Digital China Holdings Limited — Proxy Solicitation & Information Statement 2007

Nov 27, 2007

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult 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 Digital China Holdings Limited, you should at once hand this circular and the accompanying form of proxy to the purchaser(s) or the transferee(s) or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser(s) or transferee(s).

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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(Incorporated in Bermuda with limited liability)

(Stock Code: 0861)

CONTINUING CONNECTED TRANSACTIONS

Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders

Optima Capital Limited

A letter from the Board is set out on pages 3 to 8 of this circular. A letter from the Independent Board Committee is set out on page 9 of this circular. A letter from the Independent Financial Adviser containing its advice to the Independent Board Committee and the Independent Shareholders is set out on pages 10 to 16 of this circular.

An ordinary resolution will be proposed at the Special General Meeting of Digital China Holdings Limited to be held at Suite 2008, 20th Floor, Devon House, Taikoo Place, 979 King’s Road, Quarry Bay, Hong Kong on Thursday, 20 December, 2007 at 10:00 a.m. to approve the matters referred to in this circular. The notice convening the Special General Meeting is set out on pages 20 to 21 of this circular. A form of proxy for use at the Special General Meeting is enclosed with this circular. Whether or not you are able to attend the meeting, you are requested to complete the enclosed form of proxy in accordance with the instructions printed thereon and return it to Tricor Abacus Limited, the Company’s branch share registrar in Hong Kong at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong not less than 48 hours before the time appointed for holding the Special General Meeting. Completion and return of the accompanying form of proxy will not preclude you from attending and voting at the Special General Meeting should you so wish.

* For identification purpose only

28 November, 2007

CONTENTS

		Page
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
LETTER	FROM THE BOARD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.	BACKGROUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.	THE 2007 MASTER AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.	REASONS FOR, AND BENEFITS OF, THE SALE. . . . . . . . . . . . . . . . . . . . . . . . . .	5
4.	GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5.	LISTING RULES IMPLICATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
6.	PROCEDURE FOR DEMANDING A POLL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
7.	SPECIAL GENERAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
8.	GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
9.	RECOMMENDATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
LETTER	FROM THE INDEPENDENT BOARD COMMITTEE. . . . . . . . . . . . . . . . . . . . . . . . 9
LETTER	FROM OPTIMA CAPITAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
APPENDIX — GENERAL INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
NOTICE	OF SPECIAL GENERAL MEETING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

– i –

DEFINITIONS

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

“Announcement” means the announcement of the Company dated 7 November, 2007 in relation to the 2007 Master Agreement; “2006 Agreement” means the supplemental master agreement entered into between the Company and Lenovo on 27 March, 2006 in relation to the Sale; “2006 Announcement” means the announcement of the Company dated 27 March, 2006 in relation to the 2006 Agreement; “2007 Master Agreement” means the master agreement dated 7 November, 2007 entered into between the Company and Lenovo in relation to the Sale; “associate(s)” has the meaning ascribed to it under the Listing Rules; “Board” means the board of Directors; “Bye-Laws” means the Bye-Laws of the Company and all supplementary, amended or substituted bye-laws for the time being in force; “Company” means Digital China Holdings Limited (神州數碼控股有限公司*), an exempted company incorporated under the laws of Bermuda with limited liability, the shares of which are listed on the main board of the Stock Exchange; “connected person(s)” has the meaning ascribed to it under the Listing Rules; “Directors” means the directors of the Company; “Effective Date” means the date on which the Independent Shareholders approve the 2007 Master Agreement; “Group” means the Company and its subsidiaries; “HK$” means Hong Kong dollars; “Hong Kong” means the Hong Kong Special Administrative Region of the PRC; “Independent Board means the independent board committee of the Company comprising Committee” Mr. HU Zhao Guang, Professor WU Jinglian, Mr. WONG Man Chung, Francis and Mr. KWAN Ming Heung, Peter established to advise the Independent Shareholders on the 2007 Master Agreement and the Revised Annual Caps; “Independent Shareholders” means the Shareholders other than those who are required to abstain from voting at the Special General Meeting; “IT” means information technology; “Latest Practicable Date” means 23 November, 2007, being the latest practicable date prior to the printing of this circular for ascertaining certain information for inclusion in this circular;

* For identification purpose only

– 1 –

DEFINITIONS

• “Legend” means 聯想控股有限公司 (for identification purpose, in English, Legend Holdings Limited), a company established in the PRC with limited liability;

• “Lenovo” means Lenovo Group Limited, a company incorporated in Hong Kong with limited liability, the shares of which are listed on the main board of the Stock Exchange;

• “Lenovo Group” means Lenovo and its subsidiaries; “Listing Rules” means the Rules Governing the Listing of Securities on the Stock Exchange in force for the time being;

• “Optima Capital” or Optima Capital Limited, a licensed corporation under the SFO to “Independent conduct Type 1 (dealing in securities), Type 4 (advising on securities) Financial Adviser” and Type 6 (advising on corporate finance) regulated activities under the SFO;

• “percentage ratios” means the percentage ratios under Rule 14.07 of the Listing Rules; “PRC” means the People’s Republic of China;

• “Products and Services” means the IT products and services (including installation, training and maintenance, etc) offered by the Group from time to time;

• “Resolution” means the ordinary resolution to approve the 2007 Master Agreement and the transactions contemplated thereunder and the Revised Annual Caps at the Special General Meeting;

• “Revised Annual Caps” means the revised maximum aggregate amount for the Sale for each of the three financial years ending 31 March, 2010 in the approximate amount of HK$286,110,000, HK$205,980,000 and HK$183,230,000 respectively;

• “Sale” means the sale of Products and Services by the Group to the Lenovo Group;

• “SFC” Securities and Futures Commission; “SFO” means the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong);

• “Share(s)” means ordinary share(s) of HK$0.10 each in the capital of the Company;

• “Shareholders” means the holders of the Shares; “Special General Meeting” means the special general meeting of the Company to be convened to consider and, if thought fit, approve the 2007 Master Agreement and the Revised Annual Caps or any adjournment thereof (as the case may be);

• “Stock Exchange” means The Stock Exchange of Hong Kong Limited; and “%” means per cent.

– 2 –

LETTER FROM THE BOARD

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(Incorporated in Bermuda with limited liability)

(Stock Code: 0861)

Executive Directors: Mr. LI Qin (Chairman) Mr. GUO Wei (Vice Chairman, President and Chief Executive Officer) Mr. ZENG Maochao Mr. LIN Yang Mr. HUA Zhinian

Registered office: Canon’s Court 22 Victoria Street Hamilton HM 12 Bermuda

Non-executive Director: Mr. William O. GRABE

Independent non-executive Directors: Mr. HU Zhao Guang Professor WU Jinglian Mr. WONG Man Chung, Francis Mr. KWAN Ming Heung, Peter

Head office and principal place of business in Hong Kong: Suite 2008, 20th Floor Devon House Taikoo Place 979 King’s Road Quarry Bay Hong Kong 28 November, 2007

To the Shareholders

Dear Sir or Madam,

CONTINUING CONNECTED TRANSACTIONS

Reference is made to the Announcement relating to the 2007 Master Agreement entered into on 7 November, 2007 with Lenovo in relation to the Sale. The purpose of this circular is to provide you with all the information reasonably necessary to enable you to make an informed decision on whether to vote for or against the proposed Resolution at the Special General Meeting.

1. BACKGROUND

On 7 November, 2007, the Company entered into the 2007 Master Agreement in relation to the sale of IT products and services by the Group to the Lenovo Group. As the applicable percentage ratios of the annual caps for the Sale exceed 2.5%, the Sale is subject to the reporting, announcement and Independent Shareholders’ approval requirements under the Listing Rules. The 2007 Master Agreement shall have a term of three years commencing from the Effective Date and is conditional upon the approval of the Independent Shareholders at the Special General Meeting.

* For identification purpose only

– 3 –

LETTER FROM THE BOARD

2. THE 2007 MASTER AGREEMENT

Date

7 November, 2007

Parties

• (1) Company (as seller); and

• (2) Lenovo (as purchaser).

Sale of Products and Services

The Group agreed to sell and procure members of the Group to sell the Products and Services to the Lenovo Group, and Lenovo agreed to purchase and procure members of the Lenovo Group to purchase the Products and Services from the Group, in accordance with the terms and conditions of the 2007 Master Agreement.

Term

The term is three years commencing from the Effective Date. Upon the Effective Date, the 2006 Agreement will be superseded by the 2007 Master Agreement in entirety.

The 2007 Master Agreement is conditional upon the approval of the Independent Shareholders at the Special General Meeting being obtained. If the Independent Shareholders’ approval is not obtained, the 2006 Agreement shall continue to take effect, the 2007 Master Agreement shall be automatically terminated and the Company will discuss and negotiate with Lenovo on the appropriate steps and procedures to be taken to accommodate the Sale with a view to complying with the Listing Rules.

Historical Transaction Value and Revised Annual Caps

The annual transaction value in respect of the Sale for each of the three years ended 31 March, 2007 were approximately HK$16,825,000, HK$14,065,000 and HK$44,822,000, respectively. The annual caps of the Sale for the three years ending 31 March, 2007, 2008 and 2009 were disclosed in the 2006 Announcement and approved by Shareholders who were eligible to vote on 9 June, 2006. The transaction value in respect of the Sale for the six months ended 30 September, 2007 was approximately HK$53,699,000, according to the unaudited management accounts of the Group.

Lenovo regularly reviews and revises, if required, its purchase order for IT products and/or services to cope with its internal and/or external operations, including its IT infrastructure and architecture. After further and subsequent negotiation with Lenovo, the Directors anticipate that the Sale for each of the three years ending 31 March, 2010 will increase dramatically due to the expected sales increase as a result of the improvement initiative of Lenovo’s IT infrastructure and architecture in replacing the current IT infrastructure and architecture that is part of IBM’s legacy IT system and new business co-operation opportunities.

– 4 –

LETTER FROM THE BOARD

In view of the above factors, the Directors have reviewed the caps for the Sale in 2008 and 2009 and consider it necessary to revise such caps upward and to propose a new cap for the Sale in 2010 as shown in the table below:

	Year	ended	Year	ending	Year	ending	Year ending
	31 March, 2007		31 March, 2008		31 March, 2009		31 March, 2010
		Transaction		Revised cap		Revised cap	New cap
	Original cap	value	Original cap	proposed	Original cap	proposed	proposed
	(HK$)	(HK$)	(HK$)	(HK$)	(HK$)	(HK$)	(HK$)
Sale	45,000,000	44,822,000	56,000,000	286,110,000	70,000,000	205,980,000	183,230,000

Pricing of the Products and Services will be negotiated between the relevant member of the Lenovo Group and the Group on an arms’ length basis and on normal commercial terms in the ordinary and usual course of business of the Group in accordance with the prevailing market conditions for the Products and Services.

Basis of determination

The Revised Annual Caps were calculated after taking into account the following:

• (a) The historical figures of the Sale for the financial years ended 31 March, 2005, 2006 and 2007;

• (b) The expected increase in Sale due to the improvement initiative of Lenovo’s IT infrastructure and architecture which is expected to give rise to the following:

• (i) an increase in the anticipated sales of IT hardware and software products by the Group to the Lenovo Group; and

• (ii) the anticipated growth in the provision of services (including installation, training and maintenance, etc) by the Group to the Lenovo Group as a result of the expected increase in sales of IT hardware and software products to the Lenovo Group as discussed in sub-paragraph (i) above.

3. REASONS FOR, AND BENEFITS OF, THE SALE

The Sale has been, and will continue to be, conducted between the Group and the Lenovo Group on a regular and continuing basis and in the ordinary and usual course of business of the Group. The Directors are of the view that the terms of Sale have been, and will be, negotiated on an arms’ length basis and on normal commercial terms. Through the extended business relationships established between the two groups, the Lenovo Group is assured of the quality of the products provided by the Group and such continuing relationships are expected to bring synergies to the parties.

4. GENERAL INFORMATION

The Group is principally engaged in the sale and distribution of general IT products and systems products, the provision of related value-added services, and the provision of systems integration, applications software development, consultancy and training, etc. The principal activities of Lenovo are the sales and manufacture of personal computers and related IT products, mobile devices, and the provision of advanced information services in the PRC, the America, Europe, Middle East, Africa, and Asia Pacific.

– 5 –

LETTER FROM THE BOARD

5. LISTING RULES IMPLICATIONS

As at the Latest Practicable Date, Legend was interested in approximately 16.23% of the Shares as disclosed under the SFO. Legend, the substantial shareholder of the Company and thus a connected person of the Company under the Listing Rules, is also the controlling shareholder of Lenovo. As Lenovo is an associate of Legend, it is a connected person of the Company under the Listing Rules. The Sale under the 2007 Master Agreement constitutes a continuing connected transaction for the Group. As the applicable percentage ratios for the Revised Annual Caps exceed 2.5%, the Sale constitutes a non-exempt continuing connected transaction under Rule 14A.35 of the Listing Rules and is subject to the reporting, announcement and Independent Shareholders’ approval requirements and the annual review requirements set out in Rules 14A.37 to 14A.40 of the Listing Rules.

An Independent Board Committee has been formed to advise the Independent Shareholders on the 2007 Master Agreement and the Revised Annual Caps and the Independent Financial Adviser has been appointed to advise and make recommendations to the Independent Board Committee and the Independent Shareholders in this regard.

6. PROCEDURE FOR DEMANDING A POLL

Pursuant to Bye-Law 70 of the Bye-Laws, at any general meeting a resolution put to the vote of the meeting shall be decided on a show of hands unless a poll is taken as may from time to time be required under the Listing Rules or unless a poll is (before or on the declaration of the result of the show of hands or on the withdrawal of any other demand for a poll) demanded:

• (i) by the chairman presiding at the meeting (the “ Chairman ”); or

• (ii) by at least three shareholders present in person or by its duly authorised corporate representative or by proxy for the time being entitled to vote at the meeting; or

• (iii) by any shareholder or shareholders present in person or by its duly authorised corporate representative or by proxy and representing not less than one-tenth of the total voting rights of all the shareholders having the right to vote at the meeting; or

• (iv) by any shareholder or shareholders present in person or by its duly authorised corporate 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 and not less than one-tenth of the total sum paid up on all the shares conferring that right; or

• (v) by any Director or Directors or Chairman of the meeting who, individually or collectively, hold proxies in respect of shares representing five per cent (5%) or more of the total voting rights at such meeting.

Unless a poll be so demanded and the demand is not withdrawn or unless a poll is taken as may from time to time be required under the Listing Rules, a declaration by the Chairman that a resolution has on a show of hands been carried or carried unanimously, or by a particular majority, or lost, and an entry to that effect in the book containing the minutes of the proceedings of the Company shall be conclusive evidence of the fact without proof of the number or proportion of the votes recorded in favour or against such resolution. The Company shall only be required to disclose the voting figures on a poll if such disclosure is required by the Listing Rules.

– 6 –

LETTER FROM THE BOARD

7. SPECIAL GENERAL MEETING

The notice convening the Special General Meeting to be held at Suite 2008, 20th Floor, Devon House, Taikoo Place, 979 King’s Road, Quarry Bay, Hong Kong on Thursday, 20 December, 2007 at 10:00 a.m. at which the Resolution will be proposed is set out on pages 20 and 21 of this circular.

A form of proxy for use at the Special General Meeting is enclosed. Whether or not you are able to attend the meeting, you are requested to complete and return the form of proxy in accordance with the instructions printed thereon to the Company’s branch share registrar in Hong Kong, Tricor Abacus Limited, at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for holding the Special General Meeting or any adjournment thereof (as the case may be). Completion and return of the form of proxy will not preclude you from attending and voting in person at the Special General Meeting and any adjourned meeting (as the case may be) should you so wish.

8. GENERAL

Under the Listing Rules, any connected person of the Company with a material interest in the 2007 Master Agreement and the transactions contemplated thereunder, and any Shareholders and their respective associates with a material interest in the 2007 Master Agreement and the transactions contemplated thereunder, shall abstain from voting on the Resolution.

As at the Latest Practicable Date, Legend, being the substantial shareholder of the Company, was also the controlling shareholder of Lenovo and was interested in 156,381,719 Shares, representing 16.23% of the issued share capital of the Company. Therefore, Legend and its associates who, together are interested in 233,754,796 Shares, will abstain from voting on the Resolution.

As far as the Company is aware, having made all reasonable enquiries, as at the Latest Practicable Date:

• (a) Legend controlled or was entitled to exercise control over the voting rights in respect of its Shares;

• (b) there were no voting trusts or other agreements or arrangements or understandings (other than an outright sale) entered into by or binding upon Legend, and there were no obligations or entitlements of Legend, whereby such persons have or might have temporarily or permanently passed control over the exercise of the voting rights in respect of its Shares to third parties, either generally or on a case-by-case basis; and

• (c) there were no discrepancies between the beneficial shareholding interests of Legend in the Company as disclosed in this circular and the number of Shares in respect of which it would control or would be entitled to exercise control over the voting rights at the Special General Meeting.

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LETTER FROM THE BOARD

9. RECOMMENDATIONS

The Independent Board Committee is required to advise the Independent Shareholders on the 2007 Master Agreement and the Revised Annual Caps. Optima Capital has been appointed as the independent financial adviser to the Independent Board Committee and Independent Shareholders in this regard. Accordingly, your attention is drawn to the “Letter from the Independent Board Committee” set out on page 9 of this circular, which contains its recommendations to the Independent Shareholders, and the “Letter from Optima Capital” set out on pages 10 to 16 of this circular, which contains its advice to the Independent Board Committee and the Independent Shareholders in respect of the 2007 Master Agreement and the transactions contemplated thereunder and the Revised Annual Caps.

Having taken into account the recommendation and advice of Optima Capital in relation to the 2007 Master Agreement and the Revised Annual Caps (as contained in “Letter from Optima Capital” on pages 10 to 16 of this circular), the Independent Board Committee is of the view that the terms of the 2007 Master Agreement together with the Revised Annual Caps are fair and reasonable so far as the Independent Shareholders are concerned and the entering into of the 2007 Master Agreement is in the interests of the Company and the Shareholders as a whole. Accordingly, the Independent Board Committee recommends the Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the Special General Meeting to approve the 2007 Master Agreement and the Revised Annual Caps.

Accordingly, the Directors (including the independent non-executive Directors) consider that the terms of the 2007 Master Agreement and the Revised Annual Caps are fair and reasonable and the entering into of the 2007 Master Agreement and the transactions contemplated thereunder, in accordance with the terms set out in the 2007 Master Agreement, are in the interests of the Company and its Shareholders as a whole and so far as the Company and the Independent Shareholders are concerned.

The Resolution will be decided by way of a poll.

The Company will publish an announcement on the results of the Special General Meeting on the websites of the Company and the Stock Exchange respectively on the business day following the Special General Meeting with respect to whether or not the Resolution has been passed by the Independent Shareholders.

Your attention is drawn to the additional information set out in the appendix to this circular.

Yours faithfully, On behalf of the Board of Digital China Holdings Limited (神州數碼控股有限公司[] )*

GUO Wei

President and Chief Executive Officer

* for identification purpose only

– 8 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

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(Incorporated in Bermuda with limited liability)

(Stock Code: 0861)

28 November, 2007

To the Independent Shareholders

Dear Sir or Madam,

CONTINUING CONNECTED TRANSACTIONS

We refer to the circular of the Company to the Shareholders dated 28 November, 2007 (the “ Circular ”), of which this letter forms part. Unless the context requires otherwise, capitalised terms used in this letter will have the same meanings given to them in the section headed “Definitions” of the Circular.

The Independent Board Committee has been formed to advise the Independent Shareholders as to whether the entering into of the 2007 Master Agreement and the transactions contemplated thereunder are in the interest of the Company and its Shareholders as a whole and the terms thereof and the Revised Annual Caps are fair and reasonable so far as the Independent Shareholders are concerned. Optima Capital has been appointed as the independent financial adviser to the Independent Board Committee and the Independent Shareholders in relation to the 2007 Master Agreement and the Revised Annual Caps.

We wish to draw your attention to the “Letter from Optima Capital” as set out on pages 10 to 16 of the Circular and the “Letter from the Board” set out on pages 3 to 8 of the Circular.

Having taken into account the information contained in the “Letter from the Board” and the recommendation and advice of Optima Capital, we are of the opinion that the terms of the 2007 Master Agreement and the Revised Annual Caps are fair and reasonable and the entering into of the 2007 Master Agreement and the transactions contemplated thereunder, in accordance with the terms set out in the 2007 Master Agreement, are in the interests of the Company and its Shareholders as a whole and so far as the Company and the Independent Shareholders are concerned.

Accordingly, we recommend the Independent Shareholders to vote in favour of the Resolution.

Yours faithfully, the Independent Board Committee

HU Zhao Guang WU Jinglian Independent non-executive Director

Independent non-executive Director

WONG Man Chung, Francis Independent non-executive Director

KWAN Ming Heung, Peter

Independent non-executive Director

* For identification purpose only

– 9 –

LETTER FROM OPTIMA CAPITAL

The following is the letter of advice from Optima Capital to the Independent Board Committee and the Independent Shareholders, which has been prepared for the purpose of inclusion in this circular.

Unit 3618, 36th Floor, Bank of America Tower 12 Harcourt Road Central Hong Kong

28 November, 2007

To : the Independent Board Committee and the Independent Shareholders of Digital China Holdings Limited

Dear Sirs,

CONTINUING CONNECTED TRANSACTIONS

INTRODUCTION

We refer to our appointment to advise the Independent Board Committee and the Independent Shareholders on (i) the 2007 Master Agreement entered into between the Company and Lenovo on 7 November, 2007; and (ii) the Revised Annual Caps, for which the Independent Shareholders’ approval is being sought. Details of the 2007 Master Agreement and the Revised Annual Caps are set out in the letter from the Board contained in the circular of the Company to the Shareholders dated 28 November, 2007 (the “ Circular ”), of which this letter forms part. Capitalised terms used in this letter shall have the same meanings as those defined in the Circular unless otherwise defined.

As at the Latest Practicable Date, Legend was interested in approximately 16.23% of the issued share capital of the Company. Legend, the substantial shareholder of the Company and thus a connected person of the Company under the Listing Rules, is also the controlling shareholder of Lenovo. As Lenovo is an associate of Legend, it is a connected person of the Company under the Listing Rules and the Sale contemplated under the 2007 Master Agreement therefore constitutes a continuing connected transaction for the Group. As the applicable percentage ratios for the Revised Annual Caps exceed 2.5%, the Sale constitutes a non-exempt continuing connected transaction under Rule 14A.35 of the Listing Rules and is subject to the reporting, announcement and Independent Shareholders’ approval requirements and the annual review requirements set out in Rules 14A.37 to 14A.40 of the Listing Rules. In this connection, the Company will seek the Independent Shareholders’ approval of the 2007 Master Agreement and the Revised Annual Caps at the Special General Meeting. Legend and its associates will be required to abstain from voting on the ordinary resolution to be proposed at the Special General Meeting in respect of the 2007 Master Agreement and the Revised Annual Caps.

The Independent Board Committee, comprising all the four independent non-executive Directors, namely Mr. HU Zhao Guang, Professor WU Jinglian, Mr. WONG Man Chung, Francis and Mr. KWAN Ming Heung, Peter, has been established to make recommendation to the Independent Shareholders regarding the 2007 Master Agreement and the Revised Annual Caps. Optima Capital has been appointed to advise the Independent Board Committee and the Independent Shareholders as to whether (i) the Sale pursuant to the 2007 Master Agreement is in the ordinary and usual course of business; (ii) the terms of the 2007 Master Agreement are on normal commercial terms; (iii) the 2007

– 10 –

LETTER FROM OPTIMA CAPITAL

Master Agreement and the Revised Annual Caps are fair and reasonable in so far as the Independent Shareholders are concerned; and (iv) the entering into of the 2007 Master Agreement is in the interests of the Company and the Shareholders as a whole.

In formulating our opinion, we have relied on the information and facts supplied, and the opinions expressed, by the executive Directors and management of the Company and have assumed that the information and facts provided and opinions expressed to us are true, accurate and complete in all material aspects at the time they were made and up to the date of the Special General Meeting. We have also sought and received confirmation from the executive Directors that no material facts have been omitted from the information supplied and opinions expressed to us. We have relied on such information and consider that the information we have received is sufficient for us to reach an informed view and have no reason to believe that any material information have been withheld, nor doubt the truth or accuracy of the information provided. We have not, however, conducted any independent investigation into the business and affairs of the Group, nor have we carried out any independent verification of the information supplied.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In considering whether the terms of the 2007 Master Agreement and the Revised Annual Caps are fair and reasonable in so far as the Independent Shareholders are concerned, we have taken into account the principal factors and reasons set out below:

1. Background to and reasons for the 2007 Master Agreement

The Group is principally engaged in the sale and distribution of general IT products and system products, the provision of related value-added services, and the provision of systems integration, applications software development, consultancy and training, etc.

Lenovo is principally engaged in the sale and manufacture of personal computers and related IT products, mobile devices and the provision of advanced information services in the PRC, the America, Europe, Middle East, Africa and Asia Pacific.

The Company has been selling a wide range of IT products and services (including installation, training and maintenance, etc.) to Lenovo on a regular and continuing basis. As set out in the announcements of the Company dated 2 June, 2004 and 27 March, 2006, the Company entered into a series of agreements with Lenovo, including a master agreement dated 17 May, 2004 and the 2006 Agreement respectively, to regulate the sales activities between the Group and the Lenovo Group. In compliance with the requirements of the Listing Rules, annual cap amounts have been sought from the Independent Shareholders for the Sale for the three financial years ending 31 March, 2009. After further and subsequent negotiations with Lenovo, the Directors anticipate that the Sale for each of the three years ending 31 March, 2010 will increase substantially due to the improvement initiative of Lenovo’s IT infrastructure and architecture and other new business cooperation opportunities. In light of this, the Group and Lenovo entered into the 2007 Master Agreement. Once the 2007 Master Agreement becomes unconditional, it will supersede and replace the 2006 Agreement entirely upon the Effective Date and shall govern the Sale for the three financial years ending 31 March, 2010.

The Products and Services to be offered by the Group under the 2007 Master Agreement are substantially the same broad categories of IT products and services offered by the Group to Lenovo or to other independent customers in the past. These Products and Services are being provided to the Lenovo Group in accordance with their specifications and include servers, notebooks, other networking

– 11 –

LETTER FROM OPTIMA CAPITAL

software and hardware, as well as installation, training and maintenance services. In light of the respective principal activities of the Group and the Lenovo Group, we consider that the 2007 Master Agreement is entered into in the ordinary and usual course of business of the Group. We are also of the view that the 2007 Master Agreement enables the Group to cement a continuous business relationship with Lenovo and is in the interests of the Company and the Shareholders as a whole.

2. Principal terms of the 2007 Master Agreement

Pursuant to the 2007 Master Agreement, the Group agreed to sell and procure members of the Group to provide the Products and Services to the Lenovo Group, and Lenovo agreed to purchase and procure members of the Lenovo Group to purchase the Products and Services from the Group, in accordance with the terms and conditions contained therein. The 2007 Master Agreement sets out a framework of the principal terms and conditions upon which all future Sale during the three-year period from the Effective Date shall base. If the Independent Shareholders’ approval for the 2007 Master Agreement is not obtained, the 2006 Agreement shall continue to take effect, while the 2007 Master Agreement will not proceed and the Company will take appropriate steps and procedures to accommodate the Sale with a view to complying with the Listing Rules.

Pursuant to the 2007 Master Agreement, the relevant members of the Group and the relevant members of the Lenovo Group shall from time to time enter into separate formal sale agreement which will set out the particulars and specific terms for each Sale transaction. The relevant members of the Group and the relevant members of the Lenovo Group have no obligation to purchase or to accept purchase orders until a formal sale agreement is reached. The terms of the formal sale agreements will be negotiated based on the following principles:

• (i) the price, quantity, time and place of delivery, payment method, means of delivery and other terms and conditions for the sale and purchase of the Products and Services shall be determined by the relevant member of the Group offering such Products and Services and the relevant member of the Lenovo Group purchasing such Products and Services at the time of entering into the relevant formal sale agreements. Each formal sale agreement shall form part of the 2007 Master Agreement; and

• (ii) the price for the Products and Services offered by the Group to the Lenovo Group shall be competitive and shall be determined by the relevant parties to each formal sale agreement on an arm’s length negotiation along the basis of market price and having regard to the quantity, technical requirements and/or other conditions of the Products and Services offered.

On the basis that the formal supply agreements are entered into based on normal commercial terms along the basis of market price and the terms of the Sale will be no less favourable than those available to the independent customers of the Group, we are of the view that the terms of 2007 Master Agreement are fair and reasonable so far as the Independent Shareholders are concerned.

3. Revised Annual Caps

In view of the anticipated increase in the Sale for each of the three years ending 31 March, 2010, the Directors have reviewed the caps for the Sale in 2008 and 2009 which were approved by the Shareholders who were eligible to vote on 9 June, 2006, and consider it is necessary to revise such caps upwards and to propose a new cap for the Sale in 2010.

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LETTER FROM OPTIMA CAPITAL

The following table summarises the actual Sale and annual caps in each of the 2005/06 and 2006/07 financial years, and the Revised Annual Caps for the financial years ending 31 March, 2008, 2009 and 2010:

									Year ending
	Year ended		Year ended		Year ending		Year	ending	31 March,
	31 March, 2006		31 March, 2007		31 March, 2008		31 March, 2009		2010
		Transaction		Transaction		Revised cap		Revised cap	New
	Original cap	value	Original cap	value	Original cap	proposed	Original cap	proposed	cap proposed
	(HK$’000)	(HK$’000)	(HK$’000)	(HK$’000)	(HK$’000)	(HK$’000)	(HK$’000)	(HK$’000)	(HK$’000)
Sale	36,200	14,065	45,000	44,822	56,000	286,110	70,000	205,980	183,230

In assessing the reasonableness of the Revised Annual Caps for the Sale, we have reviewed the past Sale between the Group and the Lenovo Group and discussed with the management of the Company the basis and assumptions underlying the Group’s sales forecast for the purpose of setting the relevant caps.

Review of past Sale

Set out below are the total transaction value for the Sale for each of the three financial years ended 31 March 2005, 2006 and 2007 and for the six months ended 30 September , 2007:

				For the six
				months ended
	For the	year ended 31	March,	30 September,
	2005	2006	2007	2007
	(HK$’000)	(HK$’000)	(HK$’000)	(HK$’000)
Sale to the Lenovo Group	16,825	14,065	44,822	53,699
Percentage change	N/A	-16.4%	+218.7%	N/A

It is noted from the table above that the value of Sale for the past three financial years has been rather erratic. Sale to the Lenovo Group amounted to approximately HK$14.1 million in the year ended 31 March , 2006, representing a decrease of 16.4% from the previous financial year. Sale increased significantly by over 200% and recorded approximately HK$44.8 million in the year ended 31 March , 2007. The demand for the Products and Services continued to increase in the first half of the 2007/08 financial year. Sale for the six months ended 30 September , 2007 amounted to approximately HK$53.7 million which has already exceeded the full year Sale in the 2006/07 financial year. The fluctuation in the value of Sale can be explained by the nature of the Sale which was mainly on project basis and no regular sale pattern is normally seen for Products and Services of this kind.

We have reviewed the annual reports of the Company for the financial years ended 31 March , 2006 and 2007 and noted that the auditors of the Company, Ernst & Young, has confirmed to the Directors that the Sale for the respective financial years are conducted in accordance with the pricing policies of the Group and these transactions have been entered into in accordance with the relevant agreements governing the transactions. We understand that the auditors have reviewed samples of Sale transactions for each of the years ended 31 March , 2006 and 2007 and compared the terms of the Sale transactions with the pricing policies of the Group. In particular, they have also compared the pricing policy and the terms of the Sale transactions to other transactions entered into between the Group and independent third parties. In view of the above, we are of the view that the past Sale was conducted on arm’s length basis and on normal commercial terms.

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LETTER FROM OPTIMA CAPITAL

Basis of determining the Revised Annual Caps

We have reviewed the unaudited management accounts of the Group for the six months ended 30 September , 2007 and noted that the unaudited Sale value for the six months ended 30 September , 2007 was approximately HK$53.7 million, representing approximately 95.9% of the original cap of HK$56 million for the year ending 31 March , 2008. It is therefore necessary and in the interests of the Company and the Shareholders as a whole to revise the original cap amount for the year ending 31 March , 2008 in order that the Group will be able to continue to conduct its business with the Lenovo Group and comply with the Listing Rules requirements for the rest of the 2007/08 financial year. In addition, as the 2007 Master Agreement will cover the three financial years ending 31 March , 2010 , the Company will also seek the Independent Shareholders’ approval to revise the cap amount for the financial year ending 31 March , 2009 and a new cap amount for the financial year ending 31 March , 2010.

We have discussed with the management of the Company the basis and assumptions underlying the determination of the Revised Annual Caps and obtained the understanding that the Revised Annual Caps for each of the years ending 31 March , 2008, 2009 and 2010 are based upon the written indication obtained from Lenovo regarding the expected demand for IT products and services in the coming years. The management of Lenovo has indicated that it is their plan to launch a comprehensive IT system expansion and upgrade project during 2008 to 2010. New IT hardware and software are required to replace Lenovo’s current IT infrastructure and architecture which is part of IBM’s legacy IT system. In conjunction with this initiative, Lenovo has estimated the amount of investments required for IT hardware and software and related services such as training and maintenance in the three years ending 31 March , 2008, 2009 and 2010. We have reviewed the written indication from Lenovo which sets out the forecast by Lenovo of the broad categories and value of IT products and services expected to be required during 2008 to 2010 for its IT system upgrade. The Revised Annual Caps are set with reference to the estimated investment amount indicated by Lenovo in the aforesaid written indication, with an additional buffer set by the Company to cater for possible fluctuations and adjustments in the selling price and quantity of the Products and Services during the years ending 31 March , 2008 to 2010. Although there is no commitment from Lenovo that all the IT hardware and software and related services that it requires in the coming years will be purchased from the Group, we consider that the Revised Annual Caps are justifiable as they provide sufficient flexibility for the Group to capture potential demand for the Products and Services from the Lenovo Group should they materialise.

Taking into account the above factors and on the basis that the Revised Annual Caps are set based on the written indication from Lenovo of its requirements for IT products and services for the coming years, we consider Revised Annual Caps to be fair and reasonable.

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LETTER FROM OPTIMA CAPITAL

4. Conditions

The Sale under the 2007 Master Agreement shall be subject to a number of conditions pursuant to the Listing Rules including, among other things:

• (i) the value of the Sale will not exceed the respective Revised Annual Caps for each of the financial years ending 31 March, 2008, 2009 and 2010;

• (ii) each year the independent non-executive Directors must review the Sale transactions and confirm in the Company’s annual report and accounts that the transactions have been entered into (a) in the ordinary and usual course of business of the Group; (b) either on normal commercial terms or, if there are not sufficient comparable transactions to judge whether they are on normal commercial terms, on terms no less favorable to the Group than terms available to or from independent third parties; and (c) in accordance with the relevant agreements governing them on terms that are fair and reasonable and in the interests of the Shareholders as a whole;

• (iii) the auditors of the Company will, in accordance with Rule 14A.38 of the Listing Rules, review annually the Sale and they will confirm in a letter to the Directors (a copy of which letter will be provided to the Stock Exchange at least 10 business days prior to the bulk printing of the annual report of the Company) in respect of each relevant financial year, during which the transactions have been conducted that the transactions (i) have received the approval of the Board; (ii) are in accordance with the pricing policy of the Group; (iii) have been entered into in accordance with the relevant agreement governing the transactions; and (iv) have not exceeded the relevant Revised Annual Caps;

• (iv) the Company will allow and will procure that Lenovo to provide the auditors of the Company with sufficient access to the relevant records of the transactions for the purpose of the auditors’ review as referred to in paragraph (iii) above. The Board must state in the annual report whether its auditors have confirmed the matters stated in Rule 14A.38 of the Listing Rules; and

• (v) the Company will comply with the applicable provisions of the Listing Rules governing connected transactions in the event that the total amount of the transactions exceeds the Revised Annual Caps, or that there is any material amendment to the terms of the 2007 Master Agreement.

In light of the conditions attached to the transactions, in particular, (i) the restriction of the value of the transactions by way of the Revised Annual Caps; and (ii) the ongoing review by the independent non-executive Directors and the auditors of the Company of the terms of the transactions and the Revised Annual Caps not being exceeded, we are of the view that appropriate measures will be in place to govern the conduct of the transactions and safeguard the interests of the Independent Shareholders.

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LETTER FROM OPTIMA CAPITAL

OPINION

Having taken into account the above principal factors, we consider that the entering into of the 2007 Master Agreement is in the ordinary and usual course of business of the Group and the terms of the 2007 Master Agreement are on normal commercial terms. We also consider that the terms of the 2007 Master Agreement together with the Revised Annual Caps are fair and reasonable so far as the Independent Shareholders are concerned and the entering into of the 2007 Master Agreement is in the interests of the Company and the Shareholders as a whole. Accordingly, we advise the Independent Board Committee to recommend the Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the Special General Meeting to approve the 2007 Master Agreement and the Revised Annual Caps.

Yours faithfully, for and on behalf of OPTIMA CAPITAL LIMITED Beatrice Lung Managing Director

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GENERAL INFORMATION

APPENDIX

RESPONSIBILITY STATEMENT

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

DISCLOSURE OF INTERESTS

As at the Latest Practicable Date, the interests and short positions, if any, of each Director and chief executive of the Company and their associates in the Shares, underlying shares and debentures of the Company and any of 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 and 8 of Part XV of the SFO (including interests and short positions which the Directors and chief executive were taken or deemed to have taken under such provisions of the SFO), or which were required to be and are recorded in the register required to be kept by the Company pursuant to Section 352 of Part XV of the SFO, or which were required to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Companies adopted by the Company (the “ Model Code ”) were as follows:

Interests and Short Positions of Directors and Chief Executive

Shares of HK$0.10 each of the Company

			Percentage
		Interests in	of aggregate
Name of directors	Capacity	shares	holding (%)
		(Note 1)	(Note 3)
LI Qin (Note 4)	Beneficial owner	1,016,000	0.11
GUO Wei	Beneficial owner	11,504,000	1.19
	Interest of controlled corporation	89,414,286	9.28
	Interest of persons acting in concert	287,216,109	29.81
ZENG Maochao_(Note 4)_ Beneficial owner		808,000	0.08
	Interest of spouse_(Note 2)_	60,000	0.01
LIN Yang	Beneficial owner	56,000	0.01
HUA Zhinian	Beneficial owner	183,000	0.02

Notes:

1. All the above interests in the shares of the Company were long positions. None of the directors and chief executive of the Company or their associates held any short positions in the shares of the Company as at the Latest Practicable Date.

2. The 60,000 Shares were owned by the spouse of Mr. ZENG Maochao, Ms. HU Xilan.

3. The percentage of aggregate holding were calculated on the basis of 963,619,581 shares of the Company in issue as at the Latest Practicable Date.

4. As at the Latest Practicable Date, Mr. LI Qin and Mr. ZENG Maochao, the executive Directors, are also directors of Legend, which has an interest in the Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO.

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APPENDIX

GENERAL INFORMATION

Save as disclosed above, as at the Latest Practicable Date, none of the directors and chief executive of the Company or their associates had any interests or short positions in the shares, underlying shares or debentures of the Company or any of 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 and 8 of Part XV of the SFO (including interests or short positions which the directors and chief executive were taken or deemed to have taken under such provisions of the SFO), or which were required to be recorded in the register required to be kept by the Company pursuant to Section 352 of Part XV of the SFO or which were required to be notified to the Company and the Stock Exchange pursuant to the Model Code.

INTEREST IN CONTRACTS OR ARRANGEMENT AND COMPETING BUSINESS

• (a) As at the Latest Practicable Date, none of the Directors had any direct or indirect interest in any assets which have been acquired or disposed of by or leased to or are proposed to be acquired or disposed of by or leased to any member of the Group since 31 March, 2007, being the date to which the latest published audited consolidated financial statements of the Group were made up.

• (b) As at the Latest Practicable Date, none of the Directors was materially interested in any contract or arrangement entered into by any member of the Group and subsisting at the date of this circular which was significant in relation to the business of the Group.

• (c) As at the Latest Practicable Date, none of the Directors or their associates had interests in a business, apart from the business of the Group, which competes or is likely to compete, either directly or indirectly, with the business of the Group.

SERVICE CONTRACT

As at the Latest Practicable Date, none of the Directors had an existing or proposed service contract with any member of the Group (excluding the contracts expiring or determinable by any member of the Group within one year within payment of compensation, other than statutory compensation).

CONSENT AND QUALIFICATION

The following is the name and the qualification of the professional adviser who has given opinion or advice which is contained in this circular:

Name Qualification Optima Capital Limited Licensed by the SFC to conduct Type 1 (dealing in securities), Type 4 (advising on securities) and Type 6 (advising on corporate finance) regulated activities under the SFO

Optima Capital has no shareholding in any member of the Group nor has any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group. Optima Capital has no interest, either directly or indirectly, in any assets which have been acquired or disposed of by or leased to or are proposed to be acquired or disposed of by or leased to any member of the Group since 31 March, 2007, the date to which the latest published audited financial statements of the Group were made up.

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GENERAL INFORMATION

APPENDIX

Optima Capital has given and has not withdrawn its written consent to the issue of this circular with the inclusion of its letter of advice and references to its name, in the form and context in which they respectively appear herein.

NO MATERIAL ADVERSE CHANGE

During the year ended 31 March, 2007, the Group obtained an unsecured term loan facility (the “Facility”) from a bank in the PRC in the amount of up to approximately RMB1,010.0 million (equivalent to approximately HK$1,050.2 million). In accordance with the terms of the Facility, the Group has drawn down additional loans with principal amount of approximately HK$311.9 million subsequent to 31 March, 2007. In addition, additional short term borrowings were drawn down after 31 March, 2007. These additional loans were utilised by the Group for its principal business. As a result, the aggregate outstanding borrowings of the Group as at 31 July, 2007 increased by 74.0% to approximately HK$2,152.5 million as compared to those as at 31 March, 2007.

Save as disclosed above, as at the Latest Practicable Date, the Board was not aware of any material changes in the financial or trading position or outlook of the Group subsequent to 31 March, 2007, being the date to which the latest audited financial statements of the Group were made up.

MISCELLANEOUS

The English text of this circular shall prevail over the Chinese text, in case of any inconsistency.

DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection during normal business hours at the offices of Norton Rose at 38/F, Jardine House, 1 Connaught Place, Central, Hong Kong from the date of this circular up to and including 20 December, 2007:

• (a) the 2006 Agreement;

• (b) the 2007 Master Agreement;

• (c) the letter dated 28 November, 2007 from Optima Capital to the Independent Board Committee and the Independent Shareholders, the text of which is set out on pages 10 to 16 of this circular;

• (d) the letter dated 28 November, 2007 from the Independent Board Committee to the Independent Shareholders, the text of which is set out on page 9 of this circular; and

• (e) the letter of consent referred to in the paragraph headed “Consent and Qualification” in this Appendix.

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NOTICE OF SPECIAL GENERAL MEETING

==> picture [229 x 110] intentionally omitted <==

(Incorporated in Bermuda with limited liability)

(Stock Code: 0861)

NOTICE IS HEREBY GIVEN that a special general meeting (“Special General Meeting”) of the Company will be held at Suite 2008, 20th Floor, Devon House, Taikoo Place, 979 King’s Road, Quarry Bay, Hong Kong on Thursday, 20 December, 2007 at 10:00 a.m. for the purpose of considering and, if thought fit, passing with or without modification the following resolution as ordinary resolution of the Company:

ORDINARY RESOLUTION

1. “ That :

2. (a) The 2007 Master Agreement (the details of which are set out in the circular dated 28 November, 2007 despatched by the Company to its shareholders (the “ Circular ”)), a copy of which has been produced to the meeting marked “A” and signed by the chairman of the meeting for identification purpose, and the transactions contemplated thereunder and the Revised Annual Caps (as defined in the Circular) be and are hereby approved, confirmed and/or ratified; and

3. (b) any one director of the Company be and is hereby authorised to execute all such other documents, instruments or agreements and to do or take all such actions or things as such director considers necessary or desirable to implement and/or give effect to the terms of the 2007 Master Agreement and the transactions contemplated thereunder.”

By Order of the Board GUO Wei President and Chief Executive Officer

Hong Kong, 28 November, 2007

Registered office: Canon’s Court 22 Victoria Street Hamilton HM 12 Bermuda

Head office and principal place of business in Hong Kong: Suite 2008, 20th Floor Devon House Taikoo Place 979 King’s Road Quarry Bay Hong Kong

* For identification purpose only

– 20 –

NOTICE OF SPECIAL GENERAL MEETING

Notes:

• (1) Any shareholder of the Company entitled to attend and vote at the Special General Meeting is entitled to appoint one or more person(s) as his proxy/proxies to attend and, on a poll, vote instead of him. A proxy need not be a shareholder of the Company.

• (2) Where there are joint holders of any share of the Company, any one of such joint holders may vote at the Special General Meeting, either in person or by proxy, in respect of such share as if he were solely entitled thereto, but if more than one of such joint holders be present at the Special General Meeting, then one of the said persons so present whose name stands first on the register of shareholders of the Company in respect of such share shall alone be entitled to vote in respect thereof.

• (3) To be valid, the instrument appointing a proxy and the power of attorney or other authority, if any, under which it is signed or a notarially certified copy thereof must be deposited at the Company’s branch share registrar and transfer office in Hong Kong, Tricor Abacus Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong, not less than 48 hours before the time appointed for holding the Special General Meeting or any adjourned meeting thereof. Delivery of an instrument appointing a proxy shall not preclude a shareholder from attending and voting in person at the Special General Meeting or at any adjourned meeting thereof.

• (4) The voting at the Special General Meeting in respect of the resolution above will be conducted by poll.

• (5) As at the date of this notice, the board of directors of the Company comprises five executive directors, namely, Mr. LI Qin (Chairman), Mr. GUO Wei (Vice Chairman, President and Chief Executive Officer), Mr. ZENG Maochao, Mr. LIN Yang and Mr. HUA Zhinian; one non-executive director, namely, Mr. William O. GRABE; and four independent non-executive directors, namely Mr. HU Zhao Guang, Professor WU Jinglian, Mr. WONG Man Chung, Francis and Mr. KWAN Ming Heung, Peter.

– 21 –