First Pacific Company Limited - Proxy Solicitation & Information Statement 2012

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular, you should consult your stockbroker or other registered dealer in securities, 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 circular and the accompanying form of proxy to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

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

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

VERY SUBSTANTIAL DISPOSAL AND

CONNECTED TRANSACTION AND

NOTICE OF EXTRAORDINARY GENERAL MEETING

Independent Financial Adviser to the Independent Board Committee and Independent Shareholders

A notice convening the EGM of Sun Hung Kai & Co. Limited to be held at Plaza 1&2, Lower Lobby, Novotel Century Hong Kong, 238 Jaffe Road, Wanchai, Hong Kong on Monday, 23 July 2012 at 3:00 p.m. is set out on page 94 of this circular.

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

29 June 2012

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Director’s Service Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Information of the Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
Information of the Disposal Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
Reasons for Entering into the Director’s Service Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
Financial Impact of the Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
Listing Rules Implications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	15
Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	15
Letter from the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	16
Letter from the Independent Financial Adviser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	17
Appendix I — Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	45
Appendix II — Financial Information of the Target Companies . . . . . . . . . . . . . . . . . . . . . . .	58
Appendix III — Unaudited Pro Forma Financial Information of the Remaining Group . . .	66
Appendix IV — General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	83
Notice of EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	94

– i –

DEFINITIONS

In this circular, the following expressions have the meanings respectively set opposite them unless the context otherwise requires:

‘‘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)
‘‘APL’’	Allied Properties (H.K.) Limited, a company incorporated in
	Hong Kong with limited liability, the securities of which are
	listed on the Main Board of the Stock Exchange (Stock Code: 56
	and Warrant Code: 1183), and a non wholly-owned subsidiary of
	AGL. As at the Latest Practicable Date, APL was beneficially
	owned as to approximately 74.97% by AGL
‘‘associate’’	has the meaning ascribed to it under the Listing Rules
‘‘Board’’	the board of Directors
‘‘Company’’	Sun Hung Kai & Co. 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: 86), and an
	indirect non wholly-owned subsidiary of each of AGL and APL.
	As at the Latest Practicable Date, the Company was beneficially
	owned as to approximately 53.78% by APL
‘‘connected person’’	has the meaning ascribed to it under the Listing Rules
‘‘Director(s)’’	director(s) of the Company
‘‘Director’s Service Agreement’’	the director’s service agreement entered into between UA Finance
	and Mr. Nagahara on 9 May 2012
‘‘Disposal Group’’	the Newco and the PRC Subsidiaries
‘‘EOS’’	the Employee Ownership Scheme of the Company, which was
	formally adopted on 18 December 2007
‘‘Exercise Period’’	the exercise period of the Option
‘‘Exercise Price’’	the exercise price of the Option
‘‘EGM’’	an extraordinary general meeting to be held by the Company to
	approve the Director’s Service Agreement and the transactions
	contemplated thereunder
‘‘Group’’	the Company and its subsidiaries
‘‘HK$’’	Hong Kong dollars, the lawful currency of Hong Kong

– 1 –

DEFINITIONS

‘‘Hong Kong’’
Hong Kong Special Administrative Region of the PRC
‘‘Independent Board Committee’’
the independent board committee, comprising Messrs. David Craig Bartlett, Alan Stephen Jones, Carlisle Caldow Procter and Peter Wong Man Kong, all being the independent non-executive Directors, formed to advise the Independent Shareholders as to the Director’s Service Agreement and the transactions contemplated thereunder
‘‘Independent Financial Adviser’’/ ‘‘Centurion’’
Centurion Corporate Finance Limited, a corporation licensed to carry out Type 1 (dealing in securities), Type 4 (advising on securities), Type 6 (advising on corporate finance) and Type 9 (asset management) regulated activities as defined under the SFO, being the independent financial adviser appointed by the Company to advise the Independent Board Committee and the Independent Shareholders in relation to the Director’s Service Agreement and the transactions contemplated thereunder
‘‘Independent Shareholders’’
has the meaning ascribed to it under the Listing Rules
‘‘Latest Practicable Date’’
22 June 2012 being the latest practicable date prior to the printing of this circular for ascertaining certain information in this circular
‘‘Listing Rules’’
the Rules Governing the Listing of Securities on the Stock Exchange
‘‘Mr. Nagahara’’ Mr. Akihiro Nagahara, a director and the chief executive officer of UA Finance
‘‘Newco’’
a new company to be incorporated under UA Finance for the purpose of the Restructuring
‘‘Option’’ has the meaning ascribed to it in the section headed ‘‘Option’’ of the ‘‘Letter from the Board’’ contained in this circular
‘‘PRC’’
the People’s Republic of China (for the purpose of this circular excludes Hong Kong, the Macau Special Administrative Region and Taiwan)
‘‘PRC Business’’ money lending business in the PRC
‘‘PRC Development Bonus’’ has the meaning ascribed to it in the section headed ‘‘PRC Development Bonus’’ of the ‘‘Letter from the Board’’ contained in this circular

‘‘PRC Development Project’’ the project of developing the PRC Business for the UA Finance Group

– 2 –

DEFINITIONS

‘‘PRC Subsidiaries’’ all the subsidiaries of UA Finance incorporated or to be incorporated in the PRC directly or indirectly engaged in the PRC Business ‘‘Remaining Group’’ the Group immediately upon full exercise of the Option ‘‘Restructuring’’ the proposed incorporation of the Newco to hold all equity interest in the PRC Subsidiaries and all the direct and indirect equity interest in the PRC Subsidiaries held by UA Finance, its subsidiaries or its nominee shareholders to be transferred to the Newco

‘‘RMB’’ Renminbi, the lawful currency of the PRC
‘‘SFO’’ the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)
‘‘Share(s)’’ ordinary share(s) of nominal value of HK$0.20 each in the share capital of the Company
‘‘Shareholder(s)’’ holder(s) of the Share(s)
‘‘Stock Exchange’’ The Stock Exchange of Hong Kong Limited
‘‘substantial shareholder’’ has the meaning ascribed to it under the Listing Rules
‘‘Target Company(ies)’’ the following PRC Subsidiary(ies):
(i) 亞聯財信息諮詢(深圳)有限公司 (wholly-owned by UA Finance);
(ii) 深圳亞聯財行銷顧問有限公司 (wholly-owned by UA Finance);
(iii) 深圳市亞聯財小額信貸有限公司 (wholly-owned by UA Finance);
(iv) 瀋陽金融商貿開發區亞聯財小額貸款有限公司 (wholly-owned by UA Finance);
(v) 重慶市渝中區亞聯財小額貸款有限責任公司 (wholly-owned by UA Finance);
(vi) 天津亞聯財小額貸款有限公司 (wholly-owned by UA Finance);
(vii) 成都亞聯財小額貸款有限公司 (wholly-owned by UA Finance);
(viii) 大連保稅區亞聯財小額貸款有限公司 (wholly-owned by UA Finance);

– 3 –

DEFINITIONS

(ix) 雲南省亞聯財小額貸款有限公司 (wholly-owned by UA Finance); and
(x) 北京亞聯財小額貸款有限公司 (80% owned by UA Finance)
‘‘Tian An’’ Tian An China Investments Company Limited, a company incorporated in Hong Kong with limited liability, the shares of which are listed on the Stock Exchange (Stock Code: 28)
‘‘UA Finance’’ United Asia Finance Limited, a company incorporated with limited liability in Hong Kong and a non wholly-owned subsidiary of the Company. As at the Latest Practicable Date, UA Finance was beneficially owned as to approximately 58.18% by the Company
‘‘UA Finance Group’’ UA Finance and its subsidiaries from time to time
‘‘Valuer’’ Norton Appraisals Limited

‘‘%’’ per cent

– 4 –

LETTER FROM THE BOARD

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(Incorporated in Hong Kong with limited liability)

(Stock code: 86)

Executive Directors:

Mr. Lee Seng Huang (Group Executive Chairman)

Mr. William Leung Wing Cheung Mr. Joseph Tong Tang Mr. Peter Anthony Curry

Registered Office: 42/F, The Lee Gardens 33 Hysan Avenue Causeway Bay Hong Kong

Non-Executive Directors:

Mr. Goh Joo Chuan

Mr. Leung Pak To

Mr. Roy Kuan Mr. Ho Chi Kit (alternate to Mr. Roy Kuan)

Independent Non-Executive Directors:

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

29 June 2012

To the Shareholders of the Company

Dear Sir or Madam,

VERY SUBSTANTIAL DISPOSAL

AND

CONNECTED TRANSACTION AND

NOTICE OF EXTRAORDINARY GENERAL MEETING

INTRODUCTION

The Board announced that on 9 May 2012, UA Finance entered into the Director’s Service Agreement with Mr. Nagahara for a term of 10 years from the date of the Director’s Service Agreement.

– 5 –

LETTER FROM THE BOARD

DIRECTOR’S SERVICE AGREEMENT

The principal terms of the Director’s Service Agreement are set out below:

Date

9 May 2012

Parties

UA Finance:

an indirect non wholly-owned subsidiary of the Company.

Mr. Nagahara:

a director and the chief executive officer of UA Finance and indirectly holds 9.46% equity interest in UA Finance through Icapital City Limited which is wholly-owned by Mr. Nagahara. Save as aforesaid, Mr. Nagahara is not a director or a substantial shareholder or an associate of any connected person of the Company.

Term

Subject to the early termination and conditions precedent provisions set out below, UA Finance shall engage Mr. Nagahara for a term of 10 years from the date of the Director’s Service Agreement.

Termination

UA Finance may terminate the Director’s Service Agreement on the occurrence of certain events, including Mr. Nagahara becoming incapacitated from performing his duties for more than 6 months, committing any serious or persistent breach of the Director’s Service Agreement, being guilty of any act of dishonesty, grave misconduct or wilful neglect, becoming bankrupt, a lunatic or of unsound mind, being absent for the board meeting of UA Finance continuously for 3 months without leave of absence, making arrangement or composition with his creditors, or being prohibited by law from acting as a director or convicted of any criminal offence or any offence which will seriously prejudice the performance of his duties or be identified as an insider dealer under any statutory enactment or regulations relating to insider dealing in force from time to time.

Conditions Precedent

The Director’s Service Agreement shall not be effective until:

(a) each of AGL, APL and the Company having obtained the approval of their respective shareholders for the Director’s Service Agreement and the transactions contemplated thereunder as required by the Listing Rules;
(b) each of AGL, APL and the Company having complied with and to the satisfaction of the Stock Exchange all requirements under the Listing Rules in relation to the Director’s Service Agreement and the transactions contemplated thereunder; and

– 6 –

LETTER FROM THE BOARD

(c) all other necessary consents and approvals as may be required in respect of the Director’s Service Agreement and the transactions contemplated thereunder having been obtained.

PRC Development Bonus

Pursuant to the Director’s Service Agreement, UA Finance will grant to Mr. Nagahara a bonus (the ‘‘PRC Development Bonus’’) in respect of the PRC Development Project on an annual basis for a period of 10 years commencing from the financial year ending 31 December 2012. The amount of the PRC Development Bonus shall be subject to a cap of HK$20,000,000 for each financial year.

The amount of the PRC Development Bonus shall be calculated as follows:

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where:

A = PRC Development Bonus in respect of a financial year
B = Combined net profits after tax of the PRC Subsidiaries attributable to the owners of UA Finance in respect of the relevant financial year
C = Cost of capital of the UA Finance Group for its combined equity investments in the PRC Subsidiaries (being the sum of the cost of capital of the UA Finance Group for each month in the relevant financial year calculated by the UA Finance Group’s combined equity investments in the PRC Subsidiaries attributable to the owners of UA Finance at each month end multiplied by the prime lending rate for HK$ (expressed as a % per month) adopted by The Hongkong and Shanghai Banking Corporation Limited at the respective month end for the relevant financial year)

Upon expiry of the Director’s Service Agreement during a financial year, Mr. Nagahara shall be entitled to such amount of the PRC Development Bonus pro rata to the number of days that has elapsed prior to the date of expiry of the Director’s Service Agreement.

Option

Pursuant to the Director’s Service Agreement, UA Finance will grant an option to Mr. Nagahara (the ‘‘Option’’) to (i) subscribe for up to 20% of the enlarged issued capital of the Newco (corresponding to 25% of the issued capital of the Newco as at the date immediately prior to the date of the exercise of the Option); or (ii) purchase from UA Finance or its subsidiary up to 20% of the then existing issued capital of the Newco as at the date of the exercise of the Option subject to and in accordance with the terms of the Director’s Service Agreement provided that Mr. Nagahara shall not hold more than 20% of the then issued share capital of the Newco upon full exercise of the Option. Mr. Nagahara shall obtain prior written approval of the board of directors of UA Finance before he transfers any shares of the Newco to a third party (such approval shall not be unreasonably withheld).

– 7 –

LETTER FROM THE BOARD

A share of the Newco allotted upon the exercise of the Option shall not carry voting rights until completion of the registration of Mr. Nagahara as the holder thereof. A share of the Newco issued upon such exercise shall rank for all dividends or other distributions paid or made on or after the date of exercise, other than any dividend or other distribution previously declared or recommended or resolved to be paid or made with respect to a record date which is before such date of exercise. Subject as aforesaid, shares of the Newco allotted upon the exercise of the Option shall rank pari passu in all respects with the shares of the Newco in issue on the date of exercise (provided that when the date of exercise falls on a day upon which the register of members of the Newco is closed, then the first business day on which the register of members of the Newco is reopened) and shall be subject to all the provisions of the memorandum and articles of association of the Newco for the time being in force.

(i) in the case of subscription for new shares in the Newco by Mr. Nagahara,

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where:

A = Exercise Price
B = Number of new shares of the Newco to be issued
C = Total number of issued shares of the Newco as at the date immediately prior to the date of exercise of the Option
D = Consolidated equity attributable to owners of the Newco (excluding noncontrolling interests of the subsidiaries of the Newco) as at the end of the month immediately prior to the date of exercise of the Option based on the monthly management accounts prepared to the month end immediately prior to the date of exercise of the Option
E = Total amount of the loans owed by the Newco to its shareholders as at the date immediately prior to the date of exercise of the Option
F = Total number of issued shares of the Newco held by Mr. Nagahara as at the date immediately prior to the date of exercise of the Option
G = Total amount of the loans owed by the Newco to Mr. Nagahara as at the date immediately prior to the date of exercise of the Option

– 8 –

LETTER FROM THE BOARD

(ii) in the case of purchase of issued shares of the Newco from UA Finance or its subsidiary by Mr. Nagahara,

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

B B
A = x D + x E
C C
----- End of picture text -----

where:

A = Exercise Price
B = Number of shares of the Newco to be purchased
C = Total number of issued shares of the Newco as at the date immediately prior to the date of exercise of the Option
D = Consolidated equity attributable to owners of the Newco (excluding noncontrolling interests of the subsidiaries of the Newco) as at the end of the month immediately prior to the date of exercise of the Option based on the monthly management accounts prepared to the month end immediately prior to the date of exercise of the Option
E = Total amount of the loans owed by the Newco to its shareholders as at the date immediately prior to the date of exercise of the Option

Consolidated equity attributable to owners of the Newco shall be calculated as follows:

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where:

H = Consolidated equity attributable to owners of the Newco
I = Total amount paid up or credited as paid up on the issued capital of the Newco
J = Total amount standing to the credit of the consolidated revenue and capital reserves of the Newco and its subsidiaries (excluding any amount attributable to the non-controlling interests of the subsidiaries of the Newco). The revenue reserves should include consolidated retained profit and loss accounts of the Newco and its subsidiaries
K = Total amount of dividend or other distribution declared, recommended or made by the Newco but not yet paid
L = Total amount standing to the debit of the consolidated revenue and capital reserves of the Newco and its subsidiaries (excluding any amount attributable to the non-controlling interests of the subsidiaries of the Newco). The revenue reserves should include consolidated retained profit and loss accounts of the Newco and its subsidiaries

– 9 –

LETTER FROM THE BOARD

In case of any disagreement on the Exercise Price between UA Finance and Mr. Nagahara, UA Finance’s determination of the Exercise Price shall be final and binding (in the absence of manifest error) on UA Finance and Mr. Nagahara.

As advised and confirmed by UA Finance to the Company, it is the current intention of UA Finance to finance the acquisition of the PRC Subsidiaries by the Newco partly by way of shareholders loans before the exercise of the Option but there is no concrete plan yet as to the amount and details (including whether such loans are interest bearing) of such loans.

UA Finance and Mr. Nagahara shall be deemed to hold such amount of the loans owed by the Newco to its shareholders proportional to their respective shareholdings in the Newco upon payment of the Exercise Price. UA Finance and Mr. Nagahara shall enter into an assignment regarding such amount of the shareholders loans to be taken up by Mr. Nagahara before completion of registration of Mr. Nagahara as the holder of the relevant shares in respect of such exercise of the Option. UA Finance and Mr. Nagahara shall procure that their loans to the Newco to be repaid at the same time proportional to their shareholdings in the Newco. There is no concrete plan yet as to the timing and method of repayment.

The Exercise Period will be 10 years from the date of the Director’s Service Agreement.

The exercise of the Option will be conditional on (1) the obtaining of requisite approval from the relevant government approving authorities in the PRC for the Restructuring; and (2) the completion of the Restructuring. The aforesaid conditions are for the sole benefit of UA Finance and UA Finance may in its sole discretion and at any time waive any or all of such conditions. Such waiver may be made subject to such reasonable terms and conditions as UA Finance sees fit. Neither the Company nor Mr. Nagahara has the rights to waive any or all of such conditions. UA Finance had no intention to waive any of the conditions up to the Latest Practicable Date.

According to rules and regulations applicable to money lenders of various cities and provinces in the PRC, such as, Shenzhen, Chongqing and Tianjin, a pure investment holding company which has no profit track record is not qualified to be a major shareholder or a promoter of setting up a company in such places to carry on the money lending business. Therefore, the condition of obtaining the requisite approval from the relevant government authorities in the PRC for the Restructuring could only be satisfied when it becomes permissible under the rules and regulations of the PRC applicable to money lending business and it is not possible to estimate the time for the completion of the Restructuring.

According to the ‘‘Guiding Opinion on the Pilot Operation of Small Loan Companies’’ (關於小額貸款公司試點的指導意見) issued by the China Banking Regulatory Commission and the People’s Bank of China (the ‘‘PBoC’’) on 4 May 2008, a Target Company must fulfill, inter alia, the following conditions for carrying on the money lending business:

(a) as a limited liability company, its minimum capital must be not less than RMB5 million;
(b) its directors, supervisors and senior management do not have any criminal offences record or adverse credit record;

– 10 –

LETTER FROM THE BOARD

(c) its major source of funding must be registered capital, donated capital and borrowings from a maximum of two banks, while the balance of the bank borrowings must not exceed 50% of its net capital;
(d) the outstanding amount of loans granted to a single borrower must not exceed 5% of its net capital; and
(e) interest rate charged on loans must not be higher than the level prescribed by the relevant judicial authority nor less than 0.9 times of the prevailing base loan interest rate published by the PBoC.

The Target Companies have complied with the abovementioned conditions.

Upon satisfaction of the two conditions set out above or waiver thereof by UA Finance, the Option will become exercisable and may be exercised by Mr. Nagahara in whole or in part and at any time before the expiry of the Exercise Period. Once the Option becomes exercisable, the PRC Development Bonus will cease to be payable. For the avoidance of doubt, for the financial year in which the Option becomes exercisable, Mr. Nagahara shall be entitled to such amount of the PRC Development Bonus pro rata to the number of days that has elapsed prior to the date when the Option becomes exercisable. Mr. Nagahara shall also be entitled to retain the PRC Development Bonus received for previous financial year(s).

INFORMATION OF THE GROUP

The principal business activities of SHK Group are wealth management and brokerage including asset management, capital markets, consumer finance and principal investments.

INFORMATION OF THE DISPOSAL GROUP

The Newco is proposed to be established to hold all equity interest in the PRC Subsidiaries directly or indirectly engaged or to be engaged in the PRC Business but not currently proposed to directly hold any property interest. As at 9 May 2012, the property interests held by the PRC Subsidiaries that form part of their property activities accounted for less than 1% of the total assets of the PRC Subsidiaries.

The combined net profits (both before and after taxation and extraordinary items) attributable to the PRC Subsidiaries for the two years ended 31 December 2011 are as follows:

			For the	For the
			year ended	year ended
			31 December 2011	31 December 2010
			(HK$)	(HK$)
Net	profits	before tax and extraordinary items	184,290,850	64,577,765
Net	profits	after tax and extraordinary items	141,335,262	47,595,348

The net assets value of the Disposal Group as at 31 December 2011 was HK$3,224.7 million.

– 11 –

LETTER FROM THE BOARD

The market value of the Option is valued by the Valuer in the amount of HK$265.2 million as at 31 March 2012 using the Black-Scholes Option Pricing Model.

REASONS FOR ENTERING INTO THE DIRECTOR’S SERVICE AGREEMENT

As advised and confirmed by UA Finance to the Company, Mr. Nagahara has been employed by UA Finance since 1 September 1993. Under his leadership, UA Finance has become a leading consumer finance company in Hong Kong. It has achieved record profits in recent years and has become a major profit contributor to the Company. Its pre-tax contribution to the Group amounted to HK$375.0 million, HK$751.2 million (as restated) and HK$854.3 million in 2009, 2010 and 2011 respectively. Its pre-tax contribution represented 23%, 47% and 53% of the total profit before taxation of the Group in 2009, 2010 and 2011 respectively. Mr. Nagahara is considered to have been the key person in founding the PRC Business and is considered to be essential to its development and expansion. However, his past and current remuneration packages, which comprise salary and an annual performance bonus at the discretion of the board of directors of UA Finance, are not considered to be commensurate with the contribution he has made to the success of the UA Finance Group. Accordingly, in order to ensure the retention of his services and to provide him with sufficient incentive to continue to develop the PRC Business, UA Finance entered into the Director’s Service Agreement with Mr. Nagahara.

Having taken into account the reasons for entering into the Director’s Service Agreement, the Board (other than its independent non-executive directors, whose views are set out in the ‘‘Letter from the Independent Board Committee’’ in this circular) considers that the terms of the Director’s Service Agreement and the transactions contemplated thereunder are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

No Director is considered to be interested in the Director’s Service Agreement and therefore none of them has abstained from voting on the board resolutions proposed to approve the Director’s Service Agreement.

FINANCIAL IMPACT OF THE OPTION

As the Exercise Price will be calculated by reference to the consolidated equity attributable to owners of the Newco and the amount of loans owed by the Newco to its shareholders as set out above, it is not possible for the Company to estimate the gain or loss on full exercise of the Option.

The Exercise Price will be determined based on the aggregate amount of shareholders equity and shareholders loans (both at the time of exercise of the Option) proportional to the shareholding to be taken up by Mr. Nagahara. Therefore, the excess of the Exercise Price over the net book value of the shares of the Newco (being equal to the proportional net book value of the Disposal Group) will be the amount of shareholders loans (at the time of exercise of the Option) proportional to the shareholding to be taken up by Mr. Nagahara which treatment is in line with the Company’s accounting standard or accounting policy and agreed by the Company’s auditor, Deloitte Touche Tohmatsu. The total shareholders loans owed by the Newco to its shareholders including Mr. Nagahara will be repaid by the Newco to its shareholders at the same time proportional to their shareholdings in the Newco but there is no concrete plan yet as to the timing and method of repayment.

Upon full exercise of the Option, Newco will become a 80%-owned subsidiary of UA Finance.

– 12 –

LETTER FROM THE BOARD

Based on the unaudited pro forma financial information of the Remaining Group as set out in Appendix III of this circular, the financial effects of the Option on the Group are summarised as follows:

assuming the Option had been granted and exercised on 1 January 2011, the profit attributable to the owners of the Company would decrease from approximately HK$1,032.4 million to approximately HK$855.5 million, which is calculated based on (i) the recognition of the fair value of the Option as an expense attributable to the Group of approximately HK$154.3 million; (ii) the recognition of withholding tax on dividends attributable to the Group of approximately HK$3.3 million; (iii) the recognition of expenses of the Restructuring attributable to the Group of approximately HK$2.8 million; and (iv) deduction of profit for the year attributable to additional non-controlling interests arising from the exercise of the Option of approximately HK$16.5 million.
assuming the transaction had taken place on 31 December 2011, the total assets of the Group would increase from approximately HK$22,494.4 million to approximately HK$23,096.4 million, representing an increase of approximately HK$602.0 million. Such increase is the result of consideration received on exercise of the Option, less withholding tax on dividends and expenses of the Restructuring.

In the absence of concrete plan as to the terms and conditions (including repayment schedule and terms) of the shareholders loans to the Newco, it is not practicable to determine the fair value of the Option on the basis that the Newco acquires the Target Companies wholly or partly by way of shareholders loans. Henceforth, it is not practicable to assess the quantitative effect to the unaudited pro forma financial information of the Remaining Group if the Newco acquires the Target Companies wholly or partly through shareholders loans. However, the Valuer is of the view that the fair value of the Option will decrease whenever there is repayment of shareholders loans if the Newco acquires the Target Companies wholly or partly by way of shareholders loans because the total estimated value of Newco will drop as a result thereof.

USE OF PROCEEDS

The directors of UA Finance currently intend to apply the proceeds received from the exercise of the Option as general working capital of UA Finance Group.

LISTING RULES IMPLICATIONS

The Director’s Service Agreement has a term of more than three years. Pursuant to Rule 13.68 of the Listing Rules, the Director’s Service Agreement would be subject to the prior approval of the Shareholders.

As each of the relevant percentage ratios of the PRC Development Bonus is less than 5% for the Company, the grant of the PRC Development Bonus to Mr. Nagahara is not subject to the notification, publication and shareholders’ approval requirements under Chapter 14 of the Listing Rules.

At the time of grant of the Option pursuant to the Director’s Service Agreement, the actual monetary value of each of the exercise price, the value of the underlying assets, and the profits and revenue attributable to such assets has not been determined, it is not possible for the Company to

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LETTER FROM THE BOARD

demonstrate to the satisfaction of the Stock Exchange the highest possible monetary value for the purpose of classification of notifiable transaction as required under Rule 14.76(1) of the Listing Rules. The grant of the Option is treated by the Company as a very substantial disposal under Rule 14.76(1) of the Listing Rules and therefore is conditional upon, among others, the approval of the Shareholders at a general meeting.

To the best knowledge, information and belief of the Board, Mr. Nagahara is a director and the chief executive officer of UA Finance, an indirect non wholly-owned subsidiary of the Company and is therefore a connected person of the Company.

The grant of the PRC Development Bonus to Mr. Nagahara constitutes a connected transaction but it is exempted from the connected transaction requirements because it forms part of a service contract by a director of a listed issuer under Rule 14A.31(6) of the Listing Rules.

The grant of the Option to Mr. Nagahara by UA Finance constitutes a connected transaction for the Company. As the actual monetary value of each of the exercise price, the value of the underlying assets and the revenue attributable to such assets has not been determined at the time of grant of the Option, it is not possible for the Company to demonstrate to the satisfaction of the Stock Exchange the highest possible monetary value for the purpose of classification of the connected transaction under Rule 14A.71 of the Listing Rules. Therefore, the grant of the Option would be subject to the reporting, announcement and independent shareholders’ approval requirements of Chapter 14A of the Listing Rules.

As at the Latest Practicable Date, Mr. Nagahara together with his associate held 850,254 Shares. They will abstain from voting in respect of any resolution that would be proposed to approve the Director’s Service Agreement and the transactions contemplated thereunder at the EGM.

EGM

The notice of EGM is set out on page 94 of this circular. The EGM will be held at Plaza 1&2, Lower Lobby, Novotel Century Hong Kong, 238 Jaffe Road, Wanchai, Hong Kong on Monday, 23 July 2012 at 3:00 p.m. to consider and, if thought fit, approve the Director’s Service Agreement and the transactions contemplated thereunder.

Pursuant to Rule 13.39(4) of the Listing Rules, any vote of shareholders at a general meeting must be taken by poll except where the chairman, in good faith, decides to allow a resolution which relates purely to a procedural or administrative matter to be voted on by a show of hands. The resolution to be proposed at the EGM does not relate purely to a procedural or administrative matter. Accordingly, the resolution as set out in the notice of EGM will be put to vote by way of poll at the EGM. An announcement on the results of the vote by poll will be made by the Company after the EGM in the manner prescribed under Rule 13.39(5) of the Listing Rules.

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

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LETTER FROM THE BOARD

RECOMMENDATION

The Independent Board Committee comprising Messrs. David Craig Bartlett, Alan Stephen Jones, Carlisle Caldow Procter and Peter Wong Man Kong, all of whom are independent non-executive Directors, has been established to consider, and to advise the Independent Shareholders as to the Director’s Service Agreement and the transactions contemplated thereunder.

The Independent Financial Adviser has been appointed to advise the Independent Board Committee and the Independent Shareholders in respect of the Director’s Service Agreement and the transactions contemplated thereunder.

The text of a letter to the Independent Shareholders from the Independent Board Committee in relation to the Director’s Service Agreement and the transactions contemplated thereunder is set out on page 16 of this circular. Having considered the advice from the Independent Financial Adviser in relation to the Director’s Service Agreement and the transactions contemplated thereunder, which is set out on pages 17 to 44 of this circular, the Independent Board Committee is of the opinion that the terms of the Director’s Service Agreement and the transactions contemplated thereunder are on normal commercial terms, fair and reasonable and in the interests of the Company and the Shareholders as a whole. Accordingly, the Independent Board Committee recommends the Independent Shareholders to vote in favour of the Director’s Service Agreement and the transactions contemplated thereunder.

The Board (other than the independent non-executive Directors) is of the view that the terms of the Director’s Service Agreement and the transactions contemplated thereunder are fair and reasonable and in the interests of the Company and the Shareholders as a whole. Accordingly, the Board recommends the Shareholders to vote in favour of the proposed resolution at the EGM.

ADDITIONAL INFORMATION

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

Yours faithfully, On behalf of the Board Sun Hung Kai & Co. Limited Peter Anthony Curry 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)

29 June 2012

To the Independent Shareholders

Dear Sir or Madam,

VERY SUBSTANTIAL DISPOSAL AND CONNECTED TRANSACTION DIRECTOR’S SERVICE AGREEMENT

We refer to the circular dated 29 June 2012 issued by the Company (the ‘‘Circular’’), of which this letter forms part. Terms defined in the Circular shall bear the same meanings when used herein unless the context requires otherwise.

We have been appointed by the Board as the Independent Board Committee to advise you in connection with the Director’s Service Agreement and the transactions contemplated thereunder and to advise you as to whether, in our opinion, the terms of the Director’s Service Agreement and the transactions contemplated thereunder are fair and reasonable so far as the Independent Shareholders are concerned. Details of the Director’s Service Agreement and the transactions contemplated thereunder are set out in the ‘‘Letter from the Board’’ contained in the Circular. Centurion has been appointed as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the terms of the Director’s Service Agreement and the transactions contemplated thereunder. Details of its advice and the principal factors taken into consideration in arriving at its recommendations are set out in the ‘‘Letter from the Independent Financial Adviser’’ contained in the Circular.

Having considered the terms of the Director’s Service Agreement and the transactions contemplated thereunder, taking into account the information contained in the Circular and the advice of Centurion, we are of the opinion that the terms of the Director’s Service Agreement and the transactions contemplated thereunder are on normal commercial terms, fair and reasonable and are in the interests of the Company and the Shareholders as a whole.

We would recommend the Independent Shareholders to vote in favour of the Director’s Service Agreement and the transactions contemplated thereunder.

Yours faithfully, For and on behalf of

Independent Board Committee of Sun Hung Kai & Co. Limited

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

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The following is the text of the letter of advice to the Independent Board Committee and the Independent Shareholders from Centurion dated 29 June 2012 for incorporation in this circular:

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==> picture [215 x 60] intentionally omitted <==

29 June 2012

To the Independent Board Committee and

the Independent Shareholders of Sun Hung Kai & Co. Limited

Dear Sirs,

VERY SUBSTANTIAL DISPOSAL AND CONNECTED TRANSACTION

INTRODUCTION

We have been engaged as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders with respect to the terms and conditions of the granting of the Option pursuant to the Director’s Service Agreement, details of which are outlined in the ‘‘Letter from the Board’’ set out from pages 5 to 15 of the circular dated 29 June 2012 to the 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 granting of the Option pursuant to the Director’s Service Agreement and the relevant transactions contemplated thereunder are of normal commercial terms, are fair and reasonable and in the interests of the Company and its 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 jointly announced with AGL and APL that on 9 May 2012, the entering into of the Director’s Service Agreement by Mr. Nagahara and UA Finance and pursuant to which, the grant of the Option to Mr. Nagahara by UA Finance. As set out in the ‘‘Letter from the Board’’, at the time of grant of the Option pursuant to the Director’s Service Agreement, the actual monetary value of each of the exercise price, the value of the underlying assets, and the profits and revenue attributable to such assets has not been determined, it is not possible for the Company to demonstrate to the satisfaction of the Stock Exchange the highest possible monetary value for the purpose of classification of notifiable transaction as required under Rule 14.76(1) of the Listing Rules. Therefore, the grant of the Option is treated by the Company as a very substantial disposal under Rule 14.76(1) of the Listing Rules and is conditional upon, among other things, the approval of the Independent Shareholders at the EGM.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Also as Mr. Nagahara is a director and the chief executive officer of UA Finance, an indirect non wholly-owned subsidiary of the Company and he is therefore a connected person of the Company, the grant of the Option to Mr. Nagahara by UA Finance constitutes a connected transaction for the Company. As the actual monetary value of each of the exercise price, the value of the underlying assets and the revenue attributable to such assets has not been determined at the time of grant of the Option, it is not possible for the Company to demonstrate to the satisfaction of the Stock Exchange the highest possible monetary value for the purpose of classification of the connected transaction under Rule 14A.71 of the Listing Rules. Therefore, the grant of the Option would be subject to the reporting, announcement and independent shareholders’ approval requirements of Chapter 14A of the Listing Rules.

As set out in the ‘‘Letter from the Board’’, (i) given that the Director’s Service Agreement has a term of more than three years, such 10-year term is subject to the prior approval of the Shareholders at the EGM pursuant to Rule 13.68 of the Listing Rules; and (ii) the PRC Development Bonus is not subject to the notification, publication and shareholders’ approval requirements under Chapter 14 of the Listing Rules. As the 10-year term of the Director’s Service Agreement is part and partial to the Exercise Period under which the Option may be exercised, we have also opined on such 10-year term below.

The resolution to approve the Director’s Service Agreement and the transactions contemplated thereunder will be put to vote by way of poll at the EGM. As set out in the ‘‘Letter from the Board’’, other than Mr. Nagahara and his associates, no Shareholder is required to abstain from voting on such resolution at the EGM. In this regard, please refer to the section headed ‘‘EGM’’ as set out in the ‘‘Letter From The Board’’ for further details.

The Independent Board Committee comprising Messrs. David Craig Bartlett, Alan Stephen Jones, Carlisle Caldow Procter and Peter Wong Man Kong, all of whom are independent non-executive Directors, has been established to consider and to advise the Independent Shareholders as to the Director’s Service Agreement and the transactions contemplated thereunder.

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 Director’s Service Agreement and the correctness of the valuation report on the Option by the Valuer) which have been provided to us by the executive Directors and for which they take full responsibility. The Directors have declared in a responsibility statement set out in Appendix IV 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 and pro forma financial information of each of the Group, the UA Finance Group, the PRC Subsidiaries, the Disposal Group and the Remaining Group, we have relied principally on their respective audited and/or unaudited financial statements (including unaudited pro forma financial statements), such financial statements are prepared by the Company and for which

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

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 the Listing Rules, 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 (including the pro forma financial effects) of each of the Group, the UA Finance Group, the PRC Subsidiaries, the Disposal Group and the Remaining Group or any of their respective subsidiaries, associates or parent companies, or the correctness of any of the formula or assumptions for the valuation of the Option by the Valuer, nor have we independently verified any of the information supplied to us.

PRINCIPAL FACTORS AND REASONS CONSIDERED

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

1. Background of the Group

The principal business activities of the Group are wealth management and brokerage, including asset management, capital markets, consumer finance and principal investments. As at the Latest Practicable Date, the Company is beneficially owned as to approximately 53.78% by APL. The following is an overview of the breakdown in segment revenue of the Group for the year ended 31 December 2011 by activity as extracted from the Company’s annual report dated 26 March 2012 (‘‘2011 Annual Report’’):

Table A: Segment revenue and profit before tax of the Group for the two years ended 31 December 2011 and 2010 respectively

For the year ended 31 December Segment revenue from external customers Wealth Management and Brokerage Capital Markets (formerly corporate finance) Asset Management Consumer Finance Principal Investments	2011 (HK$’ Million) (in %) 1,082.5 30.1% 328.2 9.1% 52.7 1.5% 2,084.3 58.0% 45.5 1.3% 3,593.2 100.0%	2010 (HK$’ Million) (in %) 1,034.3 33.8% 255.1 8.3% 71.1 2.3% 1,659.5 54.2% 44.1 1.4% 3,064.1 100.0%	2010 (HK$’ Million) (in %) 1,034.3 33.8% 255.1 8.3% 71.1 2.3% 1,659.5 54.2% 44.1 1.4% 3,064.1 100.0%
			100.0%

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

For the year ended 31 December Segment profit (loss) before tax Wealth Management and Brokerage Capital Markets (formerly corporate finance) Asset Management Consumer Finance Principal Investments	2011 (HK$’ Million) (in %) 359.1 22.2% 149.5 9.2% (42.7) (2.6)% 854.3 52.9% 295.1 18.3% 1,615.3 100.0%	2010 (HK$’ Million) (in %) 297.3 18.7% 258.1 16.2% 13.5 0.8% 751.2 47.2% 272.4 17.1% 1,592.5 100.0%	2010 (HK$’ Million) (in %) 297.3 18.7% 258.1 16.2% 13.5 0.8% 751.2 47.2% 272.4 17.1% 1,592.5 100.0%
			100.0%

Source: 2011 Annual Report of the Company dated 26 March 2012, certain comparable figures for 2010 were restated

For the year ended 31 December 2011, profit before taxation of the Group was approximately HK$1,615.3 million, of which approximately HK$854.3 million (or 53%) was attributable to the Consumer Finance segment under UA Finance.

UA Finance has achieved record profits in recent years. Its pre-tax contribution to the Group amounted to HK$375.0 million in 2009, HK$751.2 million (as restated) in 2010 and HK$854.3 million in 2011. It has become a major profit contributor to the Group. Its pre-tax contribution represented 23%, 47% and 53% of the total audited profit before taxation of the Group in 2009, 2010 and 2011 respectively.

2. Background of the UA Finance Group and its PRC Subsidiaries

The principal business activity of UA Finance Group is consumer finance. As at the Latest Practicable Date, UA Finance is beneficially owned as to approximately 58.18% by the Company. Mr. Nagahara is a director and the chief executive officer of UA Finance and indirectly holds 9.46% equity interest in UA Finance through Icapital City Limited, which is wholly-owned by him.

The consumer finance business of the UA Finance Group in Hong Kong is subject to the provisions governing the business of money lenders under the Money Lenders Ordinance and the money lenders’ licences issued are renewable on an annual basis. In the PRC, the consumer finance business of the PRC Subsidiaries is subject to the ‘‘Guiding Opinion on the Pilot Operation of Small Loan Companies’’ (關於小額貸款公司試點的指導意見) issued by the China Banking Regulatory Commission and the People’s Bank of China. These PRC lending licences have terms vary from 10 to 30 years terms. We understand from UA Finance management that the UA Finance Group was not subjected to any penalties or irregularities either in Hong Kong or in the PRC before.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Following the acquisition of UA Finance by the Group from AGL in 2006, UA Finance Group began to expand into the PRC in or about 2007 and as set out in the 2011 Annual Report, by the end of 2011, the UA Finance Group branch network expanded to 99 outlets, of which 54 were in the PRC. The following chart summaries the loan book of the UA Finance Group and the breakdown of such loan growth in the PRC for the PRC Subsidiaries, for the fiscal years 2007 to 2011.

Table B: Loan principal growth chart of the UA Finance Group and the breakdown in its PRC loan book for the fiscal years 2007 to 2011

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Source: Company’s annual reports and management confirmation from UA Finance

From the above chart, it is apparent that whilst the PRC Subsidiaries have only been in the PRC for five years, its loan book grew from approximately HK$25 million in 2007 to approximately HK$1,544 million as at 31 December 2011. In one year alone, loan book in the PRC, as a proportion of the total consumer finance loans of the UA Finance Group, grew from 13% in 2010 to 20% in 2011. This speaks volumes about the growth prospects of consumer finance business in the PRC marketplace and in our view, the underlying reason for the grant of the Option.

Whilst we understand from UA Finance that it has not commissioned any formal market research study on the consumer finance business in the PRC, we are also given to understand by the management of UA Finance that (i) the consumer finance business of Ping An Bank, which has considerable scale in Shenzhen, is considered a major competitor to the PRC Subsidiaries in Shenzhen, where the UA Finance Group had a total branch network of 37 by the end of 2011, its largest regional network in the PRC; and (ii) there is considerable large number of other consumer finance lending businesses established by non bank enterprises in the PRC and thus, the PRC consumer finance market appears to be fragmented.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

That said, the PRC consumer finance market, which is less mature than that of Hong Kong, is generally expected to continue to grow at a rate faster than that of Hong Kong, as the PRC economy continues to register rapid growth, details of which are set out in the two diagrams below. The following chart illustrates the nominal GDP and nominal GDP per capita in the PRC from 2003 to 2010:

Table C: Nominal GDP and nominal GDP per capita in the PRC from 2003 to 2010

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Note: Year 2010 is the latest published information

Source: China Statistical Yearbook 2011 published by National Bureau of Statistics of China

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Further, as a result of the growth in GDP per capita, growth in each of the per capita annual urban households disposable income and consumption expenditure has also registered considerable annual growth on a year-on-year basis, details of which are set out in the following chart which covers the period from 2003 to 2010:

Table D: Per capita annual urban households disposable income and consumption expenditure in the PRC from 2003 to 2010

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Note: Year 2010 is the latest published information

Source: China Statistical Yearbook 2011 published by National Bureau of Statistics of China

Such historical growth rates in per capita annual urban households disposable income and consumption expenditure explain the rate at which the loan book of the PRC Subsidiaries has also grown considerably over the past years as mentioned above. The table below summarises loans to private enterprises and self-employed individuals in the PRC from 2003 to 2010.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Table E: Total loans and loans to private enterprises and self-employed individuals in the PRC from 2003 to 2010

	2003	2004	2005	2006	2007	2008	2009	2010
	RMB	RMB	RMB	RMB	RMB	RMB	RMB	RMB
	Billion	Billion	Billion	Billion	Billion	Billion	Billion	Billion
Total Loans in the PRC	15,900	17,820	19,469	22,535	26,169	30,340	36,969	47,920
Loans to Private Enterprises	146	208	218	267	351	422	712	N.A.
and Self-employed								(Note 1)
Individuals

Note: Year 2010 is the latest published information

Note 1: Since 2010, classification of short-term loans is no longer published on a stand-alone basis.

Source: China Statistical Yearbook 2011 published by National Bureau of Statistics of China

All the aforesaid information and analyses suggest that the consumer finance market in the PRC is likely to continue to grow at a considerable rate and the UA Finance Group is positioning the PRC Subsidiaries to further capitalize on such growth opportunity, with the injection of capital, securing lending licences and expanding branch network.

3. Background of Mr. Nagahara

As the Managing Director and CEO of UA Finance, Mr. Nagahara designs, plans, and executes the development strategies of the UA Finance Group. As we understand from UA Finance management, under Mr. Nagahara’s leadership, the UA Finance Group was ranked the fifth amongst all market players including banks in terms of outstanding unsecured loans by value in Hong Kong, with a market share of approximately 6.8%, as at 31 December 2011, and the first among Hong Kong consumer finance companies (excluding banks) in terms of loan amount, according to data compiled by TransUnion Limited, which is a credit reference agency and a service provider of positive credit database in Hong Kong. Working with his management team, Mr. Nagahara has made it possible for the UA Finance Group to establish a reliable corporate image and a strong brand identity which distinguish it from its competitors in the market. UA Finance management believes that the ‘‘UA Finance’’ brand is well recognized by consumer finance customers in Hong Kong.

By mid 2007, Mr. Nagahara led UA Finance to launch its first PRC venture at Shenzhen. UA Finance was the pioneer Hong Kong consumer finance company to successfully establish a money lending business in the PRC. Since then, UA Finance has launched its money lending businesses in Chongqing, Tianjin, Shenyang, Chengdu, Yunnan, Dalian, Beijing, and Wuhan.

The biographical details of Mr. Nagahara as extracted from the 2011 Annual Report are set out below:

‘‘Mr. Nagahara, aged 71, is the Managing Director and CEO of UA Finance and a director of various subsidiaries of the Company. He holds a law degree from the National Taiwan University and a Master’s Degree from the Graduate School in Law of the National Hitotsubashi University of Japan, where he also completed his doctorate courses. He is an

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

acknowledged expert in the consumer finance business in Hong Kong and is credited with the successful establishment of Public Finance Limited (formerly known as JCG Finance Company, Limited). He is also the Chairman of The Hong Kong S.A.R. Licensed Money Lenders Association Limited, a position he has held since its establishment in 1999, which is the only industry representative association of licensed money lenders in Hong Kong.’’

As Mr. Nagahara is credited with the successful establishment of JCG Finance Company, Limited (‘‘JCG’’) as mentioned above, we have conducted our own research into JCG and our findings are set out below.

As disclosed in the prospectus of JCG dated 16 September 1991, JCG was incorporated in Hong Kong on 20 October 1977 and was registered as a deposit taking company under the Banking Ordinance of the Laws of Hong Kong. JCG had built up a 31-branch network by 1991 and was then the largest among all the deposit-taking companies in Hong Kong (there were 191 deposit-taking companies as at 31 December 1990). In order to expand its financial services, JCG began to issue its own JCG Credit Card in 1981 which at the time, was the only deposit-taking company in Hong Kong to offer such credit card service.

JCG, prior to its acquisition by Public Bank Berhad, had reported net profit after taxation but before extraordinary items of approximately HK$33 million for each of the two years ended 31 March 1988 and 1989 respectively. Prior to its acquisition on 12 January 1990 by Public Bank Berhad, the then third largest bank in Malaysia in terms of shareholders’ funds and whose Hong Kong office at the time of acquisition of JCG was operating as a restricted licence bank, JCG had encountered financial difficulty. JCG, being a deposit-taking company then, was allowed to take deposits then of not less than HK$100,000 for terms of at least three months only, and apparently JCG was relying on, among other sources, such deposit takings to fund its consumer loans outstanding. We understand that the then financial difficulty faced by JCG principally arose from its inability to attract sufficient new and/or rollover of maturing term deposits or arrange other replacement fundings for its outstanding consumer loans. It should also be noted that in the late 1980s, due to local economic and political uncertainties, apart from JCG, there were a number of small local banks and deposit-taking companies which faced similar funding difficulty, details of which are as follows.

In the Annual Report 1986 published by the Commissioner of Banking under the then Banking Ordinance, the collapse of the stock and property markets was cited as the reason for the revocation of registration of eight well known depositing-taking companies and two bank runs. In the Annual Reports 1986 and 1987 published by the Commissioner of Banking, local banks that faced financial difficulties or were taken over by the government included Wing On Bank, Ka Wah Bank, Far East Bank, Union Bank, Hong Nin Bank, Hang Lung Bank, Overseas Trust Bank and Hongkong Industrial and Commercial Bank. As set out in the Annual Report 1990 published by the Commissioner of Banking, the number of deposit-taking companies was said to decline throughout the 1980s. The global collapse of equity markets on 19 October 1987, which by 26 October 1987 (first trading day after the local stock market was closed for four days), had wiped off some 33 per cent. of the total local market capitalisation of listed issuers, the effect of which was cited by the Commissioner of Banking in its Annual Report 1987 to have significantly weakened one of the abovementioned banks. We understand that JCG, which was under financial difficulty, was sold under such circumstances.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Our views

In view of the above information, it would appear that Mr. Nagahara has a long and successful track record in establishing and running consumer finance businesses as early as 1977 and his current endeavour under UA Finance Group is in our view, a repeat of his earlier success with JCG. We understand JCG was modeled after the then Japanese consumer finance business model (JCG stands for ‘‘Japan Credit Guarantee Co. Ltd.’’) as Mr. Nagahara has had experience in such Japanese consumer finance business. Thus, Mr. Nagahara is also regarded in the industry as a pioneer in the consumer finance business in Hong Kong.

In summary, we concur with the aforesaid Company’s disclosure in the 2011 Annual Report that Mr. Nagahara is an acknowledged expert in the consumer finance business in Hong Kong.

4. The Option under the Director’s Service Agreement

As set out in the ‘‘Letter from the Board’’, on 9 May 2012, UA Finance entered into the Director’s Service Agreement with Mr. Nagahara for a term of 10 years (subject to early termination provisions as set out therein) from the date of the Director’s Service Agreement. Pursuant to the Director’s Service Agreement, UA Finance shall engage Mr. Nagahara and Mr. Nagahara shall serve UA Finance to formulate, supervise and implement the PRC Development Project and to complete the Restructuring.

The principal terms of the Director’s Service Agreement are set out below:

Date

9 May 2012

Parties

UA Finance: an indirect non wholly-owned subsidiary of each of AGL, APL and the Company

Mr. Nagahara: a director and the chief executive officer of UA Finance and indirectly holds 9.46% equity interest in UA Finance through Icapital City Limited which is wholly-owned by Mr. Nagahara. Save as stated above, Mr. Nagahara is not a director or a substantial shareholder or an associate of any connected person of any of AGL, APL and the Company.

Term

Subject to the early termination and conditions precedent provisions set out below, UA Finance shall engage Mr. Nagahara for a term of 10 years from the date of the Director’s Service Agreement.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Termination

Conditions Precedent

The Director’s Service Agreement shall not be effective until:

(a) each of AGL, APL and the Company having obtained the approval of their respective shareholders for the Director’s Service Agreement and the transactions contemplated thereunder as required by the Listing Rules;
(b) each of AGL, APL and the Company having complied with and to the satisfaction of the Stock Exchange all requirements under the Listing Rules in relation to the Director’s Service Agreement and the transactions contemplated thereunder; and
(c) all other necessary consents and approvals as may be required in respect of the Director’s Service Agreement and the transactions contemplated thereunder having been obtained.

PRC Development Bonus

Pursuant to the Director’s Service Agreement, UA Finance will grant to Mr. Nagahara the PRC Development Bonus in respect of the PRC Development Project on an annual basis for a period of 10 years commencing from the financial year ending 31 December 2012. The amount of the PRC Development Bonus shall be subject to a cap of HK$20,000,000 for each financial year.

The amount of the PRC Development Bonus shall be calculated as follows:

==> picture [108 x 9] intentionally omitted <==

where:

A = PRC Development Bonus in respect of a financial year
B = Combined net profits after tax of the PRC Subsidiaries attributable to the owners of UA Finance in respect of the relevant financial year

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

C = Cost of capital of the UA Finance Group for its combined equity investments in the PRC Subsidiaries (being the sum of the cost of capital of the UA Finance Group for each month in the relevant financial year calculated by the UA Finance Group’s combined equity investments in the PRC Subsidiaries attributable to the owners of UA Finance at each month end multiplied by the prime lending rate for HK$ (expressed as a % per month) adopted by The Hongkong and Shanghai Banking Corporation Limited at the respective month end for the relevant financial year)

Option

Pursuant to the Director’s Service Agreement, UA Finance will grant the Option to Mr. Nagahara to (i) subscribe for up to 20% of the enlarged issued capital of the Newco (corresponding to 25% of the issued capital of the Newco as at the date immediately prior to the date of the exercise of the Option); or (ii) purchase from UA Finance or its subsidiary up to 20% of the then existing issued capital of the Newco as at the date of the exercise of the Option subject to and in accordance with the terms of the Director’s Service Agreement provided that Mr. Nagahara shall not hold more than 20% of the then issued share capital of the Newco upon full exercise of the Option. Mr. Nagahara shall obtain prior written approval of the board of directors of UA Finance before he transfers any shares of the Newco to a third party (such approval shall not be unreasonably withheld).

A share of the Newco allotted upon the exercise of the Option shall not carry voting rights until completion of the registration of Mr. Nagahara as the holder thereof. A share of the Newco issued upon such exercise shall rank for all dividends or other distributions paid or made on or after the date of exercise, other than any dividend or other distribution previously declared or recommended or resolved to be paid or made with respect to a record date which is before such date of exercise. Subject as aforesaid, shares of the Newco allotted upon the exercise of the Option shall rank pari passu in all respects with the shares of the Newco in issue on the date of exercise (provided that when the date of exercise falls on a day upon which the register of members of the Newco is closed, then the first business day on which the register of members of the Newco is re-opened) and shall be subject to all the provisions of the memorandum and articles of association of the Newco for the time being in force.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

(i) in the case of subscription for new shares in the Newco by Mr. Nagahara,

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where:

A = Exercise Price
B = Number of new shares of the Newco to be issued
C = Total number of issued shares of the Newco as at the date immediately prior to the date of exercise of the Option
D = Consolidated equity attributable to owners of the Newco (excluding non-controlling interests of the subsidiaries of the Newco) as at the end of the month immediately prior to the date of exercise of the Option based on the monthly management accounts prepared to the month end immediately prior to the date of exercise of the Option
E = Total amount of the loans owed by the Newco to its shareholders as at the date immediately prior to the date of exercise of the Option
F = Total number of issued shares of the Newco held by Mr. Nagahara as at the date immediately prior to the date of exercise of the Option
G = Total amount of the loans owed by the Newco to Mr. Nagahara as at the date immediately prior to the date of exercise of the Option
(ii) in the case of purchase of issued shares of the Newco from UA Finance or its subsidiary by Mr. Nagahara,

==> picture [171 x 22] intentionally omitted <==

where:

A = Exercise Price
B = Number of shares of the Newco to be purchased

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

C = Total number of issued shares of the Newco as at the date immediately prior to the date of exercise of the Option
D = Consolidated equity attributable to owners of the Newco (excluding non-controlling interests of the subsidiaries of the Newco) as at the end of the month immediately prior to the date of exercise of the Option based on the monthly management accounts prepared to the month end immediately prior to the date of exercise of the Option
E = Total amount of the loans owed by the Newco to its shareholders as at the date immediately prior to the date of exercise of the Option

Consolidated equity attributable to owners of the Newco shall be calculated as follows:

==> picture [125 x 8] intentionally omitted <==

where:

H = Consolidated equity attributable to owners of the Newco
I = Total amount paid up or credited as paid up on the issued capital of the Newco
J = Total amount standing to the credit of the consolidated revenue and capital reserves of the Newco and its subsidiaries (excluding any amount attributable to the non-controlling interests of the subsidiaries of the Newco). The revenue reserves should include consolidated retained profit and loss accounts of the Newco and its subsidiaries
K = Total amount of dividend or other distribution declared, recommended or made by the Newco but not yet paid
L = Total amount standing to the debit of the consolidated revenue and capital reserves of the Newco and its subsidiaries (excluding any amount attributable to the non-controlling interests of the subsidiaries of the Newco). The revenue reserves should include consolidated retained profit and loss accounts of the Newco and its subsidiaries

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

As advised and confirmed by UA Finance to the Company, it is the current intention of UA Finance to finance the acquisition of the PRC Subsidiaries by the Newco partly by way of shareholder’s loan before the exercise of the Option but there is no concrete plan yet as to the amount and details (including whether or not such loans will be interest bearing) of such loans.

UA Finance and Mr. Nagahara shall be deemed to hold such amount of the loans owed by the Newco to its shareholders proportional to their respective shareholdings in the Newco upon payment of the Exercise Price, UA Finance and Mr. Nagahara shall enter into an assignment regarding such amount of the shareholders’ loans to be taken up by Mr. Nagahara before completion of registration of Mr. Nagahara as the holder of the relevant shares in respect of such exercise of the Option. UA Finance and Mr. Nagahara shall procure that their loans to the Newco to be repaid at the same time proportional to their shareholdings in the Newco. There is no concrete plan yet as to the timing and method of repayment.

The Exercise Period will be 10 years from the date of the Director’s Service Agreement.

According to rules and regulations applicable to money lenders of various cities and provinces in the PRC, such as Shenzhen, Chongqing and Tianjin, a pure investment holding company which has no profit track record is not qualified to be a major shareholder or a promoter of setting up a company in such places to carry on the money lending business. Therefore, the condition of obtaining the requisite approval from the relevant government authorities in the PRC for the Restructuring could only be satisfied when it becomes permissible under the rules and regulations of the PRC applicable to money lending business and it is not possible to estimate the time for the completion of the Restructuring.

According to the ‘‘Guiding Opinion on the Pilot Operation of Small Loan Companies’’ (關於小額貸款公司試點的指導意見) issued by the China Banking Regulatory Commission and the People’s Bank of China (the ‘‘PBoC’’) on 4 May 2008, a Target Company must fulfill, among other things, the following conditions for carrying on the money lending business:

(a) as a limited liability company, its minimum capital must be not less than RMB5 million;
(b) its directors, supervisors and senior management do not have any criminal offences record or adverse credit record;

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

(c) its major source of funding must be registered capital, donated capital and borrowings from a maximum of two banks, while the balance of the bank borrowings must not exceed 50% of its net capital;
(d) the outstanding amount of loans granted to a single borrower must not exceed 5% of its net capital; and
(e) interest rate charged on loans must not be higher than the level prescribed by the relevant judicial authority nor less than 0.9 times of the prevailing base loan interest rate published by the PBoC.

The Target Companies have complied with the abovementioned conditions.

The directors of UA Finance currently intend to apply the proceeds received from the exercise of the Option as general working capital of UA Finance Group.

Our views

As set out above, it should be noted that the Exercise Price will be determined based on the aggregate amount of shareholders equity and shareholders’ loans (both at the time of exercise of the Option) proportional to the shareholding to be taken up by Mr. Nagahara pursuant to his exercise of the Option. In this regard, Independent Shareholders should note that as set out in Notes (1) and (4) in the section headed “Notes to Unaudited Pro Forma Financial Information” in Appendix III to the Circular, the unaudited pro forma financial information as set out therein has been prepared on the basis that the Newco has sufficient equity and pays for the acquisition of the PRC Subsidiaries (referred to as the Target Companies in Appendix III) by way of issuing shares and with nil shareholders’ loan. Such assumption notwithstanding, if shareholders’ loans were indeed required by Newco, the abovementioned assignment of the shareholders’ loans (if applicable, which may or may not be interest bearing) to be taken up by Mr. Nagahara is in our view, fair and reasonable, as it shall require Mr. Nagahara to take up his pro rata share of the shareholders’ loans incurred for the injection of the PRC Subsidiaries into Newco (on the assumption that Newco is formed with minimal equity and would not have sufficient resources to pay for such injection), as part of the Restructuring.

The net asset based approach for determining the Exercise Price is in line with the consumer finance business as such business is generally accepted to be capital intensive. UA Finance management is of the view that, notwithstanding other valuation methodologies, such net asset approach for determining the Exercise Price is the most appropriate, given the PRC

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Subsidiaries are still at development stage, which is often characterised as more risky, capital intensive and requires more management attention. Whilst we take the view that there are other valuation alternatives such as price-earnings multiple and/or EBITDA (stands for earnings before interest tax depreciation and amortization) multiple approaches, having considered the historical profitability of the PRC Subsidiaries and their relatively large net asset values, details of which are as set out below, we concur that such net asset approach for determining the Exercise Price is fair and reasonable. In so far as the PRC Subsidiaries are concerned, such net asset approach, based on their most recent historical financial information, when viewed against other market comparables, details of which are set out in the section headed ‘‘The Disposal Group, the Option and market comparables’’ below, is in our view, reasonable.

The Exercise Period will be 10 years from the date of the Director’s Service Agreement, which also has a 10-year term. Such 10-year term is in our view, to allow the exercise of the Option to have reasonable time to becoming unconditional, namely on (1) the obtaining of requisite approval from the relevant government approving authorities in the PRC for the Restructuring; and (2) the completion of the Restructuring. These conditions are in our view, heavily driven by the continuous success of the PRC Subsidiaries and therefore, a term of three year or less for the Director’s Service Agreement as stipulated under Rule 13.68 of the Listing Rules, in light of the current development stage status of the PRC Subsidiaries, would likely be deemed to be too short by the parties. We have also considered that there are from time to time, published cases precedent of director’s service agreement exceeding three years by issuers listed on the Stock Exchange.

In summary, we take the view that such 10-year term of the Director’s Service Agreement (and the Exercise Period) is necessary for the intended exercise of the Option, which is granted when some of the PRC Subsidiaries are still at development stage. Given that the 10-year term is part of an agreement reached after arms-length negotiations between UA Finance and Mr. Nagahara, and the latter clearly believes as holder of the Option, the 10-year term is more adequate than say, a shorter term, in light of our other findings and recommendation as set out herein, we are of the opinion that such 10-year term is fair and reasonable.

We are also of the view that the termination clause under the Director’s Service Agreement on the occurrence of certain events, including Mr. Nagahara becoming incapacitated from performing his duties for more than 6 months, is in the interests of the Company given Mr. Nagahara’s 71 years of age as published in the 2011 Annual Report. Such termination clause notwithstanding, the board of UA Finance clearly expects Mr. Nagahara is capable to continue to contribute during the 10-year term of the Director’s Service Agreement, a position concurred by us.

5. Reason for the Option

As set out in the ‘‘Letter from the Board’’, as advised and confirmed by UA Finance to the Company, Mr. Nagahara has been employed by UA Finance since 1 September 1993. Under his leadership, UA Finance has become a leading consumer finance company in Hong Kong. It has achieved record profits in recent years and has become a major profit contributor to the Company.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Mr. Nagahara is considered to have been the key person in founding the PRC Business and is considered to be essential to its development and expansion. However, his past and current remuneration packages, which comprise salary and an annual performance bonus at the discretion of the board of directors of UA Finance, are not considered to be commensurate with the contribution he has made to the success of the UA Finance Group. Accordingly, in order to ensure the retention of his services and to provide him with sufficient incentive to continue to develop the PRC Business, UA Finance entered into the Director’s Service Agreement with Mr. Nagahara.

Having taken into account the terms of the Director’s Service Agreement, the reasons for entering into the Director’s Service Agreement and the recommendation of UA Finance, the Board (other than its independent non-executive Directors, whose views are set out in the ‘‘Letter from the Independent Board Committee’’ in this Circular) considers that the terms of the Director’s Service Agreement and the transactions contemplated thereunder are fair and reasonable and in the interests of the Company and its shareholders as a whole.

Apart from the PRC Development Bonus and the Option, Mr. Nagahara is entitled to a salary and a year end discretionary bonuses.

Our views

Mr. Nagahara is an acknowledged expert in the industry and UA Finance is, according to its management, recognized as a role model for money lenders in Hong Kong. Mr. Nagahara replicates the successful business model in the PRC using his experience at JCG and UA Finance. Mr. Nagahara is the head of UA Finance and plays a key role in steering the development roadmap of the PRC Subsidiaries’ expansion.

In light of the fact that: (i) Mr. Nagahara is considered to have been the key person in founding the PRC Business and is considered to be essential to its development and expansion; and (ii) the grant of the Option is under the Director’s Service Agreement, which is entered into by the parties after due and careful consideration with a view to ensure the retention of Mr. Nagahara’s services and to provide him with sufficient incentive to continue to develop the PRC Business, we are of the view that the Director’s Service Agreement and the transactions contemplated thereunder (including the grant of the Option) are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

6. General information on stock option

Whilst we have noted that there is no recent comparable stock option case precedent announced by an issuer whose securities are listed on the Stock Exchange, using stock option as an incentive to motivate executives is nevertheless a very common approach. Majority of the local stock options are granted under a pre-approved employee stock option scheme and such options are exercisable into new shares of a listed issuer. In this case, the Option is over new or existing shares of Newco, an unlisted future subsidiary of UA Finance. On this note, it is entirely possible

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

that the concept of a listing of Newco on a recognised stock exchange could be considered in the future and indeed, a listing, if and when it would occur, could be viewed as beneficial to the considerable future capital needs of the PRC Subsidiaries/Newco as they continue to grow.

Stock option is an expense to the issuing company and in this regard, we noted that the market value of the Option is valued by the Valuer in the amount of HK$265.2 million as at 31 March 2012 using the Black-Scholes Option Pricing Model. The Black-Scholes Option Pricing Model is a statistical formula developed by Messrs. Fischer Black and Myron Scholes in 1973 in the U.S. (Source: page 5, Stock Options & The New Rules of Corporate Accountability by Donald P. Delves) and such model has since been widely used to value stock options in different marketplaces. Details of the Option valuation and the expensing of the Option in unaudited pro forma financial statements are set out in Appendix III.

In order for the Independent Shareholders to go beyond the financial and accounting effects of the Option and to better understand the bigger picture on the subject of using stock option as a means of executive compensation package, we would like to draw the attention of the Independent Shareholders to the underlying motive for the Director’s Service Agreement, which include the Option. Similar to other service agreements, the Director’s Service Agreement is multifaceted and the Option is only one component, albeit a substantial one, of this overall compensation program.

We are of the opinion that stock option in general is an effective and appropriate tool to be used by a corporation to drive individual needs for wealth creation to predetermined corporate goals and in so doing, better align executive interests to those of its shareholder value. The section immediately below illustrates that the Option, based on most recent historical earnings of the PRC Subsidiaries, when viewed against comparable companies’ price-earnings multiples, returns on equity and total assets, is relatively expensive to Mr. Nagahara. This, in our view, would imply that the exercise of the Option is not yet financially rewarding, (commonly referred to as ‘‘out-ofthe-money’’). In order to ‘‘earn’’ such ‘‘in-the-money’’ Option, Mr. Nagahara and his team would have to (i) substantially increase the net earnings of the PRC Subsidiaries; and (ii) ensure the exercise of the Option is capable of becoming unconditional in respect of the approval from the relevant government approving authorities in the PRC for the Restructuring and the establishment of Newco.

We have made enquires with the management of the UA Finance Group and we understand that without the Option, the Company would have to rely on additional cash for Mr. Nagahara’s compensation package. As set out in the ‘‘Letter from the Board’’, Mr. Nagahara is key to the success of UA Finance Group, including of course the PRC Subsidiaries. As set out above, the Option is part of Mr. Nagahara’s compensation package, obviously negotiated on an arms-length basis and such package was to provide him with sufficient incentive to continue to develop the PRC Business, and in the process, to undertake reasonable and necessary business risks as they arise. The consumer finance business in the PRC is likely to be faced with credit risks which are unique to the PRC marketplace only, in particular, less transparency or limited access to credit reference checks on prospective borrowers and difficulties on recovery of non performing loans. We believe the Option is an effective tool to align Mr. Nagahara’s interests with that of other stakeholders in the UA Finance Group.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The Board (other than its independent non-executive Directors, whose views are set out in the ‘‘Letter from the Independent Board Committee’’) considers that the terms of the Director’s Service Agreement, including the granting of the Option, fair and reasonable and in the interests of the Company and the Shareholders as a whole.

7. The Disposal Group, the Option and market comparables

Newco is proposed to be established to hold all equity interest in the PRC Subsidiaries directly or indirectly engaged or to be engaged in the PRC Business but not currently proposed to directly hold any property interest. As at the Latest Practicable Date, the property interests held by the PRC Subsidiaries that form part of their property activities accounted for less than 1% of the total assets of the PRC Subsidiaries (or the Target Companies, for the purpose of this section only).

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The combined net profits (both before and after taxation and extraordinary items) attributable to the Target Companies for the three years ended 31 December 2011 and other financial highlights of their combined statements financial position as extracted from Appendix II to the Circular are as follows:

Table F: Combined net profits (both before and after taxation and extraordinary items) for the three years ended 31 December 2011 and other financial highlights of the combined statements of financial position of the Target Companies as at 31 December 2009, 2010 and 2011 respectively

Combined income statements highlights Total revenue Net profits before tax and extraordinary items Net profits after tax and extraordinary items Combined statements of financial position highlights Assets PRC loans and advances to consumer finance customers (Net of impairment allowances) Cash, deposits and cash equivalents Other assets Total Assets Liabilities & Equity Total liabilities Total equity attributable to UA Finance Total equity attributable to non-controlling interest Total Liabilities & Equity	For the year ended 31 December 2011 (HK$’ Million) 547.0 184.3 141.3 As at 31 December 2011 (HK$’ Million) 1,518.8 1,650.8 329.0 3,498.6 273.9 3,102.2 122.5 3,498.6	For the year ended 31 December 2010 (HK$’ Million) 247.7 64.6 47.6 As at 31 December 2010 (HK$’ Million) 745.1 1,122.3 184.1 2,051.5 510.7 1,540.8 — 2,051.5	For the year ended 31 December 2009 (HK$’ Million) 129.3 46.7 33.0 As at 31 December 2009 (HK$’ Million) 326.1 251.6 145.0
			722.7
			411.6 311.1 —
			722.7

Source: Appendix II to the Circular

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Based on the above, the net assets value of the Target Companies as at 31 December 2011 was HK$3,224.7 million, whereas its net assets attributable to UA Finance was HK$3,102.2 million.

Upon full exercise of the Option, Newco will become an 80%-owned subsidiary of UA Finance.

The market value of the Option is valued by the Valuer in the amount of HK$265.2 million as at 31 March 2012 using the Black-Scholes Option Pricing Model.

Whilst our recommendation as set out in this letter of independent advice does not rely on the outcome of the valuation of the Option, we were required to review the bases and assumptions used for such valuation. In this regard, we have discussed with the Valuer the bases and assumptions used by it in the pre programmed Black-Scholes Option Pricing Model it used in order to determine the abovementioned value of the Option. We are of the view that such bases and assumptions which can be objectively reviewed are reasonably arrived at by the Valuer.

If the Option were to be exercised based on the net asset as at 31 December 2011 of HK$3,102.2 million, based on the formula for determining the exercise price upon exercise of the Option, it would imply that such exercise price to Mr. Nagahara would have been approximately HK$620.4 million. This would represent a historical price-earnings multiple of approximately 22 times and as the exercise price is based on net asset value, a price-to-book valuation of 1 times, based on the above financial information as at 31 December 2011 and the table below. On the same basis, returns on equity and on total assets would represent 4.6% and 4.0% respectively.

Whilst we are of the view that there is no identical market comparable to the PRC Subsidiaries amongst listed issuers in Hong Kong, there are issuers which are also engaged in, among other lending businesses, consumer finance business in Hong Kong and insofar as the PRC is concerned, in other forms of consumer finance businesses such as pawn loan operation and other secured short-term consumer financing. These similar lending businesses are in our view, reasonable selection criteria for choosing the comparable companies below. We believe these companies can and should be viewed as reasonable comparables to the PRC Subsidiaries and accordingly, the following table summarises these issuers whose consumer finance business are in Hong Kong and/or the PRC.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Table G: Companies listed on the Stock Exchange which we consider reasonably comparable to the PRC Subsidiaries

			Market Cap.
		Closing	(based on
		share	closing			Return on
		price as at	share prices			audited	Return on
	Stock	9 May	as at 9 May			shareholders’	audited total
Company	code	2012	2012)	P/E	P/B	equity	assets
		(HK$)	(HK$’ Million)	(times)	(times)	%	%
Aeon Credit Service
(Asia) Company
Limited	900	6.600	2,764	9.173	1.348	14.7%	5.5%
Credit China Holdings
Limited	8207	0.900	1,595	9.095	1.985	21.7%	13.8%
Dah Sing Banking Group
Limited	2356	7.930	9,698	9.011	0.649	7.2%	0.7%
First Credit Holdings
Limited	8215	0.385	385	14.808	1.507	2.2%	2.1%
Public Financial Holdings
Limited	626	3.400	3,733	9.971	0.594	6.0%	0.9%
Vongroup Limited	318	0.045	264	N.A.	0.756	N.A.	N.A.
			Maximum	14.808	1.985	21.7%	13.8%
			Minimum	9.011	0.594	2.2%	0.7%
			Average	10.412	1.140	10.4%	4.6%
			Median	9.173	1.052	7.2%	2.1%
The Company	86	3.960	8,308	8.115	0.687	8.5%	4.6%
The PRC Subsidiaries
(Note: Based on
unaudited combined
financial statements of
the Target Companies
set out in Appendix II)				21.85	1.000	4.6%	4.0%

Source: Issuers’ annual reports

It should be noted that of the comparable companies set out in the table above, Credit China Holdings Limited and Vongroup Limited are engaged in consumer finance business in the PRC and each of them is either in the pawn loan operation or other asset-based consumer finance lending operations, and are therefore, slightly different from the unsecured personal loans business model of the PRC Subsidiaries. The rest of the above comparable companies are principally engaged in the consumer finance business in Hong Kong. We also did not include Ping An Insurance (Group) Company of China, Ltd. in the above analysis as notwithstanding its large consumer finance network under Ping An Bank in Shenzhen, its banking income (which included, among others, consumer finance income) accounted for only 16% of its total income for 2011.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Based on the above comparable companies, their average and median price-to-book ratio of approximately 1.1 times are comparable to the 1.0 time under the Exercise Price, based on the above hypothetical scenario. We are of the opinion that the consumer finance business model is capital intensive and the success of which is, to a large extent, driven by the funding capability of the market participants. In this regard, larger corporations and banking institutions in particular, would have an advantage in securing funding at relatively lower costs, when compared to consumer finance participants which are independent operators. On this basis, the above table does support that market pricing of consumer finance issuers is generally in line with their respective book values, as represented by their approximately 1.1 time average price-to-book ratio.

The higher price-earnings multiple of 22 times of the PRC Subsidiaries under the same exercise scenario for the Option, though appear exceptionally high when compared to the above average and median price-earnings multiples, can be explained by the current development stage of the PRC Subsidiaries. In this regard, it should be noted that as set out in Table F above, as at 31 December 2011, a total of approximately HK$1,651 million was in either fixed deposits or bank balances of the PRC Subsidiaries, accounted for approximately 47% of their total assets. This high level of cash is the result of recent capital injection into the PRC Subsidiaries to meet their capital requirements for money lending licences. Had such cash been used to fund consumer finance loans, the return would have been much higher and thus, a likely corresponding drop in the priceearnings multiple of the PRC Subsidiaries (and an increase in return to each of the equity and total assets). It should be noted that consumer finance business is a high return business and once cash is able to be deployed to support performing consumer finance loans, the return on investment should be relatively fast.

8. Possible financial effects of the Option

The fair value of the Option for the purpose of expensing it as illustrated herein will only be finalised based on market information on the date of the grant of the Option i.e. on the date of the EGM.

It should also be noted that as set out in Appendix III:

The unaudited pro forma financial information presented below is prepared to illustrate the financial position of the Group as at 31 December 2011 after pro forma adjustments as if the Option was granted on 31 December 2011. In addition, the unaudited pro forma financial information presented below illustrates the results and cash flows of the Group for the year ended 31 December 2011 after pro forma adjustments as if the Option was granted on 1 January 2011.

In addition, further unaudited pro forma financial information is provided to illustrate the consequential impact on the financial position of the Group as at 31 December 2011 as well as the results and cash flows of the Group for the year ended 31 December 2011, assuming the Restructuring as defined in the Circular and the eventual exercise of the Option were effected immediately after the grant of the Option, notwithstanding the fact that the completion of the Restructuring is not likely to be immediate and the timing of the exercise of the Option is solely determined by Mr. Nagahara.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The aforesaid unaudited pro forma financial information has been prepared for illustrative purposes only and because of its hypothetical nature, it may not purport to represent the true picture of the financial position of the Group as at 31 December 2011 or at any future date. The unaudited pro forma financial information is prepared based on the audited consolidated statements of the Group as at, or for the year ended, 31 December 2011 as extracted from the 2011 Annual Report after reflecting the pro forma adjustments described in the section headed ‘‘Notes to Unaudited Pro Forma Financial Information’’ in Appendix III. The unaudited pro forma financial information is also prepared on the basis that the Newco pays for the acquisition of the Target Companies (or PRC Subsidiaries in the future) by way of issuing shares only as the fair value of the Option used in the preparation of the unaudited pro forma financial information may be materially affected if the Newco acquires the Target Companies partly or fully by shareholders’ loans. For further details, please refer to Appendix III.

It should also be noted that as set out in the ‘‘Letter from the Board’’, in the absence of a concrete plan as to the terms and conditions (including repayment schedule and terms) of the shareholders’ loans to the Newco, it is not practicable to determine the fair value of the Option on the assumption that the Newco acquires the Target Companies wholly or partly by way of shareholders’ loans. Henceforth, it is not practicable to assess the quantitative effect to the unaudited pro forma financial information of the Remaining Group on the assumption that the Newco acquires the Target Companies wholly or partly by way of shareholders’ loans. However, the Valuer is of the view that the fair value of the Option will decrease if there is a repayment of such shareholders’ loans because the total estimated value of the Newco will drop as a result thereof.

As set out in the ‘‘Letter from the Board’’, the Exercise Price will be determined based on the aggregate amount of shareholders’ equity and shareholders’ loans (both at the time of exercise of the Option) proportional to the shareholding to be taken up by Mr. Nagahara. Therefore, the excess of the Exercise Price over the net book value (i.e. total assets less total liabilities) of the shares of the Newco (being equal to the proportional net book value of the Disposal Group) will be the amount of shareholders’ loans (at the time of exercise of the Option) proportional to the shareholding to be taken up by Mr. Nagahara, which treatment is in line with the Company’s accounting standard or accounting policy and agreed by the Company’s auditor, Deloitte Touche Tohmatsu. The total shareholders’ loans owed by the Newco to its shareholders including Mr. Nagahara will be repaid by the Newco to its shareholders at the same time proportional to their shareholdings in the Newco but there is no concrete plan yet as to the timing and method of repayment.

The preceding paragraph implies following the injection of the PRC Subsidiaries into Newco under the Restructuring and if Newco had only nominal paid-up capital (and therefore nil cash) to pay for such injection, a shareholder’s loan to Newco, the amount of which would be equivalent to the size of such injection would be required (the size of such injection would also need to be determined by the relevant parties in due course). Upon exercise of the Option, such shareholder would then be assigned to Mr. Nagahara proportional to his shareholding in Newco and on a dollar-to-dollar basis. This shareholder’s loan may or may not be interest bearing and is part and partial to the exercise of the Option.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

8.1 Possible effects on earnings

Based on the audited consolidated income statement of the Group for the year ended 31 December 2011 and the unaudited pro forma consolidated income statement of the Remaining Group derived thereof, on a pro forma basis and assuming the Option had been granted and exercised on 1 January 2011, profit attributable to Shareholders of approximately HK$1,032.4 million would be decreased to approximately HK$855.5 million. This is due to pro forma adjustments and assumptions arising from (i) the fair value of the Option recognised as an expense; (ii) estimated withholding tax on dividends assumed to be distributed from PRC Subsidiaries prior to the Restructuring; (iii) estimated Restructuring expense; and (iv) profit for the year attributable to the additional non-controlling interests arising from the exercise of the Option.

8.2 Possible effects on assets

Based on the audited consolidated statement of financial position of the Group as at 31 December 2011 and the unaudited pro forma consolidated statement of financial position of the Remaining Group derived thereof, on a pro forma basis and assuming the grant of the Option had taken place on 31 December 2011, total assets of the Group would increase from approximately HK$22,494.4 million to approximately HK$23,096.4 million. Total net assets of the Group attributable to Shareholders (i.e. excluding non-controlling interests) would decrease from approximately HK$12,087.5 million to approximately HK$11,922.3 million. This decrease is mainly due to (i) the fair value of the Option is assumed to be expensed at the assumed date of the grant and the allocation of such expense attributable to Shareholders; (ii) estimated withholding tax on dividends based on retained profit of the Target Companies assumed to be expensed on completion of the Restructuring; and (iii) expenses of the Restructuring.

8.3 Possible effect on cash flow

Based on the audited consolidated statement of cash flows of the Group for the year ended 31 December 2011 and the unaudited pro forma consolidated statements of cash flows of the Remaining Group derived thereof, on a pro forma basis, cash and cash equivalents for the year ended 31 December 2011 would increase from approximately HK$1,795.1 million to approximately HK$2,093.2 million. Such increase is the result of pro forma adjustments and assumptions, including the assumption that proceeds of HK$308.2 million from the assumed exercise of the Option on 1 January 2011, (based on 20% of the combined equity of the Target Companies attributable to UA Finance of HK$1,540.8 million as at 31 December 2010) would have been received.

8.4 Possible effect on gearing

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

66.9% to 67.9%. Such increase is the result of pro forma adjustments and assumptions, including withholding tax on dividend paid and recognition of the fair value of the Option as an expense attributable to Shareholders.

In summary, there is a negative impact on earnings, whereas impacts on net assets and gearing of the Group, as a result of the assumed exercise of the Option based on the aforesaid pro forma basis, are immaterial. We take the view that such negative impact on earnings is, for the reasons set out herein, an acceptable cost to the Company.

Our views

The grant of the Option is an expense to the Group and the above possible financial effects are to illustrate such cost implications, albeit on a pro forma basis and based on the valuation report on the Option. However, Independent Shareholders should note that the above effects are for illustration purpose only as the real life situation of Newco may be very different. We are of the opinion that it is impossible to accurately quantify the future prospects of Newco, in particular, in view of the success and growth experience the PRC Subsidiaries have had in the PRC over the past few years. The costs to the Company and the Shareholders upon the exercise of the Option, on a pro forma basis, are set out above. Obviously, the cost implications under the Option have been carefully considered by the Board and in its final analysis, the benefits of the Option outweigh its costs. The grant of the Option pursuant to the Director’s Service Agreement is therefore, a commercial decision duly arrived at by the Board.

SUMMARY

Mr. Nagahara is a director and the chief executive officer of UA Finance and has a successful track record in running consumer finance business since 1977. Mr. Nagahara is key to the success of UA Finance Group, including of course the PRC Subsidiaries. The Option is part of Mr. Nagahara’s compensation package, obviously negotiated on an arms-length basis and such package was to provide him with sufficient incentive to remain at the UA Finance Group and to continue to develop the PRC Business. The Exercise Price will be determined based on the aggregate amount of shareholders’ equity and shareholders’ loans proportional to the shareholding to be taken up by Mr. Nagahara pursuant to and before his exercise of the Option. This net asset based approach is in line with the consumer finance business as it is generally accepted to be capital intensive and driven by balance sheet.

Stock option in general is an effective and appropriate tool to be used by a corporation to drive individual needs for wealth creation to predetermined corporate goals and in so doing, better aligns its executive’s interests to those of its shareholder value. In this regard, while the PRC Subsidiaries have only been in the PRC for five years, its loan book grew from approximately HK$25 million in 2007 to approximately HK$1,544 million as at 31 December 2011. Should such growth be maintained, it would be in the interests of the Company and its Shareholders as a whole. The Option, based on most recent historical earnings of the PRC Subsidiaries and when compared to other market comparables, is not yet ‘‘in-the-money’’. In order to ‘‘earn’’ such ‘‘in-the-money’’ Option, Mr. Nagahara and his team would have to substantially increase the net earnings of the PRC Subsidiaries. This is the corporate goal with the Option being used as a motive for such achievement. The Option is part of Mr. Nagahara’s compensation package, in lieu of all cash. We also note that once the Option becomes exercisable, the PRC Development Bonus will cease to be payable to Mr. Nagahara.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

We are of the view that the non cash component of Mr. Nagahara’s compensation package as represented by the Option can be viewed as a balanced approach to incentive payment and cash preservation and depending on the outcome of the PRC Subsidiaries’ future prospects, is likely to better align all stakeholders’ interests in the Newco.

RECOMMENDATION

Having considered the principal factors and reasons set out above, we consider that the terms and conditions of the grant of the Option pursuant to the Director’s Service Agreement, its 10-year term and the transactions contemplated thereunder (including the possible assignment of the abovementioned shareholders’ loans to Mr. Nagahara) are of normal commercial terms, and are fair and reasonable and in the interests of the Company and its 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 Director’s Service Agreement and the transactions contemplated thereunder at the EGM.

Yours faithfully, for and on behalf of Centurion Corporate Finance Limited Baldwin LEE Managing Director

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FINANCIAL INFORMATION

APPENDIX I

1. FINANCIAL INFORMATION OF THE GROUP

Financial information of the Group for the three years ended 31 December 2011 is disclosed in the 2009, 2010 and 2011 annual reports respectively of the Company, which are published on both the Stock Exchange website (www.hkexnews.hk) and the Company’s website (www.shkco.com.hk).

2. MANAGEMENT DISCUSSION AND ANALYSIS OF THE REMAINING GROUP FOR THE THREE YEARS ENDED 31 DECEMBER 2011

(I) For the year ended 31 December 2011

Business Review

The Remaining Group’s revenue increased by 17% during the year to HK$3,593.2 million (2010: HK$3,064.1 million). The key driver for this increase was the 32% growth in total interest income, which accounted for 77% of total revenue.

The Remaining Group’s operating earnings before tax, which is profit before tax excluding other income, net loss from valuation changes to financial instruments, net exchange loss (discussed below), share of results of associates and jointly controlled entities, increased by a satisfying 14% during 2011 to HK$1,546.0 million (2010: HK$1,359.0 million). Net loss from valuation changes to financial instruments for 2011 amounted to HK$132.3 million (2010: profit of HK$121.2 million), reflecting mark to market valuation losses in the Asset Management and Capital Markets business. This amount was offset by another non-cash item, a HK$192.6 million gain from the revaluation of investment properties, which is classified as Other Income. Net foreign exchange losses of HK$46.0 million were also incurred, mainly from the Consumer Finance business, reflecting the devaluation of the HK/US dollar against the RMB, as UA Finance’s Mainland China subsidiaries converted their capital into RMB in the loan underwriting process.

For the year ended 31 December 2011, the Remaining Group’s profit attributable to the shareholders was HK$1,015.9 million (2010: HK$1,081.5 million).

Segment Results

Wealth Management and brokerage

This segment’s revenue was HK$1,082.5 million and contribution to pre-tax profit was HK$359.1 million, representing a 5% and 21% increase respectively over 2010. The increase was driven by the Remaining Group’s margin lending business, which benefited from a market environment where liquidity was tight.

Total interest income under this segment amounted to HK$458.2 million, a 38% year on year increase. The Remaining Group’s margin loan balance closed at HK$4.3 billion at the end of 2011 (2010: HK$4.4 billion). As the market deteriorated in the last quarter of the year, some of our customers sought to reduce risk in their positions and repaid their margin loans. However, overall, the Remaining Group benefited from improved pricing on its aggregate loan book with the corporate customers, and demand remaining relatively healthy.

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FINANCIAL INFORMATION

APPENDIX I

Revenue from the segment excluding interest income declined by 11%. Retail customers, who form the core of the Remaining Group’s customer base, have largely stayed on the sidelines in the volatile market, especially in the second half of 2011 when the Hang Seng Index hit a low of 16,170.

Our strategy to grow this business segment remains to continue a gradual transformation into a leading wealth management firm. SHK Private was launched, together with new products such as the SHK MasterChoice Discretionary Portfolio Management Services and the alliance with EK Immigration Consulting to promote the Capital Investment Entrant Scheme (the ‘‘CIES’’). In November 2011, a new mobile trading platform was launched. The platform, ‘‘SHKF eMO!’’, is now targeting our self-directed trading client base.

Although these new initiatives were impacted by adverse market conditions, particularly in the latter part of the year, the increase in customers bodes well for the business as the market situation normalises. For instance, client assets under management in our CIES accounts increased by 98%. Almost 200 new accounts were opened under the scheme, and with HK$10 million to be deposited for accounts under the revised scheme requirements, there should be good future revenue opportunities.

Capital markets

The Capital Markets segment covers corporate finance, structured lending, equity capital markets, and corporate and institutional sales business. Equity and debt fund raising solutions are offered to both corporate and institutional clients.

This segment’s revenue was HK$328.2 million (2010: HK$255.1 million), an increase of 29% compared with 2010. Pre-tax contribution was HK$149.5 million (2010: HK$258.1 million). The drop is attributable to a net loss of HK$94.3 million from financial instruments, which represents unrealised mark-to-market losses on positions resulting from underwriting activities during the year. In 2010, we had a gain of HK$71.8 million from our structured loans’ equity-linked component. Operating earnings from this segment (which excludes this as well as other income and exchange impact) saw an increase of 30% during 2011.

Asset management

Assets under management of HK$2.29 billion was recorded at the end of 2011. This segment recorded a loss of HK$42.7 million (2010: HK$13.5 million profit). These results included a HK$53.3 million unrealised mark-to-market valuation adjustment from our strategic investments into affiliated funds.

Consumer finance

This segment’s revenue grew by 26% to HK$2,084.3 million (2010: HK$1,659.5 million), with a pre-tax contribution of HK$854.3 million (2010 as restated: HK$751.2 million), an increase of 14%. Included in the results was an amortisation charge of intangible assets of HK$174.4 million incurred from the Remaining Group’s acquisition of UA Finance six years ago.

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FINANCIAL INFORMATION

APPENDIX I

Total impairment charges, which included bad debts written off, movement to impairment allowance and bad debts recovered, increased to HK$164.5 million (2010: HK$108.6 million), mainly reflecting the result of an increase in the loan portfolio balance over the year. Bad debts written off net of recovery were 2.8% of gross loans, improving from 3.7% last year. This reflects the Remaining Group’s prudent risk management, as well as an increase in the proportion of mortgage loans in the Hong Kong portfolio.

The devaluation of the HK/US dollars against the RMB during the year led to a foreign exchange loss of HK$61.6 million (2010: HK$25.5 million) incurred by the conversion of HK/US dollars standing on the capital accounts of the Mainland China subsidiaries which arises from capital injection in HK/US currency, into RMB in the loan underwriting process. The corresponding HK dollar appreciation of the RMB denominated loans, on the other hand, was translated into increased reserves on the Statement of Financial Position. Finance costs amounted to HK$146.0 million. This amount included HK$25.6 million incurred in the Remaining Group’s borrowings that funded the acquisition of UA Finance.

The gross loan balance at year end increased significantly by 34% to HK$8 billion (2010: HK$6 billion). This was driven by a 24% increase in the Hong Kong portfolio, and a doubling of the loan balance in Mainland China.

Principal investments

Principal Investments contributed HK$295.1 million to the Remaining Group’s pre-tax profit, an increase from HK$272.4 million in 2010. A HK$192.6 million gain was recorded from the revaluation of the Remaining Group’s investment property portfolio. The major asset in the investment property portfolio consists of the Remaining Group’s previous office premises in Admiralty. The gain offsets the reduced contribution from associates, subsequent to the Tian An restructuring in 2010.

At the end of 2011, we also signed an agreement to dispose of our interest in a Malaysia hotel. The Remaining Group will record a profit of over HK$80 million from this disposal in our 2012 accounts, realising approximately HK$175 million in cash. We will keep monitoring our legacy investments and seek to realise them at the right price.

Financial Resources and Gearing Ratio

As at 31 December 2011, the equity attributable to owners of the Company amounted to HK$11,726.6 million, representing an increase of HK$540.7 million or approximately 5% from 31 December 2010.

The Remaining Group continued to maintain a strong cash position and had short-term bank deposits, bank balances and cash amounting to HK$2,736.0 million (at 31 December 2010: HK$2,510.1 million). The Remaining Group’s total bank and other borrowings, amount due to an associate of a holding company, loans due to fellow subsidiaries and bonds amounted to HK$6,682.8 million (at 31 December 2010: HK$5,132.4 million). Of this, HK$2,923.5 million is repayable within one year and HK$3,759.3 million is repayable after one year (at 31 December 2010: HK$2,492.1 million and HK$2,640.3 million respectively).

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FINANCIAL INFORMATION

APPENDIX I

The Remaining Group’s liquidity, as demonstrated by the current ratio (current assets/ current liabilities) increased to 3.5 times as at 31 December 2011 (at 31 December 2010: 3.2 times).

The Remaining Group’s gearing ratio (calculated on the basis of the Remaining Group’s total bank and other borrowings, amount due to an associate of a holding company, loans due to fellow subsidiaries and bonds over the equity attributable to owners of the Company) was approximately 57% as at 31 December 2011 (at 31 December 2010: approximately 46%).

Capital Structure, Bank Borrowings and Exposure to Fluctuations in Exchange Rates

During the year, the Trustee of the EOS acquired 2.6 million shares of the Company for shares awarded under the scheme through purchases on the Stock Exchange. The Company issued 3.4 million shares under the 2010 final and 2011 interim scrip dividend schemes. Upon the conversion in August 2011 of all outstanding mandatory convertible notes, the Company issued 341.6 million shares. The Company repurchased 11.0 million shares during the year for a total consideration (including expenses) of HK$44.2 million. Details regarding share capital are set out in Note 41 to the consolidated financial statements of the annual report of the Company for the year ended 31 December 2011.

Other than the bonds, secured instalment loans or borrowings repayable over one year, the Remaining Group’s bank and other borrowings and loans due to fellow subsidiaries were on a short-term basis and in HK dollars and RMB as of 31 December 2011. They were charged at floating interest rates. There are no known seasonal factors in the Remaining Group’s borrowing profiles.

The Remaining Group maintained foreign currency exposure to cater for its present and potential investment activities and recurring operating activities, which means it is subject to some exchange rate exposure. The Remaining Group closely monitors the risks that this strategy involves.

Material Acquisitions and Disposals of Subsidiaries, Associates and Jointly Controlled Entities

There were no material acquisitions or disposals of subsidiaries, associates or jointly controlled entities during the year.

Charges on Assets

Listed shares held by the Remaining Group with an aggregate value of HK$125.9 million were pledged for bank loans and overdrafts. Properties of the Remaining Group with a total book value of HK$668.9 million were pledged by subsidiaries to banks for instalment loans granted to them with a total outstanding balance of HK$146.1 million as at 31 December 2011.

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FINANCIAL INFORMATION

APPENDIX I

Contingent Liabilities

Details regarding the contingent liabilities are set out in Note 47 to the consolidated financial statements of the annual report of the Company for the year ended 31 December 2011.

Human Resources and Training

As at 31 December 2011, the Remaining Group’s headcount stood at 3,541 (including Investment Consultants), representing an approximate increase of 39.4% as compared with 31 December 2010. The bulk of the increase stemmed from UA Finance’s business expansion in Mainland China (including the opening of 22 branches in Mainland China in 2011). Staff costs (including Directors’ emoluments), contributions to retirement benefit schemes and expenses recognised for the EOS amounted to approximately HK$653.8 million (2010: HK$488.8 million).

The Remaining Group operates different compensation schemes to reflect different job roles within the organisation. For sales staff and investment consultants, the package may consist of a base pay and commission/bonus/incentive, or alternatively, it may be a straight commission arrangement. For non-sales staff, the compensation comprises a base salary with or without discretionary bonus/share-based incentive, as appropriate.

Under the EOS, selected employees or directors of the Remaining Group may be awarded shares of the Company.

A wide range of quality in-house training and development programmes are conducted with frontline sales and back office staff to enhance people development and promote staff retention.

Future Plans for Material Investments or Capital Assets

There is no specific plan for material investments or acquisition of material capital assets.

(II) For the year ended 31 December 2010

Business Review

By the end of the year, the Remaining Group’s assets under management, custody and/ or advice amounted to over HK$70 billion.

The Remaining Group reported profit before tax of HK$1,592.5 million (2009: HK$1,610.6 million). Profit attributable to owners of the Company amounted to HK$1,082.2 million (2009: HK$1,254.6 million), and earnings per share were HK56.5 cents (2009: HK72.3 cents). The basic earnings per share has included the equity element of the 2% mandatory convertible notes, which converts by 2013, issued to CVC Capital Partners (‘‘CVC’’).

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FINANCIAL INFORMATION

APPENDIX I

These results should be seen in the context of the Remaining Group having, during the year, disposed of its interest in Tian An resulting in a distribution in specie equivalent to HK$3.8 billion to its shareholders.

If the effects of this disposal are excluded, and Tian An’s contribution to the Remaining Group’s earnings is adjusted, the net profit attributable to shareholders increased by 26.5%.

Segment Results

Wealth Management & Brokerage

This segment’s revenue and the contribution to pre-tax earnings were HK$1,145 million and HK$403 million respectively (2009: HK$1,269 million and HK$497 million). The principal reason behind the drop was the decreased contribution from the profit of financial assets, which was higher in 2009 as the market recovered from the depths of the global financial crisis.

The Remaining Group’s margin lending book exceeded HK$4.4 billion, growing by 32% over 2009 (2009: 3.3 billion). The segment’s interest income increased by 27%. This growth was mainly driven by an increased demand from the Remaining Group’s corporate and high net worth clients.

Asset Management

This segment recorded revenue of HK$71 million and a pre-tax profit contribution of HK$33 million for 2010. Total asset under management, including its affiliated funds, remained stable at US$531 million as at 31 December 2010.

Corporate Finance (renamed Capital Markets in 2011)

This segment’s revenue and the contribution to pre-tax profit was HK$284 million and HK$241 million, an increase of 53% and 76%, respectively, on a year on year basis. A big contributor to this increase was the HK$73 million gain from financial assets, resulting from the gains on the derivative component of the Remaining Group’s structured loans business, which contained equity-linked structures.

As at 31 December 2010, the Remaining Group’s secured term loans balance stood at HK$648.6 million, compared against HK$545.5 million at the end of 2009. Interest income from the segment increased by 59% to HK$101.6 million.

Consumer Finance

This segment’s revenue increased by 10% to HK$1,659.5 million in 2010 (2009: HK$1,511.7 million), whilst contribution to profit before tax almost doubled to HK$744.5 million (2009: HK$375.0 million). This result mainly reflected the increased contribution from the China business, as well as an improvement in credit quality which led to much

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FINANCIAL INFORMATION

APPENDIX I

lower delinquency rates. Total impairment charges, which include bad debts written off, movement to impairment allowance and bad debts recovered, decreased 76% to HK$109 million.

Also included in the results were non-cash amortisation charges of HK$174.7 million (2009: HK$181.1 million) on intangible assets, stemming from the Remaining Group’s acquisition of its interest in UA Finance in 2006. On a stand-alone basis UA Finance’s after tax profit set a new record of HK$794 million.

The consumer finance gross loan balance as at 31 December 2010 increased by 20% to HK$6 billion (31 December 2009: HK$5 billion), with growth accelerating towards the end of the year. UA Finance’s loan business in mainland China was the main driver of this growth. Loans in China as a proportion of gross loan balance increased from 6.8% in 2009 to 13%; it has more than doubled on an absolute basis.

Principal Investments

The Principal Investment segment, which included the Remaining Group’s strategic investment, rental and property holdings, recorded a loss of HK$45 million. During the year, the Remaining Group disposed of its entire interest in Tian An in order to streamline its balance sheet and corporate structure. Excluding this loss, which was non-cash in nature, the contribution from this segment remained steady.

Financial Resources and Gearing Ratio

As at 31 December 2010, the equity attributable to owners of the Company amounted to HK$11,179.7 million, representing a decrease of HK$1,467.5 million or approximately 12% from 31 December 2009. The decrease was largely attributed to the distribution in specie of the Company’s investment in Tian An.

The Remaining Group had short-term bank deposits, bank balances, treasury bills and cash amounting to HK$2,510.1 million (as at 31 December 2009: HK$1,346.0 million). The Remaining Group’s total bank and other borrowings, short-term loans due to fellow subsidiaries, three-year bonds and the financial liability element of mandatory convertible notes amounted to HK$5,118.2 million (as at 31 December 2009: HK$4,513.3 million). Of this, HK$2,488.8 million (as at 31 December 2009: HK$3,770.7 million) is repayable within one year, and HK$2,629.4 million (as at 31 December 2009: HK$742.6 million) repayable after one year.

The liquidity of the Remaining Group, as demonstrated by the current ratio (current assets/current liabilities), increased to 3.2 times as at 31 December 2010 compared to 1.9 times as at 31 December 2009.

The Remaining Group’s gearing ratio (calculated on the basis of the Remaining Group’s total bank and other borrowings, short-term loans due to fellow subsidiaries, three-year bonds and financial liability element of mandatory convertible notes over the equity attributable to owners of the Company) was approximately 46% as at 31 December 2010 (as at 31

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FINANCIAL INFORMATION

APPENDIX I

December 2009: approximately 36%). The higher gearing ratio is largely due to the decrease in equity attributable to owners of the Company as a result of the distribution in specie as mentioned above.

Capital Structure, Bank Borrowings and Exposure to Fluctuations in Exchange Rates

During the year, the appointed trustee of the EOS acquired 0.4 million shares of the Company through purchases on the Stock Exchange for the shares awarded under the scheme. The Company also issued 26.6 million shares under the 2010 interim scrip dividend scheme. The Company repurchased 3.3 million shares during the year for a total consideration (including expenses) of HK$16.3 million.

Other than the three-year bonds, the financial liability element of mandatory convertible notes, secured installment loans or those borrowings repayable over one year, the Remaining Group’s bank and other borrowings and short-term loans due to fellow subsidiaries were on a short-term basis and in HK dollars and RMB as at 31 December 2010. They were charged at floating interest rates. There are no known seasonal factors in the Remaining Group’s borrowing profiles.

The Remaining Group maintained foreign currency exposure to cater for its recurring operating activities and present and potential investment activities, meaning it will be subject to reasonable exchange rate exposure. The Remaining Group closely monitors this risk.

Material Acquisitions and Disposals of Subsidiaries, Associates and Jointly Controlled Entities

On 28 June 2010, the Remaining Group completed the disposal of its entire interest in Tian An, a listed associate, to a subsidiary of APL. The Remaining Group recognised a loss of HK$159.3 million on the disposal.

In April 2010, the Remaining Group also disposed of 49% ownership interest in a wholly-owned subsidiary engaging in leveraged foreign exchange trading business at a consideration of HK$141.1 million. The Remaining Group recognised a gain of HK$29.3 million on the disposal.

Other than the above disposals, there were no material acquisitions or disposals of subsidiaries, associates or jointly controlled entities during the year.

Charges on Assets

Listed shares held by the Remaining Group with an aggregate value of HK$1.4 million were pledged for bank loans and overdrafts. Properties of the Remaining Group with a total book value of HK$341.2 million were pledged by subsidiaries to banks for instalment loans granted to them with a total outstanding balance of HK$163.4 million as at 31 December 2010. The entire share capital of a wholly-owned subsidiary, UAF Holdings Limited, was also pledged as a share mortgage for the bonds issued by the Remaining Group.

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FINANCIAL INFORMATION

APPENDIX I

Contingent Liabilities

Details regarding the contingent liabilities are set out in Note 47 to the consolidated financial statements of the annual report of the Company for the year ended 31 December 2010.

Human Resources and Training

As at 31 December 2010, the Remaining Group’s total headcount stood at 2,540 (including Investment Consultants), an approximate increase of 27.3% as compared to 31 December 2009. The bulk of the increase stemmed from UA Finance’s business expansion in Hong Kong and China. Twelve branches were opened in mainland China and SHK Finance Limited was re-launched in Hong Kong in November 2010. Staff costs (including Directors’ emoluments), contributions to retirement benefit schemes and expenses recognised for the EOS amounted to approximately HK$488.8 million (2009: HK$472.0 million).

The Remaining Group operates different compensation schemes to reflect different job roles within the organisation. For sales staff and Investment Consultants, the package may consist of either a base pay and commission/bonus/incentive, or alternatively, it may be a straight commission arrangement. For non-sales staff, the compensation comprises either a fixed salary with discretionary bonus/share-based incentive or a fixed salary only, as appropriate.

Under the EOS, selected staff or directors of the Remaining Group may be awarded some shares of the Company.

The Remaining Group continued to provide relevant and quality in-house training for the frontline sales and mid and back office staff. At the same time, staff was encouraged to attend external training programmes to enhance their skills and competencies for career development and in turn, they will be better equipped to cope with future business needs.

(III) For the year ended 31 December 2009

Business Review

By 31 December 2009, our assets under management, custody and/or advice had swelled to more than HK$60 billion.

Our financial results for the year displayed a significant year-on-year improvement. The Remaining Group’s revenue increased 11.2% to HK$3,097.6 million (2008: HK$2,785.4 million), and with costs generally well contained, our profit after tax climbed to HK$1,405.3 million, nearly three times the previous year. Profit attributable to the owners of the Company also reached HK$1,254.6 million, a 262.2% increase when compared with 2008.

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FINANCIAL INFORMATION

APPENDIX I

Segment Results

Wealth Management & Brokerage

This segment’s revenue, which includes the margin finance business, climbed to HK$1,269.0 million (2008: 528.2 million), a 140% increase when compared with the prior year. As at 31 December 2009, the Remaining Group’s margin loan book stood at HK$3,343.6 million, a 48.8% increase from HK$2,246.5 million at 31 December 2008.

Asset Management

With a lower quantum of assets under management, revenue declined to HK$105 million from HK$183 million in 2008.

Corporate Finance (renamed Capital Markets in 2011)

This segment’s revenue increased by 21.1% to HK$185.4 million (2008: HK$153.1 million). The Remaining Group continued to scale back its structured finance business, reducing its loan book by 25% to HK$543.1 million (2008: HK$724.8 million).

Consumer Finance

This segment’s revenue increased by 11% to HK$1,511.7 million in 2009 (2008: HK$1,353.3 million), whilst contribution to profit before tax increased to HK$375.0 million (2008: HK$245.1 million) due to improvement in business and general economy, decrease in amortisation charge and impairment loss of intangible assets, and decrease in interest expenses allocated to this segment.

The consumer finance gross loan balance as at 31 December 2009 increased to HK$5 billion (31 December 2008: HK$4.8 billion).

Principal Investments

Tian An, the Remaining Group’s principal associated company, is engaged in high-end residential and commercial property development in China, along with the sale of cement, clinker and construction materials, property management and hotel operations. During the year, Tian An turned in a solid performance with revenue rising to HK$1,083.5 million, an increase of 129% compared to 2008. Profit attributable to owners of Tian An was HK$1,067.4 million in 2009, a 50% increase over 2008.

Financial Resources and Gearing Ratio

As of 31 December 2009, the equity attributable to owners of the Company amounted to HK$12,647.2 million, representing an increase of HK$1,309.4 million or approximately 12% from that of 31 December 2008. The Remaining Group continued to maintain a strong cash position and had short-term bank deposits, bank balances, treasury bills and cash amounting to HK$1,346.0 million (as at 31 December 2008: HK$1,738.9 million). The Remaining Group’s total bank and other borrowings, short-term loans and three-year bonds due to fellow subsidiaries amounted to HK$4,513.3 million (as at 31 December 2008:

– 54 –

FINANCIAL INFORMATION

APPENDIX I

HK$4,494.1 million). Of this, HK$3,657.7 million (as at 31 December 2008: HK$1,734.7 million) is repayable within one year, and HK$855.6 million (as at 31 December 2008: HK$2,759.4 million) repayable after one year.

The liquidity of the Remaining Group as demonstrated by the current ratio (current assets/current liabilities) decreased to 1.9 times as at 31 December 2009 compared to 2.7 times as at 31 December 2008.

The Remaining Group’s gearing ratio (calculated on the basis of the Remaining Group’s total bank and other borrowings, short-term loans and three-year bonds due to fellow subsidiaries over the equity attributable to owners of the Company) improved to approximately 36% as at 31 December 2009 (as at 31 December 2008: approximately 40%).

Capital Structure, Bank Borrowings and Exposure to Fluctuations in Exchange Rates

During the year, 50.0 million shares of par value HK$0.2 each in the capital of the Company were issued for HK$294.1 million as a result of the exercise of the Company’s warrants by warrant holders. The Company also issued 0.2 million shares under the 2009 interim scrip dividend scheme. The Company repurchased 14.1 million shares during the year for a total consideration (including expenses) of HK$75.5 million. The appointed trustee of the EOS also acquired 0.6 million shares of the Company through purchases on the Stock Exchange for the awarded shares of the scheme.

Other than the three-year bonds and secured instalment loans or those borrowings repayable over one year, the Remaining Group’s bank and other borrowings and short-term loans due to fellow subsidiaries were on a short-term basis and in HK dollars and RMB as at 31 December 2009. They were charged at floating interest rates. There are no known seasonal factors in the Remaining Group’s borrowing profiles.

Material Acquisitions and Disposals of Subsidiaries, Associates and Jointly Controlled Entities

There were no material acquisitions or disposals of subsidiaries, associates or jointly controlled entities during the year.

Charges on Assets

Listed shares of the Remaining Group with an aggregate value of HK$2,977.6 million were pledged for bank loans and overdrafts. Investment properties, buildings and interests in land of the Remaining Group with a total book value of HK$169.4 million were pledged by subsidiaries to banks for instalment loans granted to them with a total outstanding balance of

– 55 –

FINANCIAL INFORMATION

APPENDIX I

HK$108.9 million as at 31 December 2009. The entire share capital of a wholly-owned subsidiary, UAF Holdings Limited, was also pledged as a share mortgage for the bonds issued by the Remaining Group.

Contingent Liabilities

Details regarding the contingent liabilities are set out in Note 41 to the consolidated financial statements of the annual report of the Company for the year ended 31 December 2009.

Human Resources and Training

As at 31 December 2009, the Remaining Group’s total headcount stood at 1,996 (including Investment Consultants), representing an approximate increase of 12% as compared with 31 December 2008. Staff costs (including Directors’ emoluments), contributions to retirement benefit schemes and expenses recognised for the EOS amounted to approximately HK$472.0 million (2008: HK$604.6 million, a figure which included the staff costs of a listed subsidiary which was disposed of in the first half of 2008).

The Remaining Group operates different compensation schemes, reflecting the different roles within the organisation. For sales staff and investment consultants, the package may consist of either a base pay and commission/bonus/sales incentive, or alternatively, it may be a straight commission arrangement. For non-sales staff, compensation is comprised of either a base pay with a discretionary bonus/share-based incentive, or a straight base pay, where appropriate.

Under the EOS, selected employees or directors of the Remaining Group may be awarded shares of the Company.

Seeking to maintain its status as an ‘‘employer of choice’’, the Remaining Group continued to expand the number of high quality in-house training programmes provided to frontline sales and mid and back office staff. In addition to Continuing Professional Training and Continuing Professional Development courses, a wide range of personal development and soft skills training sessions, including stress management and Putonghua language courses, were conducted to enhance staff performance and equip them for the future expansion in China.

3. FINANCIAL AND TRADING PROSPECT OF THE REMAINING GROUP

With the European sovereign debt crisis still some way from resolution, the general outlook remains uncertain. However, monetary conditions globally remain generally easy, and in Mainland China the reserve requirement ratio was adjusted downwards in December 2011.

With the Hang Seng Index about 18,951.85 in mid May 2012 and the uncertainty portraited by the European economy, we will continue to pursue strategies that can meet the challenges and deliver sustainable long-term growth.

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FINANCIAL INFORMATION

APPENDIX I

4. STATEMENT OF INDEBTEDNESS

At the close of business on 31 May 2012, 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$6,066.6 million, comprising secured bank loans of approximately HK$589.2 million, unsecured bank loans of approximately HK$4,487.9 million, unlisted unsecured bonds of approximately HK$527.9 million, unsecured borrowings of approximately HK$402.2 million from a fellow subsidiary, unsecured borrowings of approximately HK$24.5 million from an associate of a holding company, unsecured borrowings of approximately HK$2.4 million from associates, unsecured borrowings of approximately HK$0.2 million from investee companies and unsecured other borrowings of approximately HK$32.3 million. The Group’s secured borrowings were secured by charges over its assets, including investment properties and listed investments belonging to the Group and margin clients. The unlisted unsecured bonds were guaranteed by a non wholly-owned subsidiary of the Group.

In addition, the Group had contingent liabilities in the sum of approximately HK$13.3 million comprising guarantees for banking facilities granted to a jointly controlled entity, indemnities on banking guarantees made available to a clearing house and regulatory body and other guarantees. There were also claims arising from 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 IV 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 31 May 2012.

Save as aforesaid and apart from intra-group liabilities, the Group did not have any outstanding mortgages, charges, debentures, other loan capital, bank overdrafts, loans or other similar indebtedness, hire purchase commitments, liabilities under acceptances or acceptance credits or any guarantees or other material contingent liabilities at the close of business on 31 May 2012.

5. WORKING CAPITAL

The Directors are of the opinion that, after taking into account the financial resources available to the Group including the available credit facilities and the internally generated funds, the Group has sufficient working capital to satisfy its requirements for at least the next 12 months following the date of this circular.

6. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, there has been no material adverse change in the financial or trading position of the Group since 31 December 2011 (the date to which the latest published audited consolidated financial statements of the Group were made up).

– 57 –

FINANCIAL INFORMATION OF THE TARGET COMPANIES

APPENDIX II

SUMMARY OF FINANCIAL INFORMATION

Set out below are the unaudited combined statement of financial position of the Target Companies as at 31 December 2009, 2010 and 2011 and the unaudited combined income statement, the unaudited combined statement of comprehensive income, the unaudited combined statement of changes in equity and the unaudited combined statement of cash flows of the Target Companies for the three years ended 31 December 2011 (collectively referred to ‘‘Unaudited Combined Financial Information of the Target Companies’’), which have been prepared by the Directors in accordance with Rule 14.68(2)(a)(i) of the Listing Rules.

The auditor of the Company, Deloitte Touche Tohmatsu, has reviewed the Unaudited Combined Financial Information of the Target Companies in accordance with the Hong Kong Standard on Review Engagements 2400 ‘‘Engagements to Review of Financial Statements’’ issued by the Hong Kong Institute of Certified Public Accountants and concluded that nothing has come to their attention that caused them to believe that the Unaudited Combined Financial Information of the Target Companies is not prepared, in all material respects, in accordance with the accounting policies consistent with those used in the preparation of the Group’s consolidated financial statements for the respective years in the three years period ended 31 December 2011 and the basis set out in Note 2 to the Unaudited Combined Financial Information of the Target Companies.

COMBINED INCOME STATEMENTS OF THE TARGET COMPANIES

for the years ended 31 December 2009, 2010 and 2011

Revenue (turnover) Other income Total income Administrative expenses Net exchange loss Bad and doubtful debts Finance costs Profit before taxation Taxation Profit for the year Profit attributable to: UA Finance Non-controlling interest	2011 HK$ Million 547.0 13.7 560.7 (273.5) (41.8) (52.7) (8.4) 184.3 (43.0) 141.3 142.0 (0.7) 141.3	2010 HK$ Million 247.7 4.5 252.2 (128.0) (19.2) (36.5) (3.9) 64.6 (17.0) 47.6 47.6 — 47.6	2009 HK$ Million 129.3 7.7 137.0 (66.1) (0.1) (23.2) (0.9) 46.7 (13.7) 33.0 33.0 — 33.0

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FINANCIAL INFORMATION OF THE TARGET COMPANIES

APPENDIX II

COMBINED STATEMENTS OF COMPREHENSIVE INCOME OF THE TARGET COMPANIES for the years ended 31 December 2009, 2010 and 2011

Profit for the year Other comprehensive income Exchange differences arising on translating foreign operations Total comprehensive income for the year Total comprehensive income attributable to: UA Finance Non-controlling interest	2011 HK$ Million 141.3 96.3 237.6 237.5 0.1 237.6	2010 HK$ Million 47.6 33.2 80.8 80.8 — 80.8	2009 HK$ Million 33.0
			0.2
			33.2
			33.2 —
			33.2

– 59 –

FINANCIAL INFORMATION OF THE TARGET COMPANIES

APPENDIX II

COMBINED STATEMENTS OF FINANCIAL POSITION OF THE TARGET COMPANIES

at 31 December 2009, 2010 and 2011

Non-current Assets Investment properties Leasehold interests in land Property and equipment Loans and advances to consumer finance customers Deferred tax assets Deposits for acquisition of property and equipment and other receivables Current Assets Loans and advances to consumer finance customers Trade and other receivables Amount due from a holding company Amount due from a fellow subsidiary Cash, deposits and cash equivalents Current Liabilities Bank and other borrowings Trade and other payables Amount due to a holding company Amount due to an associate of a holding company Amount due to fellow subsidiaries Taxation payable Net Current Assets Total Assets less Current Liabilities	2011 HK$ Million 32.8 5.3 102.6 76.5 27.3 7.0 251.5 1,442.3 19.8 97.2 37.0 1,650.8 3,247.1 44.4 54.3 — 24.7 118.8 22.2 264.4 2,982.7 3,234.2	2010 HK$ Million 45.3 5.2 61.7 44.4 17.0 3.4 177.0 700.7 9.8 6.3 35.4 1,122.3 1,874.5 79.0 24.9 0.9 — 337.1 14.9 456.8 1,417.7 1,594.7	2009 HK$ Million 60.6 5.2 29.7 9.7 4.6 1.6
			111.4
			316.4 3.2 6.0 34.1 251.6
			611.3
			19.3 13.9 0.8 — 362.8 9.9
			406.7
			204.6
			316.0

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FINANCIAL INFORMATION OF THE TARGET COMPANIES

APPENDIX II

Capital and Reserves Capital Reserves Equity attributable to UA Finance Non-controlling interest Total Equity Non-current Liabilities Deferred tax liabilities Amount due to an associate of a holding company	2011 HK$ Million 2,752.1 350.1 3,102.2 122.5 3,224.7 9.5 — 9.5 3,234.2	2010 HK$ Million 1,428.2 112.6 1,540.8 — 1,540.8 6.7 47.2 53.9 1,594.7	2009 HK$ Million 279.3 31.8
			311.1 —
			311.1
			4.9 —
			4.9
			316.0

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FINANCIAL INFORMATION OF THE TARGET COMPANIES

APPENDIX II

COMBINED STATEMENTS OF CHANGES IN EQUITY OF THE TARGET COMPANIES for the years ended 31 December 2009, 2010 and 2011

Attributable to UA Finance

		Attributable to	UA Finance
At 1 January 2009 Profit for the year Other comprehensive income for the year Total comprehensive income for the year Increase in capital At 31 December 2009 Profit for the year Other comprehensive income for the year Total comprehensive income for the year Increase in capital At 31 December 2010 Profit for the year Other comprehensive income for the year Total comprehensive income for the year Increase in capital At 31 December 2011	Capital HK$ Million 67.2 — — — 212.1 279.3 — — — 1,148.9 1,428.2 — — — 1,323.9 2,752.1	Exchange reserve HK$ Million 5.7 — 0.2 0.2 — 5.9 — 33.2 33.2 — 39.1 — 95.5 95.5 — 134.6	(Accumulated loss)/retained earnings HK$ Million (7.1) 33.0 — 33.0 — 25.9 47.6 — 47.6 — 73.5 142.0 — 142.0 — 215.5	Total HK$ Million 65.8 33.0 0.2 33.2 212.1 311.1 47.6 33.2 80.8 1,148.9 1,540.8 142.0 95.5 237.5 1,323.9 3,102.2	Non- controlling interest HK$ Million — — — — — — — — — — — (0.7) 0.8 0.1 122.4 122.5	Total equity HK$ Million 65.8 33.0 0.2
						33.2 212.1
						311.1 47.6 33.2
						80.8 1,148.9
						1,540.8 141.3 96.3
						237.6 1,446.3
						3,224.7

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FINANCIAL INFORMATION OF THE TARGET COMPANIES

APPENDIX II

COMBINED STATEMENTS OF CASH FLOWS OF THE TARGET COMPANIES

for the years ended 31 December 2009, 2010 and 2011

OPERATING ACTIVITIES Profit before taxation Adjustments for: Interest income Bad and doubtful debts Increase in fair value of investment properties Amortisation of leasehold interests in land Depreciation of property and equipment Interest expenses Exchange difference Operating cash flows before movements in working capital Increase in loans and advances to consumer finance customers Increase in trade and other receivables Increase in trade and other payables Cash used in operations Interest received Interest paid Taxation paid NET CASH USED IN OPERATING ACTIVITIES INVESTING ACTIVITIES Purchase of property and equipment Fixed deposits with bank placed Advances to a holding company NET CASH USED IN INVESTING ACTIVITIES	2011 HK$ Million 184.3 (544.2) 52.7 (13.5) 0.1 14.1 8.4 32.9 (265.2) (765.4) (12.6) 27.6 (1,015.6) 535.0 (8.5) (43.4) (532.5) (23.5) (653.5) (89.4) (766.4)	2010 HK$ Million 64.6 (244.5) 36.5 (4.5) 0.1 8.7 3.9 18.7 (116.5) (437.6) (8.1) 12.8 (549.4) 245.8 (3.8) (22.6) (330.0) (17.6) (282.3) (0.1) (300.0)	2009 HK$ Million 46.7 (126.1) 23.2 (7.7) 0.1 4.8 0.9 — (58.1) (164.2) (2.2) 8.4 (216.1) 122.0 (0.9) (3.1) (98.1) (9.4) — (0.3) (9.7)

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FINANCIAL INFORMATION OF THE TARGET COMPANIES

APPENDIX II

FINANCING ACTIVITIES Proceeds from capital injection Capital contribution by non-controlling interest Net short-term bank and other borrowings (repaid) raised Short-term loans due to fellow subsidiaries (repaid) raised Loan due to an associate of a holding company raised Loan due to an associate of a holding company repaid NET CASH FROM FINANCING ACTIVITIES NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT 1 JANUARY Effect of foreign exchange rate changes CASH AND CASH EQUIVALENTS AT 31 DECEMBER, represented by Cash and cash equivalents	2011 HK$ Million 1,323.9 122.4 (37.3) (227.5) — (24.1) 1,157.4 (141.5) 840.0 11.3 709.8 709.8	2010 HK$ Million 1,148.9 — 57.5 (38.1) 47.1 — 1,215.4 585.4 251.6 3.0 840.0 840.0	2009 HK$ Million 212.1 — 19.3 90.4 — —
			321.8
			214.0 37.5 0.1
			251.6
			251.6

– 64 –

FINANCIAL INFORMATION OF THE TARGET COMPANIES

APPENDIX II

NOTES TO THE COMBINED FINANCIAL INFORMATION OF THE TARGET COMPANIES

for the years ended 31 December 2009, 2010 and 2011

1. GENERAL

亞聯財信息諮詢(深圳)有限公司, 深圳亞聯財行銷顧問有限公司, 深圳市亞聯財小額信貸有限公司, 瀋陽金融商貿開發區亞聯財小額貸款有限公司, 重慶市渝中區亞聯財小額貸款有限責任公司, 天津亞聯財小額貸款有限公司, 成都亞聯財小額貸款有限公司, 大連保稅區亞聯財小額貸款有限公司, 雲南省亞聯財小額貸款有限公司 and 北京亞聯財小額貸款有限公司 (collectively referred to as the ‘‘Target Companies’’) are subsidiaries of United Asia Finance Limited (‘‘UA Finance’’), which is in turn a non wholly-owned subsidiary of Sun Hung Kai & Co. Limited (the ‘‘Company’’).

On 9 May 2012, UA Finance entered into a Director’s Service Agreement with Mr. Akihiro Nagahara (‘‘Mr. Nagahara’’), a director and the chief executive officer of UA Finance, in which a PRC Development Bonus and an Option to (i) subscribe for up to 20% of the enlarged issued capital of a newly established company which will be the holding company of all subsidiaries of UA Finance that engage in the money lending business in the People’s Republic of China (the ‘‘Newco’’) (corresponding to 25% of the issued capital of the Newco as at the date immediately prior to the date of the exercise of the Option); or (ii) purchase from UA Finance or its subsidiary up to 20% of the then existing issued capital of the Newco, will be made and granted respectively. The Director’s Service Agreement shall not be effective until:

(a) each of Allied Group Limited (‘‘AGL’’), Allied Properties (H.K.) Limited (‘‘APL’’) and the Company having obtained the approval of their respective shareholders for the Director’s Service Agreement and the transactions contemplated thereunder as required by the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the ‘‘Listing Rules’’);
(b) each of AGL, APL and the Company having complied with and to the satisfaction of The Stock Exchange of Hong Kong Limited all requirements under the Listing Rules in relation to the Director’s Service Agreement and the transactions contemplated thereunder; and
(c) all other necessary consents and approvals as may be required in respect of the Director’s Service Agreement and the transactions contemplated thereunder having been obtained.

2. BASIS OF PRESENTATION OF THE COMBINED FINANCIAL INFORMATION

The unaudited combined financial information of the Target Companies has been prepared in accordance with Rule 14.68(2)(a)(i) of the Listing Rules, and solely for the purpose of inclusion in the circular to be issued in connection with the Director’s Service Agreement of Mr. Nagahara by AGL, APL and the Company.

The amounts included in the unaudited combined financial information for the three years ended 31 December 2011 (the ‘‘Relevant Period’’) have been prepared using the same accounting policies adopted by the Company in the preparation of its consolidated financial statements for the respective years in the Relevant Period, which conform with Hong Kong Financial Reporting Standards issued by the Hong Kong Institute of Certified Public Accountants.

The unaudited combined financial information does not contain sufficient information to constitute a complete set of financial statements as defined in Hong Kong Accounting Standard 1 ‘‘Presentation of Financial Statements’’.

3. EVENTS AFTER THE END OF THE RELEVANT PERIOD

A wholly-owned subsidiary of UA Finance, 武漢亞聯財小額貸款有限公司, was incorporated with registered capital of RMB500 million. UA Finance contributed RMB75 million on 22 February 2012 as paid-up capital and the remaining RMB425 million will be injected on or before 22 December 2013. 武漢亞聯財小額貸款有限公司 will engage in the PRC business.

– 65 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

ACCOUNTANTS’ REPORT ON UNAUDITED PRO FORMA FINANCIAL INFORMATION

TO THE DIRECTORS OF SUN HUNG KAI & CO. LIMITED

We report on the unaudited pro forma financial information of the Sun Hung Kai & Co. Limited (the ‘‘Company’’) and its subsidiaries (hereinafter collectively referred to as the ‘‘Group’’), which has been prepared by the directors of the Company for illustrative purposes only, to provide information on how the grant of an option to Mr. Akihiro Nagahara (‘‘Mr. Nagahara’’), as set out in the terms of the Director’s Service Agreement entered into between United Asia Finance Limited (‘‘UA Finance’’) and Mr. Nagahara on 9 May 2012, might have affected the financial information presented, for inclusion in Appendix III to the circular dated 29 June 2012 (the ‘‘Circular’’). The basis of preparation of the unaudited pro forma financial information is set out in Appendix III to the Circular.

Respective responsibilities of directors of the Company and reporting accountants

It is the responsibility solely of the directors of the Company to prepare the unaudited pro forma financial information in accordance with paragraph 29 of Chapter 4 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the ‘‘Listing Rules’’) and with reference to Accounting Guideline 7 ‘‘Preparation of Pro Forma Financial Information for Inclusion in Investment Circulars’’ issued by the Hong Kong Institute of Certified Public Accountants.

It is our responsibility to form an opinion, as required by paragraph 29(7) of Chapter 4 of the Listing Rules, on the unaudited pro forma financial information and to report our opinion to you. We do not accept any responsibility for any reports previously given by us on any financial information used in the compilation of the unaudited pro forma financial information beyond that owed to those to whom those reports were addressed by us at the dates of their issue.

Basis of opinion

We conducted our engagement in accordance with Hong Kong Standard on Investment Circular Reporting Engagements 300 ‘‘Accountants’ Reports on Pro Forma Financial Information in Investment Circulars’’ issued by the Hong Kong Institute of Certified Public Accountants. Our work consisted primarily of comparing the unadjusted financial information with source documents, considering the evidence supporting the adjustments and discussing the unaudited pro forma financial information with the directors of the Company. This engagement did not involve independent examination of any of the underlying financial information.

We planned and performed our work so as to obtain the information and explanation we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the unaudited pro forma financial information has been properly compiled by the directors of the Company on the basis stated, that such basis is consistent with the accounting policies of the Group and that the adjustments are appropriate for the purpose of the unaudited pro forma financial information as disclosed pursuant to paragraph 29(1) of Chapter 4 of the Listing Rules.

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UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

The unaudited pro forma financial information is for illustrative purpose only, based on the judgments and assumptions of the directors of the Company, and, because of its hypothetical nature, does not provide any assurance or indication that any event will take place in future and may not be indicative of:

. the financial position of the Group (as a consequence of the grant of the Option) as at 31 December 2011 or any further date; or
. the results and cash flows of the Group for the year ended 31 December 2011 or any future period.

Opinion

In our opinion:

(a) the unaudited pro forma financial information has been properly compiled by the directors of the Company on the basis stated;
(b) such basis is consistent with the accounting policies of the Group; and
(c) the adjustments are appropriate for the purposes of the unaudited pro forma financial information as disclosed pursuant to paragraph 29(1) of Chapter 4 of the Listing Rules.

Deloitte Touche Tohmatsu

Certified Public Accountants

Hong Kong 29 June 2012

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UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

The unaudited pro forma financial information presented below is prepared to illustrate the financial position of the Group as at 31 December 2011 after pro forma adjustments as if the Option, as set out in the Director’s Service Agreement entered into on 9 May 2012 between UA Finance and Mr. Nagahara to (i) subscribe for up to 20% of the enlarged issued capital of a newly established company as described in the ‘‘Letter from the Board’’ which will be the holding company of all subsidiaries of UA Finance that engage in the money lending business in the People’s Republic of China (the ‘‘Newco’’) (corresponding to 25% of the issued capital of the Newco as at the date immediately prior to the date of the exercise of the Option); or (ii) purchase from UA Finance or its subsidiary up to 20% of the then existing issued capital of the Newco as described in the ‘‘Letter from the Board’’, was granted on 31 December 2011. In addition, the unaudited pro forma financial information presented below illustrates the results and cash flows of the Group for the year ended 31 December 2011 after pro forma adjustments as if the Option was granted on 1 January 2011.

In addition, further unaudited pro forma financial information is provided to illustrate the consequential impact on the financial position of the Group as at 31 December 2011 as well as the results and cash flows of the Group for the year ended 31 December 2011 assuming the Restructuring as defined in the circular dated 29 June 2012 and the eventual exercise of the Option were effected immediately after the granting of the Option notwithstanding the fact that the completion of the Restructuring is not likely to be immediate and the timing of the exercise of the Option is solely determined by Mr. Nagahara and not the Group.

This unaudited pro forma financial information under both circumstances has been prepared for illustrative purposes only and because of its hypothetical nature, it may not purport to represent the true picture of the financial position of the Group as at 31 December 2011 or at any future date or to represent the results and cash flows of the Group for the year ended 31 December 2011 or for any future period. The unaudited pro forma financial information is prepared based on the audited consolidated statement of financial position of the Group as at 31 December 2011, the audited consolidated income statement, audited consolidated statement of comprehensive income and audited consolidated statement of cash flows of the Group for the year ended 31 December 2011 extracted from the annual report of the Company for the year ended 31 December 2011 after reflecting the pro forma adjustments described in the accompanying notes.

– 68 –

APPENDIX III

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

	Unaudited pro	forma consolidated	statement of	financial position	assuming Option	was granted, vested	and immediately	exercised on	31 December 2011	HK$ Million			714.0	10.0	220.6	1,023.5	2,384.0	56.7	122.1	316.2	26.9	92.7	51.3		2,972.6		36.5		236.7	8,263.8		12.5		4,583.5		536.0	6,345.7	16.9	3,338.0	14,832.6
							Effect of the	exercise of	the Option	HK$ Million	(Note 4)		—	—	—	—	—	—	—	—	—	—	—		—		—		—	—		—		—		—	—	—	620.4	620.4
							Pro forma	restructuring	expenses	HK$ Million	(Note 3)		—	—	—	—	—	—	—	—	—	—	—		—		—		—	—		—		—		—	—	—	(4.5)	(4.5)
					Pro forma	withholding	tax on	dividend	paid	HK$ Million	(Note 2)		—	—	—	—	—	—	—	—	—	—	—		—		—		—	—		—		—		—	—	—	(13.9)	(13.9)
Unaudited	pro forma	consolidated	statement of	financial position	assuming Option	was granted and	immediately	vested on	31 December 2011	HK$ Million			714.0	10.0	220.6	1,023.5	2,384.0	56.7	122.1	316.2	26.9	92.7	51.3		2,972.6		36.5		236.7	8,263.8		12.5		4,583.5		536.0	6,345.7	16.9	2,736.0	14,230.6
				Pro forma	adjustments that	show the effect of	the grant and	immediate vest of	the Option	HK$ Million	(Note 1)		—	—	—	—	—	—	—	—	—	—	—		—		—		—	—		—		—		—	—	—	—	—
			Consolidated	statement of	financial position	of the Group	before pro forma	adjustments (as at	31 December 2011)	HK$ Million	(Audited)		714.0	10.0	220.6	1,023.5	2,384.0	56.7	122.1	316.2	26.9	92.7	51.3		2,972.6		36.5		236.7	8,263.8		12.5		4,583.5		536.0	6,345.7	16.9	2,736.0	14,230.6
												Non-current Assets	Investment properties	Leasehold interests in land	Property and equipment	Intangible assets	Goodwill	Interest in associates	Interest in jointly controlled entities	Available-for-sale investments	Statutory deposits	Deferred tax assets	Amounts due from associates	Loans and advances to consumer finance	customers	Deposits for acquisition of property and	equipment and other receivables	Financial assets at fair value through profit or	loss		Current Assets	Amounts due from associates	Loans and advances to consumer finance	customers	Financial assets at fair value through profit or	loss	Trade and other receivables	Taxation recoverable	Cash, deposits and cash equivalents

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UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

	Unaudited pro	forma consolidated	statement of	financial position	assuming Option	was granted, vested	and immediately	exercised on	31 December 2011	HK$ Million			(1,646.4)	(1,023.7)		(14.9)		(24.7)		(1,256.2)	(2.2)	(46.5)	(100.6)	(4,115.2)	10,717.4	18,981.2
							Effect of the	exercise of	the Option	HK$ Million	(Note 4)		—	—		—		—		—	—	—	—	—	620.4	620.4
							Pro forma	restructuring	expenses	HK$ Million	(Note 3)		—	—		—		—		—	—	—	—	—	(4.5)	(4.5)
					Pro forma	withholding	tax on	dividend	paid	HK$ Million	(Note 2)		—	—		—		—		—	—	—	—	—	(13.9)	(13.9)
Unaudited	pro forma	consolidated	statement of	financial position	assuming Option	was granted and	immediately	vested on	31 December 2011	HK$ Million			(1,646.4)	(1,023.7)		(14.9)		(24.7)		(1,256.2)	(2.2)	(46.5)	(100.6)	(4,115.2)	10,115.4	18,379.2
				Pro forma	adjustments that	show the effect of	the grant and	immediate vest of	the Option	HK$ Million	(Note 1)		—	—		—		—		—	—	—	—	—	—	—
			Consolidated	statement of	financial position	of the Group	before pro forma	adjustments (as at	31 December 2011)	HK$ Million	(Audited)		(1,646.4)	(1,023.7)		(14.9)		(24.7)		(1,256.2)	(2.2)	(46.5)	(100.6)	(4,115.2)	10,115.4	18,379.2
												Current Liabilities	Bank and other borrowings	Trade and other payables	Financial liabilities at fair value through profit	or loss	Amount due to an associate of a holding	company	Amounts due to fellow subsidiaries and a	holding company	Amounts due to associates	Provisions	Taxation payable		Net Current Assets	Total Assets less Current Liabilities

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UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

	Unaudited pro	forma consolidated	statement of	financial position	assuming Option	was granted, vested	and immediately	exercised on	31 December 2011	HK$ Million			421.9	11,500.4	11,922.3	3,082.7	15,005.0		204.6	3,203.5	12.3	555.8	3,976.2	18,981.2
							Effect of the	exercise of	the Option	HK$ Million	(Note 4)		—	—	—	620.4	620.4		—	—	—	—	—	620.4
							Pro forma	restructuring	expenses	HK$ Million	(Note 3)		—	(2.8)	(2.8)	(1.7)	(4.5)		—	—	—	—	—	(4.5)
					Pro forma	withholding	tax on	dividend	paid	HK$ Million	(Note 2)		—	(8.1)	(8.1)	(5.8)	(13.9)		—	—	—	—	—	(13.9)
Unaudited	pro forma	consolidated	statement of	financial position	assuming Option	was granted and	immediately	vested on	31 December 2011	HK$ Million			421.9	11,511.3	11,933.2	2,469.8	14,403.0		204.6	3,203.5	12.3	555.8	3,976.2	18,379.2
				Pro forma	adjustments that	show the effect of	the grant and	immediate vest of	the Option	HK$ Million	(Note 1)		—	(154.3)	(154.3)	154.3	—		—	—	—	—	—	—
			Consolidated	statement of	financial position	of the Group	before pro forma	adjustments (as at	31 December 2011)	HK$ Million	(Audited)		421.9	11,665.6	12,087.5	2,315.5	14,403.0		204.6	3,203.5	12.3	555.8	3,976.2	18,379.2
												Capital and Reserves	Share capital	Reserves	Equity attributable to owners of the Company	Non-controlling interests	Total Equity	Non-current Liabilities	Deferred tax liabilities	Bank and other borrowings	Provisions	Bonds

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APPENDIX III

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

income statement	assuming Option	was granted and	vested and	immediately	exercised on	1 January 2011	HK$ Million		3,593.2	224.3	3,817.5	(214.4)	(260.1)	(1,483.6)	(132.3)	(46.0)	(184.5)	(160.3)	(19.6)	1,316.7	17.1	6.2	1,340.0	(278.8)	1,061.2		855.5	205.7	1,061.2
				Effect of the	exercise of	the Option	HK$ Million	(Note 8)	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—		(16.5)	16.5	—
				Pro forma	restructuring	expense	HK$ Million	(Note 7)	—	—	—	—	—	—	—	—	—	—	(4.5)	(4.5)	—	—	(4.5)	—	(4.5)		(2.8)	(1.7)	(4.5)
		Pro forma	withholding	tax on	dividend	paid	HK$ Million	(Note 6)	—	—	—	—	—	—	—	—	—	—	(5.6)	(5.6)	—	—	(5.6)	—	(5.6)		(3.3)	(2.3)	(5.6)
Unaudited pro	forma consolidated	income statement	assuming Option	was granted and	immediately vested	on 1 January 2011	HK$ Million		3,593.2	224.3	3,817.5	(214.4)	(260.1)	(1,483.6)	(132.3)	(46.0)	(184.5)	(160.3)	(9.5)	1,326.8	17.1	6.2	1,350.1	(278.8)	1,071.3		878.1	193.2	1,071.3
	Pro forma	adjustments that	show the effect of	the grant and	immediate vest of	the Option	HK$ Million	(Note 5)	—	—	—	—	—	(265.2)	—	—	—	—	—	(265.2)	—	—	(265.2)	—	(265.2)		(154.3)	(110.9)	(265.2)
Consolidated	income statement	of the Group for	the year ended	31 December 2011	before pro forma	adjustments	HK$ Million	(Audited)	3,593.2	224.3	3,817.5	(214.4)	(260.1)	(1,218.4)	(132.3)	(46.0)	(184.5)	(160.3)	(9.5)	1,592.0	17.1	6.2	1,615.3	(278.8)	1,336.5		1,032.4	304.1	1,336.5
									Revenue (turnover)	Other income	Total income	Brokerage and commission expenses	Direct cost and operating expenses	Administrative expenses	Net loss on financial instruments	Net exchange loss	Bad and doubtful debts	Finance costs	Other expenses		Share of results of associates	Share of results of jointly controlled entities	Profit before taxation	Taxation	Profit for the year	Profit attributable to:	— Owners of the Company	— Non-controlling interests

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UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

forma consolidated	statement of	comprehensive	income assuming	Option was granted	and vested and	immediately	exercised on	1 January 2011	HK$ Million		1,061.2			(19.2)		(4.3)	(23.5)		109.3		(0.3)			146.0		0.1		231.6	1,292.8		1,043.5	249.3	1,292.8
						Effect of the	exercise of	the Option	HK$ Million	(Note 8)	—			—		—	—		—		—			—		—		—	—		(16.5)	16.5	—
						Pro forma	restructuring	expense	HK$ Million	(Note 7)	(4.5)			—		—	—		—		—			—		—		—	(4.5)		(2.8)	(1.7)	(4.5)
				Pro forma	withholding	tax on	dividend	paid	HK$ Million	(Note 6)	(5.6)			—		—	—		—		—			—		—		—	(5.6)		(3.3)	(2.3)	(5.6)
Unaudited pro	forma consolidated	statement of	comprehensive	income assuming	Option was granted	and immediately	vested on	1 January 2011	HK$ Million		1,071.3			(19.2)		(4.3)	(23.5)		109.3		(0.3)			146.0		0.1		231.6	1,302.9		1,066.1	236.8	1,302.9
			Pro forma	adjustments that	show the effect of	the grant and	immediate vest of	the Option	HK$ Million	(Note 5)	(265.2)			—		—	—		—		—			—		—		—	(265.2)		(154.3)	(110.9)	(265.2)
	Consolidated	statement of	comprehensive	income of the	Group for the year	ended 31 December	2011 before pro	forma adjustments	HK$ Million	(Audited)	1,336.5			(19.2)		(4.3)	(23.5)		109.3		(0.3)			146.0		0.1		231.6	1,568.1		1,220.4	347.7	1,568.1
											Profit for the year	Other comprehensive income	Available-for-sale investments	— Net fair value changes during the year	— Reclassification adjustment to profit	or loss on disposal		Exchange differences arising on translating	foreign operations	Reclassification adjustment to profit or loss on	liquidation of a jointly controlled entity	Revaluation gain on properties transferred from	property and equipment to investment	properties	Share of other comprehensive income of	associates	Other comprehensive income for the year,	net of tax	Total comprehensive income for the year	Total comprehensive income attributable to:	— Owners of the Company	— Non-controlling interests

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APPENDIX III

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

forma consolidated	statement of cash	flows assuming	Option was granted	and vested and	immediately	exercised on	1 January 2011	HK$ Million			1,340.0		(17.1)		(6.2)	(14.1)	(2,760.3)	(13.4)		(5.2)	184.5		(192.6)		0.5		4.9	202.1	0.4	198.9	49.4		9.0	265.2	155.8		4.1	61.1
					Effect of the	exercise of	the Option	HK$ Million	(Note 9)		—		—		—	—	—	—		—	—		—		—		—	—	—	—	—		—	—	—		—	—
					Pro forma	restructuring	expense	HK$ Million	(Note 7)		(4.5)		—		—	—	—	—		—	—		—		—		—	—	—	—	—		—	—	—		—	—
			Pro forma	withholding	tax on	dividend	paid	HK$ Million	(Note 6)		(5.6)		—		—	—	—	—		—	—		—		—		—	—	—	—	—		—	—	—		—	—
Unaudited pro	forma consolidated	statement of cash	flows assuming	Option was granted	and immediately	vested on	1 January 2011	HK$ Million			1,350.1		(17.1)		(6.2)	(14.1)	(2,760.3)	(13.4)		(5.2)	184.5		(192.6)		0.5		4.9	202.1	0.4	198.9	49.4		9.0	265.2	155.8		4.1	61.1
		Pro forma	adjustments that	show the effect of	the grant and	immediate vest of	the Option	HK$ Million	(Note 5)		(265.2)		—		—	—	—	—		—	—		—		—		—	—	—	—	—		—	265.2	—		—	—
	Consolidated	statement of cash	flows of the Group	for the year ended	31 December 2011	before pro forma	adjustments	HK$ Million	(Audited)		1,615.3		(17.1)		(6.2)	(14.1)	(2,760.3)	(13.4)		(5.2)	184.5		(192.6)		0.5		4.9	202.1	0.4	198.9	49.4		9.0	—	155.8		4.1	61.1
										OPERATING ACTIVITIES	Profit before taxation	Adjustments for:	Share of results of associates	Share of results of jointly controlled	entities	Dividend income	Interest income	Profit on disposal of an associate	Profit on disposal of available-for-sale	investments	Bad and doubtful debts	Increase in fair value of investment	properties	Impairment loss on available-for-sale	investments	Impairment loss on amounts due from	associates	Fair value loss on financial instruments	Amortization of leasehold interests in land	Amortization of intangible assets	Depreciation of property and equipment	Expenses recognised for the SHK	Employee Ownership Scheme	Expenses recognised for Option granted	Interest expenses	Net loss on disposal of equipment and	intangible assets	Exchange difference

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UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

forma consolidated	statement of cash	flows assuming	Option was granted	and vested and	immediately	exercised on	1 January 2011	HK$ Million			(533.0)		(2,165.6)	304.7		(348.4)	(332.2)		8.6		(0.2)	(16.8)	(3,082.9)	2,721.5		5.0	(147.4)	(317.6)		(821.4)
					Effect of the	exercise of	the Option	HK$ Million	(Note 9)		—		—	—		—	—		—		—	—	—	—		—	—	—		—
					Pro forma	restructuring	expense	HK$ Million	(Note 7)		(4.5)		—	—		—	—		—		—	—	(4.5)	—		—	—	—		(4.5)
			Pro forma	withholding	tax on	dividend	paid	HK$ Million	(Note 6)		(5.6)		—	—		—	—		—		—	—	(5.6)	—		—	—	—		(5.6)
Unaudited pro	forma consolidated	statement of cash	flows assuming	Option was granted	and immediately	vested on	1 January 2011	HK$ Million			(522.9)		(2,165.6)	304.7		(348.4)	(332.2)		8.6		(0.2)	(16.8)	(3,072.8)	2,721.5		5.0	(147.4)	(317.6)		(811.3)
		Pro forma	adjustments that	show the effect of	the grant and	immediate vest of	the Option	HK$ Million	(Note 5)		—		—	—		—	—		—		—	—	—	—		—	—	—		—
	Consolidated	statement of cash	flows of the Group	for the year ended	31 December 2011	before pro forma	adjustments	HK$ Million	(Audited)		(522.9)		(2,165.6)	304.7		(348.4)	(332.2)		8.6		(0.2)	(16.8)	(3,072.8)	2,721.5		5.0	(147.4)	(317.6)		(811.3)
										Operating cash flows before movements in	working capital	Increase in loans and advances to consumer	finance customers	Decrease in trade and other receivables	Increase in financial assets at fair value	through profit or loss	Decrease in trade and other payables	Increase in financial liabilities at fair value	through profit or loss	Decrease in amounts due to fellow	subsidiaries and a holding company	Decrease in provisions	Cash used in operations	Interest received	Dividends received from held for trading	investments	Interest paid	Taxation paid	NET CASH USED IN OPERATING	ACTIVITIES

– 75 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

forma consolidated	statement of cash	flows assuming	Option was granted	and vested and	immediately	exercised on	1 January 2011	HK$ Million			(67.1)	(34.0)	13.7	13.4	1.0		4.9	(52.9)		10.0	24.0		(16.2)			(44.9)	(653.5)		(801.6)
					Effect of the	exercise of	the Option	HK$ Million	(Note 9)		—	—	—	—	—		—	—		—	—		—			—	—		—
					Pro forma	restructuring	expense	HK$ Million	(Note 7)		—	—	—	—	—		—	—		—	—		—			—	—		—
			Pro forma	withholding	tax on	dividend	paid	HK$ Million	(Note 6)		—	—	—	—	—		—	—		—	—		—			—	—		—
Unaudited pro	forma consolidated	statement of cash	flows assuming	Option was granted	and immediately	vested on	1 January 2011	HK$ Million			(67.1)	(34.0)	13.7	13.4	1.0		4.9	(52.9)		10.0	24.0		(16.2)			(44.9)	(653.5)		(801.6)
		Pro forma	adjustments that	show the effect of	the grant and	immediate vest of	the Option	HK$ Million	(Note 5)		—	—	—	—	—		—	—		—	—		—			—	—		—
	Consolidated	statement of cash	flows of the Group	for the year ended	31 December 2011	before pro forma	adjustments	HK$ Million	(Audited)		(67.1)	(34.0)	13.7	13.4	1.0		4.9	(52.9)		10.0	24.0		(16.2)			(44.9)	(653.5)		(801.6)
										INVESTING ACTIVITIES	Purchase of property and equipment	Purchase of intangible assets	Dividends received from associates	Proceeds on disposal of an associate	Liquidation of a jointly controlled entity	Dividends received from available-for-sale	investments	Purchase of available-for-sale investments	Proceeds on disposal of available-for-sale	investments	Net refund of statutory deposits	Payment of deposits for acquisition of	equipment	Purchase of long-term financial assets	designated as at fair value through	profit or loss	Fixed deposits with banks placed	NET CASH USED IN INVESTING	ACTIVITIES

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APPENDIX III

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

forma consolidated	statement of cash	flows assuming	Option was granted	and vested and	immediately	exercised on	1 January 2011	HK$ Million			(512.9)	(17.4)		122.4		10.5	1,139.7	(17.3)	591.0	(500.0)		600.0		(112.7)		(24.1)		(14.7)	(44.2)	308.2		1,528.5		(94.5)		2,177.7	10.0	2,093.2			2,093.2
					Effect of the	exercise of	the Option	HK$ Million	(Note 9)		—	—		—		—	—	—	—	—		—		—		—		—	—	308.2		308.2		308.2		—	—	308.2			308.2
					Pro forma	restructuring	expense	HK$ Million	(Note 7)		—	—		—		—	—	—	—	—		—		—		—		—	—	—		—		(4.5)		—	—	(4.5)			(4.5)
			Pro forma	withholding	tax on	dividend	paid	HK$ Million	(Note 6)		—	—		—		—	—	—	—	—		—		—		—		—	—	—		—		(5.6)		—	—	(5.6)			(5.6)
Unaudited pro	forma consolidated	statement of cash	flows assuming	Option was granted	and immediately	vested on	1 January 2011	HK$ Million			(512.9)	(17.4)		122.4		10.5	1,139.7	(17.3)	591.0	(500.0)		600.0		(112.7)		(24.1)		(14.7)	(44.2)	—		1,220.3		(392.6)		2,177.7	10.0	1,795.1			1,795.1
		Pro forma	adjustments that	show the effect of	the grant and	immediate vest of	the Option	HK$ Million	(Note 5)		—	—		—		—	—	—	—	—		—		—		—		—	—	—		—		—		—	—	—			—
	Consolidated	statement of cash	flows of the Group	for the year ended	31 December 2011	before pro forma	adjustments	HK$ Million	(Audited)		(512.9)	(17.4)		122.4		10.5	1,139.7	(17.3)	591.0	(500.0)		600.0		(112.7)		(24.1)		(14.7)	(44.2)	—		1,220.3		(392.6)		2,177.7	10.0	1,795.1			1,795.1
										FINANCING ACTIVITIES	Dividends paid	Dividends to non-controlling interests	Capital contribution by non-controlling	interests	Net short-term bank and other borrowings	raised	New long-term bank and other loans raised	Repayment of long-term bank loans	Issue of bonds	Repayment of bonds	Short-term loans due to fellow subsidiaries	raised	Short-term loans due to fellow subsidiaries	repaid	Loan due to an associate of a holding	company repaid	Purchase of shares for the SHK Employee	Ownership Scheme	Shares repurchased and cancelled	Proceeds received upon exercise of the Option	NET CASH FROM FINANCING	ACTIVITIES	NET DECREASE IN CASH AND CASH	EQUIVALENTS	CASH AND CASH EQUIVALENTS AT	1 JANUARY	Effect of foreign exchange rate changes		CASH AND CASH EQUIVALENTS AT	31 DECEMBER, represented by	Cash and cash equivalents

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UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

Notes to Unaudited Pro Forma Financial Information

(1) This adjustment is made with an assumption that the Option, as set out in the Director’s Service Agreement, entered into between UA Finance and Mr. Nagahara on 9 May 2012, was granted on 31 December 2011. It is further assumed that the Option vested immediately at the assumed date of grant (with the assumption that all vesting conditions were met at the assumed date of grant). Therefore, the pro forma fair value of the Option is assumed to be expensed immediately at the assumed date of grant for the purpose of the preparation of this unaudited pro forma financial information.

For the purpose of the preparation of this unaudited pro forma financial information, the pro forma fair value of the Option as at the assumed date of grant of 31 December 2011 is assumed to be equal to the amount of the fair value of the Option, as set out in the Company’s announcement dated 9 May 2012, which was determined as at 31 March 2012, by an external valuer engaged by UA Finance, that is equal to HK$265.2 million based on the assumption that the Newco acquires the Target Companies by way of issuing shares only. UA Finance will determine the fair value of the Option as at the grant date when the Option is granted, and this fair value may be different from the pro forma fair value of the Option used in the preparation of the unaudited pro forma consolidated statement of financial position. Further, the pro forma fair value of the Option was based on the assumption that the Newco acquires the Target Companies by way of issuing shares only. The fair value of the Option may be materially affected and hence different from the pro forma fair value of the Option used in the preparation of the unaudited pro forma consolidated statement of financial position if the Newco acquires the Target Companies wholly or partly through shareholders’ loans.

The pro forma fair value of the Option of HK$265.2 million is assumed to be expensed immediately at the assumed date of grant and is allocated between the owners of the Company and non-controlling interests of UA Finance as follows:

Pro forma fair value of the Option as at 31 December 2011 Less: amount attributable to non-controlling interests of UA Finance (Note a) Amount attributable to the owners of the Company Note:	HK$ Million 265.2 (110.9)
	154.3

(a) As at 31 December 2011, 58.18% interest of UA Finance was held by the Company as set out in annual report of the Group for the year ended 31 December 2011. The amount represents fair value of the Option attributable to 41.82% non-controlling interests of UA Finance.
(2) The adjustment is made with an assumption that the Option was exercised immediately at the assumed date of grant. According to terms of the Director’s Service Agreement, the Option is exercisable when (a) the requisite approval from the relevant government approving authorities in the PRC for the Restructuring is obtained, and (b) the Restructuring is completed. The Restructuring was assumed to be completed on the assumed date of grant (i.e. 31 December 2011). It is further assumed that the retained profit of the Target Companies (if any) would be distributed to UA Finance and its subsidiary before the transfer of the 20% equity interest in the Target Companies to Mr. Nagahara. With this assumption, a pro forma withholding tax on dividend, that is considered as a directly attributable cost for the Restructuring, is recognised as an expense at the assumed date of the Restructuring.

For the purpose of the preparation of this unaudited pro forma financial information, the pro forma withholding tax on dividend as at the assumed date of completion of Restructuring is determined based on the retained profit of each individual Target Company as at 31 December 2011 (if any) multiplied by a tax rate set out in Article 10 of Arrangement between the Mainland of China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income. The withholding tax on dividend as at the completion of Restructuring may be different from the pro forma withholding tax on dividend in the preparation of the unaudited pro forma consolidated statement of financial position.

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UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

The pro forma withholding tax on dividend of HK$13.9 million is based on total retained earnings of each individual Target Company (if any) as at 31 December 2011 amounted to HK$277.4 million with pro forma withholding tax rate of 5% and is assumed to be expensed immediately at the assumed date of completion of Restructuring and is allocated between the owners of the Company and non-controlling interests of UA Finance as follow:

Pro forma withholding tax on dividend as at 31 December 2011 Less: amount attributable to non-controlling interests of UA Finance (Note a) Amount attributable to the owners of the Company Note:	HK$ Million 13.9 (5.8)
	8.1

(a) As at 31 December 2011, 58.18% interest of UA Finance was held by the Company as set out in annual report of the Group for the year ended 31 December 2011. The amount represents pro forma withholding tax on dividend attributable to 41.82% non-controlling interests of UA Finance.
(3) The adjustment is made with an assumption that the Restructuring was completed on 31 December 2011. Estimated restructuring expense that are directly attributable costs for the Restructuring are therefore expensed at the assumed completion date of the Restructuring for the purpose of the preparation of the unaudited pro forma financial information.

For the purpose of the preparation of this unaudited pro forma financial information, the pro forma restructuring expense as at the assumed date of completion of Restructuring is estimated by the directors of the Company. The restructuring expense as at the completion of Restructuring may be different from the pro forma restructuring expense in the preparation of the unaudited pro forma consolidated statement of financial position.

Pro forma restructuring expense as at 31 December 2011 incurred by UA Finance estimated by the directors of the Company Less: amount attributable to non-controlling interests of UA Finance (Note a) Sub-total Pro forma restructuring expense as at 31 December 2011 incurred by the Company estimated by the directors of the Company Amount attributable to the owners of the Company Note:	HK$ Million 4.0 (1.7)
	2.3 0.5
	2.8

(a) As at 31 December 2011, 58.18% interest of UA Finance was held by the Company as set out in annual report of the Group for the year ended 31 December 2011. The amount represents restructuring expense attributable to 41.82% non-controlling interests of UA Finance.
(4) The adjustment represents the assumed consideration that will be received by the Group on 31 December 2011 with an assumption that the Option is exercised on 31 December 2011. The Director’s Service Agreement entered into on 9 May 2012 sets out the terms with regards to how the exercise price is determined. For the purpose of the preparation of this unaudited pro forma financial information, the pro forma exercise price is assumed to be 20% of combined equity of the Target Companies attributable to UA Finance as at 31 December 2011 of HK$3,102.2 million, as set out in the combined statement of financial position as at 31 December 2011 (see Appendix II to this circular).

It is further assumed that the Newco is formed by issuing shares only as there is no concrete plan as to the amount and details of shareholders’ loans.

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UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

UA Finance will determine the exercise price of the Option when the Option is exercised, and this exercise price may be different from the pro forma exercise price of the Option used in the preparation of the unaudited pro forma consolidated statement of financial position.

(5) This adjustment is made with an assumption that the Option, as set out in the Director’s Service Agreement, entered into between UA Finance and Mr. Nagahara on 9 May 2012, was granted on 1 January 2011. It is further assumed that the Option vested immediately at the assumed date of grant (with the assumption that all vesting conditions were met at the assumed date of grant). Therefore, the pro forma fair value of the Option is assumed to be expensed immediately at the assumed date of grant for the purpose of the preparation of this unaudited pro forma financial information.

For the purpose of the preparation of this unaudited pro forma financial information, the pro forma fair value of the Option as at the assumed date of grant of 1 January 2011 is assumed to be equal to the amount of the fair value of the Option, as set out in the Company’s announcement dated 9 May 2012, which was determined as at 31 March 2012, by an external valuer engaged by UA Finance, that is equal to HK$265.2 million based on the assumption that the Newco acquires the Target Companies by way of issuing shares only. UA Finance will determine the fair value of the Option as at the grant date when the Option is granted, and this fair value may be different from the pro forma fair value of the Option used in the preparation of the unaudited pro forma consolidated income statement, unaudited pro forma consolidated statement of comprehensive income and unaudited pro forma consolidated statement of cash flows. Further, the pro forma fair value of the Option was based on the assumption that the Newco acquires the Target Companies by way of issuing shares only. The fair value of the Option may be materially affected and hence different from the pro forma fair value of the Option used in the preparation of the unaudited pro forma consolidated income statement, unaudited pro forma consolidated statement of comprehensive income and unaudited pro forma consolidated statement of cash flows if the Newco acquires the Target Companies wholly or partly through shareholders’ loans.

Pro forma fair value of the Option as at 1 January 2011 Less: amount attributable to non-controlling interests of UA Finance (Note a) Amount attributable to the owners of the Company Note:	HK$ Million 265.2 (110.9)
	154.3

(a) As at 1 January 2011, 58.18% interest of UA Finance was held by the Company as set out in annual report of the Group for the year ended 31 December 2010. The amount represents fair value of the Option attributable to 41.82% non-controlling interests of UA Finance.
(6) The adjustment is made with an assumption that the Option was exercised immediately at the assumed date of grant. According to terms of the Director’s Service Agreement, the Option is exercisable when (a) the requisite approval from the relevant government approving authorities in the PRC for the Restructuring is obtained, and (b) the Restructuring is completed. The Restructuring was assumed to be completed on the assumed date of grant (i.e. 1 January 2011). It is further assumed that the retained profit of the Target Companies (if any) would be distributed to UA Finance and its subsidiary before the transfer of the 20% equity interest in the Target Companies to Mr. Nagahara. With this assumption, a pro forma withholding tax on dividend, that is considered as a directly attributable cost for the Restructuring, is recognised as an expense at the assumed date of the Restructuring.

For the purpose of the preparation of this unaudited pro forma financial information, the pro forma withholding tax on dividend as at the assumed date of completion of Restructuring is determined based on retained profit of each individual Target Company as at 1 January 2011 (if any) multiplied by a tax rate set out in Article 10 of Arrangement between the Mainland of China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income. The withholding tax on dividend as at the completion of Restructuring may be different from the pro forma withholding tax on dividend in the preparation of the unaudited pro forma consolidated income statement, unaudited pro forma consolidated statement of comprehensive income and unaudited pro forma consolidated statement of cash flows.

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UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

The pro forma withholding tax on dividend of HK$5.6 million is based on total retained earnings of each individual Target Company (if any) as at 1 January 2011 amounted to HK$111.5 million with pro forma withholding tax rate of 5% and is assumed to be expensed immediately at the assumed date of completion of Restructuring and is allocated between the owners of the Company and non-controlling interests of UA Finance as follows:

Pro forma withholding tax on dividend as at 1 January 2011 Less: amount attributable to non-controlling interests of UA Finance (Note a) Amount attributable to the owners of the Company Note:	HK$ Million 5.6 (2.3)
	3.3

(a) As at 1 January 2011, 58.18% interest of UA Finance was held by the Company as set out in annual report of the Group for the year ended 31 December 2010. The amount represents pro forma withholding tax on dividend attributable to 41.82% non-controlling interests of UA Finance.
(7) The adjustment is made with an assumption that the Restructuring was completed on 1 January 2011. Estimated restructuring expense that are directly attributable costs for the Restructuring are therefore expensed at the assumed completion date of the Restructuring for the purpose of the preparation of the unaudited pro forma financial information.

Pro forma restructuring expense as at 1 January 2011 incurred by UA Finance estimated by the directors of the Company Less: amount attributable to non-controlling interests of UA Finance (Note a) Sub-total Pro forma restructuring expense as at 1 January 2011 incurred by the Company estimated by the directors of the Company Amount attributable to the owners of the Company Note:	HK$ Million 4.0 (1.7)
	2.3 0.5
	2.8

(a) As at 1 January 2011, 58.18% interest of UA Finance was held by the Company as set out in annual report of the Group for the year ended 31 December 2010. The amount represents restructuring expense attributable to 41.82% non-controlling interests of UA Finance.

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UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

(8) This adjustment represents how the exercise of the Option on 1 January 2011 will affect the allocation between owners of the Company and non-controlling interests. The calculation is as follows.

Profit of the Target Companies for the year ended 31 December 2011, as set out in Appendix II to this circular Profit for the year of the Target Companies attributable to the 20% interest owned by Mr. Nagahara Decrease in profit for the year of the Target Companies attributable to owners of UA Finance Decrease in profit attributable to non-controlling interests of UA Finance (Note a) Net impact on decrease in profit for the year of the Target Companies attributable to owners of the Company Note:	HK$ Million 142.0 20%
	28.4 (11.9)
	16.5

(a) The amount represents decrease in net profit attributable to 41.82% non-controlling interests of UA Finance as a result of profit for the year of the Target Companies attributable to the 20% interest owned by Mr. Nagahara after exercise of the Option.

As at 1 January 2011, 58.18% interest of UA Finance was held by the Company as set out in annual report of the Group for the year ended 31 December 2010. Hence HK$11.9 million was allocated to the non-controlling interests of UA Finance.

(9) The adjustment represents the assumed consideration that will be received by the Group on 1 January 2011 with an assumption that the Option is exercised on 1 January 2011. The Director’s Service Agreement entered into on 9 May 2012 sets out the terms with regards to how the exercise price is determined. For the purpose of the preparation of this unaudited pro forma financial information, the pro forma exercise price is assumed to be 20% of combined equity of the Target Companies attributable to UA Finance as at 1 January 2011 of HK$1,540.8 million, as set out in the combined statement of financial position as at 31 December 2010 (see Appendix II to this circular).

– 82 –

GENERAL INFORMATION

APPENDIX IV

1. RESPONSIBILITY STATEMENT

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

2. DISCLOSURE OF INTERESTS

(a) Directors’ and Chief Executive’s Interests and Short Positions in Shares, Underlying Shares and Debentures

Save as disclosed below, as at the Latest Practicable Date, none of the Directors, the chief executive of the Company nor their associates, had any other interests or short positions in the shares, underlying shares and debentures of the Company or any associated corporations (within the meaning of Part XV of the SFO) which (a) 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 or short positions which any such Director or the chief executive of the Company is taken or deemed to have under such provisions of the SFO); or which (b) were required to be entered into the register maintained by the Company, pursuant to Section 352 of the SFO; or which (c) were required to be notified to the Company and the Stock Exchange, pursuant to the Model Code for Securities Transactions by Directors of Listed Companies contained in the Listing Rules:

Interests in the Shares and underlying Shares of the Company

		Number of
		shares and	Approximate
		underlying	% of the issued
Directors	Capacity	shares	share capital
Lee Seng Huang	Interests of controlled	1,128,363,302	53.78%
	corporation (Note 1)	(Note 2)
Joseph Tong Tang	Beneficiary of trust	134,000	0.006%
		(Note 3(a))
	Beneficial owner	272,000	0.012%
		(Note 3(b))
Peter Anthony Curry	Beneficiary of trust	420,000	0.020%
		(Note 4(a))
	Beneficial owner	39,000	0.018%
		(Note 4(b))

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GENERAL INFORMATION

APPENDIX IV

Notes:

Mr. Lee Seng Huang, a Director, together with Mr. Lee Seng Hui and Ms. Lee Su Hwei are the trustees of Lee and Lee Trust, being a discretionary trust. Lee and Lee Trust together with Mr. Lee Seng Hui indirectly owned approximately 63.88% interest in the issued share capital of AGL and was therefore deemed to have interests in the Shares of the Company in which AGL was interested.
This refers to the interest in 1,128,363,302 Shares.
(a) These include the deemed interests in:
- (i) 26,000 unvested Shares out of the total of 78,000 Shares granted to Mr. Tong on 5 May 2010 under the EOS and accepted by him on 10 May 2010. Such awarded Shares are subject to a vesting scale in tranches whereby one-third of the Shares thereof (i.e. 26,000 Shares) was vested and became unrestricted from 15 April 2011; another one-third thereof was vested and became unrestricted from 15 April 2012; and the remaining one-third thereof shall be vested and become unrestricted from 15 April 2013; and
- (ii) 108,000 Shares granted to Mr. Tong on 13 April 2011 under the EOS and accepted by him on 19 April 2011. Such awarded Shares are subject to a vesting scale in tranches whereby one-third of the Shares thereof (i.e. 54,000 Shares) was vested and became unrestricted from 15 April 2012; another one-third thereof shall be vested and become unrestricted from 15 April 2013; and the remaining one-third thereof shall be vested and become unrestricted from 15 April 2014.
(b) This represents 272,000 Shares out of the 307,000 Shares granted under the EOS that were vested, became unrestricted and the title of which had been transferred to his beneficiary.
(a) These include the deemed interests in:
- (i) 24,000 unvested Shares out of the total of 36,000 Shares granted to and accepted by Mr. Peter Anthony Curry under the EOS according to an offer letter dated 29 October 2010. Such awarded Shares are subject to a vesting scale in tranches whereby one third of the Shares thereof was vested and became unrestricted from 1 November 2011; another one third thereof shall be vested and become unrestricted from 1 November 2012; and the remaining one-third thereof shall be vested and become unrestricted from 1 November 2013;
- (ii) 54,000 Shares granted to Mr. Curry on 13 April 2011 under the EOS and accepted by him on 19 April 2011. Such awarded Shares are subject to a vesting scale in tranches whereby one-third of the Shares thereof (i.e 27,000 Shares) was vested and became unrestricted from 15 April 2012; another one-third thereof shall be vested and become unrestricted from 15 April 2013; and the remaining one-third thereof shall be vested and become unrestricted from 15 April 2014; and
- (iii) 342,000 Shares granted to Mr. Curry on 13 April 2012 under the EOS and accepted by him on 17 April 2012. Such awarded Shares are subject to a vesting scale in tranches whereby one-third of the Shares thereof shall be vested and become unrestricted from 13 April 2013; another onethird thereof shall be vested and become unrestricted from 13 April 2014; and the remaining one-third thereof shall be vested and become unrestricted from 13 April 2015.
(b) This represents the Shares granted to Mr. Curry under the EOS that were vested, became unrestricted and the title of which had been transferred to his beneficiary.

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GENERAL INFORMATION

APPENDIX IV

Interests in the shares, underlying shares and debentures of associated corporations

			Number of shares	Approximate % of
	Associated		and underlying	the relevant issued
Directors	corporations	Capacity	Shares	share capital
Lee Seng Huang	AGL	Trustee (other than	122,286,492	63.87%
(Note 1)		a bare trustee)
		(Note 2)
	APL	Interests of	6,107,217,730	89.76%
		controlled	(Note 4)
		corporation (Note 3)
	Allied Overseas Limited	Interests of	178,042,931	86.71%
	(‘‘AOL’’)	controlled	(Note 6)
		corporation (Note 5)
	SHK Hong Kong	Interests of	2,969,329,606	72.21%
	Industries Limited	controlled	(Note 8)
	(‘‘SHK HK Ind’’)	corporation (Note 7)
Joseph Tong Tang	APL	Beneficial owner	120,951	0.001%
			(Note 9)

Notes:

Mr. Lee Seng Huang, by virtue of his interests in AGL and APL, was deemed to be interested in the shares held by AGL in SHK HK Ind, a listed subsidiary of AGL, and in the shares held by APL in AOL, a listed subsidiary of APL. Both of SHK HK Ind and AOL are associated corporations of the Company as defined under the SFO.
Mr. Lee Seng Huang is one of the trustees of Lee and Lee Trust, being a discretionary trust which indirectly owned 122,286,492 shares of AGL.
This refers to the same interests held directly or indirectly by AGL in APL.
These include interests in (i) 5,101,211,521 shares of APL; and (ii) listed physically settled warrants of APL giving rise to an interest in 1,006,006,209 underlying shares of APL. The warrants of APL entitle the holders thereof to subscribe at any time during the period from 13 June 2011 to 13 June 2016 (both days inclusive) for fully paid shares of APL at an initial subscription price of HK$2 per share (subject to adjustments).
This refers to the same interests held indirectly by APL in AOL.
These include interests in (i) 149,165,776 shares of AOL; and (ii) listed physically settled warrants of AOL giving rise to an interest in 28,877,155 underlying shares of AOL. The warrants of AOL entitle the holders thereof to subscribe at any time during the period from 4 March 2011 to 4 March 2016 (both days inclusive) for fully paid shares of AOL at an initial subscription price of HK$5 per share (subject to adjustments).
This refers to the same interests held indirectly by AGL in SHK HK Ind.
This refers to the interest in 2,969,329,606 shares of SHK HK Ind.
These include interests in (i) 100,793 shares of APL; and (ii) listed physically settled warrants of APL giving rise to an interest in 20,158 underlying shares of APL. The warrants of APL entitle the holders thereof to subscribe at any time during the period from 13 June 2011 to 13 June 2016 (both days inclusive) for fully paid shares of APL at an initial subscription price of HK$2 per share (subject to adjustments).

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GENERAL INFORMATION

APPENDIX IV

(b) Interests and Short Positions of Substantial Shareholders

As at the Latest Practicable Date, so far as was known to any Director or chief executive of the Company, the following persons (other than a Director or chief executive of the Company) had an interest or short position in the Shares and underlying Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, 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 any other member of the Group:

			Approximate
		Number of Shares	% of the
		and underlying	issued share
Shareholders	Capacity	Shares	capital
APL	Interests of controlled	1,128,363,302	53.78%
	corporation	(Note 2)
	(Note 1)
AGL	Interests of controlled	1,128,363,302	53.78%
	corporation	(Note 4)
	(Note 3)
Lee and Lee Trust	Interests of controlled	1,128,363,302	53.78%
	corporation	(Note 4)
	(Note 5)
Dubai Ventures L.L.C	Beneficial owner	166,000,000	7.84%
(‘‘Dubai Ventures’’)		(Note 6)
Dubai Ventures Group	Interests of controlled	166,000,000	7.84%
(L.L.C) (‘‘DVG’’)	corporation	(Note 8)
	(Note 7)
Dubai Group (L.L.C)	Interests of controlled	166,000,000	7.84%
(‘‘Dubai Group’’)	corporation	(Note 8)
	(Note 9)
Dubai Holding Investments	Interests of controlled	166,000,000	7.84%
Group LLC (‘‘DHIG’’)	corporation	(Note 8)
	(Note 10)
Dubai Holding (L.L.C)	Interests of controlled	166,000,000	7.84%
(‘‘Dubai Holding’’)	corporation	(Note 8)
	(Note 11)
Dubai Group Limited	Interests of controlled	166,000,000	7.84%
(‘‘DGL’’)	corporation	(Note 8)
	(Note 12)

– 86 –

GENERAL INFORMATION

APPENDIX IV

			Approximate
		Number of Shares	% of the
		and underlying	issued share
Shareholders	Capacity	Shares	capital
HH Mohammed Bin Rashid Al	Interests of controlled	166,000,000	7.84%
Maktoum	corporation	(Note 8)
	(Note 13)
Asia Financial Services Holdings	Interests of controlled	409,920,000	19.54%
Limited (‘‘AFSH’’)	corporation	(Note 23)
	(Note 14)
Asia Financial Services	Interests of controlled	409,920,000	19.54%
Group Limited (‘‘AFSG’’)	corporation	(Note 23)
	(Note 15)
CVC Capital Partners Asia III	Interests of controlled	409,920,000	19.54%
Limited	corporation	(Note 23)
(‘‘CVC Capital’’)	(Note 16)
CVC Capital Partners Advisory	Interests of controlled	409,920,000	19.54%
Company Limited	corporation	(Note 23)
(‘‘CVC Capital Partners	(Note 17)
Advisory’’)
CVC Capital Partners Finance	Interests of controlled	409,920,000	19.54%
Limited (‘‘CVC Capital Partners	corporation	(Note 23)
Finance’’)	(Note 18)
CVC Group Holdings L.P.	Interests of controlled	409,920,000	19.54%
(‘‘CVC Group Holdings’’)	corporation	(Note 23)
	(Note 19)
CVC MMXII Limited	Interests of controlled	409,920,000	19.54%
(‘‘CVC MMXII’’)	corporation	(Note 23)
	(Note 20)
CVC Capital Partners 2012 Limited	Interests of controlled	409,920,000	19.54%
(‘‘CVC Capital Partners 2012’’)	corporation	(Note 23)
	(Note 21)
CVC Capital Partners SICAV-FIS	Interests of controlled	409,920,000	19.54%
S.A. (‘‘CVC Capital Partners	corporation	(Note 23)
SA’’)	(Note 22)
Ontario Teachers’ Pension Plan	Beneficial Owner	122,035,002	5.80%
Board		(Note 24)

– 87 –

GENERAL INFORMATION

APPENDIX IV

Notes:

The interests were held by AP Emerald Limited (‘‘AP Emerald’’), a wholly owned subsidiary of AP Jade Limited which in turn was a wholly-owned subsidiary of APL. APL was therefore deemed to have interests in the Shares in which AP Emerald was interested.
This represents an interest in 1,128,363,302 Shares held by APL through AP Emerald.
AGL owned approximately 74.97% interest in the issued share capital of APL and was therefore deemed to have interests in the Shares in which APL was interested.
This refers to the same interests in 1,128,363,302 Shares held by AP Emerald.
Mr. Lee Seng Hui, Ms. Lee Su Hwei and Mr. Lee Seng Huang (a Director) are the trustees of Lee and Lee Trust, being a discretionary trust. They together owned approximately 63.88% interest in the issued share capital of AGL (inclusive of Mr. Lee Seng Hui’s personal interest) and were therefore deemed to have interests in the Shares in which AGL was interested.
This represents an interest in 166,000,000 Shares.
DVG owned a 99% interest in the issued share capital of Dubai Ventures and was therefore deemed to have an interest in the Shares in which Dubai Ventures was interested.
This refers to the interests in 166,000,000 Shares held by Dubai Ventures.
Dubai Group owned a 99% interest in the issued share capital of DVG and was therefore deemed to have an interest in the Shares in which DVG was interested.
DHIG owned a 51% interest in the issued share capital of Dubai Group and was therefore deemed to have an interest in the Shares in which Dubai Group was interested.
Dubai Holding owned approximately a 99.66% interest in the issued share capital of DHIG and was therefore deemed to have an interest in the Shares in which DHIG was interested.
DGL owned a 49% interest in the issued share capital of Dubai Group. DGL was therefore deemed to have interests in the Shares in which Dubai Group was interested.
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 Shares in which Dubai Holding was interested.
This represents an interest through a wholly-owned subsidiary namely Asia Financial Services Company Limited (‘‘AFSC’’).
This represents an interest through two of its subsidiaries, AFSH and AFSC.
CVC Capital, acting in its capacity as general partner of CVC Capital Partners Asia Pacific III L.P. (the ‘‘Fund’’) held an 88% interest in AFSG on behalf of the Fund and was therefore deemed to have interest in the Shares and the underlying Shares in which AFSG was interested.
CVC Capital Partners Advisory held 100% interest in CVC Capital and was therefore deemed to have interest in the Shares and the underlying Shares in which AFSG was interested.
CVC Capital Partners Finance held 100% interest in CVC Capital Partners Advisory and was therefore deemed to have interest in the Shares and the underlying Shares in which AFSG was interested.
CVC Group Holdings held 100% interest in CVC Capital Partners Finance and was therefore deemed to have interest in the Shares and the underlying Shares in which AFSG was interested.

– 88 –

GENERAL INFORMATION

APPENDIX IV

CVC MMXII is the general partner of CVC Group Holdings and was therefore deemed to have interest in the Shares and the underlying Shares in which AFSG was interested.
CVC Capital Partners 2012 held 100% interest in CVC MMXII and was therefore deemed to have interest in the Shares and the underlying Shares in which AFSG was interested.
CVC Capital Partners SA held 100% interest in CVC Capital Partners 2012 and was therefore deemed to have interested in the Shares and the underlying Shares in which AFSG was interested.
This represents (i) the interests in 341,600,000 Shares; and (ii) the deemed interest in 68,320,000 underlying Shares arising from HK$427,000,000 in face value of warrants issued by the Company to AFSC pursuant to a Subscription Agreement dated 22 April 2010.
This represents an interest in 122,035,002 Shares.

Save as disclosed above, as at the Latest Practicable Date, there were no other person so far was known to the Directors and chief executives of the Company (other than a Director or chief executive of the Company) had an interest or a short position in the Shares and underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or, who 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 any other member of the Group.

3. DIRECTORS’ INTERESTS IN COMPETING BUSINESSES

As at the Latest Practicable Date, so far as the Directors were aware, the following Directors (not being the independent non-executive Directors) were considered to have interests in businesses apart from the Group’s businesses which compete, or are likely to compete, either directly or indirectly, with the businesses of the Group pursuant to Rule 8.10 of the Listing Rules as set out below:

(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 subsidiaries, are partly engaged in the 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.
(b) Mr. Peter Anthony Curry is a director of Ormil Energy Limited and APAC Resources Limited and an alternate director of Mount Gibson Iron Limited which, through certain of its subsidiaries, are partly involved in the investment and/or trading in listed securities in the resources and related industries.
(c) Mr. Leung Pak To is the chairman of Luminary Capital Limited which carries out Type 6 licensed activity (advising on corporate finance) in Hong Kong.

– 89 –

GENERAL INFORMATION

APPENDIX IV

Although the above-mentioned Directors have competing interests in other companies by virtue of their respective common directorship, they will fulfil their fiduciary duties in order to ensure that they will act in the best interest of the 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 businesses of such companies.

4. DIRECTORS’ INTERESTS IN CONTRACTS AND ASSETS

As at the Latest Practicable Date, there was no contract or arrangement subsisting in which any Director was materially interested and which was significant in relation to the business of the Group.

As at the Latest Practicable Date, none of the Directors had any direct or indirect interest in any assets which have been, since 31 December 2011 (being the date to which the latest published audited accounts of the Group were made up), (i) acquired or disposed of by; or (ii) leased to; or (iii) proposed to be acquired or disposed of by; or (iv) proposed to be leased to, any member of the Group.

5. DIRECTORS’ SERVICE CONTRACTS

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

6. LITIGATION

Save as disclosed below, as at the Latest Practicable Date, neither the Company nor any of its subsidiaries was engaged in any litigation or claims of material importance and, so far as the Directors were aware, no litigation or claims of material importance were pending or threatened against any companies of the Group.

In 2001, an order was made by the Hubei Province Higher People’s Court in China (the ‘‘2001 Order’’) enforcing a CIETAC award of 19 July 2000 (the ‘‘Award’’) by which Sun Hung Kai Securities Limited (‘‘SHKS’’) (currently known as Sun Hung Kai Financial Limited) was required to pay US$3 million to Chang Zhou Power Development Company Limited (the ‘‘JVC’’), a mainland PRC joint venture. SHKS had disposed of all of its beneficial interest in the JVC to Tian An in 1998 and disposed of any and all interest it might hold in the registered capital of the JVC (the ‘‘Interest’’) to Long Prosperity Industrial Limited (‘‘LPI’’) in October 2001. Subsequent to those disposals, SHKS’ registered interest in the JVC in the amount of US$3 million was frozen further to the 2001 Order. SHKS is a party to the following litigation relating to the JVC:

(a) On 29 February 2008, a writ of summons with general indorsement of claim was issued by Global Bridge Assets Limited (‘‘GBA’’), LPI and Walton Enterprises Limited (‘‘WE’’) (the ‘‘2008 Writ’’) in the High Court of Hong Kong against SHKS (‘‘HCA 317/2008’’). In the 2008 Writ,
(i) GBA claims against SHKS for damages for alleged breaches of a guarantee, alleged breaches of a collateral contract, an alleged collateral warranty, and alleged negligent and/or reckless and/or fraudulent misrepresentation;

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GENERAL INFORMATION

APPENDIX IV

(ii) LPI claims against SHKS damages for alleged breaches of a contract dated 12 October 2001; and
(iii) WE 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 WE also claim against SHKS for 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 29 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 JVC or any transaction related thereto, covenanted not to sue, and assumed liability for and agreed to indemnify SHKS from any and all damages, losses and expenses arising from any claims by any entity or party arising in connection with the Interest, the JVC or any transaction related thereto. On 24 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. Subsequently, GBA, LPI and WE sought to amend their claims which was opposed by SHKS and is pending determination by the Court.

(b) On 20 December 2007, a writ (the ‘‘Mainland Writ’’) was issued by Cheung Lai Na 張麗娜 (‘‘Ms. Cheung’’) against Tian An and SHKS and was accepted by the Intermediate People’s Court of Wuhan City, Hubei Province (‘‘IPC’’) (湖北省武漢市中級人民法院) [(2008) 武民商外初字第8號] (the ‘‘Mainland Proceedings’’), claiming the transfer of 28% shareholding in the JVC, 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 IPC in Tian An and SHKS’ favour on 16 July 2009 which was being appealed against by Ms. Cheung. On 24 November 2010, the Higher People’s Court of Hubei Province (湖北省高級人民法院) ordered that the case be remitted back to the IPC for retrial. The IPC subsequently ordered upon Ms. Cheung’s unilateral application that the liquidator of Changjiang Power Development (H.K.) Co. Ltd. be joined as a third party to the PRC proceedings. The substantive retrial hearing took place on 29 March 2012 and judgment is pending.

7. MATERIAL CONTRACTS

There was no material contracts (not being a contract entered into in the ordinary course of business) being entered into by members of the Group within the two years immediately preceding the Latest Practicable Date.

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GENERAL INFORMATION

APPENDIX IV

8. EXPERT AND CONSENT

The following are the qualifications of the experts who have given opinion and advice contained in this circular:

Name Qualification Centurion

Independent Financial Adviser, a corporation licensed to carry out Type 1 (dealing in securities), Type 4 (advising on securities), Type 6 (advising on corporate finance) and Type 9 (asset management) regulated activities

Deloitte Touche Tohmatsu (‘‘Deloitte’’) Certified Public Accountants Norton Appraisals Limited (‘‘Norton’’) Registered Professional Surveyors, Valuers and Property Advisers

The above experts have given and have not withdrawn their written consent to the issue of this circular with the inclusion of their letter and report and reference to their name in the form and context in which it appears.

As at the Latest Practicable Date, none the above experts had 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 securities in any member of the Group.

As at the Latest Practicable Date, none of the above experts had any direct or indirect interest in any assets which have been since 31 December 2011 (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.

9. GENERAL

(a) The registered office of the Company is 42/F, The Lee Gardens, 33 Hysan Avenue, Causeway Bay, Hong Kong
(b) The secretary of the Company is Ms. Hester Wong Lam Chun, a Fellow Member of The Institute of Chartered Secretaries and Administrators and The Hong Kong Institute of Chartered Secretaries.
(c) The registrar of the Company is Tricor Secretaries Limited, 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong.
(d) This circular is in both English and Chinese. In the event of inconsistency, the English text shall prevail.

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GENERAL INFORMATION

APPENDIX IV

10. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection during normal business hours from 9:00 a.m. to 5:00 p.m. (except Saturdays and public holidays) at the registered office of the Company at 42/F, The Lee Gardens, 33 Hysan Avenue, Causeway Bay, Hong Kong on any business day from the date of this circular up to and including 23 July 2012:

(a) the Memorandum and Articles of Association of the Company;
(b) the Director’s Service Agreement;
(c) the valuation letter issued by the Valuer;
(d) the annual reports of the Company for the two financial years ended 31 December 2011;
(e) Combined Financial Information of the Target Companies;
(f) an accountants’ report on the unaudited pro forma financial information of the Remaining Group as set out in Appendix III to this circular;
(g) the letters of consent from Centurion, Deloitte and Norton referred to under ‘‘Expert and Consent’’ in this Appendix IV; and
(h) this circular.

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NOTICE OF EXTRAORDINARY GENERAL MEETING

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

(Incorporated in Hong Kong with limited liability)

(Stock code: 86)

NOTICE IS HEREBY GIVEN that the extraordinary general meeting (the ‘‘Meeting’’) of Sun Hung Kai & Co. Limited (the ‘‘Company’’) will be held at Plaza 1&2, Lower Lobby, Novotel Century Hong Kong, 238 Jaffe Road, Wanchai, Hong Kong on Monday, 23 July 2012 at 3:00 p.m. to consider and, if thought fit, pass with or without amendments the following ordinary resolution:

ORDINARY RESOLUTION

‘‘THAT:

(a) the director’s service agreement which was entered into between United Asia Finance Limited and Mr. Akihiro Nagahara on 9 May 2012 (the ‘‘Director’s Service Agreement’’), a copy of which was produced to the Meeting and initialed by the chairman of the Meeting for the purpose of identification, and all transactions contemplated thereunder be and are hereby approved, ratified and confirmed;
(b) the directors of the Company be and are hereby authorised to do such acts and/or things and/ or execute all such documents incidental to, ancillary to or in connection with matters contemplated in or relating to the Director’s Service Agreement as they may in their absolute discretion consider necessary, desirable or expedient to give effect to the Director’s Service Agreement and the implementation of all transactions contemplated thereunder.’’

By Order of the Board Sun Hung Kai & Co. Limited Hester Wong Lam Chun Company Secretary

Hong Kong, 29 June 2012

Notes:

A member entitled to attend and vote at the Meeting may appoint one or more proxies to attend and vote in his stead. A proxy need not be a member of the Company. A form of proxy in respect of the Meeting is enclosed. Whether or not you are able to attend the Meeting in person, you are requested to complete and return the form of proxy in accordance with the instructions printed thereon. Completion and return of the form of proxy will not preclude you from attending and voting in person at the Meeting if you so wish. In the event that you attend the Meeting after having lodged the form of proxy, it will be deemed to have been revoked.

To be valid, the form of proxy, 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 deposited at the office of the Company’s registrar of Tricor Secretaries Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong not less than 48 hours before the time appointed for the Meeting or any adjournment thereof.

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AI assistant

First Pacific Company Limited — Proxy Solicitation & Information Statement 2012

48980_rns_2012-06-28_489d5cf4-5982-438b-b5d1-3da7590bc2f7.pdf

VERY SUBSTANTIAL DISPOSAL AND

CONNECTED TRANSACTION AND

NOTICE OF EXTRAORDINARY GENERAL MEETING

DEFINITIONS

DEFINITIONS

VERY SUBSTANTIAL DISPOSAL

AND

CONNECTED TRANSACTION AND

NOTICE OF EXTRAORDINARY GENERAL MEETING

INTRODUCTION

DIRECTOR’S SERVICE AGREEMENT

Date

Parties

Term

Termination

Conditions Precedent

PRC Development Bonus

Option

INFORMATION OF THE GROUP

INFORMATION OF THE DISPOSAL GROUP

REASONS FOR ENTERING INTO THE DIRECTOR’S SERVICE AGREEMENT

FINANCIAL IMPACT OF THE OPTION

USE OF PROCEEDS

LISTING RULES IMPLICATIONS

LETTER FROM THE BOARD

EGM

RECOMMENDATION

ADDITIONAL INFORMATION

VERY SUBSTANTIAL DISPOSAL AND CONNECTED TRANSACTION DIRECTOR’S SERVICE AGREEMENT

Dear Sirs,

VERY SUBSTANTIAL DISPOSAL AND CONNECTED TRANSACTION

INTRODUCTION

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

BASIS OF OUR OPINION

PRINCIPAL FACTORS AND REASONS CONSIDERED

1. Background of the Group

Table A: Segment revenue and profit before tax of the Group for the two years ended 31 December 2011 and 2010 respectively

2. Background of the UA Finance Group and its PRC Subsidiaries

3. Background of Mr. Nagahara

Our views

4. The Option under the Director’s Service Agreement

Date

Term

Termination

Conditions Precedent

PRC Development Bonus

Option

Our views

5. Reason for the Option

Our views

6. General information on stock option

7. The Disposal Group, the Option and market comparables

8. Possible financial effects of the Option

8.1 Possible effects on earnings

8.2 Possible effects on assets

8.3 Possible effect on cash flow

8.4 Possible effect on gearing

Our views

SUMMARY

RECOMMENDATION

Yours faithfully, for and on behalf of Centurion Corporate Finance Limited Baldwin LEE Managing Director

1. FINANCIAL INFORMATION OF THE GROUP

2. MANAGEMENT DISCUSSION AND ANALYSIS OF THE REMAINING GROUP FOR THE THREE YEARS ENDED 31 DECEMBER 2011

(I) For the year ended 31 December 2011

Business Review

Segment Results

Wealth Management and brokerage

Capital markets

Asset management

Consumer finance

Principal investments

Financial Resources and Gearing Ratio

Capital Structure, Bank Borrowings and Exposure to Fluctuations in Exchange Rates

Material Acquisitions and Disposals of Subsidiaries, Associates and Jointly Controlled Entities

Charges on Assets

Contingent Liabilities

Human Resources and Training

First Pacific Company Limited Proxy Solicitation & Information Statement 2012