Guoxia Technology Co., Ltd. — Proxy Solicitation & Information Statement 2004

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this circular, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

If you are in 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, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Wing On Travel (Holdings) Limited, you should at once hand this circular 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.

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WING ON TRAVEL (HOLDINGS) LIMITED

(Incorporated in Bermuda with limited liability)

(Stock code: 1189)

DISCLOSEABLE TRANSACTION

ACQUISITION OF A 34.24% ATTRIBUTABLE INTEREST IN

KINGSWAY HOTEL LIMITED

16th December, 2004

CONTENTS

– i –

DEFINITIONS

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

– 1 –

DEFINITIONS

Amounts denominated in MOP and US$ in this circular have been converted into HK$ at rates of MOP1.03=HK$1.0 and US$1.0=HK$7.8 respectively for illustration purposes.

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LETTER FROM THE BOARD

WING ON TRAVEL (HOLDINGS) LIMITED

(Incorporated in Bermuda with limited liability)

(Stock code: 1189)

Executive Directors: Mr. Yu Kam Kee, Lawrence, M.B.E., J.P. (Chairman) Mr. Cheung Hon Kit (Managing Director) Dr. Chan Kwok Keung, Charles Dr. Yap, Allan Mr. Chan Pak Cheung, Natalis Mr. Lui Siu Tsuen, Richard Ms. Luk Yee Lin, Ellen

Non-Executive Directors: Mr. Chan Yeuk Wai (Honorary Chairman) Mr. Fok Kin-ning, Canning Ms. Shih, Edith (alternate to Mr. Fok Kin-ning, Canning) Independent Non-Executive Directors: Mr. Kwok Ka Lap, Alva Mr. Sin Chi Fai Mr. Wong King Lam, Joseph

Registered office: Clarendon House 2 Church Street Hamilton HM 11 Bermuda

Head office and principal place of business: 7th Floor Paul Y. Centre 51 Hung To Road Kwun Tong Kowloon Hong Kong

16th December, 2004

To the Shareholders and, for information only, to the holder(s) of the Convertible Note(s)

Dear Sirs and Madams,

DISCLOSEABLE TRANSACTION

ACQUISITION OF A 34.24% ATTRIBUTABLE INTEREST IN KINGSWAY HOTEL LIMITED

1. INTRODUCTION

The Board announced on 24th November, 2004 that the Vendor and the Purchaser entered into the Agreement, pursuant to which the Vendor agreed to dispose of and the Purchaser agreed to acquire an 80% equity interest in Triumph for a total cash consideration of approximately HK$157.5 million. Triumph will, at Completion, hold indirectly a 42.8% attributable interest in Kingsway. The principal asset of Kingsway is its interest in the Hotel. Based on the terms of the Agreement, the Acquisition constitutes a discloseable transaction for the Company under the Listing Rules.

The purpose of this circular is to provide you with further information in respect of the Acquisition and other information as required under the Listing Rules.

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LETTER FROM THE BOARD

2. THE AGREEMENT

(i) Date

20th November, 2004

(ii) Parties to the Agreement

Vendor: Mr. Chan Chak Mo, an Independent Third Party

Purchaser: Harvest Metro Corporation, a wholly-owned subsidiary of the Company incorporated in the BVI with limited liability

(iii) Subject of the sale and purchase

Pursuant to the Agreement, the Purchaser agreed to acquire, and the Vendor agreed to sell, as the legal and beneficial owner of, the Sale Shares free from any encumbrances, liens, charges, equities or third party rights. The Sale Shares shall represent 80% of the issued share capital of Triumph at Completion. Triumph is a company incorporated in the BVI and is beneficially and wholly-owned by the Vendor. The Vendor will continue to hold the remaining 20% equity interest in Triumph. Triumph has not commenced business since its incorporation on 21st April, 2004 and does not have any assets (save for its nominal issued share capital of 1 share of US$1.00) or liabilities as at the Latest Practicable Date. For the purpose of the Agreement, the Vendor will effect the Reorganisation (as detailed below) before Completion such that Triumph will hold 85.6% of the entire issued share capital of Xin Son which will, directly and indirectly, hold an attributable 50% interest in Kingsway. Kingsway is the owner and operator of the Hotel.

(iv) Reorganisation

Pursuant to the Agreement, the Vendor has undertaken to the Purchaser to use his reasonable endeavours to effect a reorganisation or transfer of capital and/or business structure of Triumph before Completion such that Triumph shall become the legal and beneficial owner of 85.6% of the entire issued share capital of Xin Son (together with the shareholder loan, if any) (the “Reorganisation”). As at the Latest Practicable Date, the Vendor owned 8% of the equity interest in Xin Son and as part of the Reorganisation, he will, through Triumph, acquire a further 77.6% of equity interest in Xin Son from an Independent Third Party for a consideration of HK$178,480,000.

Xin Son is a company incorporated with limited liability in Macau on 23rd September, 1992. As at the Latest Practicable Date, it was held as to 8% by the Vendor and as to the remaining 92% by three Independent Third Parties. Xin Son is an investment holding company whose principal business is the holding of a 50% equity interest in Xin Wei and a 25% equity interest in Kingsway. The assets of Xin Son are its equity interests in, and shareholders loans to, Xin Wei and Kingsway.

Xin Wei is a company incorporated with limited liability in Macau on 14th May, 1992. As at the Latest Practicable Date, it was held as to 50% by Xin Son and as to the remaining 50% by two Independent Third Parties. Xin Wei is an investment holding company whose sole asset and principal business are the holding of a 50% equity interest in Kingsway.

Kingsway is a company incorporated with limited liability in Macau on 26th July, 1990. It is the owner and operator of the Hotel.

Further information of Kingsway and the Hotel are set out in the paragraph headed “Information of Kingsway and the Hotel” below.

As at the Latest Practicable Date, to the best knowledge of the Directors having made all reasonable enquiries, immediately following Completion, the remaining 14.4% equity interest in Xin Son not then owned by Triumph, the remaining 50% equity interest in Xin Wei not then owned by Xin Son and the remaining 25% equity interest in Kingsway not then owned by Xin Son and Xin Wei will still be owned by the Independent Third Parties.

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LETTER FROM THE BOARD

The Reorganisation is one of the conditions precedent to the Completion. After the Reorganisation and the Completion, the Purchaser will be interested in an attributable interest of 34.24% in the Hotel.

Set out below is the shareholding structure of Xin Son and its group companies before the Reorganisation:

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Note: The Independent Third Parties holding 92% equity interest in Xin Son are different from the Independent Third Parties holding 50% equity interest in Xin Wei and 25% equity interest in Kingsway.

Set out below is the shareholding structure of the Triumph Group upon Completion:

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Note: The Independent Third Parties holding 14.4% equity interest in Xin Son are different from the Independent Third Parties holding 50% equity interest in Xin Wei and 25% equity interest in Kingsway.

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LETTER FROM THE BOARD

(v) The Consideration

The Consideration for the Sale Shares of HK$157,504,000 was agreed between the parties based on arm’s length negotiations by reference to the valuation report of the Hotel prepared by Mr. A.G. Wilkinson, an independent professional valuer, dated 23rd November, 2004. Based on such valuation, the Hotel is valued on an open market basis at approximately HK$466.0 million, a 34.24% attributable interest of which amounts to approximately HK$159.6 million.

The Consideration has been/will be satisfied as follows:

• (a) HK$5,000,000, being the initial deposit, was paid in cash upon signing of the Agreement (the “Initial Deposit”);

• (b) HK$15,750,400, being the further deposit (the “Further Deposit”), was paid in cash to the Vendor’s solicitors as an escrow agent on 30th November, 2004, on which date the Purchaser issued to the Vendor a confirmation that it was satisfied with the Due Diligence Review (as defined below); and

• (c) HK$136,753,600, being the balance of the Consideration, shall be paid in cash upon Completion.

The Initial Deposit and/or the Further Deposit may be refundable under certain circumstances which are set out under the sub-section headed “Conditions of the Agreement and Completion” below.

As announced by the Company on 24th November, 2004, the Group intended that the Consideration be financed as to approximately HK$50 million by internal resources of the Group and as to the balance of HK$107.5 million by bank borrowings. The Group may consider other debt financing and/or equity funding should these funding arrangements offer terms which are more favourable to the Group than bank borrowings. On 30th November, 2004, the Company entered into a subscription agreement with China Enterprises Limited, the controlling shareholder of the Company, raising a net proceed of approximately HK$160.6 million by issuing new Shares to China Enterprises Limited. It is the intention of the Board that HK$107.5 million of the Consideration will now be financed from such net proceeds and the remaining balance will be financed by internal resources of the Group.

(vi) Conditions of the Agreement and Completion

Completion shall be conditional upon:–

• (a) (if required under the Listing Rules) the passing of the necessary resolution(s) by the Shareholders (other than those Shareholders (if any) who are required to abstain from voting under the Listing Rules) at a general meeting to approve and ratify the Purchaser’s entry into and performance of the Agreement and the transactions contemplated thereunder;

• (b) completion of the Reorganisation in a manner to the satisfaction of the Purchaser;

• (c) the Purchaser being satisfied with the due diligence review on Triumph, Xin Son, Xin Wei, Kingsway and the Hotel including but not limited to the financial, legal, commercial, insurance, taxation and other aspects of these companies (the “Due Diligence Review”) in the manner therein provided;

• (d) the Purchaser being satisfied with the title of Kingsway to the Hotel;

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LETTER FROM THE BOARD

• (e) the warranties stipulated in the Agreement remaining true and accurate and not misleading in any material respect at all times until Completion; and

• (f) all necessary statutory governmental and regulatory obligations having been complied with and all necessary regulatory authority in Hong Kong or in Macau, governmental and third party consents (including those person entitled to any pre-emption rights) and waivers for the purposes of the transactions under the Agreement having been obtained without any conditions (or subject to other conditions reasonably acceptable to the Purchaser).

The Purchaser may waive any of the above conditions except condition (a).

If any of conditions (a), (d), (e) and (f) shall not be fulfilled (or waived, if applicable) before Completion, the Purchaser may rescind the Agreement whereupon the rights and obligations of the parties under the Agreement shall cease immediately without any further liability provided that the Vendor is entitled to retain the Initial Deposit and the Vendor shall procure that the Further Deposit (together with any interest earned thereon) be refunded to the Purchaser.

If condition (b) is not be fulfilled before Completion, the Agreement shall automatically lapse and the Vendor shall procure that the Initial Deposit and the Further Deposit (together with any interest earned thereon) already paid by the Purchaser be refunded to the Purchaser in full. The rights and obligations of the parties under the Agreement shall also cease immediately upon such lapse without any further liability.

Completion is scheduled to take place on or before 17th February, 2005 (or such other date as the parties to the Agreement may agree in writing), subject to the fulfillment or waiver (if applicable) of all the conditions referred to above. As at the Latest Practicable Date, condition (c) has been satisfied. Since the Acquisition only constitutes a discloseable transaction to the Company and no Shareholder’s approval is required under the Listing Rules, condition (a) is deemed as fulfilled.

Further announcement will be made by the Company upon Completion. Fulfillment and/or waiver of any of the above conditions will be set in that announcement.

3. INFORMATION OF KINGSWAY AND THE HOTEL

The principal activity of Kingsway is the ownership and operation of the hotel known as “Kingsway Hotel”. The Hotel is a three star hotel opened in 1992 and located at Rua De Luis Gonzaga Gomes No.176-230, Rua De Nagasaki No.64-A-82, Rua De Xiamen No.37-A-59, Macau. The Hotel has a total of 383 guest rooms with ancillary facilities. The Hotel is situated at the central area of Macau with convenient transportation to many of the landmarks and tourist attractions in Macau. For the year ended 31st December, 2003, the Hotel achieved an average occupancy rate of about 77%, which grew to about 90% for the nine months ended 30th September, 2004. It was stated in the Announcement that the total floor area of the Hotel was approximately 31,500 square metres. Having been confirmed by subsequent inspection of documentation available at the Hotel and the plans of the premises, the total floor area of the Hotel was then confirmed to be 25,662 square metres. As confirmed by Mr. A.G. Wilkinson, the valuation of the Hotel was based on usable rooms and facilities instead of the area of the premises and therefore the understatement of the area would not affect his valuation of the Hotel.

Kingsway operates and manages the hotel room letting and provision of food and beverages services in the Hotel, but leases out portions of the Hotel for rental to Independent Third Parties which currently operate a casino, health spa, night club and retail shops in the Hotel subject to lease terms ranging from one to eight years. To the best knowledge of the Vendor, information and belief having made all reasonable enquiries, Kingsway does not hold any licence to operate the casino in the Hotel and the operators of the aforesaid facilities in the Hotel have obtained all relevant licences which are necessary for their respective

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LETTER FROM THE BOARD

operations. As part of the Due Diligence Review, the Purchaser has reviewed all those licences or such other documents as affecting the management, control and operation of the Hotel. As advised by the Company’s Macau lawyers on 14th December, 2004, Kingsway is only a landlord under the lease agreements between itself and the aforesaid facilities operators in the Hotel. Kingsway, as a landloard, does not assume its tenants’ obligations to ensure that their respective operations and related activities comply with the Macau law. Kingsway will not have any legal obligations, or suffer from any legal impact, if the casino or related activities carried on in the Hotel are found to be illegal or the concession granted to the casino operator in the Hotel (the “Casino Operator”) is revoked. Pursuant to the lease agreement entered into between Kingsway and the Casino Operator, in the event that the Casino Operator’s gambling concession within Macau is terminated or it is no longer entitled to operate a casino within the Hotel by virtue of a withdrawal of government consent, the lease will be terminated. The concessionaire is obliged to give notice to Kingsway upon termination of the Casino Operator’s gambling concession or if the Casino Operator ceases to be entitled to operate a casino within the leased area in the Hotel by virtue of a withdrawal of government consent or commits any material breach of the lease agreement. In case the lease agreement is terminated, Kingsway will no longer derive any rental income from the Casino Operator as a tenant of the Hotel subsequent to the termination of such lease, while the unpaid rental outstanding up until such termination, if any, is still payable to Kingsway.

4. FINANCIAL INFORMATION ON THE TRIUMPH GROUP

According to the audited financial statements of Kingsway prepared using generally accepted accounting principles in Macau for the two years ended 31st December, 2003, Kingsway recorded a turnover of approximately MOP49.4 million (equivalent to approximately HK$48.0 million) and MOP47.3 million (equivalent to approximately HK$45.9 million) for 2002 and 2003 respectively and profits (both before and after taxation and extraordinary items) of approximately MOP7.3 million (equivalent to approximately HK$7.1 million) and MOP6.7 million (equivalent to approximately HK$6.5 million) for 2002 and 2003 respectively. As at 31st December, 2003, the total assets of Kingsway were approximately MOP177.9 million (equivalent to approximately HK$172.7 million), its total liabilities were approximately MOP189.4 million (equivalent to approximately HK$183.9 million) and its net liabilities were approximately MOP11.5 million (equivalent to approximately HK$11.2 million). Based on the unaudited management accounts of Kingsway, its unaudited gross profit for the year ended 31st December, 2003 was approximately MOP30.1 million (equivalent to approximately HK$29.2 million). According to the unaudited management accounts of Kingsway for the nine months ended 30th September, 2004, Kingsway recorded a turnover of approximately MOP47.5 million (equivalent to approximately HK$46.1 million) and profits (both before and after taxation and extraordinary items) of approximately MOP15.0 million (equivalent to approximately HK$14.6 million). As at 30th September, 2004, the total assets of Kingsway were approximately MOP186.9 million (equivalent to approximately HK$181.5 million), its total liabilities were approximately MOP178.8 million (equivalent to approximately HK$173.6 million) and its net assets were approximately MOP8.1 million (equivalent to approximately HK$7.9 million).

Based on the audited net profits of Kingsway for the year ended 31st December, 2003 as disclosed above, the Consideration represents a price-earnings multiple of 70.6 times. The principal asset of Kingsway is its interest in the Hotel, which is valued on an open market basis at approximately HK$466.0 million as at 23rd November, 2004. A 34.24% attributable interest of such valuation amounts to approximately HK$159.6 million.

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LETTER FROM THE BOARD

According to the audited financial statements of Xin Wei prepared using generally accepted accounting principles in Macau for the year ended 31st December, 2002, Xin Wei recorded nil turnover and a loss (both before and after taxation and extraordinary items) of MOP4,000 (equivalent to approximately HK$3,883) for the year ended 31st December, 2002. According to the unaudited financial information of Xin Wei for the year ended 31st December, 2003, the total assets, total liabilities and net liabilities of Xin Wei as at 31st December, 2003 were approximately MOP124.5 million (equivalent to approximately HK$120.9 million), MOP125.7 million (equivalent to approximately HK$122.1 million) and MOP1.2 million (equivalent to approximately HK$1.2 million) respectively, and Xin Wei recorded nil turnover, other income and expenses for the year ended 31st December, 2003.

Xin Son has remained dormant since its incorporation. It has no assets or business except its 50% equity interest in Xin Wei and its shareholder’s loan to Xin Wei, 25% direct interest in Kingsway and its shareholder’s loan to Kingsway. Based on the unaudited financial information of Xin Son, the total assets, total liabilities and net assets of Xin Son as at 31st December, 2003 were approximately MOP134.2 million (equivalent to approximately HK$130.3 million), MOP134.1 million (equivalent to approximately HK$130.2 million) and MOP0.1 million (equivalent to approximately HK$0.1 million) respectively, and Xin Son recorded nil turnover, other income and expenses during each of the year ended 31st December, 2002 and 31st December, 2003.

Triumph has not commenced business since its incorporation on 21st April, 2004 and does not have any assets (save for its nominal issued share capital of 1 share of US$1.00) or liabilities as at the Latest Practicable Date. Other than incorporation expenses of an immaterial amount, no other expenses or income were recorded.

5. EFFECTS OF THE ACQUISITION ON THE GROUP

Upon Completion, Xin Wei and Kingsway will respectively become 34.24% associated companies of the Company and they will be equity accounted for in the Group’s accounts, while Xin Son and Triumph will respectively become 68.48% owned and 80% owned subsidiaries of the Company whose accounts will be consolidated into the Group’s financial statements. According to the annual report of the Company, the Group recorded an audited consolidated net loss of approximately HK$371.0 million for the year ended 31st December, 2003. According to the unaudited interim report of the Company for the six months ended 30th June, 2004, the Group has turned around to record an unaudited net profit of approximately HK$33.0 million due to the positive consumer sentiment driven by the recovering economy after the outbreak of severe acute respiratory syndrome in the first half year of 2003. As mentioned under the sub-section (v) headed “The Consideration” above, the entire amount of the Consideration will be settled by cash and financed by internal resources of the Group. As a result, the Acquisition will have no impact on the assets and liabilities of the Group upon Completion. Given the profitable track record of Kingsway and the prospects of the tourism industry in Macau, the Directors consider that the Acquisition would benefit the results of the Group in future.

6. REASONS FOR THE AGREEMENT

Given (i) the Macau government’s determination in promoting tourism industry in Macau; (ii) the relaxation of the restrictions concerning mainland individuals visiting Hong Kong and Macau; and (iii) the implementation of the Closer Economic Partnership Agreement which stimulates business travel around the region, the economy of Macau has robusted recently. In view of the above, the Directors are confident that there will be significant growth potential for hotel industry in Macau.

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LETTER FROM THE BOARD

The Acquisition will enable the Group to expand its network of hotel operations into Macau. With Macau being a popular destination of many travelers from Asia, in particular, the PRC, the Directors believe there exists tremendous business synergy between the Group and the new investment. The Group would benefit from a stable supply of guest rooms by the Hotel to serve the customers traveling on group tours conducted by the Group, and the Hotel would achieve a higher occupancy rate with travelers from such group tours. The Hotel is situated at a prime strategic location in Macau, with the Macau Port, the Lisboa Hotel, the Sands Macau and other entertainment facilities in its proximity. The Acquisition will provide an attractive opportunity for the Group to make a foray into the hospitality industry in Macau which the Directors believe would benefit from the growing tourist industry.

The Directors (including the independent non-executive Directors) are of the view that the terms of the Agreement, including the Consideration, are fair and reasonable and the transactions contemplated under the Agreement are in the interests of the Company and the Shareholders as a whole.

7. INFORMATION ON THE COMPANY

The Company is an investment holding company and the subsidiaries of which are 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.

8. ADDITIONAL INFORMATION

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

Yours faithfully, For and on behalf of the Board of Wing On Travel (Holdings) Limited Cheung Hon Kit Managing Director

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GENERAL INFORMATION

APPENDIX

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.

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 are 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 and 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 Issuers to be notified to the Company and the Stock Exchange were as follows:–

• (a) Interests in the Shares

Notes:

1. Dr. Chan Kwok Keung, Charles, an executive Director, is also the chairman and chief executive officer of China Strategic Holdings Limited, a substantial Shareholder whose interests have been shown under the sub-section headed “Interests of Shareholders discloseable pursuant to the SFO” below.

2. Mr. Chan Yeuk Wai, a non-executive Director, is also a director of and has 50% control in Hounslow Limited (“Hounslow”), a substantial Shareholder. Mr. Chan Yeuk Wai is deemed to have corporate and other interests in 3,090,694,440 Shares by virtue of his interests in Hounslow. These interests are duplicated with the interests as shown under the sub-section headed “Interests of Shareholders discloseable pursuant to the SFO” below.

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APPENDIX

GENERAL INFORMATION

Save as disclosed above and other than certain nominee shares in subsidiaries held by the Directors in trust for the Company and its subsidiaries, as at the Latest Practicable Date, none of the Directors or chief executive of the Company had any interests and short positions in the Shares, underlying Shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) as notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO or as recorded in the register kept by the Company pursuant to 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 in the Listing Rules. Save as disclosed above, as at the Latest Practicable Date, none of the Directors is a director or employee of a company which 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.

• (b) As at the Latest Practicable Date, none of the Directors had any direct or indirect interest in any assets which had been, since 31st December, 2003 (the date to which the latest published audited accounts of the Company were made up), (i) acquired or disposed of by; or (ii) leased to; or (iii) proposed to be acquired or disposed of by; or (iv) proposed to be leased to any member of the Group.

(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 (other than a Director or chief executive of the Company) 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

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GENERAL INFORMATION

APPENDIX

• (b) Interests in underlying Shares under equity derivatives (as defined in Part XV of the SFO)

Notes:

• (1) (a) Million Good Limited is a wholly-owned subsidiary of CEL, whose shares are traded on the OTC Bulletin Board in the United States of America, which in turn is a company owned as to approximately 55.22% effective equity interest and approximately 88.79% effective voting interest by China Strategic. China Strategic and CEL are deemed to be interested in 6,310,000,000 Shares which are held by Million Good Limited. China Strategic and CEL are also deemed to be interested in 2,750,000,000 underlying Shares (in respect of unlisted equity derivatives of the Company) held by Million Good Limited.

• (b) Pursuant to the subscription agreement dated 13th January, 2004 (as subsequently amended on 17th March, 2004 and further amended by the supplemental agreement dated 4th May, 2004) entered into between CEL and the Company, the Company issued to a nominee of CEL a convertible note with a principal amount of HK$155,000,000. As at the Latest Practicable Date, a principal amount of HK$55,000,000 is outstanding and CEL or its nominee(s) is entitled to convert the outstanding convertible note into 2,750,000,000 new Shares at an initial conversion price of HK$0.020 per Share (subject to adjustments).

• (2) Hounslow Limited is incorporated in the BVI with limited liability in which Mr. Chan Yeuk Wai, a nonexecutive Director, has certain beneficial interests.

(c) Substantial Shareholders of other members of the Group

So far as is known to the Directors or chief executive of the Company, the following persons (other than a Director or chief executive of the Company) are, directly or indirectly, 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:–

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GENERAL INFORMATION

APPENDIX

Save as disclosed above, the Directors or chief executive of the Company are not aware that there are any other persons (not being a Director or chief executive of the Company) 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 were, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meeting of any other members of the Group, or any options in respect of such capital.

(iii) Others

• (a) As at the Latest Practicable Date, each of Mr. A.G. Wilkinson and the Company’s Macau lawyers was not beneficially interested in the share capital of any member of the Group nor had any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

• (b) As at the Latest Practicable Date, each of Mr. A.G. Wilkinson and the Company’s Macau lawyers had no direct or indirect interest in any assets which had been, since 31st December, 2003 (the date to which the latest published audited consolidated accounts of the Group were made up), (i) acquired or disposed of by; or (ii) leased to; or (iii) proposed to be acquired or disposed of by; or (iv) proposed to be leased to, any member of the Group.

LITIGATION

As at the Latest Practicable Date, no member of the Group was engaged in any litigation or arbitration of material importance and no litigation or claim of material importance is known to the Directors to be pending or threatened against any member of the Group.

SERVICE CONTRACTS

Mr. Chan Yeuk Wai, a non-executive Director, entered into a service agreement with the Company on 19th August, 2002 with a fixed salary at the annual rate of HK$1,800,000 for a period of two years commencing from 19th August, 2002 and expiring on 18th August, 2004 and deemed to be renewed automatically for consecutive one year and will be terminated by not less than one month’s prior notice in writing. Such remuneration shall include a discretionary year-end bonus of an amount (if any) to be determined by the Board and decided by the majority in number of the members of the Board after taking into account factors such as overall performance of the Group and other factors the Board may determine at its sole discretion from time to time provided that the Director in question shall abstain from voting and shall not be counted in the quorum at any meeting of the Board at which the Board is to determine the amount payable to him.

Ms. Luk Yee Lin, Ellen, a Director, entered into a service agreement with the Company on 22nd September, 1997 with a fixed salary at the annual rate of HK$663,600 and is continuing unless and until terminated by not less than one month’s prior notice in writing. Such remuneration shall include a yearend bonus of an amount to be determined by the Board and decided by the majority in number of the members of the Board provided that the Director in question shall abstain from voting and shall not be counted in the quorum at any meeting of the Board at which the Board is to determine the amount payable to her and that the aggregate amount year-end bonuses payable to the Director in question and the other executive Directors in respect of any financial year shall not exceed 5% of the audited consolidated net profits after taxation and minority interests but before extraordinary and exceptional items of the Group of the same financial year.

Save as disclosed above, none of the Directors has entered, or is proposing to enter, into a service contract with the Company or any of its subsidiaries or associated companies which is not determinable by the Group within one year without payment of compensation other than statutory compensation.

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GENERAL INFORMATION

APPENDIX

COMPETING INTERESTS

As at the Latest Practicable Date, save as disclosed as follows, none of the Directors or their respective associates was interested in any business which competes or is likely to compete, whether directly or indirectly, with the business of the Company. The Directors confirm that the Group is capable of carrying on its businesses independently of, and at arm’s length from the businesses as disclosed below which are considered to compete or likely compete with the businesses of the Group. The Directors also confirm that the respective management and administration of the businesses as set out below are independent from the Group.

Description of Name of entity businesses of which businesses the entity which are considered are considered to compete or to compete or likely to compete likely to compete with the businesses with the businesses Name of Director of the Group of the Group

Nature of interest of the Director in the entity

• Mr. Cheung Hon Kit Paul Y. – ITC Property business Construction Holdings in Hong Kong Limited and its subsidiaries

Executive director

• A subsidiary of Property business Director China Strategic in PRC

• China Development Property investment Director and shareholder Limited in Hong Kong

• Silver City Limited Property investment Director and shareholder in Hong Kong

• Artnos Limited Property investment Director and shareholder in Hong Kong

• Co-Forward Property investment Director and shareholder Development Ltd in Hong Kong

• Orient Centre Limited Property investment Shareholder in Hong Kong

• Super Time Limited Property investment Director and shareholder in Hong Kong

• Dr. Chan Kwok Paul Y. – ITC Property business Chairman and Keung, Charles Construction Holdings in Hong Kong substantial Limited and shareholder of its subsidiaries Paul Y. – ITC Construction Holdings Limited

• China Strategic Property business Chairman and chief and its subsidiaries in PRC executive officer of China Strategic

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GENERAL INFORMATION

APPENDIX

Description of Name of entity businesses of which businesses the entity which are considered are considered to compete or to compete or likely to compete likely to compete Nature of interest with the businesses with the businesses of the Director Name of Director of the Group of the Group in the entity

• Dr. Yap, Allan China Strategic and its subsidiaries

• Property business in PRC

  • Vice chairman of China Strategic

• Mr. Lui Siu Tsuen, China Strategic Property business Alternate director to Richard and its subsidiaries in PRC Dr. Yap, Allan, vice chairman of China Strategic

• Mr. Fok Kin-ning, Hutchison Whampoa Provision of airline Group managing Canning Limited (“HWL”) ticketing services director and hotel reservation services

• Property development and investment

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GENERAL INFORMATION

APPENDIX

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GENERAL INFORMATION

APPENDIX

EXPERTS AND CONSENTS

The qualifications of the experts who have given opinion in this circular and whose names are included in this circular are as follows:

Name

Qualifications

• Mr. A.G. Wilkinson (a) fellow of the Royal Institution of Chartered Surveyors;

• (b) fellow of the Hong Kong Institute of Surveyors; and

• (c) senior member of the National Association of Review Appraisers & Mortgage Underwriters

• Gonçalves Pereira, Qualified lawyers in Macau Rato, Ling, Vong & Cunha – Lawyers

Mr. A.G. Wilkinson and Gonçalves Pereira, Rato, Ling, Vong & Cunha have given and have not withdrawn their written consents to the issue of this circular with the inclusion of their respective valuation/ opinion and references to their respective names in which they respectively appear.

MISCELLANEOUS

• (a) The registered office of the Company is located at Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda.

• (b) The head office and principal place of business of the Company in Hong Kong is located at 7th Floor, Paul Y. Centre, 51 Hung To Road, Kwun Tong, Kowloon, Hong Kong.

• (c) The Hong Kong branch share registrars and transfer office of the Company are Secretaries Limited located at Ground Floor, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong.

• (d) The qualified accountant of the Company is Ms. Chan Ling, Eva, who is a fellow member of the Hong Kong Institute of Certified Public Accountants.

• (e) The company secretary of the Company is Ms. Kam Yiu Sai, Florence, who is an associate member of the Institute of Chartered Secretaries and Administrators and the Hong Kong Institute of Company Secretaries.

• (f) The English text of this circular shall prevail over its Chinese texts.

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