PegBio Co., Ltd. — Capital/Financing Update 2010

Nov 26, 2010

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 adviser.

If you have sold or transferred all your shares in Beijing Yu Sheng Tang Pharmaceutical Group Limited, you should at once hand this circular and the accompanying form of proxy to the purchaser or the transferee or to the stockbroker, other registered dealer in securities, the bank or other agent through whom the sale or transfer was effected for transmission to the purchaser or the transferee.

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

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BEIJING YU SHENG TANG PHARMACEUTICAL GROUP LIMITED 北京御生堂藥業集團有限公司[*]

(Incorporated in Bermuda with limited liability) (Stock Code: 1141)

PROPOSED PLACING OF NEW SHARES UNDER SPECIFIC MANDATE, PROPOSED REFRESHMENT OF GENERAL MANDATE TO ISSUE NEW SHARES AND NOTICE OF SPECIAL GENERAL MEETING

Placing Agent

RADLAND INTERNATIONAL LIMITED

Independent financial adviser to the Independent Board Committee and the Independent Shareholders

Grand Vinco Capital Limited

(A wholly-owned subsidiary of Vinco Financial Group Limited)

A notice convening the special general meeting of Beijing Yu Sheng Tang Pharmaceutical Group Limited to be held at Plaza 1 and 2, Lower Lobby, Novotel Century Hong Kong, 238 Jaffe Road, Wanchai, Hong Kong on Wednesday, 15 December 2010 at 2:30 p.m. is set out on pages 24 to 27 of this circular. Whether or not you are able to attend and vote at the special general meeting, you are requested to read the notice and to complete and sign the accompanying form of proxy in accordance with the instructions printed thereon and return the same to the Company’s branch share registrar in Hong Kong, Tricor Tengis Limited at 26/F., Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong as soon as possible and in any event not less than forty-eight (48) hours before the time appointed for holding the special general meeting or any adjourned meeting thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the special general meeting or any adjourned meeting thereof should you so wish and in such event, the proxy form shall be deemed to be revoked.

• For identification purpose only

29 November 2010

CONTENTS

	Page
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM THE BOARD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
LETTER FROM THE INDEPENDENT BOARD COMMITTEE. . . . . . . . . . . . . . . . . . . . . . . .	15
LETTER FROM VINCO CAPITAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	16
NOTICE OF SGM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	24

DEFINITIONS

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

“AGM”	the annual general meeting of the Company held on 8 September
	2010, at which, among other matters, the Existing General
	Mandate was approved
“Announcement”	the announcement of the Company dated 10 November 2010 in
	relation to, inter alia, the Placing
“associate(s)”	the meaning ascribed thereto in the Listing Rules
“Beijing Unioncom”	Beijing Unioncom Pharmaceutical Company Limited (now
	known as Jinhua Qinggan (Beijing) Pharmaceutical Company
	Limited* (金花清感（北京）藥業有限公司))
“Board”	the board of Directors
“Business Day”	any day (other than a Saturday, Sunday or public holiday) on
	which banks are generally open for business in Hong Kong
“Company”	Beijing Yu Sheng Tang Pharmaceutical Group Limited (Stock
	Code: 1141), a company incorporated in Bermuda with limited
	liability and the shares of which are listed on main board of the
	Stock Exchange
“Connected Person(s)”	has the meaning ascribed thereto in the Listing Rules
“Director(s)”	the director(s) of the Company
“Existing General Mandate”	the general mandate granted to the Directors by the Shareholders
	at the AGM, to allot, issue and deal with up to 517,095,952
	Shares, representing 20% of the issued share capital of the
	Company as at the date of the AGM
“Group”	the Company and its subsidiaries
“Hong Kong”	the Hong Kong Special Administrative Region of the People’s
	Republic of China
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong

1

DEFINITIONS

”Independent Board Committee”	an independent committee of the Board comprising of all the
	Independent Non-executive Directors namely, Mr. Wong Kwok
	Tai, Mr. Weng Yixiang and Mr. Lu Xinsheng, formed to advise the
	Independent Shareholders on the Issue Mandate
“Independent Shareholders”	Shareholders other than Mr. Suen Cho Hung, Paul, Excelsior
	Kingdom Limited, Global Wealthy Limited and Mr. Sue Ka Lok
	and their respective associates
“Issue Mandate”	the mandate proposed to be sought at the SGM to authorise the
	Directors to allot, issue and deal with Shares not exceeding 20%
	of the issued share capital of the Company as at the date of SGM
“Latest Practicable Date”	25 November 2010, being the latest practicable date prior to
	the printing of this circular for ascertaining certain information
	contained herein
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange
“Listing Committee”	has the meaning ascribed to such term in the Listing Rules
“Placees”	any individual(s), institutional or other professional investor(s)
	procured by the Placing Agent to subscribe for any of the Placing
	Shares pursuant to the Placing Agreement
“Placing”	placing of up to 1,000,000,000 new Shares by the Placing
	Agent on a best effort basis pursuant to the terms of the Placing
	Agreement
“Placing Agent”	Radland International Limited, a licensed corporation within the
	meaning of the SFO
“Placing Agreement”	a conditional placing agreement dated 10 November 2010 entered
	into between the Company and the Placing Agent in relation to the
	Placing
“Placing Period”	30 Business Days commencing upon the date of passing
	the resolution(s) approving the Placing Agreement and the
	transactions contemplated thereunder and the granting of the
	Specific Mandate, at the SGM and terminating at 5:00 p.m. on the
	first Business Day following the expiry of a period of 30 Business
	Days from the date of the SGM, unless terminated earlier pursuant
	to the terms of the Placing Agreement

2

DEFINITIONS

“Placing Price” HK$0.32 per Placing Share “Placing Shares” up to 1,000,000,000 Shares to be placed under the Placing “SFO” the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “SGM” the special general meeting of the Company to be convened to consider and, if appropriate, to approve, inter alia, (i) the Placing Agreement and the transactions contemplated thereunder and the granting of the Specific Mandate; and (ii) the granting of the Issue Mandate “Shareholder(s)” holder(s) of Share(s) “Share(s)” ordinary share(s) of HK$0.01 each in the share capital of the Company “Specific Mandate” a specific mandate to be sought from the Shareholders at the SGM to allot and issue the Placing Shares pursuant to the Placing Agreement “Stock Exchange” The Stock Exchange of Hong Kong Limited “Vinco Capital” Grand Vinco Capital Limited, a wholly-owned subsidiary of Vinco Financial Group Limited (stock code: 8340), a corporation licensed to carry out business in type 1 (dealing in securities) and type 6 (advising on corporate finance) regulated activities under the SFO and the independent financial adviser appointed to advise the Independent Board Committee and the Independent Shareholders in relation to the refreshment of Existing General Mandate to issue new Shares

“Yu Sheng Tang Group” Beijing Yu Sheng Tang Holdings Limited and its subsidiaries “%”

per cent

3

LETTER FROM THE BOARD

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BEIJING YU SHENG TANG PHARMACEUTICAL GROUP LIMITED 北京御生堂藥業集團有限公司[*]

(Incorporated in Bermuda with limited liability)

(Stock Code: 1141)

Executive Directors: Mr. Suen Cho Hung, Paul (Chairman) Mr. Sue Ka Lok (Chief Executive Officer) Mr. Bai Jianjiang Ms. Lee Chun Yeung, Catherine

Registered office: Clarendon House 2 Church Street Hamilton HM 11 Bermuda

Independent Non-executive Directors: Mr. Wong Kwok Tai Mr. Weng Yixiang Mr. Lu Xinsheng

Head Office and Principal Place of Business in Hong Kong: Suite 1501, 15/F. Great Eagle Centre 23 Harbour Road Wanchai Hong Kong

29 November 2010

To the Shareholders,

Dear Sir/Madam,

PROPOSED PLACING OF NEW SHARES UNDER SPECIFIC MANDATE, PROPOSED REFRESHMENT OF GENERAL MANDATE TO ISSUE NEW SHARES AND NOTICE OF SPECIAL GENERAL MEETING

INTRODUCTION

On 10 November 2010 (after trading hours), the Placing Agent and the Company entered into the Placing Agreement pursuant to which the Company agreed to place, through the Placing Agent, a maximum of 1,000,000,000 Placing Shares, on a best effort basis, to not fewer than six Placees, who and whose ultimate beneficial owners are to be third parties independent from the Company and the directors, chief executive or substantial shareholders of the Company or its subsidiaries or any of their respective associates, at a price of HK$0.32 per Placing Share within the Placing Period. The Placing Agreement and the transactions contemplated thereunder and the granting of the Specific Mandate for the allotment and issue of the Placing Shares are subject to Shareholders’ approval at the SGM. In addition, as the Existing General Mandate had been almost fully utilised pursuant to the placing of 517,000,000 new Shares announced on 28 September 2010, the Company hereby proposed to refresh the Existing General Mandate at the SGM.

• For identification purpose only

4

LETTER FROM THE BOARD

The purpose of this circular is to provide you with information relating to (i) the Placing Agreement and the transactions contemplated thereunder and the Specific Mandate; (ii) the proposed refreshment of the Existing General Mandate to issue new Shares; and (iii) to give you notice of the SGM.

THE PROPOSED PLACING UNDER SPECIFIC MANDATE

The Placing Agreement

Date

10 November 2010 (after trading hours)

Issuer

The Company

Placing Agent and the Placees

Radland International Limited is the Placing Agent, has conditionally agreed to place 1,000,000,000 Placing Shares on a best effort basis and in consideration thereof, it will receive a placing commission of 2.5% on the gross proceeds of the Placing upon completion of the Placing. The Directors are of the view that the placing commission accords with the market rate and is fair and reasonable. To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, the Placing Agent and its ultimate beneficial owners are third parties independent of and not connected with the Company and its Connected Persons.

The Placing Agent agreed to procure, on a best effort basis, not fewer than six Placees, being independent individuals, institutional or other professional investors, to subscribe for the Placing Shares at the Placing Price within the Placing Period. The Placing Agent agreed to use all reasonable endeavours to ensure that the Placees and their ultimate beneficial owners are third parties independent from the Company and the directors, chief executive or substantial shareholders of the Company or its subsidiaries or any of their respective associates.

Number of Placing Shares

A maximum of 1,000,000,000 Placing Shares represent approximately 32.13% of the Company’s existing issued share capital of the Company of 3,112,479,760 Shares as at the Latest Practicable Date and approximately 24.32% of its issued share capital as enlarged by the Placing. The aggregate nominal value of the Placing Shares under the Placing will be HK$10,000,000.

5

LETTER FROM THE BOARD

Placing Price

The Placing Price of HK$0.32 per Placing Share represents (i) a discount of approximately 5.88% to the closing price of HK$0.34 per Share as quoted on the Stock Exchange on 10 November 2010, being the date of the Placing Agreement; (ii) a premium of approximately 7.74% to the average closing price of approximately HK$0.297 per Share as quoted on the Stock Exchange for the five consecutive trading days up to and including 9 November 2010; (iii) a premium of approximately 14.70% to the average closing price of approximately HK$0.279 per Share as quoted on the Stock Exchange for the ten consecutive trading days up to and including 9 November 2010; and (iv) a discount of approximately 3.03% to the closing price of HK$0.33 per Share as quoted on the Stock Exchange on the Latest Practicable Date.

The net placing price under the Placing is approximately HK$0.311 per Placing Share.

The Directors consider that the Placing Price, which was agreed after arm’s length negotiations between the Company and the Placing Agent with reference to current market price of the Shares, is fair and reasonable and in the interests of the Company and the Shareholders as a whole.

Ranking of Placing Shares

The Placing Shares, when issued and fully paid, will rank pari passu in all respects among themselves and with the Shares in issue on the date of allotment and issue of the Placing Shares.

Specific Mandate

The Placing Shares will be allotted and issued under the Specific Mandate to be granted to the Directors by a resolution of the Shareholders passed at the SGM. An application will be made to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the new Shares to be issued pursuant to the Placing.

As at the Latest Practicable Date, 517,000,000 Shares had been issued and allotted pursuant to the placing agreement dated 28 September 2010, of which had utilised over 99.98% of the Existing General Mandate. As a result, the remaining general mandate only allows the Directors to allot and issue up to 95,952 Shares which is not sufficient for the issue and allotment of the Placing Shares under the Placing. The Company proposed to refresh the Existing General Mandate at the SGM and please also refer to the section under “PROPOSED REFRESHMENT OF GENERAL MANDATE TO ISSUE NEW SHARES” for more details.

6

LETTER FROM THE BOARD

Conditions of the Placing

The Placing is conditional upon:

• (a) the Listing Committee of the Stock Exchange granting approval for the listing of, and permission to deal in, the Placing Shares; and

• (b) the passing of the resolution(s) by the Shareholders at the SGM to approve the Placing Agreement and the transactions contemplated thereunder and the Specific Mandate.

The conditions must be fulfilled on or prior to 28 February 2011 (or such later date as agreed by the Company and the Placing Agent), failing which the Placing Agreement shall terminate and none of the parties to the Placing Agreement shall have any claim against the other for any costs or losses (save for any prior breaches of the Placing Agreement).

Termination and force majeure events

The Placing Agreement may be terminated by the Placing Agent if at any time prior to 10:00 a.m. on the date of completion for the Placing Agreement, in the reasonable opinion of the Placing Agent the success of the Placing or the business or financial prospects of the Group would or might be adversely affected by any force majeure events (as defined below):

• (a) the introduction of any new law or regulation or any change in existing laws or regulations or change in the interpretation or application thereof; or

• (b) the occurrence of any event, development or change (whether or not local, national or international or forming part of a series of events or changes occurring or continuing before, on and/or after the date hereof and including an event or change in relation to or a development of an existing state of affairs) of a political, military, industrial, financial, economic or other nature, whether or not sui generis with any of the foregoing, resulting in a material adverse change in, or which might be expected to result in a material adverse change in, political, economic or stock market conditions; or

• (c) the imposition of any moratorium, suspension or material restriction on trading in securities generally on the Stock Exchange occurring due to exceptional financial circumstances or otherwise; or

• (d) a change or development involving a prospective change in taxation in Hong Kong, Bermuda or the People’s Republic of China or the implementation of exchange controls which shall or might materially and adversely affect the Group (as a whole) or its present or prospective shareholders in their capacity as such; or

• (e) any change or deterioration in the conditions of local, national or international securities markets occurs.

7

LETTER FROM THE BOARD

Completion of the Placing

Completion of the Placing shall take place not later than the second Business Day after the Placing Agreement has become unconditional (or such later date as may be agreed between the Company and the Placing Agent).

Reasons for the Placing and use of proceeds

The Group is principally engaged in the business of supply and procurement of metal minerals and recyclable metal materials, pharmaceutical, provision of finance and securities investment.

In an attempt to generate positive return to the Shareholders and the Company as a whole, the Company had conducted various fund raising exercises to meet with different needs of the Company from time to time and allocated the additional resources in accordance with the specific plans and the relevant details as set out in the section under “Fund raising activities in the past twelve months”. Given the continuous support of the Shareholders, the efforts and dedication of the management of the Company and the funds raised by the Group for the purpose of general working capital, the operation scale of the Company’s principal activities had experienced growth. With the proceeds from the previous fund raising exercises, the Group was able to have additional financial resources for further expansion of the existing principal activities. As a result, the Group was able to expand its network of suppliers and customers for trading of metal minerals and enjoyed sharp increases in the revenue and gross profit attributed to the strong business growth of the Group’s supply and procurement division for the previous year. For the funds raised as set out in the section under “Fund raising activities in the past twelve months” totalled 859.9 million (for which part of it was retained as cash as at 31 March 2010 and included in the Company’s audited consolidated financial statements for the year ended 31 March 2010 as cash and bank balances of HK$669.2 million), save for approximately HK$200 million which has been designated to fund the acquisitions of the Yu Sheng Tang Group and Beijing Unioncom and their respective intended financial obligations and general working capital, the remaining balance of approximately HK$460 million has been mainly applied as working capital for the Group’s supply and procurement division and securities investment division; and approximately HK$200 million has been deposited with banks for future opportunistic investments which may be used as the Group’s working capital when such operational needs arise from time to time. For the purpose of coping with the business development of the Group, in particular the expected further growth of the supply and procurement of metal minerals and recyclable metal minerals division and having the financial resources to capture future investment opportunities, the Company is of the view that additional financial resources from the Placing and any future fund raising activities are favorable for the Group’s future business development and will provide a positive return to the Company in long term. Further, the Company would continue to actively seek other investment opportunities, though with a cautious approach, which can generate positive return to the Shareholders and the Company as a whole. Accordingly, by obtaining additional financial resources, the Company is able to have more financial flexibility in managing its daily operational needs and seeking investment opportunities with wider range of scale. Therefore, the Company considered that the Placing as well as the proposed refreshment of the Existing General Mandate (details are set out in the section under “PROPOSED REFRESHMENT OF GENERAL MANDATE TO ISSUE NEW SHARES”) are in the interests of the Company and the Shareholders as a whole.

8

LETTER FROM THE BOARD

The maximum gross proceeds from the Placing will be HK$320 million and the maximum net proceeds will be approximately HK$311.2 million. The Company plans to apply the net proceeds from the Placing for (i) general working capital of the Group and/or repayment of debts and/or (ii) funding of appropriate investment opportunities if arise. The Company preliminarily plans to allocate 60% of the net proceeds to finance the general working capital of the Group and/or for repayment of debts; and 40% of the net proceeds to finance any appropriate investment opportunities if arise.

The Directors are of the view that in addition to the reasons and benefits stated above, the Placing will enlarge the shareholder base and the capital base of the Company and the net proceeds of the Placing will strengthen the Group’s financial position for future development of the Group. Accordingly, they consider that the Placing is fair and reasonable and is in the interests of the Company and the Shareholders as a whole.

Fund raising activities in the past twelve months

		Net proceeds
Date of		raised	Proposed use of the net	Actual use of the net
announcement	Fund raising activity	(approximately)	proceeds	proceeds
28 Sep 2010	Placing of 517,000,000	HK$142.9 million	General working capital of	Used as intended
	new Shares under		the Group
	general mandate
11 Mar 2010	Placing of existing	HK$476 million	Approximately HK$300	Used as intended
	Shares and		million for general
	subscription of		working capital and
	425,912,000 new		the development of
	Shares at HK$1.14		the Group’s Chinese
	per Share		medicine business, and
			as to the remaining
			approximately HK$176
			million as the Group’s
			general working capital
			as well as future
			opportunistic investments
			(if suitable opportunities
			do so arise in the future)
8 January 2010	Placing of convertible	HK$241 million	General working capital and	Used as intended
	notes in an		potential investments	(approximately HK$200
	aggregate principal		opportunities	million has been
	amount of			designated to fund the
	HK$244,900,000,			acquisitions of the Yu
	which was			Sheng Tang Group and
	completed on 28			Beijing Unioncom, and
	January 2010			their respective intended
				financial obligations and
				general working capital;
				and the remaining HK$41
				million has been used as
				general working capital
				of the Group)

9

LETTER FROM THE BOARD

Save as disclosed above, the Company has not conducted any other fund raising exercises in the past twelve months before the Latest Practicable Date.

SHAREHOLDING STRUCTURE

The shareholding structure of the Company (i) as at the Latest Practicable Date; and (ii) immediately after completion of the Placing is as follows:

Shareholders Substantial Shareholder: Global Wealthy Limited Directors: Suen Cho Hung, Paul_(Note 1) Sue Ka Lok(Note 2)_ Other Shareholders: – Placees – Others Total	As at the Latest Practicable Date Number of Approximate Shares % 437,433,866 14.05 10,000,000 0.32 10,000,000 0.32 0 0 2,655,045,894 85.31 3,112,479,760 100.00	Immediately after completion of the Placing Number of Approximate Shares % 437,433,866 10.64 10,000,000 0.24 10,000,000 0.24 1,000,000,000 24.32 2,655,045,894 64.56 4,112,479,760 100.00	Immediately after completion of the Placing Number of Approximate Shares % 437,433,866 10.64 10,000,000 0.24 10,000,000 0.24 1,000,000,000 24.32 2,655,045,894 64.56 4,112,479,760 100.00
			100.00

Notes:

(1) Global Wealthy Limited, a company incorporated in the British Virgin Islands with limited liability, is a wholly owned subsidiary of Excelsior Kingdom Limited, which in turn is wholly owned by Mr. Suen Cho Hung, Paul, an Executive Director and the Chairman of the Company.

(2) Mr. Sue Ka Lok is an Executive Director and the Chief Executive Officer of the Company.

PROPOSED REFRESHMENT OF GENERAL MANDATE TO ISSUE NEW SHARES

The Company has not refreshed the Existing General Mandate since the AGM.

Since the AGM, the Company had issued and allotted 517,000,000 new Shares pursuant to the placing agreement dated 28 September 2010 (“September Placing”), of which had utilised over 99.98% of the Existing General Mandate. The net proceeds from the September Placing of approximately HK$142.9 million was used as general working capital of the Group as originally contemplated.

Subsequent to the September Placing, the remaining general mandate of the Company only allows the Directors to allot and issue up to 95,952 new Shares which is not sufficient for the issue and allotment of the Placing Shares under the Placing Agreement as announced by the Company on 10 November 2010. As a result, the Placing Shares have to be issued and allotted under a specific mandate to be sought from the Shareholders at the SGM which takes more time to complete with uncertainty.

10

LETTER FROM THE BOARD

In order to provide a flexible means for the Company to raise further funds through the issue of new Shares for its future business development if and when opportunities arise, the Board proposes the refreshment of the Existing General Mandate to allow the Directors to issue and allot new Shares not exceeding 20% of the issued share capital of the Company as at the date of the SGM.

At the SGM, an ordinary resolution will be proposed to give the Directors a general mandate to allot, issue and deal with new Shares not exceeding 20% of the aggregate nominal amount of the share capital of the Company in issue as at the date of passing the proposed resolution of the Issue Mandate.

As at the Latest Practicable Date, the Company had 3,112,479,760 issued Shares. On the basis that no Shares will be issued and/or repurchased by the Company from the Latest Practicable Date up to the date of the SGM, the Company will be allowed to allot, issue and deal with up to 622,495,952 Shares under the Issue Mandate. Set out below is a table illustrating the shareholdings of the Company as at the Latest Practicable Date; and, for illustrative purpose, the potential dilution effect on the shareholdings of the Company immediately after the completion of the Placing (assumed the maximum number of Placing Shares have been issued and allotted) and full utilisation of the Issue Mandate (assuming there are no other changes in the issued share capital of the Company from the Latest Practicable Date until the full utilisation of the Issue Mandate):

As at the Latest Practicable Date Number of Approximate Shares % Substantial Shareholders Global Wealthy Limited 437,433,866 14.05 Directors Suen Cho Hung, Paul_(Note 1)10,000,000 0.32 Sue Ka Lok(Note 2)_ 10,000,000 0.32 Other Shareholders Placees – 0 Shares that may be issued under the Issue Mandate – 0 Others 2,655,045,894 85.31 Total 3,112,479,760 100.00	Immediately after maximum number of Placing Shares have been issued and allotted Number of Approximate Shares % 437,433,866 10.64 10,000,000 0.24 10,000,000 0.24 1,000,000,000 24.32 – 0 2,655,045,894 64.56 4,112,479,760 100.00	Immediately after full utilisation of the Issue Mandate Number of Approximate Shares % 437,433,866 9.24 10,000,000 0.21 10,000,000 0.21 1,000,000,000 21.12 622,495,952 13.15 2,655,045,894 56.07 4,734,975,712 100.00	Immediately after full utilisation of the Issue Mandate Number of Approximate Shares % 437,433,866 9.24 10,000,000 0.21 10,000,000 0.21 1,000,000,000 21.12 622,495,952 13.15 2,655,045,894 56.07 4,734,975,712 100.00
			100.00

11

LETTER FROM THE BOARD

Notes:

1. Global Wealthy Limited, a company incorporated in the British Virgin Islands with limited liability, is a wholly owned subsidiary of Excelsior Kingdom Limited, which in turn is wholly owned by Mr. Suen Cho Hung, Paul, an Executive Director and the Chairman of the Company.

2. Mr. Sue Ka Lok is an Executive Director and the Chief Executive Officer of the Company.

The Issue Mandate will, if granted, remain effective until the earliest of: (i) the conclusion of the next annual general meeting of the Company; (ii) the revocation or variation of the authority given under the resolution granting the Issue Mandate by an ordinary resolution of the Shareholders in general meeting; and (iii) the expiration of the period within which the next annual general meeting of the Company is required by the Bye-laws of the Company or any applicable laws to be held.

Though the Company has been seeking different investment opportunities from time to time in an attempt to generate positive return to the Group and the Shareholders, the Company has not yet entered into any non-legally binding memorandum of understanding or formal agreement with any potential investment targets and does not have any concrete plan in relation to the scale of investment. As the Placing is yet to be completed, the Company does not have any plan or intention to raise capital by using the Issue Mandate as at the Latest Practicable Date.

Having considered that (i) the Group has been cautiously looking for appropriate opportunities; and (ii) the refreshment of the Existing General Mandate would enhance the financial flexibility for the Group to raise funds for future investments and business development if necessary and hence to strengthen the capital base and financial position of the Company, the Company considered it necessary to request for Independent Shareholders’ approval to refresh the Existing General Mandate in the SGM.

SGM

The SGM will be convened and held for the purposes of considering, and if thought fit, pass the relevant resolutions to approve (i) the Placing Agreement and the transactions contemplated thereunder and the Specific Mandate; and (ii) the proposed refreshment of the Existing General Mandate to issue new Shares under the Issue Mandate.

A notice convening the special general meeting to be held at Plaza 1 and 2, Lower Lobby, Novotel Century Hong Kong, 238 Jaffe Road, Wanchai, Hong Kong on Wednesday, 15 December 2010 at 2:30 p.m. is set out on pages 24 to 27 of this circular. Whether or not you are able to attend and vote at the SGM, you are requested to read the notice and to complete and sign the accompanying form of proxy in accordance with the instructions printed thereon and return the same to the Company’s branch share registrar in Hong Kong, Tricor Tengis Limited at 26/F., Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong as soon as possible and in any event not less than forty-eight (48) hours before the time appointed for holding the SGM or any adjourned meeting thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the SGM or any adjourned meeting thereof should you so wish and in such event, the proxy form shall be deemed to be revoked.

Pursuant to Rule 13.39(4) of Listing Rules, (i) the Placing Agreement and transactions contemplated thereunder and the granting of the Specific Mandate will be voted on by way of poll by the Shareholders; and (ii) the proposed Issue Mandate will be voted on by way of poll by the Independent Shareholders, at the SGM. The Company will make a further announcement on the results of the SGM.

12

LETTER FROM THE BOARD

No Shareholders are required to abstain from voting on the Placing Agreement and the transactions contemplated thereunder and the granting of the Specific Mandate.

Under Rule 13.36(4)(a) of the Listing Rules, since there is no controlling Shareholder, Directors (excluding Independent Non-executive Directors) and the chief executive of the Company and their respective associates are required to abstain from voting in favour of the resolution for the granting of the Issue Mandate at the SGM. As at the Latest Practicable Date, Mr. Suen Cho Hung, Paul, an Executive Director and the Chairman of the Company, being the ultimate beneficial owner of Excelsior Kingdom Limited and Global Wealthy Limited, held in total 14.37% (as to 0.32% are held by Mr. Suen Cho Hung, Paul in his personal capacity and as to 14.05% are held by Global Wealthy Limited which in turn is wholly owned by Excelsior Kingdom Limited) of the issued share capital of the Company; and Mr. Sue Ka Lok, an Executive Director and the Chief Executive Officer of the Company, held 10,000,000 Shares (being approximately 0.32% of the issued share capital of the Company). As such, Mr. Suen Cho Hung, Paul, Excelsior Kingdom Limited, Global Wealthy Limited and Mr. Sue Ka Lok and their respective associates will be required to abstain from voting in favour of the resolution for the granting of the Issue Mandate at the SGM. As at the Latest Practicable Date, none of Mr. Suen Cho Hung, Paul, Excelsior Kingdom Limited, Global Wealthy Limited and Mr. Sue Ka Lok and their respective associates had indicated that they would vote against the resolution for the granting of the Issue Mandate at the SGM.

RECOMMENDATION

The Board is of the opinion that the Placing Agreement and the transactions contemplated thereunder and the granting of the Specific Mandate are fair and reasonable and are in the best interests of the Company and the Shareholders as a whole and the Board recommends the Shareholders to vote in favour of the relevant resolution to be proposed at the SGM.

The Independent Board Committee comprising of all the Independent Non-executive Directors have been formed to advise the Independent Shareholders on the proposed Issue Mandate. Vinco Capital has been appointed as the independent financial adviser of the Company to advise the Independent Board Committee and the Independent Shareholders on the granting of the Issue Mandate.

The Board is of the opinion that the proposed refreshment of the Existing General Mandate to issue new Shares is fair and reasonable and is in the best interests of the Company and the Shareholders as a whole and the Board recommends the Independent Shareholders to vote in favour of the relevant resolution to be proposed at the SGM.

ADDITIONAL INFORMATION

Your attention is also to drawn to the additional information set out in the Letter from the Independent Board Committee, the Letter from Vinco Capital and the notice to this circular.

13

LETTER FROM THE BOARD

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.

Yours faithfully, On behalf of the Board Sue Ka Lok Chief Executive Officer

14

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

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BEIJING YU SHENG TANG PHARMACEUTICAL GROUP LIMITED 北京御生堂藥業集團有限公司[*]

(Incorporated in Bermuda with limited liability) (Stock Code: 1141)

29 November 2010

To the Independent Shareholders

Dear Sir or Madam,

PROPOSED REFRESHMENT OF GENERAL MANDATE TO ISSUE NEW SHARES

We refer to the circular from the Company to the Shareholders dated 29 November 2010 (the “Circular”) of which this letter forms part. Terms defined in the Circular shall have the same meanings when used herein unless the context otherwise requires.

We have been appointed to advise you in connection with the proposed refreshment of the Existing General Mandate, details of which are set out in the “Letter from Vinco Capital” set out on pages 16 to 23 of the Circular, which contains Vinco Capital’s advice regarding the the proposed refreshment of the Existing General Mandate.

Having taken into account the advice of Vinco Capital, we consider the proposed refreshment of the Existing General Mandate to be fair and reasonable 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 resolution to be proposed at the SGM to approve the proposed refreshment of the Existing General Mandate.

Yours faithfully,

For and on behalf of the Independent Board Committee

Mr. Wong Kwok Tai

Mr. Weng Yixiang

Independent Non-executive Independent Non-executive Director Director

Mr. Lu Xinsheng

Independent Non-executive Director

• For identification purpose only

15

LETTER FROM VINCO CAPITAL

The following is the text of a letter of advice from Vinco Capital to the Independent Board Committee and the Independent Shareholders in connection with the refreshment of Existing General Mandate to issue new shares, which has been prepared for the purpose of incorporation in this circular.

Grand Vinco Capital Limited Units 4909-4910, 49/F., The Center 99 Queen’s Road Central, Hong Kong

29 November 2010

To the Independent Board Committee and the Independent Shareholders of Beijing Yu Sheng Tang Pharmaceutical Group Limited

Dear Sirs,

PROPOSED REFRESHMENT OF GENERAL MANDATE TO ISSUE NEW SHARES

INTRODUCTION

We refer to our engagement as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in connection with the proposed refreshment of Existing General Mandate, details of which are set out in the section headed “Letter from the Board” in the circular (“Circular”) issued by the Company to the Shareholders dated 29 November 2010 of which this letter forms part thereof. Capitalised terms used in this letter shall have the same meanings ascribed to them in the Circular unless the context otherwise requires.

Since the AGM, the Company had issued and allotted 517,000,000 new Shares pursuant to the placing agreement dated 28 September 2010, of which had utilised over 99.98% of the Existing General Mandate.

As at the Latest Practicable Date, the remaining Existing General Mandate of the Company was substantially utilised as a result of the completion of the placing on 12 October 2010. If the Existing General Mandate is not refreshed, the Company only allows allotting and issuing up to 95,952 new Shares under the Existing General Mandate. In order to provide a flexible means for the Company to raise further funds through the issue of new Shares for the Company’s future business development if and when opportunities arises, the Board proposes the refreshment of the Existing General Mandate to allow the Directors to issue and allot new Shares not exceeding 20% of the issued share capital of the Company at the date of SGM.

16

LETTER FROM VINCO CAPITAL

In accordance with Rule 13.36(4)(a) of the Listing Rules, the refreshment of Existing General Mandate requires the approval of the Independent Shareholders by way of poll at the SGM. Any controlling Shareholders and their associates, or when there are no controlling Shareholders, the Directors (excluding independent non-executive Directors) and the chief executives of the Company and their respective associates shall abstain from voting in favour of the resolution approving the refreshment of Existing General Mandate.

As at the Latest Practicable Date, save for Mr. Suen Cho Hung, Paul, an Executive Director and the Chairman of the Company, being the ultimate beneficial owner of Excelsior Kingdom Limited and Global Wealthy Limited, held in total 14.37% (as to 0.32% are held by Mr. Suen Cho Hung, Paul in his personal capacity and as to 14.05% are held by Global Wealthy Limited which in turn is wholly owned by Excelsior Kingdom Limited) of the issued share capital of the Company; and Mr. Sue Ka Lok, an Executive Director and the Chief Executive Officer of the Company, held 10,000,000 Shares of approximately 0.32% of the issued share capital of the Company, no other executive Directors or chief executive of the Company or their respective associates have any interests in any Shares. As such, Mr. Suen Cho Hung, Paul, Excelsior Kingdom Limited, Global Wealthy Limited and Mr. Sue Ka Lok and their respective associates will be required to abstain from voting in favour of the resolution for the granting of the Issue Mandate at the SGM.

The Independent Board Committee, comprising Mr. Wong Kwok Tai, Mr. Weng Yixiang and Mr. Lu Xinsheng, all being the Independent Non-executive Directors, has been formed to advise the Independent Shareholders as to whether the proposed refreshment of Existing General Mandate is fair and reasonable so far as the Independent Shareholders are concerned and whether the refreshment of Existing General Mandate is in the interests of the Company and the Independent Shareholders as a whole.

BASIS OF OUR OPINION AND RECOMMENDATION

In forming our opinion and recommendation, we have relied on the information, facts and representations contained or referred to in the Circular and the information, facts and representations provided by, and the opinions expressed by the Directors, management of the Company and its subsidiaries. We have assumed that all information, facts, opinions and representations made or referred to in the Circular were true, accurate and complete at the time they were made and continued to be true, accurate and complete as at the date of the Circular and that all expectations and intentions of the Directors, management of the Company and its subsidiaries, will be met or carried out as the case may be. We have no reason to doubt the truth, accuracy and completeness of the information, facts, opinions and representations provided to us by the Directors, management of the Company and its subsidiaries. The Directors have confirmed to us that no material facts have been withheld or omitted from the information supplied and opinions expressed. We have no reason to doubt that any relevant material facts have been withheld or omitted from the information provided and referred to in the Circular or the reasonableness of the opinions and representations provided to us by the Directors, management of the Company and its subsidiaries.

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

17

LETTER FROM VINCO CAPITAL

We have relied on such information and opinions and have not, however, conducted any independent verification of the information provided, nor have we carried out any independent investigation into the business, financial conditions and affairs of the Group or its future prospect.

Based on the foregoing, we confirm that we have taken all reasonable steps applicable to the refreshment of Existing General Mandate, as referred to in Rule 13.80 of the Listing Rules (including the notes thereto).

This letter is issued for the information for the Independent Board Committee and the Independent Shareholders solely in connection with their consideration of the refreshment of Existing General Mandate and, except for its inclusion in the Circular, is not to be quoted or referred to, in whole or in part, nor shall this letter be used for any other purposes, without prior written consent.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our opinion and recommendation to the Independent Board Committee and the Independent Shareholders in respect of the refreshment of Existing General Mandate, we have taken into consideration the following principal factors and reasons:

1. Background of and reasons for the refreshment of Existing General Mandate

The Group is principally engaged in the business of supply and procurement of metal minerals and recyclable metal materials, pharmaceutical, provision of finance and securities investment.

At the AGM, the Directors were granted the Existing General Mandate to allot and issue up to 517,095,952 Shares of up to 20% of the entire issued share capital of the Company as at the date of AGM. Upon completion of the placing on 12 October 2010, 517,000,000 Shares were issued under the Existing General Mandate, representing approximately 99.98% of the Existing General Mandate. Accordingly, the Company only allows the Directors to allot and issue up to 95,952 new Shares under the Existing General Mandate.

As at the Latest Practicable Date, the issued share capital of the Company is 3,112,479,760 Shares. Subject to the passing of the ordinary resolution for the granting of the Issue Mandate and on the assumption that no further Shares will be issued or repurchased by the Company from the Latest Practicable Date and up to the date of the SGM (both dates inclusive), the Directors would be granted the authority to allot and issue up to a maximum of 622,495,952 Shares under the Issue Mandate, being 20% of the aggregate number of issued Shares as at the date of the SGM.

As stated in the letter from the Board, the Directors believe that the refreshment of Existing General Mandate will provide a flexible means for the Company to raise further funds through the issue of new Shares for its future business development if and when an opportunity arises. As advised by the Directors, the Directors consider that (i) the Existing General Mandate has been substantially utilised; (ii) the proposed refreshment of Existing General Mandate will enable the Group to conduct fund raising activities as and when opportunities arise; and (iii) when there arises any potential investment opportunities, the Company may lose the opportunities as the grant of specific mandate is subject to the approval of the Shareholders prior to the issuance which may cause undue delay if the Group wishes to

18

LETTER FROM VINCO CAPITAL

carry out timely investments or acquisitions. If the Existing General Mandate is refreshed, the Group will be in a better bargaining position in the negotiation of potential investments or acquisitions. Accordingly, the Board proposes to pass an ordinary resolution at the SGM to seek approval by the Independent Shareholders in respect of the refreshment of Existing General Mandate, pursuant to which the Directors shall be granted the authority to allot and issue additional new Shares not exceeding 20% of the issued share capital of the Company as at the date of the SGM.

In view of the above, we concur with the Directors’ view that the refreshment of Existing General Mandate 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.

2. Fund raising activities of the Company in the past twelve months

Set out below are the fund raising activities of the Company during the past twelve months immediately prior to the Latest Practicable Date:

		Net proceeds
Date of		raised	Intended use of net	Actual use of net proceeds as
announcement	Event	(approximately)	proceeds	at the Latest Practicable Date
28 September 2010	Placing of 517,000,000	HK$142.9 million	General working capital	Used as intended
	new Shares under		of the Group
	Existing General
	Mandate
11 March 2010	Placing of existing	HK$476 million	Approximately HK$300	Used as intended
	Shares and		million for general
	subscription of		working capital
	425,912,000 new		and development
	Shares at HK$1.14		of the Group’s
	per Share		Chinese medicine
			business, and as
			to the remaining
			approximately
			HK$176 million
			as the Group’s
			general working
			capital as well as
			future opportunistic
			investments (if
			suitable opportunities
			do so arise in the
			future)
8 January 2010	Placing of convertible	HK$241 million	General working capital	Used as intended
	notes in an aggregate		of the Group and	(approximately HK$200
	principal amount of		potential investment	million has been designated
	HK$244,900,000,		opportunities	to fund the acquisitions of
	which was completed			the Yu Sheng Tang Group
	on 28 January 2010			and Beijing Unioncom, and
				their respective intended
				financial obligations and
				general working capital,
				and the remaining HK$41
				million has been used as
				general working capital of
				the Group)

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LETTER FROM VINCO CAPITAL

Save as disclosed above, the Directors confirmed that the Company has not conducted any other fund raising activities during the past twelve months immediately prior to the Latest Practicable Date. As advised by the Directors, we noted that the total net proceeds of HK$859.9 million which received from the fund raising activities in the past twelve months save for approximately HK$200 million which has been designated to fund the acquisitions of the Yu Sheng Tang Group and Beijing Unioncom and their respective financial obligations and general working capital, the remaining balance of approximately HK$460 million was applied to the general working capital for the Group’s supply and procurement division and securities investment division; and as to approximately HK$200 million has been deposited with banks for future opportunistic investments which may be used as the Group’s working capital when such operational needs arise from time to time. As such, we are of the view that the actual use of net proceeds was in line with the intended use of net proceeds as stated in their respectively announcements of the abovementioned fund raising activities.

As confirmed by the Directors, we noted that, for the purpose of coping with the business development of the Group, in particular the expected further growth of the supply and procurement of metal minerals and recyclable metal minerals division, the Company intends to reserve sufficient financial resources to capture future investment opportunities. In view of that and the expected expansion in the metal minerals trading business of the Group, we are of the view that the Company requires to put in place more flexible measures which will allow the Company to raise funds in a timely manner when any other possible investment opportunities arise. On the other hand, as set out in the audited annual report of the Company for the year ended 31 March 2010, we noted that there was sharp increases in the Group’s revenue and gross profit which were mainly attributed to the strong business growth of the Group’s supply and procurement division. The Directors also confirmed that the Company will continue to expand its network of suppliers and customers for trading of metal minerals. Thus, we are of the view that the Company sought refreshment of Existing General Mandate to enhance the flexibility of the Group to raise additional funds through the issue of new Shares for its daily business operations and for its future business development if and when opportunities arise is reasonable. Having considered that (i) the Group has been continuously and cautiously looking for appropriate opportunities to optimise the value of its current business; (ii) the Group may require further funding for the future development of its business of supply and procurement of metal minerals and recyclable metal minerals; (iii) the possible investment which may proceed requires substantive funding; and (iv) the Issue Mandate would enhance the financial flexibility for the Group to raise funds for future investments and business development if necessary and hence to strengthen the capital base and financial position of the Company, we consider that it is reasonable for the Directors to propose the granting of Issue Mandate at the SGM.

The Directors confirmed that the existing cash resources of the Group are sufficient for it to conduct its daily operations and the Group has sufficient working capital to meet its present requirements. However, the Directors cannot preclude the possibilities that additional funding may still be needed for investment development as well as other opportunities arise in the future. In the event the Company identifies a suitable investment opportunity but does not have sufficient financial resources on hand, or is unable to obtain loan financing on acceptable terms, or cannot find other alternatives to finance the acquisition of such investment opportunity in a timely manner, the Company may lose its opportunities in an otherwise favourable investment and a favourable opportunity to expand its business portfolio. In view of the gradual recovery in the economy, we are advised by the Directors that they have been actively seeking potential investment opportunities and business developments of the Group, though with

20

LETTER FROM VINCO CAPITAL

a cautious approach. As such, they considered the refreshment of Existing General Mandate will provide a flexible means for the Company to raise further funds through the issue of new Shares for the Group to grasp the opportunities in a timely manner as and when an opportunity arises. In view of the above, we consider that it is reasonable for the Directors to propose the refreshment of Existing General Mandate at the SGM.

In view of the foregoing and the next annual general meeting will not be convened until around September 2011 (which is about ten months away from the Latest Practicable Date), we concur with the Directors’ view that the refreshment of Existing General Mandate is fair and reasonable to the Company and is in the interests of the Company and the Independent Shareholders as a whole.

3. Financial flexibility

The Directors believe that the refreshment of Existing General Mandate will provide a flexible means for the Company to raise further funds through the placing of new Shares for its future business development if and when an opportunity arises.

Given that (i) the Existing General Mandate has been substantially utilised; and (ii) any further Shares to be issued by the Company in excess of the limit of the Existing General Mandate will require approval from the Shareholders at the general meeting, which is rather time-consuming, we consider that the refreshment of Existing General Mandate will provide the Group with necessary financial flexibility as allowed under the Listing Rules to issue and allot new Shares to raise additional funds through the issue of new Shares for its future business development as and when an opportunity arises. Given the necessary financial flexibility available to the Company, we concur with the Directors’ view that the refreshment of Existing General Mandate is essential for the Group to respond to the market in a timely manner to seize the investment opportunities that may arise. Accordingly, we are of the view that the refreshment of Existing General Mandate is in the interests of the Company and the Independent Shareholders as a whole.

4. Other financing alternatives

We have enquired the Directors and the Directors have considered equity financing to be an important avenue of resources for the Group given its non-interest bearing nature. Other than equity financing available to the Group, the Directors confirmed that they have also considered other financing alternatives, such as debt financing and funding through internal cash resources. As confirmed by the Directors, the Group has sufficient working capital to meet its present requirements, however, there is no certainty that such cash resources will be sufficient or be available for its future investments or business developments. In addition, debt financing may incur interest burden on the Group and it may subject to, including but not limited to, lengthy due diligence and negotiations with the banks based on the Group’s financial position, capital structure and the prevailing market condition. The alternative options encompass certain uncertainties and are time-consuming as compared to equity financing.

21

LETTER FROM VINCO CAPITAL

Further to our discussion with the Directors, they have also considered other forms of equity financing methods such as rights issue and open offer, yet, such financing methods may take a longer time to complete and will incur substantially more costs such as underwriting commission and there is the likely chance of a highly dilutive pricing of the offer established by an underwriter and there is no certainty that the company will be able to procure favourable terms under such commercial underwriting. Having considered that investment opportunities which may arise at any time and require prompt decision by the Group, we consider that the refreshment of Existing General Mandate will provide the Company an additional financing alternative for the Company to raise funds for its future investments or business developments and it is reasonable for the Company to have the flexibility in deciding the best financing methods for any future investments or business developments. Accordingly, we are of the view that the refreshment of Existing General Mandate is in the interests of the Company and the Independent Shareholders as a whole.

5. Potential dilution to shareholdings of the Shareholders

Set out below is a table illustrating the shareholdings of the Company as at the Latest Practicable Date; and, for illustrative purpose, the potential dilution effect on the shareholdings of the Company immediately after full utilisation of the Issue Mandate (assuming there are no changes in the issued share capital of the Company from the Latest Practicable Date until the date of the SGM):

Substantial Shareholders Global Wealthy Limited Directors Suen Cho Hung, Paul_(Note 1) Sue Ka Lok(Note 2) Other Shareholders Shares that may be issued under the Issue Mandate Others Total _Notes:	As at the Latest Practicable Date Number Approximate of Shares % 437,433,866 14.05 10,000,000 0.32 10,000,000 0.32 – 0 2,655,045,894 85.31 3,112,479,760 100.00	Immediately after full utilisation of the Issue Mandate Number Approximate of Shares % 437,433,866 11.71 10,000,000 0.27 10,000,000 0.27 622,495,952 16.67 2,655,045,894 71.08 3,734,975,712 100.00	Immediately after full utilisation of the Issue Mandate Number Approximate of Shares % 437,433,866 11.71 10,000,000 0.27 10,000,000 0.27 622,495,952 16.67 2,655,045,894 71.08 3,734,975,712 100.00
			100.00

1. Global Wealthy Limited, a company incorporated in the British Virgin Islands with limited liability, is a wholly owned subsidiary of Excelsior Kingdom Limited, which in turn is wholly owned by Mr. Suen Cho Hung, Paul, an Executive Director and the Chairman of the Company.

2. Mr. Sue Ka Lok is an Executive Director and the Chief Executive Officer of the Company.

22

LETTER FROM VINCO CAPITAL

The aggregate shareholding of the other public Shareholders will decrease from approximately 85.31% to approximately 71.08% upon full utilisation of the Issue Mandate, indicating a potential maximum dilution of approximately 14.23%. Taking into account the potential benefits of the refreshment of Existing General Mandate as discussed above and the fact that the shareholdings of all Shareholders will be diluted proportionally to their respective shareholdings upon full utilisation of the Issue Mandate, we consider such maximum potential dilution to the shareholdings of the Shareholders to be acceptable.

CONCLUSION

Having taken into consideration the above principal factors and reasons, we are of the view that the refreshment of Existing General Mandate is fair and reasonable so far as the Independent Shareholders are concerned and that the refreshment of Existing General Mandate is in the interests of the Company and the Independent Shareholders as a whole. Accordingly, we advise the Independent Board Committee to recommend the Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the SGM to approve the granting of the Issue Mandate.

Yours faithfully, For and on behalf of Grand Vinco Capital Limited Alister Chung Managing Director

23

NOTICE OF SGM

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BEIJING YU SHENG TANG PHARMACEUTICAL GROUP LIMITED 北京御生堂藥業集團有限公司[*]

(Incorporated in Bermuda with limited liability)

(Stock Code: 1141)

NOTICE IS HEREBY GIVEN that a special general meeting of Beijing Yu Sheng Tang Pharmaceutical Group Limited (the “Company”) will be held at Plaza 1 and 2, Lower Lobby, Novotel Century Hong Kong, 238 Jaffe Road, Wanchai, Hong Kong on Wednesday, 15 December 2010 at 2:30 p.m. for the purpose of considering and, if thought fit, passing the following resolutions as ordinary resolutions:

ORDINARY RESOLUTIONS

1. “ THAT:

2. (a) the terms of the conditional placing agreement (the “Placing Agreement”) entered into on 10 November 2010 between the Company as issuer and Radland International Limited as placing agent in relation to the placing of up to 1,000,000,000 new shares (the “Placing Shares”) of HK$0.01 each in the capital of the Company, on a best effort basis, for cash at a price of HK$0.32 per Placing Share, a copy of the Placing Agreement having been produced to this Meeting and marked “A” and signed by the Chairman of the Meeting for the purpose of identification, and the transactions contemplated under the Placing Agreement, be and are hereby approved, ratified and confirmed;

3. (b) the directors (the “Directors”) of the Company be and are hereby authorised to exercise the powers of the Company to allot and issue the Placing Shares, pursuant to the terms of the Placing Agreement, such Placing Shares shall rank pari passu in all respects among themselves and with the existing ordinary shares of the Company in issue at the date of the allotment of the Placing Shares; and

4. (c) the Directors, be and are hereby authorised to take such actions, do such things, agree to such amendments, variations or extension to the Placing Agreement and execute such further documents or deeds which in their opinion may be necessary, desirable or expedient for the purpose of giving effect to and/or to implement the transactions contemplated in this resolution.”

5. For identification purpose only

24

NOTICE OF SGM

1. “ THAT:

2. (a) subject to paragraph (c) of this resolution, the exercise by the directors of the Company (the “Directors”) during the Relevant Period (as hereinafter defined) of all the powers of the Company to allot, issue and deal with authorised and unissued shares in the capital of the Company and to make or grant offers, agreements and options (including bonds, warrants, debentures, notes and any securities carrying rights to subscribe for or convert or exercise into shares of the Company) which might require the exercise of such powers be and is hereby generally and unconditionally approved;

3. (b) the approval in paragraph (a) of this resolution shall authorise the Directors to make or grant offers, agreements and options (including bonds, warrants, debentures, notes and any securities carrying rights to subscribe for or convert or exercise into shares of the Company) during the Relevant Period which would or might require the exercise of such powers after the end of the Relevant Period;

4. (c) the aggregate nominal amount of share capital allotted or agreed conditionally or unconditionally to be allotted by the Directors pursuant to the approval in paragraph (a) of this resolution, otherwise than pursuant to:

   • (i) a Right Issue (as hereinafter defined);

   • (ii) the exercise of options under a share option scheme of the Company;

   • (iii) the exercise of rights of subscription or conversion under the terms of any securities issued by the Company which are convertible or exercisable into shares of the Company; or

   • (iv) any scrip dividend scheme or similar arrangement providing for the allotment of shares in lieu of the whole or part of a dividend on shares of the Company in accordance with the Bye-laws of the Company from time to time;

shall not exceed 20% of the aggregate nominal amount of the issued share capital of the Company on the date of the passing of this resolution and the said approval shall be limited accordingly; and

25

NOTICE OF SGM

• (d) for the purpose of this resolution:

”Relevant Period” means the period from the passing of this resolution until whichever is the earliest of:

• (i) the conclusion of the next annual general meeting of the Company;

• (ii) the revocation or variation of the authority given under this resolution by ordinary resolution passed by the Company’s shareholders in general meeting; and

• (iii) the expiration of the period within which the next annual general meeting of the Company is required by the Bye-laws of the Company or any applicable laws to be held.

”Rights Issue” means an offer of shares open for a period fixed by the Directors to holders of shares of the Company or any class thereof on the register on a fixed record date in proportion to their then holdings of such shares or class thereof (subject to such exclusions or other arrangements as the Directors may deem necessary or expedient in relation to fractional entitlements or having regard to any restrictions or obligations under the laws of any relevant jurisdiction or the requirements of any recognised regulatory body or any stock exchange).”

By Order of the Board Sue Ka Lok Chief Executive Officer

Hong Kong, 29 November 2010

Head Office and Principal Place of Business in Hong Kong:

Suite 1501, 15/F. Great Eagle Centre 23 Harbour Road Wanchai, Hong Kong

26

NOTICE OF SGM

Notes:

1. Any member of the Company entitled to attend and vote at a meeting of the Company is entitled to appoint another person as his proxy to attend and vote instead of him. A member of the Company who is the holder of two or more shares may appoint more than one proxy to represent him and vote on his behalf at a general meeting of the Company or at a class meeting. A proxy need not be a member of the Company. In addition, a proxy or proxies representing either a member of the Company who is an individual or a member of the Company which is a corporation is entitled to exercise the same powers on behalf of the member of the Company which he or they represent as such member of the Company could exercise.

2. The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing or, if the appointor is a corporation, either under its seal or under the hand of an officer, attorney or other person authorised to sign the same. In the case of an instrument of proxy purporting to be signed on behalf of a corporation by an officer thereof it shall be assumed, unless the contrary appears, that such officer was duly authorised to sign such instrument of proxy on behalf of the corporation without further evidence of the fact.

3. The instrument appointing a proxy and (if required by the Board of Directors of the Company) the power of attorney or other authority (if any) under which it is signed, or a certified copy of such power or authority, shall be delivered to the Company’s branch share registrar in Hong Kong, Tricor Tengis Limited at 26/F., Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong as soon as possible and in any event not less than forty-eight (48) hours before the time appointed for holding the special general meeting or adjourned meeting thereof at which the person named in the instrument proposes to vote, and in default the instrument of proxy shall not be treated as valid.

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

5. Where there are joint holders of any share, any one of such joint holders may vote, either in person or by proxy, in respect of such share as if he were solely entitled thereto, but if more than one of such joint holders be present at any meeting the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders, and for this purpose seniority shall be determined by the order in which the names stand in the register of members of the Company in respect of the joint holding.

27