Computer And Technologies Holdings Limited - Proxy Solicitation & Information Statement 2005

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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.

If you have sold all your shares in China Aerospace International Holdings Limited, you should at once hand this circular and the accompanying form of proxy to the purchaser or to the bank, stockbroker or other agent through whom the sale was effected for transmission to the purchaser.

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

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(Stock Code: 31)

CONNECTED AND DISCLOSEABLE TRANSACTION

PROPOSED TRANSFER BY THE COMPANY OF ITS ENTIRE 100% EQUITY INTEREST IN AND SHAREHOLDER’S LOAN DUE FROM ASTROTECH GROUP LIMITED (WHICH HOLDS A CONTROLLING INTEREST OF APPROXIMATELY 44.17% IN CASIL TELECOMMUNICATIONS HOLDINGS LIMITED) TO CHINA ACADEMY OF LAUNCH VEHICLE TECHNOLOGY

AND

NOTICE OF EXTRAORDINARY GENERAL MEETING

Independent financial advisor to the independent board committee of the Company and the Independent Shareholders

SOMERLEY LIMITED

A notice convening the Extraordinary General Meeting of China Aerospace International Holdings Limited to be held at 18th Floor, China Aerospace Centre, 143 Hoi Bun Road, Kwun Tong, Kowloon, Hong Kong, on Tuesday, 15 March 2005 at 11:00 a.m. is set out on page 37 of this circular.

Whether or not you are able to attend the Extraordinary General Meeting, you are requested to complete and return the accompanying form of proxy in accordance with the instructions printed thereon to the share registrar of the Company, the Standard Registrars Limited, at Ground Floor, BEA Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong as soon as possible but in any event not less than 48 hours before the time appointed for the holding of the Extraordinary General Meeting. Completion of a form of proxy will not preclude you from attending and voting at the Extraordinary General Meeting in person if you so wish.

15 February 2005

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Chairman
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
The Sale and Purchase Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
The Group, CASTEL, Astrotech, CALT and CASC . . . . . . . . . . . . . . . . . . . . . .	10
Shareholding Structures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
Reasons for and Benefits of the Group Reorganisation . . . . . . . . . . . . . . . . . . .	12
Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
Effect on the Earnings, Assets and Liabilities of the Company . . . . . . . . . . . . .	13
Implications of the Group Reorganisation under the Listing Rules. . . . . . . . . . .	13
Extraordinary General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
Letter from the Independent Board Committee. . . . . . . . . . . . . . . . . . . . . . . . . . .	15
Letter from the Independent Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . .	16
Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	32
Notice of Extraordinary General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	37

−i −

DEFINITIONS

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

“Announcement”	the announcement dated 24 January 2005 of the
	Company;
“Astrotech”	Astrotech Group Limited, a company incorporated in the
	British Virgin Islands with limited liability and a wholly-
	owned subsidiary of the Company;
“Board”	the Board of Directors;
“CALT”	China Academy of Launch Vehicle Technology ( ), a legal entity established in the PRC and wholly-owned by CASC;
“CASC”	China Aerospace Science and Technology Corporation ( ), a State-owned enterprise established in the PRC and the ultimate controlling
	shareholder of both the Company and CASTEL;
“CASTEL”	CASIL Telecommunications Holdings Limited, a
	company incorporated in the Cayman Islands with
	limited liability and the shares of which are listed on the
	Stock Exchange;
“CASTEL Group”	CASTEL and its subsidiaries;
“CASTEL Share(s)”	ordinary share(s) of HK$0.1 each in the issued share
	capital of CASTEL;
“Company” or “CASIL”	China Aerospace International Holdings Limited, a
	company incorporated in Hong Kong with limited
	liability, the shares of which are listed on the Stock
	Exchange;
“Extraordinary General Meeting”	the extraordinary general meeting of the Company to be
	held on Tuesday, 15 March 2005 at 11:00 a.m. is set out
	on page 37 of this circular;
“Group”	the Company and its subsidiaries;

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DEFINITIONS

“Group Reorganisation” or the proposed transfer of interests in CASTEL by the “Proposed Disposal” Company to CALT pursuant to the Sale and Purchase Agreement, being a reorganisation of the listed assets of CASC;

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

“Independent Shareholders” shareholders of the Company other than Jetcote Investments Limited, Burhill Company Limited, Sin King Enterprises Company Limited, Jet Square Developments International Limited, Star River Assets Limited and Full Power International Limited (which together hold approximately 41.86% equity interest in the Company and which are all wholly-owned subsidiaries of CASC) and their respective associates (as defined under the Listing Rules);
“Latest Practicable Date” 4 February 2005, being the latest practicable date prior to the printing of this document for ascertaining certain information referred to in this circular;
“Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange;
“PRC” the People’s Republic of China;
“Registrar” the Company’s share registrar, Standard Registrars Limited, Ground Floor, BEA Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong;
“Sale and Purchase Agreement” the sale and purchase agreement dated 22 January 2005 between the Company and CALT in respect of the proposed transfer of the Company’s entire 100% equity interest in Astrotech (which, in turn, holds approximately 44.17% equity interest in CASTEL) and the entire shareholder’s loan due from Astrotech to CALT;
“SFC” the Securities and Futures Commission of Hong Kong;

“SFO” the Securities and Futures Ordinance (Cap 571 of the Laws of Hong Kong;

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DEFINITIONS

“Share(s)”	share(s) of HK$1.00 each in the share capital of the
	Company;
“Shareholders”	holders of Shares;
“Stock Exchange”	The Stock Exchange of Hong Kong Limited;
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong;
	and
“US$”	United States dollars, the lawful currency of the United
	States.

For the purpose of this circular, the conversion rate of HK$:US$ is HK$7.80:US$1.00.

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LETTER FROM THE CHAIRMAN

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(Stock Code: 31)

Executive Directors: Mr. Rui Xiaowu Mr. Zhao Liqiang Mr. Zhou Qingquan Mr. Zhao Yuanchang Mr. Wu Hongju Mr. Guo Xianpeng

Registered Office: 21st Floor, China Aerospace Tower Concordia Plaza 1 Science Museum Road Tsimshatsui East Kowloon Hong Kong

Non-executive Directors:

Mr. Lee Hung Sang (Independent)

Mr. Chow Chan Lum, Charles (Independent)

Mr. Luo Zhenbang (Independent)

Mr. Li Jinsheng Mr. Xu Shilong Mr. Chen Dingyi

Ms. Chan Ching Har, Eliza

15 February 2005

To Shareholders of the Company,

Dear Sir or Madam,

CONNECTED AND DISCLOSEABLE TRANSACTION

AND

NOTICE OF EXTRAORDINARY GENERAL MEETING

Introduction

The Board of the Company published the Announcement on 25 January 2005 in respect of the proposed transfer by the Company to CALT it’s entire 100% equity interest in and the entire shareholder’s loan due from Astrotech, which, in turn, holds 449,244,000 ordinary shares (representing approximately 44.17% equity interest) in CASTEL pursuant to a proposed Group Reorganisation of CASC.

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LETTER FROM THE CHAIRMAN

The purpose of this circular is to provide you with further information regarding on (1) the Proposed Disposal, (2) the advice of the independent financial advisor, (3) the recommendation of the Independent Board Committee, and (4) the notice of Extraordinary General Meeting.

The Sale and Purchase Agreement

Parties

For the purposes of effecting the Group Reorganisation, the Sale and Purchase Agreement dated 22 January 2005 was entered into between the following parties:

Vendor: the Company

Purchaser: CALT, which is wholly-owned by CASC (which is the beneficial owner of approximately 41.86% of the issued share capital of the Company and a substantial shareholder of the Company)

Assets to be disposed of by the Company to CALT

(a) 1 ordinary share of US$1.00 (approximately HK$7.80) each in the issued share capital of Astrotech, representing 100% of the existing issued share capital of Astrotech.

Astrotech currently holds 449,244,000 CASTEL Shares, representing approximately 44.17% of the existing issued share capital of CASTEL. Upon completion of the Sale and Purchase Agreement, the Company will no longer hold any direct or indirect equity interest in CASTEL.

(b) Shareholder’s loan outstanding due from Astrotech to the Company as at the date of Completion.

As at 31 December 2003, the amount of shareholder’s loan outstanding from Astrotech to the Company was US$37,617,369 (approximately HK$293,415,478). Nevertheless, provisions have been made in respect of such shareholder’s loan in the previous financial years in the accounts of the Company. The audited book value of the shareholder’s loan was US$12,377,267 (approximately HK$96,542,683) as at 31 December 2003.

Consideration and terms

The aggregate consideration for the disposal of the Company’s entire equity interest in and the entire shareholder’s loan due from Astrotech shall be HK$143,758,081 (with HK$143,758,080 for the equity interest in Astrotech and HK$1 for the shareholder’s loan) which will be settled in full in cash upon completion of the Sale and Purchase Agreement.

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LETTER FROM THE CHAIRMAN

Astrotech does not carry on any business or has any material assets other than its investment in CASTEL. The aforesaid consideration effectively represents a consideration of HK$0.32 per CASTEL Share, which, in turn, represents:

(a) a discount of approximately 18.99% to the closing price of HK$0.395 per CASTEL Shares as at the Latest Practicable Date;
(b) a discount of approximately 22.89% to the average closing price of approximately HK$0.415 per CASTEL Share for the 10 trading days leading up to and including the Latest Practicable Date;
(c) a discount of approximately 21.61% to the average closing price of approximately HK$0.4082 per CASTEL Share for the 30 trading days leading up to and including the Latest Practicable Date;
(d) a discount of approximately 27.27% to the closing price of HK$0.44 per CASTEL Share as at 21 January 2005 (being the last trading day preceding the release of the Announcement);
(e) a discount of approximately 21.38% to the average closing price of approximately HK$0.4070 per CASTEL Share for the 10 trading days leading up to and including 21 January 2005;
(f) a discount of approximately 21.63% to the average closing price of approximately HK$0.4083 per CASTEL Share for the 30 trading days leading up to and including 21 January 2005;
(g) a premium of approximately 75.82% over the adjusted unaudited consolidated net asset value per CASTEL Share of approximately HK$0.182 based on the unaudited consolidated net asset value of the CASTEL Group as at 30 June 2004 (adjusted for the net gain on disposal of properties totalling approximately HK$7,478,000 as announced on 13 October 2004 by CASTEL); and
(h) a substantial premium of approximately 128.57% over the adjusted unaudited consolidated net tangible asset value per CASTEL Share of approximately HK$0.140 based on the unaudited consolidated net tangible asset value of the CASTEL Group as at 30 June 2004 (adjusted for the net gain on disposal of properties totaling approximately HK$7,478,000 as announced on 13 October 2004 by CASTEL).

The terms of the Sale and Purchase Agreement were arrived at after arm’s length negotiations between the parties involved, and the aforesaid consideration of approximately HK$0.32 per CASTEL Share was determined with reference to the following factors:

(a) the closing price of HK$0.44 per CASTEL Share as at 21 January 2005 (being the last trading day preceding the release of the Announcement);
(b) the respective average closing prices of HK$0.4070 per CASTEL Share and HK$0.4083 per CASTEL Share for the 10 and 30 trading days’ periods up to and including 21 January 2005;

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LETTER FROM THE CHAIRMAN

(c) the average daily trading volume of the CASTEL Shares for the month of July 2004 up to 21 January 2005, ranging from 0.0428% to 0.1320% of the total issued CASTEL Shares;
(d) the adjusted unaudited consolidated net asset value per CASTEL Share of approximately HK$0.182 based on the unaudited consolidated net asset value of the CASTEL Group as at 30 June 2004 (adjusted for the net gain on disposal of properties totalling approximately HK$7,478,000 as announced on 13 October 2004 by CASTEL);
(e) the adjusted unaudited consolidated net tangible asset value per CASTEL Share of approximately HK$0.140 based on the unaudited consolidated net tangible asset value of the CASTEL Group as at 30 June 2004 (adjusted for the net gain on disposal of properties totalling approximately HK$7,478,000 as announced on 13 October 2004 by CASTEL); and
(f) the lack of dividend payment by CASTEL since the year ended 31 December 1998.

The board of directors (including the independent non-executive directors who have formed their views after considering the advice of Somerley Limited, their financial advisor, as set out on page 15 of this circular) of the Company considers that the Sale and Purchase Agreement was entered into on normal commercial terms, the terms of the Sale and Purchase Agreement (including the non-competition and non-disclosure undertakings) are fair and reasonable and in the interests of the shareholders of the Company as a whole.

Conditions precedent and Completion

Completion of the Sale and Purchase Agreement is conditional upon the following major conditions being fulfilled or waived (where applicable) by CALT:

(a) CALT having obtained all necessary approval documents from (i) State Administration of Foreign Exchange of the PRC, (ii) the State Development and Reform Commission of the PRC, (iii) Ministry of Commerce of the PRC, (iv) the State-owned Assets Supervision and Administration Commission of the State Council, the PRC, and (v) China Securities Regulatory Commission in respect of the transactions contemplated under the Sale and Purchase Agreement;
(b) the Independent Shareholders approving the Sale and Purchase Agreement and the transactions contemplated thereunder at the Extraordinary General Meeting;
(c) the Company having provided CALT with all relevant consent letters from the following banks and creditors of the Company:
(i) Citic Ka Wah Bank Limited, one of CASIL’s lender banks;
(ii) lender banks and creditors pursuant to subsisting loan agreements or such relevant agreements of Group, which agreements stipulate that consent or approval will be required from these banks or creditors if there is any material change in the holding of interests in Astrotech or CASTEL (or any of its subsidiaries);

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LETTER FROM THE CHAIRMAN

(d) if required, consent or approvals from lender banks or creditors of subsisting loan agreements or related agreements of the Group in respect of the disposition of assets under the Sale and Purchase Agreement;
(e) the representations, warranties and undertakings set out in the Sale and Purchase Agreement remaining true and accurate and not misleading in all material respects at all times between the date of Sale and Purchase Agreement and Completion and as at the date of Completion;
(f) the Company having fulfilled or complied with the necessary terms, undertakings and obligations under the Sale and Purchase Agreement on or before the date of Completion;
(g) the Company having provided CALT with a certificate of good standing issued by the British Virgin Islands Registrar of Companies to the Company in respect of Astrotech;
(h) CALT having completed its legal due diligence and due diligence in respect of the ownership of the share of Astrotech and the CASTEL Shares to be disposed of, the gearing position, beneficial ownership of assets of material business operation, the legal subsistence and establishment, litigation, taxation, properties of members of the Astrotech and the CASTEL Group and other material aspect of the operations of the CASTEL Group (including compliance of PRC laws and regulations and constitutional documentations in respect of the operations, investments and other related matters of the CASTEL Group in the PRC) and CALT is satisfied that there is no material impediment to the transactions under the Sale and Purchase Agreement;
(i) the CASTEL Shares remaining listed and traded on the Stock Exchange at all times from the date of the Sale and Purchase Agreement to the date of Completion, save for any suspension not exceeding 15 consecutive trading days, or such longer period as CALT may accept in writing (temporary suspension under normal circumstances and in respect of the transaction in respect of the Sale and Purchase Agreement excluded);
(j) no indication being received on or before the date of Completion from the Stock Exchange or the SFC to the effect that the listing of the CASTEL Shares on the Stock Exchange will be cancelled or withdrawn as a result of the arrangement under the Sale and Purchase Agreement;
(k) no indication being received on or before the date of Completion from the Stock Exchange by CASTEL complying with Rule 13.24 of and Practice Note 17 of the Listing Rules at all times on or before the date of Completion; and
(l) no events occurring which will adversely affect the listing status of CASTEL on the Stock Exchange.

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LETTER FROM THE CHAIRMAN

All conditions shall be satisfied or otherwise waived by CALT (save for conditions (a) to (d) which may not be waived by the parties) on or before 31 March 2005 (or such other days as the parties may agree in writing). Completion shall take place on the third Business Day after the fulfillment or waiver of the last condition, the issue of a notice by CALT to CASIL in respect of CALT’s satisfaction of the fulfillment of all the conditions after its receipt of the notification from CASIL that CASIL has fulfilled conditions (b) to (g) and confirmed the status of conditions (i) to (l). If any of the conditions stated above cannot be fulfilled (or waived by CALT), the Sale and Purchase Agreement shall cease and determine and no party shall have any liability to any other party, save in respect of any antecedent breach. As at the Latest Practicable Date, all conditions remain to be satisfied.

Non-competition and non-disclosure undertakings

Pursuant to the Sale and Purchase Agreement, CASIL and CALT agree that upon completion of the Sale and Purchase Agreement, the non-competition undertakings entered into between CASIL and CASTEL at the time of listing of CASTEL in 1997 shall cease to have any effect.

Nevertheless, CASIL undertook with CALT that, except with the prior written consent of CALT:

(a) for a period of one year after Completion, CASIL shall not either on its own account or on behalf of any person or company carry on or be engaged, directly or indirectly (whether as shareholder, director, employee, partner, agent or otherwise), in any business carried on by Astrotech or any member of the CASTEL Group during such period;
(b) for a period of one year after Completion, CASIL shall not (i) either on its own account or on behalf of any other person or company solicit or entice away or attempt to solicit or entice away from Astrotech or any member of the CASTEL Group the custom of any person, company or organisation who shall have been a customer, identified prospective customer, agent or correspondent of Astrotech or any member of the CASTEL Group or in the habit of dealing with Astrotech or any member of the CASTEL Group; or (ii) enter into any contract for sale and purchase or accept business from any such person, company or organisation in a business area in which Astrotech or any member of the CASTEL Group competes; and
(c) CASIL shall not for a period of three years after the date of the Sale and Purchase Agreement make use of or divulge to any person any information (other than any information properly available to the public or divulged pursuant to an order of a court of competent jurisdiction or any applicable stock exchange or other regulatory requirement) relating to Astrotech or any member of the CASTEL Group, the identity of their customers and suppliers, their products, finance, contractual arrangements, business or methods of business.

CASIL shall also procure that any associates controlled by it shall observe the aforesaid non-competition and non-disclosure undertakings.

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LETTER FROM THE CHAIRMAN

The Group, CASTEL, Astrotech, CALT and CASC

The Group is principally engaged in the manufacturing of electronic products including liquid crystal display, audio-video products, plastic moulds, printed circuit boards, intelligent chargers and security systems; and its various investment holdings, including CASTEL.

The CASTEL Group is principally engaged in the businesses of intelligent transportation systems, broadband wireless access systems and equipment, and manufacturing and sale of telecommunications products.

Astrotech does not carry on any business or have any material assets other than its investment in CASTEL.

The principal activities of CALT include research, design, development and manufacture of launch vehicles and the provision of launch services.

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 commercial satellite launching services.

Based on the unaudited management accounts of Astrotech for the 6 months ended 30 June 2004, its loss before and after tax and minority interests amounted to HK$4,290 and HK$4,290 respectively; and its net liabilities as at 30 June 2004 amounted to HK$142,997,053. Based on the audited accounts of Astrotech for the year ended 31 December 2003, its loss before and after tax amounted to HK$35,490 and HK$35,490 respectively. Based on the audited accounts of Astrotech for the year ended 31 December 2002, its loss before and after tax amounted to HK$4,290 and HK$4,290 respectively.

Based on the unaudited consolidated management accounts of the CASTEL Group for the 6 months ended 30 June 2004, its consolidated profit before and after tax and minority interests amounted to HK$4,556,000 and HK$2,343,000 respectively; and its consolidated net asset value as at 30 June 2004 amounted to HK$177,629,000. Based on the audited consolidated accounts of the CASTEL Group for the year ended 31 December 2003, its consolidated profit before and after tax amounted to HK$26,000 and HK$2,217,000 respectively. Based on the audited consolidated accounts of the CASTEL Group for the year ended 31 December 2002, its consolidated loss before and after tax amounted to HK$406,000 and HK$208,000 respectively.

As a result of the disposal, it is expected that the Company will make an exceptional gain of approximately HK$65,290,000 for the year ending 31 December 2005 (subject to final audit of the consolidated profit of the Company to be performed by the auditors), representing the difference between the consideration for such disposal of HK$143,758,081 and the unaudited carrying value of approximately HK$78,468,000 (assuming that such value will be the same as that as at 30 June 2004) (the audited carrying value as at 31 December 2003 was HK$66,184,000).

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LETTER FROM THE CHAIRMAN

Shareholding Structures

The shareholding structures of the Company and CASTEL before and after the Group Reorganisation are as follows:

Before Group Reorganisation

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

CASC
100% 100%
Jetcote Investments Limited
Public Shareholders CALT
and its subsidiaries
58.14% 41.86% (note 1)
CASIL (stoock code: 31)
100%
Public Shareholders Astrotech
55.83% 44.17%
CASTEL (stock code: 1185)
----- End of picture text -----

Note 1: The total shareholding in the Company of the above companies are 41.86%. Jetcote Investments Limited holds approximately 0.26%; Burhill Company Limited holds approximately 18.38%; Sin King Enterprises Company Limited holds approximately 18.36%; Jet Square Developments International Limited holds approximately 2.88%; Star River Assets Limited holds approximately 1.5% and Full Power International Limited holds approximately 0.49%. Burhill Company Limited, Sin King Enterprises Company Limited, Jet Square Developments International Limited, Star River Assets Limited and Full Power International Limited are subsidiaries of Jetcote Investments Limited. Jetcote Investments Limited is a subsidiary of CASC.

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LETTER FROM THE CHAIRMAN

After Group Reorganisation

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

CASC
100% 100%
Jetcote Investments Limited
Public Shareholders CALT
and its subsidiaries
58.14% 41.86% (note 1)
CASIL (stock code: 31) 100%
Public Shareholders Astrotech
55.83% 44.17%
CASTEL (stock code: 1185)
----- End of picture text -----

Note 1: The total shareholding in the Company of the above companies are 41.86%. Jetcote Investments Limited holds approximately 0.26%; Burhill Company Limited holds approximately 18.38%; Sin King Enterprises Company Limited holds approximately 18.36%; Jet Square Developments International Limited holds approximately 2.88%; Star River Assets Limited holds approximately 1.5% and Full Power International Limited holds approximately 0.49%. Burhill Company Limited, Sin King Enterprises Company Limited, Jet Square Developments International Limited, Star River Assets Limited and Full Power International Limited are subsidiaries of Jetcote Investments Limited. Jetcote Investments Limited is a subsidiary of CASC.

Reasons for and Benefits of the Group Reorganisation

Following the placing of new CASTEL Shares by CASTEL in September 2003 and March 2004, the Company’s beneficial interest in CASTEL was diluted from approximately 51.22% to 48.98% and eventually to approximately 44.17%. As CASTEL has ceased to be a subsidiary and has become an indirect associated company of the Company, it is believed that the proposed Group Reorganisation will be beneficial to both the Group and the CASTEL Group for the following reasons:

(a) given that the CASTEL Group has been part of the Group, upon completion of the Sale and Purchase Agreement, it will allow a clearer delineation of the respective business focuses of the Group and the CASTEL Group in that the Group will focus primarily on the electronics business whereas the CASTEL Group will focus on the telecommunications-related business;
(b) it will allow the respective management teams of the Group and the CASTEL Group to focus their time and resources on their respective distinct lines of businesses, thereby enhancing efficiency in operations and decision-making processes;

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LETTER FROM THE CHAIRMAN

(c) the Company will have the opportunity to realise its non-core investment in CASTEL through the disposal of Astrotech, thereby enhancing the cash flow of the Group; and
(d) CASTEL will be directly controlled (through CALT) by its ultimate controlling shareholder, CASC, rather than through another listed company, the Company, thus establishing a more unique image in the market and receiving more direct support from CASC and CALT.

Upon completion of the Sale and Purchase Agreement, the Company will cease to have any control over CASTEL.

Use of Proceeds

The Company intends to use most of the net proceeds totalling HK$143,758,081 from the disposal of its entire 100% equity interest in Astrotech to repay the bank borrowings of the CASIL Group of approximately HK$119 million and the rest will be used as working capital.

Effect on the Earnings, Assets and Liabilities of the Company

Based on the interim report of the Company for the six months ended 30 June 2004, the consolidated balance sheet of the Group recorded a total consolidated assets of HK$2,736,003,000 and cash and cash equivalents of HK$366,387,000 as at 30 June 2004. As at 30 June 2004, the total liabilities of the Group amounted to HK$1,785,774,000 and the book value of the Company’s investment in Astrotech was HK$78,475,000. Given that the proceeds of the proposed Group Reorganisation is HK$143,758,081, it is expected by the Company that the Company will make an exceptional gain of approximately HK$65,290,000 for the year ending 31 December 2005 (subject to final audit to be performed by the auditors). In addition, as the Company intends to use most of the net proceeds totalling HK$143,758,081 from the disposal of its entire 100% equity interest in Astrotech to repay the bank borrowings of the Group, it is expected by the Company that the financial position of the Company will be improved.

Implications of the Group Reorganisation under the Listing Rules

As CALT is wholly-owned by CASC, the ultimate controlling shareholder of the Company, the entering into of the Sale and Purchase Agreement between the Company and CALT constitutes a connected transaction for the Company under the Listing Rules and is subject to, among other things, 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 comprises of Mr. Lee Hung Sang, Mr. Chow Chan Lum, Charles and Mr. Luo Zhenbang (all of whom have no material interest in the transaction contemplated under the Sale and Purchaser Agreement) has been formed to advise the Independent Shareholders in respect of the terms of the Sale and Purchase Agreement (including the non-competition and non-disclosure undertakings) and the recommendation of voting. Somerley Limited has been appointed as the independent financial advisor to advise the independent board committee and the Independent Shareholders of the Company in respect of the proposed transaction.

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LETTER FROM THE CHAIRMAN

Extraordinary General Meeting

The notice of the Extraordinary General Meeting is set out on page 37 of this circular.

A form of proxy is enclosed with this document for use at the Extraordinary General Meeting. Whether or not you intend to be present at the meeting, you are requested to complete and return the enclosed form of proxy to the share registrar of the Company, the Standard Registrars Limited, at Ground Floor, BEA Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong in accordance with the instructions printed thereon not less than 48 hours before the time appointed for the holding of the meeting. Completion of a form of proxy will not preclude you from attending and voting at the Extraordinary General Meeting in person if you so wish.

The ordinary resolution to be proposed will be voted by way of a poll.

The six wholly-owned subsidiaries of CASC, namely, Jetcote Investments Limited, Burhill Company Limited, Sin King Enterprises Company Limited, Jet Square Developments International Limited, Star River Assets Limited and Full Power International Limited (which together hold approximately 41.86% equity interest in the Company as at the Latest Practicable Date), and their respective associates (as defined under the Listing Rules) shall abstain from voting at the Extraordinary General Meeting.

Recommendation

The Directors are of the opinion that the proposed transfer of the Company’s interests in Astrotech is in the best interests of the Company and recommend that Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the forthcoming Extraordinary General Meeting.

The Independent Board Committee having reviewed the advice given by Somerley Limited, has recommended Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the forthcoming Extraordinary General Meeting.

Your attention is also drawn to the letters from the Independent Board Committee and Somerley Limited for additional information in respect of the Proposed Disposal. Further information of the Group is set out in the Appendix.

Yours faithfully, Rui Xiaowu Chairman

−14 −

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

==> picture [247 x 85] intentionally omitted <==

(Stock Code: 31)

4 February 2005

To the Independent Shareholders,

CONNECTED AND DISCLOSEABLE TRANSACTION

We refer to the circular of the Company dated 15 February 2005 (the “Circular”) of which this letter forms part. Capitalized terms used in this letter shall have the same meanings as defined in the Circular.

We have been appointed by the Board to advise the Independent Shareholders in respect of the proposed transfer by the Company of its entire 100% equity interest in and shareholder’s loan due from Astrotech Group Limited (which in turn holds approximately 44.17% of the issued share capital of CASTEL) (the “Proposed Disposal”), details of which are contained in the Letter from the Chairman as set out on pages 4 to 14 of the Circular.

We have considered the various details of the Proposed Disposal, in particular, the reasons and benefits of the transaction and the effect thereof. We have also reviewed the advice given by Somerley Limited, the independent financial advisor, on the terms of the Proposed Disposal (including the terms of the non-competition and non-disclosure undertakings) as set out in their letter reproduced on pages 16 to 31 of the Circular.

Having considered the information set out in the Letter from the Chairman and taking into account the advice from Somerley Limited, we consider that the terms of the Sale and Purchaser Agreement (including the terms of the non-competition and non-disclosure undertakings) are on normal commercial terms and are fair and reasonable and in the interests of the shareholders of the Company as a whole. Accordingly, we recommend the Independent Shareholders to vote in favour of the ordinary resolution as set out in the notice of the Extraordinary General Meeting.

Yours faithfully,

Lee Hung Sang

Chow Chan Lum, Charles Luo Zhenbang

Independent Board Committee

−15 −

LETTER FROM THE INDEPENDENT FINANCIAL ADVISOR

The following is the letter of advice regarding the Proposed Disposal from Somerley Limited, the independent financial advisor, to the Independent Board Committee and the Independent Shareholders for inclusion in this circular.

==> picture [36 x 37] intentionally omitted <==

Somerley Limited

Suite 2201, 22nd Floor Two International Finance Centre 8 Finance Street Central Hong Kong

15 February 2005

To: The Independent Board Committee and the Independent Shareholders

Dear Sir/Madam,

DISCLOSEABLE AND CONNECTED TRANSACTION

INTRODUCTION

We refer to our appointment to advise the independent committee of the Board (the “Independent Board Committee”) and the Independent Shareholders in connection with the proposed disposal (the “Proposed Disposal”) by the Company of the entire 100% equity interest in and the entire shareholder’s loan due from Astrotech to CALT, a wholly-owned subsidiary of CASC, which is the ultimate controlling shareholder of the Company. Astrotech does not carry on any business or have any material assets other than its investment of 449,244,000 CASTEL Shares, representing approximately 44.17% of the issued share capital of CASTEL. Details of the terms of the Sale and Purchase Agreement in relation to the Proposed Disposal are contained in the circular to the Shareholders dated 15 February 2005 (the “Circular”), of which this letter forms part. Capitalised terms used in this letter have the same meanings as defined in the Circular unless the context otherwise requires.

As a wholly-owned subsidiary of CASC, CALT is a connected person of the Company. The Proposed Disposal therefore constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules and requires approval by the Independent Shareholders.

The Independent Board Committee, comprising Messrs. Lee Hung Sang, Mr. Chow Chan Lum, Charles and Luo Zhenbang who are independent non-executive directors of the Company, has been established to make a recommendation to the Independent Shareholders as regards the terms of the Proposed Disposal. We have been appointed as independent financial advisor to advise the Independent Board Committee and the Independent Shareholders in this regard.

−16 −

LETTER FROM THE INDEPENDENT FINANCIAL ADVISOR

In formulating our advice, we have relied on the information and facts supplied, and the opinions expressed, by the directors and management of the Company and CASTEL, which we have assumed to be true, accurate and complete. We have reviewed, among others, the Sale and Purchase Agreement in relation to the Proposed Disposal and financial information of the Group and the CASTEL Group, including their audited financial statements for the two years ended 31 December 2003 and the unaudited interim results for the six months ended 30 June 2004.

We have sought and received confirmation from the directors of the Company (the “Directors”) that all material relevant information has been supplied to us and that to the best knowledge of the Directors, no material facts have been omitted which would make any statements misleading. We consider that the information we have received is sufficient for us to reach the advice and recommendation as set out in this letter and to justify our relying on such information. We have no reason to doubt the truth and accuracy of the information provided to us or that any material information has been omitted or withheld. However, we have not conducted any independent investigation into the business and affairs of the Group or the CASTEL Group. We have assumed that all representations contained or referred to in the Circular are true at the date of the Circular and will continue to be true up to the date of the Extraordinary General Meeting.

PRINCIPAL FACTORS AND REASONS TAKEN INTO ACCOUNT

In arriving at our opinion on the terms of the Proposed Disposal, we have taken into consideration the following principal factors and reasons:

1. Reasons for and benefits of the Proposed Disposal

(i) Opportunity to realise the Group’s investment in CASTEL for cash on acceptable terms

CASTEL was a subsidiary of the Company until two placings of new CASTEL Shares in September 2003 and March 2004. Following these placings, the Company’s interest in CASTEL diluted from approximately 51.22% to 48.98% and eventually to approximately 44.17% and CASTEL ceased to be a subsidiary of the Company. It remains as associated company of the Group. The Proposed Disposal represents an opportunity for the Group to realise its investment in CASTEL at a premium over its attributable net assets and for a cash consideration which can be used to reduce borrowings.

(ii) Clearer business delineation and focus

The principal business of the Group is the manufacturing of electronic products including liquid crystal display, audio-video products, plastic moulds, printed circuit boards, intelligent chargers and security systems. It also holds various investments, including CASTEL.

−17 −

LETTER FROM THE INDEPENDENT FINANCIAL ADVISOR

The CASTEL Group is principally engaged in broadband wireless access systems and equipment, the manufacture and sale of communications products, video conference systems and intelligent transportation systems.

Although both groups operate broadly within the electronics sector, CASTEL is at present principally a communications company. There is no material commonality in product or product development, or in major suppliers and customer base. We concur with the Directors’ view that there is no significant commonality in the activities of the Company and CASTEL.

2. Business, results and prospects of CASTEL

(i) Business

The CASTEL Group currently employs about 275 employees, of which 38 are located in the Hong Kong head office and the remaining are in the China Mainland offices. Based on the information in CASTEL’s annual reports for the two years ended 31 December 2003 and the interim report for the six months ended 30 June 2004, set out is an analysis of turnover and segment results, and details of the principal businesses of the CASTEL Group:

Turnover Broadband wireless access Communication products Video conference system Intelligent transportation system Operating profit Broadband wireless access Communication products Video conference system Intelligent transportation system Profit margin Broadband wireless access Communication products Video conference system Intelligent transportation system	For the year ended 31 December 2002 2003 HK$ million HK$ million (audited) % (audited) % 44.4 (39.1) 74.6 (51.9) 34.4 (30.3) 37.1 (25.8) 29.4 (25.9) 13.0 (9.0) 5.3 (4.7) 19.1 (13.3) 113.5 (100.0) 143.8 (100.0)	For the year ended 31 December 2002 2003 HK$ million HK$ million (audited) % (audited) % 44.4 (39.1) 74.6 (51.9) 34.4 (30.3) 37.1 (25.8) 29.4 (25.9) 13.0 (9.0) 5.3 (4.7) 19.1 (13.3) 113.5 (100.0) 143.8 (100.0)	For the six months ended 30 June 2003 2004 HK$ million HK$ million (unaudited) % (unaudited) % 24.1 (36.6) 42.2 (62.1) 16.1 (24.4) 14.1 (20.7) 14.2 (21.5) 9.4 (13.8) 11.5 (17.5) 2.3 (3.4) 65.9 (100.0) 68.0 (100.0) 1.7 10.5 1.8 2.4 1.6 0.8 (3.4) (6.0) 1.7 7.7 7.1% 24.9% 11.2% 17.0% 11.3% 8.5% N/A N/A	For the six months ended 30 June 2003 2004 HK$ million HK$ million (unaudited) % (unaudited) % 24.1 (36.6) 42.2 (62.1) 16.1 (24.4) 14.1 (20.7) 14.2 (21.5) 9.4 (13.8) 11.5 (17.5) 2.3 (3.4) 65.9 (100.0) 68.0 (100.0) 1.7 10.5 1.8 2.4 1.6 0.8 (3.4) (6.0) 1.7 7.7 7.1% 24.9% 11.2% 17.0% 11.3% 8.5% N/A N/A
	5.7 2.6 6.0 (10.1)	13.4 3.4 (0.7) (8.2)	1.7 1.8 1.6 (3.4)	10.5 2.4 0.8 (6.0
	4.2 12.8% 7.6% 20.4% N/A	7.9 18.0% 9.2% N/A N/A	1.7 7.1% 11.2% 11.3% N/A

−18 −

LETTER FROM THE INDEPENDENT FINANCIAL ADVISOR

(a) broadband wireless access

Under this business segment, the CASTEL Group engages in developing, manufacturing and selling wireless broadband network telecommunication devices and systems integration. Broadband wireless access is in general more profitable than the other principal businesses of the CASTEL Group. The CASTEL Group’s wireless access system has been selected as network construction equipment by large operators and internet service providers such as China Telecom, China Netcom and China Unicom. The principal markets are in the Greater China region and South East Asia. New broadband wireless access products used for voice and data accessing have been launched by the CASTEL Group in 2004 and a commercial scale of operations has been achieved.

(b) communication products

The CASTEL Group engages in design, development, manufacture and sale of digital program control switching systems, wireless broadband access devices, computer peripherals and telecommunications products. The CASTEL Group’s communication products are mainly sold to customers in North America, Europe, Australia and other Asian countries. The CASTEL Group’s production base of communication terminal products was satisfactorily reviewed and accredited with ISO9001: 2000 certification in 2003.

(c) video conferencing system

The CASTEL Group’s video conferencing system business involves the development, manufacturing and selling of telecommunication products and systems integration. The main products include video-conferencing and picture-transferring systems, multi-functional digital program control switch platforms and emergency calling systems. The target customers are local public security departments across the PRC.

(d) intelligent transportation system

This line of business specialises in the research and development, integrating and implementing global positioning system, intelligence monitoring and controlling devices and applications. The intelligent transportation system is mainly applied in the areas of public security, customs, highway, bank and taxi companies.

−19 −

LETTER FROM THE INDEPENDENT FINANCIAL ADVISOR

(ii) Financial Results

We set out in the following the key financial information of the CASTEL Group for the two years ended 31 December 2003 and the six months ended 30 June 2004 extracted from its annual reports and interim report for the respective period:

	For the	For the	For the six
	year ended	year ended	months ended
	31 December	31 December	30 June
	2002	2003	2004
	(audited)	(audited)	(unaudited)
	HK$’000	HK$’000	HK$’000
	(As restated)
Turnover	113,534	143,872	68,006
Gross profit	38,938	48,293	30,367
Profit from operation	5,733	7,518	7,116
Net profit/(loss) after
taxation and minority
interest	(208)	2,217	2,343
Gross profit margin	34.3%	33.6%	44.7%
Operating profit margin	5.0%	5.2%	10.5%
Net profit margin	N/A	1.5%	3.4%
	As at	As at	As at
	31 December	31 December	30 June
	2002	2003	2004
	(audited)	(audited)	(unaudited)
	HK$’000	HK$’000	HK$’000
	(As restated)
Total assets	269,685	317,032	364,104
Total liabilities	(141,200)	(173,938)	(179,224)
Minority interest	(10,747)	(7,969)	(7,251)
Net assets	117,738	135,125	177,629
Net assets value per
CASTEL Share
(Note 1)	HK$0.116	HK$0.133	HK$0.175
Net tangible assets
(Note 2)	75,080	90,968	134,925
Net tangible assets value
per CASTEL Share
(Note 1)	HK$0.074	HK$0.089	HK$0.133

−20 −

LETTER FROM THE INDEPENDENT FINANCIAL ADVISOR

Note 1: The figures for net assets value and net tangible assets value per CASTEL Share are based on the existing issued shares capital of 1,017,139,763 CASTEL Shares as at the Latest Practicable Date.
Note 2: The figures for net tangible assets of the CASTEL Group are after deduction of intangible assets, comprised of development costs relating to research and development of broadband wireless access systems, intelligent transportation business and video conferencing systems, technology licence right and goodwill. Set out is the breakdown of the intangible assets at the respective year end or period end date:

Net assets Less: Development costs Technology licence right Goodwill Net tangible assets	As at 31 December 2002 HK$’000 117,738 8,096 33,930 632 75,080	As at 31 December 2003 HK$’000 135,125 6,830 32,799 4,528 90,968	As at 30 June 2004 HK$’000 177,629 6,635 31,668 4,401
			134,925

Based on the unaudited results for the six months ended 30 June 2004, the annualised turnover of the CASTEL Group for the year ended 31 December 2004 is approximately HK$136.0 million, representing a decrease of 5.5% from the turnover for the year ended 31 December 2003. The CASTEL Group recorded net profit of approximately HK$2.3 million for the interim period of 2004, which exceeded the net profits for the year ended 31 December 2003. As illustrated in the analysis of turnover and segment results above, the principal reason for the increase in net profit is the increase in profit margins of (i) broadband wireless access system from 18.0% in the year ended 31 December 2003 to 24.9% in the six months ended 30 June 2004 and (ii) communication products from 9.2% to 17.0% during the same period.

Based on the 44.17% interest held by the Company in CASTEL, the Group’s attributable share of CASTEL’s results for the six months ended 30 June 2004 would be approximately HK$1.03 million which represents about 2.13% of the net profit of the Group for same period. We consider that the above contribution is not significant in terms of the net profits of the Group, and therefore the Proposed Disposal should not have a material impact on the Group’s financial results.

(iii) Future prospects of the CASTEL Group

In respect of the broadband wireless access system, the major source of turnover and profits, the CASTEL Group has launched new products during 2004 which received positive market response from customers. Despite there being room

−21 −

LETTER FROM THE INDEPENDENT FINANCIAL ADVISOR

for further expansion, we understand from the management of the CASTEL Group that the market for broadband wireless access system is likely to become more competitive.

Although the CASTEL Group had implemented various measures to strengthen the market share of its communication products, its annualised turnover of approximately HK$28.2 million, calculated based on the unaudited results for the six months ended 30 June 2004, reflects a 24.0% decrease when compared to the turnover of approximately HK$37.1 million in 2003. We understand from CASTEL that this was mainly due to the reduction of purchase orders from a major customer of the CASTEL Group. It is the intention of CASTEL to contribute more marketing resources in order to improve the performance of this line of business.

Annualised turnover from video conferencing systems recorded a significant increase as a result of launching new products. We understand from CASTEL that the outlook for this line of business is positive in general terms for 2005 but a significant improvement is not expected. The substantial reduction in the turnover in respect of intelligent transportation systems was mainly due to severe competition in the industry, which the CASTEL Group believes will continue in the near future.

3. Consideration and use of proceeds

As disclosed in the “Letter from the Chairman”, the terms of the Sale and Purchase Agreement in respect of the Proposed Disposal were arrived at after arm’s length negotiations between the parties involved. Approximately HK$119.0 million of the proceeds from the Proposed Disposal is intended to be applied towards the repayment of bank borrowings of the Group, while the remaining balance will be retained as working capital.

(i) Comparison of consideration with net assets

The consideration for the Proposed Disposal represents an effective price of HK$0.32 per CASTEL Share (the “Price”). Set out is a comparison of the Price with the net asset value per CASTEL Share:

				Premium of
		Premium of		the Price
	Net asset	the Price	Net tangible	over the net
	value per	over the net	asset value	tangible asset
Price per	CASTEL	asset value	per CASTEL	value per
CASTEL	Share as at	per CASTEL	Share as at	CASTEL
Share	30 June 2004	Share	30 June 2004	Share
HK$0.32	HK$0.175	82.9%	HK$0.133	140.6%

−22 −

LETTER FROM THE INDEPENDENT FINANCIAL ADVISOR

As illustrated above, based on the unaudited interim report of the CASTEL Group for the six months ended 30 June 2004, the Price represents a premium of approximately 82.9% over the unaudited consolidated net asset value per CASTEL Share of approximately HK$0.175, and a premium of approximately 140.6% over the unaudited consolidated net tangible asset value per CASTEL Share of approximately HK$0.133.

We note from an announcement of CASTEL dated 13 October 2004 that CASTEL has entered into an agreement to dispose of certain properties of the CASTEL Group and it is expected that CASTEL will realise a net gain of approximately HK$7.48 million (subject to audit by CASTEL’s auditor). Based on the unaudited interim report of the CASTEL Group for the six months ended 30 June 2004 and adjusted for the aforesaid net gain from disposal, the unaudited adjusted consolidated net asset value and the unaudited adjusted consolidated net tangible asset value of CASTEL Group would be HK$0.182 per CASTEL Share and HK$0.140 per CASTEL Share, respectively. On this basis, the Price represents a premium of approximately 75.8% over the unaudited adjusted consolidated net asset value per CASTEL Share and a premium of approximately 128.6% over the unaudited adjusted consolidated net tangible asset value per CASTEL Share.

(ii) Comparison of premium paid on change of control of Comparable Transactions

As illustrated in the paragraph headed “Financial results” above, the CASTEL Group recorded a relatively thin profit of approximately HK$2.3 million for the interim period of 2004. As such, we consider that it is suitable to assess the Proposed Disposal as a sale of a controlling stake in a listed company with low profitability. For the purpose of our assessment of the Price, we have identified companies listed in Hong Kong which had thin profits or were loss-making and were subject to a general offer or whitewash waiver application under The Codes on Takeovers and Mergers. We have identified five comparable companies (the “Comparable Companies”) which in our opinion form a useful comparison with the terms of the Proposed Disposal.

−23 −

LETTER FROM THE INDEPENDENT FINANCIAL ADVISOR

The table below illustrates the premium paid in the case of these comparable transactions (the “Comparable Transactions”) at the respective offer price or subscription price compared to consolidated net asset value:

			Value of the
		Offer price	company at
		per offer	offer price
		share/	calculated on
		subscription	100% basis/	Consolidated	Premium over
		price per	total	net asset/	consolidated
Date of		subscription	subscription	(deficit)	net asset/
announcement	Name and stock code	share	price	(Note 1)	(deficit) value
		HK$	HK$’million	HK$’million	HK$’million
8 October 2003	Huabao International	0.10	24.7	(2.8)	27.5
	Holdings Limited
	(formerly known as
	Leaptek Limited)
	(336)
16 December 2003	VXL Capital Partners	3.723	268.1	191.6	76.5
	Corporation Limited
	(formerly know as
	Kim Eng Holdings
	(Hong Kong)
	Limited) (727)
9 January 2004	Medtech Group	0.01	50.0	1.79	48.2
	Company Limited
	(1031)
3 September 2004	Wanji Pharmaceutical	0.01313	71.5	13.6	57.9
	Holdings Limited
	(835)
20 December 2004	Chinese People Gas	0.10	261.5	33.1	228.4
	Holdings Company
	Limited (formerly
	known as KEL
	Holdings Limited)
	(681)
Average premium					87.7
24 January 2005	CASTEL (Note 2)	0.32	325.5	177.6	147.9

Note 1: The figures for consolidated net assets/(deficit) are based on the latest audited annual accounts issued before the date of announcement.
Note 2: The consolidated net assets of CASTEL is based on its unaudited interim report for the six months ended 30 June 2004.
Note 3: Save for Medtech Group Company Limited which involved a whitewash application, the other Comparable Companies were subject to general offers.

−24 −

LETTER FROM THE INDEPENDENT FINANCIAL ADVISOR

The premium of the valuation of the Comparable Companies valued at their respective offer price and the total subscription price over their consolidated net asset values is in the range of HK$27.5 million to HK$228.4 million. The average premium is approximately HK$87.7 million. The premium of the valuation of CASTEL valued at the Price over its consolidated net asset value is approximately HK$147.9 million, which is higher than all but one of the Comparable Companies and considerably higher than the average.

In the case of Chinese People Gas Holdings Company Limited (formerly known as KEL Holdings Limited) (“Chinese People”), the premium is higher. Chinese People announced on 20 December 2004 that it was subject to a mandatory unconditional cash offers as a result of change in control of the company. The share price of Chinese People had been volatile before the offer was made. We believe that this increase in the share price of Chinese People may be due to speculation of possible turnaround of the company. On 18 February 2004, Chinese People announced a proposed acquisition of interests in distribution and supply of piped natural gas and installation of natural gas distribution facilities in the PRC.

(iii) Comparison of the Price with prevailing market price

The chart below shows the daily closing prices of the CASTEL Shares on the Stock Exchange during the 24 months preceding 21 January 2005, being the last trading day preceding the suspension of trading in the CASTEL Shares before the announcement of the Proposed Disposal and up to and including the Latest Practicable Date.

==> picture [315 x 214] intentionally omitted <==

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

0.5
0.4
0.3 CASTEL
closing
price
HK$ Price
0.2
0.1
0.0
Date
21/01/03 21/02/03 21/03/03 21/04/03 21/05/03 21/06/03 21/07/03 21/08/03 21/09/03 21/10/03 21/11/03 21/12/03 21/01/04 21/02/04 21/03/04 21/04/04 21/05/04 21/06/04 21/07/04 21/08/04 21/09/04 21/10/04 21/11/04 21/12/04 21/01/05
----- End of picture text -----

−25 −

LETTER FROM THE INDEPENDENT FINANCIAL ADVISOR

The Price represents:

(a) a discount of approximately 19.0% to the closing price of HK$0.395 per CASTEL Share on the Latest Practicable Date;
(b) a discount of approximately 22.9% to the average closing price of approximately HK$0.415 per CASTEL Share for the 10 trading days leading up to and including the Latest Practicable Date;
(c) a discount of approximately 21.6% to the average closing price of approximately HK$0.4082 per CASTEL Share for the 30 trading days leading up to and including the Latest Practicable Date;
(d) a discount of approximately 27.3% to the closing price of HK$0.44 per CASTEL Share as at 21 January 2005 (being the last trading day preceding the release of the Announcement);
(e) a discount of approximately 21.4% to the average closing price of approximately HK$0.4070 per CASTEL Share for the 10 trading days leading up to and including 21 January 2005; and
(f) a discount of approximately 21.6% to the average closing price of approximately HK$0.4083 per CASTEL Share for the 30 trading days leading up to and including 21 January 2005.

As illustrated above, the highest and lowest closing price of the CASTEL Shares for the period from January 2003 to the Latest Practicable Date were approximately HK$0.53 and HK$0.315 respectively. Based on CASTEL’s net profits of approximately HK$2.2 million for the year ended 31 December 2003, which translates into earnings per CASTEL Share of 0.25 cents, the price earning ratio of the CASTEL Shares by reference to the highest closing price and the lowest closing price were approximately 212 times and 126 times respectively. In view of the abnormally high price earning ratio and net asset backing of $0.175 per CASTEL Share as at 30 June 2004, we do not consider that the market prices of CASTEL Share shown in the chart are supported by the fundamental financial performance of the CASTEL Group.

−26 −

LETTER FROM THE INDEPENDENT FINANCIAL ADVISOR

The chart below shows the monthly trading volume of the CASTEL Shares on the Stock Exchange from January 2002 up to January 2005:

==> picture [350 x 211] intentionally omitted <==

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

300,000,000
250,000,000
200,000,000
Total monthly trading volume
of CASTEL Shares
150,000,000
100,000,000
50,000,000
0
Date
Jan-02 Mar-02 May-02 Jul-02 Sep-02 Nov-02 Jan-03 Mar-03 May-03 Jul-03 Sep-03 Nov-03 Jan-04 Mar-04 May-04 Jul-04 Sep-04 Nov-04 Jan-05
Number of CASTEL Shares
----- End of picture text -----

The table below sets out the total number of CASTEL Shares traded per month, the percentage of the monthly trading volume to the issued share capital of CASTEL and the percentage of the monthly trading volume to CASTEL Shares held by the public respectively for the period commencing from 1 January 2002 and up to and including the Latest Practicable Date:

		% of total
	Total monthly	monthly trading		% of total
	trading volume	volume to total	monthly trading
	of CASTEL	issued CASTEL	volume to the
	Shares	Shares	public float
	Number of	% (Note 1)		% (Note 2)
	CASTEL Shares
2002
January	12,342,267	1.41		2.88
February	4,288,376	0.49		1.00
March	8,101,775	0.92		1.89
April	15,967,742	1.82		3.73
May	43,238,648	4.93		10.10
June	19,777,840	2.25		4.62
July	10,556,357	1.20		2.47
August	3,674,297	0.42		0.86
September	2,446,325	0.28		0.57
October	2,232,624	0.25		0.52
November	3,125,948	0.36		0.73
December	3,667,488	0.42		0.86

−27 −

LETTER FROM THE INDEPENDENT FINANCIAL ADVISOR

		% of total	% of total
	Total monthly	monthly trading			% of total
	trading volume	volume to total		monthly trading
	of CASTEL	issued CASTEL		volume to the
	Shares	Shares		public float
	Number of	% (Note 1)			% (Note 2)
	CASTEL Shares
2003
January	6,333,128		0.72		1.48
February	3,820,888		0.44		0.89
March	4,350,696		0.50		1.02
April	5,249,063		0.60		1.23
May	17,965,520		2.05		4.20
June	14,150,600		1.61		3.31
July	19,737,171		2.25		4.61
August	13,672,114		1.56		3.20
September	38,725,806		4.22		8.28
October	210,724,676		22.98		45.04
November	34,066,870		3.71		7.28
December	48,304,638		5.27		10.32
2004
January	270,969,506		29.55		57.91
February	106,698,919		11.63		22.80
March	130,761,648		12.86		23.03
April	22,554,880		2.22		3.97
May	16,735,168		1.65		2.95
June	7,308,048		0.72		1.29
July	15,611,024		1.53		2.75
August	9,570,032		0.94		1.69
September	17,870,351		1.76		3.15
October	8,697,230		0.86		1.53
November	29,546,242		2.90		5.20
December	10,133,128		1.00		1.78
2005
January	15,591,356		1.53		2.75
1st February to
the Latest
Practicable Date	3,824,000		0.38		0.67

Notes:

Based on the number of issued CASTEL Shares at the end of each month (January 2002 to August 2003: 877,139,763; September 2003 to February 2004: 917,139,763 and March 2004 to the Latest Practicable Date: 1,017,139,763).
Based on the number of issued CASTEL Shares held by public CASTEL Shareholders at the end of each month (January 2002 to August 2003: 427,895,763; September 2003 to February 2004: 467,895,763 and March 2004 to the Latest Practicable Date: 567,895,763).

−28 −

LETTER FROM THE INDEPENDENT FINANCIAL ADVISOR

The monthly trading volume of the CASTEL Shares during the aforesaid period was mixed with turnover below 6% of the CASTEL Shares in public hands for most of months, except for May 2002 and September 2003 to March 2004. CASTEL issued announcements on 9 and 13 October 2003 and 7 January 2004 confirming that it was not aware of the reasons for the increases in trading volume and/or share price. We believe that the increases in trading volume during the period from December 2003 to March 2004 are a result of both market speculation of a possible change in shareholding in CASTEL and a possible asset injection, and the placing of 100 million new CASTEL Shares in March 2004, representing approximately 10.9% of the then existing issued share capital of CASTEL.

Based on past trading volumes, in our view, it would not be realistic for the Company to consider selling its interest in CASTEL in the market except at a very substantial discount to the market price of the CASTEL Shares. We consider that the sale discount is reasonable given the fact that CASTEL Shares are thinly traded in the market.

(iv) Comparison of the Price with companies engaged in similar business

We have identified various companies listed in Hong Kong engaged in similar businesses to the CASTEL Group. However, we have found that the turnover and net profits of these companies are significantly higher than the CASTEL Group. As such, we consider that such companies are not appropriate comparables for the purpose of evaluating the terms of the Proposed Disposal.

4. Financial effects of the Proposed Disposal on the Group

(i) Gain on completion of the Proposed Disposal

Based on the unaudited carrying value of the interests in the CASTEL Group of approximately HK$78.5 million as at 30 June 2004 and the consideration of HK$143.8 million, the Company expects to make an exceptional gain of approximately HK$65.3 million (subject to the audit to be conducted by the auditors of the Group) on completion of the Proposed Disposal. This will be included in the results of the Group for the year ending 31 December 2005.

(ii) Reduction of borrowings

As mentioned in the “Letter from the Chairman”, the Group intends to apply approximately HK$119.0 million of the proceeds from the Proposed Disposal to repay bank borrowings of the Group. The proposed repayment of bank borrowings will improve the gearing ratio (represented by the ratio of total borrowings to shareholders’ equity) of the Group which stood at approximately 115% as of 30 June 2004 to approximately 96%.

−29 −

LETTER FROM THE INDEPENDENT FINANCIAL ADVISOR

5. Non-competition and non-disclosure undertakings

We note that the Company has given certain non-competition and non-disclosure undertakings in favour of CALT, details of which are set out in the “Letter from the Chairman”. We consider it reasonable for the Company to give such undertakings in the context of the Proposed Disposal which involves a sale of a substantial interest in CASTEL by the Company.

DISCUSSION AND ANALYSIS

The activities of the Company and CASTEL do not have any significant commonality. Following placings in September 2003 and March 2004, CASTEL ceased to be a subsidiary of the Company (it remains as associated company of the Group). Based on the CASTEL Group’s audited financial statements for the year ended 31 December 2003 and the unaudited interim report for the six months ended 30 June 2004, the net profit was approximately HK$2.2 million and HK$2.3 million respectively. We consider that the profit contribution from CASTEL is not material compared to the Group’s audited and unaudited net profits for the same periods of approximately HK$30.2 million and HK$48.3 million respectively. Accordingly, we are of the view that it is reasonable for the Directors to regard the holding in CASTEL as a “non-core” asset to be considered for disposal.

We have assessed the Proposed Disposal as a sale of a controlling stake in a listed company with low profitability, i.e. a listed “shell” company. In such circumstances, we believe that it is most relevant to consider the Price by reference to the premium represented by the Price over the net asset value per CASTEL Share. Based on our calculations in the paragraph headed “Comparison of premium paid on change of control of Comparable Transactions” above, the premium over consolidated net asset value being paid for CASTEL is approximately HK$147.9 million. This is substantially higher than the average premium of the Comparable Transactions we have identified. In addition, the Group expects to make a book gain of approximately HK$65.3 million (subject to the audit to be conducted by the auditors of the Group) on the Proposed Disposal. It intends to apply approximately HK$119.0 million of the proceeds to repay the Group’s bank borrowings which will improve the gearing ratio of the Group.

The price for the Proposed Disposal of HK$0.32 per CASTEL Share is lower than recent average market prices for the CASTEL Shares of about HK$0.40. However, we consider that the market price, which is based on turnover which, in our opinion, is relatively thin, has a speculative element and is not supported either by current earnings or by net asset value. Consequently, we do not consider the discount to market price to be unreasonable in these circumstances.

−30 −

LETTER FROM THE INDEPENDENT FINANCIAL ADVISOR

RECOMMENDATION

Based on the above principal factors and reasons, we consider that the Proposed Disposal is on normal commercial terms and that those terms are fair and reasonable to the Independent Shareholders. We further consider that the entering into of the Proposed Disposal is in the interests of the Company and the Shareholders as a whole. We therefore advise, and recommend that the Independent Board Committee advises, the Independent Shareholders to vote in favour of the ordinary resolution in relation to the Proposed Disposal to be proposed at the Extraordinary General Meeting.

Yours faithfully, for and on behalf of SOMERLEY LIMITED M.N. Sabine Chairman

−31 −

APPENDIX

1. Responsibility Statement

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors collectively and individually accept full responsibility for the accuracy of the information contained in this circular and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, opinions expressed in this circular have been arrived at after due and careful consideration and that there are no other facts the omission of which would make any statement contained herein misleading.

2. Disclosure of Interests

A. Directors’ interests in the securities and debentures of the Company and its associated corporations

As at the Latest Practicable Date, none of the Directors or chief executive of the Company were, or were taken or deemed to have any interest or short positions in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of the SFO) which (a) were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO; or (b) were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (c) were required, pursuant to the Model Code, to be notified to the Company and the Stock Exchange.

B. Persons who have interests or short positions in Shares and underlying Shares which are discloseable under Divisions 2 and 3 of Part XV of the SFO

As at the Latest Practicable Date, so far as is known to the Directors or chief executive of the Company, the following parties, had, or were deemed or taken to have any interests or short positions in the Shares and underlying Shares which would fall to be disclosed to the Company and the Stock Exchange under the provisions of the Divisions 2 and 3 of Part XV of the SFO, or who were, directly or indirectly, interested in 5% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other members of the Group:

−32 −

APPENDIX

Name Capacity China Aerospace Science & Technology Corporation (Note 3) Interests in controlled corporation Jetcote Investments Limited (Note 4) Beneficial owner Interests in controlled corporation (Note 2) Burhill Company Limited (Note 4) Beneficial owner (Note 2) Sin King Enterprises Company Limited (Note 4) Beneficial owner (Note 2) Jet Square Developments International Limited (Note 4) Beneficial owner (Note 2) Star River Assets Limited (Note 4) Beneficial owner (Note 2) Full Power International Limited (Note 4) Beneficial owner (Note 2)	Number of shares interested 896,818,664 (Note 1) 5,490,456 891,328,208 896,818,664 393,681,580 393,272,908 61,706,700 32,165,100 10,501,920	% of issued 41.86% 0.26% 41.60%
		41.86% 18.38% 18.36% 2.88% 1.50% 0.49%

Notes:

These 896,818,664 Shares are held by Jetcote Investments Limited, a wholly-owned subsidiary of China Aerospace Science & Technology Corporation, and its subsidiaries.
All the five companies are wholly-owned subsidiaries of Jetcote Investments Limited. The Shares held by them form part of the total number of Shares held by Jetcote Investments Limited.
Messrs. Rui Xiaowu, Wu Hongju, Guo Xianpeng, Li Jinsheng and Xu Shilong, directors of the Company, are employees of China Aerospace Science & Technology Corporation.
Mr. Xu Shilong, a director of the Company, is a director of these companies.

Save as disclosed in this circular, as at the Latest Practicable Date, so far is known to any Director or chief executive of the Company, no other person has an interest or short position in the shares, underlying shares and debentures of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or, who is, directly or indirectly, interested in 5% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other members of the Group and none of the Directors are directors or employees of person have such interest or short position.

As at the Latest Practicable Date, there were no outstanding securities, options or warrants which were convertible into new Shares.

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APPENDIX

3. Directors’ Service Contracts

As at the Latest Practicable Date, none of the Directors had entered into, or proposed to enter into, a service contract with any member of the Group excluding contracts expiring or determinable by such member of the Group within one year without payment of compensation, other than statutory compensation.

4. Competing Interests

As at the Latest Practicable Date, none of the Directors and the chief executive officer of the Company were considered to have interests in businesses which competed or were likely to compete, either directly or indirectly, with the businesses of the Group, other than those businesses in which (a) the Group was interested and (b) the Directors’ only interests were as directors appointed to represent the interests of the Group.

5. Litigation

Save as disclosed below, as at the Latest Practicable Date, neither the Company nor any of its subsidiaries was engaged in any litigation or arbitration or claim of material importance and, so far as the Directors were aware, no litigation or arbitration or claim of material importance was pending or threatened by or against any member of the Group.

A wholly-owned subsidiary of the Company, CASIL Clearing Limited, made an advance to an independent third party company who is not a connected person of the Company (the “Borrower”) in 1997. The outstanding balance of the aforementioned loan was HK$234,229,000 as at 30 June 2004, representing 26% of the Group’s audited net asset value as at 31 December 2003. The said loan was secured by a piece of land and guaranteed by the substantial shareholder and chairman of the Borrower personally. A judgement in respect of the above advance was received in July 2004. The judgement was merely a fact finding and confined to the issue of liability only. For the issue of damages, both parties have arranged for directions for the further conduct of this action. CASC, the substantial shareholder of the Company, has undertaken to the Group the full recovery of the advance.

The Borrower, its directors, and its substantial shareholder and chairman are independent third party and not a connected person of the Company.

6. Expert

Somerley Limited has given its opinion in this circular and whose name is included in this circular, is a deemed licensed corporation for types 1, 4, 6 and 9 regulated activities under the SFO. Somerley Limited has confirmed that, as at the Latest Practicable Date, it does not have any shareholding in any member of the Group or the right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

Somerley Limited has given and has not withdrawn its written consent to the issue of this circular with its advice included in the form and context in which it is included.

−34 −

APPENDIX

7. Material Adverse Change

So far as the directors of the Company are aware, there is no material adverse change in the financial or trading position of the Group since 31 December 2003, the date to which the latest published audited accounts of the issuer have been made up.

8. Miscellaneous

(a) The qualified accountant of the Company is Mr. Luk Chi Keung. Mr. Luk is an associate member of The Hong Kong Institute of Certified Public Accountants and a fellow member of Association of Chartered Certified Accountants.
(b) The company secretary of the Company is Mr. Chan Ka Kin, Ken. Mr. Chan is an associate member of Institute of Chartered Secretaries and Administrators, UK and The Hong Kong Institute of Company Secretaries.
(c) The Company’s share registrar and transfer office is Standard Registrars Limited of Ground Floor, BEA Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong;
(d) Pursuant to article 74 of the articles of association of the Company, the following categories of persons may demand the vote in respect of the resolutions to be put to at any general meeting be taken on a poll:
(i) by the Chairman of the meeting; or
(ii) by at least three members present in person or by proxy for the time being entitled to vote at the meeting; or
(iii) by any member or members present in person or by proxy and representing not less than one-tenth of the total voting rights of all the members having the right to vote at the meeting; or
(iv) by a member or members present in person or by proxy and holding shares in the Company conferring a right to vote at the meeting being shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all the shares conferring that right.

A poll may be so demanded before or on the declaration of the result of the show of hands or on the withdrawal of any other demand for a poll.

(e) As at the Latest Practicable Date, neither Somerley Limited or any directors of the Company have any interest, direct or indirect, in any assets which have been, since 31 December 2003, the date to which the latest published audited accounts of the Company were made up, acquired or disposed of by or leased to any member of the Group, or are proposed to be acquired or disposed of by or leased to any member of the Group.

−35 −

APPENDIX

(f) None of the directors of the Company is materially interested in any contract or arrangement subsisting at the date of the Latest Practicable Date and which is significant in relation to the business of the Group.
(g) The English text of this circular shall prevail over the Chinese text.

9. Documents available for inspection

The following documents (or copies thereof) will be available for inspection during normal office hours at the registered office of the Company from the date of this Circular upto the date of the Extraordinary General Meeting (both dates inclusive):

(a) the Sale and Purchase Agreement.

−36 −

NOTICE OF EXTRAORDINARY GENERAL MEETING

==> picture [247 x 85] intentionally omitted <==

(Stock Code: 31)

NOTICE IS HEREBY GIVEN that the Extraordinary General Meeting of China Aerospace International Holdings Limited (the “Company”) will be held at 18th Floor, China Aerospace Centre, 143 Hoi Bun Road, Kwun Tong, Kowloon, Hong Kong, on Tuesday, 15 March 2005 at 11:00 a.m. to consider and if thought fit to pass the following resolution as an ordinary resolution:

Ordinary Resolution

“THAT:

(a) the proposed transfer of the entire 100% equity interest in and the entire shareholder’s loan due from Astrotech Group Limited (which, in turn, holds approximately 44.17% equity interest in CASIL Telecommunications Holdings Limited) by China Aerospace International Holdings Limited (the “Company”) to China Academy of Launch Vehicle Technology ( ) (“CALT”) pursuant to the sale and purchase agreement dated 22 January 2005 (the “Agreement”) between the Company and CALT and transactions contemplated thereunder, as more particularly set out in the circular of the Company dated 15 February 2005, be and is hereby approved; and
(b) that the directors of the Company be and are hereby authorized to take such action and execute such documents as they may deem appropriate and expedient in respect of the completion of the proposed transaction contemplated under the Agreement.”

By order of the Board Ken Chan

Company Secretary

Hong Kong, 15 February 2005

Notes:

Any member entitled to attend and vote at the above meeting is entitled to appoint one or more proxies to attend and vote instead of him. A proxy need not be a member of the Company.
To be valid, a form of proxy, together with the power of attorney or other authority, if any, under which it is signed, or a notarially certified copy of that power or authority must be deposited at the share registrar of the Company, the Standard Registrars Limited, at Ground Floor, BEA Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong not less than 48 hours before the time appointed for the holding of the meeting or any adjourned meeting.
The ordinary resolution will be taken by way of poll.

−37 −

AI assistant

Computer And Technologies Holdings Limited — Proxy Solicitation & Information Statement 2005

48900_rns_2005-02-15_7096b166-3a57-47ef-86d7-6c2d8a2ba81f.pdf

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

(Stock Code: 31)

CONNECTED AND DISCLOSEABLE TRANSACTION

AND

NOTICE OF EXTRAORDINARY GENERAL MEETING

SOMERLEY LIMITED

CONTENTS

DEFINITIONS

DEFINITIONS

DEFINITIONS

(Stock Code: 31)

CONNECTED AND DISCLOSEABLE TRANSACTION

AND

NOTICE OF EXTRAORDINARY GENERAL MEETING

Introduction

LETTER FROM THE CHAIRMAN

The Sale and Purchase Agreement

Parties

Consideration and terms

LETTER FROM THE CHAIRMAN

Conditions precedent and Completion

LETTER FROM THE CHAIRMAN

Non-competition and non-disclosure undertakings

The Group, CASTEL, Astrotech, CALT and CASC

Shareholding Structures

Before Group Reorganisation

After Group Reorganisation

Reasons for and Benefits of the Group Reorganisation

LETTER FROM THE CHAIRMAN

Use of Proceeds

Effect on the Earnings, Assets and Liabilities of the Company

Implications of the Group Reorganisation under the Listing Rules

LETTER FROM THE CHAIRMAN

Extraordinary General Meeting

Recommendation

(Stock Code: 31)

CONNECTED AND DISCLOSEABLE TRANSACTION

Somerley Limited

DISCLOSEABLE AND CONNECTED TRANSACTION

INTRODUCTION

LETTER FROM THE INDEPENDENT FINANCIAL ADVISOR

PRINCIPAL FACTORS AND REASONS TAKEN INTO ACCOUNT

1. Reasons for and benefits of the Proposed Disposal

2. Business, results and prospects of CASTEL

(i) Business

LETTER FROM THE INDEPENDENT FINANCIAL ADVISOR

(a) broadband wireless access

(b) communication products

(c) video conferencing system

(d) intelligent transportation system

(ii) Financial Results

LETTER FROM THE INDEPENDENT FINANCIAL ADVISOR

(iii) Future prospects of the CASTEL Group

LETTER FROM THE INDEPENDENT FINANCIAL ADVISOR

3. Consideration and use of proceeds

(i) Comparison of consideration with net assets

LETTER FROM THE INDEPENDENT FINANCIAL ADVISOR

(iii) Comparison of the Price with prevailing market price

LETTER FROM THE INDEPENDENT FINANCIAL ADVISOR

LETTER FROM THE INDEPENDENT FINANCIAL ADVISOR

(iv) Comparison of the Price with companies engaged in similar business

4. Financial effects of the Proposed Disposal on the Group

(i) Gain on completion of the Proposed Disposal

(ii) Reduction of borrowings

5. Non-competition and non-disclosure undertakings

DISCUSSION AND ANALYSIS

RECOMMENDATION

APPENDIX

1. Responsibility Statement

2. Disclosure of Interests

APPENDIX

3. Directors’ Service Contracts

4. Competing Interests

5. Litigation

6. Expert

APPENDIX

7. Material Adverse Change

Computer And Technologies Holdings Limited Proxy Solicitation & Information Statement 2005