Vongroup Limited — Proxy Solicitation & Information Statement 2003

Sep 1, 2003

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in doubt as to any aspect of this document, you should consult your stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Kamboat Group Company Limited, you should at once hand this document and the accompanying form of proxy to the purchaser or the transferee or to the bank, stockbroker 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 (the “Stock Exchange”) 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 document.

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KAMBOAT GROUP COMPANY LIMITED 金龍船集團有限公司

(incorporated in the Cayman Islands with limited liability)

Executive Directors:

Mr. Wong Chi Man (Chairman and Managing Director) Mr. Wong See Sum J.P. (Vice Chairman) Ms. Wong Lan Fun, Roberta Mr. Wong Chi Wing, Tenny Ms. Ng Suk Bing, Mclanly

Registered office: P.O. Box 2681 GT Century Yard Cricket Square Hutchins Drive George Town Grand Cayman British West Indies

Non-Executive Director:

Mr. Tam Fook Yee

Independent Non-executive Directors: Mr. Lee Man Youn, Montareal Mr. Chan Kam Fai, Robert

Head office and Principal Place of Business in Hong Kong: Unit G, 2nd Floor, Phase 2 Yip Fat Factory Building 75 Hoi Yuen Road Kwun Town, Kowloon Hong Kong 29 August 2003

To the shareholders

Dear Sir or Madam,

PROPOSED GRANT OF GENERAL MANDATES FOR THE ALLOTMENT AND ISSUE OF NEW SHARES AND FOR THE REPURCHASE BY THE COMPANY OF ITS OWN SHARES

INTRODUCTION

The purpose of this circular is to provide you information regarding the ordinary resolutions to be proposed at the forthcoming annual general meeting (the “Annual General Meeting”) of the Company for the year ended 30 April 2003 to be held at Kamboat Chinese Cuisine, Shop 243, 2nd Floor, The Westwood,

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8 Belcher’s Street, Hong Kong on 25 September 2003 (Thursday) at 3:00 p.m. These include ordinary resolutions relating to the proposed grant of the Repurchase Mandate and the Issue Mandate. Such mandate will lapse at the conclusion of the Annual General Meeting. At the Annual General Meeting, among other businesses, the following resolutions will be proposed:

• (a) to grant a general mandate (the “General Mandate”) to the Directors to exercise the powers of the Company to allot, issue and otherwise deal with new shares of the Company (the “Share”) up to a maximum of 20 per cent. of the aggregate nominal amount of the share capital of the Company in issue as at the date of passing of such resolution;

• (b) to grant a general mandate (the “Repurchase Mandate”) to the Directors to enable them to repurchase the Shares on the Stock Exchange to a maximum of 10 per cent. of the aggregate nominal amount of the share capital of the Company in issue as at the date of passing of such resolution; and

• (c) to authorise the increase of the number of new Shares which may be allotted and issued under the General Mandate by an additional number representing such number of Shares actually repurchased under the Repurchase Mandate (such authorisation is referred to below as the “Extension Mandate”).

Under the Rules Governing the Listing of Securities (the “Listing Rules”) on the Stock Exchange, the Company is required to give to its shareholders all information which is reasonably necessary to enable its shareholders to make an informed decision as to whether to vote for or against the resolution to renew the grant to the directors of the Company (the “Directors”) of the Repurchase Mandate. This document is prepared for such purpose. The explanatory statement required by the Listing Rules to be included in this document is set out in the attached Appendix.

THE GENERAL MANDATE AND THE EXTENSION MANDATE

The Directors have no immediate plans to allot and issue any new Shares other than Shares which may fall to be issued upon the exercise of options granted under the share option scheme of the Company or pursuant to any scrip dividend scheme which may be approved by the shareholders of the Company.

THE REPURCHASE MANDATE

On pages 78 to 82 of the annual report of the Company in respect of the financial year ended 30 April 2003 is the notice of the Annual General Meeting. At the Annual General Meeting, as part of the special businesses of the Annual General Meeting, an ordinary resolution will be proposed to grant the Repurchase Mandate to the Directors.

ACTION TO BE TAKEN

Whether or not you intend to attend the Annual General Meeting, you are requested to complete and return the accompanying form of proxy in accordance with the instructions printed thereon to the Company’s branch share registrar in Hong Kong, Tengis Limited at Ground Floor, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong, as soon as possible and in any event not later than 48 hours before the time appointed for holding of the Annual General Meeting or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the Annual General Meeting or any adjournment thereof if you so wish.

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RECOMMENDATION

The Directors believe that the General Mandate, the Repurchase Mandate and the Extension Mandate are in the best interests of the Company and its shareholders. An exercise of the powers under the Repurchase Mandate may, depending on market conditions and funding arrangements at the time, lead to an enhancement of the net asset value per Share and/or earnings per Share. Such an exercise will only be made when the Directors believe that such repurchase of Shares will benefit the Company and its shareholders.

An exercise of the Repurchase Mandate in full could have a material adverse impact on the working capital and/or gearing position of the Company compared with that as at 30 April 2003, being the date of its latest audited accounts. The Directors do not, however, intend to make any repurchase in circumstances that would have a material adverse impact on the working capital or gearing position of the Company.

The Directors believe that an exercise of the General Mandate and the Extension Mandate to issue and allot new Shares will enable the Company to take advantage of market conditions to raise additional capital for the Company.

Accordingly, the Directors recommend that all shareholders of the Company should vote in favour of the resolutions approving the grant of the General Mandate, the Repurchase Mandate and the Extension Mandate to the Directors.

Yours faithfully, For and on behalf of the board of Directors of Kamboat Group Company Limited Wong Chi Man Chairman and Managing Director

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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 to make an informed decision whether to vote for or against the resolution to approve the grant of the Repurchase Mandate to the Directors.

1. SHARE CAPITAL

As at 25 August 2003, being the latest practicable date (the “Latest Practicable Date”) prior to the printing of this document, the issued share capital of the Company comprised 90,969,000 Shares.

Subject to the passing of the proposed resolution for the grant of the Repurchase Mandate to the Directors and on the basis that no Shares are allotted and issued or repurchased by the Company prior to the Annual General Meeting, the Company will be allowed under the Repurchase Mandate to repurchase a maximum of 9,096,900 Shares.

2. REASONS FOR THE REPURCHASE

The Directors believe that it is in the best interests of the Company and its shareholders for the Directors to have general authority from its shareholders to enable the Company to repurchase Shares in the market. Such repurchases may, depending on market conditions and funding arrangements at the time, lead to an enhancement of the net asset value per Share and/or earnings per Share and will only be made if the Directors believe that such repurchases of Shares will benefit the Company and its shareholders.

3. FUNDING OF REPURCHASES

In repurchasing securities, the Company may only apply funds legally available for such purpose in accordance with its memorandum and articles of association, the Listing Rules and the applicable laws of the Cayman Islands. Repurchase must be paid out of funds which are legally available for the purpose and in accordance with the memorandum and the articles of association of the Company and the Companies Law, Chapter 22 (Law 3 of 1961, as consolidated and amended) of the Cayman Islands (the “Company Law”). Under the Cayman Islands law, repurchases by the Company may only be made out of profits of the Company or out of the proceeds of a fresh issue of shares made for the purpose, or, if so authorised by its articles of association and subject to the provisions of the Companies Law, out of capital. Any premium payable on a redemption or purchase over the par value of the shares to be purchased must be provided for out of profits of the Company or out of the Company’s share premium account, or, if so authorised by its articles of association and subject to the provisions of the Companies Law, out of capital.

Taking into account the current working capital position of the Company, the Directors consider that, if the Repurchase Mandate were to be exercised in full, it would have a material adverse effect on the working capital and/or the gearing position of the Company as compared with the position as at 30 April 2003. However, the Directors do not intend to make any repurchases to such an extent as would, in circumstances, have a material adverse effect on the working capital requirements or the gearing position 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, as adjusted due to the share consolidation pursuant to a resolution passed on 11 March 2003, have been traded on the Stock Exchange in each of the twelve calendar months preceding the latest practicable date prior to the printing of the annual report are as follows:

	Highest	Lowest
	HK$	HK$
August 2002 (adjusted)	1.180	1.000
September 2002 (adjusted)	0.715	0.520
October 2002 (adjusted)	0.625	0.510
November 2002 (adjusted)	0.575	0.510
December 2002 (adjusted)	0.575	0.500
January 2003 (adjusted)	0.575	0.510
February 2003 (adjusted)	0.735	0.525
March 2003 (adjusted)	0.615	0.450
April 2003	0.450	0.330
May 2003	0.460	0.350
June 2003	0.450	0.400
July 2003	0.470	0.420

5. DISCLOSURE OF INTERESTS, THE TAKEOVERS CODE AND CONNECTED PARTIES

None of the Directors or, to the best of their knowledge and belief, having made all reasonable enquiries, any of their associates (as defined in the Listing Rules), have any present intention to sell to the Company or its subsidiaries any of the Shares if the Repurchase Mandate is approved at the Annual General Meeting and exercised.

The Directors have undertaken to the Stock Exchange that, so far as the same may be applicable, they will exercise the power of the Company to make repurchases of the Shares pursuant to the Repurchase Mandate in accordance with the Listing Rules, the applicable laws of the Cayman Islands and the regulations set out in the memorandum and articles of association of the Company.

Assuming that none of the substantial shareholders disposes of their Shares, if the Repurchase Mandate were exercised in full, the respective approximate percentage shareholdings of the substantial shareholders before and after such repurchase would be as follows:

Name	Before repurchase	After repurchase
Cambo Enterprises Limited	53.09%	58.99%
New Top HK_(Note)_	62.51%	69.45%
New Top BVI_(Note)_	62.51%	69.45%
Wong Chi Man_(Note)_	63.26%	70.29%

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EXPLANATORY STATEMENT

APPENDIX

Note: Cambo Enterprises Limited beneficially owned 48,299,000 Shares, New Top Investment Limited (“New Top HK”) beneficially owned 8,563,000 Shares and Mr Wong Chi Man beneficially owned 682,000 Shares. Cambo Enterprises Limited and New Top Investment Limited are companies incorporated in Hong Kong with limited liabilities. The entire share capital of New Top HK is held by New Top Investment Limited (“New Top BVI”), a company incorporated in the British Virgin Islands. The entire share capital of New Top BVI is owned by Mr Wong Chi Man. New Top HK and Mr. Wong Chi Man beneficially owned approximately 48.61% and 1.67% of Cambo Enterprises Limited, respectively.

If a shareholder’s proportionate interest in the voting rights of the Company increases as a result of the Company’s exercising of its powers to repurchase securities pursuant to the Repurchase Mandate, such increase will be treated as an acquisition for the purposes of Rule 32 of the Takeovers Code. As a result, a shareholder or group of shareholders acting in concert could obtain or consolidate control of the Company and become obliged to make a mandatory offer in accordance with Rules 26 and 32 of the Takeovers Code.

On the basis of the current shareholdings held by the substantial shareholders named above, an exercise of the repurchase mandate in full will not result in any of the shareholders referred to above obliged to make a mandatory offer under the Takeovers Code.

No connected party of the Company (as defined in the Listing Rules) has notified the Company that he/she/it has a present intention to sell any securities to the Company nor has any such connected party undertaken not to sell any of the securities held by him/her/it to the Company in the event that the Repurchase Mandate is granted.

6. SHARE REPURCHASE MADE BY THE COMPANY

During the six months preceding the Latest Practicable Date, the details of repurchases of Shares (whether on the Stock Exchange or otherwise) made by the Company are as follow:

		Highest	Lowest
	Number of	purchase	purchase
	Shares repurchased	price	price
		HK$	HK$
28 January 2003	95,000	0.105	0.105
29 January 2003	930,000	0.115	0.110
30 January 2003	370,000	0.111	0.108
4 February 2003	1,000,000	0.114	0.114
5 February 2003	535,000	0.111	0.111
6 February 2003	400,000	0.115	0.115
7 February 2003	290,000	0.116	0.116
10 February 2003	635,000	0.118	0.116
11 February 2003	180,000	0.120	0.120
14 February 2003	460,000	0.131	0.130
3 March 2003	260,000	0.122	0.122

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