Computer And Technologies Holdings Limited — Share Issue/Capital Change 2005

Jul 13, 2005

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: 31)

PROPOSED REDUCTION OF CAPITAL, CANCELLATION OF SHARE PREMIUM AND INCREASE IN AUTHORISED CAPITAL

The Board intends to put forward a proposal to reduce the nominal value of its shares to HK$0.10. In addition, the Board further proposes that the share premium account of the Company as at the effective date of the capital reduction be cancelled. On the basis of 2,142,419,902 Shares in issue and the amount of share premium of HK$939,048,311.50 as at 11 July 2005, a credit of approximately HK$1,928,177,912 will arise on the cancellation of the paid up capital and a credit of HK$939,048,311.50 will arise on the cancellation of the share premium account of the Company. Such credits will be set off, to the extent permitted by the High Court, against the accumulated losses of the Company, and any remaining balance will be credited to a special capital reserve account of the Company.

The proposed reduction of capital and cancellation of share premium are conditional on, inter alia, approval by the shareholders and confirmation by the High Court. The utilisation of the credits arising to set off the Company’s accumulated losses to the extent permitted by the High Court and the utilisation of any special capital reserve account which may be created will be subject to such conditions as the High Court may impose.

It is further proposed that conditional upon such reduction of capital and cancellation of share premium becoming effective, the authorised capital of the Company will immediately be restored to the original amount of HK$10,000,000,000 by the creation of 90,000,000,000 ordinary shares of HK$0.10 each.

A circular containing details of the proposed reduction of capital, cancellation of share premium and increase in authorised capital and a notice convening an extraordinary general meeting to approve the relevant matters will be despatched to the shareholders as soon as practicable.

The board of directors (“Board”) of China Aerospace International Holdings Limited (“Company”) is putting forward a proposal to its shareholders (“Shareholders”) for a reduction in capital of the Company by cancelling paid up capital to the extent of HK$0.90 on each of the issued ordinary shares of HK$1.00 each (“Shares”) and by reducing the nominal value of all the issued and unissued Shares from HK$1.00 to HK$0.10 (“Reduction of Capital”). In addition, the Board further proposes that the share premium account of the Company, as at the effective date of the Reduction of Capital, be cancelled (“Cancellation of Share Premium”) and that the authorised share capital be restored to the original amount prior to the Reduction of Capital (the “Increase in Authorised Capital”).

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REDUCTION OF CAPITAL

As at the date of this announcement, the authorised capital of the Company is HK$10,000,000,000 divided into 10,000,000,000 Shares, of which 2,142,419,902 Shares have been issued and are fully paid. The proposed Reduction of Capital will be effected by cancelling paid up capital to the extent of HK$0.90 upon each of the 2,142,419,902 Shares in issue as at the date of this announcement and any further Shares which may be issued prior to the date on which the petition for the confirmation of the Reduction of Capital is heard by the High Court and by reducing the nominal value of all the ordinary shares in the capital of the Company from HK$1.00 to HK$0.10 each. On the assumption that no further Shares will be issued after this announcement, a credit of approximately HK$1,928,177,912 will arise as a result of the reduction of capital. The credit will be set off, to the extent permitted by the High Court, against the accumulated losses of the Company. Remaining credit, if any, will be transferred to a special capital reserve account to be created by the Company, the application of which will be subject to such conditions imposed by the High Court.

CANCELLATION OF SHARE PREMIUM

As at the date of this announcement, the amount standing to the credit of the share premium account of the Company is HK$939,048,311.50. The Board further proposes that the share premium account of the Company, as at the effective date of the capital reduction, be cancelled and that the credit arising be set off, to the extent permitted by the High Court, against the accumulated losses of the Company. Remaining balance, if any, will be credited to a special capital reserve account of the Company, the application of which will be subject to such conditions imposed by the High Court.

INCREASE IN AUTHORISED CAPITAL

It is further proposed that conditional upon the Reduction of Capital and the Cancellation of Share Premium becoming effective, the authorised capital of the Company will immediately be restored to the original amount of HK$10,000,000,000 by the creation of an additional 90,000,000,000 shares of HK$0.10 each (“New Shares”).

Upon the Increase in Authorised Capital becoming effective and on the basis of 2,142,419,902 Shares in issue at the date of this announcement, the authorised capital of the Company will be HK$10,000,000,000 divided into 100,000,000,000 New Shares, of which 2,142,419,902 New Shares will be in issue and credited as fully paid.

CONDITIONS OF THE REDUCTION OF CAPITAL AND CANCELLATION OF SHARE PREMIUM

The Reduction of Capital and the Cancellation of Share Premium are conditional on the following:

1. the passing of a special resolution to approve the Reduction of Capital, the Cancellation of Share Premium and the Increase in Authorised Capital at an extraordinary general meeting to be convened by the Company; and

2. the confirmation of the Reduction of Capital and the Cancellation of Share Premium by the High Court and the registration by the Registrar of Companies in Hong Kong of an office copy of the order of the High Court and the minute containing the particulars required by Section 61 of the Companies Ordinance.

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Assuming that the above conditions are fulfilled, it is expected that the Reduction of Capital and the Cancellation of Share Premium will become effective immediately following the registration of the order of the High Court and the minute containing the particulars required by Section 61 of the Companies Ordinance. An application will be made to the High Court in respect of the Reduction of Capital and the Cancellation of Share Premium after the approval by the Shareholders and further announcement(s) will be made informing the Shareholders of the expected effective date and, if necessary or appropriate, the progress and results of application to the High Court and the Increase in Authorised Capital.

REASONS FOR THE REDUCTION OF CAPITAL AND THE CANCELLATION OF SHARE PREMIUM

The Company recorded accumulated losses of HK$2,266,101,000 as at 31 December 2004 as set out in the latest annual report and accounts of the Company. The Directors consider that it would be in the interests of the Company for it to conduct equity fund-raising exercises in future when suitable market opportunities arise. In addition, the Directors believe that in the light of such accumulated losses, the Company’s capital represented by its share capital and share premium account had been lost, it would be in the Company’s interests to reduce its capital and cancel its share premium account in order to eliminate so far as possible such accumulated losses, as this would be likely to improve the prospects of raising funds and to declare dividend in the future. At present, the Directors have no intention to issue new Shares and have not adopted any dividend policy. Further, since July 2001, the closing prices of the Shares were ranging from HK$0.187 to HK$0.81, which were below their nominal value of HK$1.00 each. The closing price of the Shares on the Stock Exchange on 8 July 2005 was HK$0.355 per Share. Under the Companies Ordinance, a company may not issue shares at a discount to the nominal value of such shares unless, among other things, the issue is authorised by a resolution of the Shareholders and is sanctioned by the High Court. The Directors consider that such an exercise will be costly and time consuming, and that it would therefore be desirable in any event to reduce the nominal value of the shares so as to avoid the necessity for such an exercise to be undertaken each time the Company wishes to raise funds. The Directors believe that the Reduction of Capital and the Cancellation of Share Premium will therefore give greater flexibility to the Company to raise funds through the issue of new shares in the future.

IMPACT OF THE REDUCTION OF CAPITAL AND THE CANCELLATION OF SHARE PREMIUM

Implementation of the Reduction of Capital and the Cancellation of Share Premium will not, of itself, alter the underlying assets, business operations, management or financial position of the Company or the proportionate interests of the Shareholders, except for the payment of the related expenses. The Board believes that the Reduction of Capital, the Cancellation of Share Premium and the Increase in Authorised Capital will not have any adverse effect on the financial position of the Company and its subsidiaries.

FREE EXCHANGE OF CERTIFICATES FOR NEW SHARES

Shareholders may submit existing certificates for the Shares to the registrar of the Company, Standard Registrars Limited, at Ground Floor, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong for exchange, at the expense of the Company up to four weeks from the effective date, for certificates for the New Shares.

Details of such free exchange of share certificates will be announced as soon as the effective date of the Reduction of Capital and the Cancellation of Share Premium is ascertainable.

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GENERAL

A circular containing details of the Reduction of Capital, the Cancellation of Share Premium and the Increase in Authorised Capital will be despatched to the Shareholders as soon as practicable.

By order of the Board Rui Xiaowu Chairman

Hong Kong, 12 July 2005

As of the date of this announcement, the Board of Directors of the Company comprises: 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, 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 China Daily”

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