Luye Pharma Group Limited — Proxy Solicitation & Information Statement 2006

Sep 13, 2006

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

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

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

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TAKSON HOLDINGS LIMITED 第一德勝控股有限公司 [*] (Incorporated in Bermuda with limited liability)

(Stock Code: 918)

DISCLOSABLE TRANSACTION

DISPOSAL OF PROPERTY

Hong Kong, 11 September 2006

* for identification purpose only

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
Provisional Sale and Purchase Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Reasons for disposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Appendix I — General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7

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DEFINITIONS

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

“Board”	the board of Directors, including of independent non
	executive directors
“Company”	Takson Holdings Limited第一德勝控股有限公司*, a
	company incorporated in Bermuda with limited liability
	whose shares are listed on the main board of the Stock
	Exchange
“connected person”	has the meaning ascribed to it under the Listing Rules
“Director(s)”	the director(s) of the Company
“Disposal”	the disposal of the Property by the Vendor to the
	Purchaser pursuant to the Provisional Sale and Purchase
	Agreement and the Formal Agreement
“Formal Agreement”	the formal sale and purchase agreement to be entered
	into between the Vendor and the Purchaser in relation to
	the sale and purchase of the Property pursuant to the
	Provisional Sale and Purchase Agreement
“Group”	the Company and its subsidiaries
“Hong Kong”	the Hong Kong Special Administrative Region of the
	PRC
“Latest Practicable Date”	11 September 2006, being the latest practicable date prior
	to the printing of this circular for ascertaining certain
	information contained in this circular
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange
“Property”	Unit 07, 5th Floor, Tower One, Harbour Centre, 1 Hok
	Cheung Street, Kowloon, Hong Kong
“Provisional Sale and	the provisional sale and purchase agreement dated 21
Purchase Agreement”	August 2006 entered into between the Vendor and the
	Purchaser in relation to the sale and purchase of the
	Property

* for identification purpose only

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DEFINITIONS

“Purchase Price”	the purchase price of HK$4,880,000 for the Property
“Purchaser”	Christmas Gallery Limited, being a third party
	independent of the Company, its subsidiaries, their
	respective directors, chief executive and substantial
	shareholders or any of their respective associates, or its
	nominee
“SFO”	the Securities and Futures Ordinance (Chapter 571 of
	the Laws of Hong Kong)
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Vendor”	Takson Properties Limited, a wholly-owned subsidiary
	of the Company
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong
“%”	per cent

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LETTER FROM THE BOARD

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TAKSON HOLDINGS LIMITED 第一德勝控股有限公司 [*]

(Incorporated in Bermuda with limited liability)

(Stock Code: 918)

Executive Directors:

Mr. Wong Tek Sun, Takson (Chairman) Ms. Pang Shu Yuk, Adeline Rita

Independent Non-executive Directors: Mr. Lee Kwok Cheung Mr. Chau Tsun Ming, Jimmy Mr. Zheng Jie

Non-Executive Director:

Mr. Wong Tak Yuen

Registered Office:

Clarendon House 2 Church Street Hamilton HM 11 Bermuda

Head Office and Principal Place of Business in Hong Kong: 5th Floor, South Wing Harbour Centre Tower One 1 Hok Cheung Street Hunghom, Kowloon Hong Kong

11 September 2006

To the shareholders

Dear Sir or Madam,

DISCLOSABLE TRANSACTION DISPOSAL OF PROPERTY

INTRODUCTION

By an announcement dated 23 August 2006, the Directors announced that on 21 August 2006, the Vendor, a wholly-owned subsidiary of the Company, entered into the Provisional Sale and Purchase Agreement with the Purchaser, to dispose the Property at a consideration of HK$4,880,000.

* for identification purpose only

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LETTER FROM THE BOARD

As the relevant percentage ratios calculated under Chapter 14 of the Listing Rules in respect of the Disposal exceeds 5% but less than 25%, the Disposal constitutes a disclosable transaction of the Company under Chapter 14 of the Listing Rules.

The purpose of this circular is to provide the shareholders of the Company with further information on the Disposal and other information in compliance with the requirements of the Listing Rules.

PROVISIONAL SALE AND PURCHASE AGREEMENT

The principal terms of the Provisional Sale and Purchase Agreement are set out as follows:—

Date : 21 August 2006 Parties : (a) Vendor: Takson Properties Limited, a wholly-owned subsidiary of the Company. (b) Purchaser: Christmas Gallery Limited.

To the best of the Directors’ knowledge, information and belief, having made all reasonable enquiries, the Purchaser and its ultimate beneficial owners are third parties independent of the Company, its subsidiaries, their respective directors, chief executive, substantial shareholders and any of their respective associates.

Sale and Purchase

Pursuant to the Provisional Sale and Purchase Agreement, the Vendor agreed to sell and the Purchaser agreed to purchase the Property upon the terms contained therein. The Vendor or the Purchaser shall not take any action except for the terms specified in the Provisional Sale and Purchase Agreement if the counterparty fails to perform the Provisional Sale and Purchase Agreement. The Vendor and the Purchaser shall enter into the Formal Agreement once both parties agree with the terms contained in the Formal Agreement. The terms of the Formal Agreement are based on the one specified in the Provisional Sale and Purchase Agreement, subject to amendment and change if necessary. An announcement then will be published in respect of the amendment and change. As at the Latest Practicable Date, the Formal Agreement has not been signed by the Vendor and the Purchases.

Property

The Property is located at Unit 07, 5th Floor, Tower One, Harbour Centre, 1 Hok Cheung Street, Kowloon, Hong Kong with gross area of 2,897 sq.ft.

The Property was held for investment purpose and is currently leased out. The gross rental income of HK$222,000 and HK$240,000 were received for the years ended 31 March 2005 and 2006 respectively. In accordance with the tenancy agreement, the property is leased out with the monthly rent of HK$20,000 for the period from 16 September 2004 to 15 September 2006.

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LETTER FROM THE BOARD

A valuation of the Property was carried out by the Dudley Surveyors Limited which assessed the value of the Property as at 31 March 2006 at HK$4,060,000. Such assessed value is equal to the book value of the Property in the Group’s audited consolidated accounts for the year ended 31 March 2006. After the Disposal, the fixed assets of the Group has been reduced by HK$4,060,000. As the sales proceeds of approximately HK$4,800,000 (being the Purchase Price minus agency fee and the legal expenses) will be used to settle the existing bank loan. The liabilities of the Group will be reduced by approximately HK$4,800,000 as a result. As at 31 March 2006, the total bank loans of the Group was approximately HK$54,843,000.

So far as the Directors are aware, the Dudley Surveyors Limited is independent of the Company, its subsidiaries, their respective directors, chief executive, substantial shareholders and any of their respective associates.

Consideration

The Purchase Price is HK$4,880,000 which is satisfied by way of cash.

The Purchase Price was determined after arm’s length negotiations between the Vendor and the Purchaser, with reference to recent transaction records of similar properties in nearby locality.

Terms of Payment

• (a) an initial deposit of HK$244,000 was paid by the Purchaser to the Vendor on 21 August 2006 upon signing of the Provisional Sale and Purchase Agreement;

• (b) a further deposit of HK$244,000 was paid by the Purchaser to the Vendor on 30 August 2006; and

• (c) the balance of the Purchase Price of HK$4,392,000 will be paid by the Purchaser on or before completion of the Disposal.

REASONS FOR DISPOSAL

As at 31 March 2006, the net book values of the Property was approximately carrying at HK$4,060,000. Accordingly the profit which is expected to accrue to the Group upon the disposal of the Property before deducting all relevant expenses is estimated at HK$820,000. In view of the improved property market condition, the board of directors of the Company (“the Board”) considers that the Company should take this opportunity to realize the Property at a reasonable price. The entire net proceeds from the disposal will be used to repay the existing bank loan. It will reduce the borrowing and interest expenses of the Group.

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LETTER FROM THE BOARD

For the years ended 31 March 2005 and 2006, the interest on bank loans and overdrafts of the Group were approximately HK$2,234,000 and HK$2,993,000 respectively. The repayment will reduce the above cost of the Group in the coming year. As less finance cost incurred, it will improve the financial position of the Group.

The Board considers that the disposal is on normal commercial terms and are fair and reasonable and in the interest of the Company and shareholders as a whole.

GENERAL

The Company and its subsidiaries (“the Group”) are principally engaged in the sourcing, subcontracting, marketing and selling of garments, including licensed products. The Vendor, being a wholly-owned subsidiary of the Company, is engaged in property holding business in Hong Kong.

To the best of the Directors’ knowledge, information and belief, having made all reasonable enquires, the Purchaser, is a manufacturer/exporter of the Christmas electrical products and trim- a-tree items and its ultimate beneficial owner are third parties independent of the Company, its subsidiaries, their respective directors, chief executives and substantial shareholders or any of their respective associates. As the relevant percentage ratios calculated under Chapter 14 of the Listing Rules in respect of Disposal exceeds 5% but less than 25%, the Disposal constitutes a disclosable transaction of the Company under Chapter 14 of the Listing Rules.

ADDITIONAL INFORMATION

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

Yours faithfully,

By order of the Board Wong Tek Sun, Takson Chairman

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GENERAL INFORMATION

APPENDIX I

1. RESPONSIBILITY STATEMENT

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

2. DISCLOSURE OF DIRECTOR’s INTERESTS

As at the Latest Practicable Date, the interests and short positions held by the Directors and chief executive of the Company in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which were required to be notified to the Company and the Stock Exchange pursuant to Division 7 and 8 of Part XV of the SFO (including interests and short positions which they are taken or deemed to have under such provisions of the SFO) ; or which were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein; or which were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Companies to be notified to the Company and the Stock Exchange, were as follows:

Interest in shares of the Company (Note 1)

Number of shares in the Company held

					Approximate %
					of total issued
	Personal	Family	Corporate		shares of
Name of director	interests	interests	interests	Total	the Company
Wong Tek Sun, Takson	4,621,000	10,800,000	285,120,000	300,541,600	58.1%
			(Note 2)
Pang Shu Yuk, Adeline Rita 10,800,000		4,621,000	285,120,000	300,541,600	58.1%
			(Note 2)

Notes:

1. These interests do not include those in the underlying shares of equity derivatives of the Company. These interests need to be aggregated with those set out in paragraph 3 below (if applicable) to give the Directors’ total interest in shares comprised in the relevant share capital of the Company within the meaning of the SFO.

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GENERAL INFORMATION

APPENDIX I

1. The references to 285,120,000 shares relate to the same block of shares in the Company. Such shares are held by Takson International Holdings Limited, the entire issued share capital of which is held by Wangkin Investments Inc. (“WII”) as trustee of the Wangkin Investments Unit Trust (the “Unit Trust”). All issued and outstanding units in the Unit Trust are beneficially held by Guardian Trustee Limited as trustee of the Wang & Kin Family Trust (the “Family Trust”). The discretionary beneficiaries of the Family Trust are, inter alia, Ms. Pang Shu Yuk, Adeline Rita, Mr. Wong Chi Wang, Calvin, and Mr. Wong Chi Kin, Christopher, both the children of Mr. Wong Tek Sun, Takson and Ms. Pang Shu Yuk, Adeline Rita.

Mr. Wong Tek Sun, Takson, being an executive Director of the Company, owns 50% of the issued share capital of WII and his children as, inter alia, discretionary beneficiaries of the Family Trust have interests in the share capital of the Company. Accordingly, he is taken to be interested in the 285,120,000 shares in the Company under the SFO.

Mr. Pang Shu Yuk, Adeline Rita, being an executive Director of the Company, owns 50% of the issued share capital of WII and his children as, inter alia, discretionary beneficiaries of the Family Trust have interests in the share capital of the Company. Accordingly, she is taken to be interested in the 285,120,000 shares in the Company under the SFO.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors and chief executives of the Company had any interests or short positions in any shares or underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they are taken or deemed to have under such provisions of the SFO), or which were required, pursuant to Section 352 of the SFO, to be entered in the register referred to therein, or which were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Companies, to be notified to the Company and the Stock Exchange.

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GENERAL INFORMATION

APPENDIX I

3. SUBSTANTIAL SHAREHOLDERS

As at the Latest Practicable Date, so far as was known to the Directors or chief executive of the Company, the parties (other than a Director or chief executive of the Company) who had an interest or short position in the shares or underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO were as follows:

Interests in the shares of the Company:

				Approximate
				% of total
	Direct	Deemed		issued shares
Name of substantial shareholder	interests	interests	Total	of the Company
Wangkin Investments Inc.		285,120,000	285,120,000	55.1%
		(Note)
Takson International Holdings	285,120,000		285,120,000	55.1%
Limited	(Note)

Note: Takson International Holdings Limited is a wholly-owned subsidiary of Wangkin Investments Inc., which in turn is owned as to 50% by Mr. Wong Tek Sun, Takson, and as to 50% by Ms. Pang Shu Yuk, Adeline Rita, both of whom are executive Directors of the Company. Therefore, all of these shares are entirely duplicated.

Save as disclosed above, as at the Latest Practicable Date, the Directors or chief executive of the Company were not aware of any person (other than a Director or chief executive of the Company) who had an interest or short position in the shares or underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who was interested, directly or indirectly, in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group.

4. DIRECTORS’ SERVICE CONTRACTS

As at the Latest Practicable Date, each of Mr. Wong Tek Sun, Takson and Ms. Pang Shu Yuk, Adeline Rita has a service contract with the Company which is determinable within one year without payment of compensation, other than statutory compensation. Apart from the aforesaid, none of the Directors has a service contract with the Company.

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GENERAL INFORMATION

APPENDIX I

5. LITIGATION

So far as the Directors are aware, as at the Latest Practicable Date, neither the Company nor any of its subsidiaries was engaged in any litigation or claim of material importance and no litigation or claim of material importance was pending or threatened against the Company or any of its subsidiaries.

6. COMPETING INTEREST

As at the Latest Practicable Date, in so far as the Directors are aware, none of the Directors or their respective associates (as defined in the Listing Rules) had any interest in a business which competes or is likely to compete with the business of the Group.

7. GENERAL

• (a) The registered office of the Company is at Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda.

• (b) The head office and principal place of business of the Company in Hong Kong is at 5th Floor, South Wing, Harbour Centre, Tower One, 1 Hok Cheung Street, Hunghom, Kowloon, Hong Kong.

• (c) The transfer offices of the Company are Abacus Share Registrars Limited, 26th Floor, Tesbury Centre, 28 Queen’s Road East, Hong Kong.

• (d) The secretary and qualified accountant of the Company is Mr. Chan Siu Man, Barry, CPA, FCCA.

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

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