TravelSky Technology Limited — Proxy Solicitation & Information Statement 2009

Feb 3, 2009

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 your licensed securities dealer, bank manager, stock broker, solicitor, professional accountant or other appropriate independent advisers.

If you have sold or transferred all your shares in TravelSky Technology Limited , you should at once hand this circular together with the accompanying form of proxy to the purchaser or transferee or to the bank, licensed securities dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim 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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(Stock Code: 0696)

CONTINUING CONNECTED TRANSACTION AND NOTICE OF EGM

Independent financial adviser to the Independent Board Committee and the Independent Shareholders

A letter from the Board is set out on pages 1 to 9 of this circular. A letter from the Independent Board Committee is set out on page 10 of this circular. A letter from China Merchants containing its advice to the Independent Board Committee and the Independent Shareholders is set out on pages 11 to 20 of this circular.

A notice convening the EGM to be held at Conference Room, 2/F, Wangfujing Grand Hotel, 57 Wangfujing Avenue, Beijing, the People’s Republic of China at 11:00 a.m. on 8 April 2009 is set out on pages 24 to 26 of this circular. Whether or not you intend to be present at the EGM, you are requested to complete and return the same to the branch share registrar of the Company in Hong Kong, Hong Kong Registrars Limited at Shops 1712-1716, 17/F, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong (in case of holders of H shares) or the registered office of the Company at Floor 18-20, South Wing, Park C, Raycom InfoTech Park, No. 2 Ke Xue Yuan South Road, Haidian District, Beijing, the PRC (in case of holders of domestic shares), no later than 24 hours before the time fixed for holding the EGM or any adjournment thereof. Completion and delivery of the form of proxy will not prevent you from attending, and voting at, the EGM or any adjournment thereof if you so wish.

4 February 2009

CONTENTS

	Page
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	ii
LETTER FROM THE BOARD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM THE INDEPENDENT BOARD COMMITTEE . . . . . . . . . . . . . . . . . . . . . . . . .	10
LETTER FROM CHINA MERCHANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
APPENDIX — GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	21
NOTICE OF EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	24

— i —

DEFINITIONS

In this circular, the following expressions shall have the meanings set out below unless the context requires otherwise:

• “2006 Circular”

the Company’s circular dated 7 April 2006 in relation to, among other things, the Hainan Airline Services Agreement

“Annual Caps”

the expected maximum amount of fees payable by Hainan Airlines under the Hainan Airline Services Agreement for the period covered thereunder

“associate(s)”

have the same meaning ascribed to it under Chapters 1 and 19A of the Listing Rules

“Board”

the board of the Directors

“CAAC”

中國民用航空局 (Civil Aviation Administration of China), the administrative authority in the civil aviation industry in the PRC

“China Merchants”

China Merchants Securities (HK) Co., Ltd., the independent financial adviser to the Independent Board Committee and the Independent Shareholders and a corporation licensed to carry on Type 1 (dealing in securities), Type 2 (dealing in futures contracts), Type 4 (advising on securities), Type 6 (advising on corporate finance) and Type 9 (asset management) regulated activities under the SFO

• “Company”

TravelSky Technology Limited, a company incorporated under the laws of the PRC whose Shares are listed on the Stock Exchange and whose American depositary shares are traded on the over-the-counter market in the United States

• “Continuing Connected Transaction”

the transactions contemplated under the Hainan Airline Services Agreement

• “Directors”

the directors of the Company

• “EGM”

extraordinary general meeting of the Company convened to be held on 8 April 2009 for the purpose of approving the Continuing Connected Transaction and the Annual Caps by the Independent Shareholders, and the notice of which is set out on pages 24 to 26 of this circular

• “Existing Hainan Airline Services Agreement”

the agreement dated 25 October 2004 and entered into between the Company and Hainan Airlines in relation to the Technology Services, particulars of which are set out in the 2006 Circular

— ii —

DEFINITIONS

“Group”

the Company and its subsidiaries

• “Hainan Airline the agreement dated 20 January 2009 and entered into between the Services Agreement” Company and Hainan Airlines in relation to the Technology Services (as supplemented by the letter dated 26 December 2008 issued by Hainan Airlines to the Company and the letter dated 20 January 2009 issued by Company to Hainan Airlines)

• “Hainan Airlines” Hainan Airlines Company Limited（海南航空股份有限公司）, a promoter of the Company (for the purpose of the Continuing Connected Transaction contemplated under the Hainan Airline Services Agreement, shall include Xin Hua Holding)

• “HK$” Hong Kong dollars, the lawful currency of Hong Kong

• “Independent Board Committee” the independent board committee of the Company established by the Company which comprises Yick Wing Fat, Simon, Yuan Yaohui and Chua Keng Kim to advise the Independent Shareholders in respect of the Continuing Connected Transaction and the Annual Caps

• “Independent Shareholders” the shareholders of the Company, other than Hainan Airlines, Xin Hua Holding and their respective associates (if holding share in the capital of the Company at the EGM)

• “Latest Practicable Date” 2 February 2009, being the latest practicable date prior to the printing of this circular for the purpose of ascertaining certain information for inclusion in this circular

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

• “Percentage Ratios” the percentage ratios, other than the profits ratio and equity capital ratio, under Rule 14.07 of the Listing Rules as calculated on an annual basis

• “PRC” the People’s Republic of China

• “RMB” Renminbi, the lawful currency of the PRC

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

• “Share(s)” H share(s) of RMB1.00 each in the capital of the Company

— iii —

DEFINITIONS

“Shareholder(s)” shareholder(s) of the Company “Stock Exchange” The Stock Exchange of Hong Kong Limited “Technology Services” various aviation information technology services and ancillary support to be provided by the Group to Hainan Airlines as set out in the paragraph headed “Services to be provided under the Hainan Airline Services Agreement” in the Letter from the Board in this circular “Xin Hua Holding” 大新華航空有限公司 (Da Xin Hua Holding Limited), the holding company of Hainan Airlines “%” per cent.

For the purpose of this circular, unless otherwise indicated, the exchange rate at RMB1 = HK$1.33 has been used, where applicable, for the purpose of illustration only and does not constitute a representation that any amount have been, could have been or may be exchanged.

— iv —

LETTER FROM THE BOARD

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(Stock Code: 0696)

Directors: Xu Qiang (Chairman) Cui Zhixiong Xiao Yinhong Zhu Xiaoxing Wang Quanhua[#] Luo Chaogeng[#] Gong Guokui[#] Rong Gang[#] Sun Yongtao[#] Liu Dejun[#] Xia Yi[#] Song Jian[#] Yick Wing Fat, Simon[##] Yuan Yaohui[##] Chua Keng Kim[##]

Registered office:

Floor 18-20, South Wing, Park C Raycom InfoTech Park No. 2 Ke Xue Yuan South Road Haidian District, Beijing 100190 The PRC

# Non-executive Directors

## Independent Non-executive Directors

4 February 2009

To the Shareholders

Dear Sir/Madam,

CONTINUING CONNECTED TRANSACTION AND NOTICE OF EGM

1. BACKGROUND

As set out in the Company’s announcement dated 21 January 2009, the Company has entered into the Hainan Airline Services Agreement and the Directors propose to seek the Independent Shareholders’ approval for the Continuing Connected Transaction and the Annual Caps at the EGM.

— 1 —

LETTER FROM THE BOARD

The purposes of this circular are to provide you with, among other things, (i) further details of the Continuing Connected Transaction; (ii) a letter of advice from China Merchants to the Independent Board Committee and the Independent Shareholders on the Continuing Connected Transaction and the Annual Caps; (iii) the recommendation of the Independent Board Committee regarding the Continuing Connected Transaction and the Annual Caps to the Independent Shareholders; and (iv) a notice of the EGM to consider, if thought fit, and approve the resolution in respect of the Continuing Connected Transaction and the Annual Caps.

2. CONTINUING CONNECTED TRANSACTION

Background

As set out in the 2006 Circular, the Company entered into the Existing Hainan Airline Services Agreement with Hainan Airlines pursuant to which the Group shall provide the Technology Services to Hainan Airlines from 1 January 2004 to 31 December 2008.

The Existing Hainan Airline Services Agreement expired on 31 December 2008. The Company has entered into the Hainan Airline Services Agreement.

Particulars of the Hainan Airline Services Agreement are set out below:

Date	:	20 January 2009
Parties	:	The Company (as provider of the Technology Services); and
		Hainan Airlines (as recipient of the Technology Services)(Note).
Term	:	1 January 2009 to 31 December 2011
Number of years	:	Three
of renewal

Note: Pursuant to the letter dated 26 December 2008 issued by Hainan Airlines to the Company and the letter dated 20 January 2009 issued by the Company to Hainan Airlines, reference to Hainan Airlines in the Hainan Airline Services Agreement shall include Xin Hua Holding.

— 2 —

LETTER FROM THE BOARD

3. SERVICES TO BE PROVIDED UNDER THE HAINAN AIRLINE SERVICES AGREEMENT

Services

: The services to be provided by the Group to Hainan Airlines under the Hainan Airline Services Agreement will cover:

• (i) flight control system services which provide, among other services, the consolidated information, flight formation, flight control, flight tickets sales, automatic tickets sales and announcement of freight price;

• (ii) electronic travel distribution system services which provide, among other services, flight information display, real-time flight reservation, automatic tickets sales, tickets price display and other travel-related services;

• (iii) airport passenger processing system services which provide checkin, boarding and load planning services; and

• (iv) civil aviation and commercial data network services which provide, among other services, the network transmission services and connection services.

Service fees : The service fees for the Technology Services payable by Hainan Airlines under the Hainan Airline Services Agreement are currently determined in accordance with the existing pricing schedule prescribed by CAAC, which is same as the one disclosed in the Company’s prospectus dated 29 January 2001.

In accordance with CAAC’s prescribed prices, depending on the types of system through which the transactions are processed, Hainan Airlines is required to pay the Company a per passenger booking fee for domestic routes ranging from RMB4.5 to RMB6.5 depending on the monthly booking volume and for international and regional routes ranging from RMB6.5 to RMB7.

— 3 —

LETTER FROM THE BOARD

In addition, the fees payable by Hainan Airlines to the Company for the services include (i) fees for each boarding passenger handled by the airport passenger processing system up to maximum allowable price of RMB7 for international and regional routes and up to a maximum of allowable price of RMB4 for domestic routes depending on the types of the route, volume, level of services etc, (ii) load balancing fees for each flight handled by the airport passenger processing system up to maximum allowable price of RMB500 depending on the size of the aircraft, and (iii) fees for using the Company’s data network services such as physical identified device (PID) connection fees and maintenance fees depending on type and quantity of equipment at the rate prescribed by CAAC.

The service fees shall be calculated on monthly basis and shall be paid within 30 days after receipt of the invoice by cash. The invoice shall be issued by the Company on the 20th day of each month for the amount charged for the immediately preceding month.

The Directors are of the view that the basis of determination of the service fees mentioned above is fair and reasonable.

4. INFORMATION ON HAINAN AIRLINES AND XIN HUA HOLDING

Hainan Airlines

Hainan Airlines is a promoter of the Company and thus a connected person of the Company. It is principally engaged in airline operation in the PRC.

Xin Hua Holding

Xin Hua Holding is the holding company of Hainan Airlines, a promoter of the Company. Xin Hua Holding is an associate of a promoter of the Company and thus a connected person of the Company under Rule 14A.11(4) of the Listing Rules.

Xin Hua Holding is principally engaged in the operation of civil aviation.

— 4 —

LETTER FROM THE BOARD

5. HISTORICAL TRANSACTION RECORDS

Set out below is a summary of the amount of the transactions between Hainan Airlines and the Company for the three years ended 31 December 2007:

		Year ended 31 December
	2005	2006	2007
Hainan Airlines	RMB119,118,000	RMB123,533,000	RMB146,464,000
	(equivalent to	(equivalent to	(equivalent to
	approximately	approximately	approximately
	HK$134,603,000)	HK$139,592,000)	HK$165,504,000)

The Group did not provide any Technology Services to Xin Hua Holding during the three years ended 31 December 2007.

The transactions between Hainan Airlines and the Company for the three years ended 31 December 2007 mentioned above did not exceed the annual caps for such transactions as set out in the 2006 Circular.

Based on the unaudited management accounts of the Group for the ten months ended 31 October 2008, the transactions between Hainan Airlines and the Company for the ten months ended 31 October 2008 have not exceeded the applicable annual caps (“2008 Annual Caps”) set for the year ending 31 December 2008 as set out in the 2006 Circular, and the Directors expect that such transactions for the year ended 31 December 2008 will not exceed the 2008 Annual Caps. The Group did not provide any Technology Services to Xin Hua Holding during the year ended 31 December 2008.

The Directors expect that, barring unforeseen circumstances, the Continuing Connected Transaction with Hainan Airlines from 1 January 2009 to the date of the EGM (assuming that it will be held by 30 April 2009) may exceed the de minimis threshold under Rule 14A.34 of the Listing Rules. If the Continuing Connected Transaction with Hainan Airlines from 1 January 2009 to the date of the EGM exceeds the de minimis threshold under Rule 14A.34 of the Listing Rules, the Company will publish an announcement in accordance with the requirements under the Listing Rules.

— 5 —

LETTER FROM THE BOARD

6. ANNUAL CAPS

Set out below is a summary of the Annual Caps of the Continuing Connected Transaction entered or to be entered between Hainan Airlines and the Company under the Hainan Airline Services Agreement:

		Year ending 31 December
	2009	2010	2011
Hainan Airlines	RMB210,908,000	RMB253,090,000	RMB303,708,000
(including Xin Hua Holding)	(equivalent to	(equivalent to	(equivalent to
(Note)	approximately	approximately	approximately
	HK$238,326,000)	HK$285,992,000)	HK$343,190,000)

• Note: The Group did not provide any Technology Services to Xin Hua Holding during the three years ended 31 December 2007. Accordingly, the Company can merely take into account the historical transaction amounts of the continuing connected transactions between Hainan Airlines and the Company in determining the Annual Caps for the Continuing Connected Transaction contemplated under the Hainan Airline Services Agreement as, to the best knowledge of the Company, it is considered necessary and reasonable to include Xin Hua Holding as recipient of the Technology Services under the Hainan Airline Services Agreement because certain flights which were used to be operated by Hainan Airlines in the past or new flights originally proposed to be operated by Hainan Airlines may be operated by Xin Hua Holding in future. The estimated aggregate transaction volume of the transactions between the Company and Hainan Airlines and Xin Hua Holding will not be affected by the possible taking up of certain operation of Hainan Airlines by Xin Hua Holding as aforesaid.

The Annual Caps set out above are determined by reference to (i) the historical transaction amounts of the continuing connected transactions between Hainan Airlines and the Company for the three years ended 31 December 2007and the ten months ended 31 October 2008 for the reason mentioned in the note above; and (ii) the estimated growth of the transaction volume taking into account of the anticipated growth of the China’s aviation and travel industry as well as the increasing frequency of business trips. The Directors estimate that the Continuing Connected Transaction with Hainan Airlines will increase by about 15% to 20% per annum and 20% is used in determining the amount of the Annual Caps.

The Directors are of the view that the Annual Caps are fair and reasonable.

— 6 —

LETTER FROM THE BOARD

7. REASONS FOR AND BENEFITS OF THE CONTINUING CONNECTED TRANSACTION

The Group is principally engaged in provision of aviation information technology services in the PRC.

The provision of the Technology Services to Hainan Airlines (including Xin Hua Holding) is in the ordinary and usual course of business of the Group. The Group will receive service fees for the Technology Services from Hainan Airlines under the Hainan Airline Services Agreement and thus, will increase the total revenue of the Group.

The historical continuing connected transactions carried out between the Company and Hainan Airlines have been conducted in the ordinary and usual course of business of the Group. The Continuing Connected Transaction will also be conducted in the ordinary and usual course of business of the Group.

The Directors are of the view that the Continuing Connected Transaction is on normal commercial terms and the terms of the Continuing Connected Transaction are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

8. LISTING RULES REQUIREMENTS

Given that Hainan Airlines and Xin Hua Holding are connected persons of the Company as mentioned above, the Continuing Connected Transaction constitutes continuing connected transaction for the Company under Chapter 14A of the Listing Rules.

Since the Percentage Ratios for the Continuing Connected Transaction with Hainan Airlines (including Xin Hua Holding) on an annual basis exceed 2.5%, the Continuing Connected Transaction is subject to the reporting, announcement and independent shareholders’ approval requirements under the Listing Rules.

The Company will disclose information in relation to the Continuing Connected Transaction in its subsequent published annual report and accounts in accordance with Rule 14A.45 of the Listing Rules.

— 7 —

LETTER FROM THE BOARD

9. THE EGM

The EGM will be held at Conference Room, 2/F, Wangfujing Grand Hotel, 57 Wangfujing Avenue, Beijing, the PRC at 11:00 a.m. on 8 April 2009 to consider and, if thought fit, approve, among other matters, the transactions contemplated under the Continuing Connected Transaction and the Annual Caps. Notice of the EGM is set out on pages 24 to 26 of this circular.

A form of proxy for use at the EGM is enclosed with this circular. Whether or not you intend to be present at such meetings, you are requested to complete the form of proxy in accordance with the instructions printed thereon and return the same to the Registrar at Shops 1712-1716, 17/F, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong (in case of holders of H Shares) or the Company’s registered office at Floor 18-20, South Wing, Park C, Raycom InfoTech Park, No. 2 Ke Xue Yuan South Road, Haidian District, Beijing, the PRC (in case of holders of domestic shares of the Company), no later than 24 hours before the time fixed for holding the EGM or any adjournment thereof. Completion and delivery of the form of proxy will not prevent you from attending, and voting at, the EGM or any adjournment thereof if you so wish.

10. VOTING ARRANGEMENTS

Under the Listing Rules, the Continuing Connected Transaction and the Annual Caps are subject to the approval of the Independent Shareholders. Accordingly, Hainan Airlines and Xin Hua Holding with a material interest in the Continuing Connected Transaction and their respective associates will abstain from voting on the resolution to approve the Continuing Connected Transaction and the Annual Caps. As at the Latest Practicable date, Hainan Airlines was interested in 22,100,000 domestic shares of RMB1 each in the issued share capital of the Company, representing about 1.2% of the total issued share capital of the Company and Xin Dua Holding was not registered holder of any shares in the capital of the Company.

11. POLL PROCEDURE

Pursuant to Rule 13.39 of the Listing Rules, all votes of the Shareholders at the EGM must be taken by poll.

Pursuant to article 73 of the Articles of Association of the Company, voting by poll can be demanded:

• (i) by the chairman of such meeting;

• (ii) by at least two Shareholders present in person or by proxy for the time being entitled to vote at the meeting; or

• (iii) by shareholder(s) of the Company present in person or by proxy(ies) and holding 10% or more Shares conferring a right to vote at the meeting on his/her own or in aggregate.

— 8 —

LETTER FROM THE BOARD

12. RECOMMENDATIONS

Your attention is drawn to the letter from the Independent Board Committee set out on page 10 of this circular and the letter of advice from China Merchants to the Independent Board Committee and the Independent Shareholders in connection with the Continuing Connected Transaction and the Annual Caps and the principal factors and reasons considered by it in arriving at such advice set out on pages 11 to 20 of this circular.

The Independent Board Committee, having taken into account the advice of China Merchants, considers that the Continuing Connected Transaction is (i) in the ordinary and usual course of business of the Group; (ii) on normal commercial terms; and (iii) fair and reasonable so far as the Independent Shareholders are concerned and in the interests of the Company and the Shareholders as a whole, and the Annual Caps are fair and reasonable so far as the Independent Shareholders are concerned and are in the interests of the Company and the Shareholders as a whole. Accordingly, the Independent Board Committee recommends the Independent Shareholders to vote in favour of the ordinary resolution approving the Continuing Connected Transaction and the Annual Caps at the EGM.

13. GENERAL

Your attention is drawn to the general information set out in the appendix to this circular.

Yours faithfully, By order of the Board TravelSky Technology Limited Xu Qiang Chairman

— 9 —

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

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(Stock Code: 0696)

4 February 2009

To the Independent Shareholders

Dear Sir/Madam,

CONTINUING CONNECTED TRANSACTION

We refer to the circular (“Circular”) issued by the Company to its shareholders dated 4 February 2009 of which this letter forms part. Capitalised terms defined in the Circular shall have the same meanings in this letter unless the context otherwise requires.

We have been appointed by the Board to consider the Continuing Connected Transaction. China Merchants has been appointed as independent financial adviser to advise us and the Independent Shareholders in this respect.

We wish to draw your attention to the letter from the Board and the letter from China Merchants set out in the Circular. Having considered the principal factors and reasons considered by, and the advice of, China Merchants set out in its letter of advice set out in the Circular, we consider that the Continuing Connected Transaction is (i) in the ordinary and usual course of business of the Group; (ii) on normal commercial terms; and (iii) fair and reasonable so far as the Independent Shareholders are concerned and in the interests of the Company and the Shareholders as a whole, and the Annual Caps are fair and reasonable so far as the Independent Shareholders are concerned and are in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Shareholders to vote in favour of the ordinary resolution approving the Continuing Connected Transaction and the Annual Caps at the EGM.

Yours faithfully,

For and on behalf of the

Independent Board Committee

Yick Wing Fat, Simon Yuan Yaohui Chua Keng Kim

Independent Non-executive Directors

— 10 —

LETTER FROM CHINA MERCHANTS

The following is the text of the letter of advice from China Merchants to the Independent Board Committee and the Independent Shareholders, which has been prepared for the purpose of inclusion in this circular.

48th Floor, One Exchange Square, Central, Hong Kong

4 February 2009

TravelSky Technology Limited Floor 18-20, South Wing, Park C, Raycom InfoTech Park, No. 2 Ke Xue Yuan South Road, Haidian District, Beijing 100190, The PRC

• To: the Independent Board Committee and the Independent Shareholders of TravelSky Technology Limited

Dear Sirs,

CONTINUING CONNECTED TRANSACTION

INTRODUCTION

We refer to our appointment as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the Continuing Connected Transaction and the Annual Caps, details of which are contained in the letter from the Board (the “ Letter from the Board ”) of the circular dated 4 February 2009 (the “ Circular ”) issued by the Company to the Shareholders, of which this letter forms part. Terms used in this letter shall have the same meanings as those defined in the Circular unless the context otherwise requires.

As referred to in the Letter from the Board, Hainan Airlines and Xin Hua Holding are connected persons of the Company under the Listing Rules. Thus, the transaction contemplated under the Hainan Airline Services Agreement constitutes continuing connected transaction for the Company under Chapter 14A of the Listing Rules. Given that the Percentage Ratios for the Continuing Connected Transaction with Hainan Airlines (including Xin Hua Holding) on an annual basis exceed 2.5%, the Continuing Connected Transaction constitute non-exempt continuing connected transaction for the Company under the Chapter 14A of the Listing Rules. Thus, the Continuing Connected Transaction is subject to the approval by the Independent Shareholders at the EGM.

— 11 —

LETTER FROM CHINA MERCHANTS

In our capacity as the independent financial adviser to the Independent Board Committee and the Independent Shareholders, our role is to provide you with an independent opinion and recommendation as to (1) whether the Continuing Connected Transaction is (i) in the ordinary and usual course of business of the Group; (ii) on normal commercial terms; and (iii) fair and reasonable so far as the Independent Shareholders are concerned and in the interests of the Company and the Shareholders as a whole; and (2) whether the Annual Caps are fair and reasonable so far as the Independent Shareholders are concerned and are in the interests of the Company and the Shareholders as a whole.

BASIS OF OUR OPINION

In formulating our advice and recommendation, we have relied on the accuracy of the information and facts supplied, and the opinions expressed by the Group, the Directors and the Group’s management to us. We have assumed that all statements of belief and intention made by the Directors in the Circular were made after due enquiries. We have also assumed that all information, representations and opinion made or referred to in the Circular were true, accurate and complete at the time they were made and will continue to be true at the date of the EGM. We have no reason to doubt the truth, accuracy and completeness of the information and representations provided to us by the Group, the Directors and the Group’s management, and have been advised by the Directors that no material facts have been omitted from the information provided by or referred to in the Circular.

In rendering our opinion, we have researched, analyzed and relied on information in relation to the Group, the Continuing Connected Transaction and the Annual Caps as set out below:

• (i) the Hainan Airline Services Agreement;

• (ii) the Existing Hainan Airline Services Agreement;

• (iii) the annual report of the Company for the year ended 31 December 2006 (the “ 2006 Annual Report ”);

• (iv) the annual report of the Company for the year ended 31 December 2007 (the “ 2007 Annual Report ”);

• (v) the official website of the Company;

• (vi) the 2006 Circular; and

• (vii) the Circular.

— 12 —

LETTER FROM CHINA MERCHANTS

We have also researched, analyzed and relied on information as set out below:

• (i) China Statistical Yearbook 2007（《中國統計年鑑－2007年》）published by the National Bureau of Statistics of China（中華人民共和國國家統計局）;

• (ii) the report headed “Production statistics report for civil aviation airports in 2006”（《2006年民航機場 生產統計公報》）published on the official website of CAAC on 21 March 2007;

• (iii) the report headed “Production statistics report for civil aviation airports in 2007”（《2007年民航機場 生產統計公報》）published on the official website of CAAC on 6 March 2008; and

• (iv) the annual reports of Hainan Airlines for the two years ended 31 December 2007.

We have assumed such information to be accurate and reliable and have not carried out any independent verification on the accuracy of such information. Such relevant information provides us with a basis on which we have been able to formulate our independent opinion.

We consider that we have reviewed sufficient information to reach an informed view, to justify our reliance on the accuracy of the information contained in the Circular and to provide a reasonable basis for our recommendation. We also consider that we have performed all reasonable steps as required under Rule 13.80 of the Listing Rules (including the notes thereto) to formulate our opinion and recommendation. We have not, however, conducted any form of in-depth investigations into the business affairs, financial position and future prospects of the Group and the parties to the Continuing Connected Transaction, nor carried out any independent verification of the information supplied, representations made or opinions expressed by the Group, the Directors and the Group’s management.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our opinion and recommendation regarding the Continuing Connected Transaction and the Annual Caps, we have taken into account the following principal factors and reasons:

I. BACKGROUND

1. Information on the Group

The Group is principally engaged in provision of aviation information technology services in the PRC. As referred to in the 2007 Annual Report, being a leading provider of information technology solutions for the China’s aviation and travel industry, the Group is at a core position along the value chain of China’s aviation and travel service distribution. While the Group provides advanced aviation information technology and extended services to the Chinese commercial airlines, it also distributes commercial airline products and services to travel agents, travel service distributors, ticketing offices, corporate clients and individual consumers.

— 13 —

LETTER FROM CHINA MERCHANTS

The Group’s turnover for each of the three years ended 31 December 2007 is set out below:

		Year ended 31 December
	2005	2006	2007
	(RMB’000)	(RMB’000)	(RMB’000)
	(Audited)	(Audited)	(Audited)
The Group’s turnover	1,496,784	1,711,705	2,001,903

Source: the 2006 Annual Report and the 2007 Annual Report

The Group’s information in respect of bookings of seats of commercial airlines of the PRC for each of the four years ended 31 December 2007 is set out below:

Bookings of seats of commercial airlines of the PRC

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

Bookings
2004 2005 2006 2007 Year
----- End of picture text -----

Source: the official website of the Company

From the year ended 31 December 2005 to the year ended 31 December 2007, (i) the Group’s audited turnover achieved a compound average growth rate (“ CAGR ”) of approximately 15.6% per annum; and (ii) the Group’s total bookings on seats of flights of commercial airlines of the PRC achieved a CAGR of approximately 15.4% per annum. As advised by the Directors, the growth in the Group’s turnover and total bookings of seats of flights of commercial airlines of the PRC were attributable to: (i) the rapid economic growth in the PRC; (ii) the increase of international trade between the PRC and other countries; and (iii) the growing aviation and tourist industries in the PRC.

— 14 —

LETTER FROM CHINA MERCHANTS

2. Information on Hainan Airlines

Hainan Airlines is a promoter of the Company and is principally engaged in airline operations in the PRC. As referred to in the Letter from the Board, reference to Hainan Airlines in the Hainan Airlines Services Agreement shall include Xin Hua Holding, which is principally engaged in operation of civil aviation and is the holding company of Hainan Airlines. Set out below is the audited turnover of Hainan Airlines and its subsidiaries from 2005 to 2007 (prepared under the PRC GAAP):

		Year ended 31 December
	2005	2006	2007
	(RMB million)	(RMB million)	(RMB million)
	(Audited)	(Audited)	(Audited)
Turnover of Hainan Airlines and
its subsidiaries
(prepared under
the PRC GAAP)	10,061	12,775	13,557

Source: the annual reports of Hainan Airlines for the two years ended 31 December 2007

Based on the above, we noted that, from the year ended 31 December 2005 to the year ended 31 December 2007, the audited turnover of Hainan Airlines and its subsidiaries achieved a CAGR of approximately 16.1% per annum. We consider that the aforesaid increase in the audited turnover of Hainan Airlines demonstrated the business growth of this airline.

3. Economy and aviation industry in the PRC

Based on (i) the report headed “Production statistics report for civil aviation airports in 2007” （《2007年民航機場生產統計公報》）published on the official website of CAAC on 6 March 2008; and (ii) the report headed “Production statistics report for civil aviation airports in 2006” （《2006年民航機場生產統計公報》）published on the official website of CAAC on 21 March 2007, the number of passenger traffic of the PRC airports (measured by number of passengers) in the PRC increased from approximately 284.4 million for the year ended 31 December 2005 to approximately 387.6 million for the year ended 31 December 2007, representing a CAGR of approximately 16.7% per annum.

Based on China Statistical Yearbook 2007（《中國統計年鑑－2007年》）published by the National Bureau of Statistics of China（中華人民共和國國家統計局）, from 2000 to 2006, the PRC’s Gross Domestic Product increased from approximately RMB9,921 billion to approximately RMB21,087 billion, representing a CAGR of approximately 13.4% per annum.

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LETTER FROM CHINA MERCHANTS

Taking into account (i) the robust growth in the passenger traffic of the aviation industry in the PRC; (ii) the steady growth of the Gross Domestic Product of the PRC; and (iii) the CAGR of the Group’s turnover of approximately 15.6% per annum from the year ended 31 December 2005 to the year ended 31 December 2007, the Directors expect that the Group’s turnover will continue to achieve a growth in the coming years.

II. THE HAINAN AIRLINE SERVICES AGREEMENT

1. Reasons for and benefits of the entering into of the Hainan Airline Services Agreement

The details of the Existing Hainan Airline Services Agreement were already set out in the 2006 Circular, and such agreement was already approved at the extraordinary general meeting of the Company held on 25 May 2006, and subsequently expired on 31 December 2008. As advised by the Directors, the Company and Hainan Airlines agreed to enter into the Hainan Airline Services Agreement for the three years ending 31 December 2011.

After reviewing the Hainan Airline Services Agreement, we noted that the Technology Services provided under such agreement are similar to (i) the core business of the Group; and (ii) the transactions contemplated under the Existing Hainan Airline Services Agreement. In light of the above, we consider that the entering into of the Hainan Airline Services Agreement is in the ordinary and usual course of business of the Group. In addition, we concur with the Directors’ view that the Continuing Connected Transaction would offer an important source of revenue to the Group.

2. The terms of the Hainan Airline Services Agreement

As referred to in the Letter from the Board, the service fees for the Technology Services payable by Hainan Airlines under the Hainan Airline Services Agreement are currently determined in accordance with the existing pricing schedule prescribed by CAAC, which is the same as the one disclosed in the Company’s prospectus dated 29 January 2001. We have discussed with the Directors and were informed that the services fees to be charged by the Group under the Hainan Airline Services Agreement are governed by the aforesaid pricing schedule prescribed by CAAC.

In accordance with CAAC’s prescribed prices, depending on the type of system through which the transaction is processed, Hainan Airlines is required to pay the Company a per passenger booking fee for domestic routes ranging from RMB4.5 to RMB6.5 depending on the monthly booking volume, and for international and regional routes ranging from RMB6.5 to RMB7.

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LETTER FROM CHINA MERCHANTS

In addition, the fees payable by Hainan Airlines to the Company for the services include (i) fees for each boarding passenger handled by the airport passenger processing system up to maximum allowable price of RMB7 for international and regional routes and up to a maximum of allowable price of RMB4 for domestic routes depending on the types of the route, volume, level of services etc.; (ii) load balancing fees for each flight handled by the airport passenger processing system up to maximum allowable price of RMB500 depending on the size of the aircraft; and (iii) fees for using the Company’s data network services such as physical identified device connection fees and maintenance fees depending on type and quantity of equipment at the rate prescribed by CAAC.

In this regard, we have reviewed the services fees to be charged by the Group under the Hainan Airline Services Agreement, and noted that they are within the respective price ranges prescribed by CAAC. Based on the aforesaid, we consider that the service fees for the Technology Services under the Hainan Airline Services Agreement, which is based on the price ranges prescribed by CAAC, is on normal commercial terms and is fair and reasonable so far as the Independent Shareholders are concerned.

Overall, we consider that the terms of the Continuing Connected Transaction are (i) in the ordinary and usual course of business of the Group; (ii) on normal commercial terms; and (iii) fair and reasonable so far as the Independent Shareholders are concerned and are in the interests of the Company and the Shareholders as a whole.

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LETTER FROM CHINA MERCHANTS

III. THE ANNUAL CAPS

1. The Annual Caps

Set out below is a summary of the annual caps for (i) the Hainan Airline Services Agreement for the three years ending 31 December 2011; and (ii) the Existing Hainan Airline Services Agreement for the year ended 31 December 2008:

			Annual	caps
	for the year
		ended
	31	December	for the year ending 31		December
		2008	2009	2010	2010
		(RMB)	(RMB)	(RMB)	(RMB)
Hainan Airline
Services Agreement		N/A	210,908,000	253,090,000	303,708,000
Existing Hainan Airline
Services Agreement	265,860,000		N/A	N/A	N/A
		(Note)

Note: as set out on page 8 of the 2006 Circular

2. The historical transaction amounts of the Existing Hainan Airline Services Agreement

Set out below is a summary of the historical transaction amounts for the Existing Hainan Airline Services Agreement for the three years ended 31 December 2007:

		Historical transaction amount
		for the year ended 31 December
	2005	2006	2007
	(RMB)	(RMB)	(RMB)
Existing Hainan Airline
Services Agreement	119,118,000	123,533,000	146,464,000

Source: Letter from the Board

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LETTER FROM CHINA MERCHANTS

3. The comparison of historical amount of the Continuing Connected Transaction for the year ended 31 December 2007 and the Annual Caps

As advised by the Directors, the historical amounts of the Existing Hainan Airline Services Agreement for the year ended 31 December 2008 were not available as at the Latest Practicable Date. We also noted that the annual cap for the Hainan Airline Services Agreement for the year ending 31 December 2009 is higher than the historical transaction amount of the Existing Hainan Airline Services Agreement for the year ended 31 December 2007 by approximately 44%. Such increase is equivalent to a CAGR of approximately 20% per annum during 2008 and 2009.

4. The basis for the Annual Caps

As referred to in the Letter from the Board, the Annual Caps are determined by reference to:

• (i) the historical annual transaction amounts of the continuing connected transaction between Hainan Airlines and the Company for the three years ended 31 December 2007 and the ten months ended 31 October 2008; and

• (ii) the estimated growth of the transaction volume, after taking into account the anticipated growth of China’s aviation and travel industry as well as the increasing frequency of business trips.

The Directors estimate that the transaction amount of the Continuing Connected Transaction will increase by about 15% to 20% per annum. Thus, a growth rate of 20% per annum (the “ Adopted Growth Rate ”) is adopted by the Group in determining the amount of the Annual Caps.

We wish to draw the attention of the Independent Board Committee and the Independent Shareholders that:

• (i) as illustrated in Section I.1 of this letter, from the year ended 31 December 2005 to the year ended 31 December 2007, (a) the Group’s audited turnover achieved a CAGR of approximately 15.6% per annum; and (b) the total bookings on seats of flights of commercial airlines of the PRC (through the Group’s operations) achieved a CAGR of approximately 15.4% per annum; and

• (ii) as illustrated in Section I.2 of this letter, from the year ended 31 December 2005 to the year ended 31 December 2007, the CAGR of the audited turnover of Hainan Airlines and its subsidiaries was approximately 16.1% per annum.

Based on the foregoing, we consider that the Adopted Growth Rate is acceptable, taking into account (1) the Group’s business growth during the three years ended 31 December 2007; and (2) the increase in the audited turnover of Hainan Airlines and its subsidiaries from 2005 to 2007.

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LETTER FROM CHINA MERCHANTS

5. Overall opinion on the Annual Caps

We consider that the Annual Caps are fair and reasonable so far as the Independent Shareholders are concerned, taking into account:

• (i) the positive outlook of the civil aviation industry in the PRC;

• (ii) the historical growth in the Group’s turnover and the booking of seats of commercial airlines of the PRC through the Group’s operations;

• (iii) the historical growth in the audited turnover of Hainan Airlines and its subsidiaries; and

• (iv) the Annual Caps would facilitate the Group’s business growth for the three years ending 31 December 2011.

Based on the aforesaid, we consider that the Annual Caps are fair and reasonable so far as the Independent Shareholders are concerned, and are in the interests of the Company and the Shareholders as a whole.

RECOMMENDATION

Having considered the above principal factors and reasons, we consider that (1) the Continuing Connected Transaction is (i) in the ordinary and usual course of business of the Group; (ii) on normal commercial terms; and (iii) fair and reasonable so far as the Independent Shareholders are concerned and is in the interests of the Company and the Shareholders as a whole; and (2) the Annual Caps are fair and reasonable so far as the Independent Shareholders are concerned and are in the interests of the Company and the Shareholders as a whole.

Accordingly, we advise the Independent Board Committee to recommend the Independent Shareholders to vote in favour of the proposed resolution to approve the Continuing Connected Transaction and the Annual Caps at the EGM. We also advise the Independent Shareholders to vote in favour of the proposed resolution to approve the Continuing Connected Transaction and the Annual Caps at the EGM.

For and on behalf of

China Merchants Securities (HK) Co., Ltd.

Tony Wu

Managing Director and Head of Investment Banking Department

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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 the omission of which would make any statement herein misleading.

2. INTERESTS AND SHORT POSITIONS OF DIRECTORS, SUPERVISORS AND CHIEF EXECUTIVE IN THE SHARE CAPITAL OF THE COMPANY

As at the Latest Practicable Date, the interest or short position in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) held by the Directors, supervisor or chief executive of the Company which is required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO), or any interests required to be entered in the register maintained in accordance with Section 352 of the SFO, or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers set out in Appendix 10 to the Listing Rules are as follow:

			Percentage to the	Percentage to
	Number and class	Capacity of	corresponding	the total share
Name of Director	of shares	Holder	share capital	capital
	(Note 1)			(Note 2)
Chua Keng Kim	417,000 H shares (L)	Interest of spouse	0.07%	0.02%
	of RMB1 each

Notes:

1. (L) — Long position

2. The percentage to the total share capital is calculated based on the total number of 1,776,315,000 shares in issue of the Company as at the Latest Practicable Date.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors, supervisor or chief executive of the Company had any interest or short position in any shares, underlying shares and debentures of the Company or any of its associated corporations (as defined in Part XV of the Ordinance) which is required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO), or any interests required to be entered in the register maintained in accordance with Section 352 of the SFO, or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers set out in Appendix 10 to the Listing Rules.

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GENERAL INFORMATION

APPENDIX

As at the Latest Practicable Date, each of China TravelSky Holding Company, China Southern Air Holding Company, China Eastern Air Holding Company and China National Aviation Holding Company had interest in the shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO.

As at the Latest Practicable Date,

• (a) each of Mr Xu Qiang (Chairman of the Company) and Mr Cui Zhixiong (an executive Director) is an employee of China TravelSky Holding Company;

• (b) each of Mr Cao Guangfu (a proposed non-executive Director) and Mr Gong Guokui (a nonexecutive Director) is an employee of China National Aviation Holding Company;

• (c) Mr Wang Quanhua (a non-executive Director) is an employee of China Southern Air Holding Company; and

• (d) Mr Luo Chaogeng (a non-executive Director) is an employee of China Eastern Air Holding Company.

3. SERVICE AGREEMENT

As at the Latest Practicable Date, none of the Directors had entered or proposed to enter into a service agreement with any member of the Group (and any company which will be become a subsidiary of the Company by reason of an acquisition which has been agreed or proposed since 31 December 2007) which will not expire or is not determinable by the employer within one year without payment of compensation (other than statutory compensation).

4. MATERIAL CHANGES

The Directors are not aware of any material adverse change in the financial or trading position of the Group since 31 December 2007, being the date to which the latest published audited financial statements of the Group were made up.

5. INTEREST IN ASSETS

As at the Latest Practicable Date, none of the Directors or China Merchants had any interest, direct or indirect, in any asset which had been since 31 December 2007, being the date to which the latest published audited accounts of the Group were made up, acquired or disposed of by or leased to any member of the Group (and any company which will be become a subsidiary of the Company by reason of an acquisition which has been agreed or proposed since 31 December 2007) or are proposed to be acquired or disposed of by or leased to any member of the Group (and any company which will be become a subsidiary of the Company by reason of an acquisition which has been agreed or proposed since 31 December 2007).

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GENERAL INFORMATION

APPENDIX

6. MATERIAL INTEREST IN CONTRACTS

As at the Latest Practicable Date, none of the Directors was materially interested in any contracts or arrangement subsisting as at the date hereof which was significant in relation to the business of the Group (and any company which will be become a subsidiary of the Company by reason of an acquisition which has been agreed or proposed since 31 December 2007).

7. COMPETING INTEREST

As at the Latest Practicable Date, none of the Directors or their respective associates had any interest in any business apart from the Company’s business which competes or is likely to compete, either directly or indirectly, with the Company’s business.

8. EXPERT

China Merchants is licensed under the SFO for Type 1 (dealing in securities), Type 2 (dealing in futures contracts), Type 4 (advising on securities), Type 6 (advising on corporate finance) and Type 9 (asset management) regulated activities as defined under the SFO. Its letter of advice to the Independent Board Committee and the Independent Shareholders dated as of the date of this circular was given for the purpose of incorporation herein.

China Merchants has given and has not withdrawn its written consent to the issue of this circular with copy of its letter and the reference to its name and its advice included in this circular in the form and context in which they respectively appear.

As at the Latest Practicable Date, China Merchants did not have any shareholding, directly or indirectly, in any member of the Group or the right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

9. GENERAL

The English text of this circular shall prevail over the Chinese text in case of inconsistency.

10. DOCUMENTS AVAILABLE FOR INSPECTION

Copy of each of the Existing Hainan Airline Services Agreement and the Hainan Airline Services Agreement will be available for inspection at the offices of Chiu & Partners, 41st Floor, Jardine House, 1 Connaught Place, Central, Hong Kong during normal business hours from the date of this circular up to and including the date of the EGM.

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NOTICE OF EGM

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this notice, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this notice.

==> picture [416 x 62] intentionally omitted <==

(Stock Code: 0696)

NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN that an extraordinary general meeting (“ EGM ”) of TravelSky Technology Limited (“ Company ”) will be held at Conference Room, 2/F, Wangfujing Grand Hotel, 57 Wangfujing Avenue, Beijing, the People’s Republic of China at 11:00 a.m. on Wednesday, 8 April 2009 to consider and, if thought fit, pass with or without amendments, the following ordinary resolution:

“ THAT :

• (a) the form and substance of the agreement (“ Hainan Airline Services Agreement ”) dated 20 January 2009 and made between the Company and Hainan Airlines Company Limited（海南航空股份有限公 司）(“ Hainan Airlines ”) (as supplemented by the letter dated 26 December 2008 issued by Hainan Airlines to the Company and the letter dated 20 January 2009 issued by the Company to Hainan Airlines) (a copy of which has been produced to the meeting marked “A” and signed by the chairman of the meeting for the purpose of identification) in relation to the provision of the Technology Services (as defined in the circular (“ Circular ”) of the Company dated 4 February 2009 (copy of which has been produced to the meeting marked “B” and signed by the chairman of the meeting for the purpose of identification)) to Hainan Airlines and 大新華航空有限公司 (Da Xin Hua Holding Limited) by the Group (as defined in the Circular) and all the transactions contemplated thereby; and

• (b) the Annual Caps (as defined in the Circular) for the transactions contemplated under the Hainan Airline Services Agreement for the three years ending 31 December 2011 as shown in the Circular,

— 24 —

NOTICE OF EGM

be and they are hereby approved and that the directors of the Company be and they are hereby authorised to take any step as they consider necessary, desirable or expedient in connection with the Hainan Airline Services Agreement and the transactions contemplated thereby.”

By order of the Board TravelSky Technology Limited Xu Qiang Chairman

Beijing, the People’s Republic of China 4 February 2009

Registered office:

Floor 18-20, South Wing, Park C Raycom InfoTech Park No. 2 Ke Xue Yuan South Road Haidian District, Beijing 100190 The People’s Republic of China

Notes:

1. The register of holders of H shares of the Company (“ H Shares ”) will be closed from 9 March 2009 to 8 April 2009 (both days inclusive), during which time no transfer of H Shares will be effected. Holders of H Shares and domestic Shares of the Company (“ Domestic Shares ”) whose names appear on the register of members of the Company at the close of business on 6 March 2009 are entitled to attend the EGM. Transfers of H Shares must be lodged with the branch share registrar of the Company’s in Hong Kong, Hong Kong Registrars Limited, at Shops 1712-1716, 17/F, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong. by 4:30 p.m. on 6 March 2009 in order to entitle the transferee to attend the EGM.

2. A member entitled to attend and vote at the EGM is entitled to appoint one or more than one proxy to attend and vote instead of him. A proxy need not be a member of the Company.

3. The instrument appointing a proxy must be in writing under the hand of the appointer or his attorney duly authorised in writing, or in the case of a legal person, must either be executed under its seal or under the hand of a legal representative or other attorney duly authorised to sign the same. If that instrument is signed by an attorney of the appointer, the power of attorney authorising that attorney to sign, or other document of authorisation, must be notarially certified. To be valid, for holders of Domestic Shares, the notarially certified power of attorney, or other document of authorisation, and the form of proxy must be delivered to the registered address of the Company no later than 24 hours before the time appointed for the holding of the meeting. To be valid, for holders of H Shares, the above documents must be delivered to Hong Kong Registrars Limited within the same period of time.

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NOTICE OF EGM

1. Completion and return of the form of proxy will not preclude a member from attending and voting in person at the EGM or any adjournment thereof. If such member attends the EGM, his form of proxy will be deemed to have been revoked.

2. Shareholders who intend to attend the EGM in person or by proxy should return the reply slip for attending the EGM to the registered address of the Company on or before 19 March 2009 personally or by mail or fax.

3. The EGM is expected to last for half a day. Shareholders (or their proxies) attending the EGM are responsible for their own transportation and accommodation expenses.

4. As at the date hereof, the board of the directors of the Company comprises:

Executive Directors: Mr Xu Qiang (Chairman) , Mr Cui Zhixiong, Mr Xiao Yinhong and Mr Zhu Xiaoxing; Non-executive Directors: Mr Wang Quanhua, Mr Luo Chaogeng, Mr Gong Guokui, Mr Rong Gang, Mr Sun Yongtao, Mr Liu Dejun, Mr Xia Yi and Mr Song Jian;

Independent Non-executive Directors: Mr Yick Wing Fat, Simon, Mr Yuan Yaohui and Mr Chua Keng Kim.

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