Win Hanverky Holdings Limited — Proxy Solicitation & Information Statement 2007

Apr 11, 2007

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your shares in Win Hanverky Holdings Limited, you should at once hand this circular to the purchaser(s) or transferee(s) or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser(s) or transferee(s).

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.

WIN HANVERKY HOLDINGS LIMITED

(incorporated in the Cayman Islands with limited liability) (Stock Code: 3322)

CONNECTED TRANSACTIONS — SHAREHOLDERS’ LOANS AND GUARANTEES

Independent financial adviser to the Independent Board Committee and the Independent Shareholders

Hercules Capital Limited

A letter from the Board is set out on pages 4 to 8 of this circular.

A letter from the Independent Board Committee, containing its recommendation to the Independent Shareholders, is set out on pages 9 to 10 of this circular.

A letter from the Independent Financial Adviser, containing its advice to the Independent Board Committee and the Independent Shareholders is set out on pages 11 to 16 of this circular.

11 April 2007

CONTENTS

			Page
Definitions	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		1
**Letter from **	**the **	Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
**Letter from **	**the **	Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
**Letter from **	**the **	Independent Financial Adviser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
Appendix	—	General Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	17

— i —

DEFINITIONS

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

• “2005 Shareholders’ Agreement”

“2005 Shareholders’ Agreement” the shareholders’ agreement dated 30 September 2005 entered into among T&S BVI, Umbro International and T&S HK; “Amended and Restated the shareholders’ agreement dated 22 March 2007 entered into Shareholders’ Agreement” among T&S BVI, Umbro International and T&S HK, which supercedes the 2005 Shareholders’ Agreement;

“associate(s)”	has the meaning ascribed thereto in the Listing Rules;
“Board”	the board of directors of the Company;
“Company”	Win Hanverky Holdings Limited, a company incorporated in
	the Cayman Islands with limited liability, the Shares of which
	are listed on the main board of the Stock Exchange;
“Completion”	completion of the sale and purchase of the T&S HK Sale
	Shares;
“Completion Date”	22 March 2007;
“connected person(s)”	has the meaning ascribed thereto in the Listing Rules;
“Director(s)”	the director(s) of the Company;
“Disclosure Letter”	the letter of the same date as the Completion Date delivered
	from T&S BVI to Umbro International pursuant to the SP
	Agreement;
“Group”	the Company and its subsidiaries;
“Guarantees”	has the meaning ascribed thereto in the “Letter from the
	Board” of this circular;
“Hong Kong”	the Hong Kong Special Administrative Region of the PRC;
“Independent Board Committee”	an independent committee of the Board, comprising all the
	independent non-executive Directors, established to advise
	the Independent Shareholders in relation to the Shareholders’
	Loans and the Guarantees;
“Independent Financial Adviser”	Hercules Capital Limited;
“Independent Shareholder(s)”	has the meaning ascribed thereto under Chapter 14A of the
	Listing Rules;

— 1 —

DEFINITIONS

“Latest Practicable Date”	3 April 2007, being the latest practicable date prior to the
	printing of this circular for ascertaining certain information
	contained herein;
“Listing”	listing of the Shares on the man board of the Stock Exchange
	on 6 September 2006;
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange;
“Offer Price”	the offer price of HK$2.28 per Share;
“PRC”	the People’s Republic of China;
“Pre-IPO Share Option(s)”	the options granted by the Company to certain employees and
	a consultant of the Group prior to the Listing;
“Quinta”	Quinta Asia Limited, a company incorporated in the British
	Virgin Islands and is beneficially owned as to 70% by Mr. Li
	Kwok Tung Roy and 30% by Mr. Lai Ching Ping;
“Share(s)”	the share(s) of HK$0.10 each in the share capital of the
	Company;
“Shareholder(s)”	holder(s) of Share(s);
“Shareholders’ Loans”	the shareholders’ loans in the aggregate amount of
	HK$38,134,814 made by T&S BVI and WHL respectively to
	T&S HK;
“SFO”	Securities and Futures Ordinance (Cap. 571 of the Laws of
	Hong Kong);
“SP Agreement”	the conditional sale and purchase agreement in respect of the
	sale and purchase of T&S HK Sale Shares dated 8 February
	2007 and entered into among Umbro International, T&S BVI
	and others;
“Stock Exchange”	The Stock Exchange of Hong Kong Limited;
“T&S BVI”	Team & Sports (BVI) Limited, a company incorporated in the
	British Virgin Islands with limited liability and indirectly
	wholly-owned by the Company;
“T&S HK”	Team & Sports Limited, a company incorporated in Hong
	Kong with limited liability, being an indirect 60% owned
	subsidiary of the Company on and after the Completion;

— 2 —

	DEFINITIONS
“T&S HK A Shares”	the “A” ordinary shares of HK$100 each in the capital of T&S
	HK;
“T&S HK B Shares”	the “B” ordinary shares of HK$100 each in the capital of T&S
	HK;
“T&S HK Sale Shares”	750 T&S HK A Shares and 600 T&S HK B Shares in the
	capital of T&S HK, representing 15% of the issued share
	capital of T&S HK;
“TSG BVI”	TSG (BVI) Limited, a company incorporated in the BVI
	which is owned and controlled by Mr. Ho Kin Yeung, Samuel
	and his relatives;
“Umbro Distributor Agreement”	the distributor agreement dated 8 February 2007 and entered
	into between Umbro International and T&S HK;
“Umbro International”	Umbro International Limited, a substantial shareholder of
	T&S HK and a connected person of the Company;
“WHL”	Win Hanverky Limited, a company incorporated in Hong
	Kong with limited liability and indirectly wholly-owned by
	the Company;
“Win Sports”	Win Sports Limited, a company incorporated in Hong Kong,
	which is owned as to 25% by TSG BVI and 75% by Frankton
	International Limited as at the date of this circular;
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong; and
“US$”	United States dollars, the lawful currency of United States of
	America.

— 3 —

LETTER FROM THE BOARD

WIN HANVERKY HOLDINGS LIMITED

(incorporated in the Cayman Islands with limited liability)

(Stock Code: 3322)

Executive Directors: Registered Office: Li Kwok Tung Roy Codan Trust Company (Cayman) Limited Lai Ching Ping Cricket Square Lee Kwok Leung Hutchins Drive Chow Chi Wai P.O. Box 2681 Cheung Chi Grand Cayman KY1-1111 Cayman Islands Independent Non-executive Directors: Chan Kwong Fai Principal Place of Business in Hong Kong: Kwan Kai Cheong 6th Floor, Phase 6 Ma Ka Chun Hong Kong Spinners Industrial Building Wun Kwang Vincent 481-483 Castle Peak Road Kowloon Hong Kong 11 April 2007

To the Shareholders

Dear Sir or Madam,

CONNECTED TRANSACTIONS — SHAREHOLDERS’ LOANS AND GUARANTEES

INTRODUCTION

Reference is made to announcement dated 8 February 2007 in relation to the SP Agreement and the Umbro Distributor Agreement. As a result of the Completion, T&S HK becomes owned as to 60% and 40% by T&S BVI and Umbro International respectively.

The purpose of this circular is to provide you with (i) the particulars of the Shareholders’ Loans and the Guarantees; (ii) the letter of recommendation from the Independent Board Committee; (iii) the letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders; and (iv) other information required by the Listing Rules.

— 4 —

LETTER FROM THE BOARD

SHAREHOLDERS’ LOANS

T&S BVI initially made a shareholders’ loan of HK$23,134,814 to T&S HK in December 2002.

WHL made shareholders’ loans of HK$2,000,000, HK$3,000,000 and HK$10,000,000 to T&S HK in May, June and November 2006 respectively.

As at the Completion Date, T&S HK owed, and will after Completion continue to owe, to T&S BVI and WHL the Shareholders’ Loans in the amount of HK$23,134,814 and HK$15,000,000 respectively.

The Shareholders’ Loans are non-interest bearing, unsecured and have no pre-determined repayment terms.

Umbro International has not provided any part of the Shareholders’ Loans on a pro rata basis. Pursuant to the 2005 Shareholders’ Agreement, T&S BVI was required to make a shareholders’ loan of HK$23,000,000 to T&S HK. Moreover, Umbro International was not required under the 2005 Shareholders’ Agreement to provide any shareholders’ loan to T&S HK on a pro rata basis.

Pursuant to the Amended and Restated Shareholders’ Agreement, neither shareholder in T&S HK is required to make or continue to make available shareholder loans to T&S HK and T&S BVI is entitled (but not obliged) to require T&S HK to obtain financing through bank borrowings to cover the costs of its working capital and capital expenditure requirements.

Reasons for granting the Shareholders’ Loans

The Shareholders’ Loans are granted for financing T&S HK’s general working capital purpose. The provision of the Shareholders’ Loans may tight up some of the working capital of the Company but causes no significant disadvantage to the Company.

GUARANTEES

The Company provided the following guarantees (the “Guarantees”):

• (a) a corporate guarantee for HK$50 million in favour of The Hongkong and Shanghai Banking Corporation Limited for the benefit of Guangzhou Baiyunshan Sportswear Company Limited (a wholly-owned subsidiary of T&S HK) in November 2006; and

• (b) an all monies corporate guarantee for HK$8.55 million in favour of Shanghai Commercial Bank Ltd. for the benefit of T&S HK in December 2006

to secure certain banking facilities granted to T&S HK and its subsidiary.

As at the Completion Date, the Company provided, and will continue to provide after the Completion the Guarantees.

— 5 —

LETTER FROM THE BOARD

The Guarantees will be released upon full repayment of the banking facilities. The banking facilities are of revolving nature and subject to their respective terms and conditions, have no fixed date of full repayment.

Pursuant to the Amended and Restated Shareholders’ Agreement, where a bank or banks providing financing to T&S HK require parent or cross guarantees or other credit support by way of security, the shareholders of T&S HK shall procure that such guarantees or other credit support acceptable to the banks is provided from within their respective groups in proportion to their then respective shareholdings in T&S HK. Although it is not expressly provided in the Amended and Restated Shareholders’ Agreement, the Company will comply with the applicable requirements under the Listing Rules when and if it or any of its group members provides such guarantees.

Reasons for providing the Guarantees

The provision of the Guarantees is to enable T&S HK and its subsidiary to obtain the relevant banking facilities for general working capital requirements as well as trade financing. As far as the Board is aware, the provision of the Guarantees does not cause any significant disadvantage to the Company.

LISTING RULES IMPLICATIONS

Both T&S BVI and WHL are indirect wholly-owned subsidiaries of the Company. As a result of the Completion, T&S HK becomes owned as to 60% and 40% by T&S BVI and Umbro International respectively. Umbro International is a substantial shareholder of a subsidiary of the Company and T&S HK becomes an associate of Umbro International and a connected person within the meaning of the Listing Rules.

The terms for providing or continuing to provide the Shareholders’ Loans after completion of the sale of 25% shareholding in T&S HK to Umbro International in September 2005 were determined after arm’s length negotiations. The executive directors therefore consider that the terms of the Shareholders’ Loans are on normal commercial terms and are fair and reasonable in the interests of the Shareholders as a whole. The Independent Board Committee will form a view on the Shareholders’ Loans once it receives the advice from the Independent Financial Adviser. Since the assets ratio of the Shareholders’ Loans is more than 2.5% but less than 25% and the aggregate amount of the Shareholders’ Loans is more than HK$10 million, the provision of the Shareholders’ Loans constitutes a connected transaction under the Listing Rules and is subject to the reporting, announcement and independent shareholders’ approval requirements of the Listing Rules.

The terms of Guarantees were negotiated on an arm’s length basis and are similar to those offered by other banks on the market. The executive directors therefore consider that the terms of the Guarantees are on normal commercial terms and are fair and reasonable in the interests of the Shareholders as a whole. The Independent Board Committee will form a view on the Guarantees once it receives the advice from the Independent Financial Adviser. As each of the assets ratio and the

— 6 —

LETTER FROM THE BOARD

revenue ratio of the Guarantees exceeds 2.5% but less than 25% and the consideration is more than HK$10 million, the provision of the Guarantees constitutes a connected transaction and is subject to the reporting, announcement and independent shareholders’ approval requirements of the Listing Rules.

INDEPENDENT SHAREHOLDERS’ APPROVAL

The Company has submitted an application to the Stock Exchange for a waiver from the requirement to hold a general meeting to approve the provision of the Shareholders’ Loans and the Guarantees on the basis that (i) to the best of the directors’ knowledge, information and belief having made all reasonable enquires, none of the Shareholders or their associates has any interest in the Shareholders’ Loans and the Guarantees, and accordingly, no Shareholder needs to abstain from voting as regards the Shareholders’ Loans and the Guarantees; and (ii) Quinta, being a major shareholder having a direct interest in approximately 59.18% of the issued share capital of the Company, has approved the Shareholders’ Loans and the Guarantees.

INFORMATION OF THE GROUP

The Group is an integrated sportswear and active and outer wear manufacturer and distributor for international sports brands.

INFORMATION OF UMBRO INTERNATIONAL

The principal activities of Umbro International are the designing, manufacturing and sale of football apparel, footwear and equipment.

GENERAL

The Independent Board Committee, comprising all the independent non-executive Directors, has been established to advise the Independent Shareholders in relation to the terms of the Shareholders’ Loans and the Guarantees. The Independent Financial Adviser has been appointed to advise the Independent Board Committee and the Independent Shareholders with respect to the Shareholders’ Loans and the Guarantees.

Details of the Shareholders’ Loans and the Guarantees will be included in the published annual report of the Company as required by the Listing Rules.

RECOMMENDATION

Your attention is drawn to (i) the letter from the Independent Board Committee set out in this circular which contains the recommendation of the Independent Board Committee to the Independent Shareholders on the terms of the Shareholders’ Loans and the Guarantees and (ii) the letter from the Independent Financial Adviser set out in this circular which contains its recommendations to the Independent Board Committee and the Independent Shareholders in relation to the terms of the Shareholders’ Loans and the Guarantees.

— 7 —

LETTER FROM THE BOARD

ADDITIONAL INFORMATION

Your attention is also drawn to the general information as set out in the appendix of this circular.

Yours faithfully, By order of the Board Win Hanverky Holdings Limited Li Kwok Tung Roy Chairman

— 8 —

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

WIN HANVERKY HOLDINGS LIMITED

(incorporated in the Cayman Islands with limited liability)

(Stock Code: 3322)

11 April 2007

To the Independent Shareholders

Dear Sir or Madam,

CONNECTED TRANSACTIONS — SHAREHOLDERS’ LOANS AND GUARANTEES

We have been appointed as members of the Independent Board Committee to advise you in connection with the Shareholders’ Loans and the Guarantees, details of which are set out in the “Letter from the Board” in the circular issued by the Company to its Shareholders dated 10 April 2007 (the “Circular”) of which this letter forms part. Terms defined in the Circular have the same meanings when used in this letter unless the context otherwise requires.

Your attention is drawn to the “Letter from the Board”, the advice of the Independent Financial Adviser in its capacity as the independent financial adviser to the Independent Shareholders and the Independent Board Committee in respect of the Shareholders’ Loans and the Guarantees as set out in the “Letter from the Independent Financial Adviser” as well as other additional information set out in other parts of the Circular.

We acknowledge that the Company has applied to the Stock Exchange for a waiver from the compliance with the requirement to hold a general meeting under Rule 14A.35(4) of the Listing Rules to approve the Shareholders’ Loans and the Guarantees on the basis that (i) to the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, none of the Shareholders or their associates has any interest in the Shareholders’ Loans and the Guarantees, and accordingly, no Shareholder needs to abstain from voting as regards the Shareholders’ Loans and the Guarantees; and (ii) Quinta, being a major shareholder having a direct interest in approximately 59.18% of the issued share capital of the Company, has approved the Shareholders’ Loans and the Guarantees.

— 9 —

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

Having taken into account the advice of, and the principal factors and reasons considered by the Independent Financial Adviser in relation thereto as stated in its letter, we consider the continued provision of the Shareholders’ Loans and the Guarantees is on normal commercial terms, fair and reasonable so far as the Independent Shareholders are concerned and is in the interests of the Company and the Shareholders as a whole, and accordingly we recommend you to vote in favour of the resolution to approve the Shareholders’ Loans and the Guarantees.

Yours faithfully, Independent Board Committee of

Win Hanverky Holdings Limited

Chan Kwong Fai Kwan Kai Cheong Independent non-executive Director Independent non-executive Director Ma Ka Chun Wun Kwang Vincent Independent non-executive Director Independent non-executive Director

— 10 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The following is the text of the letter to the Independent Board Committee and the Independent Shareholders from the Independent Financial Adviser prepared for the purpose of incorporation into this circular.

Hercules Capital Limited

1503 Ruttonjee House 11 Duddell Street Central Hong Kong 11 April 2007

To the Independent Board Committee and the Independent Shareholders

Dear Sirs,

CONNECTED TRANSACTIONS — SHAREHOLDERS’ LOANS AND GUARANTEES

We refer to our engagement as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in relation to the Shareholders’ Loans and the Guarantees, details of which are set out in the letter from the Board contained in the circular dated 11 April 2007 to the Shareholders (the “ Circular ”) of which this letter forms part. Unless the context requires otherwise, terms used in this letter have the same meanings as defined elsewhere in the Circular.

In an announcement dated 22 March 2007, the Board disclosed that as at the Completion Date, (i) T&S HK owed, and after Completion will continue to owe, to T&S BVI and WHL (both being indirect wholly-owned subsidiaries of the Company) the Shareholders’ Loans in the aggregate amount of HK$38,134,814; and (ii) the Company provided, and will continue to provide after the Completion, the Guarantees to secure certain banking facilities granted to T&S HK and its subsidiary. Following Completion, T&S HK became an associate of Umbro International and a connected person of the Company by virtue of the fact that it became owned as to 40% by Umbro International, a substantial shareholder of a subsidiary of the Company, and 60% by T&S BVI. The provision of the Shareholders’ Loans and the Guarantees therefore constitute connected transactions for the Company under the Listing Rules and are subject to Independent Shareholders’ approval. As stated in the letter from the Board, on the basis that (i) to the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, none of the Shareholders or their associates have any interest in the Shareholders’ Loans and the Guarantees and therefore are required to abstain from voting thereon; and

— 11 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

(ii) Quinta, which holds directly more that 50% of the issued share capital of the Company, has approved the Shareholders’ Loans and the Guarantees, the Company has applied for a waiver from compliance with the requirement to hold a shareholders’ meeting pursuant to Rule 14A.53 of the Listing Rules.

The Independent Board Committee, comprising all the independent non-executive Directors, namely Messrs Chan Kwong Fai, Kwan Kai Cheong, Ma Ka Chun and Wun Kwang Vincent, has been constituted to consider whether the provision of the Shareholders’ Loans and the Guarantees is on normal commercial terms, fair and reasonable and in the interests of the Company and its shareholders as a whole. We are engaged to advise the Independent Board Committee and the Independent Shareholders in this regard.

In formulating our recommendations, we have relied on the information and representations supplied, and the opinions expressed, by the Directors and management of the Company. We have assumed that such information and statements, and any representations made to us, are true, accurate and complete in all material respects as of the date hereof. We have also assumed that all information, opinions and representations contained or referred to in the Circular are true, accurate and complete in all material respects as at the date of the Circular and that they may be relied upon in formulating our opinion. The Directors have confirmed that, having made all reasonable enquiries and to the best of their knowledge and belief, there are no other facts the omission of which would make any statement in the Circular misleading. We consider that we have reviewed sufficient information to reach an informed view, to justify reliance on the accuracy of the information contained in the Circular and to provide a reasonable basis for our recommendation. We have no reason to suspect that any material information has been withheld by the Directors or management of the Company, or is misleading, untrue or inaccurate. We have not, however, for the purpose of this exercise, conducted any independent detailed investigation into or audit of the businesses or affairs or future prospects of the Group.

PRINCIPAL FACTORS AND REASONS CONSIDERED

The principal factors and reasons that we have taken into consideration in assessing the Shareholders’ Loans and the Guarantees and arriving at our opinion are set out as follows:

A. Background information

The Group is an integrated sportswear and active and outer wear manufacturer and distributor for international sports brands.

The principal activities of T&S HK and its subsidiaries are wholesale and distribution of “Umbro” branded sportswear products and related accessories.

Following Completion in March 2007, T&S HK became owned as to 60% by T&S BVI and 40% by Umbro International.

— 12 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

• (i) Provision of the Shareholders’ Loans

T&S BVI initially made a shareholders’ loan of HK$23,134,814 to T&S HK in December 2002.

WHL also made shareholders’ loans of HK$2 million, HK$3 million and HK$10 million to T&S HK in May, June and November 2006 respectively.

Pursuant to the 2005 Shareholders’ Agreement, T&S BVI was required to make a shareholders’ loan of HK$23 million to T&S HK. However, Umbro International was not required under the 2005 Shareholders’ Agreement to provide any shareholders’ loan to T&S HK on a pro rata basis.

Pursuant to the Amended and Restated Shareholders’ Agreement, neither shareholder in T&S HK is required to make or continue to make available shareholder loans to T&S HK and T&S BVI is entitled (but not obliged) to require T&S HK to obtain financing through bank borrowings to cover the costs of its working capital and capital expenditure requirements.

As at the Completion Date, T&S HK owed, and after Completion will continue to owe, to T&S BVI and WHL the Shareholders’ Loans in the amounts of HK$23,134,814 and HK$15,000,000 respectively. The Shareholders’ Loans are non-interest bearing, unsecured and have no pre-determined repayment terms.

• (ii) Provision of Guarantees

For the purpose of securing certain banking facilities granted to T&S HK and its subsidiary, the Company had provided the following Guarantees prior to Completion:

• (a) a corporate guarantee of HK$50 million in favour of The Hongkong and Shanghai Banking Corporation Limited for the benefit of Guangzhou Baiyunshan Sportswear Company Limited (a wholly-owned subsidiary of T&S HK) in November 2006; and

• (b) an all monies corporate guarantee of HK$8.55 million in favour of Shanghai Commercial Bank Ltd. for the benefit of T&S HK in December 2006.

The banking facilities are of revolving nature and subject to their respective terms and conditions, have no fixed date of full repayment.

Pursuant to the Amended and Restated Shareholders’ Agreement, where a bank or banks providing financing to T&S HK require parent or cross guarantees or other credit support by way of security, the shareholders of T&S HK shall procure that such guarantees or other credit support acceptable to the banks is provided from within their respective groups in proportion to their then respective shareholdings in T&S HK.

The Company will continue to provide the Guarantees after Completion. The Guarantees will only be released upon full repayment of the banking facilities.

— 13 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

B. Rationale

• (i) Provision of the Shareholders’ Loans

The Shareholders’ Loans were granted to finance T&S HK’s general working capital requirements. We have been advised by management of the Company that it is possible that the Shareholders Loans may be replaced by bank facilities obtained by T&S HK. According to the Directors, unless and until the Shareholders’ Loans are replaced by bank or other financing facilities, the continued provision of the Shareholders’ Loans is essential to the operation of T&S HK. Upon consolidation of the assets and liabilities of T&S HK into the Group’s accounts, the financial effect of the Shareholders’ Loans on the Group will be eliminated. Given that the Shareholders’ Loans are interest free, unsecured, have no pre-determined repayment terms, and are provided to T&S HK as an intra-group funding, the provision of the Shareholders’ Loans will lower the financing costs of T&S HK and provide it with more flexibility on repayment plans compared to debt financing from third parties. In addition, as T&S HK remains a subsidiary of the Company after Completion, the ultimate use of the Shareholders’ Loans is also under the management control of the Company for the benefit of T&S HK.

Based on the foregoing, we consider that the continued provision of the Shareholders’ Loans to T&S HK by T&S BVI and WHL is fair and reasonable insofar as the Independent Shareholders are concerned and in the interest of the Group as a whole.

As the Shareholders’ Loans were made before the entering into of the Amended and Restated Shareholders’ Agreement, they are not being shared on a pro rata basis among the shareholders of T&S HK. Given that T&S HK remains majority owned by T&S BVI after Completion, and Umbro International is only a minority shareholder of T&S HK, we consider that it is a normal commercial arrangement for the Shareholders’ Loans to be provided by the Group.

(ii) Guarantees

The provision of the Guarantees is to enable T&S HK and its subsidiary to obtain certain banking facilities for general working capital requirements as well as trade financing.

The provision of the Guarantees will not have any direct impact on the profitability, liabilities or gearing of the Group but will constitute a contingent obligation to the Company. In the event that T&S HK and/or it subsidiary fail(s) to meet its/their obligation(s) to repay the relevant banking facilities together with the interest thereon, the Company shall, by virtue of the provision of the Guarantees, assume the obligation(s) thereof.

— 14 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Based on the Company’s latest interim report, the Group’s unaudited consolidated net assets and unaudited consolidated net tangible assets as at 30 June 2006 amounted to HK$434.3 million and HK$267.6 million respectively. In the event that the entire amount of the Guarantees are called upon, the Company will have to bear in full the liabilities relating to the relevant banking facilities up to HK$58.55 million (before interest), representing approximately 13.5% and 21.9% of the Group’s unaudited consolidated net assets and unaudited consolidated net tangible assets as at 30 June 2006 respectively. Accordingly, any default by T&S HK and/or its subsidiary on the relevant banking facilities would have an adverse impact on the financial position of the Group if the Guarantees continue to be provided.

Notwithstanding such potential impact, we have been advised by management of the Company that (i) the relevant banking facilities are essential for the general working capital and trade financing requirements of T&S HK and its subsidiary ; (ii) T&S HK is owned as to 60% by the Group and the use of the facilities is under the control of the Company for the benefit of T&S HK; (iii) the provision of guarantee(s) was a condition precedent for obtaining the relevant banking facilities and unless and until the Guarantees are replaced (if acceptable to the relevant banks) by pro rata guarantees (or other security) from companies within the Company’s and Umbro International’s respective groups, the continued provision of the Guarantees is essential to the maintenance of the existing banking facilities; (iv) it might be difficult for T&S HK to give security over a part only of its fixed assets to match the size of the facilities, and giving security over all its assets may result in over-collateralisation which may not be in the best interests of T&S HK; (v) the revenue and operations of T&S HK are important to the Group as the results of T&S HK and its subsidiary will be consolidated by the Group; (vi) the Directors are confident that T&S HK and its subsidiary will be able to fulfill their repayment obligations when the relevant banking facilities become due; and (vii) the provision of the Guarantees does not involve any cash outflow of the Company unless the Guarantees are enforced, we therefore consider that the continued provision of the Guarantees to T&S HK is fair and reasonable and in the interests of the Company and the Independent Shareholders as a whole.

RECOMMENDATION

Having considered the abovementioned principal factors and reasons, we consider that the continued provision of the Shareholders’ Loans and the Guarantees is essential to the Group’s normal operations, is on normal commercial terms, fair and reasonable insofar as the Independent Shareholders are concerned and is in the interests of the Company and the Shareholders as a whole.

— 15 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

As stated in the letter from the Board, Quinta, which holds directly more than 50% of the issued share capital of the Company, has approved the Shareholders’ Loans and the Guarantees in writing, and the Company has therefore applied for a waiver from compliance with the requirement to hold a shareholders’ meeting pursuant to Rule 14A.53 of the Listing Rules. Accordingly, if the waiver is granted by the Stock Exchange, no shareholders’ meeting will need to be held to approve the Shareholders’ Loans and the Guarantees. Nevertheless, if the Company were to convene a general meeting to consider the Shareholders’ Loans and the Guarantees, we would recommend the Independent Shareholders to vote, and would advise the Independent Board Committee to advise the Independent Shareholders to vote, in favour of the resolution to approve the Shareholders’ Loans and the Guarantees.

Yours faithfully, For and on behalf of Hercules Capital Limited Louis Koo Managing Director

— 16 —

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 in this circular misleading.

2. DIRECTORS’ DISCLOSURE OF INTERESTS

As at the Latest Practicable Date, the interests and short positions of the Director and chief executive of the Company (if any) in the shares, underlying shares, debentures of the Company and its associated corporation (within the meaning of Part XV of the SFO), which (a) 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 and short positions which they have taken or deemed to have taken under such provisions of the SFO); or (b) were required to be recorded in the register maintained by the Company pursuant to section 352 of the SFO; or (c) were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers (the “Model Code”) adopted by the Company, to be notified to the Company and the Stock Exchange, were as follows:

(a) Directors’ interests and short positions in the shares, underlying shares and debentures of the Company and its associated corporations

Long positions in the Shares and underlying Shares of the Company

		Number of	Approximate
		Shares or	percentage of
		underlying	interest in the
Name of Director	Capacity	Shares	Company
Mr. Li Kwok Tung, Roy	Interests in controlled	736,735,967	59.18%
	company (Note)
Mr. Chow Chi Wai	Personal interest	24,000,000	1.93%
Mr. Cheung Chi	Personal interest	12,000,000	0.96%
Mr. Lee Kwok Leung	Personal interest	2,400,000	0.19%

Note: Mr. Li Kwok Tung, Roy holds 70% of the issued share capital of Quinta. Mr. Li Kwok Tung, Roy has a controlling interest in Quinta and is therefore deemed to be interested in Quinta’s interest in the Company for the purposes of the SFO. Mr. Lai Ching Ping, a Director, holds the remaining 30% of the issued share capital of Quinta (representing an indirect interest in 221,020,790 Shares or approximately 17.75% shareholding in the Company).

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APPENDIX

GENERAL INFORMATION

Long positions in the shares of associated corporations of the Company (as defined in the SFO)

			Approximate	Approximate
				percentage
				of interest
	Associated		Number of	in the
Name of Director	Corporation	Capacity	Shares	Company
Mr. Li Kwok Tung, Roy	Quinta	Personal interest	7	70%
Mr. Lai Ching Ping	Quinta	Personal interest	3	30%

(b) Pre-IPO Share Option Scheme

The interests of Mr. Cheung Chi, Mr. Chow Chi Wai and Mr. Lee Kwok Leung in the Shares of the Company disclosed in (a) above were the following Pre-IPO Share Options granted to, and accepted by them respectively:

	Number of
	Shares to be
	issued upon
	full exercise	Approximate
	of the Pre-	percentage of
	IPO Share	total issue		Exercise
Grantee and Position	Option	**Shares **	Exercise Periods	Price
Cheung Chi	12,000,000	0.96%	33% upon Listing on 6	30%
Executive Director			September 2006	discount to
				Offer Price
			33% on or after 30
			June 2007
			Remaining on or after
			30 June 2008
Chow Chi Wai	24,000,000	1.93%	25% upon Listing on 6	50%
Executive Director			September 2006	discount to
				Offer Price
			37.5% on or after 30
			June 2007
			Remaining on or after
			30 June 2008

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GENERAL INFORMATION

APPENDIX

	Number of
	Shares to be
	issued upon
	full exercise	Approximate
	of the Pre-	percentage of
	IPO Share	total issue		Exercise
Grantee and Position	Option	**Shares **	Exercise Periods	Price
Lee Kwok Leung	2,400,000	0.19%	33.5% upon Listing on	At Offer
Executive Director			6 September 2006	Price
			33.5% on or after 30
			June 2007
			Remaining on or after
			30 June 2008
Total	38,400,000	3.08%

Note: A cash consideration of HK$1.00 has been paid by each grantee of the Pre-IPO Share Options. Subject to other conditions of the Pre-IPO Share Option scheme, the option period shall be 10 years from the date of the offer of the respective Pre-IPO Share Options unless extended in writing by the Board (and approved by Independent non-executive Directors) in its absolute discretion. Each of the Pre-IPO Share Options (to the extent nor already exercised) shall lapse automatically at the end of such option period. As at the Latest Practicable Date, all Pre-IPO Share Option above remain outstanding.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors and chief executives of the Company (if any) had any interests or short positions in the shares, underlying shares and debentures of the Company or of any of its associated corporation (within the meaning of Part XV of the SFO) which: (a) 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 and short positions which they were taken or deemed to have taken under such provisions of the SFO); or (b) were required to be recorded in the register maintained by the Company pursuant to section 352 of the SFO; or (c) were required, pursuant to the Model Code adopted by the Company, to be notified to the Company and the Stock Exchange.

3. INTERESTS AND SHORT POSITIONS WHICH ARE DISCLOSEABLE UNDER DIVISIONS 2 AND 3 OF PART XV OF THE SFO

As at the Latest Practicable Date, so far as is known to the Directors, the persons (other than a Director or chief executive of the Company (if any)) who had an interest or short position in the Shares and underlying Shares of the Company which would fall to be disclosed to the Company under Divisions 2 and 3 of Part XV of the SFO, or who is, directly or indirectly, interested in 10 per cent.

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APPENDIX

GENERAL INFORMATION

or more of the nominal value of any class of share capital carry rights to vote in all circumstances at general meeting of any other member of the Group, or in any option, in respect of such securities were as follows:

(a) Long positions in the Shares and underlying Shares of the Company

			Approximate
			percentage
			of interest
		Number of	in the
Name	Capacity	Shares	Company
Quinta	Beneficial interest	736,735,967	59.18%
TSG BVI	Beneficial interest	67,069,636	5.39%
HTS Holding Company Limited	Interest in controlled	67,069,636	5.39%
	corporation (Note)

Note: TSG BVI is 85% controlled by HTS Holding Company Limited.

(b) Long positions in the shares of any other member of the Group

			Approximate	Approximate
				percentage
				of interest
				in the
				relevant
			Number of	member of
Name	Member of the Group	Capacity	Shares	the Group
Wong King Kuen	Bowker Faith Garment	Personal	580,000	29%
	Factory Limited	interest
Chan Siu Wa	Bowker Pacific	Personal	45,000	15%
	Garments Limited	interest
Leung Yiu Ming	Bowker Pacific	Personal	45,000	15%
	Garments Limited	interest
Chan Siu Wa	Bowker International	Personal	15	15%
	Company Limited	interest
Leung Yiu Ming	Bowker International	Personal	15	15%
	Company Limited	interest

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GENERAL INFORMATION

APPENDIX

					Approximate	Approximate
						percentage
						of interest
						in the
						relevant
					Number of	member of
Name		Member of the Group		Capacity	Shares	the Group
Fu Chi Sing		Bowker (China) Company		Personal	290	29%
		Limited		interest Beneficial	US$150,000	27.3%
(Yunfu Hong Tai		(Sport City Garment		interest	of total
Garment Co.		Factory Company			registered
Ltd.*)		Limited*)			capital
Lai Ho Man				Interests in	US$550,000 US$150,000	27.3%
		(Sport City Garment		controlled	of total
		Factory Company		corporation	registered
		Limited*)		(Note)	capital
					US$550,000
Tam Shuk Wai		Win Gear (Asia Pacific)		Personal	22,500	45%
		Company Limited		interest
Chan Hon Kwan		Bowker Garment		Personal	200	20%
		Accessories Company		interest
		Limited
Umbro International		T&S HK		Beneficial	2,000 T&S	40%
				interest	HK A Shares
					1,600 T&S
					HK B Shares
TSG BVI		Win Sports		Beneficial	15,000,000	25%
				interest

Note: (Yunfu Hong Tai Garment Co. Ltd) (“Yunfu Hong Tai”) is wholly owned by Mr. Lai Ho Man and therefore Mr. Lai is deemed to be interested in Yunfu Hong Tai’s interest in (Sport City Garment Factory Company Limited) for the purposes of the SFO.

* For identification purpose only

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GENERAL INFORMATION

APPENDIX

Saved as disclosed above, as at the Latest Practicable Date, there was no other person (other than the Directors or the chief executives of the Company (if any)) who had interests or short positions in the Shares or underlying Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who was, directly or indirectly, interested in 10 per cent. or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group or in any options in respect of such share capital.

4. DIRECTORS INTEREST IN ASSETS/CONTRACTS AND OTHER INTERESTS

None of the Directors have any interest, direct or indirect, in any asset which have since 31 December 2005, being the date to which the latest published audited accounts of the Company were made up, up to the Latest Practicable Date, been acquired or disposed of by, or leased to, any member of the Group, or are proposed to be acquired or disposed of by, or leased to, any member of the Group.

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

5. DIRECTORS’ COMPETING INTERESTS

As at the Latest Practicable Date, none of the Directors and their respective associates were considered to have interests in any business which competes or is likely to compete, either directly or indirectly, with the business of the Group or have any other conflicts of interest with the Group pursuant to the Listing Rules.

6. DIRECTORS’ SERVICE CONTRACTS

Save as disclosed below, as at the Latest Practicable Date, none of the Directors had entered or was proposing to enter into a service contract with any member of the Group (excluding contracts expiring or determinable by the employer within one year without payment of compensation (other than statutory compensation)).

Each of Mr. Li Kwok Tung, Roy and Mr. Lai Ching Ping has entered into a service agreement with the Company for a term of three years commencing 1 April 2006 with a monthly remuneration of HK$237,300 and HK$194,400 respectively. Each of Mr. Lee Kwok Leung, Mr. Chow Chi Wai and Mr. Cheung Chi has entered into a service agreement with the Company for a term of three years commencing 20 February 2006 with a monthly remuneration of HK$50,000, HK$143,000 and HK$120,000 respectively and, for Mr. Lee Kwok Leung only, a monthly housing allowance of HK$15,000. In addition, they will each be entitled to a bonus equivalent to two months’ salary at the end of each financial year and for the first financial year, such bonus shall be calculated in proportion to service rendered starting from their respective commencement dates. Each of them will also be entitled to all reasonable out-of-pocket expenses.

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GENERAL INFORMATION

APPENDIX

7. EXPERT’S QUALIFICATION AND CONSENT

The following is the qualification of the expert who has given opinion or advice which is contained in this circular:

Name

Qualification

Hercules Capital Limited

A corporation licensed to carry out business in type 6 regulated activities under the SFO

Hercules Capital Limited, the Independent Financial Adviser, 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 are included. The letter and recommendation given by the Independent Financial Adviser are given as of the date of this circular for incorporation herein.

8. EXPERT’S INTERESTS

As at the Latest Practicable Date, the Independent Financial Adviser:

• (a) had no direct or indirect interest in any asset which had since 31 December 2005, being the date to which the latest published audited accounts of the Company were made up, been acquired or disposed of by, or leased to, any member of the Group, or was proposed to be acquired or disposed of by, or leased to, any member of the Group; and

• (b) was not beneficially interested in the share capital of any member of the Group nor did they have any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

9. MATERIAL ADVERSE CHANGE

The Directors are not aware of any material adverse change in the financial or trading position of the Group since 31 December 2005, being the date to which the latest published audited accounts of the Company were made up.

10. DEMAND FOR POLL

Under the articles of association of the Company, a resolution put to the vote of a meeting shall be decided on a show of hands unless a poll is demanded:

• (a) by the chairman of such a meeting; or

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

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

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GENERAL INFORMATION

APPENDIX

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

• (e) if required by the rules of the Stock Exchange, by any Director or Directors who, individually and collectively, hold proxies in respect of Shares representing 5% or more of the total voting rights at such meeting.

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

11. DOCUMENTS FOR INSPECTION

Copies of the following documents are available for inspection during the normal business hours at the principal place of business of the Company at 6th Floor, Phase 6, Hong Kong Spinners Industrial Building, 481-483 Castle Peak Road, Kowloon, Hong Kong for a period of 14 days from the date of this circular:

• (a) the Directors’ service contracts as referred to in paragraph 6 of this appendix;

• (b) the SP Agreement;

• (c) the Umbro Distributor Agreement;

• (d) the 2005 Shareholders’ Agreement; and

• (e) the Amended and Restated Shareholders’ Agreement.

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