WLS Holdings Limited — Proxy Solicitation & Information Statement 2002

Jul 30, 2002

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

The Stock Exchange of Hong Kong Limited (the “ Stock Exchange ”) 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.

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 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 WLS Holdings Limited (the “ Company ”), you should at once hand this circular and the accompanying proxy form to the purchaser or the transferee or to the bank, stockbroker or other agent through whom the sale was effected for transmission to the purchaser or the transferee.

This circular, for which the directors of the Company (the “ Directors ”) collectively and individually accept full responsibility, includes particulars given in compliance with the Rules Governing the Listing of Securities on the Growth Enterprise Market of the Stock Exchange (the “ GEM Listing Rules ”) for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that, to the best of their knowledge and belief: (1) the information contained in this circular is accurate and complete in all material respects and not misleading; (2) there are no other matters the omission of which would make any statement in this circular misleading; and (3) all opinions expressed in this circular have been arrived at after due and careful consideration and are founded on bases and assumptions that are fair and reasonable.

WLS Holdings Limited 㶅隆控股有限公司[*]

(incorporated in the Cayman Islands with limited liability)

GENERAL MANDATES

TO ISSUE NEW SHARES AND REPURCHASE

ITS OWN SHARES

The notice convening the annual general meeting of the Company to be held at Caine Room, Level 7, Conrad Hong Kong, Pacific Place, 88 Queensway Hong Kong on 30th August, 2002 (Friday) at 2:30 p.m. is set out in the annual report of the Company for the year ended 30th April, 2002 (the “2002 Annual Report”).

A form of proxy for the annual general meeting for the year ended 30th April, 2002 is enclosed with the 2002 Annual Report. Whether or not you propose to attend the annual general meeting, you are requested to complete the form of proxy and return the same to the Company’s Branch Share Registrar in Hong Kong, Tengis Limited, 4th Floor, Hutchison House, 10 Harcourt Road, Central, Hong Kong in accordance with the instructions printed thereon as soon as possible and in any event not less than 48 hours before the time appointed for the meeting. Completion and delivery of the form of proxy will not preclude you from attending and voting at the meeting or any adjourned meeting (as the case may be) if you so wish.

This circular will remain on the GEM website at www.hkgem.com on the “Latest Company Announcements” page for 7 days from the date of its publication.

30th July, 2002

* For identification purposes only

LETTER FROM THE BOARD OF DIRECTORS

WLS Holdings Limited 㶅隆控股有限公司[*]

(incorporated in the Cayman Islands with limited liability)

Executive Directors: Mr. So Yu Shing (Chairman) Ms. Lai Yuen Mei, Rebecca Mr. Woo Siu Lun Mr. Kong Kam Wang

Independent non-executive Directors: Dr. Sritawat Kitipornchai Mr. Leung Wai Cheung

Non-executive Director

Dr. Chan Siu Lai

Registered office: PO Box 309 Ugland House South Church Street George Town Grand Cayman Cayman Islands British West Indies

Head office and principal place of business in Hong Kong: Rooms 601-603 and 605 Southmark No. 11 Yip Hing Street Wong Chuk Hang Aberdeen Hong Kong 22nd July, 2002

To the shareholders of the Company

Dear Sir or Madam,

GENERAL MANDATES TO ISSUE NEW SHARES AND REPURCHASE ITS OWN SHARES

INTRODUCTION

The Company’s existing mandates to issue and repurchase shares of the Company (“ Shares ”) were approved by the Company’s then shareholders on 25th November, 2001 prior to the commencement of listing of its Shares on GEM. Unless otherwise renewed, the existing

* For identification purposes only

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LETTER FROM THE BOARD OF DIRECTORS

mandates to issue and to repurchase Shares will lapse at the conclusion of the annual general meeting of the Company to be held at Caine Room, Level 7, Conrad Hong Kong, Pacific Place, 88 Queensway, Hong Kong on 30th August, 2002 (Friday) at 2:30 p.m. (the “ AGM ”).

In order to ensure flexibility when it is desirable to allot additional Shares or to repurchase Shares, the Directors will seek the approval of shareholders of the Company to grant new general mandates to issue and to repurchase Shares at the AGM.

The purpose of this circular is to provide you with information relating to the ordinary resolutions nos. 4 to 6 (the “ Ordinary Resolution nos. 4, 5 and 6 respectively) to be proposed at the AGM (i) to grant to the Directors a fresh general mandate (“New Issue Mandate”) to allot, issue and deal with new Shares up to a maximum of 20% of the aggregate nominal amount of the issued share capital of the Company as at the date of passing of the Ordinary Resolution no. 4; (ii) to grant to the Directors a fresh general mandate (“Repurchase Mandate”) to exercise the powers of the Company to repurchase the Company’s fully paid up Shares representing up to a maximum of 10% of the aggregate nominal amount of the issued shares capital of the Company as at the date of passing of the Ordinary Resolution no. 5 and (iii) by extending the general mandate granted pursuant to Resolution No. 4, to allot, issue and otherwise deal with Shares with an aggregate nominal amount not exceeding the aggregate nominal amount of the share capital of the Company purchased pursuant to the Repurchase Mandate (as more particularly described in the Ordinary Resolution no. 6).

The previously granted general mandates will lapse at the conclusion of the AGM.

Under Rule 13.08 of the GEM Listing Rules, the Company is required to give 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 New Issue Mandate and the Repurchase Mandate. This circular is prepared for such purpose. The explanatory statement required by the GEM Listing Rules to be included in this circular is set out in the appendix to this circular.

GENERAL MANDATE TO ISSUE SHARES

The Company has in issue an aggregate of 457,500,000 Shares as at 22nd July, 2002, being the latest practicable date (the “Latest Practicable Date”) prior to the printing of this circular.

Subject to the passing of the Ordinary Resolution no. 4 and in accordance with the terms therein, the Company would be allowed to allot additional Shares up to the aggregate nominal amount of a maximum of 91,500,000 Shares on the basis that no further Shares will be issued or repurchased prior to the AGM.

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LETTER FROM THE BOARD OF DIRECTORS

ACTION TO BE TAKEN

Details of the proposed Ordinary Resolution nos. 4, 5 and 6 are contained in the notice (the “ Notice ”) convening the AGM. The Notice and a form of proxy for use at the AGM are enclosed with the 2002 Annual Report. To be valid, the form of proxy must be completed in accordance with the instructions printed thereon and deposited, together with the 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 at the Company’s branch share registrar in Hong Kong, Tengis Limited, 4th Floor, Hutchison House, 10 Harcourt Road, Central, Hong Kong as soon as possible and in any event not less that 48 hours before the time fixed for holding the AGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the AGM or any adjournment thereof should you so wish.

RECOMMENDATION

The Directors believe that the granting of fresh general mandates to allot, issue and deal with new Shares and to repurchase Shares are in the best interests of the Company and its shareholders as a whole. Accordingly, the Directors recommend that all shareholders should vote in favour of the Ordinary Resolution nos. 4 to 6 to be proposed at the AGM.

Yours faithfully, By order of the Board WLS Holdings Limited So Yu Shing Chairman

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EXPLANATORY STATEMENT

APPENDIX

1. GENERAL MANDATE TO REPURCHASE SHARES

This appendix serves as an explanatory statement, as required by the Rule 13.08 and other relevant provisions of the GEM Listing Rules, to provide requisite information to you for your consideration of the Repurchase Mandate.

2. GEM LISTING RULES RELATING TO THE REPURCHASE OF SHARES

The GEM Listing Rules permit companies whose primary listing is on the Stock Exchange to repurchase their shares on GEM subject to certain restrictions, the more important of which are summarised below. The Company is empowered by its memorandum and articles of association to repurchase its own Shares.

Source of funds

Repurchase must be funded out of funds which are legally available for such purpose and in accordance with the memorandum and articles of association of the Company and the Companies Law (2002 Revision) of the Cayman Islands (the “Companies Law”). A listed company may not repurchase its own securities on the Stock Exchange for a consideration other than cash or for settlement otherwise than in accordance with the trading rules of the Stock Exchange.

Connected persons

The GEM Listing Rules prohibit a company from knowingly repurchasing shares on GEM from a “connected person”, that is, a director, chief executive, substantial shareholder or management shareholder of the company or any of its subsidiaries or any of their associates (as defined in the GEM Listing Rules) and a connected person is prohibited from knowingly selling his shares to the company on GEM.

As at the Latest Practicable Date, to the best knowledge of the Directors, no connected person of the Company has notified the Company that he has a present intention to sell any Shares to the Company nor has any such connected person undertaken not to sell any of the Shares held by him to the Company in the event that such mandate as proposed in the Ordinary Resolution no.5 is approved by the shareholders of the Company.

3. SHARE CAPITAL

As at the Latest Practicable Date, the issued share capital of the Company comprised 457,500,000 shares of HK$0.01 each.

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EXPLANATORY STATEMENT

APPENDIX

Subject to the passing of the Repurchase Mandate and on the basis that no Shares are issued or repurchased by the Company prior to the AGM, the Company will be allowed under the Repurchase Mandate to repurchase a maximum of 45,750,000 Shares of HK$0.01 each during the period from the date of passing of the Ordinary Resolution no. 5 up to (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 its memorandum and articles of association or any applicable laws of the Cayman Islands to be held; or (iii) the revocation, variation or renewal of the Repurchase Mandate by ordinary resolution of the shareholders of the Company in general meeting, whichever occurs first.

4. REASONS FOR THE REPURCHASES

Although the Directors have no present intention of repurchasing any Shares of the Company, they believe that the flexibility afforded by the Repurchase Mandate would be in the best interests of the Company and its shareholders. An exercise of 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 and will only be made when the Directors believe that such repurchase of Shares will benefit the Company and its shareholders.

5. FUNDING OF REPURCHASES

In repurchasing Shares, the Company may only apply funds legally available for such purpose in accordance with its memorandum and articles of association, the GEM Listing Rules and the applicable laws of the Cayman Islands.

Pursuant to the Repurchase Mandate, repurchase would be funded entirely from the Company’s available cash flow or working capital facilities which will be funds legally available under applicable laws of the Cayman Islands for such purpose. The Company may not repurchase its own Shares on GEM for a consideration other than cash or for settlement otherwise than in accordance with the trading rules of the Stock Exchange from time to time.

An exercise of the Repurchase Mandate in full could have a material adverse impact on the working capital and gearing position of the Company. 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 of the Company or on the gearing level which in the opinion of the Directors are from time to time appropriate for the Company.

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EXPLANATORY STATEMENT

APPENDIX

6. SHARE PRICES

The highest and lowest prices at which the Shares have traded on GEM in each of the previous seven months since 7th December, 2001 (the date of listing of the Shares on GEM) are set out as follows:

Month	Highest	Lowest
	HK$	HK$
2001
December	0.50	0.39
2002
January	0.71	0.35
February	0.46	0.40
March	0.425	0.38
April	0.41	0.35
May	0.44	0.37
June	0.42	0.32
July (up to the Latest Practicable Date, 22nd July, 2002)	0.36	0.19

7. SUBSTANTIAL SHAREHOLDERS

As at the Latest Practicable Date, the respective interests of each of the substantial shareholders, being persons or corporations who are entitled to exercise or control the exercise of 10% or more of voting power at any general meeting of the Company (the “Substantial Shareholders”) in the share capital of the Company are set out as follows:

			Approximate
	Number of	Nature of	percentage of
Name	Shares	interests	interests
Mr. So Yu Shing	242,215,000	personal interest	52.94%
Ms. Lai Yuen Mei,	74,225,000	personal interest	16.22%
Rebecca_(Note 1)_

Notes:

1. Mr. So Yu Shing and Ms. Lai Yuen Mei, Rebecca are spouses and their deemed interest in the Company was 316,440,000 Shares representing approximately 69.16% of the entire issued share capital of the Company.

Save as disclosed above, no person has notified the Company that he has an interest amounting to 10% or more of the issued share capital of the Company as at the Latest Practicable Date pursuant to Section 16(1) of the SDI Ordinance.

8. DISCLOSURE OF INTERESTS, THE CODE AND MINIMUM PUBLIC HOLDING

None of the Directors nor, to the best of their knowledge having made all reasonable enquiries, their associates (as defined in the GEM Listing Rules) currently intends to sell any

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EXPLANATORY STATEMENT

APPENDIX

Shares to the Company or its subsidiaries under the Repurchase Mandate if such is appoved by the shareholders of the Company.

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

In the event that the Substantial Shareholders do not dispose of their Shares, if the Repurchase Mandate were exercised in full, the percentage shareholding of the Substantial Shareholders of the Company before and after such repurchase would be as follows:

	Before	After
Substantial Shareholders	repurchase	repurchase
Mr. So Yu Shing	52.94%	58.83%
Ms. Lai Yuen Mei, Rebecca	16.22%	18.03%

If a shareholder’s proportionate interest in the voting rights of the Company increases on the Company exercising its powers to repurchase its Shares pursuant to the Repurchase Mandate, such increase will be treated as an acquisition for the purposes of Rule 32 of the Hong Kong Code on Takeover and Mergers (the “Code”). As a result, a shareholder or a group of shareholders acting in concert (within the meaning under the Code) 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 Code.

In the event that the Directors exercised in full the power to repurchase shares of the Company in accordance with the terms of the Ordinary Resolution no. 5 to be proposed at the AGM, the total interests of Mr. So Yu Shing and Ms. Lai Yuen Mei, Rebecca in the existing issued share capital of the Company would be proportionally increased to approximately 58.83% and 18.03% respectively. On the basis of the shareholdings held by the Substantial Shareholders named above, an exercise of the Repurchase Mandate in full will not have any implications under the Code. The Directors have no intention to exercise the Repurchase Mandate to an extent as may result in mandatory offer under the Code.

Assuming that there is no issue of Shares in the Company between the Latest Practicable Date and the date of a repurchase, an exercise of the Repurchase Mandate whether in whole or in part will result in less than the relevant prescribed minimum percentage of the Shares of the Company being held by the public as required by the Stock Exchange. The Directors have no intention to exercise the Repurchase Mandate to an extent as may result in a public shareholding of less than such minimum percentage.

9. SHARE REPURCHASE MADE BY THE COMPANY

The Company had not repurchased any of its Shares (whether on GEM or otherwise) since 7th December, 2001 (date of listing of the Shares on GEM) up to the Latest Practicable Date.

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