Automated Systems Holdings Limited — Proxy Solicitation & Information Statement 2003

Jan 17, 2003

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your securities in China Online (Bermuda) Limited, you should at once hand this circular to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

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

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(Incorporated in Bermuda with limited liability)

DISCLOSEABLE TRANSACTION

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16th January, 2003

CONTENTS

Page

Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1	Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.	Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.	Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.	Particulars of assets disposed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.	Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5.	Reasons for giving the Irrevocable Undertaking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
6.	Intended application of the proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
7.	Information on Sun Hung Kai Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
8.	Principal business activities of the Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
9.	General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
10.	Additional information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Appendix : General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

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DEFINITIONS

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

below:
“Accepting Shareholders”	Qualifying Shareholders who tender SHK Shares for acceptance under the Offer
	by making Tenders at the Offer Price
“Board”	the board of Directors
“Company”	China Online (Bermuda) Limited, an exempted company incorporated in Bermuda
	with limited liability and whose shares are listed on the Stock Exchange
“Condition”	the condition to which the Offer is subject
“Directors”	the directors of the Company
“EGM”	the extraordinary general meeting of Sun Hung Kai to be convened in connection
	with the Offer on 12th February, 2003 or any adjournment or postponement thereof
“Excluded Jurisdiction(s)”	any jurisdiction(s) where, by the terms of the Offer, the Offer is excluded or the
	laws of which prohibit the making of the Offer to the relevant SHK Shareholder in
	that jurisdiction or otherwise require Sun Hung Kai to comply with additional
	requirements which are (in the opinion of the directors of Sun Hung Kai, but subject
	to the prior consent of the Executive) unduly onerous or burdensome, having regard
	to the number of SHK Shareholders involved in that jurisdiction and their
	shareholdings in Sun Hung Kai. For the purposes of the Offer, the US, Canada and
	Malaysia are Excluded Jurisdictions
“Excluded Shareholders”	any Overseas Shareholders whose address, as shown on the Register at the time of
	submission of his or her acceptance in respect of the Offer or at the latest time for
	submission of acceptance in respect of the Offer or otherwise whose residence at
	such time(s), is located in an Excluded Jurisdiction and for the avoidance of doubt,
	all US persons (as defined under US securities laws) and residents of Canada and
	Malaysia are Excluded Shareholders
“Executive”	the Executive Director of the Corporate Finance Division of the Securities and
	Futures Commission or any delegate of the Executive Director
“Gold Chopsticks”	Gold Chopsticks Limited, a company incorporated in the British Virgin Islands
	with limited liability and an indirect wholly-owned subsidiary of the Company
“Group”	the Company and its subsidiaries
“HK$”	Hong Kong dollar(s), the lawful currency of Hong Kong
“Hong Kong”	the Hong Kong Special Administrative Region of the PRC
“Independent Shareholders”	SHK Shareholders other than Gold Chopsticks (and any other persons who may
	be required to abstain from voting in accordance with the Repurchase Code)
“Irrevocable Undertaking”	the irrevocable undertaking signed by Gold Chopsticks on 12th November, 2002
	in favour of Sun Hung Kai and SHKIL to tender at least 152,760,720 SHK Shares
“Latest Acceptance Time”	4:00 p.m. on the fourteenth day after the Offer has become unconditional (expected
	to be on Wednesday, 26th February, 2003), or such later time and date as Sun
	Hung Kai may (with the prior consent of the Executive) decide and announce,
	being the latest time for submission of acceptances by Qualifying Shareholders
	under the Offer

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DEFINITIONS

“Latest Practicable Date” 10th January, 2003, being the latest practicable date prior to the printing of this circular for inclusion of certain information in this circular “Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange “Loan Notes” the loan notes with a face value of HK$1.00 each to be issued to Accepting Shareholders as part of the Offer Price and under which Sun Hung Kai will pay to the holder of each loan note an amount equivalent to its face value on the date of its maturity subject to the terms of the loan note instrument “Maximum Number” the maximum number of SHK Shares to be repurchased pursuant to the Offer, being 325,600,000 SHK Shares in aggregate “Offer” the offer by Sun Hung Kai to repurchase SHK Shares from all Qualifying Shareholders by way of Tenders, up to in aggregate the Maximum Number “Offer Price” HK$1.30 per SHK Share, being the repurchase price at which Tenders are invited “Overseas Shareholders” SHK Shareholders whose addresses, as shown in the Register, are outside Hong Kong “PRC” the People’s Republic of China “Qualifying Shareholders” SHK Shareholders, other than Excluded Shareholders, whose names appear on the Register at the Latest Acceptance Time, which is currently expected to be 4:00 p.m. on 26th February, 2003 “Register” the register of members of Sun Hung Kai “Repurchase Code” the Hong Kong Code on Share Repurchases “SDI Ordinance” the Securities (Disclosure of Interests) Ordinance (Chapter 396 of the Laws of Hong Kong) “Stock Exchange” The Stock Exchange of Hong Kong Limited “Sun Hung Kai Group” Sun Hung Kai and its subsidiaries “SHKIL” Sun Hung Kai International Limited, an indirect wholly-owned subsidiary of Sun Hung Kai which is an exempt dealer and an investment adviser registered under the Securities Ordinance, being the financial adviser to Sun Hung Kai in respect of the Offer “SHK Shareholder(s)” holder(s) of SHK Shares “SHK Share(s)” share(s) of HK$0.20 each in the share capital of Sun Hung Kai “Sun Hung Kai” Sun Hung Kai & Co. Limited, a company incorporated in Hong Kong with limited liability, the securities of which are listed on the Stock Exchange “Tenders” tenders of SHK Shares at the Offer Price by Qualifying Shareholders for repurchase by Sun Hung Kai under the Offer “US” the United States of America

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LETTER FROM THE BOARD

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(Incorporated in Bermuda with limited liability)

Board of Directors: Ms. Chong Sok Un (Chairman) Dato’ Wong Peng Chong Mr. Kong Muk Yin Mr. Cheng Mo Chi, Moses[#] Mr. Tan Shao Hua[#] Mr. Lo Wai On[#]

# Independent Non-executive Director

Registered Office: Cedar House 41 Cedar Avenue Hamilton HM12 Bermuda

Head office and principal place of business in Hong Kong 47/F., China Online Centre 333 Lockhart Road Wan Chai Hong Kong

16th January, 2003

To the shareholders and the warrantholders of the Company

Dear Sir or Madam,

DISCLOSEABLE TRANSACTION

1. INTRODUCTION

On 12th November, 2002, the Company announced that Gold Chopsticks, an indirect wholly-owned subsidiary of the Company and currently holding 270,535,000 SHK Shares, representing approximately 17.99% of the total issued share capital of Sun Hung Kai, gave the Irrevocable Undertaking to Sun Hung Kai on 12th November, 2002 to tender at least 152,760,720 SHK Shares, representing approximately 10.16% of the present issued share capital of Sun Hung Kai, for acceptance under the Offer. Pursuant to the Listing Rules, the transaction constitutes a discloseable transaction for the Company.

Reference is also made to the announcements of the Company dated 3rd and 16th December, 2002 and 6th January, 2003 in which the Company announced that the despatch of this circular would be postponed after Sun Hung Kai has finalized the details of the circular of Sun Hung Kai in respect of the Offer which is expected to be on or before Thursday, 16th January, 2003. Accordingly, the Company has made applications to the Stock Exchange for further extension of time to despatch this circular to shareholders of the Company from Wednesday, 4th December, 2002 to on or before Thursday, 16th January, 2003.

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LETTER FROM THE BOARD

2. OFFER

Sun Hung Kai announced on 12th November, 2002 that a conditional offer will be made by SHKIL on behalf of Sun Hung Kai to repurchase up to 325,600,000 SHK Shares, representing approximately 21.65% of the total issued share capital of Sun Hung Kai as at the Latest Practicable Date, subject to the Condition.

The Offer will be conditional only upon the approval of the Offer and the issue of the Loan Notes by the Independent Shareholders voting at the EGM which will be held on 12th February, 2003. Gold Chopsticks is the only shareholder which will abstain from voting at the EGM on the resolutions to approve the Offer and the issue of the Loan Notes.

3. PARTICULARS OF ASSETS DISPOSED

Gold Chopsticks, currently holding 270,535,000 SHK Shares (with an aggregate market value of HK$216,428,000.00 based on the market closing price of HK$0.80 per SHK Share on 1st November, 2002) representing approximately 17.99% of the total issued share capital of Sun Hung Kai, has given the Irrevocable Undertaking to Sun Hung Kai to tender at least 152,760,720 SHK Shares (with an aggregate market value of HK$122,208,576.00 based on the market closing price of HK$0.80 per SHK Share on 1st November, 2002) representing approximately 10.16% of the present issued share capital of Sun Hung Kai or such additional number of SHK Shares in respect of Gold Chopsticks’ current shareholding in Sun Hung Kai to ensure its shareholding in Sun Hung Kai would be reduced to not more than 9.9% as a result of the Offer.

Pursuant to the Irrevocable Undertaking, Gold Chopsticks undertakes to each of Sun Hung Kai and SHKIL, inter alia:-

• (a) to tender or procure the tender for acceptance of not less than 152,760,720 SHK Shares or such additional number of SHK Shares in respect of its current shareholding pursuant to the terms of the Offer to ensure its shareholding percentage in Sun Hung Kai would be reduced to not more than 9.9% as a result of the Offer;

• (b) in the event that it should fail to comply with the undertaking as aforesaid, it irrevocably authorises Sun Hung Kai (unless otherwise agreed with SHKIL) to treat the Irrevocable Undertaking as a tender by Gold Chopsticks and/or its nominees for 152,760,720 SHK Shares and such additional SHK Shares in respect of its current shareholding as mentioned aforesaid;

• (c) that the 270,535,000 SHK Shares comprised in its current shareholding will remain registered in the same names at the close of business on the closing date of the Offer as those in which they are now respectively registered; and

• (d) that it shall not, and shall procure that companies controlled by it or any of its associates (as defined in the Listing Rules, whether directly or indirectly) shall not, without the prior written consent of SHKIL, acquire, dispose of or transfer any SHK Shares or any interests therein (except in performance of its undertakings therein) from the date of the Irrevocable Undertaking up to and including the latest time for submission of Tenders.

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LETTER FROM THE BOARD

In the event that the Offer does not become unconditional, it is the current intention of the Company and Gold Chopsticks to continue to hold its current shareholding in Sun Hung Kai as long term investment.

Based on the unaudited consolidated accounts of the Company as at 30th June, 2002, the book carrying value of 152,760,720 SHK Shares is approximately HK$160 million. The estimated loss (before and after tax) on realization of long term investment in respect of the said 152,760,720 SHK Shares is approximately HK$63 million subject to audit for the financial year ended 31st December, 2002.

4. CONSIDERATION

Pursuant to the terms of the Offer, Tenders will be invited at the price of HK$1.30 per SHK Share which will be paid as to HK$0.30 in cash and as to HK$1.00 in Loan Notes (the “Offer Price”). Under the Offer and pursuant to the Irrevocable Undertaking, on the basis that 152,760,720 SHK Shares are tendered by Gold Chopsticks and accepted by Sun Hung Kai, it is expected that Gold Chopsticks will receive an aggregate consideration of HK$198,588,936.00 which consists of a cash payment of HK$45,828,216.00 and a loan note of HK$152,760,720.00 on 7th March, 2003.

The principal terms of the Loan Notes are as follows:-

Issue: The Loan Notes will be issued in denominations of HK$1.00 each. On the basis that the Offer in Maximum Number is fully accepted, 325,600,000 Loan Notes with an aggregate value of HK$325.60 million will be issued.

Term: The Loan Notes are due to mature on 7th March, 2008. The Loan Notes will automatically be redeemed on 7th March, 2008 or at the option of Sun Hung Kai at any time prior to such date (in whole or in part) on the giving of one month’s written notice by Sun Hung Kai, in both cases at their principal amount then outstanding plus accrued interest. Interest: The Loan Notes will bear interest from the date of issue up to but excluding 7th March, 2008 at a rate of 4% per annum on the principal amount then outstanding and such interest will be paid half yearly (on 30th June and 31st December) in arrears in Hong Kong dollars with the first interest payment on 30th June, 2003. Interest will be rounded down to 2 decimal figures. A final payment of interest due on the principal amount of Loan Notes then outstanding will be made (together with repayment of the principal amount of Loan Notes then outstanding) on 7th March, 2008 in respect of interest accrued during the period from 1st January, 2008 to 6th March, 2008 inclusive.

Listing: In order to provide liquidity for holders of the Loan Notes, the board of directors of Sun Hung Kai will consider, at a later date following the close of the Offer, whether to seek a listing of the Loan Notes on the Stock Exchange or another recognised stock exchange. However, as the number of acceptances of the Offer cannot be ascertained before the close of the Offer, Sun Hung Kai cannot ascertain whether or not the Loan Notes can fulfill the listing requirements of the Stock Exchange. Accordingly, Sun Hung Kai will explore the possibility of listing the Loan Notes on the Stock Exchange or another recognised stock exchange after completion of the Offer, and reserves the right to seek a listing of the Loan Notes or not to

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LETTER FROM THE BOARD

seek a listing, as the case may be. If a listing is being sought by the board of directors of Sun Hung Kai, a further announcement in this respect will be made by Sun Hung Kai at the relevant time.

Transfer, The Loan Notes shall be transferable in integral multiples of HK$1.00 by instrument of transfer transmission in any usual or common form or such other form as may be approved by the directors of Sun and Hung Kai or, where the Loan Notes are subsequently listed on the Stock Exchange (or other registration: recognised exchange) and the transferor or the transferee is HKSCC Nominees Limited, the transfers may be executed by machine imprinted signature or under the hand of an authorised person. Sun Hung Kai shall maintain a register of holders of the Loan Notes in the jurisdiction where the Stock Exchange for the time being is situate. The instrument constituting the Loan Notes contains provisions relating to the transfer, transmission and registration of the Loan Notes. Transfers of the Loan Notes must be executed by both the transferor and the transferee and any stamp duty payable thereon will be payable by the transferor and/or the transferee only and not Sun Hung Kai.

Fractions: No fraction of a Loan Note is expected to arise from the Offer.

Certificates: Each Accepting Shareholder will receive one Loan Note certificate representing the aggregate holding of Loan Notes payable to him under the Offer.

The Offer Price also applies to such additional SHK Shares (in addition to the 152,760,720 SHK Shares mentioned aforesaid) in respect of Gold Chopsticks’ shareholding in Sun Hung Kai as may be tendered by Gold Chopsticks pursuant to the Irrevocable Undertaking.

5. REASONS FOR GIVING THE IRREVOCABLE UNDERTAKING

Having considered the terms of the Offer, the Company regards the Offer and the issue of the Irrevocable Undertaking as an opportunity for the Company to unwind part of its long term investment in Sun Hung Kai under the prevailing economic and stock market conditions.

6. INTENDED APPLICATION OF THE PROCEEDS

The Directors currently do not have any specific plans as to how to apply the cash proceeds, of approximately HK$45,828,216.00 (on the basis that 152,760,720 SHK Shares are tendered by Gold Chopsticks and accepted by Sun Hung Kai), to be received from Sun Hung Kai in respect of the Offer. It is the intention of the Directors that such proceeds from the realisation of part of the long term investment in Sun Hung Kai will be applied as additional general working capital of the Group.

7. INFORMATION ON SUN HUNG KAI GROUP

The principal activity of Sun Hung Kai is investment holding. The principal activities of the subsidiaries of Sun Hung Kai Group include securities, forex, bullion, commodities and futures broking, provision of online financial services and online financial information distribution, money lending including the provision of term loans, share margin financing, corporate finance, financial planning and wealth management, property investment and insurance consultancy.

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LETTER FROM THE BOARD

The following table sets out a summary of the audited consolidated results of Sun Hung Kai Group for each of the two years ended 31st December, 2001 and the unaudited consolidated interim results of Sun Hung Kai Group for the six months ended 30th June, 2002:

	(Unaudited)	(Audited)	(Audited)
	For the six	For the year ended
	months ended	31st December,
	30th June, 2002	2001	2000
	HK$’000	HK$’000	HK$’000
Turnover	288,556	624,140	619,614
Profit before taxation	125,785	254,132	148,094
Profit attributable to SHK Shareholders	103,608	220,220	124,967
Earnings per share
- Basic	6.9 cents	14.6 cents	10.7 cents
- Diluted	N/A	N/A	N/A
Sun Hung Kai’s consolidated shareholders’ funds	4,576,574	4,488,511	4,272,292

8. PRINCIPAL BUSINESS ACTIVITIES OF THE GROUP

The Company is an investment holding company and through its subsidiaries engaged in sale and distribution of telecommunication and information technology products and equipments, intelligent building system integration and strategic investments.

9. GENERAL

Pursuant to the Listing Rules, the transaction constitutes a discloseable transaction for the Company.

10. ADDITIONAL INFORMATION

Your attention is drawn to the additional information set out in the appendix which forms part of this circular.

Yours faithfully, By order of the Board

China Online (Bermuda) Limited Chong Sok Un

Chairman

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GENERAL INFORMATION

APPENDIX

1. RESPONSIBILITY STATEMENT

This document includes particulars given in compliance with the Listing Rules for the purpose of providing information with regard to the discloseable transaction and the Company.

The Directors collectively and individually accept full responsibility for the accuracy of the information contained in this circular and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, there are no other facts not contained in this circular the omission of which would make any statement herein misleading.

2. DISCLOSURE OF INTERESTS

As at the Latest Practicable Date, the interests of the Directors and chief executives of the Company in the equity or debt securities of the Company or any of its associated corporations (within the meaning of the SDI Ordinance) which were required to be notified to the Company and the Stock Exchange pursuant to Section 28 of the SDI Ordinance (including any interests which any such Directors and chief executives of the Company would be deemed or taken to have under Section 31 of, or Part 1 of the Schedule to, the SDI Ordinance) or which were required, pursuant to Section 29 of the SDI Ordinance, to be entered in the register referred to therein or which were required to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Companies are as follows:-

	Personal	Family	Corporate	Other
Name	Interests	Interests	Interests	Interests
Ms. Chong Sok Un	Nil	Nil	2,631,200,000	Nil
(“Ms. Chong”)(Note)			shares and
			273,840,000
			warrants

Note : The 2,631,200,000 shares of the Company and 273,840,000 warrants of the Company are held by Vigor Online Offshore Limited (“Vigor Online”), a 67.7% owned subsidiary of China Spirit Limited (“China Spirit”) in which Ms. Chong maintains a beneficial interest of 100%.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors and chief executives of the Company had any interests in any securities of the Company or any of its associated corporations (within the meaning of the SDI Ordinance) which were required to be notified to the Company and the Stock Exchange pursuant to Section 28 of the SDI Ordinance (including any interests which any such Directors and chief executives would be deemed or taken to have under Section 31 of, or Part 1 of the Schedule to, the SDI Ordinance) or which were required, pursuant to Section 29 of the SDI Ordinance, to be entered in the register referred to therein or which were required to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Companies.

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GENERAL INFORMATION

APPENDIX

3. SUBSTANTIAL SHAREHOLDERS

As at the Latest Practicable Date, so far as is known to the Directors, as based upon the register kept by the Company pursuant to Section 16(1) of the SDI Ordinance, the following persons were, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any member of the Group:-

Name	Number of shares held	%
Ms. Chong_(Note)_	2,631,200,000	28.33
China Spirit_(Note)_	2,631,200,000	28.33
Vigor Online	2,631,200,000	28.33

Note : Vigor Online is a 67.7% owned subsidiary of China Spirit in which Ms. Chong maintains a beneficial interest of 100%. Accordingly, China Spirit and Ms. Chong were deemed by the SDI Ordinance to be interested in 2,631,200,000 shares.

Save as disclosed above, the Directors are not aware of any other persons who were, as at the Latest Practicable Date, directly or indirectly interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any member of the Group.

4. DIRECTORS’ SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had a service contract with the Company or any of its subsidiaries which is not determinable by the Group within one year without payment of compensation, other than statutory compensation.

5. LITIGATION

Save as disclosed below, as at the Latest Practicable Date, neither the Company nor any of its subsidiaries is engaged in any litigation or claims of material importance and so far as the Directors are aware, no litigation or claims of material importance were pending or threatened by or against any member of the Group:-

• (a) In November 1998, a writ was issued against the Company’s subsidiaries, Hongkong Digital Television Limited (“Digital TV”, formerly Star Interactive Television Limited) and Star Telecom Services Limited (“STSL”, formerly Hong Kong Star Internet Limited) by nCube Corporation (“nCube”), claiming the sum of approximately US$1,980,000.00 (equivalent to approximately HK$15,305,000.00) plus interest in relation to the alleged purchase of two MediaCube 3000 systems by Digital TV from nCube. Both Digital TV and STSL are unrelated to nCube which was only a supplier of MediaCube 3000 systems to Digital TV. The claim of nCube against STSL was on the basis of a chop of STSL on the contract between Digital TV and nCube. STSL had taken legal advice and had been advised that it was very unlikely that STSL would be held liable to the claim of nCube. Digital TV was also opposing the claim of nCube and had taken legal advice.

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GENERAL INFORMATION

APPENDIX

As advised by its lawyers, Digital TV had reasonable grounds in defending the claim. Digital TV filed a defence on 14th December, 1998 and nCube had failed to take further action since that date. As at the Latest Practicable Date, there was no progress in respect of the litigation.

• (b) Stellar One Corporation (“Stellar One”) served a statutory demand under Section 178 of the Hong Kong Companies Ordinance for the sum of approximately US$1,152,000.00 (equivalent to approximately HK$8,983,000.00) upon Digital TV in November 1998. Stellar One filed a winding up petition against Digital TV in December 1998 which was vigorously opposed by Digital TV. Digital TV applied for an order for security for the costs against Stellar One. On 4th May, 1999, the Court ordered Stellar One to pay HK$200,000.00 to the court as security for the costs of Digital TV on or before 7th May, 1999. Stellar One failed to pay that amount to the court.

The petition was dismissed in November 1999 and Stellar One was to pay Digital TV its cost of the petition, which amounted to HK$253,952.00. Stellar One had indicated that it would proceed to arbitration in Honolulu to recover the alleged amount.

As at the Latest Practicable Date, Digital TV took legal advice and was advised that the arbitration proceedings had not commenced. As advised by its lawyers, Digital TV had reasonable grounds in defending the claims.

6. MISCELLANEOUS

• (i) The Secretary of the Company is Ms. Fung Ching Man, Ada, an associate member of The Institute of Chartered Secretaries and Administrators.

• (ii) The registered office of the Company is situated at Cedar House, 41 Cedar Avenue, Hamilton HM12, Bermuda.

• (iii) The branch share registrars of the Company in Hong Kong is Tengis Limited of G/F., Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong.

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