Grand Pharmaceutical Group Limited — Proxy Solicitation & Information Statement 2021

Sep 13, 2021

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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.

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 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 China Grand Pharmaceutical and Healthcare Holdings Limited (the ‘‘Company’’), you should at once hand this circular and the accompanying form of proxy to the purchaser or the transferee or to the bank, stockbroker or other agent through whom the sale was effected for transmission to the purchaser or transferee.

This circular appears for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for the securities mentioned herein.

==> picture [68 x 37] intentionally omitted <==

CHINA GRAND PHARMACEUTICAL AND HEALTHCARE HOLDINGS LIMITED 遠大醫藥健康控股有限公司 [*]

(Incorporated in Bermuda with limited liability)

(Stock Code: 00512)

CONNECTED TRANSACTION

AMENDED TOTAL RETURN SWAP TRANSACTION WITH NATIXIS

Independent Financial Adviser to

the Independent Board Committee and the Independent Shareholders

==> picture [116 x 53] intentionally omitted <==

Capitalised terms used in this cover page shall have the same meanings as those defined in the section headed ‘‘Definitions’’ of this circular.

A letter from the Board is set out on pages 5 to 17 of this circular. A letter of advice from the Independent Board Committee is set out on pages 18 to 19 to this circular. A letter of advice from the Independent Financial Adviser containing its opinion and advice to the Independent Board Committee and the Independent Shareholders is set out on pages 20 to 37 of this circular.

A notice convening the SGM to be held at Unit 3302, The Center, 99 Queen’s Road Central, Hong Kong on Thursday, 30 September 2021 at 11:15 a.m. is set out on pages 41 to 43 of this circular.

A form of proxy for use at the SGM is enclosed with this circular. Whether or not you are able to attend the SGM, you are requested to complete the enclosed form of proxy in accordance with the instructions printed thereon and return the same to the Company’s branch share registrar and transfer office in Hong Kong, Computershare Hong Kong Investor Services Limited at Shops 1712–1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong as soon as possible and in any event not later than 48 hours before the time appointed for holding the SGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the SGM or any adjournment thereof should you so wish.

PRECAUTIONARY MEASURES FOR THE SGM

Please see page ii of this circular for measures being taken to try to prevent and control the spread of the Coronavirus at the SGM, including:

. compulsory temperature check and health declaration . mandatory wearing of face mask . prohibit attendance at the SGM if the attendee has a fever. Persons exhibiting flu-like symptoms may also be refused admittance . prohibit attendance at the SGM if the attendee is subject to any prescribed quarantine by the Hong Kong Government or has close contact with any person under quarantine

• . no distribution of corporate gift and/or refreshments served at the SGM

Any person who does not comply with these precautionary measures may be denied entry into the SGM venue. The Company encourages attendees (even without flu-like symptoms) to wear surgical masks and reminds Shareholders that they may vote by proxy or appoint the chairman of the meeting as their proxy to vote on the relevant resolutions at the SGM as an alternative to attending the SGM in person.

• For identification purpose only

13 September 2021

CONTENTS

		Page
Precautionary Measures for the SGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		ii
Definitions	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from	the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Letter from	the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	18
Letter from	the Independent Financial Adviser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	20
Appendix	— General information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	38
Notice of SGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		41

– i –

PRECAUTIONARY MEASURES FOR THE SGM

In view of the Coronavirus Disease 2019 (‘‘COVID-19’’) situation, the Company will be taking the following precautionary measures at the SGM:

• . All attendees will be required to undergo a temperature check and sign a health declaration form before entering the SGM venue.

• . Every attendee is required to wear a face mask at any time within the SGM venue.

• . Any person who has a fever will not be permitted to attend the SGM. Persons exhibiting flu-like symptoms may also be refused admittance at the Company’s discretion.

• . Any person who is subject to any prescribed quarantine by the Hong Kong Government or has close contact with any person under quarantine will be denied entry into or be required to leave the SGM venue at the Company’s discretion.

• . There will be no distribution of corporate gift and/or refreshments at the SGM.

Shareholders who are feeling unwell or have been placed on leave of absence on the date of the SGM are advised not to attend the SGM.

Shareholders who prefer not to attend or are restricted from attending the SGM, may still vote by proxy or appoint the chairman of the SGM as their proxy to vote on the relevant resolutions and are advised to take note of the last date and time for the lodgement of the Proxy Form.

As the COVID-19 situation continues to evolve, the Company will closely monitor the situation and reserves the right to take further measures as appropriate in order to minimize any risk to Shareholders and others attending the SGM and to comply with any requirements or recommendations of any government agencies from time to time.

The Company seeks the understanding and cooperation of all Shareholders to minimize the risk of community spread of COVID-19.

The SGM will commence sharply at 11:15 a.m, and Shareholders are encouraged to arrive at the SGM venue at least half an hour prior to the meeting commencement time to avoid delays from precautionary measures mentioned above in the registration process.

– ii –

DEFINITIONS

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

• ‘‘Amended and Restated Shareholders Agreement’’

• the shareholders’ agreement entered into between Grand Decade, Natixis and CDH Genetech on 1 July 2021 to govern the relationship among the parties as shareholders of Sirtex HoldCo, as amended and restated in accordance with an amendment agreement between Grand Decade, Natixis and CDH Genetech dated 11 August 2021

• ‘‘Amended and Restated TRS Agreement’’

• the Original TRS Agreement as amended and restated by an amended and restated confirmation dated 11 August 2021, pursuant to which the parties confirmed the terms and conditions of the Amended TRS Transaction

• ‘‘Amended TRS Transaction’’

• the total return swap transaction under the Amended and Restated TRS Agreement

• ‘‘associate(s)’’

• has the meaning ascribed to it under the Listing Rules

• ‘‘Board’’

• the Board of Directors

• ‘‘CDH Genetech’’

• CDH Genetech Limited, a company incorporated in the Cayman Islands with limited liability

• ‘‘Company’’

• China Grand Pharmaceutical and Healthcare Holdings Limited* (遠 大 醫藥 健康 控股 有限 公司 ), a company incorporated in Bermuda with limited liability, the issued Shares of which are listed on the Stock Exchange

• ‘‘connected person(s)’’

• has the meaning ascribed to it under the Listing Rules

• ‘‘Director(s)’’

• the director(s) of the Company

• ‘‘First Natixis’ Subscription’’

• the subscription of 42,352,325 Sirtex HoldCo Shares for a consideration of US$50 million by Natixis pursuant to the First Subscription Agreement

• ‘‘First Subscription Agreement’’ the subscription agreement dated 1 July 2021 and entered into between Grand Decade and Natixis as subscribers and Sirtex HoldCo as issuer in relation to the Grand Decade’s Subscription and the First Natixis’ Subscription

• ‘‘Grand Decade’’

• Grand Decade Developments Limited, a limited company incorporated under the laws of the British Virgin Islands and a wholly-owned subsidiary of the Company

– 1 –

DEFINITIONS

• ‘‘Grand Decade’s Subscription’’

• ‘‘Group’’

• ‘‘Hong Kong’’

• ‘‘Independent Board Committee’’

• ‘‘Independent Financial Adviser’’

• ‘‘Independent Shareholders’’

• ‘‘Latest Practicable Date’’

• ‘‘Listing Rules’’

• ‘‘Natixis’’

• ‘‘Original TRS Agreement’’

• the subscription of 84,704,650 Sirtex HoldCo Shares for a consideration of US$100 million by Grand Decade pursuant to the First Subscription Agreement

• the Company and its subsidiaries

• the Hong Kong Special Administrative Region of the People’s Republic of China

• an independent board committee of the Board consisting of all independent non-executive Directors, namely Ms. So Tosi Wan, Winnie, Dr. Pei Geng and Mr. Hu Yebi, established for the purpose of advising the Independent Shareholders as to the fairness and reasonableness of the Amended and Restated TRS Agreement and the transactions contemplated thereunder

• Rainbow Capital (HK) Limited, a corporation licensed under the SFO to carry out Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities, the independent financial adviser appointed by the Company to advise the Independent Board Committee and the Independent Shareholders in relation to the Amended TRS Transaction

• Shareholders other than those who are connected to or otherwise interested in the Amended and Restated TRS Agreement

• 8 September 2021, being the latest practicable date prior to the printing of this circular for the purpose of ascertaining certain information contained herein

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

• Natixis, incorporated in France and the liability of its members is limited

• a confirmation dated 1 July 2021 made between the Company and Natixis which supplements, forms a part of, and is subject to, a 2002 ISDA master agreement between the Company and Natixis deemed to be entered into between the Company and Natixis on 1 July 2021, pursuant to which the parties confirmed the terms and conditions of the Original TRS Transaction

– 2 –

DEFINITIONS

• ‘‘Original TRS Transaction’’ the total return swap transaction under the Original TRS Agreement

• ‘‘Second Natixis’ Subscription’’ the Subscription of 42,352,325 Sirtex HoldCo Shares for a consideration of US$50 million by Natixis pursuant to the Second Subscription Agreement

• ‘‘Second Subscription the subscription agreement dated 11 August 2021 and Agreement’’ entered into between Natixis as subscriber and Sirtex HoldCo as issuer in relation to the Second Natixis’ Subscription

• ‘‘SFO’’ the Securities and Future Ordinance (Chapter 571 of the Laws of Hong Kong), as amended from time to time

• ‘‘SGM’’ the special general meeting of the Company to be convened to consider and, if thought fit, approve the Amended and Restated TRS Agreement and the transactions contemplated thereunder

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

• ‘‘Shareholder(s)’’ holder(s) of the Share(s)

• ‘‘Sirtex’’ Sirtex Medical Pty Limited (formerly known as Sirtex Medical Limited), a company incorporated in Australia with limited liability and is wholly-owned by Sirtex BidCo

• ‘‘Sirtex BidCo’’ Grand Pharma Sphere (Australia Bidco) Pty Ltd., a company incorporated with limited liability under the laws of Australia and is wholly-owned by Sirtex HoldCo

• ‘‘Sirtex HoldCo’’

• Grand Pharma Sphere Pte Ltd., a company incorporated under the laws of the Republic of Singapore with limited liability, which is owned as to approximately 44.88% by CDH Genetech, approximately 51.12% by Grand Decade and approximately 4.00% by Natixis as at the Latest Practicable Date

• ‘‘Sirtex HoldCo Shares’’ the ordinary shares of Sirtex HoldCo

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

• ‘‘subsidiary(ies)’’ has the meaning ascribed to it under the Listing Rules

– 3 –

DEFINITIONS

‘‘Transaction Documents’’

including the Second Subscription Agreement, the Amended and Restated TRS Agreement, the Amended and Restated Shareholders Agreement and any other document, certificate, and agreement delivered in connection with the transactions under the Second Subscription Agreement and the Amended and Restated TRS Agreement

‘‘HK$’’ Hong Kong dollars, the lawful currency of Hong Kong

‘‘US$’’ United States dollar, the lawful currency of the United States of America

‘‘%’’ per cent.

In this circular:

• (1) the English names of PRC nationals, entities, facilities and localities are unofficial translation or transliteration from their Chinese names and are for identification purposes only.

– 4 –

LETTER FROM THE BOARD

==> picture [68 x 37] intentionally omitted <==

CHINA GRAND PHARMACEUTICAL AND HEALTHCARE HOLDINGS LIMITED 遠大醫藥健康控股有限公司[*]

(Incorporated in Bermuda with limited liability)

(Stock Code: 00512)

Executive Directors: Dr Tang Weikun (Chairman) Dr Shao Yan Dr Niu Zhanqi Dr Shi Lin Independent non-executive Directors: Ms So Tosi Wan, Winnie Dr Pei Geng Mr Hu Yebi

Registered office: Clarendon House 2 Church Street Hamilton HM11 Bermuda

Head office and principal place of business in Hong Kong: Unit 3302, The Center 99 Queen’s Road Central Hong Kong

13 September 2021

To the Shareholders

Dear Sir or Madam,

CONNECTED TRANSACTION

AMENDED TOTAL RETURN SWAP TRANSACTION WITH NATIXIS

INTRODUCTION

Reference is made to the announcements of the Company dated 2 July 2021 and 11 August 2021.

On 1 July 2021, (i) Grand Decade had entered into the First Subscription Agreement with Natixis and Sirtex HoldCo in relation to the Grand Decade’s Subscription and the First Natixis’ Subscription; and (ii) the Company had entered into the Original TRS Agreement with Natixis, pursuant to which, among other things, Natixis shall pass through to the Company the full economic exposure to the Sirtex HoldCo Shares acquired by Natixis pursuant to the First Natixis’ Subscription. The Grand Decade’s Subscription and the Original TRS Transaction constitute connected transactions of the Group and was subject to reporting and announcement requirements but exempt from circular and independent shareholders’ approval requirements as set out in Chapter 14A of the Listing Rules as one or more of the applicable percentage ratios (as defined in Rule 14.07 of the Listing Rules) in respect of the Grand Decade’s Subscription and the Original TRS Transaction exceed 0.1% but all applicable percentage ratios are less

• For identification purposes only

– 5 –

LETTER FROM THE BOARD

than 5%. The First Subscription Agreement has been completed on 28 July 2021 and Sirtex HoldCo is owned as to approximately 44.88% by CDH Genetech, approximately 51.12% by Grand Decade and approximately 4.00% by Natixis as at the Latest Practicable Date.

On 11 August 2021, (i) Natixis had entered into the Second Subscription Agreement with Sirtex HoldCo in relation to the Second Natixis’ Subscription; and (ii) the Company had entered into the Amended and Restated TRS Agreement with Natixis, pursuant to which, among other things, the Original TRS Agreement shall be amended and restated and Natixis shall pass through the full economic exposure to the Sirtex HoldCo Shares acquired pursuant to the First Natixis’ Subscription and the Second Natixis’ Subscription to the Company. The Amended TRS Transaction with Natixis constitutes a connected transaction of the Group which is subject to reporting, announcement, circular and independent shareholders’ approval requirements under Chapter 14A of the Listing Rules.

The purpose of this circular is to provide you with, among other things, (i) further details in relation to the Amended TRS Transaction; (ii) the recommendation from the Independent Board Committee to the Independent Shareholders in respect of the Amended TRS Transaction; (iii) the letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders; and (iv) a notice of the SGM and the form of proxy.

AMENDED TRS TRANSACTION

For the avoidance of doubt, Natixis is involved as part of a financing arrangement and Natixis is not acting as a traditional private equity investor in relation to the Transaction Documents and the transactions contemplated thereby.

With effect from (and including) the Amendment and Restatement Effective Date (as defined below), subject to the approval by the Independent Shareholders in the SGM, the Original TRS Agreement shall be amended and restated in its entirety on the terms set forth in the Amended and Restated TRS Agreement.

The principal terms of the Amended TRS Transaction are as follows:

Original Effective Date: The date on which Natixis pays its subscription amount in accordance with the First Subscription Agreement (the ‘‘Original Effective Date’’) Amendment and Restatement The date on which Natixis pays its subscription Effective Date: amount in accordance with the Second Subscription Agreement (the ‘‘Amendment and Restatement Effective Date’’), subject to the satisfaction of the conditions precedent and other terms under the Amended and Restated TRS Agreement Parties: (i) The Company (ii) Natixis

– 6 –

LETTER FROM THE BOARD

Equity Notional Amount:

The number of the Total Underlying Shares (as defined below) on any day multiplied by the subscription price per Sirtex HoldCo Share for the First Natixis’ Subscription, i.e. approximately US$1.18 per Sirtex HoldCo Share (the ‘‘Equity Notional Amount’’) As at the Latest Practicable Date, the Equity Notional Amount equals to approximately US$100 million.

• Termination Date: (i) If an initial public offering does not occur by a cut-off date according to the Amended and Restated TRS Agreement for Sirtex HoldCo or Sirtex BidCo or any entity formed that directly or indirectly holds all or substantially all of the shares of Sirtex BidCo, a maximum of 48 calendar months after the Original Effective Date subject to the terms and conditions under the Amended and Restated TRS Agreement; and

• (ii) If an initial public offering occurs before a cutoff date according to the Amended and Restated TRS Agreement for Sirtex HoldCo or Sirtex BidCo or any entity formed that directly or indirectly holds all or substantially all of the shares of Sirtex BidCo, a maximum of 24 calendar months after the date of the initial public offering subject to the terms and conditions under the Amended and Restated TRS Agreement.

(the ‘‘Termination Date’’)

• Underlying Shares: (i) From (and including) the Original Effective Date to (but excluding) the Amendment and Restatement Effective Date, the 42,352,325 Sirtex HoldCo Shares subscribed by Natixis under the First Subscription Agreement (the ‘‘Initial Underlying Shares’’), whether or not fully paid up, minus the aggregate number of the Sirtex HoldCo Shares of which Natixis has disposed of in accordance with and subject to the terms and conditions under the Amended and Restated TRS Agreement;

– 7 –

LETTER FROM THE BOARD

• (ii) From (and including) the Amendment and Restatement Effective Date, the total of the Initial Underlying Shares plus 42,352,325 Sirtex HoldCo Shares subscribed by Natixis under the Second Subscription Agreement, whether or not fully paid up, minus the aggregate number of the Sirtex HoldCo Shares of which Natixis has disposed of in accordance with and subject to the terms and conditions under the Amended and Restated TRS Agreement (the ‘‘Total Underlying Shares’’).

As at the Latest Practicable Date, the number of Total Underlying Shares is 84,704,650.

Lock-up period:

Subject to the terms and conditions of the Amended and Restated TRS Agreement, Natixis shall not at any time (i) during the period from and including the Original Effective Date to and excluding the date falling 24 calendar months after the Original Effective Date; or (ii) if an initial public offering occurs, the period from and including the date of the initial public offering to and excluding the date falling 6 calendar months after the date of the initial public offering, dispose of or otherwise deal in or transfer any Total Underlying Shares to any person other than by way of a transfer to an affiliate of Natixis or otherwise agreed by the Company or in the context of a technical restructuring in preparation for the initial public offering.

– 8 –

LETTER FROM THE BOARD

Grant of options:

Subject to the terms of the Amended and Restated TRS Agreement, Natixis grants to the Company a call option (the ‘‘Call Option’’) pursuant to which the Company may call for the transfer and/or payment to it (as applicable) of the Total Underlying Shares and any sale proceeds from the sale of the Total Underlying Shares by Natixis. The Call Option may be exercised by the Company upon occurrence of (i) any events of default including failure to pay or deliver, breach or repudiation of any agreement, default under any credit support arrangement, cross default or merger without assumption; (ii) any termination events including any illegality events, force majeure events, tax event or any tax or credit event upon a merger; and (iii) any extraordinary events including any merger events, tender offers, nationalisation or insolvency of the parties which will lead to cancellation of the Amended TRS Transaction.

Subject to the terms of the Amended and Restated TRS Agreement, the Company grants to Natixis a put option (the ‘‘Put Option’’) pursuant to which Natixis may, but is not obliged to, transfer to the Company any Total Underlying Shares for the time being held by Natixis in consideration for the payment by the Company of US$1 (provided that the Company may, in its discretion, waive or defer the payment of the US$1). Natixis may exercise the Put Option at any time subject to the conditions as provided under the Amended and Restated TRS Agreement.

Floating rate payments:

Subject to the terms and conditions of the Amended and Restated TRS Agreement, the Company shall pay a floating amount to Natixis, on a semi-annual basis, calculated with reference to the Equity Notional Amount at the USD-LIBOR-BBA for a designated maturity of 6 months (subject to a minimum of zero) plus a spread of 2.5% per annum (for the first two years) or 4.5% per annum (for the period after the first two years).

– 9 –

LETTER FROM THE BOARD

The floating rate was determined and agreed between the Company and Natixis after arms’ length negotiations and with reference to the structure of the Amended TRS Transaction, the estimated reasonable return to Natixis in entering into the Amended TRS Transaction, the credibility of the Company and the business prospects of Sirtex and Sirtex HoldCo.

Total return swap arrangements:

Natixis shall, subject to the terms and conditions and the relevant lock up periods under the Amended and Restated TRS Agreement, dispose of the Total Underlying Shares (i) by selling the Total Underlying Shares to other third party purchasers; (ii) through private auction process; or (iii) through trading in the stock market if an initial public offering occurs (the ‘‘Disposal’’).

If the amount of the proceeds from the Disposal is higher than the initial subscription price of the First Natixis’ Subscription and the Second Natixis’ Subscription, i.e. US$100 million, Natixis shall pay the Company the difference on the Termination Date or other relevant settlement payment dates subject to the terms and conditions under the Amended and Restated TRS Agreement.

If the amount of the proceeds from the Disposal is lower than the initial subscription price of the First Natixis’ Subscription and the Second Natixis’ Subscription, i.e. US$100 million, the Company shall pay Natixis the difference on the Termination Date or other relevant settlement payment dates subject to the terms and conditions under the Amended and Restated TRS Agreement.

Any Total Underlying Shares not disposed of by Natixis as at the relevant Termination Date shall be deemed to have been disposed of with zero consideration.

– 10 –

LETTER FROM THE BOARD

Under the relevant terms and conditions of the Amended and Restated TRS Agreement and the Amended and Restated Shareholders Agreement, any third party purchasers under a private sale of the Total Underlying Shares shall be agreed upon by the Company and for private auction process, the Total Underlying Shares shall be sold to the potential purchaser who has made the highest offer where the Company is permitted to submit an offer in respect of the Total Underlying Shares as any other potential purchasers. Natixis will therefore use its best endeavors commercially to complete the Disposal and in any case the Company will be able to acquire the Total Underlying Shares with a maximum cost of US$100 million plus the floating rate payment.

Amended and Restated Shareholders Agreement

In contemplation of the Second Subscription Agreement and the Amended and Restated TRS Agreement and the transactions thereunder, Grand Decade, Natixis and CDH Genetech, being the shareholders of Sirtex HoldCo after completion of the First Subscription Agreement and the Second Subscription Agreement, also entered into the Amended and Restated Shareholders Agreement on 11 August 2021 as part of the Transaction Documents to govern the relationship among the parties as shareholders of Sirtex HoldCo and set forth their respective rights and obligations in relation to Sirtex HoldCo, including but not limited to, the business, information and inspection rights, board of directors, meeting and voting of the shareholders, restriction on transfer and other rights as shareholders of Sirtex HoldCo, etc.

INFORMATION ON SIRTEX HOLDCO

Sirtex HoldCo, together with Sirtex BidCo, are the special purpose vehicles established for the acquisition of Sirtex by the Group and CDH Genetech in 2018.

Sirtex is an Australian-based global life-sciences company that generates revenue through the sale of SIR-Spheres, a targeted radiation therapy for late stage liver cancer. Sirtex’s SIRSpheres have been supplied to over 40 countries with revenue primarily generated in the United States.

For details of the acquisition of Sirtex, please refer to the announcements published by the Company on 14 June 2018, 10 September 2018 and 20 September 2018.

As at the Latest Practicable Date, Sirtex is wholly-owned by Sirtex BidCo, which in turn is wholly-owned by Sirtex HoldCo. Sirtex HoldCo is owned as to approximately 44.88% by CDH Genetech, approximately 51.12% by Grand Decade and approximately 4.00% by Natixis. Upon completion of the Second Subscription Agreement, Sirtex HoldCo will be owned as to approximately 43.15% by CDH Genetech, approximately 49.15% by Grand Decade and approximately 7.70% by Natixis.

– 11 –

LETTER FROM THE BOARD

As Grand Decade will be entitled to appoint only one out of the three directors of Sirtex HoldCo and all decisions of the board of directors of Sirtex HoldCo shall require approval from at least two directors under the Amended and Restated Shareholders Agreement, Grand Decade will not have control over the operations and financial management of Sirtex HoldCo after completion of the First Subscription Agreement and the Second Subscription Agreement for the purpose of the Hong Kong Financial Reporting Standards. Accordingly, the financial results of Sirtex HoldCo and its subsidiaries will not be consolidated into the financial statements of the Company and Sirtex HoldCo and its subsidiaries will continue to be classified as associates of the Company after completion of the First Subscription Agreement and the Second Subscription Agreement (save for being connected persons of the Company under Chapter 14A of the Listing Rules).

Set out below is the audited consolidated financial information of Sirtex HoldCo prepared in accordance with Hong Kong Financial Reporting Standards for the two years ended 31 December 2020:

		For the	For the
		year ended	year ended
		31 December	31 December
		2019	2020
		HK$’000	HK$’000
		(audited)	(audited)
Net	loss before tax	327,535	132,049
Net	loss after tax	250,062	94,829
Net	assets	5,669,424	6,818,972

INFORMATION ON NATIXIS

Natixis is a multinational financial services firm incorporated in France. It specialises in asset & wealth management, corporate & investment banking, insurance and payments. Natixis has over 16,000 employees across 36 countries, and its clients include corporations, financial institutions, sovereign and supranational organizations, as well as customers of Groupe BPCE’s networks.

Natixis is a wholly-owned subsidiary of Groupe BPCE, the second-largest banking group in France. Groupe BPCE has based its organisation around 4 core business lines in France and internationally, which include retail banking and insurance, asset & wealth management, corporate and investment banking and payments.

Groupe BPCE is ultimately owned by 9 million cooperative shareholders, who collectively own 100% of the capital of the Banque Populaires and Caisses d’Epargne via cooperatives shares. The Banque Populaires and Caisses d’Epargne each own 50% of the capital of Groupe BPCE.

– 12 –

LETTER FROM THE BOARD

INFORMATION ON THE COMPANY

The Company is the holding company of the Group which is listed on the Main Board of the Stock Exchange. The Group is an international pharmaceutical company of technological innovation, mainly engaged in the research and development of innovative drugs, manufacturing and sales of pharmaceutical preparations, pharmaceutical intermediates, specialised pharmaceutical raw materials and healthcare products. The core products of the Group cover the anti-tumor, cardiovascular emergency pharmaceutical products and advanced cerebro-cardiovascular intervention advanced medical devices, anti-virus and anti-infection, respiratory and ENT, bio-health products and specialised pharmaceutical ingredients. The Group has mainly focused on four business scopes, namely ‘‘innovative drugs with high entry barriers’’, ‘‘branded drugs’’, ‘‘integration of raw materials’’ and ‘‘nutrition products’’. There are three major segments of global innovation and technology leadership, namely precision interventional diagnosis and treatment, radionuclide-drug conjugate (RDC) and immunotherapy, to be carried out with a forward-looking view by the Group.

REASONS FOR AND BENEFITS OF THE AMENDED TRS TRANSACTION

As mentioned in the announcement of the Company dated 2 July 2021 in relation to the First Subscription Agreement and the Original TRS Agreement, it is the Group’s strategy to invest further into the field of precision interventional oncology and continue to grow Sirtex’s existing global business and fully utilise the great potential of SIR-Spheres®Y-90 resin microspheres in China. The Amended TRS Transaction will allow the Company to maintain the full economic exposure to the additional Sirtex HoldCo Shares acquired by Natixis pursuant to the Second Natixis’ Subscription without paying the full consideration at once.

The Board has also considered other financing or alternatives such as acquiring the Sirtex HoldCo Shares directly. As opposed to acquiring the Sirtex HoldCo Shares directly, the Amended TRS Transaction will allow the Company to participate in the re-financing of Sirtex without immediate cash outflow or worsening of the Company’s gearing ratio in the event where the Company borrows money to pay for the consideration of directly investing in the Sirtex HoldCo Shares. The Amended TRS Transaction will also allow the Company to achieve financial leverage by using an external funding source to invest in the business operations of Sirtex and shift the payment obligation to Natixis.

The Directors also conducted a cost and benefit analysis with calculation of the floating rate payment amount under the Amended TRS Transaction as compared to the interest rate payment amount to be paid by the Company in the event the Company borrows money for direct investment in the Sirtex HoldCo Shares. Assuming the transactions period is 48 calendar months, the floating rate amount will be approximately US$14.6 million and the interest rate payment amount will be approximately US$17.3 million based on the historical weighted average borrowing rate of the Group between 2018–2020. It is concluded that by entering into the Amended TRS Transaction, the Company will be able to incur lower financial cost than a direct investment and at the same time maintain the same level of cash balance and gearing ratio.

– 13 –

LETTER FROM THE BOARD

The Directors note that there will be uncertainty on the market value of the Sirtex HoldCo Shares in the future and under the total return swap arrangement, the Company will be required to pay Natixis on the Termination Date or other relevant settlement payment dates the difference if the amount of the proceeds from the Disposal by Natixis is lower than the initial subscription price of US$100 million of the Sirtex HoldCo Shares acquired by Natixis. The Company will also have no title to the Total Underlying Shares throughout the period of the Amended TRS Transaction. However, due to the reasons that (i) as mentioned under the principal terms of the Amended TRS Transaction above, the Company shall have control over the potential purchasers of the Total Underlying Shares for a private sale and under the private auction process the Company will be able to purchase the Total Underlying Shares with the highest offer, Natixis will use its best endeavors commercially to complete the Disposal and in any event the Company will be able to acquire the Total Underlying Shares with a maximum cost of US$100 million plus any floating rate payable to Natixis; (ii) the business of Sirtex is expected to prosper in the coming years given the expected approval for launch of its main product at the end of 2021 in China as disclosed in the Company’s annual report and the market value of the Sirtex HoldCo Shares is expected to rise; (iii) taking into account the floating rate payments to be made by the Company to Natixis, the financial cost incurred from the Amended TRS Transaction would be lower than that of a direct acquisition of the Sirtex HoldCo Shares by borrowing money for payment of the full consideration; and (iv) the Amended TRS Transaction with Natixis will enable the Group to build up business connections with Natixis which is a multi-national financial services firm and is beneficial to the future business operation of the Group, the Directors believe that the Amended TRS Transaction is more commercially favourable to the Company than acquiring the Sirtex HoldCo Shares directly.

In light of the above reasons, the Directors (excluding the independent non-executive Directors, whose views are set out in the section headed ‘‘Letter from the Independent Board Committee’’ in this circular) consider that the terms and conditions of the Amended and Restated TRS Agreement, including the floating rate, were arrived at after arms’ length negotiations between the relevant parties, are on normal commercial terms and are fair and reasonable, and the Amended TRS Transaction is in the interests of the Group and the Shareholders as a whole.

LISTING RULES IMPLICATION

CDH Genetech is a company incorporated in the Cayman Islands whose principal business is investment holding. It is wholly-owned by CDH Fund V, L.P., a limited partnership formed under the laws of Cayman Islands, which is an offshore USD private equity fund managed by CDH. The general partner of CDH Fund V, L.P. is CDH V Holdings Company Limited, a Cayman Islands holding company.

CDH is a China-focused alternative asset fund manager with over US$20 billion of committed capital under management. CDH was established in 2002 and has invested capital on behalf of leading international pension funds, endowments, family offices, corporates and sovereign wealth funds. CDH Fund V, L.P. has approximately US$2.6 billion of total capital commitments.

– 14 –

LETTER FROM THE BOARD

To the best of the Directors’ knowledge having made all reasonable enquiries, as at the Latest Practicable Date, CDH Giant Health I Limited (which is wholly-owned by CDH Fund V, L.P.) holds 356,648,142 Shares (representing approximately 10.05% of the total issued share capital of the Company). Hence, CDH Fund V, L.P. is a substantial shareholder of the Company.

As at the Latest Practicable Date, Sirtex HoldCo is owned as to approximately 44.88% by CDH Genetech and is an associate of CDH Genetech and CDH Fund V, L.P.. As such, Sirtex HoldCo is a connected person of the Company under Chapter 14A of the Listing Rules.

Under Rule 14A.20 of the Listing Rules, a ‘‘deemed connected person’’ includes a person who has entered, or proposes to enter, into (i) a transaction with the Group; and (ii) an agreement, arrangement, understanding or undertaking with a connected person with respect to the transaction.

Natixis entered into (i) the Amended and Restated TRS Agreement with the Company; and (ii) the Second Subscription Agreement, which is in connection with the Amended TRS Transaction, with Sirtex HoldCo, a connected person of the Company, and therefore Natixis is considered a ‘‘deemed connected person’’ of the Company pursuant to Rule 14A.20 of the Listing Rules.

In addition, Natixis was also considered a ‘‘deemed connected person’’ of the Company under the First Subscription Agreement and the Original TRS Agreement.

Accordingly, the Amended TRS Transaction with Natixis constitutes a connected transaction of the Group. Pursuant to Rule 14A.81 of the Listing Rules, a series of connected transactions will be aggregated and related as if they were one transaction if they were all completed within a 12-month period or were all otherwise related. The Grand Decade’s Subscription under the First Subscription Agreement, together with the Amended TRS Transaction with Natixis are related and to be completed within a 12-month period. Accordingly, these transactions shall be aggregated and treated as if they were one transaction, and the aggregate figures of the Grand Decade’s Subscription and the Amended TRS Transaction shall be used for calculating the applicable percentage ratios.

As one or more of the applicable percentage ratios (as defined in Rule 14.07 of the Listing Rules) in respect of the Grand Decade’s Subscription and the Amended TRS Transaction exceed 5%, the Amended TRS Transaction is subject to reporting, announcement, circular and independent shareholders’ approval requirements under Chapter 14A of the Listing Rules.

SGM

Set out on pages 41 to 43 of this circular is a notice convening the SGM to be held at Unit 3302, The Center, 99 Queen’s Road Central, Hong Kong at which the relevant resolutions will be proposed at the SGM to approve, among other things, the Amended and Restated TRS Agreement and the transaction contemplated thereunder. The resolutions proposed to be approved at the SGM will be taken by poll and an announcement on the results of the SGM will be made by the Company after the SGM.

– 15 –

LETTER FROM THE BOARD

To the best knowledge, information and belief of the Directors having made all reasonable enquiries, there is (i) no voting trust nor other agreement nor arrangement nor understanding entered into or binding upon any Shareholders; and (ii) no obligation nor entitlement of any Shareholder as at the Latest Practicable Date, whereby it has or may have temporarily or permanently passed control over the exercise of the voting right in respect of its Shares to a third party, either generally or on a case-by-case basis.

In accordance with the Listing Rules, CDH Giant Health I Limited, CDH Fund V, L.P. and their respective associates, who in aggregate hold 356,648,142 Shares as at the Latest Practicable Date, representing approximately 10.05% of the entire issued share capital of the Company, are required to abstain from voting on the resolutions to approve the Amended TRS Transaction and any vote exercised by the Independent Shareholders at the SGM shall be taken by poll.

Save as disclosed above, no Shareholder has a material interest in the Amended TRS Transaction that is required to abstain from voting and being counted towards the quorum on the relevant resolutions at the SGM.

To the best of the Directors’ knowledge, information and belief, none of the Directors has any material interest in the Amended TRS Transaction, and none of the Directors is required to abstain from voting on the board resolutions for approving the execution and performance of the Amended and Restated TRS Agreement by the Group.

A form of proxy for use at the SGM is enclosed with this circular. Whether or not you are able to attend the SGM, you are requested to complete the enclosed form of proxy in accordance with the instructions printed thereon and return the same to the Company’s branch share registrar and transfer office in Hong Kong, Computershare Hong Kong Investor Services Limited, Shops 1712–1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong as soon as possible and in any event not later than 48 hours before the time appointed for holding the SGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the SGM or any adjournment thereof should you so wish.

INDEPENDENT BOARD COMMITTEE

The Independent Board Committee comprising Ms So Tosi Wan, Winnie, Dr Pei Geng and Mr Hu Yebi, being all independent non-executive Directors, has been formed to advise the Independent Shareholders as to the fairness and the reasonableness of the terms of the Amended and Restated TRS Agreement and as to how to vote at the SGM.

Rainbow Capital (HK) Limited has been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in relation to the Amended TRS Transaction.

The Independent Board Committee, having taken into account the advice and recommendation of the Independent Financial Adviser, consider that the terms and conditions of the Amended and Restated TRS Agreement were arrived at after arms’ length negotiations between the relevant parties, are on normal commercial terms and are fair and reasonable so

– 16 –

LETTER FROM THE BOARD

far as the Independent Shareholders are concerned. While the Amended TRS Transaction is not in the ordinary and usual course of business of the Group, it is in the interests of the Group and the Shareholders as a whole, and accordingly recommends the Independent Shareholders to vote in favour of the ordinary resolutions which will be proposed at the SGM for approving the Amended TRS Transaction.

The text of the letter from the Independent Board Committee is set out on pages 18 to 19 of this circular, the text of the letter from the Independent Financial Adviser containing its advice is set out on pages 20 to 37 of this circular.

RECOMMENDATION

The Board (including the independent non-executive Directors), having taken into account of the reasons set out in the paragraphs headed ‘‘Reasons for and benefits of the Amended TRS Transaction’’ above and the recommendations of the Independent Board Committee and the Independent Financial Adviser, considers that the Amended TRS Transaction is on normal commercial terms which are fair and reasonable so far as the Independent Shareholders are concerned and is in the interests of the Group and the Shareholders as a whole. Accordingly, the Board recommends the Independent Shareholders to vote in favour of the ordinary resolutions which will be proposed at the SGM for approving the Amended TRS Transaction.

ADDITIONAL INFORMATION

Your attention is drawn to (i) the letter from the Independent Board Committee set out on pages 18 to 19 of this circular which contains its views in relation to the Amended TRS Transaction; and (ii) the letter from the Independent Financial Adviser set out on pages 20 to 37 of this circular which contains its advice to the Independent Board Committee and the Independent Shareholders in relation to the Amended TRS Transaction and the principal factors and reasons considered by it in arriving its opinions.

Your attention is also drawn to other additional information as set out in the appendix to this circular.

Yours faithfully,

For and on behalf of the Board

China Grand Pharmaceutical and Healthcare Holdings Limited Dr. Tang Weikun Chairman

– 17 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

==> picture [68 x 37] intentionally omitted <==

CHINA GRAND PHARMACEUTICAL AND HEALTHCARE HOLDINGS LIMITED 遠大醫藥健康控股有限公司[*]

(Incorporated in Bermuda with limited liability)

(Stock Code: 00512)

13 September 2021

To the Independent Shareholders,

Dear Sir or Madam,

CONNECTED TRANSACTION

AMENDED TOTAL RETURN SWAP TRANSACTION WITH NATIXIS

We refer to the circular of the Company dated 13 September 2021 (the ‘‘Circular’’) to the Shareholders, 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 otherwise requires.

We have been appointed by the Board as members to form the Independent Board Committee and to advise you as to whether, in our opinion, the Amended TRS Transaction is on normal commercial terms which are fair and reasonable so far as the Independent Shareholders are concerned and is in the interests of the Company and the Shareholders as a whole.

Rainbow Capital (HK) Limited has been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in these respects. Details of its advice, together with the principal factors and reasons taken into consideration in arriving at such advice, are set out on pages 20 to 37 of the Circular. Your attention is also drawn to the letter from the Board set out on pages 5 to 17 of the Circular and the additional information set out in the appendix of the Circular.

• For identification purposes only

– 18 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

Having considered the terms and conditions of the Amended and Restated TRS Agreement and the principal factors and reasons considered by, and the advice and recommendation of the Independent Financial Adviser, we are of the opinion that the Amended TRS Transaction is fair and reasonable so far as the Independent Shareholders are concerned and is in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Shareholders to vote in favour of the ordinary resolutions to be proposed at the SGM to approve the Amended and Restated TRS Agreement and the Amended TRS Transaction.

Yours faithfully, Independent Board Committee of

China Grand Pharmaceutical and Healthcare Holdings Limited

So Tosi Wan, Winnie Pei Geng Independent non-executive Director Independent non-executive Director

Hu Yebi

Independent non-executive Director

– 19 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The following is the full text of a letter of advice from Rainbow Capital, the independent financial adviser to the Independent Board Committee and the Independent Shareholders in respect of the Amended TRS Transaction for the purpose of inclusion in this circular.

==> picture [139 x 63] intentionally omitted <==

13 September 2021

To the Independent Board Committee and the Independent Shareholders

China Grand Pharmaceutical and Healthcare Holdings Limited

Units 3302, The Center, 99 Queen’s Road Central, Hong Kong

Dear Sir or Madam,

CONNECTED TRANSACTION

AMENDED TOTAL RETURN SWAP TRANSACTION WITH NATIXIS

INTRODUCTION

We refer to our appointment as the independent financial adviser to the Independent Board Committee and the Independent Shareholders in respect of the total return swap transaction between the Company and Natixis under the Amended and Restated TRS Agreement dated 11 August 2021. Details of the Amended and Restated TRS Agreement and the Amended TRS Transaction are set out in the ‘‘Letter from the Board’’ (the ‘‘Letter from the Board’’) contained in the circular issued by the Company to the Shareholders dated 13 September 2021 (the ‘‘Circular’’), of which this letter forms part. Unless the context otherwise requires, capitalised terms used in this letter shall have the same meanings as those defined in the Circular.

On 11 August 2021 (after trading hours), Natixis entered into the Second Subscription Agreement with Sirtex HoldCo, pursuant to which Natixis has agreed to subscribe for 42,352,325 Sirtex HoldCo Shares for a consideration of US$50 million.

On the same day (after trading hours), the Company entered into the Amended and Restated TRS Agreement with Natixis, pursuant to which, among other things, the Original TRS Agreement shall be amended and restated and Natixis shall pass through the full economic exposure to the Sirtex HoldCo Shares acquired pursuant to the First Natixis’ Subscription and the Second Natixis’ Subscription to the Company. Details of the First Natixis’ Subscription and the Original TRS Agreement were disclosed in the Company’s announcement dated 2 July 2021.

– 20 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

As at the Latest Practicable Date, CDH Fund V, L.P., being a substantial Shareholder of the Company, through its wholly-owned subsidiary, CDH Giant Health I Limited, indirectly holds approximately 10.05% of the total issued share capital of the Company. On the other hand, Sirtex HoldCo is owned as to 44.88% by CDH Genetech (which is wholly-owned by CDH Fund V, L.P.) and thus is an associate of CDH Fund V, L.P.. As such, Sirtex HoldCo is a connected person of the Company under Chapter 14A of the Listing Rules. Given that (i) Natixis entered into the Amended and Restated TRS Agreement with the Company and the Second Subscription Agreement, which is in connection with the Amended TRS Transaction with Sirtex HoldCo, a connected person of the Company; and (ii) Natixis was also considered to be a ‘‘deemed connected person’’ of the Company under the First Subscription Agreement and the Original TRS Agreement, Natixis is considered to be a ‘‘deemed connected person’’ of the Company pursuant to Rule 14A.20 of the Listing Rules.

Accordingly, the Amended TRS Transaction constitutes a connected transaction of the Group. As the Grand Decade’s Subscription under the First Subscription Agreement, together with the Amended TRS Transaction are related and took place within a 12-month period, pursuant to Rule 14A.81 of the Listing Rules, these transactions shall be aggregated and treated as if they were one transaction. As one or more of the applicable percentage ratios in respect of the Grand Decade’s Subscription and the Amended TRS Transaction exceed 5%, the Amended TRS Transaction is subject to the reporting, announcement, circular and Independent Shareholders’ approval requirements under Chapter 14A of the Listing Rules.

The Independent Board Committee, comprising all independent non-executive Directors, namely, Ms. So Tosi Wan, Winnie, Mr. Hu Yebi and Dr. Pei Geng has been formed to advise the Independent Shareholders in respect of the Amended TRS Transaction. We, Rainbow Capital, have been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in this regard.

As at the Latest Practicable Date, we did not have any relationships or interests with the Group, Sirtex HoldCo or Natixis, or their respective substantial shareholder(s) or connected person(s), as defined under the Listing Rules that could reasonably be regarded as relevant to our independence. In the last two years, there was no engagement between the Group and us. Apart from normal professional fees paid or payable to us in connection with this appointment as the Independent Financial Adviser, no arrangements exist whereby we had received any fees or benefits from the Group, Sirtex HoldCo or Natixis, or their respective substantial shareholder(s) or connected person(s), as defined under the Listing Rules. We consider that we are independent from the Company pursuant to Rule 13.84 of the Listing Rules. Accordingly, we are qualified to give independent advice on the Amended TRS Transaction.

– 21 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

BASIS OF OUR OPINION

In formulating our opinion and advice, we have relied on (i) the information and facts contained or referred to in the Circular; (ii) the information supplied by the Group and its advisers; (iii) the opinions expressed by and the representations of the Directors and the management of the Group; and (iv) our review of the relevant public information. We have assumed that all the information provided and representations and opinions expressed to us or contained or referred to in the Circular were true, accurate and complete in all respects as at the date thereof and may be relied upon. We have also assumed that all statements contained and representations made or referred to in the Circular are true at the time they were made and continue to be true as at the Latest Practicable Date and all such statements of belief, opinions and intentions of the Directors and the management of the Group and those as set out or referred to in the Circular were reasonably made after due and careful enquiry. We have no reason to doubt the truth, accuracy and completeness of the information and representations provided to us by the Directors and the management of the Group. We have also sought and received confirmation from the Directors that no material facts have been withheld or omitted from the information provided and referred to in the Circular and that all information or representations provided to us by the Directors and the management of the Group are true, accurate, complete and not misleading in all respects at the time they were made and continued to be so until the date of the Circular.

We consider that we have reviewed sufficient information currently available to reach an informed view and to justify our reliance on the accuracy of the information contained in the Circular so as to provide a reasonable basis for our recommendation. We have not, however, carried out any independent verification of the information provided, representations made or opinion expressed by the Directors and the management of the Group, nor have we conducted any form of in-depth investigation into the business, affairs, operations, financial position or future prospects of the Group, or any of its respective substantial shareholders, subsidiaries or associates.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In considering whether the Amended TRS Transaction is fair and reasonable in so far as the Independent Shareholders are concerned, we have taken into account the principal factors and reasons set out below:

1. Background to and reasons for the Amended TRS Transaction

• (i) The Group

The Group is principally engaged in the research and development of innovative drugs, manufacturing and sales of pharmaceutical preparations, pharmaceutical intermediates, specialised pharmaceutical raw materials and healthcare products. The core products of the Group cover the anti-tumor, cardiovascular emergency pharmaceutical products and advanced cerebro-cardiovascular intervention advanced medical devices, anti-virus and anti-infection, respiratory and ENT, bio-health products and specialised pharmaceutical ingredients. The Group also has four technology R&D platforms and five R&D centers around the world for the purpose of technological innovation.

– 22 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Set out below is a summary of the consolidated financial information of the Group for the years ended 31 December 2019 and 2020 and the six months ended 30 June 2020 and 2021 as extracted from the annual report of the Company for the year ended 31 December 2020 (the ‘‘2020 Annual Report’’) and the announcement of the interim results of the Company for the six months ended 30 June 2021 (the ‘‘2021 Interim Result Announcement’’), respectively:

	For the year	ended	For the six months ended	For the six months ended
	31 December		30 June
	2019	2020	2020	2021
	HK$’000	HK$’000	HK$’000	HK$’000
	(audited)	(audited)	(unaudited)	(unaudited)
Revenue	6,590,635	6,352,919	3,255,784	4,566,530
Gross profit	4,041,365	4,035,194	2,040,589	2,892,841
Profit attributable to the
owners of the Company	1,150,948	1,792,661	718,509	1,202,543

For the years ended 31 December 2019 and 2020

Revenue of the Group decreased slightly by approximately 3.6% from approximately HK$6,590.6 million for the year ended 31 December 2019 to approximately HK$6,352.9 million for the year ended 31 December 2020. Such decrease was primarily attributable to the impact of COVID-19 epidemic, certain hospitals were restricted for access during a period of time and temporary suspended provision of non-emergency services, and thus put pressures in the sales of prescription drugs.

The Group recorded a gross profit of approximately HK$4,035.2 million for the year ended 31 December 2020 which remained relatively stable as compared to the year ended 31 December 2019. The effect of the decrease in revenue was partially offset by the Group’s efforts to optimise its profit structure, constantly promote the development strategy of innovative and barrier drugs and focus on promoting the sales of innovative high-barrier and high-margin products.

Profit attributable to owners of the Company increased by approximately 54.8% from approximately HK$1,150.9 million for the year ended 31 December 2019 to approximately HK$1,792.7 million for the year ended 31 December 2020, primarily attributable to the optimisation of its profit structure, expansion of the out-ofhospital market and increase in fair value of strategic equity investment. If disregarding the gain from changes in fair value of strategic equity investment, the total profit attributable to the owners of the Company for the year ended 31 December 2020 amounted to approximately HK$1,524.35 million, increased by approximately 32.5% as compared to the year ended 31 December 2019.

– 23 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

For the six months ended 30 June 2020 and 2021

Revenue of the Group increased by approximately 40.3% from approximately HK$3,255.8 million for the six months ended 30 June 2020 to approximately HK$4,566.5 million for the six months ended 30 June 2021. Such increase was primarily attributable to (i) the fact that the Group substantially developed pharmaceutical products with market and technical barrier, as well as exclusive and protected medical products and branded pharmaceutical products, especially in pharmaceutical preparations and medical device segments, which have recorded a significant growth; and (ii) that the Group continued to enhance cooperation with major e-commerce platforms to actively expand external market and to facilitate considerable growth in the sales on e-commerce platforms and retail pharmacies.

Gross profit of the Group increased by approximately 41.8% from approximately HK$2,040.6 million for the six months ended 30 June 2020 to approximately HK$2,892.8 million for the six months ended 30 June 2021, which was generally in line with the increase in the revenue of the Group.

Profit attributable to owners of the Company increased by approximately 67.4% from approximately HK$718.5 million for the six months ended 30 June 2020 to approximately HK$1,202.5 million for the six months ended 30 June 2021, primarily attributable to (i) the increase in the Group’s revenue and gross profit during the period and (ii) increase in fair value of strategic equity investment. If disregarding the gain from changes in fair value of strategic equity investment, the total profit attributable to the owners of the for the six months ended 30 June 2021 amounted to approximately HK$907.7 million, increased by approximately 26.3% as compared to the six months ended 30 June 2020.

	As at 31	December	As at 30 June
	2019	2020	2021
	HK$’000	HK$’000	HK$’000
	(audited)	(audited)	(unaudited)
Non-current assets	9,996,984	11,665,387	12,155,596
Current assets	3,816,323	5,318,958	6,767,129
Current liabilities	3,589,563	4,302,927	4,432,668
Non-current liabilities	1,712,737	1,337,209	2,244,994
Net current assets	226,760	1,016,031	2,334,461
Equity attributable to owners
of the Company	8,375,267	11,239,504	12,143,383

As at 30 June 2021, total assets of the Group amounted to approximately HK$18,922.7 million, representing an increase of approximately 11.4% as compared to that as at 31 December 2020. Total assets primarily consist of (i) cash and cash equivalents of approximately HK$2,337.5 million, (ii) trade and other receivables of approximately HK$2,709.5 million; (iii) interests in associates of the Group of approximately HK$6,317.9 million, which primarily included two companies with

– 24 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

principal operations of research and development, manufacture and sales of pharmaceutical products, namely Sirtex (a wholly-owned operating subsidiary of Sirtex Holdco, which is approximately 44.88% held by the Group) and OncoSec Medical Incorporated (which is approximately 43.38% held by the Group); and (iv) property, plant and equipment of approximately HK$3,093.6 million.

As at 30 June 2021, total liabilities of the Group amounted to approximately HK$6,677.7 million, representing an increase of approximately 18.4% as compared to that as at 31 December 2020. Total liabilities primarily consist of (i) trade and other payables of approximately HK$2,997.1 million, and (ii) bank and other borrowings of approximately HK$2,864.8 million.

The Group is financially healthy given its net current asset position. As at 30 June 2021, the Group had net current assets of approximately HK$2,334,5 million.

(ii) Sirtex HoldCo and Sirtex (the ‘‘Sirtex Group’’)

Sirtex HoldCo, together with Sirtex BidCo, are the special purpose vehicles established for the acquisition of the whole equity interests of Sirtex by the Group and CDH Genetech in 2018. Sirtex was listed on the Australian Securities Exchange in August 2000 which was subsequently delisted following the completion of the aforesaid acquisition in September 2018.

Sirtex is an Australian-based global life-sciences company that generates revenue through the sale of its core product SIR-Spheres®Y-90 resin microspheres. SIRSpheres®Y-90 resin microspheres are used in selective internal radiation therapy for malignant liver tumors and are the world’s only radioactive microspheres formally approved by the United States Food and Drug Administration. The acquisition of Sirtex offers an opportunity for the Group to venture into the field of interventional oncology, in particular to unlock the great potential of SIR-Spheres®Y-90 resin microspheres in China.

SIR-Spheres®Y-90 resin microspheres have been given to over 100,000 people in over 50 countries and regions around the world. With its remarkable clinical efficacy, it is recommended for treatment of hepatic malignant tumors by many authoritative guidelines, including National Institute for Health and Care Excellence (NICE), National Comprehensive Cancer Network (NCCN), European Society for Medical Oncology (ESMO) and other authoritative treatment guidelines as well as several authoritative clinical practice guidelines for liver cancer at home and abroad. It is also covered by medical insurance in places such as the United States and Europe. In June 2020, the exemption from an investigational new drug application of SIR-Spheres®Y-90 resin microspheres was formally accepted by Center for Drug Evaluation (CDE), National Medical Products Administration (NMPA) of the PRC, while a new drug application was officially submitted to and accepted by the NMPA of the PRC in November 2020. It is expected that the product will be approved for launch at the end of 2021 in the PRC.

– 25 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Set out below is a summary of the consolidated financial information of Sirtex HoldCo for the three years ended 31 December 2020 as extracted from the annual report of the Company for the year ended 31 December 2019 and 2020 Annual Report:

	For the year	ended 31 December	ended 31 December
	2020	2019	2018
	HK$’000	HK$’000	HK$’000
	(audited)	(audited)	(audited)
Revenue	1,220,699	1,236,022	351,760
Loss for the year	(94,829)	(250,062)	(41,285)
Total Assets	12,596,769	10,950,551	11,602,593
Total liabilities	5,777,797	5,281,127	5,704,391
Net assets	6,818,972	5,669,424	5,898,202

Revenue of the Sirtex Group was mainly derived from the sales of SIR-Spheres®Y-90 resin microspheres over the world, through its wholly-owned operating subsidiary, Sirtex. As advised by the management of the Group, the general increase in revenue was primarily attributable to the increase in manpower spent in research and development activities, leading to the technological advancement of such product and broadening of customer bases during the years under review. In view of the rapid development of such product, Sirtex incurred a general increase in sales and distribution costs as well as financing costs, resulting losses during the years under review.

(iii) Natixis

Natixis is a multi-national financial services firm incorporated in France. Its business mainly involved asset and wealth management, corporate and investment banking, insurance and payments. It is a subsidiary of Groupe BPCE, the second-largest banking group in France. Natixis has over 16,000 employees across 36 countries, and its clients include corporations, financial institutions, sovereign and supranational organisations, as well as customers of Groupe BPCE’s networks.

Under the First Natixis’ Subscription and Second Natixis’ Subscription, Natixis is involved as part of a financing arrangement and it is not acting as a traditional private equity investor in relation to the Transaction Documents and the transactions contemplated thereby.

(iv) Background of the Amended TRS Transaction

On 14 June 2018, the Company and CDH Genetech entered into a binding scheme implementation deed to jointly acquire 100% of the shares in Sirtex, pursuant to which the Company will provide 49% of the equity funding for the acquisition. On 20 September 2018, the acquisition was completed and the Group has become the indirect owner of 49% equity interests of Sirtex.

– 26 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

On 1 July 2021, Grand Decade, a wholly-owned subsidiary of the Company, entered into the First Subscription Agreement with Natixis and Sirtex HoldCo, pursuant to which (i) Grand Decade has agreed to subscribe for 84,704,650 Sirtex HoldCo Shares (the ‘‘Subscriptions’’) for a consideration of US$100 million; and (ii) Natixis has agreed to subscribe for 42,352,325 Sirtex HoldCo Shares for a consideration of US$50 million.

On 1 July 2021, the Company entered into the TRS Agreement with Natixis, pursuant to which, among other things, Natixis shall pass through to the Company the full economic exposure to the Sirtex HoldCo Shares acquired by Natixis pursuant to the First Natixis’ Subscription.

Upon the completion of the Subscriptions, Sirtex HoldCo is owned as to 44.88 % by CDH Genetech, 51.12% by Grand Decade and 4.00% by Natixis.

On 11 August 2021 (after trading hours), Natixis entered into the Second Subscription Agreement with Sirtex HoldCo, pursuant to which Natixis has agreed to subscribe for 42,352,325 Sirtex HoldCo Shares for a consideration of US$50 million. Accordingly, the Company also entered into the Amended and Restated TRS Agreement with Natixis, pursuant to which, among other things, the Original TRS Agreement shall be amended and restated and Natixis shall pass through the full economic exposure to the Sirtex HoldCo Shares acquired pursuant to the First Natixis’ Subscription and the Second Natixis’ Subscription to the Company.

(v) Reasons for and benefits of the Amended TRS Transaction

As discussed in the section headed ‘‘Industry Overview’’, liver cancer is a leading cause of deaths in China, and China alone accounts for over half of global population of liver cancer patients. However, as advised by the management of the Group, the effectiveness of prevailing treatments for liver cancer is limited, and Chinese patients are facing fewer treatment options than those in developed countries. Given that Sirtex is the leading organisation in the field of selective internal radiation therapy with global regulatory and reimbursement approval, the introduction of such global innovative liver cancer treatment product SIR-Spheres®Y-90 resin microspheres from Sirtex to the Chinese market will strengthen the pipeline of products available to the Group and will become one of the core drivers of the Group which is expected to demonstrate rapid growth in the mid-to-long term.

– 27 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The Board has also considered other financing or alternatives such as acquiring the Sirtex HoldCo Shares directly. As opposed to acquiring the Sirtex HoldCo Shares directly, the Amended TRS Transaction will allow the Company to participate in the refinancing of Sirtex without immediate cash outflow or worsening of the Company’s gearing ratio in the event where the Company borrows money to pay for the consideration of directly investing in the Sirtex HoldCo Shares. The Amended TRS Transaction will also allow the Company to achieve financial leverage by using an external funding source to invest in the business operations of Sirtex and shift the payment obligation to Natixis.

In recent years, the Group has participated in international investment and acquisition activities with the aim to introduce international innovative treatment methods and products with market development potential into the Chinese market. As mentioned above, SIR-Spheres®Y-90 resin microspheres are expected to be approved for launch at the end of 2021 in the PRC. With the assistance of the Group’s leading position in the pharmaceutical sector, its significant experience in research and development, academic promotion and product commercialisation of innovative medical products in China and the well-established sales network covering the nation, it can actively and effectively expand the global business of Sirtex into China, where the benefits of Sirtex’s main products have the greatest potential for development to offer important new and innovative treatment options to patients. As advised by the management of the Group, the Amended TRS Transaction, which is in substance increasing the economic exposure of Sirtex, has the potential to further enhance the future potential returns to the Shareholders resulting from the development of Sirtex as described above.

Although the Company has gained certain extent of exposure to the economic benefits of Sirtex HoldCo through the acquisition completed in September 2018, as disclosed in the Letter from the Board, the Directors are of the view that it is the Group’s strategy to invest further into the field of precision interventional oncology and continue to grow Sirtex’s existing global business and fully utilise the great potential of SIRSpheres®Y-90 resin microspheres in China. The Amended TRS Transaction will allow the Company to maintain the full economic exposure to the additional Sirtex HoldCo Shares acquired by Natixis pursuant to the Second Natixis’ Subscription without paying the full consideration.

Taking into account (i) the possible positive outlook of the global oncology drugs market as mentioned in the section headed ‘‘Industry Overview’’; (ii) the Amended TRS Transaction allows the Company to participate in the re-financing of Sirtex without immediate cash outflow or worsening of the Company’s gearing ratio; (iii) the severe condition of liver cancer in China as evidenced by the relatively high number of new cases and deaths with limited treatment options; (iv) the Group’s intention to strengthen its pipeline and introduce international innovative treatment methods and products with market development potential into the Chinese market; and (v) the Amended TRS Transaction allows the Company to maintain the additional economic exposure to Sirtex HoldCo without paying the full consideration, we are of the view that the Amended TRS Transaction is generally in line with the Group’s strategy and concur with the Directors that it is in the interests of the Company and the Shareholders as a whole.

– 28 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

2. Industry overview

(i) Worldwide

Set out below are the worldwide (i) number of new cases; and (ii) number of deaths of different types of cancers in 2020:

	No. of new		No. of new
Cancer site	cases	% Cancer site	deaths	%
Breast	2,261,419	11.7% Lung	1,796,144	18.0%
Lung	2,206,771	11.4% Colorectum	935,173	9.4%
Colorectum	1,931,590	10.0% Liver	830,180	8.3%
Prostate	1,414,259	7.3% Stomach	768,793	7.7%
Stomach	1,089,103	5.6% Breast	684,996	6.9%
Liver	905,677	4.7% Esophagus	544,076	5.5%
Cervix uteri	604,127	3.1% Pancreas	466,003	4.7%
Esophagus	604,100	3.1% Prostate	375,304	3.8%
Other cancers	8,275,743	42.9% Other cancers	3,557,464	35.7%
Total	19,292,789	100.0% Total	9,958,133	100.0%

Source: International Agency for Research on Cancer

(ii) China

Set out below are the China’s (i) number of new cases; and (ii) number of deaths of different types of cancers in 2020:

	No. of new		No. of new
Cancer site	cases	% Cancer site	deaths	%
Lung	815,563	17.9% Lung	714,699	23.8%
Colorectum	555,477	12.2% Liver	391,152	13.0%
Stomach	478,508	10.5% Stomach	373,789	12.4%
Breast	416,371	9.1% Esophagus	301,135	10.0%
Liver	410,038	9.0% Colorectum	286,162	9.5%
Other cancers	1,892,797	41.4% Other cancers	935,962	31.2%
Total	4,568,754	100.0% Total	3,002,899	100.0%

Source: International Agency for Research on Cancer

Primary liver cancer is one of the most common malignancies worldwide. As shown on the table above, it ranks the sixth and third among all cancers in terms of global incidence and mortality, respectively. A total of 905,677 new cases of liver cancer and nearly 830,180 related deaths were recorded in 2020.

– 29 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

With respect to cancer incidence and mortality in specific countries, China accounted for approximately 23.7% of all newly diagnosed cases and approximately 30.2% of the cancer deaths worldwide, in part due to China’s large population. In terms of liver cancer specifically, China accounted for approximately 45.3% of all newly diagnosed cases and approximately 47.1% of the cancer deaths worldwide. In China, liver cancer ranks the fifth and second among all cancers in terms of incidence and mortality, respectively with an estimated number of 410,038 new cases and 391,152 cancer-related deaths in 2020.

The above statistics indicate that the incident rate of liver cancer is slightly lower than that of other common cancers while its mortality rate is higher. This suggests that the treatment and prognosis of liver cancer are relatively poor and therefore there is urgent medical needs of patients with liver cancer for safe and effective new anti-cancer therapeutics.

According to the report of IQVIA Institute, the global oncology drugs market size has reached a value of approximately US$167 billion in 2020 as measured by global oncology spending and is expected to reach approximately US$273 million in 2025 with the compound annual growth rate (‘‘CAGR’’) of approximately 10.3% from 2020 to 2025. As such, the outlook for the global oncology drugs market is generally positive in the long term.

3. Principal terms of the Amended and Restated TRS Agreement

For details of the terms of the Amended and Restated TRS Agreement, please refer to the section headed ‘‘Amended TRS Transaction’’ in the Letter from the Board. Set out below are the principal terms of the Amended and Restated TRS Agreement:

Original Effective Date : The date on which Natixis pays its subscription amount in accordance with the First Subscription Agreement (the ‘‘Original Effective Date’’) Amendment and Restatement : The date on which Natixis pays its subscription Effective Date amount in accordance with the Second Subscription Agreement (the ‘‘Amendment and Restatement Effective Date’’), subject to the satisfaction of the conditions precedent and other terms under the Amended and Restated TRS Agreement Parties : (i) The Company (ii) Natixis

– 30 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

• Equity Notional Amount : The number of the Total Underlying Shares (as defined below) on any day multiplied by the subscription price per Sirtex HoldCo Share for the First Natixis’ Subscription, i.e. approximately US$1.18 per Sirtex HoldCo Share (the ‘‘Equity Notional Amount’’) As at the Latest Practicable Date, the Equity Notional Amount equals to approximately US$100 million.

• Termination Date : (i) If an initial public offering does not occur by a cut-off date according to the Amended and Restated TRS Agreement for Sirtex HoldCo or Sirtex BidCo or any entity formed that directly or indirectly holds all or substantially all of the shares of Sirtex BidCo, a maximum of 48 calendar months after the Original Effective Date subject to the terms and conditions under the Amended and Restated TRS Agreement; and

• (ii) If an initial public offering occurs before a cutoff date according to the Amended and Restated TRS Agreement for Sirtex HoldCo or Sirtex BidCo or any entity formed that directly or indirectly holds all or substantially all of the shares of Sirtex BidCo, a maximum of 24 calendar months after the date of the initial public offering subject to the terms and conditions under the Amended and Restated TRS Agreement.

(the ‘‘Termination Date’’)

• Underlying Shares : (i) From (and including) the Original Effective Date to (but excluding) the Amendment and Restatement Effective Date, the 42,352,325 Sirtex HoldCo Shares subscribed by Natixis under the First Subscription Agreement (the ‘‘Initial Underlying Shares’’), whether or not fully paid up, minus the aggregate number of the Sirtex HoldCo Shares of which Natixis has disposed of in accordance with and subject to the terms and conditions under the Amended and Restated TRS Agreement;

– 31 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

• (ii) From (and including) the Amendment and Restatement Effective Date, the total of the Initial Underlying Shares plus 42,352,325 Sirtex HoldCo Shares subscribed by Natixis under the Second Subscription Agreement, whether or not fully paid up, minus the aggregate number of the Sirtex HoldCo Shares of which Natixis has disposed of in accordance with and subject to the terms and conditions under the Amended and Restated TRS Agreement (the ‘‘ Total Underlying Shares’’).

As at the Latest Practicable Date, the number of Total Underlying Shares is 84,704,650.

• Lock-up period : Subject to the terms and conditions of the Amended and Restated TRS Agreement, Natixis shall not at any time (i) during the period from and including the Original Effective Date to and excluding the date falling 24 calendar months after the Original Effective Date; or (ii) if an initial public offering occurs, the period from and including the date of the initial public offering to and excluding the date falling 6 calendar months after the date of the initial public offering, dispose of or otherwise deal in or transfer any Total Underlying Shares to any person other than by way of a transfer to an affiliate of Natixis or otherwise agreed by the Company or in the context of a technical restructuring in preparation for the initial public offering.

• Grant of options : Subject to the terms of the Amended and Restated TRS Agreement, Natixis grants to the Company a call option (the ‘‘Call Option’’) pursuant to which the Company may call for the transfer and/or payment to it (as applicable) of the Total Underlying Shares and any sale proceeds from the sale of the Total Underlying Shares by Natixis. The Call Option may be exercised by the Company upon occurrence of certain events as stipulated under the Amended and Restated TRS Agreement.

– 32 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Subject to the terms of the Amended and Restated TRS Agreement, the Company grants to Natixis a put option (the ‘‘Put Option’’) pursuant to which Natixis may, but is not obliged to, transfer to the Company any Total Underlying Shares for the time being held by Natixis in consideration for the payment by the Company of US$1 (provided that the Company may, in its discretion, waive or defer the payment of the US$1). Natixis may exercise the Put Option at any time subject to the conditions as provided under the Amended and Restated TRS Agreement.

Floating rate payments

• : Subject to the terms and conditions of the Amended and Restated TRS Agreement, the Company shall pay a floating amount to Natixis, on a semi-annual basis, calculated with reference to the Equity Notional Amount at the USD-LIBOR-BBA for a designated maturity of 6 months (subject to a minimum of zero) plus a spread of 2.5% per annum (for the first two years) or 4.5% per annum (for the period after the first two years).

The floating rate was determined and agreed between the Company and Natixis after arms’ length negotiations and with reference to the structure of the Amended TRS Transaction, the estimated reasonable return to Natixis in entering into the Amended TRS Transaction, the credibility of the Company and the business prospects of Sirtex and Sirtex HoldCo.

• Total return swap arrangements

• : Natixis shall, subject to the terms and conditions and the relevant lock up periods under the Amended and Restated TRS Agreement, dispose of the Total Underlying Shares (i) by selling the Total Underlying Shares to other third party purchasers; (ii) through private auction process; or (iii) through trading in the stock market if an initial public offering occurs (the ‘‘Disposal’’).

If the amount of the proceeds from the Disposal is higher than the initial subscription price of the First Natixis’ Subscription and the Second Natixis’ Subscription, i.e. US$100 million, Natixis shall pay the Company the difference on the Termination Date or other relevant settlement payment dates subject to the terms and conditions under the Amended and Restated TRS Agreement.

– 33 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

If the amount of the proceeds from the Disposal is lower than the initial subscription price of the First Natixis’ Subscription and the Second Natixis’ Subscription, i.e. US$100 million, the Company shall pay Natixis the difference on the Termination Date or other relevant settlement payment dates subject to the terms and conditions under the Amended and Restated TRS Agreement. Any Total Underlying Shares not disposed of by Natixis as at the relevant Termination Date shall be deemed to have been disposed of with zero consideration.

Under the relevant terms and conditions of the Amended and Restated TRS Agreement and the Amended and Restated Shareholders Agreement, any third party purchasers under a private sale of the Total Underlying Shares shall be agreed upon by the Company and for private auction process, the Total Underlying Shares shall be sold to the potential purchaser who has made the highest offer where the Company is permitted to submit an offer in respect of the Total Underlying Shares as any other potential purchasers. Natixis will therefore use its best endeavors commercially to complete the Disposal and in any case the Company will be able to acquire the Total Underlying Shares with a maximum cost of US$100 million plus the floating rate payment.

Overall comment

The Amended and Restated TRS Agreement contains clause such as lock-up period. We consider such clause is a common market practice, on the basis that the Second Subscription Agreement is in substance similar to pre-IPO financing, which typically contain such clause to pre-IPO finance providers to restrict them to dispose the Total Underlying Shares within a period of time.

The Amended and Restated TRS Agreement allows the Company to call for the transfer and/or payment to it of the Total Underlying Shares, and any sale proceeds from the sale of the Total Underlying Shares by Natixis through exercising the Call Option. In addition, under the Amended and Restated TRS Agreement, it also allows Natixis to transfer to the Company any Total Underlying Shares to be held by Natixis in consideration for the payment by the Company of US$1 through exercising the Put Option. We consider it is a reasonable commercial term, given that the Call Option provides the Company the option to transfer the Total Underlying Shares when the

– 34 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Company considers is appropriate while the Put Option only allows Natixis to transfer the Total Underlying Shares at a nominal value, i.e. US$1, which is highly unlikely to cause immediate and significant financial burden on the Company.

For the floating rates of USD-LIBOR-BBA for a designated maturity of 6 months (subject to a minimum of zero) plus a spread of 2.5% per annum (for the first two years) or 4.5% per annum (for the period after the first two years), on the basis that (i) they were determined after arm’s length negotiation among the parties; (ii) according to the 2020 annual report, we noted that the interest rates of interest-bearing bank borrowings of the Group ranged from 2.60% to 6.89% per annum for the year ended 31 December 2020 (‘‘Market Interest Rate Range’’); and (iii) according to Bloomberg, the 6 month USD LIBOR interest rate is 0.14875% as at 6 September 2021; we consider such floating rates are within the Market Interest Rate Range.

For quantitative illustration, with reference to the 6 month USD LIBOR interest rate of 0.14875% as at 6 September 2021 and assuming the maximum of 48 calendar months after the Original Effective Date as the Termination Date, the maximum amount of interest expense payable by the Group is approximately US$14.6 million (equivalent to approximately HK$113.8 million) with the annual interest expense to be approximately US$3.6 million (equivalent to approximately HK$28.5 million). The proportion of the maximum amount of interest expense out of the balance of cash and cash equivalents as at 30 June 2021 is approximately 4.9% and the interest coverage ratio (i.e. earning before interest and tax for the year ended 31 December 2020 of HK$2,189.0 million divided by the annual interest expense of approximately HK$28.5 million) is approximately 76.8 times. On the other hand, making direct investment in the Target Company would require an immediate cash payment of US$100 million (equivalent to approximately HK$780 million). Although the financial resource of the Group is considered to be abundant as aforesaid, in light of the ongoing epidemic and the fluctuation of global economy and the cash payment of US$50 million (equivalent to approximately HK$390 million) required under the First Subscription Agreement, we consider it preferable for the Group to retain financial flexibility to develop its business and capture prospective business opportunities as and when they arise.

As regards the total return swap agreements, it effectively allows the Group to gain exposure and benefit from the future development of Sirtex as mentioned in the subsection headed ‘‘1. (iv) Reasons for and benefits of the Amended TRS Transaction’’ without incurring any immediate payment obligation. The Group is only required to pay to Natixis if the amount of the proceeds from the Disposal is lower than the initial subscription price as a result of the First Natixis’ Subscription and the Second Natixis’ Subscription, i.e. HK$100 million, on the Termination Date. Taking into account (i) our independent research which shows the possible positive outlook of the global oncology drugs market which is expected to grow at CAGR of approximately 10.3% from 2020 to 2025 as mentioned in the section headed ‘‘Industry Overview’’; (ii) our observation on the improved business performance of the Target Company with its revenue growing at CAGR of approximately 86.3% from 2018 to 2020; and (iii) our discussion and understanding with the management of the Group, the core product of the Target Company, SIR-Spheres®Y-90 is likely to be introduced and commercialised to China in

– 35 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

2022, we are of the view that the uncertainty and possibility of paying additional amount to Natixis on the Termination Date is limited. On the basis that (i) the Group is in essence shifting its current payment obligation of the Total Underlying Shares to Natixis, a French corporate and financial institution through such arrangement; (ii) the Group is able to defer its payment obligation of the Total Underlying Shares to a later date depending on the future development of Sirtex; (iii) there is no immediate cash outlay bore by the Group; (iv) the annual floating rate payment is minimal as compared to the Company’s cash balance and earnings; and (v) the limited uncertainty and possibility of paying additional amount to Natixis on the Termination Date, we consider such arrangement of investing via the Amended TRS Transaction instead of direct investment is commercially reasonable and in the interest of the Company and its Shareholders as a whole.

Based on the above and taking into account of the reasons for and benefits of the Amended TRS Transaction as mentioned in the sub-section headed ‘‘1. (iv) Reasons for and benefits of the Amended TRS Transaction’’, generally speaking, we consider the principal terms of the Amended and Restated TRS Agreement to be justifiable.

4. Financial effects of the Amended TRS Transaction

(i) Earnings

Following the completion of the Second Subscription Agreement and the Amended TRS Transaction, the Company’s equity interest in the Sirtex Group would be reduced from approximately 51.12% to 49.15%. As disclosed in the Letter from the Board, it is expected that the Sirtex Group will continue to remain as an associate of the Company. The financial result and financial position of the Target Company would therefore continue to be accounted for using the equity method of accounting in the financial statements of the Group.

Through the entering of the Amended and Restated TRS Agreement, the Group will be effectively entitled more economic exposure which represents approximately 3.85% equity interests of the Sirtex Group. To that end, the future changes in the Group’s earnings will depend on the operating results of Sirtex in the coming years. Taking into account the Group’s revenue and net profit of approximately HK$6,352.9 million and HK$1,781.2 million in 2020, the Amended TRS Transaction is not expected to have any material impact on the revenue and net profit of the Group.

(ii) Working capital

The Group is not required to incur any immediate capital outlay pursuant to the Amended and Restated TRS Agreement. Instead, the Group is able to defer its payment obligation to Natixis to a later period. Taking into account the Group’s cash and cash equivalent, the Group’s bank and other borrowings and capital commitments of the Group as at 30 June 2021, the Amended TRS Transaction is not expected to have a significant adverse effect on the Group’s financial position or working capital.

– 36 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

OPINION AND RECOMMENDATION

Having taken into account the above principal factors and reasons, we consider that the terms of the Amended and Restated TRS Agreement are on normal commercial terms which are fair and reasonable so far as the Independent Shareholders are concerned. We also consider that the entering into of the Amended TRS Transaction, while not in the ordinary and usual course of business of the Group, is nevertheless in the interests of the Company and its shareholders as a whole. Accordingly, we advise the Independent Board Committee to recommend, and we ourselves recommend, the Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the SGM to approve the Amended and Restated TRS Agreement and the Amended TRS Transaction.

Yours faithfully, For and on behalf of Rainbow Capital (HK) Limited Danny Leung Managing Director

Mr. Danny Leung is a licensed person and a responsible officer of Rainbow Capital (HK) Limited registered with the Securities and Futures Commission to carry out type 1 (dealing in securities) and type 6 (advising on corporate finance) regulated activities under the SFO. He has over 10 years of experience in the corporate finance industry.

– 37 –

GENERAL INFORMATION

APPENDIX

1. RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this circular misleading.

2. DISCLOSURE OF INTERESTS

Directors’ and chief executive’s interests and short positions in the securities of the Company and its associated corporations

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

				Approximate
	Name of the			percentage or
Name of Director	company in	Number of		attributable
and chief executive	which the	the shares	Nature of	percentage of
of the Company	shares was held	held	interests	shareholding
				(%)
Tang Weikun	The Company	60,000 (L)	Beneficial owner	0.00
Shao Yan (Note)	The Company	6,019,600 (L)	Interest in spouse	0.17
Zhou Chao	The Company	56,000 (L)	Beneficial owner	0.00

(L) denotes long position

Note: Dr. Shao Yan, a Director, is the spouse of Ms. Tian Wen Hong who is the holder of the above shares. By virtue of the SFO, Dr. Shao Yan shall be deemed to be interested in such 6,019,600 shares.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors nor the chief executive of the Company had or was deemed to have any interests or short positions in the shares, underlying shares or debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO) which were required (i) to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they were taken or deemed to

– 38 –

GENERAL INFORMATION

APPENDIX

have under such provisions of the SFO); or (ii) pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (iii) to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers contained in the Listing Rules.

Directors’ positions in other companies

As at the Latest Practicable Date, none of the Directors was also a director or employee of a company which had an interest or short position in the Shares or underlying Shares of the Company which would fall to be disclosed to the Company pursuant to the provisions of Division 2 and 3 of Part XV of SFO.

3. DIRECTORS’ SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had any existing or proposed service contract with any member of the Group (excluding contracts expiring or determinable by the employer within one year without payment of compensation (other than statutory compensation)).

4. INTERESTS IN ASSETS, CONTRACTS OR ARRANGEMENT

As at the Latest Practicable Date, none of the Directors, proposed directors and the Independent Financial Adviser has, or had, any direct or indirect interest in any assets which had been or are proposed to be acquired, disposed of by or leased to, any member of the Group since 31 December 2020, the date to which the latest published audited financial statements of the Company were made up.

None of the Directors was materially interested in any contract or arrangement subsisting at the Latest Practicable Date which was significant in relation to the business of the Group.

5. EXPERT AND CONSENT

The following is the qualification of the expert who has given opinions or advice which are contained in this circular:

Name	Qualification
Rainbow Capital (HK)	Licensed corporation under the SFO to conduct Type 1
Limited	(dealing in securities) and Type 6 (advising on corporate
	finance) regulated activities

Rainbow Capital (HK) Limited has given and has not withdrawn its written consent to the issue of this circular with the inclusion herein of its letter and report and references to its name in the form and context in which it appears.

– 39 –

GENERAL INFORMATION

APPENDIX

As at the Latest Practicable Date, Rainbow Capital (HK) Limited did not have any shareholding in any member of the Group or any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

6. MATERIAL ADVERSE CHANGE

The Directors confirm that, as at the Latest Practicable Date, there was no material adverse change in the financial or trading position of the Group since 31 December 2020, being the date to which the latest published audited consolidated financial statements of the Group were made up.

7. COMPETING INTERESTS

As at the Latest Practicable Date, Dr Niu Zhanqi, an executive Director, is a director of Huadong Medicine Company Limited (‘‘Huadong Medicine’’), which is a company listed on the Shenzhen Stock Exchange (stock code: 000963), taking into account of the difference in products, target customers and principal activities engaged by the Group and Huadong Medicine, the management of the Company consider that there is no competition among the business of the Group and Huadong Medicine. As such, so far as the Directors are aware of, no Directors or their associates had any interest in a business which competes or is likely to compete, either directly or indirectly, with the business of the Group.

8. MISCELLANEOUS

The English text of this circular and the accompanying form of proxy shall prevail over their respective texts in case of inconsistency.

9. DOCUMENTS AVAILABLE FOR INSPECTION

A copy of the Amended and Restated TRS Agreement is available for inspection during normal business hours on any weekday (except for public holidays) at the head office and principal place of business of the Company in Hong Kong at Unit 3302, The Center, 99 Queen’s Road Central, Hong Kong from the date of this circular up to and including 30 September 2021.

– 40 –

NOTICE OF SGM

==> picture [68 x 37] intentionally omitted <==

CHINA GRAND PHARMACEUTICAL AND HEALTHCARE HOLDINGS LIMITED 遠大醫藥健康控股有限公司 [*]

(Incorporated in Bermuda with limited liability)

(Stock Code: 00512)

NOTICE OF SGM

NOTICE IS HEREBY GIVEN that the Special General Meeting (the ‘‘SGM’’) of China Grand Pharmaceutical and Healthcare Holdings Limited (the ‘‘Company’’) will be held at Unit 3302, The Center, 99 Queen’s Road Central, Hong Kong on Thursday, 30 September 2021 at 11:15 a.m. for the purposes of considering and, if thought fit, passing the following resolutions with or without amendments as ordinary resolutions of the Company:

ORDINARY RESOLUTIONS

‘‘THAT

• (a) the amended and restated confirmation dated 11 August 2021, which amends and restates the original confirmation dated 1 July 2021, made between the Company and Natixis which supplements, forms a part of, and is subject to, a 2002 ISDA master agreement between the Company and Natixis deemed to be entered into between the Company and Natixis on 1 July 2021 (the ‘‘Amended and Restated TRS Agreement’’), in respect of the total return swap transaction where Natixis shall pass through to the Company the full economic exposure to the shares of Grand Pharma Sphere Pte Ltd., a company incorporated under the laws of the Republic of Singapore with limited liability, acquired or to be acquired by Natixis pursuant to the subscription agreements dated 1 July 2021 and 11 August 2021 (a copy of the Amended and Restated TRS Agreement has been produced to the SGM marked ‘‘A’’ and initialed by the Chairman of the SGM for the purpose of identification), and the transactions contemplated thereunder be and are hereby approved, confirmed and ratified;

• (b) the execution and delivery of the Amended and Restated TRS Agreement by the Company be and is hereby approved, confirmed and ratified;

• (c) any one of the Directors be and are hereby authorised to execute all documents and to do all such things and take all such other steps which, in his/her opinion, may be necessary, appropriate, desirable or expedient to implement and/or give effect to the

• For identification purposes only

– 41 –

NOTICE OF SGM

terms of, or the transactions contemplated in and for completion of the Amended and Restated TRS Agreement and to agree to such variation, amendment or waiver in relation thereto which are, in the opinion of the Directors, in the interest of the Company.’’

By order of the Board China Grand Pharmaceutical and Healthcare Holdings Limited Dr. Tang Weikun Chairman

Hong Kong, 13 September 2021

Registered office: Clarendon House 2 Church Street Hamilton HM11 Bermuda

Principal place of business in Hong Kong: Unit 3302, The Center 99 Queen’s Road Central Hong Kong

Notes:

1. Any member entitled to attend and vote at the above meeting is entitled to appoint a proxy to attend and vote instead of him. A proxy need not be a member of the Company.

2. The register of members will be closed from Monday, 27 September 2021 to Thursday, 30 September 2021, both days inclusive, during which no transfer of shares can be registered. In order to qualify to attend the SGM, all properly completed transfer forms accompanied by the relevant share certificates must be lodged with the branch share registrar and transfer office of the Company in Hong Kong, Computershare Hong Kong Investor Services Limited at Shops 1712–1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong no later than 4:30 p.m. on Friday, 24 September 2021.

3. To be valid, the form of proxy and the power of attorney or other authority (if any) under which it is signed or a certified copy of that power of attorney or authority must be deposited at the Company’s branch share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited at Shops 1712–1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong not less than 48 hours before the time appointed for holding the meeting or any adjournment thereof.

4. Where there are joint holders of a share of the Company, any one of such holders may vote at the meeting either personally or by proxy in respect of such share as if he were solely entitled thereto, but if more than one of such holders be present at the meeting personally or by proxy, that one of such holders so presents whose name stands first on the register of members of the Company in respect of such share shall alone be entitled to vote in respect thereof.

5. Delivery of an instrument appointing a proxy shall not preclude a member from attending and voting in person at the SGM and in such event, the instrument appointing a proxy shall be deemed to be revoked.

– 42 –

NOTICE OF SGM

1. The ordinary resolutions set out in this notice will be taken by poll.

PRECAUTIONARY MEASURES FOR THE SGM

Please see page ii of this circular for measures being taken to try to prevent and control the spread of the Coronavirus at the SGM, including:

• . compulsory temperature check and health declaration . mandatory wearing of face mask

• . prohibit attendance at the SGM if the attendee has a fever. Persons exhibiting flu-like symptoms may also be refused admittance

• . prohibit attendance at the SGM if the attendee is subject to any prescribed quarantine by the Hong Kong Government or has close contact with any person under quarantine

• . no distribution of corporate gift and/or refreshments served at the SGM

Any person who does not comply with these precautionary measures may be denied entry into the SGM venue. The Company encourages attendees (even without flu-like symptoms) to wear surgical masks and reminds Shareholders that they may vote by proxy or appoint the Chairman of the meeting as their proxy to vote on the relevant resolutions at the SGM as an alternative to attending the SGM in person.

As at the date of this notice, the Board comprises four executive Directors, namely, Dr. Tang Weikun, Dr. Shao Yan, Dr. Niu Zhanqi and Dr. Shi Lin, and three independent nonexecutive directors, namely, Ms. So Tosi Wan, Winnie, Dr. Pei Geng and Mr. Hu Yebi.

– 43 –