CHUN WO HOLDINGS LIMITED (Incorporated in Bermuda with limited liability) (Stock Code: 711)

Transcription

1 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 Chun Wo Holdings Limited, you should at once hand this circular to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or 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. CHUN WO HOLDINGS LIMITED (Incorporated in Bermuda with limited liability) (Stock Code: 711) DISCLOSEABLE TRANSACTION 1 September 2005

2 CONTENTS Pages Definitions Letter from the Board Introduction Details of the Investment Agreement Reasons for the Acquisition Information on Changshan Financial information of Changshan Listing Rules implication Additional information Appendix General information i

3 DEFINITIONS In this circular, the following expressions have the meanings set out below unless the context otherwise requires: Acquisition : the transactions, including the Share Acquisition, the First Subscription and the Second Subscription, contemplated under the Investment Agreement associates : has the meaning as ascribed to it under the Listing Rules Board : the board of directors of the Company Business Day : a day on which banks in Hong Kong and the PRC both open for business Changshan : (Hebei Changshan Biochemical Pharmaceutical Co., Ltd), a joint stock limited liability company incorporated in the PRC on 21 May 2002 Changshan Share(s) : share(s) of RMB1.00 each in the share capital of Changshan Changshan Shareholders : Mr. Gao, Ms. Gao, Mr. Wang, Guangxin and Hua Xu, the shareholders of Changshan as at the Latest Practicable Date Company : Chun Wo Holdings Limited, a company incorporated in Bermuda with limited liability, whose shares are listed on the Stock Exchange connected persons : has the meaning as ascribed to it under the Listing Rules Directors : the directors of the Company First Investment : the First Subscription and the Share Acquisition First Investment : the results of the valuation conducted by an independent Valuation Results valuer pursuant to the relevant laws and regulations in the PRC in respect of the First Investment First Subscription : the subscription of 12,508,800 new Changshan Shares by New Fortune, which it will be holding 24.29% of the enlarged issued share capital of Changshan Force Majeure Events : earthquake, typhoon, fire, flood, wars and acts of the governmental authorities Group : the Company and its subsidiaries 1

4 DEFINITIONS Guangxin :, a company incorporated in the PRC with limited liability. Its principal activity is investment holding HK$ : Hong Kong dollars, the lawful currency of Hong Kong Hong Kong : the Hong Kong Special Administrative Region of the PRC Hua Xu :, a company incorporated in the PRC with limited liability. Its principal activity is manufacturing and selling of chemical products Investment Agreement : the agreement entered into between the Company, the Investors, Changshan and Changshan Shareholders on 8 August 2005 in relation to the Acquisition Investors : New Fortune and Time Leader Latest Practicable Date : 26 August 2005, being the latest practicable date prior to the printing of this circular for ascertaining certain information contains herein Listing Rules : the Rules Governing the Listing of Securities on the Stock Exchange Long Stop Date : 60 Business Days after the date of the Investment Agreement Model Code : Model Code for Securities Transactions by Directors of Listed Companies contained in the Listing Rules Mr. Gao : Mr. Gao Shu Hua ( ), a PRC citizen Mr. Wang : Mr. Wang Cong Fen ( ), a PRC citizen Ms. Gao : Ms. Gao Hui Xia ( ), a PRC citizen New Fortune : New Fortune Group Limited, a limited liability company incorporated in the British Virgin Islands and is indirectly wholly-owned by the Company. Its principal activity is investment holding in Changshan Percentage Ratios : the percentage ratios under Rule of the Listing Rules PRC : The People s Republic of China RMB : Renminbi yuan, the lawful currency of the PRC 2

5 DEFINITIONS Sale Approval : the approval of sale from the respective authorities in the PRC in relation to Changshan s products, namely, (Vitality Capsule), (Low Molecule Heparin Sodium), (Low Molecule Heparin Calcium) and (Chondroitin Salt) Second Subscription : the subscription of 10,877,000 new Changshan Shares by New Fortune, which it will be holding a total of 37.49% of the then enlarged issued share capital of Changshan Second Subscription : the results of the valuation conducted by an independent Valuation Results valuer pursuant to the relevant laws and regulations in the PRC in respect of the Second Subscription SFO : Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) Share Acquisition : the transfer of 5,815,300 Changshan Shares, which represents 14.91% of the existing issued share capital of Changshan held by Guangxin to Time Leader Share(s) : ordinary share(s) of HK$0.10 each in the capital of the Company Shareholder(s) : holder(s) of the Share(s) Stock Exchange : The Stock Exchange of Hong Kong Limited Time Leader : Time Leader Group Limited, a limited liability company incorporated in the British Virgin Islands and is indirectly wholly-owned by the Company. Its principal activity is investment holding in Changshan % : per cent Unless otherwise stated, all amounts in RMB have been converted into HK$ at the exchange rate of HK$1.00 to RMB1.04 in this circular for illustration purpose only. 3

6 LETTER FROM THE BOARD CHUN WO HOLDINGS LIMITED (Incorporated in Bermuda with limited liability) Directors: Registered Office: Clarendon House Executive Church Street PANG Kam Chun (Chairman) Hamilton HM 11 KWOK Yuk Chiu, Clement (Managing Director) Bermuda LI Wai Hang, Christina NIP Yun Wing Head Office and Principal Place of Business: Independent Non-executive C2, 5th Floor AU Son Yiu Hong Kong Spinners Industrial Building WOO Kam Wai Tai Nan West Street CHAN Chiu Ying Cheung Sha Wan Road Kowloon Hong Kong To the Shareholders Dear Sir or Madam, INTRODUCTION 1 September 2005 DISCLOSEABLE TRANSACTION The Directors announced on 10 August 2005 that the Company, Time Leader, New Fortune, Changshan and the Changshan Shareholders have entered into the Investment Agreement on 8 August Time Leader and New Fortune were newly incorporated and have no activity before entering into the Investment Agreement. The purpose of this circular is to give you further information on the Investment Agreement. DETAILS OF THE INVESTMENT AGREEMENT Date 8 August

7 LETTER FROM THE BOARD Parties (1) the Company; (2) New Fortune; (3) Time Leader; (4) Changshan; (5) Guangxin; (6) Hua Xu; (7) Mr. Gao; (8) Ms. Gao; and (9) Mr. Wang. To the best of the Directors knowledge, information and belief and having made all reasonable enquiries, Changshan, Changshan Shareholders and the beneficial shareholders of Guangxin and Hua Xu are not connected persons of the Company and are third parties independent of the Company and its connected persons. The Share Acquisition As at the Latest Practicable Date, Guangxin owns 7,749,300 Changshan Shares, representing 19.87% of the existing issued share capital of Changshan. Pursuant to the Investment Agreement, Guangxin has agreed to sell and Time Leader has agreed to purchase 5,815,300 Changshan Shares, which represents 14.91% of the existing issued share capital of Changshan at a consideration of RMB10,000,000 (equivalent to approximately HK$9,616,000). The consideration for the Share Acquisition was arrived at after arm s length negotiation between the parties and with reference to the audited net assets of Changshan as at 31 December 2004 and earning capability of Changshan, which shall be satisfied in cash by the Group s internal funding. The First Subscription As at the Latest Practicable Date, the total registered share capital of Changshan is RMB39,000,000. Pursuant to the Investment Agreement, New Fortune has agreed to subscribe 12,508,800 new Changshan Shares, representing 24.29% of the then enlarged issued share capital of Changshan at a subscription price of RMB23,100,000 (equivalent to approximately HK$22,212,000). The amount for the First Subscription was arrived at after arm s length negotiation between the parties and with reference to the audited net assets of Changshan as at 31 December 2004 and earning capability of Changshan, which shall be satisfied in cash by the Group s internal funding. 5

8 LETTER FROM THE BOARD Conditions precedent for the First Investment Completion of the First Investment is conditional upon, among other things, the fulfilment or, as the case may be, waiver of the following conditions: (a) (b) (c) (d) (e) (f) (g) the relevant parties have obtained all necessary consents and approvals in respect of the transactions contemplated under the First Investment; the representations and warranties given by Changshan and/or Changshan Shareholders as set out in the Investment Agreement are true, accurate and complete; the First Subscription has complied with all applicable laws and regulations in the PRC; the completion of the Share Acquisition; the Investors being satisfied with the First Investment Valuation Results which such results should not be more than 10% of the aggregate amount payable by the Investors in relation to the Share Acquisition and the First Subscription; all necessary approvals from the relevant authorities in the PRC in relation to the First Investment have been obtained without any additional requirements which are unacceptable to the Investors and all relevant documents have been registered with the relevant authorities in the PRC; and the completion of all necessary procedures for the change of directors and supervisors of Changshan and the appointment of the directors, supervisors, general manager and chief financial officer of Changshan as nominated by the Investors. All of the above conditions can be waived by the Investors. At present, the Investors do not have any intention to waive any of the aforesaid conditions. As at the Latest Practicable Date, none of the above conditions has been fulfilled. If the aforesaid conditions have not been fulfilled or waived by the Investors (as the case may be) on or before the Long Stop Date, the Investment Agreement shall cease to have effect. Completion of the First Investment Completion of the First Investment shall take place simultaneously upon fulfilment or waiver by the Investors (as the case may be) of all the aforesaid conditions as well as the transfers of 390,000 Changshan Shares from each of Ms. Gao and Mr. Wang to Mr. Gao and Guangxin respectively. Time Leader and New Fortune shall respectively pay to Guangxin and Changshan the amount for the Share Acquisition and the First Subscription within 15 Business Days after the day on which all the aforesaid conditions have been fulfilled or waived by the Investors (as the case may be). 6

9 LETTER FROM THE BOARD After completion of the First Investment, the total registered share capital of Changshan will be increased to RMB51,508,800. The shareholdings of Changshan will then be as follows: Number of Changshan Shares Held % Mr. Gao 24,581, Guangxin 2,324, Hua Xu 6,279, Time Leader 5,815, New Fortune 12,508, ,508, The Investors will hold in aggregate 18,324,100 Changshan Shares, representing 35.58% of the then enlarged issued share capital of Changshan after the First Investment. Changshan will then be treated as an associated company of the Group. Put option for the First Investment Pursuant to the Investment Agreement, if the net profits audited in accordance with the international accounting standards for the year ending 31 December 2005 of Changshan is less than RMB10,000,000 (equivalent to approximately HK$9,616,000) or if Changshan fails to obtain the Sale Approval by the end of August 2006, save and except due to Force Majeure Events, the Investors shall have the right to issue a put option notice to Mr. Gao requiring him to purchase or procure the purchase of all of the Changshan Shares then owned by the Investors ( First Investment Shares ) at a sum equal to RMB33,100,000 (equivalent to approximately HK$31,827,000) plus interest thereon minus any dividend received by the Investors in respect of the First Investment Shares. The Company will comply with the Listing Rules requirements upon the exercise of the put option. The Second Subscription Pursuant to the Investment Agreement, New Fortune has further agreed to subscribe 10,877,000 new Changshan Shares, representing 17.44% of the then enlarged issued share capital of Changshan after the First Investment at a subscription price of RMB26,000,000 (equivalent to approximately HK$25,000,000). Therefore, after the Second Subscription, New Fortune will hold in aggregate 23,385,800 Changshan Shares, representing 37.49% of the then enlarged further issued share capital of Changshan. The amount for the Second Subscription was arrived at after arm s length negotiation between the parties and with reference to the net assets of Changshan after the First Subscription, audited net profit after tax of Changshan for the year ended 31 December 2004 and earning capability of Changshan after obtaining the Sale Approval, which shall be satisfied in cash by the Group s internal funding. 7

10 LETTER FROM THE BOARD Conditions precedent for the Second Subscription Completion of the Second Subscription is conditional upon, among other things, the fulfilment or, as the case may be, waiver of the following conditions: (a) Changshan has obtained the Sale Approval by the end of August 2006; (b) (c) (d) (e) the Second Subscription has complied with all applicable laws and regulations in the PRC; the relevant parties have obtained all necessary consents and approvals in respect of the transactions contemplated under the Second Subscription; all necessary approvals from the relevant authorities in the PRC in relation to the Second Subscription have been obtained without any additional requirements which are unacceptable to the Investors and all relevant documents have been registered with the relevant authorities; and the Investors being satisfied with the Second Subscription Valuation Results which such results should not be more than 10% of the subscription price for the Second Subscription payable by New Fortune. All of the above conditions can be waived by the Investors. At present, the Investors do not have any intention to waive any of the aforesaid conditions. Completion of the Second Subscription Completion of the Second Subscription shall take place simultaneously upon fulfilment or waiver by the Investors (as the case may be) of all the aforesaid conditions. New Fortune shall pay to Changshan the subscription price for the Second Subscription within 15 Business Days after the day on which all the above conditions have been fulfilled or waived by the Investors (as the case may be). After completion of the Second Subscription, the total registered share capital of Changshan will be increased to RMB62,385,800. The shareholdings of Changshan will then be as follows: Number of Changshan Shares Held % Mr. Gao 24,581, Guangxin 2,324, Hua Xu 6,279, Time Leader 5,815, New Fortune 23,385, ,385,

11 LETTER FROM THE BOARD The Investors will hold in aggregate 29,201,100 Changshan Shares, representing 46.81% of the then further enlarged issued share capital of Changshan after the Second Subscription. Changshan will then continue to be treated as an associated company of the Group. Call options for the Acquisition First call option Each of Mr. Gao, Guangxin and Hua Xu has unconditionally and irrevocably granted an option to the Investors to purchase from them a respective amount of Changshan Shares as determined by the Investors which will enable the Investors to hold up to 58% of the then further enlarged issued share capital of Changshan at any time after completion of the First Investment and the Second Subscription but before 1 June 2008 ( First Call Option ). Mr. Gao, Guangxin and Hua Xu will altogether hold the remaining 42% of the then further enlarged issued share capital of Changshan. Once the Investors shareholding in Changshan exceeds 50%, Changshan will be treated as a non-wholly owned subsidiary of the Group. Second call option Simultaneously with the First Call Option, each of Mr. Gao, Guangxin and Hua Xu has irrevocably granted an option to the Investors to purchase from them a respective amount of Changshan Shares as determined by the Investors which will enable the Investors to hold up to 68% of the then further enlarged issued share capital of Changshan ( Second Call Option ). Mr. Gao, Guangxin and Hua Xu will altogether hold the remaining 32% of the then further enlarged issued share capital of Changshan. Changshan will then continue to be treated as a non-wholly owned subsidiary of the Group. The exercise price for the First Call Option and the Second Call Option shall be determined by: (i) the valuation results valued by an independent valuer in accordance with the applicable laws and regulations of the PRC with reference to the net asset value of Changshan and the pre-agreed intangible assets of Changshan (such as licences, products sale approval and other intellectual properties) in the amount of RMB45,000,000 (applicable to the First Call Option) or RMB55,000,000 (applicable to the Second Call Option); or (ii) 5 times (applicable to the First Call Option) or 6 times (applicable to the Second Call Option) of the earnings per share audited in accordance with the international accounting standards of Changshan for the relevant financial year preceding the issue of the notice to exercise the relevant call option. The Company will comply with the Listing Rules requirements upon the exercise of the First Call Option and the Second Call Option. The Directors (including Independent Non-executive Directors of the Company) consider that the terms of the Investment Agreement are fair and reasonable and are in the interest of the Company and the Shareholders as a whole. REASONS FOR THE ACQUISITION The Group is principally engaged in civil engineering, electrical and mechanical engineering, foundation and building construction work, property development and property investment. 9

12 LETTER FROM THE BOARD The Group has been seeking opportunity to diversify and to invest in the PRC. The Board is optimistic about the pharmaceutical market in the PRC and believes Changshan is a good platform for the development of such business. The Directors do not expect the transactions contemplated under the First Investment and the Second Subscription by the Investors would have any significant impact on the earnings, assets and liabilities of the Company. If there is any such significant impact, the Company will comply with the Listing Rules requirements. INFORMATION ON CHANGSHAN As at the Latest Practicable Date, the total registered share capital of Changshan is RMB39,000,000, comprising of 39,000,000 Changshan Shares, which is held as to 24,191,700 Changshan Shares, representing 62.03% of the existing issued share capital of Changshan by Mr. Gao, 7,749,300 Changshan Shares, representing 19.87% of the existing issued share capital of Changshan by Guangxin, 6,279,000 Changshan Shares, representing 16.1% of the existing issued share capital of Changshan by Hua Xu, 390,000 Changshan Shares, representing 1% of the existing issued share capital of Changshan by Mr. Wang and 390,000 Changshan Shares, representing 1% of the existing issued share capital of Changshan by Ms. Gao. Changshan is principally engaged in the business of manufacturing and selling of the cardiovascular drug products. FINANCIAL INFORMATION OF CHANGSHAN The table below sets out the financial information of Changshan based on the audited financial statements for the two years ended 31 December 2004 prepared under the PRC generally accepted accounting principles ( GAAP ): For the year ended 31 December RMB RMB Net profit before tax 8,075,000 9,900,000 Net profit after tax 8,019,000 9,869,000 Based on the unaudited financial statements of Changshan prepared under the PRC GAAP, the total assets and net assets of Changshan as at 30 June 2005 amounted to RMB147,937,000 (equivalent to approximately HK$142,248,000) and RMB84,354,000 (equivalent to approximately HK$81,110,000) respectively. LISTING RULES IMPLICATION Since some of the relevant figures for the Acquisition under the Percentage Ratios exceed 5% but less than 25%, the entering into of the Investment Agreement constitutes a discloseable transaction under Chapter 14 of the Listing Rules. 10

13 LETTER FROM THE BOARD ADDITIONAL INFORMATION Your attention is drawn to the additional information set out in the Appendix to this circular. Yours faithfully, For and on behalf of the Board of Chun Wo Holdings Limited Nip Yun Wing Director 11

14 APPENDIX GENERAL INFORMATION 1. RESPONSIBILITY STATEMENT This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Group. The Directors 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 the omission of which would make any statement herein misleading. 2. DISCLOSURE OF INTERESTS (a) Directors interests and short positions in the securities of the Company and its associated corporations As at the Latest Practicable Date, the interests and short positions of the Directors and chief executives of the Company in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) (a) 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 the Directors and chief executives were taken or deemed to have under such provisions of the SFO); or (b) which were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (c) which were required to be notified to the Company and the Stock Exchange pursuant to the Model Code were as follows: (i) Directors interests in the Shares % of the Company s issued share capital as at the Latest Outstanding Name of Nature of Number of Practicable option Director interests Shares held Total Date Shares (Long Positions) (Note 2) Pang Kam Chun Personal 265,096, ,245, % 732,000 Family 10,148,875 (Note 1) Li Wai Hang, Personal 10,148, ,245, % Christina Family 265,096,950 (Note 1) Kwok Yuk Chiu, Personal 2,983,540 2,983, % 7,326,000 Clement Nip Yun Wing 3,200,000 Au Son Yiu Personal 866, , % 732,000 Woo Kam Wai Personal 346, , % 732,000 12

15 APPENDIX GENERAL INFORMATION Notes: 1. Madam Li Wai Hang, Christina is the spouse of Mr. Pang Kam Chun and is deemed to be interested in those Shares in which Mr. Pang Kam Chun has an interest. Similarly, Mr. Pang Kam Chun is also deemed to be interested in those Shares in which Madam Li Wai Hang, Christina has an interest. 2. Details of the share options granted to the Directors are stated under the heading Directors rights to acquire the Shares below. (ii) Directors rights to acquire the Shares As at the Latest Practicable Date, the outstanding interests of the Directors in share options of the Company are summarised below: Number of Exercise price outstanding Name of Director Date of grant Exercisable period per Share option Shares HK$ Pang Kam Chun 13/8/ /8/2004 to 12/8/ ,000 Kwok Yuk Chiu, Clement 13/8/ /8/2004 to 12/8/ ,326,000 Au Son Yiu 13/8/ /8/2004 to 12/8/ ,000 Woo Kam Wai 13/8/ /8/2004 to 12/8/ ,000 Nip Yun Wing 15/11/ /11/2004 to 14/11/ ,200,000 Save as disclosed above, as at the Latest Practicable Date, to the knowledge of the Company, none of the Directors and chief executives of the Company had or was deemed to have any interest or short position in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) (a) 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 the Directors and the chief executives were taken or deemed to have under such provisions of the SFO); or (b) which were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (c) which were required to be notified to the Company and the Stock Exchange pursuant to the Model Code. (b) Interests of substantial shareholders (i) Interests in the Company As at the Latest Practicable Date, according to the register required to be kept by the Company under Section 336 of the SFO and so far as is known to the Directors or chief executive of the Company, the following person (other than a 13

16 APPENDIX GENERAL INFORMATION Director or chief executive of the Company) had an interest or short position in the Shares and underlying Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO: % of the Company s issued share capital Number of as at the Latest Name Capacity Shares held Practicable Date (Long Positions) Midland Realty (Holdings) Beneficial 52,748, % Limited owner (ii) Interests in other members of the Group As at the Latest Practicable Date, the following persons (other than a Director or chief executive of the Company) were directly or indirectly interested in 10% 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: % of Name of subsidiary Name of shareholder shareholding Chun Wo (Foshan) Limited Sunlink Limited 49% Chun Wo (Shan Mei) Limited Cheong Hing Construction Company Limited 20% Hong Kong OVM Engineering Liuzhou OVM Machinery Co., Ltd. 45% Company Limited Millennium Asset Holdings Limited Riskcorp Limited 30% Competitive Developments Limited 22% 14.4% (Beijing Chun Wo Online (Beijing City Xin Yuan Technology Technology Co., Ltd.) Development Co., Ltd.) Save as disclosed above, as at the Latest Practicable Date, so far as is known to any Director or chief executive of the Company, there was no person, other than a Director or chief executive of the Company, who had an interest or short position in the Shares and underlying Shares 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% or more of the share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group. 3. LITIGATION As at the Latest Practicable Date, neither the Company nor other members of the Group was engaged in any litigation or arbitration of material importance and no litigation or claim of material importance is known to the Directors to be pending or threatened against any member of the Group. 14

17 APPENDIX GENERAL INFORMATION 4. SERVICE CONTRACTS As at the Latest Practicable Date, each of the Independent Non-executive Directors had a service agreement for a term of one year. The agreement is renewable for one year subject to consent given by the Company and the respective Directors. There is no arrangement on the period of notice and compensation required for the termination of the service agreement. The annual fee of Mr. Au Son Yiu, Mr. Chan Chiu Ying and Mr. Woo Kam Wai is HK$150,000, HK$150,000 and HK$60,000 respectively. The fees were determined by reference to their duties and responsibilities with the Company, the Company s performance and profitability, remuneration policy and the market benchmark. Mr. Nip Yun Wing has entered into a service contract with the Company for a term of 3 years commencing from 15 November The Company may terminate the service contract by giving not more than 12 months written notice. If the service contract is to be terminated by the Company in the first 2 years, Mr. Nip is entitled to a terminal payment of not exceeding HK$2,266,000. The annual emoluments of Mr. Nip is HK$2,266,000 and he is also entitled to an additional annual bonus upon achieving certain performance targets. Mr. Nip s emoluments are determined by reference to his duties and responsibilities with the Company, the Company s performance and profitability, remuneration policy and the market benchmark. Save and except as disclosed above, none of the Directors has entered into or is proposing to enter into a service contract with any member of the Group (excluding contracts expiring or determinable within 1 year without payment of compensation, other than statutory compensation). 5. COMPETING INTERESTS As at the Latest Practicable Date, so far as the Directors are aware, none of the Directors or their respective associates had any interest in a business which competes or may compete with the business of the Group, or have or may have any other conflicts of interest with the Group pursuant to Rule 8.10 of the Listing Rules. 6. GENERAL (i) (ii) The company secretary of the Company is Ms. Fung Yee Man, Iris, an associate of both The Institute of Chartered Secretaries and Administrators and The Hong Kong Institute of Chartered Secretaries. The qualified accountant of the Company is Mr. Kwok Man Fai, an associate member of the Hong Kong Institute of Certified Public Accountants. (iii) The Company s Hong Kong branch share registrars is Secretaries Limited, G/F., Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong. (iv) In case of inconsistency, the English text of this circular shall prevail over the Chinese text. 15