Skyworth Group Limited — Proxy Solicitation & Information Statement 2007

Oct 9, 2007

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your shares in Skyworth Digital Holdings Limited, you should at once hand this circular to the purchaser or transferee or to the bank or licensed securities dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

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

SKYWORTH DIGITAL HOLDINGS LIMITED ( )[*]

(Incorporated in Bermuda with limited liability)

(Stock code: 0751)

DISCLOSEABLE TRANSACTION

Disposal of 12% equity interest

in

Skyworth Digital Technology (Shenzhen) Company Limited

* For identification purpose only

10 October 2007

CONTENTS

	Page
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM THE BOARD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
APPENDIX – GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11

−i −

DEFINITIONS

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

“Announcement”	the announcement of the Company dated 19 September
	2007 in relation to the disposal of 11.69% of the equity
	interest in SDT pursuant to the First Sale and Purchase
	Agreement
“associates”	has the meaning ascribed thereto under the Listing Rules
“Board”	the board of Directors
“Business Day”	a day on which banks are open for business in the PRC
	(excluding Saturday and Sunday)
“Company”	Skyworth Digital Holdings Limited, a company
	incorporated in Bermuda with limited liability, the Shares
	are listed on the Main Board of the Stock Exchange
“connected person(s)”	has the meaning ascribed thereto under the Listing Rules
“Directors”	the directors of the Company
“Disposal”	the proposed disposal of, in aggregate, 12% of the equity
	interest in SDT to the Purchasers by RGB pursuant to the
	First Sale and Purchase Agreements and the Subsequent
	Sale and Purchase Agreements
“First Sale and Purchase	40 sale and purchase agreements dated 18 September
Agreements”	2007 (as amended by the supplemental agreements dated
	18 September 2007, 19 September 2007 and 24
	September 2007) entered into between RGB and 38 of the
	Other Purchasers, Mr. Shi and Mr. Zhang in relation to
	the sale and purchase of in aggregate 11.69% of the
	equity interest in SDT
“Group”	the Company and its subsidiaries
“HK$”	Hong Kong dollar, the lawful currency of Hong Kong
“Hong Kong”	the Hong Kong Special Administration Region of the
	PRC

−1 −

DEFINITIONS

“Latest Practicable Date”	5 October 2007, being the latest practicable date prior to
	the printing of this circular for the purpose of
	ascertaining certain information contained in this circular
“Listing Rules”	the Rules Governing the Listing of Securities on the
	Stock Exchange
“Mr. Shi”	Mr. Shi Chi, a director and the President of SDT, and the
	purchaser of 5% of the equity interest in SDT
“Mr. Zhang”	Mr. Zhang Zhi, a director, the Vice President, Financial
	Controller and Secretary to the board of directors of SDT
	and the purchaser of 0.6% of the equity interest in SDT
“Other Purchasers”	41 senior management and staff of SDT and the
	purchasers of 6.4% of the equity interest in SDT
“PRC”	the People’s Republic of China
“Purchasers” “RGB”	Mr. Shi, Mr. Zhang and the Other Purchasers -RGB (Shenzhen Chuangwei-
	RGB Electronics Co., Ltd), a sino-foreign equity joint
	venture registered in the PRC and a wholly-owned
	subsidiary of the Company
“RMB” “SDT”	Reminbi, the lawful currency of the PRC ( ) (Skyworth Digital
	Technology (Shenzhen) Company Limited), a limited
	liability company established in the PRC and a
	wholly-owned subsidiary of RGB before completion of
	the Disposal
“SDT Shares”	shares of SDT
“Shareholder(s)”	holder(s) of the Shares
“Share(s)”	share(s) of HK$0.1 each in the capital of the Company
“Shi Disposal”	the proposed disposal of 5% of the equity interest in SDT
	to Mr. Shi by RGB pursuant to the sale and purchase
	agreement entered into between Mr. Shi and RGB

−2 −

DEFINITIONS

“Stock Exchange” The Stock Exchange of Hong Kong Limited “Subsequent Sale and Purchase 3 sale and purchase agreements dated 24 September 2007 Agreements” entered into between RGB and three of the Other Purchasers in relation to the sale and purchase of in aggregate 0.31% of the equity interest in SDT “Zhang Disposal” the proposed disposal of 0.6% of the equity interest in SDT to Mr. Zhang by RGB pursuant to the sale and purchase agreement entered into between Mr. Zhang and RGB “%” per cent

In this circular, amounts denominated in RMB have been converted into HK$ at the rate of RMB0.98 = HK$1.

−3 −

LETTER FROM THE BOARD

SKYWORTH DIGITAL HOLDINGS LIMITED

( )[*]

(Incorporated in Bermuda with limited liability)

(Stock code: 0751)

Executive Directors:

Mr. Zhang Xuebin (Executive Chairman & Chief Executive Officer) Ms. Ding Kai Mr. Leung Chi Ching, Frederick Ms. Lin Wei Ping Mr. Yang Dongwen

Independent non-executive Directors: Mr. So Hon Cheung, Stephen Mr. Li Weibin Mr. Xie Zhengcai

Registered office: Clarendon House 2 Church Street Hamilton HM11 Bermuda

Principal place of business: Rooms 1601-04 Westlands Centre 20 Westlands Road Quarry Bay Hong Kong

10 October 2007

To the Shareholders

Dear Sir or Madam,

DISCLOSEABLE TRANSACTION

Disposal of 12% equity interest

in Skyworth Digital Technology (Shenzhen) Company Limited

INTRODUCTION

On 19 September 2007 and 24 September 2007, the Board announced that on 18 September 2007, 19 September 2007 and 24 September 2007, RGB, a wholly-owned subsidiary of the Company, entered into the First Sale and Purchase Agreements and the Subsequent Sale and Purchase Agreements with each of the Purchasers, pursuant to which RGB has agreed to dispose of, in aggregate, 12% of the equity interest in SDT (a wholly-owned subsidiary of RGB before the completion of the Disposal) to the Purchasers at an aggregate consideration of approximately RMB21.6 million (equivalent to approximately HK$22.0 million). The Disposal constitutes a discloseable transaction under the Listing Rules.

* For identification purpose only

−4 −

LETTER FROM THE BOARD

The purpose of this circular is to provide you with, among other things, further information in relation to the Disposal.

THE AGREEMENT

The First Sale and Purchase Agreements and the Subsequent Sale and Purchase Agreements

Date: 18 September 2007, 19 September 2007 and 24 September 2007

Parties:

Vendor: RGB, a wholly-owned subsidiary of the Company

Purchasers: the Purchasers, save for Mr. Shi and Mr. Zhang who are directors of SDT and connected persons of the Company (as defined in the Listing Rules), to the best of the knowledge, information and belief of the Directors, having made all reasonable enquiries, the Other Purchasers purchased the equity interest in SDT for themselves as ultimate beneficial owners and are not connected persons to the Company (as defined in the Listing Rules)

Pursuant to the terms of the First Sale and Purchase Agreements and the Subsequent Sale and Purchase Agreements, RGB has agreed to sell 5%, 0.6% and 6.4%, in aggregate, of the equity interest in SDT to each of Mr. Shi, Mr. Zhang and the Other Purchasers, respectively.

CONSIDERATION

Pursuant to the terms of the First Sale and Purchase Agreements and the Subsequent Sale and Purchase Agreements, the aggregate consideration for 12% of the equity interest in SDT is RMB21,556,705 (equivalent to approximately HK$22,000,000). Each of the Purchasers has to pay the consideration to the Group within ten Business Days from the date of the respective sale and purchase agreements. In the event that any of the Purchasers cannot pay the entire amount of the consideration under the respective sale and purchase agreements within ten Business Days from the date of the respective sale and purchase agreements, a minimum of 30% of the entire amount of the consideration has to be paid to the Group within that ten Business Days. Meanwhile, in addition to the outstanding balance of the consideration which has to be paid to the Group no later than 31 December 2009, each of the Purchasers has to pay (i) a compensation calculated at the rate of 0.0083% per day of the outstanding balance of the consideration under the respective sale and purchase agreements; and (ii) an interest calculated at the prevailing one to three years RMB loan standard interest rate as quoted by The People’s Bank of China during the period from the eleventh Business Day from the date of the respective sale and purchase agreements up to the payment date of the outstanding balance of the consideration; and payable to the Group on the last day of each calendar year. As at the Latest Practicable Date, 40 out of the 43 Purchasers had paid 30% or more of the respective consideration to the Group.

−5 −

LETTER FROM THE BOARD

The consideration under each of the First Sale and Purchase Agreements and the Subsequent Sale and Purchase Agreements represents a price-to-book ratio, as of 31 May 2007, of about 1.2 times which was arrived at after arm’s length negotiations between the parties to the sale and purchase agreements having taken into account, among other things, the valuation of the 12% of the equity interest in SDT as appraised by an independent valuer of approximately RMB19.3 million (equivalent to approximately HK$19.7 million); the future development of SDT; retention of the Purchasers in SDT and the lock-up provisions provided by the Purchasers (details of which are stated in the paragraphs headed “Other terms” in this circular below); which, includes the payment terms, the Directors (including the independent non-executive Directors) consider fair and reasonable.

OTHER TERMS

Restrictions in disposal

Pursuant to the terms of the First Sale and Purchase Agreements and the Subsequent Sale and Purchase Agreements, each of the Purchasers has provided the following common undertakings to RGB, which include, among others:

• (i) if the SDT Shares become listed on any stock exchange, he will not in the period commencing on the effective date of transfer of SDT Shares and ending on the date which is one year from the listing date of the SDT Shares (the “Lock-up Period”), transfer or create any options or rights to transfer any of the SDT Shares owned by him;

• (ii) the SDT Shares to be disposed of by him in first, second and third year after the expiry of the Lock-up Period (the “Restriction Period”) cannot be more than 40%, 30% and 30% of the SDT Shares owned by him, respectively;

• (iii) if the SDT Shares become listed on any stock exchange and after the expiry of the Restriction Period, he can only dispose of the SDT Shares in accordance with the prevailing and relevant securities laws or regulations; and

• (iv) if the SDT Shares become listed on any stock exchange and he left SDT without any reasons or being terminated due to breach of any contracts, rules and regulations, RGB will repurchase his SDT Shares at a price with reference to the net asset value per shares of SDT in the previous financial year.

Service contracts

Pursuant to the terms of the sale and purchase agreements entered into between RGB and each of Mr. Shi and Mr. Zhang, each of Mr. Shi and Mr. Zhang has agreed to enter into a service contract with SDT for a term of three years from the effective date of the respective sale and purchase agreements. The service contracts are renewable for a successive term of two years upon further notice by both parties and subject to compliance with the prevailing rules and regulations.

−6 −

LETTER FROM THE BOARD

Pursuant to the terms of the sale and purchase agreements entered into between RGB and each of the Other Purchasers, each of the Other Purchasers has agreed to enter into a service contract with SDT for a term of 5 years from the effective date of each of the respective sale and purchase agreements.

COMPLETION

Completion for each of the First Sale and Purchase Agreements and the Subsequent Sale and Purchase Agreements shall take place upon the receipt of at least 30% of the considerations under the respective sale and purchase agreements by the Group. As mentioned in the paragraph headed “Consideration” above, 40 out of the 43 Purchasers had paid 30% or more of the respective consideration to the Group as at the Latest Practicable Date. Accordingly, among the 43 First Sale and Purchase Agreements and the Subsequent Sale and Purchase Agreement, 40 of them, representing the disposal of 5.69% of the equity interest in SDT, had been completed.

INFORMATION ON SDT

SDT is principally engaged in manufacture and sales of set-top boxes or TV boxes for connection of broadcasting signals and providing value added services to the system integrators.

Based on its unaudited consolidated management accounts prepared in accordance with the generally accepted accounting principles in the PRC, the net profit before and after taxation for the year ended 31 December 2005 of SDT were approximately RMB17.0 million (equivalent to approximately HK$17.3 million) and approximately RMB16.2 million (equivalent to approximately HK$16.5 million) respectively; while its net profit before and after taxation for the year ended 31 December 2006 were approximately RMB91.6 million (equivalent to approximately HK$93.5 million) and approximately RMB85.0 million (equivalent to approximately HK$86.7 million) respectively. Based on the unaudited consolidated management accounts of SDT prepared in accordance with the generally accepted accounting principles in the PRC, its net asset value as at 31 May 2007 was RMB149.7 million (equivalent to approximately HK$152.8 million).

As mentioned in the announcement of the Company dated 11 September 2006, depending on how mature the businesses of the digital set-top boxes and other electronic products would become, the Board would consider different forms of business reorganisation which may or may not involve a separate listing. As at the Latest Practicable Date, the Board has taken steps to implement a plan to spin off SDT’s business by way of a separate listing. The Disposal is one of the steps to facilitate the proposed separate listing. However, Shareholders and public investors should note that the Board has not finalised a timetable for the proposed separate listing, and the Company or SDT has not submitted any application to any stock exchange (including the Stock Exchange) for obtaining the necessary approval for the proposed separate listing and spin off. The proposed separate listing of SDT may or may not proceed. Shareholders and public investors are advised to exercise caution when dealing in the shares of the Company. Further announcement on this matter will be made if and when required.

−7 −

LETTER FROM THE BOARD

SHAREHOLDING STRUCTURE

Set out below is the shareholding structure of SDT before and after completion of the Disposal:

Before completion of the Disposal

==> picture [101 x 171] intentionally omitted <==

After completion of the Disposal

==> picture [223 x 182] intentionally omitted <==

USE OF PROCEEDS

The Company estimates that the net proceeds from the Disposal would be approximately HK$22.0 million and the Board intends to apply such proceeds for general working capital of the Group.

−8 −

LETTER FROM THE BOARD

REASONS FOR AND EFFECT OF THE DISPOSAL

The Group is principally engaged in manufacture and sales of consumer electronic products and upstream accessories and property holding. As set out in the annual report of the Company for the year ended 31 March 2007, the sales of set-top boxes in the PRC for the year ended 31 March 2007 represented more than a two-fold increase as compared to the same for the year ended 31 March 2006; the sales of set-top boxes in the overseas markets also accounted for approximately 14% of total overseas turnover of the Group for the year ended 31 March 2007. Mr. Shi is currently a director and the president of SDT, he has joined the Group for more than 7 years; while Mr. Zhang is a director and the vice president, financial controller and secretary to the board of directors of SDT; and has joined the Group for more than 15 years. Having considered that human capital plays an important role in sustaining SDT’s success and the extensive experience possessed by Mr. Shi and Mr. Zhang within the industry, the Directors (including the independent non-executive Directors) are of the view that the Disposal provides an incentive to the Purchasers to contribute to the future development of SDT; enables the Group to retain key management to stabilise SDT’s operation; and is in the interest of the Company and the Shareholders as a whole and the terms of which are fair and reasonable.

Pursuant to the term of the First Sale and Purchase Agreements and the Subsequent Sale and Purchase Agreements, RGB has agreed to dispose of in aggregate 12% of the equity interest in SDT to the Purchasers. Before the completion of the First Sale and Purchase Agreements and the Subsequent Sale and Purchase Agreements, SDT is wholly-owned by RGB. After completion of the First Sale and Purchase Agreements and the Subsequent Sale and Purchase Agreements, SDT will become a non-wholly owned subsidiary of the Company and its results, assets and liabilities will continue to consolidate into the accounts of the Group. Based on the unaudited consolidated management accounts of SDT for the five months ended 31 May 2007, it is estimated that the Group would record a gain from the Disposal of approximately HK$4.0 million (being the difference between the net proceeds from the Disposal of approximately HK$22.0 million and the unaudited consolidated net asset value of SDT attributable to the 12% equity interest as at 31 May 2007 of approximately HK$18.0 million). The exact amount of profit from Disposal would be calculated on the basis of the relevant figures as at completion of each of the sale and purchase agreements and therefore would be different from the above amount. It is expected that the profit from Disposal would be reflected in the consolidated accounts of the Group for the year ending 31 March 2008. Save for the expected profit from Disposal as mentioned above and the net proceed from the Disposal would increase the cash position of the Group, it is expected that the Disposal will not have material effect on the results, assets and liabilities of the Group.

−9 −

LETTER FROM THE BOARD

GENERAL

The Disposal constitutes a discloseable transaction of the Company under Chapter 14 of the Listing Rules. Among the Purchasers, since Mr. Shi and Mr. Zhang are directors of SDT, the disposals of the SDT Shares to Mr. Shi and Mr. Zhang constitute connected transactions of the Company under Chapter 14A of the Listing Rules. As each of the applicable percentage ratios in respect of the Shi Disposal is less than 2.5% for the purposes of Rule 14.07 of the Listing Rules, the Shi Disposal is subject to the reporting and announcement requirements, but is exempt from the independent shareholders’ approval requirement. As each of the applicable percentage ratios in respect of the Zhang Disposal is less than 0.1% for the purposes of Rule 14.07 of the Listing Rules, the Zhang Disposal is exempt from the reporting, announcement and independent shareholders’ approval requirements.

Further information in respect of the Company is set out in the Appendix.

Yours faithfully, For and on behalf of the Board Skyworth Digital Holdings Limited Leung Chi Ching, Frederick Executive Director

−10 −

GENERAL INFORMATION

APPENDIX

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 make any statement herein misleading.

2. DISCLOSURE OF INTERESTS

(a) Directors’ and chief executives’ interests and short positions in shares, underlying shares and debentures of the Company or any of its associated corporations

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

Long position

• (i) Shares of the Company

Name of Director Capacity Lin Wei Ping Beneficial owner Held by trust (note a) Held by spouse (note b)	Number of Shares held 3,061,611 847,382,922 51,405,612 901,850,145	Approximate percentage of the issued share capital of the Company 0.13% 37.02% 2.25%
		39.40%

−11 −

GENERAL INFORMATION

APPENDIX

			Approximate
			percentage
			of the issued
			share capital
		Number of	of the
Name of Director	Capacity	Shares held	Company
Ding Kai	Beneficial owner	11,000,000	0.48%
Yang Dongwen	Beneficial owner	4,876,000	0.21%
Zhang Xuebin	Beneficial owner	2,800,600	0.12%
So Hon Cheung,
Stephen	Beneficial owner	100,000	0.00%

Note a: These Shares are held by Target Success Group Limited in its capacity as trustee of the Skysource Unit Trust, all of the units in which are held by HSBC International Trustee Limited in its capacity as trustee of Skysource Trust. Ms. Lin Wei Ping and her children are the discretionary beneficiaries of the Skysource Trust. Accordingly, Ms. Lin Wei Ping is deemed to be interested in 847,382,922 Shares.

Note b: Ms. Lin Wei Ping is deemed to be interested in 51,405,612 Shares being the interests held beneficially by her spouse, Mr. Wong Wang Sang, Stephen.

• Note c: Mr. Wong Wang Sang, Stephen is deemed to be interested in 901,850,145 Shares being the interests held by his spouse, Ms. Lin Wei Ping.

(ii) Options to subscribe for Shares

					Approximate
				Number	percentage
				of Shares	of the issued
				entitled to	share capital
Name of		Exercise		subscribe	of the
Director	Date of grant	price	Exercisable period	for	Company
		HK$
Zhang Xuebin	5 October 2002	0.840	5 October 2004 to	2,000,000	0.09%
			28 August 2012
			5 October 2005 to	2,000,000	0.09%
			28 August 2012
			5 October 2006 to	2,000,000	0.09%
			28 August 2012
	16 October 2003	1.660	16 October 2004 to	1,500,000	0.07%
			28 August 2012
			16 October 2005 to	1,500,000	0.07%
			28 August 2012
			16 October 2006 to	2,000,000	0.09%
			28 August 2012
			16 October 2007 to	5,000,000	0.22%
			28 August 2012
			16 October 2008 to	5,000,000	0.22%
			28 August 2012
	11 May 2007	1.048	11 May 2008 to	2,500,000	0.11%
			28 August 2012
			11 May 2009 to	2,500,000	0.11%
			28 August 2012
			11 May 2010 to	2,500,000	0.11%
			28 August 2012
			11 May 2011 to	2,500,000	0.11%
			28 August 2012

−12 −

GENERAL INFORMATION

APPENDIX

					Approximate
				Number	percentage
				of Shares	of the issued
				entitled to	share capital
Name of		Exercise		subscribe	of the
Director	Date of grant	price	Exercisable period	for	Company
		HK$
Ding Kai	11 October 2004	2.225	11 October 2005 to	250,000	0.01%
			28 August 2012
			11 October 2006 to	250,000	0.01%
			28 August 2012
			11 October 2007 to	250,000	0.01%
			28 August 2012
			11 October 2008 to	250,000	0.01%
			28 August 2012
	11 May 2007	1.048	11 May 2008 to	1,500,000	0.07%
			28 August 2012
			11 May 2009 to	1,500,000	0.07%
			28 August 2012
			11 May 2010 to	1,500,000	0.07%
			28 August 2012
			11 May 2011 to	1,500,000	0.07%
			28 August 2012
Yang	5 October 2002	0.840	5 October 2005 to	2,000,000	0.09%
Dongwen			28 August 2012
			5 October 2006 to	2,000,000	0.09%
			28 August 2012
	25 January 2006	1.136	25 January 2007 to	3,750,000	0.16%
			28 August 2012
			25 January 2008 to	3,750,000	0.16%
			28 August 2012
			25 January 2009 to	3,750,000	0.16%
			28 August 2012
			25 January 2010 to	3,750,000	0.16%
			28 August 2012
	11 May 2007	1.048	11 May 2008 to	1,500,000	0.07%
			28 August 2012
			11 May 2009 to	1,500,000	0.07%
			28 August 2012
			11 May 2010 to	1,500,000	0.07%
			28 August 2012
			11 May 2011 to	1,500,000	0.07%
			28 August 2012
So Hon	28 July 2004	2.275	28 July 2004 to	500,000	0.02%
Cheung,			28 August 2012
Stephen
Li Weibin	28 July 2004	2.275	28 July 2004 to	500,000	0.02%
			28 August 2012
Lin Wei Ping	11 May 2007	1.048	11 May 2008 to	500,000	0.02%
			28 August 2012
			11 May 2009 to	500,000	0.02%
			28 August 2012
			11 May 2010 to	500,000	0.02%
			28 August 2012
			11 May 2011 to	500,000	0.02%
			28 August 2012

−13 −

GENERAL INFORMATION

APPENDIX

					Approximate
				Number	percentage
				of Shares	of the issued
				entitled to	share capital
Name of		Exercise		subscribe	of the
Director	Date of grant	price	Exercisable period	for	Company
		HK$
Leung Chi	11 May 2007	1.048	11 May 2008 to	1,500,000	0.07%
Ching,			28 August 2012
Frederick			11 May 2009 to	1,500,000	0.07%
			28 August 2012
			11 May 2010 to	1,500,000	0.07%
			28 August 2012
			11 May 2011 to	1,500,000	0.07%
			28 August 2012

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

(b) Substantial Shareholders’ interests and short positions in Shares or underlying Shares

As at the Latest Practicable Date, so far as was known to any Directors or chief executive of the Company, the following persons (other than a Director or chief executive of the Company) had interests or short positions in the Shares or underlying Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or, who was, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group or had any options in respect of such capital:

			Approximate
			percentage of
			the issued
			shares capital
			of the
Name		No. of Shares	Company
Target	Success Group Limited	847,382,922 (note a)	37.02%
HSBC	International Trustee Limited	866,141,413 (note b)	37.83%
Wong	Wang Sang, Stephen	901,850,145 (note c)	39.40%

−14 −

GENERAL INFORMATION

APPENDIX

Note a: Target Success Group Limited holds the Shares of the Company in the capacity as trustee of the Skysource Unit Trust, all of the units in which are held by HSBC International Trustee Limited in its capacity as trustee of Skysource Trust.

Note b: HSBC International Trustee Limited is deemed to be interested in 847,382,922 Shares as it is the trustee of the Skysource Trust. HSBC International Trustee Limited hold the remaining 18,758,491 Shares in its capacity as the trustees of other trusts.

Note c: Mr. Wong Wang Sang, Stephen is deemed to be interested in 850,444,533 Shares being the interests held by his spouse, Ms. Lin Wei Ping, while the remaining 51,405,612 Shares are held by himself.

Save as disclosed above, as at the Latest Practicable Date, so far as was known to any Directors or chief executive of the Company, no other persons (not being a Director or chief executive of the Company) had any interests or short positions in the Shares or underlying Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who was, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group or had any options in respect of such capital.

3. COMPETING INTERESTS

As at the Latest Practicable Date, none of the Directors has any interest in any business which competes or is likely to compete, either directly or indirectly, with the business of the Group.

4. DIRECTORS’ SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors has any service contract with any member of the Group which will not expire or is not determinable within one year without payment of compensation (other than statutory compensation).

5. LITIGATION

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

6. MATERIAL ADVERSE CHANGES

As at the Latest Practicable Date, the Directors are not aware of any material adverse changes in the financial or trading position of the Company since 31 March 2007, being the date to which the latest published audited accounts of the Company have been made up.

7. DIRECTORS’ INTERESTS IN CONTRACTS

None of the Directors is materially interested, directly or indirectly, in any contract or arrangement entered into by any member of the Group subsisting at the date of this circular and which is significant in relation to the business of the Group.

−15 −

GENERAL INFORMATION

APPENDIX

8. DIRECTORS’ INTERESTS IN ASSETS

As at the Latest Practicable Date, no Director has any interest, direct or indirect, in any assets which have been acquired, or disposed of by, or leased to any member of the Group, or was proposed to be acquired, or disposed of by, or leased to any member of the Group since 31 March 2007, the date to which the latest published audited accounts of the Group were made up.

9. MISCELLANEOUS

• (i) The registered office of the Company is at Clarendon House, 2 Church Street, Hamilton, HM 11, Bermuda.

• (ii) The Hong Kong branch registrars and transfer office of the Company in Hong Kong is Hong Kong Registrars Limited, Rooms 1712-16, Hopewell Centre, 183 Queen’s Road East, Hong Kong.

• (iii) The qualified accountant and company secretary of the Company is Mr. Leung Chi Ching, Frederick. Mr. Leung possesses professional membership of the American Institute of Certified Public Accountants, the Hong Kong Institute of Certified Public Accountants and the Hong Kong Securities Institute.

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

10. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection during normal business hours at the registered office in Hong Kong of the Company or any weekday (except public holidays) up to including 23 October 2007:

• (a) the First Sale and Purchase Agreements;

• (b) the Subsequent Sale and Purchase Agreements; and

• (c) this circular.

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