Huscoke Holdings Limited — Proxy Solicitation & Information Statement 2003

Apr 30, 2003

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

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

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this 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.

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(Incorporated in Hong Kong under the Companies Ordinance)

PROPOSED GENERAL MANDATES TO ISSUE SHARES

AND

TO REPURCHASE SHARES

It is proposed that at the Annual General Meeting of Shanghai Industrial Holdings Limited to be held on 28th May, 2003 at 3:00 p.m., resolutions be proposed to grant to the Directors general mandates to repurchase Shares of the Company and to issue Shares. This explanatory statement contains all the information required pursuant to the Listing Rules to be given to the shareholders of the Company.

30th April, 2003

DEFINITIONS

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

• ‘‘Annual General Meeting’’

• the annual general meeting of the Company to be held on 28th May, 2003 at 3:00 p.m. at the Conference Room of the Company at 26/F., Harcourt House, 39 Gloucester Road, Wanchai, Hong Kong, the notice of which is set out in its annual report which is enclosed with this Circular;

• ‘‘Annual Report’’

• the annual report of the Company being despatched to the Shareholders together with this Circular;

• ‘‘Company’’

• Shanghai Industrial Holdings Limited, a company incorporated in Hong Kong with limited liability, the shares of which are listed on the Stock Exchange;

• ‘‘Connected Person’’

• a director, chief executive or substantial shareholder of the Company or any of its subsidiaries or their respective associates (as defined in the Listing Rules);

• ‘‘Director(s)’’

• director(s) of the Company;

• ‘‘Latest Practicable Date’’

• 25th April, 2003 which is the latest practicable date prior to the printing of this Circular for ascertaining certain information contained in it;

• ‘‘Listing Rules’’

• The Rules Governing the Listing of Securities on the Stock Exchange;

• ‘‘Share(s)’’

• share(s) of $0.10 each in the share capital of the Company;

• ‘‘Shareholder(s)’’

• holder(s) of Share(s);

• ‘‘Stock Exchange’’

• The Stock Exchange of Hong Kong Limited;

• ‘‘Takeover Code’’

• the Hong Kong Code on Takeovers and Mergers and Shares Repurchases; and

• ‘‘$’’ and ‘‘cents’’

Hong Kong dollars and cents.

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CONTENTS

		Page
LETTER FROM THE CHAIRMAN
1.	INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
2.	GENERAL MANDATE TO ISSUE SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	2
3.	GENERAL MANDATE TO REPURCHASE SHARES . . . . . . . . . . . . . . . . . . . . . . . .	2
4.	RECOMMENDATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
5.	ANNUAL REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
6.	RESPONSIBILITY STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7

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LETTER FROM THE CHAIRMAN

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(Incorporated in Hong Kong under the Companies Ordinance)

Directors

Executive Directors:

Mr. Cai Lai Xing (Chairman) Mr. Chen Wei Shu (Vice-Chairman) Mr. Lu Ming Fang (Chief Executive Officer) Mr. Lu Da Yong (Executive Deputy CEO) Mr. Li Wei Da (Deputy CEO) Mr. Lu Yu Ping (Deputy CEO) Mr. Qian Shi Zheng (Deputy CEO) Mr. Zhou Jie (Deputy CEO) Mr. Cao Fu Kang Mr. Wen Song Quan Mr. Ge Wen Yao Mr. Huang Yan Zheng

Registered Office:

26/F., Harcourt House, 39 Gloucester Road, Wanchai, Hong Kong.

Independent Non-Executive Directors:

Mr. Lee Quo Wei Mr. Lo Ka Shui Mr. Woo Chia-Wei Mr. Leung Pak To, Francis

30th April, 2003

To all Shareholders

Dear Sir or Madam,

PROPOSED GENERAL MANDATES TO ISSUE SHARES AND TO REPURCHASE SHARES

1. INTRODUCTION

On 22nd April, 2003, the Directors announced the audited consolidated results of the Company and its subsidiaries (the “Group”) for the year ended 31st December, 2002. It was also announced on the same day that at the Annual General Meeting, resolutions to grant to the Directors general mandates to issue Shares and to repurchase Shares (“Repurchase Mandate”) will be proposed.

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LETTER FROM THE CHAIRMAN

This document sets out the explanatory statement required to be given in connection with the proposed grant of a mandate to repurchase Shares in compliance with the Listing Rules and contains information reasonably necessary to enable Shareholders to make an informed decision on whether to vote for or against the ordinary resolutions to approve the Repurchase Mandate at the Annual General Meeting.

2. GENERAL MANDATE TO ISSUE SHARES

At the Annual General Meeting, an ordinary resolution will be proposed that the Directors be granted a general and unconditional mandate to allot, issue and deal with Shares with an aggregate nominal value not exceeding 20 per cent. of the aggregate nominal amount of the Shares in issue at the date of passing the resolution.

3. GENERAL MANDATE TO REPURCHASE SHARES

The Listing Rules permit companies whose primary listings are on the Stock Exchange to repurchase their shares on the Stock Exchange subject to certain restrictions, the most important of which are summarised below.

At the Annual General Meeting, an ordinary resolution will be proposed that the Directors be granted a general and unconditional mandate to exercise all powers of the Company to purchase issued and fully-paid Shares subject to the criteria set out in this circular. In particular, Shareholders should note that the maximum number of Shares which may be repurchased pursuant to the mandate will be such number of Shares representing 10 per cent. of the Shares in issue as at the date of passing the relevant resolution. As at the Latest Practicable Date, there were 936,358,000 Shares in issue. On the basis of such figures (and assuming no further Shares are issued and repurchased after the Latest Practicable Date and up to the date of passing such resolution) the Directors would be authorised to repurchase up to a limit of 93,635,800 Shares.

Shareholders should note that the authority relates only to purchases made on the Stock Exchange and otherwise in accordance with the Listing Rules. In addition, Shareholders should also note that the general mandate will continue in force until the earliest of (i) the conclusion of the next Annual General Meeting of the Company; (ii) the expiration of the period which the next Annual General Meeting of the Company is required by the Articles of Association of the Company or any applicable laws of Hong Kong to be held; and (iii) the date upon which such authority is revoked or varied by ordinary resolution of the shareholders of the Company in general meeting.

(a) Shareholders’ approval

The Listing Rules provide that all proposed repurchases of shares on the Stock Exchange by a company with its primary listing on the Stock Exchange must be approved

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LETTER FROM THE CHAIRMAN

in advance by an ordinary resolution, which may be by way of general mandate, or by specific approval of a particular transaction.

(b) Reasons for repurchase of Shares

The Directors have no present intention to repurchase any Shares and, whilst it is not possible to anticipate in advance those circumstances in which the Directors might think it appropriate to repurchase Shares, Shares would only be purchased in circumstances where the Directors consider that the purchase would be in the interests of the Company and the Shareholders. Such purchase may, depending on marketing 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.

(c) Source of funds

It is proposed that repurchases of Shares under the Repurchase Mandate would be financed from internal funds and available banking facilities of the Company. In repurchasing Shares, the Company may only apply funds legally available for such purpose in accordance with the laws of Hong Kong and the Company’s memorandum and articles of association.

(d) Working capital or gearing

If the Repurchase Mandate was exercised in full at any time during the proposed purchase period, it would not have a material adverse effect on the working capital requirements of the Company or its gearing levels (as compared with the position disclosed in the Company’s accounts for the year ended 31st December, 2002). The Directors do not propose to exercise the Repurchase Mandate to such extent as would, in the circumstances, have a material adverse effect on the working capital requirements of the Company or its gearing levels (as compared with the position disclosed in the Company’s accounts for the year ended 31st December, 2002) which in the opinion of the Directors are from time to time appropriate for the Company.

(e) Directors and heir associates

None of the Directors nor, to the best of their knowledge and belief having made all reasonable enquiries, any of their associates (as defined under the Listing Rules), has any present intention, in the event that the Repurchase Mandate is approved by Shareholders, to sell Shares to the Company.

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LETTER FROM THE CHAIRMAN

(f) Connected persons

No Connected Persons has notified the Company that he/she has a present intention to sell any Shares (in issue or to be issued) to the Company or has he/she undertaken not to sell any of the Shares held by him/her (in issue or to be issued to him/her) to the Company in the event that the Company is authorised to make repurchases of Shares.

(g) Undertaking of the Directors

The Directors have undertaken to the Stock Exchange to exercise the power of the Company to make repurchases of Shares pursuant to the proposed resolution in accordance with the Listing Rules, all applicable laws of Hong Kong, and the regulations set out in the memorandum and articles of association of the Company.

(h) Effect of Takeover Code

If, as a result of a repurchase of Shares, a shareholder’s proportionate interest in the voting rights of the Company increases, such increase will be treated as an acquisition for the purposes of the Takeover Code. Accordingly, a shareholder or group of shareholders acting in concert, could obtain or consolidate control of the Company and become obliged to make a mandatory offer in accordance with Rule 26 of the Code and the provisions may otherwise apply as a result of any such increase.

As at the Latest Practicable Date, (i) Shanghai Investment Holdings Limited, SIIC Capital (B.V.I.) Limited and Top Modern Limited were the beneficial owners of 468,066,000, 80,000,000 and 10,000 ordinary shares in the Company respectively. SIIC Capital (B.V.I.) Limited is a company wholly owned by Shanghai Investment Holdings Limited. Shanghai Industrial Investment (Holdings) Company Limited owns 100% of Top Modern Limited and also of Shanghai Industrial Investment Treasury Company Limited which in turn owns 100% of Shanghai Investment Holdings Limited; and (ii) Nanyang Enterprises Limited, Billion More Investments Limited, Nanyang Enterprises Properties Limited and Gem Capital Investment (BVI) Limited were the beneficial owners of 1,699,000, 2,333,000, 1,032,000 and 485,000 ordinary shares in the Company respectively. SIIC indirectly owns 100% of Nanyang Enterprises Limited, Billion More Investments Limited, Nanyang Enterprises Properties Limited and Gem Capital Investment (BVI) Limited.

As such, Shanghai Industrial Investment (Holdings) Company Limited is accordingly deemed to be interested in the respective shares held by the aforementioned companies, representing approximately 59.1% of the total issued share capital of the Company. Assuming no changes in the shareholdings of the aforementioned companies, in the event that the Directors of the Company exercise in full the power to repurchase the shares, the

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LETTER FROM THE CHAIRMAN

shareholding of Shanghai Industrial Investment (Holdings) Company Limited would be increased from approximately 59.1% to approximately 65.7%. Such increase would not give rise to an obligation to make a mandatory offer in accordance with Rule 26 of the Takeover Code. So the Directors do not aware of any consequences of any purchase which will arise under the Takeover Code.

(i) Share prices

The highest and lowest prices at which the Shares have been traded on the Stock Exchange in each of the previous twelve months from the Latest Practicable Date are as follows:

	Per	Share
Month	Highest	Lowest
	HK$	HK$
2002
April	15.95	15.20
May	16.75	15.90
June	16.05	14.50
July	15.20	12.65
August	13.15	11.95
September	12.55	11.20
October	12.45	11.20
November	12.35	11.25
December	11.85	10.75
2003
January	12.60	10.80
February	12.60	11.80
March	12.20	11.10

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LETTER FROM THE CHAIRMAN

(j) Share repurchases

The Company has repurchased shares on the Stock Exchange as set out hereunder in the six months preceding the Latest Practicable Date.

Date of Purchase	Number of Shares	Price or
	Purchased	Highest Price	Lowest Price
		HK$	HK$
24th September 2002	83,000	12.00	11.95
25th September 2002	216,000	11.95	11.90
26th September 2002	230,000	12.05	11.95
27th September 2002	283,000	12.05	11.90
30th September 2002	301,000	11.70	11.65
3rd October 2002	318,000	11.45	11.30
4th October 2002	420,000	11.30	11.20
7th October 2002	345,000	11.15	11.10
8th October 2002	100,000	11.25	–
9th October 2002	3,000	11.20	–
10th October 2002	1,013,000	11.20	11.05
11th October 2002	416,000	11.25	11.20
29th October 2002	621,000	12.20	12.10
30th October 2002	526,000	12.25	12.15
31st October 2002	1,104,000	12.30	12.10

Save as disclosed herein, no other share purchases have been made by the Company in the six months prior to the Latest Practicable Date.

4. RECOMMENDATION

The Directors consider that the grant of general mandates to issue Shares and to repurchase Shares are in the best interests of the Company and the Shareholders and accordingly, recommend Shareholders to vote in favour of the relevant resolutions to be proposed at the Annual General Meeting.

5. ANNUAL REPORT

A copy of the 2002 Annual Report incorporating copies of the audited consolidated results of the Group for the year ended 31st December, 2002 and the Directors’ report and auditors’ report thereon has been despatched together with this Circular. The notice convening the Annual General Meeting is set out on pages 134 to 136 of the Company’s Annual Report.

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LETTER FROM THE CHAIRMAN

6. RESPONSIBILITY STATEMENT

The Directors have taken all reasonable care to ensure that the facts stated and opinions expressed herein relating to the Company are true and accurate in all material respects and that no information has been omitted which would render any statement herein misleading. The Directors individually and collectively accept responsibility accordingly.

By order of the Board CAI LAI XING Chairman

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