Du Du Holdings Limited — Proxy Solicitation & Information Statement 2005

Sep 29, 2005

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult a stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Plasmagene Biosciences Limited (the “Company”), you should at once hand this circular to the purchaser or to the bank, stockbroker or other agent through whom the sale was effected for transmission to purchaser.

This circular, for which the directors of the Company (the “Directors”) collectively and individually accept full responsibility, includes particulars given in compliance with the Rules Governing the Listing of Securities on the Growth Enterprise Market (“GEM”) of the Stock Exchange (the “GEM Listing Rules”) for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief, (1) the information contained in this circular is accurate and complete in all material respects and not misleading; (2) there are no other matters the omission of which would make any statement in this circular misleading; and (3) all opinions expressed in this circular have been arrived at after due and careful consideration and are founded on bases and assumptions that are fair and reasonable.

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PLASMAGENE BIOSCIENCES LIMITED 普施基因生物科技有限公司[*]

(incorporated in the Cayman Islands with limited liability)

(Stock Code: 8250)

PROPOSALS FOR

(1) GENERAL MANDATES TO ISSUE NEW SHARES AND REPURCHASE SHARES; AND

(2) RE-ELECTION OF RETIRING DIRECTORS

The notice convening the annual general meeting of the Company to be held at 5/F, Club Lusitano, 16 Ice House Street, Central, Hong Kong on Monday, 24 October 2005 at 9:00 a.m. (the “Annual General Meeting”) is set out on pages 4 to 10 of the annual report of the Company for the financial year ended 30 June 2005 (the “2005 Annual Report”).

A form of proxy for the Annual General Meeting is enclosed with the 2005 Annual Report. Whether or not you intend to be present at the Annual General Meeting, you are requested to complete the form of proxy and return it to the Company’s branch share registrar and transfer office in Hong Kong, Computershare Hong Kong Investors Services Limited, at 46th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong in accordance with the instructions printed thereon by not less than 48 hours before the time fixed for the Annual General Meeting or any adjourned meeting thereof. Completion and return of a form of proxy will not preclude you from attending and voting at the Annual General Meeting in person should you so wish.

This circular will remain on the GEM website at www.hkgem.com on the “Latest Company Announcements” page for at least 7 days from the date of its posting and on the website of Plasmagene Biosciences Limited at http://www.plasma-gene.com.

* For identification purpose only

29 September 2005

CHARACTERISTICS OF THE GROWTH ENTERPRISE MARKET (“GEM”) OF THE STOCK EXCHANGE OF HONG KONG LIMITED (THE “STOCK EXCHANGE”)

GEM has been established as a market designed to accommodate companies to which a high investment risk may be attached. In particular, companies may list on GEM with neither a track record of profitability nor any obligation to forecast future profitability. Furthermore, there may be risks arising out of the emerging nature of companies listed on GEM and the business sectors or countries in which the companies operate. Prospective investors should be aware of the potential risks of investing in such companies and should make the decision to invest only after due and careful consideration. The greater risk profile and other characteristics of GEM mean that it is a market more suited to professional and other sophisticated investors.

Given the emerging nature of companies listed on GEM, there is a risk that securities traded on GEM may be more susceptible to high market volatility than securities traded on the Main Board and no assurance is given that there will be a liquid market in the securities traded on GEM.

The principal means of information dissemination on GEM is publication on the Internet website operated by the Stock Exchange. Listed companies are not generally required to issue paid announcements in gazetted newspapers. Accordingly, prospective investors should note that they need to have access to the GEM website at http://www.hkgem.com in order to obtain up-to-date information on GEM-listed issuers.

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LETTER FROM THE BOARD

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PLASMAGENE BIOSCIENCES LIMITED 普施基因生物科技有限公司[*]

(incorporated in the Cayman Islands with limited liability)

(Stock Code: 8250)

Executive Directors: Dr. Yeung Wah Hin, Alex Mr. Cheng Yan Tak, Angus Ronald Mr. Cho Kam Luk Mrs. Yeung Tsui Mai Ling, Margaret

Non-Executive Director: Mr. Lau Kam Shan

Independent Non-Executive Directors: Dr. Ngan Man Wong, Matthew Dr. Loh Kai Tsu, Kevin Mr. Chan Siu Wing, Raymond Mr. Chan Po Kwong

Registered Office:

Ugland House, PO Box 309GT South Church Street, Grand Cayman Cayman Islands

Principal Place of Business in Hong Kong: 5/F, Club Lusitano 16 Ice House Street Central Hong Kong

29 September 2005

To the shareholders of the Company

Dear Sir or Madam,

PROPOSALS FOR

(1) GENERAL MANDATES TO ISSUE NEW SHARES AND REPURCHASE SHARES; AND (2) RE-ELECTION OF RETIRING DIRECTORS

INTRODUCTION

The purpose of this circular is to provide you with the information with regard to the proposed resolutions at the annual general meeting (the “ Annual General Meeting ”) of Plasmagene Biosciences Limited (the “ Company ”) to be held at 5/F, Club Lusitano, 16 Ice House Street, Central, Hong Kong on Monday, 24 October 2005 at 9:00 a.m. relating to (1) the granting to the directors of the Company (the “ Directors ”) the general mandates to allot, issue and deal with new shares of HK$0.01 each (the “ Shares ”) in the capital of the Company and to repurchase Shares and (2) the re-election of retiring directors.

* For identification purpose only

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LETTER FROM THE BOARD

GENERAL MANDATES TO ISSUE AND REPURCHASES SHARES

At the annual general meeting of the Company held on 25 October 2004 (the “ 2004 Annual General Meeting ”), the then shareholders of the Company passed resolutions granting general mandates to the Directors to allot, issue, deal with and repurchase Shares. These general mandates will expire at the conclusion of the Annual General Meeting and the purpose of this circular is to request your support to renew the general mandates referred to below.

New issue mandate and the extension thereof

At the Annual General Meeting to be held on Monday, 24 October 2005, an ordinary resolution (which is set out as Resolution No. 4 in the notice (the “ Notice ”) convening the Annual General Meeting) will be proposed which, if passed, will give the Directors a general mandate to allot, issue and otherwise deal with new Shares not exceeding 20% of the share capital of the Company in issue on the date of the passing of that resolution (the “ New Issue Mandate ”). In addition, conditional upon the proposed resolutions in relation to the New Issue Mandate and the Repurchase Mandate (as defined below) being passed at the Annual General Meeting, another ordinary resolution (which is set out as Resolution No. 6 in the Notice) will be proposed at the Annual General Meeting which, if passed, to extend the New Issue Mandate (the “ Extension of the New Issue Mandate ”) by the addition thereto of an amount representing the aggregate nominal amount of Shares which are repurchased by the Company pursuant to the Repurchase Mandate, provided that the amount of Shares so repurchased by the Company shall not exceed 10% of the aggregate nominal amount of the issued share capital of the Company on the date of passing the resolution. The New Issue Mandate and the Extension of the New Issue Mandate will provide flexibility for issuing new Shares when it is in the interests of the Company.

As at 23 September 2005, being the latest practicable date prior to the printing of this circular (the “ Latest Practicable Date ”), the Company had an aggregate of 379,576,000 Shares in issue. Subject to the passing of the resolution for the approval of the New Issue Mandate and the Extension of New Issue Mandate and on the basis that no further Shares are issued or repurchased between the Latest Practical Date and the date of the Annual General Meeting, the Company would be allowed under the New Issue Mandate and the Extension of New Issue Mandate to allot, issue and deal with a maximum of 75,915,200 Shares.

Repurchase mandate and explanatory statement

At the Annual General Meeting, an ordinary resolution as set out as Resolution No. 5 in the Notice will also be proposed to grant the Directors a general mandate to repurchase Shares (the “ Repurchase Mandate ”) on the GEM of the Stock Exchange up to a limit of 10% in the aggregate of the Company’s issued share capital at the date of passing the resolution.

Subject to the passing of the resolution for the approval of the Repurchase Mandate and on the basis that no further Shares are issued or repurchased between the Latest Practical Date and the date of the Annual General Meeting, the Company would be allowed under the Repurchase Mandate to repurchase a maximum of 37,957,600 Shares.

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LETTER FROM THE BOARD

An explanatory statement containing all relevant information relating to the Repurchase Mandate is set out in the Appendix I to this circular. The information in the explanatory statement is to provide you with the information reasonably necessary to enable you to make an informed decision on whether to vote for or against the Resolution No. 5 as set out in the Notice to grant to the Directors the Repurchase Mandate at the Annual General Meeting.

The New Issue Mandate, the Extension of New Issue Mandate and the Repurchase Mandate shall continue to be in force during the period from the date of passing of the resolutions for the approval of the New Issue Mandate, the Extension of New Issue Mandate and the Repurchase Mandate up to (i) the conclusion of the next annual general meeting of the Company; (ii) the expiration of the period within which the next annual general meeting of the Company is required by the Memorandum and Articles of Association of the Company or any other applicable laws of the Cayman Islands to be held; or (iii) the date on which the authority given to the Directors is revoked or varied by an ordinary resolution of the shareholders of the Company in general meeting, whichever occurs first.

RE-ELECTION OF DIRECTORS

At the Annual General Meeting, ordinary resolution will be proposed to re-elect Mr. Cho Kam Luk, as executive Director and Mr. Chan Po Kwong as independent non-executive Directors.

Pursuant to Article 95 of the articles of association of the Company (the “ Articles ”), the Board shall have power from time to time and at any time to appoint any person as a Director either to fill a casual vacancy or as an addition to the Board. Any Director so appointed shall hold office only until the next following annual general meeting of the Company and shall then be eligible for re-election at that meeting.

In accordance with Article 95 of the Articles, Mr. Chan Po Kwong who was appointed as independent non-executive Director by the Board on 1 December 2004, shall retire from office at the Annual General Meeting. Mr. Chan Po Kwong will, being eligible, offer himself for re-election as independent nonexecutive Director. At the Annual General Meeting, ordinary resolution will be proposed to re-elect Mr. Chan Po Kwong as independent non-executive Director.

Pursuant to Article 112 of the Articles, one-third of the Directors (other than the managing Director or joint managing Director) for the time being, or, if their number is not three or a multiple of three, then the number nearest to, but not exceeding, one-third, shall retire from office by rotation at every annual general meeting of the Company. A retiring Director shall be eligible for re-election.

In accordance with Article 112 of the Articles, Mr. Cho Kam Luk, an executive Director and Dr. Loh Kai Tsu, Kevin, an independent non-executive Director, shall retire by rotation at the Annual General Meeting. Mr. Cho Kam Luk, being eligible, will offer himself for re-election as executive Director at the Annual General Meeting. Dr. Loh Kai Tsu, Kevin, being eligible, but will not offer himself for reelection as independent non-executive Director at the Annual General Meeting. At the Annual General Meeting, ordinary resolution will be proposed to re-elect Mr. Cho Kam Luk as executive Director.

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LETTER FROM THE BOARD

Particulars of Mr. Chan Po Kwong and Mr. Cho Kam Luk, as required to be disclosed pursuant to the GEM Listing Rules are set out in Appendix II of this circular. Saved as disclosed in Appendix II, there are no other matters that need to be brought to the attention of the shareholders of the Company in relation to the re-election of the retiring Directors.

GENERAL INFORMATION

The notice convening the Annual General Meeting is set out in the annual report of the Company for the year ended 30 June 2005 (the “ 2005 Annual Report ”).

A copy of the 2005 Annual Report incorporating copies of the audited consolidated financial statements of the Company and its subsidiaries for the year ended 30 June 2005 and the Directors’ and auditors’ reports thereon has been despatched to the shareholders of the Company together with this circular.

A form of proxy for the Annual General Meeting is enclosed with the 2005 Annual Report. Whether or not you intend to be present at the Annual General Meeting, you are requested to complete the form of proxy and return it to the Company’s branch share registrar and transfer office in Hong Kong, Computershare Hong Kong Investor Services Limited, at 46th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong in accordance with the instructions printed thereon by not less than 48 hours before the time fixed for the Annual General Meeting or any adjournment thereof. Completion and return of a form of proxy will not preclude you from attending and voting at the Annual General Meeting in person should you so wish.

RECOMMENDATION

The Directors believe that the New Issue Mandate, the Repurchase Mandate and the Extension of the New Issue Mandate are in the best interests of the Company and its shareholders as a whole. An exercise of the New Issue Mandate (and the Extension of the New Issue Mandate, if applicable) will enable the Company to take advantage of market conditions to raise additional capital for the Company. In addition, based on the reasons for repurchases as set out in the paragraph headed “Reasons for the repurchases” in the Appendix I to this circular, the Directors believe that the proposal to grant them the Repurchase Mandate is in the interests of the Company and its shareholders. Accordingly, the Directors recommend you to vote in favour of the resolutions approving the New Issue Mandate, the Repurchase Mandate and the Extension of the New Issue Mandate.

Yours faithfully For and on behalf of the Board of

Plasmagene Biosciences Limited Dr. Yeung Wah Hin, Alex

Chairman

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EXPLANATORY STATEMENT

APPENDIX I

This is an explanatory statement given to all shareholders of the Company pursuant to Rule 13.08 of the Rules Governing the Listing of Securities on GEM of the Stock Exchange (the “ GEM Listing Rules ”) relating to the Resolution No. 5 as set out in the Notice to be proposed at the Annual General Meeting authorising the Repurchase Mandate.

1. SHARE CAPITAL

As at 23 September 2005, being the latest practicable date prior to the printing of this circular (the “ Latest Practicable Date ”) for ascertaining certain information herein, the issued share capital of the Company comprised 379,576,000 Shares.

If the Resolution No. 5 as set out in the Notice authorising the Directors to repurchase the Shares is passed at the forthcoming Annual General Meeting, and assuming that no new Shares are issued or repurchased prior to the date of passing the said resolution, based on the 379,576,000 Shares in issue as at the Latest Practicable Date, up to 37,957,600 Shares, representing 10% of the existing issued share capital of the Company, may be repurchased by the Company during the period from the date of passing the resolution and ending on the earliest of (i) the date of the next annual general meeting of the Company; (ii) the date by which the next annual general meeting of the Company is required to be held by the Articles of Association of the Company or applicable laws of the Cayman Islands and (iii) the date upon which the resolution is revoked or varied by the shareholders of the Company in general meeting.

2. REASONS FOR THE REPURCHASES

The Directors believe that it is in the best interests of the Company and its shareholders for the Directors to have a general authority from the Company’s shareholders to enable the Company to repurchase Shares in the market at any appropriate time. Such repurchase may, depending on market conditions and funding arrangements at that time, lead to enhancement of the net asset value of the Company and/or its earnings per Share and will only be made when the Directors believe that such repurchases will benefit the Company and its shareholders.

3. FUNDING OF REPRUCHASES

Repurchases must be funded out of funds legally available for the purpose in accordance with the Memorandum and Articles of Association of the Company, the GEM Listing Rules and the applicable laws of the Cayman Islands. The Company may not repurchase its Shares on GEM for a consideration other than cash or for settlement otherwise than in accordance with the trading rules of the Stock Exchange from time to time. The Directors propose that any repurchases of Shares under the Repurchase Mandate will be financed from the Company’s internal resources.

4. WORKING CAPITAL

There may be a material adverse impact on the working capital or gearing position of the Company (as compared with the position disclosed in the audited consolidated financial statements contained in the 2005 Annual Report) in the event that the proposed repurchase of Shares was to be carried out in full at any time during the proposed period mentioned in the above paragraph headed “Share capital”. However, the Directors expect to exercise such mandate if and to such extent only as they are satisfied that the exercise thereof will not have such a material adverse impact.

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EXPLANATORY STATEMENT

APPENDIX I

5. SHARE PRICES

The highest and lowest prices at which the Shares have traded on GEM of the Stock Exchange, prior to the Latest Practicable Date were as follows:

	Traded	prices
	Highest	Lowest
	HK$	HK$
2004
September	0.275	0.250
October	0.250	0.245
November	0.240	0.240
December	0.240	0.240
2005
January	0.240	0.240
February	0.245	0.240
March	0.241	0.228
April	0.230	0.228
May	0.227	0.225
June	0.225	0.210
July	0.206	0.172
August	0.172	0.130
September (up to the Latest Practicable Date)	0.140	0.110

6. CODE ON TAKEOVERS AND MERGERS

If as a result of a repurchase of the Shares, a shareholder’s proportionate interests in the voting rights of the Company increases, such increase will be treated as an acquisition for the purpose of Rule 32 of the Hong Kong Code on Takeovers and Mergers (the “ Takeovers Code ”). Accordingly, a shareholder or group of shareholders acting in concert could obtain or consolidate control of the Company and become obliged to make a mandatory offer in accordance with Rules 26 and 32 of the Takeovers Code. As at the Latest Practicable Date, Dr. Yeung Wah Hin, Alex, the chairman of the Company, (together with his spouse Mrs. Yeung Tsui Mai Ling, Margaret, also a Director) (collectively “ Yeungs ”), Town Health International Holdings Company Limited (“ Town Health ”) and The Applied Research Council (the “ ARC ”) beneficially held aggregate of 121,538,824 Shares (representing 32.02% of the existing issued share capital of the Company), 74,995,524 Shares (representing 19.76% of the existing issued share capital of the Company) and 46,596,000 Shares (representing 12.28% of the existing issued share capital of the Company) respectively, were the only substantial shareholders of the Company (as defined in the GEM Listing Rules) holding more than 10% of the issued share capital of the Company. Should the power to repurchase Shares pursuant to the Repurchase Mandate be exercised in full and assuming there is no change in the respective percentage shareholdings of Yeungs, Town Health and the ARC in the Company, Yeungs, Town Health and the ARC would then be beneficially interested in 35.58%, 21.95% and 13.64% of the issued share capital of the Company respectively. Such increase will give rise to Yeungs (but not to Town Health and the ARC) an obligation to make a mandatory offer under Rule 26 of the Takeovers Code.

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EXPLANATORY STATEMENT

APPENDIX I

Assuming that there is no issue of Shares or repurchase of Shares in the Company between the Latest Practicable Date and the date of a repurchase, an exercise of the Repurchase Mandate whether in whole or in part will not result in less than the relevant prescribed minimum percentage of the Shares of the Company being held by the public as required by the Stock Exchange. The Directors have no intention to exercise the Repurchase Mandate to an extent as may result in a public shareholding of less than such prescribed minimum percentage.

7. CONNECTED PERSONS

No connected person (as defined in the GEM Listing Rules) has notified the Company that it has a present intention to sell any of the Shares to the Company, or has undertaken not to do so, if the Repurchase Mandate is exercised.

8. UNDERTAKINGS OF THE DIRECTORS

None of the Directors or, to the best of their knowledge, having made all reasonable enquiries, their associates (as defined in the GEM Listing Rules) have any present intention to sell any of the Shares to the Company or its subsidiaries if the Repurchase Mandate is exercised.

The Directors have undertaken to the Stock Exchange that they will exercise the powers of the Company to make repurchases pursuant to the Repurchases Mandate in accordance with the GEM Listing Rules and the applicable laws of the Cayman Islands.

9. REPURCHASE MADE BY THE COMPANY

Details of share repurchases made by the Company in the previous six months are as follows:

Month of	Number of Shares	Price per share	Price per share
repurchase	repurchased	Highest	Lowest
		HK$	HK$
March 2005	3,000,000	0.241	0.238
June 2005	1,092,000	0.220	0.219
July 2005	3,500,000	0.207	0.178
	7,592,000

The above shares were cancelled upon repurchases and accordingly the issued share capital of the Company was reduced by the par value of these shares. The premium portion and brokerage expenses payable on the repurchases was charged against the share premium account of the Company.

The Directors have regard to the market price of the Company’s shares at the times of the repurchases and considered that the Company’s shares were undervalued in the market, so that it was the appropriate time to repurchase certain shares of the Company in order to support its share prices.

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DETAILS OF DIRECTORS PROPOSED TO BE RE-ELECTED AT THE ANNUAL GENERAL MEETING

APPENDIX II

The details of the Directors who will retire from office at the Annual General Meeting and being eligible, offer themselves for re-election at the Annual General Meeting, are set out below:

Mr. Cho Kam Luk , aged 70, is a former executive director of Town Health, a company listed on the GEM and the father of Dr. Cho Kwai Chee, the Chief Executive Officer of Town Health. Mr. Cho has over 40 years’ of experience in interior design, decoration and general management. Mr. Cho’s experience as a director of a medical company strengthens the Group’s business knowledge on the clinical aspects of the Group’s products and services. Mr. Cho’s advice plays an important role in the practical interactions of the Group’s products with the physicians. Mr. Cho has also actively participated in community activities and is currently serving as a director of Hong Kong Commerce and Industry Associations Limited, a treasurer of Hong Kong Shatin Industries and Commerce Association Limited, a consultant to Shatin Junior Police Call Farm and the vice-chairman of Shatin Livelihood Concern Group. Mr. Cho joined the Group on 8 August 2002. Other than Town Health and the Company, Mr. Cho did not hold directorship in other listed companies for the last three years. Town Health has been one of the initial management shareholders and substantial shareholders of the Company. As at the Latest Practicable Date, Town Health indirectly owns 74,995,524 shares representing 19.76% of issued share capital of the Company while Mr. Cho Kam Luk directly beneficially owns 0.03% of Town Health.

Saved as disclosed above, Mr. Cho Kam Luk does not have any other relationship with any other Directors, senior management, management shareholders or substantial shareholders or controlling shareholder of the Company (as defined in the GEM Listing Rules). In accordance with the meaning of Part XV of the Securities and Futures Ordinance (the “SFO”), as at the Latest Practicable Date, Mr. Cho Kam Luk was beneficially interested in share option of 1,111,111 shares of the Company.

Mr. Cho Kam Luk has entered into a service contract with the Company with a term of 2 years commencing on 18 June 2004, being the listing date of the Company on GEM (the “Listing Date”) and shall continue thereafter until terminated by either party giving to the other not less than three months’ prior written notice. Mr. Cho Kam Luk is entitled to the grant of options by the Company for subscribing the shares of the Company under the share option scheme (the “ Share Option Scheme ”) of the Company adopted on 20 April 2004 up to a maximum of value of HK$250,000 per annum each and such grant shall be made annually in arrears conditional upon the completion of each consecutive 12 months of employment with the Company. Except the share option of 1,111,111 shares of the Company granted as described above, Mr. Cho did not receive other directors’ fees.

Mr. Chan Po Kwong , aged 49, is a merchant for the past twenty years. He has been engaging in real estates business in Hong Kong and overseas. He has worked in key executive positions in different trades, services including retail and wholesale of importing products for Hong Kong, Asian countries and Mainland China. Mr. Chan has been a director of various companies with extensive experience in business restructuring, corporate financing and investments. He was also a former promoter for South China Industrial Inc. of Canada in 1993. Mr. Chan was appointed as an independent non-executive Director and a member of audit committee on 1 December 2004. Other than the Company, Mr. Chan did not hold directorship in other listed companies for the last three years.

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DETAILS OF DIRECTORS PROPOSED TO BE RE-ELECTED AT THE ANNUAL GENERAL MEETING

APPENDIX II

Mr. Chan Po Kwong does not have any relationship with any other Directors, senior management, management shareholders or substantial shareholders or controlling shareholder of the Company (as defined in the GEM Listing Rules). In accordance with the meaning of Part XV of the SFO, as at the Latest Practicable Date, Mr. Chan Po Kwong had no interests in shares of the Company.

Mr. Chan Po Kwong has been appointed as an independent non-executive Director for a term of 2 years commencing on 1 December 2004. The appointment is subject to retirement by rotation and other related provisions as stipulated in the Articles of Association of the Company. Mr. Chan Po Kwong is entitled to the grant of options by the Company for subscribing the shares of the Company under the Share Option Scheme up to a maximum of value of HK$300,000 per annum each and such grant shall be made annually in arrears conditional upon the completion of each consecutive 12 months of employment with the Company. Except the share option to be granted to Mr. Chan after his completion of 12 months of services as described above, Mr. Chan did not receive any directors’ fees since his appointment.

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