Swang Chai Chuan Limited — Proxy Solicitation & Information Statement 2007

Dec 11, 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 Theme International Holdings Limited , you should at once hand this circular to the purchaser or the 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.

(Incorporated in Bermuda with limited liability) (Stock Code: 990)

(1) PROPOSED CAPITAL REORGANISATION INVOLVING, INTER ALIA, SHARE CONSOLIDATION AND CAPITAL REDUCTION, AND

(2) CHANGE OF BOARD LOT SIZE; AND

(3) CONTINUING CONNECTED TRANSACTION

Independent Financial Adviser to the Independent Board Committee

CIMB-GK Securities (HK) Limited

A letter from the Board is set out on pages 7 to 17 of this circular. A letter from the Independent Board Committee is set out on page 18 of this circular. A letter from CIMB-GK dated 12 December 2007 containing its advice to the Independent Board Committee and Independent Shareholders is incorporated and set out on pages 19 to 23 of this circular.

A notice convening the SGM to be held at 10th Floor, High Fashion Centre, 1–11 Kwai Hei Street, Kwai Chung, New Territories, Hong Kong on Thursday, 3 January 2008 at 10:00 a.m. is set out on pages 29 to 31 of this circular. Whether or not you are able to attend the SGM, please complete and return the enclosed form of proxy in accordance with the instructions printed thereon and return to the Company at 11th Floor, High Fashion Centre, 1–11 Kwai Hei Street, Kwai Chung, New Territories, Hong Kong as soon as possible but in any event not less than 48 hours before the time appointed for holding the SGM. Completion and return of the form of proxy will not preclude Shareholders from attending and voting in person at the SGM should Shareholders so wish.

12 December 2007

CONTENTS

	Page
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
EXPECTED TIMETABLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
LETTER FROM THE BOARD
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Capital Reorganisation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Share Consolidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Capital Reduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
Conditions for the Capital Reorganisation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
Reasons for the Capital Reorganisation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
Effect of the Capital Reorganisation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
Change of Board Lot Size . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
Odd Lots Arrangement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
Free Exchange of Certificates of the New Share and
Trading Arrangement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
Listing and Dealings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
Continuing Connected Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
Background of the Continuing Connected Transaction . . . . . . . . . . . . . . . . . . . . . .	11
The Continuing Connected Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
The Amounts of the Continuing Connected Transactions
for the years 2004, 2005 and 2006 and the 10 months
ended 31 October 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
Reasons for the Continuing Connected Transaction . . . . . . . . . . . . . . . . . . . . . . . . .	14
Independent Shareholders’ Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	15
Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	16
Special General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	16
Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	17
LETTER FROM THE INDEPENDENT BOARD COMMITTEE. . . . . . . . . . . . . . . . . . .	18
LETTER FROM CIMB-GK SECURITIES (HK) LIMITED. . . . . . . . . . . . . . . . . . . . . . . .	19
APPENDIX – GENERAL INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	24
NOTICE OF SPECIAL GENERAL MEETING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	29

– i –

DEFINITIONS

In this circular, the following	expressions have the following meanings, unless the context
otherwise requires:
“Announcement”	the announcement of the Company dated 26 November
	2007 relating to, among other things, the Capital
	Reorganisation, the change of board lot size and the
	Subcontracting Agreement;
“Annual Cap”	HK$30,000,000;
“associate”	has the meaning ascribed to it under the Listing Rules;
“Board”	board of directors of the Company;
“Business Day”	any day other than Saturdays, Sundays and public
	holidays in Hong Kong;
“Capital Reduction”	the reduction in the nominal value of the issued
	Consolidated Shares from HK$0.10 each to HK$0.01
	each to be effected pursuant to Section 46 of the
	Companies Act;
“Capital Reorganisation”	the Share Consolidation and the Capital Reduction;
“CCASS”	the Central Clearing and Settlement System established
	and operated by HKSCC;
“CIMB-GK”	CIMB-GK Securities (HK) Ltd., a licensed corporation
	to conduct Type 1 (dealing in securities), Type 4
	(advising on securities) and Type 6 (advising on
	corporate finance) regulated activities under the SFO
	and the independent financial adviser to the
	Independent Board Committee and the Independent
	Shareholders;
“Companies Act”	Companies Act 1981 of Bermuda;
“Company”	Theme International Holdings Limited, a company
	whose shares are listed on the Stock Exchange;
“connected person”	shall have the meaning ascribed to it in the Listing
	Rules;
“Consolidated Share(s)”	ordinary share(s) of HK$0.10 each in the issued share
	capital of the Company immediately after the
	completion of the Share Consolidation;

– 1 –

DEFINITIONS

“Continuing Connected	the transactions under the Subcontracting Agreement;
Transactions”
“DDFL”	Dongguan Dalisheng Fashion Co., Ltd., a wholly
	owned subsidiary of High Fashion;
“Directors”	the directors of the Company;
“Dongguan Sanyue”	Dongguan Sanyue Fashions Limited, a 92% non-wholly
	owned subsidiary of the Company;
“Group”	the Company and its subsidiaries;
“HFCL”	High Fashion (China) Co., Ltd., a wholly owned
	subsidiary of High Fashion;
“High Fashion”	High Fashion International Limited, a company whose
	shares are listed on the Stock Exchange;
“High Fashion Group”	High Fashion and its subsidiaries (other than the
	Group);
“HKSCC”	Hong Kong Securities Clearing Company Limited;
“Hong Kong”	the Hong Kong Special Administrative Region of the
	People’s Republic of China;
“Independent Board Committee”	an independent board committee of the Company
	comprising of Mr. Mak Kam Sing, Mr. Wong Shiu Hoi,
	Peter and Mr. Leung Hok Lim;
“Independent Shareholders”	shareholders other than High Fashion and its associates
	as defined in the Listing Rules;
“Initial Subcontracting	the subcontracting agreement dated 3 January 2007
Agreement”	and entered into between the Subcontractor and the
	Principal in relation to the Production Service;
“Latest Practicable Date”	6 December 2007, being the latest practicable date prior
	to printing of this circular for ascertaining certain
	information contained herein;
“Listing Rules”	the Rules Governing the Listing of Securities on the
	Stock Exchange of Hong Kong Limited;
“New Share(s) “	ordinary share(s) of HK$0.01 each in the capital of the
	Company immediately after the completion of the
	Capital Reorganisation;

– 2 –

DEFINITIONS

“percentage ratios”	shall have the meaning ascribed to it in the Listing
	Rules;
“PRC”	the People’s Republic of China;
“Principal”	HFCL and DDFL;
“Production Service”	the provision of labour and raw materials by the
	Subcontractor to the Principal for the production and
	processing of garments and accessories for the
	Principal;
“profits ratio”	shall have the meaning ascribed to it in the Listing
	Rules;
“SFO”	Securities and Futures Ordinance of Hong Kong;
“SGM”	a special general meeting of the Company to be
	convened to approve, amongst other things, the Capital
	Reorganisation and the Subcontracting Agreement;
“Share(s)”	ordinary share(s) of HK$0.01 each in the capital of the
	Company as at the Latest Practicable Date;
“Share Consolidation”	consolidation of every ten Shares into one
	Consolidated Share;
“Shareholder(s)”	the holder(s) of the share(s) in the capital of the
	Company for time to time;
“Stock Exchange”	The Stock Exchange of Hong Kong Limited;
“Subcontracting Order Fee”	service fee which the Subcontractor is entitled to and
	is calculated on the basis of the quantity of goods and
	unit price under any Subcontracting Order as accepted
	by the Subcontractor;
“Subcontracting Orders”	subcontracting orders placed by either of the Principal
	with the Subcontractor from time to time for the
	Production Service;
“Subcontracting Agreement”	the conditional production and processing
	subcontracting agreement dated 26 November 2007
	and entered into between the Principal and the
	Subcontractor setting out the terms and conditions for
	the Production Service;

– 3 –

DEFINITIONS

“Subcontractor” Dongguan Yihao Fashions Limited, a wholly owned subsidiary of the Company; “HK$” Hong Kong dollars, the lawful currency of Hong Kong; and “%” per cent.

– 4 –

EXPECTED TIMETABLE

The expected timetable for implementation of the Capital Reorganisation and the associated trading arrangement are set out below:

2008

Latest time for lodging of proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10:00 a.m., on Tuesday, 1 January SGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10:00 a.m., on Thursday, 3 January Effective date of the Capital Reorganisation . . . . . . . . . . . . . . . . . . . . . . . . . . Friday, 4 January Dealing in New Shares commence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Friday, 4 January Original counter for trading in existing Shares in board lot of 2,000 Shares temporarily closes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9:30 a.m., on Friday, 4 January Temporary counter for trading in New Shares in board lot of 200 New Shares in the form of existing share certificate(s) opens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9:30 a.m., on Friday, 4 January First day for free exchange of certificate(s) of Shares for new share certificate(s) for New Shares . . . . . . . . . . . . . . . . . . . . . . . . . Friday, 4 January Original counter for trading in New Shares in board lot of 10,000 New Shares in the form of new share certificate(s) for New Shares re-opens . . . . . . . . . . . . . . . . . . . . . . . . . . . 9:30 a.m., on Friday, 18 January Parallel trading in New Shares in the form of new share certificate(s) and existing share certificate(s) commences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9:30 a.m., on Friday, 18 January Designated broker starts to stand in the market to purchase and sell odd lots of New Shares . . . . . . . . . . . . . . . . . . . . . . . . . Friday, 18 January Parallel trading in New Shares in the form of new share certificate(s) and existing share certificate(s) ends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4:00 p.m., on Tuesday, 12 February

– 5 –

EXPECTED TIMETABLE

Temporary counter for trading in board

lot of 200 New Shares in the form of existing certificate(s) closes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4:00 p.m., on Tuesday, 12 February Designated broker ceases to stand in the market to purchase and sell odd lots of New Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4:00 p.m. on Tuesday, 12 February

Designated broker ceases to stand in the market to purchase and sell odd lots of New Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4:00 p.m.

Last day for free exchange of existing share certificate(s) for new share certificate(s) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Monday, 18 February

– 6 –

LETTER FROM THE BOARD

(Incorporated in Bermuda with limited liability) (Stock Code: 990)

Registered Office: Clarendon House 2 Church Street Hamilton HM11 Bermuda

Executive Directors:

Mr. Lam Foo Wah Ms. So Siu Hang, Patricia

Independent Non-Executive Directors: Bermuda Mr. Mak Kam Sing Mr. Wong Shiu Hoi, Peter Principal place of business Mr. Leung Hok Lim in Hong Kong: 11th Floor High Fashion Centre 1–11 Kwai Hei Street Kwai Chung, New Territories Hong Kong

12 December 2007

To the Shareholders,

Dear Sir or Madam,

(1) PROPOSED CAPITAL REORGANISATION INVOLVING, INTER ALIA, SHARE CONSOLIDATION AND CAPITAL REDUCTION, AND

(2) CHANGE OF BOARD LOT SIZE; AND

(3) CONTINUING CONNECTED TRANSACTION

INTRODUCTION

Reference is made to the Announcement which the Company made disclosure relating to the proposed Capital Reorganisation, change of board lot size and the Continuing Connected Transaction to be taken place under the Subcontracting Agreement in the three years ending 31 December 2008, 2009 and 2010.

1. CAPITAL REORGANISATION

(a) Share Consolidation

The Directors propose to effect the Share Consolidation pursuant to which every ten issued Shares will be consolidated into one Consolidated Share. Fractions of Consolidated Shares that arise from the Share Consolidation will be aggregated and sold for the benefit of the Company.

– 7 –

LETTER FROM THE BOARD

As at the Latest Practicable Date, the authorized share capital of the Company is HK$500,000,000.00 comprising 50,000,000,000 Shares, of which 8,964,549,597 Shares have been issued and fully paid. Immediately following the Share Consolidation and based on the number of the existing Shares issued, the issued share capital of the Company will be HK$89,645,495.90 divided into 896,454,959 issued Consolidated Shares of HK$0.10 each.

(b) Capital Reduction

The Directors also propose to effect the Capital Reduction after the Share Consolidation under which the then nominal value of the Shares in the capital of the Company will be reduced from HK$0.10 each to HK$0.01 each by way of a reduction of capital pursuant to Section 46 of the Companies Act such that the issued share capital of the Company will be reduced from an amount of HK$89,645,495.90 to HK$8,964,549.59.

Upon completion of the Share Consolidation and the Capital Reduction, the authorised share capital of the Company will remain at HK$500,000,000.00 divided into 50,000,000,000 New Shares, of which 896,454,959 New Shares are issued and 49,103,545,041 New Shares are unissued.

By transferring the credit of HK$80,680,946.31 arising from the Capital Reduction together with the credit of HK$910,203,053.69 arising from the cancellation of part of the share premium of the Company of HK$1,052,950,000 as at 4 September 2007 to the contributed surplus account of the Company in accordance with the byelaws of the Company and all applicable laws, the Directors further propose to set off the accumulated losses of the Company in full against the balance standing to the credit of that contributed surplus account. The share premium of the Company will be reduced by HK$910,203,053.69 to approximately HK$142,747,000.

The New Shares will rank pari passu in all respects with each other.

As at the Latest Practicable Date, there were no outstanding convertible securities issued or options granted which carry rights to acquire Shares and the Directors had no present intention to grant any option under the Company’s share option scheme during the period from the Latest Practicable Date to the date of the SGM.

(c) Conditions for the Capital Reorganisation

The Capital Reorganisation is conditional upon:

• (a) the passing of a special resolution at the SGM to approve the Capital Reorganisation;

– 8 –

LETTER FROM THE BOARD

• (b) the Listing Committee of the Stock Exchange granting the listing of, and permission to deal in, the New Shares to be issued upon the Capital Reorganisation becoming unconditional and effective;

• (c) compliance by the Company with Section 46(2) of the Companies Act which includes the publication of a notice in an appointed newspaper in Bermuda; and

• (d) on the date on which the Capital Reduction is to take effect, there are no reasonable grounds for believing the Company is, or after the Capital Reduction would be, unable to pay its liabilities as they fall due.

The Capital Reorganisation will become effective at the time when the above conditions are fulfilled.

(d) Reasons for the Capital Reorganisation

The Company had an unaudited consolidated accumulated losses of HK$990,884,000.00 as at 30 June 2007. Upon completion of the Capital Reorganisation, an aggregate credit of HK$990,884,000.00 (comprising the credit of HK$910,203,053.69 arising from the partial cancellation of the share premium of the Company as a result of the Share Consolidation and of HK$80,680,946.31 arising from the reduction of the nominal value of the shares in the capital of the Company under the Capital Reduction, respectively) will be transferred to the contributed surplus account of the Company in accordance with the bye-laws of the Company and all applicable laws which, in turn, will be used to set off the accumulated losses of the Company. This will enable and restore the ability of the Company to declare dividends in future should retained earnings be available. The Company has not declared and paid any dividends since April 1998.

(e) Effect of the Capital Reorganisation

The Capital Reorganisation, if and when effected, will have no effect on the consolidated net assets, the underlying assets and the business of the Company except for the payment of the expenses relating to the Capital Reorganisation. The Directors believe that the Capital Reorganisation will not have any adverse effect on the financial position of the Company and its subsidiaries.

2. CHANGE OF BOARD LOT SIZE

The Directors also propose to change the board lot size for trading in the shares of the Company from 2,000 to 10,000 with effect after the completion of the Capital Reorganisation.

The reason for the change in the board lot size is to reduce the administrative fees per board lot of New Shares to be payable by the Shareholders.

– 9 –

LETTER FROM THE BOARD

ODD LOTS ARRANGEMENT

In order to alleviate the difficulties in trading odd lots of New Shares arising from the change in the existing board lot size, the Company has procured an agent for the sale and purchase of odd lots of New Shares on behalf of the Shareholders. Holders of odd lots of New Shares who wish to take advantage of this trading facility to dispose of or top up odd lots should contact Mr. Alan Pau of South China Securities Limited at 2877-0348 during the period from 18 January 2008 to 12 February 2008, both dates inclusive.

Holders of New Shares in odd lots should note that successful matching of the sale and purchase of odd lots of New Shares will not be guaranteed. Shareholders are advised to consult their professional advisers if they are in doubt about the above procedures.

FREE EXCHANGE OF CERTIFICATES OF THE NEW SHARE AND TRADING ARRANGEMENT

Subject to the Capital Reorganisation becoming unconditional and effective, the Shareholders may, during a specified period, submit certificates for the existing Shares to the Company’s branch share registrar, Computershare Hong Kong Investor Services Limited, at Shops 1712–6, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, for exchange, at the expense of the Company, for certificates of the New Shares. Thereafter, certificates for the existing Shares will be accepted for exchange only on payment of a fee of HK$2.50 (or such higher amount as may from time to time be allowed by the Stock Exchange) for each certificate issued or cancelled, whichever is higher. Certificates for the existing Shares will continue to be good evidence of legal title and may be exchanged for certificates of the New Shares at any time.

It is expected that new certificates for New Shares will be available for collection within 10 Business Days from the date of submission of the existing certificates of Shares to Computershare Hong Kong Investor Services Limited for exchange.

LISTING AND DEALINGS

The Company will apply to the Listing Committee of the Stock Exchange for the granting of the listing of, and permission to deal in, the New Shares.

Subject to the granting of the listing of, and permission to deal in the New Shares, the New Shares will be accepted as eligible securities by HKSCC for deposit, clearance and settlement in CCASS with effect from the commencement date of dealings in the New Shares on the Stock Exchange or such other date as determined by HKSCC. Settlement of transactions between participants of the Stock Exchange on any trading day is required to take place in CCASS on the second trading day thereafter. All activities under CCASS are subject to the General Rules of CCASS and CCASS Operational Procedures in effect from time to time.

– 10 –

LETTER FROM THE BOARD

For those persons whose interests in the Company are currently held through CCASS, dealings in the New Shares are expected to be capable of settlement through CCASS with effect from the date of commencement of dealings in the New Shares on the Stock Exchange and without any need on the part of such persons to deposit the certificates for New Shares with HKSCC.

Dealings in the New Shares may be settled through CCASS. You should seek the advice of your licensed securities dealer or other professional advisers for details of the settlement arrangement and how such arrangement will affect your rights and interests.

3. CONTINUING CONNECTED TRANSACTION

The Company made disclosure by announcement dated 3 January 2007 of the continuing connected transaction to be taken place under the Initial Subcontracting Agreement in the three financial years ending 31 December 2007, 31 December 2008 and 31 December 2009 for the annual cap of HK$9,900,000 respectively. It is anticipated that the annual cap amounts will be increased to HK$30,000,000 for the next three financial years ending 31 December 2008, 2009 and 2010. Thus the Principal will enter into the Subcontracting Agreement for Production Service, which constitutes continuing connected transactions, subject to Independent Shareholders’ approval.

The Independent Board Committee has been formed to consider the Subcontracting Agreement and the Annual Cap for each of the three financial years ending 31 December 2008, 2009 and 2010. The letter from the Independent Board Committee to the Independent Shareholders is included in this circular. An independent financial adviser CIMB-GK has been appointed to advise the Independent Board Committee and the Independent Shareholders in respect of the Continuing Connected Transactions, including the Annual Cap for each of the three financial years ending 31 December 2008, 2009 and 2010, and its letter of advice to the Independent Board Committee and Independent Shareholders is included in this circular.

The purpose of this circular is to provide you with further information in relation to the Continuing Connected Transactions, to set out the recommendations of the Independent Board Committee and the letter of advice from CIMB-GK to the Independent Board Committee and the Independent Shareholders.

Resolutions to approve the Continuing Connected Transactions and the Annual Cap will be proposed at the SGM to be held on Thursday, 3 January, 2008 at 10:00 a.m..

(a) Background of the Continuing Connected Transaction

The principal activities of the Group consist of design, manufacture, marketing and retail of ladies’ executive apparel. The Company operates manufacturing facilities in Dongguan, the PRC under the Subcontractor and various retail outlets in the mainland of the PRC, Taiwan and Hong Kong and Singapore. The High Fashion Group principally engages in the manufacturing, retailing and trading of garments.

– 11 –

LETTER FROM THE BOARD

Since October 2000, Dongguan Sanyue, a non-wholly owned member of the Group, has during peak production seasons accepted subcontracting orders from various members of the High Fashion Group for it to supply to such members of the High Fashion Group labour and raw materials for production of garments and accessories in return for subcontracting charges.

For the purpose of consolidating business into wholly owned subsidiaries of the Company and complying with Rule 14A.35 of the Listing Rules, the subcontracting services originally provided by Dongguan Sanyue above has been being provided by the Subcontractor to the Principal with effect from 1 January 2007 subject to the terms of the Initial Subcontracting Agreement. The Company made disclosure by announcement dated 3 January 2007 of the continuing connected transaction to be taken place under the Initial Subcontracting Agreement in the three financial years ending 31 December 2007, 31 December 2008 and 31 December 2009 for the annual cap of HK$9,900,000 respectively.

Upon the Subcontracting Agreement becoming unconditional, the Initial Subcontracting Agreement will be automatically terminated.

Following High Fashion’s acquisition of approximately 75% of the entire issued share capital of the Company on 31 August 2000, the Group underwent an extensive cost control and reduction exercise to reduce its continuing losses and to make its operations competitively efficient and cost effective.

The business of a garment production company is seasonal and it is extremely important for it to meet tight production and delivery schedules prior to the commencement of each season. As a result, it is always the practice of a garment production company to subcontract part of its production to other parties when its own production capacity is exceeded. Since the Group has its own production facilities and may have spare production capacity from time to time, there are obviously good business reasons for the Group to complement or support High Fashion Group’s production capacity in light of market conditions and sudden changes thereto. This will enable the Group to maximize the use of its production capacity and manpower and facilitate a more efficient and effective production and delivery planning for the High Fashion Group.

(b) The Continuing Connected Transactions

The Subcontractor has entered into the conditional Subcontracting Agreement with the Principal, particulars of which are as follows:

Subcontracting Agreement

Date : 26 November 2007 Parties : (i) Subcontractor; and (ii) each of the Principal

– 12 –

LETTER FROM THE BOARD

Subject matter : Provision of the Production Service by the Subcontractor to the Principal upon and subject to the terms and conditions set out therein Annual Cap : HK$30,000,000 for each of the three financial years ending 31 December 2008, 2009 and 2010

The Subcontracting Agreement is conditional upon the same having been approved by the Independent Shareholders by ordinary resolution at the SGM.

The Subcontracting Agreement shall subsist and continue for a fixed term of three (3) years commencing from the date when the Subcontracting Agreement shall have become unconditional, unless it is terminated earlier by any of the parties thereto in accordance with the terms thereof.

Pursuant to the terms of the Subcontracting Agreement, the Principal may place Subcontracting Orders with the Subcontractor from time to time setting out the particulars of the Production Service required in detail including, without limitation, the product design, specifications, quantity, unit price, packaging standards, delivery date and place. The Subcontractor is only obliged to render the Production Service under any Subcontracting Order to which it has accepted in writing after taking into account its own operating conditions, equipment utilization rate, quantity of unfinished orders, terms of such Subcontracting Order and other factors which it deems relevant.

The Subcontractor shall be entitled to, in respect of any Subcontracting Order which it has accepted, the Subcontracting Order Fee, provided that the aggregate amount of all Subcontracting Order Fees for each financial year of the Company during the continuance of the Subcontracting Agreement shall not exceed the Annual Cap.

Pursuant to the Subcontracting Agreement, the Subcontracting Order Fee shall be calculated based on normal commercial terms and on terms no less favourable than those offered by independent third parties to the Group. The unit price under a Subcontracting Order is expected to be set by the Principal taking into account the complexity of the product design and specifications, the quantities of the order, the packaging standards and the product delivery schedule required and the prevailing market conditions. The Subcontracting Order Fee for any Subcontracting Order shall be payable in cash within thirty (30) Business Days after delivery of the goods under such Subcontracting Order. The Board is of the view that the basis of the calculation of the Subcontracting Order Fees is on terms no less favourable to the Group than terms available to independent third parties.

The annual cap under the Initial Subcontracting Agreement is HK$9,900,000. When compared with the foregoing figure, the proposed Annual Cap under the Subcontracting Agreement represents about 300% increase in value, which is driven mainly by the growing business prospects and demands of the High Fashion Group and the inflationary economic environment in the short to medium in general.

– 13 –

LETTER FROM THE BOARD

Furthermore, the actual subcontracting order fees received by the Subcontractor under the Initial Subcontracting Agreement for the ten months ended 31 October 2007 may not be reflective of the current business expectations in light of the fact that the parties to the Initial Subcontracting Agreement are contractually bound by the smaller cap under that agreement.

In case of any inconsistency between the terms of the Subcontracting Agreement and those of any Subcontracting Order which the Subcontractor has accepted, the terms of such Subcontracting Order shall prevail.

The terms of the Subcontracting Agreement are the same as the Initial Subcontracting Agreement in all material respects except the amount of the Annual Cap. Upon the Subcontracting Agreement becoming unconditional, it will supersede the Initial Subcontracting Agreement and the latter will be terminated.

(c) The Amounts of the Continuing Connected Transactions for the years 2004, 2005 and 2006 and the 10 months ended 31 October 2007

The aggregated subcontracting charges received by Dongguan Sanyue in respect of such subcontracting services for the three (3) financial years ended 31 December 2006 and aggregated subcontracting charges received by the Subcontractor for the ten months ended 31 October 2007 are summarized below:–

Subcontracting charges received Financial year ended 31 December 2004 (Audited) HK$6,273,000 Financial year ended 31 December 2005 (Audited) HK$6,915,000 Financial year ended 31 December 2006 (Audited) HK$8,659,000 Ten months ended 31 October 2007 (Unaudited) HK$9,050,000

(d) Reasons for the Continuing Connected Transaction

The Subcontracting Agreement is, in the view of the Directors (including the independent non-executive Directors), on normal commercial terms and entered in the ordinary and usual course of the Group’s business, and is on terms that are fair and reasonable insofar as the Company and the Independent Shareholders are concerned and in the interest of the Company and the Independent Shareholders as a whole.

Based on:–

• (i) the aggregate subcontracting charges received by Dongguan Sanyue for the subcontracting services rendered in the three (3) financial years ended 31 December 2006 and the aggregate subcontracting charges received by the Subcontractor for the subcontracting services rendered in the ten (10) months ended 31 October 2007 under the Initial Subcontracting Agreement;

– 14 –

LETTER FROM THE BOARD

• (ii) the possibility of the Group’s higher production demands in the coming peak seasons as estimated by the Directors;

• (iii) the possible future growth of High Fashion Group’s production volume in times of peak production demands; and

• (iv) the possible increase in or utilization of the production capacity of the Group during such peak seasons,

the Directors consider that each of the percentage ratios (other than the profits ratio) calculated by reference to the annual aggregate sum of all Subcontracting Order Fees to be received from and the Principal in the ordinary course of business in respect of the Production Service on the basis of comparable terms of labour and raw material charges that will be made available to independent third parties, is anticipated to be equal to or more than 2.5% but less than 25%, but the annual consideration is expected to be more than HK$10,000,000 and less than the Annual Cap. Accordingly, such continuing connected transaction is subject to the reporting and announcement requirements as well as the approval of the Independent Shareholders at the SGM by way of poll pursuant to Rule 14A.35(3) and (4) of Chapter 14A of the Listing Rules. High Fashion and its associates are required to abstain from voting in respect of the proposed resolution to approve the Subcontracting Agreement and the transactions contemplated thereby (including, without limitation, the Annual Cap).

(e) Independent Shareholders’ Approval

High Fashion is a substantial shareholder of the Company holding approximately 52.75% of the entire issued share capital of the Company. High Fashion is therefore a connected person of the Company and the Subcontracting Agreement and the Production Service to be rendered from time to time constitute a continuing connected transaction of the Company under the Listing Rules and would require approval of the Independent Shareholders of the Company pursuant to Rule 14A.48 of the Listing Rules. In accordance with the Listing Rules, High Fashion and its associates, which in aggregate hold 4,728,552,541 Shares as at the Latest Practicable Date, representing approximately 52.75% of the total issued share capital of the Company, will be abstained from voting on the resolutions to approve the Continuing Connected Transactions and the Annual Cap.

The Company will ensure that the Continuing Connected Transactions are in compliance with the provisions of Chapter 14A of the Listing Rules and in particulars Rules 14A.35 to 14A.41 and 14A.46 governing continuing connected transactions.

The Company would seek approval of the Independent Shareholders of the Continuing Connected Transactions and the Annual Cap for each of the three financial years ending 31 December 2008, 2009 and 2010 pursuant to Rules 14A.35 and 14A.48 of the Listing Rules.

– 15 –

LETTER FROM THE BOARD

High Fashion and its associates will abstain from voting at the SGM. High Fashion and its associates are entitled to exercise control over the voting rights in their respective Shares.

(f) Recommendations

The Board has appointed the Independent Board Committee to consider and advise the Independent Shareholders on the terms of the Subcontracting Agreement and the Annual Cap for each of the three financial years ending 31 December 2008, 2009 and 2010.

The Independent Board Committee, having taken into account the advice of CIMB-GK, considers that the terms of the Subcontracting Agreement and the Annual Cap are fair and reasonable insofar as the Independent Shareholders are concerned. Accordingly, it recommends that the Independent Shareholders vote in favour of the resolutions to approve the Continuing Connected Transactions and the Annual Cap.

(g) Special General Meeting

A SGM will be convened to approve the Continuing Connected Transactions and the Annual Cap for each of the three financial years ending 31 December 2008, 2009 and 2010 by way of poll.

An independent financial adviser CIMB-GK has been appointed to advise the Independent Board Committee and the Independent Shareholders.

According to the bye-laws of the Company, at any general meeting a resolution put to the vote of the meeting shall be decided on a show of hands unless voting by way of poll is required by the rules of the designated stock exchange or (before or on the declaration of the result of the show of hands or on the withdrawal of any other demand for a poll) a poll is demanded:

• (a) by the chairman of such meeting;

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

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

– 16 –

LETTER FROM THE BOARD

• (d) by a member or members present in person (or in the case of a member being a corporation by its duly authorised representative) or by proxy and holding Shares in the Company conferring a right to vote at the meeting being shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all Shares conferring the right.

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

Notwithstanding any other provisions in the bye-laws of the Company:

• (a) if the aggregate proxies held by the chairman of a particular general meeting and the Directors account for 5% or more of the total voting rights at that general meeting; and

• (b) if on a show of hands in respect of any resolution, the Shareholders at the general meeting vote in the opposite manner to that instructed in the proxies referred to in (a) above,

the chairman of the general meeting and/or any Director holding the proxies referred to above shall demand a poll provided that if it is apparent from the total proxies held by the persons referred to in (a) above that a vote taken on a poll will not reverse the vote taken on a show of hands, then no poll shall be required.

A notice convening the SGM to be held at 10th Floor, High Fashion Centre, 1–11 Kwai Hei Street, Kwai Chung, New Territories, Hong Kong on Thursday, 3 January 2008 at 10:00 a.m. is set out on pages 29 to 31 of this circular. Whether or not you are able to attend the SGM, please complete and return the enclosed form of proxy in accordance with the instructions printed thereon and return it to the Company at 11th Floor, High Fashion Centre, 1–11 Kwai Hei Street, Kwai Chung, New Territories, Hong Kong as soon as possible and in any event not later than 48 hours before the time appointed for holding such meeting. Completion and return of the form of proxy will not preclude you from attending and voting at the meeting should you so wish.

ADDITIONAL INFORMATION

Your attention is also drawn to the additional information contained in the Appendix to this circular.

Yours faithfully, By order of the Board Theme International Holdings Limited Cynthia Chan Company Secretary

– 17 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

(Incorporated in Bermuda with limited liability) (Stock Code: 990)

12 December 2007

To the Shareholders,

Dear Sir or Madam,

APPROVAL FOR CONTINUING CONNECTED TRANSACTIONS

We refer to the circular of the Company to the Shareholders dated 12 December 2007 (the “Circular”), of which this letter forms part. Terms as defined therein shall have the same meaning when used in this letter unless the context otherwise requires.

We have been appointed by the Board as the Independent Board Committee to advise the Independent Shareholders as to whether the terms of the Subcontracting Agreement and the Annual Cap for each of the three financial years ending 31 December 2008, 2009 and 2010 are fair and reasonable insofar as the Independent Shareholders are concerned. Details of the Subcontracting Agreement and the Annual Cap are set out in the letter from the Board contained in the Circular on pages 7 to 17. CIMB-GK has been appointed as the independent financial adviser to advise us in respect of the Subcontracting Agreement. We wish to draw your attention to the letter of advice from CIMB-GK dated 12 December 2007, which is incorporated and set out on pages 19 to 23 of the Circular.

Having considered the terms of the Subcontracting Agreement and the Annual Cap and having taken into account the advice and recommendations of CIMB-GK Securities contained in its letter, we are of the opinion that the Subcontracting Agreement are in the ordinary and usual course of business of the Company and the terms and conditions of the Subcontracting Agreement, including the Annual Cap for each of the three financial years ending 31 December 2008, 2009 and 2010, are on normal commercial terms and fair and reasonable insofar as the Independent Shareholders are concerned and are in the interest of the Company and the Independent Shareholders as a whole. We therefore advise and recommend that the Independent Shareholders should vote in favour of the resolutions to approve the Subcontracting Agreement and the Annual Cap to be proposed at the SGM.

Yours faithfully,

For and on behalf of the Independent Board Committee

Mak Kam Sing Wong Shiu Hoi, Peter Leung Hok Lim

Independent Non-executive Directors

– 18 –

LETTER FROM CIMB-GK SECURITIES (HK) LIMITED

CIMB-GK Securities (HK) Limited

25/F Central Tower 28 Queen’s Road Central Hong Kong

12 December 2007

To the Independent Board Committee and the Independent Shareholders,

Dear Sirs,

CONTINUING CONNECTED TRANSACTIONS

INTRODUCTION

We refer to our engagement as the independent financial adviser to the Independent Board Committee and the Independent Shareholders in respect of the Continuing Connected Transactions contemplated under the Subcontracting Agreement and the Annual Cap. Details of the terms of the Continuing Connected Transactions are set out in the letter from the Board (the “Letter”) contained in the circular of the Company dated 12 December 2007 (the “Circular”), of which this letter forms part. Capitalised terms used in this letter shall have the same meanings as those defined in the Circular unless the context otherwise requires.

In formulating our recommendation, we have relied on the information and facts contained or referred to in the Circular as well as the representations made or provided by the Directors and senior management of the Company. The Directors have declared in a responsibility statement set out in the Appendix to the Circular that they jointly and severally accept full responsibility for the accuracy of the information contained and representations made in the Circular. We have also assumed that the information and the Directors’ representations contained or referred to in the Circular were true and accurate at the time they were made and continue to be so at the date of the despatch of the Circular. We have no reason to doubt the truth, accuracy and completeness of the information and representations provided to us by the Company. We have also been advised by the Directors and believe that no material facts have been omitted from the Circular.

We consider that we have reviewed sufficient information and have taken reasonable steps as required under Rule 13.80, including the notes thereto of the Listing Rules, to reach an informed view, to justify reliance on the accuracy of the information contained and the Directors’ representations made in the Circular and to provide a reasonable basis for our recommendation. We have not, however, conducted an independent verification of the information nor have we conducted any form of in-depth investigation into the businesses and affairs or the prospects of the Company, High Fashion or any of their subsidiaries or associates.

– 19 –

LETTER FROM CIMB-GK SECURITIES (HK) LIMITED

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our opinion in respect of the Continuing Connected Transactions contemplated under the Subcontracting Agreement and the Annual Cap, we have considered the following principal factors and reasons:

(1) Subcontracting Agreement

Background and rationale

The Group is principally engaged in designing, manufacturing, marketing and retailing of ladies’ executive apparel, with manufacturing facilities in Dongguan, the PRC and various retail outlets in the mainland of the PRC, Taiwan, Hong Kong and Singapore. The High Fashion Group is principally engaged in the manufacturing, retailing and trading of garments.

As noted from the Letter, Dongguan Sanyue, a non-wholly owned subsidiary of the Group, has during peak production seasons accepted subcontracting orders from various members of the High Fashion Group, whereby High Fashion is a substantial shareholder of the Company holding approximately 52.75% of the entire issued share capital of the Company. For the purpose of consolidating business into wholly owned subsidiaries of the Company, the subcontracting services originally provided by Dongguan Sanyue above were provided by the Subcontractor to the Principal with effect from 1 January 2007 subject to the terms of the Initial Subcontracting Agreement. The annual cap under the Initial Subcontracting Agreement is HK$9,900,000. Taking into account the existing production capacity of the Subcontractor, the Company would like to terminate the Initial Subcontracting Agreement and enter into the Subcontracting Agreement in order to increase the annual cap of the continuing connected transaction from HK$9,900,000 to HK$30,000,000. As noted from the Letter, the terms of the Subcontracting Agreement are the same as the Initial Subcontracting Agreement in all material respects except for the amount of the Annual Cap. Upon the Subcontracting Agreement becoming unconditional, it will supersede the Initial Subcontracting Agreement and the latter will be terminated.

As advised by the Company, the business of a garment production company is seasonal and it is of utmost importance to meet tight production and delivery schedules prior to the commencement of each season. As a result, it is the general practice of a garment production company to subcontract part of its production to other parties when its own production capacity is limited. Since the Group has its own production facilities and may have spare production capacity from time to time, the Directors considered that the Subcontracting Agreement would enable the Group to maximize the use of its production capacity and manpower.

– 20 –

LETTER FROM CIMB-GK SECURITIES (HK) LIMITED

Given the above and the fact that i) the nature of the Subcontracting Agreement is related to the Group’s principal business and operations; ii) the Subcontracting Order Fee representing a stable source of income to the Group; and iii) the Subcontracting Agreement will be based on market and normal commercial terms on an arm’s length basis as elaborated below, we consider the terms of the Subcontracting Agreement are in the interest of the Company and the Shareholders as a whole.

Basis of determination

Pursuant to the terms of the Subcontracting Agreement, the Principal may place Subcontracting Orders with the Subcontractor from time to time setting out the particulars of the Production Service required in details. We have been advised by the Directors that the Subcontractor has the right to determine whether or not it would accept any Subcontracting Order after taking into account its own operating conditions, equipment utilization rate, quantity of unfinished orders, terms of such Subcontracting Order and other factors which it deems relevant.

Pursuant to the Subcontracting Agreement, the Subcontractor shall be entitled to, in respect of any Subcontracting Order which it has accepted, the Subcontracting Order Fee calculated based on the basis of the quantity of goods and unit price under such Subcontracting Order, on normal commercial terms and on terms no less favourable than those offered by independent third parties to the Subcontractor. The unit price under a Subcontracting Order is expected to be set by the Principal after taking into account the complexity of the product design and specifications, the quantities of the order, the packaging standards and the product delivery schedule required and the prevailing market conditions.

As advised by the Company, currently the Subcontractor only provides subcontracting services to members of the Group and the High Fashion Group. As a reference, we have reviewed the profit margins of other garment manufacturers listed on the Stock Exchange principally engaged in the manufacturing of garments and noted that the profit margins charged by the Subcontractor for the Production Services provided to the High Fashion Group are in line with the profit margins of these independent garment manufacturers.

Views

Having considered the above, in particular the Subcontractor is not obligated to provide the Production Service and the profit margins (being the Subcontracting Fee) for the Production Services as provided by the Subcontractor to the High Fashion Group under the Subcontracting Agreement are comparable to other listed garment manufacturers, we consider that the terms of the Subcontracting Agreement are fair and reasonable insofar as the Company and the Independent Shareholders are concerned.

– 21 –

LETTER FROM CIMB-GK SECURITIES (HK) LIMITED

Annual Cap

For the years ended 31 December 2004, 2005 and 2006, the aggregate subcontracting charges received by Dongguan Sanyue amounted to approximately HK$6,273,000, HK$6,915,000 and HK$8,659,000, respectively. For the ten months ended 31 October 2007, the aggregated subcontracting charges received by the Subcontractor amounted to HK$9,050,000. The proposed Annual Cap for the Subcontracting Order Fee for each of the three financial years ending 31 December 2008, 2009, and 2010 respectively is HK$30,000,000.

We note that the Annual Cap has been principally determined by the Directors with reference to the following factors:

1. the growing business prospects and demands of the High Fashion Group and the anticipating inflationary economic environment in the PRC prevailing in the short to medium term;

2. the historical aggregate subcontracting charges received by Dongguan Sanyue for the subcontracting services rendered in the three financial years ended 31 December 2006 and the historical aggregate subcontracting charges received by the Subcontractor for the subcontracting services rendered in the ten months ended 31 October 2007 under the Initial Subcontracting Agreement;

3. the Directors’ anticipation and estimation of the Group’s higher production demands in the coming peak seasons;

4. the estimate increase in the demand of High Fashion Group’s Subcontracting Order during peak production season after discussion with the management of High Fashion Group; and

5. the possible increase in or utilization of the production capacity of the Group during such peak seasons.

We note that the annual cap under the Initial Subcontracting Agreement is HK$9,900,000. As advised by the Company, the actual subcontracting order fees received by the Subcontractor under the Initial Subcontracting Agreement for the ten months ended 31 October 2007 may not fully reflect the current demand for the Production Service in light of the fact that the parties to the Initial Subcontracting Agreement are contractually bound by the smaller cap under that agreement. Furthermore, based on information provided by the Company relating to the historical and current production capacity of the Subcontractor, we note that Subcontractor has additional production capacity for accepting additional subcontracting orders.

– 22 –

LETTER FROM CIMB-GK SECURITIES (HK) LIMITED

Based on the aforesaid factors, we consider that the basis for determining the Annual Cap as well as the Annual Cap to be fair and reasonable insofar as the Company and the Independent Shareholders are concerned.

RECOMMENDATION

Having considered the principal factors and reasons referred to above, we consider that the Continuing Connected Transactions contemplated under the Subcontracting Agreement are in the interests of the Company and the Shareholders as a whole, and the terms thereof including the Annual Cap are based on normal commercial terms, in the ordinary and usual course of business of the Company, and are fair and reasonable insofar as the Company and the Independent Shareholders are concerned. Accordingly, we advise the Independent Shareholders, and the Independent Board Committee to recommend the Independent Shareholders, to vote in favour of the resolutions to be proposed at the SGM to approve the Continuing Connected Transactions as well as the Annual Cap.

Yours faithfully, For and on behalf of

CIMB-GK Securities (HK) LIMITED Alex Lau Flavia Hung Executive Vice President Senior Vice President

– 23 –

APPENDIX

GENERAL INFORMATION

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 matters the omission of which would make any statement in this circular misleading.

DISCLOSURE OF INTERESTS

(a) Disclosure of interests by Directors

As at the Latest Practicable Date, the interests and short positions of the Directors and chief executives of the Company and their respective associates in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) (“the SFO”)) which have been notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which any such Director or chief executive was taken or deemed to have under such provisions of the SFO), the Model Code for Securities Transactions by Directors of Listed Companies contained in the Listing Rules and which have been recorded in the register maintained by the Company pursuant to Section 352 of the SFO were as follows:

• (i) Long position in the shares of the Company

				Approximate
				Percentage
Name of		Nature of	Number of	of the Company’s
Director	Capacity	interests	Shares held	issued capital
Lam Foo Wah	Interest of controlled	Corporation	4,728,552,541	52.75%
	corporations		(Note 1)	(Note 2)

Notes:

1. The 4,728,552,541 Shares of the Company are registered in the name of Navigation Limited which is an indirect wholly-owned subsidiary of High Fashion International Limited (“High Fashion”), representing approximately 52.75% of the issued share capital of the Company. Pursuant to the SFO, Mr. Lam Foo Wah is deemed to have the corporate interest in 4,728,552,541 Shares of the Company as a result of his shareholding of 43.71% in High Fashion.

2. The issued share capital of the Company is 8,964,549,597 Shares as at the Latest Practicable Date.

– 24 –

APPENDIX

GENERAL INFORMATION

• (ii) Long Position in Shares of Associated Corporations

• (1) High Fashion International Limited – Ultimate Holding Company of the Company

					Approximate
					Percentage of
Name of			Nature of	Number of	High Fashion’s
Directors	Note(s)	Capacity	interests	shares held	issued capital
					(Note 3)
Lam Foo Wah	1, 2	Other Interest	Other	143,719,986	43.71%
So Siu Hang,		Beneficial owner	Personal	2,824,309	0.86%
Patricia

• (2) High Fashion Knitters Limited – Fellow Subsidiary of the Company

					Percentage
				Number of	of the fellow
Name of			Nature of	ordinary	subsidiary’s
Director	Note	Capacity	interests	shares held	issued capital
Lam Foo Wah	4	Interest of	Corporate	5,339,431	35.60%
		controlled
		corporations

Notes:

1. Mr. Lam Foo Wah is deemed to have an interest in 108,802,419 ordinary shares which are beneficially owned by Hinton Company Limited, the entire issued share capital of which is held under a related discretionary trust. Mr. Lam is regarded as a founder of the trust.

2. Mr. Lam Foo Wah is deemed to have an interest in 34,917,567 ordinary shares which are beneficially owned by High Fashion Charitable Foundation Limited, the entire issued share capital of which is held under a related discretionary trust. Mr. Lam is regarded as a founder of the trust.

3. The issued share capital of High Fashion is 328,815,550 shares as at the Latest Practicable Date.

4. These shares are held through three companies beneficially owned by Mr. Lam Foo Wah.

– 25 –

APPENDIX

GENERAL INFORMATION

Save as disclosed above, as at the Latest Practicable Date, none of the Directors, chief executive of the Company nor their associates had or was deemed to have any interests or short position in the shares, underlying shares or debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO), which has been recorded in the register maintained by the Company pursuant to Section 352 of the SFO or which has been notified to the Company and the Stock Exchange pursuant to the above mentioned Mode Code of the Listing Rules;

As at the Latest Practicable Date, none of the Directors is materially interested in any contract or arrangement entered into by the Company or any of its subsidiaries which contract or arrangement is subsisting at the date of this circular and which is significant in relation to the business of the Group.

None of the Directors had any direct or indirect interest in any assets which have been, other than as disclosed in the latest published audited accounts of the Group, acquired or disposed of by, or leased to the Company or any of its subsidiaries, or are proposed to be acquired or disposed of by, or leased to, the Company or any of its subsidiaries.

(b) Disclosure of interest by Substantial Shareholders

As at the Latest Practicable Date, insofar as is known to the Directors and chief executive of the Company, the following persons (not being a Director or chief executive of the Company), had an interest or short position in the shares and underlying shares of the Company which fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO were as follows:

Long positions in the shares:

			Approximate
		Number of	Percentage of the
Name of		ordinary	Company’s issued
Shareholder	Capacity	shares held	share capital
High Fashion International	Interest of controlled	4,728,552,541	52.75%
Limited_(Note)_	corporations

Note: These interests have been disclosed as interests of Mr. Lam Foo Wah in the “Disclosure of interests by Directors” above.

Save as disclosed above, as at the Latest Practicable Date, the Directors and the chief executive of the Company are not aware that there is any person (other than a Director or chief executive of the Company, whose interests are set out in the section “Disclosure of interests by Directors” above) who had registered an interest or short position in the shares, underlying shares and debentures of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who is, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group or had any options in respect of such capital.

– 26 –

APPENDIX

GENERAL INFORMATION

SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors has entered into or proposed to enter into any service contract with the Company or any other member of the Group (excluding contracts expiring or determinable by the Company or any member of the Group within one year without payment of compensation, other than statutory compensation).

LITIGATION

As at the Latest Practicable Date, no member of the Group was engaged in any litigation, arbitration or claims of material importance and, insofar as the Directors are aware, no litigation or claim of material importance is pending or threatened by or against any member of the Group.

MATERIAL ADVERSE CHANGE

The Directors are not aware of any material adverse change in the financial or trading position of the Group since 31 December 2006, the date to which the latest published audited accounts of the Company were made up.

DIRECTORS’ INTERESTS IN COMPETING BUSINESSES

As at the Latest Practicable Date, insofar as the Directors were aware, none of the Directors and their respective associates has any interests in a business which competes or may compete with, or is similar to, the business of the Group.

GENERAL

• (a) The company secretary of the Company is Ms. Chan Wai Wei, Cynthia who is a member of the Association of Chartered Certified Accountants and the Hong Kong Institute of Certified Public Accountants.

• (b) The qualified accountant of the Company is Mr. Lin Yuet Man, Edwin, who is a member of the Association of Chartered Certified Accountants, the Hong Kong Institute of Certified Public Accountants, The Hong Kong Institute of Company Chartered Secretaries and The Institute of Chartered Secretaries & Administrators.

• (c) The registered office of the Company is situate at Clarendon House, 2 Church Street, Hamilton HM11, Bermuda.

• (d) The head office and principal place of business of the Company in Hong Kong is situate at 11th Floor, High Fashion Centre, 1–11 Kwai Hei Street, Kwai Chung, New Territories, Hong Kong.

– 27 –

APPENDIX

GENERAL INFORMATION

• (e) The principal share registrar and transfer office of the Company is The Bank of Bermuda Limited whose office is situate at 6 Front Street, Hamilton HM11, Bermuda. The Hong Kong branch share registrar and transfer office of the Company is Computershare Hong Kong Investor Services Limited at Shops 1712–16, 17/F., Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong.

• (f) The English text of this circular shall prevail over the Chinese text in case of inconsistency.

DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection at the office of the Company at 11th Floor, High Fashion Centre, 1-11 Kwai Hei Street, Kwai Chung, New Territories, Hong Kong during normal business hours on the business day from the date of this circular up to and including the date of the SGM:

• (i) the Subcontracting Agreement;

• (ii) the letter from CIMB-GK, the text of which is set out in this circular; and

• (iii) the Initial Subcontracting Agreement.

QUALIFICATIONS

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

Name

Qualification

CIMB-GK

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

• (b) As at the Latest Practicable Date, CIMB-GK did not have any shareholding, direct or indirect, in the Group or any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in the Group, nor did it have any interest, direct or indirect, in any assets which had, since 31 December 2006, being the date up to which the latest published audited financial statements of the Group were made up, been acquired or disposed of by or leased to the Group, or were proposed to be acquired or disposed of by or leased to the Group.

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

– 28 –

NOTICE OF SPECIAL GENERAL MEETING

(Incorporated in Bermuda with limited liability) (Stock Code: 990)

NOTICE IS HEREBY GIVEN that the Special General Meeting of Theme International Holdings Limited (the “Company”) will be held at 10th Floor, High Fashion Centre, 1–11 Kwai Hei Street, Kwai Chung, New Territories, Hong Kong on Thursday, 3 January 2008 at 10:00 a.m. for the following resolutions, of which will be proposed as an ordinary resolution and special resolution:

SPECIAL RESOLUTION

1. “ THAT , conditional upon the Listing Committee of The Stock Exchange of Hong Kong Limited approving the listing of, and granting the permission to deal in, ordinary shares of HK$0.01 each in the issued share capital of the Company upon the Capital Reorganisation (as defined below) becoming effective and with effect from 9.30 a.m. on the date falling on the next business day not being a Saturday after the date on which this resolution is passed (the “Effective Date”):–

2. (a) every 10 issued shares of HK$0.01 each in the issued share capital of the Company be consolidated into one share of HK$0.10 each (the “Consolidated Share”) (“Share Consolidation”);

3. (b) following the Share Consolidation, the issued share capital of the Company be reduced by canceling paid up capital to the extent of HK$0.09 on each of the Consolidated Share in the capital of the Company in issue on the Effective Date (the “Capital Reduction”) so that each issued Consolidated Share shall be treated as one fully-paid up Consolidated Share of HK$0.01 in the capital of the Company (the “Reduced Share”) and any liability of the holders of Reduced Shares to make any further contribution to the capital of the Company on each such Reduced Share shall be treated as satisfied;

4. (c) the amount of HK$910,203,053.69 standing to the credit of the share premium account of the Company as at the Effective Date be cancelled (the “Share Premium Cancellation”);

5. (d) subject to and forthwith upon the Capital Reduction and the Share Premium Cancellation taking effect, the credit amounts arising from the Capital Reduction and the Share Premium Cancellation be credited to the contributed surplus account of the Company where it may be utilized in accordance with the bye-laws of the Company and all applicable laws, including to eliminate the accumulated losses of the Company (the “Application of Credit”);

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NOTICE OF SPECIAL GENERAL MEETING

• (e) all of the authorised but unissued share capital of the Company (which shall include the authorised but unissued share capital arising from the Capital Reduction) be cancelled and forthwith upon such cancellation, the authorised share capital of the Company be increased by the creation of such number of Reduced Shares as shall be sufficient to increase the authorized share capital to HK$500,000,000 divided into 50,000,000,000 Reduced Shares (collectively, the “Diminution and Increase”) in the Company; and

• (f) the Directors of the Company be and are hereby authorised generally to do all such acts, deeds and things as they shall, in their absolute discretion, deem appropriate to effect and implement the Share Consolidation, the Capital Reduction, the Share Premium Cancellation, the Application of Credit and the Diminution and Increase (collectively, the “Capital Reorganisation”).”

ORDINARY RESOLUTION

1. “ THAT the change of board lot size for trading in the New Shares of the Company from 2,000 to 10,000 with effect after the completion of the Capital Organisation be and is hereby approved and the Directors be and are hereby authorised to do all things and execute all documents as the Directors may in their absolute discretion deem necessary and desirable to effect and implement the foregoing.”

2. “ THAT the terms of, and the transactions contemplated under, the Subcontracting Agreement dated 26 November 2007, copy of which has been produced to this meeting marked “A” and signed by the Chairman of this meeting for the purpose of identification), entered into by Dongguan Yihao Fashions Limited, a wholly owned subsidiary of the Company, Dongguan Dalisheng Fashion Co., Ltd. and High Fashion (China) Co., Ltd., including, amongst other things, the increase of the annual cap for the Subcontracting Order Fee for each of the three financial years ending 31 December 2008, 2009 and 2010 from HK$9,900,000 under the Initial Subcontracting Agreement to HK$30,000,000 under the Subcontracting Agreement, be and are hereby approved and confirmed and the entering into of the Subcontracting Agreement by Dongguan Yihao Fashions Limited be and is hereby confirmed, approved and ratified.”

By Order of the Board Cynthia Chan Company Secretary

Hong Kong, 12 December 2007

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NOTICE OF SPECIAL GENERAL MEETING

Notes:

• (1) Any member entitled to attend and vote at the meeting is entitled to appoint one or more proxies to attend and vote in his stead. A proxy need not be a member of the Company.

• (2) To be valid, forms of proxy and the power of attorney or other authority (if any) under which it is signed or a notarially certified copy of that power of attorney must be deposited at the head office and principal place of business of the Company at 11th Floor, High Fashion Centre, 1–11 Kwai Hei Street, Kwai Chung, New Territories, Hong Kong not less than 48 hours before the time appointed for holding the meeting or any adjournment thereof.

• (3) Where there are joint registered holders of any Share, any one of such persons may vote at any meting, either personally or by proxy, in respect of such Shares as if he is solely entitled thereto, but if more than one of such joint holders be present at any meeting personally or by proxy, that one the said persons so present whose name stands first in the register of members in respect of such Share shall alone be entitled to vote in respect thereof.

MEMBERS OF THE BOARD

As at the date of this notice, the members of the Board of the Company comprises of (1) executive directors: Mr. Lam Foo Wah and Ms. So Siu Hang, Patricia; and (2) independent non-executive directors: Mr. Mak Kam Sing, Mr. Wong Shiu Hoi, Peter and Mr. Leung Hok Lim.

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