Kingwell Group Limited

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

This circular appears for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for the securities of the Company.

If you are in any doubt as to any aspect about this circular or as to the action to be taken, you should consult your licensed securities dealer, registered institution in securities, bank manager, solicitor, professional accountant or other professional adviser. If you have sold or transferred all your shares in Kingwell Group Limited, you should at once hand this circular and the accompanying proxy form to the purchaser or the transferee or to the bank, licensed securities dealer, registered institution in securities or other agent through whom the sale or transfer was effected for transmission to the purchaser or the transferee.

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular and the accompanying proxy form, make no representation as to their 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 and the accompanying proxy form.

==> picture [61 x 60] intentionally omitted <==

KINGWELL GROUP LIMITED 京維集團有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1195)

(i) CONNECTED AND DISCLOSEABLE TRANSACTION IN RELATION TO THE ACQUISITION OF 30% EQUITY INTEREST IN STEPHIGH GROUP LIMITED

INVOLVING THE ISSUE OF CONVERTIBLE PREFERRED SHARES; (ii) AMENDMENTS TO THE MEMORANDUM AND ARTICLES OF ASSOCIATION;

AND

(iii) INCREASE IN AUTHORISED SHARE CAPITAL

Financial adviser to the Company

Independent financial adviser to the Independent Board Committee and the Independent Shareholders

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

A letter from the Board is set out on pages 4 to 14 of this circular. A letter from the Independent Board Committee is set out on page 15 of this circular. A letter from Beijing Securities Limited, the independent financial advisor to the Independent Board Committee and the Independent Shareholders, is set out on pages 16 to 29 of this circular.

A notice convening an extraordinary general meeting of the Company to be held at Monet Room B, Basement 1, Inter-Continental Grand Stanford Hong Kong Hotel, 70 Mody Road, Tsimshatsui East, Kowloon, Hong Kong on Tuesday, 26th April, 2011 at 10:00 a.m. is set out on pages 63 to 65 of this circular. Whether or not you are able to attend the extraordinary general meeting, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon and return the same to the share registrar of the Company, Hong Kong Registrars Limited at Shops 1712–1716, 17/F, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong as soon as possible, but in any event not less than 48 hours before the time appointed for the holding of the extraordinary general meeting or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the extraordinary general meeting or any adjourned meeting thereof should you so wish.

1st April, 2011

CONTENTS

	Page
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
LETTER FROM THE INDEPENDENT BOARD COMMITTEE . . . . . . . . . . . . . . . . . . . . . . . . . .	15
LETTER FROM INDEPENDENT FINANCIAL ADVISER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	16
APPENDIX I — VALUATION REPORT ON THE PROPERTY . . . . . . . . . . . . . . . . . . . . . .	30
APPENDIX II — AMENDMENTS TO THE MEMORANDUM AND
ARTICLES OF ASSOCIATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	40
APPENDIX III — GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	58
NOTICE OF EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	63

– i –

DEFINITIONS

In this circular, the following terms shall have the following meanings:

‘‘Acquisition’’

the acquisition of 30% equity interest in Stephigh

‘‘Acquisition Agreement’’
‘‘Adjusted NAV’’

the acquisition agreement dated 28th January, 2011 entered into between the Company and the Vendor in respect of the acquisition of 30% of the equity interest in Stephigh unaudited consolidated net asset value of Stephigh as at 31st December, 2010, as adjusted by the difference between the carrying cost and the appraised value of the Property

‘‘Anlu’’
Anlu Taihe Real Estate Development Company (安陸泰合房地產開發有限公司), a wholly foreign owned company incorporated in the PRC
‘‘Announcement’’
the announcements dated 28th January, 2011 and 17th February, 2011 in relation to the Acquisition, issue of Convertible Preferred Shares and amendments to the Memorandum and Articles
‘‘Beijing Securities’’

Beijing Securities Limited, a licensed corporation permitted to carry out types 1 (dealing in securities), 4 (advise on securities) and 6 (advise on corporate finance) regulated activities under the SFO and the independent financial advisor appointed to advise the Independent Board Committee and the Independent Shareholders in respect of the Acquisition

‘‘Board’’ board of directors of the Company
‘‘Business Day’’

a day other than a Saturday or a Sunday on which banks in Hong Kong are open to the general public for business

‘‘Company’’ or ‘‘Purchaser’’

Kingwell Group Limited, a company incorporated in the Cayman Islands with limited liability and the shares of which are listed on the Main Board of the Stock Exchange

‘‘Completion’’ completion of the Acquisition Agreement
‘‘Consideration’’
the consideration of HK$93 million for the Acquisition payable to the Vendor by the Company
‘‘Controlling Shareholder(s)’’

has the meaning ascribed to it under the Listing Rules

‘‘Convertible Preferred Shares’’
the 93,000,000 convertible preferred shares of HK$1.00 each in the capital of the Company to be issued by the Company as the consideration payable to the Vendor for the Acquisition
‘‘Conversion Price’’

the conversion price of HK$0.30 per Conversion Share

– 1 –

DEFINITIONS

‘‘Conversion Share(s)’’ the Share(s) falling to be issued by the Company upon conversion of the Convertible Preferred Shares ‘‘Director(s)’’ the director(s) of the Company ‘‘EGM’’ the extraordinary general meeting to be convened to consider and approve, if thought fit, the Acquisition Agreement and the transactions contemplated thereunder, amendments to the Memorandum and Articles and increase in authorised share capital

‘‘Group’’ the Company and its subsidiaries
‘‘HKFRS’’ Hong Kong Financial Reporting Standards ‘‘Independent Board Committee’’ the independent board committee, consisting all of the independent non-executive Directors, namely Mr. Huang Jian Zi, Mr. Cheung Chuen and Ms. Wong Lai Wing, established to advise the Independent Shareholders in respect of the Acquisition
‘‘Independent Shareholder(s)’’ Shareholders other than the Vendor
‘‘Last Trading Date’’ 28th January, 2011, being the last trading date prior to the release of the Announcement

‘‘Latest Practicable Date’’ 31st March, 2011, being the latest practicable date prior to the printing of this circular for ascertaining certain information referred to in this circular

‘‘Listing Rules’’ the Rules Governing the Listing of Securities on the Stock Exchange
‘‘Memorandum and Articles’’ the memorandum and articles of association of the Company
‘‘Property’’ property assets held by Anlu, located in Anlu Taihe Paradise, Liang Ji Bei Road, Anlu Economic Development District, Anlu City, Hubei Province, the People’s Republic of China
‘‘Selling Interest’’ the 30% equity interest in Stephigh owned by the Vendor as at the Latest Practicable Date
‘‘SFO’’ Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)
‘‘Shareholder(s)’’ Shareholder(s) of the Company ‘‘Share(s)’’ ordinary share(s) of HK$0.10 each in the issued share capital of the Company

– 2 –

DEFINITIONS

‘‘Stephigh’’ Stephigh Group Limited, a company incorporated in the British Virgin Islands with limited liability, owned as to 30% by the Vendor and 70% beneficially by the Company
‘‘Stock Exchange’’ The Stock Exchange of Hong Kong Limited ‘‘Vendor’’ or ‘‘Mr. Yin’’ Mr. Yin Jia Tang (尹家堂), a connected person of the Company by virtue of his 30% interests in the issued share capital of Stephigh
‘‘HK$’’ Hong Kong dollars, the lawful currency of Hong Kong ‘‘RMB’’ Renminbi, the lawful currency of the People’s Republic of China ‘‘%’’ percent

(The exchange rate used for the purpose of this circular is at RMB1 = HK$1.1828)

– 3 –

LETTER FROM THE BOARD

==> picture [69 x 70] intentionally omitted <==

KINGWELL GROUP LIMITED 京維集團有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1195)

Executive Directors

Ms. Xu Yue Yue Mr. Xiang Song Mr. Sze Ming Yee Mr. Lin Wan Xin Mr. Hui Lung Hing Mr. Yang Xue Jun

Registered office Cricket Square Hutchins Drive P.O. Box 2681 Grand Cayman KY1-1111 Cayman Islands

Independent non-executive Directors

Mr. Huang Jian Zi Mr. Cheung Chuen Ms. Wong Lai Wing

Head office and principal place of business in Hong Kong Units 314–315 Wing On Plaza 62 Mody Road Tsim Sha Tsui East Kowloon, Hong Kong

1st April, 2011

To the Independent Shareholders

Dear Sir or Madam,

(i) CONNECTED AND DISCLOSEABLE TRANSACTION IN RELATION TO THE ACQUISITION OF 30% EQUITY INTEREST IN STEPHIGH GROUP LIMITED

INVOLVING THE ISSUE OF CONVERTIBLE PREFERRED SHARES; (ii) AMENDMENTS TO THE MEMORANDUM AND ARTICLES OF ASSOCIATION; AND

(iii) INCREASE IN AUTHORISED SHARE CAPITAL

INTRODUCTION

Reference is made to the announcements of the Company dated 28th January, 2011 and 17th February, 2011 respectively in relation to the proposed Acquisition of 30% equity interest in Stephigh, involving the issue of the Convertible Preferred Shares.

– 4 –

LETTER FROM THE BOARD

The purpose of this circular is to provide you with further information regarding (i) further details of the Acquisition, amendments to the Memorandum and Articles and increase in authorised share capital; (ii) the valuation report of the Property; (iii) the recommendation of the Independent Board Committee to the Independent Shareholders; (iv) the advice of Beijing Securities, being the independent financial adviser to the Independent Board Committee and Independent Shareholders in respect of the Acquisition; and (v) a notice convening the EGM.

THE ACQUISITION AGREEMENT

Date

28th January, 2011

Parties

i. the Company as the purchaser;
ii. Mr. Yin as the Vendor;

The Vendor is a connected person of the Company by virtue of his holding of the Selling Interest.

Assets to be acquired:

Pursuant to the terms and conditions of the Acquisition Agreement, the Vendor has conditionally agreed to sell, and the Company has conditionally agreed to purchase the Selling Interest, being the 30% equity interest in Stephigh, which is a 70% owned subsidiary of the Company. The principal asset of Stephigh is its 100% indirect equity interest in Anlu, which in turn owns the Property.

Consideration:

The Consideration will be satisfied upon Completion by the issue of the Convertible Preferred Shares with an aggregate face value of HK$93 million.

The Consideration of HK$93 million represents a 2.3% discount to 30% of the Adjusted NAV of Stephigh of RMB80.5 million (equivalent to approximately HK$95.2 million), which was determined between the Company and the Vendor after arm’s length negotiations with reference to the Adjusted NAV. The Adjusted NAV was calculated based on (i) the unaudited consolidated net asset value of Stephigh as at 31st December, 2010 of RMB36.7 million (equivalent to approximately HK$43.4 million), which includes the carrying cost of the Property of RMB180.1 million (equivalent to approximately HK$213.0 million) and (ii) adjusted by the difference between the carrying value of the Property and appraised value of the Property of RMB411.7 million (equivalent to approximately HK$487.0 million) as at 31st December, 2010 assessed by an independent valuer.

The Convertible Preferred Shares is convertible into 310,000,000 Conversion Shares at HK$0.30 per Conversion Share, which upon issue represent approximately (i) 20.5% of the existing issued share capital of the Company; and (ii) 17.0% of the total issued share capital of the Company as enlarged by such Conversion Shares upon full conversion of the Convertible Preferred Shares.

– 5 –

LETTER FROM THE BOARD

Principal terms of the Convertible Preferred Shares are summarised in the paragraph headed ‘‘Principal terms of the Convertible Preferred Shares’’ below.

Based on the above, the Directors considered that the terms of the Acquisition Agreement, including the Consideration, which were arrived at after arm’s length negotiations, are fair and reasonable and are in the interest of the Group and the Shareholders as a whole.

Conditions precedent:

Completion of the Acquisition Agreement is conditional upon, amongst other things, the following conditions precedent:

(a) the Purchaser having obtained the approval from the Stock Exchange for the issue and despatch of the circular to be issued to the Shareholders;
(b) the Purchaser having obtained voting approvals as required by the Listing Rules and the Memorandum and Articles on the Acquisition Agreement and the transactions contemplated thereunder, including the issuance of the Convertible Preferred Shares to the Vendor, issuance of Conversion Shares that may be issued upon the exercise of the conversion rights attaching to the Convertible Preferred Shares, and amendments to the Memorandum and Articles;
(c) the Listing Committee of the Stock Exchange having granted the listing of, and permission to deal in, all Conversion Shares that may be issued upon the exercise of the conversion rights attaching to the Convertible Preferred Shares;
(d) the Purchaser and the Vendor having obtained all consents that are legally required from third parties;
(e) the Vendor having fulfilled its obligations as set out the Acquisition Agreement; and
(f) all warranties given in the Acquisition Agreement being true, accurate and not misleading as at the Completion date.

Other than conditions (a), (b) and (c), all above conditions may be waived by the Purchaser by written notice to the Vendor. The Vendor should on best efforts basis procure the fulfillment of conditions (d) to (f) above, and the Purchaser should on best efforts basis procure the fulfillment of conditions (a) and (c) above. As at the Latest Practicable Date, none of the conditions above has been fulfilled.

Completion

Completion shall take place on the third Business Day after the fulfillment or waiver (as the case may be) of the last of the conditions precedent to the Acquisition Agreement or such other date as the parties to the Acquisition Agreement may agree in writing.

Immediately after Completion, Stephigh will become a wholly-owned subsidiary of the Company.

– 6 –

LETTER FROM THE BOARD

INFORMATION ON THE VENDOR AND STEPHIGH

The Vendor, Mr. Yin, is a businessman in the PRC engaged primarily in property development. Mr. Yin holds 30% equity interest in Stephigh. The Company acquainted with Mr. Yin through normal business contact. Mr. Yin acquired the Selling Interest from an independent third party at a consideration of RMB12.5 million (equivalent to approximately HK$14.8 million) on 29th December, 2009 when Phase 3 of the Property was not developed, the legal title of the land on which the Property was erected on was subject to resumption by relevant authority of local government due to later than expected construction schedule, and the net asset value of Stephigh was approximately RMB3.6 million (equivalent to approximately HK$4.3 million). Details are set out on pages 11 and 12 of this circular under the paragraph headed ‘‘Reasons for and benefit of the Acquisition’’.

Stephigh was incorporated in the British Virgin Islands with limited liability and is 70% owned by the Company and 30% owned by the Vendor. The principal asset of Stephigh is its 100% indirect equity interest in Anlu, which owns the Property. The Property is located in Anlu city of Hubei province of the PRC and is a residential complex including villas, houses, apartments, residential buildings, commercial buildings and undeveloped land.

Set out below is the financial information of Stephigh for the two years ended 30th June, 2009, 30th June, 2010 and for the six months ended 31st December, 2010, which was prepared in accordance with HKFRS:

			For the six
			months ended
	For the year ended 30th June,		31st December,
	2009	2010	2010
	(Audited)	(Audited)	(Unaudited)
	RMB	RMB	RMB
Turnover	18,364,164	51,786,888	30,939,795
Net Profits before taxation and
extraordinary items	771,908	7,748,035	4,111,135
Net Profits after taxation and
extraordinary items	553,773	6,694,085	3,082,681
			As at
	As at 30th June,		31st December,
	2009	2010	2010
	(Audited)	(Audited)	(Unaudited)
	RMB	RMB	RMB
Net Assets	8,288,315	33,633,869	36,710,812

– 7 –

LETTER FROM THE BOARD

PRINCIPAL TERMS OF THE CONVERTIBLE PREFERRED SHARES

The principal terms and conditions of Convertible Preferred Shares are summarised as follows:

Issue Date:

Within seven business days after the Acquisition Agreement becomes unconditional.

Issuer: the Company Face Value: HK$93,000,000 Issue price: At face value

Preferred Dividends:

A non-cumulative dividend of 2% per annum on the face value is payable by the Company annually in arrears on each anniversary date of the issue date, subject to sufficient reserves permissible by laws from time to time.

Conversion rights: holder of the Convertible Preferred Shares will have the right to convert the Convertible Preferred Shares in whole or in part of the outstanding amount into Shares on any Business Day.

Conversion of the Convertible Preferred Shares is subject to the compliance with the requirements under the Listing Rules.

Conversion Shares:

a total of 310,000,000 Shares to be issued upon conversion of the Convertible Preferred Shares, subject to adjustments to the Conversion Price.

Conversion Period:

any Business Day after the date of issue of the Convertible Preferred Shares.

Conversion Price:

HK$0.30 per Conversion Share, subject to adjustments for, among other things, customary anti-dilution provisions summarised below.

Redemption:

the Convertible Preferred Shares are not redeemable

Anti-dilution adjustments:

the Conversion Price shall from time to time be adjusted upon the occurrence of certain events including but not limited to the followings:

(i) consolidation or sub-division;
(ii) bonus issue of Shares;
(iii) capital distribution of Shares;

– 8 –

LETTER FROM THE BOARD

(iv) rights issues of Shares or rights to acquire Shares;
(v) right issues of other securities; and
(vi) other events upon which the Company or the Convertible Preferred Share holder determines an adjustment should be made, subject to auditors’ determination.

Transferability:

Voting:

Listing:

Ranking of Convertible Preferred Shares:

Ranking of Conversion Shares:

the Convertible Preferred Shares are transferable (whether in whole or in part) provided that: (i) they may not, without the prior written consent of the Company, be transferred to any person who is at the time of such transfer a connected person of the Company; and (ii) the principal amount to be transferred is in integral multiples of HK$1,000,000. Transfer of the Convertible Preferred Shares is further subject to rules and regulations of the Stock Exchange, the approval for listing and dealing in the Conversion Shares by the Listing Committee of the Stock Exchange, and all applicable laws and regulations.

holder(s) of the Convertible Preferred Shares will not be entitled to attend or vote at any meetings of the Company by reason only of its being a Convertible Preferred Shares holder.

no application will be made for the listing of, or permission to deal in the Convertible Preferred Shares on the Stock Exchange or any other stock exchange. An application will be made by the Company to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in the Conversion Shares that may be issued upon the conversion of the Convertible Preferred Shares.

the Convertible Preferred Shares will rank prior to the common shares in respect of, inter alia, dividend payment and distribution out of winding up proceedings.

the Conversion Shares will rank pari passu in all respects among themselves and with other Shares in issue on the date of allotment and issue of such Conversion Shares.

– 9 –

LETTER FROM THE BOARD

Conversion Price

The Conversion Price of the Convertible Preferred Shares of HK$0.30 per Conversion Share is determined after arm’s length negotiations between the Company and the Vendor with reference to the prevailing market price of the Shares, and represents:

(i) a discount of approximately 7.7% to the closing price of HK$0.325 per Share as quoted on the Stock Exchange on the Latest Practicable Date;
(ii) a discount of approximately 4.8% to the closing price of HK$0.315 per Share as quoted on the Stock Exchange on the Last Trading Date;
(iii) a discount of approximately 8.0% to the average closing price of approximately HK$0.326 per Share for the 5 trading days immediately prior to and including the Last Trading Date;
(iv) a discount of approximately 10.2% to the average closing price of approximately HK$0.334 per Share for the 10 trading days immediately prior to and including the Last Trading Date;
(v) a discount of approximately 25.0% over the Group’s audited consolidated net assets of approximately HK$0.40 per Share as at 30th June, 2010, being the date of which the latest audited consolidated financial information of the Group was made up.

PROPOSED AMENDMENTS TO THE MEMORANDUM AND ARTICLES

The Board proposes to amend the Memorandum and Articles for the purpose of, among others, incorporating the terms of the Convertible Preferred Shares to be issued by the Company. Such proposed amendments will be subject to the approval of the Shareholders by way of a special resolution at the EGM. Further details of the proposed amendments are set out in Appendix II to this circular.

PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL

The authorised share capital of the Company as at the Latest Practicable Date is HK$500,000,000 divided into 5,000,000,000 Shares of HK$0.10 each, of which 1,512,716,500 Shares are issued and fully paid up. Upon Completion, 93,000,000 Convertible Preferred Shares of HK$1.00 each will be issued, which are convertible into 310,000,000 Shares upon full conversion thereof at the initial Conversion Price. In anticipation of the issue of the Convertible Preferred Shares, the Company proposes to increase its authorised share capital from HK$500,000,000 to HK$600,000,000 (divided into 5,000,000,000 Shares of HK$0.10 each and 100,000,000 Convertible Preferred Shares of HK$1.00 each) by the creation of 100,000,000 Convertible Preferred Shares of HK$1.00 each. The proposed increase in authorised share capital is conditional upon the passing of an ordinary resolution by the Shareholders at the EGM.

– 10 –

LETTER FROM THE BOARD

EQUITY FUND RAISING ACTIVITIES IN THE PAST TWELVE MONTHS

Date of		Net proceeds
announcement		raised	Proposed use of	Actual use of the
2010	Capital raising activity	(approximately)	the net proceeds	net proceeds
		HK$
12th November	Placing of 107,400,000	1.0 million	General working capital	Used as intended
	1-year warrant		and for future
	entitling the		development of
	subscriber to		the Group
	subscribe for
	107,400,000 new
	Shares
6th August	Placing of 105,000,000	0.9 million	General working capital	Used as intended
	1-year warrant		and for future
	entitling the		development of
	subscriber to		the Group
	subscribe for
	105,000,000 new
	Shares

Save and except for the above, the Company has not undertaken any equity fund raising exercise in the 12-month period immediately preceding the date of this circular.

REASONS FOR AND BENEFITS OF THE ACQUISITION

The Group’s business comprises (i) the manufacturing and sales of printed circuit boards, printed circuit board assembling products and surface mount technology processing services and (ii) property development in the PRC. The Group’s electronic products are used in a broad range of applications in items such as mobile communication devices, consumer digital devices, automotive and medical devices. The manufacturing business is highly competitive and has been deteriorating since 2007 both in terms of sales and net profit after tax, and started to make a significant loss of RMB360.2 million (approximately HK$426.0 million) for the year ended 30th June, 2009, which continued at a loss of RMB268.7 million (approximately HK$317.8 million) for the year ended 30th June, 2010 and an unaudited loss of RMB52.4 million (approximately HK$62.0 million) for the six months ended 31th December, 2010.

To improve the prospects of the Group with a view to enhance value for the Shareholders, the Board expanded into property development in the PRC, and started with residential development in Anlu city, Hubei province in the PRC. With rapid urbanisation in the PRC, the Board is of the view that diversification into property development business in the PRC through Anlu can help improve the prospects of the Group. The Acquisition will enable the Company to have complete control over the direction and pace of development of Stephigh.

– 11 –

LETTER FROM THE BOARD

The Directors understand that the Vendor acquired the Selling Interest at RMB12.5 million (equivalent to approximately HK$14.8 million) on 29th December, 2009 when Phase 3 of the Property was not developed and the legal title of the land on which the Property were erected on was subject to resumption by local government authority due to later than expected construction schedule. The net asset value of Stephigh was approximately RMB3.6 million (equivalent to approximately HK$4.3 million) as at 31st December, 2009. As at the Latest Practicable Date, Phase 3 of the Property were further developed and the legal title of the Land on which the Property was erected on was fully vested in Anlu and not subject to resumption by local government authority currently.

Having considered (i) the net asset value of Stephigh was RMB36.7 million (equivalent to approximately HK$43.4 million) as at 31st December, 2010; (ii) prospects of property market in the PRC; (iii) the net profit after taxation and extraordinary items of Stephigh for the years ended 30th June, 2009, 30th June, 2010 and six months ended 31st December, 2010 of RMB0.6 million, RMB6.7 million and RMB3.1 million respectively (equivalent to approximately HK$0.7 million, HK$7.9 million and HK$3.7 million respectively); and (iv) the appraised value of the Property as at 31st December, 2010 of approximately RMB411.7 million (equivalent to approximately HK$487.0 million) and the attributable value of the Property to the Selling Interest of RMB123.5 million (equivalent to approximately HK$146.1 million), the Directors consider the Consideration of the Selling Interest at HK$93 million is fair and reasonable and the Acquisition is in the interest of the Company and the Independent Shareholders as a whole.

EFFECTS ON SHAREHOLDING STRUCTURE OF THE COMPANY

The following table illustrates shareholding structure of the Company before and after the conversion of the Convertible Preferred Shares.

Shareholders Mr. Sze Ming Yee Mr. Hui Lung Hing Mr. Du Hua Wai Mr. Zhang Jian The Vendor Other Shareholders Total	As at the Latest Practicable Date No. of Shares Approx. % 345,778,539 22.86% 250,000,000 16.53% 82,142,857 5.43% 82,142,857 5.43% — 0.00% 752,652,247 49.75% 1,512,716,500 100.00%	Upon completion of the Acquisition (assuming immediate and full conversion of the Convertible Preferred Shares) No. of Shares Approx. % 345,778,539 18.97% 250,000,000 13.71% 82,142,857 4.51% 82,142,857 4.51% 310,000,000 17.01% 752,652,247 41.29% 1,822,716,500 100.00%	Upon completion of the Acquisition (assuming immediate and full conversion of the Convertible Preferred Shares) No. of Shares Approx. % 345,778,539 18.97% 250,000,000 13.71% 82,142,857 4.51% 82,142,857 4.51% 310,000,000 17.01% 752,652,247 41.29% 1,822,716,500 100.00%
			100.00%

– 12 –

LETTER FROM THE BOARD

LISTING RULES IMPLICATIONS

As the relevant percentage ratios (as defined in the Listing Rules) in respect of the Acquisition are more than 5% but less than 25%, the Acquisition constitutes a discloseable transaction of the Company under Chapter 14 of the Listing Rules. Since the Vendor owns 30% of the issued share capital in Stephigh, the Vendor is a connected person of the Company. Accordingly, the Acquisition constitutes a connected transaction of the Company and is therefore subject to the approval by the Independent Shareholders at the EGM. The Company will seek the Independent Shareholders’ approval on (i) the Acquisition Agreement and transactions contemplated thereunder, including the issue of the Convertible Preferred Shares and Conversion Shares which would fall to be issued upon conversion of the Convertible Preferred Shares under special mandate and (ii) increase in authorised share capital of the Company.

The Independent Board Committee, comprising all independent non-executive Directors, namely Mr. Huang Jian Zi, Mr. Cheung Chuen and Ms. Wong Lai Wing, has been formed to advise the Independent Shareholders in respect of the Acquisition. Beijing Securities has been appointed to advise the Independent Board Committee and the Independent Shareholders in respect of the Acquisition.

No Director or Shareholder has any material interest in the Acquisition and shall abstain from voting on the resolutions to approve the Acquisition at the relevant board meeting or the EGM as the case may be.

EGM

A notice convening the EGM to be held at 10:00 a.m. on Tuesday, 26th April, 2011 at Monet Room B, Basement 1, Inter-Continental Grand Stanford Hong Kong Hotel, 70 Mody Road, Tsimshatsui East, Kowloon, Hong Kong is set out on pages 63 to 65 of this circular.

You will find enclosed a form of proxy for use at the EGM. Whether or not you are able to attend the EGM in person, you are requested to complete and return the accompanying form of proxy in accordance with the instructions printed thereon to the share registrar of the Company, Hong Kong Registrars Limited at Shops 1712–1716, 17/F, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for holding the meeting or any adjournment thereof. Completion and return of a form of proxy will not preclude you from attending and voting in person at the EGM or any adjournment thereof, should you so wish.

Pursuant to Rule 13.39 of the Listing Rules, all votes of Shareholders at a general meeting must be taken by poll. The Chairman of the meeting will therefore demand a poll for every resolution put to the vote at the EGM. An announcement on the poll results will be made by the Company after the EGM.

– 13 –

LETTER FROM THE BOARD

RECOMMENDATION

The Independent Board Committee, having taken into account the advice from Beijing Securities, is of the view that the Acquisition is entered into on normal commercial terms and is fair and reasonable so far as the Independent Shareholders are concerned, and is in the interests of the Company and the Shareholders as a whole.

The Company believes that the proposed amendments to the Memorandum and Articles are consistent with the requirements of the applicable laws and regulations and are in the interests of the Company and the Shareholders as a whole.

The Directors (including independent non-executive Directors) therefore recommend the Shareholders to vote in favour of the resolutions as set out in the notice of the EGM to approve, among other things, the ordinary resolutions in respect of the Acquisition and the increase in authorised share capital and the special resolution in respect of the amendment of Memorandum and Articles.

ADDITIONAL INFORMATION

Your attention is also drawn to the letter from the Independent Board Committee (which is set out on page 15 of this circular) setting out its recommendation to the Independent Shareholders, the letter of advice from Beijing Securities (which is set out on pages 16 to 29 of this circular) containing its advice to the Independent Board Committee and the Independent Shareholders, the additional information set out in the appendices to this circular and the notice of EGM.

By Order of the Board KINGWELL GROUP LIMITED Xu Yue Yue

Executive Director

– 14 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

==> picture [69 x 70] intentionally omitted <==

KINGWELL GROUP LIMITED 京維集團有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1195)

1st April, 2011

To the Independent Shareholders,

Dear Sir and Madam,

CONNECTED AND DISCLOSEABLE TRANSACTION IN RELATION TO THE ACQUISITION OF 30% EQUITY INTEREST IN STEPHIGH GROUP LIMITED INVOLVING THE ISSUE OF CONVERTIBLE PREFERRED SHARES

We refer to the circular (the ‘‘Circular’’) to the Shareholders dated 1st April, 2011 issued by the Company of which this letter forms part. Terms used in this letter shall have the same meanings as those defined in the Circular, unless the context otherwise requires.

We have been appointed by the Board as members of the Independent Board Committee to advice the Independent Shareholders in respect of the Acquisition, details of which are set out in the Letter from the Board contained in the Circular.

Having taken into account the advice of Beijing Securities Limited, the independent financial advisor to the Independent Board Committee and the Independent Shareholders, as set out in their letter of recommendation on pages 16 to 29 of the Circular, we are of the opinion that the Acquisition is fair and reasonable and in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Shareholders to vote in favour of the resolution to be proposed at the EGM to approve the Acquisition Agreement and the transactions contemplated thereunder.

Yours faithfully,

INDEPENDENT BOARD COMMITTEE

Huang Jian Zi Cheung Chuen Wong Lai Wing Independent Non-executive Independent Non-executive Independent Non-executive Director Director Director

– 15 –

LETTER FROM INDEPENDENT FINANCIAL ADVISER

BEIJING SECURITIES LIMITED

Room 2907–8, China Resources Building, 26 Harbour Road, Wanchai, Hong Kong

1 April 2011

To the Independent Board Committee and the Independent Shareholders

Dear Sirs,

CONNECTED AND DISCLOSEABLE TRANSACTION IN RELATION TO THE ACQUISITION OF 30% EQUITY INTEREST IN STEPHIGH GROUP LIMITED INVOLVING THE ISSUE OF CONVERTIBLE PREFERRED SHARES

INTRODUCTION

We refer to our appointment as the independent financial adviser to the Independent Board Committee and the Independent Shareholders in respect of the Acquisition. The details of the Acquisition, among other things, are set out in the circular of the Company dated 1 April 2011 (the ‘‘Circular’’), of which this letter forms a part. Terms used in this letter shall have the same meanings as those defined in this Circular unless the context requires otherwise.

As the applicable percentage ratios in relation to the Acquisition are over 5% but less than 25% and the Vendor, who owns 30% of the issued share capital of Stephigh, is a connected person of the Company, the Acquisition constitutes a discloseable and connected transaction of the Company under Chapter 14 and Chapter 14A of the Listing Rules respectively. The Acquisition and the issue of the Convertible Preferred Shares under the Acquisition Agreement are therefore subject to the approval by the Independent Shareholders at the EGM by way of poll. The Conversion Shares will be issued under the specific mandate.

The Board currently comprises six executive Directors and three independent non-executive Directors. The Independent Board Committee has been formed which is comprised of all the independent non-executive Directors, namely Messrs Huang Jian Zi, Cheung Chuen and Wong Lai Wing, to advise the Independent Shareholders regarding the Acquisition. We have been appointed by the Company as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the Acquisition.

– 16 –

LETTER FROM INDEPENDENT FINANCIAL ADVISER

Our role is to provide the Independent Board Committee and the Independent Shareholders with an independent opinion and recommendation as to whether the terms of the Acquisition are fair and reasonable and in the interests of the Company and the Shareholders as a whole, and how the Independent Board Committee should recommend the Independent Shareholders and the Independent Shareholders should vote in respect of the resolution to approve the transactions at the EGM.

BASIS OF OUR OPINION

In formulating our opinion to the Independent Board Committee and the Independent Shareholders, we have relied on the statements, information, opinions and representations contained or referred to in this circular and the information and representations provided to us by the Company, its Directors and the management of the Group.

We have assumed that all information and representations that have been provided by the Directors, for which they are solely and wholly responsible, are true and accurate at the time when they were made and continue to be so up to the Latest Practicable Date. We have also assumed that all statements of belief, opinion, expectation and intention made by the Directors in this Circular were reasonably made after due enquiry and careful consideration. We have no reason to suspect that any material facts or information have been withheld or to doubt the truth, accuracy and completeness of the information and facts contained in this Circular, or the reasonableness of the opinions expressed by the Company and its Directors, which have been provided to us.

The Directors jointly and severally accept full responsibility for the accuracy of the information contained in this circular and confirm, having made all reasonable inquiries, that to the best of their knowledge, opinions expressed in this Circular have been arrived at after due and careful consideration and there are no other facts not contained in this Circular, the omission of which would make any statement in this Circular misleading.

We consider that we have been provided with sufficient information to reach an informed view and to provide a reasonable basis for our opinion. We have not, however, conducted any independent verification of the information included in this Circular and those provided to us by the Company and its Directors nor have we conducted any form of in-depth investigation into the business, affairs, financial performance and positions or future prospects of the Group and its associates.

Lastly, where information in this letter has been extracted from published or otherwise publicly available sources, the sole responsibility of Beijing Securities is to ensure that such information has been correctly and fairly presented and reproduced from the relevant sources.

– 17 –

LETTER FROM INDEPENDENT FINANCIAL ADVISER

PRINCIPAL FACTORS TAKEN INTO CONSIDERATION

In formulating our opinion in respect of the Acquisition to the Independent Board Committee and the Independent Shareholders, we have considered the following principal factors and reasons:

Background of and reasons for the Acquisition
(a) Background information of the Group

The Group’s principal business is the manufacturing and sales of printed circuit boards, printed circuit board assembling products and surface mount technology processing services. Its products are used in a broad range of applications in items such as mobile communication devices, consumer digital devices, automotive and medical devices. In order to broaden its income source, the Company has diversified its business to PRC property development business by acquiring 70% equity interest in Stephigh, which was completed on 4 June 2010. The principal asset of Stephigh is its 100% indirect equity in Anlu, a property development company with a residential development project in Anlu city, Hubei Province.

Set out below is the financial information of the Group extracted from the annual reports of the Company for the three years ended 30 June 2010 and the interim report of the Company for the six months ended 31 December 2010.

	For the
	six months
	ended
	31 December	For the year ended 30		June
	2010	2010	2009	2008
	RMB’000	RMB’000	RMB’000	RMB’000
	(unaudited)	(audited)	(audited)	(audited)
Turnover	170,520	264,213	316,940	564,317
Gross profit/(loss)	4,769	(4,156)	46,247	171,969
Profit/(loss) from
operations	(41,960)	(291,589)	(383,655)	117,603
Profit/(loss) before
taxation	(50,438)	(301,965)	(403,521)	35,770
Profit/(loss) for the year	(51,466)	(269,062)	(360,202)	11,179
	As at
	31 December		As at 30 June
	2010	2008	2010	2009
	RMB’000	RMB’000	RMB’000	RMB’000
	(unaudited)	(audited)	(audited)	(audited)
Net asset	528,799	540,998	634,465	926,133

The Company recorded a consolidated turnover of approximately RMB316.94 million for year ended 30 June 2009, which represented a drop of approximately 43.8% when compared to the same period in 2008. The decrease in turnover was due to the decline in sales orders and unit selling prices of the Group’s products as a consequence of the global

– 18 –

LETTER FROM INDEPENDENT FINANCIAL ADVISER

economic downturn. Accordingly, the Group has a gross profit and operating loss of approximately RMB46.25 million and RMB383.66 million respectively. The operating loss was mainly attributable to the impairment of non-current assets of approximately RMB282.39 million which was mainly related to the property, plant and equipment of the Group’s operating subsidiaries in the PRC and the impairment of trade and other receivables of approximately RMB68.16 million.

For the year ended 30 June 2010, the consolidated turnover of the Company decreased by approximately 16.6% to approximately RMB264.21 million when compared to the same period last year and such decrease was mainly due to the slow recovery in sales orders and decreasing unit selling prices of the printed circuit boards and related products as a consequence of low demand and intense competition in the electronics industry. The gross loss recorded in 2010 was approximately RMB4.16 million as compared to a gross profit of RMB46.25 million for the corresponding period in the year before. Such loss was due to the slow recovery in sales and rise in production costs brought by the rising of raw material and labour costs, as well as the impairment of non-current assets of approximately RMB204.20 million, which was mainly related to the property, plant and equipment of the Group’s operating subsidiaries in the PRC, recorded during the financial year of 2010.

For the six months ended 31 December 2010, the consolidated turnover of the Company increased by approximately 33.48% to approximately RMB170.52 million as compared to the same for six months ended 30 June 2009 of approximately RMB127.75 million. The improvement was mainly due to the inclusion of the revenue of Stephigh to the Group’s results. During the six months period, the Company recorded a consolidated gross profit of approximately RMB4.77 million and a consolidated operating loss or RMB41.96 million. The gross profit was mainly attributable to the contribution from Stephigh and the operating loss was brought by the slow recovery in sales and rise in production costs which include raw material, labour and operating costs during the period.

The Group had been loss-making in the two most recent years and the net assets of the Group had been on a declining trend for the years under review. In view of the unsatisfactory financial performance of the Group, the Board has continued to review the direction of its business and resolved to broaden the income source of the Group through business diversification. In June 2010, the Group has entered into the property development business by the acquisition of 70% equity interest in Stephigh, in which its subsidiary owns a residential development project in Anlu city of Hubei Province.

(b) Information on the Vendor and Stephigh

The Vendor, Mr. Yin, is a businessman in the PRC engaged primarily in property development. Mr. Yin holds 30% equity interest in Stephigh. Mr. Yin acquired the 30% equity interest from independent third parties at consideration of RMB12.5 million (equivalent to approximately HK$14.8 million) on 29 December 2009 when Phase 3 of the Property was not developed, the legal title of the land on which the Property was erected on was subject to resumption by relevant authority of local government due to later than expected construction schedule, and the net asset value of Stephigh was approximately RMB3.6 million (equivalent to approximately HK$4.3 million).

Stephigh was incorporated in the British Virgin Islands with limited liability and is 70% owned by the Company and 30% owned by the Vendor. The principal asset of Stephigh is its 100% indirect equity interest in Anlu, which owns the Property. The Property is located in Anlu city of Hubei Province and is a residential complex including villas, houses, apartments,

– 19 –

LETTER FROM INDEPENDENT FINANCIAL ADVISER

residential buildings, commercial buildings and undeveloped land, namely Anlu Taihe Paradise. Phase 1 and Phase 2 of Anlu Taihe Paradise were completed in 2007 and 2009 respectively. The construction for Phase 3 has been commenced in June 2010 and is expected to be completed in November 2011.

Set out below is the unaudited consolidated financial information of Setphigh for the two years ended 30 June 2010 and the six months ended 31 December 2010.

	For the
	six months ended
	31 December	For the year ended 30 June
	2010	2010	2009
	RMB	RMB	RMB
	(Unaudited)	(Unaudited)	(Unaudited)
Turnover	30,939,795	51,786,888	18,364,164
Net profit before taxation and
extraordinary items	4,111,135	7,748,035	771,908
Net profit after taxation and
extraordinary items	3,082,681	6,694,085	553,773
	As at
	31 December	As at 30 June
	2010	2010	2009
	RMB	RMB	RMB
	(unaudited)	(unaudited)	(unaudited)
Net asset	36,710,812	33,633,869	8,288,315

As advised by the management of the Company, the turnover of Stephigh comprised only of the sale of residential properties located in Anlu city, Hubei Province. For the year ended 30 June 2010, the consolidated turnover of Stephigh has been increased by 182.00% to RMB51.79 million as compared to the last corresponding year.

Having reviewed the financial information of the Group and Stephigh, we are of the view that the Acquisition would enhance both the net assets and profitability of the Group. Details of the financial effects of the Acquisition to the Group are set out in the latter section in this letter.

(c) Reasons for the Acquisition

To improve the prospects of the Group with a view to enhancing value for the Shareholders, the Board has expanded the business of the Group into property development in the PRC and started with residential development in Anlu city, Hubei Province by acquiring 70% equity interest in Stephigh in June 2010. With rapid urbanisation in the PRC, the Board is of the view that the diversification into property development business in the

– 20 –

LETTER FROM INDEPENDENT FINANCIAL ADVISER

PRC through Anlu can help to improve the prospects of the Group. The acquisition of the remaining 30% equity interest in Stephigh will enable the Company to gain a complete control over the direction and development speed of Stephigh.

As stated in the letter from the Board set out in the circular of the Company dated 7 May 2010 in relation to the acquisition of 70% equity interest of Stephigh, it is the intention of the Company to purchase the remaining 30% equity interest in Stephigh. We consider that the Acquisition is in line with the overall business strategy of the Group and the entering into the Acquisition Agreement is in the ordinary and usual course of the Company’s business. Upon Completion, Stephigh will become a wholly-owned subsidiary of the Company.

2. The Acquisition

(a) Principal terms of the Acquisition Agreement

On 28 January 2011, the Company and the Vendor entered into the Acquisition Agreement, pursuant to which the Vendor conditionally agreed to sell, and the Company conditionally agreed to purchase 30% equity interest in Stephigh at the consideration of HK$93 million which will be satisfied by the issue of the Convertible Preferred Shares to the Vendor convertible at HK$0.30 per Conversion Share and such Convertible Preferred Shares are not redeemable. Upon Completion, Stephigh will become a wholly-owned subsidiary of the Company. Further details of the terms of the Acquisition Agreement, including conditions precedent are set out in the letter from board to the Circular.

(b) Consideration

As stated in the letter from the Board, the Consideration of HK$93 million was determined between the Company and the Vendor after arm’s length negotiations with reference to the Adjusted NAV of 268.3 million. The Consideration represents a 2.33% discount to 30% of the Adjusted NAV of RMB80.5 million (equivalent to approximately HK$95.21 million).

As advised by the management of the Group, the Adjusted NAV is calculated as follows:

(Approximate)

Unaudited consolidated net asset value of Stephigh as at 31 December 2010 RMB36.7 million

Add: the difference between the appraised value of the

Property and the carrying value of the Property as at 31 December 2010 (RMB411.7 million – RMB180.1 million) RMB231.6 million

Adjusted NAV

RMB268.3 million

– 21 –

LETTER FROM INDEPENDENT FINANCIAL ADVISER

(1) The Valuation Report

The Property, consists of the unsold units of Phase 1 and Phase 2 and a parcel of development land for Phase 3 of Anlu Taihe Paradise, has been valued by Roman Appraisals Limited (the ‘‘Valuer’’), an independent valuer. The full text of the valuation report dated 10 January 2011 (the ‘‘Valuation Report’’) is set out in Appendix I to this Circular.

We have reviewed the Valuation Report and have discussed with the Valuer on the methodology adopted and assumptions used in arriving at the valuation of the Property as at 31 December 2010. We understand that the Valuer made a site inspection on the Property in early January 2011. The Valuer has adopted a market approach to value the market value of the Property. For the valuation of the unsold units of the properties, the Valuer has made references to the actual sales transactions of the units in Anlu Taihe Paradise and the sales of comparable properties as available to them in the same area, and adjustments have been made for the size, character, and other physical characteristics and weighted against all the respective advantages and disadvantages to arrive at the open market values of the properties under valuation. For the valuation of the development land, the Valuer has made references to the similar land sales transactions which are analysed and adjusted for valuation. As advised by the Valuer, market approach is a common approach for valuation of properties and such approach should be adopted whenever there are market transactions available for comparison.

According to the Valuation Report, the appraised value of the Property was approximately RMB411.7 million as at 31 December 2010. As stated in the letter from the Board, the Directors made reference to the 30% of the adjusted net assets value of Stephigh being RMB80.5 million (equivalent to approximately HK$95.21 million). The Consideration of HK$93 million therefore represents a 2.33% discount to 30% of the Adjusted NAV.

(2) The Comparable Companies

The Consideration will be satisfied upon Completion by the issue of the Convertible Preferred Shares with an aggregate face value of HK$93 million. Given the unaudited consolidated net profit of Stephigh for the year ended 31 December 2010 of approximately RMB6.69 million (equivalent to approximately HK$7.91 million) and the 30% of the Adjusted NAV of approximately RMB80.5 million (equivalent to approximately HK$95.21) million, the Consideration represents a price to earnings multiple of approximately 39.19 times and a price to book multiples of approximately 0.97 time respectively.

In order to assess the fairness and reasonableness of the Consideration, we performed comparison of the price to earnings multiple and the price to book multiple implied by the Acquisition with the historical price to earnings multiples and price to book multiples of Hong Kong main board listed companies. To the best of our knowledge, we have identified 3 other listed companies in Hong Kong (the ‘‘Comparables Companies’’) which are engaged in property development in the PRC or similar business as Stephigh with market capitalisation less than HK$1,000 million as at the Latest Practicable Date. We consider the Comparable Companies selected based on this criterion are appropriate for our analysis purpose as (i) the implied equity value of Stephigh of HK$310 million; (ii) the Company’s market capitalisation as at the Latest Practicable Date of approximately HK$484.16 million;

– 22 –

LETTER FROM INDEPENDENT FINANCIAL ADVISER

(iii) the Comparables Companies are engaged in property development business in the PRC similar to Stephigh; and (iv) 70% of the equity interest of Stephigh is already owned by the Company, a company listed on the Main Board of the Stock Exchange.

We understand Stephigh is an unlisted company and with no liquidity in the market but we consider that the Comparable Companies provide another reference for determining the basis of the valuation of the Acquisition in addition to the Valuation Report.

Company (stock code) New Heritage Holdings Ltd (stock code: 95) China Gamma Group Ltd (stock code: 164) Madex International (Holdings) Ltd (stock code: 231)	Principal activities Property development and property investment businesses in the PRC Gamma ray irradiation services, property development, rental and sales, trading of building materials and provision of renovation services, and securities trading and investment Property development and property leasing, right to receive royalty fee and trading of goods	Market capitalisation at the Latest Practicable Date (HK$’ million) 345.23 614.78 778.80	Closing price as at the Latest Practicable Date (HK$) 0.27 0.208 0.198	Net asset value per share based on the latest published financial statements (HK$) 0.69 0.028 0.06	Price to earnings multiples (trailing 12 months) (approximate times) (Note 2) 18.00 N/A N/A	Price to book multiples (approximate times) (Note 3)
						0.39 7.43 3.30

– 23 –

LETTER FROM INDEPENDENT FINANCIAL ADVISER

Company (stock code) Average Maximum Minimum Stephigh	Principal activities Property development business with a residential development project in Anlu city, Hubei Province	Market capitalisation at the Latest Practicable Date (HK$’ million) 491.63 (being the market capitalisation of the Company as at the Latest Practicable Date)/310.00 (being the implied equity value based on the Consideration)	Closing price as at the Lastest Practicable Date (HK$)	Net asset value per share based on the latest published financial statements (HK$)	Price to earnings multiples (trailing 12 months) (approximate times) (Note 2) N/A N/A N/A 39.19 (Note 4)	Price to book multiples (approximate times) (Note 3)
						3.71 7.43 0.39 0.97 (Note 5)

Notes:

Amounts denominated in RMB, if any, have been translated into HK$ at an exchange rate of RMB1=HK$1.1828 for comparison purpose.
Price to earnings multiples of the Comparable Companies are based on the lastest data published by Bloomberg for the Latest Practicable Date.
Price to book multiples of the Comparable Companies are calculated on their respective closing prices per share as quoted on the Stock Exchange as at the Latest Practicable Date and their consolidated net asset value as at the balance sheet date of their latest published financial statements, which is calculated by dividing the consolidated net assets by the total number of ordinary shares in issue of the respective Comparable Companies as at the Latest Practicable Date.
The price to earnings multiple of the Acquisition is calculated based on the Consideration of HK$93 million and the unaudited consolidated net profit of Stephigh attributable to the Sale Share of approximately RMB2.01 million for the year ended 30 June 2010.
The price to book multiple of the Acquisition is calculated based on the Consideration of HK$93 million and 30% of the Adjusted NAV of approximately RMB80.5 million (equivalent to approximately HK$95.21 million).

– 24 –

LETTER FROM INDEPENDENT FINANCIAL ADVISER

As illustrated in the above table, we note that the price to earnings multiples of only one out of the total three Comparable Companies is available. We consider the use of price to earnings multiples to provide a comparison to assess the Consideration may not provide a valid analysis and therefore we have not used this aspect for assessment.

We note that the Comparable Companies have an average price to book multiples of approximately 3.71 times, which is higher than the price to book multiple as implied by the Acquisition of approximately 0.97 time and is within the lower and upper range of 0.39 time and 7.43 times respectively.

Conclusion

Having considered that, (i) the Consideration represents a discount of approximately 2.33% to the 30% of the adjusted net assets value of Stephigh; and (ii) the price to book multiple as implied by the Consideration is within the range and lower than the average of the Comparable Companies; we are of the view that the Consideration is fair and reasonable as far as the Independent Shareholders are concerned and is in the interests of the Company and the Shareholders as a whole.

(c) Settlement method of the Consideration

Pursuant to the terms of the Acquisition Agreement, the Consideration for the Acquisition will be satisfied by the issue of the Convertible Preferred Shares by the Company to the Vendor.

(1) Principal terms of the Convertible Preferred Shares

The Convertible Preferred Shares, with a principal amount of HK$93 million, has a non-cumulative dividend of 2% per annum on the face value and is payable by the Company annually in arrears on each anniversary date of the issue date, subject to sufficient reserves permissible by laws from time to time. The holder of the Convertible Preferred Shares will have the right to convert the Convertible Preferred Shares in whole or in part of the outstanding amount into Shares on any Business Day. The Convertible Preferred Shares is convertible to a total of 310,000,000 Shares at a conversion price of HK$0.30 per Conversion Share. The Convertible Preferred Shares are not redeemable.

Further details of the terms of the Convertible Preferred Shares are set out in the letter from board to the Circular.

(2) Analysis of the Conversion Price

The Conversion Price of the Convertible Preferred Shares of HK$0.30 per Conversion Share represents:

(i) a discount of approximately 4.76% to the closing price of HK$0.315 per Share as quoted on the Stock Exchange on the Last Trading Date;

– 25 –

LETTER FROM INDEPENDENT FINANCIAL ADVISER

(ii) a discount of approximately 7.98% and 10.18% to the average closing price of approximately HK$0.326 and HK$0.334 per Share for the 5 and 10 trading days immediately prior to and including the Last Trading Date respectively;
(iii) a discount of approximately 25.00% to the Group’s unaudited consolidated net assets value of approximately HK$0.40 per Share based on the Group’s unaudited consolidated net assets attributable to the Shareholders of RMB506.39 million (approximately HK$598.96 million) and 1,512,717,000 number of the Shares in issue as at 31 December 2010; and
(iv) a discount of approximately 7.69% to the closing price of HK$0.325 per Share as quoted on the Stock Exchange on the Latest Practicable Date.

We have also compared the Conversion Price to historical market prices of the Shares over the 12-month period prior to the date of the Announcement up to the Latest Practicable Date. The following chart depicts the daily closing prices of the Shares from 28 January 2009 (approximately 12 months prior to the date of the Announcement) up to the Latest Practicable Date (the ‘‘Review Period’’)

==> picture [354 x 155] intentionally omitted <==

==> picture [338 x 42] intentionally omitted <==

As illustrated above, the closing prices of the Shares ranged from HK$0.275 to HK$0.59. The Conversion Price of HK$0.30 per Conversion Share is within the range of the closing price. The average of the closing prices of the Shares during the Review Period was approximately HK$0.41. The Conversion Price represents a discount of approximately 26.83% over such average closing price. During the Review Period, the closing prices of the Shares reached its highest price of HK$0.59 on 16 September 2010 and was in a decreasing trend since then.

– 26 –

LETTER FROM INDEPENDENT FINANCIAL ADVISER

Conclusion

Notwithstanding that the Conversion Price represents a discount to the closing price of the Shares on the Last Trading Date and the audited consolidated net assets value per Share as at 30 June 2010, we have also considered (i) the historical prices of the Shares has been in a downward trend since September 2010; (ii) the issue and allotment of Conversion Shares do not incur any further liabilities and cash outflow to the Company; (iii) the Convertible Preference Shares are not redeemable; and (iv) the Acquisition would enhance the Company to have a complete control of the PRC property development business, we are of the view that the Conversion Price is fair and reasonable as far as the Independent Shareholders are concerned and is in the interests of the Company and the Shareholders as a whole.

3. Possible financial effects of the Acquisition

(a) Net assets

According to the interim results announcement of the Company dated 28 February 2011, the unaudited net asset of the Group as at 31 December 2010 was approximately RMB528.80 of which RMB506.39 was attributable to the Shareholders and RMB22.41 was attributable to the minority shareholders of Stephigh. Upon completion, as the Company’s attributable equity interest in Stephigh will increase from 70% to 100%, the net asset attributable to the Shareholder is expected to increase.

In accordance with the accounting policies of the Group, the actual amount of the goodwill arising from the Acquisition would be determined based on the fair value of the share of the assets and liabilities of Stephigh on the date of Completion. The amount of goodwill arising from the Acquisition will be recognised in the consolidated balance sheet of the Group subsequent to the Completion and such goodwill is also subject to the impairment test.

According to the accounting policies of the Company, the Convertible Preferred Shares to be issued by the Company would be accounted in full as equity on the Company’s balance sheet. The net assets of the Group would be increased by the equity component of the Convertible Preferred Shares.

As such, the total financial effect on the net asset value of the Group upon Completion and the issue of the Convertible Preferred Shares cannot be ascertained at this stage.

(b) Earnings

Upon Completion, the Company’s attributable equity interest in Stephigh will increase from 70% to 100%. As Stephigh has been generating profits based on the unaudited consolidated financial information of Setphigh for the year ended 31 December 2010 and assuming no impairment loss relating to the Acquisition is recognized, the profit attributable to the Shareholders from Stephigh is expected to increase which is in the interests of the Company and the Independent Shareholders as a whole. However, there shall be a noncumulative dividend of 2% per annum on the face value of the Convertible Preferred Shares

– 27 –

LETTER FROM INDEPENDENT FINANCIAL ADVISER

if they are not converted and is payable by the Company annually in arrears on each anniversary date of the issue date, subject to sufficient reserves permissible by laws from time to time.

(c) Gearing and working capital

As the Consideration will be fully settled by the issue of Convertible Preferred Shares to the Vendor, there would not be any cash outflow from the Group and would also have no effect on the working capital position of the Group upon Completion. Since the Convertible Preferred Shares are not redeemable and would be accounted in full as equity on the Company’s balance sheet in accordance with the accounting policies of the Company, we are of the view that there would be no material adverse effect to the Group’s gearing immediately after Completion.

Independent Shareholders should be noted that the abovementioned financial analyses are for illustrative purpose only and do not represent what the financial position of the Group will be upon Completion.

4. Effect of the issue of Conversion Shares on the shareholding structure of the Company

The Convertible Preferred Shares are convertible into 310,000,000 Conversion Shares, which represent approximately 20.49% of the existing issued share capital of the Company and approximately 17.01% of the enlarged issued capital of the Company upon the full conversion of the Convertible Preferred Shares.

Immediately after the issue of the Conversion Shares and assuming that there will be no other changes in the shareholding of the Company from the Latest Practicable Date up to and including the date of the conversion of the Convertible Preferred Shares, the shareholding of the existing Independent Shareholders in the Company will be diluted from approximately 100.00% to 82.99%. Taking into account the potential benefits of the Acquisition as discussed above and the fact that the shareholdings of all Shareholders will be diluted proportionally to their respective shareholdings, we consider such potential dilution to the shareholdings of the Independent Shareholders to be acceptable.

RECOMMENDATIONS

Having considered the principal factors discussed above and, in particular the following:

(i) the Acquisition is in line with the business strategy of the Group and the Board is of the view that the diversification of the Group’s businesses into PRC property development through Anlu can help to improve the prospects of the Group and the acquisition of the remaining 30% equity interest of Stephigh will enable the Company to have complete control over the direction and development speed of Stephigh;
(ii) the earnings and net assets value of the Company attributable to the Shareholders would be enhanced and there would be no material adverse impact to the gearing and working capital of the Group upon Completion;

– 28 –

LETTER FROM INDEPENDENT FINANCIAL ADVISER

(iii) the Consideration represents a discount of approximately 2.33% to the 30% of the adjusted net assets value of Stephigh; and
(iv) the price to book multiples as implied by the Consideration is within the range and lower than the average of the Comparable Companies;

we consider that the terms of the Acquisition are fair and reasonable and on normal commercial terms, and the entering into the Acquisition Agreement is in the ordinary and usual course of the Company’s business and in line with the Group’s stated business objective and strategy, and in the interest of the Company and the Independent Shareholders as a whole. Accordingly, we advise the Independent Board Committee to recommend the Independent Shareholders, and we also recommend the Independent Shareholders, to vote in favour of the resolution to be proposed at the EGM to approve the Acquisition Agreement and the transactions contemplated thereunder.

Yours faithfully, For and on behalf of Beijing Securities Limited Charles Li Director

– 29 –

VALUATION REPORT ON THE PROPERTY

APPENDIX I

The following is the text of a valuation report from Roma Appraisals Limited in connection with its valuation of the Property as at 31st December, 2010, prepared for the purpose of incorporation in this circular.

==> picture [99 x 58] intentionally omitted <==

Unit 3806, 38/F, China Resources Building 26 Harbour Road, Wan Chai, Hong Kong Tel (852) 2529 6878 Fax (852) 2529 6806 E-mail [email protected] http://www.roma-international.com

1st April, 2011

Kingwell Group Limited Unit 314–315, Wing On Plaza, 62 Mody Road, TST East, Kowloon

Dear Sir/Madam,

Re: Valuation of Unsold units and a parcel of development land located in Anlu Taihe Paradise, Liang Ji Bei Road, Anlu Economic Development District, Anlu City, Hubei Province, the People’s Republic of China

In accordance with the instructions from Kingwell Group Limited (hereinafter referred to as the ‘‘Company’’) for us to value various property interests located in Anlu Taihe Paradise, Liang Ji Bei Road, Anlu Economic Development District, Anlu City, Hubei Province, the People’s Republic of China (hereinafter referred to as the ‘‘PRC’’), we confirm that we have carried out inspection, made relevant enquiries and investigations, and obtained such further information as we consider necessary for the purpose of providing you with our opinion of the market value of the property interests as at 31st December, 2010 (hereinafter referred to as the ‘‘Valuation Date’’).

1. BASIS OF VALUATION

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

2. VALUATION METHODOLOGY

In valuing the property interests of similar nature, in particular located in the PRC, we have normally adopted a market approach for the unsold completed units. Reference has been made to the sales evidence as available to us in the neighbourhood, and adjustments for the size, character, and other physical characteristics would be weighed taking into account their respective advantages and disadvantages to arrive at the open market values of the properties.

– 30 –

VALUATION REPORT ON THE PROPERTY

APPENDIX I

For the land portion, we would get references from the similar land sales transactions which are analyzed and adjusted for the valuation. From our recent site inspection, we found some construction works were still in process on the subject land parcel, thus the value of the property in our valuation would mostly take into account the land value together with considering added value site improvements.

3. VALUATION ASSUMPTIONS

Our valuation has been made on the assumption that the owner sells the properties in the open market in their existing state without the benefit of deferred term contract, leaseback, joint venture, management agreement or any similar arrangement which would serve to increase the value of the properties. In addition, we do not take into account any option, or right of pre-emption concerning or affecting the sale of the properties and the possibility of forced sale situation in our valuation.

In valuing the properties, we have assumed that the owner has free and uninterrupted right to use, occupy or assign the property interests for the whole of the unexpired term of the land use rights. Furthermore, we have also assumed that all consents, approvals and licences from the relevant PRC government authorities for development of the property interests were granted without onerous conditions or delay.

4. VALUATION CONSIDERATIONS

In the course of our valuation, we have not caused title searches to be made for the property interests at the relevant government bureau in the PRC. However, we have been provided with extracts of title documents and a copy of legal opinion dated 31st March, 2011 given by Mr. An Fenglian, PRC qualified lawyer and registered foreign lawyer of Mason Ching and Associates (hereinafter referred to as the ‘‘PRC Legal Adviser’’) relating to the legal title of the property interests, part of which is shown in the attached notes. We have not, however, searched the original documents to verify the ownership, encumbrances or existence of any subsequent amendments which do not appear on the copies handed to us. All documents have been used for reference only. All dimension, measurements, and areas included in the valuation certificate are based on information contained in the documents provided to us by the Company and therefore are only approximations.

We have relied to a very considerable extent on the information provided by the instructing party and have accepted advice given to us on such matters as planning approval, statutory notice, easement, tenure, particulars of occupation, site and floor areas, and all other relevant matters which can affect the value of the property.

We have not carried out investigations on site to determine the suitability of ground conditions and services etc. for any future development, nor have we undertaken any ecological or environmental surveys. Our valuation is prepared on the assumption that these aspects are satisfactory and that no extraordinary expenses or delays will be incurred during the construction period.

5. LIMITING CONDITIONS

We have had no reason to doubt the truth and accuracy of the information provided to us by the Company. We were also advised by the Company that no material factors have been omitted from the information to reach an informed view, and have no reasons to suspect that any material information has been withheld.

– 31 –

VALUATION REPORT ON THE PROPERTY

APPENDIX I

We have relied on copies of Land Use Certificates and copies of related documents in respect of the property interests. However, no investigations have been made to verify or to ascertain the existence of any amendments, or departures which may not appear on the copies handed to us. In the absence of further information, we assume there are no material encumbrances affecting the values and the legal title of the properties.

6. REMARKS

No allowance has been made in our valuation for any charges, mortgages or amount owing neither on the property interests nor for any expenses or taxation which may be incurred in effecting a sale. Unless otherwise stated, it is assumed that the interests are free from encumbrances, restrictions and outgoings of an onerous nature which could affect its value.

Unless otherwise states, all monetary figures stated in this report are in Renminbi (RMB).

7. CONCLUSION

In this valuation, we have complied with all the requirements contained in Chapter 5 and Practice Note 12 of the rules governing the listing of securities issued by the Stock Exchange of Hong Kong Limited, and the HKIS Valuation Standards on the Properties (1st Edition) published by the Hong Kong Institute of Surveyors and effective from 1st January, 2005.

Our valuation certificates are hereby enclosed.

Yours faithfully, For and on behalf of Roma Appraisals Limited Andy Wu FRICS FHKIS RPS Valuation Surveyor

Note: Mr. Andy Wu is a chartered valuation surveyor, and a registered professional surveyor and has over 20 years of experience in the valuation of properties located in Hong Kong, and the People’s Republic of China.

– 32 –

VALUATION REPORT ON THE PROPERTY

APPENDIX I

SUMMARY OF VALUATION

Group 1 — Property interest held for sale by Anlu in the PRC

No. Property under Valuation 1. Unsold Units of Phase 1 of Anlu Taihe Paradise, Liang Ji Bei Road, Anlu Economic Development District, Anlu City, Hubei Province, The PRC 2. Unsold Units of Phase 2 of Anlu Taihe Paradise, Liang Ji Bei Road, Anlu Economic Development District, Anlu City, Hubei Province, The PRC Sub-total:	Market Value as at 31st December, 2010 RMB152,260,000 RMB149,480,000
	RMB301,740,000

Group 2 — Property interest held under development by Anlu in the PRC

No. Property under Valuation 3. Development Land of Phase 3 of Anlu Taihe Paradise, Liang Ji Bei Road, Anlu Economic Development District, Anlu City, Hubei Province, The PRC Sub-total: Total:	Market Value as at 31st December, 2010 RMB110,000,000
	RMB110,000,000
	RMB411,740,000

– 33 –

VALUATION REPORT ON THE PROPERTY

APPENDIX I

Group 1 — Property interest held for sale by Anlu in the PRC

Market value in
Particulars of existing state as at
No. Property Description and Tenure Occupancy 31st December, 2010 1. Unsold Units of Phase 1 of Anlu Taihe Paradise is a large scale The units are RMB152,260,000 Phase 1 of Anlu composite development erected on a parcel of currently vacant. (RENMINBI ONE Taihe Paradise, land having a site area of 131,277 square metres HUNDRED FIFTY Liang Ji Bei Road, approximately. TWO MILLION TWO Anlu Economic HUNDRED SIXTY Development Phase 1 of Anlu Taihe Paradise has 40 blocks THOUSAND ONLY) District, Anlu City, of 3 storey town houses, 32 blocks of 3 storey Hubei Province, detached villas, 706 residential units forming The People’s part of blocks of 5 to 6 storey residential Republic of China buildings, 48 apartment units of 1 block of apartment, and 117 commercial units of 1 block of commercial building, altogether having a total gross floor area of 117,145 square meters approximately. The development also includes a primary school and a kindergarten. It was completed in 2007.
The property is designated for residential and commercial purposes with terms expiring on 22nd August, 2065 and 22nd August, 2045 respectively.

Notes:

The units under valuation comprise the following:

Use Town House Detached Villas Multi-storey residential Apartment Commercial Total :	No. of Units 39 25 92 48 86 290	Gross Floor Area (Sq.m.) 11,653 7,651 12,202 3,069 5,363
		39,938

Pursuant to a State-owned Land Use Rights Certificate — An Tu Guo Yong (2008) No. 419 issued by Anlu City Land Resources Bureau dated 29th April, 2008, the land use rights of the property with a site area of 131,277 square metres have been granted to Anlu, a subsidiary of the Group.
Pursuant to a Construction Work Planning Permit — (2006) No. 006 dated 18th May, 2008, a development scheme in the area range of 123,050 square metres and 145,285 square metres have been approved.
We have been provided with a legal opinion given by the PRC Legal Adviser, which contains, inter alia, the following:
a. A land premium in the sum of RMB460,000 was still outstanding;

– 34 –

VALUATION REPORT ON THE PROPERTY

APPENDIX I

b. Phase 1 of the project has obtained the necessary permits and consents including construction works completion certificate, presale consent, and real estate title certificates. The PRC Legal Adviser advised that the land premium was normally settled before the presale consent was issued;
c. The property is still held by Anlu, a subsidiary of the Group;
d. Anlu is entitled to occupy, use, lease, mortgage, transfer, or dispose of the units of Phase 1 if the land premium is settled in full and all the necessary documents are available.
We assume our valuation is free of all encumbrances and the land premium will be fully settled.

– 35 –

VALUATION REPORT ON THE PROPERTY

APPENDIX I

Description and Tenure

No. Property

Phase 2 of Anlu Taihe Paradise is large scale composite development erected on a parcel of land having a site area of 65,206 square metres approximately.
Unsold Units of Phase 2 of Anlu Taihe Paradise is large scale Phase 2 of Anlu composite development erected on a parcel of Taihe Paradise, land having a site area of 65,206 square metres Liang Ji Bei Road, approximately. Anlu Economic Development Phase 2 of Anlu Taihe Paradise has 696 District, Anlu City, residential units forming part of medium rise Hubei Province, and multi storey blocks of residential buildings, The People’s 1 block of apartment, and 1 block of Republic of China commercial building, altogether having a total gross floor area of 81,615 square meters approximately. The development was completed in 2009 and 2010 by phases.

Market value in Particulars of existing state as at Occupancy 31st December, 2010 The units are RMB149,480,000 currently vacant. (RENMINBI ONE HUNDRED FORTY NINE MILLION FOUR HUNDRED EIGHTY THOUSAND ONLY)

The property is designated for residential and commercial purposes with terms expiring on 22nd August, 2065 and 22nd August, 2045 respectively.

Notes:

The units under valuation comprise the following:

Use Medium rise residential Multistorey residential Apartment Commercial Total:	No. of Units 87 432 20 58 597	Gross Floor Area (Sq.m.) 13,062 54,598 814 2,554
		71,028

Pursuant to a State-owned Land Use Rights Certificate — An Tu Guo Yong (2008) No. 420 issued by Anlu City Land Resources Bureau dated 29th April, 2008, the land use rights of the property with a site area of 65,206 square metres have been granted to Anlu, a subsidiary of the Group.
Pursuant to a Construction Work Planning Permit — (2006) No. 006 dated 18th May, 2008, a development scheme in the area range of 123,050 square metres and 145,285 square metres have been approved.
We have been provided with a legal opinion given by the PRC Legal Adviser, which contains, inter alia, the following:
a. A land premium in the sum of RMB460,000 was still outstanding;
b. Phase 2 of the project has obtained the necessary permits and consents including construction works completion certificate, presale consent, and real estate title certificates. The PRC Legal Adviser advised that the land premium was normally settled before the presale consent was issued;
c. The property is still held by Anlu, a subsidiary of the Group;

– 36 –

VALUATION REPORT ON THE PROPERTY

APPENDIX I

d. The owner is entitled to occupy, use, lease, mortgage, transfer, or dispose of the units of Phase 2 if the land premium is settled in full and all the necessary documents are available.
We assume our valuation is free of all encumbrances and the land premium will be fully settled.

– 37 –

VALUATION REPORT ON THE PROPERTY

APPENDIX I

Group 2 — Property interest held under development by Anlu in the PRC

No. Property Description and Tenure 3. Development Land The property comprises a parcel of land with a of Phase 3 of Anlu site area of 17,061 square metres Taihe Paradise, approximately. Liang Ji Bei Road, Anlu Economic A development scheme known as Phase 3 of Development Anlu Taihe Paradise was currently in process. District, Anlu City, Hubei Province, Phase 3 would include blocks of multi-storey The People’s residential buildings, 1 block of commercial Republic of China building, and 1 block of hotel, altogether having a total gross floor area of 48,106 square meters approximately. The development is scheduled to be completed in November 2011. The property is designated for residential and commercial purposes with terms expiring on 22nd August, 2065 and 22nd August, 2045 respectively.

Market value in Particulars of existing state as at Occupancy 31st December, 2010 The units are under RMB110,000,000 development. (RENMINBI ONE HUNDRED AND TEN MILLION ONLY)

Notes:

The development scheme would comprise the following:

Use Multi-storey residential Commercial Hotel Total:	Gross Floor Area (Sq.m.) 30,087 12,005 6,014
	48,106

Pursuant to a State-owned Land Use Rights Certificate — An Tu Guo Yong (2008) No. 421 issued by Anlu City Land Resources Bureau dated 29th April, 2008, the land use rights of the property with a site area of 17,016 square metres have been granted to Anlu, a subsidiary of the Group.
Pursuant to a Construction Work Planning Permit — (2006) No. 006 dated 18th May, 2008, a development scheme in the area range of 123,050 square metres and 145,285 square metres have been approved.
Pursuant to the Construction Work Commencement Permit No. 420982201007050101 dated 5th July, 2010 and the Construction Work Commencement Permit No. 420982201010080101 dated 8th October, 2010, a development scheme in the area range of 42,879 square metres and 6,014 square metres have been approved.
We have been provided with a legal opinion given by the PRC Legal Adviser, which contains, inter alia, the following:
a. A land premium in the sum of RMB460,000 was still outstanding;
b. Phase 3 of the project has not obtained the necessary permits and consents including construction works completion certificate, presale consent, and real estate title certificates;

– 38 –

VALUATION REPORT ON THE PROPERTY

APPENDIX I

c. The property is still held by Anlu, a subsidiary of the Group.
The project costs incurred up to 31 December 2010 were RMB15,000,000.
We were further advised by the Company of the following:
a. The architectural plans have been approved;
b. No specific restrictions have been imposed on the development scheme;
c. No presale arrangement or presale permit application has been processed;
d. The project was scheduled for completion in November 2011.
We estimate that the market value of the property on completion is around RMB200,000,000.
The estimated cost to complete the development scheme is around RMB50,000,000.
We assume in our valuation that the development scheme is constructed as per the owner’s plan as provided, and free of all encumbrances, and the land premium will be fully settled.

– 39 –

AMENDMENTS TO THE MEMORANDUM AND ARTICLES OF ASSOCIATION

APPENDIX II

(1) The provisions of paragraph 1 of the Memorandum be replaced and substituted in its entirety by the following:
‘‘The name of the Company is Kingwell Group Limited 京維集團有限公司.’’
(2) The provisions of paragraph 2 of the Memorandum be replaced and substituted in its entirety by the following:

‘‘The Registered Office of the Company shall be at the offices of Codan Trust Company (Cayman) Limited, Century Yard, Cricket Square, Hutchins Drive, P.O. Box 2681GT, George Town, Grand Cayman, British West Indies.’’

(3) The provisions of paragraph 8 of the Memorandum be replaced and substituted in its entirety by the following:

‘‘The share capital of the Company is HK$600,000,000 divided into two classes of shares, namely, 5,000,000,000 ordinary shares of a nominal or par value of HK$0.10 each and 100,000,000 convertible preferred shares of HK$1.00 each in the share capital of the Company, with power for the Company insofar as is permitted by law to redeem or purchase any of its shares and to increase or reduce the said capital subject to the provisions of the Companies Law (Revised) and the Articles of Association and to issue any part of its capital, whether original, redeemed or increased with or without any preference, priority or special privilege or subject to any postponement of rights or to any conditions or restrictions and so that unless the conditions of issue shall otherwise expressly declare every issue of shares whether stated to be preference or otherwise shall be subject to the powers hereinbefore contained.’’

(4) The following provisions be added immediately after and following the end of Article 1:

‘‘Schedule A to these Articles relating to the rights, privileges and restrictions of the Preferred Shares shall form part of these Articles. In the event of inconsistency with anything in these Articles, anything contained in Schedule A in respect of the Preferred Shares shall prevail.’’

(5) The definition of ‘‘Company’’ be replaced and substituted in its entirety by the following definition in Article 2(1):

‘‘‘‘Company’’ Kingwell Group Limited 京維集團有限公司.’’

(6) The following new definition be added immediately after the definition of ‘‘Ordinary resolution’’ in Article 2(1):

‘‘‘‘Ordinary Share’’

ordinary share of HK$0.10 each in the share capital of the Company.’’

– 40 –

AMENDMENTS TO THE MEMORANDUM AND ARTICLES OF ASSOCIATION

APPENDIX II

(7) The following new definition be added immediately after the definition of ‘‘paid up’’ in Article 2(1):
‘‘‘‘Preferred Share’’

convertible preferred share of HK$1.00 each in the share capital of the Company, having the rights, privileges and restrictions as set out in Schedule A hereto.’’

(8) The following new definition be added immediately after the definition of ‘‘Secretary’’ in Article 2(1):
‘‘‘‘share’’
share in the capital of the Company (including Ordinary Share and Preferred Share) and includes stock except where a distinction between stock and shares is expressed or implied.’’
(9) The provisions of Article 3(1) be replaced and substituted in its entirety by the following:

‘‘The share capital of the Company at the date on which these Articles come into effect shall be divided into two classes of shares, namely, Ordinary Shares and Preferred Shares.’’

(10) The provisions of the first sentence of Article 4 be replaced and substituted in its entirety by the following:

‘‘The Company may from time to time by ordinary resolution in accordance with the Law, but subject to the provisions of Schedule A, alter the conditions of its Memorandum of Association to:’’

(11) The provisions of Article 5 be replaced and substituted in its entirety by the following:
‘‘The Board may settle as it considers expedient any difficulty which arises in relation to any consolidation and division under the last preceding Article and in particular but without prejudice to the generality of the foregoing, and subject to the provisions of Schedule A, may issue certificates in respect of fractions of shares or arrange for the sale of the shares representing fractions and the distribution of the net proceeds of sale (after deduction of the expenses of such sale) in due proportion amongst the Members who would have been entitled to the fractions, and for this purpose the Board may authorise some person to transfer the shares representing fractions to their purchaser or resolve that such net proceeds be paid to the Company for the Company’s benefit. Such purchaser will not be bound to see to the application of the purchase money nor will his title to the shares be affected by any irregularity or invalidity in the proceedings relating to the sale.’’
(12) The provisions of Article 6 be replaced and substituted in its entirety by the following:
‘‘The Company may from time to time by special resolution, subject to any confirmation or consent required by the Law and the provisions of Schedule A, reduce its share capital or any share premium account or any capital redemption reserve or other undistributable reserve in any manner permitted by law.’’

– 41 –

AMENDMENTS TO THE MEMORANDUM AND ARTICLES OF ASSOCIATION

APPENDIX II

(13) The provisions of Article 8 be replaced and substituted in its entirety by the following:
‘‘(1) Subject to the provisions of the Law and the Memorandum and Articles of Association (including Schedule A) and to any special rights conferred on the holders of any shares or class of shares, any share in the Company (whether forming part of the present capital or not) may be issued with or have attached thereto such rights or restrictions whether in regard to dividend, voting, return of capital or otherwise as the Company may by ordinary resolution determine or, if there has not been any such determination or so far as the same shall not make specific provision, as the Board may determine.
(2) Subject to the provisions of the Law, the rules of any Designated Stock Exchange and the Memorandum and Articles of Association (including Schedule A) of the Company, and to any special rights conferred on the holders of any shares or attaching to any class of shares, shares may be issued on the terms that they may be, or at the option of the Company or the holder are, liable to be redeemed on such terms and in such manner, including out of capital, as the Board may deem fit.’’
(14) The provisions of Article 9 be replaced and substituted in its entirety by the following:

‘‘Subject to the Law and the provisions of Schedule A, any preference shares may be issued or converted into shares that, at a determinable date or at the option of the Company or the holder if so authorised by its memorandum of association, are liable to be redeemed on such terms and in such manner as the Company before the issue or conversion may by ordinary resolution of the Members determine. Where the Company purchases for redemption a redeemable share, purchases not made through the market or by tender shall be limited to a maximum price as may from time to time be determined by the Company in general meeting, either generally or with regard to specific purchases. If purchases are by tender, tenders shall be available to all Members alike.’’

(15) The provisions of the first sentence of Article 10 be replaced and substituted in its entirety by the following:

‘‘Subject to the Law and without prejudice to Article 8 and the provisions of Schedule A, all or any of the special rights for the time being attached to the shares or any class of shares may, unless otherwise provided by the terms of issue of the shares of that class, from time to time (whether or not the Company is being wound up) be varied, modified or abrogated either with the consent in writing of the holders of not less than three fourths in nominal value of the issued shares of that class or with the sanction of a special resolution passed at a separate general meeting of the holders of the shares of that class.’’

(16) The provisions of Article 11 be replaced and substituted in its entirety by the following:

‘‘Subject to the provisions of Schedule A, the special rights conferred upon the holders of any shares or class of shares shall not, unless otherwise expressly provided in the rights attaching to or the terms of issue of such shares, be deemed to be varied, modified or abrogated by the creation or issue of further shares ranking pari passu therewith.’’

– 42 –

AMENDMENTS TO THE MEMORANDUM AND ARTICLES OF ASSOCIATION

APPENDIX II

(17) The provisions of Article 12 be replaced and substituted in its entirety by the following:
‘‘(1) Subject to the Law, these Articles (including Schedule A), any direction that may be given by the Company in general meeting and, where applicable, the rules of any Designated Stock Exchange and without prejudice to any special rights or restrictions for the time being attached to any shares or any class of shares, the unissued shares of the Company (whether forming part of the original or any increased capital) shall be at the disposal of the Board, which may offer, allot, grant options over or otherwise dispose of them to such persons, at such times and for such consideration and upon such terms and conditions as the Board may in its absolute discretion determine but so that no shares shall be issued at a discount. Neither the Company nor the Board shall be obliged, when making or granting any allotment of, offer of, option over or disposal of shares, to make, or make available, any such allotment, offer, option or shares to Members or others with registered addresses in any particular territory or territories being a territory or territories where, in the absence of a registration statement or other special formalities, this would or might, in the opinion of the Board, be unlawful or impracticable. Members affected as a result of the foregoing sentence shall not be, or be deemed to be, a separate class of members for any purpose whatsoever.
(2) Subject to the provisions of Schedule A, the Board may issue warrants conferring the right upon the holders thereof to subscribe for any class of shares or securities in the capital of the Company on such terms as it may from time to time determine.’’
(18) The provisions of the first sentence of Article 66 be replaced and substituted in its entirety by the following:

‘‘Subject to any special rights or restrictions as to voting for the time being attached to any shares by or in accordance with these Articles (including Schedule A), at any general meeting on a show of hands every Member present in person (or being a corporation, is present by a representative duly authorised), or by proxy shall have one vote and on a poll every Member present in person or by proxy or, in the case of a Member being a corporation, by its duly authorised representative shall have one vote for every fully paid share of which he is the holder but so that no amount paid up or credited as paid up on a share in advance of calls or instalments is treated for the foregoing purposes as paid up on the share.’’

(19) The provisions of Article 110 be replaced and substituted in its entirety by the following:

‘‘Subject to the provisions of Schedule A, the Board may exercise all the powers of the Company to raise or borrow money and to mortgage or charge all or any part of the undertaking, property and assets (present and future) and uncalled capital of the Company and, subject to the Law, to issue debentures, bonds and other securities, whether outright or as collateral security for any debt, liability or obligation of the Company or of any third party.’’

– 43 –

AMENDMENTS TO THE MEMORANDUM AND ARTICLES OF ASSOCIATION

APPENDIX II

(20) The provisions of Article 112 be replaced and substituted in its entirety by the following:

‘‘Any debentures, bonds or other securities may be issued at a discount (other than shares), premium or otherwise and with any special privileges as to redemption, surrender, drawings, allotment of shares, attending and voting at general meetings of the Company, appointment of Directors and otherwise, but subject to the provisions of Schedule A.’’

(21) The provisions of Article 136 be replaced and substituted in its entirety by the following:

‘‘Subject to the Law and the provisions of Schedule A, the Company in general meeting may from time to time declare dividends in any currency to be paid to the Members but no dividend shall be declared in excess of the amount recommended by the Board.’’

(22) The provisions of Article 137 be replaced and substituted in its entirety by the following:

‘‘Dividends may be declared and paid out of the profits of the Company, realised or unrealised, or from any reserve set aside from profits which the Directors determine is no longer needed. With the sanction of an ordinary resolution dividends may also be declared and paid out of share premium account or any other fund or account which can be authorised for this purpose in accordance with the Law and the provisions of Schedule A.’’

(23) The provisions of the first sentence of Article 138 be replaced and substituted in its entirety by the following:

‘‘Except in so far as the rights attaching to, or the terms of issue of, any share otherwise provide and subject to the provisions of Schedule A:’’

(24) The provisions of Article 139 be replaced and substituted in its entirety by the following:

‘‘The Board may from time to time pay to the Members such interim dividends as appear to the Board to be justified by the profits of the Company and in particular (but without prejudice to the generality of the foregoing) if at any time the share capital of the Company is divided into different classes, the Board may pay such interim dividends in respect of those shares in the capital of the Company which confer on the holders thereof deferred or non preferential rights as well as in respect of those shares which confer on the holders thereof preferential rights with regard to dividend as provided in Schedule A and provided that the Board acts bona fide the Board shall not incur any responsibility to the holders of shares conferring any preference for any damage that they may suffer by reason of the payment of an interim dividend on any shares having deferred or non preferential rights and may also pay any fixed dividend which is payable on any shares of the Company half yearly or on any other dates, whenever such profits, in the opinion of the Board, justifies such payment.’’

– 44 –

AMENDMENTS TO THE MEMORANDUM AND ARTICLES OF ASSOCIATION

APPENDIX II

(25) The provisions of the first sentence of Article 145(1) be replaced and substituted in its entirety by the following:

‘‘Whenever the Board or the Company in general meeting has resolved that a dividend be paid or declared on any class of the share capital of the Company, the Board may, subject to the provisions of Schedule A, further resolve either:’’

(26) The provisions of Article 147 be replaced and substituted in its entirety by the following:

‘‘Subject to the provisions of Schedule A, the Company may, upon the recommendation of the Board, at any time and from time to time pass an ordinary resolution to the effect that it is desirable to capitalise all or any part of any amount for the time being standing to the credit of any reserve or fund (including a share premium account and capital redemption reserve and the profit and loss account) whether or not the same is available for distribution and accordingly that such amount be set free for distribution among the Members or any class of Members who would be entitled thereto if it were distributed by way of dividend and in the same proportions, on the footing that the same is not paid in cash but is applied either in or towards paying up the amounts for the time being unpaid on any shares in the Company held by such Members respectively or in paying up in full unissued shares, debentures or other obligations of the Company, to be allotted and distributed credited as fully paid up among such Members, or partly in one way and partly in the other, and the Board shall give effect to such resolution provided that, for the purposes of this Article, a share premium account and any capital redemption reserve or fund representing unrealised profits, may be applied only in paying up in full unissued shares of the Company to be allotted to such Members credited as fully paid.’’

(27) The provisions of the first sentence of Article 149 be replaced and substituted in its entirety by the following:

‘‘The following provisions shall have effect to the extent that they are not prohibited by and are in compliance with the Law and the provisions of Schedule A:’’

(28) The provisions of Article 163(2) be replaced and substituted in its entirety by the following:

‘‘Subject to the provisions of Schedule A, a resolution that the Company be wound up by the court or be wound up voluntarily shall be a special resolution.’’

(29) The provisions of Article 164(1) be replaced and substituted in its entirety by the following:

‘‘Subject to any special rights, privileges or restrictions as to the distribution of available surplus assets on liquidation for the time being attached to any class or classes of shares (i) (if the Company shall be wound up and the assets available for distribution amongst the Members of the Company shall be more than sufficient to repay the whole of the capital paid up at the commencement of the winding up, the excess shall be applied in accordance with the provisions of Schedule A and any surplus assets remaining thereafter shall be distributed pari passu amongst such members in proportion to the amount paid up on the shares held by them respectively and (ii) if the Company shall be wound up and the assets available for distribution amongst the Members as such shall be insufficient to repay the whole of the paid-up capital such assets shall be

– 45 –

AMENDMENTS TO THE MEMORANDUM AND ARTICLES OF ASSOCIATION

APPENDIX II

distributed so that, a nearly as may be, the losses shall be borne by the Members in proportion to the capital paid up, or which ought to have been paid up, at the commencement of the winding up on the shares held by them respectively.’’

(30) The provisions of Article 164(2) be replaced and substituted in its entirety by the following:

‘‘If the Company shall be wound up (whether the liquidation is voluntary or by the court) the liquidator may, with the authority of a special resolution and any other sanction required by the Law and subject to the provisions of Schedule A, divide among the Members in specie or kind the whole or any part of the assets of the Company and whether or not the assets shall consist of properties of one kind or shall consist of properties to be divided as aforesaid of different kinds, and may for such purpose set such value as he deems fair upon any one or more class or classes of property and may, subject to the provisions of Schedule A, determine how such division shall be carried out as between the Members or different classes of Members. The liquidator may, with the like authority, vest any part of the assets in trustees upon such trusts for the benefit of the Members as the liquidator with the like authority shall think fit, and the liquidation of the Company may be closed and the Company dissolved, but so that no contributory shall be compelled to accept any shares or other property in respect of which there is a liability.’’

(31) The following provisions be added as a new schedule immediate after the end of the Articles:

‘‘Schedule A

1. Interpretation of this Schedule

For the purpose of this Schedule, the words and expressions set out below shall have the meanings and interpretations attributed to them below, unless the context otherwise requires:

‘‘Business Day’’ a day (excluding Saturday) on which banks in Hong Kong are open for business;
‘‘Company’’ Kingwell Group Limited 京維集團有限公司, a company incorporated in the Cayman Islands
‘‘Conversion’’ the conversion of all or any part(s) of the Preferred Shares into Ordinary Shares;
‘‘Conversion Notice Date’’ a date on which the written notice is given pursuant to Paragraph 8.1 in respect of a Conversion;
‘‘Conversion Share’’ the Ordinary Shares issued upon conversion of the Preferred Shares;
‘‘Conversion Price’’ the price of HK$0.30 per Conversion Share, subject to adjustment set out herein;

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

– 46 –

AMENDMENTS TO THE MEMORANDUM AND ARTICLES OF ASSOCIATION

APPENDIX II

‘‘Ordinary Shares’’

ordinary shares of HK$0.10 each in the share capital of the Company and the expression ‘‘Ordinary Share’’ shall be construed accordingly;

‘‘Preferred Shares’’

preferred shares of HK$1.00 each in the share capital of the Company and the expression ‘‘Preferred Share’’ shall be construed accordingly;

‘‘Shareholders’’

shareholders of the Company;

‘‘Shares’’

shares in the capital of the Company including the Ordinary Shares and the Preferred Shares; and

‘‘Stock Exchange’’

The Stock Exchange of Hong Kong Limited.

2. Dividends

2.1. In each financial year, a holder of the Preferred Shares shall be entitled to receive a non-cumulative dividend from time to time payable out of any funds legally available therefor, prior to and in preference to any dividends on any Ordinary Shares and shares of any other class in the capital of the Company, at the rate equal to TWO per cent. (2%) per annum on the subscription price of the Preferred Shares. If no dividend is declared or paid due to insufficient funds legally available for distribution in a financial year, no dividend in respect of that particular year shall be accrued or payable to the holder of the Preferred Shares thereafter. Unless dividends on the Preferred Shares for the current financial year have been fully paid, no dividends or other distributions, whether or not in cash, shall be paid with respect to any Ordinary Shares or shares of any other class in the capital of the Company.
2.2. Where dividends on the Preferred Shares for the current financial year have been fully paid, a holder of the Preferred Shares shall not be entitled to other dividends declared payable in any financial year out of funds legally available therefor.

3. Liquidation

3.1. In the event of any liquidation, dissolution, winding up of the Company, or a return of capital (other than upon conversion, redemption or repurchase of shares or return of capital by way of a dividend) whether voluntary or not (each a ‘‘Liquidation Event’’), distributions to the members of the Company shall be made in the following manner:
(a) Each holder of the Preferred Shares shall be entitled to receive an amount equal to (i) 100% of the subscription price thereof, and (ii) all declared but unpaid dividends and distributions on each Preferred Share calculated up to and including the date of commencement of the Liquidation Event.

– 47 –

AMENDMENTS TO THE MEMORANDUM AND ARTICLES OF ASSOCIATION

APPENDIX II

(b) The remaining assets and funds of the Company available for distribution to members of the Company shall be distributed among the shareholders in the proportion which (i) the issued shares in the capital of the Company held by such shareholder bears to (ii) the aggregate issued shares in the capital of the Company.
3.2. In any Liquidation Event, if the consideration received by the Company or its shareholders is other than cash or partly in cash, the value of securities and property paid or distributed pursuant to Paragraph 3.1 shall be computed at fair market value at the time of payment to the Company or at the time made available to the shareholders, all as determined by the board of directors of the Company in the good faith exercise of its reasonable business judgement.

4. Voting rights

The holder of each Preferred Share shall not be entitled to receive notices of meetings of members of the Company or attend or vote at any meetings of the Company.

5. Redemption

The Preferred Shares are not redeemable by the Company.

6. Conversion

6.1 Subject to the terms herein, a holder of Preferred Shares shall have the right to convert on any Business Day all or any part(s) of the Preferred Shares into Ordinary Shares at the Conversion Price, provided that such part of the Preferred Shares has not previously been converted or cancelled.
6.2 No Conversion shall take place if and to the extent that, immediately following the Conversion, the Company will be unable to meet the public float requirement under the Listing Rules. Where a Conversion would result in the Company failing to meet its public float requirement, then the Company shall allot and issue the number of Conversion Shares in whole numbers of board lots to the greatest extent provided that it will still be able to meet the public float requirement after the Conversion. The excess number of Conversion Shares (the ‘‘Excess Ordinary Shares’’) shall be allotted and issued in whole numbers of board lots as soon as the Company will be able to meet the public float requirement even after the Conversion is conducted.
6.3 No fraction of an Ordinary Share shall be issued. A fractional number of a Conversion Share shall be rounded downwards to the nearest whole number.
6.4 Ordinary Shares issued upon Conversion shall rank pari passu in all respects with all other existing Ordinary Shares outstanding at the Conversion Notice Date (or the issue date in respect of the Excess Ordinary Shares) and be entitled to all dividends and other distributions the record date of which falls on a date on or after the Conversion Notice Date (or the issue date in respective of the Excess Ordinary Shares).

– 48 –

AMENDMENTS TO THE MEMORANDUM AND ARTICLES OF ASSOCIATION

APPENDIX II

7. Adjustments to the Conversion Price

7.1 The Conversion Price shall from time to time be adjusted as follows:
(a) Consolidation or subdivision:

If and whenever there shall be an alteration to the nominal value of the Ordinary Shares as a result of consolidation or subdivision, the Conversion Price shall be adjusted by multiplying the Conversion Price in force immediately prior to such alteration by the following fraction:

==> picture [18 x 22] intentionally omitted <==

where

A is the nominal amount of one Ordinary Share immediately after such alteration; and
B is the nominal amount of one Ordinary Share immediately before such alteration.

Such adjustment shall become effective from the day following the record date of such consolidation or subdivision.

(b) Bonus issue of Ordinary Shares:

If and whenever the Company shall issue any Ordinary Shares credited as fully paid to the Shareholders by way of capitalisation of profits or reserves, other than Ordinary Shares issued in lieu of a cash dividend, the Conversion Price shall be adjusted by multiplying the Conversion Price in force immediately before such issue by the following fraction:

==> picture [18 x 22] intentionally omitted <==

where

A is the aggregate nominal amount of the issued Ordinary Shares immediately before such issue; and
B is the aggregate nominal amount of the issued Ordinary Shares immediately after such issue.

Such adjustment shall become effective from the day following the record date of such issue of Ordinary Shares.

– 49 –

AMENDMENTS TO THE MEMORANDUM AND ARTICLES OF ASSOCIATION

APPENDIX II

(c) Capital Distribution:

If and whenever the Company shall pay or make any Capital Distribution to the Shareholders, or shall grant to Shareholders rights to acquire for cash assets of the Company and its subsidiaries, the Conversion Price shall be adjusted by multiplying the Conversion Price in force immediately prior to such Capital Distribution by the following fraction:

==> picture [37 x 22] intentionally omitted <==

where:

A is the Current Market Price of one Ordinary Share on the record date of such Capital Distribution; and
B is the fair market value on the record date of such Capital Distribution, as determined in good faith by the Auditors acting as an expert, of the portion of the Capital Distribution or of such rights which is attributable to one Ordinary Share.

Such adjustment shall become effective from the day following the record date of such Capital Distribution or grant.

(d) Rights issues of shares or rights to acquire Ordinary Shares:

If and whenever the Company shall issue Ordinary Shares to all or substantially all Shareholders as a class by way of rights, or shall issue or grant to all or substantially all Shareholders as a class, by way of rights, any options, warrants or other rights to subscribe for or purchase any Ordinary Shares, in each case at less than the Current Market Price per Ordinary Share on the record date of such issue or grant to Shareholders, the Conversion Price shall be adjusted by multiplying the Conversion Price in force immediately prior to such issue or grant by the following fraction:

==> picture [38 x 22] intentionally omitted <==

where:

A is the number of Ordinary Shares in issue immediately before such issue or grant;
B is the number of Ordinary Shares which the aggregate amount (if any) payable for the rights or for the options or warrants or other rights issued by way of rights and for the total number of Ordinary Shares comprised therein would purchase at such Current Market Price per Ordinary Share; and

– 50 –

AMENDMENTS TO THE MEMORANDUM AND ARTICLES OF ASSOCIATION

APPENDIX II

C is the aggregate number of Ordinary Shares issued or, as the case may be, comprised in the grant.

Such adjustment shall become effective from the day following the record date of the issue of such Ordinary Shares or issue or grant of such options, warrants or other rights (as the case may be).

(e) Right issues of other securities:

If and whenever the Company shall:

(i) issue any securities (other than Ordinary Shares or options, warrants or other rights to subscribe for or purchase Ordinary Shares) to all or substantially all Shareholders as a class by way of rights; or
(ii) grant to all or substantially all Shareholders as a class by way of rights any options, warrants or other rights to subscribe for or purchase any such securities; or
(iii) offer any preferential rights to subscribe for or purchase securities of a subsidiary of the Company granted to all or substantially all Shareholders upon an initial public offering of the securities of such subsidiary where the rights of the Shareholders are exercisable at a subscription or purchase price, as the case may be, which is less than that at which the securities are offered to the public or any other person,

the Conversion Price shall be adjusted by multiplying the Conversion Price in force immediately prior to such issue, grant or offer by the following fraction:

==> picture [37 x 22] intentionally omitted <==

where:

A is the Current Market Price of one Ordinary Share on the record date of such issue, grant or offer; and
B is the fair market value on the record date of such issue, grant or offer as determined in good faith by the Auditors acting as an expert, of the portion of the rights attributable to one Ordinary Share.

Such adjustment shall become effective from the day following the record date of the issue of the securities or grant or offer of such rights, options, warrants or preferential rights (as the case may be).

– 51 –

AMENDMENTS TO THE MEMORANDUM AND ARTICLES OF ASSOCIATION

APPENDIX II

(f) Other events:

If the Company or the holders of the Preferred Shares determines that an adjustment should be made to the Conversion Price as a result of one or more events or circumstances not referred to in this Paragraph 7.1, the Company shall at its own expense, request the Auditors to determine (acting as experts) as soon as practicable what adjustment (if any) to the Conversion Price is fair and reasonable to take account thereof and the date on which such adjustment should take effect and upon such determination such adjustment (provided that the adjustment would result in a reduction in the Conversion Price) shall be made and shall take effect in accordance with such determination, provided that where the circumstances giving rise to any adjustment pursuant to this Paragraph 7.1 have already resulted or will result in an adjustment to the Conversion Price or where any other circumstances giving rise to any adjustment arise by virtue of any other circumstances which have already given or will give rise to an adjustment to the Conversion Price, such modification (if any) shall be made to the operation of the provisions of this Paragraph 7.1 as may be advised by the Auditors to be in their opinion appropriate to give the intended result.

7.2 Where more than one event which gives, or may give, rise to an adjustment to the Conversion Price occurs within such a short period of time that in the opinion of the Auditors the foregoing provisions would need to be operated subject to some modification in order to give the intended result, such modification shall be made to the operation of the provisions of Paragraph 7.1 as may be advised by the Auditors to be in their opinion appropriate in order to give such intended result.
7.3 Any adjustment to the Conversion Price shall not involve an increase in the Conversion Price (except upon any consolidation of the Ordinary Shares pursuant to Paragraph 7.1(a)). The minimum Conversion Price shall not be less than the par value of each Conversion Share. If an adjustment is not made to the Conversion Price because it would reduce it below the then par value of each Conversion Share and such par value is subsequently reduced then any adjustment not previously made shall be immediately made to the Conversion Price on such reduction in par value but only to the extent that such adjustment will not reduce the Conversion Price below the newly reduced par value. Where an adjustment would reduce the Conversion Price to below the par value of each Conversion Share the Conversion Price shall be reduced to such par value subject to the provisions of this paragraph.
7.4 On any adjustment, the resultant Conversion Price shall be rounded down to the nearest Hong Kong cent but no adjustment shall be made to the Conversion Price where such adjustment (rounded down if applicable) would be less than one Hong Kong cent. Any adjustment not required to be made, and any amount by which the Conversion Price has not been rounded down shall be carried forward and taken into account in any subsequent adjustment. Notice of any adjustments shall be given to the holders of Preferred Shares as soon as practicable after the determination thereof.

– 52 –

AMENDMENTS TO THE MEMORANDUM AND ARTICLES OF ASSOCIATION

APPENDIX II

7.5 The Auditors shall certify every adjustment to the Conversion Price in writing. Notice of any adjustments, including the new Conversion Price and the effective date thereof, shall be given to the holders of Preferred Shares as soon as practicable after the determination thereof. In giving any certificate or making any adjustment hereunder, the Auditors shall be deemed to be acting as experts and not as arbitrators and, in the absence of manifest error, their decision shall be conclusive and binding on the Company and the holders of Preferred Shares and all persons claiming through or under them respectively.
7.6 The Company shall make available for inspection at its principal place of business in Hong Kong at all times after the effective date of the adjustment in Conversion Price and so long as any Preferred Share remains outstanding, a signed copy of the certificate of the Auditors and a certificate signed by a director of the Company setting forth brief particulars of the event giving rise to the adjustment, the Conversion Price in effect prior to the adjustment, the adjusted Conversion Price and the effective date thereof and shall, on request, send a copy thereof to the holders of Preferred Shares.
7.7 If the Conversion Note Date in relation to any Preferred Share shall be on or after a date with effect from which an adjustment to the Conversion Price takes effect but yet which has not been reflected in the relevant Conversion Price (where for example any adjustment to the Conversion Price for a prior event is still being determined), the Company shall (conditional upon such adjustment becoming effective) procure that there shall be issued to the converting holders of Preferred Shares or in accordance with the instructions contained in the conversion notice (subject to any applicable exchange control or other laws or other regulations) such additional number of Ordinary Shares as, together with the Ordinary Shares issued or to be issued on conversion of the relevant Preferred Shares, is equal to the number of Ordinary Shares which would have been required to be issued on conversion of such Preferred Shares if the relevant adjustment to the Conversion Price had in fact been made and become effective immediately after the relevant record date. Such additional Ordinary Shares shall be allotted as at, and within one month after, the relevant Conversion Date or, if the adjustment results from the issue of Ordinary Shares, the date of issue of Ordinary Shares. Certificates for such Ordinary Shares shall be despatched within such period of one month.
7.8 For the purposes of this Paragraph 7:

‘‘announcement’’ shall include the release of an announcement to the press or the delivery or transmission by telephone, facsimile, electronic means or otherwise of an announcement to the Stock Exchange and ‘‘date of announcement’’ shall mean the date on which the announcement is first released, delivered or transmitted;

‘‘Auditors’’ the auditors for the time being and from time to time of the Company or if they are unable or unwilling to carry out any action requested by the Company, such other firm of accountants as may be nominated by the Company for the purpose;

– 53 –

AMENDMENTS TO THE MEMORANDUM AND ARTICLES OF ASSOCIATION

APPENDIX II

‘‘Capital Distribution’’ shall (without prejudice to the generality of that phrase) include any dividends, capital distributions or distributions in cash or specie;

‘‘Current Market Price’’ while the Ordinary Shares are listed on the Stock Exchange, means in respect of an Ordinary Share at a particular date the average of the closing price (as shown in the daily quotation sheets or similar summaries issued by the Stock Exchange) for one Ordinary Share for the five consecutive dealing days ending on and inclusive of the dealing day immediately preceding such date; provided that if at any time during the said five dealing days the Ordinary Shares shall have been quoted exdividend and during some other part of that period the Ordinary Shares shall have been quoted cum-dividend then;

(i) if the Ordinary Shares to be issued or purchased do not rank for the dividend in question, the quotations on the dates on which the Ordinary Shares shall have been quoted cum-dividend shall for the purpose of this definition be deemed to be the amount thereof reduced by an amount equal to the amount of that dividend per Ordinary Share; and
(ii) if the Ordinary Shares to be issued or purchased rank for the dividend in question, the quotations on the dates on which the Ordinary Shares shall have been quoted ex-dividend shall for the purpose of this definition be deemed to be the amount thereof increased by an amount equal to the amount of that dividend per Ordinary Share;

and provided further that if the Ordinary Shares on each of the said five dealing days have been quoted cum-dividend in respect of a dividend which has been declared or announced but the Ordinary Shares to be issued or purchased do not rank for that dividend, the quotations on each of such dates shall for the purpose of this definition be deemed to be the amount thereof reduced by an amount equal to the amount of that dividend per Share;

‘‘issue’’ shall include allot;

‘‘record date’’ shall mean the relevant date of the event or, if Shareholder entitlements to participate in such event have been determined as at an earlier record date, such earlier record date;

‘‘reserves’’ includes unappropriated profits;

‘‘rights’’ includes rights in whatsoever form issued; and

‘‘subsidiary’’ has the meaning ascribed to it under section 2 of the Companies Ordinance (Cap 32 of the Laws of Hong Kong).

– 54 –

AMENDMENTS TO THE MEMORANDUM AND ARTICLES OF ASSOCIATION

APPENDIX II

8. Procedure for Conversion and issue of Conversion Shares

8.1 The holder of Preferred Shares may, subject as provided herein, exercise its conversion right herein on any Business Day, by delivering a written notice (specifying the number of Preferred Shares to be converted and the name of person to whom the Conversion Shares shall be issued to) and the certificate for the Preferred Shares to the Company for cancellation upon the Conversion taking effect.
8.2 The Company shall pay directly to the relevant authorities all taxes, issue and registration duties (if any) and levies and charges (if any) arising on any Conversion.
8.3 The Conversion shall take effect in such manner permitted by law (including, without limitation, by way of repurchase set out in Section 37 of The Companies Law (Revised) of the Cayman Islands) as any one director considers appropriate without the further authorization of the board of directors and any one director shall have all such power and take all actions necessary to give effect to the Conversion.
8.4 Subject to all applicable laws, the Conversion Shares shall be allotted and issued by the Company, credited as fully paid in the name of the holder of the Preferred Shares being converted or its nominee. The Conversion Shares (except the Excess Ordinary Shares) shall be allotted and issued by the Company within five Business Days after, and with effect from, the Conversion Notice Date.
8.5 The certificate(s) for the Conversion Shares to which the holder of the Preferred Shares being converted shall become entitled in consequence of any Conversion shall, if the holder so requests in the notice, be deposited in the CCASS participant’s stock account set out in the notice or in the absence of such request by the holder, shall be issued in board lots to the extent possible, with one certificate for any odd lot of Ordinary Shares arising from the Conversion and made available for collection at the Company’s principal place of business in Hong Kong, in each case, within the time period provided for in Paragraph 8.4, and (if appropriate) the certificate for the part of Preferred Shares not converted shall be made available for collection at the Company’s principal place of business in Hong Kong within the same period.

9. Protection of holder(s) of Preferred Shares

9.1 So long as any Preferred Share is outstanding, unless with prior written approval of all the holders thereof:
(a) the Company shall from time to time keep available for issue, free from pre emptive rights, out of its authorised but unissued capital sufficient Ordinary Shares to satisfy in full the Conversion;
(b) the Company shall ensure that all Ordinary Shares issued upon conversion of the Preferred Shares will be duly and validly issued fully paid or credited as fully paid and rank pari passu with all other Ordinary Shares then on issue;

– 55 –

AMENDMENTS TO THE MEMORANDUM AND ARTICLES OF ASSOCIATION

APPENDIX II

(c) the Company shall pay all fees, capital and stamp duties payable, if any, in respect of the issue of Ordinary Shares upon conversion of all or part of the Preferred Shares;
(d) as soon as possible, and in any event not later than seven Business Days after the announcement of the full terms of any event which gives rise to adjustments pursuant to Paragraph 7, the Company give notice to the holders of Preferred Shares advising it of the date on which the relevant adjustment of the Conversion Price is likely to become effective and of the effect of exercising the conversion rights pending such date;
(e) the Company shall comply with and procure the compliance of any conditions imposed by the Stock Exchange or by any other competent authority (in Hong Kong or elsewhere) for the listing of and permission to deal in the Ordinary Shares issued or to be issued from time to time;
(f) the Company shall not make any redemption of share capital, share premium account or capital redemption reserve involving any repayment to its Shareholder(s) either in cash or in specie;
(g) the Company shall not in any way modify the rights attaching to the Ordinary Shares or Preferred Shares or create or issue or permit to be in issue any other class of equity share capital carrying, any right to income or capital which is more favourable than the corresponding right attaching to the Ordinary Shares or Preferred Shares or attach any special rights or privileges to any such other class of equity share capital provided that nothing, in this paragraph shall prevent any consolidation or sub-division of the Ordinary Shares;
(h) the Company shall have Ordinary Shares of such par value so as to ensure that any conversion of the Preferred Shares for Ordinary Shares would not constitute a subscription for the Ordinary Shares at an amount less than the par value of the Ordinary Shares;
(i) the Company shall obtain and promptly renew (if appropriate) from time to time, all such authorisations, approvals, consents, licences and exemptions as may be required under any applicable law or regulation to enable it to perform its obligations under the terms hereunder or which are required for the validity or enforceability of the Preferred Shares;
(j) the Company shall procure that at no time shall there be in issue Ordinary Shares of differing nominal values; and
(k) the Company shall use all reasonable endeavours (i) to maintain listing of all the issued Ordinary Shares on the Stock Exchange; and (ii) to obtain and maintain listing on the Stock Exchange of all the Conversion Shares issued upon conversion of the Preferred Shares.

– 56 –

AMENDMENTS TO THE MEMORANDUM AND ARTICLES OF ASSOCIATION

APPENDIX II

10. Transfer

10.1. Any Preferred Share may be transferred at any time, provided that (i) they may not, without the prior written consent of the Company, be transferred to any person who is at the time of such transfer a connected person of the Company and that such transfer shall be in compliance with the conditions hereunder and further subject to (where applicable) the conditions, approvals, requirements and any other provisions of or under:
(a) the Rules Governing the Listing of Securities on the Stock Exchange;
(b) the Codes of Takeovers and Mergers issued by the Securities and Futures Commission; and
(c) all applicable laws and regulations.
10.2 The permitted transfer of the Preferred Shares may be in respect of all or any part(s) (in multiples of HK$1,000,000 except for the balance of the unconverted Preferred Shares) of the Preferred Shares held by a holder and dividends and benefits attached or accrued thereon.
10.3 Any reasonable legal and other costs and expenses which may be properly incurred by the Company in connection with any transfer of Preferred Shares or any request therefor shall be borne by the holder of such Preferred Shares.

11. Replacement certificate

If the certificate for any Preferred Shares is lost or mutilated, the holder therefor shall forthwith notify the Company and a replacement certificate shall be issued if the holder provides the Company with a declaration by the holder or its officer or director that the original certificate had been lost or mutilated (as the case may be) or other evidence that the certificate had been lost or mutilated, together with the mutilated certificate (if applicable). The certificate for Preferred Shares replaced in accordance with this paragraph shall forthwith be cancelled.’’

– 57 –

GENERAL INFORMATION

APPENDIX III

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. SHARE CAPITAL

Share capital

The authorised and issued share capital of the Company as at the Latest Practicable Date and immediately following conversion of the Convertible Preferred Shares was and will be, as follows:

Authorised 5,000,000,000 Shares Issued as fully paid 1,512,716,500 Shares as at the Latest Practicable Date To be issued upon conversion of the Convertible Preferred Shares 310,000,000 Convertible Preferred Shares	HK$ 500,000,000
	151,271,650 31,000,000
	182,271,650

All the Shares in issue and to be issued (when fully paid) rank and will rank pari passu in all respects with each other including rights to dividends, voting and return of capital. As at the Latest Practicable Date, no share or loan capital of the Company has been issued or is proposed to be issued for cash or otherwise and no commissions, discounts, brokerages or other special terms have been granted in connection with the issue or sale of any such capital, except for the proposed issue of Conversion Shares that would fall to be issued upon conversion of the Convertible Preferred Shares.

3. DIRECTORS’ INTERESTS IN SECURITIES

As at the Latest Practicable Date, none of the Directors and chief executives of the Company had any interest or short position in shares, underlying shares and debentures of the Company or any of its 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 and short positions which they were taken or deemed to have under such provisions

– 58 –

GENERAL INFORMATION

APPENDIX III

of the SFO); (b) were required, pursuant to Section 352 of the SFO, to be entered in the register referred to therein; or (c) were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Companies (the ‘‘Model Code’’), to be notified to the Company and the Stock Exchange.

Long Position in the Shares of the Company

				Number of
				underlying	Total
			Number of	shares held	approximate
			issued	pursuant to	% of the
		Number of	ordinary	share	issued share
Name of Director	Capacity	Shares	shares held	options	capital
Sze Ming Yee (Note)	Interest held as beneficial	347,778,539	345,778,539	2,000,000	23.0
	owner and through
	controlled corporations
Hui Lung Hing	Beneficial owner	250,000,000	250,000,000	—	16.5
Yang Xue Jun	Beneficial owner	10,500,000	—	10,500,000	0.7
Xu Yue Yue	Beneficial owner	10,000,000	—	10,000,000	0.7

Note: Mr. Sze Ming Yee, a Director, is the controlling shareholder of Union Day Group Limited (‘‘Union Day’’), which in turn is the controlling shareholder of the Company. By virtue of the SFO, Mr. Sze is deemed to have interest in the 345,778,539 Shares. The share options convertible into 2,000,000 Shares was granted by the Company on 26th May, 2010.

4. SUBSTANTIAL SHAREHOLDERS

So far as is known to the Directors or chief executive of the Company, the following persons (other than a Director or chief executive of the Company) who, as at the Latest Practicable Date, had an interest or short position in the shares, underlying shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which would fall to be disclosed under provisions of Division 2 and 3 of Part XV of the SFO, or who, as at the Latest Practicable Date, was directly or indirectly interested in ten per cent 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.

Long Position in the Shares of the Company

				Number of
				underlying	Total
			Number of	shares held	approximate
			issued	pursuant to	% of the
		Number of	ordinary	share	issued share
Name	Capacity	Shares	shares held	options	capital
Sze Ming Yee (Note)	Interest held as beneficial	347,778,539	345,778,539	2,000,000	23.0
	owner and through
	controlled corporations
Hui Lung Hing	Beneficial owner	250,000,000	250,000,000	—	16.5

Note: Mr. Sze Ming Yee, a Director, is the controlling shareholder of Union Day, which in turn is the controlling shareholder of the Company. By virtue of the SFO, Mr. Sze is deemed to have interest in the 345,778,539 Shares. The share options convertible into 2,000,000 Shares was granted by the Company on 26th May, 2010.

– 59 –

GENERAL INFORMATION

APPENDIX III

Save as disclosed above, so far as is known to the Directors or chief executive of the Company, the Company had not been notified of any other interest or short position in the shares, underlying shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which would fall to be disclosed under provisions of Division 2 and 3 of Part XV of the SFO, or any persons (other then the Directors and chief executive of the Company) who, as at the Latest Practicable Date, was directly or indirectly interested in ten percent 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.

5. SERVICE CONTRACT

As 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. COMPETING INTERESTS

As at the Latest Practicable Date, so far as the Directors were aware, none of the Directors or their respective associates were considered to have interest in any business which competes or may compete, either directly or indirectly, with the business of the Group or have or may have any other conflicts of interest with the Group pursuant to the Listing Rules.

7. MATERIAL ADVERSE CHANGE

The Directors are not aware of any material adverse change in the financial and trading position of the Group since 30th June, 2010 (being the date to which the latest published audited financial statements of the Group have been made up) and up to the Latest Practicable Date.

8. LITIGATION

As at the Latest Practicable Date, no member of the Group was engaged in any litigation or arbitration of material importance and no litigation or claim of material importance known to the Directors to be pending or threatened against any member of the Group.

9. DIRECTORS’ INTERESTS IN CONTRACTS AND ASSETS

No contract or arrangement in which any of the Directors is materially interested and which is significant in relation to the business of the Group subsisted as at the Latest Practicable Date.

As at the Latest Practicable Date, none of the Directors had any direct or indirect interest in any assets which have been, since 30th June, 2010 (the date to which the latest published audited financial statements 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.

– 60 –

GENERAL INFORMATION

APPENDIX III

10. EXPERT AND CONSENT

The following is the qualification of the experts whose letter or report is contained in this circular:

Name Qualification

Beijing Securities

a licensed corporation permitted to carry out type 1 (dealing in securities), 4 (advising on securities) and 6 (advising on corporate finance) regulated activities under the SFO, and the independent financial adviser appointed to advise the Independent Board Committee and the Independent Shareholders

Roma Appraisal Limited

Property valuer

Each of Beijing Securities and Roma Appraisal Limited has given and has not withdrawn their written consent to the issue of this circular with the inclusion of their respective letter or report and the reference to their names in the form and context in which they appear.

As at the Latest Practicable Date, Beijing Securities and Roma Appraisal Limited did not have any shareholding in any member of the Group and did not have any right, whether legally enforceable or not, to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

As at the Latest Practicable Date, Beijing Securities and Roma Appraisal Limited did not have any direct or indirect interests in any assets which have been, since 30th June, 2010 (the date to which the latest published audited financial statements 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.

11. MISCELLANEOUS

(a) The registered office of the Company is at Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman, KY1-1111, Cayman Islands and the head office and principal place of business in Hong Kong is at Units 314–315, Wing On Plaza, 62 Mody Road, Tsim Sha Tsui East, Kowloon, Hong Kong.
(b) The secretary of the Company is Mr. Poon Yan Wai, who is a fellow member of The Hong Kong Institute of Certified Public Accountants.
(c) The Hong Kong branch share registrar of the Company is Hong Kong Registrars Limited at Shops 1712–1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong.
(d) The English texts of this circular shall prevail over the Chinese text.

– 61 –

GENERAL INFORMATION

APPENDIX III

12. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection during normal business hours at the head office and principal place of business of the Company in Hong Kong at Units 314–315, Wing On Plaza, 62 Mody Road, Tsim Sha Tsui East, Kowloon, Hong Kong, up to and including 26th April, 2011:

(a) the Memorandum and Articles and their subsequent amendments;
(b) the annual report of the Company for the financial year ended 30th June, 2010;
(c) the letter from the Independent Board Committee;
(d) the letter from Beijing Securities;
(e) the valuation report from Roma Appraisal Limited in respect of the Property;
(f) the letters of consent from Beijing Securities and Roma Appraisal Limited referred to in the paragraph ‘‘Expert and Consent’’ in this Appendix;
(g) the Acquisition Agreement;
(h) the terms of Convertible Preferred Shares; and
(i) this circular.

– 62 –

NOTICE OF EGM

==> picture [69 x 70] intentionally omitted <==

KINGWELL GROUP LIMITED 京維集團有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1195)

NOTICE IS HEREBY GIVEN that an extraordinary general meeting (the ‘‘EGM’’) of Kingwell Group Limited (the ‘‘Company’’) will be held at 10:00 a.m. at Monet Room B, Basement 1, InterContinental Grand Stanford Hong Kong Hotel, 70 Mody Road, Tsimshatsui East, Kowloon, Hong Kong on Tuesday, 26th April, 2011 for the purpose of considering and, if thought fit, passing with or without modifications, the following resolutions of the Company:

ORDINARY RESOLUTIONS

‘‘THAT :
(a) The authorised share capital of the Company be and is hereby increased from HK$500,000,000 to HK$600,000,000 (divided into 5,000,000,000 ordinary Shares of HK$0.10 each (‘‘Shares’’) and 100,000,000 preferred shares of HK$1.00 each (‘‘Preferred Shares’’)) by the creation of 100,000,000 Preferred Shares of HK$1.00 each; and
(b) any one of the directors of the Company (the ‘‘Directors’’) be and is hereby authorised for and on behalf of the Company to execute all such documents, instruments and agreements and to do all such acts or things deemed by him to be incidental to, ancillary to or in connection with the matters contemplated in and for giving effect to the increase in authorised share capital.’’
‘‘THAT,
(a) the acquisition agreement dated 28th January, 2011 (‘‘Acquisition Agreement’’) entered into between the Company and Mr. Yin Jia Tang (尹家堂) (a copy of which has been produced at the Meeting marked ‘‘A’’ and signed by the chairman of the Meeting for identification purposes), the terms and conditions thereof and transactions contemplated thereunder be and is hereby approved, confirmed and ratified;
(b) subject to and conditional upon the shareholders of the Company approving the ordinary resolution to increase the authorised share capital and the special resolution to amend the memorandum and articles of association of the Company for the purpose of incorporating the terms of the Preferred Shares (as defined below) of the Company, the creation and issuance of the 93,000,000 Preferred Shares (‘‘Preferred Shares’’) by the Company upon completion of the Acquisition Agreement in accordance with the terms and conditions thereof be and is hereby approved;

– 63 –

NOTICE OF EGM

(c) subject to and conditional upon the granting by the Listing Committee of The Stock Exchange of Hong Kong Limited of the listing of and permission to deal in the Conversion Shares (as defined below), the allotment and issue of the new shares in the share capital of the Company upon exercise of the conversion rights attaching to the Preferred Shares (‘‘Conversion Shares’’) be and is hereby approved, and the directors of the Company (‘‘Directors’’) be and are hereby authorised to allot and issue the Conversion Shares upon conversion of the Preferred Shares pursuant to and in accordance with the memorandum and article of association as amended pursuant to the special resolution below; and
(d) any one Director or, if the affixation of the common seal of the Company is necessary, any one Director and the company secretary of the Company or any two Directors or such other person (including a director) or persons as the board of directors of the Company may appoint be and is/are hereby authorised for and on behalf of the Company to approve and execute all documents, instruments and agreements and to do all such acts or things deemed by him/her/them to be incidental to, ancillary to or in connection with the matters contemplated in or related to the Acquisition Agreement, the issue of the Preferred Shares, the issue of the Conversion Shares and transactions contemplated thereunder and completion thereof as he/she/they may consider necessary, desirable or expedient.’’

SPECIAL RESOLUTION

‘‘THAT the amendments to the memorandum and articles of association of the Company in accordance with the terms as set out in appendix II to the circular dated 1st April, 2011 issued to the shareholders of the Company be and are hereby approved.’’

By Order of the Board KINGWELL GROUP LIMITED Poon Yan Wai Company Secretary

Hong Kong, 1st April, 2011

Notes:

A form of proxy for use at the EGM is enclosed herewith.
The instrument appointing a proxy shall be in writing under the hand of the appointor or of his/her attorney duly authorised in writing or, if the appointor is a corporation, either executed under its common seal or under the hand of any officer, attorney or other person duly authorised to sign the same.
Any shareholder entitled to attend and vote at the EGM is entitled to appoint another person as his/her proxy to attend and vote instead of him/her. A shareholder who is the holder of two or more shares may appoint not more than two proxies (who must be an individual or individuals) to attend and vote instead of him/her on the same occasion. A proxy need not be a shareholder of the Company but must attend the EGM in person to represent him/her.

– 64 –

NOTICE OF EGM

In order to be valid, a form of proxy in the prescribed form together with the power of attorney or other authority (if any) under which it is signed, or a notarially certified copy of such power or authority, must be lodged with the branch share registrar and transfer office of the Company in Hong Kong, Hong Kong Registrars Limited at Shops 1712–1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong, not later than 48 hours before the time appointed for holding the EGM or any adjourned meeting thereof (as the case may be). Such prescribed form of proxy for use at the EGM is also published on the HKExnews website of The Stock Exchange of Hong Kong Limited at www.hkexnews.hk and the website of the Company at www.kingwell.todayir.com.
Completion and return of the form of proxy will not preclude any shareholders from attending and voting in person at the EGM or at any adjourned meeting thereof (as the case may be) should they so wish, and in such event, the form of proxy shall be deemed to be revoked.
Where there are joint registered holders of any share(s), any one of such joint holders may attend and vote at the EGM or at any adjourned meeting thereof (as the case may be), either in person or by proxy, in respect of such share(s) as if he/she was solely entitled thereto, but if more than one of such joint holders are present at the EGM or at any adjourned meeting thereof (as the case may be), the most senior shall alone be entitled to vote, whether in person or by proxy. For this purpose, seniority shall be determined by the order in which the names stand in the register of members of the Company in respect of the joint holding.

– 65 –

AI assistant

Kingwell Group Limited — Proxy Solicitation & Information Statement 2011

49757_rns_2011-03-31_9491f937-9282-4083-aef7-d307ffb47d13.pdf

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

KINGWELL GROUP LIMITED 京 維 集 團 有 限 公 司

(i) CONNECTED AND DISCLOSEABLE TRANSACTION IN RELATION TO THE ACQUISITION OF 30% EQUITY INTEREST IN STEPHIGH GROUP LIMITED

AND

(iii) INCREASE IN AUTHORISED SHARE CAPITAL

KINGWELL GROUP LIMITED 京 維 集 團 有 限 公 司

Executive Directors

Independent non-executive Directors

(i) CONNECTED AND DISCLOSEABLE TRANSACTION IN RELATION TO THE ACQUISITION OF 30% EQUITY INTEREST IN STEPHIGH GROUP LIMITED

INVOLVING THE ISSUE OF CONVERTIBLE PREFERRED SHARES; (ii) AMENDMENTS TO THE MEMORANDUM AND ARTICLES OF ASSOCIATION; AND

(iii) INCREASE IN AUTHORISED SHARE CAPITAL

INTRODUCTION

LETTER FROM THE BOARD

THE ACQUISITION AGREEMENT

Date

Parties

Assets to be acquired:

Consideration:

Conditions precedent:

Completion

INFORMATION ON THE VENDOR AND STEPHIGH

PRINCIPAL TERMS OF THE CONVERTIBLE PREFERRED SHARES

Conversion Price

PROPOSED AMENDMENTS TO THE MEMORANDUM AND ARTICLES

PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL

REASONS FOR AND BENEFITS OF THE ACQUISITION

LETTER FROM THE BOARD

EFFECTS ON SHAREHOLDING STRUCTURE OF THE COMPANY

LISTING RULES IMPLICATIONS

EGM

RECOMMENDATION

ADDITIONAL INFORMATION

By Order of the Board KINGWELL GROUP LIMITED Xu Yue Yue

KINGWELL GROUP LIMITED 京 維 集 團 有 限 公 司

CONNECTED AND DISCLOSEABLE TRANSACTION IN RELATION TO THE ACQUISITION OF 30% EQUITY INTEREST IN STEPHIGH GROUP LIMITED INVOLVING THE ISSUE OF CONVERTIBLE PREFERRED SHARES

Yours faithfully,

INDEPENDENT BOARD COMMITTEE

KINGWELL GROUP LIMITED

BEIJING SECURITIES LIMITED

Dear Sirs,

CONNECTED AND DISCLOSEABLE TRANSACTION IN RELATION TO THE ACQUISITION OF 30% EQUITY INTEREST IN STEPHIGH GROUP LIMITED INVOLVING THE ISSUE OF CONVERTIBLE PREFERRED SHARES

INTRODUCTION

LETTER FROM INDEPENDENT FINANCIAL ADVISER

BASIS OF OUR OPINION

PRINCIPAL FACTORS TAKEN INTO CONSIDERATION

(b) Information on the Vendor and Stephigh

(c) Reasons for the Acquisition

2. The Acquisition

(a) Principal terms of the Acquisition Agreement

(b) Consideration

(1) The Valuation Report

(2) The Comparable Companies

LETTER FROM INDEPENDENT FINANCIAL ADVISER

Conclusion

(c) Settlement method of the Consideration

(1) Principal terms of the Convertible Preferred Shares

(2) Analysis of the Conversion Price

LETTER FROM INDEPENDENT FINANCIAL ADVISER

Conclusion

3. Possible financial effects of the Acquisition

(a) Net assets

(b) Earnings

LETTER FROM INDEPENDENT FINANCIAL ADVISER

(c) Gearing and working capital

4. Effect of the issue of Conversion Shares on the shareholding structure of the Company

RECOMMENDATIONS

1. BASIS OF VALUATION

2. VALUATION METHODOLOGY

3. VALUATION ASSUMPTIONS

4. VALUATION CONSIDERATIONS

5. LIMITING CONDITIONS

6. REMARKS

7. CONCLUSION

SUMMARY OF VALUATION

Description and Tenure

No. Property

APPENDIX II

Kingwell Group Limited Proxy Solicitation & Information Statement 2011

KINGWELL GROUP LIMITED 京維集團有限公司

KINGWELL GROUP LIMITED 京維集團有限公司

KINGWELL GROUP LIMITED 京維集團有限公司

KINGWELL GROUP LIMITED 京維集團有限公司