WLS Holdings Limited — Proxy Solicitation & Information Statement 2003

Jul 29, 2003

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, REFRESHMENT OF THE LIMIT ON GRANT OF OPTIONS UNDER THE SHARE OPTIONS SCHEME AND AMENDMENT OF THE COMPANY’S ARTICLES OF ASSOCIATION

The notice convening the annual general meeting of the Company to be held at Rooms 1001-1006, 10th Floor, Southmark, 11 Yip Hing Street, Wong Chuk Hang, Aberdeen, Hong Kong on 29th August, 2003 (Friday) at 2:30 p.m. (the “ AGM ”) is set out in the annual report of the Company for the year ended 30th April, 2003 (the “2003 Annual Report”).

A form of proxy for the AGM is enclosed with the 2003 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, Ground Floor, BEA Harbour View Centre, 56 Gloucester Road, Wanchai, 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.

29th July, 2003

* 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. Lau Wan Pui, Joseph Mr. Woo Siu Lun Mr. Kong Kam Wang

Independent non-executive Directors:

Dr. Sritawat Kitipornchai Mr. Yeung Po Chin

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

29th July, 2003

To the shareholders of the Company

Dear Sir or Madam,

GENERAL MANDATES TO ISSUE NEW SHARES AND REPURCHASE ITS OWN SHARES, REFRESHMENT OF THE LIMIT ON GRANT OF OPTIONS UNDER THE SHARE OPTIONS SCHEME AND AMENDMENT OF THE COMPANY’S ARTICLES OF ASSOCIATION

INTRODUCTION

The Company’s existing mandates to issue and repurchase shares of the Company (“ Shares ”) were approved by the Company’s shareholders at the annual general meeting held

* For identification purposes only

–1 –

LETTER FROM THE BOARD OF DIRECTORS

on 30th August, 2002. Unless otherwise renewed, the existing mandates to issue and to repurchase Shares will lapse at the conclusion of 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 7 (the “ Ordinary Resolution nos. 4, 5, 6 and 7 respectively) and the special resolution no. 8 (the “ Special Resolution no. 8 ”) 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, (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), (iv) to refresh the scheme limit of the Company’s share option scheme adopted on 25th November, 2001 and all other share option schemes of the Company, up to 10% of the number of shares in the capital of the Company in issue as at the date of passing of the Ordinary Resolution no. 7 and (v) to amend the articles of association of the Company (the “Articles” ) as more particularly described in the Special Resolution no. 8.

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 23rd July, 2003, being the latest practicable date (the “ Latest Practicable Date ”) prior to the printing of this circular.

–2 –

LETTER FROM THE BOARD OF DIRECTORS

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 a maximum of 20% of the issued share capital of the Company at the date of passing of the ordinary resolution approving the New Issue Mandate, i.e. 91,500,000 Shares, on the basis that no further Shares will be issued or repurchased prior to the AGM.

REPURCHASE MANDATE

At the AGM, an ordinary resolution will be proposed to grant to the Directors the Repurchase Mandate, details of which are set out in Ordinary Resolution no. 5. The Shares which may be repurchased pursuant to the Repurchase Mandate is limited to a maximum of 10% of the issued share capital of the Company at the date of passing of the ordinary resolution approving the Repurchase Mandate, i.e. 45,750,000 Shares.

REFRESHMENT OF THE GENERAL SCHEME LIMIT

The Company adopted the Share Option Scheme pursuant to an ordinary resolution passed by the Shareholders on 25th November, 2001. The purpose of the Share Option Scheme is to provide incentive and to recognise the contribution of the employees in full-time employment including directors (whether executive, non-executive or independent non-executive) of the Company and/or its subsidiaries.

Under the terms of the Share Option Scheme:

• (1) The maximum number of Shares which may be issued upon exercise of all outstanding options granted and yet to be exercised under the Share Option Scheme and any other share option schemes of the Company shall not exceed 30% of the total number of Shares in issue from time to time.

• (2) The total number of Shares which may be issued upon exercise of all options to be granted under the Share Option Scheme and any other share option schemes of the Company shall, in aggregate, not exceed 10% of the total number of Shares in issue as at the Listing Date (as defined in the prospectus of the Company dated 30th November, 2001), or 45,000,000 Shares (the “ General Scheme Limit ”).

• (3) Subject to paragraph (1) above and without prejudice to paragraph (4) below, the Company may seek approval of the Shareholders in general meeting to “refresh” the General Scheme Limit provided that the total number of Shares which may be issued upon the exercise of all options to be granted under the Share Option Scheme and any other share option schemes of the Company must not exceed 10% of the Shares in issue as at the approval of the “refreshed” limit and, for the purpose of calculating the “refreshed” limit, options previously granted under the Share Option Scheme and

–3 –

LETTER FROM THE BOARD OF DIRECTORS

any other share option schemes of the Company (including those outstanding, cancelled, lapsed or exercised in accordance with the Share Option Scheme and any other share option schemes of the Company) will not be counted.

• (4) Subject to paragraph (1) above and without prejudice to paragraph (3) above, the Company may seek separate approval of the Shareholders in general meeting to grant options beyond the General Scheme Limit or, if applicable, the “refreshed” limit referred to in paragraph (3) above to participants specifically identified by the Company before such approval is sought.

Based on the number of Shares in issue as at the Listing Date, the General Scheme Limit was 45,000,000 Shares. As at the Latest Practicable Date, options representing 28,300,000 Shares, representing approximately 6.29% of the issued share capital of the Company as at the Listing Date, have been granted under the Share Option Scheme. These options were granted to eligible participants in recognition of their contribution to the Group. Unless the General Scheme Limit is “refreshed”, a balance of 16,700,000 Shares, representing approximately 3.71% of the issued share capital of the Company as at the Listing Date, may be issued pursuant to the grant of options under the Share Option Scheme. The Directors believe that the Share Option Scheme is a cost effective way to reward persons who have made contributions to the Group. The refreshment of the General Scheme Limit will allow the Directors more flexibility in employing the Share Option Scheme in the future should they need to grant share options that are over the current limit to recognize contributions made to the Group. Accordingly, the Directors would like to take the AGM as an opportunity to approve the refreshment of the General Scheme Limit instead of calling a separate extraordinary general meeting.

If the General Scheme Limit is “refreshed”, on the basis that 457,500,000 Shares were issued as at the Latest Practicable Date and assuming that no Shares are issued or repurchased by the Company prior to the AGM, the General Scheme Limit will be reset to 45,750,000 Shares (being 10% of the issued share capital of the Company as at the date of the AGM in which the refreshed limit is approved) and the Company will be allowed to grant further options under the Share Option Scheme and other share option schemes of the Company carrying the rights to subscribe for a maximum of 45,750,000 Shares. As at the Latest Practicable Date, the Company has not adopted any share option schemes other than the Share Option Scheme.

At the AGM, an ordinary resolution will be proposed to approve the refreshment of the limit on grant of options under the Share Option Scheme, details of which are set out in Ordinary Resolution no. 7.

–4 –

LETTER FROM THE BOARD OF DIRECTORS

Application has been made to GEM for the listing of and permission to deal in any Shares, representing 10% of the Shares in issue as the AGM approving the “refreshed” General Scheme Limit, to be issued upon the exercise of the options granted under the “refreshed” General Scheme Limit.

AMENDMENT TO THE ARTICLES

At the AGM, Special Resolution no. 8 will be proposed to amend the interpretation of “recognised clearing house” in the Interpretation Section of the Articles to the effect that the reference to the repealed Securities and Futures (Clearing Houses) Ordinance in such interpretation shall be replaced by the Securities and Futures Ordinance (the “SFO” ) consequent upon the commencement of the SFO on 1st April, 2003.

ACTION TO BE TAKEN

Details of the proposed Ordinary Resolution nos. 4, 5, 6 and 7 and Special Resolution no. 8 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 2003 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, Ground Floor, BEA Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong as soon as possible and in any event not less than 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 proposals referred to in this circular 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 7 and Special Resolution no. 8 to be proposed at the AGM.

Yours faithfully, By order of the Board

WLS Holdings Limited So Yu Shing Chairman

–5 –

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.

– 6 –

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.

– 7 –

EXPLANATORY STATEMENT

APPENDIX

6. SHARE PRICES

The highest and lowest prices at which the Shares have traded on GEM in each of the previous twelve months are set out as follows:

Month	Highest	Lowest
	HK$	HK$
2002
July	0.360	0.190
August	0.199	0.115
September	0.175	0.100
October	0.165	0.127
November	0.154	0.110
December	0.145	0.110
2003
January	0.140	0.100
February	0.137	0.100
March	0.130	0.100
April	0.120	0.100
May	0.128	0.100
June	0.132	0.100

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)_

Note:

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.

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

– 8 –

EXPLANATORY STATEMENT

APPENDIX

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) during the 6 months preceding the date of this circular.

– 9 –