Sunny Optical Technology (Group) Company Limited — Proxy Solicitation & Information Statement 2004

May 3, 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 Hengan International Group Company Limited, you should at once hand this circular, together with the enclosed form of proxy, 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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(Incorporated in the Cayman Islands with limited liability) website: http://www.irasia.com/listco/hk/hengan http://www.hengan.com

GENERAL MANDATES TO ISSUE AND REPURCHASE SHARES

AMENDMENT TO ARTICLES OF ASSOCIATION

A notice convening the Annual General Meeting of Hengan International Group Company Limited to be held at Level 3, Aberdeen Room, JW Marriott Hotel, Pacific Place, 88 Queensway, Hong Kong on Monday, 3rd May, 2004 at 10:00 a.m., is set out on pages 18 to 23 of the Company’s 2003 Annual Report.

Whether or not Shareholders intend to attend the said meeting, they are requested to complete and return the enclosed form of proxy in accordance with the instructions printed thereon as soon as possible and in any event not less than 48 hours before the time appointed for holding the meeting or any adjournment thereof. Completion and return of the form of proxy will not prevent you from attending and voting in person at the meeting or any adjournment thereof should you so wish.

• for identification purposes

23rd March, 2004

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	2
Amendment to Articles of Association . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
General Mandate to Repurchase Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
General Mandate to Issue Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Closure of Register of Members . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Annual General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Responsibility Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Appendix — Explanatory Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6

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DEFINITIONS

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

“Articles”	the Articles of Association of the Company;
“associate(s)”	has the meaning ascribed to it under rule 1.01 of the Listing
	Rules;
“AGM”	the annual general meeting of the Company to be held on 3rd
	May, 2004;
“Board”	the board of Directors or a duly authorised committee of the
	board of Directors;
“Companies Law”	the Companies Law (1998 Revision), as amended, of the
	Cayman Islands;
“Company”	Hengan International Group Company Limited, a company
	incorporated in the Cayman Islands under the Companies
	Law, the securities of which are listed on the Stock Exchange;
“Connected Person”	has the meaning ascribed to it under rules 1.01 of the Listing
	Rules;
“Directors”	the directors of the Company;
“Hong Kong”	the Hong Kong Special Administrative Region of the People’s
	Republic of China;
“Latest Practicable Date”	31st March, 2004, being the latest practicable date for
	ascertaining certain information for inclusion in this circular;
“Listing Rules”	The Rules Governing the Listing of Securities on the Stock
	Exchange;
“Share(s)”	ordinary shares of HK$0.10 in the capital of the Company;
“Shareholder(s)”	holder(s) of Shares of the Company;
“Stock Exchange”	the Stock Exchange of Hong Kong Limited; and
“HK$”	Hong Kong dollars.

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LETTER FROM THE BOARD

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(Incorporated in the Cayman Islands with limited liability)

Executive Directors: Registered Office: Sze Man Bok (Chairman) Ugland House, Hui Chi Lin (Deputy Chairman and South Church Street, Chief Executive Officer) P.O. Box 309, George Town, Yeung Wing Chun Grand Cayman, Cayman Islands, Zhang Shi Pao British West Indies Hung Ching Shan Poon Fuk Chuen Head Office: Xu Da Zuo Hengan Industrial Centre, Xu Chun Man Anhai Town, Jinjiang City, Fujian Province, Non-Executive Directors: PRC

Independent Non-Executive Directors: Chu Cheng Chung Henry Chan Guan Tao Ada Ying Kay Wong

Place of Business in Hong Kong: Units 2101D, 21st Floor, Admiralty Centre, Tower 1, 18 Harcourt Road, Hong Kong

23rd March, 2004

To the Shareholders,

Dear Sir or Madam,

GENERAL MANDATES TO ISSUE AND REPURCHASE SHARES AND AMENDMENT TO ARTICLES OF ASSOCIATION

INTRODUCTION

By an ordinary resolution of the Shareholders passed on 2nd May, 2003, general mandates were granted to the Directors (i) to repurchase, on the Stock Exchange, Shares up to a maximum of 10% of the aggregate nominal amount of the share capital in issue of the Company; (ii) to allot, issue or otherwise deal with Shares up to a maximum of 20% of the total of the aforesaid aggregate nominal amount of share capital in issue of the Company and the number of Shares repurchased (if any) pursuant to the aforesaid general mandate to repurchase Shares. These general mandates will expire at the conclusion of the AGM if they are not revoked or varied by an ordinary resolution of the Shareholders before the AGM.

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LETTER FROM THE BOARD

AMENDMENT TO ARTICLES OF ASSOCIATION

The Securities and Futures (Clearing Houses) Ordinance (Cap. 420 of the Laws of Hong Kong) was repealed on the coming into effect of the Securities and Futures Ordinance on 1st April, 2003, the definition of “recognised clearing house” under Article 2 should be amended accordingly. In addition, amendment should also be made to Articles 89(c), 107(c), 107(f) and 120 so as to conform to the provisions of Appendix 3 to the Listing Rules which will become effective on 31st March, 2004. Further, the definition of “subsidiary and holding company” and Article 80 shall also be amended to be in line with the amendments in the Listing Rules.

To enhance efficiency of the proceedings of the Board, the Directors propose amending Articles 123, 124 and 133 as well as Articles 167(a) and 169 for allowing notices or documents to be served on members of the Company by using electronic means. As such, a new definition for the word “electronic” is required to be added.

In view of the abovementioned changes, a special resolution is therefore proposed at the forthcoming AGM to approve the proposed amendments to the Articles as summarized below.

Article	2	—	the definition of “electronic” to be inserted;
		—	widening the definition of “subsidary and holding company” to
			include the interpretation under the Listing Rules;
		—	amending the definition of “recognised clearing house” to be in line
			with that in the Securities and Futures Ordinance;
Article	80	—	a resolution shall be decided on a show of hands unless a poll is
			required under the Listing Rules;
Acticle	89(c)	—	restriction to voting that, where any Shareholder is, under the Listing
			Rules, required to abstain from voting on any particular resolution or
			restricted to voting only for or only against any particular resolution,
			any votes cast by or on behalf of such shareholder in contravention of
			such requirement or restriction shall not be counted;
Article	107(c)	—	a director may not to vote nor be counted in a quorum on any board
			resolution where he or any of his associates has a material interest;
Article	107(f)	—	definition of “Associates” to be deleted;
Article	120	—	notice to be given when the person proposed for election as a director
			of the Company;
Article	123	—	that a meeting of the Board or a committee of the Board can be held
			by means of a telephone or tele-conferencing, or any other electronic
			means provided that all participants are thereby able to communicate
			each other simultaneously and instantaneously;
Article	124	—	that a notice of Directors meeting can be given to each Director either
			in writing or by telephone or by facsimile, telex or telegram or
			electronic mean at the address or telephone, facsimile or telex number
			from time to time notified to the Company;

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LETTER FROM THE BOARD

Article	133	—	that a resolution in writing signed by each and every one of the
			Directors in writing or by facsimile or other electronic means shall be
			as valid and effectual as if it had been passed at a board meeting;
Article	167(a)	—	that notices or documents can be served on any members of the
			Company by using electronic means; and
Article	169	—	that notices or documents can be served on any members of the
			Company by using electronic means be deemed to have been duly
			served.

GENERAL MANDATE TO REPURCHASE SHARES

Under the Companies Law and the Listing Rules, listed companies are allowed to repurchase their own issued securities. The Articles also enable such securities repurchases to be made. The Directors consider that the power to repurchase Shares increase flexibility in the conduct of the Company’s affairs and is in the interests of its Shareholders.

At the AGM, an ordinary resolution will be proposed that the Directors be given a general mandate to exercise all powers of the Company to repurchase Shares subject to the Articles, the applicable law and relevant regulatory requirements. Shareholders should note that the maximum number of Shares that may be repurchased pursuant to the mandate as set out in Resolution No. 6 of the notice of AGM on page 19 of the Company’s Annual Report will be such number of Shares not exceeding 10% of the aggregate nominal amount of the share capital of the Company in issue at the date of the resolution (the “Share Repurchase Mandate”). A resolution authorizing the extension of the mandate as set out in Resolution No. 5 of the notice of AGM to the Directors to issue additional Shares by the number of Share repurchased (if any) under the repurchase mandate (as set out in Resolution No. 6) will be proposed as Resolution No. 7 at the AGM.

Appendix to this circular contains the Explanatory Statement required under the Listing Rules that gives all the information reasonably necessary to enable Shareholders to make an informed decision in connection with their approval of the Share Repurchase Mandate.

GENERAL MANDATE TO ISSUE SHARES

An ordinary resolution will also be proposed at the AGM for the grant of a general mandate to the Directors to issue, allot or otherwise deal with additional Shares of the Company up to a maximum of 20% of the aggregate nominal amount of the issued capital of the Company as at the date of the resolution.

CLOSURE OF REGISTER OF MEMBERS

The register of members of the Company will be closed from 28th April, 2004 to 3rd May, 2004, both days inclusive, during which period no transfer of shares can be registered. To qualify for attending the AGM, shareholders must ensure that all transfer documents accompanied by the relevant share certificates must be lodged with the Company’s share registrar, Abacus Share Registrars Limited at G/F., Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong for registration not later than 4:00 p.m. on 27th April, 2004.

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LETTER FROM THE BOARD

ANNUAL GENERAL MEETING

The AGM will be held at Level 3, Aberdeen Room, JW Marriott Hotel, Pacific Place, 88 Queensway, Hong Kong on Monday, 3rd May, 2004 at 10:00 a.m. The notice of AGM is set out on pages 18 to 23 of the Company’s 2003 Annual Report. Resolutions in respect of the general mandates and amendment to the Articles as referred to above will be proposed, amongst others, at the AGM.

A form of proxy for use at the AGM is enclosed. Whether or not you are able to attend the AGM, you are requested to complete and return the form of proxy to the Company’s share registrars, Abacus Share Registrars Limited at G/F, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong as soon as possible, and in any event not less than 48 hours before the time appointed for holding of the meeting. Completion and return of the form of proxy will not preclude you attending and voting at the AGM should you so wish.

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 material facts not contained in this circular, the omission of which would make any statement in this circular misleading.

RECOMMENDATION

The Directors believe the general mandates to repurchase and issue Shares and the amendment to the Articles of Association are in the interests of the Company and Shareholders, and accordingly recommend you to vote in favour of all the relevant resolutions to be proposed at the AGM.

ADDITIONAL INFORMATION

The purpose of this circular is to provide you with information regarding the proposed amendment to the Articles of Association.

Your attention is also drawn to the Explanatory Statement as set out in the Appendix to this circular.

By order of the Board Sze Man Bok Chairman

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EXPLANATORY STATEMENT

APPENDIX

(a) Proposed Share Repurchase Mandate

It is proposed that the Directors may exercise the powers of the Company to repurchase up to 10% of the Shares in issue as at the date of the passing of the resolution to approve the granting to the Directors the Shares Repurchase Mandate. At the Latest Practicable Date the number of Shares in issue was 1,039,866,455 shares. Accordingly, the exercise of the Share Repurchase Mandate in full (being the repurchase of 10% of the Shares in issue as at the date of the passing of the resolution to approve the Share Repurchase Mandate) would enable the Company to repurchase 103,986,645 shares.

(b) Reasons for Repurchases

Repurchases of Shares will only be made if the Directors believe that such repurchases will benefit the Company and its shareholders. Such repurchases may, depending on market conditions and funding arrangements at the time, lead to an enhancement of the net value of the Company and its assets and/or its earnings per share.

(c) Funding of Repurchases

In repurchasing securities, the Company may only apply funds legally available for such purpose in accordance with the Articles, the Listing Rules and the applicable laws of the Cayman Islands.

There might be a material adverse impact on the working capital or gearing position of the Company in the event that the Share Repurchase Mandate is exercised in full. However, the Directors do not propose to exercise the Share 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.

(d) Undertaking

None of the Directors or, to the best of their knowledge having made all reasonable enquiries, any of their Associates has any present intention to sell Shares to the Company or its subsidiaries if the Share Repurchase Mandate is granted.

The Directors have undertaken to the Stock Exchange that, so far as the same may be applicable, they will exercise the repurchase mandate in accordance with the Articles, the Listing Rules and the applicable laws of the Cayman Islands.

No Connected Person has notified the Company that he has a present intention to sell Shares to the Company, or has undertaken not to do so, in the event that the repurchase mandate is granted.

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EXPLANATORY STATEMENT

APPENDIX

(e) Hong Kong Codes on Takeovers and Mergers and Share Repurchases

If on the exercise of the power to repurchase Shares pursuant to the Share Repurchase Mandate, a shareholder’s proportionate interest in the voting rights of the Company increases, such increase will be treated as an acquisition for the purposes of Rule 32 of the Code on Takeovers and Mergers (“Takeover Code”). As a result, a shareholder or a group of shareholders acting in concert, 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 Rules 26 and 32 of the Takeover Code. The Directors are not aware of any consequences which may arise under the Takeover Code as a result of any repurchase made under the Share Repurchase Mandate.

(f) Share Prices

The highest and lowest prices at which Shares of the Company had been traded on the Stock Exchange during each of the previous twelve months before the Latest Practicable Date, were as follows:

	**Share **	Price
	Highest	Lowest
	(HK$)	(HK$)
2003
April	2.650	2.350
May	2.825	2.400
June	3.150	2.725
July	3.250	2.925
August	3.450	3.025
September	3.800	3.375
October	3.650	3.400
November	3.800	3.475
December	4.225	3.575
2004
January	4.400	3.875
February	5.050	4.225
March	5.850	4.800

(g) Share Repurchase Made By the Company

During the six months prior to the printing of this annual report, the Company had not purchased any of its Shares.

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