APT Satellite Holdings Limited - Proxy Solicitation & Information Statement 2002

IMPORTANT

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

If you have sold or transferred all your shares in CAPITAL AUTOMATION HOLDINGS LIMITED (“the Company”), you should at once hand this circular to the purchaser(s) or transferee(s) or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser(s) or transferee(s).

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)

CONNECTED TRANSACTION – SUBSCRIPTION OF NEW SHARES IN THE COMPANY AND

PROPOSED INCREASE OF AUTHORISED SHARE CAPITAL AND GENERAL MANDATES TO ISSUE AND REPURCHASE SHARES

Independent financial adviser to the Independent Board Committee of CAPITAL AUTOMATION HOLDINGS LIMITED

A letter from the Independent Board Committee is set out on pages 14 to 15 of this circular.

A letter from Asia Financial containing its advice to the Independent Board Committee on the Subscription is set out on pages 16 to 28 of this circular.

A notice convening a special general meeting of the Company to be held at Queensway Room and Victoria Room, JW Marriott Hotel, 88, Queensway, Pacific Place, Hong Kong, on Wednesday, 27 March 2002, at 10:00 a.m. is set out on pages 36 to 39 of this circular. Whether or not you are able to attend the meeting, you are requested to complete the enclosed form of proxy in accordance with the instructions printed thereon and return it to the Company’s Hong Kong branch registrar, Abacus Share Registrars Limited at 5th Floor, Wing On Centre, 111 Connaught Road, Central, Hong Kong, in accordance with the instructions printed thereon as soon as possible but in any event not later than 48 hours before the time appointed for the holding of such meeting or any adjourned meeting. Completion and return of the form of proxy will not preclude you from subsequently attending and voting in person at the special general meeting or an adjourned meeting should you so wish.

11 March 2002

Page

Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
The Subscription Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Reasons for the Subscription . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Possible cash Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Principal terms of the Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Comparison of value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Highest and lowest closing prices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
Total consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
Effect of accepting the Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
Stamp duty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
Intention of Shinning Crown regarding the Company . . . . . . . . . . . . . . . . . . . . . . .	8
Shareholding structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
The Proposed Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
Public float . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
Increase in authorised share capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
General mandates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
Special General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
Additional information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
Letter from the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
Letter from Asia Financial. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	16
Appendix I – Explanatory Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	29
Appendix II – General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	33
Notice of Special General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	36

– i –

DEFINITIONS

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

“Asia Financial”

Asia Financial Capital Limited, an investment adviser registered under the Securities Ordinance (Chapter 333 of the Laws of Hong Kong) and the independent financial adviser to the Independent Board Committee

“associate” has the meaning as given to it in the Listing Rules
“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
“Directors” directors of the Company
“Executive”
the Executive Director of the Corporate Finance Division of the SFC or any delegate of the Executive Director
“Group”

the Company and its subsidiaries

“Hong Kong”
the Hong Kong Special Administrative Region of the PRC
“Independent Board Committee” an independent committee of the Board comprising Messrs. Peng Chengzhi and Ng Lap Kwan who are independent non-executive Directors
“Independent Shareholders”

Shareholders other than Mr. Wong and his associates

“Latest Practicable Date”
6 March 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

– 1 –

DEFINITIONS

“Listing Rules”
“Mr. Han”
“Mr. Wong”
“Offer”
“Offer Shares”
“Offeror”
“Placing”
“Placing Agreement”
“PRC”
“Property”
“Proposed Acquisition”
“SDI Ordinance”
Rules Governing the Listing of Securities on the Stock Exchange
Mr. Han Yuejun (韓月軍 ), who beneficially owns an 84% interest in the Property and is an independent third party not connected with the directors, chief executives or substantial shareholders of the Company, its subsidiaries, or any of their respective associates
Mr. Wong Kwong Yu (formerly known as Wong Chun Kit) (黃光裕 ), a substantial shareholder of the Company who owns about 13.4% interest of the issued share capital of the Company as at the date of this circular
the possible cash offer to be made by TingKongRexCapital on behalf of Shinning Crown in accordance with the Takeovers Code to acquire the Offer Shares
all issued Shares but excluding the Subscription Shares and any other Shares owned by Shinning Crown or persons acting in concert with it and/or acquired or agreed to be acquired by Shinning Crown or persons acting in concert with it (within the meaning of the Takeovers Code)
Shinning Crown
the placing of Shares contemplated under the Placing Agreement
the placing agreement dated 5 February 2002 entered into between Shinning Crown and TingKong-RexCapital for the purpose of restoring the public float of the Company after the close of the Offer

the People’s Republic of China

the property in the PRC and the subject of the Proposed Acquisition

the proposed acquisition of an attributable interest of up to 50% in the Property from Mr. Han

Securities (Disclosure of Interests) Ordinance (Chapter 396 of the Laws of Hong Kong)

– 2 –

DEFINITIONS

“SFC”
“Shareholder(s)”
“Share(s)”
“Shinning Crown”
“Special General Meeting”
“Stock Exchange”
“Subscription”
“Subscription Agreement”
“Subscription Price”
“Subscription Shares”
“Takeovers Code”
“TingKong-RexCapital”
“HK$”
“RMB”
“%”

the Securities and Futures Commission of Hong Kong

holder(s) of the Shares

the ordinary share(s) of HK$0.10 each in the capital of the Company
Shinning Crown Holdings Inc., a company incorporated in the British Virgin Islands with limited liability, the shares of which are wholly and beneficially owned by Mr. Wong
special general meeting of the Shareholders to be held at Queensway Room and Victoria Room, JW Marriott Hotel, 88, Queensway, Pacific Place, Hong Kong on Wednesday, 27 March, 2002 at 10:00 a.m. to consider and, if thought fit, approve, amongst others, the Subscription pursuant to the terms of the Subscription Agreement

The Stock Exchange of Hong Kong Limited

the subscription of the Subscription Shares by Shinning Crown contemplated under the Subscription Agreement
the conditional agreement dated 5 February, 2002 entered into between the Company as issuer and Shinning Crown as subscriber for the subscription of the Subscription Shares
HK$0.10 per Subscription Share
1,350,000,000 new Shares to be subscribed by Shinning Crown as contemplated under the Subscription Agreement
the Hong Kong Code on Takeovers and Mergers
TingKong-RexCapital Securities International Limited, a securities dealer registered under the Securities Ordinance (Chapter 333 of the Laws of Hong Kong)

Hong Kong dollar(s), the lawful currency of Hong Kong

Renminbi, the lawful currency of the PRC
per cent.

– 3 –

LETTER FROM THE BOARD

CAPITAL AUTOMATION HOLDINGS LIMITED

(Incorporated in Bermuda with limited liability)

Executive Directors: Lam Pang (Chairman) Ng Kin Wah

Independent Non-executive Directors: Peng Chengzhi Ng Lap Kwan

Registered Office: Cedar House 41 Cedar Avenue Hamilton HM12 Bermuda

Head Office and Principal Place of Business: Unit 6110, 61st Floor The Center 99 Queen’s Road Central Hong Kong 11 March 2002

To the Shareholders

Dear Sirs,

CONNECTED TRANSACTION – SUBSCRIPTION OF NEW SHARES IN THE COMPANY AND PROPOSED INCREASE OF AUTHORISED SHARE CAPITAL AND GENERAL MANDATES TO ISSUE AND REPURCHASE SHARES

INTRODUCTION

On 18 February 2002, the Board announced that on 5 February 2002, Shinning Crown and the Company entered into the Subscription Agreement under which Shinning Crown conditionally agreed to subscribe for and the Company conditionally agreed to issue and allot to Shinning Crown the Subscription Shares at the Subscription Price. The consideration shall be satisfied by cash. Shinning Crown is wholly owned by Mr. Wong, who is a substantial shareholder of the Company. Accordingly, the Subscription constitutes a connected transaction of the Company for the purpose of the Listing Rules.

The Independent Board Committee has been appointed to consider and advise the Independent Shareholders as to whether or not the Subscription is in the interests of the Company and whether the terms thereof are fair and reasonable so far as the Independent Shareholders are concerned. Asia Financial has been appointed as the independent financial adviser to advise the Independent Board Committee in this regard.

– 4 –

LETTER FROM THE BOARD

The purposes of this circular are to provide you with further information on, amongst other things, the increase in the authorised share capital, the Subscription and the granting of the general mandates to the Directors to issue and repurchase securities of the Company. This circular also sets out the advice from Asia Financial to the Independent Board Committee in respect of the Subscription and the recommendation of the Independent Board Committee in respect of the Subscription and gives notice of the Special General Meeting at which the necessary resolutions will be proposed to consider and, if thought fit, approve (i) the increase in the authorised share capital of the Company from HK$50,000,000 to HK$500,000,000 by the creation of 4,500,000,000 new Shares; (ii) the Subscription; (iii) the granting of a general mandate to the Directors to allot, issue and deal with the Shares not exceeding 20% of the aggregate nominal amount of the share capital of the Company in issue immediately after completion of the Subscription; (iv) the granting of a general mandate to the Directors to repurchase the Shares up to 10% of the aggregate nominal amount of the share capital of the Company in issue immediately after completion of the Subscription; and (v) the extension of the general mandate to the Directors granted pursuant to (iii) above by the addition of the number of the Shares repurchased by the Company pursuant to (iv) above.

The Subscription Agreement

Date: 5 February 2002 Subscriber: Shinning Crown, a company incorporated in the British Virgin Islands with limited liability and is wholly and beneficially owned by Mr. Wong Issuer: The Company Subscription Shares: 1,350,000,000 new Shares, representing about 83.4% of the issued share capital of the Company as enlarged by the Subscription Subscription price: HK$0.10 per Subscription Share. Conditions: Completion is conditional on, amongst other things:

the passing by the Shareholders who are permitted to vote under the Listing Rules at a general meeting of the Company of resolution(s) to approve the Subscription;
the listing of and permission to deal in the Subscription Shares being granted by the Listing Committee of the Stock Exchange (and such permission and listing not subsequently being revoked prior to the delivery of definitive share certificate(s) representing the Subscription Shares); and
if required, the Bermuda Monetary Authority granting permission to allot and issue the Subscription Shares.

– 5 –

LETTER FROM THE BOARD

Completion:

Completion of the Subscription Agreement is to take place on the business day immediately after the date upon fulfilment of all the conditions set out in the Subscription Agreement.

The Subscription Agreement constitutes a connected transaction of the Company under the Listing Rules as Mr. Wong is a substantial shareholder (as defined in the Listing Rules) of the Company.

Upon completion of the Subscription Agreement, Mr. Wong, together with his interests through Shinning Crown, will hold about 85.6% of the issued share capital of the Company as enlarged by the Subscription. It is the intention of Shinning Crown to nominate Mr. Wong to be a Director following completion of the Subscription Agreement.

None of Mr. Wong, Shinning Crown and any of the parties acting in concert with them dealt in the Shares during the preceding six months prior to 18 February 2002 and up to the Latest Practicable Date.

Reasons for the Subscription

The Company has diversified its principal activities to property investment in 2001. Prior to such diversification, the Company was principally engaged in the design, production and sale of computer-aided-design systems and machinery. The Company has constantly been seizing opportunities to expand the scope of its business activities with a view to capture any 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 Company aims at raising capital through the Subscription for financing the expansion of the Company’s property business in the PRC as and when such opportunities arise. The net proceeds of the Subscription will be about HK$135 million. Out of the net proceeds, it is intended that up to about HK$120 million will be applied for financing the expansion of the Company’s property business and the remaining will be used for general working capital purpose.

Possible cash Offer

As at the date of this circular, Mr. Wong directly owns 36,003,500 Shares, representing about 13.4% of the existing issued share capital of the Company and about 2.2% of the then issued share capital of the Company as enlarged by the Subscription. Upon completion of the Subscription Agreement, Shinning Crown will hold 1,350,000,000 Shares, representing about 83.4% of the then issued share capital of the Company as enlarged by the Subscription. Mr. Wong, together with his interest in Shinning Crown, will hold about 1,386,003,500 Shares, representing about 85.6% of the then issued share capital of the Company as enlarged by the Subscription. There are no other parties acting in concert with Mr. Wong or Shinning Crown

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LETTER FROM THE BOARD

with respect to the control of the Company. Save as disclosed above, none of Mr. Wong and Shinning Crown has any other shareholding interest in the Company prior to and after the completion of the Subscription Agreement. Under Rule 26.1 of the Takeovers Code, Shinning Crown is required to make an unconditional cash offer for all the issued Shares not already owned or agreed to be acquired by it or parties acting in concert with it. Upon completion of the Subscription Agreement, the Company will have 1,618,303,500 Shares in issue. Apart from the aforesaid 1,386,003,500 Shares, the remaining 232,300,000 Shares will be subject to the Offer.

The obligation of Shinning Crown to make the Offer is conditional upon completion of the Subscription.

The Offer will be made on the terms set out below.

Principal terms of the Offer

TingKong-RexCapital, on behalf of Shinning Crown, will make an unconditional cash offer on the following basis:

For each Share HK$0.10 in cash

Comparison of value

The offer price of HK$0.10 per Share is equivalent to the Subscription Price. The offer price of HK$0.10 per Share represents:

(a) a discount of about 65.5% to the closing price of HK$0.290 per Share quoted on the Stock Exchange prior to the suspension of trading in the Shares on 5 February 2002;
(b) a discount of about 66.1% to the average closing price of approximately HK$0.295 per Share for the ten trading days up to and including 5 February 2002;
(c) a discount of about 46.5% to the audited net asset value per Share of about HK$0.187 based on the Group’s audited accounts for the financial year ended 31 March 2001; and
(d) a discount of about 19.4% to the pro forma unaudited consolidated net tangible assets of the Group immediately after the completion of the Subscription of approximately HK$0.124 per Share.

There were no outstanding warrants or share options or securities convertible into Shares as at the Latest Practicable Date.

– 7 –

LETTER FROM THE BOARD

Highest and lowest closing prices

During the six-month period preceding the Latest Practicable Date, the highest and lowest closing prices of the Shares on the Stock Exchange were HK$0.335 per Share on 6 December 2001 and HK$0.177 per Share on 12 October 2001 and 15 October 2001 respectively.

Total consideration

As at the Latest Practicable Date, there were 268,303,500 Shares in issue. Following the completion of the Subscription, there will be 1,618,303,500 Shares in issue. At a price of HK$0.10 per Share, the entire issued share capital of the Company is valued at approximately HK$161.830 million under the Offer. REXCAPITAL (Hong Kong) Limited, the financial adviser to Shinning Crown, is satisfied that there are sufficient financial resources available to Shinning Crown to meet the full acceptance of the Offer.

Effect of accepting the Offer

By accepting the Offer, Shareholders will sell their Shares and all rights attached to them, including the rights to receive all dividends and distribution declared, made or paid on or after the posting of the offer document, which is expected to be on or about 10 April 2002 or such later date as the Executive may approve.

Stamp duty

Stamp duty at a rate of HK$1.00 for every HK$1,000 or part thereof of the amount payable in respect of relevant acceptances will be deducted from the amount payable to Shareholders who accept the Offer.

Intention of Shinning Crown regarding the Company

The Company has diversified its principal activities to property investment in 2001. Prior to such diversification, the Company was principally engaged in the design, production and sale of computer-aided-design systems and machinery. It is the intention of Shinning Crown that the existing principal activity of the Company will remain unchanged. Upon completion of the Subscription Agreement, Shinning Crown intends to nominate Mr. Wong to be a Director of the Company. Save as aforesaid, it is the intention of Shinning Crown that there will be no material change in the board of directors, existing management and employees of the Company and its subsidiaries following completion of the Subscription.

Shinning Crown is a private investment holding company incorporated in the British Virgin Islands with limited liability and was acquired specifically for the purpose of entering into the Subscription Agreement. Since its incorporation, Shinning Crown has not carried on any business other than entering into the Subscription Agreement.

– 8 –

LETTER FROM THE BOARD

Mr. Wong, aged 33, is a PRC citizen. He is the chairman of 鵬潤集團 (the Eagle Group), which is principally engaged in property investment and development in the PRC since 1996. In addition, Mr. Wong is the founder of 國美集團 (the Gome Group), a distributor of household electrical appliances in the PRC market.

Upon Mr. Wong being appointed to the Board, it is his intention to conduct a review on the financial position and operation of the Company and will formulate long-term business plans and management strategy for the business of the Company, and may explore other business opportunities and consider whether any asset disposals, asset acquisitions, business rationalisation, business divestment and/or business diversification will be appropriate in order to enhance the long term growth potential of the Company.

Shareholding structure

The table below sets out the changes in the Company’s shareholding structure immediately before and after the completion of the Subscription Agreement and the Placing Agreement:

Mr. Wong Shinning Crown_(Note 1) Golden Mount Limited(Note 2)_ Others Total	Shareholding immediately before completion of the Subscription (%) 36,003,500 (13.4) – 40,000,000 (14.9) 192,300,000 (71.7) 268,303,500 (100.0)	Shareholding immediately after completion of the Subscription (%) 36,003,500 (2.2) 1,350,000,000 (83.4) 40,000,000 (2.5) 192,300,000 (11.9) 1,618,303,500 (100.0)	Shareholding upon completion of the Placing Agreement to restore 25% public float (%) 36,003,500 (2.2) 1,177,724,125 (72.8) 40,000,000 (2.5) 364,575,875 (22.5) 1,618,303,500 (100.0)

Notes:

Shinning Crown is beneficially owned by Mr. Wong. As such, Mr. Wong will beneficially own about 85.6% interest of the Company upon completion of the Subscription.
Golden Mount Limited is wholly and beneficially owned by Chim Pui Chung, who is independent of, not connected with, and not acting in concert with Mr. Wong or Shinning Crown, the directors, chief executives or substantial shareholders of the Company, its subsidiaries, or any of their respective associates.

The Proposed Acquisition

On 5 February 2002, 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. Mr. Han is independent of, not connected with, and not acting in

– 9 –

LETTER FROM THE BOARD

concert with the Directors, chief executives or substantial shareholders (including Mr. Wong) of the Company or its subsidiaries or their respective associates. Subsequently, one of the conditions precedent had not been fulfilled and thus such sale and purchase agreement 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. Mr. Han has undertaken that he will not enter into discussion with other parties in respect of the sale and purchase of the Property during a 60-day period.

The Property is a parcel of land located at 7 Xi Ba He Bei Lane, Chaoyang District, Beijing, the PRC, with a gross area of approximately 35,300 sq.m.. The Property is planned to be developed into a commercial/ residential complex.

Further announcement will be made by the Company regarding the progress of the Proposed Acquisition. The Company will comply with the relevant Listing Rules in relation to the Proposed Acquisition in the event that a formal agreement has been reached between the parties concerned.

Public float

Upon completion of the Subscription Agreement, the shareholding of the public in the Company will be reduced to approximately 14.4%. The executive Directors, Mr. Wong and Shinning Crown have 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.

On 5 February, 2002, Shinning Crown entered into the Placing Agreement with TingKong-RexCapital whereby TingKong-RexCapital has agreed to place or procure the placing of a sufficient number of Shares to independent third parties out of the Shares to be issued and allotted to Shinning Crown pursuant to the Subscription and the Shares that may be tendered to Shinning Crown under the Offer at HK$0.10 per Share to ensure that not less than 25% of the issued share capital of the Company will be held in public hands immediately following the close of the Offer (failing which, TingKong-RexCapital is obliged to purchase the aforesaid Shares). Mr. Wong and Shinning Crown together will hold a maximum of 75 % of the issued share capital of the Company after the close of the Offer.

In view of the fact that the shareholding of the public in the Company will be reduced to approximately 14.4% upon completion of the Subscription, the Company will apply for a waiver from the Stock Exchange regarding Rule 8.08 of the Listing Rules during the Offer period on the basis that suspension of trading of Shares during the Offer period will prejudice the interest of those independent Shareholders who choose to dispose of their Shares at the market during such period.

– 10 –

LETTER FROM THE BOARD

Investors should note that trading of Shares will be suspended immediately following the close of the Offer until the public float of the Shares is restored pursuant to Rule 8.08 of the Listing Rules.

The Stock Exchange has indicated that if, at the close of the Offer, less than 25% of the Company’s securities are held by the public or if the Stock Exchange believes that:

a false market exists or may exist in the securities of the Company; or
there are too few securities of the Company in public hands to maintain an orderly market,

then it will consider exercising its discretion to suspend trading in the securities of the Company.

The Stock Exchange will also closely monitor all acquisitions or disposals of assets by the Company. The Stock Exchange has the discretion to require the Company to issue a circular to its Shareholders irrespective of the size of the proposed transaction, particularly when such proposed transaction represents a departure from the principal activities of the Company. The Stock Exchange also has the discretion to aggregate a series of transactions and any such transactions may result in the Company being treated as if it were a new listing applicant.

General

The Subscription constitutes a connected transaction of the Company for the purpose of the Listing Rules and is subject to Independent Shareholders’ approval at the Special General Meeting in which Mr. Wong and his associates will abstain from voting. The Company has established an Independent Board Committee to advise the Independent Shareholders and has appointed Asia Financial to advise the Independent Board Committee in respect of the Subscription and the Offer. The Independent Board Committee comprises Messrs. Peng Chengzhi and Ng Lap Kwan, who are the independent non-executive Directors. A composite document containing the terms of the Offer, letter from the Independent Board Committee, letter from Asia Financial, and form of acceptance and transfer to the Shareholders will be despatched within seven days after the completion date of the Subscription Agreement or such later date as the Executive may approve.

Application will be made by the Company for the listing of and dealings in the Shares to be issued and allotted under the Subscription.

INCREASE IN AUTHORISED SHARE CAPITAL

In order to provide for further flexibility and accommodate future expansion and growth, an ordinary resolution will be proposed at the Special General Meeting to approve an increase of the authorised share capital of the Company from HK$50,000,000 to HK$500,000,000 by the creation of 4,500,000,000 new Shares. Except for the Subscription, the Directors have no current intention to issue any part of the unissued share capital of the Company.

– 11 –

LETTER FROM THE BOARD

GENERAL MANDATES

In connection with the enlarged share capital as a result of the Subscription, the Directors will also seek the approval of the Shareholders for (1) the grant of a general mandate to the Directors to allot, issue and deal with the Shares not exceeding 20% of the aggregate nominal amount of the share capital of the Company in issue immediately after completion of the Subscription; (2) the grant of a general mandate to the Directors to repurchase the Shares up to 10% of the aggregate nominal amount of the share capital of the Company in issue immediately after completion of the Subscription; and (3) the extension of the general mandate to the Directors referred to in (1) above by the addition thereto of the Shares repurchased by the Company pursuant to the mandate mentioned in (2) above.

The explanatory statement required by the Listing Rules to be sent to the Shareholders in connection with the proposed general mandate to repurchase securities is set out in Appendix I to this circular. The explanatory statement contains all the information reasonably necessary to enable the Shareholders to make an informed decision on whether to vote for or against the relevant resolution at the Special General Meeting.

SPECIAL GENERAL MEETING

Set out on pages 36 to 39 of this circular is a notice convening the Special General Meeting to be held at Queensway Room and Victoria Room, JW Marriott Hotel, 88 Queensway, Pacific Place, Hong Kong on 27 March 2002 at 10:00 a.m. at which ordinary resolutions will be proposed for the approval by the Shareholders in relation to (i) the increase in the authorised share capital of the Company from HK$50,000,000 to HK$500,000,000 by the creation of 4,500,000,000 new Shares; (ii) the Subscription; (iii) the granting of a general mandate to the Directors to allot, issue and deal with the Shares not exceeding 20% of the aggregate nominal amount of the share capital of the Company in issue immediately after completion of the Subscription; (iv) the granting of a general mandate to the Directors to repurchase the Shares up to 10% of the aggregate nominal amount of the share capital of the Company in issue immediately after completion of the Subscription; and (v) the extension of the general mandate to the Directors granted pursuant to in (iii) above by the number of the Shares repurchased by the Company pursuant to in (iv) above.

Whether or not you are able to attend the Special General Meeting in person, you are requested to complete and return the enclosed proxy form in accordance with the instructions printed thereon to the Company’s Hong Kong branch registrar, Abacus Share Registrars Limited at 5th Floor, Wing On Centre, 111 Connaught Road, Central, Hong Kong but in any event not later than 48 hours before the time appointed for the holding of the Special General Meeting or any adjournment thereof. The completion of the enclosed proxy form will not preclude you from attending and voting at the Special General Meeting or any adjournment should you so wish.

– 12 –

LETTER FROM THE BOARD

ADDITIONAL INFORMATION

Your attention is drawn to the letters from the Independent Board Committee and from Asia Financial which are respectively set out on pages 14 to 15 and 16 to 28 of this circular. Additional information is also set out in the Appendix II to this circular for your information.

Yours faithfully, For and on behalf of the Board of CAPITAL AUTOMATION HOLDINGS LIMITED

Mr. Lam Pang

Chairman

– 13 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

CAPITAL AUTOMATION HOLDINGS LIMITED

(Incorporated in Bermuda with limited liability)

Registered Office: Cedar House 41 Cedar Avenue Hamilton HM12 Bermuda

Head Office and Principal Place of Business: Unit 6110, 61st Floor The Center 99 Queen’s Road Central Hong Kong

11 March 2002

To the Independent Shareholders

Dear Sirs,

CONNECTED TRANSACTION – SUBSCRIPTION OF NEW SHARES IN THE COMPANY

We refer to the circular dated 11 March 2002 issued by the Company (the “ Circular ”) of which this letter forms part. Terms defined in the Circular bear the same meanings herein unless the context otherwise requires.

We, the independent non-executive Directors, have been appointed to constitute the Independent Board Committee to consider the Subscription and Asia Financial has been appointed as the independent financial adviser to advise us in this respect.

We would like to draw your attention to the letter from the Board, as set out on pages 4 to 13 of the Circular, and the letter from Asia Financial to the Independent Board Committee which contains its opinion in respect of the Subscription, as set out on pages 16 to 28 of the Circular.

– 14 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

As members of the Independent Board Committee, we have discussed the Subscription with the management of the Company. We have also considered the principal factors taken into account by Asia Financial in arriving at its recommendation regarding the Subscription. In the context of the unfavourable effects of the Subscription to the Independent Shareholders as summarised in the section headed “Recommendation” contained in the letter from Asia Financial as set out in the Circular, we consider that the terms of the Subscription are unfair and unreasonable so far as the interests of the Independent Shareholders taken as a whole are concerned. However, given the commercial rationale for the Subscription as explained in the same section of the letter from Asia Financial, we recommend those Independent Shareholders, who believe that there is a commercial justification for the Company to proceed with the Subscription, to vote for the ordinary resolution for approving the Subscription to be proposed at the Special General Meeting.

Yours faithfully,

The Independent Board Committee

Peng Chengzhi Independent Non-executive Director

Ng Lap Kwan Independent Non-executive Director

– 15 –

LETTER FROM ASIA FINANCIAL

==> picture [57 x 34] intentionally omitted <==

Asia Financial Capital Limited 12th Floor, Asia Financial Centre 120 Des Voeux Road Central Hong Kong

11 March 2002

To the Independent Board Committee of

CAPITAL AUTOMATION HOLDINGS LIMITED

Dear Sirs,

CONNECTED TRANSACTION – SUBSCRIPTION OF NEW SHARES IN THE COMPANY

INTRODUCTION

We refer to our appointment to advise the Independent Board Committee in respect of the terms of the Subscription Agreement, particulars of which are set out in a circular (the “Circular”) to the Shareholders dated 11 March 2002 and in which this letter is reproduced. Unless the context requires otherwise, terms used in this letter shall have the same meanings as given to them under the definitions section of the Circular.

The subscriber to the Subscription is Mr. Wong, who is a substantial shareholder of the Company. Accordingly, the Subscription Agreement constitutes a connected transaction of the Company under the Listing Rules and is subject to the approval of the Independent Shareholders. In this connection, the Circular containing, amongst other things, further information relating to the Subscription Agreement, the recommendation from the Independent Board Committee and this advice letter, is despatched to the Shareholders.

In formulating our opinion, we have relied on the accuracy of the information and representations contained in the Circular and have assumed that all information and representations made or referred to in the Circular were true at the time they were made and continue to be true as at the date of the Circular. We have also relied on our discussion with the Directors regarding the information and representations contained in the Circular. We have also assumed that all statements of belief, opinion and intention made by the Directors in the Circular were reasonably made after due enquiry. We consider that we have reviewed sufficient information to reach an informed view, to justify relying on the accuracy of the information contained in the Circular and to provide a reasonable basis for our advice. We have no reason to suspect that any material facts have been omitted or withheld from the information contained or opinions expressed in the Circular nor to doubt the truth, accuracy and completeness of the information and representations provided to us by the Directors. We have not, however, conducted an independent in-depth investigation into the business and affairs of the Company, the Group, Shinning Crown, Mr. Wong, Mr. Han, the Property and their respective associates nor have we carried out any independent verification of the information supplied.

– 16 –

LETTER FROM ASIA FINANCIAL

PRINCIPAL FACTORS CONSIDERED

In arriving at our recommendation in respect of the terms of the Subscription Agreement, we have considered the following principal factors:

1. Rationale of the Subscription Agreement

Financial performance and prospects of the Group

As set out in the letter from the Board (the “Letter from the Board”) contained in the Circular, the Company was principally engaged in the design, production and sale of computer-aided-design systems and machinery and has diversified its principal activities to property investment in 2001.

We noted that the Group has incurred net losses for the five years ended 31 March 2001. Loss attributable to Shareholders for the year ended 31 March 2001 was approximately HK$14.2 million, representing an increase of around 47.6% when compared with the net loss of previous financial year. As a result of the dissolution or disposal of certain subsidiary companies with persistent records of loss making and the reduction in administrative expenses, the Group managed to control the loss attributable to Shareholders for the six months ended 30 September 2001 at approximately HK$5.0 million which is at a similar level when compared with the net loss of approximately HK$5.7 million for the corresponding period of previous financial year.

We also found that the turnover of the Group in computer-aided-design systems and machinery has dropped significantly by around 39% from approximately HK$21.5 million for the year ended 31 March 2000 to approximately HK$13.1 million for the year ended 31 March 2001. Turnover of the Group further declined by approximately 67% from approximately HK$8.6 million for the six months ended 30 September 2000 to approximately HK$2.8 million for the six months ended 30 September 2001. We were informed by the Directors that fierce competition in the trade from domestic players offering similar products and the ever decreasing selling prices of computer-aided-design software systems accounted for the significant decline in turnover of the Group.

Given the continuation of unsatisfactory financial performance of the Group in the past and the difficult operating environment of the software industry in the PRC, the Directors have admitted in the annual report for the year ended 31 March 2001 that the Group has been unable to turnaround the existing principal business despite several years of hard work and efforts. Under such circumstances, the Directors have determined to actively seek for opportunities in new investments, in particular, property and real estates investments, which will bring about a steady income to the Group. In this connection, the Group has diversified its

– 17 –

LETTER FROM ASIA FINANCIAL

principal activities into property investment by completing the acquisition of three office units totalling 1,388 square metres at Chaoyang District, Beijing in June 2001. The property has been leased for a term of two years from 1 July 2001 to 30 June 2003 at a rent of US$18 (approximately HK$140.4) per square metre and is generating an annual rental income before expense and tax of HK$2.34 million for the Group since 1 July 2001, representing a hefty rental yield of approximately 9.1%.

As mentioned, the Company has constantly been seizing opportunities to expand the scope of its business activities with a view to capture any opportunities which may become available as a result of the continuous development of the PRC economy and the accession of the PRC into the World Trade Organisation. As mentioned in the Letter from the Board, the Company entered into the Letter of Intent in respect of the Proposed Acquisition of up to 50% attributable interest in a development project in Chaoyang District, Beijing. The Directors consider that the Proposed Acquisition represents another opportunity for the Company to capitalise on the growth of the market in Beijing as a result of the 2008 Olympics and the accession of the PRC into the World Trade Organisation.

Use of proceeds

It is intended that, out of the net proceeds of approximately HK$135 million, up to approximately HK$120 million will be applied for financing the expansion of the property business of the Group and the remaining will be used for general working capital purpose.

As explained above, the historical financial performance of the Group has been adversely affected by the difficult operating environment of the software industry in the PRC. Accordingly, it is an appropriate strategy for the Company to diversify into other business areas with an objective to enhance the earnings prospects of the Group. In this connection, the Group has successfully diversified its principal business into property investment in 2001. As detailed in the subsection headed “New Management” below, the experience of the management of the Company in property development and investment will be further enhanced following the appointment of Mr. Wong as a Director of the Board. Accordingly, the Group should be in a position to develop its business in the property market despite that the property business is different from the existing software operation of the Group. In view that the Group has entered into the Letter of Intent to lock up an opportunity to invest in a property development project and there is no other appropriate investment opportunity available to the Group, we concur with the Directors that it is an appropriate time for the Group to raise new funding for potential investment projects.

– 18 –

LETTER FROM ASIA FINANCIAL

Other means of fund raising

We noted that the Group has successfully raised new funding of approximately HK$7.7 million by way of placing of new shares in October 2001. Based on our discussion with the Directors, the Directors have considered various other means of fund raising including, inter alia, debt financing, placing of new shares to independent investors and rights issue. However, given the prevailing difficult market sentiment in Hong Kong and the unsatisfactory financial performance of the Group, the Directors confirmed that they have experienced difficulties in securing independent underwriters in the market for raising a sizable amount of HK$135 million even if the issue price is as low as the Subscription Price of HK$0.10 per Share.

New Management

It is the intention of Shinning Crown to appoint Mr. Wong to be a Director following completion of the Subscription Agreement (“Completion”). As detailed in the Letter from the Board, Mr. Wong is the chairman of 鵬潤集團 (the Eagle Group) which is principally engaged in property investment and development in the PRC since 1996. We were further advised that 鵬潤集團 (the Eagle Group) has completed the development of a large scale residential project and an office building in Beijing. The residential development project, comprising 6 residential towers with a total gross floor area of around 300,000 square metres, has been partly sold and partly held for investment purpose. The office development project, comprising a 32-storey office tower with a total floor area of around 200,000 square metres, has also been partly sold and partly held for investment purpose. In view of the solid experience of Mr. Wong in property development and investment market, we believe that the appointment of Mr. Wong as a Director to the Board could build up the management’s capability in capturing the business opportunities in the PRC property market.

Based on the commercial rationale as explained above, it is sensible for the Company to enter into the Subscription agreement and put forward the Subscription to the Independent Shareholders for approval.

2. Terms of the Subscription Agreement

Under the Subscription Agreement, Shinning Crown agreed to subscribe 1,350,000,000 new Shares at HK$0.10 per Subscription Share.

Apart from the business fundamental and prospects of the Company, we have also assessed the Subscription Price in terms of (a) the historical level of Share price and (b) the historical level of Share turnover as set out below.

– 19 –

LETTER FROM ASIA FINANCIAL

(a) Historical level of Share price

We summarise below the highest and the lowest closing prices of the Shares on the Stock Exchange from 1 August 2001 to 5 February 2002, being the last trading day immediately prior to the date of the joint announcement of the Company and Shinning Crown of 18 February 2002 (the “Joint Announcement”) and up to the Latest Practicable Date (the “Relevant Period”):

	Highest	Lowest
	Closing	Closing
Month	Price	Price
	(HK$)	(HK$)
2001
August	0.410	0.250
September	0.375	0.190
October	0.230	0.177
November	0.275	0.188
December	0.335	0.270
2002
January	0.320	0.245
February (1 February to 5 February)	0.290	0.290
February (19 February to 28 February)	0.300	0.270
March (1 March up to and including
the Latest Practicable Date)	0.270	0.260
Source: Infocast

During the Relevant Period, the highest closing price and lowest closing price of the Shares on the Stock Exchange were HK$0.410 on 30 August 2001 and HK$0.177 on 15 October 2001 respectively. The Subscription Price of HK$0.10 per Share falls below the lowest closing price of the Shares during the Relevant Period.

– 20 –

LETTER FROM ASIA FINANCIAL

The chart below shows the historical performance of the Shares during the Relevant Period:

==> picture [339 x 203] intentionally omitted <==

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

0.50
0.45
0.40
0.35
0.30
0.25
0.20
0.15
0.10
0.05
0.00
Aug-01 Sep-01 Oct-01 Nov-01 Dec-01 Jan-02 Feb-02 Mar-02
----- End of picture text -----

Source: Infocast

The Subscription Price of HK$0.10 per Share represents:

(i) a discount of about 65.5% to the closing price of HK$0.290 per Share as quoted on the Stock Exchange on 5 February 2002, being the date of the Agreement;
(ii) a discount of about 66.1% to the average closing price of HK$0.295 per Share as quoted on the Stock Exchange for the last ten trading days ended on 5 February 2002;
(iii) a discount of about 65.9% to the average closing price of HK$0.293 per Share as quoted on the Stock Exchange for the last 30 trading days ended on 5 February 2002;
(iv) a discount of about 63.0% to the closing price of HK$0.270 per Share as quoted on the Stock Exchange on the Latest Practicable Date;
(v) a discount of about 46.5% to the audited consolidated net tangible assets of the Group as at 31 March 2001 of HK$0.187 per Share;
(vi) a discount of about 61.8% to the unaudited consolidated net tangible assets of the Group as at 30 September 2001 of HK$0.262 per Share;

– 21 –

LETTER FROM ASIA FINANCIAL

(vii) a discount of about 59.7% to the pro forma unaudited consolidated net tangible assets immediately before Completion of approximately HK$0.248 per Share as shown in the section headed “Financial effects on the Group” below; and
(viii) a discount of about 19.4% to the pro forma unaudited consolidated net tangible assets immediately after Completion of approximately HK$0.124 per Share as shown in the section headed “Financial effects on the Group” below.

For the purpose of assessing the discount level of the issue price of the shares relative to their respective closing prices, we have identified below 7 recent funding raising exercises of companies listed on the Stock Exchange with issue sizes of over HK$100 million:

						Discount/
			Closing price			(premium) of
			as at the last	Discount/		placing price
			trading day	(premium) of		to 10-day
			immediately	placing price	10-day	average
			preceding	to closing	average	closing
			their	price as	closing price	price up
	Number of	Placing	respective	at the last	up the last	to the last	Fund
Company name	placing shares	price	announcements	trading day	trading day	trading day	raised
	(in million)	(in HK$)	(in HK$)	(in HK$)	(in HK$)	(in HK$)	(in HK$)
	A	B	C	= 1 -B/C	D	= 1- B/D	= A*B
Yanion International
Holdings Limited	86	1.260	1.4100	10.64%	1.3500	6.67%	108,360,000
Global Bio-chem
Technology Group
Company Limited	256	1.860	2.0750	10.36%	1.8600	0.00%	476,160,000
E-life International
Limited	2,256	0.050	0.2150	76.74%	0.1959	74.48%	112,800,000
Chaoda Modern
Agriculture (Holdings)
Limited	223	2.300	2.5750	10.68%	2.4575	6.41%	512,900,000
Shum Yip Investment
Limited	50	2.075	2.2750	8.79%	2.3875	13.09%	103,750,000
Wah Lee Resources
Holdings Limited	2,000	0.052	0.0580	10.34%	0.0293	(77.47%)	104,000,000
Forefront International
Holdings Limited	40	2.950	3.2000	7.81%	3.2200	8.39%	118,000,000
The Company	1,350	0.100	0.2900	65.52%	0.2950	66.10%	135,000,000

– 22 –

LETTER FROM ASIA FINANCIAL

We reckoned that these comparable companies are engaged in different industries and have different fundamentals and, therefore, may not be totally representative for direct comparison purpose. Nevertheless, these identified fund raising exercises may be able to reflect the recent market trend in terms of pricing.

As shown in the above table, the discount levels of the issue prices of the shares relative to their respective last trading prices immediately preceding the relevant announcements ranged from approximately 7.81% to 76.74%. However, it was noted that the range of discounts is skew towards the lower end. Except the funding raising exercise of E-life International Limited, the discount levels of all the remaining six exercises fall below 11.0%. Accordingly, the discount of the Subscription Price of approximately 65.5% to the closing price per Share immediately preceding the date of the Joint Announcement compares unfavourably with those of the recent funding raising exercises in the market.

We also noted that the Company arranged a placing of Shares with an independent placing agent in September 2001 and the placing price of HK$0.18 per Share under such placing represented (i) a discount of approximately 10% to the closing price per Share on the date of the placing agreement and (ii) a discount of approximately 40.2% to the average closing price per Share for the last ten trading days immediately prior to and including the date of the placing agreement. The discount of the Subscription Price to closing price of approximately 65.5% and the discount of the Subscription Price to 10-day average closing price of approximately 66.1% are at a level lower than the discounts of the previous fund raising exercise of the Group.

(b) Historical level of Share turnover

The following chart sets out the turnover of the Shares on the Stock Exchange during the Relevant Period:

Daily turnover of the Shares

==> picture [330 x 201] intentionally omitted <==

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

6000000
5000000
4000000
3000000
2000000
1000000
0
Aug-01 Sep-01 Oct-01 Nov-01 Dec-01 Jan-02 Feb-02 Mar-02
Source: Infocast
----- End of picture text -----

– 23 –

LETTER FROM ASIA FINANCIAL

The highest, lowest and average daily volume of the Shares traded on the Stock Exchange and the percentage of the average daily trading volume as compared with the total number of the Shares in issue as at the Latest Practicable Date during the Relevant Period were tabulated below:

					Percentage
					of average
					daily trading
	Highest	Lowest		Average	volume to
	daily	daily		daily	total number
	trading	trading		trading	of Shares
Month	volume	volume		volume	in issue
	(in number	(in number	(in number		(%) (Note)
	of Shares)	of Shares)	of Shares)
2001
August	5,002,000	0		426,174	0.159
September	2,770,000	0		340,300	0.127
October	640,000	0		93,400	0.035
November	936,000	0		256,636	0.096
December	1,260,000	0		269,579	0.100
2002
January	1,664,000	0		151,000	0.056
February	304,000	0		117,091	0.044
March (1 March up to the
Latest Practicable Date)	512,000	0		101,000	0.038

Source: Infocast

Note: based on the 268,303,500 Shares in issue as at the Latest Practicable Date.

As shown in the above table, the average daily trading volume of the Shares in each month was fairly thin and ranged from 93,400 Shares to 426,174 Shares, representing about 0.035% to 0.159% of the total number of Shares in issue as at the Latest Practicable Date respectively. In addition, during the Relevant Period, there were 62 trading days out of a total of 141 trading days on which no trading of the Shares on the Stock Exchange was recorded.

Based on the above analysis, we reckoned that the Subscription Price represents deep discounts to the historical trading prices of the Shares and the net asset value per Share immediately prior to Completion. With reference to the recent fund raising exercises in the market and the previous placing of Shares of the Company, the Subscription Price also compares unfavourably in terms of its discount level to closing price. Under such circumstances, we consider that the Subscription Price is unfavourable so far as the Independent Shareholders are concerned.

– 24 –

LETTER FROM ASIA FINANCIAL

However, as the trading volume of the Shares was fairly thin, it is not unreasonable for any subscriber, who is committed to subscribe a sizable volume of Shares, to bargain for a substantial discount to market price from the Company.

3. Financial effects on the Group

(a) Net tangible assets

As provided by the Directors, the effect on the pro forma adjusted unaudited consolidated net tangible assets of the Group immediately after Completion is set out as follows:

		Per Share
	HK$’000	HK$
Unaudited consolidated net tangible assets
of the Group immediately as at
30 September 2001_(Note 1)_	58,722	0.262
Add:
Net proceeds arising from issue and
allotment of new Shares_(Note 2)_	7,734
Proforma adjusted unaudited consolidated
net tangible assets of the Group
immediately before Completion_(Note 3)_	66,456	0.248
Add:
Net proceeds arising from issue and
allotment of new Shares under
the Subscription Agreement	135,000
Proforma adjusted unaudited consolidated
net tangible assets of the Group
after Completion_(Note 4)_	201,456	0.124
Notes:

Based on 224,003,500 Shares in issue as at 30 September 2001
Based on the announcement of the Company dated 12 September 2001 in respect of a placing of new shares pursuant to a placing agreement dated 12 September 2001 which has been completed in October 2001
Based on 268,303,500 Shares in issue as at the Latest Practicable Date
Based on 1,618,303,500 Shares in issue after Completion

– 25 –

LETTER FROM ASIA FINANCIAL

As illustrated in the above, the pro forma adjusted unaudited consolidated net tangible assets of the Company would increase substantially by approximately 203% from approximately HK$66.5 million before Completion to approximately HK$201.5 million after Completion.

On a per Share basis, the pro forma adjusted unaudited consolidated net tangible asset value per Share would be diluted by approximately 50% from approximately HK$0.248 per Share to approximately HK$0.124 per Share as a result of the Subscription. This dilution effect in net asset value is primarily due to the substantial discount of the Subscription Price to the pro forma adjusted unaudited consolidated net tangible asset value per Share prior to Completion. Although the Subscription will enhance the capital base of the Group, we consider that the dilution effect on net asset value per Share is unfavourable to the Independent Shareholders as a whole.

(b) Liquidity

As set out in the interim report of the Company for the six months ended 30 September 2001, the Group has approximately HK$5.4 million of cash and bank balances. As the Subscription will enable the Company to raise net proceeds of approximately HK$135 million, it is expected that the cash and bank balances of the Group will increase by the same amount upon Completion. Accordingly, we consider that the liquidity of the Group will be substantially improved as a result of the Subscription.

(c) Earnings

Based on the annual report of the Company for the year ended 31 March 2001, the audited consolidated loss attributable to the Shareholders was approximately HK$14.2 million for the year ended 31 March 2001.

Although the Company has entered into the Letter of Intent and may proceed with the Proposed Acquisition, the earnings prospects of the Group are still subject to various factors such as the development plan and the market reception of the property project. Accordingly, it is difficult for us to ascertain at this stage whether the application of the net proceeds from Subscription will eventually improve the earnings of the Group.

(d) Gearing

As set out in the interim report of the Company for the six months ended 30 September 2001, the total unaudited liabilities of the Group as at 30 September 2001 was approximately HK$3.9 million, and the unaudited consolidated net tangible assets of the Group were approximately HK$58.7 million. On such basis, the gearing ratio of the Group was staying at a low level of approximately 6.6%.

– 26 –

LETTER FROM ASIA FINANCIAL

Upon completion of the Subscription Agreement, the gearing ratio of the Group would be reduced to approximately 1.9% based on (i) the total unaudited liabilities of the Group of approximately HK$3.9 million as at 30 September 2001 and (ii) the pro forma adjusted unaudited net tangible assets of the Group after Completion of approximately HK$201.5 million. As we noted from the interim report of the Company for the six months ended 30 September 2001 that the Company has no outstanding bank loans as at 30 September 2001, there would not be a significant benefit to the Company as a result of the improvement of gearing position.

4. Dilution effect on shareholding

Under the Subscription Agreement, the Company would issue 1,350,000,000 new Shares upon Completion, representing (i) approximately 503.2% of the existing issued number of Shares; or (ii) approximately 83.4% of the issued share capital of the Company as enlarged by the issue of such Shares.

On the above basis, the aggregate interests of the Independent Shareholders in the Company will be diluted from approximately 86.6% to approximately 14.4%, representing a reduction of approximately 83.4%.

Having considered that (i) the Subscription Price is at a deep discount to the historical market price of the Shares; (ii) the dilution effect on the pro forma adjusted unaudited consolidated net tangible asset value per Share; and (iii) it is difficult to ascertain at this stage if the Subscription will eventually improve the earnings of the Group, we consider that the dilution effect on the shareholding of the Independent Shareholders is unfair and unreasonable .

RECOMMENDATION

Based on the technical analysis in respect of the Subscription Price and the financial effects of the Subscription on the Group as detailed above, we are of the view that the terms of the Subscription are unfavourable to the Independent Shareholders in the following sense:

the Subscription Price represents deep discounts to the historical trading prices of the Shares and the net asset value per Share immediately prior to Completion;
notwithstanding that the capital base of the Company would be enhanced, there would be a substantial dilution to the net asset value per Share upon Completion; and
there would be a heavy dilution to the shareholding of the Independent Shareholders as a result of the Subscription.

– 27 –

LETTER FROM ASIA FINANCIAL

As the Company at this stage has no definite plan to utilise the net proceeds of the Subscription, we could not envisage and quantify any immediate and apparent benefits to the Group, other than the improvement in cash position, as a result of the Subscription. In the context of the unfavourable effects of the Subscription to the Independent Shareholders as summarised above, we consider that the terms of the Subscription are unfair and unreasonable so far as the interests of the Independent Shareholders taken as a whole are concerned.

However, having regard to the historical financial performance of the Group and the difficult operating environment of the software industry in the PRC, we agreed with the Directors that the Company should seek for other investment opportunities which will be able to bring about a steady income to the Group. Given the weak market sentiment in Hong Kong and the unsatisfactory financial performance of the Group, it is understandable that the Company would experience difficulties in arranging debt or equity financing in the market. In light of the lack of financial resources, the Company may not be in a position to secure any appropriate investment if such opportunity arises. As mentioned, the Company has already entered into the Letter of Intent in respect of the Proposed Acquisition of up to 50% attributable interest in a development project in Chaoyang District, Beijing. We were advised by the Directors that currently there is no other appropriate investment opportunity available to the Group. In the event that the Company fails to complete the Subscription and to secure other source of financing, the Company may not be able to proceed with the Proposed Acquisition. Accordingly, the Subscription could be considered as a financial support of Mr. Wong to the Company for implementing its business diversification plan. Given the commercial rationale for the Subscription as explained above, we recommend the Independent Board Committee to advise those Independent Shareholders, who believe that there is a commercial justification for the Company to proceed with the Subscription, to vote for the ordinary resolution for approving the Subscription to be proposed at the Special General Meeting.

Independent Shareholders should note that the Offeror will make the Offer to the Independent Shareholders only if the Subscription Agreement is completed. Details of the Offer and our advice letter in respect of the terms of the Offer will be set out in the composite offer document to be despatched to the Shareholders if the Offer is to be made. Independent Shareholders are reminded that if the Subscription Agreement is not approved and accordingly the Subscription Agreement could not become unconditional, the Offer will not be made.

Yours faithfully, For and on behalf of

Asia Financial Capital Limited Alan Fung

Deputy Managing Director

– 28 –

EXPLANATORY STATEMENT

APPENDIX I

SECURITIES BUY BACK MANDATE

The Listing Rules permit companies with primary listing on the Stock Exchange to repurchase their own securities, subject to certain restrictions as set out in Rules 10.05 and 10.06 of the Listing Rules, on the Stock Exchange. At the Special General Meeting, an ordinary resolution will be proposed to grant to the Directors general mandate to repurchase (the “Repurchase Mandate”) Shares up to 10% of the aggregate nominal amount of the share capital of the Company in issue as at the date of the passing of the relevant resolution as enlarged immediately after completion of the Subscription. The Shares proposed to be purchased by the Company are fully paid up.

The Company is empowered by its memorandum of association and bye-laws to repurchase its Shares.

The Company is required by the Listing rules to send to the Shareholders an explanatory statement containing all the information reasonably necessary to enable them to make an informed decision on whether to vote for or against the Repurchase Mandate. Such information is provided below:

(a) Share capital

As at the Latest Practicable Date, the issued share capital of the Company comprised 268,303,500 Shares. Subject to the passing of the relevant ordinary resolution and on the basis that (i) no further securities are issued or repurchased between the Latest Practicable Date and the date of the Special General Meeting; and (ii) the Subscription is approved at the Special General Meeting, the Company will be allowed under the Repurchase Mandate to repurchase a maximum of 161,830,350 Shares (on the basis of the then enlarged issued share capital of 1,618,303,500 Shares of the Company as a result of the Subscription) during the period ending on the earlier of the conclusion of the next annual general meeting of the Company or the expiration of the period within which the next annual general meeting of the Company is required to be held by law or the date upon which such authority is revoked or varied by an ordinary resolution of the Shareholders in the general meeting.

(b) Shareholders’ approval

The Listing Rules require that all proposed repurchases of securities by a company with a primary listing on the Stock Exchange must be approved by shareholders in advance by means of an ordinary resolution either by way of a general mandate or by a specific approval in relation to a specific transaction.

– 29 –

EXPLANATORY STATEMENT

APPENDIX I

(c) Reason for the repurchase

The Directors currently have no intention of repurchasing securities of the Company. Such repurchases may, depending on market conditions and funding arrangements at the time, lead to an enhancement of the net asset value per Share and will only be made when the Directors believe that such a repurchase will benefit the Company and the Shareholders.

(d) Effect of the Hong Kong Code on Takeovers and Mergers (the “Code”)

If on the exercise of the power to repurchase Shares pursuant to the Repurchase Mandate, a Shareholder’s proportionate interest in the voting rights of the Company increases, such increase will be treated as an acquisition for the purpose of Rule 32 of the Code. As a result, a Shareholder or group of Shareholders acting in concert could obtain or consolidate control of the Company and, depending on the level of increase of the Shareholder’s interest, may become obliged to make a mandatory offer in accordance with Rules 26 and 32 of the Code.

The Company will not exercise the Repurchase Mandate to the extent that the number of Shares held by the public will fall below 25% of the total issued Shares.

(e) Terms and conditions of the repurchases

(1) Source of funds

Repurchases of securities must be financed out of funds legally available for the purpose in accordance with the memorandum of association and bye-laws of the Company and the laws of Bermuda.

The Companies Act 1981 of Bermuda (as amended) provides that the Company cannot repurchase its own Shares if on the date on which the repurchase is to be effected, there are reasonable grounds for believing that the Company is or after such repurchase would be, unable to pay its liabilities as they become due.

– 30 –

EXPLANATORY STATEMENT

APPENDIX I

(f) Share prices

The highest and lowest closing prices at which the Shares have traded in each of the past twelve months were as follows:

	Shares
	Highest	Lowest
	HK$	HK$
2001
March	0.395	0.340
April	0.360	0.325
May	0.380	0.300
June	0.440	0.320
July	0.340	0.250
August	0.410	0.250
September	0.375	0.190
October	0.230	0.177
November	0.275	0.188
December	0.335	0.270
2002
January	0.320	0.245
February	0.300	0.265

(g) General

The Directors have undertaken to the Stock Exchange that they will exercise the Repurchase Mandate in accordance with the applicable laws of Bermuda and the Listing Rules.

The Directors anticipate that there might be a material adverse impact to the working capital or gearing position of the Company in the event that the Repurchase Mandate is exercised in full during the proposed repurchase period. However, the Directors do not propose to exercise the Repurchase Mandate to such extent as would, in the circumstances, have a material adverse effect on the working capital requirements of the Company or the gearing levels which, in the opinion of the Directors, are from time to time appropriate for the Company.

None of the Directors nor, to the best of their knowledge having made all reasonable enquiries, their respective associates have any intention to sell any Shares to the Company or its subsidiaries if the Repurchase Mandate is approved by Shareholders at the Special General Meeting and exercised by the Company.

– 31 –

EXPLANATORY STATEMENT

APPENDIX I

No other connected person (as defined in the Listing Rules) of the Company has notified the Company that he has a present intention to sell any Shares to the Company.

No securities have been repurchased by the Company or any of its subsidiaries during the six months preceding the date of this circular.

– 32 –

GENERAL INFORMATION

APPENDIX II

RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Group. The Directors jointly and severally accept full responsibility for 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 herein misleading.

The information relating to Mr. Wong and Shinning Crown included in this circular has been provided by Mr. Wong and Shinning Crown. Mr. Wong accepts full responsibility for the accuracy of the information relating to Mr. Wong and Shinning Crown and there are no other facts relating to Mr. Wong and Shinning Crown not contained in this circular, the omission of which would make any statement in this circular misleading.

SHARE CAPITAL

As at the Latest Practicable Date, the authorised and issued share capital of the Company and the number of Shares to be issued under the Subscription Agreement were as follows:

Authorised: 500,000,000 Shares Issued and fully paid: 268,303,500 Shares To be issued under the Subscription Agreement: 1,350,000,000 Shares	HK$ 50,000,000

	26,830,350

	135,000,000

All of the Shares currently in issue rank pari passu in all respects with each other, including, in particular, as to dividends, voting rights and capital. No part of the share capital of the Company is listed or dealt in on any stock exchange other than the Stock Exchange.

Save as disclosed in this circular, none of the Directors is interested, directly or indirectly, in any assets which have been acquired or disposed of by or leased to or are proposed to be acquired or disposed of by or leased to any member of the Group since 31 March 2001, the date to which the latest published audited accounts of the Company were made up.

– 33 –

GENERAL INFORMATION

APPENDIX II

DISCLOSURE OF INTERESTS

(a) As at the Latest Practicable Date, none of the Directors or the chief executive of the Company had, or was taken or deemed to have under section 28 of the SDI Ordinance or under section 31 of, or Part I of the Schedule to, the SDI Ordinance, any interests in the securities of the Company or any of its associated corporations, within the meaning of the SDI Ordinance, or any interests which were entered in the register kept by the Company pursuant to section 29 of the SDI Ordinance or which were required to be notified to the Company and the Stock Exchange pursuant to the Model Code.
(b) None of the Directors has entered or is proposing to enter into a service contract with any member of the Group, excluding contracts expiring or determinable by the employer within one year without payment of compensation, other than statutory compensation.
(c) Save as disclosed in this circular, none of the Directors has any material interest in any contract or arrangement subsisting at the Latest Practicable Date and which is significant in relation to the business of the Group.

SUBSTANTIAL SHAREHOLDER

As at the Latest Practicable Date, according to the register of substantial shareholders kept by the Company under section 16(1) of the SDI Ordinance and so far as is known to the Directors, the following persons were interested or taken or deemed to be interested in 10% or more of the nominal value of the issued share capital of the Company:

	Number	of Shares	held
	Direct	Deemed	Shareholding
Name of shareholder	interest	interest	percentage
Golden Mount Limited	40,000,000	–	14.91%
Wong Kwong Yu	36,003,500	–	13.42%

Note: Golden Mount Limited holds 40,000,000 Shares and is solely owned by Mr. Chim Pui Chung.

Save as disclosed herein, the Directors are not aware of any other person who, as at the Latest Practicable Date, was directly or indirectly interested in 10% or more of the issued share capital of any member of the Group.

MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, save as disclosed in the Company’s interim report for the six months ended 30th September, 2001, the Directors are not aware of any material adverse changes in the financial position or trading prospects of the Group since 31st March 2001, the date to which the latest audited financial statements of the Group were made up.

– 34 –

GENERAL INFORMATION

APPENDIX II

LITIGATION

No member of the Group is at present engaged in any litigation or claim of material importance to the Group and no litigation or claim of material importance to the Group is known to the Directors to be pending or threatened by or against any member of the Group.

QUALIFICATION AND CONSENT

Asia Financial is an investment adviser registered under the Securities Ordinance (Chapter 333 of the Laws of Hong Kong).

Asia Financial has given and has not withdrawn its written consent to the issue of this circular with the inclusion of and references to its name and/or letter in the form and context in which they respectively appear.

MISCELLANEOUS

(a) The secretary of the Company is Ms. Cecilia Tang, an associate member of the Hong Kong Society of Accountants.
(b) The branch share registrar and transfer office of the Company in Hong Kong is Abacus Share Registrars Limited, 5th Floor, Wing On Centre, 111 Connaught Road, Central, Hong Kong.
(c) The English text of this circular shall prevail over the Chinese text for the purpose of interpretation.

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 up to and including 27 March 2002:

(a) the annual reports of the Company for the two years ended 31 March 2001;
(b) the Subscription Agreement;
(c) the Letter of Intent;
(d) the letter from Asia Financial to the Independent Board Committee in relation to the Subscription as set out on pages 16 to 28 of this circular; and
(e) the written consent from Asia Financial referred to in section headed “Qualification and Consent” in this Appendix.

– 35 –

NOTICE OF SPECIAL GENERAL MEETING

CAPITAL AUTOMATION HOLDINGS LIMITED

(Incorporated in Bermuda with limited liability)

NOTICE IS HEREBY GIVEN that a special general meeting of CAPITAL AUTOMATION HOLDINGS LIMITED (the “Company”) will be held at Queensway Room and Victoria Room, JW Marriott Hotel, 88, Queensway, Pacific Place, Hong Kong on Wednesday, 27 March 2002, at 10:00 a.m. for the purpose of considering and, if thought fit, passing, with or without amendments, the following resolutions:

ORDINARY RESOLUTIONS

“ THAT the authorised share capital of the Company be and is hereby increased from HK$50,000,000 to HK$500,000,000 by the creation of additional 4,500,000,000 shares of HK$0.10 each (“Shares”) ranking pari passu in all respects with the existing shares of HK$0.10 each in the share capital of the Company.”
“ THAT subject to and conditional upon:
(a) ordinary resolution numbered 1 aforesaid being passed;
(b) the listing of and permission to deal in the Subscription Shares (as defined in a circular dated 11 March 2002 dispatched to the shareholders of the Company (“Circular”), a copy of which is marked “A” and has been initiated by the Chairman of this meeting for the purpose of identification) being granted by the Listing Committee of The Stock Exchange Hong Kong Limited (and such permission and listing not subsequently being revoked prior to the delivery of definitive share certificate(s) representing the Subscription Shares); and
(c) if required, the Bermuda Monetary Authority granting permission to allot and issue the Subscription Shares,

the Subscription Agreement (as defined in the Circular), the execution thereof by a director of the Company (“Director”) and the transactions contemplated under the Subscription Agreement and the performance by the Company thereof be and are hereby confirmed, ratified and approved; and that any one director of the Company be and is hereby authorised to sign or execute such other documents or supplemental agreements/deeds on behalf of the Company and to do all such things and take all such action as he may consider necessary or desirable for the purpose of giving effect to the Subscription Agreement and completing the

– 36 –

NOTICE OF SPECIAL GENERAL MEETING

transactions contemplated by the Subscription Agreement with such changes as such Director may consider necessary, desirable or expedient, including but not limited to, allotting and issuing new shares of the Company.”

“ THAT
(a) subject to paragraph (c) of this resolution, the exercise by the Directors during the Relevant Period (as hereinafter defined) of all the powers of the Company to allot, issue and deal with additional Shares in the capital of the Company and to make or grant offers, agreements and options which might require the exercise of such power be and is hereby generally and unconditionally approved in substitution for and to the exclusion of any existing authority previously granted;
(b) the approval in paragraph (a) of this resolution shall authorise the Directors during the Relevant Period to make or grant offers, agreements and options which might require the exercise of such power after the end of the Relevant Period;
(c) the aggregate nominal amount of share capital in the Company allotted or agreed conditionally or unconditionally to be allotted, whether pursuant to an option or otherwise, and issued by the Directors pursuant to the approval in paragraph (a) of this resolution, otherwise than pursuant to (i) any rights issue (as defined below); (ii) any issue of Shares in the Company under any option scheme or similar arrangement for the time being adopted for the grant or issue to employees of the Company and/or any of its subsidiaries of Shares or rights to acquire for Shares in the Company; (iii) any issue of Shares in the Company upon the exercise of the subscription rights attaching to any warrants of the Company or any securities which are convertible into Shares of the Company or (iv) any issue of Shares in the Company as scrip dividends pursuant to the Bye-laws of the Company from time to time, shall not exceed 20% of the aggregate nominal amount of the issued share capital of the Company immediately after completion of the Subscription (as defined in the Circular), and the said approval shall be limited accordingly; and
(d) for the purpose of this resolution:

“Relevant Period” means the period from the passing of this resolution until whichever is the earliest of:

(i) the conclusion of the next annual general meeting of the Company;

– 37 –

NOTICE OF SPECIAL GENERAL MEETING

(ii) the expiration of the period within which the next annual general meeting of the Company is required by law or the Company’s Byelaws to be held; or
(iii) the date upon which the authority set out in this resolution is revoked or varied by an ordinary resolution in any general meeting of the Company; and

“right issue” means an offer of Shares of the Company open for a period fixed by the Directors to holders of Shares of the Company whose names appear on the register of members of the Company on a fixed record date in proportion to their then holdings of such Shares as at that date (subject to such exclusion or other arrangements as the Directors may deem necessary or expedient in relation to fractional entitlements or overseas Shareholders having regard to any restrictions or obligations under the laws of, or the requirements of any recognised regulatory body or any stock exchange in, any territory applicable to the Company).”

“ THAT
(a) subject to paragraph (b) of this resolution, the exercise by the Directors during the Relevant Period (as hereinafter defined) of all the powers of the Company to purchase its own securities, subject to the applicable laws and the requirements of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, be and is hereby approved generally and unconditionally in substitution for and to the exclusion of any existing authority previously granted;
(b) the aggregate nominal amount of share capital in the Company which may be purchased by the company pursuant to the approval in paragraph (a) of this resolution shall not exceed 10% of the aggregate nominal amount of the share capital of the Company in issue immediately after completion of the Subscription, and the said approval shall be limited accordingly; and
(c) for the purposes of this resolution, “Relevant Period” means the period from the passing of this resolution until whichever is the earliest of:
- (i) the conclusion of the next annual general meeting of the Company;
- (ii) the expiration of the period within which the next annual general meeting of the Company is required by law or the Company’s Byelaws to be held; or
- (iii) the date upon which the authority set out in this resolution is revoked or varied by an ordinary resolution in any general meeting of the Company.”

– 38 –

NOTICE OF SPECIAL GENERAL MEETING

“ THAT subject to the passing of Ordinary Resolutions numbered 3 and 4 set out in the notice of this meeting, the general mandate granted to the Directors to exercise the powers of the Company to allot, issue and deal with Shares of the Company pursuant to Ordinary Resolution numbered 3 above be and is hereby extended by the addition thereto of an amount representing the aggregate nominal amount of the share capital of the Company repurchased by the Company under the authority granted pursuant to Ordinary Resolution numbered 4 above, provided that subject amount shall not exceed 10% of the aggregate nominal amount of the share capital of the Company in issue immediately after completion of the Subscription.”

By Order of the Board Capital Automation Holdings Limited Mr. Lam Pang Chairman

Hong Kong, 11 March, 2002

Notes:

(a) A member entitled to attend and vote at the Special General Meeting convened by the above notice is entitled to appoint another person as his proxy to attend and vote instead of him. A member may appoint a proxy in respect of part of his holding of shares in the Company. A proxy need not be a member of the Company.
(b) A form of proxy for use at the Special General Meeting is enclosed herewith.
(c) To be valid, the form of proxy and the power of attorney, if any, or other authority, if any, under which it is signed or a notarially certified copy of that power of attorney or authority must be deposited at the Company’s Hong Kong branch registrar, Abacus Share Registrars Limited at 5th Floor, Wing On Centre, 111 Connaught Road, Central, Hong Kong, not less than 48 hours before the time appointed for holding of the Special General Meeting or adjourned meeting and in default the proxy will be treated as invalid.

– 39 –

CAPITAL AUTOMATION HOLDINGS LIMITED

(Incorporated in Bermuda with limited liability)

FORM OF PROXY FOR USE BY SHAREHOLDERS AT THE SPECIAL GENERAL MEETING

I/We [(Note 1)] , of

being the registered holder(s) of [(Note 2)] shares of HK$0.10 each in the capital of CAPITAL AUTOMATION HOLDINGS LIMITED (the “Company”) hereby appoint the Chairman of the Meeting [(Note 3)] or of

as my/our proxy to attend and act for me/us at the Special General Meeting of the Company (“SGM”) to be held at Queensway Room and Victoria Room, JW Marriott Hotel, 88, Queensway, Pacific Place, Hong Kong, on Wednesday, 27 March 2002, at 10:00 a.m., (or at any adjournment thereof) for the purposes of considering and, if thought fit, passing the resolution set out in the notice convening the SGM and at such meeting (or at any adjournment thereof) to vote on my/our behalf as indicated below.

I/We direct my/our proxy to vote in respect of the resolutions to be proposed at the SGM in the following manner and if no such indication is given, as my/our proxy thinks fit [(Note 4)] :

==> picture [441 x 91] intentionally omitted <==

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

RESOLUTIONS FOR [4] AGAINST [4]
Ordinary Resolution No.1 – approval of increase in authorised share capital
Ordinary Resolution No.2 – approval of Subscription Agreement
Ordinary Resolution No.3 – approval of General Mandate
Ordinary Resolution No.4 – approval of Repurchase Mandate
Ordinary Resolution No.5 – approval of extension of General Mandate
----- End of picture text -----

Dated the day of , 2002 Shareholder’s Signature [(Note 5)]

Note:

(1) Full name(s) and address(es) to be inserted in BLOCK CAPITALS. The names of all joint holders should be stated.
(2) Please insert the number of shares of HK$0.10 each registered in your name(s) and to which this form of proxy relates; if no such number is inserted, this form of proxy will be deemed to relate to all the shares in the capital of the Company registered in your name(s).
(3) Any member of the Company entitled to attend, and to vote at, the SGM is entitled to appoint one proxy to attend and vote for him. A proxy need not be a member of the Company, but must attend the SGM in person to represent you. If any proxy other than the Chairman of the Meeting is desired, you must delete the words “the Chairman of the Meeting” and insert the name and address of the proxy desired in the space provided. If no name is inserted, the Chairman of the Meeting will act as your proxy.
(4) If you wish to vote for a resolution, please tick appropriate box marked “For”. If you wish to vote against a resolution, please tick appropriate box marked “Against”. Failure to complete the box will entitle your proxy to cast his votes at his discretion.
(5) This form of proxy must be signed and dated by you or your attorney duly authorised in writing, or, if you are a corporation, this form of proxy must either be executed under common seal or under the hand of an officer or attorney so authorised.
(6) In order to be valid, this form of proxy together with the power of attorney or other authority, if any, under which it is signed or notarially certified copy thereof, must be deposited at the branch registrar of the Company in Hong Kong, Abacus Share Registrars Limited at 5th Floor, Wing On Centre, 111 Connaught Road, Central, Hong Kong, not less than 48 hours before the time for holding the SGM or any adjourned meeting.
(7) In the case of joint holders of a share, any one of such holders may vote at the SGM either in person or by proxy in respect of such share as if he were solely entitled thereto; but if more than one of such joint holders are present at the SGM personally or by proxy, then the one of such holders whose name stands first on the register of members in respect of such share shall alone be entitled to vote in respect thereof.
(8) Any alteration made to this form of proxy must be initialled by the shareholder who signs it.
(9) Completion and return of this form of proxy will not preclude you from attending and voting in person at the SGM or on the poll concerned and, in such event, this form of proxy will be deemed to have been revoked.

AI assistant

APT Satellite Holdings Limited — Proxy Solicitation & Information Statement 2002

49643_rns_2002-03-11_f2369a99-f565-48fd-b9d6-6674fcbc6949.pdf

IMPORTANT

CAPITAL AUTOMATION HOLDINGS LIMITED

CONTENTS

DEFINITIONS

DEFINITIONS

DEFINITIONS

CAPITAL AUTOMATION HOLDINGS LIMITED

CONNECTED TRANSACTION – SUBSCRIPTION OF NEW SHARES IN THE COMPANY AND PROPOSED INCREASE OF AUTHORISED SHARE CAPITAL AND GENERAL MANDATES TO ISSUE AND REPURCHASE SHARES

INTRODUCTION

LETTER FROM THE BOARD

The Subscription Agreement

LETTER FROM THE BOARD

Reasons for the Subscription

Possible cash Offer

LETTER FROM THE BOARD

The obligation of Shinning Crown to make the Offer is conditional upon completion of the Subscription.

Principal terms of the Offer

Comparison of value

Highest and lowest closing prices

Total consideration

Effect of accepting the Offer

Stamp duty

Intention of Shinning Crown regarding the Company

LETTER FROM THE BOARD

Shareholding structure

The Proposed Acquisition

LETTER FROM THE BOARD

Public float

General

INCREASE IN AUTHORISED SHARE CAPITAL

GENERAL MANDATES

SPECIAL GENERAL MEETING

ADDITIONAL INFORMATION

Yours faithfully, For and on behalf of the Board of CAPITAL AUTOMATION HOLDINGS LIMITED

Mr. Lam Pang

CAPITAL AUTOMATION HOLDINGS LIMITED

CONNECTED TRANSACTION – SUBSCRIPTION OF NEW SHARES IN THE COMPANY

Yours faithfully,

CONNECTED TRANSACTION – SUBSCRIPTION OF NEW SHARES IN THE COMPANY

INTRODUCTION

PRINCIPAL FACTORS CONSIDERED

1. Rationale of the Subscription Agreement

LETTER FROM ASIA FINANCIAL

Use of proceeds

Other means of fund raising

New Management

2. Terms of the Subscription Agreement

(a) Historical level of Share price

(b) Historical level of Share turnover

LETTER FROM ASIA FINANCIAL

3. Financial effects on the Group

(a) Net tangible assets

(b) Liquidity

(c) Earnings

(d) Gearing

LETTER FROM ASIA FINANCIAL

4. Dilution effect on shareholding

RECOMMENDATION

LETTER FROM ASIA FINANCIAL

Asia Financial Capital Limited Alan Fung

SECURITIES BUY BACK MANDATE

(a) Share capital

(b) Shareholders’ approval

(c) Reason for the repurchase

(d) Effect of the Hong Kong Code on Takeovers and Mergers (the “Code”)

(e) Terms and conditions of the repurchases

(1) Source of funds

(f) Share prices

(g) General

RESPONSIBILITY STATEMENT

SHARE CAPITAL

DISCLOSURE OF INTERESTS

SUBSTANTIAL SHAREHOLDER

MATERIAL ADVERSE CHANGE

LITIGATION

QUALIFICATION AND CONSENT

MISCELLANEOUS

APT Satellite Holdings Limited Proxy Solicitation & Information Statement 2002