PegBio Co., Ltd. — Proxy Solicitation & Information Statement 2006

Mar 13, 2006

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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.

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 licensed securities dealer, other licensed corporation, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Xin Corporation Limited (the “Company”), 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, other licensed corporation or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

This circular is for information purpose only and does not constitute an invitation or offer to acquire, purchase or subscribe for the shares or other securities of the Company.

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(Incorporated in Bermuda with limited liability)

(Stock Code: 1141)

CONNECTED TRANSACTION RELATING TO THE PROPOSED ISSUE OF CONVERTIBLE NOTE

Financial adviser to Xin Corporation Limited

SOMERLEY LIMITED

Independent financial adviser to the independent board committee and the independent shareholders of Xin Corporation Limited

A letter from the board of directors of the Company is set out on pages 4 to 13 of this circular. A letter from the independent board committee of the Company and a letter from Dao Heng Securities Limited containing their recommendations and advices are set out on on page 14 and pages 15 to 29 of this circular respectively.

A notice convening a special general meeting of the Company to be held at Plaza IV, Lower Lobby, Novotel Century Hong Kong, 238 Jaffe Road, Wanchai, Hong Kong on Monday, 27th March, 2006 at 10:00 a.m. is set out on pages 34 to 35 of this circular. If you are not able to attend the meeting of the Company, you are requested to complete the accompanying 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 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 meeting of the Company or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the meeting of the Company or any adjournment thereof if you so wish.

* For identification only

10th March, 2006

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Letter from the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
Letter from Dao Heng Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	15
Appendix – General information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	30
Notice of Special General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	34

DEFINITIONS

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

• “Announcement” the announcement of the Company dated 17th February, 2006 in relation to the proposed issue of Convertible Note

• “associates” has the meaning ascribed to it under the Listing Rules “Board” the board of Directors “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

• “Completion” completion of the Subscription Agreement in accordance with its terms and conditions

• “Completion Date” the first business day following the date on which all the conditions precedent to the Subscription Agreement are fulfilled

• “Conversion Price” the initial conversion price of HK$0.205, subject to adjustment pursuant to the terms and conditions of the Convertible Note

• “Conversion Shares” Shares to be allotted and issued by the Company upon exercise of the conversion rights attached to the Convertible Note

• “Convertible Note” a convertible note with an aggregate principal amount of HK$37,000,000, bearing interest at 1% per annum on the principal amount outstanding from time to time, to be issued by the Company in accordance with the provisions of the Subscription Agreement

• “Dao Heng Securities” Dao Heng Securities Limited, the independent financial adviser to the Independent Board Committee and the Independent Shareholders in connection with the terms of the Subscription Agreement and the Convertible Note, being a corporation licensed under the SFO to conduct types 1 (dealing in securities), 4 (advising on securities) and 6 (advising on corporate finance) regulated activities

• “Director(s)” the director(s) of the Company

• “Facility” a credit facility for the amount of HK$50 million granted to the Group by Vision Century pursuant to a loan facility agreement dated 2nd July, 2003 (as supplemented on 29th October, 2004)

• “Group”

the Company and its subsidiaries

– 1 –

DEFINITIONS

“Hong Kong”

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

• “Independent Board Committee” independent board committee of the Company constituted by the three independent non-executive Directors, comprising Mr. Wong Kwok Tai, Mr. Lau Pok Lam and Mr. Ko Kwong Woon, Ivan

• “Independent Shareholders” Shareholders other than the Subscriber and its associates

• “Latest Practicable Date” 8th March, 2006, being the latest practicable date prior to the printing of this circular for the purpose of ascertaining certain information for inclusion in this circular

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

• “Loan” the loan drawn down by the Company under the Facility in the principal amount of HK$31,377,540 as at the Latest Practicable Date

• “Maturity Date” the date preceding the third anniversary of the date of issue of the Convertible Note

• “SFO” Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)

• “Share(s)” ordinary share(s) of HK$0.01 each in the issued share capital of the Company

• “Shareholder(s)” holder(s) of the Shares

• “Special General Meeting” the special general meeting of the Company to be held at Plaza IV, Lower Lobby, Novotel Century Hong Kong, 238 Jaffe Road, Wanchai, Hong Kong on Monday, 27th March, 2006 at 10:00 a.m. for the purpose of considering and, if thought fit, approving the Subscription Agreement and the issue of the Convertible Note

• “Stock Exchange” The Stock Exchange of Hong Kong Limited

• “Subscriber” or “Vision Century”

Vision Century Group Limited, a company incorporated in the British Virgin Islands, being the controlling Shareholder interested in approximately 61.9% of the issued share capital of the Company as at the Latest Practicable Date

– 2 –

DEFINITIONS

the subscription agreement dated 15th February, 2006 entered into between the Company and the Subscriber in relation to the subscription of the Convertible Note and as supplemented by an agreement dated 17th February, 2006

“Subscription Agreement” the subscription agreement dated 15th February, 2006 entered into between the Company and the Subscriber in relation to the subscription of the Convertible Note and as supplemented by an agreement dated 17th February, 2006 “HK$” Hong Kong dollars, the lawful currency of Hong Kong “%” per cent.

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LETTER FROM THE BOARD

(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

10th March, 2006

To the Shareholders

Dear Sir or Madam,

CONNECTED TRANSACTION RELATING TO THE PROPOSED ISSUE OF CONVERTIBLE NOTE

INTRODUCTION

The Board announced on 17th February, 2006 that the Company had entered into the Subscription Agreement with the Subscriber pursuant to which the Company agreed to issue the Convertible Note in the principal amount of HK$37,000,000 to the Subscriber. As at the Latest Practicable Date, HK$37,661,225 (being the principal amount of the Loan in the sum of HK$31,377,540 and accrued interest in the sum of HK$6,283,685 calculated up to the Latest Practicable Date) was owed by the Company to the Subscriber. The Subscriber agreed to release and discharge the Company from its obligations and liabilities for the amount of HK$37,000,000 owed by the Company to the Subscriber upon the issue of the Convertible Note. The Company will, upon Completion, settle the remaining accrued interest in the sum of HK$661,225 calculated up to the Latest Practicable Date and any further interest to be accrued up to the Completion Date by cash from internal resources of the Group.

Vision Century, the Subscriber and the controlling Shareholder, was interested in approximately 61.9% of the issued share capital of the Company as at the Latest Practicable Date and is therefore a connected person of the Company. Accordingly, the transactions contemplated under the Subscription Agreement, including the issue of the Convertible Note, constitute connected transactions of the Company under the Listing Rules. The Subscription Agreement and all matters contemplated thereunder, including

* For identification only

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LETTER FROM THE BOARD

the issue of the Convertible Note, are subject to the approval of the Independent Shareholders by way of a poll at the Special General Meeting where Vision Century and its associates will be required to abstain from voting.

The Independent Board Committee, comprising Mr. Wong Kwok Tai, Mr. Lau Pok Lam and Mr. Ko Kwong Woon, Ivan, has been constituted to advise the Independent Shareholders relating to the Subscription Agreement and the issue of the Convertible Note. Dao Heng Securities has been appointed to advise the Independent Board Committee and the Independent Shareholders in this regard.

The purpose of this circular is to provide you with, among other things, (i) details of the Subscription Agreement and the Convertible Note; (ii) a letter of recommendation from the Independent Board Committee to the Independent Shareholders; (iii) a letter of advice from Dao Heng Securities to the Independent Board Committee and the Independent Shareholders on the terms of the Subscription Agreement and the Convertible Note; and (iv) a notice of the Special General Meeting of the Company.

THE SUBSCRIPTION AGREEMENT

Date : 15th February, 2006 Issuer : the Company

• Subscriber : Vision Century Group Limited, the controlling Shareholder interested in approximately 61.9% of the issued share capital of the Company as at the Latest Practicable Date

The Subscriber is an investment holding company, the principal asset of which is the investment in the Company.

Conditions:

Completion of the Subscription Agreement is conditional upon:

• (i) the Listing Committee of the Stock Exchange having granted (either unconditionally or subject only to conditions to which neither the Company nor the Subscriber shall reasonably object) listing of and permission to deal in the Conversion Shares;

• (ii) if required, the Stock Exchange or any relevant regulatory authorities shall have approved and not withdrawn approval for the issue of the Convertible Note and the transactions contemplated under the Subscription Agreement (either unconditionally or subject only to conditions to which neither the Company nor the Subscriber shall reasonably object and the fulfilment of such conditions);

• (iii) if required, all consents or approvals of, and all filings with, any relevant governmental or regulatory authorities and other third parties in Bermuda; and

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LETTER FROM THE BOARD

• (iv) the approval of the Independent Shareholders having been obtained at a duly convened shareholders’ meeting of the Company to approve the Subscription Agreement and all matters contemplated thereunder, including the issue of the Convertible Note.

None of the above conditions is capable of being waived. If any of the above conditions are not fulfilled on or before 30th April, 2006 (or such later date as may be agreed between the Subscriber and the Company), the Subscription Agreement shall lapse and become null and void and the parties to the Subscription Agreement shall be released from all obligations thereunder. None of the parties shall have any claims against the others for costs, damages, compensation or otherwise, save for any liability arising out of any antecedent breaches thereof.

Completion:

Subject to fulfilment of the aforesaid conditions precedent to the Subscription Agreement, Completion shall take place before 5:00 p.m. on the first business day following the date on which all the conditions precedent to the Subscription Agreement have been fulfilled, or such other time and date as the Company and the Subscriber may agree in writing.

On Completion, the Subscriber shall deliver a waiver to the Company under which the Subscriber shall release and discharge the Company from its obligations and liabilities for the amount of HK$37,000,000 owed by the Company to the Subscriber.

PRINCIPAL TERMS OF THE CONVERTIBLE NOTE

Issuer : the Company Principal : HK$37,000,000 Amount Maturity : Unless previously converted or repaid, the Convertible Note will mature on the date preceding the third anniversary of the date of its issue. Interest : 1% per annum on the principal amount of the Convertible Note outstanding from time to time, payable semi-annually in arrears on 31st March and 30th September each year. Conversion : Subject to the terms and conditions of the Convertible Note, holder(s) of the Convertible Note will have the right to convert on any business day (prior to the earlier of (1) the date on which a notice is given by the Company exercising its rights attached to the Convertible Note to redeem the whole or a part of the principal amount of the Convertible Note, or (2) five business days prior to the Maturity Date) the whole or part of the outstanding principal amount of the Convertible Note (in an amount or integral multiple of HK$500,000) into Shares at any time and from time to time at the initial conversion price of HK$0.205 per Conversion Share, subject to adjustment as detailed below.

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LETTER FROM THE BOARD

The Conversion Price is subject to adjustment from time to time for (1) any consolidation or subdivision of Shares; (2) issue of new Shares by way of capitalisation of profits or reserves; (3) capital distribution; (4) rights issue or grant of option or warrants to subscribe for new Shares; (5) issue of other securities which are convertible or exchangeable into Shares for cash at an effective price which is less than 90% of the then prevailing market price; or the effective price of Shares receivable from the rights of conversion or exchange of such securities are modified to be less than 90% of the then prevailing market price; and (6) issue of Shares at a price which is less than 90% of the then prevailing market price for cash.

The holder(s) of the Convertible Note including the subsequent transferee(s) shall be entitled to exercise the conversion right to convert the whole or part of the outstanding principal amount of the Convertible Note into new Shares to the extent that such conversion will not cause the public float of the Company to fall below the minimum public float requirement under Rule 8.08 and Rule 13.32 of the Listing Rules.

The Conversion Price represents:

• (i) the closing price of HK$0.205 per Share as quoted on the Stock Exchange on 15th February, 2006, being the last trading day on which the Shares were traded on the Stock Exchange prior to the release of the Announcement;

• (ii) a premium of approximately 1.0% over the weighted average closing price of approximately HK$0.203 per Share for the five trading days (excluding those trading days without trading volume) ended on 15th February, 2006, being the last trading day on which the Shares were traded on the Stock Exchange prior to the release of the Announcement; and

• (iii) a premium of approximately 2.5% over the closing price of HK$0.200 per Share as quoted on the Stock Exchange as at the Latest Practicable Date.

The Conversion Price was determined after arm’s length negotiations between the Company and the Subscriber with reference to the weighted average closing price of the Shares for the five trading days (excluding those trading days without trading volume) ended on 15th February, 2006, being the date of the subscription agreement entered into between the Company and the Subscriber.

No fraction of a Share will be issued on conversion of the Convertible Note. Fractional entitlements shall be ignored and any sum paid by the Subscriber in respect thereof shall be retained by the Company for its own benefit.

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LETTER FROM THE BOARD

• Conversion : The Conversion Shares shall, when issued, rank pari passu in all respects Shares with all the Shares then in issue and be entitled to all dividends and other distributions, the record date of which falls on a date on or after the date of the conversion notice.

There were 82,704,014 Shares in issue as at the Latest Practicable Date. Upon full conversion of the entire principal amount of the Convertible Note into Conversion Shares at the initial conversion price of HK$0.205 (subject to adjustment), a total of 180,487,804 Conversion Shares will be issued, which represents approximately 218.2% of the issued share capital of the Company as at the Latest Practicable Date and approximately 68.6% of the issued share capital of the Company as enlarged by such conversion, assuming no other Shares are issued before full conversion of the Convertible Note.

• Early : The Company may at any time prior to the Maturity Date, by giving not Redemption less than 5 business days’ prior notice to the holder(s) of the Convertible Note, repay the whole or part only (in an amount or integral multiple of HK$500,000) of the outstanding principal amount of the Convertible Note together with the outstanding interest accrued thereon in accordance with the terms and conditions of the Convertible Note.

• Transferability : The Convertible Note may be assigned or transferred subject to compliance of the terms and conditions of the Convertible Note and further subject to the conditions, approvals, requirements and any other provisions of or under (i) the Stock Exchange (and any other stock exchange on which the Shares may be listed at the relevant time) or their rules and regulations; (ii) the approval for listing in respect of the Conversion Shares; and (iii) all applicable laws and regulations.

Save with the prior written approval of the Company, none of the Convertible Note or any part thereof may be transferred to a connected person of the Company (as defined in the Listing Rules).

• Voting : Holder(s) of the Convertible Note will not be entitled to receive notices of, attend or vote at any general meetings of the Company by reason only of it being a holder of the Convertible Note.

• Listing : The Convertible Note will not be listed on the Stock Exchange or any other stock exchange. An application will be made to the Stock Exchange for the listing of and permission to deal in the Conversion Shares to be issued upon the exercise of the conversion rights attached to the Convertible Note.

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LETTER FROM THE BOARD

SHAREHOLDING STRUCTURE OF THE COMPANY

The effect of the full conversion of the Convertible Note on the shareholding structure of the Company is as follows:

Shareholders Vision Century_(Note)_ Independent Shareholders	As at the Latest Practicable Date Number of Shares % 51,157,196 61.9 31,546,818 38.1 82,704,014 100.0	Assuming full conversion of the Convertible Note Number of Shares % 231,645,000 88.0 31,546,818 12.0 263,191,818 100.0	Assuming full conversion of the Convertible Note Number of Shares % 231,645,000 88.0 31,546,818 12.0 263,191,818 100.0
			100.0

• Note: Vision Century is a wholly-owned subsidiary of Huang Worldwide Holding Limited, which is in turn wholly owned by Huang Group (BVI) Limited. Huang Group (BVI) Limited is wholly owned by a discretionary trust, of which Mr. Ng (Huang) Cheow Leng is the settlor and Mr. Kan Ka Chong, Frederick is the trustee. Mr. Ng (Huang) Cheow Leng, Mr. Wilson Ng and Mr. Ng Wee Keat are discretionary beneficiaries of the trust.

The Stock Exchange has stated that if, upon the issue of the Conversion Shares, less than 25% of the Shares are held by the public or if the Stock Exchange believes that:

• a false market exists or may exist in the trading of the Shares; or

• there are too few Shares in public hands to maintain an orderly market,

then it will consider exercising its discretion to suspend trading in the Shares until a sufficient level of public float is attained.

Vision Century has undertaken to the Company that, so long as the conversion rights attached to the Convertible Note remains valid and subsisting, it will not cause the public float of the Company to fall below the minimum public float requirement under Rule 8.08 and Rule 13.32 of the Listing Rules as a result of it allowing, causing, or procuring any part of the Convertible Note to be converted into new Shares.

REASONS FOR THE ISSUE OF THE CONVERTIBLE NOTE AND USE OF PROCEEDS

The principal activities of the Group are the provision of supply and procurement business. The Group recorded net losses of approximately HK$30.9 million and HK$11.1 million for each of the two years ended 31st March, 2004 and 2005 respectively. In order to provide continuing financial support to the Group, the Subscriber has granted the Facility of HK$50 million to the Group pursuant to a loan facility agreement dated 2nd July, 2003 (as supplemented on 29th October, 2004) which will be expired by October 2006. The Group has since then utilised the Facility. As at the Latest Practicable Date, HK$37,661,225 (being the principal amount of the Loan in the sum of HK$31,377,540 and accrued interest in the sum of HK$6,283,685 calculated up to the Latest Practicable Date) was owed by the

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LETTER FROM THE BOARD

Company to the Subscriber. The Subscriber has agreed to release and discharge the Company from its obligations and liabilities of HK$37,000,000 owed by the Company to the Subscriber upon the issue of the Convertible Note. The Company will, upon Completion, settle the remaining accrued interest in the sum of HK$661,225 calculated up to the Latest Practicable Date and any further interest to be accrued up to the Completion Date by cash from internal resources of the Group.

The Loan is unsecured and bears interest at prime rate quoted from time to time by The Hongkong and Shanghai Banking Corporation Limited plus 3% per annum. The interest expenses incurred in respect of the Loan for each of the two years ended 31st March, 2004 and 2005 were approximately HK$1.9 million and HK$2.1 million respectively. The other secured bank borrowings and unsecured borrowings obtained by the Group before Vision Century became the controlling Shareholder in 2002 bear interests ranging from 4.0% to 6.4% per annum at present. The Facility and the other borrowings were negotiated and agreed by the Group at different financial years. Having regard to the then financial position of the Group, the then economic environment in general and the unsecured nature of the Facility, the Board considers that the interest rate of the Facility to be on normal commercial terms. Based on the interest rate of 1% per annum of the Convertible Note, the annual interest expense of the Convertible Note is expected to be HK$370,000 which is significantly less than the interest expenses which would otherwise be borne by the Company under the Facility.

The terms of the Subscription Agreement and the Convertible Note have been arrived at after arm’s length negotiations between the Company and the Subscriber and are on normal commercial terms. Given that (i) there will be interest saving for the Group from the issue of the Convertible Note; (ii) the issue of the Convertible Note would not have immediate dilution effect to the Shareholders; and (iii) the long term feature of the Convertible Note as compared to that of the Facility expiring in October 2006, the Directors (including the independent non-executive Directors) consider the Subscription Agreement and the issue of the Convertible Note are in the interests of the Company and the Shareholders as a whole and the terms of the Subscription Agreement and the Convertible Note are fair and reasonable so far as the Company and the Independent Shareholders are concerned.

DILUTION EFFECT ON SHAREHOLDERS

In view of the future dilution to existing Shareholders on the exercise of the conversion rights attached to the Convertible Note, the Company will keep the Shareholders informed of the level of dilution and details of conversion as follows:

• (a) the Company will make a monthly announcement (the “Monthly Announcement”) on the website of the Stock Exchange after Completion. Such announcement will be made on or before the fifth business day following the end of each calendar month and will include the following details in a table form:

• (i) whether there is any conversion of the Convertible Note during the relevant month. If there is a conversion, details thereof including the conversion date, number of new Shares issued and conversion price for each conversion. If there is no conversion during the relevant month, a negative statement to that effect;

• (ii) the number of outstanding Convertible Note after conversion, if any;

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LETTER FROM THE BOARD

• (iii) the total number of new Shares issued pursuant to other transactions during the relevant month, including new Shares issued pursuant to exercise of options under any share option scheme(s) of the Company; and

• (iv) the total issued share capital of the Company as at the commencement and the last day of the relevant month; and

• (b) in addition to the Monthly Announcement, if the cumulative amount of new Shares issued pursuant to the conversion of the Convertible Note reaches 5% of the issued share capital of the Company as disclosed in the last Monthly Announcement or any subsequent announcement made by the Company in respect of the Convertible Note (as the case may be) (and thereafter in a multiple of such 5% threshold), the Company will make an announcement on the website of the Stock Exchange including details as stated in (a) above for the period commencing from the date of the last Monthly Announcement or any subsequent announcement in respect of the Convertible Note (as the case may be) up to the date on which the total amount of Shares issued pursuant to the conversion amounted to 5% of the issued share capital of the Company as disclosed in the last Monthly Announcement or any subsequent announcement made by the Company in respect of the Convertible Note (as the case may be).

FUND RAISING ACTIVITIES IN THE PAST TWELVE MONTHS

In February 2005, the Company completed an open offer from which approximately HK$20.9 million (net of expenses) was raised. Details of the open offer were set out in the announcement of the Company dated 14th January, 2005 and the prospectus of the Company dated 4th February, 2005. The net proceeds of approximately HK$20.9 million were used as to approximately HK$16 million to repay the Group’s liabilities including bank loans, other loans, account payables and accruals due to independent third parties and as to the remaining balance of approximately HK$4.9 million as general working capital of the Group, which comply with the intended use of proceeds as set out in the announcement of the Company dated 14th January, 2005 and the prospectus of the Company dated 4th February, 2005.

Other than the open offer completed as mentioned above, the Company has not conducted any other fund raising activities in the past twelve months before the date of the Announcement.

SPECIAL GENERAL MEETING

A notice convening the Special General Meeting, at which an ordinary resolution will be proposed to the Independent Shareholders to consider and, if thought fit, approve the Subscription Agreement, the issue of the Convertible Note, the issue of the Conversion Shares and all matters contemplated under the Subscription Agreement, is set out on pages 34 to 35 of this circular.

Voting on the resolution in relation to the Subscription Agreement, the issue of the Convertible Note, the issue of the Conversion Shares and all matters contemplated under the Subscription Agreement set out in the notice of the Special General Meeting contained in this circular will be conducted by way of a poll. Vision Century and its associates, holding 51,157,196 Shares as at the Latest Practicable Date, shall abstain from voting on such resolution at the Special General Meeting.

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LETTER FROM THE BOARD

A form of proxy for use at the Special General Meeting is accompanied with this circular. If you are not able to attend the Special General Meeting, you are requested to complete the accompanying 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 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 attending and voting in person at the Special General Meeting or any adjournment thereof if you so wish.

An announcement will be made by the Company following the conclusion of the Special General Meeting to inform you of the results thereof.

PROCEDURES FOR DEMANDING A POLL BY SHAREHOLDERS

Pursuant to Bye-law 66 of the Bye-laws of the Company, a resolution put to the vote of a general meeting shall be decided on a show of hands unless voting by way of a poll is required by the rules of the designated stock exchange or (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 the 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 a 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; or

• (e) if required by the rules of the designated stock exchange, by any Director or Directors who, individually or collectively, hold proxies in respect of Shares representing five per cent (5%) or more of the total voting rights at such meeting.

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.

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LETTER FROM THE BOARD

RECOMMENDATION

Your attention is drawn to the recommendation of the Independent Board Committee (set out on page 14 of this circular) and advice of Dao Heng Securities (set out on pages 15 to 29 of this circular) regarding the terms of the Subscription Agreement and the Convertible Note.

FURTHER INFORMATION

Your attention is also drawn to the additional information set out in the appendix to this circular.

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

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

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(Incorporated in Bermuda with limited liability)

(Stock Code: 1141)

10th March, 2006

To the Independent Shareholders

Dear Sir or Madam,

CONNECTED TRANSACTION RELATING TO THE PROPOSED ISSUE OF CONVERTIBLE NOTE

We refer to the circular of the Company dated 10th March, 2006 (the “Circular”), of which this letter forms part. Terms used herein have the same meanings as those defined in the Circular unless the context otherwise requires.

We have been appointed as the Independent Board Committee to consider the terms of the Subscription Agreement and the Convertible Note, and to advise you as to whether, in our opinion, such terms are fair and reasonable so far as the Company and the Independent Shareholders are concerned and the Subscription Agreement and the issue of the Convertible Note are in the interests of the Company and the Shareholders as a whole.

Dao Heng Securities has been appointed as the independent financial adviser to advise us and you regarding the terms of the Subscription Agreement and the Convertible Note. Details of its advice, together with the principal factors and reasons it has taken into consideration in giving its advice, are set out in its letter on pages 15 to 29 of the Circular. Your attention is also drawn to the letter from the Board and the additional information set out in the appendix to the Circular.

Having considered the terms of the Subscription Agreement and the Convertible Note together with the independent advice of Dao Heng Securities, we consider that the terms of the Subscription Agreement and the Convertible Note are fair and reasonable so far as the Company and the Independent Shareholders are concerned, and the Subscription Agreement and the issue of the Convertible Note are in the interests of the Company and the Shareholders as a whole. On this basis, we recommend the Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the Special General Meeting to approve the Subscription Agreement, the issue of the Convertible Note, the issue of the Conversion Shares and all matters contemplated under the Subscription Agreement.

Yours faithfully,

Independent Board Committee

Wong Kwok Tai Lau Pok Lam Ko Kwong Woon, Ivan

Independent non-executive Directors

* For identification only

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LETTER FROM DAO HENG SECURITIES

The following is the text of the letter of advice to the Independent Board Committee and the Independent Shareholders from Dao Heng Securities in connection with the terms of the Subscription Agreement and the Convertible Note, which has been prepared for the purpose of inclusion in this circular.

10th March, 2006

To the Independent Board Committee

and the Independent Shareholders Xin Corporation Limited Room 2107, 21st Floor Nan Fung Tower 173 Des Voeux Road Central Hong Kong

Dear Sirs,

CONNECTED TRANSACTION RELATING TO THE PROPOSED ISSUE OF CONVERTIBLE NOTE

INTRODUCTION

We refer to our engagement by the Company as an independent financial adviser to advise the Independent Board Committee and the Independent Shareholders with respect to the Subscription Agreement. Details of the principal terms of the Subscription Agreement are contained in the letter from the Board in the circular dated 10th March, 2006 to the Shareholders (the “Circular”), of which this letter forms part. Terms defined in the Circular bear the same meanings herein unless the context otherwise requires.

On 17th February, 2006, the Board announced that the Company had entered into the Subscription Agreement with the Subscriber pursuant to which the Company agreed to issue the Convertible Note in the principal amount of HK$37,000,000 to the Subscriber and the Subscriber agreed to release and discharge the Company from its obligations and liabilities for the amount of HK$37,000,000 owed by the Company to the Subscriber upon the issue of the Convertible Note. As at the Latest Practicable Date, HK$37,661,225 (being the principal amount of the Loan in the sum of HK$31,377,540 and the accrued interest in the sum of HK$6,283,685 calculated up to the Latest Practicable Date) was owed by the Company to the Subscriber. The Company will settle, upon Completion, the remaining accrued interest in the sum of HK$661,225 calculated up to the Latest Practicable Date and any further interest to be accrued up to the Completion Date by cash from internal resources of the Group.

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LETTER FROM DAO HENG SECURITIES

As the Company is approximately 61.9% beneficially owned by Vision Century, the transactions contemplated under the Subscription Agreement, including the issue of the Convertible Note, constitute connected transactions of the Company under the Listing Rules and, accordingly, the Subscription Agreement and all the matters contemplated thereunder, including the issue of the Convertible Notes, are conditional upon, among other things, the approval of the Independent Shareholders by way of a poll at the Special General Meeting at which Vision Century and its associates will be required to abstain from voting on the relevant resolution in relation to the Subscription Agreement and the issue of the Convertible Note. Mr. Wong Kwok Tai, Mr. Lau Pok Lam and Mr. Ko Kwong Woon, Ivan have been appointed as an Independent Board Committee to advise the Independent Shareholders in respect of the terms of the Subscription Agreement and the Convertible Note.

Our role as the independent financial adviser to the Independent Board Committee and the Independent Shareholders is to give our opinion as to whether the terms of the Subscription Agreement and the Convertible Note are fair and reasonable so far as the Independent Shareholders are concerned.

In formulating our recommendations, we have relied on the accuracy of the information and representations contained in the Circular, which have been provided by the management of the Company and the Directors and have assumed that all information and representations made or referred to in the Circular are true and accurate in all material respects. We have no reason to doubt the truth, accuracy and completeness of the information and representations provided to us by the Directors and have been advised by the management of the Company and the Directors that no material facts have been omitted from the information provided and referred to in the Circular. We consider that we have reviewed sufficient information to reach an informed view and to justify reliance on the accuracy of the information contained in the Circular and to provide a reasonable basis for our advice. We have not, however, conducted any independent investigation into the business and affairs or the future prospects of the Group.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In giving our opinion as to the fairness and reasonableness of the terms of the Subscription Agreement and giving our advice to the Independent Board Committee and the Independent Shareholders, we have taken into account the following factors and reasons:

A. Background and reasons for the issue of the Convertible Note

• (i) Background of the Loan

The principal activities of the Group are the provision of supply and procurement business. The Group recorded net losses of approximately HK$30.9 million and HK$11.1 million for each of the two years ended 31st March, 2004 and 2005 respectively. In order to provide continuing financial support to the Group, the Subscriber has granted the Facility of HK$50.0 million to the Group pursuant to a loan facility agreement dated 2nd July, 2003 (as supplemented on 29th October, 2004), which will be expired by October 2006. The Group has since then utilised the Facility and as at the Latest Practicable Date, HK$37,661,225 (being the principal amount of the Loan in the sum of HK$31,377,540 and the accrued interest in the sum of approximately HK$6,283,685 calculated up to the Latest Practicable Date) was owed by the Company to the

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LETTER FROM DAO HENG SECURITIES

Subscriber. The Loan is unsecured and bears interest at prime rate quoted from time to time by The Hongkong and Shanghai Banking Corporation Limited (“HSBC”) plus 3% per annum. The interest expenses incurred in respect of the Loan for the years ended 31st March, 2004 and 31st March, 2005 were approximately HK$1.9 million and HK$2.1 million respectively. The other secured bank borrowings and unsecured borrowing obtained by the Group before Vision Century became the controlling Shareholder in 2002 bear interest rates ranging from 4.0% to 6.4% per annum at present. Based on the interest rate of 1% per annum of the Convertible Note, the annual interest expense of the Convertible Note is expected to be HK$370,000 which is significantly less than the interest expenses which would otherwise be borne by the Company under the Facility. During the period from late 2002 to 2004, the best lending rate as quoted by HSBC remained at 5.0% per annum. Having enjoyed the relatively low borrowing cost since the grant of the Facility in 2003, the Group started to face the adverse effect brought by the elevating interest rate by the end of 2004. The eight best lending rate hikes since November 2004 from 5.0% to the latest of 7.75% has aggravated the borrowing cost burden of the Group under the Loan.

In order to deal with the Loan, the Company and the Subscriber had entered into the Subscription Agreement, pursuant to which the Company agreed to issue the Convertible Note to the Subscriber and the Subscriber agreed to release and discharge the Company from its obligations and liabilities for the amount of HK$37,000,000 owed by the Company to the Subscriber upon the issue of the Convertible Note. The remaining balance of interest charge of HK$661,225 calculated up to the Latest Practicable Date and any further interest to be accrued up to the Completion Date will be settled by cash from internal resources of the Group upon Completion.

Given that (i) there will be interest saving for the Group from the issue of the Convertible Note; (ii) the issue of the Convertible Note would not have immediate dilution effect to the Shareholders, and (iii) the long term feature of the Convertible Note as compared to that of the Facility expiring in October 2006, the Directors (including the independent non-executive Directors) consider the issue of the Convertible Note and the terms therein to be fair and reasonable and are in the interests of the Company and the Shareholders as a whole. As stated in the letter from the Board, the terms of the Subscription Agreement and the Convertible Note have been arrived at arm’s length negotiations between the Company and the Subscriber and are on normal commercial terms.

(ii) Current financial position and performance of the Group

As mentioned above, the Group recorded net losses of approximately HK$30.9 million and HK$11.1 million for each of the two years ended 31st March, 2004 and 2005 respectively. As at 31st March, 2005, the Group had audited consolidated net current liabilities of approximately HK$19.2 million (as restated in the interim report for the six months ended 30th September, 2005) and net assets of approximately HK$5.4 million (as restated in the interim report for the six months ended 30th September, 2005), while as at 30th September, 2005, the Group recorded unaudited consolidated net current liabilities of approximately HK$22.8 million and net assets of approximately HK$3.6 million.

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LETTER FROM DAO HENG SECURITIES

As stated in the report of the auditors contained in the Company’s annual report for the year ended 31st March, 2005 (“FY2005”), the Group has undertaken a number of measures to improve its financial and current liquidity position. Huang Worldwide Holding Limited, the immediate holding company of Vision Century, had undertaken to the Company to provide continuing financial support to the Group so as to enable the Group to continue its day-to-day business operations as a viable going concern notwithstanding any present or further financial difficulties experienced by the Group up to 31st October, 2006. It was further stated in the report of the auditors that the financial statements had been prepared on a going concern basis, the validity of which depends upon the ongoing support by the Group’s holding companies, bankers and other creditors, the availability of additional external funding and the attainment of profitable and positive cash flow operations to meet the Group’s future working capital and financial requirements. It was also stated in the report of the auditors that the financial statements did not include any adjustment that might be necessary should the implementation of such measures be unsuccessful. In this regard, the Company’s auditors considered that this fundamental uncertainty relating to whether the going concern basis was appropriate was so extreme that they had disclaimed their opinion on the Company’s accounts for FY2005.

Having considered the current financial position of the Group and the relatively low and fixed interest rate carried by the Convertible Note, we concur with the Directors’ view that the issue of the Convertible Note is an appropriate means for the Company to settle the Loan rather than keeping the Loan from Vision Century under the current interest rate environment.

B. Principal terms of the Convertible Note

The following table summarises the principal terms of the Convertible Note (details of which are set out in the letter from the Board):

Issuer	:	the Company
Principal Amount	:	HK$37,000,000
Maturity	:	Unless previously converted or repaid, the Convertible Note will mature
		on the date preceding the third anniversary of the date of its issue.
Interest	:	1% per annum on the principal amount of the Convertible Note
		outstanding from time to time, payable semi-annually in arrears on 31st
		March and 30th September each year.
Conversion Price	:	HK$0.205 per Share, subject to adjustment from time to time for: (i)
		any consolidation or subdivision of Shares; (ii) issue of new Shares by
		way of capitalisation of profits or reserves; (iii) capital distribution; (iv)
		rights issue or grant of option or warrants to subscribe for new Shares;
		(v) issue of other securities which are convertible or exchangeable into
		Shares for cash at an effective price which is less than 90% of the then
		prevailing market price; or the effective price of Shares receivable from
		the rights of conversion or exchange of such securities are modified to

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LETTER FROM DAO HENG SECURITIES

be less than 90% of the then prevailing market price; and (vi) issue of Shares at a price which is less than 90% of the then prevailing market price for cash.

The Conversion Price was determined after arm’s length negotiations between the Company and the Subscriber with reference to the weighted average closing price of the Shares for the five trading days (excluding those trading days without trading volume) ended on 15th February, 2006, being the date of the subscription agreement entered into between the Company and the Subscriber.

• Conversion Shares : The Conversion Shares shall, when issued, rank pari passu in all respects with all the Shares then in issue and be entitled to all dividends and other distributions, the record date of which falls on a date on or after the date of the conversion notice.

• Early Redemption

• : The Company may at any time prior to the Maturity Date, by giving not less than five business days’ prior notice to the holder(s) of the Convertible Note, repay the whole or part only (in an amount or integral multiple of HK$500,000) of the outstanding principal amount of the Convertible Note together with the outstanding interest accrued thereon in accordance with the terms and conditions of the Convertible Note.

• Transferability : The Convertible Note may be assigned or transferred subject to compliance of the terms and conditions of the Convertible Note and further subject to the conditions, approvals, requirements and any other provisions of or under (i) the Stock Exchange (and any other stock exchange on which the Shares may be listed at the relevant time) or their rules and regulations; (ii) the approval for listing in respect of the Conversion Shares; and (iii) all applicable laws and regulations.

Save with the prior written approval of the Company, none of the Convertible Note or any part thereof may be transferred to a connected person of the Company (as defined in the Listing Rules).

• Voting : Holder(s) of the Convertible Note will not be entitled to receive notices of, attend or vote at any general meetings of the Company by reason only of it being a holder of the Convertible Note.

Listing

• : The Convertible Note will not be listed on the Stock Exchange or any other stock exchange.

In giving our opinion as to the fairness and reasonableness of the principal terms of the Convertible Note, we have reviewed all the issuance of convertible notes/bonds announced by the companies listed on the Stock Exchange and identified 68 convertible note/bond issues since 16th February, 2005 up to 15th February, 2006, being the last trading day on which the Shares were traded on the Stock Exchange

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LETTER FROM DAO HENG SECURITIES

prior to the release of the Announcement (the “One-year Period”). Nine of these convertible note/bond issues are of issue size below HK$60 million with three-year maturity and (where applicable) were approved by its relevant shareholders (the “Comparable Note Issues”), which we consider to be comparable to the Convertible Note. As the terms of convertible notes/bonds are usually determined by reference to the prevailing market condition, its issue size and life to maturity, we consider that the selected time frame and the relevant parameters from the Comparable Note Issues are appropriate for the purposes of our comparison which would also provide a reasonable number of Comparable Note Issues. The following table sets out the key terms of these Comparable Note Issues:

Table 1: Summary of Comparable Note Issues

						Premium/		Premium/
						(Discount)		(Discount)
						over/to the		over/to the
						closing share	average closing
						price of the	share price of the
					**last trading day **		10 days immediately
						immediately	prior to the date of
	Date of					prior to the	the announcement
	announce-	**Principal **	Conversion	Interest		date of the		(“10-day
Issuer	ment	amount	price	rate	announcement		Average Price”)
(stock code)	(dd-mm-yy)	(HK$ million)	(HK$)	(%)		(%)		(%)
Universal Technologies	1-Mar-05	6.00	0.10	3.50		3.10		8.10
Holdings Limited
(8091)
South Sea Petroleum	23-Jun-05	40.00	0.34	1.00		4.85		2.11
Holdings Limited (76)			Notes (a)
			& (b)
Inno-Tech Holdings	5-Jul-05	6.30	0.05	7.50		0.00		(10.23)
Limited (8202)
Wo Kee Hong	18-Aug-05	30.00	0.10	7.25		49.25		69.49
(Holdings) Limited
(720)
Thiz Technology Group	28-Sep-05	10.00	0.11	2.50		10.00		10.00
Limited (8119)
Signal Media &	14-Nov-05	51.00	0.27	0.00		(18.18)		16.63
Communications
Holdings Limited
(formerly known as
“Goldigit Atom-tech
Holdings Limited”)
(2362)

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LETTER FROM DAO HENG SECURITIES

					Premium/	Premium/
					(Discount)	(Discount)
					over/to the	over/to the
					closing share	average closing
					price of the	share price of the
					**last trading day **	10 days immediately
					immediately	prior to the date of
	Date of				prior to the	the announcement
	announce-	**Principal **	Conversion	Interest	date of the	(“10-day
Issuer	ment	amount	price	rate	announcement	Average Price”)
(stock code)	(dd-mm-yy)	(HK$ million)	(HK$)	(%)	(%)	(%)
Grandy Corporation	1-Dec-05	20.00	0.27	4.00	15.02	12.26
(8143)
MAE Holdings Limited	6-Jan-06	44.84	0.33	4.50	(51.47)	(53.06)
(851)
LeRoi Holdings Limited	8-Feb-06	3.00	0.20	6.50	(42.03)	(42.11)
(221)Note (c)		Note (d)
Average of the				4.08	(3.27)	1.47
Comparable
Note Issues
The Company (1141)	17-Feb-06	37.00	0.205	1.00	0.00	(4.03)
Source: Website of the Stock Exchange

Notes:

• (a) 105% of the 5-day average closing share price for the five consecutive trading days immediately preceding the date of conversion notice.

• (b) Calculation of premium over the average closing share price is based on the assumption that the conversion price equals to 105% of the average closing share price for the five consecutive trading days immediately preceding to the date of the relevant announcement (i.e. HK$0.34).

• (c) Information in relation to this Comparable Note Issue is extracted from the announcement of Wai Yuen Tong Medicine Holdings Limited dated 8th February, 2006. The subscriber of the subject convertible note is an indirectly wholly-owned subsidiary of Wai Yuen Tong Medicine Holdings Limited.

• (d) The subscriber is granted an option to require the issuer to issue additional convertible notes of not more than HK$7 million in aggregate.

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LETTER FROM DAO HENG SECURITIES

(i) Interest rate

The interest rates of the Comparable Note Issues in Table 1 range from zero to 7.50% per annum, with an average interest rate of approximately 4.08% per annum. The interest rate carried by the Convertible Note of 1.00% per annum represents the lower end of the range of the Comparable Note Issues and is lower than the average interest rate of the Comparable Note Issues.

We also noted from the Company’s interim report for the six months ended 30th September, 2005 (the “Interim Period”) that the Company had unsecured other borrowing amounted to HK$5.5 million as at 30th September, 2005, which carries interest of 4% per annum and is repayable within one year or on demand. According to the management of the Company, the Company also had two secured bank loans of approximately HK$18 million which bear interest rates at 6.264% and 6.372% per annum as at 30th September, 2005. Besides, the Facility provided by Vision Century to the Company is unsecured and bears interest at prime rate quoted from time to time by HSBC plus 3% per annum. Based on the prime lending rate quoted by HSBC as at the Latest Practicable Date of 7.75% per annum, the Loan carries interest at a rate of 10.75% per annum. Hence, based on the interest rate of 1% per annum borne by the Convertible Note, the issuance of the Convertible Note enables the Company to enjoy interest saving of approximately HK$3.6 million per annum as compared with the Loan under the Facility provided by Vision Century.

Having considered that the fixed interest rate of the Convertible Note of 1% per annum (i) represents the lower end of the interest rate of the Comparable Note Issues; and (ii) is substantially lower than the borrowing costs under the Facility provided by Vision Century and the secured bank borrowings and unsecured other borrowing of the Group, we consider that the interest rate of the Convertible Note is fair and reasonable so far as the Company and the Independent Shareholders are concerned.

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LETTER FROM DAO HENG SECURITIES

(ii) Conversion Price

The Conversion Price is HK$0.205. The premiums/discounts of the Conversion Price over/ to the closing prices of the Shares for different periods are set out in the following table.

Table 2: Comparison of the Conversion Price with the Share prices

	Closing	Premium/
	Share price/	(Discount) of
	average closing	the Conversion
	Share price/	Price over/ to
	net asset value	the closing Share
	per Share for the	price/net asset
Date/ period	respective period	value per Share
	(HK$)	(%)
As at 15th February, 2006, being the last trading day
prior to the suspension of trading in the Shares
pending the release of the Announcement	0.2050	0.00
5 trading days up to and including
15th February, 2006	0.2052	(0.10)
10 trading days up to and including
15th February, 2006	0.2136	(4.03)
1 month up to and including 15th February, 2006	0.2190	(6.39)
3 months up to and including 15th February, 2006	0.2399	(14.55)
6 months up to and including 15th February, 2006	0.2542	(19.35)
The One-year Period	0.3522	(41.79)
As at the Latest Practicable Date	0.2000	2.50
From 20th February, 2006 (being the first trading day
after the issue of the Announcement) to the
Latest Practicable Date (the “Latest Period”)	0.1996	2.71
Audited consolidated net asset value per Share
as at 31st March, 2005 (based on the figure restated
in the interim report for the six months ended
30th September, 2005 and 82,704,014 Shares in issue)	0.0658	211.55
Unaudited consolidated net asset value per Share
as at 30th September, 2005	0.0438	368.04

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LETTER FROM DAO HENG SECURITIES

Chart 1: Closing Share price and trading volume in the One-year Period

==> picture [347 x 239] intentionally omitted <==

----- Start of picture text -----

1.0 80,000,000
0.9 70,000,000
0.8
0.7 Conversion Price of HK$0.205 per 60,000,000
Conversion Shares
0.6 50,000,000
0.5 40,000,000
0.4 30,000,000
0.3
20,000,000
0.2
0.1 10,000,000
0.0 -
trading volume share closing price
Source: Infocast
16-Feb-05 11-Apr-05 1-Jun-05 21-Jul-05 8-Sep-05 31-Oct-05 19-Dec-05 13-Feb-06
Share closing price (HK$) Trading volume (Shares)
----- End of picture text -----

The closing Share price ranged from HK$0.19 to HK$0.90 per Share during the One-year Period, of which the Conversion Price of HK$0.205 represents the lower end.

As shown in Chart 1 above, the closing Share price reached its peak at HK$0.90 per Share on 21st February, 2005. During such period, the Company underwent an open offer on the basis of one offer Share for every two Shares to raise fund of approximately HK$21 million (details of which were set out in the Company’s announcement dated 14th January, 2005). Thereafter, the Share price had been trending downwards and plummeted on 11th April, 2005 from HK$0.70 per Share to HK$0.34 per Share on 20th April, 2005. During such period, the Company underwent a capital reorganisation which involved capital reduction, share premium cancellation and share consolidation (details of which were set out in the Company’s announcement dated 13th April, 2005). On 15th April, 2005, the Company published a teletext, confirming that the Company and its Directors had noted the increase in the trading volume and decrease in the Share price and were not aware of any reasons for such movements save for the capital reorganisation announced on 13th April, 2005. Since October 2005, the Shares have been traded between HK$0.188 and HK$0.26 per Share.

• (a) Conversion price of the Comparable Note Issues

The conversion price of six Comparable Note Issues were set at a premium ranged from approximately 2.11% to 69.49% over their respective 10-day Average Price, while three of them were set at a discount ranged from approximately 10.23% to 53.06% to their respective 10-day Average Price. As compared with the average premium of approximately 1.47% of the Comparable Note Issues, the Conversion Price represents a discount of approximately 4.03% to its 10-day Average Price though such discount falls within the range of those of the Comparable Note Issues.

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LETTER FROM DAO HENG SECURITIES

• (b) Price of the placing/subscription shares of the Placing/Subscription Comparables (as defined below)

As we understand from the Directors, the Company has considered other alternatives to raise funds for settlement of the Loan instead of issuing the Convertible Note, such as bank borrowings and placing/subscription of new Shares in the market. However, the terms of these alternatives are considered to be less favourable to the Company as compared with those of the Convertible Note.

As discussed in the paragraph headed “(i) Interest rate” above, the Group’s unsecured other borrowing carries an interest rate of 4% per annum and two secured bank loans of approximately HK$18 million carry interest rates at 6.264% and 6.372% per annum, and the Loan under the Facility (which is unsecured and bears interest at prime rate quoted from time to time by HSBC plus 3% per annum) currently bears interest of 10.75% per annum, are all substantially higher than that offered by the Subscriber under the Convertible Note.

We have also looked into the placing/subscription of new shares announced by listed companies in Hong Kong during the One-year Period and identified 71 placing/subscription issues (“Placing/Subscription Comparables”) with fund raising size below HK$60,000,000, which we consider to be comparable to the principal amount of the Convertible Note. 58 Placing/Subscription Comparables have the price of the placing/subscription shares set at a discount ranged from approximately 0.15% to 48.45% to their respective 10-day Average Price, while 13 Placing/Subscription Comparables have the price of the placing/subscription shares set at a premium ranged from approximately 1.65% to 65.00% over their respective 10-day Average Price, with an overall average discount of approximately 7.44%. We are also aware that the Company had completed an open offer in February 2005 from which a total of approximately HK$20.9 million (net of expenses) was raised at a subscription price of HK$0.04 per Share, representing approximately 32.1% discount to the 10-day Average Price prior to the date of such announcement.

With reference to the above analysis and given the thin trading volume of the Shares during the six months prior to 15th February, 2006 (the average daily trading volume of 59,347 Shares only represents approximately 0.19% of the public float of 31,546,818 Shares), we believe that, in the event that the Company raises fund by placing/subscription of new Shares, the price of the placing/subscription Shares is likely to be set at an even deeper discount to market Share price under the prevailing market sentiment as compared with the Conversion Price, which we consider to be less favourable to the Company and the Independent Shareholders as a whole. Placing or Subscription of new Shares will also result in an immediate dilution in the shareholding interest of the existing Shareholders.

Having considered that (i) the discount of the Conversion Price to the 10-day Average Price of the Shares falls within the range of those of the Comparable Issues; (ii) the terms of other alternatives to raise funds for settlement of the Loan, such as bank borrowings and placing/ subscription of new Shares, are considered to be less favourable to the Company as compared with those of the Convertible Note; and (iii) in the event that the Company raises fund by placing/ subscription of new Shares, the price of the placing/subscription Shares is likely to be set at an even deeper discount to market Share price as compared with the Conversion Price, we consider that the Conversion Price is fair and reasonable so far as the Company and the Independent Shareholders are concerned.

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LETTER FROM DAO HENG SECURITIES

(iii) Term of the Loan

Under the existing Facility provided by Vision Century, the Loan is repayable on demand. As stated in the Company’s annual report for FY2005, Vision Century has undertaken that it will not demand the repayment, in part or in whole, of any advance made to the Group under the Facility before 31st October, 2006. According to the Company’s interim report for the Interim Period, the Group had an unaudited cash and bank balances of approximately HK$13.8 million as at 30th September, 2005. Given that the Convertible Note has a maturity of three years, the issue of the Convertible Note enables the Group to extend the repayment of the Loan from 31st October, 2006 to the date preceding the third anniversary of the issue date of the Convertible Note. Based on the aforesaid, we consider the maturity of three years of the Convertible Note to be favourable to the Group and the Shareholders as a whole.

C. Effect on the financial position of the Group

(i) Net asset value

Based on the Company’s interim report for the Interim Period, the Group had net assets of approximately HK$3.6 million with a net asset value per Share of approximately HK$0.04 (based on 82,704,014 Shares then in issue) as at 30th September, 2005. The subscription price of the Convertible Note of HK$37,000,000 will be settled by waiving the Loan with principal amount of HK$31,377,540 and part of the accrued interest thereto of HK$5,622,460. The remaining balance of the interest accrued and to be accrued up to the Completion Date will be settled by cash upon Completion. Therefore, the issuance of the Convertible Note will have no effect on the liabilities of the Group.

However, upon full conversion of the Convertible Note, the Company will have net asset value of approximately HK$40.6 million, representing approximately HK$0.15 per Share (based on 82,704,014 Shares in issue as at the Latest Practicable Date and 180,487,804 Conversion Shares to be issued upon full conversion of the Convertible Note). Given the potential improvement in the Company’s financial position of net assets as a result of the conversion of the Convertible Note, we consider that the issue of Convertible Note is in the interests of the Company and its Shareholders as a whole.

(ii) Gearing ratio

As at 30th September, 2005, the Group recorded net asset value of approximately HK$3.6 million and total borrowings of approximately HK$66.5 million. The gearing ratio (which is expressed as the Group’s total borrowings divided by net asset value) is approximately 18.4 times. As mentioned above, the subscription price of the Convertible Note will be settled by waiving the Loan with principal amount of HK$31,377,540 and part of the accrued interest thereto of HK$5,622,460. The remaining balance of the interest accrued and to be accrued up to the Completion Date will be settled by cash (which was approximately HK$661,225 as at the Latest Practicable Date). Therefore, upon Completion, the Group’s total borrowings will decrease by the amount equivalent to the cash payment made by the Group, while the net asset value will remain unchanged.

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LETTER FROM DAO HENG SECURITIES

Nonetheless, upon full conversion of the Convertible Note into new Shares, the Group’s total borrowings will reduce from approximately HK$66.5 million as at 30th September, 2005 to approximately HK$28.8 million (having taken into account the settlement of the remaining balance of interest accrued up to the Latest Practicable Date) and its net asset value will increase by HK$37.0 million to approximately HK$40.6 million, representing a gearing ratio of approximately 70.94%.

Having considered the improvement of the indebtedness of the Group as a result of the full conversion of the Convertible Note at the Conversion Price by the holder of the Conversion Note during the conversion period, we consider that the issue of the Convertible Note together with the issue of the Conversion Shares are in the interests of the Company and the Shareholders as a whole.

(iii) Working capital

The subscription price of the Convertible Note will be settled by waiving the Loan of HK$31,377,540 and the accrued interest of HK$5,622,460. The remaining balance of the interest accrued and to be accrued up to the Completion Date will be settled by cash upon Completion. As at the Latest Practicable Date, the remaining balance of the accrued interest to be settled by cash amounted to approximately HK$661,225, representing approximately 4.81% of the Group’s cash and bank balances of approximately HK$13.75 million as at 30th September, 2005. As advised by the Directors, the Group’s cash and bank balances was approximately HK$8.42 million as at 31st January, 2006 according to the Group’s latest management accounts, of which the remaining balance of the accrued interest to be settled by cash represents approximately 7.85%.

Based on the above, we consider that the issue of the Convertible Note and the repayment of the remaining balance of the interest accrued and to be accrued up to the Completion Date will have no material effect on the working capital position of the Group. On the other hand, the issue of the Convertible Note will bring improvement to the working capital position of the Group given that the Company can benefit from interest saving (as mentioned in the paragraph headed “(i) Interest rate” above) resulted from the significantly lower interest rate carried by the Convertible Note as compared with that of the Loan and the alleviation of the pressure on its working capital (as mentioned in the paragraph headed “(iii) Term of the Loan” above) that the issue of the Convertible Note enables the Group to extend the repayment of the Loan from 31st October, 2006 to the date preceding the third anniversary of the issue date of the Convertible Note.

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LETTER FROM DAO HENG SECURITIES

D. Dilution effect on the interests of Independent Shareholders

As at the Latest Practicable Date, Vision Century held approximately 61.9% of the total issued share capital of the Company.

The following table shows the effect of the full conversion of the Convertible Note by Vision Century on the shareholding structure of the Company:

	Issued share capital as at	Issued share capital as at	Assuming full conversion	Assuming full conversion
	the Latest Practicable Date		of the Convertible Note
	(No. of shares)	(%)	(No. of shares)	(%)
Vision Century_(Note)_	51,157,196	61.9	231,645,000	88.0
Independent Shareholders	31,546,818	38.1	31,546,818	12.0
Total	82,704,014	100.0	263,191,818	100.0

Note: Vision Century is a wholly-owned subsidiary of Huang Worldwide Holding Limited, which is in turn wholly owned by Huang Group (BVI) Limited. Huang Group (BVI) Limited is wholly owned by a discretionary trust, of which Mr. Ng (Huang) Cheow Leng is the settlor and Mr. Kan Ka Chong, Frederick is the trustee. Mr. Ng (Huang) Cheow Leng, Mr. Wilson Ng and Mr. Ng Wee Keat are discretionary beneficiaries of the trust.

Upon full conversion of the Convertible Note at the Conversion Price, Vision Century shall increase its shareholdings of the Company by approximately 26.1% and the shareholding of public Shareholders in the Company will be diluted from approximately 38.1% to 12.0%. As a result, the Company will not be able to meet the minimum public float requirement of 25% under the Listing Rules. As stated in the letter from the Board, Vision Century has undertaken to the Company that, so long as the conversion rights attached to the Convertible Note remains valid and subsisting, it will not cause the public float of the Company to fall below the minimum public float requirement under Rule 8.08 and Rule 13.32 of the Listing Rules as a result of it allowing, causing, or procuring any part of the Convertible Note to be converted into new Shares.

Having considered the reasons and benefits for the issue of the Convertible Note as stated in “A. Background and reasons for the issue of the Convertible Note” and “C. Effect on the financial position of the Group” above and that Vision Century has undertaken to maintain the public float of the Shares and other benefits brought by the issue of the Convertible Note, we consider that the dilution effect on the shareholding interest of the public Shareholders is acceptable.

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LETTER FROM DAO HENG SECURITIES

RECOMMENDATION

Having considered the factors and reasons set out above, in particular:

• (i) the interest rate of the Convertible Note of 1% per annum is (a) at the lower end of the range of those of the Comparable Note Issues; (b) significantly lower than the interest rate under the Loan of 3% above the best lending rate offered from time to time by HSBC; and (c) lower than the interest rate carried by the Group’s unsecured other borrowing of 4% and the secured bank borrowings of 6.264% and 6.372%;

• (ii) the Conversion Price represents a discount of approximately 4.03% to the 10-day Average Price of the Shares, which falls within the range of those of the Comparable Note Issues;

• (iii) terms under other alternatives of raising funds for settlement of the Loan appear to be less favourable than those offered by the Subscriber under the Convertible Note;

• (iv) the full conversion of the Convertible Note shall significantly improve the Group’s gearing ratio;

• (v) the issue of the Convertible Note will enable the Company to enjoy interest saving of approximately HK$3.6 million per annum as compared with keeping the Loan;

• (vi) Vision Century has undertaken to maintain the public float of the Shares; and

• (vii) the issue of the Convertible Note enables the Group to extend the repayment of the Loan from 31st October, 2006 to the date preceding the third anniversary of the issue date of the Convertible Note,

we consider that the terms of the Subscription Agreement and the Convertible Note are fair and reasonable as far as the interests of the Independent Shareholders are concerned. Accordingly, we recommend the Independent Board Committee to advise the Independent Shareholders to vote in favour of the resolution to be proposed at the Special General Meeting.

Yours faithfully, For and on behalf of

Dao Heng Securities Limited

Venus Choi Jenny Leung Executive Director Director, Corporate Finance

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GENERAL INFORMATION

APPENDIX

1. RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. 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.

2. DISCLOSURE OF INTERESTS OF DIRECTORS AND CHIEF EXECUTIVES

As at the Latest Practicable Date, the interests and short positions of each Director and chief executive of the Company in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which required notification to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which he was deemed or taken to have under such provisions of the SFO) or which were required, pursuant to Section 352 of the SFO, to be entered in the register referred to therein, or which were required pursuant to the Model Code for Securities Transactions by Directors of Listed Companies to be notified to the Company and the Stock Exchange were as follows:

				Approximate
		Number of Shares		% of the
	Nature of	Long	Short	existing issued
Name of Directors	interests	position	position	share capital
Mr. Lo Ming Chi,	Personal interest	800,000 (Note 1)	–	0.97%
Charles
Mr. Yu Wai Man	Personal interest	800,000 (Note 1)	–	0.97%
Mr. Wilson Ng	Personal interest	800,000 (Note 1)	–
	Other interest	231,645,000 (Note 2)	–	281.06%
Mr. Ng Wee Keat	Personal interest	800,000 (Note 1)	–
	Other interest	231,645,000 (Note 2)	–	281.06%
Mr. Ng Eng Leng	Personal interest	800,000 (Note 1)	–	0.97%

Notes:

1. Each of the personal interests of Mr. Lo Ming Chi, Charles, Mr. Yu Wai Man, Mr. Wilson Ng, Mr. Ng Wee Keat and Mr. Ng Eng Leng represented 800,000 underlying Shares in respect of the share options granted by the Company.

2. Vision Century was interested in 231,645,000 Shares and is ultimately owned by the discretionary trust of which Mr. Wilson Ng and Mr. Ng Wee Keat are discretionary beneficiaries. Details of the 231,645,000 Shares held by Vision Century are set out in item number 3 of this appendix under the heading “Substantial Shareholders”.

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GENERAL INFORMATION

APPENDIX

Save as disclosed above, as at the Latest Practicable Date, none of the Directors or chief executive of the Company had any interests or short positions in the shares, underlying shares and debentures of the Company or any of its associated corporations which required notification to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which he was deemed or taken to have under such provisions of the SFO) or which were required, pursuant to Section 352 of the SFO, to be entered in the register referred to therein or which were required pursuant to the Model Code for Securities Transactions by Directors of Listed Companies to be notified to the Company and the Stock Exchange; and none of the Directors was a director or employee of a company which had an interest or short position in the Shares and underlying Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO.

3. SUBSTANTIAL SHAREHOLDERS

So far as is known to any Director or chief executive of the Company and as at the Latest Practicable Date, the following persons, other than the Directors or chief executive of the Company as disclosed above, had interests or short positions in the Shares or underlying Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who was, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group and the amount of each such person’s interest in such securities, together with particulars of any options in respect of such capital:

				Approximate
		Number of Shares		% of the
	Long		Short	existing issued
Name of substantial Shareholders	position		position	share capital
Vision Century	231,645,000	(Note 1)	–	280.08%
Huang Worldwide Holding Limited	231,645,000	(Note 1)	–	280.08%
Huang Group (BVI) Limited	231,645,000	(Notes 1 and 2)	–	280.08%
Mr. Kan Ka Chong, Frederick	231,645,000	(Notes 2 and 3)	–	280.08%
Mr. Ng (Huang) Cheow Leng	231,645,000	(Notes 2 and 3)	–	280.08%

Notes:

1. Huang Group (BVI) Limited is the ultimate holding company of Huang Worldwide Holding Limited and Vision Century. Huang Worldwide Holding Limited is the immediate holding company of Vision Century. Huang Worldwide Holding Limited and Vision Century were interested in 231,645,000 Shares representing 51,157,196 Shares held by Vision Century as at the Latest Practicable Date and a maximum of 180,487,804 Conversion Shares (subject to adjustment) to be issued to Vision Century upon full conversion of the Convertible Note.

1. Huang Group (BVI) Limited is held by Mr. Kan Ka Chong, Frederick as the trustee of the discretionary trust of which Mr. Ng (Huang) Cheow Leng is the settlor.

2. Mr. Kan Ka Chong, Frederick was deemed to be interested in 231,645,000 Shares since Mr. Kan is the trustee of the discretionary trust of which Mr. Wilson Ng and Mr. Ng Wee Keat are discretionary beneficiaries.

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GENERAL INFORMATION

APPENDIX

Save as disclosed above, no other person as at the Latest Practicable Date had interests or short positions in the Shares or underlying Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who was, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other members of the Group, or in any options in respect of such capital.

4. EXPERT

Dao Heng Securities is a corporation licensed under the SFO to conduct types 1 (dealing in securities), 4 (advising on securities) and 6 (advising on corporate finance) regulated activities.

Dao Heng Securities has given and has not withdrawn its written consent to the issue of this circular with the inclusion of its letter as set out in this circular and references to its name in the form and context in which they appear respectively.

As at the Latest Practicable Date, Dao Heng Securities was not beneficially interested in the share capital of any member of the Group, nor did it have any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group, nor did it have any interest, either direct or indirect, in any assets which had been since 31st March, 2005 (being the date to which the latest published audited financial statements of the Company were made up) acquired or disposed of by or leased to or were proposed to be acquired or disposed of by or leased to any member of the Group.

5. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors were not aware of any material adverse change in the financial or trading position of the Group since 31st March, 2005 (the date to which the latest audited financial statements of the Company were made up).

6. COMPETING INTERESTS

As at the Latest Practicable Date, so far as the Directors were aware, none of the Directors or their respective associates was considered to have an interest in a business which competes or is likely to compete, either directly or indirectly, with the business of the Group pursuant to Rule 8.10 of the Listing Rules.

7. MISCELLANEOUS

• (a) As at the Latest Practicable Date, none of the Directors had any existing or proposed service contract with any member of the Group which does not expire or is not determinable by the Group within one year without payment of compensation (other than statutory compensation).

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GENERAL INFORMATION

APPENDIX

• (b) As at the Latest Practicable Date, save for (i) a shareholders’ agreement dated 20th February, 2004 entered into between Able Market Profits Limited, Huang & Co (Singapore) Pte Ltd and Xin Procurement & Trading Pte. Ltd.; (ii) a supply agreement dated 20th February, 2004 entered into between Huang & Co (Singapore) Pte Ltd and Xin Procurement & Trading Pte. Ltd.; (iii) the loan facility agreement relating to the Facility; and (iv) the Subscription Agreement, there was no contract or arrangement entered into by any member of the Group subsisting at the Latest Practicable Date in which any Director was materially interested and which was significant in relation to the business of the Group.

• (c) As at the Latest Practicable Date, none of the Directors had any direct or indirect interest in any assets which had been acquired, disposed of or leased to, or which are proposed to be acquired, disposed of or leased to, the Company or any of its subsidiaries since 31st March, 2005 (the date to which the latest published audited financial statements of the Company were made up).

• (d) The English texts of this circular and the accompanying form of proxy shall prevail over their respective Chinese texts.

8. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection during normal business hours (Saturdays and public holidays excepted) at the head office and 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 from the date of this circular up to and including 27th March, 2006, being the date of the Special General Meeting:

• (a) the memorandum of association and Bye-laws of the Company;

• (b) the annual reports of the Company for each of the two years ended 31st March, 2004 and 2005 and the interim report of the Company for the six months ended 30th September, 2005;

• (c) the letter from the Independent Board Committee, the text of which is set out on page 14 of this circular;

• (d) the letter from Dao Heng Securities, the text of which is set out on pages 15 to 29 of this circular;

• (e) the written consent from Dao Heng Securities referred to in the paragraph headed “Expert” in this appendix;

• (f) the Subscription Agreement, which contained, among other things, the terms and conditions of the Convertible Note;

• (g) the loan facility agreement dated 2nd July, 2003 (as supplemented on 29th October, 2004) entered into between the Company and Vision Century regarding the Facility; and

• (h) a copy of each of the circulars issued pursuant to the requirements set out in Chapters 14 and/or 14A of the Listing Rules which have been issued since 31st March, 2005.

– 33 –

NOTICE OF SPECIAL GENERAL MEETING

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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 IV, Lower Lobby, Novotel Century Hong Kong, 238 Jaffe Road, Wanchai, Hong Kong on Monday, 27th March, 2006 at 10:00 a.m. for the purpose of considering and, if thought fit, passing the following resolution, with or without amendments, as an ordinary resolution of the Company:

ORDINARY RESOLUTION

“ THAT :

• (a) the subscription agreement dated 15th February, 2006 entered into between the Company and Vision Century Group Limited (the “Subscriber”) (a copy of which has been produced to this meeting marked “A” and signed by the chairman of this meeting for the purpose of identification) (the “Subscription Agreement”) pursuant to which the Company agreed, subject to the terms and conditions therein contained, to issue the convertible note in the principal amount of HK$37,000,000 (the “Convertible Note”) to the Subscriber and the Subscriber agreed to release and discharge the Company from its obligations and liabilities for the amount of HK$37,000,000 owed by the Company to the Subscriber upon the issue of the Convertible Note, be and is hereby ratified, confirmed and approved;

• (b) the supplemental agreement to the Subscription Agreement dated 17th February, 2006 entered into between the Company and the Subscriber (the “Supplemental Agreement”) in relation to the amendment of the terms and conditions of the Convertible Note (a copy of which has been produced to this meeting marked “B” and signed by the chairman of this meeting for the purpose of identification), be and is hereby ratified, confirmed and approved;

• (c) the directors of the Company be and are hereby authorised to issue the Convertible Note to the Subscriber in accordance with the terms of the Subscription Agreement and allot and issue shares of the Company to the holder(s) of the Convertible Note or as it may direct upon the exercise of the conversion rights under the Convertible Note on and subject to its terms and conditions; and

* For identification only

– 34 –

NOTICE OF SPECIAL GENERAL MEETING

• (d) the directors of the Company be and are hereby authorised to implement and give effect to the proposals, arrangements, terms and transactions contemplated in the Subscription Agreement and the Supplemental Agreement, and to do all acts and things and to execute all documents, instruments and agreements which may in their opinion be necessary or desirable for the purpose of implementing and giving effect to the Subscription Agreement and the Supplemental Agreement.”

By order of the Board Yu Wai Man Company Secretary

Hong Kong, 10th March, 2006

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 of 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. In case of an instrument of proxy purporting to be signed on behalf of a corporation by an officer thereof it shall be assumed, unless the contrary appears, that such officer was duly authorised to sign such instrument of proxy on behalf of the corporation without further evidence of the fact.

3. The instrument appointing a proxy and (if required by the board) 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 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 thereto, 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.

6. As the above ordinary resolution is subject to independent shareholders’ approval, the votes of members to be taken at the above meeting to approve such ordinary resolution shall be taken on a poll.

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