Fulum Group Holdings Limited - Proxy Solicitation & Information Statement 2005

THE CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult your 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 CIG-WH International (Holdings) Limited (the “ Company ”), you should at once hand this circular together with the enclosed form of proxy to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected, for transmission to the purchaser or transferee.

This circular is for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for the securities.

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 on the whole or any part of the contents of this circular.

(Incorporated in Bermuda with limited liability)

(Stock Code: 621)

DISCLOSEABLE AND CONNECTED TRANSACTION INVOLVING ISSUE OF NEW SHARES AND UNLISTED WARRANTS AND PROPOSED CAPITAL REDUCTION

Independent financial adviser to the Independent Board Committee and the Independent Shareholders

Grand Vinco Capital Limited

A letter from the independent board committee is set out on pages 22 and 23 of this circular. A letter from Grand Vinco Capital Limited, the independent financial adviser, containing its advice to the independent board committee and the independent shareholders of the Company is set out on pages 24 to 32 of this circular.

A notice convening a special general meeting of the Company to be held at Victoria Room 3, 3/F, Regal Hongkong Hotel, 88 Yee Wo Street, Causeway Bay, Hong Kong on Thursday, 25 August 2005 at 10:00 a.m. is set out on pages 40 and 41 of this circular. Whether or not you are able to attend the special general meeting, you are requested to complete the accompanying form of proxy, in accordance with the instructions printed thereon and deposit the same at the offices of 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 as soon as possible and in any event not less than 48 hours before the time appointed for the holding of the special general meeting or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the extraordinary general meeting or any adjournment thereof should you so wish.

29 July 2005

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Letter from the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	22
Letter of advice from Grand Vinco. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	24
Appendix – General information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	33
Notice of SGM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	40

DEFINITIONS

In this circular, unless the context requires otherwise, the following expressions shall have the following meanings when used herein:

“Acquisition”

the proposed acquisition by Wing Hing BVI of the Sale Shares and the Sale Loan subject to and upon the terms and conditions of the Acquisition Agreement

“Acquisition Agreement” the agreement dated 21 June 2005 and made between the Vendor, Wing Hing BVI and the Guarantor for the sale and purchase of the Sale Shares and the Sale Loan
“Accumulated Losses” the accumulated losses of the Company as shown in the audited financial statements of the Company for the year ended 31 March 2004 which amounted to HK$138,808,000
“Announcement” the press announcement issued by the Company dated 27 June 2005 regarding the Acquisition
“Asset Co.” 珠海威望迪水務污水處理有限公司 (Veolia Water (Zhuhai) Wastewater Treatment Company Limited), a Chinese-foreign cooperative joint venture established pursuant to the Asset Co. JV Contract and the Asset Co. JV Articles and an associated company of the Company
“Asset Co. JV Articles” the articles of association relating to the Asset Co. entered into on 25 November 2002 between CSP, Veolia Water and GZ Mont des Nuages
“Asset Co. JV Contract” the joint venture contract relating to the Asset Co. entered into on 25 November 2002 between CSP, Veolia Water and GZ Mont des Nuages
“associate(s)” has the meaning ascribed to this term under the Listing Rules
“Board” the board of Directors
“Business Day” any day (other than a Saturday) on which licensed banks are generally open for business in Hong Kong throughout their normal business hours
“Capital Reduction” the proposed elimination of an approximate amount of HK$138,808,000 in the Company’s share premium account so as to write off the Accumulated Losses
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DEFINITIONS

CIG-WH International (Holdings) Limited, a company incorporated in Bermuda with limited liability, the issued Shares of which are listed on the Stock Exchange

“Company” listed on the Stock Exchange
“Companies Act” Companies Act 1981 of Bermuda
“Complete Success Acquisition” the acquisition by the Vendor of the equity interests in the Assets Co. and the Operation Co. held by GZ Mont des Nuages subject to and upon the terms and conditions of the Transfer Agreement
“Completion” completion of the sale and purchase of the Sale Shares and the Sale Loan in accordance with the terms and conditions of Acquisition Agreement
“Connected Person” has the meaning ascribed to it under the Listing Rules
“Consideration Share(s)” 17,000,000 new Shares to be allotted and issued to the Vendor in accordance with the terms of the Acquisition Agreement
“CSP” CSP (HK) Ltd., a company incorporated in Hong Kong and as at the Latest Practicable Date, a indirect non-wholly owned subsidiary of the Company, which is owned as to 60% by Wing Hing BVI and as to 40% by the Vendor
“Directors” the directors of the Company
“Effective Consideration the Total Effective Consideration divided by the maximum number per new Share” of new Shares to be issued upon (and assuming) the full conversion or exchange thereof at the initial conversion or exchange rate or the exercise in full of the subscription rights attaching thereto at the initial subscription price, in each case without any deduction of any commissions, discounts or expenses paid, allowed or incurred in connection with the issue thereof
“Exercise Price” the price of HK$0.30 per Share
“Grand Vinco” Grand Vinco Capital Limited, a licensed corporation to carry out type 1 (dealing in securities) and type 6 (advising on corporate finance) regulated activities under the SFO, the independent financial adviser to the Independent Board Committee and the Independent Shareholders
“Group” the Company together with its subsidiaries
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DEFINITIONS

“Guarantor”
“GZ Mont des Nuages”
“Hong Kong”
“Independent Board Committee”
“Independent Shareholders”
“Latest Practicable Date”
“Listing Rules”
“Operation Co.”
“Operation Co. JV Articles”
“Operation Co. JV Contract”
“PRC”
Ms Li Dan Dan, the guarantor of the Vendor under the Acquisition Agreement and the legal and beneficial owner of the entire issued share capital of the Vendor
廣州靈峰環保工程有限公司 (Guangzhou Mont des Nuages Environmental Co. Ltd.), a company established and existing under the laws of PRC and is not a connected person of the Company and is an independent third party not connected with the directors, chief executive and substantial shareholder of the Company or any of its subsidiaries or any of their respective associates
Hong Kong Special Administrative Region of the PRC
an independent board committee comprising Mr Wong Lit Chor, Alexis, Mr Leung Wai Cheung and Mr Lo Ka Wai, all being the independent non-executive Directors, to advise the Independent Shareholders as to the fairness and reasonableness of the Acquisition
the Shareholders other than the Vendor and its associates
22 July 2005, being the latest practicable date prior to printing of this circular for ascertaining certain information in this circular
the Rules Governing the Listing of Securities on the Stock Exchange
珠海威望迪水務污水處理管理有限公司 (Veolia Water (Zhuhai) Wastewater Treatment Operations Company Limited), a Chineseforeign cooperative joint venture established pursuant to the Operation Co. JV Contract and Operation Co. JV Articles and an associated company of the Company
the articles of association relating to the Operation Co. entered into on 25 November 2002 between CSP, Veolia Water and GZ Mont des Nuages
the joint venture contract relating to the Operation Co. entered into on 25 November 2002 between CSP, Veolia Water and GZ Mont des Nuages
the People’s Republic of China which, for the purpose of this circular, shall exclude Hong Kong, the Macau Special Administrative Region of the PRC and Taiwan
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DEFINITIONS

“Sale Loan” the shareholder’s loan owed by CSP to the Vendor on Completion which amounted to HK$14,063,184.68 as at the date of the Acquisition Agreement
“Sale Shares” four shares of HK$1.00 each, representing 40% of the entire issued share capital of CSP
“SFO” Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)
“SGM” the special general meeting of the Company which will be held on Thursday, 25 August 2005 at 10:00 a.m. to consider and approve the Acquisition and the Capital Reduction
“Share(s)” share(s) of HK$0.10 each in the capital of the Company “Shareholder(s)” holder(s) of Share(s)
“Share Issue Price” the price of HK$0.20 per Consideration Share
“Stock Exchange” The Stock Exchange of Hong Kong Limited
“Total Effective Consideration” receivable for the relevant securities shall be deemed to be the aggregate consideration receivable by the Company of such securities for the issue thereof plus the additional minimum consideration (if any) to be received by the Company upon (and assuming) the full conversion or exchange thereof or the exercise in full of the subscription rights attaching thereto
“Transfer Agreement” the agreement dated 19 July 2004 in relation to the transfer of 11% registered capital of the Asset Co. and 10% registered capital of the Operation Co. by GZ Mont des Nuages to the Vendor
“Vendor” Complete Success Limited, a company incorporated in the British Virgin Islands with limited liability and the vendor of the Sale Shares and the Sale Loan
“Vendor Loan” the loan owed by the Vendor to the Asset Co. on Completion which amounted to HK$4,716,981.13 as at the date of the Acquisition Agreement
“Veolia Water” Veolia Water S.A., a company established and existing under the laws of the Republic of France and is not a connected person of the Company and is an independent third party not connected with the directors, chief executive and substantial shareholder of the Company or any of its subsidiaries or any of their respective associates
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DEFINITIONS

“Warrantholder(s)”	holder(s) of the Warrant(s)
“Warrants”	the 50,000,000 new warrants conferring rights to subscribe up to
	HK$15,000,000 in aggregate for Shares, equivalent to the aggregate
	subscription price for a total of 50,000,000 Shares on the basis of
	an initial subscription price of HK$0.30 per Share (subject to
	adjustment) during the three-year period commencing from the
	date of issue, proposed to be issued by the Company to the Vendor
	in accordance with the terms of the Acquisition Agreement
“Warrant Issue Price”	the price of HK$0.02 per Warrant
“Wing Hing BVI”	Wing Hing Group (BVI) Limited, a wholly owned subsidiary of
	the Company and the purchaser of the Sale Shares and the Sale
	Loan
“HK$”	Hong Kong dollars, the lawful currency for the time being of
	Hong Kong
“RMB”	Renminbi, the lawful currency for the time being of the PRC
“%”	per cent.

LETTER FROM THE BOARD

(Incorporated in Bermuda with limited liability) (Stock Code: 621)

Executive Directors:

Mr. Ng Tat Leung, George (Chairman and Managing Director)

Mr. Wong Teck Ming, Philip

Mr. Chen Jinkui

Registered office:

Canon’s Court 22 Victoria Street Hamilton HM 12 Bermuda

Mr. Sun Haichao

Mr. Lui Siu Yee, Samuel

Mr. Chan Wai Keung, Ivan

Mr. Lo Chung Sun, Simon

Non-executive Director:

Mr. Wang Xianzhang (Honourary Chairman)

Independent non-executive Directors:

Head office and principal place of business in Hong Kong: 14th Floor Yau Lee Centre 45 Hoi Yuen Road Kwun Tong Kowloon Hong Kong

Mr. Wong Lit Chor, Alexis

Mr. Leung Wai Cheung

Mr. Lo Ka Wai

29 July 2005

To the Shareholders

Dear Sir or Madam,

DISCLOSEABLE AND CONNECTED TRANSACTION INVOLVING ISSUE OF NEW SHARES AND UNLISTED WARRANTS AND PROPOSED CAPITAL REDUCTION

INTRODUCTION

By an announcement dated 27 June 2005, the Board announced that Wing Hing BVI had entered into the Acquisition Agreement with the Vendor pursuant to which Wing Hing BVI has agreed to purchase and the Vendor has agreed to sell the Sale Shares and the Sale Loan at an aggregate consideration of HK$14,063,188.68.

By an announcement also dated 27 June 2005, the Board announced that the Company proposes to reduce the capital of the Company.

The purpose of this circular is to provide you with details of the Acquisition and the Capital Reduction, the recommendation of the Independent Board Committee, the advice from Grand Vinco to the Independent Board Committee and the Independent Shareholders in relation to the Acquisition and to give you the notice of the SGM to be convened for the purpose of considering and, if thought fit, approving the Acquisition by way of poll and the Capital Reduction.

LETTER FROM THE BOARD

THE ACQUISITION

THE ACQUISITION AGREEMENT

Date: 21 June 2005 Parties: (1) Vendor : Complete Success Limited (2) Purchaser : Wing Hing BVI (3) Guarantor : Ms Li Dan Dan

The Vendor is incorporated in the British Virgin Islands with limited liability and is principally engaged in investment holding. As at the Latest Practicable Date, other than holding the interests in CSP, the Vendor does not hold any interests in other entities. The entire issued share capital of the Vendor is legally and beneficially owned by the Guarantor. The Guarantor, aged 31, is the sole shareholder and sole director of the Vendor. The Guarantor does not hold interests in any entities, other than her interests in the Vendor. She graduated from Jinan University.

Prior to the entering into of the Acquisition Agreement, the entire issued share capital of CSP is owned as to 60% and 40% by Wing Hing BVI and the Vendor respectively.

As 40% of the entire issued share capital of CSP is beneficially owned by the Vendor, the Vendor, being a substantial shareholder of CSP, is therefore a Connected Person. Other than being a substantial shareholder of CSP, the Vendor and the Guarantor are independent third parties not connected with the directors, chief executive and substantial shareholder of the Company or any of its subsidiaries or any of their respective associates.

Asset to be acquired:

The Sale Shares

Four shares of HK$1.00 each in the issued share capital of CSP, representing 40% of the entire issued share capital of CSP.

The Sale Loan

The shareholder’s loan owing by CSP to the Vendor on Completion which, as at the date of the Acquisition Agreement, amounted to HK$14,063,184.68.

The shareholder’s loan is unsecured, not guaranteed and does not carry any interest and is repayable by CSP to the Vendor upon demand by the Vendor.

LETTER FROM THE BOARD

Consideration:

The aggregate consideration for the sale and purchase of the Sale Shares and the Sale Loan shall be HK$14,063,188.68, of which HK$4 shall be the consideration for the sale and purchase of the Sale Shares and HK$14,063,184.68 shall be the consideration for the sale and purchase of the Sale Loan.

The aggregate consideration for the sale and purchase of the Sale Shares and the Sale Loan shall be satisfied (i) as to HK$3,400,000 by Wing Hing BVI procuring the Company to allot and issue the Consideration Shares to the Vendor credited as fully paid, at the price of HK$0.20 per Consideration Share; (ii) as to HK$4,946,207.55 by Wing Hing BVI paying in cash to the Vendor; (iii) as to HK$4,716,981.13 by Wing Hing BVI paying in cash to the Asset Co. to settle the Vendor Loan; and (iv) as to HK$1,000,000 by Wing Hing BVI procuring the Company to issue the Warrants to the Vendor at the Warrant Issue Price. The whole consideration for the sale and purchase of the Sale Shares and the Sale Loan will be settled upon Completion.

Based on the closing price of HK$0.180 per Share as quoted on the Stock Exchange on 21 June 2005, being the last trading day before 27 June 2005, the part consideration to be settled by Wing Hing BVI in procuring the Company to allot and issue the Consideration Shares to the Vendor credited as fully paid will be HK$3,060,000.

Based on the closing price of HK$0.192 per Share as quoted on the Stock Exchange on Latest Practicable Date, the part consideration to be settled by Wing Hing BVI in procuring the Company to allot and issue the Consideration Shares to the Vendor credited as fully paid will be HK$3,264,000.

The part consideration of HK$4,946,207.55 and HK$4,716,981.13 payable by Wing Hing BVI in cash to the Vendor and the Asset Co. respectively, will be paid from the general working capital of the Company.

The consideration payable by Wing Hing BVI to the Vendor for the Sale Loan was arrived at based on the amount of the shareholder’s loan owed by CSP to the Vendor which amounted to HK$14,063,184.68 as at the date of the Acquisition Agreement. The consideration payable by Wing Hing BVI to the Vendor for the Sale Shares was arrived at based on the par value of the Sale Shares of HK$4 and the net liabilities position of CSP as at 31 March 2005.

The consideration for the Acquisition was arrived at after arm’s length negotiations between the parties to the Acquisition Agreement. The Directors consider the terms and conditions of the Acquisition to be fair and reasonable and are in the interests of the Company and the Shareholders as a whole. The Directors consider the terms and conditions of the Acquisition to be on normal commercial terms. The Independent Board Committee will also seek the view of the independent financial adviser as to the fairness and reasonableness of the Acquisition.

LETTER FROM THE BOARD

The Consideration Shares

The Share Issue Price represents:

(a) a premium of approximately 11.1% over the closing price of HK$0.180 per Share as quoted on the Stock Exchange on 21 June 2005, being the last trading day before the date of the Announcement;
(b) a premium of approximately 8.7% over the average of the closing prices of HK$0.184 per Share as quoted on the Stock Exchange for the last five consecutive trading days up to and including the date of the Announcement;
(c) a premium of approximately 4.2% over the closing price of HK$0.192 per Share as quoted on the Stock Exchange on the Latest Practicable Date;
(d) a premium of approximately 0.5% over the average closing prices of approximately HK$0.199 per Share as quoted on the Stock Exchange for the last five consecutive trading days up to and including the Latest Practicable Date; and
(e) a discount of approximately 56.5% to the net tangible asset value of approximately HK$0.46 per Share based on the Group’s net tangible assets as at 31 March 2005 of approximately HK$132,799,000 (as shown in the Group’s audited consolidated financial statements made up to 31 March 2005).

The Share Issue Price was arrived at after arm’s length negotiation between the Group and the Vendor. The Directors consider that the Share Issue Price is fair and reasonable and in the interests of the Shareholders as a whole.

The Consideration Shares will be issued under the specific mandate to be granted to the Directors to allot and issue the Consideration Shares at the SGM.

The Consideration Shares, when allotted and issued, will rank pari passu in all respects with each other and with the Shares in issue on the date of allotment and issue of the Consideration Shares.

The Consideration Shares represent approximately 4.9% of the existing issued share capital of the Company and approximately 4.7% of the issued share capital of the Company as enlarged by the allotment and issue of the Consideration Shares.

The Vendor undertakes that within the period commencing on the Completion Date and ending on the date falling six months after the Completion, it will not transfer or otherwise dispose of or create any encumbrance or other rights in respect of any of the Consideration Shares or transfer or otherwise dispose of or create any Encumbrance or other rights over any shares in any company controlled by it which is for the time being the beneficial owner of any of the Consideration Shares.

LETTER FROM THE BOARD

The Warrants

The Warrants will be issued to the Vendor upon Completion in registered form and constituted by a warrant instrument. The Warrants will rank pari passu in all respects among themselves.

Each Warrant carries the right to subscribe for one Share at the Exercise Price and is issued at the Warrant Issue Price.

The subscription rights attaching to the Warrants can be exercised in whole or in part, at any time during a period of three years commencing from the date of issue of the Warrants.

The Shares to be allotted and issued upon the exercise of the subscription rights attaching to the Warrants will be issued under the specific mandate to be granted to the Directors to allot and issue such Shares at the SGM and, when fully paid and allotted, will rank pari passu in all respects with the then existing issued Shares.

Number of Warrants

A total of 50,000,000 Warrants.

Warrant Issue Price

HK$0.02 per Warrant.

Exercise Price

HK$0.30 per Share.

The Warrant Issue Price and the Exercise Price were negotiated on an arm’s length basis between the Group and the Vendor.

The aggregate of the Warrant Issue Price and the Exercise Price represents:

(a) a premium of approximately 77.8% over the closing price of HK$0.180 per Share as quoted on the Stock Exchange on 21 June 2005, being the last trading day before the date of the Announcement;
(b) a premium of approximately 73.9% over the average of the closing prices of HK$0.184 per Share as quoted on the Stock Exchange for the last five consecutive trading days up to and including the date of the Announcement;
(c) a premium of approximately 66.7% over the closing price of HK$0.192 per Share as quoted on the Stock Exchange on the Latest Practicable Date;
(d) a premium of approximately 60.8% over the closing prices of approximately HK$0.199 per Share as quoted on the Stock Exchange for the last five consecutive trading days up to and including the Latest Practicable Date; and
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LETTER FROM THE BOARD

(e) a discount of approximately 30.4% to the net tangible asset value of approximately HK$0.46 per Share based on the Group’s net tangible assets as at 31 March 2005 of approximately HK$132,799,000 (as shown in the Group’s audited consolidated financial statements made up to 31 March 2005).

Adjustment to the Exercise Price

The Exercise Price of the will be adjusted upon the occurrence of the following events:

(a) alteration to the nominal amount of each of the Shares by reason of any consolidation or subdivision;
(b) the Company issues (other than pursuant to a scrip dividend scheme in lieu of a cash dividend) any Shares credited as fully paid by way of capitalisation of profits or reserves (including any share premium account or capital redemption reserve fund);
(c) the Company makes (whether on a reduction of capital or otherwise) any capital distribution to all Shareholders (in their capacity as such) (including, but not limited to, such a distribution pursuant to a reduction or redemption of share capital, share premium account or capital redemption reserve fund or otherwise) or shall grant to such holders rights to acquire for cash assets of the Company or any of its subsidiaries;
(d) the Company offers to all Shareholders new Shares for subscription by way of rights, or shall grant to all Shareholders any options or warrants to subscribe for new Shares, at a price per new Share which is less than 90 per cent. of the market price on the date of the announcement of the terms of the offer or grant (whether or not such offer or grant is subject to the approval of the holders of Shares or other persons);
(e) the Company issues wholly for cash any securities which by their terms are convertible into or exchangeable for or carrying rights of subscription for new Shares, and the total Effective Consideration per new Share initially receivable for such securities is less than 90 per cent. of the market price on the date of the announcement of the terms of issue of such securities (whether or not such issue is subject to the approval of the holders of Shares or other persons);
(f) the rights of conversion or exchange or subscription attaching to any such securities as mentioned in (e) above are modified so that the total Effective Consideration per new Share initially receivable for such securities shall be less than 90 per cent. of the market price at the date of announcement of the proposal to modify such rights of conversion or exchange or subscription;
(g) the Company issues wholly for cash any Shares at a price which is less than 90 per cent. of the market price on the date of the announcement of the terms of such issue; and
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LETTER FROM THE BOARD

(h) the Company makes an offer or invitation to holders of Shares to tender for sale to the Company any Shares or if the Company shall purchase any Shares or securities convertible into Shares or any rights to acquire Shares (excluding any such purchase made on the Stock Exchange, or any recognised stock exchange, being a stock exchange recognised for this purpose by the Executive Director of the Corporate Finance Division of the Securities & Futures Commission of Hong Kong or equivalent authority and the Stock Exchange) and the Directors consider that it may be appropriate to make an adjustment to the Exercise Price.

Transferability

The Warrants are freely transferable in integral multiples of 5,000,000 Warrants.

Upon full exercise of the subscription rights attaching to the Warrants, a total of 50,000,000 Shares, representing (i) approximately 14.5% of the issued share capital of the Company as at the date of this announcement; (ii) approximately 12.7% of the issued share capital of the Company as enlarged by the allotment and issue of the Shares from the full exercise of the subscription rights attaching to the Warrants; and (iii) approximately 12.1% of the issued share capital of the Company as enlarged by the allotment and issue of the Consideration Shares and the Shares from the full exercise of the subscription rights attaching to the Warrants, will fall to be allotted and issued.

Winding up of the Company

If an effective resolution is passed during the period of three years commencing from the date of issue of the Warrants for the voluntary winding-up of the Company, then:

(a) if such winding-up is for the purpose of reconstruction or amalgamation pursuant to a scheme of arrangement to which the Warrantholders, or some person designated by them for such purpose by special resolution, will be a party or in conjunction with which a proposal is made to the Warrantholders and is approved by special resolution, the terms of such scheme of arrangement or (as the case may be) proposal will be binding on all Warrantholders; and
(b) in any other case, every Warrantholder shall be entitled at any time within six weeks after the passing of such resolution by irrevocable surrender of his Warrant certificate(s) to the Company’s branch share registrar in Hong Kong with the subscription form(s) duly completed, together with payment of the exercise moneys (or the relative portion thereof), to elect to be treated as if he had immediately prior to the commencement of such winding-up exercised such of the subscription rights represented by his Warrant(s) as are specified in the subscription form(s) submitted by him and had on such date been the holder of the Shares to which he would have become entitled pursuant to such exercise and the Company and the liquidator of the Company shall give effect to such election accordingly. The Company shall give notice to the Warrantholders of the passing of any such resolution within seven days after the passing thereof and such notice shall contain a reminder to Warrantholders with respect to their rights.
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LETTER FROM THE BOARD

Subject to the above, if the Company is wound up, all subscription rights which have not been exercised at the date of the passing of such resolution shall lapse and Warrant certificates shall cease to be valid for any purpose.

Conditions:

The Acquisition is conditional upon the satisfaction of the following conditions precedent:

(a) the Listing Committee of the Stock Exchange granting of listing of and permission to deal in the Consideration Shares and the Shares which may fall to be allotted and issued upon the exercise of the subscription rights attaching to the Warrants;
(b) if necessary, the Bermuda Monetary Authority granting consent to the allotment and issue of the Consideration Shares, the issue of the Warrants and the allotment and issue of the Shares which may fall to be allotted and issued upon the exercise of the subscription rights attaching to the Warrants; and
(c) the Independent Shareholders passing at a special general meeting of the Company of the necessary resolutions approving the Acquisition Agreement and the transactions contemplated hereunder including the allotment and issue of the Consideration Shares, the issue of the Warrants and the allotment and issue of the Shares which may fall to be allotted and issued upon the exercise of the subscription rights attaching to the Warrants.

If the conditions are not satisfied on or before 12:00 noon on 31 August 2005, the Acquisition Agreement shall cease and determine and neither party to the Acquisition Agreement shall have any obligations and liabilities hereunder save for any antecedent breaches of the terms of the Acquisition Agreement.

Completion:

Completion shall take place on the second Business Day after the date on which the conditions of the Acquisition Agreement have been fulfilled.

Upon Completion, CSP will become a wholly owned subsidiary of the Company and 100% of its earnings, assets and liabilities of which will be accounted for in the consolidated financial statements of the Group. As part of the consideration of HK$3,400,000 and HK$1,000,000 would be settled by the issue of the Consideration Shares and Warrants respectively, the consolidated net asset value of the Company will be improved immediately after the Completion.

Guarantee:

Under the Acquisition Agreement, Ms Li Dan Dan has guaranteed to Wing Hing BVI the due and punctual performance of the Vendor of its obligations under the Acquisition Agreement.

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LETTER FROM THE BOARD

INFORMATION ON CSP

CSP, a 60% owned subsidiary of the Company, was incorporated on 26 May 1999 in Hong Kong with limited liability and is principally engaged in investment holding and construction of superstructures. On 15 July 2002, Wing Hing BVI subscribed for ten shares in the capital of CSP. On 22 November 2002, Wing Hing BVI transferred four shares in the capital of CSP to the Vendor. As at the Latest Practicable Date, the entire issued share capital of CSP is owned as to 60% by Wing Hing BVI and as to 40% by the Vendor.

The original costs of the interests of Wing Hing BVI in CSP is HK$6 and the original costs of the interests of Wing Hing BVI in the Asset Co. and the Operation Co. are the amount of the capital contribution of RMB32,800,000 (equivalent to approximately HK$30,654,200) and RMB3,900,000 (equivalent to approximately HK$3,644,900) respectively.

CSP is the registered owner of 40% of the registered capital of the Asset Co. and 39% of the registered capital of the Operation Co.. Other than holding the equity interests in the Asset Co. and the Operation Co., CSP was also engaged in the construction of the wastewater treatment and management facilities for the Asset Co.

Asset Co.

The Asset Co. is a Chinese-foreign cooperative joint venture established in the PRC and is principally engaged in the investment, construction, maintenance and operation of wastewater treatment facilities in Zhuhai, the PRC. The Asset Co. has a term of operation of 35 years from 29 November 2002, being the date of issue of the business licence of the Asset Co..

The registered capital and total investment of the Asset Co. is RMB82,000,000 (approximately HK$76,635,000) and RMB205,000,000 (approximately HK$191,588,800) respectively.

Upon its establishment on 29 November 2002, the registered capital of the Asset Co. is owned as to 40% by CSP, as to 49% by Veolia Water and as to the balance of 11% by GZ Mont des Nuages.

By the Transfer Agreement, GZ Mont des Nuages has agreed to transfer to the Vendor its 11% registered capital of the Asset Co.. The transfers of the registered capital of the Asset Co. were approved by the relevant governmental authority of the PRC on 13 June 2005 but yet to be completed.

As at the Latest Practicable Date, the registered capital of the Asset Co. is owned as to 40% by CSP, as to 49% by Veolia Water and as to the balance of 11% by GZ Mont des Nuages.

According to the Asset Co. JV Articles and the Asset Co. JV Contract, Veolia Water, CSP and GZ Mont des Nuages are required to pay the RMB40,180,000 (equivalent to approximately HK$37,551,400), RMB32,800,000 (equivalent to approximately HK$30,654,200) and RMB9,020,000 (equivalent to approximately HK$8,429,000) respectively towards the registered capital of the Asset Co..

As at the Latest Practicable Date, Veolia Water, CSP and GZ Mont des Nuages has contributed RMB40,180,000 (equivalent to approximately HK$37,551,400), RMB32,800,000 (equivalent to approximately HK$30,654,200) and RMB9,020,000 (equivalent to approximately HK$8,429,000) respectively towards the registered capital of the Asset Co..

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LETTER FROM THE BOARD

Operation Co.

The Operation Co. is a Chinese-foreign cooperative joint venture established in the PRC and is principally engaged in, among other things, the maintenance, management and operation of water treatment facilities in Zhuhai, the PRC and will undertake the work subcontracted to it by the Asset Co.. The Operation Co. has a term of operation of 35 years from 29 November 2002, being the date of issue of the business licence of the Operation Co..

The registered capital and total investment of the Operation Co. are both RMB10,000,000 (approximately HK$9,345,800).

Upon its establishment on 29 November 2002, the registered capital of the Operation Co. is owned as to 39% by CSP, as to 51% by Veolia Water and as to the balance of 10% by GZ Mont des Nuages.

By the Transfer Agreement, GZ Mont des Nuages has agreed to transfer to the Vendor its 10% registered capital of the Operation Co.. The transfer of the registered capital of the Operation Co. was approved by the relevant governmental authority of the PRC on 13 June 2005 but yet to be completed.

As at the Latest Practicable Date, the registered capital of the Operation Co. is owned as to 39% by CSP, as to 51% by Veolia Water and as to the balance of 10% by GZ Mont des Nuages.

According to the Operation Co. JV Articles and the Operation Co. JV Contract, Veolia Water, CSP and GZ Mont des Nuages are required to pay the RMB5,100,000 (equivalent to approximately HK$4,766,300), RMB3,900,000 (equivalent to approximately HK$3,644,900) and RMB1,000,000 (equivalent to approximately HK$934,600) respectively towards the registered capital of the Operation Co..

As at the Latest Practicable Date, Veolia Water, CSP and GZ Mont des Nuages has contributed RMB5,100,000 (equivalent to approximately HK$4,766,300), RMB3,900,000 (equivalent to approximately HK$3,644,900) and RMB1,000,000 (equivalent to approximately HK$934,600) respectively towards the registered capital of the Operation Co..

Financial information of CSP

According to the audited financial statements of CSP for the year ended 31 March 2004, CSP had a turnover of approximately HK$13,226,033 and the net loss before and after taxation and extraordinary items of CSP were both approximately HK$37,935.

As at 31 March 2004, the principal assets of CSP were its equity interests in the Asset Co. and the Operation Co.. The principal liabilities of CSP were the amount due to the Company, Wing Hing BVI, W. Hing Construction Company Limited (an indirect wholly owned subsidiary of the Company) and the Vendor of approximately HK$5,487,571, HK$3,999,996, HK$1,660,000 and HK$5,649,996 respectively.

As at 31 March 2004, the audited total assets of CSP was approximately HK$26,226,266 and the audited total liabilities of CSP was approximately HK$26,502,002.

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LETTER FROM THE BOARD

According to the unaudited management accounts of CSP for the year ended 31 March 2005, CSP had a turnover of approximately HK$49,627,552 and the net loss before and after taxation and extraordinary items of CSP were approximately HK$5,313.

As at 31 March 2005, the principal assets of CSP were its equity interests in the Asset Co. and the Operation Co. of HK$34,638,511. The principal liabilities of CSP were the amount due to JCL Engineering Limited (an indirect non-wholly owned subsidiary of the Company), the Company, Wing Hing BVI and the Vendor of approximately HK$10,360,563, HK$6,580,590, HK$3,999,996 and HK$14,063,185 respectively.

As at 31 March 2005, the unaudited total assets of CSP was approximately HK$41,034,206 and the unaudited total liabilities of CSP was approximately HK$41,315,255.

For further details regarding the establishment of the Asset Co. and the Operation Co., please refer to the announcements of the Company dated 10 December 2002 and the circular of the Company dated 30 January 2003.

REASONS FOR THE ACQUISITION

The Company is an investment holding company and its subsidiaries are principally engaged in the superstructure construction, foundation piling, substructure works, slope improvement works, special construction projects and interior decoration works in Hong Kong.

Wing Hing BVI is principally engaged in investment holding.

Wing Hing BVI will acquire 40% of the issued share capital of CSP, CSP will become an indirect wholly owned subsidiary of the Company upon Completion.

As at the Latest Practicable Date, the Asset Co. has completed the construction of the facilities for its wastewater treatment and management operation. As the wastewater treatment management operation has commenced its commercial operation in 1 June 2005, the Asset Co. and the Operation Co. are beginning to generate revenue.

In or about June 2004, GZ Mont des Nuages was encountering financial difficulties brought about by the macroeconomic austerity measures implemented by the PRC government and decided to sell its equity interests in the Asset Co. and the Operation Co. to the Vendor. On 19 July 2004, the Vendor entered into the Transfer Agreement to purchase the 11% and 10% equity interests held by GZ Mont des Nuages in the Asset Co. and the Operation Co. respectively.

On 13 June 2005, the Vendor obtained the necessary approvals from the relevant authorities for the transfer of the equity interests held by GZ Mont des Nuages in the Asset Co. and the Operation Co., upon which the conditions of the Transfer Agreement have been fulfilled and the transfer will proceed to completion. The total amount of the consideration of the Complete Success Acquisition is payable by the Vendor to GZ Mont des Nuages upon completion, which is expected to be in September 2005. As the crude oil price has inflated substantially in the past year, the Guarantor, who is principally engaged in general trading, was greatly affected and was unable to raise the required fund to pay for the consideration. As a result, the Vendor decided to sell its shares in the capital of CSP to raise the required fund.

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LETTER FROM THE BOARD

The construction of the wastewater treatment and management facilities owned by the Asset Co. was completed at the end of March 2005 and has commenced its operation on 1 June 2005. As the Asset Co. entered into a concession agreement with the People’s Government of Zhuhai Municipality to provide non-exclusive wastewater treatment and management services for Xiangzhou, Beiqu and Zhuhai, PRC, for 30 years from the date of final acceptance of the wastewater treatment and management facilities (which is expected by the Directors to be in around August 2005) with a guaranteed minimum volume of 130,000 cubic metres per day, the Asset Co. and the Operation Co. will begin to generate a stable revenue and a positive cash flow. The Directors consider that the Acquisition offers the Group with a good opportunity to step up its interests in the wastewater treatment and management operation, which the Directors’ believe will contribute positively to the results of the Group.

EFFECTS ON SHAREHOLDING STRUCTURE OF THE COMPANY

Set out below are the potential changes to the shareholding structure of the Company upon Completion and the exercise of the Warrants in full:

Name of Shareholders Ng Tat Leung George Grand Legend Limited (Note 1) Glado Development Limited_(Note 2)_ Lui Siu Yee Wong Teck Ming The Vendor Public Total	As at the Latest Practicable Date Shares % 72,018,000 20.87 57,500,000 16.67 45,000,000 13.04 204,000 0.06 200,000 0.06 – – 170,078,000 49.30 345,000,000 100.00	Assuming Completion but before exercise of the Warrants in full Shares % 72,018,000 19.89 57,500,000 15.88 45,000,000 12.43 204,000 0.06 200,000 0.06 17,000,000 4.70 170,078,000 46.98 362,000,000 100.00	Assuming exercise of Warrants in full Shares % 72,018,000 17.48 57,500,000 13.96 45,000,000 10.92 204,000 0.05 200,000 0.05 67,000,000 16.26 170,078,000 41.28 412,000,000 100.00	Assuming exercise of Warrants in full Shares % 72,018,000 17.48 57,500,000 13.96 45,000,000 10.92 204,000 0.05 200,000 0.05 67,000,000 16.26 170,078,000 41.28 412,000,000 100.00
				100.00

Notes:

(1) The entire issued share capital of Grand Legend Limited is owned by Mr. Lo Chun Yang.
(2) Glado Development Limited (“Glado Development”) is a company incorporated in Hong Kong and is a 99.9% owned subsidiary of China Insurance HK (Holdings) Co. Ltd. (“China Insurance”). Other than being substantial shareholder of the Company, the Glado Development and China Insurance are independent third parties not connected with the directors, chief executive and substantial shareholder of the Company or any of its subsidiaries or any of their respective associates.
(3) Percentage may be added or reduced for rounding purposes.

Upon the Completion, assuming that all the Warrants are exercised in full, there will not be a change of control of the Company.

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LETTER FROM THE BOARD

LISTING RULES IMPLICATION

As 40% of the entire issued share capital of CSP is beneficially owned by the Vendor, the Vendor, being a substantial shareholder of CSP, is therefore a Connected Person. Accordingly, the Acquisition constitutes a connected transaction on the part of the Company and will be subject to the approval of the Independent Shareholders at the SGM by way of poll. The Acquisition also constitutes a discloseable transaction on the part of the Company under the Listing Rules.

Details of the Acquisition will be included in the next published annual report of the Company.

INDEPENDENT BOARD COMMITTEE

The Independent Board Committee, comprising Mr Wong Lit Chor, Alexis, Mr Leung Wai Cheung and Mr Lo Ka Wai, all being independent non-executive Directors, has been established to consider and advise the Independent Shareholders in respect of the fairness and reasonableness of the terms of the Acquisition. Grand Vinco has been appointed as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders on the terms of the Acquisition.

PROPOSED CAPITAL REDUCTION

Pursuant to section 46 of the Companies Act, the Board announced on 28 June 2005 that the Company proposed to effect an elimination of approximately HK$138,808,000 standing to the credit of the Company’s share premium account. The credit of approximately HK$138,808,000 arising from such elimination will be applied to set off against the Accumulated Losses.

The Capital Reduction does not involve any reduction in the authorised or issued share capital of the Company nor does it involve any reduction in the nominal value of the Shares or the trading arrangements in respect of the Shares.

Conditions:

The Capital Reduction is conditional on:

(a) the passing of a special resolution by the Shareholders at the SGM to approve the Capital Reduction; and
(b) compliance by the Company with the requirements of section 46 of the Companies Act to effect the Capital Reduction.

The Capital Reduction will become effective on the date of passing of the special resolution by the Shareholders at the SGM to approve the Capital Reduction.

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LETTER FROM THE BOARD

REASONS FOR THE CAPITAL REDUCTION

The Accumulated Losses as shown in the audited financial statements of the Company for the year ended 31 March 2004 amounted to approximately HK$138,808,000. For information purpose, the accumulated losses of the Company as shown in the audited financial statements of the Company for the year ended 31 March 2005 (the date to which the latest audited financial statements of the Company were made up) is equivalent to the accumulated losses of the Company for the year ended 31 March 2004. The Capital Reduction (and the setting off of the accumulated losses against the credit arsing from the Capital Reduction) is designed to ensure that the Company will have a capital structure that would permit payment of dividends as and when the Directors consider it appropriate in the future. The Board considers that the substantial Accumulated Losses represent a permanent loss of assets of the Company and therefore proposes the reduction of the share premium account to eliminate the Accumulated Losses which it considers to be in the best interests of the Company and the Shareholders as a whole.

At this stage, the Board has yet decided on the future dividend policy of the Company. Even in circumstances where the Capital Reduction becomes effective, there can be no assurance that a dividend will be declared or paid in the future.

EFFECT OF THE CAPITAL REDUCTION

Implementation of the Capital Reduction will not of itself alter the underlying assets, business, operations, management, financial position (other than as regards the payment of relevant expenses) or the paid up share capital of the Company.

SGM

A notice convening the SGM to be held at Victoria Room 3, 3/F, Regal Hongkong Hotel, 88 Yee Wo Street, Causeway Bay, Hong Kong on Thursday, 25 August 2005 at 10:00 a.m. is set out on pages 40 to 41 on this circular.

An ordinary resolution will be proposed at the SGM to approve the Acquisition by Independent Shareholders by way of poll. The Acquisition is subject to, among others, the approval by the Independent Shareholders at the SGM to be taken by way of a poll. The Vendor, the Guarantor and their associates will abstain from voting for the relevant resolution at the SGM to approve the Acquisition and the transactions contemplated thereunder due to their interests in the Acquisition, if they are interested in any Shares. As at the Latest Practicable Date, the Vendor, the Guarantor and their associates are not interested in any Share.

A special resolution will be proposed to approve the capital reduction of the Company. None of the Shareholders are required to abstain from voting at the SGM.

Application will be made by the Company to the Stock Exchange for the listing of, and permission to deal in, the Consideration Shares and the Shares to be issued upon the exercise of the subscription rights attached to the Warrants.

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LETTER FROM THE BOARD

A form of proxy for use at the SGM is enclosed with this circular. Whether or not you are able to attend the SGM, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon and deposit the same at the offices of 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 as soon as possible and in any event not less than 48 hours before the time appointed for the holding of the SGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the SGM or any adjournment thereof should you so wish.

PROCEDURES FOR DEMANDING A POLL AT GENERAL MEETING

According to bye-law 79 of the bye-laws of the Company, a resolution put to the vote at any general meeting shall be determined by a show of hands of the Shareholders present in person (or, in the case of a Shareholder being a corporation, by its authorised representative entitled to vote) or by proxy unless a poll is (before or on the declaration of the result of the show of hands or on the withdrawal of any other demand for a poll) demanded by:

(i) the chairman of such meeting; or
(ii) 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) any 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) any 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 in accordance with the foregoing provisions, a declaration by the chairman that a resolution has on a show of hands been carried unanimously, or by a particular majority, or lost, and an entry to that effect in the book containing the minutes of the proceedings of the Company, shall be conclusive evidence of the fact without proof of the number or proportion of the votes recorded in favour of or against such resolution.

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LETTER FROM THE BOARD

RECOMMENDATION

The Board considers that the terms of the Acquisition and the proposed capital reduction of the Company are fair and reasonable and are in the interests of the Company and the Shareholders as a whole. Accordingly, the Board recommends the Shareholders to vote in favour of the ordinary resolution and the special resolution as set out in the notice of the SGM.

Your attention is drawn to (i) the letter from the Independent Board Committee set out on pages 22 and 23 of this circular which contains its recommendation to the Independent Shareholders as to voting at the SGM in relation to the Acquisition; and (ii) the letter from Grand Vinco, which contains its advice to the Independent Board Committee and the Independent Shareholders in relation to the Acquisition and the principal factors and reasons considered by it in arriving at its opinions. The text of the letter from Grand Vinco is set out on pages 24 to 32 of this circular.

The Independent Board Committee, having taken into account the advice of Grand Vinco, considers that the Acquisition was entered into on normal commercial terms, and that the terms of the Acquisition are fair and reasonable and in the interests of the Group so far as the Independent Shareholders are concerned. Accordingly, the Independent Board Committee recommends the Independent Shareholders to vote in favour of the ordinary resolutions to be proposed at the SGM in relation to the Acquisition.

ADDITIONAL INFORMATION

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

Yours faithfully On behalf of the Board CIG-WH International (Holdings) Limited Ng Tat Leung, George Chairman and Managing Director

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

(Incorporated in Bermuda with limited liability) (Stock Code: 621)

29 July 2005

To the Independent Shareholders

Dear Sir or Madam,

DISCLOSEABLE AND CONNECTED TRANSACTION INVOLVING ISSUE OF NEW SHARES AND UNLISTED WARRANTS AND PROPOSED CAPITAL REDUCTION

We refer to the circular of the Company dated 29 July 2005 (the “ Circular ”) to the Shareholders, of which this letter forms part. Capitalised terms used in this letter shall have the same meanings as defined in the Circular unless the context otherwise requires.

We have been appointed by the Board as members to form the Independent Board Committee and to advise you the terms of the Acquisition whether such terms are fair and reasonable and in the interests of the Company and the Independent Shareholders as a whole and how to vote on resolutions regarding the Acquisition.

Grand Vinco has been appointed to advise the Independent Board Committee and the Independent Shareholders as to whether the terms of the Acquisition are fair and reasonable so far as the Independent Shareholders are concerned, whether such terms are in the interests of the Company and the Independent Shareholders as a whole and how to vote on resolutions regarding the Acquisition. Details of its advice, together with the principal factors taken into consideration in arriving at such advice, is set out on pages 24 to 32 of the Circular.

Your attention is also drawn to the letter from the Board set out on pages 6 to 21 of the Circular and the additional information set out in the appendices of the Circular.

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

Having considered the terms of the Acquisition and the advice of Grand Vinco, we are of the opinion that the terms of the Acquisition are fair and reasonable so far as the Independent Shareholders are concerned and are in the interests of the Company and the Independent Shareholders as a whole. Accordingly, we recommend the Independent Shareholders to vote in favour of the resolutions to be proposed at the SGM to approve the Acquisition.

Yours faithfully Independent Board Committee of CIG-WH International (Holdings) Limited

Wong Lit Chor, Alexis

Independent non-executive Director

Leung Wai Cheung

Independent non-executive Director

Lo Ka Wai

Independent non-executive Director

23 -

LETTER OF ADVICE FROM GRAND VINCO

Set out below is a full text of the letter of advice from Grand Vinco to the Independent Board Committee and the Independent Shareholders in relation to the Acquisition, which has been prepared for the purpose of incorporation into this circular.

Grand Vinco Capital Limited

29 July 2005

The Independent Board Committee and the Independent Shareholders CIG-WH International (Holdings) Limited 14th Floor, Yau Lee Centre, 45 Hoi Yuen Road, Kwun Tong, Kowloon Hong Kong

CIG-WH International (Holdings) Limited

Dear Sirs,

DISCLOSEABLE AND CONNECTED TRANSACTIONS INVOLVING ISSUE OF NEW SHARES AND UNLISTED WARRANTS

We refer to the Announcement issued by the Company dated 27 June 2005 in respect of the Acquisition. Details of the terms of the Acquisition Agreement are set out in the circular (the “Circular”) issued by the Company to the Shareholders dated 29 July 2005 of which this letter forms part. Capitalised terms used in this letter shall have the same meanings ascribed to them in the Circular unless the context otherwise requires.

As 40% of the entire share capital of CSP is beneficially owned by the Vendor, the Vendor, being a substantial shareholder of CSP, is therefore a Connected Person. Accordingly, the Acquisition constitutes a discloseable and connected transaction under the Listing Rules. The Acquisition is subject to disclosure requirements and the approval of the Independent Shareholders by way of poll at the SGM at which the Vendor and its associates shall abstain from voting for the relevant resolution at the SGM. The Independent Board Committee, comprising Mr. Wong Lit Chor, Alexis, Mr. Leung Wai Cheung and Mr. Lo Ka Wai, all being independent non-executive Directors, has been formed to consider the Acquisition Agreement and to give relevant recommendation to the Independent Shareholders.

We, Grand Vinco, have been appointed by the Company to advise the Independent Board Committee and the Independent Shareholders in relation to the Acquisition Agreement. This letter contains our advice to the Independent Board Committee and the Independent Shareholders as to whether or not the terms of the Acquisition Agreement are fair and reasonable so far as the Independent Shareholders are concerned and are in the interest of the Company and the Shareholders as a whole.

In formulating our opinion and recommendation to the Independent Board Committee and the Independent Shareholders in relation to the Acquisition Agreement, we have relied on the accuracy of the

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LETTER OF ADVICE FROM GRAND VINCO

information and representations contained in the Circular which have been provided to us by the Directors and which the Directors consider to be complete and relevant. We are not aware that any statements, information and representations made or referred to in the Circular, for which the Directors are solely responsible, were untrue and incorrect in all respects at the time they were made and continued to be so as at the date of despatch of the Circular. We are also not aware that any statements of belief, opinion and intention made by the Directors in the Circular were not reasonably made after due and careful enquiry and are not based on honestly-held opinions. We have no reason to doubt the truth, accuracy and completeness of the information and representations provided to us by the Directors and we have been advised by the Directors that no material facts have been omitted from the information and representations provided in and referred to in the Circular.

We consider that we have received sufficient information to enable us to reach an informed view and to justify our reliance on the accuracy of the information and representations contained in the Circular and to provide a reasonable basis for our opinion and recommendation. We have no reason to suspect that any material information has been withheld by the Company or by the executive Directors. We have not, however, carried out any independent in-depth investigation into the affairs of the Company and its subsidiaries.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our opinion to the Independent Board Committee and the Independent Shareholders in respect of the Acquisition Agreement, we have taken the following principal factors and reason into consideration:

1. Background and reasons for the Acquisition

As stipulated in the letter of the Board, the Company is an investment holding company and its subsidiaries are principally engaged in the superstructure construction, foundation piling, substructure works, slope improvement works, special construction projects and interior decoration works in Hong Kong. The Company, through Wing Hing BVI, currently holds 60% of the entire issued share of CSP.

Upon a review of the Company’s 2005 annual report, we note the Group has emerged from a loss situation in the year ended 31 March 2004 and achieved an operation profit of approximately HK$9,576,000 in the year ended 31 March 2005. Operating efficiency has improved despite a 17% reduction in the turnover of the Group to HK$434 million. The Group recorded a net profit of approximately HK$13.1 million for the financial year ended 31 March 2005 and a net loss of approximately HK$2.8 million for the financial year ended 31 March 2004. The Group has undertaken a 130,000 m[3] /day wastewater treatment contract in Zhuhai, the PRC, through Asset Co., a jointly-controlled entity. The Group will focus mainly on environmental, industrial related projects and landscaping markets. With the experience of the wastewater treatment plant in Zhuhai, the Group has been looking for new investment and contracts in this sector. The Directors expect that new projects may be secured in the new future.

On 21 June 2005, the Directors announced that Wing Hing BVI, a wholly owned subsidiary of the Company, entered into the Acquisition Agreement with the Vendor pursuant to which Wing Hing BVI has agreed to purchase and the Vendor has agreed to sell the Sale Shares and the Sale Loan at an aggregate consideration of HK$14,063,188.68. The Sale Shares represent 40% of the entire issued share capital of CSP.

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LETTER OF ADVICE FROM GRAND VINCO

CSP is principally engaged in investment holding and is incorporated on 26 May 1999 in Hong Kong with limited liability. Prior to the completion of the Acquisition, the entire issued share capital of CSP is owned as to 60% by Wing Hing BVI and as to 40% by the Vendor. CSP is the registered owner of 40% of the registered capital of the Asset Co. and 39% of the registered capital of the Operation Co.. The Asset Co. is a Chinese-foreign cooperation joint venture established in the PRC and is principally engaged in the investment, construction, maintenance and operation of wastewater treatment facilities in Zhuhai, the PRC. The Asset Co. has a term of operation of 35 years from 29 November 2002, being the date of issue of the business license of Asset Co.. The Operation Co. is a Chinese-foreign cooperative joint venture established in the PRC and is principally engaged in, among other things, the maintenance and operation of wastewater treatment facilities in Zhuhai, the PRC and will undertake the work subcontracted to it by the Asset Co.. The Operation Co. has a term of operation of 35 years from 29 November 2002, being the date of issue of the license of Operation Co.. The construction of the wastewater treatment and management facilities owned by Asset Co. was completed at the end of March 2005 and has commenced its operation by Operation Co. on 1 June 2005. As the Asset Co. entered into a concession agreement with the People’s Government of Zhuhai Municipality to provide non-exclusive wasterwater treatment and management services for Xiangzhou, Beiqu and Zhuhai, the PRC, for 30 years from the final acceptance of wastewater treatment and management facilities by People’s Government of Zhuhai Municipality (which is expected by the Directors to be at around August 2005) with a guaranteed minimum volume of 130,000 cubic metres per day, the Asset Co. and the Operation Co. are expected to generate a more stable income stream and positive cash flow. On these bases, we are of the view that both Asset Co. and Operation Co. will make more and more contribution to CSP’s results in the future. It follows that an increase in the shareholding of CSP will enable the Group to capture the increasing contribution from Asset Co. and Operation Co. which is, in our opinion, in the interests of the Company and the Shareholders as a whole.

2. Consideration

The aggregate consideration for the sale and purchase of the Sale Shares and the Sale Loan shall be the sum of HK$14,063,188.68, of which HK$4 shall be the consideration for the sale and purchase of the Sale Shares and HK$14,063,184.68 shall be the consideration for the sale and purchase of the Sale Loan. As stated in the letter from the Board in the Circular, the Directors consider that the consideration was arrived at after arm’s length negotiation between the Company and the Vendors.

According to the unaudited management accounts of CSP for the year ended 31 March 2005, the net liabilities of CSP was approximately HK$281,049. However, we note that both shareholders of CSP, i.e. Wing Hing BVI and the Vendor, supported CSP financially by way of short term loans instead of equity capital. Therefore, CSP has only nominal share capital. Should these financial supports be viewed as their respective investment, the net assets of CSP should be adjusted by excluding these short term financings from the shareholders. According to the unaudited management account of CSP for the year ended 31 March 2005, the amount due to the Group and the Vendor were approximately HK$20,941,149 and HK$14,063,185 (which represents the Sale Loan) respectively. By excluding these financial supports, the adjusted net assets of CSP as at 31 March 2005 was approximately HK$34,723,285. As the Company currently purchased 40% of CSP, the adjusted net assets attributable to this shareholding was approximately HK$13,889,314. Therefore, the total consideration of approximately HK$14,063,188.68 represented a 1.25% premium over the adjusted unaudited net assets.

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LETTER OF ADVICE FROM GRAND VINCO

As disclosed in this Circular, as at 31 March 2005, the principal assets of CSP were its equity interests in the Asset Co. and the Operation Co.. Also, the construction of the wastewater treatment and management facilities owned by the Asset Co. was completed at the end of March 2005 and has commenced its commercial operation by Operation Co. on 1 June 2005. We are of the opinion that a slight (approximately 1.25% in this case) premium over the adjusted net assets is fair and reasonable and in the interests of the Company and its shareholders as a whole.

3. The Settlement of the Consideration

The aggregate consideration shall be satisfied (1) as to HK$3,400,000 by Wing Hing BVI procuring the Company to allot and issue the Consideration Shares to the Vendor credited as fully paid, at the Share Issue Price; (2) as to HK$4,946,207.55 by Wing Hing BVI paying in cash to the Vendor; (3) as to HK$4,716,981.13 by Wing Hing BVI paying in cash to the Asset Co. to settle the Vendor Loan and (4) as to HK$1,000,000 by Wing Hing BVI procuring the Company to issue the Warrants to the Vendor at the Warrant Issue Price.

The issue of Consideration Shares

The 17,000,000 Consideration Shares represent approximately 4.9% of the issued share capital of the Company as at the Latest Practicable Date and approximately 4.7% of the issued share capital of the Company as enlarged by the allotment and issue of the Consideration Shares.

The consideration price of HK$0.200 per new Share represents:

(a) a premium of approximately 11.1% over the closing price of HK$0.180 per Share as quoted on the Stock Exchange on 21 June 2005, being the last trading day before the date of the Announcement;
(b) a premium of approximately 8.7% over the average of the closing prices of HK$0.184 per Share as quoted on the Stock Exchange for the last five consecutive trading days up to and including the date of the Announcement;
(c) a premium of approximately 0.5% over the average closing prices of approximately HK$0.199 per Share as quoted on the Stock Exchange for the last five consecutive trading days up to and including the Latest Practicable Date;
(d) a premium of approximately 4.2% over the closing price of HK$0.192 per Share as quoted on the Stock Exchange on the Latest Practicable Date; and
(e) a discount of approximately 56.5% to the net tangible asset value of approximately HK$0.46 per Share based on the Group’s net tangible assets as at 31 March 2005 of approximately HK$132,799,000 (as shown in the Group’s audited consolidated financial statements made up to 31 March 2005).
27 -

LETTER OF ADVICE FROM GRAND VINCO

The average daily closing prices, the monthly highest recorded price and the monthly lowest recorded price of the Shares traded on the Stock Exchange in each of the 13 months during the period commencing from 1 June 2004 to 30 June 2005 and from 1 July 2005 up to and including the Latest Practicable Date are summarized as follows:

	Average daily
Month	closing price	Highest price	Lowest price
	(HK$)	(HK$)	(HK$)
2004
June	0.184	0.227	0.155
July	0.176	0.190	0.168
August	0.169	0.175	0.162
September	0.170	0.183	0.160
October	0.173	0.180	0.165
November	0.201	0.238	0.170
December	0.190	0.230	0.178
2005
January	0.185	0.198	0.163
February	0.184	0.190	0.171
March	0.175	0.186	0.162
April	0.194	0.270	0.171
May	0.196	0.229	0.171
June	0.183	0.189	0.172
July_(Note)_	0.192	0.210	0.175

Note: up to and including the Latest Practicable Date

The following chart illustrates the closing price of the Shares on the Stock Exchange versus the Share Issue Price during the above periods.

==> picture [294 x 241] intentionally omitted <==

----- Start of picture text -----

HK$
0.26
0.24
0.22
0.20
0.18
0.16
0.14
0.12 Closing Price
0.10
Issue Price
0.08
0.06
0.04
0.02
0
- 28 -
Jun-2004 Jul-2004 Aug-2004 Sep-2004 Oct-2004 Nov-2004 Dec-2004 Jan-2005 Feb-2005 Mar-2005 Apr-2005 May-2005 Jun-2005 Jul-2005
----- End of picture text -----

LETTER OF ADVICE FROM GRAND VINCO

As illustrated in the chart above, during the above periods, the closing prices of the Shares were always lower than HK$0.46, the audited net tangible assets per share of the Company as at 31 March 2005. Also, the average daily closing price during the above periods is approximately HK$0.184. As the closing price of the Shares shown above, only few periods in the 13 months mentioned above experienced slight fluctuations of which the highest trading price reached HK$0.27. Therefore, we consider that the issue price of HK$0.2 of the Consideration Share is fair and reasonable to the Company and Shareholders as a whole.

The issue of unlisted warrants

The cost of subscribing one Share of the Company by exercising one Warrant is approximately HK$0.32 (which includes the aggregate of the Warrant Issue Price of HK$0.02 and the Exercise Price of HK$0.3). This represents:

(a) a premium of approximately 77.8% over the closing price of HK$0.180 per Share as quoted on the Stock Exchange on 21 June 2005, being the last trading day before the date of the Announcement;
(b) a premium of approximately 73.9% over the average of the closing prices of HK$0.184 per Share as quoted on the Stock Exchange for the last five consecutive trading days up to and including the date of the Announcement;
(c) a premium of approximately 66.7% over the closing price of HK$0.192 per Share as quoted on the Stock Exchange on the Latest Practicable Date;
(d) a premium of approximately 60.8% over the closing prices of HK$0.199 per Share as quoted on the Stock Exchange for the last five consecutive trading days up to and including the Latest Practicable Date; and
(e) a discount of approximately 30.4% to the net tangible asset value of approximately HK$0.46 per Share based on the Group’s net tangible assets as at 31 March 2005 of approximately HK$132,799,000 (as shown in the Group’s audited consolidated financial statements made up to 31 March 2005).

Given that the unit cost of subscribing the Shares through exercising the Warrants represents a substantial premium over the closing prices above, we are of the opinion that the Warrant Issue Price and the Exercise Price are fair and reasonable as to the Shareholders as a whole.

The period for exercising the Warrants is three years commencing from the date of issue of the Warrants. We are of the opinion that such short exercise period together with the substantial premium described above is beneficial to the Shareholders as a whole. Furthermore, no matter whether the Warrants will be exercised in the future, the Company paid HK$1,000,000 less cash to settle the Acquisition. Should the holder of the Warrants exercise the Warrants in the future, the Company would have a maximum of HK$15,000,000 cash inflow which will enhance the Company’s cash flow position at the time when the Warrants be exercised.

Therefore, we are of the opinion that the issue of the Warrants as part of the consideration of the Acquisition and the terms of the Warrants are fair and reasonable as to the Shareholders as a whole.

29 -

LETTER OF ADVICE FROM GRAND VINCO

4. Financial effects of the Acquisition

Earnings

Based on the unaudited management accounts of CSP for the year ended 31 March 2005, the net loss was approximately HK$5,313. The main activity of CSP is the holding of the investment in Asset Co. and Operation Co. and was also engaged in the construction of the wastewater treatment and management facilities for the Asset Co. which was completed at the end of March 2005. Therefore, the performance of CSP depends mainly on the performance of Asset Co and Operation Co.. According to the PRC audited accounts for Asset Co. and Operation Co. for the year ended 31 December 2004, Asset Co. sustained a loss of approximately RMB5,529,678 and Operation Co. earned a profit of approximately RMB3,035,385. The construction of the wastewater treatment and management facilities owned by Asset Co. was completed at the end of March 2005 and has commenced its operation by Operation Co. on 1 June 2005. As the Asset Co. entered into a concession agreement with the People’s Government of Zhuhai Municipality to provide non-exclusive wastewater treatment and management services for Xiangzhou, Beiqu and Zhuhai, the PRC, for 30 years from the final acceptance of wastewater treatment and management facilities by People’s Government of Zhuhai Municipality (which is expected by the Directors to be at around August 2005) with a guaranteed minimum volume of 130,000 cubic metres per day, the Asset Co. and the Operation Co. are expected to generate a more stable income stream and positive cash flow. Therefore, we concur the Directors’ view that they will contribute positively to the results of the Group.

Net assets value

As at 31 March 2005, the Group’s audited net assets was approximately HK$135,107,000. As part of the consideration of HK$3,400,000 and HK$1,000,000 would be settled by the issue of the Consideration Shares and Warrants respectively, the consolidated net asset value of the Group shall be improved immediately after the Completion.

Working capital

The Company intends to finance the Acquisition in cash of the total HK$9,663,188.67, including HK$4,946,207.55 payable to the Vendor and HK$4,716,981.13 payable to the Asset Co. to settle the Vendor Loan, with the Group’s internal resources. We have obtained the working capital projection for the Group for the period from July 2005 to June 2006. We note that payment of the cash consideration for the Acquisition would only exert short term effect on the Group’s working capital position and during the above period, the Group is able to sustain positive working capital to finance its operation after taking into account of the effect of the payment of the cash consideration. Therefore, we are of the opinion that the payment of the cash consideration for the Acquisition would not have material adverse effect on the Group’s working capital position and after taking into account of the effect of the payment of the cash consideration the current level of working capital is sufficient to finance the operation of the Group in the above period.

30 -

LETTER OF ADVICE FROM GRAND VINCO

As from the audited consolidated balance sheet of the Group for the year ended 31 March 2005, we note that the cash and bank balances of the Group was approximately HK$13,025,000. The cash consideration represents approximately 74% of the cash and bank balances of the Group as at 31 March 2005. Although the cash consideration would exert short term pressure to the Group’s cash flow position, we note that the convertible note issued by the Company on 12 May 2004 of aggregate principal amount of HK$11,500,000 was converted into 57,500,000 Shares on 12 May 2005 which will ease the Group’s short term cash requirement. In addition, we note from the Group that both as at 31 Mach 2005 and 30 June 2005 the Group had unutilized bank facilities of approximately HK$8,800,000. Therefore, we are of the view that the Group has the necessary financial resources to finance the cash consideration.

5. Dilution effect on shareholdings

We set out below a table showing the shareholding structure of the Company upon Completion and the exercise of the Warrants in full:

Name of Shareholders Ng Tat Leung George Grand Legend Limited (Note 1) Glado Development Limited_(Note 2)_ Lui Siu Yee Wong Teck Ming The Vendor Public Total	As at the date of this announcement Shares % 72,018,000 20.87 57,500,000 16.67 45,000,000 13.04 204,000 0.06 200,000 0.06 – – 170,078,000 49.30 345,000,000 100.00	Assuming Completion but before exercise of the Warrants in full Shares % 72,018,000 19.89 57,500,000 15.88 45,000,000 12.43 204,000 0.06 200,000 0.06 17,000,000 4.70 170,078,000 46.98 362,000,000 100.00	Assuming exercise of Warrants in full Shares % 72,018,000 17.48 57,500,000 13.96 45,000,000 10.92 204,000 0.05 200,000 0.05 67,000,000 16.26 170,078,000 41.28 412,000,000 100.00	Assuming exercise of Warrants in full Shares % 72,018,000 17.48 57,500,000 13.96 45,000,000 10.92 204,000 0.05 200,000 0.05 67,000,000 16.26 170,078,000 41.28 412,000,000 100.00
				100.00

Notes:

(1) The entire issued share capital of Grand Legend Limited is owned by Mr. Lo Chun Yang.
(2) Glado Development Limited (“Glado Development”) is a company incorporated in Hong Kong and is a 99.9% owned subsidiary of China Insurance HK (Holdings) Co. Ltd. (“China Insurance”). Other than being substantial shareholder of the Company, the Glado Development and China Insurance are independent third parties not connected with the directors, chief executive and substantial shareholder of the Company or any of its subsidiaries or any of their respective associates.
(3) Percentage may be added or reduced for rounding purpose.
31 -

LETTER OF ADVICE FROM GRAND VINCO

Immediately upon the Completion, the shareholding of the existing public Shareholders in the Company will be diluted from the current level of approximately 49.30% to approximately 46.98%. Assuming the exercise of Warrants in full after the Completion, the shareholding of the existing public Shareholders in the Company will further be diluted from the current level of approximately 49.30% to approximately 41.28%. In view of the fact that by means of the issue of the Consideration Shares and Warrants, the Company can pursue the Acquisition by lesser impact on its working capital position, we are of the opinion that the potential dilution effect on the shareholding of the existing Shareholders is acceptable so far as the Independent Shareholders are concerned.

CONCLUSION

Having taken into consideration of the principal factors and reasons, in particular,

(i) both Asset Co. and Operation Co. are expected to make more and more contribution to CSP’s results in the future, therefore we concur the Directors’ view that they will contribute positively to the results of the Group;
(ii) the slight premium of the Consideration over the adjusted net assets of CSP;
(iii) the issue price of the Consideration Shares represents a premium of the closing price on 21 June 2005, being the last trading day before the date of Announcement, and a premium of the average daily closing price during the period from 1 June 2004 to and including the Latest Practicable Date; and
(iv) the issue of Warrants as part consideration of the Acquisition and the terms of the Warrants which are considered above in the section of “The Settlement of the Consideration” are fair and reasonable as to the Shareholders as a whole;
(v) the consolidated net tangible asset value of the Group shall be improved immediately after the Completion as part of the consideration would be settled by issue of Consideration Shares and Warrants;
(vi) the Group has the necessary financial resources to finance the cash consideration and its working capital position will not be materially be affected by the Acquisition; and
(vii) the dilution effect on the shareholding of the existing Shareholders is acceptable so far as the Independent Shareholders are concerned;

we consider that the Acquisition is in the interests of the Company and its Shareholders as a whole and the terms and conditions of the Acquisition Agreement are fair and reasonable so far as the Independent Shareholders are concerned and are in the interests of the Company and its Shareholders as a whole.

Yours faithfully For and on behalf of Grand Vinco Capital Limited Alister Chung Ivan Chan Managing Director Director

32 -

GENERAL INFORMATION

APPENDIX

1. RESPONSIBILITY STATEMENT

This document includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors collectively and individually accept full responsibility for the accuracy of the information contained in this document and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief there are no other facts the omission of which would make any statement herein misleading.

2. SHARE CAPITAL

Authorised		HK$
1,000,000,000	Shares	100,000,000
Issued and to be	issued, fully paid or credited as fully paid
345,000,000	Shares in issue as at the Latest Practicable Date	34,500,000
17,000,000	Consideration Shares to be allotted and issued	1,700,000
50,000,000	Shares to be allotted and issued pursuant to the exercise	5,000,000
	of the subscription rights attaching to the Warrants
412,000,000	Shares	41,200,000

3. DISCLOSURE OF INTERESTS

(a) Director’s interests and short positions in the securities of the Company and its associated corporations

As at the Latest Practicable Date, the interests and short positions of the Directors and the chief executive of the Company in the shares, underlying shares or debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO) (i) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they were taken or deemed to have under such provisions of the SFO); or (ii) which were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (iii) which were required to be notified to the

33 -

GENERAL INFORMATION

APPENDIX

Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Companies contained in the Listing Rules, were as follows:

	Number or		Approximate
	attributable		percentage
	number of		or attributable
	Shares held or	Nature of	percentage
Name of Directors	short positions	interests	of shareholding
			(%)
Ng Tat Leung, George	72,018,000 (L)	Beneficial	20.87
Lui Siu Yee	204,000 (L)	Beneficial	0.06
Wong Teck Ming	200,000 (L)	Beneficial	0.06

L: Long Position

Save as disclosed above, as at the Latest Practicable Date, none of the Directors nor the chief executive of the Company had or was deemed to have any interests or short positions in the shares, underlying shares or debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO) (i) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they were taken or deemed to have under such provisions of the SFO); or (ii) which were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (iii) which were required to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Companies contained in the Listing Rules.

34 -

GENERAL INFORMATION

APPENDIX

(b) Persons who have an interest or short position which is discloseable under Divisions 2 and 3 of Part XV of the SFO

So far as is known to the Directors and the chief executive of the Company, as at the Latest Practicable Date, the following persons (not being Directors or chief executive of the Company) had, or were deemed to have, interests or short positions in the Shares or underlying Shares which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO:

	Number or		Approximate
	attributable		percentage
	number of		or attributable
	Shares held or	Nature of	percentage
Name of shareholder	short positions	interests	of shareholding
			(%)
Glado Development	45,000,000 (L)	Beneficial_(Note 1)_	13.04
Grand Legend Limited	57,500,000 (L)	Beneficial_(Note 2)_	16.67
Lo Chun Yang	57,500,000 (L)	Corporate_(Note 2)_	16.67
Loh Siu Yin, Lulu	57,500,000 (L)	Family_(Note 2)_	16.67
The Vendor	67,000,000 (L)	Beneficial_(Note 3)_	16.26
The Guarantor	67,000,000 (L)	Corporate_(Note 3)_	16.26

L: Long Position

Notes:

The issued share capital of Glado Development is owned as to 99.90% by China Insurance.
The entire issued share capital of Grand Legend Limited is owned by Mr. Lo Chun Yang. Ms. Loh Siu Yin, Lulu is the spouse of Mr. Lo Chun Yang.
The interests in 67,000,000 Shares represent the Consideration Shares and the Shares to be issued upon the exercises of Warrants in full.

The entire issued share capital of the Vendor is owned by the Guarantor.

35 -

GENERAL INFORMATION

APPENDIX

(c) Substantial shareholders of other members of the Group

So far as is known to the Directors and the chief executive of the Company, as at the Latest Practicable Date, the following persons (not being Directors or chief executive of the Company) were directly or indirectly interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any member of the Group:

Name of subsidiary	Name of shareholder	Percentage of shareholding
		(%)
CSP	The Vendor	40

Save as disclosed above, as at the Latest Practicable Date, the Directors and the chief executive of the Company were not aware of any other person (other than the Directors and the chief executive of the Company) who had, or was deemed to have, interests or short positions in the Shares or underlying Shares, which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who was directly or indirectly interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any member of the Group.

As at the Latest Practicable Date, none of the Directors was a director or employee of a company which had, or was deemed to have, an interest or short position in the Shares or underlying Shares which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO.

4. DIRECTORS’ SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had any existing or proposed service contract with any member of the Group (excluding contracts expiring or determinable by the employer within one year without payment of compensation (other than statutory compensation)).

36 -

GENERAL INFORMATION

APPENDIX

5. EXPERT

The following is the qualification of the expert who has given opinions or advice which is contained in this circular:

Name

Qualification

Grand Vinco

A licensed corporation to carry out type 1 (dealing in securities) and type 6 (advising on corporate finance) regulated activities under the SFO

Grand Vinco has given and has not withdrawn its written consent to the issue of this circular with the inclusion herein of its letter and report and references to its name in the form and context in which it appears.

As at the Latest Practicable Date, Grand Vinco does not have any shareholding in any member of the Group or any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

6. LITIGATION

(a) A number of claims have been brought against the Group in respect of compensation for alleged personal injuries sustained by construction workers during the execution of contract works. Most of the litigation claims are personal injury claims and the some of them have not reached the stage in which the amount of the claim can be calculated. The Directors believe that any liabilities of the Group in respect of such claims will be covered either by the Group’s insurance policies, or that the Group has a meritorious defence against such claims. Accordingly, the Directors, after obtaining legal advice, do not believe that these claims will have any material adverse impact on the Group and, therefore no provisions have been made in respect thereof.
(b) A claim for approximately HK$1.6 million was brought against a subsidiary of the Company by a subcontractor in 2002 alleging that the Group is liable for the settlement of subcontracting charges to the subcontractor. Having considered the legal counsel’s advice, the Directors believe that the Group has meritorious defences for the claim. Accordingly, the Directors consider that a provision for the claim is not necessary.

Save as disclosed, no member of the Group is engaged in any litigation, arbitration or claim of material importance and no litigation, arbitration or claim of material importance is known to the Directors to be pending or threatened against any member of the Group as at the Latest Practicable Date.

37 -

GENERAL INFORMATION

APPENDIX

7. MATERIAL ADVERSE CHANGE

Save as disclosed herein, the Directors are not aware of any material adverse change in the financial position or trading position of the Group since 31 March 2005, being the date to which the latest published audited financial statements of the Group was made up.

8. COMPETING INTERESTS

As at the Latest Practicable Date, none of the Directors nor their respective associates had any business which competes or is likely to compete, either directly or indirectly, with the business of the Group.

9. MISCELLANEOUS

(a) There is no contract or arrangement entered into by any member of the Group subsisting at the date of this circular in which any Director is materially interested and which is significant to the business of the Group;
(b) As at the Latest Practicable Date, neither Grand Vinco nor any Directors had any direct or indirect interest in any assets which had been acquired, disposed of by or leased to, or which were proposed to be acquired, disposed of by or leased to, any member of the Group since 31 March 2005, the date to which the latest published audited consolidated financial statements of the Group were made up;
(c) Tengis Limited, the transfer office of the Company is located at Ground Floor, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong
(d) The company secretary of the Company is Ms. Chan Yuen Bik, Jane. Ms Chan is a Fellow of the Hong Kong Institute of Company Secretaries in Hong Kong and a Fellow of the Institute of Chartered Secretaries and Administrators in the United Kingdom.; and
(e) The qualified accountant of the Company appointed pursuant to Rule 3.24 of the Listing Rules is Mr. Chan Yau Chung, Louis. Mr. Chan has obtained a Master of Business Administration from the University of Surrey. He is an Associate Member of the Association of International Accountants and an Associate Member of Hong Kong Institute of Certified Public Accountants.
38 -

GENERAL INFORMATION

APPENDIX

10. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be made available for inspection during normal business hours at the office of the legal advisers of the Company, Michael Li & Co. at 14th Floor, Printing House, 6 Duddell Street, Central, Hong Kong from the date of this circular up to and including 25 August 2005 and at the SGM:

(a) the memorandum of association and bye-laws of the Company;
(b) the Acquisition Agreement;
(c) the draft instrument constituting the Warrants;
(d) the Asset Co. JV Contract;
(e) the Operation Co. JV Contract;
(f) the Transfer Agreement;
(g) the concession agreement dated 30 November 2002 entered into between the Asset Co. and the People’s Government of Zhuhai Municipality in relation to the provision non-exclusive wastewater treatment and management services by the Asset Co.;
(h) the letter from the Independent Board Committee, the text of which is set out on pages 22 to 23 in this circular;
(i) the written consent of Grand Vinco referred to in the paragraph headed “Expert” in this appendix;
(j) the letter of advice from Grand Vinco to the Independent Board Committee and the Independent Shareholders, the text of which is set out on pages 24 and 32 in this circular;
(k) the annual report of the Company for end of the two financial years ended 31 March 2005 and 31 March 2004; and
(l) the circular of the Company in relation to the investment in a joint venture dated 29 October 2004.
39 -

NOTICE OF SGM

(Incorporated in Bermuda with limited liability)

(Stock Code: 621)

NOTICE IS HEREBY GIVEN that a special general meeting (the “Meeting”) of CIG-WH International (Holdings) Limited (the “Company”) to be held at Victoria Room 3, 3/F, Regal Hongkong Hotel, 88 Yee Wo Street, Causeway Bay, Hong Kong on Thursday, 25 August 2005 at 10:00 a.m. for the purpose of considering and, if thought fit, passing the following resolutions:

ORDINARY RESOLUTION

“ THAT

(a) the agreement (the “Agreement”, a copy of which has been produced at the meeting and marked “A” and signed by the chairman of the meeting for the purpose of identification) dated 21 June 2005 and entered into among Wing Hing Group (BVI) Limited, a wholly owned subsidiary of the Company, as purchaser, Complete Success Limited (the “Vendor”) as vendor and Ms. Li Dan Dan as guarantor in relation to the sale and purchase of four shares (the “Sale Shares”) of HK$1.00 each in the capital of CSP (HK) Ltd. (“CSP”) and the shareholder’s loan (the “Sale Loan”) owed by CSP to the Vendor on the completion of the sale and purchase of the Sale Shares and the Sale Loan and the transactions contemplated thereunder, be and are hereby approved;
(b) the allotment and issue of an aggregate of 17,000,000 shares of HK$0.10 each of the Company (the “Consideration Shares” and each a “Consideration Share”) to the Vendor pursuant to the Agreement be and is hereby approved and that the Consideration Shares shall, when allotted and issued, rank pari passu in all respects with all other shares of HK$0.10 each in the capital of the Company (the “Shares” and each a “Share”) in issue on the date of such allotment and issue;
(c) the issue of an aggregate of 50,000,000 warrants (the “Warrants”) conferring rights to subscribe for Shares at an initial exercise price of HK$0.30 per Share, subject to adjustment and subject to the terms and conditions set out in the warrant instrument (a draft copy of which has been produced at the meeting and marked “B” and signed by the chairman of the meeting for the purpose of identification) be and is hereby approved;
(d) the allotment and issue of up to 50,000,000 Shares (the “Warrant Shares”) arising from the exercise of subscription rights attaching to the Warrants be and is hereby approved and the Warrant Shares shall, when allotted and issued, rank pari passu in all respects with all other Shares in issue on the date of such allotment and issue; and
(e) the directors of the Company be and are hereby authorised to do all other acts and things and execute all documents which they consider necessary or expedient for the implementation of and giving effect to the Agreement and the transaction contemplated thereunder.”
40 -

NOTICE OF SGM

SPECIAL RESOLUTION

“ THAT the amount of HK$138,808,000 standing to the credit of the Company’s share premium account be cancelled and the credit arising from such elimination will be applied to set off against the accumulated losses of the Company as shown in the audited financial statements of the Company for the year ended 31 March 2004 which amounted to HK$138,808,000 (the “Capital Reduction”) be and are hereby approved and that the Board be and is hereby authorised to take such action as may in the opinion of the Board be necessary or desirable to give effect to the Capital Reduction.”

By order of the Board CIG-WH International (Holdings) Limited Ng Tat Leung, George Chairman and Managing Director

Hong Kong, 29 July 2005

Registered office: Head office and principal place Canon’s Court of business in Hong Kong: 22 Victoria Street 14th Floor Hamilton HM 12 Yau Lee Centre Bermuda 45 Hoi Yuen Road Kwun Tong Kowloon Hong Kong

Notes:

A member of the Company entitled to attend and vote at the meeting convened by the above notice is entitled to appoint one or more than one proxy to attend and, subject to the provisions of the bye-laws of the Company, to vote on his behalf. A proxy need not be a member of the Company but must be present in person at the meeting to represent the member. If more than one proxy is so appointed, the appointment shall specify the number and class of shares in respect of which each such proxy is so appointed.
A form of proxy for use at the meeting is enclosed. 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 notarially certified copy of such power or authority, at the offices of 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 not less than 48 hours before the time appointed for holding the meeting or any adjournment thereof. Completion and return of a form of proxy will not preclude a member from attending in person and voting at the above meeting or any adjournment thereof, should he so wish
In the case of joint holders of shares, any one of such holders may vote at the meeting, either personally or by proxy, in respect of such shares as if he was solely entitled thereto, but if more than one of such joint holders are present at the meeting personally or by proxy, that one of the said persons so present whose name stands first in the register of members of the Company in respect of such shares shall alone be entitled to vote in respect thereof.
41 -

AI assistant

Fulum Group Holdings Limited — Proxy Solicitation & Information Statement 2005

49926_rns_2005-07-29_5d81d93f-63bc-4e95-911d-01bad2cbeb3e.pdf

DISCLOSEABLE AND CONNECTED TRANSACTION INVOLVING ISSUE OF NEW SHARES AND UNLISTED WARRANTS AND PROPOSED CAPITAL REDUCTION

Independent financial adviser to the Independent Board Committee and the Independent Shareholders

Grand Vinco Capital Limited

CONTENTS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DISCLOSEABLE AND CONNECTED TRANSACTION INVOLVING ISSUE OF NEW SHARES AND UNLISTED WARRANTS AND PROPOSED CAPITAL REDUCTION

INTRODUCTION

THE ACQUISITION

THE ACQUISITION AGREEMENT

Asset to be acquired:

The Sale Shares

The Sale Loan

Consideration:

The Consideration Shares

Number of Warrants

Warrant Issue Price

Exercise Price

Adjustment to the Exercise Price

Transferability

Winding up of the Company

LETTER FROM THE BOARD

Conditions:

Completion:

Guarantee:

INFORMATION ON CSP

Asset Co.

Operation Co.

Financial information of CSP

REASONS FOR THE ACQUISITION

LETTER FROM THE BOARD

EFFECTS ON SHAREHOLDING STRUCTURE OF THE COMPANY

LISTING RULES IMPLICATION

INDEPENDENT BOARD COMMITTEE

PROPOSED CAPITAL REDUCTION

Conditions:

REASONS FOR THE CAPITAL REDUCTION

EFFECT OF THE CAPITAL REDUCTION

SGM

LETTER FROM THE BOARD

PROCEDURES FOR DEMANDING A POLL AT GENERAL MEETING

RECOMMENDATION

ADDITIONAL INFORMATION

DISCLOSEABLE AND CONNECTED TRANSACTION INVOLVING ISSUE OF NEW SHARES AND UNLISTED WARRANTS AND PROPOSED CAPITAL REDUCTION

Yours faithfully Independent Board Committee of CIG-WH International (Holdings) Limited

Wong Lit Chor, Alexis

Leung Wai Cheung

Lo Ka Wai

Grand Vinco Capital Limited

CIG-WH International (Holdings) Limited

DISCLOSEABLE AND CONNECTED TRANSACTIONS INVOLVING ISSUE OF NEW SHARES AND UNLISTED WARRANTS

LETTER OF ADVICE FROM GRAND VINCO

PRINCIPAL FACTORS AND REASONS CONSIDERED

1. Background and reasons for the Acquisition

LETTER OF ADVICE FROM GRAND VINCO

2. Consideration

3. The Settlement of the Consideration

The issue of unlisted warrants

4. Financial effects of the Acquisition

Earnings

Net assets value

Working capital

LETTER OF ADVICE FROM GRAND VINCO

5. Dilution effect on shareholdings

CONCLUSION

1. RESPONSIBILITY STATEMENT

2. SHARE CAPITAL

3.

DISCLOSURE OF INTERESTS

(a) Director’s interests and short positions in the securities of the Company and its associated corporations

L: Long Position

(b) Persons who have an interest or short position which is discloseable under Divisions 2 and 3 of Part XV of the SFO

L: Long Position

(c) Substantial shareholders of other members of the Group

Fulum Group Holdings Limited Proxy Solicitation & Information Statement 2005