China Technology Industry Group Limited — Proxy Solicitation & Information Statement 2002

Jun 19, 2002

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt about any aspect of this circular, you should consult a stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold all your shares of Soluteck Holdings Limited, you should at once hand this circular to the purchaser or to the bank or stockbroker or other agent through whom the sale was effected for transmission to the purchaser.

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this document, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this document.

This circular, for which the directors of Soluteck Holdings Limited 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 of Hong Kong Limited for the purpose of giving information with regard to Soluteck Holdings Limited. 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 has been arrived at after due and careful consideration and are founded on bases and assumptions that are fair and reasonable.

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SOLUTECK HOLDINGS LIMITED 一創科技集團有限公司 * (Incorporated in the Cayman Islands with limited liability)

PROPOSED GENERAL MANDATE

FOR PURCHASE OF OWN SHARES

This circular is dispatched together with the Annual Report which comprises of the directors’ report, the auditors’ report by Messrs. PricewaterhouseCoopers and the financial statements of the Company for the year ended 31 March, 2002.

A notice convening the annual general meeting of the Company to be held at the Basement Function Room II, Luk Kwok Hotel, 72 Gloucester Road, Wanchai, Hong Kong on 30 July, 2002 at 10:00 a.m. is set out on pages 68 to 70 of the Annual Report. Whether or not you are able to attend such meeting, please complete and return the enclosed form of proxy in accordance with the instructions printed thereon to the principal office of the Company at Room 1004, SUP Tower, 75-83 King’s Road, North Point, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for holding such meeting 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 at the meeting or any adjourned meeting (as the case may be) should you so wish.

* For identification only

20 June, 2002

CHARACTERISTICS OF THE GROWTH ENTERPRISE MARKET (“GEM”) OF THE STOCK EXCHANGE OF HONG KONG LIMITED (THE “EXCHANGE”)

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 sector 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 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 in order to obtain up-to-date information on GEM-listed issuers.

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SOLUTECK HOLDINGS LIMITED 一創科技集團有限公司 *

(Incorporated in the Cayman Islands with limited liability)

Executive Directors: Chung Lok Fai (Chairman) Chung Yuk Hung, Yvonne Hou Hsiao Bing Hou Hsiao Wen, Eddie Chung Yuk Man, Kevin Tam Wing Chit, Tom

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

Independent Non-Executive Directors:

Lui Ming, Rosita Ho Wai Wing, Raymond

Head Office and

Principal place of business: Room 1004, SUP Tower 75-83 King’s Road North Point, Hong Kong

20 June, 2002

To the Shareholders,

Dear Shareholders

PROPOSED GENERAL MANDATE FOR PURCHASE OF OWN SHARES

INTRODUCTION

This circular serves as the explanatory statement required by the Rules Governing the Listing of Securities (the “GEM Listing Rules”) on the Growth Enterprise Market (the “GEM”) of the Stock Exchange of Hong Kong Limited (the “Stock Exchange”) concerning the regulation of purchases by companies of their own securities on the GEM of the Stock Exchange to provide Shareholders with all the information reasonably necessary for them to make an informed decision in relation to the proposal.

* For identification only

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GENERAL MANDATE TO REPURCHASE SHARES

At the Annual General Meeting of the Company to be held on Tuesday, 30 July, 2002 (the “AGM”), an ordinary resolution will be proposed to renew the granting to the Directors of a general mandate in the terms set out in the notice of the AGM allowing the Company to repurchase its own shares up to a limit of 10 per cent in aggregate of the Company’s issued share capital at the date of passing the resolution during the period ending on the earliest of the date of the next Annual General Meeting, the date by which the next Annual General Meeting of the Company is required to be held by the Articles of Association or applicable laws of the Cayman Islands and the date upon which such authority is revoked or varied (the “Buyback Mandate”). This will allow the Company to repurchase its own shares, inter alia, on-market in accordance with the GEM Listing Rules.

SHARE CAPITAL

As at 18 June, 2002, the issued share capital of the Company comprised 452,612,072 ordinary shares of HK$0.10 each.

Exercise in full of the Buyback Mandate, on the basis that no further shares are issued or repurchased prior to 30 July, 2002, being the date of the AGM, could accordingly result in up to a maximum of HK$45,261,207 shares being repurchased by the Company during the course of the period from 30 July, 2002 to the earliest of (1) the date of the Annual General Meeting for the year ended 31 March, 2003, (ii) the date by which the next Annual General Meeting of the Company is required to be held by the Articles of Association or applicable laws of the Cayman Islands and (iii) the date upon which such authority is revoked or varied.

REASONS FOR REPURCHASES

The Directors believe that it is in the best interests of the Company and its Shareholders to seek a general authority from Shareholders to enable the Directors to purchase shares of the Company in the market. Such purchases may, depending on market conditions and funding arrangements at the time, lead to an enhancement of the net value of the Company and its assets and/or its earnings per share and will only be made when the Directors believe that such a purchase will benefit the Company and its Shareholders.

FUNDING OF REPURCHASES

Pursuant to the Buyback Mandate, repurchases would be funded entirely from the Company’s available cash flow or working capital facilities which will be funds legally available for the purpose in accordance with all applicable laws of the Cayman Islands and the Company’s Memorandum and Articles of Association.

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On the basis of the consolidated financial position of the Company as at 31 March, 2002 (being the date to which the latest published financial statements of the Company have been made up), the Directors consider that the exercise in full of the Buyback Mandate to repurchase shares might have a material adverse impact on the working capital position of the Company as compared with its position as at 31 March, 2002. No purchase would be made in circumstances that might have a material adverse impact on the working capital or gearing position of the company (as compared with the position disclosed in the latest published audited financial statements) unless the Directors considered that such purchases were in the best interests of the Company notwithstanding such material adverse impact.

SHARE PRICES AND REPURCHASED SHARES

The highest and lowest prices at which the shares have traded on the GEM of the Stock Exchange in each of the previous twelve months are as follows:

	Highest	Lowest
	HK$	HK$
June 2001	0.7300	0.4100
July 2001	0.4550	0.4000
August 2001	0.4000	0.2000
September 2001	0.2070	0.1980
October 2001	0.2040	0.1720
November 2001	0.2600	0.2000
December 2001	0.2050	0.1720
January 2002	0.2000	0.1650
February 2002	0.1930	0.1850
March 2002	0.1920	0.1920
April 2002	0.1800	0.1740
May 2002	0.1650	0.1360

The Company has not made any purchase of shares (whether on the GEM of the Stock Exchange or otherwise) in the six months preceding the date of this circular.

HONG KONG CODE ON TAKEOVERS AND MERGERS

If as a result of a share repurchase, a shareholder’s proportionate interest in the voting capital of the Company increases, such increase will be treated as an acquisition for the purposes of the Hong Kong Code on Takeovers and Mergers (the “Code”) and, if such increase results in a change of control, may in certain circumstances give rise to an obligation to make a general offer for shares under Rule 26 and 32 of the Code.

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As at 19 June, 2002, being the latest practicable date prior to the printing of this circular. The following companies and persons have the following interest in the issued share capital of the Company:

		Number of	Percentage of
Name	Notes	Shares	issued share capital
Innovative Tech Worldwide Inc (“ITW”)	2	262,500,000	58.00%
Dynatek Limited	2	262,500,000	58.00%
Hou Chung	2	270,500,000	59.76%
Chung Po Chu	2	270,500,000	59.76%
Tsou Lo Nien	2	282,000,000	62.31%
Chung Lok Fai (“Mr Chung”)	1,2	282,000,000	62.31%

Notes:

1. 262,500,000 shares are registered in the name of ITW of which Chung Lok Fai and his wife, Tsou Lo Nien, own, in aggregate, 36.4 per cent. of the issued share capital. The other 19,500,000 shares are registered in the name of his wife, Tsou Lo Nien.

2. These shares were registered in the name of ITW, a company incorporated in the British Virgin Islands.

The issued share capital of ITW is owned by the following persons:

Name of Shareholders Number of shares Dynatek Limited (a) 25.5 Mr. Chung (b) 15.3 Tsou Lo Nien (b) 12.0 Hou Chung (c) 12.0 Chung Yuk Hung, Yvonne (d) 5.1 Chung Yuk Man, Kevin (e) 5.1 75.0	Percentage of shareholding 34.0 20.4 16.0 16.0 6.8 6.8
	100.0

• (a) Dynatek Limited is an investment holding company incorporated in Hong Kong with all of its shares held by Hou Chung and Chung Po Chu, his spouse, in equal shares. Dynatek Limited holds 25.5 shares issued by ITW, representing 34.0 per cent. of the issued share capital of ITW. Accordingly, Dynatek Limited is deemed, by virtue of the SDI Ordinance, to be interested in the Shares in which ITW is interested, amounting to 262,500,000 Shares. Dynatek Limited, Hou Chung and Chung Po Chu are deemed to be Initial Management Shareholders. Chung Po Chu is the sister of Mr. Chung. Chung Po Chu and Hou Chung are parents of Hou Hsiao Bing and Hou Hsiao Wen, Eddie, both of whom are executive Directors.

• (b) Mr. Chung and his spouse, Tsou Lo Nien, own, in aggregate, 36.4 per cent. of the issued share capital of ITW. Accordingly, each of Mr. Chung and Tsou Lo Nien is deemed, by virtue of the SDI Ordinance, to be interested in the Shares in which ITW is interested, amounting to 262,500,000 Shares. Mr. Chung is also deemed to be interested in 19,500,000 shares registered in the name of Tsou Lo Nien. Mr. Chung is an executive Director and Tsou Lo Nien is a director of Truth Honour Electronic Limited, a subsidiary of the Company. As a result, each of Mr. Chung and Tsou Lo Nien is deemed, by virtue of the SDI Ordinance, to be interested in 282,000,000 Shares in aggregate, representing approximately 62.31 per cent., of the Shares in issue. Mr. Chung and Tsou Lo Nien are deemed to be Initial Management Shareholders.

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• (c) Hou Chung, together with Dynatek Limited, a company beneficially owned by him and his spouse, Chung Po Chu, is interested in 50.0 per cent, of the issued shares of ITW. Accordingly, Hou Chung is deemed, by virtue of the SDI Ordinance, to be interested in all the Shares in which ITW is interested, amounting to 262,500,000 Shares. Together with the 8,000,000 Shares registered in his own name, Hou Chung is deemed, by virtue of the SDI Ordinance, to be interested in 270,500,000 Shares in aggregate, representing approximately 59.76 per cent., of the Shares in issue. Hou Chung is deemed to be an Initial Management Shareholder.

• (d) Chung Yuk Hung, Yvonne is an executive Director. Chung Yuk Hung, Yvonne holds 5.1 shares issued by ITW, representing 6.8 per cent. of the issued share capital of ITW. Accordingly, Chung Yuk Hung, Yvonne has an attributable interest in 6.8 per cent. of the Shares in which ITW is interested, amounting to 17,850,000 Shares. She is deemed to be an Initial Management Shareholder.

• (e) Chung Yuk Man, Kevin is an executive Director. Chung Yuk Man, Kevin holds 5.1 shares issued by ITW, representing 6.8 per cent. of the issued share capital of ITW. Accordingly, Chung Yuk Man, Kevin has an attributable interest in 6.8 per cent. of the Shares in which ITW is interested, amounting to 17,850,000 Shares. He is deemed to be an Initial Management Shareholder.

In the event that the Directors exercised in full the power to repurchase shares which is proposed to be granted pursuant to the Buyback Mandate, the shareholding of these companies and persons in the Company would be increased to 69.23 per cent of the issued share capital of the Company. Such increase would not give rise to an obligation to make a mandating offer under Rule 26 and 32 of the Code.

These companies and persons have notified the Company that if the Buyback Mandate is approved and exercised, it has no present intention to sell shares to the Company.

CONNECTED PERSONS

No persons who are connected persons (as defined in the GEM Listing Rules 20.10) of the Company have notified the Company that they have a present intention to sell shares to the Company nor have they undertaken not to do so, if the Buyback Mandate is approved and exercised.

DIRECTORS

None of the Directors nor, to the best of their knowledge and having made all reasonable enquiries, their associates have any present intention if the Buyback Mandate is approved and exercised to sell any shares to the Company or its subsidiaries.

The Directors have undertaken to the Stock Exchange that they will exercise the Buyback Mandate in accordance with the GEM Listing Rules and the applicable laws of the Cayman Islands, the jurisdiction in which the Company is incorporated, and in accordance with the regulations set out in the Memorandum and Articles of Association of the Company.

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RECOMMENDATION

The notice containing resolution regarding the proposal to be passed at the AGM is contained in the Company’s Annual Report for the year ended 31 March, 2002 which is being despatched to shareholders together with this circular.

The Directors recommend the proposal to all Shareholders for their favourable consideration and urge them to vote in favour of the resolution to be proposed at the AGM as they intend to do themselves in respect of their own holdings.

Yours faithfully Chung Lok Fai Chairman

This circular will remain on the Company’s website and on the GEM website with the domain name of www.hkgem.com on the “Latest Company Announcements” page for at least 7 days from the date of its posting.

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