CGN Mining Company Limited — Proxy Solicitation & Information Statement 2011

May 22, 2011

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult your licensed securities dealer or registered institution in securities, bank manager, solicitor, professional accountant or other professional advisor. If you have sold or transferred all your shares in Vital Group Holdings Limited, you should at once hand this circular, together with the enclosed form of proxy, to the purchaser(s) or transferee(s) or to the bank, licensed securities dealer or registered institution in securities or other agent through whom the sale or transfer was effected for transmission to the purchaser(s) or the transferee(s).

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

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(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1164)

(1) SUBSCRIPTION AGREEMENT IN RELATION TO: (A) PROPOSED SUBSCRIPTION OF SHARES IN VITAL GROUP HOLDINGS LIMITED; AND (B) PROPOSED SUBSCRIPTION OF CONVERTIBLE BONDS ISSUED BY VITAL GROUP HOLDINGS LIMITED

(2) APPLICATION FOR THE GRANTING OF THE WHITEWASH WAIVER

AND

(3) NOTICE OF EGM

FINANCIAL ADVISER TO Vital Group Holdings Limited

FINANCIAL ADVISER TO China Uranium Development Company Limited

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China International Capital Corporation Hong Kong Securities Limited 中國國際金融香港證券有限公司

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

A letter from the Board is set out on pages 6 to 28 of this circular. A letter from the Independent Board Committee containing its advice to the Independent Shareholders is set out on pages 29 to 30 of this circular.

A letter from Guangdong Securities, the Independent Financial Adviser, containing its advice to the Independent Board Committee and the Independent Shareholders is set out on pages 31 to 52 of this circular.

A notice convening the EGM to be held at Gloucester Room II, 3/F, The Excelsior Hong Kong, 281 Gloucester Road, Causeway Bay, Hong Kong on Wednesday, 8 June 2011 at 11:00 a.m. is set out on pages 130 to 131 of this circular. Whether or not you are able to attend and/or vote at the EGM in person, you are requested to complete the enclosed form of proxy and return it to the Company’s branch share registrar and transfer office in Hong Kong, Union Registrars Limited at 18th Floor, Fook Lee Commercial Centre, Town Place, 33 Lockhart Road, Wanchai, Hong Kong in accordance with the instructions printed thereon as soon as possible but in any event not later than 48 hours before the time appointed for the holding of the EGM or any adjournment thereof (as the case may be). Completion and return of the form of proxy will not preclude you from subsequently attending and voting in person at the EGM or any adjournment thereof (as the case may be) should you so wish.

23 May 2011

CONTENTS

	Page
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
LETTER FROM THE INDEPENDENT BOARD COMMITTEE . . . . . . . . . . . . . . . . . . . . . . . . . .	29
LETTER FROM GUANGDONG SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	31
APPENDIX I — FINANCIAL INFORMATION OF THE GROUP . . . . . . . . . . . . . . . . . . . .	53
APPENDIX II — VALUATION REPORTS OF THE GROUP’S ASSETS
AND RELATED LETTER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	79
APPENDIX III — GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	119
NOTICE OF EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	130

– i –

DEFINITIONS

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

• ‘‘acting in concert’’ has the meaning ascribed to it in the Code

• ‘‘Announcement’’ the announcement dated 31 March 2011 jointly released by the Company and the Subscriber in relation to, among others, the Share Subscription, the CB Subscription and the Whitewash Waiver

• ‘‘associates’’ has the meaning ascribed to it under the Listing Rules

• ‘‘Board’’ the board of the Directors

‘‘Business Day(s)’’ any day (excluding Saturdays and Sundays and public holidays in Hong Kong and the PRC)

• ‘‘CB Subscription’’ the subscription of the Convertible Bonds pursuant to the Subscription Agreement

• ‘‘CGNPC’’ China Guangdong Nuclear Power Holding Corporation (中國廣東 核電集團有限公司)

• ‘‘Charged Shares’’ has the meaning given to it in the section headed ‘‘(VI) Share Charge’’ in the Letter from the Board in this circular

• ‘‘Closing’’ the closing of the Share Subscription and the CB Subscription pursuant to the Subscription Agreement

• ‘‘Closing Date’’ the date on which Closing occurs

• ‘‘Code’’ the Hong Kong Code on Takeovers and Mergers

• ‘‘Company’’ Vital Group Holdings Limited, a company incorporated in the Cayman Islands with limited liability, the shares of which are listed on the Stock Exchange

• ‘‘Conditions Precedent’’ the conditions precedent to Closing under the Subscription Agreement

• ‘‘Controlling Shareholder’’ Perfect Develop Holding Inc., a company incorporated in British Virgin Islands, holding 552,526,940 Shares representing 33.69% of the shareholding in the Company as at the Latest Practicable Date

• ‘‘Conversion Price’’ has the meaning given to it in the section headed ‘‘(II) CB Subscription’’ in the Letter from the Board in this circular

– 1 –

DEFINITIONS

• ‘‘Conversion Shares’’

any Shares to be allotted and issued by the Company upon the conversion of the Convertible Bonds

• ‘‘Convertible Bonds’’ convertible bonds with a principal amount of HK$600,000,000 to be issued by the Company to the Subscriber

• ‘‘CP Satisfaction Date’’ the date on which all Conditions Precedent have been satisfied or waived in accordance with the terms of the Subscription Agreement

• ‘‘Director(s)’’ the director(s) of the Company

• ‘‘EGM’’ the extraordinary general meeting of the Company to be convened on Wednesday, 8 June 2011 at 11:00 a.m. for the purpose of considering and, if thought fit, approving, among others, the Special Mandate and, for the purposes of the Whitewash Waiver, the issuance of the Subscription Shares

• ‘‘Encumbrances’’ any claim, charge, mortgage, lien, option, equity, power of sale, hypothecation, retention of title, right of pre-emption, right of first refusal, other third party rights or security interest of any kind, or any agreements, arrangements or obligations with respect to the above

• ‘‘Executive’’ the Executive Director of the Corporate Finance Division of the SFC or any delegate of the Executive Director

• ‘‘First Reimbursement Amount’’

• has the meaning given in the section headed ‘‘(V) Reimbursement Amounts’’ in the Letter from the Board in this circular

• ‘‘Founders’’

• Mr. Tao Lung (陶龍), Mr. Huang Jianming (黃建明), and Mr. Liu James Jin, holding approximately 58.28%, 30.67% and 11.05% shareholding in the Controlling Shareholder respectively as at the Latest Practicable Date

• ‘‘Group’’ the Company and the Subsidiaries, and ‘‘Group Company’’ means any one of them

• ‘‘Guangdong Securities’’ or

• ‘‘Independent Financial Adviser’’

• Guangdong Securities Limited, a licensed corporation to carry out type 1 (dealing in securities), type 2 (dealing in futures contracts), type 4 (advising on securities), type 6 (advising on corporate finance) and type 9 (asset management) regulated activities as defined under the SFO and the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the Subscription Agreement and the Whitewash Waiver

‘‘Hong Kong’’

the Hong Kong Special Administrative Region of the PRC

– 2 –

DEFINITIONS

‘‘HK$’’

• ‘‘Indemnity’’

• ‘‘Independent Board Committee’’

• ‘‘Independent Shareholder(s)’’

• ‘‘Independent Third Party(ies)’’

• ‘‘Last Trading Day’’

• ‘‘Latest Practicable Date’’

• ‘‘Listing Rules’’

• ‘‘Maturity Date’’

• ‘‘Net Cash Confirmation Date’’

• ‘‘Net Cash of the Company’’

• ‘‘Offer’’

Hong Kong dollars, the lawful currency of Hong Kong

• has the meaning given in the section headed ‘‘(VIII) Indemnity’’ in the Letter from the Board in this circular

• the independent committee of the Board comprising all of the independent non-executive Directors, namely, Mr. Lee Kwong Yiu, Mr. Lui Tin Nang and Mr. Chong Cha Hwa

• the Shareholders, other than (i) the Subscriber and parties acting in concert with it; (ii) those Shareholders who are involved in, or interested in, the Share Subscription and (iii) the Controlling Shareholder, the Founders and their ultimate beneficial owners

• third party(ies) independent of and not connected with the Company and any of its connected persons (as defined under the Listing Rules)

• 4 March 2011, being the last Trading Day of the Shares and the date of suspension of trading in the Shares pending the release of the Announcement

• 20 May 2011, being the latest practicable date for ascertaining certain information contained in this circular

• the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited

• has the meaning given to it in the section headed ‘‘(II) CB Subscription’’ in the Letter from the Board in this circular

• has the meaning given to it in the section headed ‘‘(III) Interconditionality and Simultaneous Closing’’ in the Letter from the Board in this circular

• in respect of any point of time, refers to the amount of bank balances and cash of the Company less the sum of (i) current liabilities and (ii) non-current liabilities of the Company (including sufficient provision of all liabilities of the Company and including contingent liabilities of the Company) as of that point of time

• the unconditional mandatory general offer to be made by or on behalf of the Subscriber for all Shares other than those already owned or agreed to be acquired by the Subscriber or parties acting in concert with it in accordance with the Code if the Whitewash Condition is not satisfied and the Subscriber waives the satisfaction of the Whitewash Condition

– 3 –

DEFINITIONS

• ‘‘Offer Announcement’’

• the announcement to be made by the Subscriber in accordance with Rules 3.5 and/or 3.7 of the Code in respect of the Offer if the Whitewash Condition is not satisfied and the Subscriber waives the satisfaction of the Whitewash Condition

• ‘‘PRC’’ The People’s Republic of China, excluding for the purpose of this circular, Taiwan, Hong Kong and the Macau Special Administrative Region of the PRC

• ‘‘Reimbursement Period’’ the period from the Closing Date until the earlier of the date falling 30 months after the Closing Date or such date as the Company no longer holds any legal or beneficial interest in any Subsidiary

• ‘‘Second Reimbursement Amount’’ has the meaning given to it in the section headed ‘‘(V) Reimbursement Amounts’’ in the Letter from the Board in this circular

• ‘‘Settlement Date’’ has the meaning given to it under the section headed ‘‘(VI) Share Charge’’ in the Letter from the Board in this circular

• ‘‘SFC’’ the Securities and Futures Commission of Hong Kong

• ‘‘SFO’’ Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)

• ‘‘Share Charge’’ the share charge dated 1 April 2011 executed by the Controlling Shareholder in favour of the Subscriber

• ‘‘Share Subscription’’ the subscription of the Subscription Shares by the Subscriber pursuant to the Subscription Agreement

• ‘‘Shareholder(s)’’ holder(s) of the Shares from time to time

• ‘‘Shares’’ the ordinary shares of HK$0.01 each of the Company

• ‘‘Special Mandate’’ the authority to be sought from the Shareholders to authorize the Directors to allot and issue the Subscription Shares and the Conversion Shares

• ‘‘Stock Exchange’’ The Stock Exchange of Hong Kong Limited

• ‘‘Subscriber’’ or ‘‘China Uranium’’ China Uranium Development Company Limited

• ‘‘Subscriber Group’’ the Subscriber and its subsidiaries

– 4 –

DEFINITIONS

• ‘‘Subscription Agreement’’

the subscription agreement dated 18 March 2011, between the Company, the Subscriber, Tao Lung (陶龍), Huang Jianming (黃 建明), Liu James Jin and the Controlling Shareholder in relation to the Share Subscription and the CB Subscription

• ‘‘Subscription Price’’

• HK$0.23 per Subscription Share

• ‘‘Subscription Shares’’

• the 1,670,000,000 Shares to be allotted and issued pursuant to the Subscription Agreement

• ‘‘Subsidiaries’’

• means the Company’s subsidiaries, and ‘‘Subsidiary’’ means any one of them and exclude any subsidiaries to be acquired and/or incorporated after closing

• ‘‘Subsidiaries Value’’ has the meaning given to it in the section headed ‘‘(V) Reimbursement Amounts’’ in the Letter from the Board in this circular

• ‘‘Trading Days’’ the days on which the Shares are traded on the Stock Exchange, each a ‘‘Trading Day’’

• ‘‘Whitewash Condition’’

• the Whitewash Waiver being granted by the Executive and the approval by the Independent Shareholders being obtained in accordance with the Code and all applicable laws

• ‘‘Whitewash Waiver’’

the whitewash waiver pursuant to Note 1 on dispensations from Rule 26 of the Code in respect of any obligation of the Subscriber and any parties acting in concert with it to make a mandatory general offer for all the issued Shares and other securities of the Company not already owned or agreed to be acquired by the Subscriber and any parties acting in concert with it which might otherwise arise as a result of the Subscriber subscribing for the Subscription Shares under the Subscription Agreement

• ‘‘%’’

per cent.

– 5 –

LETTER FROM THE BOARD

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(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1164)

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

23 May 2011

To the Shareholders

Dear Sir or Madam,

(1) SUBSCRIPTION AGREEMENT IN RELATION TO:

(A) PROPOSED SUBSCRIPTION OF SHARES IN VITAL GROUP HOLDINGS LIMITED; AND

(B) PROPOSED SUBSCRIPTION OF CONVERTIBLE BONDS ISSUED BY VITAL GROUP HOLDINGS LIMITED

• (2) APPLICATION FOR THE GRANTING OF THE WHITEWASH WAIVER

AND

(3) NOTICE OF EGM

INTRODUCTION

Reference is made to the Announcement. The purpose of this circular is to provide you with (i) further details about the Subscription Agreement; (ii) the letter from the Independent Board Committee; (iii) the recommendation from Guangdong Securities on the terms of the Subscription Agreement; and (iv) a notice convening the EGM.

– 6 –

LETTER FROM THE BOARD

THE SUBSCRIPTION AGREEMENT

The principal terms of the Subscription Agreement are summarised below.

Date:

18 March 2011

Parties:

(i) Tao Lung (陶龍) (ii) Huang Jianming (黃建明) (iii) Liu James Jin (iv) Perfect Develop Holding Inc. (v) China Uranium Development Company Limited (vi) The Company

(I) Share Subscription

The Company entered into the Subscription Agreement on 18 March 2011 with, among others, the Subscriber, pursuant to which the Company agreed to allot and issue and the Subscriber agreed to subscribe for a total of 1,670,000,000 Subscription Shares at the Subscription Price of HK$0.23 per Share for a total cash consideration of HK$384,100,000, representing (i) approximately 107.67% of the existing issued share capital of the Company as at the Latest Practicable Date, (ii) approximately 51.85% of the entire issued share capital of the Company as enlarged by the Subscription Shares (assuming that the conversion rights attached to the Convertible Bonds have not been exercised) and (iii) approximately 28.65% of the entire issued share capital of the Company as enlarged by the Subscription Shares (assuming that the conversion rights attached to the Convertible Bonds have been exercised in full).

The Subscription Price

The price per Subscription Share of HK$0.23 represents:

• . a discount of approximately 36.11% to the closing price of HK$0.36 per Share as quoted on the Stock Exchange on the Last Trading Day;

• . a discount of approximately 20.96% to the average closing price of HK$0.2910 per Share as quoted on the Stock Exchange for the last five Trading Days up to and including the Last Trading Day;

• . a discount of approximately 13.99% to the average closing price of HK$0.2674 per Share as quoted on the Stock Exchange for the last 10 Trading Days up to and including the Last Trading Day;

– 7 –

LETTER FROM THE BOARD

• . a discount of approximately 12.15% to the average closing price of HK$0.2618 per Share as quoted on the Stock Exchange for the last 15 Trading Days up to and including the Last Trading Day;

• . a discount of approximately 11.61% to the average closing price of HK$0.2602 per Share as quoted on the Stock Exchange for the last 20 Trading Days up to and including the Last Trading Day; and

• . a discount of approximately 8.77% to the average closing price of HK$0.2521 per Share as quoted on the Stock Exchange for the last 30 Trading Days up to and including the Last Trading Day.

Ranking of the Subscription Shares

The Subscription Shares shall, when allotted and issued, rank pari passu in all respects with the other Shares then in issue including the rights to all dividends and other distributions declared, made or paid at any time after the date of allotment, free and clear of Encumbrances. At the EGM, the Company will seek the Special Mandate from the Shareholders in order to allot and issue the Subscription Shares.

Conditions precedent for the Share Subscription

Closing of the Share Subscription is conditional upon the following conditions having been fulfilled (or where applicable, waived):

• (a) the Subscriber having completed due diligence investigations on each Group Company and the results of such due diligence investigations being satisfactory at the absolute discretion of the Subscriber;

• (b) the passing at the EGM of a resolution giving the Special Mandate to the Directors to allot and issue the Subscription Shares in accordance with the requirements of the Listing Rules and applicable laws;

• (c) the Listing Committee of the Stock Exchange granting the listing of, and permission to deal in, the Subscription Shares and such listing and permission not subsequently being revoked prior to the issue of the Subscription Shares on the Closing Date;

• (d) all consents and approvals of, notices to and filings or registrations with, any regulatory authority or other person required pursuant to any applicable laws, or pursuant to any contract binding on the Subscriber which are necessary or required in connection with execution, delivery or performance of the Share Subscription having been obtained and effected including but not limited to (if applicable):

• (i) approvals or filings required in relation to the Share Subscription and, if the Whitewash Condition is not satisfied but is waived and the Subscriber proceeds with the Offer, the Offer, from or with the National Development and Reform Commission of the PRC or its local counterpart;

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LETTER FROM THE BOARD

• (ii) approvals or filings required in relation to the Share Subscription and, if the Whitewash Condition is not satisfied but is waived and the Subscriber proceeds with the Offer, the Offer, from or with the Ministry of Commerce of the PRC or its local counterpart;

• (iii) approvals relating to the Share Subscription and, if the Whitewash Condition is not satisfied but is waived and the Subscriber proceeds with the Offer, the Offer, from the State Administration of Foreign Exchange of the PRC or its local counterpart; and

• (iv) filings required in relation to the Share Subscription and, if the Whitewash Waiver is not obtained, the Whitewash Condition is waived, and the Subscriber proceeds with the Offer, the Offer, with the State-owned Assets Supervision and Administration Commission of the State Council of the PRC or its local counterpart;

• (e) the Whitewash Condition being satisfied;

• (f) (if the Whitewash Condition is not satisfied but is waived and the Subscriber proceeds with the Offer), the Executive having cleared the Offer Announcement;

• (g) neither the Stock Exchange nor the Executive having indicated or required that the Founders, the Controlling Shareholder, the Company or the Subscriber should bear any responsibilities or perform any obligations that are unacceptable to the Subscriber (and the Founders, the Controlling Shareholder, the Company and the Subscriber shall not unreasonably refuse to bear or perform any such responsibilities or obligations).

The responsibilities and obligations of the Founders and the Controlling Shareholder are relevant as the Subscriber would, on completion of the Share Subscription and CB Subscription, hold approximately 51.85% of the entire issued share capital of the Company as enlarged by the Share Subscription (assuming the conversion rights attached to the Convertible Bonds have not been exercised) and would therefore be interested in the future performance of the Company as a substantial shareholder of the Company. Accordingly, as the Founders and the Controlling Shareholder will remain as Shareholders of the Company, the Subscriber believes that it would be in the best interests of the Company if the Founders and the Controlling Shareholder do not have any undue responsibilities or obligations imposed on them;

• (h) each of the Subsidiaries having amended their respective memorandum and articles of association in accordance with the terms of the Subscription Agreement and such amendments having become effective;

• (i) there having been no material adverse change to the operations, assets, liabilities, business condition or prospects of any Group Company;

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LETTER FROM THE BOARD

• (j) each of the Founders, the Controlling Shareholder and the Company not having breached any applicable laws, any provisions of the Subscription Agreement or the Share Charge, and all representations and warranties given by each of the Founders, the Controlling Shareholder and the Company remaining true, accurate and not misleading;

• (k) the Share Charge having been duly executed and delivered by the parties to it, in a form and substance satisfactory to the Subscriber; and

• (l) all Conditions Precedent for the CB Subscription (save for the condition in paragraph (d) of the section headed ‘‘Conditions Precedent for the CB Subscription’’) having been satisfied.

Waiver of Conditions

The Subscriber may at any time waive any or all of the conditions set out in paragraphs (a), (d), (e), (g), (h), (i), (j), (k) and (l) of the section headed ‘‘Conditions Precedent for the Share Subscription’’. The remaining conditions to the Share Subscription may not be waived unless otherwise agreed by the parties to the Subscription Agreement. In the event that the Subscriber elects to waive the satisfaction of the Whitewash Condition and proceeds with the Share Subscription, the Subscriber will comply with the relevant requirements under the Code, including the making of the Offer (which shall be accompanied by a confirmation from the financial adviser to the Subscriber stating that it is satisfied that the Subscriber has sufficient financial resources to satisfy the full acceptance of the Offer) and further announcements will be made as and when appropriate. As at the Latest Practicable Date, the Subscriber has not determined whether to proceed with the Share Subscription if the Whitewash Condition is not satisfied.

The Subscriber has also warranted to the other parties to the Subscription Agreement that the execution and completion of the Subscription Agreement would not result in the Subscriber acting in violation of any applicable laws and regulations. Accordingly, the Subscriber will only decide to waive condition (d) to the extent that any such consents, approvals or filings are not legally required for Closing.

As at the Latest Practicable Date, condition (k) above has been fulfilled.

Application for Listing

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

– 10 –

LETTER FROM THE BOARD

(II) CB Subscription

Pursuant to the Subscription Agreement, the Company has agreed to allot and issue, and the Subscriber has agreed to subscribe for 600,000 Convertible Bonds in the principal amount of HK$600,000,000 in accordance with the terms of the Subscription Agreement. The total subscription price for the CB Subscription of HK$600,000,000 will be paid by the Subscriber in cash at Closing. A summary of the principal terms of the Convertible Bonds is set out below.

• Issue Date : Closing Date Issuer : The Company Subscriber : China Uranium Issue Price : The issue price of the Convertible Bonds is 100% of the principal amount of the Convertible Bonds.

• Status : The Convertible Bonds constitute direct, unsubordinated, unconditional and unsecured obligations of the Company and shall at all times rank pari passu and without any preference or priority among themselves. The payment obligations of the Company under the Convertible Bonds shall, save for such exceptions as may be provided by mandatory provisions of applicable laws and subject to applicable terms and conditions of the Convertible Bonds, at all times rank at least equally with all of its other present and future direct, unsubordinated, unconditional and unsecured obligations.

• Interest : The Convertible Bonds do not bear interest unless, upon due presentation thereof, payment of principal is improperly withheld or refused. In such event, such unpaid amount shall bear interest at the rate of 1.8% per annum from the date of non-payment in accordance with the terms of the Convertible Bonds.

• Maturity Date : Subject to the terms and conditions of the Convertible Bonds, the Company shall redeem the Convertible Bonds on the fifth anniversary of the Closing Date (the ‘‘Maturity Date’’) at its principal amount.

• Conversion Rights : The Subscriber shall have the right to convert the Convertible Bonds in full or in part (in an amount of HK$1,000 and integral multiples thereof) into the Conversion Shares at any time on or after the Closing Date up to the close of business on the date falling seven days prior to the Maturity Date at the then prevailing Conversion Price subject to the terms and conditions of the Convertible Bonds.

– 11 –

LETTER FROM THE BOARD

If the issue of the Conversion Shares in satisfaction of the conversion right in respect of a Convertible Bond would result in the Company failing to meet its obligations under the Listing Rules to maintain the minimum prescribed percentage of the Shares that must at all times remain in public hands, then such conversion right in respect of a Convertible Bond shall be deemed not to have been exercised and the conversion notice in respect of such conversion right shall be withdrawn, without prejudice whatsoever to any later exercise of such conversion right.

Conversion Shares

• : Based on the initial Conversion Price of HK$0.23, 2,608,695,652 Conversion Shares will be issued upon full conversion of the Convertible Bonds.

The 2,608,695,652 Conversion Shares represent approximately 168.19% of the existing issued share capital of the Company as at the Latest Practicable Date and approximately 44.75% of the issued share capital of the Company as at Closing (as enlarged by the Subscription Shares and assuming full conversion of the Convertible Bonds).

Conversion Price

: The conversion price will initially be HK$0.23 per Share, subject to adjustments, including, among other things, for any consolidation, sub-division or reclassification of the Shares, capitalisation of profits or reserves, capital distributions, rights issue of Shares or option over Shares, rights issue of other securities, issues at less than current market price and other dilutive events (the ‘‘Conversion Price’’). The initial Conversion Price represents:

• (a) a discount of approximately 49.54% to the audited net asset value per Share as at 31 December 2010;

• (b) a discount of approximately 36.11% to the closing price of HK$0.36 per Share as quoted on the Stock Exchange on the Last Trading Day;

• (c) a discount of approximately 20.96% to the average closing price of HK$0.2910 per Share as quoted on the Stock Exchange for the last five Trading Days up to and including the Last Trading Day;

• (d) a discount of approximately 13.99% to the average closing price of HK$0.2674 per Share as quoted on the Stock Exchange for the last 10 Trading Days up to and including the Last Trading Day;

– 12 –

LETTER FROM THE BOARD

• (e) a discount of approximately 12.15% to the average closing price of HK$0.2618 per Share as quoted on the Stock Exchange for the last 15 Trading Days up to and including the Last Trading Day;

• (f) a discount of approximately 11.61% to the average closing price of HK$0.2602 per Share as quoted on the Stock Exchange for the last 20 Trading Days up to and including the Last Trading Day; and

• (g) a discount of approximately 8.77% to the average closing price of HK$0.2521 per Share as quoted on the Stock Exchange for the last 30 Trading Days up to and including the Last Trading Day.

• Redemption at Maturity

• : Unless previously redeemed, converted or purchased or cancelled, the Company will redeem the Convertible Bonds on the Maturity Date at its principal amount.

Transferability

• : Save for transfers to affiliates, the Convertible Bonds and interests in such Convertible Bonds shall not be transferable without the consent of the Company.

• Listing : The Convertible Bonds will not be listed on the Stock Exchange or any other stock exchange. An application will be made to the Stock Exchange for the listing of, and permission to deal in, the Conversion Shares.

• Ranking : The Conversion Shares will be fully paid and will rank pari passu in all respects among themselves and the Shares in issue at the date on which the holder(s) of the Conversion Shares is/are registered as such in the Company’s register of members.

Conditions Precedent for the CB Subscription

Closing of the CB Subscription is conditional upon the following conditions having been fulfilled (or where applicable, waived):

• (a) the passing at the EGM of a resolution giving the Special Mandate to the Directors to allot and issue the Convertible Bonds and the Conversion Shares, in accordance with the requirements of the Listing Rules and all applicable laws and such approval not being amended and remaining in full force and effect;

• (b) the Listing Committee of the Stock Exchange granting the listing of, and permission to deal in, the Conversion Shares and such approval not being amended and remaining in full force and effect;

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LETTER FROM THE BOARD

• (c) all consents and approvals of, notices to and filings or registrations with, any regulatory authority or other person required pursuant to any applicable laws, or pursuant to any contract binding on the Subscriber which are necessary or required in connection with execution, delivery or performance of the CB Subscription having been obtained and effected including but not limited to (if applicable):

• (i) approvals or filings required in relation to the CB Subscription from or with the National Development and Reform Commission of the PRC or its local counterpart;

• (ii) approvals or filings required in relation to the CB Subscription from or with the Ministry of Commerce of the PRC or its local counterpart;

• (iii) approvals required in relation to the CB Subscription from the State Administration of Foreign Exchange of the PRC or its local counterpart; and

• (iv) filings required in relation to the CB Subscription with the State-owned Assets Supervision and Administration Commission of the State Council of the PRC or its local counterpart; and

• (d) all Conditions Precedent for the Share Subscription (save for the condition in paragraph (l) of the section headed ‘‘Conditions Precedent for the Share Subscription’’) having been satisfied.

As at the Latest Practicable Date, none of the conditions listed above have been fulfulled.

Waiver of Conditions

The Subscriber may at any time waive the conditions set out in paragraphs (c) and (d) of the section headed ‘‘Conditions Precedent for the CB Subscription’’. The remaining Conditions Precedent for the CB Subscription may not be waived unless otherwise agreed by the parties to the Subscription Agreement. As mentioned above, the Subscriber has warranted to the other parties to the Subscription Agreement that the execution and completion of the Subscription Agreement would not result in the Subscriber acting in violation of any applicable laws and regulations. Accordingly, the Subscriber will only decide to waive condition (c) to the extent that any such consents, approvals or filings are not legally required for Closing.

Application for Listing

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

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LETTER FROM THE BOARD

(III) Inter-conditionality and Simultaneous Closing

The completion of each of the Share Subscription and the CB Subscription is conditional on their respective Conditions Precedent being fulfilled (or, if applicable, waived) and shall be inter-conditional and take place simultaneously on the Closing Date in accordance with the terms of the Subscription Agreement. Closing is expected to take place on the third Business Day after the date on which the Net Cash of the Company as at the CP Satisfaction Date is determined by an independent auditor (which shall be no later than 10 Business Days following the CP Satisfaction Date) (the ‘‘Net Cash Confirmation Date’’).

If any Conditions Precedent are not satisfied or waived by the date that is five months from the date of the Subscription Agreement or any other date as agreed by the parties, the Subscription Agreement may be terminated by the Subscriber.

If any Conditions Precedent are not satisfied or waived within five months from the date of the Subscription Agreement, until the termination of the Subscription Agreement (by the Subscriber or otherwise), each of the parties to it has to continue to use all reasonable endeavours to procure the satisfaction of the Conditions Precedent for which it is responsible and will continue to be bound by the other provisions of the Subscription Agreement. Accordingly, the Conditions Precedents may still be satisfied and/or Closing may still occur, on a date that is five months after the date of the Subscription Agreement.

(IV) Warranties and undertakings under the Subscription Agreement

In connection with the Share Subscription and the CB Subscription, each of the Company, the Controlling Shareholder and the Founders has given certain warranties to the Subscriber, in respect of, among other things, the underlying business and operations of the Group, preparation of the audited accounts of the Group, ownership of the properties owned by the Group, compliance with applicable laws and regulations and litigation and proceedings against the Group. The Subscriber has also provided some customary warranties to the Company, the Controlling Shareholder and the Founders in relation to its authority and capacity to enter into the Subscription Agreement, that the Subscriber is duly incorporated and that the Subscription Agreement and the Share Charge, when executed, will constitute valid and binding obligations on the Subscriber, etc.

In addition, the Company has agreed, and the Controlling Shareholder and the Founders have agreed to procure, among other things:

• (a) that between the date of the Subscription Agreement and Closing (both days inclusive), each of the Group Companies shall not, without the consent of the Subscriber, take certain actions, including but not limited to transferring or disposing of assets or shares in excess of certain amounts and amending the constitutional documents of any Group Company;

• (b) that as at the CP Satisfaction Date and on the Closing Date, the Net Cash of the Company will be at least HK$13,750,000;

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LETTER FROM THE BOARD

• (c) that the Company shall promptly provide all information reasonably requested by the Subscriber for the purposes of due diligence investigations in order to enable the Subscriber to conduct due diligence investigations within 30 Business Days from the date of the Subscription Agreement;

• (d) to take all necessary action to procure the satisfaction of the Conditions Precedent set out in paragraphs (b) and (e) of the section headed ‘‘Conditions Precedent for the Share Subscription’’ and in paragraph (a) of the section headed ‘‘Conditions Precedent for the CB Subscription’’, including, to promptly prepare and issue to the Shareholders the circular in connection with the Subscription Agreement and convene the EGM, and, to the extent permitted by applicable laws and regulations, to vote in favour of the resolutions to be proposed at the EGM;

• (e) to make an application to the Stock Exchange as soon as reasonably practicable for the listing of and permission to deal in the Subscription Shares and the Conversion Shares; and

• (f) that between the date of the Subscription Agreement and Closing (both days inclusive), each Group Company shall carry on its business as a going concern in the ordinary and usual course as carried on prior to the date of the Subscription Agreement, save in so far as provided in the Subscription Agreement.

On 15 April 2011, the Company disposed of a total of nine dormant Subsidiaries to Independent Third Parties. The Directors confirm that these dormant Subsidiaries do not have business operations and the disposal of these dormant Subsidiaries will not have any positive or negative impact on the financial position of the Group.

The Directors intend to increase the Company’s net cash position by collecting more account receivables. As at the Latest Practicable Date, the Company has not determined any proposed disposal of its assets to increase the Net Cash of the Company.

(V) Reimbursement Amounts

At Closing, if the Net Cash of the Company is lower than HK$13,750,000, the Controlling Shareholder shall reimburse the Company for the difference between HK$13,750,000 and the Net Cash of the Company as at Closing, grossed up to include any tax payable by the Company and the related costs in respect of such reimbursement (the ‘‘First Reimbursement Amount’’).

As soon as reasonably practicable after the expiry of the Reimbursement Period, the Company shall appoint a valuer and procure that such valuer determines the value of the Company’s interest in the Subsidiaries as at the date of expiry of the Reimbursement Period, taking into account the debt of each Subsidiary (including any actual or contingent liabilities, and liabilities which are taxation, environmental and labour related) and any sums payable in respect of any termination of the services of any employees of any Subsidiary and termination of any contracts of any Subsidiary (the ‘‘Subsidiaries Value’’). If the Subsidiaries Value is less than HK$261,250,000, the Controlling Shareholder shall reimburse the Company for the difference between HK$261,250,000 and the Subsidiaries Value, grossed up to include any tax payable by the Company and the related costs in respect of such reimbursement (the ‘‘Second Reimbursement Amount’’).

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LETTER FROM THE BOARD

The reimbursement arrangements outlined above were put into place in light of the following commercial considerations:

• (i) as of the date of the Subscription Agreement, the Controlling Shareholder has, through its board representatives, been closely involved in the management of the Company;

• (ii) the Controlling Shareholder will remain a substantial shareholder of the Company following Closing;

• (iii) the Subscriber has agreed to the terms of the Share Subscription and the CB Subscription based solely on its review of publicly available information relating to the Company and prior to conducting due diligence on the Company;

• (iv) to provide some assurance to the Subscriber as to the financial condition of the Company and its financial viability in the near future, and to reflect the continuing participation and commitment of the Controlling Shareholder as a shareholder of the Company, the Controlling Shareholder has agreed to reimburse the Company in respect of the Net Cash of the Company and the Subsidiaries Value; and

• (v) the reimbursement arrangements would be in the best interest of the Company and its Shareholders as any reimbursement amounts due will be paid to the Company.

(VI) Share Charge

On 1 April 2011, the Controlling Shareholder charged 450,000,000 Shares in favour of the Subscriber (the ‘‘Charged Shares’’) pursuant to the terms of the Share Charge to guarantee the obligations of the Controlling Shareholder under the Subscription Agreement, including but not limited to the obligations of the Controlling Shareholder to pay the First Reimbursement Amount and the Second Reimbursement Amount, any amounts due under the Indemnity or losses suffered as a result of any breach of warranties. The Share Charge will be released on the later of the date of expiry of the Reimbursement Period and the date on which the Controlling Shareholder has discharged all its obligations to pay the Second Reimbursement Amount (the ‘‘Settlement Date’’).

(VII) Lock Up

• (a) For a period of six months commencing from the date of the Subscription Agreement, the Controlling Shareholder shall not, and shall not agree to sell, assign, transfer or otherwise dispose of any interest comprised in the Shares held by the Controlling Shareholder (other than the Charged Shares).

• (b) For a period commencing from the date of the Subscription Agreement and ending on the Settlement Date (both days inclusive):

• (i) the Controlling Shareholder shall not, and shall not agree, to sell, assign, transfer or otherwise dispose of any interest in the Charged Shares; and

• (ii) each of the Founders shall not, and shall not agree to sell, assign, transfer or otherwise dispose of any of its interest in the shares of the Controlling Shareholder.

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LETTER FROM THE BOARD

The Founders and the Controlling Shareholder agreed to the lock up arrangements described above as a show of confidence and support to the Company as they believe that the Share Subscription and the CB Subscription will enhance the business development of the Company as the Company would be able to leverage on the background and expertise of the Subscriber to explore investment opportunities. The Founders and the Controlling Shareholder also consider that the terms of the lock-up arrangements are fair and reasonable, and in the interests of the Company and themselves as a whole.

The Subscriber requested the lock-up arrangements to address the concern that any disposal of any portion of the substantial shareholding retained by the Controlling Shareholder following Closing (being approximately 16.22% of the entire issued share capital of the Company as enlarged by the Share Subscription (assuming the conversion rights attached to the Convertible Bonds have not been exercised)) may have a negative impact on the price of the Shares.

The Subscriber also requested a lock up of the Founder’s interests in the Controlling Shareholder as the Controlling Shareholder owes various obligations under the Subscription Agreement to the Company and to the Subscriber. Such a lock up would ensure that the Founders continue to be shareholders of the Controlling Shareholder so that the Subscriber and the Company will have some assurance that the Controlling Shareholder will continue to perform its obligations under the Subscription Agreement and, if necessary, be provided with financial support from the Founders, to fulfill such obligations.

(VIII) Indemnity

The Controlling Shareholder and the Founders have jointly and severally agreed to indemnify the Subscriber and each other member of the Subscriber Group for any losses suffered by the Subscriber or any other member of the Subscriber Group arising in connection with or as a result of (i) any investigations conducted by the Stock Exchange or any other regulatory authority against the Company for breaches of the Listing Rules or other applicable laws and regulations and (ii) any act or omission of any of the Subsidiaries (the ‘‘Indemnity’’).

BASIS FOR DETERMINING THE SUBSCRIPTION PRICE AND THE CONVERSION PRICE

The Subscription Price was arrived at after arm’s length negotiations between the Company and the Subscriber with reference to the market price of the Shares prior to the suspension of trading of the Shares on 4 March 2011 and the recent trading volume of the Shares prior to the date of the Announcement. The Subscription Price is exclusive of brokerage, SFC transaction levy and Stock Exchange trading fee as may be payable. The net price (net of commission and expenses incurred) per Subscription Share is expected to be approximately HK$0.227.

The initial Conversion Price of HK$0.23 was arrived at after arm’s length negotiations between the Company and the Subscriber with reference to the market price of the Shares prior the suspension of trading of the Shares on 4 March 2011 and the recent trading volume of the Shares prior to the date of the Announcement. The initial Conversion Price is exclusive of brokerage, SFC transaction levy and Stock Exchange trading fee as may be payable. The net price (net of commission and expenses incurred) per Conversion Share, based on the initial Conversion Price is expected to be approximately HK$0.23.

The Board (including the independent non-executive Directors after considering the advice of the Independent Financial Adviser) considers that the Subscription Price and the Initial Conversion Price are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

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LETTER FROM THE BOARD

MAINTENANCE OF LISTING

The Subscriber intends to maintain the listing of the Shares on the Main Board of the Stock Exchange. If the Company remains listed on the Stock Exchange, the Stock Exchange will closely monitor all future acquisitions or disposals of assets by the Company. Any acquisitions or disposals of assets by the Company will be subject to the provisions of the Listing Rules. Pursuant to the Listing Rules, the Stock Exchange has the discretion to require the Company to issue an announcement and/or circular to the Shareholders irrespective of the size of the transaction, particularly when such proposed transaction represents a departure from the principal activities of the Company. The Stock Exchange also has the power pursuant to the Listing Rules to aggregate a series of acquisitions of assets by the Company and any such acquisitions may result in the Company being treated as if it were a new applicant and subject to the requirements of new listing applications as set out in the Listing Rules.

REASONS FOR AND BENEFITS OF ENTERING INTO THE SUBSCRIPTION AGREEMENT AND THE USE OF PROCEEDS

The principal activities of the Group are the selling, distributing and manufacturing of pharmaceutical and food products and property investment. CGNPC, which indirectly controls the Subscriber, is a PRC state-owned nuclear power producer with material interests in nuclear fuels procurement and production. The Board is of the view that, in light of the year-on-year declines in both the turnover and profit after tax for the year ended 31 December 2009 and the year ended 31 December 2010 due to the keen competition in the pharmaceutical industry, the Share Subscription and the CB Subscription present an opportunity for the Company to explore the possibility of diversification.

Upon Closing, the Subscriber intends to conduct a detailed review of the existing business and financial position of the Group for the purpose of assisting the Company in formulating business plans and strategies for its future business development. The Company believes that it would be able to leverage on the background and expertise of the Subscriber in the uranium industry to explore business development and investment opportunities. The gross proceeds from the Share Subscription and the CB Subscription will be approximately HK$984,100,000. The Company intends to use the proceeds from the Share Subscription and the CB Subscription to finance any future business opportunities or investments of the Group. As at the Latest Practicable Date, no such investment or opportunity has yet been identified. However, the Board considers that it would be beneficial to substantially enhance the capital base and cash flow position of the Company at the outset to better prepare for the timely participation in any such business opportunities that may be identified and/or may materialise. The Company will make announcement(s) if and when any investments are implemented as necessary in compliance with the relevant requirements of the Listing Rules.

As a small cap company, the Company would have to devote extra costs and efforts in order to procure underwriters to carry out rights issues or open offers on a fully underwritten basis. Given the relatively small size of fundraising undertaken by the Company, in general, it is expected that it may be difficult to place down new Shares after an underwriter has committed its fully underwritten obligation and hence, it is possible that such underwriter may incur an obligation to make a general offer under the Code. In addition, in view of the recent financial and operational performance of the Company, it is uncertain whether the Company will be able to procure such underwriter(s). Though both the Subscription Price and the Conversion Price represent a discount of 36% to the closing price of the Share as of the Last Trading Day, the discounts to the average closing prices for the last 10, 15, 20 and

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LETTER FROM THE BOARD

30 days are all less than 15%. Furthermore, given that the Share Subscription and the CB Subscription would allow the Company to raise such a significant amount of capital of approximately HK$984 million at such a low cost, the Board is of the view that the Subscription Agreement is fair and reasonable as a whole even if there is a dilution effect on the interests of the public shareholders.

The Board (including the independent non-executive Directors after considering the advice of the Independent Financial Adviser) considers that the terms of the Subscription Agreement are on normal commercial terms, are fair and reasonable, and in the interests of the Company and the Shareholders as a whole.

APPLICATION FOR THE WHITEWASH WAIVER

The Subscriber and parties acting in concert with it, do not, as at the Latest Practicable Date, own, control or direct any Shares, convertible securities, warrants or options (or outstanding derivatives) in respect of the Shares. Upon Closing, the interests held by the Subscriber and parties acting in concert with it will, in aggregate, hold Shares representing approximately 51.85% of the entire issued share capital of the Company as enlarged by the issue of the Subscription Shares (assuming that all the Subscription Shares have been issued but the conversion rights attached to the Convertible Bonds have not been exercised).

Accordingly, the Subscriber will, unless the Whitewash Waiver is granted by the Executive and the approval of the Independent Shareholders is obtained in accordance with the Code, be obliged to make a mandatory general offer for all the issued Shares and other securities of the Company not already owned or agreed to be acquired by the Subscriber and parties acting in concert with it pursuant to Rule 26.1 of the Code.

The Subscriber has applied to the Executive for the Whitewash Waiver pursuant to Note 1 on dispensations from Rule 26 of the Code, which, if granted, will be subject to the approval of the Independent Shareholders taken by way of poll at the EGM.

If the Whitewash Waiver is granted and approved by the Independent Shareholders and Closing occurs, the Subscriber and parties acting in concert with it will hold more than 50% of the issued share capital of the Company. As such, any further acquisition of interests in the Company by the Subscriber will not be subject to the obligation to make a general offer under the Code.

INTEREST OF THE SUBSCRIBER AND PARTIES ACTING IN CONCERT WITH IT

As at the Latest Practicable Date, neither the Subscriber nor any party acting in concert with it owns, controls or directs any Shares, convertible securities, warrants or options (or outstanding derivatives) in respect of the Shares.

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LETTER FROM THE BOARD

Save for the entering into of the Subscription Agreement and the Share Charge by the Subscriber, neither the Subscriber nor any party acting in concert with it has dealt for value in any Shares or convertible securities, warrants or options (or outstanding derivatives) in respect of the Shares during the six month period prior to and including the date of the Announcement.

FURTHER AGREEMENTS OR ARRANGEMENTS

As at the Latest Practicable Date:

• (a) save for the transactions contemplated under the Subscription Agreement and the Share Charge, there is no arrangement (whether by way of option, indemnity or otherwise) in relation to the Shares or the shares of the Subscriber which might be material to the Subscription Agreement or the Whitewash Waiver;

• (b) save for the Subscription Agreement, there is no agreement or arrangement to which the Subscriber is a party which relates to the circumstances in which it may or may not invoke or seek to invoke a condition to the Subscription Agreement; and

• (c) neither the Subscriber nor any party acting in concert with it has borrowed or lent any relevant securities of the Company.

DISCLOSURE OF DEALINGS

The respective associates (as defined under the Code which includes a person who owns or controls 5% or more of any class of relevant securities (as defined in Note 4 to Rule 22 of the Code)) of the Subscriber and the Company are reminded to disclose their dealings in the Shares pursuant to the requirements of the Code.

Pursuant to Note 11 to Rule 22 of the Code, stockbrokers, banks and others who deal in relevant securities on behalf of clients have a general duty to ensure, so far as they are able, that those clients are aware of the disclosure obligations attaching to associates and other persons under Rule 22 and that those clients are willing to comply with them. Principal traders and dealers who deal directly with investors should, in appropriate cases, likewise draw attention to the relevant rules of the Code. However, this does not apply when the total value of dealings (excluding stamp duty and commission) in any relevant security undertaken for a client during any seven-day period is less than HK$1 million. This dispensation does not alter the obligation of principals, associates and other persons themselves to initiate disclosure of their own dealings, whatever total value is involved. Intermediaries are expected to co-operate with the Executive in its dealings enquiries. Therefore, those who deal in relevant securities should appreciate that stockbrokers and other intermediaries will supply the Executive with relevant information as to those dealings, including identities of clients, as part of that co-operation.

SUBSCRIBER’S INTENTIONS IN RELATION TO THE GROUP

The Subscriber intends to maintain the listing of the Company on the Stock Exchange. In addition, it intends to conduct a detailed review of the existing business and financial position of the Group for the purpose of assisting the Company in formulating business plans and strategies for its future business development which would enable the Group to diversify its business and broaden its income sources. In this regard, the Subscriber intends to actively assist and cooperate with the Company to explore other

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LETTER FROM THE BOARD

investment or business options and opportunities, including, potentially, selling or disposing of shares in, or assets of the Group provided that any such sale or disposal would not result in the Company becoming a company whose assets consist wholly or substantially of cash or otherwise becoming unsuitable for listing under Chapter 8 of the Listing Rules. The Subscriber would like to develop the Company into a uranium resources investment and trading platform. If suitable investment or business opportunities are identified and are available to the Group, the Company may utilise all or part of the net proceeds from the issuance of the Subscription Shares and the Convertible Bonds and its other resources to fund such investments or opportunities.

The Subscriber has been seeking investment opportunities in Hong Kong, and in particular, investments in companies which may have the capacity and potential to develop into a uranium resources investment and trading platform. On the other hand, from the Company’s perspective, its turnover declined by 47.5% and its profit after tax dropped by 13% for the year ended 31 December 2009. The trend continued during the year ended 31 December 2010, where the turnover and profit after tax of the Company also declined by 10.6% and 26% respectively. The Board is also of the view that, in light of the keen competition in the pharmaceutical industry, the Share Subscription and the CB Subscription present an opportunity for the Company to explore the possibility of diversification and, in the process, to raise new capital and leverage on the background and expertise of the Subscriber in the uranium industry to explore business development and investment opportunities in this industry. The Company and the Subscriber share the view that an investment in the Company by the Subscriber through the Share Subscription and the CB Subscription will offer them the opportunity to co-operate and develop the business of the Company in a manner that would meet their respective commercial objectives.

Notwithstanding the above, the Subscriber intends to continue the existing business of the Group and continue to employ the employees of the Group after Closing, whilst actively assisting and cooperating with the Company in exploring investment and business opportunities with a view to developing the Company into a uranium resources investment and trading platform, including through the acquisition of assets. When such new business venture(s) and investments become reasonably selfsustainable, the Subscriber will re-consider its business options at that stage, including whether to dispose of part or all of the existing business and assets of the Group. Such disposals, if made, may impact on the continued employment of current and other employees of the Group. Any such acquisition of assets or disposals will be made in compliance with the requirements of the Code, the Listing Rules and other applicable laws and regulations.

BOARD COMPOSITION OF THE COMPANY

After Closing, subject to applicable laws and regulations (including the Listing Rules and the Code), the Subscriber and the Controlling Shareholder shall procure that the Board shall consist of a minimum of nine Directors (or such other number as may be agreed by the Subscriber), including such number of independent non-executive Directors as required from time to time under the Listing Rules.

It is intended that Mr. Liu James Jin, Mr. Xu Xiaofan, Madam Guo Lin, Mr. Huang Zemin, Mr. Li Ke, Mr. Lee Kwong Yiu, Mr. Lui Tin Nang and Mr. Chong Cha Hwa will resign as Directors after Closing. Mr. Chen Zhiyu, as the representative of the Controlling Shareholder, will remain as a Director after Closing. Mr. Chen will continue to be closely involved in the management of the Company. In addition, the Company has, under the Subscription Agreement, agreed to maintain the stability of the

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LETTER FROM THE BOARD

management structure of the Subsidiaries for the period commencing from the date of the Subscription Agreement to the end of the Reimbursement Period, provided that the Company shall not be so bound if any of the Founders breach their undertaking to the Company to procure that the Subsidiaries are managed and operated in compliance with applicable laws and regulations. The Company considers that the resignation of the existing Directors as mentioned above will not cause any adverse impact to the Company’s operations.

Under the Subscription Agreement, the Subscriber shall, subject to applicable laws and regulations, be entitled, as from the Closing Date, from time to time, to nominate for appointment to the Board five persons as Directors (excluding any independent non-executive directors) and three persons as independent non-executive Directors, and to remove such Directors nominated, and upon removal, to nominate for appointment other persons in their replacement. It is contemplated by the parties that if the Whitewash Condition is not satisfied but is waived and the Subscriber proceeds with the Offer, one candidate nominated by the Subscriber will be appointed as Director after the despatch of the composite offer and response document and the other four candidates nominated by the Subscriber will be appointed as Directors, on the first closing date of the Offer. The Controlling Shareholder has agreed to use its voting rights to, and procure that the Director(s) nominated by it, vote in support of the appointment of the Subscriber’s chosen nominees to the Board. The Board committees of the Company shall, to the extent permitted by applicable laws and the constitutional documents of the Company, be comprised the Directors nominated by the Subscriber as from the Closing Date and the Controlling Shareholder shall use its voting rights to, and procure that the Director(s) nominated by it, vote in support of the appointment of the Subscriber’s chosen nominees to the relevant Board committees. It is expected that Mr. Xu Xiaofan, Madam Guo Lin, Mr. Huang Zemin, Mr. Li Ke, Mr. Liu James Jin, Mr. Lee Kwong Yiu, Mr. Lui Tin Nang and Mr. Chong Cha Hwa will resign as Directors after Closing.

The Controlling Shareholder shall be entitled, during the Reimbursement Period, for so long as it continues to hold not less than 5% of the total issued share capital of the Company and provided the Controlling Shareholder remains as the second largest Shareholder of the Company, to nominate for appointment to the Board one person as Director and to remove such Director nominated, and upon removal, to nominate for appointment another person in replacement. The Subscriber has agreed to use its voting rights to, and procure that the Directors nominated by it, vote in support of the appointment of the Controlling Shareholder’s chosen nominee to the Board.

If at any time prior to Closing, any Director is reprimanded, censured, disciplined, criticised or investigated by the Stock Exchange or any other regulatory authority, each of the Controlling Shareholder and the Founders shall, upon the request of the Subscriber, procure that such Director resigns from the Board together with a binding acknowledgement that such Director has no claim against any Group Company for breach of contract, compensation for loss of office, redundancy or unfair dismissal or on any other account whatsoever and that no agreement or arrangement exists under which any Group Company has or could have any obligation to such Director.

The Founders would continue to co-operate and communicate regularly with the directors and management of the Subsidiaries and have undertaken to the Company to procure that the Subsidiaries are managed and operated in compliance with applicable laws and regulations. The Company shall also, for the period commencing from the date of the Subscription Agreement to the end of the Reimbursement Period (both days inclusive), maintain the stability of the management structure of the Subsidiaries, provided that the Company shall not be so bound as from the Closing Date if any of the

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LETTER FROM THE BOARD

Founders breach their undertaking to the Company to procure that the Subsidiaries are managed and operated in compliance with applicable laws and regulations. The Company shall also procure that each Subsidiary amends its memorandum and articles of association prior to Closing, such that certain matters can only be effected with the approval of a simple majority of its shareholders. These matters include the transfer of assets in excess of certain amounts, proposal of and implementation of employee redundancy plans, changes to accounting policies and amendments to constitutional documents.

INFORMATION ABOUT THE SUBSCRIBER

The Subscriber was incorporated in Hong Kong on 17 October 2006 and is a wholly owned subsidiary of CGNPC Uranium Resources Co., Ltd., a company incorporated in the PRC on 15 August 2006, which is in turn a subsidiary of CGNPC. Based in Shenzhen within the PRC, CGNPC is a state owned nuclear power producer with material interests in nuclear fuels procurement and production.

CGNPC Uranium Resources Co., Ltd.’s core business activities are to (i) manage supply of nuclear fuels for CGNPC; (ii) establish an interest in and support development of commercial resources and reserves of natural uranium; and (iii) deal with the import and export trade of PRC and overseas natural uranium and related products.

FUND RAISING ACTIVITIES OF THE COMPANY IN THE PAST 12 MONTHS

The Company has not conducted any fund raising activity in the 12 months immediately before the date of this circular.

SHAREHOLDING STRUCTURE OF THE COMPANY

The following table sets out the shareholding structure of the Company (i) as at the Latest Practicable Date; (ii) upon issuance and allotment of the Subscription Shares; and (iii) upon closing of the Share Subscription and the CB Subscription and assuming full conversion of the Convertible Bonds:

Shareholders Perfect Develop Holding Inc. (Note 1) Executive Directors Mr. Chen Zhiyu Mr. Liu James Jin (Note 2) Subscriber and parties acting in concert with it Subscription Shares Conversion Shares Other Public Shareholders Total	Shareholding structure as at the Latest Practicable Date No. of Shares % 522,526,940 33.69 26,666 0.0017 15,630,400 1.01 — — — — — — 1,012,872,987 65.30 1,551,056,993 100.00	Upon issuance and allotment of the Subscription Shares No. of Shares % 522,526,940 16.22 26,666 0.0008 15,630,400 0.49 1,670,000,000 51.85 — — 1,670,000,000 51.85 1,012,872,987 31.44 3,221,056,993 100.00	Upon closing of the Share Subscription and the CB Subscription and assuming full conversion of the Convertible Bonds No. of Shares % 522,526,940 8.96 26,666 0.0005 15,630,400 0.27 1,670,000,000 28.65 2,608,695,652 44.75 4,278,695,652 73.40 1,012,872,987 17.37 (Note 3) 5,829,752,645 100.00	Upon closing of the Share Subscription and the CB Subscription and assuming full conversion of the Convertible Bonds No. of Shares % 522,526,940 8.96 26,666 0.0005 15,630,400 0.27 1,670,000,000 28.65 2,608,695,652 44.75 4,278,695,652 73.40 1,012,872,987 17.37 (Note 3) 5,829,752,645 100.00
				73.40 17.37 (Note 3)
				100.00

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LETTER FROM THE BOARD

Notes:

1. 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 of the Company, and currently paid consultants of the Company. Mr. Liu James Jin is a founder of the Group and an executive Director. On 1 April 2011, Perfect Develop Holding Inc. charged 450,000,000 Shares in favour of the Subscriber pursuant to the Share Charge.

2. Mr. Liu James Jin has been granted 8,500,000 share options to subscribe for 8,500,000 Shares. As at the Latest Practicable Date, none of these share options have been exercised.

3. Upon closing of the Share Subscription and assuming full conversion of the Convertible Bonds, Perfect Develop Holding Inc. will become a member of the public. The total number of Shares held by the public shareholders will be 1,535,399,927 Shares representing approximately 26.33% of the total issued share capital of the Company. Therefore there will not be a breach of the public float requirement under the Listing Rules upon the Closing of the Share Subscription and assuming full conversion of the Convertible Bonds.

As at the Latest Practicable Date, the Company has granted the following share options pursuant to the share option scheme adopted on 26 January 2002 and the share option scheme adopted on 23 July 2003:

Executive Directors Mr. Xu Xiaofan Mr. Liu James Jin Ms. Guo Lin Ex-Directors Mr. Tao Lung (Note) Mr. Huang Jianming (Note) Mr. Shen Songqing (Note) Independent non-executive Directors Mr. Chong Cha Hwa Employees Other eligible participants Total	Outstanding share options 15,000,000 8,500,000 11,500,000 15,000,000 8,500,000 8,500,000 1,500,000 32,390,000 11,500,000
	112,390,000

Note: Each of Mr. Tao Lung, Mr. Huang Jianming and Mr. Shen Songqing resigned with effect from 11 November 2009. However, the outstanding options held by each of them can still be exercised up until 6 February 2012.

Save as disclosed above, there are no other options, convertible securities, warrants or derivatives issued by the Company.

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LETTER FROM THE BOARD

VALUATION OF THE PROPERTY INTERESTS

To comply with the Listing Rules, the Company has engaged BMI Appraisals Limited to value the property interests of the Group. Details of the valuation report are set out in Appendix II of this circular. Disclosure of the reconciliation of the net book value and the valuation as required under Rule 5.07 of the Listing Rules is set out below:

	As at	As at
	31 December	31 March
	2010	2011
	HK$	HK$
Valuation of properties as at 31 March 2011 as set out in the
Property Valuation in Appendix II of this circular	—	286,480,000
Net book value as at 31 December 2010	209,045,000	—
Additions	—
Depreciation	(1,352,000)	—
Disposal	—	—
Exchange realignment	6,580,000	—
Net book value of properties as at 31 March 2011	—	214,273,000
Revaluation surplus	—	72,207,000

FURTHER DISCLOSURE IN RELATION TO THE GROUP’S BUSINESS

Cessation of sale of Agiolax

Since the import drug licence for Agiolax expired on 17 March 2009 and was not renewed, Beshabar (Macao Commercial Offshore) Limited has stopped purchasing Agiolax, a drug to restore the functions of the intestines, from Madaus GmbH and importing the same to the PRC for sale.

APPOINTMENT OF THE INDEPENDENT BOARD COMMITTEE AND THE INDEPENDENT FINANCIAL ADVISER

The Independent Board Committee comprising the Company’s independent non-executive Directors (namely Mr. Lee Kwong Yiu, Mr. Lui Tin Nang and Mr. Chong Cha Hwa) has been established to advise the Independent Shareholders as to (i) whether the Share Subscription and the Whitewash Waiver are fair and reasonable and in the interests of the Shareholders as a whole; and (ii) how to vote at the EGM.

Guangdong Securities Limited has been appointed (with the approval of the Independent Board Committee) as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the Subscription Agreement and the Whitewash Waiver. The letter from Guangdong Securities setting out its advice and recommendations to the Independent Board Committee and the Independent Shareholders on the Subscription Agreement and the Whitewash Waiver is set out on pages 31 to 52 of this circular.

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LETTER FROM THE BOARD

EGM

The EGM will be held at Gloucester Room II, 3/F, The Excelsior Hong Kong, 281 Gloucester Road, Causeway Bay, Hong Kong on Wednesday, 8 June 2011 at 11:00 a.m. to consider and, if thought fit, approve the ordinary resolutions by way of poll in respect of (a) the terms of the Subscription Agreement and transactions contemplated thereunder; (b) the issue and allotment of the Subscription Shares and the Conversion Shares to be issued upon exercise of the conversion right attached to the Convertible Bonds; and (c) the Whitewash Waiver. A notice of the EGM is set out on pages 130 to 131 of this circular.

Despite the fact that the Controlling Shareholder is a party to the Subscription Agreement, its role is to provide guarantee and undertakings in favour of the Subscriber for the Company’s compliance with and performance of certain obligations under the Subscription Agreement and in particular, payment of the First Reimbursement Amount and the Second Reimbursement Amount. Further, taking into consideration that the Subscription Shares and the Conversion Shares will not be allotted and issued to the Controlling Shareholder, and none of the sales proceeds of HK$984,100,000 will be paid to the Controlling Shareholder or for the benefit of the Controlling Shareholder, the Directors consider that the Controlling Shareholder has no material interest in the Share Subscription and the CB Subscription under the Listing Rules.

None of the Shareholders (including the Controlling Shareholder) has any material interest in the Share Subscription and the CB Subscription under the Listing Rules. Therefore, none of the Shareholders (including the Controlling Shareholder) shall be required to abstain from voting in respect of the ordinary resolutions approving the Subscription Agreement and the transactions contemplated thereunder. In respect of the ordinary resolution approving the Whitewash Waiver, the Controlling Shareholder, its parties acting in concert and its associates shall be required to abstain from voting on this resolution. As at the Latest Practicable Date, the Controlling Shareholder, its parties acting in concert together with its associates hold 559,298,988 Shares of the Company.

A form of proxy for use by the Shareholders at the EGM is enclosed with this circular. Whether or not you are able to attend the EGM, please complete and return the enclosed form of proxy in accordance with the instructions printed thereon and return it to the branch share registrar and transfer office 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 less than 48 hours before the time appointed for holding the EGM or any adjournment thereof (as the case may be). Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM or any adjournment thereof (as the case may be) should you so wish.

RECOMMENDATION

The Directors (including members of the Independent Board Committee after considering the advice of Guangdong Securities) consider that the Subscription Agreement and the Whitewash Waiver are in the interests of the Company and the Shareholders as a whole and are fair and reasonable so far as the Independent Shareholders are concerned. The Directors therefore recommend that the Shareholders vote in favour of the resolutions to be proposed at the EGM to approve the Subscription Agreement and the transactions contemplated thereunder and that the Independent Shareholders vote in favour of the resolution to approve the Whitewash Waiver.

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LETTER FROM THE BOARD

ADDITIONAL INFORMATION

Your attention is drawn to the letters from the Independent Board Committee and from Guangdong Securities which are respectively set out on pages 29 to 30 and pages 31 to 52 of this circular. Additional information is also set out in the Appendix III of this circular for your information.

By Order of the Board Vital Group Holdings Limited Chen Zhiyu

Executive Director

– 28 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

==> picture [279 x 58] intentionally omitted <==

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1164)

23 May 2011

To the Independent Shareholders

Dear Sir or Madam,

(1) SUBSCRIPTION AGREEMENT IN RELATION TO: (A) PROPOSED SUBSCRIPTION OF SHARES IN VITAL GROUP HOLDINGS LIMITED; AND

(B) PROPOSED SUBSCRIPTION OF CONVERTIBLE BONDS ISSUED BY VITAL GROUP HOLDINGS LIMITED

AND

(2) APPLICATION FOR THE GRANTING OF THE WHITEWASH WAIVER

We refer to the circular dated 23 May 2011 issued by the Company (the ‘‘Circular’’) of which this letter forms part. Terms defined in the Circular bear the same meanings herein unless the context otherwise requires.

We have been appointed as the members of the Independent Board Committee to consider (1) the terms of the Subscription Agreement and the transactions contemplated thereunder; and (2) the Whitewash Waiver and to advise the Independent Shareholders as to the fairness and reasonableness of the same. Guangdong Securities has been appointed to advise the Independent Board Committee and the Independent Shareholders in this regard.

RECOMMENDATION

We wish to draw your attention to the letter from the Board, as set out on pages 6 to 28 of the Circular, and the letter of advice from Guangdong Securities, as set out on pages 31 to 52 of the circular which contains its advice and recommendation to the Independent Board Committee and the Independent Shareholders as to whether or not (1) the terms of the Subscription Agreement and the transactions contemplated thereunder; and (2) the Whitewash Waiver are fair and reasonable and in the interests of the Independent Shareholders, as well as the principal factors and reasons for its advice and recommendation.

After taking into consideration the factors and reasons considered by Guangdong Securities, and the opinions, advice and recommendations of the Independent Financial Adviser, we concur with the views of Guangdong Securities and consider that (1) the terms of Subscription Agreement and the transactions contemplated thereunder; and (2) the Whitewash Waiver are each in the interests of the Company and the Shareholders as a whole and are fair and reasonable so far as the Independent

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

Shareholders are concerned. Accordingly, we recommend that the Independent Shareholders vote in favour of the relevant resolutions to be proposed at the EGM to approve (1) the Subscription Agreement and the transactions contemplated thereunder; and (2) the Whitewash Waiver.

Lee Kwong Yiu

Yours faithfully, Independent Board Committee Lui Tin Nang Chong Cha Hwa Independent Non-executive Directors

– 30 –

LETTER FROM GUANGDONG SECURITIES

Set out below is the text of a letter received from Guangdong Securities, the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders regarding the Subscription Agreement and the Whitewash Waiver for the purpose of inclusion in this circular.

==> picture [213 x 34] intentionally omitted <==

Units 2505–06, 25/F. Low Block of Grand Millennium Plaza 181 Queen’s Road Central Hong Kong

23 May 2011

• To: The independent board committee and the independent shareholders of Vital Group Holdings Limited

Dear Sirs,

SUBSCRIPTION OF NEW SHARES AND CONVERTIBLE BONDS AND WHITEWASH WAIVER

INTRODUCTION

We refer to our appointment as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in connection with the Subscription Agreement and the Whitewash Waiver, details of which are set out in the letter from the Board (the ‘‘Board Letter’’) contained in the circular dated 23 May 2011 issued by the Company to the Shareholders (the ‘‘Circular’’), of which this letter forms part. Capitalised terms used in this letter shall have the same meanings as defined in the Circular unless the context requires otherwise.

The Board announced that on 18 March 2011, the Company entered into the Subscription Agreement with, amongst others, the Subscriber, pursuant to which the Company agreed to allot and issue and the Subscriber agreed to subscribe for (i) a total of 1,670,000,000 Subscription Shares at the Subscription Price of HK$0.23 per Subscription Share for a total cash consideration of HK$384,100,000; and (ii) the Convertible Bonds in the principal amount of HK$600,000,000. Completion of the Share Subscription and the CB Subscription is conditional on their respective Conditions Precedent being fulfilled (or, if applicable, waived) and shall be inter-conditional and take place simultaneously on the Closing Date in accordance with the terms of the Subscription Agreement.

Upon Closing, the Subscriber and parties acting in concert with it will, in an aggregate, hold Shares representing approximately 51.85% of the entire issued share capital of the Company as enlarged by the issue of the Subscriptions Shares (assuming that all the Subscription Shares have been issued but the conversion rights attaching to the Convertible Bonds have not been exercised). Accordingly, the Subscriber will, unless the Whitewash Waiver is granted by the Executive and the relevant approval by the Independent Shareholders is obtained in accordance with the Code, be obliged to make a mandatory general offer for all the issued Shares and other securities of the Company not already owned or agreed to be acquired by the Subscriber and parties acting in concert with it pursuant to Rule 26.1 of the Code.

– 31 –

LETTER FROM GUANGDONG SECURITIES

In this regard, the Subscriber has made an application to the Executive for the Whitewash Waiver pursuant to Note 1 on dispensations from Rule 26 of the Code. The Whitewash Waiver, if granted, will be subject to approval of the Independent Shareholders by way of poll at the EGM. The Controlling Shareholder, its associates and parties acting in concert with it shall abstain from voting on the relevant resolution approving the Whitewash Waiver at the EGM.

An Independent Board Committee comprising Messrs. Lee Kwong Yiu, Lui Tin Nang and Chong Cha Hwa (all being independent non-executive Directors) has been established to advise the Independent Shareholders on (i) whether the terms of the Subscription Agreement are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned; (ii) whether the Subscription Agreement and the Whitewash Waiver are in the interests of the Company and the Shareholders as a whole; and (iii) how the Independent Shareholders should vote on the relevant resolutions to approve the Subscription Agreement and the transactions contemplated thereunder, and the Whitewash Waiver at the EGM. All members of the Independent Board Committee have verbally confirmed to the Company that they are independent with respect to the aforementioned transactions. We, Guangdong Securities Limited, have been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in the above respects, and such appointment has been approved by the Independent Board Committee.

BASIS OF OUR OPINION

In formulating our opinion to the Independent Board Committee and the Independent Shareholders, we have relied on the statements, information, opinions and representations contained or referred to in the Circular and the information and representations as provided to us by the Directors. We have assumed that all information and representations that have been provided by the Directors, for which they are solely and wholly responsible, are true and accurate at the time when they were made and continue to be so as at the Latest Practicable Date, and should there be any material changes to our opinion after the Latest Practicable Date, Shareholders would be notified as soon as possible. We have also assumed that all statements of belief, opinion, expectation and intention made by the Directors in the Circular were reasonably made after due enquiry and careful consideration. We have no reason to suspect that any material facts or information have been withheld or to doubt the truth, accuracy and completeness of the information and facts contained in the Circular, or the reasonableness of the opinions expressed by the Company, its advisers and/or the Directors, which have been provided to us. We consider that we have taken sufficient and necessary steps on which to form a reasonable basis and an informed view for our opinion in compliance with Rule 13.80 of the Listing Rules.

The Directors jointly and severally accept full responsibility for the accuracy of information contained in the Circular (other than the information in relation to the Subscriber) and confirm, having made all reasonable enquiries, that to the best of their knowledge, opinions expressed in the Circular (other than those expressed by the directors of the Subscriber) have been arrived at after due and careful consideration, and there are no other facts not contained in the Circular the omission of which would make any statement in the Circular misleading.

The respective directors of the Subscriber and CGNPC Uranium Resources Co., Ltd. jointly and severally accept full responsibility for the accuracy of information contained in the Circular (other than the information in relation to the Group, the Controlling Shareholder and the Founders) and confirm, having made all reasonable enquiries, that to the best of their knowledge, opinions expressed in the

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LETTER FROM GUANGDONG SECURITIES

Circular (other than those expressed by the Directors) have been arrived at after due and careful consideration, and there are no other facts not contained in the Circular the omission of which would make any statement in the Circular misleading.

We consider that we have been provided with sufficient information to reach an informed view and to provide a reasonable basis for our opinion. We have not, however, conducted any independent indepth investigation into the business and affairs of the Company, the Controlling Shareholder, the Founders and the Subscriber or their respective subsidiaries or associates, nor have we considered the taxation implication on the Group or the Shareholders as a result of the Share Subscription, the CB Subscription as well as the Whitewash Waiver. Our opinion is necessarily based on the financial, economic, market and other conditions in effect and the information made available to us as at the Latest Practicable Date. Nothing contained in this letter should be construed as a recommendation to hold, sell or buy any Shares or any other securities of the Company.

Lastly, where information in this letter has been extracted from published or otherwise publicly available sources, the sole responsibility of Guangdong Securities is to ensure that such information has been correctly extracted from the relevant sources.

PRINCIPAL FACTORS AND REASONS CONSIDERED

THE SUBSCRIPTION AGREEMENT

In arriving at our opinion in respect of the Subscription Agreement, we have taken into consideration the following principal factors and reasons:

• (1) Background of and reasons for the Subscription Agreement

Business and financial information on the Group

The principal activities of the Group are the selling, distribution and manufacturing of pharmaceutical and food products and property investment. Tabularised below is a summary of the audited consolidated financial information on the Group as extracted from the annual report of the Company for the year ended 31 December 2010 (the ‘‘2010 Annual Report’’):

	For the	For the	For the
	year ended	year ended	year ended	Year on year	Year on year
Consolidated	31 December	31 December	31 December	change from	change from
Income Statement	2010	2009	2008	2009 to 2010	2008 to 2009
	HK$’000	HK$’000	HK$’000	%	%
		(restated)
Turnover	328,120	367,056	698,225	(10.61)	(47.43)
Gross Profit	224,022	259,711	447,367	(13.74)	(41.95)
Profit for the year attributable
to owners of the Company	36,610	53,010	61,095	(30.94)	(13.23)

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LETTER FROM GUANGDONG SECURITIES

	As at	As at	As at	Year on year	Year on year
	31 December	31 December	31 December	change from	change from
Consolidated Balance Sheet	2010	2009	2008	2009 to 2010	2008 to 2009
	HK$’000	HK$’000	HK$’000	%	%
Bank balances and cash	80,284	163,959	152,353	(51.03)	7.62
Net asset value (‘‘NAV’’)	707,015	650,190	597,372	8.74	8.84
Gearing ratio (Total bank
borrowings/Equity attributable
to equity holders of the
Company, net of intangible				Not
assets and goodwill)	11%	Nil	17%	applicable	(100)

As depicted by the above table, the Group recorded audited total turnovers of approximately HK$328.12 million and HK$367.06 million for the years ended 31 December 2010 and 31 December 2009 respectively, representing declines of approximately 10.61% and 47.43% as compared to their respective prior years. Moreover, the Group’s profitability also dropped continuously from 2008 to 2010. According to the 2010 Annual Report, in the foreseeable future, consolidation is expected to take place in the markets of food, pharmaceuticals and properties in the PRC, with substantial pressure existing in the operating environment. As also advised by the Directors, competition in the pharmaceuticals industry faced by the Company is keen given that the Company’s existing pharmaceutical products are not differentiated and unique enough and it is hence not difficult for consumers to find substitutes if they want to. Based on our discussion with the Directors regarding the Company’s business operation and the types of pharmaceutical products it sells, we concur with the Directors that the Company faces keen competition in the pharmaceuticals industry. Moreover, taking into account the continuous reduction in profitability of the Group from 2008 to 2010, we concur with the Directors that it would be beneficial for the Group to diversify its business when suitable opportunities arise. As at 31 December 2010, the Group had audited consolidated net assets of approximately HK$707.02 million, representing an increase of approximately 8.74%. Furthermore, the Group’s bank balances and cash in hand reduced by approximately 51.03% from approximately HK$163.96 million as at 31 December 2009 to approximately HK$80.28 million as at 31 December 2010. Regarding the gearing position of the Group, resulting from the Group’s new bank borrowings which were incurred in 2010, the gearing level of the Group rose to approximately 11% as at 31 December 2010 as compared to nil as at the prior year end.

Information on the Subscriber

With reference to the Board Letter, the Subscriber was incorporated in Hong Kong on 17 October 2006 and is a wholly-owned subsidiary of CGNPC Uranium Resources Co, Ltd., a company incorporated in the PRC on 15 August 2006, which is in turn a subsidiary of CGNPC. Based in Shenzhen, the PRC, CGNPC is a state-owned nuclear power producer with material interests in nuclear fuels procurement and production.

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LETTER FROM GUANGDONG SECURITIES

The core business activities of CGNPC Uranium Resources Co., Ltd. are to (i) manage the supply of nuclear fuels for CGNPC; (ii) establish an interest in and support the development of commercial resources and reserves of natural uranium; and (iii) deal with the import and export trade of the PRC and overseas natural uranium and related products.

As far as the Directors and we were aware of and to the best of our respective knowledge as at the Latest Practicable Date, the Company will become the first subsidiary of the Subscriber which is listed in Hong Kong upon completion of the Subscription Agreement.

The Subscriber’s intentions in relation to the Group

As referred to in the Board Letter, the Subscriber intends to maintain the listing of the Company on the Stock Exchange. In addition, it intends to conduct a detailed review of the existing business and financial position of the Group for the purpose of assisting the Company in formulating business plans and strategies for its future business development which would enable the Group to diversify its business and broaden its income sources. In this regard, the Subscriber intends to actively assist and co-operate with the Company to explore other investment or business options and opportunities, including, potentially, selling or disposing of the Shares, or assets of the Group provided that any such sale or disposal would not result in the Company becoming a company whose assets consist wholly or substantially of cash or otherwise becoming unsuitable for listing under Chapter 8 of the Listing Rules, and would like to develop the Company into a uranium resources investment and trading platform. If suitable investment or business opportunities are identified and are available to the Group, the Company may utilise all or part of the net proceeds from the issuance of the Subscription Shares and the Convertible Bonds and its other resources to fund those investments or business opportunities.

As stated in the Board Letter, the Subscriber has been seeking investment opportunities in Hong Kong, and in particular, investments in companies which may have the capacity and potential to develop into a uranium resources investment and trading platform. On the other hand, from the Company’s perspective, the Directors are of the view that, in light of the keen competition in the pharmaceuticals industry and the reduction in profitability of the Group from 2009 to 2010, the Share Subscription and the CB Subscription may allow the Company to explore the possibility of diversification and, in the process of raising new capital and leverage on the background and expertise of the Subscriber in the uranium or related industry, to search for business development and investment opportunities in this respect. According to the Board Letter, the Company and the Subscriber share the view that the Share Subscription and the CB Subscription will offer them the opportunity to co-operate and develop the business of the Company in a manner that would meet their respective commercial objectives.

With reference to the Board Letter, notwithstanding the above, the Subscriber intends to continue the existing business of the Group and continue to employ the employees of the Group after the Closing, whilst actively assisting and co-operating with the Company in exploring investment and business opportunities with a view to developing the Company into a uranium resources investment and trading platform, including through the acquisition of assets. When such new business venture(s) and investments become reasonably self-sustainable, the Subscriber will re-consider its business options at that stage, including whether to dispose of part or all of the existing business and assets of the Group.

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LETTER FROM GUANGDONG SECURITIES

For further details regarding the Subscriber’s intentions in relation to the Group and the future board composition of the Company, please refer to the sections headed ‘‘Subscriber’s intentions in relation to the Group’’ and ‘‘Board composition of the Company’’, respectively in the Board Letter.

Reasons for the entering into of the Subscription Agreement and the use of proceeds

As stated in the Board Letter and further confirmed by the Directors, upon Closing, the Subscriber will conduct a detailed review of the existing business and financial position of the Group for the purpose of assisting the Company in formulating business plans and strategies for the Group’s future business development. The Directors believe that the Company would be able to leverage on the background and expertise of the Subscriber in the uranium or related industry to explore the possible business development and investment opportunities in this industry. It is estimated that the gross proceeds from the Share Subscription and the CB Subscription will be of approximately HK$384,100,000 and HK$600,000,000 respectively, totaling HK$984,100,000. The Company intends to use such proceeds to finance any future investment or business opportunities of the Group. According to the Directors, as at the Latest Practicable Date, no such investment or business opportunity had been identified. However, the Board considers that it would be beneficial to substantially enhance the capital base and cash flow position of the Company at the outset to better prepare for the timely participation in any such investment or business opportunities which may be identified and/or may materialise at any time.

As a small cap company, the Directors consider that the Company would have to devote extra costs and efforts in order to procure underwriters to carry out rights issue or open offer on a fully underwritten basis. In addition, the Directors also expected that a large size of private placement of the Shares would be rather impracticable given the recent financial and operational performance of the Company. In view of that the Share Subscription and the CB Subscription would allow the Company to raise a significant amount of capital, being approximately HK$984 million which is even much larger than the size of market capitalisation of the Company before the Announcement, at a low cost, the Directors are of the view that the entering into of the Subscription Agreement is preferable to the Company. We concur with the Directors’ view in relation to the above.

We understand that from the Subscriber’s intention in relation to the Group that there is a possibility for the Group to penetrate into the uranium or related industry in the PRC after the entering into of the Subscription Agreement, and have therefore researched over the internet regarding the development of nuclear power in the PRC. We noted from a report dated 13 April 2011 (the ‘‘Report’’) issued by the World Nuclear Association (an international organisation established in 2001 but founded from the Uranium Institute of London, a forum on the market for nuclear fuel established in 1975 to promote and support companies that comprise the global nuclear industry) at http://www.world-nuclear.org, that nuclear power is expected to have a growing important role in the PRC, especially in the coastal areas remote from the coalfields and where the economy is developing rapidly. As at the date of the Report, the PRC had 13 nuclear power reactors in operation, 34 further reactors had been approved by the PRC government, among which 26 reactors were under construction. Those additional reactors are likely to lead to a more than ten-fold increase in nuclear capacity to at least 80 gigawatt electrical (GWe) by 2020, 200

– 36 –

LETTER FROM GUANGDONG SECURITIES

GWe by 2030 and 400 GWe by 2050. Going forward and in the long run, the PRC’s domestic manufacturing of nuclear plant and equipment is expected to maximise, with self-reliance in design and management although international cooperation will continue to be encouraged.

We understand that the nuclear crisis which happened in Fukushima city of Japan in March 2011 (the ‘‘Crisis’’) has aroused worldwide concern on the safety use of nuclear power. In this relation, we noted from the Report that following the Crisis, the State Council of the PRC announced that it would suspend approvals for new nuclear power stations and conduct comprehensive safety checks of all nuclear projects in the PRC. However, notwithstanding the possible delay in the relevant governmental approval process for future nuclear projects in the PRC due to the Crisis, the Report further suggested that the possible adverse effect on the development of nuclear power in the PRC is expected to be in short run only. Based on our research over the internet, we further noted from several Chinese newspaper articles that the vice chairman of the National Development and Reform Commission of the PRC reaffirmed on 21 April 2011 that the PRC would continue to develop nuclear power while ensuring its safety. Given also the limited supply of power generating resources (such as oil and coal) without satisfactory and sufficient substitutes as well as the expected strong demand for energy in the long term for development of the PRC economy, it is anticipated that the nuclear power industry, and in turn the uranium or related industry in the PRC would be developing persistently in the future.

Having taken into consideration (i) the continuous reduction in profitability of the Group from 2008 to 2010 as set forth in the sub-section headed ‘‘Business and financial information on the Group’’ of this letter; (ii) that the entering into of the Subscription Agreement would substantially enhance the capital base and cash flow position of the Company to allow it to better prepare for the timely participation in any investment or business opportunities which may be identified and/or may materialise at any time; (iii) the shortcomings of the other fund raising activities; and (iv) that the entering into of the Subscription Agreement may pose an opportunity for the Group to penetrate into the uranium or related industry in the PRC whose future long run prospect is likely to be favourable, we consider that the entering into of the Subscription Agreement is in the interests of the Company and the Shareholders as a whole.

However, Shareholders should also note that in the event that the Group penetrates into the uranium or related industry in the PRC in the future, it would constitute an investment into a new business sector which the Group has not previously had the exposure and experience. There may be risks which are beyond the Company’s control associated with the mining and trading of uranium in the PRC. These risks include but are not limited to those related to the cyclical nature of the uranium market and fluctuations in demand and prices for uranium-related products, the global environmental and safety concern, natural disasters such as earthquake and tsunami and the relevant laws, regulations and licenses imposed by the PRC government which may become more stringent in the future. Furthermore, the uranium or related business would require significant and continuous capital investment and may not be completed as planned or scheduled, and may or may not follow the original budgets. Consequently, we are of the view that Independent Shareholders should bear in mind all the risk factors associated with the Group’s potential penetration into the uranium or related industry in the PRC when considering the Share Subscription and the CB Subscription based on their own risk preference and risk toleration level.

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LETTER FROM GUANGDONG SECURITIES

(2) Principal terms of the Subscription Agreement

On 18 March 2011, the Company entered into the Subscription Agreement with, amongst others, the Subscriber, pursuant to which the Company agreed to allot and issue and the Subscriber agreed to subscribe for (i) a total of 1,670,000,000 Subscription Shares at the Subscription Price of HK$0.23 per Subscription Share for a total cash consideration of HK$384,100,000; and (ii) the Convertible Bonds in the principal amount of HK$600,000,000.

The Directors are of the view that the terms of the Subscription Agreement are on normal commercial terms, fair and reasonable so far as the Independent Shareholders are concerned and are in the interests of the Company and the Shareholders as a whole.

The following summarises the principal terms of the Share Subscription and the CB Subscription (details of which are set out in the Board Letter):

The Share Subscription

Pursuant to the Subscription Agreement, the Company will allot and issue to the Subscriber a total of 1,670,000,000 Subscription Shares at the Subscription Price of HK$0.23 per Subscription Share for a total cash consideration of HK$384,100,000.

The Subscription Shares represent (i) approximately 107.67% of the existing issued share capital of the Company as at the Latest Practicable Date; (ii) approximately 51.85% of the entire issued share capital of the Company as enlarged by the issue of the Subscription Shares (assuming that all the Subscription Shares have been issued but the conversion rights attaching to the Convertible Bonds have not been exercised); and (iii) approximately 28.65% of the entire issued share capital of the Company as enlarged by the issue of the Subscription Shares and the Conversion Shares assuming full conversion of the Convertible Bonds. The Subscription Shares shall, when allotted and issued, rank pari passu in all aspects with the other Shares then in issue including the rights to all dividends and other distributions declared, made or paid at any time after the date of allotment, free and clear of Encumbrances.

The CB Subscription

Pursuant to the Subscription Agreement, the Company will issue to the Subscriber the Convertible Bonds in the principal amount of HK$600,000,000 at the initial Conversion Price of HK$0.23 per Conversion Share. The Convertible Bonds do not bear interest unless, upon due presentation thereof, payment of principal is improperly withheld or refused, and will mature on the fifth anniversary of the Closing Date.

A total of 2,608,695,652 Conversion Shares will be issued upon full conversion of the Convertible Bonds at the initial Conversion Price, representing (i) approximately 168.19% of the existing issued share capital of the Company as at the Latest Practicable Date; and (ii) approximately 44.75% of the entire issued share capital of the Company as enlarged by the issue of the Subscription Shares and the Conversion Shares assuming full conversion of the Convertible Bonds. The Conversion Shares will be fully paid and will rank pari passu in all respects among themselves and the Shares in issue at the date on which holder(s) of the Conversion Shares is/are registered as such in the Company’s register of members.

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LETTER FROM GUANGDONG SECURITIES

The Subscription Price and the initial Conversion Price (altogether, the ‘‘Issue Price’’)

The Issue Price of HK$0.23 per Subscription Share and Conversion Share represents:

• (a) a discount of approximately 84.97% to the closing price of HK$1.53 per Share as quoted on the Stock Exchange on the Latest Practicable Date;

• (b) a discount of approximately 36.11% to the closing price of HK$0.36 per Share as quoted on the Stock Exchange on the Last Trading Day;

• (c) a discount of approximately 20.96% to the average closing price of HK$0.2910 per Share as quoted on the Stock Exchange for the last five trading days up to and including the Last Trading Day; and

• (d) a discount of approximately 13.99% to the average closing price of HK$0.2674 per Share as quoted on the Stock Exchange for the last ten trading days up to and including the Last Trading Day.

The Directors confirmed that the Issue Price was determined after arm’s length negotiations between the Company and the Subscriber with reference to the market price of the Shares prior to the suspension of trading in the Shares on 4 March 2011 and the recent trading volume of the Shares prior to the date of the Announcement.

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LETTER FROM GUANGDONG SECURITIES

In order to assess the fairness and reasonableness of the Issue Price, we set out below various informative analyses for illustrative purpose:

Review on historical price of the Shares

The following table sets out the highest and lowest closing prices and the average daily closing prices of the Shares as quoted on the Stock Exchange in each month during the period commencing from 1 March 2010 up to and including the Latest Practicable Date (the ‘‘Review Period’’):

			Average
	Highest	Lowest	daily
Month	closing price	closing price	closing price
	(HK$)	(HK$)	(HK$)
2010
Period before the suspension of trading in the Shares due to the release of the Announcement
(the ‘‘Pre-Announcement Period’’)
March	0.214	0.180	0.188
April	0.365	0.196	0.263
May (Note 1)	0.325	0.197	0.245
June	0.255	0.207	0.235
July	0.285	0.195	0.221
August	0.285	0.255	0.268
September	0.265	0.249	0.256
October	0.260	0.229	0.246
November	0.250	0.224	0.234
December	0.265	0.222	0.233
2011
January	0.250	0.229	0.239
February	0.265	0.238	0.250
March (up to and including the Last
Trading Day) (Note 2)	0.360	0.265	0.299
Period from resumption of trading in the Shares to the Latest Practicable Date (the ‘‘Post-
Announcement Period’’)
April	0.980	0.680	0.853
May (from 1 May 2011 to the Latest
Practicable Date)	1.60	0.880	1.239

Source: the Stock Exchange web-site (www.hkex.com.hk)

Notes:

1. Trading in the Shares was suspended from 7 May 2010 to 11 May 2010 (both days inclusive).

2. Trading in the Shares was suspended from 4 March 2011 (afternoon session) to 31 March 2011 (both days inclusive).

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LETTER FROM GUANGDONG SECURITIES

As shown by the above table, the closing prices of the Shares ranged from the lowest of HK$0.180 to the highest of HK$0.365 during the Pre-Announcement Period. As such, the Issue Price is within the said range of the closing prices of the Shares. After the release of the Announcement on 31 March 2011, the Share price rose significantly and reached the peak of HK$1.60 on 19 May 2011. According to the Directors, they were not aware of any specific events of the Company other than the entering into of the Subscription Agreement which had happened during the Post-Announcement Period and as such they considered that such surge of the Share price may reflect the positive market sentiment towards the Share Subscription as well as the CB Subscription and the market perception on the potential benefits of the Subscription Agreement to the Company upon completion. We concur with the Directors that the said surge of the Share price may reflect the positive market sentiment and perception towards the Share Subscription as well as the CB Subscription.

Review on historical trading liquidity of the Shares

The number of trading days, average daily number of the Shares traded per month, and the respective percentages of the Shares’ monthly trading volume as compared to (i) the total number of issued Shares held by the public as at the Latest Practicable Date; and (ii) the total number of issued Shares as at the Latest Practicable Date during the Review Period are tabulated as below:

			% of the
			Average
			Volume to total	% of the
			number of	Average
			issued Shares	Volume to total
			held by the	number of
		Average daily	public as at	issued Shares
	No. of	trading volume	the Latest	as at the Latest
	trading	(the ‘‘Average	Practicable	Practicable
Month	days	Volume’’)	Date (Note 3)	Date (Note 4)
		Shares	%	%
2010
The Pre-Announcement	Period
March	23	5,618,722	0.55	0.36
April	19	41,338,979	4.08	2.67
May (Note 1)	17	21,447,116	2.12	1.38
June	21	8,700,924	0.86	0.56
July	21	7,993,095	0.79	0.52
August	22	5,977,740	0.59	0.39
September	21	7,085,238	0.70	0.46
October	20	4,507,851	0.45	0.29
November	22	4,824,379	0.48	0.31
December	22	6,349,545	0.63	0.41

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LETTER FROM GUANGDONG SECURITIES

			% of the
			Average
			Volume to total	% of the
			number of	Average
			issued Shares	Volume to total
			held by the	number of
		Average daily	public as at	issued Shares
	No. of	trading volume	the Latest	as at the Latest
	trading	(the ‘‘Average	Practicable	Practicable
Month	days	Volume’’)	Date (Note 3)	Date (Note 4)
		Shares	%	%
2011
January	21	2,420,000	0.24	0.16
February	18	5,345,556	0.53	0.34
March (up to and
including the Last
Trading Day) (Note 2)	4	36,184,681	3.57	2.33
The Post-Announcement Period
April	18	108,137,519	10.68	6.97
May (from 1 May 2011 to
the Latest Practicable
Date)	13	82,632,827	8.16	5.33

Source: the Stock Exchange web-site (www.hkex.com.hk)

Notes:

1. Trading in the Shares was suspended from 7 May 2010 to 11 May 2010 (both days inclusive).

2. Trading in the Shares was suspended from 4 March 2011 (afternoon session) to 31 March 2011 (both days inclusive).

3. Based on 1,012,872,987 Shares held in public hands as at the Latest Practicable Date.

4. Based on 1,551,056,993 Shares in issue as at the Latest Practicable Date.

The above table illustrated that the average daily trading volume of the Shares per month was thin during the Pre-Announcement Period, with ranges of approximately 0.24% to 4.08% and approximately 0.16% to 2.67% of the total number of issued Shares held by the public as at the Latest Practicable Date and the total number of issued Shares as at the Latest Practicable Date, respectively. Thus, the Shares had not been actively traded historically. For this reason, we consider that the historical price of the Shares may not serve as a good benchmark to determine the fairness and reasonableness of the Issue Price.

During the Post-Announcement Period, trading in the Shares had become much more active. Same as the price surge of the Shares, the Directors were not aware of any specific events of the Company other than the entering into of the Subscription Agreement which had happened during

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LETTER FROM GUANGDONG SECURITIES

the Post-Announcement Period and as such they considered that the rise in trading volume of the Shares after the release of the Announcement may reflect the positive market sentiment towards the Share Subscription as well as the CB Subscription and the market perception on the potential benefits of the Subscription Agreement to the Company upon completion. We concur with the Directors that the said rise in trading volume of the Shares may reflect the positive market sentiment and perception towards the Share Subscription as well as the CB Subscription.

Trading multiples comparison

We have attempted to apply the trading multiples analyses (which comprise the price to earnings and price to book ratios) for assessing the fairness and reasonableness of the Issue Price. Nevertheless, in view of that the existing principal business of the Group may change after the Share Subscription and the CB Subscription, we are of the opinion that using companies which are engaging in the pharmaceutical and food products industry for comparison would be unsuitable since the potential earning power and book value of the Company once it enters into the uranium or related industry may not be reflected in such comparison. On the other hand, using companies which are engaging in the uranium or related industry are also unsuitable for comparison purpose since the Company’s results during the latest financial year were mainly derived from its business in the pharmaceutical and food products industry. Due to the above reasons, we consider the trading multiples analyses to be inapplicable in this case and have therefore resorted to the below comparison methods in order to evaluate the fairness and reasonable of the Issue Price, and to give Shareholders a general reference for the common market practice of companies listed on the Stock Exchange in transactions which involved (a) placing and subscription of shares under specific mandate and (b) the issue and subscription of convertible bonds/notes.

Comparison with other transactions involving share placing and subscription

To evaluate the fairness and reasonableness of the Subscription Price, we have identified, to the best of our knowledge and as far as we are aware of, 17 exhaustive recent transactions of companies listed on the Stock Exchange which involved placing and subscription of shares under specific mandate from 1 January 2011 up to the Latest Practicable Date (the ‘‘Subscription Price Comparables’’). As the terms of the Subscription Price Comparables were determined under similar market conditions and sentiments as the Share Subscription, we believe that the Subscription Price Comparables may reflect the recent trend of placing and subscription of shares under specific mandate in the market and therefore we consider the Subscription Price Comparables to be fair and representative samples. Nevertheless, Shareholders should also note that the businesses, operations and prospects of the Company are not the same as the Subscription Price Comparables as set out in the table below. The Subscription Price Comparables are hence only being used to provide a general reference for the common market practice of companies listed on the Stock Exchange in transactions which involved placing and subscription of shares under specific mandate.

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LETTER FROM GUANGDONG SECURITIES

The table below summarises our relevant findings:

					Premium/
					(Discount) of the
					issue price over/to
					the closing price of
					the shares as at the
					last trading day
					prior to the release
	Stock	Date of	Change	Approximate	of the
Company	Code	announcement	in control	fund raised	announcement
			(Note 5)	(HK$ million)	%
China Timber Resources	269	13 January 2011	N	2,800	8.11
Group Limited
21 Holdings Limited	1003	19 January 2011	N	56	1.35
China Power New	735	23 January 2011	N	2,100	0.00
Energy Development
Co. Ltd.
China Data	8016	27 January 2011	N	8	(62.41)
Broadcasting
Holdings Limited
Fulbond Holdings	1041	2 February 2011	N	1,500	(19.05)
Limited
China Minsheng	1988	25 February	N	To be determined	To be determined
Banking Corp., Ltd.		2011			(Note 1)
Garron International	1226	9 March 2011	N	566	(31.95)
Limited
Eternite International	8351	9 March 2011	N	14	(19.86)
Company Limited
Culture Landmark	674	21 March 2011	N	160	(33.33)
Investment Limited
New Environmental	3989	30 March 2011	N	81	(54.50)
Energy Holdings
Limited
Rojam Entertainment	8075	31 March 2011	Y	100	(95.80)
Holdings Limited					(Note 2)
Rojam Entertainment	8075	31 March 2011	Y	19	(92.80)
Holdings Limited					(Note 3)
Minmetals Resources	1208	19 April 2011	N	3,889	(13.41)
Limited
Dragonite International	329	6 May 2011	N	109	(17.61)
Limited
China Fortune Group	290	12 May 2011	N	50	(4.35)
Limited
Sam Woo Holdings	2322	17 May 2011	N	159	(19.72)
Limited
China Post E-Commerce	8041	17 May 2011	N	165	To be determined
(Holdings) Limited			(Note 4)		(Note 4)
Maximum					8.11
Minimum					(95.80)
Average					(30.36)
The Company	1164	31 March 2011	Y	384	(36.11)

Source: the Stock Exchange web-site (www.hkex.com.hk)

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LETTER FROM GUANGDONG SECURITIES

Notes:

1. The issue price of the H shares of China Minsheng Banking Corp., Ltd. to be issued shall be determined by its board of directors and in the best interest of its shareholders according to the prevailing market conditions, and also be referenced to the trading performance and trading multiples of the comparable listed companies that engaged in similar businesses before the issuance.

2. The discount is based on the subscription price per share for Perfect Sky Holdings Limited and Sun Great Investments Limited, both being independent to Rojam Entertainment Holdings Limited.

3. The discount is based on the subscription price per share for Next Gen Entertainment Limited and Memestar Limited, both being independent to Rojam Entertainment Holdings Limited.

4. The subscription price shall be the lesser of (i) 92.5% of the average of three daily volume weighted average prices per share of China Post E-Commerce (Holdings) Limited (as selected by the investor in its sole discretion) during the period commencing on the date of payment of that tranche and ending on the date immediately preceding the date of issue of the subscription shares, or (ii) HK$0.30 per share, as may be adjusted pursuant to the relevant subscription agreement (‘‘Subscription Price B’’), provided, however, that Subscription Price B may be used not more than three times during the term of the relevant subscription agreement.

Moreover, information as disclosed in the relevant announcement is insufficient to indicate as if there will be a change in control of China Post E-Commerce (Holdings) Limited.

1. A change in control is assumed when at least one of the subscriber(s) of the Subscription Price Comparables would acquire a controlling interest in the relevant company and intend(s) to re-formulate the business plans and strategies of the future business development of the relevant company.

We noted from the above table that the issue prices of the shares of the 17 Subscription Price Comparables ranged from a discount of approximately 95.80% to a premium of approximately 8.11% to/over the respective closing prices of their shares as at the last trading days prior to the release of the relevant announcements. Out of the 17 Subscription Price Comparables, the issue prices of 12 of them represented discounts to the closing prices of their shares as at the last trading days prior to the release of the announcements. On the other hand, two of them involved a change in control of the relevant companies, with the issue prices representing discounts of approximately 95.80% and 92.80% to the respective closing prices of their shares as at the last trading days prior to the release of the relevant announcements. The Subscription Price, which represents a discount of approximately 36.11% to the closing price of the Shares as at the Last Trading Day, falls within the market range and is above the average discount of the Subscription Price Comparables; and is of much less discount than the Subscription Price Comparables which involved a change in control of the relevant companies. Thus, we consider such discount to be acceptable.

Comparison with other issue and subscription of convertible bonds/notes

To evaluate the fairness and reasonableness of the initial Conversion Price, we have identified to the best of our knowledge and as far as we are aware of, 21 exhaustive transactions by companies listed on the Stock Exchange which involved the issue and subscription of convertible bonds/notes from 1 January 2011 up to the Latest Practicable Date (the ‘‘CB Comparables’’). As the terms of the CB Comparables were determined under similar market conditions and sentiments as the CB Subscription, we believe that the CB Comparables may reflect the recent trend of issue and subscription of convertible bonds/notes in the market and therefore we consider the CB Comparables to be fair and representative samples. Nevertheless, Shareholders

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LETTER FROM GUANGDONG SECURITIES

should also note that the businesses, operations and prospects of the Company are not the same as the CB Comparables as set out in the table below. The CB Comparables are hence only being used to provide a general reference for the common market practice of companies listed on the Stock Exchange in transactions which involved the issue and subscription of convertible bonds/notes.

The table below summarises our relevant findings:

					Premium/
					(Discount) of the
					conversion price
					over/to the closing
					price of the shares
					as at the last
					trading day prior
	Stock	Date of			to the release of the
Company	Code	announcement	Term	Interest	announcement
			Years	%	%
Hanny Holdings Limited	275	31 January 2011	2.0	2.00	14.75 (Note 1)
Hanny Holdings Limited	275	31 January 2011	2.0	2.00	15.51 (Note 2)
Fulbond Holdings Limited	1041	2 February 2011	5.0	0	(19.05)
China Star Entertainment	326	9 February 2011	5.0	8.00	9.59
Limited
TLT Lottotainment Group	8022	15 February 2011	2.0	0	16.67
Limited
ITC Properties Group Limited	199	21 February 2011	2.5	3.25	19.57
Shougang Concord	521	3 March 2011	3.0	1.50	15.38
Technology Holdings
Limited
Pacific Plywood Holdings	767	8 March 2011	1.5	6.00	(19.44) (Note 3)
Limited
Pacific Plywood Holdings	767	8 March 2011	1.5	6.00	(18.00) (Note 4)
Limited
Sage International Group	8082	15 March 2011	5.0	0	(65.90)
Limited
Same Time Holdings Limited	451	23 March 2011	3.0	1.00	(71.00)
SMI Corporation Limited	198	30 March 2011	2.0	0.25	20.51
Rojam Entertainment	8075	31 March 2011	3.0	0	(95.80) (Note 5)
Holdings Limited
Rojam Entertainment	8075	31 March 2011	3.0	0	(92.80) (Note 6)
Holdings Limited
China Lumena New Materials	67	7 April 2011	3.0	6.00	(9.65)
Corp.
China Lumena New Materials	67	7 April 2011	3.0	6.00	To be determined
Corp.					(Note 7)
ITC Properties Group Limited	199	15 April 2011	2.5	3.25	6.80
Mingfa Group (International)	846	18 April 2011	5.0	5.25	20.00
Company Limited
Comtec Solar Systems Group	712	19 April 2011	5.0	0.00	(6.02)
Limited
China Gamma Group Limited	164	3 May 2011	3.0	1.00	29.81
SRE Group Limited	1207	6 May 2011	5.0	2.00	44.90
Maximum				8.00	44.90
Minimum				0	(95.80)
Average				2.55	(9.21)
The Company	1164	31 March 2011	5.0	0	(36.11)

Source: the Stock Exchange web-site (www.hkex.com.hk)

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LETTER FROM GUANGDONG SECURITIES

Notes:

1. Assuming the relevant rights issue does not become unconditional or does not proceed at the time of issue of the convertible notes.

2. The premium was calculated as conversion price over the theoretical ex-rights price per adjusted share on the last trading day assuming that the relevant rights issue has become unconditional at the time of issue of the convertible notes.

3. Assuming the relevant rights issue does not become unconditional or does not proceed at the time of issue of the convertible notes.

4. The discount was calculated as conversion price over the theoretical ex-rights price per adjusted share on the last trading day assuming that the relevant rights issue has become unconditional at the time of issue of the convertible notes.

5. The discount is based on the initial conversion price per conversion share for the first completion convertible notes for Perfect Sky Holdings Limited and Sun Great Investments Limited.

6. The discount is based on the initial conversion price per conversion share for (i) the first completion convertible notes for Next Gen Entertainment Limited, Memestar Limited, On Chance Inc., and Grace Promise Limited; and (ii) the second completion convertible notes.

7. The conversion price in respect of the additional convertible bonds shall be the average of the closing prices for one share of China Lumena New Materials Corp. for the 20 consecutive trading days ending on the trading day immediately preceding the date of the relevant option exercise notice, provided that the conversion price for the additional convertible bonds shall not be less than the then applicable conversion price for the convertible bonds.

(i) The initial Conversion Price

The conversion prices of the CB Comparables ranged from a discount of approximately 95.80% to a premium of approximately 44.90% to/over the respective closing prices of their shares as at the last trading days prior to the release of the relevant issue of convertible bonds/notes announcements. Among the CB Comparables, four of them were of much deeper discount than that as represented by the initial Conversion Price, being approximately 36.11%. Moreover, the initial Conversion Price also falls within the aforesaid market range of the CB Comparables. In view of the foregoing, we are of the opinion that the discount level as represented by the initial Conversion Price is not exceptional in the market.

(ii) Annual interest rate

As presented by the above table, the CB Comparables carried an annual interest rate of 0% to 8%. The Convertible Bonds, which do not bear any interest, hence is at the minimum of the said market range of the CB Comparables. As a result, we are of the view that the interest rate of the Convertible Bonds is in the interests of the Company and the Shareholders as a whole.

Having considered the above, we consider the terms of the Convertible Bonds, as a whole, to be fair and reasonable.

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LETTER FROM GUANGDONG SECURITIES

Other terms of the Subscription Agreement

In addition, we have also reviewed the other major terms of the Subscription Agreement and are not aware of any terms which are uncommon. Accordingly, we are of the view that the terms of the Subscription Agreement are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned.

(3) Dilution effect on the shareholding interests of the existing public Shareholders

The table below demonstrates the Company’s shareholding structure (i) as at the Latest Practicable Date; (ii) upon issuance and allotment of the Subscription Shares; and (iii) upon closing of the Share Subscription and the CB Subscription and assuming full conversion of the Convertible Bonds:

Perfect Develop Holding Inc. (Note 1) Mr. Chen Zhiyu Mr. Liu James Jin (Note 2) The Subscriber and parties acting in concert with it Existing public Shareholders Total	As at the Latest Practicable Date No. of Shares % 522,526,940 33.69 26,666 0.00 15,630,400 1.01 — — 1,012,872,987 65.30 1,551,056,993 100	Upon issuance and allotment of the Subscription Shares No. of Shares % 522,526,940 16.22 26,666 0.00 15,630,400 0.49 1,670,000,000 51.85 1,012,872,987 31.44 3,221,056,993 100	Upon closing of the Share Subscription and CB Subscription and assuming full conversion of the Convertible Bonds No. of Shares % 522,526,940 8.96 26,666 0.00 15,630,400 0.27 4,278,695,652 73.40 1,012,872,987 17.37 5,829,752,645 100	Upon closing of the Share Subscription and CB Subscription and assuming full conversion of the Convertible Bonds No. of Shares % 522,526,940 8.96 26,666 0.00 15,630,400 0.27 4,278,695,652 73.40 1,012,872,987 17.37 5,829,752,645 100
				100

Notes:

1. The issued share capital of Perfect Develop Holding Inc. is beneficially owned as to approximately 58.28% by Mr. Tao Lung, approximately 30.67% by Mr. Huang Jianming and approximately 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 a founder of the Group and an executive Director. On 1 April 2010, Perfect Develop Holding Inc. charged 450,000,000 Shares in favour of the Subscriber pursuant to the Share Charge.

2. Mr. Liu James Jin has been granted 8,500,000 share options of the Company to subscribe for 8,500,000 Shares. As at the Latest Practicable Date, none of these share options had been exercised.

As demonstrated by the above table, the shareholding interests of the existing public Shareholders will be reduced from approximately 65.30% to:

• (i) approximately 31.44% upon issuance and allotment of the Subscription Shares; and

• (ii) approximately 17.37% upon closing of the Share Subscription and the CB Subscription and assuming full conversion of the Convertible Bonds.

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LETTER FROM GUANGDONG SECURITIES

We noted that the shareholding interests of the existing public Shareholders is subject to dilution of the aforementioned extents as a result of the Share Subscription as well as the possible exercise in full of the Convertible Bonds. Nevertheless, as balanced by the fact that (i) the entering into of the Subscription Agreement would substantially enhance the capital base and cash flow position of the Company to allow it to better prepare for the timely participation in any investment or business opportunities which may be identified and/or may materialise at any time, particularly in light of the continuous reduction in profitability of the Group from 2008 to 2010; (ii) the terms of the Subscription Agreement, including the terms of the Share Subscription and the CB Subscription, being fair and reasonable so far as the Independent Shareholders are concerned; and (iii) the substantial enlargement in the share capital of the Company upon closing of the Share Subscription, we consider the possible dilution effect on the shareholding interests of the existing public Shareholders to be justifiable.

(4) Financial effects of the Share Subscription and the CB Subscription

Effect on NAV

As referred to in the 2010 Annual Report, the audited consolidated NAV of the Group was approximately HK$707.02 million as at 31 December 2010. As confirmed by the Directors, the NAV would rise while the NAV per Share would drop due to the issue of the Subscription Shares. Regarding the issue of the Convertible Bonds, we are advised by the Directors that the Convertible Bonds would be divided into a liability component and an equity component in the consolidated balance sheet of the Group, the distribution of which could not yet been ascertained at this early stage and would only be determined when the Group prepares its annual report for the year ending 31 December 2011.

Effect on earnings

The Directors expected that the Share Subscription and the CB Subscription would not have any immediately impact on the earnings of the Group.

Effect on gearing and liquidity position

As extracted from the 2010 Annual Report, the gearing level of the Group, which is calculated as total bank borrowings to equity attributable to equity holders of the Company, net of intangible assets and goodwill, was approximately 11% as at 31 December 2010. As stated in the foregoing, the consolidated NAV of the Group would rise due to the Share Subscription. Given that the Group’s total bank borrowings would remain unchanged, the Directors advised us that the gearing level of the Group would be reduced upon completion of the Share Subscription. Nonetheless, as also stated in the foregoing, since the relevant accounting entries for the Convertible Bonds have not yet been determined, the extent of the aforesaid reduction on the gearing level of the Group could not be estimated at this early stage.

As mentioned in the sub-section headed ‘‘Reasons for the entering into of the Subscription Agreement and the use of proceeds’’ of this letter, it is estimated that the aggregate gross proceeds from the Share Subscription and the CB Subscription will be of approximately HK$984,100,000 and the Company intends to use such proceeds to finance any future investment or business opportunities of the Group. As at the Latest Practicable Date, no such investment or business

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LETTER FROM GUANGDONG SECURITIES

opportunity had been identified by the Company. The Directors confirmed that the liquidity position of the Group would be enhanced by the Share Subscription and the CB Subscription before the Group utilises the said proceeds for its future investment or business opportunities.

It should be noted that the aforementioned analyses are for illustrative purpose only and does not purport to represent how the financial position of the Company will be upon completion of the Share Subscription and the CB Subscription.

THE WHITEWASH WAIVER

Upon Closing, the Subscriber and parties acting in concert with it will, in an aggregate, hold Shares representing approximately 51.85% of the entire issued share capital of the Company as enlarged by the issue of the Subscriptions Shares (assuming that all the Subscription Shares have been issued but the conversion rights attaching to the Convertible Bonds have not been exercised). Accordingly, the Subscriber will, unless the Whitewash Waiver is granted by the Executive and the relevant approval by the Independent Shareholders is obtained in accordance with the Code, be obliged to make a mandatory general offer for all the issued Shares and other securities of the Company not already owned or agreed to be acquired by the Subscriber and parties acting in concert with it pursuant to Rule 26.1 of the Code.

In this regard, the Subscriber has made an application to the Executive for the Whitewash Waiver pursuant to Note 1 on dispensations from Rule 26 of the Code. The Whitewash Waiver, if granted, will be subject to approval of the Independent Shareholders by way of poll at the EGM. The Controlling Shareholder, its associates and parties acting in concert with it shall abstain from voting on the relevant resolution approving the Whitewash Waiver at the EGM.

It is a condition precedent to the Share Subscription (and simultaneously the CB Subscription) that the Whitewash Condition is fulfilled. If the Whitewash Condition is not satisfied, the completion of the Share Subscription will depend on whether the fulfilment of such Whitewash Condition is waived by the Subscriber and the Subscriber chooses to proceed with the Offer, and whether the Executive clears the Offer Announcement (the ‘‘Alternative Condition’’). In the event that the Alternative Condition is not fulfilled, the Share Subscription (and simultaneously the CB Subscription) will not proceed to completion.

Given the aforementioned possible benefits of the Subscription Agreement and the transactions contemplated thereunder to the Company and the terms of the Subscription Agreement being fair and reasonable so far as the Independent Shareholders are concerned, we are of the opinion that the approval of the Whitewash Waiver, which is one of the Conditions Precedents for the completion of the Subscription Agreement, is in the interests of the Company and the Shareholders as a whole and is fair and reasonable for the purpose of proceeding with the Subscription Agreement.

Shareholders should note that upon Closing, the Subscriber and parties acting in concert with it will hold more than 50% of the enlarged issued share capital of the Company. In the event that the Subscriber and its concert parties’ shareholding interests in the Company exceed 50% upon Closing, and the Whitewash Condition is fulfilled, the Subscriber and parties acting in concert with it may increase their shareholdings in the Company without incurring any further obligations under Rule 26 of the Code to make a general offer.

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LETTER FROM GUANGDONG SECURITIES

RECOMMENDATION

Having taken into account the above principal factors and reasons being also summarised below:

• (i) the keen competition of the pharmaceuticals industry given the general nature of the Company’s existing pharmaceutical products as set forth in the sub-section headed ‘‘Business and financial information on the Group’’ of this letter;

• (ii) the continuous reduction in profitability of the Group from 2008 to 2010 as set forth in the sub-section headed ‘‘Business and financial information on the Group’’ of this letter;

• (iii) the entering into of the Subscription Agreement would substantially enhance the capital base and cash flow position of the Company to allow it to better prepare for the timely participation in any investment or business opportunities which may be identified and/or may materialise at any time;

• (iv) the shortcomings of the other fund raising activities;

• (v) the future intentions of the Subscriber in relation to the Group and the rationale for the entering into of the Subscription Agreement;

• (vi) the future long run prospect of the uranium or related industry in the PRC as mentioned in the sub-section headed ‘‘Reasons for the entering into of the Subscription Agreement and the use of proceeds’’ of this letter;

• (vii) the Convertible Bonds are interest-free; and

• (viii) the substantial enlargement in the share capital of the Company upon closing of the Share Subscription,

we consider that the terms of the Subscription Agreement are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned, and the Share Subscription and the CB Subscription are in the interests of the Company and the Shareholders as a whole. Accordingly, we advise the Independent Board Committee to advise the Independent Shareholders to vote in favour of the relevant resolution at the EGM to approve the Subscription Agreement and the transactions contemplated thereunder. We also recommend the Independent Shareholders to vote in favour of the relevant resolution to approve the Subscription Agreement and the transactions contemplated thereunder at the EGM.

– 51 –

LETTER FROM GUANGDONG SECURITIES

Taking into consideration the reasons and benefits of the Share Subscription and the CB Subscription and that the Share Subscription and the CB Subscription are conditional upon the fulfillment of the Whitewash Condition, we consider that the Whitewash Waiver is in the interests of the Company and the Shareholders as whole. Accordingly, we advise the Independent Board Committee to advise the Independent Shareholders to vote in favour of the resolution in relation to the Whitewash Waiver at the EGM. We also recommend the Independent Shareholders to vote in favour of the resolution to approve the Whitewash Waiver at the EGM.

Yours faithfully, For and on behalf of Guangdong Securities Limited Graham Lam Managing Director

– 52 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

1. SUMMARY OF FINANCIAL INFORMATION OF THE GROUP

The following financial information (‘‘Financial Information’’) has been extracted from the audited financial positions of the Group for the years ended 31 December 2010, 2009 and 2008 as set out in the relevant published result announcement and annual report of the Company:

No qualified opinion had been given in the auditor’s report issued by SHINEWING (HK) CPA Limited in respect of the three years ended 31 December 2010.

Consolidated Income Statement

Turnover Cost of sales Gross profit Other operating income Selling and distribution expenses Administrative expenses Impairment loss recognised in respect of goodwill Finance costs Profit before taxation Income tax expense Profit for the year Profit for the year attributable to: Owners of the Company Non-controlling interests Earnings per share Basic Diluted	2010 HK$’000 328,120 (104,098) 224,022 16,230 (82,178) (82,563) (22,569) (779) 52,163 (12,947) 39,216 36,610 2,606 39,216 HK2.36 cents HK2.36 cents	2009 HK$’000 (Restated) 367,056 (107,345) 259,711 24,428 (107,158) (80,828) (29,982) (586) 65,585 (12,615) 52,970 53,010 (40) 52,970 HK3.42 cents HK3.42 cents	2008 HK$’000 (Restated) 699,317 (251,045) 448,272 25,465 (182,611) (155,343) (37,896) (16,405) 81,482 (20,563) 60,919 61,095 (176) 60,919 HK3.94 cents HK3.93 cents

Note: Certain figures for the years ended 31 December 2009 and 2008 had been reclassified to conform the presentation of consolidated income statement for the year ended 31 December 2010. The Directors consider that reclassification of (i) rental income of approximately HK$3,034,000 and approximately HK$1,092,000; and (ii) other taxes of approximately HK$541,000 and approximately HK$187,000 for the years ended 31 December 2009 and 2008 respectively, from other operating income to turnover and to cost of sales is more meaningful in view of the introduction of property investment business during the year ended 31 December 2010.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Consolidated Statement of Financial Position

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 Current liabilities Trade and other payables Value added tax payable Income tax payable Obligations under finance leases Secured bank borrowings Net current assets Total assets less current liabilities Capital and reserves Share capital Reserves Equity attributable to owners of the Company Non controlling interests Total equity Non-current liabilities Other payables Obligations under finance leases Deferred tax liabilities	2010 HK$’000 3,028 174,139 95,409 32,922 4,063 — 52,355 361,916 240,561 108,968 69,195 672 8,091 — 2,173 12,138 68,146 509,944 67,148 3,591 7,746 — 71,285 149,770 360,174 722,090 15,511 688,090 703,601 3,414 707,015 920 — 14,155 15,075 722,090	2009 HK$’000 3,030 203,015 74,384 38,711 4,201 2,331 74,924 400,596 — 73,730 69,241 800 9,118 5,537 2,121 668 163,291 324,506 58,993 — — 446 — 59,439 265,067 665,663 15,511 633,871 649,382 808 650,190 2,778 — 12,695 15,473 665,663	2008 HK$’000 2,651 225,552 57,032 39,511 4,571 1,203 104,906
			435,426
			— 66,984 131,660 800 6,031 — 1,667 4,002 148,351
			359,495
			76,008 17,522 11,705 114 84,349
			189,698
			169,797
			605,223
			15,511 581,448
			596,959 413
			597,372
			— 344 7,507
			7,851
			605,223

– 54 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

2. SUMMARY OF AUDITED FINANCIAL STATEMENTS

Set out below is the audited financial statements of the Group.

Consolidated Income Statement

For the year ended 31 December 2010

NOTES Turnover 4 Cost of sales Gross profit Other operating income 4 Selling and distribution expenses Administrative expenses Impairment loss recognised in respect of goodwill Finance costs 6 Profit before taxation Income tax expense 7 Profit for the year 8 Profit for the year attributable to: Owners of the Company Non-controlling interests Earnings per share 10 Basic Diluted	2010 HK$’000 328,120 (104,098) 224,022 16,230 (82,178) (82,563) (22,569) (779) 52,163 (12,947) 39,216 36,610 2,606 39,216 HK2.36 cents HK2.36 cents	2009 HK$’000 (Restated) 367,056 (107,345) 259,711 24,428 (107,158) (80,828) (29,982) (586) 65,585 (12,615) 52,970 53,010 (40) 52,970 HK3.42 cents HK3.42 cents

– 55 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Consolidated Statement of Comprehensive Income

For the year ended 31 December 2010

Profit for the year Other comprehensive income (expense) Exchange differences arising on translating foreign operations Exchange differences arising during the year Reclassification adjustments relating to foreign operations deregistered of during the year Available-for-sale investments Net gain arising on revaluation of available-for-sale financial assets during the year Reclassification adjustments relating to available-for-sale investments disposed of during the year Gain arising on transfer of property, plant and equipment and prepaid lease payments to investment properties at fair value Deferred tax liability arising on gain on transfer of property, plant and equipment and prepaid lease payments to investment properties at fair value Other comprehensive income (expense) for the year, net of tax Total comprehensive income for the year, net of tax Total comprehensive income for the year attributable to: Owners of the Company Non-controlling interests	2010 HK$’000 39,216 15,589 (1,922) 13,667 333 (683) (350) 5,723 (1,431) 4,292 17,609 56,825 54,219 2,606 56,825	2009 HK$’000 52,970 (3,383) 898 (2,485) 1,903 (5) 1,898 — — — (587) 52,383 52,423 (40) 52,383

– 56 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Consolidated Statement of Financial Position

As at 31 December 2010

NOTES 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 11 Inventories Trade and other receivables 12 Prepaid lease payments on land use rights Income tax recoverable Value added tax recoverable Held-for-trading investment Bank balances and cash — pledged — unpledged Current liabilities Trade and other payables 13 Value added tax payable Income tax payable Obligations under finance leases Secured bank borrowings Net current assets Total assets less current liabilities Capital and reserves Share capital Reserves Equity attributable to owners of the Company Non controlling interests Total equity Non-current liabilities Other payables Deferred tax liabilities	2010 HK$’000 3,028 174,139 95,409 32,922 4,063 — 52,355 361,916 240,561 108,968 69,195 672 8,091 — 2,173 12,138 68,146 509,944 67,148 3,591 7,746 — 71,285 149,770 360,174 722,090 15,511 688,090 703,601 3,414 707,015 920 14,155 15,075 722,090	2009 HK$’000 3,030 203,015 74,384 38,711 4,201 2,331 74,924
		400,596
		— 73,730 69,241 800 9,118 5,537 2,121 668 163,291
		324,506
		58,993 — — 446 —
		59,439
		265,067
		665,663
		15,511 633,871
		649,382 808
		650,190
		2,778 12,695
		15,473
		665,663

– 57 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Consolidated Statement of Cash Flows

For the year ended 31 December 2010

OPERATING ACTIVITIES Profit before taxation Adjustments for: Amortisation of intangible assets Amortisation of prepaid lease payments on land use rights Net increase in fair value of investment properties Decrease (increase) in fair value of held-for-trading investment Depreciation of property, plant and equipment Finance costs Loss on disposal of available-for-sale investments Net (gain) loss on deregistration of subsidiaries Impairment loss recognised in respect of goodwill Impairment loss recognised in respect of property, plant and equipment Impairment loss recognised in respect of prepayments, deposits and other receivables Impairment loss recognised in respect of trade receivables Interest income from bank deposits Dividend income from held-for-trading investment Loss on disposal of property, plant and equipment Provision for compensation claim Reversal of impairment loss recognised in respect of trade receivables Reversal of impairment loss recognised of prepayments, deposits and other receivables Reversal of provision for compensation of staff redundant Write back of long outstanding payables Written off of other receivables Write down and written off of inventories Operating cash flow before movements in working capital Increase in inventories Increase in properties under development Decrease in trade and other receivables Increase (decrease) in trade and other payables Increase in income tax recoverable Decrease (increase) in value-added tax recoverable Increase (decrease) in value-added tax payable Cash (used in) generated from operations People’s Republic of China Enterprise Income Tax paid NET CASH (USED IN) FROM OPERATING ACTIVITIES	2010 HK$’000 52,163 1,335 672 — 6 14,367 779 9 (2,099) 22,569 9,702 1,724 — (1,544) (343) 8,064 — (152) (2,778) (1,493) (3,330) — 161 99,812 (33,393) (239,315) 2,491 10,622 — 5,728 3,591 (150,464) (4,372) (154,836)	2009 HK$’000 65,585 1,119 800 (17,352) (454) 16,999 586 — 898 29,982 3,126 1,497 1,172 (995) (663) 144 1,111 — — — — 333 951 104,839 (7,697) — 56,005 (13,096) (2,060) (5,537) (17,522) 114,932 (20,159) 94,773

– 58 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

INVESTING ACTIVITIES (Increase) decrease in pledged bank balances Purchase of property, plant and equipment Deposit paid for acquisition of property, plant and equipment Purchase of intangible assets Proceeds from the disposal of available-for-sale investments Interest income from bank deposits Dividend received from held-for-trading investment Proceeds from the disposal of property, plant and equipment NET CASH (USED IN) FROM INVESTING ACTIVITIES FINANCING ACTIVITIES New bank borrowings raised Repayment of bank borrowings Interest paid Repayment of obligations under finance leases NET CASH FROM (USED IN) FINANCING ACTIVITIES NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR Effect of foreign exchange rate changes CASH AND CASH EQUIVALENTS AT END OF THE YEAR, representing unpledged bank balances and cash	2010 HK$’000 (11,469) (3,994) (1,650) (1,230) 1,972 1,544 343 57 (14,427) 94,274 (22,989) (2,025) (446) 68,814 (100,449) 163,291 5,304 68,146	2009 HK$’000 3,334 (1,485) (1,778) (1,896) 770 995 663 4,623 5,226 — (84,349) (586) (148) (85,083) 14,916 148,351 24 163,291

– 59 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

NOTES:

1. GENERAL

The Company is incorporated in the Cayman Islands as an exempted company with limited liabilities. The shares of the Company are listed on The Stock Exchange of Hong Kong Limited (the ‘‘Stock Exchange’’).

The consolidated financial statements are presented in Hong Kong dollars (‘‘HK$’’). Other than those subsidiaries established in the People’s Republic of China (the ‘‘PRC’’) whose functional currency is Renminbi (‘‘RMB’’), the functional currency of the Company and its subsidiaries is HK$.

As the Company is listed in Hong Kong, the Directors consider that it is appropriate to present the consolidated financial statements in HK$.

The principal activities of the Group are the selling, distributing and manufacturing of pharmaceutical and food products and property investment.

Pursuant to a special resolution passed at the annual general meeting held on 2 June 2010, the name of the Company was changed from Vital Pharmaceutical Holdings Limited 維奧醫藥控股有限公司 to Vital Group Holdings Limited 維奧集 團控股有限公司. The ‘‘Certificate of Incorporation on Change of Name’’ has been issued by the Registrar of Companies in the Cayman Islands and the change of name took effect on 2 June 2010.

2. APPLICATION OF NEW AND REVISED HONG KONG FINANCIAL REPORTING STANDARDS (‘‘HKFRSs’’)

In the current year, the Group has	applied the following new and revised standards, amendments to standards and
interpretations (‘‘new and revised HKFRSs’’) issued by the Hong Kong Institute of Certified Public Accountants (the
‘‘HKICPA’’).
HKFRSs (Amendments)	Amendment to HKFRS 5 as part of Improvement to HKFRSs 2008
HKFRSs (Amendments)	Improvements to HKFRSs 2009
Hong Kong Accounting Standard	Consolidated and Separate Financial Statements
(‘‘HKAS’’) 27 (Revised)
HKAS 39 (Amendments)	Eligible Hedged Items
HKFRS 1 (Revised)	First-time Adoption of HKFRSs
HKFRS 1 (Amendment)	Additional Exemptions from First-time Adopters
HKFRS 2 (Amendment)	Group Cash-settled Share-based Payment Transactions
HKFRS 3 (Revised)	Business Combinations
HK-Interpretations (‘‘Int’’) 5	Presentation of Financial Statements — Classification by the Borrower of a
	Term Loan that Contains a Repayment on Demand Clause
HK(IFRIC)-Int 17	Distributions of Non-cash Assets to Owners

HKFRS 3 (Revised 2008) Business Combinations

The Group applies HKFRS 3 (Revised) Business Combinations prospectively to business combinations for which the acquisition date is on or after 1 January 2010. The requirements in HKAS 27 (Revised) Consolidated and Separate Financial Statements in relation to accounting for changes in ownership interests in a subsidiary after control is obtained and for loss of control of a subsidiary are also applied prospectively by the Group on or after 1 January 2010.

As there was no transaction during the current year in which HKFRS 3 (Revised) and HKAS 27 (Revised) are applicable, the application of HKFRS 3 (Revised), HKAS 27 (Revised) and the consequential amendments to other HKFRSs had no effect on the consolidated financial statements of the Group for the current or prior accounting periods.

Results, of the Group in future periods, may be affected by future transactions for which HKFRS 3 (Revised), HKAS 27 (Revised) and the consequential amendments to the other HKFRSs are applicable.

– 60 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Amendment to HKAS 17 Leases

As part of Improvements to HKFRSs issued in 2009, HKAS 17 Leases has been amended in relation to the classification of leasehold land. Before the amendment to HKAS 17, the Group was required to classify leasehold land as operating leases and to present leasehold land as prepaid lease payments in the consolidated statement of financial position. The amendment to HKAS 17 has removed such a requirement. The amendment requires that the classification of leasehold land should be based on the general principles set out in HKAS 17, that is, whether or not substantially all the risks and rewards incidental to ownership of a leased asset have been transferred to the lessee.

In accordance with the transitional provisions set out in the amendment to HKAS 17, the Group reassessed the classification of unexpired leasehold land as at 1 January 2010 based on information that existed at the inception of the leases. The application of amendment to HKAS 17 had no material effect on the consolidated financial statements.

HK-Int 5 Presentation of Financial Statements — Classification by the Borrower of a Term Loan that Contains a Repayment on Demand Clause

HK-Int 5 clarifies that term loans that include a clause that gives the lender the unconditional right to call the loans at any time (repayment on demand clause) should be classified by the borrower as current liabilities. As the Group’s bank borrowings are repayable within twelve months from the end of the reporting date, the application of HK-Int 5 had no effect on the consolidated financial statements of the Group for the current or prior accounting periods.

The application of the other new and revised HKFRSs had no material effect on the consolidated financial statements of the Group for the current or prior accounting periods.

The Group has not early applied the following new and revised standards, amendments or interpretations that have been issued but are not yet effective.

HKFRSs (Amendments)	Improvements to HKFRSs 2010 except for the amendments to HKFRS 3
	(Revised in 2008), HKFRS 7, HKAS 1 and HKAS 281
HKFRS 1 (Amendment)	Limited Exemption from Comparative HKFRS 7 Disclosures for First-
	time Adopters3
HKFRS 1 (Amendment)	Severe Hyperinflation and Removal of Fixed Dates for First-time
	Adopters5
HKFRS 7 (Amendments)	Disclosures — Transfer of Financial Assets5
HKFRS 9	Financial Instruments7
HKAS 12 (Amendment)	Deferred Tax: Recovery of Underlying Assets6
HKAS 24 (Revised)	Related Party Disclosures4
HKAS 32 (Amendment)	Classification of Rights Issues2
HK(IFRIC)-Int 14 (Amendment)	Prepayments of a Minimum Funding Requirement4
HK(IFRIC)-Int 19	Extinguishing Financial Liabilities with Equity Instruments3

• 1 Amendments that are effective for annual periods beginning on or after 1 July 2010 and 1 January 2011, as appropriate.

• 2 Effective for annual periods beginning on or after 1 February 2010. 3 Effective for annual periods beginning on or after 1 July 2010. 4 Effective for annual periods beginning on or after 1 January 2011. 5 Effective for annual periods beginning on or after 1 July 2011. 6 Effective for annual periods beginning on or after 1 January 2012. 7 Effective for annual periods beginning on or after 1 January 2013.

HKFRS 9 Financial Instruments issued in November 2009 and amended in October 2010 introduces new requirements for the classification and measurement of financial assets and financial liabilities and for derecognition.

• . HKFRS 9 requires all recognised financial assets that are within the scope of HKAS 39 Financial Instruments: Recognition and Measurement to be subsequently measured at amortised cost or fair value. Specifically, debt investments that are held within a business model whose objective is to collect the contractual cash flows, and that have contractual cash flows that are solely payments of principal and

– 61 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

interest on the principal outstanding are generally measured at amortised cost at the end of subsequent accounting periods. All other debt investments and equity investments are measured at their fair values at the end of subsequent accounting periods.

• . The most significant effect of HKFRS 9 regarding the classification and measurement of financial liabilities relates to the accounting for changes in fair value of a financial liability (designated as at fair value through profit or loss) attributable to changes in the credit risk of that liability. Specifically, under HKFRS 9, for financial liabilities that are designated as at fair value through profit or loss, the amount of change in the fair value of the financial liability that is attributable to changes in the credit risk of that liability is recognised in other comprehensive income, unless the recognition of the effects of changes in the liability’s credit risk in other comprehensive income would create or enlarge an accounting mismatch in profit or loss. Changes in fair value attributable to a financial liability’s credit risk are not subsequently reclassified to profit or loss. Previously, under HKAS 39, the entire amount of the change in the fair value of the financial liability designated as at fair value through profit or loss was recognised in profit or loss.

HKFRS 9 is effective for annual periods beginning on or after 1 January 2013, with earlier application permitted.

The Directors anticipate that HKFRS 9 that will be adopted in the Group’s consolidated financial statements for the annual period beginning 1 January 2013 and that the application of the new standard will have a significant impact on amounts reported in respect of the Group’s financial assets and financial liabilities. However, it is not practicable to provide a reasonable estimate of that effect until a detailed review has been completed.

The amendments to HKFRS 7 titled Disclosures — Transfers of Financial Assets increase the disclosure requirements for transactions involving transfers of financial assets. These amendments are intended to provide greater transparency around risk exposures when a financial asset is transferred but the transferor retains some level of continuing exposure in the asset. The amendments also require disclosures where transfers of financial assets are not evenly distributed throughout the period. To date, the Group has not entered into transactions involving transfers of financial assets. However, if the Group enters into any such transactions in the future, disclosures regarding those transfers may be affected.

HKAS 24 Related Party Disclosures (as revised in 2009) modifies the definition of a related party and simplifies disclosures for government-related entities. The disclosure exemptions introduced in HKAS 24 (as revised in 2009) do not affect the Group because the Group is not a government-related entity.

The amendments to HKAS 32 titled Classification of Rights Issues address the classification of certain rights issues denominated in foreign currency as either an equity instrument or as a financial liability. To date, the Group has not entered into any arrangements that would fall within the scope of the amendments. However, if the Group does enter into any rights issues within the scope of the amendments in future accounting periods, the amendments to HKAS 32 will have an impact on the classification of those rights issues.

The amendments to HK(IFRIC)-Int 14 require entities to recognise as an economic benefit any prepayment of minimum funding requirement contributions. As the Group has no defined benefit scheme, the amendments are unlikely to have any financial impact on the Group.

HK(IFRIC)-Int 19 provides guidance regarding the accounting for the extinguishment of a financial liability by the issue of equity instruments. To date, the Group has not entered into transactions of this nature. However, if the Group does enter into any such transactions in the future, HK(IFRIC)-Int 19 will affect the required accounting. In particular, under HK(IFRIC)-Int 19, equity instruments issued under such arrangements will be measured at their fair value, and any difference between the carrying amount of the financial liability extinguished and the fair value of equity instruments issued will be recognised in profit or loss.

The amendments to HKAS 12 titled Deferred Tax: Recovery of Underlying Assets mainly deal with the measurement of deferred tax for investment properties that are measured using the fair value model in accordance with HKAS 40 Investment Property. Based on the amendments, for the purposes of measuring deferred tax liabilities and deferred tax assets for investment properties measured using the fair value model, the carrying amounts of the

– 62 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

investment properties are presumed to be recovered through sale, unless the presumption is rebutted in certain circumstances. The Directors anticipates that the application of the amendments to HKAS 12 may have a significant impact on deferred tax recognised for investment properties that are measured using the fair value model.

The Directors anticipate that the application of other new and revised standards, amendments or interpretations will have no material impact on the results and the financial position of the Group.

3. BASIS OF PREPARATION

The consolidated financial statements have been prepared in accordance with HKFRSs issued by the HKICPA. In addition, the consolidated financial statements include applicable disclosures required by the Rules Governing the Listing of Securities on the Stock Exchange and by the Hong Kong Companies Ordinance.

The consolidated financial statements have been prepared on the historical cost basis except for investment properties and certain financial instruments, which are measured at fair values. Historical cost is generally based on the fair value of the consideration given in exchange for assets.

4. TURNOVER AND OTHER OPERATING INCOME

Turnover represents amount received and receivable from sales of pharmaceutical and food products net of returns, discounts allowed, sales related taxes and gross rental income during the year. Revenues recognised during the year are as follows:

Turnover Sales of goods Gross rental income (Note a) Other operating income Net increase in fair value of investment properties Government grants (Note b) Exchange gain Bank interest income Dividend income from held-for-trading investment Increase in fair value of held-for-trading investment Sundry income Write back of long outstanding payables Gain on deregistration of subsidiaries Reversal of impairment losses recognised in respect of trade receivables Reversal of provision for compensation of staff redundant Reversal of impairment losses recognised in respect of prepayments, deposits and other receivables Total revenues	2010 HK$’000 323,954 4,166 328,120 — — 4,491 1,544 343 — — 3,330 2,099 152 1,493 2,778 16,230 344,350	2009 HK$’000 (Restated) 364,022 3,034
		367,056
		17,352 3,497 1,382 995 663 454 85 — — — — —
		24,428
		391,484

– 63 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes:

• (a) An analysis of the Group’s net rental income is as follows:

Gross rental income Less: Outgoings (included in cost of sales) Net rental income	2010 HK$’000 4,166 (700) 3,466	2009 HK$’000 3,034 (541
		2,493

• (b) For the year ended 31 December 2009, the amounts represented unconditional grants from the PRC government specifically for encouraging the Group’s business development in Sichuan Province, the PRC.

5. SEGMENT INFORMATION

In prior years, no segment analysis of financial information was presented as the Group’s revenue, expenses, assets, liabilities and capital expenditure are primarily attributable to the selling, distributing and manufacturing of pharmaceutical and food products.

During the year, a new segment of property investment was introduced as a result of the acquisition of land use rights as set out in Note 11. The Group’s operating segments, based on the information reported to the chief operating decision maker, Chief Executive Officer, for the purposes of resource allocation and performance assessment are as follows:

• (a) Pharmaceutical and food segment engages in the selling, distributing and manufacturing of pharmaceutical and food products.

• (b) Property investment segment engages in leasing, developing and selling of office premises and residential properties.

No operating segments have been aggregated to form the above reportable segments.

Segment revenues and results

The following is an analysis of the Group’s revenue and results by reportable segments:

For the year ended 31 December 2010

Turnover Segment profit Other income and gains Central administrative costs Finance costs Profit before taxation	Pharmaceutical and food HK$’000 323,954 54,164	Property investment HK$’000 4,166 2,813	Total HK$’000 328,120
			56,977 8,477 (12,512 (779
			52,163

– 64 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

For the year ended 31 December 2009

Turnover Segment profit Other income and gains Central administrative costs Finance costs Profit before taxation	Pharmaceutical and food HK$’000 364,022 50,507	Property investment HK$’000 3,034 19,845	Total HK$’000 367,056
			70,352 6,991 (11,172 (586
			65,585

The accounting policies of the reportable segments are the same as the Group’s accounting policies. Segment profit represents the profit earned by each segment without allocation of central administrative costs, directors’ salaries, other income and gains and finance costs. This is the measure reported to the Chief Executive Officer for the purposes of resource allocation and assessment of segment performance.

Segment assets and liabilities

The following is an analysis of the Group’s assets and liabilities by reportable segments:

Segment assets

Pharmaceutical and food Property investment Unallocated corporate assets Total assets Segment liabilities Pharmaceutical and food Property investment Unallocated corporate liabilities Total liabilities	2010 HK$’000 435,762 345,394 781,156 90,704 871,860 2010 HK$’000 66,153 216 66,369 98,476 164,845	2009 HK$’000 472,819 74,384
		547,203 177,899
		725,102
		2009 HK$’000 56,486 —
		56,486 18,426
		74,912

For the purposes of monitoring segment performances and allocating resources between segments:

• . All assets are allocated to reportable segments other than available-for-sale investments, held-fortrading investment, income tax recoverable, bank balances and cash and other assets for corporate use including property, plant and equipment and other receivables.

– 65 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

. All liabilities are allocated to reportable segments other than obligations under finance leases, secured bank borrowings, deferred tax liabilities and other payables for corporate use.

Other segment information

2010 Amounts included in the measure of segment profit or loss or segment assets: Addition to property, plant and equipment Addition to intangible assets Impairment loss recognised in respect of goodwill Depreciation and amortisation Impairment losses recognised in respect of property, plant and equipment Loss on disposal of property, plant and equipment Write-down of inventories Write-off of inventories Impairment loss recognised in respect of prepayments, deposits & other receivables Research and development costs Operating lease rental on land and buildings Write back of long outstanding payables Amounts regularly provided to the chief operating decision maker but not included in the measure of segment profit or loss or segment assets: Loss on disposal of available-for-sale financial assets Decrease in fair value of held-for-trading investment Interest expenses Income tax expenses Bank interest income Dividend income from held-for-trading investments	Pharmaceutical and food HK$’000 3,042 1,230 22,569 16,368 9,702 8,064 41 120 1,724 381 1,654 (3,330) — — — — — —	Property investment HK$’000 605 — — — — — — — — — — — — — — — — —	Unallocated HK$’000 — — — 6 — — — — — — — — 9 6 779 12,947 (1,544) (343)	Total HK$’000 3,647 1,230 22,569 16,374 9,702 8,064 41 120 1,724 381 1,654 (3,330
				9 6 779 12,947 (1,544 (343

– 66 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

2009

Amounts included in the measure of segment profit or loss or segment assets: Addition to property, plant and equipment Addition to intangible assets Impairment loss recognised in respect of goodwill Depreciation and amortisation Impairment losses recognised in respect of property, plant and equipment Loss on disposal of property, plant and equipment Write down of inventories Written off of inventories Impairment loss recognised in respect of trade receivable Impairment loss recognised in respect of prepayments, deposits and other receivables Written off of other receivables Research and development costs Provision for compensation claim Increase in fair value of investment properties Amounts regularly provided to the chief operating decision maker but not included in the measure of segment profit or loss or segment assets: Dividend income from held-for trading investment Increase in fair value of held-for-trading investment Bank interest income Interest expenses Income tax expenses	Pharmaceutical and food HK$’000 2,176 2,331 29,982 18,898 3,126 144 213 738 1,172 1,497 333 1,194 1,111 — — — — — —	Property investment HK$’000 — — — — — — — — — — — — — (17,352) — — — — —	Unallocated HK$’000 — — — 20 — — — — — — — — — — (663) (454) (995) 586 12,615	Total HK$’000 2,176 2,331 29,982 18,918 3,126 144 213 738 1,172 1,497 333 1,194 1,111 (17,352
				(663 (454 (995 586 12,615

Geographical information

No geographical information is presented as the Group’s business is principally carried out in the PRC and the Group’s revenue from external customers and non-current assets are in the PRC. No geographical information for other countries is of a significant enough size to be reported separately.

– 67 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Information about major customers

Revenues from customers of the corresponding years contributing over 10% of the total sales of the Group are as follows:

Customer A1 1 Revenue from pharmaceutical and food segment	2010 HK$’000 112,643	2009 HK$’000 127,862

6. FINANCE COSTS

Interest expenses on: — bank borrowings and overdrafts wholly repayable within five years — obligations under finance leases — discounted bills of exchange without recourse Other incidental borrowing costs Total borrowing costs Less: amounts capitalised into properties under development	2010 HK$’000 1,246 6 773 — 2,025 (1,246) 779	2009 HK$’000 473 44 42 27
		586 —
		586

Borrowing costs capitalised during the year arose on the general borrowing pool are calculated by applying a capitalisation rate of 5.82% (2009: nil) per annum to expenditure on properties under development.

7. INCOME TAX EXPENSE

PRC Enterprise Income Tax — current year — overprovision in prior years Deferred tax	2010 HK$’000 15,920 (2,739) 13,181 (234) 12,947	2009 HK$’000 7,427 —
		7,427 5,188
		12,615

Hong Kong Profits Tax has not been provided for in the consolidated financial statements as there was no estimated assessable profit derived from Hong Kong for both years.

The Hong Kong Profits Tax amounting to HK$6,031,000 of a subsidiary of the Company in respect of the years of assessment 2000/01 and 2001/02 are under inquiry by the Inland Revenue Department (‘‘IRD’’). The subsidiary had lodged an objection against the assessments and the IRD had held over the payment of the profits tax and the equal amount of tax reserve certificates was purchased and recorded as income tax recoverable as at 31 December 2010 and 2009.

During the year ended 31 December 2009, the IRD further issued protective profits tax assessments of approximately HK$1,760,000 to that subsidiary of the Company relating to the year of assessment 2002/03, that is, for the financial year ended 31 December 2002. The Group lodged objections with the IRD against the protective assessments and purchased a tax reserve certificate of approximately HK$1,760,000 during the year ended 31 December 2009 as demanded by the IRD. The amount was recorded as income tax recoverable as at 31 December 2010 and 2009.

– 68 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

During the year ended 31 December 2010, the IRD further issued protective profits tax assessments of approximately HK$5,250,000 to that subsidiary of the Company relating to the year of assessment 2003/04, that is, for the financial year ended 31 December 2003. The Group again lodged objections with the IRD against the protective assessments and the IRD agreed to hold over the tax claim unconditionally.

The Directors believes that that subsidiary has a reasonable likelihood of success in defending its position that the income derived is non-Hong Kong sourced and therefore, are not subject to Hong Kong Profits Tax. Accordingly, no provision for profits tax is required.

During the year ended 31 December 2009, the IRD issued protective profits tax assessments of approximately HK$599,000 to another subsidiary of the Company relating to the year of assessment 2002/03, that is, for the financial year ended 31 December 2002. The Group lodged objections with the IRD against the protective assessments. The IRD agreed to hold over the tax claim subject to the purchasing of a tax reserve certificate of approximately HK$300,000, the Group purchased the tax reserve certificate during the year ended 31 December 2009 as demanded by the IRD. The amount was recorded as income tax recoverable as at 31 December 2010 and 2009.

During the year ended 31 December 2010, the IRD further issued protective profits tax assessments of approximately HK$5,250,000 to that subsidiary of the Company relating to the year of assessment 2003/04, that is, for the financial year ended 31 December 2003. The Group again lodged objections with the IRD against the protective assessments and the IRD agreed to hold over the tax claim unconditionally.

The Directors believe that that subsidiary has a reasonable likelihood of success in defending its position that the income derived is non-Hong Kong sourced and therefore, are not subject to Hong Kong Profits Tax. Accordingly, no provision for profits tax is required.

Under the Law of the PRC on Enterprise Income Tax (the ‘‘EIT Law’’) and Implementation Regulation of the EIT Law, the tax rate of the PRC subsidiaries is 25% for both years.

Certain PRC subsidiaries obtained approval from the relevant tax bureau and are qualified as High and New Technology Enterprises which are subject to a tax rate of 15% for the current and previous years.

Certain PRC subsidiaries were either in loss-making positions for the current and the previous years or had sufficient tax losses brought forward from previous year to offset the estimated assessable income for the year and accordingly did not have any assessable income for the current and previous years.

The subsidiary operating in Macau is exempted from the income tax in Macau for the current and previous years.

Pursuant to the laws and regulations of the Cayman Islands and British Virgin Islands (‘‘BVI’’), the Group is not subject to any income tax in the Cayman Islands and BVI for the current and previous years.

No Australian income tax has been provided as the subsidiaries operating in Australia had no estimated assessable profits for the current and previous years.

– 69 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The income tax expense for the year can be reconciled to the profit before taxation per the consolidated income statement as follows:

Profit before taxation Tax calculated at rates applicable to profits in the respective tax jurisdiction concerned Effect of tax exemption granted to a Macau subsidiary Tax effect of income not taxable for tax purpose Tax effect of expenses not deductible for tax purposes Utilisation of previously unrecognised tax losses and temporary difference Tax effect of tax losses and deductible temporary difference not recognised Overprovision in prior years Income tax expense for the year PROFIT FOR THE YEAR Profit for the year has been arrived at after charging: Amortisation of intangible assets Amortisation of prepaid lease payments on land use rights Auditors’ remuneration Cost of inventories sold Depreciation of property, plant and equipment Impairment loss recognised in respect of trade receivables (included in administrative expenses) Impairment loss recognised in respect of property, plant and equipment (included in administrative expenses) Impairment loss recognised in respect of prepayments, deposits and other receivables (included in administrative expenses) Loss on disposal of property, plant and equipment Operating lease rental on land and buildings Provision for compensation claim (included in administrative expenses) Research and development costs Staff costs (including directors’ emoluments) Written off of inventories (included in cost of sales) Write down of inventories (included in cost of sales) Net loss on deregistration of subsidiaries Written off of other receivables Loss on disposal of available-for-sale investments Decrease in fair value of held-for-trading investment	2010 HK$’000 52,163 13,998 (3,851) (708) 6,208 (8,205) 8,244 (2,739) 12,947 2010 HK$’000 1,335 672 1,264 103,237 14,367 — 9,702 1,724 8,064 1,654 — 381 69,844 120 41 — — 9 6	2009 HK$’000 65,585
		15,081 (9,559 (1,020 7,624 (1,029 1,518 —
		12,615
		2009 HK$’000 1,119 800 1,423 105,853 16,999 1,172 3,126 1,497 144 2,341 1,111 1,194 73,244 738 213 898 333 — —

8. PROFIT FOR THE YEAR

9. DIVIDENDS

No dividend was paid or proposed during the year ended 31 December 2010, nor has any dividend been proposed since the end of the reporting period (2009: nil).

– 70 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

10. EARNINGS PER SHARE

The calculation of the basic and diluted earnings per share attributable to the owners of the Company is based on the following data:

Earnings Profit for the year attributable to the owners of the Company for the purposes of basic and diluted earnings per share Number of shares Weighted average number of ordinary shares for the purpose of basic earnings per share Effect of dilutive ordinary shares in respect of share options Weighted average number of ordinary shares for the purpose of diluted earnings per share	2010 HK$’000 36,610 1,551,056,993 193,633 1,551,250,626	2009 HK$’000 53,010
		1,551,056,993 —
		1,551,056,993

For the year ended 31 December 2009, the computation of dilutive earnings per share does not assume the exercise of the Company’s outstanding share options as the exercises price of those options is higher than the average market price for shares. Hence, the dilutive earnings per share is the same as basic earnings per share for the year ended 31 December 2009.

11. PROPERTIES UNDER DEVELOPMENT

At 1 January Additions At 31 December Represented by: Prepaid lease payments on land use rights Construction costs and capitalised expenditure Finance costs capitalised	2010 HK$’000 — 240,561 240,561 237,446 1,869 1,246 240,561	2009 HK$’000 — —
		—
		— — —
		—

The Group is in the process of obtaining the land use right certificates.

The carrying amounts of the land use rights held for property development in the PRC are as follows:

Medium-term lease Long-term lease	2010 HK$’000 23,745 213,701 237,446	2009 HK$’000 — —
		—

– 71 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

According to the accounting policy of the Group, properties under development are classified as current assets as the construction period of the relevant property development project is expected to be completed in the normal operating cycle even if it is expected to be recovered after one year from the end of the reporting period.

12. TRADE AND OTHER RECEIVABLES

Trade and bills receivables Prepayments, deposits and other receivables Payments for pharmaceutical projects (Note a) Less: Impairment loss recognised in respect of trade receivables Impairment loss recognised for payments for pharmaceutical projects (Note b) Impairment loss recognised in respect of prepayment, deposits and other receivables (Note c)	2010 HK$’000 50,360 29,770 138 80,268 (7,800) — (3,273) 69,195	2009 HK$’000 64,588 20,814 21,010
		106,412 (12,387 (20,509 (4,275
		69,241

Notes:

• (a) Amounts paid for the development of technology and pharmaceutical products are deferred prior to completion of the projects and included in payments for pharmaceutical projects. On completion, these amounts are transferred to development costs in accordance with the Group’s accounting policy.

• (b) As at 31 December 2009, the Directors reviewed the carrying values of the payments for pharmaceutical projects and considered that in light of the market conditions in the PRC, the Group had terminated projects which involved high risks and ceased on its own initiative the application of projects of minimal benefit, therefore accumulated impairment loss of approximately HK$20,509,000 had been recognised.

During the year ended 31 December 2010, the Directors considered writing off the balances which were long outstanding and which they expected could not be receivable.

The movements in impairment loss of payments for pharmaceutical projects were as follows:

At 1 January Written off At 31 December	2010 HK$’000 20,509 (20,509) —	2009 HK$’000 20,509 —
		20,509

As at 31 December 2009, included in the impairment loss were individually impaired payments for pharmaceutical projects with an aggregate balance of approximately HK$20,509,000 which are of high risk and the application of these projects provides minimal benefits. The Group does not hold any collateral over these balances.

– 72 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

(c) The movements in impairment loss of prepayments, deposits and other receivables were as follows:

At 1 January Exchange realignment Recognised during the year Reversal during the year At 31 December	2010 HK$’000 4,275 52 1,724 (2,778) 3,273	2009 HK$’000 2,778 — 1,497 —
		4,275

As at 31 December 2010, included in the impairment loss were individually impaired prepayments, deposits and other receivables with an aggregate balance of approximately HK$3,273,000 (2009: HK$4,275,000) which are long outstanding. The Group does not hold any collateral over these balances.

The Group normally grants to its customers credit periods ranging from 90 days to 180 days which are subject to periodic review by management.

The following is an aged analysis of the trade and bills receivables, based on the invoice date at the end of the reporting period, and net of impairment loss recognised:

Within 30 days 31–60 days 61–90 days Over 90 days	2010 HK$’000 13,755 18,381 10,161 263 42,560	2009 HK$’000 13,979 14,823 12,998 10,401
		52,201

The movements in impairment loss of trade receivables were as follows:

At 1 January Exchange realignment Recognised during the year Reversal during the year Written off At 31 December	2010 HK$’000 12,387 251 — (152) (4,686) 7,800	2009 HK$’000 11,215 — 1,172 — —
		12,387

As at 31 December 2010, included in the impairment loss of trade receivables were individually impaired trade receivables with an aggregate balance of approximately HK$7,800,000 (2009: HK$12,387,000) which are long outstanding. The Group does not hold any collateral over these balances.

– 73 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

At 31 December 2010 and 2009, the aged analysis of trade receivables that were past due but not impaired are as follows:

Total Neither past due nor impaired HK$’000 HK$’000 31 December 2010 42,560 42,560 31 December 2009 52,201 41,800	Past due but not impaired
	590 days 91 to 180 days 181 to 365 days 1 to 2 years HK$’000 HK$’000 HK$’000 HK$’000 — — — — 10,401 — — —

For the year ended 31 December 2010 and 2009, trade receivables that were neither past due nor impaired relate to a wide range of customers for whom there was no recent history of default. The Group does not hold any collateral over these balances.

Trade receivables that were past due but not impaired relate to a number of independent customers that have a good track record with the Group. Based on past experience, management believes that no impairment loss is necessary in respect of these balances as there has not been a significant change in credit quality and the balances are still considered fully recoverable. The Group does not hold any collateral over these balances.

13. TRADE AND OTHER PAYABLES

Trade and bills payable Accrued expenses and other payables	2010 HK$’000 19,576 47,572 67,148	2009 HK$’000 5,462 53,531
		58,993

The following is an aged analysis of trade and bills payable based on the invoice date at the end of the reporting period:

Within 30 days 31–60 days 61–90 days Over 90 days	2010 HK$’000 16,448 946 1,797 385 19,576	2009 HK$’000 5,008 60 28 366
		5,462

The average credit period on purchases of goods is 30 days (2009: 30 days). The Group has financial risk management policies in place to ensure that all payables are settled within the credit time frame.

– 74 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Included in accrued expenses and other payables, there was provision for compensation claim following the voluntary recall of one of the Group’s product ‘‘Depile Capsules’’ from the market after reports of possible damage to the liver by ‘‘Depile Capsules’’ were received. Details of the particulars were set out in an announcement dated 12 November 2008. The movement of the provision for compensation claims is set out below:

At 1 January Exchange realignment Provision for the year Settled in the year At 31 December	2010 HK$’000 2,500 86 — (1,139) 1,447	2009 HK$’000 5,556 — 1,111 (4,167
		2,500

14. COMMITMENTS

At the end of the reporting period, the Group had the following commitments:

(a) Capital commitments for the acquisition of property, plant and equipment

Contracted but not provided for (b) Commitments for the acquisition of technical know-how Contracted but not provided for (c) Commitments for the properties under development Contracted but not provided for Authorised but not contracted for	2010 HK$’000 940 2010 HK$’000 — 2010 HK$’000 230 759,439 759,669	2009 HK$’000 4,014
		2009 HK$’000 571
		2009 HK$’000 — —
		—

(d) Commitments under operating leases

The Group as a lessor

Property rental income earned during the year was approximately HK$4,166,000 (2009: HK$3,034,000). The investment properties are expected to generate rental yields of 4.37% (2009: 4.08%) on an ongoing basis. The investment properties held have committed tenants for the next one to four years.

– 75 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

At the end of the reporting period, the Group had contracted with tenants for the following future minimum lease payments:

Within one year In the second to fifth year inclusive	2010 HK$’000 3,236 5,974 9,210	2009 HK$’000 1,016 1,895
		2,911

The Group as lessee

The Group leases certain of its offices and staff quarters under operating lease arrangements. Leases for properties are negotiated for a term ranging from one to two years and rentals are fixed throughout the rental period.

At the end of the reporting period, the Group had commitments for future minimum lease payments under non-cancellable operating leases which fall due as follows:

Land and buildings Within one year In the second to fifth year inclusive	2010 HK$’000 905 562 1,467	2009 HK$’000 715 16
		731

15. PLEDGE OF ASSETS

At the end of the reporting period, certain assets of the Group were pledged to secure banking facilities granted to the Group as follows:

Property, plant and equipment Investment properties Bank balances and cash Prepaid lease payments on land use rights	2010 HK$’000 62,457 78,396 12,138 15,875 168,866	2009 HK$’000 40,304 57,898 668 16,270
		115,140

16. EVENTS AFTER THE REPORTING PERIOD

• (i) On 24 January 2011, the Company received a written notification from Pharmco International, Inc. (‘‘Pharmco’’), the sole supplier of Osteoform Compound Calcium Amino Acid Chelate Capsules (‘‘Osteoform’’). In the written notice, it was mentioned that, on 7 December 2010, Pharmco was notified by the Department of Drug Registration of the State Food and Drug Administration in the PRC that they intend to issue a notice of non-renewal of import drug license of Osteoform to Pharmco in the near future. Details of the information are set out in the announcement dated 25 January 2011.

• (ii) On 28 January 2011, Vital Pharmaceuticals Company Limited (‘‘VPCL’’), a wholly-owned subsidiary of the Company, entered into a provisional sale and purchase agreement with an independent third party, Bright Future Pharmaceutical Laboratories Limited (‘‘Bright Future’’), pursuant to which VPCL agreed to sell and

– 76 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Bright Future agreed to purchase a property of the Group for cash consideration of HK$21,000,000. At 31 December 2010, the carrying value of the property amounted to HK$11,415,000. Details of the disposal of property are set out in the announcement dated 28 January 2011.

• (iii) On 18 March 2011, the Company entered into a subscription agreement with China Uranium Development Company Limited (‘‘China Uranium’’). Please refer to the holding announcement of the Company dated 28 March 2011 for the details of the subscription agreement.

17. COMPARATIVE FIGURES

Certain comparative figures had been reclassified to conform to current year’s presentation. The Directors consider that reclassification of rental income and other taxes from other operating income to turnover and to cost of sales in the consolidated income statement is more meaningful in view of the introduction of new property investment segment as detailed in Note 5.

3. INDEBTEDNESS

At the close of business on 31 March 2011, being the latest practicable date for the purpose of the statement of indebtedness prior to the printing of this circular, the Group had secured bank borrowings of approximately HK$73,699,000.

Pledge of assets

At the close of business on 31 March 2011, 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 31 March 2011 HK$’000 64,041 81,129 643 16,219
	162,032

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 31 March 2011.

Foreign currency amounts have been translated into Hong Kong dollars at the approximate exchange rates prevailing at the close of business on 31 March 2011.

– 77 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

4. MATERIAL CHANGE

The Directors confirm that there has been no material change in the financial or trading position or outlook of the Group since 31 December 2010, the date to which the latest published audited financial statements of the Group were made up.

5. WORKING CAPITAL

The Directors are of the opinion that, taking into account the business prospects, its internal resources and the existing available credit facilities of the Group, and upon the completion of the Share Subscription and the CB Subscription, 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.

– 78 –

VALUATION REPORTS OF THE GROUP’S ASSETS AND RELATED LETTER

APPENDIX II

1. REPORT FROM BMI APPRAISALS LIMITED ON THE GROUP’S PROPERTIES

The following is the text of a letter, summary of values and valuation certificates, prepared for the purpose of incorporation in this circular received from BMI Appraisals Limited, an independent valuer, in connection with its valuations as at 31 March 2011 of the properties located in the People’s Republic of China, Hong Kong and Macau.

==> picture [185 x 38] intentionally omitted <==

33[rd] Floor, Shui On Centre, Nos. 6–8 Harbour Road, Wanchai, Hong Kong 香港灣仔港灣道 6–8 號瑞安中心 33 樓 Tel 電話： (852) 2802 2191 Fax 傳真： (852) 2802 0863 Email 電郵： info@bmintelligence.com Website 網址： www.bmi-appraisals.com

23 May 2011

The Directors

Vital Group Holdings Limited

Unit 7, 31st Floor Tower 1, Lippo Centre 89 Queensway Hong Kong

Dear Sirs,

INSTRUCTIONS

We refer to your instructions for us to value the properties held/leased/to be acquired/to be disposed of by Vital Group Holdings Limited (the ‘‘Company’’) and/or its subsidiaries (together referred to as the ‘‘Group’’) located in the People’s Republic of China (the ‘‘PRC’’), Hong Kong and Macau. We confirm that we have conducted inspections, made relevant enquiries and obtained such further information as we consider necessary for the purpose of providing you with our opinion of the market values of the properties as at 31 March 2011 (the ‘‘date of valuation’’).

BASIS OF VALUATION

Our valuations of the concerned properties have 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’’.

– 79 –

VALUATION REPORTS OF THE GROUP’S ASSETS AND RELATED LETTER

APPENDIX II

PROPERTY CATEGORISATIONS

In the course of our valuations, the portfolio of the properties are categorised into the following groups:

• Group I — Property partly held for investment and partly held for owner-occupation by the Group in the PRC

• Group II — Properties held by the Group for owner-occupation in the PRC

• Group III — Property held by the Group for future development in the PRC

• Group IV — Property held by the Group for investment in the PRC

• Group V — Property held and occupied by the Group in Hong Kong

Group VI — Property contracted to be disposed of by the Group in Hong Kong

Group VII — Property contracted to be acquired by the Group in the PRC

Group VIII — Property leased by the Group in the PRC

Group IX — Property leased by the Group in Macau

VALUATION METHODOLOGIES

We have valued Property Nos. 4 to 9 and 11 to 12 on market basis by the Comparison Approach assuming sale in their existing state with the benefit of vacant possession and by making reference to comparable sales evidence as available in the market. Appropriate adjustments have been made to account for the differences between the properties and the comparables in terms of time, floor level, size and other relevant factors.

In valuing Property Nos. 1 to 3, we have adopted the Depreciated Replacement Cost Approach. Depreciated replacement cost is defined as ‘‘the aggregate amount of the value of the land for the existing use or a notional replacement site in the same locality and the new replacement cost of the buildings and other site works, from which appropriate deductions may then be made to allow for the age, condition, economic or functional obsolescence and environmental factors etc.; all of these might result in the existing property being worth less to the undertaking in occupation than would a new replacement’’. This basis has been used due to the lack of an established market upon which to base comparable transactions, which generally furnishes the most reliable indication of values for assets without a known used market. This opinion of value does not necessarily represent the amount that might be realized from the disposition of the subject asset in the market and is subject to adequate profitability of the business compared to the value of the total assets employed.

For Property No. 10, we have adopted the Investment Approach by taking into account the current passing rents of the property being held under existing tenancies and the reversionary potential of the tenancies if they have been or would be let to tenants.

– 80 –

VALUATION REPORTS OF THE GROUP’S ASSETS AND RELATED LETTER

APPENDIX II

For Property No. 13 in Group VII, we have attributed no commercial value to it as the title of the property is not vested in the Group.

We have attributed no commercial value to the properties in Groups VIII and IX, due either to the short-term nature of the leases or the prohibition against assignment or sub-letting or otherwise due to the lack of substantial profit rents.

TITLE INVESTIGATION

We have been provided with copies of title 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 valuations, we have relied upon the advice and information given by the Group’s PRC legal advisor — Tahota Law Firm (泰和泰律師事務所) regarding the title of the properties located in the PRC. All documents have been used for reference only.

VALUATION ASSUMPTIONS

Our valuations have been made on the assumption that the properties are 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 values of the properties.

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

VALUATION CONSIDERATIONS

We have inspected the properties externally and where possible, the interior of the properties. In the course of our inspections, we did not note any serious defects. However, no structural surveys have been made. We are, therefore, unable to report whether the properties are free from rot, infestation or any other structural defects. No tests were carried out on any of the services.

In the course of our valuations, 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/floor areas, completion dates of the buildings, identification of the properties and other relevant information.

Except otherwise stated, dimensions, measurements and site/floor areas included in the valuation certificates 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/floor areas in respect of the properties but have assumed that the site/floor areas shown on the documents handed to us are correct.

– 81 –

VALUATION REPORTS OF THE GROUP’S ASSETS AND RELATED LETTER

APPENDIX II

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 provided. We consider that we have been provided with sufficient information for us to reach an informed view.

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

Unless otherwise stated, it is assumed that the properties are free from encumbrances, restrictions and outgoings of an onerous nature, which could affect their values.

For the purpose of compliance with Rule 11.3 of the Code on Takeovers and Mergers and as advised by the Company, the potential tax liabilities which may arise from the sale of the properties include:

• . Business tax at a rate of 5% of consideration for the property in the PRC;

• . Profits tax on the profit from the sale at a rate of 25% for the property in the PRC;

• . Land value appreciation tax for the property in the PRC at progressive tax rates ranging from 30% to 60% on the appreciation;

• . Stamp duty for the property in Hong Kong; and

• . Profits tax on the profit from the sale at a rate of 16.5% for the property in Hong Kong.

As advised by the Group, it is expected that the relevant tax will be crystalised in the future for the property in Group VI. For the properties in Groups I to V, the likelihood of any potential tax liability being crystalised is remote as the Group has no intention to sell these properties.

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

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

– 82 –

VALUATION REPORTS OF THE GROUP’S ASSETS AND RELATED LETTER

APPENDIX II

REMARKS

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

Unless otherwise stated, all monetary amounts stated herein are in Hong Kong Dollars (HK$). Where necessary, the exchange rate adopted in our valuations is approximately Renminbi (RMB)1 = HK$1.19, being the prevailing exchange rate as at the date of valuation.

Our summary of values and the valuation certificates are attached herewith.

Yours faithfully, For and on behalf of BMI APPRAISALS LIMITED

Joannau W.F. Chan

Man C.M. Lam

BSc., MSc., MRICS, MHKIS, RPS(GP) BCom, MHKIS, RPS(GP), AAPI, CPV Senior Director Associate Director

Notes:

Ms. Joannau W.F. Chan is a member of The Hong Kong Institute of Surveyors (General Practice) who has over 18 years’ experience in valuations of properties in Hong Kong and over 12 years’ experience in valuations of properties in the People’s Republic of China.

Mr. Man C.M. Lam is a member of The Hong Kong Institute of Surveyors (General Practice) and an associate member of Australian Property Institute who has over 6 years’ experience in valuations of properties in Hong Kong.

– 83 –

VALUATION REPORTS OF THE GROUP’S ASSETS AND RELATED LETTER

APPENDIX II

SUMMARY OF VALUES

No. Property

Market Value in existing state as at 31 March 2011

HK$

Group I — Property partly held for investment and partly held for owner-occupation by the Group in the PRC

1.	2 land parcels, 6 buildings and various structures located at	26,960,000
	No. 3 Ke Yuan South Road,
	Fengjiawan Industrial Park,
	Hi-Tech Zone,
	Chengdu City,
	Sichuan Province,
	The PRC
	位於中國四川省
	成都市高新區
	馮家灣工業園
	科園南路3號
	之2塊土地、6棟房屋及若干構築物

Sub-total: 26,960,000

Group II — Properties held by the Group for owner-occupation in the PRC

2.	4 land parcels, 17 buildings and various structures located at	49,750,000
	No. 778 Feng Xi Main Road South,
	Wenjiang District,
	Chengdu City,
	Sichuan Province,
	The PRC

位於中國四川省

成都市溫江區 鳳溪大道南段778號 之4塊土地、17棟房屋及若干構築物

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APPENDIX II

VALUATION REPORTS OF THE GROUP’S ASSETS AND RELATED LETTER

No. Property

Market Value in existing state as at 31 March 2011

HK$

1. A land parcel, 10 buildings and various structures located in Wuhan University Science Park, Donghu New Technical Development Zone, Wuhan City, Hubei Province, The PRC

56,090,000

位於中國湖北省 武漢市東湖新技術開發區 武大科技園 之1塊土地、10棟房屋及若干構築物

1. Room D on Level 15, 2nd Unit, Block 9, Eastlake Kingdom, No. 189 Dong Hu Road, Wuchang District, Wuhan City, Hubei Province, The PRC

3,280,000

中國湖北省 武漢市武昌區 東湖路189號 東湖天下 9棟2單元15層D室

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APPENDIX II

VALUATION REPORTS OF THE GROUP’S ASSETS AND RELATED LETTER

No. Property

Market Value in existing state as at 31 March 2011 HK$

1. 6 residential units (Room 10 on Level 6, 1st Unit, Block 6, Room 8 on Level 5, 1st Unit, Block 6, Room 7 on Level 5, 2nd Unit, Block 6, Room 8 on Level 5, 2nd Unit, Block 6, Room 7 on Level 5, 1st Unit, Block 6 and Room 9 on Level 6, 2nd Unit, Block 6), Jingui Garden, No. 225 Liutai Main Road, Liucheng Town, Wenjiang District, Chengdu City, Sichuan Province, The PRC

3,840,000

中國四川省成都市 溫江區柳城鎮 柳台大道225號 金桂花園 之六個住宅單位 （6棟1單元6層10室， 6棟1單元5層8室， 6棟2單元5層7室， 6棟2單元5層8室， 6棟1單元5層7室及 6棟2單元6層9室）

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APPENDIX II

VALUATION REPORTS OF THE GROUP’S ASSETS AND RELATED LETTER

No. Property

Market Value in existing state as at 31 March 2011 HK$

1. 6 residential units (Room 11 on Level 4, 4th Unit, Block 7, Room 14 on Level 5, 4th Unit, Block 7, Room 8 on Level 3, 4th Unit, Block 7, Room 2 on Level 1, 4th Unit, Block 7, Room 5 on Level 2, 4th Unit, Block 7 and Room 17 on Level 6, 4th Unit, Block 7), Ziguangxing City, Wenquan Main Road, Gongping Street, Wenjiang District, Chengdu City, Sichuan Province, The PRC 中國四川省 成都市溫江區 公平街溫泉大道 紫光興城 之六個住宅單位 （7棟4單元4樓11號， 7棟4單元5樓14號， 7棟4單元3樓8號， 7棟4單元1樓2號， 7棟4單元2樓5號及 7棟4單元6樓17號） 7. Units 2–22E and 2–23E, Block 3, Zhongcheng Tianyi Garden, the junction of Xin Zhou Road and Xin Sha 6th Road, Futian District, Shenzhen City, Guangdong Province, The PRC 中國廣東省 深圳市福田區 新洲路與新沙六街交匯處 中城天邑花園 3座2–22E單位及2–23E單位

2,280,000

4,500,000

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APPENDIX II

VALUATION REPORTS OF THE GROUP’S ASSETS AND RELATED LETTER

No. Property 8. Unit 5A, Block C, Jade Garden, the junction of Qiao Cheng East Road and Shen Nan Main Road, Nanshan District, Shenzhen City, Guangdong Province, The PRC 中國廣東省 深圳市南山區 僑城東路與深南大道交匯處 翡翠郡C棟5A Sub-total: Group III — Property held by the Group for future development in the PRC 9. Land Parcel No. WJ01(252/211):2010-035, Wansheng Community, Liucheng Street, Wenjiang District, Chengdu City, Sichuan Province, The PRC 中國四川省成都市 溫江區柳城街道 萬盛社區 WJ01(252/211):2010-035號地塊 Sub-total:	Market Value in existing state as at 31 March 2011 HK$ 7,570,000
	127,310,000
	No Commercial Value
	Nil

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VALUATION REPORTS OF THE GROUP’S ASSETS AND RELATED LETTER

APPENDIX II

No. Property

Market Value in existing state as at 31 March 2011

HK$

Group IV — Property held by the Group for investment in the PRC

1. Units 15–16 on Level 1, Units 15–16 on Level 2, 82,110,000 Units 15–16 on Level 3, Units 1–12 on Level 4 and Unit 1 on Level 5, Technology & Fortune Centre, No. 1480 Tian Fu Main Road North, Hi-Tech Zone, Chengdu City, Sichuan Province, The PRC 中國四川省 成都市高新區 天府大道北段1480號 科技財富中心 1樓15–16號單位， 2樓15–16號單位， 3樓15–16號單位， 4樓1–12號單位以及 5樓1號單位

Sub-total: 82,110,000

Group V — Property held and occupied by the Group in Hong Kong

1. Office No. 7 on 29,100,000 31st Floor, Tower 1, Lippo Centre, No. 89 Queensway, Hong Kong Sub-total: 29,100,000

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VALUATION REPORTS OF THE GROUP’S ASSETS AND RELATED LETTER

APPENDIX II

No. Property

Market Value in existing state as at 31 March 2011 HK$

Group VI — Property contracted to be disposed of by the Group in Hong Kong

12. Workshop B, 6th Floor, and Truck Parking Space 5 on 1st Floor, and Private Car Parking Space 13 on Upper 1st Floor, Sunking Factory Building, Nos. 1–7 Shing Chuen Road, Shatin, New Territories, Hong Kong	21,000,000

Sub-total: 21,000,000

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APPENDIX II

VALUATION REPORTS OF THE GROUP’S ASSETS AND RELATED LETTER

No. Property

Market Value in existing state as at 31 March 2011

HK$

Group VII — Property contracted to be acquired by the Group in the PRC

1. 12 residential units (Room 2 on Level 1, 3rd Unit, Block 14, Room 1 on Level 1, 1st Unit, Block 14, Room 1 on Level 8, 2nd Unit, Block 14, Room 2 on Level 8, 2nd Unit, Block 14, Room 1 on Level 8, 1st Unit, Block 10, Room 1 on Level 9, 1st Unit, Block 10, Room 1 on Level 10, 1st Unit, Block 10, Room 1 on Level 11, 1st Unit, Block 10, Room 1 on Level 12, 1st Unit, Block 10, Room 1 on Level 13, 1st Unit, Block 10, Room 1 on Level 14, 1st Unit, Block 10 and Room 1 on Level 15, 1st Unit, Block 10), Haike Estate, No. 187 Liu Tai Main Road East, Wenjiang District, Chengdu City, Sichuan Province, The PRC

No Commercial Value

位於中國四川省 成都市溫江區 柳台大道東段187號 海科名城之12個住宅單位 （14棟3單元1樓2號， 14棟1單元1樓1號， 14棟2單元8樓1號， 14棟2單元8樓2號， 10棟1單元8樓1號， 10棟1單元9樓1號， 10棟1單元10樓1號， 10棟1單元11樓1號， 10棟1單元12樓1號， 10棟1單元13樓1號， 10棟1單元14樓1號及 10棟1單元15樓1號）

Sub-total:

Nil

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VALUATION REPORTS OF THE GROUP’S ASSETS AND RELATED LETTER

APPENDIX II

No. Property

Market Value in existing state as at 31 March 2011

HK$

Group VIII — Property leased by the Group in the PRC

1. Unit No. 208, Kaixuan Apartment, No. 36 Deshengmen Outer Street, Xicheng District, Beijing, The PRC

No Commercial Value

中國北京市

西城區 德勝門外大街36號 凱旋公寓208室

Sub-total: ngos Macau Sub-total: Grand-total:	Nil
	No Commercial Value
	Nil
	286,480,000

Group IX — Property leased by the Group in Macau

1. E-45 do 3[l] andar do prédio nos. 16-F a 16-L da Rua de S. Doningos Macau 澳門大堂區板樟堂街16F–16L號顯利商業中心3樓45室

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APPENDIX II

VALUATION REPORTS OF THE GROUP’S ASSETS AND RELATED LETTER

VALUATION CERTIFICATE

Group I — Property partly held for investment and partly held for owner-occupation by the Group in the PRC

				Market Value
				in existing state
			Particulars	as at
No.	Property	Description and tenure	of occupancy	31 March 2011
				HK$
1.	2 land parcels, 6 buildings and	The property comprises 2 parcels of land	A portion of the	26,960,000
	various structures located at	with a total site area of approximately	property with a total
	No. 3 Ke Yuan South Road,	22,320.07 sq.m. and 6 buildings and	GFA of approximately
	Fengjiawan Industrial Park,	various ancillary structures completed in	2,308 sq.m. was leased
	Hi-Tech Zone,	about 2010 erected thereon.	to an independent third
	Chengdu City,		party for a term
	Sichuan Province,	The total gross floor area (‘‘GFA’’) of	expiring on 30 January
	The PRC	the buildings of the property is	2014 at a monthly rent
		approximately 12,073.94 sq.m.	of RMB41,544
	位於中國四川省		exclusive of relevant
	成都市高新區	The land use rights of the property have	outgoings as at the date
	馮家灣工業園	been granted for a common term	of valuation.
	科園南路3號	expiring on 30 November 2054 for
	之2塊土地、6棟房屋及	industrial use.	The remaining portion
	若干構築物		of the property is partly

The remaining portion of the property is partly vacant and partly occupied by the Group for industrial, storage, office and ancillary purposes.

Notes:

1. Pursuant to 2 State-owned Land Use Rights Certificates, Cheng Gao Guo Yong (2007) Di No. 6259 and Cheng Gao Guo Yong (2008) Di No. 2183, the land use rights of the land parcels of the property with a total site area of approximately 22,320.07 sq.m. have been granted to Vital (Chengdu) Pharmaceutical Company Limited (維奧(成都) 製藥有限公司) (‘‘Vital Chengdu’’) for a common term expiring on 30 November 2054 for industrial use.

2. For the buildings of the property with a total GFA of approximately 12,073.94 sq.m., the title certificates have not been obtained. As advised by the Company, portions of the buildings are vacant or not involved in production. The remaining portion of the buildings is currently occupied but will be unoccupied in the future.

3. As advised by the Group’s PRC legal advisor, the risk of being subject to any cost or fine due to the absence of title certificates is relatively low. As advised by the Company, there should be no material adverse impact on the Group’s financial position and such cost or fine has not been included as contingent liabilities of the Group.

4. In the valuation of this property, we have attributed no commercial value to the buildings stated in Note 2 as relevant title certificates of the buildings have not been obtained. However, for your reference purpose, we are of the opinion that the depreciated replacement cost of the buildings (excluding the land) as at the date of valuation would be in the sum of approximately HK$34,320,000 assuming all relevant title certificates have been obtained and the buildings could be freely transferred in the market.

5. The opinion given by the PRC legal advisor to the Group is as follows:

6. a. Vital Chengdu has obtained the land use rights of the property and is entitled to transfer the land use rights of the property in the market;

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VALUATION REPORTS OF THE GROUP’S ASSETS AND RELATED LETTER

APPENDIX II

• b. The application for Building Ownership Certificates of 4 buildings without title certificates with a total GFA of approximately 11,758.94 sq.m. is being processed and there is no legal impediment for Vital Chengdu to obtain the relevant Building Ownership Certificates for these 4 buildings;

• c. The remaining 2 buildings of the property without title certificates with a total GFA of approximately 315 sq.m. may be ordered by relevant authorities to be demolished and Vital Chengdu may be subject to a fine or penalty. Vital Chengdu should apply for the construction permits and construction completion inspections of the buildings. After the construction permits have been obtained and the completion inspections have been completed, there is no legal impediment for Vital Chengdu to obtain the relevant Building Ownership Certificates for these buildings; and

• d. The land premium of the property has been settled in full.

• Vital Chengdu is a wholly-owned subsidiary of the Company.

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APPENDIX II

VALUATION REPORTS OF THE GROUP’S ASSETS AND RELATED LETTER

VALUATION CERTIFICATE

Group II — Properties held by the Group for owner-occupation in the PRC

				Market Value
				in existing state
			Particulars	as at
No.	Property	Description and tenure	of occupancy	31 March 2011
				HK$
2.	4 land parcels, 17 buildings	The property comprises 4 parcels of land	The property is partly	49,750,000
	and various structures	with a total site area of approximately	vacant and partly
	located at	81,657.43 sq.m. and 17 buildings and	occupied by the Group
	No. 778 Feng Xi Main	various ancillary structures completed in	for industrial, storage,
	Road South,	various stages between 2002 and 2010	office and ancillary
	Wenjiang District,	erected thereon.	purposes.
	Chengdu City,
	Sichuan Province,	The total gross floor area (‘‘GFA’’) of
	The PRC	the buildings of the property is
		approximately 24,318.95 sq.m.
	位於中國四川省
	成都市溫江區	The land use rights of the property have
	鳳溪大道南段778號	been granted for various terms with the
	之4塊土地、17棟房屋及	earliest expiry date on 25 December
	若干構築物	2050 for industrial use.

Notes:

1. Pursuant to 4 State-owned Land Use Rights Certificates, Wen Guo Yong (2010) Di Nos. 5544 to 5547, the land use rights of the land parcels of the property with a total site area of approximately 81,657.43 sq.m. have been granted to Vital Pharmaceuticals (Sichuan) Company Limited (四川維奧製藥有限公司) (‘‘Vital Sichuan’’) for various terms with the earliest expiry date on 25 December 2050 for industrial use.

2. Pursuant to 10 Building Ownership Certificates, Wen Fang Quan Zheng Jian Zheng Zi Di Nos. 0059076 and 0281685 to 0281693, the building ownership rights of 10 buildings of the property with a total GFA of approximately 15,990.89 sq.m. are legally owned by Vital Sichuan.

3. For the remaining buildings of the property with a total GFA of approximately 8,328.06 sq.m., the title certificates have not been obtained. As advised by the Company, portions of the buildings are vacant or not involved in production. The remaining portion of the buildings is currently occupied but will be unoccupied in the future.

As advised by the Group’s PRC legal advisor, the risk of being subject to any cost or fine due to the absence of title certificates is relatively low. As advised by the Company, there should be no material adverse impact on the Group’s financial position and such cost or fine has not been included as contingent liabilities of the Group.

1. In the valuation of this property, we have attributed no commercial value to the buildings stated in Note 3 as relevant title certificates of the buildings have not been obtained. However, for your reference purpose, we are of the opinion that the depreciated replacement cost of the buildings (excluding the land) as at the date of valuation would be in the sum of approximately HK$20,590,000 assuming all relevant title certificates have been obtained and the buildings could be freely transferred in the market.

2. The opinion given by the PRC legal advisor to the Group is as follows:

3. a. Vital Sichuan has obtained the land use rights and building ownership rights of the property (except the buildings stated in Note 3);

4. b. The property is subject to mortgage;

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VALUATION REPORTS OF THE GROUP’S ASSETS AND RELATED LETTER

APPENDIX II

• c. The buildings stated in Note 3 may be ordered by relevant authorities to be demolished and Vital Sichuan may be subject to a fine or penalty. Vital Sichuan should apply for the construction permits and construction completion inspections of the buildings. After the construction permits have been obtained and the completion inspections have been completed, there is no legal impediment for Vital Sichuan to obtain the relevant Building Ownership Certificates for these buildings;

• d. Vital Sichuan has the rights to legally transfer the property (except the buildings stated in Note 3 and the restriction in relation to the mortgage); and

• e. The land premium of the property has been settled in full.

• Vital Sichuan is a wholly-owned subsidiary of the Company.

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APPENDIX II

VALUATION REPORTS OF THE GROUP’S ASSETS AND RELATED LETTER

VALUATION CERTIFICATE

No. Property Description and tenure 3. A land parcel, 10 buildings The property comprises a parcel of land and various structures located with a site area of approximately in Wuhan University 34,844.72 sq.m. and 10 buildings and Science Park, various ancillary structures completed in Donghu New Technical about 2004 erected thereon. Development Zone, Wuhan City, The total gross floor area (‘‘GFA’’) of Hubei Province, the buildings of the property is The PRC approximately 11,180.39 sq.m. 位於中國湖北省 The land use rights of the property have 武漢市 been granted for a term expiring on 30 東湖新技術開發區 August 2052 for industrial use. 武大科技園 之1塊土地、10棟房屋及若干 構築物

Market Value in existing state Particulars as at of occupancy 31 March 2011 HK$ The property is 56,090,000 occupied by the Group for industrial, storage, office and ancillary purposes.

Notes:

1. Pursuant to a State-owned Land Use Rights Certificate, Wu Xin Guo Yong (2003) Zi Di No. 010, the land use rights of the property with a site area of approximately 34,844.72 sq.m. have been granted to Wuhan Weiao Pharmaceuticals Company Limited (武漢維奧製藥有限公司) (‘‘Vital Wuhan’’) for a term expiring on 30 August 2052 for industrial use.

2. Pursuant to 2 Building Ownership Certificates, Wu Fang Quan Zheng Hu Zi Di Nos. 200400283 and 200403371, the building ownership rights of 7 buildings of the property with a total GFA of approximately 10,963.57 sq.m. are legally owned by Vital Wuhan.

3. For the remaining 3 buildings of the property with a total GFA of approximately 216.82 sq.m., the title certificates have not been obtained. As advised by the Company, the buildings are not involved in production.

As advised by the Group’s PRC legal advisor, the risk of being subject to any cost or fine due to the absence of title certificates is relatively low. As advised by the Company, there should be no material adverse impact on the Group’s financial position and such cost or fine has not been included as contingent liabilities of the Group.

1. In the valuation of this property, we have attributed no commercial value to the buildings stated in Note 3 as relevant title certificates of the buildings have not been obtained. However, for your reference purpose, we are of the opinion that the depreciated replacement cost of the buildings (excluding the land) as at the date of valuation would be in the sum of approximately HK$250,000 assuming all relevant title certificates have been obtained and the buildings could be freely transferred in the market.

2. The opinion given by the PRC legal advisor to the Group is as follows:

3. a. Vital Wuhan has obtained the land use rights and building ownership rights of the property (except the buildings stated in Note 3);

4. b. The property is subject to mortgage;

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VALUATION REPORTS OF THE GROUP’S ASSETS AND RELATED LETTER

APPENDIX II

• c. The buildings stated in Note 3 may be ordered by relevant authorities to be demolished and Vital Wuhan may be subject to a fine or penalty. Vital Wuhan should apply for the construction permits and construction completion inspections of the buildings. After the construction permits have been obtained and the completion inspections have been completed, there is no legal impediment for Vital Wuhan to obtain the relevant Building Ownership Certificates for these buildings;

• d. Vital Wuhan has the rights to legally transfer the property (except the buildings stated in Note 3 and the restriction in relation to the mortgage) in the market; and

• e. The land premium of the property has been settled in full.

• Vital Wuhan is a 95.7%-owned subsidiary of the Company.

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APPENDIX II

VALUATION REPORTS OF THE GROUP’S ASSETS AND RELATED LETTER

VALUATION CERTIFICATE

Market Value in existing state Particulars as at No. Property Description and tenure of occupancy 31 March 2011 HK$ 4. Room D on Level 15, The property comprises a residential unit The property is 3,280,000 2nd Unit, Block 9, on Level 15 of a 20-storey residential occupied by the Group Eastlake Kingdom, building erected upon a single-storey for residential purpose. No. 189 Dong Hu Road, basement completed in about 2008. Wuchang District, Wuhan City, The gross floor area (‘‘GFA’’) of the Hubei Province, property is approximately 197.29 sq.m. The PRC The land use rights of the property have 中國湖北省國湖北省湖北省北省省 been granted for a term expiring on 14 武漢市武昌區漢市武昌區市武昌區武昌區昌區區 January 2072 for residential use.

No. Property

中國湖北省國湖北省湖北省北省省 武漢市武昌區漢市武昌區市武昌區武昌區昌區區 東湖路189號 東湖天下 9棟2單元15層D室

Notes:

1. Pursuant to a Wuhan City Commodity Real Estate Purchase Contract, the property with a GFA of approximately 196.22 sq.m. was contracted to be transferred to Wuhan Weiao Pharmaceuticals Company Limited (武漢維奧製藥有 限公司) (‘‘Vital Wuhan’’) at a consideration of RMB2,568,403.

2. Pursuant to a State-owned Land Use Rights Certificate, Dong Guo Yong (2008 Shang) Di No. 136, the land use rights of the property with an apportioned site area of approximately 17 sq.m. have been granted to Vital Wuhan for a term expiring on 14 January 2072 for residential use.

3. Pursuant to a Building Ownership Certificate, Wu Fang Quan Zheng Shi Zi Di No. 2008016326, the building ownership rights of the property with a GFA of approximately 197.29 sq.m. are legally owned by Vital Wuhan.

4. The opinion given by the PRC legal advisor to the Group is as follows:

5. a. Vital Wuhan has obtained the land use rights and building ownership rights of the property; and

6. b. Vital Wuhan has the rights to legally transfer the property in the market.

7. Vital Wuhan is a 95.7%-owned subsidiary of the Company.

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APPENDIX II

VALUATION REPORTS OF THE GROUP’S ASSETS AND RELATED LETTER

VALUATION CERTIFICATE

No. Property

1. 6 residential units (Room 10 on Level 6, 1st Unit, Block 6, Room 8 on Level 5, 1st Unit, Block 6, Room 7 on Level 5, 2nd Unit, Block 6, Room 8 on Level 5, 2nd Unit, Block 6, Room 7 on Level 5, 1st Unit, Block 6 and Room 9 on Level 6, 2nd Unit, Block 6), Jingui Garden, No. 225 Liutai Main Road, Liucheng Town, Wenjiang District, Chengdu City, Sichuan Province, The PRC

Market Value in existing state Particulars as at Description and tenure of occupancy 31 March 2011 HK$ The property comprises 6 residential The property is 3,840,000 units within a residential development occupied by the Group completed in about 2003. for residential purpose.

The total gross floor area (‘‘GFA’’) of the property is approximately 814.74 sq.m.

The land use rights of the property have been granted for a term expiring on 23 May 2050 for residential use.

中國四川省成都市 溫江區柳城鎮 柳台大道225號 金桂花園 之六個住宅單位 （6棟1單元6層10室， 6棟1單元5層8室， 6棟2單元5層7室， 6棟2單元5層8室， 6棟1單元5層7室及 6棟2單元6層9室）

Notes:

1. Pursuant to 6 State-owned Land Use Rights Certificates, Wen Guo Yong (2004) Di Nos. 17631 to 17636, the land use rights of the property with a total apportioned site area of approximately 316.02 sq.m. have been granted to Vital Pharmaceuticals (Sichuan) Company Limited (四川維奧製藥有限公司) (‘‘Vital Sichuan’’) for a term expiring on 23 May 2050 for residential use.

2. Pursuant to 6 Building Ownership Certificates, Wen Fang Quan Zheng Jian Quan Zi Di Nos. 0025690 to 0025693 and 0025695 to 0025696, the building ownership rights of the property with a total GFA of approximately 814.74 sq.m. are legally owned by Vital Sichuan.

3. The opinion given by the PRC legal advisor to the Group is as follows:

4. a. Vital Sichuan has obtained the land use rights and building ownership rights of the property; and

5. b. Vital Sichuan has the rights to legally transfer the property in the market.

6. Vital Sichuan is a wholly-owned subsidiary of the Company.

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APPENDIX II

VALUATION REPORTS OF THE GROUP’S ASSETS AND RELATED LETTER

VALUATION CERTIFICATE

No. Property

1. 6 residential units (Room 11 on Level 4, 4th Unit, Block 7, Room 14 on Level 5, 4th Unit, Block 7, Room 8 on Level 3, 4th Unit, Block 7, Room 2 on Level 1, 4th Unit, Block 7, Room 5 on Level 2, 4th Unit, Block 7 and Room 17 on Level 6, 4th Unit, Block 7), Ziguangxing City, Wenquan Main Road, Gongping Street, Wenjiang District, Chengdu City, Sichuan Province, The PRC

		Market Value
		in existing state
	Particulars	as at
Description and tenure	of occupancy	31 March 2011
		HK$
The property comprises 6 residential	The property is	2,280,000
units of a 6-storey residential building	occupied by the Group
completed in about 2007.	for residential purpose.

The total gross floor area (‘‘GFA’’) of the property is approximately 476.04 sq.m. The land use rights of the property have been granted for a term expiring on 8 December 2074 for residential use.

中國四川省

成都市溫江區 公平街溫泉大道

紫光興城 之六個住宅單位 （7棟4單元4樓11號， 7棟4單元5樓14號， 7棟4單元3樓8號， 7棟4單元1樓2號， 7棟4單元2樓5號及 7棟4單元6樓17號）

Notes:

1. Pursuant to 6 State-owned Land Use Rights Certificates, Wen Guo Yong (2008) Di Nos. 37670 and 37672 to 37676, the land use rights of the property with a total apportioned site area of approximately 76.86 sq.m. have been granted to Vital Pharmaceuticals (Sichuan) Company Limited (四川維奧製藥有限公司) (‘‘Vital Sichuan’’) for a term expiring on 8 December 2074 for residential use.

2. Pursuant to 6 Building Ownership Certificates, Wen Fang Quan Zheng Jian Zheng Zi Di Nos. 0086325, 0086326, 0086327, 0086391, 0086794 and 0086939, the building ownership rights of the property with a total GFA of approximately 476.04 sq.m. are legally owned by Vital Sichuan.

3. The opinion given by the PRC legal advisor to the Group is as follows:

4. a. Vital Sichuan has obtained the land use rights and building ownership rights of the property; and

5. b. Vital Sichuan has the rights to legally transfer the property in the market.

6. Vital Sichuan is a wholly-owned subsidiary of the Company.

– 101 –

APPENDIX II

VALUATION REPORTS OF THE GROUP’S ASSETS AND RELATED LETTER

VALUATION CERTIFICATE

No. Property Description and tenure 7. Units 2–22E and 2–23E, The property comprises 2 residential Block 3, units of a 32-storey residential building Zhongcheng Tianyi Garden, completed in about 2008. the junction of Xin Zhou Road and Xin Sha 6th Road, The total gross floor area (‘‘GFA’’) of Futian District, the property is approximately 139.76 Shenzhen City, sq.m. Guangdong Province, The PRC The land use rights of the property have been granted for a term of 70 years 中國廣東省 commencing on 30 December 2003 and 深圳市福田區圳市福田區市福田區福田區田區區 expiring on 29 December 2073 for 新洲路與新沙六街交匯處洲路與新沙六街交匯處路與新沙六街交匯處與新沙六街交匯處新沙六街交匯處沙六街交匯處六街交匯處街交匯處交匯處匯處處 residential use.

深圳市福田區圳市福田區市福田區福田區田區區 新洲路與新沙六街交匯處洲路與新沙六街交匯處路與新沙六街交匯處與新沙六街交匯處新沙六街交匯處沙六街交匯處六街交匯處街交匯處交匯處匯處處 中城天邑花園 3座2–22E單位及2–23E單位

Market Value in existing state Particulars as at of occupancy 31 March 2011 HK$ The property is 4,500,000 occupied by the Group for residential purpose.

Notes:

1. Pursuant to 2 Real Estate Title Certificates, Shen Fang Di Zi Di Nos. 3000564380 and 3000564381, the land use rights of the property have been granted for a term of 70 years commencing on 30 December 2003 and expiring on 29 December 2073 for residential use and the building ownership rights of the property with a total GFA of approximately 139.76 sq.m. are legally vested in Vital Pharmaceuticals (Sichuan) Company Limited (四川維奧製藥 有限公司) (‘‘Vital Sichuan’’).

2. The opinion given by the PRC legal advisor to the Group is as follows:

3. a. Vital Sichuan has obtained the land use rights and building ownership rights of the property; and

4. b. Vital Sichuan has the rights to legally transfer the property in the market.

5. Vital Sichuan is a wholly-owned subsidiary of the Company.

– 102 –

APPENDIX II

VALUATION REPORTS OF THE GROUP’S ASSETS AND RELATED LETTER

VALUATION CERTIFICATE

Market Value in existing state Particulars as at No. Property Description and tenure of occupancy 31 March 2011 HK$ 8. Unit 5A, Block C, The property comprises a residential unit The property is 7,570,000 Jade Garden, on Level 5 of a 28-storey residential occupied by the Group the junction of building completed in about 2003. for residential purpose. Qiao Cheng East Road and Shen Nan Main Road, The gross floor area (‘‘GFA’’) of the Nanshan District, property is approximately 139.76 sq.m. Shenzhen City, Guangdong Province, The land use rights of the property have The PRC been granted for a term of 70 years commencing on 28 November 2001 and 中國廣東省 expiring on 27 November 2071 for 深圳市南山區圳市南山區市南山區南山區山區區 residential use.

No. Property

深圳市南山區圳市南山區市南山區南山區山區區 僑城東路與深南大道交匯處 翡翠郡C棟5A

Notes:

1. Pursuant to a Real Estate Title Certificate, Shen Fang Di Zi Di No. 4000265316, the land use rights of the property have been granted for a term of 70 years commencing on 28 November 2001 and expiring on 27 November 2071 for residential use and the building ownership rights of the property with a GFA of approximately 139.76 sq.m. are legally vested in Vital Pharmaceuticals (Sichuan) Company Limited Shenzhen Branch (四川維奧製藥有限公司深圳 辦事處) (‘‘Vital Sichuan Shenzhen’’).

2. The opinion given by the PRC legal advisor to the Group is as follows:

3. a. Vital Sichuan Shenzhen has obtained the land use rights and building ownership rights of the property; and

4. b. Vital Sichuan Shenzhen has the rights to legally transfer the property in the market.

5. As advised by the Company, Vital Sichuan Shenzhen is an office of Vital Pharmaceuticals (Sichuan) Company Limited (四川維奧製藥有限公司), a wholly-owned subsidiary of the Company.

– 103 –

APPENDIX II

VALUATION REPORTS OF THE GROUP’S ASSETS AND RELATED LETTER

VALUATION CERTIFICATE

Group III — Property held by the Group for future development in the PRC

				Market Value
				in existing state
			Particulars	as at
No.	Property	Description and tenure	of occupancy	31 March 2011
				HK$
9.	Land Parcel No. WJ01(252/	The property comprises a parcel of land	The property is vacant.	No Commercial
	211):2010-035,	with a site area of approximately		Value
	Wansheng Community,	49,595.3 sq.m.
	Liucheng Street,
	Wenjiang District,	As per information provided by the
	Chengdu City,	Group, the property is planned to be
	Sichuan Province,	developed into a composite commercial/
	The PRC	residential development.
	中國四川省成都市	As advised by the Group, the detailed
	溫江區柳城街道	planning of the development is yet to be
	萬盛社區	determined.
	WJ01(252/211):2010-035
	號地塊	The land use rights of the property will
		be granted for terms of 70 years and 40
		years for residential and commercial uses
		respectively.

Notes:

1. Pursuant to a State-owned Construction Land Use Rights Grant Contract, the land use rights of the property with a site area of approximately 49,595.3 sq.m. were contracted to be granted to Chengdu Wenjiang Vital Property Development Company Limited (成都溫江維奧房地產開發有限公司) (‘‘Vital Property’’) at a land premium of RMB204,572,500 with land use rights terms of 70 years and 40 years for residential and commercial uses respectively. The planning and design requirements of the property are as follows:

Plot Ratio: ≥2.0 Building Density: ≤28% Greenery Ratio: ≥30% Construction Commencement Date: before 6 May 2011 Construction Completion Date: before 6 May 2013

According to a letter issued by Chengdu (Wenjiang District) State-owned Land Resources Bureau, the handover time of the property has been delayed. As advised by the Group’s PRC legal advisor, Vital Property should not be subject to any penalty if Vital Property cannot commence the construction of the property before 6 May 2011 due to the delay of handover.

1. Pursuant to a Construction Land Planning Permit, Di Zi Di No. 510115201020052, dated 27 July 2010, Vital Property is permitted to develop the property with a site area of approximately 74.39 mu.

2. In the valuation of this property, we have attributed no commercial value to the property as relevant title certificates of the property have not been obtained.

3. As advised by the Company, the land premium of the property has been settled in full. After the settlement of deed tax, Vital Property can apply for the title certificates of the property. The detailed planning of the property will be confirmed and the construction will commence after the title certificates of the property have been obtained.

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VALUATION REPORTS OF THE GROUP’S ASSETS AND RELATED LETTER

APPENDIX II

1. As advised by the Company, it is expected that the title certificates of the property will be obtained in December 2011 and the construction of the property will commence in December 2011.

2. The opinion given by the PRC legal advisor to the Group is as follows:

3. a. The land use rights grant contract has been legally signed;

4. b. The land premium has been settled in full;

5. c. After the settlement of deed tax, Vital Property can apply for the title certificates of the property; and

6. d. There is no legal impediment to obtain relevant title certificates.

7. As advised by the Company, Vital Property is a wholly-owned subsidiary of the Company.

– 105 –

APPENDIX II

VALUATION REPORTS OF THE GROUP’S ASSETS AND RELATED LETTER

VALUATION CERTIFICATE

Group IV — Property held by the Group for investment in the PRC

				Market Value
				in existing state
			Particulars	as at
No.	Property	Description and tenure	of occupancy	31 March 2011
				HK$
10.	Units 15–16 on Level 1,	The property comprises 19 units of a 5-	Portions of the property	82,110,000
	Units 15–16 on Level 2,	storey office building completed in about	with a total GFA of
	Units 15–16 on Level 3,	2005.	approximately 5,095.71
	Units 1–12 on Level 4 and		sq.m. were subject to
	Unit 1 on Level 5,	The total gross floor area (‘‘GFA’’) of	various tenancies for
	Technology & Fortune Centre,	the property is approximately 7,263.37	various terms with the
	No. 1480 Tian Fu	sq.m.	latest expiry date on 30
	Main Road North,		April 2015 at a total
	Hi-Tech Zone,	The land use rights of the property have	monthly rent of
	Chengdu City,	been granted for a term expiring on 24	RMB253,911 as at the
	Sichuan Province,	November 2054 for industrial use.	date of valuation.
	The PRC
			The remaining portion
	中國四川省		of the property was
	成都市高新區		vacant as at the date of
	天府大道北段1480號		valuation.
	科技財富中心
	1樓15–16號單位，
	2樓15–16號單位，
	3樓15–16號單位，
	4樓1–12號單位以及

5樓1號單位

Notes:

1. Pursuant to a State-owned Land Use Rights Certificate, Cheng Gao Guo Yong (2007) Di No. 3455, the land use rights of the property with an apportioned site area of approximately 1,843.73 sq.m. have been granted to Sichuan Hengtai Pharmaceutical Company Limited (四川恒泰醫藥有限公司) (‘‘Hengtai Pharmacy’’) for a term expiring on 24 November 2054 for industrial use.

2. Pursuant to a Building Ownership Certificate, Cheng Fang Quan Zheng Jian Zheng Zi Di No. 1615392, the building ownership rights of the property with a total GFA of approximately 7,263.37 sq.m. are legally owned by Hengtai Pharmacy.

3. The opinion given by the PRC legal advisor to the Group is as follows:

4. a. Hengtai Pharmacy has obtained the land use rights and building ownership rights of the property; and

5. b. Hengtai Pharmacy has the rights to legally transfer the property in the market.

6. Hengtai Pharmacy is a wholly-owned subsidiary of the Company.

– 106 –

VALUATION REPORTS OF THE GROUP’S ASSETS AND RELATED LETTER

APPENDIX II

VALUATION CERTIFICATE

Group V — Property held and occupied by the Group in Hong Kong

				Market Value
				in existing state
			Particulars	as at
No.	Property	Description and tenure	of occupancy	31 March 2011
				HK$
11.	Office No. 7 on 31st Floor,	The property comprises an office unit on	The property is	29,100,000
	Tower 1,	the 31st floor of a high-rise office	occupied by the Group
	Lippo Centre,	building completed in about 1988.	for office purpose.
	No. 89 Queensway,
	Hong Kong	The gross floor area (‘‘GFA’’) of the
		property is approximately 1,565 sq.ft. (or
	126/102,750th equal and	about 145.39 sq.m.).
	undivided shares of and in
	Inland Lot No. 8615	The property is held under Conditions of
		Grant No. UB11720 for a term of 75
		years renewable for a further term of 75
		years commencing on 15 February 1984
		at an annual Government rent of
		HK$1,000.

Notes:

1. The registered owner of the property is Wide Triumph Limited vide Memorial No. 06061200990034 dated 15 May 2006 at a consideration of HK$13,459,000.

2. The property is subject to the following material encumbrances:

3. a. Deed of Mutual Covenant vide Memorial No. UB3824584 dated 31 August 1988; and

4. b. Supplemental Deed of Mutual Covenant with Plans vide Memorial No. UB4877936 dated 27 June 1991.

5. Wide Triumph Limited is a wholly-owned subsidiary of the Company.

– 107 –

VALUATION REPORTS OF THE GROUP’S ASSETS AND RELATED LETTER

APPENDIX II

VALUATION CERTIFICATE

Group VI — Property contracted to be disposed of by the Group in Hong Kong

				Market Value
				in existing state
			Particulars	as at
No.	Property	Description and tenure	of occupancy	31 March 2011
				HK$
12.	Workshop B, 6th Floor, and	The property comprises an industrial unit	The property is vacant.	21,000,000
	Truck Parking Space 5 on	on the 6th floor and 2 parking spaces of
	1st Floor, and Private Car	a 7-storey industrial building completed
	Parking Space 13	in about 1981.
	on Upper 1st Floor,
	Sunking Factory Building,	The gross floor area (‘‘GFA’’) of the
	Nos. 1–7 Shing Chuen Road,	industrial unit is approximately 14,514
	Sha Tin,	sq.ft. (or about 1,348.38 sq.m.).
	New Territories,
	Hong Kong	The property is held under New Grant
		No. 11228 for a term of 99 years
	48/850th equal and undivided	commencing on 1 July 1898 which has
	shares of and in Sha Tin Town	been statutorily extended till 30 June
	Lot No. 26	2047 at an annual Government rent of
		3% of the rateable value for the time
		being on the lot.

Notes:

1. The registered owner of the property is Vital Pharmaceuticals Company Limited vide Memorial No. 06082601570054 dated 4 August 2006 at a consideration of HK$13,338,000.

2. The property is subject to a Deed of Mutual Covenant vide Memorial No. ST200836 dated 19 June 1981.

3. Pursuant to a Sale and Purchase Agreement entered into between Vital Pharmaceuticals Company Limited and Bright Future Pharmaceutical Laboratories Limited, an independent third party, dated 15 March 2011, the property was contracted to be transferred to the latter at a consideration of HK$21,000,000. As advised by the Group, the disposal of the above property has been completed on 16 May 2011.

4. Vital Pharmaceuticals Company Limited is a wholly-owned subsidiary of the Company.

– 108 –

APPENDIX II

VALUATION REPORTS OF THE GROUP’S ASSETS AND RELATED LETTER

VALUATION CERTIFICATE

Group VII — Property contracted to be acquired by the Group in the PRC

Market Value in existing state Particulars as at No. Property Description and tenure of occupancy 31 March 2011 HK$ 13. 12 residential units The property comprises 12 residential The property is vacant. No Commercial (Room 2 on Level 1, units located in a residential development Value 3rd Unit, Block 14, known as Haike Estate (海科名城) Room 1 on Level 1, completed in about 2011. 1st Unit, Block 14, Room 1 on Level 8, The total gross floor area (‘‘GFA’’) of 2nd Unit, Block 14, the property is approximately 1,374.88 Room 2 on Level 8, sq.m. 2nd Unit, Block 14, Room 1 on Level 8, 1st Unit, Block 10, Room 1 on Level 9, 1st Unit, Block 10, Room 1 on Level 10, 1st Unit, Block 10, Room 1 on Level 11, 1st Unit, Block 10, Room 1 on Level 12, 1st Unit, Block 10, Room 1 on Level 13, 1st Unit, Block 10, Room 1 on Level 14, 1st Unit, Block 10 and Room 1 on Level 15, 1st Unit, Block 10), Haike Estate, No. 187 Liu Tai Main Road East, Wenjiang District, Chengdu City, Sichuan Province, The PRC 位於中國四川省 成都市溫江區 柳台大道東段187號 海科名城之12個住宅單位 （14棟3單元1樓2號， 14棟1單元1樓1號， 14棟2單元8樓1號， 14棟2單元8樓2號， 10棟1單元8樓1號， 10棟1單元9樓1號， 10棟1單元10樓1號， 10棟1單元11樓1號， 10棟1單元12樓1號， 10棟1單元13樓1號， 10棟1單元14樓1號及 10棟1單元15樓1號）

– 109 –

VALUATION REPORTS OF THE GROUP’S ASSETS AND RELATED LETTER

APPENDIX II

Notes:

1. Pursuant to 12 Commodity Real Estate Purchase Contracts (the ‘‘Contracts’’), the property with a total GFA of approximately 1,374.88 sq.m. was contracted to be transferred to Vital Pharmaceuticals (Sichuan) Company Limited (四川維奧製藥有限公司) (‘‘Vital Sichuan’’) at a total consideration of RMB3,605,272.

2. In the valuation of this property, we have attributed no commercial value to it as the title of the property is not vested in the Group.

3. The opinion given by the PRC legal advisor to the Group is as follows:

4. a. The Contracts are legal, valid and enforceable;

5. b. The consideration of the property has been settled in full;

6. c. According to the Contracts, the developer of the property would help Vital Sichuan to complete the registration of title transfer within 545 days after the property has been transferred to Vital Sichuan; and

7. d. There is no legal impediment to obtain relevant title certificates.

8. Vital Sichuan is a wholly-owned subsidiary of the Company.

– 110 –

APPENDIX II

VALUATION REPORTS OF THE GROUP’S ASSETS AND RELATED LETTER

VALUATION CERTIFICATE

Group VIII — Property leased by the Group in the PRC

• Market Value

• in existing state

• Particulars as at

• No. Property Description and tenure of occupancy 31 March 2011 HK$

• 1. Unit No. 208, The property comprises an office unit on The property is No Commercial Kaixuan Apartment, Level 2 of a high-rise office building occupied by the Group Value No. 36 Deshengmen Outer completed in about 2009. for office purpose. Street, Xicheng District, The gross floor area of the property is Beijing, approximately 64 sq.m. The PRC

Pursuant to a Tenancy Agreement, the 中國北京市 property is leased to Vital 西城區 Pharmaceuticals (Sichuan) Company 德勝門外大街36號 Limited (四川維奧製藥有限公司), a 凱旋公寓208室 wholly-owned subsidiary of the Company, from an independent third party for a term expiring on 24 September 2011 at a monthly rent of RMB12,480 exclusive of relevant outgoings.

Note:

The opinion given by the PRC legal advisor to the Group is as follows:

• a. The Tenancy Agreement is legal and valid; and

• b. The Tenancy Agreement has not been registered, however, such non-registration would not affect the validity of the tenancy.

– 111 –

APPENDIX II

VALUATION REPORTS OF THE GROUP’S ASSETS AND RELATED LETTER

VALUATION CERTIFICATE

Group IX — Property leased by the Group in Macau

				Market Value
				in existing state
			Particulars	as at
No.	Property	Description and tenure	of occupancy	31 March 2011
				HK$
15.	E-45 do 3l andar do prédio	The property comprises an office unit on	The property is	No Commercial
	nos. 16-F a 16-L da Rua de	the 3rd floor of an 8-storey office	occupied by the Group	Value
	S. Doningos Macau	building completed in 1990s.	for office use.
	澳門大堂區板樟堂街	The saleable area of the property is
	16F–16L號顯利商業中心	approximately 570 sq.ft. (or about 52.95
	3樓45室	sq.m.).
		Pursuant to a Tenancy Agreement and a
		Renewal Letter, the property is leased to
		Beshabar (Macao Commercial Offshore)
		Limited (芘莎芭(澳門離岸商業服務)有
		限公司), a wholly-owned subsidiary of
		the Company, from an independent third
		party for a term expiring on 31
		December 2011 at a monthly rent of
		HK$4,380 exclusive of relevant
		outgoings.

– 112 –

VALUATION REPORTS OF THE GROUP’S ASSETS AND RELATED LETTER

APPENDIX II

2. LETTER FROM CHANCETON CAPITAL PARTNERS LIMITED

==> picture [156 x 35] intentionally omitted <==

Unit A, 23/F., CMA Building, 64-66 Connaught Road Central, Hong Kong

23 May 2011

The Board of Directors Vital Group Holdings Limited Room 3107, 31st Floor Tower 1, Lippo Centre 89 Queensway Admiralty, Hong Kong

Dear Sirs/ Madams,

We refer to the circular dated 23 May 2011 in relation to the Subscription Agreement and the Whitewash Waiver (the ‘‘Circular’’). Unless otherwise defined or if the context otherwise requires, all terms defined in the Circular shall have the same meaning when used in this letter.

This letter constitutes a report pursuant to Rule 11.1(b) of the Takeovers Code and sets out our assessment and review of the qualifications and experience of Dr. C.H. Cheng (‘‘Dr. Cheng’’) and Ms. Joannau Chan (‘‘Ms. Chan’’) from BMI Appraisals Limited, the valuer of the Company (the ‘‘Valuer’’) and the expertise and track records of the Valuer whose reports are set out in this Circular. We hereby confirm that:

• (i) there is no specific legal or regulatory requirement which applies to the valuation of the machineries and equipment as disclosed in this valuation report;

• (ii) we have undertaken reasonable checks to assess the relevant experience and expertise of Dr. Cheng, Ms. Chan and the Valuer and to satisfy ourselves that reliance could fairly be placed on their work; and

• (iii) we have reviewed and discussed with the Company, Ms. Chan and the Valuer the qualifications, basis and assumptions adopted by Dr. Cheng, Ms. Chan and the Valuer, in the course of their work, and have satisfied ourselves that Dr. Cheng, Ms. Chan and the Valuer are suitably qualified and experienced with sufficient current knowledge, skills and understanding necessary to undertake the valuation of the assets of the Company competently, that the qualifications, basis and assumptions have been made with due care and objectivity, and on a reasonable basis.

For and on behalf of

Chanceton Capital Partners Limited Johnny Wong

Managing Director

– 113 –

VALUATION REPORTS OF THE GROUP’S ASSETS AND RELATED LETTER

APPENDIX II

3. REPORT FROM BMI APPRAISALS LIMITED ON THE GROUP’S MACHINERIES AND EQUIPMENT

The following is the text of a letter and opinion of values, prepared for the purpose of incorporation in this circular received from BMI Appraisals Limited, an independent valuer, in connection with its valuations as at 31 March 2011 of the machineries and equipment located in the People’s Republic of China and Hong Kong.

==> picture [185 x 38] intentionally omitted <==

33[rd] Floor, Shui On Centre, Nos. 6–8 Harbour Road, Wanchai, Hong Kong 香港灣仔港灣道 6–8 號瑞安中心 33 樓 Tel 電話： (852) 2802 2191 Fax 傳真： (852) 2802 0863 Email 電郵： info@bmintelligence.com Website 網址： www.bmi-appraisals.com

23 May 2011

The Directors

Vital Group Holdings Limited

Unit 7, 31st Floor Tower 1, Lippo Centre 89 Queensway Hong Kong

Dear Sirs,

INSTRUCTIONS

We refer to your instructions for us to value the machineries and equipment held by Vital Group Holdings Limited (the ‘‘Company’’) and/or its subsidiaries (together referred to as the ‘‘Group’’) located in the People’s Republic of China (the ‘‘PRC’’) and Hong Kong (the ‘‘Machineries and Equipment’’). We confirm that we have conducted inspections, made relevant enquiries and obtained such further information as we consider necessary for the purpose of providing you with our opinion of the market values of the Machineries and Equipment as at 31 March 2011 (the ‘‘date of valuation’’).

SCOPE OF INVESTIGATION

We have conducted sample inspections of the Machineries and Equipment, investigated market conditions and interviewed relevant personnel in order to familiarize ourselves with the condition, usage and history of the Machineries and Equipment.

– 114 –

APPENDIX II

VALUATION REPORTS OF THE GROUP’S ASSETS AND RELATED LETTER

LOCATION OF THE MACHINERIES AND EQUIPMENT

The Machineries and Equipment are situated in various locations within the PRC and Hong Kong, which are held by the following 8 entities:

Name of the Entity

Location

• (1) Vital Pharmaceuticals (Sichuan) Co., Ltd. (四川維奧製藥有限公司) (A 100%-owned subsidiary of the Company)

• No. 778, Fengxi Avenue South, Wenjiang District, Chengdu City, Sichuan Province, the PRC (中國四 川省成都市溫江區鳳溪大道南段778號)

• (2) Sichuan Hengtai Pharmaceutical Company Limited

• (四川恒泰醫藥有限公司)四川恒泰醫藥有限公司)川恒泰醫藥有限公司)恒泰醫藥有限公司)泰醫藥有限公司)醫藥有限公司)藥有限公司)有限公司)限公司)公司)司)) (A 100%-owned subsidiary of the Company)

(2) Sichuan Hengtai Pharmaceutical 1st–2nd Floor, Office Unit No. 1, No. 3 Keyuan Company Limited South Road, High-Tech Industrial Development (四川恒泰醫藥有限公司)四川恒泰醫藥有限公司)川恒泰醫藥有限公司)恒泰醫藥有限公司)泰醫藥有限公司)醫藥有限公司)藥有限公司)有限公司)限公司)公司)司)) Zone, Chengdu City, Sichuan Province, the PRC (中 (A 100%-owned subsidiary of the 國四川省成都市高新區科園南路3號一棟1，2樓) Company) (3) Chengdu Vital Zhiye Co., Ltd. No. 3 Keyuan South Road, High-Tech Industrial (成都維奧置業有限公司)成都維奧置業有限公司)都維奧置業有限公司)維奧置業有限公司)奧置業有限公司)置業有限公司)業有限公司)有限公司)限公司)公司)司)) Development Zone, Chengdu City, Sichuan (A 100%-owned subsidiary of the Province, the PRC (中國四川省成都市高新區科園 Company) 南路3號) (4) Vital Pharmaceuticals (Chengdu) Co., Ltd. No. 3 Keyuan South Road, High-Tech Industrial (維奧 (成都) 製藥有限公司) Development Zone, Chengdu City, Sichuan (A 100%-owned subsidiary of the Province, the PRC (中國四川省成都市高新區科園 Company) 南路3號) (5) Chengdu Wenjiang Vital Property Office Unit No. 8, No. 778 Fengxi Avenue South, Development Company Limited Wenjiang District, Chengdu City, Sichuan Province, (成都溫江維奧房地產開發有限公司) the PRC (中國四川省成都市溫江區鳳溪大道南段 (A 100%-owned subsidiary of the 778號8棟) Company) (6) Wuhan Weiao Pharmaceuticals Co., Ltd. Science Park of Wuhan University, Jiangxia Road, (武漢維奧製藥有限公司) Wuhan East Lake High-tech Development Zone, (A 95.7%-owned subsidiary of the Wuhan City, Hubei Province, the PRC (中國湖北省 Company) 武漢市武漢東湖新技術開發區江夏大道武大科技園) (7) Vital Pharmaceuticals Company Limited Sunking Factory Building, Nos. 1–7 Shing Chuen (A 100%-owned subsidiary of the Road, Shatin, New Territories, Hong Kong

• (3) Chengdu Vital Zhiye Co., Ltd. (成都維奧置業有限公司)成都維奧置業有限公司)都維奧置業有限公司)維奧置業有限公司)奧置業有限公司)置業有限公司)業有限公司)有限公司)限公司)公司)司)) (A 100%-owned subsidiary of the Company)

• (7) Vital Pharmaceuticals Company Limited (A 100%-owned subsidiary of the Company)

• (8) Wide Triumph Limited (A 100%-owned subsidiary of the Company)

Office No. 7 on 31st Floor, Tower 1, Lippo Centre, No. 89 Queensway, Hong Kong

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VALUATION REPORTS OF THE GROUP’S ASSETS AND RELATED LETTER

APPENDIX II

DESCRIPTION OF THE MACHINERIES AND EQUIPMENT

As advised by Group, the Machineries and Equipment comprise motor vehicles, office equipment, furniture and machineries held by the Group contained in various industrial buildings located in the PRC and Hong Kong. Such Machineries and Equipment valued are being utilized by the 8 entities which are principally engaged in the pharmaceutical industry.

OBSERVATION

During the inspection, we checked some of the maintenance records and interviewed relevant personnel who are familiar with the condition of the Machineries and Equipment. As advised by the Group and as per our on-site observation, they are generally in reasonable condition. Although not all the Machineries and Equipment were in use upon our inspections, we are of the opinion that they should be capable of operating the purposes for which they were designed and produced. During our inspections, some of the Machineries and Equipment appeared to be under-maintained. Thus, in our opinion, this reflects a reasonable level of regular maintenance and repair works.

BASIS OF VALUATION

We have valued the Machineries and Equipment on the basis of Market Value, which is defined as ‘‘the estimated amount for which an asset 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’’.

EXCLUSIONS

This valuation exercise excludes the land, buildings, leasehold improvements, raw materials, inventory, semi-finished and finished products, spare parts and any current or intangible assets.

VALUATION METHODOLOGIES

We have considered two generally accepted approaches to ascertain the market values of the Machineries and Equipment, namely:

The Market Approach

The market approach considers transaction prices recently paid for similar assets, with adjustments made to the indicated market prices to reflect the conditions and utilities of the appraised assets relative to their market comparables. The values of assets for which there are established secondhand market comparables may be appraised by this approach.

The Cost Approach

The cost approach considers the cost to reproduce or replace in new condition the assets appraised in accordance with current market prices for similar assets, with allowances for accrued depreciation arising from condition, utility, age, wear and tear, and/or obsolescence present (physical, functional and/or economic), taking into consideration the past and present maintenance policy and rebuilding history. This approach generally furnishes the most reliable indication of the values of assets in the absence of a known market based on comparable sales.

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VALUATION REPORTS OF THE GROUP’S ASSETS AND RELATED LETTER

APPENDIX II

Any one or combination of the market approach and the cost approach may be used in a particular valuation, depending on the objectives and the nature of the relevant machineries and equipment.

The Machineries and Equipment can be broadly classified into 4 major categories: motor vehicles, office equipment, furniture and machineries. In valuing the category of motor vehicles, we have adopted the market approach. For the remaining categories of Machineries and Equipment, in the absence of market information regarding sales and purchases of facilities with similar nature to the remaining categories of the Machineries and Equipment, it is considered that the market approach is not applicable and the most reliable approach in arriving at our opinion of value of these remaining categories of Machineries and Equipment is the cost approach.

We have relied on the information provided by the Group that the Machineries and Equipment are in reasonable conditions. We did not attempt to operate or test the Machineries and Equipment. In addition, our valuations have been prepared based upon the following assumptions:

• The Machineries and Equipment will continue in existing use in the course of business of the existing owners subject to adequate potential profitability of the business; and

• The Machineries and Equipment will be used in the existing state with the benefit of continuity of tenure of land and buildings in the foreseeable future.

It must be noted that the valuations are dated as at the date of valuation. We take no responsibility for the condition, continued existence and/or operational abilities of the Machineries and Equipment after this date. We must advise that the valuations are not suitable for insurance purposes.

VALUATION CONSIDERATIONS

During our inspections, we have been provided by the Group a list of the Machineries and Equipment regarding information on the identifications, quantities, purchase years and dates of first use of the Machineries and Equipment, which we have selectively inspected and verified. We have relied considerably on this plus on other information such as maintenance records, equipment specifications, construction cost data and other documents provided to us.

We have had no reason to doubt the truth and accuracy of the information provided to us by the Group. The Group has also advised us that no material facts have been omitted from the information for us to reach an informed view, and we have no reason to suspect that any material information has been withheld.

No allowance has been made in our valuations for any charges, mortgages or amounts owing on the Machineries and Equipment or for any expenses or taxation, which may be incurred in effecting a sale. Unless otherwise stated, it is assumed that the Machineries and Equipment are free from encumbrances, restrictions and outgoings of an onerous nature, which could affect their values.

We have not investigated the title or any liabilities affecting the Machineries and Equipment appraised. No consideration was made for any outstanding amount owned under financing agreements, if any.

Unless otherwise stated, it is assumed that all necessary procedures, licenses, permits and other relevant documents have been obtained by the Group in accordance with relevant legislations and regulations for utilization of the Machineries and Equipment can be freely disposed of in the market.

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APPENDIX II

VALUATION REPORTS OF THE GROUP’S ASSETS AND RELATED LETTER

For the purpose of compliance with Rule 11.3 of the Code on Takeovers and Mergers and as advised by the Company, the potential tax liabilities which would arise on the transfer of the Machineries and Equipment at the amount of the valuation are PRC value-added tax and PRC corporate income tax. The likelihood of any potential tax liability being crystalised is remote as the Group has no intention to sell the Machineries and Equipment in the PRC.

REMARKS

We hereby certify that we neither have any present nor any prospective interest in the Group or the Machineries and Equipment appraised or the values reported.

Unless otherwise stated, all monetary amounts stated herein are in Hong Kong Dollars (HK$). Where necessary, the exchange rate adopted in our valuations is approximately Renminbi (RMB)1 = HK$1.19, being the prevailing exchange rate as at the date of valuation.

OPINION OF VALUES

We are of the opinion that the total market value of the Machineries and Equipment based on the aforesaid basis, assumptions and considerations, as at 31 March 2011, was in the sum of HK$43,141,600 (HONG KONG DOLLARS FORTY THREE MILLION ONE HUNDRED AND FORTY ONE THOUSAND AND SIX HUNDRED ONLY) and the market values of the respective machineries and equipment held by the 8 entities are as follows:

Name of the Entity (1) Vital Pharmaceuticals (Sichuan) Co., Ltd. (四川維奧製藥有限公司) (2) Sichuan Hengtai Pharmaceutical Company Limited (四川恒泰醫藥有限公司) (3) Chengdu Vital Zhiye Co., Ltd. (成都維奧置業有限公司) (4) Vital Pharmaceuticals (Chengdu) Co., Ltd. (維奧(成都) 製藥有限公司) (5) Chengdu Wenjiang Vital Property Development Company Limited (成都溫江維奧房地產開發有限公司) (6) Wuhan Weiao Pharmaceuticals Co., Ltd. (武漢維奧製藥有限公司) (7) Vital Pharmaceuticals Company Limited (8) Wide Triumph Limited TOTAL:

Market Value as at 31 March 2011 (HK$) 21,253,000 1,872,000 6,700,000 1,947,000 895,000 8,819,000 1,537,000 118,600

43,141,600

Yours faithfully,

For and on behalf of BMI APPRAISALS LIMITED

Dr. Tony C.H. Cheng

BSc., MUD, MBA(Finance), MSc.(Eng), PhD(Econ), MCIArb, AFA, SIFM, FCIM, MASCE, MIET, MIEEE, MASME, MIIE

Joannau W.F. Chan BSc., MSc. (Applied Finance) Senior Director

Managing Director

Note: Dr. Tony C.H. Cheng has various engineering qualifications with extensive experience in machinery valuations in Hong Kong and the PRC.

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GENERAL INFORMATION

APPENDIX III

1. RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules and the Code for the purpose of giving information with regard to the Group and the Subscriber.

The Directors jointly and severally accept full responsibility for the accuracy of information contained in this circular (other than the information in relation to the Subscriber) and confirm, having made all reasonable enquiries, that to the best of their knowledge, opinions expressed in this circular (other than those expressed by the directors of the Subscriber) have been arrived at after due and careful consideration, and there are no other facts not contained in this circular the omission of which would make any statement in this circular misleading.

The directors of the Subscriber are Mr. Yu Zhiping, Mr. He Zuyuan and Mr. Zheng Xiaowei and the directors of CGNPC Uranium Resources Co., Ltd. are Mr. Zhou Zhenxing, Mr. Yu Zhiping, Mr. Zou Yongping, Mr. Wu Junfeng and Mr. Hou Yalin. The directors of the Subscriber and CGNPC Uranium Resources Co., Ltd. jointly and severally accept full responsibility for the accuracy of information contained in this circular (other than the information in relation to the Group, the Controlling Shareholder and the Founders) and confirm, having made all reasonable enquiries, that to the best of their knowledge, opinions expressed in this circular (other than those expressed by the Directors) have been arrived at after due and careful consideration, and there are no other facts not contained in this circular the omission of which would make any statement in this circular misleading.

2. SHARE CAPITAL

The authorised and issued share capital of the Company are as follows:

Authorised ordinary share capital: 50,000,000,000 Shares as at the Latest Practicable Date Issued and to be issued ordinary share capital as fully paid: 1,551,056,993 Shares as at the Latest Practicable Date 1,670,000,000 Subscription Shares to be issued pursuant to the Share Subscription 2,608,695,652 Conversion Shares to be issued upon exercise of the conversion rights attached to the Convertible Bonds in full 5,829,752,645 Total issued ordinary share capital upon Closing (assuming no share options will be exercised on or before Closing)	HK$ 500,000,000
	15,510,570 16,700,000 26,086,957
	58,297,527

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GENERAL INFORMATION

APPENDIX III

All the issued Shares are fully paid and rank pari passu in all respects including the rights as to voting, dividends and return of capital. The Subscription Shares to be allotted and issued will, when issued and fully paid, rank pari passu in all respects with the then existing Shares in issue on the date of allotment of the Subscription Shares. The issued Shares are listed on the Stock Exchange. No part of the securities of the Company is listed or dealt in, nor is listing or permission to deal in the securities of the Company being or proposed to be sought, on any other stock exchange.

Since 31 December 2010, being the date up to which the latest audited published financial statements of the Group were made, and up to the Latest Practicable Date, no Shares have been allotted and issued by the Company. As at the Latest Practicable Date, the Company had no convertible securities, derivatives or warrants outstanding and had not entered into any agreement (save for the Subscription Agreement) for the issue of any convertible securities, options, warrants or derivatives of the Company.

As at the Latest Practicable Date, the Company has granted the following share options:

Executive Directors Mr. Xu Xiaofan Mr. Liu James Jin Ms. Guo Lin Ex-Directors Mr. Tao Lung (Note) Mr. Huang Jianming (Note) Mr. Shen Songqing (Note) Independent non-executive directors Mr. Chong Cha Hwa Employees Other eligible participants Total	Outstanding share options 15,000,000 8,500,000 11,500,000 15,000,000 8,500,000 8,500,000 1,500,000 32,390,000 11,500,000
	112,390,000

Note: Each of Mr. Tao Lung, Mr. Huang Jianming and Mr. Shen Songqing resigned with effect from 11 November 2009. However, the outstanding options held by each of them can still be exercised up until 6 February 2012.

Save for the aforesaid share options and the Convertible Bonds set out in the section headed ‘‘Shareholding Structure of the Company’’ in the Letter from the Board in this circular, the Company did not have any other derivatives, options, warrants or conversion rights affecting the Shares and no capital of any member of the Group was under option, or agreed to conditionally or unconditionally to be put under option as at the Latest Practicable Date.

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GENERAL INFORMATION

APPENDIX III

3. INTERESTS OF DIRECTORS

(a) Interests in securities

As at the Latest Practicable Date, the interests and short positions of the Directors and the chief executive of the Company in the Shares, underlying Shares and debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO) which: (i) were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions in which he was deemed or taken to have under such provisions of the SFO); or (ii) were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (iii) were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers in the Listing Rules, to be notified to the Company and the Stock Exchange were as follows:

Long Positions in Shares and underlying Shares

• (i) Interests in the Shares

			Approximate
			percentage
			of the total
			issued share
		Number of	capital of the
Name of Director	Capacity	Shares held	Company
Mr. Chen Zhiyu	Personal	26,666	0.0017%
Mr. Liu James Jin	Personal	15,630,4001	1.01%

Note:

1. Mr. Liu James Jin is deemed to be interested in 1,000,000 Shares held by his spouse by virtue of Part XV of the SFO.

2. (ii) Interests in the Share Options granted pursuant to the Share Option Scheme

	Outstanding
	share options
Executive Directors
Mr. Xu Xiaofan	15,000,000
Mr. Liu James Jin	8,500,000
Ms. Guo Lin	11,500,000
Ex-Directors
Mr. Tao Lung (Note)	15,000,000
Mr. Huang Jianming (Note)	8,500,000
Mr. Shen Songqing (Note)	8,500,000
Independent non-executive directors
Mr. Chong Cha Hwa	1,500,000

Note: Each of Mr. Tao Lung, Mr. Huang Jianming and Mr. Shen Songqing resigned with effect from 11 November 2009. However, the outstanding options held by each of them can still be exercised up until 6 February 2012.

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GENERAL INFORMATION

APPENDIX III

(b) Other interests

As at the Latest Practicable Date,

• (i) none of the Directors had any direct or indirect interest in any assets which had been acquired or disposed of by or leased to any member of the Group or were proposed to be acquired or disposed of by or leased to any member of the Group since 31 December 2010, being the date up to which the latest audited published financial statements of the Group were made;

• (ii) none of the Directors was materially interested in any contract or arrangement entered into by any member of the Group which was significant in relation to the business of the Group; and

• (iii) save as disclosed in this circular, none of the Directors or their respective associates had any interest in a business which competes or is likely to compete, either directly or indirectly, with the business of the Group.

4. INTERESTS OF SUBSTANTIAL SHAREHOLDERS

As at the Latest Practicable Date, so far as was known to any Director or chief executive of the Company, the following persons (other than any Director or the chief executive of the Company) had an interest or short position in the Shares and underlying Shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or, who were, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group:

Long Positions in Shares

			Approximate
			percentage of
			issued share
		Number	capital of the
Name of Shareholder	Capacity	of Shares	Company
Perfect Develop Holding Inc.	Corporate	522,526,940	33.69%

Note: 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 of the Company, and currently paid consultants of the Company. Mr. Liu James Jin is a founder of the Group and an executive Director.

Pursuant to the Share Charge, Perfect Develop Holding Inc. charged 450,000,000 Shares in favour of China Uranium Development Company Limited.

Save as disclosed above, as at the Latest Practicable Date, so far as was known to any Director or the chief executive of the Company, no persons (other than any Director or the chief executive of the Company) had an interest or short position in the Shares and underlying Shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the

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GENERAL INFORMATION

APPENDIX III

SFO, or, who were, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group.

5. MARKET PRICES

The table below shows the closing price of the Shares on the Stock Exchange on (i) the last day on which trading took place in each calendar month during the period commencing six months preceding 31 March 2011, being the date of the Announcement, and ending on the Latest Practicable Date; (ii) the last trading day immediately preceding the date of the Announcement and (iii) the Latest Practicable Date:

	Closing price
Date	per Share
	HK$
30 September 2010	0.260
31 October 2010	0.230
30 November 2010	0.229
31 December 2010	0.230
31 January 2011	0.234
28 February 2011	0.260
4 March 2011 (being the last trading date prior to Announcement)	0.360
31 March 2011 (being the price on the Last Trading Date pending release of
the Announcement)	0.360
29 April 2011	0.920
20 May 2011	1.530

The highest and lowest closing prices per Share recorded on the Stock Exchange during the period commencing six months preceding 31 March 2011, being the date of the Announcement, and ending on the Latest Practicable Date were HK$1.600 on 19 May 2011, and HK$0.222 on 13 December 2010, respectively.

6. SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had any existing or a proposed service contract with any member of the Group which is not expiring or determinable by the relevant Group member within one year without payment of compensation, other than statutory compensation.

None of the Directors has a service contract with the Company or any of the Subsidiaries or associated companies which:

• (a) (including continuous and fixed term contracts) was entered into or amended within six months before the date of the Announcement;

• (b) is a continuous contract with a notice period of 12 months or more; or

• (c) is a fixed term contract with more than 12 months to run irrespective of the notice period.

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GENERAL INFORMATION

APPENDIX III

7. COMPETING INTERESTS

As at 31 December 2010, Mr. Chen Zhiyu (‘‘Mr. Chen’’), an executive Director and chief executive officer of the Company, has approximately 52% shareholding in Guangdong Suntop Pharmaceutical Co., Ltd. (‘‘Guangdong Suntop’’). Mr. Chen therefore had interests in businesses which compete or are likely to compete, either directly or indirectly with the business of the Group. Guangdong Suntop principally engages in the sales of pharmaceutical products in the PRC. The major pharmaceutical products sold by 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 of the Company, i.e. calcium capsule, minerals, vitamins and liver protecting drug. 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 Guangdong Suntop and the Company.

Save as disclosed above, none of the Directors, the controlling shareholders of the Company and their respective associates had an interest in a business which operates in or may operate in significant competition with the business of the Group and any other conflicts of interest which any such person has or may have with the Group.

8. MATERIAL CHANGE

The Directors confirmed that there has been no material change in the financial or trading positions or outlook of the Group since 31 December 2010, being the date up to which the latest published audited financial statements of the Group were made, and up to the Latest Practicable Date.

9. LITIGATION

No member of the Group was engaged in any litigation or arbitration or claims of material importance, and no such litigation or arbitration or claim of material importance was known to the Directors to be pending or threatened by or against any members of the Group, as at the Latest Practicable Date.

10. EXPERT AND CONSENT

The following are the qualifications of the experts who have given an opinion or advice to the contents of this circular:

BMI Appraisals Limited	Professional Property surveyors and valuers
Chanceton Capital Partners Limited	a licensed corporation to carry on Type 6 (advising on
	corporate finance) regulated activity under the SFO
Guangdong Securities Limited	a licensed corporation to carry out type 1 (dealing in
	securities), type 2 (dealing in futures contracts), type 4
	(advising on securities), type 6 (advising on corporate
	finance) and type 9 (asset management) regulated activities
	as defined under the SFO

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GENERAL INFORMATION

APPENDIX III

As at the Latest Practicable Date, none of BMI Appraisals Limited, Chanceton Capital Partners Limited, and Guangdong Securities have any interest, either direct or indirect, in any assets which have been, since 31 December 2010, the date to which the latest audited consolidated financial statements of the Company were published, acquired or disposed of by or leased to or were proposed to be acquired or disposed of by or leased to any member of the Group nor had any shareholding in any member of the Group nor the right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

Each of BMI Appraisals Limited, Chanceton Capital Partners Limited, and Guangdong Securities has given and has not withdrawn its written consent to the issue of this circular with the inclusion of its report and/or reference to its name, in the form and context in which they appear.

11. ARRANGEMENTS IN CONNECTION WITH THE SHARE SUBSCRIPTION AND CB SUBSCRIPTION

As at the Latest Practicable Date,

• (a) no agreement, arrangement or understanding had been entered into by the Subscriber to transfer, charge or pledge the Subscription Shares to any person;

• (b) save for the transactions contemplated under the Subscription Agreement and the Share Charge, there was no agreement, arrangement or understanding (including any compensation arrangement) existing between the Subscriber or any party acting in concert with it and any of the Directors, recent Directors, Shareholders or recent Shareholders having any connection with or dependence upon the Share Subscription, the CB Subscription and the Whitewash Waiver;

• (c) no benefit will be or has been given to any Director as compensation for loss of office or otherwise in connection with the Share Subscription, the CB Subscription and the Whitewash Waiver;

• (d) there was no agreement or arrangement between any Director and any other person which is conditional on or dependent upon the outcome of the Share Subscription, the CB Subscription and the Whitewash Waiver or otherwise connected with the Share Subscription, the CB Subscription and the Whitewash Waiver;

• (e) save for the Subscription Agreement, no material contract had been entered into by the Subscriber and/or parties acting in concert with it in which any Director has a material personal interest;

• (f) no person had any arrangement of the kind referred to in Note 8 to Rule 22 of the Code with the Company, any person who is an associate of the Company by virtue of classes (1), (2), (3) or (4) of the definition of associate under the Code;

• (g) no person has any arrangement of the kind referred to in Note 8 to Rule 22 of the Code with the Subscriber or any party acting in concert with it;

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GENERAL INFORMATION

APPENDIX III

• (h) save for the undertaking by the Controlling Shareholder under the Subscription Agreement to take all necessary action to procure the satisfaction of the Conditions Precedent, including, to the extent permitted by applicable laws and regulations, to vote in favour of the resolutions to be proposed at the EGM, neither the Subscriber nor any party acting in concert with it has received any irrevocable commitment to vote in favour of the Subscription Agreement and the transactions contemplated thereunder and/or the Whitewash Waiver at the EGM;

• (i) save for the Subscription Agreement, there is no agreement or arrangement to which the Subscriber is a party which relates to the circumstances in which it may or may not invoke or seek to invoke a condition to the Subscription Agreement;

• (j) neither the Subscriber nor any party acting in concert with it has borrowed or lent any relevant securities of the Company;

• (k) pursuant to the undertaking given by Mr. Liu James Jin under the Subscription Agreement to procure that the Controlling Shareholder complies with all its obligations and undertakings under the Subscription Agreement, including but not limited to the undertaking to take all necessary action to procure the satisfaction of the Conditions Precedent, Mr. Liu James Jin, to the extent permitted by applicable laws, will vote in favour of the resolutions to be proposed at the EGM; and

• (l) Mr. Chen Zhiyu, an executive Director holding 26,666 Shares, and who has not involved in the Subscription Agreement, has indicated that he will vote in favour of the resolutions to be proposed at the EGM.

12. SHAREHOLDING AND DEALINGS IN SHARES

As at the Latest Practicable Date:

• (a) the Subscriber and parties acting in concert with it did not own or control any Shares, derivatives, options, warrants and conversion rights or other similar rights which are convertible or exchangeable into Shares;

• (b) the directors of the Subscriber did not own or control any Shares, derivatives, options, warrants and conversion rights or other similar rights which are convertible or exchangeable into Shares;

• (c) save as disclosed under the section headed ‘‘Interests of Directors’’ in this appendix, none of the Directors was interested in any Shares, derivatives, options, warrants and conversion rights or other similar rights which are convertible or exchangeable into Shares;

• (d) the Company did not own or control any shares, derivatives, options, warrants and conversion rights or other similar rights which are convertible or exchangeable into shares in the Subscriber;

• (e) none of the Directors was interested in any shares, derivatives, options, warrants and conversion rights or other similar rights which are convertible or exchangeable into shares of the Subscriber;

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GENERAL INFORMATION

APPENDIX III

• (f) no subsidiary of the Company or any pension fund of the Company or of any member of the Group owned or controlled any Shares, convertible securities, warrants, options and derivatives in respect of the Shares;

• (g) save for the Shares held and dealt for the accounts of the non-discretionary clients by the brokerage division of Guangdong Securities, none of the professional advisers named under the section headed ‘‘Expert and Consent’’ in this appendix or any adviser to the Company as specified in class (2) of the definition of associate under the Code owned or controlled any Shares, convertible securities, warrants, options and derivatives in respect of the Shares;

• (h) no fund manager who managed securities of the Company on a discretionary basis and is connected with the Company had any interest in Shares, convertible securities, warrants, options and derivatives in respect of the Shares; and

• (i) save as disclosed in the section headed ‘‘Shareholding Structure of the Company’’ in the Letter from the Board in this circular, the Controlling Shareholder, who has undertaken to take all necessary action to procure the satisfaction of the Conditions Precedent, including, to the extent permitted by applicable laws and regulations, to vote in favour of the resolutions to be proposed at the EGM, does not own or control any Shares, derivatives, options, warrants and conversion rights or other similar rights which are convertible or exchangeable into Shares.

During the period commencing six months prior to 31 March 2011, being the date of the Announcement, and up to the Latest Practicable Date:

• (a) none of the Company and the Directors dealt for value in shares, convertible securities, warrants, options and derivatives of the Subscriber or the Company;

• (b) save for the entering into of the Subscription Agreement and the Share Charge, none of the Subscriber, the directors of the Subscriber and parties acting in concert with the Subscriber dealt for value in the Shares, convertible securities, warrants, options and derivatives of the Company;

• (c) none of (i) the Directors, (ii) the Company and (iii) the Subscriber and parties acting in concert with it borrowed or lent any of the Shares, convertible securities, warrants, options and derivatives of the Company; and

• (d) the Controlling Shareholder, who has undertaken to take all necessary action to procure the satisfaction of the Conditions Precedent, including, to the extent permitted by applicable laws and regulations, to vote in favour of the resolutions to be proposed at the EGM, has not dealt for value in any Shares, convertible securities, warrants, options and derivatives of the Company.

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GENERAL INFORMATION

APPENDIX III

13. MATERIAL CONTRACTS

The following material contracts (not being contracts entered into in the ordinary course of business) had been entered into by the Group within the two years immediately preceding the date of the Announcement:

• (a) the land grant contract dated 6 May 2010 entered into between 成都市溫江區國土資源局 (Chengdu City, Wancheng Community Land Resources Bureau) and 成都溫江維奧房地產開 發有限公司 (Chengdu Wenjiang Vital Property Development Company Limited) in relation to acquisition of a piece of land located at Wancheng Community, Wenjiang District, Chengdu, the PRC with a total site area of approximately 49,595.3 square meters;

• (b) the joint venture agreement dated 10 May 2010 entered into between 維奧(成都)製藥有限公 司 (Vital Pharmaceutical (Chengdu) Co., Ltd.) (‘‘Vital Chengdu’’), 成都眾合高新企業管理 有限公司 (Chengdu Zhonghe Management Company Limited) (‘‘Chengdu Zhonghe’’) and 四川西文科技有限公司 (Sichuan Xiwen Technology Company Limited*) (‘‘Sichuan Xiwen’’) relating to the formation of a joint venture company in the PRC for developing a property development project;

• (c) the agreement dated 26 May 2010 entered into between Vital Chengdu, Chengdu Zhonghe and Sichuan Xiwen in relation to the termination of the joint venture agreement dated 10 May 2010;

• (d) an agreement for sale and purchase dated 15 March 2011 entered into between Vital Pharmaceuticals Company Limited as vendor and Bright Future Pharmaceutical Laboratories Limited as purchaser in relation to the sale of a workshop and 2 car parking spaces located in Hong Kong together with certain equipment at a consideration of HK$21,000,000; and

• (e) the Subscription Agreement.

14. 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.

• (c) The company secretary of the Company is Ms. Cheung Hin Kiu. Ms. Cheung is an associate of The Institute of Chartered Secretaries and Administrators and The Hong Kong Institute of Chartered Secretaries. She is also a member of the Association of Chartered Certified Accountants.

• (d) The registered and correspondence address of the Subscriber is Room 1901, C.C. Wu Building, 302 Hennessy Road, Wanchai, Hong Kong.

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GENERAL INFORMATION

APPENDIX III

• (e) The principal party acting in concert with the Subscriber is CGNPC Uranium Resources Co., Ltd. The registered and correspondence address of CGNPC Uranium Resources Co., Ltd. is 30/F, Bldg A, The International Center of Times, No. 101, Shaoyaoju Beili, Chaoyang District, Beijing, China 100029 (北京市朝陽區芍藥居北里101號30層).

• (f) In the case of any inconsistencies, the English text of this circular shall prevail over the Chinese text.

15. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection at the office of Li & Partners at 22nd Floor, World-Wide House, Central, Hong Kong during normal business hours from 9:00 a.m. to 5:00 p.m. on any business day up to and including the date of the EGM:

• (a) the letter from the Board, the text of which is set out on pages 6 to 28 of this circular;

• (b) the letter from Guangdong Securities, the text of which is set out on pages 31 to 52 of this circular;

• (c) the consent letters referred to in the paragraph headed ‘‘Expert and Consent’’ in this appendix;

• (d) the letter of advice from the Independent Board Committee, the text of which is set out on pages 29 to 30 of this circular;

• (e) the material contracts referred to in the paragraph headed ‘‘Material Contracts’’ in this appendix;

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

• (g) the memorandum and articles of association of the Subscriber;

• (h) the annual reports of the Company for the financial years ended 31 December 2009 and 31 December 2010;

• (i) the valuation report of the Group’s properties, the text of which is set out on pages 79 to 112 in this circular;

• (j) the letter from Chanceton Capital Partners Limited, the text of which is set out on page 113 in this circular; and

• (k) the valuation report of the Group’s machineries and equipment, the text of which is set out on pages 114 to 118 in this circular.

The above documents will be available on the website of the SFC at www.sfc.hk and the Company’s website at www.vital-pharm.com from the date of this circular up to and including the date of the EGM.

• For identification purposes only

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NOTICE OF EGM

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(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1164)

NOTICE IS HEREBY GIVEN that the extraordinary general meeting of Vital Group Holdings Limited (the ‘‘Company’’) will be held at Gloucester Room II, 3/F, The Excelsior Hong Kong, 281 Gloucester Road, Causeway Bay, Hong Kong on Wednesday, 8 June 2011 at 11:00 a.m. for the purpose of considering and, if thought fit, passing the following resolutions of the Company:

AS ORDINARY RESOLUTIONS

1. ‘‘THAT:

2. (a) the subscription agreement (the ‘‘Subscription Agreement’’) dated 18 March 2011 entered into by and among (1) the Company, (2) Mr. Tao Lung, (3) Mr. Huang Jianming, (4) Mr. Liu James Jin, (5) Perfect Develop Holding Inc., and (6) China Uranium Development Company Limited (the ‘‘Subscriber’’) in relation to (i) subscription of 1,670,000,000 ordinary shares of HK$0.01 each in the capital of the Company (the ‘‘Subscription Shares’’) at a subscription price of HK$0.23 per Subscription Share; and (ii) subscription of the convertible bonds (the ‘‘Convertible Bonds’’) in the aggregate principal amount of HK$600,000,000, which can be converted into 2,608,695,652 conversion shares or such number of shares (as a result of any adjustment to the Conversion Price) which may fall to be allotted and issued upon exercise of the conversion right attaching to the Convertible Bonds (the ‘‘Conversion Shares’’) at the initial conversion price of HK$0.23 per Conversion Share (subject to adjustments), (a copy of the Subscription Agreement is tabled at the meeting and marked ‘‘A’’ by the chairman of the meeting for identification purposes) and the transactions contemplated thereunder be and is hereby confirmed, approved and ratified;

3. (b) conditional upon the Listing Committee of The Stock Exchange granting the listing of, and permission to deal in Subscription Shares and the Conversion Shares, the unconditional special mandate granted to the Directors to exercise the powers of the Company to allot, issue and deal with the Subscription Shares and the Conversion Shares pursuant to the Subscription Agreement be and is hereby approved;

4. (c) the directors of the Company be and are hereby authorised for and on behalf of the Company to sign, seal, 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 implement and/or effect the transactions contemplated by the Subscription Agreement, the issue of the Subscription Shares and Conversion Shares and the amendment, variation or modification of the terms and conditions of the Subscription Agreement on such terms and conditions as the director of the Company may think fit.’’

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NOTICE OF EGM

1. ‘‘THAT the waiver granted or to be granted by the Executive Director of the Corporate Finance Division of the Securities and Futures Commission pursuant to note 1 on dispensations for Rule 26 of the Hong Kong Code on Takeovers and Mergers waiving any obligation of the Subscriber and parties acting in concert with it to make a general offer to acquire the shares of the Company and all other securities of the Company in issue not already owned or agreed to be acquired by the Subscriber and parties acting in concert with it, as a result of the closing of the Share Subscription under the Subscription Agreement (as defined in resolution no.1 of the notice of which this resolution forms part) be and is hereby approved.’’

As at the date of this notice, the board of directors of the Company comprises six executive directors: Mr. Xu Xiaofan, Mr. Chen Zhiyu, Madam Guo Lin, Mr. Huang Zemin, Mr. Li Ke and Mr. Liu James Jin and three independent non-executive directors: Mr. Lui Tin Nang, Mr. Lee Kwong Yiu and Mr. Chong Cha Hwa.

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

Hong Kong, 23 May 2011

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 place. 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 and transfer office, 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) Delivery of an instrument appointing a proxy should not preclude a member 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.

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