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

Jul 30, 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, 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)

GENERAL MANDATES TO ISSUE AND REPURCHASE SHARES, TERMINATION OF EXISTING SHARE OPTION SCHEME, ADOPTION OF NEW SHARE OPTION SCHEME, RE-ELECTION OF THE RETIRING DIRECTORS, PROPOSED APPOINTMENT OF AUDITOR AND NOTICE OF ANNUAL GENERAL MEETING

A notice convening the annual general meeting of Beijing Yu Sheng Tang Pharmaceutical Group Limited to be held at Plaza 3, Lower Lobby, Novotel Century Hong Kong, 238 Jaffe Road, Wanchai, Hong Kong on Monday, 24 September 2012 at 9:30 a.m. is set out on pages 23 to 27 of this circular. Whether or not you are able to attend and vote at the annual general meeting, you are requested to read the notice and to complete and sign the accompanying form of proxy in accordance with the instructions printed thereon and return the same to the Company’s branch share registrar in Hong Kong, 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 annual general meeting or any adjourned meeting thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the annual 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.

• For identification purpose only

31 July 2012

CONTENTS

			Page
DEFINITIONS.	. .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM	THE BOARD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		3
APPENDIX I	–	EXPLANATORY STATEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
APPENDIX II	–	SUMMARY OF THE PRINCIPAL TERMS OF THE NEW SHARE
		OPTION SCHEME. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
APPENDIX III	–	DETAILS OF THE RETIRING DIRECTORS PROPOSED
		FOR RE-ELECTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	20
AGM NOTICE.	. .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	23

DEFINITIONS

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

• “Adoption Date”

the date on which the New Share Option Scheme is adopted by an ordinary resolution passed by the Shareholders at the AGM

• “AGM”

• the annual general meeting of the Company to be held at Plaza 3, Lower Lobby, Novotel Century Hong Kong, 238 Jaffe Road, Wanchai, Hong Kong on Monday, 24 September 2012 at 9:30 a.m. (or any adjournment thereof) for the purpose of considering, if thought fit, approving the resolutions proposed in the AGM Notice

• “AGM Notice” the notice convening the AGM as set out on pages 23 to 27 of this circular

• “Board” the Board of Directors

• “Bye-laws” the Bye-laws of the Company

• “Company”

• Beijing Yu Sheng Tang Pharmaceutical Group Limited, a company incorporated in Bermuda with limited liability, the shares of which are listed on the main board of the Stock Exchange

• “Companies Act” Companies Act 1981 of Bermuda as amended, supplemented or otherwise modified from time to time

• “Directors” the directors of the Company

• “Excelsior Kingdom”

• Excelsior Kingdom Limited, a company incorporated in the British Virgin Islands and is wholly owned by Mr. Suen

• “Existing Share Option Scheme”

• the share option scheme adopted by the Company on 30 December 2002

• “Global Wealthy”

• Global Wealthy Limited, a company incorporated in the British Virgin Islands, being the substantial Shareholder of the Company and is wholly owned by Excelsior Kingdom

• “Group” the Company and its subsidiaries

• “Hong Kong”

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

1

DEFINITIONS

• “Issue Mandate” a general mandate proposed to be granted to the Directors at the AGM to allot, issue and deal with authorised and unissued Shares of up to 20% of the aggregate nominal amount of the issued share capital of the Company as at the date of passing of the relevant resolution approving the mandate

• “Latest Practicable Date” 26 July 2012, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained in the circular

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

• “Mr. Suen” Mr. Suen Cho Hung, Paul, an Executive Director, the Chairman and the substantial Shareholder of the Company

• “New Share Option Scheme” the new share option scheme proposed to be adopted at the AGM, a summary of the principal terms is set out in Appendix II to this circular

• “Repurchase Mandate” a general mandate proposed to be granted to the Directors at the AGM to repurchase Shares not exceeding 10% of the aggregate nominal amount of the issued share capital of the Company as at the date of passing of the relevant resolution approving the mandate

“SFO” Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “Share(s)” ordinary share(s) of HK$0.10 each (or of such other nominal amount as shall result from a sub-division or a consolidation of such shares from time to time) in the capital of the Company “Shareholder(s)” holder(s) of the Share(s) “Stock Exchange” The Stock Exchange of Hong Kong Limited “Takeovers Code” The Codes on Takeovers and Mergers “HK$” Hong Kong dollars, the lawful currency of Hong Kong “%” per cent.

2

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 HM 11 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 31 July 2012

To the Shareholders and, for information only,

the holders of warrants of the Company

Dear Sir or Madam,

GENERAL MANDATES TO ISSUE AND REPURCHASE SHARES, TERMINATION OF EXISTING SHARE OPTION SCHEME, ADOPTION OF NEW SHARE OPTION SCHEME, RE-ELECTION OF THE RETIRING DIRECTORS, PROPOSED APPOINTMENT OF AUDITOR AND NOTICE OF ANNUAL GENERAL MEETING

1. INTRODUCTION

The purpose of this circular is to provide you with information in respect of the resolutions to be proposed at the AGM for the approval of (a) the granting to the Directors of the Issue Mandate; (b) the granting to the Directors of the Repurchase Mandate; (c) the extension of the Issue Mandate by adding to it the aggregate number of Shares repurchased under the Repurchase Mandate; (d) the termination of the Existing Share Option Scheme and adoption of the New Share Option Scheme; (e) the re-election of the retiring Directors; and (f) the proposed appointment of auditor.

• For identification purpose only

3

LETTER FROM THE BOARD

2. GENERAL MANDATES TO ISSUE AND REPURCHASE SHARES

At the AGM, ordinary resolutions will be proposed to grant to the Directors the Issue Mandate and the Repurchase Mandate. Conditional upon the above resolutions being passed, a separate resolution will be proposed to extend the Issue Mandate by adding to it the aggregate number of Shares repurchased under the Repurchase Mandate. Details of these resolutions are contained in the AGM Notice.

As at the Latest Practicable Date, the issued share capital of the Company comprised 2,965,487,447 Shares. Assuming that there is no change in the issued share capital of the Company during the period between the Latest Practicable Date and the date of the AGM, the maximum number of Shares which may be issued pursuant to the Issue Mandate on the date of passing the resolution approving the Issue Mandate will be 593,097,489 Shares and the maximum number of Shares which may be repurchased pursuant to the Repurchase Mandate on the date of the AGM will be 296,548,744 Shares.

In accordance with the requirements of the Listing Rules, the Company is required to send to Shareholders an explanatory statement containing all the information reasonably necessary to enable them to make an informed decision on whether to vote for or against the granting of the Repurchase Mandate. The explanatory statement as required by the Listing Rules in connection with the Repurchase Mandate is set out in Appendix I to this circular.

3. TERMINATION OF EXISTING SHARE OPTION SCHEME AND ADOPTION OF NEW SHARE OPTION SCHEME

The Existing Share Option Scheme was adopted by the Company on 30 December 2002 and will be terminated on the date on which the New Share Option Scheme comes into effect upon the fulfilment of the conditions set out below. Upon termination of the Existing Share Option Scheme, no further options will be granted thereunder. As at the Latest Practicable Date, 4,311,864 options were outstanding under the Existing Share Option Scheme, representing 0.15% of the total issued share capital of the Company as at the Latest Practicable Date.

A summary of the principal terms of the New Share Option Scheme is set out in Appendix II to this circular. A copy of the rules of the New Share Option Scheme is available for inspection at the principal place of business of the Company at Suite 1501, 15th Floor, Great Eagle Centre, 23 Harbour Road, Wanchai, Hong Kong during normal business hours for a 14-day period immediately preceding the AGM.

The coming into effect of the New Share Option Scheme is conditional upon:

• (i) the passing of an ordinary resolution at the AGM approving the termination of the Existing Share Option Scheme and the adoption of the New Share Option Scheme, and authorising the Directors to grant options to subscribe Shares thereunder and to allot, issue and deal in the Shares pursuant to the exercise of any options under the New Share Option Scheme; and

4

LETTER FROM THE BOARD

• (ii) the Listing Committee of the Stock Exchange granting the listing of, and permission to deal in, any new Shares which may fall to be issued upon the exercise of the options that may be granted under the New Share Option Scheme.

As at the Latest Practicable Date, there were 2,965,487,447 Shares in issue. Assuming that there are no further allotment of Shares from the Latest Practicable Date up to the date of approval of the New Share Option Scheme at the AGM, options to subscribe for up to 296,548,744 Shares may be issued under the New Share Option Scheme and any other schemes of the Company pursuant to Rule 17.03(3) of the Listing Rules, representing 10% of the Shares in issue as at the date of approval of the New Share Option Scheme at the AGM.

The Company is not required to appoint any trustee for the purpose of administering the New Share Option Scheme. The New Share Option Scheme will be subject to administration of the Board. None of the Directors is or will be a trustee of the New Share Option Scheme or have a direct or indirect interest in any such trustee.

To the extent that the Directors are aware having made all reasonable enquiries, none of the Shareholder is required to abstain for voting of the adoption of the New Share Option Scheme.

Value of the options

The Directors consider that it is not appropriate to state the value of all the options that can be granted under the New Share Option Scheme as if they had been granted as at the Latest Practicable Date prior to the approval of the New Share Option Scheme given that the variables which are critical for the calculation of the value of such options cannot be determined. These variables include, but not limited to, the subscription price payable for the Shares upon the exercise of subscription rights attaching to the options, whether or not options will be granted under the New Share Option Scheme and the timing of the granting of such options, the period during which the subscription rights may be exercised, and any other conditions that the Board may impose with respect to the options and whether or not such options, if granted, will be exercised. The subscription price payable for the Shares depends on the price of the Shares as quoted on the Stock Exchange, which in turn depends on when the Board is to grant options under the New Share Option Scheme. With a scheme life of ten years, the Board is of the view that it is too premature to state whether or not options will be granted under the New Share Option Scheme and, if so, the number of options that may be granted. It is also difficult to ascertain with accuracy the subscription price of the Shares given the volatility to which the price of the Shares may be subject to during the ten-year life span of the New Share Option Scheme. The Directors are of the view that the value of the options depends on a number of variables which are either difficult to ascertain or can only be ascertained subject to a number of theoretical bases and speculative assumptions. Accordingly, the Directors believe that any calculation of the value of the options would not be meaningful to Shareholders in the circumstances.

5

LETTER FROM THE BOARD

Application for listing

An application will be made to the Listing Committee of the Stock Exchange for any options that may be granted under the New Share Option Scheme and the listing of, and permission to deal in, the Shares which may fall to be issued pursuant to the exercise of any options that may be granted under the New Share Option Scheme up to 10% of the Shares in issue as at the date of approval of the New Share Option Scheme at the AGM.

Reasons for adopting the New Share Option Scheme

The Existing Share Option Scheme was adopted by the Company on 30 December 2002 for a period of ten years. As such, the Existing Share Option Scheme will expire on 29 December 2012. The Directors consider that it is appropriate to adopt the New Share Option Scheme. The purpose of the New Share Option Scheme is to enable the Group to attract, retain and motivate talented key management and employees to strive for future development and expansion of the Group. The New Share Option Scheme shall be an incentive to encourage participants to perform their best in achieving the goals of the Group and allow the participants to enjoy the results of the Company attained through their efforts and contributions. When making an offer under the New Share Option Scheme to any participant, the Board is in its absolute discretion to impose the terms on which the option is to be granted (including a minimum period for which an option must be held or a performance target which must be achieved before an option can be exercised) either on a case by case basis or generally. The Board will also have absolute discretion in determining the subscription price (not less than the price to be determined pursuant to Rule 17.03(9) of the Listing Rules) in respect of any option. The Directors are of the view that the continuation of flexibility given to the Directors to grant share options to eligible persons subject to the Board’s absolute discretion in imposing or not imposing the minimum period for holding the options and the condition of achieving performance targets and the Board’s absolute discretion in determining the subscription price will place the Group in a better position to motivate participants to recognise their performance and efficiency for the benefit of the Group and to attract and retain or otherwise maintain on-going relationship with such participants whose contributions are or will be beneficial to the long term growth of the Group.

4. RE-ELECTION OF THE RETIRING DIRECTORS

The Board currently consists of seven Directors, namely Mr. Suen Cho Hung, Paul, Mr. Sue Ka Lok, Mr. Bai Jianjiang, Ms. Lee Chun Yeung, Catherine, Mr. Wong Kwok Tai, Mr. Weng Yixiang and Mr. Lu Xinsheng.

Pursuant to bye-law 87 of the Bye-laws, Mr. Sue Ka Lok, Mr. Weng Yixiang and Mr. Lu Xinsheng will retire by rotation at the AGM and, being eligible, will offer themselves for re-election at the AGM.

Details of the retiring Directors proposed to be re-elected at the AGM are set out in Appendix III to this circular.

6

LETTER FROM THE BOARD

5. APPOINTMENT OF AUDITORS

The Board has received a notice from HLB Hodgson Impey Cheng (“HLB”), the auditors of the Company, informing that the practice of HLB was reorganised as HLB Hodgson Impey Cheng Limited in March 2012, accordingly, HLB will not offer themselves for re-appointment as auditors of the Company and will retire at the conclusion of the AGM.

HLB have confirmed that there are no matters in connection with their retirement as auditors that need to be brought to the attention of the Shareholders.

A notice of the intention to propose an ordinary resolution to be passed at the AGM has been received from a Shareholder pursuant to section 89(3) of the Companies Act as follows:–

“THAT HLB Hodgson Impey Cheng Limited be appointed as the auditor of the Company in lieu of the retiring auditors, Messrs HLB Hodgson Impey Cheng, until the conclusion of the next annual general meeting of the Company and to authorise the Board of Directors of the Company to fix its remuneration.”

The Board considers that HLB have merely reorganised their practice and it is in the interests of the Company and the Shareholders as a whole if HLB can continue to serve the Company as auditor. It is proposed that HLB Hodgson Impey Cheng Limited shall be appointed as auditor of the Company in lieu of the retiring auditors HLB, at a fee to be agreed with the Directors.

The Board confirms that there are no circumstances in respect of the proposed change of auditors that need to be brought to the attention of the Shareholders.

6. VOTING AT THE AGM

For the purpose of compliance with Rule 13.39(4) of the Listing Rules, the Company will procure the Chairman of the AGM to demand for a poll for the ordinary resolutions put to the vote of the AGM in accordance with the Bye-laws.

7. ACTION TO BE TAKEN

The AGM Notice is set out on pages 23 to 27 of this circular. A form of proxy for use at the AGM is also enclosed. Whether or not you are able to attend and vote at the AGM, you are requested to read the notice and to complete and sign the accompanying form of proxy in accordance with the instructions printed thereon and return the same to the Company’s branch share registrar in Hong Kong, 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 AGM or any adjourned meeting thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the AGM or any adjourned meeting thereof should you so wish and in such event, the form of proxy shall be deemed to be revoked.

7

LETTER FROM THE BOARD

8. RECOMMENDATION

The Directors consider that the proposed resolutions referred in this circular and the AGM Notice are in the best interests of the Company and the Shareholders as a whole. The Directors therefore recommend Shareholders to vote in favour of all the resolutions set out in the AGM Notice.

9. 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 Company. 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 make any statement herein or this circular misleading.

10. ADDITIONAL INFORMATION

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

Yours faithfully, On behalf of the Board

Sue Ka Lok

Chief Executive Officer

8

EXPLANATORY STATEMENT

APPENDIX I

The following is an explanatory statement required by the Listing Rules to be sent to Shareholders to enable them to make an informed decision on whether to vote for or against the ordinary resolution to be proposed at the AGM in relation to the granting of the Repurchase Mandate.

1. SHARE CAPITAL

As at the Latest Practicable Date, the issued share capital of the Company comprised 2,965,487,447 Shares. Subject to the passing of the ordinary resolution granting the Repurchase Mandate and on the basis that no further Shares are issued or repurchased from the Latest Practicable Date up to the date of the AGM, the Company would be allowed under the Repurchase Mandate to repurchase a maximum of 296,548,744 Shares, representing 10% of the issued shares of the Company as at the date of the AGM.

2. SOURCE OF FUNDS

In repurchasing Shares, the Company may only apply funds legally available for the purpose and in accordance with the Company’s constitutive documents and the laws of the jurisdiction in which the Company is incorporated or otherwise established. Bermuda laws provide that funds used for a share repurchase may only be paid out of the capital paid up on the relevant shares, or the funds of the Company that would otherwise be available for dividend or distribution, or the proceeds of a fresh issue of shares made for the purpose. The amount of premium, if any, payable on a repurchase may only be paid out of either the funds of the Company that would otherwise be available for dividend or distribution or out of the share premium account of the Company before the shares are repurchased.

3. REASONS FOR REPURCHASES

The Directors believe that it is in the best interests of the Company and the Shareholders as a whole to seek a general authority from the Shareholders to enable the Company to repurchase its Shares on the Stock Exchange. Such repurchases may, depending on the market conditions, and funding arrangements at the time, lead to an enhancement of the net asset value of the Company and/or earnings per Share and will only be made when the Directors believe that such a repurchase will benefit the Company and the Shareholders as a whole.

4. IMPACT OF REPURCHASES

There might be a material adverse impact on the working capital or gearing position of the Company (as compared with the position disclosed in the consolidated financial position of the Company as at 31 March 2012, being the date of the latest published audited financial statements of the Company) in the event that the Repurchase Mandate is exercised in full. The Directors do not propose to exercise the Repurchase Mandate to such an extent as would, in the circumstances, have a material adverse effect on the working capital of the Company or its gearing levels which in the opinion of the Directors are from time to time appropriate for the Company.

9

EXPLANATORY STATEMENT

APPENDIX I

5. SHARES PRICES

The highest and lowest prices at which the shares of the Company have been traded on the Stock Exchange in each of the last twelve months before the Latest Practicable Date were as follows:

Month	Highest	Lowest
	HK$	HK$
2011
July	0.363*	0.308*
August	0.373*	0.290*
September	0.340*	0.275*
October	0.307*	0.253*
November	0.308*	0.258*
December	0.277*	0.155*
2012
January	0.253*	0.162*
February	0.480*	0.152*
March	0.168	0.081
April	0.095	0.072
May	0.078	0.047
June	0.057	0.048
July (up to the Latest Practicable Date)	0.197	0.041

• The prices disclosed above were adjusted to take into account the effects of (i) the Share Consolidation which became effective on 1 February 2012; and (ii) the Rights Issue which became unconditional on 6 March 2012. Details of the Share Consolidation and the Rights Issue were contained in the circular of the Company dated 13 January 2012.

6. EFFECT OF THE TAKEOVERS CODE

If, on the exercise of the power to repurchase Shares pursuant to the Repurchase Mandate, a Shareholder’s proportionate interest in the voting rights of the Company increases, such increase will be treated as an acquisition for the purposes of the Takeovers Code. Accordingly, a Shareholder, or group of Shareholders acting in concert, depending on the level of increase of the Shareholders’ interest, could obtain or consolidate control of the Company and become obliged to make a mandatory offer in accordance with Rule 26 of the Takeovers Code for all the Shares not already owned by such Shareholder or group of Shareholders.

As at the Latest Practicable Date, to the best of the knowledge and belief of the Directors, Global Wealthy beneficially owned 863,460,316 Shares, representing approximately 29.12% of the total issued share capital of the Company. Global Wealthy is wholly owned by Excelsior Kingdom which in turn is wholly owned by Mr. Suen. Together with the 6,000,000 Shares beneficially owned by him, Mr. Suen is deemed to be interested in a total of 869,460,316 Shares, representing approximately 29.32% of the issued share capital of the Company.

10

EXPLANATORY STATEMENT

APPENDIX I

On the basis that the issued share capital of the Company and the shareholdings of Global Wealthy and Mr. Suen in the Company remain unchanged immediately before the full exercise of the Repurchase Mandate, in the event that the Directors exercise in full the power to repurchase Shares in accordance with the terms of the relevant ordinary resolution to be proposed at the AGM, the interests of Mr. Suen in the issued Shares would be increased to approximately 32.58% of the total issued share capital of the Company. Such increase would give rise to an obligation to make a mandatory offer under Rule 26 of the Takeovers Code. The Directors have no intention to exercise the power to repurchase Shares to such an extent as would result in such an obligation arising.

Save as aforesaid, the Directors are not aware of any other consequences, which will arise under the Takeovers Code as a result of any repurchases to be made under the Repurchase Mandate.

7. DIRECTORS, THEIR ASSOCIATES AND CONNECTED PERSONS

To the best of the knowledge of the Directors, having made all reasonable enquiries, none of the Directors nor any of their respective associates (as defined in the Listing Rules) has any present intention to sell any Shares to the Company in the event that the Repurchase Mandate is approved by the Shareholders.

The Company has not been notified by any connected persons (as defined in the Listing Rules) of the Company that they have a present intention to sell any Shares to the Company, or that they have undertaken not to sell any Shares held by them to the Company in the event that the granting of the Repurchase Mandate is approved by the Shareholders.

8. UNDERTAKING

The Directors have undertaken to the Stock Exchange that, so far as the same may be applicable, they will exercise the power of the Company to make repurchases of the Shares pursuant to the Repurchase Mandate in accordance with the Listing Rules and the applicable laws of Bermuda.

9. REPURCHASES OF SHARES MADE BY THE COMPANY

The Company has not repurchased any Shares whether on the Stock Exchange or otherwise, in the six months preceding the Latest Practicable Date.

10. GENERAL

The Listing Rules prohibit a company from making repurchase on the Stock Exchange if the result of the repurchase would be that less than 25% (or such other prescribed minimum percentage as determined by the Stock Exchange) of the company’s issued share capital would be in public hands. The Directors do not intend to repurchase Shares which would result in less than the prescribed minimum percentage of Shares in public hands.

11

SUMMARY OF THE PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX II

This Appendix summarises the principal terms of the New Share Option Scheme.

1. PURPOSE OF THE NEW SHARE OPTION SCHEME

The purpose of the New Share Option Scheme is to enable the Group to attract, retain and motivate talented Participants (as defined in paragraph (4) below) to strive for future development and expansion of the Group. The New Share Option Scheme shall be an incentive to encourage Participants to perform their best in achieving the goals of the Group and allow the Participants to enjoy the results of the Company attained through their efforts and contributions.

2. CONDITIONS

The New Share Option Scheme shall take effect subject to: (a) the passing of an ordinary resolution of the Shareholders in the general meeting for the approval for the adoption of the New Share Option Scheme and the termination of the Existing Share Option Scheme and to authorise the Directors to grant options to subscribe for Shares under the New Share Option Scheme and to allot, issue and deal in the Shares pursuant to the exercise of any options granted under the New Share Option Scheme; and (b) the Listing Committee of the Stock Exchange granting the listing of and permission to deal in, any Shares which may fall to be issued pursuant to the exercise of options that may be granted under the New Share Option Scheme.

3. PERIOD OF THE NEW SHARE OPTION SCHEME

The New Share Option Scheme shall be valid and effective for a period of ten (10) years commencing on the Adoption Date after which period no further options will be granted and accepted; and thereafter for so long as there are any outstanding unexercised options granted and accepted pursuant thereto prior to the expiration of the said ten-year period and in order to give effect to the exercise of any such options or otherwise as may be required in accordance with the provisions of the New Share Option Scheme.

4. WHO MAY JOIN

The Board may grant (subject to acceptance in accordance with the terms of the New Share Option Scheme) an option to subscribe for such number of Shares as it may determine at a price determined in accordance with paragraph (5) below to any individual being an employee, officer, agent, consultant or representative of any member of the Group (including any executive or non-executive director of any member of the Group) who, as the Board may determine in its absolute discretion, has made valuable contribution to the business of the Group based on his/her performance and/or years of service, or is regarded to be a valuable human resource of the Group based on his/her working experience, knowledge in the industry and other relevant factors (a “Participant”), subject to such conditions as the Board may think fit, provided that no grants shall be made except to such number of Participants and in such circumstances that the Company will not be required under applicable securities laws and regulations to issue a prospectus or other offer document in respect thereof; and will not result in the breach by the Company or its directors of any applicable securities laws and regulations or in any filing or other requirements arising.

12

SUMMARY OF THE PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX II

5. SUBSCRIPTION PRICE FOR THE SHARES UNDER THE NEW SHARE OPTION SCHEME

The subscription price for the Shares on the exercise of options under the New Share Option Scheme shall be a price determined by the Board and notified to the relevant Participant at the time the grant of the options (subject to any adjustments made pursuant to paragraph (17) below) is made to (subject to acceptance by) the Participant and shall be at least the highest of: (i) the closing price of the Shares as stated in the Stock Exchange’s daily quotations sheet on the date on which the option is granted, which date must be a business day; (ii) the average closing price of the Shares as stated in the Stock Exchange’s daily quotations sheets for the five (5) business days immediately preceding the date on which the option is granted; and (iii) the nominal value of the Share.

6. MAXIMUM NUMBER OF THE SHARES AVAILABLE FOR SUBSCRIPTION

The limit on the total number of the Shares which may be issued upon exercise of all outstanding options granted and yet to be exercised under the New Share Option Scheme and any other share option scheme(s) of the Company must not exceed 30% of the total number of the Shares in issue from time to time. Options lapsed or cancelled in accordance with the terms of the New Share Option Scheme or any other share option scheme(s) of the Company shall not be counted for the purpose of calculating the said 30% limit.

In addition, the total number of the Shares which may be issued upon exercise of all options to be granted under the New Share Option Scheme, together with all options to be granted under any other share option scheme(s) of the Company, must not represent more than 10% of the total number of the Shares in issue as at the date of approval of the New Share Option Scheme (the “Scheme Mandate Limit”). Options lapsed in accordance with the terms of the New Share Option Scheme or any other share option scheme(s) of the Company shall not be counted for the purpose of calculating the Scheme Mandate Limit.

The Company may seek separate approval from the Shareholders in general meeting to refresh the Scheme Mandate Limit, but in any event the total number of the Shares in respect of which options may be granted by the Board under the New Share Option Scheme and any other share option scheme(s) of the Company shall not exceed 10% of the total number of the Shares in issue as at the date of approval of the refreshed Scheme Mandate Limit. Options previously granted under the New Share Option Scheme and any other share option scheme(s) of the Company (including those outstanding, cancelled, lapsed in accordance with the New Share Option Scheme or exercised options) will not be counted for the purpose of calculating such refreshed Scheme Mandate Limit.

The Company may also seek separate approval from the Shareholders in general meeting in accordance with the relevant provisions of the Listing Rules for granting options to specified Participants beyond the Scheme Mandate Limit (or refreshed Scheme Mandate Limit) in respect of such number of the Shares and on such terms as may be specified in such approval.

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SUMMARY OF THE PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX II

7. MAXIMUM NUMBER OF OPTIONS TO EACH PARTICIPANT

The total number of the Shares issued and to be issued upon exercise of the options granted to each Participant, together with all options granted and to be granted to him/her under any other share option scheme(s) of the Company, within the 12-month period immediately preceding the proposed date of grant (including exercised, cancelled and outstanding options) shall not exceed 1% of the total number of the Shares in issue as at the proposed date of grant. Any further grant of options to a Participant in excess of the 1% limit shall be subject to the shareholders’ approval of the Company with such Participant and his/her associates abstaining from voting. The number and terms of the options to be granted to such Participant shall be fixed before the shareholders’ approval of the grant of such options.

8. GRANT OF OPTIONS TO CONNECTED PERSONS

Where any grant of options is proposed to be made to a Participant who is a director, chief executive or substantial shareholder (each has the meaning as ascribed under the Listing Rules) of the Company or any of their respective associates, such grant must be approved by the independent nonexecutive directors of the Company (excluding independent non-executive director who is the Participant).

Where the Board proposes to grant any option to a Participant who is a substantial shareholder or an independent non-executive director of the Company or any of their respective associates and such option which would result in the Shares issued and which may fall to be issued upon the exercise of all options already granted and to be granted (including options exercised, cancelled and outstanding) to such person under the New Share Option Scheme and any other share option scheme(s) of the Company in the 12-month period up to and including the proposed date of grant for such options:

• (i) representing in aggregate over 0.1% of the number of the Shares then in issue; and

• (ii) having an aggregate value, based on the closing price of the Shares as stated in the Stock Exchange daily quotations sheet on each relevant date of the grant (subject to acceptance) of the options, in excess of HK$5,000,000.00,

such proposed grant of options must be approved by the Shareholders in general meeting at which all connected persons of the Company must abstain from voting. Any vote taken at the meeting to approve the grant of such options must be taken on a poll.

9. OFFER AND ACCEPTANCE

A grant of an option shall be made to a Participant by letter in such form as the Board may from time to time determine requiring the Participant to undertake to hold the option on the terms on which it is to be granted including but not limited to the minimum period for which an option must be held before it can be exercised (if any) and to be bound by the provisions of the New Share Option Scheme and shall remain open for acceptance by the Participant for a period of thirty (30) days from the date of grant (the “Acceptance Period”).

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SUMMARY OF THE PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX II

An option shall be deemed to have been accepted when the duplicate letter, comprising acceptance of the option duly signed by the grantee together with a remittance in favour of the Company of HK$1.00 by way of consideration for the grant thereof, is received by the Company within the Acceptance Period.

10. TRANSFERABILITY OF OPTIONS

An option shall be personal to the grantee and shall not be assignable and no grantee shall in any way sell, transfer, assign, charge, mortgage, encumber or create any interest in favour of any third party over or in relation to any option or purport to do any of the foregoing. Any breach of the foregoing shall entitle the Company to cancel the relevant grantee’s outstanding options in whole or in part.

11. PERFORMANCE TARGET

No performance target needs to be achieved by the grantee before the options can be exercised, unless otherwise determined by the Board.

12. TIME OF EXERCISE OF OPTIONS

An option may be exercised in accordance with the terms of the New Share Option Scheme and such other terms and conditions upon which an option was granted, at any time during the option period after the option has been granted by the Board but in any event, not longer than ten (10) years from the date of grant. An option shall lapse automatically and not be exercisable (to the extent not already exercised) on the expiry of the option period.

13. RIGHTS ON CEASING EMPLOYMENT OR DEATH

If the grantee ceases to be an employee (including any executive director), officer (including any non-executive director), agent, consultant or representative of the relevant member of the Group for any reason other than on death, ill health, disability or insanity or the termination of employment, office, agency, consultancy or representation on certain grounds specified in the New Share Option Scheme, then, if the option period has not at the date of cessation commenced, the option shall lapse; and if the option period has commenced, the grantee may exercise the option up to his/her entitlement at the date of cessation (to the extent not already exercised) until whichever is the earlier of the date of expiry of the option period or the date falling one (1) month from the date of such cessation, and such cessation date shall be the last actual day of employment, office, agency, consultancy or representation with the relevant member of the Group whether payment in lieu of notice is made or not (if applicable).

For the purposes of this paragraph (13), a grantee shall not be regarded as ceasing to be an employee (including any executive director), officer (including any non-executive director), agent, consultant or representative of the relevant member of the Group if he/she ceases to hold a position of employment, office, agency, consultancy or representation with a particular member of the Group but at the same time takes up a different position of employment, office, agency, consultancy or representation with another member of the Group.

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SUMMARY OF THE PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX II

14. RIGHTS ON DEATH, ILL HEALTH, DISABILITY AND INSANITY

If the grantee ceases to be an employee (including any executive director), officer (including any non-executive director), agent, consultant or representative of the relevant member of the Group by reason of death, ill health, disability or insanity before exercising the option in full and none of certain events which would be a ground for termination of his/her employment, office, agency, consultancy or representation specified in the New Share Option Scheme arises, the grantee or his/her legal personal representative(s) shall be entitled after commencement of the option period until whichever is the earlier of the date of expiry of the option period or the date falling twelve (12) months from the date of cessation (or such longer period as the Board may determine) to exercise the option (to the extent not already exercised) up to his/her entitlement.

15. RIGHTS ON TAKEOVER

If a general offer to acquire the Shares (whether by takeover offer, merger, privatisation proposal by scheme of arrangement between the Company and the Shareholders or otherwise in like manner) is made to all the Shareholders (or all such holders other than the offeror and/or any person controlled by the offeror and/or any person acting in concert with the offeror) and such offer, having been approved (if required) in accordance with applicable laws and regulatory requirements, becomes or is declared unconditional, the grantee (or his/her legal personal representative(s)) shall, even though the option period has not yet commenced, be entitled to exercise the option (to the extent not already exercised) at any time until whichever is the earlier of the date of expiry of the option period or the date falling fourteen (14) days from the date on which the offer becomes or is declared unconditional, after which the option shall lapse.

16. RIGHTS ON WINDING-UP

If a notice is given by the Company to the Shareholders to convene a general meeting for the purposes of considering, and if thought fit, approving a resolution to voluntarily wind up the Company, the Company shall on the same date as or soon after it despatches such notice to each Shareholder give notice thereof to all grantees and thereupon, each grantee (or his/her legal personal representative(s)) shall be entitled to exercise all or any of his/her options at any time not later than five (5) business days prior to the proposed general meeting of the Company by giving notice in writing to the Company, accompanied by a remittance for the full amount of the aggregate subscription price for the Shares in respect of which the notice is given whereupon the Company shall as soon as possible and, in any event, no later than the business day immediately prior to the date of the proposed general meeting referred to above, allot the relevant Shares to the grantee credited as fully paid.

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SUMMARY OF THE PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX II

17. EFFECT ON REORGANISATION OF CAPITAL STRUCTURE

In the event of any capitalisation issue, rights issue, open offer, consolidation, sub-division or reduction of the share capital of the Company (other than an issue of the Shares as consideration in respect of a transaction), corresponding adjustments (if any) shall be made in:

• (i) the number or nominal amount of the Shares subject to options so far as unexercised;

• (ii) the subscription price in relation to each outstanding option; and/or

• (iii) the method of exercise of the options,

provided that any such adjustments shall be made such that the proportion of the issued share capital of the Company to which an option entitles the grantee to subscribe after such adjustment must be the same as that to which the option entitled the grantee to subscribe immediately before such adjustment, but so that no such adjustment shall be made to the extent that the effect of such adjustment would be to enable any Share to be issued at less than its nominal value.

In respect of any adjustment required by the foregoing provisions, other than any adjustment made on a capitalisation issue, an independent financial adviser or the auditor of the Company for the time being must also confirm to the Board in writing that the adjustments satisfy the foregoing provisions and fairly and reasonably satisfy the requirement that any such adjustment shall be made in compliance with the provisions stipulated under Chapter 17 of the Listing Rules or such other guidelines and supplementary guidance on the interpretation of the Listing Rules issued or as may be issued by the Stock Exchange from time to time.

In any event, any such alterations will be made on the basis that a grantee shall have the same proportion of the issued share capital of the Company. No such alteration will be made the effect of which would be to enable a Share to be issued at less than its nominal value. The issue of securities as consideration in a transaction is not to be regarded as a circumstance requiring any such alterations.

18. RANKING OF SHARES

The Shares to be allotted and issued upon the exercise of an option will be subject to all the provisions of the Bye-laws for the time being in force and will rank pari passu with the fully paid Shares in issue on the date of allotment or, if that date falls on a day when the register of members of the Company is closed, the first day of the reopening of the register of members and accordingly will entitle the holders to participate in all dividends or other distributions paid or made on or after the date of allotment other than any dividend or other distribution previously declared or recommended or resolved to be paid or made if the record date thereof is before the date of allotment.

A Share issued upon the exercise of an option shall not carry any voting rights until the registration of the grantee (or any other person) as the holder thereof.

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SUMMARY OF THE PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX II

19. CANCELLATION OF OPTIONS

The Board may effect the cancellation of any options granted but not exercised on such terms as may be agreed with the relevant grantee, as the Board may in its absolute discretion see fit and in a manner that complies with all applicable legal requirements for such cancellation.

Where the Company cancels any options granted but not exercised and grants new option to the same grantee, the grant of such new options may only be made under the New Share Option Scheme if there is available unissued options (excluding the cancelled options) within each of the 10% limits as referred to in paragraph (6) above and there is available options (excluding the cancelled options) under the 1% limit for each Participant as referred to in paragraph (7) above.

20. LAPSE OF OPTION

An option shall lapse automatically (to the extent not already exercised) on the earliest of:

• (i) the expiry of the option period;

• (ii) the expiry of any of the other periods referred to in paragraphs (13), (14) or (15);

• (iii) subject to paragraph (16) above, the earliest of the close of business on the 5th business day prior to the general meeting referred to in paragraph (16) above or the date of commencement of the winding-up of the Company;

• (iv) save as otherwise provided in paragraph (15) above or by the court in relation to the New Share Option Scheme in question, upon the sanctioning pursuant to the Companies Act by the Supreme Court of Bermuda of a compromise or arrangement between the Company and the Shareholders or creditors for the purposes of or in connection with a scheme for the reconstruction of the Company or its amalgamation with any other company or companies;

• (v) the date on which the grantee ceases to be an employee (including any executive director), officer (including any non-executive director), agent, consultant or representative of any relevant member of the Group by reason of the termination of his/her employment, office, agency, consultancy or representation on certain grounds specified in the New Share Option Scheme including but not limited to, guilty of misconduct, bankruptcy or insolvency, having made any arrangement or composition with his creditors generally, or conviction of any criminal offence involving his integrity or honesty or (if so determined by the Board) on any other ground on which an employer or principal would be entitled to terminate his/ her employment, office, agency, consultancy or representation at common law or pursuant to any applicable laws or under the grantee’s service contract, terms of office, or agency, consultancy, or representation agreement or arrangement with the relevant member of the Group; or

• (vi) the date on which the Board exercises the Company’s right to cancel the option because of a breach by the grantee of the rules summarised in paragraph (10).

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SUMMARY OF THE PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX II

21. ALTERATION OF THE NEW SHARE OPTION SCHEME

The terms of the New Share Option Scheme may be altered in any respect by resolution of the Board except that the provisions of the New Share Option Scheme relating to matters contained in Rule 17.03 of the Listing Rules shall not be altered to the advantage of Participants unless with the prior sanction of a resolution of the Shareholders in general meeting.

Any alterations to the terms and conditions of the New Share Option Scheme which are of a material nature or any change to the terms of options granted must first be approved by the Shareholders in general meeting, except where the alterations take effect automatically under the existing terms of the New Share Option Scheme. Any change to the authority of the Board or the scheme administrators in relation to any alteration to the terms of the New Share Option Scheme must first be approved by the Shareholders in general meeting.

The amended terms of the New Share Option Scheme or the options must still comply with the relevant requirements of Chapter 17 of the Listing Rules.

22. TERMINATION OF THE NEW SHARE OPTION SCHEME

The Company may by ordinary resolution in general meeting terminate or the Board may at any time terminate the operation of the New Share Option Scheme and in such event no further options will be granted but in all other respects the provisions of the New Share Option Scheme in relation to any outstanding options shall remain in full force and effect. All options granted and accepted prior to such termination and not then exercised shall continue to be valid and exercisable subject to and in accordance with the New Share Option Scheme.

19

DETAILS OF THE RETIRING DIRECTORS PROPOSED FOR RE-ELECTION

APPENDIX III

The following are the details of the retiring Directors proposed to be re-elected at the AGM.

Mr. Sue Ka Lok , Chief Executive Officer and members of the Remuneration Committee and the Nomination Committee

Mr. Sue, aged 47, joined the Company as an Executive Director in November 2007 and appointed the Chief Executive Officer of the Company in November 2009. Mr. Sue is also a director of various members of the Group. Mr. Sue holds a Bachelor of Economics degree from the University of Sydney in Australia and a Master of Science in Finance degree from the City University of Hong Kong. Mr. Sue is a fellow member of the Hong Kong Institute of Certified Public Accountants, a certified practising accountant of the CPA Australia, a fellow member of both the Hong Kong Institute of Chartered Secretaries and the Institute of Chartered Secretaries and Administrators and a member of the Hong Kong Securities Institute. Mr. Sue has extensive experience in corporate management, finance, accounting and company secretarial practice. Mr. Sue is also an executive director and the chief executive officer of BEP International Holdings Limited (stock code: 2326) (“BEP International”), a non-executive director and the chairman of China Tycoon Beverage Holdings Limited (stock code: 209) (“China Tycoon”), and an executive director and the chief executive officer of Sunlink International Holdings Limited (stock code: 2336) (“Sunlink International”). All of the above companies are listed companies in Hong Kong. Mr. Sue was also an executive director and the chief executive officer of China Yunnan Tin Minerals Group Company Limited (stock code: 263), a listed company in Hong Kong, until 18 January 2010.

Save as disclosed above, Mr. Sue has not held any other directorship in other public companies the securities of which are listed on any securities market in Hong Kong or overseas for the last three years.

As at the Latest Practicable Date, Mr. Sue did not have any interest in the Shares within the meaning of Part XV of the SFO.

Mr. Sue and Mr. Suen are both executive directors of BEP International and Sunlink International of which Mr. Suen is the chairman and the controlling shareholder of both companies. Mr. Sue is also a non-executive director and the chairman of China Tycoon of which Mr. Suen is the controlling shareholder and Mr. Wong Kwok Tai (an Independent Non-executive Director of the Company) is an independent non-executive director.

Save as disclosed above, Mr. Sue does not have any other relationship with any other Directors, senior management, substantial Shareholders or controlling Shareholders of the Company.

There is a service contract entered into between a subsidiary of the Company and Mr. Sue. According to the service contract, Mr. Sue is not appointed for any specific length or proposed length of service and his term of service shall continue unless terminated by either party by giving to the other three months’ prior notice in writing. The directorship of Mr. Sue is subject to retirement by rotation and re-election in accordance with the Bye-laws. Mr. Sue is entitled to receive a director’s remuneration of HK$715,000 per annum which has been approved by the Remuneration Committee based on his qualifications, experience, level of responsibilities undertaken, contribution to the Company

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DETAILS OF THE RETIRING DIRECTORS PROPOSED FOR RE-ELECTION

APPENDIX III

and prevailing market conditions. Mr. Sue may also be entitled to receive discretionary bonuses or other benefits as may be decided by the Remuneration Committee having regard to Mr. Sue’s and the Company’s performance. The director’s remuneration of Mr. Sue is subject to annual review by the Remuneration Committee. The director’s remuneration of Mr. Sue for the year ended 31 March 2012 amounted to approximately HK$751,000.

Save as disclosed above, Mr. Sue has confirmed that there is no other information which is required to be disclosed pursuant to the requirements of Rule 13.51(2) of the Listing Rules nor are there other matters that need to be brought to the attention of the Shareholders.

Mr. Weng Yixiang , Independent Non-executive Director, Chairman of the Remuneration Committee and members of the Audit Committee and the Nomination Committee

Mr. Weng, aged 53, joined the Company as an Independent Non-executive Director in October 2007. Mr. Weng graduated from China Central Radio and TV University specialising in law and is also qualified as a senior economist in the People’s Republic of China (the “PRC”). Mr. Weng has over 20 years of experience in banking, investment and finance and had served as senior executive in government authorities and financial institutions in the PRC. Mr. Weng is the general manager of an investment management and consulting company in the PRC.

Mr. Weng has not held any directorship in other public companies the securities of which are listed on any securities market in Hong Kong or overseas for the last three years.

As at the Latest Practicable Date, Mr. Weng did not have any interest in the Shares within the meaning of Part XV of the SFO.

Mr. Weng does not have any relationship with any other Directors, senior management, substantial Shareholders or controlling Shareholders of the Company.

There is a letter of appointment entered into between the Company and Mr. Weng. According to the letter of appointment, Mr. Weng is not appointed for any specific length or proposed length of services with the Company but is subject to retirement by rotation and re-election in accordance with the Byelaws. Mr. Weng is entitled to receive an annual director’s fee in the sum of HK$60,000 which has been recommended by the Remuneration Committee and approved by the Board based on his qualifications, experience, level of responsibilities undertaken, contribution to the Company and prevailing market conditions. The director’s fee of Mr. Weng is subject to annual review by the Remuneration Committee and the Board. The director’s fee of Mr. Weng for the year ended 31 March 2012 amounted to HK$60,000.

Save as disclosed above, Mr. Weng has confirmed that there is no other information which is required to be disclosed pursuant to the requirements of Rule 13.51(2) of the Listing Rules nor are there other matters that need to be brought to the attention of the Shareholders.

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DETAILS OF THE RETIRING DIRECTORS PROPOSED FOR RE-ELECTION

APPENDIX III

Mr. Lu Xinsheng , Independent Non-executive Director, Chairman of the Nomination Committee and members of the Audit Committee and the Remuneration Committee

Mr. Lu, aged 45, joined the Company as an Independent Non-executive Director in October 2007. Mr. Lu graduated from Sichuan University with a Bachelor of Science degree specialising in environmental chemistry. Mr. Lu has over 20 years of experience in trading business and has held senior positions in trading and logistics companies in the PRC.

Mr. Lu has not held any directorship in other public companies the securities of which are listed on any securities market in Hong Kong or overseas for the last three years.

As at the Latest Practicable Date, Mr. Lu did not have any interest in the Shares within the meaning of Part XV of the SFO.

Mr. Lu does not have any relationship with any other Directors, senior management, substantial Shareholders or controlling Shareholders of the Company.

There is a letter of appointment entered into between the Company and Mr. Lu. According to the letter of appointment, Mr. Lu is not appointed for any specific length or proposed length of service with the Company but is subject to retirement by rotation and re-election in accordance with the Bye-laws. Mr. Lu is entitled to receive an annual director’s fee in the sum of HK$60,000 which has been recommended by the Remuneration Committee and approved by the Board based on his qualifications, experience, level of responsibilities undertaken, contribution to the Company and prevailing market conditions. The director’s fee of Mr. Lu is subject to annual review by the Remuneration Committee and the Board. The director’s fee of Mr. Lu for the year ended 31 March 2012 amounted to HK$60,000.

Save as disclosed above, Mr. Lu has confirmed that there is no other information which is required to be disclosed pursuant to the requirements of Rule 13.51(2) of the Listing Rules nor are there other matters that need to be brought to the attention of the Shareholders.

22

AGM NOTICE

==> 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 IS HEREBY GIVEN that an annual general meeting of Beijing Yu Sheng Tang Pharmaceutical Group Limited (the “Company”) will be held at Plaza 3, Lower Lobby, Novotel Century Hong Kong, 238 Jaffe Road, Wanchai, Hong Kong on Monday, 24 September 2012 at 9:30 a.m. for the following purposes:

1. To receive, consider and adopt the audited financial statements and the reports of the directors and auditors of the Company for the year ended 31 March 2012.

2. To re-elect the retiring directors of the Company and to authorise the Board of Directors of the Company to fix the directors’ remuneration.

3. To appoint HLB Hodgson Impey Cheng Limited as the auditor of the Company in lieu of the retiring auditors, Messrs HLB Hodgson Impey Cheng, until the conclusion of the next annual general meeting of the Company and to authorise the Board of Directors of the Company to fix its remuneration.

4. As special business, to consider and, if thought fit, pass, with or without amendments, the following resolutions as ordinary resolutions of the Company:

5. (A) “ THAT :

   • (a) subject to paragraph (c) of this resolution, the exercise by the directors of the Company (the “Directors”) during the Relevant Period (as hereinafter defined) of all the powers of the Company to allot, issue and deal with authorised and unissued shares in the capital of the Company and to make or grant offers, agreements and options (including bonds, warrants, debentures, notes and any securities carrying rights to subscribe for or convert or exercise into shares of the Company) which might require the exercise of such powers be and is hereby generally and unconditionally approved;

   • (b) the approval in paragraph (a) of this resolution shall authorise the Directors to make or grant offers, agreements and options (including bonds, warrants, debentures, notes and any securities carrying rights to subscribe for or convert or exercise into shares of the Company) during the Relevant Period which would or might require the exercise of such powers after the end of the Relevant Period;

• For identification purpose only

23

AGM NOTICE

• (c) the aggregate nominal amount of the share capital allotted or agreed conditionally or unconditionally to be allotted by the Directors pursuant to the approval in paragraph (a) of this resolution, otherwise than pursuant to:

• (i) a Rights Issue (as hereinafter defined);

• (ii) the exercise of options under a share option scheme of the Company;

• (iii) the exercise of rights of subscription or conversion under the terms of any securities issued by the Company which are convertible or exercisable into shares of the Company; or

• (iv) any scrip dividend scheme or similar arrangement providing for the allotment of shares in lieu of the whole or part of a dividend on the shares of the Company in accordance with the Bye-laws of the Company from time to time,

shall not exceed 20% of the aggregate nominal amount of the issued share capital of the Company as at the date of passing of this resolution and the said approval shall be limited accordingly; and

• (d) for the purpose of this resolution:

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

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

• (ii) the revocation or variation of the authority given under this resolution by an ordinary resolution passed by the Company’s shareholders in general meetings; and

• (iii) the expiration of the period within which the next annual general meeting of the Company is required by the Bye-laws of the Company or any applicable laws to be held.

“Rights Issue” means an offer of shares open for a period fixed by the Directors to holders of shares of the Company or any class thereof on the register of members on a fixed record date in proportion to their then holdings of such shares or class thereof (subject to such exclusions or other arrangements as the Directors may deem necessary or expedient in relation to fractional entitlements or having regard to any restrictions or obligations under the laws of any relevant jurisdiction or the requirements of any recognised regulatory body or any stock exchange).”

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AGM NOTICE

(B) “ THAT :

• (a) subject to paragraph (b) of this resolution, the exercise by the directors of the Company during the Relevant Period (as hereinafter defined) of all the powers of the Company to repurchase its shares, subject to and in accordance with the applicable laws, be and is hereby generally and unconditionally approved;

• (b) the aggregate nominal amount of the shares of the Company to be repurchased pursuant to the approval in paragraph (a) of this resolution shall not exceed 10% of the aggregate nominal amount of the issued share capital of the Company as at the date of passing of this resolution and the said approval shall be limited accordingly; and

• (c) for the purpose of this resolution:

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

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

  • (ii) the revocation or variation of the authority given under this resolution by an ordinary resolution passed by the Company’s shareholders in general meetings; and

  • (iii) the expiration of the period within which the next annual general meeting of the Company is required by the Bye-laws of the Company or any applicable laws to be held.”

• (C) “ THAT conditional upon the passing of the resolutions numbered 4(A) and 4(B) as set out in the notice convening this meeting (the “Notice”), the general mandate referred to in the resolution numbered 4(A) of the Notice be and is hereby extended by the addition to the aggregate nominal amount of the shares which may be allotted and issued or agreed conditionally or unconditionally to be allotted and issued by the directors of the Company pursuant to such general mandate of an amount representing the aggregate nominal amount of the shares repurchased by the Company pursuant to the general mandate referred to in the resolution numbered 4(B) of the Notice, provided that such amount shall not exceed 10% of the aggregate nominal amount of the issued share capital of the Company as at the date of passing of this resolution.”

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AGM NOTICE

1. As special business, to consider and, if thought fit, pass, with or without amendments, the following resolution as an ordinary resolution of the Company:

“ THAT conditional upon The Stock Exchange of Hong Kong Limited granting approval of the listing of and permission to deal in the shares falling to be issued pursuant to the exercise of any options granted under the share option scheme referred to in the circular despatched to the shareholders of the Company on the same day as this notice, the terms of which are set out in the printed document marked “A” now produced to this meeting and for the purpose of identification signed by the Chairman of this meeting hereof (the “Share Option Scheme”), the Share Option Scheme be approved and adopted and that the directors of the Company be authorised to grant options thereunder and to allot, issue and deal in shares of the Company pursuant to the Share Option Scheme and take all such steps as may be necessary or desirable to implement such Share Option Scheme and with effect from the date of the Share Option Scheme becoming unconditional and coming into effect, the existing share option scheme of the Company which was adopted by the Company on 30 December 2002 be terminated.”

By Order of the Board Sue Ka Lok Chief Executive Officer

Hong Kong, 31 July 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:

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

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

3. 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 branch share registrar in Hong Kong, 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 annual general meeting or 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.

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AGM NOTICE

1. 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.

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

3. An explanatory statement containing further details regarding the resolution numbered 4(B) above is set out in Appendix I to this circular.

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