10:51     CHEVALIER INT'L<00025> - Announcement (3)                           

    In August 2002, the Group acquired 13.8 million                           
    NordiTube Shares, representing approximately 46.2%                        
    of the then issued share capital of NordiTube. During                     
    2002 and 2003, the Group acquired further 15.0 million                    
    NordiTube Shares. Consequently, the Group held 28.8                       
    million NordiTube Shares, representing 57.9% of the                       
    then issued share capital of NordiTube. In February                       
    2004, the Group in aggregate disposed of 1.2 million                      
    NordiTube Shares. In May and July 2004, the Group in                      
    aggregate acquired further 1.8 million NordiTube                          
    Shares from independent third parties which brought                       
    the Group's shareholding in NordiTube to 29.4 million                     
    NordiTube Shares, representing approximately 59.1%                        
    of the issued share capital of NordiTube. To the best                     
    of the Directors' knowledge, information and belief                       
    and after having made all reasonable enquiries, the                       
    remaining 7.6% interest in the issued share capital                       
    of NordiTube is held by third parties who are not                         
    connected persons of the Company.                                         
                                                                              
    Upon completion of the NordiTube Agreement, the Group                     
    will be interested in 92.4% of the issued share capital                   
    of NordiTube.                                                             
                                                                              
    NordiTube, through its subsidiaries, is principally                       
    engaged in the design, development, manufacturing,                        
    trading and marketing of polymer-coated textile                           
    tubing for renovation and lining of existing                              
    sub-surface water, waste water and gas pipes and mains.                   
    NordiTube is a specialist in CIPP technologies with                       
    extensive expertise in the areas of fabrics/textiles,                     
    resins and applications. NordiTube's technology for                       
    pressure pipe is well accepted in Europe, the United                      
    States of America and Hong Kong.                                          
                                                                              
    For the year ended 31st December, 2003, NordiTube                         
    recorded audited consolidated net loss before and                         
    after tax of approximately SEK3.3 million (equivalent                     
    to approximately HK$3.7 million) and SEK3.2 million                       
    (equivalent to approximately HK$3.6 million)                              
    respectively. For the year ended 31st December, 2002,                     
    NordiTube recorded audited consolidated net loss                          
    before and after tax of approximately SEK7.4 million                      
    (equivalent to approximately HK$8.4 million) and                          
    SEK7.3 million (equivalent to approximately HK$8.2                        
    million). As at 31st December, 2003, the audited                          
    consolidated net tangible asset value of NordiTube                        
    amounted to approximately SEK14.2 million                                 
    (equivalent to approximately HK$16.0 million). The                        
    audited financial statements of NoridTube were                            
    prepared based on the generally accepted accounting                       
    principles in Sweden.                                                     
                                                                              
    Consideration:                                                            
    The consideration for the NordiTube Agreement is                          
    SEK15.8 million (equivalent to approximately HK$17.8                      
    million). The consideration, which will be funded by                      
    internal resources of the Group, is payable after the                     
    16,603,320 NordiTube Shares are officially                                
    registered in the name of Chevalier Pipe in the share                     
    register of NordiTube.                                                    
                                                                              
    The consideration for the NordiTube Agreement                             
    represents a premium of 236% over the attributable                        
    audited net tangible assets of NordiTube of SEK4.7                        
    million (equivalent to approximately HK$5.3 million)                      
    as at 31st December, 2003. The consideration was                          
    determined after arm's length negotiations between                        
    the Group and rabmer and taking into account                              
    principally the growth potential of the pipe                              
    rehabilitation industry worldwide including Europe                        
    and the United States of America. The Board considers                     
    the consideration is fair and reasonable and the                          
    payment terms are acceptable given the Group's current                    
    cashflow position.                                                        
                                                                              
    Completion:                                                               
    The NordiTube Agreement is expected to be completed                       
    within one month from the date of the NordiTube                           
    Agreement.                                                                
                                                                              
    The Directors (including the independent                                  
    non-executive Directors) consider the NordiTube                           
    Agreement (including the consideration) are on normal                     
    commercial terms and are fair and reasonable to the                       
    Company and its shareholders as a whole.