Television Broadcasts Limited — Proxy Solicitation & Information Statement 2004

Mar 11, 2004

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

Important: 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 licensed securities dealer, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Hong Tong Holdings Limited, you should at once hand this circular to the purchaser(s) or transferee(s) or to the bank, licensed securities dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser(s) or transferee(s).

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this document, 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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HONG TONG HOLDINGS LIMITED 泓通控股有限公司

(Incorporated in the Cayman Islands with limited liability)

DISCLOSEABLE TRANSACTION

TERMINATION OF THE CO-OPERATION AGREEMENT AND

ENTERING INTO OF TRIPARTITE CO-OPERATION AGREEMENT FOR THE FORMATION OF

JOINT VENTURE

IN

THE PEOPLE’S REPUBLIC OF CHINA

9 March 2004

CONTENTS

	Pages
Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
The Dongguan JV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
The Tripartite Co-operation Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Undertaking from BCS General Energy & Environment . . . . . . . . . . . . . . . . . . . .	9
Reasons for entering into of the Tripartite Co-operation Agreement . . . . . . . . . .	10
Financial effects of the formation of the Dongguan JV on the Group . . . . . . . . .	10
Prospects of the Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
Additional information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
Appendix – General information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13

– i –

DEFINITIONS

In this circular, unless otherwise defined, terms used herein shall have the following meaning:

“24 December 2003 Announcement” the announcement made by the Company dated 24 December 2003 relating to, among other things, the entering into of the Co-operation Agreement; “Announcement” the announcement made by the Company dated 17 February 2004 relating to, among other things, the termination of the Co-operation Agreement and the entering into of the Tripartite Co-operation Agreement;

• “associates” has the meaning ascribed thereto in the Listing Rules;

“Beijing Xuce” 北京旭策置業有限公司 (Beijing Xuce Development Co., Ltd.)*, a company incorporated in the PRC and is interested in approximately 32.89% of the issued share capital of BCS General Energy & Environment. It is an independent third party and not a connected person of the Company within the meaning of the Listing Rules and is not related to China Sciences Group;

• “Board” the board of Directors; “BCS General Energy 北京中科通用能源環保有限責任公司 (Beijing China & Environment” Sciences General Energy & Environment Co., Ltd.)*, a company incorporated in the PRC and owned as to approximately 36.84% by China Sciences Group, as to approximately 32.89% by Beijing Xuce and as to approximately 30.27% by 20 individuals who are independent third parties and not connected persons of the Company within the meaning of the Listing Rules;

“China Sciences Group” 中科實業集團（控股）公司 (China Sciences Enterprise Group (Holding) Corporation)*, a large scale enterprise group established by 中國科學院 (Chinese Academy of Science); “Company” Hong Tong Holdings Limited, a company incorporated in the Cayman Islands with limited liability, the shares of which are listed on the Stock Exchange;

– 1 –

DEFINITIONS

“Co-operation Agreement”	the co-operation agreement dated 24 December 2003 entered
	into between HTH and China Sciences Group relating to
	the formation of the Dongguan JV, particulars of which are
	set out in the 24 December 2003 Announcement;
“Directors”	the directors of the Company;
“Dongguan JV”	the equity joint venture to be named東莞中科環保電力有
	限公司(Dongguan China Sciences Conservational Power
	Co., Ltd.)* and to be established in Dongguan, the PRC
	pursuant to the Tripartite Co-operation Agreement;
“Framework Agreement”	the framework agreement dated 2 December 2003 and
	entered into between HTH and China Sciences Group
	relating to the formation of the Dongguan JV;
“Group”	the Company and its subsidiaries;
“Guangzhou Huandao”	廣州保稅區環島貿易有限公司(Guanzhou Tax Bond
	District Huandao Trading Co., Ltd.)*, a company
	incorporated in the PRC and owned as to 52% by廣州恆業
	創興科技投資有限公司(Guangzhou Hang Yip Chong Hing
	Technology Investment Co., Ltd.)* and as to 48% by劉健
	先生. Both廣州恆業創興科技投資有限公司(Guangzhou
	Hang Yip Chong Hing Technology Investment Co., Ltd.)*
	and劉健先生are independent third parties and not
	connected persons of the Company within the meaning of
	the Listing Rules;
“HTH”	Hong Tong Hai Investments Limited, a company incorporated
	in Hong Kong with limited liability and an indirect wholly-
	owned subsidiary of the Company;
“Hong Kong”	The Hong Kong Special Administrative Region of the PRC;
“Latest Practicable Date”	5 March 2004, being the latest practicable date prior to the
	printing of this circular for ascertaining certain information
	contained herein;

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DEFINITIONS

“Letter of Intent”	the letter of intent entered into between HTH and Beijing
	Xuce on 17 February 2004 in relation to the Proposed
	Acquisition;
“Listing Rules”	The Rules Governing the Listing of Securities on the Stock
	Exchange;
“PRC”	The People’s Republic of China, which, for the sole purpose
	of this circular shall exclude Hong Kong, The Macau Special
	Administrative Region of the People’s Republic of China
	and Taiwan;
“Placing”	the placing of 53,712,000 new Shares as described in the
	Announcement;
“Proposed Acquisition”	the proposed acquisition of an approximately 32.89% interest
	in BCS General Energy & Environment;
“SFO”	Securities and Futures Ordinance (Chapter 571 of the Laws
	of Hong Kong);
“Share(s)”	ordinary share(s) of HK$0.10 each in the share capital of
	the Company;
“Share Option Schemes”	the share option scheme adopted by the Company 3 April
	2001 and terminated on 12 February 2003 and the share
	option scheme adopted by the Company on 12 February
	2003;
“Shareholder(s)”	holder(s) of Shares;
“Stock Exchange”	The Stock Exchange of Hong Kong Limited;
“Tripartite Co-operation	the co-operation agreement dated 13 February 2004 and
Agreement”	entered into among HTH, China Sciences Group and
	Guanzhou Huandao, the particulars of which are set out in
	the paragraph headed “The Dongguan JV – The Tripartite
	Co-operation Agreement” in the letter from the Board;

– 3 –

DEFINITIONS

“HK$”	Hong Kong dollars, the lawful currency of Hong Kong;
“RMB”	Reminbi, the lawful currency of the PRC; and
“%”	per cent.

• for identification purposes only

In this circular, HK$1.00 is equivalent to RMB1.06. The conversion rate is for the purpose of illustration only and does not constitute a representation that any amounts have been, could have been, or may be exchanged at the aforementioned or any other rates.

– 4 –

LETTER FROM THE BOARD

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HONG TONG HOLDINGS LIMITED 泓通控股有限公司

(Incorporated in the Cayman Islands with limited liability)

Executive Directors: Mr. Hon Ming Kong (Chairman) Mr. Hon Yik Kwong Mr. Lee Yu Leung

Independent Non-executive Directors: Mr. Tsoi Wai Kwong Mr. Fork Siu Lun, Tommy

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

Head Office and Principal Place of Business in Hong Kong: Unit 3616, 36th Floor China Merchants Tower Shun Tak Centre 168-200 Connaught Road Central Sheung Wan Hong Kong 9 March 2004

To the Shareholders

Dear Sir or Madam,

DISCLOSEABLE TRANSACTION

TERMINATION OF THE CO-OPERATION AGREEMENT AND

ENTERING INTO OF A TRIPARTITE CO-OPERATION AGREEMENT FOR THE FORMATION OF JOINT VENTURE IN THE PEOPLE’S REPUBLIC OF CHINA

INTRODUCTION

References is made to the circulars issued by the Company dated 27 October 2003 and 14 January 2004 and the announcements made by the Company dated 7 October, 28 November and 2 December 2003, respectively, and the 24 December 2003 Announcement relating to, among others,

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LETTER FROM THE BOARD

the possibility of formation of joint venture companies in the PRC between the Group and China Sciences Group to carry out the business of waste incineration and processing in the PRC and the entering into of a framework agreement on 2 December 2003 for the Dongguan JV.

On 17 February 2004, it was announced that HTH, China Sciences Group and Guangzhou Huandao entered into the Tripartite Co-operation Agreement relating to, among other things, the termination of the Co-operation Agreement and the formation of the Dongguan JV for the waste incineration and processing business project in Dongguan, the PRC.

The formation of the Dongguan JV constitutes a discloseable transaction for the Company under the Listing Rules and is subject to the disclosure requirements set out in Rule 14.13 of the Listing Rules.

The purpose of this circular is to provide to Shareholders further information regarding the termination of the Co-operation Agreement, the terms of the Tripartite Co-operation Agreement, the formation of the Dongguan JV and the diversification of the business of the Group into the business of waste incineration and processing.

THE DONGGUAN JV

Further to the Framework Agreement dated 2 December 2003, HTH and China Sciences Group on 24 December 2003 entered into the Co-operation Agreement relating to the formation of the Dongguan JV for the waste incineration and processing business project in Dongguan, the PRC. The Co-operation Agreement sets out the detail terms of the Dongguan JV on the basis of the basic terms set out in the Framework Agreement. Details of the Co-operation Agreement were set out in the 24 December 2003 Announcement and the circular issued by the Company dated 14 January 2004, respectively.

The Tripartite Co-operation Agreement

Subsequent to the entering into of the Co-operation Agreement, for the reasons set out in the paragraph headed “Reasons for entering into of the Tripartite Co-operation Agreement” below, HTH and China Sciences Group agreed to join Guangzhou Huandao as a partner to the Dongguan JV. HTH, China Sciences Group and Guangzhou Huandao on 13 February 2004 entered into the Tripartite Co-operation Agreement for the termination of the Co-operation Agreement and the formation of the Dongguan JV for the waste incineration and processing business project in Dongguan, the PRC.

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LETTER FROM THE BOARD

Pursuant to the Tripartite Co-operation Agreement, HTH and China Sciences Group agreed to terminate the Framework Agreement and the Co-operation Agreement. All rights and obligations of HTH and China Sciences Group under the Framework Agreement and the Co-operation Agreement shall cease and neither party shall have any liabilities towards the other party under the Framework Agreement and the Co-operation Agreement.

With the termination of the Co-operation Agreement and the entering into of the Tripartite Co-operation Agreement, the terms for the formation of the Dongguan JV will be governed by the Tripartite Co-operation Agreement. The terms of the Tripartite Co-operation Agreement for the formation of the Dongguan JV are the same as those of the Co-operation Agreement save and except (i) the percentage of equity interest of the Group in the Dongguan JV; and (ii) the amount of contribution to the registered capital of the Dongguan JV to be made by the Group.

The following are the principal terms of the Dongguan JV in accordance with the terms of Tripartite Co-operation Agreement:

Parties : (1) HTH, an indirect wholly owned subsidiary of the Company; (2) China Sciences Group; and (3) Guangzhou Huandao.

China Sciences Group, Guangzhou Huandao and their respective beneficial owners are not connected persons of the Company within the meaning of the Listing Rules.

Registered capital : The registered capital of the Dongguan JV will be RMB100,000,000 (equivalent to approximately HK$94.3 million) and to be contributed as to RMB51 million (equivalent to approximately HK$48.1 million) by HTH, as to RMB10 million (equivalent to approximately HK$9.4 million) by China Sciences Group and as to RMB39 million (equivalent to approximately HK$36.8 million) by Guangzhou Huandao, in proportion to their respective equity interest in the Dongguan JV.

The registered capital is to be paid by the parties in one lump sum within 5 days from the date of the issue of the business licence for the Dongguan JV. The Group’s contribution to the registered capital of the Dongguan JV will be funded as to approximately HK$41.6 million by the proceeds from the Placing and as to remaining approximately HK$6.5 million by the part of the proceeds from the placing as announced in an announcement made by the Company dated 23 September 2003.

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LETTER FROM THE BOARD

The registered capital is determined by the parties by arm’s length negotiation taking into account the cost required to set up the operation of the Dongguan JV, which includes the expected cost for purchasing the requisite equipment, construction of the plant and initial working capital for the operation of the Dongguan JV.

• Total investment : The total investment of the Dongguan JV will be RMB322 million (equivalent to approximately HK$303.6 million). The portion of the total investment in excess of the registered capital in the amount of RMB222 million (equivalent to approximately HK$209.3 million) will be raised by the Dongguan JV by way of external borrowings.

• Term : The term of the Dongguan JV will be 25 years from the date of the issue of the business licence of the Dongguan JV.

• Equity ratio : The Dongguan JV will be held as to 51% by HTH, as to 10% by China Sciences Group and as to 39% by Guangzhou Huandao.

• Profit and loss : Profit and loss of the Dongguan JV will be shared by HTH, sharing ratio China Sciences Group and Guangzhou Huandao in the proportion of 51%, 10% and 39%, respectively, in proportion to their respective equity interest.

• Board representation :

• Under the Tripartite Co-operation Agreement, the board of the Dongguan JV will comprise of not more than 10 directors to be appointed by HTH, China Sciences Group and Guangzhou Huandao in proportion to their respective equity interest in the Dongguan JV.

However, the parties agreed that the board of directors will initially be comprised of 7 directors, to be appointed as to 3 directors by HTH, as to 2 directors by China Sciences Group and as to 2 directors by Guangzhou Huandao. The chairman and the vicechairman of the board of directors of the Dongguan JV will be a director nominated by HTH and Guangzhou Huandao, respectively. Should the parties decided to appoint up to the maximum number of directors, based on the current board composition, HTH will be entitled to appoint two directors and Guangzhou Huandao will be entitled to appoint one director.

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LETTER FROM THE BOARD

Scope of business : The Dongguan JV will carry out waste incineration and processing business in Dongguan, the PRC.

The formation of the Dongguan JV is subject to the approval by the relevant PRC authorities. In the event, the relevant approval cannot be obtained within 120 days from the date of the Tripartite Co-operation Agreement, that is, 11 June 2004, any one party can terminate the Tripartite Co-operation Agreement without further liability to the other parties.

The terms of the Tripartite Co-operation Agreement are agreed upon after arm’s length negotiation between the parties and the Directors are of the view that the terms of the Tripartite Co-operation Agreement are fair and reasonable in so far as the Shareholders are concerned.

Further announcement will be made by the Company in the event of any change in the terms relating to the Dongguan JV as set out in the Tripartite Co-operation Agreement.

Undertaking from BCS General Energy & Environment

On 13 February 2004, BCS General Energy & Environment has also given an undertaking to HTH and Guangzhou Huandao undertaking to provide to the Dongguan JV the necessary technical support for the carrying out of the business of waste incineration and processing upon formation of the Dongguan JV and will enter into a technology support agreement for the provision of such services. The undertaking was given in substitution for and on the same terms as the one given by BCS General Energy & Environment to HTH on 24 December 2003. Details of the services to be provided by BCS General Energy & Environment have yet to be agreed between BCS General Energy & Environment and Dongguan JV upon its formation.

Upon formation of the Dongguan JV, the Dongguan JV will become an indirect subsidiary of the Company. BCS General Energy & Environment, being a 54.9% subsidiary of China Sciences Group, which is interested in 10% of the equity interest of the Dongguan JV and a substantial shareholder of the Dongguan JV, will become a connected person of the Company within the meaning of the Listing Rules upon formation of the Dongguan JV. The provision of technology support services by BCS General Energy & Environment to Dongguan JV will constitute on-going connected transactions of the Company. The Company will comply with all the requirements of the Listing Rules in relation to the provision of technology support services by BCS General Energy & Environment to Dongguan JV upon finalization of the terms of the technology support agreement and the entering into of the same.

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LETTER FROM THE BOARD

Reasons for the entering into of the Tripartite Co-operation Agreement

As mentioned in the 24 December 2003 Announcement and the circular issued by the Company dated 14 January 2004, the entering into of the Co-operation Agreement for the formation of the Dongguan JV represents a further step by the Group to diversify into the business of waste incineration and processing. The Directors are of the view that the income generated from the operation of the waste incineration and processing business of the Dongguan JV will provide the Group with the diversification. At the same time, the Directors expect that the construction of the waste incineration plants and the related electrical engineering projects will provide the Group with an opportunity to participate in the construction of the waste incineration plants and in the electrical engineering contracting services so as to create a synergy with the existing business of the Group. Hence, the formation of the Dongguan JV is in line with the corporate strategy of the Group to minimize the adverse impact arising from the contraction of the electrical engineering market by way of vertical integration into construction related businesses and horizontal diversification.

The total investment of the Dongguan JV will be RMB322 million (equivalent to approximately HK$303.6 million) to be funded by contribution to the registered capital of the Dongguan JV in the amount of RMB100 million (equivalent to approximately HK$94.3 million) and by external borrowings in the amount of RMB222 million (equivalent to approximately HK$209.3 million). The Directors believe that Guangzhou Huandao, which has established relationship with financial institutions will be able to assist the Dongguan JV in obtaining the required financing from the financial institutions. Therefore, it is considered beneficial to invite Guangzhou Huandao to become a partner of the Dongguan JV.

Taking into account the above factors, the Directors are of the view that the entering into of the Tripartite Co-operation Agreement is in the interests of the Shareholders of the Company.

Financial effects of the formation of the Dongguan JV on the Group

Taking into account the time required to obtain all the requisite approval for the establishment of the Dongguan JV and the setting up of the operation of the Dongguan JV, the Dongguan JV is not expected to be able to generate income in the short term. On the other hand, the utilization of the proceeds from the two placings to finance the Group’s portion of contribution to the registered capital as mentioned in the sub-paragraph headed “The Tripartite Co-operation Agreement – Registered capital” above would mean that the Group has foregone the interest income that would have been generated from such proceeds if the money was placed on deposit with financial institutions. However, with the current low interest rate, it is not expected that substantial income will be generated from placing the proceeds with financial institutions. Having considered the aforementioned factors, the Directors are of the view that the formation of the Dongguan JV will have minimal immediate effect on the Group’s earnings.

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LETTER FROM THE BOARD

As the Dongguan JV will be accounted for as a subsidiary in the books of the Company, its assets and liabilities will be consolidated into the accounts of the Company.

PROSPECTS OF THE GROUP

The Group is principally engaged in electrical engineering contracting business, trading in electrical equipment and materials in private sector in Hong Kong and the PRC and provision of corporate and business consultancy services, direct investments and securities brokerage services in Hong Kong.

In addition to the entering into of the Tripartite Co-operation Agreement for the formation of the Dongguan JV to carry out waste incineration and processing business in the PRC. As stated in the 24 December 2003 Announcement, the Group has on 24 December 2003 entered in a framework agreement with杭州錦江集團有限公司 (Hangzhou Jinjiang Group Co., Ltd.) for the acquisition of an interest in杭州錦江綠色能源有限公司 (Hangzhou Jinjiang Green Power Co., Ltd.), which is engaged in the business of waste incineration and processing for generation of electricity. Although no agreement has been reached up for the acquisition, the Group has commenced due diligence review of the affairs of杭州錦江綠色能源有限公司 (Hangzhou Jinjiang Green Power Co., Ltd.)*.

On 17 February 2004, HTH and Beijing Xuce entered into the Letter of Intent for the acquisition of an approximately 32.89% interest in BCS General Energy & Environment. BCS General Energy & Environment is a subsidiary of China Sciences Group and the holder of certain technology for application in waste incineration and processing. Beijing Xuce currently has an approximately 32.89% interest in BCS General Energy & Environment. It is expected that subject to completion of the due diligence exercise to the satisfaction of the Company and finalisation of the terms of the Proposed Acquisition, the Company will acquire from Beijing Xuce all of its interest in BCS General Energy & Environment. Beijing Xuce is not a connected person of the Company within the meaning of the Listing Rules.

As mentioned in the paragraph headed “The Dongguan JV – The Tripartite Co-operation Agreement” above, upon formation of the Dongguan JV, BCS General Energy & Environment will entered into a technology support agreement with the Dongguan JV to provide the Dongguan JV with the necessary technical support. As BCS General Energy & Environment holds certain technology for application in waste incineration and processing, the Directors consider the Proposed Acquisition as part of the diversification strategy of the Group into the waste incineration and processing business. The Director also consider the Proposed Acquisition to be beneficial to the Company as it would enable the Company to have an interest in BCS General Energy & Environment, which will provide technical support to the Dongguan JV and other waste incineration and processing projects that the Group may acquire in the future. In the meantime, to forge a good working relationship with BCS General Energy & Environment, a director of BCS General Energy & Environment was also appointed as a director of HTH. The director has no shareholding in BCS General Energy & Environment.

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LETTER FROM THE BOARD

The Proposed Acquisition is subject to the completion of a due diligence exercise within three months from the date of the Letter of Intent and the negotiation and finalization of the terms of the Proposed Acquisition. In the event the Company proceeds with the Proposed Acquisition, disclosure/approval requirements under the Listing Rules will be complied with by the Company.

Further announcement will be made by the Company in respect of the Proposed Acquisition as and when it is appropriate.

ADDITIONAL INFORMATION

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

By Order of the Board Hong Tong Holdings Limited Hon Ming Kong Chairman

• for identification purpose only

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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 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 contained in this circular misleading.

2. DISCLOSURE OF INTERESTS OF DIRECTORS

As at the Latest Practicable Date, the interest in the shares, underlying shares or debentures of the Company or any associated corporation (within the meaning of Part XV of the SFO) of the Directors or chief executive officer of the Company which are required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which he is taken or deemed to have under such provisions of the SFO); or are required, pursuant to Section 352 of the SFO to be entered in the register referred to therein; or are required, pursuant to the Model Code for Securities Transactions by Directors of Listed Companies to be notified to the Company and the Stock Exchange are as follows:

(i) interest in Shares

		Number of
		Shares held	Percentage of
Name of Director	Nature of interest	(Long position)	shareholding
Mr. Hon Ming Kong	Corporate_(Note)_	54,900,000	17.04%
Mr. Tsoi Wai Kwong	Personal	174,000	0.05%

Note: The 54,900,000 Shares are held by Highworth Venture Limited, a company incorporated in the British Virgin Islands and is wholly owned by Mr. Hon Ming Kong.

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GENERAL INFORMATION

APPENDIX

(ii) Interest in options to subscribe for Shares

As at the Latest Practicable Date, the following are the outstanding options to subscribe for Shares granted to the Directors under the Share Option Schemes:

			Number
	Exercise price		of options
Name of Director	per Share	Exercise period	outstanding
	(HK$)
Mr. Hon Ming Kong	4.9600	14 November 2002	2,000,000
		to 13 November 2007
	1.3060	27 August 2003	2,000,000
		to 26 August 2008
Mr. Hon Yik Kwong	1.3500	28 July 2003	2,000,000
		to 27 July 2008
Mr. Lee Yu Leung	1.4944	1 September 2002	2,000,000
		to 31 August 2007
	1.3060	27 August 2003	2,000,000
		to 26 August 2008

Save as disclosed herein, as at the Latest Practicable Date, none of the Directors or chief executive officer of the Company had any interest in the shares, underlying shares or debentures of the Company or any associated corporation (within the meaning of Part XV of the SFO) which are required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which he is taken or deemed to have under such provisions of the SFO); or are required, pursuant to Section 352 of the SFO to be entered in the register referred to therein; or are required, pursuant to the Model Code for Securities Transactions by Directors of Listed Companies to be notified to the Company and the Stock Exchange.

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GENERAL INFORMATION

APPENDIX

3. SUBSTANTIAL SHAREHOLDERS

As at the Latest Practicable Date, so far as the Directors were aware, the following person, not being a Director or chief executive officer of the Company has an interests or short position in the Shares and underlying Shares 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, is directly or indirectly, interested in ten per cent. or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group:

(i) Interest in Shares

	Number of	Approximate
	Shares held	percentage of
Name of Shareholder	(Long position)	shareholding
YSH Investments Limited_(Note 1)_	58,916,000	18.28%
Highworth Venture Limited_(Note 2)_	54,900,000	17.04%
AWH Fund Ltd.	27,366,000	8.49%
Kingston Securities Limited_(Note 3)_	53,712,000	16.67%

Notes:

1. YSH Investments Limited is beneficially owned as to 90.4% by Mr. Lai Sai Sang, the former chairman of the Company and an existing director of certain subsidiaries of the Company.

2. Highworth Venture Limited is wholly owned by Mr. Hon Ming Kong, the present Chairman and an executive Director.

3. Pursuant to a placing underwriting agreement dated 17 February 2004, Kingston Securities Limited has agreed to act as placing agent in relation to the placing of 53,712,000 Shares on a fully written basis. Details of the Placing is set out in the Announcement. Each of Mr. Ma Siu Fong and Ms. Chu Yuet Wah is interested in 49% and 51% of the issued share capital of Kingston Securities Limited and are deemed under the SFO to be interested in the 53,712,000 Shares which Kingston Securities Limited has agreed to underwrite under the placing and underwriting agreement dated 17 February 2004. The Placing was completed on 5 March 2004 and all the 53,712,000 shares have been placed to investors who are independent third parties and not connected persons of the Company within the meaning of the Listing Rules.

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GENERAL INFORMATION

APPENDIX

(ii) Interest in other members of the Group

		Approximate
Name of the member	Name of	percentage
of the Group	the shareholder	of shareholding
Topeast Engineering Limited	Uni-Pacific Trading Ltd	49%
China Ace Enterprises Limited	Tang Iok Peng	25%
	Xie He Ping	24%
Global Maritime Inc.	Zhang Guanghai	10%
Cyber Touch Limited	Barossa Management Inc.	40%
Country Super Limited	Lin Lu	49%

Save as disclosed herein and so far as the Directors were aware, no person has an interests or short position in the Shares and underlying Shares 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, is directly or indirectly, interested in ten per cent. or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group as at the Latest Practicable Date.

4. DIRECTORS’ SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors has any existing or proposed contract of service with any member of the Group which is not expiring or terminable within one year without payment of compensation (other than statutory compensation).

5. LITIGATION

As at the Latest Practicable Date, neither the Company nor any of its subsidiaries is engaged in any litigation or arbitration of material importance and so far as the Directors are aware, no litigation or claim of material importance are pending or threatened by or against the Company or any of its subsidiaries.

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GENERAL INFORMATION

APPENDIX

6. MISCELLANEOUS

• (a) The company secretary of the Company is Mr. Chan Tak Hing, Kenji. He is a member of the Association of Chartered Certified Accountants, the Hong Kong Society of Accountants and the Taxation Institute of Hong Kong.

• (b) The registered office of the Company is located at P.O. Box 309, Ugland House, South Church Street, George Town, Grand Cayman, Cayman Islands, British West Indies. The head office and principal place of business in Hong Kong is located at Unit 3616, 36th Floor, China Merchants Tower, Shun Tak Centre, 168-200 Connaught Road Central, Sheung Wan, Hong Kong.

• (c) The branch registrar and transfer office of the Company in Hong Kong is Hong Kong Registrars Limited at Rooms 1901-5, 19th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong.

• (d) The English text of this circular shall prevail over their respective Chinese text.

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