Bloks Group Limited — AGM Information 2007

Mar 19, 2007

THIS DOCUMENT 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 licensed securities dealer, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Hong Kong Pharmaceutical Holdings Limited (the “Company”), you should at once hand this circular and the accompanying form of proxy to the purchaser or the transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or the transferee.

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this circular, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

HONG KONG PHARMACEUTICAL HOLDINGS LIMITED 香港葯業集團有限公司[*]

(Incorporated in Bermuda with limited liability)

(Stock Code: 182)

(1) PROPOSED INCREASE IN AUTHORIZED ORDINARY SHARE CAPITAL

(2) PROPOSED ADOPTION OF A NEW SHARE OPTION SCHEME

(3) GENERAL MANDATE TO ISSUE NEW SHARES

(4) APPOINTMENT OF NEW AUDITORS

(5) RE-ELECTION OF DIRECTORS

(6) PROPOSED AMENDMENT TO THE BYE-LAWS AND

(7) NOTICE OF ANNUAL GENERAL MEETING

A notice convening the annual general meeting (the “AGM”) of the Company to be held at Mont Blanc Room, Pacific Place Conference Centre, Level 5, One Pacific Place, 88 Queensway, Hong Kong on Monday, 16 April 2007 at 10:00 a.m. is set out on pages 24 to 28 of this circular.

A form of proxy for use by the Shareholders at the AGM is enclosed. Whether or not you intend to attend and vote at the AGM in person, you are requested to complete and return the accompanying form of proxy in accordance with the instructions printed thereon and return it to the branch share registrar and transfer office of the Company in Hong Kong, Tengis Limited at 26/F, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong, as soon as practicable but in any event not later than 48 hours before the time appointed for holding the AGM or any adjournment thereof. Such form of proxy for use at the AGM is also published on the website of the Stock Exchange (www.hkex.com.hk). Completion and return of the form of proxy will not preclude you from attending and voting at the AGM or any adjourned meeting thereof should you so wish.

19 March 2007

* for identification purposes only

CONTENTS

	Page
Responsibility Statement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	ii
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
Appendix I — Summary of the New Share Option Scheme. . . . . . . . . . . . . . . . . . .	14
Notice of AGM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	24

— i —

RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Group. 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 contained herein misleading.

— ii —

DEFINITIONS

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

• “Adoption Date” the date on which the New Share Option Scheme will be adopted

“AGM”	the annual general meeting of the Company to be held at Mont
	Blanc Room, Pacific Place Conference Centre, Level 5, One
	Pacific Place, 88 Queensway, Hong Kong on Monday, 16 April
	2007 at 10:00 a.m., or any adjournment thereof (or as the case
	may be), the notice of which is set out on pages 24 to 28 of
	this circular
“associate(s)”	has the same meaning ascribed to it under the Listing Rules
“Associated Company”	a company, not being a subsidiary, in which the Company
	directly or indirectly holds not less than 20 per cent. of its
	issued share capital or the voting power at general meetings or
	in which an equity interest is held by the Company directly or
	indirectly for long term purpose and a significant influence is
	exercised over its management
“Auditors”	means the auditors of the Company from time to time
“Board”	the board of Directors or a duly authorised committee thereof
“business day”	means any day on which the Stock Exchange is open for
	business of dealing in securities
“Bye-laws”	the bye-laws of the Company
“Company”	Hong Kong Pharmaceutical Holdings Limited, a company
	incorporated in Bermuda with limited liability, and the Shares
	of which are listed on the main board of the Stock Exchange
“connected person(s)”	has the same meaning ascribed to it under the Listing Rules
“Directors”	the directors of the Company
“Existing Share Option	the existing share option scheme adopted by the Company on
Scheme”	6 November 2001
“Group”	the Company and its subsidiaries

— 1 —

DEFINITIONS

“HK$”	Hong Kong dollars, the lawful currency of Hong Kong
“Hong Kong”	the Hong Kong Special Administrative Region of the People’s
	Republic of China
“Issue Mandate”	a general and unconditional mandate proposed to be granted to
	the Directors to allot, issue and deal with the new Shares not
	exceeding 20% of the aggregate nominal amount of the share
	capital of the Company in issue as at the date of passing of the
	ordinary resolution in relation thereof
“Latest Practicable Date”	15 March 2007, 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
“Moore Stephens”	Messrs. Moore Stephens
“New Share Option	the new share option scheme proposed to be adopted by the
Scheme”	Company at the AGM, the principal terms of which are set out
	in Appendix I to this circular
“PRC”	the People’s Republic of China
“Preference Shares”	preference shares of the Company of HK$0.01 each
“PwC”	Messrs. PricewaterhouseCoopers
“SFO”	the Securities and Futures Ordinance (Cap. 571 of the Laws of
	Hong Kong) as amended from time to time
“Share(s)”	the ordinary share(s) of HK$0.01 each in the share capital of
	the Company
“Shareholders”	the holder(s) of the Share(s)
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“%”	per cent.

— 2 —

LETTER FROM THE BOARD

HONG KONG PHARMACEUTICAL HOLDINGS LIMITED 香港葯業集團有限公司[*]

(Incorporated in Bermuda with limited liability)

(Stock Code: 182)

Executive Directors:

Mr. Ko Chun Shun, Johnson (Chairman) Mr. Chan Kam Kwan, Jason

Mr. Tsoi Tong Hoo, Tony

Mr. Wong Fan, Frank

Registered office:

Clarendon House 2 Church Street Hamilton HM 11 Bermuda

Mr. Yeung Heung Yeung

Head office and principal place

Non-executive Director:

Mr. Kelvin Edward Flynn

Independent non-executive Directors:

Mr. Ho Tak Man, Billy

Dr. Wong Yau Kar, David

of business in Hong Kong:

Units 4306-7 Far East Finance Center 16 Harcourt Road Admiralty Hong Kong

Mr. Yap Fat Suan

19 March 2007

To the Shareholders

Dear Sir or Madam,

(1) PROPOSED INCREASE IN AUTHORIZED ORDINARY SHARE CAPITAL

(2) PROPOSED ADOPTION OF A NEW SHARE OPTION SCHEME

(3) GENERAL MANDATE TO ISSUE NEW SHARES

(4) APPOINTMENT OF NEW AUDITORS

(5) RE-ELECTION OF DIRECTORS

(6) PROPOSED AMENDMENT TO THE BYE-LAWS AND

(7) NOTICE OF ANNUAL GENERAL MEETING

INTRODUCTION

At the AGM, among other actions, ordinary resolutions will be proposed to the Shareholders for approving the proposed increase in authorized ordinary share capital, the proposed adoption of the New Share Option Scheme, the grant of the Issue Mandate to the Directors, the proposed appointment of new auditors, the proposed re-election of Directors and the proposed amendment to the Bye-laws.

* for identification purposes only

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LETTER FROM THE BOARD

The purpose of this circular is to provide you with information regarding the said resolutions to be proposed at the AGM to enable you to make an informed decision on whether to vote for or against those resolutions.

PROPOSED INCREASE IN AUTHORIZED ORDINARY SHARE CAPITAL

The Board intends to put forward a proposal to the Shareholders to increase the authorized ordinary share capital of the Company from HK$35,000,000, dividing into 3,500,000,000 Shares, to HK$60,000,000, dividing into 6,000,000,000 Shares, by the addition of HK$25,000,000, dividing into 2,500,000,000 new Shares which will rank pari passu in all respects with all the existing Shares. The authorized preference share capital of the Company will remain unchanged at HK$25,000,000, dividing into 2,500,000,000 Preference Shares.

As at the Latest Practicable Date, 950,379,669 Shares and 2,160,000,000 Preference Shares were in issue. The aggregate number of the 950,379,669 Shares in issue and the 2,160,000,000 new Shares which may be issued by the Company (at the prevailing conversion price as at the Latest Practicable Date) upon full conversion of the Preference Shares represented approximately 88.9% of the existing authorized ordinary share capital of the Company. The Directors consider that the increase in the authorized ordinary share capital will help the Company carry out equity-related transactions (including any share placement) when the right opportunities arise and is in the interests of the Company and the Shareholders as a whole.

The proposed increase in the authorized ordinary share capital of the Company is subject to approval of the Shareholders at the AGM. Under the relevant Bermuda laws, the Company is required to file a memorandum of increase in the authorized ordinary share capital together with a certified resolution with the Bermuda Registrar of Companies within 30 days of the effective date of the increase.

The Company has no present plan or intention to issue any Shares, save for the issue of new Shares pursuant to the exercise of any share options which may be granted under the New Share Option Scheme and the conversion of the Preference Shares.

PROPOSED ADOPTION OF THE NEW SHARE OPTION SCHEME

After the restructuring of the Company completed earlier in 2006, the new management has reviewed the staff remuneration policies of the Group. Based on such review, the Directors propose to terminate the Existing Share Option Scheme and to adopt the New Share Option Scheme in accordance with the requirements under Chapter 17 of the Listing Rules. The New Share Option Scheme is conditional upon the approval of the Shareholders at the AGM. Your attention is drawn to Appendix I to this circular for a summary of the terms of the New Share Option Scheme.

— 4 —

LETTER FROM THE BOARD

Upon the New Share Option Scheme becoming effective, the Directors will be authorised to grant share options under the New Share Option Scheme and any other option schemes to subscribe for a total number of Shares up to 10% of the Shares in issue as at the date of the approval by the Shareholders at the AGM. As at the Latest Practicable Date, the Company did not have any other option schemes save for the Existing Share Option Scheme. The Company does not propose to adopt any other option schemes other than the New Share Option Scheme. Any options granted but lapsed in accordance with the terms of the New Share Option Scheme or any other option schemes which the Company may adopt will not be counted for the purpose of calculating the above mandate limit. Based on the number of Shares in issue as at the Latest Practicable Date and assuming there will be no changes to the number of Shares in issue between the Latest Practicable Date and the AGM date, the Directors will be granted a general authority to grant share options under the New Share Option Scheme to subscribe for 95,037,966 new Shares, subject to the relevant resolution being passed by the Shareholders at the AGM.

As at the Latest Practicable Date, there were no outstanding options granted under the Existing Share Option Scheme. The Directors do not intend to grant any further options under the Existing Share Option Scheme.

Pursuant to the Listing Rules, the Shares which may be issued upon exercise of all outstanding options granted and yet to be exercised under the New Share Option Scheme and any other share option schemes of the Company (inducing the Existing Share Option Scheme) at any time shall not exceed 30% of the Shares in issue from time to time. No options shall be granted under any scheme(s) of the Company or any of its subsidiaries if this will result in the 30% limit being exceeded.

Upon the New Share Option Scheme becoming effective, the Existing Share Option Scheme will cease to be effective, and all outstanding options were lapsed under the Existing Share Option Scheme there are no any outstanding options under the Existing Share Option Scheme.

Conditions

Adoption of the New Share Option Scheme is subject to (a) approval of the Shareholders at the AGM; and (b) the Stock Exchange granting the approval for the listing of, and permission to deal in, the Shares to be issued pursuant to the exercise of any options granted under the above-mentioned 10% general mandate.

Application for listing

Application has been made to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the Shares which may fall to be issued upon the exercise of any options that may be granted under the general mandate to be granted to the Directors to grant Share Options under the New Share Option Scheme to Subscribe for up to 10% of the Shares in issue as at the date of the AGM.

— 5 —

LETTER FROM THE BOARD

Value of option

The Directors consider it inappropriate to value any options which may be granted under the New Share Option Scheme, as a number of variables which are crucial for the valuation (such as the possibility of lapses or cancellations of options granted, cessation of the grantee as a participant not foreseeable nor controllable by the Directors at this stage) cannot be determined evidently at this stage. Such variables also include the exercise price of the options and the conditions, if any, that an option is subject to. Accordingly, any valuation of any options which may be granted under the New Share Option Scheme based on a large number of speculative assumptions would not be meaningful and may be misleading to the Shareholders.

PROPOSED GENERAL MANDATE TO ISSUE NEW SHARES

At the AGM, an ordinary resolution will be also proposed that the Directors be given the Issue Mandate in order to give the Directors flexibility and discretion to issue the new Shares. Subject to the passing of the proposed ordinary resolution approving the Issue Mandate and on the basis that no further Shares will be issued or allotted by the Company prior to the AGM, the exercise of the Issue Mandate in full would result in up to a maximum of 190,075,933 Shares, representing 20% of the total number of the Shares in issue, being issued. The Issue Mandate will become effective after it has been approved by the Shareholders and will continue to be effective until the earlier of (i) the conclusion of the next annual general meeting of the Company after the AGM or (ii) the date by which the next annual general meeting of the Company is required to be held by law or (iii) the date upon which the Issue Mandate is revoked or varied by an ordinary resolution of the Shareholders at a general meeting of the Company.

APPOINTMENT OF NEW AUDITORS

On 23 February 2007, Moore Stephens tendered its resignation to the Company with effect from the date of its resignation letter and will not seek re-appointment as Auditors of the Company at the AGM. In this regard, the Board is not aware of any facts or circumstances that ought to be brought to the notice of the Shareholders of the Company. Moore Stephens have issued a letter to the audit committee of the Company, confirming that there are no circumstances connected with their resignation that they consider ought to be brought to the attention of the Shareholders.

The Board proposes to appoint, PwC as auditors of the Company to fill the causal vacancy following the resignation of Moore Stephens. The appointment of PwC will be subject to approval of the Shareholders at the AGM in accordance with the Bye-laws.

As part of a general review of its obligations under the new corporate governance code, the Board had invited proposals from other audit firms for the purpose of reviewing professional appointments generally. Having taken into account the various proposals, the Board decided to appoint PwC as the Auditors of the Company at the AGM as PwC’s proposal meets most of the needs of the Company and fits in well with the Company’s corporate governance approach.

— 6 —

LETTER FROM THE BOARD

Save for the above, to the best of the Directors’ knowledge, there is no other information which should be brought to the attention of the Shareholders in this regard.

INFORMATION ON RETIRING DIRECTORS STANDING FOR RE-ELECTION

The following are the information as required to be disclosed under the Listing Rules on retiring Directors standing for re-election at the AGM:

Executive Directors

Mr. Ko Chun Shun, Johnson, aged 55, is the Chairman and controlling shareholder of the Company. He is also the executive director and controlling shareholder of Asian Union New Media (Group) Limited, the chairman and a substantial shareholder of DVN (Holdings) Limited and the co-chairman and a substantial shareholder of Varitronix International Limited, the securities of these companies are listed on the Main Board of the Stock Exchange. Mr. Ko has more than 30 years of experience in international trade and investment, in particular, in manufacturing and distribution of electronic products and in the media and technology industries.

As at the Latest Practicable Date, Mr. Ko was deemed to have an interest in 610,000,000 Shares and 2,160,000,000 Preference Shares (convertible into 2,160,000,000 Shares based on the prevailing conversion price) under the meaning of Part XV of the SFO through his interest in Gain Alpha Finance Limited.

Mr. Chan Kam Kwan, Jason, aged 33, is the company secretary of the Company. He graduated from the University of British Columbia with a Bachelor of Commerce degree. Mr. Chan is a member of the American Institute of Certified Public Accountant and has more than 10 years of experience in accounting and corporate finance. Mr. Chan is currently the company secretary of Asian Union New Media (Group) Limited and DVN (Holdings) Limited, and is also an independent non-executive director of Jackin International Holdings Limited, the shares of which are listed on the Main Board of the Stock Exchange.

Mr. Tsoi Tong Hoo, Tony, aged 42, graduated from the University of Western Ontario, Canada with a Bachelor of Business Administration degree. He has been a Chartered Financial Analyst since 1989, and has extensive experience in the areas of investment research, investing banking and corporate management. Mr. Tsoi is a member of Dual Filing Advisory Group of the SFC, and a member of the Listing Committees of the Growth Enterprise Market and Main Board of the Stock Exchange. Since March 2005, Mr. Tsoi has been appointed as an executive director of Varitronix International Limited and redesignated as a non-executive director of Asian Union New Media (Group) Limited, the securities of both companies being listed on the Main Board of the Stock Exchange.

— 7 —

LETTER FROM THE BOARD

Mr. Wong Fan, Frank, aged 42, has over 13 years of experience in the retail operations in both Hong Kong and the PRC, especially in the food and beverage market. Mr. Wong graduated from The Chinese University of Hong Kong, with a major in Mathematics, and worked for numerous well-known regional companies and was responsible for retail, wholesale and market promotion of products in the PRC from 1993 to 1996. Mr. Wong was also responsible for setting up representative offices of these companies in Dalian, Wuhan and Chengdu to handle sales and marketing activities. From 1996 to 1998, Mr. Wong helped set up Southsea Oils and Fats Industrial (Chiwan) Ltd. (“ SOFIL ”), a subsidiary of Kuok Oils and Grains Pte. Ltd. in the PRC. SOFIL’s main business operation is in cooking oil refinery with production and wholesale of its products in the PRC market. SOFIL is the PRC’s largest company in the production of cooking oil. With vast experience gained in the expansion and setting up of different ventures in the food and beverage industries, Mr. Wong joined Nam Pei Hong Sum Yung Drugs Company Limited (“Nam Pei Hong”), a wholly-owned subsidiary of the Company, in 1998. Mr. Wong has been working as the general manager of Nam Pei Hong for 7 years, and during his tenure of service, Nam Pei Hong has opened more than 12 new shops. Mr. Wong is also responsible for the expansion and development of Nam Pei Hong’s products in Mainland China including the promotion of the “Double Swallow” range of products, a popular range of ready-to-consume health food. Mr. Wong now receives a monthly salary of HK$40,000 from Nam Pei Hong.

Mr. Yeung Heung Yeung, aged 44, graduated from the Tsinghua University in the PRC with a Master’s degree in Applied Mathematics in 1987. Mr. Yeung has over 6 years of experience in the management of pharmaceutical and biotechnology companies in the PRC. He has been the chief executive officer of Tsinghua Yuanxing Bio-Pharm Co. Ltd. (“THYX”) since 2000. THYX is engaged in the investment, research and development, manufacture and commercialisation of biological therapeutics chemical therapeutics, natural product-based therapeutics as well as nanotechnology-based materials and medical products.

Mr. Ko is the sole beneficial owner and director of Gain Alpha Finance Limited. Save for the above, none of the above executive Directors has any relationships with any directors, senior management or substantial or controlling shareholders of the Company subject to the disclosure requirement under Rule 13.51(2)(e) of the Listing Rules.

Each of the above executive Directors has not entered into any service contract with the Company in respect of his directorship in the Company and there is no fixed or proposed length of service. Each of them is subject to retirement by rotation and re-election at the AGM of the Company in accordance with the Bye-laws and the Code on Corporate Governance Practices of the Listing Rules.

— 8 —

LETTER FROM THE BOARD

As at the Latest Practicable Date, the Company did not have any written or verbal agreement with any of its executive Directors in respect of their emoluments or director’s fees (if any). Save for disclosed above, the executive Directors are not entitled to monthly basic salary, but may be entitled to director’s fee and/or emoluments based on their performance and experience and prevailing market conditions as the Board may from time to time determine. Save for Mr. Ko’s, Mr. Chan’s and Mr. Tsoi’s directorships in other listed companies as disclosed above, each of the executive Directors did not hold any directorship in other listed companies in the last three years up to and including the Latest Practicable Date.

Save for Mr. Ko’s interest in the Company as disclosed above, each of the executive Directors did not have any interests or short positions in the share capital of the Company within the meaning of Part XV of the SFO as at the Latest Practicable Date. There are no other matters concerning each of the executive Directors that need to be brought to the attention of the Shareholders nor is there any information need to be disclosed pursuant to the requirements of Rule 13.51(2)(h) to 13.51(2)(v) of the Listing Rules.

Non-executive Director

Mr. Kelvin Edward Flynn, aged 36, is an executive director in the Asian Special Situations Group in Hong Kong of Goldman Sachs (Asia) L.L.C and was a managing director of Alvarez & Marsal Asia Limited. He has over 15 years of corporate recovery experience, including appointments as adviser to troubled companies in workout situations and to major groups of syndicated lenders and bondholders in complex debt restructuring assignments. Mr. Flynn has handled various appointments as liquidator, receiver and administrator and complex workouts in Hong Kong, Malaysia and Australia. He has also undertaken turnaround, workout, restructuring and due diligence assignments in Hong Kong, Japan, Korea, the PRC, Taiwan, Singapore and the Philippines.

Mr. Flynn’s primary industry experience includes telecommunications, retail and manufacturing. He also has experience in power generation and distribution, infrastructure, shipbuilding, hospitality, property, construction, mining, timber, plantations and commercial vehicle distribution.

Mr. Flynn has been involved in the restructuring of a number of listed companies in Hong Kong, Malaysia, the Philippines and Australia and was one of the provisional liquidators of the Company before 6 December 2006.

Mr. Flynn has entered into a letter of appointment with the Company for a term of 6 months commencing from the 6 December 2006 and he will be subject to retirement at the AGM of the Company in accordance with the Bye-laws and the Listing Rules. Mr. Flynn is entitled to a remuneration of HK$30,000 per month which was determined by the Board with reference to his duties and responsibilities.

— 9 —

LETTER FROM THE BOARD

Mr. Flynn does not have any relationships with any directors, senior management or substantial or controlling shareholders of the Company subject to be the disclosure requirement under Rule 13.51(2)(e) of the Listing Rules.

Mr. Flynn is also a director of Forefront International Holdings Limited, the shares of which are listed on the Stock Exchange.

Mr. Flynn did not have any interests or short positions in the share capital of the Company within the meaning of Part XV of the SFO as at the Latest Practicable Date. There is no other matter relating to Mr. Flynn that need to be brought to the attention of the Shareholders, nor is there any information needed to be disclosed pursuant to the requirements of Rule 13.51(2)(h) to 13.51(2)(v) of the Listing Rules.

Independent non-executive Directors

Mr. Ho Tak Man, Billy, aged 58, holds a Bachelor of Medicine and Bachelor of Surgery degree from the University of Hong Kong and is a general practitioner in Hong Kong. Save for his directorship in the Company, Mr. Ho has not held any positions in listed public companies in the past three years.

Dr. Wong Yau Kar, David, aged 49, holds a doctor’s degree in economics from University of Chicago. Dr. Wong has extensive experience in direct investments and corporate finance. Currently, Dr. Wong is the managing director of United Overseas Investments Limited and an independent non-executive director of Asian Union New Media (Group) Limited, a company listed on the Stock Exchange. Dr. Wong has also been actively participated in public services and to name a few, he has been a council member of the Hong Kong Institute of Directors since 1999 and a vice-president of the Chinese Manufacturers’ Association of Hong Kong.

Mr. Yap Fat Suan, aged 61, holds a Master of Business Administration degree from the University of Strathclyde, Glasgow. Mr. Yap is a Chartered Accountant in England and Wales and is a Fellow Member of the Institute of Chartered Accountants in England and Wales and an Associate Member of Hong Kong Institute of Certified Public Accountants. Mr. Yap has over 16 years of experience in finance and accounting. Mr. Yap is currently the managing director of Johnson Matthey Hong Kong Limited and prior to that appointment he was the general manager of Sun Hung Kai China Development Limited. Since September 2004, Mr. Yap is an independent non-executive director of DVN (Holdings) Limited, a company listed on the Stock Exchange.

None of the above independent non-executive Directors has any relationships with any directors, senior management or substantial or controlling shareholders of the Company subject to the disclosure requirement under Rule 13.51(2)(e) of the Listing Rules.

— 10 —

LETTER FROM THE BOARD

Each of the independent non-executive Directors has entered into a letter of appointment with the Company for a term of two years commencing from 6 December 2006 and each of them will be subject to retirement by rotation and re-election at the AGM of the Company in accordance with the Bye-laws and the Listing Rules. Each independent non-executive Director is entitled to a remuneration of HK$12,000 per month which was determined by the Board with reference to his duties and responsibilities and in line with remuneration payable to the other non-executive Director.

None of the independent non-executive Directors had any interests or short positions in the share capital of the Company within the meaning of Part XV of the SFO as at the Latest Practicable Date. There are no other matters concerning each of the independent non-executive Directors that need to be brought to the attention of the Shareholders, nor is there any information that need to be disclosed pursuant to the requirements of Rule 13.51(2)(h) to 13.51(2)(v) of the Listing Rules.

PROPOSED AMENDMENT TO THE BYE-LAWS

Under the existing Bye-law 102(B), all Directors appointed in general meeting of the Company or by the Board from time to time shall hold office only until the next general meeting of the Company after their appointments. The Company does not intend to require Directors appointed in general meeting by ordinary resolution of the Shareholders to retire and subject to reelection in the next general meeting of the Company. The above arrangement is a result of a typographical error in the existing Bye-law 102(B). To rectify the above situation, the Board proposes to amend Bye-law 102(B) so that Directors appointed in general meeting will not be required to retire in the next general meeting of the Company after their appointments. Directors appointed by the Board without Shareholders’ approval will continue to be required to retire, but be eligible for re-election at the next following annual general meeting of the Company after their appointments.

AGM

A notice convening the AGM to be held at Mont Blanc Room, Pacific Place Conference Centre, Level 5, One Pacific Place, 88 Queensway, Hong Kong on Monday, 16 April 2007 at 10:00 a.m. is set out in this circular.

At the AGM, in addition to the ordinary business to be transacted, resolutions will be proposed to the Shareholders to consider and, if thought fit, passing the relevant resolutions is set out on pages 24 to 28 of this circular.

— 11 —

LETTER FROM THE BOARD

ACTIONS TO BE TAKEN

A form of proxy for use by the Shareholders at the AGM is enclosed. Whether or not you intend to attend and vote at the AGM in person, you are requested to complete and return the accompanying form of proxy in accordance with the instructions printed thereon and return it to the branch share registrar and transfer office of the Company in Hong Kong, Tengis Limited at 26/F, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong as soon as practicable but in any event not less than 48 hours before the time appointed for holding the AGM or any adjournment thereof. Such form of proxy for use at the AGM is also published on the website of the Stock Exchange (www.hkex.com.hk). Completion and return of the form of proxy will not preclude you from attending and voting at the AGM or any adjourned meeting thereof should you so wish.

PROCEDURE FOR DEMANDING A POLL

A resolution put to the vote of a meeting of the Company shall be decided on a show of hands unless (before or on the declaration of the result of the show of hands or on the withdrawal of any other demand for a poll) a poll is demanded;

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

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

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

• (d) any Shareholder or the Shareholders present in person or in the case of the Shareholder being a corporation by its duly authorised corporate representative or by proxy and holding the Shares in the Company conferring a right to vote at the meeting being the 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 the Shares conferring that right.

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

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LETTER FROM THE BOARD

RECOMMENDATION

The Directors consider that (1) the proposed increase in authorized ordinary share capital; (2) the proposed adoption of the New Share Option Scheme; (3) the proposed grant of the Issue Mandate; (4) the appointment of PwC as the Company’s auditors; (5) the re-election of all Directors; and (6) the proposed amendment to the Bye-laws are in the interests of the Company and the Shareholders as a whole and accordingly recommend all the Shareholders to vote in favour of the relevant resolutions to be proposed at the AGM.

DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection at the head office and principal place of business of the Company in Hong Kong during normal business hours from the date of this circular up to and including the date of the AGM:

• (i) the Bye-laws; and

• (ii) the New Share Option Scheme.

Yours faithfully, For and on behalf of

Hong Kong Pharmaceutical Holdings Limited Ko Chun Shun, Johnson

Chairman

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APPENDIX I SUMMARY OF THE NEW SHARE OPTION SCHEME

NEW SHARE OPTION SCHEME

The following is a summary of the principal terms of the New Share Option Scheme which is proposed to be approved and adopted by the Company at the AGM:

(a) Who may join

The Company including (the Board may at its discretion grant options to (i) any parttime or full time employee or officer of any member of the Group or of any Associated Company (collectively, the “Employee”); (ii) the chief executive or director (executive or non-executive or independent non-executive) of any member of the Group or of any Associated Company; (iii) any supplier, agent, customer, distributor, business associate or partner of any member of the Group or of any Associated Company; (iv) any professional or other adviser of, or consultant or contractor to, any member of the Group or any Associated Company; (v) any shareholder of any member of the Group or of any Associated Company who, in the opinion of the Board, has made or will make contributions which are or may be beneficial to the Group as a whole (collectively, “Qualified Persons”).

(b) The purpose of the New Share Option Scheme

The New Share Option Scheme seeks to motivate the Qualified Persons to contribute to and promote the interests of the Company and to develop and maintain business relationships with the Qualified Persons for the benefit of the Group.

(c) Subscription Price

The subscription price (“Subscription Price”) in relation to each option under the New Share Option Scheme shall be a price notified by the Board to the respective Qualified Person. Such price shall not be less than the higher of (i) the closing price of the Shares as stated in the Stock Exchange’s daily quotation sheets on the date (which must be a business day) on which the option is offered to the relevant Qualified Person (“Offer Date”); (ii) the average of the closing prices of the Shares (or the equivalent Ordinary Shares) as stated in the Stock Exchange’s daily quotation sheets for the 5 business days immediately preceding the Offer Date; or (iii) the nominal value of the Shares.

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SUMMARY OF THE NEW SHARE OPTION SCHEME

APPENDIX I

(d) Grant of Option

An offer of the grant of an option shall be made to a Qualified Person by letter (“Offer Letter”) in such form as the Board may from time to time determine specifying the terms and subject to the conditions on which the option is to be granted.

An option shall be deemed to have been granted and accepted and to have taken effect when the duplicate Offer Letter comprising acceptance of the option duly signed by the option-holder together with a remittance in favour of the Company of HK$1.00 by way of consideration for the grant thereof shall have been received by the Company on or before the last day for acceptance as set out in the Offer Letter.

(e) Maximum number of Shares

(i) General Mandate

Subject to approval of the Shareholders, the Board shall be given a general authority to grant share options under this New Share Option Scheme and any other share option schemes of the Company to subscribe for a maximum number of equal to 10 per cent. (“General Mandate”) of the issued ordinary share capital of the Company as at the date the Shareholders’ approval is obtained. For the purpose of calculating the General Mandate, options which have been lapsed in accordance with the terms of the New Share Option Scheme or any other share option schemes shall not be counted and the purposes of the above General Mandate.

The Company may seek approval of its Shareholders in general meeting for refreshing the General Mandate provided that the total number of Shares in respect of which options may be granted under the New Share Option Scheme and any other share option schemes of the Company under the General Mandate as being refreshed must not in aggregate exceed 10 per cent. of the total number of Shares in issue as at the date when such refreshment of the General Mandate is approved by the Shareholders.

For the purpose of calculating the 10% limit of refreshing the General Mandate, options previously granted under the New Share Option Scheme and any other share option schemes of the Company, whether exercised, outstanding, cancelled, lapsed in accordance with its applicable rules or already exercised, before the refreshment of the General Mandate is approved by the Shareholders will not be counted.

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SUMMARY OF THE NEW SHARE OPTION SCHEME

APPENDIX I

(ii) Grant of options to specifically identified Qualified Persons

The Company may seek separate approval of the Shareholders in general meeting for granting options beyond the General Mandate provided the options in excess of the General Mandate are granted only to Qualified Persons specifically identified before such approval is sought. A circular will be sent by the Company to its Shareholders in accordance with the Listing Rules in such circumstance.

(iii) Overriding limit

Notwithstanding any provisions to the contrary, the limit on the number of the Shares which may be issued upon exercise of all outstanding options granted and yet to be exercised under the New Share Option Scheme and any other share option schemes of the Company must not exceed such number of the Shares as shall represent 30 per cent. of the Shares in issue from time to time. No options may be granted under the New Share Option Scheme and any other share option schemes of the Company if such grant will result in the aforesaid limit being exceeded.

(iv) Maximum entitlement of each Qualified Person

Unless separately approved by the Shareholders in general meeting in the manner as prescribed in the Listing Rules, the total number of Shares issued and to be issued upon exercise of options granted to each Qualified Person (including both exercised, cancelled and outstanding options) under the New Share Option Scheme and any other share option schemes of the Company in any 12-month period must not exceed 1 per cent. of the Shares then in issue (subject to the requirements summarised in paragraph (u) below, where applicable).

(f) Timing for exercise options

The period during which an option may be exercised in accordance with the terms of the New Share Option Scheme (“Option Period”) shall be the period set out in the Offer Letter provided that such period shall commence on the date upon which such option is offered to the Qualified Person in accordance with the terms of the New Share Option Scheme and must expire no later than the tenth anniversary of the Offer Date. The Board may impose restrictions on exercise of each option during the Option Period such option may be exercised depending on the then circumstances with a view to achieving the objective of the New Share Option Scheme.

(g) Performance target

There are no performance targets to be met before a grantee is entitled to exercise an option which has been duly granted, unless such performance targets as determined by the Board on a case-by-case basis are specified in the particular offer.

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APPENDIX I SUMMARY OF THE NEW SHARE OPTION SCHEME

(h) Rights personal to option-holder

An option shall not be sold, transferred, charged, mortgaged, encumbered or created with any interest (legal or beneficial) in favour of any third party or assigned and shall be personal to the option-holder (save that the option-holder may nominate a nominee to hold the Shares to be issued pursuant to the exercise of options granted under the New Share Option Scheme on trust for the sole benefit of such option-holder provided that evidence of such trust arrangement between the option-holder and the nominee shall be provided to the satisfaction of the Company).

(i) Rights on ceasing employment

If the option-holder being an Employee ceases to be a Qualified Person for any reason other than his or her death or termination of his or her employment or appointment on one or more of the grounds specified in sub-paragraph (v) of paragraph (q) below or retirement in accordance with the terms of his or her contract of employment or appointment or by virtue of any statutory requirement, such option-holder may exercise the option up to his or her entitlement at the date of cessation (to the extent not already exercised) within the period of 1 month following the date of such cessation, which date shall be the last actual working day with the Company or its relevant subsidiary or its relevant Associated Company (as the case may be) whether salary is paid in lieu of notice or not.

(j) Rights on death

If the option-holder (being an individual) ceases to be a Qualified Person by reason of death (and, in the case of such option-holder is an Employee, none of the events which would be a ground for termination of his or her employment or appointment as specified in sub-paragraph (v) of paragraph (q) below has arisen), the legal personal representative(s) of the option-holder shall be entitled within a period of 12 months from the date of death (or such other period as the Board may determine) to exercise the option in full (to the extent not already exercised).

(k) Rights on retirement

If the option-holder being an Employee ceases to be a Qualified Person by reason of retirement in accordance with the terms of his or her contract of employment or appointment or by virtue of any statutory requirement and none of the events which would be a ground for termination of his or her employment as specified in subparagraph (v) of paragraph (q) below has arisen, the option-holder shall be entitled within a period of 12 months from the date of retirement (or such other period as the Board may determine) to exercise the option up to his or her entitlement (to the extent not already exercised).

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APPENDIX I SUMMARY OF THE NEW SHARE OPTION SCHEME

(l) Rights on termination of business relation

If the option-holder being a non-Employee in the absolute opinion of the Board ceases to be qualified as a Qualified Person by reason of termination of its business relation with the relevant member of the Group or the Associated Company (as the case may be) or otherwise, any outstanding options then held by such option-holder shall lapse with immediate effect from the date on which the Board notifies such option-holder in writing of the relevant termination.

(m) Rights on a compromise or arrangement

In the event of a compromise or scheme of arrangement between the Company and the Shareholders or its creditors being proposed in connection with a scheme for the reconstruction or amalgamation of the Company, the Company shall give notice thereof to the option-holder (or his or her legal representative(s)) on the same day as it gives notice of the meeting to its shareholders or creditors to consider such a compromise or arrangement and the options (to the extent not already exercised) shall become exercisable on such date and the option-holder may at any time thereafter until the earlier of (i) two calendar months after that date or (ii) the date on which such compromise or arrangement is sanctioned by court, exercise any of the option whether in full or in part, but the exercise of an option as aforesaid shall be conditional upon such compromise or arrangement being sanctioned by the court and becoming effective. Upon such compromise or arrangement becoming effective, all options shall lapse except insofar as previously exercised under the New Share Option Scheme. The Company may require the option-holder (or his or her personal representative(s)) to transfer or otherwise deal with the Shares issued as a result of the exercise of options in these circumstances so as to place the option-holder in the same position as nearly as would have been the case had such Shares been subject to such compromise or arrangement.

(n) Effect of capital alteration

In the event of any alteration in the capital structure of the Company whilst any option remains exercisable, whether by way of capitalisation issue, rights issue, share consolidation, share sub-division or reduction of the share capital of the Company (other than an issue of Shares as consideration in respect of a transaction to which the Company is a party), the Board shall make (and shall notify to the option-holder) such corresponding alterations (if any) in:

• (i) the number or nominal amount of the Shares subject to any option so far as such option remains unexercised; and/or

• (ii) the Subscription Price;

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APPENDIX I SUMMARY OF THE NEW SHARE OPTION SCHEME

as the auditors or an independent financial adviser shall certify in writing to the Board, provided that any alteration shall be made on the basis that the proportion of the issued share capital of the Company to which a option-holder is entitled after such alteration shall remain the same as that to which he was entitled before such alteration, but so that no such alteration shall be made the effect of which would be to enable any Share to be issued at less than its nominal value.

(o) Rights on voluntary winding up

In the event a notice is given by the Company to its shareholders to convene a shareholders’ meeting for the purpose of considering and, if thought fit, approving a resolution to wind up the Company voluntarily, the Company shall on the same date as or promptly after it despatches such notice to each Shareholder gives notice thereof to all option-holders and thereupon, the option-holders (or their personal representative) shall be entitled to exercise all or any of the option at any time no later than four business days prior to the proposed shareholders’ meeting of the Company by giving notice in writing to the Company, accompanied by a remittance for the full amount of the aggregate Subscription Price for the Shares in respect of which the notice is given, whereupon the Company shall as soon as practicable as the circumstances allow but in any event no later than the business day immediately before the proposed shareholders’ meeting, allot the relevant Shares to the option-holder credited as full paid.

(p) Rights on general offer

If a general offer is made to all the holders of Shares (or all such holders other than the offeror and/or any person controlled by the offeror and/or any person acting in concert with the offeror) and such offer subsequently becomes or is declared unconditional, the option-holder (or his or her personal representative(s)) shall be entitled to exercise the option then outstanding in full at any time within fourteen days after the date on which the offer becomes or is declared unconditional notwithstanding the Option Period of the relevant option may not have commenced.

(q) Lapse of options

An option shall lapse automatically (to the extent not already exercised) on the earliest of:

• (i) the expiry of the Option Period;

• (ii) the expiry of the periods referred to in paragraphs (i), (j), (k), (l) or (p);

• (iii) the date of the commencement of the winding-up of the Company in respect of the situation contemplated in paragraph (o);

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SUMMARY OF THE NEW SHARE OPTION SCHEME

APPENDIX I

• (iv) subject to the scheme of arrangement or compromise becoming effective, the expiry of the periods referred to in paragraph (m);

• (v) the date on which the option-holder being an Employee ceases to be a Qualified Person by reason of the termination of his or her employment or appointment on any one or more of the grounds that he or she has been guilty of misconduct, or has committed an act of bankruptcy or has become insolvent or has made any arrangement or composition with his or her creditors generally, or has been convicted of any criminal offence involving his or her integrity or honesty or on any other ground on which an employer would be entitled to terminate his or her employment at common law or pursuant to any applicable laws or under the option-holder’s service contract with the Company or its relevant subsidiary or its relevant Associated Company (as the case may be);

• (vi) the date on which the option-holder commits a breach of paragraph (h);

• (vii) if an option was granted subject to certain conditions, restrictions or limitations, the date on which the Board resolves that the option-holder has failed to satisfy or comply with such conditions, restrictions or limitations;

• (viii) in respect of the option-holder being a consultant or adviser (whether individual or corporation), the date on which the Board resolves that the consultant or adviser fails to comply with any provisions of the relevant contract, or breaches its fiduciary duty under the common law; or

• (ix) the occurrence of any event or expiry of any period as may have been specifically provided for in the Offer Letter, if any.

(r) Ranking of the Shares

The Shares to be allotted upon the exercise of an option will be subject to all provisions of the Memorandum of Association of the Company and Bye-laws for the time being in force and will rank pari passu in all respects with the fully paid Shares in issue on the date of allotment and accordingly will entitle the holders to participate in all dividends or other distributions paid or made on or after the date of allotment other than any dividends or other distributions previously declared or recommended or resolved to be paid or made if the record date therefor shall be before the date of allotment.

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APPENDIX I SUMMARY OF THE NEW SHARE OPTION SCHEME

(s) Life of the New Share Option Scheme

The New Share Option Scheme shall be valid and effective for a period of ten years commencing from the date on which the New Share Option Scheme is deemed to take effect in accordance with its terms, after which period no further options will be granted but the provisions of the New Share Option Scheme shall remain in full force and effect in all other respects.

(t) Alterations of the New Share Option Scheme

The New Share Option Scheme may be altered by the Board except that any material alteration to its terms and conditions or any change to the terms of options granted (except where such alterations take effect automatically under the existing terms of the New Share Option Scheme) shall first be approved by the Shareholders in general meeting and the provisions of the New Share Option Scheme which relate to the matters set out in Rule 17.03 of the Listing Rules cannot be altered to the advantage of the option-holders except with the prior sanction of a resolution of the Company in general meeting. Any amended terms of the New Share Option Scheme shall comply with Chapter 17 of the Listing Rules.

(u) Administration

The New Share Option Scheme shall be subject to the administration of the Board or a duly authorised committee thereof whose decision as to all matters relating to the New Share Option Scheme or its interpretation or effect (save as otherwise provided) shall be final and binding on all parties affected thereby.

Without prejudice to any of the provisions of the New Share Option Scheme, the Board may from time to time adopt such operational rules as it may deem fit for the purpose of giving effect to or implementing the New Share Option Scheme including without limitation rules which may restrict the exercise of the options granted or to be granted in any way or otherwise impose restrictions whatsoever on the part of the option-holder provided always that such operational rules shall not contravene the applicable provisions of the Listing Rules.

Any change to the authority of the Board or the administrators of the New Share Option Scheme in relation to any alteration of the terms of the New Share Option Scheme shall be approved by the Shareholders in general meeting.

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SUMMARY OF THE NEW SHARE OPTION SCHEME

APPENDIX I

(v) Options to Related Persons

• (i) Grant of any options to a director, chief executive or substantial shareholder of the Company or any of their respective associates (“Related Person”) under the New Share Option Scheme must be approved by the independent non-executive Directors (excluding independent non-executive Director who is the option-holder of such options).

• (ii) Grant of any options to a substantial Shareholder or an independent non-executive Director or any of their respective associates under the New Share Option Scheme shall comply with paragraph (iii) below if such proposed grant of options, when aggregated with all options (whether exercised, cancelled or outstanding) already granted to that Related Person under the New Share Option Scheme and any other share option schemes of the Company during the 12-month period up to and including the date of such grant of options, would (a) entitle him or her to receive more than 0.1 per cent. of the total issued Shares for the time being; and (b) represent an aggregate value in excess of HK$5,000,000 (or such other amount as shall be permissible under the Listing Rules from time to time) based on the closing price of the Shares on the Stock Exchange at the date of each grant.

• (iii) Grant of any options referred to in paragraph (ii) must, in addition to obtaining the approval of the independent non-executive Directors pursuant to paragraph (i), be approved by the Shareholders in general meeting where all connected persons of the Company must abstain from voting save and except any connected person may vote against the proposed grant in the general meeting provided that his intention so to do has been stated in a circular to be despatched to the Shareholders in accordance with the Listing Rules.

• (iv) Any vote taken at such general meeting to approve the grant of such options must be taken on a poll.

(w) Restrictions on grant of options

No grant of options shall be made after a price sensitive event has occurred or a price sensitive matter has been the subject of a decision, until such price sensitive information has been announced pursuant to the requirements of the Listing Rules. Without prejudice to the foregoing, no option shall be granted during any period specified in the Listing Rules as being a period during which no option may be granted.

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APPENDIX I SUMMARY OF THE NEW SHARE OPTION SCHEME

(x) Cancellation of options

Subject to the consent from the relevant option-holder, the Board may in its discretion cancel options previously granted to, and yet to be exercised by, such option-holder; provided that if such cancellation of options is made for the purpose of re-issuing new options to such option-holder, there must be sufficient available unissued options (excluding such cancelled options) for such re-issuance under the General Mandate.

(y) Termination

The Company by resolution in general meeting or the Board may at any time terminate the operation of the New Share Option Scheme and in such event no further options will be offered but the provisions of the New Share Option Scheme shall remain in force in all other respects.

Present status of the New Share Option Scheme

The New Share Option Scheme is conditional upon (i) the approval of the Shareholders at the AGM and (ii) granting by the Stock Exchange the approval for the listing of, and permission to deal in, the Shares to be issued pursuant to the exercise of any options granted under the New Share Option Scheme under the General Mandate.

As at the date of this circular, no options have been granted or agreed to be granted under the New Share Option Scheme.

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NOTICE OF AGM

HONG KONG PHARMACEUTICAL HOLDINGS LIMITED 香港葯業集團有限公司[*]

(Incorporated in Bermuda with limited liability)

(Stock Code: 182)

NOTICE IS HEREBY GIVEN that the Annual General Meeting of Hong Kong Pharmaceutical Holdings Limited will be held at Mont Blanc Room, Pacific Place Conference Centre, Level 5, One Pacific Place, 88 Queensway, Hong Kong on Monday, 16 April 2007 at 10:00 a.m. for the following purposes:

AS ORDINARY BUSINESS

1. To receive and consider the audited financial statements and reports of the Directors and auditors for the year ended 31 March 2006.

2. To re-elect the following retiring directors:

3. (a) Ko Chun Shun, Johnson

4. (b) Chan Kam Kwan, Jason

5. (c) Tsoi Tong Hoo, Tony

6. (d) Wong Fan, Frank

7. (e) Yeung Heung Yeung

8. (f) Kelvin Edward Flynn

9. (g) Ho Tak Man, Billy

10. (h) Wong Yau Kar, David

11. (i) Yap Fat Suan

12. To authorize the board of Directors to fix the remuneration of each director.

13. To appoint Messrs. PricewaterhouseCoopers as the Auditors of the Company to fill the causal vacancy following the resignation of Messrs. Moore Stephens, to hold office until the conclusion of next Annual General Meeting and authorise the Directors to fix their remuneration.

* for identification purposes only

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NOTICE OF AGM

AS SPECIAL BUSINESS

To consider as special business and, if thought fit, pass with or without modifications, the following resolutions as ordinary resolution or special resolution of the Company:

ORDINARY RESOLUTIONS

1. “ THAT the authorized ordinary share capital of the Company be increased from HK$35,000,000, dividing into 3,500,000,000 Shares of par value HK$0.01 each, to HK$60,000,000, dividing into 6,000,000,000 Shares of par value HK$0.01 each, by the addition of HK$25,000,000, dividing into 2,500,000,000 new Shares of par value HK$0.01 each.”

2. “ THAT :

3. (A) subject to paragraph (C) of this Resolution, the exercise by the Directors of the Company during the Relevant Period (as hereinafter defined) of all the powers of the Company to allot, issue and deal with additional shares in the capital of the Company and to make or grant offers, agreements options and rights of exchange or conversion which might require the exercise of such powers be and is hereby generally and unconditionally approved;

4. (B) the approval in paragraph (A) of this Resolution shall authorise the Directors of the Company during the Relevant Period to make or grant offers, agreements options and rights of exchange or conversion which might require the exercise of such powers after the end of the Relevant Period;

5. (C) the aggregate nominal amount of share capital allotted or agreed conditionally or unconditionally to be allotted (whether pursuant to an option or otherwise) by the Directors of the Company pursuant to the approval in paragraph (A) of this Resolution, otherwise than pursuant to (i) a Rights Issue (as hereinafter defined), (ii) any share option scheme or similar arrangement for the time being adopted for the grant or issue to officers and/or employees of the Company and/or any of its subsidiaries of shares or rights to acquire shares of the Company or (iii) any scrip dividend or similar arrangement providing for the allotment of shares in lieu of the whole or part of a dividend on shares of the Company in accordance with the Bye-laws of the Company, shall not exceed the aggregate of 20% of the aggregate nominal amount of the issued share capital of the Company as at the date of passing this resolution, and the said approval shall be limited accordingly; and

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NOTICE OF AGM

• (D) for the purposes of this Resolution:

“Relevant Period” means the period from the passing of this Resolution until whichever is the earlier of:

• (i) the conclusion of the next Annual General Meeting of the Company;

• (ii) the expiration of the period within which the next Annual General Meeting of the Company is required by law or by the Company's Bye-laws to be held; and

• (iii) the date on which the authority set out in this Resolution is revoked or varied by way of an ordinary resolution of the shareholders in general meeting of the Company.

“Rights Issue” means an offer of shares open for a period fixed by the Directors of the Company to holders of shares of the Company on the register on a fixed record date in proportion to their then holdings of such shares or class thereof (subject to such exclusion or other arrangements as the Directors of the Company may deem necessary or expedient in relation to fractional entitlements or having regard to any restrictions or obligations under the laws of any relevant jurisdiction, or the requirements of any recognised regulatory body or any stock exchange in, any territory outside Hong Kong).”

1. “ THAT subject to and conditional on the Listing Committee of The Stock Exchange of Hong Kong Limited (“Listing Committee”) granting approval for the listing of, and permission to deal in, the shares to be issued pursuant to the exercise of options which may be granted under the new share option scheme (“New Share Option Scheme”), a copy of which has been produced to this meeting marked “A” for the purpose of identification signed by the Chairman thereof, the terms of the New Share Option Scheme be and are hereby approved and adopted and that the board of directors of the Company (the “Directors”) be and is hereby authorized to grant options thereunder, to subscribe for the shares in the Company (“Shares”) and to allot, issue, distribute and deal with the Shares pursuant to the exercise of options granted under the New Share Option Scheme and to execute such documents and take all such steps and do all such acts and enter into all such transactions and arrangements as may be necessary or desirable to implement the New Share Options Scheme in accordance with the terms specified therein and subject to the terms of the New Share Option Scheme.”

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NOTICE OF AGM

SPECIAL RESOLUTION

1. “ THAT the existing bye-law 102(B) of the Company be replaced in entirety by the following paragraph:

2. (B) The Board shall have power from time to time and at any time to appoint any person as a Director either to fill a casual vacancy on or as an addition to the Board but the number of Directors so appointed shall not exceed the maximum number determined from time to time by the shareholders in general meeting. Any Director so appointed pursuant to this Bye-Law 102(B) shall hold office only until the next following annual general meeting of the Company and shall then be eligible for re-election at the meeting but shall not be taken into account in determining the Directors or the number of Directors who are to retire by rotation at such meeting.”

By order of the Board Chan Kam Kwan, Jason Company Secretary

Hong Kong, 19 March 2007

As at the date of this notice, the Board comprises the following directors:

Executive Directors:

Mr. Ko Chun Shun, Johnson (Chairman)

• Mr. Chan Kam Kwan, Jason

Mr. Tsoi Tong Hoo, Tony

• Mr. Wong Fan, Frank

• Mr. Yeung Heung Yeung

Non-executive Director:

Mr. Kelvin Edward Flynn

Independent non-executive Directors:

Mr. Ho Tak Man, Billy

Dr. Wong Yau Kar, David

Mr. Yap Fat Suan

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NOTICE OF AGM

Notes:

1. Any shareholder entitled to attend and vote at the meeting is entitled to appoint one or more proxies to attend and vote instead of that member. A proxy need not be a shareholder of the Company.

2. In order to be valid, the form of proxy in the prescribed form together with a power of attorney or other authority, if any, under which it is signed, or a notarially certified copy of that power of attorney or authority, must be deposited with the branch share registrars and transfer office of the Company in Hong Kong, Tengis Limited at 26/F, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong not less than 48 hours before the time appointed for holding of the meeting or any adjournment thereof. Such prescribed form of proxy for use at the annual general meeting is also published on the website of The Stock Exchange of Hong Kong Limited at www.hkex.com.hk.

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