China Netcom Technology Holdings Limited — Proxy Solicitation & Information Statement 2005

Oct 24, 2005

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in 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 Glory Future Group Limited (“ Company ”), you should at once hand this circular, together with the accompanying form of proxy, to the purchaser or the transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or the transferee.

The Stock Exchange of Hong Kong Limited (“ Stock Exchange ”) and Hong Kong Securities Clearing Company Limited take 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.

This circular, for which the directors of the Company (“ Directors ”) collectively and individually accept full responsibility, includes particulars given in compliance with the Rules Governing the Listing of Securities on the Growth Enterprise Market of the Stock Exchange for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that, to the best of their knowledge and belief: (1) the information contained in this circular is accurate and complete in all material respects and not misleading; (2) there are no other matters the omission of which would make any statement in this circular misleading; and (3) all opinions expressed in this circular have been arrived at after due and careful consideration and are founded on bases and assumptions that are fair and reasonable.

GLORY FUTURE GROUP LIMITED

(incorporated in the Cayman Islands with limited liability)

(stock code: 8071)

PROPOSED CAPITAL REORGANISATION INVOLVING SHARE CONSOLIDATION, SHARE PREMIUM CANCELLATION, PAR VALUE REDUCTION, CANCELLATION OF UNISSUED SHARES AND RESTORATION OF AUTHORISED SHARE CAPITAL, CHANGE IN BOARD LOT SIZE

AND PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

A notice convening an extraordinary general meeting (“ EGM ”) of the Company to be held at 7/F, San Kei Tower, 56-58 Yee Wo Street, Causeway Bay, Hong Kong on Wednesday, 16 November 2005 at 10:00 a.m. is set out on pages 17 to 22 of this circular.

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

This circular will remain on the “Latest Company Announcements” page of the GEM website at www.hkgem.com for at least seven (7) days from the date of its posting.

24 October 2005

CONTENTS

		Page
Characteristics of GEM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		1
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		2
**Expected **	timetable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Letter from the board
1.	Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
2.	Capital Reorganisation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
3.	Effects of the Capital Reorganisation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
4.	Reasons for the Capital Reorganisation . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
5.	Conditions of the Capital Reorganisation . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
6.	Change in board lot size . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
7.	Application for listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
8.	Trading arrangements and free exchange
	of certificates for Consolidated Shares and New Shares . . . . . . . . . . . . . .	11
9.	Proposed amendments to the Articles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
10.	EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
11.	Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
12.	Adjustments to share options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
Procedures for demanding a poll. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		16
**Notice of **	EGM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	17

– i –

CHARACTERISTICS OF GEM

GEM has been established as a market designed to accommodate companies to which a high investment risk may be attached. In particular, companies may list on GEM with neither a track record of profitability nor any obligation to forecast future profitability. Furthermore, there may be risks arising out of the emerging nature of companies listed on GEM and the business sectors or countries in which the companies operate. Prospective investors should be aware of the potential risks of investing in such companies and should make the decision to invest only after due and careful consideration. The greater risk profile and other characteristics of GEM mean that it is a market more suited to professional and other sophisticated investors.

Given the emerging nature of companies listed on GEM, there is a risk that securities traded on GEM may be more susceptible to high market volatility than securities traded on the main board and no assurance is given that there will be a liquid market in the securities traded on GEM.

The principal means of information dissemination on GEM is publication on the internet website operated by the Stock Exchange. Listed companies are not generally required to issue paid announcements in gazetted newspapers. Accordingly, prospective investors should note that they need to have access to the GEM website www.hkgem.com in order to obtain up-to-date information on GEM-listed issuers.

– 1 –

DEFINITIONS

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

• “Articles” the articles of association of the Company, as amended from time to time

• “Board” the Board of Directors

• “Capital Reorganisation” the Share Consolidation, the Share Premium Cancellation, the Par Value Reduction, the cancellation of the authorised but unissued share capital and the restoration of the authorised share capital

• “Companies Law” the Companies Law, Cap. 22 (Law 3 of 1961, as consolidated and revised) of the Cayman Islands

• “CCASS” the Central Clearing and Settlement System established and operated by HKSCC

• “Company” Glory Future Group Limited ( ), a company incorporated in the Cayman Islands with limited liability, the shares of which are listed on GEM

• “Consolidated Share(s)” the ordinary shares of HK$0.50 each in the capital of the Company upon the Share Consolidation becoming effective

• “Corporate Governance Code”

• the Code on Corporate Governance Practices which is set out in Appendix 15 to the GEM Listing Rules

• “Court”

• the Grand Court of the Cayman Islands

• “Directors” the directors (including independent non-executive directors) of the Company

• “EGM”

• the extraordinary general meeting of the Company to be convened to approve the proposed Capital Reorganisation and the proposed amendments to the Articles

• “Existing Shares” the existing ordinary shares of HK$0.05 each in the capital of the Company

• “GEM”

• the Growth Enterprise Market operated by the Stock Exchange

• “GEM Listing Rules”

• the Rules Governing the Listing of Securities on GEM

– 2 –

DEFINITIONS

• “HKSCC”

Hong Kong Securities Clearing Company Limited

• “HK$”

Hong Kong dollars, the lawful currency of Hong Kong

• “Hong Kong”

• the Hong Kong Special Administrative Region of the PRC

• “Latest Practicable Date”

• 19 October 2005, being the latest practicable date prior to the printing of this circular for ascertaining certain information for inclusion in this circular

• “New Shares”

• the ordinary shares of HK$0.01 each in the capital of the Company upon the Capital Reorganisation becoming effective

• “Par Value Reduction”

• the reduction of the nominal value of each of the 75,372,000 issued Consolidated Shares from HK$0.50 to HK$0.01 by cancelling the paid-up capital to the extent of HK$0.49 on each issued Consolidated Share, such that the Company’s existing issued share capital of HK$37,686,000 will be reduced by HK$36,932,280 to HK$753,720

• “PRC”

• the People’s Republic of China

• “Share Consolidation”

• the consolidation of every 10 issued and unissued Existing Shares into one Consolidated Share

• “Shareholder(s)” holder(s) of the Existing Share(s)

• “Share Option Scheme”

• the share option scheme of the Company adopted on 19 February 2001

• “Share Premium Cancellation”

• the proposed cancellation of the entire amount standing to the credit of the share premium account of the Company as at 30 June 2005

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

• “%”

• per cent.

– 3 –

EXPECTED TIMETABLE

The following expected timetable takes into account the Court procedures for the Par Value Reduction and tentative timing relating thereto. The expected timetable is therefore indicative only and is subject to changes including changes caused by the Court.

The expected timetable for the Capital Reorganisation is as follows:

Latest time for lodging form of proxy in respect of the EGM . 10:00 a.m. on Monday,
14 November 2005
EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10:00 a.m. on Wednesday,
16 November 2005
Effective time for the Share Consolidation . . . . . . . . . . . . . . . . 9:00 a.m. on Thursday,
17 November 2005
Dealings in the Consolidated Shares on GEM commence . . . . Thursday, 17 November
2005
Original counter for trading in Existing Shares
(represented by existing share certificates)
in board lots of 8,000 closes . . . . . . . . . . . . . . . . . . . Thursday, 17 November 2005
Temporary counter for trading in Consolidated Shares
(represented by existing share certificates)
in board lots of 800 opens . . . . . . . . . . . . . . . . . . . . . Thursday, 17 November 2005
First day of free exchange of existing share certificates
(for the Existing Shares) for new share certificates
(for the Consolidated Shares) . . . . . . . . . . . . . . . . . . . Thursday, 17 November 2005
Original counter for trading in Consolidated Shares
(represented by new share certificates)
in board lots of 15,000 reopens . . . . . . . . . . . . . . . . . . . . . . 9:30 a.m. on Thursday,
1 December 2005
Parallel trading in Consolidated Shares
(represented by both existing share certificates
and new share certificates) begins . . . . . . . . . . . . . . . . . . . . 9:30 a.m. on Thursday,
1 December 2005
First day for the designated broker to stand in the
market to provide matching services . . . . . . . . . . . . . . . Thursday, 1 December 2005
Temporary counter for trading in Consolidated Shares
(represented by existing share certificates)
in board lots of 800 closes . . . . . . . . . . . . . . . . . . . . . . . . . . 4:00 p.m. on Thursday,
22 December 2005

– 4 –

EXPECTED TIMETABLE

• Parallel trading in Consolidated Shares

• (represented by both existing share certificates

• and new share certificates) ends . . . . . . . . . . . . . . . . . . . . . . 4:00 p.m. on Thursday, 22 December 2005

• Last day for the designated broker to stand in the market to provide matching services . . . . . . . . . . . . . 4:00 p.m. on Thursday, 22 December 2005

• Last day for free exchange of existing share certificates (for Existing Shares) for new share certificates (for Consolidated Shares) . . . . . . . . Thursday, 29 December 2005

• Court hearing of petition to confirm the

• Par Value Reduction (Note 1) . . . . . . . . . . . . . . . . . Between 20 February 2006 and 20 March 2006

• Registration of court order confirming the Par Value Reduction and the minute approved by the Court with the

• Registrar of Companies in the Cayman Islands ( Note 1 ) . . . . . . . . . . . 21 April 2006

• Effective date of the Par Value Reduction ( Note 2 ) . . . . . . . . . . . . . . . . 21 April 2006

Dealings in the New Shares on GEM commence . . . . . . . . . . . . . . . . . . 26 April 2006

Notes:

1. All references in this circular to times and dates are references to Hong Kong times and dates other than references to the expected date for the Court hearing of the petition confirming the Par Value Reduction and registration of the Court order and the minute approved by the Court with the Registrar of Companies in the Cayman Islands, which refer to relevant times and dates in the Cayman Islands. Cayman Islands time is 13 hours behind Hong Kong time.

2. The Par Value Reduction will become effective when it is confirmed by the Court and an office copy of the order of the Court and the minute approved by the Court containing the particulars required under the Companies Law are filed and registered with the Registrar of Companies in the Cayman Islands. Registration is currently expected to take place between 9:00 a.m. and 5:00 p.m. on or about 21 April 2006 (Cayman Islands time) (equivalent to between 10:00 p.m. on 21 April 2006 and 6:00 a.m. on 22 April 2006 (Hong Kong time)). Upon the Par Value Reduction becoming effective, further details of the free exchange of share certificates will be announced at the appropriate time.

3. Announcement(s) will be made if there is any change of the expected timetable as set out above.

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LETTER FROM THE BOARD

GLORY FUTURE GROUP LIMITED

(incorporated in the Cayman Islands with limited liability)

(stock code: 8071)

Executive Directors: Choi Koon Ming (Chairman) Ng Kam Yiu Chow Yeung Tuen, Richard

Non-executive Director Ha Kee Choy, Eugene

Independent non-executive Directors:

Wu Tak Lung Phillip King Ho Suk Yin, JP

Registered address: 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:

7th Floor, San Kei Tower 56-58 Yee Wo Street Causeway Bay Hong Kong

24 October 2005

To the Shareholders and for information only, the optionholders

Dear Sir or Madam

PROPOSED CAPITAL REORGANISATION INVOLVING SHARE CONSOLIDATION, SHARE PREMIUM CANCELLATION, PAR VALUE REDUCTION, CANCELLATION OF UNISSUED SHARES AND RESTORATION OF AUTHORISED SHARE CAPITAL, CHANGE IN BOARD LOT SIZE AND PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

INTRODUCTION

The Board announced on 6 October 2005 that proposals would be put forward to the Shareholders for the Capital Reorganisation and for the amendments to the Articles. The principal purposes of this circular are to provide you with further information relating to the proposed Capital Reorganisation, the proposed amendments to the Articles and to give you the notice convening the EGM at which resolutions will be proposed to approve, among

– 6 –

LETTER FROM THE BOARD

other matters, the Share Consolidation, the Share Premium Cancellation, the Par Value Reduction, the cancellation of unissued shares and restoration of authorised share capital and the proposed amendments to the Articles.

CAPITAL REORGANISATION

(1) Share Consolidation

The Share Consolidation will be made on the basis of every 10 issued and unissued shares of HK$0.05 each in the capital of the Company consolidating into one Consolidated Share of HK$0.50. On the basis of 753,720,000 Existing Shares in issue as at the Latest Practicable Date, there will be 75,372,000 Consolidated Shares in issue following the Share Consolidation.

The Share Consolidation will become effective at 9:00 a.m. (Hong Kong time) on the trading day, which is expected to be 17 November 2005, immediately following the fulfilment of the conditions of the Share Consolidation, which are more particularly described in the paragraph headed “Conditions of the Capital Reorganisation” below.

The Consolidated Shares will rank pari passu in all respects with each other and the Share Consolidation will not result in any change in the relative rights of the Shareholders in the Company.

In order to facilitate the trading of odd lots of the Consolidated Shares as a result of the Share Consolidation, the Company will, for a period of one month commencing on Thursday, 1 December 2005, provide matching services to the Shareholders who wish to buy or sell their holdings of odd lots. Details are set out in the paragraph headed “Trading arrangements and free exchange of certificates for Consolidated Shares and New Shares” below.

(2) Share Premium Cancellation

It is proposed that, subject to the condition set out below, the entire amount standing to the credit of the share premium account of the Company as at 30 June 2005 shall be cancelled and applied towards the elimination of the accumulated loss of the Company. As at 30 June 2005, the amount standing to the credit of the share premium account of the Company and the accumulated loss amounted to approximately HK$15,796,000 and HK$71,645,000 respectively.

(3) Par Value Reduction and related capital reorganisation

As at the Latest Practicable Date, the authorised share capital of the Company was HK$100,000,000 divided into 2,000,000,000 shares of HK$0.05 each, of which 753,720,000 Existing Shares were issued and were fully paid or credited as fully paid. Assuming there would not be any change in the share capital structure prior to the EGM, following the Share Consolidation, the authorised share capital would be HK$100,000,000 divided into 200,000,000 shares of HK$0.50 each, of which 75,372,000 Consolidated Shares would be in issue.

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LETTER FROM THE BOARD

As at the Latest Practicable Date, the closing price of the Existing Shares was HK$0.014 per Existing Share. Under the Companies Law, a company may not issue shares at a discount to the nominal value of such shares unless, among others, the issue is authorised by a resolution of the shareholders of the company and is sanctioned by the Court. The Directors intend to put forward the following proposals:

• (a) the nominal value of each of the 75,372,000 issued Consolidated Shares will be reduced from HK$0.50 to HK$0.01 by cancelling the paid-up capital to the extent of HK$0.49 on each issued Consolidated Share, such that the Company’s existing issued share capital of HK$37,686,000 will be reduced by HK$36,932,280 to HK$753,720;

• (b) the credit in the sum of HK$36,932,280 arising from the Par Value Reduction will be directly applied towards the elimination of part of the accumulated loss of the Company. The accumulated loss of the Company as at 30 June 2005 as shown in the unaudited financial statements of the Company for the six months ended 30 June 2005 amounted to HK$71,645,000; and

• (c) upon the Par Value Reduction becoming effective, all the authorised but unissued share capital of the Company will be cancelled and forthwith upon such cancellation, the authorised share capital of the Company (including the authorised but unissued share capital arising from the Par Value Reduction) will be immediately restored to the original amount of HK$100,000,000 by the creation of the requisite number of new shares of HK$0.01 each. On the basis of 753,720,000 Existing Shares in issue as at the Latest Practicable Date (which will become 75,372,000 Consolidated Shares upon the Share Consolidation becoming effective), the authorised share capital of the Company will then be HK$100,000,000 divided into 10,000,000,000 shares of HK$0.01 each, of which 75,372,000 shares of HK$0.01 each will be in issue and 9,924,628,000 shares of HK$0.01 each will be unissued.

The New Shares will rank pari passu in all respects with each other and have the rights and privileges and be subject to the restrictions contained in the Articles. The Directors have no present intention to issue any New Shares.

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LETTER FROM THE BOARD

EFFECTS OF THE CAPITAL REORGANISATION

The table below illustrates the effects of the Capital Reorganisation on the capital structure of the Company as at 30 June 2005:

ture of the Company as at	30 June 2005:
					After the
	As at 30 June		After the		Share		After the
	2005		Share		Premium		Par Value
	(Unaudited)		Consolidation		Cancellation		Reduction
	HK$’000		HK$’000		HK$’000		HK$’000
Issued share capital	37,686		37,686		37,686		754
Share premium account	15,796		15,796		–		–
Accumulated losses	(71,645)		(71,645)		(55,849)		(18,917)
	(18,163)		(18,163)		(18,163)		(18,163)
Number of authorised shares	2,000,000,000		200,000,000		200,000,000		10,000,000,000
	Existing		Consolidated		Consolidated		New Shares
	Shares		Shares		Shares
Authorised share capital	HK$100,000,000	HK$100,000,000		HK$100,000,000		HK$100,000,000
Nominal value per share	HK$0.05		HK$0.50		HK$0.50		HK$0.01
Number of shares issued and	753,720,000		75,372,000		75,372,000		75,372,000
fully paid	Existing		Consolidated		Consolidated		New Shares
	Shares		Shares		Shares
Issued share capital	HK$37,686,000		HK$37,686,000		HK$37,686,000		HK$753,720

REASONS FOR THE CAPITAL REORGANISATION

Recently, the Company’s share price has been approaching HK$0.01 and in order to comply with Rule 17.76 of the GEM Listing Rules, the Share Consolidation is proposed. Upon the Share Consolidation becoming effective and on the basis of the closing price of HK$0.014 per Existing Share as at the Latest Practicable Date, the market value of each Consolidated Share is expected to be approximately HK$0.14. In view of the legal constraint that the Company is prohibited from issuing shares at a price which is less than the nominal value of the shares (which will then be HK$0.50 per Consolidated Share), with a view to providing greater flexibility to the Company in pricing future capital raising exercises when circumstances arise, the Par Value Reduction is also proposed. However, as at the Latest Practicable Date, the Directors did not have any concrete plan on any equity fund raising exercises.

The accumulated loss of the Company as at 30 June 2005 as shown in the unaudited financial statements of the Company for the six months ended 30 June 2005 amounted to HK$71,645,000. Since the Directors believe that it is unlikely that the Company will have sufficient profits in the immediate future to eliminate its deficit, the Share Premium Cancellation and the Par Value Reduction and the application of the credit arising from the Share Premium Cancellation and the Par Value Reduction will be a direct and preferable

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LETTER FROM THE BOARD

step to reduce the accumulated loss of the Company. As at 30 June 2005, the amount standing to the credit of the share premium account of the Company amounted to approximately HK$15,796,000.

Save for the expenses incurred by the Company in relation to the Capital Reorganisation, the Directors consider that the Capital Reorganisation will have no effect on the underlying assets, business operations, management or financial position of the Company.

Based on the above reasons, the Directors consider that the Capital Reorganisation is in the interest of the Company and the Shareholders as a whole.

CONDITIONS OF THE CAPITAL REORGANISATION

Share Consolidation

The Share Consolidation is conditional upon:

• (1) the passing of an ordinary resolution by the Shareholders at the EGM to approve the Share Consolidation; and

• (2) the Stock Exchange granting the listing of, and permission to deal in, the Consolidated Shares resulting from the Share Consolidation.

Shareholders should note that the Share Consolidation is independent from, and not conditional upon, the Par Value Reduction, the Share Premium Cancellation or any other capital reorganisation referred to in this circular becoming effective.

Share Premium Cancellation

The Share Premium Cancellation is conditional upon the passing of a special resolution by the Shareholders at the EGM to approve the Share Premium Cancellation.

Shareholders should also note that the Share Premium Cancellation is independent from, and not conditional upon, the Share Consolidation, the Par Value Reduction or any other capital reorganisation referred to in this circular becoming effective.

Par Value Reduction

The Capital Reorganisation (other than the Share Consolidation and the Share Premium Cancellation) is subject to the following conditions:

• (1) the Share Consolidation having become effective;

• (2) the passing of a special resolution by the Shareholders at the EGM to approve the Par Value Reduction, the cancellation of the then authorised but unissued share capital and the restoration of the authorised share capital;

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LETTER FROM THE BOARD

• (3) the compliance with any conditions the Court may impose;

• (4) the confirmation of the Par Value Reduction by the Court and the registration by the Registrar of Companies in the Cayman Islands of a copy of the Court order and the minute approved by the Court containing the particulars required under the Companies Law; and

• (5) the Stock Exchange granting the listing of, and permission to deal in, the New Shares resulting from the Capital Reorganisation.

CHANGE IN BOARD LOT SIZE

Currently, the Existing Shares are traded in board lots of 8,000 Existing Shares. Upon the Share Consolidation becoming effective, which will be on the trading day immediately following the fulfilment of the conditions of the Share Consolidation, the Consolidated Shares are expected to be traded in board lots of 15,000 Consolidated Shares.

APPLICATION FOR LISTING

Application will be made to the Stock Exchange for the listing of, and permission to deal in, the Consolidated Shares and the New Shares at the appropriate time.

Subject to the granting of the listing of, and permission to deal in, the Consolidated Shares or, where appropriate, the New Shares on the Stock Exchange, the Consolidated Shares or, where appropriate, the New Shares will be accepted as eligible securities by HKSCC for deposit, clearance and settlement in CCASS with effect from the commencement date for dealings in the Consolidated Shares or, as the case may be, the New Shares on the Stock Exchange or such other date as determined by HKSCC. Settlement of transactions between participants of the Stock Exchange on any trading day is required to take place in CCASS on the second trading day thereafter. All activities under CCASS are subject to the General Rules of CCASS and CCASS Operational Procedures in effect from time to time.

TRADING ARRANGEMENTS AND FREE EXCHANGE OF CERTIFICATES FOR CONSOLIDATED SHARES AND NEW SHARES

Any fractional entitlements to the Consolidated Shares will not be issued to the Shareholders but will be aggregated and sold and retained for the benefit of the Company. In order to alleviate the difficulties arising from the existence of odd lots of the Consolidated Shares as a result of the Share Consolidation, the Company has agreed to procure an agent to stand in the market to provide matching services for the odd lots of Consolidated Shares on a best effort basis for a period of one month after the Share Consolidation has become effective. The proposed arrangements for dealings in the Consolidated Shares are as follows:

• (1) with effect from Thursday, 17 November 2005, the original counter for trading in Existing Shares (represented by existing share certificates) in board lots of 8,000 will be closed and a temporary counter for trading in the Consolidated Shares (represented by existing share certificates) in board lots of 800 will be opened.

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LETTER FROM THE BOARD

Accordingly, 10 Existing Shares will represent one Consolidated Share. Existing share certificates for the Existing Shares can only be traded in this temporary counter;

• (2) on the same date, existing share certificates for the Existing Shares may 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 in exchange for new share certificates for the Consolidated Shares during the period from Thursday, 17 November 2005 to Thursday, 29 December 2005 at any time during normal business hours (except for Saturdays, Sundays and public holidays). Shareholders should note that unless the relevant existing share certificates are lodged with Tengis Limited by 4:30 p.m. on Thursday, 29 December 2005, a charge of HK$2.50 (or such higher amounts as may from time to time be allowed by the Stock Exchange) will be made on the issue of every new share certificate for the Consolidated Shares or cancellation of every old share certificate, whichever is the higher. New share certificates for the Consolidated Shares will be issued in the colour of blue to distinguish from the existing share certificates for the Existing Shares in the colour of orange ;

• (3) with effect from 9:30 a.m. on Thursday, 1 December 2005, the original counter for trading in the Consolidated Shares (represented by new share certificates) in board lots of 15,000 will be reopened and parallel trading in the Consolidated Shares (represented by both existing share certificates and new share certificates) will begin. In order to alleviate the difficulties arising from the existence of odd lots of the Consolidated Shares as a result of the Share Consolidation, the Company has agreed to procure Sun Hung Kai Investment Services Limited to stand in the market to provide matching services on a best effort basis for the holders of odd lots of the Consolidated Shares during the period from Thursday, 1 December, 2005 to Thursday, 22 December 2005 (both dates inclusive). Holders of odd lots of Consolidated Shares who wish to top up to board lots of 15,000 Consolidated Shares, may contact Ms. Cheung Sau Lin, Connie, of Sun Hung Kai Investment Services Limited at Level 12, One Pacific Place, 88, Queensway, Hong Kong at telephone number (852) 2822 5075 during the period from Thursday, 1 December 2005 to Thursday, 22 December 2005 (both dates inclusive). Holders of odd lots of the Consolidated Shares should note that the match up of the sale and purchase of odd lots of the Consolidated Shares is not guaranteed;

• (4) at 4:00 p.m. on Thursday, 22 December 2005, the temporary counter for trading in the Consolidated Shares (represented by existing share certificates) in board lots of 800 will be closed and the parallel trading in the Consolidated Shares (represented by both existing share certificates and new share certificates) will end. This will also be the last day for the designated broker to stand in the market to provide matching services.

Trading in the Consolidated Shares represented by existing share certificates will cease after the close of business on 22 December 2005. Existing share certificates for the Existing Shares will only be valid for delivery and settlement in respect of trading for

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LETTER FROM THE BOARD

the period up to 22 December 2005 and thereafter will not be acceptable for trading purposes. However, the existing share certificates for the Existing Shares will continue to be good evidence of legal title to the Consolidated Shares on the basis of 10 Existing Shares for one Consolidated Share (fractional entitlements to the Consolidated Shares shall be sold for the benefit of the Company) and may be exchanged for new share certificates for the Consolidated Shares at any time provided that if any Shareholder holds share certificates for Existing Shares which in aggregate are capable of being aggregated into multiples of 10 Existing Shares, such Shareholder shall be entitled to tender his/her share certificates for the Existing Shares in exchange for new share certificate(s) for the Consolidated Shares in board lots of 15,000 Consolidated Shares so that his/her shareholding may be accurately represented by the new share certificate(s).

Shareholders are urged to exchange their existing share certificates for the Existing Shares for new share certificates for the Consolidated Shares as soon as possible on or after 17 November 2005. This may be done free of charge on or before 29 December 2005 by delivering the existing share certificates for the Existing Shares 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. Thereafter, existing share certificates for the Existing Shares will be accepted for exchange only on payment of a fee of HK$2.5 (or such higher amount as may from time to time be allowed by the Stock Exchange) for each new share certificate issued in exchange of existing share certificates submitted or every old share certificate submitted for cancellation, whichever is the higher.

It is expected that new share certificates for the Consolidated Shares will be available for collection on or after the 10th business day from the date of submission of the existing share certificates for the Existing Shares to the Company’s branch share registrar at the above address. Unless otherwise instructed, new share certificates for the Consolidated Shares will be issued in board lots of 15,000 Consolidated Shares.

Upon the Par Value Reduction becoming effective, further details of the free exchange of share certificates will be announced at the appropriate time.

PROPOSED AMENDMENTS TO THE ARTICLES

In November 2004, the Stock Exchange made amendments to the GEM Listing Rules which came into effect on 1 January 2005. Amongst the various changes, the Corporate Governance Code was introduced. It sets out principles of good corporate governance, and two levels of recommendations being code provisions and recommended best practices. Issuers, such as the Company, are expected to comply with, but may choose to deviate from the code provisions whereas the recommended best practices are for guidance only. The Company intends to implement the code provisions of the Corporate Governance Code to the extent that it is reasonable, practicable and in the interest of the Company to do so. In this connection, it is proposed that certain provisions of the existing Articles be changed to the effect that:

• (1) all Directors, if they are appointed by the Board to fill a casual vacancy, should be subject to election by the shareholders at the first general meeting after their appointment; and

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LETTER FROM THE BOARD

• (2) all Directors should be subject to retirement by rotation at least once every three years.

The full text of the proposed amendments to the Articles is set out in Resolution No. 4 of the notice of EGM set out on pages 17 to 22 of this circular.

EGM

A notice convening the EGM to be held at 7/F, San Kei Tower, 56-58 Yee Wo Street, Causeway Bay, Hong Kong, on Wednesday, 16 November 2005, at 10:00 a.m. for the purpose of considering and, if thought fit, passing the resolutions in respect of, among other matters, the proposed Capital Reorganisation and the proposed amendments to the Articles is set out on pages 17 to 22 of this circular.

A form of proxy for use by the Shareholders at the EGM is enclosed. Whether or not you intend to attend and vote at the EGM in person, you are required to complete the enclosed form of proxy in accordance with the instructions printed thereon and return it to the branch share registrar of the Company 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 but in any event, not less than 48 hours before the time appointed for holding the EGM or any adjourned meeting (as the case may be). Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM or any adjourned meeting (as the case may be) should you so wish.

RECOMMENDATION

Having regard to the information described above, the Board is of the opinion that the proposed Capital Reorganisation and the proposed amendments to the Articles are in the interest of the Company and the Shareholders as a whole. Accordingly, the Board recommends the Shareholders to vote in favour of the resolutions to approve the same at the EGM.

ADJUSTMENTS TO SHARE OPTIONS

As at the Latest Practicable Date, the Company had 13,500,000 outstanding share options. The exercise price of the share options and/or the number of shares subject to the share options have to be adjusted in accordance with the rules of the Share Option Scheme as a result of the Share Consolidation becoming effective. The adjustments to be made to the share options upon the Share Consolidation becoming effective are as follows:

Existing exercise price of the share = HK$0.1148 per Existing Share option Share Consolidation = consolidation of 10 Existing Shares into one Consolidated Share i.e. Consolidation factor (F) = 1/10

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LETTER FROM THE BOARD

Therefore,

Adjusted number of share options = Existing number of share options x F = 13,500,000 x 1/10 = 1,350,000

(The new 1,350,000 share options will be allocated to the existing holders of share options in the proportion of one new option for every ten old options held by him/her.)

1 New exercise price = Existing exercise price x 1/10 = HK$0.1148 x 10 = HK$1.148

If any share option(s) granted under the Share Option Scheme becomes or remains exercisable upon the Share Consolidation becoming effective, the Company will request the auditors of the Company to provide a certificate as to the adjustment required to be made in accordance with the rules of the Share Option Scheme and Rule 20.03(13) of the GEM Listing Rules once the Share Consolidation becomes effective. Any adjustment shall be made on the basis that the proportion of the issued share capital of the Company to which a grantee of the share options is entitled shall remain the same before and after such adjustment. Other than the Share Consolidation, none of the proposals of the Capital Reorganisation as stated above has any adjustment effects on the outstanding options.

Yours faithfully For and on behalf of Glory Future Group Limited Choi Koon Ming Chairman

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PROCEDURES FOR DEMANDING A POLL

Pursuant to the existing article 66 of the Articles, at any general meeting a resolution put to the vote of the meeting shall be decided on a show of hands unless (before or on the declaration of the result of the show of hands or on the withdrawal of any other demand for a poll) a poll is demanded:

• (i) by the chairman of the meeting; or

• (ii) by 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

• (iii) by a 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

• (iv) by a 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.

Unless a poll is duly demanded and the demand is not withdrawn, a declaration by the chairman that a resolution has on a show of hands been carried, or carried unanimously, or by a particular majority, or not carried by a particular majority, or lost, and an entry to that effect made in the minute book of the Company, shall be conclusive evidence of the facts without proof of the number or proportion of the votes recorded for or against the resolution.

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NOTICE OF EXTRAORDINARY GENERAL MEETING

GLORY FUTURE GROUP LIMITED

(incorporated in the Cayman Islands with limited liability)

(stock code: 8071)

NOTICE IS HEREBY GIVEN that an extraordinary general meeting (“ EGM ”) of Glory Future Group Limited ( “Company” ) will be held at 7/F, San Kei Tower, 56-58 Yee Wo Street, Causeway Bay, Hong Kong on Wednesday, 16 November 2005 at 10:00 a.m. to consider and, if thought fit, pass the following resolutions as special/ordinary resolutions:

ORDINARY RESOLUTION

1. “ THAT , conditional upon the Listing Committee of The Stock Exchange of Hong Kong Limited (“ Stock Exchange ”) granting the approval of the listing of and the permission to deal in the consolidated shares of HK$0.50 each (“ Consolidated Shares ”) arising from the Share Consolidation (as defined below) pursuant to this resolution, with effect from 9:00 a.m. (Hong Kong time) on the trading day immediately following the date of passing of this resolution,

2. (a) every 10 issued and unissued shares of HK$0.05 each in the capital of the Company be consolidated into one Consolidated Share of HK$0.50 (“ Share Consolidation ”); and

3. (b) any one of the directors of the Company be and is hereby authorised generally to do all things appropriate to effect and implement the Share Consolidation as such director may deem necessary and/or expedient.”

SPECIAL RESOLUTIONS

1. “ THAT with effect from 4:00 p.m. (Hong Kong time) on the date on which this resolution is duly passed, the entire amount standing to the credit of the share premium account of the Company as at 30 June 2005 of an amount of HK$15,795,816 be cancelled (“ Share Premium Cancellation ”) and the credit arising from the Share Premium Cancallation be applied towards the elimination of part of the accumulated loss of the Company.”

2. “ THAT , conditional upon:

3. (a) the passing of Resolution No. 1 set out in the notice convening this meeting;

4. (b) the confirmation of the Par Value Reduction (as defined below) by the Grand Court of the Cayman Islands (“ Court ”), the filing with and registration by the Registrar of Companies in the Cayman Islands of a copy of the order of the Court

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NOTICE OF EXTRAORDINARY GENERAL MEETING

confirming the Par Value Reduction and a copy of the minute approved by the Court and the compliance with any conditions as may be imposed by the Court in relation to the Par Value Reduction; and

• (c) the Listing Committee of Stock Exchange granting approval of the listing of and permission to deal in the new shares of HK$0.01 each in the share capital of the Company arising upon the Par Value Reduction becoming unconditional and effective:

• (i) on the date on which this resolution becomes unconditional (“ Effective Date ”), the issued share capital of the Company be reduced (“ Par Value Reduction ”) by cancelling the paid-up capital to the extent of HK$0.49 on each Consolidated Share (as defined in Resolution No. 1 set out in the notice convening this meeting) in issue on the Effective Date;

• (ii) the directors of the Company (“ Directors ”) be and are hereby authorised to apply the credit arising from the Par Value Reduction in an amount of HK$36,932,280 towards the elimination of part of the accumulated loss of the Company as at 30 June 2005;

• (iii) subject to and forthwith upon the Par Value Reduction becoming effective, the entire authorised but unissued share capital of the Company as at the Effective Date (including that arising from the Par Value Reduction) be cancelled (“ Authorised Capital Cancellation ”);

• (iv) subject to and forthwith upon the Authorised Capital Cancellation becoming effective, the authorised share capital of the Company be increased from such amount as shall have resulted from the Authorised Capital Cancellation to HK$100,000,000 by the creation of such number of new shares of HK$0.01 each as shall be necessary to restore the authorised share capital of the Company to HK$100,000,000 (“ Capital Restoration ”); and

• (v) the Directors be and are hereby authorised generally to do all acts and things, and to approve, sign and execute any other documents which in their opinion may be necessary, desirable or expedient to carry into effect or to give effect to the Par Value Reduction and/or the Authorised Capital Cancellation and/or the Capital Restoration.”

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NOTICE OF EXTRAORDINARY GENERAL MEETING

1. “ THAT the articles of association of the Company (“ Article s”) be and they are hereby amended in the following manner:

2. (a) Article 2(1) be amended by:

   • i. deletion of the following words on the first to the third lines in the definition of “clearing house”:

     • “a recognised clearing house within the meaning of Section 2 of the Securities and Futures (Clearing Houses) Ordinance of Hong Kong or”; and

   • ii. deletion of the words “written notice” in the definition of “Notice” and insertion of the words “notice in writing” in their place;

3. (b) Article 8(2) be amended by deletion of the word “my” on the third line and insertion of the word “may” in its place;

4. (c) Article 12(2) be amended by insertion of the words “or convertible securities or securities of similar nature” immediately after the word “warrants” on the first line;

5. (d) Article 51 be amended by replacing the words “and, where applicable” with the word “or” on the second line and insertion of the words “or by any other means” immediately after the word “newspapers” and immediately preceding the words “in accordance with the requirements” on the third line;

6. (e) Article 61(1) be deleted in its entirety and replaced by the following:

   • “61. (1) All business shall be deemed special that is transacted at an extraordinary general meeting, and also all business that is transacted at an annual general meeting, with the exception of:

     - (a) the declaration and sanctioning of dividends;
     
     - (b) consideration and adoption of the accounts and balance sheet and the reports of the Directors and Auditors and other documents required to be annexed to the balance sheet;
     
     - (c) the election of Directors whether by rotation or otherwise in the place of those retiring;
     
     - (d) appointment of Auditors (where special notice of the intention for such appointment is not required by the Law) and other officers;
     
     - (e) the fixing of the remuneration of the Auditors, and the voting of remuneration or extra remuneration to the Directors;
     

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NOTICE OF EXTRAORDINARY GENERAL MEETING

     - (f) the granting of any mandate or authority to the Directors to offer, allot, grant options over or otherwise dispose of the unissued shares in the capital of the Company representing not more than 20 per cent. in nominal value of its existing issued share capital; and

     - (g) the granting of any mandate or authority to the Directors to repurchase securities of the Company.”;

• (f) Article 66 be deleted in its entirety and replaced by the following:

• “66. Subject to any special rights or restrictions as to voting for the time being attached to any shares by or in accordance with these Articles, at any general meeting on a show of hands every Member present in person (or being a corporation, is present by a representative duly authorised), or by proxy shall have one vote and on a poll every Member present in person or by proxy or, in the case of a Member being a corporation, by its duly authorised representative shall have one vote for every fully paid share of which he is the holder but so that no amount paid up or credited as paid up on a share in advance of calls or instalments is treated for the foregoing purposes as paid up on the share. Notwithstanding anything contained in these Articles, where more than one proxy is appointed by a Member which is a clearing house (or its nominee(s)), each such proxy shall have one vote on a show of hands. A resolution put to the vote of a meeting shall be decided on a show of hands unless voting by way of a poll is required by the rules of the Designated Stock Exchange or (before or on the declaration of the result of the show of hands or on the withdrawal of any other demand for a poll) a poll is 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 authorised 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 authorised 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 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 shares conferring that right; or

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NOTICE OF EXTRAORDINARY GENERAL MEETING

• (e) if required by the rules of the Designated Stock Exchange, by any Director or Directors who, individually or collectively, hold proxies in respect of shares representing five per cent. (5%) or more of the total voting rights at such meeting.

A demand by a person as proxy for a Member or in the case of a Member being a corporation by its duly authorised representative shall be deemed to be the same as a demand by a Member.”;

• (g) Article 68 be amended by deletion of its last sentence “There shall be no requirement for the chairman to disclose the voting figures on a poll.” in its entirety and insertion of the sentence “The Company shall only be required to disclose the voting figures on a poll if such disclosure is required by the rules of the Designated Stock Exchange.” in its place;

• (h) Article 86(2) be deleted in its entirety and replaced by the following:

• “(2) The Company may from time to time in general meeting by ordinary resolution elect any person to be a Director either to fill a casual vacancy on the Board or as an addition to the existing Board.”;

• (i) Article 86(3) be deleted in its entirety and replaced by the following:

• “(3) The Board shall have power from time to time and at any time to appoint any person as a Director either to fill a casual vacancy on the Board or as an addition to the existing Board but so that the number of Directors so appointed shall not exceed any maximum number determined from time to time by the shareholders in general meeting. Any Director so appointed shall hold office until the next following general meeting of the Company (in the case of filling a casual vacancy) or until the next following annual general meeting of the Company (in the case of an addition to the existing Board), and shall then be eligible for re-election at such meeting. The Directors to retire at an annual general meeting pursuant to this Article 86(3) shall not be taken into account in determining the Directors or the number of Directors who are to retire by rotation at such annual general meeting pursuant to Article 87(1).”;

• (j) Article 87(1) be deleted in its entirety and replaced by the following:

• “(1) Notwithstanding any other provisions in the Articles, at each annual general meeting one-third of the Directors for the time being (or, if their number is not a multiple of three (3), the number nearest to but not less than one-third) shall retire from office by rotation provided that every Director, including those appointed for a specific term, shall be subject to retirement by rotation at least once every three years.”; and

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NOTICE OF EXTRAORDINARY GENERAL MEETING

• (k) Article 135 be amended by:

• i. re-designation of the original Article 135 as Article 135(1); and

• ii. insertion of the following as the new Article 135(2):

  • “(2) Notwithstanding any provision contained in this Article, the Directors may, if permitted by applicable law, rules and regulations, authorise the destruction of documents set out in sub-paragraphs (a) to (e) of paragraph (1) of this Article and any other documents in relation to share registration which have been microfilmed or electronically stored by the Company or by the share registrar on its behalf provided always that this Article shall apply only to the destruction of a document in good faith and without express notice to the Company and its share registrar that the preservation of such document was relevant to a claim.”.

Yours faithfully For and on behalf of Glory Future Group Limited Choi Koon Ming Chairman

Hong Kong, 24 October 2005

As at the date of this notice, the executive Directors of the Company are Messrs. Choi Koon Ming, Ng Kam Yiu, and Chow Yeung Tuen, Richard; the non-executive Director of the Company is Mr. Ha Kee Choy, Eugene; and the independent non-executive Directors of the Company are Messrs. Wu Tak Lung, Phillip King and Ms. Ho Suk Yin, JP.

Head office and principal place of business in Hong Kong:

7th Floor, San Kei Tower 56-58 Yee Wo Street

Causeway Bay Hong Kong

Notes:

1. A member entitled to attend and vote at the EGM is entitled to appoint one or, if he holds two or more shares, more than one proxy to attend and, subject to the provisions of the articles of association of the Company, vote in his stead. A proxy need not be a member of the Company.

2. In order to be valid, the form of proxy must be duly completed and signed in accordance with the instructions printed thereon and deposited together with a power of attorney or other authority, if any, under which it is signed or a certified copy of that power or authority, at the office of the Company’s Hong Kong branch registrar, Tengis Limited at Ground Floor, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong not less than 48 hours before the time for holding the EGM or adjourned meeting. Completion and return of a form of proxy will not prelude a member from attending in person and voting at the EGM or any adjournment thereof, should he so wish.

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