VSTECS Holdings Limited — Proxy Solicitation & Information Statement 2005

Jul 6, 2005

THIS 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 accountant or other professional adviser.

If you have sold or transferred all your shares in VST Holdings Limited, you should at once hand this circular 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 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.

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(Stock Code: 856)
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GENERAL MANDATES TO ISSUE AND REPURCHASE SHARES RE-ELECTION OF DIRECTORS

The notice for the annual general meeting of VST Holdings Limited is set out on pages 12 to 15 in this circular. Whether or not you intend to attend the annual general meeting of VST Holdings Limited, you are requested to complete the form of proxy and return it to the branch share registrar of VST Holdings Limited in Hong Kong, Abacus Share Registrars Limited at Ground Floor, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong in accordance with the instructions printed thereon not less than 48 hours before the time appointed for holding the Annual General Meeting. The return of the proxy form will not preclude you from attending and voting in person if you so wish.

6 July 2005

CONTENTS

Page

Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board
A.	Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
B.	General mandates to issue and repurchase shares. . . . . . . . . . . . . . . . . . . .	3
C.	Re-election of Directors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
D.	Responsibility statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
E.	Procedures for demanding a poll . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
F.	General information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
G.	Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Appendix	– Explanatory Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
**Notice of **	Annual General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12

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DEFINITIONS

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

“Annual General Meeting” the annual general meeting of the Company for the year ended 31 March 2005 to be held on Friday, 12 August 2005, to consider and, if thought fit, to approve, among others, the audited annual results of the Company for the year ended 31 March 2005 and the repurchase mandate of the Company for its own shares “Articles of Association” the articles of association of the Company “associates” having the meaning as ascribed in the Listing Rules “Company” VST Holdings Limited, a company incorporated in the Cayman Islands with limited liability and the shares of which are listed on the Stock Exchange “Directors” the directors of the Company “HK$” Hong Kong dollars, the lawful currency of Hong Kong “Hong Kong” the Hong Kong Special Administrative Region of the People’s Republic of China “Latest Practicable Date” 24 June 2005, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained herein “Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange “Repurchase Mandate” a general mandate to exercise all powers of the Company to repurchase issued and fully paid Shares of HK$0.1 each in the Company “Shareholders” holders of the Share and a “Shareholder” shall be construed accordingly

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DEFINITIONS

“Shares” ordinary shares of HK$0.1 each in the share capital of the Company (or of such other nominal amount as shall result from a sub-division, consolidation, reclassification or reconstruction of the share capital of the Company from time to time) and a “Share” shall be construed accordingly “Stock Exchange” The Stock Exchange of Hong Kong Limited “Takeovers Code” the Hong Kong Code on Takeovers and Mergers

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LETTER FROM THE BOARD

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(Stock Code: 856)

Directors: Li Jialin Cheng Kam Chung

Non-executive Director: Sun Ali

Principal office: Unit 1901, 19th Floor, West Tower, Shun Tak Centre, 168 Connaught Road Central, Hong Kong

Independent non-executive Directors: Chan Po Fun Peter (appointed on 16 April 2005) Hu Yebi (appointed on 9 May 2005) Ni Zhenwei

6 July 2005

To the Shareholders

Dear Sir or Madam,

A. INTRODUCTION

At the Annual General Meeting to be held at JW Marriott Hotel, Queensway & Victoria (Level 3), Pacific Place, 88 Queensway, Hong Kong on Friday, 12 August 2005 at 10:30 a.m., resolutions will be proposed to grant to the Directors general mandates to allot, issue and deal with new Shares and to repurchase Shares. This circular contains the explanatory statement in compliance with the Listing Rules and to give all the information reasonably necessary to enable shareholders of the Company to make an informed decision on whether to vote for or against the resolutions.

B. GENERAL MANDATES TO ISSUE AND REPURCHASE SHARES

At the Annual General Meeting, separate ordinary resolutions will be proposed to renew the general mandates given to the Directors (i) to allot, issue and otherwise deal with Shares of HK$0.1 each in the Company not exceeding 20% of the aggregate nominal amount of the issued share capital of the Company at the date of passing of the resolution; (ii) to exercise all powers of the Company to repurchase issued and fully paid Shares on the Stock Exchange up to a maximum of 10% of the aggregate nominal amount of the issued share capital of the

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LETTER FROM THE BOARD

Company at the date of the passing of the resolution; (iii) to extend the general mandate granted to the Directors to allot, issue and deal with additional Shares as mentioned in paragraph (i) above by the amount representing the aggregate nominal amount of the share capital of the Company repurchased by the Company under the Repurchase Mandate. The Repurchase Mandate allows the Company to make or agree to make repurchases only during the period ending on the earliest of (a) the date of the next annual general meeting; (b) the date by which the next annual general meeting of the Company is required to be held by law or by its articles of association; or (c) the date upon which such authority is revoked or varied by an ordinary resolution of the shareholders in a general meeting of the Company. The existing Repurchase Mandate granted to the Company at the annual general meeting of the Company on 27 August 2004 will expire at the Annual General Meeting.

An explanatory statement containing all relevant information relating to the proposed Repurchase Mandate is set out in the Appendix to this circular. The information in the explanatory statement is provided to you with information reasonably necessary to enable you to make an informed decision on whether to vote for or against the resolution to grant to the Directors the Repurchase Mandate.

C. RE-ELECTION OF DIRECTORS

As at the date of this circular, the executive Directors are Li Jialin and Cheng Kam Chung; the non-executive Director is Sun Ali; and the independent non-executive Directors are Chan Po Fun Peter, Hu Yebi and Ni Zhenwei.

Pursuant to Article 86(3) of the Articles of Association, the Directors shall have the power from time to time and at any time to appoint any person as a Director either to fill a casual vacancy on the board or as an addition to the existing board. Any Director so appointed shall hold office only until the next following annual general meeting of the Company and shall then be eligible for re-election.

Pursuant to Article 87 of the Articles of Association, at each annual general meeting, one third of the Directors for the time being (or if their number is not a multiple of three, then the number to but not greater than one third) will retire from office by rotation. The Directors to retire by rotation shall include any Director who wishes to retire and not to offer himself for re-election. Any further Directors so to retire shall be those of the other Directors subject to retirement by rotation who have been longest in office since their last re-election or appointment and so that as between persons who became or were last re-elected Directors on the same day those to retire shall (unless they otherwise agree among themselves) be determined by lot.

Accordingly, Chan Po Fun Peter and Hu Yebi, who have been appointed by the Company on 16 April 2005 and 9 May 2005 respectively, and Sun Ali, who has to retire by rotation according to the Articles of Association, will retire at the Annual General Meeting, and being eligible, they will offer themselves for re-election at the Annual General Meeting.

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LETTER FROM THE BOARD

Chan Po Fun Peter, aged 83, received his education from Oxford University in England, Starndford University in Switzerland and Harvard University in Boston, the United States of America. Dr. Chan is a fellow of the Hong Kong Society of Accountants and of the Australian Society of Accountants; a member of the Law Association for Asia and Pacific, and the Inter-Pacific Bar Association; a member of the Society of Naval Architect and Marine Engineer of the United States; an honourary fellow of the Society for Underwater Technology of the United Kingdom; and a registered security dealer licensed by the Securities and Futures Commission. Dr. Chan has extensive experience in serving as senior executive of over 30 public listed companies in Hong Kong. He is currently an independent non-executive director of Chuang’s China Investments Limited and of Chuang’s Consortium International Limited; and is a non-executive director of Prime Investments Holdings Limited. He is also appointed to the Po Leung Kuk Advisory Board and is a Research Professor of Hong Kong Shue Yan College. Pursuant to an appointment letter given by the Company to Dr. Chan, Dr. Chan’s appointment took effect from 16 April 2005 for a term of 1 year subject to retirement by rotation and re-eclection at the annual general meeting in accordance with the Articles of Association. Dr. Chan is entitled to receive an annual director’s fee of HK$120,000 which is determined by the board of Directors with reference to his qualification and experience, responsibilities to be undertaken, and the prevailing market level of remuneration of similar position. To the best knowledge and belief of the board of Directors, having made all reasonable enquiries, Dr. Chan is not connected with any director, senior management, substantial shareholder or controlling shareholder of the Company and, as at the Latest Practicable Date, Dr. Chan did not have any interest in the Shares which was required to be disclosed under Part XV of the Securities and Futures Ordinance. Save as disclosed above, Dr. Chan and the Company are not aware of any other matter regarding his appointment that needs to be brought to the attention of the Shareholders.

Hu Yebi, aged 42, received his MBA from International Management School of Netherlands in Delft, Holland; Master degree in General Management from Beijing Technology University in Beijing, China; and BSc in Electronics from Hunan University in Changsha, China. Mr. Hu has experience in serving as senior executive of certain companies in Hong Kong engaging in securities and financial services business. He is currently a director of Partners Capital Asset Management Limited, Partners Capital Securities Limited and Yuan Asset Management (HK) Limited. Pursuant to an appointment letter given by the Company to Mr. Hu, Mr. Hu’s appointment took effect from 9 May 2005 for a term of 1 year subject to retirement by rotation and re-election at the annual general meeting in accordance with the Articles of Association. Mr. Hu is entitled to receive an annual director’s fee of HK$100,000 which is determined by the board of Directors with reference to his qualification and experience, responsibilities to be undertaken, and the prevailing market level of remuneration of similar position. To the best knowledge and belief of the board of Directors, having made all reasonable enquiries, Mr. Hu is not connected with any director, senior management, substantial shareholder or controlling shareholder of the Company and, as at the Latest Practicable Date, Mr. Hu did not have any interest in the Shares which was required to be disclosed under Part XV of the Securities and Futures Ordinance. Save as disclosed above, Mr. Hu and the Company are not aware of any other matter regarding his appointment that needs to be brought to the attention of the Shareholders.

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LETTER FROM THE BOARD

Sun Ali, aged 52, is the assistant general manager of a listed company in Hong Kong and is responsible for the business development policy of that company. Madam Sun graduated from the Wuhan University of Communication and Science in the PRC, and has worked as assistant engineer, engineer and deputy director of the Vessel Inspection Division under the Ministry of Communication in the PRC and then served as deputy general manager of CNFC International Fisheries Corporation. She has extensive experience and background in international trading, international partnership, market development, finance and corporate management. Madam Sun was appointed by the Company on 15 April 2002. Pursuant to the current appointment letter given by the Company to Madam Sun, Madam Sun’s appointment took effect from 9 May 2005 for a term of 1 year subject to retirement by rotation and re-election at the annual general meeting in accordance with the Articles of Association. Madam Sun is entitled to receive an annual director’s fee of HK$60,000 which is determined by the board of Directors with reference to her qualification and experience, responsibilities to be undertaken, and the prevailing market level of remuneration of similar position. To the best knowledge and belief of the board of Directors, having made all reasonable enquiries, Madam Sun is not connected with any director, senior management, substantial shareholder or controlling shareholder of the Company and, as at the Latest Practicable Date, Madam Sun did not have any interest in the Shares which was required to be disclosed under Part XV of the Securities and Futures Ordinance. Save as disclosed above, Madam Sun and the Company are not aware of any other matter regarding his appointment that needs to be brought to the attention of the Shareholders.

D. 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 information contained herein relating to the Company has been supplied by the Directors, who jointly and severally accept 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, opinions expressed in this circular have been arrived at after due and careful consideration and there are no other facts not contained in this circular the omission of which would make any statement contained herein misleading insofar as it relates to the Company.

E. PROCEDURES FOR DEMANDING A POLL

Under the Articles of Association, at any general meeting a resolution put to the vote of the meeting is to be decided on a show of hands unless (before or on the declaration of the result of the show of hands or on the withdrawal of any other demand for a poll) a poll is demanded by (i) the chairman of the meeting or (ii) at least three members present in person or, in case of a member being a corporation, by its duly authorised representative or by proxy for the time being entitled to vote at the meeting or (iii) any member or members present in person or, in the case of a member being a corporation, by its duly authorised representative 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 (iv) a member of members present in person or, in the case of a member being a corporation, by its duly authorised representative or by

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LETTER FROM THE BOARD

proxy and holding shares in the Company conferring a right to vote at the meeting being shares on which an aggregate sum has been paid equal to not less than one-tenth of the total sum paid up on all the shares conferring that right.

F. GENERAL INFORMATION

The notice for the Annual General Meeting is set out on pages 12 to 15 in this circular. Whether or not you intend to attend the Annual General Meeting, you are requested to complete the form of proxy and return it to the Company’s branch share registrar in Hong Kong, Abacus Share Registrars Limited at Ground Floor, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong in accordance with the instructions printed thereon not less than 48 hours before the time appointed for holding the Annual General Meeting. The return of the proxy form will not preclude you from attending and voting in person if you so wish.

G. RECOMMENDATION

The Directors consider that (i) the general mandates to issue and repurchase Shares; and (ii) the re-election of Directors are in the interest of the Company and so recommend you to vote in favour of the relevant resolutions at the Annual General Meeting. The Directors will vote in favour of such resolutions in respect of their shareholdings (if any) in the Company.

Yours faithfully, By Order of the Board VST Holdings Limited Li Jialin Chairman

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EXPLANATORY STATEMENT

APPENDIX

This Appendix serves as an explanatory statement given to all Shareholders, as required by the Listing Rules, to provide requisite information of the Repurchase Mandate.

1. LISTING RULES FOR REPURCHASES OF SHARES

The Listing Rules permit companies whose primary listing is on the Stock Exchange to repurchase their fully-paid shares subject to certain restrictions, the more important of which are summarised below:

(a) Shareholders’ approval

All proposed repurchase of securities on the Stock Exchange by a company with primary listing on the Stock Exchange must be approved in advance by an ordinary resolution, either by way of general mandate or by special approval of a particular transaction.

(b) Share capital

Under the Repurchase Mandate, the number of Shares that the Company may repurchase shall not exceed 10% of the aggregate nominal amount of the issued share capital of the Company at the date of the passing of the relevant resolutions granting the Repurchase Mandate. The Company’s authority is restricted to repurchases in accordance with the Listing Rules. On the Latest Practicable Date, there were in issue an aggregate of 840,000,000 Shares. Exercise in full of the Repurchase Mandate, on the basis that no further Shares would be issued or repurchased prior to the date of the Annual General Meeting, would accordingly result in up to 84,000,000 Shares being repurchased by the Company. The Shares repurchased by the Company shall, subject to applicable law, be automatically cancelled upon such repurchase.

(c) Reasons for repurchase

The Directors have no present intention to repurchase any Shares but consider that the Repurchase Mandate will provide the Company the flexibility to make such repurchase when appropriate and is beneficial to the Company. Such repurchases may, depending on the market conditions and funding arrangements at the time, lead to an enhancement of the net asset value of the Company and/or its earnings per Share. As compared with the financial position of the Company as at 31 March 2005 (being the date of its latest published audited accounts), the Directors consider that there would not be any material adverse impact on the working capital and on the gearing position of the Company in the event that the Repurchase Mandate is exercised in full at any time during the proposed repurchase period. The Directors do not propose to exercise the Repurchase Mandate in circumstances that would have a material adverse impact on the working capital or gearing ratio of the Company.

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EXPLANATORY STATEMENT

APPENDIX

(d) Funding of repurchases

Repurchase of the Shares will be funded out of funds legally available for such purpose in accordance with the memorandum and articles of association of the Company and the applicable laws of the Cayman Islands.

The Company is empowered by its memorandum and articles of association to repurchase its Shares. The Cayman Islands law provides that the amount of capital repaid in connection with a Share repurchase may only be paid out of either the capital paid up on the Shares repurchased, or the funds of the Company that would otherwise be available for distribution by way of dividend or the proceeds of a new issue of Shares made for such purpose. The amount of premium payable on repurchase may only be paid out of either the funds of the Company that would otherwise be available for distribution by way of dividend or out of the share premium of the Company. The repurchased Shares will remain part of the authorised but unissued share capital.

(e) Directors, their associates and connected persons

None of the Directors nor, to the best of the knowledge and belief of the Directors having made all reasonable enquiries, any of their associates has any present intention, in the event that the proposed Repurchase Mandate is approved by the Shareholders, to sell Shares to the Company.

At the Latest Practicable Date, no connected person (as defined in the Listing Rules) of the Company has notified the Company that he/she has a present intention to sell Shares to the Company nor has he/she undertaken not to sell any of the Shares held by him/her to the Company in the event that the Repurchase Mandate is granted.

(f) Undertaking of the Directors

The Directors have undertaken to the Stock Exchange that they will exercise the powers of the Company to make repurchases pursuant to the Repurchase Mandate in the proposed resolution in accordance with the Listing Rules, the memorandum and articles of association of the Company and the applicable laws of the Cayman Islands.

(g) Effect of the Takeovers Code

If as a result of a repurchase of Shares, a Shareholder’s proportionate interest in the voting rights of the Company increases, such increase will be treated as an acquisition for the purpose of Rule 26 of the Takeovers Code. As a result, a Shareholder, or a group of Shareholders acting in concert (within the meaning under the Takeovers Code), depending on the level of increase in the Shareholder’s interests, could obtain or consolidate control of the Company and become(s) obliged to make a mandatory offer in accordance with Rule 26 of the Takeovers Code.

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EXPLANATORY STATEMENT

APPENDIX

As at the Latest Practicable Date, the register of the Shareholders maintained by the Company pursuant to Section 336 under Part XV of the Securities and Futures Ordinance (Cap.571 of the laws of Hong Kong) showed that the Company has been notified of the following interests, being 5% or more of the Company’s issued share capital:

			Approximate
		Approximate	percentage of
		percentage of the	shareholding if
		shareholding as	the Repurchase
Name of	Number of	at the Latest	Mandate is
Shareholder	Shares held	Practicable Date	exercised in full
CKC Holdings	143,500,000	17.08%	18.98%
Limited (Note 1)
L & L Limited	241,500,000	28.75%	31.94%
(Note 2)
Liu Li (Note 3)	165,000,000	19.64%	21.82%

Notes:

1. All issued share capital in CKC Holdings Limited is held by Infinity Fortune Limited, a company incorporated in the British Virgin Islands as a trustee of Infinity Fortune Unit Trust. Infinity Fortune Unit Trust is a unit trust of which 1 unit is held by Madam Kwan How Yin, the spouse of Mr. Cheng Kam Chung, vice chairman of the Company and an executive Director, and 9,999 units are held by HSBC International Trustee Limited as trustee for the CKC Family Trust, a discretionary trust which objects include Madam Kwan How Yin and her children, namely, Cheng Wing Shun Vincent, Cheng Wing Ni Vene and Cheng Wing Tsan Wilson.

2. The entire issued share capital of L & L Limited is held by Mr. Li Jialin, the chairman and chief executive officer of the Company and an executive Director and Madam Liu Li (the spouse of Mr. Li Jialin) equally.

3. Apart from her interest in L & L Limited, Madam Liu Li is also interested in 165,000,000 Shares personally.

In the event that the Directors shall exercise in full the Repurchase Mandate, the total interests of the above Shareholders would be increased to approximately the respective percentages shown in the last column above and such increase will give rise to an obligation to make a mandatory offer under Rule 26 of the Takeovers Code but will not reduce the amount of Shares held by the public to be less than 25%.

The Directors have no intention to exercise the Repurchase Mandate to an extent as may result in the amount of Shares held by the public being reduced to less than 25% of the total issued share capital of the Company nor to an extent as would result in an obligation to make a mandatory offer under Rule 26 of the Takeover Code.

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EXPLANATORY STATEMENT

APPENDIX

2. SHARE PURCHASE MADE BY THE COMPANY

During each of the six months preceding the date of this circular, no Shares have been repurchased by the Company.

3. SHARE PRICES

During each of the previous 12 months, the highest and lowest traded prices for Shares on the Stock Exchange were as follows:

	Per Share
Month	Highest	Lowest
	HK$	HK$
2004
July	0.186	0.136
August	0.142	0.135
September	0.141	0.129
October	0.140	0.135
November	0.170	0.135
December	0.159	0.133
2005
January	0.159	0.123
February	0.145	0.133
March	0.145	0.130
April	0.154	0.130
May	0.156	0.133
June (up to the Latest Practicable Date)	0.169	0.146

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NOTICE OF ANNUAL GENERAL MEETING

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(Stock Code: 856)

NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the Annual General Meeting of VST Holdings Limited (the “ Company ”) will be held at JW Marriott Hotel, Queensway & Victoria (Level 3), Pacific Place, 88 Queensway, Hong Kong on Friday, 12 August 2005 at 10:30 a.m. for the following purposes:

1. To receive and consider the audited consolidated financial statements and the reports of the directors and auditors for the year ended 31 March 2005.

2. To declare a final dividend for the year ended 31 March 2005.

3. A. To re-elect Chan Po Fun Peter as director;

4. B. To re-elect Hu Yebi as director;

5. C. To re-elect Sun Ali as director; and

6. D. To authorise the board of directors to fix the remuneration of the directors.

7. To appoint auditors and to authorise the board of directors to fix their remuneration.

8. As special business, to consider and, if thought fit, pass with or without amendments, the following resolutions each as ordinary resolutions:

9. A. “ THAT :

   • (a) subject to paragraph (c) of this Resolution, the exercise by the directors of the Company (the “ Directors ”) during the Relevant Period (as defined below) of all the powers of the Company to allot, issue and deal with additional shares in the capital of the Company and to make or grant offers, agreements and options which might require the exercise of such powers be and is hereby generally and unconditionally approved;

   • (b) the approval in paragraph (a) of this Resolution shall authorise the Directors during the Relevant Period to make or grant offers, agreements and options which might require the exercise of such powers after the end of the Relevant Period;

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NOTICE OF ANNUAL GENERAL MEETING

• (c) the aggregate nominal amount of share capital allotted or agreed conditionally or unconditionally to be allotted (whether pursuant to an option or otherwise) by the Directors pursuant to the approval in paragraph (a) of this Resolution, otherwise than pursuant to (i) a Rights Issue (as defined below); (ii) the exercise of rights of subscription or conversion under the terms of any warrants issued by the Company or any securities which are convertible into shares of the Company; (iii) the exercise of any option under any share option scheme or similar arrangement for the time being adopted for the grant or issue to officers, employees of the Company and/or any of its subsidiaries or other eligible participants of shares or rights to acquire shares in the Company or (iv) any scrip dividend or similar arrangement providing for the allotment of shares in lieu of the whole or part of the cash payment for a dividend on shares of the Company in accordance with the articles of association of the Company, shall not exceed 20 per cent. of the aggregate nominal amount of the share capital of the Company in issue at the date of this Resolution and the said approval shall be limited accordingly; and

• (d) for the purposes of this Resolution:

“ Relevant Period ” means the period from the passing of this Resolution until whichever is the earlier of:

• (i) the conclusion of the next annual general meeting of the Company;

• (ii) the expiration of the period within which the next annual general meeting of the Company is required by the articles of association of the Company or any applicable law to be held; and

• (iii) the date of which the authority set out in this Resolution is revoked or varied by an ordinary resolution of the shareholders of the Company in general meeting.

“ Rights Issue ” means an offer of shares or other securities of the Company open for a period fixed by the Directors to holders of shares of the Company or any class thereof on the register on a fixed record date in proportion to their then holdings of such shares or class thereof (subject to such exclusion or other arrangements as the Directors may deem necessary or expedient in relation to fractional entitlements or having regard to any restrictions or obligations under the laws of, or the requirements of any recognized regulatory body or any stock exchange in, any territory outside the Hong Kong Special Administrative Region of the People’s Republic of China).”

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NOTICE OF ANNUAL GENERAL MEETING

• B. “ THAT :

• (a) subject to paragraph (b) of this Resolution, the exercise by the Directors during the Relevant Period (as defined below) of all powers of the Company to repurchase shares of the Company, subject to and in accordance with all applicable laws and requirements, be and is hereby generally and unconditionally approved;

• (b) the aggregate nominal amount of the shares of the Company which may be purchased pursuant to the approval in paragraph (a) of this Resolution shall not exceed 10 per cent. of the aggregate nominal amount of the share capital of the Company as at the date of passing of this Resolution and the said approval shall be limited accordingly; and

• (c) for the purposes of this resolution:

“ Relevant Period ” means the period from the passing of this Resolution until whichever is the earlier of:

• (i) the conclusion of the next annual general meeting of the Company;

• (ii) the expiration of the period within which the next annual general meeting of the Company is required by the articles of association of the Company or any applicable law to be held; and

• (iii) the date which the authority set out in this Resolution is revoked or varied by an ordinary resolution of the shareholders of the Company in general meeting.”

• C. “ THAT conditional upon Resolutions A and B set out above being passed, the aggregate nominal amount of the shares of the Company which are repurchased by the Company under the authority granted to the Directors as mentioned in Resolution B above shall be added to the aggregate nominal amount of the share capital of the Company that may be allotted or agreed conditionally or unconditionally to be allotted by the Directors pursuant to the Resolution A above.”

By Order of the Board Lung Cheuk Wah Company Secretary

Hong Kong 6 July 2005

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NOTICE OF ANNUAL GENERAL MEETING

Notes:

1. A member entitled to attend and vote at the meeting convened by the above notice is entitled to appoint proxies to attend and, in the event of a poll, vote in his stead. A proxy need not be a member of the Company.

2. The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing or, if the appointor is a corporation, either under its common seal or under the hand of an officer or attorney or other person duly authorised.

3. In order to be valid, the form of proxy must be deposited at the Company’s branch share registrar in Hong Kong, Abacus Share Registrars Limited, Ground Floor, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong together with a power of attorney or other authority, if any, under which it is signed or a notarially certified copy of that power of attorney or authority, not less than 48 hours before the time for holding the meeting or any adjourned meeting.

4. Delivery of the form of proxy will not preclude a member from attending and voting in person at the meeting convened and in such event, the form of proxy shall be deemed to be revoked.

5. The register of members of the Company will be closed from 9 August 2005 to 12 August 2005, both days inclusive, during which period no transfer of shares will be effected. In order to qualify for the final dividend to be approved at the general meeting, all transfers accompanied by the relevant share certificates must be lodged with the Company’s branch share registrar in Hong Kong, Abacus Share Registrars Limited, Ground Floor, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong not later than 4:30 p.m. on 8 August 2005.

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