Luye Pharma Group Limited — Proxy Solicitation & Information Statement 2008

May 6, 2008

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult a licensed securities dealer, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your securities in Takson Holdings Limited, you should at once hand this circular to the purchaser or the transferee or to the bank manager, the licensed securities dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser or the transferee.

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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TAKSON HOLDINGS LIMITED

第一德勝控股有限公司 *

(incorporated in Bermuda with limited liability)

(Stock Code: 918)

CAPITALISATION OF LOAN BY CONNECTED PERSON AND SPECIAL MANDATE

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

A letter from the Board is set out on pages 4 to 10 of this circular.

A letter from the Independent Board Committee is set out on pages 11 to 12 of this circular and a letter from CIMB-GK, the independent financial adviser to the Independent Board Committee and the Independent Shareholders is set out on pages 13 to 23 of this circular.

A notice convening the SGM of the Company to be held at Salon III, 1st Floor, Harbour Plaza Hong Kong, 20 Tak Fung Street, Whampoa Garden, Hunghom, Kowloon, Hong Kong on Tuesday, 27 May 2008 at 4:00 p.m. is set out on pages 29 to 31 of this circular.

A form of proxy for use at the SGM is enclosed with this circular. Whether or not you are able to attend the SGM, you are requested to complete the form of proxy in accordance with the instructions printed thereon and return it to the office of the Company’s branch share registrar in Hong Kong, Tricor Abacus Limited, at 26/F, Tesbury Centre, 28 Queen’s Road East, Hong Kong as soon as possible and in any event not less than forty-eight (48) hours before the time appointed for the holding of the SGM. Completion and return of the form of proxy will not preclude you from attending and voting in person at the SGM or any adjournment of it, if you so wish.

7 May 2008

* For identification purpose only

CONTENTS

	Page
Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Letter from the Independent Board Committee. . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
Letter from CIMB-GK Securities (HK) Limited. . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
Appendix – General information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	24
Notice of SGM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	29

— i —

DEFINITIONS

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

“Announcement”	the announcement of the Company dated 24 April 2008
	in relation to, among other things, the capitalisation of
	the Capitalised Loan Amount by connected person and
	the special mandate to issue and allot the Subscription
	Shares;
“associate(s)”	has the meaning ascribed to it under the Listing Rules;
“Business Day”	any day (other than a Saturday, Sunday or public
	holiday) on which banks in Hong Kong are generally
	open for banking business;
“Capitalised Loan Amount”	HK$36,000,000, being a portion of the Loan;
“CIMB-GK”	CIMB-GK Securities (HK) Ltd., the independent
	financial adviser to the Independent Board Committee
	and the Independent Shareholders in relation to the
	Subscription;
“Company”	Takson Holdings Limited, a company incorporated in
	Bermuda with limited liability and the Shares of which
	are listed on the Main Board of the Stock Exchange;
“connected person”	has the meaning ascribed to it under the Listing Rules;
“Director(s)”	the directors of the Company;
“Group”	the Company and its subsidiaries;
“Hong Kong”	the Hong Kong Special Administrative Region of the
	People’s Republic of China;
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong;
“Independent Board Committee”	the independent committee of the board established
	by the independent non-executive Directors, namely,
	Mr. Lee Kwok Cheung, Mr. Chau Tsun Ming, Jimmy
	and Mr. Cunningham, James Patrick to advise the
	Independent Shareholders in respect of the terms of
	Subscription Agreement and the special mandate to
	issue and allot the Subscription Shares;

— 1 —

DEFINITIONS

“Independent Shareholders”	Shareholders other than Mr. Wong and his associates,
	who are not required to abstain from voting at the SGM
	to approve the Subscription Agreement and the special
	mandate to issue and allot the Subscription Shares under
	the Listing Rules;
“Last Dealing Date”	24 April 2008, being the last trading day for the Shares
	prior to the issue of the Announcement;
“Latest Practicable Date”	2 May 2008, the latest practicable date for ascertaining
	relevant information for inclusion in this circular;
“Listing Rules”	the Rules Governing the Listing of Securities on the
	Stock Exchange;
“Loan”	the director’s loan owed by the Group to the Subscriber
	in the principal amount of HK$41,035,674 with no
	fixed term of repayment which is bearing interest
	accruing at the rate of Hong Kong Prime Lending
	Rate less 0.5% prevailing from time to time which
	outstanding principal amount together with interest is
	HK$42,235,472 as at the Latest Practicable Date;
“SGM”	the special general meeting of the Company to be held at
	Salon III, 1st Floor, Harbour Plaza Hong Kong, 20 Tak
	Fung Street, Whampoa Garden, Hunghom, Kowloon,
	Hong Kong on Tuesday, 27 May 2008 at 4:00 p.m. to
	consider and, if thought fit, to approve the Subscription
	Agreement and the transactions contemplated therein
	(including the special mandate to issue and allot the
	Subscription Shares);
“Share(s)”	share(s) of a nominal value of HK$0.10 each in the
	issued capital of the Company;
“Shareholder(s)”	the holder(s) of the Share(s);
“Stock Exchange”	The Stock Exchange of Hong Kong Limited;

— 2 —

DEFINITIONS

• “Subscriber” or “Mr. Wong” Mr. Wong Tek Sun, Takson, the chairman, an executive Director and controlling Shareholder of the Company, who together with his associates holding approximately 58.1% of the issued share capital of the Company as at the Latest Practicable Date;

• “Subscription” the subscription of the Subscription Shares by the Subscriber pursuant to the Subscription Agreement;

• “Subscription Agreement” the conditional subscription agreement dated 24 April 2008 entered into between the Company and Mr. Wong relating to the subscription of Shares in the Company;

• “Subscription Price” HK$0.18 per Subscription Share; “Subscription Share(s)” 200,000,000 Shares to be subscribed for by the Subscriber pursuant to the Subscription Agreement;

• “%” per cent.

Translations of RMB into HK$ are based on the exchange rate of RMB1 to HK$1.116 (as per the exchange rate adopted in the announcement of the Company dated 7 April 2008) for information purpose only. No representation is made that the relevant amount have been, or could have been, or could be converted at that or any other rate or at all.

— 3 —

LETTER FROM THE BOARD

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TAKSON HOLDINGS LIMITED 第一德勝控股有限公司 *

(incorporated in Bermuda with limited liability)

(Stock Code: 918)

Executive Directors:

Mr. Wong Tek Sun, Takson (Chairman) Ms. Pang Shu Yuk, Adeline Rita

Non-executive Director:

Registered Office: Clarendon House 2 Church Street Hamilton HM11 Bermuda

Mr. Wong Tak Yuen

Independent Non-executive Directors:

Mr. Lee Kwok Cheung Mr. Chau Tsun Ming, Jimmy Mr. Cunningham, James Patrick

Head Office and Principal Office of Business in Hong Kong: 5th Floor, South Wing Harbour Center Tower One 1 Hok Cheung Street Hunghom, Kowloon Hong Kong

7 May 2008

To the Shareholders of the Company

Dear Sir or Madam,

CAPITALISATION OF LOAN BY CONNECTED PERSON AND SPECIAL MANDATE

INTRODUCTION

On 24 April 2008, the Company entered into a Subscription Agreement with the Subscriber. Pursuant to the Subscription Agreement, the Company agreed to issue and allot an aggregate of 200,000,000 Subscription Shares at the price of HK$0.18 per Subscription Share to the Subscriber as consideration for full and final settlement of the Capitalised Loan Amount.

* For identification purpose only

— 4 —

LETTER FROM THE BOARD

The purpose of this circular is to give you further information, among other things, details of the Subscription Agreement, the advice and recommendation of the Independent Board Committee and the letter from CIMB-GK to the Independent Board Committee and the Independent Shareholders together with a notice convening the SGM.

THE SUBSCRIPTION AGREEMENT

Date: 24 April 2008 Parties: The Company, as the issuer Mr. Wong Tek Sun, Takson, as the Subscriber

Pursuant to the Subscription Agreement, the Company shall issue and allot, and the Subscriber shall subscribe for 200,000,000 Subscription Shares at a price of HK$0.18 per Subscription Share. The issue of the Subscription Shares by the Company is in consideration for full and final settlement of the Capitalised Loan Amount.

Relationship of the Subscriber and the Company

As at the Latest Practicable Date, Mr. Wong, (the chairman, an executive Director and controlling Shareholder of the Company) and his associates own 58.1% of the issued share capital of the Company.

Accordingly, Mr. Wong is a connected person of the Company pursuant to the Listing Rules.

Subscription Shares

200,000,000 Subscription Shares, representing (i) approximately 38.65% of the Company’s existing issued share capital; and (ii) approximately 27.88% of the Company’s issued share capital as enlarged by the Subscription, will be issued pursuant to the Subscription Agreement.

Subscription Price

The Subscription Price is HK$0.18 per Subscription Share and is determined by reference to the current market price of the Shares. The Subscription Price of each Subscription Share represents:

• (i) a discount of approximately 15.09% to the closing price of HK$0.212 per Share as quoted on the Stock Exchange on the Last Dealing Date;

— 5 —

LETTER FROM THE BOARD

• (ii) a discount of approximately 10.45% to the average closing price of HK$0.201 per Share as quoted on the Stock Exchange from 18 April 2008 to 24 April 2008, both days inclusive, being the last five trading days including the Last Dealing Date;

• (iii) a discount of approximately 14.81% to the average closing price of HK$0.2113 per Share as quoted on the Stock Exchange from 11 April 2008 to 24 April 2008, both days inclusive, being the last ten trading days including the Last Dealing Date; and

• (iv) a discount of approximately 18.92% to the closing price of HK$0.222 per Share as quoted on the Stock Exchange on the Latest Practicable Date on the Stock Exchange.

Conditions of the Subscription Agreement

Completion of the Subscription Agreement is conditional upon:

• (i) the approval by the Independent Shareholders of the Subscription Agreement and the transactions contemplated under it and the grant of the special mandate to the Directors to issue and allot the Subscription Shares by the Independent Shareholders having been obtained at the SGM in accordance with the requirements of the Listing Rules; and

• (ii) the Listing Committee of the Stock Exchange granting its approval to the listing of, and permission to deal in the Subscription Shares.

If any of the above conditions is not fulfilled on or before 30 September 2008 (or such other date as may be agreed between the Company and the Subscriber), the Subscription Agreement will lapse and become null and void and the parties will be released from all obligations thereunder, save the liabilities for any antecedent breaches of the Subscription Agreement.

Completion of the Subscription Agreement

Completion of the Subscription Agreement is expected to take place on the fifth Business Day following the date on which both the conditions (i) and (ii) as stated in the section headed “Conditions of the Subscription Agreement” above, or such other date as the parties to the Subscription Agreement may agree, are fulfilled.

Ranking of Capitalisation Shares

The Subscription Shares, when issued and fully paid, will rank pari passu in all respects among themselves and with the other Shares in issue including the rights to any dividends or distributions declared, made or paid at any time after the date of allotment.

There is no restriction to the subsequent sale of the Capitalisation Shares.

— 6 —

LETTER FROM THE BOARD

Special Mandate

The Subscription Shares shall be issued pursuant to a special mandate to be granted to the Directors which will be sought from the Independent Shareholders who are permitted to vote in the forthcoming SGM, and such special mandate shall not affect any general mandate which have been granted to the Directors. The Company will apply to the Stock Exchange for the approval of the listing of and permission to deal in the Subscription Shares.

INFORMATION ON THE GROUP

The Group is principally engaged in the business of sourcing, subcontracting, marketing and selling of garments and sportswear products. Reference is also made to the announcement of the Company dated 7 April 2008 whereby it was announced that in consideration of US$3 million payable by Diadora S.P.A. to Fan Shing International Limited (“Fan Shing”), Fan Shing, an indirect wholly-owned subsidiary of the Company, being the licensee, entered into a conditional termination agreement on 7 April 2008 with Diadora S.P.A., the licensor, with respect to the termination of the licensing of the manufacturing and distribution of Diadora branded products by Fan Shing (the “Termination Agreement”). The Group also entered into a conditional sale and purchase agreement on 7 April 2008 (the “Sale and Purchase Agreement”) to dispose of the stock-in-trade and certain trade debts in connection with the business of the manufacturing and distribution of Diadora branded products at the maximum consideration of RMB6,927,005 (equivalent to approximately HK$7,730,538) (subject to adjustment). Please also refer to the announcement of the Company dated 7 April 2008 for further details of the Termination Agreement and the Sale and Purchase Agreement.

After completion of the disposal aforesaid, the Group will no longer be engaged in the licensee business to use the trademark or tradename “Diadora” with the manufacture, advertising and sale and distribution of the licensed Diadora branded products and the Group will in the future concentrate its resources on its export business.

REASONS FOR THE SUBSCRIPTION

According to the interim report, as at 30 September 2007, the Group had unaudited consolidated net assets value of approximately HK$6.28 million and the Group’s gearing ratio was 0.96. The Board considers that the Subscription will enlarge the capital base of the Company and will reduce the gearing level of the Group thereby strengthening the financial position of the Group for its continuous development of the export business. The Board also considers that the improvement in gearing level of the Group would help the Company in obtaining and negotiating terms of banking facilities. The Directors believe that it is in the interests of the Company to capitalise the Capitalised Loan Amount owed by the Group to the Subscriber into share capital as loan capitalisation can reduce the overhanging effect of the Loan towards the financial position of the Company and would avoid unnecessary cash outflow from the Company in the event of repayment.

— 7 —

LETTER FROM THE BOARD

The Directors (including the independent non-executive Directors) consider that the terms of the Subscription Agreement (including the Subscription Price) are on normal commercial terms and the terms thereof are fair and reasonable and in the interests of the Company and its Shareholders as a whole.

SHAREHOLDING STRUCTURE

Set out below is the shareholding structure of the Company as at the Latest Practicable Date and immediately upon completion of the Subscription Agreement (assuming that there are no other changes in the issued share capital of the Company):

Number of Shares held before completion of the Subscription Wong Tek Sun, Takson and his associates 300,541,600 Public Shareholders 216,858,400 TOTAL 517,400,000	% of Shares held before completion of the Subscription 58.09 41.91 100.00	Number of Shares held after completion of the Subscription % of Shares held after completion of the Subscription 500,541,600 69.77 216,858,400 30.23 717,400,000 100.00

FUND RAISING ACTIVITIES IN THE PAST 12 MONTHS IMMEDIATELY PRECEDING THE LATEST PRACTICABLE DATE

The Company has not conducted any equity fund raising exercise in the 12 months immediately preceding the Latest Practicable Date.

CONNECTED TRANSACTION

The Subscription is a connected transaction for the Company and accordingly it is subject to the requirements of reporting, announcement and the approval of the Independent Shareholders by way of poll at the SGM as set out in Chapter 14A of the Listing Rules where the Subscriber and his associates will abstain from voting.

An Independent Board Committee will be constituted to make recommendations to the Independent Shareholders in relation to the terms of the Subscription Agreement and the special mandate to issue and allot the Subscription Shares. The Company has also appointed CIMB-GK as its independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in this regard.

— 8 —

LETTER FROM THE BOARD

SGM

A notice convening the SGM to be held at Salon III, 1st Floor, Harbour Plaza Hong Kong, 20 Tak Fung Street, Whampoa Garden, Hunghom, Kowloon, Hong Kong on Tuesday, 27 May 2008 at 4:00 p.m. is set out on pages 29 to 31 of this circular. An ordinary resolution would be put forward at the SGM for the shareholders to consider, and if thought fit, approve the Subscription Agreement and the transactions contemplated therein (including the special mandate to issue and allot the Subscription Shares).

A form of proxy for use at the SGM is also enclosed. Whether or not you are able to attend the SGM, you are required to complete and return the accompanying form of proxy in accordance with the instructions printed thereon and return it to the office of the Company’s branch share registrar in Hong Kong, Tricor Abacus Limited, at 26/F, Tesbury Centre, 28 Queen’s Road East, Hong Kong as soon as possible and, in any event, not less than 48 hours before the time appointed for the holding of the SGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the SGM or any adjournment thereof should you so wish.

PROCEDURES FOR DEMANDING A POLL AT THE SGM

The votes to be taken at the SGM in relation to the Subscription will be taken or by a poll, the results of which will be announced after the SGM.

Pursuant to Article 66 of the bye-laws of the Company, a resolution is put to the vote at the SGM, the resolution shall be decided on a show of hands unless voting by way of a poll is required under the Listing Rules (before or on the declaration of the result of the show of hands or on the withdrawal of any other demand for a poll) a poll is demanded:

• (a) by the chairman of the SGM; or

• (b) by at least three Shareholders present in person (or in the case of a Shareholder being a corporation by its duly authorized representative) or by proxy for the time being entitled to vote at the SGM; or

• (c) by a Shareholder or Shareholders present in person (or in the case of a Shareholder being a corporation by its duly authorized representative) or by proxy and representing not less than one-tenth of the total voting rights of all Shareholders having the right to vote at the SGM; or

• (d) by a Shareholder or Shareholders present in person (or in the case of a Shareholder being a corporation by its duly authorized representative) or by proxy and holding Shares conferring a right to vote at the SGM being shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all shares conferring that right; or

— 9 —

LETTER FROM THE BOARD

• (e) if required by the Listing Rules, by any Director or Directors who, individually or collectively, hold proxies in respect of Shares representing 5% or more of the total voting rights at the SGM.

A demand by a person as proxy for a Shareholder or in the case of a Shareholder being a corporation by its duly authorised representative shall be deemed to be the same as a demand by a Shareholder.

RECOMMENDATION

The Directors (including the independent non-executive Directors) are of the view that the terms and conditions of the Subscription Agreement (including the Subscription Price) are on normal commercial terms and the terms thereof are fair and reasonable and the issue and allotment of the Subscription Shares pursuant to the special mandate are in the interests of the Company and its Shareholders as a whole. Accordingly, the Directors recommend that you vote in favour of the resolutions to be proposed at the SGM.

Your attention is drawn to the letter from the Independent Board Committee as set out on pages 11 to 12 of this circular which contains its recommendation to the Independent Shareholders in respect of the resolution to approve the Subscription Agreement and the transactions contemplated thereunder (including the special mandate to issue and allot the Subscription Shares).

The advice of CIMB-GK to the Independent Board Committee and the Independent Shareholders as to whether the terms of the Subscription Agreement and the transactions contemplated therein (including the special mandate to issue and allot the Subscription Shares) are fair and reasonable and in the interest of the Company and its Shareholders as a whole are set out on pages 13 to 23 of this circular.

FURTHER INFORMATION

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

Yours faithfully, By order of the Board Takson Holdings Limited Wong Tek Sun, Takson Chairman

— 10 —

LETTER FROM INDEPENDENT BOARD COMMITTEE

The following is the text of the letter of advice from the Independent Board Committee setting out its recommendation to the Independent Shareholders in relation to the terms of the Subscription Agreement and the transaction contemplated thereunder and the special mandate to issue and allot the Subscription Shares .

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TAKSON HOLDINGS LIMITED 第一德勝控股有限公司 *

(incorporated in Bermuda with limited liability)

(Stock Code: 918)

To the Independent Shareholders

7 May 2008

Dear Sir or Madam,

CAPITALISATION OF LOAN BY CONNECTED PERSON AND SPECIAL MANDATE

We have been appointed as members of the Independent Board Committee to advise the Independent Shareholders in respect of the Subscription Agreement and the transactions contemplated therein, details of which are set out in the “Letter from the Board” contained in the circular of the Company (the “Circular”) of which this letter forms part. Unless the context otherwise requires, terms defined in the circular shall have the same meanings when used in this letter.

Your attention is drawn to the “Letter from the Board”, the advice of CIMB-GK in its capacity as the independent financial adviser to the Independent Board Committee and the Independent Shareholders in respect of whether the terms of the Subscription Agreement and the transactions contemplated therein (including the special mandate to issue and allot the Subscription Shares) are on normal commercial terms, fair and reasonable and in the interests of the Company and its Shareholders as a whole.

Having taken into account the advice of, and the principal factors and reasons considered by CIMB-GK in relation thereto as stated in its letter, we consider the terms of the transactions contemplated under Subscription Agreement (including the special mandate to issue and allot the Subscription Shares) are on normal commercial terms, fair and reasonable and are in

* For identification purpose only

— 11 —

LETTER FROM INDEPENDENT BOARD COMMITTEE

the interests of the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the SGM to approve the Subscription Agreement and the transactions contemplated therein (including the special mandate to issue and allot the Subscription Shares).

Yours faithfully,

Mr. Lee Kwok Cheung Mr. Chau Tsun Ming, Jimmy Mr. Cunningham, James Patrick Independent Board Committee

— 12 —

LETTER FROM CIMB-GK SECURITIES (HK) LIMITED

The following is the text of a letter of advice to the Independent Board Committee and the Independent Shareholders from CIMB-GK prepared for the purpose of incorporation in this circular:

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CIMB-GK Securities (HK) Limited

25th Floor, Central Tower 8 Queen’s Road Central Hong Kong

7 May 2008

To the Independent Board Committee and the Independent Shareholders of Takson Holdings Limited

Dear Sirs,

CAPITALISATION OF LOAN BY CONNECTED PERSON

We refer to our engagement as the independent financial adviser to the Independent Board Committee and the Independent Shareholders in relation to the Subscription Agreement. Details of the Subscription Agreement are contained in a circular (the “Circular”) to the Shareholders dated 7 May 2008, of which this letter forms part. Expressions used in this letter have the same meanings as defined in the Circular unless the context otherwise requires.

The Independent Board Committee comprising Mr. Lee Kwok Cheung, Mr. Chau Tsun Ming, Jimmy and Mr. Cunningham, James Patrick; being the independent non-executive Directors, has been formed to advise the Independent Shareholders in respect of the Subscription Agreement. The Subscriber is a connected person of the Company and the Subscription constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules and therefore subject to approval of the Independent Shareholders by way of poll at the SGM where the Subscriber and his associates will be required to abstain from voting.

In formulating our recommendation, we have relied on the information and facts provided by the Directors and contained or referred to in the Circular. The Directors have declared in a responsibility statement set out in the appendix to the Circular that they collectively and individually accept full responsibility for the accuracy of the information contained in the Circular. We have assumed that the information and representations contained or referred to in the Circular were true and accurate at the time they were made and continue to be so at the date of the SGM to be held to approve the Subscription Agreement. We have no reason to doubt the truth, accuracy and completeness of the information and representations provided to us by the Directors. The Directors have also confirmed that all material relevant information

— 13 —

LETTER FROM CIMB-GK SECURITIES (HK) LIMITED

has been supplied to us and they believe that no material facts have been omitted from the information supplied and opinions expressed by them.

We consider that we have reviewed sufficient information to reach an informed view, to justify reliance on the accuracy of the information contained in the Circular and to provide a reasonable basis for our recommendation. We have not, however, conducted an independent verification of the information nor have we conducted any form of in-depth investigation into the businesses and affairs or the prospects of the Group or any of its subsidiaries or associates.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our opinion in relation to the Subscription Agreement (including the special mandate to issue and allot the Subscription Shares), we have considered the following principal factors and reasons:

1. Background and Reasons

The Group is principally engaged in the business of sourcing, subcontracting, marketing and selling of garments and sportswear products. As announced by the Company on 7 April 2008 (“Disposal Announcement”), an indirect wholly-owned subsidiary of the Company, being the licensee, entered into a conditional termination agreement (the “Termination Agreement”) with Diadora S.P.A., the licensor, with respect to the termination of the licensing of the manufacturing and distribution of Diadora branded products by the Group. The Group also entered into a conditional sale and purchase agreement on 7 April 2008 (the “Sale and Purchase Agreement”) to dispose of the stock-in-trade and certain trade debts in connection with the business of the manufacturing and distribution of Diadora branded products. After completion of the disposal, the Group will no longer be engaged in the licensee business to use the trademark or tradename “Diadora” with the manufacture, advertising and sale and distribution of the licensed Diadora branded products and the Group will in the future concentrate its resources on its export business.

As at the Latest Practicable Date, the principal amount of the director’s loan owed by the Group to the Subscriber amounted to HK$41,035,674 with no fixed term of repayment which is bearing interest accruing at the rate of Hong Kong Prime Lending Rate less 0.5% prevailing from time to time.

As noted from the annual report of the Company for the year ended 31 March 2007, the Group incurred a loss of approximately HK$35.83 million, representing a 59.74%

— 14 —

LETTER FROM CIMB-GK SECURITIES (HK) LIMITED

increase when compare with the loss incurred by the Group for the year ended 31 March 2006 of approximately HK$22.43 million. The Group had a consolidated net assets of approximately HK$21.79 million as at 31 March 2007, representing a 60.07% decrease when compare with the Group’s consolidated net assets of approximately HK$54.57 million as at 31 March 2006.

As noted from the interim report of the Company for the six months ended 30 September 2007 (“Interim Report”), the Company continued to record net loss in the first six months of the financial year of 2007, and the loss had widened to approximately HK$16.57 million compared to that of approximately HK$11.70 million for the corresponding period in 2006. As a result of the loss incurred in the first six months of the financial year of 2007, the Group’s consolidated net asset further decreased to approximately HK$6.28 million as at 30 September 2007.

The Directors believe that it is in the interest of the Company to capitalise the Capitalised Loan Amount owed by the Group to the Subscriber into share capital as the Subscription will enlarge the capital base of the Company and will reduce the gearing level of the Group thereby strengthening the financial position of the Group for its continuous development of the export business. The loan capitalization can also avoid unnecessary cash outflow from the Company in the event of repayment. We also note from the letter from the board that the Directors consider that the improvement in gearing level of the Group would help the Company in obtaining and negotiating terms of banking facilities.

Given the Group’s recent losses, we concur that it is in the interest of the Company to strengthen its financial position by enlarging its capital base and reducing the gearing level and to reserve its cash flow for its future business development of the export business.

Having considered (i) the Group’s net assets and the recent loss position; (ii) the fact that the Subscription will not only reduce the Group’s indebtedness level but also strengthen the Company’s capital base; and (iii) the fairness of the terms of the Subscription Agreement as elaborated below, we concur with the Directors’ view that the Subscription Agreement is in the interests of the Company and the Shareholders as a whole.

— 15 —

LETTER FROM CIMB-GK SECURITIES (HK) LIMITED

2. Principal terms of the Subscription Agreement

(i) Full and final settlement of the Capitalised Loan Amount

Pursuant to the terms of the Subscription Agreement, 200,000,000 Subscription Shares at an issue price of HK$0.18 per Subscription Share will be issued to the Subscriber as consideration for full and final settlement of the Capitalised Loan Amount.

(ii) The Subscription Price

The Subscription Price is HK$0.18 per Subscription Share and is determined by reference to the current market price of the Shares. The Subscription Price of each Subscription Share represents:

• (i) a discount of approximately 15.09% to the closing price of HK$0.212 per Share as quoted on the Stock Exchange on the Last Dealing Date (being the last day of trading in the Shares on the Stock Exchange prior to the release of the Announcement, “Last Dealing Date”);

• (ii) a discount of approximately 10.45% to the average closing price of HK$0.201 per Share as quoted on the Stock Exchange from 18 April 2008 to 24 April 2008, both days inclusive, being the last five trading days including the Last Dealing Date;

• (iii) a discount of approximately 14.81% to the average closing price of HK$0.2113 per Share as quoted on the Stock Exchange from 11 April 2008 to 24 April 2008, both days inclusive, being the last ten trading days including the Last Dealing Date;

• (iv) a discount of approximately 18.92% to the closing price of HK$0.222 per Share as quoted on the Stock Exchange on the Latest Practicable Date;

• (v) a premium of approximately 328.57% over the audited net assets value per Share of HK$0.042 as at 31 March 2007; and

• (vi) a premium of approximately 1,400% over the unaudited net assets value per Share of HK$0.012 as at 30 September 2007.

— 16 —

LETTER FROM CIMB-GK SECURITIES (HK) LIMITED

In assessing the fairness and reasonableness of the Subscription Price, we have considered the following principal factors:

(A) Historical market price and liquidity of the Shares

We have reviewed the movements in trading prices of the Shares during the period from 25 September 2007 to 24 April 2008, representing the six-month period immediately preceding and including the date of the Announcement (the “Pre-Announcement Period”) and up to the Latest Practicable Date (the “Review Period”).

==> picture [363 x 193] intentionally omitted <==

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

0.7
0.6
Share
0.5 Price($)
0.4
0.3
0.2
0.1
Sep 28 Oct 31 Nov 30 Dec31 Jan 31 Feb 29 Mar 31 Latest
Practicable
Date
----- End of picture text -----

Source: Bloomberg

During the Review Period, the closing price of the Shares ranged from the lowest of HK$0.174 per Share (recorded on 18 March 2008) to the highest of HK$0.66 per Share (recorded on 29 October 2007). The average closing price of the Shares for the Review Period is approximately HK$0.32.

For the period between 25 September 2007 to 26 October 2007, the closing price of the Shares traded within a range of between HK$0.435 to HK$0.5 per Share for most of the time. On 29 October 2007, the price of the Shares increased rapidly by 43.48% from HK$0.46 to HK$0.66 per Share; since then, for the rest of the Review Period, the price of the Shares has fallen substantially from HK$0.66 per Share on 29 October 2007 to HK$0.212 per Share on the Last Dealing Date, representing a dropped of 67.88%. We note that during the Review Period, the Company has announced three announcements on 29 October 2007, 30 October 2007 and 21 February 2008, respectively, stating that it was not aware of any reasons for the change in the price and trading volumes of the Shares. Save for these announcements, during the Review Period, the Company announced its interim results announcement on 29 December 2007.

— 17 —

LETTER FROM CIMB-GK SECURITIES (HK) LIMITED

As noted from the interim results announcement, the Group has recorded a loss attributable to Shareholders of approximately HK$16.6 million for the six months ended 30 September 2007 as compared to a loss attributable to Shareholders of approximately HK$11.7 million for the six months ended 30 September 2006.

The closing price of the Shares as at the Latest Practicable Date was HK$0.222 per Share, which is 4.72% above the closing price of the Shares as at the Last Dealing Date and is 18.92% below the Subscription Price, respectively.

We have also reviewed the historical trading volume of the Shares during the Review Period. The average daily trading volume of the Shares, the percentages of average daily trading volume of the Shares as compared to the total number of issued Shares and the Shares held by the public during the Review Period are shown in Table 1 below.

Table 1 – Historical average daily trading volume of the Shares

			% of average
		% of average	daily trading
		daily trading	volume to the
		volume to	total number of
		the total	issued Shares
	Average daily	number of	held by the
Month	trading volume	issued Shares	public
		(Note 1)	(Note 2)
25 Sep-07 to 28 Sept-07	1,258,000	0.24%	0.58%
Oct-07	4,307,048	0.83%	1.99%
Nov-07	1,107,905	0.21%	0.51%
Dec-07	1,290,265	0.25%	0.59%
Jan-08	617,714	0.12%	0.28%
Feb-08	2,926,137	0.57%	1.35%
March-08	367,067	0.07%	0.17%
1 April to the Last Dealing
Date	329,059	0.06%	0.15%
From the Last Dealing
Date up to the Latest
Practicable Date	1,082,800	0.21%	0.50%

Source: Bloomberg

— 18 —

LETTER FROM CIMB-GK SECURITIES (HK) LIMITED

Notes:

1. Based on 517,400,000 Shares in issue as at the Last Dealing Date.

2. Based on 216,858,400 Shares held by the public Shareholders as at the Last Dealing Date.

3. No trading in the Shares on 15 November 2007, 17 January 2008, 6 February 2008, 11 February 2008, 13 March 2008, 26 March 2008, 27 March 2008 and 28 March 2008.

Table 1 demonstrates that during the Pre-Announcement Period, the average daily trading volume of the Shares was in the range of approximately 0.06% to 0.83% of the total number of issued Shares as at the Last Dealing Date and approximately 0.15% to 1.99% of the total number of the Shares held in public Shareholders as at the Last Dealing Date.

The average daily trading volume of the Shares from 25 April 2008, being the trading day immediately after the date of the Announcement, up to the Latest Practicable Date was 1,082,800 Shares, representing approximately 0.21% of the total number of issued Shares as at the Latest Practicable Date, and approximately 0.50% to the total number of the Shares held by the public Shareholders as at the Latest Practicable Date.

During the Review Period, 8 days had no trading in the Shares, representing approximately 5.44% of the total trading days of the Shares in the Review Period. The above statistics showed that the trading of the Shares was inactive.

(B) Price-earning ratio analysis

In addition to the historical share price analysis, price-earning ratio is also a common valuation method to value a company with recurrent income. However, as the Company has recorded losses for the financial year ended 31 March 2006 and 2007, price-earning ratio analysis in the case of the Company is not appropriate.

(C) Net assets value analysis

According to the Company’s annual report for the year ended 31 March 2007, the Company had audited consolidated net assets value of approximately HK$21.79 million, representing an audited net assets value per Share of approximately HK$0.042. The Company’s unaudited consolidated net assets value as at 30 September 2007 as reported in its Interim Report further decreased to approximately HK$6.28 million, representing an unaudited net assets value per Share of approximately HK$0.012. In addition, as noted from the Disposal Announcement, based on the unaudited net assets value of the Diadora licensee

— 19 —

LETTER FROM CIMB-GK SECURITIES (HK) LIMITED

business as at the date of the Sale and Purchase Agreement, it is estimated that the Company will recognize a gain (the “Gain”) on disposal of approximately HK$11.44 million (assuming that there will be no adjustment to the consideration under the Sale and Purchase Agreement). After taking into account of such gain on disposal, the unaudited consolidated net assets value of the Company as at 30 September 2007, as adjusted by the Gain is approximately HK$17.72 million. Given that the Subscription Price represents i) a premium of approximately 328.57% over the audited net assets value per Share as at 31 March 2007; ii) a premium of approximately 1,400% over the unaudited net assets value per Share as at 30 September 2007; and iii) a premium of approximately 425.6% over the unaudited net assets value per Share as at 30 September 2007 as adjusted for the Gain, the completion of the Subscription will lead to an enhancement of the net assets value per Share of the Company.

(D) Comparable analysis

As fund raising by way of issuance of the Subscription Shares has a similar nature with a share placement, in considering the reasonableness of the Subscription Price, for reference purpose, we have also reviewed the recently announced share placements. We set out below certain information in related to 30 recent share placements conducted by companies listed on the main board of the Stock Exchange (the “Comparables”) from December 2007 to the Last Dealing Date:

Date of	Stock		(Discount)/
announcement	Code	Name of company	premium %
22-Apr-08	412	Heritage Int’l Hldgs Ltd	(15.45)
18-Apr-08	408	Yip’s Chemical Hldgs Ltd	(6.78)
15-Apr-08	254	eCyberChina Hldgs Ltd	(16.32)
10-Apr-08	268	Kingdee Int’l Software Group Co. Ltd	(9.80)
8-Apr-08	901	Radford Capital Investment Limited	(2.65)
28-Mar-08	552	China Communications Services	(0.57)
		Corporation Limited
26-Mar-08	1222	Wang On Group Limited	(8.54)
20-Mar-08	223	Kenfair Int’l (Hldgs) Ltd	(11.11)
19-Mar-08	629	Yue Da Holdings Limited	—
27-Feb-08	61	Venture Int’l Inv. Hldgs. Ltd.	(13.79)
26-Feb-08	412	Heritage Int’l Hldgs Ltd	(13.33)
22-Feb-08	569	China Automation Group Ltd	(8.97)
11-Feb-08	885	Forefront Group Limited	(9.50)
11-Feb-08	1159	Karce International Holdings Co. Ltd.	(13.00)
4-Feb-08	612	China Investment Fund Co. Ltd	(19.57)

— 20 —

LETTER FROM CIMB-GK SECURITIES (HK) LIMITED

Date of	Stock		(Discount)/
announcement	Code	Name of company	premium %
29-Jan-08	2324	Sino Katalytics Inv. Corp.	(5.41)
3-Jan-08	901	Radford Capital Investment Limited	1.11
20-Dec-07	600	Honesty Treasure Int’l Hldgs Ltd	(7.87)
18-Dec-07	161	Catic Shenzhen Hldgs Ltd	(6.98)
17-Dec-07	575	Regent Pacific Group Limited	—
17-Dec-07	433	Sun Man Tai Holdings Limited	(7.69)
13-Dec-07	326	China Star Entertainment Limited	(11.76)
12-Dec-07	996	Oriental Ginza Hldgs Ltd	(41.18)
11-Dec-07	1004	Rising Development Hldgs Ltd	(15.52)
10-Dec-07	959	A-Max Holdings Limited	(6.50)
10-Dec-07	193	Capital Estate Limited	(12.00)
7-Dec-07	2366	Qin Jia Yuan Media Services	—
		Company Limited
7-Dec-07	629	Yue Da Holdings Limited	(16.39)
4-Dec-07	36	Far East Holdings Int’l Ltd	(16.27)
4-Dec-07	862	New World Mobile Hldgs Ltd	(13.04)
		Average	(10.30)

As demonstrated in the table above, the placing prices of the Comparables ranged from a discount of approximately 41.18% to a premium of 1.11% to the closing prices on the last trading day before the respective placements, with an average discount of approximately 10.30%. The Subscription Price of HK$0.18 per Subscription Share represents a discount of 15.09% to the closing price of HK$0.212 per Share as quoted on the Stock Exchange on the Last Dealing Date which is within the range and higher than the average discount of the Comparables.

Based on the annual reports of the Company, we note that the Group’s export business had only recorded small segmental operating profit before allocation of corporate expenses for the past two financial years. After completion of the Termination Agreement, the Group will concentrate its effort on growing the export business as stated in the Company’s announcement dated 7 April 2008. Furthermore, the trading of the Shares was inactive during the Review Period as illustrated in the section headed “(A) Historical market price and liquidity of the Shares” of our letter. Given the above, we consider that it would have been difficult for the Company to conduct a share placement for the Loan repayment at or below the average discount of the Comparables at the Latest Dealing Date.

— 21 —

LETTER FROM CIMB-GK SECURITIES (HK) LIMITED

Having considered the i) historical market price and liquidity of the shares; ii) the price-earning ratio analysis; iii) the net assets value analysis and; iv) the comparable analysis above, we consider that the Subscription Price of HK$0.18 per Share is fair and reasonable.

3. Financial Effects

(i) Earnings

Upon settlement of the Capitalised Loan Amount, the Company will no longer be required to pay interest of Hong Kong prime lending rate less 0.5% per annum on the Capitalised Loan Amount.

(ii) Net assets

The Group had unaudited consolidated net assets value of approximately HK$6.28 million as at 30 September 2007. Upon completion of the Subscription Agreement, the Group’s net assets value will be increased by the amount of the Capitalised Loan Amount less related expenses.

(iii) Cash flow

As the proceeds from the issue of the Subscription Shares to be issued pursuant to the Subscription Agreement will be applied for full and final settlement of the Capitalised Loan Amount, the Subscription will enable the Company to free the cash flow for the development of its export business.

(iv) Borrowings

Upon completion of the Subscription, the Capitalised Loan Amount will be fully settled, thus reducing the Group’s total borrowings by the amount of the Capitalised Loan Amount. According to the interim report, as at 30 September 2007, the Group’s gearing ratio was 0.96. Assuming that the Subscription Agreement was completed as at 30 September 2007, the Group’s gearing ratio would be reduced to 0.76.

4. Dilution Effect

As at the Latest Practicable Date, 216,858,400 Shares, representing approximately 41.91% of the existing issued share capital of the Company, were held by public Shareholders. An aggregate of 200,000,000 Subscription Shares will be issued to the Subscriber pursuant to the Subscription Agreement. The Subscription Shares to be issued to the Subscriber represents approximately 38.65% of the Company’s existing

— 22 —

LETTER FROM CIMB-GK SECURITIES (HK) LIMITED

issued share capital and approximately 27.88% of the Company’s issued share capital as enlarged by the Subscription. Upon completion of the Subscription, the percentage of Shares held by public Shareholders will decrease from 41.91% to 30.23%. Having taken into account of the recent financial performances of the Group, the benefits of the Subscription and the fair and reasonableness of the Subscription price as explained above, we consider that the dilution effect on the shareholding of the public Shareholders arising from the Subscriptions to be acceptable.

RECOMMENDATION

Having considered the principal factors and reasons set out above, we consider that the terms of the Subscription Agreement (including the special mandate to issue and allot the Subscription Shares) are on normal commercial terms, fair and reasonable and in the interests of the Company and the Shareholders as a whole. Accordingly, we advise (i) the Independent Board Committee to advise the Independent Shareholders, and (ii) the Independent Shareholders, to vote in favour of the ordinary resolution to be proposed at the SGM to approve the Subscription Agreement.

Yours faithfully, For and on behalf of CIMB-GK Securities (HK) Limited Alex Lau Flavia Hung Director Director Head of Corporate Finance

— 23 —

GENERAL INFORMATION

APPENDIX

RESPONSIBILITY STATEMENT

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

1. DISCLOSEABLE INTEREST AND SHORT POSITIONS OF DIRECTORS AND CHIEF EXECUTIVE IN THE SHARE CAPITAL OF THE COMPANY AND ITS ASSOCIATED CORPORATIONS

As at the Latest Practicable Date, the interests and short positions of the Directors in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the Securities and Future Ordinance (“SFO”)) which 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 in which they were deemed or taken to have under such provisions of the SFO) or which were required pursuant to section 352 of the SFO, to be entered into the register referred to therein or which were required pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers (the “Model Code”) contained in the Listing Rules to be notified to the Company and the Stock Exchange were as follows:

(a) Long positions in Shares

		Number of	Shares beneficially held	Shares beneficially held
	Personal	Family	Corporate	Total	Percentage
Name of directors	interests	interests	interests	interests	of holding
Mr. Wong Tek Sun,	4,621,600	10,800,000	285,120,000	300,541,600	58.1%
Takson			(Note)
Ms. Pang Shu Yuk,	10,800,000	4,621,600	285,120,000	300,541,600	58.1%
Adeline Rita			(Note)

Note:

Such shares are held by Takson International Holdings Limited, the entire issued share capital of which is held by Wangkin Investments Inc. (“WII”) as trustee of the Wangkin Investments Unit Trust (the “Unit Trust”). All issued and outstanding units in the Unit Trust are beneficially held by Guardian Trustee Limited as trustee of the Wang & Kin Family Trust (the “Family Trust”). The discretionary beneficiaries of the Family Trust are, inter alia, Ms. Pang Shu Yuk, Adeline Rita and the children of Mr. Wong Tek Sun, Takson and Ms. Pang Shu Yuk, Adeline Rita, namely, Mr. Wong Chi Wang, Calvin and Mr. Wong Chi Kin, Christopher.

— 24 —

GENERAL INFORMATION

APPENDIX

Mr. Wong Tek Sun, Takson, being an executive Director of the Company, owns 50% of the issued share capital of WII and he, as one of the founders of the Family Trust, the husband of Ms. Pang Shu Yuk, Adeline Rita and the father of Mr. Wong Chi Kin, Christopher who is under the age of 18, is deemed to have interests in 285,120,000 shares held by Takson International Holdings Limited in the issued share capital of the Company under the SFO.

Ms. Pang Shu Yuk, Adeline Rita, being an executive Director of the Company, owns 50% of the issued share capital of WII and she, as one of the discretionary beneficiaries of the Family Trust and the mother of Mr. Wong Chi Kin, Christopher who is under the age of 18, is deemed to have interests in the 285,120,000 shares held by Takson International Holdings Limited in the issued share capital of the Company under the SFO.

(b) Long positions in underlying Shares

Each of Mr. Wong Tek Sun, Takson and Ms. Pang Shu Yuk, Adeline Rita has share options to subscribe for 5,170,000 Shares.

(c) Long positions in ordinary shares of associated corporations of the Company

Each of Mr. Wong Tek Sun, Takson and Ms. Pang Shu Yuk, Adeline Rita beneficially owns 1 share of US$1 each of WII, representing 50% of its entire issued share capital. Each of them is also deemed to have interest in 100% interest in Takson International Holdings Limited under the SFO. Mr. Wong Tek Sun, takson and Ms. Pang Shu Yuk, Adeline Rita are directors of both WII and Takson International Holdings Limited.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors and the chief executive of the Company had any interests and short positions in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which 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 in which they were deemed or taken to have under such provisions of the SFO) or which were required, pursuant to section 352 of the SFO, to be entered into the register referred to therein or pursuant to the Model Code contained in the Listing Rules to be notified to the Company and the Stock Exchange.

— 25 —

GENERAL INFORMATION

APPENDIX

2. DISCLOSEABLE INTEREST UNDER DIVISIONS 2 AND 3 OF PART XV OF THE SFO

As at the Latest Practicable Date, according to the register kept by the Company pursuant to section 336 of the SFO and so far as was known to, or can be ascertained after reasonable enquiry by the Directors, the following persons (other than the Directors and chief executive of the Company), had or was taken or deemed to have, an interest or short position in the shares and underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO or who was directly and 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 or had any option in respect of such capital were as follows:

		Number of Shares	Percentage of
Name	Capacity	beneficially held	holding
Wangkin Investments	Interest of a controlled	285,120,000	55.1%
Inc.(Note)	corporation
Takson International	Beneficial owner	285,120,000	55.1%
Holdings Limited
(Note)

Note: Takson International Holdings Limited is a wholly-owned subsidiary of Wangkin Investments Inc., which in turn is owned as to 50% by Mr. Wong Tek Sun, Takson, and as to 50% by Ms. Pang Shu Yuk, Adeline Rita, both of whom being the executive Directors of the Company.

Save as disclosed above, so far as is known to the Directors, as at the Latest Practicable Date, there was no other entity or person who had an interest or short position in the shares and underlying shares in the Company (including interest in options, if any) which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who was directly or indirectly, interested in the Shares representing 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 other members of the Group or had any option in respect of such capital.

3. SERVICE CONTRACTS

None of the Directors had any existing or proposed service contract with any member of the Group (excluding contracts expiring, or determinable by the Group within one year without payment of compensation other than statutory compensation).

— 26 —

GENERAL INFORMATION

APPENDIX

4. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors were not aware of any material adverse change in the financial or trading position of the Group since 31 March 2007, being the date up to which the latest published audited financial statements of the Group were made up.

5. COMPETING INTERESTS

As at the Latest Practicable Date, none of the Directors of the Company and their respective associates (as defined in the Listing Rules) have any interest in a business, which competes or may compete with the business of the Group.

6. EXPERT

• (a) The following is the qualification of CIMB-GK, which has given its opinion or advice which is contained in this circular:

Name

Qualification

CIMB-GK

a licensed corporation to conduct type 1 (dealing in securities), type 4 (advising on securities) and type 6 (advising on corporate finance) regulated activities under the SFO

• (b) As at the Latest Practicable Date, CIMB-GK did not have any shareholding, direct or indirect, in the Group or any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in the Group, nor did it have any interest, direct or indirect, in any assets which had, since 31 March, 2007, being the date up to which the latest published audited financial statements of the Group were made up, been acquired or disposed of by or leased to the Group, or were proposed to be acquired or disposed of by or leased to the Group.

• (c) CIMB-GK has given and has not withdrawn its written consent to the issue of this circular with the inclusion of its letter and references to its name in the form and context in which they appear.

— 27 —

GENERAL INFORMATION

APPENDIX

7. DIR ECTOR’S I NTER ESTS I N ASSETS/CONTR ACTS A N D OTH ER INTERESTS

• (a) As at the Latest Practicable date, none of the Directors has any direct or indirect interest in any assets which have been acquired or disposed of by or leased to any member of the Group or are proposed to be acquired or disposed of by or leased to any member of the Group since 31 March, 2007, being the date up to which the latest published audited financial statements of the Group were made.

• (b) As at the Latest Practicable date, none of the Directors is materially interested in any contract or arrangement entered into by any member of the Group since 31 March, 2007, being the date up to which the latest published audited financial statements of the Group were made which was significant in relation to the business of the Group.

8. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection during normal business hours on any weekday (except public holidays) at the Head Office and Principal Place of Business in Hong Kong of the Company at 5th Floor, South Wing Harbour Centre, Tower One, 1 Hok Cheung Street, Hunghom, Kowloon, Hong Kong from 8 May 2008 up to 27 May 2008:

• (a) the Subscription Agreement;

• (b) the letter from the Independent Board Committee, the text of which is set out on pages 11 to 12 of this circular;

• (c) the letter from CIMB-GK, the text of which is set out on pages 13 to 23 of this circular; and

• (d) the written consent of CIMB-GK referred to in the section headed “Expert” in this Appendix.

— 28 —

NOTICE OF SGM

==> picture [90 x 55] intentionally omitted <==

TAKSON HOLDINGS LIMITED

第一德勝控股有限公司 *

(incorporated in Bermuda with limited liability)

(Stock Code: 918)

NOTICE OF SPECIAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that a Special General Meeting of Takson Holdings Limited (the “Company”) will be held at Salon III, 1st Floor, Harbour Plaza Hong Kong, 20 Tak Fung Street, Whampoa Garden, Hunghom, Kowloon, Hong Kong on Tuesday, 27 May 2008 at 4:00 p.m. for the purposes of considering and, if thought fit, passing, with or without modifications, the following resolution of the Company:

ORDINARY RESOLUTION

1. “THAT:

• (a) the subscription agreement dated 24 April, 2008 (the “ Subscription Agreement ”) entered into between the Company and Mr. Wong Tek Sun, Takson (the “ Subscriber ”), pursuant to which the Company agreed to issue and allot to the Subscriber and the Subscriber agreed to subscribe for an aggregate of 200,000,000 subscription shares of HK$0.10 each in the share capital of the Company (the “ Subscription Shares ”) at a price of HK$0.18 per Subscription Share as consideration for full and final settlement of a loan in the amount of HK$36,000,000 (being a portion of the loan owed by an indirect whollyowned subsidiary of the Company to the Subscriber in the principal amount of HK$41,035,674), a copy of which marked “A” has been produced to the meeting and signed by the chairman of the meeting for the purpose of identification and a summary of which are set out in the circular of the Company dated 7 May, 2008, and the transactions contemplated under the Subscription Agreement, be and are hereby approved, confirmed and ratified and the directors of the Company (the “ Directors ”) be and are hereby authorised on behalf of the Company to allot and issue the 200,0000,000 Subscription Shares to the Subscriber pursuant to the Subscription Agreement (the “ Special Mandate ”), such Subscription Shares, when issued and fully paid, ranking pari passu in all respects among themselves and with the other shares of the Company then in issue including the rights to

* For identification purpose only

— 29 —

NOTICE OF SGM

any dividends or distributions declared, made or paid at any time after the date of allotment and to do all such acts and things and execute all such documents which they may in their discretion consider necessary or desirable for the purpose of or in connection with implementation of the Subscription Agreement and any transactions contemplated thereunder; and

• (b) the Special Mandate is in addition to, and shall not prejudice or revoke any existing general mandate granted to the Directors by the shareholders of the Company or such other general or special mandate(s) which may from time to time be granted to the Directors prior to or after the passing of this resolution.”

By order of the Board Takson Holdings Limited Wong Tek Sun, Takson Chairman

Hong Kong, 7 May, 2008

Registered office: Clarendon House 2 Church Street Hamilton HM11 Bermuda

Head office and principal place of business in Hong Kong: 5th Floor, South Wing Harbour Center, Tower One 1 Hok Cheung Street Hunghom, Kowloon Hong Kong

Notes:

1. The ordinary resolution above shall be decided by way of poll. Mr. Wong Tek Sun, Takson together with his associates will abstain from voting on such ordinary resolutions.

2. A member of the Company entitled to attend and vote at the special general meeting are entitled to appoint one or, if he/she is the holder of two or more shares, more than one proxy as their proxy to attend and vote on behalf of themselves. A proxy need not be a member of the Company.

3. In order to be valid, the form of proxy, together with a duly notarised power of attorney or other document of authority, if any, under which the form is signed or a certified copy of such power of authority, must be deposited at Company’s branch share registrar in Hong Kong, Tricor Abacus Limited, at 26/F., Tesbury Centre, 28 Queen’s Road East, Hong Kong not less than 48 hours before the time for holding the special general meeting.

— 30 —

NOTICE OF SGM

1. Completion and return of the proxy form will not preclude members from attending and voting in person at the aforesaid meeting.

2. As at the date of this notice, the board of Directors of the Company comprises two executive Directors, namely Mr. Wong Tek Sun, Takson and Ms. Pang Shu Yuk, Adeline Rita; three independent non-executive Directors, namely Mr. Lee Kwok Cheung, Mr. Chau Tsun Ming, Jimmy and Mr. Cunningham, James Patrick; and one non-executive Director, namely Mr. Wong Tak Yuen.

— 31 —