Beijing Beida Jade Bird Universal Sci-Tech Company Limited — Proxy Solicitation & Information Statement 2007

Jun 11, 2007

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 a stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your H Shares, you should at once hand this circular and the accompanying form of proxy to the purchaser or the transferee, or to the bank, stockbroker or other agent through whom the sale was effected for transmission to the purchaser or the transferee.

The Stock Exchange takes no responsibility for the contents of this circular, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

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北京北大青鳥環宇科技股份有限公司 BEIJING BEIDA JADE BIRD UNIVERSAL SCI-TECH COMPANY LIMITED

(a joint stock limited company incorporated in the People’s Republic of China with limited liability)

(Stock Code: 8095)

MAJOR TRANSACTION RELATING TO THE GRANT OF SHARE OPTIONS AND AMENDMENT TO THE SECURITIES LENDING AGREEMENT

A letter from the Board dated 11 June 2007 is set out on pages 5 to 14 of this circular.

A notice convening a special general meeting of the Company to be held at Room 3104, Beida Jade Bird Building, No. 207 Chengfu Road, Haidian District, Beijing, the PRC on Friday, 3 August 2007 at 10:00 a.m. is set out on pages 26 to 28 of this circular. For holders of H Shares, whether or not you are able to attend the meeting, please complete and return the enclosed reply slip to the Company’s H share registrar in Hong Kong, Hong Kong Registrars Limited, 46th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong on or before 4:30 p.m. on Friday, 13 July 2007 and the form of proxy in accordance with the instructions printed thereon to Hong Kong Registrars Limited not less than 24 hours before the time appointed for the holding of the special general meeting. For holders of the Promoter Shares, whether or not you are able to attend the meeting, please complete and return the enclosed reply slip and form of proxy in accordance with the instructions printed thereon to the principal place of business of the Company in Beijing at 3rd Floor, Beida Jade Bird Building, No. 207 Chengfu Road, Haidian District, Beijing 100871, the PRC as soon as practicable but in any event, for the reply slip, on or before 4:30 p.m. on Friday, 13 July 2007 and for the form of proxy, not less than 24 hours before the time appointed for the holding of the special general meeting. Completion of the form of proxy will not preclude you from attending and voting at the meeting or any adjourned meeting should you so wish.

This circular will remain on the GEM website at www.hkgem.com for at least 7 days from the day of its posting.

11 June 2007

CHARACTERISTICS OF GEM OF THE STOCK EXCHANGE

GEM has been established as a market designed to accommodate companies to which a high investment risk may be attached. In particular, companies may list on GEM with neither a track record of profitability nor any obligation to forecast future profitability. Furthermore, there may be risks arising out of the emerging nature of companies listed on GEM and the business sectors or countries in which the companies operate. Prospective investors should be aware of the potential risks of investing in such companies and should make the decision to invest only after due and careful consideration. The greater risk profile and other characteristics of GEM mean that it is a market more suited to professional and other sophisticated investors.

Given the emerging nature of companies listed on GEM, there is a risk that securities traded on GEM may be more susceptible to high market volatility than securities traded on the Main Board and no assurance is given that there will be a liquid market in the securities traded on GEM.

The principal means of information dissemination on GEM is publication on the internet website operated by the Stock Exchange. GEM-listed companies are not generally required to issue paid announcements in gazetted newspapers. Accordingly, prospective investors should note that they need to have access to the GEM website at www.hkgem.com in order to obtain up-to-date information on GEM-listed issuers.

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CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
The Supplemental Letter Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
The Share Options Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
Information on SMIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
Financial Effects of the Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
Reasons for the Transactions and Use of proceeds . . . . . . . . . . . . . . . . . . . . . . . . . .	10
GEM Listing Rules Implications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
Special General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
Appendix I – Financial information of the Group. . . . . . . . . . . . . . . . . . . . . . . . . . . . .	15
Appendix II – General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	18
Notice of Special General Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	26

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DEFINITIONS

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

• “Business Day”

a day other than a Saturday or a Sunday on which banks and securities markets are open for business generally in Hong Kong and Dublin

• “Board” board of Directors

• “Chengjian Donghua”

北京城建東華房地產開發有限責任公司 (Beijing Chengjian Donghua Real Estate Development Company Limited), a company established in the PRC with limited liability which is engaged in the development of a parcel of land in the city centre of Beijing into a transportation terminal and residential and commercial complex (“ Dongzhimen Project ”) and 44%, 10%, 14.5% and 31.5% of whose equity interests are held by the Company, 北京市東城區住宅發展中 心 (Beijing Dong Cheng District Residential Development Centre), 北京北大青鳥安全系統工程技術 有限公司 (Beijing Beida Jade Bird Security System Engineering Technology Company Limited), a company incorporated in the PRC and a non wholly owned subsidiary of Beijing Beida Jade Bird Limited and 海南京灝實業有限公司 (Hainan Jing Hao Asset Limited) respectively

• “Collateral”

the amount of cash collateral paid to JBU Development by NCL on 18 December 2006 and to be repaid by JBU Development to NCL on the Termination Date, as adjusted from time to time pursuant to the Securities Lending Agreement (as amended)

• “Company” 北京北大青鳥環宇科技股份有限公司 (Beijing Beida Jade Bird Universal Sci-Tech Company Limited), a Sino-foreign joint stock limited company incorporated in the PRC with limited liability with its H shares listed on GEM

• “Directors” the directors of the Company

• “Exercise Period” the 40 Scheduled Trading Days preceding and ending on the Expiration Date

“Expiration Date” the date falling two Scheduled Trading Days before 18 June 2010

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DEFINITIONS

“GEM” The Growth Enterprise Market of the Stock Exchange “GEM Listing Rules” the Rules Governing the Listing of Securities on GEM “Group” the Company and its subsidiaries

• “HK$” Hong Kong dollars “H Share(s)” overseas-listed foreign share(s) in the ordinary share capital of the Company, with a nominal value of RMB0.10 each and which are listed on GEM

• “Latest Practicable Date” 7 June 2007, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained herein

• “JBU Development” Beida Jade Bird Universal Sci-Tech (Cayman) Development Company Limited, a company incorporated in the Cayman Islands and a whollyowned subsidiary of the Company

• “Loan Share(s)” any or all of the 323,888,000 fully paid ordinary share(s) of SMIC listed on the Stock Exchange lent by JBU Development to NCL pursuant to the Securities Lending Agreement

• “Market Value” in connection with the valuation of the Loan Shares, the volume-weighted average price of the Loan Shares on the previous Business Day, as published by Bloomberg, and if not available, the market quotation for the bid price of the Loan Shares as derived from a reputable pricing information service or (if unavailable) the prices or rates bid by a reputable dealer for the Loan Shares reasonably chosen in good faith by JBU Development at close of business on the previous Business Day

• “NCL” Nexgen Capital Limited, a company incorporated in Ireland

“Options Relevant Price” the volume-weighted average price of a Loan Share published by Bloomberg or its successor on any day converted into US$ by the US$/HK$ foreign exchange rate published by Bloomberg or its successor at the relevant time on such day

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DEFINITIONS

“PRC” the People’s Republic of China “Promoter Share(s)” ordinary share(s) issued by the Company with a nominal value of RMB0.10 each which are subscribed for by the promoters of the Company “RMB” Renminbi, the lawful currency of the PRC “Scheduled Trading Day(s)” day(s) on which the Stock Exchange is scheduled to be open for trading during its regular trading session “Securities Lending Agreement” the Global Master Securities Lending Agreement, as supplemented by the Schedule, and the Securities Lending Transaction Confirmation both entered into between JBU Development and NCL on 15 December 2006 “SFO” Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “SGM” the special general meeting of the Company to be convened for the purpose of formally recording the approval of the Securities Loan by the Shareholders “Share Option(s)” any or all of the 161,944,000 physically settled call option(s), on the basis of one Loan Share per option, granted by JBU Development to NCL pursuant to the Share Options Agreement “Share Options Agreement” International Swaps and Derivatives Association (ISDA) Master Agreement, as supplemented by the Schedule, and the Share Options Transaction Confirmation both entered into between JBU Development and NCL on 18 May 2007 “Share(s)” H Share(s) and Promoter Share(s) “Shareholder(s)” Holder(s) of the Shares “SMIC” Semiconductor Manufacturing International Corporation, a company incorporated in the Cayman Islands with its shares listed on the Stock Exchange (stock code: 981) “Stock Exchange” The Stock Exchange of Hong Kong Limited

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DEFINITIONS

“Strike Price” US$0.2168 (equivalent to approximately HK$1.6959), representing 150% of the Options Relevant Price on 18 May 2007 “Supplemental Letter Agreement” the letter agreement dated 18 May 2007 between NCL and JBU Development confirming certain amendments to the Securities Lending Agreement “Termination Date” 18 June 2010 “US$” United States dollars “%” per cent

Unless otherwise specified in this circular and for the purpose of illustration only, translation rates have been used as follows:

HK$7.8222 = US$1.00

No representation is made that any amounts in US$ or HK$ have been or could be converted at the above rates or any other rates or at all.

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LETTER FROM THE BOARD

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北京北大青鳥環宇科技股份有限公司 BEIJING BEIDA JADE BIRD UNIVERSAL SCI-TECH COMPANY LIMITED

(a joint stock limited company incorporated in the People’s Republic of China with limited liability) (Stock Code: 8095)

Executive Directors: Legal address: Mr. Xu Zhen Dong (Chairman) Rooms 1117/1119 Mr. Xu Zhi Xiang Zhongcheng Building Mr. Zhang Wan Zhong Haidian Road Beijing 100080 Non-executive Directors: PRC Mr. Liu Yong Jin Mr. Hao Yi Long Principal place of business in the PRC: Mr. Li Li Xin 3rd Floor Beida Jade Bird Building Independent non-executive Directors: No. 207 Chengfu Road Professor Nan Xiang Hao Haidian District Professor Chin Man Chung, Ambrose Beijing 100871 Mr. Cai Chuan Bing PRC

Principal place of business in Hong Kong: Unit 02, 7th Floor Asia Pacific Centre 8 Wyndham Street Central Hong Kong

11 June 2007

To Shareholders

Dear Sir/Madam,

MAJOR TRANSACTION RELATING TO THE GRANT OF SHARE OPTIONS AND AMENDMENT TO THE SECURITIES LENDING AGREEMENT

INTRODUCTION

In the announcement of the Company dated 15 December 2006, the Directors announced that JBU Development had entered into the Securities Lending Agreement with NCL on 15 December 2006, pursuant to which JBU Development has lent and NCL

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LETTER FROM THE BOARD

has borrowed the Loan Shares. Further to the abovementioned securities lending transaction, the Directors announced in the Company’s announcement dated 18 May 2007 that JBU Development had entered into the Supplemental Letter Agreement with NCL, pursuant to which the parties thereto agreed to certain amendments to the terms of the Securities Lending Agreement including, inter alia, extension of the duration of the transaction under the Securities Lending Agreement for three more years following its expiration, and adjustment to the rate of interest on the Collateral and the maximum amount of Collateral to be deposited by NCL with JBU Development.

Furthermore, JBU Development and NCL entered into the Share Options Agreement on 18 May 2007, pursuant to which JBU Development agreed to grant to NCL the Share Options on 50% of the Loan Shares, on the basis of one Loan Share per Share Option and expiring on the Expiration Date. The Share Options are automatically exercisable by reference to the Options Relevant Price on each day of the Exercise Period, or the Expiration Date, depending on the method of settlement to be chosen by JBU Development.

To the best knowledge of the Directors, as of the date of this circular, NCL and its ultimate beneficial owners are third parties independent of the Company and its connected persons as defined under the GEM Listing Rules and therefore are not connected persons to the Group. To the best knowledge of the Directors, NCL and its associates are also not interested in any members of the Group.

The purpose of this circular is:

• (i) to provide the Shareholders with details of the Supplemental Letter Agreement, the Securities Lending Agreement and the transactions thereunder; and

• (ii) to give the Shareholders the notice of the SGM to be convened as a procedural formality for the purpose of formally recording the approval of the Supplemental Letter Agreement, the Share Options Agreement and the transactions thereunder by the Shareholders.

BACKGROUND

On 15 December 2006, JBU Development had entered into the Securities Lending Agreement with NCL, pursuant to which JBU Development has lent and NCL has borrowed the Loan Shares, being 323,888,000 fully paid ordinary shares of SMIC listed on the Stock Exchange, for a term of six months ending on 18 June 2007. Pursuant to the Securities Lending Agreement, NCL had deposited with JBU Development the Collateral in the initial amount of US$28,295,723.63 (equivalent to approximately HK$221,334,809.38), to be adjusted from time to time in accordance with the terms of the Securities Lending Agreement. Details of the Securities Lending Agreement had been disclosed in the announcement and circular of the Company dated 15 December 2006 and 24 January 2007 respectively.

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LETTER FROM THE BOARD

On 18 May 2007, JBU Development entered into the Supplemental Letter Agreement with NCL, pursuant to which the parties thereto agreed to certain amendments to the terms of the Securities Lending Agreement including, inter alia, extension of the duration of the transaction under the Securities Lending Agreement for three more years following its expiration, and adjustment to the rate of interest on the Collateral and the maximum amount of Collateral to be deposited by NCL with JBU Development.

Furthermore, JBU Development and NCL entered into the Share Options Agreement on 18 May 2007, pursuant to which JBU Development agreed to grant to NCL the Share Options on 50% of the Loan Shares, on the basis of one Loan Share per Share Option and expiring on the Expiration Date. The Share Options are automatically exercisable by reference to the Options Relevant Price on each day of the Exercise Period, or on the Expiration Date, depending on the method of settlement to be chosen by JBU Development.

The principal terms and conditions of the Supplemental Letter Agreement and Share Options Agreement are detailed as follows:

THE SUPPLEMENTAL LETTER AGREEMENT

Agreement Date

18 May 2007

Parties

Lender : Beida Jade Bird Universal Sci-Tech (Cayman) Development Company Limited, a wholly owned subsidiary of the Company

Borrower : Nexgen Capital Limited

Duration

Pursuant to the Supplemental Letter Agreement, the parties thereto agreed to extend the term of the transaction under the Securities Lending Agreement from a period of six months ending on 18 June 2007 to a period of 42 months ending on the Termination Date. Contrary to the Securities Lending Agreement which may be terminated upon the expiry of a notice of not less than two Business Days to be given by JBU Development, under the Supplemental Letter Agreement, JBU Development is not entitled to terminate the Securities Lending Agreement prior to the Termination Date.

Collateral

Pursuant to the Supplemental Letter Agreement, the maximum amount of Collateral shall not at any time exceed US$32,761,271.20 (equivalent to approximately HK$256,265,215.58, representing the amount of Collateral as adjusted pursuant to and on the date of the Supplemental Letter Agreement. All of the Collateral to be deposited with JBU Development will be repaid to NCL on the Termination Date from the Group’s internal resources.

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LETTER FROM THE BOARD

The maximum amount of Collateral as adjusted by the Supplemental Letter Agreement was determined after arm’s length negotiations between JBU Development and NCL with reference to the Market Value of the Loan Shares and credit assessment of JBU Development conducted by NCL.

Interest on the Collateral

Under the Securities Lending Agreement, JBU Development is required to pay to NCL an interest on the Collateral at US$ LIBOR one-month rate plus 4.00%. Pursuant to the Supplemental Letter Agreement, the aforesaid interest rate was amended to US$ LIBOR three-month rate plus 4.00%. The Directors consider that this adjusted rate of interest on the Collateral was fair and reasonable and in the interest of the Company and the Shareholders as a whole.

THE SHARE OPTIONS AGREEMENT

Agreement Date

18 May 2007

Parties

Seller : Beida Jade Bird Universal Sci-Tech (Cayman) Development Company Limited, a wholly owned subsidiary of the Company Purchaser : Nexgen Capital Limited

Subject Matter

161,944,000 Share Options on 50% of the Loan Shares, on the basis of one Loan Share per Share Option.

Exercise of the Share Options

The Share Options are automatically exercisable by NCL by reference to the Options Relevant Price on each day of the Exercise Period as compared to the Strike Price which is fixed at the amount of US$0.2168 (equivalent to approximately HK$1.6959), and will expire on the Expiration Date. There are two methods of settlement provided under the Share Options Agreement at the option of JBU Development, being physical settlement and cash settlement.

In the case of physical settlement, on each day of the Exercise Period, if the Options Relevant Price is greater than the Strike Price, 4,048,600 Share Options (representing 1/40 of the total number of Share Options) will be automatically exercised at the Strike Price; if the Options Relevant Price is equal to or less than the Strike Price, no Share Option will be exercised. On the Termination Date, NCL shall pay to JBU Development an amount equal to the aggregate number of Share Options exercised during the Exercise Period multiplied by the Strike Price, while JBU Development shall deliver to NCL such number of the Loan Shares equal to the aggregate number of Share Options exercised during the Exercise Period.

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LETTER FROM THE BOARD

In the case of cash settlement, on the Expiration Date, if the arithmetic average of the Options Relevant Price over the Exercise Period (the “ Cash Settlement Final Price ”) is greater than the Strike Price, 161,944,000 Share Options will be automatically exercised at the Strike Price; otherwise, no Share Option will be exercised. On the Termination Date, JBU Development shall pay to NCL an amount equal to 161,944,000 Share Options multiplied by the difference between the Strike Price and the Cash Settlement Final Price.

The Strike Price was determined after arm’s length negotiations between JBU Development and NCL.

Premium

Pursuant to the Share Options Agreement, the amount of premium payable by NCL to JBU Development comprises an upfront premium amount and quarterly premium amounts. The upfront premium in the amount of US$270,730.69 (equivalent to approximately HK$2,117,709.60) and payable on 22 May 2007 (the “ Effective Date ”) is determined with reference to the amount of Collateral deposited by NCL on 18 December 2006 multiplied by a premium rate of 2.2% per annum for the period commencing from 18 December 2006 to the Effective Date.

The quarterly premium amounts are payable on the 19th day of each quarter after the Effective Date up to and including the Termination Date and shall be an amount determined with reference to the amount of Collateral deposited by NCL as at the date on which the relevant quarterly premium amount is payable multiplied by a premium rate of 2.2% per annum for the period commencing from the preceding date on which a premium was payable up to but excluding the date on which such relevant quarterly premium amount is payable.

The premium rate of 2.2% per annum was determined after arm’s length negotiations between JBU Development and NCL.

The Company will publish an announcement, if necessary, as soon as reasonably practicable after the Termination Date or termination of the Share Options Agreement in accordance with its terms, whichever is the earlier.

Guarantee to be provided by the Company

Pursuant to a guarantee and indemnity to be entered into between the Company and NCL, the Company guarantees the due and punctual performance of all obligations of JBU Development under the Share Options Agreement and will indemnify NCL against all outstanding amounts due and payable by JBU Development thereunder and all losses, costs, damages and expenses (except for consequential losses such as loss of profit or loss of business opportunity) suffered or incurred by NCL directly or indirectly under the Share Options Agreement arising from any obligation on JBU Development thereunder being or becoming void, invalid, illegal or unenforceable.

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LETTER FROM THE BOARD

INFORMATION ON SMIC

As at the date of this circular, JBU Development is interested in 383,163,400 ordinary shares in SMIC, representing approximately 2.08% of the issued share capital of SMIC. The principal business of SMIC is its investment in SMIC Shanghai, which is principally engaged in manufacture, probe test and testing of semiconductor (silicon and compound semiconductor), integrated circuit chips, research and development, design, technical services, mask manufacture, testing and packaging and sale of proprietary IC-related products.

The net loss of SMIC for the two years ended 31 December 2006 and the net asset value of SMIC as at 31 December 2005 and 31 December 2006 are set out below:

	For the year	For the year
	ended/as at	ended/as at
	31 December	31 December
	2005	2006
	(US$’000)	(US$’000)
Net loss before taxation	(113,362)	(69,971)
Net loss after taxation	(114,775)	(44,109)
Net asset value	3,068,098	3,046,220

The Group’s investment in the shares in SMIC was booked into the Group’s accounts as an available-for-sale financial asset. For the two financial years immediately preceding the execution of the Supplemental Letter Agreement and completion of the grant of the Share Options, no net profit of the Company was attributable to the Loan Shares as no dividend was declared by SMIC during such period.

FINANCIAL EFFECTS OF THE TRANSACTIONS

Immediately after execution of the Supplemental Letter Agreement and completion of the grant of the Share Options, the Group’s assets and revenue have been increased by US$270,730.69 (equivalent to approximately HK$2,117,709.60) being the upfront premium paid by NCL to JBU Development pursuant to the Share Options Agreement.

REASONS FOR THE TRANSACTIONS AND USE OF PROCEEDS

The Directors consider that the terms of the Supplemental Letter Agreement were fair and reasonable and have allowed the Group to obtain short-term working capital to fund its operations and therefore were in the interest of the Company and the Shareholders as a whole. The Collateral (the amount of which as adjusted by the Supplemental Letter Agreement) deposited by NCL pursuant to the Securities Lending Agreement would continue to be used by the Group for general working capital purposes.

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LETTER FROM THE BOARD

The Directors consider that the terms of the Share Options Agreement were fair and reasonable and that the grant of the Share Options would allow the Group to have the future opportunity to realise part of its investment in SMIC at a profit and therefore was in the interest of the Company and the Shareholders as a whole. Moreover, the premium received by the Group pursuant to the Share Options Agreement would be used by the Group for general working capital purposes. Based on the aggregate carrying value of a Loan Share as reflected in the audited results of the Company as at 31 December 2006 and the Strike Price, JBU Development is expected to record a gain of approximately US$13.7 million (equivalent to approximately HK$107.2 million) should the Share Options be fully exercised pursuant to the Share Options Agreement.

GEM LISTING RULES IMPLICATIONS

The transaction under the Securities Lending Agreement (as supplemented by the Supplemental Letter Agreement) constitutes a provision of financial assistance by the Group and thus a major transaction pursuant to rule 19.06 of the GEM Listing Rules and is subject to approval by the Shareholders.

The grant of the Share Options by JBU Development under the Share Options Agreement by the physical settlement method constitutes a major transaction pursuant to rule 19.73 of the GEM Listing Rules and is subject to approval by the Shareholders.

To the best knowledge of the Directors, as of the date of this circular, NCL and its ultimate beneficial owners are third parties independent of the Company and its connected persons as defined under the GEM Listing Rules and therefore are not connected persons to the Group. To the best knowledge of the Directors, NCL and its associates are also not interested in any members of the Group.

Pursuant to rule 19.44 of the GEM Listing Rules, the approval by the Shareholders may be obtained by means of written approval of the transaction by a Shareholder who holds, or a closely allied group of Shareholders who together hold, more than 50% of the voting rights of the Company. Written confirmations from a closely allied group of the Shareholders (the “ Closely Allied Group ”), consisting of seven corporate Shareholders, namely Beijing Beida Jade Bird Limited, Beijing Beida Jade Bird Software System Company, Beijing Beida Yu Huan Microelectronics System Engineering Company, Dynamic Win Assets Limited, Hinet Company Limited, Dragon Air Investments Limited and New View Venture Limited, holding approximately 54.86% of the issued share capital of the Company approving the terms and conditions of the Supplemental Letter Agreement and Share

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LETTER FROM THE BOARD

Options Agreement have been obtained. The respective shareholding of each of the above seven corporate shareholders are set out as follows:

	Number of shares	Shareholding
Name of Shareholder	held in the Company	in the Company
Beijing Beida Jade Bird Limited	115,000,000	9.71%
(北京北大青鳥有限責任公司)
Beijing Beida Jade Bird Software System Company	110,000,000	9.28%
(北京市北大青鳥軟件系統公司)
Beijing Beida Yu Huan Microelectronics System	85,000,000	7.17%
Engineering Company
(北京市北大宇環微電子系統工程公司)
Dynamic Win Assets Limited	205,414,000	17.34%
(致勝資產有限公司)
Hinet Company Limited	20,000,000	1.69%
Dragon Air Investments Limited	30,000,000	2.53%
(龍騰投資有限公司)
New View Venture Limited	84,586,000	7.14%
Total	650,000,000	54.86%

All the members of the Closely Allied Group are promoters of the Company and therefore Shareholders since its incorporation. They had also voted unanimously in the past on Shareholders’ resolutions in addition to routine resolutions at the Company’s annual general meetings, e.g. the subdivision of the shares of the Company in November 2000, the acquisition of 5.29% interest in SMIC in February 2002, the disposal of 156,842,000 ordinary shares in SMIC pursuant to an offer for sale in connection with the listing of shares in SMIC on the Stock Exchange and the New York Stock Exchange in June 2004 and the securities lending transaction under the Securities Lending Agreement. As confirmed by the Directors, Beijing Beida Jade Bird Limited, Beijing Beida Jade Bird Software System Company and Beijing Beida Yu Huan Microelectronics System Engineering Company are wholly and beneficially owned by Peking University. In addition, Beijing Beida Jade Bird Limited and Dynamic Win Assets Limited have one common director. Save as disclosed above, to the best knowledge of the Directors, the Shareholders of the Closely Allied Group have no shareholding relationship or prior business relationship amongst one another.

As confirmed by the Directors, no Shareholder of the Company is required to abstain from voting if the Company is to convene a general meeting for the approval of the Supplemental Letter Agreement and Share Options Agreement pursuant to rule 19.46 of the GEM Listing Rules by reason that it has a material interest in the Supplemental Letter Agreement and Share Options Agreement.

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LETTER FROM THE BOARD

As written confirmations from the members of the Closely Allied Group approving the Supplemental Letter Agreement and Share Options Agreement have been obtained, in accordance with rule 19.44 of the GEM Listing Rules, the Company need not hold an SGM to consider the Supplemental Letter Agreement and Share Options Agreement. However, Article 99 of its articles of association provides that approval from the Shareholders’ meeting is required if the estimated value of the assets to be assigned is over 33% of the value of the fixed assets of the Company. Although PRC counsel to the Company is of the view that such written confirmations are legal and valid, an SGM is advisable to be convened as a procedural formality and for the purpose of formally recording the approval of the Supplemental Letter Agreement and Share Options Agreement by the Shareholders even if written confirmations have been obtained. To fully minimise any risk of nonapproval of the Supplemental Letter Agreement and Share Options Agreement at the subsequent SGM, the relevant Shareholder was required under its confirmation to undertake to the Company that it will or will appoint a proxy to attend the SGM.

GENERAL

The Group is principally engaged in the research, development, manufacture, marketing and sales of embedded systems, including network security products, wireless fire alarm systems and related products. The Group is also engaged in the sales of computer products and the provision of total solution services through application of its existing embedded system products.

NCL is a wholly-owned subsidiary of Nexgen Financial Holdings Limited (“ Nexgen Financial ”), which is principally engaged in the provision of risk-based financial solutions to corporations, insurance companies, banks and other financial service firms, and high net worth individuals in Europe and Asia. NCL primarily undertakes capital market transactions of the group to whom Nexgen Financial belongs, which include the provision of financial solutions such as equity derivative linked instruments designed for mergers and acquisitions, treasury management, corporate finance, risk transfer and private financing situations. Nexgen Financial is a wholly-owned subsidiary of IXIS Corporate & Investment Bank, which is a subsidiary of Natixis.

SPECIAL GENERAL MEETING

The notice of the SGM convened as a procedural formality to approve, ratify and confirm the Supplemental Letter Agreement, the Share Options Agreement and the transactions thereunder by way of ordinary resolutions is set out on pages 26 to 28 in this circular. Shareholders holding approximately 54.86% of the issued share capital of the Company have already given their written approval of the Securities Loan and have undertaken to the Company that it will or will appoint a proxy to attend the SGM.

A reply slip and a form of proxy for the SGM to be held at Room 3104, 3rd Floor, Beida Jade Bird Building, No. 207 Chengfu Road, Haidian District, Beijing, the PRC on Friday, 3 August 2007 at 10:00 a.m. are enclosed. For holders of H Shares, whether or not you are able to attend the meeting, please complete and return the enclosed reply slip to the Company’s H share registrar in Hong Kong, Hong Kong Registrars Limited, 46th

– 13 –

LETTER FROM THE BOARD

Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong on or before 4:30 p.m. on Friday, 13 July 2007 and the form of proxy in accordance with the instructions printed thereon to Hong Kong Registrars Limited not less than 24 hours before the time appointed for the holding of the special general meeting. For holders of the Promoter Shares, whether or not you are able to attend the meeting, please complete and return the enclosed reply slip and form of proxy in accordance with the instructions printed thereon to the principal place of business of the Company in Beijing at Room 3104, 3rd Floor, Beida Jade Bird Building, No. 207 Chengfu Road, Haidian District, Beijing 100871, the PRC as soon as practicable but in any event, for the reply slip, on or before 4:30 p.m. on Friday, 13 July 2007 and for the form of proxy, not less than 24 hours before the time appointed for the holding of the special general meeting. Completion of the form of proxy will not preclude you from attending and voting at the meeting or any adjourned meeting should you so wish.

RECOMMENDATION

The Directors consider that the terms of the Supplemental Letter Agreement, the Share Options Agreement and the transactions thereunder are in the interests of the Company and the Shareholders as a whole and are fair and reasonable so far as the Shareholders are concerned and recommend the Shareholders to vote in favour of the resolutions to be proposed at the SGM for approving the Supplemental Letter Agreement, the Share Options Agreement and the transactions thereunder.

ADDITIONAL INFORMATION

Your attention is also drawn to the additional information contained in the appendices to this circular.

Yours faithfully, By order of the Board Xu Zhen Dong Chairman

– 14 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

1. STATEMENT OF INDEBTEDNESS

As at the close of business on 30 April 2007, being the latest practicable date for ascertaining information regarding this indebtedness statement, the Group had total outstanding borrowings of approximately RMB10 million which represents long-term interest-bearing bank loans and an amount due to NCL of approximately US$28,295,723.63 (equivalent to approximately HK$221,334,809.38) which represents the Collateral deposited by NCL with JBU Development in consideration of the Lending of the Loan Shares by JBU Development to NCL pursuant to the Securities Lending Agreement (as supplemented by the Supplemental Letter Agreement). The Group’s long term interest-bearing bank loans were secured by mortgage over certain of the Group’s property, plant and equipment and prepaid land lease payments with net book values of approximately RMB13.9 million and RMB nil respectively.

Contingent liabilities

Chengjian Donghua, a connected person of the Company within the meaning of the GEM Listing Rules, is currently a defendant in a civil litigation in Beijing involving the land use rights of a parcel of land (the “ Land ”) located in Beijing which is currently registered under the name of Chengjian Donghua. Shenzhen Development Bank (“ SDB ”) is the plaintiff in such civil proceedings. The Land is used for the development of the Dongzhimen Project. The development right of the Dongzhimen Project was vested in Chengjian Donghua from a joint venture company established by Chengjian Donghua and Strong Ground Investment Limited (“ Strong Ground ”) in 2002, namely 北京東華廣場置 業有限公司 (“ Beijing Donghua Company ”), by the cancellation of the cooperation between Chengjian Donghua and Strong Ground.

Beijing Donghua Company is the guarantor of a principal sum of RMB1,500 million together with interest accrued thereon lent by SDB to Zhongcai State-owned Enterprise Investment Company Limited and Shouchuang Network Company Limited. Based on documents filed with the People’s High Court of Beijing, SDB alleges that the cancellation of the cooperation between Beijing Donghua Company and Strong Ground has infringed the right of SDB by removing such a main asset from Beijing Donghua Company and in turn has reduced the repaying power of Beijing Donghua Company and its claim comprised, among other things, an order that Beijing Donghua Company be adjudged liable as guarantor for the principal sum of RMB1,500 million (together with interest accrued thereon up to 31 October 2005 in the amount of RMB30.74 million) lent by SDB to Zhongcai State-owned Enterprise Investment Company Limited and Shouchuang Network Company Limited and an order for the transfer of the Land from Chengjian Donghua to Beijing Donghua Company.

On 17 November 2005, SDB obtained an order from the People’s High Court of Beijing to freeze the assets of Beijing Donghua Company and Chengjian Donghua for a value equivalent to RMB1,530 million. The assets forming the subject of the order included the Land.

– 15 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

On 21 August 2006, in view of the provision of a guarantee by 北大資產經營有限公 司 (Peking University Asset Management Company Limited) (a company wholly owned by the Peking University which is the ultimate controlling shareholder of three existing promoters of the Company and is therefore a connected person of the Company under the GEM Listing Rules), the People’s High Court of Beijing discharged the freeze order upon application by Chengjian Donghua on the ground that the guarantee was able to satisfy the requirements of the relevant laws and regulations relating to the provision of guarantees by small- to mid-sized enterprises.

Under the above circumstances, although the above claim by SDB against Beijing Donghua Company and Chengjian Donghua is still pending adjudication by the People’s High Court of Beijing, the Directors are of the view that Chengjian Donghua has a valid defence against the aforesaid claim by SDB. Therefore, no provision for the above claim was made in the financial statements of Chengjian Donghua.

Save as aforesaid or as otherwise mentioned in the paragraph headed “The Share Options Agreement – Guarantee to be provided by the Company” on page 9 of this circular and apart from intra-group liabilities, the Directors confirmed that no company in the Group had any outstanding, as at the close of business of the Latest Practicable Date, any mortgages, charges, pledges, debentures, loan capital, bank loans and overdrafts, debt securities or other similar indebtedness, finance leases or hire purchase commitments, acceptance liabilities or acceptance credits, any guarantees or other material contingent liabilities.

Save as aforesaid, the Directors confirmed that there has been no material change in the indebtedness and contingent liabilities of the Group since the close of business on 30 April 2007 being the latest practicable date for ascertaining information regarding this indebtedness statement.

2. WORKING CAPITAL

The Directors, including the independent non-executive Directors, are of the opinion that, following execution of the Supplemental Letter Agreement and completion of the grant of the Share Options, taking into account the financial resources available to the Group, including internally generated funds and the present available bank facilities, and in the absence of unforeseen circumstances, the Group will have sufficient working capital for its requirements within 12 months from the Latest Practicable Date.

3. RULES 17.15 TO 17.21 OF THE GEM LISTING RULES

The Directors have confirmed that, as at the Latest Practicable Date, the Group was not aware of any circumstances that would give rise to a disclosure requirement under rules 17.15 to 17.21 of the GEM Listing Rules.

– 16 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

4. MATERIAL ADVERSE CHANGE

The Directors have confirmed that, as at the Latest Practicable Date, they are not aware of any material adverse change in the financial or trading position of the Group since 31 December 2006, being the date to which the latest published audited financial statements of the Company were made up.

5. FINANCIAL AND TRADING PROSPECTS OF THE GROUP

Under escalating market competition, the development of the Group will be divided into two aspects. On the one hand, the Group will put more efforts in marketing by focusing on promotion in key industries and regional construction to increase the Group’s market share. On the other hand, the Group will enhance its after-sales services for the existing high-quality customers and provide new customised products and solutions in order to establish a high-quality customer base. The Group will continue to control cost strictly in order to push up the margin.

The Company had conditionally agreed to dispose of 44% equity interests in Chengjian Donghua at an aggregate consideration of RMB697.2 million on 21 May 2007. Net proceeds from the disposal is approximately RMB696 million. The Directors currently intends to apply the net proceeds from such disposal for expansion of the existing network securities products and wireless fire alarm systems businesses and investment in businesses, projects or assets which the Directors believe to have good potential. As at the Latest Practicable Date, the Directors have not yet identified any such investment opportunities nor do they have any concrete proposals relating to such investment opportunities.

– 17 –

APPENDIX II

GENERAL INFORMATION

1. RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the GEM Listing Rules for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that, to the best of their knowledge and belief:

• (a) the information contained in this circular is accurate and complete in all material respects and not misleading;

• (b) there are no other matters the omission of which would make any statement in this circular misleading; and

• (c) all opinions expressed in this circular have been arrived at after due and careful consideration and are found on bases and assumptions that are fair and reasonable.

2. DISCLOSURE OF INTERESTS

• (a) Interests and short positions of the Directors, chief executive and supervisors of the Company in the total issued Promoter Shares and its associated corporations

As at the Latest Practicable Date, the interests (including interests in shares and short positions) of the Directors, chief executive or supervisors of the Company in the Promoter Shares of the issued share capital of the Company and its associated corporations (within the meaning of Part XV of the SFO) which will be required to be notified to the Company and the Stock Exchange pursuant to: (a) Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which each of them is taken or deemed to have taken under such provisions of the SFO); or (b) which will be required pursuant to section 352 of the SFO to be entered in the register referred to in that section; or (c) will be required, pursuant to rules 5.46 to 5.67 of

– 18 –

APPENDIX II

GENERAL INFORMATION

the GEM Listing Rules relating to securities transactions by Directors, to be notified to the Company and the Stock Exchange, will be as follows:

Long positions:

		Number of
		Shares held,	Approximate
		capacity and	% of the	Approximate
		nature of	Company’s	% of the
		beneficial	total issued	Company’s
		interest	Promoter	total issued
	Note	of a trust	Shares	share capital
Name of Director
Mr. Xu Zhen Dong	(a)	205,414,000	29.34%	17.34%
Mr. Xu Zhi Xiang	(a)	205,414,000	29.34%	17.34%
Mr. Zhang Wan Zhong	(a)	205,414,000	29.34%	17.34%
Mr. Liu Yong Jin	(a)	205,414,000	29.34%	17.34%
Name of supervisor
of the Company
Mr. Zhang Yong Li	(a)	205,414,000	29.34%	17.34%
Ms. Dong Xiao Qing	(a)	205,414,000	29.34%	17.34%

Note:

• (a) The above Directors and supervisors of the Company are taken to be interested in the issued share capital of the Company through their respective interests as beneficiaries, among other beneficiaries, of Heng Huat Trust. By a declaration of trust (“ Heng Huat Trust ”) made as a deed on 19 July 2000, Mr. Xu Zhen Dong, Mr. Zhang Wan Zhong and Ms. Liu Yue (who has been replaced by Mr. Xu Zhi Xiang since 9 May 2003 as a trustee) declared that they held the shares of Heng Huat Investments Limited (“ Heng Huat ”) as trustees for the benefits of 477 employees of Beijing Beida Jade Bird Software System Company, Beijing Beida Jade Bird Limited, Beijing Beida Yu Huan Microelectronics System Engineering Company and Beijing Tianqiao Beida Jade Bird Sci-Tech Company Limited and their respective subsidiaries and associated companies and the Company. Heng Huat is beneficially interested in the entire issued share capital of Dynamic Win Assets Limited (“ Dynamic Win ”), and is taken to be interested in 205,414,000 Shares which Dynamic Win is interested. Mr. Xu Zhen Dong, Mr. Zhang Wan Zhong and Mr. Xu Zhi Xiang (who replaced Ms. Liu Yue as a trustee on 9 May 2003 upon Ms. Liu’s resignation as a trustee on the same date) are trustees holding 60, 20 and 20 shares, respectively, out of 100 shares in the issued share capital of Heng Huat.

Saved as disclosed above, none of the Directors and supervisors of the Company had registered an interest or short position in the Shares or underlying Shares or any of the Company’s associated corporations that was required to be recorded pursuant to Divisions 7 and 8 of Part XV of the SFO, or pursuant to section 352 of the SFO, or as otherwise notified to the Company and the Stock Exchange pursuant to rule 5.46 to 5.67 of the GEM Listing Rules.

– 19 –

APPENDIX II

GENERAL INFORMATION

(b) Interests in share options

As at the Latest Practicable Date, no options have been granted by the Group pursuant to the share option scheme adopted by the Company on 5 July 2000.

3. DIRECTORS’ SERVICE CONTRACTS

Except for Mr. Cai Chuan Bing whose service contract with the Company commenced on 20 October 2006, each of the Directors and supervisors of the Company has entered into a service contract with the Company for a term of three years commencing from 30 June 2006 until the date of the annual general meeting to be convened in 2009.

Save as disclosed above, none of the Directors had any existing or proposed service contracts with the Company, excluding contracts expiring or determinable by the Company or any of its subsidiaries within one year without payment of compensation other than statutory compensation as at the Latest Practicable Date.

4. SUBSTANTIAL SHAREHOLDERS

As at the Latest Practicable Date, so far as is known to any Director or chief executive of the Company, the following persons (other than a Director or chief executive of the Company) had interests or short positions in the Shares or underlying Shares which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who was expected, directly or indirectly, to be 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 member of the Group:

Long positions:

				Approximate	Approximate
				% of the	% of the	Approximate
				Company’s	Company’s	% of the
		Capacity	Number of	total issued	total number	Company’s
		and nature	ordinary	Promoter	of issued	total issued
	Note	of interest	Shares held	Shares	H Shares	share capital
Peking University	(a)	Through controlled	310,000,000	44.28%	Not applicable	26.16%
		corporations
Beijing Beida Yu Huan	(a)	Directly beneficially	85,000,000	12.14%	Not applicable	7.17%
Microelectronics System		owned
Engineering Company
Beijing Beida Jade Bird	(a)	Directly beneficially	110,000,000	15.71%	Not applicable	9.28%
Software System		owned
Company

– 20 –

APPENDIX II

GENERAL INFORMATION

				Approximate	Approximate
				% of the	% of the	Approximate
				Company’s	Company’s	% of the
		Capacity	Number of	total issued	total number	Company’s
		and nature	ordinary	Promoter	of issued	total issued
	Note	of interest	Shares held	Shares	H Shares	share capital
Beijing Beida Jade	(a)	Directly beneficially	115,000,000	16.43%	Not applicable	9.71%
Bird Limited		owned
Heng Huat Investments	(b)	Through a controlled	205,414,000	29.34%	Not applicable	17.34%
Limited		corporation
Dynamic Win Assets	(b)	Directly beneficially	205,414,000	29.34%	Not applicable	17.34%
Limited		owned
Mongolia Energy	(c)	Through a controlled	84,586,000	12.08%	Not applicable	7.14%
Corporation Limited		corporation
(formerly known as
“New World CyberBase
Limited”)
New View Venture	(c)	Directly beneficially	84,586,000	12.08%	Not applicable	7.14%
Limited		owned
Tai Fook Securities	(d)	Directly beneficially	80,800,000	Not applicable	16.67%	6.82%
Company Limited		owned
Tai Fook Finance	(d)	Through a controlled	80,800,000	Not applicable	16.67%	6.82%
Company Limited		corporation
Tai Fook (BVI) Limited	(d)	Through a controlled	80,800,000	Not applicable	16.67%	6.82%
		corporation

Notes:

• (a) Peking University is taken to be interested in 26.16% of the total issued share capital of the Company through the following companies:

• (i) 85,000,000 Promoter Shares (representing approximately 7.17% of the Company’s total share capital) held by 北京市北大宇環微電子系統工程公司 (Beijing Beida Yu Huan Microelectronics System Engineering Company), which is beneficially wholly-owned by Peking University;

• (ii) 110,000,000 Promoter Shares (representing approximately 9.28% of the Company’s total share capital) held by 北京市北大青鳥軟件系統公司 (Beijing Beida Jade Bird Software System Company), which is beneficially wholly-owned by Peking University; and

• (iii) 115,000,000 Promoter Shares (representing approximately 9.71% of the Company’s total share capital) held by 北京北大青鳥有限責任公司(Beijing Beida Jade Bird Limited), which is approximately 46% owned by Peking University.

– 21 –

APPENDIX II

GENERAL INFORMATION

• (b) The Shares are held by Dynamic Win Assets Limited, which is wholly owned by Heng Huat Investments Limited.

• (c) The Shares are held by New View Venture Limited, which is wholly-owned by Mongolia Energy Corporation Limited (formerly known as “New World CyberBase Limited”).

• (d) The Shares are held by Tai Fook Securities Company Limited, which is directly wholly owned by Tai Fook Finance Company Limited and indirectly wholly owned by Tai Fook (BVI) Limited.

Save as disclosed above, no person, other than the Directors and supervisors of the Company, whose interests are set out in the previous paragraphs, had registered an interest or short position in the Shares or underlying Shares that was required to be recorded pursuant to section 336 of the SFO.

5. SHARE CAPITAL

As at the Latest Practicable Date, the registered, issued and fully paid share capital of the Company was as follows:

	Number of
	issued shares	Nominal value	Paid up capital
	’000	RMB’000	RMB’000
Existing Issued Shares:
Promoter Shares	700,000	70,000	70,000
H Shares	484,800	48,480	48,480
	1,184,800	118,480	118,480

Note : Promoter Shares and H Shares are both ordinary shares in the share capital of the Company with nominal value of RMB0.10 each.

6. COMPETING INTERESTS

As at the Latest Practicable Date, none of the Directors, the management shareholders and substantial shareholders of the Company or any of their respective associates (as defined in the GEM Listing Rules) had an interest in a business which competes or may compete with the businesses of the Group, or may have any conflicts of interest with the Group pursuant to the GEM Listing Rules.

7. LITIGATION

Save as disclosed in the paragraph headed “Statement of Indebtedness – contingent liabilities” in Appendix I to this circular, as at the Latest Practicable Date, no member of the Group is 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 by or against any member of the Group.

– 22 –

APPENDIX II

GENERAL INFORMATION

8. GENERAL

• (a) In the event of any inconsistency, the English language text of this circular shall prevail over the Chinese language text.

• (b) The principal place of business of the Company in the PRC is at 3rd Floor, Beida Jade Bird Building, No. 207 Chengfu Road, Haidian District, Beijing 100871, the PRC.

• (c) The place of business of the Company in Hong Kong is at Unit 02, 7th Floor, Asia Pacific Centre, 8 Wyndham Street, Central, Hong Kong.

• (d) The share register and transfer office of the Company is Hong Kong Registrars Limited at 46th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong.

• (e) The compliance officer of the Company is Mr. Zhang Wan Zhong (“ Mr. Zhang ”). Mr. Zhang graduated from Peking University with a master degree in science.

• (f) The qualified accountant and company secretary of the Company is Mr. Leung Wai Man (“ Mr. Leung ”). Mr. Leung is a fellow member of The Association of Chartered Certified Accountants and an associate member of each of The Hong Kong Institute of Certified Public Accountants, The Institute of Chartered Secretaries and Administrators and The Hong Kong Institute of Chartered Secretaries.

• (g) Pursuant to rule 5.28 of the GEM Listing Rules, the Company has set up an audit committee. In compliance with rule 5.29 of the GEM Listing Rules, the authority and responsibility of the audit committee has been properly written out. The primary duties of the audit committee are to review the financial reporting process, internal control and corporate governance issues of the Company and make relevant recommendations to the Board. The audit committee has three members, namely the three independent non-executive Directors, Professor Nan Xiang Hao (“ Prof. Nan ”), Professor Chin Man Chung, Ambrose (“ Prof. Chin ”), and Mr. Cai Chuan Bing (“ Mr. Cai ”). Prof. Nan has been awarded various science awards such as 國家科技進步二等獎 (the Second Prize of State Technological Achievement). He is currently a part-time professor in the Graduate University of Chinese Academy of Science. Prof. Chin graduated from the Department of Oriental Language and Cultures of Peking University with a master degree in Literature. He is currently a professor in the History Department of Fudan University and a researcher of morality and religion research centre of Tsinghua University. Mr. Cai graduated from Anhui University of Finance and Trade. He is currently the chairman of the Communications Branch of the China Institute of Internal Audit. He is also a non-executive director of Yue Da Holdings Limited whose shares are listed on the Stock Exchange.

– 23 –

APPENDIX II

GENERAL INFORMATION

• (h) Save as disclosed in this circular, none of the Directors is, directly or indirectly, interested in any assets which have been acquired or disposed of by or leased to any member of the Group, or are proposed to be acquired or disposed of by or leased to any member of the Group since 31 December 2006, the date to which the latest published audited accounts of the Company were made up.

• (i) Save as disclosed in this circular, there is no other contract or arrangement subsisting at the date of this circular in which a Director is materially interested and which is significant in relation to the business of the Group.

9. MATERIAL CONTRACTS

The following contracts (not being contracts in the ordinary course of business of the Company) have been entered into by members of the Group within two years immediately preceding the date of this circular which are or may be material:

1. the Securities Lending Agreement;

2. the Supplemental Letter Agreement;

3. the Share Options Agreement;

4. the supply agreement dated 15 May 2007 between 河北北大青鳥環宇消防設 備有限公司 (Hebei Beida Jade Bird Universal Fire Alarm Device Company Limited) (“ Hebei Fire Alarm ”), a non wholly-owned subsidiary of the Company, and 上海北大青鳥消防設備銷售有限公司 (Shanghai Beida Jade Bird Fire Equipment Marketing Company Limited) (“ Shanghai Jade Bird Fire ”), a connected person of the Company, pursuant to which Hebei Fire Alarm agreed to supply fire alarm system products to Shanghai Jade Bird Fire;

5. the supply agreement dated 15 May 2007 between 武漢北大青鳥網軟有限公 司 (Wuhan Beida Jade Bird Netsoft Company Limited) (“ Wuhan Netsoft ”), non wholly-owned subsidiary of the Company, and 北京北大青鳥信息系統有 限公司 (Beijing Beida Jade Bird Information System Company Limited) (“ BJ Beida IS ”), pursuant to which Wuhan Netsoft agreed to supply network management products and firewall products to BJ Beida JS; and

6. the conditional share transfer agreement dated 21 May 2007 entered into between the Company and 北京北大青鳥安全系統工程技術有限公司 (Beijing Beida Jade Bird Security System Engineering Technology Company Limited) (“ BJ Jade Bird Security ”), a non wholly-owned subsidiary of 北京北大青鳥有 限責任公司 (Beijing Beida Jade Bird Limited), a promoter of the Company, pursuant to which the Company conditionally agreed to sell to BJ Jade Bird Security 44% of the registered capital of Chengjian Donghua and the shareholder’s loan advanced by the Company to Chengjian Donghua, for an aggregate cash consideration of RMB697.2 million.

– 24 –

APPENDIX II

GENERAL INFORMATION

10. PROCEDURES TO DEMAND A POLL

Pursuant to article 75 of the articles of association of the Company, a resolution put to the vote in a general meeting of the Shareholders shall be decided on a show of hands unless (before or on the declaration of the result of the show of hands or on the withdrawal of any other demand for a poll) a poll is demanded by:

• (a) the chairman of the meeting; or

• (b) at least two Shareholders present in person (or in the case of a Shareholder being a corporation by its duly authorised representative) or by proxy for the time being entitled to vote at the meeting; or

• (c) a Shareholder or Shareholders present in person (or in the case of a Shareholder being a corporation by its duly authorised representative) or by proxy and representing not less than 10% or more of the total voting rights of all Shareholders having the right to vote at the meeting.

11. MATERIAL ACQUISITION/DISPOSALS OF SUBSIDIARIES AND AFFILIATED COMPANY AND SIGNIFICANT INVESTMENTS

During the year ended 31 December 2006, the Group disposed of its entire equity interests in Beida Jade Bird Overseas Education Limited, a wholly-owned subsidiary of the Company, to Hong Kong Jade Bird Science and Technology Limited for a consideration of approximately RMB413,000.

Save as disclosed above, the Group had no material acquisitions and disposals of subsidiaries and affiliated company and investment during the year ended 31 December 2006.

12. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents (and English translations thereof, if appropriate) will be available for inspection at Unit 02, 7th Floor, Asia Pacific Centre, 8 Wyndham Street, Central, Hong Kong during normal business hours from the date of this circular up to and including the date of the SGM:

• (a) the articles of association of the Company;

• (b) the annual report of the Company for each of the two years ended 31 December 2006;

• (c) the material contracts referred to in paragraph 9 of this Appendix;

• (d) this circular; and

• (e) the circular of the Company dated 24 January 2007.

– 25 –

NOTICE OF SPECIAL GENERAL MEETING

==> picture [62 x 57] intentionally omitted <==

北京北大青鳥環宇科技股份有限公司 BEIJING BEIDA JADE BIRD UNIVERSAL SCI-TECH COMPANY LIMITED (a joint stock limited company incorporated in the People’s Republic of China with limited liability) (Stock Code: 8095)

NOTICE OF SPECIAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that a special general meeting (the “ Special General Meeting ”) of the holders of the shares of Beijing Beida Jade Bird Universal Sci-Tech Company Limited (the “ Company ”) will be held at Room 3104, 3rd Floor, Beida Jade Bird Building, No. 207 Chengfu Road, Haidian District, Beijing, the PRC on Friday, 3 August 2007 at 10:00 a.m. for the purpose of considering and, if thought fit, passing the following as ordinary resolutions:

ORDINARY RESOLUTION 1

THAT :

• (a) certain amendments to the terms of a Securities Lending Transaction Confirmation in connection with a Global Master Securities Lending Agreement (as supplemented by a Schedule) (together, the “ Securities Lending Agreement ”), both dated 15 December 2006 and entered into between Beida Jade Bird Universal Sci-Tech (Cayman) Development Company Limited (“ JBU Development ”), a wholly-owned subsidiary of the Company and Nexgen Capital Limited (“ NCL ”) pursuant to a letter agreement (“ Supplemental Letter Agreement ”) dated 18 May 2007 and entered into between JBU Development and NCL, including, inter alia, (i) extension of the duration of the transaction under the Securities Lending Agreement to a period of 42 months ending on 18 June 2010; (ii) adjustment to the rate of interest on the collateral to be deposited by NCL with JBU Development (the “ Collateral ”); and (iii) adjustment to the maximum amount of Collateral (details of which have been set out in an announcement of the Company dated 18 May 2007 and in a circular to the shareholders of the Company dated 11 June 2007) be and are hereby approved, ratified and confirmed; and

• (b) the acts of the board of directors of the Company on behalf of the Company for the purpose of or in connection with the implementation and completion of the Supplemental Letter Agreement and the transactions thereunder be and are hereby approved, ratified and confirmed.

– 26 –

NOTICE OF SPECIAL GENERAL MEETING

ORDINARY RESOLUTION 2

THAT :

• (a) the granting of call options on 161,944,000 ordinary shares of Semiconductor Manufacturing International Corporation (the “ Option Shares ”, and individually the “ Option Share ”) by JBU Development to NCL expiring on the date falling two scheduled trading days before 18 June 2010 (the “ Expiration Date ”) and in the event physical settlement is elected, automatically exercisable on each of the 40 scheduled trading days preceding and ending on the Expiration Date based on the volume-weighted average price of an Option Share on each of such 40 days, and in the event cash settlement is elected, automatically exercisable on the Expiration Date based on the arithmetic average of the volume-weighted average price of an Option Share over the above 40-day period, pursuant to an ISDA Master Agreement, as supplemented by a schedule, and a Share Options Transaction Confirmation, all dated 18 May 2007 and entered into between JBU Development and NCL (together, the “ Share Options Agreement ”) (details of which have been set out in an announcement of the Company dated 18 May 2007 and in a circular to the shareholders of the Company dated 11 June 2007) be and are hereby approved, ratified and confirmed; and

• (b) the acts of the board of directors of the Company on behalf of the Company for the purpose of or in connection with the implementation and completion of the Share Options Agreement and the transactions contemplated thereunder be and are hereby approved, ratified and confirmed.

By order of the board of directors Xu Zhen Dong

Chairman

Hong Kong, 11 June 2007

Place of business in Hong Kong: Unit 02, 7th Floor Asia Pacific Centre 8 Wyndham Street Central Hong Kong

Notes:

• (A) The register of holders of H Shares of the Company (“ H Shares ”) will be closed from Tuesday, 3 July June 2007 to Friday, 3 August 2007 (both days inclusive) during which period no transfer of H shares will be registered. Any holder of the H Shares and whose name appearing in the Company’s register of holders of H Shares with Hong Kong Registrars Limited at the close of business hours on Friday, 29 June 2007 and have completed the registration process, will be entitled to attend the Special General Meeting.

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NOTICE OF SPECIAL GENERAL MEETING

The address of Hong Kong Registrars Limited is as follows: 46th Floor, Hopewell Centre, 183 Queens Road East, Hong Kong (Fax no: 852-2865-0990)

• (B) Holders of promoter shares of the Company (“ Promoter Shares ”) or H Shares who intend to attend the Special General Meeting must complete the reply slips for attending the Special General Meeting and return them to Hong Kong Registrars Limited at the address set out above (for holders of H Shares) or to the place of business of the Company in Beijing (for Promoter Shares) not later than 20 days before the date of the Special General Meeting, i.e. no later than 4:30 p.m. on Friday, 13 July 2007.

The place of business of the Company in Beijing is as follows:

3rd Floor, Beida Jade Bird Building, No. 207 Chengfu Road, Haidian District, Beijing 100871, the PRC (Fax no: 86-10-6275-8434)

• (C) Each holder of H Shares who has the right to attend and vote at the Special General Meeting is entitled to appoint in writing one or more proxies, whether a shareholder or not, to attend and vote on his behalf at the Special General Meeting. A proxy of a shareholder who has appointed more than one proxy may only vote on a poll.

• (D) The instrument appointing a proxy must be in writing under the hand of the appointer or his attorney duly authorised in writing. If that instrument is signed by an attorney of the appointer, the power of attorney authorising that attorney to sign, or other documents of authorisation, must be notarially certified.

• (E) To be valid, the form of proxy, and if the form of proxy is signed by a person under a power of attorney or other authority on behalf of the appointer, a notarially certified copy of that power of attorney or other authority, must be delivered to the Company’s H Share registrar, Hong Kong Registrars Limited, the address of which is set out in Note (A) above, not less than 24 hours before the time for holding the Special General Meeting or any adjournment thereof in order for such documents to be valid.

• (F) Each holder of Promoter Shares is entitled to appoint in writing one or more proxies, whether a shareholder or not, to attend and vote on its behalf at the Special General Meeting. Notes (C) to (D) also apply to holders of Promoter Shares, except that the proxy form or other documents of authority must be delivered to the place of business of the Company in Beijing, the address of which is set out in Note (B) above, not less than 24 hours before the time for holding the Special General Meeting or any adjournment thereof in order for such documents to be valid.

• (G) If a proxy attends the Special General Meeting on behalf of a shareholder, he should produce his identity card and the instrument signed by the proxy or his legal representative, and specifying the date of its issuance. If a legal person shareholder appoints its corporate representative to attend the Special General Meeting, such representative should produce his/her identity card and the notarised copy of the resolution passed by the board of directors or other authorities or other notarised copy of the licence issued by such legal person shareholder.

• (H) The Special General Meeting is expected to last for one hour. Shareholders attending the Special General Meeting are responsible for their own transportation and accommodation expenses.

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