Risecomm Group Holdings Limited — Proxy Solicitation & Information Statement 2004

Jun 14, 2004

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 dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Singamas Container Holdings Limited, you should at once hand this circular to the purchaser or other 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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SINGAMAS CONTAINER HOLDINGS LIMITED

(Incorporated in Hong Kong with limited liability)

Stock code: 0716

CONNECTED AND DISCLOSEABLE TRANSACTION ACQUISITION OF AN ADDITIONAL 30% EQUITY INTEREST IN GUANGDONG SHUN AN DA PACIFIC CONTAINER CO., LTD.

Independent Financial Adviser to the Independent Board Committee

MANAGEMENT CAPITAL LIMITED

This circular gives you further information of the conditional share transfer agreement dated 7 May 2004 entered into by Singamas Container Holdings Limited. A letter from the Independent Board Committee is set out on page 10 of this circular. A letter from Management Capital Limited, the independent financial adviser, containing its advice to the Independent Board Committee is set out on pages 11 to 18 of this circular.

10 June 2004

CONTENTS

	Page
Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
The Agreement dated 7 May 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Reasons for the Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
Connected and Discloseable Transaction and
Waiver From Requirement of Holding a General Meeting . . . . . . . . . . . . . . . . . . . . . .	8
Independent Advice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
Letter from the Independent Board Committee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
Letter from Management Capital Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
Appendix – General Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	19

– i –

DEFINITIONS

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

• “Agreement”

the share transfer agreement dated 7 May 2004 made between Singamas and SSCMC

• “Board”

the board of Directors of Singamas

• “Completion Date”

• Any day on which the conditions precedent to the Agreement have been fulfilled or such other time the parties mutually agree in writing

• “Company” or “Singamas”

• Singamas Container Holdings Limited, the shares of which are listed and traded on the Stock Exchange and the Singapore Exchange Limited

• “Consideration”

• the total sum of US$5,400,000 (equivalent to approximately HK$42,120,000) to be paid by Singamas for the acquisition of 30% equity interest in Shun An Da

• “Director(s)”

the director(s) of the Company

• “Equity Interest”

• the 30% equity interest currently held by SSCMC in Shun An Da

• “Group”

the Company together with its subsidiaries

• “HK$”

• Hong Kong Dollars, the lawful currency of the Hong Kong Special Administrative Region of the PRC

• “Independent Board Committee”

the independent board committee of the Company comprising Mr. Ngan Man Kit, Alexander, Mr. Ong Ka Thai and Mr. Soh Kim Soon, established for the purpose of advising the Shareholders in respect of the Transaction

• “Latest Practicable Date”

• 7 June 2004, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained herein

– 1 –

DEFINITIONS

“Listing Rules”	Rules Governing the Listing of Securities on the Stock
	Exchange of Hong Kong Limited
“MCL”	Management Capital Limited, an investment adviser and a
	deemed licensed corporation under the Securities and Futures
	Ordinance (Chapter 571 of the Laws of Hong Kong) and the
	independent financial adviser to the Independent Board
	Committee in respect of the Transaction
“PRC”	the People’s Republic of China and for the purpose of this
	announcement, excluding Hong Kong, the Macau Special
	Administrative Region of the People’s Republic of China
	and Taiwan
“RMB”	Renminbi, the lawful currency of the PRC
“SFO”	Securities and Futures Ordinance (Chapter 571 of the Laws
	of Hong Kong)
“Share(s)”	Share(s) at the par value of HK$0.10 each in the capital of
	the Company
“Shareholder(s)”	The holder(s) of the Share(s)
“Shun An Da”	Guangdong Shun An Da Pacific Container Co., Ltd., a
	wholly foreign owned joint venture established on 12 July
	1991 in the PRC and is currently owned as to 70% by
	Singamas and 30% by SSCMC
“SSCMC”	SSCMC Transportation Company Limited, a company
	incorporated in Hong Kong and is in the business of
	providing logistics services
“Stock Exchange”	the Stock Exchange of Hong Kong Limited
“TEUs”	twenty-foot equivalent units, a standard unit of measurement
	for one twenty-foot container
“Transaction”	The proposed transaction under the Agreement whereby the
	Company agreed to acquire from SSCMC 30% equity interest
	in Shun An Da

– 2 –

DEFINITIONS

“US$”

United States dollars, the lawful currency of United States of America

“%”

per cent.

For the purposes of illustration only and unless otherwise stated, the translation of United States dollars into Hong Kong dollars is based on the exchange rate of US$1.00 = HK$7.80, the translation of Renminbi into Hong Kong dollars is based on the exchange rate of HK$1.00 = RMB1.06 and the translation of United States dollars into Renminbi is based on the exchange rate of US$1.00 = RMB8.28. Such translations should not be construed as a representation that the amounts in question have been, could have been or could be converted at any particular rate or at all.

– 3 –

LETTER FROM THE BOARD

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SINGAMAS CONTAINER HOLDINGS LIMITED

(Incorporated in Hong Kong with limited liability)

Executive Directors: Mr. Chang Yun Chung (Chairman) (also known as Mr. Teo Woon Tiong) Mr. Teo Siong Seng (Vice Chairman) Mr. Hsueh Chao En Mr. Teo Tiou Seng

Registered Office: 22/F., Dah Sing Financial Centre 108 Gloucester Road Hong Kong

Non-Executive Director:

Mr. Kuan Kim Kin

Independent Non-Executive Directors:

Mr. Ngan Man Kit, Alexander Mr. Ong Ka Thai Mr. Soh Kim Soon

10 June 2004

To the Shareholders

Dear Sirs or Madams,

CONNECTED AND DISCLOSEABLE TRANSACTION ACQUISITION OF AN ADDITIONAL 30% EQUITY INTEREST IN GUANGDONG SHUN AN DA PACIFIC CONTAINER CO., LTD.

INTRODUCTION

On 7 May 2004, the Company announced, among other things, that it had on that day entered into the Agreement under which the Company agreed to purchase from SSCMC 30% equity interest in Shun An Da. On 28 May 2004, the Company made an announcement for the purpose of mainly providing new information on the Transaction.

The purpose of this circular is to provide you with further information in relation to the Agreement. The recommendation of the Independent Board Committee to the Shareholders regarding the Agreement is set out on page 10 of this circular. A copy of the letter from Management Capital Limited to the Independent Board Committee containing its advice in relation to the terms of the Agreement is set out on pages 11 to 18 of this circular.

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LETTER FROM THE BOARD

THE AGREEMENT DATED 7 MAY 2004

Parties

• 1) The Company; and

• 2) SSCMC, company incorporated in Hong Kong and is in the business of providing logistics services.

Save for SSCMC’s holding in Shun An Da, the Directors, to the best of their knowledge, information and belief and having made all reasonable enquiries, confirm that SSCMC and Messrs. Wu Zhi Qiang, Zheng Ju Chang and Mok Weng Cheon, its ultimate beneficial owners, are independent third parties not connected with the Directors, chief executive and substantial shareholders of Singamas and its subsidiaries and their respective associates (as defined under the Listing Rules).

Transaction

Pursuant to the Agreement, the Company agreed to purchase and SSCMC agreed to sell the Equity Interest.

The Company and SSCMC are currently holding 70% and 30% respectively equity interest in Shun An Da, a company engages in the business of container manufacturing. The Company started to invest in Shun An Da in 2001. From 2001 until the day of this circular, the Company has gradually increased its stake held in Shun An Da from 40% to 70% as follows:

		Percentage of	Consideration	Consideration
Date of Transaction	Contracting Parties	Interest Acquired	US$	HK$ Equivalent
6 February 2001	Singamas and SSCMC	40%	7,200,000	56,160,000
4 November 2002	Singamas and SSCMC	20%	3,600,000	28,080,000
13 November 2003	Singamas and SSCMC	10%	1,800,000	14,040,000

The aforesaid considerations were all determined by reference to the total registered paid-up capital of Shun An Da in the sum of US$18,000,000 (equivalent to approximately HK$140,400,000).

Upon completion of the Agreement, Shun An Da will become a wholly owned subsidiary of the Company.

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LETTER FROM THE BOARD

Consideration

Pursuant to the Agreement, the Company agreed to pay US$5,400,000 (equivalent to approximately HK$42,120,000), which was determined by reference to the total registered paid-up capital of Shun An Da in the sum of US$18,000,000 (equivalent to approximately HK$140,400,000) for the Equity Interest in cash. This payment will be funded by internal resources of the Group on the Completion Date.

Subsequent to the entering of the Agreement by the Company and SSCMC on 7 May 2004, both parties have reached another agreement on 14 May 2004 to provide further elaboration to certain terms and conditions of the Agreement. Under this agreement, it was agreed that the Consideration shall be determined on ex-dividend basis and the entire retained earnings of Shun An Da in the sum of RMB132,419,447 (equivalent to approximately HK$124,924,007) will be distributed to the Company and SSCMC, the existing shareholders of Shun An Da prior to the completion of the Agreement. Shun An Da had held a board meeting on 31 May 2004 and the distribution of its entire retained earnings as at 31 December 2003 to the Company and SSCMC was approved accordingly.

As the Company’s investment in Shun An Da had increased in stages to 60% as at 31 December 2003 (excluding the 10% which the Company agreed to purchase on 13 November 2003 but which was only completed in January 2004), the Company and SSCMC will receive a dividend of approximately RMB64.1 million and RMB68.3 million respectively out of the total retained earnings of approximately RMB132.4 million.

The Group will satisfy the Consideration of US$5.4 million and the dividend payment of approximately RMB68.3 million (or equivalent to approximately US$8.2 million) attributable to the minority interest in Shun An Da in cash out of internal resources. Other than this expected cash payment, the Transaction will not have any effect on the consolidated net assets of the Company immediately upon the completion of the Agreement.

Completion

The obligation of the Company to purchase the Equity Interest under the Agreement is conditional on the fulfillment of the following conditions precedent on or before the expiry of 3 months after the signing of the Agreement:

• (a) all approvals from the relevant PRC authorities approving the Agreement and the transactions contemplated therein have been obtained; and

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LETTER FROM THE BOARD

• (b) the passing by the shareholders of the Company in a general meeting of an ordinary resolution approving the Agreement and the transactions contemplated therein; or

• (c) the obtaining of such approval to be given in lieu of a resolution passed at a general meeting.

Completion shall take place the day on which the conditions precedent to the Agreement have been fulfilled or such other time the parties mutually agree in writing.

Board representation

The board of directors of Shun An Da currently consists of five directors, of which four were appointed by the Company and one was appointed by SSCMC. Upon completion of the Agreement, the board of directors of Shun An Da will be reduced to four directors, all of them will be appointed by the Company.

Basis of determination of the Consideration

The Consideration of US$5,400,000 (equivalent to approximately HK$42,120,000), which has been arrived at after arm’s length negotiation and on normal commercial terms, will be funded by internal resources of the Group on the Completion Date. The Consideration was determined on ex-dividend basis and by reference to the total registered paid-up capital of Shun An Da in the sum of US$18,000,000 (equivalent to approximately HK$140,400,000).

Based on its audited accounts, Shun An Da reported a net profit before and after taxation and extraordinary items of RMB77,725,859 (equivalent to approximately HK$73,326,282) and RMB68,303,903 (equivalent to approximately HK$64,437,644), respectively for the year ended 31 December 2003. It also reported a net profit before and after taxation and extraordinary items of RMB82,101,387 (equivalent to approximately HK$77,454,139) and RMB72,204,362 (equivalent to approximately HK$68,117,323), respectively for the year ended 31 December 2002. Shun An Da had audited net assets of RMB305,592,052 (equivalent to approximately HK$288,294,389) as at 31 December 2003. It also had audited net assets of RMB237,971,187 (equivalent to approximately HK$224,501,120) as at 31 December 2002.

Prior to the completion of the Agreement and distribution of Shun An Da’s entire retained earnings as at 31 December 2003 (as dividends to its existing shareholders) in the sum of RMB132,419,447 (equivalent to approximately HK$124,924,007), the Consideration of US$5,400,000 (equivalent to approximately HK$42,120,000) represents approximately 51% discount to the net assets of Shun An Da as at 31 December 2003 attributable to the Equity Interest. After the aforesaid dividend payment, the Consideration represents approximately 14% discount to the reduced net assets of Shun An Da (reduced after distribution of its entire retained earnings) attributable to the Equity Interest.

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LETTER FROM THE BOARD

The Board (including the independent non-executive Directors) considers the terms and conditions of the Agreement are fair and reasonable and are in the interest of the Company insofar as the independent shareholders of the Company are concerned and are on normal commercial terms.

REASONS FOR THE TRANSACTION

The Group is one of the world’s leading container manufacturers and logistics service providers. The Transaction is in line with the principal activities of the Group.

Shun An Da, principally engaged in the manufacturing of conventional dry freight and 45foot/48-foot specialised containers, is strategically located in Shunde, at the center of the Pearl River Delta, the heart of economic and trading zone in the Guangdong Province. Due to the increasing trade activities in the region, demand for new containers has been high in that area. Upon completion of the Agreement, Shun An Da will become a wholly owned subsidiary of the Company.

The Directors believe that with the full control of the board of directors of Shun An Da after completion of the Agreement, the entering into the Agreement is in the interest of Singamas and will further enhance Shun An Da’s business objectives with those of the Group. It will also enhance Singamas’ overall management control of Shun An Da and enable Singamas to expand its network and market coverage in the PRC. This will therefore enhance the Group’s overall profitability in the long run.

CONNECTED AND DISCLOSEABLE TRANSACTION AND WAIVER FROM REQUIREMENT OF HOLDING A GENERAL MEETING

None of the Directors or the Shareholders of the Company is interested in the Transaction other than their respective shareholding in the Company.

SSCMC is currently holding 30% equity interest in Shun An Da while the remaining interest of 70% is held by the Company. Accordingly, SSCMC is a substantial shareholder of Shun An Da, currently a non-wholly owned subsidiary of the Company. The Transaction therefore constitutes a connected transaction of the Company under the Listing Rules.

Based on the five size tests performed, each of the percentage ratio computed exceeded 2.5% but less than 25% of the total assets/market capitalisation, net profit (after deducting all charges except taxation and before minority interests and extraordinary items), revenue and issued equity capital of the Company, respectively as disclosed in the annual report of the Company for the year ended 31 December 2003. Accordingly, the Transaction constitutes a discloseable transaction under the Listing Rules.

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LETTER FROM THE BOARD

As each of the percentage ratio of the five size tests performed exceeded 2.5% and each of the relevant parameters, inter alia, the Consideration of the Transaction, exceeded HK$10,000,000, the Transaction will also be subject to independent shareholders’ approval under the Listing Rules. An independent adviser has been appointed to advise the Shareholders on the Transaction.

The ultimate beneficial owners of Pacific International Lines (Private) Limited (“PIL”) are Messrs. Chan Poh Tong, Chan Yean Fock, Chang Yun Chung, Go Hui Hong, Go Hui Hoon, Lio Tjwie Bien, Ngo Hwee Bee, Ngo Hwee Khoo, Ngo Wee Bin, Teh Lam Seng, Teo Chew Seng, Teo Cho Keng, Teo Choo Kiong, Teo Choo Wee, Teo Choon Seng, Teo Siong Seng, Teo Teng Seng, Teo Tiou Seng, Teo Tung Seng, Toh Kie Liam, Yeoh Yen Guan, and Madams Lee Kheng Wah, Teo Geok Seng, Teo Gim Seng, Teo Hui Seng, Teo Kiok Seng, Teo Lay Seng, Teo Siew Seng, Tiew Beng Watt and Yeo Chwee Lian. PIL is the controlling shareholder of the Company currently holds 289,308,178 Shares, representing 55.38% of the issued share capital of the Company. Save for their respective shareholdings in the Company and PIL, PIL and its ultimate beneficial owners are not interested in the Transaction. As a result, PIL will not be required to abstain from voting at a general meeting to approve the Transaction. Furthermore, no other shareholder of the Company is required to abstain from voting. PIL has undertaken that they will vote in favour of the resolution to approve the Transaction. In order to save time and costs in convening a general meeting, application has been made to the Stock Exchange for a waiver from the requirement for the Transaction to be approved by the Shareholders at a general meeting. On this ground, the Company has applied to the Stock Exchange for and been granted a waiver from the requirements under the Listing Rules for the Company to hold a general meeting to seek Shareholders’ approval in respect of the Transaction.

INDEPENDENT ADVICE

MCL has been appointed as an independent financial adviser to advise the Independent Board Committee on the Agreement. Your attention is drawn to the letter from Management Capital Limited set out on pages 11 to 18 of this circular which contains its recommendations to the Independent Board Committee in respect of the Agreement and the principal factors and reasons considered by MCL in arriving at its recommendations.

The Independent Board Committee, having taken into account the advice of MCL, considers that the terms of the Agreement are fair and reasonable so far as the Shareholders are concerned and are in the interest of the Company and the Shareholders as a whole.

ADDITIONAL INFORMATION

Your attention is drawn to the general information set out in the appendix to this circular.

By order of the Board

Singamas Container Holdings Limited Chang Yun Chung

Chairman

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

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SINGAMAS CONTAINER HOLDINGS LIMITED

(Incorporated in Hong Kong with limited liability)

10 June 2004

To the Shareholders

Dear Sirs or Madams,

CONNECTED AND DISCLOSEABLE TRANSACTION ACQUISITION OF AN ADDITIONAL 30% EQUITY INTEREST IN GUANGDONG SHUN AN DA PACIFIC CONTAINER CO., LTD.

We have been appointed as members of the Independent Board Committee to advise the Shareholders in respect of the Agreement, details of which are set out in the letter from the Board in the circular dated 10 June 2004 to the Shareholders. Unless the context otherwise requires, terms defined in this circular shall have the same meanings when used in this letter.

Having considered, among other things, the reasons and benefits of the Transaction, and the advice of MCL, as stated in its letter of advice which is set out on pages 11 to 18 of this circular, we consider the terms of the Agreement to be fair and reasonable so far as the interests of the Shareholders are concerned. Accordingly, we would have recommended the Shareholders to vote in favour of the ordinary resolution in relation to the Transaction had an extraordinary general meeting been held to approve the Agreement.

Yours faithfully

Ngan Man Kit, Alexander Ong Ka Thai Soh Kim Soon Independent Board Committee

– 10 –

LETTER FROM MANAGEMENT CAPITAL LIMITED

The following is the text of the letter of advice dated 10 June 2004 from Management Capital Limited prepared for the purpose of incorporation in this circular, setting out its advice to the Independent Board Committee.

MANAGEMENT CAPITAL LIMITED

19th Floor, St. George’s Building 2 Ice House Street Central, Hong Kong

10 June 2004

The Independent Board Committee Singamas Container Holdings Limited 22nd Floor, Dah Sing Financial Centre, 108 Gloucester Road,

Hong Kong

Dear Sirs,

PROPOSED CONNECTED AND DISCLOSEABLE TRANSACTION ACQUISITION OF AN ADDITIONAL 30% EQUITY INTEREST IN GUANGDONG SHUN AN DA PACIFIC CONTAINER CO., LTD.

We have been appointed to act as the independent financial adviser to the Independent Board Committee in connection with the proposed purchase by the Company of a 30% equity interest in Shun An Da from SSCMC, the terms of which are set out in the Letter from the Board contained in the shareholders’ circular dated 10 June 2004 (the “Circular”), of which this letter forms a part.

Pursuant to the Listing Rules, the purchase will constitute a discloseable and connected transaction for the Company and will require the approval of independent shareholders in a general meeting. Pacific International Lines (Private) Limited, the controlling shareholder of the Company with a shareholding of 55.38% of the issued share capital of the Company, is not interested in the Transaction other than through its shareholding in the Company and is permitted to vote on this Transaction. Furthermore, no other shareholder of the Company is required to abstain from voting. Pacific International Lines (Private) Limited has undertaken that it will vote in favour of the resolution to approve the Transaction. In order to save time and costs in convening a general meeting (as Pacific International Lines (Private) Limited’s votes are sufficient on their own to approve the Transaction), we are advised that the Company has made an application to the Stock Exchange for a waiver from the requirement for the Transaction to be approved by the Shareholders in a general meeting and we note that a waiver has been granted.

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LETTER FROM MANAGEMENT CAPITAL LIMITED

Management Capital Limited has been appointed to advise the Independent Board Committee, consisting of Mr. Ngan Man Kit, Alexander, Mr. Ong Ka Thai and Mr. Soh Kim Soon, as to whether the Transaction is fair and reasonable so far as the Shareholders are concerned.

Management Capital Limited is independent from and not connected with any of the Company and their respective associates or parties acting in concert with any of them and is accordingly considered suitable to give independent advice.

Expressions used in this letter have the same meanings as defined in the Circular unless the context otherwise requires.

In formulating our recommendation, we have relied on the information and facts supplied, and the opinions expressed by the Company. We have also sought and received confirmation from the Directors that no material facts have been omitted from the information supplied and opinions expressed. We consider that we have been provided with sufficient information for us to reach an informed view, and have no reason to doubt the truth or accuracy of the information provided. We have assumed that all information and representations made or referred to in the Circular to be true. We have not however conducted an independent investigation into the financial position and affairs of the Company and its subsidiaries.

The Directors have jointly and severally accepted full responsibility for the accuracy of the information contained in the Circular and have confirmed, having made all reasonable enquiries, that to the best of their knowledge and belief there are no other facts not contained in the Circular, the omission of which would make any statement in the Circular misleading.

THE TRANSACTION

Pursuant to the Agreement and the related announcement made by the Company on 28 May 2004, the Company has agreed to purchase and SSCMC has agreed to sell the Equity Interest, on an ex-dividend basis, in consideration for the sum of US$5,400,000 (equivalent to approximately HK$42,120,000) in cash, which will be payable on Completion Date. The distribution of the entire retained earnings of Shun An Da as at 31 December 2003 to its shareholders prior to the completion of the Agreement was approved in a board meeting of Shun An Da held on 31 May 2004.

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LETTER FROM MANAGEMENT CAPITAL LIMITED

PRINCIPAL FACTORS CONSIDERED

In formulating our opinion, we have taken into consideration the following principal factors and reasons:

(a) Reasons for and benefits of the Transaction

As set out in the Letter from the Board, the Board considers that the Transaction is beneficial for the Company for the following reasons:

• The Group is one of the world’s leading container manufacturers and logistics service providers and the Transaction is in line with its principal activities.

• Shun An Da, principally engaged in the manufacturing of conventional dry freight and 45-foot/48-foot specialised containers, is strategically located in Shunde, at the center of the Pearl River Delta, the heart of economic and trading zone in the Guangdong Province. Due to increasing trade activities in the region, demand for new containers has been high in that area which could increase demand for Shun An Da’s containers. The Company has confirmed that Shun An Da’s order book as of 31 May 2004 is approximately 10% higher than the comparable amount in the preceding year.

• Upon completion of the Agreement, Shun An Da will become a wholly owned subsidiary of the Company. The Directors believe that with the full control of the board of directors of Shun An Da after completion of the Agreement, the entering into the Agreement is in the interest of Singamas and will further enhance Shun An Da’s business objectives with those of the Group. It will also enhance Singamas’ overall management control in Shun An Da, enable Singamas to expand its network and market coverage in the PRC and therefore enhance the Group’s overall profitability by generating satisfactory returns for the Group in the long run.

We accept this reasoning on the basis that, through the Transaction, the Company is acquiring the minority interest in Shun An Da, when trading conditions are buoyant as the Company expects demand for new containers to remain strong in 2004. In addition, the acquisition of the minority interest in Shun An Da will result in Shun An Da becoming a wholly owned subsidiary which, in our opinion, will simplify the Group’s overall control over its business strategy, and operational and financial management.

Based on the above, we consider there to be good commercial and strategic reasons for the proposed Transaction.

– 13 –

LETTER FROM MANAGEMENT CAPITAL LIMITED

(b) Valuation

We note that the Consideration of US$5,400,000 (equivalent to approximately HK$42,120,000) was arrived at after arm’s length negotiation and on normal commercial terms by reference to the total registered paid-up capital of Shun An Da. In this respect, we note the following:

• The Company’s investments in Shun An Da from its initial investment in 2001 have been on the following terms:

		Percentage of		Consideration
		Interest	Consideration	(equivalent to
Date of Transaction	Contracting Parties	Acquired	(US$)	HK$)
6 February 2001	Singamas and SSCMC	40%	7,200,000	56,160,000
4 November 2002	Singamas and SSCMC	20%	3,600,000	28,080,000
13 November 2003	Singamas and SSCMC	10%	1,800,000	14,040,000

Each of these transactions, including the current proposal, have been on terms which are determined by reference to the (original and current) total registered paidup capital of Shun An Da in the sum of US$18,000,000 (or equivalent to approximately HK$140,400,000). As the Consideration has been determined on an ex-dividend basis, the board of Shun An Da has approved, at a meeting on 31 May 2004, the distribution of all of its retained earnings as at 31 December 2003 to its existing shareholders prior to the completion of the Agreement. As the Company’s investment in Shun An Da had increased in stages to 60% in December 2003 (excluding the 10% which the Company agreed to purchase on 13 November 2003 but was only completed in January 2004), the Company and SSCMC will receive a dividend of approximately RMB64.1 million (approximately 48.4% of the total retained earnings of Shun An Da as at 31 December 2003) and approximately RMB68.3 million (approximately 51.6% of the total retained earnings of Shun An Da as at 31 December 2003) respectively out of the total retained earnings of approximately RMB132.4 million.

• According to its audited accounts, Shun An Da had net assets of approximately RMB305.6 million as at 31 December 2003 which comprised registered capital of approximately RMB149.0 million, capital reserve of approximately RMB24.2 million and retained earnings of approximately RMB132.4 million. The Consideration of US$5.4 million or approximately RMB44.7 million represents approximately a 51% discount to the net assets of Shun An Da as at 31 December 2003 attributable to the Equity Interest. After the distribution of the entire retained earnings of Shun An Da (approximately RMB132.4 million), the Consideration represents a discount of approximately 14% to the net assets of Shun An Da (after the distribution of its entire retained earnings) attributable to the Equity Interest.

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LETTER FROM MANAGEMENT CAPITAL LIMITED

• The Consideration represents a Price/Earnings Ratio of approximately 2.2 times.

Shun An Da

Shun An Da
For the year ended 31 December 2003	RMB million
Net profit after taxation and extraordinary items
(“Net Earnings”)(note)	68.3
Percentage shareholding attributable to the Equity Interest	30%
Net Earnings attributable to the Equity Interest	20.5(A)
Consideration for the Equity Interest (US$5.4 million)	44.7(B)
Price/Earnings Ratio (B/A)	2.2x
Note: Extracted from the audited accounts of Shun An Da for the year ended 31 December 2003.

• The Consideration represents approximately 1.4 times the operating cashflow (Earnings before interest, tax, depreciation and amortisation or “EBITDA”) of Shun An Da as at 31 December 2003.

Shun An Da

For the year ended 31 December 2003 Operating cashflow_(note)_ Percentage shareholding attributable to the Equity Interest EBITDA attributable to the Equity Interest Consideration for the Equity Interest (US$5.4 million) Price/Operating cashflow Ratio (D/C)	RMB million 107.0 30% 32.1(C) 44.7(D) 1.4x

Note: Operating cashflow is derived by adding profit tax, total interest expenses, depreciation and amortisation expenses to the net profit of Shun An Da. All of the said figures are extracted from the audited accounts of Shun An Da for the year ended 31 December 2003.

• There is no listed company in Hong Kong comparable to Shun An Da for benchmarking the valuation ascribed to Shun An Da through this Transaction.

– 15 –

LETTER FROM MANAGEMENT CAPITAL LIMITED

Nevertheless, based on the discount of the Consideration to its underlying net assets, the low price earnings ratio and low price to operating cashflow ratio for the Transaction, we consider the valuation to be fair and reasonable.

(c) Effects on the Group

Interest in Shun An Da

As mentioned above, the Group currently owns 70% of the equity in Shun An Da. Upon completion of the Agreement, Shun An Da will become a wholly owned subsidiary of the Company.

Net asset value

According to its audited accounts as at 31 December 2003, the Group had net assets of approximately US$104.4 million. The Company has confirmed that other than the cash payment for the Consideration of US$5.4 million and the dividend payment of approximately RMB68.3 million (or equivalent to approximately US$8.2 million) attributable to the minority interest in Shun An Da, the Transaction will not have any effect on the consolidated net assets of the Group upon completion of the Agreement.

Earnings

Upon completion of the Agreement, the Group will be able to account for the profit or loss attributable to the additional 30% equity interest in Shun An Da. Based on its audited accounts, Shun An Da reported a net profit after taxation and extraordinary items of approximately RMB68.3 million and approximately RMB72.2 million for the years ended 31 December 2003 and 2002 respectively. Accordingly, the 30% attributable to the Equity Interest amounts to approximately RMB20.5 million (or equivalent to approximately US$2.5 million) and approximately RMB21.7 million (or equivalent to approximately US$2.6 million) for the respective years. Furthermore, the net contribution to profits of the Group would also need to take into account principally the recognition of negative goodwill of approximately US$0.9 million resulting from the Transaction. The Company has confirmed that such negative goodwill will be recognised as income over a period of time of not more than five years. Although the recognition of such negative goodwill will have a positive impact on the earnings of the Group, whether the Transaction will have an overall positive or negative impact on the earnings of the Group shall depend largely on the performance of Shun An Da in future.

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LETTER FROM MANAGEMENT CAPITAL LIMITED

Net debt to net assets ratio

The Group will satisfy the Consideration of US$5.4 million and the dividend payment of approximately RMB68.3 million (or equivalent to approximately US$8.2 million) attributable to the minority interest in Shun An Da in cash out of internal resources. As such, the Transaction will reduce the Group’s cash balances which will result in an increase in the net debt of the Group (total bank borrowings less cash balances) and, accordingly, the net debt to net assets ratio of the Group will increase. According to its audited accounts as at 31 December 2003, the Group had net debt of approximately US$74.7 million (being the total bank borrowings of approximately US$119.2 million less cash balances of approximately US$44.5 million) and net assets of approximately US$104.4 million, representing a net debt to net assets ratio of approximately 72%.

We have discussed with management of the Company the effect of the Transaction on the net debt to net assets ratio of the Group and note that:

• The Consideration and the above dividend payment represent approximately 31% of the Group’s cash and bank balances of approximately US$44.5 million as at 31 December 2003;

• As at 31 December 2003, short term and long term bank borrowings of the Group amounted to approximately US$79.2 million and US$40.0 million respectively;

• The Company has confirmed that approximately US$72 million out of the US$79.2 million in short term bank borrowings were related to trade finance or working capital which could revolve on maturity (i.e. such facilities can be redrawn in accordance with their terms to fund additional trade finance or working capital requirements) and that the Group does not currently expect any substantial capital commitments; and

• The Company has also confirmed that there are un-utilised banking facilities of approximately US$200 million which are available to the Group to finance the Group’s working capital requirements.

Taking into account the available cash resources which provide adequate cover for short-term facilities, the absence of significant capital commitments, un-utilised banking facilities and the Company’s confirmation that internal resources will be sufficient for financing the Transaction, the increase in net debt to net equity ratio appears within the Group’s capacity and we are comfortable that the Transaction would not adversely impact the financial position of the Group.

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LETTER FROM MANAGEMENT CAPITAL LIMITED

In conclusion, the Company expects demand for new containers in 2004 to remain strong as trading conditions are buoyant and that the Group would benefit from the contribution from the additional 30% interest in Shun An Da, although this is offset by an outflow of funds which will increase the net debt to net assets ratio of the Group. Notwithstanding the related increase in net debt to net assets ratio, we consider this increased obligation to be within the Group’s capacity and that, given the benefits of the Transaction, we consider the proposal to be beneficial to the Group.

RECOMMENDATION

Having considered the above principal factors and reasons, we are of the opinion that the Transaction is fair and reasonable so far as the Shareholders are concerned and that the Transaction is in the interest of the Group.

Yours faithfully, For and on behalf of MANAGEMENT CAPITAL LIMITED

David H.T. Yu

Director

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GENERAL INFORMATION

APPENDIX

1) RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules 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 the Latest Practicable Date, the authorised share capital of the Company was HK$75,000,000 divided into 750,000,000 Shares of HK$0.10 each, of which 522,417,760 Shares were issued and fully paid up and such total amount paid up is HK$52,241,776.

All the Shares currently in issue rank pari passu in all respects with each other, including in particular, as to dividends, voting rights and capital.

Save as disclosed herein, no part of the share capital of the Company is listed or dealt in on stock exchange other than the Stock Exchange and the Singapore Exchange Limited and no application is being made or is currently proposed or sought for the Shares to be listed in or on any other stock exchange.

3) DISCLOSURE OF INTERESTS

As the Latest Practicable Date, the interests or short positions of the Directors and chief executive in the shares, underlying shares and debentures of the Company or any associated corporation (within the meaning of Part XV of the SFO) which (a) were required notification to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which any such Director and chief executive is taken or deemed to have under such provisions of the SFO); or which (b) were required pursuant to Section 352 of the SFO to be entered into the register maintained by the Company; or which (c) were required, pursuant to Model Code for Securities Transactions by Directors of Listed Companies contained in the Listing Rules, to be notified to the Company and the Stock Exchange were as follows:

Interests in share capital of the Company

			Number of	Shares
		Personal	Corporate	Percentage of
Name	Capacity	Interest	Interest	Issued Shares
Mr. Chang Yun Chung	Beneficial Owner	–	289,308,178	55.38
			(Note)
Mr. Teo Siong Seng	Beneficial Owner	13,234,000	–	2.53

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GENERAL INFORMATION

APPENDIX

• Note: These shares are held by Pacific International Lines (Private) Limited (“PIL”) (an associated corporation, within the meaning of Part XV of the SFO, of the Company) in which Mr. Chang Yun Chung is interested, in aggregate, in 16,525,000 shares representing 89.42% of the issued share capital of that company. Mr. Chang Yun Chung’s interest in shares of PIL comprises a personal interest in 2,642,500 shares and corporate interests in 5,850,000 shares through South Pacific International Holdings Limited, a company in which he holds 59.95% of the issued share capital and 8,032,500 shares through Y. C. Chang & Sons Private Limited, a company in which he holds 2.86% of the issued share capital. Messrs. Teo Siong Seng and Teo Tiou Seng, directors of the Company, both of their interests in shares of PIL comprise personal interests in 120,000 shares and 80,000 shares respectively and representing 0.65% and 0.43% of the issued share capital of PIL.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors, nor their associates, has any other interests or short positions in the shares, underlying shares and debentures of the Company or any associated corporations (within the meaning of Part XV of the SFO) which (a) were required notification to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which any such Director or chief executive is taken or deemed to have under such provisions of the SFO); or which (b) were required pursuant to Section 352 of the SFO to be entered into the register maintained by the Company; or which (c) were required, pursuant to the Model Code for Securities Transaction by Directors of Listed Companies contained in the Listing Rules, to be notified to the Company or the Stock Exchange; and none of the Directors, nor their spouse or children under the age of 18, had any right to subscribe for securities of the Company, or had exercised any such right since 31 December 2003 (being the date of the Company’s latest published audited accounts).

Save as disclosed herein, none of the Directors was materially interested in any contract or arrangement entered into by any member of the Group since 31 December 2003 (being the date of the Company’s latest published audited accounts) and which was significant in relation to the business of the Group.

As at the Latest Practicable Date, none of the Directors, nor their associates, has any interest in any business apart from the business of the Company which competes or likely to compete, either directly or indirectly, with the Company’s business.

As at the Latest Practicable Date, MCL has no shareholding in any member of the Group and does not have any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

Save as disclosed herein, none of the Directors or MCL is interested, directly or indirectly, in any assets which had since 31 December 2003 (being the date to which the latest published audited financial statements of the Company were made up) been acquired or disposed of by or leased to any member of the Group, or are proposed to be acquired or disposed of by or leased to any member of the Group.

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GENERAL INFORMATION

APPENDIX

4) SUBSTANTIAL SHAREHOLDERS

As at the Latest Practicable Date, according to the register kept by the Company pursuant to Section 336 of the SFO, and so far as was known to any Director or the chief executive of the Company, the following persons (other than the interests of Directors or chief executive of the Company), had an interest or short position in the shares and underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who were directly or indirectly interested in 10% or more of the issued share capital of the Company, carrying rights to vote in all circumstances at general meetings of the Company together with the number of shares in which they were deemed to be interested were:

			Number of Shares
				Percentage
		Direct	Indirect	of Total
Name	Notes	Interest	Interest	Issued Shares
CDC IXIS Asset Management
Asia Ltd.		31,646,000(L)#	–	6.06
INVESCO Asia Limited
(in its capacity as manager/
adviser for various accounts)		27,718,000(L)#	–	5.31
J.P. Morgan Chase & Co.	(1)	–	78,368,000(L)#	15.00
		–	34,760,000(P)#	6.65
Madam Lee Kheng Wah	(2)	–	289,308,178(L)#	55.38
PIL	(3)	289,308,178(L)#	–	55.38
Y.C. Chang & Sons
Private Limited	(4)	–	289,308,178(L)#	55.38

• #(L) – Long Position; (P) – Lending Pool

Notes:

• (1) These shares in which J.P. Morgan Chase & Co. is deemed to be interested, were held via J.P. Morgan Fleming Asset Management (UK) Limited, JF International Management Inc., JF Asset Management (Taiwan) Limited, JF Asset Management Limited and JP Morgan Chase Bank, respectively.

• (2) Madam Lee Kheng Wah, as the spouse of Mr. Chang Yun Chung, is deemed to be interested in these shares.

• (3) A full explanation of these shares is disclosed under the section headed ’Disclosure of Interests’ above.

• (4) As Y.C. Chang & Sons Private Limited directly controls one-third or more of the voting rights in the shareholders’ meeting of PIL, in accordance with SFO, Y.C. Chang & Sons Private Limited is deemed to be interested in PIL’s interests in the Company’s issued shares.

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GENERAL INFORMATION

APPENDIX

5) MATERIAL ADVERSE CHANGE

The Directors are not aware of any material adverse change in the financial or trading position of the Group since 31 December 2003 (being the date to which the latest published audited financial statements of the Company were made up).

6) SERVICE CONTRACT

As at the Latest Practicable Date, none of the Directors or proposed directors has any existing service contract or proposed service contract with any member of the Group.

7) CONSENT

MCL is an investment adviser and a deemed licensed corporation under the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong). MCL has given and has not withdrawn its written consent to the issue of this circular with the inclusion of its letter dated 10 June 2004 and references to its name in the form and context in which they appear.

8) LITIGATION

None of the members of the Group 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 by or against any member of the Group.

9) MISCELLANEOUS

• a) The registered office of the Company in Hong Kong is at 22nd Floor, Dah Sing Financial Centre, 108 Gloucester Road, Hong Kong.

The Share registrar of the Company is Computershare Hong Kong Investor Services Limited at 17th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong.

• b) The secretary of the Company is Ms. Tam Shuk Ping, Sylvia who is a member of the Canadian Institute of Chartered Accountants and a fellow member of the Hong Kong Society of Accountants.

• c) In the event of any inconsistency, the English text of this circular shall prevail over the Chinese text.

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GENERAL INFORMATION

APPENDIX

10) DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection during normal business hours at the registered office of the Company in Hong Kong at 22nd Floor, Dah Sing Financial Centre, 108 Gloucester Road, Hong Kong from 11 June 2004 to 25 June 2004 (both days inclusive):

• a) the memorandum and articles of association of the Company;

• b) the Agreement;

• c) the letter from Management Capital Limited dated 10 June 2004, the text of which is set out on pages 11 to 18 of this circular;

• d) the written consent of MCL as referred to in paragraph 7 of this appendix;

• e) the letter from the Independent Board Committee, the text of which is set out on page 10 of this circular; and

• f) a written confirmation dated 10 May 2004 by Pacific International Lines (Private) Limited to approve the Transaction.

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