China Literature Limited — Proxy Solicitation & Information Statement 2002

Dec 31, 2002

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 a 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 China Gas Holdings Limited, you should at once hand this circular 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.

CHINA GAS HOLDINGS LIMITED 中國燃氣控股有限公司 [*]

(incorporated in Bermuda with limited liability)

DISCLOSEABLE TRANSACTION

31 December 2002

* For identification purpose only

CONTENTS

	Page
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM THE BOARD
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
THE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
INFORMATION ON SHENZHEN NATURAL GAS . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
INFORMATION ON WUHAN NATURAL GAS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
INFORMATION ON YICHANG NATURAL GAS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
INFORMATION ON YICHANG JV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
THE PROPOSED INVESTMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
THE CANCELLATION AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
REASONS FOR THE PROPOSED INVESTMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
APPENDIX – GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9

DEFINITIONS

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

“Agreement” The cooperative agreement dated 6 December 2002 entered into among Shenzhen Natural Gas, Wuhan Natural Gas and Yichang Natural Gas in relation to the establishment of Yichang JV and the operation of the Natural Gas Project contemplated thereunder

• “Board” Board of Directors of the Company

• “Business Licence Date” the date on which the business licence of Yichang JV is issued

• “BVI” The British Virgin Islands

• “BVI Company”

• China Gas Development Group Limited, a company incorporated in the British Virgin Islands with limited liability, which is owned as to 49% by the Company and 51% by Hai Xia Finance

• “Cancellation Agreement” The cancellation agreement entered into between the Company and Hai Xia Finance dated 6 December to deal with issues relating to cancellation of the proposed investment in the gas project to be launched in Yichang, Hubei Province, the PRC

• “Company”

• China Gas Holdings Limited (中國燃氣控股有限公司 ), a company incorporated in Bermuda with limited liability, whose shares are listed on the Stock Exchange

• “Directors” Directors of the Company

• “Group”

The Company and its subsidiaries

• “Hai Xia Finance”

Hai Xia Finance Holdings Limited, a company incorporated in the British Virgin Islands, holding of 101,549,457 ordinary shares representing 8.37% of the issued share capital of the Company and 6,298,571 preference shares of the Company

• “Heads of Agreements”

Three heads of agreements, all dated 13 June 2002, entered into between the Samoa Company and the People’s Government of Suizhou City, Yichang City Natural Gas Company Limited and Development Plan Commission of Shiyan City, respectively, in relation to the investments in natural gas projects in Suizhou, Yichang and Shiyan in the Hubei Province, the PRC

• “Hong Kong”

Hong Kong Special Administrative Region of the People’s Republic of China

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DEFINITIONS

• “HK$” Hong Kong dollars, the lawful currency of Hong Kong “Latest Practicable Date” 27 December 2002, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained in this circular

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

• “Natural Gas Project” A series of projects to be carried out by Yichang JV in Yichang, Hubei Province, the PRC, in the design, construction and operation of natural gas pipeline network and ancillary facilities, the provision of piped natural gas, repair and maintenance of natural gas equipment and facilities as well as expansion of existing natural gas facilities

• “PRC” The People’s Republic of China

• “RMB”

• Renminbi yuan, the lawful currency of the PRC

• “Samoa Company” China Gas Development Group Limited, a company incorporated in Samoa with limited liability, which is wholly owned by the BVI Company

• “Shenzhen Natural Gas” 中亞燃氣實業（深圳）有限公司 (Central Asia Natural Gas (Shenzhen) Company Limited), a wholly foreign owned enterprise incorporated in the PRC and is wholly owned subsidiary of the Company

• “Stock Exchange”

The Stock Exchange of Hong Kong Limited

• “Wuhan Natural Gas”

• Wuhan China Natural Gas Investment Company Limited, a PRC company with limited liability, is beneficially wholly owned by Shenzhen Natural Gas

• “Yichang JV”

• Yichang China Gas & City Gas Company Limited, a Sinoforeign equity joint venture company in the PRC to be established by Shenzhen Natural Gas, Wuhan Natural Gas and Yichang Natural Gas pursuant to the Agreement

• “Yichang Natural Gas”

• Yichang City Natural Gas Company Limited, a PRC company with limited liability, is independent of and not connected with any of the directors, chief executive or substantial shareholders of the Company or any of its subsidiaries or their respective associates (as defined in the Listing Rules).

In this circular, the exchange rate of HK$1 to RMB1.06 and the exchange rate of US$1 to HK$7.80 have been used for reference only.

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LETTER FROM THE BOARD

CHINA GAS HOLDINGS LIMITED 中國燃氣控股有限公司 [*]

(incorporated in Bermuda with limited liability)

Executive Directors: Mr. Li Xiaoyun (Co-Chairman) Mr. Liu Ming Hui (Co-Chairman and Managing Director) Mr. Ma Jin Long Mr. Zhu Wei Wei Ms. Liu Yu Jie

Non-Executive Directors: Mr. Xu Ying (Vice-Chairman) Mr. Wu Bangjie

Independent Non-Executive Directors: Mr. Lee Ka Leung, Daniel Mr. Zhao Yu Hua

Registered Office: Clarendon House Church Street Hamilton HM 11 Bermuda

Principal Place of Business: Room 1601, 16th Floor AXA Centre 151 Gloucester Road Wanchai Hong Kong

31 December, 2002

To the Shareholders and,

for information only, the holders of convertible preference shares of the Company

Dear Sir or Madam,

DISCLOSEABLE TRANSACTION

INTRODUCTION

The Directors announced on 11 December 2002 that Shenzhen Natural Gas, a wholly owned subsidiary of the Company, entered into the Agreement with Wuhan Natural Gas and Yichang Natural Gas on 6 December 2002, pursuant to which Shenzhen Natural Gas, Wuhan Natural Gas and Yichang Natural Gas have agreed to establish Yichang JV to principally engage in the design, construction and operation of natural gas pipeline network and ancillary facilities as well as provision of piped natural gas in Yichang, Hubei Province, the PRC. Yichang JV will be owned as to 49% by Shenzhen Natural Gas, 21% by Wuhan Natural Gas and 30% by Yichang Natural Gas. Wuhan Natural Gas is, however, beneficially owned by Shenzhen Natural Gas. Upon establishment, Yichang JV will become a non-wholly owned subsidiary of the Company.

* For identification purpose only

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LETTER FROM THE BOARD

Reference is also made to the Company’s announcements dated 10 June 2002 and 14 June 2002, respectively, in which it was announced that the Company and Hai Xia Finance would set up the BVI Company, owned as to 49% by the Company and 51% by Hai Xia Finance, and that the BVI Company, through the Samoa Company (a wholly owned subsidiary of the BVI Company), entered into three legally-binding Heads of Agreements, all dated 13 June 2002, with respect to the proposed investment in three natural gas projects respectively in Suizhou, Yichang, Shiyan in Hubei Province, the PRC. The Directors announced on 11 December 2002 that the Company entered into the Cancellation Agreement with Hai Xia Finance on 6 December 2002, pursuant to which Hai Xia Finance agreed to waive all its rights and benefits under the Heads of Agreement in relation to the proposed investment in the natural gas project in Yichang. Pursuant to the Cancellation Agreement, the Group is entitled to manage, operate and develop the natural gas project in Yichang on its own or with other investment parties. In addition, Hai Xia Finance agreed not to claim against the Company for any loss or damages incurred as a result of such cancellation.

The Directors also announced that Yichang Natural Gas, one of the contracting parties to the Heads of Agreement in relation to the proposed investment in the natural gas project in Yichang, made a declaration on 5 December 2002, pursuant to which Yichang Natural Gas agreed Samoa Company to transfer its rights and interests under the Heads of Agreement to Shenzhen Natural Gas and Wuhan Natural Gas.

Also pursuant to the terms of the Agreement, the Group will make a total investment of RMB49,000,000 (equivalent to approximately HK$46,226,415.09) in Yichang JV, of which RMB34,300,000 will be contributed by Shenzhen Natural Gas and RMB14,700,000 will be contributed by Wuhan Natural Gas on behalf of Shenzhen Natural Gas. The investment in the sum of RMB49,000,000 (equivalent to approximately HK$46,226,415.09) will be contributed by the Company by way of shareholders’ loans to Shenzhen Natural Gas and/or Wuhan Natural Gas, respectively, which will in turn use such money to pay up the registered capital in Yichang JV (the “ Proposed Investment ”).

The Proposed Investment constitutes a discloseable transaction under the Listing Rules.

The purpose of this circular is to give you further information in relation to the Proposed Investment.

THE AGREEMENT

Date of the Agreement: 6 December 2002

Parties: Shenzhen Natural Gas, Wuhan Natural Gas and Yichang Natural Gas

The parties to the Agreement agreed to set up Yichang JV to principally engage in the design, construction and operation of natural gas pipeline network and ancillary facilities as well as provision of piped natural gas in Yichang, Hubei Province, the PRC.

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LETTER FROM THE BOARD

INFORMATION ON SHENZHEN NATURAL GAS

Shenzhen Natural Gas, a wholly owned subsidiary of the Company, was set up in the PRC as a wholly foreign owned enterprise. Shenzhen Natural Gas has a registered capital of US$10,000,000 and about 25% of the registered capital has already been paid-up and it has a tenure of 20 years from 22 November 2002, being the date of issue of the business licence. As at the Latest Practicable Date, Shenzhen Natural Gas does not own any assets and has not commenced any operation.

INFORMATION ON WUHAN NATURAL GAS

Wuhan Natural Gas, a company with limited liability, was set up in the PRC on 22 November 2002. Wuhan Natural Gas is beneficially wholly owned by Shenzhen Natural Gas. Wuhan Natural Gas has a registered and paid-up capital of RMB9,980,000 and has a tenure of 30 years from 22 November 2002. As at the Latest Practicable Date, Wuhan Natural Gas does not own any assets and has not commenced any operation.

INFORMATION ON YICHANG NATURAL GAS

Yichang Natural Gas, a company with limited liability, was set up in the PRC on 7 August 2000 and is wholly owned by the People’s Government of Yichang.

INFORMATION ON YICHANG JV

Yichang JV, a sino-foreign limited company to be incorporated in the PRC, will be owned as to 49% by Shenzhen Natural Gas, 21% by Wuhan Natural Gas and 30% by Yichang Natural Gas. Wuhan Natural Gas is beneficially owned by Shenzhen Natural Gas. Yichang Natural Gas and its ultimate beneficial owners are independent of and not connected with any of the directors, chief executive or substantial shareholders of the Company or any of its subsidiaries or their respective associates (as defined in the Listing Rules).

Yichang JV will become a 70% subsidiary of the Company upon its being set up pursuant to the Agreement and be consolidated into the Group’s accounts. It is principally engaged in the Natural Gas Project.

The registered capital of Yichang JV Company will be RMB70,000,000 (equivalent to approximately HK$66,037,735.85) which has yet to be paid up by Shenzhen Natural Gas, Wuhan Natural Gas and Yichang Natural Gas in proportion to their respective shareholdings in Yichang JV (i.e., as to RMB34,300,000 to be contributed by Shenzhen Natural Gas in cash, RMB14,700,000 to be contributed by Wuhan Natural Gas in cash and RMB21,000,000 to be contributed by Yichang Natural Gas in assets in accordance with the required laws and regulations). Yichang JV has a tenure of 30 years and it will make a total investment in the sum of RMB200,000,000 (equivalent to approximately HK$188,679,245.28) in the Natural Gas Project (the “ Total Yichang JV Investment Amount ”). Pursuant to the Agreement, Shenzhen Natural Gas, Wuhan Natural Gas and Yichang Natural Gas have agreed that the difference between the Total Yichang JV Investment Amount and the registered capital of the JV Company for which Shenzhen Natural Gas and Wuhan Natural Gas are responsible will be paid up with funds drawn from the cashflow generated by the Natural Gas Project. The Directors take the view that such cashflow generated by the Gas Project will be sufficient for this purpose. All parties in Yichang JV have no obligations to contribute the difference between the Total Yichang JV Investment and the registered capital of Yichang JV. It

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LETTER FROM THE BOARD

has been agreed among all the parties that within 3 months from the Business Licence Date, initial investment in the aggregate sum of RMB10,500,000 will be injected as registered capital by the parties in proportion to their respective shareholdings in Yichang JV and the remaining balance of the registered capital will be contributed within 2 years from Business Licence Date. The Company is required to comply with all the requirements under the Listing Rules in respect of any additional financial assistance provided by the Group to Yichang JV.

Yichang City is the second largest city in the Hubei Province, the PRC, comprising three direct governance districts, namely Xiling, Wujiagang and Dianjun, and two development zones, namely Dongshan and Xiaoting, as well as two cities, namely Zhijiang and Yidu, and seven counties, namely Yichang, Dangyang, Changyang, Yuanan, Wufeng, Xingshan and Zigui. At the end of 2000, Yichang City had a population of approximately 4,000,000, approximately 1,330,000 of whom resided in the city areas and the average personal income rate ranked second in the Hubei Province, the PRC.

Yichang City is a world famous city for its being a hydroelectric base and a tourist city, which is one of the important harbours at the middle and upper Changjiang and a central city at the southwest part of the Hubei Province, the PRC. In this regard, the city government of the Hubei Province takes a very serious view on natural gas development in the region and different levels of the local authorities have given their support to the market development of natural gas to ensure compliance with the environment policy in relation to city construction.

According to the feasibility studies of Yichang JV, it is estimated that at present, the aggregate gas consumption rate through pipelines at the Yichang City District for coal gas and liquefied gas amounts to 93.55%, in which 3.8% (based on the population in 2002) is for 50,000 subscribers for coal gas through pipelines. The total numbers of population in the district using liquefied gas will reach approximately 741,400 in 2008, in which natural gas accounts for 56% of the gas consumption rate with 185,000 liquefied gas subscribers; the total numbers of population in the district using liquefied gas will reach approximately 820,000 in 2010, in which natural gas accounts for 61% of the gas consumption rate with 205,000 liquefied gas subscribers.

In accordance with the feasibility studies of Yichang JV, it is anticipated that the gas consumption will rise from 24,000,000 cubic metres in 2004 to 95,000,000 cubic metres in 2008 and the Group targets that the Natural Gas Project will be launched in full in 2004. Investors are advised that the above figures quoted from the feasibility studies of Yichang JV may not be realized.

The board of directors of Yichang JV will comprise 7 directors, 2 of whom will be appointed by Yichang Natural Gas, 4 of whom will be appointed by Shenzhen Natural Gas, and 1 of whom will be appointed by Wuhan Natural Gas. The chairman of the board of directors of Yichang JV will be nominated by the Group. However, the persons nominated by the Group to Yichang JV will represent the majority of the board of Yichang JV. Upon establishment of Yichang JV, all the parties to the Yichang JV is entitled to share profits generated from the Natural Gas Project in proportion to its shareholding in Yichang JV.

Since the Agreement only signed on 6 December 2002, the establishment of Yichang JV is still in progress.

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LETTER FROM THE BOARD

THE PROPOSED INVESTMENT

Pursuant to the terms of the Agreement, Shenzhen Natural Gas, Wuhan Natural Gas and Yichang Natural Gas will make a total investment of RMB70,000,000 in Yichang JV (i.e., as to RMB34,300,000 to be contributed by Shenzhen Natural Gas in cash, RMB14,700,000 to be contributed by Wuhan Natural Gas in cash, and RMB21,000,000 to be contributed by Yichang Natural Gas in assets).

Apart from paying up the registered capital of Yichang JV, the Group is not required to make further capital contribution to Yichang JV. Any difference between the Total Yichang JV Investment Amount and the registered capital of Yichang JV will be financed with funds drawn from the profits generated by the Natural Gas Project. The Company will make further announcement in case the financing arrangement on the difference between Total Yichang JV Investment Amount and the registered capital of Yichang JV is changed.

The Proposed Investment constitutes a discloseable transaction under the Listing Rules.

CONDITIONS

The Proposed Investment contemplated under the Agreement is conditional, among other things, upon the following:

1. The Proposed Investment be carried out in compliance with the Listing Rules; and

2. The submission of a PRC legal opinion by PRC lawyer duly authorized by the PRC Justice Department and China Securities Regulatory Commission to opine on securities related law to Shenzhen Natural Gas and to the satisfaction of the Group in relation to issues including but not limited to the legal status, validity of establishment and continued existence of Yichang JV, its business activities, assets, indebtedness, the cancellation of Hai Xia Finance’s interest under the Heads of Agreement pursuant to the Cancellation Agreement, the validity of Wuhan Natural Gas and Shenzhen Natural Gas being the legal shareholder and the beneficial shareholder, respectively, of Yichang JV owning 21% and 49%, respectively, of its equity interest, and other matters of which the Group should be aware in relation to Yichang JV.

THE CANCELLATION AGREEMENT

Date of the Cancellation Agreement: 6 December 2002 Parties: Hai Xai Finance and the Company

Reference is made to the Company’s announcements dated 10 June 2002 and 14 June 2002, respectively, in which it was announced that the Company (formerly known as Hai Xia Holdings Limited) and Hai Xia Finance would set up the BVI Company, owned as to 49% by the Company and 51% by Hai Xia Finance, and that the BVI Company, through the Samoa Company (a wholly owned subsidiary of the BVI Company), entered into three legally-binding Heads of Agreements, all dated 13 June 2002, with respect to the proposed investment in three natural gas projects respectively in Suizhou, Yichang, Shiyan in Hubei Province, the PRC.

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LETTER FROM THE BOARD

The Company and Hai Xia Finance, entered into the Cancellation Agreement on 6 December 2002, pursuant to which Hai Xia Finance (in its capacity as the owner of 51% shareholding in the BVI Company which in turn owns the entire issued share capital of the Samoa Company) agreed to waive all its rights and benefits under the Heads of Agreement in relation to the proposed investment in the natural gas project in Yichang. According to the Cancellation Agreement, the Group is entitled to manage, operate and develop the natural gas project in Yichang on its own or with other investment parties. In addition, Hai Xia Finance agreed not to claim against the Company for any loss or damages incurred as a result of such cancellation.

Yichang Natural Gas, one of the contracting parties to the Heads of Agreement in relation to the proposed investment in the natural gas project in Yichang, made a declaration on 5 December 2002, pursuant to which Yichang Natural Gas agreed to the transfer of the Samoa Company’s rights and interests under the Heads of Agreement to Shenzhen Natural Gas and Wuhan Natural Gas at nil consideration.

REASONS FOR THE PROPOSED INVESTMENT

The Group is principally engaged in investment in, among others, natural gas/energy and property projects. As announced in the Company’s announcements dated 9 May 2002, 16 May 2002, 10 June 2002, 14 June 2002, 30 July 2002 and 19 November 2002, the Group has already engaged in natural gas projects in certain cities and provinces in the PRC. The Directors consider that the Proposed Investment represents a good opportunity for the Company to further invest in the natural gas business in the PRC which is in line with the Company’s strategy to expand into natural gas industries in the PRC whereupon Yichang JV will be treated as a subsidiary of the Company upon establishment. Furthermore, according to the Heads of Agreements, Yichang JV could only be classified as an associate company of the Group. Yet, Yichang JV could be classified as a subsidiary of the Group upon establishment under the Agreement. Henceforth, the Directors consider that the entering of the Cancellation Agreement could enhance the Group to take effective control in Yichang JV and benefit the Group as a whole.

The Directors take the view that given that the Natural Gas Project will be operated, managed and developed by Yichang JV on an exclusive basis and that natural gas is a household necessity, profits generated by the Natural Gas Project are certain and sufficient to cover the investment contribution.

The Directors, including the independent non-executive Directors, consider the Agreement and the Proposed Investment are fair and reasonable, taking into account the prospects of development in the Natural Gas Project in Yichang, Hubei Province, the PRC.

GENERAL

Your attention is drawn to the appendix of this circular.

By Order of the Board Liu Ming Hui Managing Director

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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 regard 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, none of the Directors or the chief executive of the Company had any interests in the ordinary share capital of the Company or its associated corporation (within the meaning of the Securities (Disclosure of Interest) Ordinance (Chapter 396 of the Laws of Hong Kong) (the “SDI Ordinance”)) which required notification to the Company and the Stock Exchange pursuant to Section 28 of the SDI Ordinance (including interests which they were deemed or taken to have under Section 31 of or Part I of the Schedule to the SDI Ordinance) or which were required to be entered into the register maintained by the Company under Section 29 of the SDI Ordinance 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.

3. SUBSTANTIAL SHAREHOLDERS

As at the Latest Practicable Date, according to the register maintained pursuant to Section 16(1) of the SDI Ordinance, the following Shareholders were interested in 10% or more of the Company’s issued share capital:

	Direct interest	Deemed interest
	(Shares)/	(Shares)/
	% in the Company’s	% in the Company’s
Name	issued share capital	issued share capital
Sure World Capital Limited_(Note)_	101,557,700/8.38%	–
Rasa Sayang Limited_(Note)_	10,104,000/0.83%	–
Heng Fung Capital Company Limited_(Note)_	3,388,000/0.28%	–
Heng Fung Underwriter Limited_(Note)_	200,000/0.016%	–
Heng Fung Holdings Limited	204,935,457/16.9%	320,185,157/26.4%

Note : These companies are wholly-owned subsidiaries of Heng Fung Holdings Limited.

Save as disclosed above and other than the interests (if any) of the Directors and companies controlled by them as set out above, the Directors and the chief executive of the Company are not aware that there is any person who, as at the Latest Practicable Date, was directly or indirectly interested in 10% or more of the issued share capital of the Company or in any interests which were required to be recorded under Section 16(1) of the SDI Ordinance.

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GENERAL INFORMATION

APPENDIX

4. LITIGATION

Two former staff issued writs against the Company on 4 May 1998 and 13 May 1998, respectively, claiming for wrongful dismissal and compensation of approximately HK$1,862,000 plus interest and related costs. As at the Latest Practicable Date, no witness statements have been filed and no trial date has yet been fixed. The Directors are advised by the legal counsel of the Company that it is unlikely that the former staff will succeed in their claims. Save as aforesaid, neither the Company nor any of its subsidiaries is engaged in litigation or arbitration of material importance and so far as the Directors are aware, no litigation or claims of material importance are pending or threatened by or against the Company or any of its subsidiaries nor could they have a material adverse effect on the Group’s financial condition or operations, taken as a whole.

5. MISCELLANEOUS

• (a) None of the Directors has any existing or proposed service contract with any member of the Group which does not expire or is not terminable by the Group within one year without payment of compensation (other than statutory compensation).

• (b) The registered office of the Company is at Clarendon House, Church Street, Hamilton HM 11, Bermuda. The principal share registrar and transfer office of the Company is Butterfield Corporate Services Limited at Rosebank Centre, 14 Bermudiana Road, Pembroke, Bermuda. The Hong Kong branch share registrar and transfer office of the Company is Computershare Hong Kong Investor Services Limited at Rooms 1901-5, 19th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong.

• (c) The secretary of the Company is Ms. Yang Yan Tung, Doris, ACIS, ACS .

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