CWT International Limited — Proxy Solicitation & Information Statement 2004

Aug 2, 2004

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your shares in Sinochem Hong Kong Holdings Limited, you should at once hand this circular and the accompanying proxy form 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.

SINOCHEM HONG KONG HOLDINGS LIMITED 中化香港控股有限公司[*]

(Incorporated in Bermuda with limited liability)

(Stock Code: 297)

PROPOSALS INVOLVING

GENERAL MANDATES TO ISSUE AND REPURCHASE SHARES

AMENDMENTS TO BYE-LAWS

AND

RE-ELECTION OF DIRECTORS

A notice convening an annual general meeting of Sinochem Hong Kong Holdings Limited to be held at Bowen Room, Level 7, Conrad Hong Kong, Pacific Place, 88 Queensway, Hong Kong on Monday, 30 August 2004 at 10:00 a.m. is set out on pages 11 to 16 of this circular. If you do not propose to attend the meeting, you are requested to complete the accompanying proxy form in accordance with the instructions printed thereon and return it to the principal place of business of the Company at Unit 4603, 46th Floor, Office Tower, Convention Plaza, 1 Harbour Road, Wanchai, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for the holding of the meeting. Completion and return of the proxy form will not preclude you from subsequently attending and voting at the meeting or any adjourned meeting if you so wish.

30 July 2004

* For identification purpose only

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
General Mandates to Issue and Repurchase Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Proposed Amendments to the Bye-laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Re-election of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Annual General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Document available for Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
General information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Appendix – Explanatory Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
Notice of Annual General Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11

• i -

DEFINITIONS

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

“Annual General Meeting”

the annual general meeting of the Company to be held at Bowen Room, Level 7, Conrad Hong Kong, Pacific Place, 88 Queensway, Hong Kong on Monday, 30 August 2004 at 10:00 a.m., the notice of which is set out on pages 11 to 16 of this circular, or any adjournment thereof

“Board” the board of Directors “Bye-laws” the bye-laws of the Company “Code” the Hong Kong Code on Takeovers and Mergers “Company” Sinochem Hong Kong Holdings Limited, a company incorporated in Bermuda with limited liability, the ordinary shares of which are listed on the Stock Exchange “Companies Act” the Companies Act 1981 of Bermuda “Directors” the directors of the Company “Existing Issue Mandate” a general mandate granted to the Directors at the special general meeting of the Company held on 29 August 2003 to allot, issue and deal with Shares not exceeding 20 per cent. of the aggregate number of Shares comprised in the share capital of the Company in issue as at that date “Existing Repurchase Mandate” a general mandate granted to the Directors at the special general meeting of the Company held on 29 August 2003 to repurchase Shares not exceeding 10 per cent. of the aggregate number of Shares comprised in the share capital of the Company in issue as at that date “Group” the Company and its subsidiaries “HK$” Hong Kong dollars, the lawful currency in Hong Kong “Hong Kong” The Hong Kong Special Administrative Region of the PRC “Latest Practicable Date” 27 July 2004, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained herein “Listing Rules” The Rules Governing the Listing of Securities on the Stock Exchange “PRC” The People’s Republic of China “Proposed Repurchase Mandate” a general mandate proposed to be granted to the Directors at the Annual General Meeting to repurchase Shares not exceeding 10 per cent. of the aggregate nominal amount of the issued ordinary share capital of the Company as at the date of passing of the relevant resolution granting the Proposed Repurchase Mandate

• 1 -

DEFINITIONS

“SFO”	the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)
“Shares”	ordinary shares of HK$0.10 each in the capital of the Company
“Shareholders”	registered holders of the Shares
“Stock Exchange”	The Stock Exchange of Hong Kong Limited

• 2 -

LETTER FROM THE BOARD

SINOCHEM HONG KONG HOLDINGS LIMITED 中化香港控股有限公司[*]

(Incorporated in Bermuda with limited liability)

(Stock Code: 297)

Executive Directors: LIU Deshu (Chairman) SONG Yu Qing (Deputy Chairman and Chief Executive Officer) CHU David Yu Lin CHU Ho Miu Hing CHEN Hao

Independent non-executive directors: KO Ming Tung, Edward TANG Tin Sek

Registered office: Clarendon House 2 Church Street Hamilton HM 11 Bermuda

Principal place of business: Unit 4603, 46th Floor Office Tower Convention Plaza 1 Harbour Road Wanchai Hong Kong

30 July 2004

To the Shareholders and, for information only, holders of

the preference shares and share options of the Company

Dear Sir or Madam,

PROPOSALS INVOLVING

GENERAL MANDATES TO ISSUE AND REPURCHASE SHARES

AMENDMENTS TO BYE-LAWS

AND

RE-ELECTION OF DIRECTORS

INTRODUCTION

The purpose of this circular is to provide Shareholders with information concerning the resolutions to be proposed at the Annual General Meeting for (a) the granting to the Directors of a general mandate to allot, issue and deal with Shares of up to 20 per cent. of the aggregate nominal amount of the ordinary share capital of the Company in issue at the date of passing the relevant resolution granting this mandate; (b) the granting to the Directors of the Proposed Repurchase Mandate; (c) the extension of the general mandate to issue Shares by adding to it the aggregate number of Shares repurchased under the Proposed Repurchase Mandate; (d) approving the proposed amendments to the Bye-laws; and (e) the re-election of Directors.

* For identification purpose only

• 3 -

LETTER FROM THE BOARD

GENERAL MANDATES TO ISSUE AND REPURCHASE SHARES

At the special general meeting of the Company held on 29 August 2003, ordinary resolutions were passed granting to the Directors the Existing Issue Mandate and the Existing Repurchase Mandate.

In accordance with the Listing Rules and the terms of the Existing Issue Mandate and the Existing Repurchase Mandate, the Existing Issue Mandate and the Existing Repurchase Mandate will lapse on the conclusion of the Annual General Meeting.

A new general mandate to allot, issue and deal with Shares of up to 20 per cent of the aggregate nominal amount of the ordinary share capital of the Company in issue as at the date of passing the relevant resolution granting this mandate, the Proposed Repurchase Mandate and an extension of the general mandate to issue Shares by adding to it the aggregate number of Shares repurchased under the Proposed Repurchase Mandate (as respectively set out in resolutions numbered 4, 5 and 6 in the notice of the Annual General Meeting) will be proposed at the Annual General Meeting. With reference to the proposed new general mandates, the Directors wish to state that they have no immediate plans to issue or repurchase any Shares pursuant to the relevant mandates.

An explanatory statement required by the Listing Rules to be sent to the Shareholders in connection with the Proposed Repurchase Mandate is set out in the Appendix to this circular. The explanatory statement contains all information reasonably necessary to enable the Shareholders to make an informed decision on whether to vote for or against the relevant resolution at the Annual General Meeting.

PROPOSED AMENDMENTS TO THE BYE-LAWS

The Stock Exchange has revised the Listing Rules concerning various corporate governance issues. In view of these revisions which became effective on 31 March 2004 (subject to specific transitional arrangements in respect of some of the new provisions), the Board considers that changes to the Bye-laws should be made in line with the changes required under the revised Listing Rules. As such, amendments to the Bye-laws will be proposed at the Annual General Meeting and the full details of these amendments are set out in resolution numbered 7 in the notice of the Annual General Meeting which will be proposed as a special resolution of the Company.

The proposed amendments primarily relate to the following:

• (a) where any Shareholder is, under the Listing Rules, required to abstain from voting on any particular resolution or restricted to voting only for or only against any particular resolution, any votes cast by or on behalf of such Shareholder in contravention of such requirement or restriction will not be counted;

• (b) subject to such exceptions as permitted by the Listing Rules, a Director must not vote on any board resolution approving any contract or arrangement or any other proposal in which he or any of his associates has a material interest nor will he be counted in the quorum present at the meeting; and

• (c) a period of at least 7 days will be allowed for a Shareholder to lodge a notice to the Company of its intention to propose a person for election as a Director and for such person to give notice to the Company of his willingness to be elected, and this period will commence no earlier than the day after the despatch of the notice of the meeting appointed for such election and end no later than 7 days prior to the date of such meeting.

• 4 -

LETTER FROM THE BOARD

RE-ELECTION OF DIRECTORS

According to Bye-law 86(2), Mr. Liu Deshu may hold office only until the Annual General Meeting and is then eligible for re-election at that meeting. In addition, pursuant to Bye-laws 87(1) and 87(2), at each annual general meeting of the Company, one-third of the Directors for the time being (or, if their number is not a multiple of three, the number nearest to but not greater than one-third) must retire from office by rotation; any Director appointed pursuant to Bye-law 86(2) will not be taken into account in determining which particular Directors or the number of Directors who are to retire by rotation; and a retiring Director will be eligible for re-election. Accordingly, the Directors who will retire by rotation at the Annual General Meeting pursuant to Bye-laws 87(1) and 87(2) are Mr. Chu David Yu Lin and Mrs. Chu Ho Miu Hing.

Mr. Liu Deshu, Mr. Chu David Yu Lin and Mrs. Chu Ho Miu Hing, being eligible, will offer themselves for reelection at the Annual General Meeting. Biographies of each of these Directors are set out below.

Mr. Liu Deshu , age 51, is the Chairman of the Company and an executive Director. Mr. Liu graduated from Tsinghua University in the PRC with a Bachelors degree in Manufacturing Technology and Equipment and from China Europe International School in the PRC with an Executive Masters in Business Administration. During the period between March 1995 and January 1998, Mr. Liu was the chairman of China National Machinery & Equipment Import & Export Corporation, a state-owned enterprise in the PRC which principally engages in contracting international engineering projects and import and export of electrical products. During the period between December 2001 and May 2002, Mr. Liu was the chairman of Sinochem International Co., Ltd., a company listed on the stock exchange in Shanghai, PRC which principally engages in import and export of chemical raw materials, fine chemicals, agricultural chemicals, plastic, rubber product, storage and transportation and agency services. Sinochem International Co., Ltd. is also a subsidiary of Sinochem Corporation, a state-owned enterprise in the PRC, which in turn is the holding company of Sinochem Hong Kong (Holdings) Company Limited, currently a substantial shareholder and the single largest shareholder of the Company interested in approximately 21.18% of its issued ordinary share capital and a total of 103 unlisted convertible redeemable non-voting preference shares of the Company with a nominal value of HK$1 million each.

Mr. Liu has been nominated by Sinochem Hong Kong (Holdings) Company Limited and appointed as a Director by the Board on 13 April 2004. Mr. Liu has been a chief executive officer of Sinochem Corporation since 1998. Mr. Liu is also a director of Sinochem Hong Kong (Holdings) Company Limited and several other subsidiaries of Sinochem Corporation. In particular, he is currently the vice-chairman of Dalian West Pacific Petro-chemical Co., Ltd., a director of Manulife-Sinochem Life Insurance Co, Ltd., a director of 中國國貿有限責任公司 (China Guomao Company Ltd., which English name has been translated for the purpose of reference only) and the chairman of Lion Fund Management Ltd., all of which are joint venture companies in which Sinochem Corporation or its subsidiary(ies) has/have an interest. The core businesses of Sinochem Corporation and its subsidiaries include petroleum, fertiliser, rubber, plastic, chemical products, inbound/outbound trade, real estate and finance etc. Mr. Liu has extensive experience of over 20 years in corporate management and is currently a member of the 10th National Committee of the Chinese People’s Political Consultative Conference.

Mr. Chu David Yu Lin , aged 60, joined the Group in September 1987 and is currently an executive Director and director of members of the Group. Mr. Chu received a degree in Master of Business Administration from Harvard University after acquiring degrees in electrical engineering and management from Northeastern University and was awarded an honorary Doctor of Public Service degree from Northeastern University. Prior to joining the Group, he had worked for a number of international corporations which include companies engaged in the property sector. In addition, Mr. Chu was a director of CATIC Shenzhen Holdings Limited and Guangzhou Pharmaceutical Company Limited and currently holds directorships in Chuang’s China Investments Limited, CATIC International Holdings

• 5 -

LETTER FROM THE BOARD

Limited, Hong Kong Pharmaceutical Holdings Limited ad Zhu Kuan Development Limited, all of which are companies listed on the Stock Exchange. Mr. Chu is currently a deputy of the Hong Kong Special Administrative Region to the 10th National Congress of the People’s Republic of China, a Justice of the Peace of Hong Kong and a Legislative Councilor for the Hong Kong Government.

Mr. Chu is the husband of Mrs. Chu Ho Miu Hing. Mr. Chu, together with his associates and concert parties, were formerly the single largest shareholder of the Company interested in approximately 29.76% of its issued ordinary share capital. As disclosed in the Company’s announcements dated 25 November 2003 and 2 February 2004, Mr. Chu had granted an option to Sinochem Hong Kong (Holdings) Company Limited to acquire certain ordinary and preference shares held in the Company by Mr. Chu and his concert party. This option was exercised at the beginning of February 2004, as a result of which the interest of Mr. Chu, his associates and concert parties in the issued ordinary share capital of the Company decreased from about 29.76% to about 15.38%. As at the Latest Practicable Date, for the purposes of Part XV of the SFO and apart from the interests of Mrs. Chu described below, Mr. Chu was directly interested in 312,876,297 Shares (representing approximately 8.51% of the Company’s issued ordinary share capital) and held outstanding options exercisable into 5,800,000 Shares (representing approximately 0.16% of the Company’s issued ordinary share capital as enlarged by the Shares issued upon full exercise of such options) which were granted to him under the share option scheme of the Company.

Mrs. Chu Ho Miu Hing , aged 62, received a bachelor’s degree in chemistry from Mount Holyoke College, the United States of America, and a bachelor’s degree in music from New England Conservatory of Music, the United States of America. She joined the Group in September 1987 and was a Council Member of the Stock Exchange. She is currently the vice-chairman of The Chamber of Hong Kong Listed Companies. Mrs. Chu is an executive Director and director of members of the Group. Apart from her position with the Company, Mrs. Chu did not hold any directorship in any listed companies in the last three years.

Mrs. Chu is the wife of Mr. Chu David Yu Lin. As at the Latest Practicable Date, for the purposes of Part XV of the SFO and apart from the interests of Mr. Chu described above, Mrs. Chu was directly interested in 238,925,668 Shares (representing approximately 6.50% of the Company’s issued ordinary share capital) and held outstanding options exercisable into 5,800,000 Shares (representing approximately 0.16% of the Company’s issued ordinary share capital as enlarged by the Shares issued upon full exercise of such options) which were granted to her under the share option scheme of the Company.

As at the Latest Practicable Date, none of Mr. Liu Deshu, Mr. Chu David Yu Lin and Mrs. Chu Ho Miu Hing has any subsisting director’s service contract with the Company or any of its subsidiaries; no term has been fixed or proposed for their length of service with the Company and no agreement has been made for the payment of any director’s emoluments to any of them.

Save as described in their respective biographies set out above, none of Mr. Liu Deshu, Mr. Chu David Yu Lin and Mrs. Chu Ho Miu Hing has any other relationship with any directors, senior management or substantial shareholders of the Company and none of them had any interest in Shares within the meaning of Part XV of the SFO as at the Latest Practicable Date.

Apart from those described above, there is no other matter in relation to the re-election of these Directors that need to be brought to the attention of the Shareholders.

ANNUAL GENERAL MEETING

A notice convening the Annual General Meeting to be held at Bowen Room, Level 7, Conrad Hong Kong, Pacific Place, 88 Queensway, Hong Kong on Monday, 30 August 2004 at 10:00 a.m. is set out on pages 11 to 16 of this circular.

• 6 -

LETTER FROM THE BOARD

Enclosed is a proxy form for use at the Annual General Meeting. If Shareholders do not intend to be present at the Annual General Meeting, they are requested to complete the proxy form and return it to the principal place of business of the Company at Unit 4603, 46th Floor, Office Tower, Convention Plaza, 1 Harbour Road, Wanchai, Hong Kong in accordance with the instructions printed thereon not less than 48 hours before the time fixed for the holding of the Annual General Meeting or any adjournment thereof. Completion and return of the proxy form will not prevent Shareholders from attending and voting at the Annual General Meeting if they so wish.

Pursuant to the Bye-laws, a poll may be demanded in relation to any resolution put to the vote of the Annual General Meeting 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) by the chairman of the meeting; or

• (b) 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

• (c) 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

• (d) 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 shares conferring that right.

RECOMMENDATION

The Directors consider that the proposed resolutions for (a) granting to the Directors a general mandate to allot, issue and deal with Shares of up to 20 per cent of the aggregate nominal amount of the ordinary share capital of the Company in issue as at the date of passing the relevant resolution granting this mandate; (b) granting to the Directors the Proposed Repurchase Mandate; (c) the extension of the general mandate to issue Shares by adding to it the aggregate number of Shares repurchased under the Proposed Repurchase Mandate; (d) approving the proposed amendments to the Bye-laws; and (e) the re-election of Directors are in the interests of the Company and the Shareholders as a whole. The Directors therefore recommend the Shareholders to vote in favour of all the resolutions set out in the notice of the Annual General Meeting.

DOCUMENT AVAILABLE FOR INSPECTION

Copies of the Bye-laws are available for inspection at the principal place of business of the Company at Unit 4603, 46th Floor, Office Tower, Convention Plaza, 1 Harbour Road, Wanchai, Hong Kong during normal business hours for a 14 day period immediately preceding the Annual General Meeting.

GENERAL INFORMATION

Your attention is drawn to the additional information set out in the Appendix to this circular.

Yours faithfully,

By order of the Board

Liu Deshu

Chairman

• 7 -

EXPLANATORY STATEMENT

APPENDIX

This Appendix contains the particulars required by the Listing Rules to be included in an explanatory statement to enable the Shareholders to make an informed view on whether to vote for or against the resolution to be proposed at the Annual General Meeting in relation to the Proposed Repurchase Mandate.

LISTING RULES FOR REPURCHASE OF SHARES

The relevant sections of the Listing Rules which permit companies with primary listing on the Stock Exchange to repurchase their shares on the Stock Exchange subject to certain restrictions are summarised below.

SOURCE OF FUNDS

Repurchases must be funded out of funds legally available for the purpose and in accordance with the Company’s constitutive documents and the laws of the jurisdiction in which the Company is incorporated or otherwise established. Bermuda laws provide that funds used for a share repurchase may only be paid out of the capital paid up on the relevant shares, or the funds of the Company that would otherwise be available for dividend or distribution, or the proceeds of a fresh issue of shares made for the purpose. The amount of premium, if any, payable on a repurchase may only be paid out of either the funds of the Company that would otherwise be available for dividend or distribution or out of the share premium account of the Company before the shares are repurchased.

SHARE CAPITAL

As at the Latest Practicable Date, the issued ordinary share capital of the Company comprised 3,676,098,284 Shares. Subject to the passing of the resolution granting the Proposed Repurchase Mandate and on the basis that no further Shares are issued or repurchased before the Annual General Meeting, the Company would be allowed to repurchase a maximum of 367,609,828 Shares during the period ending on the earlier of the conclusion of the next annual general meeting of the Company, or the date by which the next annual general meeting of the Company is required to be held by law or the Bye-laws, or the date on which such authority is revoked or varied by an ordinary resolution of the Shareholders in general meeting.

REASONS FOR REPURCHASES

The Directors believe that it is in the best interests of the Company and the Shareholders as a whole to seek a general authority from the Shareholders to enable the Company to repurchase its Shares on the Stock Exchange. Such repurchases may, depending on market conditions, and funding arrangements at the time, lead to an enhancement of the net asset value of the Company and/or earnings per Share and will only be made when the Directors believe that such a repurchase will benefit the Company and the Shareholders as a whole.

The Directors have no present intention to repurchase any Shares and they would only exercise the power to repurchase in circumstances where they consider that the repurchase would be in the best interests of the Company. The Directors consider that there might be an adverse impact on the working capital or gearing position of the Company, as compared with the positions disclosed in the audited accounts contained in the annual report of the Company for the year ended 31 March 2004, in the event that the Proposed Repurchase Mandate were to be exercised in full at any time during the proposed repurchase period. The Directors, however, do not propose to exercise the Proposed Repurchase Mandate to such an extent as would, in the circumstances, have a material adverse effect on the working capital of the Company or its gearing levels which in the opinion of the Directors are from time to time appropriate for the Company.

• 8 -

EXPLANATORY STATEMENT

APPENDIX

SHARE PRICES

The following table shows the highest and lowest prices at which the Shares have been traded on the Stock Exchange in each of the last twelve months before the Latest Practicable Date.

	Highest	Lowest
Month	HK$	HK$
2003
July	0.067	0.043
August	0.088	0.049
September	0.076	0.060
October	0.095	0.061
November	0.170	0.085
December	0.330	0.117
2004
January	0.440	0.290
February	0.460	0.355
March	0.405	0.280
April	0.435	0.320
May	0.340	0.248
June	0.355	0.275
July (up to the Latest Practicable Date)	0.410	0.350

TAKEOVERS CODE

If as a result of a repurchase of Shares, a Shareholder’s proportionate interest in the voting rights of the Company increases, such increase will be treated as an acquisition for the purposes of the Code. Accordingly, a Shareholder, or group of Shareholders acting in concert, depending on the level of increase of the Shareholders’ interest, could obtain or consolidate control of the Company and become obliged to make a mandatory offer in accordance with Rule 26 of the Code.

As at the Latest Practicable Date and so far was known to the Directors, Sinochem Hong Kong (Holdings) Company Limited was interested in a total of 778,477,633 Shares, representing approximately 21.18% of the issued ordinary share capital of the Company. On the basis that no further Shares are issued or repurchased after the Latest Practicable Date, in the event that the Directors exercise the Proposed Repurchase Mandate in full, the ordinary shareholdings of Sinochem Hong Kong (Holdings) Company Limited in the Company would be increased to approximately 23.53% of the entire issued ordinary share capital of the Company. Such an increase would not trigger any obligation to make a mandatory offer for Shares under Rule 26 of the Code. The Directors are not aware of any consequences to make such an offer under the Code in the event of a repurchase of Shares pursuant to the Proposed Repurchase Mandate.

GENERAL

None of the Directors nor, to the best of their knowledge having made all reasonable enquiries, any of their associates have any present intention to sell any Shares to the Company in the event that the Proposed Repurchase Mandate is approved.

• 9 -

EXPLANATORY STATEMENT

APPENDIX

The Directors have undertaken to the Stock Exchange that, so far as the same may be applicable, they will exercise the Proposed Repurchase Mandate in accordance with the Listing Rules and the applicable laws of Bermuda.

No connected person, as defined in the Listing Rules, has notified the Company that he has a present intention to sell any Shares to the Company, or has undertaken not to do so, in the event that the Proposed Repurchase Mandate is approved.

The Listing Rules prohibit a company from making repurchase on the Stock Exchange if the result of the repurchase would be that less than 25 per cent (or such other prescribed minimum percentage as determined by the Stock Exchange) of its listed securities would be in public hands. The Directors do not propose to repurchase Shares which would result in less than the prescribed minimum percentage of Shares in public hands.

The Company has not repurchased any Shares, whether on the Stock Exchange or otherwise, in the six months preceding the Latest Practicable Date.

• 10 -

NOTICE OF ANNUAL GENERAL MEETING

SINOCHEM HONG KONG HOLDINGS LIMITED 中化香港控股有限公司[*]

(Incorporated in Bermuda with limited liability)

(Stock Code: 297)

NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that a annual general meeting of the Company will be held at Bowen Room, Level 7, Conrad Hong Kong, Pacific Place, 88 Queensway, Hong Kong on Monday, 30 August 2004 at 10:00 a.m. for the following purposes:

1. To receive and consider the audited financial statements and the reports of the directors and auditors for the year ended 31 March 2004.

2. To re-elect directors and to authorise the Board of Directors to fix the remuneration of the directors.

3. To re-appoint auditors and to authorise the Board of Directors to fix their remuneration.

4. As special business, to consider and, if thought fit, pass, with or without modifications, the following resolution as an ordinary resolution of the Company:

“ THAT :

• (a) subject to paragraph (c) below, the exercise by the directors of the Company (“Directors”) during the Relevant Period (as hereinafter defined) of all the powers of the Company to allot, issue and otherwise deal with additional ordinary shares of the Company (“Shares”) or securities convertible into Shares, or options, warrants or similar rights to subscribe for Shares, and to make or grant offers, agreements and options (including bonds and debentures convertible into Shares) which would or might require the exercise of such power be and is hereby generally and unconditionally approved;

• (b) the approval in paragraph (a) above shall be in addition to any other authorisations given to the Directors and shall authorise the Directors during the Relevant Period to make or grant offers, agreements and options (including bonds, warrants and debentures convertible into Shares) which would or might require the exercise of such power after the end of the Relevant Period;

• (c) the aggregate nominal amount of the ordinary share capital allotted or agreed conditionally or unconditionally to be allotted (whether pursuant to an option or otherwise) and issued by the Directors pursuant to the approval in paragraph (a) above, otherwise than pursuant to:

• (i) a Rights Issue (as hereinafter defined);

• (ii) the exercise of rights of subscription or conversion under the terms of any warrants issued by the Company or any securities which are convertible into Shares;

• (iii) the exercise of any option granted under any option scheme or similar arrangement for the time being adopted for the grant or issue to officers and/or employees of the Company and/or any of its subsidiaries of Shares or right to acquire Shares; or

* For identification purpose only

• 11 -

NOTICE OF ANNUAL GENERAL MEETING

• (iv) any scrip dividend or similar arrangement providing for the allotment of Shares in lieu of the whole or part of a dividend on the Shares in accordance with the bye-laws of the Company from time to time;

shall not exceed 20 per cent. of the aggregate nominal amount of the ordinary share capital of the Company in issue as at the date of passing of this Resolution and the said approval shall be limited accordingly;

• (d) subject to the passing of each of paragraphs (a), (b) and (c) of this Resolution, any prior approvals of the kind referred to in paragraphs (a), (b) and (c) of this Resolution which had been granted to the Directors and which are still in effect be and are hereby revoked; and

• (e) for the purpose of this Resolution:

• “Relevant Period” means the period from the passing of this Resolution until whichever is the earlier of:

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

• (ii) the expiration of the period within which the next annual general meeting of the Company is required by law or the bye-laws of the Company to be held; and

• (iii) the date on which the authority given under this Resolution is revoked or varied by ordinary resolution of the shareholders of the Company in general meeting; and

“Rights Issue” means the allotment, issue or grant of Shares pursuant to an offer of Shares open for a period fixed by the Directors to holders of Shares or any class thereof on the register on a fixed record date in proportion to their then holdings of such Shares or class thereof (subject to such exclusion or other arrangements as the Directors may deem necessary or expedient in relation to fractional entitlements, or having regard to any restrictions or obligations under the laws of, or the requirements of, any recognised regulatory body or any stock exchange in any territory outside Hong Kong).”

5.

As special business, to consider and, if thought fit, pass, with or without modifications, the following resolution as an ordinary resolution of the Company:

“ THAT :

• (a) subject to paragraph (b) below, the exercise by the directors of Company (“Directors”) during the Relevant Period (as hereinafter defined) of all the powers of the Company to repurchase ordinary shares of the Company (“Shares”) on The Stock Exchange of Hong Kong Limited or on any other stock exchange on which the Shares may be listed and recognised by the Securities and Futures Commission and The Stock Exchange of Hong Kong Limited for this purpose, and subject to and in accordance with all applicable laws and the requirements of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited or of any other stock exchange as amended from time to time, be and is hereby generally and unconditionally approved;

• 12 -

NOTICE OF ANNUAL GENERAL MEETING

• (b) the aggregate nominal amount of Shares which may be repurchased pursuant to the approval in paragraph (a) above shall not exceed 10 per cent. of the aggregate nominal amount of the ordinary share capital of the Company in issue as at the date of passing of this Resolution and the said approval shall be limited accordingly;

• (c) subject to the passing of each of paragraphs (a) and (b) of this Resolution, any prior approvals of the kind referred to in paragraphs (a) and (b) of this Resolution which had been granted to the Directors and which are still in effect be and are hereby revoked; and

• (d) for the purpose of this Resolution, “Relevant Period” means the period from the passing of this Resolution until whichever is the earlier of:

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

• (ii) the expiration of the period within which the next annual general meeting of the Company is required by law or the bye-laws of the Company to be held; and

• (iii) the date on which the authority given under this Resolution is revoked or varied by ordinary resolution of the shareholders of the Company in general meeting.”

• As special business, to consider and, if thought fit, pass, with or without modifications, the following resolution as an ordinary resolution of the Company:

“ THAT , subject to the passing of resolutions numbered 4 and 5 as set out in the notice of this meeting, the general mandate granted to the directors of the Company (“Directors”) to exercise the powers of the Company to allot, issue and otherwise deal with ordinary shares of the Company pursuant to the resolution numbered 4 set out in the notice of this meeting be and is hereby extended by the addition to the aggregate nominal amount of the ordinary share capital of the Company which may be allotted by the Directors pursuant to such general mandate an amount representing the aggregate nominal amount of the ordinary share capital of the Company repurchased by the Company under the authority granted pursuant to the resolution numbered 5 set out in the notice of this meeting, provided that such amount shall not exceed 10 per cent. of the aggregate nominal amount of the ordinary share capital of the Company in issue as at the date of passing of this Resolution.”

7.

As special business, to consider and, if thought fit, pass the following resolution as a special resolution of the Company:

• “ THAT the existing Bye-laws of the Company be and are hereby amended as follows:

• (a) by adding the following definition in Bye-law 1 immediately after the definition of “Act”:

• ““associate” shall have the meaning attributed to it in the Listing Rules.”;

• (b) by adding the following definition in Bye-law 1 immediately after the definition of “head office”:

• ““Listing Rules” the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited as may be amended from time to time.”;

• 13 -

NOTICE OF ANNUAL GENERAL MEETING

• (c) by deleting the existing definition of “clearing house” in Bye-law 1 and substituting therefor the following new definition:

• ““clearing house” a recognised clearing house within the meaning of the Securities and Futures Ordinance (Chapter 571 of the laws of Hong Kong) and any amendments thereto or re-enactments thereof for the time being in force or a clearing house or authorised shares depository recognised by the laws of the jurisdiction in which the shares of the Company are listed or quoted on the Designated Stock Exchange.”;

• (d) by adding the following Bye-law 76A immediately after Bye-law 76:

• “76A. Where any Member is, under the Listing Rules, required to abstain from voting on any particular resolution or restricted to voting only for or only against any particular resolution, any votes cast by or on behalf of such Member in contravention of such requirement or restriction shall not be counted.”;

• (e) by deleting the existing Bye-law 88 in its entirety and substituting therefor the following:

• “88. No person other than a Director retiring at the meeting shall, unless recommended by the Directors for election, be eligible for election as a Director at any general meeting unless a Notice signed by a Member (other than the person to be proposed) duly qualified to attend and vote at the meeting for which such notice is given of his intention to propose such person for election and also a Notice signed by the person to be proposed of his willingness to be elected shall have been lodged at the head office or at the Registration Office, provided that the minimum length of the period, during which such Notice(s) are given, shall be at least seven (7) days and that the period for lodgement of such Notice(s) shall commence no earlier than the day after the despatch of the notice of the general meeting appointed for such election and end no later than seven (7) days prior to the date of such general meeting.”;

• (f) by deleting the existing Bye-law 103 in its entirety and substituting therefor the following:

• “103. (1) A Director shall not vote on any resolution of the Board in respect of any contract or arrangement or any other proposal in which he or any of his associates is/are materially interested, and if he shall do so his vote shall not be counted and he shall not be counted in the quorum of such resolution of the Board but this prohibition shall not apply to any of the following matters namely:

  • (i) any contract or arrangement for the giving of any security or indemnity either:

    • (a) to the Director or his associate(s) in respect of money lent or obligations incurred or undertaken by him or any of them at the request of or for the benefit of the Company or any of its subsidiaries; or

    • (b) to a third party in respect of a debt or obligation of the Company or any of its subsidiaries for which the Director or his associate(s) has himself/ themselves assumed responsibility in whole or in part and whether alone or jointly under a guarantee or indemnity or by the giving of security;

• 14 -

NOTICE OF ANNUAL GENERAL MEETING

• (ii) any proposal concerning an offer of shares or debentures or other securities of or by the Company or any other company which the Company may promote or be interested in for subscription or purchase where the Director or his associate(s) is/are or is/are to be interested as a participant in the underwriting or subunderwriting of the offer;

• (iii) any proposal concerning any other company in which the Director or his associate(s) is/are interested only, whether directly or indirectly, as an officer or executive or shareholder or in which the Director or his associate(s) is/are beneficially interested in shares of that company, provided that the Director and any of his associates are not in aggregate beneficially interested in 5% or more of the issued shares, or of the voting rights, of any class of shares of such company (or of any third company through which his interest or that of his associate(s) is derived);

• (iv) any proposal or arrangement concerning the adoption, modification or operation of any share scheme or any share incentive or share option scheme or pension fund or retirement, death or disability benefits scheme which relates both to Directors, his associates and employees of the Company or any of its subsidiaries and does not provide in respect of any Director, or his associate(s), as such any privilege or advantage not generally accorded to the class of persons to which such scheme or fund relates; and

• (v) any contract or arrangement in which the Director or his associate(s) is/are interested in the same manner as other holders of shares or debentures or other securities of the Company by virtue only of his/their interest in shares or debentures or other securities of the Company.

• (2) A company shall be deemed to be a company in which a Director and/or his associate(s) has an interest of five (5) per cent. or more if and so long as (but only if and so long as) he together with his associates (either directly or indirectly) are the holders of or beneficially interested in five (5) per cent. or more of the issued shares of any class of the equity share capital of such company or of the voting rights available to members of such company (or of any third company through which his interest or that of any of his associates is derived). For the purpose of this paragraph there shall be disregarded any shares held by a Director or his associate(s) as bare or custodian trustee and in which he or any of them has no beneficial interest, any shares comprised in a trust in which the interest of the Director or his associate(s) is/are in reversion or remainder if and so long as some other person is entitled to receive the income thereof, and any shares comprised in an authorised unit trust scheme in which the Director or his associate(s) is/are interested only as a unit holder.

• (3) Where a company in which a Director together with his associate(s) has an interest of five (5) per cent. or more is materially interested in a transaction, then that Director shall also be deemed materially interested in such transaction.

• 15 -

NOTICE OF ANNUAL GENERAL MEETING

• (4) If any question shall arise at any meeting of the Board as to the materiality of the interest of a Director (other than the chairman of the meeting) or any of his associates or as to the entitlement of any Director (other than such chairman) to vote or be counted in the quorum and such question is not resolved by his voluntarily agreeing to abstain from voting or not be counted in the quorum, such question shall be referred to the chairman of the meeting and his ruling in relation to such other Director shall be final and conclusive except in a case where the nature or extent of the interest of the Director concerned or of any of his associates as known to such Director has not been fairly disclosed to the Board. If any question as aforesaid shall arise in respect of the chairman of the meeting or of any of his associates, such question shall be decided by a resolution of the Board (for which purpose such chairman shall not vote thereon) and such resolution shall be final and conclusive except in a case where the nature or extent of the interest of such chairman or any of his associates as known to such chairman has not been fairly disclosed to the Board.”

and that the directors of the Company be and are hereby authorised to do all such acts, deeds and things as they shall, in their absolute discretion, deem fit in order to effect the foregoing.”

By order of the Board Navin Aggarwal Secretary

Hong Kong, 30 July 2004

Notes:

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

2. To be valid, a proxy form, together with the power of attorney or other authority (if any) under which it is signed, or a notarially certified copy of that power or authority, must be deposited at the principal place of business of the Company at Unit 4603, 46th Floor, Office Tower, Convention Plaza, 1 Harbour Road, Wanchai, Hong Kong not less than 48 hours before the time fixed for the holding of the meeting or any adjournment thereof.

3. Where there are joint holders of any ordinary share of the Company, any one of such holders may vote at the meeting, either personally or by proxy, in respect of such share as if he were solely entitled thereto, but if more than one of such holders be present at the meeting personally or by proxy, that one of such holders so present whose name stands first on the register of members of the Company in respect of such share shall alone be entitled to vote in respect thereof.

4. As at the date of this notice, the executive directors of the Company are Mr. Liu Deshu who is also the Chairman, Mr. Song Yu Qing who is also the Deputy Chairman and Chief Executive Officer, Ms. Chen Hao, Mr. Chu David Yu Lin and Mrs. Chu Ho Miu Hing. The independent non-executive directors are Mr. Tang Tin Sek and Mr. Ko Ming Tung, Edward.

5. 16 -