Wasion Holdings Limited — Proxy Solicitation & Information Statement 2006

Oct 24, 2006

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 to be taken, you should consult your licensed securities dealer, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Wasion Meters Group Limited, you should at once hand this circular and the accompanying form of proxy to the purchaser or the transferee or to the bank, licensed securities dealer 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.

WASION METERS GROUP LIMITED

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 3393)

REVISED ANNUAL CAPS FOR CONTINUING CONNECTED TRANSACTIONS

Independent financial adviser to the Independent Board Committee and the Independent Shareholders

Hantec Capital Limited

A letter from the Board is set out on pages 3 to 6 of this circular and a letter from the Independent Board Committee containing its recommendations to the Independent Shareholders in relation to the terms of the increases in the annual caps for the Purchases under the Master Agreement is set out on page 7 of this circular. A letter from Hantec Capital, the independent financial adviser to the Independent Board Committee and the Independent Shareholders, containing its advice to the Independent Board Committee and the Independent Shareholders on the terms of the increases in the annual caps for the Purchases under the Master Agreement is set out on pages 9 to 14 of this circular.

A notice convening the Extraordinary General Meeting to be held at Room 3203, 32/F., Admiralty Centre I, 18 Harcourt Road, Hong Kong on Thursday, 9 November 2006 at 10:30 a.m. is set out on pages 20 to 21 of this circular. A form of proxy for use at the Extraordinary General Meeting is enclosed with this circular. 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 and deposit with the Company’s Hong Kong branch share registrar, Computershare Hong Kong Investor Services Limited at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong as soon as possible but in any event not less than 48 hours before the time appointed for the holding of the Extraordinary General Meeting. Completion and return of the form of proxy will not preclude you from attending and voting in person at the Extraordinary General Meeting or any adjourned meeting should you so wish.

24 October 2006

CONTENTS
	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
Letter from the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Letter from Hantec Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
Appendix — General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	15
Notice of Extraordinary General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	20

— i —

DEFINITIONS

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

“associate(s)”	has the same meaning as ascribed to it under the Listing Rules
“Board”	the board of Directors of the Company
“Business Day”	any day (excluding Saturday and Sunday) that banks in Hong
	Kong are generally open for business
“Company”	Wasion Meters Group Limited, a company incorporated in the
	Cayman Islands with limited liability, the shares of which are
	listed on the main board of the Stock Exchange
“connected person(s)”	has the same meaning as ascribed to it under the Listing Rules
“Director(s)”	the directors of the Company
“Extraordinary General Meeting”	the extraordinary general meeting of the Company to be
	convened for the Shareholders to consider and, if thought fit,
	approve the increases in the annual caps for the Purchases
	under the Master Agreement
“Group”	the Company and its subsidiaries
“Hantec Capital”	Hantec Capital Limited, a licensed corporation to conduct
	types 1 (dealing in securities) and 6 (advising on corporate
	finance) regulated activities under the SFO and the
	independent financial adviser to advise the Independent
	Board Committee and the Independent Shareholders on the
	terms of the increases in the annual caps for the Purchases
	under the Master Agreement
“HK$”	Hong Kong dollar, the lawful currency of Hong Kong
“Hong Kong”	the Hong Kong Special Administrative Region of the PRC
“Hunan Weike”	Hunan Weike Power Meter Co., Ltd., a wholly foreign-owned
	enterprise established in the PRC on 24 May 2002 and is
	wholly-owned by Mr. Liang Ke Nan, a brother of Mr. Ji Wei,
	an executive Director and the chairman of the Company
“Independent Board Committee”	the independent committee of the Board, comprising the three
	independent non-executive Directors, namely Mr. Hui Wing
	Kuen, Mr. Pan Yuan and Mr. Wu Jin Ming, which has been
	formed for the purpose of advising the Independent
	Shareholders as to the terms of the increases in the annual
	caps for the Purchases under the Master Agreement

— 1 —

DEFINITIONS

“Independent Shareholders”	shareholders of the Company other than Mr. Ji Wei and his
	associates
“Latest Practicable Date”	20 October 2006, 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
“Master Agreement”	the agreement dated 5 December 2005 between the Company
	and Hunan Weike in relation to, among other things, the
	Purchases
“PRC”	the People’s Republic of China
“Purchases”	the purchases of single-phase electronic power meters from
	Hunan Weike by the Company under the Master Agreement
“RMB”	Renminbi, the lawful currency of the PRC
“SFO”	Securities and Futures Ordinance (Chapter 571 of the Laws of
	Hong Kong)
“Share(s)”	share(s) of par value of HK$0.01 each in the capital of the
	Company
“Shareholder(s)”	shareholders of the Company
“Stock Exchange”	the Stock Exchange of Hong Kong Limited
“substantial shareholder”	has the same meaning as ascribed to it under the Listing Rules
“%”	per cent

For the purpose of this circular, amounts in RMB have been translated into RMB1.00 = HK$0.96.

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LETTER FROM THE BOARD

WASION METERS GROUP LIMITED

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 3393)

Executive Directors: Ji Wei (Chairman) Wang Xue Xin Cao Zhao Hui Zheng Xiao Ping Liao Xue Dong Zeng Xin

Registered office:

Cricket Square Hutchins Drive P.O. Box 2681GT George Town Grand Cayman British West Indies

Independent non-executive Directors

Hui Wing Kuen Pan Yuan Wu Jin Ming

Principal place of business in Hong Kong

Room 2903 Far East Finance Centre 16 Harcourt Road Central Hong Kong

24 October 2006

To the Shareholders

Dear Sir/Madam,

REVISED ANNUAL CAPS FOR CONTINUING CONNECTED TRANSACTIONS

THE MASTER AGREEMENT

On 5 December 2005, the Company and Hunan Weike entered into the Master Agreement pursuant to which the Company agreed to purchase single-phase electronic power meters from Hunan Weike on an OEM basis and sell to Hunan Weike three-phase electronic power meters for distribution. The single-phase electronic power meters are manufactured in accordance with the Group’s specifications and requirements under the brandname of “Wasion”.

The Master Agreement has a term commencing on the date the shares of the Company commences dealing on the Stock Exchange until 31 December 2007. Hunan Weike is principally engaged in the production of single-phase electronic power meters and is wholly-owned by Mr. Liang Ke Nan, a brother of Mr. Ji Wei, a Director and the chairman of the Company. As the annual

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LETTER FROM THE BOARD

transactional amount of the transaction with Hunan Weike will exceed 2.5% of each of the approximate percentage ratios as defined in Chapter 14 of the Listing Rules, the transactions between the Company and Hunan Weike constitute non-exempt continuing connected transactions for the Company under Chapter 14A of the Listing Rules.

EXISTING ANNUAL CAPS FOR PURCHASES UNDER THE MASTER AGREEMENT

On 30 November 2005, the Stock Exchange granted a waiver to the Company pursuant to Rule 14A.42(3) of the Listing Rules from strict compliance with the announcement and Independent Shareholders’ approval requirements under Rules 14A.47 and 14A.48 of the Listing Rules in respect of the transactions under the Master Agreement. The waiver is subject to, among other things, the aggregate annual amount of purchases under the Master Agreement not exceeding RMB34 million, RMB40 million and RMB46 million for the three years ending 31 December 2005, 2006 and 2007, respectively.

The total purchases by the Group from Hunan Weike for the year ended 31 December 2005 was approximately RMB33.7 million, representing approximately 99% of the annual cap of Purchases for the year ended 31 December 2005. As of 15 September 2006, purchases from Hunan Weike by the Group was approximately RMB39.19 million, representing approximately 98% of the annual cap of Purchases for the year ending 31 December 2006. In order not to exceed the existing annual cap for the Purchases for the year ending 31 December 2006 of RMB40 million, the Company has suspended transactions with Hunan Weike since 15 September 2006 and such transactions will remain suspended until the proposed increase in the annual caps for the continuing connected transactions with Hunan Weike has been approved by the Independent Shareholders at the Extraordinary General Meeting.

REASONS FOR REVISING THE ANNUAL CAPS FOR PURCHASES

Prior to 2006, the Group only has limited sales overseas. As a result of the Group’s expansion into the export markets in 2006 and the successful winning of contracts in Africa and elsewhere, there has been strong growth in demand for the Group’s products overseas. The export markets of the Group are currently Africa and Southeast Asia where the demands are primarily in less technologically advanced single phase electronic power meters. With the growth in the Group’s sales overseas, and the increase in demand for electronic single-phase power meters in the domestic market pursuant to the directive of the PRC Government on reducing power wastage, the Directors expect that the annual caps for the Purchases will be exceeded for the two financial years ending 31 December 2006 and 31 December 2007, respectively. Accordingly, the Company and Hunan Weike have on 29 September 2006 entered into a supplemental agreement to increase the annual caps for the Purchases to RMB100 million and RMB130 million for the two years ending 31 December 2006 and 2007, respectively.

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LETTER FROM THE BOARD

The increases were determined by reference to the anticipated future requirements of single-phase electronic power meters by the Group for the export and domestic markets. In late 2005 and early 2006, the Group has concluded several significant export orders for single-phase electronic power meters which resulted in a significant increase in demand for such products for the year ending 31 December 2006. The Directors expect that the export market will continue to grow at a steadier pace in 2007. Save for the revisions to the annual caps for the Purchases, all other terms of the Master Agreement shall remain unchanged.

The Directors (including the independent non-executive Directors) consider that the transactions under the Master Agreement are entered into in the usual and ordinary course of businesses of the Group, the transactions under the Master Agreement are conducted on an arm’s length basis and on normal commercial terms and the increases to the annual caps for the Purchases are fair and reasonable and in the interests of the Group and the Shareholders as a whole.

As the applicable percentage ratios as defined under Rule 14.07 of the Listing Rules on the aggregate revised annual caps under the Master Agreement exceed 2.5% on an annual basis for the two years ending 31 December 2006 and 2007, the revision of the annual caps is subject to the approval by the Independent Shareholders in accordance with Chapter 14A of the Listing Rules.

GENERAL

The Group is principally engaged in the development, manufacture and sale of electronic power meters and data collection terminals and the provision of software development services.

The Company will comply with the relevant provisions under Chapter 14A of the Listing Rules governing connected transactions in the event that the total amount of any of the transactions under the Master Agreement shall exceed the revised annual caps, or that there is any material amendment to their terms.

The revisions to the annual caps of the Master Agreement will be subject to approval by the Independent Shareholders in an extraordinary general meeting where Mr. Ji Wei, who is interested in approximately 68.16% of the issued share capital of the Company, and his associates will abstain from voting.

Hantec Capital has been appointed the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders on the terms of the increase in the annual caps of the Master Agreement.

— 5 —

LETTER FROM THE BOARD

EXTRAORDINARY GENERAL MEETING

Set out on pages 20 to 21 is a notice convening the Extraordinary General Meeting to be held at Room 3203, 32/F., Admiralty Centre I, 18 Harcourt Road, Hong Kong on Thursday, 9 November 2006 at which an ordinary resolution will be proposed to the Independent Shareholders to consider and, if thought fit, approve the increases in the annual caps for the Purchases under the Master Agreement. Pursuant to the requirements of the Listing Rules, the vote of the Shareholders at the Extraordinary General Meeting for the approval of the increases in the annual caps for the Purchases under the Master Agreement will be taken by poll where Mr. Ji Wei and his associates will abstain from voting.

The form of proxy for use at the Extraordinary General Meeting is enclosed with this circular. Whether or not you are able to attend the Extraordinary General Meeting in person, you are advised to read the notice and complete and return the form of proxy in accordance with the instructions printed thereon to the Company’s Hong Kong branch share registrar, Computershare Hong Kong Investor Services Limited at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong as soon as possible but in any event not later than 48 hours before the time appointed for the holding of the Extraordinary General Meeting or any adjourned meeting thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the Extraordinary General Meeting or any adjourned meeting thereof should you so wish.

RECOMMENDATIONS

Your attention is drawn to the letter from the Independent Board Committee set out on page 7 of this circular which contains its recommendations to the Independent Shareholders in respect of the terms of the increases in the annual caps for the Purchases under the Master Agreement and the letter from Hantec Capital on pages 9 to 14 of this circular which contains its advice and the principal factors and reasons it has taken into consideration in arriving at its advice with regard to the terms of the increases in the annual caps for the Purchases under the Master Agreement.

You are advised to read the letter from Independent Board Committee and the letter from Hantec Capital mentioned above before deciding as to how to vote at the Extraordinary General Meeting.

ADDITIONAL INFORMATION

Your attention is also drawn to the additional information set out in the appendix to this circular and the notice of the Extraordinary General Meeting.

Yours faithfully, By order of the Board of Wasion Meters Group Limited Cao Zhao Hui Executive Director

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

WASION METERS GROUP LIMITED

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 3393)

24 October 2006

To the Independent Shareholders

Dear Sir or Madam,

REVISED ANNUAL CAPS FOR CONTINUING CONNECTED TRANSACTIONS

We have been appointed as members of the Independent Board Committee to advise you in connection with the terms of the increases in the annual caps for the Purchases under the Master Agreement, details of which are set out in the “Letter from the Board” in the circular dated 24 October 2006 (the “ Circular ”) of which this letter forms part. Defined terms used in this letter shall have the same meanings as given to them in the Circular unless the context otherwise requires.

We, being the independent non-executive Directors constituting the Independent Board Committee, are writing to you to set out our opinion in respect of the terms of the increases in the annual caps for the Purchases under the Master Agreement. The Independent Board Committee was set up to advise you whether in its view the terms of the increases in the annual caps for the Purchases under the Master Agreement are in the interests of the Company and the Shareholders as a whole and whether the terms of the increases in the annual caps for the Purchases are fair and reasonable so far as the Company and the Shareholders are concerned.

Hantec Capital has been appointed by the Company to advise us and the Shareholders as to whether the terms of the increases in the annual caps for the Purchases under the Master Agreement are fair and reasonable so far as the Company and the Shareholders are concerned. Details of its advice, together with the principal factors taken into consideration in arriving at such advice, are set out on pages 9 to 14 of the Circular.

Your attention is also drawn to the “Letter from the Board” set out on pages 3 to 6 of the Circular and the additional information set out in the appendix to the Circular.

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

Having considered the terms of the increases in the annual caps for the Purchases under the Master Agreement and the advice of Hantec Capital, we consider that the terms of the increases in the annual caps for the Purchases under the Master Agreement are fair and reasonable as far as the Company and the Shareholders are concerned and that they are in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Shareholders to vote in favour of the ordinary resolution as set out in the notice of the Extraordinary General Meeting attached to the Circular to approve the increases in the annual caps for the Purchases under the Master Agreement.

Yours faithfully, For and on behalf of

Independent Board Committee

Hui Wing Kuen	Pan Yuan	Wu Jin Ming
Independent Non-executive	Independent Non-executive	Independent Non-executive
Director	Director	Director

— 8 —

LETTER FROM HANTEC CAPITAL

The following is the full text of a letter of advice from Hantec Capital to the Independent Board Committee and the Independent Shareholders in relation to the revised annual caps for the Purchases under the Master Agreement, which has been prepared for the purpose of inclusion in this circular:

Hantec Capital Limited

45th Floor, COSCO Tower 183 Queen’s Road Central Hong Kong

24 October 2006

To the Independent Board Committee and the Independent Shareholders of Wasion Meters Group Limited

Dear Sirs and Madams,

REVISED ANNUAL CAPS FOR CONTINUING CONNECTED TRANSACTIONS

INTRODUCTION

We refer to our engagement as the independent financial adviser to the Independent Board Committee and the Independent Shareholders on the revised annual caps (the “ Revised Annual Caps ”) for the Purchases under the Master Agreement, details of which are contained in the Letter from the Board (the “ Letter from the Board ”) contained in the circular (the “ Circular ”) of the Company to the Shareholders dated 24 October 2006, of which this letter forms part. Terms used in this letter have the same meanings as defined in the Circular unless the context otherwise requires.

On 30 November 2005, the Stock Exchange granted a waiver to the Company in relation to the Purchases of annual caps of RMB34 million, RMB40 million and RMB46 million for each of the three years ending 31 December 2007. However, due to the increase in the demand for single-phase electronic power meters in overseas and domestic markets, the Directors proposed to increase the annual caps to the Revised Annual Caps for each of the two years ending 31 December 2007. As the applicable percentage ratios as defined under Rule 14.07 of the Listing Rules on the Revised Annual Caps under the Master Agreement exceed 2.5% on an annual basis for each of the two years ending 31 December 2007, the Revised Annual Caps are subject to the reporting and independent shareholders’ approval requirements under Rule 14A.35 of the Listing Rules. The Extraordinary General Meeting will be convened for the Independent Shareholders to approve the Revised Annual Caps by poll, at which Mr. Ji Wei and his associates will abstain from voting in relation to the resolution approving the Revised Annual Caps. The Independent Board Committee, comprising the independent non-executive Directors, namely Mr. Hui Wing Kuen, Mr. Pan Yuan and Mr. Wu Jin Ming, has been formed to advise the Independent Shareholders on the Revised Annual Caps.

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LETTER FROM HANTEC CAPITAL

In formulating our recommendation, we have relied on the statements, information, opinions and representations contained in the Circular and the information and representations provided to us by the Directors and management of the Company. We have assumed that all information, representations and opinions contained or referred to in the Circular and all information, representations and opinions which have been provided by the Directors and management of the Company for which they are solely responsible, are true and accurate at the time they were made and will continue to be accurate at the date of the despatch of the Circular.

The Directors jointly and severally accept full responsibility for the accuracy of the information contained in the Circular and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, opinions expressed in the Circular have been arrived at after due and careful consideration and there are no other facts not contained in the Circular the omission of which would make any such statement contained in the Circular misleading. We consider that we have been provided with sufficient information on which to form a reasonable basis for our opinion. We have no reason to suspect that any relevant information has been withheld, nor are we aware of any fact or circumstance which would render the information provided and representations and opinions made to us untrue, inaccurate or misleading. We have not, however, carried out any independent verification of the information provided by the Directors and management of the Company, nor have we conducted an independent investigation into the business and affairs of the Group.

PRINCIPAL FACTORS TAKEN INTO ACCOUNT

In arriving at our opinion regarding whether the Revised Annual Caps are in the interest of the Company and the Shareholders as a whole and whether the terms of the Purchases and the Revised Annual Caps are fair and reasonable in so far as the Independent Shareholders are concerned, we have considered the following principal factors and reasons:

1. Background information

The Group is principally engaged in the development, manufacture and sale of electronic power meters and data collection terminals and the provision of software development services.

Hunan Weike is principally engaged in the production and sale of single-phase electronic power meters.

On 5 December 2005, the Company and Hunan Weike entered into the Master Agreement pursuant to which the Company agreed to purchase single-phase electronic power meters from Hunan Weike on an OEM basis and sell to Hunan Weike three-phase electronic power meters for distribution. The Group is capable of producing single-phase electronic power meters with its own manufacturing facility. The principal reason for purchasing single-phase electronic power meters on OEM basis from Hunan Weike rather than manufacturing such meters by itself is that the production capacity of the Group can then be better allocated to the production of the more technologically advanced, higher-priced three-phase electronic power meters. As Hunan Weike is wholly-owned by Mr. Liang Ke

— 10 —

LETTER FROM HANTEC CAPITAL

Nan, a brother of Mr. Ji Wei, a Director and the chairman of the Company, Mr. Liang Ke Nan and his associates are connected persons of the Company and hence the transactions contemplated under the Master Agreement constitute continuing connected transactions of the Company under Chapter 14A of the Listing Rules.

On 30 November 2005, the Stock Exchange granted a waiver to the Company pursuant to Rule 14A.42(3) of the Listing Rules from strict compliance with the announcement and Independent Shareholders’ approval requirements under Rules 14A.47 and 14A.48 of the Listing Rules in respect of the transactions under the Master Agreement. The waiver is subject to, among others, the aggregate annual amount of the Purchases under the Master Agreement not exceeding RMB34 million, RMB40 million and RMB46 million for each of the three years ending 31 December 2007.

2. Principal terms of the Purchases

Pursuant to the Master Agreement, among others, the Group agreed to purchase single-phase electronic power meters from Hunan Weike on OEM basis. The single-phase electronic power meters are manufactured in accordance with the Group specifications and requirements under the brand name of “Wasion”. The Purchases are conducted at 95% of the sale price of the single-phase electronic power meters of the Group, subject to final acceptance of the order by Hunan Weike. The Master Agreement will expire on 31 December 2007.

The original annual cap amounts for the Purchases under the Master Agreement for each of the three years ending 31 December 2007 are as follows:

	Year ended 31 December	**Year ending **	31 December
Cap amount	2005	2006	2007
	(RMB million)	(RMB million)	(RMB million)
Purchases	34	40	46

The Directors advised that the annual caps for the Purchases under the Master Agreement are determined based on the historical figures and the Group’s plan of development.

In light of the fact that (i) the Purchases are in line with the business of the Group; (ii) the Purchases will improve the allocation of production capacity of the Group; and (iii) the Purchases secure the Group’s profit margin in trading of single-phase electronic power meters, we are of the view that the Purchases are entered into in the ordinary and usual course of business of the Company and in the interests of the Company and the Shareholders taken as a whole.

3. The Revised Annual Caps

Prior to 2006, the Group only had limited sales overseas. As a result of the Group’s expansion into the export markets in 2006 and the successful winning of contracts in Africa and elsewhere, there has been strong growth in demand for the Group’s products overseas. The export markets of the Group are currently Africa and Southeast Asia where the demands are primarily in less technologically advanced single-phase electronic power meters. With the exploration of the Group’s overseas market,

— 11 —

LETTER FROM HANTEC CAPITAL

and the increase in demand for electronic single-phase power meters in the domestic market pursuant to the directive of the PRC Government on reducing power wastage, the Directors expect that the original annual caps for the Purchases for each of the two years ending 31 December 2007 will be exceeded. Accordingly, the Company and Hunan Weike have on 29 September 2006 entered into a supplemental agreement to increase the annual caps for the Purchases to RMB100 million and RMB130 million for each of the two years ending 31 December 2007. We have reviewed the historical sales amounts of the Group’s single-phase power meters for the three years ended 31 December 2005 and for the period from 1 January 2006 to 15 September 2006 as well as the amount of export sales in 2006. We noted that the Group’s sales of single-phase electronic power meters in domestic market have increased in a compound annual growth rate of approximately 28% from 2003 to 2005 and the actual sales of single-phase electronic power meters for the period from 1 January 2006 to 15 September 2006 have increased approximately 211% as compared with the corresponding period in 2005.

Set out below are the Revised Annual Caps, the original annual caps for the Purchases under the Master Agreement and the actual value of single-phase electronic power meters purchased from Hunan Weike by the Group for each of the three years ending 31 December 2007:

	Year ended 31 December	**Year ending **	31 December
	2005	2006	2007
	(RMB million)	(RMB million)	(RMB million)
Revised Annual Caps	N/A	100	130
Original annual caps	34	40	46
Actual value	approximately 33.7	approximately	N/A
		39.19 (up to 15
		September 2006)

As of 15 September 2006, the aggregate value of the Purchases amounted to approximately RMB39.19 million, representing approximately 98% of the original cap amount of RMB40 million for the year ending 31 December 2006. We understand from the Directors that such considerable purchase is principally attributable to several significant export orders concluded by the Group in late 2005 and early 2006 and therefore the volume to be purchased from Hunan Weike will increase to cater for such demand.

In estimating the total value of single-phase electronic power meters to be purchased from Hunan Weike for the purpose of setting the Revised Annual Caps for the two years ending 31 December 2007, the Directors have taken into account of the anticipated future requirements of single-phase electronic power meters by the Group for the export and domestic markets.

We have obtained and reviewed the schedule (the “ Schedule ”) of expected sales of single-phase electronic power meters for the two years ending 31 December 2007 prepared by the Company. Pursuant to the Schedule, the expected sales of single-phase electronic power meters for the year ending 31 December 2006 include (i) the actual sales of approximately RMB39.19 million up to 15 September 2006, (ii) the estimated sales supported by the confirmed orders up to 15 September 2006

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LETTER FROM HANTEC CAPITAL

and (iii) the expected sales for the period from 15 September 2006 to 31 December 2006. As advised by the Directors, the expected sales for the period from 15 September 2006 to 31 December 2006 were determined with reference to (i) historical performance and expected growth rate of sales of single-phase electronic power meters of the Group for the year ending 31 December 2006; (ii) seasonal factors; and (iii) the potential orders under negotiation. We have reviewed the Group’s historical sales performance for the period from 15 September to 31 December in the past three years and we noted that the projected sales for the period from 15 September to 31 December in 2006 is similar to the actual sales amount for the period from 15 September to 31 December in 2005 and we consider that the expected growth rate of sales for such period has been considered when estimating the potential orders under negotiation. Taking into account the amount of confirmed orders and the basis for projection of the expected sales for the remaining time of 2006, the Revised Annual Cap for 2006 is set at RMB100 million, which represents an increase of approximately 196.7% from the actual sales in 2005 and such increase is principally attributable to the strong demand in overseas and domestic markets. Having considered the basis on which the Revised Annual Cap for 2006 was determined as described above, we are of the view that the Revised Annual Cap for 2006 is fair and reasonable.

Based on the market demand and the growth trend in the sales of single-phase electronic power meters of the Group, the Directors forecast that the expected sales of single-phase electronic power meters for the year ending 31 December 2007 will record an increase of approximately 30% over 2006. As advised by the Directors, the growth rate of 30% was determined with reference to the anticipated future requirements of single-phase electronic power meters for the export and domestic markets. We have confirmed by the Directors that after the rapid expansion in overseas market in 2006, the Group will not process another rapid expansion into new foreign markets in 2007. In this regard, we have discussed with the management of the Company and noted that the anticipated future requirements of single-phase electronic power meters of the Group for the year 2007 was determined with reference to (i) the marketing efforts taken and to be taken for exploration of overseas market; and (ii) the historical growth rate of domestic market. The Directors confirmed that, in 2007, the Group will continue its marketing efforts taken in 2006 to explore the overseas market. As the overseas market is newly explored with major marketing activities commenced in 2006, we concur with the Directors and consider that historical growth rate of overseas market is not suitable for comparison purpose. Considering that the historical growth rate of overseas market is not comparable and the Group does not expect there will have another rapid expansion into new foreign markets in 2007, with reference to the historical growth rate in current markets, the Directors therefore determined the revised cap amount for the year ended 31 December 2007 based on the sales growth of domestic market. We have also advised by the Directors that after the surging demand in domestic market in 2006, the demand in domestic market in 2007 will resume to a steadier growth rate of approximately 30%, which is in line with the historical growth rate of sales of single-phase electronic power meters of the Group. We have reviewed the sales of single-phase electronic power meters of the Group from 2003 to 2005, representing average annual growth rate of approximately 28%. Taking into account the above factors, the Revised Annual Cap for 2007 is set at RMB130 million, representing an increase of approximately 30% from that of 2006 to cater for expected demand and business growth of the Group. In view of the basis on which the Revised Annual Cap for 2007 was determined as described above, we consider the Revised Annual Cap for 2007 is consistent with the Group’s growth trend and therefore is fair and reasonable.

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LETTER FROM HANTEC CAPITAL

RECOMMENDATION

Having taken into account the principal factors and reasons referred to the above, we are of the opinion that the Revised Annual Caps are in the interests of the Company and the Shareholders as a whole and fair and reasonable so far as the Company and the Shareholders are concerned. We therefore advise the Independent Shareholders, and the Independent Board Committee to recommend the Independent Shareholders, to vote in favour of the ordinary resolution to be proposed at the Extraordinary General Meeting to approve the Revised Annual Caps.

Yours faithfully, For and on behalf of Hantec Capital Limited Thomas Lai Director

— 14 —

GENERAL INFORMATION

APPENDIX

1. RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with respect to the Company. The information contained herein relating to the Company has been supplied by the Directors, who collectively and individually 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 and belief, there are no other facts not contained in this circular the omission of which would make any statement herein misleading insofar as it relates to the Company.

2. DISCLOSURE OF INTERESTS

(I) Disclosure of interests by the Directors

As at the Latest Practicable Date, the interests and short positions of the Directors and chief executive of the Company in the shares, underlying shares and debentures of the Company or any associated corporations (within the meaning of Part XV of the SFO) which were 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 they were taken or deemed to have under such provisions of the SFO) or were required to be entered in the register maintained by the Company pursuant to section 352 of the SFO or were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Companies, to be notified to the Company and the Stock Exchange were as follows:

(a) Directors’ interests in shares

	Capacity/	Number of	Percentage
Name of Director	Nature of interest	Shares held	of holding
			(%)
Ji Wei	Interested	480,000,000	68.16
	in controlled
	corporation (Note)

Note: Star Treasure Investments Holdings Limited is 100% beneficially owned by Mr. Ji Wei.

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APPENDIX

GENERAL INFORMATION

• (b) Directors’ interests in underlying shares of the Company attached to the share options granted by the Company

	Capacity/
	Nature of	Number of	Percentage
Name of Director	interest	Shares held	of holding
			(%)
Cao Zhao Hui	Personal	2,000,000	0.28
Hui Wing Kuen	Personal	600,000	0.09
Liao Xue Dong	Personal	1,600,000	0.23
Pan Yuan	Personal	200,000	0.03
Wang Xue Xin	Personal	5,000,000	0.71
Wu Jin Ming	Personal	200,000	0.03
Zeng Xin	Personal	2,000,000	0.28
Zhang Xiao Ping	Personal	5,000,000	0.71

Note: The above share options were granted pursuant to the Company’s share option scheme adopted on 26 November 2005. Upon execution of the share options in accordance with such scheme, shares are issuable.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors of the Company or their associates has any interests or short positions in any shares, underlying shares and debentures of the Company or any associated corporations (within the meaning of Part XV of the SFO) as recorded in the register to be kept by the Company under section 352 of the SFO or as otherwise notified to the Company and the Stock Exchange.

(II) Substantial Shareholders’ Interests

As at the Latest Practicable Date, so far as is known to any Directors of the Company, the following persons have interests or short positions in the shares and underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO as recorded in the register required to be kept by the Company pursuant to section 336 of the SFO:

	Number of	Percentage
Name of Shareholder	shares held	of holding
		(%)
Star Treasure Investments Holdings Limited (Note)	480,000,000	68.16
Asset Managers (China) Fund Co., Ltd	44,247,787	6.28

Note: Star Treasure Investments Holdings Limited is 100% beneficially owned by Mr. Ji Wei.

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APPENDIX

GENERAL INFORMATION

Save as disclosed above, the Directors of the Company were not aware that there was any person (other than a Director of the Company) who, as at the Latest Practicable Date, had an interest or a short position in the shares and underlying shares of the Company 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 was, directly or indirectly, interested in 10 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, or in any options, in respect of such capital.

(III) Others

As at the Latest Practicable Date, none of the Directors is a director or employee of a company which had an interest or short position in the shares and underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO.

3. MATERIAL ADVERSE CHANGES

The Directors are not aware of any material adverse changes in the financial and trading position of the Group since 31 December 2005, the date of which the latest audited financial statements of the Group were made up.

4. COMPETING INTERESTS

As at the Latest Practicable Date, none of the Directors of the Company and their respective associates have any interests in a business, which competes or may compete with the business of the Company and its subsidiaries.

5. DIRECTORS’ INTEREST IN ASSETS

As at the Latest Practicable Date, none of the Directors had any direct or indirect interest in any assets which had been acquired, or disposed of by, or leased to any member of the Group, or was proposed to be acquired, or disposed of by, or leased to any member of Group since 31 December 2005, the date of which the latest audited financial statements of the Group were made up.

6. DIRECTORS’ INTERESTS IN CONTRACTS OF SIGNIFICANCE

None of the Directors is interested in any contract or arrangement entered into by the Company or any of its subsidiaries which contract or arrangement is subsisting at the date of this circular and which is significant in relation to the business of the Company.

7. DIRECTORS’ SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors has a service contract with the Compnay or any of its subsidiaries which is not determinable by the group within one year without payment of compensation, other than statutory compensation.

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GENERAL INFORMATION

APPENDIX

8. LITIGATION

As at the Latest Practicable Date, neither the Company nor any of its subsidiaires was engaged in any litigation or arbitration of material importance and no litigation or claim of material importance was known to the Directors to be pending or threatened by or against the Company or any of its subsidiaries.

9. EXPERT’S QUALIFICATION AND CONSENT

Hantec Capital has given and has not withdrawn its written consent to the issue of this circular with the inclusion of its letter and references to its name in the form and context in which it appears.

The following is the qualification of the expert who has given its opinion or advice which is contained in this circular:

Name Qualification Hantec Capital a licensed corporation to conduct types 1 (dealing in securities) and 6 (advising on corporate finance) regulated activities under the SFO

10. EXPERT’S INTERESTS

As at the Latest Practicable Date, Hantec Capital did not have any direct or indirect interest in any asset which had been acquired, or disposed of by, or leased to any member of the Group, or was proposed to be acquired, or disposed of by, or leased to any member of the Group, since 31 December 2005, the date to which the latest audited financial statements of the Group were made up; and was not beneficially interested in the share capital of any member of the Group and did not have any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

11. PROCEDURES FOR DEMANDING A POLL

Pursuant to Article 66 of the Articles of Association, a resolution put to the vote of a meeting shall be decided on a show of hands unless a poll is required by the Listing Rules or (before or on the declaration of the result of the show of hands) demanded by:

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

• (b) by at least three members present in person or in the case of a member being a corporation by its duly authorized representative or by proxy for the time being entitled to vote at the meeting; or

• (c) by a member or members present in person or in the case of a member being a corporation by its duly authorized representative or by proxy and representing not less than one-tenth of the total voting rights of all members having the right to vote at the meeting; or

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GENERAL INFORMATION

APPENDIX

• (d) by a member or members present in person or in the case of a member being a corporation by its duly authorized representative or by 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 up equal to not less than one-tenth of the total sum paid up on all shares conferring that right; or

• (e) by any Director or Directors, who, individually or collectively, hold proxies in respect of shares representing five per cent or more of the total voting rights at such meeting.

12. GENERAL

• (a) The registered office of the Company is situated at Cricket Square, Hutchins Drive, P.O. Box 2681GT, George Town, Grand Cayman, British West Indies.

• (b) The branch share registrar of the Company in Hong Kong is Computershare Hong Kong Investor Services Limited, Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong.

• (c) The secretary and the qualified accountant of the Company is Mr. Chow Sheung Wa, a member of The Hong Kong Institute of Certified Public Accountants.

• (d) The auditors of the Company is KPMG of 8/F., Prince’s Building, 10 Chater Road, Central, Hong Kong.

• (e) In the event of inconsistency, the English text of this circular shall prevail over the Chinese text.

13. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection at the principal place of business of the Company in Hong Kong at Room 2903, Far East Finance Centre, 16 Harcourt Road, Central, Hong Kong during normal business hours from the date of this circular up to and including 9 November 2006:

• (a) the Memorandum of Association and the Articles of Association of the Company;

• (b) the letter from the Independent Board Committee to the Independent Shareholders, the text of which is set out on page 7 of this circular;

• (c) the letter from Hantec Capital to the Independent Board Committee and the Independent Shareholders, the text of which is set out on pages 9 to 14 of this circular;

• (d) the Master Agreement and supplemental agreement; and

• (e) the written consent from Hantec Capital referred to in the paragraph headed “Expert’s Qualification and Consent” in this Appendix.

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NOTICE OF EXTRAORDINARY GENERAL MEETING

WASION METERS GROUP LIMITED

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 3393)

NOTICE IS HEREBY GIVEN that an extraordinary general meeting of Wasion Meters Group Limited (the “ Company ”) will be held at Room 3203, 32/F., Admiralty Centre I, 18 Harcourt Road, Hong Kong on Thursday, 9 November 2006 at 10:30 a.m. for the purpose of considering, and, if thought fit, pass the following resolution as an ordinary resolution:

ORDINARY RESOLUTION

“ THAT

• (1) the supplemental agreement (the “ Supplemental Agreement ”) dated 29 September 2006 entered into between the Company and Hunan Weike Power Meter Co., Ltd (“ Hunan Weike ”) to increase the annual caps for the Purchases (as defined in the circular of the Company dated 24 October 2006) under the Master Agreement dated 5 December 2005 between the Company and Hunan Weike to RMB100 million and RMB130 million for the two years ending 31 December 2006 and 2007, respectively, be and is hereby approved, confirmed and ratified; and

• (2) any one Director be and is hereby authorised to execute the Supplemental Agreement and to do all such things and take all other steps which, in his/her opinion, may be necessary or desirable in connection with the Supplemental Agreement without limitation to the settling, approving and signing any other documents in connection with the Supplemental Agreement.”

By Order of the Board Chow Sheung Wa Company Secretary

Hong Kong, 24 October 2006

Notes:

1. Any member of the Company entitled to attend and vote at the meeting of the Company by the above notice shall be entitled to appoint another person as his/her proxy to attend and vote instead of such member. 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/her attorney duly authorized in writing or, if the appointor is a corporation, either under its seal or under the hand of an officer, attorney or other person authorized to sign the same.

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NOTICE OF EXTRAORDINARY GENERAL MEETING

1. The instrument appointing a proxy and (if required by the Board) the power of attorney or other authority (if any) under which it is signed, or a notary certified copy of such power or authority must be delivered to the office of Computershare Hong Kong Investor Services Limited, Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong or by way of notice to or in any document accompanying the notice convening the meeting not less than forty-eight (48) hours before the time appointed for holding the meeting or adjourned meeting at which the person named in the instrument proposed to vote and in default the instrument of proxy shall not be treated as valid.

2. Delivery of an instrument appointing a proxy shall not preclude a member of the Company from attending and voting in person at the meeting convened and in such event, the instrument appointing a proxy shall be deemed to be revoked.

3. In the case of joint holders of any share, if more than one of such joint holders be present at any meeting, the vote of the senior who tenders a vote, whether in person, or by proxy, shall be accepted to the exclusion of the votes of the other joint holders, and for this purpose seniority shall be determined by the order in which the names stand in the register in respect of the joint holding.

4. The votes to be taken at the meeting of the Company by the above notice will be taken by poll. As at the date of this notice, the Board comprises Messrs. Ji Wei, Wang Xue Xin, Cao Zhao Hui, Zheng Xiao Ping, Liao Xue Dong and Zeng Xin as Executive Directors of the Company and Messrs. Hui Wing Kuen, Pan Yuan and Wu Jin Ming as Independent non-executive Directors of the Company.

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