Central Development Holdings Limited — Capital/Financing Update 2003

Oct 22, 2003

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this announcement, 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 announcement.

SEAPOWER RESOURCES INTERNATIONAL LIMITED （海暉國際實業有限公司）

(Provisional Liquidators Appointed)

MANY RETURNS LIMITED

(Incorporated in the British Virgin Islands with limited liability)

(Incorporated in the Cayman Islands with limited liability)

DESPATCH OF THE CIRCULAR IN RESPECT OF THE

RESTRUCTURING OF SEAPOWER RESOURCES INTERNATIONAL LIMITED (PROVISIONAL LIQUIDATORS APPOINTED)

INVOLVING, INTER ALIA, CAPITAL RESTRUCTURING, DEBT RESTRUCTURING INVOLVING CREDITORS’ SCHEMES OF ARRANGEMENT

IN ACCORDANCE WITH SECTION 86 OF THE CAYMAN COMPANIES LAW AND SECTION 166 OF THE COMPANIES ORDINANCE, SUBSCRIPTION OF NEW SHARES AND WARRANTS, WHITEWASH WAIVER AND GENERAL MANDATES TO ISSUE AND REPURCHASE NEW SHARES

Financial Adviser to Seapower Resources International Limited Financial Adviser to Many Returns Limited

(Provisional Liquidators Appointed)

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Independent financial adviser to the Independent Shareholders

The circular of the Company containing details of the Restructuring Proposal was despatched to the Shareholders on 22nd October, 2003.

Shareholders should peruse the Circular carefully before making their voting decision.

The Stock Exchange informed the Company on 7th March, 2003 that the Company had been placed into the second stage of the delisting procedures in accordance with Practice Note 17 of the Listing Rules.

The release of this announcement does not necessarily indicate that the Restructuring Proposal will be successfully implemented and completed as the conditions precedent to the Restructuring Agreement may not be fulfilled or otherwise waived. Trading in the Shares of the Company has been suspended at the request of the Company since 2:30 p.m. on 28th December, 2001 and will remain suspended until Completion and a sufficient public float has been restored. Further announcement will be issued as and when appropriate.

Reference is made to the joint announcement issued by the Company and the Investor dated 18th June, 2003 (“Announcement”). Unless otherwise stated, terms used in this announcement shall have the same meaning as those defined in the Announcement.

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1. DESPATCH OF CIRCULAR

The Provisional Liquidators and the Investor are pleased to announce that the circular containing details of the Restructuring Proposal together with a form of proxy for use at the EGM was despatched to the Shareholders on 22nd October, 2003 (“Circular”). Shareholders should peruse the Circular carefully, in particular, all the financial information and the letter of advice from the independent financial adviser contained therein. The Restructuring Proposal is subject to a number of conditions, including the Whitewash Waiver, and if any of the conditions precedent have not been fulfilled or waived in writing on or before 15th November, 2003 or such later date up to and including 31st December, 2003 as the Investor, the Company and the Provisional Liquidators may agree, in writing, pursuant to the terms of the Restructuring Agreement, the Restructuring Proposal will lapse. If the Whitewash Waiver is not approved by the Independent Shareholders, the Restructuring Agreement will lapse.

2. EXPECTED TIMETABLE

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Announcement of the interim results for the six months ended 30th September, 2002 31st October

Latest time for lodging forms of proxy for the EGM 10:00 a.m. on 12th November EGM 10:00 a.m. on 14th November

The following events are conditional on, amongst other things, the availability of the HK Court and the Cayman Islands Court, the results of the EGM, and the restoration of sufficient public float of not less than 25% of the enlarged issued Share capital of the Company after Completion. Accordingly, there is no guarantee that trading in the shares of the Company can be resumed in accordance with the timetable set out below. Further announcement will be made to update the Shareholders and potential investors as and when appropriate.

HK Court hearing of petition to sanction the Scheme 14th November Completion 15th November Announcement of results of the EGM 17th November Announcement of the Completion 17th November Existing counter for trading in the Shares in board lots of 5,000 Shares closes 17th November Temporary counter for trading in New Shares in board lots of 300 New Shares in the form of existing share certificates for existing Shares opens 17th November First day of free exchange of existing share certificates for new share certificates for New Shares 17th November First day of operation of odd lot trading facility 17th November Existing counter for trading in New Shares in board lots of 100,000 New Shares in the form of new shares certificates for New Shares re-opens 1st December Parallel trading in New Shares (in the form of new share certificates and existing share certificates) starts 1st December Temporary counter for trading in New Shares in board lots of 300 New Shares (in the form of existing share certificates) closes 22nd December Parallel trading in New Shares (in the form of new share certificates and existing share certificates) ends 22nd December Last day of operation of odd lot trading facility 22nd December Free exchange of existing share certificates for new share certificates for New Shares ends 29th December

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• Note: Hearing is being sought in the Cayman Islands Court to approve the petition to sanction the Scheme. Further announcement in relation to the date of the hearing by the Cayman Islands Court will be made as and when appropriate.

3. PRO FORMA ADJUSTED CONSOLIDATED NET TANGIBLE ASSETS OF THE GROUP UPON COMPLETION

Set out below is the pro forma adjusted consolidated net tangible assets of the restructured Group upon Completion which is based on the audited consolidated net liabilities of the existing Group as at 31st March, 2003 and after adjustments:

Audited Consolidated Net Liabilities of the existing Group as at 31st March, 2003 Net liabilities of the companies excluded from the Restructuring Proposal_(Notes 1 & 2)_ Debt to be compromised and discharged under the Debt Restructuring upon Completion Pro forma adjusted consolidated net tangible asset value of the Group after Debt Restructuring Proceeds from the Subscription Cash payment to Creditors and Petitioning Creditor Restructuring costs paid and payable Interim working capital requirement of the Company prior to Completion Pro forma adjusted net tangible assets upon Completion but before full exercise of Warrants Issuance of New Shares to the Investor upon full exercise of Warrants at an excise price of HK$0.01 per New Share Pro forma adjusted net tangible assets upon full exercise of Warrants Pro forma adjusted net tangible assets per New Share upon Completion but before full exercise of Warrants(Note 3) Pro forma adjusted net tangible assets per New Share upon Completion and after full exercise of Warrants(Note 4)

Amount HK$’000 (1,304,090) 664,401 657,286 17,597 46,000 (39,000) (6,400) (600) 17,597 9,578 27,175 0.37 cents 0.47 cents

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• Note 1: Save for the subsidiaries remaining with the Company for the on-going operations of the Group post Completion, all other subsidiaries of the Company, most of which are dormant or inactive, will be transferred to the Scheme Administrators on Completion, hence the net liabilities relating to these excluded subsidiaries are excluded;

• Note 2: Particulars of the Company’s principal subsidiaries as at 31st March, 2003 which would remain with the Company post Completion are as follows:

Name of subsidiary	Principal activities
Allied National Limited	Investment holding
Australian Service Cold Storage (NSW) Pty Ltd.	Cold storage warehousing
iPower Alliance Limited	Dormant
iPowerB2B.com Limited	Investment holding
iPower Warehousing Management System Limited	Warehousing management system holding
Pentagon Profits Limited	Property holding
Seapower China Investments Limited	PRC representative offices holding
Seapower Developments (Indonesia) Limited	Land development
Seapower Resources Australia Pty Ltd	Investment holding
Seapower Resources Gosford Pty Ltd.	Cold storage warehousing
Seapower Resources Investment Pty. Ltd	Investment holding
Seapower Resources Mackay Pty. Ltd	Dormant
Seapower Secretaries Limited	Provision of secretarial services
Topcrown Investments Limited	Property holding

Note 3: This is based on 4,788.82 million New Shares in issue upon Completion but before full exercise of Warrants;

Note 4: This is based on 5,746.58 million New Shares in issue upon Completion and after full exercise of Warrants.

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4. PRO FORMA UNAUDITED CONSOLIDATED BALANCE SHEET OF THE GROUP

The following pro forma unaudited consolidated balance sheet of the Group, which has been reviewed by the auditors of the Company, is based on the audited consolidated balance sheet of the Group as at 31st March, 2003, which was prepared on a basis consistent with the accounting policies normally adopted by the Group, and adjusted to reflect the financial effect of the Restructuring Proposal.

Effect of Audited Debt consolidated Restructuring balance and sheet as at Capital Exclusion of 31st March, 2003 Restructuring Subsidiaries HK$000 HK$000 HK$000 (note 1) (note 2) Non-Current Assets Property, plant and equipment 20,298 – (1,235) Current Assets Trade and other receivables 14,708 – (9,541) Amount due from I-China Group_(note 4)_ 0 – 0 Other investments 52 – (52) Restricted bank deposits 1,692 – (1,692) Cash and bank balances 6,648 – (44,184) Total Current Assets 23,100 – (55,469) Current liabilities Trade and other payables 151,533 – (148,363) Amount due to a jointly controlled entity 1,007 – (1,007) Taxation payable 26,302 – (26,302) Bank and other borrowings 515,584 – (510,657) Amounts due to subsidiaries under liquidation 652,553 – (652,553) Total Current Liabilities 1,346,979 – (1,338,882) Net Current Liabilities (1,323,879) – 1,283,413 Total Assets less Current Liabilities (1,303,581) – 1,282,178 Minority Interests (509) – 509 (1,304,090) – 1,282,687 Capital and Reserves Share capital 77,352 (76,424) 960 Reserves (1,381,442) 76,424 1,281,727 (1,304,090) – 1,282,687	Subscription HK$000 (note 3) – – – – – 39,000 39,000 – – – – – – 39,000 39,000 – 39,000 46,000 (7,000) 39,000	The Group upon Completion HK$000 19,063 5,167 – – – 1,464 6,631 3,170 – – 4,927 – 8,097 (1,466) 17,597 – 17,597 47,888 (30,291) 17,597

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Notes:

1. The Company will undertake a capital reduction exercise to reduce its issued and paid-up share capital from HK$77,352,141 to HK$928,226 by the reduction of the par value of its existing issued Share of 1,547,042,829 Shares from HK$0.05 each to HK$0.0006 each. The credit arising from the capital reduction of approximately HK$76 million will be applied so as to reduce, by an equivalent amount, the accumulated losses.

2. This reflects full settlement of Creditors’ indebtedness by cash of HK$39 million and issuance of 96 million New Shares to the Creditors and the removal of the assets and liabilities of those subsidiaries that will not remain with the Group post Completion. The amount of the Group’s indebtedness adjusted herein include claims by the creditors of the subsidiaries which will not remain with the Group post Completion.

3. Restructuring costs and interim working capital advanced by the Investor during the course of the restructuring were estimated to be approximately HK$7 million. The entire loan balance will be capitalised by issuing up to 700 million New Shares to the Investor.

4. The secured loans of HK$1,655,000 were granted by Seapower Finance Limited to Trinity Rent A Car Limited (“Trinity”), which is a wholly owned subsidiary of I-China Holdings Limited (Provisional Liquidators Appointed), and were secured by motor vehicles. Since their appointment, the Provisional Liquidators have been unable to make to any recovery/realisation in respect of those loans as Trinity is also experiencing financial difficulties. Full provision has been made against this amount according to the last audited accounts of the Group for the year ended 31st March, 2003.

5. CASHFLOW PROJECTIONS

The following is the cashflow projections for the Group (“Cashflow Projections”) prepared by the Provisional Liquidators for the 12 months period following Completion (“Projection Period”) with input from the Investor and its sole director in relation to their future plans and on the basis of the assumptions of the Investor and its sole director. The actual cashflow may defer substantially from the Cashflow Projections since actual events frequently do not occur as expected and such variation may be material.

	HK$’000
Expected bank balance and cash upon Completion_(Note 1)_	2,200
Expected net cash inflow from operating activities over the Projection Period_(Note 2)_	715
Proceeds from Subscription by the Investor	46,000
Cash payment to the Creditors and Petitioning Creditor	(39,000)
Payment of restructuring costs	(6,400)
Interim working capital injected into the Company by the Investor prior to Completion	(600)
Expected bank balance and cash at the end of the Projection Period	2,915

• Note 1: As at 31st March, 2003, the cash balance as per the audited accounts was approximately HK$6.6 million. The expected bank balance of approximately HK$2.2 million as stated in above, represents the expected cash balance of the Company and the subsidiaries which will continue to remain in the Group after Completion. The difference between these two amounts represents the funds held by the subsidiaries which will be transferred to the Scheme Administrators upon Completion, after deducting all the costs paid and payable in connection with the cold storage and warehousing operations in Australia and all priority costs including legal and other costs associated with the termination of the Former Restructuring Agreement and the adjudication of claims against the Group.

• Note 2: The expected net cash inflow from operating activities over the Projection Period is based upon the existing business of the Group continuing at current levels on and on the basis of the assumptions set out in the Circular.

• The expected cash inflow would be primarily derived from the cold storage warehousing and logistics management operations in Australia although on a lesser scale when compared to preceding financial years pending on the implementation of the future plans by the Investor.

In the opinion of the Investor and its sole director, in light of the advance of up to HK$5 million by the Investor as disclosed in the Circular as well as in the absence of unforeseen circumstances, the assumptions underlying the Cashflow Projections remaining valid and subject to Completion, the Group will have sufficient working capital for on-going operations for the 12 month period following Completion.

In addition, in the opinion of the Provisional Liquidators, subject to Completion and in the absence of unforeseen circumstances and the assumptions underlying the Cashflow Projections remaining valid, the Group will have sufficient working capital for on-going operations of the Group for 12 month period following Completion.

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6. EXISTING BUSINESS OF THE GROUP

Since the appointment of the Provisional Liquidators on 31st December, 2001, the Group’s non-core business operations have been discontinued and only the core businesses of logistics management services and cold storage and warehousing have been maintained, albeit on a lesser scale than in previous years, as the Company has Provisional Liquidators appointed and is suffering from a lack of working capital.

Under the Restructuring Proposal, the entire equity interest in Pentagon Profits and SDI will continue to remain with the Company.

(a) Pentagon Profits

Following the termination of the Former Restructuring Agreement, and in response to various statements in relation to Pentagon Profits made by the Former Investors in an announcement dated 10th March, 2003, the Provisional Liquidators appointed a PRC legal adviser, East Rain Law Office (華意律 師事務所) to further investigate Pentagon Profits’ title to the 24 townhouses. The PRC legal adviser, in its legal opinion dated 21st August, 2003, stated that notwithstanding the payments made by Pentagon Profits (to parties other than Beijing Xinglong Park Company Limited), in its opinion, Pentagon Profits had entered into the sale and purchase agreements with unauthorized entities and, accordingly that there was little prospect of the Group obtaining title to the 24 townhouses without substantial legal proceedings. The Provisional Liquidators did not know Beijing Jitai Construction Installation Engineering Company Limited (“Beijing Jitai”) was an unauthorised entity prior to 14th November, 2002 despite Beijing Jitai denied knowledge of the sale and purchase agreements in relation to the 24 townhouses.

The Provisional Liquidators only received confirmation from their PRC legal adviser in its legal opinion dated 21st August, 2003 that Beijing Jitai, the selling party to whom Pentagon Profits entered into the sale and purchase agreements in 1995 in respect of the 24 townhouses was not the owner/ developer of those townhouses. The PRC legal adviser also confirmed in the same opinion that the statement made by Beijing Jitai claiming that they had obtained the relevant authority/rights to the townhouse through the developer and the necessary legal procedures, was not accurate and concluded that Beijing Jitai was not the authorised entity.

On the basis of the above advice of the PRC legal adviser, there is little prospect of the Certificate for Housing Ownership and land use right title being obtained in respect of the 24 townhouses. Accordingly, no value is attributed to Pentagon Profits upon Completion.

Full details in relation to the work undertaken by the Provisional Liquidators and the findings in relation to Pentagon Profits have been set out in the Circular.

(b) SDI

SDI made investments in 111 plots of land located in Indonesia. Based on the legal advice obtained by the Provisional Liquidators from the Indonesian legal adviser on 9th January, 2003, 111 plots of land are held by 19 Indonesian trustees as the legal title holders on trust for the Group.

Based on the information available to the Provisional Liquidators to date and legal advice obtained by the Provisional Liquidators from the Indonesian legal adviser, SDI does not possess the legal title to the various plots of land located in Indonesia. There is little evidence that the Company will be able to recover the legal title without incurring substantial time and legal costs. Similarly, the auditors who conducted the audits of the Group for the two financial years ended 31st March, 2002 and 2003 have not been able to obtain direct confirmation from the Indonesian trustees as to whether the land is still held in trust for the Group and to satisfy themselves as to whether SDI can exercise its rights to obtain the legal title of the land. In light of the above, the Provisional Liquidators considered it prudent to attribute zero value to the 111 plots of land in which SDI has made investments.

As stated in the auditors’ reports for the years ended 31st March, 2002 and 2003, the Group had fully provided for the carrying value of the land for the year ended 31st March, 2002 on the basis that the Group may not be able to obtain the title of the land.

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7. PUBLIC FLOAT

In view of the Investors and the parties acting in concert with it holding in aggregate more than 75% of the enlarged issue share capital of the Company upon Completion, the Investor and the proposed directors of the Company have undertaken to the Stock Exchange that they will use their best endeavours to ensure that a sufficient number of New Shares will be sold, placed or otherwise disposed of to independent third parties to restore the public float of not less than 25% of the enlarged issued share capital of the Company as required under Rule 8.08 of the Listing Rules before the resumption of trading of the Company’s Shares. The Investor will make arrangements for the restoration of the public float of the Company. The placing price of the New Shares is still under negotiations and has not been determined. A further announcement will be made once the details of the placing arrangements are finalised.

The Stock Exchange informed the Company on 7th March, 2003 that the Company had been placed into the second stage of the delisting procedures in accordance with Practice Note 17 of the Listing Rules.

The release of this announcement does not necessarily indicate that the Restructuring Proposal will be successfully implemented and completed as the conditions precedent to the Restructuring Agreement may not be fulfilled or otherwise waived. Shareholders should peruse the Circular carefully before making their voting decision.

Trading in the Shares of the Company has been suspended since 2:30 p.m. on 28th December, 2001 and will remain suspended until Completion and a sufficient public float has been restored. Further announcement will be issued as and when appropriate.

For and on behalf of SEAPOWER RESOURCES INTERNATIONAL LIMITED (Provisional Liquidators Appointed) Cosimo Borrelli

By Order of the Board MANY RETURNS LIMITED Kenneth Chan Director

Fan Wai Kuen Joint and Several Provisional Liquidators

Hong Kong, 22nd October, 2003

The Provisional Liquidators jointly and severally accept full responsibility for the accuracy of the information contained in this announcement other than that relating to the Investor and confirm, having made all reasonable inquiries, that to the best of their knowledge, opinions expressed in this announcement have been arrived at after due and careful consideration and there are no other facts not contained in this announcement, the omission of which would make any statement in this announcement misleading.

The Investor and its sole director jointly and severally accept full responsibility for the accuracy of the information contained in this announcement other than that relating to the Company and the Group and confirm, having made all reasonable inquiries, that to the best of their knowledge, opinions expressed in this announcement have been arrived at after due and careful consideration and there are no other facts not contained in this announcement, the omission of which would make any statement in this announcement misleading.

Please also refer to the published version of this announcement in The Standard.

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