S.A.S. Dragon Holdings Limited

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

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(Incorporated in Bermuda with limited liability)

(Stock Code : 1184)

Directors: Executive: Mr. Yim Yuk Lun, Stanley, J.P. Chairman and Managing Director Mr. Wong Sui Chuen Mr. Cheung Yuk Kuen Mr. Lau Ping Cheung

Non-Executive: Dr. Chang Chu Cheng

Independent non-executive: Dr. Lui Ming Wah, J.P. Mr. Chang Ping Kin Mr. Wong Tak Yuen, Adrian Mr. Liu Chun Ning

Registered Office: Clarendon House Church Street Hamilton HM11 Bermuda

Principal Office: 6th Floor Tower B Hunghom Commercial Centre 37 Ma Tau Wai Road Hunghom Kowloon Hong Kong

Mr. Cheung Chi Kwan

29th April 2005

To the shareholders

Dear Sir or Madam,

GENERAL MANDATES FOR THE REPURCHASE BY THE COMPANY OF ITS OWN SHARES AND ISSUE OF NEW SHARES AND RE-ELECTION OF DIRECTORS

INTRODUCTION

It is proposed that at the annual general meeting of the Company to be held on 25th May 2005, an ordinary resolution, as set out in the notice of annual general meeting, will be proposed to grant the Directors general mandates to issue new shares and repurchase existing shares of the Company.

GENERAL MANDATE TO ISSUE SHARES

Approval is being sought from the shareholders of the Company to grant a general mandate in order to ensure flexibility and discretion to the directors of the Company (“Directors”) in the event it becomes desirable for the Company to issue new shares equal in aggregate up to 20 per cent. of its existing issued share capital. The obtaining of such a mandate is in accordance with the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (“Listing Rules”). The Directors wish to state that they have no immediate plans to issue any new shares of the Company.

SHARES REPURCHASE MANDATE

The Listing Rules permit companies with a primary listing on The Stock Exchange of Hong Kong Limited (“the Exchange”) to purchase their own shares, subject to certain restrictions, on the Exchange. At the annual general meeting of the Company to be held on 25th May 2005 an ordinary resolution will be proposed to grant the Directors a general mandate to, inter alia, purchase up to 10 per cent. of the shares of the Company in issue as at the date of the passing of the relevant resolution (“Repurchase Proposal”). In addition, an ordinary resolution will be proposed to provide the Directors with a general mandate to allot and issue new shares of the Company up to an amount not exceeding 20 per cent. of the share capital of the Company in issue as at the date of the passing of such resolution and adding to such general mandate by a separate ordinary resolution to be proposed at the said annual general meeting, any shares purchased by the Company pursuant to the Repurchase Proposal (up to a maximum of 10 per cent. of the Company’s issued share capital as at the date of the resolution). The Company is required by the particular rules in the Listing Rules regulating such share repurchases (the “Share Buy Back Rules”) to send to shareholders an explanatory statement containing all the information reasonably necessary to enable them to make an informed decision on whether to vote for or against the Repurchase Proposal. Such information is provided below.

1. Share Capital

As at 27th April 2005 being the latest practicable date prior to the printing of this document for ascertaining such information, the issued share capital of the Company comprised 242,540,720 shares of HK$0.10 each. Subject to the passing of the relevant ordinary resolution and on the basis that no further shares are issued or repurchased prior to the annual general meeting on 25th May 2005, the Company will be allowed under the Repurchase Proposal to repurchase a maximum of 24,254,072.

2. Reasons for Repurchases

The Directors believe that the Repurchase Proposal is in the best interests of the Company and its shareholders. Such repurchases may, depending on whether the Company’s shares are trading at prices below the Company’s net asset value per share and funding arrangements at the time, lead to an enhancement of the net value per share of the Company’s shares and its assets and/ or its earnings per share and will only be made when the Directors believe that such repurchases will benefit the Company and its shareholders.

3. Funding of Repurchases

In repurchasing shares, the Company may only apply funds legally available for such purpose in accordance with its memorandum of association and bye-laws and the laws of Bermuda.

There may be a material adverse impact on the working capital or gearing position of the Company (as compared with the position disclosed in the audited accounts for the year ended 31st December 2004) in the event that the mandate to repurchase shares is exercised in full at any time during the proposed repurchase period. However, the Directors do not propose to exercise the mandate to such extent as would, in the circumstances, have a material adverse effect on the working capital requirements of the Company or the gearing levels which in the opinion of the Directors are from time to time appropriate for the Company.

4. General

None of the Directors or, to the best of their knowledge having made all reasonable enquiries, any of their associates has any present intention, if the repurchase proposal is approved by the shareholders at the annual general meeting on 25th May 2005, to sell any shares to the Company or its subsidiaries.

The Directors have undertaken to the Exchange that so far as the same may be applicable, they will exercise the repurchase mandate pursuant to the proposed resolution in accordance with the Listing Rules and the applicable laws of Bermuda.

The Company has not repurchased any shares on the Exchange during the past six months.

If as a result of the exercise of the power to repurchase shares pursuant to the repurchase mandate, a shareholder’s proportionate interest in the voting rights of the Company increases, such increase will be treated as an acquisition for the purposes of the Hong Kong Code on Takeovers and Mergers (“Takeover Code”). As a result a shareholder, or group of shareholders acting in concert depending on the level of increase of the shareholders interest, could obtain or consolidate control of the Company and become obliged to make a mandatory offer in accordance with Rule 26 of the Takeover Code.

As at 27th April 2005 (being the latest practicable date prior to the printing of this document), Unimicro Limited, as trustee of a unit trust was the beneficial owner of 62,511,400 shares of HK$0.10 each. All units in the unit trust are beneficially owned by a discretionary trust established by Mr. Yim Yuk Lun, Stanley, the Chairman and Managing Director of the Company, the beneficiaries of which include the spouse and children of Mr. Yim Yuk Lun, Stanley. Mr. Yim Yuk Lun, Stanley also has personal interest of 5,490,000 shares of HK$0.10 each. Unimicro Limited and Mr. Yim Yuk Lun, Stanley hold shares representing approximately 28.04 per cent. of the total issued share capital of the company. In the event that the Directors exercise in full the power to repurchase the shares, the joint shareholdings of Unimicro Limited and Mr. Yim Yuk Lun, Stanley would be increased from approximately 28.04 per cent. to approximately 31.15 per cent., and such increase would give rise to an obligation to make a mandatory offer in accordance with Rule 26 of the Takeover Code. The Directors do not propose to exercise the Repurchase Mandate to such extent as would, in the circumstances, have an effect to give rise to an obligation to make a mandatory offer under Rule 26 of the Takeover Code.

In addition, Foxconn Holding Limited (“Foxconn”) is the substantial shareholder of the company holding 46,000,000 shares of HK$0.10 each (represents 18.97 per cent. of the total issued share capital of the company)*. In the event that the Directors exercise in full the power to repurchase the shares, the shareholding of Foxconn would be increased from approximately 18.97 per cent. to approximately 21.07 per cent., and such increase would not give rise to an obligation to make a mandatory offer in accordance with Rule 26 of the Takeover Code.

No connected persons or their associates (as defined in the Listing Rules) have notified the Company that they have a present intention to sell shares to the Company, or have undertaken not to do so in the event that the Company is authorized to make purchases of shares.

Hon Hai Precision Industry Co. Ltd. (‘’Hon Hai’’) owns 100 per cent. interests in Foxconn. All interests from Foxconn are deemed to be beneficially interested by Hon Hai.

5. Share Prices

The highest and lowest prices at which the Company’s shares were traded on the Exchange during each of the previous twelve months up to 31st March 2005 were as follows:


	highest	lowest
	HK$	HK$
April 2004	0.960	0.870
May 2004	1.050	0.810
June 2004	0.900	0.840
July 2004	0.900	0.820
August 2004	0.900	0.800
September 2004	0.920	0.810
October 2004	0.850	0.760
November 2004	0.800	0.700
December 2004	0.800	0.680
January 2005	0.860	0.750
February 2005	0.920	0.830
March 2005	1.040	0.850

RE-ELECTION OF DIRECTORS

At the annual general meeting of the Company, Mr. Cheung Yuk Kuen, Mr. Lau Ping Cheung, Mr. Chang Ping Kin, Mr. Cheung Chi Kwan and Mr. Liu Chun Ning, Wilfred will retire from office by rotation in accordance with the Bye-laws and they, being eligible, offer themselves for re-election. Pursuant to Rule 13.74 of the Listing Rules, the details of such directors are set out below:-

Mr. Cheung Yuk Kuen, aged 46, is an executive Director of the Company and was appointed on 10th September 2004. He is the General Manger of RDL Electronic Company Limited, and is responsible for the sales, marketing and operation. Mr. Cheung graduated in 1985 from the University College of London, with a Bachelor’s degree in Electrical and Electronic Engineering. He was over ten years’ experience in distribution of electronic components and was the managing director of another electronic distribution company for three years prior to joining the Group in 1997.

After his re-election at the forthcoming annual general meeting, he will continue to serve on the Board for a period of approximately three years until he becomes due to retire by rotation in accordance with the Bye-laws. So far as the Directors are aware as at the Latest Practicable Date, Mr. Cheung is beneficially interested in 6,500,000 ordinary shares of the Company within the meaning of Part XV of the Securities and Futures Ordinance. He does not have any relationship with any other Directors, senior management or substantial or controlling shareholders of the Company. Mr. Cheung has no service contract with the Company and his total remuneration was approximately HK$539,000 for the financial year ended 31st December 2004 after his appointment as Director of the Company. The level of this remuneration was determined on the basis of his responsibilities, the prevailing market conditions and the performance of the Company’s results.

Mr. Lau Ping Cheung, aged 34, is an executive director and was appointed on 10th September 2004. He joined the Group in 2002 and is the Vice President of S.A.S. Electronic Company Limited. Mr. Lau graduated from the University of Hong Kong with a Bachelor’s degree in Electrical and Electronic Engineering and got his Master’s degree in Engineering Business Management jointly awarded by The Hong Kong Polytechnic University and The University of Warwick in 2003. He is under study of Engineering Doctorate in the City University of Hong Kong. He has over ten years’ experience in electronic field on sales, marketing and R&D project development.

After his re-election at the forthcoming annual general meeting, he will continue to serve on the Board for a period of approximately three years until he becomes due to retire by rotation in accordance with the Bye-laws. So far as the Directors are aware as at the Latest Practicable Date, Mr. Lau did not have any interest (within the meaning of Part XV of the Securities and Futures Ordinance) in the shares of the Company. He does not have any relation with other Directors, senior management or substantial or controlling shareholders of the Company. Mr. Lau has no service contract with the Company and his total remuneration was approximately HK$289,000 for the financial year ended 31st December 2004 after his appointment as Director of the Company. The level of this remuneration was determined on the basis of his responsibilities, the prevailing market conditions and the performance of the Company’s results.

Mr. Chang Ping Kin, aged 56, graduated from the National Chengchi University inTaiwan, majoring in accounting, and has over twenty years’ experience in marketing and finance. After his re-election at the forthcoming annual general meeting, he will continue to serve on the Board for a period of approximately three years until he becomes due to retire by rotation in accordance with the Bye-laws. So far as the Directors are aware as at the Latest Practicable Date, Mr. Chang did not have any interest (within the meaning of Part XV of the Securities and Futures Ordinance) in the shares of the Company. He does not have any relation with other Directors, senior management or substantial or controlling shareholders of the Company. Mr. Chang has no service contract with the Company and his total director’s fee was HK$60,000 in 2004. The amount of director’s fee is determined by reference to his duties and responsibilities.

Mr. Cheung Chi Kwan, aged 45, was appointed as Independent Non-Executive Director of the Company in September 2004. He has over 20 years of accounting experience. He is an associate member of the Hong Kong Institute of Certified Public Accountants and a fellow member of Association of Chartered Certified Accountants. In addition, Mr. Cheung holds a Bachelor’s Degree in Laws from University of Wolverhampton, United Kingdom.

Mr. Liu Chun Ning, Wilfred, aged 43, is an Independent Non-Executive Director of the Company. He is an Executive Director in charge of the securities business of Liu Chong Hing Banking Group. He holds a Bachelor’s degree in economics from the University of NewcastleuponTyne, U.K.

Other than disclose above, all of the above directors did not have any other directorships held in listed public companies in the last three years. In addition, there are no other matters that need to be brought to the attention of holders of securities of the Company.

RECOMMENDATION

The Directors consider that the general mandate to issue shares and the Repurchase Proposal and the re-election of Directors are in the best interests of the Company and its shareholders and accordingly recommend that all shareholders should vote in favour of the ordinary resolutions to be proposed at the said annual general meeting, as they intend to do so themselves in respect of their own holdings.

Yours faithfully, On behalf of the Board Yim Yuk Lun, Stanley Chairman and Managing Director

NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the 2005 annual general meeting of the Company will be held at Rose Room, Lower Level II, Kowloon Shangri-La Hotel, 64 Mody Road, Kowloon on 25th May 2005 at 10:00 a.m. for the following purposes:

To receive and consider the audited financial statements and the reports of the directors and auditors for the year ended 31st December 2004;
To declare a final dividend of HK 4.0 cents in respect of the year ended 31st December 2004;
To re-elect directors and to authorize the Board of Directors to fix their remuneration;
To re-appoint auditors and to authorize the Board of Directors to fix their remuneration;

As special business, to consider and if thought fit, pass the following resolutions as ordinary resolutions:

“ THAT
- (a) subject to paragraph (b) below, the exercise by the directors of the Company (the “Directors”) during the Relevant Period (as hereinafter defined) of all the powers of the Company to purchase its own shares on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) or on any other stock exchange on which the shares of the Company may be listed and recognized by the Securities and Futures Commission and the Stock Exchange for this purpose, subject to and in accordance with all applicable laws and the requirements of the Rules Governing the Listing of Securities on the Stock Exchange (as amended from time to time) or of any other stock exchange, be and is hereby generally and unconditionally approved and authorized;
- (b) the aggregate nominal amount of the shares of the Company to be purchased by the Company pursuant to the approval in paragraph (a) above during the Relevant Period shall not exceed 10% of the nominal amount of the share capital of the Company in issue as at the date of passing this Resolution and the approval pursuant to paragraph (a) shall be limited accordingly; and
- (c) for the purpose of this Resolution, “Relevant Period” means the period from the passing of this Resolution until whichever is the earlier of:
  - (i) the conclusion of the next annual general meeting of the Company;
  - (ii) the expiration of the period within which the next annual general meeting of the Company is required by the bye-laws of the Company or any applicable law to be held; or
  - (iii) the revocation or variation of the authority given under this Resolution by an ordinary resolution of the shareholders of the Company in general meeting” (Note (2)).

“ THAT
(a) subject to paragraph (b) below, a general mandate be and is hereby unconditionally given to the directors of the Company (the “Directors”) to exercise all the powers of the Company during the Relevant Period (as hereinafter defined) to allot, issue and deal with the shares in the capital of the Company (including making and granting offers, agreements and options which would or might require the exercise of such powers, whether during the continuance of the Relevant Period or thereafter);
(b) the aggregate nominal amount of the share capital allotted or agreed conditionally or unconditionally to be allotted or dealt with pursuant to the approval in paragraph (a) above during the Relevant Period, otherwise than pursuant to the following, shall not exceed 20% of the nominal amount of the share capital of the Company in issue as at the date of passing this Resolution and the said approval shall be limited accordingly;
- (i) a rights issue where shares are offered for a period fixed by the Directors to shareholders on the register on a fixed record date in proportion to their than holdings of such shares (subject to such exclusion or other arrangements as the Directors may deem necessary or expedient in relation to fractional entitlements or having regard, as appropriate, to any restrictions or obligations under the laws of, or the requirements of any recognized regulatory body or stock exchange in, or in any territory applicable to the Company);
- (ii) an issue of shares under any share option scheme or similar arrangement for the time being adopted for the grant or issue to officers and/or employees of the Company and/or any of its subsidiaries of shares or rights to acquire shares of the Company and approved by The Stock Exchange of Hong Kong Limited;
- (iii) any issue of shares in the Company upon the exercise of subscription rights attaching to any warrants of the Company; or
- (iv) any scrip dividend scheme or similar arrangement implemented in accordance with the bye-laws of the Company; and
(c) for the purpose of this Resolution, “Relevant Period” means the period from the passing of this Resolution until whichever is the earlier of;
- (i) the conclusion of the next annual general meeting of the Company;
- (ii) the expiration of period within which the next annual general meeting of the Company is required by the bye-laws of the Company or any applicable law to be held; or
- (iii) the revocation or variation of the authority given under this Resolution by an ordinary resolution of the shareholders of the Company in general meeting” (Notes (2) and (4)); and

“ THAT conditionally upon Resolutions Numbers 5 and 6 being, passed, the general mandate granted to the directors of the Company and for the time being in force to exercise the powers of the Company to allot shares in the capital of the company be and is hereby extended by the addition to the nominal value of the share capital which may be allotted or agreed conditionally or unconditionally to be allotted by the

directors of the company pursuant to such general mandate an amount representing the aggregate nominal value of the share capital of the Company repurchased by the Company under the authority granted pursuant to Resolution Number 6, provided that such amount shall not exceed 10% of the aggregate nominal amount of the share capital of the Company in issue as at the date of passing this resolution.”

On behalf of the Board Yim Yuk Lun, Stanley Chairman and Managing Director

Hong Kong, 29th April 2005

Notes:

(1) A member entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and vote instead of him. A proxy need not be a member of the Company. In order to be valid, the form of proxy must be deposited with the Company’s Share Registrars in Secretaries Limited, G/F, BEA Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong together with any power of attorney or other authority, under which it is signed, or a notarially certified copy of that power or authority, not less than 48 hours before the time for holding the meeting.
(2) An Explanatory Statement in relation to Resolution Number 5 will be sent to shareholders and other persons who are entitled into.
(3) The register of members of the Company will be closed from 23rd May 2005 to 25th May 2005, both days inclusive. All transfers accompanied by the relevant share certificates must be lodged with the Company’s Share Registrars in Hong Kong, Secretaries Limited, G/F, BEA Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong for registration no later than 4:00 p.m. on 20th May 2005.
(4) Concerning item 6 above, the Directors wish to state that they have no immediate plans to issue any additional new shares of the Company pursuant to the power to be conferred by this mandate. Under the listing rules of The Stock Exchange of Hong Kong Limited (as amended from time to time) the general mandate lapses unless it is renewed at each annual general meeting.
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S.A.S. Dragon Holdings Limited Proxy Solicitation & Information Statement 2005

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