Dream International Limited — Proxy Solicitation & Information Statement 2005

Oct 26, 2005

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your Shares, you should at once hand this circular to the purchaser(s) or transferee(s) or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser(s) or transferee(s).

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

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International
Limited
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DREAM INTERNATIONAL LIMITED 德林國際有限公司

(incorporated in Hong Kong with limited liability) (Stock Code: 1126)

Joint Venture Manufacturing Plant in PRC

DISCLOSEABLE TRANSACTION

A letter from the board of directors of Dream International Limited is set out on pages 4 to 11 of this circular.

25 October 2005

CONTENTS

	Page
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM THE BOARD
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Details of the Joint Venture Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Condition Precedents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Details of the Sale and Purchase Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Business of the Joint Venture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
Source of Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
Reasons for the Joint Venture Agreement and Sale and Purchase Agreements . . . . . . . . . . . .	9
Financial Effect of the Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
Additional information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
APPENDIX – GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12

• i -

DEFINITIONS

In this circular, the following expressions have the following meanings unless the context otherwise requires:

• “Associate(s)”

has the meaning ascribed to it in the Listing Rules

• “Board” the board of Directors of the Company

“Company” Dream International Limited, a company incorporated in Hong Kong with limited liability and the shares of which are listed on the main board of the Stock Exchange

“C & H HK” C & H HK Corp., Ltd., a shell company incorporated in Hong Kong on 21 July 2004 with initial issued capital of HK$1 will be increased to US$3 million and paid up by the end of November 2005. Subsequently, its share capital will be increased and paid up to US$6 million by the end of year 2005. Its registered address is Flat/Rm 11, 12/F Wing On Centre, 111 Connaught Road Central, Central, Hong Kong

“Directors” the directors of the Company “Far Great Plastics” Far Great Plastics Industrial Co., Ltd. (遠大塑膠工業有限公司 ), wholly owned by Mr. Chen, is a trading company of the products manufactured by Shanghai Atem to overseas markets. It is the immediate holding company of Shanghai Atem incorporated in Taiwan with registered address at 4F-3, No. 23, Dong Ling Road, Eastern District, Tainan City, Taiwan

“Group” Dream International Limited and its subsidiaries “HK$” Hong Kong Dollars, the lawful currency of the Hong Kong Special Administrative Region of PRC. “Independent valuation report” An independent valuation report dated 27 December 2004 performed by independent professional valuer of the prevailing value of the Tangible and Intangible assets as at 30 November 2004. It was assessed on replacement cost basis with reference to the information in the management accounts as at 30 November 2004 provided by the sellers of three sale and purchase agreements as described under the section heading “DETAILS OF THE SALE AND PURCHASE AGREEMENTS”

“Intangible assets” Assets to be acquired from Shanghai Atem, Far Great Plastics and Mr. Chen in the three sale and purchase agreements marked A, B and C regarding trademarks, business logos, patents and selling distribution channel as described under the section heading “DETAILS OF THE SALE AND PURCHASE AGREEMENTS”

• 1 -

DEFINITIONS

“J.Y. Plasteel”	J.Y. Plasteel (Suzhou) Co., Ltd. (正潤童車(蘇州)有限公司), a
	wholly owned subsidiary of C & H HK Corp., Ltd., which was
	incorporated on 29 March 2005 as a Wholly Foreign Owned
	Enterprise under PRC laws with initial registered capital of US$3.1
	million, which is required to be paid up by 5 September 2008,
	and will be increased to US$6 million by the end of year 2006. Its
	location of manufacturing facility will be in Taicang city, Jiangsu
	province of the PRC
“JV Agreement”	the JV agreement dated 28 September 2005 between the Company
	and other three investors from USA, Japan and Taiwan with the
	purpose to set up a manufacturing factory in the PRC
“Latest Practicable Date”	25 October 2005, being the latest practicable date for ascertaining
	information herein prior to printing of this circular
“Listing Rules”	the Rules Governing the Listing of Securities on the The Stock
	Exchange of Hong Kong Limited
“Mr. Chen”	Mr. Chen Ding Xing (陳定興), a Taiwanese being the ultimate
	owner of Far Great Plastics and Shanghai Atem Plastics with
	address at 4F-3, No. 23, Dong Ling Road, Eastern District, Tainan
	City, Taiwan
“Mr. Lea”	Mr. Lea Yu Sun, an independent investor from USA
“OAKS”	OAKS Co., Ltd., an independent investor from Japan with
	registered address at 1-3/F, Maekawa Building 1, 2-7-5 Komagata
	Taito-ku, Tokyo, Japan engaging in business of design,
	manufacturing and trading bicycles, infant carts, shopping carts,
	autobike accessories and toys in Japan
“OBM”	original brand manufacturing, under which the manufacturer
	creates or owns the design, logo, trademark, patent and brand
	name of the products which are sold under its own unique
	identifiable name or label
“ODM”	original design manufacturing, under which the manufacturer
	creates and/or owns the circuitry, pattern, design, trademark, logo,
	patent and brand name of the products which are sold under the
	brandname of the customer or the Group
“OEM”	original equipment manufacturing, under which products are
	designed and manufactured in whole or in part in accordance with
	customer’s specifications and are marketed under the customer’s
	brandname using the customer’s character licensed products

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DEFINITIONS

“PRC”	the People’s Republic of China
“RMB”	Reminbi, the lawful currency of the PRC. For the disclosure
	purpose only, the exchange rate to HK$ is 0.96
“Selling distribution channel”	the customers relationship and information related to trading
	business of the products manufactured by Shanghai Atem to either
	domestic or overseas markets except Taiwan. The customers
	relationship is acquired through serving mutually signed notice to
	existing customers and arranging visits to the major customers of
	Shanghai Atem and Far Great Plastics
“SFO”	the Securities and Futures Ordinance (Chapter 571 of the laws of
	Hong Kong)
“Shanghai Atem”	Shanghai Atem Plastics Industrial Co., Ltd. (上海亞太橡塑膠工
	業有限公司), a wholly owned subsidiary of Far Great Plastic, a
	factory incorporated in Shanghai, PRC with business in
	manufacturing tricycles, bicycles, scooters, infant carts, plastic
	wheels and inline skates for domestic and export markets
“Shares”	Ordinary shares of US$0.01 each in the issued share capital of the
	Company
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Tangible assets”	Assets to be acquired from Shanghai Atem and Far Great Plastics
	in the sale and purchase agreements marked A and B regarding
	the used manufacturing machineries and equipments, fixed assets
	and moulds as described under the section heading “DETAILS
	OF THE SALE AND PURCHASE AGREEMENTS”
“US$”	United States Dollars, the lawful currency of United States of
	America. For the disclosure purpose only, the exchange rate to
	HK$ is 7.8

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LETTER FROM THE BOARD

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DREAM INTERNATIONAL LIMITED 德林國際有限公司

(incorporated in Hong Kong with limited liability)

(Stock Code: 1126)

Executive Directors: Kyoo Yoon Choi Chul Hong Min Young M. Lee Tae Sub Choi James Wang

Registered office: 8th Floor Tower 5, China HK City 33 Canton Road Tsimshatsui Kowloon Hong Kong

Independent non-executive Directors: Valiant, Kin Piu Cheung Cheong Heon Yi Chan Yoo

25 October 2005

To the Shareholders of the Company

Dear Sir or Madam,

Joint Venture Manufacturing Plant in PRC

DISCLOSEABLE TRANSACTION

INTRODUCTION

The Board announced on 6 October 2005 that the Company entered into an JV Agreement on 28 September 2005 with three investors from USA, Japan and Taiwan to jointly invest in a joint venture company C & H HK with the purpose to acquire, through C & H HK’s wholly subsidiary J.Y. Plasteel (a wholly foreign owned enterprise in PRC), the used manufacturing machineries and equipments, moulds and domestic selling distribution channel for US$1.5 million from Shanghai Atem (a factory in Shanghai, PRC with business in manufacturing tricycles, bicycles, scooters, infant carts, plastic wheels and inline skates for domestic and export markets except Taiwan). Meanwhile, another two agreements each worth US$0.75 million have been entered by C & H HK with Far Great Plastics (the immediate holding company of Shanghai Atem incorporated in Taiwan) and Mr. Chen (the Taiwanese ultimate owner of Far Great Plastics) to acquire trademarks, business logos, patents, moulds and overseas selling distribution

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LETTER FROM THE BOARD

channel except Taiwan within the scope related to business of Shanghai Atem. The consideration has been arrived at after arm’s length negotiations between the parties with reference to the Independent valuation report of the prevailing value of the Tangible and Intangible assets as at 30 November 2004 and the possible synergistic benefit.

The initial share capital of C & H HK will be US$3 million to be paid up by end of November 2005 and will be further increased to US$6 million by the end of year 2005, which will be contributed in cash and equity owned by the Company, USA investor, Japanese investor and Mr. Chen in the proportion of 52.5%, 30%, 15% and 2.5% respectively. Its major business will be trading of the products to be manufactured by J.Y. Plasteel to overseas markets except Taiwan after 1 January 2006.

J.Y. Plasteel will complete its new production plant with capital investment of about US$4 million in Taicang city of Jiangsu province, PRC by end of April 2006. After the relocation of all machineries to the new plant by the end of July 2006, the plant will be fully operated in the second half of 2006 with an anticipated annual sales volume over US$15 million. Both C & H HK and J.Y. Plasteel will become subsidiaries of the Company after the transaction. The transaction constitutes a discloseable transaction of the Company under Chapter 14 of the Listing Rules.

The main purpose of this circular is to provide you with further particulars of the Joint Venture Agreement and the Sale and Purchase Agreements.

DETAILS OF THE JOINT VENTURE AGREEMENT

Date of the Agreement: 28 September 2005 Parties to the Agreement: Dream International Ltd. Mr. Lea Yu Sun (USA) OAKS (Japan) Mr. Chen Ding Xing (Taiwan) Particulars of the JV: C & H HK A shell company incorporated by Sung Sim Service Limited (a secretarial service company) in Hong Kong on 21 July 2004 with initial issued capital of HK$1. There is no operation since incorporation. Its share capital will be increased to US$3 million and paid up by the end of November 2005. Its share capital will be increased further to US$6 million (equivalent to HK$46.8 million) by the end of year 2005. All the share capital of C & H HK (including the one share held by Sung Sim Service Limited) will be subscribed in cash by the Company, Mr. Lea, OAKS and Mr. Chen in the proportion of 52.5%, 30%, 15% and 2.5% respectively. Its registered address is Flat/Rm 11, 12/F Wing On Centre, 111 Connaught Road Central, Central, Hong Kong.

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LETTER FROM THE BOARD

J.Y. Plasteel

A wholly owned subsidiary of C & H HK, which was incorporated and set up by C & H HK on 29 March 2005 as a Wholly Foreign Owned Enterprise under PRC laws with initial registered capital of US$3.1 million, which is required to be paid up by 5 September 2008, and is planned to increase to US$6 million by the end of year 2006. Its production plant will be established in Taicang city, Jiangsu province of the PRC. There is no operation since incorporation.

Both C & H HK and J.Y. Plasteel will become subsidiaries of the Company after the transactions. Each of the board of directors of these two subsidiaries will be composed of three members solely appointed by the Company.

Consideration & Terms:

C & H HK

The share capital of US$3 million will be contributed in cash as to US$1.575 million by the Company, as to US$0.9 million by Mr. Lea, as to US$0.45 million by OAKS and as to US$0.075 million by Mr. Chen by the end of November 2005. By the end of year 2005, the share capital will be further increased to US$6 million which will be contributed in cash totally as to US$3.15 million by the Company, as to US$1.8 million by Mr. Lea, as to US$0.9 million by OAKS and as to US$0.15 million by Mr. Chen. Apart from this agreed share capital subscription, there is no further capital commitment or guarantee committed by the joint venture parties.

J.Y. Plasteel

The initial registered capital of US$3.1 million will be paid up by C & H HK by the end of year 2005. Subsequently, the registered capital is planned to increase and be paid up to US$6 million by the end of year 2006. The entire registered capital of J.Y. Plasteel will be funded by C & H HK.

Purpose:

To acquire Tangible and Intangible assets from Mr. Chen and his companies and set up a new production plant in Taicang city, Jiangsu province of the PRC for manufacturing and selling tricycles, bicycles, scooters, infant carts, plastic wheels and inline skates to domestic and export markets except Taiwan.

CONDITION PRECEDENTS

To effect the acquisition of the Tangible and Intangible assets from Mr. Chen and his two companies, three subordinate agreements are entered. Those three interrelated agreements form part of this JV agreement and are inseverable with each other. If one or more of the sale and purchase agreements is held to be void or unenforceable, the remaining agreements and this JV agreement will be terminated. Any prejudiced parties are entitled to rescind this agreement and recover any sum paid.

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LETTER FROM THE BOARD

DETAILS OF THE SALE AND PURCHASE AGREEMENTS

To effect the acquisition of the Tangible and Intangible assets from Mr. Chen and his two companies, three subordinate agreements are entered as follows:

Agreement marked A

Date of the Agreement:

28 September 2005

Parties to the Agreement: J.Y. Plasteel (Buyer) Shanghai Atem (Seller)

Particulars of the Agreement:

US$1.5 million (equivalent to HK$11.7 million) will be paid in cash by J.Y. Plasteel to Shanghai Atem as consideration of the used manufacturing machineries and equipments, moulds and domestic selling distribution channel in PRC totally with value according to the Independent valuation report of RMB20.37 million (equivalent to HK$19.56 million) within the business of tricycles, bicycles, scooters, infant carts, plastic wheels and inline skates for domestic and export markets except Taiwan.

The price will be settled by three different instalments before the completion of relocation of the acquired assets. The first payment US$750,000 will be paid on or before 31 December 2005, the second payment US$375,000 will be paid on or before 31 April 2006 and the final payment US$375,000 will be paid on or before 31 July 2006.

Agreement marked B

Date of the Agreement:

28 September 2005

Parties to the Agreement:

C & H HK (Buyer) Far Great Plastics (Seller)

Particulars of the Agreement:

US$0.75 million (equivalent to HK$5.85 million) will be paid in cash by C & H HK to Far Great Plastics as consideration of the acquired trademarks and business logos related to “Great” and “Far Great” for infinite time limit, moulds and overseas selling distribution channel totally with value according to the Independent valuation report of RMB8.92 million (equivalent to HK$8.56 million) within the business of tricycles, bicycles, scooters, infant carts, plastic wheels and inline skates for domestic market of PRC and overseas markets except Taiwan.

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LETTER FROM THE BOARD

The price will be settled by three different instalments before 30 November 2005. The first payment US$350,000 was made on 3 October 2005 (five days upon signing of this Agreement), the second payment US$150,000 will be paid on or before 31 October 2005 and the final payment US$250,000 will be paid on or before 30 November 2005.

Agreement marked C

Date of the Agreement: 28 September 2005 Parties to the Agreement: C & H HK (Buyer) Mr. Chen (Seller) Particulars of the Agreement: US$0.75 million (equivalent to HK$5.85 million) will be paid in cash by C & H HK to Mr. Chen as consideration of the acquired patents for infinite time limit related to “Great” and “Far Great” totally with value according to the Independent valuation report of RMB7.52 million (equivalent to HK$7.22 million) within the business of tricycles, bicycles, scooters, infant carts, plastic wheels and inline skates for domestic and overseas markets except Taiwan.

The price will be settled by three different instalments before 30 November 2005. The first payment US$350,000 was made on 3 October 2005 (five days upon signing of this Agreement), the second payment US$150,000 will be paid on or before 31 October 2005 and the final payment US$250,000 will be paid on or before 30 November 2005.

Consideration

The consideration has been arrived at after arm’s length negotiations between the parties with reference to the Independent valuation report dated 27 December 2004 performed by independent professional valuer of the prevailing value of the Tangible and Intangible assets and the possible synergistic benefit.

Delivery of the acquired assets

The delivery date for the acquired Tangible assets, excluding inventory of the existing business of Shanghai Atem under the trademark of “Great” and Far Great”, to be transferred to J.Y. Plasteel is 1 January 2006. The Tangible assets will be physically transferred to the new production plant in Taicang city of Jiangsu province, PRC by the end of July 2006. The titles of the acquired Intangible assets will be transferred to C & H HK on 31 December 2005. Starting from 1 January 2006, J.Y. Plasteel will take over the production for sales orders and shipment of the tricycles, bicycles, scooters, infant carts, plastic wheels and inline skates from Shanghai Atem and C & H HK will engage in the trading business of the products to be manufactured by J.Y. Plasteel to overseas markets except Taiwan.

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LETTER FROM THE BOARD

BUSINESS OF THE JOINT VENTURE

C & H HK is used to acquire trademarks, business logos, patents, moulds and overseas selling distribution channel for US$1.5 million from Mr. Chen and Far Great Plastics in Taiwan. Its major business is trading of the products to be manufactured by J.Y. Plasteel to overseas markets except Taiwan after 1 January 2006. Meanwhile, J.Y. Plasteel is used to acquire the used manufacturing machineries and equipments, moulds and selling distribution channel for US$1.5 million from Shanghai Atem within the business of manufacturing tricycles, bicycles, scooters, infant carts, plastic wheels and inline skates for domestic and export markets except Taiwan.

J.Y. Plasteel will complete its own production plant in Taicang city of Jiangsu province, PRC by end of April 2006. After the relocation of all the acquired assets to the new plant by the end of July 2006, the plant will be fully operated in the second half of 2006 with an anticipated annual sales volume over US$15 million, which is based on the actual sales volume of the acquired business of Shanghai Atem and Far Great Plastics for the year 2004. While most of the products will continue to be manufactured under the trademarks “Great” and “Far Great”, J.Y. Plasteel will develop its own design and trademark for a new kind of bicycles. The new factory will specialize in producing tricycles, bicycles, scooters, infant carts, plastic wheels and inline skates for domestic and export markets of Japan, South Korea, Europe and USA.

SOURCE OF FUND

The source of funding for the acquisition for the three sale and purchase agreements marked A, B and C will be funded solely from the paid up issued capital of C & H HK. There is no additional contribution required to be made by the joint venture parties. The Board is confident that the US$3.15 million capital requirement from the Company will be satisfied by its internal resource or bank loan and there is no need to raise any fund for this purpose.

REASONS FOR THE JOINT VENTURE AGREEMENT AND SALE AND PURCHASE AGREEMENTS

The Company is a manufacturing company together with its subsidiaries are principally engaged in the design, development, manufacturing and sales of a wide range of plush stuffed toys as well as steel and plastic toys on OEM and ODM basis.

In view of the fact that sales of the Group’s plastic and steels toys business accounted for only approximately 5% of the Group’s total turnover for the six months period ended 30 June 2005, the Group is focusing on increasing the plastic and steels toys business in the Group’s turnover mix. The well established domestic and overseas selling channels to be acquired from Mr. Chen and his companies under the renowned trademarks of “Great” and “Far Great”, being the trademarks acquired for the products scooters, tricycle and inline skates, have promised steady orders from his patronage overseas customers, especially in Japan, over many years. It provided the timely opportunity for the Company to diversify its domestic and overseas markets as well as plastic and steels products lines. Meanwhile, this joint venture can help the Company to forge a closer strategic business alliance with the strong international business partners so as to further transform the Group from OEM supplier to ODM manufacturer and

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LETTER FROM THE BOARD

further to OBM manufacturer in future. Leveraging on the well established selling distribution network together with the Group’s manufacturing expertise and profound experience in producing tricycles and bicycles type products except inline skates, the Group will synergistically broaden its horizon in the plastic and steel toys business in domestic and overseas markets.

The total cost of construction of the plant, including the cost of 50 years land use right, is estimated approximately US$4 million to be acquired and funded by J.Y. Plasteel and C & H HK through internal resources or bank loan. In the event that any transactions falling within the definition of notifiable transactions of Listing Rules, the Company will make a further announcement and comply with the requirements of the Listing Rules, where necessary, as soon as practicable after signing of the respective agreements or contracts. The construction work will be started in later 2005 and will be completed before the end of April 2006. The new plant will cover a total plant area of 45,000 square metres and the plant building will be about 25,000 square metres. It will be equipped with steel and pipe processing, painting processing, injection processing and product assembly lines. The plant is expected to commence operation by the second half of year 2006. It will specialize in producing tricycles, bicycles, scooters, infant carts, plastic wheels and inline skates mainly for the market of Japan, Korea, Europe and USA.

The Board, including independent non-executive directors, consider that the terms of the JV and Sale and Purchase Agreements are fair and reasonable and believe that the JV is in the best interests of the Company and the Shareholders as whole. To the best of the Board’s knowledge, information and belief having made all reasonable enquiries, Mr. Chen and his companies and the other shareholders of C & H HK are not connected persons of the Company and are third parties independent of the Company and connected persons of the Company.

FINANCIAL EFFECT OF THE TRANSACTIONS

The C & H HK and its subsidiary J.Y. Plasteel will be consolidated in the Company’s consolidated balance sheet as non-wholly owned subsidiaries. Based on the information published in interim results for the six months ended 30 June 2005, the net asset value of the Group will be broadened slightly by less than 4% upon the delivery of the acquired assets by 31 December 2005. Starting from 1 January 2006, the Board expects about US$8.75 million increase in the Group’s turnover and insignificant earnings (based on the actual sales volume of the acquired business of Shanghai Atem and Far Great Plastics for the year 2004) attributable to the acquired assets before the fully operation of the new production plants after 1 August 2006. Save as aforesaid, the Directors confirm that there is no other material impact on the earnings of the Group as a result of the transactions. The Directors also confirm that the transactions will not have material impact on the liabilities of the Group as the transactions will be funded by internal resources or bank loan. In case of funding fully by bank loan, the gearing ratio will merely increase from existing 17.5% to 21.0% (based on the information published in interim results for the six months ended 30 June 2005).

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LETTER FROM THE BOARD

ADDITIONAL INFORMATION

Your attention is also drawn to the information set out in the appendix to this circular.

Yours faithfully By order of the Board Chul Hong Min Director

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GENERAL INFORMATION

APPENDIX

1. RESPONSIBILITY STATEMENT

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

2. DISCLOSURE OF INTERESTS

2.1 Directors’ and chief executives’ interest and short positions in shares, underlying shares and debentures

As at the Latest Practicable Date, the interests and short positions of each Director and chief executive of the Company in the shares, underlying shares and debentures of the Company or any associated corporations (within the meaning of the SFO) which (a) were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions, if any, which the Director is taken or deemed to have under such provisions of the SFO); or (b) were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (c) were required, pursuant to the Appendix 10 of the Listing Rules – Model Code for Securities Transactions by Directors of Listed Companies to be notified to the Company and the Stock Exchange were as follows:

(a) Interests in issued shares

		Number of Ordinary Shares	Number of Ordinary Shares	Number of Ordinary Shares
				Total number	Percentage
	Personal	Family	Corporate	of shares	of total
	interests	interests	interests	held	issued shares
	(Note 1)
The Company
Kyoo Yoon Choi	–	–	455,000,000	455,000,000	68.06%
			(Note 2)
Chul Hong Min	3,900,000	–	–	3,900,000	0.58%
Tae Sub Choi	585,000	–	–	585,000	0.09%
Young M. Lee	1,740,000	–	–	1,740,000	0.26%
C & H Co., Ltd.
Kyoo Yoon Choi	189,917	124,073	–	313,990	59.39%
		(Note 3)
Chul Hong Min	14,212	–	–	14,212	2.69%
Tae Sub Choi	5,685	–	–	5,685	1.08%
Gina World Co., Ltd.
Kyoo Yoon Choi	1,546,809		3,905,439	5,452,248	69.90%
	(Note 4)		(Note 5)

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GENERAL INFORMATION

APPENDIX

Notes:

1. The shares are registered under the names of the directors and chief executive of the Company who are the beneficial owners.

2. Kyoo Yoon Choi in his own name holds approximately 35.92% of the issued share capital of C & H Co., Ltd., and together with his wife, Woul Hee Cha, , hold approximately 59.39% of the issued share capital of C & H Co., Ltd. which owned 382,850,000 shares in the Company. In addition, Kyoo Yoon Choi beneficially owns 100% of interest of Uni-Link Technology Limited which owned 72,150,000 shares of the Company.

3. The wife of Mr. Kyoo Yoon Choi, Woul Hee Cha, holds approximately 23.47% of the issued share capital of C & H Co., Ltd.

4. Kyoo Yoon Choi holds approximately 19.83% of the issued share capital of Gina World Co., Ltd., which is a subsidiary of C & H Co., Ltd. and is listed on the Korea Securities Dealers Automated Quotation market in Korea.

5. Kyoo Yoon Choi in his own name holds approximately 35.92% of the issued share capital of C & H Co., Ltd., and together with his wife, Woul Hee Cha, hold approximately 59.39% of the issued share capital of C & H Co., Ltd. which owned 3,905,439 shares representing 50.07% of issued shares capital of Gina World Co., Ltd..

6. (b) Interests in underlying Shares (Options granted under the Company’s share option scheme)

		Period during	Exercise	No. of	Total
Name of	Date	which options	price per	options	underlying	Approximate
Director	granted	exercisable	share	outstanding	Shares	percentage
Chul Hong Min	7 February	7 February 2003	HK$1.18	2,600,000	2,600,000	0.39%
	2002	to 7 February
		2012
Young M. Lee	7 February	7 February 2003	HK$1.18	1,360,000	1,360,000	0.20%
	2002	to 7 February
		2012
Tae Sub Choi	15 April	15 April 2004	HK$1.43	1,365,000	1,365,000	0.20%
	2003	to 15 April
		2013
James Wang	7 February	7 February 2003	HK$1.18	520,000	520,000	0.08%
	2002	to 7 February
		2012

Save as disclosed in this circular, as at the Latest Practicable Date, none of Directors and chief executives of the Company has any interest or short position in the shares, underlying shares and debentures of the Company or any associated corporations (within the meaning of the SFO)

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GENERAL INFORMATION

APPENDIX

which (a) were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which the Director is taken or deemed to have under such provisions of the SFO); or (b) were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (c) were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Companies to be notified to the Company and the Stock Exchange.

2.2 Interests in services contracts

As at the Latest Practicable Date, none of the Directors had entered into any service contract with the Company or any member of the Group which is not expiring or determinable by the Company within one year without payment of compensation other than statutory compensation.

3. SUBSTANTIAL SHAREHOLDERS

So far as is known to the Directors, the following parties, as at the Latest Practicable Date, other than a Director or chief executive of the Company, had an interest or short position in the Shares and underlying Shares which would fall to be disclosed to the Company under the provisions of Division 2 and 3 of Part XV of the SFO, or who is, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meeting of any other member of the Group:

				Approximate
		Name of	Number of	percentage of
Name of Shareholder		Group member	Shares held	shareholding
C & H Co., Ltd.	(Note 1)	Company	382,850,000	57.27%
Uni-Link Technology Limited	(Note 1)	Company	72,150,000	10.79%
Arisaig Greater China Fund		Company	45,318,000	6.78%
Arisaig Partners (Maurititus) Limited	(Note 2)	Company	45,318,000	6.78%
Lindsay William Ernest Cooper	(Note 3)	Company	45,318,000	6.78%

Notes:

1. Kyoo Yoon Choi, being a director of C & H Co., Ltd., together with his wife, Woul Hee Cha, hold approximately 59.39% of the issued share capital of C & H Co., Ltd. and Kyoo Yoon Choi beneficially owns 100% of the issued share capital of Uni-Link Technology Limited. Kyoo Yoon Choi is considered to have deemed interests in the 455,000,000 ordinary shares as to approximately 68.06% of the issued shares of the Company.

2. Arisaig Partners (Mauritius) Limited is the fund manager of Arisaig Greater China Fund.

3. Lindsay William Ernest Cooper is deemed interested through his indirect 33.33% beneficial interest in Arisaig Partners (Mauritius) Limited.

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GENERAL INFORMATION

APPENDIX

Save as disclosed in this circular, the Directors are not aware of any person as at the Latest Practicable Date had any interest or short position in the Shares and underlying Shares which would fall to be disclosed to the Company under the provisions of Division 2 and 3 of Part XV of the SFO, or who is, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any member of the Group.

4. LITIGATION

So far as the Directors are aware, as at the Latest Practicable Date, no member of the Group was engaged in any litigation or arbitration of material importance and no litigation or claim of material importance was known to the Directors to be pending or threatened against any member of the Group.

5. COMPETING INTERESTS

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

6. MISCELLANEOUS

• (a) The registered office and principal place of business of the Company is at 8th Floor, Tower 5, China HK City, 33 Canton Road, Tsimshatsui, Kowloon, Hong Kong.

• (b) The share registrar and transfer office of the Company in Hong Kong is Abacus Share Registrars Limited at G/F., Bank of East Asia Harbour View Centre, 56 Glocester Road, Wanchai, Hong Kong.

• (c) The company secretary and qualified accountant of the Company is Mr Wong Wai Sing, Wilson. He is a fellow member of Hong Kong Institute of Certified Public Accountants.

• (d) The English text of this circular shall prevail over the Chinese text in case of inconsistency.

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