RemeGen Co., Ltd. — Capital/Financing Update 2007

Mar 21, 2007

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.

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HUALI HOLDINGS (GROUP) LIMITED 華力控股(集團)有限公司

(Incorporated in the Cayman Islands with limited liability) (Stock Code: 3366)

DISCLOSEABLE TRANSACTION ACQUISITION OF LAND USE RIGHTS

The Board is pleased to announce that on 19 March 2007, Huizhou Huali, an indirect wholly owned subsidiary of the Company, entered into the Transfer Agreement with the Transferor to acquire the land use rights of the Land at a consideration of RMB64,460,000 (equivalent to approximately HK$64,999,000), subject to the Adjustment.

The Acquisition constitutes a discloseable transaction for the Company under Chapter 14 of the Listing Rules. A circular containing, among other things, details of the Acquisition will be despatched to the shareholders of the Company as soon as practicable.

The Transfer Agreement

Date: 19 March 2007

Transferor: 廣東泳和藥業開發有限公司 (Guangdong Yonghe Pharmaceuticals Development Limited), a Sino-foreign equity joint venture enterprise with limited liability incorporated in the PRC

Transferee: Huizhou Huali, a wholly foreign owned joint venture enterprise incorporated in the PRC and an indirect wholly-owned subsidiary of the Company

Pursuant to the Transfer Agreement, the Transferor, having obtained the relevant state owned land use rights certificates (國有土地使用權證 ) of the Land in its name and hence having legal title of the Land, has agreed to transfer the land use rights of the Land to the Transferee subject to the terms and conditions thereof.

To the best of the Directors’ knowledge, information and belief having made all reasonable enquires, the Transferor and its ultimate beneficial owners are third parties independent of and not connected with the Group and the connected persons (as defined under the Listing Rules) of the Company.

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Information of the Land

The Land, which is currently vacant, is located at 惠陽區淡水鎮新橋村行誠科技園 (Hangcheng Industrial Park, Xinqiao Village, Danshui Town, Huiyang District), Guangdong Province, the PRC and has a total site area of approximately 220,000 square metres. The final total site area of the Land may be adjusted based on the red-line map as approved by the relevant planning bureau, but shall not be more than 220,000 square metres. The Land shall be used for industrial purpose. The Transferor undertakes that the term of the Land as to be approved by the relevant land bureau by way of issuance of the state owned land use rights certificate(s)（國有土 地使用權證）shall be 50 years expiring on 19 August 2054.

According to a valuation report prepared by an independent valuer engaged by the Group, the value of the Land as of 7 March 2007 was estimated to be approximately RMB300 per square metre, inclusive of tax payments of approximately RMB9 per square metre, or approximately RMB64,020,000 in aggregate, exclusive of tax payments of approximately RMB9 per square metre.

Consideration

The Consideration is RMB64,460,000 (equivalent to approximately HK$64,999,000), i.e. at RMB293 (equivalent to approximately HK$295) per square metre, subject to the Adjustment. The Consideration is inclusive of tax payments arising from the Acquisition.

The Consideration for the Acquisition was arrived at after arm’s length negotiations between the parties with reference to the land premium for industrial land at nearby areas of Huiyang District, Guangdong Province, the PRC.

The Directors consider that the Land was acquired at market price and the terms of the Acquisition are fair and reasonable and are in the interests of the Company and its shareholders as a whole.

Payment terms

The Consideration shall be satisfied by the Transferee in the following manner:

• (a) within three business days from the date of signing of the Transfer Agreement (i.e. 22 March 2007), the Transferee shall remit 30% of the Consideration into the Escrow Account;

• (b) the Transferor shall, within 3 days from the date of signing of the Transfer Agreement inform the Transferee the necessary documents required for application of the Three Certificates, and shall procure the issue of the planning permit for construction of land （建 設用地規劃許可證）under the name of the Transferee within 30 days from the day of receipt of the necessary documents provided by the Transferee. Within ten business days upon the issue of the planning permit for construction of land（建設用地規劃許可證 ) under the name of the Transferee, the Transferee shall remit 40% of the Consideration into the Escrow Account, and the Transferor shall proceed with the transfer of the state owned land use rights; and

• (c) within ten business days upon the issue of the state owned land use rights certificate(s) （國 有土地使用權證）with the Transferee recorded as the relevant land use rights owner and after the Transferee having confirm the Three Certificates being correct, the Transferee shall pay to the Transferor the remaining Consideration (subject to the Adjustment) and shall together with the Transferor arrange the bank to release the Consideration (plus any accrued interest) placed in the Escrow Account to the Transferor, and on the same day, the Transferor shall deliver the original copy of the Three Certificates to the Transferee.

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Within 5 days after signing of the Transfer Agreement, the Transferor shall deliver the current red-line map held by the Transferor to the Transferee, and the Transferor and the Transferee shall, within one month after signing of the Transfer Agreement, confirm the actual site area of the Land based on such red-line map. But the final total site area of the Land shall be adjusted based on the red-line map as approved by the relevant planning bureau of the Land issued to the Transferee.

Termination in case of failure to obtain the Three Certificates

The Transferor undertakes that it shall be responsible for obtaining the Three Certificates in the name of the Transferee within two months from the date of receipt of the necessary documents for the application of the Three Certificates from the Transferee in accordance with the terms of the Transfer Agreement.

The Transferor shall pay to the Transferee a daily penalty at a rate of 0.3% of the Consideration already paid by the Transferee if the Transferor fails to obtain the Three Certificates within the agreed timeframe as provided in the Transfer Agreement. If the Transferor fails to obtain the Three Certificates within the agreed timeframe as provided in the Transfer Agreement for more than 30 days, the Transferee shall be entitled to terminate the Transfer Agreement, and the Transferor shall:

• (i) refund to the Transferee the full amount of the Consideration already paid by the Transferee plus the accrued interest;

• (ii) pay damages at a rate of 0.3% of the Consideration already paid by the Transferee per day during the period of delay; and

• (iii) indemnify any extra costs incurred by the Transferee arising out of acquisition of another land use rights.

Reasons for the Acquisition

As stated in the prospectus of the Company dated 24 October 2005, the Group plans to acquire a piece of land in Shenzhen for building a factory to expand its production capacity, and approximately HK$45 million of the net proceeds from the public offer and placing of Shares will be used for acquiring a piece of land in Shenzhen for such purpose. After considering the land costs involved in acquiring a piece of land in Shenzhen and its nearby counties, the Directors consider that it is more cost-effective in expanding its production base in Huizhou instead of Shenzhen, both of which are located in the Guangdong province.

The Group intends to use the Land to facilitate the Group’s production expansion. A new production facility will be built on the Land and the production capacity of the Group is expected to be enhanced accordingly. The Group may also consider to relocating the Group’s operation in Shenzhen to the new production base. For the time being, the Company does not have a concrete plan for the site located at Shenzhen if the relocation is carried out.

The Consideration will be satisfied by the net proceeds from the public offer and placing of Shares as mentioned above and internally generated funds of the Group.

The Directors consider that the terms of the Acquisition and the Transfer Agreement are fair and reasonable and in the interests of the Company and the shareholders of the Company as a whole.

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Information of the Group

The Group is principally engaged in the manufacture of quality paper-based packaging containers and materials, including corrugated paperboard and printed cartons for customers in the PRC.

Information on the Transferor

The Transferor is a Sino-foreign equity joint venture enterprise with limited liability incorporated in the PRC and principally engaged in building Chinese medicine cultural and technological centre, researching, manufacturing and operating biotechnological products, health products and Chinese herbal medicine. It was authorized by 惠州市惠陽區人民政府 (the People’s Government of Huiyang District, Huizhou City, Guangdong, the PRC) to transfer the land use rights of the land located in 惠陽區淡水鎮新橋村行誠科技園 (Hangcheng Industrial Park, Xinqiao Village, Danshui Town, Huiyang District), Guangdong Province, the PRC to interested project companies pursuant to a notification issued by 惠州市惠陽區人民政府 (the People’s Government of Huiyang District, Huizhou City, Guangdong, the PRC) dated 5 September 2005.

Discloseable Transaction

The Acquisition constitutes a discloseable transaction for the Company under Chapter 14 of the Listing Rules. A circular containing, among other things, details of the Acquisition will be despatched to the shareholders of the Company as soon as practicable.

DEFINITIONS

• “Acquisition” the acquisition of the land use rights of the Land pursuant to the Transfer Agreement

• “Adjustment” adjustment to be made to the Consideration if the actual site area of the Land as determined by the red-line map as approved by the relevant planning bureau is less than 220,000 square metres at a deduction rate of RMB293 (equivalent to approximately HK$295) per square metre

• “Board” the board of Directors

• “Company” Huali Holdings (Group) Limited, a company incorporated in the Cayman Islands with limited liability, the Shares of which are listed on the Stock Exchange

• “Consideration” the consideration for the Acquisition pursuant to the Transfer Agreement, being RMB64,460,000 (equivalent to approximately HK$64,999,000) in total, or RMB293 (equivalent to approximately HK$295) per square metre, subject to the Adjustment

• “Directors” the directors of the Company

• “Escrow Account” an escrow account jointly operated by the Transferor and the Transferee with a bank the operation of which is governed by an escrow agreement entered into by the Transferor, the Transferee and the relevant bank

• “Group” the Company and its subsidiaries

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“HK$”	Hong Kong dollars, the lawful currency of Hong Kong
“Hong Kong”	the Hong Kong Special Administrative Region of the PRC
“Huizhou Huali”	惠州華力包裝有限公司, a wholly foreign owned joint venture
or “Transferee”	enterprise incorporated in the PRC and an indirect wholly owned subsidiary
	of the Company
“Land”	subject matter of the Transfer Agreement, being a piece of industrial-use
	land with a total site area of approximately 220,000 square metres situated
	at惠陽區淡水鎮新橋村行誠科技園(Hangcheng Industrial Park,
	Xinqiao Village, Danshui Town, Huiyang District), Guangdong Province,
	the PRC. The final total site area of the Land may be adjusted based on
	the red-line map as approved by the relevant planning bureau, but shall
	not be more than 220,000 square metres
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock Exchange
“PRC”	the People’s Republic of China, for the purpose of this announcement,
	excluding Hong Kong, the Macau Special Administrative Region of the
	PRC and the Taiwan region
“RMB”	Renminbi, the lawful currency of the PRC
“Shares”	shares of the Company
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Three Certificates”	the state owned land use rights certificate(s) (國有土地使用權證) to
	be issued by the relevant land bureau of the PRC, the planning permit for
	construction of land（建設用地規劃許可證）and the red-line map to
	be issued by the relevant planning bureau of the PRC
“Transfer Agreement”	the agreement for transfer of land use rights of the Land dated 19 March
	2007 entered into between the Transferor and the Transferee
“Transferor”	廣東泳和藥業開發有限公司(Guangdong Yonghe Pharmaceuticals
	Development Limited), a Sino-foreign equity joint venture enterprise with
	limited liability incorporated in the PRC
“%”	per cent

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Unless otherwise specified in this announcement, amounts denominated in RMB have been translated, for the purpose of illustration only, into HK$ at an exchange rate of HK$100 = RMB99.17.

If there is any inconsistency between the Chinese names of PRC entities, departments, facilities or titles mentioned in this announcement and their English translations, the Chinese version shall prevail.

As at the date of this announcement, the Board of the Company comprises eight Directors, namely: Mr. Zheng Fan, Mr. Ni Zheng, Mr. Liu Danlin and Mr. Zhou Guangneng as executive Directors; Ms. Xie Mei as a non-executive Director; Mr. Lee Kit Wah, Mr. Chen Xiangdong and Mr. Xiao Yongping as independent non-executive Directors.

By order of the Board Huali Holdings (Group) Limited Zheng Fan Chairman

Hong Kong, 20 March 2007

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

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