Bloks Group Limited — Capital/Financing Update 2007

May 25, 2007

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this announcement, 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 announcement.

This announcement is for information purpose only and does not constitute an invitation or offer to acquire, purchase or subscribe for securities nor is it calculated to invite any such offer or invitation.

HONG KONG PHARMACEUTICAL HOLDINGS LIMITED

(incorporated in Bermuda with limited liability)

(Stock code: 182)

PLACING OF EXISTING SHARES AND SUBSCRIPTION OF NEW SHARES (CONNECTED TRANSACTION)

RESUMPTION OF TRADING

Placing Agent

UOB Kay Hian (Hong Kong) Limited

On 22 May 2007, the Placing Agreement was entered into, pursuant to which, the Placing Agent has agreed to place, on a best effort basis, up to 800,000,000 existing Shares held by Gain Alpha at the Placing Price of HK$0.5 per Share. Under the Subscription Agreement, Gain Alpha will, thereafter subscribe for the same number of Placing Shares (up to 800,000,000 new Shares) at the Subscription Price of HK$0.5 per Share (equivalent to the Placing Price). Immediately prior to the Placing, Gain Alpha will convert 1,350,000,000 Preference Shares held by it into 1,350,000,000 Shares. 800,000,000 Placing Shares represent approximately 34.78% of the issued Shares after completion of the Placing and the Conversion and approximately 25.80% after completion of the Subscription.

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Gain Alpha is the substantial Shareholder and thus a connected person of the Company. The Subscription Shares will not be issued under the General Mandate. The issue of the Subscription Shares constitutes a non-exempt connected transaction for the Company and will be subject to approval of the Independent Shareholders as required under Listing Rules. The Subscription is conditional upon the completion of the Placing Agreement, approval of the Independent Shareholders and the granting of the approval by the Stock Exchange for the listing of and permission to deal in the Subscription Shares. Gain Alpha and its associates will abstain from voting at the SGM to be held to approve the Subscription.

Application will be made to the Listing Committee of the Stock Exchange for the listing of and permission to deal in the Subscription Shares.

The net proceeds from the Subscription are estimated to be approximately HK$387 million. It is the intention of the Company to use such net proceeds for the development of the wind power business of the Group, including acquisition and development of wind farms and wind power related businesses, and/or establishment of new wind power related businesses.

An independent board committee will be established by the Company to advise the Independent Shareholders in respect of the Subscription and an independent financial adviser will be appointed by Company to advise the independent board committee and the Independent Shareholders in this regard. A circular setting out, among other things, details of the Subscription and the advice and recommendation from the independent board committee and the independent financial adviser will be despatched to the Shareholders as soon as practicable.

Trading in the Shares was suspended at the request of the Company with effect from 9:30 a.m. on 23 May 2007 pending the release of this announcement. An application has been made by the Company to the Stock Exchange for the trading in the Shares to resume from 9:30 a.m. on 25 May 2007 following the publication of this announcement.

THE PLACING AGREEMENT

Date : 22 May 2007

Parties : (1) Gain Alpha; and (2) the Placing Agent

To the best of the directors’ knowledge, information and belief having made all reasonable enquiries, (i) the Placing Agent is a securities company in Hong Kong and (ii) the Placing Agent and its ultimate beneficial owners are third parties independent of the Company and its connected persons.

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Gain Alpha is a substantial Shareholder holding approximately 64.18% of the issued share capital of the Company as at the date of this announcement. Gain Alpha also holds 2,160,000,000 Preference Shares as at the date of this announcement and, in connection with the Placing, is going to serve a notice to the Company in respect of the Conversion (conversion of 1,350,000,000 Preference Shares into 1,350,000,000 Shares).

Major terms of the Placing are summarized as follows:

• Placees : Not less than six investors who are, to the best of the directors’ knowledge, information and belief having made all reasonable enquiries, and their respective ultimate beneficial owners are third parties independent of the Company and its connected persons and are not acting in concert with any connected persons of the Group.

• Number of Placing : Up to 800,000,000 Shares (on a best-effort basis) Shares representing (i) approximately 84.18% of the existing issued share capital of the Company; (ii) approximately 34.78% of the issued share capital of the Company after completion of the Placing and the Conversion; and (iii) approximately 25.80% of the issued share capital of the Company after completion of the Subscription.

• Placing Price : HK$0.5 per Share, which was determined after arm’s length negotiations between the Company and the Placing Agent and represents (i) a discount of approximately 41.9% to the closing price per Share of HK$0.86 on 22 May 2007, being the day immediately prior to the date of the Placing Agreement; and (ii) a discount of approximately 19.2% to the average closing price per Share of approximately HK$0.619 for the last five trading days up to and including 22 May 2007 (trading in the Shares was suspended from 30 April 2007 to 21 May 2007). The Placing Price was arrived at after arm’s length negotiations among the Company, Gain Alpha and the Placing Agent by reference to the trading prices of the Shares since trading in the Shares resumed in December 2006 (the closing prices ranging from HK$0.205 per Share to HK$0.86 per Share).

• Placing commission : 3% of the amount equal to the Placing Price multiplied by the number of Placing Shares.

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It is expected that completion of the Conversion and the Placing Agreement will take place on 25 May 2007.

THE SUBSCRIPTION AGREEMENT

Date : 22 May 2007 Issuer : the Company Subscriber : Gain Alpha (an investment holding company) Number of Subscription : Up to 800,000,000 Shares (equal to the number of Shares Placing Shares placed) representing (i) approximately 84.18% of the existing issued share capital of the Company; and (ii) approximately 25.80% of the issued share capital of the Company after completion of the Subscription. Subscription Price : HK$0.5 per new Share (equal to the Placing Price)

The 800,000,000 Subscription Shares are proposed to be allotted and issued by the Company subject to a specific approval of the Independent Shareholders.

Completion of the Subscription is conditional upon fulfillment of (i) completion of the Placing Agreement; (ii) approval of the Independent Shareholders for the Subscription; and (iii) granting of the approval by the Stock Exchange for the listing of, and permission to deal in, the Subscription Shares.

Completion of the Subscription shall take place on the second business day after the fulfillment of the conditions set out above, provided that, such date shall not be later than 31 August 2007 (or such later date as Gain Alpha and the Company may agree).

COST AND EXPENSES

The Company will be responsible for all cost and expenses incurred in relation to the execution of the Placing Agreement and the Subscription Agreement if both the Placing Agreement and the Subscription Agreement complete. In case the Subscription Agreement does not complete, Gain Alpha will be responsible for all cost and expenses incurred in relation to the execution of the Placing Agreement.

RANKING

All the Subscription Shares, when fully paid for and issued, will rank pari passu in all respects among themselves and with the other Shares in issue on the date of allotment of the Subscription Shares pursuant to the Subscription Agreement or the Subscription Agreement.

LISTING APPLICATION

Application will be made to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the Subscription Shares.

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EFFECT OF THE PLACING, CONVERSION AND SUBSCRIPTION

The following table sets out the shareholding structure of the Company as at the date of this announcement and the shareholding structures of the Company after completion of the Placing, the Conversion and the Subscription:

Gain Alpha and its associates Placees Public Shareholders Total	Existing shareholding 610,000,000 — 340,379,669 950,379,669	Immediately after completion of the Placing and the Conversion but before completion of the Subscription 64.18% 1,160,000,000 0.00% 800,000,000 35.82% 340,379,669 100.00% 2,300,379,669	Immediately after completion of the Placing, the Conversion and the Subscription 50.42% 1,960,000,000 34.78% 800,000,000 14.80% 340,379,669 100.00% 3,100,379,669	Immediately after completion of the Placing, the Conversion and the Subscription 50.42% 1,960,000,000 34.78% 800,000,000 14.80% 340,379,669 100.00% 3,100,379,669	63.22% 25.80% 10.98%
				3,100,379,669	100.00%

Note: No placees are or will become (as a result of the Placing) connected persons of the Company and thus all placees are Public Shareholders.

The Company refers to the announcement of the Company dated 21 May 2007 in respect of the Acquisition. The Acquisition will involve, among other things, issue of convertible notes with an aggregate principal amount of HK$100,000,000 convertible into 1,000,000,000 new Shares (based on the initial conversion price, subject to adjustment) upon completion of the Acquisition. Completion of the Acquisition is conditional upon, among other things, obtaining approval of the Shareholders. The Subscription is also conditional upon, among other things, approval of the Independent Shareholders. The Company intends to convene and hold the SGM to seek approval from the Independent Shareholders as soon as practicable. Resolution for approving the Acquisition may be proposed at the SGM or at another general meeting of the Company to be convened and held after the date of the SGM depending on the progress on the preparation of the information to be included in the circular of the Company regarding the Acquisition which constitutes a very substantial acquisition for the Company. Under the Subscription Agreement, completion of the Subscription shall take place on the second business day after all the relevant conditions precedent have been satisfied. Completion of the Acquisition shall, pursuant to its relevant sale and purchase agreement, take place on the third business day after all the relevant conditions precedent are satisfied or waived. Based on the above timing, the Company expects that the Subscription will take place before completion of the Acquisition and the issue of the convertible notes. Accordingly, the Company does not expect that the shareholding interest of Gain Alpha in the Company will fall to 50% or below after completion of the Placing and the Conversion but before completion of the Subscription.

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REASONS FOR THE PLACING AND THE SUBSCRIPTION AND USE OF PROCEEDS

The Group is principally engaged in the management and operation of a chain of traditional Chinese medicine and health food retail outlets in Hong Kong under the trading name of Nam Pei Hong and a medical clinic in Wan Chai, Hong Kong under the name of NPH Chinese Medical Centre. As set out in the announcement of the Company dated 21 May 2007, the Company entered into a sale and purchase agreement to acquire for the entire issue share capital of Wind Power which, though its subsidiaries and associates, is principally engaged in the operation of, management of and investment in wind power electricity generating facilities in the PRC. Certain subsidiaries and associate of Wind Power also plan to engage in the development, manufacture and sale of wind power electricity generating facilities.

In view of the market conditions, the Directors consider that the placing of up to 800,000,000 Placing Shares, through the placing and the top-up subscription arrangements under the Placing Agreement and the Subscription Agreement, represents a good opportunity to raise capital to strengthen the working capital position of the Group and to broaden the shareholders base and capital base of the Company. The Directors (excluding the independent non-executive directors who with opine on the transaction after considering the advice of the independent financial adviser to be appointed) are of the view that the terms of the Placing and Subscription are fair and reasonable and in the interests of the Shareholders.

The net proceeds from the Subscription are estimated to be HK$387 million (representing a net placing price of approximately HK$0.484 per Placing Share). It is the intention of the Company to use such net proceeds for the development of the wind power business of the Group, including acquisition and development of wind farms and wind power related businesses, and/or establishment of new wind power related businesses.

FUND RAISING ACTIVITIES OF THE COMPANY FOR THE 12 MONTHS BEFORE THE DATE OF THIS ANNOUNCEMENT

Pursuant to a subscription agreement dated 7 September 2005, the Company issued 810,000,000 Shares and 2,160,000,000 Preference Shares to Gain Alpha in December 2006 at a total consideration of HK$21,870,000 and HK$58,320,000 respectively. Details of such issue have been set out in the circular of the Company dated 29 July 2006. Part of the net proceeds amounting to HK$45.5 million from the above issue has been used by the Group for the Group’s restructuring with the remaining net proceeds of HK$34.69 million being used by the Group as general working capital purpose. Save for the above, the Company has not conducted any equity fund raising activities in the past twelve months.

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SPECIAL GENERAL MEETING

As set out above in this announcement, Gain Alpha is a connected person of the Company. Issue of the Subscription Shares will not be made under the General Mandate. Such issue is subject to the approval of the Independent Shareholders as required under Rule 13.36(1)(a)(i) of the Listing Rules. As completion of the Subscription is not expected to take place within 14 days from the date of the Placing Agreement, the Subscription constitutes a non-exempt connected transaction for the Company and thus is subject to all the relevant reporting, announcement and independent shareholders’ approval requirements under Chapter 14A of the Listing Rules. Accordingly, completion of the Subscription has been made conditional on, among other things, the approval of the Independent Shareholders.

The Company will convene and hold the SGM with a view to seeking approval from the Independent Shareholders in respect of the Subscription. Gain Alpha and its associates will abstain from voting in respect of the relevant resolution to be proposed at the SGM with regard to the Subscription.

An independent board committee will be established by the Company to advise the Independent Shareholders in respect of the Subscription and an independent financial adviser will be appointed by Company to advise the independent board committee and the Independent Shareholders in this regard. A circular setting out details of the Subscription, and recommendation from the independent board committee and the independent financial adviser will be despatched to the Shareholders as soon as practicable.

GENERAL

Trading in the Shares was suspended at the request of the Company with effect from 9:30 a.m. on 23 May 2007 pending the release of this announcement. An application has been made by the Company to the Stock Exchange for the trading in the Shares to resume from 9:30 a.m. on 25 May 2007 following the publication of this announcement.

As at the date of this announcement, the Board comprises Mr. Ko Chun Shun, Johnson, Mr. Tsoi Tong Hoo, Tony, Mr. Chan Kam Kwan, Jason, Mr. Wong Fan, Frank, and Mr. Yeung Heung Yeung (who are executive Directors), Mr. Kelvin Edward Flynn (who is a non-executive Director), and Mr. Ho Tak Man, Billy, Mr. Yap Fat Suan and Dr. Wong Yau Kar, David (who are independent non-executive Directors).

DEFINITIONS

“Acquisition”

the proposed acquisition of the entire issued share capital of Wind Power, the details of which have been set out in the announcement of the Company dated 21 May 2007

“Board”

the board of Directors

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“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

• “Conversion” conversion of 1,350,000,000 Preference Shares into 1,350,000,000 Shares by Gain Alpha

• “connected person(s)” has the same meaning as ascribed to it under the Listing Rules

• “Directors” director(s) of the Company “Gain Alpha” Gain Alpha Finance Limited, a company incorporated in the British Virgin Islands with limited liability and whollyowned beneficially owned by Mr Ko Chun Shun, Johnson, the Chairman of the board of Directors

• “General Mandate” existing available general mandate granted to the board of Directors at the annual general meeting of the Company held on 16 April 2007

• “Group” the Company and its subsidiaries “HK$” Hong Kong dollars, the lawful currency of Hong Kong “Independent Shareholders other than Gain Alpha and its associates Shareholders”

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

• “Placing” the placing of the Placing Shares under the Placing Agreement

• “Placing Agent” UOB Kay Hian (Hong Kong) Limited “Placing Agreement” the Placing Agreement entered into between the Company and the Placing Agent on 22 May 2007

• “Placing Price” HK$0.5 per Placing Share “Placing Shares” an aggregate of up to 800,000,000 Shares to be placed by the Placing Agent under the Placing Agreement

• “Preference Shares” preference shares of the Company of HK$0.01 each “SGM” a special general meeting of the Company to be held to seek Independent Shareholders’ approval for the Subscription

• “Share(s)” ordinary share(s) of HK$0.01 each in the issued share capital of the Company

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“Shareholders” holders of the Shares

• “Stock Exchange” The Stock Exchange of Hong Kong Limited “Subscription Price” HK$0.5 per Subscription Share “Subscription Share(s)” the new Share(s) to be issued by the Company under the Subscription Agreement

“Wind Power” China Wind Power Holdings Limited, a limited liability company incorporated in the British Virgin Islands

By order of the Board Hong Kong Pharmaceutical Holdings Limited Johnson Ko Chun Shun Chairman

23 May 2007, Hong Kong

Please also refer to the published version of this announcement in the China Daily.

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