Xi’an Kingfar Property Services Co., Ltd. — Proxy Solicitation & Information Statement 2007

Jul 30, 2007

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 adviser.

If you have sold or transferred all your shares in Luk Fook Holdings (International) Limited , you should at once hand this circular together with the accompanying form of proxy to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

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

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(Incorporated in Bermuda with Limited Liability)

(Stock Code: 590)

GENERAL MANDATES TO ISSUE SHARES

AND REPURCHASE SHARES, AND RE-ELECTION OF DIRECTORS

31st July 2007

DEFINITIONS

In this circular, unless otherwise specified, the following words and expressions shall have the same meanings set out below:

“AGM”	The annual general meeting of the Company to be
	held at 25/F, BEA Tower, Millennium City 5, 418 Kwun
	Tong Road, Kwun Tong, Kowloon, Hong Kong on
	Thursday, 23rd August 2007 or any adjournment
	thereof
“Board”	The board of directors of the Company
“Bye-laws”	The Bye-laws of the Company
“Company”	Luk Fook Holdings (International) Limited, a company
	incorporated in Bermuda and the shares of which are
	listed on the Stock Exchange
“Directors”	The directors of the Company
“Group”	The Company and its subsidiaries
“Latest Practicable Date”	24th July 2007, being the latest practicable date prior
	to the printing of this circular for ascertaining certain
	information for inclusion herein
“Listing Rules”	The Rules Governing the Listing of Securities on the
	Stock Exchange
“Luk Fook (Control)”	Luk Fook (Control) Limited, a company incorporated
	in British Virgin Islands, the ultimate holding company
	of the Company
“SFO”	Securities and Futures Ordinance
“Share(s)”	Fully paid share(s) of HK$0.10 each in the capital of
	the Company
“Shareholders”	The shareholders of the Company
“Share Issue Mandate”	The general mandate to be granted to the Directors to
	exercise the power of the Company to issue Shares
“Share Repurchase Mandate”	The general mandate to be granted to the Directors to
	exercise the power of the Company to repurchase
	Shares on the Stock Exchange
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Takeovers Code”	Hong Kong Code on Takeovers and Mergers

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LETTER FROM THE BOARD

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(Incorporated in Bermuda with Limited Liability)

(Stock Code: 590)

Executive Directors: WONG Wai Sheung (Chief Executive) TSE Moon Chuen LAW Tim Fuk, Paul LAU Kwok Sum

Registered office: Canon’s Court 22 Victoria Street Hamilton HM12 Bermuda

Non-Executive Directors:

WONG Koon Cheung CHAN Wai LEE Shu Kuan YEUNG Po Ling, Pauline HUI King Wai

Principal Place of Business: 25/F, BEA Tower Millennium City 5 418 Kwun Tong Road Kwun Tong Kowloon Hong Kong

Independent Non-Executive Directors: CHIU Wai Mo HUI Chiu Chung LO Mun Lam, Raymond (Chairman)

31st July 2007

To the Shareholders

Dear Sir or Madam,

GENERAL MANDATES TO ISSUE SHARES AND REPURCHASE SHARES, AND RE-ELECTION OF DIRECTORS

I. INTRODUCTION

The purpose of this letter is to provide Shareholders with details of the Share Issue Mandate and Repurchase Mandate and the proposals for re-election of directors to be dealt with at the forthcoming AGM. The Directors propose to seek the approval of the Shareholders at the AGM for the following:

1. Share Issue Mandate to issue Shares up to a maximum of 20% of the Shares in issue as at the date of passing the relevant resolution;

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LETTER FROM THE BOARD

1. Share Repurchase Mandate to repurchase Shares up to a maximum of 10% of the Shares in issue as at the date of passing the relevant resolution; and

2. the Share Issue Mandate shall be extended to the Shares that are allowed to be repurchased by the Company pursuant to the Repurchase mandate.

II. GENERAL MANDATE TO ISSUE SHARES

Ordinary resolutions will be proposed at the AGM: (i) to grant a Share Issue Mandate to the Directors to issue and otherwise deal with Shares up to a maximum of 20% of the issued share capital of the Company as at the date of passing such resolution; and (ii) to approve the addition to the Share Issue Mandate of any Shares repurchased by the Company under the authority of the Share Repurchase Mandate as at the date of passing such resolution. The Directors have no present intention to issues any new Shares. As at the Latest Practicable Date, the number of Shares in issue was 492,507,850. On the basis of such figure (assuming no further Shares are issued or repurchased after and up to the date of passing such resolution), the Directors would be authorized to issue Shares up to a maximum of 98,501,570.

III. GENERAL MANDATE TO REPURCHASE SHARES

At the AGM, an ordinary resolution will be proposed that the Directors be given a general and unconditional mandate to exercise all the powers of the Company to repurchase Shares subject to the criteria set out in this letter. The Shareholders should note that the authority relates only to purchase made on the Stock Exchange and otherwise in accordance with the Listing Rules. All repurchases of shares must be approved in advance by an ordinary resolution, which may be by way of general mandate, or by specific approval in relation to specific transactions.

In addition, the general mandate will continue in force during the Relevant Period (as referred to in paragraph (c) of resolution 6 (the “Resolution”) set out in the notice of the AGM of the Company), which means the period from the passing of the Resolution until whichever is the earlier of:

• (i) the conclusion of the next AGM of the Company;

• (ii) the expiration of the period within which the next AGM of the Company is required by the Bye-laws of the Company or any applicable laws to be held; or

• (iii) the revocation or variation of the authority given under the Resolution by ordinary resolution of the shareholders in general meeting.

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LETTER FROM THE BOARD

1. Exercise of the Repurchase Mandate

It is proposed that the maximum number of Shares which may be repurchased pursuant to the Repurchase Mandate will be 10 per cent of the issued share capital of the Company as at the date of passing of the relevant resolution. Based on 492,507,850 Shares in issue as at the Latest Practicable Date, and assuming that no shares are issued and repurchased by the Company prior to the AGM, exercise in full of the Repurchase Mandate will result in up to 49,250,785 Shares being repurchased by the Company during the Relevant Period.

2. Reasons for Repurchases

Whilst the Directors do not presently intend to repurchase any Shares they believe that the flexibility afforded by the Repurchase Mandate granted to them, if resolution 6 set out in the notice of the AGM is passed, would be beneficial to the Company. Such repurchases may, depending on the market conditions and funding arrangements at the time, lead to an enhancement of the net value of the Company and its assets and/or its earnings per share. Repurchases of shares will only be made when the Directors believe that such repurchases will benefit the Company and its shareholders.

3. Funding of Repurchases

Repurchases of shares must be funded out of funds legally available for the purpose in accordance with the Memorandum of Association of the Company, its Bye-laws and the applicable laws of Bermuda. Repurchases of shares pursuant to the Repurchase Mandate would be financed entirely from the Company’s paid up share capital plus funds available for dividends or distribution to shareholders and the share premium account.

There might be a material adverse impact on the working capital or gearing position of the Company (as compared with the position disclosed in its most recent published audited accounts for the year ended 31st March 2007), in the event that the Repurchase Mandate is exercised in full. However, the Directors do not propose to exercise the Repurchase Mandate to such extent as to in the circumstances have a material adverse effect on the working capital requirements or the gearing levels of the Company which, in the opinion of the Directors, are from time to time appropriate for the Company.

4. Disclosure of Interests

None of the Directors and, to the best of the knowledge and belief of the Directors having made all reasonable enquiries, none of their associates has present intention, if the Repurchase Mandate is approved by shareholders, to sell any Shares to the Company.

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LETTER FROM THE BOARD

No connected persons of the Company, as defined in the Listing Rules, have notified the Company that they have a present intention to sell any Shares to the Company nor have any connected persons (as so defined) undertaken not to do so if the Company is authorised to make purchases of Shares.

5. Directors’ Undertaking

The Directors have undertaken to the Stock Exchange that, so far as the same may be applicable, they will exercise the Repurchase Mandate in accordance with the Listing Rules and all applicable laws of Bermuda and in accordance with the regulations set out in the Memorandum of Association of the Company and its Byelaws.

6. Shares Repurchases made by the Company

No repurchases of Shares (whether on the Stock Exchange or otherwise) have been made by the Company during the six months prior to the date of this circular.

7. Takeovers Code consequences

If as a result of a repurchase of Shares a shareholder’s proportionate interest in the voting rights of the Company increases, such increase will be treated as an acquisition for the purposes of the Takeovers Code. As a result, a shareholder or a group of shareholders acting in concert, depending on the level of increase in the shareholder’s or group of shareholders’ interest, could obtain or consolidate control of the Company and become obliged to make a mandatory offer in accordance with Rule 26 of the Takeovers Code.

As at the Latest Practicable Date, Luk Fook (Control), being the controlling shareholder of the Company and the person directly interested in 10 per cent or more of the Shares in issue, was interested in 231,858,000 Shares being approximately 47.08 per cent of the issued share capital of the Company. Certain directors of the Company, namely, Mr. WONG Wai Sheung, Mr. TSE Moon Chuen, Mr. CHAN Wai, Mr. LEE Shu Kuan and Mr. WONG Koon Cheung are also directors, and together with their associates collectively control 57,252,618 shares representing 57.25 per cent of the issued share capital, of Luk Fook (Control). These directors were deemed to be interested in the same shares for the purpose of the SFO.

In the event that the Repurchase Mandate is exercised in full, Luk Fook (Control) would be interested in up to approximately 52.31 per cent of the issued Shares. This would oblige Luk Fook (Control) to make a mandatory offer in accordance with Rule 26 of the Takeovers Code. However, the Directors would not exercise the mandate to such an extent.

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LETTER FROM THE BOARD

8. Market Prices

During each of the previous twelve months, the highest and lowest traded prices for Shares recorded on the Stock Exchange were as follows:

	Traded Market	Price
	Per Share
Month	Highest	Lowest
	HK$	HK$
2006
July	1.280	1.060
August	1.380	1.240
September	1.490	1.310
October	1.470	1.390
November	1.480	1.390
December	2.550	1.460
2007
January	2.600	2.120
February	2.980	2.500
March	2.950	2.330
April	3.300	2.860
May	3.380	2.880
June	3.600	3.300
July (up to the Latest Practicable Date)	3.960	3.300

IV. RE-ELECTION OF DIRECTORS

Pursuant to Bye-law 99 of the Bye-laws, one-third of the Directors shall retire from office by rotation at each annual general meeting of the Company. Accordingly, Mr. TSE Moon Chuen, Mr. YEUNG Po Ling, Pauline, Mr. CHIU Wai Mo, and Mr. LO Mun Lam, Raymond shall retire by rotation at the AGM. All retiring Directors are eligible for reelection. Details of the Directors proposed to be re-elected are as follows:

Mr. TSE Moon Chuen (Executive Director)

Mr. TSE Moon Chuen, aged 57, is the co-founder of the Group. Presently, he is the Director & Deputy General Manager and also a member of the Remuneration Committee. He has over 33 years of experience in jewellery retailing business and is responsible for the sales operations and administration of the Group’s retail shops. He has been appointed to various positions over the years including: an executive committee member of the Diamond Federation of Hong Kong, China Ltd. since 2000; an alternate committee member of the Chinese Gold & Silver Exchange Society since July 2004 and the Vice-Chairman of Kowloon Pearls, Precious Stones, Jade, Gold and Silver Ornament Merchants Association since 2005. Moreover, he was the Vice-President of Hong Kong Tsuen Wan Industries and Commerce Association Limited for 10 years and was elected the Chairman of the fifth session in 2006;

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LETTER FROM THE BOARD

executive committee member of the Tsuen Wan Trade Association Limited since 1996 and was appointed as a co-opted member of the Tsuen Wan District Council, Industry & Commerce Committee in 1997 for a 10-year term. He is also a committee member of the Tsuen Wan District Fight Crime Committee since 2003 and the Vice-Chairman of the Tsuen Wan District Economy Promotion Committee from the year 2005 to 2007. Mr. Tse was appointed as the Chairman of the Tsuen Wan Festival Lightings Organizing Committee for 7 consecutive years between 1999 and 2005 and became the Vice President in 2006. He also served as the honourable President of the 32nd session of Hong Kong Kwun Tong Junior Police Call in the same year. On 1st July 2006, Mr. TSE was awarded the Chief Executive’s Commendation for Community Service” by the Government of the Hong Kong SAR. As at the Latest Practicable Date, Mr. TSE had 245,167,520 Shares within the meaning of Part XV of the SFO. For the year ended 31st March 2007, his emoluments amounted to HK$1,734,949 including a discretionary bonus on performance. He is also entitled to a director’s fee of HK$55,000 per annum.

Miss YEUNG Po Ling, Pauline (Non-Executive Director)

Miss YEUNG Po Ling, Pauline, aged 40, is the co-founder of the Group. Miss YEUNG has over 19 years of experience in public relations. Miss YEUNG was the winner of Miss Hong Kong and Miss International of Goodwill in 1987. Miss YEUNG was also the president of the Wai Yin Club for the year 1995–1996. She received the GIA Diamonds Graduate title in 2005. As at the Latest Practicable Date, Miss YEUNG did not have any interests in the Shares within the meaning of Part XV of the SFO. Miss YEUNG indirectly provides promotional services to the Group at the annual fee of HK$335,000. She is also entitled to a director’s fee of HK$55,000 per annum.

Mr. CHIU Wai Mo (Independent Non-Executive Director)

Mr. CHIU Wai Mo, aged 57, has over 40 years of experience in general trading, property investment and management consultancy in Hong Kong and Japan. Mr. CHIU holds directorships in a number of companies in Hong Kong and Japan. He joined the Group in 1997 and is a member of both the Audit Committee and the Remuneration Committee. As at the Latest Practicable Date, Mr. CHIU did not have any interests in the Shares within the meaning of Part XV of the SFO. He is entitled to a director’s fee of HK$130,000 per annum.

Mr. LO Mun Lam, Raymond (Independent Non-Executive Director)

Mr. LO Mun Lam, Raymond, aged 54, joined the Group since 2004. He was elected Chairman of the Board on 12th April 2005 and is the Chairman of the Audit Committee and a member of the Remuneration Committee, Mr. LO is the Chairman of a private equity firm with interest in various business sectors. He has previously served as advisor, director and financial strategist in many multidisciplinary listed and major companies. Professionally, Mr. LO is a Fellow member and a Corporate Finance designate of the Institute of Chartered Accountants in England & Wales, a

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LETTER FROM THE BOARD

Counselor of Real Estate, USA and a Fellow member of the Royal Institute of Chartered Surveyors, UK. He is also a member of the International Bar Association and a Certified Hospitality Educator. Mr. LO is currently director of three other listed companies in Hong Kong. As at the Latest Practicable Date, Mr. LO did not have any interests in the Shares within the meaning of Part XV of the SFO. He is entitled to a director’s fee of HK$150,000 per annum.

Save as the aforesaid, each of the retiring Directors does not have any relationship with any Directors, senior management or substantial or controlling shareholders (as defined in the Listing Rules) of the Company. In addition, there is no other information which is required to be disclosed pursuant to any of the requirements under Rule 13.51(2)(h) to 13.51(2)(v) of the Listing Rules, and there are no other matters that need to be brought to the attention of Shareholders, in respect of the re-election of the retiring Directors.

None of the Directors’ service contracts requires the Company to give a period of notice of more than one year or to pay compensation or make other payments equivalent to more than one year’s emoluments, other than statutory compensation. Pursuant to the Bye-laws, one-third of the Directors shall retire from office by rotation at each annual general meeting of the Company.

The fees and other emoluments of Directors are determined by reference to industry norm and market conditions.

V. ANNUAL GENERAL MEETING

A notice of the AGM is set out in the Annual Report 2007 sent to Shareholders on the same date as this circular, which also outlines the proposed Ordinary Resolutions to grant the Share Issue Mandate and Share Repurchase Mandate to the Directors, the extension of the Share Issue Mandate and the re-election of Directors.

A proxy form for use at the AGM is enclosed with the Annual Report. Whether or not you are able to attend the meeting, you are advised to complete the proxy form in accordance with the instructions printed thereon and deposit it at the Company’s principal place of business in Hong Kong at 25/F, BEA Tower, Millennium City 5, 418 Kwun Tong Road, Kwun Tong, Kowloon, Hong Kong not less than 48 hours before the time appointed for holding the meeting or the adjourned meeting. Completion and return of the proxy form will not preclude you from attending and voting in person at the AGM or any adjourned meeting if you so wish.

Pursuant to Article 70 of the Bye-laws, at any general meeting a resolution put to the vote of the meeting shall be decided on a show of hands unless a poll is demanded:

• (i) by the Chairman of the meeting; or

• (ii) by at least three Shareholders present in person or by a duly authorized corporate representative or by proxy for the time being entitled to vote at the meeting; or

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LETTER FROM THE BOARD

• (iii) by any Shareholder or Shareholders present in person or by a duly authorized corporate representative or by proxy and representing not less than one-tenth of the total voting rights of all the Shareholders having the right to vote at the meeting; or

• (iv) by any Shareholder or Shareholders present in person or by a duly authorized corporate representative or by proxy and holding Shares in the Company conferring a right to vote at the meeting being Shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all the Shares conferring that right; or

• (v) if required by the Listing Rules, by the Chairman of the meeting and/or directors who, individually or collectively, hold proxies in respect of shares representing 5% or more of the total voting rights at a particular meeting in certain circumstances where, on a show of hands, a meeting votes in the opposite manner to that instructed in those proxies.

VI. RECOMMENDATION

The Directors believe that the granting of the Share Issue Mandate and the Share Repurchase Mandate, the extension of the Share Issue Mandate, and the Re-election of Directors are in the best interests of the Company as well as its shareholders. Accordingly, the Directors recommend you to vote in favour of all relevant resolutions set out in the notice of the AGM.

Yours faithfully, For and on behalf of the Board WONG Wai Sheung Chief Executive

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