KLN Logistics Group Limited - AGM Information 2012

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold all your shares in Vitasoy International Holdings Limited (the “Company”), you should at once hand this circular and the accompanying form of proxy to the purchaser or to the bank, stockbroker or other agent through whom the sale was effected for transmission to the purchaser.

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

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(Incorporated in Hong Kong with limited liability) (Stock code: 345)

PROPOSALS FOR

GENERAL MANDATES TO ISSUE AND REPURCHASE SHARES,

RE-ELECTION OF DIRECTORS,

GRANT OF OPTIONS TO A DIRECTOR AND SUBSTANTIAL SHAREHOLDER, ADOPTION OF NEW SHARE OPTION SCHEME AND NOTICE OF ANNUAL GENERAL MEETING

A notice convening the Annual General Meeting of the Company to be held at Harcourt Room, Lower Lobby, Conrad Hong Kong, Pacific Place, 88 Queensway, Hong Kong on Tuesday, 28th August, 2012 at 3:00 p.m., at which the above proposals will be considered, is being dispatched to shareholders together with this circular. Whether or not you are able to attend the Annual General Meeting, you are required to complete and return the form of proxy enclosed with the Annual Report that is being dispatched to the shareholders, in accordance with the instructions printed thereon as soon as possible and in any event not less than 48 hours before the time of the Annual General Meeting. Completion of the form of proxy shall not preclude you from attending and voting at the Annual General Meeting should you so wish.

19th July, 2012

	Page
DEFINITIONS..................................................................................................................	1
LETTER FROM THE BOARD
Introduction...............................................................................................................	4
General Mandate to Repurchase Shares ................................................................	5
General Mandate to Issue Shares and Extension of Share Issue Mandate .......	5
Re-election of Directors ..........................................................................................	5
Grant of Options to a Director and Substantial Shareholder..............................	7
Proposed Adoption of the New Share Option Scheme and
Cancellation of the Existing Share Option Scheme ........................................	11
Voting by way of Poll ..............................................................................................	12
Action to be taken ....................................................................................................	12
Responsibility Statement ........................................................................................	12
Recommendation ......................................................................................................	13
APPENDIX I – REPURCHASE MANDATE
EXPLANATORY STATEMENT ..........................................	14
APPENDIX II – LETTER FROM THE INDEPENDENT
NON-EXECUTIVE DIRECTORS.......................................	16
APPENDIX III – PRINCIPAL TERMS OF
THE NEW SHARE OPTION SCHEME............................	17
NOTICE OF ANNUAL GENERAL MEETING.........................................................	28

– i –

DEFINITIONS

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

“AGM” or the annual general meeting of the Company to be held at Harcourt Room, “Annual General Meeting” Lower Lobby, Conrad Hong Kong, Pacific Place, 88 Queensway, Hong Kong on Tuesday, 28th August, 2012 at 3:00 p.m. “Associates” has the meaning ascribed to such term from time to time in the Listing Rules

“Board” the board of Directors “business day” any day on which the Stock Exchange is open for the business of dealing in securities listed thereon

“Companies Ordinance” the Companies Ordinance (Chapter 32 of the Laws of Hong Kong)

“Company” Vitasoy International Holdings Limited (維他奶國際集團有限公司), a company incorporated in Hong Kong whose shares are listed on the Stock Exchange “connected person” has the meaning ascribed to such term from time to time in the Listing Rules and “connected persons” shall be construed accordingly “Directors” the directors, including independent non-executive directors of the Company “Eligible Participants” any Director, executive or employee of the Company or its subsidiaries “Existing Options” the Options which have been granted to Mr. Winston Yau-lai LO under the Existing Share Option Scheme and which remain outstanding as at the Latest Practicable Date

“Existing Share Option the Company’s existing share option scheme adopted on 4th September, Scheme” 2002 “Grantees” Eligible Participants who accept the offer of options in accordance with the terms of the New Share Option Scheme or their personal representatives “Group” the Company and its subsidiaries “HK$” Hong Kong dollars, the lawful currency of Hong Kong “Hong Kong” The Hong Kong Special Administrative Region of the People’s Republic of China

– 1 –

DEFINITIONS

“Independent Shareholders” in the case of the grant of Options to Mr. Winston Yau-lai LO, the Shareholders other than Mr. Winston Yau-lai LO and his Associate(s) and the connected persons
“Latest Practicable Date” 12th July, 2012, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained herein
“Listing Rules”

Rules Governing the Listing of Securities on the Stock Exchange

“New Share Option Scheme” the new share option scheme proposed to be approved by the Shareholders at the AGM, a summary of the principal terms of which is set out in Appendix III to this circular

“Options” options to subscribe for Shares granted pursuant to the Existing Share Option Scheme and for the time being subsisting

“Proposed Date of Grant” 31st August, 2012 or such other date as the Board may determine
“Proposed Grant”

subject to the Independent Shareholders’ approval at the AGM, the proposed grant of the Proposed Options to Mr. Winston Yau-lai LO under the Existing Share Option Scheme on the Proposed Date of Grant, the terms of which are set out in the sub-section headed “Principal Terms of the Proposed Grant” under the section headed “Grant of Options to a Director and Substantial Shareholder” of the “Letter from the Board” in this circular

“Proposed Options” the options proposed to be granted to Mr. Winston Yau-lai LO under the Existing Share Option Scheme, entitling him to subscribe for 2,822,000 Shares

“Repurchase Mandate” a general mandate to be given to the Directors to repurchase Shares not exceeding 10% of the aggregate nominal amount of the issued share capital of the Company as at the date of passing of the relevant resolution to approve such mandate
“SFO”

Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)

“Shares”

shares of HK$0.25 each in the capital of the Company

“Share Issue Mandate”
a general and unconditional mandate to be given to the Directors to issue, allot and deal with Shares not exceeding 20% of the aggregate nominal amount of the issued share capital of the Company as at the date of passing of the relevant resolution to approve such mandate

“Shareholders”

holders of Shares

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DEFINITIONS

“Stock Exchange” The Stock Exchange of Hong Kong Limited “Subscription Price” the price per Share at which the grantee of the options may subscribe for the Shares on the exercise of an option under the New Share Option Scheme

“subsidiary” a subsidiary for the time being of the Company within the meaning of the Companies Ordinance and “subsidiaries” shall be construed accordingly

“Supplementary Guidance” the supplementary guidance attached to the letter from the Stock Exchange dated 5th September 2005 and any guidance and interpretation issued from time to time by the Stock Exchange relating to share option schemes

“Takeovers Code” The Hong Kong Codes on Takeovers and Mergers “%” per cent

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LETTER FROM THE BOARD

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(Incorporated in Hong Kong with limited liability)

(Stock code: 345)

Directors:–

Mr. Winston Yau-lai LO (Executive Chairman)

Dr. the Hon. Sir David Kwok-po LI (Independent Non-executive Director)

Mr. Iain F. BRUCE (Independent Non-executive Director)

Mr. Jan P. S. ERLUND (Independent Non-executive Director)

Registered Office:– No.1 Kin Wong Street, Tuen Mun, New Territories, Hong Kong

Ms. Valiant Kin-piu CHEUNG (Independent Non-executive Director)
Ms. Myrna Mo-ching LO (Non-executive Director)
Ms. Yvonne Mo-ling LO (Non-executive Director)
Mr. Laurence P. EISENTRAGER (Executive Director)

19th July, 2012

To the Shareholders

Dear Sir or Madam,

PROPOSALS FOR

GENERAL MANDATES TO ISSUE AND REPURCHASE SHARES,

RE-ELECTION OF DIRECTORS,

GRANT OF OPTIONS TO A DIRECTOR AND SUBSTANTIAL SHAREHOLDER,

ADOPTION OF NEW SHARE OPTION SCHEME AND

NOTICE OF ANNUAL GENERAL MEETING

INTRODUCTION

At the AGM, resolutions will be proposed to approve the grant of the Repurchase Mandate and the Share Issue Mandate, the extension of the Share Issue Mandate, the re-election of Directors, the proposed grant of Options to a Director and substantial Shareholder of the Company and the adoption of the New Share Option Scheme.

The purpose of this circular is to provide you with information regarding the above proposals and to seek the approval of Shareholders for the resolutions relating to such matters at the AGM.

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LETTER FROM THE BOARD

GENERAL MANDATE TO REPURCHASE SHARES

An ordinary resolution will be proposed at the AGM to approve the grant of a Repurchase Mandate to the Board which will continue until the first to occur of the following: the conclusion of the next annual general meeting of the Company following the passing of the resolution (unless the mandate is renewed at such meeting), or the expiration of the period within which the next annual general meeting of the Company is required by the Companies Ordinance or the Company’s Articles of Association to be held, or the time when the mandate is revoked or varied by an ordinary resolution of the Shareholders in general meeting. The Shares which may be repurchased pursuant to the Repurchase Mandate is limited to a maximum of 10% of the issued share capital of the Company at the date of the passing of the ordinary resolution approving the Repurchase Mandate. Subject to the passing of the ordinary resolution to approve the Repurchase Mandate and on the basis that the number of issued Shares as at the Latest Practicable Date was 1,022,441,500 Shares, and assuming that no further Shares will be issued or repurchased prior to the AGM, the Company will be allowed to repurchase a maximum of 102,244,150 Shares.

GENERAL MANDATE TO ISSUE SHARES AND EXTENSION OF SHARE ISSUE MANDATE

At the AGM, an ordinary resolution will be proposed to approve the grant to the Board of a Share Issue Mandate to issue further new Shares representing up to 20% of the aggregate nominal amount of the share capital of the Company in issue on the date such resolution is passed. Subject to the passing of the ordinary resolution to approve the Share Issue Mandate and on the basis that the number of issued Shares as at the Latest Practicable Date was 1,022,441,500 Shares and assuming that no further Shares will be issued or repurchased prior to the AGM, the Company will be allowed to issue a maximum of 204,488,300 Shares. In addition, an ordinary resolution will also be proposed to authorise an extension of the Share Issue Mandate to be granted to the Board to issue new Shares during the period up to the next annual general meeting of the Company or such earlier period as stated in such resolution by adding to it the number of Shares repurchased under the Repurchase Mandate.

RE-ELECTION OF DIRECTORS

Two Directors will retire from office by rotation at the AGM pursuant to Article 104 of the Company’s Articles of Association and these Directors, being eligible, will offer themselves for re-election. The details of those two Directors are as follows:

Dr. the Hon. Sir David Kwok-po LI , aged 73, was appointed an Independent Non-executive Director of the Company in 1994. Sir David holds Honorary Doctorate Degrees in Law from the University of Cambridge, University of Warwick and The University of Hong Kong. He also holds Honorary Doctorate Degrees from Lingnan University (Social Sciences), Trinity College, Hartford (Humane Letters), Edinburgh Napier University (Business Administration), Macquarie University (Letters honoris causa) and Imperial College London (Science). He is Fellow of the Chartered Institute of Bankers, the Institute of Chartered Accountants in England and Wales and the Australian Society of Certified Practicing Accountants. Sir David is the chairman and chief executive of The Bank of East Asia, Limited, a company listed on the Hong Kong Stock Exchange. He is the chairman of The Chinese Banks’ Association, Limited and The Hong Kong Management Association. He is a member of the Legislative Council of the Hong Kong Special Administrative Region. He is also a member of the Banking Advisory Committee and the Council of the Treasury Markets Association. Sir David is a director of Hong Kong Interbank Clearing Limited and The

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LETTER FROM THE BOARD

Hong Kong Mortgage Corporation Limited. He is also a director of China Overseas Land & Investment Limited, Guangdong Investment Limited, The Hong Kong and China Gas Company Limited, The Hongkong and Shanghai Hotels, Limited, PCCW Limited, San Miguel Brewery Hong Kong Limited, SCMP Group Limited, AFFIN Holdings Berhad and CaixaBank S.A. (formerly known as Criteria CaixaCorp, S.A.), all being companies listed either in Hong Kong or overseas. He was a director of COSCO Pacific Limited, a company listed in Hong Kong.

Save as disclosed above, Sir David is not related to any Director, senior management or substantial or controlling shareholder of the Company. Sir David has not held any positions with the Company and other members of the Group, and has not held any directorships in other listed public companies in the last three years.

As at the Latest Practicable Date, Sir David had a personal interest of 6,000,000 shares in the Company (representing 0.59% of the issued share capital of the Company) within the meaning of Part XV of the SFO as recorded in the register required to be kept under section 352 of the SFO.

As an Independent Non-executive Director, Sir David has not entered into any service contract with the Company.

Sir David is appointed for a specific term of not more than three years and is subject to retirement by rotation and re-election at the AGM in accordance with Article 104 of the Articles of Association. The fee payable to Sir David is determined by the Board with reference to his duties and responsibilities with the Company and the market benchmark. The Director’s fee of Sir David as an Independent Non-executive Director, the chairman of the Remuneration and Nomination Committee and a member of the Audit and Corporate Governance Committee will be HK$338,993 for the year of 2012/2013.

Sir David has served as an Independent Non-executive Director of the Company for more than nine years. In addition to his confirmation of independence pursuant to Rule 3.13 of the Listing Rules, Sir David continues to demonstrate the attributes of an independent non-executive director and there is no evidence that his tenure has had any impact on his independence. The Board is of the opinion that Sir David remains independent and believes that his profound knowledge and experience in the field of banking, finance, commerce and industry particularly in Mainland China would continue to generate significant contribution to the Company and the Shareholders as a whole.

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

Mr. Jan P. S. ERLUND , aged 73, was appointed an Independent Non-executive Director of the Company in 2006. He graduated with a Master degree in Law from the University of Aarhus and studied at the Nordic Institute for Maritime Law, the University of Oslo. Mr. Erlund was admitted to the Danish Bar in 1968 and was admitted to the Supreme Court in 1976. Mr. Erlund is now a partner in Copenhagen Chambers focusing on Danish and international arbitration. He was a partner of Gorrissen Federspiel Kierkegaard, a law firm in Copenhagen, Denmark. He was the president of the Danish Bar and Law Association, president of the Danish Maritime Law Association and chairman of the Maritime and Transport

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LETTER FROM THE BOARD

Committee of the International Bar Association. Mr. Erlund was the chairman of the board of directors of The East Asiatic Company Ltd. A/S and Dansk Skovselskab A/S, deputy chairman of ERRIA A/S and a member of the board of directors of PSA International Pte. Ltd., all being companies listed overseas.

Save as disclosed above, Mr. Erlund is not related to any Director, senior management or substantial or controlling shareholder of the Company. Mr. Erlund has not held any positions with the Company and other members of the Group, and has not held any directorships in other listed public companies in the last three years.

As at the Latest Practicable Date, Mr. Erlund had a personal interest of 100,000 shares in the Company (representing 0.01% of the issued share capital of the Company) within the meaning of Part XV of the SFO as recorded in the register required to be kept under section 352 of the SFO.

As an Independent Non-executive Director, Mr. Erlund has not entered into any service contract with the Company.

Mr. Erlund is appointed for a specific term of not more than three years and is subject to retirement by rotation and re-election at the AGM in accordance with Article 104 of the Articles of Association. The fee payable to Mr. Erlund is determined by the Board with reference to his duties and responsibilities with the Company and the market benchmark. The Director’s fee of Mr. Erlund as an Independent Non-executive Director, the member of the Remuneration and Nomination Committee and the Audit and Corporate Governance Committee will be at an amount of HK$330,725 for the year of 2012/2013.

GRANT OF OPTIONS TO A DIRECTOR AND SUBSTANTIAL SHAREHOLDER

Pursuant to Rule 17.04 of the Listing Rules, the grant of options to a Director must be approved by the independent non-executive Directors. Furthermore, where any grant of option(s) to a substantial Shareholder or an independent non-executive Director, or any of their respective Associate, would result in the Shares issued and to be issued upon exercise of all options already granted and to be granted (including options exercised, cancelled and outstanding) to such person in the 12-month period up to and including the date of such grant:

(i) represent in aggregate over 0.1% of the Shares in issue; and
(ii) have an aggregate value, based on the closing price of the Shares at the date of each grant, in excess of HK$5 million,

such further grant of options must be separately approved by the Independent Shareholders in general meeting. All connected persons of the Company must abstain from voting in favour of the resolution to approve such grant at the general meeting.

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LETTER FROM THE BOARD

It is proposed that Options in excess of 0.1% of the total Shares in issue and having an aggregate value in excess of HK$5 million (based on the closing price of the Shares at the Proposed Date of Grant) be granted to Mr. Winston Yau-lai LO. As Mr. Winston Yau-lai LO is a Director and substantial Shareholder, the Proposed Grant falls within Rule 17.04 of the Listing Rules.

By resolutions in writing dated 26th June, 2012 signed by all Directors (with Mr. Winston Yau-lai LO abstaining from voting), including all independent non-executive Directors (“Written Board Resolutions”), the Proposed Grant was approved, subject to the Independent Shareholders’ approval at the AGM. Pursuant to the Existing Share Option Scheme, subject to the approval of the Proposed Grant by the Independent Shareholders at the AGM, the date of the Board meeting approving the Proposed Grant shall be taken as the date of grant for the purpose of calculating the exercise price of the Proposed Options. Under the Articles of Association of the Company, a resolution in writing signed by all the Directors shall be as valid and effectual as if it had been passed at a meeting of the Directors duly convened and held. Thus, for the purpose of calculating the exercise price of the Proposed Options only, 26th June, 2012 shall be taken as the date of grant.

A resolution to approve the Proposed Grant will be proposed at the AGM and votes in respect of such resolution shall be taken on a poll. Mr. Winston Yau-lai LO and his Associates (collectively, controlled or were entitled to exercise the control of approximately 14.80% of the voting right of the Company as at the Latest Practicable Date) who have material interest in the Proposed Grant, and all connected persons of the Company are required to abstain from voting in favour of the resolution to approve the Proposed Grant at the AGM.

As at the Latest Practicable Date, no notice has been received by the Company from any connected person of the Company of his, her or its intention to vote against the resolution approving the grant of the Proposed Options to be proposed at the AGM.

Subject to the approval of the Independent Shareholders at the AGM, the Board will offer the Proposed Options to Mr. Winston Yau-lai LO on the Proposed Date of Grant.

The Company will comply with all disclosure requirements under the Listing Rules, including the issue of an announcement in respect of the poll result of the resolution to approve the Proposed Grant at the AGM.

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LETTER FROM THE BOARD

Principal Terms of the Proposed Grant

The principal terms of the Proposed Grant are as follows:

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Amount
payable on
acceptance
Number of of the
Proposed Proposed Proposed Exercise
Date of Grant Options Options price Exercise period
(Note 1) (Note 2)
Mr. Winston Yau-lai LO 31st August, 2,822,000 HK$10 HK$6.400 705,500 Shares, exercisable between
2012 per Share 31/8/2013 and 30/8/2022
705,500 Shares, exercisable between
31/8/2014 and 30/8/2022
705,500 Shares, exercisable between
31/8/2015 and 30/8/2022
705,500 Shares, exercisable between
31/8/2016 and 30/8/2022
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Notes:

2,822,000 Shares to be issued upon exercise, representing approximately 0.28% of the total issued Shares as at the Latest Practicable Date.
Being the highest of (i) the closing price of HK$6.400 per Share as stated in the daily quotations sheet of the Stock Exchange on 26th June, 2012, being the date of the Written Board Resolutions; (ii) the average closing price of HK$6.266 per Share as stated in the daily quotations sheet of the Stock Exchange for the five business days immediately preceding 26th June, 2012, being the date of the Written Board Resolutions; and (iii) the nominal value of the Shares.

The Shares to be allotted upon the exercise of the Proposed Options shall rank pari passu in all respects with and shall have the same voting rights, rights in respect of any dividend or other distributions paid or made on or after the date of issue, rights of transfer and other rights, including those arising on liquidation of the Company as attached to the Shares in issue on the date of such allotment and will be subject to all the provisions of the Articles of Association of the Company for the time being in force.

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LETTER FROM THE BOARD

Reasons for the Proposed Grant

Mr. Winston Yau-lai LO is the Executive Chairman of the Group. The Options proposed to be granted to him form part of the offer of Options to the Group’s senior management staff in recognition of their past contribution to the business performance of the Group and as an incentive for their continuing commitment and contribution to the Group in the future. Such offer of the Proposed Options was made on the recommendation of an independent consultant. No performance targets have to be achieved before the Proposed Options can be exercised.

Information on Proposed Grant

The particulars of the Options already granted to Mr. Winston Yau-lai LO under the Existing Share Option Scheme which remained outstanding as at the Latest Practicable Date are set out below.

Mr. Winston Yau-lai LO

Total number of outstanding	Percentage of the total
Options as at the	number of issued Shares as at the
Latest Practicable Date	Latest Practicable Date
13,384,000	1.31%

As at the Latest Practicable Date, Mr. Winston Yau-lai LO was interested in 151,320,600 Shares (other than his interests in the Existing Options) within the meaning of Part XV of the SFO. Upon the full exercise of the Existing Options and the Proposed Options, the equity interests of Mr. Winston Yau-lai LO in the Company will be as follows:

Mr. Winston Yau-lai LO

Percentage of number Percentage shareholding of issued Shares upon upon exercise in full of the exercise in full of Existing Options and the Percentage of number the Existing Options Proposed Options to the Number of issued of issued Shares and the Proposed enlarged issued share Shares Mr. Winston interested to the Options to the capital of the Company Yau-lai LO is total number of total number of as enlarged by the interested issued Shares issued Shares exercise in full of the as at the Latest as at the Latest as at the Latest Existing Options and Practicable Date Practicable Date Practicable Date the Proposed Options (Note) 151,320,600 14.80% 16.38% 16.13%

Note:

As at the Latest Practicable Date, Mr. Winston Yau-lai LO was interested or deemed to be interested in the Shares (other than interests in Existing Options) within the meaning of the SFO, as to 49,939,800 Shares (being Shares beneficially owned by him), 28,702,500 Shares (being Shares held by his wife) and 72,678,300 Shares (being Shares held under a charitable trust of which Mr. Winston Yau-lai LO is a trustee).

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LETTER FROM THE BOARD

PROPOSED ADOPTION OF THE NEW SHARE OPTION SCHEME AND CANCELLATION OF THE EXISTING SHARE OPTION SCHEME

The Board proposes to replace the Existing Share Option Scheme, which will expire on 3rd September, 2012, by the New Share Option Scheme. A proposal will be made at the AGM to seek Shareholders’ approval of the adoption of the New Share Option Scheme and the cancellation of the Existing Share Option Scheme. A summary of the principal terms of the New Share Option Scheme is set out in Appendix III to this circular. The purpose of the New Share Option Scheme is to recognise and acknowledge the contributions which the Eligible Participants have made or will make to the Group. As at the Latest Practicable Date, the number of outstanding options granted under the Existing Share Option Scheme is 32,448,000 Shares. Each of such outstanding options is granted with an exercisable period of nine (9) years after the date of grant and subject to a vesting scale in tranches of 25% each per annum starting from the first anniversary of the date of grant and being fully vested on the fourth anniversary of the date of grant. Subject to their respective exercisable periods, such outstanding options will still be valid and exercisable after the expiration of the Existing Share Option Scheme and the adoption of the New Share Option Scheme.

The New Share Option Scheme does not specify a minimum period for which an option must be held nor a performance target which must be achieved before an option can be exercised. However, at the time of the grant of the options, the Company may specify such minimum period or performance target and the terms of the New Share Option Scheme provided that the Board may determine, at its sole discretion, such terms(s) on the grant of an option. The basis for determination of the exercise price is also specified in the terms of the New Share Option Scheme. Subject to the Listing Rules, the Board has the discretion in determining the exercise price in respect of any option. The Directors consider that the aforesaid criteria and rules will enable the Directors to properly operate and regulate the New Share Option Scheme and thus help serve the purpose of the New Share Option Scheme and to preserve the value of the Company.

The New Share Option Scheme is conditional upon the passing of an ordinary resolution by the Shareholders approving, inter alia, (i) the adoption of the New Share Option Scheme and authorising the Board to grant options to subscribe for Shares thereunder and to allot and issue Shares pursuant to the exercise of any options granted under the New Share Option Scheme; and (ii) the cancellation of the Existing Share Option Scheme. The grant of options under the New Share Option Scheme is conditional upon the Listing Committee of the Stock Exchange granting the approval for the listing of, and permission to deal in, the Shares which may fall to be issued upon the exercise of subscription rights attaching to the options to be granted under the New Share Option Scheme.

The Directors believe that any calculation of the fair value of the options as at the Latest Practicable Date before the options are actually granted would not be meaningful and would be misleading to Shareholders, because any valuation of the fair value of the options would have to be based on the circumstances as at the Latest Practicable Date, but options would not be granted until the New Share Option Scheme is approved, which will be after the Latest Practicable Date. Given also the fact that there are various factors relevant to each individual grant (including vesting periods), such valuation figure cannot be relied upon as being an accurate measure of the fair value of all options that may, in the future, be granted.

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LETTER FROM THE BOARD

Subject to obtaining of the Shareholders’ approval of the adoption of the New Share Option Scheme pursuant to Rule 17.03 of the Listing Rules, the total number of Shares which may be issued upon the exercise of all the options to be granted under the New Share Option Scheme and any other share option schemes of the Company must not, in aggregate, exceed 10% of the total issued Shares as at the date of approval of the resolution to approve the adoption of the New Share Option Scheme. Based on 1,022,441,500 Shares in issue as at the Latest Practicable Date and assuming that there is no change in the issued share capital of the Company before the AGM, the maximum number of Shares to be issued upon the exercise of options that may be granted under the New Share Option Scheme under such initial mandate limit is 102,244,150 Shares. The Company may seek approval of the Shareholders in general meetings to refresh the 10% initial mandate limit. Notwithstanding that the mandate limit may be refreshed, the Board shall not grant options which would result in the maximum aggregate number of Shares which may be issued upon exercise of all the outstanding options granted but yet to be exercised under the New Share Option Scheme and any other share option schemes of the Company which entitle the holders to acquire or subscribe for Shares exceeding, in aggregate, 30% of the issued share capital of the Company from time to time.

There is no trustee regime under the New Share Option Scheme. As such, none of the Directors is a trustee of the New Share Option Scheme or has any direct or indirect interest in any trustee.

The full terms of the New Share Option Scheme can be inspected at the registered office of the Company at No.1 Kin Wong Street, Tuen Mun, New Territories, Hong Kong during normal business hours from the date of this circular up to and including the date of the AGM and at the AGM.

VOTING BY WAY OF POLL

Pursuant to Rule 13.39(4) of the Listing Rules, all votes at the AGM will be taken by poll and the Company will announce the results of the poll in the manner prescribed under Rule 13.39(5) of the Listing Rules.

ACTION TO BE TAKEN

A form of proxy for use at the AGM is enclosed. Whether or not you intend to attend at the AGM, you are requested to complete and return the form of proxy to the registered office of the Company in accordance with the instructions printed thereon as soon as possible and in any event not less than 48 hours before the time fixed for the meeting. The completion and return of the form of proxy will not preclude you from attending and voting in person at the AGM if you so wish.

RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this circular misleading.

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LETTER FROM THE BOARD

RECOMMENDATION

The Board believes that the grant of the Repurchase Mandate and the Share Issue Mandate, the extension of the Share Issue Mandate, the re-election of Directors and the adoption of the New Share Option Scheme are in the best interests of the Company and the Shareholders as a whole. The independent non-executive Directors believe that the proposed grant of the Proposed Options to Mr. Winston Yau-lai Lo, a Director and substantial Shareholder, is in the best interests of the Company and the Shareholders as a whole. Accordingly, the Board recommends the Shareholders (including the Independent Shareholders) to vote in favour of the resolutions to be proposed at the AGM.

Your attention is drawn to the “Letter from the Independent Non-executive Directors” in Appendix II of this circular, which sets out the recommendation of the independent non-executive Directors to the Independent Shareholders as to voting in relation to the resolution to be proposed at the AGM for the approval of the Proposed Grant.

By Order of the Board Laurence P. EISENTRAGER Executive Director

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APPENDIX I REPURCHASE MANDATE EXPLANATORY STATEMENT

This Appendix serves as an explanatory statement, as required by the Listing Rules, to provide requisite information to you for your consideration of the Repurchase Mandate and should be read in conjunction with the Letter from the Board on pages 4 to 13 of this circular.

1. SHARE CAPITAL

As at the Latest Practicable Date, the issued share capital of the Company comprised 1,022,441,500 Shares.

Subject to the passing of the ordinary resolution to approve the Repurchase Mandate and on the basis that no further Shares will be issued or repurchased prior to the AGM, the Company will be allowed under the Repurchase Mandate to repurchase a maximum of 102,244,150 Shares.

2. FUNDING OF REPURCHASES

Repurchases would be funded entirely from the Company’s available cash flow or working capital facilities legally available for the purpose and in accordance with the laws of Hong Kong and the Memorandum and Articles of Association of the Company.

In the event that the proposed Share repurchases were to be carried out in full at any time during the proposed repurchase period there could be a material adverse impact on the working capital or gearing position of the Company (as compared with the position disclosed in the Company’s latest published audited consolidated accounts for the year ended 31st March, 2012). However, the Board does not propose to exercise the Repurchase Mandate to such an extent as would, in the circumstances, have a material adverse effect on the working capital requirements of the Company or the gearing levels which, in the opinion of the Board, are from time to time appropriate for the Company.

3. SHARE PRICES

The highest and lowest prices at which the Shares have traded on the Stock Exchange in each of the previous twelve months prior to the Latest Practicable Date were as follows:-

	Per Share
	Highest	Lowest
	HK$	HK$
July 2011	6.33	5.68
August 2011	5.77	5.00
September 2011	5.70	4.99
October 2011	5.76	4.75
November 2011	5.91	5.12
December 2011	5.77	5.40
January 2012	5.94	5.51
February 2012	6.20	5.80
March 2012	6.35	5.86
April 2012	6.09	5.62
May 2012	5.90	5.40
June 2012	6.58	5.65
July 2012_(up to and including the Latest Practicable Date)_	6.82	6.45

– 14 –

REPURCHASE MANDATE EXPLANATORY STATEMENT

APPENDIX I

4. GENERAL

The Board has undertaken to the Stock Exchange to exercise the power of the Company to make repurchases pursuant to the ordinary resolution proposed at the AGM in accordance with the Listing Rules and the laws of Hong Kong.

If, on the exercise of the power to repurchase Shares pursuant to the Repurchase Mandate, a Shareholder’s proportionate interest in the voting rights of the Company increases, such increase will be treated as an acquisition for the purposes of the Takeovers Code. Accordingly, a Shareholder, or a group of Shareholders acting in concert, could obtain or consolidate control of the Company and become obliged to make a mandatory offer under Rule 26 of the Takeovers Code. To the best of the knowledge of the Directors having made all reasonable enquiries, as at the Latest Practicable Date, Mr. Winston Yau-lai LO and his immediate family were interested in 82,684,300 Shares, representing approximately 8% of the issued share capital of the Company, which together represented the single largest shareholding in the Company as at that date. In the event that the Repurchase Mandate is exercised in full, the interest of Mr. Winston Yau-lai LO and his immediate family would be increased to approximately 9% of the issued share capital of the Company. As such, an exercise of the Repurchase Mandate in full will not result in Mr. Winston Yau-lai LO becoming obliged to make a mandatory offer under the Takeovers Code. The Board is not aware of any consequences which may arise under the Takeovers Code as a result of any repurchase made under the Repurchase Mandate.

None of the Directors nor, to the best of their knowledge having made all reasonable enquiries, their Associates, have any present intention to sell any Shares to the Company under the Repurchase Mandate if such Repurchase Mandate is approved by the Shareholders.

No connected persons has notified the Company that he/she has a present intention to sell Shares to the Company, or has undertaken not to do so, in the event that the Repurchase Mandate is approved by the Company’s Shareholders.

5. SHARE REPURCHASES MADE BY THE COMPANY

No Share has been repurchased by the Company (whether on the Stock Exchange or otherwise) in the six months prior to the Latest Practicable Date before the printing of this circular.

6. REASONS FOR REPURCHASES

The Board believes that it is in the best interests of the Company and its Shareholders as a whole to seek a general authority from the Shareholders to enable the Board to repurchase Shares in the market. Such repurchases may, depending on market conditions and funding arrangements at the time, lead to an enhancement of the net assets and/or earnings per Share. The number of Shares to be repurchased on any occasion and the price and other terms upon which the same are repurchased will be decided by the Board at the relevant time having regard to the circumstances then prevailing.

– 15 –

APPENDIX II

LETTER FROM THE INDEPENDENT NON-EXECUTIVE DIRECTORS

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(Incorporated in Hong Kong with limited liability) (Stock code: 345)

19th July, 2012

To the Independent Shareholders

Dear Sir or Madam,

GRANT OF OPTIONS TO A SUBSTANTIAL SHAREHOLDER

UNDER THE SHARE OPTION SCHEME

We refer to the circular of Vitasoy International Holdings Limited (the “Company”) dated 19th July, 2012 to the Shareholders of the Company (the “Circular”) of which this letter forms part. Terms used in this letter shall have the same meanings as defined in the Circular unless the context otherwise requires.

This letter sets out our recommendation to the Independent Shareholders as to voting in relation to the resolution to be proposed at the AGM for the approval of the proposed grant of share options to Mr. Winston Yau-lai LO, a Director and substantial Shareholder, on the Proposed Date of Grant (the “Proposed Grant”).

Having considered the past contribution of Mr. Winston Yau-lai LO to the business growth of the Group and also to provide an incentive for his continuing commitment and contribution towards the business development of the Group, we are of the view that the terms of the Proposed Grant are fair and reasonable and in the interest of the Company and the Independent Shareholders as a whole. The Proposed Grant was also made on the recommendation of an independent consultant. Accordingly, we recommend the Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the AGM to approve the Proposed Grant.

David Kwok-po LI

Iain F. BRUCE Jan P. S. ERLUND Valiant Kin-piu CHEUNG

Independent Non-executive Directors

– 16 –

PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX III

NEW SHARE OPTION SCHEME

The following is a summary of the principal terms of the New Share Option Scheme proposed to be approved at the AGM.

(a) The Scheme is a share incentive scheme and is established to recognise and acknowledge the contributions which the Eligible Participants have made or will make to the Group.
(b) The Scheme will provide the Eligible Participants with an opportunity to have a personal stake in the Company with a view to motivating the Eligible Participants to excel their performance and efficiency for the benefit of the Group; and attracting and retaining or otherwise maintaining an ongoing relationship with the Eligible Participants whose contributions are or will be beneficial to the long term growth of the Group.
The Board may at its discretion grant options to any Director, executive or employee of the Company or its subsidiaries.
The overall limit on the number of Shares which may be issued upon exercise of all outstanding options granted and yet to be exercised under the New Share Option Scheme and any other share option schemes for the time being of the Company shall not, in aggregate, exceed such number of Shares as equals 30% of the Shares in issue from time to time, subject to the conditions set out below. As at the Latest Practicable Date, such 30% represents 306,732,450 Shares. No option may be granted under the Scheme or any other share option scheme of the Company if it will result in the above-mentioned 30% limit being exceeded. Within the abovementioned limit:
(a) The total number of Shares which may be issued upon exercise of all options to be granted under the New Share Option Scheme and any other share option scheme of the Company must not, in aggregate, exceed 10% of the Shares in issue as at the date of approval of the New Share Option Scheme by the Shareholders (the “Scheme Mandate Limit”), unless Shareholders’ approval has been obtained pursuant to paragraphs 3(b) or 3(c). As at the Latest Practicable Date, such 10% represents 102,244,150 Shares. Options lapsed in accordance with the terms of the New Share Option Scheme or any other share option scheme of the Company will not be counted for the purpose of calculating the Scheme Mandate Limit.

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APPENDIX III

PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

(b) The Scheme Mandate Limit referred to under paragraph 3(a) may be renewed at any time subject to prior Shareholders’ approval but in any event, the total number of Shares which may be issued upon exercise of all options to be granted under the New Share Option Scheme and any other share option schemes of the Company under the limit as refreshed must not exceed 10% of the Shares in issue as at the date of approval of the renewed limit. Options previously granted under the New Share Option Scheme or any other share option schemes of the Company (including those outstanding, cancelled, lapse in accordance with the terms of exercised options) will not be counted for the purpose of the calculating the limit as renewed.
(c) Notwithstanding the foregoing, the Company may grant options beyond the Scheme Mandate Limit to Eligible Participants if (i) separate Shareholders’ approval has been obtained for granting options beyond the Scheme Mandate Limit to Eligible Participants specifically identified by the Company before such Shareholders’ approval is sought; and (ii) the Company, in connection with the seeking of such separate Shareholders’ approval, has first sent a circular to Shareholders containing such information as may be required by the Listing Rules then prevailing to be included in such circular.
(a) Unless approved by Shareholders in the manner set out in this paragraph below, no option may be granted to any Eligible Participant which, if exercised in full, would result in the total number of Shares issued and to be issued upon exercise of all options already granted or to be granted to such Eligible Participant (including exercised, cancelled and outstanding options) in the 12-month period up to and including the date of such new grant exceeding 1% of the Shares in issue as at the date of such new grant.
(b) Any grant of options to a director, chief executive or substantial Shareholder of the Company or its subsidiaries or any of their respective Associates under the New Share Option Scheme must be subject to the prior approval of the independent non-executive Directors (excluding any independent non-executive Director who is a grantee of the relevant options).
(c) Where any grant of options to a substantial Shareholder or an independent nonexecutive director of the Company or its subsidiaries, or any of their respective Associates, would result in the Shares issued and to be issued upon exercise of all options already granted and to be granted (including options exercised, cancelled and outstanding) to such person in the 12-month period up to and including the date of such grant:
- (i) representing in aggregate over 0.1% of the Shares in issue, and
- (ii) having an aggregate value, based on the closing price of the Shares at the date of each grant, in excess of HK$5 million.

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PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX III

then such further grant must be subject to the approval by Shareholders at a general meeting taken on a poll. All connected persons of the Company must abstain from voting in favour of such resolution in such general meeting. The Company shall issue a circular to the Shareholders containing such information from time to time required by the Stock Exchange, including a recommendation from the independent nonexecutive Directors (excluding any independent non-executive Director who is a grantee of the relevant options) on whether or not to vote in favour of the proposed grant.

(a) The period within which the options must be exercised will be specified by the Company at the time of grant. This period must expire no later than 10 years from the relevant date of grant.
(b) In the event of the Grantee (being an individual) ceasing to be an Eligible Participant by reason of his death before exercising his option in full and none of the events for termination of employment under paragraph 12(d) then exists with respect to such Grantee, his personal representative(s) may exercise such option up to the Grantee’s entitlement as at the date of death (to the extent vested and not already exercised) in whole or in part in accordance with the provisions of the New Share Option Scheme within a period of 12 months from the date of his death and any option not so exercised shall lapse and determine without compensation at the expiry of such period, provided that where any of the events set out in paragraphs 12(h), 12(i) and 12(j) occurs prior to his death or within such period of 6 months following his death, then his personal representative(s) may so exercise the option only within such of the various periods respectively set out in such paragraphs. If within a period of 3 years prior to the Grantee’s death, the Grantee had committed any of the acts specified in paragraph 12(d) which would have entitled the Company to terminate his employment prior to his death, the Board may at any time forthwith terminate the option (to the extent not already exercised) by written notice to the Grantee’s personal representative(s) and/or to the extent the option has been exercised in whole or in part by his personal representative(s), but Shares have not been allotted as at the date of his death, he shall be deemed not to have so exercised such option and the Company shall return to him the amount of the Subscription Price for the Shares received by the Company in respect of the purported exercise of such option.

– 19 –

PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX III

(c) Except for Directors’ retirement by rotation as required under the Articles of Association of the Company or the Listing Rules, in the event of the Grantee who is a director or an employee of the Group ceasing to be such a director or employee by reason of his retirement, then the Grantee may exercise his option (to the extent vested and not already exercised on the date of the retirement (the “Retirement Date”) or on the Extended Retirement Date (as defined below) if the Grantee is re-employed by the Group on the Retirement Date) in whole or in part at any time within a period of 6 months (the “Extended Period”) commencing on the Retirement Date and any option not so exercised before the expiry of the Extended Period shall lapse and determine without compensation at the end of such period, provided that if the Grantee is reemployed by the Group on the Retirement Date, the Extended Period will commence from the date of retirement of his re-employment instead (the “Extended Retirement Date”). For the avoidance of doubt, if the Grantee is re-employed by the Group on the Retirement Date, any of his unvested options on the Retirement Date shall continue to vest over the scheduled vesting period until the Extended Retirement Date which shall immediately lapse thereafter.
(d) In the event of the employing company of a Grantee who is a director or an employee ceasing to be a member of the Group (provided that the employment of such Grantee has not been transferred to another Group member within 6 months upon such employing company ceasing to be a member of the Group), or in the event of the Grantee (being an individual) ceasing to be an Eligible Participant by reason of his ill-health, injury or disability (in each case evidenced to the satisfaction of the Board), or by termination of his employment by his employing company on notice or with payment in lieu of such notice, then the Grantee may exercise his option (to the extent vested and not already exercised on the date of cessation) in whole or in part at any time within a period of 6 months commencing on the date of the cessation and any option not so exercised shall lapse and determine without compensation at the end of such period.
(e) In the event of the Grantee who is a director or an employee of the Group ceasing to be such a director or employee by reason of his resignation, then all his options (to the extent not already exercised on the date of the tender of the resignation (the “Resignation Date”)) shall lapse on the Resignation Date and shall on that day ceases to be exercisable. To the extent the Grantee has exercised the option in whole or in part pursuant to the New Share Option Scheme, but Shares have not been allotted to him on the Resignation Date, the Grantee shall be deemed not to have so exercised such option and the Company shall return to the Grantee the amount of the Subscription Price for the Shares received by the Company in respect of the purported exercise of such option.

– 20 –

APPENDIX III

PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

(f) In the event of the Grantee ceasing to be an Eligible Participant as and when determined by the Board in a Board meeting or by a written resolution for any reason other than as described in paragraph 5 and paragraph 12, any unvested option of such Grantee on the date of such cessation shall lapse and determine without compensation on such date and the Board may by written notice to such Grantee within 1 month from the date of such cessation determine the period within which the option (to the extent vested and not already exercised) shall be exercisable following the date of such cessation.
(g) In the event of the Grantee ceasing to be an Eligible Participant by reason of summary dismissal or on one or more of the grounds specified in paragraph 12(d), then all his options shall lapse automatically and determine without compensation on the date he so ceases (to the extent not already exercised) and to the extent the Grantee has exercised the option in whole or in part pursuant to the New Share Option Scheme, but Shares have not been allotted to him on the date of cessation, the Grantee shall be deemed not to have so exercised such option and the Company shall return to the Grantee the amount of the Subscription Price for the Shares received by the Company in respect of the purported exercise of such option.
(h) If, in consequence of any general offer made to all the Shareholders (or all such Shareholders other than the offeror, any person controlled by the offeror and any person acting in association or concert with the offeror) (including an offer made in the first instance on a condition such that, if it is satisfied, the offeror will have control of the Company) or otherwise, and such offer becomes or is declared unconditional prior to the expiry date of the relevant option, then the Board shall as soon as practicable thereafter notify every Grantee accordingly and each Grantee (or his personal representative) shall be entitled at any time within the period of 21 days after such offer becomes or is declared unconditional, to exercise all or any of his outstanding option (to the extent that such options have not lapsed or been cancelled), and such option shall, to the extent not having been exercised, lapse and determine without compensation upon the expiry of such period.
(i) In the event a notice is given by the Company to the Shareholders to convene a general meeting for the purpose of considering and, if thought fit, approving a resolution for the voluntary winding up of the Company, the Company shall as soon as possible give notice thereof to every Grantee and the Grantee (or his personal representative) shall be entitled by notice in writing to the Company (such notice to be received by the Company not later than four business days prior to the proposed general meeting) to exercise all or any of his option (to the extent that such options have not lapsed or been cancelled) and the Company shall as soon as possible and in any event not later than the day immediately prior to the date of the proposed general meeting, allot and issue such number of Shares to the Grantee which falls to be issued on such exercise and all options shall, to the extent not having been exercised, lapse and determine without compensation on the date of commencement of the winding up of the Company.

– 21 –

PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX III

(j) In the event of a compromise or arrangement between the Company and its members or creditors is proposed for the purposes of or in connection with a scheme for the reconstruction of the Company or its amalgamation with any other company or companies, the Company shall give notice thereof to every Grantee on the same day as it despatches to each Shareholder or creditor of the Company a notice summoning the meeting to consider such a compromise or arrangement, and thereupon each Grantee (or his personal representative) shall be entitled by notice in writing to the Company accompanied by the remittance for the Subscription Price in respect of his option (such notice to be received by the Company not later than two business days prior to the proposed meeting) to exercise all or any of his option (to the extent that such options have not lapsed or been cancelled). With effect from the date of such meeting, the rights of all Grantees to exercise their respective options shall forthwith be suspended. Upon such compromise or arrangement becoming effective, all options shall, to the extent not having been exercised, thereupon lapse and determine without compensation. The Board shall endeavour to procure that the Shares issued as a result of the exercise of options under this paragraph shall for the purposes of such compromise or arrangement form part of the issued share capital of the Company on the effective date thereof and that such Shares shall in all respects be subject to such compromise or arrangement. If for any reason such compromise or arrangement is not approved by the relevant court having jurisdiction (the “Court”) (whether upon the terms presented to the Court or upon any other terms as may be approved by such Court), the rights of the Grantees to exercise their respective options shall with effect from the date of the making of the order by the Court be restored in full and shall thereupon become exercisable (but subject to the other terms of the New Share Option Scheme) as if such compromise or arrangement had not been proposed by the Company and no claim shall lie against the Company or any of its officers for any loss or damage sustained by any Grantee as a result of the aforesaid suspension.
(k) Upon the occurrence of any of the events referred to in paragraphs 5(h) to 5(j), the Company may at its discretion and notwithstanding the terms of the relevant option, also give notice to the Grantee that his option may be exercised at any time within such period as shall be notified by the Company and/or to the extent (not being less than the extent to which it could then be exercised in accordance with its terms) notified by the Company.
(l) In any case where options lapse pursuant to paragraphs 5(b) to 5(g), the Board may in its absolute discretion determine that all or any of such options shall not so lapse (or shall lapse on a later date) subject to such conditions or limitations as the Board may decide.

– 22 –

PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX III

At the time of grant of the options, the Company may specify any minimum period(s) for which an option must be held before it can be exercised. The New Share Option Scheme does not contain any such minimum period.
At the time of the grant of the options, the Company may specify any performance target(s) which must be achieved before the options can be exercised. The New Share Option Scheme does not contain any performance targets.
An offer of options (“Offer”) shall be deemed to have been accepted by an Eligible Participant in respect of all Shares which are offered to such Eligible Participant (save when acceptance of a lesser number of Shares is clearly stated in the duplicate letter comprising acceptance of the Offer) when the duplicate letter comprising acceptance of the Offer duly signed by the Eligible Participant together with a remittance in favour of the Company of HK$10.00 by way of consideration for the grant thereof is received by the secretary of the Company at the principal place of business of the Company in Hong Kong on or before the last day by which the Offer must be accepted. Such remittance shall in no circumstances be refundable. To the extent that the Offer is not accepted within 28 days or any such shorter or longer period as the Board may specify, from the date on which the letter containing the Offer is delivered to that Eligible Participant in the manner indicated in this paragraph, it shall be deemed to have been irrevocably declined.
Subject to adjustments made in a situation contemplated under paragraph 13 below, the subscription price in respect of any option shall be at the discretion of the Board, provided that it must be not less than the highest of:
(a) the closing price of a Share as shown in the daily quotations sheet of the Stock Exchange on the date of grant (which must be a business day) in respect of such option;
(b) the average of the closing prices of the Shares as shown in the daily quotations sheet of the Stock Exchange for the five business days immediately preceding the relevant date of grant in respect of such option; and
(c) the nominal value of a Share.
The Shares to be allotted upon the exercise of an option will be subject to all the provisions of the Memorandum and Articles of Association of the Company for the time being in force and will rank pari passu in all respects with the existing fully paid Shares in issue on the date on which the option is duly exercised or, if that date falls on a day when the register of members of the Company is closed, the first day of the re-opening of the register of members (the “Exercise Date”) and accordingly will entitle the holders thereof to participate in all dividends or other distributions (including distributions made upon the liquidation of the Company) paid or made on or after the Exercise Date other than any dividend or other distribution previously declared or recommended or resolved to be paid or made if the record date therefor shall be before the Exercise Date. A Share allotted and issued upon the exercise of an option shall not carry voting rights until the name of the Grantee has been duly entered onto the register of members of the Company as the holder thereof.

– 23 –

PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX III

The New Share Option Scheme shall be valid and effective for a period of ten (10) years commencing on the adoption of the New Share Option Scheme. No further options shall be offered or granted under the New Share Option Scheme on or after the date of the tenth anniversary of the adoption of the New Share Option Scheme.
The option period in respect of any option shall automatically terminate and that option (to the extent not already exercised) shall lapse on the earliest of:
(a) the expiry of the option period (subject to the provisions of the New Share Option Scheme);
(b) any expiry date or the expiry of any period (as the case may be) referred to in paragraphs 5(b) to 5(l);
(c) the date on which an order for bankruptcy (or any such equivalent order in any other jurisdictions) has been laid against the Grantee;
(d) the date on which the Grantee ceases to be an Eligible Participant by reason of a termination of his employment with the Group on the grounds that:
- (i) he has been guilty of persistent or serious misconduct;
- (ii) he appears either to be unable to pay or to have no reasonable prospect of being able to pay debts;
- (iii) he has been convicted of any criminal offence (other than an offence which in the opinion of the Board does not bring the Grantee or the Group into disrepute); or
- (iv) he has been in breach of the terms of his employment agreement with the Group.
(e) the date of commencement of the winding up of the Company;
(f) the date on which the Grantee commits a breach of paragraph 16;
(g) the date on which any of the following events, unless otherwise waived by the Board, happen:
- (i) any liquidator, provisional liquidator, receiver or any person carrying out any similar function has been appointed anywhere in the world in respect of the whole or any part of the assets or undertaking of the Grantee (being a corporation);

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PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX III

(ii) the Grantee (being a corporation) has ceased or suspended payment of its debts, become unable to pay its debts (within the meaning of Section 178 of the Companies Ordinance or any similar laws or regulations) or otherwise become insolvent;
(iii) there is unsatisfied judgement, order or award outstanding against the Grantee;
(iv) there are circumstances which entitle any person to take any action, appoint any person, commence proceedings or obtain any order of the type mentioned in sub-paragraphs (i), (ii) and (iii) above;
(v) a bankruptcy order has been made against any director of the Grantee (being a corporation) in any jurisdiction; or
(vi) a petition for bankruptcy has been presented against any director of the Grantee (being a corporation) in any jurisdiction;
(h) the date on which the Grantee commits a breach of any terms and conditions of the New Share Option Scheme or the grant of his option, if the Board shall exercise the Company’s right to cancel the option without compensation;
(i) the date on which the Board considers that the Grantee fails to meet the continuing eligibility criteria as provided in the New Share Option Scheme, if the Board shall exercise the Company’s right to cancel the option without compensation; or
(j) the date on which the Board resolves to cancel any option pursuant to paragraph 14.

If any of the events set out in paragraph 12(f) happen or the Grantee commits a breach of any terms and conditions of the New Share Option Scheme or the grant of his option, the Board shall have the right to cancel his option without compensation.

In the event of any alteration in the capital structure of the Company whilst any option remains exercisable or the New Share Option Scheme remains in effect, including but not limited to any capitalisation of profits or reserves, bonus issue, rights issue, open offer or other offer of securities to the Shareholders which has a price-dilutive effect (including any offer of securities convertible into share capital or warrants or options to subscribe for any share capital of the Company, but excluding any offer of options under the New Share Option Scheme and options under any other similar share option schemes of the Company or issue of securities as consideration in a transaction), consolidation or sub-division of Shares or reduction of share capital of the Company in accordance with legal requirements and requirements of the Stock Exchange, then, in any such case the number or nominal amount of Shares to which the New Share Option Scheme or any option(s) relates (insofar as it is/ they are unexercised) and/or the Subscription Price thereunder and/or the relevant maximum limits determined under paragraph 3 may be adjusted in such manner as the Board may deem appropriate provided always that:

– 25 –

PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX III

(a) any such adjustment shall be made to give a Grantee the same proportion of the equity capital of the Company as that to which that Grantee was previously entitled (as interpreted in accordance with the Supplementary Guidance);
(b) any such adjustment shall be made on the basis that the aggregate Subscription Price payable by a Grantee on the full exercise of any option shall remain as nearly as possible the same (but shall not be greater than) as it was before such event;
(c) no such adjustment shall be made the effect of which would be to enable a Share to be issued at less than its nominal value; and
(d) any adjustments as a result of an issue of securities with a price-dilutive element, such as a rights issue, open offer or capitalisation issue, shall be made in accordance with the acceptable adjustments set forth in the Supplementary Guidance and such other guidelines or supplementary guidance as may be issued by the Stock Exchange from time to time.
The Board may cancel any option provided that: (i) the Company pays to the Grantee an amount equal to the cash value of the option at the date of cancellation as determined by the Board by reference to the difference between the market value of a Share and the Subscription Price; or (ii) the Board offers to grant to the Grantee replacement options of equivalent value of the options being cancelled; or (iii) the Board makes such arrangements as the Grantee may agree to compensate him for the loss of the option. Where the Company cancels options and issue new options to the same Grantee, the issue of such new options may only be made with available unissued options (excluding the cancelled options) within the Scheme Mandate Limit.
The Company by an ordinary resolution by the Shareholders in a general meeting or the Board may at any time terminate the operation of the New Share Option Scheme and in such event no further options will be offered but in all other respects the provisions of the New Share Option Scheme shall remain in force to the extent necessary to give effect to the exercise of any options granted prior thereto or otherwise as may be required in accordance with the provisions of the New Share Option Scheme and any options granted prior to such termination shall continue to be valid and exercisable in accordance with the New Share Option Scheme.
An option shall be personal to the Grantee and shall not be assignable and no Grantee shall in any way sell, transfer, charge, mortgage, encumber or create any interest whatsoever in favour of any third party over or in relation to any option or enter into any agreement so to do. Any breach of the foregoing by a Grantee shall entitle the Company to cancel any option or part thereof granted to such Grantee without compensation to the extent not already exercised without incurring any liability on the part of the Company.

– 26 –

APPENDIX III

PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

(a) The New Share Option Scheme may be altered in any respect by a resolution of the Board except that the provisions of the New Share Option Scheme relating to matters set out in Rule 17.03 of the Listing Rules shall not be altered to the advantage of any Grantees or prospective Grantees except with the prior sanction of a resolution of the Company in a general meeting. Any alteration to the terms and conditions of the New Share Option Scheme which are of a material nature or any change to the terms of the options granted prior to such alteration shall be approved by the Shareholders in a general meeting, except where the alterations take effect automatically under the existing terms of the New Share Option Scheme.
(b) The Board shall be entitled to amend the terms of the New Share Option Scheme so as to comply with the Listing Rules and any Supplementary Guidance or any future guidance or interpretation of the Listing Rules from time to time applicable to the New Share Option Scheme, provided that such amendments are allowed by the Listing Rules and any Supplementary Guidance. Any change to the authority of the Board in relation to any alteration to the terms of the New Share Option Scheme must be approved by the Shareholders in a general meeting.

– 27 –

NOTICE OF ANNUAL GENERAL MEETING

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(Incorporated in Hong Kong with limited liability) (Stock code: 345)

NOTICE IS HEREBY GIVEN that the Annual General Meeting (“AGM”) of Vitasoy International Holdings Ltd. (the “Company”) will be held at Harcourt Room, Lower Lobby, Conrad Hong Kong, Pacific Place, 88 Queensway, Hong Kong on Tuesday, 28th August, 2012 at 3:00 p.m. for the following purposes:

To receive and adopt the audited Financial Statements and the Reports of the Directors and Auditors for the year ended 31st March, 2012;
To approve the payment of a final dividend in respect of the year ended 31st March, 2012;
(a) To re-elect Dr. the Hon. Sir David Kwok-po LI as an Independent Non-executive Director;
(b) To re-elect Mr. Jan P. S. ERLUND as an Independent Non-executive Director;
(c) To authorise the Board of Directors of the Company to fix the remuneration of the Directors;
To appoint Auditors and authorise the Directors to fix their remuneration;
As special business, to consider and, if thought fit, to pass with or without amendments, the following resolutions as Ordinary Resolutions:
A. “ THAT there be granted to the Directors of the Company an unconditional general mandate to issue, allot and deal with additional shares of HK$0.25 each in the capital of the Company (“Shares”), and to make or grant offers, agreements and options in respect thereof, subject to the following conditions:
- (a) such mandate shall not extend beyond the Relevant Period (as defined below) save that the Directors of the Company may during the Relevant Period make or grant offers, agreements and options which might require the exercise of such powers after the end of the Relevant Period;

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NOTICE OF ANNUAL GENERAL MEETING

(b) the aggregate nominal amount of share capital allotted or agreed conditionally or unconditionally to be allotted (whether pursuant to an option or otherwise) by the Directors of the Company otherwise than pursuant to (i) a Rights Issue (as defined below); (ii) any scrip dividend scheme or similar arrangement providing for the allotment of Shares in lieu of the whole or part of a dividend on Shares in accordance with the Articles of Association of the Company; and (iii) an issue of Shares pursuant to the exercise of any options which may be granted under any option scheme or similar arrangement for the time being adopted for the grant or issue to officers and/or employees of the Company and/or any of its subsidiaries of Shares or rights to acquire Shares, shall not exceed the aggregate of (aa) 20% of the aggregate nominal amount of the share capital of the Company in issue at the date of passing of this resolution plus (bb) (if the Directors of the Company are so authorised by a separate ordinary resolution of the shareholders of the Company) the nominal amount of share capital of the Company repurchased by the Company subsequent to the passing of this resolution (up to a maximum equivalent to 10% of the aggregate nominal amount of the share capital of the Company in issue at the date of passing this resolution), and the said approval shall be limited accordingly; and
(c) for the purposes of this resolution:

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

(i) the conclusion of the next AGM;
(ii) the expiration of the period within which the next AGM is required by the Articles of Association of the Company or any applicable laws to be held; and
(iii) the revocation or variation of this resolution by an ordinary resolution of the shareholders of the Company in General Meeting.

“Rights Issue” means an offer of Shares open for a period fixed by the Directors of the Company made to holders of Shares on the Register of the Company on a fixed record date in proportion to their then holdings of Shares subject to such exclusions or other arrangements as the Directors of the Company may deem necessary or expedient in relation to fractional entitlements or having regard to any restriction or obligation under the laws of, or the requirements of any recognised regulatory body or any stock exchange in, or in any territory outside, Hong Kong.”

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NOTICE OF ANNUAL GENERAL MEETING

B. “ THAT there be granted to the Directors of the Company an unconditional general mandate to repurchase Shares, and THAT the exercise by the Directors of the Company of all powers of the Company to purchase Shares subject to and in accordance with all applicable laws, rules and regulations be and is hereby generally and unconditionally approved, subject to the following conditions:
(a) such mandate shall not extend beyond the Relevant Period (which shall have the same meaning for the purpose of this resolution, mutatis mutandis, as given in paragraph (c) of Resolution 5A set out in the Notice of AGM);
(b) such mandate shall authorise the Directors of the Company to procure the Company to repurchase Shares at such prices as the Directors of the Company may at their discretion determine; and
(c) the aggregate nominal amount of Shares repurchased or agreed to be repurchased by the Company pursuant to paragraph (a) of this resolution during the Relevant Period shall not exceed 10% of the aggregate nominal amount of the share capital of the Company in issue at the date of passing of this resolution and the said approval shall be limited accordingly.”
C. “ THAT , conditional upon the passing of Resolutions 5A and 5B set out in the Notice of AGM, the aggregate nominal amount of the Shares which are repurchased by the Company pursuant to and in accordance with Resolution 5B set out in the Notice of AGM shall be added to the aggregate nominal amount of the Shares which may be allotted or agreed, conditionally or unconditionally, to be allotted by the Directors of the Company pursuant to and in accordance with Resolution 5A set out in the Notice of AGM”.
D. “ THAT the grant of options to subscribe for 2,822,000 Shares at an exercise price of HK$6.400 per Share to Mr. Winston Yau-lai LO, the Executive Chairman and substantial shareholder of the Company, subject to and in accordance with the terms of the share option scheme adopted by the Company on 4th September, 2002, be and is hereby approved; and THAT any Director or the Company Secretary of the Company be and is hereby authorised to do all such acts and execute all such documents as may be necessary or expedient to give full effect to such grant of options”.
E. “ THAT the new share option scheme of the Company (“New Share Option Scheme”), the terms of which are contained in the document marked “A” and produced to this meeting and for the purposes of identification signed by the Chairman thereof, be and is hereby approved and adopted, and with effect from the date of the New Share Option Scheme becoming unconditional and coming into effect, the Company’s existing share option scheme adopted on 4th September, 2002 be cancelled and the Board of Directors of the Company (or any committee thereof) be and is hereby authorised to do all such acts and to enter into all such transactions, arrangements and agreements as may be necessary or expedient in order to give full effect to the New Share Option Scheme, including but without limitation:

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NOTICE OF ANNUAL GENERAL MEETING

(a) to administer the New Share Option Scheme;
(b) to modify and/or amend the New Share Option Scheme from time to time provided that such modification and/or amendment is effected in accordance with the provisions of the New Share Option Scheme relating to modification and/or amendment;
(c) to allot and issue from time to time such number of Shares as may fall to be issued pursuant to the exercise of the options granted under the New Share Option Scheme, provided always that such acts are done in compliance with the Articles of Association of the Company and the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited;
(d) to make application at the appropriate time or times to the Stock Exchange of Hong Kong Limited for listing of and permission to deal in any Shares which may hereafter from time to time fall to be issued pursuant to the exercise of the options granted under the New Share Option Scheme; and
(e) to consent, if it so deems fit and expedient, to such conditions, modifications and/or variations as may be required or imposed by the relevant authorities in relation to the New Share Option Scheme.”

By Order of the Board Paggie Ah-hing TONG Company Secretary

Hong Kong, 19th July, 2012

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NOTICE OF ANNUAL GENERAL MEETING

Notes:

A shareholder entitled to attend and vote at the AGM is entitled to appoint one or more proxies to attend and vote in his stead. A proxy need not be a shareholder of the Company.
To be valid, the form of proxy, together with the power of attorney or other authority (if any) under which it is signed or a notarially certified copy thereof, must be deposited with the Company Secretary at the Registered Office of the Company at No. 1 Kin Wong Street, Tuen Mun, New Territories, Hong Kong not less than 48 hours before the appointed time for holding the AGM or any adjournment hereof (as the case may be).
The register of members of the Company will be closed as follows:
(a) For the purpose of determining shareholders who are entitled to attend and vote at the AGM, the register of members of the Company will be closed from Friday, 24th August, 2012 to Tuesday, 28th August, 2012, both days inclusive. In order to qualify for the right to attend and vote at the AGM, all transfers accompanied by the relevant share certificates must be lodged with the Company’s Share Registrar, Computershare Hong Kong Investor Services Limited of Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong for registration no later than 4:30 p.m. on Thursday, 23rd August, 2012.
(b) For the purpose of determining shareholders who qualify for the final dividend, the register of members of the Company will be closed from Tuesday, 4th September, 2012 to Friday, 7th September, 2012, both days inclusive. In order to qualify for the final dividend, all transfers accompanied by the relevant share certificates must be lodged with the Company’s Share Registrar, Computershare Hong Kong Investor Services Limited of Shops 17121716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong for registration no later than 4:30 p.m. on Monday, 3rd September, 2012.

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AI assistant

KLN Logistics Group Limited — AGM Information 2012

49356_rns_2012-07-18_8f50805f-df18-47b9-aff3-fe41f208df85.pdf

PROPOSALS FOR

GENERAL MANDATES TO ISSUE AND REPURCHASE SHARES,

RE-ELECTION OF DIRECTORS,

CONTENTS

DEFINITIONS

DEFINITIONS

DEFINITIONS

LETTER FROM THE BOARD

PROPOSALS FOR

GENERAL MANDATES TO ISSUE AND REPURCHASE SHARES,

RE-ELECTION OF DIRECTORS,

GRANT OF OPTIONS TO A DIRECTOR AND SUBSTANTIAL SHAREHOLDER,

ADOPTION OF NEW SHARE OPTION SCHEME AND

NOTICE OF ANNUAL GENERAL MEETING

INTRODUCTION

GENERAL MANDATE TO REPURCHASE SHARES

GENERAL MANDATE TO ISSUE SHARES AND EXTENSION OF SHARE ISSUE MANDATE

RE-ELECTION OF DIRECTORS

LETTER FROM THE BOARD

LETTER FROM THE BOARD

GRANT OF OPTIONS TO A DIRECTOR AND SUBSTANTIAL SHAREHOLDER

LETTER FROM THE BOARD

Principal Terms of the Proposed Grant

Reasons for the Proposed Grant

Information on Proposed Grant

Mr. Winston Yau-lai LO

PROPOSED ADOPTION OF THE NEW SHARE OPTION SCHEME AND CANCELLATION OF THE EXISTING SHARE OPTION SCHEME

LETTER FROM THE BOARD

VOTING BY WAY OF POLL

ACTION TO BE TAKEN

RESPONSIBILITY STATEMENT

RECOMMENDATION

1. SHARE CAPITAL

2. FUNDING OF REPURCHASES

3. SHARE PRICES

4. GENERAL

5. SHARE REPURCHASES MADE BY THE COMPANY

6. REASONS FOR REPURCHASES

APPENDIX II

LETTER FROM THE INDEPENDENT NON-EXECUTIVE DIRECTORS

GRANT OF OPTIONS TO A SUBSTANTIAL SHAREHOLDER

UNDER THE SHARE OPTION SCHEME

David Kwok-po LI

Iain F. BRUCE Jan P. S. ERLUND Valiant Kin-piu CHEUNG

NEW SHARE OPTION SCHEME

PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX III

PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

NOTICE OF ANNUAL GENERAL MEETING

NOTICE OF ANNUAL GENERAL MEETING

NOTICE OF ANNUAL GENERAL MEETING

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KLN Logistics Group Limited AGM Information 2012