered and negotiated on a post-distribution basis. The Mandatory Convertible Note would be mandatorily convertible into new SHK Shares, while the Warrant is exercisable at the discretion of its holder. Therefore, the Warrant exercise price is negotiated between the parties to be at 25% premium to the conversion price of the Mandatory Convertible Note. The Proposed Distribution involves distributing 1.309 APL Shares for every SHK Share held, on the basis of 1,752,148,077 SHK Shares in issue as at the Latest Practicable Date. For illustrative purposes, based on the closing price per APL Share of HK$1.66 as at 16th April, 2010 (being the last trading day prior to the date of the Subscription Agreement), the value of the Proposed Distribution per SHK Share is approximately HK$2.173. However, SHK Shareholders should note that the value of Proposed Distribution per SHK Share is determined by the market price per APL Share from time to time prior to the Proposed Distribution.

The total proceeds from the issue of the Mandatory Convertible Notes and the Warrants will be HK$1,708,000,000 (before deduction of expenses) which will be paid by the Investor to the Company on the Closing Date and a further amount of HK$427,000,000 would be received by the Company if the Warrants are exercised in full. It is intended that all the proceeds will be used to fund the development, distribution and/or provision of consumer finance services by the Group (‘‘Permitted Businesses’’). However, the Board has not finalized and adopted a business plan for the Permitted Businesses. If the approved business plan (which may be modified by the Board from time to time as it considers appropriate) requires less capital than the amount of proceeds, the Board shall determine how best to deploy the remaining proceeds in such a way that it considers to be in the Company’s best interest and deploy them accordingly. If the capital is idle because of timing issue, to maximize return for the Group, the Company may use the proceeds for the Group’s general working capital purposes and would manage them in a responsible way such that they can be funneled back for the purpose of the Permitted Businesses as and when required in accordance with then prevailing business plan.

The Subscription not only provides the new capital to expand the Company’s consumer finance business but also enable the Company to leverage on the Investor’s network and expertise to develop the Group’s business. Therefore, the Subscription is considered in the interest of the SHK Shareholders despite the dilution effect as a result of the Subscription.

The Board has not considered a pro-rata issue of securities to the SHK Shareholders as it would not accrue the benefits of the Subscription to the Company, in particular, Investor’s network and expertise in developing the Group’s business.

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LETTER FROM THE BOARD

Fund Raising Activities in the Past Twelve Months

The Company has not undertaken any fund raising activities in the past twelve months immediately prior to the Latest Practicable Date except that the Company allotted 50,014,915 SHK Shares on 3rd June, 2009 upon the exercise of subscription rights by certain holders of 2009 Warrants. The total proceeds raised from the allotment of the SHK Shares were HK$294,087,700.20 based on an adjusted subscription price of HK$5.88 per SHK Share, and such proceeds were used for the general working capital of the Group and to reduce the indebtedness of the Company in general as intended.

INFORMATION ABOUT THE INVESTOR AND CVC CAPITAL PARTNERS

Investor

Based on confirmations provided by the Investor, the Investor is a company incorporated in the Cayman Islands on 15th April, 2010, with limited liability. Its principal business is investment holding and it was incorporated specifically for the purpose of making this investment in the Company. The Investor is ultimately owned by funds which are advised by CVC AP, a company incorporated in Hong Kong.

CVC Capital Partners

Based on confirmations provided by the Investor, CVC is one of the world’s largest private equity firms, with approximately US$45 billion in equity funds. Founded in 1981, CVC now has a network of 20 offices and over 220 employees throughout Europe, Asia and the United States. CVC’s current portfolio consists of 52 companies, with aggregate sales of Euro 88 billion and over 300,000 employees. Since 1999, CVC, through CVC AP, has completed 32 investments in the Asia Pacific region. CVC’s previous investments in the financial services sector include:

• . IG Group: UK’s leading provider of speculative investment products

• . Collins Stewart: a leading independent financial advisory group in UK

• . Fraikin: a leading commercial vehicle operational leasing company in Europe

• . Acromas: UK’s leading provider of insurance, financial and travel services

APPOINTMENT OF NEW DIRECTORS

The Investor has given a written notice to the Company to nominate Mr. Ho Chi Kit and Mr. Leung Pak To, Francis for election as non-executive Directors pursuant to the Subscription Agreement. According to Article 105 of the articles of association of the Company, the Board recommended to propose to SHK Shareholders that Mr. Ho Chi Kit and Mr. Leung Pak To, Francis to be appointed as non-executive Directors. Subject to satisfaction of the conditions precedent under the Subscription Agreement, such appointments will be effected on Closing Date. Mr. Ho Chi Kit has given notice to the Company that upon his appointment as a Director, he proposes to appoint Mr. Roy Kuan as his alternate

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in his place during his absence. The proposed appointment of Mr. Roy Kuan as Mr. Ho Chi Kit’s alternate is subject to the approval of the Board. Their biographic information is as follows:

Ho Chi Kit

To be appointed as Non-Executive Director

Mr. Ho Chi Kit, aged 47, is a Partner of CVC AP, the adviser to the investment funds which ultimately own the Investor. Mr. Ho holds a B.S. (Honours) in Computer Science from the University of Manitoba and an M.B.A. from the University of British Columbia. He is also a Chartered Financial Analyst. Mr. Ho has been with CVC AP since 1999 and is currently responsible for CVC’s investment activities in Hong Kong and China. Prior to CVC AP, Mr. Ho was an investment director of Citicorp Everbright China Fund where he actively led the fund’s investments in China. Prior to that, he was the associate investment director of Citicorp Capital Asia Limited and assisted in building a regional investment portfolio for Citicorp in Asia. Mr. Ho is currently the vice chairman of Zhuhai Zhongfu Enterprise Co., Ltd., a Chinese company listed on the Shenzhen Stock Exchange and a non-executive director of Hung Hing Printing Group Limited, a company listed on the Stock Exchange. Save as disclosed herein, he had not held any directorship in any other listed companies in Hong Kong and overseas during the three years preceding the Latest Practicable Date.

As at the Latest Practicable Date, Mr. Ho does not have any interest in SHK Shares within the meaning of Part XV of the SFO. Save as disclosed above, he does not have any relationship with any Directors, senior management, substantial shareholders or controlling shareholders of the Company. Mr. Ho has not entered into any director service contract with the Company. His appointment is subject to retirement by rotation and re-election in accordance with the articles of association of the Company. Mr. Ho is entitled to a Director’s fee with reference to the existing package to the other non-executive Directors which is to be proposed for SHK Shareholders’ approval at the annual general meeting of the Company. Mr. Ho confirmed that there is no other information to be disclosed pursuant to Rule 13.51(2)(h) to (v) of the Listing Rules and there are no matters that need to be brought to the attention of the SHK Shareholders.

Leung Pak To, Francis

To be appointed as Non-Executive Director

Mr. Leung, aged 55, has over 30 years of experience in investment banking, in particular, the field of corporate finance involving capital raising, mergers and acquisitions, corporate restructuring and reorganisation, investments and other general finance advisory activities in Hong Kong and the PRC. Mr. Leung is currently the Chairman (Greater China) of CVC AP, the Vice-Chairman and Managing Director of Yung’s Enterprise Holdings Limited, the Chairman of Luminary Capital Limited and an independent non-executive director of Shanghai Industrial Holdings Limited, a company listed on the Stock Exchange. Mr. Leung was a non-executive director of Zhuhai Zhongfu Enterprise Co., Ltd., a company listed on the Shenzhen Stock Exchange, from 8th November, 2007 to 28th April, 2010. During June 2001 and July 2006, Mr. Leung was Chairman of Citigroup Global Markets in Asia. Prior to Citigroup, he was Chief Executive and Vice Chairman of BNP Paribas Peregrine Ltd. Mr. Leung holds an MBA and an undergraduate degree from the University of Toronto in Canada. Save as disclosed herein, he had not held any directorship in any other listed companies in Hong Kong and overseas during the three years preceding the Latest Practicable Date.

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LETTER FROM THE BOARD

Mr. Leung was a director of Peregine Investment Holdings Limited which went into liquidation on 13th January, 1998. Mr. Leung was also a director of Denway Motors Limited when it committed breaches of the Listing Rules, details of which are stated in the news release made by the Stock Exchange on 7th August, 2003.

As at the Latest Practicable Date, Mr. Leung does not have any interest in SHK Shares within the meaning of Part XV of the SFO. Save as disclosed above, he does not have any relationship with any Directors, senior management, substantial shareholders or controlling shareholders of the Company. Mr. Leung has not entered into any director service contract with the Company. His appointment is subject to retirement by rotation and re-election in accordance with the articles of association of the Company. Mr. Leung is entitled to a Director’s fee with reference to the existing package to the other nonexecutive Directors which is to be proposed for the shareholders’ approval at the annual general meeting of the Company. Mr. Leung confirmed that there is no other information to be disclosed pursuant to Rule 13.51(2)(h) to (v) of the Listing Rules and there are no matters that need to be brought to the attention of the SHK Shareholders.

Roy Kuan

To be appointed as Alternate Director to Mr. Ho Chi Kit

Mr. Roy Kuan, aged 43, is a Managing Partner and Head of Asia of CVC AP, the adviser to the investment funds which ultimately own the Investor. Mr. Kuan has worked at CVC AP and its predecessor firms since 1996. Over that period, he has completed or signed 27 investments in Greater China, Korea, Japan, and Southeast Asia. He served on the board of directors in 17 of these companies. Mr. Kuan holds a BA from Georgetown University and an MBA from the Wharton School University of Pennsylvania. Mr. Kuan was a director of Zhuhai Zhongfu Enterprise Co., Ltd., a company listed on the Shenzhen Stock Exchange, from 8th November, 2007 to 20th October, 2008. Save as disclosed herein, he had not held any directorship in any other listed companies in Hong Kong and overseas during the three years preceding the Latest Practicable Date.

Mr. Kuan, along with board members appointed by the Carlyle Group and PPM Ventures, served as a board director of Mercury Corporation in Korea when it filed for corporate reorganization under Korea’s Corporate Restructuring Act in March 2004. Mr. Kuan, along with board representatives from Francisco Partners and Court Square Capital, was a board director of Magnachip Semiconductor LLC when it filed for bankruptcy protection in the US in June 2009.

As at the Latest Practicable Date, Mr. Kuan does not have any interest in SHK Shares within the meaning of Part XV of the SFO. Save as disclosed above, he does not have any relationship with any directors, senior management, substantial shareholders or controlling shareholders of the Company. Mr. Kuan confirmed that there is no other information to be disclosed pursuant to Rule 13.51(2)(h) to (v) of the Listing Rules and there are no matters that need to be brought to the attention of the SHK Shareholders.

EGM

The notice convening the EGM to be held at Plaza 4, Lower Lobby, Novotel Century Hong Kong, 238 Jaffe Road, Wanchai, Hong Kong at 10:00 a.m. on Friday, 18th June, 2010 at which, among others, ordinary resolutions will be proposed and, if thought fit, passed to approve (i) the Acquisition

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Agreement and the transactions contemplated thereunder including the Proposed Distribution, (ii) the Subscription Agreement and the Issue Documents and the transactions contemplated thereunder including the issue of the Mandatory Convertible Notes and the Warrants and (iii) the appointment of new Directors (conditional upon the approval of the Subscription Agreement and its completion).

As far as the Acquisition Agreement and the transactions contemplated thereunder including the Proposed Distribution are concerned, as APL is (i) the connected person, interested in approximately 62.31% of the issued share capital of the Company; (ii) the guarantor under the Acquisition Agreement; and (iii) the controlling shareholder of the Purchaser and the SEN Issuer, APL is considered to have a material interest which is different from other SHK Shareholders. APL and its associates will be required to abstain from voting at the EGM on the resolution approving the Acquisition Agreement and the transactions contemplated thereunder including the Proposed Distribution (i.e. Resolution 1). As at the Latest Practicable Date, to the best knowledge of the Directors, APL and its associates held a total of 1,091,885,163 SHK Shares (representing approximately 62.31% of the issued share capital of the Company).

Mr. Steven Samuel Zoellner is an independent non-executive director of APL and is also a SHK Shareholder holding 49,200 SHK Shares representing approximately 0.00% of the total issued share capital of SHK as at the Latest Practicable Date. Assuming the Proposed Distribution is approved and completed, 64,402 APL Shares will be issued to Mr. Steven Samuel Zoellner under the SEN pursuant to the Proposed Distribution. As such, Mr. Steven Samuel Zoellner is considered to have a conflict of interest and has abstained from voting at the board meeting of APL approving the Transaction. As Mr. Steven Samuel Zoellner will only receive APL Shares under the SEN on a pro-rata basis in accordance with the Proposed Distribution in his capacity as a SHK Shareholder, the issue of APL Shares to him under the SEN is not considered to be a connected transaction to the Company or APL. Considering Mr. Steven Samuel Zoellner has abstained from voting at the board meeting of APL, he will be entitled to vote at the EGM.

As far as the Subscription is concerned, neither a Director, SHK Shareholder nor any of their associates has a material interest in the Subscription Agreement and the Issue Documents and the transactions contemplated thereunder, no SHK Shareholder is required to abstain from voting at the EGM on the resolutions approving (i) the Subscription Agreement and the Issue Documents and the transactions contemplated thereunder including the issue of the Mandatory Convertible Notes and the Warrants; and (ii) the appointment of new Directors (conditional upon the approval of the Subscription Agreement and its completion) (i.e. Resolutions 2, 3 and 4).

The votes at the EGM shall be taken by poll. An announcement will be made by the Company after the EGM regarding the results of the EGM.

A form of proxy for use at the EGM is enclosed. SHK Shareholders are advised to read the notice of the EGM and to complete the accompany form of proxy for use at the EGM in accordance with the instructions printed thereon and return the same to the share registrar of the Company, Tricor Secretaries Limited at 26/F, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong as soon as practicable but, in any event, not less than 48 hours before the time appointed for holding the EGM or any adjourned meeting (as the case may be). Completion and return of the form of proxy will not preclude the SHK Shareholders from attending and voting at the EGM in person or at any adjourned meeting thereof (as the case may be) in person should they so wish.

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CLOSURE OF REGISTER OF MEMBERS OF THE COMPANY

For the purpose of the determination of the entitlements to attend and vote at the EGM, and (in the event that the Acquisition Agreement and the transactions contemplated thereunder including the Proposed Distribution are approved at the EGM) in order to establish entitlements to the Proposed Distribution, the register of members of the Company will be closed on Monday, 14th June 2010 to Friday, 18th June 2010, both dates inclusive. In order to qualify for attending and voting at the EGM and (in the event that the Acquisition Agreement and the transactions contemplated thereunder including the Proposed Distribution are approved at the EGM) in order to qualify for the Proposed Distribution, all completed transfer forms accompanied by the relevant share certificates must be lodged with the share registrar of the Company, Tricor Secretaries Limited at 26/F, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong, not later than 4:00 p.m. on Friday, 11th June 2010. The record date for the Proposed Distribution will be on Friday, 18th June, 2010. The actual distribution date will be further announced by the Company.

In the event that the Acquisition Agreement and the transactions contemplated thereunder including the Proposed Distribution are not approved at the EGM, the record date for the payment of the final dividend of the Company of HK$0.16 per SHK Share will also be on Friday, 18th June, 2010. The actual payment date of such final dividend (if any) will be further announced by the Company.

LISTING RULES IMPLICATION

Since APL is the controlling shareholder of the Company on the one hand and the Purchaser and the SEN Issuer are wholly-owned subsidiaries of APL on the other hand, APL, the Purchaser and the SEN Issuer are therefore connected persons of the Company. Accordingly, the Transaction constitutes a connected transaction of the Company. As one or more applicable Percentage Ratio(s) in respect of the Transaction is more than 25% but less than 75%, the Transaction also constitutes a major transaction of the Company. As such, the Transaction is subject to the announcement, reporting and independent shareholders’ approval requirements of Chapters 14 and 14A of the Listing Rules. A single resolution will be proposed at the EGM to approve the Transaction and the Proposed Distribution. As APL is considered to have a material interest which is different from other SHK Shareholders so far as the Transaction is concerned, APL and its associates will be required to abstain from voting at the EGM on such resolution.

As the SEN is to be issued to the Company (which is not a connected person of AGL and APL) in satisfaction of the consideration payable by APL under the Transaction, any issue and allotment of APL Shares pursuant thereto upon distribution of the SEN by the Company to any SHK Shareholder who happens to be a connected person of AGL and APL will not constitute a connected transaction for the Company as the Proposed Distribution is to be made by the Company to SHK Shareholders as pro-rata entitlement to securities in the capacity as SHK Shareholders and there is no transaction between AGL and/or APL and such SHK Shareholders.

Mr. Mak Pak Hung, a director of AGL, holds 5,000 SHK Shares as beneficiary of trust under the SHK Employee Ownership Scheme as at the Latest Practicable Date. Mr. Steven Samuel Zoellner, an independent non-executive director of APL, holds 49,200 SHK Shares as at the Latest Practicable Date. Save for Mr. Mak Pak Hung and Mr. Steven Samuel Zoellner, there is no SHK Shareholder, who is a connected person of AGL and/or APL as at the Latest Practicable Date. The issue and allotment of APL

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LETTER FROM THE BOARD

Shares under the SEN to Mr. Mak Pak Hung and Mr. Steven Samuel Zoellner will not constitute connected transactions for AGL or APL or the Company as they will only receive APL Shares as prorata entitlement to the APL Shares in their capacity as SHK Shareholders.

As at the Latest Practicable Date, the Company has four independent non-executive Directors, namely Mr. David Craig Bartlett, Mr. Alan Stephen Jones, Mr. Carlisle Caldow Procter and Mr. Peter Wong Man Kong. Mr. David Craig Bartlett is also an independent non-executive director of AGL, and Mr. Alan Stephen Jones is also an independent non-executive director of APL and AGL, hence they are not considered to be sufficiently independent to be members of the Independent Board Committee. Accordingly, the Independent Board Committee, comprising Mr. Carlisle Caldow Procter and Mr. Peter Wong Man Kong, has been formed to advise the Independent Shareholders on the Transaction and the Proposed Distribution. Centurion has been appointed to advise the Independent Board Committee and the Independent Shareholders on the Transaction and the Proposed Distribution.

The Company is an indirect non wholly-owned subsidiary of APL, which in turn is a non whollyowned subsidiary of AGL. Under Rule 14.29 of the Listing Rules, a reduction of shareholding percentage following an allotment of new shares by a subsidiary of a listed issuer may be regarded as a deemed disposal by that listed issuer, which may fall to be treated as a notifiable transaction for the purposes of Chapter 14 of the Listing Rules. The Subscription constitutes a deemed disposal to AGL and APL in the Company. As far as the Subscription is concerned, and as far as the Directors are aware of, neither a Director, SHK Shareholder nor any of their associates has a material interest in the Subscription Agreement and the transactions contemplated thereunder and no SHK Shareholder is required to abstain from voting at the EGM on resolutions approving (i) the Subscription Agreement and the Issue Documents and the transactions contemplated thereunder including the issue of the Mandatory Convertible Notes and the Warrants; and (ii) the appointment of new Directors (conditional upon the approval of the Subscription Agreement and its completion).

Despite the reduction of shareholding percentage, the Company will continue to be a subsidiary of each of APL and AGL.

Under Rule 13.36(1)(a) of the Listing Rules, the allotment and issue of the Mandatory Convertible Notes and Warrants pursuant to the Subscription Agreement are conditional upon approval being obtained from the SHK Shareholders.

Applications will be made by the Company to the Stock Exchange for the listing of, and permission to deal in, the SHK Shares to be issued on conversion of the Mandatory Convertible Notes and upon exercise of the Warrants.

PROPERTY VALUATION REPORT

The Company and AGL have applied to the Stock Exchange for consent to include in their respective circulars a summary of the valuation report with respect to the property interests of the Group in the PRC through its holding of the Tian An Interest as at 31st March, 2010 (comprising the text of a letter and a summary of values prepared by Norton Appraisals Limited) (the ‘‘Summary Report’’) in lieu of a full valuation report (comprising the text of a letter, a summary of values and the valuation certificates) (the ‘‘Full Report’’), which is required pursuant to Rules 14.66(11), 14A.59(6), 5.02 and

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LETTER FROM THE BOARD

5.03 of the Listing Rules. On 14th May, 2010, the Stock Exchange has granted a waiver to the Company and AGL from strict compliance with the requirements set out in Rules 14.66(11), 14A.59(6), 5.02 and 5.03 of the Listing Rules, on the condition that the Company and AGL will:

• (1) include the Summary Report in this circular and in the circular of AGL;

• (2) publish the Full Report (both the English and Chinese version) on the websites of the Company, AGL and the Stock Exchange, and include proper reference to such websites in this circular and in the circular of AGL;

• (3) make the Full Report available for public inspection;

• (4) send hardcopies of the Full Report (either the English or Chinese version) to shareholders within 10 business days upon their written requests; and

• (5) disclose details of the waiver granted by the Stock Exchange including the circumstances and conditions imposed in this circular and the circular of AGL.

In compliance with the conditions set by the Stock Exchange, the Company has made the following arrangements:

• (1) the Summary Report is included in this circular;

• (2) the Full Report is published on the website of the Company at www.shkf.com and on that of the Stock Exchange at www.hkexnews.hk;

• (3) the Full Report is available for inspection at such place and time as set out in Appendix III to this circular under the section headed ‘‘Documents Available for Inspection’’;

• (4) hardcopies of the Full Report will be sent to SHK Shareholders whose names appear on the register of members of the Company (the ‘‘Registered Shareholders’’) within 10 business days of receipt of a written request made by such Registered Shareholders, detailed procedures for which are set out below:

• (a) a Registered Shareholder may by written notice (the ‘‘Notice’’) sent to the registered office of the Company, being 12th Floor, CITIC Tower, 1 Tim Mei Avenue, Central, Hong Kong (for the attention of Ms. Hester Wong Lam Chun, Company Secretary) to request for one English or Chinese hardcopy (but not both), or in the case of a Registered Shareholder who is a depositary and acts in such capacity (the ‘‘Depositary’’), such reasonable number of hardcopies of the English and/or Chinese Full Report;

• (b) for an individual Registered Shareholder: the Notice shall specify (i) the choice of language of the Full Report; and (ii) the correspondence address for which the Full Report shall be sent. Each individual Registered Shareholder may request for one copy of the Full Report only in either English or Chinese;

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LETTER FROM THE BOARD

• (c) for a Depositary: the Notice shall specify (i) the choice of language of the Full Report(s); (ii) the correspondence address for which the Full Report(s) shall be sent; and (iii) such reasonable number of hardcopies of the Full Report in the specified language;

• (d) each Registered Shareholder is entitled to make one request for the Full Report only; and any Notice received after 5:00 p.m. on 18th June, 2010 will not be effective;

• (e) upon receipt of a Notice, the Company will, at its own costs, despatch such number of Full Report(s) as requested in such Notice or as such Registered Shareholder is entitled, within 10 business days by ordinary post to the relevant Registered Shareholder at his/ her/their own risks;

• (f) if the Registered Shareholder fails to elect the choice of language of the Full Report, only an English Full Report will be sent to such Registered Shareholder;

• (g) if the Registered Shareholder fails to specify the correspondence address or if such correspondence address is, in the reasonable opinion of the Company, illegible, the Full Report will only be sent to the address as recorded in the register of members of the Company; and

• (h) if a Registered Shareholder who is a Depositary fails to specify such reasonable number of hardcopies of the Full Report, only one hardcopy of the Full Report will be sent to such Registered Shareholder.

RECOMMENDATION

Your attention is drawn to:

• (a) the letter from the Independent Board Committee, the text of which is set out on page 44 of this circular;

• (b) the letter from Centurion, the text of which is set out on pages 45 to 71 of this circular.

The Independent Shareholders are advised to read the aforesaid letters before deciding as to how to vote at the EGM.

The Independent Board Committee, having taken into account the advice of Centurion, considers that the terms and conditions of the Acquisition Agreement and the transactions contemplated thereunder including the Proposed Distribution, whilst not in the ordinary course of business of the Group, are of normal commercial terms, and are fair and reasonable and in the interests of the Company and the SHK Shareholders as a whole. Accordingly, the Independent Board Committee recommends the Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the EGM to approve the Acquisition Agreement and the transactions contemplated thereunder including the Proposed Distribution.

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LETTER FROM THE BOARD

Taking into account the letter from the Independent Board Committee and all other factors stated above as a whole, the Directors are of the view that the Acquisition Agreement and the transactions contemplated thereunder including the Proposed Distribution, whilst not in the ordinary course of business of the Group, are of normal commercial terms, and are fair and reasonable and in the interests of the Company and the SHK Shareholders as a whole. Accordingly, the Directors recommend the Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the EGM to approve the Acquisition Agreement and the transactions contemplated thereunder including the Proposed Distribution.

Further, the Board believes that the terms of the Subscription Agreement and the transactions contemplated thereunder including the issue of the Mandatory Convertible Notes and the Warrants and the proposed appointment of new Directors (conditional upon the approval of the Subscription Agreement and its completion) are not in the ordinary course of business of the Company but are on normal commercial terms and are fair and reasonable and in the interests of the Company and the SHK Shareholders as a whole. As such, the Board recommends the SHK Shareholders to vote for the ordinary resolutions to be proposed at the EGM to approve (i) the Subscription Agreement and the transactions contemplated thereunder, including the allotment and issue of SHK Shares pursuant to the Mandatory Convertible Notes and the Warrants under the special mandate; and (ii) the appointment of new Directors (conditional upon the approval of the Subscription Agreement and its completion).

Yours faithfully For and 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

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(Incorporated in Hong Kong with limited liability)

(Stock code: 86)

24th May, 2010

To the Independent Shareholders

Dear Sir or Madam,

MAJOR AND CONNECTED TRANSACTION

PROPOSED DISPOSAL OF INTEREST IN TIAN AN CHINA INVESTMETNS COMPANY LIMITED TO ALLIED PROPERTIES (H.K.) LIMITED AND

PROPOSED DISTRIBUTION IN SPECIE

We have been appointed as members of the Independent Board Committee to advise you in respect of the Acquisition Agreement and the transactions contemplated thereunder including the Proposed Distribution, details of which are set out in the ‘‘Letter from the Board’’ in the circular of the Company dated 24th May, 2010 (the ‘‘Circular’’), of which this letter forms part. Capitalised terms used in this letter shall have the same meanings as defined in the Circular unless the context requires otherwise.

Your attention is drawn to the letter of advice from Centurion as set out on pages 45 to 71 of the Circular, which contains its advice and recommendation to us and the Independent Shareholders in respect of the Transaction and the Proposed Distribution, as well as the principal factors and reasons for its advice and recommendation.

Having considered the factors and reasons considered by, and the opinion of, Centurion as stated in the aforementioned letter of advice, we are of the opinion that the terms and conditions of the Acquisition Agreement and transactions contemplated thereunder including the Proposed Distribution, whilst not in the ordinary course of business of the Group, are of normal commercial terms, and are fair and reasonable and in the interests of the Company and the SHK Shareholders as a whole. We therefore recommend the Independent Shareholders to vote in favour of the resolution to approve the Acquisition Agreement, the transactions contemplated thereunder and the Proposed Distribution at the EGM.

Yours faithfully, INDEPENDENT BOARD COMMITTEE

SUN HUNG KAI & CO. LIMITED

Carlisle Caldow Procter

Independent non-executive Director

Peter Wong Man Kong

Independent non-executive Director

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LETTER FROM CENTURION

The following is the text of the letter of advice to the Independent Board Committee and the Independent Shareholders from Centurion dated 24 May 2010 for incorporation in this circular:

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24 May 2010

To the Independent Board Committee and

The Independent Shareholders of Sun Hung Kai & Co. Limited

Dear Sirs,

MAJOR AND CONNECTED TRANSACTION

RELATING TO PROPOSED DISPOSAL OF INEREST IN TIAN AN CHINA INVESTMENTS COMPANY LIMITED TO ALLIED PROPERTIES (H.K.) LIMITED INVOLVING PROPOSED DISTRIBUTION IN SPECIE

INTRODUCTION

We have been engaged to advise the Independent Board Committee and the Independent Shareholders with respect to the terms and conditions of the Transaction under the Acquisition Agreement (including the Proposed Distribution), details of which are outlined in the ‘‘Letter From The Board’’ set out from pages 8 to 43 of the circular dated 24 May 2010 to the SHK Shareholders (‘‘Circular’’) of which this letter forms a part.

We have been appointed to give an opinion as to whether the terms and conditions of the Acquisition Agreement, the transactions contemplated thereunder including the Proposed Distribution are of normal commercial terms, and are fair and reasonable and in the interests of the Company and the SHK Shareholders as a whole. Capitalised terms used in this letter shall have the same meanings as defined in the Circular unless the context otherwise requires.

The Company announced on 26 April 2010 the entering into of the Acquisition Agreement and for the reasons set out in the ‘‘Letter From The Board’’, the Transaction contemplated thereunder constitutes ‘‘Major and Connected Transaction’’ of the Company under the Listing Rules. As such, the Transaction is subject to the approval of the Independent Shareholders by way of a poll at the EGM. As APL is considered to have material interest which is different from other SHK Shareholders so far as the Transaction is concerned, APL and its associates will be required to abstain from voting at the EGM on the relevant resolution approving the Acquisition Agreement and the transactions contemplated thereunder including the Proposed Distribution. In this regard, please refer to the section headed ‘‘Listing Rules Implication’’ as set out in the ‘‘Letter From The Board’’ for further details.

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LETTER FROM CENTURION

The Independent Board Committee comprising Mr. Carlisle Caldow Procter and Mr. Peter Wong Man Kong, has been formed to advise the Independent Shareholders in relation to the terms and conditions of the Transaction and the Proposed Distribution. The Company has four independent nonexecutive Directors, namely Mr. David Craig Bartlett, Mr. Alan Stephen Jones, Mr. Carlisle Caldow Procter and Mr. Peter Wong Man Kong. Mr. David Craig Bartlett is also an independent non-executive director of AGL, and Mr. Alan Stephen Jones is also an independent non-executive director of APL and AGL, hence they are not considered to be sufficiently independent to be members of the Independent Board Committee.

Independent Shareholders who are Overseas Shareholders should note that their ability to participate in the Proposed Distribution is subject to, and may be limited by, the laws and regulations of their respective jurisdictions. For further details, please refer to the sections headed ‘‘Subsequent Sale Restriction’’, ‘‘Overseas Shareholders’’ and ‘‘Taxation’’ as respectively set out in the ‘‘Letter From The Board’’.

BASIS OF OUR OPINION

In formulating our opinion and recommendation, we have relied on the accuracy of the information, opinions and representations contained in the Circular and other documents (including but not limited to the Acquisition Agreement) which have been provided to us by the executive Directors of the Company and for which they take full responsibility. The Directors have declared in a responsibility statement set out in Appendix III to the Circular that they collectively and individually accept full responsibility for the accuracy of the information contained in the Circular. We have also assumed that all statements, information, opinions and representations made or referred to in the Circular were true at the time they were made and continued to be true at the date of this Circular. We have also assumed that all statements of belief, opinion and intention made by the Directors in the Circular are reasonably made after due and careful enquiry.

In respect of the financial information of each of the Group, Tian An Group, APL Group and AGL group, we have relied principally on their respective audited and/or unaudited financial statements, such financial information of the Group are prepared by the Company and for which the Directors take full responsibility. We have also sought and obtained confirmation from the Directors that, having made all reasonable enquiries and to the best of their knowledge and belief, no material facts have been omitted from the information provided and/or referred to in the Circular.

We have no reason to doubt the truth, accuracy and completeness of the information and representations provided to us by the Directors. We consider that we have reviewed sufficient financial information and have taken reasonable steps as required under Listing Rule 13.90, which enable us to reach an informed view and to justify reliance on the accuracy of the information as contained in the Circular and to provide us with a reasonable basis for our opinion. We have not, however, conducted any form of independent or in-depth investigation into the businesses and affairs or the prospects of each of the Group, Tian An Group, APL Group and AGL group, or any of their respective subsidiaries, associates or parent companies, nor have we independently verified any of the information supplied to us.

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LETTER FROM CENTURION

PRINCIPAL FACTORS AND REASONS CONSIDERED

In formulating our recommendation, we have taken into consideration the following principal factors and reasons:

1. Background

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, the provision of medical and healthcare services and the provision of financial services.

The Group is principally engaged in the businesses of (i) wealth management and brokerage; (ii) asset management; (iii) corporate finance; (iv) consumer finance; and (v) principal investments, that is, the provision of strategic investments and properties holding and rental through its interest in Tian An. The following is an overview of the breakdown in segment revenue of the Group for the year ended 31 December 2009 by activity as extracted from the Company’s annual report dated 29 March 2010:

Table A: Segment revenue of the Group for the year ended 31 December 2009

Wealth management, brokerage and margin finance Corporate finance Asset management Consumer finance Principal investment - Others	(HK$’ million) 1,269.0 185.4 104.5 1,511.7 27.0 3,097.6	(%) 41.0 6.0 3.3 48.8 0.9
		100.0

For the year ended 31 December 2009, segment results of the Group arising from the above segment revenues were approximately HK$1,170.5 million. Such segment revenues and results do not include the results of Tian An and its subsidiaries attributable to the Group, which were being accounted for using the equity method of accounting, details of which are set out in the section headed ‘‘6. The Remaining Group’’ below.

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LETTER FROM CENTURION

Tian An is principally engaged in the development of high-end apartments, villas, office buildings and commercial properties, property investment, property management and hotel operation, as well as the manufacture and sale of construction materials in China. The following is an overview of the breakdown in segment revenue of Tian An and its subsidiaries for the year ended 31 December 2009 by activity as extracted from its annual report dated 19 March 2010:

Table B: Segment revenue of Tian An and its subsidiaries for the year ended 31 December 2009

Sale of completed properties Rental income Sale of cement, clinker and construction materials Income from golf course operation Income from hotel and property management	(HK$’ million) 627.5 216.8 150.0 25.1 64.1 1,083.5	(%) 57.9 20.0 13.9 2.3 5.9
		100.0

Pursuant to the Acquisition Agreement, the Purchaser had agreed to acquire, and the Company had agreed to sell, the Tian An Interest, being 573,589,096 Tian An Shares, representing approximately 38.06% of the existing total issued share capital of Tian An. There is no change in ultimate control of Tian An as a result of the Transaction. The Executive has given a waiver to dispense with APL’s obligation to make a general offer for the Tian An Shares as a result of the Transaction pursuant to Note 6 to Rule 26.1 of the Takeovers Code.

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LETTER FROM CENTURION

Following Completion, the Company will remain a listed company and the principal business of the Remaining Group will be the provision of financial services. Tian An will continue to be equity accounted for in the consolidated financial statements of APL following Completion. A simplified overview of the approximate shareholding structure amongst AGL, APL, the Company and Tian An as at the date of the Circular and before Completion are set out below:

As at the date of the Circular:

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LETTER FROM CENTURION

The shareholding of the relevant companies after Completion and after the Proposed Distribution would be as follows:

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2. Reason for the Transaction

As set out in the ‘‘Letter From The Board’’, upon Completion, (i) the Company will be more focused on its financial services business; (ii) the Independent Shareholders will receive APL Shares pursuant to the Proposed Distribution; and (iii) APL will hold approximately 38.06% equity interest in Tian An directly, instead of holding through the Company, its 62.31% owned subsidiary.

The Board takes the view that the Company should focus on its financial service businesses upon Completion and also believes that the Transaction will enable investors to compare the Company with other financial institutions, and hence would probably enhance value for SHK Shareholders through rerating of the SHK Shares as well as through the Proposed Distribution. The Board believes that the current market price of the SHK Shares does not fully reflect the value of its holding of the Tian An Interest due to its existing corporate structure and business mix of financial services business and property development business, and the Transaction will unlock value for the SHK Shareholders and allow them to realise part of this value by way of holding the Tian An Interest through holding APL Shares after the Proposed Distribution upon Completion.

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LETTER FROM CENTURION

3. Tian An

The asset proposed to be disposed of is the Tian An Interest, being 573,589,096 Tian An Shares, representing approximately 38.06% of the existing total issued share capital of Tian An. For the five years ended 31 December 2009, financial summary of the audited consolidated financial results of Tian An and its subsidiaries as extracted from its 2009 annual report dated 19 March 2010 is as follows:

Table C: Five-Year financial summary of Tian An and its subsidiaries

For the year ended 31 December Results Revenue Profit attributable to owners of the Company Assets and Liabilities Total assets Total liabilities Minority interest Equity attributable to owners of the Company Per Tian An Share Basis Basic earnings per share (HK cents) Dividend per share (HK cents) Net assets per share (HK$)*	2005 (HK$’000) 1,397,100 202,540 9,900,964 4,827,973 416,889 4,656,102 23.1 — 5.3	2006 (HK$’000) 889,302 51,496 10,864,898 4,513,721 407,173 5,944,004 4.39 2.5 5.3	2007 (HK$’000) 863,188 702,976 14,846,012 5,582,904 390,549 8,872,559 54.55 10.0 6.1	2008 (HK$’000) 473,329 711,087 14,936,023 4,797,702 291,234 9,847,087 46.98 3.0 6.7	2009 (HK$’000) 1,083,528 1,067,379
					18,985,033 7,599,516 501,201
					10,884,316
					70.84 7.0 7.6

(* Note: as extracted from the 2009 annual report, the amounts included minority interests.)

As set out in its annual report, in 2009, Tian An and its subsidiaries took advantage of the recovery of the PRC property market and acquired two completed property projects in Shanghai, including Shanghai Racquet Club & Apartments and Shanghai Forest Villas. Tian An also purchased the operations of Shanghai Allied Cement Holdings Limited, which holds three cement factories in the mainland. During 2009, Tian An and its subsidiaries continued to dispose of their non-core assets.

Total attributable sales of Tian An and its subsidiaries amounted to 91,700 m[2] in 2009, compared to 93,400 m[2] in 2008. A total attributable gross floor area of approximately 34,700 m[2] (2008: 180,700 m[2] ) of residential/commercial properties was completed during the year under review, representing a decrease of 81%. By the end of 2009, a total attributable gross floor area of approximately 550,400 m[2] (2008: 403,800 m[2] ) was under construction, representing a 36% increase over 2008.

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LETTER FROM CENTURION

Rental income of Tian An and its subsidiaries increased by 27% as compared with 2008. Following the end of the fixed rent period for the shopping arcades of Nanjing Tian An International Building at the end of 2008, this property was said to be contributing significantly to the cashflow and profit of Tian An and its subsidiaries.

Tian An and its subsidiaries were also continuing to negotiate with local authorities to increase their landbank in Dongguan (1,450 mu), Beijing (500 mu), Tianjin (1,960 mu), Chongqing (380 mu), Wuxi (375 mu) and Nantong (280 mu), where they intend to build integrated business parks. As at 2009 year end, the group currently had a landbank of total gross floor area of approximately 7,142,500 m[2] total gross floor area attributable to the group was approximately 5,763,100 m[2] , consisting of 366,800 m[2] of completed investment properties and 5,396,300 m[2] of properties for development.

As at 31 December 2009, Tian An and its subsidiaries were in a strong financial position with total bank balances and cash or cash equivalents of over HK$3.0 billion.

As stated in the Tian An’s last annual report of 2008, its share price was then at a substantial discount to the group’s book net asset value. However, as set out in its 2009 Annual Report, Tian An’s managing director stated that (i) since stating Tian An’s intention to repurchase shares, its share price had increased by approximately 170%; and (ii) it would continue to monitor the discount between its share price and its book net asset value closely and should the discount widen, Tian An would give further consideration to its shares buy-back for cancellation purpose.

4. Consideration of the Transaction

4.1 Basis of consideration

The consideration of the Transaction is to be satisfied by the issuance of the SEN to the Company, which will confer the right to call for the issue of 2,293,561,833 fully paid APL Shares. Based on the closing price of APL Shares of HK$1.66 per APL Share on 16 April 2010 (being the last trading day prior to the date of the Acquisition Agreement), and 573,589,096 Tian An Shares held by the Company, Tian An Interest is valued at approximately HK$3,807.31 million. The consideration for the Transaction represents an exchange ratio of approximately 4 APL Shares for every 1 Tian An Share held by the Company.

The above consideration for the Transaction values the Tian An Interest at approximately HK$6.64 per Tian An Share, which is determined after arm’s length negotiation between the contractual parties after taking into account, inter alia (i) the carrying value of Tian An Interest in the Company’s financial statements less its share of reserve of Tian An as at 31 December 2009 of approximately HK$3,804.24 million; (ii) the closing price of the Tian An Shares of HK$5.10 per Tian An Share on 16 April 2010; and (iii) the closing price of the APL Shares of HK$1.66 per APL Share on 16 April 2010.

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LETTER FROM CENTURION

As set out in the ‘‘Letter From The Board’’, the premium of the consideration for the Transaction is determined and agreed upon by the contractual parties based on the ratio of approximate 4 APL Shares over 1 Tian An Share when comparing both their respective market value and audited consolidated net asset value as at 31 December 2009 as follows:

	For Every Four	For Every
	APL Shares	Tian An Share	Premium
Market value as at 16 April 2010	HK$6.64	HK$5.10	30.2%
Audited consolidated net asset value
as at 31 December 2009	HK$8.32	HK$7.22	15.2%

The APL Board is optimistic about the long term prospects of the PRC property market, and considers a premium as necessary to be attractive enough for the Independent Shareholders to vote for the Transaction at the EGM, where APL and its associates will have to abstain from voting.

However, the actual value of the consideration for the Transaction, being 2,293,561,833 fully paid APL Shares to be issued under the SEN, will depend on the market price of APL Shares on the Completion Date, and may or may not represent a premium to the value of the Tian An Shares as at the Completion Date. Based on the above, the Directors are of the view that the consideration for the Transaction is fair and reasonable.

We have noted the abovementioned ‘‘premium‘‘ of the consideration for the Transaction and concur with the Board that such consideration is fair and reasonable. At HK$6.64 per Tian An Share, such consideration also represents:

• . a historical price-earnings multiples ratio (‘‘PER’’) of approximately 9.37 times, based on the audited consolidated earnings per Tian An Share of HK$0.7084 for the year ended 31 December 2009; and

• . a price to historical audited net asset value (‘‘PBR’’) of approximately 0.92 time, based on the audited consolidated net assets per Tian An Share of HK$7.22 attributable to shareholders of Tian An as at 31 December 2009.

In trying to determine the fairness and reasonableness of such consideration per Tian An Share, we have considered the following:

• (i) As set out above, the HK$6.64 consideration per Tian An Share under the Transaction is with reference to the closing price per Tian An Share of HK$5.10 and also to the closing price per APL Share of HK$1.66 (both on 16 April 2010). The reference to such market prices is in view of the reorganisation nature of the Transaction and that following Completion, there is no change in ultimate control of Tian An as a result of the Transaction. That is, APL will hold approximately the 38.06% equity interest in Tian An directly instead of holding through the Company, its 62.31% owned subsidiary.

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LETTER FROM CENTURION

• (ii) In light of the above, we are of the view that market comparables involving other listed issuers whose shares are listed on the Stock Exchange and are principally engaged in owning and developing properties in the PRC, based on their respective market share prices, could potentially provide a reasonable basis of comparison to the consideration offered per Tian An Share. We should however point out that different accounting policies and provisions, operating environments, business models, location of properties and other individual characteristics of different companies may have an impact on our findings below.

• (iii) For the comparison in the table below, we have also taken the view that market capitalisation is a relevant factor and as such, in order to avoid comparables which are either too small or too large, we have limited the range of such comparables from HK$3,000 million to no more than HK$15,000 million in terms of market capitalisation, which we believe are likely to be more comparable to Tian An.

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LETTER FROM CENTURION

Table D: Market comparables with respect to PER/PBR

Company Stock Code Closing share price as at 16 April 2010 Market Cap. (based on closing share prices as at 16 April 2010 (HK$) (HK$ million) China Aoyuan Property Group Limited 3883 1.35 3,527 Central China Real Estate Limited 832 2.03 4,060 China Properties Group Limited 1838 2.51 4,541 Sinolink Worldwide Holdings Limited 1168 1.31 4,639 Tomson Group Limited 258 3.47 4,676 Zhong An Real Estate Limited 672 2.63 5,109 Yuzhou Properties Company Limited 1628 2.48 5,952 Fantasia Holdings Group Co., Limited 1777 1.65 8,042 China South City Holdings Limited 1668 1.35 8,100 Shenzhen Investment Limited 604 2.68 9,472 Powerlong Real Estate Holdings Limited 1238 2.50 10,219 Guangzhou R&F Properties Co. Ltd. (H Shares) 2777 11.94 12,122 Kaisa Group Holdings Limited 1638 2.66 13,300 Yuexiu Property Company Limited 123 1.96 13,990 Mingfa Group (International) Company Limited 846 2.44 14,640 Highest Lowest Weighted average Tian An 28 5.10 7,685	PER based on the latest published audited results (times) 9.4 8.9 0.5 3.6 3.3 11.1 3.8 14.6 10.7 9.1 2.4 11.7 17.1 N.A. (Loss) 11.4 17.1 0.5 10.0 7.2	PBR based on the latest published audited N.A.V. (times) 0.55 1.15 0.16 0.77 0.51 1.06 1.42 1.89 1.04 0.76 1.10 2.01 1.77 1.05 2.80
		2.80
		0.16
		1.52
		0.71

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Our view

Based on the above, whilst the PER and PBR of Tian An are below the weighted average, they are still within the high/low range of such comparables. The fact that Tian An Share price was trading at a substantial discount to its net asset value had been known for sometimes and indeed, it was the subject of a discussion in the Managing Director’s Statement in Tian An 2009 annul report, who also acknowledged the approximately 170% improvement in share price of late but nevertheless, reserved the share repurchase option should such discount widen. The fact that PER of Tian An is below the weighted average of market comparables as set out in the above table is also consistent with its PBR discount finding. That said, on balance, the above market comparables, in general, do support the underlying value of the consideration offered per Tian An Share as such consideration are in line with the pricing of other market comparables whose shares are trading, just like the Tian An Shares, on a market price basis.

4.2 Tian An Share prices

The closing price of the Tian An Shares of HK$5.10 per share on 16 April 2010 (being the last trading date prior to the date of the Acquisition Agreement) represents:

• (i) a discount of approximately 1.0% over the closing price of HK$5.15 per Tian An Share for the 10 trading days up to and including 16 April 2010;

• (ii) a premium of approximately 3.2% over the average closing price of HK$4.94 per Tian An Share for the 30 trading days up to and including 16 April 2010;

• (iii) a premium of approximately 5.4% over the average closing price of HK$4.84 per Tian An Share for the 60 trading days up to and including 16 April 2010;

• (iv) a premium of approximately 5.1% over the average closing price of HK$4.85 per Tian An Share for the 90 trading days up to and including 16 April 2010;

• (v) a premium of approximately 5.8% over the average closing price of HK$4.82 per Tian An Share for the 120 trading days up to and including 16 April 2010;

• (vi) a premium of approximately 7.4% over the closing price of HK$4.75 per Tian An Share as at the Latest Practicable Date; and

• (vii) a discount of approximately 29.4% over the audited consolidated net asset value per Tian An Share of approximately HK$7.22 as at 31 December 2009.

For the purpose of this letter of independent advice, we have chosen the period from 1 April 2009 (being the first trading day of the 12 calendar months prior to the date of the Acquisition Agreement) to the Latest Practicable Date as the review period (‘‘Review Period’’) for the share price performance of Tian An Shares (and also of the APL Shares below), which was chosen on the basis that such time frame should be adequate to cover various recent milestone events reasonably expected to affect the market share prices and trading volume.

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During the Review Period, the highest closing price of the Tian An Shares was HK$5.35 per Tian An Share as quoted on the Stock Exchange on 8 April 2010 and the lowest closing price of the Tian An Shares was HK$2.13 per Tian An Share as quoted on the Stock Exchange on 1 April 2009. Independent Shareholders should note that as a result of the global financial turmoil in 2008, Hang Seng Index closed at the record low of 11,015 on 27 October 2008, which may explain such low closing price per Tian An Share in April 2009, as global equity markets were just beginning to recover then. The rising trend of Tian An Shares during the Review Period is likely a reflection of the improving market sentiments in general, and the robust PRC property market in particular. The closing price of HK$5.10 per Tian An Share on 16 April 2010 represents a 139% increase from the record low of HK$2.13 on 1 April 2009. The following table summarises the highest and the lowest closing prices of the Tian An Shares during the Review Period:

Table E: Highest and lowest Tian An Share prices comparison during the Review Period

			Weighted
	Highest	Lowest	average daily
Month/Period	closing price	closing price	closing price
	(HK$)	(HK$)	(HK$)
2009
April	2.66	2.13	2.50
May	4.19	2.78	3.46
June	4.28	3.55	4.00
July	4.59	3.66	4.12
August	4.45	4.12	4.23
September	4.72	4.18	4.41
October	5.12	4.50	4.93
November	4.80	4.61	4.69
December	5.10	4.69	4.79
2010
January	5.00	4.64	4.88
February	4.94	4.60	4.75
March	5.00	4.70	4.88
April	5.35	4.99	5.21
May (up to the Latest Practicable Date)	5.15	4.70	4.84

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The following chart illustrates the consideration under the Transaction which values the Tian An Interest at approximately HK$6.64 per Tian An Share, as compared to the daily closing price of the Tian An Shares as quoted on the Stock Exchange during the Review Period:

Chart I: Closing Tian An Share prices chart during the Review Period

==> picture [37 x 196] intentionally omitted <==

==> picture [42 x 83] intentionally omitted <==

Source: data extracted from the website of the Stock Exchange - www.hkex.com.hk

Our view

During the Review Period, the Tian An Share was trading below the approximately HK$6.64 consideration offered per Tian An Share which as mentioned above, was recovering from the global financial turmoil in 2008 and as illustrated above, such recovery was also tracking the recovery of Hang Seng Index throughout the Review Period, as market sentiment improved. The fact that the Tian An Share price, while recovered from its lows and have been tracking the Hang Seng Index upward movements, is still below the approximately HK$6.64 consideration offered supports our view that the HK$6.64 consideration is fair and reasonable, based on Tian An Share price performance during the Review Period.

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4.3 Tian An Share volume

The following table highlights the number of Tian An Shares traded on the Stock Exchange in each calendar month during the Review Period:

Table F: Monthly trading volume of the Tian An Shares during the Review Period

			Percentage
			of total	Percentage
			monthly	of total
			trading	monthly
	Total		volume to	trading
	monthly		total issued	volume to
	trading	Average daily	share capital	public float
Month/Period	volume	trading volume	(Note 1)	(Note 2)
	(Shares)	(Shares)	(%)	(%)
2009
April	60,412,653	3,020,633	4.01	6.40
May	60,375,900	3,177,679	4.01	6.40
June	27,495,869	1,249,812	1.82	2.91
July	30,705,760	1,395,716	2.04	3.25
August	31,383,728	1,494,463	2.08	3.33
September	16,971,379	771,426	1.13	1.80
October	7,776,509	388,825	0.52	0.82
November	18,255,851	869,326	1.21	1.94
December	15,001,448	681,884	1.00	1.61
2010
January	11,124,491	556,225	0.74	1.19
February	6,296,885	349,827	0.42	0.67
March	59,357,640	2,580,767	3.94	6.36
April	11,677,652	834,118	0.78	1.25
May (up to the Latest
Practicable Date)	5,531,366	502,851	0.37	0.59

Note 1: Based on 1,506,769,491 Tian An Shares, being the total number of Tian An Shares in issue as at the Latest Practicable Date

Note 2: Based on 933,180,395 Tian An Shares, being the total number of Tian An Shares held by independent shareholders counted as public float (i.e. excluding the Company) as at the Latest Practicable Date and for the months September, November and December 2009, on the exact number of Tian An Shares held by independent shareholders, calculated on a daily basis

The above table shows that the number of Tian An Shares traded on the Stock Exchange per month during the Review Period as compared to the number of total issued Tian An Shares held in public hands (i.e. excluding those shareholdings held by Group) ranges from 0.67% to 6.40%. The surge in the trading volume of the Tian An Shares in the months of April and May 2009 was due

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to larger volumes of Tian An Shares traded in general, and in particular, on 2, 3, 6 April 2009 and on 7, 18 and 20 May 2009. Trading was suspended on 22 to 26 May 2009, pending the release of a major transaction and price-sensitive information announcement. Trading volumes began to recede beginning in June 2009. The increase in the trading volume of the Tian An Shares was again noted in March 2010, which was due to the larger volume of Tian An Shares traded on 31 March 2010. In so far as liquidity is concerned, total trading volume of the Tian An Shares for the twelve months ended 31 March 2010 was approximately 37%, based on the aggregate monthly trading volume to public float.

4.4 Value unlocking anaylsis

We noted the Board’s view that the Transaction will unlock value for the SHK Shareholders and allow them to realize part of their value in APL Shares through the Proposed Distribution. We have reviewed the value to be unlocked under the Transaction with the consolidated net asset value of the Remaining Group attributable to the SHK Shareholders of HK$8,586.5 million as disclosed in the section headed ‘‘Financial Impact of the Transaction’’ in the ‘‘Letter From The Board’’ and divided by the total number of SHK Shares in issue, our findings are as follows:

Table G: Value unlocking analysis

Market closing price per APL Share Proposed Distribution value of APL Shares at closing price (1.309 x market closing price per APL Share) Net asset value of the Remaining Group Total value per SHK Share (a) Closing price per SHK Share on 16 April 2010 (b) Estimated theoretical enhancement in value per SHK Share ((a-b)/b)	Proposed distribution of 1.309 APL Shares per SHK Share (HK$) (HK$) (HK$) (HK$) (HK$) 1.50 1.60 1.66 1.70 1.80 1.96 2.09 2.17 2.23 2.36 4.90 4.90 4.90 4.90 4.90 6.86 6.99 7.07 7.13 7.26 6.60 6.60 6.60 6.60 6.60 3.94% 5.91% 7.12% 8.03% 10.00%	Proposed distribution of 1.309 APL Shares per SHK Share (HK$) (HK$) (HK$) (HK$) (HK$) 1.50 1.60 1.66 1.70 1.80 1.96 2.09 2.17 2.23 2.36 4.90 4.90 4.90 4.90 4.90 6.86 6.99 7.07 7.13 7.26 6.60 6.60 6.60 6.60 6.60 3.94% 5.91% 7.12% 8.03% 10.00%
		2.36 4.90
		7.26 6.60 10.00%

(* Note: closing prices on 16 April 2010, being the last trading date prior to the date of the Acquisition Agreement. Other closing prices are to provide ‘‘bracketing’’ effects based on two possible closing prices (HK$0.10 apart) above and below the HK$1.66 for illustration purpose.)

(Source: Market closing share prices are from the website of the Stock Exchange — www.hkex.com.hk

Distribution value of APL Shares and net asset value of the Remaining Group per SHK Share are from, or derived from, the Circular and the 2009 annual report of the Company respectively)

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As set out above, based on the closing price per APL Share on 16 April 2010, the Transaction and the Proposed Distribution will give rise to an estimated theoretical enhancement in the value of each SHK Share by approximately 7.12%. Given that the actual declared value of the consideration will depend on the market price of APL Shares on the Completion Date, and therefore, the precise theoretical enhancement value per SHK Share will only be known on the Completion Date, we have included in the table above a range of possible closing prices per APL Share, to give a general overview of the other scenarios in relation to our theoretical enhancement in value analysis.

Our view

The above findings illustrate that such theoretical enhancement in value remains positive under the various scenarios as compared to the range of market values per APL Share as assumed in the above table. We are therefore in concurrence with the Board’s view that the Transaction will unlock value for the SHK Shareholders and allow them to realize part of their value in APL Shares through the Proposed Distribution.

5. Payment-in-kind using APL Shares and the Proposed Distribution

Pursuant to the Acquisition Agreement, among other things, the Purchaser has agreed to acquire, and the Company has agreed to sell, the Tian An Interest, being 573,589,096 Tian An Shares, representing approximately 38.06% of the existing total issued share capital of Tian An.

The consideration of the Transaction is to be satisfied by the issuance of the SEN to the Company, which will confer the right to call for the issue of 2,293,561,833 fully paid APL Shares to its holder. Based on the closing price of APL Shares of HK$1.66 per APL Share on 16 April 2010 and 573,589,096 Tian An Shares held by the Company, the Tian An Interest is valued at approximately HK$3,807.31 million. The consideration for the Transaction represents an exchange ratio of approximately 4 APL Shares for every 1 Tian An Share held by the Company.

Holders of APL Shares issued and allotted under the SEN will be entitled to dividends proposed or declared after Completion. For the avoidance of doubt, the APL Shares (which would fall to be issued and allotted under the SEN) will not be entitled to the final dividend distribution of HK$0.015 per APL Share, which was proposed by APL Board on 1 April 2010 for the financial year ended 31 December 2009.

It is agreed that, prior to Completion, all rights and entitlements to dividends, distributions and return of capital declared, paid or made by Tian An accrued or accruing to the Tian An Interest, including but not limited to the final dividend of HK$0.07 per Tian An Share proposed by Tian An Board on 19 March 2010 for the financial year ended 31 December 2009, shall belong to the Company absolutely.

The SEN confers on the holder the Allotment Right. The SEN to be issued to the Company at Completion will carry an Allotment Right for 2,293,561,833 APL Shares. Any APL Shares (to be issued pursuant to the SEN) will be issued and credited as fully paid and rank pari passu in all respects among themselves and with all other APL Shares outstanding as at the date of issue and be entitled to all dividends and other distributions on the record date of which falls on a date on or after the date of issue.

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The Board proposes to recommend for approval by the Independent Shareholders at the EGM, that upon Completion, for each SHK Share, 1.309 fully paid APL Shares be allotted under the SEN, on the basis of 1,752,148,077 SHK Shares issued and outstanding as at the Latest Practicable Date. Assuming that Completion takes place, the Proposed Distribution will take the following form:

		Type of
Form of Distribution	Amount	Distribution
Final dividend of HK$0.16 per SHK Share proposed	Approximately	SEN
by the Company for the year ended 31 December	HK$280 million
2009 (Note)
Special dividend	Value depends on	SEN
	the market price of
	each APL Share on
	the Completion Date

Note: The proposed final dividend has been calculated with reference to the number of SHK Shares in issue as at 29 March 2010, (HK$0.16 x 1,752,148,077 issued SHK Shares at 29 March 2010 = approximately HK$280 million).

In the event that the Transaction is not approved by the Independent Shareholders at the EGM, or if the Transaction has been approved at the EGM but Completion does not take place, the final dividend of the Company of HK$0.16 per SHK Share may be paid in cash with a scrip alternative whereby SHK Shareholders may elect to receive the final dividend wholly or partly by the allotment of new SHK Shares in lieu of cash, in which case further details will be announced by the Company. Further, if such resolution is not passed at the EGM, approval will be sought by the Board from the SHK Shareholders for the declaration of the final dividend of the Company at the annual general meting to be convened after the EGM. For the avoidance of doubt, we are not required to opine on the final dividend of HK$0.16 per SHK Share.

Out of the total of 2,293,561,833 APL Shares falling to be issued under the SEN, APL or its subsidiaries would have an entitlement of 1,429,277,678 APL Shares representing approximately 23.47% of the total issue share capital of APL (based on its current holding of 1,091,885,163 SHK Shares). Such entitlement will be cancelled upon distribution of the SEN to APL or its subsidiaries and the APL Shares relating thereto will not be allotted. Accordingly, only up to 864,284,155 APL Shares will be allotted to the Independent Shareholders. The 864,284,155 APL Shares represent approximately 14.19% of the existing issued share capital of APL, and approximately 12.43% of the issued share capital of APL as enlarged by the issue of such APL Shares under the SEN.

If Independent Shareholders believe in the future prospects of APL Shares, in particular, because of the Transaction, they could elect to continue holding the APL Shares allotted to them according to their entitlements.

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5.1 APL Share price

At a closing price of HK$1.66 per APL Share on 16 April 2010 (being the last trading date prior to the date of the Acquisition Agreement), such share price represents:

• . a historical PER of approximately 5.32 times, based on the audited consolidated earnings per APL Share of HK$0.312 for the year ended 31 December 2009; and

• . a historical PBR of approximately 0.8 time, based on the audited consolidated net assets per APL Share of approximately HK$2.08 attributable to the shareholders of APL as at 31 December 2009.

The closing price of the APL Shares of HK$1.66 per share on 16 April 2010 also represents:

• (i) a premium of approximately 1.2% over the closing price of HK$1.64 per APL Share for the 10 trading days up to and including 16 April 2010;

• (ii) a premium of approximately 9.2% over the average closing price of HK$1.52 per APL Share for the 30 trading days up to and including 16 April 2010;

• (iii) a premium of approximately 16.1% over the average closing price of HK$1.43 per APL Share for the 60 trading days up to and including 16 April 2010;

• (iv) a premium of approximately 17.7% over the average closing price of HK$1.41 per APL Share for the 90 trading days up to and including 16 April 2010;

• (v) a premium of approximately 20.3% over the average closing price of HK$1.38 per APL Share for the 120 trading days up to and including 16 April 2010; and

• (vi) a premium of approximately 5.1% over the closing price of HK$1.58 per APL Share as at the Latest Practicable Date.

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During the Review Period, the highest closing price of the APL Shares was HK$1.78 per APL Share as quoted on the Stock Exchange on 27 April 2010 and the lowest closing price of the APL Shares was HK$0.60 per APL Share as quoted on the Stock Exchange on 1 April 2009. Independent Shareholders should again note that as a result of the global financial turmoil in 2008, Hang Seng Index closed at the record low of 11,015 on 27 October 2008, which may explain such low closing price per APL Share on 1 April 2009, as global equity markets had just begun to recover. The closing price of HK$1.66 per APL Share on 16 April 2010 represents a 177% increase from the record low of HK$0.60 on 1 April 2009. The following table summarises the highest and the lowest closing prices of the APL Shares during the Review Period:

Table H: Highest and lowest APL Share prices comparison during the Review Period

			Weighted
			average
	Highest	Lowest	daily closing
Month/Period	closing price	closing price	price
	(HK$)	(HK$)	(HK$)
2009
April	0.90	0.60	0.71
May	1.08	0.99	1.04
June	1.08	0.98	1.04
July	1.05	0.96	1.01
August	1.06	0.94	1.02
September	1.24	1.02	1.17
October	1.26	1.15	1.21
November	1.41	1.18	1.31
December	1.46	1.33	1.41
2010
January	1.45	1.26	1.38
February	1.40	1.30	1.37
March	1.62	1.37	1.49
April	1.78	1.60	1.71
May (up to the Latest Practicable Date)	1.72	1.58	1.67

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The following chart illustrates the consideration under the Transaction which values the Tian An Interest at approximately HK$6.64 per Tian An Share, as compared to the daily closing price of the APL Shares as quoted on the Stock Exchange during the Review Period:

Chart II: Closing APL Share prices chart during the Review Period

Source: data extracted from the website of the Stock Exchange — www.hkex.com.hk

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APL Share price has also been increasing as set out in Chart I above. In terms of absolute percentage increase from lowest to the closing share prices on 16 April 2010 during the Review Period, APL Share price performance of 177% was superior to the 139% increase of Tian An Share. The following chart better illustrates APL Share price performance when compared to those of Tian An and the Company.

Chart III: Changes in APL Share price vs. Tian An Share price, the SHK Share price and Hang Seng Index

==> picture [412 x 268] intentionally omitted <==

Source: data extracted from the website of the Stock Exchange — www.hkex.com.hk

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5.2 APL Shares trading volume

The following table highlights the number of APL Shares traded on the Stock Exchange in each calendar month during the Review Period:

Table I: Monthly trading volume of the APL Shares during the Review Period

			Percentage
			of total	Percentage
			monthly	of total
			trading	monthly
	Total		volume to	trading
	monthly		total issued	volume to
	trading	Average daily	share capital	public float
Month/Period	volume	trading volume	(Note 1)	(Note 2)
	(Shares)	(Shares)	(%)	(%)
2009
April	65,789,320	3,289,466	1.16	8.11
May	78,059,743	4,108,408	1.38	9.60
June	55,782,452	2,535,566	0.94	5.26
July	20,823,740	946,534	0.34	1.33
August	17,481,110	832,434	0.29	1.12
September	63,443,160	2,883,780	1.04	4.07
October	16,865,720	843,286	0.28	1.08
November	24,229,710	1,153,796	0.40	1.55
December	20,875,810	948,900	0.34	1.34
2010
January	6,319,357	315,968	0.10	0.40
February	13,548,680	752,704	0.22	0.87
March	20,713,200	900,574	0.34	1.33
April	30,159,570	2,154,255	0.50	1.93
May (up to the Latest
Practicable Date)	14,921,204	1,356,473	0.25	0.96

Note 1: Based on 6,088,832,430 APL Shares, being the total number of APL Shares in issue as at the Latest Practicable Date

Note 2: Based on 1,560,712,120 APL Shares, being the total number of APL Shares held by independent shareholders counted as public float (i.e. excluding Group) as at the Latest Practicable Date and for the month of May, June 2009, on the exact number of APL Shares held by independent shareholders, calculated on a daily basis

The above table shows that the number of APL Shares traded on the Stock Exchange per month during the Review Period as compared to the number of total issued APL Shares held in public hands (i.e. excluding those shareholdings held by Group) ranges from 0.40% to 9.60%. The surge in the trading volume of the APL Shares in the months of April, May, June and September 2009 was due to larger volume traded on a particular trading date, in particular, on 2 April, 29 May, 1 June, 9 and 10 September 2009. Total trading volume of the APL Shares during the twelve

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months period ended 31 March 2010 amounted to approximately 36%, based on the aggregate monthly trading volume to public float. Thus such liquidity of the APL Shares is, in our view, comparable to the liquidity of 37% to public float as recorded by the Tian An Shares during the same twelve months period.

6. The Remaining Group

Before Completion, the financial contribution of Tian An and its subsidiaries are accounted for using the equity method of accounting and the table below contains disclosures extracted from the notes to, and audited income statements of, the Group for the year ended 31 December 2009 as set out in its 2009 annual report dated 29 March 2010 and certain input from management of Group:

Table J: Consolidated income statement highlights of the Group for the year ended 31 December 2009

Revenue Segment results Loss on warrants of a listed associate (Tian An) Share of results of associate (Tian An) Share of results of other associates Share of results of jointly controlled entities Profit before taxation	(HK$’ million) 3,097.6 1,170.5 (1.2) 425.4 14.6 1.3 1,610.6

Following Completion, the Company will remain a listed company and the principal business of the Remaining Group will be the provision of financial services. Therefore, Tian An and its subsidiaries will no longer be accounted for by the Group and on the basis that had Completion been taken place prior to 31 December 2009, the above HK$425.4 million results of Tian An (and the HK$1.2 million loss on warrants) would not have been equity accounted for by the Group.

7. Possible financial effects of the Transaction

As the actual declared value of the consideration will depend on the market price of APL Shares on the Completion Date and therefore, some of the financial impacts as set out below and profit or loss arising from the Transaction on the Company will only be known on the Completion Date. Thus insofar as those financial impacts which will only be known on the Completion Date, the following are for illustration purpose only.

7.1 Possible effects on earnings

As set out in the ‘‘Letter From The Board’’, according to the 2009 audited consolidated financial statements of the Company, the profit attributable to owners of the Company was approximately HK$1,258.4 million. The Board estimated that, upon Completion, the Group would recognize a gain on disposal of approximately HK$34.1 million, representing the difference

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between (i) the value of consideration based on the closing price of APL Share on 16 April 2010 of HK$3,807.3 million plus the 2009 final dividend proposed by Tian An Board to be received by the Company of HK$40.1 million and (ii) the carrying amount of the Tian An Interest (after netting off the share of reserves of Tian An) as at 31 December 2009 of HK$3,804.2 million plus estimated expense (including, but not limited to, stamp duty, fees for professional advisers for relevant documentation and execution for the Transaction) to be incurred of HK$9.1 million.

Such gain on disposal will be subject to changes depending on the share price movement of the APL Share and will be determined based on APL Share price on the Completion Date and taking into account the change in the Group’s share of results of Tian An for the period from 1 January 2010 to the Completion Date as required by applicable Hong Kong Financial Reporting Standards.

As the actual financial impact and profit and loss arising from the Transaction will only be ascertainable on the Completion Date, the following table further gives an overview of other possible effects on earnings, based on the same assumptions as estimated by the Board for the $34.1 million gain and the ‘‘bracketing’’ effects of market prices scenarios per APL Share (two possible closing prices (HK$0.10 apart) above and below the HK$1.66).

Table K: Effects on earnings based on different scenarios

Market closing price per APL Share Possible effects on one-off accounting gain or (loss) as a result of the Transaction	1.50 (HK$332.8 million)	1.60 (HK$103.5 million)	1.66* 1.70 HK$34.1 million HK$125.9 million	1.80
				HK$355.2 million

7.2 Possible effects on assets

According to the 2009 audited consolidated financial statements of the Company, the net asset value of the Group as at 31 December 2009 was approximately HK$12,683.4 million (net of minority interests). Upon completion of the Tian An Restructuring, the net asset value of the Remaining Group will be decreased to approximately HK$8,586.5 million. In so far as total assets and total liabilities are concerned, the assets of the Group will be decreased by approximately HK$4,087.8 million and the liabilities of the Group will be increased by approximately HK$9.1 million. These effects are due to the Transaction and the distribution in specie of the SEN. Such reduction in asset values is however, not affected by any change in the APL Share prices upon Completion. Thus the main reason for such decline in net asset is due to the Proposed Distribution.

Our view

Given that the reduction in net assets is due to the proposed distribution in specie of the SEN (and the resulting decline in equity attributable to SHK Shareholders), and that such distribution is to all SHK Shareholders and is indeed part of this proposed reorganisation of the APL group involving the Group, its parent and subsidiary companies, we are of the view that such effect is fair and reasonable.

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LETTER FROM CENTURION

7.3 Effect on gearing

Based on the same assumptions as estimated by the Board in determining the possible effects on assets and liabilities of the Group, the gearing of the Remaining Group, defined as total interest-bearing liabilities over equity attributable to Shareholder, will be increased from 35.6% to 52.6% after the Proposed Distribution, on the basis of the audited consolidated statement of financial position of the Group as at 31 December 2009. This 52.6.% gearing will remain unchanged based on the different market prices scenarios per APL Share as set out in Table K above.

Our view

Given that the increase in gearing is due to the proposed distribution in specie of the SEN (and the resulting decline in equity attributable to SHK Shareholders), and that such distribution is to all SHK Shareholders and is indeed part of this proposed reorganisation of the APL Group, we are of the view that such effect is fair and reasonable.

SUMMARY

The Transaction is driven by the proposed reorganization of the APL Group’s interest in the Tian An Interest. There is no change in ultimate control of Tian An as a result of the Transaction and the Executive has given a waiver to dispense with APL’s obligation to make a general offer for the Tian An Shares as a result of the Transaction pursuant to Note 6 to Rule 26.1 of the Takeovers Code. Upon Completion, the Company will be more specifically focused on its financial services business whereas APL will hold approximately 38.06% equity interest in Tian An directly, instead of holding through the Company.

Based on our findings set out in Table G above, we concur with the Board that the Transaction will crystallize value for the Company through the realization of the market value for its holding in Tian An and the Transaction will unlock value for the SHK Shareholders and allow them to realize part of their value in APL Shares through the Proposed Distribution. This is because under the closing price of HK$1.66 per APL Share, the estimated theoretical enhancement in value per SHK Share is approximately 7.12%, when compared to its closing price of HK$6.60 on 16 April 2010.

The consideration for the Transaction of 4 APL Shares values the Tian An Interest at approximately HK$6.64 per Tian An Share, which is above the closing price of HK$5.10 per Tian An Share on 16 April 2010. The underlying audited net asset value of the 4 APL Shares amounted to approximately HK$8.3 (i.e. HK$2.08 per APL Share as set out in the sub-section above headed ’’APL Share Price’’), which is above the audited consolidated net assets value per Tian An Share of HK$7.22 as set out in sub-section headed ‘‘Basis of consideration’’, both as at 31 December 2009.

The market share price and volume movements of each of APL Shares and the SHK Shares have tracked Hang Seng Index’s rising trends over the Review Period and thus, these two shares have achieved considerable price recovery from their respective lows. Based on their respective closing prices on 16 April 2010, APL’s market capitalization at approximately HK$10.1 billion is slightly larger than Tian An’s HK$7.7 billion. The closing price per APL Share of HK$1.66 on 16 April 2010 represents a 177% increase from the record low of HK$0.60 on 1 April 2009 during the Review Period up to 16 April 2010 and thus, such price performance is comparable to the 139% increase per Tian An Share

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LETTER FROM CENTURION

during the same period. The liquidity which measures turnover to public float in so far as each of the APL Share and Tian An Share are concerned confirms that they have similar liquidity features and are thus comparable to each others. We are therefore of the view that APL represents a comparable property company, when viewed against Tian An, if Independent Shareholders, who will receive APL Shares under the Proposed Distribution, believe in the future prospects of APL and elect to continue to hold such APL Shares. Alternatively, Independent Shareholders may also dispose of their APL Shares received under the Proposed Distribution and reinvest the proceeds in Tian An Shares, should they be attracted by the specialised PRC focus as represented by the Tian An Shares.

Insofar as financial effects of the Transaction is concerned, based on the closing price per APL Share of HK$1.66 on 16 April 2010, the one-off accounting gain of approximately HK$34.1 million is not something to opine on, it is what it is, an accounting gain (or loss, if applicable). Given that the reduction in net assets and the increase in gearing are due to the proposed distribution in specie of the SEN (and the resulting decline in equity attributable to SHK Shareholders) and that such distribution is to all SHK Shareholders, we are of the view that these financial effects are fair and reasonable.

RECOMMENDATION

Having considered the principal factors and reasons set out above, we consider that the terms and conditions of the Acquisition Agreement, the transactions contemplated thereunder including the Proposed Distribution, whilst not in the ordinary course of business of the Group, are of normal commercial terms, and are fair and reasonable and in the interests of the Company and the SHK Shareholders as a whole. We therefore, advise the Independent Board Committee to recommend the Independent Shareholders to vote in favour of the ordinary resolution approving the Acquisiton Agreement and the transactions contemplated thereunder including the Proposed Distribution at the EGM.

Yours faithfully, for and on behalf of

Centurion Corporate Finance Limited Baldwin LEE Managing Director

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

1. FINANCIAL AND TRADING PROSPECTS

The Group’s financial and trading performance has continued its momentum from the second half of 2009. The operating environment has so far remained favorable. For the Hong Kong stock market as a whole, the average daily turnover for the first three months of the year was HK$65 billion, compared against HK$45 billion for the first three months of 2009 and HK$62 billion for the whole of 2009. The Group’s consumer finance business also enjoyed good growth as it benefited from significant growth in its China business as well as generally lower rates of provision as a result of falling bankruptcy petitions and improved economic conditions in Hong Kong. However, management is cognizant of possible challenges brought by the operational environment where there is a delicate balance between low interest rates and rising inflation. Central banks may decide to raise rates thereby dampening sentiment should the rate of inflation increase beyond expectations.

As a Group we shall remain vigilant on maintaining a strong, liquid balance sheet and focus on constantly improve our quality of service and operational efficiencies. We believe this focus will help us weather the potential fluctuations brought by economic cycles.

2. INDEBTEDNESS STATEMENT

At the close of business on 31st March, 2010, being the latest practicable date for the purpose of this indebtedness statement prior to the printing of this circular, the Group had outstanding borrowings of approximately HK$5,399.8 million, comprising secured bank loans and overdrafts of approximately HK$916.2 million, unsecured bank loans of approximately HK$2,205.3 million, secured unlisted threeyear bonds of HK$500 million issued to a fellow subsidiary, unsecured borrowings of approximately HK$1,564.8 million from fellow subsidiaries, unsecured borrowings of approximately HK$8.4 million from associates, unsecured borrowings of approximately HK$6.4 million from investee companies, unsecured borrowing of approximately HK$0.4 million from a minority equity holder, and unsecured other borrowings of approximately HK$198.3 million. The Group’s banking facilities were secured by charges over respective assets, including investment properties, leasehold interests in land and buildings with an aggregate carrying value of HK$208.5 million, and listed investments belonging to the Group and margin clients with fair values of HK$4,841.2 million. The secured three-year bonds were secured by the entire issued share capital of a subsidiary with a carrying value of HK$4,359.6 million.

In addition, the Group had contingent liabilities in the sum of approximately HK$7.5 million in respect of indemnities on banking guarantees made available to a clearing house and regulatory body and other guarantees. There were also contingent liabilities arising from the litigation regarding to proceedings relating to Chang Zhou Power Development Company Limited, further particulars of which are set out in the section headed ‘‘Litigation’’ in Appendix III to this circular.

Foreign currency amounts have been translated into Hong Kong dollars at the rates of exchange prevailing at the close of business on 31st March, 2010.

Save as aforesaid and apart from intra-group liabilities, the Group did not have any outstanding mortgages, charges, debenture or other loan capital or bank overdrafts, loans or other similar indebtedness or hire purchase commitments, liabilities under acceptances or acceptance credits or any guarantees or other material contingent liabilities at the close of business on 31st March, 2010.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

3. WORKING CAPITAL

The Board, after due and careful consideration, is of the opinion that, taking into consideration of the current cash and bank balances as well as the available loan facilities to the Group, the Group will have sufficient working capital for at least twelve months from the date of this circular.

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SUMMARY PROPERTY VALUATION REPORT

APPENDIX II

The following is the text of a letter and summary of values as extracted from the valuation report received from Norton Appraisals Limited, an independent property valuer, in connection with their valuation as at 31st March, 2010 of the property interests of the SHK Group in the PRC for the purpose of inclusion in this circular.

==> picture [140 x 35] intentionally omitted <==

Unit 01, 21/F, Emperor Group Center 288 Hennessy Road Wanchai, Hong Kong Tel: (852) 2810 7337 Fax: (852) 2810 6337

24th May, 2010

The Directors Sun Hung Kai & Co. Limited 11/F, Tower II, Admiralty Centre 18 Harcourt Road Hong Kong

Dear Sirs,

In accordance with the instructions from Sun Hung Kai & Co. Limited and its subsidiaries (hereinafter together referred to as the ‘‘SHK Group’’) for us to value properties held by Tian An China Investments Company Limited and its subsidiaries (hereinafter referred to as the ‘‘Tian An Group’’) in the People’s Republic of China (hereinafter referred to as the ‘‘PRC’’) (as more particularly described in the attached summary of values), we confirm that we have carried out inspections, made relevant enquiries and obtained such further information as we consider necessary for providing you with our opinion of values of such property interests as at 31 March 2010 (hereinafter referred to as the ‘‘date of valuation’’) for public documentation purpose.

Our valuations are our opinion of value of the property on the basis of ‘‘Market Value’’ which we would define as intended to mean ‘‘the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion’’.

In valuing the property interests, we have assumed that the Tian An Group has valid and enforceable title to the property interests which are freely transferable, and has free and uninterrupted right to use the same, for the whole of the land use terms granted subject to payment of annual land use fees and all requisite premium payable have been fully paid.

Our valuations have been made on the assumption that the Tian An Group sells the property interests on the open market without the benefit of a deferred terms contract, leaseback, management agreement or any similar arrangement which could serve to affect the value of such property interests.

In the course of our valuation of the property interests, we have assumed that transferable land use rights in respect of the properties for respective specific terms at nominal annual land use fees have been granted and that any premium payable has already been fully paid. We have relied on the advice given by the Tian An Group and its legal adviser on PRC law (the ‘‘PRC Legal Adviser’’), 福建天衡聯合律師

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SUMMARY PROPERTY VALUATION REPORT

APPENDIX II

事務所上海分所 (Tenet & Partners Law Firm (Shanghai Branch)), regarding the title to each of the property interests. For the purpose of our valuation, we have assumed that the Tian An Group has legal and enforceable title to the property interests in Groups I, II, III, and IV.

In valuing the property interests in Group I which are held under development by the Tian An Group in the PRC, we have valued each of these property interests on the basis that these properties will be developed and completed in accordance with the Tian An Group’s latest development proposals provided to us. We have assumed that all the relevant approvals for the development have been obtained. In arriving at our opinion of values, we have valued them by Direct Comparison Approach by making reference to comparable transactions in the locality and have also taken into account the construction costs that will be expended to complete the developments to reflect the development potential of the properties and the quality of the completed developments. The ‘‘capital value when completed’’ represents our opinion of the aggregate selling prices of the development assuming that it would have been completed at the date of valuation.

In valuing the property interests in Group II which are held for future development by the Tian An Group in the PRC, we have also valued each of these property interests by Direct Comparison Approach assuming sale of each of these property interests in their existing states with the benefit of vacant possession and by making reference to comparable sale evidence as available in the relevant markets.

In valuing the property interests in Group III (except property No. 71) which are held for investment by the Tian An Group in the PRC, we have adopted Investment Approach by taking into account the current rents passing and the reversionary income potential of the tenancies or, wherever appropriate, the Direct Comparison Approach by making reference to comparable sale evidence as available in the relevant market.

In valuing Property No. 71 which is currently operated as a cement-manufacturing plant in Zaozhuang City, Shandong Province, the PRC, we have valued the property interest on the basis of its continued existing use. Due to the nature of buildings and structures constructed, there is no readily identifiable market sales comparable, and the buildings and structures cannot be valued by comparison with cost. The depreciated replacement cost method sums our opinion of the land value of the property in its existing use and the cost to reproduce or replace in new condition the buildings and structures of the property valued in accordance with current construction costs for similar buildings and structures in the locality, with allowance for accrued depreciation as evidenced by observed condition or obsolescence present, whether arising from physical, functional or economic causes.

In valuing the property interests in Group IV which are held for sale by the Tian An Group in the PRC, we have valued each of these property interests by Direct Comparison Approach assuming such property interests are capable of being sold in their existing states and on a strata-titled basis with the benefit of vacant possession and by making reference to comparable sales evidence as available in the relevant markets.

We have inspected the exterior and, where possible, the interior of the properties. During the course of our inspections, we did not note any serious defects. However, no structural survey has been made and we are therefore unable to report as to whether the properties are free from rot, infestation or other defects.

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SUMMARY PROPERTY VALUATION REPORT

APPENDIX II

Furthermore, we did not carry out any site investigations to determine or otherwise the suitability of the ground conditions, the presence or otherwise of contamination and the provision of/or suitability for services, etc. for future development. Our valuations are prepared on the assumption that these aspects are satisfactory and that no extraordinary expenses or delays will be incurred during the construction period.

We have not carried out site measurements to verify the correctness of the site and floor areas in respect of the relevant properties but have assumed that the areas shown on the documents and official site plans handed to use are correct. All dimensions, measurements and areas included in the valuation certificates are based on information contained in the documents provided to us by the Tian An Group and therefore only approximations.

We have relied to a considerable extent on the information provided by the Tian An Group and have accepted advice on such matters as planning approvals, statutory notices, easements, tenures, completion dates of buildings, particulars of occupancy, tenancy summaries, development proposals, construction costs already expended, estimated outstanding construction costs, site and floor areas and all other relevant matter in the identification of the properties.

We have had no reason to doubt the truth and accuracy of the information provided to us by the Tian An Group. We were also advised by the Tian An Group that no material facts have been omitted from the information provided. We consider that we have been provided with sufficient information to reach an informed view, and we have no reason to suspect that any material information has been withheld.

No allowance has been made in our valuations for any charges, mortgages or amounts owing on the property interests nor for any expenses or taxation which may be incurred in effecting a sale. Unless otherwise stated, it is assumed that the property interests are free from encumbrances, restrictions and outgoings of an onerous nature which could affect their values.

In our valuations, we have complied with all the requirements contained in the Chapter 5 and Practice Note 12 to the Rules Governing the Listing of Securities issued by The Stock Exchange of Hong Kong Limited and The HKIS Valuation Standards on Properties (1st Edition) published by The Hong Kong Institute of Surveyors (‘‘HKIS’’).

Unless otherwise stated, all sums stated in our valuations are in Hong Kong dollars. The exchange rate adopted in our valuations are approximately HK$1=RMB0.88 which was approximately the prevailing exchange rate as at the date of valuation.

Our summary of values is enclosed herewith.

Yours faithfully, For and on behalf of Norton Appraisals Limited

Paul M. K. Wong MRICS, MHKIS, RPS (G.P.)

Director

• Note: Mr. Paul M. K. Wong is a Registered Professional Surveyor who has more than 18 years’ experience in valuation of properties in Hong Kong and in the PRC.

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SUMMARY PROPERTY VALUATION REPORT

APPENDIX II

SUMMARY OF VALUES

				Capital value
			Attributable	attributable to
		Capital value	interest to	the SHK Group
		as at	the SHK	as at
No.	Property	31st March, 2010	Group	31st March, 2010
		HK$		HK$
Group I — Property interests held under		development in the PRC
1.	天安東湖花園(Tian An Donghu	$326,000,000	38.06%	$124,075,600
	Garden), Pengjiang District,
	Jiangmen City,
	Guangdong Province,
	the PRC
2.	Part 1 in Phase II of	$371,000,000	38.06%	$141,202,600
	Shanghai Tian An Villa,
	Dongjing Town,
	Songjiang District,
	Shanghai,
	the PRC
3.	Phase I of the Manhattan,	$467,000,000	38.06%	$177,740,200
	the junction of Taihu Main Road and
	Hubin Road,
	Binhu District,
	Wuxi City,
	Jiangsu Province,
	the PRC
4.	Sale Office of Shanghai Tian An	$53,000,000	38.06%	$20,171,800
	Place located at Caobao Road,
	Qibao Town,
	Minhang District,
	Shanghai,
	the PRC
5.	Phase I Parts 1 and 2 of Shanghai	$623,000,000	38.06%	$237,113,800
	Tian An Place located at
	Caobao Road,
	Qibao Town,
	Minhang District,
	Shanghai,
	the PRC

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SUMMARY PROPERTY VALUATION REPORT

APPENDIX II

				Capital value
			Attributable	attributable to
		Capital value	interest to	the SHK Group
		as at	the SHK	as at
No.	Property	31st March, 2010	Group	31st March, 2010
		HK$		HK$
6.	Phase IV Part 2 of Nantong Tian An	$152,000,000	38.06%	$57,851,200
	Garden, Gongnong Road,
	Nantong City,
	Jiangsu Province,
	the PRC
7.	Phase V Part 1 of Nantong	$138,000,000	38.06%	$52,522,800
	Tian An Garden,
	Gongnong Road,
	Nantong City,
	Jiangsu Province,
	the PRC
8.	Phase II Part 1 of Tian An Villa,	$217,000,000	38.06%	$82,590,200
	Wujin District,
	Changzhou City,
	Jiangsu Province,
	the PRC
9.	Phase I of Changzhou Tian An	$232,000,000	19.03%	$44,149,600
	Cyber Park,
	Wujin District,
	Changzhou City,
	Jiangsu Province,
	the PRC
10.	Phase II of Tian An Longgang Cyber	$423,000,000	19.03%	$80,496,900
	Park at Zhong Xin Cheng,
	Longgang District,
	Shenzhen,
	the PRC
11.	Phase V of Guangzhou Tian An	$206,000,000	19.03%	$39,201,800
	Panyu Hi-Tech Ecological Park,
	Longmei Village,
	Shiqiao Town,
	Panyu District,
	Guangzhou City,
	Guangdong Province,
	the PRC

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SUMMARY PROPERTY VALUATION REPORT

APPENDIX II

No. Property Capital value as at 31st March, 2010 Attributable interest to the SHK Group HK$ 12. Phase III Part 2 of Shanghai Elegant Garden, Longxi Road, Changning District, Shanghai, the PRC $790,000,000 22.84% 13. Phase III of Foshan Tian An Nanhai Cyber Park, Jianping Road, Nanhai District, Foshan City, Guangdong Province, the PRC $101,000,000 17.13% Sub-total: $4,099,000,000 Group II — Property interests held for future development in the PRC 14. Shanghai Tian An Sunshine Peninsula, Moganshan Road, Putuo District, Shanghai, the PRC $1,852,000,000 38.06% 15. Remaining Site of Shanghai Tian An Place located at Caobao Road, Qibao Town, Minhang District, Shanghai, the PRC $1,497,000,000 38.06% 16. Remaining site in Phase II of Shanghai Tian An Villa, Dongjing Town, Songjiang District, Shanghai, the PRC $1,471,000,000 38.06%

Capital value attributable to the SHK Group as at 31st March, 2010 HK$ $180,436,000 $17,301,300

$1,254,853,800 $704,871,200 $569,758,200 $559,862,600

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SUMMARY PROPERTY VALUATION REPORT

APPENDIX II

				Capital value
			Attributable	attributable to
		Capital value	interest to	the SHK Group
		as at	the SHK	as at
No.	Property	31st March, 2010	Group	31st March, 2010
		HK$		HK$
17.	Remaining site of Changchun Tian An	$212,000,000	38.06%	$80,687,200
	City One, High-Tech Industrial
	Development Zone,
	Changchun City,
	Jilin Province,
	the PRC
18.	Phase IV of Dalian Tian An Seaview	$161,000,000	22.84%	$36,772,400
	Garden,
	Liaohe West Road,
	Economic and Technical Development
	Zone,
	Dalian City,
	Liaoning Province,
	the PRC
19.	Phase II of the Manhattan,	$287,000,000	38.06%	$109,232,200
	the junction of Taihu Main Road and
	Hubin Road,
	Binhu District,
	Wuxi City,
	Jiangsu Province,
	the PRC
20.	Remaining site of Changzhou	$323,000,000	38.06%	$122,933,800
	Tian An Villa,
	Wujin District,
	Changzhou City,
	Jiangsu Province,
	the PRC
21.	Remaining site of Tian An Longgang	$281,000,000	19.03%	$53,474,300
	Cyber Park at Zhong Xin Cheng,
	Longgang District,
	Shenzhen,
	the PRC

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SUMMARY PROPERTY VALUATION REPORT

APPENDIX II

				Capital value
			Attributable	attributable to
		Capital value	interest to	the SHK Group
		as at	the SHK	as at
No.	Property	31st March, 2010	Group	31st March, 2010
		HK$		HK$
22.	Remaining site of Guangzhou Tian An	$374,000,000	19.03%	$71,172,200
	Panyu Hi-Tech Ecological Park,
	Longmei Village,
	Shiqiao Town,
	Panyu District,
	Guangzhou City,
	Guangdong Province,
	the PRC
23.	Remaining site of	$68,000,000	38.06%	$25,880,800
	Nantong Tian An Garden,
	Gongnong Road,
	Nantong City,
	Jiangsu Province,
	the PRC
24.	Remaining site of Foshan	$90,000,000	17.13%	$15,417,000
	Tian An Nanhai Cyber Park,
	Jianping Road,
	Nanhai District,
	Foshan City,
	Guangdong Province,
	the PRC
25.	A development site of Nanjing Baixia	$838,000,000	38.06%	$318,942,800
	Hi-technology Industrial Development
	Area located at Guanghua Road,
	Shishan Village,
	Baixia District,
	Nanjing City,
	Jiangsu Province,
	the PRC
26.	Remaining Site of Changzhou Tian	$324,000,000	19.03%	$61,657,200
	An Cyber Park,
	Wujin District,
	Changzhou City,
	Jiangsu Province,
	the PRC

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SUMMARY PROPERTY VALUATION REPORT

APPENDIX II

No. Property Capital value as at 31st March, 2010 Attributable interest to the SHK Group HK$ 27. A development site located at Economic and Technical Development Zone, Dalian City, Liaoning Province, the PRC $501,000,000 38.06% 28. A development site of 無錫(太湖)國 際科技園(Wuxi (Taihu) International Science and Technology Park) at south of Kelang Road and north of Guanshan Road, Xin District, Wuxi City, Jiangsu Province, the PRC $63,000,000 38.06% Sub-total: $8,342,000,000 Group III — Property interests held for investment in the PRC 29. Three parcels of land located in Danshui Town, Huiyang District, Huizhou City, Guangdong Province, the PRC $642,000,000 38.06% 30. 81 Car Parking Spaces in Shanghai Central Garden, Nos. 2–12, Lane 800, Jinxiu Road, Pudong District, Shanghai, the PRC $18,000,000 30.45%

Capital value attributable to the SHK Group as at 31st March, 2010 HK$ $190,680,600 $23,977,800

$2,945,320,300 $244,345,200 $5,481,000

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SUMMARY PROPERTY VALUATION REPORT

APPENDIX II

				Capital value
			Attributable	attributable to
		Capital value	interest to	the SHK Group
		as at	the SHK	as at
No.	Property	31st March, 2010	Group	31st March, 2010
		HK$		HK$
31.	Unsold portions of Shanghai	$1,308,000,000	37.30%	$487,884,000
	Tian An Centre,
	No. 338 Nanjing Road West,
	Huangpu District,
	Shanghai,
	the PRC
32.	7 residential units of	$18,000,000	38.06%	$6,850,800
	Beijing Lakeside Garden,
	No. 5 Chaoyang Park West Road,
	Chaoyang District,
	Beijing,
	the PRC
33.	Basement B2 to Level 12,	$782,000,000	38.06%	$297,629,200
	Nanjing Tian An International
	Building,
	No. 122 Zhongshan South Road and
	Shigu Road,
	Jianye District,
	Nanjing City,
	Jiangsu Province,
	the PRC
34.	Various portions of Dalian Tian An	$725,000,000	38.06%	$275,935,000
	International Tower,
	Zhongshan Road/Jiefang Road/
	Wuzhou Road/Kunming Road,
	Zhongshan District,
	Dalian City,
	Liaoning Province,
	the PRC
35.	Tianjin International Building,	$898,000,000	9.25%	$83,065,000
	No. 75 Nanjing Road,
	Heping District,
	Tianjin,
	the PRC

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SUMMARY PROPERTY VALUATION REPORT

APPENDIX II

				Capital value
			Attributable	attributable to
		Capital value	interest to	the SHK Group
		as at	the SHK	as at
No.	Property	31st March, 2010	Group	31st March, 2010
		HK$		HK$
36.	Various portions in Futian Tian An	$240,000,000	19.03%	$45,672,000
	Hi-Tech Venture Park,
	Shenzhen Tian An Cyber Park,
	Futian District,
	Shenzhen,
	the PRC
37.	Unsold portions on Levels 8 to 23 of	$12,100,000	36.16%	$4,375,360
	Wuxi Tian An Building,
	No. 270 Zhongshan Road,
	Chongan District,
	Wuxi City,
	Jiangsu Province,
	the PRC
38.	80 Car Parking Spaces of	$10,000,000	36.16%	$3,616,000
	Wuxi Tian An Building,
	No. 270 Zhongshan Road,
	Chongan District,
	Wuxi City,
	Jiangsu Province,
	the PRC
39.	Levels 1 to 8, Changzhou Tian An	$122,000,000	38.06%	$46,433,200
	City Plaza,
	junction of Heping North Road and
	Xinmin Lane,
	Changzhou City,
	Jiangsu Province,
	the PRC
40.	Commercial portions of Phase V of	$52,000,000	38.06%	$19,791,200
	Changzhou New City Garden,
	Changjiang Road/Zhujiang Road,
	Xinbei District,
	Changzhou City,
	Jiangsu Province,
	the PRC

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SUMMARY PROPERTY VALUATION REPORT

APPENDIX II

				Capital value
			Attributable	attributable to
		Capital value	interest to	the SHK Group
		as at	the SHK	as at
No.	Property	31st March, 2010	Group	31st March, 2010
		HK$		HK$
41.	The whole of Levels 1 and 2 of	$208,000,000	19.03%	$39,582,400
	Blocks A and B,
	Phase I of Innovation Science and
	Technology Plaza,
	Shenzhen Tian An Cyber Park,
	Futian District,
	Shenzhen,
	the PRC
42.	Various portions of	$399,000,000	19.03%	$75,929,700
	Cyber Times Building,
	Shenzhen Tian An Cyber Park,
	Futian District,
	Shenzhen,
	the PRC
43.	Various portions of Shenzhen Tian An	$391,000,000	19.03%	$74,407,300
	International Building,
	Renmin South Road,
	Luohu District,
	Shenzhen,
	the PRC
44.	20/F, Block A of Shenzhen Tian An	$10,170,000	38.06%	$3,870,702
	International Building,
	Renmin South Road,
	Luohu District,
	Shenzhen,
	the PRC
45.	8 shop units located at	$13,200,000	38.06%	$5,023,920
	Tianbeiyi Road,
	Luwu District,
	Shenzhen,
	the PRC

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APPENDIX II

				Capital value
			Attributable	attributable to
		Capital value	interest to	the SHK Group
		as at	the SHK	as at
No.	Property	31st March, 2010	Group	31st March, 2010
		HK$		HK$
46.	The whole of 26th Floor,	$57,500,000	38.06%	$21,884,500
	Main Block of
	Cyber Times Building,
	Shenzhen Tian An Cyber Park,
	Futian District,
	Shenzhen,
	the PRC
47.	Various portions of	$4,050,000	38.06%	$1,541,430
	Sun Hai Tung Building,
	No. 15 Qingnian West Road,
	Chongchuan District,
	Nantong City,
	Jiangsu Province,
	the PRC
48.	Various portions in Phase I of	$20,000,000	38.06%	$7,612,000
	Changchun Tian An City One,
	High-Tech Industrial
	Development Zone,
	Changchun City,
	Jilin Province,
	the PRC
49.	Various units of Eastern and Western	$83,000,000	19.03%	$15,794,900
	Blocks, Phase II of
	Shenzhen Tian An Innovation Science
	and Technology Plaza,
	Shenzhen Tian An Cyber Park,
	Futian District,
	Shenzhen,
	the PRC
50.	Summit Golf Country Club and	$1,757,000,000	25.90%	$455,063,000
	Dengyun Resort,
	No. 388 Dengyun Road,
	Jinan District, Fuzhou City,
	Fujian Province,
	the PRC

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APPENDIX II

				Capital value
			Attributable	attributable to
		Capital value	interest to	the SHK Group
		as at	the SHK	as at
No.	Property	31st March, 2010	Group	31st March, 2010
		HK$		HK$
51.	Zhaoqing Resort and Golf Club,	$701,900,000	33.48%	$234,996,120
	Huilong Town,
	Gaoyao City,
	Zhaoqing,
	Guangdong Province,
	the PRC
52.	Various portion in phases I, II and III	$82,000,000	19.03%	$15,604,600
	of Guangzhou Tian An Panyu
	Hi-Tech Ecological Park,
	Longmei Village,
	Shiqiao Town,
	Panyu District,
	Guangzhou City,
	Guangdong Province,
	the PRC
53.	76 residential units in Beijing Park	$555,000,000	38.06%	$211,233,000
	Apartments,
	Nanhu Road,
	Chaoyang District,
	Beijing,
	the PRC
54.	Part of Ground Floor,	$18,400,000	37.68%	$6,933,120
	Shanghai The Riverside,
	No. 668 North Suzhou Road,
	Zhabei District,
	Shanghai,
	the PRC
55.	Various portions of	$17,100,000	36.16%	$6,183,360
	Wuxi Redhill Peninsula,
	south of Liangxi River,
	Binhu District,
	Wuxi City,
	Jiangsu Province,
	the PRC

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APPENDIX II

				Capital value
			Attributable	attributable to
		Capital value	interest to	the SHK Group
		as at	the SHK	as at
No.	Property	31st March, 2010	Group	31st March, 2010
		HK$		HK$
56.	The whole of 5th Floor and Car	$85,000,000	38.06%	$32,351,000
	Parking Space Nos. 41 to 43 on
	Basement B2,
	Shanghai Tian An Centre,
	No. 338 Nanjing Road West,
	Huangpu District,
	Shanghai,
	the PRC
57.	The whole of 8th Floor,	$67,000,000	38.06%	$25,500,200
	Shanghai Tian An Centre,
	No. 338 Nanjing Road West,
	Huangpu District,
	Shanghai,
	the PRC
58.	The whole of 16th Floor and Car	$94,700,000	38.06%	$36,042,820
	Parking Space Nos. 13 to 15 on
	Basement B2,
	Shanghai Tian An Centre,
	No. 338 Nanjing Road West,
	Huangpu District,
	Shanghai,
	the PRC
59.	Villa No. 28 of	$65,700,000	38.06%	$25,005,420
	Shanghai Mandarin Palace,
	No. 599 Fangdian Road,
	Pudong New District,
	Shanghai,
	the PRC
60.	Villa No. 57 of	$75,700,000	38.06%	$28,811,420
	Shanghai Mandarin Palace,
	No. 599 Fangdian Road,
	Pudong New District,
	Shanghai,
	the PRC

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APPENDIX II

				Capital value
			Attributable	attributable to
		Capital value	interest to	the SHK Group
		as at	the SHK	as at
No.	Property	31st March, 2010	Group	31st March, 2010
		HK$		HK$
61.	12 residential units in Phase III of	$25,700,000	22.84%	$5,869,880
	Dalian Tian An Seaview Garden,
	Liaohe West Road,
	Economic and Technical
	Development Zone,
	Dalian City,
	Liaoning Province,
	the PRC
62.	Various portions of Phase IVa of	$36,000,000	19.03%	$6,850,800
	Guangzhou Tian An Panyu
	Hi-Tech Ecological Park,
	Longmei Village,
	Shiqiao Town,
	Panyu District,
	Guangzhou City,
	Guangdong Province,
	the PRC
63.	Various portions of Phase I of	$107,000,000	19.03%	$20,362,100
	Tian An Longgang Cyber Park at
	Zhong Xin Cheng,
	Longgang District,
	Shenzhen,
	the PRC
64.	Various portions of Phase I of Foshan	$31,300,000	17.13%	$5,361,690
	Tian An Nanhai Cyber Park,
	Jianping Road,
	Nanhai District,
	Foshan City,
	Guangdong Province,
	the PRC

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APPENDIX II

				Capital value
			Attributable	attributable to
		Capital value	interest to	the SHK Group
		as at	the SHK	as at
No.	Property	31st March, 2010	Group	31st March, 2010
		HK$		HK$
65.	Units 2002 and 2004 Residential	$5,640,000	19.02%	$1,072,728
	Block of Everbright Convention and
	Exhibition Centre,
	86 Caobao Road,
	Xuhui District,
	Shanghai,
	the PRC
66.	Unit 1603 of Jin Xuan Buildings,	$2,630,000	19.02%	$500,226
	No. 3, Lane 228,
	East Nandan Road,
	Xuhui District,
	Shanghai,
	the PRC
67.	Units 201 and 202,	$3,740,000	19.02%	$711,348
	Jin Cheng Lu Garden No. 69,
	Lane 398, Shenbei Road,
	Minhang District,
	Shanghai,
	the PRC
68.	Unit 1501, Block 2,	$3,530,000	19.02%	$671,406
	House No. 3 of
	Jin Quan Jia Garden,
	Datun Road,
	Chaoyang District,
	Beijing,
	the PRC
69.	Shanghai Racquet Club & Apartments	$1,627,000,000	38.06%	$619,236,200
	located at 555 Jinfeng Road,
	Minhang District,
	Shanghai,
	the PRC

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SUMMARY PROPERTY VALUATION REPORT

APPENDIX II

No. Property 70. Level 2 in Building No. 4 of Jin Xiu Court, Hao Nan Road, Chongchuan District, Nantong City, Jiangsu Province, the PRC 71. Land, buildings and structures in the factory complex of 山東聯合王晁水 泥有限公司(Shandong Allied Wangchao Cement Limited) located at Dundong village, Jiantouji town, Taierzhuang District, Zaozhuang City, Shandong Province, the PRC Sub-total: Group IV — Property interest held for sale 72. Various portions of Phases I and II of Foshan Tian An Nanhai Cyber Park, Jianping Road, Nanhai District, Foshan City, Guangdong Province, the PRC 73. 143 Car Parking Spaces of Shanghai The Riverside, No. 668 North Suzhou Road, Zhabei District, Shanghai, the PRC	Capital value as at 31st March, 2010 Attributable interest to the SHK Group HK$ $12,700,000 38.06% $110,000,000 38.06% $11,497,760,000 in the PRC $168,000,000 17.13% $27,000,000 37.68%	Capital value attributable to the SHK Group as at 31st March, 2010 HK$ $4,833,620 $41,866,000
		$3,551,784,870 $28,778,400 $10,173,600

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APPENDIX II

				Capital value
			Attributable	attributable to
		Capital value	interest to	the SHK Group
		as at	the SHK	as at
No.	Property	31st March, 2010	Group	31st March, 2010
		HK$		HK$
74.	Various units of Jun An Garden,	$220,000,000	24.74%	$54,428,000
	Nong Ke Centre,
	Longxuan Road,
	Futian District,
	Shenzhen, the PRC
75.	Unsold portions in Phases I to III of	$54,200,000	22.84%	$12,379,280
	Dalian Tian An Seaview Garden,
	Liaohe West Road,
	Economic and Technical
	Development Zone,
	Dalian City,
	Liaoning Province,
	the PRC
76.	Unsold units in Phase I of	$26,000,000	38.06%	$9,895,600
	Shanghai Tian An Villa,
	Dongjiang Town,
	Songjiang District,
	Shanghai,
	the PRC
77.	Various portions in	$654,000,000	38.06%	$248,912,400
	CRED Forest Villas,
	No. 3388 Kunyang Road,
	Minhang District,
	Shanghai,
	the PRC
78.	Various portions in Phases I to IV of	$492,000,000	19.03%	$93,627,600
	Guangzhou Tian An Panyu
	Hi-Tech Ecological Park,
	Longmei Village,
	Shiqiao Town,
	Panyu District,
	Guangzhou City,
	Guangdong Province,
	the PRC

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APPENDIX II

				Capital value
			Attributable	attributable to
		Capital value	interest to	the SHK Group
		as at	the SHK	as at
No.	Property	31st March, 2010	Group	31st March, 2010
		HK$		HK$
79.	Club House of California Court,	$5,900,000	38.06%	$2,245,540
	No. 9–11, Lane 369,
	Huanghua Road,
	Minhing District,
	Shanghai,
	the PRC
80.	Unsold units in Nanjing Tian An	$11,600,000	38.06%	$4,414,960
	International Building,
	No. 122 Zhongshan South Road and
	Shigu Road,
	Jianye District,
	Nanjing City,
	Jiangsu Province,
	the PRC
81.	Unsold portions of Wuxi Redhill	$37,000,000	36.16%	$13,379,200
	Peninsula, south of Liangxi River,
	Binhu District,
	Wuxi City,
	Jiangsu Province,
	the PRC
82.	Unsold portions of Changzhou	$24,000,000	38.06%	$9,134,400
	New City Garden,
	Changjiang Road/Zhujiang Road,
	Xinbei District,
	Changzhou City,
	Jiangsu Province,
	the PRC
83.	Unsold portions of Changzhou	$5,117,000	38.06%	$1,947,530
	Tian An City Plaza,
	junction of Heping North Road and
	Xinmin Lane,
	Changzhou City,
	Jiangsu Province,
	the PRC

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APPENDIX II

				Capital value
			Attributable	attributable to
		Capital value	interest to	the SHK Group
		as at	the SHK	as at
No.	Property	31st March, 2010	Group	31st March, 2010
		HK$		HK$
84.	Unsold units in Phase I of Changzhou	$9,700,000	38.06%	$3,691,820
	Tian An Villa, Wujin District,
	Changzhou City,
	Jiangsu Province,
	the PRC
85.	Unsold portions of Nantong Tian An	$28,600,000	38.06%	$10,885,160
	Garden, Gongnong Road,
	Nantong City,
	Jiangsu Province,
	the PRC
86.	Unsold portions in Phases I to III of	$77,800,000	38.06%	$29,610,680
	Changchun Tian An City One,
	High-Tech Industrial
	Development Zone,
	Changchun City,
	Jilin Province,
	the PRC
87.	Unsold units in Beijing Park	$35,000,000	38.06%	$13,321,000
	Apartments,
	Nanhu Road,
	Chaoyang District,
	Beijing,
	the PRC
88.	Unsold units in Phase III Part 1 of	$609,000,000	22.84%	$139,095,600
	Shanghai Elegant Garden,
	Longxi Road,
	Changning District,
	Shanghai,
	the PRC

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APPENDIX II

No. Property 89. Various portions of Shenzhen Tian An Cyber Park, Futian District, Shenzhen, the PRC Sub-total: GRAND TOTAL:	Capital value as at 31st March, 2010 Attributable interest to the SHK Group HK$ $2,900,000,000 19.03% $5,384,917,000 $29,323,677,000	Capital value attributable to the SHK Group as at 31st March, 2010 HK$ $551,870,000
		$1,237,790,770 $8,989,749,740

– 95 –

STATUTORY AND GENERAL INFORMATION

APPENDIX III

1. RESPONSIBILITY STATEMENT

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

2. SHARE CAPITAL

Assuming there is no change to the number of SHK Shares in issue from the Latest Practicable Date to the Closing Date, the authorised and issued share capital of the Company (a) as at the Latest Practicable Date; and (b) after completion of the transactions contemplated under the Subscription Agreement and upon the allotment and issue of the SHK Shares under the Mandatory Conversion Notes and the Warrants will be as follows:

Authorised: 15,000,000,000 SHK Shares as at the Latest Practicable Date	HK$ 3,000,000,000

Issued and fully paid up or credited as fully paid up

1,752,148,077 SHK Shares in issue as at the Latest Practicable Date 341,600,000 SHK Shares to be issued upon conversion of the Mandatory Conversion Notes based on the conversion price of HK$5.00 per SHK Share 68,320,000 SHK Shares to be issued upon exercise of the Warrants based on the subscription price of HK$6.25 per SHK Share	350,429,615 68,320,000 13,664,000

Total number of issued SHK Shares after completion under the Subscription Agreement and upon the allotment and issue of the SHK Shares under the Mandatory Conversion Notes and the Warrants

2,162,068,077 SHK Shares 432,413,615

3. DISCLOSURE OF INTERESTS

• (a) Directors’ interests and short positions in the shares and the underlying shares of the Company and its associated companies

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

– 96 –

STATUTORY AND GENERAL INFORMATION

APPENDIX III

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 SHK Shares and underlying SHK Shares

		Number of
		SHK Shares and	Approximate %
		underlying	of the issued
Directors	Capacity	SHK Shares	share capital
Lee Seng Huang	Interests of controlled corporation	1,091,885,163	62.31%
	(Note 1)	(Note 2)
Joseph Tong Tang	Beneficiary of trust	167,000	0.009%
		(Note 3(a))
	Beneficial owner	77,000	0.004%
		(Note 3(b))

Notes:

1. Mr. Lee Seng Huang, Director, together with Mr. Lee Seng Hui and Ms. Lee Su Hwei are the trustees of Lee and Lee Trust, being a discretionary trust. The Lee and Lee Trust together with Mr. Lee Seng Hui indirectly owned approximately 52.40% AGL Shares and was therefore deemed to have interests in the SHK Shares and underlying SHK Shares of the Company in which AGL was interested through APL, its 74.36% owned subsidiary.

2. This refers to the interest in 1,091,885,163 SHK Shares.

3. (a) These include the deemed interests in:

4. (i) 45,000 unvested SHK Shares out of the total of 135,000 SHK Shares granted to Mr. Joseph Tong Tang under the SHK Employee Ownership Scheme (‘‘EOS’’) on 15 April 2008 (and accepted on 17 April 2008). Such SHK Shares are subject to a vesting scale in tranches whereby one-third of the SHK Shares thereof (i.e. 45,000 SHK Shares) was vested and became unrestricted from 15 April 2009 and the other one-third thereof (i.e. 45,000 SHK Shares) from 15 April 2010 (the title of such interests was transferred on 6 May 2009 and 28 April 2010 respectively); and the remaining one-third thereof shall be vested and become unrestricted from 15 April 2011;

5. (ii) 44,000 unvested SHK Shares out of the total of 66,000 SHK Shares granted to and accepted by Mr. Tong on 6 May 2009 under the EOS. Such SHK Shares are subject to a vesting scale in tranches whereby one-third of the SHK Shares thereof (i.e. 22,000 SHK Shares) was vested and became unrestricted from 15 April 2010 (the title of such interests was transferred on 3 May 2010); another one-third thereof shall be vested and become unrestricted from 15 April 2011; and the remaining one-third thereof shall be vested and become unrestricted from 15 April 2012; and

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STATUTORY AND GENERAL INFORMATION

APPENDIX III

  - (iii) 78,000 SHK Shares granted to Mr. Tong on 5 May 2010 under the EOS and accepted on 10 May 2010. Such SHK Shares are subject to a vesting scale in tranches whereby onethird of the SHK Shares thereof shall be vested and become unrestricted from 15 April 2011; another one-third thereof shall be vested and become unrestricted from 15 April 2012; and the remaining one-third thereof shall be vested and become unrestricted from 15 April 2013.

• (b) This represents 77,000 SHK Shares out of the 112,000 SHK Shares granted under EOS that were vested and became unrestricted on 15 April 2009 and 15 April 2010.

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

			Number of	Approximate
			shares and	% of the
			underlying	relevant issued	Amount of
Directors	Associated corporations	Capacity	shares	share capital	debentures
Lee Seng Huang	AGL	Trustee (other than	108,626,492	52.39%	—
(Note 1)		a bare trustee)
		(Note 2)
	APL	Interests of controlled	4,528,120,310	74.36%	—
		corporation	(Note 4)
		(Note 3)
	SHK Hong Kong	Interests of controlled	2,632,535,606	70.40%	—
	Industries Limited	corporation	(Note 6)
	(‘‘SHK HK Ind’’)	(Note 5)
	Quality HealthCare	Interests of controlled	144,385,776	64.16%	—
	Asia Limited	corporation
	(‘‘QHA’’)	(Note 7)
	Tian An	Interests of controlled	573,589,096	38.06%	—
		corporation
		(Note 8)
	Swan Islands Limited	Interests of controlled	—	—	HK$500,000,000
		corporation			(Note 9)
		(Note 9)
Patrick Lee	AGL	Beneficial owner	550,000	0.26%	—
Seng Wei			(Note 10)
	APL	Beneficial owner	2,700,000	0.04%	—
			(Note 11)

Notes:

1. Mr. Lee Seng Huang, by virtue of his interests in AGL and APL, was also deemed to be interested in the shares of the unlisted subsidiaries of AGL (and SHK HK Ind, a listed subsidiary of AGL) and APL (and QHA, a listed subsidiary of 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 Mr. Lee’s deemed interests in the shares of such associated corporations of the Company in this circular, and a waiver was granted by the Stock Exchange on 13th May, 2010.

1. Mr. Lee Seng Huang is one of the trustees of Lee and Lee Trust, being a discretionary trust which indirectly owned 108,626,492 AGL Shares.

2. This refers to the same interests held directly or indirectly by AGL in APL.

– 98 –

STATUTORY AND GENERAL INFORMATION

APPENDIX III

1. This refers to the interest in 4,528,120,310 APL Shares.

2. This refers to the interest held indirectly by AGL in SHK HK Ind.

3. This includes interests in (i) 2,324,288,032 shares of SHK HK Ind; and (ii) listed physically settled warrants of SHK HK Ind giving rise to an interest in 308,247,574 underlying shares of SHK HK Ind. The warrants of SHK HK Ind entitle the holders thereof to subscribe at any time during the period from 23 April 2009 to 22 April 2011 (both days inclusive) for fully paid shares of SHK HK Ind at a subscription price of HK$0.10 per share.

4. This refers to the interest in 144,385,776 shares held indirectly by APL in QHA.

5. This refers to the interest held directly by the Company in Tian An.

6. This represents the outstanding amount of 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 30 June 2006.

7. This refers to the interest in 550,000 AGL Shares.

8. This refers to the interest in 2,700,000 APL Shares.

All interests stated above represent long positions.

Save as disclosed above, as at the Latest Practicable Date, neither the Directors nor the chief executive of the Company had any interests or short positions 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) as recorded in the register required to be kept under Section 352 of the SFO or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 of the Listing Rules.

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STATUTORY AND GENERAL INFORMATION

APPENDIX III

(b) Interests of Substantial Shareholders

(i) Interests in the SHK Shares and underlying SHK Shares

As at the Latest Practicable Date, the following persons (other than Directors and chief executive of the Company) had interests in the SHK Shares and underlying SHK Shares as recorded in the register required to be kept under Section 336 of the SFO (the ‘‘SFO Register’’) or who was directly or indirectly interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of the Group:

		Number of	Approximate
		shares and	% of the issued
Shareholders	Capacity	underlying shares	share capital
APL	Interests of controlled corporation	1,091,885,163	62.31%
	(Note 1)	(Note 2)
AGL	Interests of controlled corporation	1,091,885,163	62.31%
	(Note 3)	(Note 4)
Lee and Lee Trust	Interests of controlled corporation	1,091,885,163	62.31%
	(Note 5)	(Note 4)
Dubai Ventures L.L.C	Beneficial owner	166,000,000	9.44%
(‘‘Dubai Ventures’’)		(Note 6)
Dubai Ventures Group	Interests of controlled corporation	171,462,000	9.75%
(L.L.C) (‘‘DVG’’)	(Notes 7 & 14)	(Notes 8 & 14)
Dubai Group (L.L.C)	Interests of controlled corporation	171,462,000	9.75%
(‘‘Dubai Group’’)	(Note 9)	(Notes 8 & 14)
Dubai Holding Investments	Interests of controlled corporation	171,462,000	9.75%
Group LLC (‘‘DHIG’’)	(Note 10)	(Notes 8 & 14)
Dubai Holding (L.L.C)	Interests of controlled corporation	171,462,000	9.75%
(‘‘Dubai Holding’’)	(Note 11)	(Notes 8 & 14)
Dubai Group Limited	Interests of controlled corporation	171,462,000	9.75%
(‘‘DGL’’)	(Note 12)	(Notes 8 & 14)
HH Mohammed Bin Rashid	Interests of controlled corporation	171,462,000	9.75%
Al Maktoum	(Note 13)	(Notes 8 & 14)
Penta Investment Advisers	Investment manager	157,478,788	8.99%
Limited (‘‘Penta’’)		(Note 15)
Goldlex Limited	Beneficial owner	113,085,000	6.42%
(‘‘Goldlex’’)		(Note 16)
Lee Mei Wan Betty	Beneficial owner (Note 17)	113,085,000	6.42%
Asia Financial Services	Interests of controlled corporation	409,920,000	23.40%
Group Limited (‘‘AFSG’’)	(Note 18)	(Note 19)
CVC Capital Partners Asia	Interests of controlled corporation	409,920,000	23.40%
III Limited (‘‘CVC	(Note 18)	(Note 19)
Capital’’)

– 100 –

STATUTORY AND GENERAL INFORMATION

APPENDIX III

Notes:

1. 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 SHK Shares and underlying SHK Shares in which AP Emerald was interested.

2. This represents an interest in 1,091,885,163 SHK Shares held by APL through AP Jade Limited and AP Emerald.

3. AGL owned approximately a 74.36% interest in the issued share capital of APL and was therefore deemed to have interests in the SHK Shares in which APL was interested.

4. This refers to the same interests in 1,091,885,163 SHK Shares held by AP Emerald.

5. 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 are interested in approximately 52.40% of the issued share capital of AGL and were therefore deemed to have interests in the SHK Shares in which AGL was interested through APL, its 74.36% owned subsidiary.

6. This represents an interest in 166,000,000 SHK Shares.

7. DVG owned a 99% interest in the issued share capital of Dubai Ventures and was therefore deemed to have an interest in the SHK Shares in which Dubai Ventures was interested. Additionally, DVG was deemed to have an interest in 5,462,000 SHK Shares held by Dubai Ventures Group Limited (‘‘DVGL’’), a wholly-owned subsidiary of DVG.

8. This refers to the respective interests in 166,000,000 SHK Shares and 5,462,000 SHK Shares held by Dubai Ventures and DVGL.

9. Dubai Group owned a 99% interest in the issued share capital of DVG and was therefore deemed to have an interest in the SHK Shares in which DVG was interested.

10. DHIG owned a 51% interest in the issued share capital of Dubai Group and was therefore deemed to have an interest in the SHK Shares in which Dubai Group was interested.

11. Dubai Holding owned approximately a 99.66% interest in the issued share capital of DHIG and was therefore deemed to have an interest in the SHK Shares in which DHIG was interested.

12. DGL owned a 49% interest in the issued share capital of Dubai Group. DGL was therefore deemed to have interests in the SHK Shares in which Dubai Group was interested.

13. HH Mohammed Bin Rashid Al Maktoum owned approximately a 97.40% interest in the issued share capital of Dubai Holding and was therefore deemed to have interests in the SHK Shares in which Dubai Holding was interested.

14. The Company has been informed that DVGL had disposed of its 5,462,000 SHK Shares and thus as at the Latest Practicable Date, the Dubai Group’s interest in the SHK Shares was 166,000,000 SHK Shares, representing approximately 9.47% of the current issued share capital of the Company.

15. This includes interests in (i) 74,408,824 SHK Shares; and (ii) unlisted cash settled derivatives of the Company, giving rise to an interest in 83,069,964 underlying SHK Shares.

16. This represents an interest in 113,085,000 SHK Shares.

17. Ms. Lee Mei Wan Betty owned 100% of the issued share capital of Goldlex and was therefore deemed to have an interest in the SHK Shares in which Goldlex was interested.

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1. This represents an interest through two of its wholly-owned subsidiaries, Asia Financial Services Holdings Limited and Asia Financial Services Company Limited (‘‘AFSC’’).

2. CVC Capital, through a wholly-owned subsidiary, owns 88% interest in AFSG and is therefore deemed to have interest in the underlying SHK Shares in which AFSG was interested.

3. This represents the deemed interests in the underlying SHK Shares arising pursuant to the Subscription Agreement entered into between the Company as issuer and ASFC as investor on 22nd April, 2010 whereby the Company conditionally agreed to issue and ASFC conditionally agreed to subscribe for (a) HK$1,708,000,000 in aggregate principal amount of the Mandatory Convertible Notes and (b) HK$427,000,000 in face value of Warrants.

All interests stated above represent long positions. As at Latest Practicable Date, no short positions were recorded in the SFO Register.

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

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

Save as disclosed above, as at Latest Practicable Date, the Directors are not aware of any persons (other than the Directors and chief executive of the Company) who had interests or short positions in the SHK Shares or underlying SHK Shares or any associated corporations (within the meaning of Part XV of the SFO) which would require to be disclosed to the Company pursuant to the provisions under Divisions 2 and 3 of Part XV of the SFO, or who were interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other members of the Group, or any options in respect of such capital.

4. DIRECTOR’S SERVICE CONTRACTS

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

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5. DIRECTORS’ INTERESTS IN COMPETING BUSINESSES

Save as disclosed below, as at the Latest Practicable Date, none of the Directors (other than such Directors being independent non-executive directors of any other company carrying on business which competes or may compete with the Company) or their respective associates was considered to have interests in any competing businesses pursuant to the Listing Rules:

• (a) Mr. Lee Seng Huang is one of the trustees of Lee and Lee Trust which is a deemed substantial shareholder of each of AGL, APL and Tian An which, through their respective subsidiaries, are partly engaged in businesses as follows:

• AGL, through certain of its subsidiaries, is partly engaged in the businesses of money lending and property investment;

• APL, through certain of its subsidiaries, is partly engaged in the businesses of money lending and property investment; and

• Tian An, through certain of its subsidiaries, is partly engaged in the businesses of money lending and property investment in the PRC.

• (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.

Although the abovementioned Directors have competing interest in other companies by virtue of their respective common directorship, they will fulfill their fiduciary duties in order to ensure that they will act in the best interest of the SHK Shareholders and the Company as a whole at all times. Hence, the Group is capable of carrying on its businesses independently of, and at arm’s length from, the business 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) In 2001, an order was made by the Hubei Province Higher People’s Court in China (‘‘2001 Order’’) enforcing a CIETAC award of 19th July, 2000 (‘‘Award’’) by which SHKS was required to pay US$3 million to Chang Zhou Power Development Company Limited (‘‘JV’’), a mainland PRC joint venture. SHKS had disposed of all of its beneficial interest in the JV to the Company’s listed associate, Tian An, in 1998 and disposed of any and all interest it might hold in the registered capital of the JV (‘‘Interest’’) to Long Prosperity Industrial Limited (‘‘LPI’’) in October 2001. Subsequent to those disposals, SHKS’ registered interest in the JV

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in the amount of US$3 million was frozen further to the 2001 Order. SHKS is party to the following litigation relating to the JV:

• (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 (‘‘Walton’’) (‘‘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 an alleged collateral warranty, and for alleged 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) Walton claims against SHKS for the sum of US$3 million under a shareholders agreement and/or pursuant to the Award and damages for alleged wrongful breach of a shareholders agreement. GBA, LPI and Walton also claim against SHKS interest on any sums or damages payable, costs, and such other relief as the Court may think fit. The 2008 Writ was served on SHKS on 29th May, 2008. It is being vigorously defended. Among other things, pursuant to a 2001 deed of waiver and indemnification, LPI (being the nominee of GBA) waived and released SHKS from any claims including any claims relating to or arising from the Interest, the JV 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 JV or any transaction related thereto. On 24th February, 2010 the Court of Appeal struck out the claims of GBA and LPI, and awarded costs of the appeal and the strike out application as against GBA and LPI to SHKS. While a provision has been made for legal costs, the Company does not consider it presently appropriate to make any other provision with respect to HCA 317/2008.

• (ii) On 20th December, 2007, a writ (‘‘Mainland Writ’’) was issued by Cheung Lai Na (張 麗娜) (‘‘Ms. Cheung’’) against Tian An and SHKS and was accepted by a mainland PRC court, 湖北省武漢市中級人民法院((2008)武民商外初字第8號), claiming the transfer of a 28% shareholding in the JV, and RMB19,040,000 plus interest thereon for the period from January 1999 to the end of 2007, together with related costs and expenses. Judgment was awarded by the mainland PRC court in Tian An’s and SHKS’ favour on 27th July, 2009 which judgment is currently being appealed against by Ms. Cheung. While a provision has been made for legal costs, the Company does not consider it presently appropriate to make any other provision with respect to this writ.

• (iii) On 4th June, 2008, a writ of summons was issued by Tian An and SHKS in the High Court of Hong Kong against Ms. Cheung (‘‘HK Writ’’), seeking declarations that (a) Ms. Cheung is not entitled to receive or obtain the transfer of 28% or any of the shareholding in the JV from Tian An and SHKS; (b) Ms. Cheung is not entitled to damages or compensation; (c) Hong Kong is the proper and/or the most convenient forum to determine the issue of Ms. Cheung’s entitlement to any shareholding in the JV; (d) further and alternatively, that Ms. Cheung’s claim against Tian An and SHKS in respect of her entitlement to the shareholding in the JV is scandalous, vexatious and/or frivolous; and (e) damages, interest and costs as well as further or other relief (together with related costs and expenses). The HK Writ was not served on Ms. Cheung and

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lapsed on 3rd June, 2009. A further writ of summons was issued by Tian An and SHKS in the High Court of Hong Kong against Ms. Cheung on 4th June, 2009 seeking the same relief as the HK Writ. The Company does not consider it presently appropriate to make any provision with respect to this action.

• (b) On 14th October, 2008, a writ of summons was issued by Sun Hung Kai Investment Services Limited (‘‘SHKIS’’) in the High Court of Hong Kong against Quality Prince Limited, Allglobe Holdings Limited, the Personal Representative of the Estate of Lam Sai Wing, Chan Yam Fai Jane (‘‘Ms. Chan’’) and Ng Yee Mei (‘‘Ms. Ng’’), seeking recovery of (a) the sum of HK$50,932,876.64; (b) interest; (c) legal costs; and (d) further and/or other relief. Having sold collateral for the partial recovery of amounts owing, SHKIS filed a Statement of Claim in the High Court of Hong Kong on 24th October, 2008 claiming (a) the sum of HK$36,030,376.64; (b) interest; (c) legal costs; and (d) further and/or other relief. Summary judgment against all the defendants was granted by Master C Chan on 25th May, 2009, but judgment with respect to Ms. Chan and Ms. Ng only was overturned on appeal by the judgment of Suffiad J dated 7th August, 2009. SHKIS’ appeal of that judgment to the Court of Appeal was heard 6th May, 2010, and was dismissed. The trial will be heard on a date to be fixed.

7. QUALIFICATIONS AND CONSENTS OF EXPERTS

The following are the qualifications of the experts who have been named in this circular or who have given reports or advice which are contained or referred to in this circular.

Name	Qualification
Norton Appraisals Limited	Registered Professional Surveyors, Valuers and
	Property Advisers
Centurion	a licensed corporation to carry out regulated activities of type
	1 (dealing in securities), type 4 (advising on securities), type
	6 (advising on corporate finance) and type 9 (asset
	management) under the SFO

Norton Appraisals Limited and Centurion have given and have not withdrawn their respective written consents to the issue of this circular with the inclusion of their respective reports and references to their respective names in the form and context in which they respectively appear.

As at the Latest Practicable Date, Norton Appraisals Limited and Centurion did not have any direct or indirect shareholding in any member of the Group or any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for any SHK Shares or shares of any member of the Group.

As at the Latest Practicable Date, Norton Appraisals Limited and Centurion did not have any direct or indirect interest in any assets which have been since 31st December, 2009, the date to which the latest published audited consolidated accounts of the Group were made up, acquired or disposed of by, or leased to any member of the Group, or are proposed to be acquired or disposed of by, or leased to any member of the Group.

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8. 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, 2009 (the date to which the latest published audited consolidated accounts of the Group were made up).

9. MATERIAL CONTRACTS

The following material contracts (not being contracts entered into in the ordinary course of business) have been entered into by members of the Group within the two years immediately preceding the Latest Practicable Date:

• (a) on 7th May, 2008, the Company, as the vendor, Famestep Investments Limited (‘‘Famestep’’) as the purchaser (being subsidiary of APL) and APL, as the purchaser’s guarantor entered into a sale and purchase agreement, pursuant to which (i) the Company had conditionally agreed to sell 2,675,400 shares of Wah Cheong Development (B.V.I.) Limited (‘‘Wah Cheong’’) representing the entire issued share capital of Wah Cheong, which held approximately 51.15% of the issued share capital of QHA and assign the shareholder’s loan in the amount of HK$271,391,445 due by Wah Cheong to Famestep; and (ii) Famestep had conditionally agreed to purchase the Wah Cheong shares and accept the assignment of the shareholder’s loan at an aggregate consideration of HK$470,690,000. Further details were disclosed in the joint announcement of the Company, AGL and APL dated 14th May, 2008 and the circular of each of the Company, AGL and APL dated 4th June, 2008;

• (b) on 24th December, 2008, SHKSC and Itso Limited, both being indirect non wholly-owned subsidiaries of the Company, as vendors, entered into a sale and purchase agreement with Winning Beauty Limited as purchaser; and SHKSC as vendor, entered into two sets of the sale and purchase agreements with each of Kindstart Limited and Shiny Gloss Limited as purchasers, for the sale of an aggregate of 598,532,893 shares of HK$0.10 each in the capital of APAC Resources Limited (‘‘APAC’’), being an aggregate of approximately 12.66% of the issued share capital of APAC for an aggregate consideration of HK$371,090,393.66. Pursuant to the sale and purchase agreements, each of the purchasers had agreed to provide a share charge in favour of the relevant vendors as security for the payment of the relevant purchase price. The terms of each of the sale and purchase agreements and the share charges were substantially the same. Further details were disclosed in the joint announcement of the Company, AGL and APL on 31st December, 2008 and the circular of each of the Company, AGL and APL dated 20th January, 2009;

• (c) the Acquisition Agreement, details of which are disclosed in the Joint Announcement and in this circular; and

• (d) on 22nd April, 2010, the Company, as the issuer and Asia Financial Services Company Limited (the ‘‘Investor’’) entered into the Subscription Agreement pursuant to which the Company conditionally agreed to issue and the Investor conditionally agreed to subscribe for (i) the Mandatory Convertible Notes and (ii) the Warrants, on the Closing Date being the date which is 21 days after and excluding the date upon which the last of the conditions precedent (as set out in the Subscription Agreement) has been or remains satisfied or waived (as applicable) and if such day is not a Business Day on the next Business Day thereafter,

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provided that it shall be a date no later than 31st October, 2010, or such other time and/or date as the Company and the Investor may agree in writing. Further details were disclosed in the announcement jointly issued by AGL, APL and the Company relating to the Subscription Agreement dated 26th April, 2010 and in this circular.

Save as disclosed above, there are no other contracts (not being contracts in the ordinary course of business) being entered into by the members of the Group within the two years immediately preceding the Latest Practicable Date, which are or may be material.

10. DIRECTORS’ INTERESTS IN CONTRACTS AND ASSETS

Mr. Lee Seng Huang, a Director, is one of the trustees of Lee and Lee Trust, a discretionary trust. As at the Latest Practicable Date, Lee and Lee Trust was indirectly interested in approximately 52.39% of AGL, which was in turn interested in approximately 74.36% of APL. APL was interested in approximately 62.31% in SHK, which was in turn holding the Tian An Interest. Besides, Mr. Patrick Lee Seng Wei, a Director, was interested in approximately 0.04% in APL. As disclosed in this circular, APL and SHK are both parties to the Acquisition Agreement in relation to the sale and purchase of the Tian An Interest.

Save as disclosed in this circular, as at the Latest Practicable Date, none of the Directors was materially interested in any contract or arrangement subsisting as at the Latest Practicable Date which is significant in relation to the business of the Group.

Save as disclosed in this circular, as at the Latest Practicable Date, none of the Directors or proposed Directors had any direct or indirect interests in any assets which have been acquired or disposed of by, or leased to, or which are proposed to be acquired or disposed of by, or leased to, any member of the Group since 31st December, 2009, being the date to which the latest published audited financial statements of the Group were made up.

11. GENERAL

• (a) The registered office of the Company is 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 share registrar of the Company is Tricor Secretaries Limited of 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong.

• (d) This circular is prepared in both English and Chinese. In the event of inconsistency, the English text shall prevail.

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12. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection at the head office and principal place of business of the Company in Hong Kong at 12th Floor, CITIC Tower, 1 Tim Mei Avenue, Central, Hong Kong during normal office hours on any weekday, except Saturdays, Sundays and public holidays, from the date of this circular up to and including 18th June, 2010:

• (a) the memorandum of association and articles of association of the Company;

• (b) the annual reports of the Company for the two years ended 31st December, 2009;

• (c) the material contracts referred to in the paragraph headed ‘‘Material Contracts’’ in this appendix;

• (d) the letter from the Independent Board Committee, the text of which is set out on page 44 of this circular;

• (e) the Summary Report issued by Norton Appraisals Limited, the text of which is set out in Appendix II to this circular;

• (f) the Full Report issued by Norton Appraisals Limited. Please also refer to the section headed “Summary Property Valuation Report” on pages 40 to 42 of this circular;

• (g) the letter of advice from Centurion to the Independent Board Committee and the Independent Shareholders, the text of which is set out on pages 45 to 71 in this circular;

• (h) the respective written consents given by Centurion and Norton Appraisals Limited referred to in the paragraph headed ‘‘Qualifications and Consents of Experts’’ in this appendix;

• (i) the Acquisition Agreement;

• (j) the Subscription Agreement;

• (k) the Issue Documents; and

• (l) this circular.

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NOTICE OF EGM

==> picture [299 x 44] intentionally omitted <==

(Incorporated in Hong Kong with limited liability)

(Stock code: 86)

NOTICE IS HEREBY GIVEN that an extraordinary general meeting (the ‘‘EGM’’) of Sun Hung Kai & Co. Limited (the ‘‘Company’’) will be held at 10:00 a.m. at Plaza 4, Lower Lobby, Novotel Century Hong Kong, 238 Jaffe Road, Wanchai, Hong Kong on Friday, 18th June, 2010 for the purpose of considering and, if thought fit, passing with or without modifications, the following resolutions as ordinary resolutions of the Company:

ORDINARY RESOLUTIONS

1. ‘‘THAT:

• A. (i) the conditional acquisition agreement (the ‘‘Acquisition Agreement’’) dated 19th April, 2010 between the Company, China Elite Holdings Limited and Allied Properties (H.K.) Limited (‘‘APL’’) (a copy of which is marked ‘‘A’’ and initialed by the chairman of the EGM for the purpose of identification) in relation to the Transaction (as defined and described in the circular dated 24th May, 2010 (the ‘‘Circular’’, a copy of which is marked ‘‘B’’ and initialed by the chairman of the EGM for the purpose of identification) despatched to the shareholders of the Company of which the notice convening this meeting forms part (including the transactions contemplated thereby) be and is hereby approved, confirmed and ratified; and

• (ii) the taking of all steps and doing of all things and execution of all documents to implement, give effect to or complete the Acquisition Agreement, and the making and giving of and agreeing to such variations, amendments, modifications, waivers or extensions of the terms of the Acquisition Agreement, as the directors of the Company (the ‘‘Directors’’) may consider to be necessary or expedient, be and are hereby approved; and

• B. on the recommendation of the Directors:

• (i) a final dividend of HK$0.16 per share of HK$0.20 in the capital of the Company (the aggregate amount of such final dividend payable on all shares of the Company shall be referred to as the ‘‘Minimum Amount’’), be and is hereby declared, and

• (ii) subject to and conditional upon completion of the Acquisition Agreement, an additional amount equal to the product of the closing price of the shares in the capital of APL of HK$0.20 each (‘‘APL Shares’’) as stated in The Stock Exchange of Hong Kong Limited’s daily quotation sheets as at the date of completion of the Acquisition Agreement multiplied by 2,293,561,833 less the Minimum Amount (the ‘‘Additional Amount’’), be and is hereby declared as an additional amount of dividend to be added to and included in the said final dividend;

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NOTICE OF EGM

PROVIDED however that

  - (a) forthwith and conditional upon completion of the Acquisition Agreement the aggregate amount of the final dividend, namely the Minimum Amount and the Additional Amount is not to be paid in cash but is to be satisfied by the distribution in specie among the Company’s shareholders registered in the register of members on a date to be fixed and determined by the Directors (the ‘‘Record Date’’) on the terms and conditions described in the Circular of the benefit of the SEN (as defined in the Circular and is the note conferring the right to procure the issue of fully paid APL Shares to be provided to the Company as consideration for and upon completion of the Acquisition Agreement) to the intent that for each share in the Company shareholders will become entitled to 1.309 fully paid shares in the capital of APL, but so that nevertheless the Directors may exercise any and all powers under Article 147 of the Company’s articles of association including power to deal with fractional entitlements (and in particular to sell fractional entitlements and to retain the net proceeds of sale for benefit of the Company) or other cases of difficulty (and in particular any case where a shareholder is resident or has a registered address in any jurisdiction the laws or regulations of which would make it inconvenient or impractical for the shareholder to receive shares, or a right to shares, in APL); and

  - (b) unless previously paid in specie in accordance with sub-paragraph (a) of this resolution the Minimum Amount of the final dividend (HK$0.16 per share of HK$0.20 in the capital of the Company) is to be paid in cash with a scrip alternative whereby shareholders of the Company may elect to receive the final dividend wholly or partly by the allotment of new shares of HK$0.20 each in the capital of the Company in lieu of cash, and on such date, as the board of Directors may decide to the Company’s shareholders registered in the register of members on the Record Date.’’

1. ‘‘THAT:

2. (a) the conditional subscription agreement (the ‘‘Subscription Agreement’’) dated 22nd April, 2010 between the Company as issuer and Asia Financial Services Company Limited as investor (the ‘‘Investor’’) (a copy of which is marked ‘‘C’’ and initialled by the chairman of the EGM for the purpose of identification), all documents in connection therewith including the Issue Documents (as defined and described in the Circular) and all the transactions contemplated thereby be and are hereby approved, confirmed and ratified;

3. (b) the issue and allotment of the Mandatory Convertible Notes and the Warrants (as defined and described in the Circular) by the Company in accordance with the terms and conditions of the Subscription Agreement be and are hereby approved;

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NOTICE OF EGM

• (c) the issue and allotment of such number of new ordinary shares in the share capital of the Company which may fall to be issued upon the conversion of the Mandatory Convertible Notes and the exercise of the subscription right attaching to the Warrants be and are hereby approved; and

• (d) the Directors be and are hereby authorised to do all such acts and things, to sign and execute all such other or further documents and to take such steps as the Directors in their discretion may consider necessary, appropriate, desirable or expedient to give effect to or in connection with, the implementation of and giving effect to the terms of, or the transactions contemplated by, the Subscription Agreement and all documents in connection therewith (including the Issue Documents) and to agree to such variation, amendments or waiver or matters relating thereto (including any variation, amendments or waiver of the terms and conditions of the Mandatory Convertible Notes and the Warrants), as are, in the opinion of the Directors, in the interest of the Company and its Shareholders as a whole.’’

• ‘‘THAT, subject to (a) the issue by the Company and subscription by the Investor of the Mandatory Convertible Notes and Warrants on completion of the transactions contemplated under the Subscription Agreement on the closing date in accordance with the terms and conditions of the Subscription Agreement (‘‘Closing Date’’); and (b) provided that, the Investor holds, on the Closing Date (i) at least 15% of the issued SHK Shares (as defined and described in the Circular) or (ii) SHK Shares and/or Mandatory Convertible Notes and/or Warrants which on an as converted or exercised basis in aggregate represent at least 15% of the issued SHK Shares, Mr. Ho Chi Kit be and is hereby elected as a non-executive Director with effect after the issue and subscription of the Mandatory Convertible Notes and Warrants on the Closing Date.’’

• ‘‘THAT, subject to (a) the issue by the Company and subscription by the Investor of the Mandatory Convertible Notes and Warrants on completion of the transactions contemplated under the Subscription Agreement on the Closing Date; and (b) provided that, the Investor holds, on the Closing Date (i) at least 15% of the issued SHK Shares or (ii) SHK Shares and/ or Mandatory Convertible Notes and/or Warrants which on an as converted or exercised basis in aggregate represent at least 15% of the issued SHK Shares, Mr. Leung Pak To, Francis be and is hereby elected as a non-executive Director with effect after the issue and subscription of the Mandatory Convertible Notes and Warrants on the Closing Date.’’

By Order of the Board

Sun Hung Kai & Co. Limited Joseph Tong Tang Executive Director

Hong Kong, 24th May, 2010

Head office and principal place of business in Hong Kong:

12th Floor, CITIC Tower

1 Tim Mei Avenue

Central, Hong Kong

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NOTICE OF EGM

Notes:

1. A form of proxy for use at the EGM is enclosed herewith.

2. The instrument appointing a proxy shall be in writing under the hand of the appointor or of his/her attorney duly authorized in writing or, if the appointor is a corporation, either executed under its common seal or under the hand of any officer, attorney or other person duly authorized to sign the same.

3. A shareholder entitled to attend and vote at the EGM may appoint one or more proxies to attend and, on a poll, to vote in his/her stead. A proxy need not be a shareholder of the Company but must be present in person to represent him/her.

4. In order to be valid, a form of proxy in the prescribed form together with the power of attorney or other authority (if any) under which it is signed, or a notarially certified copy of such power or authority, must be lodged with the share registrar of the Company, Tricor Secretaries Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong, not later than 48 hours before the time appointed for holding the EGM or any adjourned meeting thereof (as the case may be). Such prescribed form of proxy for use at the EGM is also published on the HKExnews website of The Stock Exchange of Hong Kong Limited at www.hkexnews.hk and the website of the Company at www.shkf.com.

5. Completion and return of the form of proxy will not preclude any shareholders from attending and voting in person at the EGM or at any adjourned meeting thereof (as the case may be) should they so wish, and in such event, the form of proxy shall be deemed to be revoked.

6. Where there are joint registered holders of any share(s), any one of such joint holders may attend and vote at the EGM or at any adjourned meeting thereof (as the case may be), either in person or by proxy, in respect of such share(s) as if he/she was solely entitled thereto, but if more than one of such joint holders are present at the EGM or at any adjourned meeting thereof (as the case may be), the most senior shall alone be entitled to vote, whether in person or by proxy. For this purpose, seniority shall be determined by the order in which the names stand in the register of members of the Company in respect of the joint holding.

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