Luye Pharma Group Limited — Proxy Solicitation & Information Statement 2008

Apr 24, 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 you should take, you should consult your stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.

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

(Incorporated in Bermuda with limited liability)

(Stock Code: 918)

MAJOR TRANSACTION –

PROPOSED RELEASE OF LICENCE AGREEMENT AND SUB-LICENCES AND SALE OF ASSETS

A letter from the Board of Directors is set out on pages 5 to 12 of this circular.

25 April 2008

CONTENTS

	Page
Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Appendix I — Financial Information of the Group. . . . . . . . . . . . . . . . . . . . . . . .	13
Appendix II — General Information of the Group. . . . . . . . . . . . . . . . . . . . . . . . .	15

— i —

DEFINITIONS

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

“Assets”	the Stock and the Book Debts
“Board”	the board of Directors
“Book Debts”	all trade debts net of the relevant deposits owing to Shanghai
	Diadora and Suzhou Diadora as at Completion in connection
	with the Business
“Business”	the licensee business to use the trademark or tradename “Diadora”,
	and of the design known as forked badge device in connection
	with the manufacture, advertising, sale and distribution of the
	Licensed Products within the Licensed Territories under the
	Licence Agreement and the Sub-Licences carried on by the
	Vendors
“Business Day”	a day, other than a “general holiday” (as defined in the General
	Holidays Ordinance (Chapter 149 of the Laws of Hong Kong)),
	Saturday and any day on which a tropical cyclone warning No.
	8 or above is hoisted or remains hoisted between 9:00 a.m.
	and 12:00 noon and is not lowered at or before 12:00 noon
	or on which a “black” rainstorm warning signal is hoisted or
	remains in effect between 9:00 a.m. and 12:00 noon and is not
	discontinued at or before 12:00 noon, on which commercial
	banks are generally open for banking business in Hong Kong
“Company”	Takson Holdings Limited, a company incorporated in Bermuda
	with limited liability, the shares of which are listed on the Main
	Board of the Stock Exchange
“Completion”	the completion of the Sale and Purchase Agreement which is
	scheduled to take place at 5:00 p.m. on the second Business
	Day after the day of fulfilment of the conditions to the Sale
	and Purchase Agreement and the setting up of a wholly foreign-
	owned enterprise by Winor at any time after signing of the Sale
	and Purchase Agreement but in any event on or before the Long
	Stop Date, failing which, Winor shall nominate a wholly foreign-
	owned enterprise to purchase the Assets

— 1 —

	DEFINITIONS
“Controlling Shareholders”	Takson International Holdings Limited, Wangkin Investments
	Inc, Mr. Wong Tek Sun, Takson and Ms. Pang Shu Yuk, Adeline
	Rita
“Diadora”	Diadora S.P.A. (formerly known as Diadora – Invicta S.p.A.),
	a company incorporated in Italy and the licensor to the Licence
	Agreement
“Directors”	the directors of the Company (including non-executive director
	and independent non-executive directors of the Company)
“Disposal”	the proposed release of the Licence Agreement and the Sub-
	Licences pursuant to the Termination Agreement and sale and
	purchase of the Assets pursuant to the Sale and Purchase
	Agreement
“Effective Date”	the date of completion of both the conditions precedent to the
	Termination Agreement
“Fan Shing”	Fan Shing International Limited, an indirect wholly-owned
	subsidiary of the Company
“Group”	the Company and its subsidiaries
“Hong Kong”	the Hong Kong Special Administrative Region of the PRC
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong
“Independent Third Parties”	entities and their ultimate beneficial owner(s) which are third
	parties independent of and not connected with the Company
	and any connected persons (as defined in the Listing Rules) of
	the Company
“Latest Practicable Date”	21 April 2008, being the latest practicable date prior to the
	printing of this circular for the purpose of ascertaining relevant
	information contained herein
“Licence Agreement”	the licence agreement dated 22 December 2004 entered into
	between Diadora as licensor, Fan Shing as licensee and the
	Company as guarantor for the manufacturing and distribution
	of Diadora branded products

— 2 —

	DEFINITIONS
“Licensed Products”	(i) soccer sportswear, tennis sportswear, running sportswear,
	leisure wear; and (ii) soccer footwear, tennis footwear, running
	footwear, jogging footwear, leisure footwear, sandals, and related
	accessories (i.e. bags, caps, hats, balls, shin guards, gloves) and
	footwear belonging to the “Heritage” line
“Licensed Territories”	Hong Kong, the PRC and the Macau Special Administrative
	Region of the PRC
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange
“Long Stop Date”	the date falling four (4) calendar months after the date of the Sale
	and Purchase Agreement or such other date as may be agreed
	between the parties thereto in writing from time to time
“PRC”	the People’s Republic of China, for the purpose of this circular,
	excludes Hong Kong and the Macau Special Administrative
	Region of the PRC
“Purchaser”	the WOFE to be nominated by Winor to be the purchaser of the
	Assets
“RMB”	Renminbi, the lawful currency of the PRC
“Sale and Purchase	the conditional asset purchase agreement dated 7 April 2008
Agreement”	entered into between the Vendors, Winor and the Company in
	relation to the sale and purchase of the Assets
“SFO”	Securities and Futures Ordinance (Cap.571 of the Laws of Hong
	Kong)
“Shanghai Diadora”	上海迪阿多納國際貿易有限公司(Shanghai Diadora International
	Trading Company Limited), a wholly foreign-owned enterprise
	established in the PRC with limited liability and an indirect
	wholly-owned subsidiary of the Company
“Shareholders”	shareholders of the Company
“Stock”	the stock-in-trade of the Business as at Completion, including
	without limitation, raw materials, work in progress and finished
	goods
“Stock Exchange”	The Stock Exchange of Hong Kong Limited

— 3 —

DEFINITIONS

“Sub-Licences”	the sub-licence agreement letters dated 1 July 2005 and 12
	November 2005 from Fan Shing to Suzhou Diadora and Shanghai
	Diadora respectively
“Subscription and	the conditional subscription and shareholders’ agreement dated 7
Shareholders’ Agreement”	April 2008 entered into among Win Hanverky Holdings Limited,
	Windia Holdings Limited, Diadora and Winor pursuant to which,
	inter alia, each of Diadora and Windia Holdings Limited has
	agreed to subscribe for shares in the capital of Winor
“Suzhou Diadora”	蘇州迪阿多納體育用品有限公司(Suzhou Fan Shing International
	Limited), a wholly foreign-owned enterprise established in
	the PRC with limited liability and an indirect wholly-owned
	subsidiary of the Company
“Termination Agreement”	the conditional termination and release agreement dated 7 April
	2008 entered into among Diadora, the Vendors and the Company
	in relation to, among others, the termination of the Licence
	Agreement and the Sub-Licences
“Vendors”	Fan Shing, Shanghai Diadora and Suzhou Diadora
“Winor”	Winor International Company Limited, a company incorporated
	in Hong Kong and a party to the Sale and Purchase Agreement
	who agreed to procure the WOFE to purchase the Assets from
	the Vendors
“WOFE”	a company established or to be established in the PRC which will
	be a wholly foreign-owned enterprise nominated by Winor
“Written Approval”	written approval from Takson International Holdings Limited,
	Mr. Wong Tek Sun, Takson and Ms. Pang Shu Yuk, Adeline
	Rita, the controlling shareholders of the Company approving
	the Disposal
“%”	per cent.

Translations of RMB into HK$ are based on the exchange rate of RMB1 to HK$1.116 for information purpose only. Such translations should not be construed as a representation that the relevant amounts have been, could have been, or could be converted at that or any other rate or at all.

— 4 —

LETTER FROM THE BOARD

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TAKSON HOLDINGS LIMITED

(Incorporated in Bermuda with limited liability)

(Stock Code: 918)

Executive Directors: Mr. Wong Tek Sun, Takson Ms. Pang Shu Yuk, Adeline Rita

Non-Executive Director:

Registered Office: Clarendon House 2 Church Street Hamilton HM 11 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 Place of Business in Hong Kong: 5th Floor, South Wing Harbour Centre, Tower One 1 Hok Cheung Street Hunghom, Kowloon Hong Kong

25 April 2008

To the Shareholders

Dear Sir or Madam,

MAJOR TRANSACTION –

PROPOSED RELEASE OF LICENCE AGREEMENT AND SUB-LICENCES AND SALE OF ASSETS

INTRODUCTION

On 7 April 2008, the Board announced that the Group entered into (a) the Termination Agreement on 7 April 2008 under which the parties conditionally agreed to terminate the Licence Agreement and the Sub-Licences in consideration of Diadora agreeing to pay US$3 million to the Group and (b) the Sale and Purchase Agreement on 7 April 2008 for the sale of the Assets by the Group at an aggregate cash consideration of RMB6,927,005 (equivalent to approximately HK$7,730,538), subject to adjustment.

— 5 —

LETTER FROM THE BOARD

The Disposal constituted a major transaction of the Company pursuant to Rule 14.06(3) of the Listing Rules. The purpose of this circular is to give you further details of the Disposal in accordance with the requirements of the Listing Rules.

TERMINATION AGREEMENT

On 7 April 2008, the Vendors, Diadora and the Company reached an amicable agreement and entered into the Termination Agreement to terminate the Licence Agreement and the Sub-Licences in connection with the Business, the details of which are as follows:

Date:	7 April 2008
Parties:
Licensor:	Diadora S.P.A. To the best of the Directors’ knowledge, information
	and belief having made all reasonable enquiries, Diadora and its
	ultimate beneficial owners are Independent Third Parties.
Licensee:	Fan Shing International Limited, an indirect wholly-owned subsidiary
	of the Company
Sub-Licencees:	上海迪阿多納國際貿易有限公司(Shanghai Diadora International
	Trading Company Limited) and蘇州迪阿多納體育用品有限公司
	(Suzhou Fan Shing International Limited), both indirect wholly-owned
	subsidiaries of the Company
Guarantor:	Takson Holdings Limited, the guarantor under the Licence
	Agreement
Payment terms:	In consideration of US$3 million payable by Diadora to Fan Shing,
	Diadora, Fan Shing and the Company agreed to terminate the Licence
	Agreement such that all rights and obligations of each party to the
	Licence Agreement under or in connection with the Licence Agreement
	(whether past, present or future) shall cease and terminate with effect
	from the Effective Date. Accordingly, the Sub-Licences will also be
	terminated from the Effective Date. The Licence Agreement is for a
	term of 5 years expiring on 31 December 2009 with an option to renew
	by Fan Shing for a further term of five years.

— 6 —

LETTER FROM THE BOARD

The consideration of US$3 million for the release of the Licence Agreement and the Sub-Licences was determined after arm’s length negotiations between the parties by reference to the estimated costs that had spent by the Company to develop and promote the Business and the expected profit/revenues generated by the Company for the remaining unexpired period of the Licence Agreement. The consideration of US$3 million less the outstanding royalty in the sum of US$408,789.90 payable under the Licence Agreement will be paid on the Effective Date.

Conditions Precedent: Completion of the Termination Agreement is conditional upon:

• (a) the shareholders of the Company approving the Termination Agreement and the Sale and Purchase Agreement and the transactions contemplated under the Termination Agreement and the Sale and Purchase Agreement as required by and in accordance with the Listing Rules, by a written shareholders’ approval in lieu of holding of a special general meeting pursuant to Rule 14.44 of the Listing Rules, or if not permitted by the Stock Exchange, at a duly convened and held special general meeting of the Company; and

• (b) completion of the Subscription and Shareholders’ Agreement in accordance with the provisions thereof.

The above condition (a) has been fulfilled by way of the obtaining of the Written Approval in lieu of holding of a special general meeting pursuant to Rule 14.44 of the Listing Rules. As at the Latest Practicable Date, the above condition (b) is yet to be fulfilled. Completion of the Termination Agreement will take place on the day of fulfilment of the conditions as mentioned above.

— 7 —

LETTER FROM THE BOARD

SALE AND PURCHASE AGREEMENT

On 7 April 2008, the Vendors, the Company and Winor entered into the Sale and Purchase Agreement, the details of which are as follows:

Date: 7 April 2008

Parties:

• Vendors: Fan Shing International Limited, 上海迪阿多納國際貿易有限公司 (Shanghai Diadora International Trading Company Limited) and 蘇州迪阿多納體育用品有限公司 (Suzhou Fan Shing International Limited)

• Purchaser: the WOFE nominated by Winor International Company Limited to be the purchaser of the Assets

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, Winor and its ultimate beneficial owners are Independent Third Parties. The Directors contemplated that the WOFE and its ultimate beneficial owners will be Independent Third Parties.

• Guarantor: Takson Holdings Limited

• The Company agreed to guarantee to Winor the due and punctual performance and discharge by the Vendors of all obligations due, owing or incurred to Winor by the Vendors under or pursuant to the Sale and Purchase Agreement and the obligation of the Company is a primary obligation.

Assets to be disposed of by the Group

Under the Sale and Purchase Agreement, the Vendors agreed to dispose of the Stock and the Book Debts in the aggregate consideration of RMB6,927,005, both subject to final adjustment upon Completion. The Assets to be sold exclude all the liabilities and obligations (including any tax liabilities) of the Vendors, whether relating to the Business or the Assets or otherwise, outstanding as at Completion.

— 8 —

LETTER FROM THE BOARD

Consideration

The maximum consideration for the sale and purchase of the Assets is RMB6,927,005 (equivalent to approximately HK$7,730,538), subject to adjustment upon Completion. In the event that the value of the Stock and the Book Debts as at Completion as shown in the lists to be delivered by the Vendors to the Purchaser on Completion falls short of the value of the Stock and the Book Debts as stated in the lists attached to the Sale and Purchase Agreement, the consideration to be satisfied at Completion shall be reduced by the amount equivalent to such short-fall on a dollar-for-dollar basis.

The consideration for the sale and purchase of the Assets was determined after arm’s length negotiations between the parties with reference to the fair value of the Assets being the net realizable value and recoverable value of the Stock and the Book Debts respectively.

Payment Terms

The consideration for the sale and purchase of the Assets will be paid by the Purchaser to the Vendors by transferring to the bank account of Shanghai Diadora (as directed by the Vendors) upon Completion.

Conditions Precedent

Completion of the Sale and Purchase Agreement is subject to the fulfilment of the same conditions precedent to the Termination Agreement.

Under the Sale and Purchase Agreement, if any of the above conditions shall not have been fulfilled on or before the Long Stop Date , the Sale and Purchase Agreement shall be terminated and shall cease to have any further effect save in respect of any antecedent breach.

Completion

Completion will take place at 5:00 p.m. on the second Business Day after the day of fulfilment of the conditions as mentioned above and the setting up of a wholly foreign-owned enterprise by Winor at any time after signing of the Sale and Purchase Agreement but in any event on or before the Long Stop Date, failing which, Winor shall nominate a wholly foreign-owned enterprise to purchase the Assets.

After the completion of the Disposal, the Group will no longer be engaged in the licensee business to use the trademark or tradename “Diadora”, and of the design known as forked badge device in connection with the manufacture, advertising, sale and distribution of the Licensed Products and the Vendors will remain the indirect wholly-owned subsidiaries of the Company.

— 9 —

LETTER FROM THE BOARD

INFORMATION OF THE GROUP

The Company is a company incorporated in Bermuda with limited liability, the shares of which are listed on the Main Board of the Stock Exchange. The Group is principally engaged in sourcing, subcontracting, marketing and selling of garments and sportswear products.

INFORMATION OF THE BUSINESS, THE ASSETS, DIADORA AND WINOR

According to the audited consolidated accounts of the Company, as at 31 March 2007, the net assets value of the Business (including the Assets) amounted to HK$20,297,900 and the loss of the Business for the years ended 31 March 2006 and 31 March 2007 amounted to HK$3,246,955 and HK$17,478,103 respectively. The book value (unaudited) of the Assets as at the date of the Sale and Purchase Agreement amounted to approximately HK$12,667,000.

Diadora is a company incorporated in Italy and the principal activity of Diadora and its subsidiaries is the manufacture and distribution of team sports equipment, apparel, footwear, and accessories.

Winor, currently an indirect wholly-owned subsidiary of Win Hanverky Holdings Limited, is a company incorporated in Hong Kong with limited liability and has been incorporated solely for the purpose of the joint venture for the manufacture, sale and distribution of products bearing the trademark “Diadora” in the Licensed Territories. Win Hanverky Holdings Limited, a company whose shares are listed on the Main Board of the Stock Exchange, is the holding company of Windia Holdings Limited which in turns currently owns Winor. Win Hanverky Holdings Limited and its subsidiaries are principally engaged in the manufacturing and distribution of sportswear and active and outer wear.

REASONS FOR THE DISPOSAL

The Directors consider that the termination of the Business and the sale of the Assets will enable the Company to concentrate its sources on export business, which is expected a sizable growth in the forthcoming years and to explore for better opportunities. The proceeds will be applied to repay part of the bank loan of the Group and to improve the working capital of the Group.

Based on the net assets value (unaudited) of the Business (including the Assets) of approximately HK$18,170,000 as at the date of the Sale and Purchase Agreement, it is estimated that the Company will recognise a gain on Disposal of approximately HK$11,438,000 in the consolidated accounts of the Group upon completion of the Disposal (assuming that there will be no adjustment to the consideration under the Sale and Purchase Agreement).

— 10 —

LETTER FROM THE BOARD

Given the above, the Directors (including the independent non-executive Directors) consider the terms of the Termination Agreement and the Sale and Purchase Agreement to be fair and reasonable and in the interests of the Company and the Shareholders as a whole. The Directors (including the independent non-executive Directors) would recommend the Shareholders to vote in favour of the resolution approving the Disposal if a physical meeting is held.

FINANCIAL EFFECTS OF THE DISPOSAL ON THE GROUP

Upon Completion, an estimate net gain of approximately HK$11,438,000 would be realized by the Group for the Disposal after considering the relevant attributable assets and liabilities of the Business.

The Directors do not expect the completion of the Disposal itself to have any material adverse financial impact on the assets and liabilities of the Group, and the Directors do not consider the Disposal to have any material adverse effect on the Group’s earnings as the Business has resulted in losses for the previous two years ended 31 March 2006 and 31 March 2007.

GENERAL

Since the relevant percentage ratios (as defined in the Listing Rules) are greater than 25% but less than 75%, the entering into of the Termination Agreement and the Sale and Purchase Agreement constituted a major transaction for the Company according to Rule 14.06(3) of the Listing Rules and is subject to the Shareholders’ approval. As no Shareholder is required to abstain from voting in respect of the resolution on the Disposal, written approval from Takson International Holdings Limited, Mr. Wong Tek Sun, Takson and Ms. Pang Shu Yuk, Adeline Rita, the controlling shareholders of the Company holding the respective 285,120,000, 4,621,600 and 10,800,000 shares or an aggregate of about 58.1% of the issued share capital of the Company dated 7 April 2008, has been obtained to approve the Disposal pursuant to Rule 14.44 of the Listing Rules. Therefore, no general meeting is required to be convened for the approval of the Disposal. The purpose of this circular is for Shareholders’ information only. Mr. Wong is the husband of Ms. Pang and both of them are together the ultimate beneficial owners of the entire issued share capital of Takson International Holdings Limited.

Before signing of the Termination Agreement and the Sale and Purchase Agreement, Takson International Holdings Limited had undertaken to the Company and Winor that it held and was able to, and would at the time of obtaining the Written Approval hold and able to, control the exercise of the voting rights attaching to the shares of the Company representing more than 50% of the entire issued share capital of the Company. Each of Mr. Wong Tek Sun, Takson and Ms. Pang Shu Yuk, Adeline Rita had undertaken to the Company and Winor that they were, and would be at the time of obtaining the Written Approval, together the ultimate beneficial owners of the entire issued share capital of Takson International Holdings Limited. Each of the Controlling Shareholders had undertaken to the Company and Winor that it would vote or procure

— 11 —

LETTER FROM THE BOARD

the voting in favour of any resolution(s) proposed at any general meeting(s) of the shareholders of the Company or approve or procure the approval of any written shareholders’ approval in lieu of the holding of a general meeting pursuant to Rule 14.44 of the Listing Rules to approve the transactions contemplated under the Sale and Purchase Agreement and the Termination Agreement. The Company had warranted and represented such undertakings to Winor under the Sale and Purchase Agreement.

Your attention is also drawn to the general information as set out in the Appendix to this circular.

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

— 12 —

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

1. FINANCIAL AND TRADING PROSPECTS

As mentioned in our last annual report, the Group is focusing on the development and expansion of its export business. For the past several years, the Group’s profitability was stifled by the licensee business including HEAD and Diadora. The Disposal of the licensee business of Diadora is in fact an exercise to enable the Group to focus on the development of its export business.

Looking forward, the Group will continue its strategy of expanding its customer base and diversifying its product varieties, and explore for better opportunities of other investments. Through the use of proceeds from the Disposal, together with the expanded network and the continuing expansion of the customer base, the Group is confident of achieving economies of scale and maintaining its competitiveness.

2. INDEBTEDNESS

Borrowings

As at 31 March 2008, being the latest practicable date for the purpose of this statement of indebtedness prior to the printing of this circular, the Group had outstanding borrowings of approximately HK$77.7 million, details of which are set out below:

Bank borrowings — secured Loans from a director Obligations under finance lease	HK$’000 38,484 38,736 522
	77,742

Contingent Liabilities

As at 31 March 2008, the Group had the following contingent liabilities:

• (a) The Company has executed guarantees with respect to certain banking facilities of its subsidiaries. Such facilities utilized as at 31 March 2008 amounted to approximately HK$27,922,000.

• (b) In February 2007, the Company initiated a legal action against the landlord of the Directors’ quarters for damages and return of deposit as a result of wrongful repudiation of the tenancy agreement, which is quantified at HK$604,000 plus general damages and additional rent, rates and management fee to be assessed. The

— 13 —

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

landlord commenced a separate legal action to counter-claim against the Company, which the claim amount has been reduced to HK$495,000 on 21 December 2007, being the outstanding and unpaid rent for the remainder of the term of the tenancy agreement, plus losses, damages, repair costs and re-instatement expenses to be assessed. The legal proceedings are still ongoing and the outcome is uncertain, the Directors are of the opinion that the amount of liabilities (if any) cannot be ascertained at this stage.

Mortgages and charges

At 31 March 2008, the Group had a first legal charge over the Group’s investment properties and leasehold land and buildings in Hong Kong and the PRC held by the Group with an aggregate carrying value of approximately HK$46.7 million as per the audited consolidated financial statements of the Company as at 31 March 2007.

Disclaimer

Save as aforesaid and apart from intra-group liabilities and normal trade debts payable, at 31 March 2008, being the latest practicable date for the purpose of this statement of indebtedness prior to the printing of this circular, the Group had no other outstanding mortgages, charges, debentures or other loan capital or bank overdrafts or loans or other similar indebtedness, finance lease or hire purchase commitments, liabilities under acceptance or acceptance credits, debt securities, guarantees or other material contingent liabilities.

Save as aforesaid, the Directors confirm that there has been no material change to the indebtedness of the Group since 31 March 2008.

3. WORKING CAPITAL

Taking into account the financial resources available to the Group including the proceeds from the Disposal and internally generated funds, the Directors are of the opinion that the Group has sufficient working capital for its present requirements for the twelve months from the date of this circular in the absence of unforeseen circumstances.

4. NO MATERIAL CHANGE

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

— 14 —

GENERAL INFORMATION OF THE GROUP

APPENDIX II

RESPONSIBILITY STATEMENT

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

DISCLOSURE OF INTERESTS

Interests of Directors in the shares, underlying shares and debenture

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 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 which they were taken or deemed to have under such provisions of the SFO), or were required pursuant to section 352 of the SFO, to be entered in the register referred to therein, or were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Companies (the “Model Code”) in the Listing Rules, to be notified to the Company and the Stock Exchange were as follows:

(a) Long positions in ordinary shares of HK$0.10 each of the Company (“Shares”)

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

Note:

Such Shares are held by Takson International Holdings Limited, the entire issued share capital of which is held by Wangkin Investments Inc., a company wholly-owned by Mr. Wong Tek Sun, Takson and Ms. Pang Shu Yuk, Adeline Rita. Accordingly, Mr. Wong Tek Sun, Takson and Ms. Pang Shu Yuk, Adeline Rita are 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 is the wife of Mr. Wong Tek Sun, Takson. Mr. Wong Tek Sun, Takson and Ms. Pang Shu Yuk, Adeline Rita are directors of both Wangkin Investments Inc. and Takson International Holdings Limited.

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GENERAL INFORMATION OF THE GROUP

APPENDIX II

(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 position 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 Wangkin Investments Inc., 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.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors or any chief executive of the Company had any interests or short positions in any shares, underlying shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which would have to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which he/she was taken or deemed to have under such provisions of the SFO) or which was required, pursuant to section 352 of the SFO, to be entered in the register referred to therein, or pursuant to the Model Code in the Listing Rules to be notified to the Company and the Stock Exchange.

Interests of substantial shareholders and other persons in the share capital of the Company

As at the Latest Practicable Date, so far as is known to the Directors, the following persons (other than Directors or chief executive of the Company) had 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:

Long positions in Shares

		Number of
Name of substantial		Shares	Percentage
shareholders	Capacity	beneficially held	of holding
Wangkin Investments Inc.	Interest of a controlled	285,120,000	55.1%
(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.

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GENERAL INFORMATION OF THE GROUP

APPENDIX II

Save as disclosed above, as at the Latest Practicable Date, according to the register of interests required to be kept by the Company under section 336 of the SFO, there was no person who had an interest or short position in the shares or 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.

Interests in other members of the Group

Save as disclosed above, as at the Latest Practicable Date, the Directors were not aware of any person (other than a Director or chief executive of the Company) who was interested, directly or indirectly, in 10% or more of the issued shares of any subsidiary of the Company or any options in respect of such capital.

Service contracts

None of the Directors has entered into any service contract with any member of the Group (excluding contracts expiring or determinable by the employer within one year without payment of compensation other than statutory compensation).

Competing business

None of the Directors or any of their respective associates (as defined in the Listing Rules) has any interest in any business which competes or is likely to compete, either directly or indirectly, with the Group’s business.

Directors’ interest in assets

As at the Latest Practicable Date, none of the Directors had any interest, direct or indirect, in any asset which have been, since 31 March 2007, being the date to which the latest published audited consolidated financial statements of the Company were made up, 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.

Directors’ interest in contracts

None of the Directors was materially interested, directly or indirectly, in any contract or arrangement entered into by any member of the Group subsisting as at the Latest Practicable Date which is significant in relation to their respective businesses.

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GENERAL INFORMATION OF THE GROUP

APPENDIX II

MATERIAL CONTRACTS

The following contracts (not being contracts entered into in the ordinary course of business) have been entered into by the Group within two years immediately preceding the date of this circular which are or may be material:

• (a) the Termination Agreement; and

• (b) the Sale and Purchase Agreement.

MATERIAL LITIGATION

Save as disclosed in the sub-paragraph headed “Contingent Liabilities” under the paragraph headed “Indebtedness” in Appendix I to this circular, neither the Company nor any of its subsidiaries is engaged in any litigation or arbitration of material importance and no litigation or claim of material importance is known to the Directors to be pending or threatened against the Company or any of its subsidiaries.

PROCEDURE FOR DEMANDING A POLL

Pursuant to bye-law 66 of the bye-laws of the Company, at any general meeting a resolution put to the vote of a meeting shall be decided on a show of hands unless voting by way of a poll is required by the Listing Rules or (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 such meeting; or

• (b) by at least three members present in person (or the case of a member being a corporation by its duly authorised representative) or by proxy for the time being entitled to vote at the meeting; or

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

• (d) by a member or members present in person (or in the case of a member being a corporation by its duly authorised representative) or by proxy and holding shares in the Company conferring a right to vote at the meeting 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

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

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GENERAL INFORMATION OF THE GROUP

APPENDIX II

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

Pursuant to bye-law 77 of the bye-laws of the Company, unless a poll is duly demanded and the demand is not withdrawn, a declaration by the chairman that a resolution has been carried, or carried unanimously, or by a particular majority, or not carried by a particular majority, or lost, and an entry to that effect made in the minute book of the Company, shall be conclusive evidence of the fact without proof of the number or proportion of the votes recorded for or against the resolution.

GENERAL

• (a) The company secretary and qualified accountant of the Company is Ms. Cheung Sui Ping, Annie. She is an associate member of the Hong Kong Institute of Certified Public Accountants.

• (b) The registered office of the Company is situated at Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda, and the head office and principal place of business is situated at 5th Floor, South Wing, Harbour Centre, Tower One, 1 Hok Cheung Street, Hunghom, Kowloon, Hong Kong.

• (c) The Hong Kong share registrar and transfer office of the Company is Tricor Abacus Limited of 26/F., Tesbury Centre, 28 Queen’s Road East, Hong Kong.

DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection at the head office and principal place of business of the Company at 5th Floor, South Wing, Harbour Centre, Tower One, 1 Hok Cheung Street, Hunghom, Kowloon, Hong Kong, during normal business hours on any weekday, except public holidays, from the date hereof up to and including 9 May 2008:

• (a) the Company’s memorandum of association and bye-laws;

• (b) the material contracts referred to in the paragraph headed “Material Contracts” in this appendix;

• (c) the annual reports of the Company for the last two financial years ended 31 March 2006 and 2007;

• (d) the Company’s circular(s) since 31 March 2007; and

• (e) this circular.

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