PegBio Co., Ltd. — Proxy Solicitation & Information Statement 2005

Apr 29, 2005

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

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

If you have sold or transferred all your shares in Xin Corporation Limited , you should at once hand this circular and the accompanying form of proxy to the purchaser or transferee or to the bank, licensed securities dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

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(Incorporated in Bermuda with limited liability)

(Stock Code: 1141)

PROPOSED CAPITAL REORGANISATION INVOLVING CAPITAL REDUCTION, SHARE PREMIUM REDUCTION AND SHARE CONSOLIDATION, CHANGE OF BOARD LOT SIZE, PROPOSED GRANT OF THE GENERAL MANDATES TO ALLOT, ISSUE AND REPURCHASE CONSOLIDATED SHARES AND

PROPOSED REFRESHMENT OF THE 10% LIMIT ON GRANT OF OPTIONS UNDER THE SHARE OPTION SCHEME

Financial adviser to Xin Corporation Limited

SOMERLEY LIMITED

A notice convening a special general meeting of Xin Corporation Limited to be held at Plaza I-III, Lower Lobby, Novotel Century Hong Kong, 238 Jaffe Road, Wanchai, Hong Kong on Monday, 23rd May, 2005 at 9:30 a.m. is set out on pages 18 to 21 of this circular. If you are not able to attend the special general meeting, you are requested to complete the enclosed form of proxy in accordance with the instructions printed thereon and return it to the principal place of business of Xin Corporation Limited in Hong Kong at Room 2107, 21st Floor, Nan Fung Tower, 173 Des Voeux Road Central, Hong Kong as soon as possible and in any event not later than forty-eight (48) hours before the time appointed for holding the special general meeting or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attendng and voting in person at the special general meeting or any adjournment of it, if you so wish.

• For identification only

29th April, 2005

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Expected timetable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Letter from the Board
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Capital Reorganisation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Change of board lot size . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
Proposed grant of the general mandates to allot, issue and
repurchase Consolidated Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
Proposed refreshment of the Scheme Mandate Limit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
SGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
Right to demand poll . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
Directors’ responsibility statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
Appendix I – Explanatory statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	15
Notice of SGM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	18

– i –

DEFINITIONS

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

• “AGM”

the annual general meeting of the Company held on 24th September, 2004

• “Board”

• “Capital Reduction”

• the board of Directors the proposed capital reduction which involves the nominal value of each Existing Share in issue being reduced from HK$0.01 to HK$0.0005

• “Capital Reorganisation” collectively, the Capital Reduction, the Share Premium Reduction and the Share Consolidation

• “Company” Xin Corporation Limited, a company incorporated in Bermuda with limited liability and the issued shares of which are listed on the Main Board of the Stock Exchange

• “Consolidated Share(s)”

• new ordinary share(s) of HK$0.01 each in the capital of the Company after the Share Consolidation has taken effect

• “Convertible Bonds” 5% convertible bonds of the Company in an aggregate outstanding principal amount of HK$2,166,664, which are repayable on 16th May, 2005 or convertible into Existing Shares at a conversion price of HK$0.2228 per Existing Share (subject to adjustment)

• “Current General Mandate” the general mandate approved and granted to the Directors to allot and issue not exceeding 20% of the issued share capital of the Company as at the date of passing the resolution at the AGM

• “CCASS”

• the Central Clearing and Settlement System established and operated by HKSCC

• “Directors”

directors of the Company

• “Existing Shares”

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

• “Group”

the Company and its subsidiaries

• “HKSCC”

Hong Kong Securities Clearing Company Limited

• “Latest Practicable Date”

• 28th April, 2005, being the latest practicable date prior to the printing of this circular for the purpose of ascertaining certain information contained herein

– 1 –

DEFINITIONS

• “Listing Rules”

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

• “New General Mandate” a general mandate proposed to be granted to the Directors at the SGM to exercise the power of the Company to allot and issue Consolidated Shares in the manner as set out in the accompanying notice of SGM

• “Open Offer” the issue of offer shares of the Company by way of open offer to the then qualifying Shareholders on the basis of one offer share for every two Existing Shares (on an assured basis) completed in February 2005, details of which were set out in the announcement of the Company dated 14th January, 2005 and the open offer prospectus of the Company dated 4th February, 2005

• “Registrar” Tengis Limited, the branch share registrar of the Company in Hong Kong

• “Repurchase Mandate” a general mandate proposed to be granted to the Directors to exercise the power of the Company to repurchase Consolidated Shares in the manner as set out in the accompanying notice of SGM

• “Scheme Mandate Limit” the maximum number of shares in respect of which options may be granted under the Share Option Scheme and any other share option scheme(s) of the Company, which is 10% of the total number of issued shares in the Company as at the date of adoption of the Share Option Scheme subject to any refreshment thereafter

• “SGM” the special general meeting of the Company to be held at Plaza I-III, Lower Lobby, Novotel Century Hong Kong, 238 Jaffe Road, Wanchai, Hong Kong on Monday, 23rd May, 2005 at 9:30 a.m. for the purpose of considering and, if thought fit, approving the Capital Reorganisation, the New General Mandate and the extension thereof, the Repurchase Mandate and the refreshment of the Scheme Mandate Limit

• “Share Consolidation” the proposed consolidation of every 20 shares of HK$0.0005 each resulting from the Capital Reduction into one Consolidated Share of HK$0.01

• “Share Option Scheme” the share option scheme adopted by an ordinary resolution passed at the special general meeting of the Company held on 30th December, 2002

– 2 –

DEFINITIONS

“Share Premium Reduction” the proposed cancellation of the entire amount standing to the credit of the share premium account of the Company as at 31st March, 2005 “Shareholder(s)” holder(s) of Existing Shares or, as the case may be, Consolidated Shares “Stock Exchange” The Stock Exchange of Hong Kong Limited “HK$” Hong Kong dollars “%” per cent.

– 3 –

EXPECTED TIMETABLE

2005

Latest time for lodging form of proxy for the SGM . . . . . . . . . . . . . . . . . 9:30 a.m. on Saturday, 21st May SGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9:30 a.m. on Monday, 23rd May Effective date for the Capital Reorganisation . . . . . . . . . . . . . . . . . . . . . . . 4:00 p.m. on Monday, 23rd May Free exchange of existing orange share certificates for new yellow share certificates commences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tuesday, 24th May Original counter for trading in Existing Shares in board lot of 4,000 shares closes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9:30 a.m. on Tuesday, 24th May Temporary counter for trading in Consolidated Shares in board lot of 200 Consolidated Shares (in the form of existing orange share certificates) opens . . . . . . . . . . . . . . . . . . . . . . . . . 9:30 a.m. on Tuesday, 24th May Original counter for trading in Consolidated Shares in new board lot of 8,000 Consolidated Shares (in the form of new yellow share certificates) re-opens . . . . . . . . . . . . . . . . . . . . . . . . . . 9:30 a.m. on Tuesday, 7th June Parallel trading in Consolidated Shares (in the form of new yellow and existing orange share certificates) commences . . . . . . 9:30 a.m. on Tuesday, 7th June Designated broker starts to stand in the market to provide matching services for odd lots of shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tuesday, 7th June Temporary counter for trading in Consolidated Shares in board lot of 200 Consolidated Shares (in the form of existing orange share certificates) closes . . . . . . . . . . . 4:00 p.m. on Tuesday, 28th June Parallel trading in Consolidated Shares (in the form of new yellow and existing orange share certificates) ends . . . . . . . . . . . 4:00 p.m. on Tuesday, 28th June Designated broker standing in the market to provide matching services for odd lots of shares ends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Tuesday, 28th June Free exchange of existing orange share certificates for new yellow share certificates ends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tuesday, 5th July Note: All times in this circular refer to Hong Kong times.

– 4 –

LETTER FROM THE BOARD

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(Incorporated in Bermuda with limited liability)

(Stock Code: 1141)

Executive Directors: Mr. Lo Ming Chi, Charles (Chairman) Mr. Yu Wai Man Mr. Wilson Ng Mr. Ng Wee Keat Mr. Ng Eng Leng

Independent Non-executive Directors: Mr. Wong Kwok Tai Mr. Lau Pok Lam Mr. Ko Kwong Woon, Ivan

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

Head Office and Principal Place of Business in Hong Kong: Room 2107, 21st Floor Nan Fung Tower 173 Des Voeux Road Central Hong Kong

29th April, 2005

To the Shareholders and, for information only, holders of the Convertible Bonds

Dear Sir or Madam,

PROPOSED CAPITAL REORGANISATION INVOLVING CAPITAL REDUCTION, SHARE PREMIUM REDUCTION AND SHARE CONSOLIDATION, CHANGE OF BOARD LOT SIZE, PROPOSED GRANT OF THE GENERAL MANDATES TO ALLOT, ISSUE AND REPURCHASE CONSOLIDATED SHARES AND PROPOSED REFRESHMENT OF THE 10% LIMIT ON GRANT OF OPTIONS UNDER THE SHARE OPTION SCHEME

INTRODUCTION

The Board announced on 13th April, 2005 the Capital Reorganisation which is subject to, among others, the approval of the Shareholders at the SGM. The Board wishes to take the opportunity at the SGM to propose resolutions to approve the grant of the New General Mandate and the extension thereof, the Repurchase Mandate and the refreshment of the Scheme Mandate Limit. In addition, the board lot size of the Company will be changed upon the Capital Reorganisation becoming effective.

Accordingly, the SGM will be convened by the Company at which resolutions will be proposed to seek approval of the Shareholders for the Capital Reorganisation, the New General Mandate and the extension thereof, the Repurchase Mandate and the refreshment of the Scheme Mandate Limit.

* For identification only

– 5 –

LETTER FROM THE BOARD

The purpose of this circular is to provide you with, among others, (i) information on the Capital Reorganisation and the associated trading arrangements, change of the board lot size, the New General Mandate and the extension thereof, the Repurchase Mandate and the refreshment of the Scheme Mandate Limit; and (ii) the notice of the SGM.

CAPITAL REORGANISATION

The Board proposes the Capital Reorganisation which involves the Capital Reduction, the Share Premium Reduction and the Share Consolidation.

1. Capital Reduction

Pursuant to the Capital Reduction, the issued share capital of the Company will be reduced by cancelling an amount of HK$0.0095 of the paid-up capital from each issued Existing Share so that the nominal value of each Existing Share in issue will be reduced from HK$0.01 to HK$0.0005.

2. Share Premium Reduction

Pursuant to the Share Premium Reduction, the entire amount standing to the credit of the share premium account of the Company as at 31st March, 2005 will be cancelled.

The credit arising from (1) and (2) above will be transferred to the contributed surplus account of the Company where it may be utilised by the Directors in accordance with the bye-laws of the Company and all applicable laws, including to apply such credit against the accumulated losses of the Company.

3. Share Consolidation

Immediately following the Capital Reduction, the Share Consolidation will be implemented whereby every 20 shares of HK$0.0005 each resulting from the Capital Reduction will be consolidated into one Consolidated Share. Fractional Consolidated Shares will not be issued to the Shareholders but will be aggregated and, if possible, sold for the benefits of the Company.

4. Effects of the Capital Reorganisation

As at the Latest Practicable Date, the authorised share capital of the Company amounted to HK$100,000,000 comprising 10,000,000,000 Existing Shares, of which 1,654,080,285 Existing Shares have been allotted and issued as fully paid or credited as fully paid. Upon the Capital Reorganisation taking effect and on the basis that the Company does not allot and issue any further Existing Shares prior thereto, the authorised share capital of the Company shall remain at HK$100,000,000 comprising 10,000,000,000 Consolidated Shares, but of which 82,704,014 Consolidated Shares only will be in issue. The Consolidated Shares will rank pari passu in all respects with each other.

On the basis of 1,654,080,285 Existing Shares in issue and the unaudited amount of approximately HK$58.7 million standing to the credit of the share premium account of the Company as at 31st March, 2005, a credit of approximately HK$74.4 million will arise from the Capital Reduction and the Share Premium Reduction. Such amount will be transferred to the contributed surplus account of the Company

– 6 –

LETTER FROM THE BOARD

upon implementation of the Capital Reduction and the Share Premium Reduction. The contributed surplus of the Company will be applied to eliminate the accumulated losses of the Company, which amounted to approximately HK$71.7 million as at 30th September, 2004. Based on the above, the accumulated losses of the Company will be fully eliminated and there will be a surplus of approximately HK$2.7 million standing to the credit of the contributed surplus account of the Company following completion of the Capital Reorganisation.

Other than the expenses incurred in relation to the Capital Reorganisation, the implementation thereof will not alter the underlying assets, business operations, management or financial position of the Company or the interests or rights of the Shareholders, save for any fractional Consolidated Shares to which Shareholders may be entitled.

5. Conditions of the Capital Reorganisation

The Capital Reorganisation is conditional on:

• (i) the passing by the Shareholders of a special resolution to approve the Capital Reorganisation at the SGM;

• (ii) compliance with the relevant legal procedures and requirements under Bermuda law to effect the Capital Reorganisation; and

• (iii) the Listing Committee of the Stock Exchange granting approval for the listing of, and permission to deal in, the Consolidated Shares in issue and to be issued.

The Capital Reorganisation will be effective at the time when the above conditions are fulfilled, which is expected to be 4:00 p.m. on Monday, 23rd May, 2005.

6. Reasons for the Capital Reorganisation

The unaudited interim financial statements of the Company as at 30th September, 2004 showed that the Company had accumulated losses of approximately HK$71.7 million. The Directors consider that it would be inappropriate for the Company to pay dividends while the deficit remains and the Capital Reorganisation will facilitate such payment as and when appropriate in future. Based on the accumulated losses as at 30th September, 2004, the number of Existing Shares in issue as at the Latest Practicable Date and the unaudited balance of share premium account as at 31st March, 2005, it is expected that the accumulated losses of the Company will be fully eliminated upon the Capital Reduction becoming effective.

In view of the relatively low market value for each existing board lot of the Existing Shares, the Directors believe that the Share Consolidation will increase the value per share and reduce the transaction costs for dealing in the shares in the Company including charges with reference to the number of share certificates issued.

– 7 –

LETTER FROM THE BOARD

7. Trading arrangements

Upon the Capital Reorganisation becoming effective, all existing orange share certificates for any number of Existing Shares in issue immediately before the effective date will be deemed to be certificates, and will be effective as documents of title, for one twentieth of that number of Existing Shares. New share certificates (which will be yellow in colour) will be issued for Consolidated Shares. Parallel trading arrangements will be established on the Stock Exchange for dealings in Consolidated Shares in the form of the existing orange share certificates and in the form of the new yellow share certificates. The trading arrangements proposed for dealings in Consolidated Shares are set out as follows:

• (i) with effect from 9:30 a.m. on Tuesday, 24th May, 2005, the original counter for trading in Existing Shares in existing board lot of 4,000 Existing Shares will close temporarily. A temporary counter for trading in Consolidated Shares represented by existing orange share certificates in board lot of 200 Consolidated Shares will be established. Every existing certificate for whatever number of Existing Shares will be deemed to be a certificate, and will be effective as a document of title valid for settlement and delivery for trading transacted from 9:30 a.m. on Tuesday, 24th May, 2005 to 4:00 p.m. on Tuesday, 28th June, 2005 for Consolidated Shares, in the amount equivalent to one twentieth of that number of Existing Shares. The existing orange share certificates for Existing Shares can only be traded at this temporary counter;

• (ii) with effect from 9:30 a.m. on Tuesday, 7th June, 2005, the original counter will re-open for trading in Consolidated Shares in new board lot of 8,000 Consolidated Shares. Only new yellow share certificates for Consolidated Shares can be traded at this counter;

• (iii) with effect from 9:30 a.m. on Tuesday, 7th June, 2005 to 4:00 p.m. on Tuesday, 28th June, 2005 (both dates inclusive), there will be parallel trading at the counters mentioned in (i) and (ii) above; and

• (iv) the temporary counter for trading in Consolidated Shares represented by the existing orange share certificates in the board lot of 200 Consolidated Shares will be removed after the close of trading on Tuesday, 28th June, 2005. Thereafter, trading will only be in Consolidated Shares represented by new yellow share certificates in new board lot of 8,000 Consolidated Shares and the existing orange share certificates for Existing Shares will cease to be marketable and will not be acceptable for dealing and settlement purposes.

Subject to the Capital Reorganisation becoming effective on Monday, 23rd May, 2005, Shareholders may, during Tuesday, 24th May, 2005, to Tuesday, 5th July, 2005 (both dates inclusive), submit existing orange share certificates for Existing Shares to the Registrar in exchange, at the expense of the Company, for new yellow share certificates for Consolidated Shares (on the basis of 20 Existing Shares for one Consolidated Share). Thereafter, certificates for Existing Shares will be accepted for exchange only on payment of a fee of HK$2.50 (or such higher amount as may be allowed by the Stock Exchange from time to time) for each share certificate for Existing Shares cancelled or each new share certificate issued for Consolidated Shares, whichever number of certificates cancelled/issued is higher. Nevertheless, certificates for Existing Shares will continue to be good evidence of legal title and may be exchanged for certificates for Consolidated Shares at any time.

– 8 –

LETTER FROM THE BOARD

It is expected that new certificates for Consolidated Share will be available for collection within 10 business days after the submission of the existing share certificates for Existing Shares to the Registrar for exchange. Unless otherwise instructed, new share certificates will be issued in board lot of 8,000 Consolidated Shares each. New share certificates for Consolidated Shares will be yellow in colour to distinguish them from the existing share certificates for Existing Shares which are orange in colour.

Odd lots of Consolidated Shares may arise as a result of the Share Consolidation. In order to alleviate the difficulties in trading odd lots of Consolidated Shares, the Company has appointed Kingston Securities Limited to act as the agent to match, on a “best effort” basis, the sale and purchase of odd lots of Consolidated Shares arising from the Share Consolidation from Tuesday, 7th June, 2005 up to and including Tuesday, 28th June, 2005. Such arrangement is to facilitate Shareholders who wish to dispose of or top up their odd lots of Consolidated Shares. Shareholders who wish to take advantage of this facility should contact Ms. Rosita Kiu of Kingston Securities Limited at Suite 2801, 28th Floor, One International Finance Centre, 1 Harbour View Street, Central, Hong Kong (Tel: 2298 6215) during the aforesaid period. Shareholders should note that the matching of the sale and purchase of odd lots of Consolidated Shares is not guaranteed.

Shareholders are recommended to consult their licensed securities dealer, bank manager, solicitor, professional accountant or other professional adviser if they are in any doubt about the facility described above.

8. Listing and dealings

An application has been made to the Stock Exchange for the granting of the listing of, and permission to deal in, Consolidated Shares to be in issue upon the Capital Reorganisation becoming effective.

No part of the share capital of the Company is listed or dealt in on any other stock exchanges other than the Stock Exchange and no such listing or permission to deal is being or is currently proposed to be sought from any other stock exchange.

Dealings in Consolidated Shares on the branch register of members of the Company will be subject to Hong Kong stamp duty.

Subject to the granting of listing of, and permission to deal in, Consolidated Shares on the Stock Exchange, Consolidated Shares will be accepted as eligible securities by HKSCC for deposit, clearance and settlement in CCASS with effect from the commencement date of dealings in Consolidated Shares on the Stock Exchange or such other date 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.

CHANGE OF BOARD LOT SIZE

At present, Existing Shares are traded in board lot size of 4,000. The Board will change the board lot size of the Company to 8,000 Consolidated Shares upon the Capital Reorganisation becoming effective.

– 9 –

LETTER FROM THE BOARD

Based on the closing price of Existing Shares of HK$0.017 as at the Latest Practicable Date and the existing board lot size of 4,000 Existing Shares, the prevailing board lot value is HK$68 (equivalent to HK$1,360 upon the Capital Reorganisation becoming effective). On the basis of the aforesaid closing price and the new board lot size of 8,000 Consolidated Shares, the new board lot value would be HK$2,720. The change in board lot size will result in Consolidated Shares being traded in a more reasonable board lot size and value.

PROPOSED GRANT OF THE GENERAL MANDATES TO ALLOT, ISSUE AND REPURCHASE CONSOLIDATED SHARES

1. Current General Mandate

At the AGM, the Shareholders approved, among others, an ordinary resolution to grant the Directors the Current General Mandate to allot and issue not exceeding 220,544,038 Existing Shares, being 20% of the aggregate nominal amount of the issued share capital of the Company of 1,102,720,190 Existing Shares as at the date of the AGM.

Pursuant to the Current General Mandate, a maximum of 220,544,038 new Existing Shares are allowed to be allotted and issued before (i) the conclusion of the next annual general meeting of the Company; (ii) the expiration of the period within which the next annual general meeting of the Company is required by the bye-laws of the Company or any applicable law to be held; and (iii) the revocation or variation of the Current General Mandate by an ordinary resolution of the Shareholders in general meeting, whichever occurs first.

Since the last AGM, the Current General Mandate has not been utilised.

2. Proposed grant of the New General Mandate and the Repurchase Mandate

In February 2005, the Open Offer was completed. As a result thereof, the number of the issued Existing Shares has increased from 1,102,720,190 Existing Shares to 1,654,080,285 Existing Shares.

On the basis of 1,654,080,285 Existing Shares in issue, 82,704,014 Consolidated Shares will be in issue immediately following the Capital Reorganisation becoming effective which is expected to be 4:00 p.m. on 23rd May, 2005, the date of the SGM to be held.

In order to (i) replace the Current General Mandate to reflect the changes in the issued share capital as a result of the Open Offer and the Capital Reorganisation; and (ii) maintain the financial flexibility for the Group so that it is able to proceed with any equity financing exercise at any time should that be required, the Company will be convening the SGM at which an ordinary resolution will be proposed to the Shareholders that the Directors be granted the New General Mandate to allot and issue not exceeding 20% of the issued share capital of the Company as at the date of passing such resolution. At the SGM, resolutions will be also proposed to seek approval of the Shareholders in respect of the Repurchase Mandate and the extension of the New General Mandate in respect of any Consolidated Shares repurchased under the Repurchase Mandate.

– 10 –

LETTER FROM THE BOARD

Upon passing the resolutions at the SGM to approve the Capital Reorganisation, the New General Mandate and the extension thereof and the Repurchase Mandate as well as on the basis that no further Existing Shares will be issued and/or repurchased by the Company between the Latest Practicable Date and the date of the SGM, the Company would be allowed pursuant to the New General Mandate to allot and issue not exceeding 16,540,802 new Consolidated Shares, being 20% of 82,704,014 Consolidated Shares in issue as at the date of the SGM, together with such additional Consolidated Shares repurchased pursuant to the Repurchase Mandate. Pursuant to the Repurchase Mandate, the Company would also be able to repurchase up to 8,270,401 Consolidated Shares, being 10% of 82,704,014 Consolidated Shares in issue as at the date of the SGM. An explanatory statement as required by the Listing Rules to be sent to the Shareholders in connection with the Repurchase Mandate is set out in Appendix I to this circular.

PROPOSED REFRESHMENT OF THE SCHEME MANDATE LIMIT

An ordinary resolution was passed at the special general meeting of the Shareholders held on 30th December, 2002 to approve the adoption of the Share Option Scheme.

Pursuant to the Share Option Scheme, the maximum number of shares in the Company in respect of which options may be granted under the Share Option Scheme and any other share option scheme(s) of the Company shall not exceed 10% of the total number of issued shares in the Company as at the date of adoption of the Share Option Scheme. The Company may refresh the Scheme Mandate Limit by ordinary resolution of the Shareholders at general meeting provided that:

• (i) the Scheme Mandate Limit so refreshed shall not exceed 10% of the total number of issued shares in the Company as at the date of Shareholders’ approval of the refreshment of the Scheme Mandate Limit; and

• (ii) options previously granted under any existing schemes (including options outstanding, cancelled, or lapsed in accordance with the relevant scheme rules or exercised options) shall not be counted for the purpose of calculating the limit as refreshed.

Notwithstanding the foregoing, the maximum number of shares in the Company which may be issued upon exercise of all outstanding options granted and yet to be exercised under the Share Option Scheme and any other share option scheme(s) of the Company must not in aggregate exceed 30% of the total number of shares in the Company in issue from time to time.

Based on the total number of issued shares of the Company of 215,525,638 on the date of approval of the Share Option Scheme (taking into account the then capital reorganisation which became effective on the date immediately thereafter), the maximum number of shares in the Company that may be issued upon exercise of the options under the Scheme Mandate Limit is 21,552,563.

As at the Latest Practicable Date, there were in issue an aggregate of 1,654,080,285 Existing Shares (equivalent to 82,704,014 Consolidated Shares upon the Capital Reorganisation becoming effective). No options under the Share Option Scheme have been granted since its date of adoption and no options under the Share Option Scheme or any other share option scheme(s) of the Company were outstanding as at the Latest Practicable Date.

– 11 –

LETTER FROM THE BOARD

In order to reflect the changes in the issued share capital of the Company as a result of the Open Offer and the Capital Reorganisation, the Company will propose an ordinary resolution to approve the refreshment of the Scheme Mandate Limit by the Shareholders at the SGM.

Assuming no further issue or repurchase of Existing Shares prior to the SGM, upon the Capital Reorganisation and the refreshment of the Scheme Mandate Limit being approved by the Shareholders at the SGM and becoming unconditional and effective, the Company may grant options entitling holders thereof to subscribe for 8,270,401 Consolidated Shares (representing 10% of Consolidated Shares in issue as at the date of the SGM). No options may be granted if this will result in the number of Consolidated Shares which may be issued upon exercise of all outstanding options granted and yet to be exercised under the Share Option Scheme and any other share option scheme(s) of the Company exceed 30% of Consolidated Shares in issue from time to time.

The purpose of the Share Option Scheme is to provide any directors (including executive, nonexecutive directors and independent non-executive directors) and employees of the Group and any advisers (professional or otherwise), consultants, distributors, contractors, suppliers, agents, customers, business partners, joint venture business partners, promoters, service providers of any member of the Group who the Board considers, in its sole discretion, have contributed to the Group and its shareholders with the opportunity to acquire proprietary interests in the Company and to encourage such persons or organisations to work towards enhancing the value of the Company and the shares in which for the benefits of the Company and the Shareholders as a whole.

The refreshment of the Scheme Mandate Limit is conditional on:

• (i) the Capital Reorganisation becoming unconditional and effective;

• (ii) the passing of an ordinary resolution to approve the refreshment of the Scheme Mandate Limit by the Shareholders at the SGM; and

• (iii) the Listing Committee of the Stock Exchange granting approval for the listing of, and permission to deal, in the Consolidated Shares (representing a maximum of 10% of Consolidated Shares in issue as at the date of the SGM approving the refreshment of the Scheme Mandate Limit) which may fall to be issued pursuant to the exercise of options under the Share Option Scheme and any other share option scheme(s) of the Company.

Application has been made to the Listing Committee of the Stock Exchange for the granting of the listing of, and permission to deal in, Consolidated Shares (representing a maximum of 10% of Consolidated Shares in issue as at the date of the SGM approving the refreshment of the Scheme Mandate Limit) which may fall to be issued pursuant to the exercise of options under the Share Option Scheme and any other share option scheme(s) of the Company.

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LETTER FROM THE BOARD

SGM

A notice of the SGM which is to be held at Plaza I-III, Lower Lobby, Novotel Century Hong Kong, 238 Jaffe Road, Wanchai, Hong Kong on Monday, 23rd May, 2005 at 9:30 a.m. is set out on pages 18 to 21 of this circular for the purpose of considering and, if thought fit, approving the Capital Reorganisation, the New General Mandate and the extension thereof, the Repurchase Mandate and the refreshment of the Scheme Mandate Limit.

The form of proxy for use at the SGM is enclosed with this circular. If you are not able to attend the SGM, you are requested to complete the enclosed form of proxy in accordance with the instructions printed thereon and return it to the principal place of business of the Company in Hong Kong as soon as possible and in any event not later than forty-eight (48) hours before the time appointed for holding of the SGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the SGM or any adjournment of it, if you so wish.

RIGHT TO DEMAND POLL

Pursuant to bye-law 66 of bye-laws of the Company, a resolution put to the vote of a general meeting shall be decided on a show of hands unless (before or on the declaration of the result of the show of hands or on the withdrawal of any other demand for a poll) a poll is demanded:

• (a) by the chairman of such meeting; or

• (b) by at least three members present in person (or in case of a member being a corporation by its duly authorised representative) or by proxy for the time being entitled to vote at the meeting; or

• (c) by a member or members present in person (or in the case of member being a corporation by its duly authorised representative) or by proxy and representing not less than one-tenth of the total voting rights of all members having the right to vote at the meeting; or

• (d) by a member or members present in person (or in the case of a member being a corporation by its duly authorised representative) or by proxy and holding shares in the Company conferring a right to vote at the meeting being shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all shares conferring that right.

A demand by a person as proxy for a member or in the case of a member being a corporation by its duly authorised representative shall be deemed to be the same as a demand by a member.

RECOMMENDATION

The Directors believe that the Capital Reorganisation, the New General Mandate and the extension thereof, the Repurchase Mandate and the refreshment of the Scheme Mandate Limit are fair and reasonable and in the interests of the Company and the Shareholders as a whole and therefore recommend the Shareholders to vote in favour of the resolutions to be proposed at the SGM to approve the aforesaid proposals.

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LETTER FROM THE BOARD

DIRECTORS[’] RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Group. The Directors collectively and individually accept full responsibility for the accuracy of the information contained in this circular, and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, there are no other facts the omission of which would make any statement herein misleading.

Yours faithfully, For and on behalf of the Board Lo Ming Chi, Charles Chairman

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EXPLANATORY STATEMENT

APPENDIX I

This appendix serves as an explanatory statement, as required by the Listing Rules, to provide requisite information for the Shareholders to consider the Repurchase Mandate.

1. STOCK EXCHANGE RULES FOR REPURCHASES OF SHARES

The Listing Rules permit companies with a primary listing on the Stock Exchange to repurchase their shares on the Stock Exchange subject to certain restrictions.

The Listing Rules provide that all proposed repurchases of shares by a company with a primary listing on the Stock Exchange must be approved by shareholders in advance by an ordinary resolution either by way of a general mandate or by a specific approval of a particular transaction and that the shares to be repurchased must be fully paid up.

2. SHARE CAPITAL

As at the Latest Practicable Date, the issued share capital of the Company comprised 1,654,080,285 Existing Shares (equivalent to 82,704,014 Consolidated Shares upon the Capital Reorganisation becoming effective).

Subject to the passing of the relevant ordinary resolutions to approve the Capital Reorganisation, New General Mandate and the Repurchase Mandate and on the basis that no further Existing Shares are issued and/or repurchased by the Company between the Latest Practicable Date and the date of the SGM, the Company would be allowed under the Repurchase Mandate to repurchase a maximum of 8,270,401 Consolidated Shares.

3. REASONS FOR REPURCHASES

The Directors believe that the Repurchase Mandate is in the best interest of the Company and the Shareholders as a whole. Repurchases of Consolidated Shares made under the Repurchase Mandate may, depending on market conditions and funding arrangements at the time, lead to an enhancement of the value of the Company’s net assets and will only be done when the Directors consider that such repurchases will benefit the Company and the Shareholders as a whole.

4. FUNDING OF REPURCHASES

In repurchasing Consolidated Shares, the Company may only apply funds legally available for such purpose in accordance with its memorandum of association and bye-laws and the applicable laws of Bermuda. The Companies Act 1981 of Bermuda 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 out of funds of the Company that would otherwise be available for dividend or distribution or out of the proceeds of a fresh issue of shares made for the purpose. The amount of premium payable on repurchase may 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 before the shares are repurchased.

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EXPLANATORY STATEMENT

APPENDIX I

There might be an adverse impact on the working capital or gearing position of the Company (as compared with the position disclosed in the audited financial statements for the year ended 31st March, 2004) in the event that the Repurchase Mandate was to be exercised in full. However, the Directors do not propose to exercise the Repurchase Mandate to such extent as would, in the circumstances, have a material adverse affect on the working capital requirements of the Company or the gearing levels which in the opinion of the Directors are from time to time appropriate for the Company.

5. SHARE PRICES

The highest and lowest prices at which the Existing Shares were traded on the Stock Exchange during each of the twelve months preceding the Latest Practicable Date were as follows:

	Per Existing Share	Per Existing Share
Month	Highest	Lowest
	HK$	HK$
2004
April	0.078	0.068
May	0.071	0.060
June	0.074	0.059
July	0.073	0.059
August	0.069	0.059
September	0.090	0.061
October	0.111	0.051
November	0.076	0.051
December	0.061	0.040
2005
January	0.069	0.040
February	0.047	0.038
March	0.040	0.029
April (up to the Latest Practicable Date)	0.035	0.015

6. UNDERTAKING

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.

7. EFFECT OF THE CODE ON TAKEOVERS AND MERGERS

A repurchase of Existing Shares or Consolidated Shares by the Company may result in an increase in the proportionate interests of a substantial Shareholder 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 Code on Takeovers and Mergers.

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EXPLANATORY STATEMENT

APPENDIX I

As at the Latest Practicable Date, to the best of the knowledge and belief of the Company, Vision Century Group Limited (“Vision Century”), was interested in 61.86% of the total issued share capital of the Company. In the event that the Directors exercise in full the power to repurchase Consolidated Shares which is proposed to be granted pursuant to the resolution, the shareholding of Vision Century in the Company would be increased to approximately 68.73% 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 on Takeovers and Mergers in relation to Vision Century as it already held more than 50% of the total issued share capital of the Company as at the Latest Practicable Date.

Any repurchase of Consolidated Shares which would result in the number of Consolidated Shares held by the public being reduced to less than 25% of Consolidated 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 waiver of this provision would not normally be given other than in exceptional circumstances. The Directors do not have any present intention to repurchase Consolidated Shares to an extent which would result in the amount of Consolidated Shares held by the public being reduced to less than 25%.

8. DIRECTORS, THEIR ASSOCIATES AND CONNECTED PERSONS

None of the Directors nor, to the best of their knowledge and belief and 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 Consolidated 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 Consolidated Shares to the Company nor has he/she undertaken not to sell any of Consolidated Shares held by him/her to the Company in the event that the Company is authorised to make repurchases of Consolidated Shares.

9. SHARE REPURCHASE MADE BY THE COMPANY

The Company had not repurchased any Existing Shares (whether on the Stock Exchange or otherwise) in the six months preceding the Latest Practicable Date.

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NOTICE OF SGM

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

NOTICE IS HEREBY GIVEN that a special general meeting of Xin Corporation Limited (the “Company”) will be held at Plaza I-III, Lower Lobby, Novotel Century Hong Kong, 238 Jaffe Road, Wanchai, Hong Kong on Monday, 23rd May, 2005 at 9:30 a.m. for the purposes of considering and, if thought fit, passing with or without amendments, the following resolutions of the Company:

SPECIAL RESOLUTION

“THAT , conditional upon the Listing Committee of The Stock Exchange of Hong Kong Limited approving the listing of, and granting the permission to deal in, shares of HK$0.01 each in the issued share capital of the Company upon the Capital Reorganisation (as defined below) becoming effective, with effect from 4:00 p.m. on the date on which this resolution is passed (the “Effective Date”):

• (a) the issued share capital of the Company be reduced by cancelling paid up capital to the extent of HK$0.0095 on each of the shares of HK$0.01 in the capital of the Company in issue on the Effective Date (the “Capital Reduction”) so that each issued share in the capital of the Company shall be treated as one fully-paid up share of HK$0.0005 each in the capital of the Company (the “Reduced Share”) and any liability of the holders of Reduced Shares to make any further contribution to the capital of the Company on each such Reduced Share shall be treated as satisfied;

• (b) the entire amount standing to the credit of the share premium account of the Company as at 31st March, 2005 be cancelled (the “Share Premium Cancellation”);

• (c) subject to and forthwith upon the Capital Reduction and the Share Premium Cancellation taking effect, the credit amounts arising from the Capital Reduction and the Share Premium Cancellation be credited to the contributed surplus account of the Company where they may be utilised in accordance with the bye-laws of the Company and all applicable laws, including to set off the accumulated losses of the Company as at 30th September, 2004 (the “Application of Credit”);

• (d) subject to and forthwith upon the Capital Reduction and Share Premium Cancellation, every twenty (20) Reduced Shares be consolidated into one (1) share of HK$0.01 each (the “Consolidated Share”) in the capital of the Company (the “Share Consolidation”); and

* For identification only

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NOTICE OF SGM

• (e) the directors of the Company (the “Directors”) be and are hereby authorised generally to do all such acts, deeds and things as they shall, in their absolute discretion, deem appropriate to effect and implement the Capital Reduction, the Share Premium Cancellation, the Application of Credit and the Share Consolidation (collectively, the “Capital Reorganisation”)”.

ORDINARY RESOLUTION NO. 1

“ THAT , conditional upon the Capital Reorganisation (as defined in the Special Resolution) becoming unconditional and effective:

• (a) subject to paragraph (c) below, the exercise by the Directors during the Relevant Period (as defined below) of all the powers of the Company to allot, issue and deal with additional shares in the capital of the Company and to make or grant offers, agreements and options which might require the exercise of such power be and is hereby generally and unconditionally approved in substitution for and to the exclusion of any existing authority previously granted;

• (b) the approval in paragraph (a) above shall authorise the Directors during the Relevant Period to make or grant offers, agreements and options which might require the exercise of such power after the end of the Relevant Period;

• (c) the aggregate nominal amount of share capital allotted or agreed conditionally or unconditionally to be allotted (whether pursuant to an option or otherwise) by the Directors pursuant to the approval in paragraph (a) above, otherwise than pursuant to the Rights Issue (as defined below) or the exercise of the subscription rights under the share option scheme of the Company, shall not exceed 20 per cent. of the aggregate nominal amount of the share capital of the Company in issue as at the date of this resolution and the said approval shall be limited accordingly; and

• (d) for the purposes of this resolution:

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

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

• (ii) the expiration of the period within which the next annual general meeting of the Company is required by the bye-laws of the Company or any applicable law to be held; and

• (iii) the revocation or variation of this resolution by an ordinary resolution of the shareholders of the Company in general meeting.

“Rights Issue” means an offer of shares open for a period fixed by the Directors to holders of shares on the Register of Members of the Company on fixed record date in proportion to their then holdings of such shares (subject to such exclusion or other arrangements as the Directors may deem necessary or expedient in relation to fractional entitlements or having

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NOTICE OF SGM

regard to and 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).”

ORDINARY RESOLUTION NO. 2

“ THAT , conditional upon the Capital Reorganisation (as defined in the Special Resolution) becoming unconditional and effective:

• (a) subject to paragraph (b) below, the exercise by the Directors during the Relevant Period (as defined in paragraph (d) of Ordinary Resolution No. 1 above) of all powers of the Company to repurchase shares of the Company on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) or on any other stock exchange recognised, for this purpose by the Securities and Futures Commission and the Stock Exchange, subject to and in accordance with all applicable laws and requirements, be and is hereby generally and unconditionally approved; and

• (b) the aggregate nominal amount of shares of the Company repurchased by the Company pursuant to the approval in paragraph (a) above shall not exceed 10 per cent. of the aggregate nominal amount of the share capital of the Company in issue as at the date of this resolution and the said approval be limited accordingly.”

ORDINARY RESOLUTION NO. 3

“ THAT conditional upon (i) the passing of Ordinary Resolution Nos. 1 and 2 set out in the notice convening this meeting being duly passed; and (ii) the Capital Reorganistion (as defined in the Special Resolution) becoming unconditional and effective, the general mandate granted to the Directors to exercise the power of the Company to allot, issue and deal with additional shares pursuant to Ordinary Resolution No. 1 above be and is hereby extended by the addition to the aggregate nominal amount of the share capital which may be allotted or agreed conditionally or unconditionally to be allotted by the Directors pursuant to such general mandate of an amount representing the aggregate nominal amount of the share capital of the Company repurchased by the Company under the authority granted pursuant to Ordinary Resolution No. 2 above, provided that such an amount shall not exceed 10 per cent. of the aggregate nominal amount of the issued share capital of the Company as at the date of passing this resolution.”

ORDINARY RESOLUTION NO. 4

“ THAT subject to and conditional upon (i) the Capital Reorganisation (as defined in the Special Resolution) becoming unconditional and effective; (ii) the Listing Committee of The Stock Exchange of Hong Kong Limited granting the listing of and permission to deal in the ordinary shares of HK$0.01 each in the capital of the Company (representing a maximum of 10 per cent. of the ordinary shares of the Company in issue as at the date of passing this resolution) which may be issued pursuant to the exercise of options granted under the Company’s share option scheme adopted on 30th December, 2002 (the “Scheme”), the scheme limit on grant of options under the Scheme and any other share option scheme(s) of the Company be refreshed so that it be and is hereby increased to that number of shares equal to 10 per cent. of the ordinary shares of the

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NOTICE OF SGM

Company in issue as at the date of passing this resolution (“Refreshed Mandate Limit”) and any director of the Company be and is hereby authorised to do such act and execute such document to effect the Refreshed Mandate Limit.”

By order of the Board Yu Wai Man Company Secretary

Hong Kong, 29th April, 2005

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

Head Office and Principal Place

of Business in Hong Kong:

Room 2107, 21st Floor Nan Fung Tower 173 Des Voeux Road Central Hong Kong

Notes:

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

2. The instrument appointing a proxy shall be in writing under the hand of the appointor or his attorney duly authorised in writing or, if the appointor is a corporation, either under its seal or under the hand of an officer, attorney or other person authorised to sign the same.

3. The instrument appointing a proxy and the power of attorney or other authority (if any) under which it is signed, or a certified copy of such power or authority, shall be delivered to the principal place of business of the Company in Hong Kong at Room 2107, 21st Floor, Nan Fung Tower, 173 Des Voeux Road Central, Hong Kong not less than forty-eight (48) hours before the time appointed for holding the meeting at which the person named in the instrument proposes to vote and in default the instrument of proxy shall not be treated as valid.

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

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

As at the date of this notice, the Board comprises Mr. Lo Ming Chi, Charles (Chairman), Mr. Yu Wai Man, Mr. Wilson Ng, Mr. Ng Wee Keat and Mr. Ng Eng Leng as executive directors and Mr. Wong Kwok Tai, Mr. Lau Pok Lam and Mr. Ko Kwong Woon, Ivan as independent non-executive directors.

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