PegBio Co., Ltd. - Capital/Financing Update 2012

THIS PROSPECTUS IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in doubt as to any aspect of this Prospectus 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.

A copy of each of the Prospectus Documents, having attached thereto the documents specified in the paragraph headed “Documents delivered to the Registrars of Companies” in Appendix III to this Prospectus, has been registered with the Registrar of Companies in Hong Kong as required by Section 342C of the Companies Ordinance in Hong Kong. A copy of each of the Prospectus Documents will as soon as reasonably practicable be delivered to the Registrar of Companies in Bermuda for filing in accordance with the requirements of the Companies Act. The Registrar of Companies in Hong Kong and the Registrar of Companies in Bermuda take no responsibility for the contents of any of these documents.

Dealings in the Rights Shares in their nil-paid form and fully-paid form, the Bonus Warrants and the Bonus Warrant Shares may be settled through CCASS established and operated by HKSCC and you should consult your stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser for details of those settlement arrangements and how such arrangements may affect your rights and interests. All activities under CCASS are subject to the General Rules of CCASS and CCASS Operational Procedures in effect from time to time.

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

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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 RIGHTS ISSUE ON THE BASIS OF FIVE RIGHTS SHARES FOR EVERY ONE CONSOLIDATED SHARE HELD ON THE RECORD DATE AT HK$0.13 PER RIGHTS SHARE WITH BONUS WARRANTS ON THE BASIS OF ONE BONUS WARRANT FOR EVERY FIVE RIGHTS SHARES TAKEN UP

Underwriters

CHUNG NAM SECURITIES LIMITED GLOBAL WEALTHY LIMITED

Capitalised terms used in this cover page have the same meanings as defined in this Prospectus.

It should be noted that the Consolidated Shares have been dealt in on an ex-rights basis from Friday, 3 February 2012. Dealings in the Rights Shares in the nil-paid form will take place from Monday, 20 February 2012 to Monday, 27 February 2012 (both dates inclusive). If the conditions of the Underwriting Agreement are not fulfilled or waived (as appropriate) or the Underwriting Agreement is terminated by Chung Nam, the Rights Issue and the Bonus Warrant Issue will not proceed. Any Shareholders or other persons contemplating selling or purchasing Rights Shares in their nil-paid form during the period from Monday, 20 February 2012 to Monday, 27 February 2012 (both dates inclusive) who are in any doubt about their position are recommended to consult their professional advisers. Any Shareholders or other persons dealing in the Consolidated Shares up to the date on which all the conditions to which the Rights Issue and the Bonus Warrant Issue is subject are fulfilled (and the date on which Chung Nam’s right of termination of the Underwriting Agreement ceases) and any persons dealing in the nil-paid Rights Shares during the period from Monday, 20 February 2012 to Monday, 27 February 2012 (both dates inclusive) will accordingly bear the risk that the Rights Issue and the Bonus Warrant Issue may not become unconditional or do not proceed. Any Shareholders or other persons contemplating dealing in the Consolidated Shares and/or the Rights Shares in their nil-paid form are recommended to consult their own professional advisers .

It should be noted that the Underwriting Agreement in respect of the Rights Issue and the Bonus Warrant Issue contains provisions entitling Chung Nam (after prior consultation with Global Wealthy) by notice in writing to the Company at any time prior to 4:00 p.m. on Tuesday, 6 March 2012 to terminate the obligations of the Underwriters thereunder on the occurrence of certain events including force majeure. These events are set out under the section headed “Termination or Rescission of the Underwriting Agreement” on pages 9 to 10 and pages 26 to 28 of this Prospectus. In such event, the Rights Issue and the Bonus Warrant Issue will not proceed. The latest time for acceptance of and payment for the Rights Shares is 4:00 p.m. on Thursday, 1 March 2012. The procedures for acceptance and transfer is set out on pages 18 to 20 of this Prospectus.

* For identification purpose only

15 February 2012


DEFINITIONS	. .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
EXPECTED TIMETABLE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
TERMINATION OR RESCISSION OF THE UNDERWRITING AGREEMENT. . . . . . . . . . . 9
LETTER FROM THE BOARD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
APPENDIX I	–	FINANCIAL AND OTHER INFORMATION OF
		THE GROUP. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
APPENDIX II	–	UNAUDITED PRO FORMA FINANCIAL INFORMATION
		OF THE GROUP. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
APPENDIX III	–	GENERAL INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
APPENDIX IV	–	SUMMARY OF TERMS OF THE BONUS WARRANTS. . . . . . . . . . . . . 54

DEFINITIONS

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

“acting in concert” has the meaning ascribed to it under the Takeovers Code “associate(s)” has the meaning ascribed to it in the Listing Rules “Announcement” the announcement of the Company dated 20 December 2011 in relation to, among other things, the Share Consolidation, the Increase in Authorised Share Capital, the Rights Issue and the Bonus Warrant Issue
“Board” board of Directors
“Bonus Warrant(s)” bonus warrant(s) to be issued by the Company to the successful applicants of the Rights Shares pursuant to the Rights Issue on the basis of one (1) bonus warrant for every five (5) Rights Shares taken up, conferring rights on the holder(s) thereof to subscribe for the Bonus Warrant Shares at the Exercise Price of HK$0.10 per Consolidated Share (subject to adjustments)
“Bonus Warrant Issue” the proposed issue of the Bonus Warrants on the basis of one (1) Bonus Warrant for every five (5) Rights Shares taken up under the Rights Issue
“Bonus Warrant Share(s)” Consolidated Share(s) to be issued by the Company upon exercise of the subscription rights attaching to the Bonus Warrants
“Bonus Warrants Subscription the period commencing from the date of issue of the Bonus Period” Warrants, which is currently expected to be on or about Friday, 9 March 2012 and expire at 4:30 p.m. on the Business Day immediately preceding the date which is 24 months after such date, which is currently expected to be on or about Friday, 7 March 2014
“Business Day” a day (other than a Saturday, a Sunday or days on which a typhoon signal no. 8 or above or black rainstorm signal is hoisted in Hong Kong between 9:00 a.m. to 5:00 p.m.) on which banks in Hong Kong are generally open for business
“Bye-Laws” the bye-laws of the Company
“CCASS” The Central Clearing and Settlement System established and operated by HKSCC
“Chung Nam” Chung Nam Securities Limited, a corporation licensed to carry out type 1 (dealing in securities) regulated activities within the meaning of the SFO

DEFINITIONS
“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
“Companies Act” Companies Act 1981 of Bermuda “Companies Ordinance” the Companies Ordinance (Chapter 32 of the Laws of Hong Kong) “connected person(s)” has the meaning ascribed to it in the Listing Rules “Consolidated Share(s)” consolidated share(s) of HK$0.10 each in the issued and unissued share capital of the Company immediately after the completion of the Share Consolidation, which became effective at 5:00 p.m. on Wednesday, 1 February 2012
“Director(s)” director(s) of the Company “EAF(s)” the form(s) of application for use by the Qualifying Shareholders who wish to apply for excess Rights Shares, being in such usual form as may be agreed between the Company and the Underwriters
“Exercise Price” the price payable for each Bonus Warrant Share on exercise of the subscription rights attached to the Bonus Warrants, which is initially set at HK$0.10 per Consolidated Share (subject to adjustments)
“Excelsior Kingdom” Excelsior Kingdom Limited, a company incorporated in the British Virgin Islands with limited liability, whose entire issued share capital is beneficially owned by Mr. Suen, an Executive Director and the Chairman of the Company
“Global Wealthy” Global Wealthy Limited, a company incorporated in the British Virgin Islands with limited liability, is a wholly owned subsidiary of Excelsior Kingdom, which in turn is wholly owned by Mr. Suen, an Executive Director and the Chairman of the Company and is a Shareholder of the Company as at the Latest Practicable Date. The ordinary business of Global Wealthy does not include underwriting
“Group” the Company and its subsidiaries “HKSCC” Hong Kong Securities Clearing Company Limited “Hong Kong” the Hong Kong Special Administrative Region of the PRC

DEFINITIONS

“Increase in Authorised Share Capital”
“Independent Shareholders”
“Irrevocable Undertakings”
“Last Trading Day”
“Latest Time for Acceptance”
“Latest Time for Termination”
“Latest Practicable Date”
“Listing Committee”
“Listing Rules”
“Mr. Suen”
the increase in the authorised share capital of the Company from HK$100,000,000 divided into 1,000,000,000 Consolidated Shares to HK$1,000,000,000 divided into 10,000,000,000 Consolidated Shares
the Shareholder(s), other than the Directors (excluding the Independent Non-executive Directors), the chief executive of the Company and their respective associates, including but not limited to, Mr. Suen and parties acting in concert with him, who are not involved in, nor interested in, the Underwriting Agreement and the Irrevocable Undertakings
irrevocable undertakings dated 20 December 2011 under which Mr. Suen, Excelsior Kingdom and Global Wealthy provided the irrevocable undertakings to the Company and Chung Nam as described under the section headed “Irrevocable Undertakings” in this Prospectus
Tuesday, 20 December 2011, being the last trading day of the Shares on the Stock Exchange prior to the publication of the Announcement
4:00 p.m. on Thursday, 1 March 2012 or such later time or date as may be agreed between the Company and the Underwriters, being the latest time for acceptance of and payment for the Rights Shares and the application for excess Rights Shares in the manner as set out in this Prospectus (or such other time or date as the Underwriters and the Company may agree in writing)
4:00 p.m. on Tuesday, 6 March 2012 or such later time or date as may be agreed between the Company and the Underwriters, being the latest time to terminate the Underwriting Agreement
9 February 2012, being the latest practicable date prior to the despatch of this Prospectus for ascertaining certain information for inclusion in this Prospectus

the listing sub-committee of the board of the Stock Exchange

the Rules Governing the Listing of Securities on Stock Exchange
Mr. Suen Cho Hung, Paul, an Executive Director and the Chairman of the Company

DEFINITIONS

“Non-Qualifying Shareholder(s)”
Shareholder(s) whose name(s) appear(s) on the register of members of the Company as at the close of business on the Record Date and whose addresses as shown on such register are outside Hong Kong where the Directors, based on opinions provided by its legal advisers, consider it necessary or expedient not to offer the Rights Shares and the Bonus Warrants to such Shareholder(s) on account either of legal restrictions under the laws of the relevant place or the requirements of the relevant regulatory body or stock exchange in that place
“Overseas Shareholder(s)” the Shareholder(s) with registered address(es) on the register of members of the Company which are outside Hong Kong as at the close of business on the Record Date
“PAL(s)”

the renounceable provisional allotment letter(s) issued to the Qualifying Shareholders in connection with the Rights Issue

“PRC”
The People’s Republic of China but, for the purpose of this Prospectus, excludes the Macau Special Administrative Region of the PRC, Hong Kong and Taiwan region
“Prospectus” this Prospectus despatched to the Shareholders on the Prospectus Posting Date in connection with the Rights Issue and the Bonus Warrant Issue
“Prospectus Documents”
this Prospectus, PAL and EAF
“Prospectus Posting Date” Wednesday, 15 February 2012 or such later date as may be agreed between the Underwriters and the Company for the despatch of the Prospectus Documents
“Qualifying Shareholder(s)” the Shareholder(s), other than the Non-Qualifying Shareholders, whose name(s) appear(s) on the register of members of the Company as at the close of business on the Record Date
“Record Date”
Monday, 13 February 2012, or such other date as may be agreed by the Company and the Underwriters, being the date by reference to which entitlements to the Rights Issue will be determined

“Rights Issue”

the proposed rights issue on the basis of five (5) Rights Shares for every one (1) whole Consolidated Share in issue and held on the Record Date at the Subscription Price, with Bonus Warrants on the basis of every one (1) Bonus Warrant for every five (5) Rights Shares taken up

DEFINITIONS

“Rights Shares”	2,471,087,850 Consolidated Shares proposed to be offered to the
	Qualifying Shareholders for subscription on the basis of five (5)
	Rights Shares for every one (1) whole Consolidated Share held at
	the Record Date pursuant to the Rights Issue
“SFO”	the Securities and Futures Ordinance (Chapter 571 of the Laws of
	Hong Kong)
“SGM”	the special general meeting of the Company convened and held
	at Plaza 1 and 2, Lower Lobby, Novotel Century Hong Kong,
	238 Jaffe Road, Wanchai, Hong Kong on Wednesday, 1 February
	2012 at 9:00 a.m. approved, among other things, the Share
	Consolidation, the Increase in Authorised Share Capital, the
	Rights Issue and the Bonus Warrant Issue
“Share(s)”	ordinary share(s) of HK$0.01 each in the share capital of the
	Company before the Share Consolidation becoming effective
“Shareholder(s)”	holder(s) of the Shares or the Consolidated Shares, as the case
	may be
“Share Consolidation”	the consolidation of every ten (10) issued and unissued Shares of
	HK$0.01 each into one (1) Consolidated Share of HK$0.10
“Share Registrar”	the Company’s branch share registrar and transfer office in Hong
	Kong, which is Tricor Tengis Limited of 26th Floor, Tesbury
	Centre, 28 Queen’s Road East, Wanchai, Hong Kong
“Share Options”	the share options granted under the share option scheme adopted
	by the Company on 30 December 2002
“Specified Event”	an event occurring or matter arising on or after the date of
	the Underwriting Agreement and prior to the Latest Time for
	Termination which if it had occurred or arisen before the date
	hereof would have rendered any of the warranties contained in
	the Underwriting Agreement untrue or incorrect in any material
	respect
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Subscription Price”	HK$0.13 per Rights Share under the Rights Issue
“Takeovers Code”	the Hong Kong Code on Takeovers and Mergers

DEFINITIONS

“Underwritten Shares” 2,247,370,920 Rights Shares (total 2,471,087,850 Rights Shares less 223,716,930 Rights Shares to be provisionally allotted to Global Wealthy and Mr. Suen and will be taken up by them pursuant to the Irrevocable Undertakings) to be fully underwritten by the Underwriters pursuant to the terms and conditions of the Underwriting Agreement

“Underwriters” Global Wealthy and Chung Nam “Underwriting Agreement” the underwriting agreement dated 20 December 2011 entered into between the Company and the Underwriters in relation to the underwriting arrangement in respect of the Rights Issue

“HK$” Hong Kong dollars, the lawful currency of Hong Kong “%” per cent.

Certain English translations of the Chinese/Japanese names with * are included in this Prospectus for information purpose only and shall not be regarded as the official translations of such Chinese/ Japanese names.

EXPECTED TIMETABLE

The expected timetable for the Rights Issue and the Bonus Warrant Issue set out below is for indicative purposes only assuming that all conditions of the Rights Issue and the Bonus Warrant Issue will be fulfilled. The expected timetable is subject to change, and any such change will be announced in a separate announcement by the Company as and when appropriate.

2012
Designated broker starts to stand in the market
to provide for matching services for the sale and 9:00 a.m. on Thursday,
purchase of odd lots of Consolidated Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 February
Parallel trading in the Consolidated Shares 9:00 a.m. on Thursday,
(represented both existing and new certificates) commences. . . . . . . . . . . . . . . . . . . . . . . . 16 February
Original counter for trading in Consolidated Shares
in board lots of 10,000 Consolidated Shares
(only new certificates for
the Consolidated Shares can be traded at 9:00 a.m. on Thursday,
this counter) re-opens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 February
First day of dealings in nil-paid Rights Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Monday, 20 February
Latest time for splitting of nil-paid Rights Shares . . . . . . . . . . . . . 4:30 p.m. on Wednesday, 22 February
Last day of dealings in nil-paid Rights Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Monday, 27 February
Latest time for acceptance of, and payment for,
the Rights Shares and the application
for excess Rights Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4:00 p.m. on Thursday, 1 March
Latest time to terminate the Underwriting Agreement
and for the Rights Issue to become unconditional . . . . . . . . . . . . . . . . 4:00 p.m. on Tuesday, 6 March
Temporary counter for trading in Consolidated Shares
in board lots of 800 Consolidated Shares
(in the form of existing share certificates) closes . . . . . . . . . . . . . . . 4:00 p.m. on Wednesday, 7 March
Designated brokers ceases to stand in
the market to provide matching service . . . . . . . . . . . . . . . . . . . . . . 4:00 p.m. on Wednesday, 7 March
Parallel trading in the Consolidated Shares
(represented both existing and new certificates) ends . . . . . . . . . . . . 4:00 p.m. on Wednesday, 7 March
Announcement of results of the Rights Issue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thursday, 8 March
Refund cheques to be despatched in relation to
wholly or partially unsuccessful applications
for excess Rights Shares on or before . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Friday, 9 March

EXPECTED TIMETABLE

2012

Certificates for fully paid Rights Shares and

Bonus Warrants to be despatched on or before . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Friday, 9 March

Last day of free exchange of existing

certificates for the Shares into

new certificates for the Consolidated Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Monday, 12 March

Commencement of dealings in

fully-paid Rights Shares and the Bonus Warrants . . . . . . . . . . . . . . . . 9:00 a.m. on Tuesday, 13 March

Note:

All references to time in this Prospectus are references to Hong Kong time. Dates or deadlines specified in this Prospectus are indicative only and may be extended or varied. Further announcement(s) will be made by the Company on any changes to the above expected timetable, if and when appropriate.

Effect of bad weather on the latest time for acceptance of and payment for the Rights Issue and for application and payment for excess Rights Shares

If there is a “black” rainstorm warning or a tropical cyclone warning signal number 8 or above:–

(i) in force in Hong Kong at any local time before 12:00 noon but no longer in force after 12:00 noon on Thursday, 1 March 2012, the latest time for acceptance of and payment for the Rights Shares and the application for excess Rights Shares will not take place at 4:00 p.m. on Thursday, 1 March 2012, but will be extended to 5:00 p.m. on the same day instead; or
(ii) in force in Hong Kong at any local time between 12:00 noon and 4:00 p.m. on Thursday, 1 March 2012, the latest time for acceptance of and payment for the Rights Shares and the application for excess Rights Shares will not take place on Thursday, 1 March 2012, but will be rescheduled to 4:00 p.m. on the following Business Day which does not have either of those warnings in force at any time between 9:00 a.m. and 4:00 p.m..

If the latest time for acceptance of and payment for the Rights Shares and the application for excess Rights Shares does not take place on Thursday, 1 March 2012, the dates mentioned in the timetable contained in this section may be affected. An announcement will be made by the Company in such event.

TERMINATION OR RESCISSION OF THE UNDERWRITING AGREEMENT

If, prior to the Latest Time for Termination:

(1) in the reasonable opinion of Chung Nam (after prior consultation with Global Wealthy), the success of the Rights Issue and the Bonus Warrant Issue would be materially and adversely affected by:
(a) the introduction of any new law or regulation or any change in existing law or regulation (or the judicial interpretation thereof) or other occurrence of any nature whatsoever which may, in the reasonable opinion of Chung Nam (after prior consultation with Global Wealthy), materially and adversely affect the business or the financial or trading position or prospects of the Group as a whole or is materially adverse in the context of the Rights Issue and the Bonus Warrant Issue; or
(b) the occurrence of any local, national or international event or change (whether or not forming part of a series of events or changes occurring or continuing before, and/ or after the date thereof) of a political, military, financial, economic or other nature (whether or not ejusdem generis with any of the foregoing), or in the nature of any local, national or international outbreak or escalation of hostilities or armed conflict, or affecting local securities markets which may, in the reasonable opinion of Chung Nam (after prior consultation with Global Wealthy), materially and adversely affect the business or the financial or trading position or prospects of the Group as a whole or materially and adversely prejudice the success of the Rights Issue or otherwise makes it inexpedient or inadvisable to proceed with the Rights Issue and the Bonus Warrant Issue; or
(c) any material adverse change in the business or in the financial or trading position of the Group as a whole; or
(2) any material adverse change in market conditions (including without limitation, any change in fiscal or monetary policy, or foreign exchange or currency markets, suspension or material restriction or trading in securities) occurs which in the reasonable opinion of Chung Nam (after prior consultation with Global Wealthy) are likely to materially or adversely affect the success of the Rights Issue or otherwise makes it inexpedient or inadvisable to proceed with the Rights Issue and the Bonus Warrant Issue; or
(3) there is any change in the circumstances of the Company or any member of the Group which in the reasonable opinion of Chung Nam (after prior consultation with Global Wealthy) will adversely affect the prospects of the Company, including without limiting the generality of the foregoing the presentation of a petition or the passing of a resolution for the liquidation or winding up or similar event occurring in respect of any of member of the Group or the destruction of any material asset of the Group; or
(4) any suspension in the trading of securities generally or the Company’s securities on the Stock Exchange for a period of more than ten consecutive Business Days, excluding any suspension in connection with the clearance of the Announcement, or the Prospectus Documents or other announcements or circulars in connection with the Rights Issue and the Bonus Warrant Issue; or

TERMINATION OR RESCISSION OF THE UNDERWRITING AGREEMENT

(5) the circular, prospectus or announcements of the Company (including any amendments or supplements thereto) published since the date of the Underwriting Agreement when published contain information (either as to business prospects or the condition of the Group or as to its compliance with any laws, Listing Rules, Takeovers Code or any applicable regulations) which has not prior to the date of the Underwriting Agreement been publicly announced or published by the Company and which in the reasonable opinion of Chung Nam (after prior consultation with Global Wealthy) are material to the Group as a whole and is likely to affect materially and adversely the success of the Rights Issue or might cause a prudent investor not to accept the Rights Shares provisionally allotted to it,

then, Chung Nam shall (after prior consultation with Global Wealthy) at its reasonable discretion be entitled by notice in writing to the Company (which shall be binding on Global Wealthy), served prior to the Latest Time for Termination, to terminate the Underwriting Agreement.

Chung Nam (after prior consultation with Global Wealthy) shall be entitled by notice in writing to the Company to rescind the Underwriting Agreement if prior to the Latest Time for Termination:

(1) any material breach of any of the representations, warranties or undertakings of the Company contained in the Underwriting Agreement that comes to the knowledge of Chung Nam; or
(2) any Specified Event comes to the knowledge of Chung Nam, provided that Chung Nam shall have given prior notice of its intention to rescind to Global Wealthy. Any such notice of rescission shall be served by Chung Nam to the Company (which shall be binding on Global Wealthy) prior to the Latest Time for Termination.

Upon termination or rescission of the Underwriting Agreement, the Rights Issue and the Bonus Warrant Issue will not proceed, and the obligations of all parties under the Underwriting Agreement shall terminate and no party shall have any claim against any other party save for any antecedent breaches.

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: Registered office: Mr. Suen Cho Hung, Paul (Chairman) Clarendon House Mr. Sue Ka Lok (Chief Executive Officer) 2 Church Street Mr. Bai Jianjiang Hamilton HM11 Ms. Lee Chun Yeung, Catherine Bermuda Independent Non-executive Directors: Head office and principal place Mr. Wong Kwok Tai of business in Hong Kong: Mr. Weng Yixiang Suite 1501, 15th Floor Mr. Lu Xinsheng Great Eagle Centre 23 Harbour Road Wanchai Hong Kong 15 February 2012

To the Qualifying Shareholders, and for information purpose only, the Non-Qualifying Shareholders and the holder(s) of the Share Options

Dear Sir or Madam,

PROPOSED RIGHTS ISSUE ON THE BASIS OF FIVE RIGHTS SHARES FOR EVERY ONE CONSOLIDATED SHARE HELD ON THE RECORD DATE AT HK$0.13 PER RIGHTS SHARE WITH BONUS WARRANTS ON THE BASIS OF ONE BONUS WARRANT FOR EVERY FIVE RIGHTS SHARES TAKEN UP

1. INTRODUCTION

On 20 December 2011, the Board announced that the Company proposed to raise approximately HK$321.2 million, before expenses, by issuing 2,471,087,850 Rights Shares to the Qualifying Shareholders by way of a rights issue on the basis of five (5) Rights Shares for every one (1) whole Consolidated Share held on the Record Date at the Subscription Price of HK$0.13 per Rights Share. On the basis that 494,217,570 whole Consolidated Shares will be in issue after the Share Consolidation, 2,471,087,850 Rights Shares will be allotted and issued under the Rights Issue, representing approximately 83.33% of the issued share capital of the Company as enlarged by the allotment and issue of the Rights Shares.

* For identification purpose only

LETTER FROM THE BOARD

Subject to the fulfillment or waiver (as appropriate) of the conditions to the Rights Issue and Bonus Warrant Issue, successful applicants of the Rights Shares will receive one (1) Bonus Warrant for every five (5) Rights Shares taken up. On the basis of 2,471,087,850 Rights Shares to be issued under the Rights Issue, the total number of Bonus Warrants to be issued will be 494,217,570. Each of the Bonus Warrants will entitle the holder(s) thereof to subscribe for one Consolidated Share at the Exercise Price of HK$0.10 per Consolidated Share (subject to adjustments), at any time between the date of issue of the Bonus Warrants and the Business Day immediately preceding the date which is 24 months after the date of issue.

At the SGM held on 1 February 2012 at 9:00 a.m., the Share Consolidation, the Increase in Authorised Capital, the Rights Issue, the Bonus Warrant Issue and the transactions contemplated thereunder were approved by Shareholders or the Independent Shareholders (as appropriate) by way of poll. In compliance with the Listing Rules, Mr. Suen and Global Wealthy together with their respective associates who/which had a material interest in the Rights Issue and Bonus Warrant Issue, were required to abstain and had abstained from voting in favour of the resolution approving the Rights Issue and the Bonus Warrant Issue at the SGM.

The Rights Issue (other than the Rights Shares that will be provisionally allotted to Global Wealthy and Mr. Suen as Qualifying Shareholders and will be taken up by them pursuant to the Irrevocable Undertakings) will be fully underwritten by the Underwriters on the terms and subject to the conditions set out in the Underwriting Agreement.

The purpose of this Prospectus is to provide you with, among others, further details of the Rights Issue and the Bonus Warrant Issue including information on dealings in, transfer and acceptance of the Rights Shares and certain financial and other information in respect of the Group.

2. RIGHTS ISSUE

Issue Statistics

Basis of the Rights Issue:

Five (5) Rights Shares for every one (1) whole Consolidated Share held on the Record Date with Bonus Warrants on the basis of one (1) Bonus Warrant for every five (5) Rights Shares taken up

Number of Consolidated 494,217,570 whole Consolidated Shares Shares in issue as at the Latest Practicable Date:

Number of Rights Shares: 2,471,087,850 Rights Shares

The aggregate nominal value HK$247,108,785.00 of the Rights Shares:

Subscription Price: HK$0.13 per Rights Share

LETTER FROM THE BOARD

Number of Bonus Warrants: 494,217,570 Bonus Warrants Underwriters: Global Wealthy and Chung Nam

The Underwritten Shares are fully underwritten by the Underwriters on the terms and subject to the conditions of the Underwriting Agreement, details of which are set out under the section headed “Underwriting Arrangement” below.

As at the Latest Practicable Date, the Company has 1,600,000 Share Options outstanding. Save as disclosed, no outstanding convertible securities, options or warrants in issue which confer any right to subscribe for, convert or exchange into Consolidated Shares other than the Share Options.

Assuming there shall be no further issue of new Consolidated Shares or repurchase of Consolidated Shares on or before the Record Date, the 2,471,087,850 nil-paid Rights Shares proposed to be provisionally allotted represent:

(i) 500% of the number of Consolidated Shares (based on the Company’s existing issued share capital as at the Latest Practicable Date); and
(ii) approximately 83.33% of the Company’s issued share capital as enlarged by the issue of the Rights Shares.

Qualifying Shareholders and Non-Qualifying Shareholders

The Rights Issue and the Bonus Warrant Issue are only available to the Qualifying Shareholders. To qualify for the Rights Issue and the Bonus Warrant Issue, a Shareholder must:

(1) be registered as a member of the Company at the close of business on the Record Date; and
(2) not be a Non-Qualifying Shareholder.

Basis of the Provisional Allotment

The basis of the provisional allotment shall be five (5) Rights Shares for every one (1) whole Consolidated Share held on the Record Date, being 2,471,087,850 Rights Shares at the Subscription Price of HK$0.13 per Rights Share. Application for all or any part of a Qualifying Shareholder’s provisional allotment should be made by completing the PAL and lodging the same with a remittance for the Rights Shares being applied for.

Rights of the Overseas Shareholders

The Prospectus Documents have not been and will not be registered or filed by the Company under the applicable securities legislation of any jurisdiction other than Hong Kong and Bermuda.

LETTER FROM THE BOARD

According to the register of members of the Company as at the Latest Practicable Date, there was one Overseas Shareholder with address located in the PRC. Based on the advice provided by the Company’s legal advisers on the laws of the PRC, it is not prohibited under the laws of the PRC to offer the Rights Shares and the Bonus Warrants to the Overseas Shareholder with address located in the PRC, even though the Prospectus Documents will not be registered in the PRC by the Company. Based on the legal advice provided by the Company’s legal advisers on the laws of the PRC, the Company is not required to complete any registration or filing with or obtain any approval or consent from the relevant regulatory body or stock exchange of the PRC with respect to the offer of the Right Shares and the Bonus Warrants, the despatch of the Prospectus Documents to such Overseas Shareholder in the PRC and its acceptance of subscription for the Rights Shares and payment of the subscription price. Therefore, the Directors have decided to extend the Rights Issue and the Bonus Warrant Issue to such Overseas Shareholder with registered address located in the PRC as shown on the register of members of the Company as at the Record Date and there was no Non-Qualifying Shareholder as at the Latest Practicable Date. No part of the Prospectus Documents should be published, reproduced, distributed or otherwise made available in whole or in part to any other person without the written consent of the Company.

Overseas Shareholders should note that they may or may not be entitled to the Rights Issue and the Bonus Warrant Issue, subject to the results of enquiries made by the Directors pursuant to Rule 13.36(2)(a) of the Listing Rules. Accordingly, Overseas Shareholders should exercise caution when dealing in the securities of the Company.

Application for Excess Rights Shares

The Qualifying Shareholders shall be entitled to apply for any unsold entitlements of the Non-Qualifying Shareholders and any Rights Shares provisionally allotted but not accepted or otherwise not subscribed for by the transferees of nil-paid Rights Shares. Application may be made by completing the EAFs for application for excess Rights Shares and lodging the same with a separate remittance for the excess Rights Shares being applied for. The Directors will allocate the excess Rights Shares at their discretion, but on a fair basis in accordance with the Listing Rules on the following principles:

(i) preference will be given to applications for less than a board lot of Rights Shares where they appear to the Directors that such applications are made to round up oddlot holdings to whole-lot holdings and that such applications are not made with the intention to abuse this mechanism; and
(ii) subject to availability of excess Rights Shares after allocation under principle (i) above, the excess Rights Shares will be allocated based on a sliding scale with reference to the number of excess Rights Shares applied by them (i.e. applications for a smaller number of Rights Shares are allocated with a higher percentage of successful application but will receive lesser number of Rights Shares; whereas applications for a larger number of Rights Shares are allocated with a smaller percentage of successful application but will receive greater number of Rights Shares).

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Any persons holding Consolidated Shares through a nominee company should note that the Company will regard the nominee company as a single Shareholder according to the register of members of the Company. Accordingly, such Shareholders should note that the aforesaid arrangement in relation to the allocation of excess Rights Shares will not be extended to beneficial owners individually.

If a Qualifying Shareholder wishes to apply for any Rights Shares in addition to his/her/its provisional allotment, he/she/it must complete and sign the enclosed EAF in accordance with the instructions printed thereon and lodge the same with a separate remittance for the amount payable on applications in respect of the excess Rights Shares being applied for with the Share Registrar by not later than 4:00 p.m. on Thursday, 1 March 2012. All remittances must be made in Hong Kong dollars by cheques which must be drawn on a bank account with, or by banker’s cashier orders which must be issued by, a licensed bank in Hong Kong and made payable to “ BEIJING YU SHENG TANG PHARMACEUTICAL GROUP LIMITED – EXCESS APPLICATION ACCOUNT ” and crossed “ ACCOUNT PAYEE ONLY ”. The Share Registrar will notify the relevant Qualifying Shareholders of any allotment of excess Rights Shares made to them. An announcement of results of acceptance of and excess applications for the Rights Issue will be published on the websites of the Stock Exchange and the Company on Thursday, 8 March 2012.

Where the number of excess Rights Shares applied for under one EAF is larger than the total number of Rights Shares being offered under the Rights Issue, being 2,471,087,850 Rights Shares, such application (other than from a nominee company) would be treated as invalid and be rejected. If no excess Rights Shares are allotted to a Qualifying Shareholder, the amount tendered on application is expected to be returned by refund cheque to that Qualifying Shareholder in full by ordinary post by the Share Registrar at his/her/its own risk on or before Friday, 9 March 2012. If the number of excess Rights Shares allotted to a Qualifying Shareholder is less than that applied for, the surplus application monies are also expected to be returned by refund cheque to that Qualifying Shareholder by ordinary post by the Share Registrar at his/her/its own risk on or before Friday, 9 March 2012.

All cheques or banker’s cashier orders will be presented for payment following receipt and all interest earned on such monies will be retained for the benefit of the Company. Completion and return of the EAF will constitute a warranty and representation by the applicant that all registration, legal and regulating requirements of all relevant jurisdictions in connection with the EAF and any acceptance of it, have been, or will be, duly complied with. Completion and return of the EAF together with a cheque or a banker’s cashier order in payment for the excess Rights Shares applied will constitute a warranty by the applicant that the cheque or the banker’s cashier order will be honoured on first presentation. Without prejudice to the other rights of the Company in respect thereof, any EAF in respect of which a cheque or banker’s cashier order is dishonoured on first presentation is liable to be rejected.

The EAF is for use only by the person(s) to whom it is addressed and is not transferable. All documents, including cheques or banker’s cashier orders for amounts due, will be sent by ordinary post at the risk of the persons entitled thereto to their registered addresses by the Share Registrar. The Company may, at its discretion, treat an EAF as valid and binding on the person(s) by whom or on whose behalf it is lodged even if the EAF is not completed in accordance with the relevant

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instructions. The Company may require such incompleted EAF to be completed by the relevant applicants at a later stage. Save as described under the paragraph headed “Rights of the Overseas Shareholders” above, no action has been taken to permit the offering of the Rights Shares or the distribution of the Prospectus Documents in any territory other than Hong Kong. Accordingly, no person receiving a copy of the EAF in any territory outside Hong Kong may treat it as an offer or invitation to apply for the excess Rights Shares, unless in a territory where such an offer or invitation could lawfully be made without compliance with any registration or other legal and regulatory requirements thereof. It is the responsibility of anyone outside Hong Kong wishing to make an application for the excess Rights Shares to satisfy itself/himself/herself before acquiring any rights to subscribe for the excess Rights Shares as to the observance of the laws and regulations of all relevant territories, including the obtaining of any governmental or other consents, and to pay any taxes and duties required to be paid in such territory in connection therewith. The Company reserves the right to refuse to accept any application for the excess Rights Shares where it believes that doing so would violate the applicable securities or other laws or regulations of any jurisdiction.

If the Underwriters exercise the right to terminate or rescind the Underwriting Agreement or if any of the conditions of the Rights Issue and the Bonus Warrant Issue as set out in the paragraph headed “Conditions Precedent to the Rights Issue, the Bonus Warrant Issue and the Underwriting Agreement” below is not fulfilled on or before 4:00 p.m. on Tuesday, 6 March 2012 (or such later time as the Company and the Underwriters may agree in writing), the monies received in respect of application for excess Rights Shares will be returned to the Qualifying Shareholders or, in the case of joint applicants, to the first-named person without interest, by means of cheques despatched by ordinary post at the risk of such Qualifying Shareholders to their registered addresses by the Share Registrar on or before Friday, 9 March 2012.

Subscription Price

The Subscription Price is HK$0.13 per Rights Share, which shall be payable in full by the Qualifying Shareholders upon acceptance of the provisional allotment of the Rights Shares or, where applicable, upon application for any of the excess Rights Shares, or when a transferee of nilpaid Rights Shares applies for the Rights Shares.

The Subscription Price represents:

(i) a discount of approximately 84.3% to the adjusted closing price of HK$0.83 per Consolidated Share based on the closing price of HK$0.083 per Share as quoted on the Stock Exchange on the Last Trading Day and adjusted for the effect of the Share Consolidation;
(ii) a discount of approximately 85.1% to the adjusted average closing price of approximately HK$0.87 per Consolidated Share, based on the average closing price of approximately HK$0.087 as quoted on the Stock Exchange for the 5 consecutive trading days up to and including the Last Trading Day and adjusted for the effect of the Share Consolidation;

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(iii) a discount of approximately 48% to the theoretical ex-rights price of approximately HK$0.25 per Consolidated Share after the Rights Issue based on the closing price of HK$0.083 per Share as quoted on the Stock Exchange on the Last Trading Day and adjusted for the effect of the Share Consolidation; and
(iv) a discount of approximately 51.9% to the closing price of HK$0.27 per Consolidated Share as quoted on the Stock Exchange on the Latest Practicable Date.

The net price per Rights Share (after deduction of expenses, including the commission to be paid to the Underwriters) will be approximately HK$0.126.

Bonus Warrant Issue

Subject to the fulfillment or waiver (as appropriate) of the conditions to the Rights Issue and the Bonus Warrant Issue, Bonus Warrants will be issued to those Qualifying Shareholders and such other persons who have taken up the Rights Shares on the basis of one (1) Bonus Warrant for every five (5) Rights Shares taken up. Each of the Bonus Warrants will entitle the holder(s) thereof to subscribe for one Consolidated Share at the Exercise Price of HK$0.10 per Consolidated Share (subject to adjustments).

The Bonus Warrants Subscription Period will commence from the date of issue of the Bonus Warrants, which is currently expected to be on or about Friday, 9 March 2012 and expire at 4:30 p.m. on the Business Day immediately preceding the date which is 24 months after such date, which is currently expected to be on or about Friday, 7 March 2014.

On the basis of 2,471,087,850 Rights Shares to be issued under the Rights Issue, the total number of the Bonus Warrants to be issued will be 494,217,570 entitling holders thereof to subscribe for a total of 494,217,570 Bonus Warrant Shares at the Exercise Price. The Bonus Warrant Shares to be issued upon full exercise of the Bonus Warrants will represent approximately 14.29% of issued share capital of the Company as enlarged by the allotment and issue of the Rights Shares and the Bonus Warrant Shares.

Other than the proposed Bonus Warrant Issue and the outstanding Share Options granted to Mr. Suen, the Company does not have any other equity securities which are convertible into Consolidated Shares upon the exercise of the subscription rights attaching thereto. As at the Latest Practicable Date and based on the information currently available, the Company confirms that the Bonus Warrant Shares to be issued upon the exercise of the subscription rights attaching to the Bonus Warrants will not exceed 20% of the issued share capital of the Company at the time the Bonus Warrants are issued in compliance with Rule 15.02(1) of the Listing Rules.

LETTER FROM THE BOARD

The Exercise Price of each Bonus Warrant represents:

(i) a discount of approximately 88% to the adjusted closing price of HK$0.83 per Consolidated Share based on the closing price of HK$0.083 per Share as quoted on the Stock Exchange on the Last Trading Day and adjusted for the effect of the Share Consolidation;
(ii) a discount of approximately 88.5% to the adjusted average closing price of approximately HK$0.87 per Consolidated Share based on the average closing price of approximately HK$0.087 per Share as quoted on the Stock Exchange for the 5 consecutive trading days ending on the Last Trading Day and adjusted for the effect of the Share Consolidation;
(iii) a discount of approximately 60% to the theoretical ex-rights price of approximately HK$0.25 per Consolidated Share after the Rights Issue based on the closing price of HK$0.083 per Share as quoted on the Stock Exchange on the Last Trading Day and adjusted for the effect of the Share Consolidation; and
(iv) a discount of approximately 63% to the closing price of HK$0.27 per Consolidated Share as quoted on the Stock Exchange on the Latest Practicable Date.

Assuming all the Bonus Warrants are exercised, the estimated gross proceeds (before expenses) and the estimated net proceeds of approximately HK$49.4 million and HK$49.2 million respectively will be raised. The net price per Bonus Warrant Share is therefore approximately HK$0.099. The aggregate nominal value of all the Bonus Warrant Shares that may fall to be issued is approximately HK$49.4 million.

Basis of determining the Subscription Price and the Exercise Price

The Subscription Price and the Exercise Price were arrived at after arm’s length negotiation between the Company and the Underwriters with reference to the market price of the Shares and the then prevailing market conditions. The Directors consider that the discount would encourage Shareholders to participate in the Rights Issue and accordingly maintain their shareholdings in the Company and participate in the future growth of the Group. In view of the prevailing market conditions of the capital market in Hong Kong and the benefits of the Rights Issue, the Directors (including the Independent Non-executive Directors) consider that the terms of the Rights Issue and the Bonus Warrant Issue are fair and reasonable and in the best interests of the Company and the Shareholders as a whole.

Procedures for acceptance and transfer

A PAL is enclosed with this Prospectus which entitles the Qualifying Shareholder(s) to whom it is addressed to subscribe for the number of the Rights Shares shown therein. If the Qualifying Shareholders wish to accept all the Rights Shares provisionally allotted to them as specified in the PAL, they must lodge the PAL in accordance with the instructions printed thereon,

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together with a remittance for the full amount payable on acceptance, with the Share Registrar on or before 4:00 p.m. on Thursday, 1 March 2012. All remittances must be made in Hong Kong dollars by cheques which must be drawn on an account with, or by banker’s cashier orders which must be issued by, a licensed bank in Hong Kong and made payable to “ BEIJING YU SHENG TANG PHARMACEUTICAL GROUP LIMITED – RIGHTS ISSUE ACCOUNT ” and crossed “ ACCOUNT PAYEE ONLY ”. It should be noted that unless the PAL, together with the appropriate remittance, have been lodged with the Share Registrar on or before 4:00 p.m. on Thursday, 1 March 2012, whether by the original allottee or any person in whose favour the rights have been validly transferred, that provisional allotment and all rights thereunder will be deemed to have been declined and will be cancelled. The Company may, at its sole discretion, treat a PAL as valid and binding on the person(s) by whom or on whose behalf it is lodged even if the PAL is not completed in accordance with the relevant instructions. The Company may require such incompleted PAL to be completed by the relevant applicants at a later stage.

If the Qualifying Shareholders wish to accept only part of provisional allotment or transfer part of their rights to subscribe for the Rights Shares provisionally allotted to them under the PAL or to transfer part or all of their rights to more than one person, the entire PAL must be surrendered and lodged for cancellation on or before 4:30 p.m. on Wednesday, 22 February 2012, to the Share Registrar, who will cancel the original PAL and issue new PALs in the denominations required which will be available for collection from the Share Registrar after 9:00 a.m. on the second Business Day after such Shareholder surrendering the original PAL.

The PAL contains further information regarding the procedures to be followed for acceptance and/or transfer of the whole or part of the provisional allotment of the Rights Shares by the Qualifying Shareholders. All cheques or banker’s cashier orders will be presented for payment following receipt and all interest earned on such monies will be retained for the benefit of the Company. Completion and return of the PAL with a cheque or a banker’s cashier order, whether by a Qualifying Shareholder or by any nominated transferees, will constitute a warranty by the applicant that the cheque or the banker’s cashier order will be honoured on first presentation. Without prejudice to the other rights of the Company in respect thereof, the Company reserves the right to reject any PAL in respect of which the cheque or banker’s cashier order is dishonoured on first presentation, and in that event the provisional allotment and all rights thereunder will be deemed to have been declined and will be cancelled.

Save as described under the paragraph headed “Rights of the Overseas Shareholders” above, no action has been taken to permit the offering of the Rights Shares or the distribution of the Prospectus Documents in any territory other than Hong Kong. Accordingly, no person receiving the Prospectus Documents in any territory outside Hong Kong may treat it as an offer or invitation to apply for the Rights Shares or excess Rights Shares, unless in a territory where such an offer or invitation could lawfully be made without compliance with any registration or other legal and regulatory requirements thereof. Subject as referred to below, it is the responsibility of anyone outside Hong Kong wishing to make an application for the Rights Shares to satisfy itself/himself/ herself before acquiring any rights to subscribe for the provisionally allotted Rights Shares or excess Rights Shares as to the observance of the laws and regulations of all relevant territories, including the obtaining of any governmental or other consents, and to pay any taxes and duties

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required to be paid in such territory in connection therewith. Any acceptance of the offer of the Rights Shares by any person will be deemed to constitute a representation and warranty from such person to the Company that these local laws and requirements have been fully complied with. If you are in doubt as to your position, you should consult your own professional advisers. The Company reserves the right to refuse to accept any application for the Rights Shares where it believes that doing so would violate the applicable securities or other laws or regulations of any jurisdiction. No application for the Rights Shares will be accepted from any person who is a NonQualifying Shareholder.

If the Underwriters exercise the right to terminate or rescind the Underwriting Agreement or if any of the conditions of the Rights Issue as set out in the paragraph headed “Conditions Precedent to the Rights Issue, the Bonus Warrant Issue and the Underwriting Agreement” below is not fulfilled on or before 4:00 p.m. on Tuesday, 6 March 2012 (or such later time as the Company and the Underwriters may agree in writing), the monies received in respect of acceptances of the Rights Shares will be returned to the Qualifying Shareholders or such other persons to whom the Rights Shares in their nil-paid form have been validly transferred or, in the case of joint acceptances, to the first-named person without interest, by means of cheques despatched by ordinary post at the risk of such Qualifying Shareholders or such other persons to their registered addresses by the Share Registrar on or before Friday, 9 March 2012.

Fractions of the Rights Shares and the Bonus Warrants (if any)

The Company will not provisionally allot fractions of Rights Shares in nil-paid form or allot fractions of the Bonus Warrants. All fractions of nil-paid Rights Shares and the Bonus Warrants will be aggregated (rounded down to the nearest whole number) and allotted to a nominee appointed by the Company and all nil-paid Rights Shares and Bonus Warrants arising from such aggregation will be sold in the market, if a premium (net of expenses) can be achieved, and the Company will retain the proceeds from such sale(s) for its benefit. Any unsold nil-paid Rights Shares will be made available for excess application by the Qualifying Shareholders.

Certificates for the Rights Shares, the Bonus Warrants and Refund Cheques

Subject to the fulfillment or waiver (as appropriate) of the conditions of the Rights Issue and the Bonus Warrant Issue, certificates for the fully-paid Rights Shares and certificates for the Bonus Warrants are expected to be posted on or before Friday, 9 March 2012 by ordinary post to those Qualifying Shareholders and applicants who have accepted or (as the case may be) applied and paid for the Rights Shares, at their own risks. One share certificate and one Bonus Warrant certificate will be issued for all the Right Shares and the Bonus Warrants issued and allotted to an applicant respectively.

Refund cheques in respect of wholly or partially unsuccessful applications for excess Rights Shares (if any) are expected to be posted on or before Friday, 9 March 2012 by ordinary post to the applicants at their own risks.

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Status of the Rights Shares and the Bonus Warrant Shares

The Rights Shares and the Bonus Warrant Shares, when fully paid and issued, will rank pari passu in all respects with the Consolidated Shares then in issue, including the right to receive all future dividends and distributions which may be declared, made or paid on or after the date of allotment of the Rights Shares in their fully-paid form or the Bonus Warrant Shares (as the case may be).

Specific Mandate to Allot and Issue the Bonus Warrant Shares

The Company will allot and issue the Bonus Warrant Shares upon exercise of the rights attaching to the Bonus Warrants. A specific mandate from the Shareholders to allot and issue the Bonus Warrant Shares was granted at the SGM.

Application for Listing

The Company has applied to the Listing Committee for the listing of, and permission to deal in, the Rights Shares (in both nil-paid and fully-paid forms), the Bonus Warrants and the Bonus Warrant Shares on the Stock Exchange and such application has been granted by the Stock Exchange.

No part of the securities of the Company is listed or dealt in or on which listing or permission to deal is being or is proposed to be sought on any other stock exchange.

The Rights Shares (in both their nil-paid and fully-paid forms), the Bonus Warrants and the Bonus Warrant Shares will be accepted as eligible securities by HKSCC for deposit, clearance and settlement in CCASS with effect from their respective commencement dates of dealings in the Rights Shares in each of their nil-paid and fully-paid forms, the Bonus Warrants and the Bonus Warrant Shares on the Stock Exchange or such other dates as determined by HKSCC. Settlement of transactions between participants of the Stock Exchange on any trading day is required to take place in CCASS on the second trading day thereafter. All activities under CCASS are subject to the General Rules of CCASS and CCASS Operational Procedures in effect from time to time.

Nil-paid Rights Shares and Bonus Warrants will be traded in board lots of 10,000. Dealings in the Rights Shares (in both nil-paid and fully-paid forms), the Bonus Warrants and the Bonus Warrant Shares will be subject to the payment of stamp duty, Stock Exchange trading fee, Securities and Futures Commission transaction levy or any other applicable fees and charges in Hong Kong.

LETTER FROM THE BOARD

Irrevocable Undertakings

As at the Latest Practicable Date, Global Wealthy is a Shareholder interested in 43,743,386 Consolidated Shares, representing approximately 8.85% of the existing issued share capital of the Company. Global Wealthy is a wholly owned subsidiary of Excelsior Kingdom, which in turn is wholly and beneficially owned by Mr. Suen. Mr. Suen is directly interested in 1,000,000 Consolidated Shares and is indirectly through Global Wealthy interested in 43,743,386 Consolidated Shares, together being 44,743,386 Consolidated Shares in aggregate, representing approximately 9.05% of the existing issued share capital of the Company and Mr. Suen holds the Share Options entitling him to subscribe for 1,600,000 Consolidated Shares.

Global Wealthy as a Shareholder, Excelsior Kingdom as sole owner of Global Wealthy and Mr. Suen as the ultimate beneficial owner of Global Wealthy, a Shareholder and a holder of the Share Options, have given the Irrevocable Undertakings to the Company and Chung Nam that:

(i) Global Wealthy will, Excelsior Kingdom will procure, and Mr. Suen will and will procure that the applications in respect of 218,716,930 Rights Shares by Global Wealthy and 5,000,000 Rights Shares by Mr. Suen comprising their respective entitlements under the Rights Issue will be lodged with the Share Registrar, with payment in full therefor in cash, by no later than the Latest Time for Acceptance and otherwise in accordance with the instructions printed on the PAL(s);
(ii) the Consolidated Shares comprising Mr. Suen’s and Global Wealthy’s current shareholding beneficially owned by him/it shall remain beneficially owned by him/ it from the date of their undertakings up to and including the date on which dealings in the fully-paid Rights Shares are expected to commence on the Stock Exchange (or such later date as may be agreed with the Company in writing); and
(iii) Global Wealthy will not, and Mr. Suen will not, and he and Excelsior Kingdom will procure Global Wealthy not to apply for any additional Rights Shares, by way of excess application.

Mr. Suen further undertakes to the Company and Chung Nam that he will not exercise the subscription rights attaching to the Share Options on or before the Latest Time for Termination.

3. CONDITIONS PRECEDENT TO THE RIGHTS ISSUE, THE BONUS WARRANT ISSUE AND THE UNDERWRITING AGREEMENT

The Rights Issue, the Bonus Warrant Issue and the underwriting obligations of the Underwriters under the Underwriting Agreement are conditional upon the following:

(i) the Share Consolidation and the Increase in Authorised Share Capital having become effective;

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(ii) the passing of the necessary resolution(s) by the Shareholders (where applicable, the Independent Shareholders) at the SGM to approve, among others, the Share Consolidation, the Increase in Authorised Share Capital, the Rights Issue and the Bonus Warrant Issue, and the transactions contemplated thereunder;
(iii) the delivery to the Stock Exchange for authorisation and the registration with the Registrar of Companies in Hong Kong respectively of one copy of each of the Prospectus Documents duly signed by two Directors (or by their agents duly authorised in writing) as having been approved by resolution of the Directors (and all other documents required to be attached thereto) and otherwise in compliance with the Listing Rules and the Companies Ordinance not later than the Prospectus Posting Date;
(iv) the filing of one copy of the Prospectus Documents with the Registrar of Companies in Bermuda prior to or as soon as reasonably practicable after publication of the Prospectus Documents in compliance with the Companies Act;
(v) the posting of the Prospectus Documents to the Qualifying Shareholders and the posting of the Prospectus stamped “For information only” to the Non-Qualifying Shareholders, if any, for their information purpose on or before the Prospectus Posting Date;
(vi) the Listing Committee granting or agreeing to grant (subject to allotment) the listing of, and permission to deal in, the Rights Shares (in both their nil-paid and fully-paid forms), the Bonus Warrants and the Bonus Warrant Shares, either unconditionally or subject to such conditions as the Underwriters may in their absolute discretion accept and the satisfaction of such conditions (if any and where relevant) before 8:00 a.m. on the first date of dealings in nil-paid Rights Shares, the Bonus Warrants and the Bonus Warrant Shares on the Stock Exchange and not having withdrawn or revoked such listing and permission on the first day of their dealings;
(vii) if necessary, the obtaining of the consent or permission from the Bermuda Monetary Authority in respect of the issue of the Rights Shares and the Bonus Warrant Issue on or before the Prospectus Posting Date;
(viii) compliance with and performance by the Company of all the undertakings and obligations under the terms of the Underwriting Agreement;
(ix) compliance with and performance of all the undertakings and obligations of Mr. Suen and Global Wealthy under the Irrevocable Undertakings;
(x) compliance with and performance of all the undertakings and obligations of the Underwriters pursuant to the terms and conditions of the Underwriting Agreement; and
(xi) the obligations of the Underwriters under the Underwriting Agreement not being terminated by the Underwriters in accordance with the terms thereof.

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Where any condition relates to compliance with applicable laws, rule and regulations, it cannot be waived. Subject to the foregoing sentence, the above conditions (i) to (vii) cannot be waived, the Company may waive the condition (x), and the Underwriters may waive the condition (viii).

In the event that the above conditions have not been satisfied or waived on or before 4:00 p.m. on Tuesday, 6 March 2012 (or such other date as the Underwriters and the Company may agree in writing), the obligations of the parties to the Underwriting Agreement shall cease and determine and no party shall have any claim against the other party save for any antecedent breach of the Underwriting Agreement and save that all legal fees as well as such other out of pocket expenses of the Underwriters shall continue to be borne by the Company, and the Rights Issue and the Bonus Warrant Issue will not proceed.

4. UNDERWRITING ARRANGEMENT

The Underwriting Agreement

Date: 20 December 2011 Underwriters: (1) Global Wealthy, a Shareholder of the Company as at the Latest Practicable Date; and
(2) Chung Nam, to the best of the knowledge, information and belief of the Directors having made all reasonable enquiries, Chung Nam and its ultimate beneficial owners are independent third parties. As at the Latest Practicable Date, Chung Nam and its associates are not interested in any Shares or securities of the Company.

Number of Rights Shares The Underwriters have conditionally agreed pursuant to underwritten: the Underwriting Agreement and subject to the Irrevocable Undertakings to underwrite the Underwritten Shares, being 2,247,370,920 Rights Shares, on a fully underwritten basis in the following priority:

(1) Firstly, Global Wealthy shall underwrite up to a maximum of 601,000,000 Underwritten Shares; and
(2) Secondly, Chung Nam shall underwrite the balance of the Underwritten Shares up to a maximum of 1,646,370,920 Right Shares.

Total number of Bonus 494,217,570 Bonus Warrants Warrants:

Commission: 2.50% of the aggregate Subscription Price in respect of the number of Underwritten Shares to be underwritten by the Underwriters

LETTER FROM THE BOARD

The commission rate was determined after arm’s length negotiation between the Company and the Underwriters by reference to the existing financial position of the Group, the size of the Rights Issue, and the current and expected market condition. The Directors (including the Independent Non-executive Directors) consider the terms of the Underwriting Agreement including the commission rate are fair and reasonable so far as the Company and the Shareholders are concerned. Mr. Suen had abstained from voting at the meeting of the Board approving the Rights Issue and the Bonus Warrant Issue and all matters contemplated thereunder.

Pursuant to the Underwriting Agreement, Chung Nam undertakes and warrants to the Company that:

(i) it shall use all reasonable endeavours to procure that each of the subscribers of the Underwritten Shares (including any direct and indirect sub-underwriters) shall be third party independent of, not acting in concert with and not connected with the Directors, chief executive or substantial shareholders of the Company (within the meaning of the Listing Rules) or any of its subsidiaries and their respective associates;
(ii) in performing its undertaking obligations under the Underwriting Agreement, no subscriber or sub-underwriter (including any direct and indirect sub-underwriters) of the Underwritten Shares will, together with any party acting in concert with it or its associates (within the meaning of the Takeovers Code), become a Shareholder holding 10% or more of the voting rights of the Company immediately upon completion of the Rights Issue;
(iii) it shall use all reasonable endeavours to ensure that no subscriber or sub-underwriter (including any direct and indirect sub-underwriters) of the Underwritten Shares will, together with any party acting in concert with it or its associates (within the meaning of the Takeovers Code), become a Shareholder holding 30% or more of the voting rights of the Company immediately upon completion of the Rights Issue;
(iv) it shall not, together with any party acting in concert with it or its associates (within the meaning of the Takeovers Code), become a Shareholder holding 30% or more of the voting rights of the Company immediately upon completion of the Rights Issue; and
(v) it shall use all reasonable endeavours to ensure that each of the subscribers or sub-underwriters of the Underwritten Shares procured by it shall be third parties independent of and not parties acting in concert with Global Wealthy, Excelsior Kingdom, their respective directors and shareholders or their associates and are not a connected person of the Company such that the Company will be able to comply with the minimum public float requirement set out in Rule 8.08(1) of the Listing Rules.

LETTER FROM THE BOARD

In the event that no Shareholders (except Mr. Suen and Global Wealthy) take up their entitlements of the Rights Shares, it is expected that Mr. Suen and Global Wealthy will hold up to 869,460,316 Consolidated Shares representing approximately 29.32% of the enlarged issued share capital of the Company upon completion of the Rights Issue. Save that, it is expected that (i) no subscriber or purchaser of the Underwritten Shares will become a substantial shareholder (as defined in the Listing Rules) immediately after completion of the Rights Issue; (ii) Chung Nam and its associates, together with any party acting in concert (within the meaning of the Takeovers Code) with it will not become a Shareholder holding 20% or more of the voting rights of the Company immediately after completion of the Rights Issue.

Save as disclosed above, the Board has not received any information or irrevocable undertakings, other than the Irrevocable Undertakings from Excelsior Kingdom, Global Wealthy and Mr. Suen, from any Shareholders of their intention to take up their assured entitlements under the Rights Issue.

Termination or Rescission of the Underwriting Agreement

If, prior to the Latest Time for Termination:

(1) in the reasonable opinion of Chung Nam (after prior consultation with Global Wealthy), the success of the Rights Issue and the Bonus Warrant Issue would be materially and adversely affected by:
(a) the introduction of any new law or regulation or any change in existing law or regulation (or the judicial interpretation thereof) or other occurrence of any nature whatsoever which may, in the reasonable opinion of Chung Nam (after prior consultation with Global Wealthy), materially and adversely affect the business or the financial or trading position or prospects of the Group as a whole or is materially adverse in the context of the Rights Issue and the Bonus Warrant Issue; or
(b) the occurrence of any local, national or international event or change (whether or not forming part of a series of events or changes occurring or continuing before, and/or after the date thereof) of a political, military, financial, economic or other nature (whether or not ejusdem generis with any of the foregoing), or in the nature of any local, national or international outbreak or escalation of hostilities or armed conflict, or affecting local securities markets which may, in the reasonable opinion of Chung Nam (after prior consultation with Global Wealthy), materially and adversely affect the business or the financial or trading position or prospects of the Group as a whole or materially and adversely prejudice the success of the Rights Issue or otherwise makes it inexpedient or inadvisable to proceed with the Rights Issue and the Bonus Warrant Issue; or
(c) any material adverse change in the business or in the financial or trading position of the Group as a whole; or

LETTER FROM THE BOARD

(2) any material adverse change in market conditions (including without limitation, any change in fiscal or monetary policy, or foreign exchange or currency markets, suspension or material restriction or trading in securities) occurs which in the reasonable opinion of Chung Nam (after prior consultation with Global Wealthy) are likely to materially or adversely affect the success of the Rights Issue or otherwise makes it inexpedient or inadvisable to proceed with the Rights Issue and the Bonus Warrant Issue; or
(3) there is any change in the circumstances of the Company or any member of the Group which in the reasonable opinion of Chung Nam (after prior consultation with Global Wealthy) will adversely affect the prospects of the Company, including without limiting the generality of the foregoing the presentation of a petition or the passing of a resolution for the liquidation or winding up or similar event occurring in respect of any of member of the Group or the destruction of any material asset of the Group; or
(4) any suspension in the trading of securities generally or the Company’s securities on the Stock Exchange for a period of more than ten consecutive Business Days, excluding any suspension in connection with the clearance of the Announcement, or the Prospectus Documents or other announcements or circulars in connection with the Rights Issue and the Bonus Warrant Issue; or
(5) the circular, prospectus or announcements of the Company (including any amendments or supplements thereto) published since the date of the Underwriting Agreement when published contain information (either as to business prospects or the condition of the Group or as to its compliance with any laws, Listing Rules, Takeovers Code or any applicable regulations) which has not prior to the date of the Underwriting Agreement been publicly announced or published by the Company and which in the reasonable opinion of Chung Nam (after prior consultation with Global Wealthy) are material to the Group as a whole and is likely to affect materially and adversely the success of the Rights Issue or might cause a prudent investor not to accept the Rights Shares provisionally allotted to it,

Chung Nam (after prior consultation with Global Wealthy) shall be entitled by notice in writing to the Company to rescind the Underwriting Agreement if prior to the Latest Time for Termination:

(1) any material breach of any of the representations, warranties or undertakings of the Company contained in the Underwriting Agreement that comes to the knowledge of Chung Nam; or

LETTER FROM THE BOARD

(2) any Specified Event comes to the knowledge of Chung Nam, provided that Chung Nam shall have given prior notice of its intention to rescind to Global Wealthy. Any such notice of rescission shall be served by Chung Nam to the Company (which shall be binding on Global Wealthy) prior to the Latest Time for Termination.

5. REASONS FOR THE RIGHTS ISSUE AND THE BONUS WARRANT ISSUE AND INTENDED USE OF PROCEEDS

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

The estimated gross proceeds (before expenses) and the estimated net proceeds from the Rights Issue (after deduction of expenses, including the commission to be paid to the Underwriters) will be approximately HK$321.2 million and HK$311.7 million respectively. The Company intends to apply the net proceeds from the Rights Issue for the following purposes:

(i) not less than 50% of the net proceeds on potential and future investments in energy and resources related business or other suitable/attractive business opportunities by way of trading or acquisitions of business or assets, in particular, the Company is conducting feasibility studies on the business of methanol and may pursue business opportunities in that area; and
(ii) the remaining balance of the net proceeds will be applied for general corporate and working capital of the Group.

Methanol is an important raw material for the chemical industry and has wide industrial applications including production of synthetic fibre, plastic, pharmaceutical, pesticides, dye and synthetic protein and can also be used to produce fuel which is commonly considered as an alternative energy source. The Company is currently exploring the feasibility of importing methanol from overseas into the PRC and carrying out research regarding market demand, government policies and regulatory framework for methanol in the PRC and the logistic arrangements for such operations. The business of trading of methanol requires pledging of cash with bank(s) for the purpose of issuing letter(s) of credit. Given the value of each trading contract, substantial amounts have to be reserved for this purpose. The Company expects to commit not less than HK$150 million for the methanol business when it is materialized. Having been focused on carrying out the feasibility studies of methanol business, at present the Company has not yet identified other investments opportunities or acquisition targets in the energy and resources related business.

Assuming all the Bonus Warrants are exercised, the estimated gross proceeds (before expenses) and the estimated net proceeds of approximately HK$49.4 million and HK$49.2 million respectively will be raised. The Company intends to apply such net proceeds as general corporate and working capital of the Group for its future business development.

LETTER FROM THE BOARD

The Board considers that it is prudent to finance the Group’s long-term growth by long-term financing, preferably in the form of equity after considered other fund raising alternatives for the Group, such as bank borrowings and issuance of convertible securities, after taking into account the benefits and cost of each alternatives. The Rights Issue allows the Group to strengthen its financial position without raising debts and bearing interests. Taken into account the terms of the Rights Issue, the Board considers that the Rights Issue are fair and reasonable and in the interests of the Company and the Shareholders as a whole. Furthermore, it also offers all the Qualifying Shareholders an equal opportunity to participate in the enlargement of the capital base of the Company and enables the Qualifying Shareholders to maintain their proportionate interests in the Company to participate in the future development of the Company should they wish to do so. However, those Qualifying Shareholders who do not take up the Rights Shares to which they are entitled should note that their shareholdings in the Company will be diluted .

As at 30 September 2011, the Group had cash and bank balances of approximately HK$444,695,000 and net proceeds of approximately HK$74,400,000 had been raised in the placing of Shares completed on 1 November 2011. According to the Group’s operational plan, most of the cash resources have been designated to finance the existing operations of the Group where (i) approximately HK$250 million have been designated to be pledged with bank(s) from time to time for trade facilities granted by banks to finance the operation of the Group’s supply and procurement division; (ii) approximately HK$165 million have been designated for settlement of the balance of purchase price for the acquisition of an intellectual property rights to a Chinese medicine known as Jinhua Qinggan and as additional working capital for the Group’s pharmaceutical division; and (iii) the remaining cash resources of approximately HK$104 million have been designated to finance the Group’s other operating activities. Having considered the cash position of the Group and the intended usages of the available cash resources, the Board considers that the current capital raising activities are appropriate and beneficial for the long term development of the Group.

6. ADJUSTMENT TO THE SHARE OPTIONS

As at the Latest Practicable Date, there are 1,600,000 Share Options outstanding entitling Mr. Suen to subscribe for 1,600,000 Consolidated Shares. As a result of the Rights Issue and Bonus Warrant Issue, adjustments will need to be made to the exercise price and/or the number of Consolidated Shares to be issued upon exercise of the Share Options in accordance with the terms and conditions of the Share Options. The Company will appoint an independent financial adviser to certify the adjustments, if any, to the 1,600,000 Share Options and will notify Mr. Suen regarding adjustments to be made and further announcement will be made by the Company in respect of such adjustments as and when appropriate.

LETTER FROM THE BOARD

7. FUND RAISING EXERCISES OF THE COMPANY DURING THE PAST 12 MONTHS

The Company’s equity fund raising exercises over the past 12-month period immediately preceding the Latest Practicable Date are set out below:

Date of Net proceeds raised announcement Fund raising activity (approximately) Use of net proceeds Actual use of net proceeds 24 October 2011 Placing of 823,695,952 new HK$74.4 million General working capital Used as intended Shares at a price of HK$0.093 per Share under general mandate, completed on 1 November 2011

Save for the above, the Company has not carried out other capital raising activities in the 12 months immediately preceding the Latest Practicable Date.

8. EFFECTS ON SHAREHOLDING STRUCTURE OF THE COMPANY

Set out below is the shareholding structure of the Company assuming that there is no change in the issued share capital of the Company from the Latest Practicable Date until such date falling immediately after completion of the Rights Issue and the Bonus Warrant Issue.

Shareholders Substantial Shareholders Global Wealthy_(Note 1) Global Wealthy as Underwriter Director Mr. Suen Public Chung Nam and/or subscribers procured by it(Note 2)_ Other public Shareholders Total	As at the Latest Practicable Date Number of Consolidated Approx. Shares % 43,743,386 8.85% N/A N/A 1,000,000 0.20% N/A N/A 449,474,184 90.95% 494,217,570 100.00%	Before full exercise of Bonus Warrants None of the Rights Shares are subscribed by the Qualifying Shareholders (except Mr. Suen and All Rights Shares are Global Wealthy) subscribed by the and all taken up Qaulifying Shareholders by the Underwriters Number of Number of Consolidated Approx. Consolidated Approx. Shares % Shares % 262,460,316 8.85% 262,460,316 8.85% N/A N/A 601,000,000 20.27% 6,000,000 0.20% 6,000,000 0.20% N/A N/A 1,646,370,920 55.52% 2,696,845,104 90.95% 449,474,184 15.16% 2,965,305,420 100.00% 2,965,305,420 100.00%	After full exercise of Bonus Warrants None of the Rights Shares are subscribed by the Qualifying Shareholders (except Mr. Suen and Global Wealthy) All Rights Shares are and all taken up subscribed by the by the Underwriters Qualifying Shareholders (Notes 3 & 4) Number of Number of Consolidated Approx. Consolidated Approx. Shares % Shares % 306,203,702 8.85% 306,203,702 8.85% N/A N/A 721,200,000 20.85% 7,000,000 0.20% 7,000,000 0.20% N/A N/A 1,975,645,104 57.11% 3,146,319,288 90.95% 449,474,184 12.99% 3,459,522,990 100.00% 3,459,522,990 100.00%	After full exercise of Bonus Warrants None of the Rights Shares are subscribed by the Qualifying Shareholders (except Mr. Suen and Global Wealthy) All Rights Shares are and all taken up subscribed by the by the Underwriters Qualifying Shareholders (Notes 3 & 4) Number of Number of Consolidated Approx. Consolidated Approx. Shares % Shares % 306,203,702 8.85% 306,203,702 8.85% N/A N/A 721,200,000 20.85% 7,000,000 0.20% 7,000,000 0.20% N/A N/A 1,975,645,104 57.11% 3,146,319,288 90.95% 449,474,184 12.99% 3,459,522,990 100.00% 3,459,522,990 100.00%
				100.00%

LETTER FROM THE BOARD

Notes:

Global Wealthy, a company incorporated in the British Virgin Islands with limited liability, is a wholly owned subsidiary of Excelsior Kingdom, which in turn is wholly owned by Mr. Suen, an Executive Director and the Chairman of the Company.
Chung Nam undertakes and warrants to the Company that in performing its obligations under the Underwriting Agreement, no subscriber or sub-underwriter (including any direct or indirect sub-underwriters) of the Underwritten Shares will, together with any party acting in concert with it or its associates, become a Shareholder holding 10% or more of the voting rights of the Company immediately after completion of the Rights Issue.
As at the Latest Practicable Date, the outstanding Share Options that can subscribe for 1,600,000 Consolidated Shares under the share option scheme of the Company held by Mr. Suen remain unexercised and Mr. Suen undertakes to the Company not to exercise the Share Options on or before the Latest Time for Termination.
For illustration purposes only, in the event that, upon completion of the Rights Issue, no Qualifying Shareholders (except Global Wealthy and Mr. Suen) take up any Rights Shares, the Underwriters will be required to subscribe for or procure subscribers of the Underwritten Shares, which will result in Global Wealthy taking up 601,000,000 Rights Shares such that the total shareholding of Global Wealthy, together with parties acting in concert with it (including Mr. Suen), will increase to an aggregate of 869,460,316 Consolidated Shares, representing approximately 29.32% of the entire issued share capital of the Company as enlarged by the Rights Issue immediately after completion of the Rights Issue, and assuming all of the Bonus Warrants have been exercised, an aggregate of 1,034,403,702 Consolidated Shares, representing approximately 29.90% of the entire issued share capital of the Company as enlarged by the Rights Issue and full exercise of the Bonus Warrants.

Shareholders and public investors should note that the above changes in shareholding structure of the Company are for illustration purpose only and the actual change in the shareholding structure of the Company upon completion of the Rights Issue and the full exercise of the Bonus Warrants are subject to various factors including, among other things, the results of acceptance of the Rights Issue and the exercising of the Bonus Warrants.

9. WARNING OF THE RISKS OF DEALING IN THE CONSOLIDATED SHARES AND THE NIL-PAID RIGHTS SHARES AND/OR TAKING UP THE RIGHTS SHARES

Dealings in the Rights Shares in the nil-paid form are expected to take place from Monday, 20 February 2012 to Monday, 27 February 2012 (both dates inclusive). Shareholders and potential investors should note that dealing in the Consolidated Shares and/or nil-paid Rights Shares will take place while the conditions to which the Underwriting Agreement is subject remain unfulfilled. If the conditions of the Underwriting Agreement are not fulfilled or the Underwriting Agreement is terminated by the Underwriters, the Rights Issue and the Bonus Warrant Issue will not proceed.

Any dealings in the Consolidated Shares up to 4:00 p.m. on Tuesday, 6 March 2012, being the time and date by which all the conditions of the Rights Issue and the Bonus Warrant Issue are to be fulfilled and when the right of the Underwriters to terminate the Underwriting Agreement is to lapse, and any dealings in the Rights Shares in their nil-paid form between Monday, 20 February 2012 to Monday, 27 February 2012, both dates inclusive, are accordingly subject to the risk that the Rights Issue and the Bonus Warrant Issue may not proceed. Shareholders and potential investors should therefore exercise caution when dealing in the Consolidated Shares or the Rights Shares in their nil-paid form and, if they are in any doubt about their position, they should consult their professional adviser(s).

LETTER FROM THE BOARD

10. PROFESSIONAL TAX ADVICE RECOMMENDED

Qualifying Shareholders are recommended to consult their professional advisers if they are in doubt as to the taxation implications of subscribing for the Rights Shares, or about purchasing, holding or disposals of, or dealings in or exercising any rights in relation to the Consolidated Shares or the Rights Shares or the Bonus Warrant Shares, and similarly, the Non-Qualifying Shareholders as regards their receipt of the net proceeds of sale of the nil-paid Rights Shares (if any) otherwise falling to be issued to them under the Rights Issue under the laws of jurisdictions in which they are liable to taxation. It is emphasised that none of the Company, the Directors nor any other parties involved in the Rights Issue and the Bonus Warrant Issue accepts responsibility for any tax effects on, or liabilities of, any person resulting from subscribing for, purchasing, holding, disposal of, dealings in or exercising any rights in relation to the Consolidated Shares or the Rights Shares or the Bonus Warrant Shares.

ADDITIONAL INFORMATION

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

Yours faithfully, On behalf of the Board Suen Cho Hung, Paul Chairman

FINANCIAL AND OTHER INFORMATION OF THE GROUP

APPENDIX I

1. THREE-YEAR FINANCIAL INFORMATION

The audited consolidated financial statements of the Company for each of the three years ended 31 March 2009, 2010 and 2011 are disclosed in the annual reports of the Company for the years ended 31 March 2009 (pages 35 to 131), 2010 (pages 28 to 107) and 2011 (pages 25 to 107) respectively, which are published on both the website of the Stock Exchange (www.hkex.com.hk) and the website of the Company (www.beijingyst.com). The auditors of the Company have not issued any qualified opinion on the Group’s financial statements for the financial years ended 31 March 2009, 2010 and 2011.

2. UNAUDITED INTERIM RESULTS

The unaudited condensed consolidated financial statements of the Company for the six months ended 30 September 2011 are disclosed in the interim report of the Company for the six months ended 30 September 2011 (pages 7 to 25), which are published on both the website of the Stock Exchange (www.hkex.com.hk) and the website of the Company (www.beijingyst.com).

3. INDEBTEDNESS

At the close of business on 31 December 2011, being the latest practicable date for the purpose of ascertaining the indebtedness of the Group prior to the printing of this Prospectus, the Group had outstanding borrowings totalling approximately HK$151,979,000, comprising secured bank loans of approximately HK$30,470,000 and bank advances for discounted bills guaranteed by the Company of approximately HK$121,509,000.

Save as disclosed above, the Group, apart from intra-group liabilities, did not have any loan capital issued and outstanding or agreed to be issued, bank overdrafts, loans or other similar indebtedness, liabilities under acceptance (other than normal trade bills), or acceptance credits, debentures, mortgages, charges, finance leases, hire purchase commitments, guarantees or other material contingent liabilities as at 31 December 2011.

4. WORKING CAPITAL

The Directors are of the opinion that, after taking into account the present available financial resources, the existing banking facilities available and the estimated net proceeds from the Rights Issue, the Group will have sufficient working capital for its present requirements and for at least 12 months from the date of this Prospectus in the absence of unforeseen circumstances.

5. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors were not aware of any material adverse change in the financial or trading position of the Group since 31 March 2011, being the date to which the latest published audited consolidated financial statements of the Company were made up, save as disclosed in the interim report of the Company for the six months ended 30 September 2011.

FINANCIAL AND OTHER INFORMATION OF THE GROUP

APPENDIX I

6. BUSINESS REVIEW FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2011

Operations Review

For the six months ended 30 September 2011, the Group continued to register growth of its revenue and gross profit primarily as a result of the management’s continuous efforts in developing the business of the Group. The Group reported revenue of HK$775,758,000, representing a growth of 91% from the previous period (30 September 2010: HK$406,077,000), and gross profit of HK$24,073,000, showing a 2.1 times increase over the previous period (30 September 2010: HK$7,750,000). The significant increase in the Group’s revenue was mainly contributed by the growth of the Group’s supply and procurement business, whereas the rise of the Group’s gross profit was primarily attributed to the increase in dividend income from the Group’s listed equity investments.

During the period under review, the Group’s supply and procurement division continued to focus on the sourcing, transporting and supplying of metal minerals. When compared to the previous period, the division continued to achieve encouraging business results by reporting an 87% increase in revenue to HK$747,427,000 (30 September 2010: HK$400,629,000) and a 21% increase in operating profit to HK$3,275,000 (30 September 2010: HK$2,710,000). The increase in the division’s revenue was mainly attributed to the strong demand of the division’s steel mill customers in Mainland China during the first half of the financial year. Nevertheless, the division’s operating profit grew at a much lesser rate mainly because a loss of approximately HK$8 million was incurred by the division due to the deviation of minerals content of a shipment of metal minerals transacted during the period. The Group has already initiated an arbitration claim against the supplier of that shipment, owing to uncertainty of the outcome of the arbitration, the compensation recoverable from the supplier has not been recognised in the Group’s financial statements. During the previous period a claim of similar nature of approximately HK$5 million was made against another supplier, a large part of such claim was recovered during the current period and partly offset the effect of the HK$8 million loss mentioned. Owing to the series of financial tightening measures that have been imposed by the Chinese government on the property sector of the economy, the metal minerals market in the Mainland has been very volatile and there are signs that the demand of various metal minerals has slowed down which may affect the division’s performance in the remainder of the financial year.

APPENDIX I

FINANCIAL AND OTHER INFORMATION OF THE GROUP

The Group continued to develop its pharmaceutical business that was acquired in early 2010. For the review period, the division reported revenue of HK$11,452,000 which represented an increase of 3.1 times over the previous period (30 September 2010: HK$2,788,000). The revenue of the division mainly comprised product sales of Jinhua Qinggan, which is a Chinese medicine for healing patients who have been infected with Influenza A (H1N1) and other types of influenza. Currently, Jinhua Qinggan is selling as a prescription drug to designated medical institutions in Beijing. The Group is in the process of applying for a new drug certificate for Jinhua Qinggan from the relevant authorities in the Mainland, whereupon the issuance of such certificate, the Group will be able to market Jinhua Qinggan as a non-prescription drug to the general public. The Group is still awaiting for the results of such application. For the review period, the division incurred operating loss of HK$6,261,000 (30 September 2010: HK$4,252,000) primarily due to the reasons that the sales volume of Jinhua Qinggan has not yet reached a scale that can cover operating costs of the division, in particular the high start-up costs in its early stage of operation.

The financing division continued to provide a stable income source to the Group for the period under review. When compared with the previous period, the interest income and operating profit generated by the financing division were up by 19% to HK$1,784,000 (30 September 2010: HK$1,502,000) and 18% to HK$1,698,000 (30 September 2010: HK$1,443,000). Such increases were mainly due to the higher average amount of loans advanced to customers over the previous period. The loan portfolio held by the Group amounted to HK$26,440,000 (31 March 2011: HK$20,000,000) at the period end.

The Group’s securities investment division recorded revenue of HK$15,095,000 (30 September 2010: HK$1,158,000) representing mainly dividend from equity securities investments received during the period. As a whole, the division reported a loss of HK$229,101,000 (30 September 2010: HK$66,483,000) primarily as a result of the loss incurred from investing in Hong Kong listed equity securities, and that loss incurred comprised mainly unrealised holding loss of HK$229,502,000 (30 September 2010: HK$58,546,000) for listed equity securities measured at fair values at the period end date. During the review period, the Hong Kong stock market was very volatile largely caused by the continuance of the sovereign debts crises in Europe, the fear that the United States economy would go into a “double-dip” recession and the financial tightening measures imposed by the Chinese government on the banking and property sector of the economy. Investor confidence and market sentiments were weak for most part of the period and pressed down prices of listed securities invested by the Group. The Group’s securities portfolio at the period end comprised mainly listed equity securities in conglomerate company, infrastructure company, property company, mining and resources company, industrial materials company, consumer goods retail company, health care services company, agricultural machinery company and financial services company. At the period end, the Group’s securities portfolio was valued at HK$496,032,000 (31 March 2011: HK$487,676,000). The management expects that the division will perform better when investor confidence and positive market sentiments are restored in the stock markets.

FINANCIAL AND OTHER INFORMATION OF THE GROUP

APPENDIX I

For the period ended 30 September 2011, the Group recorded loss attributable to owners of the Company of HK$238,427,000 (30 September 2010: HK$82,979,000) and basic loss per share of HK5.79 cents (30 September 2010: HK3.22 cents). The overall loss incurred by the Group was mainly attributed to the loss incurred by the Group’s securities investment division during the period.

Financial Review

At 30 September 2011, the Group had current assets of HK$1,435,734,000 (31 March 2011: HK$1,642,903,000) and liquid assets comprising cash and short-term securities investment of HK$940,727,000 (31 March 2011: HK$997,614,000) (excluding pledged bank deposits for trade facilities granted by banks). The Group’s current ratio, calculated based on current assets of HK$1,435,734,000 (31 March 2011: HK$1,642,903,000) over current liabilities of HK$619,129,000 (31 March 2011: HK$398,749,000), was at a strong ratio of 2.3 at the period end (31 March 2011: 4.1).

The Group’s finance costs for the current period included a notional interest on convertible notes of HK$7,890,000 (30 September 2010: HK$7,525,000) calculated in accordance with the Group’s accounting policy on financial instruments, such notional interest required no cash outlay whereas interest requiring cash settlement amounted to HK$912,000 for the period (30 September 2010: HK$948,000). As announced by the Company on 23 September 2011, the Company repurchased all outstanding convertibles notes in the aggregate principal amount of HK$189,100,000 at the price of HK$187,209,000, representing a discount of 1% on the aggregate principal amount of such notes. The net gain on repurchase of the convertible notes amounted to HK$2,159,000.

At the period end, equity attributable to owners of the Company amounting to HK$1,041,968,000 (31 March 2011: HK$1,297,559,000) and is equivalent to an attributable amount of HK$0.25 (31 March 2011: HK$0.32) per share of the Company.

At the period end, the Group’s indebtedness comprised of bank advances for discounted bills and bank loans totalling HK$306,991,000 (31 March 2011: HK$197,019,000 (including fair value of convertible notes)). The Group’s gearing ratio, calculated on the basis of total indebtedness divided by total indebtedness and equity attributable to the Company’s owners, was at a moderate ratio of 23% at the period end (31 March 2011: 13%). All bank loans were repayable within one year, denominated in Renminbi and bore interest at floating rates.

With the amount of liquid assets on hand as well as credit facilities granted by banks, the management is of the view that the Group has sufficient financial resources to meet its ongoing operational requirements.

APPENDIX I

FINANCIAL AND OTHER INFORMATION OF THE GROUP

The monetary assets and liabilities and business transactions of the Group are mainly carried and conducted in Hong Kong dollars, Renminbi and US dollars. The Group maintains a prudent strategy in its foreign currency risk management, to a large extent, foreign exchange risks are minimized via balancing the foreign currency monetary assets versus the corresponding currency liabilities, and foreign currency revenues versus the corresponding currency expenditures. In light of the above, it is considered that the Group’s exposure to foreign exchange risks is not significant and no hedging measure has been undertaken by the Group.

At 30 September 2011, bank deposits of HK$26,399,000 (31 March 2011: HK$248,028,000) were pledged to secure credit facilities granted to the Group.

At 30 September 2011, buildings and prepaid lease payments of carrying amount of HK$30,378,000 (31 March 2011: HK$30,127,000) and HK$34,095,000 (31 March 2011: HK$33,643,000) respectively were pledged to secure for bank loans of the Group.

At 30 September 2011, the Group had no significant contingent liability (31 March 2011: nil).

At 30 September 2011, the Group had capital commitment in respect of upgrading works of its medicine production plant in Beijing of HK$108,000 (31 March 2011: HK$105,000).

Human Resources and Remuneration Policy

At 30 September 2011, the Group had about 130 (30 September 2010: 100) employees including directors. Total staff costs for the review period, including directors’ remuneration, was HK$5,664,000 (30 September 2010: HK$5,063,000). Remuneration packages for employees and directors are structured by reference to market conditions and individual performance. Benefits plans maintained by the Group include provident fund scheme, medical insurance, share option scheme and discretionary bonuses.

Business and Trading Prospects

In light of the uncertainties and challenges face by the world major economies and investment markets, the Group will continue to manage its businesses in a prudent manner for the remainder of the financial year. In light of new investments, the Group will continue with its cautious approach in identifying new investment opportunities with the view to create new value and a stable prospect to shareholders.

7. MAJOR ACQUISITION OF THE GROUP AFTER THE DATE OF THE LATEST PUBLISHED ACCOUNTS OF THE COMPANY

No major acquisition of the Group after the date of the latest published accounts of the Company.

APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

For illustrative purposes only, set out below is the unaudited pro forma statement of adjusted consolidated net tangible assets of the Group after completion of the Rights Issue and the Bonus Warrant Issue.

1. UNAUDITED PRO FORMA STATEMENT OF ADJUSTED CONSOLIDATED NET TANGIBLE ASSETS OF THE GROUP

The unaudited pro forma statement of adjusted consolidated net tangible assets of the Group prepared in accordance with Rule 4.29 of the Listing Rules is set out below to illustrate the effect on the unaudited consolidated net tangible assets of the Group for (i) the Rights Issue in the proportion of five Rights Shares for every one Consolidated Share held on the record date at HK$0.13 per Rights Share and (ii) the Bonus Warrant Issue in the proportion of one Bonus Warrant for every five Rights Shares taken up at the Exercise Price of HK$0.10 per Consolidated Share as if the Rights Issue and the Bonus Warrant Issue had taken place on 30 September 2011. Capitalised terms used herein have the same meanings as those defined in this Prospectus unless the context otherwise requires.

The unaudited pro forma statement of adjusted consolidated net tangible assets of the Group has been prepared for illustrative purposes only, and because of its hypothetical nature, it may not give a true picture of the financial position of the Group as at 30 September 2011 or at any future date.

The following unaudited pro forma statement of adjusted consolidated net tangible assets of the Group is based on the unaudited consolidated net tangible assets of the Group as at 30 September 2011 and adjusted to reflect the effect of the Rights Issue and the Bonus Warrant Issue:

					Unaudited		Unaudited pro
					consolidated	Unaudited pro	forma adjusted
		Unaudited pro		Unaudited pro	net tangible assets	forma adjusted	consolidated
		forma adjusted		forma adjusted	of the Group	consolidated net	net tangible
		consolidated net		consolidated net	attributable to	tangible assets	assets of the Group
		tangible assets		tangible assets	the owners of the	of the Group per	per Consolidated
Unaudited		of the Group		of the Group	Company per	Consolidated Share	Share attributable
consolidated		attributable to the		attributable to the	Shares as at	attributable to the	to the owners
net tangible assets	Estimated	owners of the	Estimated	owners of the	30 September 2011	owners of the	of the Company
of the Group	proceeds	Company upon	proceeds	Company upon	prior to the	Company upon	upon completion of
attributable to the	less related	completion of the	less related	completion of the	completion of the	completion of the	the Rights Issues
owners of the	expenses	Rights Issue but	expenses from	Rights Issue	Rights Issue and	Rights Issue but	and the
Company as at	from the	before the Bonus	the Bonus	and the Bonus	and the Bonus	before the Bonus	Bonus Warrant
30 September 2011	Rights Issue	Warrant Issue	Warrant Issue	Warrant Issue	Warrant Issue	Warrant Issue	Issue
HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$	HK$	HK$
Note (a)	Note (b)		Note (c)		Note (d)	Note (e)	Note (f)
875,873	311,700	1,187,573	49,200	1,236,773	0.21	0.48	0.43

APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

Notes:

(a) The unaudited consolidated net tangible assets of the Group as at 30 September 2011 is calculated based on the capital and reserves attributable to the owners of the Company as at 30 September 2011 of approximately HK$1,041,968,000 and after deducting goodwill of approximately HK$9,935,000 and intangible assets of approximately HK$156,160,000 as at 30 September 2011 as extracted from the interim report of the Company for the six months ended 30 September 2011.
(b) The estimated proceeds less related expenses from the Rights Issue of approximately HK$311,700,000 are calculated based on 2,471,087,850 Rights Shares to be issued at the Subscription Price of HK$0.13 per Rights Share and after deducting estimated related expenses which are directly attributable to the Rights Issue, include among others, underwriting commission, financial advisory fee and other professional fees, of approximately HK$9,500,000.
(c) The estimated proceeds less related expenses from exercise of the Bonus Warrants of approximately HK$49,200,000 are calculated based on 494,217,570 Bonus Warrants to be issued and fully exercised at the Exercise Price of HK$0.10 per Consolidated Share and after deducting estimated related expenses which are directly attributable to the Bonus Warrant Issue, include among others, financial advisory fee and other professional fees, of approximately HK$200,000.
(d) The number of shares used for the calculation of the unaudited consolidated net tangible assets of the Group per Share attributable to the owners of the Company as at 30 September 2011 prior to completion of the Rights Issue and the Bonus Warrant Issue is based on 4,118,479,760 Shares in issue as at 30 September 2011.
(e) The number of shares used for the calculation of the unaudited pro forma adjusted consolidated net tangible assets of the Group per Consolidated Share attributable to the owners of the Company as at 30 September 2011 after completion of the Rights Issue but prior to completion of the Bonus Warrant Issue is based on 2,471,087,856 Consolidated Shares which represents the sum of:
(i) 411,847,976 Consolidated Shares, which is calculated based on 4,118,479,760 issued shares of the Company as at 30 September 2011 as stated in note (d) and taking into account the Share Consolidation which consolidated every ten issued and unissued Shares of HK$0.01 each into one Consolidated Share of HK$0.10; and
(ii) 2,059,239,880 Rights Shares to be issued, which is calculated based on 411,847,976 Consolidated Shares as referred to in (e)(i) above and on the basis of five (5) Rights Shares for every one (1) Consolidated Share.
(f) The number of shares used for the calculation of the unaudited pro forma adjusted consolidated net tangible assets of the Group per Consolidated Share attributable to the owners of the Company as at 30 September 2011 after completion of the Rights Issue and the Bonus Warrant Issue is based on 2,882,935,832 Consolidated Shares which represents the sum of:
(i) 2,471,087,856 Consolidated Shares, which is calculated based on 411,847,976 Consolidated Shares and 2,059,239,880 Rights Shares as stated in note (e); and
(ii) 411,847,976 Bonus Warrant Shares to be issued, which is calculated based on 2,059,239,880 Rights Shares as stated in note (e)(ii) and on the basis of one (1) Bonus Warrant for every five (5) Rights Shares taken up.
(g) No adjustment has been made to reflect any trading results or other transactions of the Group (including a share placement of 823,695,952 Shares which took place in November 2011) entered into subsequent to 30 September 2011.

APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

2. ACCOUNTANTS’ REPORT ON THE UNAUDITED PRO FORMA STATEMENT OF ADJUSTED CONSOLIDATED NET TANGIBLE ASSETS OF THE GROUP

The following is the text of a report received from HLB Hodgson Impey Cheng, Certified Public Accountants, in respect of the unaudited pro forma financial information of the Group for the sole purpose of incorporation in this Prospectus.

==> picture [182 x 68] intentionally omitted <==

31/F., Gloucester Tower The Landmark 11 Pedder Street Central Hong Kong

15 February 2012

The Board of Directors Beijing Yu Sheng Tang Pharmaceutical Group Limited Suite 1501, 15th Floor Great Eagle Centre 23 Harbour Road Wanchai Hong Kong

Dear Sirs,

Beijing Yu Sheng Tang Pharmaceutical Group Limited (the “Company”)

We report on the unaudited pro forma financial information (the “Unaudited Pro Forma Financial Information”) of the Company and its subsidiaries (hereinafter collectively referred to as the “Group”) as set out in Appendix II to the Prospectus (the “Prospectus”) dated 15 February 2012, which has been prepared by the directors of the Company for illustrative purposes only, to provide information about how the proposed rights issue and the bonus warrant issue of the shares of the Company might have affected the financial information of the Company presented. The basis of preparation of the Unaudited Pro Forma Financial Information of the Group is set out on page 38 to page 39 to the Prospectus.

Respective responsibilities of directors of the Company and reporting accountants

It is the responsibility solely of the directors of the Company to prepare the Unaudited Pro Forma Financial Information in accordance with Rules 4.29 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”) and with reference to Accounting Guideline 7 “Preparation of Pro Forma Financial Information for Inclusion in Investment Circulars” issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”). It is our responsibility to form an opinion, as required by Rule 4.29(7) of the Listing Rules, on the Unaudited Pro Forma Financial Information and to report our opinion solely to you. We do not accept any responsibility for any reports previously given by us on any financial information used in the compilation of the Unaudited Pro Forma Financial Information beyond that owed to those to whom those reports were addressed by us at the dates of their issue.

APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

Basis of opinion

We conducted our engagement in accordance with Hong Kong Standard on Investment Circular Reporting Engagements 300 “Accountants’ Reports on Pro Forma Financial Information in Investment Circulars” issued by the HKICPA. Our work consisted primarily of comparing the unadjusted financial information with the source documents, considering the evidence supporting the adjustments and discussing the Unaudited Pro Forma Financial Information with the directors of the Company. This engagement did not involve independent examination of any of the underlying financial information.

We planned and performed our work so as to obtain the information and explanations we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the Unaudited Pro Forma Financial Information has been properly compiled by the directors of the Company on the basis stated, that such basis is consistent with the accounting policies of the Group and that the adjustments are appropriate for the purposes of the Unaudited Pro Forma Financial Information as disclosed pursuant to Rule 4.29(1) of the Listing Rules.

The Unaudited Pro Forma Financial Information is for illustrative purposes only, based on the judgements and assumptions of the directors of the Company, and, because of its hypothetical nature, it does not provide any assurance or indication that any event will take place in the future and may not be indicative of the financial position of the Group as at 30 September 2011 or any future date.

Opinion

In our opinion:

a) the Unaudited Pro Forma Financial Information has been properly compiled by the directors of the Company on the basis stated;
b) such basis is consistent with the accounting policies of the Group; and
c) the adjustments are appropriate for the purposes of the Unaudited Pro Forma Financial Information as disclosed pursuant to Rule 4.29(1) of the Listing Rules.

Yours faithfully

HLB Hodgson Impey Cheng Chartered Accountants Certified Public Accountants

Hong Kong

GENERAL INFORMATION

APPENDIX III

1. RESPONSIBILITY STATEMENT

This Prospectus, 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 Prospectus 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 Prospectus misleading.

2. SHARE CAPITAL

The authorised and issued share capital of the Company (i) as at the Latest Practicable Date; (ii) immediately following the completion of the Rights Issue and the Bonus Warrant Issue and none of the Bonus Warrants are exercised in full and (iii) immediately following the completion of the Rights Issue and the Bonus Warrant Issue and all of the Bonus Warrants are exercised were and are expected to be as follows:

(i) As at the Latest Practicable Date

Authorised: 10,000,000,000 Consolidated Shares of HK$0.10 each Issued and fully paid: 494,217,570 Consolidated Shares	HK$ 1,000,000,000

	49,421,757

(ii) Immediately following the completion of the Rights Issue and the Bonus Warrant Issue and none of the Bonus Warrants are exercised in full

Authorised: 10,000,000,000 Consolidated Shares of HK$0.10 each Issued and to be issued: 494,217,570 Consolidated Shares in issue before completion of the Rights Issue 2,471,087,850 Rights Shares to be allotted and issued under the Rights Issue 2,965,305,420 Consolidated Shares	HK$ 1,000,000,000

	49,421,757 247,108,785
	296,530,542

Note: 494,217,570 Consolidated Shares were adopted to calculate the aggregate number of Rights Shares and Bonus Warrants under the Rights Issue and the Bonus Warrant Issue.

GENERAL INFORMATION

APPENDIX III

(iii) Immediately following the completion of the Rights Issue and the Bonus Warrant Issue and all of the Bonus Warrants are exercised

Authorised: 10,000,000,000 Consolidated Shares of HK$0.10 each Issued and to be issued: 494,217,570 Consolidated Shares in issue before completion of the Rights Issue 2,471,087,850 Rights Shares to be allotted and issued under the Rights Issue 494,217,570 Bonus Warrant Shares to be allotted and issued under the Bonus Warrant Issue 3,459,522,990 Consolidated Shares	HK$ 1,000,000,000

	49,421,757 247,108,785 49,421,757
	345,952,299

Note: 494,217,570 Consolidated Shares were adopted to calculate the aggregate number of Rights Shares and Bonus Warrants under the Rights Issue and the Bonus Warrant Issue.

All of the Rights Shares and the Bonus Warrant Shares, once issued and fully paid, will rank pari passu in all respects, including, in particular, as to dividends, voting rights and capital with each other and with all the Consolidated Shares in issue as at the date of allotment and issue of the Rights Shares and the Bonus Warrant Shares (as the case may be). The Rights Shares, the Bonus Warrants and the Bonus Warrant Shares to be issued will be listed on the Stock Exchange.

No part of the share capital or any other securities of the Company is listed or dealt in on any stock exchange other than the Stock Exchange and no application is being made or is currently proposed or sought for the Consolidated Shares or Rights Shares, the Bonus Warrants, the Bonus Warrant Shares or any other securities of the Company to be listed or dealt in on any other stock exchange.

As at the Latest Practicable Date, the Company has no outstanding options, convertible securities or warrants which confer any right to subscribe for or convert or exchange into the Consolidated Shares except for 1,600,000 Share Options outstanding entitling Mr. Suen to subscribe for 1,600,000 Consolidated Shares.

3. DISCLOSURE OF INTERESTS BY DIRECTORS AND CHIEF EXECUTIVE

As at the Latest Practicable Date, the interests or short positions of the Directors and chief executive of the Company in the Consolidated Shares, underlying Consolidated Shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which were

GENERAL INFORMATION

APPENDIX III

required (i) to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they were taken or deemed to have under such provisions of the SFO); or (ii) pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (iii) pursuant to the “Model Code for Securities Transactions by Directors of Listed Issuers” contained in the Listing Rules, to be notified to the Company and the Stock Exchange were as follows:

(i) Interests in the Company

Long positions in Consolidated Shares of the Company:

				Approximate
				percentage of
		Number of		the Company’s
	Capacity and	Consolidated	Total	issued
Name of director	nature of interest	Shares held	interests	share capital
Mr. Suen	Interest held by	43,743,386	–	–
	controlled corporation	(Note 1)
	Directly beneficially owned	1,000,000	44,743,386	9.05%

Long position in Share Options of the Company:

			Approximate
		Number of	percentage of
		underlying	the Company’s
	Capacity and	Consolidated	issued
Name of director	nature of interest	Shares	share capital
Mr. Suen	Directly beneficially	1,600,000_(Note 2)_	0.32%
	owned

Notes:

These Consolidated Shares were held by Global Wealthy, which was a wholly owned subsidiary of Excelsior Kingdom which in turn was wholly owned by Mr. Suen. Accordingly, Mr. Suen was deemed to be interested in 43,743,386 Consolidated Shares under the SFO.
This represented the interest of Mr. Suen in 1,600,000 underlying Consolidated Shares issuable under the share options granted by the Company to him on 1 September 2009 under the share option scheme of the Company adopted by the shareholders of the Company on 30 December 2002. The consideration paid by Mr. Suen on acceptance of the share options granted was HK$1.00. The exercise price of the share options is HK$2.72 per Consolidated Share and the Share Options can be exercised on or before 31 August 2012.
Mr. Suen was also interested in 601,000,000 Consolidated Shares, which represented the maximum number of the Rights Shares underwritten by Global Wealthy pursuant to the Underwriting Agreement.

GENERAL INFORMATION

APPENDIX III

Save as disclosed above, as at the Latest Practicable Date, none of the Directors and chief executive of the Company had any interests or short positions in the Consolidated Shares, underlying Consolidated Shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which were required (i) to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they were taken or deemed to have under such provisions of the SFO); or (ii) pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (iii) pursuant to the “Model Code for Securities Transactions by Directors of Listed Issuers” contained in the Listing Rules, to be notified to the Company and the Stock Exchange.

4. INTERESTS OF SUBSTANTIAL SHAREHOLDERS

As at the Latest Practicable Date, so far as is known to the Directors or chief executive of the Company, the following persons (other than a Director or chief executive of the Company) had interests or short positions in the Consolidated Shares or underlying Consolidated Shares 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, directly or indirectly, interested 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:

(i) Long positions in Consolidated Shares of the Company:

				Approximate
				percentage of
		Number of		the Company’s
Name of	Capacity and	Consolidated	Total	issued
Shareholder	nature of interest	Shares held	interests	share capital
Excelsior Kingdom	Interest held by controlled	43,743,386	43,743,386	8.85%
	corporation	(Note 1)
Global Wealthy	Directly beneficially owned	43,743,386	43,743,386	8.85%
		(Note 1)

Notes:

These Consolidated Shares were held by Global Wealthy, which was a wholly owned subsidiary of Excelsior Kingdom which in turn was wholly owned by Mr. Suen. Accordingly, Mr. Suen and Excelsior Kingdom were deemed to be interested in 43,743,386 Consolidated Shares under the SFO.
Global Wealthy and Excelsior Kingdom were also interested in 601,000,000 Consolidated Shares, which represented the maximum number of the Rights Shares underwritten by Global Wealthy pursuant to the Underwriting Agreement.

GENERAL INFORMATION

APPENDIX III

(ii) Interest in other members of the Group

As at the Latest Practicable Date, so far as is known to the Directors or chief executive of the Company, the following persons (other than a Director or chief executive of the Company) were, directly or indirectly, interested 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 members of the Group other than the Company:

Name of non-wholly			Percentage of the
owned subsidiary	Name of substantial		subsidiary’s issued
of the Company	shareholder	Total interests	share capital
Beijing Yu Sheng	Beijing Yu Sheng	Renminbi 180,000	30%
Tang Chinese Medicine	Tang Investment Group
Clinic Company Limited*	Limited * (北京御生堂
(北京御生堂中醫門診部	投資集團有限公司)
有限公司)

Save as disclosed above, as at the Latest Practicable Date, so far as is known to the Directors or chief executive of the Company, no person (other than a Director or chief executive of the Company) had interests or short positions in the Consolidated Shares or underlying Consolidated Shares 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, directly or indirectly, interested 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 or any options in respect of such capital.

5. DIRECTORSHIP OR EMPLOYMENT OF DIRECTORS IN SUBSTANTIAL SHAREHOLDERS

As at the Latest Practicable Date, so far as is known to the Directors and chief executive of the Company and based on the register maintained by the Company under Section 336 of the SFO, Mr. Suen is the sole director of Global Wealthy and Excelsior Kingdom. Save as disclosed, none of the Directors were the directors or employees of Shareholders whose interest in the Consolidated Shares and underlying Consolidated Shares of the Company would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO.

6. DIRECTORS’ INTERESTS IN ASSETS/CONTRACTS AND OTHER INTERESTS

As at the Latest Practicable Date, none of the Directors has, or has had, any direct or indirect interest in any assets which have been acquired or disposed of by or leased to or which are proposed to be acquired or disposed of by or leased to the Company or any of its subsidiaries, respectively, since 31 March 2011, the date to which the latest published audited consolidated financial statements of the Company were made up.

GENERAL INFORMATION

APPENDIX III

Save for the Underwriting Agreement, there is no contract or arrangement entered into by any member of the Group, subsisting as at the Latest Practicable Date in which any of the Directors is materially interested and which is significant in relation to the business of the Group as a whole.

7. EXPERT

The following is the qualification of the expert who has given opinion or advice, which is contained in this Prospectus:

Name

Qualification

HLB Hodgson Impey Cheng Chartered Accountants Certified Public Accountants

As at the Latest Practicable Date, the above expert did not have any direct or indirect shareholdings in any member of the Group, or any right to subscribe for or to nominate persons to subscribe for shares in any member of the Group, or any interests, directly or indirectly, in any assets which have been acquired or disposed of by or leased to or which are proposed to be acquired or disposed of by or leased to the Company or any of their respective subsidiaries, respectively, since 31 March 2011, the date to which the latest published audited consolidated financial statements of the Company were made up.

The above expert has given and has not withdrawn its written consent to the issue of this Prospectus with the inclusion therein of its reports and references to its name in the form and context in which they appear.

8. SERVICE CONTRACTS

There is no service contract between the Directors and any member of the Group which does not expire or is not determinable by the employer within one year without payment of compensation (other than statutory compensation).

9. LITIGATION

As at the Latest Practicable Date, no member of the Group was engaged in any litigation, claim or arbitration of material importance and there was no litigation, claim or arbitration of material importance known to the Directors to be pending or threatened against any member of the Group.

GENERAL INFORMATION

APPENDIX III

10. MATERIAL CONTRACTS

The following contracts had been entered into by the Group (not being contracts entered into in the ordinary course of business) within two years immediately preceding the Latest Practicable Date and are or may be material:

(a) the placing and subscription agreement dated 9 March 2010 entered into among the Company, Global Wealthy as vendor and CCB International Capital Limited as placing agent in respect of placing an aggregate of up to 425,912,000 Shares beneficially owned by Global Wealthy and subscription of Shares by Global Wealthy;
(b) memorandum of understanding dated 10 May 2010 entered into between 株式會社 PURE (Corporation PURE) as proposed seller and Beijing Yu Sheng Tang Holdings Limited, an indirect wholly-owned subsidiary of the Company as proposed purchaser for the acquisition of 70% equity interest in the entire shareholdings of 日本製藥工業株式會社 (Nihon Seiyaku Kogyo Co., Ltd.);
(c) the conditional placing agreement dated 28 September 2010 entered into between the Company and Radland International Limited as placing agent for the placing of an aggregate of 517,000,000 Shares in the Company;
(d) the conditional placing agreement dated 10 November 2010 entered into between the Company and Radland International Limited as placing agent for the placing of an aggregate of 1,000,000,000 Shares in the Company;
(e) the placing agreement dated 24 October 2011 entered into between the Company and Chung Nam Securities Limited as placing agent for the placing of an aggregate of 823,695,952 Shares in the Company; and
(f) the Underwriting Agreement.

GENERAL INFORMATION

APPENDIX III

11. CORPORATE INFORMATION AND PARTIES INVOLVED IN THE RIGHTS ISSUE AND THE BONUS WARRANT ISSUE

Registered office of the Company

Clarendon House 2 Church Street Hamilton HM 11 Bermuda

Head office and principal place of business Suite 1501, 15th Floor of the Company in Hong Kong Great Eagle Centre 23 Harbour Road Wanchai Hong Kong Branch share registrar and Tricor Tengis Limited transfer office of the Company 26th Floor, Tesbury Centre in Hong Kong 28 Queen’s Road East Wanchai Hong Kong Authorised representatives Mr. Sue Ka Lok Ms. Chan Yuk Yee Legal advisers to the Company (as to Hong Kong laws in respect of the Rights Issue and the Bonus Warrant Issue) Troutman Sanders 34th Floor, Two Exchange Square 8 Connaught Place Central, Hong Kong (as to Bermuda laws in respect of the Rights Issue and the Bonus Warrant Issue) Conyers Dill & Pearman 2901 One Exchange Square 8 Connaught Place, Central Hong Kong Auditors HLB Hodgson Impey Cheng Chartered Accountants Certified Public Accountants 31/F., Gloucester Tower The Landmark 11 Pedder Street, Central Hong Kong

GENERAL INFORMATION

APPENDIX III

Principal bankers Bank of Communications Co., Ltd., Hong Kong Branch Bank of China (Hong Kong) Limited ABN AMRO Bank N.V. BNP Paribas Hong Kong Branch Rabobank International Hong Kong Branch Underwriters Global Wealthy Limited Palm Grove House, P.O. Box 438 Road Town, Tortola British Virgin Islands Chung Nam Securities Limited 26th Floor, China United Centre 28 Marble Road, North Point Hong Kong

Particulars of Directors

EXECUTIVE DIRECTORS

Mr. Suen Cho Hung, Paul , Chairman

Aged 50, joined the Company as an Executive Director and the Chairman of the Company in November 2007 and is also a director of various members of the Group. Mr. Suen holds a Master of Business Administration degree from the University of South Australia. Mr. Suen has extensive experience in managing metal, minerals and raw materials, energy and property business ventures as well as in strategic planning and corporate management of business enterprises in Hong Kong and the PRC. Mr. Suen is a Shareholder of the Company as disclosed in above section headed “Disclosure of Interests by Directors and Chief Executive”. Mr. Suen is also an executive director and the chairman of BEP International Holdings Limited (stock code: 2326), a listed company in Hong Kong. Mr. Suen was also an executive director and the chairman of China Yunnan Tin Minerals Group Company Limited (stock code: 263) until 16 September 2009.

Mr. Sue Ka Lok , Chief Executive Officer

Aged 46, joined the Company as an Executive Director in November 2007 and appointed as the Chief Executive Officer of the Company in November 2009. Mr. Sue is also a director of various members of the Group. Mr. Sue holds a Bachelor of Economics degree from the University of Sydney in Australia and a Master of Science in Finance degree from the City University of Hong Kong. Mr. Sue is a fellow member of the Hong Kong Institute of Certified Public Accountants, a certified practising accountant of the CPA Australia, a fellow member of both the Hong Kong Institute of Chartered Secretaries and the Institute of Chartered Secretaries and Administrators and a member of the Hong Kong Securities Institute. Mr. Sue has extensive experience in corporate management, finance, accounting and company secretarial practice. Mr. Sue is also an executive director and the chief executive officer of BEP International Holdings Limited (stock code: 2326) and a non-executive director and the chairman of China Tycoon Beverage Holdings Limited

GENERAL INFORMATION

APPENDIX III

(“China Tycoon”) (stock code: 209), both are listed companies in Hong Kong. Mr. Sue was also an executive director and the chief executive officer of China Yunnan Tin Minerals Group Company Limited (stock code: 263) until 18 January 2010, a listed company in Hong Kong.

Mr. Bai Jianjiang

Aged 48, joined the Company as an Executive Director in February 2010 and is a director of various members of the Group. Mr. Bai graduated from Henan College of Chinese Medicine[] (河南中醫學院) in the PRC and is the 13th generation successor of Bai’s Yu Sheng Tang[] (白氏御生堂第十三代傳人). Mr. Bai has been the curator of Beijing Yu Sheng Tang Chinese Medicine Museum[] (北京御生堂中醫藥博物館館長) since 1999. Mr. Bai is currently the deputy chairman & deputy secretary-general of New Chinese Medicine Professional Committee of Beijing Association of Chinese Medicine[] (北京中醫藥學會中醫藥新藥專業委員會副會長兼副秘書長), a part-time professor of Henan College of Chinese Medicine[] (河南中醫學院兼職教授), a director of Beijing Association of Chinese Medicine[] (北京中醫藥學會理事), a youth committee member of Chinese Medical History Association[] (中華醫史學會青年委員), a director of China Medicine of Minorities[] (中國民族醫藥學會理事), a committee member of Beijing International Forum of Chinese Medicine[] (北京中醫藥國際論壇委員) and a member of Beijing Museum Association[] (北京博物館學會會員). Mr. Bai has profound knowledge in tradition, history and culture of Chinese medicine and also has extensive management experience in modern Chinese medicine business. Mr. Bai oversees the Group’s pharmaceutical operation in the PRC.

Ms. Lee Chun Yeung, Catherine

Aged 43, joined the Group in February 2009 and was appointed as an Executive Director in October 2010. Ms. Lee is also a director of various members of the Group. Ms. Lee holds a Bachelor of Arts degree from Guangdong University of Foreign Studies (formerly known as Guangzhou Institute of Foreign Languages) and a Master in Business Administration degree from the University of South Australia. Ms. Lee has extensive experience in international trading of metal minerals and commodities and oversees the Group’s operation of supply and procurement of metal minerals and recyclable metal materials. Prior to joining the Group, Ms. Lee worked as an economist in a major commercial bank and a senior executive in a state-owned trading group in the PRC.

INDEPENDENT NON-EXECUTIVE DIRECTORS

Mr. Wong Kwok Tai

Aged 73, joined the Company as an Independent Non-executive Director in August 2001. Mr. Wong graduated from the Deakin University in Geelong, Australia and holds a Diploma of Commerce. Mr. Wong is a Practising Certified Public Accountant and a fellow member of the CPA Australia and the Hong Kong Institute of Certified Public Accountants. Mr. Wong is the director of W. Wong CPA Limited and has more than 45 years of financial experience. Mr. Wong is also an independent non-executive director of China Power New Energy Development Company Limited (stock code: 735), New Century Group Hong Kong Limited (stock code: 234), China Tycoon and Takson Holdings Limited (stock code: 918), all being listed companies in Hong Kong.

GENERAL INFORMATION

APPENDIX III

Mr. Weng Yixiang

Aged 53, joined the Company as an Independent Non-executive Director in October 2007. Mr. Weng graduated from China Central Radio and TV University specialising in law and is also qualified as a senior economist in the PRC. Mr. Weng has over 20 years of experience in banking, investment and finance and had served as senior executive in government authorities and financial institutions in the PRC. Mr. Weng is the general manager of an investment management and consulting company in the PRC.

Mr. Lu Xinsheng

Aged 44, joined the Company as an Independent Non-executive Director in October 2007. Mr. Lu graduated from Sichuan University with a Bachelor of Science degree specialising in environmental chemistry. Mr. Lu has over 20 years of experience in trading business and has held senior positions in trading and logistics companies in the PRC.

SENIOR MANAGEMENT

Ms. Chan Yuk Yee , Company Secretary

Aged 43, joined the Company as Company Secretary in November 2008. She holds a Master of Business Law degree from Monash University in Australia and is an associate member of both the Hong Kong Institute of Chartered Secretaries and the Institute of Chartered Secretaries and Administrators. Ms. Chan has over 10 years of experience in company secretarial practice. Ms. Chan is also an executive director and the company secretary of China Tycoon and an executive director of New Island Printing Holdings Limited (stock code: 377), both are listed companies in Hong Kong.

Business address of Directors and senior management

The business address of the Directors and senior management is the same as the Company’s head office and principal place of business in Hong Kong located at Suite 1501, 15th Floor, Great Eagle Centre, 23 Harbour Road, Wanchai, Hong Kong.

12. MISCELLANEOUS

In the event of inconsistency, the English text of this Prospectus shall prevail over the Chinese text.

13. EXPENSES

The expenses in connection with the Rights Issue, including underwriting commission, financial advisory fees, printing, registration, translation, legal and accounting fees, are estimated to be approximately HK$9.5 million and are payable by the Company.

GENERAL INFORMATION

APPENDIX III

14. LEGAL AND BINDING EFFECT

The Prospectus Documents and all acceptances of any offer or application contained therein are governed by and shall be construed in accordance with the laws of Hong Kong. The Prospectus Documents shall have the effect, if an application is made in pursuance hereof, of rendering all persons concerned bound by all the provisions (other than the penal provisions) of Sections 44A and 44B of the Companies Ordinance so far as applicable.

15. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection during normal business hours from 9:00 a.m. to 12:30 noon and from 2:00 p.m. to 5:30 p.m. (other than Saturdays, Sundays and public holidays in Hong Kong) at the principal place of business of the Company in Hong Kong at Suite 1501, 15th Floor, Great Eagle Centre, 23 Harbour Road, Wanchai, Hong Kong from the date of this Prospectus up to and including the Latest Time for Acceptance:

(a) the Memorandum of Association and the Bye-Laws;
(b) the annual reports of the Company for the three financial years ended 31 March 2009, 31 March 2010 and 31 March 2011;
(c) the interim report of the Company for the six months ended 30 September 2011;
(d) the letter on the unaudited pro forma financial information of the Group issued by HLB Hodgson Impey Cheng set out in Appendix II to this Prospectus;
(e) the material contracts disclosed in the paragraph under the heading “Material Contracts” in this appendix;
(f) the written consent referred to in the paragraph under the heading “Expert” in this appendix; and
(g) this Prospectus.

16. DOCUMENTS DELIVERED TO THE REGISTRARS OF COMPANIES

A copy of each of the Prospectus Documents, having attached thereto the written consent referred to in the paragraph headed “Expert” in this appendix, have been registered by the Registrar of Companies in Hong Kong as required by Section 342C of the Companies Ordinance. A copy of each of the Prospectus Documents will be filed with Registrar of Companies in Bermuda, as soon as reasonably practicable after publication of this Prospectus as required by the Companies Act 1981 of Bermuda.

APPENDIX IV

SUMMARY OF TERMS OF THE BONUS WARRANTS

The Bonus Warrants will be issued subject to and with benefit of an instrument by way of deed poll (the “ Instrument ”) and they will be issued in registered form and will form one class and rank pari passu in all respects with each other.

The principal terms and conditions of the Bonus Warrants (the “ Conditions ”) will be set out in the certificate(s) for the Bonus Warrant (the “ Warrant Certificate(s) ”) and will include provisions to the effect set out below. Holders of the Bonus Warrant (the “ Warrantholders ”) will be entitled to the benefit of, be bound by, and be deemed to have notice of the Conditions, copies of which will be available at the principal place of business for the time being of the Company in Hong Kong.

1. DEFINITIONS

In this appendix, unless otherwise stipulated, the following terms shall have the following meanings:

“Equity Share Capital”

the issued share capital of the Company excluding any part thereof which does not either as respects dividends or as respects capital carry the right to participate beyond a specified amount or beyond an amount calculated by reference to a specified rate in a distribution

“Exercise Moneys”

in relation to any Bonus Warrant(s), the amount stated on the face of the Warrant Certificate issued in respect of such Bonus Warrant(s) as the amount in cash which the Warrantholder of such Bonus Warrant(s) is/are entitled to subscribe upon the exercise of the Subscription Rights represented thereby

“Shares”
ordinary share(s) of HK$0.10 each in the share capital of the Company existing on the date of the Instrument and all other (if any) stock or shares from time to time and for the time being ranking pari passu therewith and all other (if any) shares or stock in the Equity Share Capital of the Company resulting from any sub-division, consolidation or reclassification of Shares
“Subscription Date”

the close of business on any business day falling during the Subscription Period on which any of the Subscription Rights are duly exercised

“Subscription Period”

the period commencing from the date of issue of the Bonus Warrants, which is currently expected to be on or about Friday, 9 March 2012 and expire at 4:30 p.m. on the Business Day immediately preceding the date which is 24 months after such date, which is currently expected to be on or about Friday, 7 March 2014

SUMMARY OF TERMS OF THE BONUS WARRANTS

APPENDIX IV

“Subscription Price”

the sum payable in respect of each Share upon exercise of the Subscription Rights represented thereby, initially being HK$0.10 in cash per Share (subject to adjustments)

“Subscription Rights”

the rights of the Warrantholders represented by the Bonus Warrants to subscribe in a maximum aggregate amount of HK$49,421,757 for Shares pursuant to the Bonus Warrants and, in relation to each Bonus Warrant, means the right of the relevant Warrantholder to subscribe for one Share upon and subject to the Conditions

2. EXERCISE OF SUBSCRIPTION RIGHTS

(A) Subject to the provisions hereof and to compliance with all fiscal and other laws and regulations applicable thereto the registered holder of the Bonus Warrants will have the right, which may be exercised in whole or in part at any time during the Subscription Period, to subscribe at the Exercise Moneys for one fully paid Share at the Subscription Price per Share. After the Business Day immediately preceding the date which is 24 months after the date of the issue of the Bonus Warrants, any Subscription Rights which have not been exercised will lapse and the Bonus Warrant Certificate will cease to be valid for any purpose.
(B) Each Warrant Certificate will contain a Subscription Form (as defined in the Instrument). In order to exercise in whole or in part the Subscription Rights, the Warrantholder must complete and sign the Subscription Form (which shall be irrevocable) and deliver the Warrant Certificate to the Registrar (as defined in the Instrument), together with a remittance for the Exercise Moneys (or, in the case of a partial exercise, the relevant portion of the Exercise Moneys). In each case compliance must also be made with any exchange control, fiscal or other laws or regulations for the time being applicable.
(C) The number of Shares to be allotted on exercise of the Subscription Rights shall be the number of the Bonus Warrants subject to exercise as specified in the relevant Subscription Form. No fraction of a Share will be allotted but any balance representing fractions of the Exercise Moneys paid on exercise of the Subscription Rights will be paid by the Company to the Warrantholder.
(D) The Company has undertaken in the Instrument that Shares falling to be issued upon the exercise of the Subscription Rights will be issued and allotted not later than 21 days (or, if applicable, such other period as prescribed by the Stock Exchange) after the relevant Subscription Date and will rank pari passu with the fully paid Shares in issue on the relevant Subscription Date and accordingly shall entitle the holders to participate in all dividends or other distributions paid or made after the relevant Subscription Date other than any dividend or other distribution previously declared or recommended or resolved to be paid or made if the record date therefor shall be on or before the relevant Subscription Date and notice of the amount and record date for which shall have been given to the Stock Exchange prior to the relevant Subscription Date.

SUMMARY OF TERMS OF THE BONUS WARRANTS

APPENDIX IV

(E) As soon as practicable after the relevant allotment of Shares (and not later than 21 days or, if applicable, such other period as prescribed by the Stock Exchange, after the relevant Subscription Date) there will be issued free of charge to the Warrantholder(s):
(i) a certificate (or certificates) for the relevant Shares in the name(s) of such Warrantholder(s);
(ii) (if applicable) a balancing Warrant Certificate in registered form in the name(s) of such Warrantholder(s) in respect of any Subscription Rights and remaining unexercised; and
(iii) (if applicable, and subject to any announcement published by the Company in respect of factional entitlement) a cheque representing the fractional entitlement to Shares not allotted as mentioned in paragraph (C) of this Condition.

The certificate(s) for Shares arising on the exercise of Subscription Rights, the balancing Warrant Certificate (if any) and the cheque in respect of fractional entitlement (if any) will be sent by post at the risk of such Warrantholder(s) to the address of such Warrantholder(s) or (in the case of a joint holding) to that one of them whose name stands first on the Register (as defined in the Instrument). If the Company agrees, such certificates and cheques may by prior arrangement be retained by the Registrar (as defined in the Instrument) to await collection by the relevant Warrantholder(s).

3. ADJUSTMENTS OF SUBSCRIPTION PRICE

The Instrument contains detailed provisions relating to the adjustment of the Subscription Price. The following is a summary of, and is subject to, the adjustment provisions of the Instrument:

(A) The Subscription Price shall (except as mentioned in the proviso to (v) below and in paragraphs (B) and (C) below) be adjusted as provided in the Instrument in each of the following cases:
(i) an alteration of the nominal amount of the Shares by reason of any consolidation or subdivision;
(ii) an issue (other than in lieu of a cash dividend) by the Company of Shares credited as fully paid by way of capitalisation of profits or reserves (including any share premium account or capital redemption reserve);
(iii) a Capital Distribution (as defined in the Instrument) being made by the Company, whether on a reduction of capital or otherwise, to holders of its Shares in their capacity as such;

SUMMARY OF TERMS OF THE BONUS WARRANTS

APPENDIX IV

(iv) a grant by the Company to the holders of Shares (in their capacity as such) of rights to acquire for cash assets of the Company or any of its subsidiaries;
(v) an offer or grant being made by the Company to holders of its Shares of Shares by way of rights or of options or warrants to subscribe Shares at a price which is less than 80 per cent. of the market price (calculated as provided in the Instrument) provided that no such adjustment shall be made if the Company shall also make a like offer or grant (as the case may be) at the same time to each holder of Bonus Warrants (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, or the requirements of any recognised regulatory body or any stock exchange in, any territory outside Hong Kong) as if he had exercised the Subscription Rights in full on the day immediately preceding the record date for such offer or grant;
(vi) an issue wholly for cash being made by the Company or any other company of securities convertible into or exchangeable for or carrying rights of subscription for new Shares, if in any case the total Effective Consideration (as defined in the Instrument) per Share is less than 80 per cent. of the market price (calculated as provided in the Instrument), or the terms of any such issue being altered so that the said total Effective Consideration is less than 80 per cent. of the market price;
(vii) an issue being made wholly for cash of Shares other than pursuant to a Share Option Scheme (as defined in the Instrument) at a price less than 80 per cent. of the market price (calculated as provided in the Instrument); and
(viii) the purchase of Shares by the Company in circumstances where the total Effective Consideration per Share (as defined in the Instrument) is more than 110 per cent. of the closing price of one Share on the Stock Exchange (calculated as provided in the Instrument).
(B) Except as mentioned in paragraph (C), the provisions set out in paragraph (A) shall not apply to:
(i) an issue of fully paid Shares upon the exercise of any conversion rights attached to securities convertible into Shares or upon the exercise of any rights (including the Subscription Rights) to acquire Shares;
(ii) an issue of Shares or other securities of the Company or any subsidiary or rights to acquire Shares to directors or employees of the Company or any subsidiaries pursuant to a share option scheme;
(iii) an issue by the Company of Shares or by the Company or any subsidiary of securities convertible into or rights to acquire Shares, in any such case in consideration or part consideration for the acquisition of any other securities, assets or business;

APPENDIX IV

SUMMARY OF TERMS OF THE BONUS WARRANTS

(iv) an issue of fully paid Shares by way of capitalisation of all or part of the Subscription Right Reserve (as defined in the Instrument) to be established in certain circumstances pursuant to the terms and conditions contained in the Instrument (or any similar reserve which has been or may be established pursuant to the terms of any other securities convertible into or rights to acquire Shares); or
(v) an issue of Shares in lieu of a cash dividend where an amount not less than the nominal amount of the Shares so issued is capitalised and the market value (calculated as provided in the Instrument) of such Shares is not more than 110 per cent. of the amount of dividend which holders of Shares could elect to or would otherwise receive in cash.
(C) Notwithstanding the provisions referred to in paragraphs (A) and (B) of this Condition, in any circumstances where the Company shall consider that an adjustment to the Subscription Price provided for under the said provisions should not be made or should be calculated on a different basis or that an adjustment to the Subscription Price should be made notwithstanding that no such adjustment is required under the said provisions, the Company may appoint an approved financial adviser to consider whether for any reason whatever the adjustment to be made (or the absence of adjustment) would not or might not fairly and appropriately reflect the relative interests of the persons affected thereby and, if such an approved financial adviser shall consider this to be the case, the adjustment shall be modified or nullified or an adjustment made instead of no adjustment in such manner (including, without limitation, making an adjustment calculated on a different basis) as shall be certified by such approved financial adviser to be in its opinion appropriate.
(D) Any adjustment to the Subscription Price shall be made to the nearest one cent so that any amount under half a cent shall be rounded down and any amount of half a cent or more shall be rounded up. No adjustment shall be made to the Subscription Price in any case in which the amount by which the same would be reduced would be less than one cent and any adjustment which would otherwise then be required shall not be carried forward. No adjustment may be made (except on a consolidation of Shares) which would increase the Subscription Price.
(E) Every adjustment to the Subscription Price will be certified to be fair and appropriate by an approved financial adviser and notice of each adjustment (giving the relevant particulars) will be given to the Warrantholders. Any such certificates of the approved financial adviser will be available at the registered office and principal office of the Company, where copies may be obtained.

4. REGISTERED WARRANTS

The Bonus Warrants will be issued in registered form. The Company shall be entitled to treat the registered holder of any Bonus Warrant as the absolute owner thereof and accordingly shall not, except as ordered by a Court of competent jurisdiction or required by law, be bound to recognise any equitable or other claim to or interest in such Bonus Warrant on the part of any other person, whether or not it shall have express or other notice thereof.

SUMMARY OF TERMS OF THE BONUS WARRANTS

APPENDIX IV

5. TRANSFER, TRANSMISSION AND REGISTER

(A) The Subscription Rights are transferable by instrument of transfer in any usual or common form or in any other form which may be approved by the Directors. The Company shall maintain a register of Warrantholders accordingly. Transfers of the Bonus Warrants must be executed by both the transferor and the transferee. Where the transferor or the transferee is HKSCC Nominees Limited or its successor thereto (or such other companies as may be approved by the Board of Directors for this purpose), the transfers may be executed by machine imprinted signature on its behalf or under hand by its authorised person(s), as the case may be. The provisions of the Company’s Bye-Laws for the time being relating to the registration, transmission and transfer of Shares shall, mutatis mutandis, apply to the registration, transmission and transfer of the Bonus Warrants and shall have full effect as if the same had been incorporated therein.
(B) The Register may be closed from time to time, subject to the same restrictions, mutatis mutandis, as apply to the closure of the register of members of the Company under the Companies Act 1981 of Bermuda except that publication of notice of closure in appointed newspaper shall not be required. Any exercise of Subscription Rights during the period for which the Register is closed shall be deemed to be and shall be effective upon the first day upon which the Register reopens and such date shall be deemed to be the relevant Subscription Date for all purposes in respect of such exercise of Subscription Rights.
(C) Persons who hold Bonus Warrants and have not registered the Bonus Warrants in their own names and wish to exercise the Bonus Warrants may incur additional costs and expense in connection with any expedited re-registration of the Bonus Warrants prior to the transfer or exercise of the Bonus Warrants, in particular during the period commencing 10 Business Days (or any period from time to time prescribed by the Stock Exchange) prior to and including the last day for subscription being the Business Day immediately preceding the date which is 24 months after the date of the issue of the Bonus Warrants.
(D) Since the Bonus Warrants will be admitted to the CCASS, so far as applicable laws or regulations of relevant regulatory authorities, terms of the Instrument and circumstances permit, the Company may determine the last trading day of the Bonus Warrants to be a date at least three trading days before the date immediately preceding the date which is 24 months after the date of the issue of the Bonus Warrants.

SUMMARY OF TERMS OF THE BONUS WARRANTS

APPENDIX IV

6. PURCHASE AND CANCELLATION

The Company or any of the subsidiaries may at any time purchase Bonus Warrants:

(i) in the open market or by tender (available to all Warrantholders alike) at any price; or
(ii) by private treaty at a price, exclusive of expenses, not exceeding 110 per cent. of the closing price on the Stock Exchange per Bonus Warrant for one or more board lots of Bonus Warrants prior to the date of purchase of the Bonus Warrants on the Stock Exchange, but not otherwise. All Bonus Warrants purchased as aforesaid shall be cancelled forthwith and may not be reissued or resold.

7. MEETINGS OF WARRANTHOLDERS AND MODIFICATION OF RIGHTS

(A) The Instrument contains provisions for convening meetings of Warrantholders to consider any matter affecting the interests of Warrantholders, including the modification by an Extraordinary Resolution (as defined in the Instrument) of the provisions of the Instrument and/or these Conditions. An Extraordinary Resolution duly passed at any such meeting shall be binding on the Warrantholders, whether present or not.
(B) All or any of the rights for the time being attached to the Bonus Warrants (including any of the provisions of the Instrument) may from time to time (whether or not the Company is being wound up) be altered or abrogated (including but without prejudice to that generality by waiving compliance with, or by waiving or authorising any past or proposed breach of, any of the provisions of these Conditions and/or the Instrument) and the sanction of an Extraordinary Resolution shall be necessary and sufficient to effect such alteration or abrogation.
(C) Where the Warrantholder is a recognised clearing house (within the meaning of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)) or its nominee(s), it may authorise such person or persons as it thinks fit to act as its representative (or representatives) or proxy (or proxies) at any Warrantholders’ meeting provided that, if more than one person is so authorised, the authorisation or proxy form must specify the number and class of warrants in respect of which each such person is so authorised. The person so authorised will be entitled to exercise the same power on behalf of the recognised clearing house as that clearing house or its nominee(s) could exercise as if such person were an individual Warrantholder of the Company.

SUMMARY OF TERMS OF THE BONUS WARRANTS

APPENDIX IV

8. REPLACEMENT OF WARRANT CERTIFICATES

If a Warrant Certificate is mutilated, defaced, lost or destroyed, it may, at the discretion of the Company, be replaced at the principal office of the Registrar on payment of such costs as may be incurred in connection therewith and on such terms as to evidence, indemnity and/or security as the Company may require and on payment of such fee not exceeding HK$2.50 (or such higher fee as may from time to time be permitted by the Stock Exchange) as the Company may determine. Mutilated or defaced Warrant Certificates must be surrendered before replacements will be issued. The provisions of the Company’s Bye-Laws relating to replacement of share certificate shall apply, mutatis mutandis, to replacement of Warrant Certificate and shall have full effect as of the same had been incorporated therein.

In the case of lost Warrant certificates, subsections (2), (3), (4), (6), (7) and (8) of section 71A of the Companies Ordinance (Chapter 32 of the Laws of Hong Kong) shall apply as if “shares” referred to therein included Bonus Warrants.

9. PROTECTION OF SUBSCRIPTION RIGHTS

The Instrument contains certain undertakings by and restrictions on the Company designed to protect the Subscription Rights.

10. CALL

If at any time the aggregate of the amount of Exercise Moneys attached to unexercised Bonus Warrants is equal to or less than 20 per cent. of the amount of Exercise Moneys attached to the aggregate of all the Bonus Warrants issued under the Instrument then the Company may, on giving not less than 3 months’ notice, require Warrantholders either to exercise their Subscription Rights or to allow them to lapse. On expiry of such notice, all unexercised Bonus Warrants will be automatically cancelled without compensation to Warrantholders.

11. FURTHER ISSUES

The Company shall be at liberty to issue further shares or securities convertible into equity securities of the Company, including options or warrants to purchase or subscribe equity securities and other forms of convertible equity securities. The Instrument does not confer on the Warrantholders any right to participate in any distribution and/or offers of further securities made by the Company.

SUMMARY OF TERMS OF THE BONUS WARRANTS

APPENDIX IV

12. UNDERTAKINGS BY THE COMPANY

In addition to the undertakings given by it in relation to the grant and exercise of the Subscription Rights and the protection thereof the Company has undertaken in the Instrument that:

(i) it will use its best endeavours to ensure that all Shares allotted on the exercise of Subscription Rights shall be admitted to listing on the Stock Exchange;
(ii) it will send to each Warrantholder, at the same time as the same are sent to the holders of Shares, its audited accounts and all other notices, reports and communications despatched by it to the holders of the Shares generally; and
(iii) it will pay all Hong Kong stamp duties, registration fees or similar charges in respect of the execution of the Instrument, the creation and initial issue of the Bonus Warrants in registered form, the exercise of the Subscription Rights and the issue of Shares upon exercise of the Subscription Rights.

13. NOTICES

The Instrument contains provisions relating to notices to be given to Warrantholders.

Every Warrantholder shall register with the Company an address either in Bermuda or in Hong Kong or elsewhere to which notices can be sent.

The provisions of the Company’s Bye-Laws for the time being relating to service of notices on members of the Company shall apply, mutatis mutandis, to service of notices on Warrantholders and shall have full effect as of the same had been incorporated therein.

14. OVERSEAS WARRANTHOLDERS

If a Warrantholder has a registered address in any territory other than Hong Kong where, in the opinion of the Directors, the allotment of Shares to such Warrantholder upon exercise of any Subscription Rights would or may be in the absence of compliance with registration or any other special formalities in such territory, be unlawful or impracticable under the laws of such territory or Hong Kong, then the Company will as soon as practicable after exercise by such Warrantholder of any Subscription Rights either (i) allot the Shares which would otherwise have been allotted to such Warrantholder to one or more third parties selected by the Company or (ii) allot such Shares to such Warrantholder and then, on his behalf, sell them to one or more third parties selected by the Company, in each case for the best consideration then reasonably obtainable by the Company. As soon as reasonably practicable following such allotment or allotment and sale, the Company will pay such Warrantholder an amount equal to the consideration received by it by posting the remittance to him at his risk. The Company is hereby deemed to be authorised to effect the transactions required by this Condition 14 and for this purpose the Company may appoint some person to complete and execute transfers or other documents on behalf of the relevant Warrantholders and generally may make all arrangements which appear to it to be necessary or appropriate in connection therewith.

SUMMARY OF TERMS OF THE BONUS WARRANTS

APPENDIX IV

15. WINDING UP OF THE COMPANY

15.1 If an effective resolution is passed during the Subscription Period for the voluntary windingup of the Company for the purpose of reconstruction or amalgamation pursuant to a scheme of arrangement to which the Warrantholders, or some persons designated by them for such purpose by Extraordinary Resolution, shall be a party or in conjunction with which a proposal is made to the Warrantholders and is approved by Extraordinary Resolution, the terms of such scheme of arrangement or (as the case may be) proposal shall be binding on all the Warrantholders.
15.2 In the event a notice is given by the Company to its shareholders to convene a shareholders’ meeting for the purposes of considering, and if thought fit approving, a resolution to voluntarily wind-up the Company, the Company shall forthwith give notice thereof to each Warrantholder and thereupon, every Warrantholder shall be entitled by irrevocable surrender of his Warrant Certificate(s) to the Company (such surrender to occur not later than two business days prior to the proposed shareholders’ meeting referred to above) with the Subscription Form(s) duly completed, together with payment of the Exercise Moneys or the relative portion thereof, to exercise the Subscription Rights represented by such Warrant and the Company shall as soon as possible and, in any event, no later than the day immediately prior to the date of the proposed shareholders’ meeting, allot such number of Shares to the Warrantholders which fall to be issued pursuant to the exercise of the Subscription Rights represented by such Warrant. The Company shall give notice to the Warrantholders of the passing of such resolution within seven days after the passing thereof.
15.3 Subject to the foregoing, if the Company is wound up, all Subscription Rights which have not been exercised at the commencement of the winding up shall lapse and each Warrant Certificate will cease to be valid for any purpose.

16. GOVERNING LAW

The Instrument and the Bonus Warrants are governed by and will be construed in accordance with the laws of Hong Kong.

AI assistant

PegBio Co., Ltd. — Capital/Financing Update 2012

50676_rns_2012-02-15_61bcb84e-9f67-4b6e-a646-bea5445734bf.pdf

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

PROPOSED RIGHTS ISSUE ON THE BASIS OF FIVE RIGHTS SHARES FOR EVERY ONE CONSOLIDATED SHARE HELD ON THE RECORD DATE AT HK$0.13 PER RIGHTS SHARE WITH BONUS WARRANTS ON THE BASIS OF ONE BONUS WARRANT FOR EVERY FIVE RIGHTS SHARES TAKEN UP

Underwriters

CHUNG NAM SECURITIES LIMITED GLOBAL WEALTHY LIMITED

CONTENTS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

EXPECTED TIMETABLE

Commencement of dealings in

Note:

Effect of bad weather on the latest time for acceptance of and payment for the Rights Issue and for application and payment for excess Rights Shares

TERMINATION OR RESCISSION OF THE UNDERWRITING AGREEMENT

TERMINATION OR RESCISSION OF THE UNDERWRITING AGREEMENT

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

PROPOSED RIGHTS ISSUE ON THE BASIS OF FIVE RIGHTS SHARES FOR EVERY ONE CONSOLIDATED SHARE HELD ON THE RECORD DATE AT HK$0.13 PER RIGHTS SHARE WITH BONUS WARRANTS ON THE BASIS OF ONE BONUS WARRANT FOR EVERY FIVE RIGHTS SHARES TAKEN UP

1. INTRODUCTION

LETTER FROM THE BOARD

2. RIGHTS ISSUE

Issue Statistics

Qualifying Shareholders and Non-Qualifying Shareholders

Basis of the Provisional Allotment

Rights of the Overseas Shareholders

LETTER FROM THE BOARD

Application for Excess Rights Shares

LETTER FROM THE BOARD

LETTER FROM THE BOARD

Subscription Price

LETTER FROM THE BOARD

Bonus Warrant Issue

Basis of determining the Subscription Price and the Exercise Price

Procedures for acceptance and transfer

LETTER FROM THE BOARD

LETTER FROM THE BOARD

Fractions of the Rights Shares and the Bonus Warrants (if any)

Certificates for the Rights Shares, the Bonus Warrants and Refund Cheques

LETTER FROM THE BOARD

Status of the Rights Shares and the Bonus Warrant Shares

Specific Mandate to Allot and Issue the Bonus Warrant Shares

Application for Listing

LETTER FROM THE BOARD

Irrevocable Undertakings

3. CONDITIONS PRECEDENT TO THE RIGHTS ISSUE, THE BONUS WARRANT ISSUE AND THE UNDERWRITING AGREEMENT

LETTER FROM THE BOARD

LETTER FROM THE BOARD

4. UNDERWRITING ARRANGEMENT

The Underwriting Agreement

LETTER FROM THE BOARD

LETTER FROM THE BOARD

Termination or Rescission of the Underwriting Agreement

LETTER FROM THE BOARD

5. REASONS FOR THE RIGHTS ISSUE AND THE BONUS WARRANT ISSUE AND INTENDED USE OF PROCEEDS

LETTER FROM THE BOARD

6. ADJUSTMENT TO THE SHARE OPTIONS

7. FUND RAISING EXERCISES OF THE COMPANY DURING THE PAST 12 MONTHS

8. EFFECTS ON SHAREHOLDING STRUCTURE OF THE COMPANY

LETTER FROM THE BOARD

9. WARNING OF THE RISKS OF DEALING IN THE CONSOLIDATED SHARES AND THE NIL-PAID RIGHTS SHARES AND/OR TAKING UP THE RIGHTS SHARES

LETTER FROM THE BOARD

10. PROFESSIONAL TAX ADVICE RECOMMENDED

ADDITIONAL INFORMATION

1. THREE-YEAR FINANCIAL INFORMATION

2. UNAUDITED INTERIM RESULTS

3. INDEBTEDNESS

4. WORKING CAPITAL

5. MATERIAL ADVERSE CHANGE

6. BUSINESS REVIEW FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2011

Operations Review

APPENDIX I

FINANCIAL AND OTHER INFORMATION OF THE GROUP

APPENDIX I

Financial Review

APPENDIX I

FINANCIAL AND OTHER INFORMATION OF THE GROUP

Human Resources and Remuneration Policy

PegBio Co., Ltd. Capital/Financing Update 2012

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

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