Nanjing Panda Electronics Company Limited

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in 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 advisor.

If you have sold or transfer all your shares in Nanjing Panda Electronics Company Limited, you should at once hand this circular and the accompanying form of proxy to the purchaser or other transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim 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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南京熊貓電子股份有限公司

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

(Stock Code: 0553)

AMENDMENTS TO THE ARTICLES OF ASSOCIATION, RENEWAL OF CONTINUING CONNECTED TRANSACTIONS, ELECTION OF DIRECTOR AND NOTICE OF EXTRAORDINARY MEETING

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

A letter from the board of directors of Nanjing Panda Electronics Company Limited (the “Company”) is set out on pages 1 to 21 of this circular. A letter from the independent board committee containing its advice to the independent shareholders of the Company is set out on page 22 of this circular. A letter of advice from Guangdong Securities to the independent board committee and the independent shareholders of the Company is set out on pages 23 to 41 of this circular.

A notice convening an extraordinary general meeting of the Company to be held on 23 December 2009 (Wednesday) at 9:00 a.m. at the Conference Room, Workers’ Union, 301 Zhongshan Road East, Nanjing, the People’s Republic of China is set out on pages 53 to 57 of this circular. Whether or not you are able to attend the extraordinary general meeting, please complete and return the enclosed form of proxy in accordance with the instructions printed thereon to the office of the Company as soon as possible and in any event not less than 48 hours before the time of the extraordinary general meeting or any adjournment thereof. Completion and delivery of the form of proxy will not preclude you from attending and voting in person at the extraordinary general meeting or any adjournment thereof should you so wish.

5 November 2009

	Page
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	ii
LETTER FROM THE BOARD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM THE INDEPENDENT BOARD COMMITTEE. . . . . . . . . . . . . . . . . . . . . . . . . . .	22
LETTER FROM GUANGDONG SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	23
APPENDIX I — GENERAL INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	42
APPENDIX II — PROPOSED AMENDMENTS TO
THE ARTICLES OF ASSOCIATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	48
APPENDIX III — DETAILS OF DIRECTOR PROPOSED TO BE ELECTED. . . . . . . . . . . . . .	52
NOTICE OF EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	53

— i —

DEFINITIONS

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

“Articles of Association” the existing articles of association of the Company “associate(s)” has the meaning ascribed to it under the Listing Rules “Annual Cap(s)” a maximum aggregate annual value of each of the Existing Continuing Connected Transactions and the Future Continuing Connected Transactions “Board” the board of Directors “CEC” China Electronics Corporation（中國電子信息產業集團有限公司）, a company incorporated in the PRC “connected person(s)” has the meaning ascribed to it under the Listing Rules “Company” Nanjing Panda Electronics Company Limited（南京熊貓電子股份有限公司）, a joint stock company incorporated in the PRC with limited liability “Directors” the directors of the Company “EGM” the extraordinary general meeting of the Company to be convened on 23 December 2009 (Wednesday) to consider and, if thought fit, approve, among other matters, the amendments to the Articles of the Association, the Renewed Master Agreements and the Future Continuing Connected Transactions

“Existing CCT Agreements”

the 8 continuing connected transactions agreements entered into between the Group and the PEGL Group, all dated 8 November 2006, for a term of 3 years commencing from 1 January 2007 and expiring on 31 December 2009, the details of which are set out in the Company’s announcement dated 11 December 2006

“Existing Continuing Connected Transactions”

the continuing connected transactions between the Group and the PEGL Group pursuant to the Existing CCT Agreements

“Factory Premises Lease Agreement” the factory premises lease agreement entered into between the Company and PEGL for the lease of factory premises by the Group

— ii —

DEFINITIONS

“Future Continuing Connected the continuing connected transactions between the Group and the PEGL Transaction(s)” Group, to be carried out between 1 January 2010 to 31 December 2012, pursuant to the Renewed Master Agreements “Group” the Company and its subsidiaries “HK$” Hong Kong dollars, the lawful currency of Hong Kong “Hong Kong” the Hong Kong Special Administrative Region of the PRC “Import & Export Company” Nanjing Panda Electronics Import and Export Company（南京熊貓電子進出口有限公司）, a wholly-owned subsidiary of PEGL “Independent Board Committee” an independent committee of the Board comprising all independent non-executive Directors, namely Mr. Cai Lianglin, Mr. Ma Chung Lai, Lawrence, and Mr. Tang Yousong “Independent Financial Adviser” Guangdong Securities Limited, a licensed corporation to carry out type or “Guangdong Securities” 1 (dealing in securities), type 4 (advising on securities), type 6 (advising on corporate finance) and type 9 (asset management) regulated activities under the SFO, has been appointed as the independent financial adviser to the Independent Board Committee in respect of the Future Continuing Connected Transactions “Independent Shareholders” Shareholders other than PEGL and its associates “Latest Practicable Date” 4 November 2009, 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 “Model Code” Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 to the Listing Rules “NEIIC” Nanjing Electronics Information Industrial Corporation（南京中電熊貓信息產業集團有限公司）, a company incorporated in the PRC with limited liability

— iii —

DEFINITIONS

“Non-competition Agreement” the non-competition and first right of refusal agreement entered into between the Group and the PEGL Group dated 18 March 1996 as supplemented by a supplemental agreement entered into between the Group and the PEGL Group on 9 October 2000 “PEGL” Panda Electronics Group Limited（熊貓電子集團有限公司）, the controlling Shareholder of the Company holding approximately 51.10% of the total issued share capital of the Company as at the Latest Practicable Date “PEGL Group” a group comprising PEGL, its subsidiaries (for the purpose of this circular, excluding the Group), its holding companies and their respective associates “PEGL Import & Export Agency the import and export agency agreement entered into between the Agreement” Company and Import & Export Company for the provision of import and export services by the PEGL Group “PEGL Sale Agreement” the sale of materials, components and parts agreement entered into between the Company and PEGL relating to the sale of materials by the PEGL Group “PEGL Sub-contracting Agreement” the sub-contracting services and composite services agreement entered into between the Company and PEGL for the provision of services by the PEGL Group “PRC Lawyer” Jiangsu FD Yongheng Law Firm “Renewed Master Agreements” Sub-contracting Agreement, PEGL Sub-contracting Agreement, Sale Agreement, PEGL Sale Agreement, PEGL Import & Export Agency Agreement, Trademark Licence Agreement and Factory Premises Lease Agreement “RMB” Renminbi, the lawful currency of PRC “Sale Agreement” the sale of materials, components and parts agreement entered into between the Company and PEGL relating to the sale of materials by the Group

— iv —

DEFINITIONS

“SFO”	Securities and Futures Ordinance, Chapter 571 of the laws of Hong
	Kong
“Shareholder(s)”	holder(s) of the share(s) of the Company
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Sub-contracting Agreement”	the sub-contracting services and composite services agreement entered
	into between the Company and PEGL for the provision of services by
	the Group
“Trademark Licence Agreement”	the trademark licence agreement entered into between the Company
	and PEGL relating to the grant of rights to use the PANDA Trademark
	by the Group
“%”	Percentage

In this circular, RMB has been converted to HK$ at the rate of RMB1.00 = HK$1.13 for illustration purpose only. No representation is made that any amounts in RMB or HK$ have been, could have been or could be converted at the above rate or at any other rates.

The English names of the PRC established companies/entities in this circular are only translation of their official Chinese names. In case of inconsistency, the Chinese names prevail.

— v —

LETTER FROM THE BOARD

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南京熊貓電子股份有限公司 NANJING PANDA ELECTRONICS COMPANY LIMITED

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

(Stock Code: 0553)

Executive Director Li Anjian (Chairman)

Non-executive Directors Mr. Xu Guofei (Vice Chairman) Ms. Liu Ailian Mr. Zhu Lifeng Mr. Shi Qiusheng Mr. Lu Qing

Independent Non-executive Directors Mr. Cai Lianglin Mr. Ma Chung Lai, Lawrence Mr. Tang Yousong

Registered Address: Level 1-2 Block 5, North Wing Nanjing High and New Technology Development Zone Nanjing the PRC

Office Address: 301 Zhongshan Road East Nanjing the PRC Postal Code: 210002

5 November 2009

To the Shareholders

Dear Sir or Madam,

AMENDMENTS TO THE ARTICLES OF ASSOCIATION RENEWAL OF CONTINUING CONNECTED TRANSACTIONS ELECTION OF DIRECTOR

INTRODUCTION

Reference is made to the announcement issued by the Company dated 15 October 2009 in relation to the amendments to the Articles of Association and the renewal of continuing connected transactions.

— 1 —

LETTER FROM THE BOARD

The Board proposed to make certain amendments to the Articles of Association in accordance with the needs of the Company and in compliance with the requirements of the Company Law of the PRC. The proposed amendments to the Articles of Association are subject to approval of the Shareholders by way of passing a special resolution at the EGM.

As the Existing CCT Agreements will expire on 31 December 2009 and all, except one, of the Existing Continuing Connected Transactions are expected to continue after the expiration, the Board proposed to renew the Existing CCT Agreements. On 15 October 2009, the Company announced that the Renewed Master Agreements have been entered into between the Group and the PEGL Group.

As PEGL is the controlling shareholder of the Company holding approximately 51.10% of the total issued share capital of the Company, PEGL is a connected person of the Company and the PEGL Group is an associate of PEGL. Therefore, the Future Continuing Connected Transactions contemplated under the Renewed Master Agreements constitute a continuing connected transaction of the Company under Chapter 14A of the Listing Rules.

Given that the relevant percentage ratios (other than profits ratio) calculated under Rule 14.07 of the Listing Rules for some of the Future Continuing Connected Transactions are expected to exceed 2.5% and the relevant Annual Caps to be more than HK$10,000,000, the Future Continuing Connected Transactions are subject to reporting, announcement and Independent Shareholders’ approval requirements under Chapter 14A of the Listing Rules.

The purpose of this circular is to provide you with (i) details of the proposed amendments to the Articles of Association; (ii) further details of the Future Continuing Connected Transactions; (iii) a letter from the Independent Board Committee with its recommendation on the Future Continuing Connected Transactions to the Independent Shareholders; (iv) a letter from Guangdong Securities containing its advice on the Future Continuing Connected Transactions to the Independent Board Committee and the Independent Shareholders; (v) details of election of Director; and (vi) a notice of the EGM.

I. AMENDMENTS TO THE ARTICLES OF ASSOCIATION

The Board confirms that the proposed amendments to the Articles of Association conforms with the requirements of Appendix 3 and the applicable requirements set out in Part D of the Appendix 13 of the Listing Rules.

— 2 —

LETTER FROM THE BOARD

II. RENEWAL OF CONTINUING CONNECTED TRANSACTIONS

BACKGROUND INFORMATION

As announced by the Company on 11 December 2006, the Company entered into the Existing CCT Agreements with the PEGL Group for a term of three years commencing from 1 January 2007 to 31 December 2009. The Existing Continuing Connected Transactions include the mutual provision of subcontracting services and composite services, the mutual provision of material, components and parts, the import and export agency services provided by the PEGL Group to the Group, the licensing of PANDA Trademark by the Group to the PEGL Group, and the mutual leasing of factory premises.

The Existing CCT Agreements will expire on 31 December 2009 and most of the Existing Continuing Connected Transactions are expected to continue after the expiration. The Board proposed to renew the Existing CCT Agreements, except the land/factory premises lease agreement relating to the provision of land use right and factory premises by the PEGL Group to the Group, as the acquisition of land by the Company in late 2008 has provided sufficient factory premises for the Group (please refer to the Company’s announcement dated 7 November 2008 and circular dated 14 November 2008 for details). Apart from the amount of the Annual Caps, there is no material difference between the Existing CCT Agreements and the Renewed Master Agreements.

HISTORICAL AND PROPOSED ANNUAL CAPS

The table below sets forth a summary of the categories and the historical as well as proposed Annual Caps of the Existing Continuing Connected Transactions and the Future Continuing Connected Transactions:

Categories of the Continuing	Categories of the Continuing	Annual	Caps
Connected Transactions		Historical	Proposed
		2007.01.01-	2010.01.01-
		2009.12.31	2012.12.31
		(RMB’000)	(RMB’000)
(A)	Provision of sub-contracting services and composite
	services by the Group to the PEGL Group	35,000	12,000
(B)	Provision of sub-contracting services and composite
	services by the PEGL Group to the Group	15,000	10,000
(C)	Sale of materials, components and parts
	by the Group to the PEGL Group	25,000	280,000

— 3 —

LETTER FROM THE BOARD

(D)	Sale of materials, components and parts
	by the PEGL Group to the Group	15,000	30,000
(E)	Import and export agency services provided
	by the PEGL Group to the Group	15,000	1,000
(F)	Licensing of PANDA Trademark by
	the Group to the PEGL Group	1,000	3,000
(G)	Lease of factory premises by the Group
	to the PEGL Group	2,000	500
(H)	Lease of factory premises by
	the PEGL Group to the Group	6,000	—

PARTICULARS OF THE RENEWED MASTER AGREEMENTS

Details of the Renewed Master Agreements are set out below. The Future Continuing Connected Transactions will be conditional upon the Independent Shareholders’ approval at the EGM.

(A) PROVISION OF SUB-CONTRACTING & COMPOSITE SERVICES BY THE GROUP

1.	Agreement:	Provision of Sub-contracting Services and Composite
		Services Agreement（提供分包服務及綜合服務協議）
2.	Date:	15 October 2009
3.	Term:	From 1 January 2010 to 31 December 2012
4.	Parties:	(i) The Company
		(ii) PEGL

— 4 —

LETTER FROM THE BOARD

5. Nature of Transaction:

Provision of sub-contracting services including manufacture of external plastic casings for television sets, processing of machinery facilities, processing of surface mount technology (“SMT”), and quality control services by the Group to the PEGL Group.
Provision of composite services including apparatus maintenance, periodic inspection of measuring instruments and equipments, and computer network services by the Group to the PEGL Group.

6. Reasons for Transaction:

The provision of sub-contracting and composite services by the Group to the PEGL Group will enlarge the Group’s business and provide a stable source of income for the Group. Therefore, the continuation of such transactions is beneficial to and in the interest of the Group.

7. Pricing basis:

The service fees for the provision of sub- contracting services and composite services by the Group to the PEGL Group will continue to be determined after arm’s length negotiation between the parties and on normal commercial terms with reference to (1) the quality and quantity of materials used and level of techniques involved in each transaction; and (2) the prevailing market prices, being prices no less favourable than those offered by an independent third party for similar sub-contracting and composite services.

8. Historical Figures:

The historical amount of sub-contracting and composite services provided by the Group to the PEGL Group are as follows:

	6 months	Year	Year
	ended	ended	ended
	30 Jun	31 Dec	31 Dec
	2009	2008	2007
	(unaudited)	(audited)	(audited)
Amount
(RMB’000)	4,460	20,902	16,339

— 5 —

LETTER FROM THE BOARD

9. Annual Cap:

The proposed Annual Cap of not exceeding RMB12,000,000 has been determined with reference to (i) the historical transaction amounts of the sub-contracting and composite services provided by the Group; (ii) the terms of the subject agreement which does not contain a provision requiring the PEGL Group to exclusively obtain services from the Group; and (iii) the estimated drop in the demand for the subcontracting and composite services from the PEGL Group.

(B) RECEIPT OF SUB-CONTRACTING & COMPOSITE SERVICES FROM THE PEGL GROUP

1. Agreement:

Receipt of Sub-contracting Services and Composite Services Agreement（接受分包服務及綜合服務協議）

2. Date: 15 October 2009

3. Term:

From 1 January 2010 to 31 December 2012

4. Parties:

(i) The Company
(ii) PEGL

5. Nature of Transaction:

Provision of sub-contracting services in respect of processing of raw materials or semi-finished products for satellite communication, electronic production, information and electromechanical products by the PEGL Group to the Group.

Provision of composite services including property management services, machinery maintenance services and other utility services in factory premises, and medical services, social and recreational services and other general welfare services for the Group’s employees and families (if applicable) by the PEGL Group to the Group.

6. Reasons for Transaction:

The provision of the sub-contracting and composite services by the PEGL Group has provided the Group with better quality warranties of such services and has reduced cost in management and transportation, and hence the continuation of such arrangement is beneficial to and in the interest of the Group.

— 6 —

LETTER FROM THE BOARD

7. Pricing basis:

The service fees for the provision of sub-contracting and composite services by the PEGL Group to the Group will continue to be determined after arm’s length negotiation between the parties and on normal commercial terms with reference to (1) the quality and quantity of materials used and level of techniques involved in each transaction; and (2) the prevailing market prices, being prices no less favourable than those offered by an independent third party for similar sub-contracting and composite services.

8. Historical Figures:

The historical amount of sub-contracting and composite services provided by the PEGL Group to the Group are as follows:

	6 months	Year	Year
	ended	ended	ended
	30 Jun	31 Dec	31 Dec
	2009	2008	2007
	(unaudited)	(audited)	(audited)
Amount
(RMB’000)	350	4,854	14,785

9. Annual Cap:

The proposed Annual Cap of not exceeding RMB10,000,000 has been determined with reference to (i) the historical transaction amounts of the sub-contracting and composite services provided by the PEGL Group; (ii) the Company’s estimate of its demand for raw materials and semi-finished products for its future development; and (iii) the Company’s estimate of its demand for composite services.

— 7 —

LETTER FROM THE BOARD

(C) SALE OF MATERIALS, COMPONENTS & PARTS BY THE GROUP

1. Agreement:

Sale of Materials, Components and Parts Agreement（銷售物資及零部件協議）

2. Date:

15 October 2009

3. Term:

From 1 January 2010 to 31 December 2012

4. Parties:

(i) The Company
(ii) PEGL

5. Nature of Transaction:

Provision of materials, components and parts by the Group to the PEGL Group including raw materials, metal and plastic parts necessary for manufacture of television sets, shortwave communication products and trading business, as well as office information products such as calculators and software.

6. Reasons for Transaction:

The sale of the Group’s materials, components and parts to the PEGL Group will enlarge the Group’s business and provide the Group with a stable source of income in a fiercely competitive market, and hence the continuation of such transactions is beneficial to and in the interest of the Group.

7. Pricing basis:

The selling prices of the materials, components and parts by the Group to the PEGL Group will continue to be determined after arm’s length negotiation between the parties and normal commercial terms with reference to the prevailing market prices, being prices no less favourable than those offered by an independent third party for similar materials, components and parts in the PRC.

— 8 —

LETTER FROM THE BOARD

8. Historical Figures:

The historical transaction amount of materials components and parts sold by the Group to the PEGL Group are as follows:

	6 months	Year	Year
	ended	ended	ended
	30 Jun	31 Dec	31 Dec
	2009	2008	2007
	(unaudited)	(audited)	(audited)
Amount
(RMB’000)	6,980	23,236	24,071

9. Annual Cap:

The proposed Annual Cap of not exceeding RMB280,000,000 has been determined with reference to (i) the Company’s estimate of the great demand for the supply of materials, components and parts from the PEGL Group and its associates, in particular CEC and NEIIC, which are expanding their production of liquid crystal diode television sets; (ii) the estimated increase in transactions with CEC which is one of the major state-owned conglomerates in the electronic field in the PRC holding numerous highly specialized electronic information and related enterprises; and (iii) the development of the Company, which has developed advanced technology in the electronics manufacturing field and adopted scientific management methods, which in turn enable the Group to provide quality materials, components and parts to satisfy the orders from CEC and NEIIC in accordance with their developments and requests.

The Board notes that the proposed Annual Cap of RMB280,000,000 is a drastic increase from the existing Annual Cap of RMB25,000,000. The main reason for the increase is due to the estimated increase of the number of transactions with CEC and the projected income generated through the sales transactions with CEC in the coming three financial years ending 31 December 2012, and considering the scale of operation of CEC in the PRC (please refer to the Company’s announcement dated 7 September 2009 relating to CEC entitled “Overseas Regulatory Announcement and Update on the Change of the Ultimate Controller of the Company” for further details).

— 9 —

LETTER FROM THE BOARD

(D) PURCHASE OF MATERIALS, COMPONENTS & PARTS FROM THE PEGL GROUP

1. Agreement:

Purchase of Materials, Components and Parts Agreement （購買物資及零部件協議）

2. Date:

15 October 2009

3. Term: From 1 January 2010 to 31 December 2012

4. Parties:

(i) The Company
(ii) PEGL

5. Nature of Transaction:

Provision of materials, components and parts necessary for production of electronic manufacturing, satellite communication, information and electromechanical products by the PEGL Group to the Group.

6. Reasons for Transaction:

The purchase of materials, components and parts by the Group from the PEGL Group offers the Group easy and efficient access to materials, components and parts with quality warranties and reduces the Group’s costs in purchasing, management and transportation. Therefore, the continuation of such arrangement is beneficial to and in the interest of the Group.

7. Pricing basis:

The selling prices of the materials, components and parts by the PEGL Group to the Group will continue to be conducted on arm’s length negotiation between the parties and normal commercial terms with reference to the prevailing market prices, being prices no less favourable than those offered by an independent third party for similar materials, components and parts in the PRC.

— 10 —

LETTER FROM THE BOARD

8. Historical Figures:

The historical transaction amount of materials components and parts purchased by the Group from the PEGL Group are as follows:

	6 months	Year	Year
	ended	ended	ended
	30 Jun	31 Dec	31 Dec
	2009	2008	2007
	(unaudited)	(audited)	(audited)
Amount
(RMB’000)	1,510	11,773	7,498

9. Annual Cap:

The proposed Annual Cap of not exceeding RMB30,000,000 has been determined with reference to (i) the Company’s estimate of future growth in its production volume; and (ii) the Company’s plan to purchase more materials, components and parts from the PEGL Group and its associates, in particular CEC, NEIIC and their subsidiaries, in the coming three financial years ending 31 December 2012 in line with the development of the Group’s business.

The Board notes that the proposed Annual Cap of RMB30,000,000 is the double of the existing Annual Cap of RMB15,000,000. The significant increase in the Annual Cap is in line with the development of the Company. In 2007 and 2008, the Company experienced strong growth in the businesses of electronic manufacturing products and electronic information products. According to the Company’s annual reports, the sales income generated from electronic manufacturing products were RMB237,224,000, RMB305,820,000 and RMB407,647,000 for the three years ended 31 December 2006, 2007 and 2008 respectively, and the sales income generated from electronic information products were RMB192,728,000, RMB276,672,000 and RMB339,192,000 for the three years ended 31 December 2006, 2007 and 2008 respectively. In view of the strong growth, the Company expects to purchase more supporting materials, components and parts from the PEGL Group in the next three years.

— 11 —

LETTER FROM THE BOARD

Moreover, the proposed increase in the Annual Cap has also taken into account state policy. The State Council of the PRC has recently announced a series of industrial restructuring and revitalization schemes, such as the Electronic and Information Industry Adjustment and Revitalization Plan （《電子信息產業調整和振興規劃》）and the Electronic and Information Industry and Technological Advancement and Technological Transformation Investment Direction 2009-2011（《電子信息產業技術進步和技術改造投資方向2009-2011》）in order to promote further development of the national economy. Considering the above, the Company believes that its electronic manufacturing and electronic information businesses will continue to develop prosperously in the next three years.

(E) PROVISION OF IMPORT & EXPORT AGENCY SERVICES BY THE PEGL GROUP

1. Agreement: Import and Export Agency Agreement（進出口代理合同） 2. Date: 15 October 2009 3. Term: From 1 January 2010 to 31 December 2012 4. Parties: (i) The Company (ii) Import & Export Company 5. Nature of Transaction: Provision of services of importing certain raw materials and parts necessary for the Group’s production activities and exporting certain products abroad by the Import & Export Company. During the three financial years ending 31 December 2010, 2011 and 2012 respectively, the Group will continue appointing Import & Export Company as its non-exclusive import and export agent in respect of its electromechanical and other products and businesses.

— 12 —

LETTER FROM THE BOARD

6. Reasons for Transaction:

Two of the Company’s subsidiaries, namely Nanjing Panda Information Industry Co., Ltd. and Nanjing Panda Electronic Manufacture Co., Ltd have now in their possession import and export rights to trade their own products. As such, the demand for import and export agency services from the Import & Export Company will decrease in the future. However, considering the favourable import and export channels and the service advantages provided by the Import & Export Company, the Company is of the view that the continuation of such arrangement will provide the Group with excellent import and export agency services and thus are beneficial to and in the interest of the Group.

7. Pricing basis:

The import and export agency services to be charged by the Import & Export Company will continue to be conducted on arm’s length negotiation between the parties and on normal commercial terms with reference to (1) the prevailing market prices, being prices not higher than those offered by an independent third party for similar import and export services in the PRC; and (2) the historical agency fees agreed between the parties, being approximately 1.5% agency fees on the total value of goods imported and approximately 3% agency fees on the total value of goods exported through the Import & Export Company. As the number and value of the goods involved are different, the agency fees will be charged on a transaction basis and subject to adjustments. According to the Import & Export Agency Agreement, in the event that there are disputes over the amount of agency fees payable after adjustments, the Company shall appoint an independent international accountant to determine a fair and reasonable agency fees with reference to the sales reports, invoices, receipts and other relevant documents relating to such transaction, and the decision made by the independent international accountant is final and binding.

— 13 —

LETTER FROM THE BOARD

8. Historical Figures:

The historical amount of import and export agency services provided by the PEGL Group to the Group are as follows:

6 months	Year	Year
ended	ended	ended
30 Jun	31 Dec	31 Dec
2009	2008	2007
(unaudited)	(audited)	(audited)

Amount

(RMB’000) — — 180

9. Annual Cap:

The proposed Annual Cap of not exceeding RMB1,000,000 has been determined with reference to (i) the historical transaction amounts of the import and export services provided by the PEGL Group; and (ii) the establishment of the Company’s own import and export entities as mentioned in paragraph 6 “Reasons for the Transaction” above and hence the expected drastic drop in the demand for import and export agency services from the PEGL Group in the coming three financial years ending 31 December 2010, 2011 and 2012.

(F) LICENSING OF PANDA TRADEMARK BY THE GROUP

1. Agreement: Trademark Licence Agreement（商標使用許可合同）

2. Date: 15 October 2009 3. Term: From 1 January 2010 to 31 December 2012

4. Parties: (i) The Company

(ii) PEGL

— 14 —

LETTER FROM THE BOARD

5. Nature of Transaction:

The grant of the right to use the PANDA Trademark by the Group to the PEGL Group and its associates in respect of certain television sets and other electronic products produced by the PEGL Group and its associates which do not fall within any product category of the Group as set out in the Noncompetition Agreement. The right to use the PANDA Trademark granted by the Group to the PEGL Group are non-exclusive. The PEGL Group undertakes to protect and to procure its related parties to protect the PANDA Trademark during the term of the Trademark Licence Agreement. The Company shall file a copy of the Trademark Licence Agreement with the State Trademark Office of the State Administration for Industry and Commerce （國家工商行政管理局商標局）within 3 months of the signing of the said agreement.

6. Reasons for Transaction:

The grant of the right to use the PANDA Trademark to the PEGL Group can provide the Group with a stable source of income and can enhance the brand popularity of “PANDA” which in turn helps generate more revenue for the Group in future. Hence, the continuation of such transaction is beneficial to and in the interest of the Group.

7. Pricing basis:

The licence fees payable by the PEGL Group to the Group for the right to use the PANDA Trademark will continue to be conducted on arm’s length negotiation between the parties and on normal commercial terms with reference to (i) the overall business of the television set markets in the PRC; and (ii) the market prices paid by other similar entities (if any) for the use of the PANDA Trademark. In view of the severe competition in the television set and electronic product markets in the PRC, the licence fees per unit shall be at the same level as that charged under the previous Trademark Licence Agreement which are as follows:

	License
Type of products	fee per unit
Colour television set (34" and above)	RMB5.00
Colour television set (29")	RMB4.00
Colour television set (25")	RMB3.00
Colour television set (21")	RMB2.00

— 15 —

LETTER FROM THE BOARD

The above licence fee per unit will be reduced in respect of products that are manufactured and sold for export purpose or incurred loss, in view of greater costs and resources required to penetrate into the overseas markets.

8. Historical Figures:

The historical amount of trademark licence fees paid by the PEGL Group to the Group are as follows:

	6 months	Year	Year
	ended	ended	ended
	30 Jun	31 Dec	31 Dec
	2009	2008	2007
	(unaudited)	(audited)	(audited)
Amount
(RMB’000)	* see Note	192	133

Note: As the trademark licence fees is payable by PEGL annually at the end of each calendar year for the three years ending 31 December 2007, 2008 and 2009, the trademark licence fees for 2009 cannot be ascertained at the date of this circular, but in any event it will not exceed the existing Annual Cap.

9. Annual Cap:

The proposed Annual Cap of not exceeding RMB3,000,000 has been determined with reference to (i) the historical licence fees paid by the PEGL Group to the Group; and (ii) the Company’s estimate of a substantial increase in the demand for the PANDA Trademark from the PEGL Group and its associates, in particular one of the major productions of CEC in the coming years is liquid crystal diode (“LCD”) televisions sets. According to the website of Ministry of Industry and Information Technology of the PRC（中華人民共和國工業和信息化部） , Nanjing City Government, CEC, NEIIC and representative of SHARP entered into cooperation agreements concerning the eighth generation LCD products on 31 August 2009. Pursuant to the agreements, a SHARP LCD research and development centre will be set up and the sixth generation of LCD production lines and technologies will be introduced to the PRC. Hence, it is expected that PEGL Group and its associates would have greater demand for the use of PANDA Trademark in their LCD products in the next three years.

— 16 —

LETTER FROM THE BOARD

The Board notes that the proposed Annual Cap of RMB3,000,000 is a significant increase from the existing Annual Cap of RMB1,000,000. In addition to the reasons stated above, the Company also considers the effects and benefits from the Government’s “subsidies on electronic home appliances for rural areas” policy. The Company noted that PEGL has recently been included in the List of Products and Enterprises relating to Subsidies on Electronic Home Appliances for Rural Areas（《家電下鄉補貼產品及企業名單》）. Hence, it is expected that PEGL shall gradually expand its development and production in colour TVs, which in turn would increase the demand for PANDA Trademark in the next three years.

(G) LEASE OF FACTORY PREMISES BY THE GROUP

1. Agreement: Factory Premises Lease Agreement（廠房租賃合同） 2. Date: 15 October 2009 3. Term: From 1 January 2010 to 31 December 2012 4. Parties: (i) The Company (ii) PEGL 5. Nature of Transaction:

Lease of vacant factory premises by the Group to the PEGL Group which are situated at No. 301, Zhongshan Road East, Nanjing City and Nanjing New Economic and Technological Zone, for the purpose of manufacture and operation. The total annual rent will not exceed RMB500,000 which are payable per year within 7 days before the end of each calendar year. Depending on the needs of the PEGL Group and the availability of premises offered by the Group, the actual area of premises available for rent and the duration of the lease may be different from time to time. Considering the above and the cap of the rental per year is not very significant, the Company is of the view that for the purpose of administrative efficiency the rental payable by the PEGL Group to the Group shall be charged on an annual basis instead of on a monthly basis.

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LETTER FROM THE BOARD

6. Reasons for Transaction:

The lease of the factory premises by the Group to the PEGL Group can make good use of the existing idle resources of the Group and provide the Group with a stable source of income. Therefore, the continuation of such arrangement is beneficial to and in the interest of the Group.

7. Pricing basis:

The lease of factory premises by the Group to the PEGL Group will continue to be conducted on arm’s length negotiation between the parties and on normal commercial terms with reference to the prevailing market prices, being prices no less favourable than those accepted or offered by an independent third party for similar leases in similar locations in the PRC.

8. Historical Figures:

The amount of rental has fluctuated over the 2 years ended 31 December 2007 and 2008 and 6 months ended 30 June 2009 because the actual area of premises that was rented to the PEGL Group was different from time to time. The historical amounts of rental paid by the PEGL Group to the Group are as follows:

6 months Year Year ended ended ended 30 Jun 31 Dec 31 Dec 2009 2008 2007 (unaudited) (audited) (audited)

Amount

(RMB’000) 198 101 1,010

9. Annual Cap: The proposed Annual Cap of not exceeding RMB500,000, which has been determined with reference to (i) the historical rental paid by the PEGL Group to the Group; and (ii) the estimated drop in the demand for lease of factory premises from the PEGL Group, considering that Nanjing Panda Handa Technology Company Limited, a wholly-owned subsidiary of PEGL, has recently acquired certain land use rights for a piece of land for industrial use and hence it may not be necessary for the PEGL Group to rent substantial factory premises from the Group or other parties.

— 18 —

LETTER FROM THE BOARD

REASONS FOR AND BENEFITS OF THE FUTURE CONTINUING CONNECTED TRANSACTIONS

The respective reasons for and benefits of each of the Future Continuing Connected Transactions are set out under the respective paragraphs headed “Reasons for the Transaction” under the section headed “PARTICULARS OF THE RENEWED MASTER AGREEMENTS” above. As the Group started business relationship with the PEGL Group since the listing of the Company in 1996, the services mutually provided between the PEGL Group and the Group have reached satisfactory results and provided overall business and operational convenience to the Group. Moreover, it is expected that the Future Continuing Connected Transactions will provide a stable source of income to the Group.

Taking into account the above, the Directors (including the independent non-executive Directors) consider that it is in the interest of the Company to renew the Renewed Master Agreements and to be engaged in the Future Continuing Connected Transactions and that the terms of the Renewed Master Agreements are fair and reasonable and in the interest of the Company and the Shareholders as a whole.

RELATIONSHIP BETWEEN THE GROUP AND THE PEGL GROUP

PEGL is the controlling shareholder of the Company, holding approximately 51.10% of the total issued share capital of the Company. The Import & Export Company is a wholly-owned subsidiary of PEGL.

As PEGL is a connected person of the Company and the PEGL Group (which includes the Import & Export Company) is an associate of PEGL, the Future Continuing Connected Transactions contemplated under the Renewed Master Agreements constitute a continuing connected transaction of the Company under Chapter 14A of the Listing Rules.

REQUIREMENTS UNDER THE LISTING RULES

PEGL, the PEGL Group and their associates will abstain from voting on the resolutions to approve the Future Continuing Connected Transactions at the EGM.

— 19 —

LETTER FROM THE BOARD

An Independent Board Committee comprising Mr. Cai Lianglin, Mr. Ma Chung Lai, Lawrence and Mr. Tang Yousong has been formed to advise the Independent Shareholders on the fairness and reasonableness of the Future Continuing Connected Transactions. Guangdong Securities as the Independent Financial Adviser to provide its opinion on the Future Continuing Connected Transactions to the Independent Board Committee and the Independent Shareholders.

The Company will comply with the relevant requirements under Chapter 14A of the Listing Rules if the amounts under the Future Continuing Connected Transactions for each of the three years ending 31 December 2010, 2011 and 2012 exceed the Annual Cap or when there is a material change to the terms of the Renewed Master Agreements.

III. ELECTION OF DIRECTOR

Reference is made to the Company’s announcement dated 20 October 2009, on which the Board passed a resolution on nominating Dr. Jason Hsuan（宣建生博士）as a non-executive Director of the Company. In accordance with Articles 69 and 126 of the Articles of Association, election of a Director shall be approved by Shareholders at the general meeting of the Company.

The biographical details of Dr. Hsuan are set out in Appendix III to this circular in accordance with the relevant requirements of the Listing Rules.

THE EGM

A notice convening the EGM is set out on pages 53 to 57 of this circular. Votes taken at the EGM for the approval of the Future Continuing Connected Transactions by the Independent Shareholders shall be taken by way of poll. As at the Latest Practicable Date, PEGL is holding approximately 51.10% of the total issued share capital of the Company. Mr. Xu Guofei (non-executive Director), Mr. Zhu Lifeng (non-executive Director), Mr. Shi Qiusheng (non-executive Director) and Ms. Zhang Zhengping (a supervisor of the Company), who hold an aggregate of approximately 0.00268% of the total issued share capital of the Company, are connected persons of the Company. Mr. Xu Guofei, Mr. Zhu Lifeng and Ms. Zhang Zhengping also hold offices in PEGL as disclosed in Appendix I to this circular. Therefore, PEGL and its associates, Mr. Xu Guofei, Mr. Zhu Lifeng, Mr. Shi Qiusheng and Ms. Zhang Zhengping will be required to abstain from voting in respect of the resolution approving the Future Continuing Connected Transactions. Save as disclosed above, no other associate of PEGL holds any shares in the Company and will be required to abstain from voting in respect of the resolution approving the Future Continuing Connected Transactions.

— 20 —

LETTER FROM THE BOARD

PROXY ARRANGEMENT

A form of proxy for use in connection with the EGM is accompanied with this circular. Whether or not you intend to attend the EGM, you are requested to complete the form of proxy upon receipt in accordance with the instructions printed thereon and return the same to the office of the Company as soon as possible and in any event not later than 48 hours before the time of the EGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM or any adjournment thereof should you so wish.

VOTING BY POLL

Pursuant to Rule 13.39(4) of the Listing Rules, any vote of shareholders at a general meeting must be taken by a poll. Therefore, all resolutions proposed at the EGM shall be voted by poll. The results of the poll will be published on the HKExnews website at www.hkexnews.hk and the Company’s website at www.panda.cn after the EGM as soon as possible.

RECOMMENDATION

The Directors (including the independent non-executive Directors) are of the opinion that the terms of the Future Continuing Connected Transactions contemplated under the Renewed Master Agreements are fair and reasonable and on normal commercial terms and the Future Continuing Connected Transactions are in the interests of the Company and the Shareholders as a whole. Accordingly, the Directors recommend the Independent Shareholders to vote in favour of the relevant ordinary resolution to be proposed at the EGM.

The text of the letter from the Independent Board Committee is set out on page 22 of this circular. The text of the letter from Guangdong Securities containing its advice to the Independent Board Committee and the Independent Shareholders and the principal factors and reasons which it has taken into account in arriving at its advice is set out on pages 23 to 41 of this circular. Independent Shareholders are strongly recommended to read carefully these two letters for details of the advice.

The Directors also recommend the Shareholders to vote in favour of the special resolution to approve the proposed amendments to the Articles of Association.

ADDITIONAL INFORMATION

Your attention is also drawn to the additional information set out in the appendices to this circular as required under the Listing Rules.

By Order of the Board

Nanjing Panda Electronics Company Limited

Li Anjian Chairman

— 21 —

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

The following is the text of a letter of recommendation from the Independent Board Committee to the Independent Shareholders which has been prepared for the purpose of inclusion in this circular.

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

南京熊貓電子股份有限公司 NANJING PANDA ELECTRONICS COMPANY LIMITED

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

(Stock Code: 0553)

5 November 2009

To the Independent Shareholders

Dear Sir or Madam,

RENEWAL OF CONTINUING CONNECTED TRANSACTIONS

We have been appointed as members of the Independent Board Committee to advise you in connection with the Future Continuing Connected Transactions contemplated under the Renewed Master Agreements, details of which are set out in the Letter from the Board contained in the circular dated 5 November 2009 issued by the Company to the Shareholders (the “Circular”), of which this letter forms part. Unless specified otherwise, capitalized terms used herein shall have the same meanings as those defined in the Circular.

Having considered the advice of Guangdong Securities and the principal factors and reasons taken into consideration by it in arriving at its advice as set out on pages 23 to 41 of the Circular, we are of the opinion that the terms of the Renewed Master Agreements are fair and reasonable and the Future Continuing Connected Transactions are in the interests of the Company and the Shareholders as a whole so far as the Independent Shareholders are concerned. Accordingly, we recommend the Independent Shareholders to vote in favour of the relevant ordinary resolution to be proposed at the EGM.

Yours faithfully,

For and on behalf of the

Independent Board Committee

Mr. Cai Lianglin Mr. Ma Chung Lai, Lawrence Mr. Tang Yousong Independent Non-executive Directors

— 22 —

LETTER FROM GUANGDONG SECURITIES

Set out below is the text of a letter received from Guangdong Securities, the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders in respect of the Future Continuing Connected Transactions for the purpose of inclusion in this circular.

==> picture [201 x 32] intentionally omitted <==

Units 2505-06, 25/F. Low Block of Grand Millennium Plaza 181 Queen’s Road Central Hong Kong

5 November 2009

To: The independent board committee and the independent shareholders

of Nanjing Panda Electronic Co. Ltd.

Dear Sirs,

RENEWAL OF CONTINUING CONNECTED TRANSACTIONS

INTRODUCTION

We refer to our appointment as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the Future Continuing Connected Transactions, details of which are set out in the letter from the Board (the “ Board Letter ”) contained in the circular dated 5 November 2009 issued by the Company to the Shareholders (the “ Circular ”), of which this letter forms part. Terms used in this letter shall have the same meanings as defined in the Circular unless the context requires otherwise.

As announced by the Company on 11 December 2006, the Company entered into the Existing CCT Agreements with the PEGL Group for a term of three years commencing from 1 January 2007 to 31 December 2009. The Board proposed to continue the Existing Continuing Connected Transactions after their expiration, save and except for the provision of land use right and factory premises by the PEGL Group to the Group. In addition, apart from the amount of the annual caps, there is no material difference between the Existing CCT Agreements and the Renewed Master Agreements.

On 15 October 2009, the Company entered into the Renewed Master Agreements with the PEGL Group, pursuant to which the Group will conduct the Future Continuing Connected Transactions for a three-year period commencing from 1 January 2010 to 31 December 2012.

— 23 —

LETTER FROM GUANGDONG SECURITIES

As referred to in the Board Letter, PEGL is a controlling shareholder of the Company and it also holds 100% of the shareholding interest in the Import & Export Company, PEGL and the Import & Export Company are therefore considered to be connected persons of the Company. Since the relevant percentage ratios of the Future Continuing Connected Transactions as calculated in accordance with Rule 14.07 of the Listing Rules are above 2.5% and the relevant Future Annual Caps (as being defined in the latter section of this letter) are more than HK$10,000,000, the Future Continuing Connected Transactions constitute non-exempt continuing connected transactions for the Company under Chapter 14A of the Listing Rules and are subject to approval of the Independent Shareholders at the EGM by way of poll. PEGL, the PEGL Group and their respective associates are required to abstain from voting on the relevant resolutions to approve the Future Continuing Connected Transactions (together with the Future Annual Caps) at the EGM.

The Independent Board Committee comprising Mr. Cai Lianglin, Mr. Ma Chung Lai, Lawrence, Mr. Tang Yousong (all being independent non-executive Directors) has been formed to advise the Independent Shareholders on (i) whether the terms of the Renewal Master Agreements (including the Future Annual Caps) are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned; and (ii) whether the Future Continuing Connected Transactions are conducted in the ordinary and usual course of business of the Company and are in the interests of the Company and the Shareholders as a whole. We, Guangdong Securities Limited, have been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in this respect.

BASIS OF OUR OPINION

In formulating our advice and recommendation to the Independent Board Committee and the Independent Shareholders, we have relied on the statements, information, opinions and representations contained or referred to in the Circular and the information and representations as provided to us by the Directors. We have assumed that all information and representations that have been provided by the Directors, for which they are solely and wholly responsible, are true, complete and accurate in all material respects at the time when they were made and continue to be so as at the Latest Practicable Date. We have also assumed that all statements of belief, opinion, expectation and intention made by the Directors in the Circular were reasonably made after due enquiries and careful considerations. We have no reason to suspect that any material facts or information have been withheld or to doubt the truth, accuracy and completeness of the information and facts contained in the Circular, or the reasonableness of the opinions expressed by the Company, its advisers and/or the Directors, which have been provided to us. We consider that we have taken sufficient and necessary steps on which to form a reasonable basis and an informed view for our recommendation in compliance with Rule 13.80 of the Listing Rules.

The Directors have collectively and individually accepted full responsibility for the accuracy of the information contained in the Circular and have confirmed, having made all reasonable enquiries, which to the best of their knowledge and belief, there are no other facts the omission of which would make any statement in the Circular misleading.

— 24 —

LETTER FROM GUANGDONG SECURITIES

We consider that we have been provided sufficient information to reach an informed view and to provide a reasonable basis for our recommendation. We have not, however, conducted any independent in-depth investigation into the business and affairs of the Company, PEGL or their respective subsidiaries or associates, nor have we considered the taxation implication on the Group or the Shareholders as a result of the Future Continuing Connected Transactions. In addition, we have no obligation to update this opinion to take into account events occurring after the issue of this letter. Nothing contained in this letter should be construed as a recommendation to hold, sell or buy any Shares or any other securities of the Company.

Lastly, where information in this letter has been extracted from published or otherwise publicly available sources, the sole responsibility of Guangdong Securities is to ensure that such information has been correctly extracted from the relevant sources.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our opinion in respect of the Future Continuing Connected Transactions and the Future Annual Caps, we have taken into consideration the following principal factors and reasons:

(1) Background of the Future Continuing Connected Transactions

As announced by the Company on 11 December 2006, the Company entered into the Existing CCT Agreements with the PEGL Group for a term of three years commencing from 1 January 2007 to 31 December 2009. The Board proposed to continue the Existing Continuing Connected Transactions after their expiration, save and except for the provision of land use right and factory premises by the PEGL Group to the Group. In addition, apart from the amount of the annual caps, there is no material difference between the Existing CCT Agreements and the Renewed Master Agreements.

The Directors advised that the terms of the Renewed Master Agreements were negotiated and entered into on arm’s length basis between the Company and PEGL and the Directors are of the view that the terms and conditions of the Renewed Master Agreements are on normal commercial terms, fair and reasonable so far as the Independent Shareholders are concerned and are in the interests of the Company and the Shareholders as a whole.

— 25 —

LETTER FROM GUANGDONG SECURITIES

Information on the Group

The Group is principally engaged in the development, manufacture and sale of satellite products, electromechanical instrument products, electronic information products, and the electronic manufacturing business.

Extracted below is the segmental information of the audited financial results of the Company for the two years ended 31 December 2008:

	For the	For the
	year ended	year ended
	31 December	31 December	% growth from
	2008	2007	2007 to 2008
	RMB’000	RMB’000	RMB’000
Electronic manufacturing products	407,647	305,820	33.30%
Electromechanical products	213,320	189,002	12.87%
Satellite telecommunication products	131,982	198,771	(33.60)%
Electronic information products	339,192	276,672	22.60%
Other operations	28,250	23,773	18.83%
Total turnover	1,120,391	994,038	12.71%

Source: the annual report of the Company for the year ended 31 December 2008.

The above table depicted that the Group’s financial performance in all business segments, save and except for the satellite telecommunication products segment, had been improving significantly from the 2007 financial year to the 2008 financial year.

Information on the PEGL Group

The PEGL Group is principally engaged in the development, manufacture and sale of communication equipment, computer and other electronic equipment; instruments and apparatus, cultural and office machines; electricity transmission, distribution and control equipment; environmental protection, public safety and other equipment; financial tax control products, power supply products; computer services, software and system integration; as well as the sale and technical support services for the products developed by PEGL. As mentioned previously, PEGL is a controlling shareholder of the Company.

— 26 —

LETTER FROM GUANGDONG SECURITIES

Information on the Import & Export Company

The Import & Export Company is principally engaged in the provision of import and export agency services relating to the operation and technology of various products (save and except for those products restricted by the PRC Government).

Information on CEC

As extracted from the Board Letter, CEC is a limited liability company which is wholly-owned and directly managed by the State Council. CEC, through one of its controlling subsidiaries, holds approximately 47.98% equity interest in PEGL.

CEC is principally engaged in electronic products, electronic application products and the research and development of software and integrated systems; electronic application engineering; construction engineer; communication engineering; organisation and management of water projects; promotion and development of environmental products and technology; operation and development of real estate; vehicles and parts; hardware and electronics; consultancy services and technical services and transfer.

(2) Reasons for the Future Continuing Connected Transactions

With reference to the Board Letter, the Group started business relationship with the PEGL Group since the listing of the Company on the Stock Exchange in 1996, and the services mutually provided between the Group and the PEGL Group have reached satisfactory results and provided overall business and operational convenience to the Group. Moreover, it is expected that the Future Continuing Connected Transactions will provide a stable source of income to the Group.

The reasons for and benefits of each of the Future Continuing Connected Transactions to the Group are set out under the respective paragraphs headed “Reasons for the transaction” under the section headed “Particulars of the Renewed Master Agreements” in the Board Letter. The Directors consider that the Future Continuing Connected Transactions conform to the Group’s principal businesses and development strategies. Furthermore, due to those various reasons for and benefits of the Future Continuing Connected Transactions, it would be beneficial for the Group to continue its business transactions with the PEGL Group.

Given that the Future Continuing Connected Transactions are expected to be recurrent in nature and would occur on a regular and continuing basis, the Directors proposed to enter into the Renewed Master Agreements to regulate the Future Continuing Connected Transactions under a stipulated framework.

— 27 —

LETTER FROM GUANGDONG SECURITIES

Having considered the reasons for and benefits of the Future Continuing Connected Transactions, we concur with the Directors that the Future Continuing Connected Transactions are in the interests of the Company and the Shareholders as a whole as such transactions have facilitated and would continue to facilitate the operation and growth of the Group’s business. In addition, we also consider that the Future Continuing Connected Transactions are conducted in the ordinary and usual course of business of the Company.

(3) Principal terms of the Renewed Master Agreements

The tables below summarise the major terms of each of the Renewed Master Agreements dated 15 October 2009 as referred to in the Board Letter:

(A) Provision of sub-contracting & composite services by the Group (“ CCT 1 ”)

Agreement: Provision of Sub-contracting Services and Composite Services Agreement Date: 15 October 2009

Term: From 1 January 2010 to 31 December 2012 (both dates inclusive)

Parties: (i) The Company

(ii) PEGL

Nature of transaction:

(i) Provision of sub-contracting services including manufacture of external plastic casings for television sets, processing of machinery facilities, processing of surface mount technology, and quality control services by the Group to the PEGL Group; and (ii) provision of composite services including apparatus maintenance, periodic inspection of measuring instruments and equipments, and computer network services by the Group to the PEGL Group.

Pricing basis:

The service fees for the provision of sub-contracting services and composite services by the Group to the PEGL Group will be determined after arm’s length negotiation between the parties and on normal commercial terms with reference to (1) the quality and quantity of materials used and level of techniques involved in each transaction; and (2) the prevailing market prices, being prices no less favourable than those offered by an independent third party for similar sub-contracting and composite services.

— 28 —

LETTER FROM GUANGDONG SECURITIES

Future Annual Caps: Not exceeding RMB12,000,000 for the three years ending 31 December 2011

(B) Receipt of sub-contracting & composite services from the PEGL Group (“ CCT 2 ”)

Agreement: Receipt of Sub-contracting Services and Composite Services Agreement Date: 15 October 2009

Term: From 1 January 2010 to 31 December 2012 (both dates inclusive) Parties: (i) The Company (ii) PEGL

Nature of transaction: (i) Provision of sub-contracting services in respect of processing of raw materials or semi-finished products for satellite communication, electronic production, information and electromechanical products by the PEGL Group to the Group; and (ii) provision of composite services including property management services, machinery maintenance services and other utility services in factory premises, and medical services, social and recreational services and other general welfare services for the Group’s employees and families (if applicable) by the PEGL Group to the Group.

Pricing basis:

The service fees for the provision of sub-contracting and composite services by the PEGL Group to the Group will be determined after arm’s length negotiation between the parties and on normal commercial terms with reference to (1) the quality and quantity of materials used and level of techniques involved in each transaction; and (2) the prevailing market prices, being prices no less favourable than those offered by an independent third party for similar sub-contracting and composite services.

Future Annual Caps:

Not exceeding RMB10,000,000 for the three years ending 31 December 2011

— 29 —

LETTER FROM GUANGDONG SECURITIES

(C) Sale of materials, components & parts by the Group (“ CCT 3 ”)

Agreement: Sale of Materials, Components and Parts Agreement

Date: 15 October 2009

Term: From 1 January 2010 to 31 December 2012 (both dates inclusive)

Parties: (i) The Company

(ii) PEGL

Nature of transaction: Provision of materials, components and parts by the Group to the PEGL Group, including raw materials, metal and plastic parts necessary for manufacture of television sets, shortwave communication products and trading business, as well as office information products such as calculators and software.

Pricing basis:

The selling prices of the materials, components and parts by the Group to the PEGL Group will be determined after arm’s length negotiation between the parties and on normal commercial terms with reference to the prevailing market prices, being prices no less favourable than those offered by an independent third party for similar materials, components and parts in the PRC.

Future Annual Caps: Not exceeding RMB280,000,000 for the three years ending 31 December 2011

— 30 —

LETTER FROM GUANGDONG SECURITIES

(D) Purchase of materials, components & parts from the PEGL Group (“ CCT 4 ”)

Agreement: Purchase of Materials and Components and Parts Agreement Date: 15 October 2009

Term: From 1 January 2010 to 31 December 2012 (both dates inclusive) Parties: (i) The Company (ii) PEGL

Nature of transaction: Provision of materials, components and parts necessary for production of mobile communication, satellite communication, information and electromechanical products by the PEGL Group to the Group.

Pricing basis:

The selling prices of the materials, components and parts by the PEGL Group to the Group will be conducted on arm’s length negotiation between the parties and on normal commercial terms with reference to the prevailing market prices, being prices no less favourable than those offered by an independent third party for similar materials, components and parts in the PRC.

Future Annual Caps: Not exceeding RMB30,000,000 for the three years ending 31 December 2011

— 31 —

LETTER FROM GUANGDONG SECURITIES

(E) Provision of import & export agency services by the PEGL Group (“ CCT 5 ”)

Agreement: Import and Export Agency Agreement Date: 15 October 2009

Term: From 1 January 2010 to 31 December 2012 (both dates inclusive) Parties: (i) The Company (ii) PEGL

Nature of transaction: (i) Provision of services of importing certain raw materials and parts necessary for the Group’s production activities and exporting certain products abroad by the Import & Export Company; and (ii) during the three years ending 31 December 2010, 2011 and 2012 respectively, the Group will continue appointing the Import & Export Company as its non-exclusive import and export agent in respect of its electromechanical and other products and businesses.

Pricing basis:

The import and export agency services to be charged by the Import & Export Company will be conducted on arm’s length negotiation between the parties and on normal commercial terms with reference to (1) the prevailing market prices, being prices not higher than those offered by an independent third party for similar import and export services in the PRC; and (2) the historical agency fees agreed between the parties, being approximately 1.5% agency fees on the total value of goods imported and approximately 3% agency fees on the total value of goods exported through the Import & Export Company. As the number and value of the goods involved are different, the agency fees will be charged on a transaction basis and subject to adjustments. According to the Import & Export Agency Agreement, in the event that there are disputes over the amount of agency fees payable after adjustments, the Company shall appoint an independent international accountant to determine a fair and reasonable agency fee with reference to the sales reports, invoices, receipts and other relevant documents relating to such transaction, and the decision made by the independent international accountant shall be final and binding.

Future Annual Caps: Not exceeding RMB1,000,000 for the three years ending 31 December 2011

— 32 —

LETTER FROM GUANGDONG SECURITIES

(F) Licensing of panda trademark by the Group (“ CCT 6 ”)

Agreement: Trademark Licence Agreement Date: 15 October 2009

Term: From 1 January 2010 to 31 December 2012 (both dates inclusive) Parties: (i) The Company (ii) PEGL

Nature of transaction: The grant of the right to use the PANDA Trademark by the Group to the PEGL Group and its associates in respect of certain television sets and other electronic products produced by the PEGL Group and its associates which do not fall within any product category of the Group as set out in the Non-competition Agreement. The right to use the PANDA Trademark granted by the Group to the PEGL Group is nonexclusive. The PEGL Group undertakes to protect and to procure its related parties to protect the PANDA Trademark during the term of the Trademark Licence Agreement. The Company shall file a copy of the Trademark Licence Agreement with the State Trademark Office of the State Administration for Industry and Commerce （國家工商行政管理局商標局） within three months of the signing of the said agreement.

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LETTER FROM GUANGDONG SECURITIES

Pricing basis:

The licence fees payable by the PEGL Group to the Group for the right to use the PANDA Trademark will be conducted on arm’s length negotiation between the parties and on normal commercial terms with reference to (i) the overall business of the television set markets in the PRC; and (ii) the market prices paid by other similar entities (if any) for the use of the PANDA Trademark. In view of the severe competition in the television set markets in the PRC, the licence fees per unit shall be at the same level as that charged under the previous Trademark Licence Agreement which are as follows:

Type of products	License fee per unit
Colour television set (34" and above)	RMB5.00
Colour television set (29")	RMB4.00
Colour television set (25")	RMB3.00
Colour television set (21")	RMB2.00

Future Annual Caps: Not exceeding RMB3,000,000 for the three years ending 31 December 2011

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LETTER FROM GUANGDONG SECURITIES

(G) Lease of factory premises by the Group (“ CCT 7 ”)

Agreement:

Factory Premises Lease Agreement

Date: 15 October 2009

Term: From 1 January 2010 to 31 December 2012 (both dates inclusive)

Parties: (i) The Company

(ii) PEGL

Nature of transaction:

Lease of vacant factory premises by the Group to the PEGL Group which are situated at No. 301, Zhongshan Road East, Nanjing City and Nanjing New Economic and Technological Zone, for the purpose of manufacture and operation. The total annual rent will not exceed RMB5,000,000 which is payable per year within seven days before the end of each calendar year. Depending on the needs of the PEGL Group and the availability of premises offered by the Group, the actual area of premises available for rent and the duration of the lease may be different from time to time. Considering the above and the cap of the rental per year is not very significant, the Company is of the view that for the purpose of administrative efficiency, the rental payable by the PEGL Group to the Group shall be charged on an annual basis instead of on a monthly basis.

Pricing basis:

The lease of factory premises by the Group to the PEGL Group will be conducted on arm’s length negotiation between the parties and on normal commercial terms with reference to the prevailing market prices, being prices no less favourable than those accepted or offered by an independent third party for similar leases in similar locations in the PRC.

Future Annual Caps: Not exceeding RMB5,000,000 for the three years ending 31 December 2011

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LETTER FROM GUANGDONG SECURITIES

Other terms of the Renewal Master Agreements

Other than the above listed terms, we have also reviewed the other major terms of the Renewed Master Agreements and are not aware of any terms which are unusual. From the Board Letter and as also highlighted above, we noted that each of the Future Continuing Connected Transactions will be conducted on normal commercial terms or on terms no less favourable than those offered by an independent third party for similar goods/services/trademark/premise. For our due diligence purpose, we have reviewed the sale and purchase agreements and services agreements entered into between the Group and other third parties indicating specifically the price and payment terms, and we noted that the pricing basis and the terms of the Renewed Master Agreements are in line with the general practice of the Company. In light of the foregoing, we consider that the terms of the Renewal Master Agreements are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned.

(4) The Future Annual Caps

Each of the Future Continuing Connected Transactions will be subject to, among other things, the Annual Caps for each of the three years ending 31 December 2012 (the “ Future Annual Caps ”). From the Board Letter, we noted that the historical amounts of the actual transactions and the Future Annual Caps for each of the Future Continuing Connected Transactions are as follow:

					Proposed Future
			Historical figures		Annual Caps
		For year ended	For year ended	For the	for each of the
		31 December	31 December	six months ended	three years ending
		2007	2008	30 June 2009	31 December 2012
		RMB’000	RMB’000	RMB’000	RMB’000
CCT	1	16,339	20,902	4,460	12,000
CCT	2	14,785	4,854	350	10,000
CCT	3	24,701	23,236	6,980	280,000
CCT	4	7,498	11,773	1,510	30,000
CCT	5	180	—	—	1,000
CCT	6	133	192	— (Note)	3,000
CCT	7	1,010	101	198	500

Note:

As the trademark licence fees are payable by PEGL annually at the end of each calendar year for the two years ended 31 December 2007, 2008 and the year ending 31 December 2009, the trademark licence fees for 2009 could not be ascertained at the Latest Practicable Date, but in any event it will not exceed the relevant existing Annual Cap.

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LETTER FROM GUANGDONG SECURITIES

The Directors confirmed that the Future Annual Caps were determined generally with reference to (i) the historical amounts of the actual transactions for the Future Continuing Connected Transactions recorded in the two years ended 31 December 2008 and the six months ended 30 June 2009; and (ii) the expected demand for the goods/services and use of the trademark/premise under the respective Future Continuing Connected Transactions given the projected business development of the Group as well as the PEGL Group.

To assess the fairness and reasonableness of the Future Annual Caps, we have discussed with the management of the Company regarding the basis and assumptions underlying the projections of the Future Annual Caps.

As set forth in the section headed “Information on the Group” of this letter, the Group is principally engaged in the development, manufacture and sale of satellite products, electromechanical instrument products, electronic information products, and the electronic manufacturing business. We understand from the management of the Company that the Group has been providing the relevant goods/services and the use of trademark/premise to the PEGL Group (or vice versa, as the case may be) and there have been upstream and downstream business linkages between the Group and the PEGL Group since the listing of the Company on the Stock Exchange in 1996.

According to the Board Letter, the Future Annual Caps under CCT 1 were estimated based on (i) the historical transaction amounts of the sub-contracting and composite services provided by the Group; (ii) the terms of the subject agreement which does not contain a provision requiring the PEGL Group to exclusively obtain services from the Group; and (iii) the estimated drop in the demand for the subcontracting and composite services from the PEGL Group. Regarding point (iii) above, we have enquired into the management of the Company and were informed by the management of the Company that the estimated drop in the demand for the sub-contracting and composite services from the PEGL Group is due to a change in the relevant production process which requires less of such sub-contracting and composite services.

According to the Board Letter, the Future Annual Caps under CCT 2 were estimated based on (i) the historical transaction amounts of the sub-contracting and composite services provided by the PEGL Group; (ii) the Company’s estimate of its demand for raw materials and semi-finished products for its future development; and (iii) the Company’s estimate of its demand for composite services. We have discussed with the management of the Company regarding the aforementioned basis for determining the Future Annual Caps under CCT 2.

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LETTER FROM GUANGDONG SECURITIES

As for the Future Annual Caps under CCT 3 and CCT 4, we noted from the Board Letter that the Future Annual Caps under CCT 3 were estimated based on (i) the Company’s estimate of the huge demand for materials, components and parts from the PEGL Group and its associates, in particular CEC and NEIIC, which are expanding their production of liquid crystal diode television sets; (ii) the estimated increase in transactions with CEC which is one of the major state-owned conglomerates within the electronic field in the PRC holding numerous highly specialised electronic information and related enterprises; and (iii) the development of advanced technology by the Company within the electronics manufacturing field, and the Company’s adoption of scientific management methods which in turn enable the Group to provide quality materials, components and parts to satisfy the orders from CEC and NEIIC in accordance with their developments and requests. In addition, based on our discussion with the management of the Company and as also referred to in the Board Letter, the Board noted that the Future Annual Caps under CCT 3 of RMB280,000,000 is a significant increase from the existing Annual Cap of RMB25,000,000 as well as the actual amount of such transaction of approximately RMB23,236,000 for the year ended 31 December 2008. The management of the Company explained that such significant increase is due to the estimated rise in the number of transactions with CEC and the projected income generated through the sales transactions with CEC in the coming three financial years ending 31 December 2012, after also considering the scale of operation of CEC in the PRC. Upon our request, the Company provided us with the relevant transaction proposal between the Group and PEGL Group. According to the aforesaid transaction proposal, the demand for materials, components and parts from the PEGL Group may reach RMB280,000,000, based on its scale of operation.

Whereas the Future Annual Caps under CCT 4 were estimated based on (i) the Company’s estimate of future growth in its production volume; and (ii) the Company’s plan to purchase more materials, components and parts from the PEGL Group and its associates, in particular CEC, NEIIC and their respective subsidiaries, in the coming three years ending 31 December 2012 which is in line with the development of the Group’s business. According to the Board Letter, the Board also noted that the proposed Future Annual Caps of RMB30,000,000 doubles that of the existing Annual Cap of RMB15,000,000 as well as the actual amount of such transaction of approximately RMB11,773,000 for the year ended 31 December 2008. We have discussed with the management of the Company and as represented by the management of the Company, the substantial increase in the Future Annual Caps under CCT 4 aligns with the development of the Company. As further explained by the management of the Company, in 2007 and 2008, the Company experienced strong growth in the businesses of electronic manufacturing products and electronic information products. With reference to the Company’s annual reports, the sales income generated from electronic manufacturing products were RMB237,224,000, RMB305,820,000 and RMB407,647,000 for the three years ended 31 December 2006, 2007 and 2008 respectively, and the sales income generated from electronic information products were RMB192,728,000, RMB276,672,000 and RMB339,192,000 for the three years ended 31 December 2006, 2007 and 2008 respectively. In view of such strong growth, the Company expected to purchase more supporting materials, components and parts from the PEGL Group in the next three years.

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LETTER FROM GUANGDONG SECURITIES

As referred to in the Board Letter and depicted by the table in the section headed “Information on the Group” of this letter, the Company experienced strong growth in the businesses of electronic manufacturing products and electronic information products. The management of the Company advised that such strong growth in businesses was primarily resulting from the new state policy which comprised a series of industrial restructuring and revitalisation schemes, such as the Electronic and Information Industry Adjustment and Revitalisation Plan （《電子信息產業調整和振興規劃》） and the Electronic and Information Industry and Technological Advancement and Technological Transformation Investment Direction 20092011 （《電子信息產業技術進步和技術改造投資方向2009－2011》） for the purpose of promoting further development of the national economy. As represented by the management of the Company, the significant increase in the Future Annual Caps under CCT 3 and CCT 4 is attributable to the aforesaid factor which is expected to further trigger (i) the demand for materials, components and parts for manufacture of television sets, shortwave communication products and trading business as well as office information products from the PEGL Group; and (ii) the demand for materials, components and parts for production of satellite communication, information and electromechanical products from the Group. For our due diligence purpose, we have requested for further information on the Electronic and Information Industry Adjustment and Revitalisation Plan （《電子信息產業調整和振興規劃》） and the Electronic and Information Industry and Technological Advancement and Technological Transformation Investment Direction 20092011 （《電子信息產業技術進步和技術改造投資方向2009－2011》） from the Company and have also discussed the expected impact of these two state policies on the PRC’s electronic industry with the management of the Company. In this regard, we concur with the management of the Company’s belief that the Company’s electronic manufacturing and electronic information businesses will continue to develop prosperously in the next three years.

From the Board Letter, we noted that the Future Annual Caps under CCT 5 were estimated based on (i) the historical transaction amounts of the import and export services provided by the PEGL Group; and (ii) the decrease in demand for the import and export agent services. In this relation, we understand from the management of the Company that following the establishment of the Company’s own import and export entities, namely Nanjing Panda Information Industry Co., Ltd. and Nanjing Panda Electronic Manufacture Co. Ltd., which have now obtained their own import and export rights to trade their own products, there would likely to be a drastic drop in the demand for import and export agency services from the Group provided by the PEGL Group.

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LETTER FROM GUANGDONG SECURITIES

In addition, according to the Board Letter, the Future Annual Caps under CCT 6 were estimated with reference to (i) the historical licence fees paid by the PEGL Group to the Group; and (ii) the Company’s estimate of a substantial increase in the demand for the PANDA Trademark from the PEGL Group and its associates, in particular that one of the major productions of CEC in the coming years will be liquid crystal diode (“ LCD ”) televisions sets. As advised by the management of the Company and also presented in the website of Ministry of Industry and Information Technology of the PRC （中華人民共和國工業和信息化部）, Nanjing City Government, CEC, NEIIC and representative of SHARP entered into three cooperation agreements concerning (i) the eighth generation LCD products on 31 August 2009; (ii) the setting up a SHARP LCD research and development centre; and (iii) the introduction of the sixth generation of LCD production lines and technologies into the PRC. Therefore, the management of the Company expected that the PEGL Group and its associates would increase their demand for the use of the PANDA Trademark in their LCD products substantially in the next three years. The Board also noted that the proposed Future Annual Caps under CCT 6 of RMB3,000,000 is a significant increase from the existing Annual Cap of RMB1,000,000 as well as the actual amount of such transaction of approximately RMB192,000 for the year ended 31 December 2008. In addition to the reasons stated above, the management of the Company also confirmed with us that the Company has also considered the effects and benefits from the PRC Government’s “subsidies on electronic home appliances for rural areas” policy. The Company noted that PEGL has recently been included in the List of Products and Enterprises relating to Subsidies on Electronic Home Appliances for Rural Areas（《家電下鄉補貼產品及企業名單》）. Hence, it is expected that PEGL would gradually expand its development and production in colour TVs, which in turn would increase the demand for the PANDA Trademark in the next three years.

Lastly, the Future Annual Caps under CCT 7 were estimated based on (i) the historical rental paid by the PEGL Group to the Group; and (ii) the estimated drop in the demand for lease of factory premises from the PEGL Group. With reference to the Board Letter and the announcement of the Company dated 10 August 2009, Nanjing Panda Handa Technology Company Limited, a wholly-owned subsidiary of PEGL, has acquired a parcel of industrial land with not less than four factory buildings constructed thereon for industrial use. In light of the above, the demand for lease of factory premises from the PEGL Group is expected to drop.

Taking into account the foregoing basis for determining the Future Annual Caps, we consider that the Future Annual Caps for each of the three years ending 31 December 2012 are fair and reasonable so far as the Independent Shareholders are concerned. Although the Future Annual Caps under CCT3, CCT4 and CCT 6 represent a significant increase from their respective existing Annual Caps, having considered the reasons and basis for the respective increase as explained by the management of the Company, we are of the view that the Future Annual Caps under CCT3 , CCT4 and CCT6 may still be attainable.

Shareholders should note that as the Future Annual Caps are relating to future events and were estimated based on assumptions which may or may not remain valid for the entire period up to 31 December 2012, and they do not represent forecasts of revenue to be generated from the Future Continuing Connected Transactions. Consequently, we express no opinion as to how closely the actual revenue to be generated under the Future Continuing Connected Transactions will correspond with the Future Annual Caps.

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LETTER FROM GUANGDONG SECURITIES

(5) Listing Rules implication and internal control of the Group

The Directors confirmed that the Company shall comply with the requirements of Rules 14A.37 to 14A.41 of the Listing Rules pursuant to which (i) the values of the Future Continuing Connected Transactions must be restricted by the Future Annual Caps for the three years ending 31 December 2012; (ii) the terms of the Renewed Master Agreements (including the Future Annual Caps) must be reviewed by the independent non-executive Directors annually; (iii) details of independent non-executive Directors’ annual review on the terms of the Renewed Master Agreements (including the Future Annual Caps) must be included in the Company’s subsequent published annual reports and financial accounts. Furthermore, it is also required by the Listing Rules that the auditors of the Company must provide a letter to the Board confirming, among other things, that the Future Continuing Connected Transactions are carried out in accordance with the pricing policies of the Company, and the Future Annual Caps are not being exceeded. In the event that the total amount of each of the Future Continuing Connected Transactions exceeds their respective Future Annual Caps, or that there is any material amendment to the terms of the Renewed Master Agreements, the Company, as confirmed by the Directors, shall comply with the applicable provisions of the Listing Rules governing continuing connected transactions.

With the stipulation of the above requirements for the Future Continuing Connected Transactions pursuant to the Listing Rules, we are of the view that there are adequate measures in place to monitor the Future Continuing Connected Transactions (including the Future Annual Caps) and hence the interest of the Independent Shareholders would be safeguarded.

RECOMMENDATION

Having taken into account the above factors and reasons, we are of the opinion that (i) the terms of the Renewed Master Agreements (including the Future Annual Caps) are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned; and (ii) the Future Continuing Connected Transactions are conducted in the ordinary and usual course of business of the Company and are in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Board Committee to advise the Independent Shareholders to vote in favour of the relevant resolutions to be proposed at the EGM to approve the Future Continuing Connected Transactions (together with the Future Annual Caps) and we recommend the Independent Shareholders to vote in favour of the resolutions in this regard.

Yours faithfully,

For and on behalf of

Guangdong Securities Limited

Graham Lam

Managing Director

— 41 —

GENERAL INFORMATION

APPENDIX I

1. RESPONSIBILITY STATEMENT

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

2. DISCLOSURE OF INTERESTS

(A) Interests of Directors

As at the Latest Practicable Date, the interests and short positions of the Directors, supervisors and the chief executive of the Company in the shares, underlying shares and 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 they are taken or deemed to have under such provisions of the SFO), or which were required pursuant to Section 352 of the SFO to be entered in the register maintained by the Company referred therein, or which were required to be notified to the Company and the Stock Exchange pursuant to the Model Code were as follows:

Interests in the domestic shares of the Company:

				No. of
				domestic	Percentage of
			Nature of	shares held	share capital
Name of Director	Duties	Capacity	interests	(Long position)	in issue
					(%)
Xu Guofei	Non-executive Director	Beneficial owner	Personal	2,546	0.00039
Zhu Lifeng	Non-executive Director	Beneficial owner	Personal	4,378	0.00067
Shi Qiusheng	Non-executive Director	Beneficial owner	Personal	5,940	0.00091
Zhang Zhengping	Chairman of Supervisor	Beneficial owner	Personal	4,648	0.00071
	Committee

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GENERAL INFORMATION

APPENDIX I

(B) Interests of Substantial Shareholders

As at the Latest Practicable Date, so far as is known to the Directors, supervisors and chief executive of the Company, the interests or short positions of the persons (not being a Director or supervisor or chief executive of the Company) in the shares and underlying shares of the Company which would fall to be disclosed under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who are, 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 member of the Group:

(i) Interests in the shares of the Company

			Approximate	Approximate
		Class/	percentage in	percentage
		no. of shares	the relevant	in the
Name of		interested	class of shares	total shares
Shareholder	Capacity/nature of interests	(long position)	in issue	in issue
PEGL	Corporate interests held in the	334,715,000	81.04%	51.10%
	capacity of beneficial owner	domestic shares
Lewis Joseph	Personal interests held in the	20,260,000	8.37%	3.10%
	capacity of beneficial owner	H shares
Tuesday Thirteen	Corporate interests held in the	16,920,000	7.00%	2.59%
Inc.	capacity of beneficial owner	H shares

As at the Latest Practicable Date, so far as is known to the Directors, the following Directors and supervisors are holding offices as directors or employees in PEGL, the substantial shareholder of the Company as shown above:

Name of Director/Supervisor

Position held in PEGL

Xu Guofei General Manager Zhu Lifeng Deputy General Manager Lu Qing Deputy General Manager Zhang Zhengping Deputy Secretary to Party Committee

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GENERAL INFORMATION

APPENDIX I

(ii) Interests in non-wholly owned subsidiaries of the Company

	Name of shareholders	Approximate
	interested	percentage
Name of non-wholly	in 10% or more	of interest
owned subsidiaries	of the subsidiaries	held by that
of the Company	of the Company	shareholder
Nanjing Panda Accurate	Corporate legal person of	30% (L)
Machinery Co., Ltd.	Nanjing Panda Accurate
	Machinery Co., Ltd.
Nanjing Panda Information	GALANT (HK) LIMITED	28% (L)
Industry Co., Ltd.
Nanjing Panda International	Hong Kong Shun Sing	28.23% (L)
Telecommunication	Development Co., Ltd.
System Co. Ltd.
Nanjing Panda Electronics	GALANT (HK) LIMITED	25% (L)
Manufacturing Co., Ltd.
Nanjing Panda System	Liu Changhua	10.90% (L)
Integration Co., Ltd.
Nanjing Panda Power Supply	Ye Qingrong	11.45% (L)
Technology Manufacture
Co., Ltd.

(L) denotes long position

Save as disclosed above, the Directors, supervisors and chief executive of the Company are not aware that there is any person (other than a Director, supervisor or chief executive of the Company) who, as at the Latest Practicable Date, had an interest or short position in the shares and 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 is, 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 members of the Group or any options in respect of such capital.

— 44 —

GENERAL INFORMATION

APPENDIX I

3. LITIGATION

As at the Latest Practicable Date, there was no litigation or claim of material importance known to the Directors to be pending or threatened against the Company or any of its subsidiaries.

4. SERVICE CONTRACTS

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

5. COMPETING INTERESTS

As at the Latest Practicable Date, so far was known to the Directors, none of the Directors or their respective associates was considered to have an interest in a business which competes or is likely to compete, either directly or indirectly, with the business of the Group (other than those businesses to which the Directors and his/her associates were appointed to represent the interests of the Company and/or the Group) or have any other conflicts of interest with the Group pursuant to the Listing Rules.

6. DIRECTORS’ INTERESTS IN CONTRACTS AND ASSETS

As at the Latest Practicable Date, none of the Directors had any direct or indirect interests in any assets which had been acquired or disposed of by, or leased to, any member of the Group or were proposed to be acquired or disposed of by, or leased to, any member of the Group since 31 December 2008 (being the date to which the latest published audited accounts of the Group were made up).

As at the Latest Practicable Date, none of the Directors was materially interested in any contract or arrangement subsisting as at the Latest Practicable Date which was significant in relation to the business of the Group.

7. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors were not aware of any material adverse change in the financial or trading position of the Group since 31 December 2008 (being the date to which the latest published audited accounts of the Group were made up).

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GENERAL INFORMATION

APPENDIX I

8. EXPERTS AND CONSENTS

The followings are the qualification of the experts who have been named in this circular or have given opinions or advice in this circular:

Name Qualifications Guangdong Securities Limited A licensed corporation registered under the SFO to carry type 1 (dealing in securities), type 4 (advising on securities), type 6 (advising on corporate finance) and type 9 (asset management) regulated activities Jiangsu FD Yongheng Law Firm Legal advisor on the PRC law

As at the Latest Practicable Date, each of the Independent Financial Adviser and the PRC Lawyer did not have any shareholding in any member of the Group or any right (whether legally enforceable or not) to subscribe for securities in any member of the Group nor did it have any direct or indirect interests in any assets which had been, since 31 December 2008 (being the date to which the latest published audited consolidated financial statements of the Group were made up), acquired or disposed of by or leased to any member of the Group, or which were proposed to be acquired or disposed of by or leased to any member of the Group.

As at the Latest Practicable Date, each of the Independent Financial Adviser and the PRC Lawyer has given and has not withdrawn its written consent to the issue of this circular with the inclusion of its letter and references to its name in the form and context in which they respectively appear herein.

9. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection at the offices of the Company at 301 Zhongshan Road East, Nanjing, Jiangsu Province, the PRC and the Company’s solicitors at 23rd Floor, Admiralty Centre, Tower II, 18 Harcourt Road, Hong Kong, during normal business hours on any weekday (except public holidays) from the date of this circular up to and including 20 November 2009:

(a) the Provision of Sub-contracting Services and Composite Services Agreement;
(b) the Receipt of Sub-contracting Services and Composite Services Agreement;
(c) Sale of Materials, Components and Parts Agreement (by the Group);
(d) Purchase of Materials, Components and Parts Agreement (by the Group);

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GENERAL INFORMATION

APPENDIX I

(e) Import and Export Agency Agreement;
(f) Trademark Licence Agreement;
(g) Lease of Factory Premises Agreement;
(h) the letter from the Independent Board Committee, the text of which is set out in this circular;
(i) the letter from Guangdong Securities, the text of which is set out in this circular;
(j) the PRC Legal Opinion on the amendments to the Articles of Association issued by the PRC Lawyer;
(k) the written consents referred to in the section headed “Experts and Consents” in this Appendix; and
(l) The Memorandum and Articles of Association of the Company.

10. GENERAL

(a) The registered office of the Company is situated at Level 1-2, Block 5, North Wing, Nanjing High and New Technology Development Zone, Nanjing, Jiangsu Province, the PRC.
(b) The principal place of business of the Company is at 301 Zhongshan Road East, Nanjing, Jiangsu Province, the PRC.
(c) The company secretary of the Company is Mr. Shi Qiusheng, who is a senior economist with extensive experience in corporate management. Mr. Shen Jianlong is the Chief Accountant and Secretary to the Board of the Company.

— 47 —

APPENDIX II PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

The original Article 4 be amended:

Original: “Article 4 The Chairman of the Company shall be the legal representative of the Company.”

Amended: “Article 4 The Chairman or General Manager of the Company shall be the legal representative of the Company, subject to the discretion of the Board.”

The original Article 14 be amended:

Original: “Article 14 The Company shall only engage in businesses which have been approved by the registration authority of the Company. The authorized business scope includes: development, production and sale of communication equipments, computers and other electronic facilities; meters and instruments, cultural and office-based machinery; electrical machinery and equipments; plastic products; general equipments such as fans, scales and packaging equipments; special equipments for the processing of nonmetallic products such as chemical and wood; transmission and distribution equipments; environmental, public safety and related equipments; financial tax control products; electricity source products; molds; computer services, software and system integration business; property management; as well as after-sale services and technical services for the aforesaid businesses.”

Amended: “Article 14 The Company shall only engage in businesses which have been approved by the registration authority of the Company. The authorized business scope includes: development, production and sale of communication equipments, computers and other electronic facilities; meters and instruments, cultural and office-based machinery; electrical machinery and equipments; plastic products; general equipments such as fans, scales and packaging equipments; special equipments for the processing of nonmetallic products such as chemical and wood; transmission and distribution equipments; environmental, public safety and related equipments; wireless television broadcast equipment; financial tax control products; electricity source products; molds; computer services, software and system integration business; property management; as well as after-sale services and technical services for the aforesaid businesses.”

— 48 —

APPENDIX II PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

Two new paragraphs be inserted immediately after the original 127(8):

Original:

“Article 127 The Board shall be responsible for the shareholders’ meetings, with the following duties and powers:

(1) to convene shareholders’ meeting and present reports to the shareholders;
(2) to implement the resolutions passed at the shareholders’ meetings;
(3) to decide on the company’s operation and investment plans;
(4) to prepare the company’s annual financial budgets and final account plans;
(5) to prepare the company’s profits distribution plans (including programs other than distribution of year-end dividend) and loss recovery plans;
(6) to formulate corporate plans in respect of the increase or reduction of registered capital and the issuance of corporate bonds;
(7) to formulate corporate plans in respect of merger, split and dissolution;
(8) to make decisions on the establishment of the company’s internal management departments;
(9) to hire or dismiss the company’s general manager and, in accordance with the recommendation of the general manager, to hire or dismiss the assistant general manager and chief accountant and fixing their remuneration;
(10) to set out the company’s basic management systems;
(11) to prepare the proposal for amendments to the Memorandum and Articles of Association of the company;
(12) to make decisions on issues such as external investment, acquisition and sale of assets, pledge of assets, provision of guarantee, trustee investment, and connected transactions, except for those approved at the shareholders’ meeting; and

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APPENDIX II PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

(13) to take up any other duties stipulated under the Memorandum and Articles of Association of the company or authorized by the shareholders’ at general meetings.

All of the above matters, excluding those under articles (6), (7), (11) and (12) which require approval of the two-third of the votes at the Board meeting, require the approval of the majority votes at the Board meeting.

Amended:

“Article 127 The Board shall be responsible for the shareholders’ meetings, with the following duties and powers:

(1) to convene shareholders’ meeting and present reports to the shareholders;
(2) to implement the resolutions passed at the shareholders’ meetings;
(3) to decide on the company’s operation and investment plans;
(4) to prepare the company’s annual financial budgets and final account plans;
(5) to prepare the company’s profits distribution plans (including programs other than distribution of year-end dividend) and loss recovery plans;
(6) to formulate corporate plans in respect of the increase or reduction of registered capital and the issuance of corporate bonds;
(7) to formulate corporate plans in respect of merger, split and dissolution;
(8) to make decisions on the establishment of the company’s internal management departments;
(9) to determine the legal representative of the Company;
(10) to specify the products within the business scope in accordance with tender requirements;
(11) to hire or dismiss the company’s general manager and, in accordance with the recommendation of the general manager, to hire or dismiss the assistant general manager and chief accountant and fixing their remuneration;

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APPENDIX II PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

(12) to set out the company’s basic management systems;
(13) to prepare the proposal for amendments to the Memorandum and Articles of Association of the company;
(14) to make decisions on issues such as external investment, acquisition and sale of assets, pledge of assets, provision of guarantee, trustee investment, and connected transactions, except for those approved at the shareholders’ meeting; and
(15) to take up any other duties stipulated under the Memorandum and Articles of Association of the company or authorized by the shareholders’ at general meetings.

All of the above matters, excluding those under articles (6), (7), (13) and (14) which require approval of the two-third of the votes at the Board meeting, require the approval of the majority votes at the Board meeting.

Save for the above-mentioned amendments, other articles in the Articles of Association and reference to other clauses in the Articles of Association shall be sequentially renumbered.

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DETAILS OF DIRECTOR PROPOSED TO BE ELECTED

APPENDIX III

Pursuant to the Listing Rules, the details of the Director proposed for election at the EGM are provided as follows:

Dr. Jason HSUAN （宣建生博士）

(proposed to be appointed as non-executive Director of the Company)

Dr. HSUAN, aged 65, graduated from the Department of Electrical Engineering of National Cheng Kung University, Taiwan in 1968. He holds a doctorate degree of philosophy in Systems Engineering from the Polytechnic Institute of Brooklyn, New York, U.S.A. and a master’s degree in Systems Engineering from Boston University, U.S.A. Dr. HSUAN is the chairman and chief executive officer of TPV Technology Limited (stock code: 903), a company listed on the Main Board of the Stock Exchange. Dr. Hsuan joined TPV Technology Limited in November 1999 responsible for the overall corporate strategies and business development. He has about 20 years of corporate management experience in well-known multi-national enterprises which include General Electric and PepsiCo.

Save as disclosed above, Dr. HSUAN has not held any directorship in any listed public companies in the last three years preceding the Latest Practicable Date. Nor does he have any relationship with any Directors, senior management, substantial or controlling shareholders of the Company.

As at the Latest Practicable Date, Dr. HSUAN does not have any interests of shares and underlying shares in the Company within the meaning of Part XV of the SFO.

There is no service contract between Dr. HSUAN and the Company. The term of service of Dr. HSUAN will expire until the end of the sixth Board of the Company. The director’s fee paid to Dr. HSUAN will be determined with reference to market conditions, his duties and responsibilities in the Group during the year, and will not exceed the limit of RMB2,600,000, being the total directors’ fees payable to the sixth Board.

Save as disclosed above, there are no other matters concerning Dr. HSUAN that need to be brought to the attention of the Shareholders nor any information to be disclosed pursuant to Rule 13.51(2) of the Listing Rules.

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NOTICE OF EGM

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this notice, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this notice.

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南京熊貓電子股份有限公司 NANJING PANDA ELECTRONICS COMPANY LIMITED

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

(Stock Code: 0553)

NOTICE OF THE EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN that the extraordinary general meeting (the “ EGM ”) of Nanjing Panda Electronics Company Limited (the “ Company ”) will be held at the Conference Room, Workers’ Union, 301 Zhongshan Road East, Nanjing, the People’s Republic of China on 23 December 2009 (Wednesday) at 9:00 a.m., to transact the following business:

SPECIAL RESOLUTION

“ THAT the Articles of Association of the Company be amended in the following manner :
(a) The original Article 4 be amended as follows:

“Article 4 The Chairman or General Manager of the Company shall be the legal representative of the Company, subject to the discretion of the Board.”

(b) The original Article 14 be amended as follows:

“Article 14 The Company shall only engage in businesses which have been approved by the registration authority of the Company. The authorized business scope includes: development, production and sale of communication equipments, computers and other electronic facilities; meters and instruments, cultural and office-based machinery; electrical machinery and equipments; plastic products; general equipments such as fans, scales and packaging equipments; special equipments for the processing of non-metallic products such as chemical and wood; transmission and distribution equipments; environmental, public safety and related equipments; wireless television broadcast equipment; financial tax control products; electricity source products; molds; computer services, software and system integration business; property management; as well as after-sale services and technical services for the aforesaid businesses.”

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NOTICE OF EGM

“Article 127 The Board shall be responsible for the shareholders’ meetings, with the following duties and powers:

(1) to convene shareholders’ meeting and present reports to the shareholders;
(2) to implement the resolutions passed at the shareholders’ meetings;
(3) to decide on the company’s operation and investment plans;
(4) to prepare the company’s annual financial budgets and final account plans;
(5) to prepare the company’s profits distribution plans (including programs other than distribution of year-end dividend) and loss recovery plans;
(6) to formulate corporate plans in respect of the increase or reduction of registered capital and the issuance of corporate bonds;
(7) to formulate corporate plans in respect of merger, split and dissolution;
(8) to make decisions on the establishment of the company’s internal management departments;
(9) to determine the legal representative of the Company;
(10) to specify the products as stated in the authorized business scope of the company in accordance with tender requirements;
(11) to hire or dismiss the company’s general manager and, in accordance with the recommendation of the general manager, to hire or dismiss the assistant general manager and chief accountant and fixing their remuneration;
(12) to set out the company’s basic management systems;
(13) to prepare the proposal for amendments to the Memorandum and Articles of Association of the company;
(14) to make decisions on issues such as external investment, acquisition and sale of assets, pledge of assets, provision of guarantee, trustee investment, and connected transactions, except for those approved at the shareholders’ meeting; and

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NOTICE OF EGM

(15) to take up any other duties stipulated under the Memorandum and Articles of Association of the company or authorized by the shareholders’ at general meetings.

(d) Save for the above-mentioned amendments, other articles in the Articles of Association and reference to other clauses in the Articles of Association shall be sequentially renumbered.”

ORDINARY RESOLUTIONS

“ THAT
(a) the Future Continuing Connected Transactions contemplated under the Renewed Master Agreements (as defined in the circular of the Company dated 5 November 2009, a copy of each of the relevant agreements was marked “A”, “B”, “C”, “D”, “E”, “F”, and “G” respectively and has been produced to the meeting and signed by the chairman of the meeting for identification purpose) be and are hereby approved;
(b) the Annual Caps (as defined in the said circular) for the Future Continuing Connected Transactions contemplated under the Renewed Master Agreements from 1 January 2010 to 31 December 2012 be and are hereby approved; and
(c) the Board of the Company be and is hereby authorized to take all steps necessary or expedient in its opinion to implement and/or give effect to the Future Continuing Connected Transactions.”
“ THAT Dr. Jason Hsuan（宣建生博士）be appointed as an additional Director of the Company until the expiry of the sixth Board, and that the Board of the Company be and is hereby authorized to fix his remuneration which shall not exceed the limit of RMB2,600,000, being the total directors’ fees payable to the sixth Board.”
“ THAT the State-owned Land Use Right Transfer Agreement entered into between Nanjing Huage Appliance and Plastic Industrial Company Limited (a wholly-owned subsidiary of the Company) and Nanjing Panda Handa Technology Company Limited (a wholly-owned subsidiary of Panda Electronics Group Limited, the controlling shareholder of the Company) dated 10 August 2009 be and is hereby approved, and the Board of the Company be and is hereby authorized to take all steps necessary or expedient in its opinion to give effect to such connected transaction.”
“ THAT a corporate guarantee to be provided by the Company to Nanjing Panda Information Industry Co., Ltd.（南京熊貓信息產業有限公司）, a 100% wholly-owned subsidiary of the Company, for financing in the sum of not exceeding RMB50,000,000 for the year 2010 be and is hereby approved.”

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NOTICE OF EGM

“ THAT a corporate guarantee to be provided by the Company to Nanjing Panda Electronic Manufacture Co., Ltd（南京熊貓電子製造有限公司）, a 100% wholly-owned subsidiary of the Company, for financing in the sum of not exceeding RMB30,000,000 for the year 2010 be and is hereby approved.”
“ THAT a corporate guarantee to be provided by the Company to Nanjing Huage Appliance and Plastic Industrial Co., Ltd.（南京華格電汽塑業有限公司）, a 100% wholly-owned subsidiary of the Company, for financing in the sum of not exceeding RMB55,000,000 for the year 2010 be and is hereby approved.”
“ THAT a corporate guarantee to be provided by the Company to Nanjing Panda Mechanical Manufacturing Co., Ltd.（南京熊貓機電製造有限公司）, a 70%-owned subsidiary of the Company, for financing in the sum of not exceeding RMB5,000,000 for the year 2010 be and is hereby approved.”
“ THAT a corporate guarantee to be provided by the Company to Nanjing Panda Electronic Equipment Co., Ltd.（南京熊貓電子裝備有限公司）, a 100% wholly-owned subsidiary of the Company, for financing in the sum of not exceeding RMB20,000,000 for the year 2010 be and is hereby approved.”

By Order of the Board Nanjing Panda Electronics Company Limited Li Anjian Chairman

5 November 2009

Nanjing, the People’s Republic of China

As at the date of this notice, the Board comprises: 1. Executive Director: Mr. Li Anjian; 2. Non-executive Directors: Mr. Xu Guofei, Ms. Liu Ailian, Mr. Zhu Lifeng, Mr. Shi Qiusheng, Mr. Lu Qing; 3. Independent Nonexecutive Directors: Mr. Cai Lianglin, Mr. Ma Chung Lai, Lawrence, Mr. Tang Yousong.

Notes:

In respect of resolution no. 4, shareholders of the Company are advised to refer the circular of the Company dated 28 August 2009 for details.
All shareholders of the Company whose names appear in the Company’s register of members at the close of business on Monday, 23 November 2009 are entitled to attend the EGM. Holders of A Shares of the Company whose names appear in register of member in the Shanghai branch of China Securities Depository and Clearing Corporation Limited at the close of business on 23 November 2009 can bring along with their identity cards or shareholder account cards to attend the EGM. Holders of A Shares or their proxies (if any) shall bring their identity cards, shareholder account cards and the proxy forms (if any) to complete the procedures for attending the EGM at the secretarial office of the Board of the Company at 301 Zhongshan Road East, Nanjing at 9:00 a.m. to 4:00 p.m. from 23 November 2009 to 2 December 2009. Overseas shareholders can register by post or by fax.

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NOTICE OF EGM

All holders of H Shares of the Company should pay attention that the register of members of the Company will be closed from 23 November 2009 to 23 December 2009, both days inclusive, during which period no transfer of H Shares can be registered. Holders of H Shares whose names appear in the Company’s register of member at the close of business on 23 November 2009, or their representatives or proxies are entitled to attend the EGM with their identity certificates or passports. If a shareholder appoints a proxy to attend the EGM on his behalf, his proxy must bring along with the proxy form.
Shareholder who has the right to attend and vote at the EGM is entitled to appoint one proxy or several proxies, whether a member of the Company or not, to attend and vote at the EGM.
If more than one proxy are appointed, the rights of voting may only be exercised when a poll is taken.
The instrument appointing a proxy must be in writing under the hand of the appointer or his attorney duly authorized in writing. In the case of a corporation, the proxy form must be under its common seal or under the hand of its director or duly authorized attorney. If the proxy form is signed by an agent on behalf of an appointer, the proxy form or other authority must be notarially certified. The proxy form together with the notarially certified power of attorney or other authority must be delivered to the office of the Company 48 hours before the time appointed for the holding of the EGM.
Shareholders who intend to attend the EGM should send a reply in writing to the office of the Company in person or by post or by fax before to 2 December 2009. The written reply would not preclude the shareholders to attend the EGM.
If any shareholder of the Company has a material interest in, or is involved or interested in, the matters considered at the meeting, such shareholder and its associates are required to abstain from voting on the resolution(s) relating to such matters at the meeting.
The EGM is expected to last for a half day. Shareholders and their proxies attending the EGM are responsible for their own transportation and accommodation expenses.
The Company’s office and correspondence address:

301 Zhongshan Road East, Nanjing, the People’s Republic of China Postal code: 210002 Telephone: (8625) 8480 1144 Fax: (8625) 8482 0729

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AI assistant

Nanjing Panda Electronics Company Limited — Proxy Solicitation & Information Statement 2009

49292_rns_2009-11-05_979336f6-4266-4bc8-95c2-0c64c3f1a601.pdf

南京熊 貓 電子股份有限公司