THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

Transcription

1 THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION If you are in any doubt about any aspect of this circular or as to the action to be taken, you should consult your licensed securities dealer or registered institution in securities, bank manager, solicitor professional accountant or other professional advisers. If you have sold or transferred all your securities in Sun Hung Kai & Co. Limited, you should at once hand this circular together with the enclosed form of proxy to the purchaser or transferee, or to the bank, licensed securities dealer or registered institution in securities 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. (Incorporated in Hong Kong with limited liability) (Stock Code: 86) DISCLOSEABLE TRANSACTION AND CONNECTED TRANSACTION CONDITIONAL SALE AND PURCHASE OF THE ENTIRE ISSUED SHARE CAPITAL OF WAH CHEONG DEVELOPMENT (B.V.I.) LIMITED WHICH HOLDS APPROXIMATELY 51.15% OF THE ISSUED SHARE CAPITAL OF QUALITY HEALTHCARE ASIA LIMITED Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders A letter from the Board is set out on pages 5 to 16 of this circular. A letter from the Independent Board Committee is set out on page 17 of this circular. A letter from Wallbanck Brothers Securities (Hong Kong) Limited containing its advice to the Independent Board Committee and the Independent Shareholders is set out on pages 18 to 34 of this circular. A notice convening the extraordinary general meeting of Sun Hung Kai & Co. Limited to be held at Plaza V, Lower Lobby, Novotel Century Hong Kong, 238 Jaffe Road, Wanchai, Hong Kong on Monday, 23rd June, 2008 at 10:00 a.m. is set out on pages 46 to 47 of this circular. Whether or not you are able to attend the meeting, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon and return it to the Company s registrar, Tricor Secretaries Limited at 26th Floor, Tesbury Centre, 28 Queen s Road East, Wanchai, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for holding the meeting or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the meeting or any adjournment thereof if you so wish. 4th June, 2008

2 CONTENTS Page Definitions... 1 Letter from the Board Introduction... 5 The Agreement... 7 Information about AGL, APL, the Company, Wah Cheong, Famestep and QHA. 10 Summary of Financial Results of Wah Cheong and QHA Reasons for and Benefits of the Sale and Purchase of the Sale Shares Listing Rules Implications EGM Procedures for Demanding a Poll Recommendation Additional Information Letter from the Independent Board Committee Letter from Wallbanck Brothers Appendix General Information Notice of EGM i

3 DEFINITIONS In this circular, unless the context otherwise requires, the following expressions have the following meanings: AGL Allied Group Limited, a company incorporated in Hong Kong with limited liability, with its shares listed on the Main Board of the Stock Exchange AGL Group AGL and its subsidiaries Agreement the sale and purchase agreement dated 7th May, 2008 made between the Company, Famestep and APL, relating to the conditional sale and purchase of the Sale Shares and the assignment of the Loan APL Allied Properties (H.K.) Limited, a company incorporated in Hong Kong with limited liability, with its securities listed on the Main Board of the Stock Exchange, and a non wholly-owned subsidiary of AGL associates having the meaning ascribed to it under the Listing Rules Board board of Directors B.V.I. British Virgin Islands Code The Hong Kong Code on Takeovers and Mergers Company Sun Hung Kai & Co. Limited, a company incorporated in Hong Kong with limited liability, with its securities listed on the Main Board of the Stock Exchange, and an indirect non wholly-owned subsidiary of APL Completion completion of the sale and purchase of all the Sale Shares and the assignment of the Loan pursuant to the Agreement connected person having the meaning ascribed to it under the Listing Rules Directors the directors of the Company EGM extraordinary general meeting of the Company to be convened for the purpose of considering and, if thought fit, approving, the Agreement and the transactions contemplated therein 1

4 DEFINITIONS Executive Famestep Group HK$ HKGAAP the Executive Director of the Corporate Finance Division of the SFC or any delegate of the Executive Director (in each case acting in the capacity of Executive under the Code) Famestep Investments Limited, a company incorporated in the B.V.I. with limited liability and a direct whollyowned subsidiary of APL the Company and its subsidiaries Hong Kong dollars, the lawful currency of Hong Kong the Hong Kong Generally Accepted Accounting Practice Hong Kong Hong Kong Special Administrative Region of the People s Republic of China Independent Board Committee Independent Shareholders Joint Announcement Latest Practicable Date Listing Rules Loan the committee comprising Mr. Carlisle Caldow Procter and Mr. Peter Wong Man Kong being the two independent non-executive Directors appointed by the Board under the Listing Rules to advise the Independent Shareholders in respect of the terms of the Agreement Shareholders (other than APL and its associates) who are not required under the Listing Rules to abstain from voting at the EGM to approve the transactions contemplated under the Agreement the joint announcement of AGL, APL and the Company dated 14th May, 2008 in relation to the conditional sale and purchase of the entire issued share capital of Wah Cheong which holds approximately 51.15% of the issued share capital of QHA 29th May, 2008, being the latest practicable date prior to the printing of this circular for the purpose of ascertaining certain information contained in this circular Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited the shareholder s loan in the amount of HK$271,391,445 due by Wah Cheong to the Company 2

5 DEFINITIONS QHA Quality HealthCare Asia Limited, a company incorporated in Bermuda with limited liability, with its shares listed on the Main Board of the Stock Exchange and a non wholly-owned subsidiary of Wah Cheong QHA Dividends the dividends of approximately HK$24,015,007 (being the final dividend of HK5.25 cents and the special dividend of HK14.4 cents per ordinary share of QHA) for the QHA Shares for the year ended 31st December, 2007 to be declared at the annual general meeting of QHA to be held on 4th June, 2008 and payable on 18th June, 2008 QHA Shares 122,213,776 shares of HK$0.10 each representing approximately 51.15% of the entire issued share capital of QHA Sale Shares SFC SFO Share(s) Shareholder(s) Stock Exchange substantial shareholder US$ Wah Cheong Wah Cheong Dividends 2,675,400 shares of US$1.00 each representing the entire issued share capital of Wah Cheong The Securities and Futures Commission of Hong Kong Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) ordinary share(s) of HK$0.20 each in the issued share capital of the Company holder(s) of the Share(s) The Stock Exchange of Hong Kong Limited having the meaning ascribed to it under the Listing Rules United States Dollars Wah Cheong Development (B.V.I.) Limited, a company incorporated in the B.V.I. with limited liability, and a direct wholly-owned subsidiary of the Company the dividends to be declared and paid by Wah Cheong to the Company, upon the receipt of the QHA Dividends by Wah Cheong before Completion, the amount being equal to the QHA Dividends 3

6 DEFINITIONS Waiver Wallbanck Brothers or Independent Financial Adviser a waiver from the obligation of Famestep, its holding companies, or parties acting in concert with any one of them (if any) to make a mandatory unconditional general offer for all the issued shares of QHA pursuant to Rule 26 of the Code as a result of the acquisition of the QHA Shares by Famestep through its acquisition of the Sale Shares Wallbanck Brothers Securities (Hong Kong) Limited, a licensed corporation for carrying out types 4, 6 and 9 regulated activities (advising on securities, advising on corporate finance and asset management) under the SFO and the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the transactions contemplated in the Agreement % per cent. 4

7 LETTER FROM THE BOARD (Incorporated in Hong Kong with limited liability) (Stock Code: 86) Executive Directors: Lee Seng Huang (Chairman) Joseph Tong Tang Non-executive Directors: Abdulhakeem Abdulhussain Ali Kamkar Amin Rafie Bin Othman (also as alternate to Mr. Abdulhakeem Abdulhussain Ali Kamkar) Patrick Lee Seng Wei Registered Office: Units & th Floor, CITIC Tower 1 Tim Mei Avenue Central Hong Kong Independent non-executive Directors: David Craig Bartlett Alan Stephen Jones Carlisle Caldow Procter Peter Wong Man Kong 4th June, 2008 To the Shareholders and, for information only, the holders of warrants of the Company Dear Sir or Madam, DISCLOSEABLE TRANSACTION AND CONNECTED TRANSACTION CONDITIONAL SALE AND PURCHASE OF THE ENTIRE ISSUED SHARE CAPITAL OF WAH CHEONG DEVELOPMENT (B.V.I.) LIMITED WHICH HOLDS APPROXIMATELY 51.15% OF THE ISSUED SHARE CAPITAL OF QUALITY HEALTHCARE ASIA LIMITED INTRODUCTION Reference is made to the Joint Announcement in which AGL, APL and the Company jointly announced that, on 7th May, 2008, the Company as the vendor, Famestep (a direct wholly-owned subsidiary of APL) as the purchaser, and APL as the purchaser s guarantor entered into the Agreement, pursuant to which the Company has conditionally agreed to sell the 5

8 LETTER FROM THE BOARD Sale Shares and assign the Loan, and Famestep has conditionally agreed to purchase the Sale Shares and accept the assignment of the Loan, at an aggregate consideration of HK$470,690,000. An initial deposit of HK$47,069,000 was paid in cash by Famestep to the Company upon the signing of the Agreement. The balance of the aggregate consideration in the sum of HK$423,621,000 will be settled in cash upon Completion. Completion is conditional upon fulfillment of a number of conditions, including the granting of the Waiver by the Executive to Famestep. The transactions contemplated in the Agreement constitute a discloseable transaction for the Company under Rule 14.06(2) of the Listing Rules, on the basis that the calculation of the relevant percentage ratios are within the range of 5% and 25%. The transactions contemplated in the Agreement also constitute a connected transaction for the Company, on the basis that Famestep is a direct wholly-owned subsidiary of APL (which is a substantial shareholder of the Company) and hence a connected person of the Company. Since the calculation of the relevant percentage ratios are more than 2.5% but under 25% and the total consideration is more than HK$10,000,000, pursuant to Rule 14A.17 of the Listing Rules, the transactions contemplated under the Agreement are subject to the reporting, announcement and independent shareholders approval requirements under the Listing Rules. APL and its associates will abstain from voting on the resolution for approving the Agreement at the EGM to be held by the Company. The Independent Board Committee has been constituted to consider the terms of the Agreement and to make recommendations to the Independent Shareholders as to how to vote at the EGM on the ordinary resolution regarding the Agreement. Mr. David Craig Bartlett, an independent non-executive Director, is also an independent non-executive director of AGL. Mr. Alan Stephen Jones, an independent non-executive Director, is also an independent non-executive director of both AGL and APL. They were thus not appointed as members of the Independent Board Committee. Mr. Carlisle Caldow Procter and Mr. Peter Wong Man Kong, being the other two independent non-executive Directors, have been appointed by the Board to form the Independent Board Committee. Wallbanck Brothers has been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders on the fairness and reasonableness of the transactions contemplated in the Agreement. The purpose of this circular is (i) to provide the Shareholders with details of the terms of the Agreement; (ii) to set out the advice of Wallbanck Brothers and the recommendation of the Independent Board Committee; and (iii) to give the Shareholders notice of the EGM and other information in accordance with the requirements of the Listing Rules. 6

9 LETTER FROM THE BOARD THE AGREEMENT Date 7th May, 2008 Parties (1) The Company as vendor (2) Famestep as purchaser (3) APL as purchaser s guarantor The Sale Shares and the Assignment of the Loan The Sale Shares represent the entire issued share capital of Wah Cheong as at the Latest Practicable Date. Wah Cheong is the beneficial owner of the QHA Shares (being 122,213,776 shares of QHA representing approximately 51.15% of the entire issued share capital of QHA). Other than its investment in the QHA Shares, the only asset held by Wah Cheong is the bank balances of approximately HK$167,000 as at 31st December, 2007, 7th May, 2008 and the Latest Practicable Date. The sale and purchase of the Sale Shares are conducted on an ex-dividend basis under the Agreement, pursuant to which the Company is entitled to the Wah Cheong Dividends before Completion. The Sale Shares and the QHA Shares will be acquired free from any encumbrance as of Completion and there will be no restrictions which apply to the subsequent sale of the Sale Shares. The Loan will be assigned by the Company to Famestep free from any encumbrance as of Completion. Consideration The aggregate consideration for the sale and purchase of the Sale Shares and the assignment of the Loan shall be HK$470,690,000 (or effectively the equivalent of approximately HK$3.85 per QHA Share). The aggregate consideration was arrived at after arm s length negotiations between the Company and Famestep, having regard to the carrying values of Wah Cheong and QHA in the consolidated financial statements of the Company as at 31st December, 2007, the actual amount of the Loan owed by Wah Cheong to the Company and the market value of the QHA Shares. 7

10 LETTER FROM THE BOARD In particular, the consideration for the Sale Shares and the assignment of the Loan are HK$199,298,555 and HK$271,391,445 respectively. The consideration for the Sale Shares is determined with reference to the carrying values of Wah Cheong and QHA in the consolidated financial statements of the Company, and represents a disposal at a premium to the Company. The consideration for the assignment of the Loan represents the actual amount of the Loan owed by Wah Cheong to the Company. In effect, the aggregate consideration represents: (i) (ii) a premium of approximately 30.51% to the closing price of HK$2.95 per share of QHA as quoted on the Stock Exchange on the last trading day of the shares of QHA immediately before the date of the Joint Announcement; a premium of approximately 29.19% to the average closing price of approximately HK$2.98 per share of QHA as quoted on the Stock Exchange for the last five trading days of the shares of QHA immediately before the date of the Joint Announcement; (iii) a premium of approximately 29.63% to the average closing price of approximately HK$2.97 per share of QHA as quoted on the Stock Exchange for the last ten trading days of the shares of QHA immediately before the date of the Joint Announcement; (iv) (v) a premium of approximately 29.63% to the average closing price of approximately HK$2.97 per share of QHA as quoted on the Stock Exchange for the last one month of the shares of QHA immediately before the date of the Joint Announcement; and a premium of approximately 30.95% to the closing price of HK$2.94 per share of QHA as quoted on the Stock Exchange as at the Latest Practicable Date. An initial deposit of HK$47,069,000 was paid in cash by Famestep to the Company upon the signing of the Agreement. The balance of the aggregate consideration in the sum of HK$423,621,000 will be settled in cash upon Completion. Conditions Completion is conditional upon the fulfillment of a number of conditions, including: (i) (ii) the Sale Shares, the QHA Shares and the Loan being free from any encumbrance as of Completion; the warranties as contained in the Agreement remaining true and accurate and not misleading in any material respect as given as of the date of the Agreement and as of Completion, and as given at all times between the date of the Agreement and Completion; (iii) the Company having complied in full with the obligations under the Agreement and otherwise having duly performed and observed all of the obligations, undertakings and covenants required to be performed and observed by them under the Agreement on or prior to Completion; 8

11 LETTER FROM THE BOARD (iv) all approvals, authorisations, consents, licences, certificates, permits, concessions, agreements or other permissions of any kind of, from or by any governmental authority, regulatory body or any other third party necessary or desirable for the consummation of the transactions contemplated in the Agreement having been obtained by the Company and Wah Cheong and remaining in full force and effect; (v) the granting of the Waiver by the Executive and such Waiver not having been revoked; (vi) no matter, event, circumstance or change having occurred which has caused, causes or is likely to cause any material adverse effect on: (a) the business, operations, prospects or financial condition, or a material portion of the properties or assets, of Wah Cheong or of its subsidiaries including any licensing issues; or (b) the ability of the Company to perform or observe any of its obligations, undertakings or covenants under the Agreement; (vii) there being no applicable law which prohibits, restricts or imposes conditions or limitations on, or is reasonably expected to operate to prohibit, restrict or impose conditions or limitations on, the consummation of any of the transactions contemplated in the Agreement; (viii)there being no bona fide proceedings in effect, pending or genuinely threatened as of Completion before any court, tribunal or arbitrator of a competent jurisdiction or by any governmental authority which seek to prohibit, restrict, impose condition or limitation on or otherwise challenge any of the transactions contemplated in the Agreement; (ix) QHA retaining its listed status, with the trading in the shares of QHA not having been suspended from listing, other than for suspensions of a routine nature, including (without limitation) any suspension relating to the transactions and matters contemplated referred to in the Agreement; (x) compliance by AGL, APL and the Company with all applicable disclosure and independent shareholders approval requirements under the Listing Rules, as the case may be; (xi) Wah Cheong having paid the Wah Cheong Dividends to the Company; and (xii) the Loan being assigned by the Company to Famestep. 9

12 LETTER FROM THE BOARD The Company will use its best endeavours to procure the fulfillment of all the conditions. If any of the conditions as set out in the Agreement is not fulfilled (or waived by Famestep, except conditions (v), (ix), (x) and (xii) which cannot be waived and except condition (xi) which can only be waived by the Company) on or before 31st July, 2008 (or such later date as may be agreed by the Company and Famestep in writing), no party will be obliged to proceed to Completion, and the Company shall forthwith refund to Famestep the full amount of the deposit previously received by it. Completion Subject to the fulfillment of the conditions set out in the Agreement, Completion will take place on the third business day after the day on which the last of the conditions is fulfilled (or otherwise waived) (or such other date as may be agreed by the Company and Famestep in writing) outside Hong Kong (or at a place agreed by the Company and Famestep in writing). On Completion, the remaining balance of the consideration in the total sum of HK$423,621,000 will be paid by Famestep to the Company in cash. Waiver Immediately upon Completion, Famestep, its holding companies, and parties acting in concert with any one of them (if any) will be interested in the QHA Shares. Accordingly, Famestep has made an application to the Executive for the Waiver from its obligations under the Code to make a mandatory unconditional general offer for all the issued shares of QHA (other than those already owned or agreed to be acquired by Famestep, its holding companies, or parties acting in concert with any one of them) (if any). On 14th May, 2008, the Waiver was granted by the Executive. INFORMATION ABOUT AGL, APL, THE COMPANY, WAH CHEONG, FAMESTEP AND QHA AGL AGL is a company incorporated in Hong Kong with limited liability. Its shares are listed on the Main Board of the Stock Exchange. The principal business activity of AGL is investment holding. The principal business activities of its major subsidiaries are property investment and development, hospitality related activities and the provision of financial services. APL APL is a company incorporated in Hong Kong with limited liability. Its securities are listed on the Main Board of the Stock Exchange. The principal business activity of APL is investment holding. The principal business activities of its major subsidiaries are property investment and development, hospitality related activities and the provision of financial services. 10

13 LETTER FROM THE BOARD As at the Latest Practicable Date, APL was beneficially owned as to approximately 73.79% by AGL. The Company The Company is incorporated in Hong Kong with limited liability. Its securities are listed on the Main Board of the Stock Exchange. The principal business activity of the Company is investment holding. The principal business activities of its major subsidiaries are wealth management and brokerage, asset management, corporate finance, consumer finance as well as principal investments. As at the Latest Practicable Date, the Company was beneficially owned as to approximately 58.65% by APL. Wah Cheong Wah Cheong is a company incorporated in the B.V.I. with limited liability. It is a direct wholly-owned subsidiary of the Company, and is the beneficial owner of the QHA Shares. The principal business activity of Wah Cheong is investment holding. Other than its investment in the QHA Shares, the only asset held by Wah Cheong is the bank balances of approximately HK$167,000 as at 31st December, 2007, 7th May, 2008 and the Latest Practicable Date. Famestep Famestep is a company incorporated in the B.V.I. with limited liability. It is a direct wholly-owned subsidiary of APL. The principal business activity of Famestep is investment holding. QHA QHA is a company incorporated in Bermuda with limited liability. Its shares are listed on the Main Board of the Stock Exchange. The principal business activities of QHA are health administration, medical scheme administration and the provision of healthcare services. As at the Latest Practicable Date, QHA was beneficially owned as to approximately 51.15% by Wah Cheong. 11

14 LETTER FROM THE BOARD SUMMARY OF FINANCIAL RESULTS OF WAH CHEONG AND QHA A summary of the audited results of Wah Cheong for the two financial years ended 31st December, 2007 is as follows: Year ended 31st December, HK$ 000 HK$ 000 Revenue 5,957 33,150 Profit before tax 15,231 32,913 Profit after tax 15,231 32,913 Profit attributable to the equity holders of Wah Cheong 15,231 32,913 The audited net asset value of Wah Cheong as at 31st December, 2007 was approximately HK$62,654,000. A summary of the audited consolidated results of QHA for the two financial years ended 31st December, 2007 is as follows: Year ended 31st December, HK$ 000 HK$ 000 Revenue 893, ,701 Profit before tax 78,300 71,593 Profit after tax 65,149 63,233 Profit attributable to the equity holders of QHA 65,149 63,233 The audited consolidated net asset value of QHA as at 31st December, 2007 was approximately HK$307,412,000. The accounts summarised above have been prepared in accordance with the HKGAAP. Prior to Completion, Wah Cheong and QHA are subsidiaries of the Company and in turn subsidiaries of APL and AGL. Upon Completion, the Company will deconsolidate Wah Cheong and QHA. Wah Cheong and QHA shall remain as subsidiaries of APL and AGL upon Completion. Therefore, the results, assets and liabilities of Wah Cheong and QHA, which have already been consolidated by AGL and APL prior to Completion, will continue to be consolidated in the consolidated financial statements of AGL and APL. 12

15 LETTER FROM THE BOARD REASONS FOR AND BENEFITS OF THE SALE AND PURCHASE OF THE SALE SHARES The principal business activities of QHA and its subsidiaries are health administration, medical scheme administration and the provision of healthcare services. A plan has been formulated to effect an overall reorganisation of the businesses of the AGL Group. This involves the sale and purchase of the Sale Shares (currently held by the Company), which is intended to consolidate the healthcare services businesses of QHA into APL within the AGL Group. Over the recent years, the Company has been crystallizing the gain in some parts of its principal investment portfolio to allow redeployment of capital. The disposal of the Sale Shares will realise the capital investment of the Company in QHA. It is estimated that, as a result of the transaction, the Company will recognise a gain on the disposal of the Sale Shares of approximately HK$170,897,000, which will be reflected in the consolidated income statement of the Company for the year ending 31st December, The transaction will generate net sale proceeds (before expenses) of HK$470,690,000 for the Company which will be applied as working capital for its core business activities. The carrying values of the total assets and total liabilities of Wah Cheong and QHA as at 31st March, 2008 in the consolidated financial statements of the Company were approximately HK$883,140,000 and HK$450,356,000 respectively. After Completion, the assets and liabilities of Wah Cheong and QHA will be deconsolidated in the consolidated financial statements of the Company. The gain of approximately HK$170,897,000 represents the sum of the aggregate consideration and Wah Cheong Dividends less (i) the carrying values of Wah Cheong and QHA in the consolidated financial statements of the Company as at 31st March, 2008; (ii) the Loan; and (iii) estimated expenses on disposal of Wah Cheong. Since the carrying values of Wah Cheong and QHA in the consolidated financial statements of the Company may change from the date of the Joint Announcement to the date of Completion, the gain on disposal of Wah Cheong to be recognised in the Company s consolidated income statement may be different as a result of the change in the carrying values of Wah Cheong and QHA during the period. The consideration for the Sale Shares (i.e. HK$199,298,555) represents approximately 37% premium over the carrying values of Wah Cheong and QHA in the consolidated financial statements of the Company as at 31st March, 2008, whilst the aggregate consideration represents a premium of approximately 13% over the carrying values of Wah Cheong and QHA in the consolidated financial statements of the Company as at 31st March, 2008 when the Loan (being part of the Agreement) has been taken into consideration in the calculation of the percentage premium to the Company. As at the Latest Practicable Date, APL is indirectly interested in approximately 58.65% of the issued share capital of the Company which, through its wholly-owned subsidiary, Wah Cheong, indirectly holds approximately 51.15% of the issued share capital of QHA. Immediately following Completion, Famestep, a direct wholly-owned subsidiary of APL, will be directly interested in approximately 51.15% of the issued share capital of QHA. Upon Completion, the effective interest of APL in QHA will increase by approximately 21.15% from approximately 30.00% to approximately 51.15% of the entire issued share capital of QHA. 13

16 LETTER FROM THE BOARD Upon Completion, the effective interest of AGL in QHA will increase by approximately 15.60% from approximately 22.14% to approximately 37.74% of the entire issued share capital of QHA. Having regard to the nature of and the benefits resulting from such reorganisation, the Directors believe that the terms of the transactions contemplated under the Agreement are fair and reasonable and in the interests of the Shareholders taken as a whole. Unaudited consolidated net profits attributable to the Sale Shares for the two financial years ended 31st December, 2007 were: (i) a profit of approximately HK$49,592,000 (before taxation) or a profit of approximately HK$46,717,000 (after taxation) for the financial year ended 31st December, 2006; and (ii) a profit of approximately HK$50,425,000 (before taxation) or a profit of approximately HK$45,737,000 (after taxation) for the financial year ended 31st December, Immediately following Completion, the Company will cease to hold any interests in Wah Cheong and QHA. The change in shareholding structure of the AGL Group as at the Latest Practicable Date and after the Completion is as follows: As at the Latest Practicable Date: Immediately following the Completion: 14

17 LETTER FROM THE BOARD LISTING RULES IMPLICATIONS The transactions contemplated in the Agreement constitute a discloseable transaction for the Company under Rule 14.06(2) of the Listing Rules, on the basis that the calculation of the relevant percentage ratios are within the range of 5% and 25%. The transactions contemplated in the Agreement also constitute a connected transaction for the Company, on the basis that Famestep is a direct wholly-owned subsidiary of APL (which is a substantial shareholder of the Company) and hence a connected person of the Company. Since the calculation of the relevant percentage ratios are more than 2.5% but under 25% and the total consideration is more than HK$10,000,000, pursuant to Rule 14A.17 of the Listing Rules, the transactions contemplated under the Agreement are subject to the reporting, announcement and independent shareholders approval requirements under the Listing Rules. APL and its associates will abstain from voting on the resolution for approving the Agreement at the EGM to be held by the Company. EGM A notice convening the EGM is set out on pages 46 and 47 of this circular. An ordinary resolution in respect of the Agreement will be proposed at the EGM. A form of proxy for use at the EGM is enclosed with this circular. Whether or not you are able to attend the EGM, you are requested to complete the form of proxy in accordance with the instructions printed thereon and return it to the Company s registrar, Tricor Secretaries Limited at 26th Floor, Tesbury Centre, 28 Queen s Road East, Wanchai, Hong Kong as soon as possible and in any event not later than 48 hours before the time appointed for holding the EGM or any adjournment thereof. Completion and return of the form of proxy shall not preclude you from attending and voting in person at the EGM or any adjournment thereof should you so wish. PROCEDURES FOR DEMANDING A POLL Pursuant to Article 73 of the Articles of Association of the Company, at any general meeting a resolution put to the vote of the meeting shall be decided on a show of hands unless (before or on the declaration of the result of the show of hands) a poll is demanded: (a) (b) (c) by the chairman of the meeting; or by at least three registered Shareholders present in person or by proxy for the time being entitled to vote at the meeting; or by any registered Shareholder or Shareholders present in person or by proxy and representing not less than one-tenth of the total voting rights of all the registered Shareholders having the right to vote at the meeting; or 15

18 LETTER FROM THE BOARD (d) by any registered Shareholder or Shareholders present in person 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 shares conferring that right. Under the Listing Rules, the ordinary resolution to be proposed at the EGM to approve the Agreement is required to be voted on by poll. APL and its associates will abstain from voting on the resolution at the EGM. RECOMMENDATION The Directors consider that the Agreement is in the interests of the Company and the Shareholders as a whole and the terms of which are fair and reasonable so far as the Independent Shareholders are concerned. Accordingly, the Directors recommend all the Independent Shareholders to vote in favour of the ordinary resolution set out in the notice of the EGM. ADDITIONAL INFORMATION Your attention is also drawn to the letter from the Independent Board Committee, the letter from Wallbanck Brothers and the additional information set out in the Appendix to this circular. Yours faithfully, On behalf of the Board Sun Hung Kai & Co. Limited Joseph Tong Tang Executive Director 16

19 LETTER FROM THE INDEPENDENT BOARD COMMITTEE The following is the text of a letter from the Independent Board Committee to the Independent Shareholders in connection with the Agreement for inclusion in the circular. (Incorporated in Hong Kong with limited liability) (Stock Code: 86) 4th June, 2008 To the Independent Shareholders Dear Sir or Madam, DISCLOSEABLE TRANSACTION AND CONNECTED TRANSACTION CONDITIONAL SALE AND PURCHASE OF THE ENTIRE ISSUED SHARE CAPITAL OF WAH CHEONG DEVELOPMENT (B.V.I.) LIMITED WHICH HOLDS APPROXIMATELY 51.15% OF THE ISSUED SHARE CAPITAL OF QUALITY HEALTHCARE ASIA LIMITED We have been appointed to form this Independent Board Committee to consider and advise you on the terms of the Agreement, details of which are set out in the circular issued by the Company to the Shareholders dated 4th June, 2008 (the Circular ), of which this letter forms part. Terms defined in the Circular will have the same meanings when used herein unless the context otherwise requires. We wish to draw your attention to the letter from the Board and letter of advice from Wallbanck Brothers set out on pages 5 to 16 and pages 18 to 34 of the Circular respectively. Having taken into account the principal factors and reasons considered by Wallbanck Brothers, its conclusion and advice, we concur with the view of Wallbanck Brothers and consider that the terms of the Agreement are fair and reasonable and in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend you to vote in favour of the ordinary resolution to be proposed at the EGM to approve the Agreement and the transactions contemplated in it. Carlisle Caldow Procter Independent non-executive Director Yours faithfully, For and on behalf of Independent Board Committee Peter Wong Man Kong Independent non-executive Director 17

20 LETTER FROM WALLBANCK BROTHERS The following is the full text of a letter of advice from Wallbanck Brothers, the independent financial adviser to the Independent Board Committee and the Independent Shareholders regarding the Agreement, for the purpose of incorporation into this circular. 1005B, Tower 1, Lippo Centre, 89 Queensway, Central, Hong Kong 4 June 2008 To the independent board committee and the independent shareholders of Sun Hung Kai & Co. Limited Dear Sirs, DISCLOSEABLE TRANSACTION AND CONNECTED TRANSACTION CONDITIONAL SALE AND PURCHASE OF THE ENTIRE ISSUED SHARE CAPITAL OF WAH CHEONG DEVELOPMENT (B.V.I.) LIMITED WHICH HOLDS APPROXIMATELY 51.15% OF THE ISSUED SHARE CAPITAL OF QUALITY HEALTHCARE ASIA LIMITED INTRODUCTION We refer to our appointment as independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the Agreement, details of which are set out in the letter from the Board (the Letter from the Board ) contained in the circular to the Shareholders dated 4 June 2008 (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 requires the otherwise. It was announced on 14 May 2008 that the Company as the vendor, Famestep (a direct wholly-owned subsidiary of APL) as the purchaser, and APL as the purchaser s guarantor entered into the Agreement, pursuant to which the Company has conditionally agreed to sell the Sale Shares and assign the Loan, and Famestep has conditionally agreed to purchase the Sale Shares and accept the assignment of the Loan, at an aggregate consideration of HK$470,690,

21 LETTER FROM WALLBANCK BROTHERS An initial deposit of HK$47,069,000 was paid in cash by Famestep to the Company upon the signing of the Agreement. The balance of the aggregate consideration in the sum of HK$423,621,000 will be settled in cash upon Completion. Completion is conditional upon fulfilment of a number of conditions, including the granting of the Waiver by the Executive to Famestep. The transactions contemplated in the Agreement constitute a discloseable transaction for the Company under Rule 14.06(2) of the Listing Rules, on the basis that the calculation of the relevant percentage ratios are within the range of 5% and 25%. The transactions contemplated in the Agreement also constitute a connected transaction for the Company, on the basis that Famestep is a direct wholly-owned subsidiary of APL (which is a substantial shareholder of the Company) and hence a connected person of the Company. Since the calculation of the relevant percentage ratios are more than 2.5% but under 25% and the total consideration is more than HK$10,000,000, pursuant to Rule 14A.17 of the Listing Rules, the transactions contemplated under the Agreement are subject to the reporting, announcement and independent shareholders approval requirements under the Listing Rules. APL and its associates will abstain from voting on the resolution for approving the Agreement at the EGM to be held by the Company. An Independent Board Committee comprising Messrs. Carlisle Caldow Procter and Peter Wong Man Kong (both being independent non-executive Directors) has been formed to advise the Independent Shareholders on (i) whether the terms of the Agreement are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned; and (ii) whether the transactions contemplated in the Agreement are in the interests of the Company and the Shareholders as a whole. Mr. David Craig Bartlett, an independent non-executive Director, is also an independent non-executive director of AGL. Mr. Alan Stephen Jones, an independent non-executive Director, is also an independent non-executive director of both AGL and APL. They were thus not appointed as members of the Independent Board Committee. We, Wallbanck Brothers, have been appointed as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in this respect. BASIS OF OUR OPINION In formulating our opinion and recommendations, we have relied on the accuracy of the information, opinions and representations provided to us by the Directors and management of the Company, and have assumed that all information, opinions and representations contained or referred to in this circular were true and accurate at the time when they were made and will continue to be accurate at the Latest Practicable Date. We have also assumed that all statements of belief, opinion and intention made by the Directors in this circular were reasonably made after due enquiry. We have no reasons to doubt that any relevant information has been withheld, nor are we aware of any fact or circumstance which would render the information provided and representations and opinions made to us untrue, inaccurate or misleading. We consider that we 19

22 LETTER FROM WALLBANCK BROTHERS have received sufficient information to enable us to reach an informed view and to justify reliance on the accuracy of the information contained in this circular to provide a reasonable basis for our opinions and recommendations. Having made all reasonable enquiries, the Directors have further confirmed that, to the best of their knowledge, they believe there are no other facts or representations the omission of which would make any statement in this circular, including this letter, misleading. We have not, however, carried out any independent verification of the information provided by the Directors and management of the Company, nor have we conducted an independent investigation into the business and affairs of the Company. In formulating our opinion, we have relied on the financial information provided by the Company, particularly, on the accuracy and reliability of financial statements and other financial data of the Company. We have not audited, compiled nor reviewed the said financial statements and financial data. We shall not express any opinion or any form of assurance on them. We have had no reason to doubt the truth and accuracy of the information provided to us by the Company. The Directors have also advised us that no material facts have been omitted from the information to reach an informed view, and we have no reason to suspect that any material information has been withheld. We have not carried out any feasibility study on any past, and forthcoming investment decision, opportunity or project undertaken or be undertaken by the Company. Our opinion has been formed on the assumption that any analysis, estimation, forecast, anticipation, condition and assumption provided by the Company are valid and sustainable. Our opinions shall not be constructed as to give any indication to the validity, sustainability and feasibility of any past, existing and forthcoming investment decision, opportunity or project undertaken or to be undertaken by the Company. In formulating our opinion, we have not considered the taxation implications on the Independent Shareholders arising from the Agreement as these are particular to the individual circumstances of each Shareholder. It is emphasized that we will not accept responsibility for any tax effect on or liability of any person resulting from his or her decision to the Agreement. In particular, the Independent Shareholders who are overseas residents or are subject to overseas taxation or Hong Kong taxation on securities dealings should consult their own tax positions, and if in any doubt, should consult their own professional advisers. Our opinions are necessarily based upon the financial, economic, market, regulatory and other conditions as they existed on, and the facts, information, representations, and opinions made available to us as of, the Latest Practicable Date. We disclaim any undertaking or obligation to advise any person of any change in any fact or matter affecting the opinion expressed herein which may come or be brought to our attention before and after the EGM. Our opinions are formulated only and exclusively for the purpose of the Agreement and shall not be used for any other purpose in any circumstance nor for any comparable purpose with any other opinions. We take no responsibility for the contents of the Letter from the Board, make no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this letter. 20

23 LETTER FROM WALLBANCK BROTHERS PRINCIPAL FACTORS AND REASONS CONSIDERED In arriving at our opinion to the Independent Board Committee in respect of the Agreement, we have taken into consideration the following principal factors and reasons: 1. The Agreement A) Date 7 May 2008 B) Parties (1) Vendor: the Company (2) Purchaser: Famestep (3) Purchaser s guarantor: APL C) The Sale Shares and the assignment of the Loan The Sale Shares represent the entire issued share capital of Wah Cheong as at the Latest Practicable Date. Wah Cheong is the beneficial owner of the QHA Shares (being 122,213,776 shares of QHA representing approximately 51.15% of the entire issued share capital of QHA). Other than its investment in the QHA Shares, the only asset held by Wah Cheong is the bank balances of approximately HK$167,000 as at 31 December 2007 and the Latest Practicable Date. The sale and purchase of the Sale Shares are conducted on an ex-dividend basis under the Agreement, pursuant to which the Company is entitled to the Wah Cheong Dividends before Completion. The Sale Shares and the QHA Shares will be acquired free from any encumbrance as of Completion and there will be no restrictions which apply to the subsequent sale of the Sale Shares. The Loan will be assigned by the Company to Famestep free from any encumbrance as of Completion. 21

24 LETTER FROM WALLBANCK BROTHERS D) Consideration As stated in the Letter from the Board, the aggregate consideration for the sale of the Sale Shares and the assignment of the Loan shall be HK$470,690,000 (or effectively the equivalent of approximately HK$3.85 per QHA Share). The aggregate consideration was arrived at after arm s length negotiations between the Company and Famestep, having regard to the carrying values of Wah Cheong and QHA in the consolidated financial statements of the Company as at 31 December 2007, the actual amount of the Loan owed by Wah Cheong to the Company and the market value of the QHA Shares. In particular, the consideration for the Sale Shares and the assignment of the Loan are HK$199,298,555 and HK$271,391,445 respectively. The consideration for the Sale Shares is determined with reference to the carrying values of Wah Cheong and QHA in the consolidated financial statements of the Company, and represents a disposal at a premium to the Company. The consideration for the assignment of the Loan represents the actual amount of the Loan owed by Wah Cheong to the Company. In effect, the aggregate consideration represents: (i) (ii) a premium of approximately 30.51% over the closing price of HK$2.95 per share of QHA Share as quoted on the Stock Exchange on the last trading day of the shares of QHA immediately before the date of the Joint Announcement; a premium of approximately 29.19% over the average closing price of approximately HK$2.98 per share of QHA Share as quoted on the Stock Exchange for the last five trading days of the shares of QHA immediately before the date of the Joint Announcement; (iii) a premium of approximately 29.63% over the average closing price of approximately HK$2.97 per share of QHA as quoted on the Stock Exchange for the last ten trading days of the shares of QHA immediately before the date of the Joint Announcement; (iv) (v) a premium of approximately 29.63% over the average closing price of approximately HK$2.97 per share of QHA as quoted on the Stock Exchange for the last one month of the shares of QHA Shares immediately before the date of the Joint Announcement; and a premium of approximately 30.95% over the closing price of HK$2.94 per share of QHA as quoted on the Stock Exchange on the Latest Practicable Date. An initial deposit of HK$47,069,000 was paid in cash by Famestep to the Company upon the signing of the Agreement. The balance of the aggregate consideration in the sum of HK$423,621,000 will be settled in cash upon Completion. 22

25 LETTER FROM WALLBANCK BROTHERS E) Conditions precedent As stated in the Letter from the Board, Completion is conditional upon the fulfillment of a number of conditions, including: (i) the Sale Shares, the QHA Shares and the Loan being free from any encumbrance as of Completion; (ii) the warranties as contained in the Agreement remaining true and accurate and not misleading in any material respect as given as of the date of the Agreement and as of Completion, and as given at all times between the date of the Agreement and Completion; (iii) the Company having complied in full with the obligations under the Agreement and otherwise having duly performed and observed all of the obligations, undertakings and covenants required to be performed and observed by them under the Agreement on or prior to Completion; (iv) all approvals, authorisations, consents, licences, certificates, permits, concessions, agreements or other permissions of any kind of, from or by any governmental authority, regulatory body or any other third party necessary or desirable for the consummation of the transactions contemplated in the Agreement having been obtained by the Company and Wah Cheong and remaining in full force and effect; (v) the granting of the Waiver by the Executive and such Waiver not having been revoked; (vi) no matter, event, circumstance or change having occurred which has caused, causes or is likely to cause any material adverse effect on: (a) the business, operations, prospects or financial condition, or a material portion of the properties or assets, of Wah Cheong or of its subsidiaries including any licensing issues; or (b) the ability of the Company to perform or observe any of its obligations, undertakings or covenants under the Agreement; (vii) there being no applicable law which prohibits, restricts or imposes conditions or limitations on, or is reasonably expected to operate to prohibit, restrict or impose conditions or limitations on, the consummation of any of the transactions contemplated in the Agreement; 23