Rykadan Capital Limited - Proxy Solicitation & Information Statement 2012

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

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

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

RYKADAN CAPITAL LIMITED 宏基資本有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 2288)

CONNECTED AND DISCLOSEABLE TRANSACTION

ACQUISITION OF FURTHER INTERESTS IN KAILONG REI PROJECT INVESTMENT CONSULTING (HONG KONG) CO., LIMITED

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

Sun Hung Kai International Limited

A letter from the board of directors of Rykadan Capital Limited (the “ Company ”) is set out on pages 6 to 22 of this circular and a letter from the Independent Board Committee (as defined herein) is set out on pages 23 to 24 of this circular. A letter from SHK (as defined herein) containing its advice to the Independent Board Committee and the Independent Shareholders (as defined herein) is set out on pages 25 to 55 of this circular.

28 September 2012

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Letter from the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . .	23
Letter from SHK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	25
Appendix – General Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	56

– i –

DEFINITIONS

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

“Additional Talent Step Loan” as such term is defined in the section headed “The Restructuring Agreement – Background” in the Letter from the Board “Agreements” the Restructuring Agreement, the Subscription Agreement and the Shareholders’ Deed “associate(s)” has the meaning given to it by the Listing Rules “Board” the board of Directors “Borrison” Borrison (B.V.I.) Limited, a company incorporated in the BVI “BVI” the British Virgin Islands “Company” Rykadan Capital Limited, (formerly known as Sundart International Holdings Limited), the shares of which are listed on the Stock Exchange (Stock Code: 2288) “connected person(s)” has the meaning ascribed thereto in the Listing Rules “Director(s)” the director(s) of the Company, including independent non-executive directors “Good Grace” Good Grace Investments Limited, a company incorporated in the BVI “Group” the Company and its subsidiaries “HK$” Hong Kong dollar(s), the lawful currency of Hong Kong “Hong Kong” the Hong Kong Special Administrative Region of the PRC “Independent Board Committee” an independent board committee of the Company comprising Mr. To King Yan, Adam, Mr. Wong Hoi Ki and Mr. Ho Kwok Wah, George, all being independent non-executive Directors “Independent Shareholders” Shareholders who are not prohibited from voting if general meeting were to be convened to approve the Transactions under the Listing Rules

– 1 –

DEFINITIONS

“independent third party(ies)”

third party(ies) independent of the Company, its directors, chief executives or substantial Shareholder

“KLR Group” KLR Hong Kong and its subsidiaries
“KLR Holdings” Kailong REI Holdings Limited, a company incorporated in the BVI, as more particularly described in the section headed “Information on KLR Holdings and KLR Hong Kong” in the Letter from the Board
“KLR Holdings Restructuring” the restructuring of the shareholding of KLR Holdings pursuant to the Restructuring Agreement, details of which are summarised in the section headed “The Restructuring Agreement – KLR Holdings Restructuring” in the Letter from the Board
“KLR Holdings Restructuring as such term is defined in the section headed “The Completion” Restructuring Agreement – Background” in the Letter from the Board
“KLR Holdings Share(s)” share(s) in the capital of KLR Holdings

“KLR Hong Kong” Kailong REI Project Investment Consulting (Hong Kong) Co., Limited, a company incorporated in Hong Kong, as more particular described in the section headed “Information on KLR Holdings and KLR Hong Kong” in the Letter from the Board

“KLR Hong Kong Acquisition” as such term is defined in the section headed “The Restructuring Agreement – Background” in the Letter from the Board
“KLR Hong Kong Restructuring” the restructuring of the shareholding of KLR Hong Kong pursuant to the Restructuring Agreement, details of which are summarised in the section headed “The Restructuring Agreement – KLR Hong Kong Restructuring” in the Letter from the Board
“KLR Hong Kong Share(s)” share(s) in the capital of KLR Hong Kong
“KLR Hong Kong Shareholders” Talent Step and the Other KLR Hong Kong Shareholders

– 2 –

DEFINITIONS

“KLR Hong Kong Subscription” the subscription of KLR Hong Kong Shares by the Subscribers pursuant to the terms and conditions of the Subscription Agreement, details of which are summarised in the section headed “The Subscription Agreement – Subscription of KLR Hong Kong Shares” in the Letter from the Board
“Kwun Tong Project” the redevelopment project relating to the property located at 135-137 Hoi Bun Road, Kwun Tong, Kowloon, Hong Kong owned by Vital Success
“Listing Rules” Rules Governing the Listing of Securities on the Stock Exchange
“Latest Practicable Date” 25 September 2012, being the latest practicable date prior to the printing of this circular for ascertaining certain information for inclusion in this circular
“Macau” the Macau Special Administrative Region of the PRC “Mr. Chan” Mr. Chan William, an executive Director, the Chairman, the Chief Executive Officer of the Company and a substantial Shareholder
“Mr. Ivan Ho” Mr. Ho Chun Tung Ivan, a director of Wit Legend Investments Limited, a subsidiary of the Company
“Mr. Leung” Mr. Leung Kai Ming, an ex-executive Director and the chief operating officer of the Company who resigned from the Company with effect from 1 July 2012
“Mr. Li” Mr. Li Chu Kwan, Ms. Li’s brother and a substantial Shareholder
“Mr. Ng” Mr. Ng Tak Kwan, an executive Director and a substantial Shareholder
“Mr. Wong” Mr. Wong Kim Hung Patrick, an ex-non-executive Director who resigned from the Company with effect from 1 July 2012 and a Shareholder
“Ms. Li” Ms. Li Wing Yin, Mr. Li’s sister and a substantial Shareholder

“Other KLR Hong Kong Good Grace, Borrison, Mr. Stephen Anthony Roth, Shareholders” SCIM, PAG, Mr. Cheng Hei Ming, Mr. Ivan Ho, Ms. Woo Wai Yu and Mr. Geng Hao

– 3 –

DEFINITIONS

“Other Subscribers”
Good Grace, Borrison, Mr. Cheng Hei Ming, Mr. Ivan Ho, Mr. Stephen Anthony Roth and PAG
“PAG” PAG Real Estate Limited, a company incorporated in the Cayman Islands
“PRC” the People’s Republic of China, excluding Hong Kong, Macau and Taiwan for the purposes of this circular
“Restructuring Agreement” the restructuring agreement dated 11 July 2012 entered into between Talent Step, Good Grace, Borrison and KLR Holdings, as more particular described in the section headed “The Restructuring Agreement” in the Letter from the Board
“RMB” Renminbi, the lawful currency of the PRC
“Sale Borrison Loan” as such term is defined in the section headed “The Restructuring Agreement – KLR Holdings Restructuring” in the Letter from the Board
“Sale Good Grace Loan” as such term is defined in the section headed “The Restructuring Agreement – KLR Holdings Restructuring” in the Letter from the Board
“Scenemay Holdings”
“SCIM”

Scenemay Holdings Limited, an investment holding company incorporated in the BVI with limited liability on 18 December 2007, whose entire issued share capital is owned by Mr. Li and Ms. Li in equal shares Secured Capital Investment Management Co., Ltd., a company incorporated in Japan

“SFO”
The Securities and Futures Ordinance, Chapter 571 of the Laws of Hong Kong
“Share(s)” share(s) of HK$0.01 each in the Company
“Shareholder(s)” the holder(s) of Share(s)
“Shareholders’ Deed”

the shareholders’ deed dated 11 July 2012 entered into between the KLR Hong Kong Shareholders and KLR Hong Kong, as more particular described in the section headed “The Shareholders’ Deed” in the Letter from the Board

– 4 –

DEFINITIONS

“SHK” Sun Hung Kai International Limited, a licensed corporation to carry out Type 1 (dealing in securities) and Type 6 (advising on corporate finance) of the regulated activities under the SFO and the independent financial adviser to the Independent Board Committee and the Independent Shareholders in relation to the Restructuring Agreement and the Subscription Agreement and the transactions contemplated thereunder
“Stock Exchange” The Stock Exchange of Hong Kong Limited
“Subscribers” Talent Step and the Other Subscribers
“Subscription Agreement” the subscription agreement dated 11 July 2012 entered into between the Subscribers and KLR Hong Kong, as more particularly described in the section headed “The Subscription Agreement” in the Letter from the Board
“Talent Step” Talent Step Investments Limited, a company incorporated in the BVI and a wholly owned subsidiary of the Company
“Talent Step Loan” as such term is defined in the section headed “The Restructuring Agreement – Background” in the Letter from the Board
“Tiger Crown” Tiger Crown Limited, an investment holding company incorporated in the BVI with limited liability on 2 March 2004, the entire issued share capital of which is owned by Mr. Chan
“Transactions” the KLR Holdings Restructuring, the KLR Hong Kong Restructuring and the KLR Hong Kong Subscription
“Written Approval”
the written approval of the Transactions, the Restructuring Agreement, the Subscription Agreement and the transactions contemplated thereby by Tiger Crown, Scenemay Holdings, Mr. Leung, Mr. Ng and Mr. Wong, dated 11 July 2012
“US$”
United States dollars, the lawful currency of the United States
“%”
per cent.

English names of the PRC established companies in this circular are only translations of their official Chinese names. In case of inconsistency, the Chinese names prevail.

– 5 –

LETTER FROM THE BOARD

RYKADAN CAPITAL LIMITED 宏基資本有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 2288)

Executive Directors: Mr. Chan William（陳偉倫） (Chairman and Chief Executive Officer)

Mr. Ng Tak Kwan（吳德坤） Mr. Yip Chun Kwok（葉振國） (Chief Financial Officer)

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

Independent non-executive Directors:

Mr. Ho Kwok Wah, George（何國華） Mr. To King Yan, Adam（杜景仁） Mr. Wong Hoi Ki（黃開基）

Principal Place of Business in Hong Kong: Room 1305, 13/F, Shun Tak West Tower, 200 Connaught Road Central, Hong Kong

28 September 2012

To the Shareholders

Dear Sir/Madam,

CONNECTED AND DISCLOSEABLE TRANSACTION

ACQUISITION OF FURTHER INTERESTS IN KAILONG REI PROJECT INVESTMENT CONSULTING (HONG KONG) CO., LIMITED

INTRODUCTION

On 11 July 2012, the Company announced that Talent Step, an indirect wholly-owned subsidiary of the Company, entered into:

(i) the conditional Restructuring Agreement with Good Grace, Borrison and KLR Holdings in respect of the KLR Holdings Restructuring and the KLR Hong Kong Restructuring;

– 6 –

LETTER FROM THE BOARD

(ii) the conditional Subscription Agreement with the Other Subscribers and KLR Hong Kong in relation to the KLR Hong Kong Subscription; and
(iii) the Shareholders’ Deed with the other KLR Hong Kong Shareholders and KLR Hong Kong in respect of the matters relating to, among others, the management of KLR Hong Kong.

Following the completion of the Transactions, the Company’s indirect interest in the issued share capital of KLR Hong Kong will increase from representing approximately 21.38% to approximately 41.07%. Pursuant to the Shareholders’ Deed, the Company is able to exercise control over the board of directors of KLR Hong Kong, which is responsible for making major decisions relating to the financing and operations of KLR Hong Kong. Accordingly, KLR Hong Kong will be accounted for as a subsidiary of the Company after the signing of the Shareholders’ Deed.

Since Borrison, a substantial shareholder of KLR Holdings, is an associate of Mr. Ivan Ho who is a director of Wit Legend Investments Limited, a subsidiary of the Company, the entering into of the Restructuring Agreement constitutes a connected transaction of the Company pursuant to Rule 14A.13(1)(b)(i) of the Listing Rules. Pursuant to Rules 14.22 and 14A.25 of the Listing Rules, the advance of the Talent Step Loan and the Additional Talent Step Loan, the KLR Holdings Restructuring, the KLR Hong Kong Restructuring and the KLR Hong Kong Subscription will be aggregated and treated as if they were one transaction. As one or more of the applicable percentage ratios in respect of the aggregate amount of the Talent Step Loan, the Additional Talent Step Loan and the consideration payable by Talent Step pursuant to the KLR Holdings Restructuring, the KLR Hong Kong Restructuring and the KLR Hong Kong Subscription exceed 5% but all the applicable percentage ratios are below 25%, the entering into of the Restructuring Agreement also constitutes, and the entering into of the Subscription Agreement constitutes, discloseable transactions for the Company. As the Company considers that the Subscription Agreement and the Restructuring Agreement are part of the Company’s plan to acquire further interests in KLR Hong Kong, thus the Subscription Agreement is related to the Restructuring Agreement. Accordingly, both the Restructuring Agreement and the Subscription Agreement are subject to the reporting and announcement requirements under Chapter 14 of the Listing Rules as well as the Independent Shareholders’ approval requirement under Chapter 14A of the Listing Rules.

Pursuant to Rule 14A.43 of the Listing Rules, written Independent Shareholders’ approval may be accepted in lieu of holding a general meeting if (i) no Shareholder is required to abstain from voting if the Company were to convene a general meeting for the approval of the Restructuring Agreement, the Subscription Agreement and the transactions contemplated thereunder; and (ii) written approval has been obtained from a Shareholder or a closely allied group of Shareholders who together hold more than 50% in nominal value of the issued share capital of the Company giving the right to attend and vote at general meetings to approve the Restructuring Agreement, the Subscription Agreement and the transactions contemplated thereunder.

– 7 –

LETTER FROM THE BOARD

So far as the Company is aware, none of the Shareholders is materially interested in the Restructuring Agreement, the Subscription Agreement and the transactions contemplated thereunder. As such, no Shareholder is required to abstain from voting if general meeting were to be convened to approve the Restructuring Agreement, the Subscription Agreement and the transactions contemplated thereunder. As at 11 July 2012, being the date on which the Written Approval was given and on which the Restructuring Agreement, the Subscription Agreement and the Shareholders’ Deed were entered into, Mr. Chan (through Tiger Crown) and Mr. Li and Ms. Li (through Scenemay Holdings) were regarded as a group of controlling shareholders acting in concert to exercise their voting rights in the Company, pursuant to the provisions of the SFO, each of them was deemed to be interested in the 194,208,000 Shares beneficially or deemed to be owned by each other. Tiger Crown, Scenemay Holdings, Mr. Chan, Mr. Li and Ms. Li together were therefore interested in a total of approximately 40.46% of the issued share capital of the Company as at 11 July 2012. Mr. Ng (an existing executive Director), Mr. Leung and Mr. Wong (who were previously Directors) were interested in 84,000,000 Shares, 34,272,000 Shares and 20,520,000 Shares respectively as at 11 July 2012. None of Mr. Chan, Tiger Crown, Mr. Li, Ms. Li, Mr. Leung, Mr. Ng and Mr. Wong has any material interest in the Restructuring Agreement and the transactions contemplated thereunder other than through their interest in the Shares. The Company has obtained the Written Approval from Tiger Crown, Scenemay Holdings, Mr. Leung, Mr. Ng and Mr. Wong, being a closely allied group of the Shareholders who collectively held an aggregate of 333,000,000 Shares (representing approximately 69.75% of the issued share capital of the Company) as at the date of 11 July 2012, being the date on which the Written Approval was given and on which the Restructuring Agreement, the Subscription Agreement and the Shareholders’ Deed were entered into. Accordingly, pursuant to Rules 14A.43 and 14A.53 of the Listing Rules, the Company has applied for, and the Stock Exchange has granted, a waiver from the requirement to hold a general meeting and the permission for the Independent Shareholders’ approval in respect of the Restructuring Agreement, the Subscription Agreement and the transactions contemplated thereunder be given in the form of the Written Approval. Accordingly, no general meeting of the Company will be held.

The Independent Board Committee has been formed to advise the Independent Shareholders on whether or not the Restructuring Agreement, the Subscription Agreement and the transactions contemplated thereunder are fair and reasonable and in the interests of the Shareholders as a whole. SHK has been appointed by the Company as its independent financial adviser to advise the Independent Board Committee and the Independent Shareholders regarding the Restructuring Agreement, the Subscription Agreement and the transactions contemplated thereunder.

The purpose of this circular is to provide the Shareholders with, among other things:

(i) further details of the Restructuring Agreement, the Subscription Agreement and the transactions contemplated thereunder;
(ii) the recommendation of the Independent Board Committee to the Independent Shareholders with respect to the Restructuring Agreement, the Subscription Agreement and the transactions contemplated thereunder; and

– 8 –

LETTER FROM THE BOARD

(iii) the advice from the independent financial adviser to the Independent Board Committee and the Independent Shareholders with respect to the Restructuring Agreement, the Subscription Agreement and the transactions contemplated thereunder.

INTRODUCTION

The Company had in 2010 first acquired approximately 15.86% interest in the KLR Group. As mentioned in the announcement of the Company dated 16 May 2012 and the circular of the Company dated 1 June 2012, there was a plan to further increase the Company’s stake in KLR Holdings to the extent that KLR Holdings or KLR Hong Kong may become a subsidiary of the Company. The Company is pleased to announce that on 11 July 2012, Talent Step entered into a series of transactions as detailed below with view to acquire further interests in KLR Group and to consolidate KLR Hong Kong into the accounts of the Company.

THE RESTRUCTURING AGREEMENT

Date

11 July 2012

Parties

Talent Step
Good Grace
Borrison
KLR Holdings

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, save for the Company’s indirect interest in KLR Holdings (being approximately 29.36% at the time of signing of the Restructuring Agreement), each of Good Grace and KLR Holdings and their respective ultimate beneficial owner (other than Mr. Ivan Ho or Borrison) are independent third parties at the time of signing of the Restructuring Agreement. Since Mr. Ivan Ho is a director of Wit Legend Investments Limited, a subsidiary of the Company, and Borrison is owned as to 50% by each of him and his brother, Borrison is an associate of Mr. Ivan Ho and thus a connected person of the Company.

Background

Prior to the signing of the Restructuring Agreement, KLR Holdings entered into a sale and purchase agreement dated 12 April 2012 with various sellers, pursuant to which KLR Holdings had purchased a total of 121,884 KLR Hong Kong Shares (representing approximately 18.81% of the issued share capital of KLR Hong Kong) from various sellers at an aggregate cash consideration of US$1,636,000 (the “ KLR Hong Kong Acquisition ”).

– 9 –

LETTER FROM THE BOARD

To finance the payment of such cash consideration, each of Talent Step, Good Grace and Borrison, being all the shareholders of KLR Holdings, has agreed to advance interest-free shareholders’ loans in the amount of US$480,000 (the “ Talent Step Loan ”), US$947,000 (the “ Good Grace Loan ”) and US$209,000 (the “ Borrison Loan ”) respectively to KLR Holdings.

Following the KLR Hong Kong Acquisition and immediately prior to the signing of the Restructuring Agreement, KLR Hong Kong is owned as to approximately 72.83% by KLR Holdings.

On 10 April 2012, Talent Step has, in addition to advancing the Talent Step Loan to KLR Holdings, advanced further loans equivalent to the aggregate of the Good Grace Loan and the Borrision Loan (the “ Additional Talent Step Loan ”) to KLR Holdings pending the advance of the Good Grace Loan and the Borrison Loan to KLR Holdings by Good Grace and Borrison as mentioned above. As a result, immediately prior to the signing of the Restructuring Agreement, KLR Holdings was indebted to Talent Step in the aggregate amount of US$1,636,000, which is interest-free and has no fixed repayment term.

KLR Holdings Restructuring

Conditional upon the satisfaction of the condition as described in the section headed “Condition to completion of the Restructuring Agreement” below, the parties thereto shall take all such actions within their powers to cause all of the following transactions to be completed or effected on or before 31 July 2012 (the “ KLR Holdings Restructuring Completion ”):

(a) (i) Talent Step shall purchase, and Good Grace shall sell and assign, 2,283 KLR Holdings Shares (representing approximately 22.83% of the issued share capital of KLR Holdings) to Talent Step and a portion of the Good Grace Loan in the amount of US$374,000 (the “ Sale Good Grace Loan ”), at an aggregate cash consideration of US$3,149,000 (of which, the consideration for the Sale Good Grace Loan is US$374,000 and the consideration for the 2,283 KLR Holdings Shares is US$2,775,000);
(ii) Good Grace shall refinance KLR Holdings with an amount equivalent to the Good Grace Loan. Upon Good Grace having so refinanced KLR Holdings, KLR Holdings shall repay an amount equivalent to the Good Grace Loan to Talent Step as partial settlement of the Additional Talent Step Loan;
(b) (i) Good Grace shall purchase, and Borrison shall sell and assign, 335 KLR Holdings Shares (representing approximately 3.35% of the issued share capital of KLR Holdings) to Good Grace and a portion of the Borrison Loan in the amount of US$55,000 (the “ Sale Borrison Loan ”) to Good Grace at an aggregate cash consideration of US$212,000 (of which, the consideration for the Sale Borrison Loan is US$55,000 and the consideration for the 335 KLR Holdings Shares is US$157,000);

– 10 –

LETTER FROM THE BOARD

(ii) Borrison shall refinance KLR Holdings with an amount equivalent to the Borrison Loan. Upon Borrison having so refinanced KLR Holdings, KLR Holdings shall repay an amount equivalent to the Borrison Loan to Talent Step as partial settlement of the Additional Talent Step Loan;

Prior to the KLR Holdings Restructuring, KLR Holdings was owned as to approximately 29.36% by Talent Step, approximately 57.87% by Good Grace and approximately 12.77% by Borrison. The original purchase cost of the 12.77% interest in KLR Holdings held by Borrison was US$1,159,800. Following the KLR Holdings Restructuring Completion, KLR Holdings will be owned as to approximately 52.19% by Talent Step, approximately 38.39% by Good Grace and approximately 9.42% by Borrison and the Additional Talent Step Loan will be fully repaid to Talent Step. KLR Holdings will not be accounted for as a subsidiary of the Company.

KLR Hong Kong Restructuring

Following the KLR Holdings Restructuring Completion, the parties thereto shall take all such actions within their powers to cause all of the following transactions to be completed as soon as possible and in any event on or before 31 July 2012 (the “ KLR Hong Kong Restructuring Completion ”):

(a) KLR Holdings shall assign and distribute 246,288 KLR Hong Kong Shares (representing approximately 38.01% of the issued share capital of KLR Hong Kong) to Talent Step and in consideration thereof, Talent Step shall waive and discharge the whole of the outstanding amount owing by KLR Holdings to Talent Step in the amount of US$854,000 (being the aggregate of the Talent Step Loan plus the Sale Good Grace Loan);
(b) KLR Holdings shall assign and distribute 181,192 KLR Hong Kong Shares (representing approximately 27.96% of the issued share capital of KLR Hong Kong) to Good Grace and in consideration thereof, Good Grace shall waive and discharge the whole of the outstanding amount owing by KLR Holdings to Good Grace in the amount of US$628,000 (being the aggregate of the Good Grace Loan less the Sale Good Grace Loan plus the Sale Borrison Loan); and
(c) KLR Holdings shall assign and distribute 44,454 KLR Hong Kong Shares (representing approximately 6.86% of the issued share capital of KLR Hong Kong) to Borrison and in consideration thereof, Borrison shall waive and discharge the whole of the outstanding amount owing by KLR Holdings to Borrison in the amount of US$154,000 (being the aggregate of the Borrison Loan less the Sale Borrison Loan).

Condition to completion of the Restructuring Agreement

Each of the KLR Holdings Restructuring Completion and the KLR Hong Kong Restructuring Completion is conditional upon the approval of the Restructuring Agreement and the transactions contemplated thereunder by the Independent Shareholders in accordance with the relevant requirements of the Listing Rules.

– 11 –

LETTER FROM THE BOARD

The condition set out above has been satisfied and the KLR Holdings Restructuring Completion and the KLR Hong Kong Restructuring Completion took place on 11 July 2012 and 30 July 2012 respectively.

Consideration

In relation to the KLR Holdings Restructuring, Talent Step shall pay US$3,149,000 in cash to Good Grace at the KLR Holdings Restructuring Completion, which was determined with reference to the net asset value of KLR Group as at 30 April 2012.

In relation to the KLR Hong Kong Restructuring, since Talent Step shall waive and discharge the whole of the outstanding amount owing by KLR Holdings to Talent Step in the amount of US$854,000, the effective consideration for the acquisition of 246,228 KLR Hong Kong Shares is US$854,000, which was determined with reference to the total assets value, the reserves and the shareholders’ loans of single company accounts of KLR Holdings as at 30 April 2012.

After the distribution by KLR Holdings of the total of 471,934 KLR Hong Kong Shares, being its entire shareholding in KLR Hong Kong, to its shareholders pursuant to the KLR Hong Kong Restructuring, KLR Holdings ceased to have any interest in KLR Hong Kong.

THE SUBSCRIPTION AGREEMENT

Date

11 July 2012

Parties

Talent Step
the Other Subscribers
KLR Hong Kong

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, save for the Company’s indirect interest in KLR Hong Kong (being approximately 21.38% at the time of signing of the Subscription Agreement), each of KLR Hong Kong and the Other Subscribers (other than Mr. Ivan Ho, Borrison, SCIM and PAG) and their respective ultimate beneficial owner (where applicable, other than Mr. Ivan Ho, Borrison, SCIM and PAG) are independent third parties at the time of signing of the Subscription Agreement. Since Mr. Ivan Ho is a director of Wit Legend Investments Limited, a subsidiary of the Company, and Borrison is owned as to 50% by Mr. Ivan Ho, each of Mr. Ivan Ho and Borrison is a connected person of the Company. SCJREP IV Cayman E, Ltd. is a substantial shareholder of Wit Legend Investments Limited (a

– 12 –

LETTER FROM THE BOARD

subsidiary of the Company). As SCIM is a general partner of SCJREP IV Caymen E, Ltd. and a wholly owned subsidiary of PAG, each of SCIM and PAG is regarded as an associate of SCJREP IV Cayman E, Ltd. and thus a connected person of the Company.

Subscription of KLR Hong Kong Shares

Subject to the terms and conditions of the Subscription Agreement, each of the Subscribers agreed to subscribe and pay for KLR Hong Kong Shares at the subscription price of US$17.32 per KLR Hong Kong Share in the following manner:

	Number of KLR	Number of KLR	Subscription
Name of Subscriber	Hong	Kong Shares	amount
Talent Step		304,333	US$5,271,000
Good Grace		223,895	US$3,878,000
Borrison		54,931	US$ 951,000
Mr. Cheng Hei Ming		74,917	US$1,298,000
Mr. Ivan Ho		10,386	US$ 180,000
Mr. Stephen Anthony Roth		4,019	US$ 70,000
PAG		20,346	US$ 352,000

Consideration

The consideration payable by Talent Step under the Subscription Agreement is US$5,271,000 (the “ Subscription Amount ”), which shall be paid by Talent Step to KLR Hong Kong in cash. The Subscription Amount was determined with reference to the net asset value of KLR Group as at 30 April 2012 and the capital requirements of KLR Hong Kong.

All of the Subscribers shall pay their respective subscription amount on the date falling 7 days after the signing of the Subscription Agreement, or such other date as the parties thereto agree in writing (the “ Subscription Agreement Completion Date ”) or within 7 days before the Subscription Agreement Completion Date.

Completion

The subscription, allotment and issue of KLR Hong Kong Shares pursuant to the Subscription Agreement is conditional upon the approval of the Subscription Agreement and the transactions contemplated thereunder by the Independent Shareholders in accordance with the relevant requirements of the Listing Rules. Upon satisfaction of the aforesaid condition and the payment by a Subscriber of its corresponding subscription amount in accordance with the Subscription Agreement, KLR Hong Kong shall allot and issue to such Subscriber the relevant number of fully paid KLR Hong Kong Shares at an issue price of US$17.32 per KLR Hong Kong Share.

The completion of the Restructuring Agreement and the completion of the Subscription Agreement are not inter-conditional upon each other.

– 13 –

LETTER FROM THE BOARD

The condition set out above has been satisfied and the KLR Hong Kong Subscription was completed on 30 July 2012.

THE SHAREHOLDERS’ DEED

Date

11 July 2012

Parties

Talent Step
the Other KLR Hong Kong Shareholders
KLR Hong Kong

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, save for the Company’s indirect interest in KLR Hong Kong (being approximately 21.38% at the time of signing of the Shareholders’ Deed), each of KLR Hong Kong and the Other KLR Hong Kong Shareholders (other than Mr. Ivan Ho, Borrison, SCIM and PAG) and their respective ultimate beneficial owner (where applicable) are independent third parties at the time of signing of the Shareholders’ Deed. Since Mr. Ivan Ho holds 5% interests in and is a director of Wit Legend Investments Limited, a subsidiary of the Company, and Borrison is owned as to 50% by Mr. Ivan Ho, each of Mr. Ivan Ho and Borrison is a connected person of the Company. SCJREP IV Caymen E, Ltd. (a company controlled by SCIM) is a substantial shareholder of Wit Legend Investments Limited (a subsidiary of the Company). As SCIM is a general partner of SCJREP IV Caymen E, Ltd. and a wholly owned subsidiary of PAG, each of SCIM and PAG is regarded as an associate of SCJREP IV Cayman E, Ltd. and thus a connected person of the Company.

The KLR Hong Kong Shareholders and KLR Hong Kong have entered into the Shareholders’ Deed to provide for the ownership, management, financing and other activities of KLR Hong Kong. The principal terms of the Shareholders’ Deed, among other things, are summarised as follows:

Effectiveness

The Shareholders’ Deed shall become effective upon the approval of the Shareholders’ Deed and the transactions contemplated thereunder by the Independent Shareholders in accordance with the relevant requirements of the Listing Rules.

The approval set out above has been obtained and thus the Shareholders’ Deed has become effective.

– 14 –

LETTER FROM THE BOARD

Board Representation

The board of directors of KLR Hong Kong shall consist of a maximum of 7 directors, of which Talent Step has the right to appoint and remove up to 4 directors. The chairman of the board of directors of KLR Hong Kong shall be a director designated by Talent Step and the quorum for board meetings of KLR Hong Kong shall be 4 of which at least 2 shall be directors nominated by Talent Step.

All matters relating to the management and operation of KLR Hong Kong shall be decided by the board of directors of KLR Hong Kong. Questions at meetings of the board of directors of KLR Hong Kong shall be decided by a simple majority vote. The board of directors of KLR Hong Kong shall not do certain reserved matters specified in the Shareholders’ Deed unless with the prior approval of Talent Step, Good Grace, Borrison, Mr. Stephen Anthony Roth and SCIM.

Finance for KLR Hong Kong

The capital and cash requirements of KLR Hong Kong shall be satisfied by utilisation of the proceeds of the amounts received by KLR Hong Kong from the Subscribers pursuant to the Subscription Agreement.

KLR Hong Kong may, directly or indirectly through affiliates in which it has an interest, among others, obtain financing or create security on such terms as the board of directors of KLR Hong Kong considers appropriate. The KLR Hong Kong Shareholders shall not be under any obligation to guarantee any borrowing or other debts or obligations of KLR Hong Kong.

Dividend Policy

Subject to applicable law, the appropriation of prudent and proper reserves, the retention out of profits of funds to meet any investment or other capital expenditure requirements and requirements as to solvency or otherwise applicable to KLR Hong Kong as determined by its board of directors in its sole discretion, KLR Hong Kong shall distribute by way of dividend to the KLR Hong Kong Shareholders 70% of its distributable profits in respect of each financial year ending 31 December.

Further issue of KLR Hong Kong Shares

Any new shares created in the capital of KLR Hong Kong shall before issuance be offered for subscription in the first instance to the shareholders of KLR Hong Kong in proportion as nearly as practicable to their respective shareholding in KLR Hong Kong.

Pre-emption rights

Each time where a shareholder of KLR Hong Kong wishes to transfer all or part of its KLR Hong Kong Shares to any third party who has made a bona fide offer therefor, the selling shareholder shall first offer the KLR Hong Kong Shares desired to be transferred to

– 15 –

LETTER FROM THE BOARD

all the other shareholders of KLR Hong Kong at the same price and on the same terms as those offered by the third party purchaser in accordance with the provisions of the Shareholders’ Deed.

Drag-along rights

In the event that Talent Step and Good Grace (the “ Majority Shareholders ”) wishes to transfer all of their KLR Hong Kong Shares to a third party purchaser (the “ Drag-Along Purchaser ”), the Majority Shareholders shall be entitled, by notice in writing, to all shareholders of KLR Hong Kong other than the Majority Shareholders (the “ Drag-Along Shareholders ”), to require the Drag-Along Shareholders to sell to the Drag-Along Purchaser all (but not less than all) of the KLR Hong Kong Shares held by the Drag-Along Shareholders at the same price and on the same terms and conditions as those applicable to the sale by the Majority Shareholders of their KLR Hong Kong Shares to the Drag-Along Purchaser.

INFORMATION ON KLR HOLDINGS AND KLR HONG KONG

General

KLR Holdings is an investment holding company incorporated in the BVI which principal business prior to the KLR Hong Kong Restructuring Completion was the holding of interest in KLR Hong Kong, which description is set out in the paragraph below. Following the distribution by KLR Holdings of the total of 471,934 KLR Hong Kong Shares, being its entire shareholding in KLR Hong Kong, to its shareholders pursuant to the KLR Hong Kong Restructuring, KLR Holdings ceased to have any interest in KLR Hong Kong.

KLR Hong Kong is a company incorporated in Hong Kong with limited liability. KLR Hong Kong, which through its subsidiaries and/or affiliates carries out real estate investment and asset management businesses in the Greater China Region. KLR Group was founded in 2004 by Mr. Stephen Anthony Roth and Mr. Cheng Hei Ming. KLR Group’s principals and institutional shareholders have extensive experience in the United States institutional real estate capital markets. Their expertise also includes a comprehensive understanding of and familiarity with Japanese, western Europe, China and other international markets.

KLR Group pursues opportunity to invest in real estate projects such as existing stabilised real estate projects that are generating positive cash flow, completed real estate assets that have not yet achieved full occupancy and co-investment in real estate development projects with reputable local or international developers. KLR Group’s investment focus lies in major markets such as Shanghai, Beijing, Guangzhou, Shenzhen, Hangzhou, Tianjin, Chongqing, Chengdu, Wuhan, Nanjing, Dalian, Qingdao, Kunming and other major second-tier cities.

– 16 –

LETTER FROM THE BOARD

Simplified corporate structure

Assuming that there are no changes in the issued share capital of each of the companies set out below other than changes as a result of the Transactions, set out below are the simplified corporate structures of KLR Hong Kong immediately prior to and immediately after completion of the Transactions:

(i) Immediately prior to the completion of the Transactions

==> picture [402 x 193] intentionally omitted <==

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

The Company Mr. Cheng Hei Ming Mr. Ivan Ho
100% 100% 50%
Talent Step Good Grace Borrison
29.36% 57.87% 12.77%
PAG Real Estate
Limited KLR Holdings SCIM Others [(Note 1)]
1.86% 72.83% 5.36% 19.95%
KLR Hong Kong
----- End of picture text -----

Note 1: Others includes Mr. Stephen Anthony Roth (8.15%), Mr. Cheng Hei Ming (9.36%), Mr. Geng Hao (0.93%) and Ms. Woo Wai Yu (1.51%)

(ii) Immediately after the completion of the Transactions

==> picture [410 x 145] intentionally omitted <==

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

Mr. Cheng Hei
The Company Ming Mr. Ivan Ho
100% 100% 50%
PAG Real
Estate Limited SCIM Talent Step Good Grace Borrison Others [(Note 2) ]
2.42% 2.59% 41.07% 30.21% 7.41% 16.30%
KLR Hong Kong
----- End of picture text -----

Note 2: Others includes Mr. Stephen Anthony Roth (4.24%), Mr. Cheng Hei Ming (10.11%), Mr. Geng Hao (0.45%), Ms. Woo Wai Yu (0.73%) and Mr. Ivan Ho (0.77%)

– 17 –

LETTER FROM THE BOARD

Financial Information

Based on the unaudited consolidated financial statements of KLR Holdings for the two years ended 31 December 2011, its net profits before and after taxation and extraordinary items for the financial year ended 31 December 2010 were approximately US$300,000 and approximately US$280,000 respectively and for the financial year ended 31 December 2011 were approximately US$1,035,000 and approximately US$724,000 respectively.

The unaudited net asset value and the unaudited total asset value of KLR Holdings as at 31 December 2011 amounted to approximately US$9,441,000 and approximately US$13,801,000 respectively.

Based on the audited consolidated financial statements of KLR Group for the year ended 31 December 2011, its net profits before and after taxation and extraordinary items for the financial year ended 31 December 2011 were approximately US$1,035,000 and approximately US$724,000 respectively.

Based on the audited consolidated financial statements of KLR Group for the year ended 31 December 2010, its net loss before and after taxation and extraordinary items for the financial year ended 31 December 2010 were approximately US$3,242,000 and approximately US$3,258,000 respectively.

The audited net asset value and the audited total asset value of KLR Group as at 31 December 2011 amounted to approximately US$8,637,000 and approximately US$12,997,000 respectively.

REASONS FOR AND BENEFITS OF THE TRANSACTIONS

As disclosed in the announcement dated 16 September 2010 of the Company, the Group had indirectly acquired approximately 15.86% effective interest in KLR Hong Kong through its acquisition of 29.36% interest in KLR Holdings.

Since the KLR Group undertakes fund management, real estate investment and asset management business in the PRC, the Directors believe that further increasing its interest in KLR Hong Kong will enable the Company to further increase its involvement in the real estate investment and fund management and asset management business in the PRC.

As disclosed in the announcement of the Company dated 16 May 2012 and the circular of the Company dated 1 June 2012, the Company considered the prospect of real estate-related investment business is good, and accordingly intended to expand and strengthen its existing real estate-related businesses, including increasing its shareholding in KLR Holdings to the extent that KLR Holdings or KLR Hong Kong may, ultimately, become a subsidiary of the Company.

Following the completion of the Transactions, the Company has approximately 41.07% interest in KLR Hong Kong. Pursuant to the Shareholders’ Deed, the Company is able to exercise control over the board of directors of KLR Hong Kong, which is responsible for

– 18 –

LETTER FROM THE BOARD

making major decisions relating to the financing and operations of KLR Hong Kong. Accordingly, KLR Hong Kong will be accounted for as a subsidiary of the Company after the signing of the Shareholders’ Deed.

So far as the Company is aware, the operation of the KLR Group’s business usually involves three stages. First, the KLR Group will identify opportunities and acquire assets at a right time with a right price. Then, the KLR Group will provide asset management by improving the asset value through the provision of consulting services. Finally, the KLR Group will dispose of the asset when the timing is right to maximize the return. The Company understands that the KLR Group derives income primarily from fund management fees, asset management fees, acquisition and disposition fees and performance fees which are linked to the asset being managed and the return when the asset is disposed of. Since its inception in 2004, the KLR Group has managed 14 real estate projects in Beijing, Shanghai, Hangzhou and Hong Kong respectively, of which 10 are office developments, 2 are retail developments and 2 are residential developments.

After the Company’s initial acquisition of the shareholding in KLR Holdings in 2010, KLR Holdings through its subsidiaries has successfully closed two RMB real estate funds in Tianjin and Suzhou. Also, as far as the Company is aware, the KLR Group is now managing two funds with a total capital of RMB650 million and plans to invest in around RMB1.2 billion worth of property. As KLR Group has already established a presence in the PRC, the Company believes that the Group will be able to benefit from the expertise and the experience of the management team and the professional operation team of the KLR Group in operating the businesses of real estate investment, fund management and asset management. Further, by becoming a shareholder of KLR Hong Kong, the Group gained access to the network and chance to co-invest with a real estate fund manager in the Kwun Tong Project. As KLR Hong Kong can complement the Company’s business well and the PRC market for RMB fund products is very large, the Directors consider that acquisition of further interest in KLR Hong Kong will enable the Company to be further involved in the real estate investment, fund management and asset management business in the PRC.

The executive Directors believe that the terms of the Restructuring Agreement and the Subscription Agreement are on normal commercial terms, fair and reasonable and in the interests of the Company and the Shareholders as a whole. As set out in the letter from the Independent Board Committee on pages 23 to 24 of this circular, the independent non-executive Directors also consider that the Restructuring Agreement, the Subscription Agreement and the transactions contemplated thereunder are on normal and commercial terms, are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

– 19 –

LETTER FROM THE BOARD

LISTING RULES IMPLICATIONS

Since Borrison, a substantial shareholder of KLR Holdings, is an associate of Mr. Ivan Ho who is a director of Wit Legend Investments Limited, a subsidiary of the Company, the entering into of the Restructuring Agreement constitutes a connected transaction of the Company pursuant to Rule14A.13(1)(b)(i) of the Listing Rules. Pursuant to Rules 14.22 and 14A.25 of the Listing Rules, the advance of the Talent Step Loan and the Additional Talent Step Loan, the KLR Holdings Restructuring, the KLR Hong Kong Restructuring and the KLR Hong Kong Subscription will be aggregated and treated as if they were one transaction. As one or more of the applicable percentage ratios in respect of the aggregate amount of the Talent Step Loan and the Additional Talent Step Loan and the consideration payable by Talent Step under the KLR Holdings Restructuring, the KLR Hong Kong Restructuring and the KLR Hong Kong Subscription exceed 5% but all the applicable percentage ratios are below 25%, the entering into of the Restructuring Agreement also constitutes, and the entering into of the Subscription Agreement constitutes, discloseable transactions for the Company. As the Company considers that the Subscription Agreement and the Restructuring Agreement are part of the Company’s plan to acquire further interests in KLR Hong Kong, thus the Subscription Agreement is related to the Restructuring Agreement. Accordingly, both the Restructuring Agreement and the Subscription Agreement are subject to the reporting and announcement requirements under Chapter 14 of the Listing Rules as well as the Independent Shareholders’ approval requirement under Chapter 14A of the Listing Rules.

WRITTEN APPROVAL

– 20 –

LETTER FROM THE BOARD

Mr. Ng (an existing Director), Mr. Leung and Mr. Wong (who were previously Directors) were interested in 84,000,000 Shares, 34,272,000 Shares and 20,520,000 Shares respectively as at 11 July 2012. None of Mr. Chan, Tiger Crown, Mr. Li, Ms. Li, Mr. Leung, Mr. Ng and Mr. Wong have any material interest in the Restructuring Agreement, the Subscription Agreement and the transactions contemplated thereunder other than through their interest in the Shares. The Company has obtained the Written Approval from Tiger Crown, Scenemay Holdings, Mr. Leung, Mr. Ng and Mr. Wong, being a closely allied group of the Shareholders who collectively held an aggregate of 333,000,000 Shares (representing approximately 69.75% of the issued share capital of the Company) as at 11 July 2012, being the date on which the Written Approval was given and the date on which the Restructuring Agreement, the Subscription Agreement and the Shareholders’ Deed were entered into. Accordingly, pursuant to Rules 14A.43 and 14A.53 of the Listing Rules, the Company has applied for, and the Stock Exchange has granted, a waiver from the requirement to hold a general meeting and the permission for the Independent Shareholders’ approval in respect of the Restructuring Agreement, the Subscription Agreement and the transactions contemplated thereunder be given in the form of the Written Approval. Accordingly, no general meeting of the Company will be held.

As none of the Directors has any material interest in the Restructuring Agreement, the Subscription Agreement and the transactions contemplated thereunder, no Director is required to abstain from voting on the board resolution to approve the Restructuring Agreement, the Subscription Agreement and the transactions contemplated thereunder.

INDEPENDENT BOARD COMMITTEE

The Independent Board Committee comprising all three independent non-executive Directors has been formed to advise the Independent Shareholders as to whether the terms of the Restructuring Agreement and the Subscription Agreement are fair and reasonable and in the interests of the Company and the Shareholders as a whole, taking into account the recommendation of SHK, the independent financial adviser appointed by the Company to advise the Independent Board Committee and the Independent Shareholders in this regard.

PRINCIPAL ACTIVITIES OF THE PARTIES

The Company is principally engaged in real estate development, real estate related investment, fund management and asset management, and distribution of construction and/or decoration materials.

Good Grace is principally engaged in investment holding activities.

Borrison is principally engaged in investment holding activities.

SCIM is principally engaged in real estate investment management activities.

PAG is principally engaged in alternative investment activities.

– 21 –

LETTER FROM THE BOARD

ADDITIONAL INFORMATION

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

By order of the Board Rykadan Capital Limited CHAN William Chairman

– 22 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

RYKADAN CAPITAL LIMITED 宏基資本有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 2288)

28 September 2012

To the Independent Shareholders

Dear Sir and Madam,

CONNECTED AND DISCLOSEABLE TRANSACTION

ACQUISITION OF FURTHER INTERESTS IN KAILONG REI PROJECT INVESTMENT CONSULTING (HONG KONG) CO., LIMITED

We refer to the circular of the Company dated 28 September 2012 (the “ Circular ”) to the Shareholders, of which this letter forms part. Terms defined in the Circular shall have the same meanings in this letter unless specified otherwise.

We have been appointed by the Board as the Independent Board Committee to advise you in respect of the Transactions, details of which are set out in the Circular. SHK has been appointed as the independent financial adviser to advise us and the Independent Shareholders in this regard. Details of its advice, together with the principal factors taken into consideration in arriving at such, are set out in its letter on pages 25 to 55 of the Circular. Your attention is also drawn to the Letter from the Board in the Circular and the additional information set out in the appendices thereto.

Having considered the terms of the Restructuring Agreement and the Subscription Agreement and taking into account the advice of SHK, we consider that the Restructuring Agreement, the Subscription Agreement and the transactions contemplated thereunder are on normal and commercial terms, are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

The Stock Exchange has granted a waiver to the Company from complying with the requirement to hold a general meeting and the permission for the Independent Shareholders’ approval in respect of the Restructuring Agreement, the Subscription Agreement and the

– 23 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

transactions contemplated thereunder to be given in the form of the Written Approval. As such, no general meeting of the Company will be held to approve the Restructuring Agreement, the Subscription Agreement and the transactions contemplated thereunder. However, had the Restructuring Agreement, the Subscription Agreement and the transactions contemplated thereunder been required to be put forward for consideration and approval at a general meeting of the Company, we would recommend the Independent Shareholders to approve them.

Yours faithfully, Independent Board Committee of Rykadan Capital Limited

TO King Yan, Adam

Independent non-executive Director

WONG Hoi Ki Independent non-executive Director

HO Kwok Wah Independent non-executive Director

– 24 –

LETTER FROM SHK

Set out below is the full text of a letter received from SHK setting out its advice to the Independent Board Committee and the Independent Shareholders in relation to the Restructuring Agreement, the Subscription Agreement and the transactions contemplated thereunder, which has been prepared for inclusion in this circular.

Sun Hung Kai International Limited

42/F., The Lee Gardens 33 Hysan Avenue Causeway Bay Hong Kong

28 September 2012

To: the Independent Board Committee and the Independent Shareholders of Rykadan Capital Limited (formerly known as Sundart International Holdings Limited)

Dear Sirs,

CONNECTED AND DISCLOSEABLE TRANSACTION

ACQUISITION OF FURTHER INTERESTS IN KAILONG REI PROJECT INVESTMENT CONSULTING (HONG KONG) CO., LIMITED

INTRODUCTION

We refer to our engagement as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the Transactions, details of which are set out in the letter from the Board (the “ Board Letter ”) contained in the circular of the Company to the Shareholders dated 28 September 2012 (the “ Circular ”), of which this letter forms part. Terms used in this letter shall have the same meanings as those defined in the Circular unless the context otherwise requires. Further, for the purpose of illustration only, the amounts denominated in US$ and RMB in this letter are translated into HK$ at the rate of US$1 = HK$7.78 and RMB1 = HK$0.82. Such translation should not be construed as a representation and is for illustrative purpose only.

On 11 July 2012, Talent Step, an indirect wholly-owned subsidiary of the Company, entered into:

(i) the conditional Restructuring Agreement with Good Grace, Borrison and KLR Holdings in respect of the KLR Holdings Restructuring and the KLR Hong Kong Restructuring;
(ii) the conditional Subscription Agreement with the Other Subscribers and KLR Hong Kong in relation to the KLR Hong Kong Subscription; and

– 25 –

LETTER FROM SHK

(iii) the Shareholders’ Deed with the Other KLR Hong Kong Shareholders and KLR Hong Kong in respect of the matters relating to, among others, the board composition of KLR Hong Kong which shall consist of a maximum of seven directors of which Talent Step has the right to appoint and remove up to four directors.

Prior to completion of the Transactions, Talent Step was indirectly interested in approximately 21.38% in the issued share capital of KLR Hong Kong. As at the Latest Practicable Date, the Transactions were completed and Talent Step had a direct interest of approximately 41.07% in the issued share capital of KLR Hong Kong. Further, pursuant to the Shareholders’ Deed which has become effective as at 11 July 2012, the Company is able to exercise control over the board of directors of KLR Hong Kong, as such, KLR Hong Kong will be accounted for as a subsidiary of the Company and its financial results will be consolidated into the consolidated financial statements of the Company.

As at 11 July 2012, Mr. Ivan Ho was a director of Wit Legend Investments Limited (a subsidiary of the Company) and Borrison, a company owned as to 50% by Mr. Ivan Ho, was a substantial shareholder of KLR Holdings. Accordingly, Borrison is regarded as a connected person of the Company. As referred to in the Board Letter, the entering into of the Restructuring Agreement constitutes a non-exempt connected transaction for the Company pursuant to Chapter 14A of the Listing Rules and both the entering into of the Restructuring Agreement and the Subscription Agreement constitute discloseable transactions for the Company. With reference to the Board Letter, the Company regards that the Restructuring Agreement and the Subscription Agreement are part of the Company’s plan to acquire further interests in KLR Hong Kong, thus the Subscription Agreement is related to the Restructuring Agreement. Hence, the Restructuring Agreement, the Subscription Agreement and the transactions contemplated thereunder are subject to the reporting, announcement and the Independent Shareholders’ approval requirements under the Listing Rules.

As referred to the Board Letter, insofar as the Company is aware, none of the Shareholders is materially interested in the Restructuring Agreement, the Subscription Agreement and the transactions contemplated thereunder. Accordingly, no Shareholder is required to abstain from voting if general meeting was to be convened to approve the Restructuring Agreement, the Subscription Agreement and the transactions contemplated thereunder. The Company had obtained the Written Approval from Tiger Crown, Scenemay Holdings, Mr. Leung, Mr. Ng and Mr. Wong, being a closely allied group of the Shareholders who collectively hold an aggregate of 333,000,000 Shares (representing approximately 69.75% of the issued share capital of the Company) as at 11 July 2012. Pursuant to Rules 14A.43 and 14A.53 of the Listing Rules, the Company has applied for, and the Stock Exchange has granted, a waiver from the requirement to holding a general meeting and the permission for the Independent Shareholders’ approval in respect of the Restructuring Agreement, the Subscription Agreement and the transactions contemplated thereunder to be given in the form of the Written Approval on the basis that (i) written Independent Shareholders’ approval has been obtained from a closely allied group of Shareholders holding more than 50% of the issued share capital of the Company; and (ii) no Shareholder would be required to abstain from voting at the general meeting, if one was to be held, to approve the Restructuring Agreement, the Subscription Agreement and the

– 26 –

LETTER FROM SHK

transactions contemplated thereunder. As such, no general meeting will be held for the approval of the Restructuring Agreement, the Subscription Agreement and the transactions contemplated thereunder.

The Independent Board Committee comprising all of the independent non-executive Directors namely Messrs. To King Yan, Adam, Wong Hoi Ki and Ho Kwok Wah, George, has been established to advise on the fairness and reasonableness of the Restructuring Agreement and Subscription Agreement insofar as the Independent Shareholders are concerned and as to whether the Restructuring Agreement and Subscription Agreement are in the interests of the Company and the Shareholders as a whole, and to make recommendations to the Independent Shareholders. We, SHK, have been appointed as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in this regard.

SHK is independent from, and not connected with, the Company, the parties involving in the Restructuring Agreement and the Subscription Agreement or any of their respective substantial shareholders, directors or chief executive, or any of their respective associates, and is accordingly qualified to give independent advice to the Independent Board Committee and the Independent Shareholders.

BASIS OF OUR OPINION

In formulating our recommendations, we have relied on the information and facts provided by the Company and the representations of, the Directors and management of the Company, including those set out in the Circular. We have assumed that all the information and representations so provided by the Company and/or the Directors and all information and representations referred to or contained in the Circular, for which the Company and the Directors are solely and wholly responsible, were true, accurate and complete at the time they were made and continue to be so as the date hereof. No representation or warranty, expressed or implied, is made by us on the accuracy of such information or representation. 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 the Circular, or the reasonableness of the opinions expressed by the Company, its advisers and/ or the Directors, which have been provided to us. The Directors have collectively and individually accepted full responsibility for the accuracy of the information contained in the Circular and confirmed that, having made all reasonable enquiries that to the best of their knowledge and belief, there are no omission of material facts of which would make any statements in the Circular misleading.

We consider that we have reviewed sufficient information and documents to reach an informed view and to provide a reasonable basis for our recommendations. We have not, however, conducted any independent investigation into the businesses or affairs or assets and liabilities or future prospects of the Group, the KLR Group and the Other Subscribers, or any of their associates, nor have we carried out any independent verification of information provided. Our opinion is based on the financial, economic, market and other conditions in effect and the information made available to us as at the Latest Practicable Date. Shareholders should note that the subsequent developments (including any material change in market and economic conditions) may affect and/or change our opinion and we have no

– 27 –

LETTER FROM SHK

obligation to update this opinion to take into account events occurring after the Latest Practicable Date or to update, revise or reaffirm our opinion. In addition, nothing contained in this letter should be construed as a recommendation to hold, sell or buy any Shares or any other securities of the Company.

Our opinions and their validity are subject to the views of the Board concerning the Restructuring Agreement and the Subscription Agreement and the transactions contemplated therein.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In formulating our opinion regarding the Restructuring Agreement, the Subscription Agreement and the transactions contemplated thereunder, we have taken into consideration the following principal factors and reasons:

1. Background of the Transactions

On 11 July 2012, Talent Step, an indirect wholly-owned subsidiary of the Company, entered into three agreements, namely the Restructuring Agreement, the Subscription Agreement and the Shareholders’ Deed. As the Restructuring Agreement, the Subscription Agreement, the Shareholders’ Deed and the transactions contemplated thereunder are steps taken by the Group to acquire further interests in the KLR Group and to account KLR Hong Kong as its subsidiary by consolidating its results into the Company, we have considered the Transactions as one overall transaction and their effect on the Group in aggregate.

(I) Information on the Group

The Group is principally engaged in real estate development, real estate related investment, fund management and asset management, and distribution of construction and/or decoration materials.

Set out below is a summary of the audited consolidated financial results extracted from the Company’s annual report for the year ended 31 March 2012 (the “ 2012 Annual Report ”):

	For the year ended	For the year ended
	31 March
	2012	2011
	(audited)	(audited)
	HK$’000	HK$’000
Turnover	1,659,859	1,362,278
Gross profit	227,254	250,844
Net profit attributable to Shareholders	109,565	141,215
Gross profit margin	13.69%	18.41%
Net profit margin	6.60%	10.37%

– 28 –

LETTER FROM SHK

	As at 31	March
	2012	2011
	(audited)	(audited)
	HK$’000	HK$’000
Cash at bank and in hand	370,771	434,307
Total assets	2,005,056	1,554,591
Total liabilities	1,046,382	693,260
Net assets	958,674	861,331

As depicted from the table above, the Group’s audited turnover was approximately HK$1,659.86 million for the year ended 31 March 2012 and had increased by approximately 21.84% as compared to the year ended 31 March 2011. However, with the drop in the audited gross profit and net profit for the year ended 31 March 2012 as compared with the previous year ended 31 March 2011, the gross profit margin and net profit margin decreased from approximately 18.41% and approximately 10.37% respectively for the year ended 31 March 2011 to approximately 13.69% and approximately 6.60% respectively for the year ended 31 March 2012.

According to the 2012 Annual Report, the Group’s turnover was mainly attributable to its fitting-out business which was dependent on the progress of individual projects. Such fitting-out business of the Group had encountered increasing number of challenges that had limited its growth and profitability prospects which included limited expansion prospects in the Hong Kong and Macau fitting-out markets as well as falling profit margins as depicted in the table above and funding risks for projects in the PRC. As set out in the 2012 Annual Report, the Group made a decision to partially exit the fitting-out business and redeploy its resources to other business streams, particularly property development.

As advised by the management of the Company, in June 2012, the Group had completed the disposal of 85% of its fitting business and retaining a 15% stake. Details of the disposal are referred to the announcements dated 16 May 2012 and 20 June 2012, and the circular dated 1 June 2012 issued by the Company (the “ Disposal Circular ”). As referred to the Disposal Circular, the expected net sales proceeds of the disposal amounted to approximately HK$488 million and it was stated that the partial disposal of the Group’s fitting-out business represented a good opportunity to allow the Group to reallocate its resources and focus on the development and expansion of its other line of business, being real estate investment (including property development business) in the future and also to expand and strengthen its existing real estate-related businesses, including increasing the Group’s shareholding in KLR Holdings to the extent that KLR Hong Kong might, ultimately, become a subsidiary of the Company.

– 29 –

LETTER FROM SHK

(II) Information on the KLR Group

(a) Business review

KLR Hong Kong is a company incorporated in Hong Kong with limited liability. Immediately prior to the completion of the Transactions, KLR Hong Kong is indirectly owned as to approximately 21.38%, approximately 42.15% and approximately 9.30% respectively by Talent Step, Good Grace and Borrison. The principal activity of KLR Hong Kong is investment holding.

Based on the information provided by the Company, KLR Hong Kong entered into a shareholders’ agreement with, amongst others, KLR Holdings on 14 September 2010 (the “ 2010 Shareholders’ Agreement ”). It was stipulated under the 2010 Shareholders’ Agreement that, save for transfers by a Selling Shareholder (as defined below) of its KLR Hong Kong Shares to an entity directly or indirectly controlling, controlled by or under common control with the Selling Shareholder (“ Affiliate ”) or transfers with the prior written consent from the other shareholders of KLR Hong Kong, (i) the shareholders of KLR Hong Kong who wish to transfer or dispose of their KLR Hong Kong Shares (the “ Selling Shareholder(s) ”) must first offer its KLR Hong Kong Shares to other existing shareholders of KLR Hong Kong (the “ Other Shareholders ”); (ii) the Other Shareholders have the right to purchase the KLR Hong Kong Shares offered on a pro rata basis (according to its shareholding interests of KLR Hong Kong); and (iii) the Selling Shareholder may sell its KLR Hong Kong Shares to a person that is not a shareholder of KLR Hong Kong if none of the Other Shareholders accept the offer.

As confirmed by the Directors, as at the Latest Practicable Date, KLR Hong Kong has a total of 11 subsidiaries and the KLR Group is principally engaged in fund management, real estate investment and asset management business in the PRC. As set out in the Board Letter, the KLR Group was jointly founded in 2004 by Mr. Stephen Anthony Roth (“ Mr. Roth ”) and Mr. Cheng Hei Ming (“ Mr. Cheng ”). According to the management of the Company, apart from the KLR Group, Mr. Roth is also a founding member of three other international investment management companies and has over 20 years of extensive experience in senior management position in the asset management, capital market investment and fund management. As for Mr. Cheng, he has over five years of experience in property management industry prior to founding the KLR Group and over six years of experience in the financial industry. Based on the information provided by the Company, Mr. Cheng has led the KLR Group to launch two RMB funds and managed 14 real estate projects with a total value of over RMB6.93 billion (equivalent to approximately HK$8.45 billion). Further, in order to raise capital for further expansion, Mr. Roth and Mr. Cheng had brought in a number of strategic institutional investors, including an international fund which has extensive experience in the institutional real estate capital markets in Japan and Asia-Pacific countries. Moreover, Mr. Roth and Mr. Cheng also led a team of experienced management with extensive expertise in various fields including asset management, acquisition and fund management.

– 30 –

LETTER FROM SHK

As set out in the Board Letter, the operation of the KLR Group’s business usually involves three stages which include firstly identifying opportunities, followed by the provision of consulting services and lastly disposal of the assets at the right time to maximize the return, and since inception in 2004 till announcement dated on 11 July 2012, the KLR Group has managed 14 real estate projects in Beijing, Shanghai, Hangzhou and Hong Kong respectively. Further, as stated in the Board Letter, the KLR Group derives income primarily from four types of fees, namely (i) fund management fees; (ii) asset management fees; (iii) acquisition and disposition fees; and (iv) performance fees which are linked to the asset being managed and the return when the asset is disposed. As set out in the Board Letter, the KLR Group is managing two funds with a total capital of RMB650 million (equivalent to approximately HK$792.68 million) for investing in around RMB1.2 billion (equivalent to approximately HK$1.46 billion) worth of property.

We are given to understand from the management of the Company that the KLR Group’s strategy is to invest principally in three kinds of projects located in Shanghai, Beijing, Guangzhou, Shenzhen, Hangzhou, Tianjin, Chongqing, Chengdu, Wuhan, Nanjing, Dalian, Qingdao, Kunming and other major second-tier cities, namely (i) established real estate projects which are generating positive cash flow; (ii) completed real estate assets that have not yet achieved full occupancy; and (iii) co-investment in real estate development projects with local or international developers. According to the Company, the KLR Group aims to enhance the values of and reposition the properties under management by repackaging and redeveloping the properties and to increase the attractiveness to investors.

Subsequent to the Shareholders’ Deed coming into effect on 11 July 2012 and the completion of the Restructuring Agreement and the Subscription Agreement on 30 July 2012, the Company had in its announcement dated 1 August 2012 (the “ JV Announcement ”) announced that Best Key Holding Limited (a wholly-owned subsidiary of the Company) (“ Best Key ”), China Real Estates Investment Holdings Ltd. (“ China Real ”) and KLR Hong Kong had formed a joint venture company, namely Kings Haul Limited (the “ JV ”), which is held by Best Key, China Real and KLR Hong Kong as to approximately 84.38%, 7.81% and 7.81% respectively. As referred in the JV Announcement, the JV entered into a sales and purchase agreement to acquire interests in Power City Investments Limited which had interests in Bestlinkage Business Park Shanghai located in Shanghai, the PRC (the “ Land ”) and that upon completion of the acquisition, the KLR Group will provide asset management and investment services by upgrading the Land’s existing buildings to enhance the rental yield as well as the capital value of the Land. For details of the aforesaid transaction, Shareholders may refer to the JV Announcement.

– 31 –

LETTER FROM SHK

(b) Financial overview

Set out below is KLR Hong Kong’s audited consolidated financial information for the two years ended 31 December 2010 and 2011 and unaudited consolidated financial information for the four months ended 30 April 2012 based on its management accounts prepared under the Hong Kong Financial Reporting Standards:

	For the four	For the four
	months ended		For the year ended
		30 April	31 December
		2012	2011	2010
		(unaudited)	(audited)	(audited)
		US$’000	US$’000	US$’000
Revenue		2,977	6,541	3,450
Profit/(loss) before tax		547	1,035	(3,242)
Net profit/(loss) after tax		547	724	(3,258)
Net profit margin		18.37%	11.07%	N/A
		As at
		30 April	As at 31	December
		2012	2011	2010
		(unaudited)	(audited)	(audited)
		US$’000	US$’000	US$’000
Total assets		14,895	12,997	8,880
Total liabilities		6,029	4,360	1,501
Net assets		8,866	8,637	7,379

Revenue of the KLR Group was contributed by acquisition fee, asset management fees, disposition fees, incentive fees and other service fees. Revenue in 2011 rose by approximately 89.59% to approximately US$6.54 million (equivalent to approximately HK$50.88 million) as compared to 2010. Such increase was mainly due to the increase in asset management fees, disposition fees and performance fees. The KLR Group delivered a consolidated net profit of approximately US$0.72 million (equivalent to approximately HK$5.60 million) in 2011 versus a consolidated net loss of approximately US$3.26 million (equivalent to approximately HK$25.36 million) in 2010. Based on our review on the audited consolidated accounts of KLR Hong Kong provided by the Company, we noted that the improvement in the 2011 results was not only contributed by the substantial rise in revenue but also the decrease in expenses which included bonus payment in 2010. During the year 2011, the disposal of three properties under management by the KLR Group contributed to the increase in disposition fees and performance fees.

– 32 –

LETTER FROM SHK

For the four months ended 30 April 2012, the unaudited revenue of approximately US$2.98 million (equivalent to approximately HK$23.18 million) was mainly contributed by the disposition from the disposal of an office property in Beijing. As shown in the table above, the unaudited consolidated net assets value (“ NAV ”) of the KLR Group was approximately US$8.87 million (equivalent to approximately HK$69.01 million) as at 30 April 2012. According to the management accounts of the KLR Group, the net assets mainly comprised of investment in unlisted equity security in four PRC private companies, trust products and other payable balance mainly in relation to amounts due to related parties. The four PRC private companies are principally engaged in holding the real estate projects under the two RMB funds. The investment in trust products represented investment in two RMB funds of US$11.18 million (equivalent to approximately HK$86.98 million).

(III) General overview of the PRC economy and PRC property market

The PRC economy has experienced significant growth since the economic reforms introduced by the PRC government in late 1970’s. According to the National Bureau of Statistic in China, during the past decade, the PRC’s gross domestic product (“ GDP ”) has increased from approximately RMB9,921.5 billion (equivalent to approximately HK$12,099.39 billion) in 2000 to approximately RMB40,120.2 billion (equivalent to approximately HK$48,927.07 billion) in 2010, representing a compound annual growth rate of approximately 15.0%. The GDP growth rate was 1.8% in the second quarter of 2012, representing a year-on-year increase of 7.8%.

On the supply-side, the total investment in real estate development was RMB3,061 billion (equivalent to approximately HK$3,732.93 billion) from January to June in 2012 indicating a double-digit year-on-year growth rate of 16.6% in June 2012. Investment in residential buildings, totalling RMB2,087.9 billion (equivalent to approximately HK$2,546.22 billion), accounted for approximately 68.2% of the total real estate development investment. On the demand side, the floor space of commercial buildings sold in the first six months of 2012 was 399.64 million square meters, representing a year-on-year decrease of 10.0% in which the decreasing amplitude has been narrowed by 4.0% over the first two months of 2012. The sales of commercial buildings amounted to RMB2,331.4 billion (equivalent to approximately HK$2,843.17 billion) shows a year-on-year decrease of 5.2%, and the decreasing amplitude has been narrowed by 15.7% over the first two months of 2012. Despite the tightening real estate market policy in the PRC, the real estate market shows signs of picking up in the first half of 2012.

(IV) Negotiation of the Agreements

The management of the Company had advised us that in March 2012, the Company had the intention to acquire further interest in KLR Hong Kong so that KLR Holdings or KLR Hong Kong would ultimately become a subsidiary of the Company. As such, the Company approached Mr. Cheng (being the sole shareholder of Good Grace, the largest beneficial shareholder of KLR Holdings and KLR Hong Kong, and holding an aggregate direct and indirect interests of approximately 40.62% in the share

– 33 –

LETTER FROM SHK

capital of KLR Hong Kong) to negotiate the same. After the discussions, Mr. Cheng preliminarily agreed to sell his controlling stake in KLR Hong Kong to Talent Step and Mr. Cheng proposed that all KLR Hong Kong Shareholders subscribe further KLR Hong Kong Shares in order to meet capital requirements of KLR Hong Kong for its future expansion plan. After reaching a preliminary consensus with Talent Step as to the total amount to be contributed by Talent Step and the ultimate shareholding interest to be held by Talent Step in KLR Hong Kong, Mr. Cheng, being the largest and controlling shareholder of KLR Hong Kong, took the lead to negotiate with the other KLR Hong Kong Shareholders with a view to work out an agreed shareholding structure of KLR Hong Kong.

The Directors had confirmed that throughout the negotiation process, the Company was mainly involved in negotiations with Mr. Cheng and was not involved in any negotiation of the terms of the Restructuring Agreement including the sale of KLR Holdings Shares by Borrison to Good Grace as well as the Subscription Agreement between Mr. Cheng and the other KLR Hong Kong Shareholders. The Director further confirmed that the management of the Company did not consider or approach Borrison regarding the same as Borrison had less than 7% indirect interests in the share capital of KLR Hong Kong.

In addition, as each of Talent Step, Good Grace and Borrison intended to nominate their own representative to the board of KLR Hong Kong to represent their respective interests, it was agreed among the parties to the Restructuring Agreement, to hold KLR Hong Kong Shares directly instead of through KLR Holdings.

2. Reasons of and benefits of entering into the Transactions

As mentioned above, the Group had disposed 85% of its fitting-out business during this year and reallocated its resources and focus on real estate related business. Since 2010, the Group had entered into the real estate related business by acquiring shareholding interests in the KLR Group and the property at Kwun Tong. The property at Kwun Tong was the Group’s first project under the business model in which the Group would reposition and enhance the value of the property by way of refurbishing and re-packaging of the property, with the intention to sell the same at a higher value after such works. The Kwun Tong Project was carried out in collaboration with KLR Hong Kong, which held the role as property manager, and marked a new beginning for the Group in its real estate related business.

Prior to the signing of the Restructuring Agreement, (i) KLR Holdings entered into a share purchase agreement on 12 April 2012 (the “ Share Purchase Agreement ”) with the then certain various KLR Hong Kong’s shareholders (the “ Vendors ”), pursuant to which the Vendors agreed to sell a total of 147,363 KLR Hong Kong Shares (the “ Offered Shares ”) and KLR Holdings agreed to acquire a total of 121,884 KLR Hong Kong Shares (representing approximately 18.81% of the then issued share capital of KLR Hong Kong) out of the Offered Shares from the Vendors at an aggregate cash consideration of US$1,636,000 (equivalent to approximately HK$12.73 million) translating to approximately US$13.42 (equivalent to approximately HK$104.41) per KLR Hong Kong Share; and (ii) each of Talent Step, Good Grace and Borrison agreed to advance the Talent Step Loan in the

– 34 –

LETTER FROM SHK

amount of US$480,000 (equivalent to approximately HK$3.73 million), the Good Grace Loan in the amount of US$947,000 (equivalent to approximately HK$7.37 million) and the Borrison Loan in the amount of US$209,000 (equivalent to approximately HK$1.63 million) (together, the “ Loans ”) respectively to KLR Holdings to finance the payment of the consideration by KLR Holdings for the KLR Hong Kong Acquisition.

We have enquired into the management of the Company for the reason for KLR Holdings entering into the Share Purchase Agreement instead of Talent Step and we were advised that due to the clauses stipulated under the 2010 Shareholders’ Agreement as mentioned above, the Offered Shares were only extended to the then existing KLR Hong Kong Shareholders. As KLR Holdings required funding from its shareholders to finance the acquisition of the 121,884 KLR Hong Kong Shares, each of Talent Step, Good Grace and Borrison agreed to advance the Loans, which in aggregate, are equivalent to the purchase price for the 121,884 KLR Hong Kong Shares agreed to be acquired by KLR Holdings under the Share Purchase Agreement.

Prior to entering into the Restructuring Agreement, the acquisitions of KLR Hong Kong Shares by Talent Step, Good Grace and Borrison were carried out through KLR Holdings. The Restructuring Agreement was structured in two sequential steps which facilitated Talent Step to increase its interests as well as to hold direct interests in KLR Hong Kong. Accordingly, the KLR Holdings Restructuring was an initial step for Talent Step to acquire controlling stake in KLR Hong Kong from Good Grace and also as part of the restructuring of the shareholding of KLR Hong Kong among the shareholders of KLR Holdings. As a shareholder of KLR Hong Kong may at any time transfer its KLR Hong Kong Shares to Affiliate(s) pursuant to the 2010 Shareholders’ Agreement, the KLR Hong Kong Restructuring was the final restructuring step among the KLR Holdings’ shareholders to hold KLR Hong Kong Shares directly.

Taking into consideration the expertise of the management of the KLR Group acquired through the Kwun Tong Project and the proven track record of the KLR Group, we concur with the views of the Directors that the Transactions will enable the Group to be more actively involved in the real estate investment, fund management and asset management in the PRC and will be able to leverage on the KLR Group’s local network in PRC. Further, based on our understanding with the management of the Company, given the Group’s current management experience in the real estate related business is within Hong Kong as demonstrated by the Kwun Tong Project and that the Group’s experience currently lies with project management and fitting-out business to a large extent, we concur with the views of the Directors that Mr. Cheng and his management team will play an important role to bring in their network built and connections made with international funds to the Group and assist the Group in advancing further in the real estate related business out of Hong Kong and into the PRC.

Apart from the Kwun Tong Project, we also noted from the JV Announcement that after completion of the Transactions, KLR Hong Kong (as at the Latest Practicable Date, being a subsidiary of the Company) had been adopting the business model as stated above, i.e. refurbishing and re-packaging properties with a view to enhance its capital value. We were also given to understand that opportunity in participating in the investment of the Land was through the network of the KLR Group’s management.

– 35 –

LETTER FROM SHK

We have discussed with the management of the Company that the Directors are confident with the PRC property market in the long run, and targeting various different properties and refurbishing them would reap a higher return as a result of the value enhancement of such properties. Moreover, the Transactions will also enable the Group to be in close collaboration with the experienced management of the KLR Group, thereby increase the Group’s exposure in the real estate business based on the network expected to be brought in by the KLR Group’s management, strengthen the Group’s connections with the international funds through the KLR Group and open up opportunities in taking part in possible large scale projects.

Based on the information provided by the Company, the table below illustrates the effective holding of Talent Step, Mr. Cheng, Good Grace and Borrison on KLR Hong Kong prior to the Transactions:

Table 1

Shareholders Mr. Cheng (personal interests) Good Grace Subtotal of Mr. Cheng’s interests Talent Step Borrison	Before After Completion of the Share Purchase Agreement Implied approximate number of KLR Hong Kong Shares Effective KLR Hong Kong shareholding interests Implied approximate number of KLR Hong Kong Shares Effective KLR Hong Kong shareholding interests % % 60,628 9.36 60,628 9.36 202,574 31.26 (Note) 273,108 42.15 (Note) 263,202 40.62 (Note) 333,736 51.50 (Note) 102,775 15.86 (Note) 138,560 21.38 (Note) 44,701 6.90 (Note) 60,266 9.30 (Note)	Difference Approximate number of KLR Hong Kong Shares involved Effective shareholding change in KLR Hong Kong % – – 70,534 10.88 70,534 10.88 35,785 5.52 15,565 2.40	Difference Approximate number of KLR Hong Kong Shares involved Effective shareholding change in KLR Hong Kong % – – 70,534 10.88 70,534 10.88 35,785 5.52 15,565 2.40
			10.88 5.52 2.40

Note: The shareholding represents the effective interests held through KLR Holdings.

As illustrated in Table 1 above, in March 2012 (the period when the Company approached Mr. Cheng) which was prior to entering into the Share Purchase Agreement, the aggregate direct and indirect shareholding of Mr. Cheng in KLR Hong Kong was approximately 40.62% and after the Share Purchase Agreement, Mr. Cheng’s interests increased to approximately 51.50%. In comparison, Borrison’s interests before the negotiation were only approximately 6.90% and after the Share Purchase Agreement, its interests increased slightly to approximately 9.30%. After taking into account that prior to entering into the Restructuring Agreement, Mr. Cheng had the largest controlling stake in KLR Hong Kong share capital among the KLR Hong Kong Shareholders, we consider that it is commercially justifiable for Talent Step to negotiate with and acquire such controlling stake from Mr. Cheng, being the largest shareholder of KLR Hong Kong, but not from Borrison, being a minority shareholder of KLR Hong Kong and holding less than 7% equity

– 36 –

LETTER FROM SHK

interests in KLR Hong Kong. In view of the above reasons, we concur with the views of the Directors that it is in the interests of the Company and the Shareholders as a whole to enter into the Restructuring Agreement.

Further, as stated above, taking into account the reason for the Subscription Agreement was to meet capital requirements of KLR Hong Kong for its future expansion plan, we concur with the views of the Directors that the entering into of the Subscription Agreement is in the interests of the Company and the Shareholders as a whole.

Taking into consideration the potential benefits of the Transactions (including the acquisition of the expertise and network of the KLR Group’s management), the Group’s current limited management experience in the real estate related business other than the Kwun Tong Project, and that the Transactions are in line with the Group’s strategy to reallocate its resources in real estate related business, we concur with the views of the Directors that it is important for the Company to capitalise on the expertise, experience, knowledge and connections of the KLR Group’s management and that the Transactions are conducted in the ordinary and usual course of business of the Company and is in the interests of the Company and the Shareholders as a whole.

3. Principal terms of the Restructuring Agreement and the Subscription Agreement

Prior to the signing of the Restructuring Agreement, (i) KLR Holdings entered the Share Purchase Agreement, pursuant to which KLR Holdings agreed to acquire a total of 121,884 KLR Hong Kong Shares (representing approximately 18.81% of the then issued share capital of KLR Hong Kong) from KLR Hong Kong’s other shareholders at an aggregate cash consideration of US$1,636,000 (equivalent to approximately HK$12.73 million); and (ii) the shareholders of KLR Holdings agreed to advance the Loans to finance the payment of the consideration by KLR Holdings for the KLR Hong Kong Acquisition. Following completion of the Share Purchase Agreement, KLR Holdings’ interests in KLR Hong Kong increased from approximately 54.02% to approximately 72.83%.

On 10 April 2012, Talent Step advanced the Additional Talent Step Loan (aggregate amount of US$1,156,000 (equivalent to approximately HK$8.99 million)) to KLR Holdings pending the advance of the Good Grace Loan and the Borrison Loan to KLR Holdings by Good Grace and Borrison respectively as mentioned above.

As such, immediately prior to the signing of the Restructuring Agreement, KLR Holdings was indebted to Talent Step in the aggregate amount of US$1,636,000 (equivalent to approximately HK$12.73 million) which was interest-free and had no fixed repayment term.

Restructuring Agreement

On 11 July 2012, the Talent Step, Good Grace, Borrison and KLR Holdings entered into the Restructuring Agreement to undergo a restructuring exercise whereby Talent Step, Good Grace and Borrison would directly hold the relevant KLR Hong Kong Shares after completion.

– 37 –

LETTER FROM SHK

KLR Holdings Restructuring

Pursuant to the Restructuring Agreement,

(i) Talent Step had conditionally agreed to acquire 2,283 KLR Holdings Shares at a cash consideration of US$2,775,000 (equivalent to approximately HK$21.59 million) and the Sale Good Grace Loan at a cash consideration of US$374,000 (equivalent to approximately HK$2.91 million) from Good Grace totalling aggregate cash consideration of US$3,149,000 (equivalent to approximately HK$24.50 million) (the “ Restructuring Consideration I ”); and
(ii) Good Grace had conditionally agreed to acquire 335 KLR Holdings Share at a cash consideration of US$157,000 (equivalent to approximately HK$1.22 million) and the Sale Borrison Loan at a cash consideration of US$55,000 (equivalent to approximately HK$0.43 million) from Borrison totalling aggregate cash consideration of US$212,000 (equivalent to approximately HK$1.65 million)).

Details of the refinancing of KLR Holdings regarding the financing of the Good Grace Loan and the Borrison Loan by Good Grace and Borrison respectively and the settlement of the Additional Talent Step Loan are set out in the Board Letter in the section headed “The Restructuring Agreement – KLR Holdings Restructuring” in the Circular.

KLR Hong Kong Restructuring

Pursuant to the Restructuring Agreement, following the KLR Holdings Restructuring Completion,

(i) KLR Holdings shall assign and distribute 246,288 KLR Hong Kong Shares (representing approximately 38.01% of the issued share capital of KLR Hong Kong) to Talent Step and in consideration thereof, Talent Step shall waive and discharge the whole outstanding amount of US$854,000 (equivalent to approximately HK$6.64 million) owing by KLR Holdings to Talent Step (being the aggregate of the Talent Step Loan and the Sale Good Grace Loan) (the “ Restructuring Consideration II ”);
(ii) KLR Holdings shall assign and distribute 181,192 KLR Hong Kong Shares (representing approximately 27.96% of the issued share capital of KLR Hong Kong) to Good Grace and in consideration thereof, Good Grace shall waive and discharge the whole outstanding amount of US$628,000 (equivalent to approximately HK$4.89 million) owing by KLR Holdings to Good Grace (being the aggregate of the Good Grace Loan less the Sale Good Grace Loan plus the Sale Borrison Loan); and

– 38 –

LETTER FROM SHK

(iii) KLR Holdings shall assign and distribute 44,454 KLR Hong Kong Shares (representing approximately 6.86% of the issued share capital of KLR Hong Kong) to Borrison and in consideration thereof, Borrison shall waive and discharge the whole outstanding amount of US$154,000 (equivalent to approximately HK$1.20 million) owing by KLR Holdings to Borrison (being the aggregate of the Borrison Loan less the Sale Borrison Loan).

The Restructuring Agreement was completed on 30 July 2012.

Subscription Agreement

On 11 July 2012, Talent Step and the Other Subscribers entered into the Subscription Agreement, pursuant to which, Talent Step and the Other Subscribers agreed to subscribe for 304,333 KLR Hong Kong Shares and aggregate 388,494 KLR Hong Kong Shares respectively at the subscription price of US$17.32 (equivalent to approximately HK$134.75) per KLR Hong Kong Share (the “ Subscription Price ”). Pursuant to the Subscription Agreement, the subscription amount payable by Talent Step was US$5,271,000 (equivalent to approximately HK$41.01 million) (the “ Subscription Amount ”) and the total subscription amount payable by the Subscribers was US$12,000,000 (equivalent to approximately HK$93.36 million). The Subscription Agreement was completed on 30 July 2012.

(I) Basis of determination the consideration

(a) Consideration for the Restructuring Agreement

As confirmed by the Directors, the Restructuring Consideration I of US$3,149,000 (equivalent to approximately HK$24.50 million) was arrived at after arm’s length negotiations between the parties to the Restructuring Agreement with reference to the unaudited consolidated NAV of the KLR Group as at 30 April 2012 being US$8,865,767 (equivalent to approximately HK$68.98 million).

As referred to the Board Letter, the effective consideration for the acquisition of 246,228 KLR Hong Kong Shares by Talent Step from KLR Holdings of US$854,000 (equivalent to approximately HK$6.64 million) was determined with reference to the total assets value, the reserves and the shareholders’ loans of single company accounts of KLR Holdings as at 30 April 2012. Further, as confirmed by the Directors, the consideration for the KLR Hong Kong Acquisition of US$1,636,000 (equivalent to approximately HK$12.73 million) was arrived at after arm’s length negotiations between the parties to the Share Purchase Agreement with reference to the then unaudited consolidated NAV of the KLR Group as at 31 December 2011.

As illustrated in Table 2 below, Talent Step paid approximately US$29.23 (equivalent to approximately HK$227.41) per KLR Hong Kong Share for the increase in the stake from approximately 21.38% to 38.01%, Good Grace received in aggregate approximately US$31.95 (equivalent to approximately HK$248.57) per KLR Hong Kong Share for the decrease in the stake from approximately 42.15% to 27.96% and

– 39 –

LETTER FROM SHK

Borrison received in aggregate approximately US$13.41(equivalent to approximately HK$104.33) per KLR Hong Kong Share for the decrease in the stake from approximately 9.30% to 6.86%.

As mentioned above, the negotiation of the consideration under the Restructuring Agreement was independently carried out and coordinated by Mr. Cheng among the parties to the Restructuring Agreement. Although the Directors were aware that the Restructuring Consideration I payable by Talent Step to Good Grace was higher than the consideration payable by Good Grace to Borrison under the Restructuring Agreement, the Directors had assessed the Restructuring Consideration I on the additional benefits to be derived from the Shareholders’ Deed of which the Company would be able to exercise control over the board of directors of KLR Hong Kong, the anticipated potential benefits from business prospects of the KLR Group and that the Group could enjoy the network built and the connections made with the international funds by the management of the KLR Group.

The implied shareholding of Talent Step, Good Grace and Borrison in KLR Hong Kong before and after completion of the Restructuring Agreement and the consideration involved is tabulated as below:

Table 2

	Before	Before		After	After
	Completion of		the KLR	Restructuring	Agreement	Difference		Consideration involved
	Implied					Approximate	Effective		Implied
	approximate			Approximate		number of	shareholding		approximate
	number of	Shareholding		number of	Shareholding	KLR Hong	change in		per KLR
	KLR Hong		in KLR	KLR Hong	in KLR	Kong Shares	KLR Hong	Aggregate	Hong Kong
	Kong Shares	Hong Kong		Kong Shares	Hong Kong	involved	Kong	Amount	Share
	(A)		(B)	(C)	(D)	(C)-(A)	(D)-(B)	(E)	(E)/((C)-(A))
			%		%		%	US$	US$
Talent Step	138,560	21.38 (Note)		246,288	38.01	107,728	16.62	Paid	29.23
								3,149,000
Good Grace	273,108	42.15 (Note)		181,192	27.96	91,916	-14.18	Received	31.95
								2,937,000
Borrison	60,266	9.30 (Note)		44,454	6.86	15,812	-2.44	Received	13.41
								212,000
KLR Holdings	471,934		72.83
								Average	24.86

Note: The shareholding represents the effective interests held through KLR Holdings.

In respect of the Restructuring Consideration II, the Directors had advised that the amount was solely to off-set the loans advanced to the KLR Hong Kong Acquisition, hence, no actual payment would be made by the parties to the Restructuring Agreement

– 40 –

LETTER FROM SHK

in this part of the restructuring exercise as the consideration of the KLR Hong Kong Restructuring is equivalent to the KLR Hong Kong Acquisition’s consideration which was financed by the Loans, i.e. the amount had been off-set as a result.

We have enquired into and have been advised by the Directors that in assessing the Restructuring Consideration I, they have considered both the price-to-earnings ratio (“ PER ”) approach and price-to-book ratio (“ PBR ”) approach. The Directors considered that adopting the PBR approach is more appropriate as compared with the PER as the Company considers the value of the KLR Group is based on its network in the PRC real estate market, its experienced management team and its established investment in the RMB funds and the exercise of the control over the board of directors of KLR Hong Kong through the execution of the Shareholders’ Deed.

(b) Subscription Amount for the Subscription Agreement

As confirmed by the Directors, the Subscription Amount and the considerations payable by the Other Subscribers was determined with reference to the unaudited consolidated NAV of the KLR Group as at 30 April 2012 being US$8,865,767 (equivalent to approximately HK$68.98 million) and the capital requirements of KLR Hong Kong of US$12,000,000 (equivalent to approximately HK$93.36 million). The Subscription Amount for the 304,333 KLR Hong Kong Shares is equivalent to US$17.32 (equivalent to approximately HK$134.75) per KLR Hong Kong Share as stipulated under the Subscription Agreement.

We have enquired into and have been advised by the Directors that in assessing the Subscription Amount, similar to the Restructuring Consideration I, they have also considered both the PER approach and the PBR approach. On the same reason as aforementioned under the paragraph headed “(a) Consideration for the Restructuring Agreement”, the Directors considered that adopting the PBR approach is more appropriate in assessing the Subscription Amount.

– 41 –

LETTER FROM SHK

The shareholding of Talent Step, the Other Subscribers and the Other KLR Hong Kong Shareholders excluding the Other Subscribers in KLR Hong Kong before and after completion of the Subscription Agreement and the consideration involved is tabulated as below:

Table 3

Talent Step Other Subscribers Other KLR Hong Kong Shareholders excluding the Other Subscribers Total	Before After Completion of the Subscription Agreement Number of KLR Hong Kong Shares Shareholding in KLR Hong Kong Number of KLR Hong Kong Shares Shareholding in KLR Hong Kong Consideration involved % % US$ 246,288 38.01 550,621 41.07 5,271,000 351,140 54.19 739,634 55.16 6,729,000 50,572 7.80 50,572 3.77 – 648,000 100.00 1,340,827 100.00 12,000,000	Before After Completion of the Subscription Agreement Number of KLR Hong Kong Shares Shareholding in KLR Hong Kong Number of KLR Hong Kong Shares Shareholding in KLR Hong Kong Consideration involved % % US$ 246,288 38.01 550,621 41.07 5,271,000 351,140 54.19 739,634 55.16 6,729,000 50,572 7.80 50,572 3.77 – 648,000 100.00 1,340,827 100.00 12,000,000
		12,000,000

(c) Aggregate consideration under the Restructuring Agreement and the Subscription Agreement

Based on the above, the total consideration under the Transactions, being the Restructuring Consideration I of US$3,149,000 (equivalent to approximately HK$24.50 million) and the Subscription Amount of US$5,271,000 (equivalent to approximately HK$41.01 million) amounted to US$8,420,000 (equivalent to approximately HK$65.51 million) (the “ Aggregate Consideration ”).

– 42 –

LETTER FROM SHK

The implied shareholding of Talent Step, Good Grace and Borrison in KLR Hong Kong before and after completion of the Transactions and the consideration involved is tabulated as below:

Table 4

	Before	Before	After	After
	Completion of		the Transactions		Difference		Consideration involved
	Implied				Approximate	Effective		Implied
	approximate		Approximate		number of	shareholding		approximate
	number of	Shareholding	number of	Shareholding	KLR Hong	change in		per KLR
	KLR Hong	in KLR	KLR Hong	in KLR	Kong Shares	KLR Hong	Aggregate	Hong Kong
	Kong Shares	Hong Kong	Kong Shares	Hong Kong	involved	Kong	Amount	Share
	(A)	(B)	(C)	(D)	(C)-(A)	(D)-(B)	(E)	(E)/((C)-(A))
		%		%		%	US$	US$
Talent Step	138,560	21.38 (Note)	550,621	41.07	412,061	19.69	8,420,000	20.43
Good Grace	273,108	42.15 (Note)	405,087	30.21	131,979	-11.94	941,000	7.13
Borrison	60,266	9.30 (Note)	99,385	7.41	39,119	-1.89	739,000	18.89
							Average	15.48

Note: The shareholding represents the effective interests held through KLR Holdings.

(II) Assessment of the consideration

We have enquired into and have been advised by the management of the Company that no valuation report on the KLR Group has been prepared for the purpose of the Transactions. However, an independent valuer has been appointed by the Company for the purpose of issuing a valuation report for auditing requirements and such valuation is not available for our review as at the Latest Practicable Date. As such, our independent assessment will be based on the information available and provided by the Company.

Taking into consideration that the valuation methods as adopted by the Company were commonly and widely adopted, in assessing the fairness and reasonableness of the Transactions, we have compared the implied PERs and PBRs of the KLR Group in respect of the Restructuring Consideration I, the Subscription Amount and the Aggregate Consideration with the PERs and PBRs of other listed companies engaged principally in businesses similar to that of the KLR Group.

– 43 –

LETTER FROM SHK

The PBR and PER of the Transactions are calculated as follows:

I. Restructuring Consideration I

(a) PBR

Implied consideration per KLR Hong Kong under the Restructuring Agreement (Note) Multiplied by: Total number of issued KLR Hong Kong Shares Market value of the KLR Group based on the Restructuring Consideration I Divided by: Unaudited consolidated NAV of the KLR Group as at 30 April 2012 *PBR* PER Market value of the KLR Group based on the Restructuring Consideration I Divided by: Audited consolidated net profit after tax of the KLR Group for the year ended 31 December 2011 *PER*	US$29.23 648,000
	US$18,941,040 US$8,865,767 *2.14* US$18,941,040 US$724,406 *26.15*

Implied consideration per KLR Hong Kong under the
Restructuring Agreement (Note)
Multiplied by:
Total number of issued KLR Hong Kong Shares
Market value of the KLR Group based on the
Restructuring Consideration I
Divided by:
Unaudited consolidated NAV of the KLR Group as at 30
April 2012
PBR
PER
Market value of the KLR Group based on the
Restructuring Consideration I
Divided by:
Audited consolidated net profit after tax of the KLR
Group for the year ended 31 December 2011
PER

US$29.23
648,000

US$18,941,040
US$8,865,767
2.14
US$18,941,040
US$724,406
26.15

(b) PER

Note: Based on the calculation in Table 2 in this letter.

– 44 –

LETTER FROM SHK

II. Subscription Amount

(a) PBR

Subscription Price Multiplied by: Total number of issued KLR Hong Kong Shares and total number of KLR Hong Kong Shares issued under the Subscription Agreement Market value of the KLR Group based on the Subscription Amount Divided by: (i) Unaudited consolidated NAV of the KLR Group as at 30 April 2012 (Note 1) i) Unaudited pro forma adjusted NAV of the KLR Group as at 30 April 2012 (Note 2) *PBR* (Note 3) *PBR* (Note 4)	US$17.32 1,340,827
	US$23,223,124 US$8,865,767 US$20,842,767 *2.62* *1.11*

Subscription Price
Multiplied by:
Total number of issued KLR Hong Kong Shares and
total number of KLR Hong Kong Shares issued under
the Subscription Agreement
Market value of the KLR Group based on the Subscription
Amount
Divided by:
(i)
Unaudited consolidated NAV of the KLR Group as
at 30 April 2012 (Note 1)
i)
Unaudited pro forma adjusted NAV of the KLR
Group as at 30 April 2012 (Note 2)
PBR (Note 3)
PBR (Note 4)

US$17.32
1,340,827

US$23,223,124
US$8,865,767
US$20,842,767
2.62
1.11

(b) PER

Market value of the KLR Group based on the Subscription
Amount	US$23,223,124
Divided by:
Audited consolidated net profit after tax of the KLR
Group for the year ended 31 December 2011	US$724,406
*PER*	*32.06*

Note:

Extracted from the management accounts of KLR Hong Kong provided by the Company for the four months ended 30 April 2012.
The unaudited pro forma adjusted NAV is arrived at after making adjustments of the net proceeds received under the Subscription Agreement of approximately US$11.97 million (equivalent to approximately HK$93.13 million) and the 692,827 KLR Hong Kong Shares issued. Such pro forma adjusted figure is presented for information only and will not be used in our analysis below.
Calculated based on the KLR Hong Kong’s unaudited consolidated NAV as at 30 April 2012.
Calculated based on the unaudited pro forma adjusted NAV after making adjustments from the net proceeds under the Subscription Agreement.

– 45 –

LETTER FROM SHK

III. Aggregate Consideration

(a) PBR

Implied consideration per KLR Hong Kong Share in respect to the Transactions (Note 1) US$20.43 Multiplied by: Total number of issued KLR Hong Kong Shares and total number of KLR Hong Kong Shares issued under the Subscription Agreement 1,340,827

Market value of the KLR Group based on the Aggregate
Consideration	US$27,393,096
Divided by:
(i) Unaudited consolidated NAV of the KLR Group as
at 30 April 2012 (Note 2)	US$8,865,767
i) Unaudited pro forma adjusted NAV of the KLR
Group as at 30 April 2012 (Note 3)	US$20,842,767
*PBR* (Note 4)	*3.09*
*PBR* (Note 5)	*1.31*

(b) PER

Market value of the KLR Group based on the Aggregate
Consideration	US$27,393,096
Divided by:
Audited consolidated net profit after tax of the KLR
Group for the year ended 31 December 2011	US$724,406
*PER*	*37.82*

Note:

Based on the calculation in Table 4 in this letter.
Extracted from the management accounts of KLR Hong Kong provided by the Company for the four months ended 30 April 2012.
The unaudited pro forma adjusted NAV is arrived at after making adjustments of the net proceeds received under the Subscription Agreement of approximately US$11.97 million (equivalent to approximately HK$93.13 million) and the 692,827 KLR Hong Kong Shares issued. Such pro forma adjusted figure is presented for information only and will not be used in our analysis below.
Calculated based on the KLR Hong Kong’s unaudited consolidated NAV as at 30 April 2012.

– 46 –

LETTER FROM SHK

Calculated based on the unaudited pro forma adjusted NAV after making adjustments from the net proceeds under the Subscription Agreement.

For comparison purpose, we have, on a best effort basis, conducted a search of comparable companies (the “ Comparables ”) which meet the criteria of (i) their business being closely comparable to that of the KLR Group; and (ii) having more than 50% of their consolidated revenue being attributable to real estate-related assets management, real estate advisory services and fund management. Based on the abovementioned criteria, we have identified five Comparables listed in Singapore, Hong Kong, the United States and the United Kingdom. To the best of our knowledge, effort and endeavor and based on the search conducted according to the abovementioned criteria, we consider that the Comparables are fair and representative for comparison purpose.

Independent Shareholders should note that while the revenue of the KLR Group is mainly generated from the PRC (including Hong Kong), the Comparables operate in a broader range of geographical segments including the United States, Europe, Middle East, and Asia Pacific. In addition, the Comparables may also have other operations such as corporate finance advisory services, agency leasing and valuation service that are not comparable with and/or are unrelated to the principal business of the KLR Group. We wish to highlight to the Independent Shareholders that none of the Comparables operates in the exact same geographical segment as the KLR Group does and that the PBR/PER of each of the Comparables may be sensitive to the specific circumstances of specific geographical segment in which the Comparables operate in. Nonetheless, having considered that (i) despite the differences in geographical segmentations, all the Comparables are principally engaged in the asset management industry; and (ii) all the Comparables are selected based on the criteria that they must have more than 50% of their consolidated revenue being attributable to real estate-related assets management, real estate advisory services and fund management for their latest financial year, where the percentage ratio of 50% was used because it ensures that all the Comparables chosen are principally engaged in the same business as the KLR Group does and generated the majority of their respective revenue for their latest financial year from such business operations. We therefore consider that the analysis in Table 5 below offers a good reference for comparison purpose and we are of the view that such comparison analysis can still provide guidance on valuation and a general reference towards the sector.

– 47 –

LETTER FROM SHK

Table 5

Comparables
(stock code)
Stock
Exchange
Principal business
Market
capitalisation
as at
11 July 2012
(Note 1)
NAV
(Note 2)
Net profit
(Note 3)
PER
PBR
HK$’ million HK$’ million HK$’ million
(times)
(times)
ARA Asset
Management Limited
(Stock code: ARA)
Singapore
(i)
Real estate investment trusts;
(ii)
private real estate funds;
(iii)
real estate management
services; and
(iv)
corporate finance advisory
services
6,603.33
1,136.94
416.96
15.42
5.81
Jones Lang LaSalle
Incorporated
(Stock code: JLL)
New York
(i)
Property and facilities
management;
(ii)
project and development
services;
(iii)
capital markets and value
recovery services;
(iv)
leasing services; and
(v)
advisory, consulting and
others services
23,452.55
13,182.28
1,288.46
18.20
1.78
Synergis Holdings
Limited
(Stock code: 2340)
Hong Kong
Property and facility management
services
225.76
125.58
15.98
14.13
1.80
CBRE Group Inc
(Stock code: CBG)
New York
(i)
Provision of real
estate-related advisory
services; and
(ii)
valuation services
39,707.61
11,025.53
2,258.73
17.58
3.60
Savills PLC
(Stock code: SVS)
London
(i)
Provision of transactional
consultancy;
(ii)
property and facilities
management services;
(iii)
Provision of property related
financial services; and
(iv)
fund management
5,811.25
2,466.49
323.40
17.95
2.36
Maximum
18.20
5.81
Minimum
14.13
1.78
Median
17.58
2.36
Mean
16.66
3.07
Restructuring Consideration I
24.50
(Note 4)
68.98
(Note7)
5.64
(Note 8)
26.15
2.14
Subscription Amount
41.01
(Note 5)
68.98
(Note 7)
5.64
(Note 8)
32.06
2.62
Aggregate Consideration
65.51
(Note 6)
68.98
(Note 7)
5.64
(Note 8)
37.82
3.09

– 48 –

LETTER FROM SHK

Note:

The market capitalization of the Comparables denominated in Singapore Dollar and Sterling are translated into HK$ at the rate of SPG$1 = HK$6.140868 and GBP1 = HK$12.044009.
The NAVs of the Comparables are extracted from their respective latest published annual reports and that the NAVs of the Comparables which are denominated in Singapore Dollar and Sterling are translated into HK$ at the rate of SPG$1 = HK$6.140868 and GBP1 = HK$12.044009.
The net profit of the Comparables are extracted from their respective latest published annual reports and that the net profit of the Comparables which are denominated in Singapore Dollar and Sterling are translated into HK$ at the rate of SPG$1 = HK$6.140868 and GBP1 = HK$12.044009.
The Restructuring Consideration I had been used in the calculation of PER and PBR.
The Subscription Amount had been used in the calculation of PER and PBR.
The Aggregate Consideration had been used in the calculation of PER and PBR.
The unaudited consolidated NAV of the KLR Group as at 30 April 2012 of approximately US$8,865,767 is translated to HK$ at the rate of US$1 = HK$7.78 and is equivalent to approximately HK$68.98 million.
The audited consolidated net profit after tax KLR Group’s for the year ended 31 December 2011 of approximately US$724,406 is translated to HK$ at the rate of US$1 = HK$7.78 and is equivalent to approximately HK$5.64 million.
(a) Assessment of the Restructuring Consideration I

As referred to Table 2 above, the implied approximate consideration per KLR Hong Kong Share under the Restructuring Agreement paid by Talent Step, received by Good Grace and received by Borrison are US$29.23 (equivalent to approximately HK$227.41), US$31.95 (equivalent to approximately HK$248.57) and US$13.41 (equivalent to approximately HK$104.33) respectively. It is noted that Talent Step paid a premium of approximately 17.56% whereas Borrison received a discount of approximately 46.08% over/to the average consideration. It is also noted that, Good Grace (being a company controlled by Mr. Cheng) received a premium of approximately 28.51% over the average consideration.

As mentioned above, the consideration per KLR Hong Kong was approximately US$13.42 (equivalent to approximately HK$104.41) under the Share Purchase Agreement. As such, it is noted that the price per KLR Hong Kong Share for Borrison’s disposal of its indirect interests in KLR Hong Kong to Good Grace under the KLR Holdings Restructuring was nearly equivalent to the consideration payable by KLR Holdings under the Share Purchase Agreement whereas Talent Step acquired its indirect interests in KLR Hong Kong from Good Grace at a higher price based on per KLR Hong Kong Share.

As referred above, the implied PBR represented by the Restructuring Consideration I, being 2.14 times is below the mean of approximately 3.07 times for the Comparables and falls within the range of the PBRs of the Comparables from approximately 1.78 times to 5.81 times. In relation to the implied PER represented by the Restructuring Consideration I, being 26.15 times, it is above the range as well as the mean of the Comparables’ PERs from 14.13 times to 18.20 times.

– 49 –

LETTER FROM SHK

Although the implied PER under the Restructuring Agreement was above the range and the mean of the Comparables and that Talent Step paid a premium for its increase in stake in KLR Hong Kong during the restructuring exercise as compared to the Share Purchase Agreement, having considered that (i) the acquisition of the controlling stake from Mr. Cheng through Good Grace, the largest and controlling shareholder of KLR Hong Kong prior to the completion of the Share Purchase Agreement, which had the bargaining power of which Borrison, being a minority shareholder and holding less than 7% equity interests in KLR Hong Kong prior to the Share Purchase Agreement, lacked, was necessary for Talent Step as such transaction with Mr. Cheng via Good Grace enabled Talent Step to acquire the controlling stake in KLR Hong Kong as well as the power to exercise control over the board of directors of KLR Hong Kong; (ii) the KLR Group being an asset-based group of companies and that the implied PBR of the KLR Group under the Restructuring Agreement represented by the Restructuring Consideration I, being 2.14 times, is below the mean and within the range of PBRs of the Comparables; (iii) the acquisition of the KLR Group’s network, connections, expertise and management through the KLR Holdings Restructuring and the KLR Hong Kong Restructuring, being part of the Transactions, may not be measurable by earnings, i.e. through PER approach; and (iv) the ability to exercise control over the board of directors of KLR Hong Kong through the execution of the Shareholders’ Deed (details of which are set out in the Board Letter), we consider that the Restructuring Consideration I is fair and reasonable insofar as the Independent Shareholders are concerned.

Loan arrangement

As mentioned above, Talent Step, Good Grace and Borrison agreed to advance the Loans to KLR Holdings for the purpose of financing the KLR Hong Kong Acquisition. Given after the distribution by KLR Holdings of the total 471,934 KLR Hong Kong Shares, being its entire shareholding in KLR Hong Kong, to its shareholders pursuant to the KLR Hong Kong Restructuring, KLR Holdings ceases to have any interest in KLR Hong Kong, it was the intention of the shareholders of KLR Holdings to settle the Loans on the book of KLR Holdings’ accounts in the KLR Hong Kong Restructuring.

– 50 –

LETTER FROM SHK

(i) KLR Holdings Restructuring

The table below illustrates the shareholding interest on KLR Holdings and the percentage of the distribution of the Loans before and after completion of the KLR Holdings Restructuring:

Table 6

KLR Holdings’ shareholders Talent Step Good Grace Borrison Total	Before After Completion of the KLR Holdings Restructuring Loans Loans distribution Shareholding in KLR Holdings Loans Loans distribution Shareholding in KLR Holdings (A) (B) US$ % % US$ % % 480,000 29.34 29.36 854,000 52.20 52.19 947,000 57.89 57.87 628,000 38.39 38.39 209,000 12.78 12.77 154,000 9.41 9.42 1,636,000 100.00 100.00 1,636,000 100.00 100.00	Difference (B-A) US$ 374,000 (319,000) (55,000) –

As illustrated in Table 6 above, it is noted that the Loans percentage among Talent Step, Good Grace and Borrison was restructured in proportional to their shareholding interest percentage in KLR Holdings before and after the KLR Holdings Restructuring Completion. As mentioned above, the total cash consideration under the Restructuring Agreement in respect for the effective interest of approximately 16.62% on KLR Hong Kong under the KLR Holdings Restructuring was US$3,149,000 (equivalent to approximately HK$24.50 million) which included the cash consideration for the 2,283 KLR Holdings Shares and the Sale Good Grace Loan. Given that it was the intention of the shareholders of KLR Holdings to settle the Loans, the total cash consideration under the KLR Holdings Restructuring shall effectively include the difference of the Loans according to the shareholding interests of KLR Holdings by acquiring such difference as partial settlement. Given Talent Step’s interest in KLR Holdings before the KLR Holdings Restructuring was approximately 29.36%, for the purpose of settlement of the Loans by KLR Holdings after the restructuring, the Sale Good Grace Loan was included as part of the consideration. As illustrated in Table 6 above, the Sale Good Grace Loan was equivalent to the difference for Talent Step’s attributable interests on the Loans according to Talent Step’s interests on the share capital of KLR Holdings. Likewise for Good Grace, the Sale Borrison Loan was equivalent to the difference for Good Grace’s attributable interests on the Loans according to its interests on the share capital of KLR Holdings. It is also noted that the cost of acquisition of the Sale Good Grace Loan is on a dollar-to-dollar basis.

– 51 –

LETTER FROM SHK

(ii) KLR Hong Kong Restructuring

After the KLR Holdings Restructuring Completion, as a final step for restructuring and settling the Loans on the books of KLR Holdings’ accounts, the KLR Hong Kong Restructuring was put forward. As mentioned in the paragraph headed “(a) Consideration for the Restructuring Agreement” above, the Restructuring Consideration II was solely to off-set the Loans and there was no actual payment of the Loans as the Loans were eventually off-set against the consideration payable by the relevant parties under the Restructuring Agreement. Upon the KLR Hong Kong Completion, the Loans were fully settled by KLR Holdings.

Taking into consideration that (i) the Loans were advanced by each of Talent Step, Good Grace and Borrison for the purpose of financing the acquisition of the 471,934 KLR Hong Kong Shares by KLR Holdings under the Share Purchase Agreement; (ii) the cost of acquisition of the Sale Good Grace Loan is on a dollar-to-dollar basis; (iii) the inclusion of the Sale Good Grace Loan in the consideration under the Restructuring Agreement was the difference of the Loans according to the shareholding interest of KLR Holdings; and (iv) there was no actual payment of the Loans as the Loans were eventually off-set against the consideration payable by Talent Step, we consider that the loan arrangement under the Restructuring Agreement is fair and reasonable and in the interests of the Company and the Shareholders as a whole.

(b) Assessment of the Subscription Amount

As set out above, the Subscription Amount represents an implied PBR of approximately 2.62 times and is within the range of the PBRs of the Comparables from 1.78 times to 5.81 times and below the mean of 3.07 times and represents an implied PER of approximately 32.06 times which is above the mean of 16.66 times and the range of the PERs of the Comparables from approximately 14.13 times to 18.20 times.

We have enquired into and have been advised by the Directors that the aggregate proceeds to be raised from the subscription was based on the unaudited consolidated NAV position as at 30 April 2012 as well as the working capital requirements of the KLR Group which would be US$12,000,000 (equivalent to approximately HK$93.36 million). Based on the management accounts of the KLR Group as at 30 April 2012, the cash balance amounted to approximately US$530,000 million (equivalent to approximately HK$4.12 million). As advised by the Directors, the current cash balance may not be sufficient to invest in more projects, as such there is fund raising needs for the KLR Group. Accordingly, the amount of the working capital requirements was based on the intentions of the KLR Group to invest in the third RMB fund, real estate projects and for daily working capital use. As such, the amount to be raised from the issue of KLR Hong Kong Shares was not based on the earnings of the KLR Group but rather on the capital requirements which is US$12,000,000 (equivalent to approximately HK$93.36 million) and PER approach is inappropriate for our assessment purposes.

– 52 –

LETTER FROM SHK

Although the implied PER under the Subscription Amount is above the range and the mean of the Comparables, after taking into consideration the above, (i) the implied PBR is below the mean and within the range of the Comparables; (ii) the Subscription Price of US$17.32 (equivalent to approximately HK$134.75) per KLR Hong Kong Share is offered to Talent Step is the same as offered to the Other Subscribers; and (iii) the above assessment on the working capital requirement of the KLR Group, we are of the view that the Subscription Amount is fair and reasonable insofar as the Independent Shareholders are concerned.

(c) Assessment of the Aggregate Consideration

As mentioned above, the transactions contemplated under the Restructuring Agreement and the Subscription Agreement are steps taken by the Group to acquire further interests in the KLR Group and to account KLR Hong Kong as its subsidiary, our assessment and analysis below will be taken into consideration as one overall transaction and their effect on the Group in aggregate. Taking into consideration the above, the Aggregate Consideration for the Transactions would amount to US$8,420,000 (equivalent to approximately HK$65.51 million).

As referred to Table 4 above, the implied approximate consideration per KLR Hong Kong Share in respect to the Transactions paid by each of Talent Step, Good Grace and Borrison are US$20.43 (equivalent to approximately HK$158.95), US$7.13 (equivalent to approximately HK$55.47) and US$18.89 (equivalent to approximately HK$146.96) respectively. As compared with the average, it is noted that Talent Step paid a premium of approximately 31.96%, Good Grace paid a discount of approximately 53.96% and Borrison paid a premium of approximately 22.00% over/to the average consideration.

As set out above, the Aggregate Consideration represents an implied PBR of approximately 3.09 times which is above the mean of approximately 3.07 times for the Comparables and falls within the range of the PBRs of the Comparables from approximately 1.78 times to 5.81 times. The Aggregate Consideration represents an implied PER of approximately 37.82 times which is above the mean of approximately 16.66 times for the Comparables and falls out of the range of the PERs of the Comparables from approximately 14.13 times to 18.20 times.

Although the PER of the Aggregate Consideration is above the range and the mean of the Comparables and on per KLR Hong Kong Share basis, Talent Step paid more than Good Grace and Borrison in respect to the Transactions, taking into account the (i) the controlling stake was initially acquired from Mr. Cheng who, being the sole shareholder of Good Grace and the largest and controlling shareholder of KLR Hong Kong prior to the Transactions, had the bargaining power to enable Talent Step to acquire the controlling stake in KLR Hong Kong as well as the power to exercise control over the board of directors of KLR Hong Kong, but not from Borrison which is merely a minority shareholder of KLR Hong Kong prior to the Transactions; (ii) the KLR Group is an asset-based group of companies and that the implied PBR is above the mean but falls within the range of the Comparables; (iii) the Transactions were a series of exercise to acquire the KLR Group’s network, connections, expertise and

– 53 –

LETTER FROM SHK

management and such exercise may not be measurable by earnings, i.e. through PER approach; and (iv) the ability to exercise control over the board of directors of KLR Hong Kong through the execution of the Shareholders’ Deed, we are of the view that the Aggregate Consideration is fair and reasonable insofar as the Independent Shareholders are concerned.

In light of the above, we consider that the terms of the Restructuring Agreement and the Subscription Agreement are on normal commercial terms and are fair and reasonable insofar as the Independent Shareholders are concerned and are in the interests of the Company and the Shareholders as a whole.

4. Financial effect of the Transactions

As at the Latest Practicable Date, the Transactions have been completed and KLR Hong Kong has become an indirect non wholly-owned subsidiary of the Company. Accordingly, the results, assets and liabilities of the KLR Group will be consolidated into the Group’s consolidated financial statements.

Earnings

Given the profitability of the KLR Group for the year ended 31 December 2011 and for the period ended 30 April 2012, the Transactions will contribute to the revenue and earning base of the Group but the extent of such contribution will depend on the future performance of the KLR Group.

NAV

As reported in 2012 Annual Report, the audited consolidated net assets of the Group were HK$958.67 million as at 31 March 2012. We are advised by the Company that, according to the applicable accounting policy, the KLR Group will be accounted for at fair value on completion of the Transactions based on the Aggregate Consideration. Since the Aggregate Consideration will be satisfied in full in cash, the Company expects that there will not be significant impact on the net assets of the Group as a result of the completion of the Transactions.

Working capital

As abovementioned in the section headed “3. Principal terms of the Restructuring Agreement and the Subscription Agreement”, the Restructuring Consideration I and the Subscription Amount will be payable in cash. As confirmed by the Directors, the Restructuring Consideration I and the Subscription Amount will be financed by the Group’s remaining IPO proceeds as stated in the Company’s announcement in May 2012. According to 2012 Annual Report, the Group had cash and bank balances of approximately HK$370.77 million as at 31 March 2012, which included the cash to be paid as dividend in the total amount of HK$31.03 million. We are advised by the Company that, as at the Latest Practicable Date, the Group had received the net cash proceeds of approximately HK$488 million on 26 June 2012 from the disposal of 85% of its fitting-out business. Taking into account the above and as the settlement of the

– 54 –

LETTER FROM SHK

Aggregate Consideration is not expected to have significant impact on the working capital of the Group, we concur with the view of Directors that the Transactions will not have significant adverse impact on the cash position and the normal operations of the Group following the completion of the Transactions.

Based on the above, we are of the view that the Transactions will not have material adverse effect on the Group’s earnings, net assets and working capital immediately upon completion of the Transactions. It should be noted that the abovementioned analyses are for illustrative purpose only and do not purport to represent how the financial position of the Group will be upon completion of the Transactions.

RECOMMENDATION

Having taken into account the abovementioned principal factors and reasons, we consider that (i) the Transactions are in the ordinary and usual course of business of the Group; and (ii) the terms of the Transactions are on normal commercial terms, fair and reasonable insofar as the Independent Shareholders are concerned, and in the interests of the Company and the Shareholders as a whole. Accordingly, if a general meeting of the Shareholders is to be held for the purpose of consideration and, if thought fit, approving the transactions contemplated under the Restructuring Agreement and the Subscription Agreement, we would advise the Independent Shareholders, as well as recommend the Independent Board Committee to advise the Independent Shareholders, to vote in favour of the ordinary resolution to approve the Restructuring Agreement, the Subscription Agreement and the transactions contemplated thereunder.

Yours faithfully, For and on behalf of

Sun Hung Kai International Limited Derek Chan Managing Director and Head of Corporate Finance

– 55 –

GENERAL INFORMATION

APPENDIX

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 herein or this circular misleading.

2. DISCLOSURE OF INTERESTS OF DIRECTORS

As at the Latest Practicable Date, the interests and short positions of each Director and chief executive of the Company in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which 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 he was taken or deemed to have under such provisions of the SFO) or are required, pursuant to Section 352 of the SFO, to be entered in the register referred to therein or were required pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers of the Listing Rules (the “ Model Code ”) to be notified to the Company and the Stock Exchange were as follows:

Long position

Name of Director Nature of interest and capacity Mr. Chan Interest in a controlled corporation(1) Other interest(2) Mr. Ng Beneficial owner Note:	Total number of shares held as at the Latest Practicable Date 97,104,000 97,104,000 194,208,000 84,000,000	Approximate percentage of issued share capital of the Company as at the Latest Practicable Date 20.335% 20.335%
		40.67% 17.59%

The entire issued share capital of Tiger Crown is owned by Mr. Chan. As Mr. Chan controls more than one-third of the voting power in general meetings of Tiger Crown, he is deemed to be interested in the 97,104,000 Shares which will be beneficially owned by Tiger Crown.

– 56 –

APPENDIX

GENERAL INFORMATION

Since Tiger Crown, Scenemay Holdings, Mr. Chan, Mr. Li, and Ms. Li are regarded as a group of controlling shareholders acting in concert to exercise their voting rights in the Company, pursuant to the provisions of the SFO, each of them is deemed to be interested in the 97,104,000 Shares beneficially owned or deemed to be interested by each other. Tiger Crown, Scenemay Holdings, Mr. Chan, Mr. Li and Ms. Li together are therefore interested in a total of 40.46% of the issued share capital of the Company.

Save as disclosed above, as at the Latest Practicable Date, so far as was known to the Directors, none of the Directors or the chief executive of the Company had any interest or short positions in any shares or underlying shares or interest in debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they are taken or deemed to have under such provisions of the SFO), or which were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein, or which were required, pursuant to the Model Code, to be notified to the Company and the Stock Exchange.

Save and except that Mr. Chan is a director of Tiger Crown, as at the Latest Practicable Date, none of the Directors or the proposed Directors (if any) was a director or employee of a company which had an interest or short position in the Shares and underlying Shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO.

3. SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had entered into or proposed to enter into a service contract or had an unexpired service with any member of the Group which is not determinable by the Group within one year without payment of compensation, other than statutory compensation.

4. DIRECTORS’ INTERESTS IN COMPETING BUSINESSES

As at the Latest Practicable Date, so far as the Directors are aware, none of the Directors and their respective associates had any interest in any business which competes or may compete with the business of the Group or had any other conflict of interest with the Group.

– 57 –

GENERAL INFORMATION

APPENDIX

5. DIRECTORS INTERESTS IN ASSETS, CONTRACTS OR ARRANGEMENTS SIGNIFICANT TO THE GROUP

As at the Latest Practicable Date:

(i) none of the Directors had any direct or indirect interest in any assets acquired or disposed of by or leased to, or which were proposed to be acquired, disposed of by or leased to, any member of the Group since 31 March 2012, the date up to which the latest published audited accounts of the Group were made up; and
(ii) none of the Directors was materially interested in any contract or arrangement entered into by any member of the Group subsisting as at the Latest Practicable Date and which was significant in relation to the business of the Group taken as a whole.

6. EXPERT

The qualification of the expert who has given opinion in this circular is as follows:

Name Qualification SHK a licensed corporation under the SFO to carry out Type 1 (dealing in securities) and Type 6 (advising on corporate finance) of the regulated activities under the SFO

As at the Latest Practicable Date, SHK did not have any shareholding in any member of the Group and did not have any right (whether legally enforceable or not) to subscribe or to nominate persons to subscribe for securities in any member of the Group.

As at the Latest Practicable Date, SHK did not have any interest, direct or indirect, in any assets which had been, since 31 March 2012, the date to which the latest published audited consolidated financial statements of the Group were made up, acquired or disposed of by or leased to any member of the Group, or were proposed to be acquired or disposed of by or leased to any member of the Group.

7. CONSENT

SHK has given and has not withdrawn its written consent to the issue of this circular with the inclusion herein of its report and references to its name and advice or opinion in the form and context in which it appears in this circular.

8. MATERIAL ADVERSE CHANGE

The Directors are not aware of any material adverse change in the financial or trading position of the Group since 31 March 2012, the date to which the latest published audited financial statements of the Group were made up.

– 58 –

GENERAL INFORMATION

APPENDIX

9. GENERAL

In the event of inconsistency, the English text of the circular shall prevail over the Chinese text thereof.

10. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection at the principal place of business of the Company in Hong Kong at Room 1305, 13/F, Shun Tak West Tower, 200 Connaught Road Central, Hong Kong during normal business hours on any weekday (except public holidays) for a period of 14 days from the date hereof:

(a) the Restructuring Agreement;
(b) the Subscription Agreement; and
(c) the Shareholders’ Deed.

– 59 –

AI assistant

Rykadan Capital Limited — Proxy Solicitation & Information Statement 2012

50499_rns_2012-09-28_2a271e6f-227c-4ed5-b6d8-285c09a94edc.pdf

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

RYKADAN CAPITAL LIMITED 宏基資本有限公司

CONNECTED AND DISCLOSEABLE TRANSACTION

ACQUISITION OF FURTHER INTERESTS IN KAILONG REI PROJECT INVESTMENT CONSULTING (HONG KONG) CO., LIMITED

CONTENTS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

RYKADAN CAPITAL LIMITED 宏基資本有限公司

To the Shareholders

CONNECTED AND DISCLOSEABLE TRANSACTION

ACQUISITION OF FURTHER INTERESTS IN KAILONG REI PROJECT INVESTMENT CONSULTING (HONG KONG) CO., LIMITED

INTRODUCTION

LETTER FROM THE BOARD

INTRODUCTION

THE RESTRUCTURING AGREEMENT

Date

Parties

Background

LETTER FROM THE BOARD

KLR Holdings Restructuring

LETTER FROM THE BOARD

KLR Hong Kong Restructuring

Condition to completion of the Restructuring Agreement

Consideration

THE SUBSCRIPTION AGREEMENT

Date

Parties

Subscription of KLR Hong Kong Shares

Consideration

Completion

THE SHAREHOLDERS’ DEED

Date

Parties

Effectiveness

Board Representation

Finance for KLR Hong Kong

Dividend Policy

Further issue of KLR Hong Kong Shares

Pre-emption rights

LETTER FROM THE BOARD

Drag-along rights

INFORMATION ON KLR HOLDINGS AND KLR HONG KONG

General

Simplified corporate structure

(i) Immediately prior to the completion of the Transactions

(ii) Immediately after the completion of the Transactions

Financial Information

REASONS FOR AND BENEFITS OF THE TRANSACTIONS

LETTER FROM THE BOARD

LISTING RULES IMPLICATIONS

WRITTEN APPROVAL

LETTER FROM THE BOARD

INDEPENDENT BOARD COMMITTEE

PRINCIPAL ACTIVITIES OF THE PARTIES

LETTER FROM THE BOARD

ADDITIONAL INFORMATION

RYKADAN CAPITAL LIMITED 宏基資本有限公司

CONNECTED AND DISCLOSEABLE TRANSACTION

ACQUISITION OF FURTHER INTERESTS IN KAILONG REI PROJECT INVESTMENT CONSULTING (HONG KONG) CO., LIMITED

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

Yours faithfully, Independent Board Committee of Rykadan Capital Limited

TO King Yan, Adam

LETTER FROM SHK

Sun Hung Kai International Limited

CONNECTED AND DISCLOSEABLE TRANSACTION

ACQUISITION OF FURTHER INTERESTS IN KAILONG REI PROJECT INVESTMENT CONSULTING (HONG KONG) CO., LIMITED

INTRODUCTION

LETTER FROM SHK

LETTER FROM SHK

BASIS OF OUR OPINION

PRINCIPAL FACTORS AND REASONS CONSIDERED

1. Background of the Transactions

(I) Information on the Group

LETTER FROM SHK

Rykadan Capital Limited Proxy Solicitation & Information Statement 2012