Continental Aerospace Technologies Holding Limited — Proxy Solicitation & Information Statement 2002

Jun 26, 2002

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

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

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.

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CATIC INTERNATIONAL HOLDINGS LIMITED (incorporated in Bermuda with limited liability)

ASSIGNMENT OF NET INCOME, CAPITAL INJECTION, ESTABLISHMENT OF EQUITY JOINT VENTURES, PLACING OF EXISTING SHARES AND SUBSCRIPTION OF NEW SHARES

DISCLOSEABLE AND CONNECTED TRANSACTIONS AND PROPOSAL FOR GENERAL MANDATES TO ALLOT AND ISSUE SHARES AND TO REPURCHASE SHARES

Financial Adviser to the Company

Shenyin Wanguo Capital (H.K.) Limited

Independent Financial Adviser to the Independent Board Committee

A notice convening a special general meeting of CATIC International Holdings Limited to be held at 11:00 a.m. on Monday, 8th July, 2002 at Chater Rooms 3 & 4, Basement 3, Regal Hongkong Hotel, 88 Yee Wo Street, Causeway Bay, Hong Kong is set out on pages 37 to 40 of this circular. Whether or not you are able to attend the meeting, please complete and return the enclosed form of proxy in accordance with the instructions printed thereon as soon as possible and in any event by no later than 48 hours before the time appointed for the holding of the meeting. Completion of the form of proxy shall not preclude you from attending and voting at the meeting or any adjournment thereof should you so wish.

20th June, 2002

CATIC International Holdings Limited

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Letter from the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	18
Letter from Platinum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	19
Appendix I — Valuation Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	27
Appendix II — Explanatory Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	30
Appendix III — General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	33
Notice of Special General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	37

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CATIC International Holdings Limited

DEFINITIONS

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

“Agreements”	the Income Assignment Agreement, the Capital Injection	the Income Assignment Agreement, the Capital Injection
	Agreement, the EJV I Agreement, the EJV II Agreement, the
	Placing Agreement and the Subscription Agreement
“Assignment of Net Income”	the assignment of an 80% interest in the Net	Income from
	CATIC to WFOE pursuant to the Income	Assignment
	Agreement
“Associate(s)”	has the meaning ascribed to it under the Listing Rules
“Beijing Shangluo”	Beijing Shangluo Data System Co., Ltd, an independent third
	party
“Board”	board of Directors
“Capital Injection”	the injection of HK$26.5 million in cash by the Company,
	through CATIC GA, into CATIC Siwei pursuant	to the Capital
	Injection Agreement
“Capital Injection Agreement”	the capital injection agreement dated 28th May,	2002 entered
	into amongst CATIC GA, CATIC and China Siwei in relation
	to the capital injection by CATIC GA of HK$26.5 million into
	CATIC Siwei
“CATIC”	China National Aero-Technology Import	& Export
	Corporation, a state-owned enterprise in the	PRC and the
	controlling shareholder of the Company
“CATIC GA”	CATIC General Aviation Holdings Limited,	a company
	incorporated in the British Virgin Islands	with limited
	liability and a wholly-owned subsidiary of the	Company
“CATIC Siwei”	CATIC Siwei Co., Ltd, a company in which CATIC has a 49%
	interest
“China Cartographic”	China Cartographic Publishing House, an independent third
	party
“China Siwei”	China Siwei Surveying & Mapping Technology	Corporation,
	an independent third party
“Company”	CATIC International Holdings Limited,	a company
	incorporated in Bermuda with limited liability,	the shares of
	which are listed on the Stock Exchange
“Director(s)”	the director(s) of the Company

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CATIC International Holdings Limited

DEFINITIONS

“EJV I”	the sino-foreign equity joint venture to be established under
	the EJV I Agreement
“EJV I Agreement”	the EJV I agreement dated 28th May, 2002 entered into
	amongst the Company, China Siwei, China Cartographic,
	CATIC Siwei and Beijing Shangluo in relation to the
	establishment of the EJV I
“EJV II”	the sino-foreign equity joint venture to be established under
	the EJV II Agreement
“EJV II Agreement”	the EJV II agreement dated 28th May, 2002 entered into
	between CATIC GA and CATIC in relation to the
	establishment of the EJV II
“Eurocopter”	Eurocopter S.A., an independent third party
“GIS”	Geographical Information System, a database with location
	information such as street, road and building locations, for
	providing information in the deployment of digital maps
“GPS”	Global Positioning System, a system with satellite
	constellation that broadcasts radio signals. GPS can be used
	to derive precise three-dimensional location, velocity and
	timing information. It is being used in air, land and sea
	navigation, mapping, surveying and other applications where
	precise positioning is required
“Group”	the Company and its subsidiaries
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong
“Hong Kong”	Hong Kong Special Administrative Region of the PRC
“Income Assignment Agreement”	the Income Assignment Agreement dated 28th May, 2002
	entered into between WFOE (through CATIC Helicopter
	(H.K.) Limited, a wholly-owned subsidiary of the Company)
	and CATIC in relation to the Assignment of Net Income
“Independent Board Committee”	a committee comprising the independent non-executive
	Directors, namely, Mr. Chu Yu Lin, David and Mr. Li Ka
	Cheung, Eric, appointed to advise the Independent
	Shareholders in connection with the Transactions
“Independent Shareholders”	the Shareholders other than CATIC and its Associates
“Latest Practicable Date”	18th June, 2002, being the latest practicable date prior to the
	printing of this circular for ascertaining certain information
	contained herein

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CATIC International Holdings Limited

	DEFINITIONS
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange
“Net Income”	income, net of all expenses except taxation, to be derived
	from CATIC’s interests in Project EC 120 in relation to (i)
	sale and production of parts and spares of helicopters and
	profits accrued to CATIC from the sale of helicopters
	globally; (ii) recovery of non-recurring costs accrued to
	CATIC; (iii) commission income accrued to CATIC on the
	sale of helicopters by CATIC in the PRC; and (iv)
	administrative income accrued to CATIC from the operation
	of Project EC120
“Norton”	Norton Appraisals Limited, an independent valuer
“Over-allotment Option”	an option granted by Tacko to the Placing Agent under the
	Placing Agreement pursuant to which the Placing Agent has
	required Tacko to sell an aggregate of not more than
	70,000,000 Shares (being part of the Placing Shares) to
	placees procured by the Placing Agent
“PDA”	personal data assistant
“Placing”	the placing of the Placing Shares pursuant to the Placing
	Agreement
“Placing Agent”	Ever-Long Securities Company Limited
“Placing Agreement”	the placing agreement dated 28th May, 2002 entered into
	between Tacko and the Placing Agent in relation to the
	Placing
“Placing Shares”	an aggregate of 600,000,000 Shares, including 70,000,000
	Shares which were placed pursuant to the exercise of the
	Over-allotment Option, placed by the Placing Agent pursuant
	to the Placing Agreement
“Platinum”	Platinum Securities Company Limited, an investment adviser
	and a securities dealer registered under the Securities
	Ordinance and the independent financial adviser to the
	Independent Board Committee
“PRC”	the People’s Republic of China
“Project EC120”	a jointly controlled operation established on 20th October,
	1992 by Eurocopter, ST Aero and CATIC. Pursuant to the
	relevant agreements entered into amongst Eurocopter, ST
	Aero and CATIC, they shall cooperate to develop,
	manufacture and distribute EC 120 helicopters
“RMB”	Renminbi, the lawful currency of the PRC

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CATIC International Holdings Limited

DEFINITIONS

“SDI Ordinance”	the Securities (Disclosure of Interests) Ordinance (Chapter
	396 of the Laws of Hong Kong)
“SGM”	the special general meeting of the Company to be convened
	and held on Monday, 8th July, 2002 to consider and, if
	thought fit, approve, inter alia, the Transactions, including
	any adjourned meeting thereof
“Shareholder(s)”	holder(s) of the Shares
“Share(s)”	ordinary share(s) of nominal value of HK$0.1 each in the
	capital of the Company
“ST Aero”	Singapore Aerospace Ltd., Singapore Technologies Aerospace
	Ltd. or Singpapore Aerospace International Structures Pte
	Ltd., as the case may be, independent third parties
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Subscription”	the subscription for the Subscription Shares pursuant to the
	Subscription Agreement
“Subscription Agreement”	the subscription agreement dated 28th May, 2002 entered into
	between Tacko and the Company in relation to the
	Subscription
“Subscription Shares”	an aggregate of 600,000,000 Shares (including 70,000,000
	Shares which were issued and allotted following completion
	of the placing of 70,000,000 Shares pursuant to the exercise
	of the Over-allotment Option) which were subscribed for by
	Tacko pursuant to the Subscription Agreement
“Tacko”	Tacko International Limited, a company incorporated in the
	British Virgin Islands with limited liability and a wholly-
	owned subsidiary of CATIC
“Takeovers Code”	the Hong Kong Code on Takeovers and Mergers
“Transactions”	the Assignment of Net Income, the Capital Injection, the
	establishment of the EJV I and the establishment of the EJV
	II
“WFOE”	a wholly-owned subsidiary of the Company to be established
	in the PRC with limited liability
“%”	per cent.

In this circular, except as otherwise indicated, RMB has been translated into HK$ at a rate of HK$1.00=RMB1.06 for reference purpose only.

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CATIC International Holdings Limited

LETTER FROM THE BOARD

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CATIC INTERNATIONAL HOLDINGS LIMITED

(Incorporated in Bermuda with limited liability)

Executive Directors:

Mr. Yang Chunshu (Chairman)

Mr. Wang Xinyan (Deputy Chairman)

Mr. Ji Guirong (Deputy Chairman and Chief Executive Officer) Ms. Yu Li

Registered Office: Cedar House 41 Cedar Avenue Hamilton HM 12 Bermuda

Mr. Ren Haifeng (Deputy Chief Executive Officer)

Mr. Cui Wei (Deputy Chief Executive Officer)

Non-executive Director:

Mr. Ip Tak Chuen, Edmond

Independent non-executive Directors:

Mr. Chu Yu Lin, David

Principal place of business in Hong Kong: 21st Floor CATIC Plaza 8 Causeway Road Causeway Bay Hong Kong

Mr. Li Ka Cheung, Eric

20th June, 2002

To the Shareholders

Dear Sir and Madam,

ASSIGNMENT OF NET INCOME, CAPITAL INJECTION, ESTABLISHMENT OF EQUITY JOINT VENTURES, PLACING OF EXISTING SHARES AND SUBSCRIPTION OF NEW SHARES

DISCLOSEABLE AND CONNECTED TRANSACTIONS AND PROPOSAL FOR GENERAL MANDATES TO ALLOT AND ISSUE SHARES AND TO REPURCHASE SHARES

INTRODUCTION

On 28th May, 2002, the Company or its wholly-owned subsidiaries and Tacko entered into one or more of the Agreements in respect of the Assignment of Net Income, the Capital Injection, establishment of the EJV I and the EJV II, the Placing and the Subscription. Upon completion of the Transactions, the Group will diversify itself into aero-technology related businesses.

The Assignment of Net Income constitutes a connected and discloseable transaction of the Company and each of the Capital Injection, the establishment of the EJV I and the establishment of the EJV II constitutes a connected transaction of the Company under the Listing Rules by virtue of

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CATIC International Holdings Limited

LETTER FROM THE BOARD

CATIC being the controlling shareholder of the Company. The Assignment of Net Income, the Capital Injection, the establishment of the EJV I and the establishment of the EJV II, in aggregate, constitute a connected and discloseable transaction of the Company. Each of the agreements in respect of the Transactions will become effective when all the conditions precedent thereto are fulfilled, including the approval by the Independent Shareholders of the Transactions at the SGM. CATIC and its Associates shall abstain from voting in respect of an ordinary resolution to be proposed at the SGM to approve the Transactions.

The purpose of this circular is mainly to (i) provide Shareholders with further details of the Transactions and the Agreements; (ii) provide Shareholders with the advice of the Independent Board Committee on the Transactions; and (iii) provide Shareholders with the notice of the SGM to seek the approval of the Independent Shareholders in respect of the Transactions.

THE AGREEMENTS

1. Income Assignment Agreement dated 28th May, 2002

Parties

1. WFOE

2. CATIC

Particulars of the Income Assignment Agreement

Pursuant to the Income Assignment Agreement, CATIC has agreed to assign an 80% interest in the Net Income in relation to Project EC120 to WFOE for a consideration of RMB40 million (equivalent to approximately HK$37.74 million) and the provision of technical assistance and management consultancy services by WFOE to CATIC. Under the Income Assignment Agreement, the amount of RMB40 million (equivalent to approximately HK$37.74 million) shall be payable within 30 days upon the agreement becoming effective. The Directors confirm that neither WFOE nor the Company has assumed any liabilities or funding requirements relating to Project EC120 under the Income Assignment Agreement and there is no specific period for the operation of Project EC 120.

The amount of RMB40 million (equivalent to approximately HK$37.74 million), representing approximately 20% discount to 80% of the valuation of the Net Income of approximately RMB62.5 million as determined on 1st May, 2002 by Norton, an independent valuer, was arrived at after arm’s length negotiation between the parties involved. The Directors are of the view that the terms of the Income Assignment Agreement are on normal commercial terms and are fair and reasonable so far as the Company and the Shareholders are concerned.

Background of Project EC 120

Project EC120, a jointly controlled operation, was established on 20th October, 1992 by Eurocopter, ST Aero and CATIC. Pursuant to the relevant agreements entered into amongst Eurocopter, ST Aero and CATIC relating to Project EC120, they shall cooperate to develop, manufacture and globally distribute EC120 helicopters which are advanced multipurpose light

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CATIC International Holdings Limited

LETTER FROM THE BOARD

helicopters equipped with mono engine and five seats and can be used for passenger transport, agricultural spray, fire-fighting, line visits, marine operation and air photography. Under the relevant agreements, CATIC is entitled to receive certain income from the operation of the project. The amount of income to be received by CATIC in relation to Project EC 120 regarding:

• (i) sale and production of parts and spares of helicopters and profits accrued to CATIC from the sale of helicopters globally;

• (ii) recovery of non-recurring costs accrued to CATIC;

• (iii) commission income accrued to CATIC on the sale of helicopters by CATIC in the PRC; and

• (iv) administrative income accrued to CATIC from the operation of Project EC120,

varies depending on a number of factors including the value of the purchase orders placed by Eurocopter. For the past three financial years ended 31st December, 2001, such gross amount of income received by CATIC was RMB32.9 million (equivalent to approximately HK$31.0 million), RMB34.0 million (equivalent to approximately HK$32.1 million) and RMB37.5 million (equivalent to approximately HK$35.4 million) respectively. In terms of earnings, CATIC’s unaudited Net Income was approximately RMB3.77 million (equivalent to approximately HK$3.56 million), RMB4.17 million (equivalent to approximately HK$3.93 million) and RMB5.49 million (equivalent to approximately HK$5.18 million) respectively for the corresponding periods.

Guarantee on Net Income

Pursuant to the terms of the Income Assignment Agreement, in the event the amount actually received by WFOE under and in accordance with the Income Assignment Agreement for each of the two financial years ending 31st December, 2003 falls short of RMB6.50 million, CATIC will pay an amount equal to the shortfall to WFOE in cash on a dollar for dollar basis within three months after the issuance of the relevant audited accounts. If the guarantee on the Net Income is not met and CATIC fails to pay the shortfall to WFOE as described above, the Company will make appropriate announcement as soon as practicable after the shortfall falls due. Also, a statement of opinion of the independent non-executive Directors on the guarantee on the Net Income will be included in the annual reports of the Company for each of the two financial years ending 31st December, 2003.

Source of Funding

The amount of RMB40 million (equivalent to approximately HK$37.74 million) will be funded by the proceeds of the Subscription.

Conditions Precedent

The Assignment of Net Income is conditional upon, inter alia, the occurrence of the following events:

• i. the passing of an ordinary resolution by the Independent Shareholders at the SGM to approve the Transactions as contemplated therein; and

• ii. the obtaining of the necessary consents in respect of the Assignment of Net Income from the relevant authorised supervisory authorities.

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CATIC International Holdings Limited

LETTER FROM THE BOARD

Completion

The Income Assignment Agreement will become effective when all the conditions precedent thereto are fulfilled. The conditions precedent of the Income Assignment Agreement are required to be fulfilled by 26th August, 2002 or such other date as the parties to Income Assignment Agreement may agree, failing which the Income Assignment Agreement will lapse and all the obligations and liabilities of the parties to the Income Assignment Agreement will cease (save for antecedent breaches). Save as disclosed herein, CATIC has not assigned any rights, benefit and/or liabilities under the relevant agreements in relation to Project EC120 to WFOE under the Income Assignment Agreement. However, if permitted by all applicable laws and regulations and all relevant approvals and consents have been obtained, under the Income Assignment Agreement, WFOE shall be entitled to require CATIC to assign all of its rights, benefit and liabilities under all relevant agreements relating to Project EC120 to WFOE. Upon completion of such assignment, WFOE shall be entitled to enjoy all the rights and benefits and be subject to all liabilities under such agreements. Should WFOE request CATIC to assign its rights, benefit and liabilities under such agreements to WFOE in future and if any disclosure and/or shareholders’ approval requirements arise under Chapter 14 of the Listing Rules, the Company will make appropriate announcement in due course and will comply with such requirements.

1. Capital Injection Agreement dated 28th May, 2002

Parties

1. CATIC GA

2. CATIC

3. China Siwei

Particulars of the Capital Injection Agreement

Pursuant to the Capital Injection Agreement, CATIC GA has agreed to contribute HK$26.5 million to CATIC Siwei, of which as to HK$21.4 million will be credited into the account of registered capital, representing approximately 40% of the registered capital of CATIC Siwei as enlarged, and as to HK$5.1 million will be credited into the account of capital reserve of CATIC Siwei. Upon completion of the Capital Injection, the registered capital of CATIC Siwei will be increased from approximately HK$32.1 million to approximately HK$53.5 million and, CATIC Siwei will be converted from a domestic PRC limited liability company into a sino-foreign equity joint venture.

The amount of HK$26.5 million, representing approximately 40% of the unaudited net asset value as at 31st December, 2001 of CATIC Siwei of approximately HK$66.2 million as enlarged, was arrived at after arm’s length negotiation amongst the parties involved. The Directors are of the view that the terms of the Capital Injection Agreement are on normal commercial terms and are fair and reasonable so far as the Company and the Shareholders are concerned.

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CATIC International Holdings Limited

LETTER FROM THE BOARD

Background of CATIC Siwei

CATIC Siwei, established in July 2001, is principally engaged in the provision of aerophotographic services in the PRC. For the financial year ended 31st December 2001, CATIC Siwei recorded an unaudited turnover and profit after tax of approximately RMB28.17 million (equivalent to approximately HK$26.58 million) and RMB8.08 million (equivalent to approximately HK$7.62 million) respectively. The unaudited net asset value of CATIC Siwei was approximately RMB42.08 million (equivalent to approximately HK$39.70 million) as at 31st December, 2001.

Basic Terms of CATIC Siwei

Distributable profits to be generated from CATIC Siwei will be shared and distributed amongst its shareholders in proportion to their respective interests in the registered capital of CATIC Siwei. There is no specific period for the operation of CATIC Siwei.

Shareholding Structure of CATIC Siwei

Existing shareholding structure of CATIC Siwei

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

China Siwei CATIC
51% 49%
CATIC Siwei
(a domestic PRC limited
liability company)
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Shareholding structure of CATIC Siwei immediately after completion of the Capital Injection

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

CATIC GA China Siwei CATIC
40% 30.6% 29.4%
CATIC Siwei
(a sino-foreign equity joint venture
established in
the PRC with limited liability and converted
from the original domestic PRC limited
liability company)
----- End of picture text -----

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CATIC International Holdings Limited

LETTER FROM THE BOARD

Source of Funding

The amount of HK$26.5 million to be contributed by CATIC GA will be funded by the proceeds of the Subscription.

Conditions Precedent

The Capital Injection is conditional upon the occurrence of the following events:

• i. the passing of an ordinary resolution by the Independent Shareholders at the SGM to approve the Transactions as contemplated therein; and

• ii. the obtaining of all necessary consents and approvals in respect of the Capital Injection from the relevant PRC governmental authorities.

Completion

Completion of the Capital Injection will take place following fulfillment of the conditions precedent for the Capital Injection Agreement, which according to the Capital Injection Agreement is expected to be on or before 26th August, 2002. If the conditions for the Capital Injection Agreement have not been fulfilled by then (or such other date as may be agreed by the parties involved), the Capital Injection Agreement will lapse and all the obligations and liabilities of the parties to the Capital Injection Agreement will cease (save for antecedent breaches).

1. EJV I Agreement dated 28th May, 2002

Parties

1. the Company

2. China Siwei

3. China Cartographic

4. CATIC Siwei

5. Beijing Shangluo

Particulars of the EJV I Agreement

Pursuant to the EJV I Agreement, the Company, China Siwei, China Cartographic, CATIC Siwei and Beijing Shangluo will contribute RMB5.90 million (equivalent to approximately HK$5.57 million), RMB10.03 million (equivalent to approximately HK$9.46 million), RMB7.67 million (equivalent to approximately HK$7.24 million), RMB2.95 million (equivalent to approximately HK$2.78 million) and RMB2.95 million (equivalent to approximately HK$2.78 million) to the registered capital of the EJV I, representing approximately 20%, 34%, 26%, 10% and 10% of the registered capital of the EJV I respectively. Upon establishment of the EJV I, its registered capital will be RMB29.50 million (equivalent to approximately HK$27.83 million).

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CATIC International Holdings Limited

LETTER FROM THE BOARD

Background of the EJV I

Upon establishment of the EJV I, it will be a sino-foreign equity joint venture. It will utilise its GIS and GPS technologies to manufacture location-based navigation products and provide related services, which will principally be applied in the areas of PDAs, mobile phones and GPS call centres with digital maps.

Basic Terms of the EJV I

Distributable profits to be generated from the EJV I will be shared and distributed amongst its shareholders in proportion to their respective interests in the registered capital of the EJV I. There is no specific period for the operation of the EJV I. The Directors confirm that the board composition of the EJV I will be decided upon establishement of the EJV I in the PRC.

Source of Funding

The amount of RMB5.90 million (equivalent to approximately HK$5.57 million) to be contributed by the Company will be funded by the proceeds of the Subscription.

Conditions Precedent

The establishment of the EJV I is conditional upon the occurrence of the following events:

• i. the passing of an ordinary resolution by the Independent Shareholders at the SGM to approve the Transactions as contemplated therein; and

• ii. the obtaining of all necessary consents and approvals in respect of the establishment of the EJV I from the relevant PRC governmental authorities.

Completion

Completion of the establishment of the EJV I will take place following the fulfillment of the conditions precedent for the EJV I Agreement, which according to the EJV I Agreement, is expected to be on or before 26th August, 2002. If the conditions for the EJV I Agreement have not been fulfilled by then (or such other date as may be agreed by the parties involved), the EJV I Agreement will lapse and all the obligations and liabilities of the parties to the EJV I Agreement will cease (save for antecedent breaches).

Non-competition

Under the EJV I Agreement, all shareholders of the EJV I are restricted from establishing other entities conducting business which will compete with the GIS or GPS business of the EJV I. Upon establishment of the EJV I, if the business currently conducted by any shareholders of the EJV I is within the scope of business of the EJV I and may thereafter be developed by the EJV I, such shareholders shall, as far as all relevant and applicable laws and policies permit and subject to the non-competition restriction described above, first offer any co-operation opportunities to the EJV I.

CATIC International Holdings Limited

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LETTER FROM THE BOARD

1. The EJV II Agreement dated 28th May, 2002

Parties

1. CATIC GA

2. CATIC

Particulars of the EJV II Agreement

Pursuant to the EJV II Agreement, CATIC GA and CATIC will contribute HK$24.5 million and HK$25.5 million to the registered capital of the EJV II, representing 49% and 51% of the registered capital of the EJV II respectively. Upon establishment of the EJV II, its registered capital will be HK$50 million.

Background of the EJV II

Upon establishment, the EJV II will be a sino-foreign equity joint venture. It will be principally engaged in the provision of aircraft leasing and related services in the PRC.

Basic Terms of the EJV II

Distributable profits to be generated from the operation of the EJV II will be shared and distributed amongst its shareholders in proportion to their respective interests in the registered capital of the EJV II. The term of the EJV II is for 30 years from the date of issue of the business licence. The board of directors of the EJV II will comprise 5 directors, of which as to 3 directors will be appointed by CATIC GA and as to 2 directors will be appointed by CATIC.

Source of Funding

The amount of HK$24.5 million to be contributed by CATIC GA will be funded partly by the proceeds of the Subscription and partly by internal resources of the Company.

Conditions Precedent

The establishment of the EJV II is conditional upon the occurrence of the following events:

• i. the passing of an ordinary resolution by the Independent Shareholders at the SGM to approve the Transactions as contemplated therein; and

• ii. the obtaining of all necessary consents and approvals in respect of the establishment of the EJV II from the relevant PRC governmental authorities.

Completion

Completion of the establishment of the EJV II will take place after the conditions precedent for the EJV II Agreement have been fulfilled, which according to the EJV II Agreement is expected to be on or before 26th August 2002. If the conditions for the EJV II Agreement have not been fulfilled by then (or such other date as may be agreed by the parties involved), the EJV II Agreement will lapse and all the obligations and liabilities of the parties to the EJV II Agreement will cease (save for antecedent breaches).

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CATIC International Holdings Limited

LETTER FROM THE BOARD

5. Placing Agreement dated 28th May, 2002

Particulars of the Placing Agreement

On 28th May, 2002, Tacko entered into the Placing Agreement with the Placing Agent, pursuant to which, Tacko placed, through the Placing Agent, 530,000,000 Shares, representing approximately 17.23% of the issued share capital of the Company as at the date of the Placing Agreement, to not less than six independent investors at a price of HK$0.16 per Share. Tacko also in the Placing Agreement granted the Over-allotment Option to the Placing Agent in respect of a further 70,000,000 Shares which were also placed to independent investors and such Shares represented approximately 2.28% of the issued share capital of the Company as at the date of the Placing Agreement. The Placing was fully underwritten by the Placing Agent.

Placing Price

The placing price was HK$0.16 per Placing Share. This price was agreed after arm’s length negotiation between Tacko and the Placing Agent and represented (i) a discount of approximately 28.57% to the average closing price of approximately HK$0.224 per Share as quoted on the Stock Exchange for the last 50 trading days up to and including 28th May, 2002, being the last trading day prior to the suspension of trading in the Shares; (ii) a discount of approximately 31.91% to the average closing price of approximately HK$0.235 per Share as quoted on the Stock Exchange for the last 10 trading days up to and including 28th May, 2002; (iii) a discount of approximately 36.00% to the closing price of HK$0.250 per Share as quoted on the Stock Exchange on 28th May, 2002; (iv) a discount of approximately 24.53% to the closing price of HK$0.212 per Share as quoted on the Stock Exchange on the Latest Practicable Date; and (v) a discount of approximately 30.43% to the average closing price of approximately HK$0.230 per Share quoted on the Stock Exchange for the last 10 trading days up to and including the Latest Practicable Date.

Placing Agent

The Placing Agent is independent of and not acting in concert with the Directors, chief executive or substantial shareholders of any member of the Group or any of their respective Associates or concert parties (as such term is used in the Takeovers Code).

Completion

As at the date of this circular, an aggregate of 600,000,000 Placing Shares (including 70,000,000 Shares under the Over-allotment Option) were placed to not less than six placees who are individual, corporate and/or institutional investors independent of and not acting in concert with the Directors, chief executive or substantial shareholders of any member of the Group or any of their respective Associates and concert parties. No placees became substantial shareholders of the Company as a result of the Placing.

6. Subscription Agreement dated 28th May, 2002

Particulars of the Subscription Agreement

On 28th May, 2002, the Company entered into the Subscription Agreement with Tacko, pursuant to which, Tacko subscribed for, and were alloted and issued an aggregate of 600,000,000 new Shares, including 70,000,000 new Shares which were issued and allotted following completion of the

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CATIC International Holdings Limited

LETTER FROM THE BOARD

placing of 70,000,000 Shares pursuant to the exercise of the Over-allotment Option, at the same price of HK$0.16 upon completion of the Subscription Agreement. These 600,000,000 new Shares represented approximately 19.51% of the issued share capital of the Company as at the date of the Placing Agreement and approximately 16.32% of the issued share capital as enlarged by the issue of the Subscription Shares. The Stock Exchange granted its approval for listing of and permission to deal in the Subscription Shares on 7th June, 2002 and the completion of the Subscription took place on 10th June, 2002.

General Mandate

The Subscription Shares were issued pursuant to the general mandate to allot, issue and deal with Shares granted to the Directors pursuant to a resolution passed at the Company’s annual general meeting held on 10th May, 2002. There was sufficient mandate to allot and issue the Subscription Shares.

Use of Proceeds

The net proceeds of approximately HK$93.4 million from the Subscription of 600,000,000 Shares will be used as funding for the Transactions, if completed, or general working capital of the Group.

Change of Shareholding as a result of the Placing and the Subscription

The shareholding of the Company before and after the Placing and the Subscription is summarised as follows:

			After completion	After completion
			of the Subscription
	Before completion		(the Over-allotment
Shareholders	of the Placing		**Option exercised **	in full)
	No. of Shares	%	No. of Shares	%
Tacko	1,265,767,000	41.15	1,265,767,000	34.43
Speed Profit Enterprises
Limited (note 1)	508,616,000	16.54	508,616,000	13.84
Mr. Ren Haifeng (note 2)	4,400,000	0.14	4,400,000	0.12
Public	1,296,948,000	42.17	1,896,948,000	51.61
Total	3,075,731,000	100	3,675,731,000	100
Notes:

1. Speed Profit Enterprises Limited is a wholly-owned subsidiary of CATIC.

2. Mr. Ren Haifeng is a Director.

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CATIC International Holdings Limited

LETTER FROM THE BOARD

CORPORATE STRUCTURE OF THE GROUP BEFORE AND IMMEDIATELY AFTER COMPLETION OF THE TRANSACTIONS

Existing corporate structure

==> picture [278 x 195] intentionally omitted <==

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

The Company
FEA Holdings Limited Hangzhou Sealand
and its subsidiaries Electric Power
- design, manufacture and 100% 70% Company Limited
installation of fabricated - generation and sale of
aluminum and stainless steel electricity and steam power
products for buildings in Hangzhou, the PRC
Pimpernel Resources Limited
23.5% property investment
- development of Web-enabled
in Hong Kong
document system software
----- End of picture text -----

Corporate structure immediately after completion of the Transactions

==> picture [263 x 303] intentionally omitted <==

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

The Company
FEA Holdings Limited and WFOE
its subsidiaries
- helicopter related business
- design, manufacture and 100% 100%
and provision of technical
installation of fabricated
assistance and management
aluminum and stainless steel
consultancy services
products for buildings
Hangzhou Sealand Electric
Power Company Limited CATIC Siwei
70% 40%
- generation and sale of - provision of
electricity and steam power in aerophotographic services
Hangzhou, the PRC
10%
EJV I
- manufacture of
Pimpernel Resources Limited
23.5% 20% location-based navigation
- development of Web-enabled
products with digital maps by
document system software
using GIS and GPS
technologies
EJV II
property investment 49%
- provision of aircraft leasing
in Hong Kong
and related services
----- End of picture text -----

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CATIC International Holdings Limited

LETTER FROM THE BOARD

REASONS FOR ENTERING INTO THE AGREEMENTS

The principal activities of the Group are undertaking building facade projects, involving the design, manufacture and installation of fabricated aluminum and stainless steel products for buildings and generation and sale of electricity and steam power. As stated in the annual report of the Company for the financial year ended 31st December, 2001, the Group, while continuing to focus on maintaining and developing its existing business of facade contracting works and generation and sale of electricity and steam power, remains committed to the strategy of business diversification. It was further stated that the Group would adopt a selective and prudent approach to explore investment opportunities to diversify itself into aero-technology businesses in future.

The Directors are of the view that the entering into of the agreements in respect of the Transactions will help the Group in diversifying itself into aero-technology related businesses. The Group will be able to (1) fully utilise GIS and GPS technologies of the EJV I to manufacture location-based navigation products and to provide related services, which will principally be applied in the areas of PDAs, mobile phones, GPS call centres with digital maps; (2) generate income from helicopter related business; and (3) engage in the provision of aerophotographic services and aircraft leasing services upon completion of the Transactions. The Directors believe that, through cooperation with its controlling shareholder, CATIC, under the agreements in respect of the Transactions, the Group will be able to benefit from utilising CATIC’s expertise and knowledge in the area of aero-based development. The Group will diversify into the aero-technology related businesses upon completion of the Transactions. As such, the earnings base of the Group will be broadened.

Accordingly, the Directors, including independent non-executive Directors, consider that the terms of the agreements in respect of the Transactions are fair and reasonable and are in the interests of the Shareholders and the Company as a whole.

PROPOSAL FOR GENERAL MANDATES TO ALLOT AND ISSUE SHARES AND TO REPURCHASE SHARES

General Mandate to Allot and Issue Shares

At the annual general meeting of the Company held on 10th May, 2002, a general mandate was given to the Directors to allot, issue and deal with Shares. As such mandate was almost fully utilised following the allotment and issue of the Subscription Shares pursuant to the Subscription, the Directors proposed at the SGM an ordinary resolution granting the Directors a fresh general mandate to allot, issue and deal with Shares not exceeding the aggregate of (a) 20% of the issued share capital of the Company as at date of the SGM; and (b) an amount representing the aggregate nominal amount of Shares to be repurchased by the Company provided that such amount shall not exceed 10% of the aggregate nominal amount of the share capital of the Company in issue as at the date of the SGM.

General Mandate to Repurchase Shares

The Directors also proposed an ordinary resolution at the SGM granting the Directors a fresh general mandate to exercise the power of the Company to repurchase Shares up to a maximum of 10% of the aggregate nominal amount of the share capital of the Company in issue as at the date of the SGM. An explanatory statement as required to be sent to the Shareholders under the Listing Rules providing information in connection with this proposed resolution is set out in Appendix II to this circular.

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CATIC International Holdings Limited

LETTER FROM THE BOARD

SGM

Set out on pages 37 to 40 is a notice convening the SGM to be held at 11:00 a.m. on Monday, 8th July, 2002 at Chater Rooms 3 & 4, Basement 3, Regal Hongkong Hotel, 88 Yee Wo Street, Causeway Bay, Hong Kong at which ordinary resolutions will be proposed to approve the Transactions and the general mandates to allot and issue Shares and to repurchase Shares.

CATIC and its Associates will abstain from voting in respect of the ordinary resolution to be proposed at the SGM to approve the Transactions. A form of proxy for use at the SGM is enclosed. Whether or not you are able to attend the meeting in person, you are requested to complete and return the form of proxy in accordance with the instructions printed thereon to the branch share registrars of the Company in Hong Kong, Computershare Hong Kong Investor Services Limited at 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong as soon as possible but in any event no later than 48 hours before the time appointed for the holding of the meeting. Completion of the form of proxy will not preclude you from attending and voting at the meeting or any adjournment thereof should you so wish.

RECOMMENDATIONS

Your attention is drawn to the letter from the Independent Board Committee set out on page 18 of this circular. The Independent Board Committee, having taken into account the advice of Platinum, the text of which is set out on pages 19 to 26 of this circular, considers that the Transactions are in the interests of the Company and the Independent Shareholders as a whole and that the terms of the agreements in respect of the Transactions are fair and reasonable so far as the Independent Shareholders are concerned. Accordingly, the Independent Board Committee recommends the Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the SGM to approve the Transactions.

The Directors believe that the general mandates to allot and issue Shares and to repurchase Shares are in the best interests of the Company and the Shareholders as a whole. Accordingly, the Directors recommend that the Shareholders to vote in favour of the resolutions relating to such general mandates to be proposed at the SGM.

FURTHER INFORMATION

Your attention is also drawn to the additional information set out in the appendices to this circular and the notice of the SGM set out in this circular.

Yours faithfully, By order of the Board of CATIC International Holdings Limited Yang Chunshu Chairman

— 17 —

CATIC International Holdings Limited

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

==> picture [85 x 68] intentionally omitted <==

CATIC INTERNATIONAL HOLDINGS LIMITED

(Incorporated in Bermuda with limited liability)

20th June, 2002

To the Independent Shareholders

Dear Sir or Madam,

ASSIGNMENT OF NET INCOME, CAPITAL INJECTION, ESTABLISHMENT OF EQUITY JOINT VENTURES, PLACING OF EXISTING SHARES AND SUBSCRIPTION OF NEW SHARES

DISCLOSEABLE AND CONNECTED TRANSACTIONS

We refer to the circular dated 20th June, 2002 of the Company (the “Circular”), of which this letter forms part. Terms defined in the Circular bear the same meanings herein unless the context otherwise requires.

We have been appointed to form the Independent Board Committee to consider the Transactions and to advise the Independent Shareholders as to whether, in our opinion, the terms of the agreements in respect of the Transactions are fair and reasonable and in the interests of the Company and the Independent Shareholders as a whole. Platinum has been appointed as the independent financial adviser to advise the Independent Board Committee in respect of the Transactions.

We wish to draw your attention to the letter from the Board as set out on pages 5 to 17 of the Circular which contains details of the Agreements and the letter of advice from Platinum as set out on pages 19 to 26 which contains its advice in respect of the Transactions.

Having taken into account the advice of Platinum, we consider that the terms of the agreements in respect of the Transactions are fair and reasonable and are in the interests of the Company and the Independent Shareholders as a whole. We therefore recommend the Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the SGM to approve the Transactions.

Yours faithfully, For and on behalf of

the Independent Board Committee Chu Yu Lin, David Li Ka Cheung, Eric Independent non-executive Directors

— 18 —

CATIC International Holdings Limited

LETTER FROM PLATINUM

Set out below is the text of a letter from Platinum to the Independent Board Committee prepared for inclusion in this circular:

==> picture [108 x 64] intentionally omitted <==

20th June, 2002

CATIC International Holdings Limited 21/F Catic Plaza 8 Causeway Road Causeway Bay Hong Kong

To the Independent Board Committee

Dear Sirs,

ASSIGNMENT OF NET INCOME, CAPITAL INJECTION AND ESTABLISHMENT OF EQUITY JOINT VENTURES DISCLOSEABLE AND CONNECTED TRANSACTIONS

INTRODUCTION

We refer to the announcement (the “Announcement”) made by the Company dated 30 May, 2002 in relation to, inter alia, the Transactions, namely the Assignment of Net Income, the Capital Injection and the establishments of EJV I and EJV II.

We have been appointed to act as the independent financial adviser to the Independent Board Committee to advise as to whether the terms of the agreements in respect of the Transactions are fair and reasonable and in the interest of the Company and the Independent Shareholders as a whole. Details of the Transactions are contained in the letter from the Board set out on pages 5 to 17 in the circular dated 20th June, 2002 (the “Circular”) of which this letter forms part. Terms used in this letter shall have the same meanings as defined in the Circular unless the context otherwise requires.

In formulating our opinion, we have relied on the information and facts supplied by, the opinions expressed by and the representations of, the Directors and management of Company concerning the Group, the Transactions, including those facts, opinions and representations set out in the Circular. We have assumed that all such information is true and accurate in all material respects as at the date hereof. The Directors have confirmed that they take full responsibility for the contents of the Circular.

We have no reason to suspect that such information is inaccurate or that any material facts have been omitted or withheld from the information supplied or opinions expressed in the Circular. In line with normal practice, we have not, however, conducted a verification process of the information supplied to us, nor have we conducted any independent in-depth investigation into the business and

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CATIC International Holdings Limited

LETTER FROM PLATINUM

affairs of the Group. The Directors have confirmed that no material facts have been omitted from the information supplied to us. We consider that we have reviewed sufficient information to enable us to reach an informed view and to provide a reasonable basis for our recommendation regarding the Transactions.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In formulating our recommendation to the Independent Board Committee, we have considered the principal factors and reasons behind the Transactions.

I. Rationale behind the Transactions

The principal activities of the Group are the design, manufacture and installation of fabricated aluminum and stainless steel products for buildings, such as the external curtain wall and cladding systems, and the generation and sale of electricity and steam power. As stated in the annual report of the Company for the financial year ended 31 December 2001, the Group, while continuing to maintain and develop its existing business of building facade contracting works and generation and sale of electricity and steam power, will remain committed to the strategy of business diversification. Aero-technology business has been specifically identified as an area where the Group would invest and diversify into to keep pace with its long term development.

Under the Income Assignment Agreement, WFOE will be assigned 80% of the Net Income from Project EC120. This will allow the Company to generate income from the EC120 helicopter development, manufacture and distribution business. The Company’s investment in CATIC Siwei also provides a gateway into the provision of aerophotograghic services. Through EJV I, the Group will be able to fully utilise GIS and GPS technologies to manufacture location-based navigation products and to provide related services, which will principally be applied in the areas of PDAs, mobile phones and GPS call centres with digital maps. EJV II involves the provision of aircraft leasing and related services.

On this basis, we concur with the Directors’ view that the investments in the Transactions will help the Group diversify into aero-technology related businesses, and through cooperation with its controlling shareholder, CATIC, under the agreements in respect of the Transactions, the Group will be able to capitalise on CATIC’s expertise and knowledge in the area of aero-based developments.

The Directors have also considered the broadening effect of the Transactions on the Group’s revenue base. The Income Assignment Agreement, for instance, guarantees RMB6.5 million annual return for each of the two financial years ending 31 December 2003 which effectively translates to approximately 16.3% gross annual return on investment for each of those two years.

In view of the above, we consider the Group’s diversification into the aero-technology related business by entering into the Transactions to be in line with the Group’s overall corporate diversification strategy. Coupling this with the aero-technological expertise that the Group may possibly stand to gain through co-operations with other parties under the various Transactions, as well as the widening income opportunities realisable from these Transactions, we consider the rationale behind the Transactions to be logical and reasonable as far as the Company is concerned.

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CATIC International Holdings Limited

LETTER FROM PLATINUM

II. The Income Assignment Agreement

(i) Principal terms and consideration

WFOE entered into the Income Assignment Agreement with CATIC, pursuant to which, CATIC will assign an 80% interest in the Net Income in relation to Project EC120 to WFOE for a consideration of RMB40 million (approximately HK$37.7 million) and the provision of technical assistance and management consultancy services by WFOE to CATIC.

Pursuant to the Income Assignment Agreement, in the event that the amount actually received by WFOE for each of the two financial years ending 31 December 2003 falls short of RMB6.5 million, CATIC will pay an amount equal to the shortfall to WFOE in cash on a dollar for dollar basis within three months after the issuance of the relevant audited accounts.

(ii) Basis of the consideration

The Directors have confirmed to us that the terms of the Income Assignment Agreement have been arrived at after arm’s length negotiation based on normal commercial terms. The amount of RMB40 million (approximately HK$37.7 million) represents approximately 20% discount to 80% of the valuation of the Net Income of HK$59 million (approximately RMB62.5 million) as determined on 1st May, 2002 by Norton.

Net Income is limited to CATIC’s share of income, net of all expenses except taxation, to be derived from its interest in Project EC120 in relation to (i) sales and production of parts and spares of helicopters and profits accrued to CATIC from sales of helicopters globally; (ii) recovery of non-recurring costs accrued to CATIC; (iii) commission income accrued to CATIC on the sale of helicopters by CATIC in the PRC; and (iv) administrative income accrued to CATIC from the operation of Project EC120.

• (iii) Market value of Net Income estimated by an independent valuer

In evaluating the reasonableness of the consideration for the Assignment of Net Income, we make reference to the professional review performed by Norton, an independent valuer. Your attention is, therefore, drawn to Norton’s valuation report in Appendix I to the Circular.

According to the valuation report prepared by Norton, the fair market value of Net Income as at 1st May, 2002 was HK$59 million.

We understand that in assessing the valuation of the Net Income, Norton has employed an income capitalisation approach known as the discounted cash flow method, which involves the conversion of expected periodic future economic benefits of ownership into an indication of value. It is based on the principle that an informed buyer would pay no more than an amount equal to the present worth of anticipated future benefit (income) from the asset acquired. Other two common valuation techniques include (i) market approach which considers prices recently paid for similar assets with necessary adjustments; and (ii) cost approach which considers the cost to reproduce or replace in new condition the assets appraised in accordance with current market prices for similar assets. In view that there are no known market transactions directly comparable to that of the Assignment of Net Income, and that the cost approach does not directly incorporate information about the economic benefits associated

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CATIC International Holdings Limited

LETTER FROM PLATINUM

with such Assignment of Net Income, we consider the income capitalisation approach to be a reasonable method in the valuation of the Net Income as it takes into account factors that affect the present value of future economic benefits, namely income to be derived from the Assignment of Net Income.

We also noted that in arriving at the estimation of the fair market value of the Net Income, Norton has applied discount rates of 13% to the projected net income streams for the years 2002 to 2006, and 12% to the remaining 15 operating years starting from year 2007. Such discount rates were derived by Norton using the capital asset-pricing model which included a risk premium to account for the specific risks relating to the Project EC120.

Given that the consideration represents 20% discount to 80% of the valuation appraised by Norton, and that the guaranteed income provided by the Income Assignment Agreement of RMB6.5 million represents a gross return on investment of approximately 16.3% for each of the two financial years ending 31 December 2003 as discussed in the section headed “Rationale behind the Transactions”, we are of view that the consideration has been fairly determined.

III. The Capital Injection Agreement

(i) Principal terms and consideration

CATIC GA entered into the Capital Injection Agreement with CATIC and China Siwei, pursuant to which, CATIC GA has agreed to contribute approximately HK$26.5 million to CATIC Siwei, of which as to HK$21.4 million will be credited into the account of registered capital, representing approximately 40% of the registered capital of CATIC Siwei as at 31 December 2001 as enlarged, and as to HK$5.1 million will be credited into the account of capital reserve of CATIC Siwei. Upon completion of the Capital Injection, the registered capital of CATIC Siwei will be increased from approximately HK$32.1 million to approximately HK$53.5 million and CATIC Siwei will be converted from a domestic PRC limited liability company into a sino-foreign equity joint venture.

The Directors have confirmed to us that the terms of the Capital Injection Agreement have been arrived at after arm’s length negotiation based on normal commercial terms. The amount of Capital Injection of HK$26.5 million was determined by reference to the net asset value of CATIC Siwei. Specifically, it represents 40% of the unaudited net asset value of CATIC Siwei as at 31 December 2001 of approximately HK$66.2 million as enlarged, which is consistent with the Group’s 40% interest in CATIC Siwei. Based on this, we are of the opinion that the basis for determination of the consideration for the Capital Injection is fair and reasonable.

(ii) Principal business activities

CATIC Siwei is principally engaged in the provision of aerophotographic services in the PRC. The Directors have confirmed that they will regularly review the business of the venture for investment opportunities that will create value for its shareholders and, therefore, the Group.

Considering the above and the experience of the other shareholders of CATIC Siwei in the area of aerophotography that the Group may stand to tap, as well as the consistency of such investment with the Group’s overall strategy of diversification, we are of the view that the investment in CATIC Siwei is in the interest of the Company and its Shareholders taken as a whole.

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CATIC International Holdings Limited

LETTER FROM PLATINUM

(iii) Basic terms of the CATIC Siwei joint venture

(a) Capital contribution and profit sharing ratio

As stated in the letter from the Board, the profit sharing ratio of the parties in the Capital Injection Agreement will be in line with their respective capital contribution ratio for the registered capital of CATIC Siwei. Thus, we view the terms relating to capital contribution and profit sharing available to the Group under the Capital Injection arrangement to be no less favourable than those available to the other shareholders of CATIC Siwei and, therefore, fair and reasonable as far as the Company and the Independent Shareholders are concerned.

(b) Constitution of the board of directors

The Directors have confirmed that the board constitution for CATIC Siwei has not yet been agreed among the joint venture parties, but that the Group’s representation in the board of directors of CATIC Siwei will not be less than its 40% proportional interest in CATIC Siwei. We consider such board constitution reasonable as far as the Company and Shareholders are concerned.

Having considered the reasonable basis used in the determination of the consideration, the principal business of CATIC Siwei and the reasonableness of the profit sharing arrangement and board constitution, we are of the view that the terms of the Capital Injection are fair and reasonable as far as the Company and Independent Shareholders are concerned.

IV. The EJV I Agreement

(i) Principal terms and consideration

The contributions and resulting interests of the joint venture parties in the registered capital of the EJV I are as follow:

		Capital
Parties	Contribution				Interest
		approximate
				HK$	approximate
	RMB	equivalent			%
	(in million)	_(in _	million)
The Company	5.90			5.57	20
China Siwei	10.03			9.46	34
China Cartography	7.67			7.24	26
CATIC Siwei	2.95			2.78	10
Beijing Shangluo	2.95			2.78	10
Total registered capital	29.50		27.83		100

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CATIC International Holdings Limited

LETTER FROM PLATINUM

(ii) Principal business activities

The EJV I will be principally engaged in the manufacture of location-based navigation products with digital maps by using GIS and GPS technologies.

(iii) Basic terms of the EJV I

(a) Capital contribution and profit sharing ratio

As stated in the letter from the Board, the profit sharing ratio of the parties in the EJV I will be in line with their respective capital contribution ratio for the registered capital of the EJV I. Thus, we view the terms relating to capital contribution and profit sharing available to the Group under the EJV I to be no less favourable than those available to the other EJV I parties.

(b) Non-competition provision

Under the EJV I Agreement, all shareholders of the EJV I are restricted from establishing other entities conducting business which will compete with the GIS or GPS business of the EJV I. Upon establishment of the EJV I, if the business currently conducted by any shareholders of the EJV I is within the scope of business of the EJV I and may thereafter be developed by the EJV I, such shareholders shall, as far as all relevant and applicable laws and policies permit and subject to the non-competition restriction described above, first offer any co-operation opportunities to the EJV I. We consider such arrangement to be in the interest of the EJV I and, therefore, the Company.

• (c) Constitution of the board of directors

The Directors have confirmed that the board constitution for the EJV I has not yet been agreed among the joint venture parties, but that the Company’s representation in the board of directors of the EJV I will not be less than its 20% proportional interest in the EJV I. We consider such board constitution reasonable as far as the Company and Shareholders are concerned.

(iv) Term of operations of the EJV I

Based on the letter from the Board, we understand that the EJV I will have an unlimited term of operations.

Considering the reasonableness of the profit sharing arrangement and the board constitution, as well as the existence of the non-competition provision, we are of the view that the terms of the EJV I are fair and reasonable as far as the Company and the Independent Shareholders are concerned.

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CATIC International Holdings Limited

LETTER FROM PLATINUM

V. The EJV II Agreement

• (i) Principal terms and consideration

CATIC GA entered into the EJV II Agreement with CATIC pursuant to which CATIC GA and CATIC will contribute HK$24.5 million and HK$25.5 million respectively to the registered capital of the EJV II, representing 49% and 51% of the registered capital of the EJV II respectively. Upon establishment of the EJV II, its registered capital will be HK$50 million.

(ii) Principal business activities

The EJV II will be principally engaged in the provision of aircraft leasing and related services.

(iii) Basic terms of the EJV II

• (a) Capital contribution and profit sharing ratio

The profit sharing ratio of the parties in the EJV II are in line with their respective capital contribution ratio for the registered capital of the EJV II. Thus, we view the terms relating to capital contribution and profit sharing available to the Group under the EJV II to be no less favourable than those available to the other EJV II party.

• (b) Constitution of the board of directors

The board of directors of the EJV II will comprise 5 directors, of whom 3 directors will be appointed by CATIC GA and 2 directors will be appointed by CATIC, effectively allowing the Group a majority control over the board.

• (iv) Term of the operations of the EJV II

The term of the EJV II is 30 years from the date of issue of the business license.

In view of the reasonableness of the profit sharing arrangement and majority control the Company will have over the board of the EJV II, we consider that the terms of the EJV II are fair and reasonable as far as the Company and the Independent Shareholders are concerned.

VI. Financial effects of the Transactions

As stated in the letter from the Board, the Directors intend to fund the Transactions through equity financing, namely proceeds from the Subscription. The Transactions, therefore, will have no direct impact on the Group’s gearing and net asset value positions.

— 25 —

CATIC International Holdings Limited

LETTER FROM PLATINUM

In respect of the earnings effect to the Group, the Directors consider that the Transactions will potentially widen the income base of the Group. In addition, pursuant to the Income Assignment Agreement, the Group will earn a guaranteed profit of RMB6.5 million for each of the first two financial years ending 31st December, 2003. We consider that the potential broadening of the Group’s income base and the positive earnings contribution of the Income Assignment Agreement for at least two financial years is in the interest of the Group.

RECOMMENDATION

Having considered the principal factors and reasons referred to above such as the bases of consideration, profit sharing arrangements and board constitutions, we consider the terms of the agreements in respect of the Transactions fair and reasonable so far as the interest of the Independent Shareholders are concerned and that the Transactions are reasonable in view of the Company’s long term corporate strategy. Accordingly, we advise the Independent Board Committee to recommend to the Independent Shareholders to vote in favour of the resolution to approve the Transactions at the SGM.

Yours faithfully, For and on behalf of

Platinum Securities Company Limited Jeny Lau Managing Director

— 26 —

CATIC International Holdings Limited

VALUATION REPORT

APPENDIX I

The following are the texts of the letter summarised by Norton in connection with its valuation of the Net Income prepared for the purpose of incorporation in this circular:

Norton Appraisals

Registered Professional Surveyors, Valuers & Property Advisers

Room 4135, Sun Hung Kai Centre 30 Harbour Road Wanchai Hong Kong Tel: (852) 2810 7337 Fax: (852) 2810 6337

20th June, 2002

The Directors

CATIC International Holdings Limited

21st Floor, Catic Plaza

No. 8 Causeway Road Causeway Bay Hong Kong

Dear Sirs,

In accordance with the instructions of CATIC International Holdings Limited (hereinafter referred to as the “Company”), we have made an appraisal of the fair market value of the 100% interest in the Net Income (as defined below) of China National Aero-Technology Import & Export Corporation (hereinafter referred to as “CATIC”) in an international co-operation project which includes defining, developing, industrializing, manufacturing, marketing and supporting of the new light helicopter-EC120 helicopter (hereinafter referred to as the “Project EC120”).

The business interest in which CATIC is engaged in Project EC120, the subject of this appraisal, is limited to its income, net of all expenses except taxation to be derived from CATIC’s interests in Project EC120 in relation to (i) sale and production of parts and spare parts of helicopters and profits accrued to CATIC from the sale of helicopters globally; (ii) recovery of non-recurring costs accrued to CATIC; (iii) commission income accrued to CATIC on the sale of helicopters by CATIC in the PRC; and (iv) administrative income accrued to CATIC from the operation of Project EC120 throughout the period of the operation (collectively the “Net Income”).

It is understood that the purpose of this appraisal is to express an independent opinion of the fair market value of the interest of the Net Income as at 1st May, 2002. We confirm that we have carried out inspections, made relevant enquiries and obtained such further information as we considered necessary for the purpose of this appraisal.

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CATIC International Holdings Limited

VALUATION REPORT

APPENDIX I

“Fair Market Value” is defined as the estimated amount at which the interest in a business enterprise might be expected to exchange between a willing buyer and a willing seller, neither being under compulsion, each having reasonable knowledge of all relevant facts, with equity to both, and with the buyer and seller contemplating retention of the interest for continuation of current operations unless the break-up of the business or the sale of its assets would yield greater investment returns.

As part of our analysis, we have reviewed such financial information, project documents, business plan and other pertinent data concerning Project EC120 provided to us by the Company and have assumed their accuracy. We have also consulted sources of financial and business information. We have relied to a very considerable extent on such information in arriving at our opinion of value.

Our investigation included discussions with members of CATIC’s management in relation to the history and nature of the business, review of projected financial information and other relevant documents of Project EC120.

The appraisal of the interest in Project EC120 requires consideration of all pertinent factors affecting the operation of the business and its ability to generate future project returns. The factors considered in the appraisal included, but not limited to, the following:

• the nature of the business and its history from inception;

• the financial condition of the business;

• the economic outlook in general and the specific economic environment for the project including demand, supply, the industry and the market;

• past and projected operating results;

• agreements and projected schedules;

• effects of debt financing, offtake agreements and other agreements;

• market-derived investment returns of entities engaged in similar lines of business; and

• the financial and risk of the business including the continuity of income and the projected future results.

The value of Net Income was developed through the application of the income capitalisation approach technique known as the discounted cash flow method. Under this method, value depends on the present worth of future economic benefits to be derived from operation of the project. Indication of value have been developed by discounting projected future net cash flows to their present worth at market-derived rates of return which in our opinion is appropriate and reasonable to reflect the risk and hazard of the business of Project EC120.

The approach adopted to arrive at the value of the interest in the Net Income in its existing state can be summarised as follows:

• i) The projected net income for the Year 2002 to 2006 are discounted to a present value as of effective date of valuation, 1st May, 2002, by applying a discount rate of 13%.

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CATIC International Holdings Limited

VALUATION REPORT

APPENDIX I

• ii) We then capitalized the stabilized net income of year 2006 for the remaining term of the operation period (i.e. approximately 15 years) from Year 2007 at a discount rate of 12%.

• iii) The summation of the discounted income for the period Year 2002 to 2006 and the present value of the capitalized cashflow for the remaining term of the operation period is the value of the business interest of the Net Income.

Based on the investigation and analysis as outlined in this report, it is our opinion that as at 1st May, 2002, the Fair Market Value of the business interest of the Net Income relating to Project EC120 is reasonably stated at the amount of HK$59,000,000 (HONG KONG DOLLARS FIFTY NINE MILLION ONLY) (equivalent to approximately RMB62,500,000).

The conclusion of value is based on generally accepted appraisal procedures and practices that rely substantially on the use of numerous assumptions and the consideration of many uncertainties, not all of which can be easily quantified or ascertained.

Further, while the assumptions and consideration of such matters and projections of future net cashflows are considered by us to be reasonable, they are inherently subject to significant business, economic and competitive uncertainties and contingencies many of which are beyond the control of CATIC.

Unless otherwise stated, all sums stated in our appraisal are in Hong Kong dollars. The exchange rate adopted in our appraisal is approximately HK$1=RMB1.06 which was approximately the prevailing exchange rate as at the date of appraisal.

Yours faithfully, For and on behalf of Norton Appraisals Limited Paul M. K. Wong MRICS, AHKIS, RPS (G.P.) Director

Note: Mr. Paul M. K. Wong is a Chartered Surveyor and has more than nine years experience in the property and business valuations in Hong Kong and in the People’s Republic of China.

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CATIC International Holdings Limited

EXPLANATORY STATEMENT

APPENDIX II

This Appendix serves as an explanatory statement, as required by the Listing Rules, to provide the requisite information to the Shareholders for their consideration of the resolution relating to general mandate to repurchase Shares to be proposed by the Directors at the SGM (the “Repurchase Resolution”).

SHARE CAPITAL

As at the Latest Practicable Date, the issued share capital of the Company comprised 3,675,731,000 Shares.

Subject to the passing of the Repurchase Resolution and on the basis that no further Shares will be issued or repurchased prior to the SGM, the Company would be allowed under the Repurchase Resolution to repurchase a maximum of 367,573,100 Shares.

REASON FOR REPURCHASE

The Directors believe that the repurchase proposal is in the best interests of the Company and the Shareholders. Such repurchase may, depending on market conditions and funding arrangements at the time, lead to an enhancement of the net asset value and/or earnings per Share and will only be made when the Directors believe that such a repurchase will benefit the Company and the Shareholders.

FUNDING OF REPURCHASES

In repurchasing Shares, the Company may only apply funds legally available for such purpose in accordance with its memorandum of association and bye-laws and the laws of Bermuda. Bermuda law provides that the amount of capital repaid in connection with a share repurchase may only be paid out of either the capital paid up on the relevant Shares, or out of the funds of the Company otherwise available for dividend or distribution or the proceeds of a fresh issue of Shares made for the purpose. The amount of premium payable on repurchase may only be paid out of either the funds of the Company that would otherwise be available for dividend or distribution or out of the share premium of the Company. Further, under the laws of Bermuda, the Company cannot purchase its own Shares if on the date on which the purchase is to be effected, there are reasonable grounds for believing that the Company is, or after the purchase would be, unable to pay its liabilities as they become due.

There might be an adverse impact on the working capital or gearing position of the Company as compared with the position disclosed in the audited accounts contained in the annual report for the year ended 31st December, 2001, in the event that the repurchase proposal were to be carried out in full at any time during the proposed repurchase period. However, the Directors do not propose to exercise the repurchase of Shares to such extent as would, in the circumstances, have a material adverse effect on the working capital requirements of the Company or the gearing levels which in the opinion of the Directors are from time to time appropriate for the Company.

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CATIC International Holdings Limited

EXPLANATORY STATEMENT

APPENDIX II

SHARE PRICES

The highest and lowest prices at which the Shares were traded on the Stock Exchange during each of the previous twelve months before the Latest Practicable Date were as follows:

	Highest	Lowest
	HK$	HK$
June, 2001	0.520	0.325
July, 2001	0.360	0.220
August, 2001	0.255	0.170
September, 2001	0.168	0.093
October, 2001	0.215	0.134
November, 2001	0.275	0.189
December, 2001	0.290	0.225
January, 2002	0.255	0.204
February, 2002	0.228	0.196
March, 2002	0.260	0.196
April, 2002	0.226	0.203
May, 2002	0.255	0.195

UNDERTAKING

The Directors have undertaken to the Stock Exchange that, so far as the same may be applicable, they will exercise the power of the Company to make repurchases pursuant to the Repurchase Resolution and in accordance with the Listing Rules and the applicable laws of Bermuda.

None of the Directors nor, to the best of their knowledge having made all reasonable enquiries, their Associates, have any present intention to sell any Shares to the Company or its subsidiaries pursuant to the Repurchase Resolution if such is approved by the Shareholders.

No connected persons (as defined in the Listing Rules) have notified the Company that they have a present intention to sell Shares to the Company or its subsidiaries, or have undertaken not to sell any of the Shares to the Company or its subsidiaries, in the event that the Repurchase Resolution is approved by the Shareholders.

TAKEOVERS CODE

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

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CATIC International Holdings Limited

EXPLANATORY STATEMENT

APPENDIX II

As at the Latest Practicable Date, CATIC, through its wholly owned subsidiaries, Tacko and Speed Profit Enterprises Limited, was interested in 1,774,383,000 Shares, representing approximately 48.27% of the issued share capital of the Company. Based on such shareholding and in the event that the repurchase proposal pursuant to the Repurchase Resolution is exercised in full, the interests of CATIC will be increased to 53.64% of the issued share capital of the Company.

The Directors are not aware of any consequences which may arise under the Takeovers Code as a result of any repurchases made pursuant to the Repurchase Resolution. The Company may not repurchase Shares which would result in the amount of Shares held by the public being reduced to less than 25%.

SHARES REPURCHASE MADE BY THE COMPANY

The Company had not repurchased any Shares (whether on the Stock Exchange or otherwise) in the six months preceding the Latest Practicable Date.

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CATIC International Holdings Limited

GENERAL INFORMATION

APPENDIX III

RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Group. The Directors 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 there are no other facts not contained in this circular the omission of which would make any statement herein misleading.

DISCLOSURE OF INTERESTS

Interests in the Company

As at the Latest Practicable Date, the interests of the Directors and chief executive in the securities of the Company or any associated corporation (within the meaning of the SDI Ordinance) which were required to be notified to the Company and the Stock Exchange pursuant to Section 28 of the SDI Ordinance (including the interests which they were deemed or taken to have under Section 31 of, or Part I of the Schedule to, the SDI Ordinance) or pursuant to the Model Code for Securities Transactions by Directors of Listed Companies contained in the Listing Rules or which were required, pursuant to Section 29 of the SDI Ordinance, to be entered in the register referred to therein were as follows:

Name

Mr. Ren Haifeng

Number of Shares held 4,400,000

Name

Mr. Yang Chunshu Ms. Yu Li

Number of Shares under options held 8,160,000 5,400,000

Save as disclosed herein, none of the Directors, chief executive and their associates had any interests in the share capital of the Company or any of its associated corporations which were required to be notified to the Stock Exchange pursuant to Section 28 of the SDI Ordinance (including interests which they are deemed or taken to have under Section 31 or Part I of the Schedule to, the SDI Ordinance) or which were required, pursuant to Section 29 of the SDI Ordinance, to be entered in the register referred to therein or which were required to be notified pursuant to the Model Code for Securities Transactions by Directors of Listed Companies.

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CATIC International Holdings Limited

GENERAL INFORMATION

APPENDIX III

SUBSTANTIAL SHAREHOLDERS

As at the Latest Practicable Date, according to the register required to be kept by the Company pursuant to Section 16(1) of the SDI Ordinance, the following Shareholders were directly or indirectly interested in 10% or more of any class of the Company’s issued share capital:

	Percentage
	of existing	Number of
Shareholders	issued capital	Shares held
Tacko	34.43%	1,265,767,000 (Note 1)
CATIC (H.K.) Limited	34.43%	1,265,767,000 (Note 1)
Speed Profit Enterprises Limited	13.84%	508,616,000 (Note 2)
Catic International Finance Limited
(“Catic Finance”)	13.84%	508,616,000 (Note 2)
CATIC	48.27%	1,774,383,000 (Notes 1, 2 & 3)
China Aviation Industries Corporation I
(“AVIC I”)	48.27%	1,774,383,000 (Notes 1, 2 & 3)
China Aviation Industries Corporation II
(“AVIC II”)	48.27%	1,774,383,000 (Notes 1, 2 & 3)

Notes:

1. Tacko is a wholly-owned subsidiary of CATIC (H.K.) Limited, which is in turn a wholly-owned subsidiary of CATIC. Under the SDI Ordinance, both CATIC (H.K.) Limited and CATIC are deemed to be interested in the 1,265,767,000 Shares held by Tacko.

2. Speed Profit Enterprises Limited is a wholly-owned subsidiary of Catic Finance, which is in turn a wholly-owned subsidiary of CATIC. Under the SDI Ordinance, both Catic Finance and CATIC are deemed to be interested in the 508,616,000 Shares held by Speed Profit Enterprises Limited.

3. CATIC is owned as to 50% by AVIC I and as to 50% by AVIC II. Under the SDI Ordinance, each of AVIC I and AVIC II is deemed to be interested in the aggregate of the Shares stated in notes (1) and (2) above (i.e., an aggregate of 1,774,383,000 Shares held by Tacko and Speed Profit Enterprises Limited).

Save as disclosed above, the Directors and the chief executive of the Company are not aware of any person or entity (other than the Directors or chief executive of the Company) who, as at the Latest Practicable Date, was interested, directly or indirectly, in 10% or more of any class of the issued share capital of the Company which was required to be recorded in the register of interest of the Company pursuant to Section 16(1) of the SDI Ordinance.

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CATIC International Holdings Limited

GENERAL INFORMATION

APPENDIX III

As at the Latest Practicable Date, so far as the Directors and the chief executive are aware, the following person or entity was interested directly or indirectly in 10% or more of the nominal value of any class of the share capital carrying rights to vote in all circumstances at general meetings of any members of the Group (other than the Company):

Name of Owner Name of subsidiary % of shares held Asia Capital Financial Group Hangzhou Sealand Electric Power 30% Limited Company Limited

LITIGATION

As at the Latest Practicable Date, neither the Company nor any of its subsidiaries was involved in any litigation or claim of material importance and there was no litigation or claim of material importance known to the Directors to be pending or threatened against the Company or any of its subsidiaries.

QUALIFICATION

The following are the qualification of the experts who have given opinion or advice which are contained in this circular:

Name	Qualification
Norton	Registered professional surveyors and valuers property
	consultants
Platinum	Registered investment adviser and exempt dealer under the
	Securities Ordinance

CONSENTS

• (a) As at the Latest Practicable Date, none of Norton and Platinum is interested in any shares of the Company or any of its subsidiaries or associated corporations or any right or option to subscribe for or nominate persons to subscribe for any shares of the Company or any of its subsidiaries or associated corporations.

• (b) As at the Latest Practicable Date, none of Norton and Platinum has any direct or indirect interest in any assets which have been since 31st December, 2001, the date to which the latest published audited account of the Group were made up, acquired or disposed of by, or leased to, or which are proposed to be acquired or disposed of by, or leased to, the Company or any of its subsidiaries.

• (c) Each of Norton and Platinum has given and has not withdrawn their respective written consent to the issue of this circular with the inclusion of its letter, report or certificate or summary of their opinion (as the case may be) and references to their name included herein in the form and context in which it is included.

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CATIC International Holdings Limited

GENERAL INFORMATION

APPENDIX III

MATERIAL CHANGE

The Directors are not aware of any material adverse change in the financial or trading position of the Group since 31st December, 2001 (the date to which the latest published audited consolidated accounts of the Group were made up).

GENERAL

• (a) As at the Latest Practicable Date, none of the Director has any existing or proposed service contract with any member of the Group which is not terminable by the employer within one year without payment of compensation other than statutory compensation.

• (b) None of the Director is materially interested in any contract or arrangement subsisting at the date of this circular which is significant in relation to the business of the Group taken as a whole.

• (c) None of the Directors has any direct or indirect interest in any assets acquired or disposed of by or leased to any member of the Group or is proposed to be acquired or disposed of by or leased to any member of the Group since 31st December, 2001, being the date to which the latest published audited accounts of the Group were made up.

• (d) The secretary of the Company is Mr. Yu Yu Cheung, Anthony, AHKSA, CA.

• (e) The transfer office of the Company is situated at the offices of its branch share registrars, Computershare Hong Kong Investor Services Limited at 17th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong.

DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection during normal business hours at the offices of Baker & McKenzie at 14th Floor, Hutchison House, 10 Harcourt Road, Hong Kong, up to and including 8th July, 2002:

• (a) the Agreements;

• (b) the memorandum of association and bye-laws of the Company;

• (c) the audited financial statement of the Group for each of the two financial years ended 31st December, 2001;

• (d) the written consents given by Norton and Platinum and referred to in the paragraph headed “Consents” in this appendix;

• (e) the letter from the Independent Board Committee set out in this circular;

• (f) the letter of advice from Platinum, the text of which is set out in this circular; and

• (g) the valuation report prepared by Norton, the text of which is set out in Appendix I to this circular.

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CATIC International Holdings Limited

NOTICE OF SGM

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CATIC INTERNATIONAL HOLDINGS LIMITED

(Incorporated in Bermuda with limited liability)

NOTICE IS HEREBY GIVEN that a special general meeting of the shareholders of CATIC International Holdings Limited (the “ Company ”) will be held at Chater Rooms 3 & 4, Basement 3, Regal Hongkong Hotel, 88 Yee Wo Street, Causeway Bay, Hong Kong on Monday, 8th July, 2002 at 11:00 a.m. for the purposes of considering and if thought fit, passing the following resolutions as ordinary resolutions:

ORDINARY RESOLUTIONS

1. “THAT:

• (a) each of the following agreements and all transactions thereunder be and are hereby approved, confirmed and ratified:

• (i) the income assignment agreement dated 28th May, 2002 (the “Income Assignment Agreement”) entered into between (through CATIC Helicopter (H.K.) Limited, a wholly-owned subsidiary of the Company) a wholly foreign-owned enterprise to be established by the Company as its wholly-owned subsidiary in the People’s Republic of China (the “PRC”) and China National Aero-Technology Import & Export Corporation (“CATIC”), a controlling shareholder of the Company, a copy of which has been produced to the meeting marked “A” and signed by the Chairman of the meeting for identification purposes;

• (ii) the capital injection agreement dated 28th May, 2002 (the “Capital Injection Agreement”) entered into amongst CATIC General Aviation Holdings Limited (“CATIC GA”), a wholly-owned subsidiary of the Company, CATIC and China Siwei Surveying & Mapping Technology Corporation, a copy of which has been produced to the meeting marked “B” and signed by the Chairman of the meeting for identification purposes;

• (iii) the agreement dated 28th May, 2002 (the “EJV I Agreement”) entered into amongst the Company, China Siwei Surveying & Mapping Technology Corporation, China Cartographic Publishing House, CATIC Siwei Co., Ltd. and Beijing Shangluo Data System Co., Ltd. in relation to the establishment of a sino-foreign equity joint venture in the PRC, a copy of which has been produced to the meeting marked “C” and signed by the Chairman of the meeting for identification purposes; and

• (iv) the agreement dated 28th May, 2002 (the “EJV II Agreement”) entered into between CATIC GA and CATIC in relation to the establishment of a sino-foreign joint venture in the PRC, a copy of which has been produced to the meeting marked “D” and signed by the Chairman of the meeting for identification purposes, and

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CATIC International Holdings Limited

NOTICE OF SGM

• (b) the directors of the Company (the “Directors”) be and are hereby authorised to do all such acts and things and to sign, seal and/or deliver all such documents and to take all steps which in their discretion may be necessary, desirable or expedient to implement and/or give effect to the transactions contemplated under each of the Income Assignment Agreement, the Capital Injection Agreement, the EJV I Agreement and the EJV II Agreement, with any changes as the Directors may consider appropriate.”

2. “THAT:

• (a) subject to paragraph (c) below, pursuant to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”), the exercise by the Directors during the Relevant Period (as defined in Resolution No. 3(c) below) of all the powers of the Company to allot, issue and deal with additional shares in the capital of the Company (the “Shares”) and to make or grant offers, agreements and options which might require the exercise of such power be and is hereby generally and unconditionally approved;

• (b) the approval in paragraph (a) above shall authorise the Directors during the Relevant Period to make or grant offers, agreements and options which might require the exercise of such powers after the end of the Relevant Period;

• (c) the aggregate nominal amount of share capital allotted, issued or dealt with or agreed conditionally or unconditionally to be allotted, issued or dealt with (whether pursuant to an option or otherwise) by the Directors pursuant to the approval in paragraph (a) above, otherwise than pursuant to:

• (i) a Rights Issue (as defined below); or

• (ii) the exercise of the subscription rights under any option scheme of the Company or similar arrangement for the time being adopted for the grant or issue to participants of such scheme or arrangement or rights to acquire Shares; or

• (iii) any issue of Shares upon the exercise of the subscription rights attaching to any warrants or convertible notes of the Company or any securities which are convertible into Shares; or

• (iv) any scrip dividend or similar arrangement providing for allotment of Shares in lieu of the whole or part of a dividend on Shares in accordance with the bye-laws of the Company,

shall not exceed the aggregate of:

• (A) 20% of the aggregate nominal amount of the share capital of the Company in issue at the date of passing of this resolution; and

• (B) an amount representing the aggregate nominal amount of Shares repurchased by the Company pursuant to the mandate referred to in Resolution No. 3 below provided that such amount shall not exceed 10% of the aggregate nominal amount of the share capital of the Company in issue as at the date of the passing of Resolution No.3 below and as mentioned in Resolution No. 3 below,

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CATIC International Holdings Limited

NOTICE OF SGM

and the said approval shall be limited accordingly; and

• (d) for the purposes of this Resolution:

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

3. “THAT:

• (a) subject to paragraph (b) below and subject to and in accordance with all applicable laws and the requirements of the Listing Rules as amended from time to time, the exercise by the Directors during the Relevant Period (as hereinafter defined) of all the powers of the Company to repurchase Shares on The Stock Exchange of Hong Kong Limited, be and is hereby generally and unconditionally approved;

• (b) the aggregate nominal amount of the Shares which the Company is authorised to repurchase pursuant to the approval in paragraph (a) above shall not exceed 10% of the aggregate nominal amount of the share capital of the Company in issue at the date of the passing of this resolution and the said approval shall be limited accordingly; and

• (c) for the purposes of this Resolution and Resolution No. 2 above:

• “Relevant Period” means the period from the date on which this Resolution or Resolution No. 2 above, as the case may be, is passed until whichever is the earliest of:

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

• (ii) the expiration of the period within which the next annual general meeting of the Company is required by the bye-laws of the Company or the Companies Act 1981 of Bermuda (as amended) or any other applicable law of Bermuda to be held; and

• (iii) the date on which the authority set out in this Resolution or Resolution No. 2 above, as the case may be, is revoked or varied by an ordinary resolution of the shareholders of the Company in general meeting.”

By Order of the Board YANG Chunshu Chairman

Hong Kong, 20th June, 2002

CATIC International Holdings Limited

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NOTICE OF SGM

Notes:

1. A member entitled to attend and vote at the special general meeting is entitled to appoint one or more proxies to attend and vote in his or her stead. A proxy need not be a member of the Company.

2. In order to be valid, a proxy form together with any power of attorney or other authority, if any, under which it is signed, or a notarially certified copy of such power of attorney or authority, must be deposited at the Company’s branch share registrar and transfer office in Hong Kong at Computershare Hong Kong Investor Services Limited at 17th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong, at least 48 hours before the time appointed for holding the meeting or any adjournment thereof. Completion and return of the proxy form will not preclude you from attending and voting in person at the meeting or any adjourned meeting should you so wish.

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CATIC International Holdings Limited