Design Capital Limited - M&A Activity 2005

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this announcement, 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 announcement.

JOINT ANNOUNCEMENT

Tomorrow International Swank International Manufacturing China Time Investment Holdings Limited Company Limited Holdings Limited (incorporated in Bermuda with limited liability) (incorporated in Hong Kong with limited liability) (incorporated in the British Virgin Islands (Stock code: 760) (Stock code: 663) with limited liability) Major Transaction Special Deal and Connected Transactions Possible Continuing Connected Transaction Possible Mandatory Cash Offer to be made by

DBS Asia Capital Limited

on behalf of China Time Investment Holdings Limited to acquire all the issued shares of Swank International Manufacturing Company Limited (other than those already owned or agreed to be acquired by China Time Investment Holdings Limited or parties acting in concert with it)

Financial Adviser to China Time Investment Holdings Limited

DBS Asia Capital Limited

Financial Adviser to Tomorrow International Holdings Limited

Deloitte & Touche Corporate Finance Ltd.

Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders of Swank

Barits Securities (Hong Kong) Limited

The Possible Offer

On 20 January 2005, the Offeror entered into the Sale and Purchase Agreement (as amended by the Supplemental Agreement) with Probest, Rich Global, Kingsway Lion, TIHL and SW Kingsway, pursuant to which the Offeror conditionally agreed to acquire from Probest, Rich Global and Kingsway Lion 1,437,396,440, 156,283,205 and 281,238,000 Shares respectively, representing approximately 46%, 5% and 9% of the existing issued share capital of Swank as at the date of this announcement for HK$43,121,893.20, HK$4,688,496.15 and HK$8,437,140 respectively (i.e. equivalent to HK$0.03 per Share). The purchase price for the relevant Sale Shares was determined by each of Probest, Rich Global and Kingsway Lion and the Offeror after arm’s length negotiations. Completion is conditional upon the fulfillment or waiver of certain conditions.

Upon Completion, the Offeror will be obliged under Rule 26 of the Takeovers Code to make a mandatory cash offer to acquire all the issued Shares (other than those already owned by the Offeror and parties acting in concert with it). Following and subject to Completion, DBS Asia will, on behalf of the Offeror, make a mandatory cash offer on the terms and subject to the conditions referred to in this announcement and to be set out in the Offer Document to acquire all the issued Shares (other than those already owned by the Offeror and parties acting in concert with it) at HK$0.03 per Share. The terms of the Offer are set out under the section headed “Possible Cash Offer” below.

The Offer Document

Pursuant to Rule 8.2 of the Takeovers Code, the Offer Document should be posted within 21 days of the date of this announcement. As the making of the Offer is conditional upon Completion, the Offer Document is, subject to the Executive’s consent, expected to be despatched to the shareholders of Swank in accordance with the Takeovers Code within 7 days of fulfillment or waiver of the conditions of the Sale and Purchase Agreement.

Special Deal and Connected Transactions

On 20 January 2005, Swank, Probest and Profitown also entered into the conditional Loan Restructuring Agreement. Pursuant to the terms of the Loan Restructuring Agreement, subject to Completion taking place, Profitown will issue the Promissory Note in favour of Probest, in consideration of Probest waiving portion of the outstanding loan due and owing by Swank to Probest under the Existing Promissory Note and releasing Swank from all future obligations and liabilities under the Existing Promissory Note. Pursuant to the terms of the Loan Restructuring Agreement, Swank will also execute the Guarantee to guarantee Profitown’s obligations in respect of interest payment under the Promissory Note.

On Completion, Swank, Probest, TIHL and Profitown will enter into the Shareholders Agreement, the principal terms of which will include unanimous board approval on material issues regarding Profitown, a put option exercisable by Swank in respect of its shares in Profitown and an indemnity by Probest in favour of Profitown in the event of certain deficit in the net tangible asset value of Profitown as set out in the sub-section headed “Shareholders Agreement” below. On Completion, Probest and TIHL will also execute the TIHL Deed in favour of the Offeror. The Shareholders Agreement and the Loan Restructuring Agreement will constitute special deals under the Takeovers Code.

As Probest is a substantial shareholder of each of Swank and Profitown and thus a connected person of Swank under the Listing Rules, the transactions contemplated under the Shareholders Agreement, the Loan Restructuring Agreement and the Guarantee will constitute connected transactions of Swank under the Listing Rules.

Possible Continuing Connected Transaction

The Agency Agreement will be entered into between the Trading Company and the Nominee upon Completion and will commence from the date of Completion and expire on 31 December 2007. Pursuant to the terms of the Agency Agreement, the Trading Company will provide agency services to the Nominee in relation to the sale of the Products to the Territory at an agency fee of 3% of the invoiced amount of the Products sold by the Agent on behalf of the Nominee.

As the Trading Company will be wholly-owned by Swank and upon Completion, the Offeror will be the controlling shareholder of Swank, the Nominee as an associate of the Offeror will become a connected person of Swank under the Listing Rules upon Completion. Transactions between the Nominee and the Swank Group will constitute continuing connected transactions for Swank under the Listing Rules.

General

An independent board committee comprising the independent non-executive directors of Swank will be appointed to consider the Offer, the Shareholders Agreement, the Loan Restructuring Agreement (including the Guarantee and the Promissory Note) and the Agency Agreement and Barits Securities (Hong Kong) Limited was appointed as the independent financial adviser to advise the independent board committee of Swank and the Independent Shareholders in respect of the terms of the Offer, the Shareholders Agreement, the Loan Restructuring Agreement (including the Guarantee and the Promissory Note) and the Agency Agreement.

A circular containing, among other things, further details of the Offer, the Shareholders Agreement, the Loan Restructuring Agreement (including the Guarantee and the Promissory Note), the Agency Agreement, the recommendation of the independent board committee of Swank in respect of the Offer, the Shareholders Agreement, the Loan Restructuring Agreement (including the Guarantee and the Promissory Note) and the Agency Agreement, the advice of its independent financial adviser in respect of the Offer, the Shareholders Agreement, the Loan Restructuring Agreement (including the Guarantee and the Promissory Note) and the Agency Agreement and the notice convening the EGM will be despatched to the shareholders of Swank. The Disposal and the Loan Restructuring Agreement constitutes a major transaction for TIHL under Chapter 14 of the Listing Rules. A circular containing further details of the Disposal and the Loan Restructuring Agreement will be despatched to the shareholders of TIHL.

Shareholders of and potential investors in TIHL should note that the Sale and Purchase Agreement is conditional upon the fulfillment or waiver of certain conditions. Shareholders of and potential investors in TIHL should therefore exercise extreme caution when dealing in the securities of TIHL.

Shareholders of and potential investors in Swank should note that the Offer is a possibility only. Shareholders of and potential investors in Swank should therefore exercise extreme caution when dealing in the securities of Swank.

Resumption of Trading

At the request of Swank, the securities of Swank were suspended from trading on the Main Board of the Stock Exchange from 9:30 a.m. on 21 January 2005 pending release of this announcement. Swank has made an application for the resumption of trading in the securities of Swank on the Main Board of the Stock Exchange with effect from 9:30 a.m. on 19 April 2005.

At the request of TIHL, the securities of TIHL were suspended from trading on the Main Board of the Stock Exchange from 9:30 a.m. on 21 January 2005 pending release of this announcement. TIHL has made an application for the resumption of trading in the securities of TIHL on the Main Board of the Stock Exchange with effect from 9:30 a.m. on 19 April 2005.

1. SALE AND PURCHASE AGREEMENT (as amended by the Supplemental Agreement)

Date

20 January 2005

Parties

Purchaser: the Offeror, a company incorporated in the British Virgin Islands who and whose ultimate beneficial owner, to the best of the knowledge, information and belief of the directors of TIHL, having made all reasonable enquiries, are third parties independent of and not connected with TIHL or Swank or their respective connected persons (as defined in the Listing Rules). The Offeror is a company principally engaged in investment holding.

Vendors: (a) Probest, a wholly-owned subsidiary of TIHL and a company principally engaged in investment holding;
(b) Rich Global, a wholly-owned subsidiary of SW Kingsway and a company principally engaged in investment holding; and
(c) Kingsway Lion, a wholly-owned subsidiary of SW Kingsway and a company principally engaged in investment holding.
Warrantors: (a) TIHL, a company incorporated in Bermuda whose securities are listed on the Main Board of the Stock Exchange (in respect of the obligations of Probest); and
(b) SW Kingsway, a company incorporated in Bermuda whose securities are listed on the Main Board of the Stock Exchange (in respect of the obligations of Rich Global and Kingsway Lion).

Sale Shares

(a) the First Sale Shares, being 1,437,396,440 Shares and representing approximately 46% of the existing issued share capital of Swank as at the date of this announcement. Following Completion, Probest will hold 156,202,790 Shares representing approximately 5% of existing issued share capital of Swank as at the date of this announcement and Probest has undertaken not to accept the Offer in respect of such Shares;
(b) the Second Sale Shares, being 156,283,205 Shares and representing approximately 5% of the existing issued share capital of Swank as at the date of this announcement. Following Completion, Rich Global will hold 156,202,795 Shares representing approximately 5% of existing issued share capital of Swank as at the date of this announcement and Rich Global has undertaken not to accept the Offer in respect of such Shares;
(c) the Third Sale Shares, being 281,238,000 Shares and representing approximately 9% of the existing issued share capital of Swank as at the date of this announcement. Following Completion, Kingsway Lion will hold no interest in Swank.

Consideration

(a) HK$43,121,893.20 in cash (i.e. equivalent to HK$0.03 per Share) in respect of the First Sale Shares which was determined by Probest and the Offeror after arm’s length negotiations with reference to the market price of the First Sale Shares and was agreed between Probest and the Offeror as a matter of commercial decision;
(b) HK$4,688,496.15 in cash (i.e. equivalent to HK$0.03 per Share) in respect of the Second Sale Shares which was determined by Rich Global and the Offeror after arm’s length negotiations with reference to the market price of the Second Sale Shares and was agreed between Rich Global and the Offeror as a matter of commercial decision; and

(c) HK$8,437,140 in cash (i.e. equivalent to HK$0.03 per Share) in respect of the Third Sale Shares which was determined by Kingsway Lion and the Offeror after arm’s length negotiations with reference to the market price of the Third Sale Shares and was agreed between Kingsway Lion and the Offeror as a matter of commercial decision.

Of the consideration referred to above, an initial deposit of HK$3,000,000 has been paid by the Offeror to an escrow agent (the “Escrow Agent”), a third party jointly appointed by, among others, the Offeror and the Vendors, on the signing of the Sale and Purchase Agreement, and the balance is to be paid by the Offeror to the Escrow Agent within 90 days of the date of the Sale and Purchase Agreement and is to be released in the following manner:

(a) as to HK$23,121,893.20 shall be released to Probest, as to HK$2,938,496.15 shall be released to Rich Global and as to HK$5,187,140 shall be released to Kingsway Lion, all within six months of Completion; and
(b) as to the remaining balance of HK$20,000,000 shall be released to Probest, the remaining balance of HK$1,750,000 shall be released to Rich Global and the remaining balance of HK$3,250,000 shall be released to Kingsway Lion, all on the 1st anniversary of Completion.

The respective dates for the payment of the consideration and the release thereof to the Vendors were agreed between the Offeror and the Vendors as a matter of commercial decision after taking into account the time which may be required by the Offeror to verify the warranties given by the Vendors and the Warrantors in the Sale and Purchase Agreement.

Conditions

Completion of the Sale and Purchase Agreement (as amended by the Supplemental Agreement) is conditional upon, among other things:

(a) there being no breach of the warranties given by the Vendors and the Warrantors as set out in the Sale and Purchase Agreement which is material to the Swank Group as a whole;
(b) the Vendors and the Warrantors not being in breach of their obligations under the Sale and Purchase Agreement in any material respect;
(c) if required, the consent of the Executive in relation to the Shareholders Agreement and the Loan Restructuring Agreement as “special deals” under Rule 25 of the Takeovers Code having been obtained;
(d) the passing by the Independent Shareholders in a general meeting of ordinary resolutions approving (i) the Agency Agreement and the cap amounts as set out in the paragraph headed “Possible Continuing Connected Transaction” below; (ii) the Shareholders Agreement and the transactions contemplated thereunder; (iii) the Loan Restructuring Agreement and the transactions contemplated thereunder; and (iv) the Guarantee, in each case, in accordance with the requirements of the Listing Rules, the Takeovers Code, Swank’s memorandum and articles of association and as required by law;
(e) the current listing of the Shares not having been withdrawn, the Shares continuing to be traded on the Stock Exchange prior to the Completion Date, save for any temporary suspension not exceeding 28 consecutive business days (as defined in the Listing Rules) from the date of the Sale and Purchase Agreement (as extended for a further 29 business days by the Supplemental Agreement), i.e. on or before 19 April, 2005 or such longer time as the parties may further agree in writing;
(f) no indication being received on or before the Completion Date from the Stock Exchange or the SFC to the effect that the listing of the Shares may be withdrawn or objected to (or conditions which may be attached thereto) as a result of Completion or in connection with the terms of the Sale and Purchase Agreement;

(g) the conditional cancellation agreement dated 20 January 2005 between Rich Global, Fortune Dynamic and TIHL in respect of the option agreement dated 16 December 2003 between Fortune Dynamic, TIHL and Rich Global (which option agreement was announced in the joint announcement of TIHL and Swank dated 29 December 2003) remaining valid and the provision of evidence to that effect to the reasonable satisfaction of the Offeror;
(h) if required, the passing by the shareholders of TIHL permitted to vote in a general meeting of resolutions approving the Sale and Purchase Agreement and the transactions contemplated thereunder including (i) the Shareholders Agreement and the transactions contemplated thereunder; (ii) the Loan Restructuring Agreement and the transactions contemplated thereunder; and (iii) the Guarantee and the transactions contemplated thereunder, in each case, in accordance with the requirements of the Listing Rules, the Takeovers Code, its memorandum of association and bye-laws and as required by law; and
(i) compliance by Swank and TIHL of all legal and regulatory requirements (including those under the Listing Rules or otherwise of the Stock Exchange) which require compliance in relation to the Sale and Purchase Agreement and the transactions contemplated thereunder.

Completion is expected to take place on the 7th Business Day after the satisfaction (other than conditions (a), (b), (e) and (f) which shall remain fulfilled (unless waived) when all the other conditions shall have been fulfilled or waived) or waiver (as the case may be) of the above conditions, provided this occurs before the Long Stop Date.

The Offeror may waive all or any of the above conditions (other than (c), (d) and (f)) at any time by notice in writing to the Vendors. Pursuant to the Listing Rules and the Takeovers Code, the votes of the Independent Shareholders referred to in (d) shall be taken by way of poll.

In the event that any of the above conditions are not fulfilled or waived prior to the Long Stop Date or conditions (a), (b) and (f) shall not remain fulfilled at the time when all the other conditions shall have been fulfilled or waived, or this announcement shall not have been cleared by the Stock Exchange and the SFC within 28 business days (as defined in the Listing Rules) from the date of the Sale and Purchase Agreement (as extended for a further 29 business days by the Supplemental Agreement), i.e. on or before 19 April, 2005 or such longer time as the parties may further agree in writing, the Sale and Purchase Agreement shall terminate and cease to be of any effect.

Winspark Venture Limited, the controlling shareholder of TIHL, has undertaken to the Offeror that it shall cast its votes in favour of the resolutions referred to in (h) above unless it is required or directed by the Stock Exchange or the SFC to abstain from voting or to cast its votes against such resolutions or any of them or in some other manner.

Reasons for the Disposal

The TIHL Group (excluding the Swank Group) is principally engaged in the design, development, manufacture and sale of electronic products, the manufacture and sale of printed circuit boards, the trading and distribution of electronic components and parts, the trading of listed equity investments and the provision of loan financing. The Swank Group is principally engaged in the design, manufacture and marketing of frames, sunglasses and lenses. The audited consolidated net profit before and after taxation and minority interests of Swank for the year ended 31 December 2002 were approximately HK$10,763,000 and approximately HK$10,141,000 respectively. The audited consolidated net loss before and after taxation and minority interests of Swank for the year ended 31 December 2003 were approximately HK$8,401,000 and approximately HK$7,054,000 respectively. The unaudited consolidated net loss before and after taxation and minority interests of Swank for the six months ended 30 June 2004 were approximately HK$802,000 and approximately HK$1,844,000 respectively. The unaudited consolidated net liability of Swank as at 30 June 2004 amounted to approximately HK$61,815,000.

Further to the disposal of TIHL Group’s 19% interest in Swank as announced in the joint announcement of TIHL and Swank dated 29 December 2003, the directors of TIHL consider the entering into of the Sale and Purchase Agreement will provide an opportunity for the TIHL Group to further realise its investment in Swank. Upon completion of the Disposal, Swank will cease to be the subsidiary of either Probest or TIHL. The directors of TIHL believe that the terms of the Disposal (including the terms of the Shareholders Agreement and the TIHL Deed) and the Loan Restructuring Agreement, which is part and parcel of the Disposal, are fair and reasonable and in the interests of the shareholders of TIHL as a whole.

Upon completion of the Disposal and the conditional Loan Restructuring Agreement, the TIHL Group will realise a gain of approximately HK$43 million since Swank is a net liability company and its carrying value on TIHL’s balance sheet is nil. The proceeds from the Disposal of approximately HK$43 million will be used as general working capital of the TIHL Group.

Listing Rules Implication

The Disposal constitutes a major transaction for TIHL under Chapter 14 of the Listing Rules. As permitted under Rule 14.44 of the Listing Rules, as no shareholder is required to abstain from voting in the event TIHL convenes a meeting for the purpose of obtaining approval for the Disposal and no shareholder has a material interest in the Disposal save for their shareholding in TIHL and as Winspark Venture Limited, being the controlling shareholder of TIHL which holds approximately 58% of the issued share capital of TIHL as at the date of this announcement, has provided its written consent to the Sale and Purchase Agreement and the transactions contemplated thereunder, no meeting of the shareholders of TIHL will be convened for this purpose and such condition is already fulfilled as at the date of this announcement.

Controlling Shareholder of TIHL

As at the date of this announcement, the controlling shareholder of TIHL is as follows:

Name of shareholder	Capacity	Number of Shares	% Shareholding
Winspark Venture	Beneficial owner	165,835,963	58.0
Limited	(Note)

Note: The entire issued share capital of Winspark Venture Limited is beneficially owned by Mr. Chan Yuen Ming.

2. LOAN RESTRUCTURING AGREEMENT

On 20 January 2005, Probest, Swank and Profitown entered into the conditional Loan Restructuring Agreement. The Loan Restructuring Agreement constitutes a special deal under Rule 25 of the Takeovers Code and requires consent from the Executive.

Principal terms of the Loan Restructuring Agreement

Pursuant to the Loan Restructuring Agreement:

Probest conditionally agreed to waive an outstanding principal of the Debt over and above the Remaining Debt, the interest and the default interest on the Debt for the period from 5 November 2003 up to and inclusive of the date of the Sale and Purchase Agreement in the amount of approximately HK$12,669,995 and any further interest which may accrue on the Debt up to and inclusive of the Effective Date. Based on the amount of the Debt and the Profitown/Swank Loan of approximately HK$112,167,732 as at the date of this announcement, the principal amount, interests and default interests of the Debt to be waived amounts to approximately HK$66,270,000;
the Existing Promissory Note will be cancelled as from the Effective Date;

Profitown will issue and deliver the Promissory Note to Probest, in consideration of which Swank undertakes to waive a sum equivalent to the Remaining Debt (HK$112,167,732 as at the date of this announcement) from the Profitown/Swank Loan on the Effective Date. Accordingly, after such waiver on the Effective Date, there will not be any Profitown/Swank Loan outstanding;
Swank will execute the Guarantee in favour of Probest.

Below is a chart showing the relationship between the Debt, the Remaining Debt and the Profitown/Swank Loan:

==> picture [190 x 181] intentionally omitted <==

----- Start of picture text -----

TIHL
100%
Probest
the Debt under
the Existing 51% before
Promissory Note Completion and
5% upon
Completion
30% the Remaining Debt
under Promissory Note
Swank
the Profitown/ 70%
Swant Loan
Profitown
----- End of picture text -----

Principal terms of the Promissory Note

Principal amount: an amount equivalent to the Remaining Debt, which, based on the outstanding amount of the Profitown/Swank Loan as at the date of this announcement, would be approximately HK$112,167,732

Maturity Date: bullet payment on a date falling 30 months of the date of issue of the Promissory Note

Interest: 1% above the prime rate for Hong Kong dollar quoted from time to time by The Hongkong and Shanghai Banking Corporation Limited, which is based on prevailing market rate and is the same as the interest rate under the Existing Promissory Note, payable quarterly in arrears

Security: the Promissory Note will be unsecured and not guaranteed by the Offeror or any of its concert parties or any other person except for the Guarantee to be given by Swank

Other terms: all amounts payable under the Promissory Note will become immediately due and payable if at any time after issue of the Promissory Note, inter alia:

(a) the aggregate shareholding of the Offeror in Swank falls below 51%;
(b) there is any change to the majority of the board of directors of the Offeror, which comprises Mr. Wang, Mr. Zhao Jun（趙俊）and Mr. Li Wei （李偉）, as disclosed in the Sale and Purchase Agreement;

(c) if Mr. Wang ceases to be the legal and beneficial owner of at least 75% of and in the Offeror; or
(d) Swank ceases to be listed on the Stock Exchange.

As is the same for the Debt under the Existing Promissory Note as stated in the circular of Swank dated 30 September 2003, the directors of TIHL and Swank expect the Promissory Note will be settled by the internal resources of Profitown generated from the operating activities of its subsidiaries and associates. If such internal resources of Profitown are not sufficient to repay the interest and the principal due under the Promissory Note, the board of directors of Profitown will consider other fund raising methods.

Conditions of the Loan Restructuring Agreement

The Loan Restructuring Agreement will take effect on the Effective Date when all of the following conditions have been satisfied:

(a) the passing at the EGM by independent shareholders of Swank (if required by the Stock Exchange and the Takeovers Code, other than Probest, its associates, and/or parties acting in concert with it) of ordinary resolutions approving the Loan Restructuring Agreement and the transactions contemplated thereunder, including the issue of the Promissory Note and the Guarantee;
(b) if required, the approval by the shareholders of TIHL of the Loan Restructuring Agreement and the transactions contemplated thereunder by way of an ordinary resolution to be passed at a special general meeting of TIHL;
(c) all other consents and acts required of Swank in connection with the Loan Restructuring Agreement and the transactions contemplated thereunder under the Listing Rules having been obtained and completed or, as the case may be, the relevant waiver from compliance with any of such rules having been obtained from the Stock Exchange;
(d) all other consents and acts, if any, required of TIHL in connection with the Loan Restructuring Agreement and the transactions contemplated thereunder under the Listing Rules having been obtained and completed or, as the case may be, the relevant waiver from compliance with any of such rules having been obtained from the Stock Exchange;
(e) the Sale and Purchase Agreement becoming unconditional and having been completed in accordance with the terms thereof, save for any condition therein requiring the Loan Restructuring Agreement to become unconditional; and
(f) Probest having received the Promissory Note duly executed by Profitown under its common seal and the Guarantee duly executed by Swank under its common seal.

If any of the above conditions are not wholly fulfilled on or before 31 July 2005, unless an extension of time has been granted by Probest, the Loan Restructuring Agreement will cease to have any further force and effect except for antecedent breach.

The Loan Restructuring Agreement becoming unconditional is one of the conditions precedent to Completion and the Loan Restructuring Agreement is therefore part and parcel of the Disposal. Accordingly, the directors of TIHL believe that the terms of the Disposal and the Loan Restructuring Agreement becoming unconditional, which is one of the conditions precedent to Completion, are fair and reasonable and in the interests of the shareholders of TIHL as a whole.

Guarantee

Under the Guarantee, Swank will undertake to Probest that if and whenever Profitown defaults for any reason in payment of the principal sum due under the Promissory Note, Swank will upon demand by Probest unconditionally pay and satisfy all interest which Profitown is liable to pay under the Promissory Note on and after such default. The obligations of Swank under the Guarantee are unsecured and not guaranteed by the Offeror or any of its concert parties or any other person. The Guarantee will cease to be effective if the Put Option referred to in the section headed “Shareholders Agreement” below is exercised and the transaction contemplated under the Put Option is completed.

3. OTHER AGREEMENTS

Shareholders Agreement

The Shareholders Agreement constitutes a special deal under Rule 25 of the Takeovers Code and requires consent from the Executive. Both before and immediately after Completion, Profitown will be held as to 30% by Probest and as to 70% by Swank and the shareholding chart is set out below. On Completion, Swank, Probest, TIHL and Profitown will enter into the Shareholders Agreement to regulate the management of the Profitown Group.

Pre-Completion

==> picture [274 x 185] intentionally omitted <==

----- Start of picture text -----

TIHL SW Kingsway
(Warrantors) (Warrantors)
100% 100%
100%
Probest Rich Global Kingsway Lion Public Mr. Cheung WahHing
51% 10% 9% 29.99% 0.01%
30%
Swank
70%
the Profitown Group
Design, manufacture and
marketing of frames
----- End of picture text -----*

TIHL holds 100% of Fortune Dynamic, which in turn holds 100% of Probest
** Mr. Cheung Wah Hing is a director of Swank

Post-Completion

==> picture [274 x 185] intentionally omitted <==

----- Start of picture text -----

TIHL SW Kingsway
100% 100%
Probest Rich Global Offeror Public Mr. Cheung WahHing
5% 5% 60% 29.99% 0.01%
30%
Swank
70%
the Profitown Group
Design, manufacture and
marketing of frames
----- End of picture text -----*

TIHL holds 100% of Fortune Dynamic, which in turn holds 100% of Probest
** Mr. Cheung Wah Hing is a director of Swank

The principal terms of the Shareholders Agreement are as follows:

(1) Within the period of 30 months from Completion, unanimous approval by the board of directors, which directors shall be nominated by Probest and Swank respectively (Swank shall be entitled to appoint four directors of Profitown and Probest shall be entitled to appoint two directors of Profitown, with a maximum of six directors holding office at any time. The chairman of the board shall be a director appointed by Probest but shall not have a casting vote in the event of an equality of votes.), of Profitown is required on material issues regarding Profitown, an investment holding company which holds the major operating subsidiaries of Swank, such as :
(a) approval of accounts;
(b) reduction or alteration of share capital;
(c) issue of shares or debentures;
(d) provision of any guarantee or indemnity other than for the benefit of the Profitown Group;
(2) Swank will have the right to require Probest or an independent third party procured by Probest to purchase (the “Put Option”) all (but not part only) of its shares, being approximately 70% of all issued shares of Profitown, in Profitown exercisable at any time before the expiry of 30 months from the Completion Date at a price equal to the net tangible asset value of Profitown as at the date of exercise of such put option attributable to such shares and such purchaser will assume all the liabilities due from Swank to any member of the Profitown Group incurred prior to the date of the Shareholders Agreement at nil consideration; and

(3) if the net tangible asset value of Profitown as determined on the same basis and accounting policies and principles adopted by Profitown in its latest audited accounts shall fall below zero during the 30-month period from the Completion Date, Probest will indemnify Profitown on demand for the deficit in the event that such deficit exceeds the outstanding principal amount of the Promissory Note and the interest accrued.

The Put Option and indemnity referred to in paragraphs (2) and (3) above will cease and Probest shall have no further obligation in respect thereof if:

(a) the aggregate shareholding of the Offeror in Swank falls below 51%;
(b) there is any change to the majority of the board of directors of the Offeror since the date of and as disclosed in the Sale and Purchase Agreement; or
(c) Mr. Wang ceases to be the legal and beneficial owner of at least 75% of and in the Offeror.

Subject as aforesaid, there is no pre-condition under the Shareholders Agreement for the exercise of the Put Option by Swank. The Put Option and the exercise price thereof were negotiated between Probest and Swank on an arms-length basis as part of the terms of the Shareholders Agreement. The directors of Swank have not, as at the date of this announcement, decided under what circumstances the Put Option will be exercised.

Information on the Profitown Group

The Profitown Group is principally engaged in the design, manufacture and marketing of frames, sunglasses and lenses. Profitown is owned as to 70% by Swank and 30% by Probest and is one of the principal subsidiaries of Swank. An accountants’ report on the financial information of the Profitown Group for the two financial years ended 31 December 2004 will be included in the circular to be sent to the shareholders of Swank in respect of the Offer, the Shareholders Agreement, the Loan Restructuring Agreement and the Agency Agreement.

TIHL Deed

On Completion, Probest and TIHL will execute the TIHL Deed in favour of the Offeror. Under the terms of the TIHL Deed, in the event (i) the listing of the Shares on the Stock Exchange shall be withdrawn during the 30-month period after the date hereof (the “Relevant Period”) or (ii) trading in the Shares on the Stock Exchange is suspended during the Relevant Period and the listing of the Shares on the Stock Exchange is subsequently withdrawn; or (iii) Swank is placed under the delisting procedure by the Stock Exchange during the Relevant Period and the listing of the Shares on the Stock Exchange is withdrawn during or after the Relevant Period, in each case, as a result of any event or a series of events relating to or any condition or any change in any condition of (including any change which resulted in Swank’s failure to comply with Rule 13.24 of the Listing Rules) or an act, deed or omission by any member of the Profitown Group, Probest shall indemnify the Offeror by paying the Offeror an amount of HK$56,247,530 upon demand after Swank ceases to be listed on the Stock Exchange as a result of the matters aforesaid. TIHL shall be the guarantor of Probest’s obligations under the TIHL Deed. The TIHL Deed does not require the Offeror to return its interest in Swank to TIHL.

Probest and TIHL shall have no further obligations under the said indemnity if:

(a) the aggregate shareholding of the Offeror in Swank falls below 51%;
(b) there is any change to the majority of the board of directors of the Offeror since the date of and as disclosed in the Sale and Purchase Agreement; or
(c) Mr. Wang ceases to be the legal and beneficial owner of at least 75% of and in the Offeror.

Listing Rules and Takeovers Code implications

The Disposal and the Loan Restructuring Agreement constitutes a major transaction for TIHL under Chapter 14 of the Listing Rules. Upon completion of the Disposal, Swank will cease to be the subsidiary of either Probest or TIHL. As permitted under Rule 14.44 of the Listing Rules, as no shareholder is required to abstain from voting in the event TIHL convenes a meeting for the purpose of obtaining approval for the entering into of the Sale and Purchase Agreement and the

Loan Restructuring Agreement and as Winspark Venture Limited, being the controlling shareholder of TIHL which holds approximately 58% of the issued share capital of TIHL as at the date of this announcement, has no interest in the Sale and Purchase Agreement and the Loan Restructuring Agreement save for its shareholding in TIHL and has provided its written consent to the Sale and Purchase Agreement and the Loan Restructuring Agreement, no meeting of the shareholders of TIHL will be convened for this purpose and such condition is already fulfilled as at the date of this announcement.

As Probest is a substantial shareholder of each of Swank and Profitown, TIHL and Probest are connected persons of Swank under the Listing Rules. The entering into each of the Shareholders Agreement and the Loan Restructuring Agreement (including the Promissory Note and the Guarantee) constitutes a connected transaction for Swank under Chapter 14A of the Listing Rules. The Shareholders Agreement and the Loan Restructuring Agreement constitute special deals under Rule 25 of the Takeovers Code and require consent from the Executive. Each of the Shareholders Agreement and the Loan Restructuring Agreement (including the Promissory Note and the Guarantee) is subject to the approval of the Independent Shareholders at a general meeting by way of poll. TIHL, SW Kingsway and their respective associates and concert parties will abstain from voting on such resolution in the EGM.

The Option Agreement

As announced in the joint announcement of TIHL and Swank dated 29 December 2003, on 16 December 2003, Fortune Dynamic and TIHL (as warrantor of Fortune Dynamic) entered into the Option Agreement with Rich Global. Fortune Dynamic, TIHL and Rich Global entered into a conditional cancellation agreement on 20 January 2005 whereby it was provided that subject to Completion taking place within 10 Business Days of the Long Stop Date, the Option Agreement shall be cancelled on Completion and in consideration of which Fortune Dynamic shall pay to Rich Global a sum of HK$2,000,000 on receipt of the first instalment of the consideration by Probest as mentioned in the section headed “Sale and Purchase Agreement” above. The said sum of HK$2,000,000 was agreed between Fortune Dynamic and Rich Global as a matter of commercial decision.

4. POSSIBLE CASH OFFER

Following and subject to Completion, the Offeror and parties acting in concert with it will own approximately 60% of the entire issued share capital of Swank (assuming that Swank’s issued share capital remains unchanged from that as at the date of this announcement). As a result thereof, the Offeror will be obliged under Rule 26 of the Takeovers Code to make a mandatory unconditional cash offer for all the issued Shares (other than those already owned by the Offeror and parties acting in concert with it). Swank has no outstanding convertible securities, warrants or options as at the date of this announcement.

The Vendors, TIHL and SW Kingsway are parties acting in concert with the Offeror. The Offer will not be extended to Probest and Rich Global. All Sale Shares and Offer Shares will be pledged to Kingsway Group.

As at the date of this announcement, neither the Offeror nor any parties acting in concert with it, apart from the Vendors and their concert parties, owns any Shares or any other securities convertible into Shares, including warrants, options or subscription rights. Other than by entering into the Sale and Purchase Agreement and the on-market sale of an aggregate of 2,500,000 Shares by a company controlled by Mr. Ko Kam Chuen, Stanley, an independent nonexecutive director of SW Kingsway who had no knowledge of, and did not participate in any part of this transaction, on 5 January 2005 (1,700,000 shares sold) and 6 January 2005 (800,000 shares sold) at a sale price of HK$0.061 per Share, neither the Offeror nor any parties acting in concert (including the Vendors and their concert parties) with it has dealt in any Shares or any other securities convertible into Shares, including warrants, options or subscription rights, during the six months prior to the date of this announcement.

No shareholder of Swank has undertaken with the Offeror to accept the Offer. There are no persons having any arrangement of the kind referred to in the third paragraph of Note 8 to Rule 22 of the Takeovers Code with the Offeror, Swank or any of their respective associates (as defined in the Takeovers Code). The Offer, if made, will be unconditional.

Terms of the Offer

Subject to Completion, DBS Asia will, on behalf of the Offeror, make the Offer, which will be subject to the conditions and further terms referred to in this announcement and to be set out in the Offer Document when issued, on the following basis:

For each Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . HK$0.03 in cash

The offer price per Share represents:

(a) a discount of approximately 52.4% to the closing price of Shares on the Stock Exchange of HK$0.063 per Share, being the closing price of the Shares as quoted on the Stock Exchange on 20 January 2005 (being the last trading day immediately prior to the suspension of trading in Shares on 21 January 2005);
(b) a discount of approximately 52.4 % to the average closing price of Shares on the Stock Exchange of HK$0.063 per Share for the 10 trading days up to and including 20 January 2005 (being the last trading day prior to the suspension of trading in Shares on 21 January 2005).

Given the net liability financial position of Swank as in the latest published financial results, the relative premium/discount of the offer price per Share to Swank’s net asset value (“NAV”) per Share is not applicable.*

According to Swank’s 2004 interim report, Swank had audited net liability of HK$60.0 million as at 31 December 2003 and unaudited net liability of HK$61.8 million as at 30 June 2004. Swank’s audited net loss for the year ended 31 December 2003 was HK$7.1 million and the unaudited net loss for the first six months of 2004 was HK$1.8 million.

The Offer is based on the same pricing terms as the Sale and Purchase Agreement commercially agreed between the Vendors and Offeror.

During the six-month period preceding the date of this announcement, the highest closing price of Shares on the Stock Exchange was HK$0.07 (on 15, 16, 17 December 2004 and 6 January 2005) and the lowest closing price of Shares on the Stock Exchange was HK$0.056 per Share (on both 11 November 2004 and 22 November 2004).

As at the date of this announcement, there are a total number of 3,124,862,734 Shares in issue. At a cash offer price of HK$0.03 per Share, the Offeror values the Sale Shares at approximately HK$56 million and the cost of the Offer, assuming full acceptance excluding Shares retained and held by Probest and Rich Global immediately after Completion, at approximately HK$28 million.

DBS Asia has been appointed by the Offeror to advise the Offeror in connection with the Offer and DBS Asia is satisfied that sufficient financial resources are available to the Offeror to complete the purchase of the Sale Shares and to meet full acceptance of the Offer. Kingsway Financial Services Group Limited has provided financing in the total amount of approximately HK$51 million to the Offeror to enable it to complete the purchase of the Sale Shares and to enable it to meet full acceptance of the Offer.

Stamp duty

Stamp duty at the rate of HK$1.00 for every HK$1,000 or part thereof of the amount payable in respect of relevant acceptances will be payable by each shareholder of Swank who accepts the Offer. The Offeror will pay for such amount of stamp duty on behalf of and for the account of accepting shareholders of Swank who accept the Offer and such amount will be deducted from the amount payable to shareholders of Swank on acceptance of the Offer.

Effect of accepting the Offer

Acceptance of the Offer by any shareholder of Swank will be deemed to constitute a warranty by such person that all Shares sold by such person under the Offer are free from all liens, charges, options, claims, equities, adverse interests, third-party rights or encumbrances whatsoever and together with all rights accruing or attaching thereto, including, without limitation, the right to receive dividends and distributions declared, made or paid, if any, on or after the Completion Date.

Change in shareholding structure of Swank

The shareholding structure of Swank before and after Completion but before the commencement of the Offer is and will be as follows:

	Number of		Number of
	Shares directly		Shares
	and indirectly	Approximate %	held	Approximate %
	held immediately	of total	immediately	of total
	before	issued	after	issued
Name	Completion	Shares	Completion	Shares
TIHL and its concert parties	1,593,599,230	51	156,202,790	5
SW Kingsway and its
concert parties	593,724,000	19	156,202,795	5
Offeror and its concert parties	–	–	1,874,917,645	60
Cheung Wah Hing,
a Swank director	358,400	0.01	358,400	0.01
Public shareholders	937,181,104	29.99	937,181,104	29.99
Total	3,124,862,734	100	3,124,862,734	100

Other than by entering into the Sale and Purchase Agreement and the on-market sale of an aggregate of 2,500,000 Shares by a company controlled by Mr. Ko Kam Chuen, Stanley, an independent non-executive director of SW Kingsway who had no knowledge of, and did not participate in any part of, this transaction, on 5 January 2005 (1,700,000 shares sold) and 6 January 2005 (800,000 shares sold) at a sale price of HK$0.061 per Share, neither TIHL nor SW Kingsway nor any of their respective concert parties has dealt in any Shares or any other securities convertible into Shares, including warrants, options, or subscription rights, during the six months prior to the date of this announcement.

5. INFORMATION ON THE OFFEROR

The Offeror is a private investment company incorporated in the British Virgin Islands with limited liability on 1 July 2004, and is wholly and beneficially owned by Mr. Wang. The directors of the Offeror are Mr. Wang, Mr. Zhao Jun（趙俊）and Mr. Li Wei （李偉）. The Offeror, Mr. Wang, Mr. Zhao Jun and Mr. Li Wei, to the best of the knowledge, information and belief of the directors of TIHL, having made all reasonable enquiries, are third parties independent of and not connected with TIHL or Swank or their respective connected persons (as defined in the Listing Rules).

Since its incorporation on 1 July 2004, the Offeror has not carried on any business other than entering into the Sale and Purchase Agreement and the transactions contemplated thereunder.

Set out below is the biography and background of each of Mr. Wang, Mr. Zhao Jun and Mr. Li Wei:

Mr. Wang An Kang, aged 41. Mr. Wang has been engaged in the phosphorus industry through the import and export of the Products since 1990. In 1999, he restructured several state-owned enterprises on the verge of bankruptcy into Yunnan Phosphorous Group Co., Ltd. (“Yunphos”) and is currently the controlling shareholder holding over 51% equity interest in Yunphos. The remaining two shareholders of Yunphos are two of its directors. Over the last 13 years, Yunphos

(including its predecessors) has evolved into a vertically integrated company engaged in the development, manufacturing, import and export of the Products. With Mr. Wang’s continuous efforts in exploring the international market, Yunphos has built strong relationships with numerous long-term international customers in Europe, America, Australia, Japan and South East Asia. He is currently the vice chairman of the Federation of Industry & Commerce of Yunnan Province, the vice chairman of the Yunnan Overseas Association and the vice chairman of the Chamber of Commerce for Import and Export of Yunnan Province. Mr. Wang is a PRC citizen.

Mr. Zhao Jun, aged 42. Mr. Zhao joined the chemical department of Kunming Import & Export Corporation, the predecessor of Yunphos, as the deputy general manager in 1993 and has gained extensive experience in international trade as a senior executive of Yunphos. Under the supervision and guidance of Mr. Zhao, the operations of Yunphos have been continuously improved and refined. Mr. Zhao has guided Yunphos’s move towards standardisation. With a heavy workload, he still managed to complete one year of MBA core courses. Mr. Zhao is a PRC citizen.

Mr. Li Wei, aged 38. In 1988, Mr. Li Wei became the deputy general manager of Golden Dragon Hotel in Kunming, a Hong Kong owned hotel, and accumulated extensive experience in hotel management. Mr. Li joined Yunnan Xinge Group（雲南鑫格集團）as its general manager, responsible for planning and investment, in 2000. Since 2002, Mr. Li has been the assistant to Mr. Wang. He possesses strong experience in international trade management. Mr. Li is a PRC citizen.

The Offeror and parties acting in concert with it, apart from the Vendors and their concert parties, do not have any shareholding in Swank as at the date of this announcement.

6. INTENTION OF THE OFFEROR REGARDING THE SWANK GROUP

Business

Subsequent to Completion, the Offeror will initiate a detailed strategic review of the Swank Group’s businesses. The Offeror will formulate business plans and strategies for the Swank Group with a view to consolidate Swank’s overall group operations and enhancing the shareholder value of Swank. The Offeror also plans to set up the Trading Company, which will be a wholly-owned subsidiary of Swank, to enter into a new business providing agency services to the Nominee in relation to the sale of the Products to the Territory.

Directors and management

At present, Swank has 5 executive directors and 3 independent non-executive directors. It is intended that with effect from the earliest time permitted under (or pursuant to any dispensation from) the Takeovers Code or by the Executive, all of the directors of Swank will resign.

The Offeror expects that such persons as may be nominated by the Offeror will be appointed as executive directors of Swank with effect from the earliest time permitted under (or pursuant to any dispensation from) the Takeovers Code or by the Executive. The new directors, including independent non-executive directors, whom the Offeror intends to nominate to the board of directors of Swank, have not yet been determined. Such information will be disclosed when the information is available by way of an announcement.

Save as disclosed above and other than the proposed new agency business, the Offeror intends that Swank will continue with the existing business of the Swank Group and does not intend to propose or seek any major changes to the existing operations or management of the Swank Group by reason only of the Offer. Up to the date hereof, the Offeror does not have any intention of injecting any assets into the Swank Group. The Offeror confirms that any future asset injections into the Swank Group will be implemented in accordance with all applicable laws and regulations and the relevant provisions of the Listing Rules.

Maintaining the listing of Swank

It is the intention of the Offeror that the listing of the Shares on the Stock Exchange will be maintained. Accordingly, the Offeror and the new directors to be appointed to the board of directors of Swank will undertake to the Stock Exchange following Completion, to take

appropriate steps as soon as practicable following the close of the Offer to ensure that at least 25% of all the Shares (based on the market capitalisation of Swank as at the relevant time) (or such other percentage as the Listing Rules may stipulate from time to time) are held by the public at all times in accordance with Rule 8.08 of the Listing Rules.

The Stock Exchange has stated that if there is less than 25% of all the Shares in public hands following the close of the Offer, or the Stock Exchange believes that a false market exists or may exist in Shares or that there are insufficient Shares in public hands to maintain an orderly market, then it will consider exercising its discretion to suspend trading in Shares until a level of sufficient public float is attained.

So long as Swank remains a listed company, the Stock Exchange will also closely monitor all future acquisitions or disposals of assets of Swank. Any acquisitions or disposals of assets by the Swank Group will be subject to the provisions of the Listing Rules. Pursuant to the Listing Rules, the Stock Exchange has the discretion to require Swank to issue an announcement and a circular to the shareholders of Swank irrespective of the size of any proposed transactions, particularly when such proposed transactions represent a departure from the principal activities of Swank. The Stock Exchange also has the power to aggregate a series of acquisitions or disposals of Swank and any such transactions may result in Swank being treated as if it were a new listing applicant and subject to the requirements for new listing applicants as set out in the Listing Rules.

7. INFORMATION ON TIHL

8. DESPATCH OF THE OFFER DOCUMENT

An independent board committee comprising the independent non-executive directors of Swank will be appointed to consider the Offer and Barits Securities (Hong Kong) Limited was appointed as the independent financial adviser to advise the independent board committee of Swank in respect of the terms of the Offer.

9. POSSIBLE CONTINUING CONNECTED TRANSACTION

Upon Completion, the Trading Company, which will be a wholly-owned subsidiary of Swank, and the Nominee will enter into the Agency Agreement pursuant to which the Trading Company will provide agency services to the Nominee in relation to the sale of the Products to the Territory. With the establishment of the Trading Company engaging in the new agency business upon Completion, the directors of Swank believe that the Swank Group is able to leverage on Mr. Wang’s considerable experience in international trade in relation to the Products and such new agency business to be conducted by the Trading Company will supplement the Swank Group’s existing businesses.

The transactions contemplated under the Agency Agreement constitute continuing connected transactions for Swank upon Completion, which will be subject to approval of the Independent Shareholders.

Pursuant to the terms of the Agency Agreement, the fees payable by the Nominee to the Trading Company will be 3% of the invoiced amount of the Products sold by the Agent on behalf of the Nominee. The Agency Agreement will commence from the date of Completion and expire on 31 December 2007.

As the Trading Company will be wholly-owned by Swank and, upon Completion, the Offeror will be the controlling shareholder of Swank, the Nominee, being an associate of the Offeror, will become a connected person of Swank under the Listing Rules upon Completion. Transactions between the Offeror and the Swank Group therefore constitute continuing connected transaction for Swank under the Listing Rules and will be subject to reporting, announcement and independent shareholders’ approval requirements under the Listing Rules.

The directors (including the independent non-executive directors) of Swank consider that the Continuing Connected Transaction will be entered into in the usual and ordinary course of businesses of the Swank Group, as the Swank Group seeks to leverage Mr. Wang’s considerable experience in international trade in relation to the Products through the new agency business. They also consider the terms of the Continuing Connected Transaction have been negotiated and will be conducted on an arm’s length basis between the Swank Group and the Offeror and the Continuing Connected Transaction is on normal commercial terms.

The directors (including the independent non-executive directors) of Swank are of the view that so far as the Independent Shareholders are concerned, the Continuing Connected Transaction and the terms of the Agency Agreement are fair and reasonable and in the best interests of the Swank Group and the shareholders of Swank as a whole.

The directors of Swank propose that the annual cap amounts of the agency fee to be received by the Trading Company under the Continuing Connected Transaction will be HK$10 million for the year ending 31 December 2005, HK$15 million for the year ending 31 December 2006 and HK$20 million for the year ending 31 December 2007. The above cap amounts have been determined with reference to the sales target, based on Mr. Wang’s considerable international trading experience and the Offeror’s goal of doubling the turnover of the new agency business in two years to further supplement Swank’s existing businesses, to be generated by the Trading Company.

The Trading Company is to be headquartered in Hong Kong and will likely recruit several experienced staff. Mr. Li Wei, one of the directors of the Offeror with extensive international business experience, is expected to spend considerable amount of time in Hong Kong as one of the directors of the Trading Company.

Trading Business

The Trading Company will engage in the provision of agency services to promote the sale of the Products to customers in the Territory and to other territories as the Nominee and the Trading Company may agree from time to time as and when appropriate. The Trading Company is expected to leverage on Mr. Wang’s considerable experience in international trade in relation to the Products and such new agency business will supplement the Swank Group’s existing business.

The Nominee does not currently use any agency services. The directors of Swank are of the opinion that the agency service to be provided by the Trading Company will help to improve the Nominee’s sale of the Products from China to customers in the Territory. There are also advantages for conducting such a business in Hong Kong due to the well established business and legal environment and availability of suitable sales and marketing employees.

10. RESUMPTION OF TRADING

11. GENERAL

The Swank Group is principally engaged in the design, manufacture and marketing of frames, sunglasses and lenses. Its production facilities are located in Dongguan and Shenzhen. Products of the Swank Group are mainly exported to the United States, Europe and Australia.

As at the date of this announcement, the executive directors of Swank comprises Mr. Yau Tak Wah, Paul, Ms. Louis Mei Po, Ms. Wong Shin Ling, Irene, Mr. Tam Wing Kin and Mr. Cheung Wah Hing and the independent non-executive directors of Swank comprises Mr. Hahn Ka Fai, Mark, Miss Shum Wai Ting, Rebecca and Mr. Wu Wang Li.

As at the date of this announcement, the executive directors of TIHL comprises Mr. Yau Tak Wah, Paul, Ms. Louis Mei Po, Ms. Wong Shin Ling, Irene, Mr. Tam Wing Kin and Mr. Tam Ping Wah and the independent non-executive directors of TIHL comprises Mr. Ng Wai Hung, Mr. Cheung Chung Leung Richard and Mr. Wu Wang Li.

An independent board committee comprising the independent non-executive directors of Swank will be appointed to consider the Offer, the Shareholders Agreement, the Agency Agreement and the Loan Restructuring Agreement (including the Promissory Note and the Guarantee), and Barits Securities (Hong Kong) Limited was appointed as the independent financial adviser to advise the independent board committee and the Independent Shareholders in respect of the terms of the Offer, the Shareholders Agreement, the Agency Agreement and the Loan Restructuring Agreement (including the Promissory Note and the Guarantee).

A circular containing, among other things, further details of the Offer, the Shareholders Agreement, the Agency Agreement, the Loan Restructuring Agreement (including the Promissory Note and the Guarantee), the recommendation of the independent board committee of Swank in respect of the Offer, the Shareholders Agreement, the Agency Agreement and the Loan Restructuring Agreement (including the Promissory Note and the Guarantee), the advice of its independent financial adviser in respect of the Offer, the Shareholders Agreement, the Agency Agreement and the Loan Restructuring Agreement (including the Promissory Note and the Guarantee) and the notice convening the EGM will be despatched to the shareholders of Swank as soon as practicable.

The Disposal and the Loan Restructuring Agreement constitute a major transaction for TIHL under Chapter 14 of the Listing Rules. A circular containing further details of the Disposal and the Loan Restructuring Agreement will be despatched to the shareholders of TIHL.

The Offer is a possibility only. Shareholders of and potential investors in Swank should therefore exercise extreme caution when dealing in its securities.

Definitions

“acting in concert” the meaning ascribed to it in the Takeovers Code “Agency Agreement” the agency agreement to be entered into between the Nominee and the Trading Company upon Completion pursuant to which the Trading Company will be engaged by the Nominee to provide agency services for the Nominee for sale of the Products to the Territory

“associate”	the meaning ascribed to it in the Listing Rules
“Business Day”	a day (other than Saturday or Sunday) on which commercial banks
	are generally open in Hong Kong for normal business
“Completion”	completion of the Sale and Purchase Agreement, upon the transfer
	of Sale Shares to the Offeror
“Completion Date”	Date of Completion
“Continuing Connected	the transaction contemplated under the Agency Agreement
Transaction”
“DBS Asia”	DBS Asia Capital Limited, a deemed licensed corporation under
	the Securities and Futures Ordinance (Chapter 571 of the Laws of
	Hong Kong) to conduct types 1, 4, 6 and 9 of the regulated
	activities and the financial adviser to the Offeror
“Debt”	the loan in the principal amount of HK$163,000,000 due and owing
	by Swank to Probest under the Existing Promissory Note
“Deloitte”	Deloitte & Touche Corporate Finance Limited, a company which is
	deemed licensed under the Securities and Futures Ordinance
	(Chapter 571 of the Laws of Hong Kong) for the regulated
	activities of dealing in securities, advising on securities, advising
	on corporate finance and asset management, and the financial
	adviser to TIHL.
“Disposal”	disposal of the First Sale Shares by Probest pursuant to the Sale
	and Purchase Agreement
“Effective Date”	the date on which all the conditions to the Loan Restructuring
	Agreement shall have been fulfilled
“EGM”	the extraordinary general meeting of Swank to be convened for
	approving the Shareholders Agreement, the Loan Restructuring
	(including the Promissory Note and the Guarantee) and the Agency
	Agreement and the transactions contemplated thereunder
“Executive”	the Executive Director of the Corporate Finance Division of the
	SFC or any delegate of the Executive Director
“Existing Promissory Note”	the promissory note dated 3 November 2003 issued by Swank in
	favour of Probest in the principal sum of HK$163,000,000 which is
	repayable by instalments, that is, as to HK$25,500,000 repayable
	on or before 1 June 2004, as to HK$62,500,000 repayable on or
	before 1 June 2005 and as to HK$75,000,000 repayable on or
	before 1 June 2006 (the instalment due on 1 June 2004 being in
	default)
“First Sale Shares”	1,437,396,440 Shares, representing approximately 46% of the
	issued share capital of the Company as at the date of this
	announcement
“Fortune Dynamic”	Fortune Dynamic Group Corp., a wholly owned subsidiary of TIHL
“Guarantee”	the guarantee to be executed by Swank in favour of Probest
	pursuant to the Loan Restructuring Agreement in respect of the
	liabilities of Profitown under the Promissory Note
“HK$”	Hong Kong dollar, the lawful currency of Hong Kong
“Hong Kong”	the Hong Kong Special Administrative Region of the PRC

“Independent Shareholders”	Shareholders of Swank other than Probest, Rich Global, Kingsway
	Lion, their respective associates and parties acting in concert with
	any of them
“Kingsway Group”	SW Kingsway and its subsidiaries
“Kingsway Lion”	Kingsway Lion Spur Technology Limited, a company incorporated
	in the British Virgin Islands and a wholly-owned subsidiary of SW
	Kingsway
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange
“Loan Restructuring	the conditional loan restructuring agreement dated 20 January 2005
Agreement”	as varied and supplemented by the supplemental loan restructuring
	agreement dated 13 April 2005 entered into between Probest,
	Swank and Profitown in relation to, inter alia, the restructuring of
	the Debt

“Long Stop Date” the day falling on the numerically corresponding day in the sixth calendar month after the date of the Sale and Purchase Agreement, where such day is not a Business Day, it shall fall on the next succeeding Business Day or if there is no numerically corresponding day in the sixth calendar month after the date hereof, the first following Business Day
“Mr. Wang” Mr. Wang An Kang (王安康 ), being the ultimate beneficial owner of the entire issued share capital of the Offeror
“Nominee” an associate of the Offeror to be nominated by the Offeror to enter into the Agency Agreement with the Trading Company
“Offer” the possible mandatory unconditional cash offer to be made by DBS Asia, on behalf of the Offeror, on the terms and subject to the conditions referred to in this announcement and to be set out in the Offer Document to acquire all the issued Shares at approximately HK$0.03 per Share (other than those already owned or agreed to be acquired by the Offeror and parties acting in concert with it) that will be made following and subject to Completion

	conditions referred to in this announcement and to be set out in the Offer Document to acquire all the issued Shares at approximately HK$0.03 per Share (other than those already owned or agreed to be acquired by the Offeror and parties acting in concert with it) that will be made following and subject to Completion
“Offer Document”	the document to be issued by or on behalf of the Offeror to the
	shareholders of Swank in accordance with the Takeovers Code
	containing, among other things, details of the Offer and the related
	acceptance and transfer forms
“Offeror”	China Time Investment Holdings Limited, a company incorporated
	in the British Virgin Islands with limited liability
“Option Agreement”	the option agreement dated 16 December 2003 entered into
	between Fortune Dynamic, TIHL and Rich Global whereby Fortune
	Dynamic agreed to grant to Rich Global an option to purchase 50%
	of the entire issued shares of Probest at the time of exercise of such
	option
“PRC”	People’s Republic of China
“Probest”	Probest Holdings Inc., a company incorporated in the British
	Virgin Islands and a wholly-owned subsidiary of TIHL
“Products”	chemical products including phosphorus and related products

“Profitown” Profitown Investment Corporation, a company incorporated in the British Virgin Islands and held as to 70% by Swank and as to 30% by Probest
“Profitown/Swank Loan” the shareholder’s loans and any other monies (including interest) due and owing by Profitown to Swank on completion of the Sale and Purchase Agreement, which amounted to the principal sum of approximately HK$112,167,732 as at the date hereof
“Profitown Group” Profitown and its subsidiaries “Promissory Note” the promissory note to be issued by Profitown in favour of Probest pursuant to the Loan Restructuring Agreement
“Remaining Debt” the balance of the Debt in such principal sum as is equivalent to the Profitown/Swank Loan
“Rich Global” Rich Global Investments Limited, a company incorporated in the British Virgin Islands and a wholly-owned subsidiary of SW Kingsway

“Rich Global”	Rich Global Investments Limited, a company incorporated in the British Virgin Islands and a wholly-owned subsidiary of SW Kingsway
“Sale and Purchase Agreement”	the conditional agreement for the sale and purchase of the Sale
	Shares dated 20 January 2005 entered into between the Offeror,
	Probest, Rich Global, Kingsway Lion, TIHL and SW Kingsway
“Sale Shares”	the First Sale Shares, the Second Sale Shares and the Third Sale
	Shares
“Second Sale Shares”	156,283,205 Shares, representing approximately 5% of the issued
	share capital of Swank as at the date of this announcement
“SFC”	the Securities and Futures Commission of Hong Kong
“Shareholders Agreement”	the shareholders agreement to be entered into between Swank,
	Probest, TIHL and Profitown in respect of Profitown
“Share(s)”	share(s) of HK$0.01 each in the issued share capital of Swank
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Supplemental Agreement”	the supplemental agreement in relation to the Sale and Purchase
	Agreement dated 13 April 2005 entered into between the Offeror,
	Probest, Rich Global, Kingsway Lion, TIHL and SW Kingsway
“SW Kingsway”	SW Kingsway Capital Holdings Limited, a company incorporated
	in Bermuda and whose securities are listed on the Main Board of
	the Stock Exchange
“Swank”	Swank International Manufacturing Company Limited, a company
	incorporated in Hong Kong whose securities are listed on the Main
	Board of the Stock Exchange
“Swank Group”	Swank and its subsidiaries
“Takeovers Code”	the Hong Kong Code on Takeovers and Mergers
“Territory”	Italy, Japan and Korea
“Third Sale Shares”	281,238,000 Shares, representing approximately 9% of the issued
	share capital of the Swank as at the date of this announcement

“TIHL” Tomorrow International Holdings Limited, a company incorporated in Bermuda and whose securities are listed on the Main Board of the Stock Exchange

“TIHL Deed”

the deed of indemnity to be executed by Probest and TIHL in favour of the Offeror on Completion pursuant to the Sale and Purchase Agreement as referred to in the sub-section headed “TIHL Deed” above

“TIHL Group” TIHL and its subsidiaries other than the Swank Group
“Trading Company”
a company to be established as a wholly-owned subsidiary of the Swank
“Vendors”
“Warrantors”
collectively, Probest, Kingsway Lion and Rich Global

collectively, TIHL and SW Kingsway

By order of the Board By order of the Board By order of the Board TOMORROW INTERNATIONAL SWANK INTERNATIONAL CHINA TIME HOLDINGS LIMITED MANUFACTURING INVESTMENT COMPANY LIMITED HOLDINGS LIMITED Yan Tak Wah, Paul Yan Tak Wah, Paul Wang An Kang Chairman Executive Director Chairman

Hong Kong, 18 April 2005

All of the directors of Swank jointly and severally accept full responsibility for the accuracy of the information contained in this announcement (other than that relating to the TIHL Group and the Offeror) and confirm, having made all reasonable enquiries, that to the best of their knowledge, opinions expressed in this announcement (other than those relating to the TIHL Group and the Offeror) have been arrived at after due and careful consideration and there are no other facts not contained in this announcement (other than those relating to the TIHL Group and the Offeror), the omission of which would make any statement in this announcement misleading.

All of the directors of TIHL jointly and severally accept full responsibility for the accuracy of the information contained in this announcement (other than that relating to the Kingsway Group, the Swank Group and the Offeror) and confirm, having made all reasonable enquiries, that to the best of their knowledge, opinions expressed in this announcement (other than those relating to the Kingsway Group, the Swank Group and the Offeror) have been arrived at after due and careful consideration and there are no other facts not contained in this announcement (other than those relating to the Kingsway Group, the Swank Group and the Offeror), the omission of which would make any statement in this announcement misleading.

All of the directors of the Offeror jointly and severally accept full responsibility for the accuracy of the information contained in this announcement (other than that relating to the Kingsway Group, the TIHL Group and the Swank Group) and confirm, having made all reasonable enquiries, that to the best of their knowledge, opinions expressed in this announcement (other than those relating to the Kingsway Group, the TIHL Group and the Swank Group) have been arrived at after due and careful consideration and there are no other facts not contained in this announcement (other than those relating to the Kingsway Group, the TIHL Group and the Swank Group), the omission of which would make any statement in this announcement misleading.

Please also refer to the published version of this announcement in The Standard.