Tong Ren Tang Technologies Co. Ltd. — Proxy Solicitation & Information Statement 2006

Apr 19, 2006

THIS CIRCULAR REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular, you should consult your stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional advisor.

If you have sold or transferred all your shares in Giordano International Limited, you should at once hand this circular to the purchaser or 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.

GIORDANO INTERNATIONAL LIMITED

(Incorporated in Bermuda with limited liability)

(Stock Code: 709)

CONTINUING CONNECTED TRANSACTIONS

Independent Financial Advisor to the Independent Board Committee and the Independent Shareholders

A letter from the Board of Giordano International Limited is set out on pages 3 to 7 of this circular. A letter from the Independent Board Committee of Giordano International Limited is set out on page 8 of this circular.

A letter from Tai Fook Capital Limited, the independent financial advisor to the Independent Board Committee, is set out on pages 9 to 16 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 on Tuesday, May 9, 2006 at the later of 9:45 a.m. and the conclusion or adjournment of the annual general meeting of Giordano International Limited convened for 9:30 a.m. on Tuesday, May 9, 2006 is set out on pages 23 and 24 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 holding the meeting or any adjourned meetings. Completion and return of the form of proxy will not preclude you from attending and voting in person at the meeting or any adjourned meetings should you so wish.

April 19, 2006

CONTENTS

	Page
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM THE BOARD
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
Reasons for the Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
The New Manufacturing License Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Reasons for entering into New Manufacturing License Agreements . . . . . . . . . . . . . . . . . . . .	5
The New Cap Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Special General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
LETTER FROM THE INDEPENDENT BOARD COMMITTEE . . . . . . . . . . . . . . . . . . . . . . . . .	8
LETTER FROM TAI FOOK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
Appendix – General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	17
Notice of the SGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	23

• i -

DEFINITIONS

In this circular, the following expressions have the meanings respectively set opposite them unless the context otherwise requires:

“Associate(s)”	has the meaning ascribed to it under the Listing Rules
“Board”	board of Directors
“Cap Amount(s)”	the maximum amount of Purchases
“Company”	Giordano International Limited, a company incorporated in
	Bermuda with limited liability and whose securities are listed on
	the Stock Exchange
“Continuing Connected	the Purchases pursuant to the New Manufacturing License Agreements
Transactions”
“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)
“Group”	the Company and its subsidiaries
“HK$”	Hong Kong dollars
“Hong Kong”	the Hong Kong Special Administrative Region of the People’s
	Republic of China
“Independent Board Committee”	the committee of the Board, comprising Mr. Au Man Chu, Milton,
	Mr. Barry John Buttifant, Mr. Kwong Ki Chi and Dr. Lee Peng
	Fei, Allen, being the independent non-executive directors of the
	Company to make recommendation to the Independent
	Shareholders in respect of the Continuing Connected Transactions
“Independent Shareholders”	shareholders other than Mr. Cheung and his associates
“Latest Practicable Date”	April 12, 2006, being the latest practicable date prior to the printing
	of this circular for ascertaining information contained herein
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange

• 1 -

	DEFINITIONS
“New Manufacturing License	the two master manufacturing license agreements dated March 29,
Agreements”	2006 entered into between the Company’s wholly-owned
	subsidiaries and Placita
“Merchandize”	clothing and related accessories
“Mr. Cheung”	Mr. Cheung Kwok Leung, a director of certain non wholly-owned
	subsidiaries of the Plactia Group
“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, its subsidiaries and associate(s) (as defined in the Listing
	Rules)
“Previous Manufacturing	the previous manufacturing license agreements dated February 23,
License Agreements”	2004 entered into between the Company’s wholly-owned
	subsidiaries and Placita
“Purchases”	the purchase of Merchandize by the Giordano Group from the
	Placita Group from time to time pursuant to the New
	Manufacturing License Agreements
“SFO”	Securities and Futures Ordinance
“SGM”	the special general meeting of the Company to be convened for
	approving the transactions contemplated under the New
	Manufacturing License Agreements
“Shareholders”	shareholders of the Company
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Tai Fook”	Tai Fook Capital Limited, a licensed corporation to carry out
	type 6 (advising on corporate finance) regulated activities under
	the SFO, the independent financial advisor to the Independent
	Board Committee and the Independent Shareholders in respect of
	the Purchases and the New Cap Amounts

• 2 -

LETTER FROM THE BOARD

GIORDANO INTERNATIONAL LIMITED

(Incorporated in Bermuda with limited liability)

Executive Directors:

Mr. LAU Kwok Kuen, Peter (Chairman) Mr. FUNG Wing Cheong, Charles Mr. MAH Chuck On, Bernard

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

Independent Non-executive Directors:

Mr. AU Man Chu, Milton

Mr. Barry John BUTTIFANT

Mr. KWONG Ki Chi, GBS, JP

Dr. LEE Peng Fei, Allen, JP

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

April 19, 2006

To the Shareholders

Dear Sir or Madam,

CONTINUING CONNECTED TRANSACTIONS

BACKGROUND

On March 29, 2006, the Company announced that its two wholly-owned subsidiaries, namely, Giordano Limited and Bluestar Exchange Limited, and Placita had entered into the New Manufacturing License Agreements, which terms are essentially identical to the Previous Manufacturing License Agreements except the New Manufacturing License Agreements have a definite term of three years as required under Rule 14A.35(1) in the Listing Rules for continuing connected transactions. The New Manufacturing License Agreements shall be effective upon the date on which the Purchases are approved by the Independent Shareholders at the SGM.

The New Manufacturing License Agreements (like the Previous Manufacturing License Agreements) govern the terms of the Purchases by the Giordano Group from the Placita Group in respect of the Giordano Branded Merchandize manufactured by the Placita Group.

• 3 -

LETTER FROM THE BOARD

Placita is owned as to 51% by the Company and 49% by Gloss Mind Holdings Limited, which in turn is wholly-owned by Mr. Cheung, a director of Placita, and Placita is considered a connected person of the Company under the Listing Rules. Accordingly, the Purchases contemplated under the New Manufacturing License Agreements (like the Previous Manufacturing License Agreements) constitute continuing connected transactions of the Company and therefore require approval of the Independent Shareholders.

At the general meeting of the Company held on March 29, 2004, approval had been obtained from the then Independent Shareholders to conduct purchases of goods from the Placita Group provided that the aggregate total amounts of the Purchases for the three financial years ending December 31, 2006 shall not exceed HK$300 million, HK$330 million and HK$363 million respectively (the “Old Cap Amount(s)”).

REASONS FOR THE PURCHASES

The Placita Group is engaged in the manufacturing and trading of clothing and accessories and is a manufacturing division of the Company.

The principal business of the Group is the retail and distribution of casual apparel and accessories under the Giordano Brands, and garment trading and manufacturing operation. The Giordano Group purchases its Merchandize from a number of authorized manufacturers and suppliers according to its requirements and the Placita Group is amongst one of them. Due to the Giordano Group’s policy that all authorized manufacturers and suppliers are required to enter into a manufacturing license agreement with its subsidiaries, the Giordano Group has entered into master manufacturing license agreements (i.e. Previous Manufacturing License Agreements and New Manufacturing License Agreements) with the Placita Group, in which such agreements have been revised from time to time to incorporate and/or amend provisions to properly safeguard the Giordano Group’s interest.

The price and payment terms for the Merchandize under the Purchases are negotiated on an orderby-order basis, based on arm’s length negotiation and with reference to the prices of similar Merchandize purchased by the Giordano Group from other independent manufacturers and suppliers for similar amount and quality of Merchandize.

The Directors consider that the Purchases under New Manufacturing License 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 Giordano Group.

• 4 -

LETTER FROM THE BOARD

THE NEW MANUFACTURING LICENSE AGREEMENTS

Under the New Manufacturing License Agreements, Placita has been appointed as an authorized non-exclusive manufacturer of Merchandize under the Giordano Brands and that the New Manufacturing License Agreements (like the Previous Manufacturing License 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.

REASONS FOR ENTERING INTO NEW MANUFACTURING LICENSE AGREEMENTS

The Board has indicated that the reasons for entering into of the New Manufacturing License Agreements are because:

• (a) pursuant to Rule 14A.35(1) in the Listing Rules, which had been revised subsequent to the date of the Previous Manufacturing License Agreements, for all continuing connected transactions, the Giordano Group is required to enter into agreements with the connected persons and the term of the agreements normally should not exceed three years. Given there was no specific length of term for the Previous Manufacturing License Agreements, the Giordano Group and the Placita Group entered into the New Manufacturing License Agreements, which have a definite term of three years, thereby fully complying with Rule 14A.35(1) in the Listing Rules; and

• (b) the Old Cap Amounts granted at the Company’s general meeting on March 29, 2004 will be expiring by the end of 2006 and it is currently anticipated that the amount of the purchases under the Previous Manufacturing License Agreements in 2006 will exceed the Old Cap Amount for 2006. As such, it is in the interest of the Company and the Shareholders as a whole to obtain the New Cap Amounts for the three years ending December 31, 2008 and adjust upward the Cap Amount for 2006 and seek the approval of the Independent Shareholders at the SGM.

THE NEW CAP AMOUNTS

For each of the three financial years ending December 31, 2008, the proposed maximum aggregate value of all Purchases (“New Cap Amount(s)”) is as follows:

Financial	year ending	New Cap Amount (HK$ million)
December	31, 2006	400
December	31, 2007	440
December	31, 2008	484

• 5 -

LETTER FROM THE BOARD

For the three years ended December 31, 2005, the purchases under the Previous Manufacturing License Agreements were approximately HK$223 million, HK$242 million and HK$265 million respectively, representing a decrease of approximately 4.4% for 2003, an increase of 8.5% and 9.5% for 2004 and 2005 on a year by year basis. However, a large increase is expected for the purchases from the Placita Group concerning 2006 because:

• (a) Given the Giordano Group’s continuing efforts to take the main Giordano Brands up-market and to introduce dressier and more fashionable lines, the Giordano Group will need to work with manufacturers that have the expertise and experience in producing higher quality and more fashionable garments. The Placita Group, by virtue of its experience working with Japanese, US and European labels, is well positioned to fulfill this role. Accordingly, it is likely that the Giordano Group will place more orders with the Placita Group in this respect; and

• (b) Since Placita Group has prior experience working with US and European labels, they will have a better understanding of the market needs and regulatory standards. As the Giordano Group continues with its efforts to expand outside its core Asia Pacific markets, Giordano Group will likely depend on the Placita Group to produce for these new and more demanding markets.

With this increase as a starting reference point for the 2006 Purchases and taking into account the expected growth of the Purchases by the Giordano Group in line with previous years of approximately 10% (other than 2003 when there was a decrease in purchases due to the Severe Acute Respiratory Syndrome), the proposed increment of the caps for the three years ending December 31, 2008 seems reasonable.

GENERAL

The Purchases constitute continuing connected transactions of the Company under Chapter 14A of the Listing Rules and should be disclosed in accordance with the Listing Rules and made conditional upon approval by the Independent Shareholders for each of the Purchases whenever they arise.

SPECIAL GENERAL MEETING

A notice of the SGM to be held on Tuesday, May 9, 2006 at the later of 9:45 a.m. and the conclusion or adjournment of the annual general meeting of the Company convened for 9:30 a.m. on Tuesday, May 9, 2006 at Block B, 3rd Floor, Tin On Industrial Building, 777-779 Cheung Sha Wan Road, Kowloon, Hong Kong is set out on pages 23 and 24 of this circular. An ordinary resolution will be proposed at the meeting to approve the Purchases. Mr. Cheung and his associates shall abstain from voting at the SGM.

A form of proxy for use at the SGM is enclosed. Whether or not you are able to attend the meeting, please complete the accompanying 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 holding the meeting or any adjourned meetings. Completion and return of the form of proxy will not preclude you from attending and voting in person at the meeting or any adjourned meetings should you so wish.

• 6 -

LETTER FROM THE BOARD

Under the Listing Rules, the Purchases constitute continuing connected transaction for the Company and are subject to the approval by the Independent Shareholders. None of the Shareholders is connected or associated with the Placita Group and its ultimate beneficial shareholders or has any material interest in the New Manufacturing License Agreements and is required to abstain from voting in the SGM.

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 Purchases under the New Manufacturing License Agreements are fair and reasonable and in the interests of the Company and the Independent Shareholders as a whole. The recommendations and advice from the Independent Board Committee and Tai Fook are set out on page 8 and pages 9 to 16 of this circular respectively.

ADDITIONAL INFORMATION

Your attention is drawn to the letter of 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

• 7 -

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

GIORDANO INTERNATIONAL LIMITED

(Incorporated in Bermuda with limited liability)

April 19, 2006

To the Independent Shareholders

Dear Sir or Madam,

CONTINUING CONNECTED TRANSACTIONS

We have been appointed by the Board to advise you as to whether the terms of the Purchases contemplated under the New Manufacturing License Agreements and the proposed New Cap Amounts are fair and reasonable, and whether the Purchases are in the interests of the Company and the Shareholders as a whole. Details of the Purchases are set out in the circular (the “Circular”) dated April 19, 2006 issued by the Company to the Shareholders of which this letter forms part. The terms defined in the Circular shall have the same meanings when used in this letter, unless the context otherwise requires.

We wish to draw your attention to the letter from the Board set out on pages 3 to 7 of the Circular and the letter of advice from Tai Fook set out on pages 9 to 16 of the Circular.

We, after taking advice from Tai Fook, concur with the views of Tai Fook and consider that the Purchases are on normal commercial terms and are conducted in the ordinary and usual course of business of the Giordano Group. We are also of the view that the terms of the Purchases and the New Cap Amounts are fair and reasonable, and that the Purchases are in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the SGM in respect of the Purchases and the New Cap Amounts.

Yours faithfully,

Independent Board Committee

AU Man Chu, Milton Independent Non-executive Director Barry John BUTTIFANT Independent Non-executive Director KWONG Ki Chi Independent Non-executive Director LEE Peng Fei, Allen Independent Non-executive Director

• 8 -

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

April 19, 2006

To the Independent Board Committee and

the Independent Shareholders

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

Dear Sirs,

CONTINUING CONNECTED TRANSACTIONS

We refer to our appointment as the independent financial advisor to the Independent Board Committee and the Independent Shareholders with respect to (i) the New Manufacturing License Agreements entered into between Giordano Limited and Bluestar Exchange Limited respectively, each a wholly-owned subsidiary of the Company, and Placita; and (ii) the New Cap Amounts for the three years ending December 31, 2008 in respect of the Purchases pursuant to the New Manufacturing License Agreements, details of which are set out in the circular of the Company dated April 19, 2006 (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.

Placita is owned as to 51% by the Company and 49% by Gloss Mind Holdings Limited. Mr. Cheung, a director of Placita, currently owns the entire equity interest of Gloss Mind Holdings Limited. Placita is considered a connected person of the Company under the Listing Rules given Mr. Cheung’s directorship in the subsidiary of the Company (i.e. Placita) and his indirect beneficial interest in Placita. Accordingly, the Purchases to be conducted under the terms of the New Manufacturing License Agreements constitute non-exempt continuing connected transactions of the Company under the Listing Rules and are subject to reporting, announcement and Independent Shareholders’ approval requirements under Rule 14A.35 of the Listing Rules.

The Independent Board Committee comprising four independent non-executive Directors, namely Mr. Au Man Chu, Milton, Mr. Barry John Buttifant, Mr. Kwong Ki Chi and Dr. Lee Peng Fei, Allen, has been established to advise the Independent Shareholders in respect of the Purchases under the New Manufacturing License Agreements and the New Cap Amounts for the three years ending December 31, 2008. In our capacity as the independent financial advisor to the Independent Board Committee and the Independent Shareholders, our role is to provide the Independent Board Committee and the Independent Shareholders with an independent opinion as to whether (i) the Purchases under the New Manufacturing

• 9 -

LETTER FROM TAI FOOK

License Agreements are on normal commercial terms, in the ordinary and usual course of business, fair and reasonable and in the interests of the Company and the Independent Shareholders as a whole; and (ii) each of the New Cap Amounts in respect of the Purchases for the three years ending December 31, 2008 is fair and reasonable so far as the Company and the Independent Shareholders are concerned. We are independent of the Company and its associates.

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 Giordano 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.

BACKGROUND INFORMATION

The Group is principally engaged in the retail and distribution of casual apparel and accessories under the Giordano Brands and garment trading and manufacturing. In general, the Giordano Group purchases its Merchandize, which carries the Giordano Brands, from a number of authorized manufacturers or suppliers (the “authorized manufacturers”) according to its business requirements. It is the Giordano Group’s policy that all authorized manufacturers and suppliers are required to enter into manufacturing license agreements with the Giordano Group.

The Placita Group, which is a manufacturing division of the Company, is principally engaged in the business of manufacturing and trading of clothing and accessories. As mentioned above, each authorized manufacturer is required to enter into manufacturing license agreement(s) with the Giordano Group. Accordingly, from time to time, with the revision of the manufacturing license agreement by the Giordano Group, the Placita Group entered into such revised versions of the manufacturing license agreements including the New Manufacturing License Agreements. As set out in the circular of the Company dated March 11, 2004, Placita became a connected person of the Company due to a change in shareholding of Gloss Mind Holdings Limited in the first quarter of 2004 and the purchases from the Placita Group by Giordano Group had since then become connected transactions of the Company and required, among other things, independent shareholders’ approval. The purchases under the Previous Manufacturing License Agreements dated February 23, 2004, which is the manufacturing license agreements entered into by the

• 10 -

LETTER FROM TAI FOOK

parties prior to the New Manufacturing License Agreements, were approved by the then independent shareholders of the Company at the special general meeting of the Company held on March 29, 2004 subject to the Old Cap Amounts as set out below:

For the year ended/ending December 31, 2004 2005 2006 HK$ million HK$ million HK$ million 300 330 363

As stated in the “Letter from the Board” of this Circular, the Company entered into the New Manufacturing License Agreements on the reasons that (i) the Previous Manufacturing License Agreements do not have a specific term; and (ii) it is anticipated that the amount of purchases from the Placita Group by the Giordano Group will exceed the Old Cap Amounts for 2006 (i.e. HK$363 million) and a revision of the cap amount is therefore necessary. Under Rule 14A.35(1) of the Listing Rules, which took effect on March 31, 2004, each listed company is required to enter into written agreement(s) with its connected persons in respect of non-exempt continuing connected transactions with a term not exceeding three years under normal circumstances. The terms of the New Manufacturing License Agreements are essentially identical with the Previous Manufacturing License Agreements except for the incorporation of a definite term of three years.

The purpose of manufacturing license agreements is to govern the terms and conditions of the purchases by the Giordano Group from its authorized manufacturers. Accordingly, the Purchases are governed by the terms of the New Manufacturing License Agreements, which are basically the master agreements setting out the major terms and conditions for the Purchases to be transacted by the parties. Separate purchase orders are placed by members of the Giordano Group to the Placita Group for each of the Purchases.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our recommendation in respect of (i) the Purchases under the New Manufacturing License Agreements; and (ii) the New Cap Amounts, we have considered the following principal factors and reasons:

I. The New Manufacturing License Agreements

• A) The business strategies of the Group

As stated in the Company’s annual report for the year ended December 31, 2004, the management of the Group has been striving to differentiate the Giordano Brands so as to compete more effectively and achieve the goals of higher sales and profit growth. We have discussed with the Directors and are given to understand that, to this end, the Group has been making efforts to take the main Giordano brands up-market and to introduce dressier and more fashionable lines. In addition, the Group is considering gradually expanding outside its core Asia Pacific markets to other major international markets such as Europe and North America markets.

• 11 -

LETTER FROM TAI FOOK

As proclaimed in the annual report of the Company for the year ended December 31, 2005, the Placita Group has been in the process of replacing its OEM (Original Equipment Manufacturer) model of the past and moving up the value chain to adopt an ODM (Original Design Manufacturer) model that focus on better design and higher quality products. We are also advised by the Directors that the Placita Group has past experience in manufacturing for Japanese, US and European fashion labels and has been selling its manufactured products to these markets. Given its expertise and experience, the Placita Group is well-positioned to meet the Group’s evolving demands of higher quality products manufactured by its authorized manufacturers. Given the above, we consider that it is in the interests of the Company and the Independent Shareholders as a whole to continue to carry out the Purchases by the Giordano Group.

• B) The Purchases under the New Manufacturing License Agreements are conducted in the ordinary and usual course of business of the Giordano Group

The Giordano Group purchases its Merchandize from a number of authorized manufacturers according to its requirements. Each of these manufacturers (including the Placita Group) is appointed by the Giordano Group as an authorized non-exclusive manufacturer and is required to enter into a manufacturing license agreement with the 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 with the Placita Group being one of these nonexclusive authorized manufacturers and currently focusing on supplying knit products, woven shirts and woven jackets to the Giordano Group. Set out below are the amounts of the purchases by the Group from its authorized manufacturers (including the Placita Group) and from the Placita Group for the three years ended December 31, 2005, which information is prepared by the management of the Giordano Group:

	2003	2004	2005
	HK$ million	HK$ million	HK$ million
Purchases from authorized
manufacturers (including the
Placita Group)	1,738.7	1,864.2	1,914.4
Purchases from the Placita Group	222.9	241.8	264.6

As illustrated above, the amounts of purchases from the Placita Group represent approximately 12.8%, 13.0% and 13.8% respectively of the total amount of purchases by the Group from all authorized manufacturers for the three years ended December 31, 2005. The Directors consider that the purchases from the Placita Group, 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.

• 12 -

LETTER FROM TAI FOOK

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

It is the policy of the Giordano Group that each of all authorized manufacturers is required to enter into one or more manufacturing license agreement(s) with the Giordano Group depending on the number of Giordano-branded products to be manufactured by the relevant authorized manufacturer. 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 New Manufacturing License 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 requirements with respect to its authorized manufacturers’ products and operation.

D) The terms of the New Manufacturing License Agreements

As mentioned above in this letter, the Giordano Group enters into manufacturing license agreements with its authorized manufacturers. The manufacturing license agreement serves as master framework agreements that are 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. The New Manufacturing License Agreements, the terms of which are essentially identical to the Previous Manufacturing License Agreements except for the incorporation of a definite term of three years, were entered into by the parties on March 29, 2006. Similar to other manufacturing license agreements entered into by the Giordano Group and other authorized manufacturers, the New Manufacturing License Agreements set out the general and operational requirements for the Placita Group to comply with for being an authorized manufacturer of the Giordano Group. A separate order is placed by the Giordano Group to the Placita Group for each of the Purchases. The Directors consider that the Purchases under the New Manufacturing License Agreements are on normal commercial terms and are no more favorable than those available to independent third parties.

In assessing the terms of the New Manufacturing License Agreements, we have reviewed the manufacturing license 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 New Manufacturing License Agreements are no more favorable than those available to the independent authorized manufacturers of the Giordano Group. Having considered this and the terms of the New Manufacturing License Agreements, we are of the view that the Purchases under the New Manufacturing License Agreements are on normal commercial terms and on terms no more favorable than those available to independent third parties.

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LETTER FROM TAI FOOK

• E) 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 policies 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 or 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 Merchandize manufactured by the authorized manufacturers;

3. the delivery lead time; and

4. the past experience with the authorized manufacturers.

Though being a subsidiary of the Company, Placita and the Placita Group as a whole are operated as an independent entity of the Giordano Group. The Giordano Group only places orders with the Placita Group when the quotations made by the Placita Group are 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 2005. We noticed that in line with the procedures as described above, in each purchase the buying department had invited more than one authorized manufacturers to submit quotation and the buying department had considered a number of factors when selecting the authorized 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 continue to be conducted under normal commercial terms and on terms no more favorable than those available to independent third parties and the price of each Purchase is and will continue to 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 authorized manufacturer with the best offer will be selected for a purchase, we are of the view that each of the Purchases is and will continue to be conducted on terms no more favorable than those available to other authorized manufacturers.

Having considered the fact that (i) the Purchases are in line with the business strategies of the Group; (ii) the Purchases are conducted in the ordinary and usual course of business of the Giordano Group; (iii) the Giordano Group has stringent requirements in approving authorized manufacturers and the Placita Group fulfills such requirements; (iv) the Purchases under the New Manufacturing License Agreements are on normal commercial terms and on terms no more favorable than those available to independent third parties; and (v) 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 and each Purchase will be made only when the terms offered by the Placita Group is considered no less favorable than those received by the Giordano Group from other authorized manufacturers, we consider

• 14 -

LETTER FROM TAI FOOK

that the terms of the New Manufacturing License Agreements are fair and reasonable and the Purchases under the New Manufacturing License Agreements are in the interests of the Company and the Independent Shareholders as a whole.

II. Basis of the Cap Amounts

The aggregate total amounts of the Purchases for each of the three financial years ending December 31, 2008 is subject to the New Cap Amounts as follows:

Financial	year ending	New Cap Amount (HK$ million)
December	31, 2006	400
December	31, 2007	440
December	31, 2008	484

• A) New products

As stated in the “Letter from the Board” of the Circular, it is anticipated that the amount of purchases from the Placita Group in 2006 will exceed the Old Cap Amount for 2006.

Currently the Placita Group supplies knit products, woven shirts and woven jackets to the Giordano Group. We have discussed with the Directors and are given to understand that the Group is contemplating expanding the products sourced from the Placita Group to jeans and sweaters. We are further advised by the Directors that the Placita Group has developed samples and is working closely with the Group on the sourcing terms. According to the Directors’ estimation, the purchases to be derived from these new products of jeans and sweaters produced by the Placita Group are anticipated to amount to approximately HK$37 million in total for 2006. As such, the Directors proposed to increase the Old Cap Amount for 2006 by HK$37 million to arrive at the New Cap Amount for 2006 of HK$400 million.

B) Historical transaction amounts

After deriving the New Cap Amount for 2006, the New Cap Amounts for 2007 and 2008 are determined by applying a 10% growth on the year on year basis.

We have reviewed the historical transaction amounts of the purchases from the Placita Group for the three years ended December 31, 2005. We noted that the amounts of the purchases for each of the two years ended December 31, 2005 represent approximately 80% of the Old Cap Amounts for the same period respectively. We also noted that the purchases grew from approximately HK$223 million in 2003 to approximately HK$265 million in 2005, representing a compound annual growth rate of approximately 9%. As such, we consider that the 10% growth rate in determining the New Cap Amounts is in tandem with the historical growth pattern and is fair and reasonable.

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LETTER FROM TAI FOOK

On the basis that the New Cap Amounts are arrived at after having considered the new products development program and the historical transactions amounts of the purchases, we are of the view that the New Cap Amounts are fair and reasonable.

RECOMMENDATION

Having taken into consideration the above principal factors and reasons, we consider that (i) the Purchases under the New Manufacturing License Agreements are on normal commercial terms, in the ordinary and usual course of business of the Group, fair and reasonable and in the interests of the Company and the Independent Shareholders as a whole; and (ii) the New Cap Amounts are fair and reasonable and in the interests of the Company and its Independent 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 to approve the Purchases under the New Manufacturing License Agreements and the New Cap Amounts.

Yours faithfully, For and on behalf of Tai Fook Capital Limited Derek C. O. CHAN Ringo KWAN Managing Director 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. 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 or any of its associated corporations (within the meaning of Part XV of the SFO) which were required to be 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 they are taken or deemed to have under such provisions of the SFO), or which were required, pursuant to Section 352 of the SFO, to be entered in the register referred to therein, or which were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Companies of the Listing Rules to be notified to the Company and the Stock Exchange, were as follows:

			Beneficial	Approximate
		Beneficial	interest	aggregate
	Nature of	interest	in underlying	percentage
Name of director	interest	in shares	shares	of interests
		(Note)	(Note)
LAU Kwok Kuen, Peter	Personal	22,708,000	–	1.52%
FUNG Wing Cheong, Charles	Personal	1,122,000	5,000,000	0.41%
MAH Chuck On, Bernard	Personal	1,619,086	5,000,000	0.44%

Note: Interests in the shares and underlying shares of equity derivatives were long position. Underlying shares are share options granted to the directors pursuant to the share option scheme of the Company.

Save as disclosed herein, as at the Latest Practicable Date, none of the directors or chief executive of the Company had any interests or short positions in any shares, underlying shares or debentures of the Company or any associated corporations (within the meaning of Part XV of the SFO) which would have to be 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 they are taken or deemed to have under such provisions of the SFO), or which were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein, or which were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers of the Listing Rules.

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GENERAL INFORMATION

APPENDIX

3. SUBSTANTIAL SHAREHOLDERS

So far as is known to the Directors and the chief executive of the Company, as at the Latest Practicable Date, the following persons had, or were deemed to have, interests or short positions in the shares and the underlying shares which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO:

			Approximate
		Aggregate long	aggregate
		position in shares	percentage of
Name	Note	and underlying shares	interests
Aberdeen Asset Management Plc and
its associates	1	225,401,000	15.13%
Harris Associates L.P.	2	209,719,800	14.08%
JPMorgan Chase & Co.	3	145,560,582	9.77%
Matthews International Capital
Management, LLC	4	134,937,000	9.06%
State Street Corporation	5	89,182,670	5.99%

Notes:

1. Aberdeen Asset Management Plc and its associates held 225,401,000 shares in the capacity of Investment Manager. Aberdeen Asset Management Plc and its various wholly-owned subsidiaries (together “the Aberdeen Group”) on behalf of the accounts managed by the Aberdeen Group held the shares as follows:

	Aggregate long
Name of subsidiary	position in shares
Aberdeen International Management Ireland Limited	61,480,000
Aberdeen Asset Management Asia Limited	205,773,000
Aberdeen Asset Managers Limited	82,252,000
Aberdeen International Fund Managers Limited	51,218,000
Aberdeen Unit Trust Managers Limited	28,642,000
Aberdeen Asset Management Inc	2,634,000
Aberdeen Asset Management Limited	1,360,000
Edinburgh Fund Management Limited	14,000,000
Aberdeen Fund Management Limited
(formerly known as “Deutsche Asset Management (Ireland) Limited”)	15,078,000

1. Harris Associates L.P. held 209,719,800 shares in the capacity of Investment Manager.

2. The capacities of JPMorgan Chase & Co. in holding the 145,560,582 shares were, as to 1,400,000 shares as Beneficial Owner, as to 39,497,693 shares as Investment Manager and as to 104,662,889 shares in the Lending Pool as Custodian Corporation.

3. 18 -

GENERAL INFORMATION

APPENDIX

Details of the breakdown of the 145,560,582 shares interested by JPMorgan Chase & Co. were as follows:

			Approximate
		Aggregate	aggregate
		long position	percentage
Name	Note	in shares	of interests
JPMorgan Chase Bank, N.A.	i	106,062,889	7.12%
JPMorgan Asset Management
Holdings Inc.	ii	39,497,693	2.65%

Notes:

• i. JPMorgan Chase Bank, N.A. was wholly-owned by JPMorgan Chase & Co.. The 106,062,889 shares held by JPMorgan Chase Bank, N.A. included:

  • (a) direct interests in 104,662,889 shares; and

  • (b) deemed interests in 1,400,000 shares held by J.P. Morgan Securities Ltd., in which J.P. Morgan Chase International Holdings Limited held 90% controlling interest. J.P. Morgan Chase International Holdings Limited was wholly-owned in turn by J.P. Morgan Chase (UK) Holdings Limited and J.P. Morgan Capital Holdings Limited respectively. J.P. Morgan International Finance Limited held 72.72% controlling interest in J.P. Morgan Capital Holdings Limited and it was a subsidiary wholly-owned in turn by Bank One International Holdings Corporation, J.P. Morgan International Inc. and JPMorgan Chase Bank, N.A. respectively.

• ii. JPMorgan Asset Management Holdings Inc. was wholly-owned by JPMorgan Chase & Co.. The 39,497,693 shares, which were deemed to be held by JP Morgan Asset Management Holdings Inc., included:

  • (a) deemed interests in 39,468,000 shares held by JPMorgan Asset Management (Asia) Inc., which was a wholly-owned subsidiary of JPMorgan Asset Management Holdings Inc.. Of the 39,468,000 shares, (aa) 1,718,000 shares were directly held by JF International Management Inc., which was wholly-owned by JPMorgan Asset Management (Asia) Inc.; and (bb) 37,750,000 shares were directly held by JF Asset Management Limited, which was a wholly-owned subsidiary of JPMorgan Asset Management (Asia) Inc.; and

  • (b) deemed interests in 29,693 shares held by its wholly-owned subsidiary, J.P. Morgan Investment Management Inc..

• Matthews International Capital Management, LLC held 134,937,000 shares in the capacity of Investment Manager.

• State Street Corporation had a deemed interest in respect of 89,182,670 shares held by its wholly-owned subsidiary, State Street Bank & Trust Company. Its capacity in holding these shares was as Controlled Corporation and these shares were held in the Lending Pool.

• 19 -

GENERAL INFORMATION

APPENDIX

4. SERVICE CONTRACT

As at the Latest Practicable Date, 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 payment of compensation (other than statutory compensation).

5. EXPERT

• (a) The following is the qualification of the independent financial advisor to the Independent Board Committee and the Independent Shareholders and the opinion or advice given by the independent financial advisor is contained in this circular:

Name

Qualification

Tai Fook Capital Limited

a licensed corporation to carry out type 6 (advising on corporate finance) regulated activities under the SFO

• (b) As at the Latest Practicable Date, Tai Fook does not have any shareholding, direct or indirect, in any member of the Company and its subsidiaries or 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) As at the Latest Practicable Date, Tai Fook was not interested, directly or indirectly, in any assets which have been acquired or disposed of by or leased to any member of the Giordano Group or are proposed to be acquired or disposed of by or leased to any member of the Giordano Group since December 31, 2005, being the date to which the latest published audited accounts of the Company were made up.

• (d) Tai Fook has given and has not withdrawn its written consent to the issue of this circular with the inclusion of its letter dated April 19, 2006, which has been prepared for inclusion in this circular, and references to its name in the form and context in which they appear.

6. DIRECTORS’ INTERESTS IN CONTRACTS

None of the Directors is materially interested in any contract or arrangement entered into by any member of the Company and its subsidiaries subsisting at the date of this circular which is significant in relation to the business of the Company and its subsidiaries.

• 20 -

GENERAL INFORMATION

APPENDIX

7. PROCEDURE FOR DEMANDING A POLL BY SHAREHOLDERS

Pursuant to Bye-Law 70 of the Bye-Laws, a poll may be demanded by: (a) the chairman of such meeting; (b) at least three shareholders present in person or in the case of a shareholder being a corporation by its duly authorized representative or by proxy for the time being entitled to vote at the meeting; (c) a shareholder or shareholders present in person or in the case of a shareholder being a corporation by its duly authorized representative or by proxy and representing not less than one-tenth of the total voting rights of all shareholders having the right to vote at the meeting; or (d) a shareholder or shareholders present in person or in the case of a shareholder being a corporation by its duly authorized representative or by proxy and holding shares conferring a right to vote at the meeting being shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all shares conferring that right.

8. GENERAL

• (a) The Secretary of the Company is Ms. Yiu Yuen Wah, Christiana.

• (b) The Qualified Accountant of the Company is Mr. Lui Chi Hung.

• (c) 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.

• (d) The registered office of the Company is Canon’s Court, 22 Victoria Street, Hamilton HM12, Bermuda.

• (e) The branch share registrars of the Company in Hong Kong is Abacus Share Registrars Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Hong Kong.

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

• (g) As at the Latest Practicable Date, none of the Directors nor their respective associates had any business or interest that competes or may compete with the business of the Giordano Group or any conflicts of interests with the Giordano Group.

• (h) As at the Latest Practicable Date, the Directors were not aware of any material adverse change in the financial or trading position of the Giordano Group since December 31, 2005 (being the date to which the latest published audited financial statements of the Giordano Group were made up).

• (i) None of the Directors has or has had any direct or indirect interest in any assets which have been acquired or disposed of by or leased to any member of the Giordano Group or are proposed to be acquired or disposed of by or leased to any member of the Giordano Group since December 31, 2005 (being the date to which the latest published financial statements of the Giordano Group were made up).

• 21 -

GENERAL INFORMATION

APPENDIX

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

9. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection during normal business hours on any weekday (except public holidays) 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 up to and including May 9, 2006:

• (a) the New Manufacturing License Agreements;

• (b) the memorandum of association and bye-laws of the Company;

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

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

• (e) the written consent of Tai Fook referred to in the section headed “Expert” in this Appendix; and

• (f) the service contract referred to in the section headed “Service Contract” in this Appendix.

• 22 -

NOTICE OF THE SGM

GIORDANO INTERNATIONAL LIMITED

(Incorporated in Bermuda with limited liability)

NOTICE OF SPECIAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that a special general meeting of the Company will be held at Block B, 3rd Floor, Tin On Industrial Building, 777-779 Cheung Sha Wan Road, Kowloon, Hong Kong on Tuesday, May 9, 2006 at the later of 9:45 a.m. and the conclusion or adjournment of the annual general meeting of the Company convened for 9:30 a.m. on Tuesday, May 9, 2006 to consider and, if thought fit, pass 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 April 19, 2006 (the “Circular”)) to be made after the date of this resolution until December 2008 between the Giordano Group and the Placita Group in accordance with the terms of the New Manufacturing License Agreements (as defined in the Circular) be and are hereby approved AND that the directors of the Company (the “Directors”) be and are hereby authorized to do, approve and transact all things which they may in their discretion consider to be necessary or desirable in connection therewith, provided that the aggregate dollar amount of the Purchases for each of the three financial years ending December 31, 2008 shall not exceed the Cap Amount as follows:

Financial	year ending	New Cap Amount (HK$ million)
December	31, 2006	400
December	31, 2007	440
December	31, 2008	484.”

By Order of the Board LAU Kwok Kuen, Peter Chairman

Hong Kong, April 19, 2006

• 23 -

NOTICE OF THE SGM

Principal Place of Business:

5th Floor

Tin On Industrial Building 777-779 Cheung Sha Wan Road

Kowloon

Hong Kong

Notes:

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

• (2) To be valid, the form of proxy, together with any power of attorney or other attorney (if any) under which it is signed, or a notarially certified copy thereof, must be lodged with the Company’s branch share registrars in Hong Kong, Abacus Share Registrars Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Hong Kong as soon as possible and in any event not later than 48 hours before the time appointed for the holding of the meeting or any adjourned meetings.

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