Matrix Holdings Limited — Share Issue/Capital Change 2003

Mar 21, 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 Matrix Holdings Limited, you should at once hand this circular 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.

MATRIX HOLDINGS LIMITED （美力時集團有限公司）

(Incorporated in Bermuda with limited liability)

Executive Directors: Cheng Yung Pun (Chairman) Cheng Wing See, Nathalie Yu Sui Chuen Lee Sai Keung, Daniel

Registered Office: Cedar House 41 Cedar Avenue Hamilton HMl2 Bermuda

Independent Non-Executive Directors: Heng Kwoo Seng Mak Shiu Chung, Godfrey

Head Office and Principal Place of Business: Rooms 1201&1222 12/F Peninsula Centre 67 Mody Road Tsimshatsui East Kowloon Hong Kong

17th March, 2003

To the Shareholders

Dear Sir/Madam,

EXPLANATORY STATEMENT TO GENERAL MANDATES TO ISSUE SHARES AND REPURCHASE SHARES

INTRODUCTION

This is the explanatory statement, as required by the relevant rules set out in the Listing Rules to give you details of, and to seek your approval in relation to the granting of the general mandates to the Directors to issue and repurchase shares, by passing the respective ordinary resolutions set out in the Notice of the Annual General Meeting (“AGM Notice”) dated 13th March, 2003. The Annual General Meeting of the Company will be held on 15th April, 2003.

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LETTER FROM THE BOARD

MANDATES TO ISSUE AND REPURCHASE SHARES

It is proposed to seek your approval of the relevant resolutions at the Annual General Meeting in respect of the grant of the respective general mandates to issue, allot and deal with new shares not exceeding 20% of the issued share capital of the Company at the date of passing the resolution and extend such general mandate so granted to the Directors by adding to it any shares repurchased by the Company up to 10% of the issued share capital of the Company at the date of passing the resolution regarding the Repurchase Mandate, and to repurchase shares in the terms contained in the resolutions set out in paragraph 5A, 5B and 5C of the AGM Notice.

The Stock Exchange Rules for Repurchases

The Listing Rules provide that all share repurchases on the Stock Exchange by a company with its primary listing on the Stock Exchange must be approved in advance by an ordinary resolution, either by way of general mandate or by specific resolution in relation to specific transactions. The shares to be repurchased are fully paid. The Listing Rules require an explanatory statement such as is contained herein to be sent to shareholders to give shareholders adequate information to enable them to decide whether to approve the mandate.

Share Capital

As at the Latest Practicable Date prior to the printing of this circular, the issued share capital of the Company comprised 322,720,000 Shares.

Exercise in full of the Repurchase Mandate, on the basis that no further Shares are issued and repurchased prior to the date of the Annual General Meeting, could accordingly result in up to 32,272,000 Shares being repurchased by the Company during the course of the period ending on the earliest of the date of the annual general meeting in 2004, 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.

Reasons for Repurchase

The Directors believe that it is in the best interests of the Company and its Shareholders to seek a general authority from Shareholders to enable the Directors to purchase Shares of the Company in the market. Such purchases may, depending on market conditions and funding arrangements at the time, lead to an enhancement of the net value of the Company and/or its earnings per Share and will only be made when the Directors believe that such a purchase will benefit the Company and its Shareholders.

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LETTER FROM THE BOARD

Funding of Repurchases

Pursuant to the Repurchase Mandate, repurchases would be funded entirely from the Company’s available cashflow or working capital facilities which will be funds legally available in accordance with the provisions of the Bye-laws of the Company and the Bermuda laws for the purpose. It is envisaged that the funds required for any repurchase would be derived from those funds of the Company, legally permitted to be utilised in this connection, including capital paid up on the Shares to be repurchased, profits otherwise available for distribution and sums standing to either the share premium account or contributed surplus account of the Company.

On the basis of the consolidated financial position of the Company as at 31st December, 2002 (being the date to which the latest published audited financial statements of the Company have been made up) and in particular the working capital position of the Company at that time and the number of Shares now in issue, the Directors consider that there might be a material adverse impact on the working capital position or the gearing position of the Company in the event that purchase of all the Shares the subject of the Repurchase Mandate were to be carried out in full during the Repurchase Mandate period. No purchase would be made in circumstances that would have a material adverse impact on the working capital position or the gearing position of the Company (as compared with the position disclosed in the latest published audited financial statements).

Share Prices

The highest and lowest market prices at which the Shares have traded on the Stock Exchange in each of the twelve months preceding the Latest Practicable Date were as follows:

Month	Highest	Lowest
	HK$	HK$
2002
March	0.97	0.88
April	0.88	0.88
May	1.09	0.88
June	1.19	0.99
July	1.40	1.16
August	1.50	1.33
September	1.60	1.10
October	1.35	1.19
November	1.30	1.11
December	1.32	1.16

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LETTER FROM THE BOARD

Month	Highest	Lowest
	HK$	HK$
2003
January	1.40	1.28
February	1.59	1.34

Repurchases of Shares made by the Company

No repurchases of Shares have been made by the Company (whether on the Stock Exchange or otherwise) in the six months preceding the date of this statement.

General Information

None of the Directors nor, to the best of their knowledge having made all reasonable enquiries, any of their associates, have any present intention, if the Repurchase Mandate is approved and exercised, to sell any Shares to the Company or its subsidiaries.

The Directors have undertaken to the Stock Exchange, so far as the same may be applicable, to exercise the power of the Company to repurchase Shares in accordance with the Listing Rules and the applicable laws of Bermuda.

If as a result of a share repurchase a Shareholder’s proportionate interest in the voting rights of the Company increases, such increase will be treated as an acquisition for the purpose of the Hong Kong Code on Takeovers and Mergers (“Takeovers Code”). Accordingly, a Shareholder or a group of Shareholders acting in concert (within the meaning of the Takeovers Code) depending on the level of increase of the Shareholder’s interest, could obtain or consolidate control of the Company and become obliged to make a mandatory offer in accordance with rule 26 of the Takeovers Code as a result of such increase. As at the Latest Practicable Date, according to the Register kept by the Company pursuant to Section 16(1) of the Securities (Disclosure of Interests) Ordinance, Suncorp Investments Group Limited controlled approximately 74.26% of the entire issued share capital of the Company. If the Repurchase Mandate is exercised in full, the controlling interests of Suncorp Investments Group Limited in the Company will increase to 82.51%. The Directors have no present intention to exercise the power to repurchase Shares pursuant to the Repurchase Mandate to such an extent as to result in the number of Shares held by the public falling below 25%.

The Directors are not aware of any Shareholders or group of Shareholders acting in concert who will become obliged to make a mandatory offer in accordance with rule 26 of the Takeovers Code as a result of repurchase of Shares.

No other connected persons (as defined in the Listing Rules) have notified the Company that they have a present intention to sell Shares to the Company, or have undertaken not to do so, if the Repurchase Mandate is approved by Shareholders of the Company.

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LETTER FROM THE BOARD

RECOMMENDATION

The Directors believe that all the proposals are in the best interests of the Company and its Shareholders and, accordingly, recommend you to vote in favour of all the relevant resolutions set out in the AGM Notice.

By Order of the Board Cheng Yung Pun Chairman

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DEFINITIONS

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

• “Annual General Meeting”

the annual general meeting of the Company to be held at Garden Room A & B, 2/F., Hotel Nikko Hong Kong, No. 72 Mody Road, Tsimshatsui East, Kowloon, Hong Kong on 15th April, 2003 at 2:30 p.m.

• “Company”

Matrix Holdings Limited, a company incorporated in Bermuda with limited liability and the Shares of which are listed on the Stock Exchange

• “Directors”

• the directors of the Company

• “Latest Practicable Date”

• 17th March, 2003, being the latest practicable date prior to the printing of this document for ascertaining certain information in this document

• “Listing Rules”

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

• “Repurchase Mandate”

• a general mandate proposed to be granted to the Directors to exercise all the power of the Company to repurchase Shares listed on the Stock Exchange with an aggregate nominal amount not exceeding 10 per cent. of the aggregate nominal amount of the issued share capital of the Company in issue as at the date of passing the relevant resolution to grant such mandate

• “Shares”

• share(s) of HK$0.1 each in the capital of the Company

• “Shareholders” holders of Shares

• “Stock Exchange” The Stock Exchange of Hong Kong Limited

• “HK$” and “cent(s)” Hong Kong dollars and cent(s)

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