China Display Optoelectronics Technology Holdings Limited — Proxy Solicitation & Information Statement 2006

Oct 12, 2006

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular, you should consult your stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.

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

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

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SW KINGSWAY CAPITAL HOLDINGS LIMITED

(Incorporated in Bermuda with limited liability)

(Stock Code: 188)

MAJOR TRANSACTION

DISPOSAL OF A 50% SHAREHOLDING INTEREST IN A SUBSIDIARY

* For identification purpose only

12 October 2006

TABLE OF CONTENTS

		Page
Responsibility Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		ii
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		1
Letter from the Board
1.	Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
2.	The Sale and Purchase Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
3.	Reasons for and Benefits of the Transaction. . . . . . . . . . . . . . . . . . . . . . . . .	9
4.	The Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
5.	Financial Effects of the Disposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
6.	Listing Rules Implications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
7.	Information of the Group and the Purchaser . . . . . . . . . . . . . . . . . . . . . . . . .	13
8.	Additional Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
Appendix I – Property Valuation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		14
Appendix II – General Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		20

– i –

RESPONSIBILITY STATEMENT

This document includes particulars given in compliance with the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited for the purpose of giving information with regard to the Company. The directors of the Company collectively and individually accept full responsibility for the accuracy of the information contained in this document 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.

– ii –

DEFINITIONS

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

• “Agreement” an agreement dated 6 September 2006 entered into, among others, by FDL as vendor and the Purchaser as purchaser pursuant to which the Purchaser agreed to acquire a 50% shareholding interest in TEIL

• “Assignment” the assignment of 50% of the Shareholder’s Loan by the Company to the Purchaser on Completion

• “Bank” Wing Hang Bank Limited, Shenzhen Branch

• “Bank Loan” the aggregate outstanding balance of HK$111,133,124 owed by LDL, OBL and WTL to the Bank as at 30 June 2006 in respect of the purchase of the Property

• “Board” the board of Directors

• “Business Day” a day on which banks are open for business in Hong Kong (excluding Saturday and days on which a tropical cyclone warning No. 8 or above or a “black rainstorm warning signal” is hoisted in Hong Kong)

• “Company” SW Kingsway Capital Holdings Limited, a company incorporated in Bermuda and the shares of which are listed on the main board of the Stock Exchange

• “Completion” completion of the Agreement

• “Completion Date” the third Business Day after the conditions precedent are fulfilled or otherwise waived (or such later date as FDL and the Purchaser may agree in writing prior to Completion)

• “Current Bye-laws” the current bye-laws adopted by the Company on 10 August 2000 (as amended on 30 November 2004)

• “Directors” the directors of the Company

• “Disposal” the disposal of a 50% shareholding interest in TEIL by FDL pursuant to the Agreement and the assignment of 50% of the Shareholder’s Loan pursuant to the Assignment

• “Escrow Account” the escrow account, being an interest bearing account with a licensed bank in Hong Kong acceptable to FDL, established pursuant to the Escrow Letter

– 1 –

DEFINITIONS

• “Escrow Agent”

the escrow agent appointed pursuant to the provisions of the Escrow Letter

• “Escrow Letter”

the escrow letter in the agreed form, entered into by and between FDL, the Purchaser and the Escrow Agent on 6 September 2006

“FDL”

Festival Developments Limited, a wholly owned subsidiary of the Company and immediate holding company of TEIL, which is incorporated in British Virgin Islands with limited liability

• “Group” the Company and its subsidiaries

• “HK$”

Hong Kong dollars, the lawful currency of Hong Kong

• “Hong Kong”

the Hong Kong Special Administrative Region of the PRC

• “Joint Asset Management Agreement”

the joint asset management agreement in the agreed form to be entered into, among others, between TEIL and each of the relevant joint asset managers on Completion pursuant to which TEIL will authorize the joint asset managers to manage the Property

• “Latest Practicable Date”

• 9 October 2006, being the latest practicable date prior to the printing of this circular for ascertaining certain information in this circular

“LDL”

Luxury Development Limited, an indirect wholly owned subsidiary of the Company, which is incorporated in Hong Kong with limited liability and is the sole owner of 9 sets of top floor non-standardized penthouse units of the Property

“Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange

• “Long Stop Date”

the day falling on the numerically corresponding day in the fourth calendar month after the date of the Agreement. Where such day is not a Business Day, it shall fall on the next succeeding Business Day or if there is no numerically corresponding day in the fourth calendar month after the Agreement date, the first following Business Day

– 2 –

DEFINITIONS

“OBL”	Overseas Billion Limited, an indirect wholly owned
	subsidiary of the Company, which is incorporated in
	Hong Kong with limited liability, is the sole owner of
	the 3rd Floor to 12th Floor (both floors inclusive) of
	the Property
“PRC”	the People’s Republic of China and, for the purpose of
	this circular, excluding Hong Kong, the Macau Special
	Administrative Region and Taiwan region
“Property”	3rd to top floor of Block 6, No. 66 Xiaguang Lane,
	Chaoyang District, Beijing, the PRC (formerly known
	as Block E, Ocean Express, B2, North Road, East
	Third Ring Road, Chaoyang District, Beijing, the PRC)
“Purchaser”	Marubeni Corporation, a company incorporated in
	Japan, its shares are listed on the Tokyo, Nagoya and
	Osaka stock exchanges
“RMB”	Renminbi, the lawful currency of the PRC
“Share(s)”	ordinary share(s) of HK$0.10 each in the capital of the
	Company
“Shareholders”	holders of the Shares
“Shareholder’s Loan”	an indebtedness comprising HK$138,541,622
	collectively owed by OBL, WTL and LDL to the
	Company as at 30 June 2006 which arose from the
	acquisition and upkeep of the Property, which is
	interest-free and payable on demand, 50% of which
	will be assigned to the Purchaser on Completion
“Shareholders’ Agreement”	the shareholders agreement in the agreed form, to be
	entered into, among others, by FDL and the Purchaser
	on Completion
“Stock Exchange”	the Stock Exchange of Hong Kong Limited
“SFO”	the Securities and Futures Ordinance of Hong Kong
“TEIL”	Total Express Investments Ltd., an indirect wholly
	owned subsidiary of the Company, which is
	incorporated in British Virgin Islands with limited
	liability

– 3 –

DEFINITIONS

“TEIL Group” TEIL and its wholly owned subsidiaries which comprise of Grandchina Assets Management Limited, Strong Castle Holdings Limited and Knowledgeable Investments Limited, each of which is incorporated in the British Virgin Islands and each of which beneficially owns the entire issued share capital of OBL, WTL and LDL respectively, all of which are investment holdings companies only and their only investment is in the Property “Valuer” RHL Appraisal Ltd. “WTL” Well Talent Limited, an indirect wholly owned subsidiary of the Company, which is incorporated in Hong Kong with limited liability and is the sole owner of the 13th Floor to top Floor (both floors inclusive) (save and except the 9 sets of top floor non-standardized penthouse units) of the Property

– 4 –

LETTER FROM THE BOARD

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SW KINGSWAY CAPITAL HOLDINGS LIMITED

*

(Incorporated in Bermuda with limited liability)

(Stock Code: 188)

Directors:

Dr Jonathan Koon Shum Choi ( Chairman ) Ms Mary Yuk Sin Lam

( Deputy Chairman and Executive Director )

Mr William Wai Leung Wu

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

(Chief Executive Officer and Executive Director)

Ms Rebecca Yuk Fung Lau (Deputy Chief Executive Officer and Executive Director) Mr Michael Koon Ming Choi ( Executive Director ) Mr Michael Wai Chung Wu (Non-executive Director )

Mr Robert Tsai To Sze

( Independent Non-Executive Director ) Mr Stanley Kam Chuen Ko

Principal Place of Business in Hong Kong: 5th Floor Hutchison House 10 Harcourt Road Central Hong Kong

( Independent Non-executive Director )

Company Secretary:

Mr Vincent Wai Shun Lai

12 October 2006

To the shareholders

Dear Sir/Madam,

MAJOR TRANSACTION DISPOSAL OF A 50% SHAREHOLDING INTEREST IN A SUBSIDIARY

1. INTRODUCTION

On 7 September 2006, the Board announced that on 6 September 2006, FDL, a wholly owned subsidiary of the Company and the immediate holding company of TEIL, the Purchaser and the Company entered into the Agreement pursuant to which FDL agreed to sell and the Purchaser agreed to purchase a 50% shareholding interest in TEIL for a cash consideration of HK$86,922,453 payable to the Company and the Purchaser shall guarantee the repayment of HK$55,566,562 to the Bank, which represents 50% of the Bank Loan.

* For identification purpose only

– 5 –

LETTER FROM THE BOARD

The Company, as the parent company guarantor, guarantees the due performance by FDL of its obligations under the Agreement. OBL, WTL and LDL, indirect wholly owned subsidiaries of TEIL, jointly hold the entire interest in the Property, valuation of which was approximately RMB288,600,000 (approximately, HK$280,357,489) as at 30 June 2006. Valuation gain on investment properties attributable to appreciation of value of the Property amounting to HK$47,778,422 was recognized in the Company’s audited financial statements as at 30 June 2006. Taking into account the previously recognized valuation gain, the completion of the Agreement will result in net gain on Disposal of approximately HK$2,135,936.

2. THE SALE AND PURCHASE AGREEMENT

Details of the Sale and Purchase Agreement is set out below:

(1) Date: 6 September 2006

(2) Parties:

Vendor: FDL, an investment holding company Purchaser: Marubeni Corporation Guarantor: The Company

(3) Subject matter:

A 50% shareholding interest in TEIL, which through indirect wholly owned subsidiaries, OBL, WTL and LDL, holds the entire interest in the Property. Upon signing of the Agreement, the Purchaser has agreed to purchase a 50% shareholding interest in TEIL.

(4) Consideration:

The Purchaser shall pay a cash consideration in the amount of HK$86,922,453 to the Company (which includes HK$69,270,811 for repayment to the Company of 50% of the Shareholder’s Loan pursuant to the Assignment) and the Purchaser shall guarantee the repayment of HK$55,566,562 to the Bank, which represents 50% of the Bank Loan. Under the Agreement, each of the Purchaser and the Vendor agreed to make further advances to the TEIL Group for its working capital requirements, repayment of bank loan and payment of expenses in relation to the Property for the period from 1 July 2006 to (and including) the Completion Date up to a maximum of HK$33,900,000 by each party. There is no schedule or definite time to make the said advances and such advances will not affect the aforesaid cash consideration. The cash consideration of HK$86,922,453 and the Purchaser’s guarantee to repay HK$55,566,562 to the Bank was determined with reference to the value of the Property as at 30 June 2006.

– 6 –

LETTER FROM THE BOARD

The consideration for the Disposal shall be made payable by the Purchaser to the Company or at its direction in the following manner:

• i. The cash consideration in the amount of HK$86,922,453 shall be paid by the Purchaser to the Escrow Agent within 3 Business Days after the signing of the Agreement by delivery of a bank cheque drawn payable to the Escrow Agent or by electronic transfer of the consideration to the Escrow Account. The Escrow Agent shall hold the cash consideration in the Escrow Account on trust for FDL and the Purchaser in accordance with terms in the Escrow Letter pending Completion;

• ii. Upon Completion, the cash consideration, together with interest thereon, shall be released to the Company on the Completion Date, or where such day is not a Business Day, on the next succeeding Business Day.

• iii. Upon Completion, the Purchaser shall guarantee the repayment of HK$55,566,562 to the Bank, which represents 50% of the Bank Loan.

The Purchaser had deposited the cash consideration of HK$86,922,453 in the Escrow Account held in the name of the Escrow Agent after signing the Agreement.

(5) Conditions:

Completion of the Agreement is conditional upon:

• i. The consent or approval as required under the Listing Rules or such other legal and regulatory requirements (including those under the listing rules or otherwise of the relevant stock exchanges in Japan).

• ii. All necessary consents or approval from the Bank in respect of the transaction contemplated pursuant to the Agreement, which will result in a change in the ultimate beneficial owners of LDL, OBL and WTL which directly hold the Property collectively, in order to maintain the Bank Loan.

In the event that any of the conditions precedent shall not have been fulfilled (or waived) prior to the Long Stop Date or such other date as may be agreed upon by the parties, the Agreement shall terminate and cease to be of any effect, the Escrow Agent shall refund the consideration together with interest incurred to the Purchaser.

As at the Latest Practicable Date, the conditions precedent have not been fully fulfilled.

– 7 –

LETTER FROM THE BOARD

(6) Completion:

Completion of the Agreement will take place at the office of the Company on the Completion Date. On Completion, the parties shall enter into the agreement for the Assignment and the Shareholders’ Agreement, and pursuant to the Shareholders’ Agreement, the Joint Asset Management Agreement will also be signed.

The initial material terms of the Assignment, Shareholders’ Agreement and Joint Asset Management Agreement are still under negotiation and subject to change and are briefly set out below.

(a) Assignment

The Assignment will be entered into, among others, by the Company as the assignor and the Purchaser as the assignee under which the Company will assign to the Purchaser absolutely and without recourse to the Company all its right, title and interest in 50% of the Shareholder’s Loan in the amount of HK$69,270,811 by payment of a cash consideration of HK$69,270,811 on the Completion Date.

(b) Shareholders’ Agreement

The Shareholders’ Agreement will be entered into between FDL and the Purchaser as the shareholders of TEIL and the Company as the parent company guarantor on the Completion Date. The purposes of the Shareholders’ Agreement are:

• (i) regulating their relationship with each other so long as they are shareholders in TEIL; and

• (ii) regulating, as between the shareholders, certain aspects of the affairs of TEIL and the TEIL Group.

The board of TEIL will comprise of not more than 6 directors and each shareholder has the right to appoint up to 3 directors and remove the same from time to time. Each year the chairman of the board of directors shall rotate between representatives of FDL and the Purchaser. The first chairman will be appointed by FDL.

It has been proposed that additional advances will be extended by each shareholder in proportion to its shareholding interest in TEIL if duly requested by the joint asset managers for the purpose of paying off the expenditures and/or liabilities of the business of TEIL including the repayment of bank loan after the Completion Date; provided that the total aggregated liability of each shareholder shall not exceed the previously said HK$33,900,000 as mentioned in the Agreement.

– 8 –

LETTER FROM THE BOARD

According to the Agreement, the shareholders’ advance is unsecured and repayable ratably by (i) the date on which all the Property or all the issued shares of TEIL is/are sold to any third party; or (ii) 31 December 2008, whichever is earlier.

The interest rate in respect of the shareholders’ advance shall be agreed between the parties in due course.

The Company will guarantee the due performance by FDL of its obligations under the Shareholders’ Agreement.

• (c) Joint Asset Management Agreement

The Joint Asset Management Agreement will be entered into, between TEIL, OBL, WTL, LDL and each of the joint asset managers on the Completion Date. The joint asset managers may be the Purchaser, its subsidiary, the subsidiary of the Company or any other qualified agent to manage the Property jointly as serviced apartment for rental income. The joint asset managers may further appoint sub-agents or consultants to do the real estate management services.

The company will make further announcement and comply with relevant Listing Rules in the case where there are any material changes to the terms of the Assignment, Shareholders’ Agreement and Joint Asset Management Agreement as disclosed in this circular.

3. REASONS FOR AND BENEFITS OF THE TRANSACTION

Given a prospect of long term growth of the property market in the PRC, the Directors decided to introduce the Purchaser as a business partner to the Group and to leverage on knowledge and experience of the Purchaser which is a seasoned investor in global property market to enhance value of the Property by sharing 50% of interest in the Property with the Purchaser.

The Purchaser, being a foreign investor, has significant experience in property investment and management of serviced apartments in the PRC. It is the intention of the Company and the Purchaser to develop the Property into quality serviced apartments to cater for high-end residential users, mainly the expatriates in Beijing, which to the Directors’ belief will enhance the value to the Property. The Purchaser’s knowledge in property market and serviced apartments operation relevant to expatriates shall be a valuable aid to the Company to achieve such business target. The funding for the development of the Property will be from the shareholders’ advances mentioned above.

Pursuant to the Shareholders’ Agreement, FDL and the Purchaser will jointly manage TEIL in an agreed manner. Pursuant to the Joint Asset Management Agreement, TEIL will authorize the relevant joint asset managers (to be nominated by FDL and the Purchaser) to jointly manage the Property which is proposed to be used for serviced apartments.

– 9 –

LETTER FROM THE BOARD

The Directors (including independent non-executive directors) are of the view that the terms of the Agreement was negotiated on an arm’s length basis and was agreed on normal commercial terms and are fair and reasonable. The Directors consider that the Agreement is in the interest of the Company and the Shareholders as a whole. Valuation gain on investment properties attributable to appreciation of value of the Property amounting to HK$47,778,422 was recognized in the Company’s audited financial statements as at 30 June 2006. Taking into account the valuation gain previously recognized, the completion of the Agreement will result in net gain on Disposal of approximately HK$2,135,936. The Group will retain the remaining 50% shareholding interest in TEIL after the Disposal.

Since TEIL is a special purpose vehicle injected into the Group after 30 June 2006, the net profit/(loss) and net asset value of TEIL Group as if the existing company structure was in existence as at 30 June 2006 and 2005 are set out as below:

		**For the year **	ended
		30 June 2006	30 June 2005
		HK$	HK$
Net	profit/(loss) before taxation	35,083,367	(66,698)
Net	profit/(loss) after taxation	31,082,510	(66,698)
Net	asset value	31,031,412	(51,098)

Net loss of TEIL Group as at 30 June 2005 was attributable to cost of preparation for acquisition of the Property. Net profit of TEIL Group as at 30 June 2006 was mainly attributable to capital gain on revaluation of the Property net of costs of upkeep and administration and provision for deferred tax.

The net asset value of the TEIL Group of HK$31,031,412 as at 30 June 2006 has already included the valuation amount of the Property of RMB288,600,000. Upon Completion, the Company will receive the cash consideration of HK$17,651,642 (representing the consideration for the sale of 50% shareholding interest in TEIL) and transfer out 50% of the net asset of TEIL Group amounting to HK$15,515,706, which will result in a net gain of approximately HK$2,135,936.

As at 30 June 2006, the major assets of TEIL Group are the Property and the cash deposit of RMB4,756,392 and the major liabilities of TEIL Group are the Bank Loan, the Shareholder’s Loan and provision for deferred tax which is estimated at about HK$4,000,000.

The cash consideration amounting to HK$86,922,453 will be received from Escrow Agent on Completion Date and the proceeds will be used as additional general working capital of the Group.

The proposed source of funding for FDL’s advance of HK$33,900,000 will be sourced from the Group’s internal resources. All further financing to TEIL Group will be borne by the parties in accordance with their equity holding in TEIL Group. Save as disclosed above, both parties’ do not have other financial commitments under the

– 10 –

LETTER FROM THE BOARD

current arrangement as at the date of this circular. The Company will comply with the applicable Listing Rules for any further advances to TEIL Group in addition to the advance of HK$33,900,000.

4. THE PROPERTY

The Property was acquired by the Group at contract price of RMB236,182,869 (approximately HK$222,898,140 as at 13 April 2005) by OBL and WTL in April 2005 for the purpose of expanding its assets base and diversification of its investment portfolio to meet business objectives of proprietary investment activities of the Group. For details of the acquisition of the Property please refer to the Company’s announcement and circular dated 15 April and 20 May 2005, respectively.

The ownership of the Property was later re-structured to be held by OBL, WTL and LDL collectively. The Property at present is vacant and refurbishment work with a purpose of upgrading the Property for higher rental yield is proposed. Valuation of the Property as at 30 June 2006 (which was the date to determine the value of the Property for the purpose of determining the Disposal consideration), amounting to RMB288,600,000 (approximately HK$280,357,489), was given by the Valuer, a professional valuer, who is independent of and not connected with the Company, its subsidiaries, connected persons (as defined in the Listing Rules) of the Company and any of the directors, chief executive and substantial shareholders of the Group or the Purchaser.

The valuation of the Property represents its “market value” which is defined as intended to mean “the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion”. Valuation gain on investment properties attributable to appreciation of value of the Property amounting to HK$47,778,422 was recognized in the Company’s audited financial statements as at 30 June 2006. Except for the bank interest of HK$19,234 arising from TEIL Group’s bank deposits, no revenue was generated by TEIL Group or from the Property since its acquisition up to the date of this circular.

The Property was pledged to the Bank and the pledge will not be discharged or released upon Completion. OBL, WTL and LDL, collectively, will continue to assume liability to the Bank and to repay the Bank by instalment, until and unless the Bank Loan is repaid or refinanced by other financial institute(s). The Company and the Purchaser will, in principle, severally guarantee repayment of outstanding balance of the loan owing to the Bank and interest thereon in proportion to their respective equity holding in TEIL. In an event that the Company on its own guarantees the repayment of full amount of the loan to the Bank, the Purchaser shall indemnify the Company the portion of claims or liability which is in excess of 50% of the claim or liability arisen due to the default of TEIL and/or its subsidiaries according to the Agreement.

According to the Valuation Report attached to this circular, the market value of the Property was RMB288,600,000 as at 31 August 2006.

– 11 –

LETTER FROM THE BOARD

The total estimated cost of refurbishment and upgrading the Property is approximately HK$27,000,000.

5. FINANCIAL EFFECTS OF THE DISPOSAL

The net asset value of the TEIL Group in the Group’s audited consolidated accounts for the year ended 30 June 2006 was HK$31,031,412. The Company will receive the cash consideration of HK$17,651,642 for the transfer out of 50% of the net assets of TEIL Group amounting to HK$15,515,706, which will result in a net gain of approximately HK$2,135,936.

Taking into account the net gain from the Disposal of HK$2,135,936, it is expected that the Group’s consolidated total assets and total liabilities at the year ended 30 June 2006 will be decreased by HK$114,455,041 and HK$116,590,977 respectively when equity method is used to account for the results of the TEIL Group upon completion of the Disposal.

6. LISTING RULES IMPLICATIONS

On Completion of the Agreement, TEIL will no longer be a wholly owned subsidiary but an associated company of the Company which will hold 50% of shareholding interest after the Disposal, and therefore, will result in the assets of TEIL and its subsidiaries no longer being consolidated in the accounts of the Company and accordingly, under Chapter 14 of the Listing Rules, 100% of TEIL’s total assets, total profit and revenue will be taken as the value of the total assets, total profit and revenue for purpose of size test irrespective of the size of the interest being disposed of. Value of total assets of TEIL and its subsidiaries on basis of consolidated accounts as at 30 June 2006 was HK$286,164,010 amounting to approximately 27.6% of the total assets of the Company of HK$1,035,199,203 as at 31 December 2005 (based on the information as disclosed in the latest published interim report of the Company for the six months period ended 31 December 2005 and adjusted for interim dividend as announced in the same report when the Agreement was signed). After considering all relevant size tests, the Agreement constitutes a major transaction of the Company under Chapter 14 of the Listing Rules and is therefore subject to shareholders’ approval in accordance with Chapter 14 of the Listing Rules. Pursuant to Rule 14.44 of the Listing Rules, shareholders’ approval for a major transaction shall be given by a majority vote at a general meeting of the shareholders of the listed issuer unless all the following conditions are met, in which case written shareholders’ approval may be accepted in lieu of holding general meeting:

• (1) no shareholder of the listed issuer is required to abstain from voting if the listed issuer were to convene a general meeting for the approval of the transaction; and

• (2) the written shareholders’ approval has been obtained from a shareholder or a closely allied group of shareholders who together hold more than 50% in nominal value of the securities of the listed issuer giving the right to attend and vote at that general meeting to approve the transaction.

– 12 –

LETTER FROM THE BOARD

As no Shareholder has a material interest in the Agreement, no Shareholder is required to abstain from voting if the Company were to convene an extraordinary general meeting for approval of the Agreement. In addition, a written approval in respect of the Agreement has been obtained from Kingsway International Holdings Limited (“Kingsway International”), a controlling shareholder of the Company holding 2,411,661,327 Shares which represent approximately 74.3% of the nominal value of the Shares as at the date of this circular and which give the right to such Shareholder to attend and vote at the general meeting for the approval of the Agreement. Accordingly, all the conditions as set out in Rule 14.44 of the Listing Rules are met by the Company and, therefore, the Company shall not be required to hold an extraordinary general meeting for the shareholders’ approval of the Agreement. The Purchaser and its beneficial owners and their respective associates, to the best of the Directors’ knowledge, information and belief having made all reasonable enquiry, do not hold any Shares as at the date of this circular.

7. INFORMATION OF THE GROUP AND THE PURCHASER

The principal activities of the Group are investment in securities and investment properties, stock and futures brokerage, provision of financial advisory services, asset management, money lending and other securities related financial services.

The Purchaser is a company whose shares are listed on the Tokyo, Nagoya and Osaka stock exchanges. The Company has been informed by the Purchaser that the Purchaser is engaged in a number of business segments including property investment, property management, agriculture-marine products, textile, forest products, general merchandise, chemicals, energy, metals and material resources, transportation, industrial machinery, infrastructure, information and communication, development and construction. The Purchaser, its ultimate beneficial owner(s) and their respective associates (as defined in the Listing Rules) are, to the best of the Directors’ knowledge, information and belief having made all reasonable enquiry, third parties independent of the Company, its subsidiaries and its connected persons (as defined in the Listing Rules).

8. ADDITIONAL INFORMATION

Your attention is drawn to the additional information set out in the Appendix I – Property Valuation and Appendix II – General Information to this circular.

Yours faithfully On behalf of the Board William Wai Leung Wu Chief Executive Officer

Note: The monetary figures have been round up or down to a whole digit.

– 13 –

PROPERTY VALUATION

APPENDIX I

The following is the text of a letter, summary of value and valuation certificate, prepared for the purpose of incorporation in this circular received from RHL Appraisal Ltd., an independent valuer, in connection with its valuation as at 31 August 2006 of the property interest of the Group.

RHL Appraisal Ltd

HONG KONG

Room 1010, Star House Tsimshatsui, Hong Kong

Surveying Practices - Corporate Valuation and Property Consultancy License No.: C-015672

T +852 2730 6212 F +852 2736 9284 E info@rhl-int.com W www.rhl-int.com

12 October 2006

The Board of Directors

SW Kingsway Capital Holdings Limited

5th Floor

Hutchison House No. 10 Harcourt Road Central Hong Kong

Dear Sirs,

INSTRUCTIONS

In accordance with your instructions to value the property in which SW Kingsway Capital Holdings Limited (the “Company”) and its subsidiaries (hereinafter together referred to as the “Group”) has interests in the People’s Republic of China (the “PRC”); we confirm that we have carried out inspection, made relevant enquiries and searches and obtained such further information as we consider necessary for the purpose of providing you with our opinion of the market value of the property interest as at 31 August 2006 (the “date of valuation”).

BASIS OF VALUATION

Our valuation of the property interest represents its market value which we would define as intended to mean “the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently, and without compulsion”.

METHODS OF VALUATION

We have valued the property interest by the direct comparison approach assuming sale of the property interest in its existing state with the benefit of immediate vacant possession and by making reference to comparable sale transactions as available in the relevant market.

– 14 –

PROPERTY VALUATION

APPENDIX I

VALUATION ASSUMPTIONS

Our valuation has been made on the assumption that the seller sells the property interest on the open market without the benefit of a deferred term contract, leaseback, joint venture, management agreement or any similar arrangement, which could serve to affect the value of the property interest.

As the property is held under a long term Government Lease, we have assumed that the owner has free and uninterrupted rights to use the property for the whole of the unexpired term of its respective Government Lease without payment of any substantial sum of taxes or expenses. We have valued the property on an open market basis assuming sale with vacant possession.

No allowance has been made in our report for any charges, mortgages or amounts owing on the property interest valued nor for any expenses or taxation which may be incurred in effecting a sale. Unless otherwise stated, it is assumed that the property is free from encumbrances, restrictions and outgoings of an onerous nature, which could affect its value.

TITLE INVESTIGATION

We have been shown copies of various title documents including State-owned Land Use Rights Certificate, Building Ownership Certificate and official plans relating to the property interest and have made relevant enquiries. Where possible, we have examined the original documents to verify the existing title to the property interest in the PRC and any material encumbrances that might be attached to the property interest or any lease amendments. We have relied considerably on the advice given by the Company’s PRC legal adviser – Lei Jie Law Office, concerning the validity of the Group’s title to the property interest.

VALUATION CONSIDERATIONS

In valuing the property interest, we have complied with all the requirements contained in Chapter 5 and Practice Note 12 to the Rules Governing the Listing of Securities issued by The Stock Exchange of Hong Kong Limited; the RICS Appraisal and Valuation Standards (5th Edition) published by the Royal Institution of Chartered Surveyors and effective from May 2003; and the HKIS Valuation Standards on Properties (First Edition 2005) published by the Hong Kong Institute of Surveyors effective from 1 January 2005.

We have relied to a very considerable extent on the information given by the Group and have accepted advice given to us on such matters as tenure, planning approvals, statutory notices, easements, particulars of occupancy, lettings, and all other relevant matters.

We have not carried out detailed site measurements to verify the correctness of the site area in respect of the property but have assumed that the site areas shown on the documents and official site plan handed to us are correct. All documents and contracts have been used as reference only and all dimensions, measurements and areas are approximations. No on-site measurement has been taken.

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PROPERTY VALUATION

APPENDIX I

We have inspected the exterior and, where possible, the interior of the property. However, no structural survey has been made, but in the course of our inspection, we did not note any serious defects. We are not, however, able to report whether the property is free of rot, infestation or any other structural defects. No tests were carried out on any of the services.

We have had no reason to doubt the truth and accuracy of the information provided to us by the Group. We have also been advised by the Group that no material factors have been omitted from the information supplied. We consider that we have been provided with sufficient information to reach an informed view, and we have no reason to suspect that any material information has been withheld.

EXCHANGE RATE

Unless otherwise stated, all monetary sums stated in this report are in Renminbi (RMB)

Our valuation is summarised below and the valuation certificate is attached.

Yours faithfully, For and on behalf of RHL Appraisal Ltd.

Serena S. W. Lau Shirley Y. F. Yeung FHKIS AAPI RPS(GP) BSc MHKIS MRICS Managing Director Senior Manager

Ms. Serena S. W. Lau is a Registered Professional Surveyor with over 15 years’ experience in valuation of properties in Hong Kong, the PRC and the Asia Pacific Region. Ms. Lau is an Associate of Australian Property Institute, a Fellow of The Hong Kong Institute of Surveyors as well as an eligible real estate appraiser in the PRC.

Ms. Shirley Y. F. Yeung is a Chartered Surveyor with over 7 years’ experience in valuation of properties in Hong Kong, the PRC and the Asia Pacific Region. Ms. Yeung is a member of The Royal Institution of Chartered Surveyors as well as a member of the Hong Kong Institute of Surveyors.

– 16 –

PROPERTY VALUATION

APPENDIX I

SUMMARY OF VALUE

PROPERTY INTEREST HELD FOR INVESTMENT BY THE GROUP IN THE PRC

Market Value in existing state as at Property 31 August 2006 1. 3rd Floor to Top Floor of Block 6 RMB288,600,000 No. 66 Xiaguang Lane Chaoyang District Beijing The PRC Total: RMB288,600,000

– 17 –

PROPERTY VALUATION

APPENDIX I

VALUATION CERTIFICATE

PROPERTY INTEREST HELD FOR INVESTMENT BY THE GROUP IN THE PRC

Property

Description and tenure

Market value in Particulars of existing state as at occupancy 31 August 2006

1. 3rd Floor to Top Floor The property comprises 158 of Block 6 units from 3rd Floor to Top No. 66 Xiaguang Lane Floor of a 22-storey Chaoyang District residential building with 3 Beijing basement levels. The property The PRC was completed in about 2005.

The property is RMB288,600,000 currently vacant.

(RENMINBI TWO HUNDRED EIGHTY EIGHT MILLION SIX HUNDRED THOUSAND ONLY)

The total gross floor area of the property is 20,326.46 square meters or thereabouts.

The land use rights of the property were granted for various terms. The land use rights for residential uses were granted for a term of approximately 70 years expiring on 23 April 2073.

Notes:–

1. Pursuant to a State-owned Land Use Right Certificate, Jing Chao Guo Yong (2003 Chu) Zi Di No. 0473 dated 20 December 2003 issued by the People’s Government of Beijing, the land use rights of a parcel of land to an apportioned site area of approximately 27,470.99 square meters were granted to (Beijing Lin Da Hua Xia Real Estate Development Company

Limited) for various terms: approximately 70 years expiring on 23 April 2073 for residential uses, approximately 40 years expiring on 23 April 2043 for ancillary facilities uses and approximately 50 years expiring on 23 April 2053 for basement car parking uses.

1. Pursuant to a Building Ownership Certificate, Jing Fang Quan Zheng Chao Gang Ao Tai 06 Zi Di No. 0096 dated 30 June 2006 issued by the Beijing Construction Committee, the building ownership rights of part of the property with a gross floor area of approximately 2,109.68 square meters were owned by Luxury Development Limited (“LDL”).

2. Pursuant to a Building Ownership Certificate, Jing Fang Quan Zheng Chao Gang Ao Tai 06 Zi Di No. 0097 dated 30 June 2006 issued by the Beijing Construction Committee, the building ownership rights of part of the property with a gross floor area of approximately 7,416.28 square meters were owned by Well Talent Limited (“WTL”).

3. Pursuant to a Building Ownership Certificate, Jing Fang Quan Zheng Chao Gang Ao Tai 06 Zi Di No. 0098 dated 30 June 2006 issued by the Beijing Construction Committee, the building ownership rights of part of the property with a gross floor area of approximately 10,800.5 square meters were owned by Overseas Billion Limited (“OBL”).

4. Pursuant to a Mortgage Agreement, Suite 1704, 1705, 1804, 2101, 2102, 2103, 2104, 2201 and 2202 of the property are together subject to a mortgage in favour of Wing Hang Bank Limited, Shenzhen Branch for a loan up to an amount of HK$13,000,000 by two batches (i.e. first batch: HK$2,000,000 or the lower of 10% of the purchase price or 10% of valuation of the property, whichever is lower and second batch: HK$11,000,000 or the lower of 51% of the purchase price or 51% of the valuation of the property, whichever is lower).

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PROPERTY VALUATION

APPENDIX I

1. Pursuant to another Mortgage Agreement, 13th Floor to Top Floor (excluding the above 9 suites) are together subject to a mortgage in favour of Wing Hang Bank Limited, Shenzhen Branch for a loan up to an amount of HK$50,000,000 by two batches (i.e. first batch: HK$8,000,000 or the lower of 10% of the purchase price or 10% of the valuation of the property, whichever is lower and second batch: HK$42,000,000 or the lower of 51% of the purchase price or 51% of the valuation of the property, whichever is lower).

2. Pursuant to another Mortgage Agreement, 3rd Floor to 12th Floor are together subject to a mortgage in favour of Wing Hang Bank Limited, Shenzhen Branch for a loan up to an amount of HK$72,000,000 by two batches (i.e. first batch: HK$12,000,000 or the lower of 10% of the purchase price or 10% of the valuation of the property, whichever is lower and second batch: HK$60,000,000 or the lower of 51% of the purchase prices or 51% of the valuation of the property, whichever is lower).

3. The abovementioned mortgages have been registered with the local government bureau vide three Building Other Rights Certificates, Jing Fang Chao Gang Ao Tai 06 Ta Zi Di Nos. 00238, 00239 and 00240.

4. LDL, WTL and OBL are indirect wholly-owned subsidiaries of the Company.

5. We have been provided with a legal opinion from the PRC legal adviser, which contains, inter alia, the following:

6. (i) LDL, WTL and OBL legally own the land use rights and the building ownership rights of their respective portions of the property and have the rights to freely lease, transfer and mortgage of the property subject to the discharge of the mortgage as mentioned in Notes 5 to 7 above;

7. (ii) LDL, WTL and OBL should apply to the relevant government authorities to change the land use rights ownership of the property from the developer to LDL, WTL and OBL for the respective portions of the property respectively, and;

8. (iii) There is no legal impediment for LDL, WTL and OBL to apply for the relevant title certificates for the land use rights held by them for the respective portions of the property.

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GENERAL INFORMATION

APPENDIX II

1. DIRECTORS’ AND CHIEF EXECUTIVES’ INTERSTS AND SHORT POSITIONS IN SHARES AND UNDERLYING SHARES

As the Latest Practicable Date, the Directors and the chief executive of the Company had the following interests and short positions in the shares, underlying shares of the Company and its associated corporations (within the meaning of Part XV of the SFO) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 & 8 of Part XV of the SFO (including interest and short positions which they were taken or deemed to have under such provisions of the SFO) or were required, pursuant to section 352 of the SFO, to be entered in the register of the Company referred to therein or were required, pursuant to Part XV of the SFO or the Model Code for Securities Transactions by Directors of Listed Issuers contained in the Listing Rules, to be notified to the Company and the Stock Exchange:

(i) Interest in long positions of ordinary shares of the Company

		Number of
		ordinary	% of total
		shares in the	issued
Name of Director	Capacity	Company*	shares*
Dr Jonathan Koon Shum Choi**	Interest of a	2,411,661,327	74.25%
	controlled
	corporation
Ms Mary Yuk Sin Lam**	Interest of a	2,411,661,327	74.25%
	controlled
	corporation
Ms Mary Yuk Sin Lam	Beneficial	7,500,000	0.23%
	owner
Ms Rebecca Yuk Fung Lau	Beneficial	4,200,000	0.13%
	owner
Mr Michael Wai Chung Wu	Beneficial	2,514,000	0.08%
	owner
Mr Stanley Kam Chuen Ko	Interest of a	1,200,000	0.04%
	controlled
	corporation

• Excludes interest in options to acquire ordinary shares of the Company which is disclosed in section (iv) below.

• ** Dr Jonathan Koon Shum Choi and Ms Mary Yuk Sin Lam are deemed to be interested in 2,411,661,327 ordinary shares by virtue of the SFO. Such interest in shares is also set out under the section “Substantial Shareholders” shown on page 23.

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GENERAL INFORMATION

APPENDIX II

• (ii) Interest in long positions of common shares of Kingsway International, the ultimate holding company of the Company

							Total
			Interest				number	%
			of				of	of total
	Beneficial	Spouse’s	controlled		Beneficiary		common	issued
Name of Director	owner	interest	corporation	Trustee	**of **	a Trust	shares*	shares*
Dr Jonathan Koon	10,101,596	−	26,828,055	–		−	36,929,651	46.1%
Shum Choi**			(Note (1))
Ms Mary Yuk Sin	9,790,507	9,726,750	–	10,515,060	2,400,000		32,432,317	40.5%
Lam**		(Note (2))		(Note (3))	(Note (4))
Mr Michael Koon	106,937	–	–	–		−	106,937	0.1%
Ming Choi
Mr Stanley Kam	20,400	–	–	–		−	20,400	<0.1%
Chuen Ko
Ms Rebecca Yuk	100	–	–	–		−	100	<0.1%
Fung Lau

• Excludes interest in options to acquire common shares of Kingsway International which is disclosed in section (v) below.

• ** By virtue of their interest in Kingsway International, Dr Jonathan Koon Shum Choi and Ms Mary Yuk Sin Lam are deemed to be interested in the shares of the subsidiaries (including the Company as disclosed in section (i) above) of Kingsway International under the SFO.

Notes:

• (1) Of these, 12,750,000 shares are held by Sun Wah Capital Limited. Dr Jonathan Koon Shum Choi is deemed to be interested in these shares as he is entitled to exercise or control the exercise of one third or more of the voting power at general meetings of Sun Wah Capital Limited.

The remaining 14,078,055 shares are held by Scarlet Red Limited. Dr Jonathan Koon Shum Choi is deemed to be interested in these shares as he is entitled to exercise or control the exercise of one third or more of the voting power at general meetings of Scarlet Red Limited.

• (2) 9,726,750 shares are held by the estate of Mr William Ka Chung Lam who was the spouse of Ms Mary Yuk Sin Lam.

• (3) 10,515,060 shares are held by Dynasty International Holdings Limited which is a wholly owned subsidiary of Global Fame Limited. Global Fame Limited is wholly owned by The WKC Lam Family Trust which is a discretionary trust with Ms Mary Yuk Sin Lam’s two children as the beneficiaries. Ms Lam is a trustee of The WKC Lam Family Trust.

• (4) 2,400,000 shares are held by Abundant World Limited. Abundant World Limited is wholly owned by The Mary Lam Family Trust which is a discretionary trust with Ms Mary Yuk Sin Lam and her two children as the beneficiaries.

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GENERAL INFORMATION

APPENDIX II

• (iii) Interest in long positions of ordinary shares of HK Weaver Group Limited, a fellow subsidiary of the Company

		Number of	% of total
		ordinary	issued
Name of Director	Capacity	shares	shares
Ms Mary Yuk Sin Lam	Beneficial owner	28,518	2.2%
Ms Mary Yuk Sin Lam	Spouse’s interest*	59,620	4.6%
Mr Michael Wai Chung Wu	Beneficial owner	39,474	3.0%
Ms Rebecca Yuk Fung Lau	Beneficial owner	5,000	0.4%

• 59,620 shares are held by the estate of Mr William Ka Chung Lam, who was the spouse of Ms Mary Yuk Sin Lam.

(iv) Interest in options to acquire ordinary shares of the Company

Details of the Directors’ interests in options under the Company’s share option scheme are as follows:

			Exercise	No. of	At Latest
	Date of share		price per	shares	Practicable
Name of Director	options granted	Exercise period	share	granted	Date
			HK$
Mr William Wai	20 December 2002	2 October 2003 to	0.3833	3,000,000	3,000,000
Leung Wu		1 April 2007
	11 March 2004	24 September 2004	0.43	7,000,000	7,000,000
		to 23 March
		2008
Ms Rebecca Yuk	4 April 2003	5 October 2003 to	0.363	24,000,000	24,000,000
Fung Lau		4 April 2007

(v) Interest in options to acquire common shares of Kingsway International

Pursuant to a share option plan operated by Kingsway International, certain Directors had been granted options to subscribe for the shares of Kingsway International. There were no options outstanding as at the Latest Practicable Date and no options were granted to the Directors during the period from 1 July 2006 to the Latest Practicable Date.

Save as disclosed above, as the Latest Practicable Date, none of the Directors and the chief executive of the Company held any interests and short positions in the shares, underlying shares of the Company and its associated corporations (within the meaning of Part XV of the SFO) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 & 8 of Part XV of the SFO (including interest and short positions which they were taken or deemed to have under such provisions of the SFO) or were required, pursuant to section 352 of the SFO, to be entered in the register of the Company referred to therein or were required, pursuant to Part XV of the SFO or the Model Code for Securities Transactions by Directors of Listed Issuers contained in the Listing Rules, to be notified to the Company and the Stock Exchange.

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GENERAL INFORMATION

APPENDIX II

2. 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 the chief executive of the Company) had an interest or short position in the shares and underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or, who were, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group:

(a) The Company

		Number of			% of
		ordinary			total
	Country of	shares in the			issued
Name of shareholders	incorporation	Company	Capacity	Note	shares
World Developments Limited	British Virgin	2,411,661,327	Beneficial	(a)	74.25%
	Islands		owner
Innovation Assets Limited	British Virgin	2,411,661,327	Interest of	(a)	74.25%
	Islands		controlled
			corporation
Kingsway International	Bermuda	2,411,661,327	Interest of	(a)	74.25%
Holdings Limited			controlled
			corporation

Note:

• (a) These shares represent the same interest and are therefore duplicated amongst World Developments Limited, Innovation Assets Limited and Kingsway International. World Developments Limited is a wholly owned subsidiary of Innovation Assets Limited whose entire issued share capital is beneficially owned by Kingsway International. Dr Jonathan Koon Shum Choi beneficially owns or has control of approximately 46.1% of the issued share capital of Kingsway International and therefore is deemed (by virtue of the SFO) to be interested in these 2,411,661,327 shares. Ms Mary Yuk Sin Lam beneficially owns or has control of approximately 40.5% of the issued share capital of Kingsway International and therefore is deemed (by virtue of the SFO) to be interested in these 2,411,661,327 shares.

(b) Subsidiary

	Name of		Appropriate %
Name of Subsidiary of the	substantial	Number of class of	of shareholding/
Company	shareholder	shares held	interest
Kingsway SBF Investment	Softbank AM	49,000 ordinary	49%
Company Limited	Corporation	shares
Kingsway SBF Investment	SBI Holdings, Inc.	15,190 ordinary	49%
Management Company		shares
Limited

– 23 –

GENERAL INFORMATION

APPENDIX II

Save as disclosed above, as at the Latest Practicable Date, so far as is known to any Director or chief executive of the Company, no persons (other than a Director or the chief executive of the Company) had an interest or short position in the shares and underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or, who were, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group.

Dr Jonathan Koon Shum Choi, Ms Mary Yuk Sin Lam, Ms Rebecca Yuk Fung Lau and Mr Michael Koon Ming Choi are directors of World Developments Limited, and/or Innovation Assets Limited and/or Kingsway International.

3. SERVICE CONTRACTS OF DIRECTORS

As at the Latest Practicable Date, none of the Directors had a service contract with the Company or any member of the Group which is not determinable by the Company or any member of the Group within one year without payment of compensation, other than statutory compensation.

4. COMPETING INTERESTS OF DIRECTORS

As at the Latest Practicable Date, none of the Directors and his or her respective associate, had interests in a business which competes or is likely to compete, either directly or indirectly, with the business of the Group.

5. DIRECTORS’ INTEREST IN CONTRACT

There was no contract or arrangement, as at the Latest Practicable Date, subsisting in which any Director was materially interested and which was significant in relation to the business of the Group.

6. DIRECTORS’ AND EXPERTS’ INTEREST IN ASSETS OF THE GROUP

As at the Latest Practicable Date, none of the Directors or the experts (as named in this section) has any interests, direct or indirect, in any assets which have been, since 30 June 2006, being the date to which the latest published audited financial statements of the Group were made up, 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.

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GENERAL INFORMATION

APPENDIX II

7. EXPERTS’ QUALIFICATION AND CONSENT

The qualifications of the experts who have given opinions which are contained in this circular are as follows:

Names Qualifications Lei Jie Law Office PRC Lawyers RHL Appraisal Ltd. Chartered surveyor and independent valuer

As at the Latest Practicable date, Lei Jie Law Office and RHL Appraisal Ltd. had no shareholding in any member of the Group and had no right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

Lei Jie Law Office and RHL Appraisal Ltd. have given and have not withdrawn its written consent to the issue of this circular with the inclusion of their respective letter, report and/or references to their names in the form and context in which respectively appear.

8. MATERIAL CONTRACTS

The following contracts (not being contracts entered into in the ordinary course of business) had been entered into by the Company or its subsidiaries within two years immediately preceding the issue of this circular:

• (a) Two Sale and Purchase Agreements dated 14 April 2005 entered into between OBL and WTL as purchasers and Beijing Lin Da Hua Xia Real Estate Development Company Limited as vendor for the acquisition of the Property for an aggregate consideration of RMB236,182,869; and

• (b) The Agreement.

Save as disclosed above, no contracts (not being contracts entered into in the ordinary course of business) had been entered into by the Company or its subsidiaries within two years preceding the Latest Practicable Date.

9. PROCEDURE TO DEMAND A POLL

The following paragraphs set out the procedure by which the Shareholders may demand a poll at a general meeting of the Company (including the Annual General Meeting) pursuant to the Current Bye-laws.

According to clause 66 of the Current Bye-laws, at any general meeting a resolution put to the vote of the meeting 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:

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GENERAL INFORMATION

APPENDIX II

• (a) the chairman of such meeting; or

• (b) at least three 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 one-tenth of the total voting rights of all Shareholders having the right to vote at the meeting; or

• (d) 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 holding Shares in the Company conferring a right to vote at the meeting being Shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all Shares conferring that right.

10. WORKING CAPITAL

The Directors are of the opinion that, after taking into account internal resources available to the Group and in the absence of unforeseen circumstances, the Group will have sufficient working capital for its present requirements for the next twelve months from 1 September 2006.

11. INDEBTEDNESS

Borrowings

At the close of business on 31 August 2006, being the latest practicable date for the purpose of this indebtedness statement prior to the printing of this circular, the Group had total outstanding borrowings of approximately HK$149,633,968.

The borrowings comprised of a bank loan for subscription of initial public offer shares of approximately HK$30,000,000 (unsecured and guaranteed by the Company), mortgage loans on properties located in the PRC of approximately HK$116,873,657 (guaranteed by the Company) and obligations under finance leases (capital portion) of approximately HK$2,760,311 (unsecured and without guarantee).

Securities and Guarantees

As at 31 August 2006, the Group had total available banking facilities of approximately HK$207,000,000.

Commitment and contingent liabilities

Save as aforesaid and apart from intra-group liabilities, the Group did not have any outstanding mortgages, charges, debentures, loan capital, debt securities (whether issued or outstanding, authorized or otherwise created but unissued), term loans and

– 26 –

GENERAL INFORMATION

APPENDIX II

overdrafts or other similar indebtedness, finance leases or hire purchase commitment, liabilities under acceptances or acceptance credits, other borrowing or indebtedness in the nature of borrowings or any guarantees or other material contingent liabilities as at close of business on 31 August 2006.

There has been no adverse change in the indebtedness or contingent liabilities of the Group since 30 June 2006, the date to which the latest audited consolidated financial statement of the Group were made up.

12. FINANCIAL AND TRADING PROSPECTS

The Group is principally engaged in proprietary investments, including merchant banking and investments in securities and property and the provision of financial services, including investment banking, brokerage, private equity and wealth management. The Group will continue its principal business activities and will further develop its business when the opportunities arise.

There are a number of uncertainties in the market today. The trend in interest rate is at a crossroad with the US Federal Reserve Board deciding to keep the discount rate unchanged for the first time in August since rate hikes began two years ago. Geo-political tensions are affecting market sentiments and so is the threat from terrorist attacks. There are signs that the PRC government is going to step up pressure on the economy as it is still growing too fast despite the various macro-economic austerity measures taken by the government so far. On the positive side, liquidity in the market remains strong. The IPO of China Merchants Bank and the planned IPO of the Industrial and Commercial Bank of China also add to the positive sentiments. With the vast experience gained during the past peaks and lows, the Directors believe the Group is well equipped to handle the current market situation.

The Group is determined to provide a full range of financial services to mid cap players. The Group will continue to advise our clients on private equity arrangements, IPO services and secondary placements, following the stage of development of our clients. The Proprietary Investment division also compliments these services and provides support in capital. The PRC is undergoing rapid development and the Directors are confident that demand for financial advices and services from mid cap companies will grow at a fast pace. The capital formation process in the PRC presents the Group with great opportunities.

To the best of the Directors’ knowledge, information and belief, there are no special trade factors or risks which are not mentioned elsewhere in this circular and which are unlikely to be known or anticipated by the general public, and which could materially affect the profits of the Group.

13. MATERIAL ADVERSE CHANGE

So far as the Directors are aware, there is no material adverse change in the financial or trading position of the Group since 30 June 2006, being the date up to which the latest published audited financial statements of the Group were made.

– 27 –

GENERAL INFORMATION

APPENDIX II

14. DOCUMENTS FOR INSPECTION

Copies of the following documents will be available for inspection at 5th Floor, Hutchison House, 10 Harcourt Road, Central, Hong Kong during the normal business hours on any weekday (Monday to Friday), except public holidays, for a period of 14 days commencing from the date of this circular:

• (a) the memorandum of association and bye-laws of the Company;

• (b) the material contracts disclosed in the paragraph under the heading “Material Contracts” in this Appendix;

• (c) the valuation report set out in Appendix I to this circular;

• (d) the written consent referred to in the paragraph under the heading “Experts’ Qualification and Consent” in this Appendix; and

• (e) the annual reports of the Company for the two years ended 30 June 2005 and 2006.

15. LITIGATION

As at the Latest Practicable Date, none of the members of the Group is engaged in any litigation or claims of material importance and no litigation or claims of material importance is known to the Directors or the Company to be pending or threatened by or against any member of the Group.

16. COMPANY SECRETARY AND QUALIFIED ACCOUNTANT

Mr Vincent Wai Shun Lai is the company secretary and the Director of Legal and Compliance of the Company. Mr Lai is a qualified solicitor in Hong Kong and is admitted to practice law in the United States of America. Mr Lai holds a Bachelors of Science degree in economics from the State University of New York at Albany and a Juris Doctor degree from Albany Law School.

Mr Eric Kwok Keung Chan, is the Chief Financial Officer of the Company and a qualified accountant appointed by the Company for the purpose of Listing Rule 3.24. Mr Chan is a fellow of the Association of Chartered Certified Accountants (U.K.). Mr Chan is also a member of the Hong Kong Institute of Certified Public Accountants, the Hong Kong Securities Institute and a Certified International Investment Analyst.

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GENERAL INFORMATION

APPENDIX II

17. REGISTERED OFFICE, HEAD OFFICE AND TRANSFER OFFICES

• (a) The registered office of the Company is situated at Clarendon House, 2 Church Street, Hamilton HM11, Bermuda.

• (b) The head office and principal place of business of the Company is situated at 5th Floor, Hutchison House, 10 Harcourt Road, Central, Hong Kong.

• (c) The Company’s principal share registrar is Butterfield Fund Services (Bermuda) Limited, Rosebank Centre, 11 Bermudiana Road, Pembroke, Bermuda.

• (d) The Company’s branch share registrar is Computershare Hong Kong Investor Services Limited, Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong.

– 29 –