CHINA STATE CONSTRUCTION DEVELOPMENT HOLDINGS LIMITED — Proxy Solicitation & Information Statement 2006

Jun 23, 2006

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult your licensed securities dealer, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your securities in Universal Holdings Limited, you should at once hand this circular and the accompanying form of proxy to the purchaser or the transferee or to the bank, licensed securities dealer or other agent through whom the sale or the transfer was effected for onward transmission to the purchaser or the 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.

UNIVERSAL HOLDINGS LIMITED 友利控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 419)

VERY SUBSTANTIAL DISPOSAL —

POSSIBLE DISPOSAL OF ALL DVN PREFERENCE SHARES HELD

AND

MAJOR TRANSACTION —

ENTERING INTO THE EXCLUSIVE ADVERTISING AGENCY AGREEMENT

A letter from the Board is set out on pages 4 to 12 of this circular.

A notice of the EGM to be held at Room 3203, 32nd Floor, Admiralty Centre I, 18 Harcourt Road, Hong Kong on 11 July 2006 at 10:00 a.m. is set out on pages 33 to 34 of this circular. A form of proxy for use by the Shareholders at the EGM is enclosed. If you do not intend to attend the EGM in person, please complete the form of proxy enclosed in accordance with the instructions printed thereon and return it to the share registrar of the Company, Tengis Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Hong Kong as soon as practicable but in any event not less than 48 hours before the time appointed for holding the EGM. Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM should you so wish.

23 June 2006

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Appendix I — Financial information of the DVN Preference Shares. . . . . . . . . .	13
Appendix II — Unaudited pro forma financial information
of the Remaining Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
Appendix III — Additional information on the Remaining Group . . . . . . . . . . . . .	22
Appendix IV — General information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	26
Notice of EGM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	33

— i —

DEFINITIONS

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

“Anglo Alliance”	Anglo Alliance Co., Ltd., a company incorporated in the British
	Virgin Islands with limited liability
“Articles”	the articles of association of the Company
“associates”	has the meaning ascribed thereto under the Listing Rules
“AUFM”	北京保利華億傳媒文化有限公司(Asian Union Film and
	Media*), a company incorporated in the PRC
“Board”	the board of Directors
“Company”	Universal Holdings Limited, a company incorporated in the
	Cayman Islands with limited liability, and the shares of which
	are listed on the main board of the Stock Exchange
“Convertible Note”	convertible note of approximately HK$104 million issued by
	the Company and held by Mr. Ko before its conversion on 18
	May 2006
“Director(s)”	the director(s) of the Company
“Distribution”	the distribution of all DVN Ordinary Shares held by the Group
	to the Shareholders which was approved by the Shareholders
	on 6 June 2006
“DVN”	DVN (Holdings) Limited, a company incorporated in Bermuda
	with limited liability, the ordinary shares of which are listed
	on the main board of the Stock Exchange
“DVN Ordinary Share(s)”	share(s) of HK$0.1 each in the ordinary share capital of DVN
“DVN Preference Shares”	exchangeable preference shares issued by DVN (Group)
	Limited, a wholly-owned subsidiary of DVN, of US$1 each,
	which carry rights to exchange into DVN Ordinary Shares
“EGM”	the extraordinary general meeting to be held by the Company
	for seeking Shareholders’ approval for the Mandate
“Exclusive Advertising	the exclusive advertising agency agreement entered into
Agency Agreement”	between Qiansi and Hainan TV on 12 May 2006

— 1 —

DEFINITIONS

“Exclusive Advertising	the transaction contemplated under the Exclusive Advertising
Agency Transaction”	Agency Agreement
“Group”	the Company and its subsidiaries
“Hainan TV”	海南海視旅遊衛視傳媒有限責任公司(Hai Nan Haishi
	Tourist Satellite TV Media Co., Ltd*)
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong
“Hong Kong”	the Hong Kong Special Administrative Region of the PRC
“Latest Practicable Date”	21 June 2006, being the latest practicable date prior to the
	printing of this circular for ascertaining certain information
	contained herein
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange
“Mandate”	the mandate proposed to be granted to the Directors in relation
	to the Possible Disposals and to be approved by the
	Shareholders
“Mr. Ko”	Mr. Ko Chun Shun, Johnson, being a Director and a substantial
	Shareholder, who together with his associates, held a total of
	approximately 51.4% direct and indirect interests in the
	Company as at the Latest Practicable Date
“Possible Disposal(s)”	possible disposal(s) of the DVN Preference Shares (including
	the rights to receive dividends attached to the DVN Preference
	Shares) held by the Group as at the Latest Practicable Date (or
	the DVN Ordinary Shares which may be exchanged into) to
	independent third parties who are not connected with the
	Company or the directors, chief executive or any of their
	respective associate at normal commercial terms during the
	twelve-month period after the Shareholders have approved the
	Mandate
“PRC”	the People’s Republic of China, excluding Hong Kong, Macau
	and Taiwan for the purposes of this circular
“Qiansi”	Beijing Hua Yi Qian Si Advertising Company Limited（北京
	華億千思廣告有限公司）

— 2 —

	DEFINITIONS
“Remaining Group”	the Group excluding its investment in the DVN Preference
	Shares
“RMB”	Renminbi, the lawful currency of the PRC
“SFO”	the Securities and Futures Ordinance (Chapter 571 of the Laws
	of Hong Kong)
“Share(s)”	the ordinary share(s) of HK$0.01 each in the share capital of
	the Company
“Shareholder(s)”	shareholder(s) of the Company
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Travel Channel”	Hainan Satellite Television Travel Channel
“US$”	United States dollars, the lawful currency of the United States
	of America
“%”	per cent.

For illustrative purposes only, RMB is converted into HK$ at an exchange rate of HK$1.00 = RMB1.039 and US$ is converted into HK$ at an exchange rate of US$1 = HK$7.75 in this circular.

• For identification purposes only

— 3 —

LETTER FROM THE BOARD

UNIVERSAL HOLDINGS LIMITED 友利控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 419)

Executive Directors: Registered office: Mr. Dong Ping (Chairman) Century Yard Mr. Ko Chun Shun, Johnson Cricket Square Mr. Shen Ka Yip, Timothy Hutchins Drive P.O. Box 2681 GT Non-Executive Directors: George Town Mr. Tsoi Tong Hoo, Tony Grand Cayman Mr. Cheong Chow Yin British West Indies Cayman Islands Independent Non-Executive Directors: Mr. Yuen Kin Principal office in Hong Kong: Mr. Wilton Timothy Carr Ingram Unit 4306-07 Dr. Wong Yau Kar, David Far East Finance Centre 16 Harcourt Road Admiralty Hong Kong 23 June 2006

To the Shareholders

Dear Sirs,

VERY SUBSTANTIAL DISPOSAL —

POSSIBLE DISPOSAL OF ALL DVN PREFERENCE SHARES HELD

AND

MAJOR TRANSACTION —

ENTERING INTO THE EXCLUSIVE ADVERTISING AGENCY AGREEMENT

POSSIBLE DISPOSALS

The Board announced on 11 May 2006 that it proposed the Mandate be granted to it allowing the Company to dispose of the DVN Preference Shares including the rights to receive dividends attached to the DVN Preference Shares (or the DVN Ordinary Shares which may be exchanged into) on normal commercial terms from time to time during the twelve-month period after the Shareholders have approved the granting of the Mandate.

— 4 —

LETTER FROM THE BOARD

The Possible Disposals constitute a very substantial disposal for the Company under Chapter 14 of the Listing Rules. The approval from the Shareholders for the granting of the Mandate will be sought at the EGM. No Shareholders are required to abstain from voting in respect of the passing of the resolution for approving the proposed granting of the Mandate.

The DVN Preference Shares to be Disposed of

As at the Latest Practicable Date, the Company holds 15,000,000 DVN Preference Shares with an aggregate nominal value of US$15,000,000. The Company acquired such DVN Preference Shares pursuant to an agreement entered into in January 2000 at a total consideration of approximately US$19.5 million (equivalent to approximately HK$151.1 million). After the acquisition, the Group wrote down its investment in the DVN Preference Shares in the past few years due to impairment in the value of the DVN Preference Shares. The amount of investment in the DVN Preference Shares as stated in the consolidated balance sheet of the Company as at 31 December 2005 was approximately HK$63.6 million.

Terms of the DVN Preference Shares

The DVN Preference Shares are entitled to a fixed cumulative dividend of 5% per annum on the nominal value of the shares. The rights to receive any accrued dividends are attached to the DVN Preference Shares. If the DVN Preference Shares are sold before the relevant accrued dividends are paid, the rights to receive such dividends will be transferred to the buyers of the shares under the Possible Disposals based on the expected present value of the accrued dividends. As at 31 December 2005, the total accrued dividends receivable from the holding of the DVN Preference Shares amounted to HK$22,576,000. Such DVN Preference Shares are non-voting, not redeemable at the option of the holders but are exchangeable at the option of the holders into approximately 28.1 million DVN Ordinary Shares based at the exchange price of HK$4.13 per share as at the Latest Practicable Date. The DVN Ordinary Shares which may be exchanged into represent approximately 4.8% of the existing DVN Ordinary Shares in issue and approximately 4.5% of the DVN Ordinary Shares in issue as enlarged by the exchange of the DVN Preference Shares in full.

Based on the closing price of DVN Ordinary Shares as at 13 June 2006, being the last trading day immediately preceding the Latest Practicable Date, the market value of the DVN Ordinary Shares which the DVN Preference Shares may be exchanged into amounts to approximately HK$52.1 million.

Reasons for the Possible Disposals

The Company presently does not have any discussion with any party to dispose of the DVN Preference Shares. Nevertheless, the Company believes that it would be in its best interests to have the flexibility of disposing of the DVN Preference Shares (and the DVN Ordinary Shares which may be exchanged into) to independent third parties (who and (where applicable) their ultimate beneficial owners are not connected with the Company or the directors, chief executive

— 5 —

LETTER FROM THE BOARD

or substantial shareholders of the Company or any of its subsidiaries or any of their respective associates) should appropriate opportunities arise and should the Possible Disposals be in the best interests of the Company. It is particularly the case after DVN ceased to be an associated company of the Group upon the Distribution of all the DVN Ordinary Shares held by the Group to the Shareholders on 8 June 2006. The Possible Disposals under favorable terms will allow the Group to realize its investment with a reasonable return and enhance its working capital position.

As a derivative instrument, the value of the DVN Preference Shares is greatly attached to the market price and volatility of the DVN Ordinary Shares. During the six-month period prior to the date of the relevant announcement on 11 May 2006, the highest and the lowest trading prices of the DVN Ordinary Shares were HK$2.2 and HK$1.26 per share respectively. Given the relatively high volatility of the share price in the past few months, the Company believes that it would be practically difficult to have the investor of every Possible Disposal be willing to accept the extra market risk and be committed to acquire a certain amount of the DVN Preference Shares (or the DVN Ordinary Shares which may be exchanged into) at a particular price if the transaction is, together with any other Possible Disposals in aggregate, subject to shareholders’ approval, which usually may take the Company one to two months to obtain.

The Mandate

For the reasons set out above, the Board proposes to obtain the Mandate from the Shareholders to exercise all the power of the Company to dispose of all the 15,000,000 DVN Preference Shares (including the rights to receive accrued and future dividends attached to the DVN Preference Shares) held by the Company (or the DVN Ordinary Shares which may be exchanged into) to independent third parties who are not connected with the Company or the directors, chief executive or substantial shareholders of the Company or any of its subsidiaries or any of their respective associates in the twelve-month period after the Shareholders have approved the granting of the Mandate.

Terms of the Possible Disposals

Under the Possible Disposals, prices are to be determined based on the market prices of the DVN Ordinary Shares from time to time (which shall not be lower than 80% of the average closing price of the DVN Ordinary Shares for the 5 trading days immediately preceding the date on which an agreement of the relevant Possible Disposal is reached).

If the DVN Preference Shares are sold before the relevant accrued dividends are paid, the rights to receive such dividends will be transferred to the buyers of the shares under the Possible Disposals at a price based on the expected present value of the accrued dividends.

Under the Mandate, the Possible Disposals have to be carried out on a cash basis and all the terms have to be on normal commercial terms.

The Directors consider that the above bases are fair and reasonable and are in the interests of the Company and its Shareholders as a whole.

— 6 —

LETTER FROM THE BOARD

Financial impacts of the Possible Disposals and use of proceeds

If the Possible Disposals are carried out, the Company will apply the relevant proceeds as general working capital of the Group.

For illustrative purposes only, if all the DVN Preference Shares are disposed of at the closing price of the DVN Ordinary Shares on 11 May 2006 (being the date of the Company’s announcement in respect of the Possible Disposals), based on the financial statements of the Group as at 31 December 2005, there may be a gross proceeds (excluding the accrued dividends) of approximately HK$49.8 million and an accounting loss of approximately HK$1.0 million after taken into account the write back of approximately HK$12.75 million of certain provision of DVN Preference Shares previously made, as a result of the Possible Disposals. If all the DVN Preference Shares are disposed of at 80% of the average closing price of the DVN Ordinary Shares for the 5 trading days up to 11 May 2006, i.e. HK$2.7502 per DVN Preference Share (or HK$1.4656 per DVN Ordinary Share), the corresponding gross proceeds (excluding the accrued dividends) and accounting loss would be approximately HK$41.3 million and approximately HK$9.6 million respectively.

Based on the unaudited pro forma financial information on the Remaining Group set out in Appendix II to this circular, assuming all the DVN Preference Shares (including the relevant accrued dividends) were disposed of on 31 December 2005, it would result in a decrease in the total assets of the Group as at 31 December 2005 of approximately HK$20.5 million. The Possible Disposals had no effect on the total liabilities of the Group. If the DVN Preference Share were all disposed of at 1 January 2005, it would result in an increase in the net loss of the Group for the year ended 31 December 2005 of approximately HK$16.9 million. Please refer to the unaudited pro forma financial information on the Remaining Group set out in Appendix II to this circular for details of the bases and assumptions for the preparation of the pro forma financial information.

Shareholders should note that the above financial information is for illustrative purposes only and the actual amounts of gross proceeds, accounting gain or loss and the effects on the net assets and earnings of the Group depend on the actual selling price of each Possible Disposal.

The amount of the DVN Preference Shares (or the DVN Ordinary Shares which may be exchanged into) actually disposed of by the Company and the relevant proceeds will be set out in the relevant interim report and the annual report of the Company.

Information on DVN

DVN is an investment holding company and, through its subsidiaries, is principally engaged in the services and design, integration and installation of digital broadcasting systems and development of related software and products, and provision of international financial market information and selective consumer data.

— 7 —

LETTER FROM THE BOARD

The following table sets out the audited consolidated losses of DVN for the two years ended 31 December 2005.

	For the year ended	For the year ended
	31 December
	2005	2004
	HK$’000	HK$’000
Loss before taxation	33,922	55,757
Loss for the year	39,734	61,569

As at 31 December 2005, the audited consolidated net assets of DVN attributable to the shareholders of DVN were approximately HK$55.8 million.

DVN was an associated company of the Company as at 31 December 2005. The amount of interests of the Company in DVN as shown in the audited consolidated balance sheet as at 31 December 2005 was approximately HK$19.5 million.

EGM

A notice of the EGM to be held at Room 3203, 32nd Floor, Admiralty Centre I, 18 Harcourt Road, Hong Kong on 11 July 2006 at 10:00 a.m. for seeking the Shareholders’ approval for the granting of the Mandate is set out on pages 33 to 34 of this circular. A form of proxy for use by the Shareholders at the EGM is enclosed. If you do not intend to attend the EGM in person, please complete the form of proxy enclosed in accordance with the instructions printed thereon and return it to the share registrar of the Company, Tengis Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Hong Kong as soon as practicable but in any event not less than 48 hours before the time appointed for holding the EGM. Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM should you so wish.

Recommendation

Having considered the factors mentioned above, the Board considers that it would be in the interests of the Shareholders and the Company as a whole to have the Mandate be granted to it. Accordingly, the Board recommends the Shareholders to vote in favour of the resolution to be proposed at the EGM.

THE EXCLUSIVE ADVERTISING AGENCY AGREEMENT

The Board announced on 18 May 2006 that on 12 May 2006, Qiansi entered into the Exclusive Advertising Agency Agreement with Hainan TV pursuant to which Qiansi acts as the exclusive advertising agent of Hainan TV up to 31 December 2011 and the advertising resources including

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LETTER FROM THE BOARD

all the commercial advertising air-time of the Travel Channel and available specific programme sponsorships will be distributed by Qiansi.

The Exclusive Advertising Agency Transaction constitutes a major transaction for the Company under Chapter 14 of the Listing Rules, which is subject to the reporting, announcement and shareholders’ approval requirements of the Listing Rules. Pursuant to Rule 14.44 of the Listing Rules, in lieu of holding a general meeting, the Company has obtained written approval from Mr. Ko and his associates, who own an aggregate of approximately 51.4% of the issued Shares, to approve the Exclusive Advertising Agency Transaction.

The Agreement

On 12 May 2006, Qiansi and Hainan TV entered into the Exclusive Advertising Agency Agreement pursuant to which Qiansi is officially engaged as the exclusive advertising agent of Hainan TV and the advertising resources including all the air-time for commercial advertising in the Travel Channel and available specific programme sponsorships will be distributed by Qiansi for a period of 6 years up to 31 December 2011. Qiansi is a wholly owned subsidiary of the Company. Hainan TV is 49% owned by AUFM, in which the Company has an effective interest of 50%. Hainan TV is 50% held by Hainan Broadcast Television Station （海南廣播電視臺）, 49% held by AUFM and 1% held by Hainan Broadcast Television Advertising Company Limited （海南廣播電視廣告有限公司）. AUFM is owned as to 50% by the Group and 50% by Poly Culture & Arts Co., Ltd. （保利文化藝術 有限公司）. Hainan Broadcast Television Station, Hainan Broadcast Television Advertising Company Limited and Poly Culture & Arts Co., Ltd. and their respective ultimate beneficial owners are independent of the directors, chief executive and substantial shareholders of the Company, its subsidiaries or any of their respective associates. Accordingly, Hainan TV is not a connected person of the Company for the purposes of the Listing Rules.

Under the Exclusive Advertising Agency Agreement, all the revenue derived from the sales and distribution of the advertising resources including commercial advertising air-time of the Travel Channel and available specific programme sponsorships shall belong to Qiansi, which in return will pay pre-agreed fixed fees to Hainan TV. The annual fixed consideration payable during each of the 6-year term of the Exclusive Advertising Agency Agreement ranges from RMB180 million (equivalent to approximately HK$173.2 million) to RMB207 million (equivalent to approximately HK$199.2 million). The consideration was agreed after arm’s length negotiations between the parties to the Exclusive Advertising Agency Agreement. In agreeing with the consideration, the Group has taken into account a number of factors including, among other things, the market position and audience rating of the Travel Channel, the management and development strategy of Hainan TV and the Travel Channel and the television advertising market trend in the PRC. The Directors consider that the terms of the Exclusive Advertising Agency Agreement are fair and reasonable and in the interests of the Shareholders as a whole.

— 9 —

LETTER FROM THE BOARD

Undertaking by Hainan TV

Hainan TV has undertaken to Qiansi that it will maintain the stability of its key management and spend annual minimum amounts ranging from RMB120 million (equivalent to approximately HK$115.5 million) to RMB138 million (equivalent to approximately HK$132.8 million) from 2006 to 2011 for the productions and purchases of programs and the expansion of the Travel Channel’s coverage in different areas in the PRC. The Company understands from Hainan TV that it intends to utilize the funds payable to it under the Exclusive Advertising Agency Agreement to finance the above proposed investments.

Information of Hainan TV and Travel Channel

Hainan TV is a jointly controlled entity of the Company. No investors in Hainan TV are connected persons of the Company for the purposes the Listing Rules. Hainan TV has obtained from the Travel Channel the sole rights to manage and run its programming and advertising of the Travel Channel for 30 years from August 2003. After Hainan TV has obtained the sole operation right, the Travel Channel was relaunched in July 2004. In January 2006, the Travel Channel underwent another major revamp with a view to further enhancing its attractiveness to the audience.

Information of Qiansi and reasons for the entering of the Exclusive Advertising Agency Agreement

The advertising market in the PRC grew from approximately RMB118 million (equivalent to approximately HK$113.6 million) in 1981 to approximately RMB90 billion (equivalent to approximately HK$86.6 billion) in 2002, representing a growth of over 760 times. It is projected that the market will further grow to about RMB289 billion (equivalent to approximately HK$278 billion) by 2010. According to the statistics issued by the State Administration of Radio, Film and Television of the PRC, the total television advertising income in the PRC increased to approximately RMB39.4 billion (equivalent to approximately HK$37.9 billion) in 2004 from approximately RMB32.6 billion (equivalent to approximately HK$31.4 billion) in 2003, representing an increase of approximately 21%. The Company considers that the advertising expenditure in the PRC as a percentage to the overall gross domestic products of the PRC is still relatively low as compared to other developed countries. The Olympic Games to be held in Beijing in 2008 will constitute a positive impact to the overall advertising industry, especially the television advertising expenditure in the PRC. The Travel Channel is a young and innovative channel offering a variety of television programs, including popular dramas, news, and other informational and documentary programs with themes of leisure and travel. The target group of audience of the Travel Channel is the relatively high income group in the PRC with ages ranging from 25 to 50 and is expected to have a higher spending power on leisure goods and services. With the target audience of the Travel Channel, it focuses to attract advertising clients with relatively high advertising spending each year, such as airlines, hotels, luxury cars and other branded products.

— 10 —

LETTER FROM THE BOARD

Qiansi is a wholly owned subsidiary of the Company. The Directors believe that the establishment of the strategic co-operation between Qiansi and Hainan TV by the entering into of the Exclusive Advertising Agency Agreement will further strengthen Qiansi’s competitive position as a television commercial production company in the PRC as it has the niche ability to arrange advertising air-time for its clients at a young and growing television channel, the Travel Channel. This will in turn enhance the ability of Qiansi to capitalize on the growing television advertising market. It is the business plan of Qiansi to sell the advertising resources including the commercial advertising air-time of the Travel Channel and available specific programme sponsorships to its customers and help its customers produce the television commercials to be broadcast. We understand from the Company that Qiansi intends to use such operating cash inflow to finance the payment of the consideration under the Exclusive Advertising Agency Agreement.

Financial impacts of the Exclusive Advertising Agency Transaction

The annual fixed consideration payable during each of the 6-year term of the Exclusive Advertising Agency Agreement ranges from RMB180 million (equivalent to approximately HK$173.2 million) to RMB207 million (equivalent to approximately HK$199.2 million), which will be recognized as cost of sales by the Group during the relevant financial years of the Company.

The Group intends to sell the advertising resources including the commercial advertising airtime of the Travel Channel and available specific programme sponsorships to its customers and help its customers produce the television and such sales will be recognized by the Group as revenue in the relevant financial years of the Company.

The impacts of the Exclusive Advertising Agency Transaction on the assets and liabilities of the Group depend on the income which may be generated by the Group for the distribution of the advertising resources and the payment of the consideration ranging from RMB180 million to RMB207 million during each of the 6-year term under the Exclusive Advertising Agency Agreement.

Listing Rules requirements

The Stock Exchange has indicated that the Exclusive Advertising Agency Transaction is regarded as an operating lease under Rule 14.04(1)(d) of the Listing Rules and thus a transaction under Chapter 14 of the Listing Rules.

The Exclusive Advertising Agency Transaction constitutes a major transaction for the Company under Chapter 14 of the Listing Rules, which is subject to the reporting, announcement and shareholders’ approval requirements of the Listing Rules. No Shareholders are required to abstain from voting in this regard. Pursuant to Rule 14.44 of the Listing Rules, in lieu of holding a general meeting, the Company has obtained written approval from Mr. Ko who owned approximately 5,187.3 million Shares as at the Latest Practicable Date, representing

— 11 —

LETTER FROM THE BOARD

approximately 43.1% of the issued Shares, from Kwan Wing Holdings Limited which owned approximately 360.4 million Shares as at the Latest Practicable Date, representing approximately 3.0% of the issued Shares as at the Latest Practicable Date, and from Techral Holdings Limited which owned approximately 640 million Shares, representing approximately 5.3% of the issued Shares to approve the Exclusive Advertising Agency Agreement. Mr. Ko has the 100% direct interest in Kwan Wing Holdings Limited and a 96% beneficial interest in Techral Holdings Limited. Mr. Ko and his associates hold an aggregate interest of 51.4% in the Company as at the Latest Practicable Date. No resolution will be proposed at the EGM for the purposes of approving the Exclusive Advertising Agency Transaction.

GENERAL

The Group is principally engaged in (i) media related business which includes the production of television dramas, investment in movie production, advertising agency and advertisement production; (ii) home audio which includes the trading of home audio and video equipment and components; (iii) telecommunications which includes the provision of computer telephony integration engineering and IP related services; and (iv) securities trading.

ADDITIONAL INFORMATION

Your attention is drawn to the additional information contained in the appendices, which form part of this circular.

Yours faithfully, For and on behalf of the Board Universal Holdings limited Dong Ping Chairman

— 12 —

FINANCIAL INFORMATION OF THE DVN PREFERENCE SHARES

APPENDIX I

UNAUDITED FINANCIAL INFORMATION OF THE DVN PREFERENCE SHARES

The following unaudited financial information of the DVN Preference Shares has been prepared by the Company based on information shown in the underlying books and records of the Group for the three years ended 31 December 2003, 2004 and 2005.

	Year	ended 31 December	ended 31 December
	2003	2004	2005
	HK$	HK$	HK$
Gains/(loss) recognised in the income statements
in relation to the DVN Preference Shares:
Preference dividend income	5,813,000	5,813,000	5,036,000
Gains arising from changes in the
fair value of the DVN Preference Shares	—	—	2,439,000
Fair value loss on the
dividends receivable in relation to the
DVN Preference Shares	—	—	(176,000)
Provision for impairment loss on the
DVN Preference Shares	(44,508,000)	—	—

Please refer to the accounting policies set out in Note 2 of “Notes to the Accounts” in the annual reports of the Company for the financial years 2003, 2004 and 2005.

In accordance with paragraph 14.68(2)(b)(i) of the Listing Rules, the Directors engaged PricewaterhouseCoopers, the auditors of the Company, to perform certain factual finding procedures on the compilation of the unaudited profit and loss statement of the DVN Preference Shares in accordance with Hong Kong Standard on Related Services 4400 “Engagements to Perform Agreed Upon Procedures Regarding Financial Information” issued by the Hong Kong Institute of Certified Public Accountants. The auditors have agreed the unaudited financial information of the DVN Preference Shares to the underlying books and records of the Group and reported their factual findings to the Directors. Since the said agreed-upon procedures were agreed between the Directors and the auditors, they should not be used or relied upon by any other parties for any purposes. In the opinion of the Directors, such information has been properly compiled.

— 13 —

APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

1. UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

A. Unaudited pro forma financial information

The unaudited pro forma financial information of the Remaining Group comprises an unaudited pro forma consolidated net assets statement as at 31 December 2005 and an unaudited pro forma consolidated income statement for the year ended 31 December 2005 and the accompanying notes (collectively referred to as the “Pro Forma Financial Information”).

For illustrative purposes only, the Pro Forma Financial Information prepared in accordance with paragraph 29 of Chapter 4 of the Listing Rules is set out below to illustrate the effect of the Possible Disposals on (i) the consolidated net assets of the Group as at 31 December 2005 as if the Possible Disposals had taken place on 31 December 2005; and (ii) the consolidated income statement of the Group for the year ended 31 December 2005 as if the Possible Disposals had taken place on 1 January 2005.

The Pro Forma Financial Information has been prepared based on the audited consolidated financial statements of the Group for the year ended 31 December 2005 after giving effect to the pro forma adjustments described in the accompanying notes.

The Pro Forma Financial Information has been prepared for illustrative purposes only and, because of its hypothetical nature, does not give a true picture of the actual financial position or results of operations of the Group that would have been attained had the Possible Disposals actually occurred on 31 December 2005 and 1 January 2005 respectively. In addition, the Pro Forma Financial Information does not purport to predict the Group’s future financial position or results of operations.

— 14 —

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX II

• (A) Unaudited Pro Forma Consolidated Net Assets Statement of the Remaining Group

	Unadjusted
	consolidated
	net assets		Unaudited
	statement		Pro forma
	of the Group		consolidated
	as at		net assets of
	31 December	Pro forma	the Remaining
	2005	adjustments	Group
	Note (i)	Note (ii)
	HK$’000	HK$’000	HK$’000
NON-CURRENT ASSETS
Property, plant and equipment	622		622
Intangible assets	247,957		247,957
Interests in associated companies	19,663		19,663
Interests in a jointly controlled entity	56,130		56,130
Available for sale financial asset	360		360
Preference dividends receivable
— non-current portion	14,896	(14,896)	—
Investment in preference shares	63,578	(63,578)	—
	403,206		324,732
CURRENT ASSETS
Inventories	10		10
Trade receivables	1,177		1,177
Due from a jointly controlled entity	67,691		67,691
Preference dividends receivable
— current portion	7,680	(7,680)	—
Financial asset at fair value
through profit or loss	12,000		12,000
Prepayments, deposits and
other receivables	25,706		25,706
Cash and cash equivalents	15,548	65,642	81,190
	129,812		187,774

— 15 —

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX II

	Unadjusted
	consolidated
	net assets		Unaudited
	statement		Pro forma
	of the Group		consolidated
	as at		net assets of
	31 December	Pro forma	the Remaining
	2005	adjustments	Group
	Note (i)	Note (ii)
	HK$’000	HK$’000	HK$’000
CURRENT LIABILITIES
Trade payables	34		34
Current income tax liabilities	1,968		1,968
Other payables and accrued liabilities	12,340		12,340
Loans	14,758		14,758
	29,100		29,100
NET CURRENT ASSETS	100,712		158,674
TOTAL ASSETS LESS
CURRENT LIABILITIES	503,918		483,406
NON-CURRENT LIABILITIES
Convertible note	77,070		77,070
NET ASSETS	426,848		406,336

— 16 —

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX II

(B) Unaudited Pro Forma Consolidated Income Statement of the Remaining Group

	Unadjusted
	consolidated		Unaudited
	income		pro forma
	statement		consolidated
	of the Group		income
	for the		statement
	year ended		of the
	31 December	Pro forma	Remaining
	2005	adjustments	Group
	Note (iii)	Note (iv)
	HK$’000	HK$’000	HK$’000
Turnover	33,691		33,691
Cost of sales	(29,531)		(29,531)
Gross profit	4,160		4,160
Other revenues	10,531	(5,036)	5,495
Marketing, selling and
distribution costs	(1,570)		(1,570)
Administration expenses	(23,963)		(23,963)
Net gain on dilution of interests
in an associated company	10,637		10,637
Loss on disposal of investment
in the DVN Preference Shares	—	(9,551)	(9,551)
Net other operating income	3,905	(2,263)	1,642
	3,700		(13,150)
Finance costs	(3,634)		(3,634)
Share of loss of a jointly
controlled entity	(13,700)		(13,700)
Share of losses of associated
companies	(8,223)		(8,223)
Loss before taxation	(21,857)		(38,707)
Taxation	(330)		(330)
Loss for the year and attributable to
equity holders of the Company	(22,187)		(39,037)

— 17 —

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX II

Notes to the Pro Forma Financial Information:

• (i) The unadjusted consolidated net assets statement of the Group as at 31 December 2005 is extracted from the audited consolidated balance sheet of the Group as at 31 December 2005.

• (ii) The adjustments represent the disposal of the DVN Preference Shares and the related dividends receivable in cash. The DVN Preference Shares were assumed to be sold at a total consideration of HK$43,066,000 (which was formulated based on HK$1.53 per DVN Ordinary Share, being the closing price of the DVN Ordinary Shares on 30 December 2005, the last trading day in 2005, and approximately 28.1 million DVN Ordinary Shares, representing the maximum number of DVN Ordinary Shares which the DVN Preference Shares can be exchanged into at the conversion price of HK$4.13 at 31 December 2005). The preference share dividends receivable was assumed to be sold at a book value of HK$22,576,000 as at 31 December 2005.

• (iii) The unadjusted consolidated income statement of the Group for the year ended 31 December 2005 is extracted from the audited consolidated income statement of the Group for the year ended 31 December 2005.

• (iv) The adjustments represent:

• (a) the loss on disposal of the DVN Preference Shares which were assumed to be sold at HK$38,838,068 (which was formulated based on HK$1.47 per DVN Ordinary Share, being the closing price of the DVN Ordinary Shares on 3 January 2005, the first trading day in 2005, and approximately 26.4 million DVN Ordinary Shares, representing the maximum number of DVN Ordinary Shares which the DVN Preference Shares can be exchanged into at the conversion price of HK$4.4 as at 1 January 2005). The related dividends receivable were assumed to be sold at book value of HK$21,797,000 as at 1 January 2005; and

• (b) the reversal of the preference dividend income, gain on valuation of DVN Preference Shares and fair value loss on the dividends receivable for 2005 in relation to the DVN Preference Shares.

• (v) No adjustment has been made to reflect any trading result or other transaction of the Group entered into subsequent to 31 December 2005.

• (vi) Since the actual amounts of consideration for the Possible Disposals may be substantially different from the amounts used in the preparation of the Pro Forma Financial Information, the actual gain/loss and cash received from the Possible Disposals may be different from those amounts shown in the Pro Forma Financial Information.

— 18 —

APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

Set out below is the letter from the auditors of the Company, PricewaterhouseCoopers, Certified Public Accountants, Hong Kong, on the unaudited pro forma financial information of the Remaining Group.

PricewaterhouseCoopers 22/F, Prince’s Building Central, Hong Kong

The Directors Universal Holdings Limited

23 June 2006

Dear Sirs,

We report on the unaudited pro forma financial information of Universal Holdings Limited (the “Company”) and its subsidiaries (hereinafter collectively referred to as the “Group”) set out on pages 14 to 18 under the heading of “Unaudited Pro Forma Financial Information of the Remaining Group” (the “Unaudited Pro Forma Financial Information”) in Appendix II of the Company’s circular dated 23 June 2006, in connection with the possible disposal of all DVN preference shares held by the Company (the “Circular”). The Unaudited Pro Forma Financial Information has been prepared by the Directors of the Company, for illustrative purposes only, to provide information about how the proposed disposal might have affected the relevant financial information of the Group. The basis of preparation of the Unaudited Pro Forma Financial Information is set out on pages 14 to 18 of the Circular.

Respective Responsibilities of Directors of the Company and Auditors

It is the responsibility solely of the Directors of the Company to prepare the Unaudited Pro Forma Financial Information in accordance with paragraph 4.29 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”) and Accounting Guideline 7 “Preparation of Pro Forma Financial Information for Inclusion in Investment Circulars” issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”).

— 19 —

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX II

It is our responsibility to form an opinion, as required by paragraph 4.29(7) of the Listing Rules, on the Unaudited Pro Forma Financial Information and to report our opinion to you. We do not accept any responsibility for any reports previously given by us on any financial information used in the compilation of the Unaudited Pro Forma Financial Information beyond that owed to those to whom those reports were addressed by us at the dates of their issue.

Basis of Opinion

We conducted our engagement in accordance with Hong Kong Standard on Investment Circular Reporting Engagements 300 “Accountants’ Reports on Pro Forma Financial Information in Investment Circulars” issued by the HKICPA. Our work, which involved no independent examination of any of the underlying financial information, consisted primarily of comparing the unadjusted consolidated net assets statement of the Group as at 31 December 2005 and unadjusted consolidated income statement of the Group for the year ended 31 December 2005 with the audited consolidated financial statements of the Company for the year ended 31 December 2005, considering the evidence supporting the adjustments and discussing the Unaudited Pro Forma Financial Information with the Directors of the Company.

We planned and performed our work so as to obtain the information and explanations we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the Unaudited Pro Forma Financial Information has been properly compiled by the Directors of the Company on the basis stated, that such basis is consistent with the accounting policies of the Group and that the adjustments are appropriate for the purposes of the Unaudited Pro Forma Financial Information as disclosed pursuant to paragraph 4.29(1) of the Listing Rules.

The Unaudited Pro Forma Financial Information is for illustrative purposes only, based on the judgements and assumptions of the Directors of the Company, and because of its hypothetical nature, it does not provide any assurance or indication that any event will take place in the future and may not be indicative of:

• the financial position of the Group as at 31 December 2005 or any future date, or

• the results of the Group for the year ended 31 December 2005 or any future periods.

Opinion

In our opinion:

• (a) the Unaudited Pro Forma Financial Information has been properly compiled by the Directors of the Company on the basis stated;

— 20 —

APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

• (b) such basis is consistent with the accounting policies of the Group; and

• (c) the adjustments are appropriate for the purposes of the Unaudited Pro Forma Financial Information as disclosed pursuant to paragraph 4.29(1) of the Listing Rules.

Yours faithfully,

PricewaterhouseCoopers Certified Public Accountants Hong Kong

— 21 —

ADDITIONAL INFORMATION ON THE REMAINING GROUP

APPENDIX III

The information in this appendix in respect of the additional information on the Remaining Group based on the financial statements set out in the annual report of the Company for the year ended 31 December 2005 and the unaudited pro forma financial information contained in Appendix II.

SEGMENT INFORMATION

Below is a review of operations for each division of the Group:

Media-related Business

In May 2005, the Group acquired 100% equity interests in Anglo Alliance. Anglo Alliance indirectly holds approximately 50% of the registered capital in AUFM. AUFM is engaged in various media related businesses, including production of television drama, investment in movie production, advertising agency as well as advertising and content production for the Travel Channel. The maximum consideration for this acquisition is HK$550 million, subject to adjustments. Details of this acquisition are disclosed in the Company’s circular dated 13 May 2005.

The Travel Channel is one of 31 provincial satellite TV channels with nationwide access, specialising in travel, lifestyle and entertainment. To better satisfy viewers’ diverse needs, the Travel Channel has undergone a major revamp in January 2006 with a view to further enhancing its attractiveness to the audience.

As stated in the section headed “Letter from the Board” under the paragraphs headed “The Exclusive Advertising Agency Agreement” in this circular, on 12 May 2006, Qiansi entered into the Exclusive Advertising Agency Agreement with Hainan TV pursuant to which Qiansi will act as the exclusive advertising agent of Hainan TV up to 31 December 2011 and the advertising resources including all the commercial advertising air-time of the Travel Channel and available specific programme sponsorships will be distributed by Qiansi. It is the business plan of Qiansi to sell the advertising resources including the commercial advertising air-time of the Travel Channel and available specific programme sponsorships to its customers and help its customers produce the television commercials to be broadcast. Qiansi intends to use such operating cash inflow to finance the payment of the consideration under the Exclusive Advertising Agency Agreement. For details of the Exclusive Advertising Agency Agreement, please refer to the paragraphs headed “The Exclusive Advertising Agency Agreement” in the “Letter from the Board” section in this circular.

— 22 —

ADDITIONAL INFORMATION ON THE REMAINING GROUP

APPENDIX III

The Group is also seeking opportunities arising from the production and distribution of television drama series and films in the PRC. In 2005, the Group has distributed a number of films such as “Peacock” and “A letter from an unknown woman” and certain television programs in the PRC and overseas, contributing to a turnover of approximately HK$10 million to the Group. Leveraging upon the reputation and market position of AUFM, the Group will continue to explore opportunities to invest in blockbuster movies and popular television programs.

Digital Broadcasting Investment

This business segment is carried out through the Group’s investment in DVN. With the Chinese government promoting and mandating digitalisation in the country, DVN’s sales performance improved significantly with increasing set-top boxes sales. Share of losses of DVN decreased from approximately HK$14,869,000 for the year ended 31 December 2004 to approximately HK$8,223,000 for the year ended 31 December 2005.

The Group’s proposal to distribute all the DVN Ordinary Shares held by it to its Shareholders was approved by the Shareholders on 6 June 2006. After the Distribution became effective on 8 June 2006, the Group ceased to hold any DVN Ordinary Shares. The results of DVN are no longer being reflected in the consolidated financial statements of the Group. Please refer to the circular of the Company dated 22 May 2006 for more information on the Distribution.

The Company will seek approval from the Shareholders at the EGM for granting of Mandate to dispose of the DVN Preference Shares (or the DVN Ordinary Shares which may be exchanged into) held by it. For more details in this regard, please refer to the section headed “Letter from the Board” under the paragraphs headed “Possible Disposals” in this circular.

Communication Division

With the aim to align the various operations of the Group and direct the Group’s strategic focus on the development of the media related business, the management of the Company has commenced reviewing the communication side of the Group’s operations. The long-term strategy for this area is currently being mapped out. Turnover for the communication division declined from HK$3,889,000 in 2004 to HK$2,561,000 in 2005 and has contributed a gain of HK$60,000 (2004: a loss of HK$354,000) to the Group.

Securities Trading

In 2005, the Group traded securities in the capital market and recorded a turnover of HK$1,387,000 (2004: HK$16,561,000) and a loss of approximately HK$48,000 (2004: a profit HK$ of 1,249,000) for this segment.

— 23 —

ADDITIONAL INFORMATION ON THE REMAINING GROUP

APPENDIX III

Home Audio Division

Facing intense price competition in the market, the Group will continue to seek ways to expand its product line into the higher value product segment with a view to raising profit margins as well as improving overall performance of this business. At the same time, the Group will review the operations and implement a long-term strategy that aligns the business in sync with its media related businesses. In 2005, the home audio recorded a turnover of HK$19,384,000 (2004: HK$18,180,000) and a loss of approximately HK$3,700,000 (2004: HK$3,092,000).

PROSPECTS

The Remaining Group will continue to focus on the development in the PRC media sector. By taking advantage of the growing advertising market in the PRC and the coming Olympics in Beijing, the Groups remains optimistic about the future well-being of the Remaining Group.

LIQUIDITY AND FINANCIAL RESOURCES AND POLICY

For illustrative purpose only, based on the Pro Forma Financial Information set out in Appendix II to this circular, as at 31 December 2005, the pro forma cash balance of the Remaining Group was about HK$81,190,000. The pro forma current ratio of the Remaining Group was 6.45 as at 31 December 2005 and the pro forma gearing ratio of the Remaining Group representing long term liabilities to net worth was 18.97% as at 31 December 2005.

The Group issued the Convertible Note of approximately HK$104 million to Mr. Ko on 31 May 2005. On 18 May 2006, the Convertible Note was converted into approximately 2,122.1 million Shares at a conversion price of HK$0.049 per Share. As at 31 December 2005, the Group had a bank loan bearing an interest of 4.698% per annum amounting to approximately HK$8,621,000, which has been repaid before 30 April 2006, and had an other loan of approximately HK$6,137,000 repayable on demand and bearing an interest of 6% per annum. The Group had no long term bank loan and no bank overdrafts outstanding as at year end of 2005. The Group did not have any assets pledged or charged as at 31 December 2005.

The Group manages its liquidity position by maintaining sufficient cash for its operation and draws on bank loans as necessary.

EMPLOYEES AND REMUNERATION POLICIES

As at 31 December 2005, the Remaining Group employed a total of 10 full-time employees in Hong Kong and a work force of about 33 in the PRC. The staff costs (excluding Directors’ remuneration) of the Group for the financial year ended 31 December 2005 amounted to approximately HK$3,739,000. The Remaining Group operates different remuneration schemes

— 24 —

ADDITIONAL INFORMATION ON THE REMAINING GROUP

APPENDIX III

for sales and non-sales employees. Sales personnel are remunerated on the basis of on-targetearning packages comprising salary and sales commission. Non-sales personnel including engineering and product development staff are remunerated by monthly salary which are reviewed by the Remaining Group from time to time and adjusted based on performance. In addition to salaries, the Remaining Group provides staff benefits including medical insurance, contribution to staff provident fund and discretionary training subsidies. Share options and bonuses are also available at the discretion of the Remaining Group and depending on the performance of the Remaining Group.

CONTINGENT LIABILITIES

The Remaining Group had no material contingent liability as at 31 December 2005.

FOREIGN EXCHANGE RISK

The Remaining Group mainly operates in the PRC and is exposed to foreign exchange risk arising from Renminbi currency exposures, primarily with respect to HK dollar.

The Remaining Group has not used any forward contracts, currency borrowings or other means to hedge its foreign currency exposure. The currencies used by the Remaining Group are mainly Renminbi and Hong Kong dollars which both had relatively stable exchange rates during the year.

— 25 —

GENERAL INFORMATION

APPENDIX IV

1. RESPONSIBILITY STATEMENT

This circular 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 issuer. The directors 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.

2. STATEMENT OF INDEBTEDNESS

None of the assets of the Group were pledged as at 30 April 2006.

The Group issued the Convertible Note of approximately HK$104 million to Mr. Ko on 31 May 2005. On 18 May 2006, the Convertible Note was converted into approximately 2,122.1 million Shares at a conversion price of HK$0.049 per Share. As at 30 April 2006, the Group had an other loan of approximately HK$6,137,000 repayable on demand and bearing an interest of 6% per annum.

Save as disclosed, as at 30 April 2006, being the latest practicable date for the purpose of this indebtedness statement and apart from intra-group liabilities, the Group did not have any debt securities issued and outstanding, or authorized/otherwise created but unissued, any term loans (secured, unsecured, guaranteed or not), any borrowings or indebtedness in the nature of borrowing including bank overdrafts and liabilities under acceptance (other than normal trade bills) or acceptance credits or hire purchase commitments (whether secured/unsecured, guaranteed or not), any mortgages and charges or any contingent liabilities.

3. WORKING CAPITAL

The Directors are of the opinion that taking into account the Group’s internal resources and the estimated net proceeds from the Possible Disposals, the Group has sufficient working capital, without relying on any external facilities, for its present requirements for at least the next twelve months from the date of this circular.

4. DISCLOSURE OF DIRECTORS’ INTERESTS

As at the Latest Practicable Date, the interests and short positions of the Directors and chief executives of the Company in the shares, underlying shares and debentures of the Company or any of its associated corporation(s) (within the meaning of Part XV of the SFO) which were required, (i) pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO), or (ii) pursuant to Section 352 of the SFO, to be entered in

— 26 —

GENERAL INFORMATION

APPENDIX IV

the register referred to therein, or (iii), pursuant to the Model Code for Securities Transactions by Directors of Listed Companies (“Model Code”) of the Listing Rules, to be notified to the Company and the Stock Exchange as follows:

(a) Long position in shares in the Company

					% of the
		Number of shares held			Issued Share
		Personal	Corporate		Capital of
Name of Director	Note	interests	interests	Total	the Company
Mr. Ko	(i)	5,187,347,483	1,000,437,150	6,187,784,633	51.40
Mr. Dong Ping		2,700,000,000	—	2,700,000,000	22.43

Notes:

• (i) Kwan Wing Holdings Limited (“Kwan Wing”) and Techral Holdings Limited (“Techral”), a subsidiary of Kwan Wing, beneficially owned 360,399,000 and 640,038,150 ordinary shares in the Company, respectively. Mr. Ko has the 100% direct interest in Kwan Wing and an approximately 96% beneficial interest in Techral.

• (ii) Depending on the audited consolidated profits of Anglo Alliance Co., Ltd. and its subsidiaries for the 12 months after completion of a deed dated 2 February 2005 entered into by Mr. Ko, Mr. Dong Ping, Orient Ventures Limited and the Company (as supplemented by a supplemental deed entered into on 11 May 2005 by the same parties), the Company may issue another convertible note to Mr. Ko with an principal amount of up to approximately HK$183.3 million which upon the exercise of the conversion rights attached to the convertible note may be converted into approximately 3,741,496,591 Shares based on the conversion price of HK$0.049. For more details in this regard, please refer to the paragraphs headed “Directors’ interests in assets/contracts and other interests” below.

Save as disclosed above and other than certain nominee shares in subsidiaries held by Mr. Ko in trust for the Company as at the Latest Practicable Date, none of the directors, the chief executive or their associates had any other beneficial interests in the shares of the Company or any of its associated corporations (within the meaning of the SFO).

Save as disclosed above, as at the Latest Practicable Date, none of the Directors or chief executive of the Company had any interests or short positions in the shares, underlying shares and debentures of the Company or any of its associated corporation(s) (within the meaning of Part XV of the SFO) which were required, (i) pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO), or (ii) pursuant to Section 352 of the SFO, to be entered in the register referred to therein, or (iii) pursuant to the Model Code of the Listing Rules to be notified to the Company and the Stock Exchange.

— 27 —

GENERAL INFORMATION

APPENDIX IV

(b) Competing interests

None of the Directors or any of their respective associates have any interests in any business which may compete with the business of the Group (as would be required to be disclosed under Rule 8.10 of the Listing Rules if each of them was a controlling shareholder of the Company).

5. SUBSTANTIAL SHAREHOLDERS

Save as disclosed under the section “Disclosure of Directors’ Interests”, as at the Latest Practicable Date, so far as known to the Directors or chief executive of the Company, no other person (not being a Director or chief executive of the Company) had any interests or short positions in shares or underlying shares of the Company 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, 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 or held any option in respect of such capital.

6. DIRECTORS’ INTERESTS IN ASSETS/CONTRACTS AND OTHER INTERESTS

Mr. Ko, Mr. Dong Ping, Orient Ventures Limited (“Orient Ventures”) and the Company entered into a deed (the “Deed”) dated 2 February 2005 (as supplemented by a supplemental deed entered into on 11 May 2005 by the same parties (the “Supplemental Deed”)) in respect of the sale and purchase of the entire issued share capital of Anglo Alliance Co., Ltd and the assignment of shareholder’s loan of Anglo Alliance Co., Ltd to Orient Ventures. Mr. Ko and the Company entered into a sale and purchase agreement (the “UHL SP Agreement”) on 2 February 2005 (as supplemented by supplemental agreement entered into on 11 May 2005 by the same parties (the “Supplemental Agreement”)) in relation to the acquisition of the entire issued share capital of Orient Ventures and the assignment of shareholder’s loan of Orient Ventures to Mr. Ko. Under the Deed (as supplemented by the Supplemental Deed) and the UHL SP Agreement (as supplemented by the Supplemental Agreement), the Company effectively acquired the entire issued capital of Anglo Alliance Co., Ltd, which in turn effectively owns a 50% interest in AUFM and the Company has issued 2,700,000,000 Shares to Mr. Dong Ping, and 3,046,570,871 Shares and the Convertible Note to Mr. Ko. Depending on the audited consolidated profits of Anglo Alliance Co., Ltd. and its subsidiaries for the 12 months after completion of the Deed, the Company may issue another convertible note to Mr. Ko with an principal amount of up to approximately HK$183.3 million which upon the exercise of the conversion rights attached to the convertible note may be converted into approximately 3,741,496,591 Shares based on the conversion price of HK$0.049. Details of the Deed, the Supplemental Deed, the UHL SP Agreement and the Supplemental Agreement were set out in the circular of the Company dated 13 May 2005.

— 28 —

GENERAL INFORMATION

APPENDIX IV

Save for the above, none of the Directors was materially interested in any contract or arrangement entered into by any member of the Group subsisting at the Latest Practicable Date which was significant in relation to the business of the Group.

The Distribution was approved by its Shareholders on 6 June 2006. Please refer to the circular of the Company dated 22 May 2006 for more information about the Distribution.

Save the transaction contemplated under the Distribution, none of the Directors has any direct or indirect interests 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 2005, being the date to which the latest published audited consolidated accounts of the Group were made up.

7. MATERIAL CONTRACTS

The following contracts, not being contracts in the ordinary course of business, were entered into by the Company or its subsidiaries within two years preceding the date of this circular and are or may be material:

• a. the Deed;

• b. the Supplemental Deed;

• c. the UHL SP Agreement;

• d. the Supplemental Agreement;

• e. the placing and subscription agreement dated 22 February 2005 entered into between the Company, Kwan Wing Holdings Limited, Techral Holdings Limited and the placing agent in relation to the placing of 654,850,000 existing Shares by Kwan Wing Holdings Limited, Techral Holdings Limited, companies controlled by Mr. Ko, at a price of HK$0.12 per Share and the subscription for 654,850,000 new Shares by Kwan Wing Holdings Limited and Techral Holdings Limited at an issue price of HK$0.12 per Share with the gross proceeds of approximately HK$78.6 million; and

• f. the Exclusive Advertising Agency Agreement.

8. LITIGATION

As at the Latest Practicable Date, neither the Company nor any member of the Group was engaged in any litigation or arbitration of material importance and no litigation or claim of material importance was known to the Directors to be pending or threatened by or against the Company or any member of the Group.

— 29 —

GENERAL INFORMATION

APPENDIX IV

9. EXPERT AND CONSENT

The following is the qualification of the expert who has been named in this circular and has given opinion or advice which are contained in this circular:

Name

Qualification

PricewaterhouseCoopers Certified Public Accountants

PricewaterhouseCoopers has given and has not withdrawn its written consent to the issue of this circular with the inclusion herein of its report and references to its name in the form and context in which they are included.

As at the Latest Practicable Date, PricewaterhouseCoopers had no shareholding in any member of the Group or the right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

As at the Latest Practicable Date, PricewaterhouseCoopers had no direct or indirect interests in any assets which have been, since 31 December 2005 (being the date to which the latest published audited accounts of the Company were made up), acquired or disposed of by or leased to any member of the Group, or which are proposed to be acquired or disposed of by or leased to any member of the Group.

10. SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had any existing or proposed service contracts with the Company or any member of the Group (other than those to expire or which may be terminated by the relevant member of the Group within 12 months without payment of any compensation (other than statutory compensation)).

11. RIGHT TO DEMAND POLL

Subject to any special rights or restrictions as to voting for the time being attached to any Shares by or in accordance with the Articles, at any general meeting on a show of hands every Shareholder present in person (or being a corporation, is present by a representative duly authorised), or by proxy shall have one vote and on a poll every Shareholder present in person or by proxy or, in the case of a Shareholder being a corporation, by its duly authorised representative, shall have one vote for every fully paid Share of which he is the holder but that no amount paid up or credited as paid up on a Share in advance of calls or instalments is treated for the foregoing purposes as paid up on the Share. Notwithstanding anything contained in the Articles, where more than one proxy is appointed by a Shareholder which is a clearing house (or its

— 30 —

GENERAL INFORMATION

APPENDIX IV

nominee(s)), each such proxy shall have one vote on a show of hands. A resolution put to the vote of a 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:

• (a) by the chairman of such meeting; or

• (b) by 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) by 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) by 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 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.

A demand by a person as proxy for a Shareholder or in the case of a Shareholder being a corporation by its duly authorised representative shall be deemed to be the same as a demand by a Shareholder.

12. MISCELLANEOUS

• (a) The registered office of the Company is located at Century Yard, Cricket Square, Hutchins Drive, P.O. Box 2681 GT, George Town, Grand Cayman, British West Indies, Cayman Islands and the principal place of business of the Company is Unit 4306-7, Far East Finance Centre, 16 Harcourt Road, Admiralty, Hong Kong.

• (b) The branch share registrar and transfer office of the Company in Hong Kong is Tengis Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Hong Kong.

• (c) The qualified accountant of the Company is Mr. Ho Te Hwai, Cecil, who is a member of the Canadian Institute of Chartered Accountants and an associate member of the Hong Kong Institute of Certified Public Accountants.

• (d) The company secretary of the Company is Mr. Chan Kam Kwan, Jason, who is a member of the American Institute of Certified Public Accountants.

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GENERAL INFORMATION

APPENDIX IV

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

13. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection at the head office and the principal place of business of the Company in Hong Kong at Unit 4306-7, Far East Finance Centre, 16 Harcourt Road, Admiralty, Hong Kong during normal business hours on any business day from the date of this circular up to and including the date of the EGM:

• the Company’s memorandum and articles of association;

• the material contracts referred to in the section headed “Material Contracts” in this Appendix;

• the letter from PricewaterhouseCoopers reporting on the unaudited pro forma financial information of the Remaining Group as set out in Appendix II to this circular;

• the written consent referred to under the section headed “Expert and Consent” in this Appendix; and

• the annual reports of the Company for each of the two years ended 31 December 2005.

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NOTICE OF EGM

UNIVERSAL HOLDINGS LIMITED 友利控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 419)

NOTICE IS HEREBY GIVEN that an extraordinary general meeting of Universal Holdings Limited (“ Company ”) will be held at 10:00 a.m. on 11 July 2006 at Room 3203, 32nd Floor, Admiralty Centre I, 18 Harcourt Road, Hong Kong for the purposes of considering and, if thought fit, passing, with or without modification, the following ordinary resolution:

ORDINARY RESOLUTION

“ THAT the exercise by the board of directors of all the powers of the Company to dispose of in one or more transactions of up to 15,000,000 exchangeable preference shares (including the rights to receive dividends attached to them) issued by DVN (Group) Limited (or the ordinary shares of HK$0.1 each in the ordinary share capital of DVN (Holdings) Limited (“DVN Ordinary Shares”) which may be exchanged into upon exercise of the exchangeable rights attached to the exchangeable preference shares) during the period from 12 July 2006 to 11 July 2007 (both dates inclusive) to independent third parties (who and (where applicable) their ultimate beneficial owners are not connected with the Company or the directors, chief executive or substantial shareholders of the Company or any of its subsidiaries or to any of their respective associates) at prices equivalent to no less than 80% of the average closing price of the DVN Ordinary Shares for the 5 trading days immediately preceding the date on which an agreement of the relevant disposal is reached, and the expected present value of the relevant dividends receivable (as the case may be), be and is hereby approved and that the directors of the Company be and are hereby authorised to carry out and effect such disposal(s) in such manner as they may in their absolute discretion determine and to do all acts and things which in their opinion are necessary or desirable to effect such disposal(s).”

By Order of the Board UNIVERSAL HOLDINGS LIMITED Chan Kam Kwan, Jason Company Secretary

Hong Kong, 23 June 2006

Principal place of business in Hong Kong:

Unit 4306-7, Far East Finance Centre 16 Harcourt Road Admiralty Hong Kong

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NOTICE OF EGM

Notes:

1. Any shareholder entitled to attend and vote at the meeting is entitled to appoint one or more proxies to attend and vote instead of him. A proxy need not be a shareholder of the Company.

2. In order to be valid, a form of proxy in the prescribed form together with the power of attorney or other authority (if any) under which it is signed must be deposited at the share registrar of the Company, Tengis Limited at 26/F., Tesbury Centre, 28 Queen’s Road East, Hong Kong not less than 48 hours before the time fixed for holding the meeting or any adjournment thereof.

3. In case of joint registered holders of any shares, any one of such persons may vote at the meeting, either personally or by proxy, in respect of such shares as if he/she/it was solely entitled thereto, but if more than one of such joint holders be present at the meeting personally or by proxy, that one of such holders so present whose name stands first in the register of member of the Company in respect of such shares shall alone be entitled to vote in respect thereof.

4. A form of proxy for use at the meeting convened by the above notice is enclosed herewith.

5. As at the date hereof, the board of directors of the Company comprises Mr. Dong Ping as Chairman, Mr. Ko Chun Shun, Johnson and Mr. Shen Ka Yip, Timothy as executive directors, Mr. Tsoi Tong Hoo, Tony and Mr. Cheong Chow Yin as non-executive directors, Mr. Yuen Kin, Mr. Wilton Timothy Carr Ingram and Dr. Wong Yau Kar, David as independent non-executive directors.

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