THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION
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 liabilitywhatsoever for any loss howsoever arising from or in reliance upon the whole or any part of thecontents 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 shouldconsult a stockbroker or other registered dealer in securities, bank manager, solicitor, professionalaccountant or other professional adviser.
If you have sold all your shares in China Insurance International Holdings Company Limited, youshould at once hand this circular, together with the enclosed form of proxy to the purchaser or to thebank, stockbroker or other agent through whom the sale was effected for transmission to the purchaser.
CHINA INSURANCE INTERNATIONAL HOLDINGS COMPANY LIMITED中 保 國 際 控 股 有 限 公 司(Incorporated in Hong Kong with limited liability)
DISCLOSEABLE AND CONNECTED TRANSACTIONAND ONGOING CONNECTED TRANSACTIONS
ACQUISITION OFCHINA INSURANCE GROUP ASSETS
MANAGEMENT LIMITED
Financial adviser to China Insurance International Holdings Company Limited
The Hongkong and Shanghai Banking Corporation Limited
Independent financial adviser to the Independent Board Committee
YU MING INVESTMENT MANAGEMENT LIMITED
A letter from the Independent Board Committee is set out on pages 14 to 15 of this circular.
A letter from Yu Ming Investment Management Limited, the independent financial adviser, containingits advice to the Independent Board Committee is set out on pages 16 to 23 of this circular.
A notice convening an extraordinary general meeting of the Company to be held at 24th Floor, MingAn Plaza Phase II, 8 Sunning Road, Causeway Bay Hong Kong at 11:00 a.m. on 21 August, 2002 toconsider and, if thought fit, to pass the ordinary resolution as set out on pages 30 to 31 of this document.Whether or not you intend to attend the meeting, you are requested to complete and return theaccompanying form of proxy in accordance with the instructions printed thereon as soon as possibleand in any event not less than 48 hours before the time appointed for holding the meeting or anyadjournment thereof. Completion and return of the form of proxy shall not preclude you from attendingand voting in person at the meeting or any adjourned meeting should you so desire.
29 July, 2002
CONTENTS
– i –
Page
Definitions ................................................................................................................................. ii
Letter from the Board
Introduction ..................................................................................................................... 1
The Sale and Purchase Agreement ................................................................................. 3
Change of the Company’s Shareholding Structure ....................................................... 6
Information on CIGAML ................................................................................................ 7
Reasons for the Proposed Acquisition ........................................................................... 7
Particulars of the Loan .................................................................................................... 8
Particulars of the Ongoing Connected Transactions ..................................................... 9
Benefits of the Ongoing Connected Transactions ......................................................... 10
Waiver Application .......................................................................................................... 10
Businesses of the Company ............................................................................................ 11
Appointment of Director ................................................................................................. 11
Approval by the Independent Shareholders ................................................................... 12
Extraordinary General Meeting ...................................................................................... 12
Recommendations ........................................................................................................... 13
Additional Information ................................................................................................... 13
Letter from the Independent Board Committee ................................................................. 14
Letter from Yu Ming ............................................................................................................... 16
Appendix — General Information ...................................................................................... 24
Notice of Extraordinary General Meeting ........................................................................... 30
DEFINITIONS
– ii –
In this circular, unless the context otherwise requires, the following expressions have the following
meanings:
“associates” has the meaning ascribed under the Listing Rules
“Board” the board of directors of the Company
“Business Day” a day (other than a Saturday or Sunday) on which banks are open for
business in Hong Kong
“CICL” China Insurance Company, Limited (中國保險股份有限公司), a
company established in the PRC and the ultimate holding company
of the Company
“CIGAML” China Insurance Group Assets Management Limited, a company
incorporated in Hong Kong, a registered investment adviser under
the Securities Ordinance and a wholly-owned subsidiary of the CIHK
“CIGAML Shares” share(s) of HK$1.00 each in the share capital of CIGAML
“CIGSL” China Insurance Group Securities Limited, a company incorporated
in Hong Kong which carries on business as a securities dealer
registered under the Securities Ordinance, which is a wholly-owned
subsidiary of CIHK
“CIHK” China Insurance H.K. (Holdings) Company Limited, a company
incorporated in Hong Kong with limited liability and a wholly-owned
subsidiary of CICL, controlling shareholder of the Company which
owns, directly and indirectly approximately 52.99% of the issued share
capital of the Company prior to Completion
“CLTL” China Life Trustees Limited, a company incorporated in Hong Kong
and a wholly-owned subsidiary of CICL
“Company” China Insurance International Holdings Company Limited, a company
incorporated in Hong Kong, the shares of which are listed on the Stock
Exchange
“Completion” the completion of the Sale and Purchase Agreement in accordance
with its terms
DEFINITIONS
– iii –
“Consideration Shares” 51,620,000 new Shares to be issued to CIHK credited as fully paid
pursuant to the Sale and Purchase Agreement
“Directors” the directors of the Company
“EGM” an extraordinary general meeting of the Company convened to
approve, among other things, the Sale and Purchase Agreement and
the transactions contemplated thereunder
“Fees” the management fees, the performance bonus fees and other fees to
be received by CIGAML for its services in managing the Trust Fund
“Group” the Company together with its subsidiaries
“HK$” Hong Kong dollars, the lawful currency of Hong Kong
“HK GAAP” generally accepted accounting principles in Hong Kong
“HKCIG” Hong Kong C.I.G. International Investment Company Limited, a
company incorporated in the British Virgin Islands and a subsidiary
of CIHK
“Hong Kong” the Hong Kong Special Administrative Region of the PRC
“HSBC” The Hongkong and Shanghai Banking Corporation Limited, an exempt
dealer under the Securities Ordinance and a licensed bank under the
Banking Ordinance (Chapter 155 of the Laws of Hong Kong) and the
financial adviser to the Company
“Independent Board the independent committee of the board of directors of the Company,
Committee” comprising Dr. Wu Jiesi and Mr. Lau Wai Kit
“Independent Shareholders” the Shareholders other than CIHK and its associates as well as any
Shareholder who is a director of CIHK on the date of the EGM
DEFINITIONS
– iv –
“Investment Management the agreements entered into between CIGAML and CLTL or C.I.G.
Agreements” (Nominee) Limited or to be entered into between CIGAML and CICL
or its subsidiaries for investment advice and investment management
services provided by CIGAML in managing the Trust Fund
“Latest Practicable Date” 25 July, 2002, being the latest practicable date before the printing of
this circular for ascertaining certain information contained in this
circular
“Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange
“Loan” a loan in the total sum of US$3,556,900.00 and HK$129,175,808.22
that is currently due and payable by CIGAML to HKCIG
“Ming An” Ming An Insurance Company (HK) Limited, a company incorporated
in Hong Kong and a wholly-owned subsidiary of CIHK which holds
approximately 6.50% of the issued shares of the Company prior to
Completion
“Ongoing Connected the transactions pursuant to the Investment Management Agreements
Transactions” entered into or to be entered into between CIGAML and CICL or its
subsidiaries regarding the provision of services by CIGAML in
managing the Trust Fund
“PRC” The People’s Republic of China
“Proposed Acquisition” the acquisition of the Sale Shares by the Company under the terms
and conditions of the Sale and Purchase Agreement
“Sale Shares” 10,000,000 CIGAML Shares which are beneficially owned by CIHK
“Sale and Purchase the conditional agreement dated 8 July, 2002 entered into between
Agreement” CIHK and the Company, regarding, among other things, the acquisition
of the entire issued share capital of CIGAML by the Company from
CIHK
DEFINITIONS
– v –
“SDI Ordinance” Securities (Disclosure of Interests) Ordinance (Chapter 396 of the
Laws of Hong Kong)
“Securities Ordinance” Securities Ordinance (Chapter 333 of the Laws of Hong Kong)
“SFC” The Securities and Futures Commission of Hong Kong
“Share(s)” share(s) of HK$0.05 each in the capital of the Company
“Shareholder(s)” holder(s) of the Shares
“Stock Exchange” The Stock Exchange of Hong Kong Limited
“subsidiary(ies)” if a company controls the composition of the board directors of another
company, or controls more than half of the voting right or holds more
than half of issued share capital in another company (excluding any
part of it which carries no right to participate beyond a specified
amount in a distribution of either profits and capital), the second
mentioned company is regarded as a subsidiary of the first mentioned
company
“Trust Fund” the investment fund of not less than 20 trusts (including but not limited
to private trust funds and MPF trust funds) of which CLTL or CICL
or any of its subsidiary is the trustee
“Yu Ming” Yu Ming Investment Management Limited, an investment adviser and
a dealer registered under the Securities Ordinance and the independent
financial adviser to the Independent Board Committee
LETTER FROM THE BOARD
– 1 –
CHINA INSURANCE INTERNATIONAL HOLDINGS COMPANY LIMITED中 保 國 際 控 股 有 限 公 司(Incorporated in Hong Kong with limited liability)
Executive Directors:— Registered Office:
Yang Chao, Chairman 12/F, Ming An Plaza Phase II
Zhang Xiaoshu, Vice Chairman 8 Sunning Road
Miao Jianmin, Chief Executive Officer Causeway Bay
Ng Yu Lam Kenneth, Deputy Chief Executive Officer Hong Kong
Dong Ming, Deputy Chief Executive Officer
Lau Siu Mun Sammy
Shen Koping Michael
Non-Executive Directors:—
Zheng Changyong
Wu Jiesi*
Lau Wai Kit*
* Independent Non-Executive Directors
29 July, 2002
To the Shareholders
Dear Sir/Madam,
DISCLOSEABLE AND CONNECTED TRANSACTIONAND ONGOING CONNECTED TRANSACTIONS
ACQUISITION OFCHINA INSURANCE GROUP ASSETS MANAGEMENT LIMITED
1. INTRODUCTION
On 8 July, 2002, the Company entered into the Sale and Purchase Agreement with CIHK,
pursuant to which the Company has conditionally agreed, among other things, to acquire the
Sale Shares from CIHK for a total consideration of HK$403,200,000 which will be satisfied on
Completion by (a) a cash payment of HK$201,623,900; and (b) the issuance and allotment of
the Consideration Shares to CIHK by the Company credited as fully paid. Immediately after
Completion, CIGAML will become and will be accounted for as a wholly-owned subsidiary of
the Company.
LETTER FROM THE BOARD
– 2 –
Following the Completion, CIGAML will enter into or continue to enter into the Ongoing
Connected Transactions with CICL or its subsidiaries as part of the normal operation of
CIGAML.
As CIHK is the controlling shareholder of the Company, the Company’s entering into of the
Sale and Purchase Agreement constituted a connected transaction of the Company for the purpose
of the Listing Rules. As the consideration of the Proposed Acquisition exceeds 15% of the
consolidated net tangible assets of the Company as disclosed in its latest published annual
report, the Proposed Acquisition also constituted a discloseable transaction for the purpose of
the Listing Rules.
The Sale and Purchase Agreement and the transactions contemplated thereby (including but
not limited to the Proposed Acquisition and the issuance and allotment of the Consideration
Shares) are subject to, among other things, the approval of the Independent Shareholders. In
view of the interests of CIHK in the Sale and Purchase Agreement, CIHK and its associates as
well as any Shareholder who is a director of CIHK on the date of the EGM will abstain from
voting at the EGM in respect of such resolution.
HSBC has been appointed as the financial adviser to the Company for the Proposed Acquisition.
The Independent Board Committee has been formed to advise the Independent Shareholders
on whether or not the terms of the Sale and Purchase Agreement and the transactions
contemplated thereunder (including but not limited to the Proposed Acquisition and the issuance
and allotment of the Consideration Shares) are in the best interest of the Company and are fair
and reasonable so far as the Independent Shareholders are concerned. Yu Ming has been
appointed as the independent financial adviser to advise the Independent Board Committee in
respect of the terms and conditions of the Sale and Purchase Agreement including the existing
Investment Management Agreements.
The purpose of this circular is (a) to provide you with further information relating to the Proposed
Acquisition and the On-going Connected Transactions; (b) to set out the letter of advice from
Yu Ming to the Independent Board Committee and the recommendation and opinion of the
Independent Board Committee as advised by Yu Ming in respect of the Proposed Acquisition;
and (c) to give notice to the Shareholders of the EGM at which ordinary resolution will be
proposed to approve, among other things, the Sale and Purchase Agreement and the transactions
contemplated thereunder (including but not limited to, the Proposed Acquisition, the issuance
and allotment of the Consideration Shares).
LETTER FROM THE BOARD
– 3 –
2. THE SALE AND PURCHASE AGREEMENT
(a) Date
8 July, 2002
(b) Parties
CIHK as the vendor
The Company as the Purchaser
(c) Proposed Acquisition
Pursuant to the Sale and Purchase Agreement, the Company has conditionally agreed, among
other things, to acquire the Sale Shares from CIHK for a total consideration of HK$403,200,000
which will be satisfied on Completion by (a) a cash payment of HK$201,623,900, which will
be financed by internal resources of the Group; and (b) the issuance and allotment of the
Consideration Shares to CIHK by the Company credited as fully paid. Immediately after
Completion, CIGAML will become and will be accounted for as a wholly-owned subsidiary of
the Company.
The terms of the Sale and Purchase Agreement (including the consideration payable by the
Company for the Proposed Acquisition) have been determined after arm’s length negotiations
between the Company and CIHK. The principal terms of the Sale and Purchase Agreement,
including the consideration payable, are set out below.
The Directors consider that the terms of the Sale and Purchase Agreement are based on normal
commercial terms and are fair and reasonable so far as the Shareholders are concerned.
LETTER FROM THE BOARD
– 4 –
(d) Consideration and payment terms
The total consideration payable by the Company to CIHK for the Sale Shares under the Sale
and Purchase Agreement is HK$403,200,000, and was determined at a price-earning ratio of
12, based on the projected net profit of CIGAML of HK$33.6 million for the financial year
ending on 31 December, 2002 and taken into account the existing Investment Management
Agreements. HK$201,623,900 of such consideration are to be satisfied by a cash payment and
the balance of HK$201,576,100 of such consideration are to be satisfied by the issuance and
allotment of 51,620,000 Shares credited as fully paid to CIHK at an agreed issue price of
HK$3.905 per Share. If the Consideration Shares were issued at the closing price as at 8 July,
2002, the date of the Sale and Purchase Agreement, of HK$3.975, the Consideration Shares
would amount to HK$205,189,500 and the consideration for the Proposed Acquisition would
be HK$406,813,400.
The Consideration Shares will rank pari passu in all respects with the then existing issued
Shares. The agreed issue price per Consideration Share of HK$3.905 represents (a)
approximately 1.76% discount to the closing price per Share at HK$3.975 on 8 July, 2002,
being the date of the Sale and Purchase Agreement; (b) approximately 1.14% discount to the
average closing price per Share at HK$3.950 for the five trading days ended on 8 July, 2002,
being the last five trading days prior to and including the date of the Sale and Purchase
Agreement; and (c) approximately 13.19% premium to the closing price of the Shares at HK$3.45
on the Latest Practicable Date. The Consideration Shares represent approximately 4.05% of
the existing issued share capital of the Company and about 3.90% of the issued share capital of
the Company as enlarged by the issue of the Consideration Shares pursuant to the Proposed
Acquisition.
The Directors consider that taking into account the business potential of CIGAML such
consideration is fair and reasonable so far as the Shareholders as a whole are concerned. The
agreed value of 100% interest in CIGAML being HK$403,200,000 has been determined after
arm’s length negotiations between the Company and CIHK.
LETTER FROM THE BOARD
– 5 –
(e) Conditions
Completion of the Proposed Acquisition is conditional upon, among other things, the following
occurring on or before 31 December, 2002 (or such other date as CIHK and the Company may
agree in writing):—
(i) the Listing Committee of the Stock Exchange granting listing of, and permission to deal
in, the Consideration Shares;
(ii) the passing by the Independent Shareholders of an ordinary resolution at the EGM to
approve the Sale and Purchase Agreement and the transactions contemplated thereunder
(including the Proposed Acquisition and the issue and allotment of the Consideration
Shares);
(iii) the obtaining of the approval of the SFC to the change in a substantial shareholder of
CIGAML pursuant to section 26A(1) of the Securities and Futures Commission Ordinance
(Chapter 24 of the Laws of Hong Kong), if applicable;
(iv) the submission of a notification by CIGAML to the SFC of the change in the ultimate
holding company of CIGAML pursuant to section 63(1)(b) of the Securities Ordinance
and section 7(c)(i) of the Securities (Miscellaneous) Rules, if applicable; and
(v) the completion to the satisfaction of the Company of such due diligence (legal, financial,
business or other conditions) as the Company may consider necessary in relation to
CIGAML by the Company.
If all the above conditions of the Sale and Purchase Agreement are not fulfilled or waived by
the Company within the deadline set out above, the Sale and Purchase Agreement will
automatically terminate and all the obligations and liabilities of the parties to the Sale and
Purchase Agreement will lapse, save in respect of antecedent breaches.
(f) Completion Date
If all the above conditions of the Sale and Purchase Agreement have been fulfilled or waived
within the deadline set above, Completion will take place within five Business Day (or such
other date as the Company and CIHK may agree in writing) after all such conditions are so
fulfilled or waived.
(g) Application for listing
Application has been made by the Company to the Stock Exchange for grant of approval for
listing of and permission to deal in the Consideration Shares.
LETTER FROM THE BOARD
– 6 –
3. CHANGE OF THE COMPANY’S SHAREHOLDING STRUCTURE
Set out below is the simplified shareholding structure of the Company immediately before and
after the issuance and allotment of the Consideration Shares (assuming that no further Shares
will be issued after the date of this Announcement other than the Consideration Shares).
Immediately before the issuance and allotment of the Consideration Shares
CICL
CIHK Public
Ming AnCIGAML
Company
100%
46.49%
(directly and indirectly)
47.01%
6.50%
100% 100%
Immediately after the issuance and allotment of the Consideration Shares
CICL
CIHK Public
Ming An
CIGAML
Company
100%
48.57%
(directly and indirectly)45.18%
6.25%
100%
100%
LETTER FROM THE BOARD
– 7 –
4. INFORMATION ON CIGAML
CIGAML was incorporated in Hong Kong on 22 October, 1996. It has an authorised and issued
share capital of HK$10,000,000 divided into 10,000,000 CIGAML Shares. CIGAML is a wholly-
owned subsidiary of CIHK.
(a) Business of CIGAML
CIGAML is a duly registered investment advisor with the SFC and its principal business is the
provision of management services for the investment of funds of various trusts.
(b) Financial Information of CIGAML
The audited net asset of CIGAML prepared under the Hong Kong GAAP as at 31 December,
2001 and 31 December, 2000 was HK$25.2 million and HK$11.1 million respectively. The
audited profit before and after tax of CIGAML prepared under the Hong Kong GAAP for the
financial year ended on 31 December, 2001 amounted to approximately HK$17.8 and HK$15.6
million respectively and for the financial year ended 31 December, 2000 amounted to
approximately HK$0.6 million. The assets under management of the CIGAML amounted
approximately HK$1,412.2 million as at 31 December, 2001.
Furthermore, the unaudited net asset of CIGAML as at 30 June, 2002 was approximately
HK$35.5 million and the unaudited profit of CIGAML for the period between 1 January, 2002
and 30 June, 2002 amounted to approximately HK$20.3 million with assets under management
of approximately HK$2,967.3 million.
5. REASONS FOR THE PROPOSED ACQUISITION
The Directors are of the view that the Proposed Acquisition will enable the Company to diversify
into the complementary business of fund management. The purchase of CIGAML provides the
Group with (a) the expertise and the required license to carry on a fund management business
in Hong Kong; (b) a recurrent revenue stream from its Hong Kong fund management operations;
(c) the ability to offer customised fund management products to members of the Group in order
to enhance risk management and improve investment returns; and (d) a platform to enter the
fast growing PRC fund management industry.
LETTER FROM THE BOARD
– 8 –
Synergies exist between the businesses of insurance and fund management. As the premium
income to be received under the insurance businesses increases, the Group will require a
professional body to manage such premiums, therefore, the acquisition of CIGAML may further
enhances the Group’s core insurance operations. With the recent acquisition of life insurance
and general insurance operations in the PRC, namely, Tai Ping Life Insurance Company, Limited
and The Tai Ping Insurance Company, Limited, premium income from the PRC is expected to
grow and accumulate significantly. The Group intends to provide advisory services for managing
the premiums received from its PRC insurance business, using the expertise of CIGAML.
Furthermore, the acquisition of a fund management company by the Company in Hong Kong
may pave way in due course for the Company to obtain the necessary license to manage funds
for PRC entities in the PRC.
6. PARTICULARS OF THE LOAN
A loan in the total sum of US$3,556,900.00 and HK$129,175,808.22 is currently due and
payable by CIGAML to HKCIG. The Loan bears interest at a rate equivalent to that charged by
a bank, which is an independent third party not connected with the Company or CIHK or their
respective directors, chief executive and substantial shareholders or their respective subsidiaries
or an associate of any of them, in Hong Kong on a loan in the sum of US$25,000,000 granted
to HKCIG. Since HKCIG is a subsidiary of CIHK, the Loan will constitute financial assistance
by HKCIG to CIGAML under Chapter 14 of the Listing Rules. The Directors consider that the
terms of the Loan are based on normal commercial terms and are fair and reasonable so far as
the Shareholders as a whole are concerned. As the Loan was granted by HKCIG to CIGAML
on normal commercial terms and no security has been given by the Company or its subsidiaries
for the Loan, under Rule 14.24(8) of the Listing Rules, the continuance granting of the Loan by
HKCIG to CIGAML is not subject to any disclosure and shareholders’ approval requirements
under Chapter 14 of the Listing Rules.
The proceeds of the Loan have been used to finance the acquisition of fixed income securities
by CIGAML over the past two years, generating returns in excess of 9% resulting in a positive
spread of approximately 6%. The Directors believe that the financial implications of the Loan
has been positive and intend to continue the arrangement until the end of the year.
LETTER FROM THE BOARD
– 9 –
7. PARTICULARS OF THE ONGOING CONNECTED TRANSACTIONS
CIGAML has previously entered into certain Investment Management Agreements and the
Directors expect that following Completion, CIGAML will continue to enter into new Investment
Management Agreements and will in its ordinary and usual course of business receive the Fees
from the Investment Management Agreements, which will constitute connected transactions
for the Company for the purpose of the Listing Rules.
The amount of Fees received or to be received by CIGAML per annum shall principally be (a)
a management fee calculated on the basis of a certain percentage of the net asset value of each
Trust Fund; and/or (b) a performance bonus fee representing a certain percentage of the amount
of net investment return at the end of the relevant calendar year in excess of an amount equivalent
to a certain percentage of the daily average balance of settlor’s subscription monies (including
fund balance as at 1 January of the year in issue ) or the increase in the net asset value of the
relevant Trust Fund managed by CIGAML. The estimated amount of Fees to be received by
CIGAML from CICL or its subsidiaries each year, based on the current anticipated growth in
the size of the Trust Funds, will not exceed 3% of the consolidated net tangible assets of the
Company as disclosed in its latest published audited accounts from time to time.
Furthermore, following Completion, CIGAML will deal with or continue to deal with certain
Hong Kong listed equity securities. The Directors intend that such dealing will be handled
primarily by CIGSL. As CIGSL is an associate of CIHK, the brokerage services to be provided
by CIGSL to the Group from time to time will constitute connected transactions for the Company
under the Listing Rules.
The Stock Exchange has granted a waiver dated 10 August, 2000 to the Company from the
relevant requirements of the Listing Rules in respect of brokerage services provided by CIGSL
to the Group provided that the fees paid by the Group including CIGAML on such brokerage
services shall be less than the higher of (a) HK$10 million; and (b) 3% of the book value of the
net tangible assets of the Group. Such waiver shall remain valid as the provision of brokerage
services by CIGSL to CIGAML after Completion will fall within the ambit as set out therein.
LETTER FROM THE BOARD
– 10 –
8. BENEFITS OF THE ONGOING CONNECTED TRANSACTIONS
The Directors (including the independent non-executive Directors) consider that the existing
Investment Management Agreements as a whole have been entered into and the new Investment
Management Agreements will be entered into on normal commercial terms. The Directors
consider it to be in the interest of CIGAML to engage in the Ongoing Connected Transactions
as these transactions and the Fees to be received by CIGAML will facilitate the smooth operation
of CIGAML’s business in terms of generating a steady stream of income.
9. WAIVER APPLICATION
The Directors expect that the transaction amount of the Ongoing Connected Transactions for
each year will be less than 3% of the consolidated net tangible asset of the Company as disclosed
in its latest published audited accounts from time to time. Under Chapter 14 of the Listing
Rules, the Ongoing Connected Transactions will constitute connected transactions of the
Company which would normally require disclosure by way of press announcement. Since the
Ongoing Connected Transactions will be in the ordinary course of business of the parties thereto,
it would be impractical and unduly onerous on the part of the Company if it is required to
comply with Rule 14.25(1) of the Listing Rules and issue a press announcement on each occasion
when the aggregate transaction amounts exceeds HK$1,000,000 or 0.03% of the consolidated
net tangible assets of the Company as disclosed in its latest published audited accounts from
time to time. The Company has applied to the Stock Exchange for a general waiver from the
requirement to issue a press announcement pursuant to Rule 14.25(1) of the Listing Rules in
respect of the Ongoing Connected Transactions on the conditions that:—
(a) the existing Investment Management Agreements as a whole have been and the new
Investment Management Agreements to be entered in the future will be:—
(i) entered into in the ordinary and usual course of business of the Group;
(ii) conducted either on normal commercial terms or on terms no less favourable than
terms available to (or from, as appropriate) independent third parties;
(iii) on terms that are fair and reasonable so far as the Shareholders are concerned;
(b) the aggregate amount of Fees received by CIGAML each year will not exceed the higher
of HK$10 million and 3% of the consolidated net tangible assets of the Company as
disclosed in its latest published audited accounts from time to time;
LETTER FROM THE BOARD
– 11 –
(c) the details of the transactions will be disclosed in the Company’s annual report as set out
in Rule 14.25(1)(A) to (D) of the Listing Rules for the relevant financial year of the
Company;
(d) the independent non-executive Directors will review annually and confirm in the
Company’s annual report of the relevant financial year that the Investment Management
Agreements have been entered into and the Fees have been received in the manner as
stated in (a) and (b) above respectively;
(e) the auditors of the Company shall review the transactions annually and provide a letter
to the Board stating that:—
(i) the Investment Management Agreements are on normal commercial terms or on
terms no less favourable than terms available to (or from, as appropriate)
independent third parties;
(ii) the aggregate amount of the Fees received by CIGAML each year have not exceeded
the cap referred to in (b) above;
(iii) where, for whatever reasons, the auditors decline to accept the engagement or are
unable to provide the auditors’ letter, the Directors shall contact the Stock Exchange
immediately.
10. BUSINESSES OF THE COMPANY
The principal activity of the Company is investment holding. The principal activities of the
Group are the underwriting of treaty and facultative reinsurance of all classes of general business,
including non-marine and marine, and certain classes of long term business and life insurance
business. The Group also carries on reinsurance broking and, to support its reinsurance activities,
holds security, money market and property investments.
11. APPOINTMENT OF DIRECTOR
Mr. Shen Koping, Michael was appointed as an Executive Director with effect from 23 July,
2002. The biography of Mr. Shen is as follows:
Mr. Shen Koping Michael, aged 33, joined the Company on 23 July 2002. Mr. Shen is also the
Chief Financial Officer of the Company. Prior to joining the Company, Mr. Shen was an
Executive Director in the Financial Institutions Group of the Investment Banking Division at
Goldman Sachs (Asia) L.L.C. (“Goldman Sachs”). Mr. Shen was responsible for marketing
LETTER FROM THE BOARD
– 12 –
and executing corporate finance and mergers/acquisitions transactions for financial institutions
in the Asia ex-Japan region. During his seven years at Goldman Sachs, Mr. Shen developed in-
depth knowledge in advising insurance and asset management companies on strategic and
operational matters. Mr. Shen received a Juris Doctorate degree in 1994 from Harvard Law
School, where he was an Executive Editor of the Harvard Law Review. Mr. Shen graduated as
the valedictorian of his class and received a Bachelor of Science in Foreign Service in 1991
from Georgetown University, where he majored in International Politics/Relations. Mr. Shen
is also a director and the Deputy General Manager of CIGAML.
12. APPROVAL BY THE INDEPENDENT SHAREHOLDERS
CIHK is the controlling shareholder of the Company. Accordingly, the Company’s entering
into of the Sale and Purchase Agreement constituted connected transaction of the Company for
the purpose of the Listing Rules. As the consideration of the Proposed Acquisition exceeds
15% of the consolidated net tangible assets of the Company as disclosed in its latest published
annual report, the Proposed Acquisition also constitutes a discloseable transaction for the purpose
of the Listing Rules and the Proposed Acquisition, the issuance and allotment for the
Consideration Shares are subject to, among other things, the approval of the Independent
Shareholders.
In view of the interests of CIHK in the Sale and Purchase Agreement, the Independent Board
Committee has been appointed to advise the Independent Shareholders on whether or not the
terms of the Sale and Purchase Agreement and the transactions contemplated thereunder
(including but not limited to the Proposed Acquisition and the issuance and allotment of the
Consideration Shares) are in the interests of the Company and are fair and reasonable so far as
the Independent Shareholders are concerned. Yu Ming has been appointed to advise the
Independent Board Committee in respect of the terms and conditions of the Sale and Purchase
Agreement including the existing Investment Management Agreements.
13. EXTRAORDINARY GENERAL MEETING
Set out on pages 30 and 31 of this circular is a notice convening the EGM which is to be held
at 24th Floor Ming An Plaza Phase II, 8 Sunning Road, Causeway Bay, Hong Kong on 21
August, 2002 at 11:00 am. The EGM will be held for the purpose of considering and, if thought
fit, approving the Sale and Purchase Agreement and the transactions contemplated thereby
(including but not limited to, the Proposed Acquisition, the issuance and allotment of the
Consideration Shares).
LETTER FROM THE BOARD
– 13 –
A form of proxy for use at the EGM is enclosed. Whether or not you are able to attend the
meeting in person, you are requested to complete and return the form of proxy in accordance
with the instructions printed thereon to the Company’s registered office at 12th Floor, Ming An
Plaza Phase II, 8 Sunning Road, Causeway Bay, Hong Kong as soon as possible and in any
event not less than 48 hours before the time appointed for the holding of the EGM. Completion
of the form of proxy will not preclude you from attending and voting at the meeting or any
adjourned meeting should you so desire.
CIHK and its associates as well as any Shareholder who is a director of CIHK on the date of
the EGM will abstain from voting at the EGM in respect of such resolution to be proposed at
the EGM to approve the Sale and Purchase Agreement and the transactions contemplated
thereunder.
14. RECOMMENDATIONS
Your attention is drawn to (a) the letter from the Independent Board Committee set out on page
14 of this circular which contains the recommendation of the Independent Board Committee to
the Independent Shareholders regarding the resolution to approve the Sale and Purchase
Agreement and the transactions contemplated thereunder; and (b) the letter from Yu Ming set
out on pages 16 to 23 of this circular which contains its recommendation to the Independent
Board Committee in relation to the Sale and Purchase Agreement and the existing Investment
Management Agreements, and the principal factors and reasons considered by Yu Ming in
arriving at its recommendation.
The Independent Board Committee, having taken into account the advice of Yu Ming, considers
that the terms of the Sale and Purchase Agreement (including existing Investment Management
Agreements taken as a whole) are fair and reasonable so far as the Independent Shareholders
are concerned.
15. ADDITIONAL INFORMATION
Your attention is also drawn to the additional information set out in the appendix to this circular.
Yours faithfully,
By Order of the Board
Yang Chao
Chairman
LETTER FROM THE INDEPENDENT BOARD COMMITTEE
– 14 –
CHINA INSURANCE INTERNATIONAL HOLDINGS COMPANY LIMITED中 保 國 際 控 股 有 限 公 司(Incorporated in Hong Kong with limited liability)
29 July, 2002
To the Independent Shareholders
Dear Sir/Madam,
CONNECTED AND DISCLOSEABLE TRANSACTION
ACQUISITION OFCHINA INSURANCE GROUP ASSETS MANAGEMENT LIMITED
We refer to the circular to the Shareholders dated 29 July, 2002 (the “Circular”), of which this letter
forms part. Unless the context requires otherwise, terms used in this letter shall have the same meanings
given to them in the definitions section of the Circular.
In view of the interests of CIHK in the Sale and Purchase Agreement, the Sale and Purchase Agreement
entered into between the Company and CIHK constituted connected transaction of the Company for
the purpose of the Listing Rules.
In view of the interests of CIHK in the Sale and Purchase Agreement, we have been appointed by as
the Independent Board Committee to consider the Sale and Purchase Agreement and the transaction
as contemplated thereby (including but not limited to the Proposed Acquisition, the issuance and
allotment of the Consideration Shares) and to advise the Independent Shareholders in respect thereof.
Rule 14.30(7) of the Listing Rules requires an independent financial adviser to opine on whether a
connected transaction is fair and reasonable to the Independent Shareholders. Accordingly, Yu Ming
has been appointed to advise us in respect of the terms governing the Proposed Acquisition.
As CIHK is the controlling shareholder of the Company, the Company’s entering into of the Sale and
Purchase Agreement constituted connected transaction of the Company for the purpose of the Listing
Rules. As the consideration of the Proposed Acquisition exceeds 15% of the consolidated net tangible
assets of the Company as disclosed in its latest published annual report, the Proposed Acquisition
also constituted a discloseable transaction for the purpose of the Listing Rules. Accordingly, pursuant
to the Listing Rules, the Proposed Acquisition, the issuance and allotment of the Consideration Shares
are subject to, among other things, the approval of the Independent Shareholders.
LETTER FROM THE INDEPENDENT BOARD COMMITTEE
– 15 –
We urge you to read the letter from the Board set out on pages 1 to 13 of the Circular, which sets out
the information relating to the Sale and Purchase Agreement, the reasons for the Proposed Acquisition
as well as the actions to be taken by the Independent Shareholders.
As members of your Independent Board Committee, we have discussed with the management of the
Company as to the terms and conditions of the Sale and Purchase Agreement, the reasons for the
Proposed Acquisition and the basis upon which the terms and conditions governing the Proposed
Acquisition have been determined. We have also discussed with Yu Ming as to the basis upon which
its advice has been given to us. We have also considered the key factors taken into account by Yu
Ming in arriving at its opinion regarding the Proposed Acquisition as set out in the letter from Yu
Ming on pages 16 to 23 of the Circular, which we urge you to read carefully.
We concur with the views of Yu Ming and consider that the terms and conditions of the Sale and
Purchase Agreement are fair and reasonable so far as the Independent Shareholders are concerned
and that the Proposed Acquisition is in the interests of the Company and the Independent Shareholders
as a whole, and it will benefit the Company in its long term development. Accordingly, as the members
of your Independent Board Committee, we recommend the Independent Shareholders to approve the
Sale and Purchase Agreement and the transactions contemplated thereby (including but not limited to
the Proposed Acquisition and the issuance and allotment of the Consideration Shares) and to vote in
favour of the ordinary resolution approving the Sale and Purchase Agreement and the transactions
contemplated thereby to be proposed at the EGM.
Yours faithfully,
For and on behalf of
Independent Board Committee
Wu Jiesi Lau Wai Kit
LETTER FROM YU MING
– 16 –
The following is the text of the letter from Yu Ming, the independent financial adviser to the
Independent Board Committee, in relation to the terms of the Sale and Purchase Agreement and the
existing Investment Management Agreements prepared for the purpose of inclusion in this circular.
YU MING INVESTMENT MANAGEMENT LIMITED
禹 銘 投 資 管 理 有 限 公 司
29th July, 2002
The Independent Board Committee
China Insurance International Holdings Company Limited
12th Floor, Ming An Plaza Phase II
8 Sunning Road
Causeway Bay
Hong Kong
Dear Sir/Madam,
DISCLOSEABLE AND CONNECTED TRANSACTIONAND ONGOING CONNECTED TRANSACTIONS
INVOLVING THE ACQUISITION OFTHE ENTIRE ISSUED SHARE CAPITAL OF
CHINA INSURANCE GROUP ASSETS MANAGEMENT LIMITED
INTRODUCTION
We have been appointed to advise the Independent Board Committee in respect of the Sale and
Purchase Agreement, details of which are set out in the Letter from the Board in the circular to the
Shareholders dated 29th July, 2002 (the “Circular”), of which this letter forms part. Terms used in
this letter shall have the same meanings as defined in the Circular unless the context otherwise requires.
In formulating our opinion, we have relied on the statements, information, opinions and representations
contained in the Circular and the information, representations and opinions provided to us by the
Directors. We have assumed that all statements, information, opinions and representations contained
or referred to in the Circular and all information, representations and opinions which have been
provided by the Directors for which they are solely responsible are, to the best of their knowledge,
true and accurate at the time they were made and continue to be so on the date of this letter.
LETTER FROM YU MING
– 17 –
We consider that we have been provided with sufficient information on which to form a reasonable
basis for our opinion. We have no reason to suspect that any relevant information has been withheld,
nor are we aware of any fact or circumstance which would render the information provided and the
representations and opinions made to us untrue, inaccurate or misleading. Having made all reasonable
enquiries, the Directors have further confirmed that, to the best of their knowledge, they believe
there are no other facts or representations the omission of which would make any statement in the
Circular, including this letter, misleading. We have not, however, carried out any independent
verification of the information provided by the Directors, nor have we conducted an independent
investigation into the business and affairs of the Group or CIGAML.
PRINCIPAL FACTORS AND REASONS CONSIDERED
The Sale and Purchase Agreement
On 8th July, 2002, the Company entered into the Sale and Purchase Agreement with CIHK, pursuant
to which the Company conditionally agreed, among other things, to acquire from CIHK the entire
issued share capital of CIGAML for a consideration of HK$403.2 million which will be satisfied by
a cash payment of approximately HK$201.6 million and the issue and allotment of the Consideration
Shares at HK$3.905 each, credited as fully paid.
CIGAML
CIGAML is an investment adviser registered with the SFC and is principally engaged in the provision
of investment management services to funds of various trusts and provident fund schemes.
Reasons for the Proposed Acquisition
The Directors are of the view that the Proposed Acquisition will enable the Company to diversify
into a complementary business of fund management and provide the Company with (i) the expertise
and the required license to carry out fund management business in Hong Kong; (ii) a recurrent revenue
from its Hong Kong fund management operations; (iii) the ability to offer customised fund management
products to members of the Group in order to enhance risk management and improve investment
returns; and (iv) a platform to enter the fast growing PRC fund management industry.
LETTER FROM YU MING
– 18 –
Terms of the Sale and Purchase Agreement
(i) The Consideration
The Directors consider that the consideration of HK$403.2 million is fair and reasonable so far
as the Shareholders as a whole are concerned. The valuation of CIGAML has been determined
after arm’s length negotiations between the Company and CIHK.
Since fund management is not an asset based business, comparing the consideration with its
net assets is irrelevant. In forming our opinion, we have not compared the consideration with
the audited net assets of CIGAML, which was approximately HK$25.2 million as at 31st
December, 2001.
Based on the existing Investment Management Agreements and the management accounts of
CIGAML for the six months ended 30th June, 2002, CIGAML has projected a net profit of
HK$33.6 million for the year ending 31st December, 2002 (the “Projected Net Profit”). We
have reviewed the basis and assumptions of the Projected Net Profit and are of the view that
they are reasonable.
Based on publicly available information on the Bloomberg, we have done a research on listed
assets management companies worldwide whose principal business is investment management
and/or provision of investment advice and found 33 comparable companies. Their shares are
traded at an average price to earnings multiple of approximately 37.5 times. If the highest two
and the lowest two multiples were excluded, the average price to earnings multiple would be
approximately 32.4 times. If the highest five and the lowest five multiples were excluded, the
average price to earnings multiple would be approximately 27.0 times (the “Average P/E Ratio”).
The consideration of HK$403.2 million represents 12 times (the “Acquisition P/E Ratio”) the
Projected Net Profit. The Acquisition P/E Ratio is approximately 56 per cent. lower than the
Average P/E Ratio which we consider is sufficient to offset the discount for illiquidity of the
Sale Shares.
Having considered the above, we consider that the consideration is fair and reasonable.
LETTER FROM YU MING
– 19 –
(ii) The Issue Price
The following chart shows the daily closing price per Share and the volume of Shares traded
on the Stock Exchange for the six months ended on 5th July, 2002, being the date on which the
parties determined the issue price of the Consideration Shares:
The issue price of the Consideration Shares:
(a) represents a discount of approximately 3.6 per cent. to the closing price of HK$4.05 per
Share on 5th July, 2002 as quoted on the Stock Exchange;
(b) is equal to the average closing price of HK$3.905 per Share for the 5 trading days ended
on 5th July, 2002 as quoted on the Stock Exchange;
(c) represents a premium of approximately 3.0 per cent. to the average closing price of
HK$3.7925 per Share for the 10 trading days ended on 5th July, 2002 as quoted on the
Stock Exchange;
(d) represents a discount of approximately 3.8 per cent. to the average closing price of
HK$4.061 per Share for the 30 trading days ended on 5th July, 2002 as quoted on the
Stock Exchange;
LETTER FROM YU MING
– 20 –
(e) represents a premium of approximately 116.2 per cent. to the audited net asset value per
Share of HK$1.81 as at 31st December, 2001; and
(f) represents a premium of approximately 13.20 per cent. to the closing price of HK$3.45
per Share on the Latest Practicable Date as quoted on the Stock Exchange.
Having considered the significant premium to the audited net asset value per Share and
insignificant discount to recent average closing prices, we consider that the issue price of the
Consideration Shares is fair and reasonable.
After taking into account the above factors, we are of the opinion that the terms of the Sale and
Purchase Agreement are fair and reasonable so far as the interest of the Company and the
Independent Shareholders are concerned.
Financial Impacts of the Proposed Acquisition on the Group
(i) Net Tangible Assets
Based on the audited consolidated net tangible assets of the Company of approximately HK$2.11
billion and 1,272,372,592 Shares in issue as at 31st December, 2001, the net tangible asset
value per Share was approximately HK$1.66.
Based on the audited consolidated net tangible assets of the Company and the audited net
tangible assets of CIGAML as at 31st December, 2001 after adjustment for the cash consideration
for the Proposed Acquisition, the pro forma consolidated net tangible assets of the Company
would be approximately HK$1.94 billion.
Based on 1,325,091,592 Shares in issue immediately after completion of the Proposed
Acquisition, the pro forma consolidated net tangible asset value per Share is approximately
HK$1.46, representing a decrease of approximately 12.0 per cent.
LETTER FROM YU MING
– 21 –
(ii) Profit and Loss
Based on the audited consolidated net profit of the Company of approximately HK$230.2 million
for the year ended 31st December, 2001 and 1,272,372,592 Shares in issue as at 31st December,
2001, the earnings per Share was approximately HK$0.18.
Based on the audited consolidated net profit of the Company for the year ended 31st December,
2001 as stated above and the Projected Net Profit, the pro forma consolidated net profit of the
Company (before amortization of goodwill mentioned below) would be approximately
HK$263.8 million. Based on 1,325,091,592 Shares in issue immediately after completion of
the Proposed Acquisition, the pro forma consolidated net profit per Share (before amortization
of goodwill mentioned below) is approximately HK$0.20, representing an increase of
approximately 10.0 per cent.
Based on the consideration of approximately HK$403.2 million and the audited net tangible
asset value of CIGAML of approximately HK$25.2 million as at 31st December, 2001, goodwill
in an amount of approximately HK$378.0 million will be created as a result of completion of
the Proposed Acquisition. Amortization of such goodwill will have a negative impact on the
profit and loss account of the Company in the future.
As we consider that the consideration is fair and reasonable for the reasons set out above, we
consider that the goodwill and the reduction in the pro forma consolidated net tangible assets
per Share are only a reflection of the intangible value of CIGAML, which is common in
acquisition of asset management companies. Fund management is not an asset based business
and revenue generating Investment Management Agreements would not be recorded on the
balance sheet as assets.
(iii) Working Capital
The cash consideration of approximately HK$201.6 million payable to CIHK will be funded
by internal resources. Based on the audited consolidated balance sheet of the Company as at
31st December, 2001, the Group had approximately HK$1.5 billion cash on hand. Therefore,
the payment of the cash consideration for the Proposed Acquisition will not have significant
negative impact on the working capital of the Group.
LETTER FROM YU MING
– 22 –
(iv) Dilution
Immediately before completion of the Proposed Acquisition, the Independent Shareholders are
interested in approximately 47.0 per cent. of the issued share capital of the Company.
Immediately after completion of the Proposed Acquisition, the Independent Shareholders will
be interested in approximately 45.2 per cent. of the issued share capital of the Company as
enlarged by the issue of the Consideration Shares, representing a reduction of approximately
1.8 per cent.
Having considered that the consideration and the issue price of the Consideration Shares are
fair and reasonable, we are of the opinion that the benefits of the Proposed Acquisition to the
Company as set out in the paragraph headed “Reasons for the Proposed Acquisition” outweigh
the dilution effect on the Independent Shareholders.
Ongoing Connected Transactions
After completion of the Proposed Acquisition, CIGAML will become a wholly-owned subsidiary of
the Company and the Investment Management Agreements will constitute ongoing connected
transactions for the Company under the Listing Rules. The Company has applied to the Stock Exchange
for a waiver from strict compliance with the disclosure requirements pursuant to Rule 14.25(1) of the
Listing Rules on the conditions set out in the Letter from the Board. We consider that they are normal
and standard conditions applicable to connected transactions of similar nature.
The aggregate of annual management fees (as a certain percentage of the net asset value of the relevant
Trust Funds based on the terms of the existing Investment Management Agreements and the size of
assets under the management of CIGAML as at 30th June, 2002) and performance bonuses (as the
amount of net investment return or a certain percentage of increase in the net asset value of the
relevant Trust Funds based on the projections for CIGAML for the year ending 31st December, 2002)
to be received by CIGAML would be approximately HK$45.7 million, representing about 1.54 per
cent. of the assets under the management of CIGAML of approximately HK$2.97 billion as at 30th
June, 2002.
Pursuant to the terms of the existing Investment Management Agreements and the investment strategy
of CIGAML, a majority of the assets of the Trust Funds are invested in bonds and the remaining
assets in other securities and instruments. The 19 samples of bond funds and balanced funds (either
investing wholly in bonds or primarily in bonds and secondarily in equity securities) managed by
five international fund houses in Hong Kong in our research charge an annual management fee
(including maintenance charge) in the range of 0.50 per cent. to 1.80 per cent. of average net assets of
the relevant funds, of which six charge in the range of 0.50 per cent. to 1.00 per cent., 12 charge more
than 1.00 per cent. but less than 1.80 per cent. and 1 charges 1.80 per cent. Since the annual percentage
LETTER FROM YU MING
– 23 –
of Fees to be received by CIGAML falls within the range charged by the market, we concur with the
view of the Directors that the terms of the existing Investment Management Agreements as a whole
were entered into on normal commercial terms.
Since the existing Investment Management Agreements are contracts underlying the core asset
management business of CIGAML, we concur with the view of the Directors that the continuance of
the existing Investment Management Agreements is in the interest of CIGAML (or the Company
after completion of the Proposed Acquisition).
When formulating our opinion on the fairness and reasonable of the consideration payable by the
Company to CIHK for the Sale Shares, we have taken into account the terms of the existing Investment
Management Agreements because the consideration was determined based on the Projected Net Profit
which has taken into account the terms of the existing Investment Management Agreements.
Regarding the Investment Management Agreements to be entered into in the future, we are not in a
position to comment because the terms and conditions are not determined yet. Shareholders are advised
to refer to the conditions of the waiver application made to the Stock Exchange set out in the Letter
from the Board. In particular, the independent non-executive Directors and the auditors of the Company
have to be satisfied that the Investment Management Agreements are conducted either on normal
commercial terms or on terms no less favourable than terms available to (or from, as appropriate)
independent third parties.
RECOMMENDATION
Having taken into account the information and representations provided to us and the above principal
factors, we are of the opinion that the terms of the Sale and Purchase Agreement are fair and reasonable
so far as the Company and the Independent Shareholders are concerned and the Proposed Acquisition
is in the interest of the Company and the Independent Shareholders. Accordingly, we advise the
Independent Board Committee to recommend the Independent Shareholders to vote in favour of the
resolution to approve the Proposed Acquisition and the transactions contemplated thereunder.
Yours faithfully,
For and on behalf of
YU MING INVESTMENT MANAGEMENT LIMITED
Warren Lee
Director
APPENDIX GENERAL INFORMATION
– 24 –
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 not contained herein the omission of which would make any statement contained
in this circular misleading.
2. SHARE CAPITAL
The authorised and issued share capital of the Company as at the Latest Practicable Date were,
and immediately after completion of the Sale and Purchase Agreement assuming that no further
Shares, other than the Consideration Shares, will be issued up to the date of completion of the
Sale and Purchase Agreement, will be, as follows:
Authorised: HK$
2,000,000,000 Shares as at the Latest Practicable Date 100,000,000.00
Issued and fully paid and to be issued:
1,273,471,592 Shares in issue as at the Latest Practicable Date 63,673,579.60
51,620,000 Shares to be issued upon Completion 2,581,000.00
1,325,091,592 66,254,579.60
All the Shares currently in issue rank pari passu in all respects with each other, including in
particular, as to dividends, voting rights and capital. The Consideration Shares when allotted
will rank pari passu in all respects with the then existing Shares, including in particular, as to
dividends, voting rights and capital.
Application will be made to the Listing Committee of the Stock Exchange for Listing of and
permission to deal in the Consideration Shares to be issued upon completion of the Sale and
Purchase Agreement. Save as disclosed herein, no part of the share capital of the Company is
listed or dealt in on stock exchange other than the Stock Exchange and no application is being
made or is currently proposed or sought for the Shares to be listed in or on any other stock
exchange.
APPENDIX GENERAL INFORMATION
– 25 –
3. DISCLOSURE OF INTERESTS
(a) As at the Latest Practicable Date, the interests of Directors, chief executive and their
associates in the share capital of the Company or its associated corporations (within the
meaning of the SDI Ordinance) which have been notified to the Company and the Stock
Exchange pursuant to Section 28 of the SDI Ordinance (including interests which they
are deemed or taken to have under Section 31 of or Part I of the Schedule to the SDI
Ordinance) or which were recorded in the register required to be kept pursuant to Section
29 of the SDI Ordinance or as otherwise notified to the Company and the Stock Exchange
pursuant to the Model Code for Securities Transactions by Directors of Listed Companies
as set out in appendix 10 of the Listing Rules were as follows:—
Share Options
Price per Market value
No. of Period during Share to be per share at
options Date which options paid on exercise date of grant
Name outstanding granted exercisable of options of options
Yang Chao 2,670,000 26 Sep 2000 26 Sep 2000 to HK$1.11 HK$1.37
25 Sep 2010
Zhang Xiaoshu 2,200,000 28 Sep 2000 28 Sep 2000 to HK$1.11 HK$1.41
27 Sep 2010
Miao Jianmin 1,740,000 26 Sep 2000 26 Sep 2000 to HK$1.11 HK$1.37
25 Sep 2010
Ng Yu Lam Kenneth 1,300,000 28 Sep 2000 28 Sep 2000 to HK$1.11 HK$1.41
27 Sep 2010
500,000 12 Feb 2001 12 Feb 2001 to HK$0.95 HK$1.33
11 Feb 2011
Dong Ming 1,500,000 27 Sep 2000 27 Sep 2000 to HK$1.11 HK$1.40
26 Sep 2010
400,000 12 Feb 2001 12 Feb 2001 to HK$0.95 HK$1.33
11 Feb 2011
Lau Siu Mun Sammy 1,100,000 27 Sep 2000 27 Sep 2000 to HK$1.11 HK$1.40
26 Sep 2010
400,000 12 Feb 2001 12 Feb 2001 to HK$0.95 HK$1.33
11 Feb 2011
Zheng Changyong 1,000,00 28 Sep 2000 28 Sep 2001 to HK$1.11 HK$1.41
27 Sep 2010
APPENDIX GENERAL INFORMATION
– 26 –
Shares
Number of
Name Type of interests ordinary shares held
Ng Yu Lam Kenneth Personal 466,000
Lau Siu Mun Sammy Personal 400,000
Apart from the foregoing, at no time up to the Latest Practicable Date was the Company,
any of its holding company, subsidiaries or fellow subsidiaries a party to any arrangement
to enable the Directors of the Company or any of their spouses or children under eighteen
years of age to acquire benefits by means of the acquisition of shares in or debentures of
the Company or any other body corporate.
(b) Save as disclosed herein, as at the Latest Practicable Date, none of the Directors or the
chief executive of the Company or their respective associates had any interest in the
share capital of the Company and its associated corporations (within the meaning of the
SDI Ordinance) notified to the Company and the Stock Exchange pursuant to section 28
of the SDI Ordinance (including interests which they are deemed or taken to have under
section 31 of, or Part I of the Schedule to, the SDI Ordinance) or pursuant to the Model
Code for Securities Transactions by Directors of Listed Companies or which are required,
pursuant to section 29 of the SDI Ordinance, to be entered in the register referred to
therein.
4. DIRECTORS’ INTERESTS IN CONTRACTS
(a) Each of Messrs Yang Chao, Zhang Xiaoshu, Miao Jianmin, Ng Yu Lam Kenneth, Dong
Ming and Lau Siu Mun Sammy entered into a service contract with the Company on 29
May 2000 for an initial period of three years commencing from 1 April 2000. Each such
contract will continue after its initial period unless and until terminated by either party
to it by giving three months’ written notice to the other party. Mr. Shen Koping Michael
entered into a service contract with the Company on 23 July 2002 for an initial period of
two years commencing from 15 July 2002. Such contract can be terminated by either
party to it by giving three month’s written notice to the other party.
APPENDIX GENERAL INFORMATION
– 27 –
(b) Save as disclosed herein, as at the Latest Practicable Date, none of the Directors is
materially interested in any contract, secrecy contract (excluding contracts expiring or
determinable by the Company or any of its Subsidiaries within one year without payment
of compensation (other than statutory compensation) or arrangement entered into with
the Company or any of its subsidiaries which contract or arrangement is subsisting at the
date of this circular and which is significant in relation to the business of the Group
taken as a whole.
(c) Save as disclosed herein, as at the Latest Practicable Date, neither the Directors nor Yu
Ming has any direct or indirect interest in any assets which have been, since 31 December
2001, the date to which the latest published audited accounts of the Company were made
up, acquired or disposed of by, or leased to the Company or any of its subsidiaries, or are
proposed to be acquired or disposed of by, or leased to, the company or any of its
subsidiaries.
5. SUBSTANTIAL SHAREHOLDERS
As at the Latest Practicable Date, according to the register maintained by the Company pursuant
to Section 16(1) of the SDI Ordinance, the shareholders who had or were deemed to have
interest in 10% or more of the Shares in issue were as follows:
Number of Percentage
Name of ordinary of existing
substantial shareholder Shares held issued capital
China Insurance Company, Limited 674,769,705 52.99%
(note 1)
China Insurance H.K. (Holdings) 674,769,705 52.99%
Company Limited (note 2)
Notes:
1. CICL’s interest in the Company is held by CIHK, Ming An and Toplap Investments Limited, all of which
are wholly owned subsidiaries of CICL.
2. 82,794,000 Shares were held by Ming An and 170,000 Shares were held by Toplap Investments Limited,
both of which are wholly owned subsidiaries of CIHK.
Save as disclosed above, there was no person known to the Directors who as at the Latest
Practicable Date was directly or indirectly interested in 10% or more of the Shares in issue of
the Company.
APPENDIX GENERAL INFORMATION
– 28 –
6. MATERIAL CHANGE
So far as the Directors are aware, there is no material adverse change in the financial or trading
position of the Company since 31 December 2001, the date to which the latest published audited
financial statements of the Group were made up.
7. LITIGATION
As at the Latest Practicable Date, neither the Company nor any of its subsidiaries is engaged in
any litigation or arbitration of material importance and there is no litigation or claim of material
importance known to the Directors to be pending or threatened by or against the Company or
any member of the Group.
8. EXPERT
(a) The following are the qualifications of the experts who have given opinion or advice
which are contained in this circular:
Name Qualification
Yu Ming an investment adviser and a dealer registered under the
Securities Ordinance
(b) As at the Latest Practicable Date, Yu Ming was not interested beneficially or non-
beneficially in any shares in the Company or any of its subsidiaries or associated
corporations or any right (whether legally enforceable or not) or option to subscribe for
or nominate persons to subscribe for any shares in the Company or any of its subsidiaries
or associated corporations.
(c) As at the Latest Practicable Date, Yu Ming did not have any direct or indirect interest in
any assets which have been since 31 December 2001, the date to which the latest published
audited account of the Group were made up, acquired or disposed of by, or leased to, or
which are proposed to be acquired or disposed of by, or leased to, the Company or any of
its subsidiaries.
(d) Yu Ming has given and has not withdrawn its written consent to the issue of this circular
with inclusion of its letter and/or report and the references to its name included herein in
the form and context in which it is included.
APPENDIX GENERAL INFORMATION
– 29 –
9. DOCUMENTS AVAILABLE FOR INSPECTION
Copies of the following documents will be available for inspection during normal business
hours at the offices of Woo, Kwan, Lee & Lo at 27th Floor, Jardine House, 1 Connaught Place,
Central, Hong Kong up to and including 21 August 2002:
(a) the service contracts referred to in paragraph 4(a) of this appendix;
(b) the Sale and Purchase Agreement;
(c) the existing Investment Management Agreements;
(d) the letter from Yu Ming, the text of which as set out in this circular; and
(e) the written consent from Yu Ming referred to in paragraph 8(d) of this appendix.
10. MISCELLANEOUS
(a) The registered office and head office of the Company is situated at 12/F, Ming An Plaza
Phase II, 8 Sunning Road, Causeway Bay, Hong Kong.
(b) The share registrars and transfer office of the Company in Hong Kong is Computershare
Hong Kong Investor Service Limited at Rooms 1901-5, 19th Floor, Hopewell Centre,
183 Queen’s Road East, Hong Kong.
(c) The secretary of the Company is Mr. Tam Chiu Tai Richard who is a qualified accountant
in the United Kingdom and Hong Kong.
(d) In the event of any inconsistency, the English language text of this circular shall prevail
over the Chinese language text.
NOTICE OF EXTRAORDINARY GENERAL MEETING
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CHINA INSURANCE INTERNATIONAL HOLDINGS COMPANY LIMITED中 保 國 際 控 股 有 限 公 司
(Incorporated in Hong Kong with Limited Liability)
NOTICE OF EXTRAORDINARY GENERAL MEETING
NOTICE IS HEREBY GIVEN that an extraordinary general meeting (the “Meeting”) of China
Insurance International Holdings Company Limited (the “Company”) will be held at 24th Floor,
Ming An Plaza Phase II, 8 Sunning Road, Causeway Bay, Hong Kong at 11:00 a.m. on 21 August,
2002 (or any adjournment thereof) for the purpose of considering and, if thought fit, passing, with or
without modification, the following resolution as ordinary resolution of the Company, namely:—
ORDINARY RESOLUTION
“THAT
(a) the terms of the sale and purchase agreement dated 8 July 2002 (the “Sale and Purchase
Agreement”) entered into between the Company and China Insurance H.K. (Holdings) Company
Limited (“CIHK”), a copy of which has been produced to the meeting and contained in the
document marked “A” and for the purpose of identification signed by the Chairman thereof,
and the transactions contemplated under the Sale and Purchase Agreement, including but not
limited to the allotment and issue of 51,620,000 shares of HK$0.05 each in the capital of the
Company at an issue price of HK$3.905 each credited as fully paid (the “Consideration Shares”)
to CIHK for the settlement of part of the consideration payable under the Sale and Purchase
Agreement to the extent of HK$201,576,100, be and are hereby approved;
(b) the directors of the Company be and are hereby authorised for and on behalf of the Company to
sign, execute, perfect and deliver all such documents and deeds, and do all such acts, matters
and things as they may in their discretion consider necessary or desirable to carry the Sale and
Purchase Agreement into effect and to allot and issue the Consideration Shares to CIHK credited
as fully paid as aforesaid; and
NOTICE OF EXTRAORDINARY GENERAL MEETING
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(c) the directors of the Company be and are hereby further authorised to make and agree to such
variations of a non-material nature in the terms of the Sale and Purchase Agreement as they
may in their discretion consider to be desirable and in the interests of the Company.”
Yours faithfully,
By Order of the Board
Tam Chiu Tai Richard
Company Secretary
29 July, 2002
Registered office and head office:—
12/F, Ming An Plaza Phase II,
8 Sunning Road,
Causeway Bay,
Hong Kong
Notes:
1. A member who is entitled to attend and vote at a meeting of the Company is entitled to appoint up to two proxies
if he holds two or more shares of the Company, to attend and, on a poll, to vote instead of him in accordance with
the articles of association of the Company. A proxy need not be a member of the Company.
2. In the case of joint holders of a share the vote of the senior who tenders a vote, whether in person or by proxy, shall
be accepted to the exclusion of the votes of the other joint holders and for this purpose seniority shall be determined
by the order in which the names stand in the register in respect of the joint holding.
3. To be valid, a form of proxy and the power of attorney or other authority (if any) under which it is signed (or a
notarially certified copy thereof) must be deposited at 12/F, Ming An Plaza Phase II, 8 Sunning Road, Causeway
Bay, Hong Kong not less than 48 hours before the time appointed for the holding of the above meeting or any
adjournment thereof.
4. The register of members will be closed from 19 August, 2002 to 21 August, 2002 inclusive during which period no
share transfers can be registered. In order to be eligible to vote in the above ordinary resolution, holders of shares
whose transfers have not been registered shall deposit the transfers at the Company’s Share Registrars,
Computershare Hong Kong Investor Services Limited at Rooms 1901-5, 19th Floor, Hopewell Centre, 183 Queen’s
Road East, Hong Kong together with the relevant share certificates not later than 4:00 p.m. on Friday, 16 August,
2002.
5. CIHK and its associates (within the meaning of the Rules Governing the Listing of Securities on the Stock Exchange
of Hong Kong Limited), will abstain from voting at the EGM in respect of the ordinary resolution to be proposed
at the EGM to approve the Sale and Purchase Agreement and the transactions contemplated thereunder.