CGN Mining Company Limited — Proxy Solicitation & Information Statement 2010

Jun 9, 2010

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt about 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 Vital Pharmaceutical Holdings Limited, you should at once hand this circular to the purchaser or the transferee or to the bank, stockbroker or other agent through whom the sale was effected for transmission to the purchaser or transferee.

Hong Kong Exchanges and Clearing Limited and 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.

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(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 01164)

MAJOR TRANSACTION IN RELATION TO THE LAND ACQUISITION

Financial adviser to the Company

A notice convening the EGM to be held at Tai Tam Room, Conrad Hong Kong, Pacific Place, 88 Queensway, Hong Kong on 25 June 2010 (Friday) at 11:00 a.m. is set out on pages 29 to 30 of this circular.

Whether or not you propose to attend the EGM in person, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon and deposit the same to the branch share registrar and transfer office in Hong Kong of the Company, Union Registrars Limited, at 18th Floor, Fook Lee Commercial Centre, Town Place, 33 Lockhart Road, Wanchai, Hong Kong as soon as possible and in any event not later than 48 hours before the time for holding the EGM or any adjournment thereof. Completion and delivery of the form of proxy will not preclude you from attending and voting in person at the EGM or any adjournment thereof should you so wish.

9 June 2010

CONTENTS

				Pages
Definitions	. . .	. . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board . . . . . . . . . . . . . .			. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Appendix I	–	**Financial information **	of the Group . . . . . . . . . . . . . . . . . . . . . .	9
Appendix II	–	Unaudited pro forma financial information of
		the Enlarged Group	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
**Appendix III **	–	Valuation report . . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	17
**Appendix IV **	–	General information	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	23
Notice of EGM		. . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	29

DEFINITIONS

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

• “Agent” 四川維奧製藥有限公司 (Vital Pharmaceuticals (Sichuan) Co., Ltd.), a company established under the laws of the PRC and a wholly-owned subsidiary of the Company and the agent for the participation in the auction of the Land

• “Board”

• the board of Directors

• “Bureau”

• 成都市國土資源局 (Chengdu Bureau of Land Resources*)

• “Chengdu Zhonghe” 成都眾合高新企業管理有限公司 (Chengdu Zhonghe Management Company Limited*), a company established under the laws of the PRC with limited liability

• “Company” Vital Pharmaceutical Holdings Limited, a company incorporated in the Cayman Islands with limited liability and the issued Shares of which are listed on the Main Board of the Stock Exchange

• “Confirmation Letter”

• the confirmation letter received by the Agent on 6 May 2010 which confirmed the successful bidding of the Land by Vital Property

• “connected person(s)”

• has the meaning ascribed to it under the Listing Rules

• “Consideration”

• the consideration for the acquisition of the Land

• “Directors”

• the directors of the Company

• “EGM”

• the extraordinary general meeting of the Company to be convened for the purpose of considering, and if thought fit, approving the Land Acquisition

• “Enlarged Group”

• the Group upon completion of the Land Acquisition

• “Group”

• the Company and its subsidiaries

• “JV Agreement”

the joint venture agreement dated 10 May 2010 entered into between Vital Chengdu, Chengdu Zhonghe and Sichuan Xiwen in relation to, among others, the formation of a joint venture company to be established under the law of the PRC for the development of the Land

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DEFINITIONS

• “JV Announcement”

• the announcement of the Company dated 11 May 2010 in relation to, among other things, the formation of the joint venture company

• “Land”

• a piece of land located at the Wancheng Community, Liucheng Street, Wenjiang District, Chengdu, the PRC (中國成都市溫江區柳城街辦萬盛社區) with a total site area of 49,595.3 square meters

• “Land Acquisition” acquisition of the Land by the Group through Vital Property, subject to the Shareholders’ approval at the EGM

• “Land Grant Contract”

• the contract to be entered into between Vital Property and the Bureau for the acquisition of the land use right in relation to the Land (國有建設用地使用權出讓 合同)

• “Latest Practicable Date”

• 7 June 2010, being the latest practicable date for ascertaining certain information contained in this circular

• “Listing Rules”

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

• “PRC”

• the People’s Republic of China

• “Share(s)”

• ordinary share(s) of HK$0.01 each in the share capital of the Company

• “Shareholder(s)”

• holder(s) of Shares

• “Sichuan Xiwen”

• 四川西文科技有限公司 (Sichuan Xiwen Technology Company Limited*), a company established under the laws of the PRC with limited liability

• “Stock Exchange”

The Stock Exchange of Hong Kong Limited

• “Termination Agreement”

• the agreement dated 26 May 2010 entered into between Vital Chengdu, Chengdu Zhonghe and Sichuan Xiwen in relation to the termination of the JV Agreement

• “Vital Chengdu”

• 維奧（成都）製藥有限公司 (Vital Pharmaceutical (Chengdu) Co., Ltd.*), a company established under the laws of the PRC and a wholly-owned subsidiary of the Company

– 2 –

DEFINITIONS

“Vital Property” 成都溫江維奧房地產開發有限公司 (Chengdu Wenjiang Vital Property Development Company Limited*), a company to be established under the laws of the PRC with limited liability for the development of the Land “HK$” Hong Kong dollars, the lawful currency of Hong Kong “RMB” Renminbi, the lawful currency of the PRC “%” per cent.

For the purpose of this circular, all amounts denominated in RMB have been translated (for information only) into HK$ using the exchange rate of RMB1.00: HK$1.14. No representation is made that any amounts in RMB or HK$ can be or could have been converted at the relevant dates at the above rates or any other rates at all.

• For identification purposes only

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LETTER FROM THE BOARD

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(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 01164)

Executive Directors: Mr. Xu Xiaofan (Chairman) Mr. Chen Zhiyu (Chief Executive Officer) Madam Guo Lin Mr. Huang Zemin Mr. Li Ke Mr. Liu James Jin

Independent non-executive Directors: Mr. Lee Kwong Yiu Mr. Lui Tin Nang Mr. Chong Cha Hwa

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

Head office and principal place of business in Hong Kong: Unit 7, 31st Floor Tower 1, Lippo Centre 89 Queensway Hong Kong

9 June 2010

To the Shareholders,

Dear Sirs,

MAJOR TRANSACTION IN RELATION TO THE LAND ACQUISITION

INTRODUCTION

References are made to the JV Announcement dated 11 May 2010 in relation to the formation of a joint venture pursuant to the JV Agreement entered into between Vital Chengdu, Chengdu Zhonghe and Sichuan Xiwen for the purpose of holding and development of the Land and the announcement of the Company dated 26 May 2010 in relation to the termination of the JV Agreement and the Land Acquisition.

On 26 May 2010, the Board announced that the parties to the JV Agreement entered into the Termination Agreement on even date to terminate the JV Agreement with effect from the date of approval by the Shareholders at the EGM of the Land Acquisition.

Following the termination of the JV Agreement, the Company will solely invest in the Land Acquisition and the development of the Land through Vital Property.

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LETTER FROM THE BOARD

The Land Acquisition constitutes major transaction of the Company and is therefore subject to approval by the Shareholders at the EGM. The purpose of this circular is to provide you with, among other things, further details of the Land Acquisition, financial information of the Group, valuation report of the Land and a notice convening the EGM.

TERMINATION OF THE JV AGREEMENT

Subsequent to the entering into of the JV Agreement, the management of the Company have revisited the overall business plan of and resources available to the Group. Having considered the resources available to the Group for the development of the Land and the reasons as set out in the section headed “Reasons for and benefits of the Land Acquisition” below, the Company liaised with Chengdu Zhonghe and Sichuan Xiwen for the termination of the JV Agreement.

On 26 May 2010, Vital Chengdu, Chengdu Zhonghe and Sichuan Xiwen entered into the Termination Agreement to terminate the JV Agreement with effect from the date of approval by the Shareholders at the EGM of the Land Acquisition. Upon termination of the JV Agreement, save that the parties to the JV Agreement are entitled to be refunded the capital contributed thereunder, neither of the parties to the JV Agreement shall have any claims against the other parties.

Each of Chengdu Zhonghe and Sichuan Xiwen is a company established under the laws of the PRC and is principally engaged in investment holding.

The Board considers that the termination of the JV Agreement will have no adverse impact on the existing business operations of the Group.

THE LAND ACQUISITION

As disclosed in the JV Announcement, on 6 May 2010, the Agent received the Confirmation Letter from the Bureau confirming the successful bid for the Land at an auction for an aggregate consideration of approximately RMB204.6 million (equivalent to approximately HK$233.2 million). The Bureau is a PRC governmental bureau in charge of the management of land resources in Chengdu, the PRC and an independent third party to the Company and its connected persons.

Following the termination of the JV Agreement as disclosed above, the Company will solely invest in the Land Acquisition and the development of the Land through Vital Property. Upon completion of the incorporation of Vital Property, it will enter into the formal Land Grant Contract with the Bureau.

Information of the Land

As disclosed in the JV Announcement, the Land is located in the Wancheng Community, Liucheng Street, Wenjiang District, Chengdu, the PRC (中國成都市溫江區柳城 街辦萬盛社區) with a total site area of approximately 49,595.3 square meters. The Land is designated for integrated residential and commercial use. The terms for the grant of the land use right of the Land for residential use and commercial use are 70 years and 40 years respectively.

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LETTER FROM THE BOARD

Based on the valuation performed by BMI Appraisals Limited (the “Valuer”), an independent professional valuer, the market value of the Land as at 31 May 2010 would be approximately RMB208.0 million assuming, among others, that relevant title documents of the Land have been obtained. As at the date of valuation, the Valuer cannot attribute any commercial value to the land due to the absence of relevant title documents. Details of the valuation are set out in the valuation report contained in Appendix III to this circular.

It is the initial intention of the Company to develop the Land into residential properties with total floor area of approximately 180,000 square metre and commercial properties with total floor area of approximately 20,000–30,000 square metre. The estimated total investment amount for the development project (including Land cost) is approximately HK$992,000,000 (approximately RMB870,000,000), provided that the planned plot ratio is around 4.0. The Company intends to finance the development project by its internal resources and/or bank financing. The development based on the aforementioned initial intention is expected to complete in or around three years time. The development plan is yet to be finalised and thus the final total investment amount may vary. Accordingly, there is no concrete plan for the financing of the investment as at the Latest Practicable Date and the Company shall determine the best financing method as and when appropriate taking into account the then overall financial position of the Group and the market environment.

Consideration and payment terms

The Consideration of approximately RMB204.6 million (equivalent to approximately HK$233.2 million) was determined through the auction carried out by the Bureau.

As disclosed in the JV Announcement, the Company has, through the Agent, paid a security deposit of RMB27.0 million (equivalent to approximately HK$30.8 million) to the Bureau for the purpose of participating in the auction and approximately RMB1.9 million (equivalent to approximately HK$2.2 million) as the auction service charge. On 13 May 2010, being the fifth day after the receipt of the Confirmation Letter, 50% of the Consideration as offset by the RMB27.0 million security deposit already paid, which amounted to approximately RMB75.3 million (equivalent to approximately HK$85.8 million), was paid to the Bureau in the name of Vital Property in accordance with the relevant terms of the auction set by the Bureau. Pursuant to the relevant terms of the auction set by the Bureau, the remaining balance of the Consideration of approximately RMB102.3 million (equivalent to approximately HK$116.6 million) shall be settled in cash in the following manner:

• (i) as to RMB40.9 million (equivalent to approximately HK$46.6 million), being 20% of the Consideration, to be paid within 60 days from 13 May 2010; and

• (ii) as to RMB61.4 million (equivalent to approximately HK$70.0 million), being the remaining 30% of the Consideration, to be paid within 180 days from 13 May 2010.

The Company intends to finance the Land Acquisition by its internal resources and/or bank financing.

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LETTER FROM THE BOARD

Conditions precedent to completion of the Land Acquisition

Completion of the Land Acquisition is conditional upon the Company having obtained approval by the Shareholders at the EGM in respect of the Land Acquisition and the balance of the Consideration being fully paid by Vital Property according to the payment schedule as set out in the above paragraph headed “Consideration and payment terms”. In the event that the Land Acquisition is not approved by the Shareholders at the EGM, the Termination Agreement will not become effective and the Company will continue its investment in the Land through Vital Property in the form of joint venture pursuant to the JV Agreement.

REASONS FOR AND BENEFITS OF THE LAND ACQUISITION

As at the Latest Practicable Date, the Group is principally engaged in the research and development, distribution, sale and manufacture of pharmaceutical products.

As mentioned in the JV Announcement, the Directors have been continuing in exploring suitable business opportunities to broaden the revenue base and to diversify the business scope of the Company. The Land Acquisition represents an opportunity to tap into the PRC property market and the Board is of the view that such opportunity would enhance the Shareholders’ value in the long run. Furthermore, the Board is of the view that the Land is of outstanding development potential, given the unique location of the Land, which is surrounded by a number of universities and colleges and with a significant number of teachers, university students and young entrepreneurs.

Taking into account the aforementioned benefits and potential of the Land Acquisition to the Group and the Directors’ assessment of the best utilization of the Group’s resources, the Directors consider it would be in the interest of the Company and its Shareholders for the Company to invest in the Land on a sole basis. The future returns from the development of the Land can be fully consolidated into the accounts of the Group and the Company will have full control and more efficient management over the development of the Land in contrast to that in the form of a joint venture.

FINANCIAL EFFECT OF THE LAND ACQUISITION ON THE GROUP

Vital Property, upon incorporation, will become an indirect wholly-owned subsidiary of the Company and its financial results will be consolidated in the future financial statements of the Group. Assuming the Land Acquisition had been completed on 31 December 2009, the total assets of the Group would have increased from approximately HK$725.1 million to approximately HK$841.7 million and the total liabilities of the Group would have increased from approximately HK$74.9 million to approximately HK$191.5 million as set out in Appendix II to this circular in respect of the unaudited pro forma financial information of the Enlarged Group.

With the outstanding development potential given the unique location of the Land, the Directors are optimistic that the Land Acquisition and the development of the Land would have a positive impact to the earnings of the Group in the long run.

IMPLICATIONS UNDER THE LISTING RULES

Given certain of the applicable percentage ratios for the Land Acquisition represent 25% or more but less than 100% for the Company, the Land Acquisition constitutes a major transaction of the Company under the Listing Rules. The Land Acquisition is therefore

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LETTER FROM THE BOARD

subject to the requirements of reporting, announcement and Shareholders’ approval pursuant to Chapter 14 of the Listing Rules.

As no Shareholder has any material interest in the Land Acquisition which is different from other Shareholders, no Shareholder is required to abstain from voting in respect of the resolution to be proposed at the EGM for the approval of the Land Acquisition.

EGM

A notice convening the EGM of the Company to be held at Tai Tam Room, Conrad Hong Kong, Pacific Place, 88 Queensway, Hong Kong on 25 June 2010 (Friday) at 11:00 a.m. for the purpose of considering, and if thought fit, the passing of the ordinary resolution in respect of the Land Acquisition is set out on pages 29 to 30 of this circular.

Whether or not you intend to be present at the EGM, you are requested to complete the form of proxy and return it to the office of the branch share registrar and transfer office of the Company in Hong Kong, Union Registrars Limited, 18th Floor, Fook Lee Commercial Centre, Town Place, 33 Lockhart Road, Wanchai, Hong Kong in accordance with the instructions printed thereon not less than 48 hours before the time fixed for holding of the EGM or any adjourned meeting (as the case may be). Completion and delivery of the form of proxy will not preclude you from attending and voting at the EGM or any adjourned meeting thereof (as the case may be) if you wish to do so.

Pursuant to Rule 13.39(4) of the Listing Rules, any vote of shareholders at a general meeting must be taken by poll. Therefore, all resolutions proposed at the EGM will be voted by poll.

RECOMMENDATIONS

Having considered the reasons set out herein, the Directors (including the independent non-executive Directors) are of the opinion that the Land Acquisition are on normal commercial terms, fair and reasonable in so far as the Shareholders are concerned and in the interests of the Group and the Shareholders as a whole. Accordingly, the Directors recommend the Shareholders to vote in favour of the proposed ordinary resolution set out in the notice of the EGM to approve the Land Acquisition.

GENERAL

Your attention is drawn to the additional information set out in the appendices to this circular.

Yours faithfully, By order of the Board Vital Pharmaceutical Holdings Limited Xu Xiaofan Chairman

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APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

1. THREE-YEAR FINANCIAL INFORMATION

Financial information of the Group for each of the three years ended 31 December 2009, 2008 and 2007 are disclosed in the annual reports of the Company for the years ended 31 December 2009, 2008 and 2007 respectively, which are published on both the website of the Stock Exchange (www.hkex.com.hk) and the website of the Company (www.vital-pharm.com).

2. STATEMENT OF INDEBTEDNESS

Pledge of assets

At the close of business on 30 April 2010, being the latest practicable date for the purpose of the statement of indebtedness prior to the printing of this circular, the Group had the following assets pledged to secure the banking facilities granted to the Group:–

Property, plant and equipment Investment properties Bank balances and cash Prepaid lease payments on land use rights	As at 30 April 2010 HK$’000 38,801 59,393 643 16,027
	114,864

At the close of business on 30 April 2010, none of the banking facilities was utilised by the Group.

Save as aforesaid or as otherwise disclosed herein, and apart from intra-group liabilities, the Group did not have any loan capital issued and outstanding, or authorised or otherwise created but unissued, any term loans (secured, unsecured, guaranteed or not), bank overdrafts, loans or other similar indebtedness, liabilities under acceptances or acceptable credits, debentures, mortgages, charges, hire purchases commitments, guarantees or other material contingent liabilities at the close of business on 30 April 2010.

Foreign currency amounts have been translated into Hong Kong dollars at the approximate exchange rates prevailing at the close of business on 30 April 2010.

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APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

3. WORKING CAPITAL

The Directors are of the opinion that, taking into account its internal resources and the existing available credit facilities of the Group, and upon the completion of the Land Acquisition, the Group has sufficient working capital for its present requirements, that is for at least the next twelve months from the date of this circular.

4. FINANCIAL AND TRADING PROSPECTS

As at the Latest Practicable Date, the Group is principally engaged in the research and development, distribution, sale and manufacture of pharmaceutical products. In respect of its pharmaceutical business, the Group intends to diversify its product range based on the Group’s relevant experiences and expertise. In the coming future, the Group will continue to expand its products portfolios. The Group will concentrate its resources on domestic sales and marketing efforts in the PRC. The Group will also provide services and distribution network to foreign companies in the PRC in an appropriate manner. By establishing an effective, fast and flexible marketing system to accommodate different needs of marketing solutions for different products.

Furthermore, the Directors have been continuing in exploring suitable business opportunities to broaden the revenue base and to diversify the business scope of the Company. The Land Acquisition represents an opportunity to tap into the PRC property market and the Board is of the view that such opportunity would enhance the Shareholders’ value in the long run.

5. MATERIAL ADVERSE CHANGE

The Directors confirm that there was no material adverse change in the financial or trading position of the Group since 31 December 2009, the date to which the latest published audited consolidated financial statements of the Group were made up.

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APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

1. UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

The following is an illustrative and unaudited pro forma consolidated statement of financial position of the Enlarged Group which has been prepared based on the consolidated statement of financial position of the Group as set out in the Company’s published annual report for the year ended 31 December 2009, after making the pro forma adjustments relating to the Land Acquisition that are (i) directly attributable to the Land Acquisition; and (ii) factually supportable.

This unaudited pro forma consolidated statement of financial position of the Enlarged Group has been prepared to illustrate the effect of the Land Acquisition for the purpose of properties development as if the Land Acquisition had taken place on 31 December 2009. This unaudited pro forma consolidated statement of financial position of the Enlarged Group has been prepared on the basis of the notes set out below and is consistent with the accounting policies adopted by the Group.

This unaudited pro forma consolidated statement of financial position of the Enlarged Group has been prepared for illustrative purposes only, and because of its hypothetical nature, it may not give a true picture of the financial position of the Enlarged Group had the Land Acquisition been completed as at 31 December 2009 or at any future date.

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APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

• (a) Unaudited pro forma consolidated statement of financial position of the Enlarged Group

Non-current assets Intangible assets Property, plant and equipment Investment properties Prepaid lease payments on land use rights Deposit for acquisition of property, plant and equipment Available-for-sale investments Goodwill Current assets Properties under development Inventories Trade and other receivables Prepaid lease payments on land use rights Income tax recoverable Value added tax recoverable Held-for-trading investment Bank balances and cash – pledged – unpledged	Audited consolidated statement of financial position of the Group as at 31 December 2009 Pro forma adjustments Notes HK$’000 HK$’000 3,030 203,015 74,384 38,711 4,201 2,331 74,924	Unaudited pro forma consolidated statement of financial position of the Enlarged Group HK$’000 3,030 203,015 74,384 38,711 4,201 2,331 74,924
	400,596 – 261,806 2(i) 73,730 69,241 800 9,118 5,537 2,121 668 163,291 (145,227) 2(ii) 324,506	400,596
		261,806 73,730 69,241 800 9,118 5,537 2,121 668 18,064
		441,085

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APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

Current liabilities Trade and other payables Obligations under finance leases Bank borrowings Net current assets Total assets less current liabilities Capital and reserves Share capital Reserves Equity attributable to owners of the Company Minority interests Total equity Non-current liabilities Other payables Deferred tax liabilities	Audited consolidated statement of financial position of the Group as at 31 December 2009 Pro forma adjustments Notes HK$’000 HK$’000 58,993 446 – 116,579 2(ii)	Unaudited pro forma consolidated statement of financial position of the Enlarged Group HK$’000 58,993 446 116,579
	59,439 265,067	176,018
		265,067
	665,663	665,663
	15,511 633,871 649,382 808 650,190 2,778 12,695 15,473	15,511 633,871
		649,382 808
		650,190
		2,778 12,695
		15,473
	665,663	665,663

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APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

• (b) Notes to the unaudited pro forma consolidated statement of financial position of the Enlarged Group

• The audited consolidated statement of financial position of the Group as at 31 December 2009 is extracted from the Company’s published annual report for the year ended 31 December 2009.

• The adjustments represent the following:

  • (i) The recognition of properties under development amounts to approximately HK$261,806,000 (equivalent to approximately RMB229,780,000), including the purchase consideration for the Land Acquisition amounting to approximately HK$233,087,000 (equivalent to approximately RMB204,570,000) and expenses directly attributable to the Land Acquisition amounting to approximately HK$28,719,000 (equivalent to approximately RMB25,210,000). The expenses mainly include city planning duty of approximately HK$12,119,000 (equivalent to approximately RMB10,640,000) and stamp duty of approximately HK$7,028,000 (equivalent to approximately RMB6,170,000); and

  • (ii) The settlement in cash of the purchase consideration for the Land Acquisition will be funded by internal resources of the Group and bank borrowings amounting to approximately HK$145,227,000 (equivalent to approximately RMB127,500,000) and approximately HK$116,579,000 (equivalent to approximately RMB102,280,000) respectively.

Bank borrowings are assumed to be drawn under existing banking facilities available to the Group.

1. Apart from the Land Acquisition, no adjustment has been made to reflect the results or transactions of the Group entered into subsequent to 31 December 2009.

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APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

2. REPORT ON THE UNAUDITED PRO FORMA FINANCIAL INFORMATION FROM THE REPORTING ACCOUNTANT

The following is the text of a report received from SHINEWING (HK) CPA Limited, Certified Public Accountants, in respect of the unaudited pro forma financial information of the Enlarged Group for the purpose of incorporation in this circular.

ACCOUNTANTS’ REPORT ON UNAUDITED PRO FORAMA FINANCIAL INFORMATION

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SHINEWING (HK) CPA Limited 43/F., The Lee Gardens 33 Hysan Avenue Causeway Bay, Hong Kong

9 June 2010

The Board of Directors Vital Pharmaceutical Holdings Limited Unit 7, 31st Floor Tower 1, Lippo Centre 89 Queensway Hong Kong Dear Sirs,

We report on the unaudited pro forma financial information of Vital Pharmaceutical Holdings Limited (the “Company”) and its subsidiaries (hereinafter collectively referred to as the “Group” and, immediately after the completion of the Land Acquisition (defined below), as the “Enlarged Group”) in relation to the proposed acquisition of the land located at Wancheng Community, Liucheng Street, Wenjiang District, Chengdu, the People’s Republic of China (the “Land Acquisition”) set out in Section 1 of Appendix II of the circular dated 9 June 2010 (the “Circular”), which has been prepared by the directors of the Company (the “Directors”) for illustrative purpose only, to provide information about how the Land Acquisition might have affected the financial information presented.

Respective responsibilities of Directors and reporting accountants

It is the responsibility solely of the Directors to prepare the unaudited pro forma financial information in accordance with paragraph 29 of Chapter 4 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”) and with reference to Accounting Guideline 7 “Preparation of Pro Forma Financial Information for Inclusion in Investment Circulars” issued by the Hong Kong Institute of Certified Public Accountants.

It is our responsibility to form an opinion, as required by paragraph 29(7) of Chapter 4 of the Listing Rules, on the unaudited pro forma financial information and to report our

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APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

opinion to you. We do not accept any responsibility for any reports previously given by us on any financial information used in the compilation of the unaudited pro forma financial information beyond that owed to those to whom those reports were addressed by us at the dates of their issue.

Basis of opinion

We conducted our work in accordance with Hong Kong Standard on Investment Circular Reporting Engagements 300 “Accountants’ Reports on Pro Forma Financial Information in Investment Circulars” issued by the Hong Kong Institute of Certified Public Accountants. Our work consisted primarily of comparing the unadjusted financial information with the source documents, considering the evidence supporting the adjustments and discussing the unaudited pro forma financial information with the Directors. This engagement did not involve independent examination of any of the underlying financial information.

We planned and performed our work so as to obtain the information and explanations we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the unaudited pro forma financial information has been properly compiled by the Directors on the basis stated, that such basis is consistent with the accounting policies of the Group and that the adjustments are appropriate for the purpose of the unaudited pro forma financial information as disclosed pursuant to paragraph 29(1) of Chapter 4 of the Listing Rules.

The unaudited pro forma financial information is for illustrative purpose only, based on the judgments and assumptions of the Directors, and, because of its hypothetical nature, does not provide any assurance or indication that any event will take place in the future and may not be indicative of the financial position of the Group or the Enlarged Group as at 31 December 2009 or any future date.

Opinion

In our opinion:

• (a) the unaudited pro forma financial information has been properly compiled by the Directors on the basis stated;

• (b) such basis is consistent with the accounting policies of the Group; and

• (c) the adjustments are appropriate for the purposes of the unaudited pro forma financial information as disclosed pursuant to paragraph 29(1) of Chapter 4 of the Listing Rules.

SHINEWING (HK) CPA Limited

Certified Public Accountants

Ip Yu Chak

Practising Certificate Number: P04798 Hong Kong

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APPENDIX III

VALUATION REPORT

The following is the text of a letter, summary of value and valuation certificate, prepared for the purpose of incorporation in this circular received from BMI Appraisals Limited, an independent valuer, in connection with its valuation as at 31 May 2010 of the property to be held by the Group located in the PRC.

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9 June 2010

The Directors Vital Pharmaceutical Holdings Limited

Room 3107, Tower One Lippo Centre No. 89 Queensway Hong Kong

Dear Sirs,

INSTRUCTIONS

We refer to the instructions from Vital Pharmaceutical Holdings Limited (the “Company”) for us to value the property to be held by the Company and/or its subsidiaries (hereinafter referred to as the “Group”) located in the People’s Republic of China (the “PRC”) (the “property”). We confirm that we have conducted an inspection, made relevant enquiries and obtained such further information as we consider necessary for the purpose of providing you with our opinion of the market value of the property as at 31 May 2010 (the “date of valuation”).

BASIS OF VALUATION

Our valuation of the property has been based on the Market Value, which is defined as “the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion”.

VALUATION METHODOLOGY

In valuing the property to be held by the Group, we have valued it on an open market basis by the Comparison Approach assuming sale in its existing state with the benefit of vacant possession and by making reference to comparable sales evidence as available in the relevant market. Appropriate adjustments have then been made to account for the differences between the property and the comparables in terms of time, location and other relevant factors.

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APPENDIX III

VALUATION REPORT

TITLE INVESTIGATION

We have been provided with copies of title/ legal documents and have been advised by the Group that no further relevant documents have been produced. However, we have not examined the original documents to verify ownership or to ascertain the existence of any amendment documents, which may not appear on the copies handed to us. In the course of our valuation, we have relied upon the advice and information given by the Group and its PRC legal adviser, regarding the title of the property. All documents have been used for reference only.

In valuing the property, we have relied on the advice given by the Group that the owner of the property has valid and enforceable title to the property which is freely transferable, and has free and uninterrupted right to use the same, for the whole of the unexpired term granted subject to the payment of annual government rent/land use fees and all requisite land premium/purchase consideration payable have been fully settled.

VALUATION ASSUMPTIONS

Our valuation has been made on the assumption that the property is sold in the market without the benefit of deferred terms contract, leaseback, joint venture, management agreement or any other similar arrangement which would serve to affect the value of the property.

In addition, no account has been taken of any option or right of pre-emption concerning or affecting the sale of the property and no forced sale situation in any manner is assumed in our valuation.

VALUATION CONSIDERATIONS

We have carried out an on-site inspection of the property within the attached valuation certificate. However, no tests or investigations are carried out to determine stability or suitability of ground conditions or factors, such as archaeological artifacts, contamination, ecological or environmental considerations, which could delay any development on the property. Unless otherwise informed, we have assumed that the site is sound and no delays will occur in a construction schedule due to considerations relating to the site, and that the ground is not contaminated.

In the course of our valuation, we have relied to a considerable extent on the information given by the Group and have accepted advice given to us on such matters as planning approvals or statutory notices, easements, tenures, particulars of occupancy, site areas, identification of the property and other relevant information.

Except otherwise stated, dimensions, measurements and site areas included in the valuation certificate are based on information contained in the leases and other documents provided to us and are therefore only approximations.

We have not carried out detailed on-site measurements to verify the correctness of the site areas in respect of the property but have assumed that the site areas shown on the documents handed to us are correct.

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APPENDIX III

VALUATION REPORT

We have no reason to doubt the truth and accuracy of the information provided to us by the Group and we have relied on your confirmation that no material facts have been omitted from the information so supplied. We consider that we have been provided with sufficient information for us to reach an informed view.

No allowance has been made in our valuation for any charges, mortgages or amounts owing on the property or for any expenses or taxation, which may be incurred in effecting a sale or purchase.

Unless otherwise stated, it is assumed that the property is free from encumbrances, restrictions and outgoings of an onerous nature, which could affect its value.

Our valuation has been prepared in accordance with the HKIS Valuation Standards on Properties (First Edition 2005) published by the Hong Kong Institute of Surveyors.

Our valuation has been prepared under the generally accepted valuation procedures and is in compliance with the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.

REMARKS

We hereby certify that we neither have any present nor any prospective interest in the Group or the appraised property or the value reported.

Unless otherwise stated, all money amounts stated herein are in Renminbi (RMB) and no allowances have been made for any exchange transfer.

Our summary of value and the valuation certificate are attached herewith.

Yours faithfully, For and on behalf of

BMI APPRAISALS LIMITED

Dr. Tony C.H. Cheng

BSc, MUD, MBA (Finance), MSc (Eng), PhD (Econ), MHKIS, MCIArb, AFA, SIFM, FCIM,

Joannau W.F. Chan

BSc. MSc. MRICS MHKIS RPS(GP) Senior Director

MASCE, MIET, MIEEE, MASME, MIIE

Managing Director

Notes:

Dr. Tony C.H. Cheng is a member of The Hong Kong Institute of Surveyors (General Practice) who has over 17 years’ experience in valuations of properties in Hong Kong and the People’s Republic of China.

Ms. Joannau W.F. Chan is a member of The Hong Kong Institute of Surveyors (General Practice) who has over 17 years’ experience in valuations of properties in Hong Kong and over 11 years’ experience in valuations of properties in the People’s Republic of China.

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APPENDIX III

VALUATION REPORT

SUMMARY OF VALUE

Property to be held by the Group for future development

Property

Market Value in existing state as at 31 May 2010

RMB

Land Parcel No. WJ01(252/211):2010-035, Wansheng Community, Liucheng Street, Wenjiang District, Chengdu City, Sichuan Province, The PRC

No Commercial Value

中國四川省成都市 溫江區柳城街辦 萬盛社區 WJ01(252/211):2010-035號地塊

Total:

Nil

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APPENDIX III

VALUATION REPORT

VALUATION CERTIFICATE

Property to be held by the Group for future development

			Market Value
			in existing
		Particulars of	state as at
Property	Description and tenure	occupancy	31 May 2010
			RMB
Land Parcel No.	The property comprises a parcel of	The property is	No Commercial
WJ01(252/211):2010-035,	vacant land with a site area of	vacant.	Value
Wansheng Community,	approximately 49,595.3 sq.m. (or
Liucheng Street,	about 533,843.81 sq.ft.).
Wenjiang District,
Chengdu City,	As per information provided by the
Sichuan Province,	Group, the property is planned to be
The PRC	developed into a composite
	commercial/residential
中國四川省成都市	development.
溫江區柳城街辦
萬盛社區	The land use rights of the property
WJ01(252/211):2010-035號	will be granted for terms of 70 years
地塊	and 40 years for residential and
	commercial uses respectively.

Notes:–

1. Pursuant to a Chengdu City State-owned Construction Land Use Rights Auction Disposal Transaction Confirmation Letter (成都市國有建設用地使用權拍賣出讓成交確認書) (the “Confirmation Letter”) entered into between Wenjiang District Land Resources Bureau (溫江區國土資源局) and Vital Pharmaceutical (Sichuan) Co., Ltd. (四川維奧製藥有限公司) (“Vital Sichuan”) dated 6 May 2010, the former confirmed that Vital Sichuan had made a successful bid for the acquisition of the land use rights of the property with a site area of 49,595.3 sq.m. (or 74.39 mu) for 2[nd] category residential use (including commercial use of not less than 10%) with land use rights terms of 70 years and 40 years for residential and commercial uses respectively at a consideration of RMB204,572,500.

2. Pursuant to a Chengdu City Auction Disposal State-owned Construction Land Use Rights Announcement (成都市拍賣出讓國有建設用地使用權公告), Cheng Guo Tu Pai Gao (2010) No. 04 (成國土拍 告(2010)04號), issued by Chengdu City Land Resources Bureau (成都市國土資源局) dated 13 April 2010, the planning and design requirements of the property are as follows:

Plot Ratio : ≥2.0 Building Density : ≤28% Greenery Ratio : ≥30% Use : 2[nd] category residential use (including commercial use of not less than 10%)

1. Pursuant to a Chengdu City Auction Disposal State-owned Construction Land Use Rights Bid Notice (成 都市拍賣出讓國有建設用地使用權競買須知), issued by Chengdu City Land Resources Bureau (成都市國土 資源局) dated 13 April 2010, the construction work of the property should commence within 1 year of the date signed for the State-owned Land Use Rights Grant Contract and be completed within 2 years of commencement of the construction work.

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APPENDIX III

VALUATION REPORT

1. As at the date of valuation, we cannot attribute any commercial value to the property due to the absence of relevant title documents. For your internal reference purpose, as at the date of valuation, the market value of the property assuming that relevant title documents have been obtained and the property could be disposed of freely in the open market would be in the sum of approximately RMB208,000,000.

2. As advised by the Group, the property will be held by Chengdu Wenjiang Vital Property Development Company Limited (成都溫江維奧房地產開發有限公司) (“Vital Property”), a company to be established under the laws of the PRC with limited liability.

3. The status of title and grant of major approvals and licenses in accordance with the information provided by the Group are as follows:

Auction Grant Conclude Confirmation Letter Yes State-owned Land Use Rights Grant Contract No State-owned Land Use Rights Certificates No Business License No

1. The legal opinion of the PRC legal adviser of the Company to the Group contains, inter-alia, the following:

2. a. Vital Sichuan has made a successful bid for the acquisition of the property;

3. b. 50% of the land premium of the property has been settled;

4. c. There exist no legal impediments for Vital Property to obtain the legal title and relevant title documents upon the following conditions have been fulfilled: i) the land premium has been fully settled in accordance with the payment schedule required by the land & resources bureau; ii) the business registration of Vital Property must be completed before full settlement of the land premium; and iii) there exists no breach of the terms in the Confirmation Letter; and

5. d. After the completion of business registration, Vital Property will be a wholly-owned subsidiary of the Company.

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APPENDIX IV

GENERAL INFORMATION

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. DISCLOSURE OF INTERESTS

• (a) The Directors’ and chief executives’ interests and short position in the shares, underlying shares and debentures of the Company or any associated corporation

As at the Latest Practicable Date, the interests and short positions of the Directors, chief executives of the Company and their associates in the shares, underlying shares and debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO) which were 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 are taken or deemed to have under such provisions of the SFO), or which were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein, or pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers (“Model Code”) contained in the Listing Rules, to be notified to the Company and the Stock Exchange, were as follows:

				Percentage
				shareholding in
		Number and		the same class
Name of Director	Capacity	class of securities		of securities
			(Note 1)
Mr. Chen Zhiyu	Beneficial owner		26,666 (L)	0.0017%
(Chief executive officer)
Mr. Liu James Jin	Beneficial owner	14,630,400 (L)		0.94%
Note:

1. The letter “L” stands for the Director’s long position in the Shares.

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APPENDIX IV

GENERAL INFORMATION

Directors’ and Chief Executive’s interests in underlying Shares under equity derivatives

As at the Latest Practicable Date, the directors and chief executive of the Company had the following personal interests in options to subscribe for Shares of the Company granted under the share option scheme of the Company.

				No. of Shares
				involved in
				the options
				outstanding
				at the Latest
		Exercisable	Exercise price	Practicable
Name of Director	Date of grant	period	per Share	Date
			(HK$)
Mr. Xu Xiaofan	12 September 2005	1 January 2006 to	0.23	15,000,000
(Executive Director		6 February 2012
and Chairman)		(Note 2)
Ms. Guo Lin	29 September 2003	2 January 2004 to	0.51	3,000,000
(Executive Director)		6 February 2012
		(Note 3)
	29 January 2008	1 October 2008 to	0.28	8,500,000
		6 February 2012
		(Note 4)
Mr. Liu James Jin	29 January 2008	1 October 2008 to	0.28	8,500,000
(Executive Director)		6 February 2012
		(Note 4)
Mr. Chong Cha Hwa	29 January 2008	1 October 2008 to	0.28	1,500,000
(Independent		6 February 2012
non-executive		(Note 4)
Director)

Notes:

1. Mr. Xu Xiaofan can exercise his rights in two periods starting from 1 January 2006 to 6 February 2012. From 1 January 2006 to 31 December 2006, he can exercise up to 50% of his rights, and starting from 1 January 2007 to 6 February 2012, he can exercise any unexercised remaining rights.

2. Ms. Guo Lin can exercise her rights in two periods starting from 2 January 2004 to 6 February 2012. From 2 January 2004 to 1 July 2004, she can exercise up to 500,000 share options, and starting from 2 July 2004 to 6 February 2012, she can exercise any unexercised remaining rights. Ms. Guo Lin is appointed as an executive Director from 1 January 2008. She had been granted share options since 29 September 2003.

3. Mr. Liu James Jin, Ms. Guo Lin and Mr. Chong Cha Hwa can exercise their rights in two periods starting from 1 October 2008 to 6 February 2012. From 1 October 2008 to 31 December 2008, grantees can exercise up to 30% of their rights, and starting from 1 January 2009 to 6 February 2012, grantees can exercise any unexercised remaining rights.

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APPENDIX IV

GENERAL INFORMATION

Save as disclosed above, none of the Directors and the chief executive of the Company had any interest and short positions in the shares, underlying shares and debentures of the Company or its associated corporations (within the meaning of the SFO) which were required to be notified to the Company and the Stock Exchange pursuant to Division 7 and 8 of part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO), or which were required, pursuant to section 352 of the SFO, to be entered in the register maintained by the Company referred to therein, or which were required, pursuant to the Model Code by Directors of Listed Issuers contained in the Listing Rules, to be notified to the Company and the Stock Exchange.

(b) Substantial Shareholders’ interest and short positions in the shares or underlying shares of the Company

As at the Latest Practicable Date, according to the register of members kept by the Company pursuant to section 336 of the SFO and so far as is known to, or can be ascertained after reasonable enquiry by the Directors, the following persons/entities, other than a Director or chief executive of the Company, had an interest or short position in the shares and underlying shares and debentures of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or, directly, or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote on all circumstances at general meetings of the Company:

				Approximate
	Company/ Name			percentage of
Name	of Group member	Capacity	Number of Shares	shareholding
			(Note 1)
Perfect Develop	Corporate	Beneficial owner	522,526,940 (L)	33.69%
Holding Inc.
(Note 2)

Notes:

1. The letter “L” denotes the person’s/entity’s long position in the Shares.

2. The issued share capital of Perfect Develop Holding Inc. is beneficially owned as to 58.28% by Mr. Tao Lung, 30.67% by Mr. Huang Jianming and 11.05% by Mr. Liu James Jin. Mr. Tao Lung and Mr. Huang Jianming are founders of the Group, former executive Directors, and currently paid consultants of the Company. Mr. Liu James Jin is founder of the Group and executive Director.

Save as disclosed above, the Directors are not aware of any person as at the Latest Practicable Date who had an interest or short positions in the shares, underlying shares and debentures of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of part XV of the SFO, or was directly or indirectly, interested in 10% or more of the nominal value of any class of shares capital carrying rights to vote in all circumstances at general meetings of the Company.

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APPENDIX IV

GENERAL INFORMATION

3. COMPETING INTERESTS

Mr. Chen Zhiyu (“Mr Chen”), an executive Director and chief executive officer of the Company, has approximately 52% shareholding in the Guangdong Suntop Pharmaceutical Co., Ltd. (the “Guangdong Suntop”). The Guangdong Suntop principally engages in the sales of pharmaceutical products in the PRC. The major pharmaceutical products sold by the Guangdong Suntop are Houtou Jun TiQuWu KeLi (猴頭菌提取物顆粒), which is for the treatment of chronic gastritis, and fungus related products Compound TianMa MiHuanTangTai Pian (複方天麻蜜環糖肽片), which is for the treatment of high blood pressures and cerebral thrombosis etc. These products are different and easily distinguishable from the major products, i.e. calcium capsule, minerals, vitamins and liver protecting drug, of the Company. As there is a clear delineation between the products sold by the Company and by Guangdong Suntop, the Directors believe that there is no direct competition between the Guangdong Suntop and the Company.

As at the Latest Practicable Date, save as disclosed above, none of the Directors and/or their respective associates had any interests in a business which competes or may compete with the business of the Group or had any other conflict of interests with the Group.

4. DIRECTORS’ SERVICE CONTRACTS

As at the Latest Practicable Date, there was no existing and any proposed service contract, excluding contract expiring or terminable by the employer within one year without payment of compensation (other than statutory compensation), between the Directors with the Company.

5. DIRECTORS’ INTERESTS IN ASSETS AND CONTRACTS

As at the Latest Practicable Date, none of the Directors has any direct or indirect interest in any assets which have 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, since 31 December 2009, being the date to which the latest published audited accounts of the Company were made up.

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

6. LITIGATION

As at the Latest Practicable Date, neither the Company nor any member of the Group was engaged in any litigation or arbitration of material importance and no litigation or claim of material importance was known to the Directors to be pending or threatened by or against the Company or any member of the Group.

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APPENDIX IV

GENERAL INFORMATION

7. EXPERTS AND CONSENTS

The following are the qualifications of the experts who have given opinion and advise, which is contained in this circular:

Qualification

Name Qualification SHINEWING (HK) CPA Limited Certified Public Accountants BMI Appraisals Limited Professional valuer

Each of SHINEWING (HK) CPA Limited and BMI Appraisals Limited has given and has not withdrawn their respective written consents to the issue of this circular with the inclusion herein of their respective letters and references to their respective names in the form and context in which they respectively appear.

As at the Latest Practicable Date, the above experts are not beneficially interested in any shareholding in the Company nor have any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in the Company, nor did they have any interest, either direct or indirect, in any assets of the Company which have been, since 31 December 2009 (being the date to which the latest published audited accounts of the Company were made up), acquired or disposed of or leased to, or are proposed to be acquired or disposed of or leased to, the Company.

8. MATERIAL CONTRACTS

Save as disclosed below, no material contracts (not being contracts entered into in the ordinary course of business carried out by the Enlarged Group) have been entered into by any member of the Enlarged Group within the two years preceding the date of this circular:

• (a) the JV Agreement; and

• (b) the Termination Agreement.

9. GENERAL

• (a) The registered office of the Company is at Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman KY1–1111, Cayman Islands and the head office and the principal place of business of the Company in Hong Kong is at Unit 7, 31st Floor, Tower 1, Lippo Centre, 89 Queensway, Hong Kong.

• (b) The branch share registrar and transfer office of the Company in Hong Kong is Union Registrars Limited at 18th Floor, Fook Lee Commercial Centre, Town Place, 33 Lockhart Road, Wanchai, Hong Kong.

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APPENDIX IV

GENERAL INFORMATION

• (c) The company secretary of the Company is Mr. Leung Wai Pong, who is a Certified Public Accountant of the Hong Kong Institute of Certified Public Accountants and a Certified Practising Accountant (Aust.) of CPA Australia.

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

10. DOCUMENTS AVAILABLE FOR INSPECTION

Copy of the following documents will be available for inspection during normal business hours at the Company’s head office and principal place of business in Hong Kong at Unit 7, 31st Floor, Tower 1, Lippo Centre, 89 Queensway, Hong Kong from the date of this circular up to the date of the EGM to be held on 25 June 2010:

• (a) the memorandum and articles of association of the Company;

• (b) the material contracts which the Group has entered into within two years preceding the date of this circular as summarised in the paragraph headed “Material Contracts” in this Appendix;

• (c) the report on the unaudited pro forma financial information of the Enlarged Group, the text of which is set out in Appendix II to this circular;

• (d) the letter, summary of value and valuation certificate from BMI Appraisals Limited in connection with the valuation of the Land, the text of which is set out in Appendix III of this circular;

• (e) the annual reports of the Company for the two years ended 31 December 2009;

• (f) the written consents as referred to under the section headed “Experts and Consents” in this Appendix; and

• (g) this circular and circulars of the Company pursuant to requirements set out in Chapters 14 and/or 14A issued since 31 December 2009, being the date the latest published audited accounts of the Company.

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NOTICE OF EGM

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(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 01164)

NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN that the extraordinary general meeting of Vital Pharmaceutical Holdings Limited (the “Company” and together with its subsidiaries, the “Group”) will be held at Tai Tam Room, Conrad Hong Kong, Pacific Place, 88 Queensway, Hong Kong on 25 June 2010 (Friday) at 11:00 a.m. for the following purposes:

“ THAT :

AS ORDINARY RESOLUTION

1. (a) the land grant contract to be entered into between 成都溫江維奧房地產開 發有限公司 (Chengdu Wenjiang Vital Property Development Company Limited), a company to be established by the Company, and 成都市國土 資源局 (Chengdu Bureau of Land Resources) in relation to the acquisition of a piece of land located at the Wancheng Community, Liucheng Street, Wenjiang District, Chengdu, the People’s Republic of China at an aggregate consideration of approximately RMB204.6 million (the “Land Acquisition”) be and is hereby approved; and

2. (b) the directors of the Company be and are hereby authorised for and on behalf of the Company to sign, execute and deliver all such documents and deeds, and do all such acts, matters and things as they may in their discretion consider necessary or desirable to carry out the Land Acquisition into effect.”

Yours faithfully, For and on behalf of the Board of Vital Pharmaceutical Holdings Limited Xu Xiaofan Chairman

Hong Kong, 9 June 2010

Registered Office: Head office and principal place Cricket Square of business in Hong Kong: Hutchins Drive Unit 7, 31st Floor P.O. Box 2681 Tower 1, Lippo Centre Grand Cayman KY1-1111 89 Queensway Cayman Islands Hong Kong

• for identification purposes only

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NOTICE OF EGM

Notes:–

• (1) A member entitled to attend and vote at the meeting convened by the above notice is entitled to appoint one or more proxy to attend and, subject to the provisions of the articles of association of the Company, in the event of a poll, to vote in his stead. A proxy need not be a member of the Company. In order to be valid, the form of proxy together with a power of attorney or other authority, if any, under which it is signed (or a notarially certified copy of that power or authority) must be deposited at the Company’s Hong Kong branch share registrar, Union Registrars Limited at 18th Floor, Fook Lee Commercial Centre, Town Place, 33 Lockhart Road, Wanchai, Hong Kong not later than 48 hours before the appointed time for holding the meeting or any adjourned meeting.

• (2) Completion and return of a form of proxy will not preclude a member of the Company from attending and voting in person at the meeting or any adjournment thereof and, in such event, the instrument appointing a proxy shall be deemed to be revoked.

• (3) In the case of joint holders of a share, any one of such joint holders may vote, either in person or by proxy, in respect of such share as if he/she were solely entitled thereto; but if more than one of such joint holders are present at the above meeting, the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders. For this purpose, seniority shall be determined by the order in which the names stand in the register of members of the Company in respect of the joint holding.

• (4) As at the date of this notice, the executive Directors are Mr. Xu Xiaofan, Mr. Chen Zhiyu, Madam Guo Lin, Mr. Huang Zemin, Mr. Li Ke and Mr. Liu James Jin; and the independent non-executive Directors are Mr. Lee Kwong Yiu, Mr. Lui Tin Nang and Mr. Chong Cha Hwa.

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