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

Jan 31, 2010

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, 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 announcement.

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POLY DEVELOPMENT HOLDINGS LIMITED 保興發展控股有限公司[*]

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

Financial Adviser

DISCLOSEABLE TRANSACTION

ACQUISITION OF THE ENTIRE ISSUED SHARE CAPITAL OF BEIJING YU SHENG TANG HOLDINGS LIMITED

On 29 January 2010, the Purchaser, a wholly-owned subsidiary of the Company, BAI, Fordland and Deluxe Dynamic as the Vendors, and Mr. Bai, Ms. Han and Mr. Tan as the Vendor Guarantors entered into the Sale and Purchase Agreement, pursuant to which the Purchaser has agreed to purchase, and the Vendors has agreed to sell, the Sale Shares for a consideration of HK$10,000,000. Under the Sale and Purchase Agreement, the Purchaser has also agreed to purchase from Fordland the Sale Loan, comprising the principal amount of the shareholder’s loan advanced by Fordland to the Target Company and outstanding and owing as at Completion, on a dollar to dollar basis for a consideration of HK$19,757,680.

The Sale and Purchase Agreement is unconditional and Completion has taken place at the office of the Purchaser on the same day as the date of execution of the Sale and Purchase Agreement. The consideration for both the Sale Shares and the Sale Loan have been effected in cash in full by the Purchaser on Completion, and the Purchaser, Fordland and the Target Company have executed the Sale Loan Assignment Document for the assignment by Fordland of the Sale Loan to the Purchaser on Completion.

The transactions contemplated under the Sale and Purchase Agreement constitute a discloseable transaction for the Company under Rule 14.06(2) of the Listing Rules and is subject to announcement requirements of Chapter 14 of the Listing Rules.

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The Board is pleased to announce that on 29 January 2010, the Purchaser, a whollyowned subsidiary of the Company, BAI, Fordland and Deluxe Dynamic as the Vendors, and Mr. Bai, Ms. Han and Mr. Tan as the Vendor Guarantors entered into the Sale and Purchase Agreement, pursuant to which the Purchaser has agreed to purchase, and the Vendors has agreed to sell, the Sale Shares, being the entire issued share capital of the Target Company as at the date of the Sale and Purchase Agreement. Under the Sale and Purchase Agreement, the Purchaser has also agreed to purchase from Fordland the Sale Loan, comprising the principal amount of the shareholder’s loan advanced by Fordland to the Target Company and outstanding and owing as at Completion.

As at the date of the Sale and Purchase Agreement, the Target Company held, directly or indirectly, 100% equity interests of Yu Sheng Tang (being the acquirer of the Intellectual Property as further discussed below), 100% equity interests of Weikang Yigan and 70% equity interests of Yu Sheng Tang Clinic (together the Target Group).

THE SALE AND PURCHASE AGREEMENT

Date

29 January 2010

Parties

Purchaser: Poly Fortune Enterprises Limited Vendors: BAI’s Holdings Limited Fordland Global Investments Limited Deluxe Dynamic Limited Vendor Guarantors: Mr. Bai Jianjiang Ms. Han Xueliang Mr. Tan Qi

The Purchaser is a wholly-owned subsidiary of the Company and its principal activity is investment holding. Save for entering into of the Sale and Purchase Agreement, the Purchaser has not engaged in any other business activity.

BAI, Fordland and Deluxe Dynamic are companies incorporated under the laws of the British Virgin Islands with limited liabilities which own 40%, 30% and 30% equity interests of the Target Company respectively. The principal activity of each of BAI, Fordland and Deluxe Dynamic is investment holding.

To the best of the Directors’ knowledge, information and belief and having made all reasonable enquiries, the Vendors and the Vendor Guarantors are Independent Third Parties.

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Assets to be acquired and consideration

The Purchaser has agreed to purchase, and the Vendors has agreed to sell, the Sale Shares for a consideration of HK$10,000,000. The said consideration was arrived at after arm’s length negotiations between the Vendors and the Company taking into consideration the future business prospect of the Chinese medicine, Jinhua Qinggan and the Intellectual Property acquired by Yu Sheng Tang. In addition, the Purchaser has agreed to purchase from Fordland the Sale Loan, on a dollar to dollar basis, for a consideration of HK$19,757,680.

The consideration for both the Sale Shares and the Sale Loan shall be paid to the Vendors and Fordland, respectively, in cash in full by the Purchaser upon Completion.

The Sale and Purchase Agreement does not contain any restriction on any subsequent resale of the Sale Shares or any part thereof by the Purchaser.

Completion

The Sale and Purchase Agreement is unconditional and Completion has taken place at the office of the Purchaser on the same day as the date of execution of the Sale and Purchase Agreement. The consideration for both the Sale Shares and the Sale Loan have been effected in cash in full by the Purchaser on Completion, and the Purchaser, Fordland and the Target Company have executed the Sale Loan Assignment Document for the assignment by Fordland of the Sale Loan to the Purchaser on Completion.

INFORMATION ABOUT THE TARGET GROUP

The Target Company

The Target Company is a company incorporated under the laws of Hong Kong with limited liability. Its principal activity is investment holding and its principal asset is the entire equity interests in Yu Sheng Tang. Yu Sheng Tang holds the entire equity interests in Weikang Yigan which in turn holds 70% equity interests in Yu Sheng Tang Clinic.

Yu Sheng Tang

Yu Sheng Tang is a company established in the PRC with limited liability with an approved business scope covering, among other things, consultation, development and transfer of modern Chinese medicine, bio-medicine, health care product, cosmetics and electronic medical device. Prior to the Acquisition, Yu Sheng Tang had engaged in consultation services.

On 7 December 2009, Yu Sheng Tang entered into the Intellectual Property Transfer Agreement with Clinical Pharmacy of Beijing for the exclusive transfer to Yu Sheng Tang of the Intellectual Property in relation to Jinhua Qinggan, a Chinese medicine aimed at treating patients who have been infected with Influenza A (H1N1) and other types of influenza.

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Clinical Pharmacy of Beijing was established in 1985 under Beijing Chinese Medicine Administration (北京市中醫管理局) and Beijing Municipal Health Bureau (北京市衛 生局) and is principally engaged in, among other things, research and development of new Chinese medicine, pre-clinical basic research of new medicine and research and development of prescription formulae of clinical drugs.

The aggregate consideration for the transfer of the Intellectual Property from Clinical Pharmacy of Beijing to Yu Sheng Tang under the Intellectual Property Transfer Agreement is RMB100 million, to be settled in stages following fulfillment of certain benchmark events on Jinhua Qinggan including approval for production and sale as prescription drug for clinical use, approval on clinical trial results, granting of the new drug certificate and the completion of the transfer of patent and new drug certificate to Yu Sheng Tang. As at the date of the Sale and Purchase Agreement, Jinhua Qinggan has been approved for production and sale as prescription drug for clinical use, and a total of RMB5,000,000 have been effected by Yu Sheng Tang to Clinical Pharmacy of Beijing as part of the consideration. It is the present intention of the Directors to fund the settlement of the balance consideration (totaling RMB95,000,000 (equivalent to approximately HK$108,585,000) as at the date of the Sale and Purchase Agreement) by way of additional shareholder’s loan(s) and/or equity injection(s) as and when needed.

Weikang Yigan

Weikang Yigan is a company established in the PRC with limited liability. Weikang Yigan has not conducted any business operation prior to the Acquisition (other than the holding of the 70% equity interests in Yu Sheng Tang Clinic).

Yu Sheng Tang Clinic

Yu Sheng Tang Clinic is a company established in the PRC with limited liability and is engaged in the provision of Chinese medical consultations. Its approved business scope covers medical examination and Chinese medicine businesses.

Key financial information of the Target Group

Based on the unaudited combined profit and loss statement of the Target Group for the years ended 31 December 2008 and 2009, the Target Group had unaudited combined turnover of approximately HK$18,000 and unaudited combined net profit before and after taxation and extraordinary items both of approximately HK$7,000 for the year ended 31 December 2008; and unaudited combined turnover of approximately HK$190,000 and unaudited combined net loss before and after taxation and extraordinary items of approximately HK$466,000 and HK$468,000 respectively for the year ended 31 December 2009.

Based on the unaudited consolidated balance sheet of the Target Group as at 25 January 2010, the Target Group had unaudited consolidated net assets of approximately HK$212,000 as at 25 January 2010.

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REASONS AND BENEFITS OF THE ACQUISITION

The Group is principally engaged in supply and procurement business, provision of finance and securities investment. The Directors consider the Acquisition to be an investment opportunity for the Group to diversify into the Chinese medicine business and to enhance its revenue base and profitability. Through the Acquisition, the Company has acquired the Intellectual Property and has the right to commence production and sale of Jinhua Qinggan as prescription drug for clinical use. Subject to further obtaining the new drug certificate, the Company will also be able to market Jinhua Qinggan as a non-prescription drug to the general public. The Directors are of the view that the Acquisition will enable the Group to capture the business opportunities arising from the future demand for Jinhua Qinggan, which is aimed at treating patients who have been infected with Influenza A (H1N1) and other types of influenza.

The Directors (including independent non-executive Directors) consider the terms of the Sale and Purchase Agreement to be fair and reasonable as far as the Shareholders are concerned and that the Sale and Purchase Agreement is in the interest of the Company and its Shareholders as a whole.

LISTING RULES IMPLICATIONS

As the applicable percentage ratios (as set out in the Listing Rules) are more than 5% but less than 25%, the transactions contemplated under the Sale and Purchase Agreement (including the sale and purchase of the Sale Shares and the assignment of the Sale Loan) constitute a discloseable transaction for the Company under the Listing Rules and is subject to the reporting and announcement requirements under Chapter 14 of the Listing Rules.

TERMS AND DEFINITIONS

“Acquisition” the acquisition of the Sale Shares, being the entire issued share capital of the Target Company as at the date of the Sale and Purchase Agreement

“BAI” BAI’s Holdings Limited, a company incorporated under the laws of the British Virgin Islands with limited liability and wholly-owned by Mr. Bai

• “Board” the board of Directors

“Company” Poly Development Holdings Limited, a company incorporated under the laws of Bermuda with limited liability whose shares are listed on the Stock Exchange

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• “Completion”

completion of the Sale and Purchase Agreement

• “Deluxe Dynamic”

Deluxe Dynamic Limited, a company incorporated under the laws of the British Virgin Islands with limited liability and wholly-owned by Mr. Tan

• “Director(s)”

• director(s) of the Company

• “Fordland”

• Fordland Global Investments Limited, a company incorporated under the laws of the British Virgin Islands with limited liability and wholly-owned by Ms. Han

• “Group”

• the Company and its subsidiaries

• “Hong Kong”

• the Hong Kong Special Administrative Region of the PRC

• “HK$”

Hong Kong dollars, the lawful currency of Hong Kong

• “Clinical Pharmacy of Beijing” 北京市衛生局臨床藥學研究所(Institute of Clinical

• Pharmacy of Beijing Municipal Health Bureau*)

• “Independent Third Party”

• a third party who is not a connected person (as defined under the Listing Rules) of the Company and who together with its ultimate beneficial owner(s) are independent of the Company and its connected persons (as defined under the Listing Rules)

• “Intellectual Property”

• the intellectual properties, as defined under the Intellectual Property Transfer Agreement, in relation to Jinhua Qinggan that includes but not limited to the patent on its composition and manufacturing knowhow, the intellectual property and the processing and production rights relating to its prescription formulae for clinical use, approval for its clinical trial results and the new drug certificate

• “Intellectual Property Transfer Agreement”

• the intellectual property transfer agreement relating to Jinhua Qinggan dated 7 December 2009 and entered into between Clinical Pharmacy of Beijing and Yu Sheng Tang

• “Listing Rules”

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

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“Jinhua Qinggan”

• “Mr. Bai”

• “Mr. Tan”

• “Ms. Han”

• “PRC”

• “Purchaser”

• “RMB”

• “Sale and Purchase Agreement”

• “Sale Loan”

• “Sale Loan Assignment Document”

• “Sale Shares”

• “Share(s)”

• “Shareholder(s)”

金花清感 (Jinhua Qinggan), a Chinese medicine aimed at treating patients who have been infected with Influenza A (H1N1) and other types of influenza and the subject of the Intellectual Property Transfer Agreement

• Mr. Bai Jianjiang, the sole shareholder of BAI

• Mr. Tan Qi, the sole shareholder of Deluxe Dynamic

• Ms. Han Xueliang, the sole shareholder of Fordland

• the People’s Republic of China

• Poly Fortune Enterprises Limited, a company incorporated under the laws of the British Virgin Islands with limited liability and a wholly-owned subsidiary of the Company

• Renminbi, the lawful currency of the PRC

• the agreement dated 29 January 2010 and entered into among the Purchaser, the Vendors and the Vendor Guarantors in relation to the Acquisition

• the principal amount of the shareholder’s loan outstanding and owing by the Target Company to Fordland, which amounted to HK$19,757,680 as at Completion

• the assignment document entered into on 29 January 2010 among the Purchaser, Fordland and the Target Company for the assignment by Fordland of the Sale Loan to the Purchaser

• 10,000 ordinary shares of par value of HK$1.00 each, representing the entire issued share capital of the Target Company as at the date of the Sale and Purchase Agreement

• ordinary shares of HK$0.01 each in the share capital of the Company

the holder(s) of Shares

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• “Stock Exchange”

The Stock Exchange of Hong Kong Limited

• “Target Company”

Beijing Yu Sheng Tang Holdings Limited, a company incorporated under the laws of Hong Kong with limited liability

• “Target Group” the Target Company and its subsidiaries (including Yu Sheng Tang, Weikang Yigan and Yu Sheng Tang Clinic)

• “Vendors”

BAI, Fordland and Deluxe Dynamic

• “Vendor Guarantors”

• Mr. Bai, Ms. Han and Mr. Tan

• “Weikang Yigan”

• 維康依感 ( 北京 ) 科技發展有限公司 ( We i k a n g Yigan (Beijing) Technology Development Company Limited*), a company established in the PRC with limited liability

• “Yu Sheng Tang” 北京御生堂文化傳播有限公司 (Beijing Yu Sheng Tang Cultural Broadcasting Company Limited*), a company established in the PRC with limited liability

• “Yu Sheng Tang Clinic” 北京御生堂中醫門診部有限公司 (Beijing Yu Sheng Tang Chinese Medicine Clinic Company Limited*), a company established in the PRC with limited liability

Translations of RMB into HK$ are made in this announcement, for illustration purpose only, at the rate of RMB1.00 to HK$1.143.

By Order of the Board Suen Cho Hung, Paul Chairman

Hong Kong, 29 January 2010

As at the date of this announcement, the Board comprises Mr. Suen Cho Hung, Paul (Chairman), Mr. Sue Ka Lok (Chief Executive Officer) and Mr. Chau Chung Tak as Executive Directors and Mr. Wong Kwok Tai, Mr. Weng Yixiang, Mr. Lu Xinsheng and Mr. Xiong Wei as Independent Non-executive Directors.

• for identification purposes only

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