Grand Pharmaceutical Group Limited — Proxy Solicitation & Information Statement 2003

Apr 30, 2003

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your shares in MAXX Bioscience Holdings Limited , you should at once hand this circular to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or the transferee.

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

MAXX BIOSCIENCE HOLDINGS LIMITED 曼盛生物科技集團有限公司

(incorporated in Bermuda with limited liability)

Executive Directors: LO Yuk Yee (Chairman) ZANG Jing Wu CAO Wu HE Jin Hong

Registered Office: Clarendon House Church Street Hamilton HM 11 Bermuda

Independent Non-Executive Directors: HO Kwok Wah, George YUEN Kin

Principal Place of Business: Room 3802, Wu Chung House 213, Queen’s Road East Wanchai Hong Kong

28th, April 2003

To the shareholders

Dear Sir or Madam

GENERAL MANDATE TO REPURCHASE SHARES EXPLANATORY STATEMENT

INTRODUCTION

Pursuant to a resolution of the shareholders of the Company passed on 23rd May, 2002, a general mandate was granted to the Directors to exercise all powers of the Company to purchase shares in the capital of the Company (the “Shares”). Such mandate will lapse at the conclusion of the forthcoming annual general meeting of the Company and the Directors propose to seek your approval to renew such mandate.

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In accordance with the Rules Governing the Listing of Securities (the “Listing Rules”) on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”), the Company is required to send to shareholders an explanatory statement containing all the information reasonably necessary to enable shareholders to make an informed decision on whether to vote for or against the above-mentioned mandate. The purpose of this explanatory statement is to set out such information. This explanatory statement also constitutes the memorandum required under Section 49BA(3) of the Companies Ordinance (Cap 32 of the laws of Hong Kong) (the “Ordinance”).

THE SHARE REPURCHASE MANDATE

Whilst the Directors do not presently intend to repurchase any Shares, they believe that the flexibility afforded by the mandate granted to them if the Ordinary Resolution 4(II)A set out in the notice of the forthcoming annual general meeting of the Company (the “Share Repurchase Mandate”) is passed would be beneficial to the Company and its shareholders. Trading conditions on the Stock Exchange have sometimes been volatile in recent years and if there are occasions in the future when Shares are trading at a discount to their underlying value, the ability of the Company to repurchase Shares can be beneficial to those shareholders who retain their investment in the Company since this may, depending on market conditions and funding arrangements at the time, lead to an enhancement of the net assets and/or earnings per Share. Furthermore, the Director’s exercise of the Share Repurchase Mandate may lead to an increased volume of trading in the Shares, and therefore enhance liquidity in the Shares, on the Stock Exchange. Based on the 1,181,430,000 Shares in issue as at 24th April, 2003 (the latest practicable date prior to the printing of this explanatory statement), the Company would be allowed under the Share Repurchase Mandate to repurchase a maximum of 118,143,000 Shares.

SOURCE OF FUNDS

The Directors propose that a repurchase of Share under the Share Repurchase Mandate would be financed from the Company’s internal resources.

In repurchasing Shares, the Company may only apply funds legally available for such purpose in accordance with the memorandum of association and bye-laws of the Company and the applicable laws of Bermuda and Hong Kong. In particular, the Companies Act 1981 of Bermuda provides that repurchases of Shares may only be made out of distributable profits of the Company or out of the proceeds of a fresh issue of Shares made for the purposes of such repurchases.

Whilst the Share Repurchase Mandate, if exercised in full, may have a material adverse impact on the working capital or gearing position of the Company, as compared with the position disclosed in the Company’s audited accounts for the year ended 31st December 2002, 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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DISCLOSURE OF INTERESTS

The Directors have undertaken to the Stock Exchange to exercise the power of the Company to make purchases pursuant to the Share Repurchase Mandate in accordance with the Listing Rules, the regulations set out in the memorandum of association and bye-laws of the Company and the applicable laws of Bermuda and Hong Kong.

None of the Directors nor, to the best of their knowledge having made all reasonable enquiries, any of their associates presently intend to sell Shares to the Company under the Share Repurchase Mandate in the event that the mandate is granted by the shareholders.

The Company has not been notified by any connected persons of the Company (as defined in the Listing Rules) that they have a present intention to sell any Shares held by them to the Company, or that they have undertaken not to sell any Shares held by them to the Company, in the event that the Share Repurchase Mandate is granted by the shareholders.

SHARE PRICES

The highest and lowest traded market prices for Shares recorded on the Stock Exchange during each of the twelve months before the printing of this document were as follows:

	Traded	Market Price
	Highest	Lowest
	HK$	HK$
2002:
April	0.2360	0.2120
May	0.4550	0.2100
June	0.3900	0.2500
July	0.3600	0.2200
August	0.2400	0.1680
September	0.2230	0.1750
October	0.2120	0.1740
November	0.1850	0.1570
December	0.1640	0.1380
2003:
January	0.2370	0.1350
February	0.1900	0.1200
March	0.1560	0.1090

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TAKEOVER CODE

If on the exercise of the power to repurchase Shares pursuant to the Share Repurchase Mandate, a shareholder’s proportionate interest in the voting rights of the Company increases, such increase will be treated as an acquisition for the purposes of Rules 32 of the Hong Kong Code on Takeovers and Mergers (the “Takeover Code”). As a result, 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 Takeover Code.

As at 24th April, 2003 (the latest practicable date prior to the printing of this explanatory statement), the controlling shareholder, Vision Ocean Investments Limited held 35.15% of the voting rights attaching to the issued share capital of the Company.

In the event that the Directors exercise in full the power to repurchase Shares which is proposed to be granted pursuant to the Repurchase Mandate, the aggregate shareholding of Vision Ocean Investments Limited would be increased to approximately 39.06% of the issued share capital of the Company and such increase would give rise to an obligation to make a mandatory offer under Rule 26 of the Takeover Code. However, the Directors have no current intention to exercise the repurchase mandate to such an extent as would give rise to this situation.

SHARE REPURCHASES MADE BY THE COMPANY

No repurchases of Shares have been made by the Company since the Shares were listed on 19th December, 1995 (whether on the Stock Exchange or otherwise).

RECOMMENDATION

The Directors believe that the proposal to grant them the Share Repurchase Mandate is in the interests of the Company and its shareholders and accordingly recommend you to vote in favour of all the relevant resolutions to be proposed at the forthcoming Annual General Meeting.

Yours faithfully Lo Yuk Yee Chairman

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