PegBio Co., Ltd. — M&A Activity 2008

Dec 5, 2008

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

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

(Incorporated in Bermuda with limited liability)

(Stock code: 1141)

MAJOR TRANSACTION –

ACQUISITION OF 25% INTEREST IN RICHTECH GROUP LIMITED PROPOSED APPOINTMENT OF EXECUTIVE DIRECTOR AND RESUMPTION OF TRADING

Financial adviser

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Board is pleased to announce that on 2 December 2008, the Purchaser, a whollyowned subsidiary of the Company, entered into the Agreement with the Vendor and the Guarantor, pursuant to which the Purchaser has conditionally agreed to acquire at the Consideration of HK$149,565,000 for the Sale Shares subject to adjustment which is detailed in the section headed “Consideration” in this announcement. The Sale Shares comprise 25% of the share capital of the Target Company in issue as at the Completion Date. It is expected that the Consideration will be satisfied by the Purchaser in cash from the internal resources of the Group on Completion.

The Acquisition constitutes a major transaction for the Company under the Listing Rules and is subject to the approval of the Shareholders at the SGM.

A circular containing further details of the Acquisition and information of the Target Company together with a notice of the SGM will be sent to the Shareholders as soon as practicable and in accordance with the Listing Rules.

The Board also proposed to appoint Dr. Lai as an executive Director subject to the Completion. Further announcement shall be published upon the appointment of Dr. Lai.

* For identification only

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At the request of the Company, dealings in the Shares on the Stock Exchange were suspended with effect from 9:30 a.m. on 3 December 2008 pending the release of this announcement. Application has been made for the resumption of trading in the Shares on the Stock Exchange with effect from 9:30 a.m. on 8 December 2008.

Reference is made to the announcement of the Company dated 10 October 2008.

THE AGREEMENT

Date of the Agreement

• 2 December 2008 (after trading hours)

Parties to the Agreement

• (a) The Purchaser (as buyer);

• (b) The Vendor (as seller); and

• (c) The Guarantor (as the guarantor to guarantee the Vendor’s obligation under the Agreement).

The Vendor is an investment holding company incorporated in the BVI and is wholly-owned by the Guarantor. As at the date of this announcement, save as its 30% equity interest in the Target Company, the Vendor does not have any other material assets, liabilities and operations.

To the best knowledge, information and belief of the Directors, having made all reasonable enquiries, each of the Vendor and its ultimate beneficial owner and the Guarantor is an Independent Third Party and none of these entities has any prior transaction with the Group which requires aggregating pursuant to the Listing Rules.

Assets to be acquired

The Sale Shares represent 25% of the share capital of the Target Company in issue as at the Completion Date.

Consideration

The total consideration for the Sale Shares shall be HK$149,565,000 payable in cash on Completion. It is expected that payment for the Consideration will be financed by the internal resources of the Group. At Completion, the Vendor shall issue a certificate to the Purchaser certifying that, save as disclosed in the unaudited balance sheet of the Target Company as at 30 September 2008 and the unaudited profit and loss account of the Target Company for the seven months ended 30 September 2008, together with the reports and other documents required by law, there is no amount owing (whether or not due) by the Target Company to and no guarantee or other contingent liability of the Target Company in respect of, its shareholders by way of shareholder’s loan or otherwise.

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The Consideration payable by the Purchaser upon Completion shall be subject to adjustment by reference to the Medicine Value as shown in the Valuation Report so that if the Medicine Value as shown in the Valuation Report is less than US$295 million (equivalent to HK$2,301 million), the Consideration shall forthwith be reduced by an amount equivalent to 25% of 26% of the arithmetical difference between the Medicine Value as shown in the Valuation Report and US$295 million (equivalent to HK$2,301 million), subject always to the Purchaser’s right to terminate the Agreement as summarised in the following paragraph.

If the Medicine Value as shown in the Valuation Report is less than US$200 million (equivalent to HK$1,560 million), the Purchaser shall be entitled, in addition to and without prejudice to all other rights and remedies available to the Purchaser in respect thereof, to rescind the Agreement by notice in writing to the Vendor to that effect whereupon the Agreement will cease and terminate save for that the Vendor will on demand indemnify the Purchaser in full for and against any costs, charges and expenses (including, but not limited to, all legal and other professional fees and expenses on a full indemnity basis) incurred by the Purchaser in connection with the negotiation, preparation and rescission of the Agreement.

For the avoidance of doubt, there shall be no adjustment to the Consideration if the Medicine Value is greater than US$295 million (equivalent to HK$2,301 million) and the maximum amount of the Consideration is always HK$149,565,000.

The Consideration was arrived at after arms’ length negotiations among the parties to the Agreement. The Consideration was determined with reference to the indication of the valuation of the Medicine in the amount of approximately US$300 million (equivalent to HK$2,340 million) from an independent valuer in Hong Kong (a valuation report will be prepared and issued by the independent valuer in Hong Kong and will be included in the circular to be despatched to the Shareholders in respect of the Acquisition). Based on the valuation of the Medicine which is solely owned by Sunfarm which in turn is legally and beneficially owned by the Target Company as to 26% and the Acquisition of 25% of the Target Company, the Consideration represents a discount of approximately 1.67% to the attributable portion of the valuation of the Medicine. Taking into account the matters above and the reasons and benefits as stated in the paragraph below headed “Reasons for and benefits of the Acquisition”, the Directors (including the independent non-executive Directors) consider the Consideration to be fair and reasonable and in the interests of the Company and the Shareholders as a whole.

Conditions precedent

Completion shall be conditional upon the following conditions being fulfilled:

• (i) the result of the “due diligence” exercise to be carried out by the Purchaser on the assets and liabilities, business and prospects of the Target Company and Sunfarm including the books, records, constitutional documents, contracts, accounting records and any other documents relating to the Target Company and Sunfarm

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and each of their businesses and assets and in particular but without prejudice to the generality of the foregoing the Medicine being found to be satisfactory to the Purchaser prior to the Completion Date and the Purchaser being satisfied that the warranties of the Agreement by reference to the facts and circumstances subsisting immediately before Completion are complete, true and accurate and written notice to that effect having been given by the Purchaser to the Vendor;

• (ii) compliance with all legal and regulatory requirements relating to the Agreement and the transactions contemplated thereunder by the Purchaser’s holding company, the Company including, if required, the approval of the Agreement, the Shareholders’ Agreement (the salient terms of which are set out in the section headed “Shareholders’ Agreement” below) and the transactions contemplated thereunder, by the Shareholders who are permitted to vote under the Listing Rules;

• (iii) the completion of the Capitalisation Issue within 14 days of the date of the Agreement;

• (iv) the delivery by the Vendor to the Purchaser of the unaudited balance sheet of the Target Company as at 31 December 2008 and the unaudited profit and loss account of the Target Company for the 10 months ending on 31 December 2008 in form and substance satisfactory to the Purchaser and which shows that the Capitalisation Issue has been completed within 14 days of the date of the Agreement;

• (v) the delivery by the Vendor to the Purchaser of a written confirmation from Sunfarm to the effect that the Company will not be required to inject funding into Sunfarm, whether by way of loan or capital or otherwise until after 30 April 2009 and after the two rebate conditions in the Sunfarm Subscription Agreement (details of which are set out in the section headed “Rebate conditions of the Sunfarm Subscription Agreement” below) in relation to the Medicine are fulfilled; and

• (vi) the obtaining by the Purchaser of the Valuation Report.

In the event that the above conditions are not fulfilled or (as the case may be) waived by the Purchaser (except for condition (ii) which is not capable of being waived) on or before the Long Stop Date (except for conditions (iii) and (iv) which are to be fulfilled by the time stipulated therein) (or such other date as may be agreed between the Vendor, the Guarantor and the Purchaser in writing) and save in respect of any antecedent breach or any accrued right or remedies, which shall not be prejudiced or affected, the Agreement shall be of no further effect, the rights and obligations of the parties under the Agreement shall lapse, any parties thereto shall be released from such obligations without any liability.

The Vendor shall use its best endeavours to procure (save for conditions (ii)), and the Purchaser shall provide reasonable assistance for, the fulfillment of the conditions (so far as it is within its power to do so) as soon as reasonably practicable and in any event before the date specified in the Agreement.

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The Purchaser may at any time waive in writing any of the conditions (save for condition (ii) which is not capable of being waived) and such waiver may be made subject to such terms and conditions as are determined by the Purchaser.

Completion

Completion will take place on the Completion Date when all the acts and requirements set out in the Agreement shall be complied with.

After Completion, the Target Company will be accounted for as an associate of the Company. The Group will account for the financial results and position of the Target Company by equity accounting method, i.e. share of the profits and net assets of the Target Company in the Group’s consolidated financial statements.

SHAREHOLDERS’ AGREEMENT

The salient terms of the Shareholders’ Agreement are summarised as follows:

Target Board

Pursuant to the Shareholders Agreement, the Target Board shall consist of four directors and the Purchaser shall have the right to require the appointment of one director whereas the other shareholders of the Target Company shall have the rights to require the appointment of three directors altogether. The Target Board shall be responsible for determining the overall policy of the Target Company.

Shareholder funding and new shares

No shareholder of the Target Company shall be obliged to provide any additional finance or financial assistance to any of the Target Company or its subsidiaries (when and where applicable) or to subscribe for any shares or other securities in the Target Company or to make any loans to or transfer any assets to any of the Target Company or its subsidiaries (when and where applicable) (other than those agreed to be provided under the Shareholders’ Agreement), nor shall any shareholder have any obligation to guarantee or provide security for any obligations of any of the Target Company or its subsidiaries (when and where applicable) or to indemnify any third party in respect of such obligations or liabilities.

Notwithstanding the above paragraph, with respect to the fulfilment of the rebate conditions as stated in the section headed “Rebate conditions of the Sunfarm Subscription Agreement”, the shareholders of the Target Company agree that they will provide to the Target Company, by way of further subscription of shares, the aggregate amount of US$7 million (equivalent to HK$54.6 million), such amount to be provided by each shareholder as and when requested by resolution of the Target Board, on a prorata basis according to each shareholder’s shareholding in the Target Company by way of subscription of new shares. For the avoidance of doubt, the maximum commitment of each shareholder will be limited to their respective shareholding in the Target Company at that time. In the event of a non-subscription by a shareholder, the other shareholders agree that they will negotiate in good faith for resolutions as to ways of funding.

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If the Target Company requires additional funding over and above US$7 million (equivalent to HK$54.6 million) and such funding is approved by the Target Board, the Target Company shall use all reasonable endeavours to raise such funds by way of bank borrowings (if necessary secured against the assets of the Target Company and its subsidiaries (when applicable)). If the Target Company is unable to obtain such bank borrowings, each shareholder may advance its pro rata share (as between themselves based on their shareholding in the Target Company) of such additional funding through an interest free (or if approved by the Target Board interest bearing) shareholder loan to the Target Company on terms that are identical (mutatis mutandis) for each shareholder. No part of any advance by a shareholder shall be repaid unless a like portion of each advance by each other shareholder is repaid simultaneously.

Save as agreed unanimously between the shareholders of the Target Company, no shares, options or other securities shall be issued by any subsidiary of the Target Company other than to the then existing shareholders of such subsidiary.

Transfer of shares

No shareholder may, without the consent of the other shareholders, create or permit to subsist any mortgage, charge, pledge, lien, encumbrance or other security interest whatsoever on or over or in respect of all or any of the shares held by it, and shall not otherwise dispose of any of its shares or otherwise purport to deal with the beneficial or economic interest therein (including but not limited to its voting rights) or any right relating thereto except by a transfer in accordance with the terms of the Shareholders’ Agreement.

If any shareholder of the Target Company wishes to transfer any of its shares or to dispose of any interest therein, the other shareholders of the Target Company shall have the first rights of refusal to purchase such interest. Otherwise, the selling shareholder shall be at liberty to transfer such interest to any person on terms not more favourable than those offered under the terms of the Shareholders’ Agreement.

Notwithstanding the foregoing, any shareholder shall have the right to transfer its interest in the Target Company to its subsidiary, or holding company of such company and any fellow subsidiary of the same holding company (or in the case of an individual shareholder to any family trust established by or for the benefit of that shareholder) without being required to comply with the restrictions on transfer of shares and/or shareholder loan and/or an interest therein before such transfer takes place.

Termination

Each shareholder shall be entitled to serve a notice of termination on any other shareholder (“Defaulting Shareholder”) if any of the events set out below shall occur:

• (a) the Defaulting Shareholder materially defaults in the performance or observance of any of its obligations under the Shareholders’ Agreement and fails to remedy such default within 30 days after having been given written notice of such default by the shareholder seeking to terminate; or

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• (b) an order is made or an effective resolution is passed or analogous proceedings are taken for the winding up of the Defaulting Shareholder, or all or substantially all of the assets of the Defaulting Shareholder are expropriated or otherwise placed under the direct control of any government, or the Defaulting Shareholder is unable to pay its debts or makes a general assignment for the benefit of its creditors or has a receiver or manager appointed over its shares or all or a substantial part of its undertaking or assets (other than for the purposes of amalgamation or reorganisation not involving or arising out of insolvency) or anything similar or analogous to the foregoing occurs in respect of the Defaulting Shareholder.

Term

The Shareholders’ Agreement shall continue in full force and effect until the Target Company is wound up or otherwise ceases to exist as a separate entity or the Shareholders’ Agreement is terminated as detailed in the section headed “Termination”.

REBATE CONDITIONS OF THE SUNFARM SUBSCRIPTION AGREEMENT

Pursuant to the Sunfarm Subscription Agreement, the Target Company’s subscription under the Sunfarm Subscription Agreement was at US$3 million (equivalent to HK$23.4 million), which represented a 70% discount from the full value of US$10 million (equivalent to HK$78 million) for the subscription shares of Sunfarm. Upon the satisfaction of the two rebate conditions as set out in the following paragraph, the Target Company will rebate to Sunfarm the 70% discount from the full value of US$7 million (equivalent to HK$54.6 million).

The two rebate conditions are as follows:

• (1) On or before 180 days from 1 November 2008, if Sunfarm is still in phase III of the FDA trial and total number of selected patients is not less than 50, the Target Company will rebate US$3 million (equivalent to HK$23.4 million) to Sunfarm, equivalent to 30% of the full value, as first discount rebate; and

• (2) On or before 360 days from 1 November 2008, if Sunfarm is still in phase III of the FDA trial and total number of selected patients is not less than 100, the Target Company will rebate US$4 million (equivalent to HK$31.2 million) to Sunfarm, equivalent to 40% of the full value, as the final discount rebate. Upon the payment of the first discount rebate and the final discount rebate, the Target Company has paid the full value for the subscription shares of Sunfarm.

The Target Company agreed to act in good faith to not restrict or impair any efforts by Sunfarm to achieve the above two rebate conditions and to not unreasonably withhold any necessary approvals needed to achieve the two rebate conditions.

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INFORMATION ON THE TARGET COMPANY AND THE MEDICINE

The Target Company is the legal and beneficial owner of 26% equity interest in Sunfarm which is engaged in the development and manufacturing of the Medicine for malignancy in the US. The Medicine is a Chinese herbal medicine which is currently known as “Selected Vegetables – Sun’s Soup” and is a dietary supplement in treating patients who are undergoing supportive care for small cell lung cancer. The Medicine was tested in the FDA – phase I/II clinical trial that involved patients with non-small cell lung cancer. It has been reported that treatment with the Medicine lengthened the survival of patients with lung cancer or other types of malignant tumors. The Medicine is the world’s first Chinese herbal mixture which has obtained permission to enter the FDA - supervised phase III clinical trial in order to be recognized as drug for cancer treatment. The Medicine is expected to pass the FDA phase III trail by mid-2010 and obtain new drug number by mid-2011. The Medicine is currently marketed in the US as a dietary supplement.

According to the studies conducted by Dr. Alexander Sun, the inventor of the Medicine, the Medicine has the following features in comparison to other anti-cancer drugs:

• The first Chinese herbal mixture completely developed in the US;

• No toxicity;

• Extending of the median survival time for inoperable stage IIIB and IV non-small cell lung cancer patients to 33.5 months, as compared to the historical median survival time of approximately 6-9 months;

• Improving quality of life and reducing the side-effects of chemotherapy;

• Less costly compared to conventional prescription cancer treatments and eliminating the costs for treating life-threatening side-effects; and

• Being a health supplement that can boost up human body’s immune system by shortening the reaction time of immune system.

As at the date of this announcement, save for its 26% equity interest in Sunfarm, the Target Company did not have any other material assets, liabilities and operations. The unaudited loss before taxation and unaudited loss after taxation of the Target Company for the period from 1 February 2008 (date of incorporation) to 30 September 2008 were both HK$15,243.25. Unaudited net liability value of the Target Company as at 30 September 2008 was HK$1,671.25. Upon completion of the Capitalisation Issue (expected to be within 14 dates after the date of the Agreement) to capitalize all the outstanding shareholder’s loan of the Target Company in the amount of HK$24,308,878.68 as at the date of the Agreement, the unaudited net asset value of the Target Company would become HK$24,307,035.15.

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REASONS FOR AND BENEFITS OF THE ACQUISITION

The Group is principally engaged in supply and procurement business operations and securities investment. The Directors have always been active in seeking investment opportunities. While keeping abreast with the core businesses, the Directors would look into investments, irrespective of whether they are in line with the principal businesses, in order to increase the value of Company, which is in the interests of Company and the Shareholders as a whole.

In terms of incidence, the most common cancers worldwide are lung cancer (12.3% of all cancers). Lung cancer is also the largest single cause of deaths from cancer in the world (approximately 1.1 million people annually), since it is almost invariably associated with poor prognosis.

It was a rare disease until the beginning of the 20th century. Since then, the occurrence of lung cancer has increased rapidly and it now accounts for an estimated 901,000 new cases each year among men and 337,000 among women. To a large extent, this is explained by the habit of smoking and urban air pollution. The association between lung cancer and smoking has been recognized by public health and regulatory authorities since the mid 1960s. There is also evidence that the lung cancer rates in cities may be 50% higher than in rural settings. These can also explain the reason why China, Japan, North America and Europe have relatively high lung cancer rates around the world.

The outlook for patients diagnosed with lung cancer is poor by comparison with many other cancers. Although the survival for stage 1 cancers may reach about 65%, overall survival from lung cancer is poor. In population based series from high-income countries, the five-year relative survival barely exceeds 10%. There has been very modest improvement in survival from lung cancer during the last 20 years.

The Acquisition involves the acquisition of 25% equity interests in the Target Company which in turn is interested in 26% of Sunfarm. Sunfarm is the manufacturer and developer of the Medicine and is currently responsible for the quality control and quality assurance and research and development of the Medicine. The Directors believe that the Acquisition provides a good opportunity for the Group to diversify its business into the medical sector, which is in the commercial interest of the Group in the long run.

The Board considers that the Acquisition is in the interest of the Company for the following reasons:

• a. the Acquisition builds up the Company’s portfolio of investment of manufacturing and developing the Medicine which is non toxic and the first world’s first Chinese herbal mixture successfully agreed by the FDA to enter the phase III clinical trial under its supervision;

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• b. the Medicine is expected to pass the FDA phase III trial by mid-2010 and obtain new drug number by mid-2011;

• c. the Acquisition allows the Company to leverage on manufacturing and developing experience of the Medicine, which will place the Company in a good position to jumpstart the plans for its entry into the medical sector through the drug industry for curing lung cancer;

• d. the Acquisition is in line with the Company’s growth strategy of acquiring strategic stakes in potential growth businesses, with a view to enhancing long-term value for the Shareholders.

The Directors, including the independent non-executive Directors, consider the terms and conditions of the Agreement to be fair and reasonable and are in the best interests of the Company and the Shareholders as a whole.

PROPOSED APPOINTMENT OF EXECUTIVE DIRECTOR

The Board proposed to appoint Dr. Lai Yat Man (“ Dr Lai ”) as an executive Director subject to the Completion.

Dr. Lai, aged 48, graduated from the Medical College of National Taiwan University and started his medical career in 1985 in Taiwan as an internist. From 1985 to 1987, Dr. Lai was a Resident Doctor of Internal Medicine Department of Cardinal Tien Hospital in Taipei County.

From 1987 to 1988, he acted as the Chief Resident of Emergency Internal Medicine Department of Neihu General Hospital in Taipei. In the same period, he completed further studies in Chest Medicine in Cathay General Hospital in Taipei and became a fellow of the Taiwan Chest Society in 1988. In the same year, he diagnosed the first AIDS patient in Taipei and was granted an award for his contribution to the medical society of Taiwan.

From 1988 to 1995, he acted as the Chief of Internal Medicine Department of Tamsui First Hospital in Taipei County.

In 1995, he migrated his medical team to Kuala Lumper to further expand the medical services to other countries of Asia. In 1996, he was highly accredited in the medical society and was invited to be speaker in the Fifth Asian Chinese Medicine Conference held in Kuala Lumper, Malaysia.

In 1998, he established United Asia Medical Network Co. Ltd. in Hong Kong (“ United Asia ”). From 1998 to now, Dr. Lai has been acting as chairman and director of United Asia. Now he owns more than 90% of the issued shares of the United Asia. He is responsible for overall business planning, strategy and management, as well as providing medical and biological information support to United Asia and its affiliated hospitals and doctors.

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Since 2001, United Asia has been appointed by Sunfarm as the exclusive distributor of the Medicine in Asia regions. He also speaks at numerous medical seminars in the Asia Pacific Region. Dr. Lai is a director of Sunfarm.

Dr. Lai did not hold directorship in any listed public companies during the past three years. Dr. Lai will not enter into any service contract which provides for a specified length of service with the Company. According to the bye-laws of the Company, Dr. Lai shall hold office until the next annual general meeting of the Company and shall be eligible for re-election. Dr. Lai, upon appointment, will receive remuneration from the Company, including salary, discretionary bonus and other benefits determined in accordance with Dr. Lai’s job duties and positions in the Company and is subject to adjustments every year with reference to prevailing market condition. Payment of bonus is determined with reference to the Company’s business performance, profitability and market conditions.

Dr. Lai has not previously held any position with the Company or its subsidiaries. Dr. Lai does not have any relationship with any directors, senior management or substantial or controlling shareholders of the Company, and as at the date of this announcement, he has no interest in the shares of the Company within the meaning of Part XV of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) nor any entitlement for share options or bonus.

Save as disclosed above, there are no any other matters that need to be brought to the attention of the Shareholders nor are there any other information that is required to be disclosed pursuant to any of the requirements under paragraphs (h) to (v) of rule 13.51(2) of the Listing Rules in respect of the proposed appointment of Dr. Lai. Further announcement shall be published upon the appointment of Dr. Lai.

IMPLICATIONS UNDER THE LISTING RULES

The Acquisition constitutes a major transaction for the Company under the Listing Rules and is subject to the approval of Shareholders at the SGM. Save for the proposed appointment of Dr. Lai as executive Director, there is no current intention to change the composition of the Board after the Completion. The Company intends to maintain its existing principal business after the Completion.

The Company will seek the approval of its Shareholders at the SGM to be convened and held by the Company to approve the Agreement and the transactions contemplated thereunder. To the best of the Directors’ knowledge, information and belief having made all reasonable enquiry, no Shareholder have material interest in the Acquisition other than their shareholding interests in the Shares, and accordingly no Shareholder is required to abstain from voting at the SGM.

A circular containing, among other things, further details of the Acquisition and information of the Group and a notice of the SGM for the purpose of approving the Acquisition will be sent to the Shareholders as soon as practicable and in accordance with the Listing Rules.

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Shareholders and investors should note that the Agreement is subject to various conditions as stated in the section headed “Conditions precedent” above and investors and Shareholders are urged to exercise caution when dealing in the Shares.

RESUMPTION OF TRADING

At the request of the Company, dealings in the Shares on the Stock Exchange were suspended with effect from 9:30 a.m. on 3 December 2008 pending the release of this announcement. Application has been made for the resumption of trading in the Shares on the Stock Exchange with effect from 9:30 a.m. on 8 December 2008.

DEFINITIONS

In this announcement, unless the context otherwise requires, the following expressions shall have the following meaning:

• “Acquisition” the acquisition of the Sale Shares under the Agreement and the transactions contemplated thereunder

• “Agreement” an agreement dated 2 December 2008 and entered into among the Purchaser, the Vendor and the Guarantor for the sale and purchase of the Sale Shares

• “associates” has the meaning ascribed to it under the Listing Rules

• “Board” the board of Directors

• “Business Day” a day (other than a Saturday and a Sunday) on which banks are open for business in Hong Kong

• “BVI” British Virgin Islands

• “Capitalisation Issue” the issue of a total of 26,000 new shares of the Target Company to its shareholders whose name appear in the register of members of the Target Company as of the date of the Capitalisation Issue in proportion to their then respective shareholding in the Target Company by capitalizing the outstanding principal amount of all shareholder’s loans owed by the Target Company to each shareholder as of the date of the Capitalisation Issue

“Company” Poly Development Holdings Limited, a company incorporated in Bermuda with limited liability, the issued Shares of which are listed on the main board of the Stock Exchange

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“Completion” completion of the Agreement in accordance with the terms thereof

• “Completion Date” date of the Completion, the date falling the third Business Day after all the conditions of the Agreement have been fulfilled (or waived as the case may be)

• “connected persons” has the meaning ascribed thereto in the Listing Rules

• “Consideration” HK$149,565,000 for the acquisition of the Sale Shares

• “Directors” the directors of the Company from time to time

• “FDA” Food and Drug Administration of the US

• “Group” the Company and its subsidiaries

• “Guarantor” Mr. Huang Xinzhi, the sole director and shareholder of the Vendor

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

• “Independent Third Party” any party independent of the Company and the connected persons of the Company and is not a connected person of the Company

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

• “Long Stop Date” 15 April 2009

• “Medicine” a Chinese herbal medicine which is currently known as “Selected Vegetables – Sun’s Soup” and which is a dietary supplement in treating patients who are undergoing supportive care for small cell lung cancer

• “Medicine Value”

• value of the Medicine as shown in the Valuation Report

• “Purchaser”

Poly Pearl Limited, a company incorporated in the BVI, which is a wholly owned subsidiary of the Company

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• “Sale Shares”

• “SGM”

• “Shareholders”

• “Shareholders’ Agreement”

• “Shares”

• “Stock Exchange”

• “Sunfarm”

• “Sunfarm Subscription

• Agreement”

• “Target Board”

• “Target Company”

• “US”

• “Valuation Report”

• the 43,500 shares of US$0.01 each in the issued share capital of the Target Company or that other number of shares as represent exactly 25% of the share capital of the Target Company in issue or agreed to be issued (including but not limited to shares of the Target Company issued as part of the Capitalisation Issue) as at the Completion Date

• a special general meeting of the Company to be convened and held to approve the Agreement and the transactions contemplated thereunder

• shareholders of the Company

• the shareholders agreement to be entered into amongst all shareholders of the Target Company and the Target Company on Completion

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

• The Stock Exchange of Hong Kong Limited

• Sun Farm Corporation, a company incorporated in Connecticut, the US

• subscription agreement dated 24 May 2008 entered into between the Target Company and Sunfarm in relation to the subscription of 4,211,000 shares of, representing 26% interest in, Sunfarm by the Target Company

• board of directors of the Target Company

• Richtech Group Limited, a company incorporated in the BVI with limited liability and is owned as to 30% by the Vendor and as to 69% and 1% by two Independent Third Parties respectively

United States of America

• a valuation report to be prepared by a firm of valuers chosen by the Purchaser only, on the Medicine showing the value of the Medicine as at 30 November 2008

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“Vendor” Superb Deluxe Limited, a company incorporated in the BVI with limited liability and is wholly owned by the Guarantor “HK$” Hong Kong dollars, the lawful currency of Hong Kong “US$” United States dollars, the lawful currency of the United States of America “%” per cent

For illustration purposes, all amounts in US$ shall be translated in HK$ at a rate of US$1 = HK$7.8 in this announcement.

On behalf of the Board Lo Ming Chi, Charles Deputy Chairman and Chief Executive Officer

Hong Kong, 5 December 2008

As at the date of this statement, the Board comprises Mr. Suen Cho Hung, Paul (Chairman), Mr. Lo Ming Chi, Charles (Deputy Chairman and Chief Executive Officer), Mr. Zhang Zhidong and Mr. Sue Ka Lok as executive Directors and Mr. Wong Kwok Tai, Mr. Weng Yixiang, Mr. Lu Xinsheng and Mr. Xiong Wei as independent non-executive Directors.

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