Bloks Group Limited — Proxy Solicitation & Information Statement 2003

Dec 24, 2003

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this document or as to the action you should take, you should consult your stockbroker or other registered dealer in securities, bank manager, solicitor, company secretary, professional accountant or other professional adviser.

If you have sold all your shares in HONG KONG PHARMACEUTICAL HOLDINGS LIMITED, you should at once hand this document and the accompanying proxy form to the purchaser or to the bank, stockbroker or other agent through whom the sale was effected for transmission to the purchaser.

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this document, 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 document.

HONG KONG PHARMACEUTICAL HOLDINGS LIMITED 香港葯業集團有限公司 * (Incorporated in Bermuda with limited liability)

GENERAL MANDATES

TO ISSUE AND REPURCHASE SHARES, AMENDMENTS TO BYE-LAWS

AND

NOTICE OF ANNUAL GENERAL MEETING

A notice convening the annual general meeting of Hong Kong Pharmaceutical Holdings Limited to be held at Salon II, 1st Floor, The Harbour Plaza, 20 Tak Fung Street, Hung Hom, Kowloon, Hong Kong on Friday, 16 January, 2004 at 10:00 a.m. is set out on pages 8 to 10 of this document. Whether or not you propose to attend the meeting, you are requested to complete the accompanying proxy form in accordance with the instructions printed thereon and return the same to the principal place of business of the Company at Room 2603, 26th Floor, China Merchants Tower, Shun Tak Centre, 200 Connaught Road Central, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for holding of the meeting or any adjournment thereof. Completion and return of the form of proxy shall not preclude you from attending and voting at the meeting or at any adjourned meeting should you desire.

12 December, 2003

• For identification purpose only

DEFINITIONS

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

“Annual General Meeting”	the annual general meeting of the Company to be held at Salon II,
	1st Floor, The Harbour Plaza, 20 Tak Fung Street, Hung Hom,
	Kowloon, Hong Kong on Friday, 16 January, 2004 at 10:00 a.m.
	(and any adjournment thereof) and notice of which is set out on
	pages 8 to 10 of this document
“Board”	the board of Directors
“Companies Act”	the Companies Act 1981 of Bermuda
“Company”	Hong Kong Pharmaceutical Holdings Limited, a company
	incorporated with limited liability as an exempted company in
	Bermuda
“Directors”	the directors of the Company
“Group”	the Company and its subsidiaries
“Hong Kong”	the Hong Kong Special Administrative Region of the People’s
	Republic of China
“Issue Mandate”	the proposed general mandate to be granted to the Directors to
	exercise the powers of the Company to allot, issue and deal in,
	during the period as set out in the Issue Resolution, Shares up to a
	maximum of 20% of the aggregate nominal amount of the share
	capital of the Company in issue as at the date of passing the Issue
	Resolution
“Issue Resolution”	the proposed ordinary resolution set out in the notice of the
	Annual General Meeting as resolution no.(1) in item 5 thereof
“Latest Practicable Date”	10 December, 2003, being the latest practicable date prior to the
	printing of this document for ascertaining certain information
	referred to in this document
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange
“Repurchase Mandate”	the proposed general mandate to be granted to the Directors to
	exercise the powers of the Company to repurchase, during the
	period as set out in the Repurchase Resolution, Shares up to a
	maximum of 10% of the aggregate nominal amount of the share
	capital of the Company in issue as at the date of passing the
	Repurchase Resolution
“Repurchase Proposal”	the proposal for granting the Repurchase Mandate
“Repurchase Resolution”	the proposed ordinary resolution set out in the notice of the
	Annual General Meeting as resolution no. (2) in item 5 thereof

“SFO”

Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)

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DEFINITIONS

“Share Buy Back Rules” the relevant rules set out in the Listing Rules to regulate the repurchase by companies with primary listing on the Stock Exchange of their own securities on the Stock Exchange “Shareholder(s)” holder(s) of Share(s) “Share(s)” share(s) of HK$0.10 each in the share capital of the Company “Stock Exchange” The Stock Exchange of Hong Kong Limited “Takeovers Code” the Hong Kong Codes on Takeovers and Mergers “HK$” Hong Kong dollars, the lawful currency of Hong Kong “%” per cent.

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LETTER FROM THE BOARD

HONG KONG PHARMACEUTICAL HOLDINGS LIMITED 香港葯業集團有限公司 *

(Incorporated in Bermuda with limited liability)

Directors: Mr SUN Hiu Lu (Chairman) Ms HUANG Shuyun (Deputy Chairman and Managing Director) Mr CHU Kwan Mr ZHAO Dake Mr ZHANG Ke, Winston (Chief Financial Officer) Mr NG Wing Hang Dr Melvin WONG Mr CHU Yu Lin, David, JP*

• Independent non-executive director

Registered Office: Clarendon House 2 Church Street Hamilton HM 11 Bermuda

Head Office and Principal Place of Business: Room 2603 26th Floor China Merchants Tower Shun Tak Centre 200 Connaught Road Central Hong Kong

12 December, 2003

• To the shareholders and, for information only, holders of share options granted under the Company’s employee share option scheme

Dear Sir/Madam,

GENERAL MANDATES TO ISSUE AND REPURCHASE SHARES, AMENDMENTS TO BYE-LAWS AND NOTICE OF ANNUAL GENERAL MEETING

INTRODUCTION

The purpose of this document is to seek your approval of the resolutions, inter alia, relating to the Issue Mandate, the Repurchase Mandate and the amendments to the Bye-laws of the Company to be proposed at the Annual General Meeting to be held on Friday, 16 January, 2004, notice of which is set out on pages 8 to 10 of this document.

GENERAL MANDATE TO ISSUE SHARES

At the Annual General Meeting, an ordinary resolution will be proposed to grant the Directors a general mandate to allot, issue and deal with Shares up to 20% of the aggregate nominal amount of the issued share capital of the Company as at the date of passing the Issue Resolution. In addition, an ordinary resolution will also be proposed to authorise an extension of the Issue Mandate by adding thereto the aggregate nominal amount of any Shares repurchased under the Repurchase Mandate.

• For identification purpose only

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LETTER FROM THE BOARD

GENERAL MANDATE TO REPURCHASE SHARES

At the Annual General Meeting, an ordinary resolution will be proposed to grant a general mandate to the Directors to exercise the powers of the Company to repurchase Shares up to 10% of the aggregate nominal amount of the issued share capital of the Company as at the date of passing the Repurchase Resolution.

An explanatory statement as required under the Share Buy Back Rules to provide all the information reasonably necessary to enable Shareholders to make an informed decision whether to vote for or against the resolution concerning the Repurchase Mandate is set out in the Appendix hereto.

AMENDMENTS TO THE BYE-LAWS OF THE COMPANY

Following the coming into effect of the SFO on 1 April, 2003, certain legislation in Hong Kong will be superseded by the new SFO. As a result, references to these legislations as stated in the existing Bye-laws of the Company will become obsolete. A special resolution to make corresponding amendments to the existing Bye-laws will therefore be put forward to Shareholders for approval at the Annual General Meeting. Details of the proposed amendments are set out in resolution no. (4) in item 5 of the notice of the Annual General Meeting.

ANNUAL GENERAL MEETING

On pages 8 to 10 of this document, you will find a notice convening the Annual General Meeting at which resolutions will be proposed to approve, inter alia, the Issue Mandate, the Repurchase Mandate and the amendments to the Bye-laws of the Company.

ACTION TO BE TAKEN

A proxy form for use at the Annual General Meeting is enclosed herewith. Whether or not you intend to attend the Annual General Meeting, you are requested to complete the proxy form and return it to the principal place of business of the Company at Room 2603, 26th Floor, China Merchants Tower, Shun Tak Centre, 200 Connaught Road Central, Hong Kong not less than 48 hours before the time appointed for holding the Annual General Meeting or any adjournment thereof. Completion and return of a proxy form will not preclude you from attending and voting at the Annual General Meeting if you so wish.

RECOMMENDATION

The Directors believe that the proposal for the Issue Mandate, the Repurchase Mandate and the amendments to the Bye-laws of the Company are all in the best interests of the Company and its Shareholders in general. Accordingly, the Directors recommend that you should vote in favour of all the resolutions to be proposed at the Annual General Meeting.

By Order of the Board Hong Kong Pharmaceutical Holdings Limited Sun Hiu Lu Chairman

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EXPLANATORY STATEMENT

APPENDIX

This appendix serves as an explanatory statement, as required by the Share Buy Back Rules, to provide requisite information to you for your consideration of the proposal to permit the repurchase of Shares up to a maximum of 10% of the share capital of the Company in issue as at the date of passing the Repurchase Resolution. For the purpose of this appendix, the term “shares” means shares of all shares and securities which carry rights to subscribe or purchase shares.

1. SHARE CAPITAL

As at the Latest Practicable Date, there were 1,403,796,698 Shares in issue.

Subject to the passing of the Repurchase Resolution and assuming that no further Shares will be issued or repurchased prior to the Annual General Meeting, the Company would be allowed under the Repurchase Resolution to repurchase a maximum of 140,379,669 Shares (representing 10% of the issued shares as at the date of the Annual General Meeting).

2. REASONS FOR REPURCHASE

The Directors believe that the Repurchase Proposal is in the best interests of the Company and its Shareholders. Such repurchase may, depending on the market conditions and funding arrangements at the time, lead to an enhancement of the net assets value per Share and/or earnings per Share of the Company and will only be made when the Directors believe that such a repurchase will benefit the Company and its shareholders.

3. FUNDING OF REPURCHASE

In repurchasing Shares, the Company may only apply funds legally available for such purpose in accordance with its Memorandum of Association and Bye-laws and the applicable laws of Bermuda. The Companies Act specifically allows a company to repurchase its own shares either out of the capital paid up thereon or from the proceeds of a fresh issue of shares made for the purpose or funds of the Company otherwise available for dividend or distribution. Any premium payable on a repurchase may be funded out of the Company’s share premium account or funds of the Company otherwise available for dividend or distribution.

There might be an adverse impact on the working capital or gearing position of the Company as compared with the position disclosed in the audited accounts contained in the annual report for the year ended 31 March, 2003 in the event that the Repurchase Mandate were to be carried out in full at any time during the proposed repurchase period. However, the Directors do not propose to exercise the Repurchase Mandate to such extent as would, in the circumstances, have a material adverse effect on the working capital requirements or the gearing levels of the Company which in the opinion of the Directors are from time to time appropriate for the Company.

4. SHARE PRICES

The highest and lowest prices per Share at which the Shares have traded on the Stock Exchange during each of the previous twelve months before the Latest Practicable Date were as follows:

	Highest	Lowest
	HK$	HK$
2002
December	0.740	0.670

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EXPLANATORY STATEMENT

APPENDIX

	Highest	Lowest
	HK$	HK$
2003
January	0.730	0.640
February	0.710	0.238
March	0.250	0.122
April	0.410	0.135
May	0.400	0.320
June	0.370	0.245
July	0.390	0.250
August	0.390	0.315
September	0.375	0.325
October	0.520	0.315
November	0.455	0.355

5. UNDERTAKING

The Directors have undertaken to the Stock Exchange that, so far as the same may be applicable, they will exercise the powers of the Company to make repurchases pursuant to the Repurchase Resolution and in accordance with the Listing Rules and the applicable laws of Bermuda.

None of the Directors nor, to the best of their knowledge, having made all reasonable enquiries, any of their associates (as defined in the Listing Rules), have any present intention to sell any Shares to the Company or its subsidiaries under the Repurchase Proposal if such is approved by the Shareholders.

No connected persons (as defined in the Listing Rules) have notified the Company that they have a present intention to sell Shares to the Company or its subsidiaries, or have undertaken not to do so, in the event that the Repurchase Proposal is approved by the Shareholders.

6. TAKEOVERS CODE

If on the exercise of the power to repurchase Shares pursuant to the Repurchase Mandate, a Shareholder’s proportionate interest in the voting rights of the Company increases, such increase will be treated as an acquisition for the purposes of Rule 32 of the Takeovers Code. As a result, a Shareholder or a group of Shareholders acting in concert, could obtain or consolidate control of the Company and become obliged to make a mandatory offer in accordance with Rules 26 and 32 of the Takeovers Code.

As at the Latest Practicable Date, so far as is known to the Directors, the following companies (the “Substantial Shareholders”) held the following Shares:

		Number of Shares held	Number of Shares held
Name	Direct Interest		Deemed Interest	Percentage
Heilongjiang China United Group Limited	(Note)	–	943,400,000	67.20
H.H.K. Finance Company Limited_(Note)_		–	943,400,000	67.20
Welcome Success Worldwide Ltd.(Note)		–	943,400,000	67.20
Hong Tau Investment Ltd.(Note)		–	943,400,000	67.20
Tin Ming Management Limited		790,000,000	–	56.28

• Note: Hong Tau Investment Ltd. (“Hong Tau”) through its wholly owned subsidiaries, Victory Hunter Holdings Limited (“Victory Hunter”) (which holds 23,400,000 Shares), Wai Fat International Limited (“Wai Fat”) (which holds 130,000,000 Shares) and Tin Ming Management Limited (“Tin Ming”) holds an aggregate of 943,400,000 Shares.

Hong Tau is owned as to 51% by Welcome Success Worldwide Ltd. (“Welcome Success”) (which is owned equally as to 50% by each of two Directors, Mr SUN Hiu Lu and Mr CHU Kwan), and as to 49% by H.H.K. Finance Company Limited (“HHK”). 黑龍江中盟集團有限公司 Heilongjiang China United Group Limited (Formerly known as “Heilongjiang Economic Development Corp.”) (“Heilongjiang China”) owns 80% interest in HHK.

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EXPLANATORY STATEMENT

APPENDIX

Accordingly, each of Hong Tau, Welcome Success, Mr SUN Hiu Lu, Mr CHU Kwan, HHK and Heilongjiang China is deemed to be interested in an aggregate of 943,400,000 Shares held by Victory Hunter, Wai Fat and Tin Ming.

On the basis that no further Shares are issued or repurchased prior to the Annual General Meeting, and in the event that the Repurchase Mandate is exercised in full, the shareholdings of Hong Tau and Tin Ming would be increased to approximately 74.67% and 62.53% respectively, the number of Shares held by the public would not fall below 25%. The Directors consider that such repurchase would not give rise to an obligation on the Substantial Shareholders to make a mandatory offer under the Takeovers Code.

7. SHARES REPURCHASE MADE BY THE COMPANY

The Company has not repurchased any Shares on the Stock Exchange during the six months preceding the Latest Practicable Date.

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NOTICE OF ANNUAL GENERAL MEETING

HONG KONG PHARMACEUTICAL HOLDINGS LIMITED 香港葯業集團有限公司 *

(Incorporated in Bermuda with limited liability)

NOTICE IS HEREBY GIVEN that an Annual General Meeting of Hong Kong Pharmaceutical Holdings Limited (the “Company”) will be held at Salon II, 1st Floor, The Harbour Plaza, 20 Tak Fung Street, Hung Hom, Kowloon, Hong Kong on Friday, 16 January, 2004 at 10:00 a.m. for the following purposes:

1. To receive and adopt the audited consolidated financial statements and the reports of the Directors and auditors for the year ended 31 March, 2003.

2. To re-elect the retiring Directors and to authorise the board of Directors to fix the Directors’ remuneration for the ensuing year.

3. To determine the maximum number of Directors and to authorise the board of Directors to appoint additional Directors up to the maximum number.

4. To appoint auditors of the Company for the ensuing year and to authorise the board of Directors to fix their remuneration.

5. As special business, to consider and, if thought fit, pass with or without amendments the following resolutions as ordinary resolutions and special resolution respectively:

ORDINARY RESOLUTIONS

• (1) “ THAT :

• (a) subject to paragraph (c) below, the exercise by the Directors during the Relevant Period (as hereinafter defined) of all the powers of the Company to allot, issue, dispose of and deal with additional shares of HK$0.10 each in the capital of the Company and to make or grant offers, agreements and options (including bonds, notes, warrants, debentures and securities convertible into shares of the Company) which would or might require the exercise of such powers be and is hereby generally and unconditionally approved;

• (b) the approval in paragraph (a) above shall authorise the Directors during the Relevant Period (as hereinafter defined) to make or grant offers, agreements and options (including bonds, notes, warrants, debentures and securities convertible into shares of the Company) which would or might require the exercise of such powers after the end of the Relevant Period;

• (c) the aggregate nominal amount of share capital allotted or agreed conditionally or unconditionally to be allotted (whether pursuant to an option or otherwise) and issued by the Directors pursuant to the approval in paragraph (a) above, otherwise than pursuant to (i) a Rights Issue (as hereinafter defined); (ii) the exercise of rights of subscription or conversion under the terms of any warrants issued by the Company or any bonds, notes, debentures or securities; (iii) an issue of shares under any option scheme or similar arrangement for the time being adopted for the grant or issue to directors and/or employees of the Company and/ or any of its subsidiaries of shares or rights of the Company; and (iv) an issue of shares as scrip dividend pursuant to the Bye-laws of the Company from time to time, shall not exceed 20% of the aggregate nominal amount of the share capital of the Company in issue as at the date of passing this Resolution and the said approval shall be limited accordingly; and

• For identification purpose only

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NOTICE OF ANNUAL GENERAL MEETING

• (d) for the purposes of this Resolution,

“Relevant Period” means the period from the passing of this Resolution until whichever is the earliest of:

• (i) the conclusion of the next annual general meeting of the Company;

• (ii) the expiration of the period within which the next annual general meeting of the Company is required by the Bye-laws of the Company or the laws of Bermuda or any other applicable law to be held; or

• (iii) the date on which the authority set out in this Resolution is revoked or varied by an ordinary resolution of the shareholders in general meeting of the Company;

“Rights Issue” means an offer of shares open for a period fixed by the Directors to the holders of shares of the Company on the register on a fixed record date in proportion to their then holdings of such shares as at that date (subject to such exclusions or other arrangements as the Directors may deem necessary or expedient in relation to fractional entitlements or having regard to any restrictions or obligations under the laws of, or the requirements of any recognised regulatory body or any stock exchange in, any territory outside Hong Kong applicable to the Company).”

• (2) “ THAT :

• (a) subject to paragraph (b) below, the exercise by the Directors during the Relevant Period (as hereinafter defined) of all the powers of the Company to repurchase shares of HK$0.10 each in the capital of the Company on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”), or on any other stock exchange on which the Shares of the Company may be listed and recognised by the Securities and Futures Commission of Hong Kong and the Stock Exchange for this purpose, subject to and in accordance with all applicable laws and the requirements of the Rules Governing the Listing of Securities on the Stock Exchange, or of any other recognised stock exchange as amended from time to time, be and is hereby generally and unconditionally approved;

• (b) the aggregate nominal amount of shares of the Company to be repurchased by the Company pursuant to the approval in paragraph (a) above shall not exceed 10% of the aggregate nominal amount of the share capital of the Company in issue as at the date of the passing of this Resolution and the said approval shall be limited accordingly; and

• (c) for the purposes of this Resolution, “Relevant Period” means the period from the passing of this Resolution until whichever is the earliest of:

  • (i) the conclusion of the next annual general meeting of the Company;

  • (ii) the expiration of the period within which the next annual general meeting of the Company is required by the Bye-laws of the Company or the laws of Bermuda or any other applicable law to be held; or

  • (iii) the date on which the authority set out in this Resolution is revoked or varied by an ordinary resolution of the shareholders in general meeting of the Company.”

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NOTICE OF ANNUAL GENERAL MEETING

• (3) “ THAT subject to the passing of Resolutions Nos. (1) and (2) set out in item 5 of the notice convening this meeting, the general mandate granted to the directors of the Company to allot, issue, dispose of and deal with additional shares pursuant to Resolution No. (1) set out in item 5 of the notice convening this meeting be and is hereby extended by the addition thereto of an amount representing the aggregate nominal amount of shares in the capital of the Company repurchased by the Company under the authority granted pursuant to Resolution No. (2) set out in item 5 of the notice convening this meeting, provided that such amount of shares so repurchased shall not exceed 10% of the aggregate nominal amount of the share capital of the Company in issue as at the date of passing Resolution No. (2) set out in item 5 of the notice convening this meeting.”

SPECIAL RESOLUTION

• (4) “ THAT the existing Bye-laws of the Company be and are hereby amended in the following manner:

• (a) by deleting the words “a recognised clearing house within the meaning of Section 2 of the Securities and Futures (Clearing House) Ordinance of Hong Kong or” appearing in the definition of “clearing house” in Bye-law 1.

The amended definition of “clearing house” in Bye-law 1 will be as follow:

“clearing house” shall mean a clearing house recognized by the laws of the jurisdiction in which the shares of the Company are listed or quoted on a stock exchange in such jurisdiction;

• (b) by adding the words “deemed to have been duly authorised without further evidence of the fact and be” before the words “entitled to exercise the same rights and powers” in the second sentence of Bye-law 84(2).

The amended Bye-law 84(2) will be as follow:

1. (2) If permitted by the Act, a clearing house (or its nominee) if a corporation being a Member, may authorise such persons as it thinks fit to act as its proxies or as its representatives at any meeting of the Company or at any meeting of any class of Members provided that the authorisation shall specify the number and class of shares in respect of which each such representative is so authorised. Each person so authorised under the provisions of this Bye-law shall be deemed to have been duly authorised without further evidence of the fact and be entitled to exercise the same rights and powers as if such person was the registered holder of the shares of the Company held by the clearing house (or its nominee).”

By Order of the Board Hong Kong Pharmaceutical Holdings Limited Sun Hiu Lu Chairman

Hong Kong, 12 December, 2003

Notes:

• 1 Any member of the Company entitled to attend and vote at the annual general meeting (or at any adjournment thereof) is entitled to appoint one or more person(s) as his proxy to attend and vote instead of him. A proxy need not be a member of the Company.

• To be valid, proxy form, together with any power of attorney or other authority (if any) under which it is signed or the certified copy thereof, must be deposited at the principal place of business of the Company at Room 2603, 26th Floor, China Merchants Tower, Shun Tak Centre, 200 Connaught Road Central, Hong Kong not less than 48 hours before the time appointed for holding the annual general meeting (or any adjournment thereof).

• Completion and return of the form of proxy will not preclude members from attending and voting at the annual general meeting (or at any adjournment thereof).

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