Cherish Sunshine International Limited — Proxy Solicitation & Information Statement 2005

Jan 28, 2005

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your securities in SUNNY GLOBAL HOLDINGS LIMITED, you should at once hand this circular to the purchaser or to the transferee or to the bank, stockbroker or other agent through whom the sale was effected for transmission to the purchaser or to the 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.

SUNNY GLOBAL HOLDINGS LIMITED

*

(Incorporated in Bermuda with limited liability)

(Stock Code: 1094)

DISCLOSEABLE TRANSACTION

ACQUISITION OF THE ENTIRE ISSUED SHARE CAPITAL OF POPULAR ASSET LIMITED

28 January 2005

* For identification purpose only

CONTENT

		Page
Definition	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board
1.	Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
2.	The Acquisition Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
3.	Information on Popular Asset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
4.	Conditions of the Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
5.	Reasons for the Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
6.	Further Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
**Appendix **	— General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7

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DEFINITION

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

“Acquisition”	the acquisition by the Purchaser from the Vendor of the entire
	issued share capital of Popular Asset
“Acquisition Agreement”	the conditional sale and purchase agreement entered into
	between the Vendor and the Purchaser dated 7 January 2005
	in connection with the Acquisition
“Board”	the board of Directors
“Company”	Sunny Global Holdings Limited, an exempted company
	incorporated in Bermuda with limited liability and the shares
	of which are listed on the Main Board of the Stock Exchange
“Completion”	completion of the Acquisition, which took place on 11
	January 2005
“Consideration”	the consideration of HK$15,000,000 for the Acquisition
“Director(s)”	the director(s) of the Company
“Group”	the Company and its subsidiaries
“Hong Kong”	the Hong Kong Special Administrative Region of the PRC
“Latest Practicable Date”	25 January 2005, being the latest practicable date prior to the
	printing of this circular for ascertaining certain information
	referred to in this circular
“Listing Rules”	Rules Governing the Listing of Securities on the Stock
	Exchange
“PRC”	the People’s Republic of China
“Popular Asset”	Popular Asset Limited, a company incorporated in Hong Kong
	with limited liability
“Purchaser”	Appraise Asia Investments Limited, a company incorporated
	in the British Virgin Islands and a wholly-owned subsidiary of
	the Company

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	DEFINITION
“SFO”	Securities and Futures Ordinance (Chapter 571 of the Laws of
	Hong Kong)
“Shareholders”	shareholders of the Company
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Vendor”	Fortis Development Limited, a company incorporated in Hong
	Kong with limited liability
“HK$”	Hong Kong dollar, the lawful currency of Hong Kong
“%”	per cent.

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LETTER FROM THE BOARD

SUNNY GLOBAL HOLDINGS LIMITED

*

(Incorporated in Bermuda with limited liability)

(Stock Code: 1094)

Executive Directors:

Mr. Lee Man Fa (Chairman)

Mr. Lin Huis Sheng (Deputy Chairman)

Mr. Kwok Ming Fai Mr. Tai King Foon

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

Independent Non-executive Directors:

Mr. Leung Sai Cheong

Mr. Li Wai Kwan

Mr. Liu Kwok Wah

Head office and principal place of business in Hong Kong: 14th Floor Harbour Commercial Building 122-124 Connaught Road Central Hong Kong

28 January 2005

To the Shareholders

Dear Sir or Madam,

DISCLOSEABLE TRANSACTION

ACQUISITION OF THE ENTIRE ISSUED SHARE CAPITAL OF POPULAR ASSET LIMITED

1. INTRODUCTION

On 7 January 2005, the Company announced that the Purchaser, a wholly-owned subsidiary of the Company, entered into the Acquisition Agreement with the Vendor pursuant to which the Purchaser agreed to acquire the entire issued share capital of Popular Asset for a cash consideration of HK$15,000,000 (subject to downward adjustment).

* For identification purpose only

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LETTER FROM THE BOARD

The Acquisition constitutes a discloseable transaction of the Company under Rule 14.06 (2) of the Listing Rules. The purpose of this circular is to provide you with further information relating to the Acquisition.

2. THE ACQUISITION AGREEMENT

• (i) Date and parties to the Acquisition Agreement

Date: 7 January 2005

Vendor: Fortis Development Limited. To the best of the Directors’ knowledge, information and belief having made all reasonable enquiry, the Vendor and its ultimate beneficial owner are third parties independent of the Company and connected persons (as defined in the Listing Rules) of the Company.

Purchaser: Appraise Asia Investments Limited, a wholly-owned subsidiary of the Company

• (ii) The Acquisition

The Purchaser agreed to acquire from the Vendor the entire issued share capital of Popular Asset. Upon Completion, Popular Asset will become an indirect wholly-owned subsidiary of the Company.

(iii) Consideration

The consideration for the Acquisition is HK$15,000,000 which has been settled by internal resources of the Company and was paid by cash at Completion. In the event that the audited total assets value of Popular Asset as at 31 December 2004 as shown in its audited financial statements for the period from 8 August 2003 (being the date of incorporation of Popular Asset) to 31 December 2004 is less than HK$1,500,000, the Consideration will be adjusted downwards. The Consideration is not subject to any upward adjustment. Any downward adjustment to the Consideration will be payable by the Vendor to the Purchaser in cash on or before 30 June 2005. The Consideration was arrived at after arm’s length negotiation and is on normal commercial terms.

The Consideration was determined by the parties having regard to the valuation of Popular Asset as at 1 December 2004 in the amount of HK$15,500,000 valued by Castores Magi Asia Limited, a valuer which is independent of the Group and connected persons (as defined in the Listing Rules) of the Group. Such valuation of Popular Asset was based on the discounted cash flow method. The valuation was based on the principal assumptions that, including but not limited to, (i) there will be no material changes from political, legal, economic or financial aspects in the jurisdictions in which Popular Asset currently runs or intends to run its business which will materially affect its operation; (ii) there will be no substantial market fluctuation in the industry in the jurisdictions or states in which Popular Asset currently runs or intends to run its business, which will materially affect its operations and the revenues attributable to shareholders; and (iii) the management of Popular Asset will not make

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LETTER FROM THE BOARD

any decision which is harmful to the revenue generation ability of Popular Asset’s business. The Company’s reporting accountants have confirmed that they have reviewed the accounting policies and calculation relating to the valuation. The Board has confirmed that the Directors have carried out due and careful enquiries in respect of the valuation.

The Directors are of the view that the terms of the Acquisition Agreement including the Consideration are fair and reasonable so far as the Shareholders are concerned and are in the interests of the Company and the Shareholder as a whole.

3. INFORMATION ON POPULAR ASSET

Popular Asset was incorporated in Hong Kong in August 2003. Based on the unaudited management accounts of Popular Asset for the period from 8 August 2003 (being the date of incorporation of Popular Asset) to 31 October 2004, Popular Asset recorded a net loss of approximately HK$107,000 and no profits tax was incurred as Popular Asset did not derive any assessable profit for the same period. Based on the same accounts, the total assets value of Popular Asset as at 31 October 2004 was approximately HK$2.4 million.

Popular Asset is principally engaged in the business of the provision of information technology and telecommunication facility management services. It operates a data center in Hong Kong which provides a wide range of services, such as server hosting and facilities management, internet connectivity, systems management and internet technology services and other value-added services.

4. CONDITIONS OF THE ACQUISITION

Completion of the Acquisition is conditional on the satisfaction of, amongst others, the following conditions:

• (a) the Purchaser being satisfied with the results of the due diligence review on the business, operation and assets of Popular Asset; and

• (b) all necessary consents required (if any) in relation to the Acquisition being granted by third parties (including governmental or official).

As all of the above conditions have been satisfied, Completion took place on 11 January 2005. Upon Completion, Popular Asset has become a wholly-owned subsidiary of the Company.

5. REASONS FOR THE ACQUISITION

The Group is principally engaged in the design, manufacture and sale of a wide range of leisure and athletic footwear. The Group is also engaged in information technology business such as the provision of system integration services and the development of information technology infrastructure network in the PRC.

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LETTER FROM THE BOARD

The Board is of the view that the information technology businesses of the Group shall be strengthened and diversified by the Acquisition. Popular Asset currently operates a data center in Hong Kong. The Acquisition is expected to bring a potential source of recurring income to the Group and provides synergies to the existing information technology related businesses of the Group. The Directors are optimistic that the Acquisition will strengthen the network platform of the Group and facilitate the Company towards the imminent information technology related business opportunities in Hong Kong and the PRC. Given the potential of the information technology market in the PRC and Hong Kong, the Company will continue to explore any opportunity for the development and investment of the information technology business in the PRC and Hong Kong.

Upon Completion, Popular Asset has become a subsidiary of the Group. In accordance to the Statement of Standard Accounting Practice 32 issued by the Hong Kong Institute of Certified Public Accountants, the respective assets and liabilities, earnings of Popular Asset are expected to be consolidated into the Group’s financial results for the financial year ending 30 September 2005.

Based on the unaudited management accounts of Popular Asset as at 31 October 2004 set out in the section headed “Information on Popular Asset” above, Popular Asset recorded a net loss and the total assets value of approximately HK$2.4 million. The consolidated total assets value of the Group shall be slightly increased by the Acquisition. Save as disclosed above, the Acquisition is not expected to have any impact in the earnings and total assets of the Group.

6. FURTHER INFORMATION

Your attention is drawn to the general information set out in the appendix to this circular.

Yours faithfully

For and on behalf of

SUNNY GLOBAL HOLDINGS LIMITED Lee Man Fa Chairman

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GENERAL INFORMATION

APPENDIX

1. RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with respect to 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 the omission of which would make any statement herein misleading.

2. DISCLOSURE OF INTERESTS

As at the Latest Practicable Date, no Directors or chief executive of the Company, save as disclosed below, had or was deemed to have any interests or short positions in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they are deemed or taken to have under such provisions of the SFO) or which were required, pursuant to section 352 of the SFO to be entered in the register referred to therein or which were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Companies, to be notified to the Company and the Stock Exchange:

Long position in the shares of the Company

		Number of issued	Percentage of the
Name of Director	Capacity	ordinary shares held	issued share capital
Mr. Lee Man Fa	Corporate interest	302,500,000	29.37%
	(Note)

Note: The 302,500,000 shares referred to above comprise 196,792,000 shares and 105,708,000 shares held by Info Fortune Holdings Limited and Rainbow Bridge Group Limited respectively, both of which are wholly owned by Mr. Lee Man Fa.

3. SUBSTANTIAL SHAREHOLDERS

Save as disclosed below, as at the Latest Practicable Date, according to the register of interests kept by the Company under section 336 of the SFO and so far as is known to the Directors, no other person other than a Director whose interests are disclosed above, had an interest or short position in the shares and underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or, was, directly or indirectly,

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GENERAL INFORMATION

APPENDIX

interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meeting of any other member of the Group or had any option in respect of such capital:

Long position in the shares of the Company

		Number of	Percentage of
		issued ordinary	the issued
Name of Shareholders	Capacity	shares held	share capital
Info Fortune Holdings Limited	Beneficial owner	196,792,000	19.11%
	(Note)
Rainbow Bridge Group Limited	Beneficial owner	105,708,000	10.26%
	(Note)
Grandtech Management Limited	Beneficial owner	160,544,458	15.59%
Win Power Limited	Beneficial owner	151,060,000	14.67%

Note: Both Info Fortune Holdings Limited and Rainbow Bridge Group Limited are wholly owned by Mr. Lee Man Fa.

4. SERVICE CONTRACTS

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

5. LITIGATION

No member of the Group was engaged in any litigation or arbitration proceedings of material importance as at the Latest Practicable Date and there was no litigation or claim of material importance known to the Directors to be pending or threatened against any member of the Group.

6. COMPETING INTEREST

As at the Latest Practicable Date, in so far as the Directors are aware, none of the Directors or their respective associates (as defined in the Listing Rules) had any interest in a business which competes or likely to compete with the business of the Group.

7. EXPERT AND CONSENT

Castores Magi Asia Limited, an independent professional valuation company, has made a statement which is contained in this circular. Castores Magi Asia Limited has given and has not withdrawn its written consent to the issue of this circular with the inclusion of references to its name and statement in the form and context in which they appear.

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GENERAL INFORMATION

APPENDIX

8. EXPERT’S INTERESTS IN ASSETS

As at the Latest Practicable Date, Castores Magi Asia Limited did not have any shareholding interest in any member of the Group or any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

9. MISCELLANEOUS

• (a) The company secretary and qualified accountant of the Company is Mr. Kwok Ming Fai, who is an associate member of the Hong Kong Institute of Certified Public Accountants.

• (b) The principal share registrar and transfer office of the Company is Butterfield Fund Services (Bermuda) Limited whose address is Rosebank Centre, 11 Bermudiana Road, Pembroke, Bermuda.

• (c) The branch share registrar and transfer office of the Company in Hong Kong is Computershare Hong Kong Investor Services Limited whose address is 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong.

• (d) The English text of this circular will prevail over the Chinese text in case of any inconsistency.

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