PegBio Co., Ltd. - Proxy Solicitation & Information Statement 2012

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your shares in Beijing Yu Sheng Tang Pharmaceutical Group Limited (the “Company”), you should at once hand this circular and the accompanying form of proxy to the purchaser or the transferee, or to the stockbroker, other registered dealer in securities, the bank or other agent through whom the sale or transfer was effected for transmission to the purchaser or the transferee.

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

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**BEIJING YU SHENG TANG PHARMACEUTICAL GROUP LIMITED 北京御生堂藥業集團有限公司[*]** (Incorporated in Bermuda with limited liability) (Stock Code: 1141)

VERY SUBSTANTIAL DISPOSAL

AND

PROPOSED CHANGE OF COMPANY NAME

Financial adviser to the Company

A notice convening the special general meeting of the Company to be held at Plaza 1 and 2, Lower Lobby, Novotel Century Hong Kong, 238 Jaffe Road, Wanchai, Hong Kong on Monday, 22 October 2012 at 9:30 a.m. is set out on pages 49 to 50 of this circular. Whether or not you are able to attend the special general meeting in person, please complete and return the accompanying form of proxy in accordance with the instructions printed thereon to the Company’s Hong Kong branch share registrar and transfer office, Tricor Tengis Limited, at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong, as soon as practicable but in any event not less than forty-eight (48) hours before the time appointed for the holding of the special general meeting or any adjourned meeting thereof. Completion and return of the accompanying form of proxy will not preclude you from attending and voting in person at the special general meeting or any adjourned meeting thereof should you so wish and in such event, the form of proxy shall be deemed to be revoked.

28 September 2012

* For identification purpose only

		Page
DEFINITIONS.	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
LETTER FROM	THE BOARD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
APPENDIX I	– FINANCIAL INFORMATION OF THE DISPOSAL GROUP. . . . . . . . . 12
APPENDIX II	– FINANCIAL INFORMATION OF THE GROUP. . . . . . . . . . . . . . . . . . . 20
APPENDIX III	– UNAUDITED PRO FORMA FINANCIAL INFORMATION
	OF THE REMAINING GROUP. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
APPENDIX IV	– GENERAL INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
NOTICE OF SGM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

DEFINITIONS

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

“Beijing YST”

Beijing Yu Sheng Tang Holdings Limited, a company incorporated in Hong Kong with limited liability and an indirect wholly-owned subsidiary of the Company

“Beijing YST (PRC)” 北京御生堂文化傳播有限公司 (Beijing Yu Sheng Tang Cultural Broadcasting Company Limited*), a company established in the PRC with limited liability and an indirect wholly-owned subsidiary of the Company

“Board” board of Directors

“Company” Beijing Yu Sheng Tang Pharmaceutical Group Limited, a company incorporated in Bermuda with limited liability, whose Shares are listed on the Main Board of the Stock Exchange “Completion” completion of the Disposal

“connected person(s)” has the meaning ascribed to it in the Listing Rules
“Director(s)” director(s) of the Company “Disposal” the disposal of the entire issued share capital of the Disposal Company and the assignments of the Sale Loans as stipulated in the S&P Agreement
“Disposal Company” Poly Fortune Enterprises Limited, a company incorporated in the British Virgin Islands with limited liability and an indirect wholly-owned subsidiary of the Company
“Disposal Group” the Disposal Company and its subsidiaries
“Group” the Company and its subsidiaries
“Hong Kong” the Hong Kong Special Administrative Region of the PRC “Jinhua Qinggan” 金花清感 (Jinhua Qinggan), a Chinese medicine aimed at treating patients who have been infected with Influenza A (H1N1) and other types of influenza
“Ju Xie Chang” 聚協昌（北京）藥業有限公司 ( J u X i e C h a n g ( B e i j i n g ) Pharmaceutical Company Limited*), a company established in the PRC with limited liability and an indirect wholly-owned subsidiary of the Company

DEFINITIONS

“Latest Practicable Date”	25 September 2012, being the latest practicable date prior to the
	printing of this circular for ascertaining certain information in this
	circular
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange
“Name Change”	the proposed change of the Company’s English name from
	“Beijing Yu Sheng Tang Pharmaceutical Group Limited” to “Poly
	Capital Holdings Limited”, and upon the proposed change of the
	Company’s English name becoming effective, the adoption of the
	Chinese name of “保興資本控股有限公司” in replacement of “北
	京御生堂藥業集團有限公司” for identification purpose
“PRC”	the People’s Republic of China, excluding Hong Kong, Taiwan
	and Macau Special Administrative Region of the PRC
“Purchaser”	Victory Land Investments Limited, a company incorporated in the
	British Virgin Islands with limited liability
“Remaining Group”	the Company and its subsidiaries immediately after the
	Completion
“S&P Agreement”	the conditional sale and purchase agreement dated 7 September
	2012 entered into between the Vendor and the Purchaser in
	relation to the sale and purchase of the Sale Share and the
	assignments of the Sale Loans
“Sale Loans”	the loans owing by the Disposal Group to the Vendor and the
	Company as at the date of Completion
“Sale Share”	one share of US$1.00 of the Disposal Company, being the entire
	issued share capital of the Disposal Company
“SFO”	the Securities and Futures Ordinance (Chapter 571 of the Laws of
	Hong Kong)
“SGM”	a special general meeting to be convened by the Company to
	consider and approve the S&P Agreement and the transactions
	contemplated thereunder and the Name Change
“Share(s)”	ordinary share(s) of HK$0.10 each in the issued share capital of
	the Company
“Shareholder(s)”	holder(s) of Share(s)
“Stock Exchange”	The Stock Exchange of Hong Kong Limited

DEFINITIONS

“Vendor”	Able Market Profits Limited, a company incorporated in the
	British Virgin Islands with limited liability and a direct wholly-
	owned subsidiary of the Company
“Weikang Yigan”	維康依感（北京）科技發展有限公司(Weikang Yigan (Beijing)
	Technology Development Company Limited*), a company
	established in the PRC with limited liability and an indirect
	wholly-owned subsidiary of the Company
“YST Clinic”	北京御生堂中醫門診部有限公司(Beijing Yu Sheng Tang
	Chinese Medicine Clinic Company Limited*), a company
	established in the PRC with limited liability and an indirect 70%
	owned subsidiary of the Company
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong
“RMB”	Renminbi, the lawful currency of the PRC
“US$”	United States dollars, the lawful currency of the United States of
	America
“%”	per cent.

For identification purpose only

LETTER FROM THE BOARD

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

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

Executive Directors:

Mr. Suen Cho Hung, Paul (Chairman) Mr. Sue Ka Lok (Chief Executive Officer) Mr. Bai Jianjiang Ms. Lee Chun Yeung, Catherine

Registered Office: Clarendon House 2 Church Street Hamilton HM11 Bermuda

Independent Non-executive Directors:

Mr. Wong Kwok Tai Mr. Weng Yixiang Mr. Lu Xinsheng

Head Office and Principal Place of Business in Hong Kong: Suite 1501, 15th Floor Great Eagle Centre 23 Harbour Road Wanchai Hong Kong

28 September 2012

To the Shareholders and, for information only, the holders of warrants of the Company

Dear Sir or Madam,

VERY SUBSTANTIAL DISPOSAL AND PROPOSED CHANGE OF COMPANY NAME

On 7 September 2012, the Board announced that the Vendor, a direct wholly-owned subsidiary of the Company, and the Purchaser entered into the S&P Agreement, pursuant to which (i) the Vendor has agreed to sell and the Purchaser has agreed to purchase the Sale Share, being the entire issued share capital of the Disposal Company, an indirect wholly-owned subsidiary of the Company, for a cash consideration of HK$1 and (ii) the Vendor shall assign and procure the Company to assign to the Purchaser and the Purchaser shall purchase all the right, title and interest of the Vendor and the Company in the Sale Loans with effect from Completion for a consideration of HK$99,999,999.

On 25 September 2012, the Board also proposed that the English name of the Company be changed from “Beijing Yu Sheng Tang Pharmaceutical Group Limited” to “Poly Capital Holdings Limited”, and upon the proposed change of the Company’s English name becoming effective, the adoption of the Chinese name of “保興資本控股有限公司” in replacement of “北京御生堂藥業集團有限公司” for identification purpose.

* For identification purpose only

LETTER FROM THE BOARD

The purpose of this circular is to give you details of the Disposal, the Name Change and a notice of the SGM at which the necessary resolutions will be proposed to consider and, if thought fit, to approve the S&P Agreement and the transactions contemplated thereunder and the Name Change.

THE S&P AGREEMENT

Date: 7 September 2012 (after trading hours) Parties Vendor: the Vendor, a direct wholly-owned subsidiary of the Company Purchaser: the Purchaser, an investment holding company

To the best of the Directors’s knowledge, information and belief, after having made all reasonable enquiry, the Purchaser and its ultimate beneficial owner(s) are third parties independent of and not connected with the Company and its connected persons, and they have no current or prior relationship or business arrangements/transactions with the Company and the Directors.

Assets to be disposed

Sale Share: 1 share of US$1.00 each of the Disposal Company, being the entire issued share capital of the Disposal Company

Sale Loans: being the loans owing by the Disposal Group to the Vendor and the Company as at the date of Completion, as at 31 March 2012, such loans amounting to approximately HK$116,452,000 in total

The consideration for the Sale Share and the Sale Loans

The aggregate consideration for the Sale Share and the Sale Loans of HK$100,000,000 shall be payable by the Purchaser to the Vendor (or as it may direct) in cash in the following manner:

(i) HK$15,000,000 as refundable deposit was paid upon signing of the S&P Agreement; and
(ii) the balance of HK$85,000,000 to be paid upon Completion.

The HK$15,000,000 deposit shall be refunded to the Purchaser if the conditions to Completion have not been fulfilled on or before 31 December 2012 or such other date as the parties to the S&P Agreement may agree.

LETTER FROM THE BOARD

The aggregate consideration for the Sale Share and the Sale Loans was arrived at after arm’s length negotiations between the Vendor and the Purchaser and also represents a premium of approximately 1.05% over the aggregate of the unaudited deficiency in equity attributable to owner of the Disposal Company as at 31 March 2012 of approximately HK$17,488,000 and the Sale Loans of approximately HK$116,452,000 in total as at 31 March 2012 which amounted to approximately HK$98,964,000.

Having considered the above and the factors described under the section headed “REASONS FOR THE DISPOSAL AND USE OF PROCEEDS” below, the Directors (including the independent nonexecutive Directors) consider that the aggregate consideration for the Sale Share and the Sale Loans is fair and reasonable and in the interests of the Company and the Shareholders as a whole.

Condition and Completion

Completion shall be conditional upon and is subject to:

(i) the approval of the S&P Agreement and transactions contemplated thereunder by the Shareholders at the SGM in accordance with the Listing Rules (if required); and
(ii) a written confirmation from the Purchaser to the Vendor that it is satisfied with the results of the due diligence review within 45 business days from the date of the S&P Agreement.

If the above conditions have not been satisfied on or before 31 December 2012 (or such later date as the Vendor and the Purchaser may agree) and the Purchaser gives notice to terminate the S&P Agreement, the S&P Agreement shall thereupon terminate and the Vendor shall return the deposit without interest to the Purchaser and the parties shall thereafter have no further claims against the other under the S&P Agreement for costs, damages, compensation or otherwise, save in respect of antecedent breaches.

Completion shall take place on the seventh business day (or if such day is not a business day, the next business day) after the date on which the conditions of the S&P Agreement shall have been satisfied (or such later date as the parties may agree in writing).

INFORMATION ON THE DISPOSAL GROUP

The Disposal Company is a company incorporated in the British Virgin Islands on 18 June 2009 with an authorised share capital of US$50,000 divided into 50,000 ordinary shares of US$1.00 each, of which 1 ordinary share has been issued. As at the Latest Practicable Date, the Disposal Company is wholly owned by the Vendor. The Disposal Company is an an investment holding company and the main asset of which is the entire interest in Beijing YST.

Beijing YST is a company incorporated in Hong Kong on 8 December 2009 with an authorised share capital of HK$10,000 divided into 10,000 ordinary shares of HK$1.00 each, of which 10,000 ordinary shares have been issued. As at the Latest Practicable Date, Beijing YST is wholly owned by the Disposal Company. Beijing YST is an investment holding company and the main asset of which is the entire interest in Beijing YST (PRC).

LETTER FROM THE BOARD

Beijing YST (PRC) is a company established in the PRC with limited liability with registered capital of RMB80 million. Its approved business scope covering, among other things, consultation, development and transfer of modern Chinese medicine, bio-medicine, health care product, cosmetics and electronic medical device. As at the Latest Practicable Date, Beijing YST (PRC) is wholly owned by Beijing YST and the main asset of Beijing YST (PRC) is (i) the intellectual properties in relation to Jinhua Qinggan that includes but not limited to the patent on its composition and manufacturing knowhow, the intellectual property and the processing and production rights relating to its prescription formulae for clinical use, approval for its clinical trial results and the new drug certificate; and (ii) the entire interest in Weikang Yigan.

Weikang Yigan is a company established in the PRC with limited liability with registered capital of RMB1 million. Weikang Yigan is a holding company and the main asset of which is the 70% equity interests in YST Clinic and the entire interest in Ju Xie Chang.

YST Clinic is a company established in the PRC with limited liability with registered capital of RMB600,000. YST Clinic is principally engaged in the provision of Chinese medicine consultation and its approved business scope covers medical examination and Chinese medicine consultation.

Ju Xie Chang is a company established in the PRC with limited liability with registered capital of RMB25 million. Ju Xie Chang is principally engaged in the manufacture of Chinese medicines and health care products and owns and occupies a GMP (Good manufacturing practice) compliant medicine production plant and other ancillary warehouse structures and office buildings, all housed under a parcel of land with site area of approximately 56,268 square meters.

Set out below is the structure of the Disposal Group:

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

Disposal Company
100%
Beijing YST
100%
Beijing YST (PRC)
100%
Weikang Yigan
70% 100%
YST Clinic Ju Xie Chang
----- End of picture text -----

LETTER FROM THE BOARD

Set out below is the summary of unaudited consolidated financial information of the Disposal Company for the two years ended 31 March 2012:

	For the year ended	For the year ended
	31 March 2012	31 March 2011
	(unaudited)	(unaudited)
	HK$’000	HK$’000
Turnover	34,490	15,791
Loss before taxation	(33,744)	(7,668)
Loss after taxation	(28,266)	(7,495)
(Deficiency in equity)/total
equity attributable to owner
of the Disposal Company	(17,488)	6,231

FINANCIAL EFFECTS OF THE DISPOSAL

Based on the calculation of the consideration of HK$100,000,000 for the Disposal less (i) the unaudited deficiency in equity attributable to owner of the Disposal Company as at 31 March 2012 of approximately HK$17,488,000; (ii) the assignments of the Sale Loans of approximately HK$116,452,000 in total by the Vendor and the Company to the Purchaser; (iii) realisation of translation reserve of the Disposal Group of approximately HK$8,081,000; and (iv) the related expenses of approximately HK$800,000, it is expected that, upon Completion, for illustrative purpose, an unaudited gain before taxation of approximately HK$8,317,000 will be recognised from the Disposal.

The actual gain or loss arising from the Disposal shall be determined based on the deficiency in equity attributable to owner of the Disposal Company, the amount of the Sale Loans and translation reserve of the Disposal Group as at the date of Completion, and the amount of expenses incidental to the Disposal which may be different from the above.

Based on the unaudited pro forma financial information of the Remaining Group as set out in Appendix III to this circular, the financial effects of the Disposal on the Group are summarized as follows:

(1) The Group’s total assets would decrease from approximately HK$1,450,517,000 to HK$1,242,763,000, and the Group’s total liabilities would decrease from approximately HK$252,568,000 to approximately HK$42,785,000 upon Completion; and
(2) The Group’s performance for the year ended 31 March 2012 would change from a loss of approximately HK$468,870,000 to a loss of approximately HK$459,580,000, which is mainly attributable to (i) the inclusion of the estimated loss of approximately HK$18,976,000 arising from the Disposal as if the Disposal had taken place on 1 April 2011, after deducting expenses incidental to the Disposal; and (ii) the exclusion of the loss of the Disposal Group for the year ended 31 March 2012 of approximately HK$28,266,000.

Upon Completion, each members of the Disposal Group shall cease to be subsidiaries of the Company. Their profit and loss and the assets and liabilities will no longer be consolidated into the Group’s consolidated financial statements.

LETTER FROM THE BOARD

REASONS FOR THE DISPOSAL AND USE OF PROCEEDS

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

As mentioned in the annual report of the Company for the year ended 31 March 2012, Jinhua Qinggan is selling as a prescription drug to designated medical institutions in Beijing, and the Group’s pharmaceutical division will only be able to market the medicine as a non-prescription drug to public subject to the issuance of a new drug certificate from the relevant authorities in the PRC. The division has submitted medicine tests results in connection with the application of such certificate and has been awaiting for feedback and results of its application.

However, as the issuance date of such certificate is uncertain and substantial promotional expenses had been incurred in marketing Jinhua Qinggan and that sales volume of the medicine had not yet reached a scale that could cover the division’s operating costs, in particular, the high start-up costs in its early stage of operation, the division had been incurring losses in the past two financial years, the Board therefore believes that the Disposal will enable the Group to deploy resources in other business with better prospects.

In view of the net proceeds of approximately HK$99,200,000 to be received from the Disposal, the Directors consider that the Disposal represents a good opportunity for the Company to strengthen its cash position. The Directors (including the independent non-executive Directors) consider that the S&P Agreement is on normal commercial terms and the terms of the S&P Agreement are fair and reasonable and the Disposal is in the interests of the Company and the Shareholders as a whole.

Upon Completion, the Group will cease the operation of the pharmaceutical business and continue to engage in the three remaining businesses, namely supply and procurement, provision of finance and securities investment. The net proceeds from the Disposal of approximately HK$99,200,000 will be applied as working capital and for the development of the Group’s three remaining businesses, in particular, the Group has recently expanded its supply and procurement business to timber logs trading and presently intends to allocate the proceeds of approximately HK$30,000,000 (the budgeted amount was arrived at by making reference to prepayments to be made to suppliers for purchase of timber logs and related estimated purchases on a quarterly basis) for the development of this new segment of business. As to the balance of net proceeds of approximately HK$69,200,000, the Group presently intends to apply such funds as general working capital for the ongoing metal minerals trading activities of its supply and procurement business, the short-term lending activities of its provision of finance business and the equity investments activities of its securities investment business. For the year ended 31 March 2012, the Group’s supply and procurement business generated a revenue of HK$1,059,617,000 and the Group held a loan and securities portfolio amounted to HK$66,838,000 and HK$715,251,000 respectively at the year end. The Group’s loan portfolio comprised mainly short-term loans made to customers based in Hong Kong, and the Group’s securities portfolio comprised mainly listed equity securities and convertible bonds issued by listed companies in Hong Kong. Depending on funding needs of these businesses from time to time, the Group will allocate the proceeds to the three business operations accordingly to cope with their operational requirements. The Group has no negotiations or arrangements relating to intended acquisitions up to the Latest Practicable Date. Nevertheless, the Directors consider that the cash resources made available after Completion will enable the Group to capture attractive business and investment opportunities should they arise.

LETTER FROM THE BOARD

The Group will continue its established business in supply and procurement of metal minerals and will put effort in developing its new operation of timber logs trading. The Directors are optimistic about the prospects of natural resources related businesses in the medium and long term and will continue to devote financial resources to develop the Group’s supply and procurement business. The Group will also continue to develop its provision of finance business in light of the profitable results achieved in the past years. The financing operation provides a stable income source to the Group and the Directors intend to progressively expand the scale of this business depending on market conditions and financial resources available from time to time. In view of the instabilities of major global financial and investment markets caused by the continuation of the European sovereign crises, the slow recovery of the United States economy and the slowdown of GDP (Gross domestic product) growth of the Mainland economy, the Directors have been, and will continue to be prudent in managing the Group’s securities investment business. The management has been regularly reviewing and reformulating the investment strategy of this business in order to cope with the market volatilities. For the year ended 31 March 2012, most of the businesses of the Group were negatively affected by the global financial issues and the weakening macroeconomic conditions in the PRC by varying degrees and had not performed well. Despite that the Directors are optimistic about the Group’s businesses in the medium to long term, the management will, in view of the uncertainties and challenges embedded in the business environments the Group is operating in, manage and develop the Group’s businesses in a prudent and cautious manner. Looking forward, the Group will continue to engage in the three remaining businesses after the Disposal and will continue to look for investment opportunities in energy and resources related businesses or other attractive business opportunities by way of trading or acquisition of business or assets.

PROPOSED CHANGE OF COMPANY NAME

On 25 September 2012, the Board proposes that the English name of the Company be changed from “Beijing Yu Sheng Tang Pharmaceutical Group Limited” to “Poly Capital Holdings Limited”, and upon the proposed change of the Company’s English name becoming effective, the adoption of the Chinese name of “保興資本控股有限公司” in replacement of “北京御生堂藥業集團有限公司” for identification purpose.

The Name Change is subject to approval of the Shareholders by way of a special resolution at the SGM and approval of the Registrar of Companies in Bermuda.

Subject to satisfaction of the conditions set out above, the Name Change will take effect from the date on which the Registrar of Companies in Bermuda enters the Company’s new English name on the register maintained by the Registrar of Companies in Bermuda in place of the existing English name. Upon the Name Change becoming effective, the Company will comply with the necessary filing procedures in Hong Kong.

The Board believes that the new English and Chinese names will provide the Company with a fresh corporate image and will better reflect the business diversity of the Group, which is in the interests of the Company and the Shareholders as a whole.

Upon the Name Change becoming effective, the Shares will be traded on the Stock Exchange under the new name. The stock short name of the Company will also be changed accordingly.

LETTER FROM THE BOARD

SHARE CERTIFICATES

Share certificates issued after the Name Change has become effective will be under the new name of the Company. The Name Change will not, by itself, affect any of the rights of the Shareholders. Save for the change of stock short name to be announced by the Company, the trading arrangements for the Shares on the Stock Exchange will not be affected. All existing share certificates of the Company (in “red” colour) in issue bearing the Company’s existing name shall continue to be evidence of legal title to the Shares and valid for trading, settlement, registration and delivery purposes. Accordingly, there will not be any arrangement for free exchange of existing share certificates of the Company for new share certificates (in “yellow” colour) under the new name of the Company.

SGM

A notice convening the SGM to be held at Plaza 1 and 2, Lower Lobby, Novotel Century Hong Kong, 238 Jaffe Road, Wanchai, Hong Kong on Monday, 22 October 2012 at 9:30 a.m. is set out on pages 49 to 50 of this circular. Whether or not you are able to attend the SGM in person, please complete and return the accompanying form of proxy in accordance with the instructions printed thereon to the Company’s Hong Kong branch share registrar and transfer office, Tricor Tengis Limited, at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong as soon as practicable but in any event not less than forty-eight (48) hours before the time appointed for the holding of the SGM or any adjourned meeting thereof. Completion and return of the accompanying form of proxy will not preclude you from attending and voting in person at the SGM or any adjourned meeting thereof should you so wish and in such event, the form of proxy shall be deemed to be revoked.

To the best of the knowledge, information and belief of the Directors, after having made all reasonable enquiry, none of the Shareholders has a material interest in the S&P Agreement and the Name Change or is required to abstain from voting on the resolutions to approve the S&P Agreement and the transactions contemplated thereunder and the Name Change.

RECOMMENDATION

The Board considers that the terms of the S&P Agreement are fair and reasonable and the Disposal is in the interests of the Company and the Shareholders as a whole. Accordingly, the Board recommends the Shareholders to vote in favour of the ordinary resolution as set out in the notice of the SGM.

The Board considers that the Name Change is in the interests of the Company and the Shareholders as a whole. Accordingly, the Board recommends the Shareholders to vote in favour of the special resolution as set out in the notice of the SGM.

ADDITIONAL INFORMATION

Your attention is drawn to the additional information contained in the appendices to this circular.

By Order of the Board Beijing Yu Sheng Tang Pharmaceutical Group Limited Suen Cho Hung, Paul

Chairman

FINANCIAL INFORMATION OF THE DISPOSAL GROUP

APPENDIX I

1. FINANCIAL INFORMATION OF THE DISPOSAL GROUP

Set out below are unaudited consolidated statement of comprehensive income, unaudited consolidated statement of financial position, unaudited consolidated statement of changes in equity and unaudited consolidated statement of cash flows of the Disposal Group for the period/years ended 31 March 2010, 2011 and 2012 prepared under the Listing Rules 14.68(2)(a)(i), which have been reviewed by the Group’s auditor, HLB Hodgson Impey Cheng, in accordance with Hong Kong Standard on Review Engagements 2410 “Review of Interim Financial Information Performed by the Independent Auditor of the Entity”, issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”). Capitalised terms used herein have the same meaning as those defined in this circular unless the context otherwise requires.

Consolidated Statement of Comprehensive Income

29 January 2010
(date of acquisition)
to 31 March 2010
HK$’000
Revenue
267
Cost of sales
(177)
Gross profit
90
Other income and gains
2
Selling and distribution costs
(409)
Administrative expenses
(1,355)
Finance costs
(574)
Impairment loss recognised in respect of
intangible asset
–
Excess of acquirer’s interest in fair value of
acquiree’s identifiable net assets over costs
10,688
Profit/(loss) before taxation
8,442
Taxation
28
Profit/(loss) for the period/year
8,470
Other comprehensive income
Exchange difference on translating foreign
operations
–
Other comprehensive income for the
period/year, net of tax
–
Total comprehensive income/(expense)
for the period/year
8,470

Years ended 31 March
2011
2012
HK$’000
HK$’000
15,791
34,490
(6,001)
(15,922)
9,790
18,568
58
48
(470)
(8,668)
(12,801)
(18,021)
(4,245)
(3,967)
–
(21,704)
–
–
(7,668)
(33,744)
173
5,478
(7,495)
(28,266)
4,527
3,488
4,527
3,488
(2,968)
(24,778)

FINANCIAL INFORMATION OF THE DISPOSAL GROUP

APPENDIX I

29 January 2010 (date of acquisition) to 31 March 2010 HK$’000 Profit/(loss) for the period/year attributable to: Owner of the Company 8,500 Non-controlling interests (30) 8,470 Total comprehensive income/(expense) attributable to: Owner of the Company 8,500 Non-controlling interests (30) 8,470	Years ended 31 March 2011 2012 HK$’000 HK$’000 (6,698) (27,247) (797) (1,019) (7,495) (28,266) (2,145) (23,719) (823) (1,059) (2,968) (24,778)

FINANCIAL INFORMATION OF THE DISPOSAL GROUP

APPENDIX I

Consolidated Statement of Financial Position

Non-current assets Property, plant and equipment Prepaid lease payments Other deposits Intangible asset Goodwill Total non-current assets Current assets Inventories Accounts receivable Prepayments, deposits and other receivables Cash and bank balances Total current assets Current liabilities Accounts payable Other payables and accruals Amounts due to ultimate and intermediate holding companies Bank loans Amount due to a director Total current liabilities Net current liabilities Total assets less current liabilities	2010 HK$’000 34,472 32,311 842 146,286 9,935 223,846 13,100 189 2,977 2,131 18,397 5,224 133,200 43,966 35,402 301 218,093 (199,696) 24,150	As at 31 March 2011 2012 HK$’000 HK$’000 35,760 38,796 32,870 33,175 2,187 190 152,320 135,558 9,935 9,935 233,072 217,654 14,179 6,704 10,822 21,260 10,647 22,933 44,384 38,403 80,032 89,300 2,396 17,108 136,972 152,971 116,498 116,452 35,672 28,751 – – 291,538 315,282 (211,506) (225,982) 21,566 (8,328)

APPENDIX I

FINANCIAL INFORMATION OF THE DISPOSAL GROUP

Non-current liabilities Deferred tax liabilities Total non-current liabilities Net assets/(liabilities) Capital and reserves Share capital Reserves Equity/(deficiency of equity) attributable to owner of the Company Non-controlling interests Total equity/(deficiency of total equity)	2010 HK$’000 15,603 15,603 8,547 – 8,500 8,500 47 8,547	As at 31 March 2011 2012 HK$’000 HK$’000 16,069 10,953 16,069 10,953 5,497 (19,281) – – 6,231 (17,488) 6,231 (17,488) (734) (1,793) 5,497 (19,281)

FINANCIAL INFORMATION OF THE DISPOSAL GROUP

APPENDIX I

Consolidated Statement of Changes in Equity

Attributable	to owner of the Company	Total HK$’000 – 8,470
Translation reserve HK$’000 – – – – – – 4,553 4,553 – 4,553 – 3,528 3,528 8,081	Retained profit/ Other (accumulated reserve losses) HK$’000 HK$’000 – – – 8,500 – 8,500 – – – 8,500 – (6,698) – – – (6,698) (124) – (124) 1,802 – (27,247) – – – (27,247) (124) (25,445)
		8,470
		77
		8,547 (7,495) 4,527
		(2,968) (82)
		5,497 (28,266) 3,488
		(24,778)
		(19,281)

FINANCIAL INFORMATION OF THE DISPOSAL GROUP

APPENDIX I

Consolidated Statement of Cash Flows

29 January 2010
(date of acquisition)
to 31 March 2010
HK$’000
Cash flows from operating activities
Profit/(loss) before taxation
8,442
Adjustments for:
Finance costs
574
Bank interest income
(2)
Depreciation of property, plant and equipment
113
Amortisation of prepaid lease payments
124
Impairment loss recognised in respect of
intangible asset
–
Excess of acquirer’s interest in fair value of
acquiree’s identifiable net assets over costs
(10,688)
Operating cash flows before movements in
working capital
(1,437)
(Increase)/decrease in inventories
(12,679)
Increase in accounts receivable
(189)
Decrease/(increase) in prepayments, deposits
and other receivables
8,048
Increase/(decrease) in accounts payable
5,224
(Decrease)/increase in other payables
and accruals
(172)
Increase/(decrease) in amount due to a director
301
Net cash (outflow)/inflow from operating
activities
(904)
Cash flows from investing activities
Bank interest received
2
Purchase of property, plant and equipment
–
Net cash outflow on acquisition of subsidiaries
(40,201)
Increase in other deposits
(732)
Net cash outflow from investing activities
(40,931)

Years ended 31 March
2011
2012
HK$’000
HK$’000
(7,668)
(33,744)
4,245
3,967
(58)
(48)
1,968
2,826
754
793
–
21,704
–
–
(759)
(4,502)
(1,079)
7,475
(10,633)
(10,438)
(7,639)
(12,259)
(2,828)
14,712
(555)
12,032
(301)
–
(23,794)
7,020
58
48
(1,206)
(2,618)
–
–
(2,006)
–
(3,154)
(2,570)

FINANCIAL INFORMATION OF THE DISPOSAL GROUP

APPENDIX I

Consolidated Statement of Cash Flows

29 January 2010
(date of acquisition)
to 31 March 2010
HK$’000
Cash flows from financing activities
Advance from/(repayment to) ultimate and
intermediate holding companies
43,966
Repayment of bank loans
–
Net cash inflow/(outflow) from financing
activities
43,966
Net increase/(decrease) in cash and cash
equivalents
2,131
Cash and cash equivalents at beginning
of period/year
–
Effect of foreign exchange rate changes, net
–
Cash and cash equivalents at end of
period/year
2,131

Years ended 31 March
2011
2012
HK$’000
HK$’000
72,532
(46)
(1,160)
(8,054)
71,372
(8,100)
44,424
(3,650)
2,131
44,384
(2,171)
(2,331)
44,384
38,403

FINANCIAL INFORMATION OF THE DISPOSAL GROUP

APPENDIX I

Notes to the Financial Information

1. GENERAL INFORMATION

On 7 September 2012, the Vendor and the Purchaser entered into the S&P Agreement as announced by the Company on 7 September 2012. Upon the completion of the Disposal, the Disposal Group ceases to be subsidiaries of the Group.

2. BASIS OF PREPARATION OF THE FINANCIAL INFORMATION

The financial information of the Disposal Group has been prepared in accordance with paragraph 68(2)(a)(i) of Chapter 14 of the Listing Rules, and solely for the purpose of inclusion in the circular to be issued by the Company in connection with the Disposal. The amounts in the financial information for each of the period/years ended 31 March 2010, 2011 and 2012 have been recognised and measured in accordance with the relevant accounting policies of the Group adopted in the preparation of its consolidated financial statements, which conform with the Hong Kong Financial Reporting Standards issued by the HKICPA.

The financial information does not contain sufficient information to constitute a complete set of financial statements as defined in Hong Kong Accounting Standard 1 “Presentation of Financial Statements”.

The unaudited consolidated statement of comprehensive income, unaudited consolidated statement of changes in equity and unaudited consolidated statement of cash flows of the Disposal Group for each of the period/years ended 31 March 2010, 2011 and 2012 include the results, changes in equity and cash flows of the Disposal Group throughout the period/ years ended 31 March 2010, 2011 and 2012.

The unaudited consolidated statement of financial position of the Disposal Group at 31 March 2010, 2011 and 2012 include assets, liabilities and equity of the Disposal Group which were in existence on those dates.

3. EVENTS AFTER THE REPORTING PERIOD

There was no significant event happened after the end of the reporting period.

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

1. INDEBTEDNESS

At the close of business 31 August 2012, being the latest practicable date for the purpose of ascertaining the indebtedness of the Group prior to the printing of this circular, the Group had outstanding borrowings comprising secured bank loans of approximately HK$25,130,000.

Save as disclosed above, the Group, apart from intra-group liabilities and normal trade payables in the ordinary course of business, did not have any loan capital issued and outstanding or agreed to be issued, bank overdrafts, loans or other similar indebtedness, liabilities under acceptance (other than normal trade bills), or acceptance credits, debentures, mortgages, charges, finance leases, hire purchase commitments, guarantees or other material contingent liabilities as at 31 August 2012.

2. WORKING CAPITAL

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

3. FINANCIAL AND TRADING PROSPECTS OF THE REMAINING GROUP

Upon Completion, the Group will cease the operation of the pharmaceutical business and continue to engage in the three remaining businesses, namely supply and procurement, provision of finance and securities investment. The net proceeds from the Disposal of approximately HK$99,200,000 will be applied as working capital and for the development of the Group’s three remaining businesses, in particular, the Group has recently expanded its supply and procurement business to timber logs trading and presently intends to allocate the proceeds of approximately HK$30,000,000 for the development of this new segment of business. The Group has an established business in supply and procurement of metal minerals and has recently expanded its operation to timber logs trading. For the metal minerals business, the operation sources from suppliers in South East Asia and Middle East and sell to industrial customers in the PRC, and for the timber logs business, the operation commences to source timber logs from suppliers in Melanesian countries and plans to sell to customers in the PRC. The Group has no negotiations or arrangements relating to intended acquisitions up to the Latest Practicable Date. Nevertheless, the Directors consider that the cash resources made available after Completion will enable the Group to capture attractive business and investment opportunities should they arise. Looking forward, the Group will continue to engage in the three remaining businesses after the Disposal and will continue to look for investment opportunities in energy and resources related businesses or other attractive business opportunities by way of trading or acquisition of business or assets.

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

4. MANAGEMENT DISCUSSION AND ANALYSIS OF THE REMAINING GROUP

Set out below is the management discussion and analysis on the Remaining Group for the three years ended 31 March 2012 as if the Disposal was completed on 1 April 2009:

(i) for the year ended 31 March 2012

Business Review

For the year ended 31 March 2012, the Remaining Group would have recorded revenue of HK$1,080,073,000, decreased by 42% from last year (2011: HK$1,862,684,000) and a gross profit of HK$1,756,000, dropped by 96% from the previous year (2011: HK$40,811,000). The decreases in the Remaining Group’s revenue and gross profit were largely due to the decline in volume of metal minerals traded by the Remaining Group’s supply and procurement division during the year.

During the year under review, the Remaining Group’s supply and procurement division continued to focus on the sourcing, transporting and supplying of metal minerals. The division posted revenue of HK$1,059,617,000 (2011: HK$1,857,066,000), declined by 43% from last year, and incurred operating loss of HK$15,165,000, in contrast to the operating profit of HK$31,708,000 in the previous year. During the last quarter of 2011, the building materials market in the Mainland showed a rapid slowdown and a drop in demand for metal minerals, which in turn, was caused by the financial tightening measures imposed on the property sector by the Chinese government. The noticeable drop in demand of metal minerals drove down the division’s revenue and consequently its profitability, in addition, the very volatile metal minerals market appeared in the fourth quarter of 2011 also posed problems on the division in fixing prices for its commodities, which ultimately resulted in a shipment of goods being completed at a considerable loss. Overall speaking, the year under review was a difficult year for the division. Looking forward, there are signs that the metal minerals market in the Mainland is stabilized and management expects that, given the current economic situation in the Mainland, the demand and price for metal minerals will tend to be steady for the remaining times in 2012.

The financing division continued to contribute a stable income to the Remaining Group’s results for the year. The division reported revenue and operating profit of HK$4,418,000 (2011: HK$3,289,000) and HK$4,235,000 (2011: HK$3,250,000) respectively, increased by 34% and 30% over their comparables in last year. The increases were mainly due to the comparatively higher average amount of loans advanced to customers over the previous year. As at 31 March 2012, the loan portfolio held by the Remaining Group amounted to HK$66,838,000, increased by 2.3 times compared to last year (2011: HK$20,000,000). In view of the profitable results achieved by the division in the past years, the management intends to progressively expand the scale of this division depending on market conditions and financial resources available from time to time.

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

The Remaining Group’s securities division incurred an overall operating loss of HK$414,792,000 (2011: HK$119,053,000) for the year. The Remaining Group invested in Hong Kong listed equity securities, convertible bonds and equity-linked notes and loss incurred comprised mainly unrealised loss of HK$410,246,000 (2011: HK$89,162,000) from holdings of listed equity securities and convertible bonds at the financial year end.

For the year ended 31 March 2012, the Remaining Group would have recorded loss attributable to owners of the Company of HK$440,604,000 (2011: HK$113,675,000). Such loss was mainly attributed to the loss incurred by the Remaining Group’s securities investment division. Throughout the financial year, the Hong Kong stock market had been under the negative influences of the sovereign debts crises in Europe, the slow recovery of the United States economy, the financial tightening measures imposed by the Chinese government on its banking and property sector, and the slowdown of GDP growth of the Mainland economy. From April 2011 to March 2012, Hang Seng Index, Hang Seng Chinese Enterprises Index and Hang Seng Composite Mid Cap Index dropped by approximately 14%, 21% and 23% respectively. Investor confidence and market sentiments were weak for a large part of the year and prices of listed securities invested by the Remaining Group fell. Looking ahead, it is expected that the global financial and investment markets will continue to be volatile in view of the issues including the European sovereign debt crises, the state of recovery of the US economy and the slower GDP growth of the Mainland economy. In light of the uncertainties embedded in the investment environments the division is facing, the management has been, and will continue to be prudent in managing the Remaining Group’s securities investment business and will review and reformulate its investment strategy from time to time in order to cope with these market volatilities.

Material Acquisitions and Disposals

There were no material acquisitions or disposals of subsidiaries, associates and jointly controlled entities during the year.

Liquidity, Financial Resources and Capital Structure

At 31 March 2012, the Remaining Group would have current assets of HK$1,257,489,000 (2011: HK$1,679,369,000) and liquid assets comprising cash and bank balances and short-term securities investments totaled HK$991,462,000 (2011: HK$953,230,000) (excluding pledged bank deposits). The Remaining Group’s current ratio, calculated based on current assets of HK$1,257,489,000 (2011: HK$1,679,369,000) over current liabilities of the Remaining Group of HK$42,785,000 (2011: HK$223,709,000), would be at a strong ratio of 29.39 at the year end (2011: 7.51).

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

The Company issued approximately 2,554 million new shares (after adjusted for the effect of share consolidation in February 2012) and raised net proceeds of approximately HK$386.3 million during the year as a result of placing and rights issue of new shares as well as exercising of warrants. At the year end, equity attributable to owners of the Company would have amounted to HK$1,217,230,000, representing a decrease of 6% compared to last year (2011: HK$1,291,328,000). The decrease of the equity attributable to owners of the Company was mainly a result of the loss incurred by the Remaining Group, after partly offset by the new capital raised during the year.

At 31 March 2012, the Remaining Group’s total indebtedness would have comprised bank advances for discounted bills of HK$31,169,000 (2011: HK$161,347,000 (represented the fair value of convertible notes)). The Remaining Group’s gearing ratio, calculated on the basis of total indebtedness divided by total indebtedness plus equity attributable to owners of the Company, would be at a low ratio of 2% at the year end (2011: 11%).

Foreign Currency Management

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

Pledge of Assets

At 31 March 2012, bank deposits of HK$15,008,000 were pledged to secure banking facilities granted to the Remaining Group. The 94% decrease in pledged bank deposits compared with last year (2011: HK$248,028,000) was mainly due to decline in trade volume of the supply and procurement division with the results that less deposits were placed with banks to secure trade credit facilities granted to the Remaining Group at the year end.

Contingent Liability

At 31 March 2012, the Remaining Group had no significant contingent liability (2011: nil).

Capital Commitment

At 31 March 2012, the Remaining Group had no significant capital commitment (2011: nil).

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

Employees and Remuneration Policy

At 31 March 2012, the Remaining Group would have about 30 (2011: 30) employees including directors. Total staff costs for the year, including directors’ remuneration, would be HK$10,081,000 (2011: HK$11,042,000). Remuneration packages for directors and employees were structured by reference to market conditions and individual performance. Benefits plans maintained by the Remaining Group included provident fund scheme, medical insurance, share option scheme and discretionary bonuses.

Future Plans for Material Investments or Capital Assets

There was no specific plan for material investments or acquisition of material capital assets.

(ii) for the year ended 31 March 2011

Business Review

For the year ended 31 March 2011, the Remaining Group would have reported revenue of HK$1,862,684,000, representing a sharp growth of 117% from last year (2010: HK$859,491,000), and gross profit of HK$40,811,000, also showing a jump rise of 87% over the previous year (2010: HK$21,797,000). The significant increases in the Remaining Group’s revenue and gross profit were largely driven by the strong growth of the Remaining Group’s supply and procurement division.

During the year under review, the Remaining Group’s supply and procurement division continued to focus on the sourcing, transporting and supplying of metal minerals. The division achieved remarkable business results by reporting a more-than-double increases in revenue and operating profit when compared to last year. There was a surge in volume of mineral ores traded by the division that was mainly due to the great demand from its industrial customers in Mainland China. The division posted revenue and operating profit of HK$1,857,066,000 (2010: HK$853,816,000) and HK$31,708,000 (2010: HK$14,879,000) respectively, which jumped by 118% and 113% over last year.

The financing division continued to contribute a stable income to the Remaining Group’s results for the year. The division reported operating profit of HK$3,250,000 (2010: HK$1,830,000), increased by 78% that was mainly due to the higher average amount of loans advanced to customers over the previous year.

The Remaining Group’s securities division incurred an overall operating loss of HK$119,053,000 for the year (2010: HK$9,811,000). The Remaining Group invested in Hong Kong listed equity securities and equity-linked notes and loss incurred comprised mainly unrealised loss of HK$89,162,000 (2010: HK$12,381,000) from listed equity securities holding at the financial year end.

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

For the year ended 31 March 2011, the Remaining Group would have recorded loss attributable to owners of the Company of HK$113,675,000 (2010: HK$25,262,000). Such loss was mainly attributed to the loss incurred by the Remaining Group’s securities investment division. During the financial year, the Hong Kong stock market was volatile largely brought by the sovereign debts crises in Europe, the uncertainties of the United States economy, the financial tightening measures imposed by the PRC government on the banking and property sector and the tri-catastrophe crises in Japan. Investor confidence and market sentiments were weak for most part of the year and pressed down prices of listed equity securities invested by the Remaining Group.

Material Acquisitions and Disposals

There were no material acquisitions or disposals of subsidiaries, associates and jointly controlled entities during the year.

Liquidity, Financial Resources and Capital Structure

At 31 March 2011, the Remaining Group would have current assets of HK$1,679,369,000 (2010: HK$1,162,305,000) and liquid assets comprising cash and bank balances and short-term securities investments totaled HK$953,230,000 (2010: HK$844,012,000) (excluding pledged bank deposits). The Remaining Group’s current ratio, calculated based on current assets of HK$1,679,369,000 (2010: HK$1,162,305,000) over current liabilities of the Remaining Group of HK$223,709,000 (2010: HK$71,675,000), would be at a strong ratio of 7.51 at the year end (2010: 16.22).

The Company issued approximately 1,563 million new shares during the year as a result of placing of new shares and exercising of share options granted. At the year end, equity attributable to owners of the Company would have amounted to HK$1,291,328,000, representing an increase of 38% compared to last year (2010: HK$938,179,000). The increase in equity attributable to owners of the Company was mainly contributed by the net proceeds raised from the issue of new shares during the year which amounted to HK$466,824,000.

At 31 March 2011, the Remaining Group’s total indebtedness would have comprised convertible notes of HK$161,347,000 (2010: HK$147,882,000). The Remaining Group’s gearing ratio, calculated on the basis of total indebtedness divided by total indebtedness plus equity attributable to owners of the Company, would be at a low level of 11% at the year end (2010: 14%). The convertible notes were dominated in Hong Kong dollars and bore fixed interest rate at 1% per annum.

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

Foreign Currency Management

Pledge of Assets

At 31 March 2011, bank deposits of HK$248,028,000 were pledged to secure banking facilities granted to the Remaining Group. The 89% increase in pledged bank deposits compared with last year (2010: HK$131,099,000) was mainly due to the surge in trade volume of the supply and procurement division with the results that additional deposits were placed with banks to secure trade credit facilities granted to the Remaining Group.

Contingent Liability

At 31 March 2011, the Remaining Group had no significant contingent liability (2010: nil).

Capital Commitment

At 31 March 2011, the Remaining Group would have no significant capital commitment (2010: nil).

Employees and Remuneration Policy

At 31 March 2011, the Remaining Group would have about 30 (2010: 25) employees including directors. Total staff costs for the year, including directors’ remuneration, would be HK$11,042,000 (2010: HK$7,363,000, excluding equity settled share-based payment expenses). Remuneration packages for directors and employees were structured by reference to market conditions and individual performance. Benefits plans maintained by the Remaining Group included provident fund scheme, medical insurance, share option scheme and discretionary bonuses.

Future Plans for Material Investments or Capital Assets

There was no specific plan for material investments or acquisition of material capital

assets.

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

(iii) for the year ended 31 March 2010

Business Review

The Remaining Group’s revenue for the year ended 31 March 2010 would have amounted to HK$859,491,000, representing a 145% growth from last year (2009: HK$350,146,000) whereas gross profit of the Remaining Group would be HK$21,797,000, which also shows an increase of 54% over the previous year (2009: HK$14,170,000). The sharp increases in the Remaining Group’s revenue and gross profit were mainly attributed to the strong business growth of the Remaining Group’s supply and procurement division.

During the year, the supply and procurement division had significantly expanded its network of suppliers and customers for trading of metal minerals with the results that the trade volume of the division had increased substantially. The revenue and operating profit of this division was HK$853,816,000 (2009: HK$348,127,000) and HK$14,879,000 (2009: HK$9,718,000) respectively, jumped by 145% and 53% over last year.

The financing division of the Remaining Group continued to contribute a stable income to the Remaining Group’s results for the year. The operating profit of the division was HK$1,830,000, increased by 16% (2009: HK$1,571,000) which was mainly due to the comparatively higher average amount of loans advanced to customers when compared to last year.

The Remaining Group’s securities division incurred an overall operating loss of HK$9,811,000 for the year (2009: HK$1,103,000). The Remaining Group mainly invested in listed equity securities in Hong Kong and loss incurred comprised mainly unrealised loss of HK$12,381,000 from securities holding at the financial year end.

For the year ended 31 March 2010, the Remaining Group would have recorded loss attributed to owners of the Company of HK$25,262,000 (2009: HK$4,907,000). Such loss was mainly attributable to the loss incurred by the Remaining Group’s securities investment division and the non-cash equity settled share-based payment expenses of HK$20,958,000 (2009: HK$2,931,000). The equity settled share-based payment expenses represented expenses recognised for fair value of share options granted to directors and employees of the Company which involved no cash outlays.

Material Acquisitions and Disposals

There were no material acquisitions or disposals of subsidiaries, associates and jointly controlled entities during the year.

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

Liquidity, Financial Resources and Capital Structure

At 31 March 2010, the Remaining Group would have current assets of HK$1,162,305,000 (2009: HK$273,967,000) and liquid assets comprising cash and shortterm securities investment of HK$844,012,000 (2009: HK$201,448,000) (excluding pledged bank deposits). The Remaining Group’s current ratio, calculated based on current assets of HK$1,162,305,000 (2009: HK$273,967,000) over current liabilities of the Remaining Group of HK$71,675,000 (2009: HK$47,236,000), would be at a strong ratio of 16.22 at the year end (2009: 5.80).

The Company issued approximately 1,160 million new shares during the year as a result of placings of new shares, conversion of convertible notes issued and exercise of share options granted. At the year end, equity attributable to owners of the Company amounting to HK$938,179,000 (2009: HK$228,022,000). The increase in equity attributable to owners of the Company was mainly contributed by proceeds raised from new shares issued during the year.

In January 2010, the Company issued convertible notes with total principal amount of HK$244,900,000 which could be converted into ordinary shares of the Company at an initial conversion price of HK$0.62 per share. Up to the year end, convertible notes with aggregate principal amount of HK$55,800,000 were converted into shares of the Company and thus convertible notes with aggregate principal amount of HK$189,100,000 were outstanding. At 31 March 2010, the Remaining Group’s total indebtedness would have comprised the fair value of convertible notes of HK$147,882,000 (2009: HK$30,563,000). The Remaining Group’s gearing ratio, calculated on the basis of total indebtedness divided by total indebtedness and equity attributable to owners of the Company, would be at a low level of 14% at the year end (2009: 12%). The convertible notes were dominated in Hong Kong dollars and bore fixed interest rate at 1% per annum.

Foreign Currency Management

Pledge of Assets

At 31 March 2010, bank deposits of HK$131,099,000 (2009: HK$37,626,000) were pledged to secure banking facilities granted to the Remaining Group.

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

Contingent Liability

At 31 March 2010, the Remaining Group had no significant contingent liability.

Capital Commitment

At 31 March 2010, the Remaining Group had no significant capital commitment.

Employees and Remuneration Policy

At 31 March 2010, the Remaining Group would have about 25 (2009: 20) employees including directors. Total staff costs for the year, including directors’ remuneration but excluding equity settled share-based payment expenses, would be HK$7,363,000 (2009: HK$4,110,000). Remuneration packages for directors and employees were structured by reference to market conditions and individual performance. Benefits plans maintained by the Remaining Group included mandatory provident fund scheme, medical insurance, share option scheme and discretionary bonuses.

Future Plans for Material Investments or Capital Assets

There was no specific plan for material investments or acquisition of material capital assets.

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

The following is the text of a report, prepared for the purpose of incorporation in this circular, received from the independent reporting accountants, HLB Hodgson Impey Cheng, Chartered Accountants, Certified Public Accountants, Hong Kong.

==> picture [239 x 89] intentionally omitted <==

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

28 September 2012

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

Dear Sirs,

ACCOUNTANTS’ REPORT ON THE UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

We report on the unaudited pro forma financial information of Beijing Yu Sheng Tang Pharmaceutical Group Limited (the “Company”) and its subsidiaries (hereinafter collectively referred to as the “Group”), set out on pages 33 to 41 under the headings of “UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP” (the “Unaudited Pro Forma Financial Information”) in Appendix III of the Company’s circular dated 28 September 2012 (the “Circular”) in connection with the proposed disposal of the entire issued share capital of Poly Fortune Enterprises Limited (the “Disposal Company”) by the Group and the proposed sale of the loans owing by the Disposal Company and its subsidiaries to Able Market Profits Limited and the Company as announced by the Company on 7 September 2012 (the “Disposal”). The Unaudited Pro Forma Financial Information has been prepared by the directors of the Company, for illustrative purposes only, to provide information about how the Disposal might have affected the relevant financial information presented, for inclusion in Appendix III of the Circular. The basis of preparation of the Unaudited Pro Forma Financial Information is set out on pages 33 to 41 of the Circular.

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

Respective responsibilities of directors of the Company and Reporting Accountants

It is the responsibility solely of the directors of the Company to prepare the Unaudited Pro Forma Financial Information in accordance with paragraph 4.29 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”) and with reference to Accounting Guideline 7 “Preparation of Pro Forma Financial Information for Inclusion in Investment Circulars” issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”).

It is our responsibility to form an opinion, as required by paragraph 4.29(7) of the Listing Rules, on the Unaudited Pro Forma Financial Information and to report our opinion solely to you. We do not accept any responsibility for any reports previously given by us on any financial information used in the compilation of the Unaudited Pro Forma Financial Information beyond that owed to those to whom those reports were addressed by us at the dates of their issue.

Basis of opinion

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

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

The Unaudited Pro Forma Financial Information is for illustrative purposes only, based on the judgments and assumptions of the directors of the Company, and because of its hypothetical nature, it does not provide any assurance or indication that any event will take place in the future and may not be indicative of:

the financial position of the Remaining Group (the Group after the Disposal) as at 31 March 2012 or any future date, or
the results and cash flows of the Remaining Group for the year ended 31 March 2012 or any future periods.

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

Opinion

In our opinion:

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

Yours faithfully, HLB Hodgson Impey Cheng Chartered Accountants Certified Public Accountants

APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

INTRODUCTION TO THE UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

The unaudited pro forma financial information of the Remaining Group has been prepared to illustrate the effect of the Disposal. Capitalised terms used herein have the same meaning as those defined in this circular unless the context otherwise requires.

The following is the unaudited pro forma financial information of the Remaining Group as if the Disposal had been taken place on 31 March 2012 for the unaudited pro forma consolidated statement of financial position and the Disposal had been taken place on 1 April 2011 for the unaudited pro forma consolidated statement of comprehensive income and the unaudited pro forma consolidated statement of cash flows.

The unaudited pro forma financial information of the Remaining Group should be read in conjunction with the unaudited financial information of the Disposal Group as set out in Appendix I to this circular, audited financial information of the Group for the year ended 31 March 2012 as contained in the Company’s annual report for the year ended 31 March 2012 and other financial information included elsewhere in this circular.

The accompanying unaudited pro forma financial information of the Remaining Group is based on certain assumptions, estimates, uncertainties and other currently available financial information, and is provided for illustrative purposes only and because of its hypothetical nature, it may not give a true picture of the actual financial position and financial results of the Remaining Group’s operations that would have been attained had the Disposal actually occurred and completed on the dates indicated herein. Further, the accompanying unaudited pro forma financial information of the Remaining Group does not purport to predict the Remaining Group’s future financial position or results of operations.

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

(i) Unaudited Pro Forma Consolidated Statement of Financial Position of the Remaining Group

The following is the unaudited pro forma consolidated statement of financial position of the Remaining Group, assuming that the Disposal had taken place on 31 March 2012. The unaudited pro forma consolidated statement of financial position is based on the audited consolidated statement of financial position of the Group as at 31 March 2012 as extracted from the Company’s annual report for the year ended 31 March 2012, and the unaudited consolidated statement of financial position of the Disposal Group as at 31 March 2012 as set out in Appendix I to this circular. Such information is adjusted to reflect the effect of the Disposal.

The unaudited pro forma consolidated statement of financial position of the Remaining Group has been prepared for illustrative purpose only, and because of its hypothetical nature, it may not give a true picture of the financial position of the Remaining Group as at the date to which it is made up to or at any future date.

Non-current assets Property, plant and equipment Prepaid lease payments Other deposits Intangible asset Goodwill Total non-current assets Current assets Inventories Accounts and bills receivable Prepayments, deposits and other receivables Loans receivable Tax recoverable Investments at fair value through profit or loss Pledged bank deposits Cash and bank balances Total current assets	The Group as at 31 March 2012 Pro forma adjustments HK$’000 HK$’000 HK$’000 (Note 1) (Note 2) (Note 3) 41,322 (38,796) 33,175 (33,175) 190 (190) 135,558 (135,558) 9,935 (9,935) 220,180 6,704 (6,704) 57,447 (21,260) 53,902 (22,933) 66,838 573 715,251 15,008 314,614 (38,403) 99,200 1,230,337	The Remaining Group as at 31 March 2012 HK$’000 2,526 – – – –
		2,526
		– 36,187 30,969 66,838 573 715,251 15,008 375,411
		1,240,237

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

Current liabilities Accounts and bills payable Other payables and accruals Amounts due to ultimate and intermediate holding companies Tax payable Bank advances for discounted bills Bank loans Total current liabilities Net current assets Total assets less current liabilities Non-current liabilities Deferred tax liabilities Total non-current liabilities Net assets Capital and reserves Share capital Reserves Share premium Contributed surplus Translation reserve Share option reserve Other reserve Accumulated losses Equity attributable to owners of the Company Non-controlling interests Total equity	The Group as at 31 March 2012 Pro forma adjustments HK$’000 HK$’000 HK$’000 (Note 1) (Note 2) (Note 3) 22,590 (17,108) 159,053 (152,971) – (116,452) 116,452 52 31,169 28,751 (28,751) 241,615 988,722 1,208,902 10,953 (10,953) 10,953 1,197,949 296,549 1,523,162 3,085 8,081 (8,081) 2,692 (124) (633,703) 8,317 1,199,742 (1,793) 1,793 1,197,949	The Remaining Group as at 31 March 2012 HK$’000 5,482 6,082 – 52 31,169 – 42,785 1,197,452 1,199,978 – – 1,199,978 296,549 1,523,162 3,085 – 2,692 (124) (625,386) 1,199,978 – 1,199,978

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

(ii) Unaudited Pro Forma Consolidated Statement of Comprehensive Income of the Remaining Group

The following is the unaudited pro forma consolidated statement of comprehensive income of the Remaining Group, assuming that the Disposal had taken place on 1 April 2011. The unaudited pro forma consolidated statement of comprehensive income is based on the audited consolidated statement of comprehensive income of the Group for the year ended 31 March 2012 as extracted from the Company’s annual report for the year ended 31 March 2012 and the unaudited consolidated statement of comprehensive income of the Disposal Group for the year ended 31 March 2012 as set out in Appendix I to this circular. Such information is adjusted to reflect the effect of the Disposal.

The unaudited pro forma consolidated statement of comprehensive income of the Remaining Group has been prepared for illustrative purpose only, and because of its hypothetical nature, it may not give a true picture of the results of the Remaining Group after completion of the Disposal for the year ended 31 March 2012 to which it is made up to or for any future period.

Revenue Cost of sales Gross profit Net losses on investments at fair value through profit or loss Other income and gains Selling and distribution costs Administrative expenses Finance costs Impairment loss recognised in respect of intangible asset Loss on disposal of subsidiaries Loss before taxation Taxation Loss for the year	The Group for the year ended 31 March 2012 Pro forma adjustments HK$’000 HK$’000 HK$’000 (Note 1) (Note 4) (Note 6) 1,114,563 (34,490) (1,094,239) 15,922 20,324 (430,825) 12,466 (48) (10,167) 8,668 (37,003) 18,021 (11,856) 3,967 (21,704) 21,704 – (18,976) (478,765) 9,895 (5,478) (468,870)	The Remaining Group for the year ended 31 March 2012 HK$’000 1,080,073 (1,078,317) 1,756 (430,825) 12,418 (1,499) (18,982) (7,889) – (18,976) (463,997) 4,417 (459,580)

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

Other comprehensive income Exchange difference on translating foreign operations Other comprehensive income for the year, net of tax Total comprehensive expense for the year Loss for the year attributable to: Owners of the Company Non-controlling interests Total comprehensive expense attributable to: Owners of the Company Non-controlling interests	The Group for the year ended 31 March 2012 Pro forma adjustments HK$’000 HK$’000 HK$’000 (Note 1) (Note 4) (Note 6) 3,488 (3,488) 3,488 (465,382) (467,851) 27,247 (18,976) (1,019) 1,019 (468,870) (464,323) 23,719 (18,976) (1,059) 1,059 (465,382)	The Remaining Group for the year ended 31 March 2012 HK$’000 – – (459,580) (459,580) – (459,580) (459,580) – (459,580)

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

(iii) Unaudited Pro Forma Consolidated Statement of Cash Flows of the Remaining Group

The following is the unaudited pro forma consolidated statement of cash flows of the Remaining Group, assuming that the Disposal had taken place on 1 April 2011. The unaudited pro forma consolidated statement of cash flows is based on the audited consolidated statement of cash flows of the Group for the year ended 31 March 2012 as extracted from the Company’s annual report for the year ended 31 March 2012 and the unaudited consolidated statement of cash flows of the Disposal Group for the year ended 31 March 2012 as set out in Appendix I to this circular. Such information is adjusted to reflect the effect of the Disposal.

The unaudited pro forma consolidated statement of cash flows of the Remaining Group has been prepared for illustrative purpose only, and because of its hypothetical nature, it may not give a true picture of the cash flows of the Remaining Group after completion of the Disposal for the year ended 31 March 2012 to which it is made up to or for any future period.

				The
	The			Remaining
	Group			Group
	for the			for the
	year ended			year ended
	31 March			31 March
	2012	Pro forma	adjustments	2012
	HK$’000	HK$’000	HK$’000	HK$’000
	(Note 1)	(Note 5)	(Note 6)
Cash flows from operating
activities
Loss before taxation	(478,765)	33,744	(18,976)	(463,997)
Adjustments for:
Finance costs	11,856	(3,967)		7,889
Bank interest income	(1,254)	48		(1,206)
Interest income from provision
of finance	(4,418)			(4,418)
Impairment loss recognised in
respect of intangible asset	21,704	(21,704)		–
Unrealised loss on investments
at fair value through profit
or loss	410,246			410,246
Depreciation of property, plant
and equipment	3,429	(2,826)		603
Amortisation of prepaid lease
payments	793	(793)		–
Gain on disposal of property,
plant and equipment	(87)			(87)
Gain on repurchase of
convertible notes	(2,159)			(2,159)
Loss on disposal of subsidiaries	–		18,976	18,976

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

Operating cash flows before movements in working capital Decrease in inventories Decrease in accounts and bills receivable Decrease in prepayments, deposits and other receivables Increase in loans receivable Increase in investments at fair value through profit or loss Decrease in accounts and bills payable Increase in other payables and accruals Cash used in operations Interest on loans receivable received Interest paid for convertible notes Hong Kong Profits Tax paid Net cash outflow from operating activities Cash flows from investing activities Bank interest received Proceeds from disposal of property, plant and equipment Purchases of property, plant and equipment Decrease in pledged bank deposits Net proceeds from disposal of the Disposal Group Net cash inflow from investing activities	The Group for the year ended 31 March 2012 Pro forma adjustments HK$’000 HK$’000 HK$’000 (Note 1) (Note 5) (Note 6) (38,655) 7,475 (7,475) 243,095 10,438 8,665 12,259 (46,838) (637,821) (196,090) (14,712) 12,371 (12,032) (647,798) 4,418 (912) (1,129) (645,421) 1,254 (48) 420 (4,487) 2,618 233,020 – 54,816 230,207	The Remaining Group for the year ended 31 March 2012 HK$’000 (34,153) – 253,533 20,924 (46,838) (637,821) (210,802) 339 (654,818) 4,418 (912) (1,129) (652,441) 1,206 420 (1,869) 233,020 54,816 287,593

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

Cash flows from financing activities Proceeds from rights issue Proceeds from exercise of warrants Proceeds from issue of shares Increase in bank advances for discounted bills Repayment from the Disposal Group Repayment of bank loans Repurchase of convertible notes Net cash inflow from financing activities Net decrease in cash and cash equivalents Cash and cash equivalents at beginning of year Effect of foreign exchange rate changes, net Cash and cash equivalents at end of year	The Group for the year ended 31 March 2012 Pro forma adjustments HK$’000 HK$’000 HK$’000 (Note 1) (Note 5) (Note 7) 311,814 18 74,483 31,169 – 46 (46) (8,054) 8,054 (187,209) 222,221 (192,993) 509,938 46 (2,331) 2,331 314,614	The Remaining Group for the year ended 31 March 2012 HK$’000 311,814 18 74,483 31,169 – – (187,209) 230,275 (134,573) 509,984 – 375,411

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

Notes to the unaudited pro forma financial information of the Remaining Group

The figures are extracted from the audited consolidated financial statements of the Group as set out in the annual report of the Company for the year ended 31 March 2012.
The adjustment represents the exclusion of assets, liabilities and non-controlling interests of the Disposal Group assuming the Disposal had taken place on 31 March 2012.
The adjustment reflects the gain on disposal of the Disposal Group assuming the Disposal had taken place on 31 March 2012 and is calculated as follows:

		HK$’000
	Consideration	100,000
	Less:
	Estimated direct expenses in relation to the Disposal	(800)
	Net consideration	99,200
	Less:
	Deficiency in equity attributable to owner of the Disposal Company
	as at 31 March 2012	17,488
	Amounts due from the Disposal Group as at 31 March 2012	(116,452)
	Realisation of translation reserve attributable to the Disposal Group as at 31 March 2012	8,081
	Gain on disposal of the Disposal Group	8,317

4.	The adjustment represents the exclusion of the results of the Disposal Group for the year ended 31 March 2012,
	assuming the Disposal had taken place on 1 April 2011.
5.	The adjustment represents the exclusion of the cash flows of the Disposal Group for the year ended 31 March 2012,
	assuming the Disposal had taken place on 1 April 2011.
6.	The adjustment reflects the loss on disposal of the Disposal Group assuming the Disposal had taken place on 1 April
	2011 and is calculated as follows:
		HK$’000
	Consideration	100,000
	Less:
	Estimated direct expenses in relation to the Disposal	(800)
	Net consideration	99,200
	Less:
	Equity attributable to owner of the Disposal Company as at 1 April 2011	(6,231)
	Amounts due from the Disposal Group as at 1 April 2011	(116,498)
	Realisation of translation reserve attributable to the Disposal Group as at 1 April 2011	4,553
	Loss on disposal of the Disposal Group	(18,976)

	The net proceeds from the Disposal is calculated as follows:
	Consideration	100,000
	Estimated direct expenses in relation to the Disposal	(800)
	Cash and bank balances of the Disposal Group as at 1 April 2011	(44,384)
		54,816

The adjustment represents the exclusion of the repayment of amount due from the Disposal Group during the year ended 31 March 2012 as such balance would be assigned to the purchaser upon the completion of the Disposal, assuming that the Disposal had taken place on 1 April 2011.
The above pro forma adjustments will have no continuing effect on the Remaining Group in the subsequent reporting periods.

GENERAL INFORMATION

APPENDIX IV

1. RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Group. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would made any statement herein or this circular misleading.

2. DISCLOSURE OF INTERESTS

Interests of Directors and chief executive

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

Long positions in the Shares:

				Approximate
				percentage of
				the Company’s
	Capacity and	Number of	Total	issued
Name of director	nature of interest	Shares held	interests	share capital
Mr. Suen Cho Hung, Paul	Interests held by	863,460,316	–	–
	controlled corporation	(Note 1)
	Directly beneficially owned	6,000,000	869,460,316	29.32%

GENERAL INFORMATION

APPENDIX IV

Long positions in warrants of the Company:

				Approximate
				percentage of
		Number of		the Company’s
	Capacity and	underlying	Total	issued
Name of director	nature of interest	Shares	interests	share capital
Mr. Suen Cho Hung, Paul	Interests held by	163,943,386	–	–
	controlled corporation	(Notes 1 & 2)
	Directly beneficially owned	1,000,000	164,943,386	5.56%
		(Note 3)

Notes:

These interests were held by Global Wealthy Limited (“Global Wealthy”), which was a wholly-owned subsidiary of Excelsior Kingdom Limited (“Excelsior Kingdom”) which in turn was wholly owned by Mr. Suen Cho Hung, Paul. Mr. Suen is the sole director of Global Wealthy and Excelsior Kingdom. Accordingly, Mr. Suen was deemed to be interested in 863,460,316 Shares and 163,943,386 underlying Shares under the SFO.
This represented the interests of Global Wealthy in 163,943,386 units of warrants issued by the Company on 9 March 2012 (the “Warrants”) which carry the rights to subscribe for 163,943,386 Shares at the initial exercise price of HK$0.10 per Share (subject to adjustments) (the “Exercise Price”) during the period from 9 March 2012 to 7 March 2014 (both days inclusive) (the “Subscription Period”).
This represented the interests of Mr. Suen Cho Hung, Paul in 1,000,000 units of Warrants which carry the rights to subscribe for 1,000,000 Shares at the Exercise Price during the Subscription Period.

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

GENERAL INFORMATION

APPENDIX IV

Interests in contract or arrangement

None of the Directors had any material interests in contract or arrangement subsisting at the Latest Practicable Date which is significant in relation to the business of the Group taken as a whole.

Interests in assets

As at the Latest Practicable Date, none of the Directors had any direct or indirect interest in any assets acquired from or disposed of by or leased to any member of the Group or is proposed to be acquired from or disposed of by or leased to any member of the Group since 31 March 2012, being the date to which the latest published audited consolidated financial statements of the Group were made up.

Service contracts

There is no Director or proposed Director has a service contract with the Company or any of its subsidiaries which is not determinable by the Group within one year without payment of compensation, other than statutory compensation.

Competing business

None of the Directors has any interest in any business which competes or is likely to compete, either directly or indirectly, with the Group’s business.

Interest of substantial Shareholders

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

GENERAL INFORMATION

APPENDIX IV

(i) Long positions in Shares and underlying Shares

					Approximate
	Capacity and		Number of		percentage of
Name of	nature of	Number of	underlying	Total	the Company’s
shareholder	interest	Shares held	Shares	interests	issued share capital
Excelsior Kingdom	Interests held	863,460,316	163,943,386	1,027,403,702	34.64%
	by controlled	(Note 1)	(Notes 1 & 2)
	corporation
Global Wealthy	Directly	863,460,316	163,943,386	1,027,403,702	34.64%
	beneficially	(Note 1)	(Notes 1 & 2)
	owned
HEC Capital Limited	Interest held	249,710,400	41,618,400	291,328,800	9.82%
(“HEC Capital”)	by controlled	(Note 3)	(Notes 3 & 4)
	corporation

Notes:

These interests were held by Global Wealthy, which was a wholly-owned subsidiary of Excelsior Kingdom which in turn was wholly owned by Mr. Suen Cho Hung, Paul. Mr. Suen is the sole director of Global Wealthy and Excelsior Kingdom. Accordingly, Mr. Suen and Excelsior Kingdom were deemed to be interested in 863,460,316 Shares and 163,943,386 underlying Shares under the SFO.
This represented the interests of Global Wealthy in 163,943,386 units of Warrants which carry the rights to subscribe for 163,943,386 Shares at the Exercise Price during the Subscription Period.
These interests were held by Murtsa Capital Management Limited (“Murtsa Capital”), which was a whollyowned subsidiary of Hennabun Development Limited which in turn was wholly owned by HEC Capital. Accordingly, HEC Capital was deemed to be interested in 249,710,400 Shares and 41,618,400 underlying Shares under the SFO.
This represented the interests of Murtsa Capital in 41,618,400 units of Warrants which carry the rights to subscribe for 41,618,400 Shares at the Exercise Price during the Subscription Period.

GENERAL INFORMATION

APPENDIX IV

(ii) Interest in other members of the Group

As at the Latest Practicable Date, so far as is known to the Directors or chief executive of the Company, the following persons (other than a Director or chief executive of the Company) were, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of members of the Group other than the Company:

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

For identification purpose only

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

LITIGATION

Neither the Company nor any of its subsidiaries is engaged in any litigation or arbitration of material importance and no litigation or claim of material importance is known to the Directors to be pending or threatened against the Company or any of its subsidiaries.

EXPERT AND CONSENT

The qualification of the expert who has given opinion in this circular is as follows:

Name	Qualification
HLB Hodgson Impey Cheng (“HLB”)	Chartered Accountants
	Certified Public Accountants

As at the Latest Practicable Date, HLB has no shareholding in any company in the Group or the right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any company in the Group and has no direct or indirect interest in any assets acquired from or disposed of by or leased to any member of the Group or is proposed to be acquired from or disposed of by or leased to any member of the Group since 31 March 2012, being the date to which the latest published audited accounts of the Company were made up.

GENERAL INFORMATION

APPENDIX IV

HLB has given and has not withdrawn its written consent to the issue of this circular with the inclusion herein of its letter and/or references to its name, in the form and context in which they respectively appear.

MATERIAL CONTRACTS

The following contracts (not being contracts in the ordinary course of business) have been entered into by members of the Group within the two years preceding the date of this circular and are or may be material:

(i) the conditional placing agreement dated 28 September 2010 entered into between the Company and Radland International Limited as placing agent for the placing of an aggregate of 517,000,000 shares in the Company;
(ii) the conditional placing agreement dated 10 November 2010 entered into between the Company and Radland International Limited as placing agent for the placing of an aggregate of 1,000,000,000 shares in the Company;
(iii) the placing agreement dated 24 October 2011 entered into between the Company and Chung Nam Securities Limited as placing agent for the placing of an aggregate of 823,695,952 shares in the Company;
(iv) the underwriting agreement dated 20 December 2011 entered into between the Company and Global Wealthy and Chung Nam Securities Limited in relation to the underwriting arrangement in respect of a rights issue; and
(v) the S&P Agreement.

MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors were not aware of any material adverse change in the financial or trading position of the Group since 31 March 2012, being the date to which the latest published audited consolidated financial statements of the Group were made up.

GENERAL

The secretary of the Company is Ms. Chan Yuk Yee, who holds a Master of Business Law degree from Monash University in Australia and is an associate member of both the Hong Kong Institute of Chartered Secretaries and the Institute of Chartered Secretaries and Administrators.
The registered office of the Company is situated at Clarendon House, 2 Church Street, Hamilton HM11, Bermuda.
The head office and principal place of business of the Company in Hong Kong is situated at Suite 1501, 15th Floor, Great Eagle Centre, 23 Harbour Road, Wanchai, Hong Kong.

GENERAL INFORMATION

APPENDIX IV

The branch share registrar and transfer office of the Company in Hong Kong is Tricor Tengis Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong.
The English text of this circular shall prevail over the Chinese text for the purpose of interpretation.

DOCUMENTS AVAILABLE FOR INSPECTION

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

(a) the Memorandum of Association and the Bye-laws of the Company;
(b) the annual reports of the Company for the two years ended 31 March 2012;
(c) the report on the unaudited pro forma financial information of the Remaining Group as set out in Appendix III to this circular;
(d) the material contracts referred to in the paragraph headed “MATERIAL CONTRACTS” in this appendix;
(e) the written consent referred to in the paragraph headed “EXPERT AND CONSENT” in this appendix; and
(f) this circular.

NOTICE OF SGM

==> picture [117 x 50] intentionally omitted <==

**BEIJING YU SHENG TANG PHARMACEUTICAL GROUP LIMITED 北京御生堂藥業集團有限公司[*]** (Incorporated in Bermuda with limited liability) (Stock Code: 1141)

NOTICE OF SPECIAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that a special general meeting (the “Meeting”) of Beijing Yu Sheng Tang Pharmaceutical Group Limited (the “Company”) will be held at Plaza 1 and 2, Lower Lobby, Novotel Century Hong Kong, 238 Jaffe Road, Wanchai, Hong Kong on Monday, 22 October 2012 at 9:30 a.m. for the purpose of considering and, if thought fit, passing, with or without amendments, the following resolutions of the Company:

ORDINARY RESOLUTION

“ THAT
(A) the conditional sale and purchase agreement dated 7 September 2012 (the “S&P Agreement”) entered into between Able Market Profits Limited (the “Vendor”), a direct wholly-owned subsidiary of the Company, as vendor and Victory Land Investments Limited as purchaser (a copy of which has been produced to the meeting and marked “A” and initialled by the chairman of the meeting for the purpose of identification) in relation to, among other matters, the sale and purchase of the entire issued share capital of Poly Fortune Enterprises Limited (the “Disposal Company”) and the loans owing by the Disposal Company and its subsidiaries to the Vendor and the Company as at the date of completion at an aggregate consideration of HK$100,000,000 and the transactions contemplated thereunder be and are hereby approved, ratified and confirmed; and
(B) any one or more of the directors of the Company (the “Directors”) be and is/are hereby authorised to execute such all other documents, to do all other acts and things and take such action as may in the opinion of the Director(s) be necessary, desirable or expedient to implement and give effect to the S&P Agreement and any other transactions contemplated under the S&P Agreement.”

SPECIAL RESOLUTION

“ THAT subject to and conditional upon the approval of the Registrar of Companies in Bermuda being obtained:
(A) the English name of the Company be changed from “Beijing Yu Sheng Tang Pharmaceutical Group Limited” to “Poly Capital Holdings Limited”; and

* For identification purpose only

NOTICE OF SGM

(B) upon the Resolution numbered 2(A) above becoming effective, “保興資本控股有限公司” be adopted in replacement of “北京御生堂藥業集團有限公司” as the Chinese name of the Company for identification purpose,

and that any one or more of the directors of the Company be and is/are hereby authorised to do all such acts and things and execute all such documents as he or she considers necessary or expedient in connection with or to give effect to such change of names of the Company.”

By Order of the Board of Beijing Yu Sheng Tang Pharmaceutical Group Limited Suen Cho Hung, Paul Chairman

Hong Kong, 28 September 2012

Head Office and Principal Place of Business in Hong Kong:

Suite 1501, 15th Floor

Great Eagle Centre 23 Harbour Road Wanchai Hong Kong

Notes:

Any member of the Company entitled to attend and vote at the Meeting is entitled to appoint another person as his/her proxy to attend and vote instead of him/her. A member of the Company who is the holder of two or more shares may appoint more than one proxy to represent him/her and vote on his/her behalf at the 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/she or they represent as such member of the Company could exercise.
The instrument appointing a proxy shall be in writing under the hand of the appointer or of his/her attorney duly authorised in writing or, if the appointer is a corporation, either under its seal or under the hand of an officer, attorney or other person authorised to sign the same. In the 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.
The instrument appointing a proxy and (if required by the Board of Directors of the Company) 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 Company’s Hong Kong branch share registrar and transfer office, Tricor Tengis Limited, at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong as soon as possible and in any event not less than forty-eight (48) hours before the time appointed for holding the Meeting or any adjourned meeting thereof at which the person named in the instrument proposes to vote, and in default the instrument of proxy shall not be treated as valid.
Delivery of an instrument appointing a proxy shall not preclude a member of the Company 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.
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/she were solely entitled thereto, but if more than one of such joint holders be present at the 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.

AI assistant

PegBio Co., Ltd. — Proxy Solicitation & Information Statement 2012

50676_rns_2012-09-27_0ebff92d-b283-44cf-882f-330a716b7781.pdf

BEIJING YU SHENG TANG PHARMACEUTICAL GROUP LIMITED 北京御生堂藥業集團有限公司[*] (Incorporated in Bermuda with limited liability) (Stock Code: 1141)

VERY SUBSTANTIAL DISPOSAL

AND

PROPOSED CHANGE OF COMPANY NAME

Financial adviser to the Company

CONTENTS

DEFINITIONS

DEFINITIONS

DEFINITIONS

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

VERY SUBSTANTIAL DISPOSAL AND PROPOSED CHANGE OF COMPANY NAME

THE S&P AGREEMENT

Assets to be disposed

The consideration for the Sale Share and the Sale Loans

LETTER FROM THE BOARD

Condition and Completion

INFORMATION ON THE DISPOSAL GROUP

LETTER FROM THE BOARD

LETTER FROM THE BOARD

FINANCIAL EFFECTS OF THE DISPOSAL

REASONS FOR THE DISPOSAL AND USE OF PROCEEDS

LETTER FROM THE BOARD

PROPOSED CHANGE OF COMPANY NAME

LETTER FROM THE BOARD

SHARE CERTIFICATES

SGM

RECOMMENDATION

ADDITIONAL INFORMATION

1. FINANCIAL INFORMATION OF THE DISPOSAL GROUP

Consolidated Statement of Comprehensive Income

APPENDIX I

Consolidated Statement of Financial Position

APPENDIX I

FINANCIAL INFORMATION OF THE DISPOSAL GROUP

Consolidated Statement of Changes in Equity

Consolidated Statement of Cash Flows

Consolidated Statement of Cash Flows

Notes to the Financial Information

1. GENERAL INFORMATION

2. BASIS OF PREPARATION OF THE FINANCIAL INFORMATION

3. EVENTS AFTER THE REPORTING PERIOD

1. INDEBTEDNESS

2. WORKING CAPITAL

3. FINANCIAL AND TRADING PROSPECTS OF THE REMAINING GROUP

4. MANAGEMENT DISCUSSION AND ANALYSIS OF THE REMAINING GROUP

(i) for the year ended 31 March 2012

Material Acquisitions and Disposals

Liquidity, Financial Resources and Capital Structure

APPENDIX II

Foreign Currency Management

Pledge of Assets

Contingent Liability

Capital Commitment

APPENDIX II

Future Plans for Material Investments or Capital Assets

(ii) for the year ended 31 March 2011

Business Review

APPENDIX II

Material Acquisitions and Disposals

Liquidity, Financial Resources and Capital Structure

APPENDIX II

Foreign Currency Management

Pledge of Assets

Contingent Liability

Capital Commitment

Employees and Remuneration Policy

Future Plans for Material Investments or Capital Assets

(iii) for the year ended 31 March 2010

Business Review

Material Acquisitions and Disposals

APPENDIX II

Liquidity, Financial Resources and Capital Structure

Foreign Currency Management

Pledge of Assets

ACCOUNTANTS’ REPORT ON THE UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

Respective responsibilities of directors of the Company and Reporting Accountants

PegBio Co., Ltd. Proxy Solicitation & Information Statement 2012

**BEIJING YU SHENG TANG PHARMACEUTICAL GROUP LIMITED 北京御生堂藥業集團有限公司[*]** (Incorporated in Bermuda with limited liability) (Stock Code: 1141)

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

**BEIJING YU SHENG TANG PHARMACEUTICAL GROUP LIMITED 北京御生堂藥業集團有限公司[*]** (Incorporated in Bermuda with limited liability) (Stock Code: 1141)