PegBio Co., Ltd. — Share Issue/Capital Change 2002

Nov 14, 2002

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

HUNG FUNG GROUP HOLDINGS LIMITED (Incorporated in Bermuda with limited liability)

PROPOSED SHARE CONSOLIDATION, CHANGE IN BOARD LOT SIZE, CAPITAL REORGANISATION, AND CHANGE OF COMPANY’S NAME

The Directors propose to effect the Share Consolidation, a change in board lot size from 20,000 shares to 4,000 shares, the Capital Reorganisation and a change of the Company’s name, as follows:

The Share Consolidation – to consolidate every fifty Shares of HK$0.01 each (whether issued or unissued) into one Consolidated Share.

The Capital Reorganisation will be effected in the following manner:

• The Capital Reduction – a reduction in the nominal value of the issued Consolidated Shares of HK$0.50 each by cancelling their paid-up capital to the extent of HK$0.49 each so that the nominal value of each issued Consolidated Share will be reduced to HK$0.01;

• The Share Premium Cancellation – cancellation of the amount standing to the credit of the share premium account of the Company as at the effective date of the Capital Reduction;

– 1 –

• Application of the credit arising from the Capital Reduction and the Share Premium Cancellation together with such of the amount standing in the contributed surplus account of the Company as may be necessary to fully eliminate the accumulated losses of the Company;

• The Authorised Capital Cancellation – cancellation of all the authorised but unissued share capital of the Company (including the authorised but unissued share capital arising from the Capital Reduction); and

• The Increase in Authorised Share Capital – increasing the authorised share capital of the Company to HK$15,000,000.00 after the implementation of the Capital Reduction and the Authorised Capital Cancellation by the creation of 1,284,474,362 Reduced Shares (or such appropriate number) of HK$0.01 each.

The Share Consolidation and the Capital Reorganisation are subject to the fulfillment of the conditions stated below.

The Directors further propose to change the name of the Company to “Xin Corporation Limited” and to adopt a Chinese name of �� !"#$%&' �� for identification only.

A circular containing details of, among other things, the Share Consolidation, the change in board lot size from 20,000 shares to 4,000 shares, the Capital Reorganisation, the change of the Company’s name and a notice convening the SGM will be despatched to the Shareholders as soon as possible.

1. THE SHARE CONSOLIDATION

Every fifty issued and unissued Shares of HK$0.01 each will be consolidated into one Consolidated Share of HK$0.50. As at the date of this announcement, there are 10,776,281,900 Shares in issue. On this basis and upon the Share Consolidation becoming effective, there will be 215,525,638 Consolidated Shares in issue. Any fractions which arise upon the Share Consolidation becoming effective will be aggregated and (if possible) sold for the benefit of the Company. The Consolidated Shares will rank pari passu in all respects with each other.

– 2 –

Change in board lot size

At present, the ordinary Shares of the Company are traded in board lots of 20,000 Shares. Subject to the Share Consolidation becoming effective, the Directors propose to change the size of the board lot for trading on the Stock Exchange to 4,000 Consolidated Shares.

Conditions of the Share Consolidation

The Share Consolidation will be conditional on:

• (a) the passing by the Shareholders at the SGM of a relevant resolution approving the Share Consolidation; and

• (b) the Listing Committee of the Stock Exchange granting the listing of, and permission to deal in, the Consolidated Shares.

Reasons for the Share Consolidation

In view of the relatively low market value for each existing board lot of the Shares, the Directors believe that the Share Consolidation together with the change in board lot size would reduce the number of board lots in the market and will reduce the handling cost for the Company and the Shareholders dealing in the shares in the Company, including charges on stock withdrawal and share certificate issues, and will be beneficial to both the Company and the Shareholders.

Trading arrangements for the Consolidated Shares

In order to facilitate the trading of odd lots of the Consolidated Shares as a result of the Share Consolidation, the Company will, during the period specified below, appoint Ms. Rosita Kiu of Kingston Securities Limited at Suite 2801, One International Finance Centre, 1 Harbour View Street, Central, Hong Kong (Tel: 2298 6215) to provide a “matching service” (on a best effort basis only) to Shareholders who wish to buy or sell their holdings of odd lots.

– 3 –

Certificates for Consolidated Shares

Arrangements will be made so that subject to the Share Consolidation and/or change of the Company’s name becoming effective, Shareholders may submit their certificates for the existing Shares in exchange for certificates for the Consolidated Shares (or Reduced Shares) free of charge during a specified period after the Share Consolidation (and/or the Capital Reorganisation) become effective. After the expiry of such period, certificates for the existing Shares will be accepted for exchange only on payment of a fee by the relevant Shareholder. Existing share certificates will cease to be good for delivery but will continue to be good evidence of legal title to the Consolidated Shares (or Reduced Shares). Details of such exchange arrangements will be set out in a circular to be despatched to the Shareholders as soon as practicable.

2. THE CAPITAL REORGANISATION

The Directors propose that the capital structure of the Company will be reorganised in the following manner:

A. THE CAPITAL REDUCTION

All issued Consolidated Shares of HK$0.50 each will be reduced by cancelling their nominal value to the extent of HK$0.49 per share so that the nominal value of each such issued Consolidated Share will be reduced from HK$0.50 to HK$0.01. Accordingly, based on the number of Shares in issue as at the date of this announcement and subject to the Share Consolidation becoming effective, the nominal value of the issued share capital of the Company after the Share Consolidation and the implementation of the Capital Reduction will be reduced by HK$105,607,562.62 to HK$2,155,256.38.

B. THE SHARE PREMIUM CANCELLATION

The share premium account of the Company as at the effective date of the Capital Reduction will be cancelled and the credit arising therefrom will be credited to the contributed surplus account of the Company. As at the date of this announcement, the unaudited share premium account of the Company amounted to approximately HK$41,465,000.

– 4 –

C. THE APPLICATION OF CREDIT

The expected credit of HK$105,607,562.62 arising from the Capital Reduction and the credit of the share premium account as at the effective date arising from the Share Premium Cancellation shall be applied, together with such amount standing in the contributed surplus account of the Company as may be necessary, by the Directors to fully eliminate the accumulated losses of the Company. The accumulated losses of the Company as at 31st March, 2002 amounted to approximately HK$206,552,000 as set out in the audited financial statements of the Company.

D. THE AUTHORISED CAPITAL CANCELLATION

All of the authorised but unissued share capital of the Company (including the authorised but unissued share capital arising from the Capital Reduction) will be cancelled. As at the date of this announcement, there are 19,223,718,100 authorised but unissued Shares of HK$0.01 each amounting to an aggregate of HK$192,237,181.00. Assuming the Share Consolidation becoming effective and on the basis of 10,776,281,900 Shares currently in issue, the entire authorised but unissued 384,474,362 Consolidated Shares, together with that arising from the Capital Reduction, will be cancelled.

E. THE INCREASE IN AUTHORISED SHARE CAPITAL

Subject to the Share Consolidation, the Capital Reduction and the Authorised Capital Cancellation becoming effective, with an aim to increasing the number of authorised shares of the Company to 1,500,000,000, the authorised share capital of the Company will be increased to HK$15,000,000.00 by the creation of 1,284,474,362 Reduced Shares (or such appropriate number) of HK$0.01 each.

– 5 –

REASONS FOR THE CAPITAL REDUCTION AND THE SHARE PREMIUM CANCELLATION

The audited financial statements of the Company as at 31st March, 2002 showed that the Company had accumulated losses of approximately HK$206,552,000. The Directors believe that it is unlikely that the Company will generate sufficient profits in the foreseeable future to eliminate this deficit and that it would be inappropriate for the Company to pay dividends while the deficit remains. Based on the current amounts, the credit arising from the proposed Capital Reduction of approximately HK$105,607,562.62 and from the Share Premium Cancellation of approximately HK$41,465,000 together with such necessary amount in the balances in the contributed surplus of the Company as at the effective date, which amounted to approximately HK$68,509,000 as at the date of this announcement, will be applied to eliminate the accumulated losses of the Company. Based on the Company’s accumulated losses of approximately HK$206,552,000 as at 31st March, 2002, the number of Shares in issue and the balances of the share premium and contributed surplus as at the date of this announcement, it is expected that the accumulated losses of the Company will be fully eliminated upon the Capital Reorganisation becoming effective.

Conditions of the Capital Reorganisation

The Capital Reorganisation will be conditional on:

• (a) the passing by the Shareholders at the SGM of a special resolution approving the Capital Reorganisation; and

• (b) the Listing Committee of the Stock Exchange granting the listing of, and permission to deal in, the Reduced Shares.

A special resolution will be proposed to approve both the Share Consolidation and the Capital Reorganisation. Pursuant to this resolution, implementation of the Share Consolidation and the Capital Reorganisation will both take place if the resolution is approved and the Share Consolidation and the Capital Reorganisation together will not be implemented if the resolution is not approved.

– 6 –

A further ordinary resolution will be proposed to consider only the Share Consolidation but not the Capital Reorganisation, and to be voted on only in the event that the abovementioned special resolution is not approved at the SGM. Under this resolution, the Share Consolidation is not subject to the Capital Reorganisation being implemented. If this resolution is voted on and approved, only the Share Consolidation will be implemented.

Details of the share capital of the Company before and after the Share Consolidation and the Capital Reorganisation

As at the date of this announcement, the authorised share capital of the Company is HK$300,000,000 divided into 30,000,000,000 Shares of HK$0.01 each, of which 10,776,281,900 Shares have been issued and are credited as fully paid.

On the basis of 10,776,281,900 Shares in issue and subject to the Share Consolidation and the Capital Reorganisation becoming effective, the authorised share capital of the Company will be HK$15,000,000 comprising 1,500,000,000 Reduced Shares, of which 215,525,638 Reduced Shares will be issued and credited as fully paid, representing an issued share capital of HK$2,155,256.38 and of which 1,284,474,362 Reduced Shares representing a share capital of HK$12,844,743.62 will be unissued.

– 7 –

Set out below is the expected capital position of the Company both before and after the completion of the Share Consolidation and the Capital Reorganisation, based on the basis of (i) the issued capital of the Company as at the date of this announcement; (ii) the unaudited balances of the contributed surplus and the share premium of the Company as at the date of this announcement; and (iii) the audited accumulated losses of the Company as at 31st March, 2002:

	The Company’s	The Company’s
	capital position before	capital position after
	the Share Consolidation	the Share Consolidation
	and the Capital	and the Capital
	Reorganisation	Reorganisation
Nominal value per share	HK$0.01	HK$0.01
Number of authorised shares	30,000,000,000	1,500,000,000
Authorised share capital	HK$300,000,000.00	HK$15,000,000.00
Number of issued shares	10,776,281,900	215,525,638
Total issued share capital	HK$107,762,819.00	HK$2,155,256.38
Number of unissued shares	19,223,718,100	1,284,474,362
Total unissued share capital	HK$192,237,181	HK$12,844,743.62
Share premium	HK$41,465,308	nil
Contributed surplus	HK$68,509,199	HK$9,029,190
Accumulated loss	HK$206,552,880	nil

– 8 –

Expected timetable

On the basis that the necessary resolutions will be approved at the forthcoming SGM, the following is the expected timetable in relation to the Share Consolidation and the Capital Reorganisation:

==> picture [32 x 11] intentionally omitted <==

Latest time for lodging forms of

proxy for the SGM . . . . . . . . . . . . . 10:00 a.m. on Saturday, 28th December

SGM . . . . . . . . . . . . . . . . . . . . . . . . . . 10:00 a.m. on Monday, 30th December

The Share Consolidation and

the Capital Reorganisation

becoming effective . . . . . . . . . . . . . . 9:30 a.m. on Tuesday, 31st December

Closure of original counter for trading in

Shares in board lots of 20,000

(represented by existing

green share certificates) . . . . . . . . . . 9:30 a.m. on Tuesday, 31st December

Establishment of temporary counter for trading in

Consolidated Shares in board lots of 400

(represented by existing green

share certificates) . . . . . . . . . . . . . . . 9:30 a.m. on Tuesday, 31st December

First day of free exchange of existing green

share certificates for new

. . . . . . . . . . . . . . . . . . . . orange share certificates Tuesday, 31st December

First day of operation of odd lot

trading facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tuesday, 31st December

– 9 –

2003

Original counter for trading in Consolidated

Shares represented by new orange

share certificates in board lots of 4,000

re-opens . . . . . . . . . . . . . . . . . . . . . . . . . 9:30 a.m. on Tuesday, 14th January

Parallel trading commences . . . . . . . . . . . 9:30 a.m. on Tuesday, 14th January

Closure of temporary counter for trading

in Consolidated Shares in board lots of 400 (represented by existing

green share certificates) . . . . . . . . . . . 4:00 p.m. on Thursday, 6th February

Parallel trading ends . . . . . . . . . . . . . . . . 4:00 p.m. on Thursday, 6th February

. . . . Last day of operation of odd lot trading facility Tuesday, 11th February

Last day of free exchange of existing share

certificates for new share certificates . . . . . . . . . . . Tuesday, 11th February

3. PROPOSED CHANGE OF THE COMPANY’S NAME

The Directors propose to change the name of the Company to “Xin Corporation Limited” and have resolved to adopt a Chinese name of �� !"#$%& �� for identification only. The Directors consider that following the completion of the debt restructuring as announced by the Company on 16th May, 2002, it would be appropriate for the Company to adopt a new company name which represents the change in the shareholding of the Company with new leadership of the new controlling Shareholder. The proposed change of name of the Company is subject to the passing of a special resolution by the Shareholders at the SGM and the approval by the Registrar of Companies in Bermuda. The change of the Company’s name will take effect from the date on which the new name is entered into the register in Bermuda by the Registrar of Companies in Bermuda in place of the existing name. Thereafter, the Company will comply with necessary filing procedures in Hong Kong.

– 10 –

The proposed change of the Company’s name will not affect any of the rights of the Shareholders. All existing share certificates in issue bearing the existing name of the Company will, after the change of the Company’s name (subject to the implementation of the Share Consolidation), continue to be evidence of title to the Shares and will be valid for trading, for the same number of Shares in the new name of the Company. As soon as the change of name has become effective, any new issue of share certificates will be issued in the new name of the Company.

GENERAL

Application will be made to the Stock Exchange for the grant of the listing of, and permission to deal in, the Reduced Shares and/or the Consolidated Shares.

Each of the proposals regarding the Share Consolidation, the change in board lot size, the Capital Reorganisation, and the change of Company name is conditional upon, inter alia, Shareholders’ approval at the SGM. A circular containing details of the aforesaid proposals and a notice convening the SGM will be despatched to the Shareholders as soon as possible.

TERMS USED IN THE ANNOUNCEMENT

“Authorised Capital the proposed cancellation of the authorised but unissued Cancellation” share capital of the Company comprising HK$192,237,181.00 divided into 384,474,362 Consolidated Shares of HK$0.50 each together with such amount arising from the Capital Reduction

“Board”

board of Directors

“Capital the proposed reduction of the nominal value Reduction” of each of the issued Consolidated Share of HK$0.50 to HK$0.01 as referred to in the paragraph headed “The Capital Reduction” above

– 11 –

“Capital

Reorganisation”

• the capital reorganisation of the Company involving the Capital Reduction, the Share Premium Cancellation, the Authorised Capital Cancellation, and the Increase in Authorised Share Capital

• “Company” Hung Fung Group Holdings Limited, a company incorporated in Bermuda with limited liability, the securities of which are listed on the Stock Exchange

• “Consolidated ordinary share(s) with nominal value of Share(s)” HK$0.50 each in the share capital of the Company created upon the Share Consolidation becoming effective

• “Directors” directors of the Company

• “Group” the Company and its subsidiaries

• “Increase in the creation of an additional 1,284,474,362 Reduced Authorised Shares (or such appropriate number) of HK$0.01 each Share Capital” to increase the number of the authorised shares in the Company after the Share Consolidation, the Capital Reduction, the Share Premium Cancellation and the Authorised Capital Cancellation to 1,500,000,000 Reduced Shares

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

• “Reduced Share(s)” ordinary share(s) with a nominal value of HK$0.01 each in the capital of the Company upon the Share Consolidation and the Capital Reorganisation becoming effective

– 12 –

“SGM”

a special general meeting of the Company to be held on 30th December, 2002 to consider and, if appropriate, approve, the Share Consolidation, the change in board lot size, the Capital Reorganisation and the change of Company’s name

“Share(s)” existing ordinary share(s) with nominal value of HK$0.01 each in the share capital of the Company

• “Share the proposed consolidation of every fifty Shares Consolidation” (whether issued or unissued) into one Consolidated Share

• “Shareholders” holders of Shares, Consolidated Shares, or Reduced Shares, as the context may require

• “Share Premium the cancellation of the entire amount standing to the Cancellation” credit of the share premium account of the Company as at the effective date of the Capital Reduction

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

• “HK$” Hong Kong dollar, the lawful currency of Hong Kong

By Order of the Board Lo Ming Chi, Charles Chairman

Hong Kong, 13th November, 2002

Please also refer to the published version of this announcement in The Standard.

– 13 –