Hony Media Group — Capital/Financing Update 2004

Dec 23, 2004

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult a licensed securities dealer, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in China Strategic Holdings Limited, you should at once hand this circular to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or 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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CHINA STRATEGIC HOLDINGS LIMITED

(incorporated in Hong Kong with limited liability) (Stock Code: 0235)

DISCLOSEABLE TRANSACTION

IN RESPECT OF THE DISPOSAL AND SUBSCRIPTION OF

2,340 MILLION SHARES IN WING ON TRAVEL (HOLDINGS) LIMITED

A letter from the board is set out on pages 4 to 9 of this circular.

22 December 2004

CONTENTS

Page	Page
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
APPENDIX – GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10

– i –

DEFINITIONS

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

• “Announcement”

the announcement dated 30 November 2004 jointly issued by the Company and Wing On Travel regarding, amongst other things, the issue of Subscription Shares pursuant to the Second Placing Agreement

• “associate(s)”

has the meaning as ascribed to it under the Listing Rules

• “Board”

the board of Directors

• “CEL”

China Enterprises Limited, a company incorporated in Bermuda with limited liability and the shares of which are traded on the OTC Bulletin Board in the United States of America

• “CEL Group”

CEL and its subsidiaries

• “Company” or “CSH”

China Strategic Holdings Limited, a company incorporated in Hong Kong with limited liability and the Shares are listed on the Main Board of the Stock Exchange

• “Directors”

the directors of the Company

• “First Placing Agreement”

• the placing agreement dated 30 November 2004 between CEL, Wing On Travel and the Placing Agent in respect of the placing of 3,660 million existing Wing On Shares and the conditional subscription of 3,660 million new Wing On Shares

• “Group”

the Company and its subsidiaries

• “HK$”

Hong Kong dollar, the lawful currency of Hong Kong

• “Hong Kong”

the Hong Kong Special Administrative Region of the PRC

• “Independent Third Party”

• a party who to the best of the knowledge, information and belief of Directors having made all reasonable enquiry is a third party independent of the Company and its connected persons (as defined in the Listing Rules)

– 1 –

DEFINITIONS

• “Independent Shareholders” shareholders of Wing On Travel (other than CEL and its associates) “Latest Practicable Date” 20 December 2004, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained herein

• “Listing Committee”

the listing sub-committee of the Stock Exchange

• “Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange

• “Placees” the placees procured by the Placing Agent under the Placing, all of which were Independent Third Parties

• “Placing” the placement of 6,000 million existing Wing On Shares by the Placing Agent to the Placees at the Placing Price under the Placing Agreements

“Placing Agent” Deutsche Bank AG, Hong Kong Branch, an Independent Third Party

• “Placing Agreements” the First Placing Agreement and the Second Placing Agreement

• “Placing Price” the placing price of HK$0.028 per Placing Share under the Placing, which is the same as the Subscription Price

• “Placing Share(s)” 6,000 million existing Wing On Shares to be placed under the Placing

• “Second Placing Agreement” the placing agreement dated 30 November 2004 between CEL, Wing On Travel and the Placing Agent in respect of the placing of 2,340 million existing Wing On Shares and the conditional subscription of 2,340 million new Wing On Shares

• “SFO” the Securities and Futures Ordinance (Cap.571 of the Laws of Hong Kong)

• “Share(s)” share(s) of HK$0.10 each in the share capital of the Company

• “Shareholder(s)” holder(s) of the Share(s)

– 2 –

DEFINITIONS

• “Stock Exchange”

The Stock Exchange of Hong Kong Limited

“Subscription” the subscription of 6,000 million new Wing On Shares by CEL (or its nominees) under the Placing Agreements

• “Subscription Price” the subscription price of HK$0.028 per Subscription Share under the Subscription, which is the same as the Placing Price

“Subscription Share(s)” new Wing On Shares to be subscribed by CEL under the Placing Agreements which is equivalent to the number of Placing Shares placed by the Placing Agent

• “Wing On Shares” share(s) of HK$0.01 each in the share capital of Wing On Travel

“Wing On Travel” Wing On Travel (Holdings) Limited, a company incorporated in Bermuda with limited liability, the shares of which are listed on the Main Board of the Stock Exchange

• “Wing On Travel Group” Wing On Travel and its subsidiaries

• “%” per cent.

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LETTER FROM THE BOARD

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CHINA STRATEGIC HOLDINGS LIMITED

(incorporated in Hong Kong with limited liability) (Stock Code: 0235)

Executive Directors:

Dr. Chan Kwok Keung, Charles Dr. Yap, Allan Mr. Li Wa Kin

Ms. Chau Mei Wah, Rosanna

Registered Office:

8th Floor, Paul Y. Centre 51 Hung To Road, Kwun Tong Kowloon Hong Kong

Ms. Chan Ling, Eva

Mr. Chan Kwok Hung

(Alternate to Dr. Chan Kwok Keung, Charles)

Mr. Lui Siu Tsuen, Richard

(Alternate to Dr. Yap, Allan)

Independent Non-Executive Directors

Mr. David Edwin Bussmann

Ms. Fung Wan Yiu, Agnes Mr. Wong King Lam, Joseph

22 December 2004

To the Shareholders

Dear Sir and Madam,

DISCLOSEABLE TRANSACTION IN RESPECT OF THE DISPOSAL AND SUBSCRIPTION OF 2,340 MILLION SHARES IN WING ON TRAVEL (HOLDINGS) LIMITED

INTRODUCTION

Reference is made to the Announcement dated 30 November 2004, in relation to the Placing Agreements entered into between CEL (a subsidiary of the Company and a substantial shareholder of Wing On Travel), Wing On Travel and the Placing Agent on 30 November 2004 pursuant to which the Placing Agent agreed to place, on a fully underwritten basis, 6,000 million Wing On

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LETTER FROM THE BOARD

Shares at the price of HK$0.028 per Placing Share to no less than six Placees under each of the Placing Agreements who and whose ultimate beneficial owners are Independent Third Parties procured by the Placing Agent and CEL would subscribe for 6,000 million new Wing On Shares at the same price of HK$0.028 per Subscription Share. The Placing has been completed on 3 December 2004 and the issue and subscription of 3,660 million new Wing On Shares pursuant to the First Placing Agreement has been completed on 14 December 2004.

The disposal of 2,340 million existing Wing On Shares and the Subscription of 2,340 million new Wing On Shares by CEL under the Second Placing Agreement constitutes a discloseable transaction of CSH under the Listing Rules as the consideration ratio in respect of each of such transaction exceeds 5% but is less than 25%.

The purpose of this circular is to provide you with further information in relation to the placing and subscription under the Second Placing Agreement.

THE SECOND PLACING AGREEMENT

Date of the Second Placing Agreement:

30 November 2004

Parties to the Second Placing Agreement:

• (1) CEL, a subsidiary of the Company and a substantial shareholder of Wing On Travel as to 19.58% as the Latest Practicable Date

• (2) Wing On Travel

• (3) Placing Agent, an Independent Third Party

Number of new Wing On Shares to be subscribed for pursuant to the Second Placing Agreement:

2,340 million Subscription Shares represent (i) approximately 7.26% of the existing issued share capital of Wing On Travel as at the Latest Practicable Date; and (ii) approximately 6.77% of the issued share capital of Wing On Travel as enlarged by the issue of the 2,340 million Subscription Shares under the Second Placing Agreement.

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LETTER FROM THE BOARD

Subscription price:

HK$0.028 per Subscription Share, being the same as the Placing Price. The aggregate Subscription Price of 2,340 million Subscription Shares amounts to HK$65.52 million payable in cash. The Placing Price represents a discount of 22.2% of closing price of HK$0.036 per Wing On Share as quoted on the Stock Exchange on the Latest Practicable Date.

Conditions of the Subscription:

The issue of Subscription Shares pursuant to the Second Placing Agreement is conditional upon (i) the Listing Committee granting listing of and permission to deal in the Subscription Shares which fall to be issued under that agreement; (ii) completion of the placing of the Placing Shares under that agreement having taken place; and (iii) the approval of such issue by Independent Shareholders having been obtained. Completion of the subscription of Subscription Shares under the Second Placing Agreement will take place on the third business day after the fulfillment of all such conditions. If such conditions (including the obtaining of Independent Shareholders’ approval of the issue of new Wing On Shares under the Second Placing Agreement) are not fulfilled on or before 31 January 2005 or such later date as CEL and Wing On Travel may agree in writing, the subscription of the 2,340 million Wing On Shares under the Second Placing Agreement will not proceed.

RANKING OF SUBSCRIPTION SHARES

The Subscription Shares, when issued and fully paid, will rank pari passu in all respects with the Wing On Shares in issue on the date of allotment and issue of the Subscription Shares including the right to any dividends or distributions. As at the Latest Practicable Date, there is no restrictions in disposal in respect of the Subscription Shares.

INFORMATION OF THE COMPANY

The Company is an investment holding company. The Group is principally engaged in manufacturing and trading of battery products and property investment and development business in the PRC.

INFORMATION OF CEL

CEL is an investment holding company and is owned as to approximately 55.22% effective equity interest and approximately 88.79% effective voting interest by the Company. CEL is therefore a subsidiary of the Company. The CEL Group has substantial interests in other investment companies, which through their subsidiaries are principally engaged in the manufacturing and marketing of tires in the PRC and other countries aboard and the business of providing package tour, travel and other related services and hotel and leisure-related-business.

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LETTER FROM THE BOARD

INFORMATION OF WING ON TRAVEL

Wing On Travel is an investment holding company. Wing On Travel Group is principally engaged in the business of providing package tours, travel and other related services with branches in Hong Kong, Macau, Canada and the United Kingdom, and hotel operation in Hong Kong and the PRC.

The audited consolidated net losses (both before and after taxation and extraordinary items and minority interest) of Wing On Travel for the nine months ended 31 December 2002 and the year ended 31 December 2003 and the unaudited consolidated net profit (both before and after taxation and extraordinary items and minority interest) of Wing On Travel for the six months ended 30 June 2004 were as follows:–

	Six months ended	**Year ended **	Nine months ended
	30 June 2004	31 December 2003	31 December 2002
	HK$’000	HK$’000	HK$’000
	(unaudited)	(audited)	(audited)
Turnover	814,139	1,416,235	1,323,286
Consolidated net profit/(loss)
before taxation and
extraordinary items and
minority interest	32,868	(373,047)	(304,153)
Taxation (charge)/credit	(8)	2,075	669
Consolidated net profit/(loss)
after taxation and
extraordinary items and
minority interest	32,953	(370,972)	(302,248)

Based on the interim report of Wing On Travel for the six months ended 30 June 2004, the unaudited consolidated net asset value and unaudited total assets of Wing On Travel as at 30 June 2004 was approximately HK$325.7 million and HK$2,553.03 million respectively.

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LETTER FROM THE BOARD

REASONS FOR AND BENEFITS OF THE ACQUISITION

The Second Placing Agreement was a part of the Placing and Subscription which as a whole facilitates fund raising by Wing On Travel and help strengthen its financial position. The Subscription Price under the Second Placing Agreement was the same as the Placing Price, both of which were determined after arm’s length negotiations between CEL, Wing On Travel and the Placing Agent. The boards of the Company and Wing On Travel including their respective independent nonexecutive directors consider the Subscription Price to be fair and reasonable.

If the issue of the Subscription Shares pursuant to the Second Placing Agreement is completed, CSH will incur a loss of approximately HK$3.9 million resulting from the dilution of interests in Wing On Travel with reference to the unaudited management accounts of CSH as at 30 June 2004. If the issue of the Subscription Shares pursuant to the Second Placing Agreement is not completed, CSH will obtain a gain of approximately HK$67.9 million resulting from the sale of 2,340 million Wing On Shares under the Second Placing Agreement with reference to the unaudited management accounts of CSH as at 30 June 2004. The consideration in respect of 2,340 million Wing On Shares of HK$65.52 million represents an excess of approximately HK$23.2 million over the unaudited net asset value of 2,340 million Wing On Shares of approximately HK$42.3 million as at 30 June 2004. Upon the completion of the issue of the Subscription Shares pursuant to the Second Placing Agreement, the Placing and the Subscription will not have any material effect on the assets and liabilities of CSH. There are no restrictions in relation to the Placing Shares to be placed pursuant to the Second Placing Agreement.

As CSH has an interest in Wing On Travel through CEL, the Directors including the independent non-executive Directors consider that the proposed Placing and Subscription could in turn help bolster the Company’s investment in Wing On Travel through improvement in Wing On Travel’s financial position and increase of its capital base, notwithstanding the dilution of the interests of the Company in Wing On Travel which the Subscription entails. If the issue of Subscription Shares pursuant to the Second Placing Agreement does not proceed (because the conditions precedent are not fulfilled by the agreed deadline, 31 January 2005), the Company intends that the net proceeds of the sale of existing Shares pursuant to the Second Placing Agreement (which would amount to HK$65.52 million if all 2,340 million existing Placing Shares were sold under the Second Placing Agreement) to be used by CEL as general working capital. CEL has no specific intended use for such proceeds.

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LETTER FROM THE BOARD

The Directors including the independent non-executive Directors are of the view that the disposal and subscription of 2,340 million Wing On Shares pursuant to the Second Placing Agreement is in the interest of the Company and the terms of the Second Placing Agreement are fair and reasonable and in the interests of the Company and Shareholders as a whole.

Yours faithfully,

By order of the Board of China Strategic Holdings Limited Dr. Chan Kwok Keung, Charles

Chairman

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GENERAL INFORMATION

APPENDIX

1. RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors collectively and individually accept full responsibility for the accuracy of the information contained in this circular and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, there are no other facts not contained in this circular, the omission of which would make any statement contained herein misleading.

2. DISCLOSURE OF INTERESTS

I. Interests of Directors

As at the Latest Practicable Date, the interests and short positions of the Directors or chief executive of the Company in the Shares, underlying Shares or debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO) which were required (a) to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they are taken or deemed to have under such provisions of the SFO); or (b) pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (c) pursuant to the Model Code for Securities Transactions by Directors of Listed Companies to be notified to the Company and the Stock Exchange were as follows:

(a) Interests in the ordinary Shares

					Approximate
Name of	Long position/		Nature	Number	percentage
Directors	Short position	Capacity	of interest	of Shares	of shareholding
Dr. Chan Kwok	Long position	Interest held by	Corporate	258,819,795	29.36%
Keung, Charles		controlled	interest
(Note)		corporation

Note Dr. Chan Kwok Keung, Charles owns the entire interest of Chinaview International Limited (“Chinaview”) which in turn owns the entire interest in Galaxyway Investments Limited (“Galaxyway”). Galaxyway owns more than one-third of the entire issued ordinary share capital of ITC Corporation Limited (“ITC”). ITC owns the entire interest of ITC Investment Holdings Limited (“ITC Investment”). ITC Investment owns the entire interest in Hollyfield Group Limited (“Hollyfield”). Hollyfield owns more than one-third of the entire issued share capital of Paul Y. – ITC Construction Holdings Limited (“Paul Y.”). Paul Y. owns

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GENERAL INFORMATION

APPENDIX

the entire interest of Paul Y. – ITC Investments Group Limited (“PYITCIG”). PYITCIG owns the entire interest of Great Decision Limited (“GDL”) which in turn owns the entire interest in Calisan. Accordingly, GDL, PYITCIG, Paul Y., Hollyfield, ITC Investment, ITC, Galaxyway, Chinaview and Dr. Chan are deemed to be interested 258,819,795 shares which are held by Calisan.

(b) Interest in Associated Corporation

	Name of					Approximate
Name of	associated	Long position/		Nature	Number	percentage
Directors	corporation	Short position	Capacity	of interest	of Shares	of shareholding
Dr. Chan Kwok	Wing On Travel	Long position	Beneficial	Personal	17,280,000	0.05%
Keung, Charles			owner	interest

II. Interests of Shareholders discloseable pursuant to the SFO

As at the Latest Practicable Date, so far as is known to the Directors or chief executive of the Company, the following persons had an interest or short position in the Shares and underlying Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO:–

(a) Interests in the Shares

						Approximate
	Long position/			Nature	Number	percentage
Name	Short position	Capacity	Notes	of interest	of Shares	of shareholding
Calisan	Long position	Beneficial owner	1	Personal interest	258,819,795	29.36%
GDL	Long position	Interest held by	1	Corporate interest	258,819,795	29.36%
		controlled
		corporation
PYITCIG	Long position	Interest held by	1	Corporate interest	258,819,795	29.36%
		controlled
		corporation
Paul Y. – ITC	Long position	Interest held by	1	Corporate interest	258,819,795	29.36%
		controlled
		corporation

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APPENDIX

GENERAL INFORMATION

						Approximate
	Long position/			Nature	Number	percentage
Name	Short position	Capacity	Notes	of interest	of Shares	of shareholding
Hollyfield	Long position	Interest held by	1	Corporate interest	258,819,795	29.36%
		controlled
		corporation
ITC Investment	Long position	Interest held by	1	Corporate interest	258,819,795	29.36%
		controlled
		corporation
ITC	Long position	Interest held by	1	Corporate interest	258,819,795	29.36%
		controlled
		corporation
Galaxyway	Long position	Interest held by	1	Corporate interest	258,819,795	29.36%
		controlled
		corporation
Chinaview	Long position	Interest held by	1	Corporate interest	258,819,795	29.36%
		controlled
		corporation
Dr. Chan Kwok	Long position	Interest held by	1	Corporate interest	258,819,795	29.36%
Keung,		controlled
Charles		corporation
Ms. Ng Yuen	Long position	Interest held by	2	Family interest	258,819,795	29.36%
Lan, Macy		family
Well Orient	Long position	Beneficial Owner	3	Personal interest	258,819,794	29.36%
Limited
Powervote	Long position	Interest held by	3	Corporate interest	258,819,794	29.36%
Technology		controlled
Lmited		corporation

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APPENDIX

GENERAL INFORMATION

						Approximate
	Long position/			Nature	Number	percentage
Name	Short position	Capacity	Notes	of interest	of Shares	of shareholding
Hanny	Long position	Interest held by	3	Corporate interest	258,819,794	29.36%
Magnetics		controlled
(B.V.I.) Limited		corporation
Hanny Holdings	Long position	Interest held by	3	Corporate interest	258,819,794	29.36%
Limited		controlled
		corporation

Notes:

1. Dr. Chan Kwok Keung, Charles owns the entire interest of Chinaview which in turn owns the entire interest in Galaxyway. Galaxyway owns more than one-third of the entire issued ordinary share capital of ITC. ITC owns the entire interest of ITC Investment. ITC Investment owns the entire interest in Hollyfield. Hollyfield owns more than one-third of the entire issued share capital of Paul Y. Paul Y. owns the entire interest of PYITCIG. PYITCIG owns the entire interest of GDL which in turn owns the entire interest in Calisan. Accordingly, GDL, PYITCIG, Paul Y., Hollyfield, ITC Investment, ITC, Galaxyway, Chinaview and Dr. Chan are deemed to be interested 258,819,795 shares of the Company which are held by Calisan.

2. Ms. Ng Yuen Lan, Macy is the spouse of Dr. Chan Kwok Keung, Charles and deemed to be interested in 258,819,795 shares of the Company held by Calisan.

3. Well Orient Limited (“WOL”) is wholly-owned by Powervote Technology Limited (“PTL”) which is in turn owned by Hanny Magnetics (B.V.I.) Limited (“Hanny Magnetics”). Hanny Megnetics is wholly-owned by Hanny Holdings Limited (“Hanny”). PTL, Hanny Magnetics and Hanny were deemed to be interested in 258,819,794 shares of the Company which were held by WOL.

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APPENDIX

GENERAL INFORMATION

(b) Substantial Shareholders of other members of the Group

So far as is known to the Directors or chief executive of the Company, the following person(s) is interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of the other members of the Group as at the Latest Practicable Date:–

		Percentage of	shareholding
Name of subsidiary	Name of shareholder	(No. of	shares)
			Other
		**The Group **	shareholder(s)
China Telecom	China Telecom	51%	49%
International Limited	Investment Corporation	510 shares	490 shares
Earnfull Industrial Limited	Wang Ming Jan	90%	10%
		9,000,000	1,000,000
		shares	shares
Orion (B.V.I.) Tire	Corondad Holding Limited	60%	40%
Corporation		60 shares	60 shares
Orion Tire Corporation	Coronada Holding Limited	60%	40%
		60 shares	60 shares
Principal Diamond Limited	Wonder Wealth Limited	80%	20%
		8 shares	2 shares
Ruby Uniforms Limited	Frederick Poon Chuan Ki	90%	10%
		900 shares	100 shares
Talent Cosmos Limited		80%	20%
	Cheung Kwok Keung, So So	10,400 shares	246 shares
	Chung Tat Yan		163 shares
	Wong Leung Ngai		328 shares
	Happy Trade Ltd.		1,534 shares
	Wong Kwok Chu		129 shares
	Power Guard Holdings Limited		200 shares

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GENERAL INFORMATION

APPENDIX

Save as disclosed above, the Directors or chief executive of the Company are not aware that there is any other persons who, as at the Latest Practicable Date, had an interest or short position in the Shares and underlying Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who was, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying right to vote in all circumstances at general meeting of any other members of the Group or had any options in respect of such shares.

III. Directors’ interests in competing business

The interests of Directors in competing businesses as at the Latest Practicable Date required to be disclosed pursuant to rule 8.10 of the Listing Rules were as follows:

Name of Director	Name of company	Nature of interest	Note
Dr. Chan Kwok Keung,	Paul Y. – ITC	As substantial shareholder	1
Charles		and chairman of
		Paul Y. – ITC
	Hanny	As substantial shareholder,	2
		chairman and executive
		director of Hanny
	Wing On Travel	As executive director of	3
		Wing On Travel
Dr. Yap, Allan	Hanny	As managing director of Hanny	2
	Wing On Travel	As executive director of	3
		Wing On Travel
Ms. Chau Mei Wah,	Paul Y. – ITC	As executive director of	1
Rosanna		Paul Y. – ITC
Ms. Chan Ling, Eva	Wing On Travel	As director of subsidiaries of	3
		Wing On Travel

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GENERAL INFORMATION

APPENDIX

Name of Director	Name of company	Nature of interest	Note
Mr. Chan Kwok Hung	Hanny	As executive director of Hanny	2
Mr. Lui Siu Tsuen,	Hanny	As deputy managing director of	2
Richard		Hanny
	Wing On Travel	As executive director of	3
		Wing On Travel

Notes:

1. Paul Y. – ITC is principally engaged in the business of building construction, civil engineering, specialist works, property development and investment, development and investment in infrastructure projects, and manufacturing and trading of construction materials. Paul Y. – ITC owns two parcel of land in the PRC which is valued at approximately HK$41.5 million and it also owns house, some development site, land, undeveloped land portion and shop in the PRC. By virtue of Paul Y. – ITC’s interest in a parcel of land in the PRC, the directors of Paul Y. – ITC who are also the Directors are considered to have interest in the business which are or are likely to compete either directly or indirectly with the property business of the Group. However given the parcel of land holds by Paul Y. – ITC is not in the proximity of the properties the Group owns, the Board considers the competition between the property business of Paul Y. – ITC and that of the Group is minimal. The Directors also confirm that the respective management and administration of the businesses as set out above are independent from the Group.

2. Hanny is principally engaged in trading of computer related products, consumer electronic products, distribution and marketing of computer accessories and storage media drives, scanners, audio and video cassettes, minidisks, household electronic products and telecommunication accessories, securities trading and land development in the PRC. Up to August 2004, a total of approximately of HK$155.4 million was paid by Hanny to obtain certain parts of land use right in Zhuhai, the PRC. By virtue of its interest in the parcel of land in Zhuhai, the PRC, which is in the proximity of the properties the Group owns, the directors of Hanny who are also the Directors are considered to have interest in the business which are or are likely to compete either directly or indirectly with the property business of the Group. The Directors also confirm that the respective management and administration of the businesses as set out above are independent from the Group.

3. Wing On Travel is principally engaged in the business of provision of package tours, travel and other related services. It also engaged in hotel and leisure-related-business. Wing On Travel owns a parcel of land with buildings and structures erected therein, in Guangxi Zhuang Nationality Autonomous Region, the PRC for hotel development, including a hotel building, a staff-quarter building and a boiler room valued at approximately HK$38.6 million as at 29 February 2004. By virtue of its interest in the parcel of land in Guangxi Zhueng Nationality Autonomous Region, the PRC, the directors of Wing On Travel who are also the Directors are considered to have interest in the business which are or are likely to compete either directly or directly with the property business of the Group. However given the parcel of land holds by Wing On Travel is not in the proximity of the properties the Group owns, the Board considers the competition between property business of Wing On Travel and that of the Group is minimal. The Directors also confirm that the respective management and administration of the businesses as set out above are independent from the Group.

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GENERAL INFORMATION

APPENDIX

3. SERVICE CONTRACTS

As at the Latest Practicable Date, none of Directors had entered into, or was proposing to enter into, any service contracts with the Company or any member of the Group (excluding contracts expiring or determinable by the employer within one year without payment of compensation (other than statutory compensation)).

4. LITIGATION

As at the Latest Practicable Date, no member of the Group was engaged in any litigation or claims of material importance and, so far as the Directors are aware, no litigation or claims of material importance are pending or threatened by or against any member of the Group

5. MISCELLANEOUS

• (a) The qualified accountant of the Company is Ms. Cheung Sze Man, who is a member of the Hong Kong Institute of Certified Public Accountants and CPA Australia.

• (b) The secretary of the Company is Ms. Chan Yan Yan, Jenny, who is an associate member of the Institute of Chartered Secretary and Administrators and the Hong Kong Institute of Company Secretary.

• (c) The registered office of the Company is situated at 8th Floor, Paul Y. Centre, 51 Hung To Road, Kwun Tong, Kowloon, Hong Kong.

• (d) The share registrars of the Company is Standard Registrars Limited at Ground Floor, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong.

• (e) In any event of inconsistency, the English language text of this circular shall prevail over the Chinese language text.

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