Tong Ren Tang Technologies Co. Ltd. — Proxy Solicitation & Information Statement 2004

Mar 12, 2004

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in 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 all your shares in Giordano International Limited , you should at once hand this circular and the accompanying form of proxy to the purchaser or to the bank, stockbroker or other agent, through whom the sale was effected, for transmission to the purchaser.

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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GIORDANO INTERNATIONAL LIMITED

(Incorporated in Bermuda with limited liability)

ONGOING CONNECTED TRANSACTIONS

WITH THE PLACITA GROUP

Independent financial adviser to the Independent Board Committee

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A letter from the Board of Giordano International Limited is set out on pages 3 to 8 of this circular. A letter from the Independent Board Committee of Giordano International Limited is set out on page 9 of this circular.

A letter from Tai Fook Capital Limited, the independent financial adviser to the Independent Board Committee, is set out on pages 10 to 17 of this circular.

A notice convening a special general meeting of Giordano International Limited to be held at Block B, 3rd Floor, Tin On Industrial Building, 777-779 Cheung Sha Wan Road, Kowloon, Hong Kong at 3:00 p.m., on Monday, March 29, 2004 is set out on pages 24 to 26 of this circular. Whether or not you are able to attend the meeting, you 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 later than 48 hours before the time appointed for the holding of the meeting or any adjournments thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the meeting or any adjournments thereof should you so wish.

March 11, 2004

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
Reasons for the Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
The Manufacturing Licence Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
The Cap Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Waiver from compliance with the Listing Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Special General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
Letter from the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
Letter from Tai Fook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
Appendix – General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	18
Notice of SGM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	24

• i -

DEFINITIONS

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

• “Announcement” the announcement made by the Company on March 10, 2004 in relation to, inter alia, the Manufacturing Licence Agreements and the Waiver

• “Associate(s)” has the meaning ascribed to it under, the Listing Rules

• “Board” board of Directors

• “Cap Amount(s)” the maximum amount of Purchases for the three financial years ending December 31, 2006

• “Company” Giordano International Limited, an exempted company incorporated in Bermuda with limited liability and whose securities are listed on the Stock Exchange

• “Directors” the directors of the Company

• “Giordano Brands” Giordano, Giordano Ladies, Giordano Junior, Bluestar Exchange and any other brands from time to time belonging to the Giordano Group

• “Giordano Group” the Company and its subsidiaries (excluding the Placita Group)

• “HK$” Hong Kong dollars, the lawful currency of Hong Kong

• “Hong Kong” the Hong Kong Special Administrative Region of the People’s Republic of China

• “Independent Board Committee” the committee of the Board, comprising Milton Au Man Chu, Barry John Buttifant and Allen Lee Peng Fei, each an independent non-executive Director, established to advise the Independent Shareholders in respect of the Waiver

• “Independent Shareholders” independent Shareholders which have no interest whatsoever in the Proposed Acquisition and the Purchases

• “Latest Practicable Date” March 10, 2004, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained herein

• “Listing Division” the listing division of the Stock Exchange

• 1 -

DEFINITIONS

“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange
“Manufacturing Licence	the two master manufacturing licence agreements, as amended
Agreements”	from time to time, for Giordano Brands Merchandise entered into
	with the Placita Group
“Merchandise”	clothing and related accessories
“Mr. Cheung”	Mr. Cheung Kwok Leung, a director of a non-wholly owned
	subsidiaries of the Company
“Mr. Ngan”	Mr. Ngan Leung Loi, an indirect shareholder of Placita
“Placita”	Placita Holdings Limited, a non-wholly owned subsidiary of the
	Company incorporated in the British Virgin Islands owned as to
	51% by the Company and 49% by Gloss Mind Holdings Limited
“Placita Group”	Placita, and its subsidiaries and associates (as that term is defined
	in the Listing Rules)
“Proposed Acquisition”	the acquisition by Mr. Cheung from Mr. Ngan of his entire equity
	interest in Gloss Mind Holdings Limited
“Purchases”	such purchase of Merchandise by the Giordano Group from the
	Placita Group, from time to time, pursuant to the Manufacturing
	Licence Agreements
“SGM”	the special general meeting of the Company to be convened for
	approving the transactions contemplated under the Manufacturing
	Licence Agreements
“Shareholders”	shareholders of the Company
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Tai Fook”	Tai Fook Capital Limited, a corporation licensed under the
	transitional arrangement to carry out Type 6 activity for the purpose
	of the Securities and Futures Ordinance (Chapter 571 of the Laws
	of Hong Kong) and the independent financial adviser to the
	Independent Board Committee
“Waiver”	a waiver application from the strict compliance with the
	requirements as set out in Chapter 14 of the Listing Rules in
	respect of the Purchases

• 2 -

LETTER FROM THE BOARD

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GIORDANO INTERNATIONAL LIMITED

(Incorporated in Bermuda with limited liability)

Directors: Lau Kwok Kuen, Peter (Chairman) Fung Wing Cheong, Charles Mah Chuck On, Bernard Au Man Chu, Milton[#] Barry John Buttifant[#] Lee Peng Fei, Allen[#]

Registered Office: Canon’s Court 22 Victoria Street Hamilton HM12 Bermuda

Principal Place of Business: 5th Floor Tin On Industrial Building 777-779 Cheung Sha Wan Road Kowloon Hong Kong

March 11, 2004

Independent non-executive Director

To the Shareholders

Dear Sir or Madam,

ONGOING CONNECTED TRANSACTIONS

WITH THE PLACITA GROUP

INTRODUCTION

On March 3, 2004, Mr. Cheung entered into a conditional sale and purchase agreement to acquire from Mr. Ngan his entire interest in Gloss Mind Holdings Limited, which is currently owned as to 28% by Mr. Cheung and 72% by Mr. Ngan. Gloss Mind Holdings Limited is a joint venture partner of the Company in Placita, a non-wholly owned subsidiary of the Company, which is owned as to 51% by the Company and 49% by Gloss Mind Holdings Limited. Mr. Cheung is currently a director of Placita and Gloss Mind Holdings Limited and following completion of the Proposed Acquisition, Gloss Mind Holdings Limited will become an associate (as that terms is defined in the Listing Rules) of Mr. Cheung. Gloss Mind Holdings Limited is a substantial shareholder of Placita.

The Placita Group carries on the business of the manufacturing and trading of clothing and accessories and is a manufacturing division of the Company.

• 3 -

LETTER FROM THE BOARD

Prior to the Proposed Acquisition, the Giordano Group had entered into various manufacturing licence agreements with the Placita Group from time to time. However, upon completion of the Proposed Acquisition, Placita will become a connected person of the Company under the Listing Rules by virtue of Mr. Cheung’s directorship and equity interest in Placita. The Purchases contemplated under the Manufacturing Licence Agreements will become ongoing connected transactions of the Company subject to disclosure and Shareholders approval requirements under Chapter 14 of the Listing Rules because the Giordano Group would under the Manufacturing Licence Agreements be purchasing Giordano Brands Merchandise from Placita, which is an associate of Mr. Cheung. Neither Mr. Cheung nor Mr. Ngan has any shareholding interest in the Company.

The Directors consider that the terms under the Manufacturing Licence Agreements are on normal commercial terms, in the ordinary and usual course of business of the Giordano Group and on terms no more favourable than those available to independent third parties. As the Purchases will be of a continuing nature during the Giordano Group’s normal course of business and the Directors consider that it would not be practicable to comply strictly with the disclosure and Shareholders approval requirements as stipulated under Chapter 14 of the Listing Rules, the Company has applied to the Stock Exchange for the Waiver. The Waiver will be subject to, inter alia, the approval of the Waiver by the Independent Shareholders at the SGM to be convened and held.

The completion of the Proposed Acquisition is subject to, among other things, the granting of the Waiver by the Stock Exchange and the approval by the Independent Shareholders at the SGM.

REASONS FOR THE PURCHASES

The principal business of the Giordano Group is the retail and distribution of casual apparel and accessories under the Giordano Brands. The Giordano Group purchases its Merchandise from a number of authorized manufacturers and suppliers according to its requirements. The Placita Group is a manufacturing division of the Company. Due to the Giordano Group’s policy that all authorized manufacturers and suppliers are required to enter into a manufacturing licence agreement with it, the Giordano Group has entered into the Manufacturing Licence Agreements with the Placita Group, in which such agreements have been revised from time to time by the Company to incorporate and/or amend provisions to properly safeguard the Giordano Group’s interest. The price and payment terms for the Merchandise under the Purchases are negotiated on an order-by-order basis, based on arm’s length negotiation and with reference to the prices of similar Merchandise purchased by the Giordano Group from other independent manufacturers and suppliers for similar amount and quality of Merchandise.

The Directors consider that the Manufacturing Licence Agreements are on normal commercial terms, in the ordinary and usual course of business of the Giordano Group and on terms no more favorable than those available to independent third parties.

In light of the above, the Directors believe that the Purchases are in the interest of the Giordano Group.

• 4 -

LETTER FROM THE BOARD

THE MANUFACTURING LICENCE AGREEMENTS

Under the Manufacturing Licence Agreements, the Giordano Group has appointed the Placita Group as an authorized non-exclusive manufacturer of Merchandise under the Giordano Brands and that the Manufacturing Licence Agreements are essentially a set of master agreements that set out the general requirements for the Placita Group to comply as an authorized manufacturer of the Giordano Group and the operational requirements that the Placita Group must comply with when handling the orders placed by the Giordano Group.

In light of the above, the Directors consider that the Manufacturing Licence Agreements are on normal commercial terms, in the ordinary and usual course of business of the Giordano Group and on terms no more favorable than those available to independent third parties.

THE CAP AMOUNTS

The aggregate total amounts of the Purchases for each of the three financial years ending December 31, 2006 is subject to the Cap Amounts as follows:

Financial	year ending	Cap Amount (HK$)
December	31, 2004	300,000,000
December	31, 2005	330,000,000
December	31, 2006	363,000,000

For the two years ended December 31, 2002, the increase in Purchases was approximately 10% year on year (approximately HK$216 million for 2001 and approximately HK$233 million for 2002). As a result of Severe Acute Respiratory Syndrome, the Purchases for 2003 (approximately HK$223 million) did not increase in line with the historical trend but dropped slightly compared to the Purchases for 2002. The Directors have calculated the “would be” Purchases for 2003 (the “Adjusted Purchases for 2003”) by multiplying the Purchases for 2002 by 110% (i.e. an increase of 10%) to adjust for the impact of Severe Acute Respiratory Syndrome. The Adjusted Purchases for 2003, which amounts to approximately HK$260 million, and an annual increase of 15% were then applied by the Directors to determine the Cap Amount for the year ending December 31, 2004. The Directors consider that the expected increase of 15% for 2004 is reasonable given the strong rebound of the economy in Hong Kong since the last quarter of 2003. For the two years ending December 31, 2006, the Directors expect the Purchases to increase by 10% per annum, which is in line with historical trend.

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LETTER FROM THE BOARD

WAIVER FROM COMPLIANCE WITH THE LISTING RULES

The Purchases will, on completion of the Proposed Acquisition, constitute connected transactions under Chapter 14 of the Listing Rules and are therefore subject to the disclosure requirements under the Listing Rules and the approval by Independent Shareholders for each of the Purchases whenever they arise. As the Purchases will be of a continuing nature during the Giordano Group’s normal course of business, the Directors consider that it would not be practicable to make disclosures, and to seek Independent Shareholders’ approval, in respect of such Purchases on each occasion they arise. The Company has therefore applied to the Stock Exchange for the Waiver from strict compliance with the requirements as set out in Chapter 14 of the Listing Rules in respect of the Purchases on each occasion they arise during the three financial years ending December 31, 2006, subject to the conditions set out below:

• (1) that the Purchases shall be:

• (i) entered into by the Giordano Group in the ordinary and usual course of its business;

• (ii) conducted either (a) on normal commercial terms (which expression will be applied by reference to transactions of a similar nature and to be made by similar entities) or (b) (where there is no available comparison) on terms that are fair and reasonable so far as the Shareholders as a whole are concerned; and

• (iii) entered into either in accordance with the terms of the agreements or order contracts or other supplemental agreements governing such Purchases;

• (2) the aggregate dollar amount of the Purchases for each of the three financial years ending December 31, 2006 shall not exceed the Cap Amounts as follows:

Financial	year ending	Cap Amount (HK$)
December	31, 2004	300,000,000
December	31, 2005	330,000,000
December	31, 2006	363,000,000

• (3) the independent non-executive Directors shall review the Purchases annually and confirm in the Company’s next annual report that the Purchases were conducted in the manner as stated in paragraphs (1) and (2) above;

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LETTER FROM THE BOARD

• (4) the Company’s auditors shall review the Purchases annually and report in a letter to the Directors (a copy of which shall be provided to the Listing Division) whether, based on the findings arising from these procedures:

• (i) the Purchases have received the approval of the Board;

• (ii) the Purchases have been entered into in accordance with the terms of the agreements or order contracts governing such Purchases; and

• (iii) the Cap Amount has been exceeded;

• (5) details of the Purchases in each financial year shall be disclosed as required under Rule 14.25(1)(A) to (D) of the Listing Rules in the annual report of the Company for that financial year together with the statement of opinion of the independent non-executive Directors referred to in paragraph (3) above; and

• (6) the Company shall provide to the Stock Exchange an undertaking that, for so long as the Company’s securities are listed on the Stock Exchange, it will provide the Company’s auditors with full access to its relevant records, and where required by the Company’s auditors, use its best efforts to procure the Placita Group to provide the Company’s auditors with access to the relevant records relating to the Purchases, for the purpose of the auditors’ review of the Purchases referred to in paragraph (4) above.

If any terms of the Purchases as mentioned above are altered in the future or the conditions of the Waiver (if granted by the Stock Exchange) are not met, the Company must comply with the provisions of Chapter 14 of the Listing Rules governing connected transactions unless it applies for and obtains a separate waiver from the Stock Exchange.

In the event of any future amendments to the Listing Rules imposing more stringent requirements than as at the date of the grant of the Waiver from the Stock Exchange on transactions of the kind to which the Purchases belong including, but not limited to, a requirement that such transactions be made conditional on approval by the Independent Shareholders, the Company must take immediate steps to ensure compliance with such requirements within a reasonable time.

SPECIAL GENERAL MEETING

A notice of the SGM to be held on Monday, March 29, 2004 at 3:00 p.m. at Block B, 3rd Floor, Tin On Industrial Building, 777-779 Cheung Sha Wan Road, Hong Kong is set out on page 24 of this circular. An ordinary resolution will be proposed at the meeting to approve the Purchases. Mr. Cheung, Mr. Ngan and their Associates shall abstain from voting at the SGM.

• 7 -

LETTER FROM THE BOARD

A form of proxy for use at the SGM is enclosed. Whether or not you are able to attend the meeting in person, please complete the accompanying form of proxy in accordance with the printed instructions thereon and deposit it at the branch share registrar in Hong Kong, Abacus Share Registrars Limited, at Ground Floor, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong as soon as possible but in any event not later than 48 hours before the time appointed for the holding of the meeting or any adjourned meeting, as the case may be. Completion and return of the form of proxy will not preclude you from attending and voting in person at the meeting or any adjournments thereof should you so wish.

RECOMMENDATION

As set out in its letter, to the Independent Shareholders, based on the advice of Tai Fook, the Independent Board Committee is of the view that the Manufacturing Licence Agreement and the Waiver (including the Cap Amounts) are fair, and reasonable so far as the Shareholders as a whole are concerned. The recommendations and advice from the Independent Board Committee and Tai Fook are set out on page 9 and pages 10 to 17 of this circular, respectively.

ADDITIONAL INFORMATION

Your attention is also drawn to the letter from the Independent Board Committee, the letter from Tai Fook and the general information set out in the appendix to this circular.

Yours faithfully, By order of the Board Lau Kwok Kuen, Peter Chairman

• 8 -

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

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GIORDANO INTERNATIONAL LIMITED

(Incorporated in Bermuda with limited liability)

March 11, 2004

To the Independent Shareholders

Dear Sir or Madam,

ONGOING CONNECTED TRANSACTIONS

We refer to the circular dated March 11, 2004 (“Circular”) issued by the Company to its Shareholders, of which this letter forms part. Terms defined in the Circular shall have the same meanings when used in this letter, unless the context otherwise requires.

We have been appointed the Independent Board Committee to advise the Independent Shareholders whether, in our opinion, the terms of the Manufacturing Licence Agreements and the Waiver are fair and reasonable so far as the Company and its Shareholders as a whole are concerned. Tai Fook has been appointed as the independent financial adviser to advise the Independent Board Committee in respect of the Manufacturing Licence Agreements and the Waiver.

Your attention is drawn to the letter from the Board on pages 3 to 8 of the Circular, which sets out information relating to the Manufacturing Licence Agreements and the Waiver. Your attention is also drawn to the letter from Tai Fook to the Independent Board Committee which contains its advice to us in respect of the Manufacturing Licence Agreements and the Waiver as set out on pages 10 to 17 of the Circular.

We have considered the principal factors taken into account by Tai Fook in arriving at its opinion in respect of the Manufacturing Licence Agreements and the Waiver. We concur with the views of Tai Fook that the terms of the Manufacturing Licence Agreements and the Waiver (including the Cap Amounts) are fair and reasonable so far as the Company and its Shareholders are concerned and are in the interests of the Company and its Shareholders as a whole. Accordingly, we recommend that the Independent Shareholders vote in favour of the ordinary resolution to be proposed at the SGM.

Yours faithfully,

the Independent Board Committee

Milton Au Man Chu, Independent Non-executive Director Barry John Buttifant, Independent Non-executive Director Allen Lee Peng Fei, Independent Non-executive Director

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LETTER FROM TAI FOOK

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Tai Fook Capital Limited 25/F New World Tower 16-18 Queen’s Road Central Hong Kong

March 11, 2004

To the Independent Board Committee of

Giordano International Limited 5th Floor Tin On Industrial Building 777-779 Cheung Sha Wan Road Kowloon Hong Kong

Dear Sirs,

ONGOING CONNECTED TRANSACTIONS AND WAIVER APPLICATION

We refer to our appointment as the independent financial adviser to the Independent Board Committee with respect to the Manufacturing Licence Agreements and the Waiver, details of which are set out in the circular of the Company dated March 11, 2004 (the “Circular”), of which this letter forms part. Terms used in this letter shall have the same respective meanings as defined in the Circular unless the context otherwise requires.

On March 3, 2004, Mr. Cheung entered into a conditional sale and purchase agreement to acquire from Mr. Ngan his entire interest in Gloss Mind Holdings Limited, which is currently owned as to 28% by Mr. Cheung and 72% by Mr. Ngan. Gloss Mind Holdings Limited is a joint venture partner of the Company in Placita, a non-wholly owned subsidiary of the Company, which is owned as to 51% by the Company and 49% by Gloss Mind Holdings Limited. Mr. Cheung is currently a director of Placita and Gloss Mind Holdings Limited and following completion of the Proposed Acquisition, Gloss Mind Holdings Limited will become an Associate of Mr. Cheung. Gloss Mind Holdings Limited is a substantial shareholder of Placita.

The Placita Group carries on the business of manufacturing and trading of clothing and accessories and is a manufacturing division of the Company. It is the Giordano Group’s policy that all authorized manufacturers and suppliers (the “authorized manufacturers”) is required to enter into a manufacturing licence agreement with the Giordano Group. Such master manufacturing licence agreement is revised from time to time by the Giordano Group with the revised version incorporating amendments and/or additional provisions to properly safeguard the Giordano Group’s interest. Prior to the Proposed Acquisition, the Giordano Group has entered into the Manufacturing Licence Agreements with the Placita Group, one for “Giordano” branded Merchandise and one for “Bluestar Exchange” branded Merchandise. The Manufacturing Licence Agreements, which are the latest version of the master manufacturing licence agreements between the Giordano Group and the Placita Group, were entered into by the parties on February 23, 2004. Separate purchase orders are placed by members of the Giordano Group to the Placita Group for each of the Purchases and the Purchases are governed by the terms and conditions set out in the Manufacturing Licence Agreements.

• 10 -

LETTER FROM TAI FOOK

Prior to the Proposed Acquisition, the Giordano Group had entered into various manufacturing licence agreements with the Placita Group from time to time. However, upon completion of the Proposed Acquisition, Placita will become a connected person of the Company under the Listing Rules by virtue of Mr. Cheung’s directorship and equity interest in Placita. The Purchases contemplated under the Manufacturing Licence Agreements will become ongoing connected transactions of the Company subject to disclosure and shareholders approval requirements under Chapter 14 of the Listing Rules because the Giordano Group would under the Manufacturing Licence Agreements be purchasing Giordano Brands Merchandise from Placita, which is an Associate of Mr. Cheung. Neither Mr. Cheung nor Mr. Ngan has any shareholding interest in the Company.

The Company has applied to the Stock Exchange for the Waiver. The Waiver will be subject to, among other things, the approval of the Independent Shareholders at the SGM. Our role as the independent financial adviser to the Independent Board Committee is to give an independent opinion as to whether the terms of the Manufacturing Licence Agreements and the Waiver are fair and reasonable so far as the Shareholders as a whole are concerned.

In formulating our recommendations, we have relied on the statements, information, opinions and representations contained in the Circular and the information and representations provided to us by the Directors and management of the Giordano Group. We have assumed that all information, representations and opinions contained or referred to in the Circular and all information, representations and opinions which have been provided by the Directors and management of the Group for which they are solely responsible are true and accurate at the time they were made and will continue to be accurate at the date of the Circular and will continue to be true up to the date of the SGM.

We consider that we have been provided with sufficient information on which to form a reasonable basis for our opinion. We have no reason to suspect that any relevant information has been withheld, nor are we aware of any fact or circumstance which would render the information provided and representations and opinions made to us untrue, inaccurate or misleading. The Directors have further confirmed that, to the best of their knowledge, they believe there are no other facts or representations the omission of which would make any statement in the Circular, including this letter, misleading. We have not, however, carried out any independent verification of the information provided by the Directors and management of the Group, nor have we conducted an independent investigation into the business and affairs of the Company.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our recommendation in respect of the Manufacturing Licence Agreements and the Waiver, we have considered the following principal factors and reasons:

I) The Manufacturing Licence Agreements

• A) The Purchases under the Manufacturing Licence Agreements are conducted in the ordinary and usual course of business of the Giordano Group

The principal business of the Giordano Group is the retail and distribution of casual apparel and accessories under the Giordano Brands. The Giordano Group purchases its Merchandise from a number of authorized manufacturers according to its requirements. Each of these manufacturers (including the Placita Group) is appointed by the Giordano

• 11 -

LETTER FROM TAI FOOK

Group as an authorized non-exclusive manufacturer of Merchandise bearing trade marks owned by members of the Giordano Group and is required to enter into a master manufacturing licence agreement with the Giordano Group, which sets out the terms and conditions that a manufacturer must comply with for being one of the Giordano Group’s authorized manufacturers. The Giordano Group currently has over 160 authorized manufacturers and the Placita Group is one of them. Set out below is the total amounts of purchases by the Giordano Group from its authorized manufacturers (including the Placita Group) and from the Placita Group respectively for the three years ended December 31, 2003, which information is prepared by the management of the Giordano Group:

	2001	2002	2003
	HK$ million	HK$ million	HK$ million
Total amounts of purchases from
authorized manufacturers
(including the Placita Group)	1,891.2	1,860.4	1,738.7
Total amounts of purchases from
the Placita Group	216.3	233.3	222.9

Based on the above table, for the three years ended December 31, 2003, the total amounts of purchases by the Giordano Group from the Placita Group represent approximately 11.4%, 12.5% and 12.8% respectively of the total amounts of purchases by the Giordano Group from its authorized manufacturers (including the Placita Group). The Directors consider that the Purchases, same as the purchases by the Giordano Group from other authorized manufacturers, are conducted under ordinary and usual course of business of the Giordano Group.

B) The Giordano Group has stringent requirements in approving authorized manufacturers

The Placita Group is a manufacturing division of the Company. It is the policy of the Giordano Group that all authorized manufacturers are required to enter into a manufacturing licence agreement with the Giordano Group. Hence, same as other authorized manufacturers, the Placita Group must satisfy the Giordano Group that it has the manufacturing facilities, manpower and production quality that meet the Giordano Group’s standards. The Giordano Group has a quality assurance department to conduct occasional site visits to authorized or proposed authorized manufacturers to ensure such standards are met. In addition, as set out in the Manufacturing Licence Agreements, the Placita Group, same as other authorized manufacturers, is required to observe and comply with the corporate quality manual of the Giordano Group, which in essence is a guideline stating the Giordano Group’s general minimum quality requirements for the products of and the quality system implemented by its authorised manufacturers.

C) The terms of the Manufacturing Licence Agreements

As mentioned above in this letter, the Giordano Group enters into a master manufacturing licence agreement with each of its authorized manufacturers. The master manufacturing licence agreement is revised from time to time by the Giordano Group with

• 12 -

LETTER FROM TAI FOOK

the revised version incorporating amendments and/or additional provisions to properly safeguard the Giordano Group’s interest. The Manufacturing Licence Agreements, which are the latest version of the master manufacturing licence agreements entered into between the Giordano Group and the Placita Group, were entered into by the parties on February 23, 2004. The Manufacturing Licence Agreements are basically master agreements that set out the general requirements for the Placita Group to comply with for being an authorized manufacturer of the Giordano Group and the operational requirements that the Placita Group must comply with when handling the orders placed by the Giordano Group. Separate order is placed by the Giordano Group to the Placita Group for each of the Purchases. The Directors consider that the terms of the Manufacturing Licence Agreements are on normal commercial terms and are no more favorable than those available to independent third parties.

In assessing the terms of the Manufacturing Licence Agreements, we have reviewed the master manufacturing licence agreements entered into between the Giordano Group and various other independent authorized manufacturers of the Giordano Group. We noted that the major terms, including those governing quality control, delivery, sub-standard products and termination of the agreement, etc., of the Manufacturing Licence Agreements are no more favorable than those available to the independent authorized manufacturers of the Giordano Group. Having considered this finding and the terms of the Manufacturing Licence Agreements, we are of the view that the Manufacturing Licence Agreements are on normal commercial terms and on terms no more favorable than those available to independent third parties.

• D) The procedures required to be followed by the buying department of the Giordano Group when selecting the authorized manufacturer for an order

The Giordano Group has a set of policy for the buying department to comply with when selecting the authorized manufacturer for an order. When the Giordano Group intends to make purchase from its authorized manufacturers, the buying department usually invites two to three of its authorized manufacturers to submit quotations for the proposed order. The buying department then determines the best offer by considering, among other things, the following four major factors:

1. the price quoted by the authorized manufacturers;

2. the quality of the Merchandise manufactured by the authorized manufacturers;

3. the delivery lead time; and

4. the past experience with the authorized manufacturers.

As such, the Giordano Group only places an order to the Placita Group when the quotation made by the Placita Group is considered the best offer among those received by the Giordano Group. In this connection, we have reviewed information provided by the buying department of the Giordano Group which sets out a number of purchases made by Giordano Group in the second half of 2003. We noticed that in line with the procedure as

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LETTER FROM TAI FOOK

described above, in each purchases the buying department had invited more than one authorised manufacturers to submit quotations and the buying department had considered a number of factors when selecting the authorised manufacturers for the purchases i.e. competitive price, shorter lead time and/or better quality.

The Directors confirm that each of the Purchases is and will continuously be conducted under normal commercial terms and on terms no more favorable than those available to independent third parties and the price of each Purchases is and will continuously be determined based on arm’s length negotiation. Having considered that the buying department of Giordano Group has imposed a stringent control to ensure only the authorised manufacturer with the best offer will be selected for a purchase, we are of the view that each of the Purchases is and will continuously be conducted on terms no more favorable than those available to other authorised manufacturers.

• E) The acquisition of a controlling interest in Gloss Mind Holdings Limited by Mr. Cheung

Mr. Cheung, a director of Placita and its subsidiaries, has no directorship or shareholding interest in the Giordano Group. As mentioned above in this letter, due to the Proposed Acquisition, the Purchases will become ongoing connected transactions of the Group upon completion of the Proposed Acquisition. The Directors confirm that the Purchases to be made subsequent to the completion of the Proposed Acquisition will continuously be conducted under normal commercial terms and on terms no more favorable than those available to independent third parties. Also, the Purchases will continuously be governed by the Manufacturing Licence Agreements.

F) Conclusion

Having considered the fact that (i) the Purchases is conducted in the ordinary and usual course of business of the Giordano Group; (ii) the Giordano Group has stringent requirements in approving authorized manufacturers of the Giordano Group and the Placita Group fulfills such requirements; (iii) the Manufacturing Licence Agreements are on normal commercial terms and on terms no more favorable than those available to independent third parties; (iv) the buying department of the Giordano Group has a set of policy to ensure that the interest of Giordano Group is properly safeguarded when placing orders to the Giordano Group’s authorized manufacturers and each Purchase will be made by the Giordano Group only when the terms offered by the Placita Group is considered no less favorable than those received by the Giordano Group from other independent authorised manufacturers; and (v) it is the policy of the Giordano Group to require each of the authorized manufacturers to execute a master manufacturing licence agreement, we consider that the terms of the Manufacturing Licence Agreements are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

II) On-going nature of the Purchases

As the Purchases will be of a continuing nature during the Giordano Group’s normal course of business and the Directors consider that it would not be practicable to comply strictly with the

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LETTER FROM TAI FOOK

disclosure and shareholders approval requirements as stipulated under Chapter 14 of the Listing Rules, the Company has applied to the Stock Exchange for the Waiver. We consider that the Waiver has the benefit of allowing the Giordano Group to execute future Purchases pursuant to the Manufacturing Licence Agreements in a more efficient and cost effective manner without going through the disclosure and shareholders approval requirements under Chapter 14 of the Listing Rules.

III) Basis of the Cap Amounts

The aggregate total amounts of the Purchases for each of the three financial years ending December 31, 2006 is subject to the Cap Amounts as follows:

Financial year ending Cap Amount (HK$) December 31, 2004 300,000,000 December 31, 2005 330,000,000 December 31, 2006 363,000,000

For the two years ended December 31, 2002, the increase in Purchases was approximately 10% year on year (approximately HK$216 million for 2001 and approximately HK$233 million for 2002). As a result of Severe Acute Respiratory Syndrome (“SARS”), the Purchases for 2003 did not increase in line with the historical trend but dropped slightly as compared to the Purchases for 2002. The Directors have calculated the “would be” Purchases for 2003 (the “Adjusted Purchases for 2003”) by multiplying the Purchases for 2002 by 110% (i.e. an increase of 10%) to adjust for the impact of SARS. The Adjusted Purchases for 2003, which amounts to approximately HK$260 million, and an annual increase of 15% were then applied by the Directors to determine the Cap Amount for the year ending December 31, 2004. The Directors consider that the expected increase of 15% for 2004 is reasonable given the strong rebound of the economy in Hong Kong since the last quarter of 2003. For the two years ending December 31, 2006, the Directors expect the Purchases to increase by 10% per annum, which is in line with the historical trend.

As illustrated above, the Cap Amounts are derived based on the historical trend of the Purchase for the two years ended December 31, 2002 with adjustments made to factor in the negative impact of SARS and the anticipated rebound of the economy in 2004. Having considered the severe negative impact caused to the economy resulting from SARS, we are of the view that the basis of calculation for the Adjusted Purchases for 2003 is fair and reasonable. Also, having considered that the economy in 2004 in general has shown a sustainable sign of rebound and the Directors, with the expertise in the industry, are in a more informed position to make a reasonable estimation on how the Purchases in 2004 will be affected by the rebound of the economy in 2004, we are of the view that the expected increase of 15% in the Purchases of 2004 is fair and reasonable. In respect of the increase in the Cap Amounts for financial year ending 2005 and 2006, we are of the view that the increase of 10% per annum, which is in line with the historical trend, is fair and reasonable. Based on the above, we are of the view that the Cap Amounts are fair and reasonable.

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LETTER FROM TAI FOOK

IV) Basis of the Waiver

As stated in the Letter from the Board in the Circular and the Announcement, the Company had applied to the Stock Exchange the Waiver for a three-year period ending December 31, 2006 from strict compliance with the disclosure and shareholders approval requirement under Chapter 14 of the Listing Rules. As the Purchases will be of a continuing nature during the Giordano Group’s normal course of business, the Directors consider that it would not be practicable to make disclosures, and to seek Independent Shareholders’ approval, in respect of such Purchases on each occasion they arise. The Company has therefore applied to the Stock Exchange for the Waiver from the strict compliance with the requirements as set out in Chapter 14 of the Listing Rules in respect of the Purchases on each occasion they arise during the three financial years ending December 31, 2006, subject to the conditions set out below:

• (1) that the Purchases shall be:

• (i) entered into by the Giordano Group in the ordinary and usual course of its business;

• (ii) conducted either (a) on normal commercial terms (which expression will be applied by reference to transactions of a similar nature and to be made by similar entities) or (b) (where there is no available comparison) on terms that are fair and reasonable so far as the Shareholders as a whole are concerned; and

• (iii) entered into either in accordance with the terms of the agreements or order contracts or other supplemental agreements governing such Purchases;

• (2) the aggregate dollar amount of the Purchases for each of the three financial years ending December 31, 2006 shall not exceed the Cap Amounts as follows:

Financial	year ending	Cap Amount (HK$)
December	31, 2004	300,000,000
December	31, 2005	330,000,000
December	31, 2006	363,000,000

• (3) the independent non-executive Directors shall review the Purchases annually and confirm in the Company’s next annual report that the Purchases were conducted in the manner as stated in paragraphs (1) and (2) above;

• (4) the Company’s auditors shall review the Purchases annually and report in a letter to the Directors (a copy of which shall be provided to the Listing Division) whether, based on the findings arising from these procedures:

• (i) the Purchases have received the approval of the Board;

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LETTER FROM TAI FOOK

• (ii) the Purchases have been entered into in accordance with the terms of the agreements or order contracts governing such Purchases; and

• (iii) the Cap Amount has been exceeded;

• (5) details of the Purchases in each financial year shall be disclosed as required under Rule 14.25(1)(A) to (D) of the Listing Rules in the annual report of the Company for that financial year together with the statement of opinion of the independent nonexecutive Directors referred to in paragraph (3) above; and

• (6) the Company shall provide to the Stock Exchange an undertaking that, for so long as the Company’s securities are listed on the Stock Exchange, it will provide the Company’s auditors with full access to its relevant records, and where required by the Company’s auditors, will use its best efforts to procure the Placita Group to provide the Company’s auditors with access to the relevant records relating to the Purchases, for the purpose of the auditors’ review of the Purchases referred to in paragraph (4) above.

If any terms of the Purchases as mentioned above are altered in the future or the conditions of the Waiver (if granted by the Stock Exchange) are not met, the Company must comply with the provisions of Chapter 14 of the Listing Rules governing connected transactions unless it applies for and obtains a separate waiver from the Stock Exchange.

In the event of any future amendments to the Listing Rules imposing more stringent requirements than as at the date of the grant of the Waiver from the Stock Exchange on transactions of the kind to which the Purchases belong including, but not limited to, a requirement that such transactions be made conditional on approval by the Independent Shareholders, the Company must take immediate steps to ensure compliance with such requirements within a reasonable time.

On such basis, we consider that the above Waiver’s conditions serve to monitor the Purchases so that they will be conducted on fair and reasonable terms and the interests of the Shareholders as a whole will be properly safeguarded.

RECOMMENDATION

Having taken into consideration the above principal factors and reasons, we consider that the terms of the Manufacturing Licence Agreements and the Waiver (including the Cap Amounts) are fair and reasonable so far as the Company and its Shareholders as a whole are concerned and are in the interests of the Company and its Shareholders as a whole. Accordingly, we recommend the Independent Board Committee to advise the Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the SGM.

Yours faithfully, For and on behalf of

Tai Fook Capital Limited Derek C.O. Chan Deputy Managing Director

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GENERAL INFORMATION

APPENDIX

1. 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.

2. MATERIAL ADVERSE CHANGE

Save as disclosed in the Company profit warning announcement in April 2003, the Directors are not aware of any material adverse change in the financial or trading position of the Company since December 31, 2002, being the date to which the latest published audited consolidated accounts of the Company were made up.

3. DISCLOSURE OF INTERESTS

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

			Beneficial
			interest in	Approximate
		Beneficial	unlisted	aggregate
	Nature of	interest	underlying	percentage of
Name of director	interest	in shares	shares	interests
		(Note)	(Note)
Lau Kwok Kuen, Peter	Personal	12,708,000	25,000,000	2.62%
Fung Wing Cheong, Charles	Personal	800,000	5,900,000	0.47%
Mah Chuck On, Bernard	Personal	479,086	6,840,000	0.51%

Note:

Interests in the shares and underlying shares of equity derivatives are long position.

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GENERAL INFORMATION

APPENDIX

Save as disclosed above, as at the Latest Practicable Date, none of the directors and chief executive of the Company had or was deemed to have any interest 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 pursuant to the above mentioned Model Code of the Listing Rules.

4. SERVICE CONTRACT

As at the Latest Practicable Date, save for the service contract of a Director which is for a fixed term of five year, no Director has any existing or proposed service contract with the Company or any of its subsidiaries which is not expiring or determinable by the employing company within one year without the payment of compensation (other than statutory compensation).

5. SUBSTANTIAL SHAREHOLDERS

As at the Latest Practicable Date, the interests or short positions of the following persons, other than directors and chief executive of the Company, in the shares or underlying shares of the Company which have been disclosed to the Company pursuant to Divisions 2 and 3 of Part XV of the SFO have been recorded in the register kept by the Company pursuant to section 336 of SFO:

		Aggregate	Approximate
		long position	aggregate
		in shares and	percentage
Name	Notes	underlying shares	of interests
Aberdeen Asset Management Asia Ltd.	1	177,848,800	12.31%
Harris Associates L.P.	2	144,006,200	9.99%
State Street Corporation	3	119,884,027	8.32%
J.P. Morgan Chase & Co.	4	114,952,071	7.97%
Matthews International Capital
Management, LLC	5	74,835,000	5.19%

Notes:

1. The capacity of Aberdeen Management Asia Ltd. in holding the 177,848,800 shares was as Investment Manager.

2. The capacity of Harris Associates L.P. in holding the 144,006,200 shares was as Investment Manager.

3. The 119,884,027 shares were held by State Street Bank & Trust Company, which was a wholly-owned subsidiary of State Street Corporation. By virtue of the SFO, State Street Corporation was deemed to be interested in the 119,884,027 shares.

The capacity of State Street Corporation in holding the 119,884,027 shares was as Controlled Corporation.

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GENERAL INFORMATION

APPENDIX

1. Details of the breakdown of the 114,952,071 shares held by J.P. Morgan Chase & Co. were as follows:

	Aggregate	Approximate
	long position	percentage of
Name	in shares	interest
J.P. Morgan Chase & Co.	114,952,071	7.971%
J.P. Morgan Fleming Asset Management Holdings Inc.	17,734,000	1.230%
J.P. Morgan Fleming Asset Management (Asia) Inc.	17,320,000	1.201%
JF Asset Management Limited	17,320,000	1.201%
JF Funds Limited	2,222,000	0.154%
JF Asset Management (Taiwan) Limited	2,222,000	0.154%
Robert Fleming Holdings Ltd	414,000	0.029%
Robert Fleming Asset Management Ltd	414,000	0.029%
J.P. Morgan Fleming Asset Management (UK) Limited	414,000	0.029%
JPMorgan Chase Bank	76,827,950	5.327%
J.P. Morgan International Inc.	3,554,000	0.246%
J.P. Morgan International Finance Limited	3,554,000	0.246%
J.P. Morgan Holdings (UK) Limited	3,500,000	0.243%
J.P. Morgan Securities Ltd.	3,500,000	0.243%
J.P. Morgan Overseas Capital Corporation	54,000	0.004%
J.P. Morgan Whitefriars Inc.	54,000	0.004%
J.P. Morgan Investment Management Inc.	20,390,121	1.414%
J.P. Morgan Investment Management Limited	2,136,000	0.148%

Notes:

(i) The entire issued share capital of each of J.P. Morgan Fleming Asset Management Holdings Inc., JPMorgan Chase Bank and J.P. Morgan Investment Management Inc. was owned by J.P. Morgan Chase & Co. which, by virtue of the SFO, was deemed to be interested in the 114,952,071 shares held by these subsidiaries.

The capacity of J.P. Morgan Chase & Co. in holding the 114,952,071 shares was, as to 3,554,000 shares, as Beneficial Owner, as to 42,836,000 shares, as Investment Manager and, as to 68,562,071 shares, as an Approved Lending Agent.

In addition, there was a Lending Pool of 68,562,071 shares.

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GENERAL INFORMATION

APPENDIX

• (ii) J.P. Morgan Fleming Asset Management Holdings Inc., by virtue of the SFO, was deemed to be interested in 17,734,000 shares, in which 414,000 shares were held by Robert Fleming Holdings Ltd, which was 96% owned by J.P. Morgan Fleming Asset Management Holdings Inc., and 17,320,000 shares were held by J.P. Morgan Fleming Asset Management (Asia) Inc., a wholly-owned subsidiary of J.P. Morgan Fleming Asset Management Holdings Inc.

414,000 shares were held by J.P. Morgan Fleming Asset Management (UK) Limited which was, in turn wholly-owned by Robert Fleming Asset Management Ltd which was, in turn, 99.96% owned by Robert Fleming Holdings Ltd.

J.P. Morgan Fleming Asset Management (Asia) Inc., by virtue of the SFO, was deemed to be interested in 17,320,000 shares held by its subsidiaries, which included 15,098,000 shares held by JF Asset Management Limited, a 99.99% owned subsidiary; and the 2,222,000 shares held by JF Asset Management (Taiwan) Limited, which was 99.9% owned by JF Funds Limited which was, in turn, wholly-owned by JF Asset Management Limited.

• (iii) The 76,827,950 shares held by JPMorgan Chase Bank included 73,273,950 shares held directly; by virtue of the SFO, JPMorgan Chase Bank was deemed to be interested in the 3,554,000 shares held by J.P. Morgan International Inc., which in turn owned the entire issued share capital of J.P. Morgan International Finance Limited.

• (iv) 3,500,000 shares were held by J.P. Morgan Securities Ltd., which was 90% owned by J.P. Morgan Holdings (UK) Limited which was, in turn, wholly-owned by J.P. Morgan International Finance Limited, which also indirectly held 54,000 shares through J.P. Morgan Whitefriars Inc. the entire share capital in which was held by J.P. Morgan Overseas Capital Corporation, a wholly-owned subsidiary of J.P. Morgan International Finance Limited.

• (v) The 20,390,121 shares held by J.P. Morgan Investment Management Inc. included 18,254,121 shares held directly and, by virtue of the SFO, the deemed interest of 2,136,000 shares held by its whollyowned subsidiary, J.P. Morgan Investment Management Limited.

• The capacity of Matthews International Capital Management, LLC in holding the 74,835,000 shares was as Investment Manager.

6. EXPERT’S DISCLOSURE OF INTEREST AND CONSENT

• (a) Tai Fook is a corporation licensed under the transitional arrangement to carry out Type 6 activity for the purpose of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong).

• (b) As at the Latest Practicable Date, Tai Fook does not have any shareholding in any member of the Company and its subsidiaries nor any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Company and its subsidiaries.

• (c) Tai Fook 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.

• (d) The letter and recommendation given by Tai Fook are given as of the date of this circular for incorporation herein.

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GENERAL INFORMATION

APPENDIX

• (e) Tai Fook has, or has had, no direct or indirect interest in any assets which have been acquired or disposed of by, or leased to, or which are proposed to be acquired or disposed of by, or leased to, the Company or any of its subsidiaries since December 31, 2002, being the date to which the latest published audited consolidated accounts of the Company were made up.

7. MATERIAL INTERESTS IN CONTRACTS

Save as disclosed herein, as at the Latest Practicable Date, none of the Directors was materially interested in any contract or arrangement subsisting at such date which was significant in relation to the business of the Company and its subsidiaries taken as a whole.

8. GENERAL

• (a) The Secretary of the Company is Alice Leung Sze Man. She is a fellow member of both the Hong Kong Institute of Company Secretaries and the Institute of Chartered Secretaries and Administrators.

• (b) The principal place of business of the Company in Hong Kong is at 5th Floor, Tin On Industrial Building, 777-779 Cheung Sha Wan Road, Kowloon, Hong Kong.

• (c) The registered office of the Company is Canon’s Court, 22 Victoria Street, Hamilton HM 12, Bermuda.

• (d) The branch share registrar of the Company in Hong Kong is Abacus Share Registrars Limited at Ground Floor, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong.

• (e) The Group is currently in dispute with the Taiwan tax authority with respect to tax treatment on certain of the Group’s sales in Taiwan. The dispute is not expected to have any material impact on the financial position of the Group.

• (f) In the event of inconsistency, the English text of this circular shall prevail over the Chinese text.

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GENERAL INFORMATION

APPENDIX

9. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection at the principal place of business of the Company in Hong Kong at 5th Floor, Tin On Industrial Building, 777-779 Cheung Sha Wan Road, Kowloon, Hong Kong during normal business hours on any weekday (public holidays excepted) up to and including March 29, 2004:

• (a) the Manufacturing Licence Agreements;

• (b) the letter from the Independent Board Committee, the text of which is set out in this circular;

• (c) the letter from Tai Fook, the text of which is set out in this circular;

• (d) the written consent referred to in paragraph 6(c) of this Appendix;

• (e) the service contract referred to in paragraph 4 above; and

• (f) the memorandum of association and bye-laws of the Company.

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NOTICE OF SPECIAL GENERAL MEETING

==> picture [168 x 37] intentionally omitted <==

GIORDANO INTERNATIONAL LIMITED

(Incorporated in Bermuda with limited liability)

NOTICE IS HEREBY GIVEN that a special general meeting of Giordano International Limited (the “Company”) will be held at Block B, 3rd Floor, Tin On Industrial Building, 777-779 Cheung Sha Wan Road, Kowloon, Hong Kong at 3:00 p.m. on Monday, March 29, 2004 for the purpose of considering and, if thought fit, passing, with or without amendment, the following resolution as an ordinary resolution:

ORDINARY RESOLUTION

“ THAT all Purchases (as defined and referred to in the circular to the Shareholders of the Company dated March 11, 2004 (the “Circular”)) to be made after the date of this resolution until December 31, 2006 between the Giordano Group and the Placita Group in accordance with the terms of the Manufacturing Licence Agreements (each as defined in the Circular) be and are hereby approved AND that the directors of the Company (the “Directors”) be and are hereby authorised to do, approve and transact all things which they may in their discretion consider to be necessary or desirable in connection therewith, provided that:

• (1) the Purchases shall be:

• (i) entered into by the Giordano Group in the ordinary and usual course of its business;

• (ii) conducted either (a) on normal commercial terms (which expression will be applied by reference to transactions of a similar nature and to be made by similar entities) or (b) (where there is no available comparison) on terms that are fair and reasonable so far as the Shareholders of the Company as a whole are concerned; and

• (iii) entered into either in accordance with the terms of the agreements or order contracts or other supplemental agreements governing such Purchases;

• (2) the aggregate dollar amount of the Purchases for each of the three financial years ending December 31, 2006 shall not exceed the Cap Amount as follows:

Financial year ending

Cap Amount (HK$)

December 31, 2004 300,000,000 December 31, 2005 330,000,000 December 31, 2006 363,000,000

• 24 -

NOTICE OF SPECIAL GENERAL MEETING

• (3) the independent non-executive Directors shall review the Purchases annually and confirm in the Company’s next annual report that the Purchases were conducted in the manner as stated in paragraphs (1) and (2) above;

• (4) the Company’s auditors shall review the Purchases annually and report in a letter to the Directors (a copy of which shall be provided to the listing division of The Stock Exchange of Hong Kong Limited (the “Stock Exchange”)) whether, based on the findings arising from these procedures:

• (i) the Purchases have received the approval of the Company’s board of Directors;

• (ii) the Purchases have been entered into in accordance with the terms of the agreements or order contracts governing such Purchases; and

• (iii) the Cap Amount has been exceeded;

• (5) details of the Purchases in each financial year shall be disclosed as required under Rule 14.25(1)(A) to (D) of the Rules Governing the Listing of Securities on the Stock Exchange in the annual report of the Company for that financial year together with the statement of opinion of the independent non-executive Directors referred to in paragraph (3) above; and

• (6) the Company shall provide to the Stock Exchange an undertaking that, for so long as the Company’s securities are listed on the Stock Exchange, it will provide the Company’s auditors with full access to its relevant records, and where required by the Company’s auditors, use its best efforts to procure the Placita Group to provide the Company’s auditors with access to the relevant records relating to the Purchases, for the purpose of the auditors’ review of the Purchases referred to in paragraph (4) above.”

By order of the Board

Leung Sze Man, Alice Company Secretary

Hong Kong, March 11, 2004

• 25 -

NOTICE OF SPECIAL GENERAL MEETING

Principal place of business: 5th Floor

Tin On Industrial Building 777-779 Cheung Sha Wan Road

Kowloon Hong Kong

Notes:

• (1) A shareholder entitled to attend and vote at the meeting convened by the above notice is entitled to appoint one or more proxies to attend and, on a poll, vote in his stead. A proxy need not be a shareholder of the Company.

• (2) To be valid, a form of proxy together with the power of attorney or other authority (if any) under which it is signed or a notarially certified copy of that power of attorney or authority must be deposited at the Company’s branch share registrars in Hong Kong, Abacus Share Registrars Limited, at Ground Floor, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong not less than 48 hours before the time appointed for holding the meeting or any adjourned meeting.

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