CK Asset Holdings Limited

Equities

1113

KYG2177B1014

Real Estate Development & Operations

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CK Asset : DISCLOSEABLE AND CONNECTED TRANSACTION AND CONDITIONAL CASH OFFER TO BUY-BACK SHARES

April 26, 2021 at 04:54 am EDT

THIS CIRCULAR AND OFFER DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in doubt as to any aspect of this Circular and Offer Document and/or the accompanying Form of Acceptance, the Share Buy-Back Offer or as to the action to be taken, you should consult a licensed securities dealer or registered institution in securities, a bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in CK Asset Holdings Limited, you should at once hand this Circular and Offer Document, the accompanying Form of Acceptance and the proxy form to the purchaser or transferee or to the licensed securities dealer, registered institution in securities, 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, The Stock Exchange of Hong Kong Limited and Hong Kong Securities Clearing Company Limited take no responsibility for the contents of this Circular and Offer Document, make no representation as to their accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this Circular and Offer Document.

Other than in respect of the Share Buy-back Offer, this Circular and Offer Document is for information purposes only and does not constitute an offer to acquire, purchase or subscribe for any securities of the Company or an invitation to enter into an agreement to do any such things, nor is it calculated to invite any offer to buy, sell or subscribe for any securities of the Company. This Circular and Offer Document is not for release, publication or distribution, in whole or in part, in, into or from any jurisdiction where to do so would constitute a violation of the relevant laws or regulations of such jurisdiction.

CK ASSET HOLDINGS LIMITED

長江實業集團有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1113)

DISCLOSEABLE AND CONNECTED TRANSACTION AND SPECIAL DEAL RELATING TO THE PROPOSED ACQUISITION OF

THE TARGET HOLDCOS

IN CONSIDERATION FOR THE ISSUE OF CONSIDERATION SHARES

UNDER A SPECIFIC MANDATE

CONDITIONAL CASH OFFER BY HSBC ON BEHALF OF THE COMPANY TO BUY-BACK UP TO 380,000,000 SHARES AT HK$51.00 PER SHARE

1. APPLICATION FOR THE WHITEWASH WAIVER AND
NOTICE OF THE EXTRAORDINARY GENERAL MEETING

Financial Adviser to the Company

Independent Financial Adviser to the Independent Shareholders and

the Independent Board Committee

A letter from the Board is set out on pages 23 to 55 of this Circular and Offer Document. A letter from the Independent Board Committee containing its advice to the Independent Shareholders in relation to the Proposal is set out on pages 67 to 68 of this Circular and Offer Document. A letter from the Independent Financial Adviser containing its advice to the Independent Board Committee and the Independent Shareholders in relation to the Proposal is set out on pages 69 to 144 of this Circular and Offer Document.

The notice convening the forthcoming EGM to be held at 1st Floor, Harbour Grand Kowloon, 20 Tak Fung Street, Hung Hom, Kowloon, Hong Kong on Thursday, 13 May 2021 at 4:30 p.m. (Hong Kong time) (or as soon thereafter as the AGM to be held at 3:30 p.m. (Hong Kong time) on the same day shall have concluded or adjourned or, if there is (i) a tropical cyclone warning signal no. 8 or above; or (ii) a black rainstorm warning signal; or (iii) extreme condition caused by super typhoon in force in Hong Kong at 9:00 a.m. (Hong Kong time) on Thursday, 13 May 2021, at the same time and place on Tuesday, 18 May 2021 (Hong Kong time)) is set out on pages N-1 to N-4 of this Circular and Offer Document. A proxy form for use at the EGM is enclosed with this Circular and Offer Document. The proxy form can also be downloaded from the websites of the Company at www.ckah.comand Hong Kong Exchanges and Clearing Limited at www.hkexnews.hk.

Whether Shareholders are able to attend the EGM physically or online, they are encouraged to appoint the Chairman of the EGM as their proxy by completing, signing and returning the proxy form in accordance with the instructions printed thereon to the Company's Hong Kong Share Registrar, Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen's Road East, Hong Kong or depositing the completed and signed proxy form at the Company's principal place of business in Hong Kong at 7th Floor, Cheung Kong Center, 2 Queen's Road Central, Hong Kong as soon as possible and in any event no less than 48 hours before the time appointed for the holding of the EGM (or any adjournment or postponement thereof). Completion and return of the proxy form will not preclude Shareholders from attending and voting in person at the EGM (or at any adjournment or postponement thereof) should they subsequently so wish and, in such event, the proxy shall be deemed to be revoked. For the EGM convened to be held on Thursday, 13 May 2021 at 4:30 p.m., the deadline to submit completed proxy forms is Tuesday, 11 May 2021 at 4:30 p.m.

In the case of inconsistency between the Chinese version and the English version of this Circular and Offer Document, the English version will prevail.

PRECAUTIONARY MEASURES FOR PHYSICAL ATTENDANCE

AT THE EXTRAORDINARY GENERAL MEETING

The following precautionary measures might be implemented at the EGM venue:

compulsory temperature screening/checks;
submission of Health Declaration Form, and scanning of the "LeaveHomeSafe" venue QR code or registering contact details in written form;
wearing of surgical face mask;
no provision of refreshments or drinks; and
no provision of shuttle bus service.

Attendees who do not comply with the precautionary measures referred to in (1) to (3) above may be denied entry to the EGM venue at the absolute discretion of the Company as permitted by law.

For the health and safety of the EGM attendees, the Company would encourage Shareholders to exercise their right to attend and vote at the EGM electronically or by appointing the Chairman of the EGM as their proxy and to return their proxy forms by the time specified above, instead of attending the physical EGM.

27 April 2021 (Hong Kong time)

CONTENTS
	Page
QUESTIONS AND ANSWERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	ii
GUIDANCE FOR THE EXTRAORDINARY GENERAL MEETING. . . . . . . . . . . .	1
PRECAUTIONARY MEASURES FOR PHYSICAL ATTENDANCE
AT THE EXTRAORDINARY GENERAL MEETING . . . . . . . . . . . . . . . . . . . . . .	4
EXPECTED TIMETABLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
LETTER FROM THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	23
LETTER FROM HSBC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	56
LETTER FROM THE INDEPENDENT BOARD COMMITTEE . . . . . . . . . . . . . .	67
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER . . . . . . . . . . . . . .	69
APPENDIX I TERMS OF THE SHARE BUY-BACK OFFER . . . . . . . . . . . . . . . . .	I-1
APPENDIX II FINANCIAL INFORMATION RELATING TO THE GROUP . . . .	II-1
APPENDIX III UNAUDITED PRO FORMA FINANCIAL
INFORMATION OF THE GROUP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	III-1
APPENDIX IV PROPERTY VALUATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	IV-1
APPENDIX V GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-1
NOTICE OF THE EXTRAORDINARY GENERAL MEETING . . . . . . . . . . . . . . .	N-1
ACCOMPANYING DOCUMENTS

PROXY FORM FOR THE EXTRAORDINARY GENERAL MEETING
FORM OF ACCEPTANCE

- i -

QUESTIONS AND ANSWERS

The following are some of the questions you, as a Shareholder, may have and the answers to those questions.

This Circular and Offer Document contains important information and you are encouraged to carefully read this Circular and Offer Document in full, including the Appendices.

1. What is the Proposal?

The Proposal comprises (i) the Proposed Acquisition of the Target Holdcos from LKSF in consideration of the issue of the Consideration Shares and (ii) the Share Buy-back Proposal (which includes the Share Buy-back Offer).

2. What are the objectives of the Proposal?

The Proposal aims to enhance the Company's investment portfolio of assets that provide stable recurrent cash flow while minimising any dilutive impact on the shareholding interest of the Shareholders. The Proposed Acquisition will allow the Company to acquire a sizeable and high quality portfolio of assets. Although the Purchase Price for the Proposed Acquisition will be settled in full by the issue of the Consideration Shares, when taken together with the effect of the Share Buy-back Offer (assuming acceptances are received for the Maximum Number of Shares), the overall effect of the Proposal would be the deployment of HK$19.38 billion of cash to acquire cash flow generating assets and to buy-back additional Shares, thereby enhancing returns per Share to the Shareholders.

Assuming the Share Buy-back Proposal (with the revised Maximum Number of Shares) is completed in full, it would result in a net reduction in the number of issued Shares and thereby greater financial accretion and an enhanced return on capital compared to the original Share Buy-back Proposal, which would be beneficial to all Shareholders.

3. What are the reasons and benefits of the Proposal?

The reasons for and benefits of the Proposal, as described in more detail in this Circular and Offer Document, are set out below:

the Proposal is a rare opportunity to acquire interests in a sizeable and high quality investment portfolio with low execution risk;
the Proposal will increase the contribution of the recurrent income base and enhance the stability of earnings of the Group;
the Proposal is a financially accretive transaction; and
the Proposal represents a liquidity event providing an opportunity for Shareholders to monetise at a premium to the prevailing market price at the time of Announcement.

- ii -

QUESTIONS AND ANSWERS

4. What is the purpose of this Circular and Offer Document?

The purpose of this Circular and Offer Document is to provide you with, among other things:

further information regarding the Proposal, in particular:
1. the Proposed Acquisition and the issue of the Consideration Shares pursuant to the Specific Mandate;
2. the Share Buy-back Proposal, which includes the Share Buy-back Offer;
3. the Takeovers Code implications of the Proposal and the application for the Whitewash Waiver; and
4. other general information regarding the Proposal;

a letter from the Independent Board Committee containing its recommendation to the Independent Shareholders;
a letter from the Independent Financial Adviser containing its advice to the Independent Board Committee and the Independent Shareholders; and
notice of the EGM to consider and, if thought fit, pass the resolutions to approve the Proposal.

5. What do I need to do if I want to vote at the EGM?

For the health and safety of EGM attendees, the Company would encourage Shareholders to:

attend the EGM and vote by means of electronic facilities; or
exercise their right to vote at the EGM by appointing the Chairman of the EGM as their proxy instead of attending the physical EGM.

The EGM will be a hybrid meeting. Shareholders have the option of attending, participating and voting at the EGM through online access by visiting the website at https:// web.lumiagm.com("Online Platform"). Shareholders participating in the EGM using the Online Platform will be deemed present at, and will be counted towards the quorum of, the EGM and they will be able to cast their votes and submit questions through the Online Platform.

All Shareholders who wish to vote in the EGM through Online Platform are advised to read "Guidance For the Extraordinary General Meeting" of this Circular and Offer Document carefully.

- iii -

QUESTIONS AND ANSWERS

For Shareholders who would like to attend the physical EGM, please note that the following precautionary measures will be implemented by the Company at the EGM venue to safeguard the health and safety of the EGM attendees and to comply with the requirements for the prevention and control of the spreading of COVID-19.

In light of the Prevention and Control of Disease (Prohibition on Group Gathering) Regulation, Cap. 599G ("Regulation"), the Company will limit the physical attendance at the EGM venue to 50 attendees (including the working team to facilitate with the conduct of the EGM) who have been allocated the right of admission to the EGM venue through the following procedures.
Both registered and non-registered Shareholders (including their proxy or corporate representative) who wish to attend the physical EGM are requested to register their interest and provide the following details by email at EGM2021reg@ckah.comduring the period from Friday, 30 April 2021, 9:00 a.m. to Wednesday, 5 May 2021, 5:00 p.m.:
1. full name;
2. contact phone number (optional) for better co-ordination; and
3. for registered Shareholders, the 10-digit shareholder reference number starting with "C" printed under the barcode on the top right corner of the Shareholder Notification.
If the online registrations exceed the attendance limit permitted by the Regulation, balloting will be conducted. Registered Shareholders and non-registered Shareholders who have been allocated the right of admission to the EGM venue will be notified by email on or before Thursday, 6 May 2021. No notification will be sent to those who are not successful in the balloting.

All Shareholders who wish to attend the physical EGM are advised to read "Precautionary Measures for Physical Attendance at the Extraordinary General Meeting" of this Circular and Offer Document carefully.

6. What do I need to do if I want to accept the Share Buy-back Offer?

To accept the Share Buy-back Offer, Qualifying Shareholders should complete and sign the Form of Acceptance in accordance with the instructions printed thereon, which form part of the terms of the Share Buy-back Offer. The instructions in this Circular and Offer Document should be read together with the instructions on the Form of Acceptance (which instructions form part of the terms and conditions of the Share Buy-back Offer).

In order to be valid, the completed Form of Acceptance should be forwarded, together with the Title Documents for not less than the number of Shares in respect of which the relevant Qualifying Shareholder wishes to accept the Share Buy-back Offer, by post or by hand to the Hong Kong Share Registrar, Computershare Hong Kong Investor Services Limited at Rooms 1712-1716, 17th Floor, Hopewell Centre, 183 Queen's Road East, Hong

- iv -

QUESTIONS AND ANSWERS

Kong, in an envelope marked "CK Asset Holdings Limited - Share Buy-back Offer" as soon as possible after receipt of the Form of Acceptance but in any event so as to reach the Hong Kong Share Registrar by no later than the Latest Acceptance Time, i.e. 4:00 p.m. (Hong Kong time) on Thursday, 27 May 2021.

7. What should I do if I support the Company in buying-back the Shares, but I don't want my own Shares to be bought back?

All Independent Shareholders can vote at the EGM to approve the Share Buy-back Offer even if such Shareholders do not intend accepting the Share Buy-back Offer themselves. Shares will only be bought back from Qualifying Shareholders who validly complete and sign a Form of Acceptance.

8. Am I entitled to the 2020 Final Dividend if I accept the Share Buy-back Offer?

Qualifying Shareholders who accept the Share Buy-back Offer and whose names appear on the register of members on the Final Dividend Record Date will be entitled to receive in respect of each Share bought-back pursuant to the Share Buy-back Offer (i) the final cash dividend (if approved by Shareholders at the 2021 AGM) and (ii) the Offer Price per Share.

9. Will I have to pay any stamp duties, fees or commissions?

Shares bought back by the Company will be free of commissions and dealing charges, but seller's ad valorem stamp duty payable by the Accepting Shareholders, calculated at a rate of HK$1.00 for every HK$1,000 or part thereof of the market value of the Shares to be bought back under the Share Buy-back Offer or the consideration payable by the Company in respect of relevant acceptances of the Share Buy-back Offer, whichever is the higher, will be deducted by the Company from the amount payable to the Accepting Shareholders. The Company will arrange for payment of the seller's ad valorem stamp duty on behalf of the Accepting Shareholders to the Stamp Duty Office in accordance with the Stamp Duty Ordinance.

10. I am an overseas Shareholder. What should I do?

All Overseas Shareholders are advised to read this Circular and Offer Document in its entirety. Your attention is drawn to "Appendix I - Terms of the Share Buy-backOffer -

8. Overseas Shareholders" of this Circular and Offer Document.

11. What are "odd lots" and are there any arrangements being made relating to the sale of odd lots of Shares?

Since the Shares are currently traded in board lots of 500 Shares, any holding of those Shares that is not a whole multiple of 500 is known as an "odd lot". The Company has no intention to change the board lot size as a result of the Share Buy-back Offer. Shareholders should note that acceptance of the Share Buy-back Offer may result in their holding of odd lots of Shares.

- v -

QUESTIONS AND ANSWERS

12. What is the position of the Independent Board Committee on the Proposal?

Having taken into account the factors and reasons considered by, and the opinion of the Independent Financial Adviser, the Independent Board Committee is of the opinion that:

the entering into of the Share Purchase Agreement (including the Proposed Acquisition contemplated thereunder) is in the ordinary and usual course of business of the Group, the terms of the Share Purchase Agreement (including the Proposed Acquisition contemplated thereunder) and the Specific Mandate are fair and reasonable so far as the Independent Shareholders are concerned and on normal commercial terms, and the Proposed Acquisition and the Specific Mandate are in the interests of the Company and the Shareholders as a whole;
the terms of the Share Buy-back Offer are fair and reasonable so far as the Independent Shareholders are concerned and that the Share Buy-back Offer is in the interests of the Company and the Shareholders as a whole; and
the terms of the Whitewash Waiver and the Special Deal are fair and reasonable so far as the Independent Shareholders are concerned and that the Whitewash Waiver and the Special Deal are in the interests of the Company and the Shareholders as a whole.

Accordingly, the Independent Board Committee recommends the Independent Shareholders to vote in favour of the resolutions to approve the Matters for Approval at the EGM.

Anglo Chinese Corporate Finance, Limited has been appointed as the Independent Financial Adviser to advise the Independent Board Committee in connection with the Proposal. It considers that, so far as the Independent Shareholders are concerned, the terms of the Proposal are fair and reasonable. The text of the letter from the Independent Financial Adviser is set out in the "Letter from the Independent Financial Adviser" section of this Circular and Offer Document. You are advised to carefully read such letter of advice before taking any action in respect of the Proposal.

13. If I accept the Share Buy-back Offer, when will I be paid for my Shares that are bought-back?

The latest date for despatch of cheques to the Accepting Shareholders will be Monday, 7 June 2021.

14. What will happen if not all of the Shares in respect of which I have accepted the Share Buy-back Offer are bought?

If the Shares of an Accepting Shareholder in respect of which the Share Buy-back Offer has been accepted are not bought-back by the Company in full, the Title Documents in respect of the balance of such Shares or a replacement certificate therefor will be returned or sent to you by ordinary post at your own risk, as soon as possible, but in any event within 7 Business Days following the close of the Share Buy-back Offer.

- vi -

QUESTIONS AND ANSWERS

15. Who should I contact if I have additional questions?

If you have any questions concerning administrative matters, such as dates, documentation and procedures relating to the Proposal, please call the hotline of the Hong Kong Share Registrar at its hotline at (852) 2862 8555 during the period between 9:00 a.m. and 6:00 p.m. (Hong Kong time) from Mondays to Fridays (other than public holidays).

The hotline cannot and will not provide any advice on the merits of the Proposal or give any financial or legal advice. If you are in doubt as to the content of this Circular and Offer Document, any aspect of the Proposal or any action to be taken, you are encouraged to consult a licensed securities dealer or registered institution in securities, stockbroker, bank manager, solicitor, professional accountant or other professional adviser and obtain independent professional advice.

- vii -

GUIDANCE FOR THE EXTRAORDINARY GENERAL MEETING

The Company does not in any way wish to diminish the opportunity available to Shareholders to exercise their rights and to attend, participate and vote in person at the EGM, but is conscious of the need to protect EGM attendees from possible exposure to the COVID-19 pandemic. For the health and safety of EGM attendees, the Company would encourage Shareholders to: (i) attend the EGM and vote by means of electronic facilities; or (ii) exercise their right to vote at the EGM by appointing the Chairman of the EGM as their proxy instead of attending the physical EGM.

ATTENDING THE EGM BY MEANS OF ELECTRONIC FACILITIES

The EGM will be a hybrid meeting. In addition to the traditional physical attendance at the EGM, Shareholders have the option of attending, participating and voting at the EGM through online access by visiting the website at https://web.lumiagm.com("Online Platform"). Shareholders participating in the EGM using the Online Platform will be deemed present at, and will be counted towards the quorum of, the EGM and they will be able to cast their votes and submit questions through the Online Platform.

The Online Platform will be open for registered Shareholders and non-registered Shareholders (see below for login details and arrangements) to log in approximately 30 minutes prior to the commencement of the EGM and can be accessed from any location with internet connection by a smart phone, tablet device or computer. Shareholders should allow ample time to log into the Online Platform to complete the related procedures. Please refer to the Online User Guide for the EGM at www.ckah.com/eng/investor_other_info.htmlfor assistance.

Details regarding the EGM arrangements including login details to access the Online Platform are included in the Company's notification letter to registered Shareholders ("Shareholder Notification") sent together with this Circular and Offer Document.

Non-registered Shareholders who wish to attend, participate and vote at the EGM using the Online Platform should (1) contact and instruct their banks, brokers, custodians, nominees or HKSCC Nominees Limited through which their shares are held (together, "Intermediary") to appoint themselves as a proxy or a corporate representative to attend the EGM and (2) provide their e-mail addresses to their Intermediary before the time limit required by the relevant Intermediary. Details regarding the EGM arrangements including login details to access the Online Platform will be sent by the Company's Hong Kong Share Registrar to the e-mail addresses of the non-registered Shareholders provided by the Intermediary. Without the login details, non-registered Shareholders will not be able to participate and vote using the Online Platform. Non-registered Shareholders should therefore give clear and specific instructions to their Intermediary in respect of both (1) and (2) above.

- 1 -

GUIDANCE FOR THE EXTRAORDINARY GENERAL MEETING

If any non-registered Shareholder has not received the login details through the e-mail address provided to the relevant Intermediary by 12 May 2021, such non-registered Shareholder should contact the Company's Hong Kong Share Registrar to request for those login details to be re-sent.

Registered and non-registered Shareholders should note that only one device is allowed per login. Please also keep the login details in safe custody for use at the EGM and do not disclose the details to anyone else.

The votes submitted through the Online Platform using the login details provided to the registered or non-registered Shareholders will be conclusive evidence that such votes were validly cast by such registered or non-registered Shareholders.

The Company is not required to, and will not, independently verify the accuracy of the e-mail addresses or other information provided by registered or non-registered Shareholders. The Company and its agents take no responsibility for all or any loss or other consequence caused by or resulting from any inaccuracy and/or deficiency in the information provided or any unauthorised use of the login details.

Voting through the Online Platform

Registered and non-registered Shareholders who wish to cast their votes through the Online Platform should note that the Online Platform only permits them to submit their votes in respect of all of the Shares held by them or in respect of which they have been appointed as a proxy or corporate representative. There is no option to choose to submit a vote in respect of part only of the Shares held.

Further, once the online voting has closed, the votes which a registered Shareholder has submitted through the Online Platform will supersede any votes which may be cast by his/her proxy (if any) at the EGM.

QUESTIONS AT AND PRIOR TO THE EGM

Shareholders attending the EGM using the Online Platform will be able to submit questions relevant to the proposed resolutions online during the EGM. Shareholders can also send their questions by email from Thursday, 6 May 2021 (9:00 a.m.) to Tuesday, 11 May 2021 (5:00 p.m.) to EGM2021@ckah.com. For registered Shareholders, please state the 10-digit shareholder reference number starting with "C" (SRN) which is printed on the top right corner of the Shareholder Notification.

Whilst the Company will endeavour to respond to as many questions as possible at the EGM, due to time constraints, the Company may respond to any unanswered questions after the EGM as appropriate.

- 2 -

GUIDANCE FOR THE EXTRAORDINARY GENERAL MEETING

VOTING BY PROXY IN ADVANCE OF THE EGM

Shareholders are encouraged to submit their completed proxy forms well in advance of the EGM. Return of a completed proxy form will not preclude Shareholders from attending and voting in person (whether physically or by means of electronic facilities) at the EGM (or any adjournment or postponement thereof) should they subsequently so wish.

Submission of proxy forms for registered Shareholders

A proxy form for use at the EGM is enclosed with this Circular and Offer Document. A copy of the proxy form can also be downloaded from the websites of the Company at www.ckah.com/eng/investor_other_info.htmland Hong Kong Exchanges and Clearing Limited at www.hkexnews.hk.

The deadline to submit completed proxy forms is Tuesday, 11 May 2021 at 4:30 p.m. Completed proxy forms must be returned to the Company's Hong Kong Share Registrar, Computershare Hong Kong Investor Services Limited at 17M Floor, Hopewell Centre, 183 Queen's Road East, Hong Kong or deposited at the Company's principal place of business in Hong Kong at 7th Floor, Cheung Kong Center, 2 Queen's Road Central, Hong Kong.

Appointment of proxy by non-registered Shareholders

Non-registered Shareholders should contact their Intermediary as soon as possible to assist them in the appointment of proxy.

- 3 -

PRECAUTIONARY MEASURES FOR PHYSICAL ATTENDANCE AT

THE EXTRAORDINARY GENERAL MEETING

LIMITING PHYSICAL ATTENDANCE AT THE EGM VENUE

Pursuant to the requirements of the Prevention and Control of Disease (Prohibition on Group Gathering) Regulation, Cap. 599G ("Regulation"), as at the Latest Practicable Date, group gatherings of more than 20 persons for a shareholders' meeting are required to be accommodated in separate partitioned rooms or areas of not more than 20 persons each. In light of the Regulation, the Company will limit the physical attendance at the EGM venue to 50 attendees (including the working team to facilitate with the conduct of the EGM) who have been allocated the right of admission to the EGM venue through the following procedures. This maximum number of attendees at the EGM is to ensure compliance with the requirement under the Regulation as at the Latest Practicable Date, and may be changed as the date of the EGM (or any adjournment or postponement thereof).

Prior online registration

Both registered and non-registered Shareholders (including their proxy or corporate representative) who wish to attend the physical EGM are requested to register their interest and provide the following details by email at EGM2021reg@ckah.comduring the period from Friday, 30 April 2021, 9:00 a.m. to Wednesday, 5 May 2021, 5:00 p.m.:

full name;
contact phone number (optional) for better co-ordination; and
for registered Shareholders, the 10-digit shareholder reference number starting with "C" printed under the barcode on the top right corner of the Shareholder Notification.

Duplicate registrations will be disregarded.

In addition, non-registered Shareholders should also contact and instruct their Intermediary to appoint them as a proxy or corporate representative so that they can attend and vote at the physical EGM if they are allocated the right of admission to the EGM venue.

Non-registered Shareholders who have not been duly appointed as proxy or corporate representative by their Intermediary will not be able to attend the physical EGM even if they are eventually allocated the right of admission to the EGM venue.

Allocation by balloting

If the online registrations exceed the attendance limit permitted by the Regulation, balloting will be conducted.

- 4 -

PRECAUTIONARY MEASURES FOR PHYSICAL ATTENDANCE AT

THE EXTRAORDINARY GENERAL MEETING

Registered Shareholders and non-registered Shareholders who have been allocated the right of admission to the EGM venue will be notified by email on or before Thursday, 6 May 2021. No notification will be sent to those who are not successful in the balloting.

HEALTH AND SAFETY MEASURES FOR THE PHYSICAL EGM

To safeguard the health and safety of the EGM attendees, the following measures might also be implemented at the EGM venue:

compulsory temperature screening/checks will be required of every attendee at the main entrance of the EGM venue. Any person with a body temperature above the reference range quoted by the Department of Health from time to time, or exhibiting respiratory infection symptoms, or is apparently unwell, may be denied entry into the EGM venue and be requested to leave the venue;
every attendee will be required to (a) submit a completed Health Declaration Form which can be downloaded from the website of the Company at www.ckah.com/eng/investor_other_info.htmland (b) scan the "LeaveHomeSafe" venue QR code or register his/her name, contact number and the date and time of visit, prior to entry into the EGM venue. Please have the completed and signed Health Declaration Form ready for collection at the main entrance of the EGM venue to facilitate prompt and smooth processing;
every attendee will be required to wear a surgical face mask at all times (including queuing for registration outside the EGM venue and throughout the EGM) and must follow the seating arrangement fixed by the Company;
no refreshments or drinks will be provided to EGM attendees; and
no shuttle bus service will be provided.

Attendees are in addition requested to observe and practise good personal hygiene at all times. To the extent permitted by law, the Company reserves the right to deny entry into the EGM venue or require any person to leave the EGM venue so as to ensure the health and safety of the EGM attendees.

Due to the constantly evolving COVID-19 pandemic situation in Hong Kong, the Company may be required to change the EGM arrangements at short notice. Shareholders should check the Company's website at www.ckah.comor the Company's EGM website at www.ckah.com/eng/2021egm.htmlfor future announcements and updates on the EGM arrangements.

- 5 -

PRECAUTIONARY MEASURES FOR PHYSICAL ATTENDANCE AT

THE EXTRAORDINARY GENERAL MEETING

If Shareholders have any questions relating to the EGM, please contact Computershare Hong Kong Investor Services Limited, the Company's Hong Kong Share Registrar, as follows:

Computershare Hong Kong Investor Services Limited

17M Floor, Hopewell Centre

183 Queen's Road East

Hong Kong

Telephone: (852) 2862 8558

Facsimile: (852) 2865 0990

Website: www.computershare.com/hk/contact

- 6 -

EXPECTED TIMETABLE(1)

The timetable set out below is indicative only and is subject to change. Any changes to the timetable will be announced by the Company. Unless otherwise specified, all times and dates refer to Hong Kong local times and dates.

Event	Time and/or Date
Announcement of the Proposal . . . . . . . . . . . . . . . . . . . . . .	Thursday, 18 March 2021
Announcement of the revision of the Maximum
Number of Shares to be bought back under
the Share Buy-back Offer . . . . . . . . . . . . . . . . . . . . . . . .	Wednesday, 14	April 2021
Despatch date of this Circular and Offer Document,
notice of EGM, proxy form for the EGM and
Form of Acceptance . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . Tuesday, 27	April 2021

Latest time for lodging a transfer of Shares to qualify

for attendance at the EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4:30 p.m. on Friday, 7 May 2021

Closure of the Register of Members . . . . . . . . . . . . . .	. . . . Monday, 10 May 2021 to
	Thursday, 13 May 2021
Latest time for lodging a proxy form for the EGM . .	. . . . . . . 4:30 p.m. on Tuesday,
	11 May 2021
AGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . 3:30 p.m. on
	Thursday, 13 May 2021
EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4:30 p.m. (or as soon thereafter
	as the AGM shall have
	concluded or adjourned)
	on Thursday, 13 May 2021

Announcement of results of the EGM and whether the Share Buy-back Offer has

become unconditional . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thursday, 13 May 2021

Latest time for lodging a transfer of Shares to

qualify for the 2020 Final Dividend . . . . . . . . . . . . . . . . . . . . . . . . . . 4:30 p.m. on Thursday, 20 May 2021

Final Dividend Record Date . . . . . . . . . . . . . . . . . . . . . . . . .

Thursday, 20 May 2021

Latest time for lodging

the Form of Acceptance(2)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4:00 p.m. on Thursday, 27 May 2021

Closing date of the Share Buy-back Offer(2) . . . . . . . . . . . . . . Thursday, 27 May 2021

- 7 -

EXPECTED TIMETABLE(1)

Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thursday, 27 May 2021

Announcement of results of the Share Buy-back Offer to be posted on the websites of

the Stock Exchange and the Company . . . . . . . . . . . . . . . no later than 7:00 p.m. on Thursday, 27 May 2021

Payment of the 2020
Final Dividend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Thursday, 3 June 2021

Latest date for despatch of cheques to the Accepting Shareholders and (if applicable) despatch of Share certificate to parties

with unsuccessful tenders(4) . . . . . . . . . . . . . . . . . . . . . . . . . . Monday, 7 June 2021

Notes:

The above timetable assumes that the Matters for Approval are approved by the Independent Shareholders at the EGM and the Conditions (comprising the Acquisition Conditions and the Offer Conditions) are satisfied resulting in the Share Buy-back Offer becoming unconditional on Thursday, 13 May 2021.
The Executive has indicated, subject to, among other things, (i) the Whitewash Waiver having been approved by at least 75% of the votes cast by the Independent Shareholders at the EGM and (ii) the Proposed Acquisition and the Share Buy-back Offer having been approved by more than 50% of the votes cast by the Independent Shareholders at the EGM, to waive any obligation of LKSF to make a mandatory general offer for all the Shares not already owned or agreed to be acquired by the Controlling Shareholder Group as a result of the Proposed Acquisition and the Share Buy-back Offer. Assuming that the Matters for Approval are approved by the Independent Shareholders and the Share Buy-back Offer becomes unconditional on Thursday, 13 May 2021, being the date of the EGM, the Share Buy-back Offer will remain open for acceptance for a period of 14 days thereafter and will not be extended.
In order to accept the Share Buy-back Offer, Qualifying Shareholders are required to submit to the Hong Kong Share Registrar the duly completed Form of Acceptance in accordance with the instructions as set out in this Circular and Offer Document and the Form of Acceptance (which instructions form part of the terms and conditions of the Share Buy-back Offer) at or before 4:00 p.m. on Thursday, 27 May 2021.
Remittance of the total amounts due to Accepting Shareholders under the Share Buy-back Offer (subject to deduction of seller's ad valorem stamp duty payable on the Shares bought-back from such Accepting Shareholders) will be made by the Company as soon as possible and in any event within 7 Business Days after the close of the Share Buy-back Offer.
Beneficial Owners of the Shares who hold their Shares in CCASS directly as an Investor Participant or indirectly via a broker or custodian participant should note the timing requirements (as set out in Appendix I to this Circular and Offer Document) for causing instructions to be made to CCASS in accordance with the General Rules of CCASS and CCASS Operational Procedures. Acceptances of the Share Buy-back Offer are irrevocable and not capable of being withdrawn, except as permitted under the Takeovers Code.

- 8 -

EXPECTED TIMETABLE(1)

EFFECT OF BAD WEATHER ON THE LATEST TIME FOR ACCEPTANCE OF THE SHARE BUY-BACK OFFER

If there is (i) a tropical cyclone warning signal no. 8 or above; or (ii) a black rainstorm warning signal; or (iii) extreme condition caused by super typhoon: (a) in force in Hong Kong at any local time before 12:00 noon and no longer in force after 12:00 noon on the closing date of the Share Buy-back Offer, the latest time and date for acceptance of the Share Buy-back Offer will remain at 4:00 p.m. on the same Business Day; or (b) in force in Hong Kong at any local time between 12:00 noon and 4:00 p.m. on the closing date of the Share Buy-back Offer, the latest time and date for acceptance of the Share Buy-back Offer will be rescheduled to 4:00 p.m. on the following Business Day which does not have either of those warnings in force at any time between 9:00 a.m. and 4:00 p.m. or such other day as the Executive may approve.

- 9 -

DEFINITIONS

In this Circular and Offer Document, the following expressions have the meanings set out below, unless the context requires otherwise:

"2020 Final Dividend"	the final cash dividend recommended by the Directors
	in respect of the year ended 31 December 2020 to
	Shareholders whose names appear on the register of
	members of the Company on the Final Dividend
	Record Date
"Accepting Shareholder(s)"	Qualifying Shareholder(s) accepting the Share
	Buy-back Offer
"Acquisition Conditions"	the conditions as set out in the section headed "The
	Proposed Acquisition - Conditions to Completion" of
	this Circular and Offer Document to which the
	Proposed Acquisition is subject
"acting in concert"	has the meaning ascribed to it in the Takeovers Code
"AGM"	the annual general meeting of the Company to be held
	on Thursday, 13 May 2021
"Announcement"	the announcement dated 18 March 2021 issued by the
	Company in relation to the Proposal
"associate"	has the meaning ascribed to it in the Takeovers Code
"AUD"	Australian dollars, the lawful currency of Australia
"Board"	the board of Directors
"Beneficial Owner"	any beneficial owner of the Shares whose Shares are
	registered in the name of a Registered Owner other
	than himself or herself
"Business Day"	a day on which the Stock Exchange is open for the
	transaction of business
"Cash Distributions"	cash distributions comprising dividends, interest and
	other distributions received by the Target Holdco Group
	from the Target Companies
"Castle Holdco"	Li Ka-Shing Castle Holdings Limited, a company
	incorporated in the Cayman Islands

- 10 -

	DEFINITIONS
"Circular and Offer Document"	this combined document comprising of (i) the circular
	relating to the Proposed Acquisition and the Specific
	Mandate and (ii) the circular relating to the Share
	Buy-back Offer, the Whitewash Waiver and the Special
	Deal
"CCASS"	the Central Clearing and Settlement System established
	and operated by HKSCC
"CCASS Operational	the operational procedures of HKSCC in relation to
Procedures"	CCASS, containing the practices, procedures and
	administrative requirements relating to the operations
	and functions of CCASS, as from time to time in force
"CCASS Participant"	a person admitted to participate in CCASS as a
	participant, including an Investor Participant
"CK Asset Provident Fund"	a registered scheme with the Mandatory Provident Fund
	Schemes Authority established under the Occupational
	Retirement Schemes Ordinance (Cap. 426 of the Laws
	of Hong Kong), with HSBC Global Asset Management
	(Hong Kong) Limited and Amundi Hong Kong Limited
	as its investment managers
"CKH"	Cheung Kong (Holdings) Limited, a company
	incorporated in Hong Kong with limited liability and a
	wholly owned subsidiary of CKHH
"CKHH"	CK Hutchison Holdings Limited, a company
	incorporated in the Cayman Islands with limited
	liability, the shares of which are listed on the Main
	Board of the Stock Exchange (Stock Code: 1)
"CKI"	CK Infrastructure Holdings Limited, a company
	incorporated in Bermuda with limited liability, the
	shares of which are listed on the Main Board of the
	Stock Exchange (Stock Code: 1038)
"CKII"	Cheung Kong (Infrastructure Investment) Limited, a
	company incorporated in Hong Kong with limited
	liability and a wholly owned subsidiary of CKH
"Codes"	the Takeovers Code and the Share Buy-backs Code
"Company"	CK Asset Holdings Limited, a company incorporated in
	the Cayman Islands with limited liability, the shares of
	which are listed on the Main Board of the Stock
	Exchange (Stock Code: 1113)

- 11 -

	DEFINITIONS
"Completion"	completion of the Proposed Acquisition in accordance
	with the terms of the Share Purchase Agreement
"Conditions"	the Acquisition Conditions and the Offer Conditions
"Consideration Shares"	333,333,333 Shares to be issued by the Company for
	the purpose of satisfying the Purchase Price
"connected person"	has the meaning ascribed to it under the Listing Rules
"controlling shareholder"	has the meaning ascribed to it under the Listing Rules
"Controlling Shareholder	Mr. Li Ka-shing, Mr. Li Tzar Kuoi, Victor, Mr. Li Tzar
Group"	Kai, Richard, Ms. Li Michelle Sarah Si De, the Trust,
	LKSF and LKSGF who directly and/or indirectly hold
	an aggregate of approximately 35.99% of the total
	issued Shares as at the Latest Practicable Date
"Creeper Limit"	in relation to any Shareholder holding not less than
	30%, but not more than 50%, of the voting rights of
	the Company, an increase in the aggregate percentage
	of voting rights of the Company held by such
	Shareholder, together with persons acting in concert
	with such Shareholder, of not more than 2% during any
	12-month period
"Directors"	the directors of the Company
"Dutch Enviro Energy"	Dutch Enviro Energy Holdings B.V., a company
	incorporated in the Netherlands, in which LKSF has an
	indirect 10% shareholding interest as at the Latest
	Practicable Date
"DT1"	The Li Ka-Shing Unity Discretionary Trust, of which
	Mr. Li Ka-shing is the settlor and, among others,
	Mr. Li Tzar Kuoi, Victor is a discretionary beneficiary,
	and the trustee of which is TDT1
"DT2"	a discretionary trust of which Mr. Li Ka-shing is the
	settlor and, among others, Mr. Li Tzar Kuoi, Victor is a
	discretionary beneficiary, and the trustee of which is
	TDT2
"DT3"	a discretionary trust of which Mr. Li Ka-shing is the
	settlor and, among others, Mr. Li Tzar Kuoi, Victor is a
	discretionary beneficiary, and the trustee of which is
	TDT3

- 12 -

	DEFINITIONS
"DT4"	a discretionary trust of which Mr. Li Ka-shing is the
	settlor and, among others, Mr. Li Tzar Kuoi, Victor is a
	discretionary beneficiary, and the trustee of which is
	TDT4
"EBITDA"	earnings before interest expenses, taxation, and
	depreciation and amortisation
"Economic Benefits Agreement"	the economic benefits agreement dated 31 August 2018
	entered into between Henley Riches Limited (a
	subsidiary of CKHH), CKHH and Team Ace
	Enterprises Limited (a subsidiary of the Company)
"EGM"	the extraordinary general meeting of the Company to
	be held on Thursday, 13 May 2021 for the Independent
	Shareholders to consider and, if thought fit, approve
	the Proposed Acquisition (including the Specific
	Mandate and the Special Deal), the Share Buy-back
	Offer and the Whitewash Waiver
"encumbrances"	liens, charges, encumbrances, equitable interests, rights
	of pre-emption or other third party rights of any nature
"EUR"	Euro, the lawful currency of the Eurozone
"Excluded Shareholders"	Overseas Shareholders, if any, whose addresses, as
	shown on the Register of Members as on the Record
	Date, are outside Hong Kong and located in
	jurisdictions the laws of which may prohibit the
	making of the Share Buy-back Offer to such
	Shareholders or otherwise require the Company to
	comply with additional requirements which are (in the
	opinion of the Directors, but subject to the prior
	consent of the Executive) unduly onerous or
	burdensome, having regard to the number of
	Shareholders involved in such jurisdictions and their
	shareholdings in the Company
"Executive"	the Executive Director of the Corporate Finance
	Division of the SFC or any delegate(s) for the time
	being of the Executive Director
"Executive Directors"	the executive Directors of the Company
"exempt fund managers"	has the meaning ascribed to it in the Takeovers Code
"exempt principal traders"	has the meaning ascribed to it in the Takeovers Code

- 13 -

	DEFINITIONS
"Final Dividend Record Date"	Thursday, 20 May 2021, being the record date for
	determining Shareholders' entitlement to receive the
	final dividend in respect of the year ended 31
	December 2020
"Form of Acceptance"	the form of acceptance issued with this Circular and
	Offer Document to Qualifying Shareholders for use by
	such persons in connection with the Share Buy-back
	Offer
"GBP" or "£"	Pound Sterling, the lawful currency of the United
	Kingdom
"Group"	the Company and its subsidiaries
"Guarantee Period"	the two years ending 31 December 2021 and 2022 in
	respect of which the Target Holdco Group will receive
	the guaranteed Cash Distributions from the Target
	Companies
"HKSCC"	Hong Kong Securities Clearing Company Limited
"HKSCC Nominees"	HKSCC Nominees Limited
"HK$" or "HKD"	Hong Kong dollars, the lawful currency of Hong Kong
"Hong Kong"	the Hong Kong Special Administrative Region of the
	People's Republic of China
"Hong Kong Share Registrar"	Computershare Hong Kong Investor Services Limited
"HSBC"	The Hongkong and Shanghai Banking Corporation
	Limited, being the financial adviser to the Company in
	relation to the Proposed Acquisition and the Share
	Buy-back Offer, a registered institution under the SFO,
	registered to carry on Type 1 (dealing in securities),
	Type 2 (dealing in futures contracts), Type 4 (advising
	on securities), Type 5 (advising on futures contracts),
	Type 6 (advising on corporate finance) and Type 9
	(asset management) regulated activities under the SFO
	and a licensed bank under the Banking Ordinance
	(Chapter 155 of the Laws of Hong Kong)
"HSBC Group"	HSBC and persons controlling, controlled by or under
	the same control as HSBC
"IFRS"	The International Financial Reporting Standards

- 14 -

	DEFINITIONS
"Independent Board	the independent committee of the Board comprising all
Committee"	the independent non-executive Directors who have no
	interest in the Proposal (including the Special Deal, the
	Share Buy-back Offer and the Whitewash Waiver) other
	than as Shareholders, which has been formed to advise
	the Independent Shareholders in respect of the above
	matters
"Independent Financial	Anglo Chinese Corporate Finance, Limited, a
Adviser"	corporation licensed to carry out type 1 (dealing in
	securities), type 4 (advising on securities), type 6
	(advising on corporate finance) and type 9 (asset
	management) regulated activities under the SFO, the
	independent financial adviser to the Independent Board
	Committee and the Independent Shareholders
"Independent Shareholders"	all Shareholders other than (i) LKSF and persons acting
	in concert with it (including the Controlling
	Shareholder Group, the Executive Directors and the
	LKSF Directors); (ii) the Company and persons acting
	in concert with it (including the Controlling
	Shareholder Group, the Executive Directors, CK Asset
	Provident Fund, INKA and HSTE); and (iii) any other
	Shareholder that is otherwise involved in, or interested
	in, the Matters for Approval
	For the avoidance of doubt, Independent Shareholders
	shall include any member of the HSBC Group which is
	a Registered Owner of Shares which are held on behalf
	of Beneficial Owners of such Shares who are
	investment clients where such Beneficial Owners (A)
	control the voting rights attached to such Shares, (B)
	give instructions as to how such Shares are to be voted
	and (C) are not otherwise involved in, or interested in,
	the Matters for Approval
"Intermediary"	banks, brokers, custodians, nominees or HKSCC
	Nominees through which shares of non-registered
	Shareholders are held
"Investor Participant"	a person admitted to participate in CCASS as an
	investor participant
"Latest Acceptance Time"	the latest time for receipt by the Hong Kong Share
	Registrar of the Form of Acceptance submitted by
	Qualifying Shareholders, being 4:00 p.m. on Thursday,
	27 May 2021, or such later date as the Company may
	announce in accordance with the requirements of the
	Codes

- 15 -

DEFINITIONS

"Last Trading Date"18 March 2021, being the last full trading day of the Shares on the Stock Exchange prior to the issue of the Announcement

"Latest Practicable Date" 23 April 2021, being the latest practicable date prior to the date of this Circular and Offer Document for the purpose of ascertaining certain information contained in this Circular and Offer Document

"Listing Rules"the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (as amended and supplemented from time to time)

"LKSF"Li Ka Shing Foundation Limited, a company incorporated in Hong Kong limited by guarantee, which is a charitable foundation and a person acting in concert with, and may be regarded as an associate (as defined in Chapter 14A of the Listing Rules) of, Mr. Li Tzar Kuoi, Victor, the Chairman and Managing Director of the Company

"LKSF Directors"Mr. Li Ka-shing, Mr. Li Tzar Kuoi, Victor, Mr. Li Tzar Kai, Richard, Mr. Chong Hok Shan, Mr. Chong Hok Hei, Charles, Ms. Pau Yee Wan, Ezra, Mr. Chow Kun Chee, Roland, Mr. Lee Yeh Kwong, Charles, Mrs. Lee Pui Ling, Angelina, Ms. Chau Hoi Shuen, Solina, Ms. Eirene Yeung, Mr. George Colin Magnus, Mr. Frank John Sixt, Mr. Kan Yuet Loong, Ms. Au Siu Yin, Amy, Ms. Li Michelle Sarah Si De and Mr. Man Ka Keung, Simon

"LKSGF"Li Ka Shing (Global) Foundation, a company incorporated in the Cayman Islands limited by guarantee, which is a charitable foundation and a person acting in concert with, and may be regarded as an associate (as defined in Chapter 14A of the Listing Rules) of, Mr. Li Tzar Kuoi, Victor, the Chairman and Managing Director of the Company

"Matters for Approval" (i) the Proposed Acquisition and the Special Deal (including the Specific Mandate), (ii) the Share Buy-back Offer and (iii) the Whitewash Waiver

"Maximum Number of Shares" 380,000,000 Shares, being the maximum number of Shares to be bought-back pursuant to the Share Buy-back Offer, representing approximately 10.29% of the issued Shares as at the Latest Practicable Date

- 16 -

DEFINITIONS

"Model Code"the Model Code for Securities Transactions by Directors of Listed Issuers set out in Appendix 10 of the Listing Rules

"Net Assets Attributable to the audited net assets of the Group attributable to the

Shareholders"Shareholders

"Northumbrian Water"Northumbrian Water Group Limited, a company incorporated in the United Kingdom, in which LKSF has an indirect 20% interest (based on the entitlements to profits and capital attaching to relevant shares of Northumbrian Water) as at the Latest Practicable Date

"Offer Conditions"the conditions as set out in the section headed "Part B

The Share Buy-back Proposal - 7. The Offer Conditions" on pages 41 to 42 of this Circular and Offer Document to which the Share Buy-backOffer is subject

"Offer Period"	has the meaning ascribed to it in the Takeovers Code,
	which commenced on Thursday, 18 March 2021
"Offer Price"	HK$51.00 per Share
"Online Platform"	the	online	platform	(by	visiting	https://
	web.lumiagm.com) through which Shareholders can
	attend, participate and vote in the EGM
"Overseas Shareholder(s)"	Shareholder(s), whose addresses as shown on the
	register of members of the Company are outside Hong
	Kong
"PAH"	Power Assets Holdings Limited, a company
	incorporated in Hong Kong with limited liability, the
	shares of which are listed on the Main Board of the
	Stock Exchange (Stock Code: 6)
"percentage ratio"	has the meaning ascribed to that term in Chapter 14 of
	the Listing Rules

"profit contribution"contribution from the principal activities after depreciation, impairment and absorption of overhead expenses but before interest costs and tax

- 17 -

	DEFINITIONS
"Property Valuers"	Cushman & Wakefield Limited, CBRE, Inc., Colliers
	International Property Advisers UK LLP, Colliers
	International Valuation UK LLP, BNP Paribas Real
	Estate Advisory and Property Management Ireland
	Limited, Jones Lang LaSalle Limited, BNP Paribas
	Real Estate Consult GmbH, Frontline Appraisal, Inc.,
	Aon Risk Services Australia Limited and Opteon
	Property Group Pty Ltd, the independent property
	valuers which carried out a valuation of certain of the
	Group's property interests, further details of which are
	set out in "Appendix IV - Property Valuation"
"Proposal"	the Proposed Acquisition and the Share Buy-back
	Proposal
"Proposed Acquisition" or	the proposed acquisition by the Company of the Target
"Special Deal"	Holdcos from LKSF in accordance with the terms of
	the Share Purchase Agreement
"Purchase Price"	HK$17 billion, being the consideration for the purpose
	of the proposed acquisition of the Target Holdcos
	payable by the Company pursuant to the Share
	Purchase Agreement
"Qualifying Shareholders"	Shareholders, other than the Excluded Shareholders (if
	any), whose names appear on the Register of Members
	on the Record Date
"RAV"	regulatory asset value
"RCV"	regulatory capital value
"Record Date"	Thursday, 27 May 2021, or such other date as shall
	have been announced to the Shareholders, being the
	record date for the purpose of determining entitlements
	in respect of the Share Buy-back Offer
"recurrent profit contribution"	profit contribution from all principal activities except
	property sales
"Register of Members"	the register of members of the Company
"Registered Owner"	any person (including without limitation a nominee,
	trustee, depositary or any other authorised custodian or
	third party) whose name is entered in the Register of
	Members of the Company as a holder of the Shares

- 18 -

	DEFINITIONS
"Regulation"	Prevention and Control of Disease (Prohibition on
	Group Gathering) Regulation, Cap. 599G
"Relevant Period"	the period commencing on 18 September 2020, being
	the date falling six months prior to 18 March 2021,
	being the commencement of the Offer Period, and
	ending on the Latest Practicable Date
"relevant securities"	has the meaning as defined in Note 4 to Rule 22 of the
	Takeovers Code
"SFC"	the Securities and Futures Commission of Hong Kong
"SFO"	the Securities and Futures Ordinance (Chapter 571 of
	the Laws of Hong Kong)
"Share Buy-back Offer"	a conditional cash offer by HSBC on behalf of the
	Company to buy-back Shares at the Offer Price from
	all Qualifying Shareholders, subject to the Maximum
	Number of Shares
"Share Buy-back Proposal"	the proposal of the Company to buy-back the
	Maximum Number of Shares through (i) the Share
	Buy-back Offer and (ii) possible on market buy-backs
	to eliminate all or part of the shortfall at a price not
	exceeding the Offer Price following the completion of
	the Share Buy-back Offer if valid acceptances under
	the Share Buy-back Offer received are less than the
	Maximum Number of Shares
"Share Buy-backs Code"	the Hong Kong Code on Share Buy-backs (as amended
	and supplemented from time to time)
"Share Purchase Agreement"	the agreement dated 18 March 2021 entered into
	between the Company and LKSF relating to the sale
	and purchase of the Target Holdcos
"Shareholder Notification"	the Company's notification letter to registered
	Shareholders sent together with this Circular and Offer
	Document
"Shareholders"	the holders of the Shares
"Shares"	the ordinary shares in the share capital of the Company
"Specific Mandate"	the specific mandate to be sought at the EGM for the
	approval of the allotment and issue of the
	Consideration Shares

- 19 -

	DEFINITIONS
"Stock Exchange"	The Stock Exchange of Hong Kong Limited
"Takeovers Code"	the Hong Kong Code on Takeovers and Mergers (as
	amended and supplemented from time to time)
"Target Companies"	(a) UK Power Networks, (b) Northumbrian Water, (c)
	Wales & West Utilities and (d) Dutch Enviro Energy,
	and "Target Company" means any of them
"Target Holdcos"	(a) Eagle Frame Limited, which has an indirect 20%
	shareholding interest in UK Power Networks;
	(b) Mondrem Corporation, which has an indirect 20%
	interest (based on the entitlements to profits and
	capital attaching to relevant shares of
	Northumbrian Water) in Northumbrian Water;
	(c) Moonstone Global Investment Limited, which has
	an indirect 10% shareholding interest in Wales &
	West Utilities; and
	(d) Gerbera Investments Limited, which has a direct
	10% shareholding interest in Dutch Enviro Energy
"Target Holdco Group"	Target Holdcos and their subsidiaries
"TDT1"	Li Ka-Shing Unity Trustee Corporation Limited, a
	company incorporated in the Cayman Islands, which is
	the trustee of DT1
"TDT2"	Li Ka-Shing Unity Trustcorp Limited, a company
	incorporated in the Cayman Islands, which is the
	trustee of DT2
"TDT3"	Li Ka-Shing Castle Trustee Corporation Limited, a
	company incorporated in the Cayman Islands, which is
	the trustee of DT3
"TDT4"	Li Ka-Shing Castle Trustcorp Limited, a company
	incorporated in the Cayman Islands, which is the
	trustee of DT4
"Title Documents"	the relevant Share certificate(s), transfer receipt(s) and/
	or other evidence of title with respect to ownership(s)
	of the Share(s) (and/or any satisfactory indemnity or
	indemnities required in respect thereof)

- 20 -

	DEFINITIONS
"Trust"	DT1, DT2, DT3, DT4, UT1 and UT3, and where the
	context requires, any of them
"TUT1"	Li Ka-Shing Unity Trustee Company Limited, a
	company incorporated in the Cayman Islands, which is
	the trustee of UT1
"TUT1 related companies"	TUT1 and its related companies in which TUT1 as
	trustee of UT1 is entitled to exercise or control the
	exercise of one-third or more of the voting power at
	their general meetings
"TUT3"	Li Ka-Shing Castle Trustee Company Limited, a
	company incorporated in the Cayman Islands, which is
	the trustee of UT3
"TUT3 related companies"	TUT3 and the related companies in which TUT3 as
	trustee of UT3 is entitled to exercise or control the
	exercise of one-third or more of the voting power at
	their general meetings
"UK Power Networks"	UK Power Networks Holdings Limited, a company
	incorporated in the United Kingdom, in which LKSF
	has an indirect 20% shareholding interest as at the
	Latest Practicable Date
"Unity Holdco"	Li Ka-Shing Unity Holdings Limited, a company
	incorporated in the Cayman Islands
"UT1"	The Li Ka-Shing Unity Trust
"UT3"	The Li Ka-Shing Castle Trust
"Wales & West Utilities"	Wales & West Gas Networks (Holdings) Limited, a
	company incorporated in the United Kingdom, in which
	LKSF has an indirect 10% shareholding interest as at
	the Latest Practicable Date

- 21 -

	DEFINITIONS
"Whitewash Waiver"	the waiver under Note 1 on Dispensations from Rule
	26 of the Takeovers Code of the obligation on the part
	of LKSF to make a general offer to the Shareholders
	for all issued Shares and other securities (as defined in
	Note 4 to Rule 22 of the Takeovers Code) of the
	Company not already owned or agreed to be acquired
	by the Controlling Shareholder Group as a result of the
	allotment and issue of the Consideration Shares to
	LKSF (or a subsidiary of LKSF) and the Share
	Buy-back Offer which will increase the Controlling
	Shareholder Group's collective holding of the voting
	rights of the Company by more than 2% in any 12
	month period
"US" or "United States"	United States of America
"%"	per cent

All references in this Circular and Offer Document to times and dates are references to Hong Kong times and dates, except as otherwise specified.

Unless otherwise stated, the figures in US$ are converted into HK$ at the rate of US$1.00:HK$7.80, the figures in GBP are converted into HK$ at the rate of GBP1.00: HK$10.79 and the figures in EUR are converted into HK$ at the rate of EUR1.00: HK$9.24 (being the exchange rates used in the Announcement) for indicative purposes only, and should not be construed as a representation that any amount has been, could have been or may be, exchanged at this or any other rate.

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LETTER FROM THE BOARD

CK ASSET HOLDINGS LIMITED

長江實業集團有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1113)

Registered Office: PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands

Principal Place of Business: 7th Floor, Cheung Kong Center, 2 Queen's Road Central, Hong Kong

Board of Directors
Executive Directors	Independent Non-executive Directors
LI Tzar Kuoi, Victor Chairman and Managing Director	CHEONG Ying Chew, Henry
KAM Hing Lam Deputy Managing Director	CHOW Nin Mow, Albert
IP Tak Chuen, Edmond Deputy Managing Director	HUNG Siu-lin, Katherine
CHUNG Sun Keung, Davy	Colin Stevens RUSSEL
CHIU Kwok Hung, Justin	Donald Jeffrey ROBERTS
CHOW Wai Kam, Raymond	Stephen Edward BRADLEY
PAU Yee Wan, Ezra
WOO Chia Ching, Grace
Company Secretary
Eirene YEUNG
	27 April 2021
Dear Shareholder(s),

DISCLOSEABLE AND CONNECTED TRANSACTION AND SPECIAL DEAL RELATING TO THE PROPOSED ACQUISITION OF THE TARGET HOLDCOS IN CONSIDERATION FOR THE ISSUE OF
CONSIDERATION SHARES UNDER A SPECIFIC MANDATE
CONDITIONAL CASH OFFER BY HSBC ON BEHALF OF THE COMPANY TO BUY-BACK UP TO 380,000,000 SHARES

AT HK$51.00 PER SHARE

1. APPLICATION FOR THE WHITEWASH WAIVER AND
NOTICE OF THE EXTRAORDINARY GENERAL MEETING

INTRODUCTION

Reference is made to the Announcement dated 18 March 2021 issued by the Company in relation to the Proposal and the announcement of the Company dated 14 April 2021 in relation to the revision of the Maximum Number of Shares to be bought back under the Share Buy-back Offer.

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LETTER FROM THE BOARD

As stated in the Announcement, the Proposal comprises (A) the Proposed Acquisition of the Target Holdcos from LKSF in consideration of the issue of the Consideration Shares and (B) the Share Buy-back Proposal (which includes the Share Buy-back Offer).

The Proposed Acquisition and the Share Buy-back Offer are inter-conditional on each other.

Subject to the fulfilment or waiver (if applicable) of the Conditions to the Proposal, it is expected that the Proposal will be completed around the end of the first half of 2021.

The purpose of this Circular and Offer Document is to provide you with, among other things:

further information regarding the Proposal, in particular:
1. the Proposed Acquisition and the issue of the Consideration Shares pursuant to the Specific Mandate;
2. the Share Buy-back Proposal, which includes the Share Buy-back Offer;
3. the Takeovers Code implications of the Proposal and the application for the Whitewash Waiver; and
4. other general information regarding the Proposal;

a letter from the Independent Board Committee containing its recommendation to the Independent Shareholders;
a letter from the Independent Financial Adviser containing its advice to the Independent Board Committee and the Independent Shareholders; and
notice of the EGM to consider and, if thought fit, pass the resolutions to approve the Proposal.

OBJECTIVE OF THE PROPOSAL

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LETTER FROM THE BOARD

REASONS FOR, AND BENEFITS OF, THE PROPOSAL

The Proposal provides the opportunity for the Company to expand its investment portfolio and enhance shareholder value and continues its stated investment strategy.

The key reasons for, and the benefits of, the Proposal are as follows:

1. Rare opportunity to acquire interests in a sizeable and high quality investment portfolio with low execution risk

The Proposed Acquisition is in line with the Company's stated corporate strategy of actively pursuing quality investment opportunities in and outside of Hong Kong that provide stable recurrent revenue and growth potential in order to improve the quality of the Group's earnings as well as cash flows, and increase its recurrent income.

The Proposed Acquisition represents a rare opportunity for the Company to acquire interests in a sizeable and high quality portfolio of assets comprising the Target Companies. The Proposed Acquisition would involve lower execution risk than would be the case with assets in which the Company had no prior interests since it already holds economic interests in three of the Target Companies (namely, Northumbrian Water, Wales & West Utilities and Dutch Enviro Energy).

The Proposed Acquisition would also allow the Company to further expand its investment portfolio without the need to go through a competitive auction process.

The Company has cash to deploy and has been actively searching for investment opportunities that would increase the proportion of its stable recurrent revenue base. As at 31 December 2020, the Group's bank balances and deposits amounted to approximately HK$59.5 billion. While the Company would satisfy the Purchase Price for the Proposed Acquisition by issuing the Consideration Shares and thereby leave such excess funds unused, the Share Buy-back Proposal would allow the Group to offset the impact of issuing the Consideration Shares using cash. Assuming the Share Buy-back Proposal is completed in full, the net effect of the Proposal for the Company would effectively be the acquisition of the Target Holdcos for cash.

2. Increase the contribution of the recurrent income base and enhance the stability of earnings of the Group

With a view to delivering sustainable shareholder returns, the Group has been actively pursuing attractive investments that provide stable revenue to improve the quality of its earnings and cash flow and increase its recurrent income. The Group has established a diversified investment portfolio with stable recurrent revenue as a result of various quality investments and acquisitions made in recent years across different sectors and geographies.

For the year ended 31 December 2020, the Group's profit contribution from the infrastructure and utility asset operation (as disclosed in the Company's annual report for the year ended 31 December 2020) was HK$4,488 million. The recurrent profit contribution,

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LETTER FROM THE BOARD

which is a non-IFRS financial measure used by the Company's management to evaluate the Group's financial and business performance, was HK$8,695 million for the year ended 31 December 2020.

The Proposed Acquisition is expected to create an additional stream of stable income for the Group. Of the Target Companies, the assets under three of the Target Companies (namely, UK Power Networks, Northumbrian Water and Wales & West Utilities) are regulated infrastructure assets in the United Kingdom, while the remaining Target Company (namely, Dutch Enviro Energy) owns a long-term contracted cash flow producing business. See the section headed "Information About the Parties, the Target Holdcos and the Target Companies" below for selected financial information on the Target Companies.

3. Financially accretive transaction

The effect of the Proposal, if the Share Buy-back Proposal is completed in full, would be to allow the Company to acquire interests in a sizeable and high quality portfolio comprising the Target Holdcos for cash. Although the Purchase Price for the Proposed Acquisition will be settled in full by the issue of the Consideration Shares, when taken together with the effect of the Share Buy-back Offer (assuming acceptances are received for the Maximum Number of Shares), the overall effect of the Proposal would be the deployment of HK$19.38 billion of cash to acquire cash flow generating assets and buy-back the Maximum Number of Shares.

Based on the Purchase Price for the Target Holdcos under the Proposed Acquisition and the guaranteed Cash Distributions from the Target Companies for the two-year Guarantee Period, the implied cash distribution yield generated from the Target Holdcos would be 5.35%.

Subject to completion of the Proposal, the total amount that the Company will pay in dividends in respect of each of the years ending 31 December 2021 and 2022 will not be less than an amount equal to the sum of (a) the total amount paid by the Company in dividends in respect of the financial year ended 31 December 2020 and (b) the Cash Distributions referred to above in respect of the relevant financial year. The effect of the foregoing is that the total dividends per Share in respect of the financial years ending 31 December 2021 and 2022 will be higher than the total dividends per Share in respect of the financial year ended 31 December 2020 irrespective of the number of Shares bought back pursuant to the Share Buy-back Proposal, assuming that no new Shares are issued other than pursuant to the Proposed Acquisition prior to the record date for the final dividend in respect of the financial year ending 31 December 2022.

For further details on the financial effects of the Proposal, please refer to the section headed "Part D - General Information - Financial Effects of the Proposal" below.

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LETTER FROM THE BOARD

4. Liquidity event providing an opportunity for Shareholders to monetise at a premium to the prevailing market price at the time of Announcement

The Share Buy-back Offer provides an opportunity for Shareholders to realise at least part of their investment in the Company at a premium to the recent historic market prices of the Shares if they so wish. As at the date of the Announcement, the Company's three-month average daily traded volume was 9.4 million Shares and the Share Buy-back Offer will be for up to a maximum of 380,000,000 Shares, therefore representing a liquidity event for Shareholders to monetise with price certainty.

As stated in the Company's announcement dated 14 April 2021, the revised Share Buy-back Proposal to increase the maximum number of Shares to be bought back from 333,333,333 to 380,000,000 was made based on feedback received from Shareholders after the Proposal was announced on 18 March 2021 and with the aim of enlarging the deployment by the Company of excess cash.

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LETTER FROM THE BOARD

PART A - THE PROPOSED ACQUISITION AND THE ISSUE OF THE CONSIDERATION SHARES

1. INTRODUCTION

On 18 March 2021 (after trading hours), the Company (as the purchaser) and LKSF (as the seller) entered into the Share Purchase Agreement pursuant to which the Company has agreed to purchase, and LKSF has agreed to sell or procure the sale of, the Target Holdcos for the Purchase Price of HK$17 billion.

2. THE PROPOSED ACQUISITION

The principal terms of the Proposed Acquisition are set out below.

Target Holdcos
The Target Holdcos comprise:
1. Eagle Frame Limited, which has an indirect 20% shareholding interest in UK Power Networks;
2. Mondrem Corporation, which has an indirect 20% interest (based on the entitlements to profits and capital attaching to relevant shares of Northumbrian Water) in Northumbrian Water;
3. Moonstone Global Investment Limited, which has an indirect 10% shareholding interest in Wales & West Utilities; and
4. Gerbera Investments Limited, which has a direct 10% shareholding interest in Dutch Enviro Energy.
Purchase Price and Consideration Shares

The Purchase Price for the Target Holdcos under the Proposed Acquisition payable by the Company is HK$17 billion, which was determined after negotiation on an arm's length basis with LKSF, with reference to, among other things, the overall financial position and performance of the Target Companies.

The Purchase Price will be satisfied in full by the issue of 333,333,333 Consideration Shares to LKSF (or a subsidiary of LKSF) pursuant to the Specific Mandate to be sought from the Independent Shareholders at the EGM. The Consideration Shares represent approximately 9.03% of the existing total issued Shares as at the Latest Practicable Date, approximately 9.14% of the total issued Shares as enlarged by the allotment and issue of the Consideration Shares (assuming the Share Buy-back Proposal is completed in full) and approximately 8.28% of the total issued Shares as enlarged by the allotment and issue of the Consideration Shares (assuming no Shares are bought-back pursuant to the Share Buy-back Proposal). An application has been made to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the Consideration Shares.

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LETTER FROM THE BOARD

The Consideration Shares will be issued at the price of HK$51.00 per Share, which was determined after arm's length negotiation with reference to the prevailing market price of the Shares and which represents:

a premium of approximately 8.4% to the closing price of HK$47.05 per Share as quoted on the Stock Exchange on the date of the Share Purchase Agreement;
a premium of approximately 9.8% to the average closing price of HK$46.44 per Share as quoted on the Stock Exchange for the last five consecutive trading days ending on the date of the Share Purchase Agreement;
a premium of approximately 10.0% to the average closing price of HK$46.37 per Share as quoted on the Stock Exchange for the last 10 consecutive trading days ending on the date of the Share Purchase Agreement;
a premium of approximately 16.4% to the average closing price of HK$43.80 per Share as quoted on the Stock Exchange for the last 30 consecutive trading days ending on the date of the Share Purchase Agreement;
a premium of approximately 21.5% to the average closing price of HK$41.96 per Share as quoted on the Stock Exchange for the last 60 consecutive trading days ending on the date of the Share Purchase Agreement;
a premium of approximately 2.2% to the 52-week high price of HK$49.90 per Share ending on the date of the Share Purchase Agreement based on the closing price as quoted on the Stock Exchange on 11 May 2020;
a premium of approximately 5.2% to the closing price of the Shares of HK$48.50 per Share as quoted on the Stock Exchange on the Latest Practicable Date; and
a discount of 46.9% to the latest Net Assets Attributable to Shareholders per Share as at 31 December 2020, being HK$96.02 per Share.

The Consideration Shares will be issued as fully paid and will rank pari passu in all respects with the Shares in issue.

Conditions to Completion

Completion of the Proposed Acquisition is conditional upon the fulfilment or waiver (if applicable) of the following conditions precedent:

the Proposed Acquisition and the Specific Mandate for the issue of the Consideration Shares having been approved by more than 50% of the votes cast by the Independent Shareholders at the EGM;
the Whitewash Waiver having been approved by at least 75% of the votes cast by the Independent Shareholders at the EGM;

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LETTER FROM THE BOARD

the Whitewash Waiver being granted by the Executive and not having been withdrawn;
no regulatory authority under any applicable foreign investment regulation having objected to, or taken any action that would prevent closing in relation to, the increase in the percentage ownership of the Controlling Shareholder Group as a result of the Proposed Acquisition and the Share Buy-back Offer by way of notification in writing on or prior to the date of the EGM, and no mandatory and suspensory foreign investment filing being required under new regulations which are not applicable as at the date of the Announcement but which come into force prior to the date of the EGM; and
all of the conditions to the Share Buy-back Offer (other than the condition specifying that all of the conditions to the Proposed Acquisition have been satisfied) having been satisfied,

together the "Acquisition Conditions".

The Acquisition Condition under paragraph (iv) above is waivable by the Company. The other Acquisition Conditions may not be waived by the parties to the Share Purchase Agreement. As at the Latest Practicable Date, none of the Acquisition Conditions has been fulfilled or waived (as applicable).

If the Acquisition Conditions are not fulfilled or waived (as applicable) by 31 August 2021 (or such other date as may be agreed in writing between the Company and LKSF), the Share Purchase Agreement shall automatically terminate and the Proposal (including the Share Buy-back Offer) will lapse.

Completion

Completion of the Proposed Acquisition will take place within five business days after all of the Acquisition Conditions are fulfilled or waived (as applicable) (or such other date as may be agreed between the Company and LKSF in writing).

Cash Distributions by the Target Companies to the Target Holdco Group

Under the terms of the Proposed Acquisition, LKSF will ensure that the Target Holdco Group receives cash distributions comprising dividends, interest and other distributions (the "Cash Distributions") of not less than HK$910 million in aggregate, directly or indirectly, from the Target Companies in respect of each of the years ending 31 December 2021 and 2022 (the "Guarantee Period"). If the aggregate amount of the Cash Distributions received by the Target Holdco Group, directly or indirectly, from the Target Companies is less than HK$910 million in respect of either year of the Guarantee Period, LKSF will pay the shortfall amount to Target Holdco Group.

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LETTER FROM THE BOARD

The Company will comply with the disclosure requirement under Rule 14A.63(2) if the aggregate amount of the Cash Distributions received by the Target Holdco Group, directly or indirectly, from the Target Companies is less than the guaranteed amount in respect of either year of the Guarantee Period.

Proposed dividend arrangements of the Company for 2021 and 2022

Following receipt of the Cash Distributions by the Target Holdco Group, directly or indirectly, from the Target Companies (and/or any shortfall payment received by the Target Holdco Group from LKSF) in respect of the Guarantee Period, the Company intends to distribute such amounts in full by way of dividend to Shareholders whose names appear on the Register of Members of the Company on the record date for determining entitlements to such dividend.

Subject to completion of the Proposal, the total amount that the Company will pay in dividends in respect of each of the years ending 31 December 2021 and 2022 will not be less than an amount equal to the sum of (a) the total amount paid by the Company in dividends in respect of the financial year ended 31 December 2020 and (b) the Cash Distributions referred to above in respect of each of the relevant financial year. The effect of the foregoing is that the total dividends per Share in respect of each of the financial years ending 31 December 2021 and 2022 will be higher than the total dividends per Share in respect of the financial year ended 31 December 2020 irrespective of the number of Shares bought back pursuant to the Share Buy-back Proposal, assuming that no new Shares are issued other than pursuant to the Proposed Acquisition prior to the record date for the final dividend in respect of the financial year ending 31 December 2022.

3. INFORMATION ABOUT THE PARTIES, THE TARGET HOLDCOS AND THE TARGET COMPANIES

LKSF

LKSF is a charitable organisation established to nurture a culture of giving and to co-ordinate donations towards educational, healthcare, cultural and community welfare projects. LKSF is a person acting in concert with, and may be regarded as an associate (as defined in Chapter 14A of the Listing Rules) of Mr. Li Tzar Kuoi, Victor, the Chairman and Managing Director of the Company.

As at the Latest Practicable Date, the directors of LKSF are Mr. Li Ka-shing, Mr. Li Tzar Kuoi, Victor, Mr. Li Tzar Kai, Richard, Mr. Chong Hok Shan, Mr. Chong Hok Hei, Charles, Ms. Pau Yee Wan, Ezra, Mr. Chow Kun Chee, Roland, Mr. Lee Yeh Kwong, Charles, Mrs. Lee Pui Ling, Angelina, Ms. Chau Hoi Shuen, Solina, Ms. Eirene Yeung, Mr. George Colin Magnus, Mr. Frank John Sixt, Mr. Kan Yuet Loong, Ms. Au Siu Yin, Amy, Ms. Li Michelle Sarah Si De and Mr. Man Ka Keung, Simon.

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LETTER FROM THE BOARD

Eagle Frame Limited and UK Power Networks

Eagle Frame Limited is an investment holding company and an indirect non-wholly owned subsidiary of LKSF. As at the Latest Practicable Date, LKSF directly holds 70% of the shareholding interest in Fortune Cone Limited, which in turn indirectly holds 100% of the shareholding interest in Eagle Frame Limited. The remaining 30% of the shareholding interest in Fortune Cone Limited is held by LKSGF.

Eagle Frame Limited holds an indirect 20% shareholding interest in UK Power Networks, which was acquired for an initial acquisition cost of HK$6,305 million in 2010. UK Power Networks' RAV has increased from GBP4.4 billion as at 31 December 2010 to GBP6.3 billion as at 31 March 2020. Other than the indirect shareholding interest in UK Power Networks, Eagle Frame Limited does not hold any other assets or businesses. See the section headed "(h) Other Information" below for details of the remaining ownership and economic interests in UK Power Networks.

UK Power Networks, a company incorporated in the United Kingdom, is one of the United Kingdom's largest power distributors comprising three regional networks with a distribution area that covers London, the south east and the east of England; and non-regulated business comprising commercial contracts to distribute electricity to a number of privately owned sites.

Mondrem Corporation and Northumbrian Water

Mondrem Corporation is an investment holding company and an indirect wholly-owned subsidiary of LKSF. It holds an indirect 20% interest in Northumbrian Water (based on the entitlements to profits and capital attaching to relevant shares of Northumbrian Water), which was acquired for an initial acquisition cost of HK$5,527 million in 2011. Northumbrian Water's RCV has increased from GBP3.6 billion as at 31 March 2012 to GBP4.3 billion as at 31 March 2020. See the section headed "(h) Other Information" below for details of the remaining ownership and economic interests in Northumbrian Water.

In addition to the indirect interest in Northumbrian Water, Mondrem Corporation also holds an indirect 20% shareholding interest in Northumbrian Services Limited and UK Water (2011) Limited.

Northumbrian Services Limited, a company incorporated in the United Kingdom, is principally engaged in the business of waste water services. It does not contribute materially to the financial results of Mondrem Corporation.

UK Water (2011) Limited, a company incorporated in the United Kingdom, is currently dormant and does not contribute materially to the financial results of Mondrem Corporation.

Save as disclosed above, Mondrem Corporation does not hold any other assets or businesses.

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LETTER FROM THE BOARD

Northumbrian Water, a company incorporated in the United Kingdom, is one of the 10 regulated water and sewerage companies in England and Wales and supplies water and sewerage services in the north east of England and supplies water services to the south east of England.

Moonstone Global Investment Limited and Wales & West Utilities

Moonstone Global Investment Limited is an investment holding company and an indirect wholly-owned subsidiary of LKSF. It holds an indirect 10% shareholding interest in Wales & West Utilities, which was acquired for an initial acquisition cost of HK$815 million in 2012. Wales & West Utilities' RAV has increased from GBP1.8 billion as at 31 March 2013 to GBP2.2 billion as at 31 March 2020. Other than the indirect shareholding interest in Wales & West Utilities, Moonstone Global Investment Limited does not hold any other assets or businesses. See the section headed "(h) Other Information" below for details of the remaining ownership and economic interests in Wales & West Utilities.

Wales & West Utilities, a company incorporated in the United Kingdom, principally operates a gas distribution network that serves Wales and the south west of England.

Gerbera Investments Limited and Dutch Enviro Energy

Gerbera Investments Limited is an investment holding company and a direct wholly-owned subsidiary of LKSF. It holds a direct 10% shareholding interest in Dutch Enviro Energy, which was acquired for an initial acquisition cost of HK$574 million in 2013. Dutch Enviro Energy's EBITDA has increased from EUR114 million for the year ended 31 December 2014 (based on its audited accounts) to EUR134 million for the year ended 31 December 2020 (based on its audited accounts). Other than the direct shareholding interest in Dutch Enviro Energy, Gerbera Investments Limited does not hold any other assets or businesses. See the section headed "(h) Other Information" below for details of the remaining ownership and economic interests in Dutch Enviro Energy.

Dutch Enviro Energy, a company incorporated in the Netherlands, owns the largest energy-from-waste player in the Netherlands, AVR-Afvalwerking B.V., which operates five waste treatment plants in Rozenburg and Duiven as well as four transfer stations.

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LETTER FROM THE BOARD

Selected financial information on the Target Holdcos

The following table sets out selected audited financial information on the Target Holdcos for the last two financial years:

				Profit before (i) taxation;
				(ii) gain on fair value
(HK$ million)				changes of financial
Financial year ended 31		Net	assets; and (iii) exchange		Profit before taxation for
December(1)		assets(4)	gain/(loss)(2)			the year(3)
		2020		2019		2020		2019	2020
Eagle Frame Limited		8,022		633		636	845		2,591
Mondrem Corporation	3,776		253		245	509		567
Moonstone Global
Investment Limited	1,103		48		48	71		66
Gerbera Investments
Limited	978		52		49	77		310
Total	13,879		986		978	1,502		3,534

Notes:

1. Financial information for each of the Target Holdcos for 2019 and 2020 is based on their respective audited accounts. The Target Holdcos' investments in the Target Companies and loans to the Target Companies are accounted for as financial assets at fair value through profit or loss and financial assets at amortised costs respectively. Dividend income and interest income from the Target Companies are recorded in profit or loss of the Target Holdcos.
2. For each Target Holdco, profit before (i) taxation; (ii) gain on fair value changes of financial assets; and (iii) exchange gain/(loss) and profit (i) after taxation; (ii) before gain on fair value changes of financial assets; and (iii) before exchange gain/(loss) are the same, given there were no tax expenses for each of the financial years ended 31 December 2019 and 2020.
3. Profit before taxation and profit for the year for each Target Holdco are the same given there were no tax expenses for each of the financial years ended 31 December 2019 and 2020.
4. Based on the respective audited financial statements of each of the Target Holdcos for the year ended 31 December 2020, the aggregated audited consolidated net asset value of the Target Holdcos as at 31 December 2020 was HK$13,879 million. Before the date of Completion, a subsidiary of LKSF will subscribe for new share(s) in Mondrem Corporation for a consideration of HK$1,948 million, which will be satisfied by way of the capitalisation of intercompany loans owed by Mondrem Corporation to a subsidiary of LKSF. It is expected that the intercompany loan capitalisation will increase the consolidated net asset value of the Target Holdcos by HK$1,948 million.
Selected Financial Information on the Target Companies
Set out below is the EBITDA of the Target Companies in the local currency and in

HK$. EBITDA is defined as earnings before interest expenses and other finance costs, tax, depreciation and amortisation. EBITDA is a non-IFRS financial measure.

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LETTER FROM THE BOARD

EBITDA (local currency)
	Currency		Financial	Based on audited accounts
	and unit		year ended		2018	2019	2020

UK Power Networks	GBP million	31	March	1,217		1,204	1,270
Northumbrian Water	GBP million	31	March	486		488	506
Wales & West Utilities	GBP million	31	March	243		265	313
Dutch Enviro Energy	EUR million	31	December	120		130	134
EBITDA (HK$)
	Currency		Financial
	and unit		year ended		2018	2019	2020

UK Power Networks	HK$ million	31	March	13,131		12,991	13,703
Northumbrian Water	HK$ million	31	March	5,244		5,266	5,460
Wales & West Utilities	HK$ million	31	March	2,622		2,859	3,377
Dutch Enviro Energy	HK$ million	31	December	1,109		1,201	1,238

Set out below is the regulatory asset value ("RAV")(1) or regulatory capital value ("RCV")(2) and net debt of the Target Companies in the local currency and in HK$.

RAV / RCV and net debt (excluding shareholders' loan) (local currency)

			Net debt
			(excluding
			shareholder
			loan) as at
			31 March
		RAV / RCV	2020 or 31
		as at 31	December
	Currency and unit	March 2020	2020

UK Power Networks	GBP billion	6.3(1)	4.6(3)
Northumbrian Water	GBP billion	4.3(2)	3.2(3)
Wales & West Utilities	GBP billion	2.2(1)	1.5(3)
Dutch Enviro Energy	EUR billion	n/a	0.3(3)

Notes:

RAV is the value ascribed by the relevant regulator to the capital employed in the company's regulated business (i.e. the regulated asset base).
RCV is a measure published by the relevant regulator and is primarily used in setting price limits for the relevant regulated industry in the United Kingdom. One of the elements considered by the relevant regulator when assessing the revenues that a company needs is a return on the capital invested in the business. The value of the capital base of the company for the purposes of setting price limits is the RCV.

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LETTER FROM THE BOARD

Based on the audited accounts.

RAV/RCV and net debt (excluding shareholders' loan) (HK$)

			Net debt
			(excluding
			shareholder
			loan) as at
			31 March
		RAV/RCV	2020 or 31
		as at 31	December
	Currency and unit	March 2020	2020

UK Power Networks	HK$ billion	68.3	49.4(1)
Northumbrian Water	HK$ billion	46.6	34.3(1)
Wales & West Utilities	HK$ billion	23.9	16.0(1)
Dutch Enviro Energy	HK$ billion	n/a	2.9(2)

Notes:

1. As at 31 March 2020.
2. As at 31 December 2020.
Other Information
The Proposed Acquisition will simplify the holding structure of the Target Holdcos by

reducing in part the joint holdings in the Target Holdcos with the Company's connected persons.

As at the Latest Practicable Date, the Group has invested in the economic benefits arising from the performance of three of the Target Companies (namely, Dutch Enviro Energy, Northumbrian Water and Wales & West Utilities). Pursuant to the Economic Benefits Agreement dated 31 August 2018 entered into between Henley Riches Limited (a subsidiary of CKHH), CKHH and Team Ace Enterprises Limited (a subsidiary of the Company), the Group will receive 40% of the economic benefits comprising amounts which include dividends and other distributions declared by CKII to CKH and other proceeds or payments (including interest payments) received by CKH from CKII from and including 31 October 2018 arising from the performance of a portfolio of infrastructure assets, including Northumbrian Water, Wales & West Utilities and Dutch Enviro Energy. For further details of the Economic Benefits Agreement, please see the Company's announcement of 31 August 2018.

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LETTER FROM THE BOARD

Before Completion of the Proposed Acquisition
							Ownership interests														Economic interest(3)(4)
	Company		LKSF	CKHH(1)	CKI(2)	PAH		Total Company	LKSF	CKHH(1)		CKI(2)	PAH	Total
UK Power Networks		-		20%			-	40%				40%			100%				-		20%				-		40%			40%			100%
Northumbrian Water		-	20%(5)	40%(5)	40%(5)			-	100%				16%		20%		4%	52%			8%			100%
Wales & West
Utilities		-	10%		30%	30%				30%			100%				12%		10%		3%	39%			36%			100%
Dutch Enviro
Energy		-	10%		35%	35%				20%			100%				14%		10%		4%	46%			27%			100%
After Completion of the Proposed Acquisition
							Ownership interests														Economic interest(3)(4)
		CompanyCKHH(1)	CKI(2)	PAH		Total	Company		CKHH(1)	CKI(2)	PAH	Total
UK Power Networks			20%			-			40%					40%			100%			20%				-			40%					40%			100%
Northumbrian Water			20%(5)			40%(5)		40%(5)			-	100%			36%				4%			52%					8%				100%
Wales & West Utilities	10%			30%			30%					30%		100%			22%				3%			39%					36%				100%
Dutch Enviro Energy			10%			35%			35%					20%		100%			24%				4%			46%					27%			100%

Notes:

Excludes ownership interests or economic interests owned by CKI.
Excludes ownership interests or economic interests owned by PAH.
For Northumbrian Water, Wales & West Utilities and Dutch Enviro Energy, this represents the split of economic interests arising from the respective economic benefits agreements entered into by the respective subsidiaries of the Company, CKHH, CKI and PAH in August 2018. For further details, please see the Company's announcement dated 31 August 2018.
UK Power Networks is not subject to the Economic Benefits Agreement.
Based on the entitlements to profits and capital attributing to relevant shares of Northumbrian Water. For further details, please see the announcement of CKI dated 14 December 2020.

On Completion of the Proposed Acquisition, the Company will, directly or indirectly, supersede LKSF as a party to the following joint venture arrangements with the parties set out below (or their subsidiaries) in respect of each of the Target Companies: (1) joint venture agreement with CKI and PAH in respect of UK Power Networks; (2) joint venture agreement with CKHH and CKI in respect of Northumbrian Water; (3) joint venture agreement with CKHH, CKI and PAH in respect of Wales & West Utilities and (4) joint venture agreement with CKHH, CKI and PAH in respect of Dutch Enviro Energy. No financial contribution is required to be made by the Company, directly or indirectly, upon becoming a party to the joint venture arrangements referred to above.

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4. INFORMATION ON THE GROUP

The Company is a leading multinational corporation and has diverse capabilities with activities encompassing property development and investment, hotel and serviced suite operation, property and project management, aircraft leasing, pub operation and investment in infrastructure and utility asset operation.

5. LISTING RULES IMPLICATIONS

As the highest applicable percentage ratio in respect of the Proposed Acquisition exceeds 5% but is less than 25%, the Proposed Acquisition constitutes a discloseable transaction of the Company under Chapter 14 of the Listing Rules. Accordingly, the Proposed Acquisition is subject to the reporting and announcement requirements, but is exempt from the shareholders' approval requirement, under Chapter 14 of the Listing Rules.

As at the Latest Practicable Date, the Controlling Shareholder Group directly and/or indirectly holds an aggregate of approximately 35.99% of the total issued Shares. LKSF is a person acting in concert with, and may be regarded as an associate (as defined in Chapter 14A of the Listing Rules) of, Mr. Li Tzar Kuoi, Victor, the Chairman and Managing Director of the Company, and may therefore be regarded as a connected person of the Company under the Listing Rules.

As the highest applicable percentage ratio in respect of the Proposed Acquisition exceeds 5%, the Proposed Acquisition constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules and is subject to the reporting, announcement, circular and independent shareholders' approval requirements under Chapter 14A of the Listing Rules.

PART B - THE SHARE BUY-BACK PROPOSAL

1. INTRODUCTION

Pursuant to the Share Buy-back Proposal, the Company proposes to buy-back for cancellation up to the Maximum Number of Shares. The Share Buy-back Proposal will be implemented through (i) the Share Buy-back Offer to all Qualifying Shareholders (so that all Qualifying Shareholders can participate should they wish) and (ii) possible subsequent on-market share buy-backs to eliminate all or part of the shortfall at a price not exceeding the Offer Price following the completion of the Share Buy-back Offer if the number of valid acceptances received under the Share Buy-back Offer is less than the Maximum Number of Shares.

2. REVISION OF THE MAXIMUM NUMBER OF SHARES TO BE BOUGHT BACK UNDER THE SHARE BUY-BACK OFFER

On 14 April 2021, the Company announced that the Maximum Number of Shares to be bought back under the Share Buy-back Offer was increased from 333,333,333 to 380,000,000, representing approximately 10.29% of the total issued Shares as at the Latest Practicable Date.

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3. THE SHARE BUY-BACK OFFER

The Share Buy-back Offer is being made by HSBC on behalf of the Company, subject to the Offer Conditions, to buy-back for cancellation up to the Maximum Number of Shares, being 380,000,000 Shares at the price of HK$51.00 per Share.

The Share Buy-back Offer is being made in full compliance with the Takeovers Code and the Share Buy-back Code. The Shares to be bought-back by the Company will not exceed the Maximum Number of Shares and there is no minimum number of Shares proposed to be bought-back under the Share Buy-back Offer.

The Share Buy-back Offer, if accepted in full, will result in the Company paying HK$19.38 billion to the Accepting Shareholders. The consideration for the Share Buy-back Offer will be paid in cash and will be funded by cash resources of the Group.

HSBC is satisfied that sufficient financial resources are available to the Company to enable it to satisfy acceptances of the Share Buy-back Offer in full in accordance with the terms of the Share Buy-back Offer stated in this Circular and Offer Document.

4. POSSIBLE ON-MARKET SHARE BUY-BACK

If valid acceptances received under the Share Buy-back Offer are less than the Maximum Number of Shares, the Company intends to seek to buy-back all or part of the shortfall through on-market share buy-backs from time to time at a price not exceeding the Offer Price following the completion of the Share Buy-back Offer, utilising the share buy-back mandate from Shareholders to be sought and granted at the Company's 2021 AGM.

Any such possible on-market share buy-backs will also be subject to, among other things, market conditions, the trading liquidity and availability of the Shares to be bought-backon-market, compliance with applicable laws and regulations (including the requirements and restrictions of the Listing Rules applicable to on-market share buy-backs and the provisions of the Takeovers Code), no Shareholder breaching the Creeper Limit, and any other factors which the Directors consider to be relevant in determining whether or not to exercise the power of the Company to make on-market share buy-backs pursuant to the share buy-back general mandate if granted by the Shareholders.

The Company has no intention to buy-back Shares on-market other than the buy-back of the shortfall (if any) between the number of valid acceptances received under the Share Buy-back Offer and the Maximum Number of Shares until the earlier of completion of the buy-back of the shortfall or the expiry of the share buy-back mandate proposed to be sought and granted at the Company's 2021 AGM, after which the Company will assess what is in the best interests of the Company and the Shareholders.

If the subsequent on-market share buy-backs (or any other purchase of Shares) cause the aggregate holding of voting rights of the Company owned or controlled by the Controlling Shareholder Group to increase by more than 2% from the percentage of voting rights held by the Controlling Shareholder Group immediately following Completion of the

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Proposed Acquisition and the Share Buy-back Offer, the Controlling Shareholder Group would be under an obligation pursuant to Rule 26 of the Takeovers Code to make a mandatory general offer for all the Shares not already owned by the Controlling Shareholder Group.

The Whitewash Waiver (as further described in the section headed "Part C - Takeovers Code Implications of the Proposal and Application for the Whitewash Waiver - The Whitewash Waiver" below), if granted by the Executive and approved by the Independent Shareholders at the EGM, would only apply to waive LKSF's obligation to make a mandatory general offer as a result of the Proposed Acquisition and the Share Buy-back Offer.

Please refer to the "Letter from HSBC" in this Circular and Offer Document for further information.

5. THE 2020 FINAL DIVIDEND

As disclosed in the annual results announcement of the Company dated 18 March 2021, the Directors have recommended the payment of a final cash dividend in respect of the year ended 31 December 2020 to Shareholders whose names appear on the Register of Members on the Final Dividend Record Date. Accordingly, Qualifying Shareholders who accept the Share Buy-back Offer and whose names appear on the Register of Members on the Final Dividend Record Date will be entitled to receive in respect of each Share bought-back pursuant to the Share Buy-back Offer (i) the final cash dividend (if approved by Shareholders at the 2021 AGM) and (ii) the Offer Price per Share.

6. THE OFFER PRICE

The Offer Price of HK$51.00 in cash per Share represents:

a premium of approximately 8.4% to the closing price of the Shares of HK$47.05 per Share as quoted on the Stock Exchange on the Last Trading Date;
a premium of approximately 9.8% to the average closing price of the Shares of approximately HK$46.44 per Share as quoted on the Stock Exchange for the last five consecutive trading days up to and including the Last Trading Date;
a premium of approximately 10.0% to the average closing price of the Shares of approximately HK$46.37 per Share as quoted on the Stock Exchange for the last 10 consecutive trading days up to and including the Last Trading Date;
a premium of approximately 16.4% to the average closing price of the Shares of approximately HK$43.80 per Share as quoted on the Stock Exchange for the last 30 consecutive trading days up to and including the Last Trading Date;
a premium of approximately 21.5% to the average closing price of the Shares of approximately HK$41.96 per Share as quoted on the Stock Exchange for the last 60 consecutive trading days up to and including the Last Trading Date;

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a premium of approximately 2.2% to the 52-week high price of HK$49.90 per Share ending on the Last Trading Date based on the closing price as quoted on the Stock Exchange on 11 May 2020;
a premium of approximately 5.2% to the closing price of the Shares of HK$48.50 per Share as quoted on the Stock Exchange on the Latest Practicable Date; and
a discount of 46.9% to the latest Net Assets Attributable to Shareholders per Share as at 31 December 2020, being HK$96.02 per Share.

7. THE OFFER CONDITIONS

The Share Buy-back Offer is conditional upon fulfilment of all of the following conditions:

the passing of an ordinary resolution by way of poll to approve the Share Buy-back Offer by the Independent Shareholders, either voting in person or by proxy, at the EGM;
not less than 75% of the votes cast on the resolution by Independent Shareholders, either voting in person or by proxy, at the EGM approving the Whitewash Waiver;
the Whitewash Waiver being granted by the Executive and not having been withdrawn;
(a) the receipt of an opinion from the Independent Financial Adviser to the Independent Board Committee confirming that the Special Deal is fair and reasonable so far as the Independent Shareholders are concerned; (b) the passing of an ordinary resolution by the Independent Shareholders at the EGM to approve the Special Deal; and (c) the consent under Rule 25 of the Takeovers Code from the Executive in respect of the Special Deal being granted and such consent not having been withdrawn; and
all of the conditions to the Proposed Acquisition (other than the condition specifying that all of the conditions to the Share Buy-back Offer have been satisfied) having been satisfied or waived (as applicable).

None of the Offer Conditions are waivable. As at the Latest Practicable Date save for the condition in paragraph (iv)(a)above, none of the Offer Conditions had been fulfilled. Accordingly, if any of the Offer Conditions is not fulfilled, the Share Buy-back Offer will not proceed and the Proposal (including the Proposed Acquisition) will lapse.

Pursuant to Note 2 to Rule 30.1 of the Takeovers Code, the Company may only invoke the above Offer Conditions as a basis for not proceeding with the Share Buy-back Offer if the circumstances which give rise to a right to invoke such Offer Conditions are of material significance to the Company in the context of the Share Buy-back Offer.

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WARNING:

The Share Buy-back Offer is subject to all of the Offer Conditions being fulfilled and therefore may or may not become unconditional. If any of the Offer Conditions is not fulfilled, the Share Buy-back Offer and the Proposed Acquisition will not proceed and will immediately lapse. Shareholders of and/or potential investors in the Company should therefore exercise caution when dealing in the Shares. Persons who are in doubt as to the action they should take should consult their stockbroker, bank manager, solicitor or other professional advisers.

Qualifying Shareholders are able to tender their Shares for acceptance under the Share Buy-back Offer from and including the date of this Circular and Offer Document. If the Share Buy-back Offer is declared unconditional, Qualifying Shareholders will be able to tender their Shares for acceptance under the Share Buy-back Offer for a period of 14 days thereafter. If the Share Buy-back Offer is not declared unconditional, the Share Buy-back Offer will lapse and any Shares tendered will not be accepted.

8. INFORMATION AND FUTURE INTENTIONS OF THE GROUP

It is the intention of the Company (i) not to rely upon sections 705, 711 to 716 and

718 to 721 of the Companies Ordinance (Cap. 622 of the Laws of Hong Kong) or any comparable provisions of applicable company law in Cayman Islands; and (ii) to continue to meet the public float requirements of Rule 8.08 of the Listing Rules.

PART C - TAKEOVERS CODE IMPLICATIONS OF THE PROPOSAL AND APPLICATION FOR THE WHITEWASH WAIVER

1. SPECIAL DEAL

As the Share Purchase Agreement is between the Company (the offeror for the purposes of the Share Buy-Back Offer) and LKSF (being a Shareholder), and is not capable of being extended to all the Shareholders, the Proposed Acquisition constitutes a special deal under Rule 25 of the Takeovers Code and requires the consent of the Executive.

The Company has made an application for consent from the Executive in respect of the Special Deal. Such consent, if granted, will be subject to (i) the Independent Financial Adviser stating that in its opinion the terms of the Proposed Acquisition are fair and reasonable and (ii) the approval of the Proposed Acquisition by the Independent Shareholders by way of poll at the EGM

2. THE WHITEWASH WAIVER

As at the Latest Practicable Date, the Controlling Shareholder Group directly and/or indirectly holds an aggregate of 1,329,429,800 Shares, representing approximately 35.99% of the total issued Shares. Following the allotment and issue of the Consideration Shares to LKSF (or a subsidiary of LKSF) and assuming the Maximum Number of Shares are bought-back pursuant to the Share Buy-back Offer, the shareholding of the Controlling Shareholder Group in the Company will be increased to 1,662,763,133 Shares in aggregate,

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representing approximately 45.60% of the total issued Shares as enlarged by the allotment and issue of the Consideration Shares and the Share Buy-back Offer. As the implementation of the Proposed Acquisition and the Share Buy-back Offer will increase the Controlling Shareholder Group's aggregate holding of voting rights of the Company by more than 2%, in the absence of the Whitewash Waiver, LKSF would be under an obligation pursuant to Rule 26 of the Takeovers Code to make a mandatory general offer for all the Shares not already owned or agreed to be acquired by the Controlling Shareholder Group.

The members of the Controlling Shareholder Group have confirmed that they will not accept the Share Buy-back Offer in respect of any of the Shares held by them (directly or indirectly) as at the Latest Practicable Date.

An application has been made to the Executive for the Whitewash Waiver pursuant to Note 1 of the Notes on dispensations from Rule 26 of the Takeovers Code. The Whitewash Waiver, if granted by the Executive, will be subject to, among other things, (i) the Whitewash Waiver having been approved by at least 75% of the votes cast by the Independent Shareholders at the EGM and (ii) the Proposed Acquisition and the Share Buy-back Offer having been approved by more than 50% of the votes cast by the Independent Shareholders at the EGM.

As at the Latest Practicable Date, the Company does not believe that the Proposal (including the Proposed Acquisition and the Share Buy-back Offer) gives rise to any concerns in relation to compliance with other applicable rules or regulations (including the Listing Rules). The Company notes that the Executive may not grant the Whitewash Waiver if the Proposal (including the Proposed Acquisition and the Share Buy-back Offer) does not comply with other applicable rules and regulations (including the Listing Rules).

PART D - GENERAL INFORMATION

1. FINANCIAL EFFECTS OF THE PROPOSAL

As a result of the Proposal (including the Completion of the Proposed Acquisition): (a) the Target Holdcos will become wholly-owned subsidiaries of the Company; (b) the Company will indirectly hold 20%, 20%, 10% and 10% of the ownership interest in UK Power Networks, Northumbrian Water, Wales & West Utilities and Dutch Enviro Energy, respectively (see the section headed "3(h) Other Information" under "Part A - Proposed Acquisition" above for details of the ownership and economic interests in the Target Companies after Completion of the Proposed Acquisition); and (c) the financial results of the Target Holdcos will be consolidated into those of the Company.

The unaudited pro forma financial information of the Group upon completion of the Proposal, illustrating the financial impact of the Proposal on the earnings per Share, dividends per Share, net assets per Share, liabilities and working capital (expressed as net current assets) of the Group, is set out in Appendix III to this Circular and Offer Document.

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Earnings per Share

Based on the unaudited pro forma financial information of the Group set out in Appendix III to this Circular and Offer Document and assuming that the Proposed Acquisition and full acceptance of the Share Buy-back Offer were completed on 1 January 2020 and the Maximum Number of Shares had been bought-back, the earnings per Share attributable to Shareholders for the year ended 31 December 2020 would, as a result, have increased by approximately 7.01% from approximately HK$4.42 per Share to approximately HK$4.73 per Share.

Dividends per Share

Based on the unaudited pro forma financial information of the Group set out in Appendix III to this Circular and Offer Document and assuming that the Proposed Acquisition and full acceptance of the Share Buy-back Offer were completed on 1 January 2020 and the Maximum Number of Shares had been bought-back, the dividends per Share for the year ended 31 December 2020 would, as a result, have increased by approximately 15% from HK$1.80 per Share to approximately HK$2.07 per Share.

Net assets per Share

Based on the unaudited pro forma financial information of the Group set out in Appendix III to this Circular and Offer Document and assuming that the Proposed Acquisition and full acceptance of the Share Buy-back Offer were completed on 31 December 2020 and the Maximum Number of Shares had been bought-back, the Net Assets Attributable to Shareholders per Share as at 31 December 2020 would, as a result, have increased by approximately 0.57% from approximately HK$96.02 per Share to approximately HK$96.57 per Share.

Liabilities

The Proposed Acquisition will be satisfied by the issue of the Consideration Shares, and the Share Buy-back Offer will be paid in cash and funded by the cash resources of the Group. Based on the unaudited pro forma financial information of the Group set out in Appendix III to this Circular and Offer Document and assuming that the Proposed Acquisition and full acceptance of the Share Buy-back Offer were completed on 31 December 2020 and the Maximum Number of Shares had been bought-back, the liabilities as at 31 December 2020 would have increased by approximately 0.02% from HK$153,485 million to HK$153,519 million following completion of the Share Buy-back Offer.

Working capital

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December 2020 and the Maximum Number of Shares had been bought-back, the working capital (expressed as net current assets) as at 31 December 2020 would have decreased by approximately 15.9% from HK$121,912 million to HK$102,544 million.

Based on the above and having considered the manner of funding of the consideration for the Proposal, the Company considers that completion of the Proposal will have no material adverse effect on the Group's earnings per Share, dividends per Share, net assets per Share, liabilities or working capital.

2. CHANGES IN SHAREHOLDINGS STRUCTURE

The table below shows the Company's existing shareholding structure and the shareholding structure assuming (i) completion of the issue of the Consideration Shares; (ii) no Shares are bought-back pursuant to the Share Buy-back Proposal; and (iii) no Shares other than the Consideration Shares are issued from the Latest Practicable Date up to and including the date of completion of the Proposal:

			As at the Latest Practicable Date		Upon completion of the Proposal
			Number of			Number of
Name of Shareholder			Shares	%		Shares	%
Controlling Shareholder Group
Li Ka-Shing Unity Trustee Company Limited
(TUT1) as trustee of The Li Ka-Shing Unity Trust	1,003,380,744		27.17%	1,003,380,744	24.92%
Li Ka-Shing Castle Trustee Company Limited as
trustee of The Li Ka-Shing Castle Trust	72,387,720		1.96%	72,387,720	1.80%
L.F. Investments S.à r.l. (1)	84,427,246		2.29%	84,427,246	2.10%
LKSF(2)	61,523,000		1.67%	394,856,333	9.81%
Lankford Profits Limited(3)	50,425,500		1.37%	50,425,500	1.25%
Grand Duke Enterprises Limited and Rapid Gain
Investments Limited(4)	407,800		0.01%	407,800	0.01%
Mr. Li Tzar Kuoi, Victor and family (including
Ms. Li Michelle Sarah Si De) and controlled
companies(5)	2,897,550		0.08%	2,897,550	0.07%
Companies jointly controlled by Mr. Li Ka-shing
and Mr. Li Tzar Kuoi, Victor(6)	53,905,000		1.46%	53,905,000	1.34%
Mr. Li Tzar Kai, Richard		75,240		0.002%	75,240		0.0019%
Sub-total	1,329,429,800		35.99%	1,662,763,133	41.29%

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LETTER FROM THE BOARD

				As at the Latest Practicable Date			Upon completion of the Proposal
				Number of				Number of
Name of Shareholder				Shares	%			Shares	%
Executive Directors of the Company (other than
Mr. Li Tzar Kuoi, Victor)
Mr. Kam Hing Lam	108,400		0.0029%	108,400		0.0027%
Mr. Ip Tak Chuen, Edmond		300,000		0.0081%		300,000	0.0075%
Sub-total	408,400		0.01%	408,400		0.01%
LKSF Directors (other than Mr. Li Ka-shing,
Mr. Li Tzar Kuoi, Victor, Mr. Li Tzar Kai,
Richard and Ms. Li Michelle Sarah Si De)(7)
Mr. Chong Hok Shan	1,000		0.000027%	1,000		0.000025%
Ms. Chau Hoi Shuen, Solina	13,589,849		0.37%	13,589,849		0.34%
Mr. Man Ka Keung, Simon	134,395		0.0036%	134,395		0.0033%
Ms. Eirene Yeung	13,654		0.00037%	13,654		0.00034%
Mr. George Colin Magnus	936,000		0.025%	936,000		0.023%
Mr. Frank John Sixt	136,800		0.0037%	136,800		0.0034%
Mr. Chow Kun Chee, Roland	99,752		0.0027%	99,752		0.0025%
Mr. Lee Yeh Kwong, Charles	806,584		0.022%	806,584		0.02%
Ms. Lee Pui Ling, Angelina	283,722		0.0077%	283,722		0.007%
Mr. Kan Yuet Loong	36,840		0.001%	36,840		0.00091%
Ms. Au Siu Yin, Amy		6,996		0.00019%		6,996	0.00017%
Sub-total	16,045,592		0.43%	16,045,592		0.40%

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LETTER FROM THE BOARD

		As at the Latest Practicable Date		Upon completion of the Proposal
		Number of			Number of
Name of Shareholder		Shares	%		Shares	%
HSBC Group(8)		1,987,605		0.05%		1,987,605	0.05%
CK Asset Provident Fund(9)	616,000		0.02%	616,000		0.02%
Total for Controlling Shareholder Group, the
Executive Directors (other than Mr. Li Tzar
Kuoi, Victor), LKSF Directors (other than
Mr. Li Ka-shing, Mr. Li Tzar Kuoi, Victor,
Mr. Li Tzar Kai, Richard and Ms. Li Michelle
Sarah Si De), HSBC Group and CK Asset
Provident Fund	1,348,487,397		36.51%	1,681,820,730		41.77%
Independent Shareholders	2,344,913,103		63.49%	2,344,913,103		58.23%
Total	3,693,400,500		100.00%	4,026,733,833		100.00%

Notes:

L.F. Investments S.à r.l. is 99.99% owned by Chinaton Investment Limited, which in turn is 100% owned by Evago Investment Limited. Evago Investment Limited is a 100% owned by Li Ka-Shing Castle Trustee Corporation Limited as trustee of a discretionary trust.
The shareholding of LKSF upon completion of the issue of the Consideration Shares represents the total number of Consideration Shares to be issued. Under the terms of the Share Purchase Agreement, LKSF may elect to nominate an affiliate to receive a portion of the Consideration Shares.
Lankford Profits Limited is 100% owned by Li Ka Shing (Global) Foundation.
Grand Duke Enterprises Limited and Rapid Gain Investments Limited (both wholly-owned subsidiaries of Mayspin Management Limited) holds 251,000 and 156,800 Shares, respectively. Mayspin Management Limited is 100% owned by Mr. Li Ka-Shing.
Mr. Li Tzar Kuoi, Victor is the beneficial owner of 220,000 Shares.
Dragonfield Limited and Dragon Reign Limited (both 100% owned by Mr. Li Tzar Kuoi, Victor) hold 1,108,186 and 1,164,164 Shares respectively.
Mr. Li Tzar Kuoi, Victor's family collectively hold 405,200 Shares, including 205,200 Shares held by Ms. Li Michelle Sarah Si De, a member of the Controlling Shareholder Group and one of the LKSF Directors.
Castle Link Holdings Limited and Shine Diamond Investment Limited, which are both indirectly 50% owned by Mr. Li Ka-Shing and indirectly 50% owned by Mr. Li Tzar Kuoi, Victor, hold 33,456,500 Shares and 20,448,500, respectively.
Comprises interests of the LKSF Directors, together with their close relatives, related trusts and companies controlled by any of the LKSF Directors, their close relatives or related trusts.

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INKA Internationale Kapitalanlagegesellschaft mbH ("INKA") holds 1,982,778 Shares, over which it has voting discretion. Hang Seng Bank (Trustee) Limited ("HSTE") holds 4,827 Shares, over which it has voting and investment discretion. Both INKA and HSTE are members of the HSBC Group (and neither is an exempt principal trader or an exempt fund manager, in each case recognised by the Executive as such for the purposes of the Takeovers Code). Accordingly, INKA and HSTE are presumed to be acting in concert with the Company by virtue of class (5) of the definition of "acting in concert" under the Takeovers Code and will abstain from voting on the resolutions in respect of Matters for Approval at the EGM.
CK Asset Provident Fund is a registered scheme with the Mandatory Provident Fund Schemes Authority (MPFA) established on 3 June 2015 under the Occupational Retirement Schemes Ordinance. The beneficiaries of the fund are employees of various members of the Group. HSBC Global Asset Management (Hong Kong) Limited and Amundi Hong Kong Limited are the investment managers to the of the fund and they manage the fund on a fully discretionary basis. CK Asset Provident Fund is presumed to be acting in concert with the Company and will abstain from voting on the resolutions in respect of Matters for Approval at the EGM.

The table below shows the Company's existing shareholding structure and the shareholding structure, assuming (i) completion of the issue of the Consideration Shares; (ii) the Maximum Number of Shares are bought-back pursuant to the Share Buy-back Proposal; and (iii) no Shares other than the Consideration Shares are issued from the Latest Practicable Date up to and including the date of completion of the Proposal:

			As at the Latest Practicable Date		Upon completion of the Proposal
			Number of			Number of
Name of Shareholder			Shares	%		Shares	%
Controlling Shareholder Group
Li Ka-Shing Unity Trustee Company Limited
(TUT1) as trustee of The Li Ka-Shing Unity Trust	1,003,380,744		27.17%	1,003,380,744	27.51%
Li Ka-Shing Castle Trustee Company Limited as
trustee of The Li Ka-Shing Castle Trust	72,387,720		1.96%	72,387,720	1.99%
L.F. Investments S.à r.l. (1)	84,427,246		2.29%	84,427,246	2.32%
LKSF(2)	61,523,000		1.67%	394,856,333	10.83%
Lankford Profits Limited(3)	50,425,500		1.37%	50,425,500	1.38%
Grand Duke Enterprises Limited and Rapid Gain
Investments Limited(4)	407,800		0.01%	407,800	0.01%
Mr. Li Tzar Kuoi, Victor and family (including
Ms. Li Michelle Sarah Si De) and controlled
companies(5)	2,897,550		0.08%	2,897,550	0.08%
Companies jointly controlled by Mr. Li Ka-shing
and Mr. Li Tzar Kuoi, Victor(6)	53,905,000		1.46%	53,905,000	1.48%
Mr. Li Tzar Kai, Richard		75,240		0.002%	75,240		0.0021%
Sub-total	1,329,429,800		35.99%	1,662,763,133	45.60%

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					As at the Latest Practicable Date			Upon completion of the Proposal
					Number of				Number of
Name of Shareholder					Shares	%			Shares	%
Executive Directors of the Company (other than
Mr. Li Tzar Kuoi, Victor)
Mr. Kam Hing Lam	108,400		0.0029%	108,400		0.0030%
Mr. Ip Tak Chuen, Edmond		300,000		0.0081%		300,000	0.0082%
Sub-total	408,400		0.01%	408,400		0.01%
LKSF Directors (other than Mr. Li Ka-shing,
Mr. Li Tzar Kuoi, Victor, Mr. Li Tzar Kai,
Richard and Ms. Li Michelle Sarah Si De)(7)
Mr. Chong Hok Shan	1,000		0.000027%	1,000		0.000027%
Ms. Chau Hoi Shuen, Solina	13,589,849		0.37%	13,589,849		0.37%
Mr. Man Ka Keung, Simon	134,395		0.0036%	134,395		0.0037%
Ms. Eirene Yeung	13,654		0.00037%	13,654		0.00037%
Mr. George Colin Magnus	936,000		0.025%	936,000		0.026%
Mr. Frank John Sixt	136,800		0.0037%	136,800		0.0038%
Mr. Chow Kun Chee, Roland	99,752		0.0027%	99,752		0.0027%
Mr. Lee Yeh Kwong, Charles	806,584		0.022%	806,584		0.022%
Ms. Lee Pui Ling, Angelina	283,722		0.0077%	283,722		0.0078%
Mr. Kan Yuet Loong	36,840		0.001%	36,840		0.001%
Ms. Au Siu Yin, Amy		6,996		0.00019%		6,996	0.00019%
Sub-total		16,045,592		0.43%		16,045,592	0.44%
HSBC Group(8)	1,987,605		0.05%	1,987,605		0.05%
CK Asset Provident Fund(9)	616,000		0.02%	616,000		0.02%

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LETTER FROM THE BOARD

		As at the Latest Practicable Date		Upon completion of the Proposal
		Number of			Number of
Name of Shareholder		Shares	%		Shares	%
Total for Controlling Shareholder Group, the
Executive Directors (other than Mr. Li Tzar
Kuoi, Victor), LKSF Directors (other than
Mr. Li Ka-shing, Mr. Li Tzar Kuoi, Victor,
Mr. Li Tzar Kai, Richard and Ms. Li Michelle
Sarah Si De), HSBC Group and CK Asset
Provident Fund	1,348,487,397		36.51%	1,681,820,730		46.12%
Independent Shareholders	2,344,913,103		63.49%	1,964,913,103		53.88%
Total	3,693,400,500		100.00%	3,646,733,833		100.00%

Notes:

L.F. Investments S.à r.l. is 99.99% owned by Chinaton Investment Limited, which in turn is 100% owned by Evago Investment Limited. Evago Investment Limited is a 100% owned by Li Ka-Shing Castle Trustee Corporation Limited as trustee of a discretionary trust.
The shareholding of LKSF upon completion of the issue of the Consideration Shares represents the total number of Consideration Shares to be issued. Under the terms of the Share Purchase Agreement, LKSF may elect to nominate an affiliate to receive a portion of the Consideration Shares.
Lankford Profits Limited is 100% owned by Li Ka Shing (Global) Foundation.
Grand Duke Enterprises Limited and Rapid Gain Investments Limited (both wholly-owned subsidiaries of Mayspin Management Limited) holds 251,000 and 156,800 Shares, respectively. Mayspin Management Limited is 100% owned by Mr. Li Ka-Shing.
Mr. Li Tzar Kuoi, Victor is the beneficial owner of 220,000 Shares.
Dragonfield Limited and Dragon Reign Limited (both 100% owned by Mr. Li Tzar Kuoi, Victor) hold 1,108,186 and 1,164,164 Shares respectively.
Mr. Li Tzar Kuoi, Victor's family collectively hold 405,200 Shares, including 205,200 Shares held by Ms. Li Michelle Sarah Si De, a member of the Controlling Shareholder Group and one of the LKSF Directors.
Castle Link Holdings Limited and Shine Diamond Investment Limited, which are both indirectly 50% owned by Mr. Li Ka-Shing and indirectly 50% owned by Mr. Li Tzar Kuoi, Victor, hold 33,456,500 Shares and 20,448,500, respectively.
Comprises interests of the LKSF Directors, together with their close relatives, related trusts and companies controlled by any of the LKSF Directors, their close relatives or related trusts.
INKA Internationale Kapitalanlagegesellschaft mbH ("INKA") holds 1,982,778 Shares, over which it has voting discretion. Hang Seng Bank (Trustee) Limited ("HSTE") holds 4,827 Shares, over which it has voting and investment discretion. Both INKA and HSTE are members of the HSBC Group (and neither is an exempt principal trader or an exempt fund manager, in each case recognised by the Executive as such for the purposes of the Takeovers Code). Accordingly, INKA and HSTE are

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LETTER FROM THE BOARD

presumed to be acting in concert with the Company by virtue of class (5) of the definition of "acting in concert" under the Takeovers Code and will abstain from voting on the resolutions in respect of Matters for Approval at the EGM.

CK Asset Provident Fund is a registered scheme with the Mandatory Provident Fund Schemes Authority (MPFA) established on 3 June 2015 under the Occupational Retirement Schemes Ordinance. The beneficiaries of the fund are employees of various members of the Group. HSBC Global Asset Management (Hong Kong) Limited and Amundi Hong Kong Limited are the investment managers to the of the fund and they manage the fund on a fully discretionary basis. CK Asset Provident Fund is presumed to be acting in concert with the Company and will abstain from voting on the resolutions in respect of Matters for Approval at the EGM.

The Controlling Shareholder Group, the Executive Directors (other than Mr. Li Tzar Kuoi, Victor) and LKSF Directors have confirmed that they will not accept the Share Buy-back Offer in respect of any of the Shares held by them (directly or indirectly) as at the Latest Practicable Date.

3. WAIVER IN RELATION TO RULE A.3(a)(i) OF THE MODEL CODE

Rule A.3(a)(i) of the Model Code provides that a director must not deal in any securities of the listed issuer on any day on which its annual results are published and during the period of 60 days immediately preceding the publication date of its annual results. As Mr. Li Tzar Kuoi, Victor may be regarded as having the ability to exercise or control the exercise of one-third or more of the voting power at general meetings of LKSF, pursuant to Rule A.3(a)(i) of the Model Code, the entering into of the Share Purchase Agreement and the proposed issue of the Consideration Shares to LKSF (or its subsidiary) thereunder could technically be construed as a "dealing" by Mr. Li Tzar Kuoi, Victor in the Consideration Shares.

The Company has applied for, and the Stock Exchange has granted, a waiver from strict compliance by Mr. Li Tzar Kuoi, Victor with Rule A.3(a)(i) of the Model Code so that the parties can enter into the Share Purchase Agreement and the announcement of the Proposal can be published on the same day as, and shortly after, the publication by the Company of its 2020 annual results announcement (the "Signing Arrangement"). The reasons for seeking the waiver were as follows: (i) in view of the price sensitive nature of the Proposal and to ensure transparency and prompt, timely disclosure of inside information, the Signing Arrangement was in the best interests of the Company and Shareholders as a whole and potential investors as it allowed them sufficient time to consider the Company's 2020 annual results as well as the Proposal before the commencement of dealings in the Shares on the following trading day, (ii) the Company did not reasonably expect the Company's 2020 annual results would be out of line with market expectations and therefore, the Company's 2020 annual results were not materially price sensitive, (iii) the Proposed Acquisition (including the issue of the Consideration Shares) is subject to the approval of the Independent Shareholders at the EGM, (iv) the price at which the Consideration Shares will be issued to LKSF (or a subsidiary of LKSF) was determined after arm's length negotiation with reference to the prevailing market price of the Shares and without reference to the Company's 2020 annual results and (v) LKSF is a charitable organisation and Mr. Li Tzar Kuoi, Victor is not a beneficiary of LKSF or any of its subsidiaries which may hold any of the Consideration Shares.

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LETTER FROM THE BOARD

4. GENERAL

Restriction on on-market share buy-backs

The Company will not conduct any on-market share buy-backs from the date of the Announcement up to and including the date the Share Buy-back Offer closes, lapses or is withdrawn, as the case may be.

Hong Kong Stamp Duty

Sellers' ad valorem stamp duty arising in connection with acceptance of the Share Buy-back Offer will be payable by each Shareholder at the current rate of HK$1.00 for every HK$1,000 or part thereof of the consideration payable by the Company for such person's Shares and will be deducted from the cash amount due to such Accepting Shareholder. The Company will pay the buyer's ad valorem stamp duty on its own behalf and, subject to such deduction aforesaid, will be responsible to account to the Stamp Office of Hong Kong for all the stamp duty payable for the sale and purchase of the Shares which are sold under the Share Buy-back Offer.

5. EGM

The EGM is to be held on Thursday, 13 May 2021 for the Independent Shareholders to consider and, if thought fit, approve the Matters for Approval.

As the Controlling Shareholder Group is presumed to be acting in concert with LKSF, its members will abstain from voting on the resolutions in respect of Matters for Approval at the EGM.

As Mr. Ip Tak Chuen, Edmond and Mr. Kam Hing Lam, being Executive Directors who hold interests in Shares, are presumed to be acting in concert with the Company, they will abstain from voting on the resolutions in respect of the Matters for Approval at the EGM.

As CK Asset Provident Fund is presumed to be acting in concert with the Company, it will abstain from voting on the resolutions in respect of the Matters for Approval at the EGM.

As the LKSF Directors are presumed to be acting in concert with LKSF, the LKSF Directors will abstain from voting on the resolutions in respect of the Matters for Approval at the EGM.

HSBC is the financial adviser to the Company in respect of the Share Buy-back Offer. Accordingly, HSBC and relevant members of the HSBC Group (including INKA and HSTE) will abstain from voting on the resolutions in respect of the Matters for Approval at the EGM, other than for any member of the HSBC Group which is: (1) a Registered Owner of Shares which are held on behalf of Beneficial Owners of such Shares who are investment clients where such Beneficial Owners (A) control the voting rights attached to such Shares,

give instructions as to how such Shares are to be voted and (C) are not otherwise involved in, or interested in, the Proposed Acquisition, the Share Buy-back Offer, the

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LETTER FROM THE BOARD

Whitewash Waiver, the Special Deal or the Specific Mandate, (2) an exempt fund manager as regards Shares held in that capacity; or (3) an exempt principal trader who holds the Shares as a simple custodian for and on behalf of non-discretionary clients, where such non-discretionary clients (A) control the voting rights attached to such Shares, and (B) give instructions as to how such Shares are to be voted. For this purpose, a written confirmation of the matters set out in points (A) and (B) above and whether the relevant underlying clients are entitled to vote in the context of the Proposal shall be submitted to the Executive prior to the EGM.

Save as disclosed above, as at the Latest Practicable Date, no other Shareholder had any material interest in the Matters for Approval, and no other Shareholder was required to abstain from voting at the EGM on the resolutions in respect of the Matters for Approval.

The notice convening the forthcoming EGM to be held at 1st Floor, Harbour Grand Kowloon, 20 Tak Fung Street, Hung Hom, Kowloon, Hong Kong on Thursday, 13 May 2021 at 4:30 p.m. (or as soon thereafter as the AGM to be held at 3:30 p.m. on the same day shall have concluded or adjourned or, if there is (i) a tropical cyclone warning signal no. 8 or above; or (ii) a black rainstorm warning signal; or (iii) extreme condition caused by super typhoon in force in Hong Kong at 9:00 a.m. on Thursday, 13 May 2021, at the same time and place on Tuesday, 18 May 2021) is set out on pages N-1 to N-4 of this circular.

Pursuant to the Listing Rules, any vote of shareholders at a general meeting must be taken by poll. The Chairman of the forthcoming EGM will therefore put each of the resolutions to be proposed at the EGM to be voted by way of a poll pursuant to Article 81 of the Articles of Association. If there are any procedural or administrative matters to be dealt with at the EGM, any resolution relating to such matters will also be taken by poll.

A proxy form for use at the EGM is enclosed with this Circular and Offer Document. The proxy form can also be downloaded from the websites of the Company at www.ckah.comand Hong Kong Exchanges and Clearing Limited at www.hkexnews.hk. Whether Shareholders are able to attend the EGM physically or online, they are encouraged to appoint the Chairman of the EGM as their proxy by completing, signing and returning the proxy form in accordance with the instructions printed thereon to the Company's Hong Kong Share Registrar, Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen's Road East, Hong Kong or depositing the completed and signed proxy form at the Company's principal place of business in Hong Kong at 7th Floor, Cheung Kong Center, 2 Queen's Road Central, Hong Kong as soon as possible and in any event no less than 48 hours before the time appointed for the holding of the EGM (or any adjournment or postponement thereof). Completion and return of the proxy form will not preclude Shareholders from attending and voting in person at the EGM (or at any adjournment or postponement thereof) should they subsequently so wish and, in such event, the proxy shall be deemed to be revoked. Shareholders can also attend the EGM and vote by means of electronic facilities. See the section headed "Guidance for the Extraordinary General Meeting" in this Circular and Offer Document.

The Independent Board Committee, comprising all the independent non-executive Directors who have no interest in the Proposal other than as Shareholders, has been formed to advise the Independent Shareholders in respect of the Proposal. Anglo Chinese Corporate

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LETTER FROM THE BOARD

Finance, Limited has been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders as to whether the Proposal is fair and reasonable so far as the Independent Shareholders are concerned, whether they are in the interests of the Company and the Shareholders as a whole, and as to acceptance and voting.

Independent Shareholders should note that their decisions on how to vote on the resolutions in respect of the Matters for Approval at the EGM should not affect their decisions on whether to accept the Share Buy-back Offer or not. Even if they vote in favour of or against the resolutions in respect of the Matters for Approval at the EGM, they are free nonetheless to accept or not accept the Share Buy-back Offer.

6. RECOMMENDATION OF THE BOARD

Your attention is drawn to (i) the letter from the Independent Board Committee set out on pages 67 to 68 of this Circular and Offer Document, containing its recommendation to the Independent Shareholders in respect of the Proposal (including the Special Deal and the Whitewash Waiver); and (ii) the letter from the Independent Financial Adviser set out on pages 69 to 144 of this Circular and Offer Document, containing its advice to the Independent Board Committee and the Independent Shareholders in respect of the Proposal (including the Special Deal and the Whitewash Waiver).

Having regard to the reasons for, and benefits of, the Proposal (including the Proposed Acquisition) as set out above, the Directors (other than the members of the Independent Board Committees, whose view is are set out in the letter from the Independence Board Committee contained in this Circular and Offer Document) believe that:

the terms of the Share Purchase Agreement (including the Proposed Acquisition and the Special Deal contemplated thereunder) and the Specific Mandate are fair and reasonable and in the interests of the Shareholders as a whole;
the terms of the Share Buy-back Proposal (including the Share Buy-back Offer) are fair and reasonable and in the interests of the Shareholders as a whole; and
the Whitewash Waiver is fair and reasonable and in the interests of the Shareholders as a whole.

As LKSF is a person acting in concert with, and may be regarded as an associate (as defined under Chapter 14A of the Listing Rules) of, Mr. Li Tzar Kuoi, Victor, the Chairman and Managing Director of the Company, Mr. Li has a material interest in the Proposal and has therefore abstained from voting on the board resolutions of the Company for approving the Proposal (including the Proposed Acquisition and the Share Buy-back Offer).

As Ms. Pau Yee Wan, Ezra is a Director and a LKSF Director, Ms. Pau has a material interest in the Proposal and has therefore abstained from voting on the board resolutions of the Company for approving the Proposal (including the Proposed Acquisition and the Share Buy-back Offer).

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LETTER FROM THE BOARD

Save as disclosed above, none of the Directors had a material interest in the Share Purchase Agreement (including the Proposed Acquisition contemplated thereunder) and the Specific Mandate and no Director has abstained from voting on the relevant resolutions of the Board.

7. FURTHER INFORMATION

Your attention is also drawn to (i) the terms of the Share Buy-back Offer as set out in the letter from HSBC and in Appendix I to this Circular and Offer Document; (ii) the financial information of the Group as set out in Appendix II to this Circular and Offer Document; (iii) the unaudited pro forma financial information of the Group as set out in Appendix III to this Circular and Offer Document; (iv) the property valuation reports or summary reports as set out in Appendix IV to this Circular and Offer Document; and (v) the general information as set out in Appendix V to this Circular and Offer Document.

Yours faithfully,

For and on behalf of the Board of

CK ASSET HOLDINGS LIMITED

Victor T K Li

Chairman and Managing Director

- 55 -

LETTER FROM HSBC

Global Banking and Markets

Level 24

1 Queen's Road Central

Hong Kong

27 April 2021

To the Shareholders

Dear Sir or Madam,

CONDITIONAL CASH OFFER BY HSBC ON BEHALF OF THE COMPANY TO BUY-BACK UP TO 380,000,000 SHARES
AT HK$51.00 PER SHARE

AND

APPLICATION FOR THE WHITEWASH WAIVER

1. INTRODUCTION

On 18 March 2021, the Board announced that the Share Buy-back Offer will be made

by HSBC on behalf of the Company, subject to the Offer Conditions, to buy-back for cancellation up to the Maximum Number of Shares at the price of HK$51.00 per Share. On 14 April 2021, the Board announced that the Maximum Number of Shares to be bought back under the Share Buy-back Offer was increased from 333,333,333 to 380,000,000, representing approximately 10.29% of the existing total issued Shares as at the Latest Practicable Date. The Shares to be bought-back by the Company will not exceed the Maximum Number of Shares and there is no minimum number of Shares proposed to be bought-back under the Share Buy-back Offer.

The Qualifying Shareholders may accept the Share Buy-back Offer by lodging the Form of Acceptance for the sale of their Shares to the Company at the Offer Price of HK$51.00 per Share.

This letter sets out details of the terms of the Share Buy-back Offer. Further details of the terms and conditions of the Share Buy-back Offer are set out in Appendix I to this Circular and Offer Document and the accompanying Form of Acceptance.

Your attention is drawn to the "Letter from the Board" set out on pages 23 to 55 of this Circular and Offer Document. You are also strongly advised to read the "Letter from the Independent Board Committee" set out on pages 67 to 68 of this Circular and Offer Document which contains its recommendation to the Independent Shareholders in respect of the Proposal, and the "Letter from the Independent Financial Adviser" set out on pages 69 to 144 of this Circular and Offer Document containing its advice to the Independent Board Committee and the Independent Shareholders in respect of the Proposal.

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LETTER FROM HSBC

2. THE SHARE BUY-BACK OFFER

The Share Buy-back Offer is being made by HSBC on behalf of the Company, subject to fulfilment of the Offer Conditions and on the terms set out below to buy-back up to the Maximum Number of Shares, being 380,000,000 Shares:

For every Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .HK$51.00 in cash

All Qualifying Shareholders are entitled to accept the Share Buy-back Offer by submitting a Form of Acceptance for the sale of any number of the Shares held by them, to the Company on the basis set out under the section headed "Other Terms of the Share Buy-back Offer" below.

The salient terms of the Share Buy-back Offer are as follows:

HSBC is making the Share Buy-back Offer to the Qualifying Shareholders on behalf of the Company to buy-back up to the Maximum Number of Shares at the Offer Price;
Qualifying Shareholders are able to accept the Share Buy-back Offer in respect of any number of Shares held by them at the Offer Price up to their entire shareholding (subject to the procedures for scale down described under the section headed "Other Terms of the Share Buy-back Offer" below);
the Share Buy-back Offer is not conditional upon a minimum number of Shares being tendered for buy-back;
a Form of Acceptance duly received by or on behalf of the Company will become irrevocable and will not be capable of being withdrawn after the Share Buy-back Offer has been declared unconditional unless in accordance with Rule 19.2 of the Takeovers Code;
Shares will be bought-back for cash, free of commission, levies and dealing charges, save that the amount of stamp duty due on the Shares repurchased attributable to the seller will be deducted from the amount payable to the Accepting Shareholders and will be paid by the Company on behalf of the Accepting Shareholders;
Shares repurchased will be cancelled and will not be entitled to any dividend declared for any record date set subsequent to the date of their cancellation. For the avoidance of doubt, the Final Dividend Record Date (in relation to the final cash dividend in respect of the year ended 31 December 2020) is set before the date of cancellation of the repurchased Shares; and
Shares will be repurchased free from all encumbrances. Accordingly, the submission of a Form of Acceptance by an Accepting Shareholder will be deemed to constitute a warranty by that Accepting Shareholder to HSBC and the Company that the Shares are being sold free from all encumbrances.

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LETTER FROM HSBC

Under the Share Buy-backs Code, the Share Buy-back Offer will need to be approved by the Independent Shareholders in a general meeting by a majority of votes by way of poll and will also be subject to other Offer Conditions as referred to in the section headed "Offer Conditions" below.

If the Share Buy-back Offer is declared unconditional, Qualifying Shareholders will be able to tender their Shares for acceptance under the Share Buy-back Offer for a period of 14 days thereafter.

3. THE OFFER PRICE

The Offer Price of HK$51.00 in cash per Share represents:

a premium of approximately 8.4% to the closing price of the Shares of HK$47.05 per Share as quoted on the Stock Exchange on the Last Trading Date;
a premium of approximately 9.8% to the average closing price of the Shares of approximately HK$46.44 per Share as quoted on the Stock Exchange for the last five consecutive trading days up to and including the Last Trading Date;
a premium of approximately 10.0% to the average closing price of the Shares of approximately HK$46.37 per Share as quoted on the Stock Exchange for the last 10 consecutive trading days up to and including the Last Trading Date;
a premium of approximately 16.4% to the average closing price of the Shares of approximately HK$43.80 per Share as quoted on the Stock Exchange for the last 30 consecutive trading days up to and including the Last Trading Date;
a premium of approximately 21.5% to the average closing price of the Shares of approximately HK$41.96 per Share as quoted on the Stock Exchange for the last 60 consecutive trading days up to and including the Last Trading Date;
a premium of approximately 2.2% to the 52-week high price of HK$49.90 per Share ending on the Last Trading Date based on the closing price as quoted on the Stock Exchange on 11 May 2020;
a premium of approximately 5.2% to the closing price of the Shares of HK$48.50 per Share as quoted on the Stock Exchange on the Latest Practicable Date; and
a discount of 46.9% to the latest Net Assets Attributable to Shareholders per Share as at 31 December 2020, being HK$96.02 per Share.

The Offer Price was determined after taking into account, among other things, the historical prices of the Shares traded on the Stock Exchange, historical financial information of the Company, and the prevailing market conditions and sentiments, and with reference to share buy-back transactions in Hong Kong in recent years.

- 58 -

LETTER FROM HSBC

4. THE OFFER CONDITIONS

The Share Buy-back Offer is conditional upon fulfilment of all of the following conditions:

the passing of an ordinary resolution by way of poll to approve the Share Buy-back Offer by the Independent Shareholders, either voting in person or by proxy, at the EGM;
not less than 75% of the votes cast on the resolution by Independent Shareholders, either voting in person or by proxy, at the EGM approving the Whitewash Waiver;
the Whitewash Waiver being granted by the Executive and not having been withdrawn;
(a) the receipt of an opinion from the Independent Financial Adviser to the Independent Board Committee confirming that the Special Deal is fair and reasonable so far as the Independent Shareholders are concerned; (b) the passing of an ordinary resolution by the Independent Shareholders at the EGM to approve the Special Deal; and (c) the consent under Rule 25 of the Takeovers Code from the Executive in respect of the Special Deal being granted and such consent not having been withdrawn; and
all of the conditions to the Proposed Acquisition (other than the condition specifying that all of the conditions to the Share Buy-back Offer have been satisfied) having been satisfied or waived (as applicable).

None of the Offer Conditions are waivable. Save for the condition in paragraph (iv)(a) above, as at the Latest Practicable Date, none of the Offer Conditions had been fulfilled. Accordingly, if any of the other Offer Conditions is not fulfilled, the Share Buy-back Offer will not proceed and the Proposal (including the Proposed Acquisition) will lapse.

WARNING:

The Share Buy-back Offer is subject to all of the Offer Conditions being fulfilled and therefore may or may not become unconditional. If any of the Offer Conditions is not fulfilled, the Share Buy-back Offer will not proceed and will immediately lapse. Shareholders and/or potential investors of the Company should therefore exercise caution when dealing in the Shares. Persons who are in doubt as to the action they should take should consult their stockbroker, bank manager, solicitor or other professional advisers.

- 59 -

LETTER FROM HSBC

tender their Shares for acceptance under the Share Buy-back Offer for a period of 14 days thereafter. If the Share Buy-back Offer is not declared unconditional, the Share Buy-back Offer will lapse and any Shares tendered will not be accepted.

5. OTHER TERMS OF THE SHARE BUY-BACK OFFER

Qualifying Shareholders may accept the Share Buy-back Offer in respect of some or all of their shareholding. If valid acceptances are received for the Maximum Number of Shares or less, all Shares for which the Share Buy-back Offer was validly accepted will be bought-back. If valid acceptances received exceed the Maximum Number of Shares, the total number of Shares to be bought-back by the Company from each Accepting Shareholder will be determined in accordance with the following formula, save that the Company may, in its absolute discretion, round such figure down to the nearest whole number with the intention of avoiding (as far as practicable) Shares being held by Accepting Shareholders in fractional entitlements of a Share:

x C

= 380,000,000 Shares, being the Maximum Number of Shares
= Total number of Shares for which valid acceptances are received from all Accepting Shareholders under the Share Buy-back Offer
= Total number of Shares for which valid acceptances are received from the relevant individual Accepting Shareholder under the Share Buy-back Offer

As a result, it is possible that not all of the Shares as regards which the Share Buy-back Offer is validly accepted by an Accepting Shareholder will ultimately be bought-back. The total number of Shares which will be bought-back by the Company will not exceed the Maximum Number of Shares. The decision of the Company as to any scaling down of acceptances in accordance with the above formula and as to the treatment of fractions will be conclusive and binding on all Shareholders.

6. OVERSEAS SHAREHOLDERS

The making and implementation of the Share Buy-back Offer to Shareholders who are not resident in Hong Kong may be subject to the laws of the relevant jurisdiction in which such Shareholders are located. Such Shareholders should inform themselves about and observe any applicable legal or regulatory requirements. It is the responsibility of any Overseas Shareholders wishing to take any action in relation to the Share Buy-back Offer to satisfy themselves as to the full observance of the laws of the relevant jurisdiction in connection therewith, including the obtaining of any governmental, exchange control or other consents which may be required, or to the compliance with other necessary formalities and the payment of any issue, transfer or other taxes due from such Overseas Shareholders in such jurisdiction as a result of their acceptances. Any acceptance of the Share Buy-back Offer by any Overseas Shareholder shall be deemed to constitute a representation and warranty from such Overseas Shareholder to the Company and HSBC that all applicable local laws and requirements have been observed and complied with.

- 60 -

LETTER FROM HSBC

According to the Register of Members, as at the Latest Practicable Date, the Company had Overseas Shareholders with registered addresses located in Australia, Austria, Bermuda, Canada, France, Guyana, Indonesia, Ireland, Japan, Kenya, Macau, Malaysia, Myanmar, New Zealand, Nigeria, Panama, the Philippines, Portugal, Singapore, Sri Lanka, Sweden, Switzerland, Tahiti, Taiwan, Thailand, the PRC, the Republic of Korea, the United Kingdom and the United States of America.

The Company has obtained advice from legal advisers in these jurisdictions, and it has been advised that under the applicable legislations and regulations of these jurisdictions, there is no regulatory restriction of any regulatory body or stock exchange with respect to extending the Share Buy-back Offer to these Overseas Shareholders in the relevant jurisdictions on the terms of the Share Buy-back Offer. Accordingly, the Share Buy-back Offer will be extended to the Overseas Shareholders and there are therefore no Excluded Shareholders.

Overseas Shareholders should refer to "Appendix I - Terms of the Share Buy-back Offer

8. Overseas Shareholders" for further details of the requirements applicable to the jurisdictions where they are located or resident.

It is the responsibility of any Overseas Shareholders wishing to take any action in relation to the Share Buy-back Offer to satisfy themselves as to the full observance of the laws of the relevant jurisdiction in connection therewith, including the obtaining of any governmental, exchange control or other consents which may be required, or to the compliance with other necessary formalities and the payment of any issue, transfer or other taxes due from such Overseas Shareholders in such jurisdiction as a result of their acceptances. Any acceptance of the Share Buy-back Offer by any Overseas Shareholder shall be deemed to constitute a representation and warranty from such Overseas Shareholder to the Company and HSBC that all applicable local laws and requirements have been observed and complied with. For the avoidance of doubt, neither HKSCC nor HKSCC Nominees Limited will give, or be subject to, any of the above representation and warranty. Shareholders should consult their professional advisers if in doubt.

7. OVERSEAS SHAREHOLDERS LOCATED IN THE UNITED STATES

The Share Buy-back Offer will be subject to Hong Kong disclosure and procedural requirements, which are different from those of the United States of America. The Share Buy-back Offer will be made in the United States of America in compliance with Section 14(e) of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the applicable rules and regulations promulgated thereunder, including Regulation 14E (subject to any exemptions or relief therefrom, if applicable) and otherwise in accordance with the requirements of Hong Kong law and the Takeover Code. Accordingly, the Share Buy-back Offer will be subject to disclosure and other procedural requirements, including with respect to the Share Buy-back Offer timetable, settlement procedures, withdrawal, waiver of conditions and timing of payments that are different from those applicable under U.S. domestic tender offer procedures and laws.

- 61 -

LETTER FROM HSBC

To the extent permissible under applicable laws and regulations, including Rule 14e-5 under the Exchange Act, and in accordance with normal Hong Kong practice, HSBC and some of its affiliates may continue to act as exempt principal traders and exempt fund managers in the Shares and any securities that are immediately convertible into, exchangeable for or exercisable for Shares. These purchases or arrangements to purchase may occur either in the open market at prevailing prices or in private transactions at negotiated prices provided that any such purchases or arrangements comply with applicable law and the Takeover Code and are made outside of the United States. Any information about such purchases will be reported to the SFC and, to the extent required to be made publicly available under the Takeovers Code, will be available on the website of the SFC at http://www.sfc.hk.

The receipt of cash pursuant to the Share Buy-back Offer by a U.S. Shareholder of Shares may be a taxable transaction for U.S. federal income tax purposes and under applicable state and local, as well as foreign and other tax laws. Each holder of Shares is urged to consult his or her independent professional adviser regarding the tax consequences of accepting the Share Buy-back Offer.

Neither the U.S. Securities and Exchange Commission nor any securities commission of any state of the United States has (a) approved or disapproved the Share Buy-back Offer,

passed upon the merits or fairness of the Share Buy-back Offer, or (c) passed upon the adequacy or accuracy of the disclosure in this Circular and Offer Document. Any representation to the contrary is a criminal offense.

8. CONFIRMATION OF FINANCIAL RESOURCES

9. PROCEDURES FOR ACCEPTANCE

- 62 -

LETTER FROM HSBC

as possible after receipt of the Form of Acceptance but in any event so as to reach the Hong Kong Share Registrar by no later than the Latest Acceptance Time, i.e. 4:00 p.m. (Hong Kong time) on Thursday, 27 May 2021, or such later time and/or date as the Company may, subject to the Takeovers Code, decide and announce.

Unless the Share Buy-back Offer is extended or revised in accordance with the Takeovers Code, no Form of Acceptance received after the Latest Acceptance Time will be accepted.

If the Form of Acceptance is executed by a person other than the Registered Owner, appropriate evidence of authority (e.g. a grant of probate or certified copy of a power of attorney) must be delivered to the Hong Kong Share Registrar with the completed Form of Acceptance.

No acknowledgement of receipt of any Form of Acceptance or Title Documents will be given.

Only one Form of Acceptance may be accepted from each Qualifying Shareholder by the Hong Kong Share Registrar. Forms of Acceptance which have been duly completed and received by the Hong Kong Share Registrar will become irrevocable and cannot be withdrawn after the Share Buy-back Offer has become or been declared unconditional unless in accordance with Rule 19.2 of the Takeovers Code.

10. ODD LOTS

The Shares are currently traded in board lots of 500 Shares each. The Company has no intention to change the board lot size as a result of the Share Buy-back Offer. Shareholders should note that acceptance of the Share Buy-back Offer may result in their holding of odd lots of Shares. No matching services will be provided.

11. NOMINEE REGISTRATION OF SHARES

To ensure equality of treatment of Shareholders, those registered holders of the Shares who hold Shares as nominees for more than one Beneficial Owner should, as far as practicable, treat the holding of each Beneficial Owner separately. In order for Beneficial Owners of the Shares, whose investments are registered in nominee names (including those whose interests in Shares are held through the Central Clearing and Settlement System established and operated by the HKSCC), to accept the Share Buy-back Offer, it is essential that they provide instructions to their nominee agents of their intentions with regard to the Share Buy-back Offer.

12. WHITEWASH WAIVER

As at the Latest Practicable Date, the Controlling Shareholder Group directly and/or indirectly holds an aggregate of 1,329,429,800 Shares, representing approximately 35.99% of the total issued Shares. Following the allotment and issue of the Consideration Shares to LKSF and assuming the Maximum Number of Shares are bought-back pursuant to the Share Buy-back Offer, the shareholding of the Controlling Shareholder Group in the Company will

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LETTER FROM HSBC

be increased to 1,662,763,133 Shares in aggregate, representing approximately 45.60% of the total issued Shares as enlarged by the allotment and issue of the Consideration Shares and the Share Buy-back Offer. As the implementation of the Proposal will increase the Controlling Shareholder Group's aggregate holding of voting rights of the Company by more than 2%, in the absence of the Whitewash Waiver, LKSF would be under an obligation pursuant to Rule 26 of the Takeovers Code to make a mandatory general offer for all the Shares not already owned or agreed to be acquired by the Controlling Shareholder Group.

An application has been made to the Executive for the Whitewash Waiver pursuant to Note 1 of the Notes on dispensations from Rule 26 of the Takeovers Code. The Whitewash Waiver, if granted by the Executive, will be subject to, among other things, (i) the Whitewash Waiver having been approved by at least 75% of the votes cast by the Independent Shareholders at the EGM and (ii) each of the Proposed Acquisition and the Share Buy-back Offer having been approved by more than 50% of the votes cast by the Independent Shareholders at the EGM.

If the Share Buy-back Offer or the Whitewash Waiver is not approved by the Independent Shareholders by way of poll at the EGM, or if the latter is not granted by the Executive, the Proposal (including the Share Buy-back Offer) will immediately lapse.

13. RESPONSIBILITY FOR DOCUMENTS

All communications, notices, Forms of Acceptance, the Title Documents and remittances to be delivered or sent by, or from any Shareholder will be delivered or sent by, to and from them, or their designated agents, at their risk and none of the Company, HSBC, the Hong Kong Share Registrar or any of their respective directors or any other persons involved in the Share Buy-back Offer accepts any liability for any loss or any other liabilities whatsoever which may rise as a result.

14. SETTLEMENT

Subject to the Share Buy-back Offer becoming unconditional and provided that a duly completed Form of Acceptance, accompanied by the relevant Title Documents are received by the Hong Kong Share Registrar by not later than the Latest Acceptance Time and are or are deemed to be in order, the Hong Kong Share Registrar will inform the relevant Accepting Shareholder by ordinary post of the buy-back of its/his/her Shares. At the same

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LETTER FROM HSBC

time, the Hong Kong Share Registrar will send, by ordinary post at that Accepting Shareholder's risk, a remittance for such total amount as is due to that Accepting Shareholder under the Share Buy-back Offer, subject to deduction pursuant to paragraph 5(e) in the section headed "Terms and Conditions of the Share Buy-back Offer" in "Appendix I - Terms of the Share Buy-back Offer" to this Circular and Offer Document, as soon as possible, but in any event within 7 Business Days following the close of the Share Buy-back Offer.

If the Shares of an Accepting Shareholder in respect of which the Share Buy-back Offer has been accepted are not bought-back by the Company in full, the Title Documents in respect of the balance of such Shares or a replacement certificate therefor will be returned or sent to it/him/her by ordinary post at its/his/her own risk, as soon as possible, but in any event within 7 Business Days following the close of the Share Buy-back Offer.

If the Share Buy-back Offer does not become unconditional, the Title Documents will be returned and/ or sent to each Accepting Shareholder (by ordinary post, at that Accepting Shareholder's own risk) within 10 days of the lapse of the Share Buy-back Offer. Where any Accepting Shareholder has sent one or more transfer receipt(s) and in the meantime one or more Share certificate(s) has/have been collected on that Shareholder's behalf in respect thereof, that Accepting Shareholder will be sent (by ordinary post, at that Accepting Shareholder's own risk) such Share certificate(s) in lieu of the transfer receipt(s).

15. TAXATION

Qualifying Shareholders are recommended to consult their own professional advisers if they are in any doubt as to the taxation implications of their acceptance of the Share Buy-back Offer. It is emphasised that none of the Company, its ultimate beneficial owners and parties acting in concert with any of them, HSBC, the Independent Financial Adviser, the Hong Kong Share Registrar or any of their respective directors or any persons involved in the Share Buy-back Offer accepts responsibility for any taxation effects on, or liabilities of, any person or persons as a result of acceptance of the Share Buy-back Offer by the Qualifying Shareholders.

16. EGM

A notice convening the forthcoming EGM to be held at 1st Floor, Harbour Grand Kowloon, 20 Tak Fung Street, Hung Hom, Kowloon, Hong Kong at 4:30 p.m. on Thursday, 13 May 2021 (or as soon thereafter as the AGM to be held at 3:30 p.m. on the same day shall have concluded or adjourned or, if there is (i) a tropical cyclone warning signal no. 8 or above; or (ii) a black rainstorm warning signal; or (iii) extreme condition caused by super typhoon in force in Hong Kong at 9:00 a.m. on Thursday, 13 May 2021, at the same time and place on Tuesday, 18 May 2021) for the purpose of considering and, if thought fit, approving, among other things, the resolutions in respect of the Share Buy-back Offer and the Whitewash Waiver respectively, is set out on pages N-1 to N-4 of this Circular and Offer Document and a proxy form for use at the EGM is also enclosed.

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LETTER FROM HSBC

17. GENERAL

Shareholders are strongly advised to consider carefully the information in (i) the "Letter from the Board" (as set out on pages 23 to 55 of this Circular and Offer Document);

the recommendation of the Independent Board Committee in respect of the Proposal (including the Share Buy-back Offer and the Whitewash Waiver) included in the "Letter from the Independent Board Committee" (as set out on pages 67 to 68 of this Circular and Offer Document); and (iii) the advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders in respect of the Proposal (including the Share Buy-back Offer and the Whitewash Waiver) included in the "Letter from the Independent Financial Adviser" (as set out on pages 69 to 144 of this Circular and Offer Document), and to consult their professional advisers as they see fit.

Further details on the terms and conditions of the Share Buy-back Offer including, amongst other things, procedures for acceptance and settlement, acceptance period and taxation matters, are set out in Appendix I to this Circular and Offer Document and in the Form of Acceptance.

Your attention is also drawn to the information set out in the appendices to this Circular and Offer Document, which form part of this Circular and Offer Document.

It should be noted that dealings in the Shares will continue during the period when the Conditions remain unfulfilled. Those Shareholders selling their Shares and persons purchasing Shares during such period will accordingly bear the risk that the Share Buy-back Offer may not become unconditional. If any Shareholder or other person contemplating selling or purchasing any Shares during this period is in any doubt about his/her/its position, it is recommended that he/she/it should consult his/her/ its professional advisers.

Yours faithfully,

For and on behalf of

The Hongkong and Shanghai Banking Corporation Limited

Stephen J. Clark

Managing Director, Advisory

Global Banking, Asia-Pacific

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

The following is the text of a letter from the Independent Board Committee to the Independent Shareholders in respect of the Proposal (including the Proposed Acquisition, the Share Buy-back Offer and the Whitewash Waiver) for inclusion in this Circular and Offer Document.

CK ASSET HOLDINGS LIMITED

長江實業集團有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1113)

27 April 2021

To the Independent Shareholders

Dear Sir or Madam,

DISCLOSEABLE AND CONNECTED TRANSACTION AND SPECIAL DEAL RELATING TO THE PROPOSED ACQUISITION OF THE TARGET HOLDCOS IN CONSIDERATION FOR THE ISSUE OF
CONSIDERATION SHARES UNDER A SPECIFIC MANDATE
CONDITIONAL CASH OFFER BY HSBC ON BEHALF OF THE COMPANY TO BUY-BACK UP TO 380,000,000 SHARES

AT HK$51.00 PER SHARE

AND

(3) APPLICATION FOR THE WHITEWASH WAIVER

We have been appointed by the Board to form the Independent Board Committee to advise you in respect of the Proposal (including the Proposed Acquisition, the Share Buy-back Offer and the Whitewash Waiver), details of which are set out in the letter from the Board in the circular and offer document issued by the Company dated 27 April 2021 (the "Circular and Offer Document"), of which this letter forms part. Capitalised terms used in this letter shall have the same meanings as defined in the Circular and Offer Document unless the context requires otherwise.

Your attention is drawn to the "Letter from HSBC" set out on pages 56 to 66 of the Circular and Offer Document and Appendix I to this Circular and Offer Document which contain the terms of the Share Buy-back Offer, and the "Letter from the Independent Financial Adviser" set out on pages 69 to 144 of the Circular and Offer Document which contains its advice and recommendation to us in respect of the Proposal as well as the principal factors and reasons for its advice and recommendation.

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

Having taken into account the factors and reasons considered by, and the opinion of, the Independent Financial Adviser as stated in the aforementioned letter of advice, we are of the opinion that:

the entering into of the Share Purchase Agreement (including the Proposed Acquisition contemplated thereunder) is in the ordinary and usual course of business of the Group, the terms of Share Purchase Agreement (including the Proposed Acquisition contemplated thereunder) and the Specific Mandate are fair and reasonable so far as the Independent Shareholders are concerned and on normal commercial terms, and the Proposed Acquisition and the Specific Mandate are in the interests of the Company and the Shareholders as a whole;
the terms of the Share Buy-back Offer are fair and reasonable so far as the Independent Shareholders are concerned and that the Share Buy-back Offer is in the interests of the Company and the Shareholders as a whole; and
the terms of the Whitewash Waiver and the Special Deal are fair and reasonable so far as the Independent Shareholders are concerned and that the Whitewash Waiver and the Special Deal are in the interests of the Company and the Shareholders as a whole.

We therefore recommend the Independent Shareholders to vote in favour of the resolutions to approve the Matters for Approval at the EGM.

We also concur with the advice of the Independent Financial Adviser to the Qualifying Shareholders to accept the Share Buy-back Offer. However, the Qualifying Shareholders are reminded to monitor the market price of the Shares during the Offer Period. If during the Offer Period, it transpires that the market price of the Shares exceeds the Offer Price and the sale proceeds (net of the transaction costs) exceed the net proceeds to be received under the Share Buy-back Offer, the Qualifying Shareholders who wish to realise their investments in the Company in whole or in part should, if they are able to do so, seek to sell their Shares in the market instead of accepting the Share Buy-back Offer. On the other hand, for those Qualifying Shareholders who, after considering the information contained in the Circular and the Offer Document, would like to participate in the future prospects of the Group following completion of the Share Buy-back Offer, they should consider retaining all or part of their Shares.

Yours faithfully,

Mr. CHEONG Ying Chew, Henry

Mr. CHOW Nin Mow, Albert

Ms. HUNG Siu-lin, Katherine

Mr. Colin Stevens RUSSEL

Mr. Donald Jeffrey ROBERTS

Mr. Stephen Edward BRADLEY

Independent Board Committee

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

ANGLO CHINESE

CORPORATE FINANCE, LIMITED

www.anglochinesegroup.com

The Independent Board Committee and

the Independent Shareholders of

CK Asset Holdings Limited

27th April, 2021

Dear Sirs,

DISCLOSEABLE AND CONNECTED TRANSACTION AND SPECIAL DEAL RELATING TO THE PROPOSED ACQUISITION OF

THE TARGET HOLDCOS

IN CONSIDERATION FOR THE ISSUE OF CONSIDERATION SHARES

UNDER A SPECIFIC MANDATE;

1. CONDITIONAL CASH OFFER BY HSBC ON BEHALF OF THE COMPANY TO BUY-BACK UP TO 380,000,000 SHARES
2. 1. AT HK$51.00 PER SHARE; AND
  2. APPLICATION FOR THE WHITEWASH WAIVER
INTRODUCTION
We refer to our engagement as the Independent Financial Adviser to advise the

Independent Board Committee and the Independent Shareholders in relation to the Proposal (including the Proposed Acquisition, the Share Buy-back Offer and the Whitewash Waiver). The terms used in this letter shall have the same meaning as defined in the Circular and Offer Document, of which this letter forms part, unless the context requires otherwise.

As at the Latest Practicable Date, the Controlling Shareholder Group directly and, or indirectly holds an aggregate of approximately 35.99% of the total issued Shares. LKSF is a person acting in concert with, and may be regarded as an associate of, Mr. Li Tzar Kuoi, Victor, the Chairman and Managing Director of the Company, and may therefore be regarded as a connected person of the Company under the Listing Rules.

As the highest applicable percentage ratio in respect of the Proposed Acquisition exceeds 5% but is less than 25%, such transaction constitutes a discloseable transaction of the Company under Chapter 14 of the Listing Rules, while the highest applicable percentage ratio in respect of the Proposed Acquisition exceeds 5%, such acquisition constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules. Accordingly, the Proposed Acquisition is subject to the reporting, announcement, circular and independent shareholders' approval requirements under Chapter 14A of the Listing Rules.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Pursuant to the Listing Rules and the Takeovers Code, the Independent Board Committee comprising all the independent non-executive Directors, who have no interest in the Proposal other than as Shareholders, has been formed to advise to the Independent Shareholders on whether or not the Proposal (including the Proposed Acquisition, the Share Buy-back Offer and the Whitewash Waiver), and the transactions contemplated thereunder is fair and reasonable, and as to voting in connection the Proposal (including the Proposed Acquisition, the Share Buy-back Offer and the Whitewash Waiver). We have been appointed to advise the Independent Board Committee and the Independent Shareholders accordingly.

In formulating our opinion and recommendations, we have reviewed, amongst other things, (i) published information on the Group, including their audited annual financial statements for the three financial years, the last of which ended on 31st December, 2020; (ii) the information in the Announcement, the announcement of the Company dated 14th April, 2021 in relation to the revision of the Maximum Number of Shares to be bought back under the Share Buy-back Offer, and the Circular and Offer Document; (iii) the corresponding financial statements of the Target Companies; (iv) the valuation reports prepared by the Property Valuers; (v) the precedent utility assets related transactions in Europe; and (vi) the past performance of the Shares. We consider the information we have reviewed is sufficient to reach the conclusions set out in this letter and have no reason to doubt the truth, accuracy or completeness of the information provided to us by the Company, and have been advised by the Directors that, to the best of their knowledge, no material information has been omitted or withheld from the information supplied to us or the information relating to the Company referred to in the Circular and Offer Document. We have relied on the accuracy of the information, facts and representations and the opinions expressed by the Company referred to in the Circular and Offer Document. We have relied on the information so provided to us and referred to in the Announcement, the announcement of the Company dated 14th April, 2021, and the Circular and Offer Document, and we have not verified it or conducted an independent investigation into the business and affairs of the Group, or any of their respective subsidiaries or associates.

Apart from normal professional fees for our services to the Company in connection with the engagement described above, no arrangement exists whereby we will receive any fees or benefits from the Company, its subsidiaries, directors, chief executive, substantial shareholders or any associates of any of them. As at the Latest Practicable Date, we did not have any relationship with, or interest in, the Company or any other parties that could reasonably be regarded as relevant to our independence. In the two years prior to the Latest Practicable Date, we have not previously acted as the independent financial adviser to the Company's other transactions. Accordingly, we consider that we are independent pursuant to Rule 13.84 of the Listing Rules.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

THE PROPOSAL

Background

On 18th March, 2021 (after trading hours), the Board announced the Proposal, which comprised (a) the Proposed Acquisition of the Target Holdcos from LKSF in consideration of the issue of the Consideration Shares; and (b) the original share buy-back proposal (including the original share buy-back offer) which was revised and announced by the Company on 14th April, 2021 (the Share Buy-back Proposal).

Part A - The Proposed Acquisition

On 18th March, 2021 (after trading hours), the Company (as the purchaser) and LKSF (as the seller) entered into the Share Purchase Agreement pursuant to which the Company agreed to purchase, and LKSF has agreed to sell or procure the sale of, the Target Holdcos for the Purchase Price of HK$17 billion. Such Purchase Price will be satisfied in full by the issue of 333,333,333 Consideration Shares to LKSF (or a subsidiary of LKSF) pursuant to the Specific Mandate to be sought from the Independent Shareholders at the EGM.

Completion of the Proposed Acquisition is conditional upon, among other things, the Proposed Acquisition, the Specific Mandate, the Share Buy-back Offer and the Whitewash Waiver being approved by the Independent Shareholders at the EGM. Please refer to the section headed "(vi) Principal terms of the Proposed Acquisition" below for the details of the conditions.

Part B - The Share Buy-back Proposal

The Board announced the original share buy-back proposal, pursuant to which the Company proposed to buy-back for cancellation up to 333,333,333 Shares (the "Original Maximum Number of Shares"), which is the same as the number of Consideration Shares to be issued by the Company for the Proposed Acquisition. On 14th April, 2021, the Board further announced that the maximum number of Shares to be bought back under the Share Buy-back Offer will be increased from 333,333,333 Shares to the Maximum Number of Shares of 380,000,000 Shares, representing approximately 10.29% of the total issued Shares as at the Latest Practicable Date. Such increase was made based on feedback received from Shareholders after the Proposal was announced and with the aim of enlarging the expenditure by the Company of excess cash.

The Share Buy-back Proposal will be implemented through (i) the Share Buy-back Offer to all Qualifying Shareholders (so that all Qualifying Shareholders can participate should they wish); and (ii) possible subsequent on-market share buy-backs to eliminate all or part of the shortfall at a price not exceeding the Offer Price following the completion of the Share Buy-back Offer if the number of valid acceptances received under the Share Buy-back Offer is less than the Maximum Number of Shares.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The Share Buy-back Offer

Pursuant to the Share Buy-back Offer, the offer will be made by HSBC on behalf of the Company, subject to the Offer Conditions, to buy-back for cancellation up to the Maximum Number of Shares, being 380,000,000 Shares (representing approximately 10.29% of the total issued Shares as at the Latest Practicable Date), which is the sum of (i) the number of Consideration Shares to be issued pursuant to the Proposed Acquisition, being 333,333,333 Shares; and (ii) an additional 46,666,667 Shares at the price of HK$51.00 per Share, from the Qualifying Shareholders.

The Share Buy-back Offer is conditional upon, among other things, the Share Buy-back Offer, the Proposed Acquisition, and the Whitewash Waiver being approved by the Independent Shareholders at the EGM. The Share Buy-back Offer, if accepted in full, will result in the Company paying HK$19.38 billion to the Accepting Shareholders.

The Proposed Acquisition and the Share Buy-back Offer are inter-conditional on each other.

Please refer to the section headed "(vii) Principal terms of the Share Buy-back Offer" below for the details of the Share Buy-back Offer.

Possible on-market share buy-back

Subject to the fulfilment or waiver (as applicable) of the conditions to the Proposal, it is expected that the Proposal will be completed around the end of the first half of 2021.

(ii) Information of LKSF

LKSF is a charitable organisation established to nurture a culture of giving and to co-ordinate donations towards educational, healthcare, cultural and community welfare projects. LKSF is a person acting in concert with, and may be regarded as an associate of, Mr. Li Tzar Kuoi, Victor, the Chairman and Managing Director of the Company.

(iii) Information of the Group

The Company is a leading multinational corporation and has diverse capabilities with activities encompassing (i) property businesses including property development and investment, hotel and serviced suite operation, as well as property and project management;

investment in infrastructure and utility asset operations; (iii) pub operation; and (iv) aircraft leasing. The Company mainly operates its business in Hong Kong, the Mainland, the United Kingdom and Singapore.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Property businesses

Development of residential and commercial properties in Hong Kong and the Mainland is the core of the Group's property businesses. The majority of the Group's development land bank is in Hong Kong and the Mainland. The Group's investment properties and hotel and serviced suite properties are mostly located in Hong Kong. In addition, the Group also provides property management and related services (including its share of joint ventures) to properties developed by the Group.

As at 31st December, 2020, the Group had 32.5%, 26.9% and 18.1% of equity interests in Hui Xian Real Estate Investment Trust (stock code: 87001), Fortune Real Estate Investment Trust (stock code: 778) and Prosperity Real Estate Investment Trust (stock code: 808), respectively.

Investment in infrastructure and utility asset operation

The Group has interests in three joint ventures, namely CK William UK Holdings Limited (a company incorporated in the United Kingdom for investment in the DUET Group), CKP (Canada) Holdings Limited (a company incorporated in Canada for investment in the Reliance Group) and Sarvana S.à r.l. (a company incorporated in Luxembourg for investment in the ista Group), which operate overseas infrastructure and utility businesses. In addition, the Group has also invested in the economic benefits arising from the performance of the following infrastructure and utility assets businesses as at 31st December, 2020:

				Interest in
				economic
Company		Principal activity		benefit

Park'N Fly		An off-airport car park provider in Canada		20%
UK Rails		A rolling stock operating company in the United	20%
	Kingdom

Northumbrian	A regulated water and sewerage company in	16%
Water	England and Wales
Wales & West	A gas distributor that serves Wales and the South	12%
Gas Networks	West of England
Dutch Enviro	An energy-from-waste company in the Netherlands	14%
Energy

Australian Gas	A distributor of natural gas in Australia	11%
Networks

Source: 2020 annual report of the Company

Pursuant to the Economic Benefits Agreement dated 31st August, 2018 entered into between Henley Riches Limited (a subsidiary of CKHH), CKHH and Team Ace Enterprises Limited (a subsidiary of the Company), the Group will receive 40% of the economic benefits comprising amounts which include dividends and other distributions declared by CKII to CKH and other proceeds or payments (including interest payments) received by CKH from CKII from and including 31st October, 2018 arising from the performance of a

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

portfolio of infrastructure assets, including Northumbrian Water, Wales & West Utilities and Dutch Enviro Energy. Please refer to the Company's announcement dated 31st August, 2018 for the details of the Economic Benefits Agreement.

Upon Completion of the Proposed Acquisition, LKSF and LKSGF will cease to have any interest in the Target Companies, and the minority interests in the Target Companies held by LKSF and LKSGF will be amalgamated with the economic interests in the same assets held by the Group. Please refer to the sub-section headed "(v) Corporate and shareholding structures" for the details of the corporate and shareholding structures before and after Completion of the Proposed Acquisition.

Pub operation and aircraft leasing

In October, 2019, the Group successfully completed the acquisition of Greene King plc ("Greene King"), which is an integrated brewer and pub retailer operating about 2,700 pubs, restaurants and hotels across England, Wales and Scotland.

As at 31st December, 2020, the Group (including interest in joint ventures) owned 120 narrow body aircraft and 5 wide body aircraft with an average age of 6.8 years and an average remaining lease term of 4.5 years, and had commitments of HK$9.6 billion for acquisition of 20 aircraft.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Business and financial performance

Set out below is the breakdown of the Group's principal sources of revenue and profits for the past three financial years, the last of which ended on 31st December, 2020.

Table 1 - Financial performance of the Group for the past three financial years

	For the year ended 31st December,
	2018		2019	2020
(HK$ million)	(audited)	(audited)	(audited)
Group revenue	50,368		82,382	59,825
Share of revenue from joint ventures	14,113		13,937	14,327

Total	64,481	96,319	74,152
Group revenue including share of
revenue from joint ventures
Property sales	34,767	64,108	38,670
Property rental	7,635	7,450	6,751
Hotel and serviced suite operation	5,152	4,185	2,055
Property and project management	884	868	836
Infrastructure and utility asset operation	13,094	12,905	13,490
Pub operation	-	3,611	9,530
Aircraft leasing	2,949		3,192	2,820
Total	64,481	96,319	74,152
Profit attributable to the Shareholders	40,117	29,134	16,332
Earnings per share (HK$)	10.85	7.89	4.42

Sources: Annual reports of the Company for the relevant years

For the financial year ended 31st December, 2020 compared to 2019

For the year ended 31st December, 2020, the Group's revenue (including share of joint ventures) amounted to approximately HK$74,152 million, representing a year-on-year decrease of approximately 23% from the year ended 31st December, 2019. The decrease in revenue was mainly due to the reduction in revenue from properties sales. The reported earnings for the year ended 31st December, 2020 were HK$16,332 million, a decrease of approximately 44% as compared to 2019, which was mainly due to the ongoing adverse impact of the COVID-19 pandemic on the Group's businesses.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

For the financial year ended 31st December, 2019 compared to 2018

For the year ended 31st December, 2019, the Group's revenue (including share of joint ventures) amounted to approximately HK$96,319 million, representing a year-on-year increase of 49% from the year ended 31st December, 2018. Such increase in revenue was mainly attributable to the increase in revenue from property sales. In addition, Greene King contributed a total revenue of HK$3,611 million after the Group's acquisition in October, 2019. The reported earnings for the year ended 31st December, 2019 were HK$29,134 million, a decrease of 27% as compared to 2018, mainly due to a substantial gain on disposal of an investment property, The Center, in 2018's results.

Financial position

Set out below is a summary of the financial position of the Group as at 31st December 2018, 2019 and 2020:

Table 2 - Financial position of the Group for the past three financial years

	As at 31st December,
	2018		2019	2020

(HK$ million)	(audited)	(audited)	(audited)
Non-current assets	255,020		317,542		327,968
Current assets	220,925		190,515		192,735
Total assets	475,945		508,057		520,703
Non-current liabilities	80,470		97,067		82,662
Current liabilities	54,447		49,758		70,823
Total liabilities	134,917		146,825		153,485
Shareholders' funds	323,520		344,253		354,639
Shareholders' funds per share (HK$)	87.59		93.21		96.02
Net debt to net total capital	3.6%		5.2%		4.8%

Sources: Annual reports of the Company for the relevant years

The Group's assets comprised mainly properties for sale, investment properties, fixed assets and joint ventures, which in aggregate represented more than 78% of total assets as at 31st December, 2020. Bank and other loans of HK$77,893 million as at 31st December, 2020 represented approximately 51% of the Group's total liabilities. Shareholders' funds per Share have been growing in the past three years, while the net debt to net total capital ratio has been stable.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Information of the Target Holdcos and Target Companies
Eagle Frame Limited and UK Power Networks

LKSGF.

Eagle Frame Limited holds an indirect 20% shareholding interest in UK Power Networks, which was acquired for an initial acquisition cost of HK$6.3 billion in 2010. Other than the indirect shareholding interest in UK Power Networks, Eagle Frame Limited does not hold any other assets or businesses.

Set forth below is the selected financial information of Eagle Frame Limited for the two financial years ended 31st December, 2020.

			Profit before (i)
			taxation; (ii) gain on
			fair value changes of
			financial assets; and (iii)
	Net assets	exchange gain/	Profit before
	(loss)(note	1)		taxation(note	2)
	as at 31st
	for the financial year ended 31st December,
(HK$	December,
billion)	2020	2019			2020	2019		2020
	8.0		0.6			0.6	0.8		2.6

Notes 1 and 2: Please refer to notes for the general disclosure on page 85 below.

UK Power Networks is one of the United Kingdom's largest power distributors which owns, operates, and manages three of the 14 electricity Distribution Networks Operators ("DNOs") in the United Kingdom with a distribution area that covers London, the south east and the east of England, distributing approximately 30% of the electrical power in the country. UK Power Networks also operates in a non-regulated business which comprises commercial contracts to distribute electricity to a number of renowned businesses and landmarks such as four London airports, the Channel Tunnel Rail Link, and the London Underground.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Set forth below is the breakdown of UK Power Networks' revenue and earnings before interest, taxes, depreciation and amortisation (the "EBITDA") for the three financial years ended 31st March, 2020:

	For the year ended 31st March,
(GBP billion)	2018		2019	2020
Revenue	1.7		1.7		1.7
EBITDA	1.2	1.2		1.3

Sources: Annual reports of UK Power Networks

UK Power Networks operates within a regulated environment with the majority of its revenue being set as part of a price control review by the industry regulator, the Office of Gas and Electricity Markets ("Ofgem"). The performance of the regulated networks businesses is benchmarked against other licensed DNOs with the most efficient networks establishing an "efficient frontier" or standard against which the other DNOs are evaluated. Ofgem sets allowances and a regime of potential incentives and penalties based on the detailed assessment of business plans submitted by the DNOs (the "Allowed Revenues").

For the year ended 31st March, 2020, UK Power Networks recorded a revenue of approximately GBP1.7 billion and an EBITDA of approximately GBP1.3 billion, representing a slight increase of 3.4% and 5.5%, respectively, as compared to the previous year. Such increase was mainly attributable to the tariff increases within the regulatory price control along with a reduction in operating cost. The regulated service segment which represents the power distribution business contributed 92.5% of the company's revenue, and 94.4% of the segment profit before corporate cost. For the year ended 31st March, 2019, UK Power Networks recorded a revenue of approximately GBP1.7 billion and an EBITDA of approximately GBP1.2 billion, representing a slight decrease of approximately 0.7% and 1.1%, respectively, as compared to the previous year. Such decrease was mainly attributable to tariff reduction applicable from April, 2018 and an increase in operating cost due to inflationary pressures but partly offset by cost control measures across the group. The regulated service segment contributed approximately 91.7% of the company's revenue, and 94.2% of the operating profit before corporate cost.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Set forth below illustrates the key financial information of UK Power Networks as at 31st March, 2018, 2019 and 2020:

	As at 31st March,
(GBP billion)	2018		2019	2020
Total assets	13.5		14.2		14.9
Total liabilities	10.2	10.5		10.7
Net asset value	3.3	3.7		4.1
Regulated asset value (RAV) (note 1)	6.0	6.2		6.3

Sources: Annual reports of UK Power Networks

Notes:

RAV is the value ascribed by the relevant regulator to the capital employed in the company's regulated business (i.e. the regulated asset base).
Due to rounding, numbers presented may not add up, or subtract from, precisely to the totals indicated.

The total assets of the UK Power Networks showed an increasing trend in the past three years of which a significant portion of the assets comprised property, plant and equipment, as well as goodwill and intangible assets, which together contributed approximately 94.2%, 93.1%, and 92.6% of the total assets as at 31st March, 2018, 2019, and 2020, respectively.

The total liabilities of UK Power Networks showed an increasing trend in the past three years, of which a significant portion of the liabilities comprised external borrowings, accruals, and deferred income, which together contributed to about 74.8%, 77.8% and 78.2% of the total liabilities as at 31st March, 2018, 2019, and 2020, respectively.

The RAV is the net value of the capital invested in regulated assets by a utility company, less the accumulated depreciation of such assets allowed by Ofgem. It is an actuarial value calculated by Ofgem and is used to determine the prices that the utility companies can charge their customers. The RAV of UK Power Networks was GBP4.4 billion as at 31st December, 2010, and increased to GBP6.3 billion as at 31st March, 2020, which represented a compound annual growth rate ("CAGR") of approximately 4.0%.

Mondrem Corporation and Northumbrian Water

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Mondrem Corporation also holds (i) an indirect 20% shareholding interest in Northumbrian Services Limited and (ii) UK Water (2011) Limited, neither of which contributes materially to the financial results of Mondrem Corporation.

Set forth below is the selected financial information of Mondrem Corporation for the two financial years ended 31st December, 2020.

Profit before (i) taxation;

gain on fair value changes of financial

	Net assets	assets; and (iii) exchange	Profit before
	gain/(loss)(note	1)		taxation(note	2)
	as at 31st
	for the financial year ended 31st December,
(HK$	December,
billion)	2020	2019		2020	2019		2020
	3.8		0.3			0.2		0.5	0.6

Notes 1 and 2: Please refer to notes for the general disclosure on page 85 below.

Northumbrian Water is one of the 10 regulated water and sewerage companies in England and Wales and supplies water and sewerage services in the north east of England and supplies water services to the south east of England. In the north east, the business comprises the supply of both potable and raw water and the collection, treatment and disposal of sewage and sewage sludge, serving approximately 2.7 million people. In the south, it supplies water services to approximately 1.6 million people in Essex and approximately 0.3 million people in Suffolk.

Northumbrian Water operates within a strict regulatory environment. The Water Services Regulation Authority ("Ofwat") regulates prices and levels of customer service, while the Drinking Water Inspectorate ("DWI") monitors drinking water quality and the Environment Agency ("EA") covers environmental protection.

Set forth below is the breakdown of Northumbrian Water's revenue and EBITDA for the three financial years ended 31st March, 2018, 2019 and 2020:

	For the year ended 31st March,
(GBP billion)	2018		2019	2020
Revenue	0.9		0.9		0.9
EBITDA	0.5	0.5		0.5

Sources: Annual reports of Northumbrian Water

Similar to UK Power Networks, Northumbrian Water also operates within a regulated environment with the majority of its revenue being set as part of a price control review by the Ofwat.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

For the year ended 31st March, 2020, Northumbrian Water recorded revenue of approximately GBP0.9 billion and EBITDA of approximately GBP0.5 billion, representing a slight increase of 3.4% and 3.7% compared to the previous year. The increase in revenue and EBITDA was mainly attributed to the generic increase in revenue generated from continuing operations from external customers in United Kingdom, which represented 97.9% of the total revenue for the financial year ended 31st March, 2020. For the year ended 31st March, 2019, Northumbrian Water recorded revenue of approximately GBP0.9 billion and EBITDA of GBP0.5 billion, representing a slight increase of 4.2% and 0.3% compared to the previous year, resulting from the generic increase in revenue from the company's continuing operations in United Kingdom, which represented approximately 97.8% of the total revenue generated from the company's water and sewerage.

Set forth below illustrates the key financial information of Northumbrian Water as at 31st March, 2018, 2019 and 2020:

	As at 31st March,
(GBP billion)	2018		2019	2020
Total assets	4.8		4.9		5.1
Total liabilities	5.5	5.5		5.7
Net liabilities	0.6	0.6		0.5
Regulatory capital value (RCV)	4.2	4.3		4.3

Sources: Annual reports of Northumbrian Water

Note: Due to rounding, numbers presented may not add up, or subtract from, precisely to the totals indicated.

The asset base of Northumbrian Water showed a steadily increasing trend from 31st March, 2018 to 31st March, 2020, of which a significant portion of the assets comprised property, plant and equipment and intangible assets.

The liabilities of Northumbrian Water remained stable as at 31st March, 2019 compared to that of previous year and increased slightly by 3.4% to GBP5.7 billion as at 31st March, 2020. The significant portion of the liabilities comprised external borrowings and capitalised grants, which contributed to about 67.0%, 66.0% and 65.6% of the total liabilities as at 31st March, 2018, 2019, and 2020, respectively.

Similar to the RAV of UK Power Networks, the RCV of Northumbrian Water is the net value of the capital invested in regulated assets, less the accumulated depreciation of such assets allowed by Ofwat. The RCV of Northumbrian Water was GBP3.6 billion as at 31st March, 2012, and increased to GBP4.3 billion as at 31st March, 2020, which represented a CAGR of approximately 2.2%.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Moonstone Global Investment Limited and Wales & West Utilities

Set forth below is the selected financial information of Moonstone Global Investment Limited for the two financial years ended 31st December, 2020.

Profit before (i) taxation;

gain on fair value changes of financial

	Net assets	assets; and (iii) exchange	Profit before
	gain/(loss)(note	1)		taxation(note	2)
	as at 31st
	for the financial year ended 31st December,
(HK$	December,
billion)	2020	2019		2020	2019		2020
	1.1		0.05			0.05		0.07	0.07

Notes 1 and 2: Please refer to notes for the general disclosure on page 85 below.

Wales & West Utilities principally operates as one of the eight independently-owned Gas Distribution Networks ("GDN") comprising the Wales and south west of England local distribution zones with a natural gas distribution network length of approximately 35,000 kilometres and serves a total population of approximately 7.5 million. In addition to its gas distribution role, Wales & West Utilities also has obligations under its Gas Transporters' License to provide 24-hour emergency response to all public reported gas escapes in Wales and south west England, irrespective of the cause, and connect gas consumers to the distribution network and provide metering services.

As an Ofgem-regulated business, Wales & West Utilities is subject to price controls set by Ofgem which define its Allowed Revenues (as described under the section of UK Power Networks above). In addition to the regulated revenues permitted by Ofgem, Wales & West Utilities also earns non-regulated revenues, primarily through gas meter work and smart meter installations.

Set forth below illustrates the breakdown of Wales & West Utilities' revenue and EBITDA for each of the three financial years ended 31st March, 2020:

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

	For the year ended 31st March,
(GBP billion)	2018		2019	2020
Revenue	0.4		0.4		0.5
EBITDA	0.2	0.3		0.3

Sources: Annual reports of Wales & West Utilities

For the year ended 31st March, 2020, Wales & West Utilities recorded revenue of approximately GBP0.5 billion and EBITDA of approximately GBP0.3 billion, representing an increase of approximately 10.7% and 18.1% compared to those of the previous year. The increase was mainly attributable to the increase in revenue from gas distribution of GBP46.8 million. For the year ended 31st March, 2019, the Wales & West Utilities recorded revenue of approximately GBP0.4 billion and EBITDA of approximately GBP0.3 billion, representing an increase of approximately 4.5% and 9.2% compared to the previous year. The increase was mainly attributable to the increase in revenue from regulated activities of GBP15.2 million.

Set forth below illustrates the key financial information of Wales & West Utilities as at 31st March, 2018, 2019 and 2020:

	As at 31st March,
(GBP billion)	2018		2019	2020
Total assets	3.5		3.0		3.3
Total liabilities	4.0	3.6		3.9
Net liabilities	0.6	0.6		0.6
RAV	2.1	2.1		2.2

Sources: Annual reports of Wales & West Utilities

Note: Due to rounding, numbers presented may not add up, or subtract from, precisely to the totals indicated.

The asset base of Wales & West Utilities mainly comprised tangible assets, which contributed about 72.8%, 85.8%, and 78.9% of the total assets as at 31st March, 2018, 2019, and 2020, respectively, while the liabilities of Wales & West Utilities principally comprised external borrowings, which contributed about 36.5%, 46.8% and 48.6% of the total liabilities as at 31st March, 2018, 2019, and 2020, respectively.

Similar to the RAV of UK Power Networks, the RAV of Wales & West Utilities is the net value of the capital invested in regulated assets by the utility companies, less the accumulated depreciation of such assets allowed by the Ofgem. It is an actuarial value calculated by the Ofgem and is used to determine the prices that the utility companies can charge on their customers. The RAV of Wales & West Utilities was GBP1.8 billion as at 31st March, 2013, and increased to GBP2.2 billion as at 31st March, 2020, which represented a CAGR of approximately 2.9%.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Gerbera Investments Limited and Dutch Enviro Energy

Gerbera Investments Limited is an investment holding company and a direct wholly owned subsidiary of LKSF. It holds a direct 10% shareholding interest in Dutch Enviro Energy, which was acquired for an initial acquisition cost of HK$0.6 billion in 2013. Other than the direct shareholding interest in Dutch Enviro Energy, Gerbera Investments Limited does not hold any other assets or businesses. Set forth below is the selected financial information of Gerbera Investments Limited for the two financial years ended 31st December, 2020.

Profit before (i) taxation;

gain on fair value changes of financial

	Net assets	assets; and (iii) exchange	Profit before
	gain/(loss)(note	1)		taxation(note	2)
	As at 31st
	for the financial year ended 31st December,
(HK$	December,
million)	2020	2019		2020	2019		2020
	978		52			49		77	310

Notes 1 and 2: Please refer to notes for the general disclosure on page 85 below.

Dutch Enviro Energy owns the largest energy-from-waste player in the Netherlands, which operates five waste treatment plants in Rozenburg and Duiven, as well as four transfer stations in Den Haag, Utrecht and central Rotterdam. It specialises in the processing of various types of residual waste: waste water, paper pulp residue, household and commercial waste, waste wood and hazardous waste. The electricity produced by Dutch Enviro Energy, as well as its steam and heat outputs are sold to nearby businesses and towns under long-term contracts.

Set forth below illustrates the breakdown of Dutch Enviro Energy's revenue and EBITDA for the three financial years ended 31st December, 2020:

	For the year ended 31st December,
(EUR billion)	2018		2019	2020
Revenue	0.2		0.2		0.3
EBITDA	0.1	0.1		0.1

Note: The audited figures of revenue and EBITDA are based on the accounts which were provided by the Company.

For the year ended 31st December, 2020, Dutch Enviro Energy recorded revenue of approximately EUR0.3 billion and EBITDA of EUR0.1 billion, representing an increase of approximately 4.5% and 2.8% compared to the previous year. Such increase was mainly attributable to the first full year of operation of the carbon dioxide capture plant in Duiven. For the year ended 31st December, 2019, Dutch Enviro Energy recorded revenue of approximately EUR0.2 billion and EBITDA of EUR0.1 billion,

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

representing an increase of approximately 8.7% and 8.6%, respectively, compared to the previous year. The increase was mainly attributable to the increase in energy output from a new plant in Rozenburg, the Netherlands for the financial year of 2019.

Set forth below illustrates the key financial information of Dutch Enviro Energy as at 31st December, 2018, 2019 and 2020:

	As at 31st December,
(EUR billion)	2018		2019	2020
Total assets	1.0		1.0		1.0
Total liabilities	0.7	0.8		0.8
Net assets value	0.3	0.3		0.3

Notes:

The audited figures of total assets and total liabilities are based on the accounts which were provided by the Company.
Due to rounding, numbers presented may not add up, or subtract from, precisely to the totals indicated.

The total assets of Dutch Enviro Energy remained relatively stable as at 31st December, 2018, 2019, and 2020, which recorded approximately EUR1.0 billion. The assets of Dutch Enviro Energy mainly comprised property, plant and equipment and goodwill. The liabilities of Dutch Enviro Energy were EUR0.7 billion, EUR0.8 billion and EUR0.8 billion as at 31st December, 2018, 2019 and 2020, respectively, mainly comprising external borrowings.

Notes to the tables above in relation to the selected financial information on the Target Holdcos for the last two financial years:

For each Target Holdco, profit before (i) taxation; (ii) gain on fair value changes of financial assets; and (iii) exchange gain / (loss) and profit (a) after taxation; (b) before gain on fair value changes of financial assets; and (c) before exchange gain/(loss) are the same, given there were no tax expenses for each of the financial years ended 31st December, 2019 and 2020.
Profit before taxation and profit for the year for each Target Holdco are the same given there were no tax expenses for each of the financial years ended 31st December, 2019 and 2020.

Additional consideration about the financial information for the Target Holdcos

The Target Holdcos hold 20%, 20%, 10% and 10% of the shareholding interest in UK Power Networks, Northumbrian Water, Wales & West Utilities and Dutch Enviro Energy, respectively. The Target Holdcos' investments in the Target Companies and loans to the Target Companies are accounted for as financial assets at fair value through profit or loss and financial assets at amortised costs, respectively. Dividend income and interest income from the Target Companies are recognised in profit or loss of the Target Holdcos.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Based on the respective audited financial statements of each of the Target Holdcos for the year ended 31st December, 2020, the aggregated audited consolidated net asset value of the Target Holdcos as at 31st December, 2020 was approximately HK$13,879 million. Before the date of Completion, a subsidiary of LKSF will subscribe for new share(s) in Mondrem Corporation for a consideration of approximately HK$1,948 million, which will be satisfied by way of the capitalisation of intercompany loans owed by Mondrem Corporation to a subsidiary of LKSF. It is expected that the intercompany loan capitalisation will increase the consolidated net asset value of the Target Holdcos by approximately HK$1,948 million to approximately HK$15,827 million.

Corporate and shareholding structures

As at the Latest Practicable Date, the Group has invested in the economic benefits arising from the performance of three of the Target Companies (namely, Dutch Enviro Energy, Northumbrian Water and Wales & West Utilities). Set out below is the simplified corporate structures of the group of companies involved in the Proposal before and after Completion of the Proposed Acquisition.

Pre-transaction

Post-transaction

Controlling

Other Shareholders

Controlling

Other Shareholders

Shareholder Group

Issue of the

35.99%

64.01%

41.291-45.602%

54.402-58.711%

Consideration

Buy-back

Company

Acquire Target

Holdcos

Infrastructure

Property business

Infrastructure

Pub operation/

Property business

Infrastructure

Pub operation/

Aircraft leasing

Interests in Target Companies:

Existing investment portfolio3:

Enlarged investment portfolio3:

• UK Power Networks (20%)

• Northumbrian Water (16%)

• Australian Gas

• UK Power Networks (20%)

• Australian Gas

• Northumbrian Water (20%)

• Wales & West Utilities (12%)

Networks (11%)

• Northumbrian Water (36%)

Networks (11%)

• Wales & West Utilities (10%)

• Dutch Enviro Energy (14%)

• DUET (40%)

• Wales & West Utilities (22%)

• DUET (40%)

• Dutch Enviro Energy (10%)

• UK Rails (20%)

• ista (65%)

• Dutch Enviro Energy (24%)

• ista (65%)

• Park'N Fly (20%)

• Reliance (75%)

• UK Rails (20%)

• Reliance (75%)

• Park'N Fly (20%)

Notes:

Assuming (i) completion of the issue of the Consideration Shares; (ii) no Shares are bought back pursuant to the Share Buy-back Proposal; and (iii) no Shares other than the Consideration Shares are issued from the dates of the Announcements up to and including the date of completion of the Proposal.
Assuming (i) completion of the issue of the Consideration Shares; (ii) the Maximum Number of Shares are bought back pursuant to the Share Buy-back Proposal; and (iii) no Shares other than the Consideration Shares are issued from the dates of the Announcements up to and including the date of completion of the Proposal.
The Company owns existing economic interests in Northumbrian Water (16%), Wales & West Utilities (12%), Dutch Enviro Energy (14%), UK Rails (20%), Park'N Fly (20%) and Australian Gas Networks (11%).

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Before Completion of the Proposed Acquisition

		Ownership interests						Economic interests
	Company	LKSF CKHH	CKI	PAH	Total	Company	LKSF CKHH	CKI	PAH	Total

UK Power Networks	-	20%	-	40%		40%		100%		-	20%	-	40%		40%		100%
Northumbrian Water	-	20%	40%	40%		-	100%		16%	20%	4%	52%		8%		100%
Wales & West Utilities	-	10%	30%	30%		30%		100%		12%	10%	3%	39%		36%		100%
Dutch Enviro Energy	-	10%	35%	35%		20%		100%		14%	10%	4%	46%		27%		100%

After Completion of the Proposed Acquisition

		Ownership interests				Economic interests
	Company CKHH	CKI	PAH	Total	Company CKHH	CKI	PAH	Total

UK Power Networks	20%	-	40%		40%		100%		20%	-	40%		40%		100%
Northumbrian Water	20%	40%	40%		-	100%		36%	4%	52%		8%		100%
Wales & West Utilities	10%	30%	30%		30%		100%		22%	3%	39%		36%		100%
Dutch Enviro Energy	10%	35%	35%		20%		100%		24%	4%	46%		27%		100%

On Completion of the Proposed Acquisition, the Company will, directly or indirectly, supersede LKSF as a party to the following joint venture arrangements with the parties set out below (or their subsidiaries) in respect of each of the Target Companies: (1) joint venture agreement with CKI and PAH in respect of UK Power Networks; (2) joint venture agreement with CKHH and CKI in respect of Northumbrian Water; (3) joint venture agreement with CKHH, CKI and PAH in respect of Wales & West Utilities; and (4) joint venture agreement with CKHH, CKI and PAH in respect of Dutch Enviro Energy. No financial contribution is required to be made by the Company, directly or indirectly, upon becoming a party to the joint venture arrangements referred to above.

As a result, we concur with the view of the Company that the Proposed Acquisition will simplify the holding structure of the Target Holdcos by reducing in part the joint holdings in the Target Holdcos with the Company's connected persons.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

(vi) Principal terms of the Proposed Acquisition

The principal terms and conditions of the Share Purchase Agreement are summarised below, and please refer to the "Letter from the Board" set out in the Circular and Offer Document for further details.

Subject matter

The Share Purchase Agreement dated 18th March, 2021 involves, the Company as the purchaser and LKSF as the seller. Pursuant to the Share Purchase Agreement, the LKSF had conditionally agreed to sell or procure of sale of, and the Company conditionally agreed to purchase the Target Holdcos for the Purchase Price of HK$17 billion. The principal assets of the Target Holdcos comprise:

Eagle Frame Limited, which has an indirect 20% shareholding interest in UK Power Networks;
Mondrem Corporation, which has an indirect 20% interest (based on the entitlements to profits and capital attaching to relevant shares of Northumbrian Water) in Northumbrian Water;
Moonstone Global Investment Limited, which has an indirect 10% shareholding interest in Wales & West Utilities; and
Gerbera Investments Limited, which has a direct 10% shareholding interest in Dutch Enviro Energy.

Please refer to the section headed "(iv) Information of the Target Holdcos and Target Companies" above for the details of each of the Target Holdcos and Target Companies.

Conditions to Completion

Completion of the Proposed Acquisition should be conditional upon and subject to, among other things, (i) the passing the relevant resolutions approving the Proposed Acquisition, the Special Mandate for the issue of the Consideration Shares, and the transactions contemplated thereunder; (ii) the Whitewash Waiver by the Independent Shareholders (other than those who are required by the Listing Rules, the Takeovers Code or applicable laws and regulations not to vote or to abstain from voting) at the EGM by way of poll, and being granted by the Executive; and (iii) the satisfaction of all of the conditions to the Share Buy-back Offer. Please refer to the section headed "-

2. THE PROPOSED ACQUISIITON - (c) Conditions to Completion" of the letter from the Board for the details of the Acquisition Conditions.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Purchase Price and Consideration Shares

As stated in the section headed "- 2. THE PROPOSED ACQUISITION - (b) Purchase Price and Consideration Shares" of the letter from the Board, the Purchase Price is HK$17 billion which was arrived at arm's length negotiations with LKSF with reference to, among other things, the overall financial position and performance of the Target Companies. Such Purchase Price will be satisfied by the issue of 333,333,333 Consideration Shares by the Company to LKSF (or a subsidiary of LKSF) at the price of HK$51.00 per Share pursuant to the Specific Mandate. Such Consideration Shares will be issued at the price of HK$51.00 per Share which was determined after arm's length negotiation with reference to the prevailing market price of the Shares and which represents:

a premium of approximately 8.4% to the closing price of HK$47.05 per Share as quoted on the Stock Exchange on the date of the Share Purchase Agreement;
a premium of approximately 9.8% to the average closing price of HK$46.44 per Share as quoted on the Stock Exchange for the last five consecutive trading days ending on the date of the Share Purchase Agreement;
a premium of approximately 10.0% to the average closing price of HK$46.37 per Share as quoted on the Stock Exchange for the last 10 consecutive trading days ending on the date of the Share Purchase Agreement;
a premium of approximately 16.4% to the average closing price of HK$43.80 per Share as quoted on the Stock Exchange for the last 30 consecutive trading days ending on the date of the Share Purchase Agreement;
a premium of approximately 21.5% to the average closing price of HK$41.96 per Share as quoted on the Stock Exchange for the last 60 consecutive trading days ending on the date of the Share Purchase Agreement;
a premium of approximately 5.2% to the closing price of HK$48.50 per Share as quoted on the Stock Exchange on the Latest Practicable Date;
a premium of approximately 2.2% to the 52-week high price of HK$49.90 per Share ending on the date of the Share Purchase Agreement based on the closing price as quoted on the Stock Exchange on 11th May, 2020; and
a discount of approximately 46.9% to the latest Net Assets Attributable to Shareholders per Share as at 31st December 2020, being HK$96.02 per Share.

The Consideration Shares represent (i) approximately 9.03% of the existing total issued Shares as at the Latest Practicable Date; (ii) approximately 9.14% of the total issued Shares as enlarged by the allotment and issue of the Consideration Shares (assuming the Share Buy-back Proposal is completed in full); and (iii) approximately

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

8.28% of the total issued Shares as enlarged by the allotment and issue of the Consideration Shares (assuming no Shares are bought-back pursuant to the Share Buy-back Proposal).

As the purchase price for the Proposed Acquisition will be settled in full by the issue of the Consideration Shares, when taken together with the effect of buying back the Original Maximum Number of Shares, the Offer Price is equivalent to the issue price of the Consideration Shares of HK$51.00 pursuant to the Share Purchase Agreement. Therefore, in order to justify the fairness and reasonableness of the issue price of the Consideration Shares as well as the Offer Price, please refer to the section headed "- (b) Analysis of the Proposed Acquisition - Assessment of the Purchase Price

Issue of Consideration Shares and evaluation of the issue price" below for our analysis of the issue price of the Consideration Shares and the Offer Price.

Cash Distributions by the Target Companies to the Target Holdco Group

Please refer to the section headed "- (a) Objectives of the Proposal - 3) Financially accretive transaction" below for our discussion and analysis of the Cash Distributions by the Target Companies to the Target Holdco Group.

(vii) Principal terms of the Share Buy-back Offer

Pursuant to the Share Purchase Agreement, the consideration for the Proposed Acquisition is HK$17 billion and will be satisfied in full by the issue of 333,333,333 Consideration Shares by the Company to LKSF (or a subsidiary of LKSF) at the price of HK$51.00 per Share pursuant to the Specific Mandate. On 14th April, 2021, the Board further announced the Share Buy-back Proposal, pursuant to which the Company proposes to buy-back for cancellation up to the Maximum Number of Shares, which is the sum of the number of Consideration Shares to be issued by the Company for the Proposed Acquisition and an additional 46,666,667 Shares. Accordingly, the Board announced that a conditional cash offer will be made by HSBC on behalf of the Company, subject to the Offer Conditions, to buy-back up to the Maximum Number of Shares at the price of HK$51.00 per Share (representing approximately 10.29% of the issued share capital of the Company as at the Latest Practicable Date) from the Qualifying Shareholders on the following basis:

For each Share . . . . . . . . . . . . . . . . . . . . . . . . . . the Offer Price of HK$51.00 in cash

The Shares to be bought-back by the Company will not exceed the Maximum Number of Shares and there is no minimum number of Shares proposed to be bought-back under the Share Buy-back Offer.

We noted that the Company will not be expecting to pay any cash as a result of the Proposed Acquisition as the consideration is to be satisfied entirely by the Consideration Shares. However, when taken together with the effect of the Share Buy-back Offer, if accepted in full, will result in the Company paying HK$19.38 billion to the Accepting Shareholders. The overall effect of the Proposed Acquisition and the Share Buy-back Offer

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

would be the expenditure of HK$19.38 billion of cash to acquire the Target Holdcos and to buy back an additional 46,666,667 Shares, and such amount will be paid in cash and funded by cash resources of the Group.

Key salient terms of the Share Buy-back Offer are as follows:

HSBC is making the Share Buy-back Offer to the Qualifying Shareholders on behalf of the Company to buy-back up to the Maximum Number of Shares at the Offer Price;
Qualifying Shareholders are able to accept the Share Buy-back Offer in respect of any number of Shares held by them at the Offer Price up to their entire shareholding, although in the case of issue Shares being asserted to the Share Buy-back Offer, such acceptance will be scaled back on a pro-rata basis as described below;
the Share Buy-back Offer is not conditional upon a minimum number of Shares being tendered for buy-back;
Shares will be bought-back for cash, free of commission, levies and dealing charges, save that the amount of stamp duty due on the Shares repurchased attributable to the seller will be deducted from the amount payable to the Accepting Shareholders and will be paid by the Company on behalf of the Accepting Shareholders; and
Shares repurchased will be cancelled and will not be entitled to any dividend declared for any record date set subsequent to the date of their cancellation.

Please refer to the section headed "2. THE SHARE BUY-BACK OFFER" in the letter from HSBC for the details of salient terms.

Based on the salient terms as described above, Qualifying Shareholders have the discretion on whether to accept their entitlements either in full or in part. If valid acceptances are received for the Maximum Number of Shares or less, all Shares for which the Share Buy-back Offer was validly accepted will be bought-back. If valid acceptances received exceed the Maximum Number of Shares, the total number of Shares to be bought-back by the Company from each Accepting Shareholder will be determined in accordance with formula, which has been disclosed in the section headed "5. OTHER TERMS OF THE SHARE BUY-BACK OFFER" in the letter from HSBC. As a result, it is possible that not all of the Shares as regards which the Share Buy-back Offer is validly accepted by an Accepting Shareholder will ultimately be bought-back. The total number of Shares which will be bought-back by the Company will not exceed the Maximum Number of Shares. The decision of the Company as to any scaling down of acceptances in accordance with the formula and as to the treatment of fractions will be conclusive and binding on all Shareholder.

- 91 -

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The Offer Price

As mentioned above, the Purchase Price for the Proposed Acquisition will be settled in full by the issue of the Consideration Shares, when taken together with the effect of buying-back the Original Maximum Number of Shares, the Offer Price is therefore equivalent to the issue price of the Consideration Shares of HK$51.00 pursuant to the Share Purchase Agreement. Therefore, in order to justify the fairness and reasonableness of the issue price of the Consideration Shares as well as the Offer Price, please refer to the section headed "- (b) Analysis of the Proposed Acquisition - Assessment of the Purchase Price - Issue of Consideration Shares and evaluation of the issue price" below for our analysis of the Consideration Shares and the Offer Price.

The Offer Conditions to the Share Buy-back Offer

Under the Share Buy-backs Code, the Share Buy-back Offer will need to be approved by the Independent Shareholders in a general meeting by a majority of votes by way of poll as well as subject to other Offer Conditions. The Share Buy-back Offer will be conditional upon fulfilment of all of the following key conditions:

ordinary resolution to approve the Share Buy-back Offer by the Independent Shareholders having been passed by way of poll at the EGM;
not less than 75% of the votes cast on the resolution to approve the Whitewash Waiver by Independent Shareholders having been passed by way of poll at the EGM; and
the Whitewash Waiver having been granted by the Executive and such waiver not being revoked.

None of the above conditions can be waived. Accordingly, if any of the Offer Conditions is not fulfilled, the Share Buy-back Offer will not proceed and the Proposal (including the Proposed Acquisition) will lapse.

The Whitewash Waiver, if granted by the Executive, will be subject to the approval of the Independent Shareholders for the Share Buy-back Offer and the Whitewash Waiver at the EGM by way of poll, to waive any obligation of LKSF to make a general offer which might result from completion of the Share Buy-back Offer. If the Share Buy-back Offer or the Whitewash Waiver is not approved by the Independent Shareholders by way of a poll, or if the latter is not granted by the Executive, the Share Buy-back Offer will immediately lapse.

Please refer to the section headed "4. THE OFFER CONDITIONS" in the letter from HSBC for the details of the Offer Conditions.

- 92 -

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CK Asset Holdings Ltd. published this content on 26 April 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 26 April 2021 08:53:02 UTC.

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Company Profile

CK Asset Holdings Limited, formerly Cheung Kong Property Holdings Limited is an investment holding company mainly engaged in the property businesses. The Company is involved in the property development, property Investment, hotel and serviced suite operation, property and project management. In addition, the Company is engaged in aircraft leasing. The Company operates its business in Hong Kong, The Mainland, and Singapore.

Sector

Real Estate Development & Operations

Calendar

2024-05-22 - Annual General Meeting

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HONG KONG HANG SENG

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Ratings for CK Asset Holdings Limited

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ESG Refinitiv

B+

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Sell

Buy

Mean consensus

OUTPERFORM

Number of Analysts

Last Close Price

32.25 HKD

Average target price

40.22 HKD

Spread / Average Target

+24.73%

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Sector Other Real Estate Development & Operations

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Other Real Estate Development & Operations