Green Energy Group Limited — Proxy Solicitation & Information Statement 2006

Oct 9, 2006

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in doubt as to any aspect of this circular or as to the action to be taken, you should consult a stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Green Energy Group Limited, you should at once hand this circular to the purchaser or the transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or the transferee.

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

GREEN ENERGY GROUP LIMITED 綠色能源科技集團有限公司[*]

(Incorporated in Bermuda with limited liability)

(Stock Code: 979)

DISCLOSEABLE TRANSACTION – ACQUISITION OF INTEREST IN A COMPANY

* For identification purpose only

9 October 2006

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
The Acquisition Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Background information of the Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Reasons for the entering into the Acquisition Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Additional information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Appendix – General information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8

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DEFINITIONS

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

• “Acquisition”

the acquisition of the entire issued share capital of, and shareholder’s loans to, ReKRETE International as contemplated under the Acquisition Agreement

• “Acquisition Agreement”

• the agreement dated 16 September 2006 and made between the Vendor and the Purchaser in respect of the sale and purchase of the entire issued share capital of, and shareholder’s loans to, ReKRETE International

• “associate(s)” has the meaning ascribed to it under the Listing Rules

• “Board”

• the board of Directors

• “BVI”

British Virgin Islands

• “Company”

Green Energy Group Limited, a company incorporated in Bermuda with limited liability and the shares of which are listed on the Main Board of the Stock Exchange

• “Consideration”

HK$27,529,108.48, being the total consideration for the Acquisition under the Acquisition Agreement

• “Directors”

the directors of the Company

• “Green Label”

the eco-labels awarded under the Green Label Scheme

• “Green Label Scheme”

a scheme for the certification of environmentally preferable products launched in December 2000 by Green Council Limited and the Hong Kong Productivity Council. The scheme sets environmental standards and awards “Green Label” to products that are qualified regarding their environment performance

• “Group”

the Company and its subsidiaries

• “HK$”

Hong Kong dollars, the lawful currency of Hong Kong

• “Hong Kong”

the Hong Kong Special Administrative Region of the PRC

• “Independent Third Party(ies)”

independent third party(ies) who is(are) independent of the Company and the connected persons (having the meaning ascribed to it under the Listing Rules) of the Company

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DEFINITIONS

“Latest Practicable Date” 5 October 2006, being the latest practicable date prior to the printing of this circular for ascertaining certain information in this circular “Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange “PRC” People’s Republic of China “Purchaser” Proven Best Limited, a company incorporated in BVI, which is a direct wholly-owned subsidiary of the Company “ReKRETE Asia” ReKRETE (Asia) Limited, a limited liability company incorporated in Hong Kong, which is the direct wholly-owned subsidiary of ReKRETE International “ReKRETE International” ReKRETE International Limited, a company incorporated in the BVI, which is wholly owned by the Vendor “SFO” the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “Shareholders” shareholders of the Company “Stock Exchange” The Stock Exchange of Hong Kong Limited “Vendor” Mr. Chan Hon Wai Thomas, an Independent Third Party “US” The United States of America “US$” US dollars, the lawful currency of the US “%” per cent.

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LETTER FROM THE BOARD

GREEN ENERGY GROUP LIMITED 綠色能源科技集團有限公司[*]

(Incorporated in Bermuda with limited liability) (Stock Code: 979)

Executive Directors:

Mr. Yip Wai Leung Jerry (Chairman) Mr. Ming Kar Fook Charles

Independent non-executive Directors: Mr. So Yin Wai Mr. Chan Kai Yung Ronney Ms. Zhu You Chun

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

Head office and principal place of business in Hong Kong: Room 2301, 23rd Floor Lippo Centre Tower II 89 Queensway Admiralty Hong Kong

9 October 2006

To the Shareholders

Dear Sir or Madam,

DISCLOSEABLE TRANSACTION – ACQUISITION OF INTEREST IN A COMPANY

INTRODUCTION

By an announcement dated 19 September 2006, the Board announced that on 16 September 2006, the Company entered into the Acquisition Agreement with the Vendor in respect of the acquisition of the entire issued share capital of, and shareholder’s loans to ReKRETE International.

The Consideration amounts to HK$27,529,108.48. The percentage ratio (as prescribed under Chapter 14 of the Listing Rules) in respect of the total value of the assets being acquired under the Acquisition to the total assets value as disclosed in the Company’s consolidated financial statements as at 31 December 2005 (adjusted by reference to the issue of Shares under the open offer, the prospectus in respect of which was issued on 6 June 2006) and the percentage ratio (as prescribed under Chapter 14 of the Listing Rules) in respect of the Consideration to the market capitalisation of the Company are both more than 5% but less than 25%. Accordingly, the Acquisition Agreement constitutes a discloseable transaction for the Company under Rule 14.06 of the Listing Rule.

• For identification purpose only

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LETTER FROM THE BOARD

The purpose of this circular is to give you further information regarding the Acquisition Agreement and other information of the Company.

THE ACQUISITION AGREEMENT

Date of the Acquisition Agreement

16 September 2006

Parties to the Acquisition Agreement

Purchaser: Proven Best Limited, a direct wholly-owned subsidiary of the Company

Vendor: Mr. Chan Hon Wai Thomas, who is an Independent Third Party to the best of the knowledge, information and belief of the Directors

Subject matter of the Acquisition: ReKRETE International and ReKRETE Asia

ReKRETE International is an international business company incorporated in the BVI on 20 April 2004 having an authorised capital of US$50,000 divided into 50,000 shares of US$1 each. ReKRETE International has an issued share capital of US$1 which is beneficially owned by and registered in the name of the Vendor.

ReKRETE International is an investment holding company and is the sole beneficial owner of ReKRETE Asia, a company incorporated on 17 September 2004 in Hong Kong with limited liability. ReKRETE Asia has an issued share capital of HK$1, represented by one share having a par value of HK$1.

In November 2004 ReKRETE Asia entered into a distribution agreement with W.C. Company/ ReKRETE Inc., a company incorporated under the laws of Colorado of the US, which is an Independent Third Party. Under the distribution agreement ReKRETE Asia has been granted an exclusive right for a period of twelve years commencing on 1 January 2005 (which may, at the option of ReKRETE Asia, be renewed for further terms of six years) to distribute in all Asian countries (including but not limited to the PRC, Taiwan, Japan, South Korea, Singapore, Malaysia and Thailand, but excluding New Zealand, Australia and the South Pacific Islands) two bio-cleaning agents known as ReKRETE Waterless Concrete Cleaner (“ReKRETE”) and Concrete And Asphalt Parking Space Cleaner (“CAAPS”) designed to remove oil and hydrocarbon petroleum matters. The Vendor represents and warrants that, unlike conventional liquid cleaning chemicals and degreasers, ReKRETE is a finely granulized dry compound containing a complex mixture of natural bio-organics that are microsized to enter the porosity of concrete surfaces and that, upon contacting hydrocarbon petroleum matters such as oil, grease, gasoline, kerosene, jet fuel, hydraulic fluid and diesel fuel, ReKRETE will begin to break down and consume the hydrocarbon petroleum matters that are trapped in the pores of the concrete surfaces without the use of water as a carrier, catalyst or neutralizing agent whether before, during or after the cleaning process. The Vendor further represents and warrants that CAAPS is a concentrated dry compound containing a mixture of natural bio-organics and enzymes designed to mix with water for application as an active cleaning ingredient for all cleaning purposes. Both ReKRETE and CAAPS are recognized as more environmentally friendly than conventional liquid cleaning chemicals and degreasers, because they are wholly non-

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LETTER FROM THE BOARD

hazardous, non-corrosive and non-toxic to humans, animals, plants, soils, metals, paint, concrete, sewer system and underground water.

Since the commencement of ReKRETE Asia’s marketing activities in early 2006, each of ReKRETE and CAAPS has been awarded a Green Label and certified as an environmentally preferable product under the product category of Industrial Cleaner pursuant to the Hong Kong Green Label Scheme launched by Green Council Limited. At present ReKRETE Asia’s customers and end-users of both products include railway companies, bus companies, airport facilities, engineering companies, petroleum companies, car park operators, estate management and other cleaning contractors.

As at 31 August 2006 the unaudited net liability from ReKRETE Asia was approximately HK$1,619,143 and the aggregate amount of shareholder’s loans amounted to HK$24,529,108.48. The Company wishes to clarify that due to an inadvertent oversight, in the announcement of the Company dated 19 September 2006, the unaudited net liability of ReKRETE Asia as at 31 March 2006 in the amount of HK$917,980.53 was wrongly stated as the unaudited net liability as at 31 August 2006. The mistake was subsequently discovered and ratified in this circular.

For the year ended 31 March 2006 the unaudited net loss before tax of ReKRETE Asia amounted to approximately HK$192,903 and for the year ended 31 March 2005, the audited net loss before tax was approximately HK$725,078. For the year ended 31 March 2006, the unaudited net loss after tax attributable to the shareholder of ReKRETE Asia amounted to approximately HK$192,903 and for the year ended 31 March 2005, the audited net loss after tax attributable to the shareholder of ReKRETE Asia amounted to approximately HK$725,078.

ReKRETE International is an investment company and, save for its shareholding in ReKRETE Asia, it has no other asset, and its only liability is due to the Vendor in the amount of approximately HK$24,500,000. No financial statement has been prepared for ReKRETE International. The only expenses incurred by ReKRETE International since the date of its incorporation were costs of its incorporation and fees paid to the registered agent and government in the BVI, which were paid by the Vendor and ReKRETE Asia on behalf of ReKRETE International and in the aggregate sum of HK$16,809.

Upon completion of the Acquisition, ReKRETE International and ReKRETE Asia will become indirect wholly-owned subsidiaries of the Company.

Consideration for the Acquisition and the basis for its determination

The Consideration amounting to an aggregate of HK$27,529,108.48 has been determined having regard to the total financial investments of HK$24,529,108.48 made by the Vendor as at 31 August 2006. The Consideration is made up of (a) the sum of HK$3,000,000 representing the purchase price of the entire issued share capital of ReKRETE International and (b) the sum of HK$24,529,108.48 representing shareholder’s loans advanced by the Vendor to ReKRETE International. The Company has agreed to pay a premium of HK$3,000,000 on top of the Vendor’s total financial investments of HK$24,529,108.48 having regard to the customer base built up by ReKRETE Asia, the exclusivity of the rights conferred by the distribution agreement, the duration of the balance of term of the exclusive distribution rights created by the distribution agreement, the market potentials of both products comprised in the distribution agreement and the fact that green labels have been awarded to both products in recognition of their environmental preference to conventional cleaning chemicals and degreasers.

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LETTER FROM THE BOARD

Payment of Consideration and conditions precedent to completion of the Acquisition Agreement

Payment of the entire Consideration shall be made by the Purchaser to the Vendor at the time of completion of the Acquisition Agreement scheduled to take place on or before 15 October 2006 (or such later date as the parties may agree) conditional upon the Purchaser notifying the Vendor in writing that the Purchaser is satisfied with the results of the due diligence review and investigation into the affairs of ReKRETE International and ReKRETE Asia including without limitation to their assets, liabilities, contracts, commitments and business and financial and legal and taxation aspects, which review shall be completed on or before 30 September 2006. The said due diligence review has been completed on 30 September 2006.

In June 2006 the Company completed an open offer and raised net proceeds in the sum of approximately HK$151,600,000, part of which will be applied in or towards payment of the Consideration. The Directors believe that the Acquisition will not have any material impact on the Group’s financial position.

BACKGROUD INFORMATION OF THE GROUP

The principal activities of the Group are construction contractor and provision of management services.

REASONS FOR ENTERING INTO THE ACQUISITION AGREEMENT

As stated in the annual report of the Company for the year ended 31 December 2005 the Group recorded a net loss attributable to Shareholders of approximately HK$4,600,000 for that financial year.

In order to improve the financial performance and position of the Group and to maximize the returns to the Group and the Shareholders as a whole, the Board considers it appropriate to explore, in addition to optimizing its operation in the existing business in the construction and property related sectors in the PRC, other business opportunities that will generate positive cash flow and earnings for the Group. The potential sectors include areas of environmental protection and recycling businesses in both Hong Kong and the PRC.

As at 30 June 2006, the Group had total current assets of approximately HK$172,600,000 (including bank and cash balance of approximately HK$150,900,000) while the total current liabilities were approximately HK$19,000,000. The cash payment of approximately HK$27,500,000 for the Acquisition was only 15.9% of the Group’s total current assets (and only 18.2% of the Group’s cash and bank balance). After the Acquisition, the Group still has sufficient funds to settle its debts. As at 31 March 2006, the unaudited net loss before tax of ReKRETE Asia was approximately HK$700,000, which is not substantial as compared with the size of the Group. Therefore, the Board believes that the Acquisition will not give rise to any material effect on the earnings and the assets and liabilities of the Group.

The Directors are of the view that the Acquisition, if implemented, will be consistent with the Group’s business outlook in the future and its proposed business diversification in the areas of environmental protection and recycling businesses.

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LETTER FROM THE BOARD

The Directors, including independent non-executive Directors, consider that the terms of the Acquisition Agreement are fair and reasonable and in the interest of the Shareholders as a whole.

ADDITIONAL INFORMATION

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

Yours faithfully, By order of the board of Green Energy Group Limited YIP Wai Leung Jerry Chairman

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GENERAL INFORMATION

APPENDIX

1. RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors collectively and individually accept full responsibility for the accuracy of the information contained in this circular and confirm, having made all reasonable inquiries, 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. INTEREST OF DIRECTORS AND CHIEF EXECUTIVE OF THE COMPANY

As at the Latest Practicable Date, the interests or short positions of the Directors and chief executive of the Company and their respective associates in the shares, underlying shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO), as required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO, or as recorded in the register required to be kept by the Company under Section 352 of the SFO, or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers were as follows:

	The Company/
	Name of				Approximate
Name of Director/	associated		Number and class		shareholding
chief executive	corporation	Capacity	of shares held		percentage
			Long position	Short position
Yip Wai Leung Jerry	The Company	Founder of a	222,971,436	–	65.21%
(“Mr. Yip”)		discretionary trust	ordinary shares of
(Note 1)			HK$0.10 each
			(each a “Share”)

Note:

1. Mr. Yip set up a discretionary family trust pursuant to a deed of settlement dated 5 December 2005 entered into between him and New Zealand Professional Trustee Limited (“Trustee”). The Trustee held the entire issued share capital of Always New Limited, which held the entire issued share capital of each of Always Adept Limited (“Always Adept”) and First Win Trading Limited (“First Win”) on trust for the benefit of the family trust. Always Adept and First Win held 66,891,428 Shares and 156,080,008 Shares respectively, Mr. Yip was deemed to be interested in the shares held by First Win and Always Adept by virtue of the SFO.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors or chief executive of the Company had any interest or short position in any shares, underlying shares or debenture of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) 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 and short positions which they were taken or deemed to have under the SFO) or were recorded in the register required to be kept by the Company under Section 352 of the SFO, or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers.

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GENERAL INFORMATION

APPENDIX

3. SUBSTANTIAL SHAREHOLDERS

As at the Latest Practicable Date, as far as is known to any Directors or chief executive of the Company, the following persons (other than a Director or chief executive of the Company) had, or were deemed to have an interest or short position in the shares and underlying shares of the Company which fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or recorded in the register kept by the Company pursuant to Section 336 of the SFO, or who were, directly or indirectly interested in 10% or more of the nominal value of any class of share carrying rights to vote in all circumstances at general meetings of the Company or any other members of the Group:

				Approximate
				shareholding
Name of Shareholder	Capacity	Number of	Shares held	percentage
		Long position	Short position
Always Adept_(Note 1)_	Beneficial owner	66,891,428	–	19.56%
First Win_(Note 1)_	Beneficial owner	156,080,008	–	45.65%
Always New Limited	Interest of controlled	222,971,436	–	65.21%
(Note 1)	corporation
The Trustee_(Note 2)_	Trustee	222,971,436	–	65.21%
Chui Pui Fun (“Mrs. Yip”)	Interest of spouse	222,971,436	–	65.21%
(Note 3)

Notes:

1. Always New Limited held the entire issued share capital of each of Always Adept and First Win. Always New Limited was deemed to be interested in Shares held by the Always Adept and First Win by virtue of the SFO.

2. Mr. Yip set up a discretionary family trust pursuant to a deed of settlement dated 5 December 2005 entered into between him and the Trustee. The Trustee held the entire issued shares in the capital of Always New Limited, which own the entire issued share capital of each of Always Adept and First Win, which in turn held in aggregate 222,971,436 Shares. The Trustee was deemed to be interested in the Shares held by Always Adept and First Win by virtue of the SFO.

3. Mrs. Yip was the spouse of Mr. Yip and she was deemed to be interested in Shares in which Mr. Yip was interested by virtue of SFO.

Save as disclosed herein, there is no person known to the Directors, who, as at the Latest Practicable Date, had an interest or short position in the shares and underlying shares of the Company which would fall to be disclosed to the Company 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 shares carrying rights to vote in all circumstances at general meetings of the Company or any other members of the Group.

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GENERAL INFORMATION

APPENDIX

4. LITIGATION

As at the Latest Practicable Date, the Company was not engaged in any litigation or arbitration of material importance and no litigation or claim of material importance is known to the Directors to be pending or threatened by or against the Company.

5. DIRECTORS’ SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had a service contract with the Company which was not determinable by the Company within one year without payment of compensation other than statutory compensation.

6. COMPETING BUSINESS

As at the Latest Practicable Date, none of the directors or their respective associates had any interests in a business which competes or may compete with the businesses of the Group or had any other conflict of interest with the Group.

7. MISCELLANEOUS

• (a) The registered office of the Company is Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda.

• (b) The head office and principal place of business of the Company in Hong Kong is Room 2301, 23rd Floor, Lippo Centre Tower II, 89 Queensway, Admiralty, Hong Kong.

• (c) The Hong Kong share registrar and transfer office of the Company is Computershare Hong Kong Investor Services Limited at Shops 1712-1716, 17/F Hopewell Centre, 183 Queen’s Road East, Hong Kong.

• (d) The company secretary and qualified accountant of the Company is Mr. Cheng Sing Wai. Mr. Cheng Sing Wai is a Certified Public Accountant (Practising) in Hong Kong and a qualified Certified Public Accountant in the United States of America.

• (e) In the event of inconsistency, the English text of this circular shall prevail over the Chinese text.

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