China Foods Limited — Proxy Solicitation & Information Statement 2002

Jul 10, 2002

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

I f you have sold or transferred all your shares in G-Prop (Holdings) Limited (the “Company”), you should at once hand this circular and 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, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

G-PROP (HOLDINGS) LIMITED

(Incorporated in Bermuda with limited liability)

PROPOSED REFRESHMENT OF THE 10 PER CENT. LIMIT OF THE 2002 SHARE OPTION SCHEME

A letter from the Board of the Company is set out on pages 4 to 6 of this circular. A notice convening the special general meeting of the Company to be held at Plaza I-III, Lower Lobby, Novotel Century Hong Kong, 238 Jaffe Road, Wanchai, Hong Kong on Friday, 26th July 2002 at 10:15 a.m. (or as soon as possible after conclusion or adjournment of the special general meeting of the Company convened at 10:00 a.m. on the same day at the same place) is set out on pages 7 to 8 of this circular.

Whether or not you intend to attend the meeting, you are requested to complete and return the enclosed form of proxy in accordance with the instructions printed thereon as soon as possible to the branch share registrar and transfer office of the Company, Secretaries Limited, at 5th Floor, Wing On Centre, 111 Connaught Road, Central, Hong Kong and in any event not later than 48 hours before the time appointed for the 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 any adjourned meeting should you so desire.

10th July, 2002

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Responsibility statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
Letter from the Board
1. Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
2. Proposed refreshment of the 10 per cent. Limit of the 2002 Share Option Scheme . . . . . . . .	5
3. Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
4. Other information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
5. General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Notice of Special General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7

DEFINITIONS

In this circular, the following expressions shall have the same meanings set out below unless the context requires otherwise:

“Board”

the board of Directors

“Companies Ordinance” the Companies Ordinance (Chapter 32 of the Laws of Hong Kong) “Company” G-Prop (Holdings) Limited, a company incorporated in Bermuda with limited liability and the Shares of which are listed on the Stock Exchange “Director(s)” director(s) of the Company “Employee(s) “ any full time employee and consultant, whether full time or otherwise, of the Company or any Subsidiary (including any executive director, non-executive director and independent nonexecutive director of the Company or any Subsidiary)

• “Group” the Company and its Subsidiaries “Hong Kong” the Hong Kong Special Administrative Region of the PRC “HK$” Hong Kong dollars, the lawful currency of Hong Kong

• “Latest Practicable Date” 5th July, 2002, being the latest practicable date prior to the printing of this circular for the purpose of ascertaining certain information for inclusion in this circular

• “Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange

• “PRC” the People’s Republic of China “Subsidiaries” means a company which is for the time being and from time to time a subsidiary (within the meaning of section 2 of the Companies Ordinance as modified from time to time) of the Company, whether incorporated in Hong Kong or not

• “SGM” a special general meeting of the Company to be held at Plaza I- III, Lower Lobby, Novotel Century Hong Kong, 238 Jaffe Road, Wanchai, Hong Kong on Friday, 26th July 2002 at 10:15 a.m. (or as soon as possible after conclusion or adjournment of the special general meeting of the Company convened at 10:00 a.m. on the same day at the same place) notice of which is set out on pages 7 to 8 of this circular

– 1 –

DEFINITIONS

share(s) of HK$0.01 each in the share capital of the Company holder(s) of Share(s) The Stock Exchange of Hong Kong Limited

“Share(s)” share(s) of HK$0.01 each in the share capital of the Company “Shareholder(s)” holder(s) of Share(s) “Stock Exchange” The Stock Exchange of Hong Kong Limited “2002 Share Option Scheme” the share option scheme of the Company approved by the Shareholders at the special general meeting of the Company held on 11th February 2002

– 2 –

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.

– 3 –

LETTER FROM THE BOARD

G-PROP (HOLDINGS) LIMITED

(Incorporated in Bermuda with limited liability)

Executive Directors:

Mr. Chan Hung Lit, Simon (Chairman) Mr. Cheung Kwai Sun, Roger (Deputy Chairman) Mr. Lee Sze Kwong, William (Managing Director) Mr. Lo Siu Wah Mr. Li Wing Kin

Independent Non-executive Directors:

Mr. Lai Hin Wing, Henry Mr. Chan Kam Wing, Jack

Registered Office: Clarendon House Church Street Hamilton HM 11 Bermuda

Head office and principal place of business in Hong Kong 13th Floor New World Tower Two 18 Queen’s Road, Central Hong Kong

10th July, 2002

To the Shareholders, holders of 7.5% convertible bonds of the Company due in 2002 and holders of non-interest bearing convertible bonds of the Company due in 2004.

Dear Sir or Madam,

PROPOSED REFRESHMENT OF THE 10 PER CENT. LIMIT OF THE 2002 SHARE OPTION SCHEME

1. PURPOSE

The purpose of this circular is to provide you with the relevant information regarding the renewal of the limit of the total number of Shares to be issued under the 2002 Share Option Scheme, which when aggregated with other share option schemes of the Company will not exceed 10 per cent. of the Shares in issue as at the date of approval of the renewed limit and seek your approval of the ordinary resolution relating thereto at the SGM.

– 4 –

LETTER FROM THE BOARD

2. PROPOSED REFRESHMENT OF 10 PER CENT. LIMIT OF THE 2002 SHARE OPTION SCHEME

The Company announced on 11th February 2002 that the Shareholders approved the 2002 Share Option Scheme at the special general meeting of the Company held on 11th February 2002. On 15th February 2002, the Listing Committee of the Stock Exchange granted its approval to the listing of, and permission to deal in any new Shares to be issued upon exercise of the options under the 2002 Share Option Scheme.

The total number of Shares available for issue under the 2002 Share Option Scheme and other share option schemes of the Company must not in aggregate exceed 10 per cent. of the Shares in issue at the date of approval of the 2002 Share Option Scheme (the “10 per cent. Limit”). The existing 10 per cent. Limit is 36,714,099 Shares, being 10 per cent. of the Shares in issue as at the date of approval of the 2002 Share Option Scheme. As at the Latest Practicable Date, options carrying the rights to subscribe for up to a total of 20,648,000 Shares, representing 5.62 per cent. of the issued share capital of the Company as at the date of adoption of the 2002 Share Option Scheme, have been granted under 2002 Share Option Scheme. These options were granted on 21st March 2002 and are in accordance with the terms of the 2002 Share Option Scheme and Chapter 17 of the Listing Rules.

Out of the options granted under 2002 Share Option Scheme, options carrying the rights to subscribe for 14,318,000 Shares were granted to the Directors and the options carrying the rights to subscribe for the remaining 6,330,000 Shares were granted to the employees of the Group. All of the aforesaid grantees fall within the category of eligible participants under the 2002 Share Option Scheme. As at the Latest Practicable Date, (i) none of these options has been exercised and (ii) none of these options has lapsed nor has been cancelled.

According to Chapter 17 of the Listing Rules, the 10 per cent. Limit may be refreshed at any time by the approval of the Shareholders in general meeting provided that the total number of Shares which may be issued upon exercise of all options to be granted under the 2002 Share Option Scheme and the other share option schemes must not exceed 10 per cent. of the Shares in issue at the date of such Shareholders’ approval. For the avoidance of doubt, options previously granted under the 2002 Share Option Scheme and the other share option schemes (including those outstanding, cancelled and lapsed in accordance with the 2002 Share Option Scheme and the other share option schemes of the Company or exercised options) will not be counted for the purpose of calculating the refreshed 10 per cent. Limit.

Since the adoption of the 2002 Share Option Scheme, there has been material increase in the issued share capital of the Company and the 10 per cent. Limit has been substantially utilized. In order to continue to reward and motivate the Employees to strive for future developments and expansion of the Group, the Company intends to grant further options in the near future which, when aggregated with the issued options under the 2002 Share Option Scheme, may exceed the existing 10 per cent. Limit. The Board wishes to take this opportunity to recommend for the Shareholders’ approval at the SGM that the existing 10 per cent. Limit to grant options under the 2002 Share Option Scheme be refreshed so that the total number of Shares to be issued and allotted pursuant to the grant or exercise of any options under the 2002 Share Option Scheme and any other schemes of the Company shall not exceed 10 per cent. of the Shares in issue on the date of passing the relevant resolution of the SGM. If the 10 per cent. Limit is

– 5 –

LETTER FROM THE BOARD

refreshed, based on 716,994,175 Shares in issue as at the Latest Practicable Date and assuming that no further Shares are issued prior to the date of the SGM, the Board will be able to grant options for subscription of up to 71,699,417 Shares.

The refreshment of the 10 per cent. Limit is conditional upon the approval by the Shareholders at the SGM and the Listing Committee of the Stock Exchange granting of the listing of and permission to deal in the Shares to be issued pursuant to the exercise of options to be granted under the 2002 Share Option Scheme and any other share option schemes of the Company up to the limit as refreshed. The Directors consider the refreshment of the 10 per cent. Limit is in the interests of the Company and the Shareholders as a whole as it allows the Company to continue to issue options to the Employees to motivate them to strive for future developments of the Group.

Application will be made to the Listing Committee of the Stock Exchange for granting of the listing of and permission to deal in the Shares to be issued pursuant to the exercise of options to be granted under the 2002 Share Option Scheme and any other share option schemes of the Company up to the limit as refreshed.

3. RECOMMENDATION

The Directors consider that the refreshment of the 10 per cent. Limit is in the best interests of the Company and the Shareholders as a whole. Accordingly, the Directors recommend the Shareholders to vote in favour of the ordinary resolution to approve the refreshment of the 10 per cent. Limit at the SGM.

4. OTHER INFORMATION

A notice convening the SGM of the Company to be held at Plaza I-III, Lower Lobby, Novotel Century Hong Kong, 238 Jaffe Road, Wanchai, Hong Kong on Friday, 26th July 2002 at 10:15 a.m. (or as soon as possible after conclusion or adjournment of the special general meeting of the Company convened at 10:00 a.m. on the same day at the same place) is set out on pages 7 to 8 of this circular.

Enclosed is a form of proxy for use at the SGM. Whether or not you propose to attend the said meeting, you are requested to complete and return the enclosed form of proxy in accordance with the instructions printed thereon to the branch share registrar and transfer office of the Company, Secretaries Limited, at 5th Floor, Wing On Centre, 111 Connaught Road, Central, Hong Kong as soon as possible and in any event not later than 48 hours before the respective time for the holding of such meeting or any adjournment thereof. Completion and return of the form of proxy shall not preclude Shareholders from attending and voting at the meeting or any adjourned meeting should they so desire.

5. GENERAL

The English text of this circular and the enclosed form of proxy shall prevail over the Chinese text.

Yours faithfully,

By order of the Board of

G-Prop (Holdings) Limited Chan Hung Lit, Simon

Chairman

– 6 –

NOTICE OF SPECIAL GENERAL MEETING

G-PROP (HOLDINGS) LIMITED

(Incorporated in Bermuda with limited liability)

NOTICE IS HEREBY GIVEN that a special general meeting of G-Prop (Holdings) Limited (the “Company”) will be held at Plaza I-III, Lower Lobby, Novotel Century Hong Kong, 238 Jaffe Road, Wanchai, Hong Kong on Friday, 26th July 2002 at 10:15 a.m. (or as soon as possible after conclusion or adjournment of the special general meeting of the Company convened at 10:00 a.m. on the same day at the same place ) for the purpose of considering and, if thought fit, passing the following resolution which will be proposed as an ordinary resolution of the Company:

ORDINARY RESOLUTION

“ THAT conditional upon the grant of approval by the Listing Committee of The Stock Exchange of Hong Kong Limited to the listing of and permission to deal in the Shares (as defined below) to be issued pursuant to the exercise of options to be granted under the 2002 Share Option Scheme (as defined in the circular of the Company dated 10th July 2002 of which this notice forms a part) and any other share option schemes of the Company up to the 10 per cent Limit (as defined below) as refreshed under the 2002 Share Option Scheme, the total number of shares of the Company (ie. shares of HK$0.01 each in the share capital of the Company) (“Shares”) to be allotted and issued pursuant to the grant or exercise of any options under the 2002 Share Option Scheme and any other share option schemes of the Company (excluding options previously granted, outstanding, cancelled, lapsed or exercised in accordance with the 2002 Share Option Scheme and any other share option schemes of the Company as at the date of passing of this resolution) be and is hereby subject to a maximum limit equal to 10 per cent. of the Shares in issue on the date of passing this resolution (“10 per cent Limit”), and that the directors of the Company be and are hereby unconditionally authorised to grant options to subscribe for Shares up to the 10 per cent. Limit and to exercise all powers of the Company to allot, issue and deal with Shares pursuant to the exercise of such options.”

By Order of the Board of G-Prop (Holdings) Limited Chan Hung Lit, Simon Chairman

Hong Kong, 10th July, 2002

Registered office : Clarendon House Church Street Hamilton HM 11 Bermuda

– 7 –

NOTICE OF SPECIAL GENERAL MEETING

Head office and principal place

of business in Hong Kong 13th Floor

New World Tower Two

18 Queen’s Road, Central

Hong Kong

Notes:

1. Any member of the Company entitled to attend and vote at the Special General Meeting shall be entitled to appoint one or more proxies to attend and vote instead of him. A proxy need not be a member of the Company.

2. Where there are joint registered holders of any share, any one of such persons may vote at the Special General Meting either personally or by proxy, in respect of such share as if he was solely entitled thereto, but if more than one of such joint holders be present at the Special General Meeting personally or by proxy, that one of the said persons so present whose names stands first on the register of members in respect of such share shall alone be entitled to vote in respect thereof.

3. To be valid, a form of proxy together with the power of attorney or other authority, if any, under which it is signed, or a certified copy of the power of attorney must be deposited at the Company’s branch share registrar and transfer office, Secretaries Limited, at 5th Floor, Wing On Centre, 111 Connaught Road, Central, Hong Kong not less than 48 hours before the appointed time for holding the Special General Meeting or any adjournment hereof. Completion and return of the form of proxy will not preclude you from attending the Special General Meeting and voting in person.

– 8 –