Television Broadcasts Limited — Proxy Solicitation & Information Statement 2002

Jul 30, 2002

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 a 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 Yew Sang Hong (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 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.

Yew Sang Hong (Holdings) Limited

(Incorporated in Cayman Islands with limited liability)

DISCLOSEABLE TRANSACTION

19 July 2002

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	ii
Letter from the Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Appendix — General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6

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DEFINITIONS

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

“associates”	has the meaning ascribed to in the Listing Rules
“Board”	the board of Directors, including independent non-executive
	Directors
“CCASS”	the Central Clearing and Settlement System established and
	operated by Hong Kong Securities Clearing Company
	Limited
“China Legend”	China Legend International Limited, a company incorporated
	in Hong Kong with limited liability and indirectly wholly
	owned by the Company
“Company”	Yew Sang Hong (Holdings) Limited, a company incorporated
	in the Cayman Islands with limited liability, the shares of
	which are currently listed on and dealt in the Stock Exchange
“Dagong International”	大公國際資信評估有限公司(Dagong International Credit
	Rating Company Limited), a company incorporated in the
	PRC with limited liability
“Director(s)”	the director(s), including the independent non-executive
	directors, of the Company
“Group”	the Company and its subsidiaries
“Hong Kong”	the Hong Kong Special Administrative Region of the PRC
“JV Company”	大公信用信息服務有限公司(Dagong Credit Information
	Service Co., Ltd.), the sino-foreign equity joint venture to
	be established under the laws of the PRC in accordance
	with the terms of the Agreements
“Latest Practicable Date”	17 July 2002, being the latest practicable date for
	ascertaining certain information contained in this circular
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange
“PRC”	the People’s Republic of China

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DEFINITIONS

“Share(s)”	share(s) of HK$0.10 each in the share capital of the
	Company
“Shareholders”	holders of Shares
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong
“RMB”	Renminbi, the lawful currency of the PRC

Note: For the purpose of this circular, all amounts in Renminbi were translated into Hong Kong dollars at an exchange rate of RMB1.00 : HK$0.943

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LETTER FROM THE BOARD

Yew Sang Hong (Holdings) Limited

(Incorporated in Cayman Islands with limited liability)

Executive Directors:

Mr. Lai Sai Sang, Chairman Ms. Leung Sau Che, Jennifer Mr. Chuk Wai Chun, Winston Mr. Lee Yu Leung Mr. Hon Ming Kong Mr. Zhang Dachun

Registered Office: Ugland House P.O. Box 309 George Town Grand Cayman Cayman Islands British West Indies

Independent non-executive Directors:

Mr. Lam Kwok Cheong Mr. Wong Tik Tung Mr. Ip Ying Chuen Mr. Lau Chun Kay

Head Office and Principal Place of Business: 13th Floor Hing Yip Centre 37 Beech Street Tai Kok Tsui Kowloon Hong Kong 19 July 2002

To the Shareholders

Dear Sir or Madam,

DISCLOSEABLE TRANSACTION

INTRODUCTION

On 28 June 2002, the Board announced that on 27 June 2002 China Legend, an indirect wholly-owned subsidiary of the Company, has entered into the Agreements with Dagong International in relation to the formation of a joint venture company in the PRC.

The Directors consider that the Agreements are in the interest of the Company and that the terms of the Agreements are fair and reasonable so far as the Shareholders are concerned.

The transaction contemplated under the Agreements constitutes a discloseable transaction for the Company under the Listing Rules. The purpose of this circular is to give the Shareholders further information on the Agreements.

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LETTER FROM THE BOARD

THE AGREEMENTS (COMPRISING A CO-OPERATIVE AGREEMENT, A JOINT VENTURE AGREEMENT AND A CAPITAL INJECTION AGREEMENT) DATED 27 JUNE 2002

Parties

• Party A: 大公國際資信評估有限公司(Dagong International Credit Rating Company Limited), a company incorporated in the PRC with limited liability

• Party B: China Legend International Limited, a company incorporated in Hong Kong with limited liability and indirectly wholly owned by the Company

Dagong International and its beneficial owners are independent third parties not connected with the Company, directors, chief executive, substantial shareholders of the Company or its subsidiaries or their respective associates.

Formation of the JV Company

China Legend and Dagong International as the joint venture parties shall as soon as practicable after the execution of the Agreements to establish the JV Company in Beijing in accordance with the laws and regulations of the PRC.

The registered capital of the JV Company shall be RMB80,000,000 (approximately HK$75,440,000). Each of China Legend and Dagong International shall inject into the JV Company RMB40,000,000 (approximately HK$37,720,000) in cash as registered capital within six months from the date of issue of the business licence of the JV Company which is expected to fall within one month from the date of submission of the Agreements for approval. Pursuant to the Agreements, there is no financial commitment on the part of China Legend or Dagong International in the JV Company other than the capital injection. Further announcement will be made by the Company if there is any material development.

As stated in the announcement of the Company dated 21 May 2002 in relation to a placing of new Shares, HK$68 million of the net proceeds of the placing is expected to be retained for the future operation of the new securities firm to be established by the Company in Hong Kong. It was also indicated in the same announcement that, in the event that the Directors are able to secure any appropriate investment opportunities for the Group prior to the commencement of business of the securities firm, the net proceeds retained for the securities business operation of the Group may be applied for such investment purpose. As the Group is yet to commence its securities business, the Directors intend to utilise a sum of HK$40 million out of the total net proceeds of the placing for the formation of the JV Company.

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LETTER FROM THE BOARD

Other terms

Pursuant to the Agreements, the term of the co-operative agreement shall be 20 years and China Legend and Dagong International agreed that:

1. both the JV Company and Dagong International shall have the right to use “Dagong” as their trade name;

2. the JV Company shall have the right to use the credit rating and analysis technology and credit risks illustration technology, which proprietary rights are currently owned by Dagong International;

3. Dagong International will grant the exclusive agency right for various kinds of credit information to the JV Company;

4. Dagong International and the JV Company shall jointly operate the web site, namely, www.dagongcredit.com, which is currently owned by Dagong International;

5. the JV Company shall have the priority right to purchase from Dagong International the copy rights of all the credit rating reports completed since its establishment (including but not limited to rating reports for corporate bonds, convertible bonds of listed companies, financial position of listed companies and corporate borrowers) and all other kinds of credit information;

6. the JV Company, as an associated company of Dagong International, has not obtained any right to engage in credit rating services independently. Likewise, Dagong International undertakes not to engage nor to operate with other institutions to engage in the sales of credit rating products. China Legend also undertakes not to incorporate on its own, or with other parties, nor to support companies which are engaged in business similar to the JV Company; and

7. the JV Company could share the copy rights of credit rating products of Dagong International in the future by means of copy rights purchase agreements.

Save for the purchase of copy rights of the credit rating reports or other products by the JV Company from Dagong International as set out in items 5 and 7 above, there are no costs for the rights conferred by Dagong International on the JV Company. The purchase price for the copy rights of credit rating products has not been determined at this stage and will be negotiated on arm’s length basis and based on normal commercial terms for each transaction.

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LETTER FROM THE BOARD

Pursuant to the Agreements, the board of directors of the JV Company shall comprise four executive directors and one non-executive director. Each of China Legend and Dogang International will appoint two directors to the board of directors of the JV Company and the tenor of the appointment will be three years. The chairman of the JV Company will be appointed by Dogang International but no casting vote will be granted to the chairman of the JV Company. It is expected that the JV Company will be jointly controlled by China Legend and Dogang International. As the Group will be interested in 50 per cent. of the equity interest in the JV Company, it is the intention of the Directors that the investment of the Group in the JV Company will be treated by way of equity accounting in the financial statements of the Group.

INFORMATION ON DAGONG INTERNATIONAL AND THE JV COMPANY

Dagong International was established in 1994 and was approved by the People’s Bank of China and the State Economic and Trade Commission as a national credit rating institution. Since 1999, Dagong International has established 12 offices in major cities and provinces in the PRC and is planning to increase the number of its offices to 20 by the end of 2002. Dagong International is one of the leading institutions principally engaged in credit rating for (i) various kinds of enterprises, including industrial and commercial enterprises, banks, securities houses, insurance companies and other enterprises; (ii) corporate borrowers and guarantors; and (iii) securities and other financial instruments. Dagong International is also engaged in the provision of financial consultancy services, credit management consultancy services, economic management consultancy services, feasibility study of projects and valuation of non-state owned assets, and has also participated in assessing the operation and management of over 100 branches of various banks in Beijing and devising corporate reorganisation plans for a number of industrial enterprises. In 1999, Dagong International had formed a strategic alliance with Moody’s for the purpose of the development of an advanced credit rating and assessment system which is applicable to the capital market in the PRC. Currently, there is only one other national credit rating institution providing similar credit rating services as Dagong International in the PRC.

The JV Company is expected to be principally engaged in the provision of various kinds of credit information services to local and overseas institutional investors, financial institutions, regulatory authorities, government departments and economic research houses. The revenue model of the JV Company includes membership fees from corporate members, sales of credit rating reports and credit research reports and service charges for access to its data base.

REASONS FOR THE FORMATION OF THE JV COMPANY

The Group is principally engaged in electrical engineering contracting business and electrical and component trading business in Hong Kong and the PRC.

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LETTER FROM THE BOARD

As mentioned in the 2001 interim report of the Company, the Directors have always been exploring investment opportunities in the PRC for the Group with an objective to capture any business potential arising as a result of the growing economy of the PRC. To diversify the business portfolio of the Group, the Company has established certain companies to engage in corporate and business consultancy and securities businesses. In anticipation of the upsurge of investment activities in the capital market of the PRC after the accession of the PRC into the World Trade Organisation and taking advantage of the reputation and expertise of Dagong International in the credit rating industry of the PRC, the Directors believe that the formation of the JV Company represents an excellent opportunity for the Company to invest in a unique business with vast market potential. To enhance the profile and expertise of the management in the PRC market, the Company has appointed Mr. Zhang Da Chun as an executive Director. Mr. Zhang Da Chun has extensive experience in the PRC as well as overseas market and has served on the board of reputable red-chip companies listed on the Stock Exchange. Mr. Zhang has also served as the Chairman of another credit rating institution in the PRC.

As the capital injection for the formation of the JV Company of RMB40,000,000 (approximately HK$37,720,000) will be financed by the placing proceeds of the Company, it is expected that there will be no material effect on the gearing and the net assets position of the Group.

ADDITIONAL INFORMATION

Your attention is drawn to the additional information contained in the appendix to this circular.

Yours faithfully, By order of the Board Lai Sai Sang Chairman

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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 the 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. DISCLOSURE OF INTERESTS

• (a) As at the Latest Practicable Date, the interests of the Directors in the share capital of the Company and its associated corporations which require notification pursuant to Section 28 of the SDI Ordinance (including interests which any such director is deemed or taken to have under Section 31 of, or Part I of the Schedule to, the SDI Ordinance), or which are required to be entered into the register maintained by the Company under Section 29 of the SDI Ordinance or which require notification, pursuant to the Model Code for Securities Transactions by Directors of Listed Company were as follows:

(i) Interests in Shares

	Number of Shares held
Name	Corporate interests
Mr. Lai Sai Sang_(Note 1)_	78,702,000
Mr. Hon Ming Kong_(Note 2)_	56,000,000

Notes:

1. These Shares are owned by YSH Investment Limited which is a company as to 90.4 per cent. owned by Mr. Lai Sai Sang.

2. These Shares are owned by Highworth Venture Limited which is a company wholly owned by Mr. Hon Ming Kong.

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GENERAL INFORMATION

APPENDIX

(ii) Interests in options to subscribe for Shares

As at the Latest Practicable Date, the following Directors held options under the share option scheme:

	Exercise		Number of
	price	Exercise	share options
Name	(HK$)	period	outstanding
Mr. Lee Yu Leung	1.4944	1 September 2002 to	2,000,000
		1 September 2007
Mr. Zhang Dachun	3.3000	9 October 2002 to	2,000,000
		9 October 2007
Mr. Hon Ming Kong	4.9680	14 November 2002 to	2,000,000
		14 November 2007

(iii) Interests in subsidiaries

Each of Mr. Lai Sai Sang and Ms. Leung Sau Che, Jennifer interests in their personal capacity in the following number of non-voting deferred shares in the following subsidiaries of the Company:

	Yew Sang	Yew Sang Hong	Brongham Park
	Hong Limited	Trading Limited	Limited
Mr. Lai Sai Sang	1,252,401 shares	1 share of	100,000 shares of
	of HK$10 each	HK$10 each	HK$10 each
			(Note)
Ms. Leung Sau Che,
Jennifer	1 share of	1 share of	—
	HK$10 each	HK$10 each

Note: Including one share held by Ms. Leung Sau Che, Jennifer on trust for Mr. Lai Sai Sang.

Save as disclosed herein, none of the Directors or their associates had any interests in the securities of the Company or any of its associated corporations as defined in the SDI Ordinance which require notification pursuant to Section 28 of the SDI Ordinance (including interests which any such Director is deemed or taken to have under Section 31 of, or Part I of the Schedule to, the SDI Ordinance), or which are required to be entered

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GENERAL INFORMATION

APPENDIX

into the register maintained by the Company under Section 29 of the SDI Ordinance or which require notification, pursuant to the Model Code for Securities Transactions by Directors of Listed Companies.

• (b) As at the Latest Practicable Date, none of the Directors had any existing or proposed service contract with any member of the Group (other than agreements expiring or determinable by the Group within one year without payment of compensation, other than statutory compensation).

3. SUBSTANTIAL SHAREHOLDER’S INTERESTS

So far as is known to any Director or chief executive of the Company, the following Shareholder was, directly or indirectly, interested in 10 per cent. or more of the issued share capital of the Company as recorded in the register required to be kept under Section 16 of the SDI Ordinance as at the Latest Practicable Date:

	Number of
Name	Shares held	Shareholding
YSH Investments Limited_(Note 1)_	78,702,000	35.2 per cent.
Highworth Venture Limited_(Note 2)_	56,000,000	25.0 per cent.
AWH Fund Limited_(Note 3)_	25,981,000	11.6 per cent.

Notes:

1. YSH Investments Limited is a company beneficially owned by Mr. Lai Sai Sang and his wife, Chairman of the Company and a Director respectively.

2. Highworth Venture Limited is a company beneficially owned by Mr. Hon Ming Kong, a Director.

3. Based on the information provided by the SDI unit of the Stock Exchange on 26 June 2002.

Save as disclosed herein, no other person was recorded in the register kept pursuant to Section 16 of the SDI Ordinance as having, directly or indirectly, an interest in 10 per cent. or more of the issued share capital of the Company as at the Latest Practicable Date.

4. LITIGATION

As at the Latest Practicable Date, neither the Company nor any of its subsidiaries is engaged in litigation or arbitration of material importance in which the Company or any of its subsidiaries are engaged and litigation or claims of material importance which are pending or threatened by or against the Company of any of its subsidiaries.

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GENERAL INFORMATION

APPENDIX

5. MISCELLANEOUS

• (a) The secretary of the Company is Mr. Lai Yau Hong, Thomson. He is an associate member of both the Institute of Chartered Secretaries and Administrators and The Hong Kong Institute of Company Secretaries.

• (b) The registered office of the Company is located at Ugland House, P.O. Box 309, George Town, Grand Cayman, Cayman Islands, British West Indies The head office and principal office of the Company in Hong Kong is located at 13th Floor, Hing Yip Centre, 37 Beech Street, Tai Kok Tsui, Kowloon, Hong Kong.

• (c) The Hong Kong branch registrars and transfer office of the Company are Computershare Hong Kong Investor Services Limited at Room 1901-5, 19/F., Hopewell Centre, 183 Queen’s Road East, Hong Kong.

• (d) The English text of the circular shall prevail over the Chinese text.

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