Times Universal Group Holdings Limited — Proxy Solicitation & Information Statement 2004

Mar 26, 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 you should take, you should consult your exchange participant 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 Kwang Sung Electronics H.K. Co. Limited , you should at once hand this circular and the accompanying form of proxy to the purchaser or transferee or to the bank, exchange participant or other agent through whom the sale or transfer was effected for transmission to the purchaser or the 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 however arising from or in reliance upon the whole or any part of the contents of this circular.

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(Incorporated in Hong Kong with limited liability)

GENERAL MANDATES TO REPURCHASE AND ISSUE SHARES

The notice convening the annual general meeting of Kwang Sung Electronics H.K. Co. Limited (the “Company”) to be held at Vinson Room, Pacific Place Conference Centre, Level 5, One Pacific Place, 88 Queensway, Hong Kong on 23 April 2004 at 10:00 a.m. is set out in the Company’s annual report for the year ended 31 December 2003 despatched together with this circular to shareholders. Whether or not you are able to attend the meeting, you are requested to complete and return the enclosed form of proxy in accordance with the instructions printed thereon to the registered office of the Company at Units 7-9, 13th Floor, Wah Wai Centre, 38-40 Au Pui Wan Street, Fotan, Shatin, New Territories, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for holding the meeting or any adjourned meeting thereof. Completion and return of the form of proxy shall not preclude you from attending and voting in person at the annual general meeting or any adjourned meeting should you so wish.

26 March 2004

LETTER FROM THE CHAIRMAN

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(Incorporated in Hong Kong with limited liability)

Executive Directors: YANG Jai Sung (Chairman) KIM Sun Cheol LEE Byung Kwan

Non-executive Directors: YANG Ho Sung KIM Chung Kweon HAN Byung Joon

Registered Office: Units 7-9 13/F, Wah Wai Centre 38-40 Au Pui Wan Street Fotan, Shatin New Territories Hong Kong

• Independent Non-executive Directors

26 March 2004

To the Shareholders

Dear Sir or Madam,

GENERAL MANDATES TO REPURCHASE AND ISSUE SHARES

INTRODUCTION

On 15 March 2004 the directors (the “Directors”) of Kwang Sung Electronics H.K. Co. Limited (the “Company”) announced the audited consolidated results of the Company for the year ended 31 December 2003 and the proposal to seek general mandates at the annual general meeting to be held on 23 April 2004 (the “Annual General Meeting”) for the Directors to repurchase and issue shares of HK$0.10 each in the capital of the Company (the “Shares”). This circular gives you details of those general mandates and seeks your approval of such general mandates at the Annual General Meeting.

GENERAL MANDATE TO REPURCHASE SHARES

At the Annual General Meeting, an ordinary resolution, as set out in ordinary resolution No. 5(1) of the notice of the Annual General Meeting, will be proposed which, if passed, will grant the Directors a general and unconditional mandate to exercise all powers of the Company to repurchase Shares up to a maximum of 10 per cent of the aggregate nominal amount of the issued share capital of the Company at the date of passing of the resolution (the “Repurchase Mandate”) since the previous repurchase mandate granted to the Directors in the written resolution passed by the shareholders of the Company on 16 June

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LETTER FROM THE CHAIRMAN

2003 will expire on conclusion of the Annual General Meeting. The Repurchase Mandate will continue in force until the conclusion of the next annual general meeting of the Company or any earlier date as referred to in paragraph (c) of the Ordinary Resolution No. 5(1) as set out in the notice of Annual General Meeting.

An explanatory statement to provide shareholders of the Company with all the information reasonably necessary for them to make an informed decision in relation to this Repurchase Mandate as required by the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”) concerning the regulation of repurchase by companies of their own securities on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) is set out in the appendix to this circular.

GENERAL MANDATE TO ISSUE SHARES

It will also be proposed as an ordinary resolution, as set out in ordinary resolution No. 5(2) of the notice of the Annual General Meeting, at the Annual general Meeting to renew the general and unconditional mandate, which will lapse at the conclusion of the Annual General Meeting. The ordinary resolution, if passed, will empower the Directors to allot, issue and deal with new Shares or convertible securities or similar rights to subscribe for any Shares or convertible securities of the Company representing up to 20 per cent of the aggregate nominal amount of the issued share capital of the Company at the date of passing of the resolution, and adding to such general mandate by a separate resolution any Shares representing the aggregate nominal amount of the relevant Shares repurchased by the Company under the Repurchase Mandate (the “Securities Issue Mandate”). The Securities Issue Mandate will continue in force until the conclusion of the next annual general meeting of the Company or any earlier date as referred to in paragraph (d) of Ordinary Resolution No. 5(2) as set out in the notice of the Annual General Meeting.

ANNUAL GENERAL MEETING

The notice of the Annual General Meeting, which contains ordinary resolutions to approve the Repurchase Mandate and the Issue Mandate, is set out in the annual report of the Company accompanying this circular.

A form of proxy is enclosed with the Company’s annual report for use at the Annual General Meeting. Whether or not you are able to attend the meeting, you are requested to complete and return the form of proxy in accordance with the instructions printed thereon to the registered office of the Company at Units 7-9, 13th Floor, Wah Wai Centre, 38-40 Au Pui Wan Street, Fotan, Shatin, New Territories, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for holding the meeting. Completing and return of the form of proxy shall not preclude you from attending and voting in person at the Annual General Meeting or any adjourned meeting should you so wish.

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LETTER FROM THE CHAIRMAN

RECOMMENDATION

The Directors consider that the grant of the Repurchase Mandate and the Securities Issue Mandate are in the interests of the Company and its shareholders as a whole. The Directors therefore recommend the shareholders to vote in favour of the ordinary resolutions to be proposed at the Annual General Meeting for approving the Repurchase Mandate and the Securities Issue Mandate.

GENERAL INFORMATION

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

RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules for the purposes of giving information with regard to the Company. The Directors collectively and individually accept full responsibility for accuracy of the information contained in the circular and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, there are no other fact the omission of which would make any statement herein misleading.

Yours faithfully, For and on behalf of the board of Directors Yang Jai Sung Chairman

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EXPLANATORY STATEMENT

APPENDIX

This appendix serves as an explanatory statement, as required by the Listing Rules, to provide requisite information to you for your consideration of the Repurchase Mandate and also constitutes the memorandum as required under section 49BA(3) of the Companies Ordinance (Chapter 32 of the Laws of Hong Kong).

1. Share Capital

As at 19 March 2004, being the latest practicable date prior to the printing of this circular for ascertaining certain information referred to in this circular (the “Latest Practicable Date”), the issued share capital of the Company comprised 313,300,000 Shares.

Exercise in full of Repurchase Mandate on the basis that no further Shares are issued or repurchased prior to the date of the Annual General Meeting could accordingly result in up to 31,330,000 Shares to be repurchased by the Company.

2. Reasons for Repurchase

The Directors believe that Repurchase Mandate is in the interests of the Company and its shareholders and will provide the Directors the flexibility to repurchase Shares in the market when appropriate and beneficial to the Company. Such repurchase may, depending on market conditions and funding arrangements at the time, lead to an enhancement of the net assets value of the Company and/or earnings per Share and will only be made when the Directors believe that such repurchase will benefit the Company and its shareholders.

3. Funding of Repurchase

In repurchasing Shares, the Company may only apply funds legally available for such purpose in accordance with the laws of Hong Kong Special Administrative Region and the Articles of Association of the Company. Such funds may include profit available for distribution and the proceeds of a fresh issue of Shares made for such purpose of the repurchase.

The Directors consider that there might be a material adverse impact on the working capital position or gearing levels of the Company in the event that the Repurchase Mandate was to be carried out in full during the proposed repurchase period. No repurchase would be made in circumstances that would have a material adverse impact on the working capital or gearing ratio of the Company which, in the opinion of the Directors, are from time to time appropriate for the Company.

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EXPLANATORY STATEMENT

APPENDIX

4. Share Prices

The highest and lowest prices at which the Shares have traded on the Stock Exchange since the listing of the Company during each of the previous six calendar months ended 31 December, 2003 were as follows:

	Per	Share
	Highest price	Lowest price
	HK$	HK$
2003
July	1.56	1.19
August	1.49	1.33
September	1.54	1.35
October	1.45	1.19
November	1.50	1.27
December	1.46	1.31

5. General

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 Listing Rules and the laws of Hong Kong Special Administrative Region.

If, on the exercise of the power to repurchase Shares pursuant to the Repurchase Mandate, a shareholder’s proportionate interest in the voting right of the Company increases, such increase will be treated as an acquisition for the purpose of the Code on Takeovers and Mergers (the “Takeovers Code”). Accordingly, a shareholder, or a group of shareholders acting in concert, could obtain or consolidate control of the Company and become obliged to make a mandatory offer under Rule 26 of the Takeovers Code. In the event that any exercise of the Repurchase Mandate would, to the knowledge of the Directors, have such a consequence, the Directors would not exercise the Repurchase Mandate to such an extent.

None of the Directors nor, to the best of their knowledge, having made all reasonable enquiries, any of their associates currently intends to sell any of its Shares to the Company under the Repurchase Mandate if the Repurchase Mandate is approved by shareholders.

No connected persons (as defined in the Listing Rules) have notified the Company that they have a present intention to sell Shares to the Company, or have undertaken not to do so, in the event that the Repurchase Mandate is approved by shareholders.

6. Share Repurchase Made by the Company

No Share repurchases have been made by the Company (whether on the Stock Exchange or otherwise) during the six months prior to the date of this circular.

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