Skyworth Group Limited — Proxy Solicitation & Information Statement 2008

Sep 1, 2008

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

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

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this circular, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular. The directors collectively and individually accept full responsibility for the accuracy of the information contained in this document and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief there are no other facts the omission of which would make any statement herein misleading.

SKYWORTH DIGITAL HOLDINGS LIMITED ( )[*]

(Incorporated in Bermuda with limited liability)

(Stock Code: 0751)

PROPOSED ADOPTION OF A NEW SHARE OPTION SCHEME AND TERMINATION OF THE EXISTING SHARE OPTION SCHEME, GENERAL MANDATE TO REPURCHASE SHARES, RE-ELECTION OF DIRECTORS AND NOTICE OF ANNUAL GENERAL MEETING

A notice convening the annual general meeting of Skyworth Digital Holdings Limited to be held at Butterfield’s, Level 4, Dorset House, Taikoo Place, 979 King’s Road, Hong Kong, on 30 September 2008 at 10:00 a.m. or any adjournments of the meeting, at which the proposed resolutions as stated in the aforesaid notice will be considered, is set out on pages 28 to 30 of this circular.

If you do not intend to attend the meeting, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon and return the same to the Company’s branch share registrar in Hong Kong, Hong Kong Registrars Limited, Rooms 1806-07, 18th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong as soon as practicable and in any event not later than forty-eight (48) hours before the time appointed for holding the meeting or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting at the meeting or any adjourned meeting should you so desire.

* For identification purposes only

1 September 2008

CONTENTS

Page

DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
**LETTER **	FROM THE BOARD
1.	INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
2.	ADOPTION OF THE NEW SHARE OPTION SCHEME AND
	TERMINATION OF THE EXISTING SHARE OPTION SCHEME . . . .	6
3.	GENERAL MANDATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
4.	RE-ELECTION OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
5.	ANNUAL GENERAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
6.	PROCEDURES BY WHICH A POLL MAY BE DEMANDED . . . . . . . . .	9
7.	RECOMMENDATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
8.	ADDITIONAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
APPENDIX I – SUMMARY OF THE PRINCIPAL TERMS OF THE
	NEW SCHEME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
APPENDIX II – EXPLANATORY STATEMENT OF THE
	REPURCHASE MANDATE . . . . . . . . . . . . . . . . . . . . . .	21
APPENDIX III – PARTICULARS OF DIRECTORS PROPOSED
	FOR RE-ELECTION AT THE ANNUAL GENERAL
	MEETING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	25
**NOTICE **	OF ANNUAL GENERAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . .	28

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DEFINITIONS

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

“2000 Share Option Scheme”	the share option scheme adopted by the Company on 27
	March 2000 and been terminated as at 28 August 2002;
“AGM”	the annual general meeting of the Company to be held at
	Butterfield’s, Level 4, Dorset House, Taikoo Place, 979
	King’s Road, Hong Kong on 30 September 2008 at 10:00
	a.m. (or any adjournment thereof);
“AGM Notice”	the notice convening the AGM as set out on pages 28 to
	30 of this circular;
“associate”	has the meaning ascribed to it under the Listing Rules;
“Board”	the board of Directors;
“Bye-laws”	the bye-laws of the Company (as amended from time to
	time);
“Code”	“Code on Corporate Governance Practices” as set out in
	Appendix 14 of the Listing Rules;
“Company”	Skyworth Digital Holdings Limited, a company
	incorporated in Bermuda with limited liability, the shares
	of which are listed on the Stock Exchange;
“connected persons”	has the meaning ascribed to it under the Listing Rules;
“control”	is where a person secures:

• (i) by means of the holding of shares or other securities or the possession of voting power in or in relation to the relevant body corporate or any other body corporate; or

• (ii) by means of controlling the composition of a majority of the board of directors of the relevant body corporate or any other body corporate; or

• (iii) by virtue of any powers conferred by the bye-laws, articles of association or other constitutional document regulating the relevant body corporate or any other body corporate,

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DEFINITIONS

the affairs of the first-mentioned body corporate so that the affairs are conducted in accordance with the wishes of such person;

“Controlling Shareholder”

any person who has, directly or indirectly, secures:

• (i) by means of the holding of shares entitling him to exercise or control the exercise of 30% (or such other amount as may from time to time be specified in the Takeovers Code (approved by the Securities and Futures Commission as amended from time to time) as being the level for triggering a mandatory general offer) or more of the voting power at general meetings of the Company; or

• (ii) by means of controlling the composition of a majority of the Board; or

• (iii) by virtue of any powers conferred by the constitutional document of the Company or any other corporation,

the affairs of the Company so that the affairs are conducted in accordance with the wishes of such person;

“Director(s)” the director(s) of the Company from time to time;

• “Eligible Person(s)” means:

• (i) (a) any director (whether executive or nonexecutive, including any independent nonexecutive director) or employee (whether full time or part time) of, or

  • (b) any individual for the time being seconded to work for,

any member of the Group or any Controlling Shareholder or any company controlled by a Controlling Shareholder (“ Category A Eligible Person(s) ”); or

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DEFINITIONS

• (ii) any shareholder of any member of the Group or any Controlling Shareholder or any company controlled by a Controlling Shareholder (“ Category B Eligible Person(s) ”); or

• (iii) (a) any business or joint venture partner franchisee, contractor or agent of,

• (b) any person or entity that provides research, development or other technological support or any advisory, consultancy, professional or other services to,

• (c) any supplier of goods or services to,

• (d) any customer of, or

• (e) any landlord or tenant (including any subtenant) of,

• any member of the Group or any Controlling Shareholder or a company controlled by a Controlling Shareholder (“ Category C Eligible Person(s) ”);

and, for the purposes of the New Scheme, shall include any company controlled by one or more persons belonging to any of the above classes of participants;

“Existing Scheme”

“Group”

“HK$”

“Hong Kong”

“Latest Practicable Date”

the existing share option scheme of the Company adopted on 28 August 2002

the Company and its subsidiaries including jointly controlled entities and associates;

Hong Kong dollars, the lawful currency of Hong Kong;

the Hong Kong Special Administrative Region of the People’s Republic of China;

• 27 August 2008, being the latest practicable date for ascertaining certain information for inclusion in this circular;

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DEFINITIONS

“Listing Rules”	the Rules Governing the Listing of Securities on the
	Stock Exchange;
“New Scheme”	the share option scheme of the Company to be proposed
	for adoption by the Company at the AGM, a summary of
	the principal terms of the rules of which is set out in
	Appendix I on pages 11 to 20 of this circular;
“PRC”	the People’s Republic of China;
“Repurchase Mandate”	a general and unconditional mandate proposed to be
	granted to the Directors at the AGM authorising them to
	repurchase Shares not exceeding 10% of the aggregate
	nominal amount of the issued share capital of the
	Company as at the date of the passing of the relevant
	ordinary resolution granting such mandate;
“RGB”	Shenzhen Chuangwei-RGB Electronics Co. Ltd., a
	wholly-owned subsidiary of the Company incorporated in
	the PRC;
“RMB”	Renminbi, the lawful currency of the PRC;
“Scheme Period”	the period commencing on the date on which the New
	Scheme is adopted by Shareholders at the AGM and
	expiring at the close of business on the day immediately
	preceding the tenth anniversary thereof;
“SDGL”	Skyworth Digital Group Limited, a wholly-owned
	subsidiary of the Company incorporated in the British
	Virgin Islands;
“Share(s)”	ordinary share(s) of HK$0.10 each in the share capital of
	the Company;
“Shareholder(s)”	holder(s) of the Shares;
“Stock Exchange”	The Stock Exchange of Hong Kong Limited;
“Takeovers Code”	The Hong Kong Code on Takeovers and Mergers; and
“%”	per cent.

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LETTER FROM THE BOARD

SKYWORTH DIGITAL HOLDINGS LIMITED ( )[*]

(Incorporated in Bermuda with limited liability)

(Stock Code: 0751)

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

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

Registered office: Clarendon House 2 Church Street Hamilton HM 11 Bermuda

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

1 September 2008

To the Shareholders

Dear Sir or Madam,

PROPOSED ADOPTION OF A NEW SHARE OPTION SCHEME AND TERMINATION OF THE EXISTING SHARE OPTION SCHEME, GENERAL MANDATE TO REPURCHASE SHARES, RE-ELECTION OF DIRECTORS AND NOTICE OF ANNUAL GENERAL MEETING

1. INTRODUCTION

The purpose of this circular is to provide you with information on the following proposals:

• (a) Proposed adoption of the New Scheme and the termination of the Existing Scheme;

• (b) Grant to Directors the general mandate to repurchase Shares; and

• (c) Re-election of Directors.

The AGM Notice is set out on pages 28 to 30 of this circular.

• For identification purposes only

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LETTER FROM THE BOARD

2. ADOPTION OF THE NEW SHARE OPTION SCHEME AND TERMINATION OF THE EXISTING SHARE OPTION SCHEME

The Board considers that in order to encourage the Participants to perform their best in achieving the goals of the Group and to allow the Participants to enjoy the results of the Company attained through their effort and contribution, it is important that the Group should continue to provide such Participants with an additional incentive by offering them an opportunity to obtain an ownership interest in the Company and to reward them for contributing to the long term success of the business of the Group. In view that the Existing Scheme will expire in 2012, the Board therefore proposes to recommend to the Shareholders at the AGM to approve the adoption of the New Scheme and simultaneously terminate the Existing Scheme.

It is proposed that subject to the approval of the Shareholders for the adoption of the New Scheme being obtained, the Existing Scheme will be terminated upon the adoption of the New Scheme after all conditions precedent as referred to under the paragraph headed “Conditions precedent of the New Scheme” have been fulfilled. Operation of the New Scheme will commence after all the conditions precedent as referred to under the paragraph headed “Conditions precedent of the New Scheme” have been fulfilled. A summary of the principal terms of the New Scheme is set out in Appendix I to this circular.

As at the Latest Practicable Date, there are 4,560,000 outstanding options under the 2000 Share Option Scheme and 268,174,000 outstanding options under the Existing Scheme. Save as aforesaid, no option was granted, exercised, lapsed nor cancelled as at the Latest Practicable Date. The Board confirms that prior to the AGM, it will not grant any further options under the Existing Scheme.

Upon termination of the Existing Scheme, no further options may be offered but in all other respects the provisions of the Existing Scheme shall remain in force. The above outstanding options granted under the Existing Scheme shall continue to be valid and subject to the provisions of the Existing Scheme. Therefore, the adoption of the New Scheme will not in any event affect the terms of the grant of such outstanding options that has already been granted under the Existing Scheme.

As at the Latest Practicable Date, the number of Shares in issue are 2,281,456,391 Shares. Assuming that there is no change in the issued share capital of the Company during the period from the Latest Practicable Date to the date of adoption of the New Scheme, the number of Shares issuable pursuant to the New Scheme and any other share option schemes of the Company on the date of adoption of the New Scheme will be 228,145,639 Shares, being 10% of the Shares in issue as at the date of adoption of the New Share Option Scheme.

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LETTER FROM THE BOARD

Conditions precedent of the New Scheme

The adoption of the New Scheme is subject to the following conditions:

• (i) the approval of the Shareholders for the termination of the Existing Scheme;

• (ii) the approval of the Shareholders for the adoption of the New Scheme; and

• (iii) the Listing Committee of the Stock Exchange granting approval for the listing of, and permission to deal in, any Shares to be issued pursuant to the exercise of the Options granted under the New Scheme to the extent of 10% of the total number of Shares in issue as at the date of approval of the New Scheme.

Subject to the fulfillment of the above conditions precedent, the Directors will have the right to grant Options to subscribe for Shares, which when aggregated with any securities subject to any other share option schemes of the Company in issue representing up to 10% of the total number of Shares in issue as at the date of approval of the New Scheme, unless the Company obtains a fresh approval from its Shareholders to renew the 10% limit on the basis that the maximum number of Shares which may be issued upon exercise of all outstanding Options granted and yet to be exercised under the New Scheme and any other share option schemes of the Company in issue shall not exceed 30% of the issued share capital of the Company from time to time.

Application will be made to the Stock Exchange for the approval of the listing of, and permission to deal, in the Shares to be issued pursuant to the exercise of Options granted under the New Scheme.

There will be no trustee for the New Scheme. No Directors will become trustee of the New Scheme or have a direct or indirect interest in such trustee.

Principal terms of the New Scheme

A summary of the principal terms of the New Scheme is set out in Appendix I to this circular. This serves as a summary of the terms of the New Scheme but does not constitute the full terms of the same. The full terms of the New Scheme can be inspected at the head office and principal place of business of the Company in Hong Kong at Rooms 1601-04, Westlands Centre, 20 Westlands Road, Quarry Bay, Hong Kong from the date of this circular up to and including the date of the AGM and at the AGM.

Value of the options

The Directors consider that it is not appropriate to state the value of all options that can be granted pursuant to the New Scheme as if they had been granted as at the Latest Practicable Date as a number of variables which are crucial for the calculation of the value of the option have not been determined. Such variables include the exercise price, exercise period, any lock up period, any performance targets set and other variables. The Directors believe that any calculation of the value of the options as at the Latest Practicable Date based on a great number of speculative assumptions would not be meaningful and would be misleading to the Shareholders.

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LETTER FROM THE BOARD

3. GENERAL MANDATES

(A) General mandate to repurchase Shares

At the 2007 annual general meeting of the Company held on 28 September 2007, an ordinary resolution was passed by the Shareholders to grant a general unconditional mandate to the Directors to repurchase Shares in accordance with the Listing Rules. This general mandate will lapse at the conclusion of the AGM. It is therefore proposed that a general mandate to repurchase Shares be granted to the Directors by an amount not exceeding 10% of the aggregate nominal amount of the issued share capital of the Company as at the date of the passing of the relevant ordinary resolution granting such mandate.

Shareholders are referred to the AGM Notice, as set out on pages 28 to 30, for details of the resolution on this general mandate which will be considered at the AGM. With reference to this resolution, the Board wishes to state that it has no immediate plans to exercise the Repurchase Mandate to repurchase any Shares.

An explanatory statement, as required by the Listing Rules to be sent to the Shareholders in connection with the Repurchase Mandate, is set out in Appendix I of this circular, which contains all the information reasonably necessary to enable Shareholders to make an informed decision on whether or not to vote for or against the ordinary resolution to grant the Repurchase Mandate at the AGM.

(B) General mandate to issue Shares

The Board, after due and careful consideration, has decided not to propose at the AGM to grant a general mandate to the Directors to issue Shares since there is no immediate need to raise equity capital in the foreseeable future. If capital raising through an issue of Shares is required in the future, the Company will seek the necessary Shareholders’ approval at the relevant time.

4. RE-ELECTION OF DIRECTORS

In accordance with bye-laws 86 and 87 of the Bye-laws, Mr. Zhang Xuebin, Ms. Lin Wei Ping and Mr. Yang Dongwen will retire at the AGM and being eligible, offer themselves for re-election. The biographical details of these Directors are set out in Appendix II of this circular.

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LETTER FROM THE BOARD

5. ANNUAL GENERAL MEETING

A notice convening the AGM to be held on 30 September 2008 at 10:00 a.m. (or any adjournment thereof) at Butterfield’s, Level 4, Dorset House, Taikoo Place, 979 King’s Road, Hong Kong is set out on pages 28 to 30 of this circular. At the meeting, resolutions will be proposed to approve (i) the proposed adoption of the New Scheme and the termination of the Existing Scheme; (ii) the granting to the Directors the general mandate to repurchase Shares; and (iii) the re-election of Mr. Zhang Xuebin, Ms. Lin Wei Ping and Mr. Yang Dongwen as Directors.

A form of proxy for the AGM is enclosed herewith. If you do not intend to attend, you are requested to complete the enclosed form of proxy in accordance with the instructions printed thereon and return the same to the Company’s Hong Kong branch share registrar, Hong Kong Registrars Limited, at Rooms 1806-07, 18th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong as soon as practicable and in any event not later than 48 hours before the time appointed for holding the AGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting at the AGM or any adjourned meeting should you so desire.

6. PROCEDURES BY WHICH A POLL MAY BE DEMANDED

In accordance with bye-law 66 of the Bye-laws, a resolution put to the vote of a meeting shall be decided on a show of hands unless (before or on the declaration of the result of the show of hands or on the withdrawal of any other demand for a poll) a poll is demanded:

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

• (b) by at least three Shareholders present in person (or in the case of a Shareholder being a corporation by its duly authorised representative) or by proxy for the time being entitled to vote at the meeting; or

• (c) by any of the Directors who individually or collectively (with the chairman of the relevant Shareholders’ meeting of the Company) hold proxies in respect of Shares holding 5% or more of the total voting rights at a particular meeting of Shareholders of the Company, and if on a show of hands such meeting votes in the opposite manner to that instructed in those proxies, such Directors shall have the right to demand a poll; or

• (d) by a Shareholder or Shareholders present in person (or in the case of a Shareholder being a corporation by its duly authorised representative) or by proxy and representing not less than one-tenth of the total voting rights of all Shareholders having the right to vote at the meeting; or

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LETTER FROM THE BOARD

• (e) by a Shareholder or Shareholders present in person (or in the case of a Shareholder being a corporation by its duly authorised representative) or by proxy and holding Shares in the Company conferring a right to vote at the meeting being Shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all Shares conferring that right.

The result of the poll shall be deemed to be a resolution of the meeting at which the poll was demanded.

7. RECOMMENDATIONS

The Board considers that (i) the adoption of the New Scheme and the termination of the Exisitng Scheme; (ii) the granting to the Directors the general mandate to repurchase Shares; and (iii) the re-election of Mr. Zhang Xuebin, Ms. Lin Wei Ping and Mr. Yang Dongwen as Directors, are in the best interests of the Company and the Shareholders as a whole. Accordingly, the Directors recommend all Shareholders to vote in favour of the resolutions to be proposed at the AGM in respect thereof.

8. ADDITIONAL INFORMATION

Your attention is drawn to the Explanatory Statement of the Repurchase Mandate set out in Appendix I and the Particulars of Directors Proposed for Re-election at the Annual General Meeting set out in Appendix II of this circular.

Yours faithfully, For and on behalf of the Board Zhang Xuebin

Executive Chairman and Chief Executive Officer

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SUMMARY OF THE PRINCIPAL TERMS OF THE NEW SCHEME

APPENDIX I

The following is a summary of the principal terms of the New Scheme proposed to be adopted at the AGM:

1. Purpose of the New Scheme

The purpose of the New Scheme is to enable the Board to grant options to selected Eligible Person(s) as incentives or rewards for their contribution or potential contribution to the Group.

2. Who may join and basis of eligibility

The Board may, at its absolute discretion and on such terms as it may think fit, grant options to any Eligible Person to subscribe at a price calculated in accordance with paragraph 3 below for such number of Shares as it may determine in accordance with the terms of the New Scheme.

The basis of eligibility of any of the Eligible Persons to the grant of options shall be determined by the Board from time to time on the basis of his contribution or potential contribution to the development and growth of the Group.

3. Option price for subscription of Shares

The option price per Share payable on the exercise of an option is to be determined by the Board provided always that it shall be at least the higher of:

• (i) the closing price of the Shares as stated in the daily quotations sheet issued by the Stock Exchange for the date of offer of grant (which is deemed to be the date of grant if the offer for the grant of an option is accepted by the Eligible Person), which must be a business day; and

• (ii) the average closing price of the Shares as stated in the daily quotations sheets issued by the Stock Exchange for the five business days immediately preceding the date of offer of grant,

(as subsequently adjusted pursuant to the terms of the New Scheme, if relevant), provided that the option price per Share shall in no event be less than the nominal amount of one Share.

4. Acceptance of offers

An offer for the grant of options must be accepted within thirty days inclusive of the day on which such offer was made. The amount payable by the grantee of an option to the Company on acceptance of the offer for the grant of an option is HK$1.00.

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SUMMARY OF THE PRINCIPAL TERMS OF THE NEW SCHEME

APPENDIX I

5. Maximum number of Shares

• (A) Subject to sub-paragraphs (B) and (C) below, the maximum number of Shares issuable upon exercise of all options to be granted under the New Scheme and any other share option schemes of the Company as from the commencement of the Scheme Period (excluding, for this purpose, options which have lapsed in accordance with the terms of the New Scheme or any other share option schemes of the Company) must not in aggregate exceed 10% of the Shares in issue as at the date of the Annual General Meeting (the “ Scheme Mandate ”). The Shares underlying any options granted under the New Scheme or any other share option schemes of the Company which have been cancelled (but not options which have lapsed) will be counted for the purpose of the Scheme Mandate.

• (B) The Scheme Mandate may be refreshed at any time by obtaining approval of the Shareholders in general meeting provided that the new limit under the refreshed Scheme Mandate must not exceed 10% of the Shares in issue at the date of the Shareholders’ approval of such refreshed Scheme Mandate. Options previously granted under the New Scheme or any other share option schemes of the Company (including those exercised, outstanding, cancelled or lapsed in accordance with the terms of the New Scheme or any other share option schemes of the Company) will not be counted for the purpose of calculating the total number of Shares subject to the refreshed Scheme Mandate.

• (C) The Company may also, by obtaining separate approval of the Shareholders in general meeting, grant options beyond the Scheme Mandate provided the options in excess of the Scheme Mandate are granted only to Eligible Persons specifically identified by the Company before such approval is sought.

• (D) The aggregate number of Shares which may be issued upon exercise of all outstanding options granted and yet to be exercised under the New Scheme and any other share option schemes of the Company must not exceed 30% of the Shares in issue from time to time. No option may be granted under any schemes of the Company (or the subsidiary) if this will result in the limit being exceeded.

6. Maximum entitlement of each Eligible Person

The maximum number of Shares issued and to be issued upon exercise of options granted under the New Scheme and any other share option schemes of the Company to any Eligible Person (including cancelled, exercised and outstanding options), in any 12-month period up to the date of grant shall not exceed 1% of the Shares in issue. Any further grant of options in excess of such limit must be separately approved by Shareholders with such Eligible Person and his associates abstaining from voting.

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SUMMARY OF THE PRINCIPAL TERMS OF THE NEW SCHEME

APPENDIX I

7. Grant of options to certain connected persons

• (A) Any grant of an option to a Director, chief executive or substantial shareholder of the Company (or any of their respective associates) must be approved by the independent non-executive Directors (excluding any independent non-executive Director who is the grantee of the option).

• (B) Where any grant of options to a substantial shareholder of the Company or an independent non-executive Director (or any of their respective associates) will result in the total number of Shares issued and to be issued upon exercise of all options already granted and to be granted to such person under the New Scheme and any other share option schemes of the Company (including options exercised, cancelled and outstanding) in any 12-month period up to and including the date of grant:

• (i) representing in aggregate over 0.1% of the Shares in issue; and

• (ii) having an aggregate value, based on the closing price of the Shares at each date of grant, in excess of HK$5 million,

such further grant of options is required to be approved by Shareholders in general meeting by way of a poll in accordance with the Listing Rules. All connected persons of the Company must abstain from voting in favour at such general meeting.

Any change in the terms of an option granted to a substantial shareholder of the Company or an independent non-executive Director or any of their respective associates is also required to be approved by Shareholders.

8. Time of exercise of option

An option may be exercised in accordance with the terms of the New Scheme at any time during a period commencing on such date on or after the date on which the option is granted as the Board may determine in granting the option and expiring at the close of business on such date as the Board may determine in granting the option but in any event shall not exceed ten years from the date of grant (which is the date of offer of grant if the offer for the grant of the option is accepted).

No minimum period during which the option granted under the New Scheme must be held will be specified in the New Scheme.

9. Performance targets

Save as determined by the Board and provided in the offer of the grant of the relevant options, there is no performance target which must be achieved before any of the options can be exercised.

No performance target will be specified in the New Scheme.

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SUMMARY OF THE PRINCIPAL TERMS OF THE NEW SCHEME

APPENDIX I

10. Ranking of Shares

If under the terms of a resolution passed or an announcement made by the Company prior to the date of exercise of an option, a dividend is to be or is proposed to be paid, or Shares are to be issued or proposed to be issued by way of the capitalization of profits or reserves or by way of rights under an offer made pro rata, to Shareholders on the register of members of the Company on a date prior to such date of exercise, the Shares to be issued upon such exercise will not rank for such dividend or such Shares. Subject as aforesaid, Shares allotted upon the exercise of an outstanding option will be subject to all the provisions of the bye-laws of the Company for the time being in force and will rank pari passu in all respects with the fully paid Shares in issue on the date of such exercise. Shares allotted upon the exercise of an option for the time being outstanding shall not carry voting rights until completion of the registration of the option holder (or any other person) as the holder thereof.

11. Rights are personal to grantee

An option shall not be transferable or assignable and shall be personal to the grantee of the option.

12. Rights of exercise for grantees who were Category A Eligible Persons

If a grantee of an option who at the time of grant of an option to him qualified as an Eligible Person because he was a Category A Eligible Person and he ceases to be such a Category A Eligible Person:

• (i) by reason of ill-health or injury or disability or death, then he or (as the case may be) his personal representative(s) may exercise his outstanding option within three months or up to the expiration of the relevant option period, whichever is earlier, failing which the option will lapse; or

• (ii) because the relevant member of the Group or the relevant Controlling Shareholder or the relevant company controlled by the relevant Controlling Shareholder by reason of his employment or engagement with, or secondment to, which he qualified as a Category A Eligible Person at the time the option was granted ceases to be a member of the Group or a Controlling Shareholder or a company controlled by the relevant Controlling Shareholder (as the case may be), then he may exercise his outstanding option within three months or up to the expiration of the relevant option period, whichever is earlier, failing which the option will lapse; or

• (iii) by reason of retirement in accordance with his contract of employment or service, then he may exercise his outstanding option within three months after he so ceases or, if the Board in its absolute discretion determine, within three months following the date of his sixtieth birthday where the retirement takes effect prior to such date, failing which the option will lapse; or

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SUMMARY OF THE PRINCIPAL TERMS OF THE NEW SCHEME

APPENDIX I

• (iv) by reason of voluntary resignation or dismissal, or upon expiration of his term of directorship (unless immediately refreshed upon expiration), or by termination of his employment or service in accordance with the termination provisions of his contract of employment or service by the relevant company otherwise than by reason of redundancy, then his outstanding options shall lapse on the date he so ceases; or

• (v) on the grounds that he has committed any act of bankruptcy or has become insolvent or has made any arrangements or composition with his creditors generally or has committed any serious misconduct or has been convicted of any criminal offence (other than an offence which in the opinion of the Board does not bring the grantee or the Group or the relevant Controlling Shareholder or the relevant company controlled by the relevant Controlling Shareholder into disrepute), then his outstanding options shall lapse automatically on the date of his ceasing to be an Eligible Person; or

• (vi) for any other reason, any options exercisable at the date he so ceases may be exercised within one month of the date he so ceases, failing which the option will lapse,

provided always that in each case the Board in its absolute discretion may decide that such options or any part thereof shall not so lapse or determined subject to such conditions or limitations as it may decide.

13. Rights of exercise for grantees who were Category B Eligible Persons

If a grantee of an option who at the time of grant of an option to him qualified as an Eligible Person because he was a Category B Eligible Person and he:

• (i) ceases to be a Category B Eligible Person by reason that such grantee ceases to be a shareholder of the relevant member of the Group or the relevant Controlling Shareholder or the relevant company controlled by a Controlling Shareholder, then his outstanding option shall lapse on the date he so ceases; or

• (ii) ceases to be a Category B Eligible Person because the relevant member of the Group by reason of his holding of shares in which he qualified as a Category B Eligible Person at the time the option was granted ceases to be a member of the Group, then he may exercise his outstanding option within three months after he so ceases or up to the expiration of the option period, whichever is earlier, failing which the option will lapse; or

• (iii) ceases to be a Category B Eligible Person because the relevant Controlling Shareholder or the relevant company controlled by the relevant Controlling Shareholder by reason of his holding of shares in which he qualified as a Category B Eligible Person at the time the option was granted ceases to be a Controlling Shareholder or a company controlled by the relevant Controlling Shareholder (as the case may be), then his outstanding option shall lapse on the date he so ceases; or

−15 −

SUMMARY OF THE PRINCIPAL TERMS OF THE NEW SCHEME

APPENDIX I

• (iv) (if the grantee is an individual) dies, then his personal representative(s) may exercise his outstanding option within three months after his death or up to the expiration of the option period, whichever is earlier, failing which the option will lapse; or

• (v) has committed any act of bankruptcy or has become insolvent or has made any arrangements or composition with his creditors generally or has committed any serious misconduct or has been convicted of any criminal offence (other than an offence which in the opinion of the Board does not bring the grantee or the Group or the relevant Controlling Shareholder or the relevant company controlled by the relevant Controlling Shareholder into disrepute), then his outstanding option shall lapse automatically on the date of the relevant court order, resolution, misconduct or conviction or the effective date of the relevant arrangements or composition (as the case may be),

provided always that in each case the Board in its absolute discretion may decide that such option or any part thereof shall not so lapse or determine subject to such conditions or limitations as it may decide.

14. Rights of exercise for grantees who were Category C Eligible Persons

If a grantee of an option who at the time of grant of an option to him qualified as an Eligible Person because he was a Category C Eligible Person and he:

• (i) has, in the absolute determination of the Board, committed any breach of contract entered into between such Eligible Person and the relevant member of the Group or the relevant Controlling Shareholder or the relevant company controlled by the relevant Controlling Shareholder; or

• (ii) has committed any act of bankruptcy or become insolvent or made any arrangements or composition with his creditors generally or committed any serious misconduct or been convicted of any criminal offence (other than an offence which in the opinion of the Board does not bring the grantee or the Group or the relevant Controlling Shareholder or the relevant company controlled by the relevant Controlling Shareholder into disrepute);

then his outstanding options shall lapse and determine automatically on the date of the Board’s determination referred to in (i) above or, as the case may be, the date of the relevant court order, resolution, misconduct or conviction or the effective date of the relevant arrangements or composition (as the case may be) for the relevant event referred to in (ii) above; or

• (iii) if the grantee (if he is an individual) dies, then his personal representative(s) may exercise his outstanding option within three months after his death or up to the expiration of the option period, whichever is earlier, failing which the option will lapse,

−16 −

SUMMARY OF THE PRINCIPAL TERMS OF THE NEW SCHEME

APPENDIX I

provided always that in each case the Board in its absolute discretion may decide that such options or any part thereof shall not so lapse or determined subject to such conditions or limitations as it may decide.

15. Rights on exercise for grantees which were companies controlled by any of the Eligible Persons

In respect of any option granted to a company which qualified as an Eligible Person because it was a company controlled by a person (“ Such Person ”) who was a Category A Eligible Person or Category B Eligible Person or Category C Eligible Person:

• (i) the relevant provisions set out in paragraph 12, or 13, or 14 (as the case may be) would apply to its outstanding option as if the option had been granted to Such Person; and

• (ii) its outstanding option shall lapse on the date it ceases to be a company controlled by Such Person,

provided always that in each case the Board in its absolute discretion may decide that such options or any part thereof shall not so lapse or determine subject to such conditions or limitations as it may decide.

16. Failure to meet continuing eligibility criteria

If the Board in the offer granting the relevant option has specified that the grantee has to meet certain continuing eligibility criteria and that the failure of the grantee to meet any such continuing eligibility criterion would entitle the Company to cancel the option then outstanding (or part thereof), then upon the failure of the grantee to meet any such continuing eligibility criterion, his outstanding option shall lapse and determine on the date the Board exercises the Company’s right to cancel the option on the ground of such failure.

17. Rights on a general offer

If a general offer by way of takeover is made to all the Shareholders other than the offeror and/or any person controlled by the offeror and/or any person acting in association or concert with the offeror, the grantee of an option shall, subject to paragraph 8 above, be entitled to exercise at any time within a period of fourteen days after such control has been obtained by the offeror any option in whole or in part to the extent not already exercised (and notwithstanding any restrictions which would otherwise have prevented such option from being exercisable at that time). For the avoidance of doubt, an option not so exercised shall remain valid in accordance with its terms and subject to such restrictions as applied to it before the general offer.

−17 −

SUMMARY OF THE PRINCIPAL TERMS OF THE NEW SCHEME

APPENDIX I

18. Rights on winding-up

If notice is given by the Company to Shareholders of a general meeting at which a resolution will be proposed for the voluntary winding-up of the Company, the Company shall forthwith give notice to all grantees of options and each grantee shall be entitled, at any time no later than two business days prior to the proposed general meeting of the Company to exercise any of his outstanding options in whole or in part to the extent not already exercised (and notwithstanding any restrictions which would otherwise have prevented such option from being exercisable at that time). If such resolution is duly passed, all options shall, to the extent that they have not been exercised, thereupon lapse and determine on the commencement of the winding-up.

19. Rights on compromise or arrangement

In the event of a compromise or arrangement between the Company and Shareholders or the Company’s creditors being proposed in connection with a scheme for the reconstruction or amalgamation of the Company pursuant to the Companies Act 1981, as amended, of Bermuda, notice of the relevant meeting shall be given to the grantees of options on the same day notice is given to the Shareholders and the Company’s creditors, and thereupon each grantee (or where permitted his personal representative(s)) may forthwith and until the expiry of the period commencing with such date and ending with the earlier of the date falling two calendar months thereafter and the date on which such compromise or arrangement is sanctioned by the Supreme Court of Bermuda be entitled to exercise his option, but such exercise of an option shall be conditional upon such compromise or arrangement being sanctioned by the Supreme Court of Bermuda and becoming effective. Failing such exercise, all options will lapse.

20. Lapse of options

An option shall lapse automatically on the earliest of:

• (i) the expiry of the period referred to in paragraph 8 above;

• (ii) the date on which the grantee commits a breach of paragraph 11 above, if the Board shall exercise the Company’s right to cancel the option;

• (iii) the expiry of the relevant period or the occurrence of the relevant event referred to in paragraph 12, 13, 14, 15 or 16 above; and

• (iv) the expiry of any of the relevant periods referred to in paragraph 18 or 19 above.

21. Cancellation of options granted but not yet exercised

Following the cancellation of any options granted under the New Scheme but not exercised, new options may only be granted to the same grantee under the New Scheme with available unissued options (excluding the cancelled options) within the limit of the Scheme Mandate then available to the Board.

−18 −

SUMMARY OF THE PRINCIPAL TERMS OF THE NEW SCHEME

APPENDIX I

22. Effects of alterations to capital

In the event of any reduction, sub-division or consolidation of the share capital of the Company or any capitalisation issue or rights issue, the number of Shares comprised in each option or the option price may be adjusted in such manner as the Board (having, except in the case of an issue of Shares by way of the capitalisation of profits or reserves, received a statement in writing from the auditors of the Company or an independent financial adviser appointed for such purpose that in their opinion the adjustments proposed are fair and reasonable) may deem appropriate, provided always that (in the case of adjustment to the number of Shares comprised in each outstanding option) the grantee shall have the same proportion of the equity capital of the Company as that to which he was entitled before such adjustments, and that no such adjustments shall be made the effect of which would be to enable a Share to be issued at less than its nominal value. The issue of Shares as consideration in a transaction will not be regarded as a circumstance requiring adjustment.

23. Period of the New Scheme

The New Scheme will remain in force for a period of ten years commencing on the date on which the New Scheme is adopted by Shareholders in general meeting and shall expire at the close of business on the day immediately preceding the tenth anniversary thereof unless terminated earlier by Shareholders in general meeting.

24. Alteration to the New Scheme

• (A) The Board may from time to time in its absolute discretion waive or amend such of the Rules as it deems desirable, provided that, no amendment shall be made to the terms and conditions of the New Scheme which extends the class of Eligible Persons, or alters to the advantage of the grantees of the options relating to matters governed by Rule 17.03 of the Listing Rules except with the prior approval of the Shareholders in general meeting.

• (B) Any amendment to any terms of the New Scheme which are of a material nature or any change to the options granted must be approved by Shareholders in general meeting except where the alterations take effect automatically under the existing terms of the New Scheme.

• (C) Any change to the authority of the Board in relation to any alteration to the terms of the New Scheme must be approved by Shareholders in general meeting.

• (D) Any amendment to any terms of the New Scheme or the options granted shall comply with the relevant requirements of Chapter 17 of the Listing Rules.

−19 −

SUMMARY OF THE PRINCIPAL TERMS OF THE NEW SCHEME

APPENDIX I

25. Termination to the New Scheme

The Company may, with the approval in general meeting of the Shareholders, terminate the New Scheme at any time following which no further grant of options shall be offered but in all other respects the rules of the New Scheme shall continue in full force and effect. Any options granted prior to such termination, including options exercised or outstanding, under the New Scheme shall continue to be valid and exercisable in accordance with the rules of the New Scheme.

26. Conditions of the New Scheme

The New Scheme is conditional on (1) the passing by the Shareholders of an ordinary resolution at the AGM to approve the adoption of the New Scheme; and (2) the Listing Committee of the Stock Exchange granting the listing of, and permission to deal in, 10% of the Shares in issue at the date of approval of the New Scheme to be issued pursuant to the exercise of any options which may be granted under the New Scheme.

−20 −

APPENDIX II EXPLANATORY STATEMENT OF THE REPURCHASE MANDATE

The following is the explanatory statement required to be sent to the Shareholders under the Listing Rules to enable Shareholders to make an informed decision on whether to vote for or against the ordinary resolution in relation to the grant of the Repurchase Mandate to be proposed at the AGM.

1. SHARE CAPITAL

As at the Latest Practicable Date, the issued share capital of the Company comprised 2,281,456,391 Shares.

Subject to the passing of the relevant ordinary resolution to approve the grant of the Repurchase Mandate and assuming no change in the issued share capital of the Company between the Latest Practicable Date and the date of the AGM, the Company may under the Repurchase Mandate purchase a maximum of 228,145,639 Shares during the period ending on the earliest of the date of the next annual general meeting, the date by which the next annual general meeting of the Company is required to be held by law and the date upon which such authority is revoked or varied.

2. REASONS FOR SHARE REPURCHASES

The Directors believe that the Repurchase Mandate is in the best interests of the Company and its Shareholders as it will give the Company additional flexibility. Such repurchases may, depending on market conditions and funding arrangements at the time, lead to an enhancement of the value of the Company’s securities and/or its earnings per Share and will only be made if the Directors believe that such repurchase is in the interest of the Company and its Shareholders.

3. FUNDING OF REPURCHASE

In repurchasing the Shares, the Company may employ funds from internal resources and may only apply funds legally available for such purpose in accordance with all applicable laws of Bermuda, the Memorandum of Association of the Company and the Bye-laws. The Company is permitted under the Memorandum of Association of the Company and the Bye-laws to repurchase its Shares.

Based on the audited consolidated financial statements of the Company as at 31 March 2008 (being the date to which the latest published audited financial statements of the Company have been made up), the Directors consider that the exercise in full of the Repurchase Mandate to repurchase Shares at any time during the proposed repurchase period may potentially have a material adverse impact on the working capital position or gearing position of the Company as compared with its financial position as at 31 March 2008. The Directors do not propose to make any repurchase to the extent that it would, in the circumstances, have a material adverse impact on the working capital or gearing position of the Company which, in the opinion of the Directors, are from time to time appropriate for the Company.

−21 −

APPENDIX II EXPLANATORY STATEMENT OF THE REPURCHASE MANDATE

4. SHARE PRICES

The highest and lowest prices per Share at which the Shares were traded on the Stock Exchange in each of the previous twelve months prior to the Latest Practicable Date were:

	Price per Share	Price per Share
	Highest	Lowest
	HK$	HK$
2007
August	1.13	0.82
September*	1.25	0.97
October	1.35	1.05
November	1.16	0.95
December	1.18	0.90
2008
January	1.18	0.70
February	0.91	0.74
March	0.86	0.63
April	0.77	0.67
May	1.03	0.76
June	0.89	0.67
July	0.87	0.67
August (up to the Latest Practicable Date)	0.94	0.76

• Trading in the Shares of the Company on the Stock Exchange has been suspended from 2:30 p.m. on 18 September 2007 to 4:30 p.m. on 19 September 2007 pending the release of an announcement.

5. DIRECTORS AND THEIR ASSOCIATES AND CONNECTED PARTIES

None of the Directors nor, to the best of their knowledge having made all reasonable enquiries, any of their respective associates, have any present intention, in the event that the Repurchase Mandate is granted by the Shareholders, to sell any Shares to the Company or its subsidiaries.

No connected persons of the Company have notified the Company that they have a present intention to sell Shares to the Company and no such persons have undertaken not to sell any Shares to the Company in the event that the Repurchase Mandate is approved by the Shareholders.

−22 −

APPENDIX II EXPLANATORY STATEMENT OF THE REPURCHASE MANDATE

6. SHARE REPURCHASES MADE BY THE COMPANY

The Company has purchased 9,472,000 Shares on the Stock Exchange during the six months preceding the Latest Practicable Date, particulars of which are as follows:

		Highest
	Number of	price paid/
	Shares	Price per	Lowest
Date of Purchase	repurchased	Share	price paid
	HK$	HK$
2007	Nil	Nil	Nil
2008
29 April	2,000	0.72	0.72
7 May	6,000	0.79	0.79
8 May	138,000	0.81	0.80
13 May	3,000,000	0.86	0.86
21 May	1,908,000	0.87	0.86
22 May	2,510,000	0.88	0.86
23 May	432,000	0.88	0.88
27 May	398,000	0.88	0.88
28 May	1,078,000	0.88	0.88

Save as disclosed, the Company has not made any repurchase of Shares during the six months preceding the Latest Practicable Date.

7. UNDERTAKING OF THE DIRECTORS

The Directors have undertaken to the Stock Exchange that they will exercise the Repurchase Mandate in accordance with the Listing Rules, all applicable laws of Bermuda and the Memorandum of Association of the Company and the Bye-laws.

8. EFFECT OF THE TAKEOVERS CODE

If, as a result of a repurchase of 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 Takeovers Code. Accordingly, a Shareholder, or a group of Shareholders acting in concert, depending on the level of increase of Shareholders’ interests, could obtain or consolidate control of the Company and may become obliged to make a mandatory offer in accordance with Rule 26 of the Takeovers Code for all Shares not already owned by such Shareholder or group of Shareholders.

−23 −

APPENDIX II EXPLANATORY STATEMENT OF THE REPURCHASE MANDATE

According to the register of interests maintained by the Company under Section 336 of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong), as at the Latest Practicable Date, Target Success Group Limited (“Target Success”) held 847,382,922 Shares in its capacity as trustee of the Skysource Unit Trust (all of the units of which are held by HSBC International Trustee Limited (“HSBC”) in its capacity as trustee of the Skysource Trust which owns all the issued shares in Target Success). HSBC, in its capacity as trustee of the Skysource Trust, is therefore deemed to be interested in the 847,382,922 Shares held by Target Success. Ms. Lin Wei Ping is deemed to be interested in 847,382,922 Shares as Ms. Lin Wei Ping and her children are the beneficiaries of the Skysource Trust. Ms. Lin Wei Ping is also deemed to be interested in 55,621,612 Shares being the interests held beneficially by her spouse, Mr. Wong Wang Sang, Stephen, the former non-executive Chairman of the Company. She is also beneficially interested in 3,061,611 Shares of the Company and share options to subscribe for 2,000,000 Shares of the Company herself. As such, Ms. Lin Wei Ping is interested or deemed to be interested in a total of 908,066,145 Shares, representing approximately 39.80% of the issued share capital of the Company as at the Latest Practicable Date.

In the event that the Directors exercise in full the power to repurchase Shares pursuant to the Repurchase Mandate, then (assuming the shareholdings as at the Latest Practicable Date remain the same) the shareholding of Target Success, HSBC and Ms. Lin Wei Ping (who is a presumed concert party under the Takeovers Code) will be increased to approximately 44.22% of the issued share capital of the Company. The Directors are aware that this would give rise to an obligation on the part of Target Success, HSBC and Ms. Lin Wei Ping (if the presumption of concert party is not rebutted) to make a mandatory general offer for all the Shares not already held by Target Success, HSBC and Ms. Lin Wei Ping under Rule 26 of the Takeovers Code. The Directors have no present intention to repurchase Shares pursuant to the Repurchase Mandate.

−24 −

PARTICULARS OF DIRECTORS PROPOSED FOR RE-ELECTION AT THE ANNUAL GENERAL MEETING

APPENDIX III

The emoluments of the Directors are reviewed by the Remuneration Committee of the Company from time to time, and determined with reference to the qualifications, responsibilities, experience and performance of the individual directors, and the financial performance of the Group. Set out below are the particulars of the Directors proposed for re-election at the AGM.

(1) Mr. Zhang Xuebin (“Mr. Zhang”)

Mr. Zhang Xuebin, aged 45, is an executive director and the Chief Executive Officer of the Company, and was elected by the Board to replace Mr. Wang Dianfu as the Executive Chairman with effect from 1 April 2007. He is also a director of certain subsidiaries of the Company. Mr. Zhang joined the Group in March 2001. He is responsible for overseeing the business operations of the Group and implementing the strategies and policies as determined by the Board from time to time. After his appointment as the Executive Chairman, Mr. Zhang is also responsible for the management of the Board, and the formulation of corporate strategy and future directions of the Group. Mr. Zhang graduated from Zhongnan University of Economics and Law in the PRC with a Bachelor degree in Accountancy and a Master degree in Economics. Mr. Zhang had worked for Hainan Coconut Palm Group Company Limited from March 1991 to February 2001 and was appointed as its General Manager in August 1997.

Pursuant to the service agreement entered into between Mr. Zhang and the Company and subject to the provisions in the Bye-laws of the Company, Mr. Zhang will hold office as an executive director for the period up to 31 March 2010 inclusive. Under the service agreement, he is entitled to a remuneration of RMB2,000,000 per annum and discretionary bonus to be determined by the Board based on, amongst other things, the results of the Company, level of responsibilities and performance.

As at the Latest Practicable Date, Mr. Zhang was beneficially interested in 4,200,600 Shares of the Company and share options to subscribe for 31,000,000 Shares of the Company and save as aforesaid, Mr. Zhang did not have any interests in any Shares of the Company within the meaning of Part XV of the Securities and Futures Ordinance.

Save for the relationship with the Group and his interests in the Company as described above, Mr. Zhang does not have any relationships with any directors, senior management or substantial or controlling shareholders of the Company.

Save as disclosed herein, there are no other matters required to be disclosed under Rule 13.51(2)(h) to (w) of the Listing Rules and there are no other matters that need to be brought to the attention of the Shareholders in respect of his re-election as a director.

−25 −

PARTICULARS OF DIRECTORS PROPOSED FOR RE-ELECTION AT THE ANNUAL GENERAL MEETING

APPENDIX III

(2) Ms. Lin Weiping (“Ms. Lin”)

Ms. Lin, aged 50, joined the Group in 1993 and was appointed as an executive director of the Company with effect from 8 February 2006. She is currently the Vice President and the director of SDGL, in-charge of the administration and human capital management of the Group. Prior to that, Ms. Lin was the Deputy Manager of the purchasing department and the Administration Manager in Hong Kong, primarily responsible for material purchasing from overseas market for the Group and administration and human capital management for certain companies within the Group. Ms. Lin graduated from South China University of Technology in the PRC with a Bachelor degree in Electronic Engineering. Before joining the Group, Ms. Lin had worked in the Ministry of Information Industry in the PRC as a research engineer.

Pursuant to the service agreement entered into between Ms. Lin and the Company and subject to the provisions in the Bye-laws of the Company, Ms. Lin will hold office as an executive director for the period up to 7 February 2009 inclusive. As an executive director and the Vice President of SDGL, Ms. Lin is entitled to a total annual remuneration of HK$840,000 which has been determined with reference to her role and responsibilities within the Group. She is not entitled to any bonus under the service agreement entered into between Ms. Lin and the Company.

Ms. Lin is the spouse of Mr. Wong Wang Sang, Stephen, the former non-executive Chairman of the Board and, ultimately, the controlling shareholder of the Company. As at the Latest Practicable Date within the meaning of Part XV of the Securities and Futures Ordinance, Ms. Lin is beneficially interested in 3,061,611 Shares of the Company and share options to subscribe for 2,000,000 Shares of the Company. She and her children are the discretionary beneficiaries of the Skysource Unit Trust, which is interested in 847,382,922 Shares, representing approximately 37.36% of the existing issued Shares. Her spouse, Mr. Wong Wang Sang, Stephen, is interested in 55,621,612 Shares.

Save as disclosed above, Ms. Lin does not have any other relationships with any directors, senior management or substantial or controlling shareholder of the Company. Ms. Lin has not held any directorships in any other listed companies for the last three years. There are no matters required to be disclosed under Rule 13.51(2)(h) to (w) of the Listing Rules. Save as disclosed herein, there are no other matters that need to be brought to the attention of the Shareholders in respect of her re-election as a director.

−26 −

PARTICULARS OF DIRECTORS PROPOSED FOR RE-ELECTION AT THE ANNUAL GENERAL MEETING

APPENDIX III

(3) Mr. Yang Dongwen (“Mr. Yang”)

Mr. Yang, aged 43, was appointed as an executive director of the Company with effect from 8 February 2006. He is currently the President of RGB and the television business unit of the Group, responsible for managing the research, manufacture and sales of the Group’s television products in the PRC. Mr. Yang is also the Vice President and the director of SDGL. Mr. Yang joined the Group in May 1988 as the Financial Controller of the finance headquarters in the PRC and from August 2000 to August 2003, he was the General Manager of the sales headquarters of the Group in the PRC and the Vice President of the Group. Mr. Yang left the Group in August 2003 for 2 years working for Oriental Yeyang Textile Co., Ltd. as President. He rejoined the Group in September 2005. Mr. Yang graduated from Zhongnan University of Economics and Laws in the PRC with a Bachelor degree in Economics and graduated from Nankai University in the PRC with a Master Degree in Law. He served as the director of the accountancy department and the associate professor of the School of Economics in Hainan University in the PRC in his early years. He was later the director of the Hainan Zhongda Certified Public Accountants firm.

Pursuant to the service agreement entered into between Mr. Yang and the Company and subject to the provisions in the Bye-laws of the Company, Mr. Yang will hold office as an executive director for the period up to 7 February 2009 inclusive. As an executive director, the President of RGB and the Vice President of SDGL, Mr. Yang is entitled to a total annual remuneration of RMB1,400,000 which has been determined with reference to his role and responsibilities within the Group. He is also entitled to bonus payments calculated by reference to the financial performance of RGB and the Group.

As at the Lastest Practicable Date, Mr. Yang is beneficially interested, within the meaning of Part XV of the Securities and Futures Ordinance, in 4,600,000 Shares of the Company and share options to subscribe for 29,600,000 Shares of the Company.

Save for his employment with the Group and his interests in the Company as described above, Mr. Yang does not have any other relationships with any directors, senior management or substantial or controlling shareholder of the Company. Mr. Yang has not held any directorships in any other listed companies for the last three years. There are no matters required to be disclosed under Rule 13.51(2)(h) to (w) of the Listing Rules. Save as disclosed herein, there are no other matters that need to be brought to the attention of the Shareholders in respect of his re-election as a director.

−27 −

NOTICE OF ANNUAL GENERAL MEETING

SKYWORTH DIGITAL HOLDINGS LIMITED ( )[*]

(Incorporated in Bermuda with limited liability)

(Stock Code: 0751)

NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that an annual general meeting of Skyworth Digital Holdings Limited (the “Company”) will be held at Butterfield’s, Level 4, Dorset House, Taikoo Place, 979 King’s Road, Hong Kong on 30 September 2008 at 10:00 a.m. (or any adjournment thereof) for the following purposes:

1. To receive and adopt the audited consolidated financial statements of the Company and the reports of the directors (the “Directors”) and the auditors (the “Auditors”) of the Company thereon for the year ended 31 March 2008.

2. To approve and declare a final dividend for the year ended 31 March 2008 (with scrip option).

3. (A) To re-elect Mr. Zhang Xuebin as an executive director;

4. (B) To re-elect Ms. Lin Wei Ping as an executive director; and

5. (C) To re-elect Mr. Yang Dongwen as an executive director.

6. To authorise the Board to fix the remuneration of directors.

7. To re-appoint Auditors and to authorise the Board to fix their remuneration.

8. To approve and adopt the New Share Option Scheme and the termination of the Existing Share Option Scheme.

9. As special business, to consider and, if thought fit, pass with or without amendments, the following resolutions as ordinary resolutions:

“ THAT :

• (a) subject to sub-paragraph (b) below, the exercise by the Directors of the Company during the Relevant Period (as defined below) of all the powers of the Company to repurchase issued shares in the capital of the Company on the Stock Exchange or any other stock exchange on which the shares may be listed and which is recognised

• For identification purposes only

−28 −

NOTICE OF ANNUAL GENERAL MEETING

by the Securities and Futures Commission of Hong Kong and the Stock Exchange for such purpose, and otherwise in accordance with the rules and regulations of the Securities and Futures Commission of Hong Kong, the Stock Exchange, the Companies Act 1981 of Bermuda (as amended from time to time) and all other applicable laws in this regard, be and is hereby generally and unconditionally approved;

• (b) the aggregate nominal amount of the share capital of the Company which may be repurchased by the Company pursuant to the approval in sub-paragraph (a) above during the Relevant Period (as defined below) shall not exceed 10 per cent of the aggregate nominal amount of the issued share capital of the Company as at the date of the passing of this resolution and the authority pursuant to sub-paragraph (a) of this resolution shall be limited accordingly; and

• (c) for the purposes of this resolution:

“Relevant Period” means the period from the date of the passing of this resolution until whichever is the earliest 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, the Companies Act 1981 of Bermuda (as amended from time to time) or any other applicable laws to be held; and

• (iii) the passing of an ordinary resolution by the shareholders of the Company in general meeting revoking or varying the authority given to the Directors of the Company by this resolution.”

On behalf of the Board

Leung Chi Ching, Frederick

Executive Director, Chief Financial Officer and Company Secretary

Hong Kong Special Administrative Region of the People’s Republic of China

1 September 2008

As at the date hereof, the Board of the Company comprised of Mr. Zhang Xuebin as executive Chairman of the Board, Ms. Ding Kai, Mr. Leung Chi Ching, Frederick, Ms. Lin Wei Ping and Mr. Yang Dongwen as executive Directors, and Mr. So Hon Cheung, Stephen, Mr. Li Weibin and Mr. Xie Zhengcai as independent non-executive Directors.

−29 −

NOTICE OF ANNUAL GENERAL MEETING

Registered office: Principal place of business: Clarendon House Rooms 1601-04 2 Church Street Westlands Centre Hamilton HM 11 20 Westlands Road Bermuda Quarry Bay Hong Kong

Notes:

• (1) A member entitled to attend and vote at a meeting of the Company is entitled to appoint another person as his proxy to attend and, subject to the provisions of the bye-laws of the Company, vote on his behalf. A member who is the holder of two or more shares may appoint more than one proxy to represent him and vote on his behalf. A proxy need not be a member of the Company.

• (2) In order to be valid, the form of proxy must be deposited together with a power of attorney or other authority, if any, under which it is signed, or a notarially certified copy of that power or authority, at the office of the Company’s branch share registrar in Hong Kong, Hong Kong Registrars Limited, Rooms 1806-07, 18th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong not less than 48 hours before the time fixed for holding the meeting or adjourned meeting thereof. Completion and return of the form of proxy will not preclude any member from attending and voting in person should he so desire.

• (3) The biographical details of the Directors of the Company proposed for election are set out in Appendix II of the circular of which this notice forms part.

CLOSURE OF THE REGISTER OF MEMBERS

The register of members of the Company will be closed from 23 September 2008 to 29 September 2008, both days inclusive, during which period no share transfer shall be registered. In order to qualify for attending the annual general meeting of the Company, all transfers of shares, accompanied by the relevant share certificates, must be lodged with the Company’s branch share registrar in Hong Kong, Hong Kong Registrars Limited, at Rooms 1712-16, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong, no later than 4:30 p.m. on 22 September 2008.

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