China City Infrastructure Group Limited — Proxy Solicitation & Information Statement 2004

May 3, 2004

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in doubt as to any aspect of this circular, 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 shares (the “ Shares ”) of HK$0.01 each in the capital of Wah Yuen Holdings Limited, you should at once hand this circular and the accompanying form of proxy to the purchaser or the transferee or to the bank, stockbroker or other agent through whom the sale or the transfer was effected for transmission to the purchaser or the transferree.

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.

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Wah Yuen Holdings Limited 華園控股有限公司

(incorporated in the Cayman Islands with limited liability) (Stock Code: 2349)

(1) PROPOSED GRANT OF GENERAL MANDATES TO ISSUE NEW SHARES AND REPURCHASE BY THE COMPANY OF ITS OWN SHARES; (2) PROPOSED AMENDMENTS TO ARTICLES OF ASSOCIATION; AND

(3) PROPOSED RE-ELECTION OF DIRECTORS

A notice convening an annual general meeting of the Company to be held at 2/F., On Shing Industrial Building, Nos. 2-16 Wo Liu Hang Road, Fo Tan, Shatin, New Territories, Hong Kong at 9:30 a.m. on Thursday, 27 May 2004 is set out on pages 69 to 80 of the annual report of the Company. A form of proxy for use at the annual general meeting is enclosed with the annual report. Such form of proxy is also published on the website of The Stock Exchange of Hong Kong Limited at www.hkex.com.hk.

Whether or not you are able to attend the annual general meeting, you are requested to complete the form of proxy, in accordance with the instructions printed thereon and deposit the same at the offices of the Company’s branch share registrar and transfer office in Hong Kong, Tengis Limited at Ground Floor, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for the holding of the annual general meeting or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the annual general meeting or any adjournment thereof should you so wish.

30 April 2004

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
General Mandate and Repurchase Mandate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Amendments to the Articles of Association . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Re-election of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
Action to be taken . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
Responsibility statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
Appendix I – Explanatory statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
Appendix II – Procedures by which Shareholders may demand
a poll at general meeting pursuant to the Articles of Association. . . . . . . . . . . .	16
Appendix III – Details of Directors proposed to be re-elected at the AGM. . . . . . . . . . . . . . . . .	17

• i -

DEFINITIONS

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

“AGM”

the annual general meeting of the Company to be convened and held to consider and, if thought fit, to approve, among other things, the proposed grant of the General Mandate and the Repurchase Mandate, the proposed amendments to the Articles of Association and the re-election of Directors

“Articles of Association”	the articles of association of the Company
“associate”	has the meaning ascribed to this term under the Listing Rules
“Board”	the board of Directors
“Company”	Wah Yuen Holdings Limited, a company incorporated in Bermuda
	with limited liability and the issued Shares of which are listed on
	the main board of the Stock Exchange
“Directors”	the directors of the Company
“General Mandate”	the general mandate proposed to be granted to the Directors at the
	AGM to issue further new Shares not exceeding 20% of the issued
	share capital of the Company
“Group”	the Company and all of its subsidiaries
“Hong Kong”	the Hong Kong Special Administrative Region of the People’s
	Republic of China
“Latest Practicable Date”	27 April 2004, being the latest practicable date prior to the printing
	of this circular for the purpose of ascertaining certain information
	contained in this circular
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange
“Repurchase Mandate”	the repurchase mandate proposed to be granted to the Directors at
	the AGM to repurchase up to 10% of the issued share capital of
	the Company
“SFO”	the Securities and Futures Ordinance (Chapter 571 of Laws of
	Hong Kong)

• 1 -

	DEFINITIONS
“Share(s)”	ordinary share(s) of HK$0.01 each in the share capital of the
	Company
“Shareholder(s)”	holder(s) of the Share(s)
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Takeovers Code”	the Hong Kong Code on Takeovers and Mergers
“%”	per cent.

• 2 -

LETTER FROM THE BOARD

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Wah Yuen Holdings Limited 華園控股有限公司

(incorporated in the Cayman Islands with limited liability) (Stock Code: 2349)

Executive Directors: Mr But Ching Pui (Honorary Chairman) Mr But Ka Wai (Chairman) Mr But Chai Tong Mr Lai Wing Kuen Mr Chu Kin Wah

Non-executive Directors:

Ms Leung Wai Ling Mr Ngai Chun Kong, Stephen

Independent non-executive Directors:

Mr Cheung Yu Yan, Tommy Mr Ip Shing Tong, Francis Mr Ku Siu Fung, Stephen

Registered office: Century Yard Cricket Square Hutchins Drive P.O. Box 2681 GT George Town Grand Cayman British West Indies

Head office and principal place

of business in Hong Kong: 2nd Floor On Shing Industrial Building Nos. 2-16 Wo Liu Hang Road Fo Tan, Shatin New Territories Hong Kong

30 April 2004

To the shareholders

Dear Sir or Madam

(1) PROPOSED GRANT OF GENERAL MANDATES TO ISSUE NEW SHARES AND REPURCHASE BY THE COMPANY OF ITS OWN SHARES; (2) PROPOSED AMENDMENTS TO ARTICLES OF ASSOCIATION; AND

• (3) PROPOSED RE-ELECTION OF DIRECTORS

INTRODUCTION

At the AGM to be held at 2/F., On Shing Industrial Building, Nos. 2-16 Wo Liu Hang Road, Fo Tan, Shatin, New Territories, Hong Kong on Thursday, 27 May 2004 at 9:30 a.m., resolutions will be proposed:

• (a) to declare a final dividend for the year ended 31 December 2003 of HK2 cents per Share;

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LETTER FROM THE BOARD

• (b) to amend the Articles of Association;

• (c) to re-elect the Directors;

• (d) to grant the General Mandate to the Directors;

• (e) to grant the Repurchase Mandate to the Directors; and

• (f) to increase the number of Shares to be allotted and issued under the General Mandate by an additional number representing such number of Shares repurchased under the Repurchase Mandate.

The purpose of this circular is to provide you with information relation to the resolutions to be proposed at the AGM for the grant of the General Mandate and the Repurchase Mandate, the proposed amendments to the Articles of Association and the re-election of Directors.

GENERAL MANDATE AND REPURCHASE MANDATE

The General Mandate and the Repurchase Mandate shall be effective until whichever is the earliest

of:

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

• (b) the expiration of the period within which the next annual general meeting of the Company is required by the Articles of Association, or any other applicable law of the Cayman Islands to be held; or

• (c) the passing of an ordinary resolution by the Shareholders in general meeting revoking or varying the authority given to the Directors.

Under the Listing Rules, the Company is required to give to the Shareholders all information which is reasonably necessary to enable Shareholders to make an informed decision as to whether to vote for or against the resolution to renew the grant to the Directors of the Repurchase Mandate. The explanatory statement required by the Listing Rules to be included in this circular is set out in the Appendix I.

In order to ascertain the entitlements to the final dividend for the year ended 31 December 2003, the register of members of the Company will be closed from Thursday, 20 May 2004 to Thursday, 27 May 2004 (both dates inclusive) during which period no transfer of Shares will be registered.

The last day for dealing in Shares cum entitlements to the proposed final dividend for the year ended 31 December 2003 will be Wednesday, 19 May 2004. Shareholders are reminded that in order to qualify for the proposed final dividend for the year ended 31 December 2003, all transfers of Shares accompanied by the relevant share certificates and transfer forms must be lodged with the Company’s branch share registrar in Hong Kong, Tengis Limited, at Ground Floor, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong not later than 4:00 p.m. on Wednesday, 19 May 2004.

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LETTER FROM THE BOARD

Please also refer to the announcement of the Company dated 26 April 2004 in relation to the declaration of the final dividend.

General Mandate

The Company has in issue an aggregate of 200,000,000 Shares as at 27 April 2004, being the Latest Practicable Date. Subject to the passing of the proposed resolution for the approval of the General Mandate and in accordance with the terms therein, the Company would be allowed to allot and issue up to a maximum of 40,000,000 Shares, representing 20% of the aggregate nominal amount of the issued Shares at the time of the passing of the resolution approving the General Mandate on the basis that no further Shares will be issued or repurchased by the Company prior to the AGM.

The Directors have no immediate plans to issue any new Shares other than Shares which may fall to be issued under the share option scheme providing for the allotment and issue of Shares in lieu of whole or part of a dividend in accordance with the Articles of Association or any scrip dividend scheme which may be approved by the Shareholders.

Repurchase Mandate

On pages 69 to 80 of the annual report of the Company in respect of the financial year ended 31 December 2003 is the notice of the AGM. At the AGM, and as part of the special business of the AGM, an ordinary resolution will be proposed to grant the Repurchase Mandate to the Directors.

AMENDMENTS TO THE ARTICLES OF ASSOCIATION

The Stock Exchange has recently announced amendments to the Listing Rules relating to, among other things, the articles of association or equivalent constitutional documents of listed issuers. The amendments to the Listing Rules have come into effect on 31 March 2004. Accordingly, the Directors propose to seek the approval of the Shareholders for the amendments to the Articles of Association to ensure compliance with the amendments made to the Listing Rules.

The Directors propose to seek the approval of the Shareholders by way of a special resolution at the AGM for the following amendments to the Articles of Association:

Article 1(A)

1. By inserting the following new definitions in Article 1(A):

2. ““associate” the meaning attributed to it in the Listing Rules.

3. “Listing Rules” shall mean the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.”

4. 5 -

LETTER FROM THE BOARD

Article 84

By deleting the existing Article 84 in its entirety and replacing therewith the following new Articles 84(A) and 84(B):

• “84 (A) Subject to paragraph (B) of this Article 84, no objection shall be raised to the qualification of any person exercising or purporting to exercise a vote or the admissibility of any vote except at the meeting or adjourned meeting at which the vote objected to is given or tendered, and every vote not disallowed at such meeting shall be valid for all purposes. Any such objection made in due time shall be referred to the Chairman, whose decision shall be final and conclusive.

• (B) At all times during the Relevant Period (but not otherwise), where any shareholder is, under the Listing Rules, required to abstain from voting on any particular resolution or restricted to voting only for or only against any particular resolution, any votes cast by or on behalf of such shareholder (whether by way of proxy or, as the case may be, corporate representative) in contravention of such requirement or restriction shall not be counted.”

Article 107

By deleting paragraphs (D), (E), (G), (H), (I), (J), (K) and (L) of the existing Article 107 in their entirety and replacing therewith the following new paragraphs respectively:

• “ (D) A Director shall not vote or be counted in the quorum on any resolution of the Directors concerning his own appointment or the appointment of any of his associates as the holder of any office or place of profit with the Company or any other company in which the Company is interested (including the arrangement or variation of the terms thereof, or the termination thereof).

• (E) Where arrangements are under consideration concerning the appointment (including the arrangement, remuneration or variation of the terms thereof, or the termination thereof) of two or more Directors or any of the associate(s) of any such Directors to offices or places of profit with the Company or any other company in which the Company is interested, a separate resolution may be put in relation to each Director or, as the case may be, the associate(s) of such Director and in such case each of the Directors concerned shall be entitled to vote (and be counted in the quorum) in respect of each resolution except that concerning hs own appointment or the appointment of any of his associates (or the arrangement or variation of the terms thereof, or the termination thereof) and (in the case of an office or place of profit with any such other company as aforesaid) where the other company is a company in which the Director and his associates in aggregate own five (5) per cent. or more of the issued shares of any class of the voting equity share capital of such company or of the voting rights of any class of shares of such company (other than shares which carry no voting rights at general meetings and no or nugatory dividend and return of capital rights).

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LETTER FROM THE BOARD

• (G) If to the knowledge of a Director, he or any of his associates, is in any way, whether directly or indirectly, interested in a contract or arrangement or proposed contract or arrangement with the Company, he shall declare the nature of his or, as the case may be, his associate(s)’ interest at the meeting of the Directors at which the question of entering into the contract or arrangement is first taken into consideration, if he knows his interests or that of his associate(s) then exists, or in any other case at the first meeting of the Directors after he knows that he or his associate(s) is or has become so interested. For the purposes of this Article, a general notice to the Directors by a Director to the effect that (a) he or his associates is a shareholder of a specified company or firm and is to be regarded as interested in any contract or arrangement which may after the ate of the notice be made with that company or firm or (b) he or his associates is to be regarded as interested in any contract or arrangement which may after the date of the notice be made with a specified person who is connected with him or any of his associates, shall be deemed to be a sufficient declaration of interest under this Article in relation to any such contract or arrangement; provided that no such notice shall be effective unless either it is given at a meeting of the Directors or the Director takes reasonable steps to secure that it is brought up and read at the next meeting of the Directors after it is given.

• (H) A Director shall not vote (nor be counted in the quorum) on any resolution of the Directors approving any contract or arrangement or proposal in which he or his associates is to his knowledge materially interested, and if he shall do so his vote shall not be counted (nor is he counted in the quorum for that resolution), but this prohibition shall not apply to any of the following matters namely:

• (i) any contract or arrangement for the giving by the Company of any security or indemnity to the Director or his associates in respect of money lent or obligation undertaken by him or any of them at the request of or for the benefit of the Company or any company in which the Company has interest;

• (ii) any contract or arrangement for the giving by the Company of any security or indemnity to a third party in respect of a debt or obligation of the Company or any company in which the Company has interest which the Director or his associates has himself/themselves guaranteed or secured or otherwise assumed responsibility in whole or in part and whether alone or jointly under a guarantee or by the giving of security;

• (iii) any contract or arrangement by the Director or his associates to subscribe for shares or debentures or other securities of the Company to be issued pursuant to any offer or invitation to the shareholders or debenture or securities holders of the Company or to the public which does not provide the Director or his associates any privilege not accorded to any other shareholders or debenture or securities holders of the Company or to the public;

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LETTER FROM THE BOARD

• (iv) any contract or arrangement concerning an offer of the shares or debentures or other securities of or by the Company or any other company which the Company may promote or be interested in for subscription or purchase where the Director or his associates is/are or is/are to be interested as a participant in the underwriting or sub-underwriting of the offer and/or for the purposes of making any representations, the giving of any covenants, undertakings or warranties or assuming any other obligations in connection with such offer;

• (v) any contract or arrangement in which the Director or his associates is/are interested in the same manner as other holders of shares or debentures or other securities of the Company by virtue only of his/their respective interest in shares or debentures or other securities of the Company and/or his/their being the offeror or one of the offerors or is interested in one of the offerors for the purchase or effective acquisition of such shares, debentures or other securities;

• (vi) any contract or arrangement concerning any other company in which the Director or his associates is/are interested only, whether directly or indirectly or as an officer or an executive or a shareholder in which the Director or his associates is/are beneficially interested in shares of that company provided that, he, or his associates, is/are not in aggregate beneficially interested in five (5) per cent. or more of the issued shares of any class of the voting equity share capital or such company or of the voting rights of any class of shares of such company (other than shares which carry no voting rights at general meetings and no or nugatory dividend and return of capital rights);

• (vii) any proposal or arrangement for the benefit of employees of the Company or its subsidiaries including the adoption, modification or operation of a pension fund or retirement, death or disability benefit scheme or personal pension plan under which a Director, his associate(s) and employees of the Company or of any of its subsidiaries may benefit and which has been approved by or is subject to and conditional on approval by the relevant taxing authorities for taxation purposes or relates both to Directors, associate(s) of Directors and employees of the Company or of any of its subsidiaries and does not give the Director or his associates any privilege not accorded to the class of persons to whom such scheme or fund relates;

• (viii) any proposal concerning the adoption, modification or operation of any employees’ share scheme involving the issue or grant of options over shares or other securities by the Company to, or for the benefit of the employees of the Company or its subsidiaries under which the Director or his associates may benefit; and

• (ix) any contract, transaction or proposal concerning the purchase and/or maintenance of any insurance policy for the benefit of any Director, his associate(s), officer or employee pursuant to these Articles.

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LETTER FROM THE BOARD

• (I) A company shall be deemed to be a company in which a Director and his associates own five (5) per cent. or more of any class of the voting equity share capital of such company or of the voting rights of any class of shares of such company if and so long as (but only if and so long as) he and his associates are (either directly or indirectly) the holder of or beneficially interested in five (5) per cent. or more of any class of the issued voting equity share capital of such company (or of any third company, other than the Company or any of its subsidiaries, through which his interest is derived) or of the voting rights of any class of shares of the company. For the purpose of this paragraph there shall be disregarded any shares held by a Director or any of his associate(s) as bare or custodian trustee and in which he or such associate(s) has/have no beneficial interest, any shares comprised in a trust in which the interest of the Director or any of his associates is in reversion or remainder if and so long as some other person is entitled to receive the income thereof, any shares comprised in an authorised unit trust scheme in which the Director or any of his associates is interested only as a unit holder, and shares which carry no voting right at general meetings and no or nugatory dividend and return of capital rights.

• (J) Where a company (other than a company which is a wholly owned subsidiary of the Company or a subsidiary or associated company of the Company in the voting equity capital of which neither the Director nor any of his associates has any interests) in which a Director and any of his associates hold five (5) per cent. or more of any class of the voting equity share capital of such company or of the voting rights of any class of shares available to shareholders of the company is materially interested in a transaction, then that Director shall also be deemed materially interested in such transaction.

• (K) If any question shall arise at any meeting of the Directors as to the materiality of the interest of a Director or any of his associates as to the entitlement of any Director to vote or be counted in the quorum and such question is not resolved by his voluntarily agreeing to abstain from voting or not to be counted in the quorum, such question (unless it relates to the Chairman) shall be referred to the Chairman and his ruling in relation to such Director shall be final and conclusive except in a case where the nature or extent of the interest of the Director concerned or his associates as known to such Director has not been fairly disclosed to the other Directors. If any question as aforesaid shall arise in respect of the Chairman such question shall be decided by a resolution of the Directors (for which purpose the Chairman shall not be counted in the quorum and shall not vote thereon) and such resolution shall be final and conclusive except in a case where the nature or extent of the interest of the Chairman or his associates as known to him has not been fairly disclosed to the other Directors.

• (L) The provisions of paragraphs (D), (E), (H), (I), (J) and (K) of this Article 107 shall apply during the Relevant Period but not otherwise. In respect of all periods other than the Relevant Period, a Director may vote in respect of any contract, arrangement or transaction or proposed contract, arrangement or transaction notwithstanding that he or any of his associates is or may be interested therein and, if he does so, his vote

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LETTER FROM THE BOARD

shall be counted and he may be counted in the quorum at any meeting of the Directors at which any such contract, arrangement or transaction or proposed contract, arrangement or transaction shall come before the meeting for consideration provided that he has, where relevant, first disclosed his interest in accordance with paragraph (G).”

Article 113

By inserting “and the period for lodgment of such notices shall commence no earlier than the day immediately after the dispatch of the notice of the general meeting and ending no later than seven days before the date of such general meeting.” after the last sentence of Article 113.

RE-ELECTION OF DIRECTORS

According to Article 108, one-third of the Directors for the time being, or, if their number is not three or a multiple of three, then the number nearest to but not exceeding one-third, shall retire from office by rotation at every annual general meeting of the Company. A retiring Director shall be eligible for re-election.

In accordance with Article 108, Ms Leung Wai Ling, Mr Ngai Chun Kong, Stephen and Mr Ku Siu Fung, Stephen shall retire from office by rotation at the AGM. Being eligible, each of Ms Leung Wai Ling, Mr Ngai Chun Kong, Stephen and Mr Ku Siu Fung, Stephen will offer himself for re-election as executive Directors. At the AGM, an ordinary resolution will be proposed to re-elect Ms Leung Wai Ling, Mr Ngai Chun Kong, Stephen and Mr Ku Siu Fung, Stephen as executive Directors.

Particulars relating to Ms Leung Wai Ling, Mr Ngai Chun Kong, Stephen and Mr Ku Siu Fung, Stephen are set out in Appendix III to this circular.

ACTION TO BE TAKEN

Whether or not you intend to attend the AGM, you are requested to complete and return the form of proxy accompanying the annual report of the Company in accordance with the instructions printed thereon not less than 48 hours before the time appointed for holding the AGM. The completion and return of a form of proxy will not preclude you from attending and voting at the AGM and adjournment thereof in person if you so wish.

RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Group. 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.

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LETTER FROM THE BOARD

RECOMMENDATION

The Directors believe that the proposed grant of the General Mandate and the Repurchase Mandate, the proposed amendments to the Articles of Association and the proposed re-election of Directors are in the best interests of the Company and the Shareholders as a whole and recommend the Shareholders to vote in favour of the above resolutions to be proposed at the AGM.

The Repurchase Mandate may, depending on market conditions and funding arrangements at the time, lead to an enhancement of the net assets value of the Company and its net assets and/or earnings per Share and will only be made when the Directors believe that a repurchase of Shares will benefit the Company and the Shareholders as a whole.

An exercise of the Repurchase Mandate in full could have a material adverse impact on the working capital and gearing position of the Company compared with that as at 31 December 2003, being the date of its latest published audited consolidated accounts. The Directors do not, however, intend to make any repurchase in circumstances that would have a material adverse impact on the working capital or gearing position of the Company.

The Directors believe that an exercise of the General Mandate to allot and issue new Shares will enable the Company to take advantage of market conditions to raise additional capital for the Company.

Yours faithfully For and on behalf of the board of Directors of Wah Yuen Holdings Limited But Ka Wai

Chairman

• 11 -

EXPLANATORY STATEMENT

APPENDIX I

This Appendix serves as an explanatory statement, as required by the Listing Rules, to provide requisite information to you for your consideration of the Repurchase Mandate.

1. REPURCHASE OF SECURITIES FROM CONNECTED PARTIES

The Listing Rules prohibit a company from knowingly purchasing securities on the Stock Exchange from a “connected person”, that is, a director, chief executive or substantial shareholder of the Company or any of its subsidiaries or their respective associates (as defined in the Listing Rules) and a connected person is prohibited from knowingly selling his/her/its securities to the Company.

No connected person of the Company has notified the Company that he/she/it has a present intention to sell any Shares to the Company nor has any such connected person undertaken not to sell any of the Shares held by him/her/it to the Company in the event that the Repurchase Mandate is passed.

2. SHARE CAPITAL

As at the Latest Practicable Date, the issued share capital of the Company comprised 200,000,000 fully paid Shares.

Subject to the passing of the proposed resolution for the approval of the Repurchase Mandate and on the basis that no further Shares are issued or repurchased by the Company prior to the AGM, the Company will be allowed under the Repurchase Mandate to repurchase a maximum of 20,000,000 fully paid Shares.

3. REASONS FOR THE REPURCHASE

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

4. FUNDING OF REPURCHASES

Pursuant to the Repurchase Mandate, repurchase would be funded entirely from the Company’s available cash flow or working capital facilities which will be funds legally available under the Cayman Islands law and the memorandum and articles of association of the Company for such purpose.

An exercise of the Repurchase Mandate in full could have a material adverse impact on the working capital and gearing position of the Company compared with that as at 31 December 2003, being the date of its latest published audited consolidated accounts. The Directors do not, however, intend to make any repurchase in circumstances that would have a material adverse impact on the working capital or gearing position of the Company.

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EXPLANATORY STATEMENT

APPENDIX I

5. SHARE PRICES

The highest and lowest closing prices at which the Shares have traded on the Stock Exchange in each of the previous eleven calendar months since 25 June 2003 (being the date of listing) were as follows:

	Highest	Lowest
	HK$	HK$
June 2003 (since 25 June 2003)	0.91	0.81
July 2003	1.02	0.80
August 2003	1.03	0.93
September 2003	0.97	0.83
October 2003	0.89	0.75
November 2003	0.82	0.73
December 2003	0.77	0.66
January 2004	0.72	0.64
February 2004	0.80	0.55
March 2004	0.70	0.59
April 2004_(up to the Latest Practicable Date)_	0.63	0.56

6. DISCLOSURE OF INTERESTS AND MINIMUM PUBLIC HOLDING

None of the Directors or, to the best of their knowledge having made all reasonable enquiries, their associates, have any present intention to sell to the Company or is subsidiaries any of the Shares in the Company if the Repurchase Mandate is approved at the AGM and exercised.

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 Mandate in accordance with the Listing Rules and applicable laws of the Cayman Islands.

If a shareholder’s proportionate interest in the voting rights of the Company increases on the Company exercising its powers to repurchase Shares pursuant to the Repurchase Mandate, such increase will be treated as an acquisition for the purposes of Rule 32 of the Takeovers Code. As a result, a shareholder or 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.

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EXPLANATORY STATEMENT

APPENDIX I

As at the Latest Practicable Date, the following Shareholders are interested in more than 10 per cent. of the Shares then in issue:

Name	Number of Shares	Percentage holding
Able Success Group Limited (“ASG Limited”)	60,500,000	30.25%
National Chain International Limited
(“NCI Limited”)	57,000,000	28.5%
Mr But Ka Wai_(Note 1)_	60,500,000	30.25%
Mr But Chai Tong_(Note 2)_	57,000,000	28.5%
Ms Chan Yuk Ha_(Note 3)_	60,500,000	30.25%
Ms Chang Tei Wah, Teresa_(Note 4)_	57,000,000	28.5%

Notes:

1. The interest in the Shares will be held through ASG Limited, the entire issued share capital of which is beneficially owned by Mr But Ka Wai.

2. The interest in the Shares will be held through NCI Limited, the entire issued share capital of which is beneficially owned by Mr But Chai Tong,

3. Ms Chan Yuk Ha is the wife of Mr But Ka Wai and is deemed to be interested in the Shares in which Mr But Ka Wai is interested under the provisions of Divisions 2 and 3 of Part XV of the SFO.

4. Ms Chang Tei Wah, Teresa is the wife of Mr But Chai Tong and is deemed to be interested in the Shares in which Mr But Chai Tong is interested under the provisions of Divisions 2 and 3 of Part XV of the SFO.

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EXPLANATORY STATEMENT

APPENDIX I

In the event that the Directors exercise in full the power to repurchase Shares in accordance with the Repurchase Mandate, the total interests of the above Shareholders in the Shares would be increased to:

	Approximate
Name	percentage holding
ASG Limited	33.61%
NCI Limited	31.66%
Mr But Ka Wai_(Note 1)_	33.61%
Mr But Chai Tong_(Note 2)_	31.66%
Ms Chan Yuk Ha_(Note 3)_	33.61%
Ms Chang Tei Wah, Teresa_(Note 4)_	31.66%

The Directors are not aware of any consequences which may arise under the Takeover Code as consequences of any purchase made under the Repurchase Mandate. However, the Company may not repurchase Shares which would result in the amount of Shares held by the public being reduced to less than 25%.

On the basis of the current shareholding of ASG Limited, NCI Limited, Mr But Ka Wai, Mr But Chai Tong, Ms Chan Yuk Ha and Ms Chang Tei Wah, Teresa, an exercise of the Repurchase Mandate in full will not result in it becoming obliged to make a mandatory offer under Rule 26 of the Takeovers Code.

At as the Latest Practicable Date, the Directors have no intention to exercise any of the Repurchase Mandate.

The Directors have no intention to exercise the Repurchase Mandate to such an extent that will result in a requirement of ASG Limited, NCI Limited, Mr But Ka Wai, Mr But Chai Tong, Ms Chan Yuk Ha and Ms Chang Tei Wah, Teresa to make a general offer under the Takeovers Code or the number of Shares in the hands of public falls below the prescribed minimum percentage of 25 per cent..

7. SHARES REPURCHASE MADE BY THE COMPANY

The Company had not purchased any of its Shares (whether on the Stock Exchange or otherwise) since 25 June 2003 (being the date of listing) and up to the date of this document.

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APPENDIX II PROCEDURES BY WHICH SHAREHOLDERS MAY DEMAND A POLL AT GENERAL MEETING PURSUANT TO THE ARTICLES OF ASSOCIATION

The procedures by which the Shareholders may demand a poll at the AGM are set out in this Appendix.

According to Article 72, at any general meeting a resolution put to the vote of the meeting shall be decided on a show of hands unless a poll is (before or on the declaration of the result of the show of hands or on the withdrawal of any other demand for a poll) demanded. A poll may be demanded by:

• (a) the chairman of the meeting; or

• (b) at least three Shareholders present in person (or, in the case of a Shareholder being a corporation, by its duly authorised representative) or by proxy for the time being entitled to vote at the meeting; or

• (c) any Shareholder or Shareholders present in person (or, in the case of a Shareholder being a corporation, by its duly authorised representative) or by proxy and representing not less than one-tenth of the total voting rights of all Shareholders having the right to vote at the meeting; or

• (d) any Shareholder or Shareholders present in person (or, in the case of a Shareholder being a corporation, by its duly authorised representative) or by proxy and holding shares in the Company conferring a right to vote at the meeting being shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all the shares conferring that right.

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DETAILS OF DIRECTORS PROPOSED TO BE RE-ELECTED AT THE AGM

APPENDIX III

The details of the Directors who will retire from office by rotation at the AGM and being eligible, will offer themselves for re-election at the AGM, are set out below:

Ms Leung Wai Ling, aged 76, is a non-executive Director. She is the wife of Mr But Ching Pui and the mother of Mr But Ka Wai and Mr But Chai Tong. Ms Leung is not responsible for the daily operations of the Group. Her role in the Group is to advise on the Group’s overall strategic planning. Ms Leung has over 45 years of experience in the snack food manufacturing business. Ms Leung joined the Group in 1960 and was appointed on 28 May 2003 as a non-executive Director for a term of two years. Ms Leung, being the wife of Mr But Ching Pui, is deemed to hold the 7,000,000 Shares (representing 3.5 % of the entire issued share capital of the Company) registered in the name of Mr But Ching Pui in the register of the Company as at the Latest Practicable Date. Save as disclosed, Ms Leung does not have, and is not deemed to have, any other interests or short positions in any shares, underlying shares or debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO). Ms Leung does not have any other relationship with other Directors, senior management, substantial shareholders or controlling shareholders of the Company.

Mr Ngai Chun Kong, Stephen, aged 45, is a non-executive Director. Mr Ngai is a member of The Toys Manufacturers’ Association of Hong Kong Limited and a director of The Chiu Chau Plastic Manufacturing Association Company Limited. He is also a director of Artin International (Holdings) Limited and Co-Pack Printing Products Limited. Mr Ngai has over 20 years of experience in the toy and printing industry. He joined the Group on 28 May 2003 when he was appointed as a non-executive Director for a term of two years. Mr Ngai does not have, and is not deemed to have, any other interests or short positions in any shares, underlying shares or debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO). Mr Ngai is one of the members of the audit committee of the Company. Mr Ngai does not have any relationship with other Directors, senior management, substantial shareholders or controlling shareholders of the Company.

Mr Ku Siu Fung, Stephen, aged 49, is an independent non-executive Director. Mr Ku is a member of The Hong Kong Institute of Architects. He has also been a director of Chau, Ku & Leung Architects and Engineers Limited since 1991. Mr Ku has over 20 years of experience in architecture. He joined the Group on 28 May 2003 when he was appointed as an independent non-executive Director for a term of two years. Mr Ku does not have, and is not deemed to have, any other interests or short positions in any shares, underlying shares or debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO). Mr Ku is one of the members of the audit committee of the Company. Mr. Ku does not have any relationship with other Directors, senior management, substantial shareholders or controlling shareholders of the Company.

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