Novautek Technologies Group Limited — Proxy Solicitation & Information Statement 2003

Mar 28, 2003

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

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

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江山控股有限公司 KONG SUN HOLDINGS LIMITED

(Incorporated in Hong Kong with limited liability)

DISCLOSEABLE TRANSACTION INVOLVING SALE OF APPROXIMATELY 65 PER CENT. INTEREST IN A SUBSIDIARY OF THE COMPANY AND SUBSCRIPTION OF NEW SHARES

28 March, 2003

CONTENTS

	Pages
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM THE BOARD
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
The Sale and Purchase Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Shares to be disposed of . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Conditions of Sale and Purchase Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Net Profit before and after taxation and extraordinary items
of Pioneer Heritage Sdn Bhd in respect of the two financial
years ended 31 December, 2001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
THE SUBSCRIPTION AGREEMENT
Shares to be subscribed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Consideration and Subscription Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Conditions of the Subscription Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Mandate to issue the Subscription Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Ranking of the Subscription Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Share Buyback . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
REASONS FOR DISPOSAL OF THE SALE SHARES
AND THE SUBSCRIPTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
USE OF SALE PROCEEDS AND PROCEEDS
OF THE SUBSCRIPTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
CHANGES TO THE SHAREHOLDING AS A RESULT
OF THE SUBSCRIPTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
FURTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
APPENDIX – GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10

– i –

DEFINITIONS

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

“Acquisition Agreement”	the acquisition agreement dated 20 February, 2003 entered
	between Madam Huang Wentong as vendor and Bestwick
	Limited, a wholly-owned subsidiary of the Company, as
	purchaser relating to an acquisition of the entire
	shareholding interest in Pioneer Gains International Limited
	and detail of which are disclosed in the announcement made
	by the Company on 25 February, 2003;
“Board”	the board of Directors;
“Company”	Kong Sun Holdings Limited, a company incorporated in
	Hong Kong and the shares of which are listed on the main
	board of the Stock Exchange;
“Completion Date”	the date upon which the completion of the Sale and Purchase
	Agreement takes place;
“Directors”	directors of the Company;
“Disposal”	disposal of the Sale Shares by Hua Chiao pursuant to the
	Sale and Purchase Agreement;
“General Mandate”	the general mandate granted to the Directors pursuant to
	the resolution of the shareholders of the Company passed
	on 30 May, 2002;
“Group”	the Company and its subsidiaries;
“Hong Kong”	the Hong Kong Special Administrative Region of the PRC;
“Hua Chiao”	Hua Chiao Development Limited, a company incorporated
	in Hong Kong and an indirect wholly-owned subsidiary of
	the Company;
“Hypermarket”	the name given to the building constructed on the piece of
	land with lot number PTB 20274 in the Township and
	District of Johor Bahru, State of Johor, Malaysia owned by
	Pioneer Heritage Sdn Bhd. Within the building, there are
	retail spaces leased to tenants which offer quality products
	with lower prices to customers as purchases are generally
	made in bulk;
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange;
“PRC”	the People’s Republic of China which for the purpose of
	this circular excludes Hong Kong, the Macau Special
	Administrative Region and Taiwan;

– 1 –

DEFINITIONS

“Sale Shares”	22,750,000 ordinary shares of RM1.00 each in the issued
	capital of Pioneer Heritage Sdn Bhd which represent
	approximately 65 per cent. of the equity share capital of
	Pioneer Heritage Sdn Bhd;
“Sale and Purchase Agreement”	the agreement dated 28 February, 2003 entered into between
	Hua Chiao as vendor and United Merit Sdn Bhd as purchaser
	relating to the Disposal;
“Shares”	ordinary shares of HK$0.10 each in the equity capital of
	the Company;
“Stock Exchange”	The Stock Exchange of Hong Kong Limited;
“Subscription”	the subscription of the Subscription Shares by United Merit
	Sdn Bhd;
“Subscription Agreement”	the subscription agreement dated 28 February, 2003 entered
	into between the Company as issuer and United Merit Sdn
	Bhd as subscriber relating to the Subscription;
“Subscription Price”	the subscription price of HK$0.162 per Subscription Share;
“Subscription Shares”	31,000,000 new Shares;
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong; and
“RM”	Malaysia Ringgit, the lawful currency of Malaysia.

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LETTER FROM THE BOARD

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江山控股有限公司 KONG SUN HOLDINGS LIMITED

(Incorporated in Hong Kong with limited liability)

Executive Directors: Mr. Kong Look Sen Mr. Kong Li Jer Mr. Kong Li Szu

Registered Office: Units 9-10, 13th Floor Tower One, Lippo Centre 89 Queensway Hong Kong

Independent Non-executive Directors: Mr. Ku Suen Fai Mr. Fai Cheong Hau

28 March, 2003

To the shareholders

Dear Sir or Madam,

DISCLOSEABLE TRANSACTION INVOLVING SALE OF APPROXIMATELY 65 PER CENT. INTEREST IN A SUBSIDIARY OF THE COMPANY AND SUBSCRIPTION OF NEW SHARES

INTRODUCTION

The Board refers to the announcement made by the Company on 7 March, 2003 in relation to the Discloseable Transaction Involving Sale of Approximately 65 per cent. Interest in a Subsidiary of the Company and Subscription of New Shares.

On 7 March, 2003 the Board was pleased to announce that:

• (a) Hua Chiao, an indirect wholly-owned subsidiary of the Company, has agreed to sell the Sale Shares to United Merit Sdn Bhd, an independent third party not connected with the directors, chief executives or substantial shareholders of the Company or any of its subsidiaries or the associates (as defined in the Listing Rules) of any of them, pursuant to the Sale and Purchase Agreement for a total consideration of RM41,000,000 (equivalent to approximately HK$82,000,000); and

• (b) the Company has entered into the Subscription Agreement with United Merit Sdn Bhd on 28 February, 2003 pursuant to which United Merit Sdn Bhd has agreed to subscribe for the Subscription Shares at a total consideration of HK$5,022,000. The Subscription Agreement is conditional upon, among other things, the completion of the Sale and Purchase Agreement. The Sale and Purchase Agreement is not conditional upon, among other things, the completion of the Subscription Agreement.

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LETTER FROM THE BOARD

THE SALE AND PURCHASE AGREEMENT

Date: 28 February, 2003

Parties: Vendor: Hua Chiao, an indirect wholly-owned subsidiary of the Company. Purchaser: United Merit Sdn Bhd, a company incorporated in Malaysia and beneficially owned as to 33.33 per cent. by Mr. Hoe Hee Liang, as to 33.33 per cent by Mr. Loy Ah Kiew and as to 33.33 per cent. by Ms. Ng Hsiao Wee. Messrs. Hoe Hee Liang and Loy Ah Kiew and Ms. Ng Hsiao Wee are directors of United Merit Sdn Bhd. Each of United Merit Sdn Bhd, Mr. Hoe Hee Liang, Mr. Loy Ah Kiew and Ms. Ng Hsiao Wee is an independent third party not connected with any of the directors, chief executives or substantial shareholders of the Company or any of its subsidiaries or the associates (as defined in the Listing Rules) of any of them. United Merit Sdn Bhd and its beneficial owners currently do not hold any Shares or any securities convertible into such Shares.

Shares to be disposed of

The Sale Shares, representing approximately 65 per cent. of the issued share capital of Pioneer Heritage Sdn Bhd, a company incorporated in Malaysia and a 70 per cent. subsidiary of Hua Chiao. Upon completion of the Sale and Purchase Agreement, Pioneer Heritage Sdn Bhd shall be owned as to approximately 65 per cent. by United Merit Sdn Bhd, as to approximately five per cent. by Hua Chiao and as to approximately 30 per cent. by an independent third party not connected with any of the directors, chief executives or substantial shareholders of the Company or any of its subsidiaries or the associates (as defined in the Listing Rules) of any of them.

Consideration

The consideration in the sum of RM41,000,000 (equivalent to approximately HK$82,000,000) was agreed after arm’s length negotiations and based on normal commercial terms having considered an independent valuation (on an open market basis) by Chesterton International (Johor) Sdn Bhd of Hypermarket owned by Pioneer Heritage Sdn Bhd of 28 February, 2003, which is not less than RM70,000,000 (equivalent to approximately HK$140,000,000). Based on the independent valuation, the Directors consider the consideration to be fair and reasonable as far as the shareholders of the Company are concerned. The sum of RM41,000,000 (equivalent to approximately HK$82,000,000) is to be satisfied in cash of which a sum of RM4,100,000 (equivalent to approximately HK$8,200,000) has been paid in cash by United Merit Sdn Bhd by way of deposit and the balance of RM36,900,000 (equivalent to approximately HK$73,800,000) shall be paid on the Completion Date.

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LETTER FROM THE BOARD

Conditions of the Sale and Purchase Agreement

Completion of the Sale and Purchase Agreement will be conditional upon, amongst other things, the following conditions:

• (a) United Merit Sdn Bhd being satisfied that all information, exhibits or reports supplied to it by Hua Chiao pursuant to the Sale and Purchase Agreement is or are accurate in all material respects;

• (b) completion of a satisfactory legal and financial due diligence audit and review of Pioneer Heritage Sdn Bhd to be conducted by United Merit Sdn Bhd within 30 days of the date of the Sale and Purchase Agreement;

• (c) approval of the Foreign Investment Committee of the Economic Planning Unit of the Prime Minister’s Department of Malaysia acceptable to United Merit Sdn Bhd being obtained by United Merit Sdn Bhd on or before the Completion Date;

• (d) the approval of the shareholders of Hua Chiao at an extraordinary general meeting to be convened;

• (e) the approval of the shareholders of United Merit Sdn Bhd at an extraordinary general meeting to be convened; and

• (f) all other necessary consents, authorisations, licences and approvals for or in connection with the Sale and Purchase Agreement and the transactions contemplated by the Sale and Purchase Agreement as may be required by the laws having been obtained.

If any of the conditions of the Sale and Purchase Agreement are not fulfilled or waived, as applicable, by United Merit Sdn Bhd by 27 May, 2003 (being the date falling three (3) months from the date of the Sale and Purchase Agreement) or such later date as may be agreed by the parties to the Sale and Purchase Agreement, either party to the Sale and Purchase Agreement may terminate the Sale and Purchase Agreement by giving notice in writing to the other party of its intention and all monies paid by United Merit Sdn Bhd to Hua Chiao pursuant to the Sale and Purchase Agreement including the deposit of RM4,100,000 (equivalent to approximately HK$8,200,000) shall forthwith be refunded without interest by Hua Chiao to United Merit Sdn Bhd and upon such refund being made, the Sale and Purchase Agreement shall lapse.

The Completion Date is expected to be 27 June, 2003, being four months from the date of the Sale and Purchase Agreement and one month after the due date for fulfilment of the aforesaid conditions. Upon completion, United Merit Sdn Bhd will complete the formality to registrate their interests in Pioneer Heritage Sdn Bdn with the Malaysian government authorities, which may take one month’s time.

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LETTER FROM THE BOARD

Net profits before and after taxation and extraordinary items of Pioneer Heritage Sdn Bhd in respect of the two financial years ended 31 December, 2001

	Audited figures for	Audited figures for
	the financial year	the financial year
	ended 31 December,	ended 31 December,
	2001 (note)	2000 (note)
The net profit before taxation of	RM889,008	RM1,167,005
Pioneer Heritage Sdn Bhd	(equivalent to approximately	(equivalent to approximately
	HK$1,778,016)	HK$2,334,010)
The net profit after taxation of	RM512,853	RM828,005
Pioneer Heritage Sdn Bhd	(equivalent to approximately	(equivalent to approximately
	HK$1,025,706)	HK$1,656,010)
Net asset value of	RM58,238,127	RM57,725,274
Pioneer Heritage Sdn Bhd	(equivalent to approximately	(equivalent to approximately
	HK$116,476,254)	HK$115,450,548)

Note: The audited figures were extracted from the accounts of Pioneer Heritage Sdn Bhd of the two years ended 31 December, 2001.

THE SUBSCRIPTION AGREEMENT

Date: 28 February, 2003 Parties: Issuer: The Company Subscriber: United Merit Sdn Bhd

Shares to be subscribed

The Subscription Shares, representing approximately 1.21 per cent. of the existing issued share capital of the Company and approximately 1.20 per cent. of the issued share capital of the Company as enlarged by the Subscription.

Consideration and Subscription Price

The total consideration of HK$5,022,000 will be payable in cash upon completion of the Subscription Agreement. The price per Subscription Share will be equivalent to HK$0.162 per Subscription Share which represents:

• a premium of approximately 19.12 per cent. to the closing price of HK$0.136 per Share as quoted on the Stock Exchange on 18 February, 2003 (being the last trading day prior to suspension of trading of the Shares on 19 February, 2003);

• a premium of approximately 7.00 per cent. to the average closing price of HK$0.1514 per Share as quoted on the Stock Exchange for the last five trading days up to and including 18 February, 2003; and

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LETTER FROM THE BOARD

• a premium of approximately 2.94 per cent. to the average closing price of HK$0.1574 per Share as quoted on the Stock Exchange for the last ten trading days up to and including 18 February, 2003.

The Subscription Agreement was entered into after arm’s length negotiations between the Company and United Merit Sdn Bhd based on normal commercial terms with reference to the recent market prices of the Shares, in particular the market price as at 18 February, 2003. The Board believes that the Subscription is an opportunity for the Company to raise capital and broadening the capital base of the Company. The Board is of the view that based on the recent market prices of the Shares and the net tangible assets of the Company, the Subscription Price is fair and reasonable as far as the shareholders of the Company as a whole are concerned.

Conditions of the Subscription Agreement

Completion of the Subscription Agreement will be conditional upon the following conditions:

• (a) completion of the Sale and Purchase Agreement; and

• (b) the Listing Committee of the Stock Exchange granting the listing of and permission to deal in the Subscription Shares.

The Company has applied to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the Subscription Shares.

If any of the conditions of the Subscription Agreement are not fulfilled by 27 May, 2003 or such later date as may be agreed by the parties to the Subscription Agreement, either party to the Subscription Agreement may terminate the Subscription Agreement by giving notice in writing to the other party of its intention.

The completion date of the Subscription Agreement is expected to be 27 June, 2003.

Mandate to issue the Subscription Shares

The Subscription Shares are to be issued under the General Mandate.

Ranking of the Subscription Shares

The Subscription Shares, when fully paid, will rank pari passu in all respects with the Shares in issue on the completion date of the Subscription including the right to any dividends or distributions after the date of completion of the Subscription.

Share buyback

The Directors confirm that there has not been any buyback of Shares by the Company within a period of 30 days from 18 February, 2003.

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LETTER FROM THE BOARD

REASONS FOR THE DISPOSAL OF THE SALE SHARES AND THE SUBSCRIPTION

The Company is an investment holding company and the Group is principally engaged in businesses which comprised of property investment and development, information technology, environmental protection, finance and other investment activities in Hong Kong, the PRC and Malaysia.

Pioneer Heritage Sdn Bhd is principally engaged in property investment and its only underlying asset is the Hypermarket, which is a property for rental purpose situated in Johor Bahru, Malaysia. The occupancy rate of the Hypermarket is approximately 90 per cent. Hua Chiao decides to dispose of Pioneer Heritage Sdn Bhd in a view to reduce the gearing of the Group. As disclosed in the 2002 interim report of the Company, the gearing ratio of the Group as at 30 June, 2002 was approximately 0.20. The Disposal would reduce the gearing ratio to approximately 0.04.

Together with the Disposal, the Board considers the Subscription a good opportunity for the Company to raise additional capital and broadening the capital base of the Company.

USE OF SALE PROCEEDS AND PROCEEDS OF THE SUBSCRIPTION

The gross sale proceeds of the Sale Shares of RM41,000,000 (equivalent to approximately HK$82,000,000) will be used as to approximately HK$41,000,000 to reduce the debt position of the Group, as to approximately HK$24,600,000 for certain property projects in the PRC and as to approximately HK$16,400,000 for the Group’s general working capital in Hong Kong. The net proceeds of the Subscription of HK$4.95 million will be used for the Group’s general working capital.

CHANGES TO THE SHAREHOLDING AS A RESULT OF THE SUBSCRIPTION

The following table illustrates the impact on the Company’s shareholding structure as a result of the Subscription:

Kong Fa Holding Limited Kong Sun Enterprise Sdn Bhd United Merit Sdn Bhd Public Total	Existing shareholding Shares approx % 1,060,850,042 41.42 403,375,794 15.75 – – 1,096,941,085 42.83 2,561,166,921 100	After completion of the Acquisition Agreement (which is expected to take place on or before 19 March, 2003) but before completion of the Subscription Agreement Shares approx % 1,060,850,042 38.28 403,375,794 14.56 – – 1,306,817,628 47.16 2,771,043,464 100	After completion of the Acquisition Agreement (which is expected to take place on or before 19 March, 2003) and the Subscription Agreement Shares approx % 1,060,850,042 37.86 403,375,794 14.40 31,000,000 1.11 1,306,817,628 46.63 2,802,043,464 100	After completion of the Acquisition Agreement (which is expected to take place on or before 19 March, 2003) and the Subscription Agreement Shares approx % 1,060,850,042 37.86 403,375,794 14.40 31,000,000 1.11 1,306,817,628 46.63 2,802,043,464 100
				100

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LETTER FROM THE BOARD

GENERAL

The Disposal involves over 15 per cent. and less than 50 per cent. of the net tangible assets of the Group and constitutes a discloseable transaction for the Company under the Listing Rules.

Application has been made to the Stock Exchange for the listing of, and permission to deal in, the Subscription Shares.

As completion of the Sale and Purchase Agreement and the Subscription Agreement is subject to fulfillment of a number of conditions and hence may or may not take place, shareholders of the Company and investors are advised to exercise caution when dealing in the Shares.

FURTHER INFORMATION

Your attention is drawn to the General Information set out in the appendix on pages 10 and 11 of this circular.

By Order of the Board Kong Sun Holdings Limited Kong Look Sen Chairman and Managing Director

For the purpose of this circular, RM has been translated into HK$ at RM1.00 = HK$2.00. However, such translation does not constitute a representation that any amounts have been, could have been or may be exchanged at such rate or any other rate.

– 9 –

GENERAL INFORMATION

APPENDIX

1. RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Rules Governing the Listing of Securities of The Stock Exchange of Hong Kong Limited 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 enquiries, 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. SHARE CAPITAL

As at 24 March 2003, being the latest practicable date prior to the printing of this circular for ascertaining certain information included in this circular, (the “Latest Practicable Date”), the authorised share capital of the Company is 4,000,000,000 Shares and the issued share capital is 2,561,166,921 Shares. Pursuant to Acquisition Agreement, 209,876,543 Shares at an issue price of HK$0.162 each will be issued upon completion. Pursuant to the Subscription Agreement, 31,000,000 Shares at an issue price of HK$0.162 will be issued upon Completion. The said Shares will rank pari passu to the existing Shares in all respects. After the completion of the Acquisition Agreement and the Subscription Agreement, the issued share capital of the Company will increase to 2,802,043,464 Shares.

3. DISCLOSURE OF INTERESTS

As at the Latest Practicable Date, the interests of the directors and their associates in the share capital of the Company or its associated corporations are within the meaning of the Securities (Disclosure of Interests) Ordinance (“SDI Ordinance”), the Law of Hong Kong (Chapter 396) which have been notified to the Company or its associated corporations and Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Company or which are required pursuant to Section 29 of the SDI Ordinance to be entered in the register referred to therein as follows:

(a) Interests in Company

Name of directors	Nature of interest	Number of Shares
Kong Look Sen	Corporate_(Note 1)_	1,457,225,836
Kong Li Jer	Corporate_(Note 1)_	1,457,225,836
Kong Li Szu	Corporate_(Note 2)_	1,053,850,042

Notes:

1. The interests in 1,457,225,836 shares comprised of 1,053,850,042 Shares being held by Kong Fa Holding Limited (“Kong Fa”) and 403,375,794 Shares held by Kong Sun Enterprise Sdn Bhd (“KSE”) respectively. Messrs. Kong Look Sen and Kong Li Jer are the directors and shareholders of Kong Fa and KSE.

2. The interests in 1,053,850,042 Shares held by Kong Fa, of which Mr. Kong Li Szu is a director and shareholder.

– 10 –

GENERAL INFORMATION

APPENDIX

(b) Interests in Grandy Applied Environmental Technology Corporation

		Number of
		ordinary shares
Name of director	Nature of interest	of HK$0.01 each
Kong Li Szu	Corporate_(Note)_	119,229,995

Note: The interests in 119,229,995 shares being held by Count Wealth Investments Limited, a whollyowned subsidiary of the Company, of which Mr. Kong Li Szu is a director.

Save as disclosed above and other than certain nominee interests in the subsidiaries held in trust for the Company, none of the directors nor their associates had or were deemed to have any beneficial interest in the securities of the Company or any of its associated corporations pursuant to the SDI Ordinance.

4. SUBSTANTIAL SHAREHOLDERS

As at the Latest Practical Date, according to the register kept by the Company under Section 16(1) of the SDI Ordinance, the following persons were the substantial shareholders of the Company:

Names	Number of Shares held	Percentage held
Kong Fa	1,053,850,042	41.50
KSE	403,375,794	15.75

Save as disclosed above, there were no parties whom were known to the Directors to be the registered holders or have any interest or right to subscribe for 10% or more of the issued share capital of the Company.

5. SERVICE CONTRACT

None of the Directors has any existing or proposed service contract with any member of the Group which does not expire or is not terminable by the Group within one year without payment of compensation (other than statutory compensation).

6. LITIGATION

Neither the Company nor any of its subsidiaries is 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 against the Company or any of its subsidiaries.

7. MISCELLANEOUS

The company secretary of the Company is Miss. Mak Tak Ping, ACS ACIS.

The registered office of the Company is at Units 9-10, 13th Floor, Tower One, Lippo Centre, 89 Queensway, Hong Kong.

The share registrars of the Company is Computershare Hong Kong Investor Services Limited of Unit 1712, 17th Floor, Hopewell Centre, 183 Queen’s Road Central, Hong Kong.

The English text of this document shall prevail over the Chinese text.

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