China Display Optoelectronics Technology Holdings Limited — Proxy Solicitation & Information Statement 2003

Oct 29, 2003

IMPORTANT

If you are in any doubt about this document, you should consult your stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold all your shares in SW Kingsway Capital Holdings Limited, you should at once hand this document to the purchaser or to the bank or stockbroker or other agent through whom the sale was effected for transmission to the purchaser.

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this document, 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 document.

==> picture [57 x 55] intentionally omitted <==

SW KINGSWAY CAPITAL HOLDINGS LIMITED 㶅富金融控股有限公司[*]

(Incorporated in Bermuda with limited liability)

PROPOSED GENERAL MANDATES TO ISSUE AND TO REPURCHASE SHARES

It is proposed that at the Annual General Meeting of SW Kingsway Capital Holdings Limited for the year ended 30th June 2003, resolutions be proposed to grant to the Directors general mandates to issue Shares of the Company and to repurchase Shares. The explanatory statement contains all the information required pursuant to the Listing Rules to be given to the Shareholders of the Company.

29th October 2003

• For identification purpose only

DEFINITIONS

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

• “Annual General Meeting”

the annual general meeting of the Company to be held at 5th Floor, Hutchison House, 10 Harcourt Road, Hong Kong on Wednesday, 26th November 2003 at 10:00 a.m.

• “Company”

SW Kingsway Capital Holdings Limited

• “Director(s)”

director(s) of the Company

• “Group”

the Company and its subsidiaries

• “HK$”

Hong Kong dollars

• “Hong Kong”

Hong Kong Special Administrative Region of the People’s Republic of China

• “Latest Practicable Date”

• 24th October 2003 being the latest practicable date prior to the printing of this document

• “Listing Rules”

• the Rules Governing the Listing of Securities on The Stock Exchange

• “Repurchase Mandate”

• the authority to the Directors to exercise all the powers of the Company to repurchase Shares of the Company in the terms set out in ordinary resolution 6 in the notice convening the Annual General Meeting

• “Share(s)”

• share(s) of HK$0.01 each in the share capital of the Company

• “Share Issue Mandate”

• general authority to the Directors to allot and issue shares in the terms set out in ordinary resolutions 5 and 7 in the notice convening the Annual General Meeting

• “Shareholders”

shareholders of the Company

• “Takeover Code”

the Hong Kong Code on Takeovers and Mergers

• “The Stock Exchange”

The Stock Exchange of Hong Kong Limited

– 1 –

LETTER FROM THE CHIEF EXECUTIVE OFFICER REGARDING THE GENERAL MANDATES

==> picture [57 x 55] intentionally omitted <==

SW KINGSWAY CAPITAL HOLDINGS LIMITED 㶅富金融控股有限公司[*]

(Incorporated in Bermuda with limited liability)

Directors:

Mr. Jonathan Koon Shum Choi (Chairman) Mr. William Ka Chung Lam (Chief Executive Officer)

Mr. Michael Wai Chung Wu

Ms. Mary Yuk Sin Lam

Registered Office: Clarendon House 2 Church Street Hamilton HM 11 Bermuda

Mr. Michael Koon Ming Choi

Dr. Douglas Ching Shan Hui (Non-executive Director)

Mr. Richard Yingneng Yin (Non-executive Director)

Mr. Robert Tsai To Sze

(Independent Non-executive Director)

• Dr. Raymond Wai Yung Wu

(Independent Non-executive Director)

Head Office and Principal Place of Business: 5th Floor, Hutchison House 10 Harcourt Road Central Hong Kong

Company Secretary:

Ms. Rebecca Yuk Fung Lau

29th October 2003

To the Shareholders

Dear Sir or Madam,

GENERAL MANDATES TO REPURCHASE SHARES AND TO ISSUE SHARES

1. At the annual general meeting of the Company held on 29th November 2002, ordinary resolutions were passed giving general unconditional mandates to the Directors (i) to repurchase Shares of the Company on The Stock Exchange up to 10 per cent of the aggregate nominal value of the share capital of the Company in issue on the date of passing the resolution; and (ii) to allot, issue and otherwise deal with Shares, options and warrants of the Company up to (a) 20 per cent of the aggregate nominal value of the share capital of the Company in issue at the date the resolution was passed, plus (b) the nominal value of any Shares repurchased by the Company.

2. For identification purpose only

– 2 –

LETTER FROM THE CHIEF EXECUTIVE OFFICER REGARDING THE GENERAL MANDATES

1. Under the Listing Rules, these general mandates will lapse at the conclusion of the forthcoming Annual General Meeting of the Company which will be held on Wednesday, 26th November 2003, unless they are renewed at the Annual General Meeting. Ordinary resolutions will be proposed to renew these mandates. An explanatory statement required by the Listing Rules to be sent to Shareholders in connection with the proposed repurchase resolution is set out in the appendix of this circular.

2. The Directors believe that it is in the best interests of the Company and its Shareholders to have a general authority from Shareholders to enable the Directors to repurchase Shares. Such repurchases may, depending on market conditions and funding arrangements at the time, lead to an enhancement of the net asset value per Share of the Company and/or its earnings per Share and will only be made when the Directors believe that such repurchases will benefit the Company and its Shares. However, the Directors do not have any present intention to repurchase the Shares.

3. The ordinary resolutions are set out in full in the notice of the Annual General Meeting forming part of the annual report for the year ended 30th June 2003.

4. A proxy form for use at the Annual General Meeting is enclosed with this document. Whether or not you are able to attend the Annual General Meeting, you are requested to complete and return the proxy form in accordance with the instructions printed thereon as soon as possible and in any event not less than 48 hours before the time appointed for the holding of the Annual General Meeting to the share registrar of the Company in Hong Kong, Computershare Hong Kong Investor Services Limited, Rooms 1712-1716, 17th Floor, Hopewell Center, 183 Queen’s Road East, Wanchai, Hong Kong. Completion and return of the proxy form will not prevent Shareholders from attending and voting at the Annual General Meeting if they wish.

5. The Directors believe that the proposed resolutions are in the best interests of the Company and its Shareholders. Accordingly, the Directors recommend that all Shareholders should vote in favour of such resolutions at the Annual General Meeting.

For and on behalf of

SW Kingsway Capital Holdings Limited William Ka Chung Lam Chief Executive Officer

– 3 –

EXPLANATORY STATEMENT

APPENDIX

This appendix serves as an explanatory statement, as required by the Listing Rules to provide requisite information for Shareholders of the Company to consider the Repurchase Mandate.

1. SHARE REPURCHASE RULES

The Listing Rules permit companies whose primary listing is on The Stock Exchange to repurchase their own securities on The Stock Exchange subject to certain restrictions, the most important of which are summarised below:

(a) Shareholders’ Approval

All repurchases of securities on The Stock Exchange by a company whose primary listing is on The Stock Exchange must be approved in advance by an ordinary resolution, either by way of general mandate or by special approval of a particular transaction.

(b) Source of Funds

Repurchases must be made out of funds legally available for such purpose in accordance with the applicable laws and regulations of Bermuda, the Memorandum of Association and Bye-laws of the Company.

2. SHARE CAPITAL

As at the Latest Practicable Date, the issued share capital of the Company was 3,128,116,327 Shares, all of which have been fully paid up.

Subject to the passing of the ordinary resolution to approve the Repurchase Mandate, and on the basis that no further Shares will be issued prior to the Annual General Meeting, the Company would be allowed under the Repurchase Mandate to purchase a maximum of 312,811,633 Shares.

3. REASONS FOR REPURCHASES

The Directors believe that it is in the best interests of the Company and its Shareholders to have a general authority from Shareholders to enable the Directors to repurchase Shares. Such repurchases may, depending on market conditions and funding arrangements at the time, lead to an enhancement of the net asset value per Share of the Company and/or its earnings per Share and will only be made when the Directors believe that such repurchases will benefit the Company and its Shareholders. However, the Directors do not have any present intention to repurchase the Shares.

– 4 –

EXPLANATORY STATEMENT

APPENDIX

4. FUNDING OF REPURCHASES

In repurchasing Shares, the Company may only apply funds legally available for such purpose in accordance with its Memorandum of Association, the Bye-laws of the Company and the applicable laws and regulations of Bermuda. The Company may not repurchase Shares on The Stock Exchange for a consideration other than cash or for settlement otherwise than in accordance with the trading rules of The Stock Exchange from time to time.

There might be a material adverse impact on the working capital or gearing position of the Company (as compared with the position disclosed in the audited accounts contained in the annual report for the year ended 30th June 2003) in the event that the Repurchase Mandate is exercised in full. However, the Directors do not propose to exercise the Repurchase Mandate to such extent as would, in the circumstances, have a material adverse effect on the working capital requirements of the Company or on its gearing levels which in the opinion of the Directors are from time to time appropriate for the Company.

5. SHARE PRICES

The highest and lowest prices at which Shares of the Company have been traded on The Stock Exchange in each of the previous 12 calendar months preceding the Latest Practicable Date were as follows.

		Shares
	Highest		Lowest
	HK$		HK$
2002
October	0.367		0.317
November	0.357		0.30
December	0.417		0.34
2003
January	0.407		0.347
February	0.39		0.34
March	0.405		0.34
April	0.365		0.315
May	0.375		0.32
June	0.35		0.325
July	0.345		0.31
August	0.36		0.315
September	0.385		0.345
October (up to the Latest Practicable Date)	0.37		0.345

– 5 –

EXPLANATORY STATEMENT

APPENDIX

6. UNDERTAKING

The Directors have undertaken to The Stock Exchange that, so far as the same may be applicable, they will exercise the Repurchase Mandate in accordance with the Listing Rules, the Memorandum of Association, the Bye-Laws of the Company and the applicable laws and regulations of Bermuda.

None of the Directors nor, to the best of their knowledge, having made all reasonable enquiries, any of their respective associates (as defined in The Listing Rules) currently intends to sell any Shares to the Company or any of its subsidiaries under the Repurchase Mandate if such Repurchase Mandate is approved by the Shareholders.

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

7. TAKEOVER CODE

If, as a result of a Share repurchase, a Shareholder’s proportionate interest in the voting rights of the Company increases, such increase will be treated as an acquisition for the purpose of the Takeover Code. As a result, a Shareholder, or group of Shareholders acting in concert, depending on the level of increase in the Shareholder’s interests, could obtain or consolidate control of the Company and becomes obliged to make a mandatory offer in accordance with Rule 26 of the Takeover Code. As at the Latest Practicable Date, World Developments Limited (“WDL”) holds 74% of the issued shares of the Company. Assuming that the Company repurchases 10% of the issued shares of the Company from its Shareholders other than from WDL, WDL’s shareholding of the Company will increase to 84%. Based upon this basis, the Directors are not aware of any consequences which would arise under the Takeover Code as consequences of any repurchase pursuant to the Repurchase Mandate. In the event that any exercise of the Repurchase Mandate would, to the knowledge of the Directors of the Company, having such a consequence, the Directors would not exercise the Repurchase Mandate to such an extent to reduce the public shareholding to less than 25%. In any event, the Directors do not have any present intention to exercise the Repurchase Mandate up to the extent to reduce the public Shareholding to less than 25%.

The Stock Exchange has stated that if less then 25% of the issued share capital of the Company are in public hands, or if the Stock Exchange believes that a false market exists or may exist in the trading of the Shares or that there are insufficient shares in public hands to maintain an orderly market, it will consider exercising its discretion to suspend the dealing in the Shares.

– 6 –

EXPLANATORY STATEMENT

APPENDIX

8. SHARE REPURCHASES MADE BY THE COMPANY

The Company has not repurchased any of its Share on The Stock Exchange in the previous six months prior to the Latest Practicable Date.

9. RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Group. The Directors collectively and individually accept full responsibility for the accuracy of the information contained in this circular and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, there are no other facts, the omission of which would make any statement herein misleading.

– 7 –