Sunny Optical Technology (Group) Company Limited — Proxy Solicitation & Information Statement 2007

Apr 12, 2007

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult 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 Hengan International Group Company Limited, you should at once hand this circular, together with the enclosed form of proxy, to the purchaser or other transferee or to the bank, 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.

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(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1044)

websites: http://www.hengan.com http://www.irasia.com/listco/hk/hengan

GENERAL MANDATES TO ISSUE AND REPURCHASE SHARES

RE-ELECTION OF RETIRING DIRECTORS

A notice convening the Annual General Meeting of Hengan International Group Company Limited to be held at Tian and Lu Shan Room, 5/F., Island Shangri-la Hong Kong, Pacific Place, Supreme Court Road, Central, Hong Kong on Tuesday, 15 May 2007 at 3:00 p.m., is set out on pages 25 to 27 of the Company’s 2006 Annual Report.

Whether or not Shareholders intend to attend the said meeting, they are requested to complete and return the enclosed form of proxy in accordance with the instructions printed thereon as soon as possible and in any event not less than 48 hours before the time appointed for holding the meeting or any adjournment thereof. Completion and return of the form of proxy will not prevent you from attending and voting in person at the meeting or any adjournment thereof should you so wish.

* for identification purpose only

Hong Kong, 12 April 2007

CONTENTS

	Page
Letter from the Board
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
General Mandate to Repurchase Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	2
General Mandate to Issue Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	2
Re-election of Retiring Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
Closure of Register of Members . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
Annual General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
Action to be Taken . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
Right to Demand a Poll . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Responsibility Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Appendix I — Explanatory Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Appendix II — Details of Retiring Directors Proposed for Re-election . . . . . . . . . . . . . .	7

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LETTER FROM THE BOARD

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(Incorporated in the Cayman Islands with limited liability)

Executive Directors: Mr. Sze Man Bok (Chairman)

Mr. Hui Lin Chit (Deputy Chairman and Chief Executive Officer)

Mr. Yeung Wing Chun

Mr. Hung Ching Shan

Registered Office: Ugland House, South Church Street, P.O. Box 309, George Town, Grand Cayman, Cayman Islands, British West Indies

Mr. Loo Hong Shing Vincent

Mr. Xu Da Zuo Mr. Xu Chun Man

Non-Executive Director:

Mr. Zhang Shi Pao

Head Office:

Hengan Industrial City, Anhai Town, Jinjiang City, Fujian Province, PRC

Independent Non-Executive Directors:

Mr. Chan Henry Mr. Chu Cheng Chung

Ms. Ada Ying Kay Wong

Place of Business in Hong Kong: Unit 2101D, 21st Floor, Admiralty Centre, Tower 1, 18 Harcourt Road, Hong Kong

Hong Kong, 12 April 2007

To the Shareholders,

Dear Sir or Madam,

GENERAL MANDATES TO ISSUE AND REPURCHASE SHARES RE-ELECTION OF RETIRING DIRECTORS

INTRODUCTION

By an ordinary resolution of the shareholders of Hengan International Group Company Limited (the “Company”) (the “Shareholders”) passed on 8 May 2006, general mandates were granted to the directors of the Company (the “Directors”) (i) to repurchase, on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”), ordinary shares of HK$0.10 each in the capital of the Company (the “Shares”) up to a maximum of 10% of the aggregate nominal amount of the share capital in issue of the Company; (ii) to allot, issue or otherwise deal with Shares up to a maximum of 20% of the total of the aforesaid aggregate nominal amount of share capital in issue of the Company and the number of Shares repurchased (if any) pursuant to the aforesaid general mandate to repurchase Shares. These general mandates will expire at the conclusion of the annual general meeting of the Company to be held on 15 May 2007 (the “AGM”) if they are not revoked or varied by an ordinary resolution of the Shareholders before the AGM.

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LETTER FROM THE BOARD

GENERAL MANDATE TO REPURCHASE SHARES

Under the Companies Law (1998 Revision) of the Cayman Islands and the Rules Governing the Listing of Securities (the “Listing Rules”), listed companies are allowed to repurchase their own issued securities. The Articles of Association of the Company (the “Articles”) also enable such securities repurchases to be made. The Directors consider that the power to repurchase Shares increases flexibility in the conduct of the Company’s affairs and is in the interests of its Shareholders.

At the AGM, an ordinary resolution will be proposed that the Directors be given a general mandate to exercise all powers of the Company to repurchase Shares subject to the Articles, the applicable laws and relevant regulatory requirements. Shareholders should note that the maximum number of Shares that may be repurchased pursuant to the mandate as set out in Resolution No. 6 of the notice of AGM on pages 25 to 27 of the Company’s Annual Report will be such number of Shares not exceeding 10% of the aggregate nominal amount of the share capital of the Company in issue at the date of the resolution (the “Share Repurchase Mandate”). A resolution authorizing the extension of the mandate as set out in Resolution No. 5 of the notice of AGM to the Directors to issue additional Shares by the number of Share repurchased (if any) under the repurchase mandate (as set out in Resolution No. 6) will be proposed as Resolution No. 7 at the AGM.

Appendix I to this circular contains the Explanatory Statement required under the Listing Rules that gives all the information reasonably necessary to enable Shareholders to make an informed decision in connection with their approval of the Share Repurchase Mandate.

GENERAL MANDATE TO ISSUE SHARES

An ordinary resolution will also be proposed at the AGM for the grant of a general mandate (the “Share Issuance Mandate”) to the Directors to issue, allot or otherwise deal with additional Shares of the Company up to a maximum of 20% of the aggregate nominal amount of the issued capital of the Company as at the date of the resolution. As at 31 March 2007, being the latest practicable date prior to the printing of this circular (the “Latest Practicable Date”), the number of Shares in issue was 1,080,975,450 shares. Accordingly, the exercise of the Share Issuance Mandate in full would enable the Company to issue, allot or otherwise deal with additional 216,195,090 Shares.

RE-ELECTION OF RETIRING DIRECTORS

As at the Latest Practicable Date, the Board comprises Mr. Sze Man Bok, Mr. Hui Lin Chit, Mr. Yeung Wing Chun, Mr. Hung Ching Shan, Mr. Loo Hong Shing Vincent, Mr. Xu Da Zuo and Mr. Xu Chun Man as executive directors, Mr. Zhang Shi Pao as non-executive director, and Mr. Chan Henry, Mr. Chu Cheng Chung and Ms. Ada Ying Kay Wong as independent non-executive directors.

Pursuant to the Article 116, Mr. Sze Man Bok, Mr. Yeung Wing Chun, Mr. Hung Ching Shan and Mr. Xu Chun Man shall retire from office at the AGM and shall be eligible for re-election. Details of the directors proposed to be re-elected at the AGM are set out in Appendix II.

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LETTER FROM THE BOARD

CLOSURE OF REGISTER OF MEMBERS

The register of members of the Company will be closed during 9 May 2007 to 15 May 2007, both days inclusive, during which period no transfer of shares can be registered. To qualify for attending the AGM and the proposed final dividend, shareholders must ensure that all transfer documents accompanied by the relevant share certificates must be lodged with the Company’s share registrar, Abacus Share Registrars Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Hong Kong for registration not later than 4:00 p.m. on 8 May 2007.

ANNUAL GENERAL MEETING

The AGM will be held at Tian and Lu Shan Room, 5/F., Island Shangri-la Hong Kong, Pacific Place, Supreme Court Road, Central, Hong Kong on Tuesday, 15 May 2007 at 3:00 p.m. The notice of AGM is set out on pages 25 to 27 of the Company’s 2006 Annual Report. Resolutions in respect of the general mandates and re-election of retiring directors as referred to above will be proposed, amongst others, at the AGM.

ACTION TO BE TAKEN

A form of proxy for use at the AGM is enclosed. Whether or not you are able to attend the AGM, you are requested to complete and return the form of proxy to the Company’s share registrars, Abacus Share Registrars Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Hong Kong as soon as possible, and in any event not less than 48 hours before the time appointed for holding of the meeting. Completion and return of the form of proxy will not prevent you from attending and voting at the AGM should you so wish.

RIGHT TO DEMAND A POLL

Pursuant to the Article 80, at the AGM, resolutions 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 duly demanded or unless a poll is required under the Listing Rules as amended from time to time. A poll may be demanded by:

• (a) a Chairman of the meeting; or

• (b) at least five members present in person or by proxy and entitled to vote; or

• (c) any member or members present in person or by proxy and representing in the aggregate not less than one-tenth of the total voting rights of all members having the right to attend and vote at the meeting; or

• (d) any member or members present in person or by proxy and holding shares conferring a right to attend and vote at the meeting on which there have been paid up sums in the aggregate equal to not less than one-tenth of the total sum paid up on all shares conferring that right.

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LETTER FROM THE BOARD

RECOMMENDATION

The Directors believe the general mandates to repurchase and issue Shares and re-election of retiring directors are in the interests of the Company and Shareholders, and accordingly recommend you to vote in favour of all the relevant resolutions to be proposed at the AGM.

RESPONSIBILITY STATEMENT

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

By order of the Board Sze Man Bok Chairman

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EXPLANATORY STATEMENT

APPENDIX I

(a) PROPOSED SHARE REPURCHASE MANDATE

It is proposed that the Directors may exercise the powers of the Company to repurchase up to 10% of the Shares in issue as at the date of the passing of the resolution to approve the granting to the Directors the Shares Repurchase Mandate. As at the Latest Practicable Date, the number of Shares in issue was 1,080,975,450 shares. Accordingly, the exercise of the Share Repurchase Mandate in full (being the repurchase of 10% of the Shares in issue as at the date of the passing of the resolution to approve the Share Repurchase Mandate) would enable the Company to repurchase 108,097,545 shares.

(b) REASONS FOR REPURCHASES

Repurchases of Shares will only be made if the Directors believe that such repurchases will benefit the Company and its shareholders. Such repurchases may, depending on market conditions and funding arrangements at the time, lead to an enhancement of the net value of the Company and its assets and/or its earnings per share.

(c) FUNDING OF REPURCHASES

In repurchasing securities, the Company may only apply funds legally available for such purpose in accordance with the Articles, the Listing Rules and the applicable laws of the Cayman Islands.

There might be a material adverse impact on the working capital or gearing position of the Company (as compared with the position disclosed in its most recent published accounts) in the event that the Share Repurchase Mandate is exercised in full. However, the Directors do not propose to exercise the Share 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.

(d) UNDERTAKING

None of the Directors or, to the best of their knowledge having made all reasonable enquiries, any of their associates has any present intention to sell Shares to the Company or its subsidiaries if the Share Repurchase Mandate is granted.

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 Articles, the Listing Rules and the applicable laws of the Cayman Islands.

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, in the event that the repurchase mandate is granted.

(e) HONG KONG CODES ON TAKEOVERS AND MERGERS AND SHARE REPURCHASES

If on the exercise of the power to repurchase Shares pursuant to the Share Repurchase Mandate, a shareholder’s proportionate interest in the voting rights of the Company increases, such increase will be treated as an acquisition for the purposes of Rule 32 of the Code on Takeovers and Mergers (“Takeovers Code”). As a result, a shareholder or a group of shareholders acting in concert, depending on the level of increase of the shareholders’ interest, could obtain or consolidate control of the

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EXPLANATORY STATEMENT

APPENDIX I

Company and become obliged to make a mandatory offer in accordance with Rules 26 and 32 of the Takeovers Code. As at the Latest Practicable Date, the substantial shareholders of the Company, Mr. Sze Man Bok and Mr. Hui Lin Chit (inclusive of family interest), held an aggregate of 442,709,256 Shares comprising 40.95% of the total issued share capital of the Company. In the event that the Directors fully exercise the power to repurchase Shares, pursuant to the Share Repurchase Mandate, the aggregate shareholding of the said substantial shareholders will represent 45.51% of the total issue share capital of the Company after the repurchases. The Directors are not aware of any consequences which may arise under the Takeovers Code as a result of any repurchase made under the Share Repurchase Mandate.

(f) SHARE PRICES

The highest and lowest prices at which Shares had been traded on the Stock Exchange during each of the previous twelve months before the Latest Practicable Date, were as follows:

	Share	Price
	Highest	Lowest
	(HK$)	(HK$)
2006
April	13.45	12.15
May	15.00	12.00
June	13.40	11.00
July	14.15	11.74
August	15.00	11.92
September	17.94	14.42
October	18.80	16.80
November	19.50	16.60
December	19.30	17.54
2007
January	22.60	19.20
February	24.25	20.00
March	24.05	18.00

(g) SHARE REPURCHASE MADE BY THE COMPANY

During the six months prior to the printing of this circular, the Company had not purchased any of its Shares.

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DETAILS OF RETIRING DIRECTORS PROPOSED FOR RE-ELECTION

APPENDIX II

MR. SZE MAN BOK

Mr. Sze Man Bok , aged 57, has been appointed an Executive Director of the Company since August 1998 and is the Chairman of the Group. He is responsible for the Group’s overall corporate direction and business strategy. Mr. Sze is one of the founding shareholders of the Company.

Mr. Sze has entered into a service agreement with the Company for an initial term of three years and continuing thereafter on an annual basis. His directorship subject to retirement by rotation and reelection in accordance with the Articles. Mr. Sze received remuneration of approximately HK$483,500 for the year ended 31 December 2006, which was determined with reference to his experience, responsibilities, performance and the Group’s financial results.

Mr. Sze does not have any relationship with any directors, senior management, substantial or controlling shareholder of the Company. As at the Latest Practicable Date, Mr. Sze has personal interests of 224,423,505 shares in the Company within the meaning of Part XV of the Securities and Futures Ordinance (“SFO”) (“Part XV of the SFO”). He has not held any directorship in other listed companies in the last three years.

No public sanctions have been made against Mr. Sze by statutory or regulatory authorities, saved as disclosed below. Reference was made to the Stock Exchange announcement on 11 October 2001. During the period from September to December 1999, the Company and its subsidiaries (the “Group”) had made temporary advances of HK$46,425,000 to United Wealth International (Holdings) Limited (“United Wealth”) and Changde Hengan Paper Products Co., (“Changde Paper”). These temporary advances, representing approximately 3.02% of the Group’s consolidated net tangible assets as at 31 December 1999, were fully received with interest and handling fee between early January 2000 and February 2000. United Wealth was wholly owned by Mr. Sze, Mr. Hui Lin Chit (formerly known Mr. Hui Chi Lin), Mr. Yeung Wing Chun and Mr. Hung Ching Shan, the Executive Directors of the Company, while Changde Paper was a 94% owned subsidiary of United Wealth. As such, the temporary advances constituted connected transactions of the Company. Mr. Sze and other relevant Executive Directors were publicly criticised for breaching the Listing Rules and Directors’ Undertaking as they failed to disclose these connected transactions by way of a press notice, seek independent shareholders’ approval in advance and notify the Stock Exchange on a timely basis. Mr. Sze considers that he is appropriate to continue to act as a Director of the Company as the above infringement was unintentional and did not arise by reason of any bad faith or deliberate conduct. In addition, he has gained relevant experience and knowledge from the above event to prevent any similar infringement in the future. The Board of Directors also considers that Mr. Sze, who has over 20 years of experience in the consumer product industry, is appropriate to be an Executive Director of the Company. He has not at any time been adjudged bankrupt or insolvent and he has not at any time been a party to a deed of arrangement or entered into any form of arrangement or composition with his creditors. There are no unsatisfied judgments or court orders of continuing effect against Mr. Sze. No company has been dissolved or put into liquidation (otherwise than by a members’ voluntary winding up when the company was solvent) or bankruptcy or been the object of an analogous proceeding, or entered into any form of arrangement or composition with creditors, or had a receiver, trustee or similar officer appointed over it during the time that Mr. Sze was one of its directors or within 12 months after his ceasing to act as one of its directors.

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APPENDIX II DETAILS OF RETIRING DIRECTORS PROPOSED FOR RE-ELECTION

Mr. Sze has not been convicted of any offence and he has not, at any time, been identified as an insider dealer or found guilty of or been involved in insider dealing pursuant to Parts XIII or XIV of the SFO and neither has any enterprise, company or unincorporated business enterprise with which he was or is connected or any enterprise, company or unincorporated business enterprise for which he acts or has acted as an officer, supervisor or manager has been identified as an insider dealer or been found guilty of or been involved in insider dealing pursuant to Parts XIII or XIV of the SFO at any time during the period when he was connected and/or acted as an officer, supervisor or manager.

Mr. Sze has not been adjudged by a court or arbitral body civilly liable for any fraud, breach of duty or other misconduct by him towards an enterprise, company, partnership or unincorporated business enterprise or institution in connection with its formation or management or any of its members or partners. No enterprise, company, partnership or unincorporated business enterprise of which Mr. Sze was or is a partner, director, supervisor or manager has had its business registration or licence revoked at any time during the period when he was one of its partners, directors, supervisors or managers. Mr. Sze has not at any time been disqualified from holding or deemed unfit to hold, the position of director, supervisor or manager of an enterprise, a company or an unincorporated business enterprise, or from being involved in the management or conduct of the affairs of any enterprise, company or unincorporated business enterprise. There is no investigation by any judicial, regulatory or governmental authority to which Mr. Sze is subject.

Mr. Sze has not at any time been refused admission to membership of any professional body or been censured or disciplined by any such body to which he belongs or belonged or been disqualified from membership in any such body or has at any time held a practicing certificate or any other form of professional certificate or licence subject to special conditions.

Mr. Sze is not now or has at any time been a member or a triad or other illegal society. Mr. Sze is not currently subject to (i) any investigation, hearing or proceeding brought or instituted by any securities regulatory authority, including the Hong Kong Takeovers Panel or any other securities regulatory commission or panel, or (ii) any judicial proceeding in which violation of any securities law, rule or regulation is or was alleged.

Mr. Sze is not a defendant in any current criminal proceeding involving an offence which may be material to an evaluation of his character or integrity to be a director or supervisor of the Company.

Save as disclosed above, Mr. Sze has confirmed that there are no other matters that need to be brought to the attention of the Shareholders in connection with his re-election.

MR. YEUNG WING CHUN

Mr. Yeung Wing Chun , aged 58, has been appointed an Executive Director of the Company since August 1998 and is responsible for supervising the construction of the new tissue business production bases in Shandong and Fujian. Mr. Yeung graduated from Fuzhou University and has the title of engineer in the People’s Republic of China. He is one of the founding shareholders of Company.

Mr. Yeung entered into a service agreement with the Company for an initial term of three years and continuing thereafter on an annual basis and his directorship is subject to retirement by rotation and re-election in accordance with the Articles. Mr. Yeung received remuneration of HK$325,529 for the year ended 31 December 2006, which was determined with reference to his experience, responsibilities, performance and the Group’s financial results.

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APPENDIX II DETAILS OF RETIRING DIRECTORS PROPOSED FOR RE-ELECTION

Mr. Yeung does not have any relationship with any directors, senior management, substantial or controlling shareholder of the Company. As at the Latest Practicable Date, he has personal and family interests of 38,389,876 shares of the Company or underlying shares within the meaning of Part XV of the SFO. He has not held any directorship in other listed companies in the last three years.

No public sanctions have been made against Mr. Yeung by statutory or regulatory authorities, saved as disclosed below. Reference was made to the Stock Exchange announcement on 11 October 2001. During the period from September to December 1999, the Company and its subsidiaries (the “Group”) had made temporary advances of HK$46,425,000 to United Wealth International (Holdings) Limited (“United Wealth”) and Changde Hengan Paper Products Co., (“Changde Paper”). These temporary advances, representing approximately 3.02% of the Group’s consolidated net tangible assets as at 31 December 1999, were fully received with interest and handling fee between early January 2000 and February 2000. United Wealth was wholly owned by Mr. Sze Man Bok, Mr. Hui Lin Chit (formerly known Mr. Hui Chi Lin), Mr. Yeung and Mr. Hung Ching Shan, the Executive Directors of the Company, while Changde Paper was a 94% owned subsidiary of United Wealth. As such, the temporary advances constituted connected transactions of the Company. Mr. Yeung and other relevant Executive Directors were publicly criticised for breaching the Listing Rules and Directors’ Undertaking as they failed to disclose these connected transactions by way of a press notice, seek independent shareholders’ approval in advance and notify the Stock Exchange on a timely basis. Mr. Yeung considers that he is appropriate to continue to act as a Director of the Company as the above infringement was unintentional and did not arise by reason of any bad faith or deliberate conduct. In addition, he has gained relevant experience and knowledge from the above event to prevent any similar infringement in the future. The Board of Directors also considers that Mr. Yeung, who has over 20 years of experience in the consumer product industry, is appropriate to be an Executive Director of the Company. He has not at any time been adjudged bankrupt or insolvent and he has not at any time been a party to a deed of arrangement or entered into any form of arrangement or composition with his creditors. There are no unsatisfied judgments or court orders of continuing effect against Mr. Yeung. No company has been dissolved or put into liquidation (otherwise than by a members’ voluntary winding up when the company was solvent) or bankruptcy or been the object of an analogous proceeding, or entered into any form of arrangement or composition with creditors, or had a receiver, trustee or similar officer appointed over it during the time that Mr. Yeung was one of its directors or within 12 months after his ceasing to act as one of its directors.

Mr. Yeung has not been convicted of any offence and he has not, at any time, been identified as an insider dealer or found guilty of or been involved in insider dealing pursuant to Parts XIII or XIV of the SFO and neither has any enterprise, company or unincorporated business enterprise with which he was or is connected or any enterprise, company or unincorporated business enterprise for which he acts or has acted as an officer, supervisor or manager has been identified as an insider dealer or been found guilty of or been involved in insider dealing pursuant to Parts XIII or XIV of the SFO at any time during the period when he was connected and/or acted as an officer, supervisor or manager.

Mr. Yeung has not been adjudged by a court or arbitral body civilly liable for any fraud, breach of duty or other misconduct by him towards an enterprise, company, partnership or unincorporated business enterprise or institution in connection with its formation or management or any of its members or partners. No enterprise, company, partnership or unincorporated business enterprise of which Mr. Yeung was or is a partner, director, supervisor or manager has had its business registration or licence revoked at any time during the period when he was one of its partners, directors, supervisors or managers. Mr. Yeung has not at any time been disqualified from holding or deemed unfit to hold, the

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DETAILS OF RETIRING DIRECTORS PROPOSED FOR RE-ELECTION

APPENDIX II

position of director, supervisor or manager of an enterprise, a company or an unincorporated business enterprise, or from being involved in the management or conduct of the affairs of any enterprise, company or unincorporated business enterprise. There is no investigation by any judicial, regulatory or governmental authority to which Mr. Yeung is subject.

Mr. Yeung has not at any time been refused admission to membership of any professional body or been censured or disciplined by any such body to which he belongs or belonged or been disqualified from membership in any such body or has at any time held a practicing certificate or any other form of professional certificate or licence subject to special conditions.

Mr. Yeung is not now or has at any time been a member or a triad or other illegal society. Mr. Yeung is not currently subject to (i) any investigation, hearing or proceeding brought or instituted by any securities regulatory authority, including the Hong Kong Takeovers Panel or any other securities regulatory commission or panel, or (ii) any judicial proceeding in which violation of any securities law, rule or regulation is or was alleged.

Mr. Yeung is not a defendant in any current criminal proceeding involving an offence which may be material to an evaluation of his character or integrity to be a director or supervisor of the Company.

Save as disclosed above, Mr. Yeung has confirmed that there are no other matters that need to be brought to the attention of the Shareholders in connection with his re-election.

MR. HUNG CHING SHAN

Mr. Hung Ching Shan , aged 57, has been appointed an Executive Director of the Company since August 1998 and is responsible for supervising the Group’s purchasing tender assignments. He has over 28 years of experience in raw materials procurement as well as in import and export trading. Mr. Hung is one of the founding shareholders of the Company.

Mr. Hung has entered into a service agreement with the Company for an initial term of three years and continuing thereafter on an annual basis and his directorship is subject to retirement by rotation and re-election in accordance with the Articles. Mr. Hung received remuneration of HK$205,413 for the year ended 31 December 2006, which was determined with reference to his experience, responsibilities and performance.

Mr. Hung does not have any relationship with any directors, senior management, substantial or controlling shareholder of the Company. As at the Latest Practicable Date, he has personal interests of 7,680,000 shares of the Company or underlying shares pursuant to Part XV of the SFO. He has not held any directorship in other listed companies in the last three years.

No public sanctions have been made against Mr. Hung by statutory or regulatory authorities, saved as disclosed below. Reference was made to the Stock Exchange announcement on 11 October 2001. During the period from September to December 1999, the Company and its subsidiaries (the “Group”) had made temporary advances of HK$46,425,000 to United Wealth International (Holdings) Limited (“United Wealth”) and Changde Hengan Paper Products Co., (“Changde Paper”). These temporary advances, representing approximately 3.02% of the Group’s consolidated net tangible assets as at 31 December 1999, were fully received with interest and handling fee between early January 2000 and February 2000. United Wealth was wholly owned by Mr. Sze Man Bok, Mr. Hui Lin Chit (formerly known Mr. Hui Chi Lin), Mr. Yeung Wing Chun and Mr. Hung, the Executive Directors of

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APPENDIX II DETAILS OF RETIRING DIRECTORS PROPOSED FOR RE-ELECTION

the Company, while Changde Paper was a 94% owned subsidiary of United Wealth. As such, the temporary advances constituted connected transactions of the Company. Mr. Hung and other relevant Executive Directors were publicly criticised for breaching the Listing Rules and Directors’ Undertaking as they failed to disclose these connected transactions by way of a press notice, seek independent shareholders’ approval in advance and notify the Stock Exchange on a timely basis. Mr. Hung considers that he is appropriate to continue to act as a Director of the Company as the above infringement was unintentional and did not arise by reason of any bad faith or deliberate conduct. In addition, he has gained relevant experience and knowledge from the above event to prevent any similar infringement in the future. The Board of Directors also considers that Mr. Hung, who has over 20 years of experience in the consumer product industry, is appropriate to be an Executive Director of the Company. He has not at any time been adjudged bankrupt or insolvent and he has not at any time been a party to a deed of arrangement or entered into any form of arrangement or composition with his creditors. There are no unsatisfied judgments or court orders of continuing effect against Mr. Hung. No company has been dissolved or put into liquidation (otherwise than by a members’ voluntary winding up when the company was solvent) or bankruptcy or been the object of an analogous proceeding, or entered into any form of arrangement or composition with creditors, or had a receiver, trustee or similar officer appointed over it during the time that Mr. Hung was one of its directors or within 12 months after his ceasing to act as one of its directors.

Mr. Hung has not been convicted of any offence and he has not, at any time, been identified as an insider dealer or found guilty of or been involved in insider dealing pursuant to Parts XIII or XIV of the SFO and neither has any enterprise, company or unincorporated business enterprise with which he was or is connected or any enterprise, company or unincorporated business enterprise for which he acts or has acted as an officer, supervisor or manager has been identified as an insider dealer or been found guilty of or been involved in insider dealing pursuant to Parts XIII or XIV of the SFO at any time during the period when he was connected and/or acted as an officer, supervisor or manager.

Mr. Hung has not been adjudged by a court or arbitral body civilly liable for any fraud, breach of duty or other misconduct by him towards an enterprise, company, partnership or unincorporated business enterprise or institution in connection with its formation or management or any of its members or partners. No enterprise, company, partnership or unincorporated business enterprise of which Mr. Hung was or is a partner, director, supervisor or manager has had its business registration or licence revoked at any time during the period when he was one of its partners, directors, supervisors or managers. Mr. Hung has not at any time been disqualified from holding or deemed unfit to hold, the position of director, supervisor or manager of an enterprise, a company or an unincorporated business enterprise, or from being involved in the management or conduct of the affairs of any enterprise, company or unincorporated business enterprise. There is no investigation by any judicial, regulatory or governmental authority to which Mr. Hung is subject.

Mr. Hung has not at any time been refused admission to membership of any professional body or been censured or disciplined by any such body to which he belongs or belonged or been disqualified from membership in any such body or has at any time held a practicing certificate or any other form of professional certificate or licence subject to special conditions.

Mr. Hung is not now or has at any time been a member or a triad or other illegal society. Mr. Hung is not currently subject to (i) any investigation, hearing or proceeding brought or instituted by any securities regulatory authority, including the Hong Kong Takeovers Panel or any other securities regulatory commission or panel, or (ii) any judicial proceeding in which violation of any securities law, rule or regulation is or was alleged.

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APPENDIX II DETAILS OF RETIRING DIRECTORS PROPOSED FOR RE-ELECTION

Mr. Hung is not a defendant in any current criminal proceeding involving an offence which may be material to an evaluation of his character or integrity to be a director or supervisor of the Company.

Save as disclosed above, Mr. Hung has confirmed that there are no other matters that need to be brought to the attention of the Shareholders in connection with his re-election.

MR. XU CHUN MAN

Mr. Xu Chun Man , aged 32, has been appointed an Executive Director of the Company since August 1998 and is the General Manager of Hengan (Shaanxi) Hygiene Products Co., Ltd, a subsidiary in Shaanxi Province. He is responsible for the overall management, business development and operations of the said subsidiary. He joined the Group after graduating from Fujian Jinjiang Vocational Institute in 1991. Mr. Xu has over 14 years of experience in business development and customer service management.

Mr. Xu has entered into a service agreement with the Company for an initial term of three years and continuing thereafter on an annual basis. His directorship subject to retirement by rotation and reelection in accordance with the Articles. Mr. Xu received remuneration of approximately HK$381,367 for the year ended 31 December 2006, which was determined with reference to his experience, responsibilities, performance and the Group’s financial results.

Save as disclosed above, Mr. Xu does not have any relationship with any directors, senior management, substantial or controlling shareholder of the Company. As at the Latest Practicable Date, Mr. Xu has personal interests of 16,493,445 shares in the Company within the meaning of Part XV of SFO. He has not held any directorship in other listed companies in the last three years.

No public sanctions have been made against Mr. Xu by statutory or regulatory authorities, saved as disclosed below. Reference was made to the Stock Exchange announcement on 11 October 2001. During the period from September to December 1999, the Company and its subsidiaries (the “Group”) had made temporary advances of HK$46,425,000 to United Wealth International (Holdings) Limited (“United Wealth”) and Changde Hengan Paper Products Co., (“Changde Paper”). These temporary advances, representing approximately 3.02% of the Group’s consolidated net tangible assets as at 31 December 1999, were fully repaid with interest and handling fee between early January 2000 and February 2000. United Wealth was wholly owned by Mr. Sze Man Bok, Mr. Hui Lin Chit (formerly known Mr. Hui Chi Lin), Mr. Yeung Wing Chun and Mr. Hung Ching Shan, the Executive Directors of the Company while Changde Paper was a 94% owned subsidiary of United Wealth. As such, the temporary advances constituted connected transactions of the Company. Mr. Hui and other relevant Executive Directors were publicly criticised for breaching the Listing Rules and Directors’ Undertaking as they failed to disclose these connected transactions by way of a press notice, seek independent shareholders’ approval in advance and notify the Stock Exchange on a timely basis. Mr. Hui considers that he is appropriate to continue to act as a Director of the Company as the above infringement was unintentional and did not arise by reason of any bad faith or deliberate conduct. In addition, he has gained relevant experience and knowledge from the above event to prevent any similar infringement in the future. The Board of Directors also considers that Mr. Hui, who has over 20 years of experience in the consumer product industry, is appropriate to be an Executive Director of the Company. He has not at any time been adjudged bankrupt or insolvent and he has not at any time been a party to a deed of arrangement or entered into any form of arrangement or composition with his creditors. There are no unsatisfied judgments or court orders of continuing effect against Mr. Xu. No company has been

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APPENDIX II DETAILS OF RETIRING DIRECTORS PROPOSED FOR RE-ELECTION

dissolved or put into liquidation (otherwise than by a members’ voluntary winding up when the company was solvent) or bankruptcy or been the object of an analogous proceeding, or entered into any form of arrangement or composition with creditors, or had a receiver, trustee or similar officer appointed over it during the time that Mr. Xu was one of its directors or within 12 months after his ceasing to act as one of its directors.

Mr. Xu has not been convicted of any offence and he has not, at any time, been identified as an insider dealer or found guilty of or been involved in insider dealing pursuant to Parts XIII or XIV of the SFO and neither has any enterprise, company or unincorporated business enterprise with which he was or is connected or any enterprise, company or unincorporated business enterprise for which he acts or has acted as an officer, supervisor or manager has been identified as an insider dealer or been found guilty of or been involved in insider dealing pursuant to Parts XIII or XIV of the SFO at any time during the period when he was connected and/or acted as an officer, supervisor or manager.

Mr. Xu has not been adjudged by a court or arbitral body civilly liable for any fraud, breach of duty or other misconduct by him towards an enterprise, company, partnership or unincorporated business enterprise or institution in connection with its formation or management or any of its members or partners. No enterprise, company, partnership or unincorporated business enterprise of which Mr. Xu was or is a partner, director, supervisor or manager has had its business registration or licence revoked at any time during the period when he was one of its partners, directors, supervisors or managers. Mr. Xu has not at any time been disqualified from holding or deemed unfit to hold, the position of director, supervisor or manager of an enterprise, a company or an unincorporated business enterprise, or from being involved in the management or conduct of the affairs of any enterprise, company or unincorporated business enterprise. There is no investigation by any judicial, regulatory or governmental authority to which Mr. Xu is subject.

Mr. Xu has not at any time been refused admission to membership of any professional body or been censured or disciplined by any such body to which he belongs or belonged or been disqualified from membership in any such body or has at any time held a practicing certificate or any other form of professional certificate or licence subject to special conditions.

Mr. Xu is not now or has at any time been a member or a triad or other illegal society. Mr. Xu is not currently subject to (i) any investigation, hearing or proceeding brought or instituted by any securities regulatory authority, including the Hong Kong Takeovers Panel or any other securities regulatory commission or panel, or (ii) any judicial proceeding in which violation of any securities law, rule or regulation is or was alleged.

Mr. Xu is not a defendant in any current criminal proceeding involving an offence which may be material to an evaluation of his character or integrity to be a director or supervisor of the Company.

Save as disclosed above, Mr. Xu has confirmed that there are no other matters that need to be brought to the attention of the Shareholders in connection with his re-election.

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