hmvod Limited — Proxy Solicitation & Information Statement 2003

Jun 30, 2003

IMPORTANT

If you are in any 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 System Information Technology (Holdings) Limited, you should at once hand this circular, together with the form of proxy, to the purchaser or the transferee or to the bank, stockbroker or other agent through whom the sale was effected for transmission to the purchaser or the transferee.

The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) 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 its circular.

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SYSTEK INFORMATION TECHNOLOGY (HOLDINGS) LIMITED (incorporated in the Cayman Islands with limited liability)

GENERAL MANDATE TO

REPURCHASE AND ISSUE SHARE

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

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

30 June 2003

LETTER FROM THE CHAIRMAN

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SYSTEK INFORMATION TECHNOLOGY (HOLDINGS) LIMITED (incorporated in the Cayman Islands with limited liability)

Executive Directors: Mr. To, Cho Kei (Chairman and Chief Executive Officer) Mr. Chan, Kai Yan Dr. Chan, Kim Chung Mr. Lam, Ching Ho Andy Mr. Wu, Man Hong Francis Mr. Lo, Chun Shing (alternate to Mr. Lam, Ching Ho Andy)

Non-executive Directors: Mr. Wu, Yang Independent Non-executive Directors: Mr. Ching, Tai Ming David Dr. Wong, Albert

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

Principal Office in Hong Kong: Suite 2514-2523, 25th Floor, Sun Hung Kai Centre, 30 Harbour Road, Wanchai, Hong Kong

30 June 2003

To the Shareholders of the Company

Dear Sir and Madam,

GENERAL MANDATE TO REPURCHASE AND ISSUE SHARE

INTRODUCTION

The purpose of this circular is to give you information regarding some of the resolutions to be proposed at the annual general meeting of the Company to be held on Friday, 25 July 2003 at 2:30 p.m. at Plaza I-III, Lower Lobby, Novotel Century Hong Kong Hotel, 238 Jaffe Road, Wanchai, Hong Kong (the “Annual General Meeting”). The resolutions include granting to the board of Directors (the “Board”) of the Company general and unconditional mandates to repurchase and issue shares of the Company.

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LETTER FROM THE CHAIRMAN

GENERAL MANDATES

At the Annual General Meeting, separate ordinary resolutions will be proposed to grant to the Board the general and unconditional mandates to:

• (i) allot and issue shares representing up to 20% of the aggregate nominal amount of the issued share capital of the Company as at the date of the passing of the resolution;

• (ii) repurchase such number of shares which represents up to 10% of the aggregate nominal amount of the issued share capital of the Company as at the date of the passing of the resolution (“Repurchase Mandate”);

• (iii) add to the general mandate for issuing shares set out in (i) above the number of shares repurchased by the Company pursuant to the Repurchase Mandate.

The General Mandates will end on the earliest of the date of the next annual general meeting, the date by which the next annual general meeting of the Company is required to be held by law or the Company’s Articles of Association, or the date upon which such authority is revoked or varied by ordinary resolution of the Company in general meeting.

An explanatory statement containing all the relevant information relating to the proposed Repurchase Mandate is set out in the Appendix to this circular. The information in the explanatory statement is to provide the information reasonably necessary to enable Shareholders of the Company to make an informed decision on whether to vote for or against the relevant resolutions.

ANNUAL GENERAL MEETING

A notice convening the Annual General Meeting is set out in the 2003 Annual Report of the Company which has been despatched to the Shareholders together with this circular. At the Annual General Meeting, resolutions relating to the general mandates will be proposed as ordinary resolutions for your consideration and approval.

A copy of the 2003 annual report of the Company incorporating copies of the audited consolidated results of the Group for the year ended 31 March 2003 and the directors’ and auditors’ reports therein is despatched to all the Shareholders together with this circular.

A form of proxy for the Annual General Meeting is also enclosed with this circular. Whether or not you intend to be present at the Annual General Meeting, you are requested to complete the form of proxy and return it to the Company’s branch share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited at Rooms 1712-1716, 17th Floor, Hopewell Centre, 183

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LETTER FROM THE CHAIRMAN

Queen’s Road East, Wanchai, Hong Kong in accordance with the instructions printed thereon not less than 48 hours before the time fixed for holding the meeting. The completion of a form of proxy will not preclude you from attending and voting at the meeting in person.

RECOMMENDATION

The Board of Directors are of the opinion that the proposals referred to above are in the best interests of the Company and therefore recommend you to vote in favour of the relevant resolutions to be proposed at the Annual General Meeting.

Yours faithfully, To Cho Kei Chairman

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EXPLANATORY STATEMENT

APPENDIX

This is an explanatory statement given to all the Shareholders of the Company relating to a resolution to be proposed at the forthcoming Annual General Meeting authorizing the Repurchase Mandate.

This explanatory statement contains all the information required pursuant to Rule 13.08 and other relevant provisions of the GEM Listing Rules which is set out as follows:

1. REGULATIONS OF THE GEM LISTING RULES

(a) Shareholders’ approval

All repurchases of securities on Growth Enterprise Market (“GEM”) by a company with its primary listing on GEM must be approved in advance by an ordinary resolution, either by way of general mandate or by specific approval in relation to specific transactions.

(b) Source of funds

Any repurchase must be financed out of funds legally available for the purpose in accordance with the Company’s memorandum and articles of association and the applicable laws of the Cayman Islands.

(c) Suspension of repurchase

Any securities repurchase programme is required to be suspended after a price-sensitive development has occurred or has been the subject of directors’ decision until the pricesensitive information is made publicly available. In particular, during the period of one month immediately preceding either the preliminary announcement of a company’s annual results or the publication of the company’s half-yearly report or a quarterly report, a company may not purchase its securities on GEM unless the circumstances are exceptional. In addition, the Stock Exchange may prohibit a company from making repurchases of its own securities on GEM if a company has breached the GEM Listing Rules.

(d) Connected person

Under the GEM Listing Rules, a company shall not knowingly repurchase shares from a connected person (as defined under the GEM Listing Rules) and a connected person shall not knowingly sell his shares to the company.

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EXPLANATORY STATEMENT

APPENDIX

2. EXERCISE OF THE REPURCHASE MANDATE

Exercise in full of the Repurchase Mandate, on the basis of 1,036,375,000 shares of HK$0.10 each of the Company (“Shares”) in issue as at 24 June 2003, being the latest practicable date for ascertaining certain information in this circular (“Latest Practicable Date”), could result in up to 103,637,500 Shares, i.e. up to 10% of the Shares of the Company in issue, being repurchased by the Company during the period up to (i) the conclusion of the next annual general meeting of the Company; (ii) the date by which the next annual general meeting of the Company is required by the Company’s articles of association or any applicable laws of the Cayman Islands; or (iii) the revocation, variation or renewal of the Repurchase Mandate by ordinary resolution of the Company in general meeting, whichever occurs first.

3. REASONS FOR REPURCHASES

Repurchases of Shares will only be made when the Directors believe that such a repurchase will benefit the Company and its Shareholders. Such repurchases may, depending on market conditions and funding arrangements at the time, lead to an enhancement of the net asset value of the Company and/or its earnings per Share.

4. FUNDING OF REPURCHASES

In repurchasing Shares, the Company may only apply funds legally available for such purposes in accordance with its memorandum and articles of association and the applicable laws of the Cayman Islands. The Company may not repurchase shares on GEM for a consideration other than cash or for settlement otherwise than in accordance with the trading rules of the Stock Exchange from time to time. None of the Directors nor, to the best of their knowledge, having made all reasonable enquiries, any of their associates (as defined in the GEM Listing Rules) has any present intention, if the Repurchase Mandate is approved by the shareholders, to sell shares to the Company and its subsidiaries.

5. GENERAL

There might be a material adverse impact on the working capital or gearing position of the Company (as compared with the position disclosed in the audited financial statements contained in the 2003 annual report of the Company) in the event that the Repurchase Mandate is exercised in full at any time during the proposed purchase period. However, the Directors do not propose to exercise the Repurchase Mandate to such an extent as would, in the circumstances, have a material adverse effect on the working capital requirements of the Company or on its gearing levels which in the opinion of the Directors are from time to time appropriate for the Company.

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EXPLANATORY STATEMENT

APPENDIX

6. UNDERTAKING

The Directors have undertaken to the Stock Exchange that, so far as the same may be applicable, they will exercise the powers of the Company to make repurchases pursuant to the Repurchase Mandate in accordance with the GEM Listing Rules, the Company’s memorandum and articles of association and the applicable laws of the Cayman Islands. As at the Latest Practicable Date prior to the printing of this circular and to the best of the knowledge of the Directors who have made all reasonable enquiries, none of the Directors or their associates has a present intention, in the event that the resolution is approved by the shareholders, to sell Shares to the Company or has undertaken not to do so.

7. TAKEOVER CODE

If a shareholder’s proportionate interest in the voting capital of the Company increases as a result of a repurchase of Shares, such increase will be treated as an acquisition for the purposes of the Hong Kong Code on Takeovers and Mergers (the “Code”). As a result, a shareholder, or a group of shareholders acting in concert, depending on the level of increase in the shareholder’s interests, could obtain or consolidate control of the Company and become(s) obliged to make a mandatory offer in accordance with Rules 26 and 32 of the Code.

As at the Latest Practicable Date, the following shareholders had interests representing 5% or more of the issued share capital of the Company:

		Percentage of total
Name	Shares held	issued shares
Wide Source Group Ltd.	538,561,914	51.97%
Suez Asia Holdings Pte Ltd	85,300,000	8.23%

In the event that the Directors exercise in full the power to repurchase Shares of the Company in accordance with the Repurchase Mandate, the total interests of the above substantial shareholders in the Shares of the Company would be increased to:

	Percentage of total
Name	issued shares
Wide Source Group Ltd.	57.74%
Suez Asia Holdings Pte Ltd	9.14%

The Directors believe that such increase would not give rise to an obligation to make a mandatory offer under Rules 26 and 32 of the Code.

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EXPLANATORY STATEMENT

APPENDIX

8. PURCHASE, SALE OR REDEMPTION OF THE COMPANY’S LISTED SECURITIES

Since the date of listing of the Shares on the GEM on 8 September 2000, neither the Company nor any of its subsidiaries has purchased, sold or redeemed any of the Company’s listed securities.

9. CONNECTED PERSON

No connected person (as defined in the GEM Listing Rules) has notified the Company that he has a present intention to sell Shares to the Company, or has undertaken not to do so, in the event that the Repurchase Mandate is approved by the Shareholders and the Company authorized to make purchases of shares.

10. SHARE PRICES

The highest and lowest prices at which the Shares traded on GEM during each of the previous twelve months preceding the Latest Practicable Date are as follows:

	Shares
	Highest	Lowest
	HK$	HK$
2002
June	0.0950	0.0550
July	0.0620	0.0230
August	0.0500	0.0400
September*	–	–
October	0.0480	0.0350
November	0.0490	0.0440
December*	–	–
2003
January*	–	–
February	0.0600	0.0600
March*	–	–
April*	–	–
May	0.0400	0.0150

Note*: No trade was recorded during these months.

11. PROXY

A form of proxy for use at the Annual General Meeting is also enclosed. Whether or not you intend to attend the meeting, you are requested to complete and return the form of proxy to the Company’s branch share registrar and transfer office of the Company in Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for the holding of the meeting. Completion and return of the form of proxy will not preclude the Shareholders from attending and voting in person at the Annual General Meeting should the Shareholders so desire.

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