Tomson Group Limited — Proxy Solicitation & Information Statement 2004

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

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

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

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(Incorporated in Bermuda with limited liability)

(Stock Code: 149)

DISCLOSEABLE TRANSACTION

DISPOSAL OF INTEREST IN SUBSIDIARY

2 November 2004

* for identification purposes only

CONTENTS

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DEFINITIONS

• In this circular, the following terms have the following meanings:— “Agreement” The agreement dated 28 September 2004 in relation to the sale and purchase of the Sale Shares and Sale Loan entered into between the Vendor and the Purchaser

• “BVI” British Virgin Islands “Company” China Velocity Group Limited, a company incorporated in Bermuda with limited liability which shares are listed on the Main Board of the Stock Exchange

• “Consideration” the aggregate purchase price of HK$31,000,000 of which HK$2.00 represents the consideration for the Sale Shares and the remaining HK$30,999,998 represents the consideration for the Sale Loan.

• “Directors” the directors of the Company “Disposal” the proposed disposal of the Sale Shares and the Sale Loan pursuant to the Agreement

• “Group” the Company and it subsidiaries “HK$” Hong Kong Dollars, the lawful currency of Hong Kong “Independent Third Party” any person who and whose ultimate beneficial owner are independent of and not connected to the Company, any director, chief executive or substantial shareholder of the Company or any of its subsidiaries or any of their respective associates (as defined in the Listing Rules) and is not a connected person of the Company (as defined in the Listing Rules)

• “ITC” ITC Corporation Limited, a company incorporated under the laws of Bermuda which shares are listed on the Main Board of the Stock Exchange

• “Latest Practicable Date” 1 November 2004, the latest practicable date before the printing of this circular for ascertaining certain information

• “Long Stop Date” 31 October 2004 “Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited

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DEFINITIONS

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LETTER FROM THE CHAIRMAN

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(Incorporated in Bermuda with limited liability)

(Stock Code: 149)

Directors: Chan Yeung Nam (Chairman) Fu Jie Pin (Chief Executive Officer) Tang Cheung Fai[#] Lam Ping Cheung[#] Jee Wengue[#]

# Independent non-executive Director

Registered office: Cedar House, 41 Cedar Avenue, Hamilton HM12, Bermuda

Principal place of business in Hong Kong: Room 1416, 14th Floor China Merchants Tower Shun Tak Centre Sheung Wan, Hong Kong

2 November 2004

To the Shareholders of the Company

Dear Sir or Madam,

DISCLOSEABLE TRANSACTION

DISPOSAL OF INTEREST IN SUBSIDIARY

INTRODUCTION

By an announcement dated 11 October 2004, the Directors announced that on 28 September 2004, the Agreement was entered into between the Vendor and the Purchaser which sets out the terms in respect of the proposed disposal of the Sale Shares and the Sale Loan for the aggregate purchase price of HK$31,000,000.

The Disposal constitutes a discloseable transaction of the Company under the Listing Rules. The purpose of this circular is to provide Shareholders with further information on the Disposal and other information in compliance with the requirements of Chapter 14 of the Listing Rules.

* for identification purposes only

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LETTER FROM THE CHAIRMAN

BACKGROUND OF THE DISPOSAL OF INTEREST IN SUBSIDIARY

Agreement dated 28 September 2004

Parties: The Vendor and the Purchaser

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiry, the Purchaser, Paul Y. – ITC (the holding company of the Purchaser, a 55.1% owned subsidiary of ITC until 20 October 2004 and a 49.6% owned associated company of ITC as at the Latest Practicable Date), ITC and their respective ultimate controlling shareholder, Dr. Chan Kwok Keung, Charles are Independent Third Parties.

Interest Disposed: The Sale Shares and the Sale Loan

Consideration: The aggregate purchase price for the Sale Shares and the Sale Loan is HK$31,000,000 which has been determined at arm’s length negotiation with reference to the negative net asset value of Yetwide of approximately HK$45.9 million based on the unaudited management accounts of Yetwide as at 31 August 2004 and taking into account an independent valuation of the Property of HK$60 million done by RHL Appraisal Limited, an independent firm of professional valuers, on an open market basis as at 31 August 2004. The Consideration represents a gain of approximately HK$1.5 million for the Group after taking into account the sale of the Sale Loan of approximately HK$75.4 million. The Directors consider that the terms of the transaction are fair and reasonable and in the interests of the Company and the shareholders of the Company as a whole.

The Consideration has been paid in full by the Purchaser to the Vendor upon signing of the Agreement which has been applied in full as payment of the Consideration upon completion which took place on 19 October 2004.

Other Terms: Additional terms include in summary the following:

The Purchaser shall procure within 3 months from the date of completion the release by a bank of a guarantee dated 20 August 2003 given by the Company for the purpose of financing construction on the Property.

REASONS FOR AND BENEFITS OF THE DISPOSAL

The Company is principally engaged in property development in the PRC.

The principal activity of the Vendor is investment holding.

The Purchaser is an investment holding company which is a wholly owned subsidiary of Paul Y. – ITC. Paul Y. – ITC is engaged in building construction, civil engineering, property development and investment, among others.

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LETTER FROM THE CHAIRMAN

INFORMATION ON THE PROPERTY

The Property was acquired by Yetwide in 1993 and is beneficially owned by it. The Property comprises a development site with an area of approximately 231,759 square metres. It is designated for a large scale residential and commercial development named “Tai Shan Orient Pointe” with a total gross floor area of 342,444 square metres. The Property is carried in the books of the Company at a value of HK$58,500,000 in the unaudited management accounts as at 31 August 2004.

As at the date of this circular, phase 1 of the construction work on the Property, which consists of 7 garden houses, 120 apartments and 108 motorcycle garages and the area of which is 17,178 square metres (representing approximately 5% of the total gross floor area of the Property of 342,444 square metres) has recently been completed around the end of July 2004, and the remaining portion of the Property of 325,266 square metres is vacant. No revenue has been generated from the sale of any part of the Property. The Directors wish to take this opportunity to dispose of this asset at its present market value which represents a gain to the Group.

INFORMATION ON YETWIDE

Yetwide is a wholly owned subsidiary of the Vendor, and the Vendor is a wholly owned subsidiary of the Company. After completion of the Disposal, Yetwide will cease to be a subsidiary of the Company.

Yetwide is principally engaged in property development in the PRC.

The loss of Yetwide as recorded in its audited accounts both before and after tax and extraordinary items was HK$5,815,600 for the year ended 31 December 2003 and HK$17,250 for the year ended 31 December 2002. The loss of Yetwide for the year ended 31 December 2003 included an impairment loss recognized in respect of the Property under development in the amount of HK$5.8 million, while there was no such loss for the year ended 31 December 2002. Based on the valuation of the Property of HK$60 million plus other current assets of Yetwide of HK$0.5 million as recorded in its unaudited management accounts as at 31 August 2004, the total assets of Yetwide including the Property is valued at approximately HK$60.5 million, while the negative net book value of Yetwide as recorded in the unaudited management accounts of Yetwide as at 31 August 2004 was approximately HK$45.9 million. There will be a reduction in the assets and liabilities of the Group after the Disposal. As Yetwide did not record any turnover, the Disposal will not have any impact on the future earnings of the Group. After taking into account the sale of the Sale Loan of approximately HK$75.4 million owing by Yetwide to the Vendor, the Disposal for the Consideration represents a gain of approximately HK$1.5 million for the Group, which will be recognised in the consolidated accounts of the Company for the year ending 31 December 2004.

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LETTER FROM THE CHAIRMAN

GENERAL

The net proceeds from the Disposal is proposed to be used as general working capital of the Company.

The Disposal constitutes a discloseable transaction of the Company under the Listing Rules.

As at the date of this circular, the Board of the Company comprises Mr. Chan Yeung Nam and Mr. Fu Jie Pin as executive directors and Mr Tang Cheung Fai, Mr. Lam Ping Cheung and Mr. Jee Wengue as independent non-executive directors.

Yours faithfully, Chan Yeung Nam Chairman

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GENERAL INFORMATION

APPENDIX

1. RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Group. The Directors collectively and individually accept full responsibility for the accuracy of the information contained in this circular and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief there are no other facts the omission of which would make any statement herein misleading.

2. SUBSTANTIAL SHAREHOLDERS

As at the Latest Practicable Date, according to the register of interests in long positions and short positions kept by the Company under the provisions of Divisions 2 and 3 of Part XV of section 336 of the SFO and so far as the Directors or chief executive of the Company were aware, the following persons (other than a director (except Mr. Chan Yeung Nam) or chief executive of the Company) had a long position in the shares, underlying shares or debentures 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:

Long Position in the Shares:

Ordinary share(s) of US$0.02 each of the Company

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GENERAL INFORMATION

APPENDIX

Notes:

• (a) Mr. Chan Yeung Nam, a director of the Company, holds the entire beneficial interest in Velocity and Mr. Chan Yeung Nam is accordingly deemed to be interested in 146,943,418 shares in the Company. Mr. Chan Yeung Nam is also a director of Velocity.

• (b) Ruby directly holds the entire beneficial interest in Wealthy which in turn beneficially owns 16,079,000 shares in the Company. Accordingly, Ruby is deemed to be interested in the same 16,079,000 shares in the Company.

• (c) CWTO beneficially owns 11,000,662 shares in the Company and directly holds the entire beneficial interest in Golden and Expert. Golden and Expert beneficially own 20,742,000 and 15,000,000 shares in the Company respectively. Accordingly, CWTO is totally interest in 46,742,662 shares in the Company.

• (d) China Strategic directly holds the entire beneficial interest in Ruby and CWTO. Ruby and CWTO are deemed to be interested in 16,079,000 and 46,742,662 shares in the Company respectively. Accordingly, China Strategic is deemed to be interested in 62,821,662 shares in the Company.

• (e) These shares were pledged to Wing On pursuant to a loan agreement and share mortgage agreement both dated 16th December, 2003.

Save as disclosed in section 2 of the Appendix to this circular, the Directors or chief executive of the Company are not aware of any other persons (other than a director (except Mr. Chan Yeung Nam) or chief executive of the Company) as at the Latest Practicable Date, who (i) had an interest or short position in the shares, underlying shares or debentures 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; or (ii) was directly or indirectly interested in 5% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other members of the Group or held any option in respect of such capital.

3. DISCLOSURE OF INTERESTS

Other than as disclosed in the section “Substantial shareholders” above, none of the Directors, chief executives, nor their associates, had any interests and short positions in any shares, underlying shares or debentures of the Company or any of its associated corporation (within the meaning of Part XV of the SFO) as at the Latest Practicable Date which (a) were 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 (b) were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (c) were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Companies to be notified to the Company and the Stock Exchange.

4. COMPETING INTERESTS

As at the Latest Practicable Date, none of the Directors or their respective associates was interested in any business which competes or is likely to compete, either directly or indirectly, with the business of the Group.

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GENERAL INFORMATION

APPENDIX

5. SERVICE CONTRACTS

As at the Latest Practicable Date, there were no existing or proposed service contracts between any of the Directors and any member of the Group, excluding contracts expiring or determinable by the employer within one year without payment of compensation (other than statutory compensation).

6. LITIGATION

As at the Latest Practicable Date, the Group was involved in the following material litigations:

• (a) In August 1999, Elton S. Y. Chow & Associates, the architect of Paul Y. Plaza located in Guangzhou, the PRC, an Independent Third Party, initiated legal proceedings against Eventic Limited (“Eventic”), an indirect wholly owned subsidiary of the Company, in respect of claim for payment of service fees and other expenses of HK$0.6 million and HK$6.6 million respectively. Eventic engaged the architect for architectural services in respect of Paul Y. Plaza, which is held by the Group.

Eventic has vigorously defended the claims and made a counterclaim in October 1999 for loss and damages to be assessed and suffered due to insufficient supervision services provided by the architect.

In view of the counterclaim made by Eventic, the architect amended its total claims to HK$7.7 million in November 1999. There has been no development since then. As at the Latest Practicable Date, the proceedings are still ongoing and at the stage of exchange of documents which is a process that none of the parties to the claim has commenced. The Directors therefore consider it is too early during the course of the legal proceedings to determine whether there will be any material adverse financial effect on the Group, in addition, the Directors are of the opinion that the proceedings is unlikely to have any material adverse financial impact on the Group as the amount involved in the litigation is not material to the Group when compared to (i) the loss of the Group of approximately HK$170 million; (ii) the net asset value of the Group of approximately HK$364 million; and (iii) the total assets of the Group of approximately HK$614 million as recorded in the consolidated audited accounts of the Group for the year ended 31 December 2003, therefore no provisions have been made in the books of the Group.

• (b) In June 2002, Edwin E & M Engineering Company, a sub-contractor of Paul Y. Plaza initiated legal proceedings against Eventic in respect of a claim for payment of subcontract works of approximately RMB5.2 million (equivalent to approximately HK$4.9 million).

Eventic has vigorously defended the claim as there was no contractual relationship between Eventic and the sub-contractor. In June 2002, Eventic made a counterclaim against the sub-contractor for the balance of unused advance payment and overpayment of approximately RMB4.2 million (equivalent to approximately HK$3.9 million) and RMB0.8 million (equivalent to approximately HK$0.7 million) respectively paid to the sub-contractor by Eventic.

The matter went before a master of the court in April 2003, and the preliminary view of the master was that (i) even if a contractual relationship can be established, the final payment would only be due upon completion of the construction which in itself is an

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GENERAL INFORMATION

APPENDIX

issued that needs to be determined; (ii) the terms of the architect’s letter dated 13 December 1995 on which the plaintiff’s claim was based was vague and uncertain; (iii) there was insufficient evidence to support a case based on estoppel by representation.

As at the Latest Practicable Date, the proceedings have not been withdrawn, but no action has been taken by either party of the claim in the last 18 months. After taking into consideration the above, the Directors are of the opinion that the proceedings is unlikely to have any material adverse financial impact on the Group as the amount involved in the litigation is not material to the Group when compared to (i) the loss of the Group of approximately HK$170 million; (ii) the net asset value of the Group of approximately HK$364 million; and (iii) the total assets of the Group of approximately HK$614 million as recorded in the consolidated audited accounts of the Group for the year ended 31 December 2003 and in addition, the views of the master of the court have so far been in favour of the Group, therefore no provisions have been made in the books of the Group.

Save as disclosed above, neither the Company nor any other member of the Group is engaged in any litigation or claims of material importance and no litigation or claim of material importance is known to the Directors to be pending or threatened against the Company or any other member of the Group.

7. EXPERT AND CONSENT

RHL Appraisal Limited, property valuer, was appointed to provide the valuation of the Property as at 31 August 2004 for the purpose of the Disposal and not for incorporation in this Circular. The valuation report was dated 28 September 2004.

It does not have any shareholding 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.

RHL Appraisal Limited has given and has not withdrawn its written consent to the issue of this circular with its opinion on the value of the Property included in the form and context in which it appears.

8. GENERAL

• (a) The registered office of the Company is situate at Cedar House, 41 Cedar Avenue, Hamilton HM12, Bermuda. The principal place of business in Hong Kong of the Company is Room 1416, 14th Floor, China Merchants Tower, Shun Tak Centre, Sheung Wan, Hong Kong.

• (b) The share registrar in Hong Kong of the Company is Computershare Hong Kong Investor Services Limited, situated at 46th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong.

• (c) The secretary and qualified accountant of the Company is Mr. Sin Ka Man, an associate member of The Hong Kong Institute of Certified Public Accountants, a fellow member of The Association of Chartered Certified Accountants, and a certified practising accountant of the CPA (Australia).

• (d) This circular has been prepared in both English and Chinese. In the case of any discrepancy, the English text shall prevail.

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