Planetree International Development Limited — AGM Information 2012

Apr 16, 2012

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your shares in YUGANG INTERNATIONAL LIMITED , you should at once hand this circular, together with the enclosed form of proxy to the purchaser or transferee or to the bank, licensed securities dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

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

YUGANG INTERNATIONAL LIMITED （渝港國際有限公司）*

(Incorporated in Bermuda with limited liability)

(Stock Code: 613)

PROPOSALS FOR RE-ELECTION OF DIRECTORS, GENERAL MANDATES TO ISSUE AND REPURCHASE SHARES AND

NOTICE OF ANNUAL GENERAL MEETING

A notice convening the AGM of Yugang International Limited to be held at 11:15 a.m. on Friday, 18 May, 2012 at Salon I & II, Mezzanine Floor, Grand Hyatt Hong Kong, 1 Harbour Road, Wanchai, Hong Kong is set out on pages 13 to 17 of this circular.

Whether or not you intend to attend the AGM, you are advised to read this circular and to complete the accompanying form of proxy in accordance with the instructions printed thereon and return the same to the Company’s Hong Kong branch share registrar, Tricor Tengis Limited at 26[th] Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong as soon as possible but in any event not less than 48 hours before the time appointed for holding of the AGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the AGM or at any adjournment thereof should you so wish.

* For identification purposes only.

17[th] April 2012

TABLE OF CONTENTS

	Page
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM THE BOARD
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
BUSINESS OF THE MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Resolution 1 — Receiving 2011 Financial Statements . . . . . . . . . . . . . . . . . . . . . . .	4
Resolution 2 — Re-election of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Resolution 3 — Re-appointment of Auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Resolution 4-6 — General Mandates to Issue Shares and Repurchase Shares . . . . .	4
VOTING BY POLL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
BOARD RECOMMENDATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
APPENDIX I — BIOGRAPHICAL DETAILS OF DIRECTORS PROPOSED
FOR RE-ELECTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
APPENDIX II — EXPLANATORY STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
NOTICE OF ANNUAL GENERAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13

— i —

DEFINITIONS

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

“AGM” or “Meeting”

the annual general meeting of the Company to be held at 11:15 a.m. on Friday, 18 May 2012 at Salon I & II, Mezzanine Floor, Grand Hyatt Hong Kong, 1 Harbour Road, Wanchai, Hong Kong, or, where the context so admits, any adjournment thereof;

• “Board” the board of Directors of the Company;

• “Bye-laws” the bye-laws of the Company

• “Company”

Yugang International Limited, a company incorporated in Bermuda with limited liability and the Shares of which are listed on the Stock Exchange;

• “Director(s)” the director(s) of the Company;

• “Issue Mandate”

a general and unconditional mandate proposed to be granted to Directors to exercise powers of the company to allot, issue and deal with new Shares representing up to 20% of the aggregate nominal amount of the share capital of the Company in issue as at the date of passing of the relevant resolution at the AGM;

• “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;

• “Latest Practicable Date”

• 12 April 2012, being the latest practicable date prior to the printing of this circular for the purpose of ascertaining certain information contained herein;

• “Listing Rules”

• Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited;

• “Notice of AGM” the notice convening the AGM as set out on pages 13 to 17 of this circular;

• “Repurchase Mandate”

a general and unconditional mandate proposed to be granted to Directors to exercise powers of the Company to repurchase Shares representing up to a maximum of 10% of the aggregate nominal amount of the share capital of the Company in issue as at the date of passing of the relevant resolution at the AGM;

— 1 —

	DEFINITIONS
“SFO”	Securities and Futures Ordinance, Chapter 571 of the Laws of
	Hong Kong;
“Share(s)”	ordinary share(s) of HK$0.01 each in the issued share capital
	of the Company;
“Shareholder(s)”	the holder(s) of Share(s);
“Stock Exchange”	the Stock Exchange of Hong Kong Limited;
“Takeovers Code”	the Codes on Takeovers and Mergers and Share Repurchases;
	and
“%”	per cent.

— 2 —

LETTER FROM THE BOARD

YUGANG INTERNATIONAL LIMITED （渝港國際有限公司）*

(Incorporated in Bermuda with limited liability)

(Stock Code: 613)

Executive Directors: Cheung Chung Kiu (Chairman) Yuen Wing Shing (Managing Director) Zhang Qing Xin Lam Hiu Lo Liang Kang

Non-Executive Directors: Lee Ka Sze, Carmelo Wong Yat Fai

Independent Non-Executive Directors: Luk Yu King, James Leung Yu Ming, Steven Ng Kwok Fu

Registered Office : Clarendon House 2 Church Street Hamilton HM 11 Bermuda

Head Office and Principal Place of Business in Hong Kong Rooms 3301-3307 China Resources Building 26 Harbour Road Wanchai Hong Kong 17[th] April 2012

Dear Shareholders,

INTRODUCTION

The Company will convene the AGM at 11:15 a.m. on Friday, 18 May 2012 at Salon I & II, Mezzanine Floor, Grand Hyatt Hong Kong, 1 Harbour Road, Wanchai, Hong Kong. The Notice of AGM is set out on pages 13 to 17 of this circular. Detailed information and explanation on the business to be considered at the AGM, together with the Board recommendation on the proposed resolutions, are set out in this circular.

A form of proxy for use at the AGM is enclosed herewith. Whether or not you intend to attend the AGM, you are advised to read this circular and to complete the accompanying form of proxy and return the same to the Company’s Hong Kong branch share registrar, Tricor Tengis Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong in accordance with the instructions printed thereon not less than 48 hours before the time for holding the AGM or any adjournment thereof. Completion and delivery of the form of proxy will not prevent you from attending and voting at the AGM or any adjournment if you so wish.

* For identification purposes only

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LETTER FROM THE BOARD

BUSINESS OF THE MEETING

Resolution 1 — Receiving 2011 Financial Statements

The audited financial statements of the Company and its subsidiaries for the year ended 31 December 2011 together with the Reports of Directors and Auditors thereon, are set out in the 2011 Annual Report which was sent together with this circular to the Shareholders on the same date. The audited financial statements have been reviewed by the audit committee of the Company.

Resolution 2 — Re-election of Directors

Pursuant to Bye-law 87 of the Bye-laws, Mr. Zhang Qing Xin, Mr. Liang Kang, Mr. Lee Ka Sze, Carmelo and Mr. Leung Yu Ming, Steven will retire by rotation, and being eligible, offer themselves for re-election at the AGM.

In compliance with the requirements of code provisions A.4.3 and E.1.1 of the Corporate Governance Code and Corporate Governance Report set out in Appendix 14 of the Listing Rules, a separate resolution will be proposed at the AGM for the re-election of each individual Director whether such Director is an executive Director, non-executive Director or independent non-executive Director.

The Board is responsible for, inter alia, assessing the independence of the independent non-executive Directors. On 28[th] March 2012, the Board assessed and reviewed the individual independent non-executive Directors’ annual confirmation of independence based on the independent criteria as set out in Rule 3.13 of the Listing Rules, and affirmed that all independent non-executive Directors including Mr. Leung Yu Ming, Steven remained independent.

Biographical details of Directors who are subject to re-election at the AGM are set out in Appendix I to this circular.

Resolution 3 — Re-appointment of Auditors

The audit committee of the Company has reviewed the work of the external auditors, Messrs. Ernst & Young and was satisfied with their independence and objectivity. Subject to Shareholders’ approval at the AGM, Messrs. Ernst & Young be re-appointed as external auditors of the Company for 2012 and Directors be authorised to fix their remuneration.

Resolutions 4-6 — General Mandates to Issue and Repurchase Shares

An ordinary resolution (Resolution 4) will be proposed at the AGM to grant to Directors a general and unconditional mandate to exercise powers of the Company to allot, issue and deal with new Shares of the Company (“Issue Mandate”). The aggregate number of Shares allotted or agreed to be allotted under this Issue Mandate must not exceed the aggregate of 20% of the issued share capital of the Company at the date of passing of the relevant resolution at the AGM.

Based on the total number of 9,305,276,756 Shares in issue as at the Latest Practicable Date, if the Issue Mandate is exercised in full, it will result in the Directors being authorised to issue, allot and deal with a maximum of 1,861,055,351 Shares.

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LETTER FROM THE BOARD

An ordinary resolution (Resolution 5) will be proposed at the AGM to grant to Directors a general and unconditional mandate to exercise powers of the Company to repurchase Shares of the Company (“Repurchase Mandate”). The number of Shares which are authorized to repurchase on the Stock Exchange may not exceed 10% of the issued share capital of the Company at the date of passing of the relevant resolution at the AGM.

The authority conferred on Directors by the Issue Mandate and the Repurchase Mandate would continue in force until the earlier of (i) the conclusion of the next annual general meeting of the Company; (ii) the expiration of the period within which the next annual general meeting of the Company is required by law or the Bye-laws to be held; and (iii) its revocation or variation by ordinary resolution of the Shareholders in a general meeting.

The full text of the resolutions 4-6 is set out in the Notice of AGM. An Explanatory Statement to provide Shareholders with all the information reasonably necessary for them to make an informed decision in relation to these proposed resolutions as required by the Listing Rules concerning the regulation of repurchases by companies of their own securities on the Stock Exchange is set out in Appendix II to this circular.

VOTING BY POLL

Pursuant to Rule 13.39(4) of the Listing Rules, all resolutions set out in the notice of AGM will be decided by poll. On a poll, pursuant to Bye-law 66, every Shareholder present in person or by proxy or, in the case of a Shareholder being a corporation, by its duly authorised representative, shall have one vote for every fully paid share of which he/she/it is the holder. Shareholders present in person or by proxy or by authorized representative who are entitled to more than one vote do not have to vote all of their shares nor do they have to cast all of their votes in the same way.

After closing the poll, the Company’s Hong Kong branch share registrar will count the votes and the poll results will be subject to scrutiny by an independent scrutineer.

The Company will announce the results of the poll in the manner prescribed under Rule 13.39(5) of the Listing Rules.

BOARD RECOMMENDATION

The Board considers that the proposed resolutions as set out in the Notice of AGM, including, among other things, the proposed resolutions in relation to the granting of the Issue Mandate and Repurchase Mandate, are in the best interests of the Company and its Shareholders as a whole. Accordingly, the Board recommends you to vote in favour of all resolutions at the AGM.

Yours faithfully, On behalf of the Board YUEN WING SHING Managing Director

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APPENDIX I

BIOGRAPHICAL DETAILS OF DIRECTORS PROPOSED FOR RE-ELECTION

The biographical details of Directors proposed to be re-elected at the AGM are set out as follows:

ZHANG QING XIN — Executive Director

Zhang Qing Xin, aged 75, was appointed an executive Director of the Company in December 1995. Mr. Zhang has over 20 years of experience in import and export trading business. Prior to joining the Company, he was the Deputy General Manager of a foreign trade enterprise for more than 10 years. Mr. Zhang is the director of Chongqing Industrial Ltd, the major shareholder of the Company. Further, Mr. Zhang is the father of Mr. Cheung Chung Kiu, the chairman fo the Company. Save as disclosed above, Mr. Zhang has not held any directorship in other public listed companies during the last three years.

As at the Latest Practicable Date, Mr. Zhang was interested in 13,600,000 Shares of the Company. Save as disclosed herein, Mr. Zhang does not have any interests in the Shares of the Company within the meaning of Part XV of the SFO.

The emoluments of Mr. Zhang are determined by the Board with authorization from time to time given by Shareholders in general meeting according to the remuneration policy of the Company and by reference to his time commitment, duties and responsibilities undertaken, employment conditions elsewhere in the Group and salaries paid by comparable companies. Mr. Zhang’s emoluments for the year ended 31 December 2011 were HK$2,850,000. Mr Zhang has not entered into a service contract with the Company and has no fixed term of service but subject to retirement by rotation and re-election once every three years pursuant to the Bye-laws.

LIANG KANG — Executive Director

Liang Kang , aged 69, was appointed an executive Director of the Company in June 1995. He is mainly responsible for the sales and marketing of the Group’s trading business in the PRC. Prior to joining the Company, he engaged in the trading business in the PRC for over 16 years. Save as disclosed above, Mr. Liang has not held any directorship in other public listed companies during the last three years.

As at the Latest Practicable Date, Mr. Liang was interested in 30,000,000 Shares of the Company. Save as disclosed herein, Mr. Liang does not have any interests in the Shares of the Company within the meaning of Part XV of the SFO.

The emoluments of Mr. Liang are determined by the Board with authorization from time to time given by Shareholders in general meeting according to remuneration policy of the Company and by reference to his time commitment, duties and responsibilities undertaken, employment conditions elsewhere in the Group and salaries paid by comparable companies. Mr. Liang’s emoluments for the year ended 31 December 2011 were HK$1,942,000. Mr. Liang has not entered into a service contract with the Company and has no fixed term of service but subject to retirement by rotation and re-election once every three years pursuant to the Bye-laws.

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APPENDIX I

BIOGRAPHICAL DETAILS OF DIRECTORS PROPOSED FOR RE-ELECTION

LEE KA SZE, CARMELO — Non-Executive Director

Lee Ka Sze, Carmelo , aged 51, was appointed an independent non-executive Director of the Company in 1993 and re-designated as a non-executive Director on 30 September 2004. He is also a member of the audit committee. Mr. Lee received his bachelor of laws degree and a postgraduate certificate in laws from The University of Hong Kong. He qualified as a solicitor in Hong Kong, England and Wales, Singapore and Australian Capital Territory, Australia. Mr. Lee is a partner of Messrs. Woo, Kwan, Lee and Lo, Solicitors & Notaries, which firm rendered professional services to the Company. Mr. Lee is a deputy chairman of the Listing Committee of the Stock Exchange, a chairman of the Transport Tribunal of the HKSAR, a member of SFC Dual Filing Advisory Group of Securities and Futures Commission and the Disciplinary Panel of the Hong Kong Institute of Certified Public Accountants, a campaign committee member of the Community Chest of Hong Kong and a co-chairman of Corporate Challenge Half Marathon of Community Chest. Mr. Lee is an independent non-executive director of KWG Property Holding Limited and Ping An Insurance (Group) Company of China, Limited, and a non-executive director of Y.T. Realty Group Limited, The Cross-Harbour (Holdings) Limited, China Pharmaceutical Group Limited, Hopewell Holdings Limited, Safety Godown Company, Limited, Termbray Industries International (Holdings) Limited, all are public companies listed on the Stock Exchange. Save as disclosed above, Mr. Lee has not held any directorship in other public listed companies in the last three years.

As at the Latest Practicable Date, Mr. Lee does not have any interests in the Shares of the Company within the meaning of Part XV of the SFO.

The emoluments of Mr. Lee are determined by the Board with authorization from time to time given by Shareholders in general meeting according to the remuneration policy of the Company by reference to his time commitment, duties and responsibilities undertaken, employment conditions elsewhere in the Group and salaries paid by comparable companies. Mr. Lee’s emoluments for the year ended 31 December 2011 were HK$1,000,000. In accordance with the Bye-laws, Mr. Lee shall retire as Director at the AGM and, being eligible, shall be re-elected for a term of not more than three years expiring at the conclusion of the annual general meeting of the Company to be held in the third year following the year of his appointment.

LEUNG YU MING, STEVEN — Independent Non-Executive Director

Leung Yu Ming, Steven , aged 52, was appointed an independent non-executive Director of the Company in October 2007. Mr. Leung is a member of the audit committee and nomination committee and the chairman of remuneration committee. Mr. Leung holds a degree of master in accountancy from Charles Sturt University in Australia and a degree of bachelor of social science from The Chinese University of Hong Kong. Mr. Leung is an associate of The Institute of Chartered Accountants in England and Wales, and a fellow of The Association of Chartered Certified Accountants, The Hong Kong Institute of Certified Public Accountants and The Taxation Institute of Hong Kong respectively. Mr. Leung is also a practising certified public accountant in Hong Kong and a certified practicing accountant of CPA Australia. Mr. Leung previously worked in Nomura International (Hong Kong) Limited as an Assistant Vice-President in International Finance and Corporate Finance Department. He commenced public practice in auditing and taxation in 1990 and is currently a senior partner of a firm

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APPENDIX I

BIOGRAPHICAL DETAILS OF DIRECTORS PROPOSED FOR RE-ELECTION

of certified public accountants. Mr. Leung has over 26 years of experience in assurance, accounting, taxation, financial management and corporate finance. Mr. Leung is an independent non-executive director of Suga International Holdings Limited, Y.T. Realty Group Limited, The Cross-Harbour (Holdings) Limited and C C Land Holdings Limited, all are public companies listed on the Stock Exchange. Save as disclosed above, Mr. Leung has not held any directorship in other public listed companies in the last three years.

As at the Latest Practicable Date, Mr. Leung does not have any interests in the Shares of the Company within the meaning of Part XV of the SFO. On March 28, 2012, the Board has assessed and reviewed the annual confirmation of independence of Mr. Leung based on the criteria set out in Rule 3.13 of the Listing Rules, and affirmed that he has remained independent. In addition, the Board is satisfied that Mr. Leung has the required character, integrity, independence and experience to fulfill the role of an independent non-executive Director.

The emoluments of Mr. Leung are determined by the Board with authorization from time to time given by Shareholders in general meeting according to the remuneration policy of the Company and by reference to his time commitment, duties and responsibilities undertaken, employment conditions elsewhere in the Group and salaries paid by comparable companies. Mr. Leung’s emoluments for the year ended 31 December 2011 were HK$200,000. In accordance with the Bye-laws, Mr. Leung shall retire as Director at the AGM and, being eligible, shall be re-elected for a term of not more than three years expiring at the conclusion of the annual general meeting of the Company to be held in the third year following the year of his appointment.

OTHER INFORMATION

Save as disclosed herein, none of the above Directors to be re-elected have any relationship with any other Directors, senior management or substantial or controlling Shareholders of the Company, and there is no information which is required to be disclosed pursuant to Rules 13.51(2) of the Listing Rules, and the Board is not aware of any other matters which need to be brought to the attention of the Shareholders.

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EXPLANATORY STATEMENT

APPENDIX II

This Appendix serves as an explanatory statement required to be sent to Shareholders under the Listing Rules in connection with the resolutions authorising the proposed Repurchase Mandate.

THE LISTING RULES

The Listing Rules permit a company with a primary listing on the Stock Exchange to repurchase its securities on the Stock Exchange subject to certain restrictions, the most important of which are summarised below:

• (a) the shares proposed to be purchased by the company are fully-paid up;

• (b) the company has previously sent to its shareholders an explanatory statement complying with the provisions of Rule 10.06(1)(b) of the Listing Rules; and

• (c) the shareholders have given a specific approval or a general mandate to the directors of the company to make the purchase, by way of an ordinary resolution which complies with Rule 10.06(1)(c) of the Listing Rules and which has been passed at a general meeting of the company duly convened and held.

SHARE CAPITAL

As at the Latest Practicable Date, the issued share capital of the Company comprised 9,305,276,756 Shares. Subject to the passing of the ordinary resolution 5 approving the Repurchase Manadate and on the basis that no further Shares are issued or repurchased following the Latest Practicable Date and up to the date of the AGM, exercise in full of the Repurchase Manadate could accordingly result in up to 930,527,675 Shares being repurchased by the Company.

REASONS FOR REPURCHASES

The Directors believe that it is in the best interests of the Company and its Shareholders to have a general authority from Shareholders to enable the Company to repurchase Shares in the market. Such repurchases may, depending on market conditions and funding arrangements at the time, lead to an enhancement of the Company’s net assets value and/or earnings per Share and will only be made when the Directors believe that such repurchases will benefit the Company and its Shareholders as a whole.

FUNDING OF REPURCHASES

In repurchasing its Shares, the Company may only apply funds legally available for such purpose in accordance with its Bye-laws and all the applicable laws of Bermuda. Under Bermuda law, repurchases may only be effected out of the capital paid up on the repurchased shares or out of funds of the company otherwise available for dividend or distribution or out of the proceeds of a fresh issue of shares made for such purpose. Any premium payable on a purchase over the par value of the shares to be purchased must be provided for out of funds of the company otherwise available for dividend or distribution or out of the company’s share premium account.

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EXPLANATORY STATEMENT

APPENDIX II

Based on the position disclosed in the Company’s most recent published audited accounts for the year ended 31 December 2011 and taking into account the current working capital position of the Company, the Directors consider that no material adverse effect on the working capital and gearing position of the Company may result in the event that the Repurchase Mandate is to be exercised in full in the period before the Repurchase Mandate expires. The Directors however do not propose to exercise the Repurchase Mandate to such an extent as would, in the circumstances, have a material adverse effect on the working capital requirements of the Company or the gearing levels which, in the opinion of the Directors, are from time to time appropriate for the Company.

EFFECT OF TAKEOVERS CODE

If, as a result of a Share repurchase, a Shareholder’s proportionate interest in the voting rights of the Company increases, such increase will be treated as an acquisition for the purpose of the Takeovers Code. In certain circumstances, a Shareholder or a group of Shareholders acting in concert, as a result of increase of its or their interests in the voting rights of the Company, could obtain or consolidate control of the Company and become obliged to make a mandatory offer in accordance with Rule 26 of the Takeovers Code.

As at the Latest Practicable Date, the following persons held the following percentage of the Shares of the Company:

	Number of shares	Percentage of
Name	of HK$0.01 each	holding
Palin Holdings Limited (Note 1)	3,194,434,684	34.33%
Chongqing Industrial Limited (Note 2)	3,194,434,684	34.33%
Timmex Investment Limited (Note 3)	851,955,056	9.16%
Cheung Chung Kiu (Note 4)	4,099,709,740	44.06%

Notes:

• (1) Palin Holdings Limited is the trustee for Palin Discretionary Trust, a family discretionary trust, the objects include Mr. Cheung Chung Kiu and his family. The voting rights of these Shares are exercisable by Chongqing Industrial Limited.

• (2) The voting rights of these Shares are exercisable by Chongqing Industrial Limited which is controlled by Mr. Cheung Chung Kiu.

• (3) Timmex Investment Limited is 100% beneficially owned by Mr. Cheung Chung Kiu.

• (4) Out of 4,099,709,740 Shares, 3,194,434,684 Shares are held by Chongqing Industrial Limited, 851,955,056 Shares are held by Timmex Investment Limited and 53,320,000 Shares are held by Mr. Cheung Chung Kiu personally.

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EXPLANATORY STATEMENT

APPENDIX II

If, which is not presently contemplated, the Directors exercise in full the power to repurchase Shares under the Repurchase Mandate, the shareholding of Palin Holdings Limited, Chongqing Industrial Limited, Timmex Investment Limited and Mr. Cheung Chung Kiu in aggregate would be increased from 44.06% to 48.95% and such increase will give rise to an obligation to make a mandatory offer under Rule 26 of the Takeovers Code. However, the Directors have no present intention to exercise the Repurchase Mandate to such an extent as would, in the circumstances, result in possible mandatory offer being made under the Takeovers Code.

UNDERTAKING

The Directors have undertaken to the Stock Exchange that, so far as the same may be applicable, they will exercise the power of the Company conferred to them under the Repurchase Mandate in accordance with the Listing Rules and all the applicable laws of Bermuda.

To the best of Directors’ knowledge and having made all reasonable enquiries, none of Directors or any of their associates (as defined in the Listing Rules) have any present intention to sell Shares to the Company or its subsidiaries if the Repurchase Mandate is approved by the Shareholders.

No connected person (as defined in the Listing Rules) has notified the Company that he/she has a present intention to sell Shares to the Company, or has undertaken not to do so, if the Repurchase Mandate is approved by the Shareholders.

SHARE REPURCHASED BY THE COMPANY

The Company has not repurchased any of its Shares, whether on the Stock Exchange or otherwise, during the six months preceding the Latest Practicable Date.

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EXPLANATORY STATEMENT

APPENDIX II

SHARE PRICES

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

	Price per share	Price per share
	Highest	Lowest
	HK$	HK$
April 2011	0.083	0.075
May 2011	0.078	0.072
June 2011	0.074	0.068
July 2011	0.075	0.069
August 2011	0.072	0.053
September 2011	0.060	0.041
October 2011	0.055	0.039
November 2011	0.053	0.044
December 2011	0.049	0.042
January 2012	0.046	0.041
February 2012	0.052	0.043
March 2012	0.050	0.041
April 2012 (up to the Latest Practicable Date)	0.043	0.040

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NOTICE OF ANNUAL GENERAL MEETING

YUGANG INTERNATIONAL LIMITED （渝港國際有限公司）*

(Incorporated in Bermuda with limited liability)

(Stock Code: 613)

NOTICE IS HEREBY GIVEN THAT the annual general meeting (“AGM”) of Yugang International Limited (the “Company”) will be held at 11:15 a.m. on Friday, 18 May 2012 at Salon I & II, Mezzanine Floor, Grand Hyatt Hong Kong, 1 Harbour Road, Wanchai, Hong Kong to transact the following ordinary businesses:

1. To receive and consider the audited financial statements of the Company and its subsidiaries for the year ended 31 December 2011 together with the Reports of Directors and Auditors thereon.

2. 2.a. To re-elect the following directors of the Company (“Directors”);

3. (i) Mr. Zhang Qing Xin as an executive Director;

4. (ii) Mr. Liang Kang as an executive Director;

5. (iii) Mr. Lee Ka Sze, Carmelo as a non-executive Director;

6. (iv) Mr. Leung Yu Ming, Steven as an independent non-executive Director.

7. 2.b. To authorise the board of Directors to fix the remuneration of Directors.

8. To re-appoint Messrs. Ernst & Young as auditors of the Company and to authorise the Directors to fix their remuneration.

By way of special business, to consider, and if thought fit, pass with or without modifications, the following resolutions as ordinary resolutions:

ORDINARY RESOLUTIONS

Resolution 4 — Issue Mandate

1. “THAT :

2. (a) a general mandate be and is hereby unconditionally granted to Directors to exercise during the Relevant Period (as hereinafter defined) all powers of the Company to allot, issue and

* For identification purposes only

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NOTICE OF ANNUAL GENERAL MEETING

deal with unissued shares of the Company (“Shares”) or securities convertible into Shares or options, warrants or similar rights to subscribe for any Shares and to make or grant offers, agreements or options which would or might require the exercise of such powers either during or after the Relevant Period, in addition to any Shares which may be issued on a Rights Issue (as hereinafter defined) or under any option scheme or similar arrangement for the time being adopted for the grant or issue to the employees of the Company and/or any of its subsidiaries or any other eligible person(s) of Shares or rights to acquire Shares, or upon the exercise of rights of subscription or conversion under the terms of any existing warrants, bonds, debentures, notes or other securities issued by the Company which carry rights to subscribe for or are convertible into Shares or any scrip dividend pursuant to the bye-laws of the Company (“Bye-laws”) from time to time, not exceeding twenty percent (20%) of the aggregate nominal value of the share capital of the Company in issue as at the date of this Resolution; and

• (b) for the purposes of this Resolution, “Relevant Period” means the period from the passing of this Resolution until the earlier of:

• (i) the conclusion of the next annual general meeting of the Company;

• (ii) the expiration of the period within which the next annual general meeting of the Company is required by law or Bye-laws to be held; or

• (iii) the date on which the authority set out in this Resolution is revoked or varied by an ordinary resolution of the shareholders of the Company (“Shareholders”) in general meeting.

“Rights Issue” means an offer of Shares open for a period fixed by Directors to holders of Shares on the register of members of the Company on a fixed record date in proportion to their then holdings of such Shares (subject to such exclusions or other arrangements as Directors may deem necessary or expedient in relation to fractional entitlements or having regard to any restrictions or obligations under the laws of any relevant jurisdiction, or of the requirements of any recognised regulatory body or any stock exchange applicable to the Company).”

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NOTICE OF ANNUAL GENERAL MEETING

Resolution 5 — Repurchase Mandate

5. “THAT:

• (a) a general mandate be and is hereby granted to Directors to exercise during the Relevant Period (as hereinafter defined) all powers of the Company to repurchase shares of the Company on the Stock Exchange of Hong Kong Limited (“Stock Exchange”) or on any other stock exchange on which the shares of the Company may be listed and which is recognized by the Securities and Futures Commission of Hong Kong and the Stock Exchange for this purpose, subject to and in accordance with all applicable laws and regulations, subject to the following conditions:

• (i) such mandate shall not extend beyond the Relevant Period;

• (ii) such mandate shall authorize Directors to procure the Company to repurchase Shares at such price as Directors may at their discretion determine;

• (iii) the aggregate nominal amount of Shares to be repurchased by the Company pursuant to this Resolution during the Relevant Period shall be no more than ten percent (10%) of the aggregate nominal amount of the share capital of the Company in issue at the date of passing of this Resolution; and

• (b) for the purpose of this Resolution, “Relevant Period” means the period from the passing of this Resolution until the earlier of:

• (i) the conclusion of the next annual general meeting of the Company;

• (ii) the expiration of the period within which the next annual general meeting of the Company is required by law or Bye-laws to be held; or

• (iii) the date on which the authority set out in this Resolution is revoked or varied by an ordinary resolution of the Shareholders in general meeting.”

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NOTICE OF ANNUAL GENERAL MEETING

Resolution 6 — Extension Mandate

1. “THAT :

2. (a) subject to the availability of unissued share capital and conditional upon the passing of the Resolutions 4 and 5 as set out in the notice of AGM, the aggregate nominal amount of the Shares which are repurchased by the Company pursuant to and in accordance with Resolution 5 set out in the notice of AGM shall be added to the aggregate nominal amount of the share capital of the Company that may be allotted or agreed conditionally or unconditionally to be allotted by Directors pursuant to and in accordance with Resolution 4 set out in the notice of AGM.”

On behalf of the Board Yuen Wing Shing Managing Director

Hong Kong, 17th April 2012

Notes:

1. A member who is a holder of two or more Shares, and who is entitled to attend and vote at the AGM is entitled to appoint one or more than one proxy or a duly authorised corporate representative to attend and, on a poll, vote in his stead. A proxy need not be a member of the Company. Completion and return of the form of proxy will not preclude a member from attending the AGM and voting in person. In such event, his form of proxy will be deemed to have been revoked.

2. In order to be valid, the form of proxy, which will be enclosed with the circular of the Company, together with the power of attorney or other authority, if any, under which it is signed, or a notarially certified copy of such power or authority, must be deposited at the Company’s Hong Kong branch share registrar, Tricor Tengis Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong not less than 48 hours before the time for holding the AGM or any adjournment thereof.

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

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NOTICE OF ANNUAL GENERAL MEETING

1. With regard to items 2 and 4 to 6 set out in the notice, a circular giving details of the re-election of Directors and general mandates to issue and repurchase shares of the Company will be despatched to Shareholders on 17 April 2012. The biographical details of the retiring Directors who are proposed to be re-elected at the above meeting are set out in Appendix I to the circular.

2. As at the date of this notice, the Board comprises five executive Directors, namely Mr. Cheung Chung Kiu (Chairman), Mr. Yuen Wing Shing (Managing Director), Mr. Zhang Qing Xin, Mr. Lam Hiu Lo and Mr. Liang Kang; two non-executive Directors, namely Mr. Lee Ka Sze, Carmelo and Mr Wong Yat Fai; three independent non-executive Directors, namely Mr. Luk Yu King, James, Mr Leung Yu Ming, Steven and Mr. Ng Kwok Fu.

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