ZO Future Group — AGM Information 2003

Aug 6, 2003

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 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 Grandtop International Holdings Limited , you should at once hand this circular together with the enclosed form of proxy to the purchaser or the transferee or to the bank, stockbroker or other agent through whom the sale or the transfer was effected for transmission to the purchaser or the transferee.

The Stock Exchange of Hong Kong Limited and Hong Kong Securities Clearing Company Limited take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

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GRANDTOP INTERNATIONAL HOLDINGS LIMITED

(incorporated in the Cayman Islands with limited liability)

PROPOSAL INVOLVING

GENERAL MANDATES TO REPURCHASE SHARES AND TO ISSUE NEW SHARES OF THE COMPANY

A notice convening the annual general meeting of Grandtop International Holdings Limited to be held at Salon III, 1st Floor, Harbour Plaza Hotel, 20 Tak Fung Street, Hunghum, Kowloon, Hong Kong on 27 August, 2003, at 11:30 a.m. is set out on pages 8 to 11 of this circular. Whether or not you intend to attend the annual general meeting, please complete and return the enclosed form of proxy and return the same to the Company’s branch share registrar in Hong Kong, Tengis Limited at Ground Floor, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong as soon as possible and in any event not less than forty-eight hours before the time appointed for holding the annual general meeting. Completion and return of the proxy will not preclude you from attending and voting at the annual general meeting or any adjourned meetings should you so wish.

Hong Kong, 5 August, 2003

DEFINITIONS

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

“Annual General Meeting”	the annual general meeting of the Company to be held at Salon III,
	1st Floor, Harbour Plaza Hotel, 20 Tak Fung Street, Hunghum,
	Kowloon, Hong Kong on Wednesday, 27 August, 2003 at 11:30
	a.m. notice of which is set out on pages 8 to 11 of this circular;
“Articles”	the articles of association of the Company adopted pursuant to the
	written resolutions of its shareholders passed on 22 October, 2002;
“Board” / “Directors”	the directors of the Company;
“Company”	Grandtop International Holdings Limited, a company incorporated
	in the Cayman Islands with limited liability, the Shares of which
	are listed on the Stock Exchange;
“Hong Kong”	Hong Kong Special Administrative Region of the People’s Republic
	of China;
“Latest Practicable Date”	30 July, 2003, being the latest practicable date prior to the printing
	of this circular for inclusion of certain information herein;
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange;
“Memorandum”	the memorandum of association of the Company;
“Repurchase Proposal”	the proposal to give a general mandate to the Directors to exercise
	the powers of the Company to repurchase during the period as set
	out in the Repurchase Resolution fully paid Shares up to a
	maximum of 10% of the issued share capital of the Company as at
	the date of the Repurchase Resolution;
“Repurchase Resolution”	the proposed ordinary resolution as referred to in resolution 4 of
	the notice of the Annual General Meeting;

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	DEFINITIONS
“Share(s)”	share(s) of nominal value of HK$0.01 each in the share capital of
	the Company;
“Share Repurchase Rules”	the relevant rules set out in the Listing Rules to regulate the
	repurchase by companies with primary listing on the Stock
	Exchange of their own securities on the Stock Exchange;
“Stock Exchange”	The Stock Exchange of Hong Kong Limited;
“Takeovers Code”	the Hong Kong Code on Takeovers and Mergers; and
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong.

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LETTER FROM THE BOARD

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GRANDTOP INTERNATIONAL HOLDINGS LIMITED

(incorporated in the Cayman Islands with limited liability)

Directors: Siu Kwok Kin, Garry (Chairman) Edmund Siu Sze Edvon Yeung Lung Lo Wing Yan, Emmy# Poon Kuai Cheong#

Independent non-executive Directors

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

Principal office of business in Hong Kong: Room 1110 11th Floor Lippo Sun Plaza 28 Canton Road Tsim Sha Tsui, Kowloon, Hong Kong

30 July, 2003

To the shareholders of the Company

Dear Sir or Madam,

PROPOSAL INVOLVING

GENERAL MANDATES TO REPURCHASE SHARES AND TO ISSUE NEW SHARES OF THE COMPANY

GENERAL MANDATE TO REPURCHASE SHARES

Introduction

The Company had on 22 October, 2002 granted a general mandate to the Directors to exercise the powers of the Company to repurchase Shares. Such mandate will lapse at the conclusion of the forthcoming Annual General Meeting. It is therefore proposed to seek your approval of the Repurchase

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LETTER FROM THE BOARD

Resolution to be proposed at the forthcoming Annual General Meeting to give a general mandate to the Directors to exercise the powers of the Company to repurchase Shares. This is the explanatory statement as required under the Share Repurchase Rules to provide you with requisite information reasonably necessary for your consideration of the Repurchase Proposal.

Share capital

As at the Latest Practicable Date, the issued share capital of the Company comprised 240,000,000 Shares.

Subject to the passing of the Repurchase Resolution and on the basis that no further Shares are issued or repurchased prior to the Annual General Meeting, the Company would be allowed under the Repurchase Proposal to repurchase a maximum of 24,000,000 Shares.

Reason for repurchase

The Directors believe that the Repurchase Proposal will benefit the Company, its members and shareholders. Such repurchases may, depending on market conditions and funding arrangements at the time, lead to an enhancement of the net asset value of the Company and/or its earnings per Share.

Funding of repurchase

In repurchasing Shares, the Company may only apply funds legally available for such purpose in accordance with its Memorandum and Articles, the Listing Rules and the applicable laws and regulations of the Cayman Islands and Hong Kong. The law of Cayman Islands provides that the amount of capital repaid in connection with a share repurchase may only be paid out of either the capital paid up on the relevant shares, or the profits of the Company or the proceeds of a fresh issue of shares made for such purpose. The amount of premium payable on repurchase may only be paid out of either the profits of the Company or out of the share premium account of the Company.

Possible material adverse impact

There might be an adverse impact on the working capital or gearing position of the Company as compared with the position disclosed in the audited financial statements contained in the annual report for the year ended 31 March, 2003 in the event that the power to repurchase Shares pursuant to the Repurchase Proposal was to be carried out in full at any time during the proposed repurchase period. However, the Directors do not propose to exercise the power to repurchase Shares pursuant to the Repurchase Proposal to such extent as would, in the circumstances, have a material adverse effect on the working capital requirements of the Company or the gearing levels which in the opinion of the Directors are from time to time appropriate for the Company.

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LETTER FROM THE BOARD

Share price

The highest and lowest prices at which the Shares have traded on the Stock Exchange during each of the previous eight months before the Latest Practicable Date were as follows:–

		Shares
	Highest		Lowest
	HK$		HK$
2002
November	1.02		1.00
December	1.36		1.06
2003
January	1.34		1.14
February	1.20		1.10
March	1.10		1.02
April	1.05		1.03
May	2.775		1.01
June	3.00		2.50

Directors’ undertaking

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 Resolution and in accordance with the Listing Rules and the applicable laws of Cayman Islands.

Directors’ dealings

None of the Directors nor, to the best of their knowledge having made all reasonable enquiries, any of their associates, have any present intention to sell Shares to the Company or its subsidiaries under the Repurchase Proposal if such is approved by the shareholders of the Company.

Connected persons

No connected persons (as defined in the Listing Rules) have notified the Company that they have a present intention to sell Shares to the Company or its subsidiaries, or have undertaken not to do so, in the event that the Repurchase Proposal is approved by the shareholders of the Company.

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LETTER FROM THE BOARD

Effect of Takeovers Code

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

As at the Latest Practicable Date, Huge Gain Development Limited, a substantial shareholder of the Company, has beneficially interest in 180,000,000 Shares representing 75% of issued Shares. In the event that the Directors exercise in full the power to repurchase Shares pursuant to the Repurchase Proposal, the interest of Huge Gain Development Limited in the Shares of the Company would increase to approximately 83.33%. The directors are not aware of any consequence which may arise under the Takeover Code as a result of any purchase to be made under the Repurchase Proposal.

However, the Directors have no intention to exercise the Repurchase Proposal to such an extent which would affect the minimum public float requirement under Rule 8.08 of the Listing Rules.

Share repurchase made by the Company

The Company had not repurchased any Shares (whether on the Stock Exchange or otherwise) in the last six months preceding the Latest Practicable Date.

GENERAL MANDATE TO ISSUE NEW SHARES

It will also be proposed at the Annual General Meeting two ordinary resolutions for granting to the Directors a general mandate to allot, issue and deal with Shares not exceeding 20% of the issued share capital of the Company as at the date of passing the resolution and adding to such general mandate so granted to the Directors any Shares representing the aggregate nominal amount of the Shares repurchased by the Company after the granting of the general mandate to repurchase Shares up to 10% of the issued share capital of the Company as the date of the Repurchase Resolution.

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LETTER FROM THE BOARD

RECOMMENDATION

The Directors consider that the granting of the Repurchase Proposal and the general mandate to issue new Shares are in the best interest of the Company and its shareholders and accordingly recommend shareholders to vote in favour of the ordinary resolutions to be proposed at the Annual General Meeting.

Yours faithfully, By order of the Board Siu Kwok Kin, Garry Chairman

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NOTICE OF ANNUAL GENERAL MEETING

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GRANDTOP INTERNATIONAL HOLDINGS LIMITED

(incorporated in the Cayman Islands with limited liability)

NOTICE IS HEREBY GIVEN that the Annual General Meeting of the members of Grandtop International Holdings Limited (hereinafter referred to as the “Company”) will be held at Salon III, 1st Floor, Harbour Plaza Hotel, 20 Tak Fung Street, Hunghum, Kowloon, Hong Kong on 27 August 2003 at 11:30 a.m. for the following purposes:

1. To receive and consider the audited consolidated financial statements and reports of the directors and auditors for the year ended 31 March 2003;

2. To re-elect retiring Director of the Company and to fix the remuneration of the Directors;

3. To re-appoint the auditors of the Company and authorise the Directors to fix their remuneration;

4. As special business, to consider and, if thought fit, pass with or without amendments the following resolution as an Ordinary Resolution:–

“ THAT :–

• (A) subject to paragraph (C) below, the exercise by the Directors of the Company during the Relevant Period of all powers of the Company to repurchase issued shares in the capital of the Company, subject to and in accordance with all applicable laws and requirements of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited as amended from time to time, be and is hereby generally and unconditionally approved;

• (B) the approval in paragraph (A) shall be in addition to any other authorisation given to the Directors of the Company and shall authorise the Directors on behalf of the Company during the Relevant Period to procure the Company to repurchase its issued shares at a price determined by the Directors;

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NOTICE OF ANNUAL GENERAL MEETING

• (C) the aggregate nominal amount of shares authorised to be repurchased or agreed conditionally or unconditionally to be repurchased by the Directors of the Company pursuant to the approval in paragraph (A) above shall, in the case of shares of the Company, not exceed 10 per cent of the aggregate nominal amount of the share capital of the Company in issue as at the date of passing this Resolution, and the said authority shall be limited accordingly;

• (D) for the purposes of this Resolution:–

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

• i) the conclusion of the next Annual General Meeting of the Company;

• ii) the expiration of the period within the next Annual General Meeting of the Company is required either by the Company’s Articles of Association or law to be held; and

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

• As special business, to consider and, if thought fit, pass with or without amendments the following resolution as an Ordinary Resolution:–

“ THAT :–

• (A) Subject to paragraph (C) below, the exercise by the Directors of the Company during the Relevant Period of all the powers of the Company to allot, issue and deal with additional shares in the capital of the Company and to make or grant offers, agreements, options and rights of exchange or conversion which might require the exercise of such powers be and is hereby generally and unconditionally approved;

• (B) the approval in paragraph (A) above shall be in addition to any other authorisation given to the Directors of the Company and shall authorise the Directors of the Company during the Relevant Period to make or grant offers, agreements, options and rights of exchange or conversion which might require the exercise of such powers after the end of the Relevant Period;

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NOTICE OF ANNUAL GENERAL MEETING

• (C) the aggregate nominal amount of share capital allotted and issued, or agreed conditionally or unconditionally to be allotted and issued (whether pursuant to an option or otherwise) by the Directors of the Company pursuant to the approval grant in paragraph (A) of this Resolution, otherwise than pursuant to (i) a Right Issue, or (ii) the Share Option Scheme of the Company approved by The Stock Exchange of Hong Kong Limited, or (iii) any scrip dividend or similar arrangement providing for the allotment of shares in lieu of the whole or part of a dividend on shares of the Company in accordance with the Company’s Articles of Association, shall not exceed 20 per cent of the aggregate nominal amount of the issued share capital of the Company as at the date of passing of this Resolution, and the said approval shall be limited accordingly; and

• (D) for the purposes of this Resolution:–

“Relevant Period” shall have the same meaning as ascribed to it under Resolution set out in paragraph 4(D) of the Notice convening this Meeting; and

“Right Issue” means an offer of shares open for a period fixed by the Directors of the Company to the holders of shares on the register on a fixed record date in proportion to their then holdings of such shares (subject to such exclusions or other arrangements as the Directors of the Company may deem necessary or expedient in relation to fractional entitlements or having regard to any restrictions or obligations under the laws or any relevant jurisdiction, or the requirements of any recognised regulatory body or any stock exchange, in any territory outside Hong Kong).”

1. As special business, to consider and, if thought fit, pass with or without amendments the following as an Ordinary Resolution:–

“ THAT :–

conditional upon the passing of Ordinary Resolutions set out in paragraphs 4 and 5 of the Notice convening this Meeting, the general mandate granted to the Directors of the Company pursuant to the Ordinary Resolution set out in paragraph 5 of the notice convening this Meeting be and is hereby extended by the addition thereto of an amount representing the aggregate nominal amount of the shares in the capital of the Company that shall have been repurchased by the Company under the authority granted pursuant

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NOTICE OF ANNUAL GENERAL MEETING

to and in accordance with the Ordinary Resolution set out in paragraph 4 of the Notice convening this Meeting, provided that such amount shall not exceed 10 per cent of the aggregate nominal amount of share capital of the Company as at the date of passing this Resolution.”

1. To transact any other business.

By Order of the Board Siu Kwok Kin, Garry Chairman

Hong Kong, 23 July 2003

Notes:

• (i) A member entitled to attend and vote at the meeting convened is entitled to appoint a proxy to attend and vote in his stead. A proxy need not be a member of the Company.

• (ii) To be valid, a form of proxy together with the power of attorney or other authority, if any, under which it is signed or a notarially certified copy of that power or authority shall be deposited at the Company’s Branch Registrar in Hong Kong, Tengis Limited of Ground Floor, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong not less than forty-eight hours before the time fixed for holding of the meeting and adjourned meeting.

• (iii) With respect to the resolution set out in paragraph 4 of the notice, approval is being sought from shareholders for a general mandate to be given to the Directors to repurchase shares of the Company.

• (iv) With respect to the resolutions set out in paragraphs 5 and 6 of the notice, approval is being sough from shareholders for general mandates to be given to the Directors to allot, issue and deal with shares of the Company in accordance with the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.

• (v) The annual report of the Company for the year ended 31 March 2003 also containing this notice together with a circular setting further information regarding resolutions set out in paragraphs 4 to 6 above will be dispatched to shareholders as soon as practicable.

• (vi) The Register of Members of the Company will be closed from 22 August 2003 to 27 August 2003 both days inclusive, during which period no transfer of shares will be registered.

In order to qualify for attending the annual general meeting to be held on 27 August 2003, all transfer documents accompanied by the relevant share certificates must be lodged with the Company’s Branch Registrar in Hong Kong, Tengis Limited of Ground Floor, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong not later than 4:00 p.m. on 21 August 2003.

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