10:52     CHEVALIER INT'L<00025> - Announcement (4)                           

    REASONS FOR ENTERING INTO THE PPR AGREEMENT AND THE                       
    NORDITUBE AGREEMENT                                                       
    The principal activity of the Company is investment                       
    holding. The Company, through its subsidiaries, is                        
    engaged in the business of construction and                               
    engineering, insurance and investment, property                           
    investment, hotel investment and information                              
    technology. The construction and engineering                              
    operation includes, among others, pipe                                    
    rehabilitation operation.                                                 
                                                                              
    As stated in the Company's 2004 annual report, the                        
    Group intends to become a leader in pipe                                  
    rehabilitation industry. In recent years, the                             
    Company's subsidiary in Singapore, PPR Technology (S)                     
    Pte Ltd., completed approximately 100 kilometers of                       
    rehabilitation pipes. In 2003, pipe rehabilitation                        
    operation carried out by the Group contributed                            
    approximately HK$46.5 million to the turnover of the                      
    Group, representing approximately 1.4% of the total                       
    turnover of the Group. In 2004, the turnover of the                       
    pipe rehabilitation operation increased to HK$112.3                       
    million, representing 3.5% of the total turnover of                       
    the Group. The Board believes the substantial growth                      
    in the pipe rehabilitation operation was largely due                      
    to the preference of pipe rehabilitation over                             
    traditional open-dig methods. The Board is optimistic                     
    that the pipe rehabilitation business will continue                       
    to grow in Hong Kong, Europe and the United States                        
    of America.                                                               
                                                                              
    The Group already has control over PPR and NordiTube.                     
    The acquisition of further interest in PPR and                            
    NordiTube enables the Group to consolidate control                        
    in its major pipe rehabilitation operations.                              
    Consequently, the Group can implement its corporate                       
    strategies and business development plans more                            
    effectively and efficiently in the future.                                
                                                                              
    In view of the above, the Directors (including the                        
    independent non-executive Directors) consider the                         
    entering into of the PPR Agreement and the NordiTube                      
    Agreement are in the interest of the Company and its                      
    shareholders as a whole.                                                  
                                                                              
    LISTING RULES IMPLICATION                                                 
    PPR and NordiTube are both non wholly-owned                               
    subsidiaries of the Company. As the Vendors and rabmer                    
    are substantial shareholders of PPR and NordiTube                         
    respectively, the PPR Agreement and the NordiTube                         
    Agreement therefore constitute connected                                  
    transactions of the Company under the Listing Rules.                      
    Given the relevant percentage ratios for each of the                      
    NordiTube Agreement and PPR Agreement are below 2.5%,                     
    both the PPR Agreement and the NordiTube Agreement                        
    are only subject to announcement and reporting                            
    requirements under Rule 14A.32 of the Listing Rules.                      
                                                                              
    DEFINITIONS                                                               
    "Board"   the board of Directors                                          
                                                                              
    "Chevalier Pipe"   Chevalier Pipe Technologies                            
    Limited, a company incorporated in Hong Kong with                         
    limited liability, a wholly-owned subsidiary of the                       
    Company                                                                   
                                                                              
    "Company"   Chevalier International Holdings Limited,                     
    a company incorporated in Bermuda with limited                            
    liability, whose shares are listed on The Stock                           
    Exchange of Hong Kong Limited                                             
                                                                              
    "connected persons"   has the meaning ascribed                            
    thereto under the Listing Rules                                           
                                                                              
    "Directors"   the directors of the Company                                
                                                                              
    "Group"   the Company and its subsidiaries                                
                                                                              
    "Hong Kong"   Hong Kong Special Administrative Region                     
    of The People's Republic of China                                         
                                                                              
    "Listing Rules"   the Rules Governing the Listing of                      
    Securities on The Stock Exchange of Hong Kong Limited                     
                                                                              
    "NordiTube Agreement"   the share sale and purchase                       
    agreement dated 11th March, 2005 for the purchase by                      
    Chevalier Pipe of 33.34% equity interest in NordiTube