Computer And Technologies Holdings Limited — Capital/Financing Update 2006

Mar 21, 2006

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.

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China Aerospace International Holdings Limited

(incorporated in Hong Kong with limited liability)

(stock code: 0031)

CONNECTED AND DISCLOSEABLE TRANSACTION ACQUISITION OF TWO PROPERTY INVESTMENT COMPANIES AND SETTING-OFF OF SHAREHOLDER’S LOAN

CASIL Clearing, a wholly-owned subsidiary of the Company, entered into an agreement with CASC pursuant to which CASIL Clearing has agreed to purchase and CASC has agreed to sell approximately 79.25% of the issued share capital of Vanbao, the related shareholders loan and 100% of the registered capital of Huadun at an aggregate consideration of HK$92,884,290, payable by assigning of certain of the loans receivable of CASIL Clearing. As the aggregate book value of the loans receivable amounted to HK$188 million approximately to be assigned by CASIL Clearing to CASC or its nominee exceed the aggregate consideration, CASC has agreed that the difference be set-off against the shareholder’s loan due from the Group to CASC as at the date of Completion (up to a maximun of HK$80,000,000) and the balance to be paid by CASC to CASIL Clearing in cash.

As CASC is the controlling shareholder of the Company, the entering into of the Sale and Purchase Agreement between CASIL Clearing and CASC constitutes a connected transaction for the Company under the Listing Rules and is subject to the approval of the Independent Shareholders by way of poll at the Extraordinary General Meeting. The entering into of the Sale and Purchase Agreement also constitutes a discloseable transaction for the Company under the Listing Rules.

An Independent Board Committee of the Company will be formed to advise the Independent Shareholders in respect of the terms of the Sale and Purchase Agreement and the recommendation of voting. An Independent Financial Adviser will also be appointed by the Independent Board Committee to advise the Independent Board Committee and the Independent Shareholders of the Company in respect thereof.

A circular containing, among other things, details of the Sale and Purchase Agreement, the recommendation of the Independent Board Committee of the Company and the letter of advice from the Independent Financial Adviser in respect of the terms of the Sale and Purchase Agreement, and a notice convening the Extraordinary General Meeting will be despatched to the shareholders of the Company as soon as practicable. CASC and its associates will abstain from voting at the Extraordinary General Meeting.

THE SALE AND PURCHASE AGREEMENT DATED 20 MARCH 2006

Parties:

Vendor: CASC, the controlling shareholder of the Company Purchaser: CASIL Clearing, a wholly-owned subsidiary of the Company

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Assets to be acquired by CASIL Clearing from CASC:

• (1) 79.25% of the issued share capital of Vanbao and the shareholder’s loan of Vanbao

252 shares, representing approximately 79.25% of the issued share capital of Vanbao were held by Wan Yuen, a wholly-owned entity of CASC. The balance of approximately 20.75% were held by two independent third parties. As at 31 December 2005, the amount of shareholder’s loan outstanding from Vanbao to Wan Yuen, was CAD3,089,091 (approximately HK$21,005,819).

• (2) 100% of the registered capital of Huadun

RMB3,000,000, representing 100% of the registered capital of Huadun currently registered as to RMB2,700,000 in the name of 北京航天衛星應用總公司 (Beijing Aerospace Satellite Application Corporation) and RMB300,000 in the name of 北京銀事達經貿發展有限責任公司(Beijing Yinshida Trading Development Co., Ltd.). Both of the shareholders are wholly-owned subsidiaries of CASC).

Consideration:

An aggregate consideration of HK$92,884,290, being

• (1) HK$30,935,614 for the approximately 79.25% of the issued share capital of Vanbao and HK$1 for the Vanbao Shareholder’s Loan;

• (2) HK$61,948,675 for the 100% of the registered capital of Huadun,

Having regard to the expected market value of the properties of Vanbao and Huadun as at 11 January 2006 and 31 December 2005 based on preliminary valuation by independent valuer and after arm’s length negotiation between the parties.

Payment:

Completion shall be the third business day after fulfillment of all conditions precedent.

The consideration payable by CASIL Clearing in settlement of the consideration will be by way of assignment of two loans receivable amounted to HK$188 million approximately due from third parties who are not connected persons of the Company to CASC or its nominee. Details of the loans receivable are as follows:

Borrower: Rich Echo Investments Limited East Pioneer International Limited Date of loan agreement: 5 June, 1997 5 June, 1997 Balance as at 30 June 2005: HK$88,609,000 HK$100,000,000

The difference between the loans receivable and the aggregate consideration will be set off against the loan due from the Group to CASC at the completion date (up to a maximum of HK$80,000,000) and the balance in cash from CASC to CASIL Clearing. As at 30 June 2005, the amount due from the Group to CASC was HK$180,619,000.

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Conditions precedent and Completion:

Completion of the Sale and Purchase Agreement is conditional upon, inter alia, the following conditions being fulfilled:

• (1) Relevant approvals from the relevant government authorities, including any approval which may be required from the State Administration of Industry and Commerce; and

• (2) Independent Shareholders’ approval of the transaction contemplated under the Sale and Purchase Agreement.

The parties shall use their endeavour to ensure fulfillment of all conditions on or before 30 September, 2006 or such later date as the parties may agree in writing.

REASONS FOR AND BENEFIT OF ENTERING INTO OF THE SALE AND PURCHASE AGREEMENT

The Group is principally engaged in the manufacturing of electronic products including liquid crystal display, plastic moulds, printed circuit boards, intelligent chargers and security systems.

The directors considered that the Company would benefit from the entering into of the transaction as this will reduce the loans receivable of the Group (as at 30 June 2005, the book value of the loans receivable was HK$258,878,000) and improve the assets portfolio of the Group. Given the recent positive prospects of developing industrial zone, technology zone and related property in mainland China and the vigorous property market in Canada, the assets to be acquired under the transaction is quality land and/or land use rights in these two countries, with strong capital appreciation potential and liquidity. It is expected that the transaction will strengthen the Group’s overall property investment portfolio and investment mix.

The terms of the Sale and Purchase Agreement are negotiated after arm’s length negotiation. The directors (including the independent non-executive directors) of the Company consider that the transaction was entered into on normal commercial terms and the terms of the Sale and Purchase Agreement are fair and reasonable and in the interests of the shareholders of the Company as a whole.

INFORMATION ON VANBAO

Vanbao is a company incorporated in Alberta, Canada with total issued share capital of CAD1,080,000 (approximately HK$7,344,000). Vanbao is engaged in property investment holding. The major assets of Vanbao is a parcel of high density residential development site in Calgary, Alberta, Canada. The total acquisition cost of CASC of the approximately 79.25% interest in Vanbao is CAD3,944,991 (approximately HK$26,825,939) (including the shareholders loan of CAD3,089,091 (approximately HK$21,005,819)).

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According to the audited accounts of Vanbao, the net assets value of Vanbao as at 31 December 2004 and 2005 were CAD1,125,024 (approximately HK$7,650,163) and CAD1,144,655 (approximately HK$7,783,654) respectively. Vanbao’s net profit before and after taxation and extraordinary items for the two years ended 31 December 2004 and 2005 were as follows:

For the year ended For the year ended 31 December 2004 31 December 2005 net profit (loss) before taxation CAD(19,784) CAD29,839 and extraordinary items (approximately HK$(134,531)) (approximately HK$202,905) net profit (loss) after taxation CAD(12,933) CAD19,631 and extraordinary items (approximately HK$(87,944)) (approximately HK$133,490)

Income of Vanbao mainly derived from rental of property.

INFORMATION ON HUADUN

Huadun is a company established in Dongguan, the PRC with total registered capital of RMB3,000,000 (approximately HK$2,884,615). Huadun is principally engaged in investment, property management, sales of construction materials and decoration materials. The major assets of Huadun are parcels of industrial land and the related buildings situate at Dongguan, the PRC. The total investment of CASC in Huadun was RMB31,300,000 (approximately HK$30,096,154).

According to the audited accounts of Huadun, the net assets value of Huadun as at 31 December 2004 and 2005 were RMB11,006,922 (approximately HK$10,583,579) and RMB48,575,623 (approximately HK$46,707,330) respectively. Huadun’s net profit before and after taxation and extraordinary items for the two years ended 31 December 2004 and 2005 were as follows:-

For the year ended For the year ended 31 December 2004 31 December 2005 net profit (loss) before taxation and RMB9,917,992 RMB12,248,741 extraordinary items (approximately HK$9,536,531) (approximately HK$11,777,636) net profit (loss) after taxation and RMB8,037,217 RMB11,224,872 extraordinary items (approximately HK$7,728,093) (approximately HK$10,793,146)

Income of Huadun mainly derived from rental of property.

INFORMATION ON CASC

The principal activities of CASC include the investment and operation of state-owned assets; the research, manufacturing and sale of various kinds of launch vehicles, satellites, satellite related system products, satellite ground systems and equipments, radars, digital control equipments, industrial automation control systems and equipments, security equipments, chemical materials, construction materials, metallic products, mechanical equipments, electronic and telecommunication equipments, medical equipments, and automotive and its parts; the development and technical consultation of aerospace technology; and international satellite launching services and etc.

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CONNECTED AND DISCLOSEABLE TRANSACTION

CASC, being a controlling shareholder of the Company, is a connected person of the Company under the Listing Rules. Accordingly, the entering into of the Sale and Purchase Agreement between CASIL Clearing and CASC constitutes a connected transaction of the Company under the Listing Rules. Given the loans receivable to be assigned by the Group as consideration under the Sale and Purchase Agreement amounted to HK$188 million represents approximately 8% of the latest published consolidated total assets of the Group as at 30 June 2005 and 16.23% of the market-captialization of the Company. The aggregate net profits before taxation and minority interests of Vanbao and Huadun and the aggregate turnover of Vanbao and Huadun for the year ended 31 December 2005 of approximately HK$11,980,541 and HK$2,531,400 represent 21.54% and 0.18% of the audited consolidated net profits before taxation and minority interests and total turnover of the Group for the year ended 31 December 2004. Accordingly, the Sale and Purchase Agreement is subject to the approval of the Independent Shareholders of the Company (being shareholders of the Company excluding CASC and its associates) voting at the Extraordinary General Meeting. The entering into of the Sale and Purchase Agreement also constitutes a discloseable transaction for the Company under the Listing Rules.

GENERAL

An Independent Board Committee comprising all the independent non-executive directors of the Company has been appointed to consider the terms of the Sale and Purchase Agreement and the connected and discloseable transaction. Somerley Limited has been appointed by the Independent Board Committee as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders on the terms of the Sale and Purchase Agreement. A circular containing, among others, (i) details of the connected and discloseable transaction, (ii) a letter from the Independent Board Committee and (iii) a letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders will be despatched by the Company to its shareholders as soon as practicable. CASC and its associates will abstain from voting at the Extraordinary General Meeting.

Terms used in this announcement

“business day” day on which the banks in Hong Kong operates and provide normal services (excluding Saturday);

• “CAD” Canadian dollars, legal currency of Canada; “CASC” 中國航天科技集團公司 (China Aerospace Science & Technology Corporation), a state-owned enterprise established in the PRC;

• “CASIL Clearing” CASIL Clearing Limited, a wholly-owned subsidiary of the Company incorporated in Hong Kong;

• “Company” China Aerospace International Holdings Limited, a company incorporated under the laws of Hong Kong with limited liability and the shares of which are listed on the Stock Exchange;

• “Completion” completion of the Sale and Purchase Agreement;

• “Extraordinary General the extraordinary general meeting to be convened by the Company for the Meeting” purpose of approving the connected and discloseable transaction;

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the Company and its subsidiaries;

• “Group” the Company and its subsidiaries; “HK$” Hong Kong dollars, the legal currency of the Hong Kong Special Administrative Region of the PRC;

• “Huadun” 東莞市華頓實業有限公司 (Dongguan Huadong Enterprises Limited), a limited liability company established in Guangdong, the PRC;

• “Independent Board an independent committee of the board of directors of the Company comprising Committee” Mr. Lee Hung Sang, Mr. Chow Chan Lum, Charles and Mr. Luo Zhenbang, being all the independent non-executive directors;

• “Independent Financial Somerley Limited, being the independent financial adviser appointed by the Adviser” Independent Board Committee to advise the Independent Board Committee and the independent shareholders in respect of the connected and discloseable transaction;

• “Independent all shareholders of the Company excluding CASC and its associates; Shareholders”

• “Listing Rules” The Rules Governing the Listing of Securities on the Stock Exchange; “PRC” the People’s Republic of China; “RMB” Reminbi, the legal currency of the PRC; “Sale and Purchase the sale and purchase agreement dated 20 March 2006 and entered into between Agreement” CASC and CASIL Clearing;

• “Stock Exchange” The Stock Exchange of Hong Kong Limited; “Vanbao” Vanbao Development (Canada) Ltd.; “Vanbao Shareholders the loan due from Vanbao to Wan Yuen, as at the date of Completion; and Loan”

• “Wan Yuen” 北京萬源工業公司 (Beijing Wan Yuan Industry Corporation), a limited liability company established in Beijing, the PRC.

For the purpose of this announcement, the exchange rate of RMB: HK$ is RMB1.04: HK$1.00 and the exchange rate of CAD:HK$ is CAD1.00:HK$6.80.

By order of the board of directors of China Aerospace International Holdings Limited Rui Xiaowu Chairman

Hong Kong, 20 March, 2006

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As at the date of this announcement, the board of directors of the Company comprises of Mr. Zhao Liqiang, Mr. Zhou Qingquan, Mr. Zhao Yuanchang, Mr. Wu Hongju and Mr. Guo Xianpeng as executive directors, Mr. Rui Xiaowu, Mr. Gong Bo, Mr. Chen Dingyi, Ms. Chan Ching Har, Eliza and Mr. Wang Yujun as non-executive directors and Mr. Lee Hung Sang, Mr. Chow Chan Lum, Charles and Mr. Luo Zhenbang as independent non-executive directors.

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

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