China Energy Development Holdings Limited — Proxy Solicitation & Information Statement 2005

Apr 29, 2005

THIS CIRCULAR 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 shares in HON PO GROUP (LOBSTER KING) LIMITED, you should at once hand this circular, together with the enclosed form of proxy 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 the Cayman Islands with limited liability)

(Stock Code: 228)

GENERAL MANDATES TO ISSUE AND TO REPURCHASE SHARES AND RE-ELECTION OF RETIRING DIRECTORS

A notice convening an annual general meeting of Hon Po Group (Lobster King) Limited to be held at Hon Po Restaurant of 1st Floor, 78A-B, To Kwa Wan Road, Kowloon on Monday, 4 July 2005 at 4:00 p.m. is contained in the Annual Report 2004 of the Company. Shareholders are advised to read the notice and to complete and return the form of proxy enclosed with the Annual Report 2004 in accordance with the instructions printed thereon as soon as possible and in any event not later than 48 hours before the time appointed for the holding of the Annual General Meeting or any adjourned meeting. Completion and return of the form of proxy shall not preclude you from attending and voting at the meeting or any adjourned meeting should you so desire.

29 April 2005

CONTENTS

		Page
Definitions	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from	the Chairman . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
Appendix I	– Explanatory Statement for the Repurchase Mandate . . . . . . . . . . . . . . . .	8
**Appendix II **	– Details of the Retiring Directors Proposed for Re-election. . . . . . . . . . . .	11

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DEFINITIONS

In this circular, 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 Hon Po Restaurant of 1st Floor, 78A-B, To Kwa Wan Road, Kowloon on Monday, 4 July 2005 at 4:00 p.m., notice of which is contained in the Annual Report 2004 of the Company

• “Annual Report 2004”

the annual report of the Company for the year ended 31 December 2004

• “Board”

the board of Directors of the Company

• “Company”

• Hon Po Group (Lobster King) Limited, a company incorporated in the Cayman Islands with limited liability

• “Directors”

the directors of the Company

• “HK$”

Hong Kong dollars, the lawful currency of Hong Kong

• “Latest Practicable Date”

• 25 April 2005 being the latest practicable date prior to the printing of this circular for ascertaining certain information contained herein

• “Listing Rules”

the Rules Governing the Listing of Securities on the Stock Exchange as amended from time to time

• “Relevant Period”

means the period from the passing of the resolution concerned until whichever is the earliest of:

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

• (ii) the expiration of the period within which the next annual general meeting of the Company is required by any applicable law or Cayman Islands Law or the existing articles of association to be held; or

• (iii) the passing of an ordinary resolution by the shareholders of the Company in general meeting revoking or varying the authority given to the Directors by the resolution concerned.

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DEFINITIONS

• “Repurchase Mandate”

a general mandate proposed to be granted to the Directors to exercise all the powers of the Company to repurchase Shares in the manner as set out in this circular

• “Rights Issue”

means the allotment or issue of Shares in the Company or other securities which would or might require Shares to be allotted and issued pursuant to an offer made to all the Shareholders (excluding for such purpose any Shareholder who is resident in a place where such offer is not permitted under the laws of that place) and, where appropriate, the holders of other equity securities of the Company entitled to such offer, pro rata (apart from fractional entitlements) to their existing holdings of Shares or such other equity securities

• “SFO” the Securities and Future Ordinance (Chapter 571 of the Laws of Hong Kong) as amended from time to time

• “Share(s)” share(s) of HK$0.05 each in the capital of the Company

• “Shareholder(s)” shareholder(s) of the Company

• “Share Issue Mandate” a general mandate proposed to be granted to the Directors to allot, issue and deal with new Shares in the manner as set out in this circular

• “Stock Exchange” The Stock Exchange of Hong Kong Limited

• “Takeovers Code” Hong Kong Code on Takeovers and Mergers

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LETTER FROM THE CHAIRMAN

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(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 228)

Executive Directors: Mr. Cheung To Sang (Chairman and Managing Director) Mr. Chan Nun Chiu (Deputy Chairman) Mrs. Cheung Lim Mai Tak, Grace Mr. She Hing Chiu Mr. Tse Chick Sang

Registered Office:

Century Yard Cricket Square Hutchins Drive P.O. Box 2681 GT Grand Cayman British West Indies

Independent Non-executive Directors:

Head Office and Principal

Mr. Chang Kin Man Place of Business: Mr. Wu Tak Lung Units E&F, G/F Ms. Lee Pui Hang, Pieann Phase II, Kingsway Industrial Building 173-175 Wo Yi Hop Road Kwai Chung Hong Kong 29 April 2005

To the Shareholders

Dear Sir or Madam,

GENERAL MANDATES TO ISSUE AND TO REPURCHASE SHARES AND RE-ELECTION OF RETIRING DIRECTORS

INTRODUCTION

The purpose of this circular is to provide you with information regarding certain ordinary resolutions to be proposed at the Annual General Meeting to enable you to make an informed decision on whether to vote for or against those resolutions.

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LETTER FROM THE CHAIRMAN

At the Annual General Meeting, resolutions, amongst others, will be proposed for the Shareholders to approve (i) the renewal of general mandates to be given to the Directors to exercise all the powers to repurchase fully paid up securities and to issue new securities of the Company and (ii) the re-election of retiring Directors.

RENEWAL OF GENERAL MANDATE TO REPURCHASE SHARES

Pursuant to the ordinary resolution of the annual general meeting of the Company passed on 27 May 2004, a general and unconditional mandate was given to the Directors to exercise all the powers of the Company to repurchase Shares of the Company. Under the Listing Rules, such general mandate will lapse at the conclusion of the Annual General Meeting unless renewed at that meeting.

An ordinary resolution will be proposed at the Annual General Meeting granting the Directors authority to repurchase Shares up to 10% of the aggregate nominal amount of the share capital of the Company in issue as at the date of passing of the relevant resolution approving the Repurchase Mandate.

An explanatory statement as required under the Listing Rules to provide the requisite information concerning the Repurchase Mandate is set out in the Appendix I hereto.

RENEWAL OF GENERAL MANDATE TO ISSUE SHARES

Pursuant to the ordinary resolution of the extraordinary general meeting of the Company passed on 8 April 2005, a general and unconditional mandate was given to the Directors to exercise all the powers of the Company to allot, issue and deal with Shares of the Company. Under the Listing Rules, such general mandate will lapse at the conclusion of the Annual General Meeting unless renewed at that meeting.

An ordinary resolution will be proposed at the Annual General Meeting granting the Directors authority to allot, issue and deal with Shares up to 20% of the aggregate nominal amount of the share capital of the Company in issue as at the date of passing the relevant resolution approving the Share Issue Mandate.

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LETTER FROM THE CHAIRMAN

EXTENSION OF THE SHARE ISSUE MANDATE

In addition, if the renewal of the Repurchase Mandate and the Share Issue Mandate are approved by Shareholders, an ordinary resolution will be proposed at the Annual General Meeting providing that any Shares repurchased under the Repurchase Mandate (up to a maximum of 10% of the issued shares as at the date of the granting of the Share Issue Mandate) will be added to the total number of Shares which may be allotted and issued under the Share Issue Mandate.

The Repurchase Mandate, Share Issue Mandate and the extension of the Share Issue Mandate will, if approved, remain in effect for the Relevant Period.

In respect of the Repurchase Mandate and the Share Issue Mandate, the Directors wish to state that they have no present intention to exercise either the Repurchase Mandate to repurchase Shares or the Share Issue Mandate to allot new Shares.

DIRECTORS PROPOSED TO BE RE-ELECTED

As at the Latest Practicable Date, the Board comprised of eight Directors of which Mr. Cheung To Sang, Mr. Chan Nun Chiu, Mrs. Cheung Lim Mai Tak, Grace, Mr. She Hing Chiu and Mr. Tse Chick Sang were executive directors, Mr. Chang Kin Man, Mr. Wu Tak Lung and Ms. Lee Pui Hang, Pieann were independent non-executive directors.

Pursuant to the articles 86(3) and 87(1) of the Company’s Articles of Association, Ms. Lee Pui Hang, Pieann, Mr. Chan Nun Chiu and Mr. Tse Chick Sang shall retire from office at the Annual General Meeting and shall be eligible for re-election. Mr. Chan Nun Chiu has informed the Company that he is not going to be re-elected at the Annual General Meeting. Details of the directors proposed to be re-elected at the Annual General Meeting are set out in Appendix II.

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LETTER FROM THE CHAIRMAN

ANNUAL GENERAL MEETING

A form of proxy for use by the Shareholders at the Annual General Meeting is enclosed with the Annual Report 2004 which has been despatched to the Shareholders together with this circular. Whether or not you intend to attend and vote at the Annual General Meeting in person, you are requested to complete the form of proxy enclosed with the Annual Report 2004 in accordance with the instructions printed thereon and return it to 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, as soon as practicable but in any event no later than 48 hours before the time appointed for holding the Annual General Meeting or any adjourned meeting. 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 adjourned meeting should you so wish.

RIGHT TO DEMAND FOR A POLL

The following sets out the procedures by which the Shareholders may demand a poll at the Annual General Meeting.

Pursuant to article 66 of the Articles of Association of the Company, 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 duly) demanded:

• (a) by the chairman of such meeting; or

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

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

• (d) by a member or members present in person or in the case of a member being a corporation by its duly authorized 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 shares conferring that right.

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LETTER FROM THE CHAIRMAN

RECOMMENDATION

The Directors consider that (i) the proposed renewal of the Repurchase Mandate and the Share Issue Mandate; and (ii) the re-election of retiring directors are in the best interests of the Company and the Shareholders as a whole and, accordingly, the Directors recommend all Shareholders to vote in favour of the relevant resolutions to be proposed at the Annual General Meeting in respect thereof.

Yours faithfully,

For and on behalf of the Board of Directors of

Hon Po Group (Lobster King) Limited Cheung To Sang

Chairman and Managing Director

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EXPLANATORY STATEMENT FOR THE REPURCHASE MANDATE

APPENDIX I

This explanatory statement contains the information required under Rule 10.06(1)(b) of the Listing Rules to provide shareholders with information reasonably necessary to enable them to make an informed decision on whether to vote for or against the resolution approving the Repurchase Mandate.

1. SHARE CAPITAL

As at the Latest Practicable Date, the issued share capital of the Company comprised of 151,200,000 Shares.

On the basis that no Shares are issued prior to the Annual General Meeting and subject to the passing of the relevant ordinary resolution approving the Repurchase Mandate, the Company would be allowed under the Repurchase Mandate to repurchase a maximum of 15,120,000 Shares.

2. REASONS FOR REPURCHASE

The Directors believe that the Repurchase Mandate is in the best interest of the Company and the Shareholders. Repurchases of Shares made under the Repurchase Mandate may, depending on the market conditions and funding arrangements at the time, lead to an enhancement of the value of the Company’s net assets and/or its earnings per share and will only be made when the Directors consider that such repurchases will benefit the Company and the Shareholders.

3. FUNDING OF REPURCHASES

In repurchasing Shares, the Company may only apply funds legally available for such purpose in accordance with its Memorandum and Articles of Association of the Company and the applicable laws of the Cayman Islands.

There might be a material 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 2004) in the event that the Repurchase Mandate were to be exercised in full. 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 of the Company or the gearing levels which in the opinion of the Directors are from time to time appropriate for the Company.

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EXPLANATORY STATEMENT FOR THE REPURCHASE MANDATE

APPENDIX I

4. SHARE PRICES

Prior to the share consolidation of which every five issued and unissued shares of HK$0.01 each were consolidated into one Share taken effect on 11 April 2005, the following were the highest and lowest prices at which the shares were traded on the Stock Exchange during each of the preceding 12 months up to the Latest Practicable Date:

	shares	prices
	Highest	Lowest
	HK$	HK$
April 2004	0.079	0.050
May 2004	0.069	0.044
June 2004	0.085	0.048
July 2004	0.079	0.048
August 2004	0.070	0.048
September 2004	0.063	0.043
October 2004	0.053	0.042
November 2004	0.060	0.044
December 2004	0.062	0.046
January 2005	0.090	0.053
February 2005	0.098	0.060
March 2005	0.230	0.063
April 2005 (up to the Latest Practicable Date)	– *	– *

• The trading in Shares of the Company was suspended on 23 March 2005 and remains suspended up to the Latest Practicable Date.

5. GENERAL

The Directors undertake to the Stock Exchange that they will exercise the powers of the Company to repurchase Shares in accordance with the Listing Rules and the applicable laws of the Cayman Islands and in accordance with the regulations set out in the Memorandum and Articles of Associations of the Company.

If as a result of the repurchase of Shares, a shareholder’s proportionate interest in the voting rights of the Company increases, such increase will be treated as an acquisition for the purpose of the Takeovers Code. Accordingly, a shareholder, or group of shareholders acting in concert, could obtain or consolidate control of the Company and becomes obliged to make a mandatory offer in accordance with Rule 26 of the Takeovers Code.

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EXPLANATORY STATEMENT FOR THE REPURCHASE MANDATE

APPENDIX I

As at the Latest Practicable Date, according to the register kept by the Company pursuant to Section 336 of the SFO, the substantial shareholders of the Company, Hon Po Investment Limited (which is in turn a wholly-owned subsidiary of Hon Po Holdings Limited) held approximately 50.26% of the issued share capital of the Company. On the basis that no further Shares are issued or repurchased and in the event that the Repurchase Mandate is exercised in full, the shareholding of Hon Po Investment Limited will be increased to approximately 55.85% of the issued share capital of the Company. On the basis of the said shareholdings, the Directors are not aware of any consequences which may arise under the Takeovers Code as a result of any repurchases made under the Repurchase Mandate.

To the best of their knowledge and having made all reasonable enquiries, none of the Directors nor any of their respective associates (as defined in the Listing Rules) has any present intention to sell any Shares to the Company or its subsidiaries if the Repurchase Mandate 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 any Shares to the Company, or have undertaken not to do so, in the event that the Repurchase Mandate is approved by the Shareholders.

6. SHARE PURCHASES MADE BY THE COMPANY

Neither the Company nor any of its subsidiaries had purchased any of the Company’s Shares in the six months preceding the Latest Practicable Date.

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APPENDIX II

DETAILS OF THE RETIRING DIRECTORS PROPOSED FOR RE-ELECTION

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

Mr. Tse Chick Sang , aged 51, is the Deputy General Manager and is responsible for the human resources, operation and promotion of all restaurants of the Group. Mr. Tse has joined the Group since its establishment in 1986 and has over 30 years of experience in the restaurant industry.

Mr. Tse did not hold any directorship in any other public listed companies in the past three years.

Mr. Tse has entered into a service agreement with the Company commencing from 1 August, 2002 for an initial term of 3 years and shall continue thereafter from year to year until terminated by either party with three months’ notice in writing served on the other side. Under the service agreement, Mr. Tse is entitled to an annual fee of HK$600,000 payable by 12 equal monthly instalments of HK$50,000 each and a discretionary bonus as determined by the Board in its absolute discretion having regard to his performance and operating results of the Group and provided that the total amount of bonus payable to all Directors shall not be more than 20% of the amount by which the audited consolidated net profit after taxation and minority interests but before extraordinary items of the Group for the relevant year. Save as disclosed herein, Mr. Tse does not have any relationship with other directors, senior management, substantial or controlling shareholders of the Company. As at the Latest Practicable Date, he did not have any interests in the Shares within the meaning of Part XV of the SFO.

Save as disclosed above, there is no other matters relating to the re-election of Mr. Tse that needs to be brought to the attention of the Shareholders.

Ms. Lee Pui Hang, Pieann, aged 30, joined the Company as an independent nonexecutive director and became a member of Audit Committee in September 2004. She holds an Advanced Diploma in Hospitality Management from HKU SPACE and majored in Family Studies at University of British Columbia. Ms. Lee is also expecting to achieve a Bachelor degree in Hotel Management in 2005 from University of Strathclyde. She has extensive experience in property management and an expertise in residential clubhouse operation.

Ms. Lee currently has neither entered into any service contract with the Company nor been appointed for a specified length of service period. She will be entitled to a director’s fee of HK$30,000 per annum which shall be subject to review by the Board by reference to her duties and responsibilities with the Company and the market benchmark.

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DETAILS OF THE RETIRING DIRECTORS PROPOSED FOR RE-ELECTION

APPENDIX II

Save as disclosed above, Ms. Lee has neither hold any positions with the Company or other members of the Group nor hold any directorship in any other public listed companies in the past three years.

Ms. Lee does not have any relationship with other directors, senior management, substantial or controlling shareholders of the Company. As at the Latest Practicable Date, she did not have any interests in the Shares within the meaning of Part XV of the SFO.

Save as disclosed above, there is no other matters relating to the re-election of Ms. Lee that needs to be brought to the attention of the Shareholders.

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