Planetree International Development Limited — Proxy Solicitation & Information Statement 2007

Apr 4, 2007

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspects of this circular, 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 YUGANG INTERNATIONAL LIMITED , you should at once hand this circular and the accompanying form of proxy to the purchaser, transferee or to the bank or stockbroker 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.

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

(Incorporated in Bermuda with limited liability)

(Stock Code: 613)

CIRCULAR ON GENERAL MANDATES TO ISSUE AND REPURCHASE SHARES OF THE COMPANY, RE-ELECTION OF RETIRING DIRECTORS, REFRESHMENT OF SHARE OPTION SCHEME MANDATE LIMIT AND

NOTICE OF ANNUAL GENERAL MEETING

A notice convening the Annual General Meeting of Yugang International Limited to be held at Lounge, Mezzanine Floor, Grand Hyatt Hong Kong, 1 Harbour Road, Wanchai, Hong Kong on Friday, 11 May 2007 at 11:00 a.m. is set out on pages 13 to 16 of this circular.

Whether or not you propose to attend the meeting, you are advised to read the notice and to complete the accompanying form of proxy in accordance with the instructions printed thereon and return the same to the principal place of business of the Company in Hong Kong at Rooms 3301-3307, China Resources Building, 26 Harbour Road, Wanchai, Hong Kong as soon as possible and in any event not later than 48 hours before the time appointed for holding of the Annual General Meeting or any adjournment thereof. Completion and return of form of proxy will not preclude Shareholders from attending and voting in person at the meeting should you so wish.

Hong Kong, 3 April 2007

* For identification purposes only.

CONTENTS

		Page
Definitions	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from	the Board
1.	Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
2.	General Mandate to Issue Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
3.	General Mandate to Repurchase Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
4.	Re-election of Retiring Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
5.	Refreshment of Share Option Scheme Mandate Limit . . . . . . . . . . . . . . . . . .	4
6.	Annual General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
7.	Poll Demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
8.	Responsibility of the Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
9.	Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Appendix I	— Explanatory Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
Appendix II — Biographical Details of the Retiring
	Directors to be Re-elected. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
Notice of Annual General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		13

— i —

DEFINITIONS

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

“Annual General Meeting”	the annual general meeting of the Company to be held at
	Lounge, Mezzanine Floor, Grand Hyatt Hong Kong, 1
	Harbour Road, Wanchai, Hong Kong on Friday, 11 May
	2007 at 11:00 a.m. 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;
“CG Code”	the Code on Corporate Governance Practices as set out in
	Appendix 14 of the Listing Rules;
“Companies Act”	the Companies Act 1981 of Bermuda (as amended from
	time to time);
“Company”	Yugang International Limited, a company incorporated in
	Bermuda with limited liability and the issued Shares of
	which are listed on the main board of the Stock Exchange;
“Director(s)”	the directors of the Company;
“General Mandate”	the general mandate to the Directors to issue Shares
	representing up to 20% of the aggregate nominal amount of
	the share capital of the Company in issue at the date of
	passing of the resolution;
“Group”	the Company and its subsidiaries;
“Hong Kong”	the Hong Kong Special Administrative Region of the
	People’s Republic of China;
“Latest Practicable Date”	28 March 2007, being the latest practicable date prior to the
	printing of this circular for the purpose of ascertaining
	certain information referred to in this circular;
“Listing Rules”	Rules Governing the Listing of Securities on the Stock
	Exchange;

— 1 —

DEFINITIONS

• “Repurchase Mandate” a general mandate to the Directors to exercise the powers of the Company to repurchase on the Stock Exchange Shares representing up to a maximum of 10% of the aggregate nominal amount of the share capital of the Company in issue at the date of passing of the resolution;

• “Share Option Scheme” the share option scheme adopted by the Company by way of shareholders’ resolution passed on 29 April 2005;

• “Share Option Scheme the maximum number of Shares which may be issued upon Mandate Limit” the exercise of all options to be granted under the Share Option Scheme and any other share option schemes of the Company, which shall not exceed 10% of the Shares in issue on 29 May 2006, being the date on which the Share Option Scheme Mandate Limit was last refreshed by way of shareholders’ resolution;

• “Shareholders” holders of Shares; “Shares” shares of HK$0.01 each in the share capital of the Company; “Stock Exchange” The Stock Exchange of Hong Kong Limited; “Takeover Code” The Codes on Takeovers and Mergers and Share Repurchase; “HK$” Hong Kong dollars, the lawful currency of Hong Kong; “%” per cent.

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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:

Mr. Cheung Chung Kiu (Chairman) Mr. Yuen Wing Shing (Managing Director) Mr. Zhang Qing Xin Mr. Lam Hiu Lo Mr. Liang Kang

Non-Executive Director:

Mr. Lee Ka Sze, Carmelo

Independent Non-Executive Directors:

Mr. Wong Wai Kwong, David Mr. Wong Yat Fai Mr. 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

3 April 2007

To the Shareholders

Dear Sir or Madam,

GENERAL MANDATES TO ISSUE AND REPURCHASE SHARES OF THE COMPANY, RE-ELECTION OF RETIRING DIRECTORS, REFRESHMENT OF SHARE OPTION SCHEME MANDATE LIMIT AND NOTICE OF ANNUAL GENERAL MEETING

INTRODUCTION

The purpose of this circular is to provide you with information regarding ordinary resolutions to be proposed at the Annual General Meeting relating to (i) the General Mandate and the Repurchase Mandate; (ii) the re-election of retiring Directors; and (iii) refreshment of the Share Option Scheme Mandate Limit.

* For identification purposes only.

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LETTER FROM THE BOARD

GENERAL MANDATE TO ISSUE SHARES

An ordinary resolution will be proposed at the Annual General Meeting to grant to the Directors a general and unconditional mandate to issue further Shares. The aggregate number of Shares allotted or agreed to be allotted under this General Mandate must not exceed the aggregate of 20% of the issued share capital of the Company at the date of passing of the resolution.

GENERAL MANDATE TO REPURCHASE SHARES

An ordinary resolution will be proposed at the Annual General Meeting to approve and give the Directors a general and unconditional mandate to exercise the powers of the Company to repurchase Shares. The number of Shares which the Company is authorized to purchase on the Stock Exchange or on another stock exchange recognized for this purpose by the Securities and Futures Commission and the Stock Exchange under the Takeover Code may not exceed 10% of the issued share capital of the Company at the date of the passing of the resolution until the next annual general meeting of the Company following the passing of the said ordinary resolution or such earlier period as stated in the said ordinary resolution.

An explanatory statement to provide the Shareholders with all the information reasonably necessary for them to make an informed decision in relation to this proposed resolution 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 I to this circular.

RE-ELECTION OF RETIRING DIRECTORS

Pursuant to Bye-law 87, Mr. Cheung Chung Kiu, Mr. Zhang Qing Xin and Mr. Lam Hiu Lo will retire by rotation at the conclusion of the Annual General Meeting, and, being eligible, will offer themselves for re-election.

Particulars of the above retiring Directors who are proposed to be re-elected at the Annual General Meeting are set out in Appendix II to this circular.

REFRESHMENT OF SHARE OPTION SCHEME MANDATE LIMIT

The existing Share Option Scheme was adopted by the Company by way of shareholders’ resolution passed on 29 April 2005. The purpose of the Share Option Scheme is to recognize and motivate the contribution of employees and other person(s) who may make a contribution to the Group and to provide incentives and help the Group in retaining its existing employees and recruiting additional employees and to provide them with a direct economic interest in attaining the long term business objectives of the Group. Apart from the existing Share Option Scheme, the Company had no other share option scheme as at the Latest Practicable Date.

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LETTER FROM THE BOARD

The maximum number of Shares which may be issued upon the exercise of all share options to be granted under the Share Option Scheme Mandate Limit is 872,432,170 Shares. On 31 July 2006, holder of the convertible note which was issued by the Company exercised the conversion rights attaching to the convertible note and converted part of the convertible note into 290,000,000 Shares at a price of HK$0.082 per Share. As a result of the said conversion, the number of issued Shares increased from 8,724,321,700 to 9,014,321,700. Unless the refreshment of Share Option Scheme Mandate Limit is approved, only up to 872,432,170 Shares may be issued pursuant to the grants of share options under the existing Share Option Scheme. The Board wishes to retain flexibility to be able to make new grants of share options under the existing Share Option Scheme and the Directors consider that the refreshment of Share Option Scheme Mandate Limit will be in the interests of the Company as the existing Share Option Scheme can continue to serve its purpose of providing incentives to the participants to work towards achieving the goals of the Group.

Up to the Latest Practicable Date, no share option was granted under the existing Share Option Scheme and there was no outstanding share option from the adoption date of the existing Share Option Scheme up to the Latest Practicable Date.

Pursuant to paragraph 29 of the existing Share Option Scheme, the Company may seek approval of its Shareholders in general meeting to renew the Share Option Scheme Mandate Limit provided that the Share Option Scheme Mandate Limit so renewed must not exceed 10% of the Shares in issue at the date of approval of the renewal by the Shareholders. Options previously granted under existing Share Option Scheme and any other option schemes of the Company (including those outstanding, cancelled, lapsed in accordance with the scheme or exercised options) will not be counted for the purpose of calculating the “refreshed” Share Option Scheme Mandate Limit.

The number of Shares which may be issued upon exercise of all outstanding options granted and yet to be exercised under the existing Share Option Scheme and any other share option schemes of the Company shall not exceed 30% of the total number of Shares in issue from time to time.

On the basis of 9,014,321,700 Shares in issue as at the Latest Practicable Date and assuming that no Shares are issued or repurchased by the Company prior to the Annual General Meeting, the Share Option Scheme Mandate Limit may be “refreshed” to enable grant of further share options to subscribe up to 901,432,170 Shares, representing 10% of the Shares in issue as at the date of the Annual General Meeting.

The refreshment of the Share Option Scheme Mandate Limit is conditional upon:

• (1) the passing of an ordinary resolution by the Shareholders to approve the refreshment of the Share Option Scheme Mandate Limit at the Annual General Meeting; and

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LETTER FROM THE BOARD

• (2) the Stock Exchange granting the listing of, and permission to deal in, such number of Shares representing 10% of the Shares in issue at the date of the Annual General Meeting, which may fall to be issued pursuant to the exercise of the share options granted under the “refreshed” Share Option Scheme Mandate Limit.

Application will be made to the Stock Exchange for the listing of and the permission to deal in the Shares to be issued pursuant to the exercise of share options granted under the “refreshed” Share Option Scheme Mandate Limit.

ANNUAL GENERAL MEETING

A notice of the Annual General Meeting to be held on 11 May 2007 is set out on pages 13 to 16 of the circular to consider the resolutions relating to, inter alia, the General Mandate, the Repurchase Mandate, the re-election of retiring Directors and the refreshment of the Share Option Scheme Mandate Limit.

A form of proxy for use at the Annual General Meeting is enclosed. Whether or not you intend to be present at the Annual General Meeting, you are requested to complete the accompanying form of proxy and return it to the Company’s principal place of business in Hong Kong at Rooms 3301-3307, China Resources Building, 26 Harbour Road, Wanchai, Hong Kong in accordance with the instructions printed thereon not later than 48 hours before the time for holding the Annual General Meeting. Completion and delivery of the form of proxy will not prevent Shareholders from attending and voting at the Annual General Meeting if they so wish.

POLL DEMAND

According to the Bye-laws, at any general meeting a resolution put to the vote of the meeting shall be decided on a show of hands unless (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 poll may be demanded by:

• a. the chairman of such meeting, or

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

• c. a Shareholder or Shareholders 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 Shareholders having the right to vote at the meeting, or

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LETTER FROM THE BOARD

• d. a Shareholder or Shareholders present in person (or in the case of a member being a corporation, by its duly authorised representative) or by proxy and holding Shares 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.

If a poll is duly demanded the result of the poll shall be deemed to be the resolution of the meeting at which the poll was demanded. There shall be no requirement for the chairman of the meeting to disclose the voting figures on a poll. On a poll votes may be given either personally or by proxy. A person entitled to more than one vote on a poll need not use all his votes or cast all the votes he uses in the same way. In the case of an equality of votes, whether on a show of hands or on a poll, the chairman of the meeting shall be entitled to a second or casting vote in addition to any other vote he may have.

RESPONSIBILITY OF THE DIRECTORS

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 enquires, that to the best of their knowledge and belief there are no other facts the omission of which would make any statement herein misleading.

RECOMMENDATION

The Directors consider that the General Mandate, the Repurchase Mandate, the re-election of retiring Directors and refreshment of the Share Option Scheme Mandate Limit as aforesaid are in the best interests of the Company and its Shareholders and accordingly recommend that you should vote in favour of the resolutions referred to the above to be proposed at the Annual General Meeting.

By Order of the Board YUEN WING SHING Managing Director

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EXPLANATORY STATEMENT

APPENDIX I

This explanatory statement contains all the information required pursuant to rule 10.06(1)(b) and other relevant provisions of the Listing Rules.

THE SHARE REPURCHASE RULES

The Listing Rules permit companies whose primary listings are on the Stock Exchange to repurchase their fully paid up shares on the Stock Exchange subject to certain restrictions. In this regard, the definition of “shares” in the Listing Rules would, and where used below in this explanatory statement (including the use of the word “share”) shall (unless the context otherwise requires) include shares of all classes and securities which carry a right to subscribe or purchase shares.

EXERCISE OF THE REPURCHASE MANDATE

Exercise in full of the Repurchase Mandate, on the basis of 9,014,321,700 existing Shares in issue as at the Latest Practicable Date and on the basis that no new Shares are issued or repurchased prior to the date of the resolution approving the Repurchase Mandate, could accordingly result in up to 901,432,170 Shares as at the date of the Annual General Meeting, being repurchased by the Company during the course of the period from the date of resolution granting the Repurchase Mandate until the earlier of the conclusion of the next annual general meeting of the Company, 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 or the revocation or variation of the existing Repurchase Mandate by Shareholders in general meeting.

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 Directors to repurchase securities of the Company in the market. Such repurchases may, depending on market conditions and funding arrangements at the time, lead to an enhancement of the net assets and/or earnings per Share and will only be made if the Directors believe that such repurchases will benefit the Company and its Shareholders.

FUNDING OF REPURCHASES

In repurchasing its securities, the Company may only apply funds legally available for such purpose in accordance with its Bye-laws and the 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 the 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 I

As compared with the position as disclosed in the Company’s most recent published audited accounts for the year ended 31 December 2006 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 was 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 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.

GENERAL

To the best of the Directors’ knowledge and having made all reasonable enquiries, none of the Directors nor any of their associates (as defined in the Listing Rules) have any present intention in the event that the Repurchase Mandate is approved by Shareholders to sell Shares to the Company.

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

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 Takeover Code. In certain circumstances, a Shareholder or a group of Shareholders acting in concert could as a result of increase of its or their interest, obtain or consolidate control of the Company and become obliged to make a mandatory offer in accordance with rule 26 of the Takeover Code.

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

	Number of shares of
Name	HK$0.01 each	Percentage of holding
Palin Holdings Limited (Note 1)	3,194,434,684	35.44%
Chongqing Industrial Limited_(Note 2)_	3,194,434,684	35.44%
Timmex Investment Limited	561,000,000	6.22%
Cheung Chung Kiu_(Note 3)_	3,808,754,684	42.25%

Notes:

(1) Palin Holdings Limited is a trustee for Palin Discretionary Trust, a family discretionary trust, the beneficiaries include Mr. Cheung Chung Kiu and his family. The voting rights of these Shares are exercisable by Chongqing Industrial Limited (“CQI”), in which Palin Holdings Limited holds 65% interest indirectly.

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EXPLANATORY STATEMENT

APPENDIX I

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

• (3) Out of 3,808,754,684 Shares, 3,194,434,684 Shares are held by CQI, 561,000,000 Shares are held by Timmex Investment Limited (“Timmex”) and 53,320,000 Shares are held by Mr. Cheung Chung Kiu personally.

If, which is not presently contemplated, the Company was to exercise the Repurchase Mandate in full, the percentage shareholding of Palin Holdings Limited, CQI, Timmex and Mr. Cheung Chung Kiu in aggregate would increase from 42.25% to 46.95% and they (including other companies or persons acting in concert with them) would then be obligated to make a mandatory offer in accordance with rule 26 of the Takeover Code.

However, the Directors do not propose to exercise the Repurchase Mandate to such extent as would, in the circumstances, cause Palin Holdings Limited, CQI, Timmex and/or Mr. Cheung Chung Kiu to become obliged to make a mandatory offer in accordance with rule 26 of the Takeover Code.

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

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

The highest and lowest prices at which the Shares have traded on the Stock Exchange during the previous twelve months prior to the date of this circular were as follows:

		Shares
	Highest		Lowest
	HK$		HK$
March 2006	0.184		0.110
April 2006	0.171		0.138
May 2006	0.150		0.112
June 2006	0.133		0.112
July 2006	0.124		0.111
August 2006	0.128		0.107
September 2006	0.133		0.115
October 2006	0.136		0.117
November 2006	0.153		0.121
December 2006	0.141		0.122
January 2007	0.139		0.121
February 2007	0.153		0.126
28 March 2007#	0.218		0.122

figures as updated to the Latest Practicable Date

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BIOGRAPHICAL DETAILS OF THE RETIRING DIRECTORS TO BE RE-ELECTED

APPENDIX II

CHEUNG CHUNG KIU — EXECUTIVE DIRECTOR

Cheung Chung Kiu , aged 42, was appointed the chairman of the Company in 1993. Mr. Cheung set up Chongqing Industrial Limited in 1985, a company mainly engaged in the trading business in the PRC. He is the founder of the Group. Mr. Cheung is also the chairman of Y.T. Realty Group Limited (“Y.T. Realty”), The Cross-Harbour (Holdings) Limited (“CrossHarbour”) and C C Land Holdings Ltd (“C C Land”, previously known as Qualipak International Holdings Ltd). All of the above companies are listed on the Stock Exchange. Further, Mr. Cheung is the son of Mr. Zhang Qing Xin, another Director.

Save as disclosed above, Mr. Cheung did not hold any directorships in other listed public companies in the last three years.

Mr. Cheung owns 3,808,754,684 Shares, and he holds convertible notes which can be converted into 290,955,056 Shares. Save as disclosed herein, Mr. Cheung does not have any interests in Shares within the meaning of Part XV of the SFO, nor does he have relationships with any Directors, senior management or substantial or controlling shareholders of the Company.

The Company has not entered into any service contract with Mr. Cheung. The emoluments of Mr. Cheung are determined by the Board (as may be authorised by Shareholders at general meeting from time to time) with reference to his qualifications, experience, responsibilities to be undertaken, contribution to the Group, and the prevailing market level or remuneration of similar position. Mr. Cheung’s emoluments for the year ended 31 December 2006 were HK$7,702,000.

ZHANG QING XIN — EXECUTIVE DIRECTOR

Zhang Qing Xin , aged 70, 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 had been 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. Mr. Zhang is the father of Mr. Cheung Chung Kiu, the chairman of the Company.

Save as disclosed above, Mr. Zhang did not hold any directorships in other listed public companies in the last three years.

Mr. Zhang owns 13,600,000 Shares. Save as disclosed herein, Mr. Zhang does not have any interests in Shares within the meaning of Part XV of the SFO, nor does he have relationships with any Directors, senior management or substantial or controlling Shareholders of the Company.

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BIOGRAPHICAL DETAILS OF THE RETIRING DIRECTORS TO BE RE-ELECTED

APPENDIX II

The Company has not entered into any service contract with Mr. Zhang. The emoluments of Mr. Zhang are determined by the Board (as may be authorised by Shareholders at general meeting from time to time) with reference to his qualifications, experience, responsibilities to be undertaken, contribution to the Group, and the prevailing market level or remuneration of similar position. Mr. Zhang’s emoluments for the year ended 31 December 2006 were HK$1,840,000.

LAM HIU LO — EXECUTIVE DIRECTOR

Lam Hiu Lo , aged 45, was appointed an Executive Director of the Company in 1993. He is mainly responsible for the sales and marketing of the Group’s automobile parts and raw materials. Prior to joining the Company, he had over 15 years of experience in trading with PRC parties. He is an executive director of C C Land.

Save as disclosed above, Mr. Lam did not hold any directorships in other listed public companies in the last three years.

Mr. Lam owns 41,800,000 Shares. Save as disclosed herein, Mr. Lam does not have any interests in Shares within the meaning of Part XV of the SFO, nor does he have relationships with any Directors, senior management or substantial or controlling Shareholders of the Company.

The Company has not entered into any service contract with Mr. Lam. The emoluments of Mr. Lam are determined by the Board (as may be authorised by Shareholders at general meeting from time to time) with reference to his qualifications, experience, responsibilities to be undertaken, contribution to the Group, and the prevailing market level or remuneration of similar position. Mr. Lam’s emoluments for the year ended 31 December 2006 were HK$2,177,000.

OTHER INFORMATION

The above retiring Directors do not have any specific length of service with the Company, but they will be subject to retirement by rotation at least once every three years in accordance with the Bye-laws.

Save as disclosed herein, there is no information which is discloseable nor are/were the above retiring Directors to be re-elected involved in any of the matters required to be disclosed pursuant to any of the requirements of the provisions under paragraphs 13.51(2)(h) to 13.51(2)(v) 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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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 (“Annual General Meeting”) of Yugang International Limited (the “Company”) will be held at Lounge, Mezzanine Floor, Grand Hyatt Hong Kong, 1 Harbour Road, Wanchai, Hong Kong on Friday, 11 May 2007 at 11:00 a.m. to transact the following ordinary businesses:

1. To receive and consider the audited consolidated financial statements and the reports of the directors and auditors for the year ended 31 December 2006.

2. To declare a final dividend of HK$0.003 per share of the Company (“Share”) in respect of the year ended 31 December 2006.

3. To re-elect the retiring directors of the Company (“Directors”) and authorize the board of Directors (the “Board”) to fix the remuneration of the Directors.

4. To re-appoint auditors and to authorize the Board to fix their remuneration.

5. By way of special business, to consider, and if thought fit, pass with or without amendments each of the following resolutions, which will be proposed as Ordinary Resolution Nos. 5 to 8 of the meeting:

ORDINARY RESOLUTIONS

ORDINARY RESOLUTION NO. 5 — GENERAL MANDATE

“It was RESOLVED THAT :

• 5.1. a general mandate be and is hereby unconditionally given to the Directors to exercise during the Relevant Period (as hereinafter defined) all the powers of the Company to allot, issue and deal with unissued 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

* For identification purposes only.

— 13 —

NOTICE OF ANNUAL GENERAL MEETING

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 of the aggregate nominal value of the share capital of the Company in issue as at the date of this Resolution; and

• 5.2. for the purposes of this Resolution:

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

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

• (b) 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; or

• (c) 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 the 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 the 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).”

ORDINARY RESOLUTION NO. 6 — REPURCHASE MANDATE

1. “ THAT there be granted to the Directors an unconditional general mandate to repurchase Shares, and that the exercise by the Directors of all powers of the Company to purchase Shares subject to and in accordance with all applicable laws, be and is hereby generally and unconditionally approved, subject to the following conditions:

2. 6.1. such mandate shall not extend beyond the Relevant Period;

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NOTICE OF ANNUAL GENERAL MEETING

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

• 6.3. the Shares to be repurchased by the Company pursuant to paragraph 6.1 of this Resolution during the Relevant Period shall be no more than ten percent of the Shares in issue at the date of passing of this Resolution; and

• 6.4. for the purpose of this Resolution:

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

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

• (b) 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; or

• (c) 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.”

ORDINARY RESOLUTION NO. 7 — EXTENSION MANDATE

1. “ THAT , subject to the availability of unissued share capital and conditional upon the passing of the Ordinary Resolutions nos. 5 and 6 as set out in the notice convening this meeting, the aggregate nominal amount of the Shares which are repurchased by the Company pursuant to and in accordance with Ordinary Resolution no. 6 set out in the notice convening this meeting 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 the Directors pursuant to and in accordance with Ordinary Resolution no. 5 set out in the notice convening this meeting.”

ORDINARY RESOLUTION NO. 8 — REFRESHMENT OF SHARE OPTION SCHEME MANDATE LIMIT

1. “ THAT the existing share option scheme mandate limit effected on 29 May 2006 in respect of the granting of share options to subscribe for Shares under the share option scheme adopted on 29 April 2005 (the “Share Option Scheme”) be refreshed and renewed provided that the total number of Shares which may be allotted and

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NOTICE OF ANNUAL GENERAL MEETING

issued pursuant to the grant or exercise of the share options under the Share Option Scheme (excluding share options previously granted, outstanding, cancelled, lapsed or exercised under the Share Option Scheme and other share option schemes of the Company) shall not exceed 10% of the Shares in issue at the date of passing of this resolution (the “Refreshed Limit”) and subject to The Stock Exchange of Hong Kong Limited granting the listing of and permission to deal in such number of Shares to be issued pursuant to the exercise of the share options granted under the Refreshed Limit and compliance with the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited, the Directors be and are hereby authorized to grant share options under the Share Option Scheme up to the Refreshed Limit and to exercise all the powers of the Company to allot, issue and deal with the Shares pursuant to the exercise of such share options.”

By Order of the Board Albert T. da Rosa, Jr. Company Secretary

Hong Kong, 3 April 2007

Notes:

1. The Register of Members will be closed from Wednesday, 9 May 2007 to Friday, 11 May 2007 (both days inclusive), during which period no share transfer will be registered. In order to be entitled to the recommended final dividend, all transfers accompanied by the relevant share certificates must be lodged with the Company’s branch registrar, Tengis Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong for registration by 4:30 p.m. on 8 May 2007.

2. A member who is a holder of two or more Shares, and who is entitled to attend and vote at the Annual General Meeting is entitled to appoint one or more than one proxy or a duly authorised corporate representative to attend and 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 Annual General Meeting and voting in person. In such event, his form of proxy will be deemed to have been revoked.

3. In order to be valid, the form of proxy, which will be enclosed with the annual report 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 principal place of business of the Company in Hong Kong at Rooms 3301-3307, China Resources Building, 26 Harbour Road, Wanchai, Hong Kong not less than 48 hours before the time for holding the Annual General Meeting or any adjournment thereof .

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