Win Hanverky Holdings Limited — Proxy Solicitation & Information Statement 2011

May 13, 2011

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 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.

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim 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 永嘉集團控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 3322)

DISCLOSEABLE AND CONNECTED TRANSACTION: BUSINESS TRANSFER

AND

CONNECTED TRANSACTIONS:

ACQUISITION OF 40% ISSUED SHARE CAPITAL OF A SUBSIDIARY AND PROVISION OF TRANSITION SERVICES AND KEY ACCOUNT SERVICES

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

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A letter from the Board is set out on pages 5 to 13 of this circular.

A letter from the Independent Board Committee, containing its recommendation to the independent Shareholders, is set out on pages 14 to 15 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 16 to 28 of this circular.

16 May 2011

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1-4
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5-13
Letter from the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14-15
Letter from the Independent Financial Adviser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	16-28
Appendix — General Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	29-33

— i —

DEFINITIONS

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

“2011 Announcement”

the announcement of the Company dated 21 April 2011 in relation to the Transactions

“APA”

the asset purchase agreement dated 21 April 2011 and entered into by and among the Company, T&S HK and T&S BVI as sellers and Global Services and UIL as purchasers in respect of the sale of the Sale Assets, the Business Transfer and the transfer of the T&S HK Sale Shares

“associate(s)”

has the meaning as ascribed to it under the Listing Rules

• “Board”

the board of Directors

• “Closing Date”

2 June 2011, or such other time as T&S HK and Global Services may agree in writing

“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

“connected person(s)”

has the meaning as ascribed to it under the Listing Rules

• “Directors”

directors of the Company

“Global Services”

Nike Global Services Pte. Ltd, a company established and existing under the laws of Singapore with limited liability, and an affiliate of UIL, both of which are wholly-owned subsidiaries of Nike, Inc.

“Group”

the Company and its subsidiaries

“Hong Kong”

the Hong Kong Special Administrative Region of the PRC

• “HK$”

Hong Kong dollars, the lawful currency of Hong Kong

• “Independent Board Committee”

an independent committee of the Board, comprising all the independent non-executive Directors, who have no material interests in the Non-Exempt Transactions, namely Dr. Chan Kwong Fai, Mr. Kwan Kai Cheong, Mr. Ma Ka Chun and Mr. Wun Kwang Vincent, established to advise the independent Shareholders in relation to the Non-Exempt Transactions and the terms (including the consideration therefor)

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DEFINITIONS

“Independent Financial Ample Capital Limited, a licensed corporation to carry out Adviser” business in types 4, 6 and 9 regulated activities (advising on securities, advising on corporate finance and asset management respectively) under the SFO, being the independent financial adviser appointed to advise the Independent Board Committee and the independent Shareholders in relation to the Non-Exempt Transactions and the terms (including the consideration therefor) “Independent Third Parties” third parties which, together with their respective beneficial owner(s) (if any) and to the best of the Director’s knowledge, information and belief after having made reasonable enquiries, are independent of the Company and their respective connected persons “KAA” the key account agreement dated 21 April 2011 and entered into by and among the Company and Win Sports on one part and Umbro HK on the other part in respect of the provision of the Key Account Services

“Latest Practicable Date”

• 12 May 2011, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained herein

• “Listing Rules”

• the Rules Governing the Listing of Securities on the Stock Exchange

“Non-Exempt Transactions” the transactions contemplated under the Business Transfer under the APA, the provision of the Transition Services under the TSA and the Key Account Services under the KAA which are subject to the reporting, announcement and independent shareholders’ approval requirement under the Listing Rules as described in the section headed “Listing Rules Implications” in the “Letter from the Board” of this circular

• “percentage ratio(s)” shall have the meaning as ascribed to it under Chapter 14 of the Listing Rules

• “PRC” the People’s Republic of China

“PRC Provinces” the following eight provinces in the PRC: Beijing, Guangdong, Guangxi, Hunan, Jiangsu, Shanghai, Hebei and Hainan

“Pre-IPO Share Options” the options granted by the Company to certain employees and a consultant of the Group prior to the listing of the Shares on the main board of the Stock Exchange on 6 September 2006

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DEFINITIONS

“Quinta” Quinta Asia Limited, a company incorporated in the British Virgin Islands and a controlling Shareholder holding 58.64% of the issued share capital of the Company. It is beneficially owned by two executive Directors as to 70% by Mr. Li Kwok Tung Roy and 30% by Mr. Lai Ching Ping as at the Latest Practicable Date “SFO” the Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong) “Shares” shares of HK$0.10 each in the capital of the Company “Shareholder(s)” holder(s) of the Shares “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, an indirect wholly-owned subsidiary of the Company “T&S HK” Team & Sports Limited, a company incorporated in Hong Kong with limited liability, an indirect 60% owned subsidiary of the Company “T&S HK Sale Shares” 2,000 “Class A” ordinary shares and 1,600 “Class B” ordinary shares of HK$100 each in the capital of T&S HK owned by UIL as at the Latest Practicable Date, representing 40% of the issued share capital of T&S HK “T&S Shenzhen” Team & Sports (Shenzhen) Ltd. (天運體育用品(深圳) 有限公司), a company established in the PRC and a wholly-owned subsidiary of T&S HK as at the Latest Practicable Date “Territory” the PRC, Hong Kong, Macau Special Administrative Region and Taiwan “Transactions” the transactions contemplated under the APA, the TSA and the KAA, including the Business Transfer, the acquisition of T&S HK Sale Shares and the provision of the Transition Services and the Key Account Services respectively “TSA” the transition services agreement dated 21 April 2011 and entered into by and among T&S HK, T&S Shenzhen and the Company as sellers and Global Services and UIL as purchasers in respect of the provision of the Transition Services

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DEFINITIONS

“UIL” Umbro International Limited, a company established and existing under the laws of England with limited liability, a substantial shareholder holding 40% interest in T&S HK as at the Latest Practicable Date “Umbro Distributor Agreement” the distributor agreement dated 8 February 2007 and entered into between UIL and T&S HK as supplemented by a side letter entered into between the same parties on 8 February 2007 “Umbro HK” Umbro Hong Kong Limited, a company incorporated in Hong Kong with limited liability, being a direct wholly-owned subsidiary of UIL “US$” United States dollars, the lawful currency of United States of America “Win Sports” Win Sports Limited, a company incorporated in Hong Kong with limited liability, an indirect 75% owned subsidiary of the Company

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LETTER FROM THE BOARD

WIN HANVERKY HOLDINGS LIMITED 永嘉集團控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 3322)

Executive Directors: Li Kwok Tung Roy Lai Ching Ping Lee Kwok Leung Cheung Chi

Registered Office: Cricket Square Hutchins Drive P.O. Box 2681 Grand Cayman KY1-1111 Cayman Islands

Independent Non-executive Directors:

Chan Kwong Fai Kwan Kai Cheong Ma Ka Chun Wun Kwang Vincent

Principal Place of Business in Hong Kong: 6th Floor, Phase 6 Hong Kong Spinners Industrial Building 481-483 Castle Peak Road Kowloon Hong Kong 16 May 2011

To the Shareholders

Dear Sir or Madam,

DISCLOSEABLE AND CONNECTED TRANSACTION: BUSINESS TRANSFER AND

CONNECTED TRANSACTIONS:

ACQUISITION OF 40% ISSUED SHARE CAPITAL OF A SUBSIDIARY AND PROVISION OF TRANSITION SERVICES AND KEY ACCOUNT SERVICES

INTRODUCTION

Reference is made to the 2011 Announcement in relation to (i) the Business Transfer and the acquisition of the T&S HK Sale Shares under the APA; (ii) the provision of the Transition Services under the TSA; and (iii) the Key Account Services under the KAA.

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LETTER FROM THE BOARD

The purpose of this circular is to provide you with (i) the particulars of the Non-Exempt Transactions; (ii) the letter of recommendation from the Independent Board Committee to the independent Shareholders; (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.

1. THE APA

Principal Terms

Date

21 April 2011

Parties

Sellers: The Company, T&S HK and T&S BVI Purchasers: Global Services and UIL

The Business Transfer

Pursuant to the APA, T&S HK has conditionally agreed to sell and Global Services has conditionally agreed to acquire the assets (“ Sale Assets ”) including, among others, (i) all of T&S HK’s rights, title to and interest in the Umbro Distributor Agreement; and (ii) all goodwill associated with the Sale Assets and the corporate activities of T&S HK permitted and licensed by UIL under the Umbro Distributor Agreement (“ Business ”) for a cash consideration of US$27.5 million (equivalent to approximately HK$214.5 million) (collectively, the “ Business Transfer ”).

The consideration for the Business Transfer of US$27.5 million (equivalent to approximately HK$214.5 million) was determined after arm’s length negotiations between the parties and shall be paid on the Closing Date, subject to the netting off of purchase price for the T&S HK Sale Shares payable by the Company to UIL on the Closing Date as mentioned in the section headed “Acquisition of T&S HK Sale Shares” below.

The Sale Assets do not carry a value in the accounts of T&S HK prior to Closing. The Company intends to apply the income from the Business Transfer of approximately US$27.5 million which represents the actual amount of consideration to be received by the Group as general working capital of the Group.

Acquisition of T&S HK Sale Shares

Concurrent with the closing of the Business Transfer, the Company has conditionally agreed to acquire and UIL has conditionally agreed to dispose of the T&S HK Sale Shares for a cash consideration of US$4.0 million (equivalent to approximately HK$31.2 million).

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LETTER FROM THE BOARD

The original investment cost of UIL in T&S HK Sale Shares is US$27.6 million (representing approximately HK$215.3 million), representing the aggregate original acquisition costs of the T&S HK Sale Shares by UIL in 2005 and 2007.

The consideration for the purchase of T&S HK Sale Shares of US$4.0 million (equivalent to approximately HK$31.2 million) was determined after arm’s length negotiations between the parties having regard to the value of the consolidated net asset value and write-off of goodwill arising from the Business attributable to the T&S HK Sale Shares as at 31 December 2010 and shall be paid on the Closing Date by netting against the consideration for the Business Transfer payable by Global Services at the Closing. It is acknowledged by UIL under the APA that the Company shall be deemed to have paid the consideration for the purchase of T&S HK Sale Shares to UIL on the Closing Date by virtue of such netting off arrangement.

Upon Closing of the Business Transfer and the writing off of goodwill, the major assets of T&S HK will be inventories, trade receivables and cash and cash equivalents. The goodwill is solely associated with the acquisition of a sportswear wholesaler operating in the PRC with an established distributor network and channels by T&S HK in 2004. The goodwill will be fully written off upon T&S HK ceasing to have the distribution rights under the Umbro Distributor Agreement at Closing of the Business Transfer. The writing off of goodwill will be recognised as expenses in the profit and loss accounts of T&S HK upon Closing.

There is no restriction on any subsequent disposal of the T&S HK Sale Shares to be acquired by the Group.

Conditions and Closing

Closing of the Business Transfer and the acquisition of the T&S HK Sale Shares (“ Closing ”) will be subject to fulfilment of the following conditions:

• (a) approval from the Shareholders having been obtained in full compliance with applicable laws, including all relevant provisions of the Companies Ordinance (Cap. 32 of the Laws of Hong Kong) and the Listing Rules;

• (b) no applicable laws prohibiting the consummation of the Closing;

• (c) all actions in respect of or filings with any government authority required to permit the consummation of the Closing and the transactions contemplated under the APA having been taken, made or obtained;

• (d) (i) each of the Company, T&S HK and T&S BVI having performed all of its obligations under the APA on or prior to the Closing Date, (ii) the representations and warranties of each of them under the APA, the TSA and the KAA (where applicable) remaining true in all material respects at the Closing Date; and (iii) Global Services having received a certificate from each of the Company, T&S HK and T&S BVI to the foregoing effect stated in (i) and (ii);

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LETTER FROM THE BOARD

• (e) no instituted or pending action or proceeding by any governmental authority seeking to, among others, restrain, prohibit or interfere with the ownership or operation by Global Services or its affiliates of all or any material portion of the Sale Assets or the business or assets of Global Services or its affiliates or to compel any of them to dispose of all or any material portion of the Sale Assets or of Global Services or its affiliates;

• (f) no applicable law, in the reasonable judgment of Global Services, resulting in any of the consequences referred to in (e) above;

• (g) no instituted or pending action or proceeding by any person or entity seeking to restrain or prohibit the sale of the Sale Assets by T&S HK or its affiliates;

• (h) T&S BVI having replaced and substituted UIL as guarantor under the guarantee made by UIL in favour of a bank in connection with a bank facility granted to T&S HK in August 2007;

• (i) all accrued royalties payable by T&S HK under the Umbro Distributor Agreement having been settled in full by T&S HK to UIL at or prior to the Closing;

• (j) each of the Company, T&S HK and T&S BVI having received all required consents, authorisations or approval with respect to the execution, delivery and performance of the APA, the TSA and the KAA (where applicable);

• (k) no change, event, circumstance or effect with a material adverse effect upon the Sale Assets and liabilities relating to the Sale Assets after Closing having occurred;

• (l) T&S HK having delivered all of the relevant financial statements of T&S HK and its subsidiaries as specified under the APA together with an unqualified report of an independent accountant to Global Services; and

• (m) a notice of transfer having been published pursuant to the Transfer of Businesses (Protection of Creditors) Ordinance (Cap. 49 of the Laws of Hong Kong) for at least 30 days and no creditor having raised any claims or objections with respect to such notice.

The Closing is expected to take place on the Closing Date provided that the conditions above shall have been satisfied or waived by the relevant party on or prior to the Closing Date. The conditions (a) and (l) above have been satisfied as at the Latest Practicable Date.

2. THE TSA

Principal Terms

Date

21 April 2011

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LETTER FROM THE BOARD

Parties

Sellers: T&S HK, T&S Shenzhen and the Company (collectively, the “ TSA Seller Group Companies ”) Purchasers: Global Services and UIL

Provision of the Transition Services

Each of the TSA Seller Group Companies shall provide or procure to provide certain transition services (the “ Transition Services ”) to assist Global Services, UIL and any Umbro Entities designated by it in avoiding disruption in the transition and operation of the Business in the Territory from the Closing Date to 30 June 2012 for a service fee of US$5.0 million (equivalent to approximately HK$39.0 million).

The Transition Services mainly include services to transition accounts and other matters, commercial services and other services in relation to the return and destruction of inventory.

Under the TSA, the TSA Seller Group Companies will retain exclusive rights under the Umbro Distributor Agreement for a certain period following the Closing Date to enable a transition of the Business, although the Umbro Entities may conduct or engage in the Business in the Territory as it relates to or in contemplation of the operations of the Business following that transition.

The service fee of US$5.0 million (equivalent to approximately HK$39.0 million) under the TSA was determined after arm’s length negotiations between the parties and shall be paid on 30 June 2012 subject to the TSA Seller Group Companies having materially performed all of their obligations under the TSA.

3. THE KAA

Principal Terms

Date

21 April 2011

Parties

The Company and Win Sports on one part and Umbro HK on the other part

Provision of services under the KAA (“Key Account Services”)

Under the KAA, Win Sports should be appointed as a retailer and, if requested, a distributor of Umbro HK on a non-exclusive basis in the PRC Provinces, Hong Kong and Macau Special Administrative Region for a period commencing on the Closing Date and ending on 31 December 2013.

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LETTER FROM THE BOARD

Consideration under the KAA

Under the KAA, the Company may receive up to US$7.5 million (equivalent to approximately HK$58.5 million) from Umbro HK in relation to certain marketing and advertising costs and expenses and other investments as mutually agreed by the parties.

These investment payments were determined after arm’s length negotiations between the parties and shall be payable pursuant to the terms of the KAA.

REASONS FOR THE TRANSACTIONS

The Directors consider that, since the acquisition of Umbro brand by Nike in 2008, the development of the Business was highly restricted subject to the view and decisions of the new brand owner. As the Umbro Distributor Agreement will expire in 2020, and from preliminary discussions with the new brand owner, it seems unlikely that the exclusive distribution rights granted to the Group thereunder will be renewed after such expiry. The Directors cautiously consider that further investment of the Group’s resources and efforts in the Business may not create substantial value to the results and performance of the Group. In addition, the Business Transfer can enhance resources allocation of the Group to focus on the development of its distribution and retail of sportswear products in the PRC, Hong Kong and Macau Special Administrative Region.

Along with the Business Transfer, the provision of the Transition Services and the Key Account Services and the acquisition of the T&S HK Sale Shares were negotiated as a package deal from the Company’s perspective. Notwithstanding the Business Transfer, the Directors believe that the provision of the Transition Services and the Key Account Services by the Group could reinforce the cooperative business arrangements with Global Services, UIL and the Umbro Entities in the long term and provide the backbone for continuous and sustainable business relationships with the multinational sportswear companies in the future. The Business Transfer and the provision of the Transition Services and the Key Account Services as a whole is essentially an arrangement whereby the Group shall cease to have rights, title to and interests in the Umbro Distributor Agreement and provide related services to the transferee to assist with a smooth transition of the Business, and to provide for its business relationship with Global Services, UIL and the Umbro Entities during and after the transition.

The aggregate consideration for the Business Transfer, the Transition Services and the Key Account Services under the APA, the TSA and the KAA respectively, which amounts to US$40.0 million (equivalent to approximately HK$312.0 million), was negotiated as a package deal and effectively serves as a compensation for the cessation of the Group’s rights under the Umbro Distributor Agreement, the provision of related transitional services and also for the role to be played by the Group after the cessation. It was determined after arm’s length negotiations among the parties by reference to the commercial value of the Sale Assets, the Transition Services and the Key Account Services having regard to (1) the historical performance of T&S HK in the past; (2) the expected business environment in the coming years in the Territory; and (3) the prospect of the Business and the fair value of the T&S HK Sale Shares having regard to the consolidated net asset value of T&S HK attributable to the T&S HK Sale Shares as at 31 December 2010. The parties have also taken into account prevailing market conditions and other factors deemed appropriate by the parties including costs in relation to the supply chain management of the Umbro products between the Group and the

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LETTER FROM THE BOARD

brand owner. The Directors (including the independent non-executive Directors) are of the view that the Non-Exempt Transactions and the terms (including the consideration therefor) are (i) on an arm’s length basis and on normal commercial terms which are not less favourable to the Group than the terms available from the Independent Third Parties; and (ii) fair and reasonable and in the interests of the Group and the Shareholders as a whole.

The Directors (including the independent non-executive Directors) are of the opinion that the acquisition of the T&S HK Sale Shares was entered into (i) in the ordinary and usual course of business of the Group; and (ii) on normal commercial terms after arm’s length negotiations between the parties. The Directors consider that the terms of such acquisition (including the consideration paid therefore) are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

INFORMATION OF THE GROUP

The Group is an integrated sportswear manufacturer, distributor and retailer for international sports brands in Europe, North America, Hong Kong and the PRC.

T&S HK is a company incorporated in Hong Kong with limited liability and is principally engaged in the trading of garment products. As at the Latest Practicable Date, T&S HK was held as to 60% by the Group and 40% by UIL.

Based on the audited accounts of T&S HK which have been prepared in accordance with The Hong Kong Financial Reporting Standards, the consolidated net asset value of T&S HK attributable to the T&S HK Sale Shares was US$5.1 million (equivalent to approximately HK$39.8 million) as at 31 December 2010. Some of the financial data of T&S HK attributable to the T&S HK Sale Shares are set out as follows:

	Consolidated net profits/(loss)	Consolidated net profits/(loss)
	before taxation and	after taxation and
	extraordinary items	extraordinary items
	attributable to the T&S HK	attributable to the T&S HK
	Sale Shares	Sale Shares
For the year ended	(US$1.7 million)	(US$2.2 million)
31 December 2010	(equivalent to approximately	(equivalent to approximately
	(HK$13.3 million))	(HK$17.2 million))
For the year ended	(US$2.1 million)	(US$1.7 million)
31 December 2009	(equivalent to approximately	(equivalent to approximately
	(HK$16.4 million))	(HK$13.3 million))

Upon closing of the acquisition of the T&S HK Sale Shares, T&S HK will be wholly owned by the Group.

INFORMATION OF OTHER PARTIES INVOLVED

Global Services is principally engaged in the ownership and licensing of certain trademarks and other intellectual property relating to the Umbro brand.

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LETTER FROM THE BOARD

UIL and its subsidiaries are principally engaged in the design, manufacturing and sale of football apparel, footwear and equipment on a worldwide basis for the Umbro brand.

LISTING RULES IMPLICATIONS

As UIL is a substantial shareholder of T&S HK, a subsidiary of the Company, it is a connected person of the Company. Umbro HK which is held as to 100% by UIL and an associate of UIL, is also a connected person of the Company. Global Services, which is an affiliate of UIL, is also a connected person of the Company. Accordingly, the Transactions constitute connected transactions under Chapter 14A of the Listing Rules.

With respect to the acquisition of the T&S HK Sale Shares, as all of the relevant percentage ratios (as defined in the Listing Rules) are less than 5%, such acquisition is only subject to reporting and announcement requirements but is exempt from the independent shareholders’ approval requirement pursuant to Rule 14A.32 of the Listing Rules. No Director has any material interest in the acquisition of the T&S HK Sale Shares and therefore none of them is required to abstain from voting on the board resolutions approving such acquisition.

With respect to the Business Transfer under the APA, as the relevant percentage ratios in respect of the Business Transfer exceed 5% but are less than 25%, the Business Transfer constitutes a discloseable and connected transaction for the Company and is subject to the reporting, announcement and independent shareholders’ approval requirement under the Listing Rules.

With respect to the provision of the Transition Services under the TSA and the Key Account Services under the KAA, as the relevant percentage ratio in respect of the provision of the Transition Services and the Key Account Services, when aggregated, exceeds 5% but is less than 25%, the transactions contemplated under the TSA and the KAA constitute connected transactions for the Company and are subject to the reporting, announcement and independent shareholders’ approval requirements under the Listing Rules.

Upon closing of the acquisition of T&S HK Sale Shares by the Company on the Closing Date, the transactions under the TSA and the KAA will cease to be the connected transactions of the Company given that UIL will no longer be a substantial shareholder of T&S HK and a connected person of the Company.

INDEPENDENT SHAREHOLDERS’ APPROVAL

The Company has submitted an application to the Stock Exchange for, and the Stock Exchange has granted, a waiver from the requirement to hold a general meeting to approve the Non-Exempt Transactions and to accept the written independent shareholders’ approval pursuant to Rule 14A.43 of the Listing Rules on the basis that (i) to the best of the Directors’ knowledge, information and belief having made all reasonable enquires, none of the Shareholders has any interest in the Non-Exempt Transactions, and accordingly, no Shareholder is required to abstain from voting if the Company were

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LETTER FROM THE BOARD

to convene a general meeting for approving the Non-Exempt Transactions; and (ii) Quinta, being a controlling Shareholder having a direct interest in approximately 58.64% of the issued share capital of the Company as at the Latest Practicable Date, has given its written approval of the Non-Exempt Transactions.

ADDITIONAL INFORMATION

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 Non-Exempt Transactions and the terms (including the consideration therefor); and (ii) the letter from the Independent Financial Adviser set out in this circular which contains its recommendation to the Independent Board Committee and the independent Shareholders in relation to the Non-Exempt Transactions and the terms (including the consideration therefor).

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

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

WIN HANVERKY HOLDINGS LIMITED 永嘉集團控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 3322)

16 May 2011

To the independent Shareholders

Dear Sir or Madam,

DISCLOSEABLE AND CONNECTED TRANSACTION: BUSINESS TRANSFER AND CONNECTED TRANSACTIONS:

ACQUISITION OF 40% ISSUED SHARE CAPITAL OF A SUBSIDIARY AND PROVISION OF TRANSITION SERVICES AND KEY ACCOUNT SERVICES

We have been appointed as members of the Independent Board Committee to advise you in connection with the Non-Exempt Transactions and the terms (including the consideration therefor), details of which are set out in the “Letter from the Board” in the circular issued by the Company to its Shareholders dated 16 May 2011 (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 Non-Exempt Transactions and the terms (including the consideration therefor) 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, and the Stock Exchange has granted, a waiver from the requirement to hold a general meeting to approve the Non-Exempt Transactions pursuant to Rule 14A.43 of the Listing Rules on the basis that (i) to the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, none of the Shareholders has any interest in the Non-Exempt Transactions, and accordingly, no Shareholder is required to abstain from voting if the Company were to convene a general meeting for approving the Non-Exempt Transactions; and (ii) Quinta, being a controlling Shareholder having a direct interest in approximately 58.64% of the issued share capital of the Company as at the Latest Practicable Date, has given its written approval of the Non-Exempt Transactions.

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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 that the Non-Exempt Transactions and the terms (including the consideration therefor) are (i) on an arm’s length basis, on normal commercial terms and in the ordinary and usual course of business of the Group; and (ii) fair and reasonable and in the interests of the Group and the Shareholders as a whole, and accordingly we recommend you to approve the Non-Exempt Transactions and the terms (including the consideration therefor) and would recommend you to vote in favour of the resolutions to approve the same if a physical shareholders’ meeting were to be held.

Yours faithfully, Independent Board Committee of

Win Hanverky Holdings Limited

Chan Kwong Fai Independent non-executive Director

Kwan Kai Cheong Independent non-executive Director

Ma Ka Chun Independent non-executive Director

Wun Kwang Vincent Independent non-executive Director

— 15 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The following is the full text of the letter of advice from the Independent Financial Adviser in respect of the Non-Exempt Transactions and is prepared for the purpose of incorporation into this circular.

==> picture [152 x 58] intentionally omitted <==

Ample Capital Limited Unit A, 14th Floor Two Chinachem Plaza 135 Des Voeux Road Central Hong Kong

16 May 2011

• To the Independent Board Committee and the independent Shareholders of Win Hanverky Holdings Limited

Dear Sirs,

DISCLOSEABLE AND CONNECTED TRANSACTION: BUSINESS TRANSFER AND CONNECTED TRANSACTIONS:

ACQUISITION OF 40% ISSUED SHARE CAPITAL OF A SUBSIDIARY AND PROVISION OF TRANSITION SERVICES AND KEY ACCOUNT SERVICES

INTRODUCTION

We refer to our engagement by the Company to advise the Independent Board Committee and the independent Shareholders in respect of the Non-Exempt Transactions, the particulars of which have been set out in a circular to the Shareholders dated 16 May 2011 (the “ Circular ”) and in which this letter is reproduced. Unless the context requires otherwise, terms used in this letter shall have the same meanings as given to them in the Circular.

Ample Capital Limited has been appointed as the Independent Financial Adviser to the Independent Board Committee and the independent Shareholders to (i) give our recommendation as to whether the Non-Exempt Transactions are fair and reasonable so far as the independent Shareholders are concerned and on normal commercial terms; (ii) give our recommendations as to whether the Non-Exempt Transactions are in the interest of the Company and the Shareholders as a whole and in

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the ordinary and usual course of business of the Group; and (iii) advise the independent Shareholders on how to vote if an actual shareholders’ meeting were to be held. Details of the reasons for the Non-Exempt Transactions are set out in the section headed “Letter from the Board” in the Circular (the “ Letter from the Board ”).

As stated in the Letter from the Board: (i) the APA was entered into by and among the Company, T&S HK and T&S BVI as sellers, and Global Services and UIL as purchasers, pursuant to which, T&S HK has conditionally agreed to sell and Global Services has conditionally agreed to acquire the Sale Assets in connection with the Business as contemplated under the Business Transfer for a cash consideration of US$27.5 million (equivalent to approximately HK$214.5 million); (ii) under the APA, the Company has also conditionally agreed to acquire and UIL has conditionally agreed to dispose of the T&S HK Sale Shares for a cash consideration of US$4.0 million (equivalent to approximately HK$31.2 million); (iii) the TSA was entered into by and among the Company, T&S Shenzhen and T&S HK as sellers, and Global Services and UIL as purchasers, pursuant to which each of the TSA Seller Group Companies shall provide or procure to provide the Transition Services to assist Global Services, UIL and certain Umbro Entities in avoiding disruption in the transition and operation of the Business in the Territory from the Closing Date to 30 June 2012 for a service fee of US$5.0 million (equivalent to approximately HK$39.0 million), payable upon the material performance of the Transition Services; and (iv) the KAA was entered into by and among the Company, Win Sports and Umbro HK, pursuant to which, among others, Win Sports should be appointed as a retailer and, if requested, a distributor of Umbro HK on a non-exclusive basis in the PRC Provinces, Hong Kong and Macau Special Administrative Region for a term up to 31 December 2013 and for an aggregate maximum consideration of up to US$7.5 million (equivalent to approximately HK$58.5 million) to the Company. The transactions contemplated under (i), (iii) and (iv) above are the Non-Exempt Transactions.

As UIL is a substantial shareholder of T&S HK, a subsidiary of the Company, it is a connected person of the Company. Umbro HK which is held as to 100% by UIL and an associate of UIL, is also a connected person of the Company. Global Services, which is an affiliate of UIL, is also a connected person of the Company. Accordingly, the Transactions (including the Non-Exempt Transactions) constitute connected transactions under Chapter 14A of the Listing Rules.

With respect to the Business Transfer under the APA, as the relevant percentage ratios in respect of the Business Transfer exceed 5% but are less than 25%, the Business Transfer constitutes a discloseable and connected transaction for the Company and is subject to the reporting, announcement and independent shareholders’ approval requirement under the Listing Rules.

With respect to the provision of the Transition Services under the TSA and the Key Account Services under the KAA, as the relevant percentage ratio in respect of the provision of the Transition Services and the Key Account Services, when aggregated, exceeds 5% but is less than 25%, the transactions contemplated under the TSA and the KAA constitute connected transactions for the Company and are subject to the reporting, announcement and independent shareholders’ approval requirement under the Listing Rules.

The Company has submitted an application to the Stock Exchange for, and the Stock Exchange has granted, a waiver from the requirement to hold a general meeting to approve the Non-Exempt Transactions and to accept the written independent shareholders’ approval pursuant to Rule 14A.43 of

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the Listing Rules on the basis that (i) to the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, none of the Shareholders has any interest in the Non-Exempt Transactions, and accordingly, no Shareholder is required to abstain from voting if the Company were to convene a general meeting for approving the Non-Exempt Transactions; and (ii) Quinta, being a controlling Shareholder having a direct interest in approximately 58.64% of the issued share capital of the Company as at the Latest Practicable Date, has given its written approval of the Non-Exempt Transactions.

BASIS OF ADVICE

In formulating our opinions and recommendations, we have relied on the information supplied to us by the Company, the opinions expressed by, and the representations of, the Directors and the management of the Company, including those set out in the Circular. We have no reason to doubt the truth, accuracy and completeness of the information and presentation provided to us by the Directors.

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 made to us untrue, inaccurate or misleading. We consider that we have performed all the necessary steps to enable us to reach an informed view and to justify our reliance on the information provided so as to provide a reasonable basis for our opinion. The Directors have confirmed that, to the best of their knowledge, they believe that no material fact or information has been omitted from the information supplied and that the representations made or opinions expressed have been arrived at after due and careful consideration and there are no other facts or representations the omission of which would make any statement in the Circular, including this letter, misleading.

While we have taken reasonable steps to satisfy the requirements under the Listing Rules, we have not carried out any independent verification of the information, opinions or representations given or made by or on behalf of the Company, nor have we conducted an independent investigation into the business affairs or assets and liabilities of the Group or any of the other parties involved in the Non-Exempt Transactions.

In the event of inconsistency, the English text of this letter shall prevail over the Chinese translation of this letter.

PRINCIPAL FACTORS CONSIDERED

In arriving at our opinion in relation to the Non-Exempt Transactions, we have taken into consideration the following factors:

1. Information on the Group

As stated in the Letter from the Board, the Group is an integrated sportswear manufacturer, distributor and retailer for international sports brands in Europe, North America, Hong Kong and the

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PRC. As the historical financial information of the Group enables us to judge the size of the Transactions relative to that of the Group, we set out below certain key audited financial information as extracted from the Group’s annual report for the year ended 31 December 2010 (the “ Annual Report ”) for your information:

Revenue Net profit attributable to Shareholders Total assets (as at period end) Total liabilities (as at period end) Net assets attributable to Shareholders (as at period end)	Year ended 31 December 2010 2009 HK$’000 HK$’000 (audited) (audited) 3,081,763 2,888,002 120,472 121,539 2,819,663 2,661,412 692,095 573,769 1,942,424 1,856,472

We note that the Company recorded a consolidated revenue of approximately HK$3,081,763,000 for the year ended 31 December 2010, representing an approximately 6.71% increase when compared with the consolidated revenue of approximately HK$2,888,002,000 recorded during the year ended 31 December 2009. Furthermore, the Group generated net profit attributable to Shareholders of approximately HK$120,472,000 during the year ended 31 December 2010, representing a decrease of approximately 0.88% when compared with the net profit attributable to Shareholders of approximately HK$121,539,000 recorded during the year ended 31 December 2009. It is noted that the Annual Report has stated that: “The decrease in gross profit was mainly resulted from the increase in labour costs and other overhead costs for production under the Manufacturing Business. In spite of the inflationary environment, management has put much effort to control its operating and administrative expenses. In addition, a significant amount of impairment loss on intangible asset related to “Diadora” trademark of HK$54.0 million (2009: HK$15.1 million related to goodwill) has been charged to the consolidated income statement during the year.” As at 31 December 2010, the Company had consolidated total assets, total liabilities and net assets attributable to Shareholders of approximately HK$2,819,663,000, HK$692,095,000 and HK$1,942,424,000 respectively.

2. Reasons for the Transactions

As stated in the Letter from the Board, the Directors consider that, since the acquisition of Umbro brand by Nike in 2008, the development of the Business was highly restricted subject to the view and decisions of the new brand owner. As the Umbro Distributor Agreement will expire in 2020, and from preliminary discussions with the new brand owner, it seems unlikely that the exclusive distribution rights granted to the Group thereunder will be renewed after such expiry. The Directors cautiously consider that further investment of the Group’s resources and efforts in the Business may

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not create substantial value to the results and performance of the Group. In addition, the Business Transfer can enhance resources allocation of the Group to focus on the development of its distribution and retail of sportswear products in the PRC, Hong Kong and Macau Special Administrative Region.

Along with the Business Transfer, the provision of the Transition Services and the Key Account Services and the acquisition of the T&S HK Sale Shares were negotiated as a package deal from the Company’s perspective. Notwithstanding the Business Transfer, the Directors believe that the provision of the Transition Services and the Key Account Services by the Group could reinforce the cooperative business arrangements with Global Services, UIL and the Umbro Entities in the long term and provide the backbone for continuous and sustainable business relationships with the multinational sportswear companies in the future. The Business Transfer and the provision of the Transition Services and the Key Account Services as a whole is essentially an arrangement whereby the Group shall cease to have rights, title to and interests in the Umbro Distributor Agreement and provide related services to the transferee to assist with a smooth transition of the Business, and to provide for its business relationship with Global Services, UIL and the Umbro Entities during and after the transition.

The aggregate consideration for the Business Transfer, the Transition Services and the Key Account Services under the APA, the TSA and the KAA respectively, which amounts to US$40.0 million (equivalent to approximately HK$312.0 million), was negotiated as a package deal and effectively serves as a compensation for the cessation of the Group’s rights under the Umbro Distributor Agreement, the provision of related transitional services and also for the role to be played by the Group after the cessation. It was determined after arm’s length negotiations among the parties by reference to the commercial value of the Sale Assets, the Transition Services and the Key Account Services having regard to (1) the historical performance of T&S HK in the past; (2) the expected business environment in the coming years in the Territory; and (3) the prospect of the Business and the fair value of the T&S HK Sale Shares having regard to the consolidated net asset value of T&S HK attributable to the T&S HK Sale Shares as at 31 December 2010. The parties have also taken into account prevailing market conditions and other factors deemed appropriate by the parties including costs in relation to the supply chain management of the Umbro products between the Group and the brand owner. The Directors are of the view that the Non-Exempt Transactions and the terms (including the consideration therefor) are (i) on an arm’s length basis and on normal commercial terms which are not less favourable to the Group than the terms available from the Independent Third Parties; and (ii) fair and reasonable and in the interests of the Group and the Shareholders as a whole.

As advised by the Group’s management, the “commercial value of the Sale Assets, the Transition Services and the Key Account Services” as referred to in the paragraph above denotes the value of the Sale Assets, the Transition Services and the Key Account Services as agreed by the parties to the Transactions after normal commercial negotiations which have taken various qualitative factors as mentioned above into consideration. Such “commercial value” as agreed by the parties is reflected in the aggregate consideration. We have taken into account those factors considered by the Group including:

• (i) the audited consolidated financial statements of T&S HK for the year ended 31 December 2010 (the “ T&S Financial Statements ”) provided to us by the management of the Group showing losses for each of the two years ended 31 December 2009 and 2010;

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• (ii) as advised by the Group’s management, the operating environment of T&S HK is expected to remain difficult in the coming years, a sentiment which appears to be echoed by:

• (a) the annual report of Li Ning Company Limited (stock code: 2331), the subsidiaries of which are principally engaged in brand development, research and development, design, manufacture, sale and distribution of sports footwear, apparel, equipment and accessories under the “LI-NING” brand, for the year ended 31 December 2010 which states: “Revenue generated from sales to franchised distributors as a percentage to total revenue of LI-NING brand dropped in 2010 as compared to 2009. This was mainly due to the increasingly competitive environment of the sporting goods industry, under which discrepancy between wholesale and actual retail sales remained, prompting aggressive discounting at the retail level.” ; and

• (b) the annual report of China Dongxiang (Group) Company Limited (stock code: 3818), the subsidiaries of which are principally engaged in brand development, design and sales of sport-related apparel, footwear and accessories under the “Kappa” brand, for the year ended 31 December 2010 which states: “Today, the industry faces a new series of challenges, including intensifying competition and inventory excess.” ; and

• (iii) the supply chain problem encountered by T&S HK and its subsidiaries (collectively the “ T&S Group ”) (further discussed in section 3 of this letter) illustrating the undesirable prospect of the T&S Group unless this problem is rectified,

and consider them to be appropriate factors to be taken into account by the parties to the Transactions as these factors are relevant to the business environment faced by the T&S Group together with its future prospect. In respect of the “fair value of the T&S HK Sale Shares” referred to above, we note from the T&S Financial Statements that the consolidated net asset value of T&S HK attributable to the T&S HK Sale Shares of approximately US$5.1 million (equivalent to approximately HK$39.8 million) appears to be arithmetically correct.

The Directors are of the opinion that the acquisition of the T&S HK Sale Shares was entered into (i) in the ordinary and usual course of business of the Group; and (ii) on normal commercial terms after arm’s length negotiations between the parties. The Directors consider that the terms of such acquisition (including the consideration paid therefore) are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

In our discussion with the Group’s management, we have learnt that Global Services has approached the Group and initiated discussions in connection with the early cessation of the Umbro Distributor Agreement prior to its expiry in 2020. Under such circumstances, the Group’s management is of the view that the Group has two options with regards to the Business, namely:

• (i) conclude discussions with Global Services in relation to the early cessation and in the process, try to bargain as much benefits as the Group possibly can under the APA, TSA and KAA as represented by the Estimated Compensations (as defined below); or

• (ii) insist to conduct the Business until the expiry of the Term (as defined below) against the wish of Global Services, facing (a) significant uncertainties arising out of an undesirable relationship with Global Services; (b) likelihood of further losses incurred in the Business, which has been loss making during the two years ended 31 December 2009 and 2010, if factors as discussed in section 3 below persist; and (c) likelihood that the Group will not receive any compensation from Global Services upon the expiry of the Term (as defined below) in 2020.

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Having considered the factors discussed above, we concur with the view of the Group’s management that proceeding with option (i) instead of option (ii) above is in the interest of the Company and the Shareholders as a whole.

3. T&S HK and the Business

As advised by the Group’s management, the T&S Group is principally engaged in the distribution of Umbro branded products. Upon completion of the Transactions, (i) T&S HK will be wholly owned by the Group; and (ii) the T&S Group will cease to carry on its existing business operations. We set out below certain financial information of T&S HK as extracted from the Letter from the Board.

			**Year ended **	**Year ended **	**Year ended **	31 December	31 December
				2010			2009
			HK$’million			HK$’million
			(audited)			(audited)
Consolidated	net	loss before taxation and extraordinary items
attributable	to	the T&S HK Sale Shares		13.3			16.4
Consolidated	net	loss after taxation and extraordinary items
attributable	to	the T&S HK Sale Shares		17.2			13.3

The Letter from the Board further states that the consolidated net asset value of T&S HK attributable to the T&S HK Sale Shares was approximately HK$39.8 million as at 31 December 2010.

We note that the Annual Report states the following with regards to the T&S Group’s business in distribution of Umbro branded products:

“The T&S Group encountered supply chain problem with the brand owner, which caused delays and cancellation of orders from distributors placed to factories as authorised by the brand owner due to their lack of production capacity. Further, the market competition in the sportswear market in Mainland China, especially in the first and second tier cities, was still fierce which gave pressure on sales performance of Umbro Products.

...

In addition to the tight cost controls implemented by management, operating loss has been reduced to HK$28.3 million as compared with HK$37.2 million for the last year.”

As stated in the Letter from the Board, the original investment cost of UIL in T&S HK Sale Shares (representing 40% interest) is US$27.6 million (equivalent to approximately HK$215.3 million). Based on the above, the valuation for 100% interest in T&S HK is approximately US$69.0 million (equivalent to approximately HK$538.2 million) (the “ T&S HK Valuation ”).

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We have also studied a copy of the Umbro Distributor Agreement provided by the Group’s management. It is noted that the term of the Umbro Distributor Agreement is for a period from 1 March 2007 to 31 December 2020 (the “ Term ”).

We note that UIL and its affiliates are connected persons of the Company by way of UIL being a substantial shareholder of a subsidiary of the Company, i.e. T&S HK. The Group’s management advised us that, to the best of its information, knowledge and belief (i) save for UIL, none of the connected persons of the Group has any control or interest in UIL and its affiliates; (ii) save for UIL’s 40% interest in T&S HK, UIL and its affiliates do not have any control or interest in the Group; and (iii) none of the Shareholders have an interest in the Transactions which is different from any of the other Shareholders. The Group’s management further advised us that the Directors have acted in the best interest of all of the Shareholders during the negotiations of the APA, TSA and KAA. Accordingly, the Directors have also confirmed that the APA, TSA and KAA were negotiated with UIL and its affiliates at arm’s length, and there was no incentive for the Group to negotiate terms that are favourable to UIL and its affiliates at the expense of the Group or the Shareholders as (i) control in T&S HK (being one of the parties to the APA and TSA) is vested in the Company as it is owned as to 60% by the Company and 40% by UIL; (ii) control in Win Sports (being one of the parties to the KAA) is vested in the Company as it is owned as to 75% by the Company; (iii) UIL and its affiliates are not in a position to control the affairs of the Group (save for T&S HK in which UIL only has a minority stake), and (iv) that would have no benefit to the Group, any of the Shareholders and any of the Directors.

4. The Transactions

4.1 APA

Pursuant to the APA, T&S HK has conditionally agreed to sell and Global Services has conditionally agreed to acquire the Sale Assets including, among others, (i) all of T&S HK’s rights, title to and interest in the Umbro Distributor Agreement; and (ii) all goodwill associated with the Sale Assets and the corporate activities of T&S HK permitted and licensed by UIL under the Umbro Distributor Agreement for a cash consideration of US$27.5 million (equivalent to approximately HK$214.5 million).

The consideration for the Business Transfer of US$27.5 million (equivalent to approximately HK$214.5 million) was determined after arm’s length negotiations between the parties.

Concurrent with the closing of the Business Transfer, the Company has conditionally agreed to acquire and UIL has conditionally agreed to dispose of the T&S HK Sale Shares for a cash consideration of US$4.0 million (equivalent to approximately HK$31.2 million) (the “ Acquisition ”).

The consideration for the purchase of T&S HK Sale Shares of US$4.0 million (equivalent to approximately HK$31.2 million) was determined after arm’s length negotiations between the parties having regard to the value of the consolidated net asset value and write-off of goodwill arising from the Business attributable to the T&S HK Sale Shares as at 31 December 2010.

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4.2 TSA

Each of the TSA Seller Group Companies shall provide or procure to provide certain Transition Services to assist Global Services, UIL and any Umbro Entities designated by it in avoiding disruption in the transition and operation of the Business in the Territory from the Closing Date to 30 June 2012 for a service fee of US$5.0 million (equivalent to approximately HK$39.0 million).

The Transition Services mainly include services to transition accounts and other matters, commercial services and other services in relation to the return and destruction of inventory.

The service fee of US$5.0 million (equivalent to approximately HK$39.0 million) under the TSA was determined after arm’s length negotiations between the parties.

The Group’s management has advised us that the Transition Services to be provided under the TSA are essentially the contractual obligations of the T&S Group under the Umbro Distributor Agreement in the event that it is terminated. Furthermore, UIL is not obligated to provide any consideration to the Group in connection with the provision of the Transition Services under the Umbro Distributor Agreement so any payment in respect of the Transition Services is beneficial to the Group.

4.3 KAA

Under the KAA, Win Sports should be appointed as a retailer and, if requested, a distributor of Umbro HK on a non-exclusive basis in the PRC Provinces, Hong Kong and Macau Special Administrative Region for a period commencing on the Closing Date and ending on 31 December 2013.

Under the KAA, the Company may receive up to US$7.5 million (equivalent to approximately HK$58.5 million) from Umbro HK in relation to certain marketing and advertising costs and expenses and other investments as mutually agreed by the parties.

These payments were determined after arm’s length negotiations between the parties.

As advised by the Group’s management, Win Sports has been a retailer in respect of the Umbro products since 2007. Furthermore, the arrangements under the KAA are put in place to ensure Win Sports’ continued participation as a retailer of Umbro HK upon Closing Date so as to minimize the disruption of this business, and it is normal industry practice that the brand owner is not required to make payments to reimburse its retailer / distributor in respect of its operating expenses. Win Sports would derive economic benefits from its appointment as a retailer and, if requested, a distributor of Umbro HK from the successful operation of such business. In the course of operating such business, expenses such as marketing and advertising costs and expenses would inevitably be incurred, and such operating costs are undeniably the responsibility of the operator of such business, i.e. Win Sports as the retailer / distributor. We have been further advised by the Group’s management that the payments of up to US$7.5 million (equivalent to approximately HK$58.5 million) that may be paid by Umbro HK to the Company

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serve as incentives to the Group upon reaching certain targets as agreed by the parties thereto. Having established that (i) the operating costs including but not limited to marketing and advertising costs and expenses incurred in connection with the operation of the said business is the sole responsibility of Win Sports; (ii) Umbro HK is under no circumstances obligated to reimburse its retailers / distributors’ operating costs; (iii) the payments, if any, under the KAA are accordingly not cost reimbursement; and (iv) such payments are incentives to the Group upon reaching certain targets as agreed by the parties thereto which only serves to “sweeten the deal” from the Group’s perspective, we consider the possible payments under the KAA are on normal commercial terms.

4.4 Combined outcome of the Transactions

In essence, the APA, the TSA and the KAA as a whole serve the purpose of (i) early relinquishment of the Group’s rights and benefits provided for under the Umbro Distributor Agreement prior to expiry of the Term on 31 December 2020; (ii) UIL’s disposal of its 40% interest in T&S HK to the Group; and (iii) an orderly transition of the Business from T&S HK to Global Services and UIL. As mentioned previously, the aggregate consideration receivable by the Group under the Transactions was negotiated as a package deal and effectively serves as, among other things, a compensation for the cessation of the Group’s rights under the Umbro Distributor Agreement. In addition, we note from the TSA and KAA that the Group should provide the Transition Services and the Key Account Services for a period commencing from the Closing Date, i.e. the date on which the completion of the APA take place, signifying that the TSA and the KAA are inter-related with the APA and justifying these transactions to be considered as a package deal. The aggregate net consideration to be received by the Group under the APA, TSA and KAA can therefore be viewed as Global Services’ compensation to the Group for the above. We set out below two scenarios depicting the net outcome of the monetary exchanges under the APA, TSA and KAA.

• (i) The Group receives the full US$7.5 million (equivalent to approximately HK$58.5 million) under the KAA (“ Scenario 1 ”)

	US$’ million
Consideration receivable by the Group under the Business Transfer	27.5
Consideration payable by the Group under the Acquisition	(4.0)
Consideration receivable by the Group under the Transition Services	5.0
Consideration receivable by the Group under the Key Account Services	7.5
Net amount receivable by the Group under the APA, TSA and KAA	36.0

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(ii) The Group receives nil under the KAA (“ Scenario 2 ”)

	US$’ million
Consideration receivable by the Group under the Business Transfer	27.5
Consideration payable by the Group under the Acquisition	(4.0)
Consideration receivable by the Group under the Transition Services	5.0
Net amount receivable by the Group under the APA, TSA and KAA	28.5

If we take an average of the net amount receivable by the Group under Scenario 1 and Scenario 2, the estimated compensation receivable by the Group under the APA, TSA and KAA would be approximately US$32.3 million (equivalent to approximately HK$251.9 million) (the “ Estimated Compensation ”).

As mentioned earlier in section 3 of this letter, the T&S HK Valuation is approximately US$69.0 million (equivalent to approximately HK$538.2 million). It is noted that the principal business of the T&S Group is conducted pursuant to the exclusive distribution rights granted under the Umbro Distributor Agreement, the Term of which is originally approximately 13.8 years. Accordingly, T&S HK’s remaining valuation should be tied to the number of years remaining in the Term. To arrive at the remaining valuation of T&S HK, we have made calculations similar to amortization using the straight line method with reference to (i) the T&S HK Valuation; and (ii) the remaining Term from the 2 June 2011 (i.e. the Closing Date) up to 31 December 2020 (i.e. expiry date of the Term) which covers a period of approximately 9.5 years.

We have adopted the straight line method as (i) it is consistent with the Company’s accounting policy of assets amortization as advised by the Group’s management; (ii) this method is one of the simplest and most commonly used amortization methods; and (iii) the Term is clearly established under the Umbro Distributor Agreement therefore enabling the use of the straight line method. Furthermore, we are of the view that no impairment or appreciation of the T&S HK Valuation is considered necessary for the purpose of our analysis as (i) the T&S HK Valuation is derived from UIL’s original acquisition cost of its T&S HK Sale Shares at a time when the T&S Group was historically making substantial profits (for example, T&S HK recorded consolidated net profit after income tax of US$5,205,349 (equivalent to approximately HK$40,601,722) during the year ended 31 December 2005 as per the Company’s announcement dated 8 February 2007); (ii) T&S HK has recorded consolidated loss for each of the two years ended 31 December 2009 and 2010 as per the T&S Financial Statements; (iii) combined with the unfavourable business environment and prospect faced by T&S HK as discussed in sections 2 and 3 of this letter, any reasonable adjustment would only be a downward one; and (iv) the T&S HK Remaining Valuation Attributable to the Group (as defined below) therefore represents a “best case scenario” of T&S HK, making it a higher benchmark for the Estimated Compensation to match. The calculations are illustrated below:

US$69.0 million 13.8 years US$5.0 million / = T&S HK Valuation Original Term Annualized T&S HK Valuation

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US$5.0 million 9.5 years US$47.5 million x = Annualized T&S HK Valuation Remaining Term T&S HK’s remaining valuation

Based on such calculations, T&S HK’s remaining valuation is approximately US$47.5 million (equivalent to approximately HK$370.5 million). Accordingly, T&S HK’s remaining valuation attributable to the 60% interest held by the Group would be approximately US$28.5 million (equivalent to approximately HK$222.3 million) (the “ T&S HK Remaining Valuation Attributable to the Group ”).

As advised by the Group’s management, no independent valuation has been conducted in respect of the Sale Assets, the Transition Services and the Key Account Services. Under such circumstances, the T&S HK Remaining Valuation Attributable to the Group is the only benchmark currently available to us which we can reliably use in respect of the valuation of T&S HK derived from the remaining Term of the Umbro Distributor Agreement. As we consider that such calculations fairly reflect the value given up by the Group by way of early relinquishment the Group’s rights and benefits provided for under the Umbro Distributor Agreement upon Closing Date, we are of the view that this analysis is an appropriate support in assisting us to arrive at our conclusion regarding the Non-Exempt Transactions set out in this letter.

It is noted that the Estimated Compensation of approximately US$32.3 million (equivalent to approximately HK$251.9 million) is larger than the T&S HK Remaining Valuation Attributable to the Group of approximately US$28.5 million (equivalent to approximately HK$222.3 million) by approximately 13.33%.

CONCLUSION

Having considered the above principal factors and in particular:

• (i) the Umbro Distributor Agreement will expire in 2020, and from preliminary discussions with the new brand owner, it seems unlikely that the exclusive distribution rights granted to the Group thereunder will be renewed after such expiry;

• (ii) the Directors cautiously consider that further investment of the Group’s resources and efforts in the Business may not create substantial value to the results and performance of the Group;

• (iii) the Business Transfer can enhance resources allocation of the Group to focus on the development of its distribution and retail of sportswear products in the PRC, Hong Kong and Macau Special Administrative Region;

• (iv) notwithstanding the Business Transfer, the Directors believe that the provision of the Transition Services and the Key Account Services by the Group could reinforce the cooperative business arrangements with Global Services, UIL and the Umbro Entities in the long term and provide the backbone for continuous and sustainable business relationships with the multinational sportswear companies in the future;

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• (v) if the Group were to insist to conduct the Business until the expiry of the Term against the wish of Global Services, the Group would face (a) significant uncertainties arising out of an undesirable relationship with Global Services; (b) likelihood of further losses incurred in the Business, which has been loss making during the two years ended 31 December 2009 and 2010, if factors as discussed in section 3 of this letter persist; and (c) likelihood that the Group will not receive any compensation from Global Services upon the expiry of the Term in 2020;

• (vi) in essence, the APA, the TSA and the KAA as a whole serve the purpose of (i) early relinquishment of the Group’s rights and benefits provided for under the Umbro Distributor Agreement prior to expiry of the Term on 31 December 2020; (ii) UIL’s disposal of its 40% interest in T&S HK to the Group; and (iii) an orderly transition of the Business from T&S HK to Global Services and UIL;

• (vii) the aggregate net consideration to be received by the Group under the APA, TSA and KAA can be viewed as Global Services’ compensation to the Group for the above; and

• (viii) the Estimated Compensation of approximately US$32.3 million (equivalent to approximately HK$251.9 million) is larger than the T&S HK Remaining Valuation Attributable to the Group of approximately US$28.5 million (equivalent to approximately HK$222.3 million) by approximately 13.33%,

we are of the opinion that the Non-Exempt Transactions are fair and reasonable and in the interests of the Company and the Shareholders as a whole. In addition, we consider that the Non-Exempt Transactions are on normal commercial terms and in the ordinary and usual course of business of the Group.

As stated in the Letter from the Board, the Company has submitted an application to the Stock Exchange for, and the Stock Exchange has granted, a waiver from the requirement to hold a general meeting to approve the Non-Exempt Transactions and to accept the written independent shareholders’ approval pursuant to Rule 14A.43 of the Listing Rules. Accordingly, the Company will not hold a shareholders’ meeting to seek for the approval of the Non-Exempt Transactions. If the Company were to convene a general meeting in respect of the Non-Exempt Transactions, we would recommend (i) the Independent Board Committee to advise the independent Shareholders and (ii) the independent Shareholders, to vote in favor of the ordinary resolution(s) to approve the Non-Exempt Transactions.

Yours faithfully, For and on behalf of

Ample Capital Limited H. W. Tang Andrew Cheng President Managing Director

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GENERAL INFORMATION

APPENDIX

1. RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this circular misleading.

2. DIRECTORS’ DISCLOSURE OF INTERESTS

As at the Latest Practicable Date, the interests and short positions of the Directors and chief executive(s) of the Company (if any) in the shares, underlying shares and debentures of the Company and its associated corporations (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:

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

			Number of
			underlying
			Shares		Percentage
			(Pre-IPO		of interest
		Number of	Share		in the
Name of Director	Capacity	Shares	Options)	Total	Company
Mr. Li Kwok Tung Roy	Interests in controlled	743,769,967	—	743,769,967	58.64%
	corporation			(Note 1)
Mr. Lai Ching Ping	Beneficial owner	4,186,000	—	4,186,000	0.33%
Mr. Cheung Chi	Beneficial owner	650,000	10,000,000	10,650,000	0.84%
			(Note 2)
Mr. Lee Kwok Leung	Beneficial owner	—	2,000,000	2,000,000	0.16%
			(Note 3)

Notes:

1. 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 holds the remaining 30% of the issued share capital of Quinta (representing an indirect interest in 223,130,990 Shares or approximately 17.59% shareholding in the Company). Both Mr. Li Kwok Tung Roy and Mr. Lai Ching Ping are the directors of Quinta.

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APPENDIX

GENERAL INFORMATION

1. The exercise price for the Pre-IPO Share Options is HK$1.596 and the exercise period is from 6 September 2006 to 9 May 2016.

2. The exercise price for the Pre-IPO Share Options is HK$2.28 and the exercise period is from 6 September 2006 to 9 May 2016.

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

				Percentage of
				interest in
	Associated		Number of	associated
Name of Director	corporation	Capacity	shares	corporation
Mr. Li Kwok Tung Roy	Quinta	Beneficial owner	7	70%
Mr. Lai Ching Ping	Quinta	Beneficial owner	3	30%

Save as disclosed above, as at the Latest Practicable Date, none of the Directors and chief executive(s) of the Company (if any) had any interests or short positions, whether beneficial or non-beneficial, in the shares, underlying shares and debentures of the Company and its associated corporations (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.

Save as disclosed herein, none of the Directors holds any directorship or employment in a company which has an interest or short position in the Shares and 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.

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GENERAL INFORMATION

APPENDIX

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 the Directors were aware, the following persons (other than the Director(s) or chief executive(s) of the Company (if any)) had interests or short positions in the Shares and 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 is, directly or indirectly, interested in 10 per cent. 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:

Long positions in the Shares

							Percentage of
						Number of	interest in the
Name				Capacity		Shares	Company
Quinta				Beneficial	owner	743,769,967	58.64%
Templeton	Asset	Management	Ltd.	Investment	manager	177,534,235	14.00%

Saved as disclosed above, as at the Latest Practicable Date, there was no other person (other than the Director(s) or the chief executive(s) 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, 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 has any interest, direct or indirect, in any asset which have since 31 December 2010, 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.

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GENERAL INFORMATION

APPENDIX

5. DIRECTORS’ INTERESTS IN COMPETING BUSINESS

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

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)).

7. EXPERT’S QUALIFICATION, CONSENT AND INTERESTS

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

Name Qualification

Ample Capital Limited A corporation licensed under the SFO to carry out business in types 4, 6 and 9 regulated activities (advising on securities, advising on corporate finance and asset management respectively) under the SFO

Ample 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.

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

• (a) had no direct or indirect interest in any asset which has since 31 December 2010, 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.

8. MATERIAL ADVERSE CHANGE

As at the Latest Practicable date, the Directors are not aware of any material adverse change in the financial or trading position of the Group since 31 December 2010, being the date to which the latest published audited accounts of the Company were made up.

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GENERAL INFORMATION

APPENDIX

9. 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 (except public holidays) from the date of this circular:

• (a) the APA;

• (b) the TSA;

• (c) the KAA; and

• (d) the Umbro Distributor Agreement.

10. GENERAL

• (a) The registered office of the Company is Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman KY1-1111, Cayman Islands.

• (b) The Company’s Hong Kong share registrar and transfer office is Tricor Investor Services Limited located at 26/F., Tesbury Centre, 28 Queen’s Road East, Wan Chai, Hong Kong.

• (c) The company secretary of the Company is Ms. Lam Choi Ha, a member of the Hong Kong Institute of Certified Public Accountant.

• (d) The English text of this circular will prevail over the Chinese text in the event of inconsistency.

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