Kingwell Group Limited — Proxy Solicitation & Information Statement 2003

Oct 10, 2003

IMPORTANT

If you are in doubt about 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 Sinotronics Holdings Limited, you should at once hand this circular to the purchaser or 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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SINOTRONICS HOLDINGS LIMITED

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(Incorporated in the Cayman Islands with limited liability)

GENERAL MANDATES TO REPURCHASE SHARES AND TO ISSUE SHARES

Resolutions will be proposed at the AGM of Sinotronics Holdings Limited to be held at Grandroom IV, Grand Hyatt Hong Kong, 1 Harbour Road, Wanchai, Hong Kong on 4th November, 2003 at 10: 00 a.m. to approve the matters referred to in this circular. The notice convening the AGM is set out in the 2003 Annual Report. Whether or not you are able to attend the AGM in person, you are requested to complete and return the form of proxy enclosed with this circular in accordance with the instructions printed thereon as soon as possible and in any event not less than 48 hours before the time appointed for holding the meeting. Completion and delivery of the form of proxy will not preclude you from attending and voting at the meeting if you so wish.

• for identification purpose only

7th October, 2003

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Chairman
Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	2
General Mandate to Repurchase Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
General Mandate to Issue Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
Extend General Mandate to Issue Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
Explanatory Statement of the Share Repurchase Mandate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4

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DEFINITIONS

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

• ‘‘2003 Annual Report’’

  • the Audited Consolidated Financial Statements and the Reports of the Directors and Auditors of the Company for the year ended 30th June, 2003;

• ‘‘AGM’’ the annual general meeting of the Company to be held at Grandroom IV, Grand Hyatt Hong Kong, 1 Harbour Road, Wanchai, Hong Kong on Tuesday, 4th November, 2003 at 10: 00 a.m. at which the 2003 Annual Report will be adopted;

• ‘‘Commission’’ the Securities and Futures Commission;

• ‘‘Company’’ Sinotronics Holdings Limited;

• ‘‘Directors’’ directors of the Company; ‘‘Issue Mandate’’ the general mandate to allot, issue and deal with Shares not exceeding 20% of the issued share capital of the Company as at the date of passing of the resolution approving the Issue Mandate;

• ‘‘Listing Rules’’ the Rules Governing the Listing of Securities on the Stock Exchange;

• ‘‘Latest Practicable Date’’ 30th September, 2003, being the latest practicable date prior to the printing of this circular;

• ‘‘Repurchase Mandate’’ the general mandate to exercise the power of the Company to repurchase Shares up to a maximum of 10% of the issued share capital of the Company as at the date of the resolution approving the Repurchase Mandate;

• ‘‘Shareholders’’ holders of Shares;

• ‘‘Share(s)’’ ordinary shares of HK$0.10 each in the share capital of the Company;

• ‘‘Stock Exchange’’ The Stock Exchange of Hong Kong Limited; and

• ‘‘Takeovers Code’’ the Codes on Takeovers and Mergers and Share Repurchases approved by the Commission as amended from time to time.

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LETTER FROM THE CHAIRMAN

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SINOTRONICS HOLDINGS LIMITED

*

(Incorporated in the Cayman Islands with limited liability)

Executive Directors:

Mr. Lin Wan Qaing (Chairman) Mr. Liu Zhao Cai (Vice-chairman) Mr. Xiang Song Mr. Tong Yiu On

Independent Non-executive Directors:

Mr. Pan Chang Chi

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

Mr. Cai Xun Shan

Principal Office in Hong Kong: Room 1805, 18th Floor Harbour Centre 25 Harbour Road Wanchai Hong Kong

7th October, 2003

To the Shareholders

Dear Sir or Madam,

GENERAL MANDATES TO REPURCHASE SHARES AND TO ISSUE SHARES

INTRODUCTION

It is proposed that at the AGM of the Company for the year ended 30th June, 2003, resolutions will be proposed to grant to the Directors general mandates to repurchase and issue Shares, and extend general mandate to issue Shares of the Company. This circular contains the explanatory statement in compliance with the Listing Rules and gives all the information reasonably necessary to enable Shareholders to make an informed decision on whether to vote for or against the resolutions to approve the Company to repurchase and issue its own Shares.

• for identification purpose only

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LETTER FROM THE CHAIRMAN

GENERAL MANDATE TO REPURCHASE SHARES

At the AGM, an ordinary resolution will be proposed to grant the Repurchase Mandate to the Directors to enable them to repurchase Shares subject to the criteria set out in this circular. Shareholders should note that the maximum number of shares that may be repurchased up to 10% of the aggregate nominal amount of the share capital of the Company in issue at the date of passing of such resolution. The Repurchase Mandate to repurchase Shares will remain in effect until whichever is the earliest of the date of the next annual general meeting, the date by which the next annual general meeting is required to be held by law and the date upon which such authority is revoked or varied by an ordinary resolution of the Shareholders in a general meeting of the Company.

GENERAL MANDATE TO ISSUE SHARES

At the AGM, an ordinary resolution will be proposed to grant the Issue Mandate to the Directors to allot, issue and deal with, otherwise than by way of rights issue or any option scheme or similar arrangements for the time being adopted for the grant or issue to employees, executives, business consultants, agents, legal or financial advisers of the Company and/or any of its subsidiaries of shares or rights to acquire shares in the Company or any shares of the Company issued as scrip dividends pursuant to the memorandum and articles of association of the Company, Shares with an aggregate nominal value not exceeding 20% of the aggregate of the total nominal value of the share capital of the Company in issue on the date of the resolution approving the Issue Mandate. The Issue Mandate to issue Shares will remain in effect until whichever is the earliest of the date of the next annual general meeting, the date by which the next annual general meeting is required to be held by law and the date upon which such authority is revoked or varied by an ordinary resolution of the Shareholders in a general meeting of the Company.

EXTEND GENERAL MANDATE TO ISSUE SHARES

At the AGM, an ordinary resolution will be proposed that the Issue Mandate will be extended by the addition to the aggregate nominal value of the share capital of the Company which may be allotted or agreed conditionally or unconditionally to be allotted by the Directors pursuant to such general mandate of an amount representing the aggregate nominal value of the share capital of the Company repurchased by the Company pursuant to the Repurchase Mandate provided that such extended amount will not exceed 10% of the aggregate of the total nominal value of the issued share capital of the Company in issue on the date of the resolution approving the Issue Mandate.

RECOMMENDATION

The Directors consider that the Repurchase Mandate, the Issue Mandate and the extension of the Issue Mandate are in the best interests of the Company and its Shareholders, so they recommend you to vote in favour of the resolutions at the forthcoming AGM. The Directors will vote all their shareholdings in favour of the resolutions.

Yours faithfully, For and on behalf of the Board of Sinotronics Holdings Limited Lin Wan Qaing Chairman

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EXPLANATORY STATEMENT OF THE SHARE REPURCHASE MANDATE

The following explanatory statement contains all the information required pursuant to Rule 10.06 of the Listing Rules to be given to all Shareholders relating to a resolution to be proposed at the forthcoming AGM authorising the Repurchase Mandate.

1. EXERCISE OF THE REPURCHASE MANDATE

Exercise in full of the Repurchase Mandate, on the basis of 410,625,000 Shares in issue as at the Latest Practicable Date and no further Shares are issued or repurchased prior to the AGM, could accordingly result in up to 41,062,500 Shares being repurchased by the Company during the period ending 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 date upon which such authority is revoked or varied by an ordinary resolution of the Shareholders in a general meeting of the Company.

2. REASONS FOR REPURCHASE

The Directors have no present intention to repurchase any Shares but consider that the mandate will provide the Company the flexibility to make such repurchase when appropriate and beneficial to the Company. Such repurchase may enhance the net assets value of the Company and/or earnings per Share.

3. GENERAL

As compared with the financial position of the Company as at 30th June, 2003 (being the date of its latest published audited accounts), the Directors consider that there would be a material adverse impact on the working capital and on the gearing position of the Company in the event that the proposed purchases were to be carried out in full during the proposed purchase period. No purchase would be made in circumstances that would have a material adverse impact on the working capital or gearing position of the Company.

4. FUNDING OF REPURCHASE

Repurchases must be made of the funds legally available for the purpose in accordance with the memorandum and articles of association of the Company and the applicable laws and regulations of the Cayman Islands and the Listing Rules.

5. DIRECTORS, THEIR ASSOCIATES AND CONNECTED PERSONS

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

No connected person of the Company (as defined in the Listing Rules) has notified the Company that he/she has a present intention to sell Shares to the Company nor has he/she undertaken not to sell any of Shares held by him/her to the Company in the event that the Company is authorised to make purchases of Shares.

6. UNDERTAKING OF THE DIRECTORS

The Directors have undertaken to the Stock Exchange to exercise the power of the Company to make purchases pursuant to the Repurchase Mandate in accordance with the Listing Rules and all applicable laws of the Cayman Islands, and in accordance with the regulations set out in the memorandum and articles of association of the Company.

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EXPLANATORY STATEMENT OF THE SHARE REPURCHASE MANDATE

7. EFFECT OF TAKEOVERS CODE

If on exercise of the power to repurchase Shares pursuant to Repurchase Mandate, a Shareholder’s proportionate interest in the voting rights of the Company increases, such an increase will be treated as an acquisition for the purposes of the Takeovers Code. As a result, a Shareholder or a group of Shareholders acting in concert could, depending on the level of increase of Shareholders’ interest, obtain or consolidate control of the Company and become obliged to make a mandatory offer in accordance with Rules 26 and 32 of the Takeovers Code. The Directors are not aware of any Shareholders, or a group of Shareholders acting in concert, who may become obliged to make a mandatory offer in accordance with Rules 26 and 32 of the Takeovers Code in the event that the Directors exercise the power to repurchase Shares pursuant to the Repurchase Mandate.

As at the Latest Practicable Date, to the best of the knowledge and belief of the Company, Mr. Lin Wan Qaing, the Chairman and an executive Director of the Company who held approximately 56.55% of the issued share capital of the Company, was the substantial Shareholder holding more than 10% of the issued share capital of the Company. In the event that the Directors should exercise in full the powers to repurchase Shares pursuant to the Repurchase Mandate, the shareholding of Mr. Lin Wan Qaing in the Company would be increased to approximately 62.83% of the issued share capital of the Company and such an increase would not give rise to an obligation to make a mandatory offer under Rules 26 and 32 of the Takeovers Code. The Directors have no present intention to exercise the Repurchase Mandate to such an extent that it would trigger a takeover obligation by the controlling Shareholder. Save as aforesaid, the Directors are not aware of any consequences which would arise under the Takeovers Code as a consequence of any repurchases pursuant to the Repurchase Mandate. The Directors may not purchase Shares on the Stock Exchange if that purchase would result in the number of Shares which are in the hands of the public falling below 25% of the Company’s issued share capital.

8. SHARE PURCHASE MADE BY THE COMPANY

During each of six months preceding the date of this circular, no Shares have been repurchased by the Company.

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EXPLANATORY STATEMENT OF THE SHARE REPURCHASE MANDATE

9. SHARE PRICES

During the previous twelve months, the highest and lowest traded prices for Shares on the Growth Enterprise Market of the Stock Exchange and the Stock Exchange were as follows:

	PER	SHARE
Months	Highest	Lowest
	HK$	HK$
2002
October	0.9700	0.8100
November	1.0000	0.8300
December	1.1300	0.9200
2003
January	1.1500	0.9800
February	1.2200	0.9700
March	1.1500	0.9700
April	1.0700	0.8900
May	1.0700	0.9000
June	1.1300	0.9600
July	1.1900	0.9700
August	1.2200	1.0500
September	1.5600	1.2000

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