China Pipe Group Limited — AGM Information 2011

Apr 11, 2011

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect about this circular or as to the action to be taken, you should consult a 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 Daphne International Holdings Limited, you should at once hand this circular and the accompanying form of proxy to the purchaser or the transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or the 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.

DAPHNE INTERNATIONAL HOLDINGS LIMITED 達 芙 妮 國 際 控 股 有 限 公 司[*] (Incorporated in the Cayman Islands with limited liability) (Stock Code: 210)

Executive Directors:

Mr Chen Ying-Chieh (Chairman) Mr Chang Chih-Kai Mr Chang Chih Chiao

Non-Executive Director: Mr Chen Hsien Min (Vice Chairman) Ms Ma Xuezheng

Independent Non-Executive Directors: Mr Hsiao Hsi-Ming Mr Huang Shun-Tsai Mr Kuo Jung-Cheng

Registered Office: Cricket Square Hutchins Drive P.O. Box 2681 Grand Cayman KY1-1111 Cayman Islands

Principal Place of Business in Hong Kong: 17th Floor, Fung House 19-20 Connaught Road Central Central Hong Kong

Alternate Director:

M. Kim Jin-Goon (Alternate Director to Ms Ma Xuezheng)

11 April 2011

To Shareholders

Dear Sir/Madam,

PROPOSALS FOR GENERAL MANDATES TO REPURCHASE AND ISSUE SHARES, RE-ELECTION OF DIRECTORS AND NOTICE OF ANNUAL GENERAL MEETING

INTRODUCTION

The purpose of this circular is to provide you with information on the resolutions to be proposed at the forthcoming annual general meeting to be held on Thursday, 12 May 2011 (“ AGM ”) for the grant of general mandates to the directors of Daphne International Holdings Limited (the “ Company ”) (the “ Directors ”) to repurchase and issue shares of the Company (the “ Shares ”), the re-election of Directors and to give you the notice of AGM.

• for identification purpose only

1

GENERAL MANDATE TO REPURCHASE SHARES

The general mandate granted to the Directors by the shareholders of the Company (the “ Shareholders ”) at the annual general meeting of the Company held on 19 May 2010 to repurchase Shares will expire at the conclusion of the AGM. At the AGM, the board of Directors (the “ Board ”) will propose an ordinary resolution to grant an unconditional general mandate to the Directors to exercise all powers of and on behalf of the Company to repurchase the Shares (the “ Repurchase Mandate ”) up to a maximum of 10% of the aggregate nominal value of the share capital of the Company in issue as at the date of passing of the resolution. The general mandate will continue to be in force until the conclusion of the next annual general meeting of the Company or any earlier date as referred to in resolution No. 5A (d) as set out in the notice of AGM. In accordance with the requirements of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “ Stock Exchange ”) (the “ Listing Rules ”), an explanatory statement on the Repurchase Mandate is set out in Appendix I to this circular to provide you with the requisite information reasonably necessary to enable you to make an informed decision on the proposed resolution.

GENERAL MANDATE TO ISSUE SHARES

The general mandate granted to the Directors by the Shareholders on 19 May 2010 will expire at the conclusion of the AGM. In order to ensure flexibility and discretion to the Directors, in the event that it becomes desirable to issue any Shares, approval is to be sought from the Shareholders for a general mandate to issue Shares pursuant to the Listing Rules. At the AGM, an ordinary resolution No. 5B will be proposed to grant the Directors an unconditional general mandate to allot, issue and deal with Shares with an aggregate nominal value not exceeding the sum of 20% of the aggregate nominal value of the share capital of the Company in issue at the date of passing of the resolution and to extend such general mandate by the aggregate nominal amount of the Shares repurchased by the Company. The general mandate will continue to be in force until the conclusion of the next annual general meeting of the Company or any earlier date as referred to in resolution No. 5A(d) as set out in the notice of AGM.

As at 4 April 2011, being the latest practicable date prior to the printing of this circular (the “ Latest Practicable Date ”), the Company had 1,637,892,384 Shares in issue. Subject to the passing of the relevant resolution approving the general mandate to issue Shares and on the basis that no Shares are issued or repurchased by the Company prior to the AGM, the Company would be allowed to issue new Shares up to a maximum of 327,578,476 Shares.

RE-ELECTION OF DIRECTORS

Pursuant to the Articles of Association of the Company (“ Articles of Association ”), Mr Chang Chih-Kai, Mr Chen Hsien Min and Mr Hsiao Hsi-Ming will retire by rotation at the AGM, and being eligible, offer themselves for re-election. Brief biography of these Directors are set out in Appendix II to this circular.

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ANNUAL GENERAL MEETING

A notice of AGM, which contains, inter alia, ordinary resolutions to approve the general mandate for Directors to issue Shares and the Repurchase Mandate, is set out on pages 10 to 12 of this circular. A proxy form is enclosed with the annual report. Whether or not you intend to be present at the AGM, you are requested to complete the proxy form and return it in accordance with the instructions printed thereon as soon as possible and in any event so as to be received not less than 48 hours before the time fixed for holding the meeting. The completion and return of the proxy form will not preclude you from attending and voting at the AGM or any adjournment thereof.

VOTING BY POLL

Pursuant to Rule 13.39(4) of the Listing Rules, any vote of Shareholders at a general meeting must be taken by poll. The chairman of the meeting will therefore demand a poll for every resolution put to the vote of the AGM in accordance with the Articles of Association. The results of the poll shall be deemed to be the resolution of the general meeting in which the poll was demanded or required and the poll results will be published on the websites of the HKExnews (www.hkexnews.hk) and the Company (www. daphneholdings.com).

RESPONSIBILITY STATEMENT

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

RECOMMENDATION

The Board considers that the proposed grant of the Repurchase Mandate, the general mandate to issue Shares and the re-election of Directors are in the best interests of the Company and its Shareholders as a whole. Accordingly, the Board recommends all Shareholders to vote in favour of the resolutions to be proposed at the AGM.

Yours faithfully, For and on behalf of the Board CHEN Ying-Chieh Chairman

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APPENDIX I EXPLANATORY STATEMENT ON REPURCHASE MANDATE

The following explanatory statement provides the requisite information to you for your consideration of the proposal to grant a general and unconditional mandate to the Directors to exercise the powers of the Company to repurchase up to a maximum of 10% of the issued share capital of the Company as at the date of the relevant resolution No. 5A of the notice of the AGM.

1. LISTING RULES RELATING TO THE REPURCHASE OF SHARES

The Listing Rules permit companies with a primary listing on the Stock Exchange to repurchase their shares on the Stock Exchange subject to certain restrictions. The Listing Rules provide that all proposed repurchases of shares must be approved by Shareholders in advance by an ordinary resolution either by way of a general mandate or by a specific approval of a particular transaction and that the shares to be repurchased must be fully paid up.

2. SHARE CAPITAL

As at the Latest Practicable Date, the issued share capital of the Company comprised 1,637,892,384 Shares.

Subject to the passing of the proposed Repurchase Mandate and on the basis that no further Shares are issued or repurchased prior to the AGM and ignoring other restrictions, such as the limitation on the basis of trading volume mentioned above, the Company would be allowed under the Repurchase Mandate to purchase up to a maximum of 163,789,238 Shares which represents a 10% of the issued share capital of the Company as at the date of passing such resolution.

3. REASONS FOR REPURCHASE

The Directors believe that the grant of the Repurchase Mandate is in the best interests of the Company and its shareholders. Repurchases may, depending on the circumstances, result in an enhancement in the net assets and/or earnings per Share. The Directors are seeking grant of a general mandate to repurchase Shares to give the Company the flexibility to do so if and when appropriate. The number(s) of Shares to be repurchased on any occasion and the price and other terms upon which the same are repurchased will be decided by the Directors at the relevant time having regard to the circumstances then pertaining.

4. FUNDING OF REPURCHASES

There may be a material adverse impact on the working capital or gearing position of the Company (as compared with the financial position disclosed in its latest published audited accounts) in the event that the proposed Shares repurchases were to be carried out in full at any time during the proposed repurchase period. However, repurchases must be made out of funds legally available for such purpose in accordance with the Articles of Association, the laws of the Cayman Islands and any other applicable laws. It is envisaged that the funds required for any repurchases would be derived from the distributable profits of the Company.

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APPENDIX I EXPLANATORY STATEMENT ON REPURCHASE MANDATE

The Directors do not intend to exercise the Repurchase Mandate to such extent as would, in the circumstances, have a material adverse effect on the working capital requirements or the gearing position of the Company unless the Directors consider that such purchases are in the best interest of the Company notwithstanding such material adverse impact.

5. SHARE PRICES

The highest and lowest prices at which Shares traded on the Stock Exchange during each of the previous twelve months preceding the Latest Practicable Date were as follows:

	Price per Share	Price per Share
	Highest	Lowest
	HK$	HK$
2010
April	8.75	7.25
May	8.43	6.88
June	8.88	7.45
July	8.16	6.86
August	8.12	7.20
September	9.60	8.01
October	9.50	8.60
November	9.60	8.38
December	8.92	7.03
2011
January	8.29	7.11
February	7.50	5.61
March	6.95	5.72
April (up to the Latest Practicable Date)	5.89	5.70

6. DISCLOSURE OF INTERESTS, TAKEOVERS CODE AND MINIMUM PUBLIC HOLDING

None of the Directors nor, to the best of their knowledge having made all reasonable enquiries, their associates, (as defined in the Listing Rules) have any present intention, in the event that the Repurchase Mandate is approved by shareholders of the Company, to sell any Shares to the Company.

The Directors have undertaken to the Stock Exchange that they may exercise the powers of the Company to make repurchases pursuant to the Repurchase Mandate only in accordance with the Listing Rules, the laws of Hong Kong and all applicable laws of the Cayman Islands.

If, as a result of a share repurchase, a shareholder’s proportionate interest in the voting rights of the Company increases, such increase will be treated as an acquisition for the purpose of the Hong Kong Code on Takeovers and Mergers (the “ Takeovers Code ”). As a result, a shareholder or a group of shareholders acting in concert (depending on the level of increase of shareholders’ interests), could obtain or consolidate control of the Company and become obliged to make a mandatory offer in accordance with Rule 26 of the Takeovers Code.

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APPENDIX I EXPLANATORY STATEMENT ON REPURCHASE MANDATE

As at the Latest Practicable Date, to the best of the knowledge and belief of the Directors, the following Shareholders are interested in more than 5% of the Company’s issued share capital:

				Approximate
				percentage of
			Approximate	shareholding if
			percentage	the Repurchase
Name of			of existing	Mandate is
shareholder	Capacity	Number of Shares	shareholding	exercised in full
Lucky Earn	Beneficial interests	400,719,995	24.47%	27.18%
International Limited
Premier China, Ltd.	Beneficial interests	298,510,572	18.23%	20.25%
		(Note 1)
TPG Asia Genpar V	Interests of controlled	298,510,572	18.23%	20.25%
Advisors, Inc.	corporation	(Note 1)
TPG Asia Genpar V, L.P.	Interests of controlled	298,510,572	18.23%	20.25%
	corporation	(Note 1)
TPG Asia V, L.P.	Interests of controlled	298,510,572	18.23%	20.25%
	corporation	(Note 1)
TPG Group Holdings	Interests of controlled	298,510,572	18.23%	20.25%
(SBS) Advisors, Inc.	corporation	(Note 1)
TPG Group Holdings	Interests of controlled	298,510,572	18.23%	20.25%
(SBS), L.P.	corporation	(Note 1)
TPG Holdings I, L.P.	Interests of controlled	298,510,572	18.23%	20.25%
	corporation	(Note 1)
TPG Holdings I-A, L.P.	Interests of controlled	298,510,572	18.23%	20.25%
	corporation	(Note 1)
Mr David Bonderman	Interests of controlled	298,510,572	18.23%	20.25%
	corporation	(Note 1)
Mr James G. Coulter	Interests of controlled	298,510,572	18.23%	20.25%
	corporation	(Note 1)
Top Glory Assets	Beneficial interests	200,846,895	12.26%	13.63%
Limited		(Note 2)
Ms Chen Yi-Chen	Interests of controlled	200,846,895	12.26%	13.63%
	corporation	(Note 2)
Mr Chen Yi-Hsun	Interests of controlled	200,846,895	12.26%	13.63%
	corporation	(Note 2)

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APPENDIX I

EXPLANATORY STATEMENT ON REPURCHASE MANDATE

				Approximate
				percentage of
			Approximate	shareholding if
			percentage	the Repurchase
Name of			of existing	Mandate is
shareholder	Capacity	Number of Shares	shareholding	exercised in full
Pushkin Holding Limited	Beneficial interests	147,738,920	9.02%	10.02%
		(Note 3)
Mr Chen Ying-Chieh	Interests of controlled	147,738,920	9.02%	10.02%
	corporation	(Note 3)
Mr Chen Ying-Tien	Interests of controlled	147,738,920	9.02%	10.02%
	corporation	(Note 3)
Mr Chen Ying-Che	Interests of controlled	147,738,920	9.02%	10.02%
	corporation	(Note 3)
JP Morgan Chase & Co.	Investment manager	49,524,000	3.02%	3.36%
	Custodian corporation/	33,852,300	2.07%	2.30%
	approved lending agent

• Note 1: Premier China, Ltd. has subscribed for convertible bonds and warrants of the Company. Upon full conversions of the convertible bonds and full exercise of the warrants, an aggregate of 278,510,572 shares will be issued. Premier China, Ltd. is an indirect wholly-owned subsidiary of TPG Group Holdings (SBS) Advisors, Inc., which is in turn owned 50% each by Mr David Bonderman and Mr James G. Coulter.

• Note 2: These Shares are held by Top Glory Assets Limited in which Ms Chen Yi-Chen and Mr Chen Yi-Hsun each has beneficial interests of 50%.

• Note 3: These Shares are held by Pushkin Holding Limited in which Mr Chen Ying-Chieh, Mr Chen Ying-Tien and Mr Chen Ying-Che each has beneficial interests of one-third.

Based on the current holding of the above Shareholders, an exercise of the Repurchase Mandate in full will not result in any of them becoming obliged to make a mandatory offer under Rule 26 of the Takeovers Code.

Save as disclosed above, the Directors are not aware of any consequences which may arise under the Takeovers Code as consequences of any repurchases made pursuant to the Repurchase Mandate.

No connected persons (as defined in the Listing Rules) of the Company have notified the Company of a present intention to sell Shares to the Company and no such persons have undertaken not to sell any of the Shares held by them to the Company in the event that the general mandate is authorised by shareholders of the Company. The Company will not repurchase Shares which would result in the amount of Shares held by public being reduced to less than 25%.

7. SHARE REPURCHASES MADE BY THE COMPANY

The Company had not repurchased any of its Shares (whether on the Stock Exchange or otherwise) during the six months preceding the Latest Practicable Date.

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BIOGRAPHY OF DIRECTORS TO BE RE-ELECTED

APPENDIX II

Mr Chang Chih-Kai

Mr Chang Chih-Kai, aged 30, has been working with the Group since 2003 and was appointed as an executive director of the Company in November 2004. Mr Chang is a director of certain subsidiaries of the Company and he has not held directorships in any other listed public companies in the last three years.

Mr Chang is responsible for product development and general management of the Group. Mr Chang has studied a bachelor’s degree of Art in Auckland University in New Zealand.

Mr Chang is the brother of Mr Chang Chih-Chiao, an executive director of the Company, a cousin of Mr Chen Ying-Chieh, the chairman and an executive director of the Company, and a nephew of Mr Chen Hsein Min, the vice-chairman and a non-executive director of the Company. As at the Latest Practicable Date, Mr Chang is interested in 407,219,995 Shares, including 6,500,000 underlying Shares pursuant to Part XV of the Securities and Futures Ordinance (the “SFO”), representing approximately 24.86% of the issued share capital of the Company.

Mr Chang’s directorship with the Company is subject to the retirement by rotation pursuant to the Articles of Association. His emoluments, including discretionary bonus, as determined by the Board of the Company with reference to his performance and the operating results of the Group for the year ended 31 December 2010 were HK$2,881,000.

Save as disclosed above, there is no information relating to Mr Chang that is required to be disclosed pursuant to Rules 13.51(2)(h) to (v) of the Listing Rules, nor are there any other matters that need to be brought to the attention of the Shareholders.

Mr Chen Hsien Min

Mr Chen Hsien Min, aged 60, joined the Group since 1988 and was the managing director of the Company up to January 2011 and one of the founders of the Group. On 27 January 2011, Mr Chen was redesignated as a non-executive director and he has acted as the vice-chairman of the Company since then. Mr Chen is currently a member of the Remuneration Committee of the Company and a director of certain subsidiaries of the Company. Mr Chen has not held directorships in any other listed public companies in Hong Kong and overseas in the last three years.

Mr Chen has over 30 years of experience in the footwear industry. Mr Chen has a bachelor degree in Land Economics from the National Cheng Chi University of Taiwan.

Mr Chen Hsien Min is an uncle of Mr Chen Ying-Chieh, the chairman and an executive director of the Company, and Mr Chang Chih-Kai and Mr Chang Chih-Chiao, executive directors of the Company. As at the Latest Practicable Date before the printing of this circular, Mr Chen is interested in 12,000,000 underlying Shares pursuant to share options within the meaning of Part XV of the SFO, representing approximately 0.73% of the issued share capital of the Company. Mr Chen is the father of Mr Chen YiChen and Mr Chen Yi-Hsun (a manager of the Group), who have beneficial interests of 50% each in Top Glory Assets Limited, which holds 200,846,895 Shares of the Company. Save as disclosed above and other than the relationship arising from him being a non-executive director, Mr Chen does not have any relationship with any directors, senior management, substantial or controlling shareholders of the Company.

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BIOGRAPHY OF DIRECTORS TO BE RE-ELECTED

APPENDIX II

Mr Chen has no fixed term of service with the Company and his appointment is subject to the retirement by rotation pursuant to the Articles of Association. During the year ended 31 December 2010 when he acted as an executive director of the Company, Mr Chen received a sum of HK$9,744,000 from the Group including a discretionary bonus which is determined by the Board of the Company with reference to his performance and the operating results of the Group.

Save as disclosed above, there is no information relating to Mr Chen that is required to be disclosed pursuant to Rules 13.51(2)(h) to (v) of the Listing Rules, nor are there any other matters that need to be brought to the attention of Shareholders.

Mr Hsiao Hsi-Ming

Mr Hsiao Hsi-Ming, aged 71, has been an Independent Non-executive Director of the Company since September 2004 and he serves as the chairman of the Audit Committee and a member of the Remuneration Committee and Nomination Committee of the Company. Mr Hsiao is a partner of an accounting firm in Taiwan and he is a member of Taiwan Provincial CPA Association with over 40 years of experience in auditing and accounting. Mr Hsiao holds a master’s degree in the National Changhua University of Education and he is a director of Tera Autotech Corporation Inc. (“TAC”) and an independent director of Formosa Optical Technology Co. Ltd. (“FOTCL”). Both TAC and FOTCL are traded over-the-counter in Taiwan.

Save as disclosed above, Mr Hsiao does not have any relationship with any other directors, senior management or substantial or controlling shareholders of the Company and he has not held directorships in any other listed public companies in the last three years.

As at the Latest Practicable Date, Mr Hsiao did not have any interests in the Shares of the Company within the meaning of Part XV of the SFO.

Mr Hsiao has a letter of appointment with the Company, which is for a term of one year and renewable or extendable automatically by one year on the expiry of such initial term and every successive period of one year thereafter unless either party gives one month’s written notice to the other to terminate the letter of appointment before expiry of the existing term, and is subject to retirement by rotation in accordance with the Articles of Association of the Company. During the year ended 31 December 2010, Mr Hsiao is entitled a sum of HK$72,000 from the Company. Mr Hsiao does not have a service contract with the Company.

Save as disclosed above, there is no other information relating to Mr Hsiao that is required to be disclosed pursuant to Rule 13.51(2)(h) to (v) of the Listing Rules, nor are there any other matters that need to be brought to the attention of the Shareholders.

9

NOTICE OF ANNUAL GENERAL MEETING

DAPHNE INTERNATIONAL HOLDINGS LIMITED 達 芙 妮 國 際 控 股 有 限 公 司[*]

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 210)

NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the Annual General Meeting of Daphne International Holdings Limited (the “Company”) will be held at Room 3, United Conference Centre, 10th Floor, United Centre, 95 Queensway, Hong Kong on Thursday, 12 May 2011 at 2:30 p.m. for the following purposes:

1. To receive and consider the audited Accounts of the Company and the Reports of the Directors and the Auditor for the year ended 31 December 2010;

2. To approve and declare a final dividend for the year ended 31 December 2010;

3. To re-elect the retiring directors and authorise the Board of Directors to fix the directors’ remuneration;

4. To re-appoint the auditor and authorise the Board of Directors to fix their remuneration;

5. To consider and, if thought fit, pass with or without amendments the following resolutions as ordinary resolutions:

6. A. “THAT:

   • (a) subject to paragraph (b) below, the exercise by the directors of the Company (“Directors”) during the Relevant Period (as hereinafter defined) of all the powers of the Company to repurchase issued shares of the Company of HK$0.10 each on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) or on any other stock exchange on which the shares of the Company may be listed and recognised by the Securities and Futures Commission of Hong Kong (the “SFC”) and the Stock Exchange for this purpose, subject to and in accordance with all applicable laws and requirements of the SFC, the Stock Exchange or of any other stock exchange as amended from time to time, be and is hereby generally and unconditionally approved;

   • (b) the approval in paragraph (a) shall be in addition to any other authorisation given to the Directors and shall authorise the Directors on behalf of the Company during the Relevant Period to procure the Company to repurchase its own shares at a price to be determined by the Directors;

   • (c) the aggregate nominal amount of shares of the Company to be repurchased or agreed to be repurchased by the Company pursuant to the approval in paragraph (a) above shall not exceed 10% of the aggregate nominal amount of the share capital of the Company in issue as at the date of passing of this resolution, and the said approval shall be limited accordingly; and

7. for identification purpose only

10

NOTICE OF ANNUAL GENERAL MEETING

• (d) for the purposes of this resolution:

“Relevant Period” means the period from the date of passing of this resolution until whichever is the earliest of:

  - (i) the conclusion of the next annual general meeting of the Company;

  - (ii) the expiration of the period within which the next annual general meeting of the Company is required by any applicable laws or the Articles of Association of the Company to be held; or

  - (iii) the date upon which the authority set out in this resolution is revoked or varied by way of an ordinary resolution of the shareholders of the Company in general meeting.”

• B. “THAT:

• (a) subject to paragraph (c) below, the exercise by the Directors during the Relevant Period (as hereinafter defined) of all the powers of the Company to allot, issue and deal with the unissued shares of the Company and to make or grant offers, agreements and options (including bonds, warrants and debentures convertible into shares of the Company) which would or might require the exercise of such powers, subject to and in accordance with all applicable laws, be and is hereby generally and unconditionally approved;

• (b) the approval in paragraph (a) above, shall be in addition to any other authorisations given to the Directors and shall authorise the Directors during the Relevant Period to make or grant offers, agreements and options (including bonds, warrants and debentures convertible into shares of the Company) which would or might require the exercise of such powers after the end of the Relevant Period;

• (c) the aggregate nominal amount of share capital allotted, issued or otherwise dealt with or agreed conditionally or unconditionally to be allotted, issued or otherwise dealt with (whether pursuant to an option or otherwise) by the Directors pursuant to the approval granted in paragraph (a) above, otherwise than pursuant to (i) a Rights Issue (as hereinafter defined); or (ii) any scrip dividend or similar arrangement providing for the allotment of shares in lieu of the whole or part of a dividend on shares of the Company in accordance with the Articles of Association of the Company; or (iii) the exercise of any options granted under the share option scheme or similar arrangement for the time being adopted or to be adopted for the grant or issue of shares or rights to acquire shares of the Company approved by the Stock Exchange; or (iv) any issue of shares upon exercise of rights of subscription or conversion under the terms of any warrants of the Company or any securities which are convertible into shares, shall not exceed 20% of the aggregate nominal amount of the issued share capital of the Company as at the date of passing this resolution, and the said approval shall be limited accordingly; and

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NOTICE OF ANNUAL GENERAL MEETING

• (d) for the purpose of this resolution:

“Relevant Period” shall have the same meaning as ascribed to it under the resolution set out in paragraph 5A(d) of this Notice; and

“Rights Issue” means the allotment, issue or grant of shares open for a period fixed by the Directors to the holders of shares of the Company on the register of members on a fixed record date in proportion to their then holdings of such shares as at that date (subject to such exclusions or other arrangements as the Directors may deem necessary or expedient in relation to fractional entitlements or having regard to any restrictions or obligations under the laws of any relevant jurisdiction, or the requirements of any recognised regulatory body or any stock exchange in, any territory applicable to the Company).”

C. “THAT:

conditional upon the passing of Resolutions Nos. 5A and 5B, the general mandate granted to the Directors pursuant to Resolution No. 5B be and hereby extended by the addition thereto of an amount representing the aggregate nominal amount of the share capital of the Company as stated in Resolution No. 5A above provided that such amount shall not exceed 10% of the aggregate nominal amount of the issued share capital of the Company as at the date of passing this resolution.”

By order of the Board Daphne International Holdings Limited Chan Oi Chu Company Secretary

Hong Kong, 11 April 2011

Notes:

1. Any member of the Company entitled to attend and vote at the meeting is entitled to appoint one or more proxies to attend and, on a poll, vote instead of him. A proxy need not be a member of the Company.

2. To be valid, a form of proxy, together with the power of attorney or other authority (if any) under which it is signed or a notarially certified copy thereof must be lodged with the Company’s share registrar in Hong Kong, Tricor Secretaries Limited, at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Hong Kong not less than 48 hours before the time appointed for holding the meeting or any adjournment thereof.

3. The register of members of the Company will be closed from 9 May 2011 to 12 May 2011, both dates inclusive, during which period no transfer of shares will be effected. In order to be entitled to attend and vote at the meeting and to qualify for the proposed final dividend, all completed transfer forms accompanied by the relevant share certificates must be lodged with the Company’s share registrar in Hong Kong not later than 4:00 p.m. on 6 May 2011.

4. Where there are joint holders of any share, any one of such persons may vote at any meeting, either in person or by proxy, in respect of such share as if he/she were solely entitled thereto; but if more than one of such joint holders be present any meeting the vote of the senior who tenders a vote, whether a person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders, and for this purpose seniority shall be determined by the order in which the names stand first in the register of members in respect of the joint holding.

5. Please refer to Appendix II of the circular dated 11 April 2011 (the “Circular”) for the details of the retiring Directors subject to re-election at the meeting.

6. In relation to resolution No. 5(A), an explanatory statement as required by the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited is set out in Appendix I of the Circular dispatched to shareholders.

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