Sinopec Engineering Group Co Ltd. — Capital/Financing Update 2002

Oct 30, 2002

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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.

UNIVERSE INTERNATIONAL HOLDINGS LIMITED （ 寰 宇 國 際 控 股 有 限 公 司 ） [*]

(Incorporated in Bermuda with limited liability)

Executive Directors: Mr. Lam Shiu Ming, Daneil (Chairman and Managing Director) Ms. Chiu Suet Ying Mr. Yeung Kim Piu

Independent non-executive Directors: Mr. Ng Kwok Tung Mr. Chiu Shin Koi

Principal Office: 18th Floor Wyler Centre Phase II 192-200 Tai Lin Pai Road Kwai Chung New Territories Hong Kong

Registered Office: Clarendon House 2 Church Street Hamilton HM 11 Bermuda

28th October, 2002

To the Shareholders

Dear Sir or Madam,

GENERAL MANDATE TO REPURCHASE SHARES

INTRODUCTION

At the forthcoming annual general meeting (the “Annual General Meeting”) of Universe International Holdings Limited (the “Company”) to be held at 18th Floor, Wyler Centre Phase II, 192-200 Tai Lin Pai Road, Kwai Chung, New Territories, Hong Kong on 26th November, 2002, the general mandate granted by the shareholders of the Company in the annual general meeting held on dated 26th November, 2001 to the directors of the Company (the “Directors”) to exercise the powers of the Company to repurchase issued and fully-paid up ordinary shares of HK$0.02 each in the capital of the Company (the “Shares”) up to a maximum of 10 per cent of Shares in issue as at 26th November,

* For identification purposes only

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2001 will be expired. An ordinary resolution will be proposed at the Annual General Meeting that the Directors be given a new general mandate to exercise the powers of the Company to repurchase the Shares up to a maximum of 10 per cent. of the share capital of the Company in issue as at the date of the passing of such proposed resolution (“Repurchase Mandate”).

This circular sets out the information required pursuant to rule 10.06(1)(b) of the Rules Governing the Listing of Securities (“Listing Rules”) on The Stock Exchange of Hong Kong Limited (“the Stock Exchange”) to enable you to make an informed decision on whether to vote for or against the resolution to approve the Repurchase Mandate at the Annual General Meeting.

Under the Repurchase Mandate, the Company may repurchase Shares on the Stock Exchange subject to and in accordance with the Listing Rules and the applicable laws of Bermuda, a maximum of 10 per cent. of the issued share capital of the company as at the date of the passing of the relevant resolution granting the general mandate may be repurchased on the Stock Exchange.

As at 25th October, 2002, being the latest practicable date prior to the printing of this circular (the “Latest Practicable Date”), the number of Shares of the Company in issue was 956,403,580 ordinary shares of HK$0.02 each. On the assumption that no further Shares will be issued or repurchased prior to the date of the passing of the resolution granting the proposed Repurchase Mandate, the Directors would be authorised to repurchase up to a maximum of 95,640,358 Shares should the Repurchase Mandate be granted by the shareholders of the Company at the Annual General Meeting.

Further, the shareholders should note that the Repurchase Mandate covers repurchases made or agreed to be made only 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 the applicable laws of Bermuda or the Bye-laws of the Company 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.

INFORMATION TO ASSIST SHAREHOLDERS

The following information is provided to enable the shareholders of the Company to make an informed decision on whether to vote for or against the resolution to approve the granting of the Repurchase Mandate to the Directors to exercise the powers of the Company to repurchase its own Shares:

(i) Listing Rules

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

(a) Shareholder’s approval

The Listing Rules provide that all shares repurchased on the Stock Exchange by a company with its primary listing on the Stock Exchange must be in respect of fully paid up shares and approved in advance by an ordinary resolution, either by way of a specific approval in relation to specific transactions or by a general mandate to the directors of the company to make such repurchases.

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(b) Source of funds

Repurchases must be in cash and made out of funds legally available for such purpose in accordance with the constitutive documents of the company and the laws of the jurisdiction in which the company is incorporated or otherwise established. A listed company may not repurchase its own shares on the Stock Exchange for a consideration other than cash or for settlement otherwise than in accordance with the trading rules of the Stock Exchange from time to time.

(ii) Reasons for Repurchase Mandate

The Directors believe that it is in the best interests of the Company and its shareholders to have a Repurchase Mandate from the shareholders to enable the Directors of the Company to repurchase Shares in the market. Such repurchases may, depending on market conditions and funding arrangements at the time, lead to an enhancement of the net asset value of the Company and/or its earnings per Share. The Directors are seeking the Repurchase Mandate so as to give the Company the flexibility to do so if and when appropriate. The number of Shares to be repurchased on any occasion and the price and other terms upon which the same are repurchased will be decided by the Directors at the relevant time having regard to the circumstances then pertaining. Shareholders can be assured that the Directors would only make such repurchases in circumstances where they believe such repurchases will benefit the Company and its shareholders.

(iii) Funding of repurchases

In repurchasing shares, the Company may only apply funds legally available for such purpose in accordance with its Memorandum of Association and Bye-laws, the Listing Rules and the applicable laws of Bermuda, being funds of the Company which would otherwise be available for dividend or distribution or the proceeds of a fresh issue of Shares made for the purpose of the repurchase. The Directors envisage that the funds required for any repurchase of Shares would be derived from the distributable reserves of the Company.

(iv) Impact on working capital or gearing position

Repurchase of Shares may have a material adverse impact on the working capital or gearing position of the Company (as compared with the position disclosed in the audited financial statements of the Company as at 30th June, 2002) in the event that the Repurchase Mandate is exercised in full during the proposed repurchase period.

However, the Directors do not propose to exercise the Repurchase Mandate to such an extent as would, in the circumstances, have a material adverse effect on the working capital requirements of the Company or the gearing levels which in the opinion of the Directors are from time to time appropriate for the Company.

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(v) Directors, their associates and connected persons

None of the Directors nor, to the best of their knowledge and belief having made all reasonable enquiries, any of their associates has any present intention, in the event that the Repurchase Mandate is approved by the shareholders of the Company, to sell their Shares to the Company or its subsidiaries under the proposed Repurchase Mandate.

No connected persons of the Company (as defined in the Listing Rules) have notified the Company that they have a present intention to sell Shares to the Company or its subsidiaries nor have they undertaken not to sell any of the Shares to the Company or its subsidiaries in the event that the Company is authorised to make repurchases of Shares.

(vi) Undertaking of the Directors

The Directors have undertaken to the Stock Exchange that, so far as the same may be applicable, they will exercise the powers of the Company to make repurchases pursuant to the Repurchase Mandate in accordance with the Listing Rules, the laws of Bermuda, the Company’s Memorandum of Association and Bye-laws.

(vii) Shares repurchased by the Company

• (a) From the commencement date of dealing in the Company’s Shares on 20th July, 1999 to the Latest Practicable Date, no Shares have been repurchased by the Company.

• (b) During each month of the period starting from 1st October, 2001 to 30th September, 2002, the highest and lowest prices at which Shares have traded on the Stock Exchange are as follows:

	Highest	Lowest
	HK$	HK$
2001
October	0.475	0.440
November	0.540	0.460
December	0.650	0.470
2002
January	0.710	0.560
February	0.640	0.560
March	0.660	0.580
April	0.640	0.540
May	0.630	0.580
June	0.620	0.540
July	0.580	0.345
August	0.420	0.360
September	0.405	0.280

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(viii) Hong Kong Code on Takeovers and Mergers (“Takeovers Code”)

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 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 shareholders’ 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 any such increase. As at the Latest Practicable Date, according to the register required to be kept under Section 16(1) of the Securities (Disclosure of Interests) Ordinance showed that the controlling shareholder of the Company, Globalcrest Enterprises Limited controls 60 per cent. of the entire issued share capital of the Company. If the Repurchase Mandate is exercised in full, the controlling interest of Globalcrest Enterprises Limited will increase to approximately 67 per cent. 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 a repurchase of Shares.

The Directors would not exercise the Repurchase Mandate to such an extent that the public shareholding would be reduced to less than 25 per cent. of the issued share capital pursuant to Rule 8.08 of the Listing Rules.

RECOMMENDATIONS

The Directors believe that the proposed Repurchase Mandate is in the best interests of the Company and its shareholders. Accordingly, the Directors recommend you to vote in favour of the resolution to be proposed at the Annual General Meeting.

Yours faithfully Lam Shiu Ming, Daneil Chairman and Managing Director

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