Vietnam Manufacturing and Export Processing (Holdings) Limited — Proxy Solicitation & Information Statement 2004

Jul 5, 2004

THE CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in 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 accountants or other professional adviser.

If you have sold or transferred all your shares in Safety Godown Company, Limited (“the Company”) you should at once hand this circular with the Annual Report 2004 and the accompanying form of proxy to the purchaser or 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.

SAFETY GODOWN COMPANY, LIMITED 安全貨倉有限公司

(Incorporated in Hong Kong with limited liability)

(Stock code : 0237)

PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION AND GENERAL MANDATES TO ISSUE SHARES AND TO REPURCHASE SHARES

A notice convening the annual general meeting of the Company to be held at 19/F., Lu Plaza, 2 Wing Yip Street, Kwun Tong, Kowloon, Hong Kong on Friday, 20 August 2004 at 12:00 noon is set out in the Annual Report 2004 of the Company to be despatched to shareholders together with this circular.

Whether or not you are able to attend the meeting, you are requested to complete the form of proxy enclosed with the Annual Report 2004 of the Company in accordance with the instructions printed thereon and return it to the principal place of business of the Company at 19/F., Lu Plaza, 2 Wing Yip Street, Kwun Tong, Kowloon, Hong Kong as soon as possible but in any event not less than 48 hours before the time appointed for the holding of the annual general meeting. Completion and return of the form of proxy will not preclude shareholders from attending and voting at the annual general meeting or any adjourned meeting if they so wish.

Hong Kong, 2 July 2004

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
Proposed Amendments to the Articles of Association . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
General Mandate to Issue Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
General Mandate to Repurchase Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Procedure to Demand a Poll . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Annual General Meeting Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Re-Election of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Action to be Taken . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Appendix I – Details of Directors Proposed to be Re-Elected. . . . . . . . . . . . . . . . . . . . .	8
Appendix II – Explanatory Statement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9

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DEFINITIONS

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

• “AGM Notice”

• the notice of the Annual General Meeting as set out in the Annual Report 2004

• “Annual General Meeting”

• the annual general meeting of the Company to be held at 19/F., Lu Plaza, 2 Wing Yip Street, Kwun Tong, Kowloon, Hong Kong on Friday, 20 August 2004 at 12:00 noon

• “Annual Report 2004” the annual report of the Company for the year ended 31 March 2004

• “Articles of Association” the articles of association of the Company as may be amended from time to time

• “Board”

the board of Directors of the Company

• “Company” Safety Godown Company, Limited（安 全 貨 倉 有 限 公 司）, a company incorporated in Hong Kong with limited liability, the Shares of which are listed on the Stock Exchange

• “Companies Ordinance” the Companies Ordinance (Chapter 32 of the Laws of Hong Kong)

• “Director(s)” the directors of the Company for the time being

• “Group” the Company and its subsidiaries

• “Hong Kong”

• the Hong Kong Special Administrative Region of the People’s Republic of China

• “Latest Practicable Date”

• 25 June 2004, being the latest practicable date prior to the printing of this circular for the purpose of ascertaining certain information for inclusion in this circular

• “Listing Rules”

• the Rules Governing the Listing of Securities on the Stock Exchange

• “Ordinary Resolution(s)”

• the proposed ordinary resolution(s) as referred to in the AGM Notice

• “Share(s)”

• share(s) of HK$1.00 each in the capital of the Company (or such other nominal amount as shall result from a subdivision, consolidation, reclassification or reconstruction of the share capital of the Company from time to time)

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DEFINITIONS

• “Share Issue Mandate” the general mandate proposed to be granted to the Directors at the Annual General Meeting to allot and issue additional Shares during the period as set out in Ordinary Resolution No. 5 not exceeding 20 per cent. of the issued share capital of the Company as at the date of passing of Ordinary Resolution No. 5

• “Share Repurchase Mandate” the general mandate proposed to be granted to the Directors at the Annual General Meeting to repurchase Shares at any time during the period as set out in Ordinary Resolution No. 6 not exceeding 10 per cent. of the aggregate nominal amount of the issued share capital of the Company as at the date of passing of Ordinary Resolution No. 6

• “Share Repurchase Rules” the relevant rules set out in the Listing Rules to regulate the repurchase by companies with primary listing of their own securities on the Stock Exchange

• “Shareholder(s)” registered holder(s) of Share(s)

• “Stock Exchange” The Stock Exchange of Hong Kong Limited

• “Takeovers Code”

• the Hong Kong Codes on Takeovers and Mergers and Share Repurchases

• “HK$” Hong Kong dollars, the lawful currency of Hong Kong

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LETTER FROM THE BOARD

SAFETY GODOWN COMPANY, LIMITED 安全貨倉有限公司

(Incorporated in Hong Kong with limited liability)

Executive Directors:

LU Sin (Chairman & Managing Director) LUI Chi Lung

Non-Executive Directors:

LU Yong Lee GAN Khai Choon LEE Ka Sze, Carmelo LAM Ming Leung*

Registered Office:

19/F., Lu Plaza 2 Wing Yip Street Kwun Tong Kowloon Hong Kong

• Independent Non-Executive Directors

2 July 2004

To the Shareholders

Dear Sir or Madam,

PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION AND GENERAL MANDATES TO ISSUE SHARES AND TO REPURCHASE SHARES

INTRODUCTION

The purpose of this circular is to provide you with information regarding the proposed Share Issue Mandate, the proposed Share Repurchase Mandate, and the proposed amendments to the Articles of Association, and to seek your approval for such matters at the Annual General Meeting to be held at 19/F., Lu Plaza, 2 Wing Yip Street, Kwun Tong, Kowloon, Hong Kong on Friday, 20 August 2004 at 12:00 noon.

PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

The Securities and Futures Ordinance (the “SFO”) came into effect on 1 April 2003 and the Companies (Amendment) Ordinance 2003 (the “Amendment Ordinance”) came into operation on 13 February 2004. In addition, the Stock Exchange has announced certain amendments to the Listing Rules which subject to certain transitional arrangements came into effect on 31 March 2004.

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LETTER FROM THE BOARD

In the circumstances, in order to comply with the aforesaid new requirements and to bring the Articles of Association up to date and in line with the current practice in Hong Kong, a special resolution to amend the Articles of Association will be proposed at the forthcoming Annual General Meeting. A brief background to the proposed amendments to the Articles of Association is set out as follows:-

• (a) Article 1

• To amend existing definitions and to provide additional definitions for certain terms for the purpose of clarification pursuant to the SFO, the Amendment Ordinance, and the Listing Rules.

• (b) Article 7A

• To amend the existing wording given that “Stock Exchange” has been defined in the amended Article 1.

• (c) Article 10

• To allow the Company to charge for the issuance of a certificate to a transferee of shares or to the transferor in respect of any shares retained by him.

• (d) Article 12

• To be consistent with the provisions of the amended Appendix 3 of the Listing Rules which stipulate that the Company must be satisfied beyond reasonable doubt that a certificate has been destroyed before it replaces a lost share certificate.

• (e) Article 18

• To clarify as required by the amended Appendix 3 of the Listing Rules which stipulate that payments in advance of calls does not entitle the holder to receive dividends subsequently declared.

• (f) new Article 24A

• To be consistent with the provisions of the amended Appendix 3 of the Listing Rules which stipulate the time period for the Company to exercise its power to cease sending cheques to untraceable members and to sell the shares of such untraceable members.

• (g) Article 37

• To be consistent with the provisions of the amended Appendix 3 of the Listing Rules which stipulate that the levels of restriction on voting rights of the different classes of shares must be shown on the shares.

• (h) Article 57

• To be consistent with the provisions of the amended Appendix 3 of the Listing Rules which stipulates that a resolution put to a vote of a general meeting shall be decided on a show of hands unless a poll is taken as required under the Listing Rules or applicable laws, rules or regulating or unless a poll is duly demanded.

• (i) Articles 67A and 67B

• To provide as required by the amended Appendix 3 of the Listing Rules that a member which is a corporation may be represented in meetings by a duly authorized representative, and that where the Company has

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LETTER FROM THE BOARD

knowledge that 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.

• (j) Article 74

• To be consistent with the provisions of the amended Appendix 3 of the Listing Rules which stipulates that, subject to certain exceptions, a Director shall abstain from voting at the board meeting on any contract or arrangement in which he and/or any of his associates has/have a material interest and that the Director shall not be counted towards the quorum of the relevant board meeting.

• (k) Article 82A

• To be consistent with the amended Appendix 3 of the Listing Rules which stipulates the minimum seven-day period for lodgment by a shareholder of the notice to nominate a director and the nomination shall commence no earlier than the day after the dispatch of the notice of the meeting appointed for such election and end no later than seven days before the date of such meeting.

• (l) Articles 111, 112 and 113

• To provide for the relevant financial documents and a copy of the summary financial report to be sent to every entitled person, and for the same to be deemed as sent where they are made available on the Company’s computer network.

• (m) Articles 115, 115A, 115B, 116 and 117

• To permit the Company to serve notice on shareholders of the Company by telex, facsimile and electronic communication and to add provision for deemed services on notice delivered in person, by telex, facsimile, electronic communication or by press advertisement.

• (n) new Articles 124 and 125 To amend the provision of indemnity on the liability of the director or other officers in the light of the Amendment Ordinance.

GENERAL MANDATE TO ISSUE SHARES

At the annual general meeting of the Company held on 8 August 2003, a general mandate was given to the Directors to exercise the powers of the Company to allot and issue Shares not exceeding 20 per cent. of the then issued share capital of the Company. Such mandate will lapse at the conclusion of the Annual General Meeting unless renewed at a general meeting of the Shareholders.

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LETTER FROM THE BOARD

At the Annual General Meeting, Ordinary Resolution No. 5 will be proposed to grant a general mandate to the Directors to exercise the powers of the Company to allot and issue Shares not exceeding 20 per cent. of the issued share capital of the Company as at the date of passing Ordinary Resolution No. 5 set out in the AGM Notice. In addition, subject to the approval by the Shareholders of Ordinary Resolution Nos. 5 and 6, any Shares representing the aggregate nominal amount of the Shares repurchased by the Company after the granting of the Share Repurchase Mandate under Ordinary Resolution No. 6 set out in the AGM Notice will also be added to the 20 per cent. Share Issue Mandate as set out in Ordinary Resolution No. 7.

GENERAL MANDATE TO REPURCHASE SHARES

At the annual general meeting of the Company held on 8 August 2003, a general mandate was given to the Directors to exercise the powers of the Company to repurchase Shares up to 10 per cent. of the then issued share capital of the Company. Such mandate will lapse at the conclusion of the Annual General Meeting unless renewed at a general meeting of the Shareholders. At the Annual General Meeting, Ordinary Resolution No. 6 will be proposed to grant a general mandate to the Directors to exercise the powers of the Company to repurchase its own Shares in accordance with the Share Repurchase Rules up to 10 per cent. of the aggregate nominal amount of the share capital of the Company in issue immediately after the passing of Ordinary Resolution No. 6.

An explanatory statement as required by the Listing Rules to be sent to the Shareholders in connection with the Share Repurchase Mandate is set out in Appendix II to this circular. The explanatory statement contains all information reasonably necessary to enable the Shareholders to make an informed decision on whether to vote for or against the relevant resolution at the Annual General Meeting.

PROCEDURE TO DEMAND A POLL

Pursuant to existing Article 57 of the Articles of Association, at any general meeting a resolution put to the vote of the meeting shall be decided on a show of hands unless (before or on the declaration of the results of the show of hands) a poll is demanded:-

• (a) by the chairman of the meeting; or

• (b) by at least three Shareholders present in person or by proxy for the time being entitled to vote at the meeting; or

• (c) by a Shareholder or Shareholders present in person or by proxy and representing not less than one-tenth of the total voting rights of all the members having the right to vote at the meeting; or

• (d) by a Shareholder or Shareholders present in person or by proxy and holding Shares conferring a right to vote at the meeting being Shares on which the aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all the Shares conferring that right.

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LETTER FROM THE BOARD

ANNUAL GENERAL MEETING NOTICE

The AGM Notice, in which a special resolution will be proposed to approve the amendments to the Articles of Association and ordinary resolutions will be proposed to approve the Share Issue Mandate, the Repurchase Mandate, and the extension of the Share Issue Mandate, is set out in the Annual Report 2004 to be despatched with this circular.

RE-ELECTION OF DIRECTORS

In accordance with Article 75 of the Articles of Association, Mr. Lam Ming Leung shall retire at the Annual General Meeting and, being eligible, offer himself for re-election.

In accordance with Articles 78 and 79 of the Articles of Association, Mr. Gan Khai Choon and Mr. Lui Chi Lung shall retire by rotation at the Annual General Meeting and, being eligible, offer themselves for re-election.

Information on the retiring Directors proposed for re-election is set out in Appendix I to this circular.

ACTION TO BE TAKEN

A form of proxy for use at the Annual General Meeting is enclosed with the Annual Report 2004. Whether or not you intend to be present at the Annual General Meeting, you are requested to complete the form of proxy and return it to the registered office of the Company at 19/F., Lu Plaza, 2 Wing Yip Street, Kwun Tong, Kowloon, Hong Kong not less than 48 hours before the time fixed for holding the Annual General Meeting. Completion and return of the form of proxy will not preclude Shareholders from attending and voting in person at the Annual General Meeting if they so wish.

RECOMMENDATION

The Directors consider that the Share Issue Mandate, the Share Repurchase Mandate and the proposed amendments to the Articles of Association are in the best interests of the Company and the Shareholders. The Directors therefore recommend the Shareholders to vote in favour of the relevant resolutions.

Yours faithfully, By order of the Board Safety Godown Company, Limited Lu Sin

Chairman & Managing Director

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APPENDIX I DETAILS OF DIRECTORS PROPOSED TO BE RE-ELECTED

The following are the particulars of the Directors proposed to be re-elected at the Annual General Meeting in accordance with the Articles of Association.

EXECUTIVE DIRECTOR

LUI Chi Lung

Mr. Lui Chi Lung, aged 52, has been an Executive Director of the Company since 1990. He is also a director of Kian Nan Financial Limited, a Hong Kong private company. Mr. Lui has over 30 years’ experience in public godown operation and textile industry.

Mr. Lui is the son of the Chairman, Mr. Lu Sin. There is no service contract entered into by Mr. Lui with the Company and no fixed or proposed length of service with the Company. Mr. Lui will be subject to retirement by rotation and re-election at annual general meetings of the Company in accordance with the Articles of Association. As at the Latest Practicable Date, within the meaning of Part XV of the SFO, Mr. Lui was interested in 947,884 Shares, representing approximately 0.7 per cent. of the issued share capital of the Company. Mr. Lui will be entitled to an emolument as determined by the Board from time to time with reference to his performance and duties.

INDEPENDENT NON-EXECUTIVE DIRECTORS

GAN Khai Choon

Mr. Gan Khai Choon, aged 58, has been a Director of the Company since 1990. He is also a director of City e-Solutions Limited (formerly known as CDL Hotels International Limited, a company listed on the Stock Exchange) and Managing Director of Hong Leong International (Hong Kong) Limited. Mr. Gan has extensive experience in finance, property development, hotel management and international trading.

Mr. Gan does not have any family relationships with any other Directors, senior management or substantial or controlling Shareholders of the Company. There is no service contract entered into by Mr. Gan with the Company and no fixed or proposed length of service with the Company. Mr. Gan will be subject to retirement by rotation and re-election at annual general meetings of the Company in accordance with the Articles of Association. As at the Latest Practicable Date, Mr. Gan did not have any interests in the Shares or underlying Shares within the meaning of Part XV of the SFO nor any interests in the principal business activities of the Company. Mr. Gan will be entitled to an emolument as determined by the Board from time to time with reference to his performance and duties.

LAM Ming Leung

Mr. Lam Ming Leung, aged 52, has been a Director of the Company since 1 January 2004. Mr. Lam was a director and general manager of The National Commercial Bank Limited, Hong Kong branch.

Mr. Lam does not have any family relationships with any other Directors, senior management or substantial or controlling Shareholders of the Company. There is no service contract entered into by Mr. Lam with the Company and no fixed or proposed length of service with the Company. Mr. Lam will be subject to retirement by rotation and re-election at annual general meetings of the Company in accordance with the Articles of Association. As at the Latest Practicable Date, within the meaning of Part XV of the SFO, Mr. Lam was interested in 10,000 Shares, representing approximately 0.007 per cent. of the issued share capital of the Company. Mr. Lam will be entitled to an emolument as determined by the Board from time to time with reference to his performance and duties.

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EXPLANATORY STATEMENT

APPENDIX II

This appendix serves as an explanatory statement as required to be sent to the Shareholders under the Listing Rules, to provide the requisite information to the Shareholders for their consideration of the Share Repurchase Mandate.

SHARE CAPITAL

As at the Latest Practicable Date, the issued share capital of the Company comprised 135,000,000 Shares.

EXERCISE OF THE REPURCHASE MANDATE

Resolution No. 6 set out in the AGM Notice will, if passed, give a general mandate to the Directors authorising the repurchase by the Company of up to 10 per cent. of the share capital of the Company in issue as at the date of the Annual General Meeting, at any time until the end of the Relevant Period as defined in Resolution No. 6 set out in the AGM Notice.

Accordingly, exercise in full of the Share Repurchase Mandate (on the basis of 135,000,000 Shares in issue as at the Latest Practicable Date and assuming no Shares are issued or repurchased prior to the date of the Annual General Meeting) would result in up to 13,500,000 Shares being repurchased by the Company during the Relevant Period.

REASONS FOR REPURCHASE

The Directors believe that it is in the best interests of the Company and its Shareholders to have a general authority from the Shareholders to enable the Directors to repurchase Shares. 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 earning per Share and will only be made when the Directors believe that such repurchases will benefit the Company and its Shareholders.

FUNDING OF REPURCHASE

In repurchasing Shares, the Company may only apply funds legally available for such purpose in accordance with its Memorandum and Articles of Association, the applicable laws of Hong Kong and the Listing Rules. Any repurchases will be made out of funds of the Company legally permitted to be utilised in this connection, being distributable profits of the Company or the proceeds of a new issue of Shares made for such purpose, and any premium payable on repurchase shall be paid out of distributable profits of the Company.

If the Share Repurchase Mandate were exercised in full at any time during the Relevant Period, there could be a material adverse impact on the working capital or gearing position of the Group (as compared with the position disclosed in the audited consolidated financial statements as at 31 March 2004). The Directors therefore do not propose to exercise the power under the Share Repurchase Mandate to such an extent unless it is determined by the Directors that such repurchases are, taking account of all relevant factors, in the best interests of the Group.

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EXPLANATORY STATEMENT

APPENDIX II

GENERAL

None of the Directors nor, to the best of their knowledge, having made all reasonable enquiries, any of their associates have a present intention to sell any Shares to the Company, or have undertaken not to do so, in the event the Share Repurchase Mandate is approved by the Shareholders.

The Directors have undertaken to the Stock Exchange that, so far as the same may be applicable, they will only exercise the Share Repurchase Mandate in accordance with the Listing Rules and the applicable laws of Hong Kong.

No other 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 Share Repurchase Mandate is approved by the Shareholders.

TAKEOVERS CODE

If as a result of a share repurchase by the Company, a shareholder’s proportionate interest in the voting rights of the Company increases, such increase will be treated as an acquisition of voting rights for the purpose of the Takeovers Code. Accordingly, a Shareholder, or a group of Shareholders acting in concert, could, depending upon the level of increase in shareholding interest(s), 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 at the Latest Practicable Date, Mr. Lu Sin, a director of the Company (controlling 49.29 per cent., before any share repurchase, and 54.77 per cent. after the full exercise of the general mandates) and Eaver Company Limited (beneficially owning 1.49 per cent., before any share repurchase, and 1.65 per cent. after the full exercise of the general mandates) and parties acting in concert with them, together already control more than 50 per cent., in aggregate, of the voting rights of the Company. The Directors are not aware of any consequences which may arise under the Takeovers Code as a result of any repurchases made under the Share Repurchase Mandate.

SHARE PRICES

The highest and lowest prices at which the Shares have been traded on the Stock Exchange during each of the twelve months preceding the Latest Practicable Date were as follows:-

	Highest	Lowest
	HK$	HK$
2003
June	2.200	1.950
July	2.200	1.950
August	2.700	2.000
September	2.700	2.500
October	2.900	2.600
November	2.800	2.625
December	2.900	2.625

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EXPLANATORY STATEMENT

APPENDIX II

	Highest	Lowest
	HK$	HK$
2004
January	3.000	2.800
February	3.850	2.700
March	3.200	2.775
April	3.000	2.775
May	3.000	2.775

SHARE REPURCHASES BY THE COMPANY

The Company has not repurchased any of its Shares (whether on the Stock Exchange or otherwise) in the six months preceding the Latest Practicable Date.

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