APT Satellite Holdings Limited - Proxy Solicitation & Information Statement 2002

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

This circular is for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for securities.

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

If you have sold all your shares in CAPITAL AUTOMATION HOLDINGS LIMITED, you should hand this circular at once to the purchaser or to the bank, stockbroker or other agent through whom the sale was effected for transmission to the purchaser.

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.

CAPITAL AUTOMATION HOLDINGS LIMITED

(incorporated in Bermuda with limited liability)

MAJOR TRANSACTION

A letter from the board of directors of CAPITAL AUTOMATION HOLDINGS LIMITED is set out on pages 4 to 13 of this circular.

* for identification purposes only

8 May, 2002

Capital Automation Holdings Limited

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board
1. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
2. The Agreement dated 10 April, 2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
3. Information on Artway, the PRC Company, the PRC JV and the Property . . . . . . . .	8
4. Reasons for the Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
5. Prospects of the Enlarged Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
6. General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
7. Responsibility statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
8. Additional information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
Appendix I — Financial information of the Group . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
Appendix II — Accountants’ report on Artway . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	44
Appendix III — Unaudited balance sheet of the PRC JV . . . . . . . . . . . . . . . . . . . . . . .	51
Appendix IV — Valuation report on Artway . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	52
Appendix V — Valuation report on the Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	56
Appendix VI — General information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	61

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Capital Automation Holdings Limited

DEFINITIONS

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

“Acquisition”	the acquisition of 100% interest in Artway by the Company
“Agreement”	the agreement in relation to the Acquisition entered into
	between Link Zone, Mr. Han and the Company on 10 April,
	2002
“Artway”	Artway Development Limited, a company incorporated in the
	British Virgin Islands and the shares of which are beneficially
	owned by Mr. Han before Completion
“associate(s)”	has the meaning ascribed in the Listing Rules
“Beijing Bus”	Beijing Bus Company Limited, , the owner
	of the Property as at the date of this circular
“Board”	the board of Directors
“Company”	CAPITAL AUTOMATION HOLDINGS LIMITED, an
	exempted company incorporated in Bermuda with limited
	liability, and the Shares of which are listed on the Stock
	Exchange
“Completion”	completion of the Agreement
“Contract”	the agreement dated 1 February, 2002 between Beijing Bus
	and the PRC Company and the supplementary agreement of
	the same date in relation to the sale and purchase of the
	Property
“Director(s)”	the director(s) of the Company
“Enlarged Group”	the Group as enlarged by the Acquisition immediately after
	Completion
“Executive”	the Executive Director of the Corporate Finance Division of
	the Securities and Futures Commission of Hong Kong or any
	delegate of the Executive Director
“First Notes”	the convertible notes in the principal amount of
	HK$37,500,000 issued by the Company in denomination of
	HK$500,000
“Group”	the Company and its subsidiaries
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong
“Hong Kong”	the Hong Kong Special Administrative Region of the PRC

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Capital Automation Holdings Limited

	DEFINITIONS
“Latest Practicable Date”	30 April, 2002, being the latest practicable date prior to the
	printing of this circular for ascertaining certain information
	contained herein
“Letter of Intent”	a non-legally-binding letter of intent entered into between the
	Company and Mr. Han on 11 February, 2002 pursuant to
	which the relevant parties agreed to further negotiate the
	terms and conditions of the proposed acquisition before
	entering into a formal agreement which shall be concluded
	within 60 days following the date of this letter of intent
	during which Mr. Han will not enter into discussion with other
	parties with respect to the sale and purchase of the Property
“Link Zone”	Link Zone International Limited, a company incorporated in
	the British Virgin Islands and the shares of which are wholly
	owned by Mr. Han
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange
“Mr. Han”	Mr. Han Yuejun, who beneficially owns a majority interest in
	the Property and is an independent third party not connected
	with the Directors, chief executive or substantial shareholders
	of the Company, its subsidiaries or any of their respective
	associates
“Mr. Wong”	Mr. Wong Kwong Yu, an executive Director and a substantial
	shareholder of the Company who directly or indirectly owns
	approximately 74.5% of the issued share capital of the
	Company as at the date of this circular
“Notes”	the First Notes and the Second Notes
“Offer”	the unconditional cash offer made by TingKong-RexCapital
	Securities International Limited on behalf of Shinning Crown
	in accordance with the Takeovers Code to acquire the shares
	of the Company not already owned by Shinning Crown or
	parties acting in concert with it
“Placing”	the placing of Shares by Shinning Crown for the purpose of
	restoring the public float of the Company after the close of the
	Offer
“PRC”	the People’s Republic of China
“PRC Company”	Beijing Jin Zun Property Development Limited, , a company incorporated in the PRC
	with limited liability

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Capital Automation Holdings Limited

DEFINITIONS

==> picture [456 x 530] intentionally omitted <==

----- Start of picture text -----

||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|“PRC|JV”|Beijing|Jin|Zun|Technology|Development|Limited,|
|,|a|sino-foreign|equity|joint|venture|
|incorporated|in|accordance|with|the|laws|of|the|PRC|
|“Property”|Area|no.|7,|Xi|Ba|He|Bei|Lane,|Chaoyang|District,|Beijing,|
|the|PRC,|(|)|
|“Proposed|Acquisition”|the|proposed|acquisition|of|an|attributable|interest|of|up|to|
|50%|in|the|Property|from|Mr.|Han|
|“RMB”|Renminbi,|the|lawful|currency|of|the|PRC|
|“Shareholder(s)”|holder(s)|of|the|Shares|
|“Share(s)”|the|ordinary|share(s)|of|HK$0.10|each|in|the|capital|of|the|
|Company|
|“Shinning|Crown”|Shinning|Crown|Holdings|Inc.,|a|company|incorporated|in|the|
|British|Virgin|Islands|and|the|shares|of|which|are|wholly|
|owned|by|Mr.|Wong|
|“Stock|Exchange”|The|Stock|Exchange|of|Hong|Kong|Limited|
|“Subscription”|the|subscription|of|1,350,000,000|Shares|by|Shinning|Crown|
|pursuant|to|a|subscription|agreement|between|Shinning|
|Crown|and|the|Company|dated|5|February,|2002|
|“subsidiary”|a|subsidiary|within|the|meaning|of|the|Companies|Ordinance|
|(Chapter|32|of|the|Laws|of|Hong|Kong)|
|“Takeovers|Code”|the|Hong|Kong|Code|on|Takeovers|and|Mergers|
|“Xin|Yi|Tian”|Beijing|Xin|Yi|Tian|Property|Agents|Company|Limited,|
|,|a|company|incorporated|in|
|the|PRC|and|is|owned|as|to|45%|and|55%|by|Mr.|Han|and|his|
|spouse,|an|independent|third|party|not|connected|with|the|
|Directors,|chief|executive|or|substantial|shareholders|of|the|
|Company,|its|subsidiaries|or|any|of|their|respective|
|associates,|respectively|
|“%”|per|cent.|

----- End of picture text -----

In this circular, amounts stated in Renminbi have been converted into Hong Kong dollars at the rate of HK$1.00 = RMB1.06.

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Capital Automation Holdings Limited

LETTER FROM THE BOARD

CAPITAL AUTOMATION HOLDINGS LIMITED

(incorporated in Bermuda with limited liability)

Executive Directors: Wong Kwong Yu (Chairman) Lam Pang Ng Kin Wah

Registered office: Cedar House 41 Cedar Avenue Hamilton HM12 Bermuda

Independent non-executive Directors:

Peng Chengzhi Ng Lap Kwan

Head office and principal place of business: Unit 6110, 61st Floor The Center 99 Queen’s Road Central Hong Kong

8 May, 2002

To the Shareholders

Dear Sir or Madam,

MAJOR TRANSACTION

1. INTRODUCTION

On 18 February, 2002, the Board announced that the Company and Mr. Han entered into a conditional sale and purchase agreement for the acquisition by the Company of an approximately 50% attributable interest in the Property on 5 February, 2002. Subsequently, one of the conditions precedent of the conditional sale and purchase agreement had not been fulfilled and such sale and purchase agreement had lapsed on 11 February, 2002. Nevertheless, the Company still intends to pursue the Proposed Acquisition and has been engaged in discussion with Mr. Han on revising the terms and conditions of the Proposed Acquisition. On 11 February, 2002, the Company and Mr. Han entered into the Letter of Intent.

On 12 April, 2002, the Board announced that the Company has entered into the Agreement with Mr. Han on 10 April, 2002. The Agreement is unconditional and was completed on 10 April, 2002. The

for identification purposes only

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Capital Automation Holdings Limited

LETTER FROM THE BOARD

consideration for the Acquisition amounts to HK$195,000,000, as to an amount of HK$120,000,000 has been settled in cash at Completion, as to an amount of HK$37,500,000 has been settled by the issue of the First Notes and as to an amount of HK$37,500,000 to be settled by the issue of the Second Notes or in cash at the option of the Company.

The Acquisition constitutes a major transaction for the Company under the Listing Rules. Pursuant to Rule 14.10 of the Listing Rules, the Acquisition must be made conditional on approval by the Shareholders either by convening a general meeting of the Company or by means of written approval of the Acquisition by the Shareholders who together hold more than 50% in nominal value of the securities of the Company giving right to attend and vote at such general meeting. In this regard, the Company has obtained written consent to the Acquisition from Shinning Crown and Mr. Wong which together hold approximately 74.5% in the nominal value of the securities in the Company that carry voting rights. Accordingly, no special general meeting will be required for the approval of the Acquisition.

The purpose of this circular is to provide the Shareholders with further information relating to the Acquisition. This circular also contains information in compliance with the Listing Rules.

2. THE AGREEMENT DATED 10 APRIL, 2002

Parties

(1) Vendor: Link Zone, a company incorporated in the British Virgin Islands and the shares of which are wholly owned by Mr. Han;
(2) Vendor’s Warrantor: Mr. Han, an independent third party not connected with the Directors, chief executive or substantial shareholders of the Company or any of its subsidiaries or any of their respective associates; and
(3) Purchaser : the Company

Neither Link Zone, Mr. Han nor their respective associates has any shareholding in the Company.

The Agreement is unconditional and was completed on 10 April, 2002.

Asset Acquired

100% of the issued share capital of Artway, Artway in turn holds an attributable interest of approximately 39.2% in the Property. No shareholder’s loan has been granted by the Company, Link Zone or Mr. Han to Artway.

Consideration

The consideration for the Acquisition is HK$195,000,000. The consideration was negotiated on an arm’s length basis between Link Zone and the Company with reference to an independent valuation of the Property as at 10 April, 2002 from Vigers Hong Kong Limited to be approximately RMB530,000,000 (equivalent to approximately HK$500,000,000), which has taken into account the

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Capital Automation Holdings Limited

LETTER FROM THE BOARD

relocation and compensation fee of RMB250,000,000 payable by the PRC Company to Beijing Bus pursuant to the Contract. Taking into account Artway’s attributable interest of approximately 39.2% in the Property, i.e. HK$196,000,000, which represents approximately 39.2% of the valuation of the Property, the consideration for the Acquisition of HK$195,000,000 represents a discount of approximately 0.51% to the valuation of the Property.

The consideration shall be payable in the manner detailed below:

(a) At Completion

Of the consideration of HK$195,000,000 payable by the Company to Link Zone, to the extent of HK$120,000,000 has been financed out of the proceeds from the Subscription and paid at Completion.

(b) Next business day after the granting of the approval by the Stock Exchange with respect to the listing of the Shares to be issued upon exercising the conversion rights of the First Notes

An amount of HK$37,500,000 has been satisfied by the issue of the First Notes in that amount on the next business day after the granting of the approval by the Stock Exchange with respect to the listing of the Shares to be issued upon exercising the conversion rights of the First Notes. Details on the major terms of the Notes are set out under the paragraphs headed “Terms of the Notes” below.

The balance of HK$37,500,000 will be satisfied on 10 July, 2002 and will depend on the cash flow position of the Group, either by (i) the issue of the Second Notes subject to fulfillment of all applicable laws and regulations or (ii) in cash, at the option of the Company. If it is satisfied by cash, the cash shall be funded by internal resources of the Company.

Terms of the Notes

Issue:

Up to an aggregate principal amount of HK$75,000,000 due 2004 and convertible into Shares at the option of the holders of the Notes. The Notes will be in registered form in denomination of HK$500,000 each or integral multiples thereof.

Interest:

The Notes bear interest from the date of its issue at the rate of 2% per annum. Such interest is payable semi-annually in arrears.

Maturity:

The second anniversary of the date of issue of the Notes. There are no early redemption rights under the terms of the Notes.

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Capital Automation Holdings Limited

LETTER FROM THE BOARD

Transfer of the Notes: The Notes may be assigned to any third party subject to compliance with the terms and conditions of the Notes and further subject to the conditions, approvals, requirements and any other provisions of or under all applicable laws and regulations. The Directors do not intend to apply for the listing of the Notes on any stock exchange. Conversion period: On any business day after the expiry of six months from the issue of the Notes and at least five business days prior to maturity. Conversion price: The lower of (1) the price of HK$0.12 per Share, which represents a discount of about 70.0% to the closing price of HK$0.40 per Share quoted on the Stock Exchange on 10 April, 2002, being the date of the Agreement, a discount of about 68.3% to the average closing price of approximately HK$0.378 per Share for the ten trading days up to and including 10 April, 2002, a discount of about 72.4% to the closing price of HK$0.435 per Share quoted on the Stock Exchange on the Latest Practicable Date and a discount of about 71.9% to the average closing price of approximately HK$0.427 per Share for the ten trading days up to and including the Latest Practicable Date, subject to adjustment for, amongst other things, subdivision or consolidation of shares, bonus issues, rights issues and other dilution events, and (2) 93% of the average closing price per Share for the five trading days immediately prior to the date of the notice given in respect of the exercise of the conversion rights of the Notes.

Further information on the Notes

The Shares to be issued upon conversion of the First Notes to the extent of HK$37,500,000, will be issued pursuant to, and covered by, the general mandate given to the Directors by resolution of the Shareholders passed at the special general meeting of the Company held on 27 March, 2002. With the assumption that the conversion price is HK$0.12, 312,500,000 Shares will be issued by the Company upon conversion of the First Notes.

The Second Notes may or may not be issued . If the Company decides to issue the Second Notes, such issuance will be subject to the Shareholders’ approval for the allotment of Shares upon conversion of the Second Notes and fulfillment of all applicable laws and regulations. A further announcement will be made should the Company decides to issue the Second Notes.

New Shares will be issued upon conversion of the Notes. Such conversion Shares will rank pari passu in all respects with the then existing Shares. Application has been made to the Stock Exchange for the listing of, and permission to deal in, the Shares to be issued upon conversion of the First Notes. And an application will be made to the Stock Exchange for the listing of, and permission to deal in, the Shares to be issued upon conversion of the Second Notes should the Company decide to issue the Second Notes.

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Capital Automation Holdings Limited

LETTER FROM THE BOARD

625,000,000 Shares will be issued by the Company upon conversion of the First and Second Notes (with the assumption that the Conversion Price will be HK$0.12). The table below sets out the changes in the Company’s shareholding structure immediately before and after the conversion of the First and Second Notes:

			Existing				Shareholding
	Shareholding		shareholding		Shareholding		immediately
	immediately		after the Offer		immediately		after the
	after the		and the		after the		conversion
	Subscription		restoration		conversion		of the First
	and before		of public float		of the First		Notes and the
	the Offer		to over 25%		Notes		Second Notes
			(Note 1)		(Note 2)		(Note 2)
Mr. Han	—	0.0%	—	0.0%	312,500,000	16.2%	625,000,000	27.9%
Mr. Wong and
Shinning
Crown	1,386,003,500	85.6%	1,206,003,500	74.5%	1,206,003,500	62.5%	1,206,003,500	53.8%
Others	232,300,000	14.4%	412,300,000	25.5%	412,300,000	21.3%	412,300,000	18.3%
	1,618,303,500	100%	1,618,303,500	100.0%	1,930,803,500	100%	2,243,303,500	100%

(Note 1) As mentioned in the accouncement of the Company dated 29 April, 2002, following completion of the Placing on 3 May, 2002, the public float of the Company has been restored to 25.5%.
(Note 2) Upon conversion of the First Notes or conversion of the First Notes and the Second Notes, the shareholding of the public in the Company may be reduced to below 25%. The Directors has undertaken to the Stock Exchange to take appropriate actions to ensure that sufficient public float exists for the Shares in accordance with the requirements of Rule 8.08 of the Listing Rules. Further announcement will be made should the shareholding of the public in the Company be reduced to below 25%.

3. INFORMATION ON ARTWAY, THE PRC COMPANY, THE PRC JV AND THE PROPERTY

Artway is a company incorporated in the British Virgin Islands on 8 January, 2002 and is wholly owned by Mr. Han. The principal activity of Artway is investment holding. Artway owns a 49% interest in the PRC JV. Other than the aforesaid, Artway has no material assets or liabilities. As at 31 March, 2002, the unaudited net liability of Artway amounted to approximately HK$7,998. For the period from its incorporation and up to 31 March, 2002, the unaudited loss for the year of Artway amounted to approximately HK$8,006. Please refer to the Accountants’ Report on Artway in Appendix II to this circular for more information.

The PRC JV is engaged in the provision of property management and the research and development of computing software. The establishment of the PRC JV was approved by Beijing Administrative for Industry and Commerce on 28 February, 2002 for a term of 30 years. The PRC JV is owned as to 49% by Artway and as to 51% by Xin Yi Tian. The PRC JV owns 80% of the PRC Company. Other than the aforesaid, the PRC JV has no material assets or liabilities.

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Capital Automation Holdings Limited

LETTER FROM THE BOARD

The PRC JV is a sino-foreign joint venture for a term of 30 years. The registered capital of the PRC JV is RMB16,000,000, as to RMB7,840,000 has been paid by Artway and as to the balance by Xin Yi Tian. The joint venture agreement provides (a) that the board of the PRC JV consists of three directors, two of whom are to be appointed by Xin Yi Tian, and the other is to be appointed by Artway; (b) the quorum for meetings of the board of the PRC JV shall be two directors; and (c) where decisions and implementation of major issues regarding the PRC JV require the approval of the board, such decisions and implementation shall only be passed on an unanimous vote.

The PRC Company is engaged in the development and sale of real estate properties as well as the management of real estate properties. The PRC Company was incorporated on 1 February, 2002 in the PRC for a term of 20 years. The PRC Company is owned as to 80% by the PRC JV and as to 20% by Mr. Han. On 1 February, 2002, the PRC Company has entered into the Contract for the acquisition of the Property.

The PRC JV and the PRC Company were established on 28 February, 2002 and 1 February, 2002 respectively. As at 31 March, 2002, the unaudited net asset values of the PRC JV and the PRC Company amounted to approximately HK$15.09 million and HK$9.43 million respectively. For the period from the incorporation date of the PRC JV and up to 31 March, 2002, the unaudited loss for the year of the PRC JV amounted to approximately HK$20. No operation has yet been conducted by the PRC Company since its incorporation and accordingly, no revenue and expense has incurred.

No arrangement of shareholders loans were made between Artway, the PRC JV and the PRC Company.

The Property is located at Area no. 7, Xi Ba He Bei Lane, Chaoyang District, Beijing, the PRC. The PRC Company intends to construct a multi-purpose complex which consists of a residential apartment tower and an office tower as well as retail premises with car parking spaces.

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Capital Automation Holdings Limited

LETTER FROM THE BOARD

The Directors confirm that both the PRC JV and the PRC Company have the necessary resources and license approvals to operate.

Before the Acquisition

==> picture [182 x 285] intentionally omitted <==

----- Start of picture text -----

Mr. Han
100%
Link Zone
100%
Xin Yi Tian Artway
51% 49%
PRC JV
20% 80%
PRC Company
(Note)
Property
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After the Acquisition

==> picture [182 x 234] intentionally omitted <==

----- Start of picture text -----

Company
100%
Xin Yi Tian Artway
51% 49%
Mr. Han PRC JV
20% 80%
PRC Company
(Note)
Property
----- End of picture text -----

— 10 —

Capital Automation Holdings Limited

LETTER FROM THE BOARD

(Note) The Contract was entered into between Beijing Bus, an independent third party not connected with the Directors, chief executive or substantial shareholders of the Company, its subsidiaries or any of their respective associates, and the PRC Company on 1 February, 2002 pursuant to which the PRC Company agreed to purchase the Property from Beijing Bus for a relocation and compensation fee of RMB250,000,000. The fee is payable by the PRC Company to Beijing Bus over six instalments. The final instalment is payable to Beijing Bus within 32 months from the date of the Contract. The PRC Company has the right to develop the Property and upon payment of a property transfer fee and subject to the PRC Company obtaining the necessary approvals and consents from the relevant authorities of the PRC, the PRC Company shall be the owner of the Property and the buildings erected thereon. To the best knowledge of the Directors after making due enquiries, the PRC Company, upon registration of the transfer of the land use right of the Property, intends to use the Property as security to obtain a facility from licensed bank or money lender in the PRC for the payment of the relocation and compensation fee. In the event the PRC Company is not able to obtain such facility, the PRC Company is to procure Mr. Han to provide such facility for the payment of the relocation and compensation fee. An agreement was made betwen Mr. Han and the PRC Company with respect to such arrangement.

4. REASONS FOR THE ACQUISITION

The Group was engaged in design, production and sale of computer-aided-design systems and machinery. The Company has since 2001 diversified its principal activities to property investment in the PRC with a view to capturing opportunities which may become available as a result of the continuous development of the PRC economy and the entry of the PRC into the World Trade Organisation. The Directors are of the view that the Acquisition provides the Company with a channel to develop the Company’s property business in the PRC and is in line with the present strategy of the Company and is in the interest of the Shareholders as a whole.

5. PROSPECTS OF THE ENLARGED GROUP

Artway has on Completion become a wholly-owned subsidiary of the Company. In view of the opportunities in the PRC, the Directors consider the Acquisition will serve to broaden and enhance the reputation of the Enlarged Group as a significant player in the property market in the PRC in the future.

Set out in Appendix I to this circular is the pro forma statement of adjusted unaudited net assets of the Enlarged Group which has been prepared on the basis of, amongst other things, the audited assets and liabilities of the Group as at 31 March, 2001.

6. GENERAL

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Capital Automation Holdings Limited

LETTER FROM THE BOARD

As announced in the joint announcement of the Company and Shinning Crown dated 18 February, 2002, Mr. Wong, through Shinning Crown, subscribed for 1,350,000,000 Shares. The Subscription was completed on 28 March, 2002. Upon completion of the Subscription, Mr. Wong, together with his interest through Shinning Crown, owns an aggregate of 1,386,003,500 Shares, representing approximately 85.6% of the issued share capital of the Company. Accordingly, Shinning Crown is required under Rule 26.1 of the Takeovers Code to make the Offer. As announced in the joint announcements of the Company and Shinning Crown dated 3 April, 2002 and 25 April, 2002, the Offer was opened on 4 April, 2002 and was closed on 25 April, 2002. As announced in the announcement of the Company dated 29 April, 2002, Shinning Crown has notified the Company that on 26 April, 2002, TingKong-RexCapital Securities International Limited has on behalf of Shinning Crown placed to 28 placees, being independent of and not connected with any of the Directors, chief executives or substantial shareholders of the Company or any of its subsidiaries, or any of their respective associates, an aggregate of 180,000,000 Shares at a price of HK$0.425 per Share, representing approximately 11.1% of the existing issued share capital of the Company. Following completion of the Placing on 3 May, 2002, the shareholding interest of the Company being held by Shinning Crown and Mr. Wong was reduced to approximately 74.5% and the public float of the Company has been restored to approximately 25.5%.

Rule 4 of the Takeovers Code provides that all frustrating action must be approved by the Shareholders prior to the Company engaging in such act unless the offeree company is under a prior contractual obligation, or where there are other special circumstances. The Acquisition, as it was completed during the Offer period, constitutes a frustrating action under Rule 4 of the Takeovers Code and therefore Shareholders’ approval must be obtained. Written consent was obtained from Shinning Crown and Mr. Wong which together hold approximately 85.6% in the nominal value of the securities in the Company that carry voting rights before the Placing. According to the Notes to Rule 4 of the Takeover Code, an application was made to the Executive for a waiver from the said requirement to obtain Shareholders’ approval and the Executive has subsequently granted such waiver.

7. 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 information contained herein relating to the Company has been supplied by the Directors, who jointly and severally 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, opinions expressed in this circular have been arrived at after due and careful consideration and there are no other facts not contained in this circular the omission of which would make any statement contained herein misleading insofar as it relates to the Company.

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Capital Automation Holdings Limited

LETTER FROM THE BOARD

8. ADDITIONAL INFORMATION

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

Yours faithfully For and on behalf of the Board Wong Kwong Yu Chairman

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Capital Automation Holdings Limited

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

1. FINANCIAL SUMMARY

The following is a summary of the financial results of the Company for each of the five years ended 31 March, 2001 as extracted from its annual reports.

Summary of financial results

		For the	year ended	31 March
	2001	2000	1999	1998	1997
	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
Turnover	13,067	24,023	21,490	18,617	15,321
Extraordinary and
exceptional items	—	—	—	—	—
Loss before taxation	(14,205)	(9,626)	(5,250)	(6,352)	(9,054)
Taxation	—	—	—	—	204
Loss attributable to
the shareholders	(14,205)	(9,626)	(5,250)	(6,352)	(9,258)
Minority interests	—	—	—	—	—
Total assets	55,828	58,989	73,637	77,320	77,803
Total liabilities	(5,745)	(6,727)	(11,749)	(10,183)	(4,314)
Net assets	50,083	52,262	61,888	67,137	73,489

— 14 —

Capital Automation Holdings Limited

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

2. AUDITED ACCOUNTS FOR THE YEAR ENDED 31 MARCH, 2001

REPORT OF THE AUDITORS TO THE MEMBERS OF CAPITAL AUTOMATION HOLDINGS LIMITED

(Incorporated in Bermuda with limited liability)

We have audited the financial statements on pages 16 to 34 which have been prepared in accordance with accounting principles generally accepted in Hong Kong.

Respective responsibilities of directors and auditors

The Companies Ordinance requires the directors to prepare financial statements which give a true and fair view. In preparing the financial statements which give a true and fair view it is fundamental that appropriate accounting policies are selected and applied consistently.

It is our responsibility to form an independent opinion, based on our audit, on those statements and to report our opinion to you.

Basis of opinion

We conducted our audit in accordance with Statements of Auditing Standards issued by the Hong Kong Society of Accountants. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial Statements. It also includes an assessment of the significant estimates and judgments made by the directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the Company’s circumstances, consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance as to whether the financial statements are free from material misstatement. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements. We believe that our audit provides a reasonable basis for our opinion.

Opinion

In our opinion the financial statement give a true and fair view of the state of affairs of the Company and of the Group as at 31 March, 2001 and of the group’s loss and cash flow for the year then ended and have been properly prepared in accordance with the Companies Ordinance.

LOUIS LEUNG & PARTNERS CPA LIMITED AU YANG SUNG FAT, CPA

Practising Certificate Number: P2433

Hong Kong, 20 July, 2001

— 15 —

Capital Automation Holdings Limited

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The following information is extracted from the audited consolidated financial statements of the Group for the year ended 31 March, 2001 contained in its annual report.

Consolidated Income Statement

For the year ended 31 March, 2001

Note Turnover 2 Other revenue 3 Change in inventories of finished goods and work in progress Raw materials and consumable used and purchases of goods for sales Change in inventories of properties held for sale Staff costs Depreciation and amortization Other operating expenses Loss from operations Gain on disposal of subsidiaries 22 Finance cost Net loss before taxation 4 Taxation 5 Net loss attributable to shareholders 7 Loss per share 8	2001 HK$’000 13,067 678 (4,538) (1,142) — (6,892) (2,470) (15,150)	2000 HK$’000 24,023 1,813 (1,229) (9,850) (2,540) (8,441) (2,285) (12,946) (11,455) 2,200 (371) (9,626) — (9,626) 6.1 cents
	(16,447) 2,496 (254) (14,205) —	(11,455 2,200 (371
		(9,626 —
	(14,205) 8.2 cents

No separate statement of recognised gains and losses is prepared, as the only component of the statement is the net loss attributable to shareholders.

The annexed notes form an integral part of these financial statements.

— 16 —

Capital Automation Holdings Limited

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Consolidated Balance Sheet

At 31 March, 2001

Note Non-current assets — Fixed assets 9 — Payments for acquisition of property interest — Deferred development costs 10 — Investment securities Current assets 12 Current liabilities 13 Net current assets Total assets less current liabilities Non-current liabilities 14 Net assets Capital and reserves Share capital 15 Authorised: 500,000,000 ordinary shares of HK$0.1 each Issued & fully paid: 188,000,000 ordinary shares of HK$0.1 each (2000: 157,000,000 shares) Share premium 16 Reserve on consolidation Revaluation reserve 17 Retained earnings 19	2001 HK$’000 28,817 — 926 1,326 24,759 (3,689) 21,070	2001 HK$’000 28,817 — 926 1,326 24,759 (3,689) 21,070
	52,139 (2,056)	52,262 —
	50,083 50,000
	18,800 27,348 620 1,019 2,296	15,700 18,422 620 1,019 16,501
	50,083

The annexed notes form an integral part of these financial statements.

— 17 —

Capital Automation Holdings Limited

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Balance Sheet

At 31 March, 2001

Note Non-current assets — Interest in subsidiaries 11 Current assets 12 Current liabilities 13 Net current assets Net assets Capital and reserves Share capital 15 Authorised Issued & fully paid Share premium 16 Contributed surplus 18 Accumulated loss 19	2001 HK$’000 34,644 15,451 (63) 15,388 50,032 50,000	2001 HK$’000 34,644 15,451 (63) 15,388 50,032 50,000
	18,800 27,348 40,423 (36,539)	15,700 18,422 40,423 (22,400
	50,032

The annexed notes form an integral part of these financial statements.

— 18 —

Capital Automation Holdings Limited

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Consolidated Cash Flow Statement

For the year ended 31 March, 2001

Note Net cash outflow from operating activities 20 Returns on investments and servicing of finance Dividend received Interest received Interest paid Net cash inflow from returns on investments and servicing of finance Investing activities Purchases of fixed assets Payments for acquisition of property interests Disposals of fixed assets Disposal of subsidiaries 22 Net cash inflow from investing activities Net cash (outflow)/inflow before financing Financing 21 Bank loans Issue of ordinary share capital Share premium (Decrease)/increase in cash and cash equivalents Cash and cash equivalents at the beginning of year Cash and cash equivalents at the end of year Analysis of the balances of cash and cash equivalents Cash at bank and on hand Bank overdraft, unsecured	2001 HK$’000 (20,781) ------------ 3 305 (254) 54 ------------ (1,729) — 4,241 2,869 5,381 ------------ ----------------------------------------------- (15,346) 1,380 3,100 8,927	2001 HK$’000 (20,781) ------------ 3 305 (254) 54 ------------ (1,729) — 4,241 2,869 5,381 ------------ ----------------------------------------------- (15,346) 1,380 3,100 8,927
	(1,939) 5,506	8,652 (3,146
	3,567
	3,569 (2)	5,506 —
	3,567

The annexed notes form an integral part of these financial statements.

— 19 —

Capital Automation Holdings Limited

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

NOTES TO THE ACCOUNTS

1) PRINCIPAL ACCOUNTING POLICIES

a) Statement of compliance

These financial statements have been prepared in accordance with all applicable Statements of Standard Accounting Practice and Interpretations issued by the Hong Kong Society of Accountants, accounting principles generally accepted in Hong Kong and the requirements of the Hong Kong Companies Ordinance. A summary of the significant accounting policies adopted by the Company is set out below.

b) Basis of preparation of the financial statements and consolidation

The measurement basis used in the preparation of the financial statements is historical cost, and in accordance with accounting principles generally accepted in Hong Kong.

The consolidated financial statements incorporate the financial statements of the Company and all its subsidiaries made up to 31 March, 2001. The results of subsidiaries acquired or disposed of during the year are consolidated from or to their effective dates of acquisition or disposal respectively. All significant intercompany transactions and balances within the group are eliminated on consolidation.

c) Goodwill on consolidation

Goodwill arising on consolidation of subsidiaries and on acquisition of associates represents the excess of the purchase consideration over the fair values ascribed to the net assets of subsidiaries and associates acquired and is written off to the income statement in the year of acquisition.

d) Subsidiary companies

Subsidiary companies are those in which the Company, directly or indirectly, holds more than half of the issued share capital, or controls more than half of the voting power, or controls the composition of the board of directors.

Investments in subsidiaries in the Company’s balance sheet are stated at cost less any provisions for diminution in value which is other than temporary as determined by the directors for each subsidiary individually. Any such provisions are recognised as an expense in the income statement.

e) Fixed assets

All fixed assets are stated at cost or valuation, being fair value at the date of revaluation, less accumulated depreciation or amortization. Depreciation is calculated to write off the cost of fixed assets at an annual rate on a straight line basis over their estimated useful lives as follows:

Land held on medium-term leases	:	Over the remaining leases terms
Buildings and improvements	:	Over the remaining leases terms or expected useful lives
		to the Group whichever is shorter
Office equipment, furniture & fixtures and	:	7% to 20% motor vehicles
Computer equipment	:	25%

— 20 —

Capital Automation Holdings Limited

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Major costs incurred in restoring fixed assets to their normal working condition are charged to the income statement. Improvements are capitalized and depreciated over the estimated useful lives to the Group.

The carrying amounts of fixed assets are reviewed regularly to assess whether their recoverable amounts have declined below their carrying amounts. When such a decline has occurred, their carrying amount is reduced to their recoverable amount. Recoverable amount is the amount which the Group expects to recover from the future use of the assets, including its residual value on disposal.

The gain or loss on disposal of fixed assets other than investment properties is the difference between the net sales proceeds and the carrying amount of the relevant assets and is recognized in the income statement. Any revaluation reserve balance remaining attributable to the relevant asset is transferred to retained profits and is shown as a movement in reserves.

f) Reliance on paragraph 72 of Statement of Standard Accounting Practice No. 17

Effective from 1 April, 1995 no further revaluation of the Group’s fixed assets has been carried out. The Group places reliance on paragraph 72 of Statement of Standard Accounting Practice No. 17 which provides exemption from the need to make regular revaluation of such assets.

g) Investment securities

Investment securities are securities intended to be held on a continuing basis for an identified long term purpose other than capital gain. Investment securities are carried at cost less provision for permanent diminution in value, where appropriate.

h) Other investments in securities

Other investments in securities are stated at fair value in the balance sheet. Realized and unrealized holding gains and losses for other investments in securities are included in net profit or loss for the year.

i) Inventories

Inventories are stated at the lower of cost and net realizable value. Cost is determined on a first-in, first-out basis and includes all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

j) Research and development

Research and development costs are charged to income statement as incurred, except that development costs are capitalized and amortized on a straight-line basis over the period of expected future benefits where it is expected that the product under development will be profitable and will be produced, and technical feasibility has been demonstrated. The deferred costs are written off over five years.

k) Hire purchase contracts

Hire purchase contracts are sales under hire purchase terms which transfer substantially all the risks and rewards associated with ownership, other than legal title to hirers.

— 21 —

Capital Automation Holdings Limited

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Amount due from hirers in respect of hire purchase contracts are recorded in the balance sheet as hire purchase debtors at the amounts of net investment which represent the total receivables under the agreements less unearned finance income. Interest income implicit in the amounts receivable is credited to the income statement over the agreement periods so as to provide an approximately constant periodic rate of return on the net investment for each accounting period.

l) Operating leases

Rental income and expenses applicable to operating leases, under which substantially all the rewards and risks of ownership of assets remain with the lessor are credited or charged to the income statement on a straight line basis over the term of the respective leases.

m) Translations of foreign currencies

Foreign currency transactions during the year are translated into Hong Kong dollars at the exchange rates ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated into Hong Kong dollars at the exchange rates ruling at the balance sheet date.

Profits and losses arising on exchange are dealt with in the income statement.

n) Deferred taxation

Provision for deferred taxation is calculated using the liability method for all significant timing differences to extent that there is a reasonable probability that these will be subject to reversal within the foreseeable future.

Deferred tax net debit balances are not carried forward as assets, except to the extent that they are expected to be recoverable without replacement by equivalent debit balances and it is justified to treat them as assets.

o) Borrowing costs

Borrowing costs are expensed in the income statement in the period in which they are incurred, except to the extent that they are capitalised as being directly attributable to the acquisition, construction or production of an asset which necessarily takes a substantial period of time to get ready for its intended use or sale.

p) Cash equivalents

Cash equivalents are short-term, highly liquid investments which are readily convertible into known amounts of cash without notice and which were within three months of maturity when acquired. For the purposes of the cash flow statement, cash equivalents would also include advances from banks repayable within three months from the date of the advance.

q) Related parties

Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control or common significant influence.

— 22 —

Capital Automation Holdings Limited

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

r) Recognition of revenue

Revenue is recognised when it is probable that the economic benefits will flow to the Company and when the revenue can be measured reliably, on the following basis:

(a) on the sale of goods, when the significant risks and rewards of ownership have been transferred to the buyer, provided that the Company maintains neither managerial involvement to the degree usually associated with ownership, nor effective control over the goods sold;
(b) on the rendering of services, based on the stage of completion of the transaction, provided that this and the costs incurred as well as the estimated costs to completion can be measured reliably;
(c) interest, on a time proportion basis; and
(d) dividends, when the right to receive payments is established.

2) TURNOVER

The Company is principally engaged in the investment holding. Principal activities of subsidiaries are set out in note 11.

Turnover represents sales at invoiced value less discounts and returns to the third parties.

The amount of each significant category of revenue recognized in turnover during the year is as follows:

Sale of computer-aided-design systems and machinery Sale of properties held for sale OTHER REVENUE Dividend income Net realized gains on holding of other investments in securities Rental income Interest income Other income	2001 HK$’000 13,067 — 13,067 2001 HK$’000 3 — 96 305 274 678	2000 HK$’000 21,532 2,491
		24,023
		2000 HK$’000 174 15 122 303 1,199
		1,813

3) OTHER REVENUE

— 23 —

Capital Automation Holdings Limited

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

4) NET LOSS BEFORE TAXATION

Net loss before taxation is arrived at after charging and crediting the following:

	2001	2000
	HK$’000	HK$’000
Charging:
Audit fee	200	198
Depreciation	1,781	1,551
Amortization of deferred development cost	689	734
Loss on disposal of fixed assets	713	216
Provision for obsolescent inventories	—	1,188
Bad debts written off	1,852	1,189
Provision for bad debts written back	—	(688)
Operating lease rental for land & buildings	736	325
Borrowing costs recognized as expenses	254	371
Staff costs	6,893	8,441
Cost of inventories	5,620	13,619
Exchange loss	1,042	—
Crediting:
Dividend income	3	174
Interest income	305	303
Rental income	96	122
Net realized gain on holding of other investments in securities	—	15
Gain on disposal of subsidiaries	2,495	2,200
Other income	274	1,200

5) TAXATION

No Hong Kong profits tax has been provided for in the financial statements as companies within the Group derived no assessable profits during the year. (2000 - Nil)

Deferred tax has not been provided for in the financial statements as there are deferred tax net debit balance. At the balance sheet date, potential assets unprovided in respect of deferred tax are as follows:

Depreciation allowances in excess of depreciation charges Accumulate tax loss Net debit balance	2001 HK$’000 (156) 3,474 3,318	2000 HK$’000 (200) 3,000 2,800

— 24 —

Capital Automation Holdings Limited

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

6) DIRECTORS’ EMOLUMENTS

(a) Directors’ emolument disclosed pursuant to Section 161 of the Companies Ordinance are as follows:

Fees Other emoluments (b) The remuneration of the directors is within the following bands: HK$ Nil - 1,000,000 1,000,001 - 1,500,000	2001 2000 HK$’000 HK$’000 — — 2,672 3,222 2,672 3,222 Number of directors 11 5 1 1	2000 HK$’000 — 3,222
		3,222

(c) Amongst the five highest paid individuals in the Group, three (2000: Four) are directors of the Company whose emoluments are disclosed in note 6(a). The aggregate amounts of emoluments of the remaining two (2000: One) individuals are as follows:

	2001	2000
	HK$’000	HK$’000
Emoluments	792	282

7) NET LOSS ATTRIBUTABLE TO SHAREHOLDERS

The net loss attributable to shareholders includes a loss of HK$14,139,237 (2000: HK$8,556,122) which have been dealt with in the financial statements of the Company.

8) LOSS PER SHARE

The calculation of loss per share is based on the consolidated losses attributable to the shareholders of HK$14,205,265 (2000: HK$9,625,765) and on the weighted average number of 172,882,192 shares in issue during the year (2000: 157,000,000).

Diluted earnings per share for the years ended 31 March, 2001 and 31 March, 2000 have not been presented as the options outstanding had no dilutive effect on the basic earnings for the years then ended.

— 25 —

Capital Automation Holdings Limited

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

9) FIXED ASSETS

							Office	Office
				Land and			equipment,
	Land and			buildings			motor
	buildings in		Freehold	outside			vehicle,
	Hong	Kong	Land and	Hong		Kong	machinery
		under	buildings		under			and
	medium-		outside	medium-			furniture &		Leasehold		Computer
The Group	term lease		Hong Kong	term lease			fixture		improvement		equipment		Total
	HK$’000		HK$’000	HK$’000			HK$’000		HK$’000		HK$’000		HK$’000
Cost/valuation
At 31/3/2000
At cost		—	4,889		11,031			7,656		2,246		5,144	30,966
At valuation		7,350	—			—		—		—		—	7,350
Additions		8,729	—			—		607		541		260	10,137
Disposal
- through disposal of
subsidiaries		—	—			—		(142)		(10)		(397)	(549)
- others		—	—		(4,892)		(1,195)			—		(49)	(6,136)
At 31/3/2001	16,079		4,889			6,139		6,926		2,777		4,958	41,768
	- - - - - - - - -		- - - - - - - - -	- - - - - - - - -			- - - - - - - - -		- - - - - - - - -		- - - - - - - - - - - - - - - - - -
Accumulated
depreciation
At 31/3/2000		898	666			1,091		4,227		940		4,705	12,527
Charges for the year		352	107			272		580		188		282	1,781
Written back
- through disposal of
subsidiaries		—	—			—		(3)		—		(173)	(176)
- others		—	—			(750)		(399)		—		(32)	(1,181)
At 31/3/2001		1,250	773			613		4,405		1,128		4,782	12,951
	- - - - - - - - -		- - - - - - - - -	- - - - - - - - -			- - - - - - - - -		- - - - - - - - -		- - - - - - - - - - - - - - - - - -
Net book value
At 31/3/2001	14,829		4,116			5,526		2,521		1,649		176	28,817
At 31/3/2000		6,452	4,223			9,940		3,429		1,306		439	25,789

The land and buildings in Hong Kong under medium-term lease were revalued by the directors on 29 February, 1992 by reference to a valuation report prepared by Jones Lang Wotton on a fair market value basis on 29 February, 1992.

The carrying amount that would be included in the financial statements if the revalued land and buildings were carried at cost less depreciation is HK$5,308,950 (2000: HK$5,431,097).

— 26 —

Capital Automation Holdings Limited

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

10) DEFERRED DEVELOPMENT COSTS

Balance at the beginning of the year Amortized during the year Balance at the end of the year 11) INTEREST IN SUBSIDIARIES Unlisted shares at cost Amount due from subsidiaries Amount due to subsidiaries Provision for losses in subsidiaries	2001 HK$’000 1,615 (689) 926 2001 HK$’000 45,623 25,246 (3,225) 67,644 (33,000) 34,644	2000 HK$’000 2,349 (734) 1,615 2000 HK$’000 45,623 27,492 — 73,115 (21,000) 52,115

— 27 —

Capital Automation Holdings Limited

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Amount due from subsidiaries is interest-free, unsecured and has no fixed term of repayment. Details of subsidiaries at 31 March, 2001 are as follows:

	Country or
	place of	Issued and	Percentage	Principal
Name of companies	incorporation	paid up capital	holding	activities
Shares held by Company directly:
Capital Automation (BVI) Limited	British Virgin	Ordinary	100	Investment
	Islands	US$50,000		holding
Shares held indirectly:
Capital Automation Company Limited	Hong Kong	Ordinary	100	Development,
		HK$100		production and
		Non-voting		sale of
		deferred		computer-
		HK$1,000,000		aided-design
				systems
Capital Automation Information	U.S.A.	Ordinary	100	Marketing of
Systems Inc.		US$10,000		computer-
				aided- design
				systems
Capital Automation Inc.	U.S.A.	Ordinary	100	Marketing of
		US$1,000		computer-
				aided- design
				systems
Capital Services & Supplies Inc.	U.S.A.	Ordinary	100	Property holding
		US$100,000
Capital Computerized Machinery	People’s	Registered	100	Manufacturing of
Manufacturing (Shaoxing)	Republic	capital		computerized
Company Limited	of China	HK$6,286,189		embroidery
				machinery
New Smarter Trading Limited	Hong Kong	Ordinary	100	Dormant
		HK$100
Capital Machinery Agency And	Hong Kong	Ordinary	100	Marketing of
Supplies Limited		HK$10,000		machinery
Capital Realty Development Company	Hong Kong	Ordinary	100	Property holding
Limited		HK$100,000
Hong Kong Punching Centre Limited	Hong Kong	Ordinary	100	Dormant
		HK$100,000

— 28 —

Capital Automation Holdings Limited

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

12) CURRENT ASSETS

Hire purchase debtors Inventories - Raw materials - Work-in-progress - Finished goods Other investment in security Accounts receivable, prepayment and deposits Cash at banks and on hand	The Group 2001 2000 HK$’000 HK$’000 — 1 1,951 2,665 441 312 4,645 8,785 108 108 14,044 4,474 3,570 5,506 24,759 21,851	The Company 2001 2000 HK$’000 HK$’000 — — — — — — — — — — 12,329 109 3,122 4 15,451 113	The Company 2001 2000 HK$’000 HK$’000 — — — — — — — — — — 12,329 109 3,122 4 15,451 113
			113

13) CURRENT LIABILITIES

Accounts payable and accrued expenses Amount due to a former director Profits tax payable - overseas Sales tax payable - overseas Amount due to related companies Bank loan, secured, repayable within one year Bank overdraft, unsecured NON-CURRENT LIABILITIES Bank loan, secured - repayable in the second to fifth years	The Group 2001 2000 HK$’000 HK$’000 1,428 5,040 1,456 — — 422 — 49 263 — 540 1,216 2 — 3,689 6,727 The Group 2001 2000 HK$’000 HK$’000 2,056 —	The Company 2001 2000 HK$’000 HK$’000 63 83 — — — — — — — — — — — — 63 83 The Company 2001 2000 HK$’000 HK$’000 — —

14) NON-CURRENT LIABILITIES

— 29 —

Capital Automation Holdings Limited

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

15) SHARE CAPITAL

Authorised: 500,000,000 ordinary shares of HK$0.1 each Issued & fully paid: At the beginning of the year (157,000,000 ordinary shares of HK$0.1 each) Issue of shares At the end of the year (188,000,000 ordinary shares of HK$0.1 each)	2001 HK$’000 50,000	2000 HK$’000 50,000
	15,700 3,100	15,700 —
	18,800	15,700

Pursuant to the placing agreement dated 7 September, 2000, an additional 31,000,000 ordinary shares of HK$0.1 each were issued to certain independent third parties at HK$0.4 each.

16) SHARE PREMIUM

During the year under review, the Company had issued 31,000,000 ordinary shares at a premium of HK$0.3 per share to raise additional working capital.

Balance at the beginning of the year Net premium on issue of ordinary shares Balance at the end of the year REVALUATION RESERVE Surplus arising on revaluation of land and buildings Balance at the beginning of the year Transfer to retained earnings Balance at the end of the year	2001 HK$’000 18,422 8,926 27,348 2001 HK$’000 1,019 — 1,019	2000 HK$’000 18,422 —
		18,422
		2000 HK$’000 1,041 (22)
		1,019

17) REVALUATION RESERVE

The board considered that the transfer to retained earnings of HK$21,576 from revaluation reserve is an immaterial amount, hence no transfer was made for the year and thereafter.

— 30 —

Capital Automation Holdings Limited

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

18) CONTRIBUTED SURPLUS

The contributed surplus of the Company represents the difference between the nominal value of the Company’s shares issued in exchange for the issued ordinary shares of Capital Automation (BVI) Limited and the value of net assets of the underlining subsidiaries acquired as at 27 March, 1992. At Group level, the contributed surplus is reclassified into its components of reserves of the underlying subsidiaries.

Under the Companies Act 1981 of Bermuda (as amended), the contributed surplus is distributable to the shareholders, subject to a solvency test.

19) RETAINED EARNINGS/(ACCUMULATED LOSS)

The Group 2001 2000 HK$’000 HK$’000 16,501 25,251 — 854	The Group 2001 2000 HK$’000 HK$’000 16,501 25,251 — 854	The Company 2001 2000 HK$’000 HK$’000 (22,400) (13,844) — — (22,400) (13,844) (14,139) (8,556) (36,539) (22,400) — — (36,539) (22,400)	The Company 2001 2000 HK$’000 HK$’000 (22,400) (13,844) — — (22,400) (13,844) (14,139) (8,556) (36,539) (22,400) — — (36,539) (22,400)
16,501 (14,205) 2,296 —	26,105 (9,626) 16,479 22	(22,400) (14,139) (36,539) —	(13,844 (8,556
			(22,400 —
2,296	16,501	(36,539)

— 31 —

Capital Automation Holdings Limited

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

20) RECONCILIATION OF OPERATING LOSS TO NET CASH OUTFLOW FROM OPERATING ACTIVITIES

Operating loss before taxation Dividend received Interest received Interest paid Depreciation Amortization of deferred development costs Loss on disposals of fixed assets Net realized and unrealized gains/(losses) on holding of other investments in securities Decrease in completed properties for sale Decrease in inventories (Increase)/decrease in accounts receivable and prepayments Decrease in hire purchase debtors (Decrease)/increase in accounts payable and accruals Decrease in sales tax payable overseas Increase in amount due to related companies Increase in amount due to a former director	2001 HK$’000 (16,701) (2) (305) 254 1,781 689 713 — — 4,724 (9,570) 1 (3,612) (471) 262 1,456 (20,781)	2000 HK$’000 (11,826) (174) (303) 278 1,551 734 216 (15) 3,633 775 1,281 993 1,521 (29) — —
		(1,365)

21) ANALYSIS OF CHANGES IN FINANCING

			Bank loans,
	Share capital	Share premium	secured
	HK$’000	HK$’000	HK$’000
Balance brought forward	15,700	18,422	1,216
Cash inflow	3,100	8,927	1,380
Balance carried forward	18,800	27,349	2,596

— 32 —

Capital Automation Holdings Limited

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

22) DISPOSAL OF SUBSIDIARIES

Net assets disposed of: Fixed assets Completed properties held for sale Properties under development for sale Inventory Other assets Liabilities and accumulated loss taken up by purchasers Gains on disposals Sales proceeds	2001 HK$’000 374 — — — — (2,869) 2,496 1	2000 HK$’000 4 9,956 6,200 513 56 — 2,200
		18,929

On 15 February, 2001, the Company’s subsidiary (Capital Automation (BVI) Limited) entered an agreement with HK Concepts International Limited (Chan Tik Yuen, Chan Ngan Hoi and Leung King Wa are also directors of that Company) on the disposal of a subsidiary (CAI Concepts, Inc) which had a net liabilities of HK$1,970,857 as at 31 January, 2001. The consideration was HK$780 for the shares and full discharge of the total indebtedness due by CAI Concepts, Inc to two fellow subsidiaries namely Capital Automation, Inc and Capital Automation Information Systems, Inc.

On the same date, the Company’s sub-subsidiary (Capital Automation Company Limited) also entered an agreement with HK Concepts Company Limited (Chan Tik Yuen, Chan Ngan Hoi and Leung King Wa are also directors of that Company) on the disposal of its investment in a subsidiary (Capsoft System Development (Shanghai) Company Limited) which had a net liabilities of HK$523,785 as at 31 January, 2001. The consideration received was HK$10 for the shares and discharge of the remaining indebtedness due by Capsoft System Development (Shanghai) Company Limited to Capital Automation Company Limited.

The revenue and operating results of the disposed subsidiaries are as follows:

							2001	2000
							HK$’000	HK$’000
Turnover							757	2,491
Contribution	to	operating	loss	for	the	year	(3,090)	(283)

— 33 —

Capital Automation Holdings Limited

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

23) OPERATING LEASE COMMITMENTS

The lease payments to which the Group is committed under non-cancellable operating leases during the year following 31 March, 2001 in respect of land and buildings are as follows:

Group On leases expiring: Within one year Between the second and fifth years Over five years	2001 HK$’000 615 — — 615	2000 HK$’000 — 100 —
		100

24) BANKING FACILITIES

The Group’s land and buildings in Hong Kong under medium-term leases have been pledged to a bank for securing general banking facilities granted to the Company.

The Company has issued a letter of guarantee of HK$6,000,000 to a banker in favour of a subsidiary.

25) CAPITAL COMMITMENTS

At balance sheet date, the Company has capital commitments as follows:

							2001	2000
							HK$’000	HK$’000
Amount	contracted	but	not	yet	provided	for	13,681	—

On 28 December, 2000, the Company entered an acquisition agreement with a third party for the acquisition of entire issued share capital in and loans advanced to, Smartech Cyberworks Limited at a consideration of HK$25,681,330. Smartech Cyberworks Limited was an investment holding company which owned the entire issued share capital in China Sino Technology Limited which entered into an agreement for the acquisition of Units 1901, 1902 and 1909, Block B, Pengrun Building, 26 Xiaoyun Road, Chaoyang District, Beijing, People’s Republic of China.

The consideration of HK$25,681,330 was satisfied by a deposit of HK$12 million upon signing of the acquisition agreement and the remaining balance of HK$13,681,330 was paid on completion of the acquisition agreement on 21 June, 2001 by way of allotment and issue of an aggregate of 36,003,500 new ordinary shares of HK$0.1 each in the Company at an issue price of HK$0.38 per consideration share.

26) MATERIAL RELATED PARTY TRANSACTIONS

On 15 February, 2001, a Company’s subsidiary and a sub-subsidiary had entered agreements with two related companies of which some directors are interested for the disposal of entire equity interests as narrated on note (22) to the financial statements.

On 17 October, 2000, a Company’s subsidiary had entered a loan agreement of HK$3,000,000 to borrow money from a former director, and at the balance sheet date, the outstanding balance of such loan was HK$1,456,364.

— 34 —

Capital Automation Holdings Limited

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

3. INTERIM FINANCIAL INFORMATION

The following is an extract from the interim report of the Group for the six months ended 30 September, 2001.

Unaudited Condensed Consolidated Income Statement

Note Turnover 2 Cost of sales Gross profit Other revenue Selling & distribution costs Administrative expenses Other operating expenses Loss from operation Loss on disposal of subsidiaries 11 Finance costs Loss before taxation Taxation 3 Loss attributable to shareholders Basic loss per share 4	Six months ended 30/9/2001 30/9/2000 HK$’000 HK$’000 2,823 8,572 (908) (3,806) 1,915 4,766 225 1,451 (187) (2,587) (4,029) (8,516) (2,257) (708) (4,333) (5,594) (612) — (96) (119) (5,041) (5,713) — — (5,041) (5,713) (2.45) cents (3.62) cents	Six months ended 30/9/2001 30/9/2000 HK$’000 HK$’000 2,823 8,572 (908) (3,806) 1,915 4,766 225 1,451 (187) (2,587) (4,029) (8,516) (2,257) (708) (4,333) (5,594) (612) — (96) (119) (5,041) (5,713) — — (5,041) (5,713) (2.45) cents (3.62) cents
	1,915 225 (187) (4,029) (2,257) (4,333) (612) (96) (5,041) —	4,766 1,451 (2,587 (8,516 (708
		(5,594 — (119
		(5,713 —
	(5,041) (2.45) cents

— 35 —

Capital Automation Holdings Limited

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Unaudited Condensed Consolidated Balance Sheet
		30/9/2001	31/3/2001
	Note	HK$’000	HK$’000
NON-CURRENT ASSETS
Property, plant and equipment	5	47,503	28,817
Investment securities		1,326	1,326
Deferred development costs	6	581	926
		49,410	31,069
CURRENT ASSETS
Inventories		6,419	7,037
Accounts receivable, prepayment and deposits	7	1,368	14,044
Other investments in securities -
Listed shares in Hong Kong at market value		—	108
Cash and bank balances		5,448	3,570
		13,235	24,759
CURRENT LIABILITIES
Amount due to related companies		—	(263)
Accounts payable and accrual	8	(3,923)	(2,884)
Bank overdraft, unsecured		—	(2)
Bank loans, secured		—	(540)
		(3,923)	(3,689)
NET CURRENT ASSETS		9,312	21,070
NON-CURRENT LIABILITIES
Bank loans - secured		—	(2,056)
NET ASSETS		58,722	50,083

— 36 —

Capital Automation Holdings Limited

APPENDIX I	FINANCIAL INFORMATION OF THE	FINANCIAL INFORMATION OF THE	GROUP
		30/9/2001	31/3/2001
	Note	HK$’000	HK$’000
Representing:
SHARE CAPITAL	9	22,400	18,800
SHARE PREMIUM	10	37,429	27,349
RESERVES
Revaluation reserve		1,019	1,019
Reserve on consolidation		620	620
(Accumulated loss)/Retained	profits	(2,746)	2,295
		58,722	50,083
Unaudited Condensed Consolidated Statement of Recognised		Gains and Losses
		Six months ended
		30/9/2001	30/9/2000
		HK$’000	HK$’000
Expenses for placing of 31 million shares deducted in
share premium account		—	(373)
Net loss not recognized in the income statement		—	(373)
Loss for the period		(5,041)	(5,713)
Total recognized losses for the period		(5,041)	(6,086)

— 37 —

Capital Automation Holdings Limited

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Unaudited Condensed Consolidated Cash Flow Statement

	Six months ended	Six months ended
	30/9/2001	30/9/2000
	HK$’000	HK$’000
Net cash inflow/(outflow) from operating activities	9,419	(2,355)
Returns on investments and servicing of finance
Interest received	76	108
Interest paid	(96)	(119)
Net cash outflow from returns on investments and
servicing of finance	(20)	(11)
Tax paid	—	—
Net cash outflow from investing activities	(18,341)	(883)
Net cash outflow before financing	(8,942)	(3,249)
Financing
Share capital	3,600	3,100
Share premium	10,081	8,926
Bank loans	(2,596)	1,630
Amount due to related companies	(263)	—
Increase in cash and cash equivalents	1,880	10,407
Cash and cash equivalents at the beginning of period	3,568	5,506
Cash and cash equivalents at the end of period	5,448	15,913

— 38 —

Capital Automation Holdings Limited

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS

1) ACCOUNTING POLICIES

The condensed financial statements have been prepared in accordance with Hong Kong Statement of Standard Accounting Practice 25 (SSAP 25) “Interim Financial Reporting”. The accounting policies and basis of presentation adopted are consistent with those followed in the Group’s annual financial statements for the year ended 31 March, 2001.

2) SEGMENT INFORMATION

The Company is an investment holding company. The principal activities of its subsidiaries are property investment, design, production and sale of computer-aided-design systems and machinery. An analysis of the operations and contributions to trading results is as follows:

Rental income Computer-aided-design systems and machinery - Mainland China - Hong Kong - Other Far East Asian Countries - North America	Turnover Six months ended 30/9/2001 30/9/2000 HK$’000 HK$’000 585 — 5 1,643 305 3,004 1,926 3,364 2 561 2,823 8,572	Contribution to operating loss Six months ended 30/9/2001 30/9/2000 HK$’000 HK$’000 585 — (284) (1,559) (2,751) (1,339) (1,841) (2,114) (42) (582) (4,333) (5,594)

3) TAXATION

No provision for Hong Kong profits tax has been provided for in the financial statements as companies within the group have no assessable profits derived from Hong Kong during the period. (2000: Nil)

Overseas profits tax has not been provided for as the Group have no assessable profits derived in the respective jurisdictions of countries in which the Group operated. (2000: Nil)

4) BASIC LOSS PER SHARE

The calculation of basic loss per share is based on the unaudited consolidated loss attributable to members of HK$5,040,952 (2000: HK$5,713,000) and on the weighted average number of shares 206,100,120 (2000: 157,846,995 shares) in issue during the period.

Diluted earnings per share has not been calculated for the six months ended 30 September, 2001 and 2000 as no diluting effect existed during these periods.

— 39 —

Capital Automation Holdings Limited

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

5) PROPERTY, PLANT AND EQUIPMENT

During the period, the Group acquired land and buildings outside Hong Kong through an acquisition agreement with a third party for the acquisition of entire issued share capital in and loans advanced to, Smartech Cyberworks Limited at a consideration of HK$25,681,330. Smartech Cyberworks Limited was an investment holding company which owned the entire issued share capital in China Sino Technology Limited which entered into an agreement for the acquisition of Units 1901, 1902 and 1909, Block B, Pengrun Building, 26 Xiaoyun Road, Chaoyang District, Beijing, People’s Republic of China.

Pursuant to a board resolution on 14 September, 2001, a provision for diminution in value of HK$1,400,000 for the property located at Room 1705 Admiralty Centre Tower II 18 Harcourt Road Hong Kong was made and included in “Other operating expenses” in the Unaudited Condensed Consolidated Income Statement.

6) DEPRECIATION/AMORTISATION

During the period, depreciation of HK$512,693 (2000: HK$912,591) was charged in respect of the Group’s property, plant and equipment and amortisation of HK$344,500 (2000: HK$344,500) was charged in respect of the Group’s deferred development costs.

7) ACCOUNTS RECEIVABLE

The Group allows an average credit period of 30 to 60 days to its trade customers.

The following is an aged analysis of accounts receivable at the reporting date:

0 - 30 days 31 - 60 days 61 - 90 days Over 90 days ACCOUNTS PAYABLE The following is an aged analysis of accounts payables at the reporting date: 0 - 30 days 31 - 60 days 61 - 90 days Over 90 days	30/9/2001 HK$’000 585 — — 240 825 30/9/2001 HK$’000 — — — 3,520 3,520	31/3/2001 HK$’000 — — — 72
		72
		31/3/2001 HK$’000 — — — 117
		117

8) ACCOUNTS PAYABLE

— 40 —

Capital Automation Holdings Limited

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

9) SHARE CAPITAL

During the six months ended 30 September, 2001, the Company has issued 36,003,500 (2000: 31,000,000 shares) ordinary shares of HK$0.10 each at the subscription price of HK$0.38 each to a third party for settlement of the remaining balance of an acquisition agreement.

10) SHARE PREMIUM

During the six months ended 30 September, 2001, share premium of HK$10,080,980 (2000: HK$9,300,000) has been accounted for in the share premium account.

11) DISPOSAL AND DISSOLUTION OF SUBSIDIARIES

Net assets disposed of: Fixed assets Current assets Liabilities and accumulated loss taken up by purchasers or loan waived Loss on disposal Sale proceeds	30/9/2001 HK$ 5,241,912 3,150,589 (7,000,526) (611,967) 780,008

On 18 May, 2001, the Company’s subsidiary (Capital Automation (BVI) Limited) entered an agreement with Li Man Yick on the disposal of a subsidiary (Capital Services & Supplies Inc.) which had a net assets of HK$780,000 at 31 March, 2001. The consideration was HK$780,000 for the shares and HK$3,330,000 for the full discharge of the loan due to Capital Automation (BVI) Limited.

On 18 June, 2001, the Company’s subsidiary (Capital Automation (BVI) Limited) entered an agreement with HK Concepts International Limited (Chan Ngan Hoi, Chan Tik Yuen and Leung King Wa are former directors of Capital Automation (BVI) Limited) on the disposal of Capital Automation Information System Inc. which had a net liabilities of HK$1,060,113.60 at 31 March, 2001. The consideration was HK$7.8 for the shares.

On 9 August, 2001, the Company dissolved a subsidiary (Capital Automation Inc.) which had a net liabilities of HK$5,712,716.57 as at that date.

12) PLACING AGREEMENT

Pursuant to the board resolution on 12 September, 2001, the Company entered a placing agreement with Berich Brokerage Limited (“Placing Agent”) for procuring on a fully underwritten basis subscription (“Placing”) of 44,300,000 shares of HK$0.10 each at a subscription price of HK$0.18 each.

The placing was completed in mid-October 2001.

— 41 —

Capital Automation Holdings Limited

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

4. STATEMENT OF PRO FORMA UNAUDITED ADJUSTED CONSOLIDATED NET TANGIBLE ASSETS

The following is a statement of the pro forma unaudited adjusted consolidated net tangible assets of the Group based on the audited consolidated net tangible assets of the Group as at 31 March, 2001 and adjusted as follows:

Audited consolidated net tangible assets of the Group as at 31 March, 2001 Add: Net proceeds arising from issue and allotment of new Shares in June 2001 allotment of new Shares in October 2001 Less: Unaudited interim results for the six months ended 30 September, 2001 Provision for diminution in value of land and buildings Unaudited consolidated net tangible assets before completion of the Subscription Agreement Add: Net proceeds arising from issue and allotment of new Shares under the Subscription Agreement Pro forma adjusted unaudited consolidated net tangible assets immediately prior to the Acquisition Estimated effect from the Acquisition Unaudited pro forma adjusted consolidated net tangible assets immediately prior to the Acquisition Unaudited pro forma adjusted consolidated net tangible assets per Share (based on an aggregate of 1,618,303,500 Shares) immediately after the Acquisition	HK$’000 13,680 7,734	HK$’000 49,157 21,414 (9,041) 61,530 135,000 196,530 12,094 208,624 HK$0.129
	(5,041) (4,000)	(9,041
		61,530 135,000
		196,530
		12,094

— 42 —

Capital Automation Holdings Limited

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

5. INDEBTEDNESS

Apart from intra-group liabilities, the Group did not have at the close of business on 31 March, 2002 any outstanding bank overdrafts, loans or other similar indebtedness (other than normal trade bills), debentures, mortgages, charges, hire purchase or finance lease commitments, guarantees or other material contingent liabilities.

6. WORKING CAPITAL

The Directors are of the opinion that after taking into account the Group’s and Artway’s present available banking facilities and in the absence of unforeseen circumstances, the Group and Artway will have sufficient working capital for its present requirements.

7. MATERIAL CHANGE

Save as disclosed in the Company’s interim report for the six months ended 30 September, 2001, the placing of 44,300,000 shares at a subscription price of HK$0.18 each with the net proceeds of approximately HK$7.7 million in October 2001, the net proceeds of approximately HK$135 million from the Subscription and the provision for diminution in value of the Group’s land and buildings of approximately HK$4.0 million, the Directors are not aware of any material change in the financial and trading position or prospects of the Group since 31 March, 2001, the date to which its latest published audited accounts were made up.

— 43 —

Capital Automation Holdings Limited

ACCOUNTANTS’ REPORT ON ARTWAY

APPENDIX II

The Directors

Capital Automation Holdings Limited

Dear Sirs,

We set out below our report on the financial information relating to Artway Development Limited (the “Company”) for inclusion in a circular to be dated on or before 8 May 2002 (the “Circular”) in connection with a major transaction for Capital Automation Holdings Limited.

The Company was incorporated in the British Virgin Islands on 8 January 2002 and is engaged in investment holding.

We have acted as auditors of the Company for the Relevant Period. As at 31 March 2002, the Company has an associated company, , a company incorporated in the PRC on 28 February 2002. No audited accounts have been prepared for . However, we have reviewed the relevant transactions of .

We have examined the audited financial statements of the Company for the Relevant Periods. Our examination was made in accordance with the Auditing Guideline titled “Prospectuses and the Reporting Accountants” issued by the Hong Kong Society of Accountants.

In our opinion, the financial information gives a true and fair view of the state of the Company’s affairs as at 31 March 2002 and of its loss for the period then ended.

LOUIS LEUNG & PARTNERS CPA LIMITED AU YANG SUNG FAT, CPA

Practising Certificate Number: P2433

Hong Kong, 8 May 2002

— 44 —

Capital Automation Holdings Limited

ACCOUNTANTS’ REPORT ON ARTWAY

APPENDIX II

INCOME STATEMENT FOR THE PERIOD FROM 8 JANUARY 2002 (DATE OF INCORPORATION) TO 31 MARCH 2002

NOTE Turnover 2 Net loss for the period and carried forward 3 Net loss for the period is arrived at after charging the following:- Charging:— Audit fee Formation expenses	HK$ — (11,506) HK$ 3,500 7,206

No separate statement of recognised gains and losses is prepared as the only component of the statement is the net loss for the period.

The annexed notes form an integral part of these financial statements.

— 45 —

Capital Automation Holdings Limited

ACCOUNTANTS’ REPORT ON ARTWAY

APPENDIX II

BALANCE SHEET AS AT 31 MARCH 2002

NOTE HK$ NON-CURRENT ASSETS — INTEREST IN AN ASSOCIATED COMPANY 6 CURRENT ASSETS 7 4,200 CURRENT LIABILITIES 8 (7,274,957) NET CURRENT LIABILITIES NET LIABILITIES CAPITAL AND RESERVES SHARE CAPITAL Authorised: 50,000 shares of US$1.00 each Issued and fully paid: 1 shares of US$1.00 each ACCUMULATED LOSS	HK$ 7,259,259 (7,270,757) (11,498) 390,000 8 (11,506) (11,498)

The annexed notes form an integral part of these financial statements.

— 46 —

Capital Automation Holdings Limited

ACCOUNTANTS’ REPORT ON ARTWAY

APPENDIX II

NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2002

1) PRINCIPAL ACCOUNTING POLICIES

a) Statement of compliance

These financial statements have been prepared in accordance with all applicable Statements of Standard Accounting Practice and Interpretations issued by the Hong Kong Society of Accountants, and accounting principles generally accepted in Hong Kong. A summary of the significant accounting policies adopted by the Company is set out below.

b) Basis of preparation of the financial statements

The measurement basis used in the preparation of the financial statements is historical cost, and in accordance with accounting principles generally accepted in Hong Kong.

c) Associated companies

An associated company is a Company in which the Company has significant influence, but not control, over its management, including participation in the financial and operating policy decisions.

The results of the associated companies are included in the Company’s income statement to the extent of dividends received and receivable, providing the dividend is in respect of a period ending on or before that of the Company and the Company’s right to receive the dividend is established before the accounts of the Company are approved by the directors. In the Company’s balance sheet, its investments in associated companies are stated at cost.

Equity accounting has not been adopted as there were no post-acquisition profits or losses of the investee companies.

d) Translations of foreign currencies

Translations of foreign currencies are converted at exchange rates ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated at rates of exchange ruling at that date. All exchange differences are dealt with in the income statement.

e) Deferred taxation

Provision for deferred taxation is calculated using the liability method for all the timing differences to the extent that there is a reasonable probability that these will be subject to reversal within the foreseeable future.

— 47 —

Capital Automation Holdings Limited

ACCOUNTANTS’ REPORT ON ARTWAY

APPENDIX II

f) Related parties

g) Recognition of revenue

Revenue is recognised when it is probable that the economic benefits will flow to the company and when the revenue can be measured reliably. Dividend is recognized when the right to receive payment is established.

2) TURNOVER

The Company is principally engaged in investment holding.

No turnover was recorded during the period under review.

3) NET LOSS FOR THE PERIOD

Turnover Operating expenses Net loss for the period	HK$ — (11,506) (11,506)

4) DIRECTORS’S EMOLUMENTS

No emolument in whatever nature has been paid or is payable to any directors of the Company during the period under review.

5) TAXATION

No Hong Kong profit tax has been provided for in the financial statements as the Company has derived no assessable profit during the period.

Deferred tax has not been provided for in the financial statements as there are no significant timing differences which are reasonably expected to crystallise in the foreseeable future.

6) INTEREST IN AN ASSOCIATED COMPANY

HK$

Unlisted shares, at cost outside Hong Kong 7,259,259*

— 48 —

Capital Automation Holdings Limited

ACCOUNTANTS’ REPORT ON ARTWAY

APPENDIX II

Particulars of investee company

		Place of	Issued & paid up	Percentage of
Name	of company	incorporation	share capital RMB16,000,000	equity held 49%	Principal activities Provision of property
					management and
					development of
					computing software

The establishment of was approved by the Beijing Administrative for Industry and Commerce on 28 February 2002 for a term of 30 years. It is to engage in the provision of property management and research and development of computing software. has an equity interest of 80% in a PRC company, .

was incorporated on 1 February 2002 for a term of 20 years. The registered capital is RMB10,000,000. On 1 February 2002, entered into a contract with Beijing Bus Company Limited for the acquisition of a property located at ( ).

The director of the Company confirmed that other than those transactions mentioned above, there were no other post-acquisition profits or loss in respect of the associated company, hence no equity accounting was adopted during the period. The director of the Company further considered that no provision for diminution in value is necessary.

7) CURRENT ASSETS

Prepayment Cash at bank and on hand	HK$ 2,000 2,200
	4,200

8) CURRENT LIABILITIES

Accrued expenses Amount due to a director	3,500 7,271,457
	7,274,957

9) MATERIAL RELATED PARTY TRANSACTIONS

Balance of current accounts with related parties have been shown on note 8 to the financial statements.

— 49 —

Capital Automation Holdings Limited

ACCOUNTANTS’ REPORT ON ARTWAY

APPENDIX II

10) POST BALANCE SHEET EVENT

On 10 April 2002, the Company’s shareholders had entered into an agreement with Capital Automation Holdings Limited for the disposal of the entire issued share capital of the Company, which in turn holds an attributable interest of 39.2% in a Property located in Area No. 7 Xi Ba He Bei Lane Chaoyang District, Beijing People’s Republic of China. The consideration for the sale amounted to HK$195,000,000, as to an amount of HK$120,000,000 has been settled in cash at completion which had taken place after signing of the agreement. An amount of HK$37,500,000 is to be settled by the issue of the First Notes and the balance, of HK$37,500,000 is to be settled by the issue of the Second Notes or in cash at the option of the purchaser.

The agreement is unconditional and was completed on 10 April 2002.

11) COMPARATIVE FIGURES

No comparative figures are shown as it is the first set of accounts prepared by the Company.

— 50 —

Capital Automation Holdings Limited

UNAUDITED BALANCE SHEET OF THE PRC JV

APPENDIX III

Beijing Jin Zun Technology Development Limited

(Incorporated in the PRC with limited liability)

Unaudited balance sheet As at 31st March 2002

Note RMB Non-current assets Interest in a subsidiary 1 8,000,000.00 Formation expenses 36,906.00 Current assets Cash on hand and at bank 7,963,072.80 Net assets 15,999,978.80 Capital and reserve Share Capital Issued and fully paid 16,000,000.00 Accumulated loss (21.20) 15,999,978.80

Note (1): Interest in a subsidiary

	Place of	Issued and	Shareholding
Company name	incorporation	paid up capital	interest held	Principal activity
Beijing Jin Zun Property	the PRC	RMB10,000,000	80	To engage in the
Development Limited				development and sale
				of real estate
				properties and the
				management of real
				estate properties

— 51 —

Capital Automation Holdings Limited

VALUATION REPORT ON ARTWAY

APPENDIX IV

Vigers Hong Kong Ltd. International Property Consultants

Suite 1607-12 Miramar Tower 132 Nathan Road Tsimshatsui Kowloon Hong Kong

==> picture [95 x 289] intentionally omitted <==

10 April, 2002

The Board of Directors Capital Automation Holdings Limited Room 6110 on 61st Floor 99 Queen’s Road Central Central Hong Kong

Dear Sir/Madam,

According to the instructions of Capital Automation Holdings Limited (“Capital Automation”), we have conducted an appraisal on the fair market value of a 100 percent equity interest of Artway Development Limited (the “Company”) as of 10 April, 2002 (the “Appraisal Date”).

It is our understanding that this appraisal will be used in connection with an acquisition of the Company by Capital Automation, which is required to be disclosed according to the Listing Rule of the Stock Exchange of Hong Kong Limited.

— 52 —

Capital Automation Holdings Limited

VALUATION REPORT ON ARTWAY

APPENDIX IV

Background

The Company was incorporated on 8 January, 2002 under the law of the British Virgin Islands and holds 49% interest of Beijing Jin Zun Technology Development Limited ( ) (“PRC JV”). Other than the aforesaid, the Company has no material assets or liabilities.

PRC JV is engaged in the provision of property management and research and development of computing software. The establishment of PRC JV was approved by the Beijing Administrative for Industry and Commerce on 28 February, 2002 for a term of 30 years. PRC JV is owned as to 49% by the Company and as to 51% by Beijing Xin Yi Tian Property Agents Company Limited ( ). PRC JV holds an 80% interest of Beijing Jin Zun Property Development Limited ( ) (“PRC Company”). Other than the aforesaid, the PRC JV has no material assets or liabilities.

PRC Company is engaged in the development and sale of real properties as well as the management of real properties. PRC Company was incorporated on 1 February, 2002 in the PRC for a term of 20 years. On 1 February, 2002, PRC Company entered into a contract of acquisition of a site located at Area No. 7, Xi Ba He Bei Lane, Chaoyang District, Beijing, the PRC (the “Property”). PRC Company intends to construct a multi-purpose complex which consists of a residential apartment tower and an office tower as well as retail premises with car parking spaces.

Basis and Methodology of Appraisal

Our appraisal was conducted on a fair market value basis. Fair market value is the estimated amount for which an asset should be exchanged between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.

The value of the Company was developed through the application of income approach with technique known as the discounted cash flow method to discount the future economic benefits of the Company into a present value as of the Appraisal Date. This method eliminates the discrepancy in the time value of money by using a discount rate to reflect all business risks including systematic and unsystematic risks in relation to the business.

The cost of equity explaining systematic risk was developed through the Capital Asset Pricing Model (“CAPM”). Size risk, lack of marketability and specific risk accounted for unsystematic risk and appropriate adjustments were made in determination of the cost of capital, namely discount rate.

Our investigation included but was not limited to discussions with the relevant parties in relation to the history and nature of the Company and the development potential of the Property. All such representations have been assumed to be accurate and true and continue to be true in future. We have

— 53 —

Capital Automation Holdings Limited

VALUATION REPORT ON ARTWAY

APPENDIX IV

also made relevant inquiries and obtained further information as considered necessary for the purposes of this appraisal. Before arriving at our opinion of value, we have considered, inter alia, the following factors.

the operating condition of the Company;
the economic outlook in general and the specific economic environment related to the business;
the potential of the business;
comparative advantages and disadvantages of the business and industry; and
market-derived investment returns of entities engaged in similar lines of business.

In preparing the appraisal, a number of assumptions have to be established for supporting our concluded opinion of value of the Company. The major assumptions adopted in this appraisal are as follows:

The PRC Company is principally engaged in developing the Property and will not involve other business in the future.
The development timetable will not significantly deviate from our forecast.
There will be no major changes in the existing political, legal, and economic conditions in the PRC and other locations in which the Company carries on its business.
Exchange rates will not differ materially from those presently prevailing.
The Company will retain competent management, key personnel, and technical staff to support its ongoing operation for the Company.
Trends and market conditions will not deviate significantly from economic forecasts.
In this appraisal, all business activities were assumed to take place in their locations and the tax rates follow their respective tax laws and regulations.
The proposed development of the Property is in compliance with the relevant planning regulations and will be approved by the relevant government authorities.

OPINION OF VALUE

Based on the aforesaid investigation, analysis and appraisal method employed, it is our opinion that, as of 10 April, 2002, the fair market value of a 100 percent equity interest of the Company is reasonably stated as HONG KONG DOLLARS ONE HUNDRED AND NINETY SIX MILLION ONLY (HKD196,000,000).

— 54 —

Capital Automation Holdings Limited

VALUATION REPORT ON ARTWAY

APPENDIX IV

The opinion of value was based on generally accepted appraisal procedures and practices that rely extensively on the use of numerous assumptions and the consideration of many uncertainties, not all of which can be easily quantified or ascertained.

The opinions expressed in this valuation are contingent upon the conditions set forth in this report, the Statement of Limiting Conditions and General Service Conditions that is a part of this report.

We hereby certify that we have neither present nor prospective interests in the Group or the value reported.

Yours faithfully,

For and on behalf of

VIGERS HONG KONG LIMITED

Raymond K.K. Ho	Mark K.Y. Mak
Registered Professional Surveyor	Chartered Financial Analyst
MRICS AHKIS	Business Analyst
Director	Valuation Department
Valuation Department

Note: Mr. Raymond K.K. Ho, Chartered Surveyor, MRICS, AHKIS and Mr. Mark K.Y. Mak, Chartered Financial Analyst, have conducted business appraisal in the Greater China region since 1993 and 1997 respectively.

— 55 —

Capital Automation Holdings Limited

VALUATION REPORT ON THE PROPERTY

APPENDIX V

Vigers Hong Kong Ltd. International Property Consultants

Suite 1607-12 Miramar Tower 132 Nathan Road Tsimshatsui Kowloon Hong Kong

==> picture [95 x 289] intentionally omitted <==

10 April, 2002

The Directors

Capital Automation Holdings Limited Room 6110 on 61st Floor

The Centre 99 Queen’s Road Central Hong Kong

Dear Sirs,

Re: A parcel of land located at Area no. 7, Xi Ba He Bei Lane, Chaoyang District, Beijing, the PRC.

In accordance with your instructions for us to value of the above property interests to be held by Capital Automation Holdings Limited (the “Company”) and its subsidiaries (together referred to as the “Group”) in the People’s Republic of China (“the PRC”), we confirm that we have carried out an inspection, made relevant enquiries and obtained such further information as we consider necessary for the purpose of providing you with our opinion of the open market value of such property interests as at 10 April, 2002.

Capital Automation Holdings Limited

— 56 —

VALUATION REPORT ON THE PROPERTY

APPENDIX V

Our valuation is our opinion of the open market value which we would define as intended to mean - “the best price at which the sale of an interest in property might reasonably be expected to have been completed unconditionally for cash consideration on the date of valuation assuming:-

(a) a willing seller;
(b) that, prior to the date of valuation, there had been a reasonable period (having regard to the nature of the property and the state of the market) for the proper marketing of the interest, for the agreement of price and terms and for the completion of the sale;
(c) that the state of the market, level of values and other circumstances were, on any earlier assumed date of exchange of contracts, the same as on the date of valuation;
(d) that no account is taken of any additional bid by a special purchaser with a special interest; and
(e) that both parties to the transaction had acted knowledgeably, prudently and without compulsion.”

Our valuation has been made on the assumption that the owner sells the property interests on the open market in its existing state without the benefit of a deferred terms contract, leaseback, joint venture, management agreement or any similar arrangement which would serve to increase the value of the property interests.

We have valued the property interests on the basis that the property will be developed and completed in accordance with the Group’s latest development proposals provided to us. We have assumed that approvals for the proposals have been obtained. In arriving at our opinion of value, we have valued it by the Direct Comparison Approach by making reference to comparable transactions in the locality and have also taken into account the construction costs that will be expended to complete the development to reflect the quality of the completed development. In forming our opinion of value of the property, we have also valued it by Direct Comparison Approach by making reference to the comparable site transactions and land prices as available in the relevant market.

We have not provided with extracts from title documents relating to such property interest. We have not, however, searched the original documents to verify ownership or to verify existence of any lease amendment which do not appear on the copies handed to us. All documents and leases have been used for reference only. All dimensions measurements and areas are approximations.

In undertaking our valuation of the property, we have relied on the legal opinion provided by the Group’s PRC legal adviser, Jingtian & Gongcheng (“the PRC Legal Opinion”) regarding the title to and the Group’s proposed interest in the property.

— 57 —

Capital Automation Holdings Limited

VALUATION REPORT ON THE PROPERTY

APPENDIX V

For the PRC Legal Opinion, we understand the current status of titles, grant of major approvals, licences and documents of property are as follows:-

(a) State-owned Land Use Rights Transfer Contract Yes (b) State-owned Land Use Rights Certificate of Beijing Bus Company Limited Yes

We have inspected the exterior and, where possible, the interior of the property. However, we have not carried out a structural survey nor have we inspected woodwork or other parts of the structures which are covered, unexposed or inaccessible and we are therefore unable to report that any such parts of the property interests are free from defect.

We are relied to a considerable extent on information provided by you and have accepted advise given to us by you on such matters as planning approvals or statutory notices, easements, tenure, occupation, lettings, site and floor areas and in the identification of those property interests in which the Group has a valid interest.

No allowance has been made in our valuation for any charges, mortgages or amounts owing on the property nor for any expenses or taxation which may be incurred in effecting a sale. Unless otherwise stated, it is assumed that the property interests is free from encumbrances restrictions and outgoings of an onerous nature which could affect its value.

Unless otherwise stated, all money amounts stated are in Renminbi. The exchange rate used in valuing the property interests in the PRC as at 10 April, 2002 was HK$1=RMB1.06. There has been no significant fluctuation in exchange rate between that date and the date of this letter.

We enclose herewith the valuation certificate.

Yours faithfully, For and on behalf of VIGERS HONG KONG LTD. Raymond Ho Kai Kwong Registered Professional Surveyor MRICS, AHKIS Director

Note: Raymond K.K. Ho, Chartered Surveyor, MRICS, AHKIS has extensive experience in undertaking valuations of properties in Hong Kong and Macau and has over eight years’ experience in the valuation of properties in the PRC.

— 58 —

Capital Automation Holdings Limited

VALUATION REPORT ON THE PROPERTY

APPENDIX V

VALUATION CERTIFICATE

Property

Description and Tenure

Capital value in Particulars of existing state as at occupancy 10 April, 2002

A parcel of land located at Area no. 7, Xi Ba He Bei Lane, Chaoyang District, Beijing, the PRC.

The property comprises a site with an area of approximately 35,300 sq.m.

The property is planned to be developed into a commercial/ residential complex with approximately gross floor area as follows:-

The property at RMB530,000,000 present is a public bus factory.

	Approximate
Use	Gross Floor Area
	(sq.m.)
Apartment	50,000
Retail	40,000
Office	220,000
Carpark	40,000
Total:	350,000

The land rights term of the property is 70 years for residential use, 40 years for commercial, entertainment uses and 50 years for composite uses.

Notes:

Pursuant to the State-owned Land Use Rights Certificate (document no.: Jing Chao Guo Yong (Di) Zi No. 000224) issued by Building and Land Administrative Bureau of Chaoyang District, Beijing on 9 July, 1997, the land user of a site having a site area of approximately 50,063.956 sq.m. is Beijing Bus Company Limited.
Pursuant to the State-owned Land Use Rights Transfer Contract (“the transfer contract”) entered into between Beijing Bus Company Limited (“Beijing Bus”) and Beijing Jin Zun Property Development Limited (“Jin Zun Property Development”) on 1 February, 2002, Jin Zun Property Development agreed to purchase the subject site having a site area of approximately 35,300 sq.m. for the relocation and compensation fee of RMB250,000,000.
In valuating the property, we have taken into account the relocation and compensation fee of RMB250,000,000 payable by Jin Zun Property Development to Beijing Bus pursuant to the transfer contract.

— 59 —

Capital Automation Holdings Limited

VALUATION REPORT ON THE PROPERTY

APPENDIX V

Pursuant the PRC Legal Opinion, we understand that the current status of titles, grant of major approvals, licences and documents of the property are as follows:-
(a) Stated-owned Land Use Rights Transfer Contract Yes (b) Stated-owned Land Use Rights Certificate of Beijing Bus Yes
The PRC legal opinion states that:
(i) Jin Zun Property Development is duly incorporated with the right of real estate development and has the right to sign the transfer contract with Beijing Bus. Jin Zun Property Development shall have the right to engage in real estate development on the subject site upon the approvals have been given by the relevant government authorities and the land premium has been fully settled.
(ii) The transfer contract is legally valid. Upon fulfillment of its obligations, Jin Zun Property Development shall obtain the right to conduct development on the subject site and shall be entitled to be the developer of the subject site in respect of applying for project recognition, planning and land utilization. Upon the above application procedures have been completed and the relevant approvals have been granted, Jin Zun Property Development has the right to engage in the development and sale and obtain the relevant interest.
(iii) There is no legal impediment in obtaining the approval from the relevant government authorities in respect of applying for project recognition, planning land use and sale.
(iv) According to the PRC State Owned Land Use Right Transfer and Grant Temporary Regulation, the permitted land use right term of the property is 70 years for residential use, 40 years for commercial, entertainment uses and 50 years for composite uses.
(v) According to the existing PRC Law and regulation, Jin Zun Property Development can have the right to transfer and shall obtain the land use rights of the subject site upon Jin Zun Property Development has fully settled the land premium.
In the course of our valuation, we have the following assumptions:
(i) Jin Zun Property Development will be in possession of a proper legal title to the property and will be entitled to transfer the property with the residual term of its land use rights at no extra land premium or other onerous payment payable to the government.
(ii) all consents, approvals and licences from relevant government authorities for development of the property will be granted without any onerous conditions or undue delay.
(iii) the proposed development scale of the property is in compliance with the relevant planning regulations and will approved by the relevant government authorities.
(iv) the property can be freely transferred in the open market to both local and overseas purchasers upon the land premium of the property has been fully settled.

— 60 —

Capital Automation Holdings Limited

GENERAL INFORMATION

APPENDIX VI

1. RESPONSIBILITY STATEMENT

The information in this circular relating to the Company has been supplied by the Directors. All the Directors jointly and severally 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, opinions expressed in this circular have been arrived at after due and careful consideration and there are no other facts not contained in this circular the omission of which would make any such statement contained in this circular misleading.

2. CORPORATE INFORMATION OF THE COMPANY

The Company was incorporated in Bermuda under the Companies Act on 31 January, 1992. Its head office and principal place of business in Hong Kong is Unit 6110, 61st Floor, The Center, 99 Queen’s Road Central, Hong Kong. The company secretary of the Company is Ms. Cecilia Tang.

3. SHARE CAPITAL

The authorised and issued share capital of the Company as at the Latest Practicable Date, and immediately following completion of the Acquisition, are expected to be, as follows:

Authorised: 5,000,000,000 Shares authorised as at the date hereof Issued and to be issued as fully paid: 1,618,303,500 Shares issued as at the date hereof 312,500,000 Shares to be issued assuming full conversion of the outstanding amount of the First Notes at the conversion price of HK$0.12 (Note 1) 1,930,803,500 Shares immediately following the full conversion of the outstanding amount of the First Notes	HK$ 500,000,000 HK$ 161,830,350 31,250,000
	193,080,350

Authorised:
5,000,000,000
Shares authorised as at the date hereof
Issued and to be issued as fully paid:
1,618,303,500
Shares issued as at the date hereof
312,500,000
Shares to be issued assuming full conversion
of the outstanding amount of the First Notes
at the conversion price of HK$0.12 (Note 1)
1,930,803,500
Shares immediately following the full conversion
of the outstanding amount of the First Notes

HK$
500,000,000
HK$
161,830,350
31,250,000

193,080,350

Note 1: The conversion price is the lower of (1) the price of HK$0.12 per Share subject to adjustment for, amongst other thins, subdivision or consolidation of shares, bonus issues , rights issues and other dilution events; and (2) 93% of the average closing price per share for the five trading days immediately prior to the date of the notice given in respect of the exercise of the conversion rights of the First Notes.

The Shares to be issued pursuant to the conversion of the outstanding amount of the First Notes will, when issued, rank pari passu in all respects with the existing Shares.

— 61 —

Capital Automation Holdings Limited

GENERAL INFORMATION

APPENDIX VI

4. DISCLOSURE OF INTERESTS

(a) Interest in shares of the Company held by the Directors

As at the Latest Practicable Date, the interests of the Directors or the chief executive of the Company in the share capital of the Company or any of its associated corporations (within the meaning of the SDI Ordinance) which were notified to the Company and the Stock Exchange pursuant to section 28 of the SDI Ordinance (including interests which they were taken or deemed to have under section 31 of, or Part I of the Schedule to, the SDI Ordinance), or which were required, pursuant to section 29 of the SDI Ordinance, to be entered into the register referred to therein, or which were required, pursuant to the Model Code, to be notified to the Company and the Stock Exchange, were as follows:

Name of	Personal	Family	Corporate	Other
Director	interests	interests	interests	interests	Total
Wong Kwong Yu	36,003,500	—	1,350,000,000	—	1,386,003,500

(b) Service contracts

Mr. Wong proposed to enter into a service contract with the Company in the coming month. Details of the terms of the service contract are yet to be finalised. However, it is the understanding of the Directors that the proposed service contract between Mr. Wong and the Company will be terminable within one year without payment of compensation (other than statutory compensation).

Save as disclosed above, none of the Directors has any existing or proposed service contract with any member of the Group or any associated company of the Company which has more than twelve months to run nor had any Director entered into or amended any service contract with any member of the Group or any associated company of the Company within six months before the date of this circular. Save as the remuneration payable to Mr. Wong, the Company does not anticipate that there will be any material increase in the remuneration of the Directors within the first six months from the date of this circular.

(c) Other interests

(i) Since 31 March, 2001 (being the date to which the latest published audited accounts of the Company were made up), none of the Directors had any interest, direct or indirect, in any assets which have been acquired or disposed of or are proposed to be acquired or disposed of by or leased to any member of the Group.
(ii) Save for the subscription agreement entered into between the Company and Shinning Crown on 5 February, 2002, there is no material contract or arrangement entered into by any of the Directors, or parties acting in concert with them in which any Director has a material personal interest.

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Capital Automation Holdings Limited

GENERAL INFORMATION

APPENDIX VI

5. SUBSTANTIAL SHAREHOLDERS

So far as is known to any Director or chief executive of the Company, as at the Latest Practicable Date, none of the shareholders (not being a Director or chief executive of the Company) were interested in 10% or more of the issued share capital of the Company.

Save as disclosed herein, as at the Latest Practicable Date, none of the Directors or the chief executive of the Company had any interest in any shares in or debentures of, the Company or any of its associated corporations (within the meaning of the SDI Ordinance) which would have to be notified to the Company and the Stock Exchange pursuant to section 28 of the SDI Ordinance (including interests which they were taken or deemed to have under section 31 of, or Part I of the Schedule to, the SDI Ordinance), or which were required, pursuant to section 29 of the SDI Ordinance, to be entered into the register referred to therein, or which were required, pursuant to the Model Code, to be notified to the Company and the Stock Exchange.

6. LITIGATION

As at the Latest Practicable Date , none of the members of the Enlarged Group is engaged in any litigation or arbitration of material importance and there is no litigation or claim of material importance known to the Directors to be pending or threatened by or against any member of the Enlarged Group.

7. MATERIAL CONTRACTS

As at the Latest Practicable Date, The following contracts (not being contracts entered into in the ordinary course of business) were entered into by members of the Group within two years preceding the Latest Practicable Date which are or may be material:

(a) placing agreements dated 7 September, 2000, 12 September, 2001 and 5 February, 2002 with respect to the placing of Shares in the Company;
(b) a subscription agreement dated 5 February, 2002 entered into between the Company and Shinning Crown whereby Shinning Crown agreed to subscribe for certain number of shares in the Company;
(c) a conditional sale and purchase agreement dated 5 February, 2002 entered into between the Company and Mr. Han for the acquisition by the Company of an approximately 50% attributable interest in the Property;

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Capital Automation Holdings Limited

GENERAL INFORMATION

APPENDIX VI

(d) the Letter of Intent; and
(e) the Agreement.

8. EXPERTS

(a) The following are the qualification of the experts who have given opinion or advice which are contained in this circular:

Date of Nature of Name Qualification opinion opinion or advice Louis Leung & Partners Certified public 8 May, 2002 Accountants’ report CPA Limited accountants on Artway Vigers Hong Kong Valuers, 10 April, 2002 Valuation report on Limited Chartered Artway and valuation Surveyors report on the Property

(b) Each of the experts does not have any shareholding in any member of the Group or any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.
(c) The opinions given by each of the experts are given as of the date of this circular for incorporation herein.

9. CONSENTS

Each of Louis Leung & Partners CPA Limited and Vigers Hong Kong Limited has given and has not withdrawn its written consent to the issue of this circular with the inclusion herein of its letter and/or references to its name, in the form and context in which it appears.

10. GENERAL

(a) The registered office of the Company is situated at Cedar House, 41 Cedar Avenue, Hamilton HM12, Bermuda.
(b) The head office and principal place of business of the Company is at Unit 6110, 61st Floor, The Center, 99 Queen’s Road Central, Hong Kong. The share registrar and transfer office of the Company is Abacus Share Registrars Limited at 5th Floor, Wing On Centre, 111 Connaught Road Central, Central, Hong Kong.

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Capital Automation Holdings Limited

GENERAL INFORMATION

APPENDIX VI

(c) The secretary of the Company is Ms. Cecilia Tang. Miss Cecilia Tang, aged 38, was appointed as the secretary of the Company since July 2001. She is a fellow member of the Association of Chartered Certified Accountants and an associate member of the Hong Kong Society of Accountants. She is also an associate member of the Institute of Chartered Secretaries and Administrators and the Hong Kong Institute of Company Secretaries. Miss Tang has over 15 years’ experience in auditing, corporate financial management and planning.
(d) Dealings in the Shares may be settled through the Central Clearing and Settlement System established and operated by Hong Kong Securities Clearing Company Limited, and investors should seek the advice of their stockbroker or other professional adviser for details of those settlement arrangement and how such arrangements will affect their rights and interests.
(e) Save as disclosed in this circular, the Directors are not aware of any person who was, as at the Latest Practicable Date, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital (including options in respect of such capital) carrying rights to vote in all circumstances at general meetings of the Company or any of its subsidiaries.
(f) The English text of this circular shall prevail over the Chinese text.

11. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection during normal business hours at the offices of the Company at Unit 6110, 61st Floor, The Center, 99 Queen’s Road Central, Hong Kong on any weekday other than public holidays, up to and including 22 May, 2002.

(a) the memorandum of association and the bye-laws of the Company;
(b) the annual report of the Company for the year ended 31 March, 2001;
(c) the interim report of the Company for the six months ended 30 September, 2001;
(d) the material contracts referred to in the section headed “Material contracts” in this appendix;
(e) the service contracts (including the proposed service contract between the Company and Mr. Wong) referred to in the paragraph headed “Service contracts” under the section headed “Disclosure of interests” in this appendix;
(f) the accountants’ reports from Louis Leung & Partners CPA Limited, the texts of which are set out on pages 44 to 50 of this circular;
(g) the valuation reports and certificates from Vigers Hong Kong Limited, the texts of which are set out on pages 52 to 60 of this circular;

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Capital Automation Holdings Limited

GENERAL INFORMATION

APPENDIX VI

(h) the written consents from the experts referred to in the section headed “Consents” in this appendix;
(i) the circular of the Company dated 11 March, 2002 involving, inter alia, a connected transaction relating to a subscription of new shares in the Company;
(j) the joint offer document of the Company and Shinning Crown dated 4 April, 2002 involving an unconditional cash offer by TingKong-RexCapital Securities International Limited on behalf of Shinning Crown to acquire all of the issued shares in the Company other than those shares already owned by Shinning Crown or parties acting in concert with it; and
(k) this circular.

— 66 —

Capital Automation Holdings Limited

AI assistant

APT Satellite Holdings Limited — Proxy Solicitation & Information Statement 2002

49643_rns_2002-06-28_5b0d3242-fb38-4bb2-b70f-e485b49a2e74.pdf

CAPITAL AUTOMATION HOLDINGS LIMITED

MAJOR TRANSACTION

DEFINITIONS

CAPITAL AUTOMATION HOLDINGS LIMITED

MAJOR TRANSACTION

1. INTRODUCTION

2. THE AGREEMENT DATED 10 APRIL, 2002

Parties

Asset Acquired

Consideration

(a) At Completion

Terms of the Notes

LETTER FROM THE BOARD

Further information on the Notes

3. INFORMATION ON ARTWAY, THE PRC COMPANY, THE PRC JV AND THE PROPERTY

Before the Acquisition

4. REASONS FOR THE ACQUISITION

5. PROSPECTS OF THE ENLARGED GROUP

6. GENERAL

LETTER FROM THE BOARD

7. RESPONSIBILITY STATEMENT

8. ADDITIONAL INFORMATION

1. FINANCIAL SUMMARY

Summary of financial results

2. AUDITED ACCOUNTS FOR THE YEAR ENDED 31 MARCH, 2001

REPORT OF THE AUDITORS TO THE MEMBERS OF CAPITAL AUTOMATION HOLDINGS LIMITED

Respective responsibilities of directors and auditors

Basis of opinion

Opinion

LOUIS LEUNG & PARTNERS CPA LIMITED AU YANG SUNG FAT, CPA

Consolidated Income Statement

Consolidated Balance Sheet

Balance Sheet

Consolidated Cash Flow Statement

NOTES TO THE ACCOUNTS

1) PRINCIPAL ACCOUNTING POLICIES

a) Statement of compliance

b) Basis of preparation of the financial statements and consolidation

c) Goodwill on consolidation

d) Subsidiary companies

e) Fixed assets

f) Reliance on paragraph 72 of Statement of Standard Accounting Practice No. 17

g) Investment securities

h) Other investments in securities

i) Inventories

j) Research and development

k) Hire purchase contracts

l) Operating leases

m) Translations of foreign currencies

n) Deferred taxation

o) Borrowing costs

p) Cash equivalents

q) Related parties

2) TURNOVER

3) OTHER REVENUE

4) NET LOSS BEFORE TAXATION

5) TAXATION

6) DIRECTORS’ EMOLUMENTS

7) NET LOSS ATTRIBUTABLE TO SHAREHOLDERS

8) LOSS PER SHARE

9) FIXED ASSETS

10) DEFERRED DEVELOPMENT COSTS

12) CURRENT ASSETS

13) CURRENT LIABILITIES

14) NON-CURRENT LIABILITIES

15) SHARE CAPITAL

16) SHARE PREMIUM

17) REVALUATION RESERVE

18) CONTRIBUTED SURPLUS

19) RETAINED EARNINGS/(ACCUMULATED LOSS)

20) RECONCILIATION OF OPERATING LOSS TO NET CASH OUTFLOW FROM OPERATING ACTIVITIES

21) ANALYSIS OF CHANGES IN FINANCING

22) DISPOSAL OF SUBSIDIARIES

23) OPERATING LEASE COMMITMENTS

24) BANKING FACILITIES

25) CAPITAL COMMITMENTS

26) MATERIAL RELATED PARTY TRANSACTIONS

APT Satellite Holdings Limited Proxy Solicitation & Information Statement 2002