PegBio Co., Ltd. — Proxy Solicitation & Information Statement 2003

Jul 30, 2003

IMPORTANT

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

If you have sold all your shares in XIN CORPORATION LIMITED, you should at once hand this circular to the purchaser or to the bank, stockbroker or other agent through whom the sale was effected for transmission to the purchaser.

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

(Incorporated in Bermuda with limited liability)

Executive Directors: Registered Office: Mr. Lo Ming Chi, Charles (Chairman) Clarendon House Mr. Yu Wai Man Church Street Mr. Wilson Ng Hamilton HM 11 Mr. Ng Wee Keat Bermuda Mr. Ng Teow Leng Mr. Ng Eng Leng Head Office and Principal Place of Business: Independent Non-Executive Directors: Room 3A03-06, 3/F. Mr. Wu Wing Kit New Mandarin Plaza Mr. Wong Kwok Tai, Wystan 14 Science Museum Road Mr. Lau Pok Lam Tsim Sha Tsui East Kowloon Hong Kong 30 July 2003

To shareholders

Dear Sir or Madam,

GENERAL MANDATE TO REPURCHASE SHARES

INTRODUCTION

It is proposed that at the annual general meeting of Xin Corporation Limited (the “Company”) for the year ended 31 March 2003, a resolution will be proposed to grant to the directors of the Company (the “Directors”) a general mandate to repurchase shares of the Company. This circular contains the explanatory statement in compliance with the Rules Governing the Listing of Securities on The Stock

* For identification purpose only

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Exchange of Hong Kong Limited (the “Listing Rules”) as stated below and gives all the information reasonably necessary to enable the shareholders to make an informed decision on whether to vote for or against the resolution to approve the repurchase by the Company of its own shares.

EXPLANATORY STATEMENT

1. GENERAL MANDATE TO REPURCHASE SHARES

At the annual general meeting to be held on 3 September 2003, an ordinary resolution will be proposed that the Directors are given a general mandate to exercise all powers of the Company to repurchase issued and fully paid shares of HK$0.01 each in the share capital of the Company (the “Share(s)”). On 30 July 2003, (the “Latest Practicable Date”), being the latest practicable date prior to the printing of this circular, there were in issue an aggregate of 215,525,638 Shares. Exercise in full of the mandate, on the basis that no further Share is issued prior to the date of the annual general meeting, could accordingly, result in up 21,552,563 Shares being repurchased by the Company.

The Directors have no present intention to repurchase any Shares but consider that the mandate will provide the Company with the flexibility to make such repurchases when appropriate and beneficial to the Company. Such repurchases may enhance the net asset value of the Company. As compared with the financial position of the Company as at 31 March 2003 (being the date of its latest audited consolidated financial statements), the Directors consider there would be a material adverse impact on the working capital and on the gearing position of the Company in the event that the proposed repurchase mandate is exercised in full during the proposed period. No repurchase would be made in the circumstances that would have a material adverse impact on the working capital or gearing ratio of the Company.

The Company is empowered by its Memorandum of Association and Bye-laws to repurchase its Shares. Bermuda law provides that the amount of capital repaid in connection with a Share repurchase may only be paid out of either the capital paid up on the relevant Shares, or funds of the Company that would otherwise be available for dividend or distribution or the proceeds of a new issue of Shares made for such purpose. The amount of premium payable on repurchase may only be paid out of either the funds of the Company that would otherwise be available for dividend or distribution or out of the share premium account of the Company.

2. DIRECTORS, THEIR ASSOCIATES AND CONNECTED PERSONS

None of the Directors nor, to the best of their knowledge and belief having made all reasonable enquiries, their respective associates (as defined in the Listing Rules), have a present intention, in the event that the proposal is approved by the shareholders, to sell Shares to the Company.

No connected person of the Company (as defined in the Listing Rules) has notified the Company that he/she has a present intention to sell Shares to the Company nor has he/she undertaken not to sell any of the Shares held by him/her to the Company in the event that the Company is authorized to make repurchases of Shares.

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3. UNDERTAKING OF THE DIRECTORS

The Directors have undertaken to the Stock Exchange to exercise the power of the Company to make repurchases pursuant to the proposed resolution in accordance with the Listing Rules and all applicable laws of Bermuda and in accordance with the regulations set out in the Memorandum of Association and Bye-laws of the Company.

4. EFFECT OF TAKEOVERS CODE

A repurchase of Shares by the Company may result in an increase in the proportionate interests of a substantial shareholder of the Company in the voting rights of the Company, which could give rise to an obligation to make a mandatory offer in accordance with Rule 26 of the Hong Kong Code on Takeovers and Mergers (the “Code”).

As at the Latest Practicable Date, to the best of the knowledge and belief of the Company, Vision Century Group Limited (“Vision Century”), who held 72.58% of the issued share capital of the Company. In the event that the Directors should exercise in full the power to repurchase Shares which is proposed to be granted pursuant to the resolution, the shareholding of Vision Century in the Company would be increased to approximately 80.64% of the issued share capital of the Company. Such increase would not give rise to an obligation to make a mandatory offer under Rule 26 of the Code in relation to Vision Century.

Any purchase of Shares which results in the number of Shares held by the public being reduced to less than 25% of the Shares then in issue could only be implemented with the agreement of the Stock Exchange to waive the requirements of the Listing Rules regarding the public shareholding referred to above. It is believed that a wavier of this provision would not normally be given other than in exceptional circumstances.

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5. GENERAL

During the six months preceding the Latest Practicable Date, no Shares of the Company have been repurchased by the Company on the Stock Exchange.

During each of the previous twelve months preceding the Latest Practicable Date, the highest and lowest prices at which the Shares have traded on the Stock Exchange were as follows:

	Per Share
Month	Highest	Lowest
	HK$	HK$
2002
July	0.011	0.010
August	0.010	0.010
September	–	–
October	0.010	0.010
November	–	–
December	–	–
2003
January	0.370	0.153
February	0.187	0.160
March	0.190	0.110
April	0.160	0.160
May	0.150	0.080
June	0.180	0.130

RECOMMENDATION

The Directors consider that the granting of the mandate to repurchase Shares of the Company is in the interest of the Company and so recommend you to vote in favour of the resolution at the forthcoming annual general meeting.

Yours faithfully

Lo Ming Chi, Charles Chairman

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