SPT Energy Group Inc. — Proxy Solicitation & Information Statement 2009

Dec 3, 2009

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your shares in Winteam Pharmaceutical Group Limited, you should at once hand this circular and the accompanying form of proxy to the purchaser or transferee or to the bank, licensed securities dealer, registered institution in securities, or other agent through whom the sale or transfer was effected for transmission to the purchaser or 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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(formerly known as WING SHAN INTERNATIONAL LIMITED ) (Incorporated in Hong Kong with limited liability)

(Stock Code: 570)

CONTINUING CONNECTED TRANSACTIONS

Financial adviser to Winteam Pharmaceutical Group Limited

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Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders

Terms used in this cover have the same meanings as defined in this circular.

A letter from the Board is set out on pages 4 to 9 of this circular. A letter from the Independent Board Committee is set out on page 10 of this circular. A letter from the Independent Financial Adviser containing its advice to the Independent Board Committee and the Independent Shareholders is set out on pages 11 to 16 of this circular.

A notice convening the EGM to be held at Boardroom V, Ground Floor, Renaissance Harbour View Hotel Hong Kong, 1 Harbour Road, Wan Chai, Hong Kong on Monday, 21 December 2009 at 10:00 a.m. is set out on page 22 of this circular. Whether or not you intend to attend the EGM, you are requested to complete the enclosed form of proxy in accordance with the instructions printed thereon and return it to the registered office of the Company at Rooms 2801-2805, China Insurance Group Building, 141 Des Voeux Road Central, Hong Kong as soon as possible and in any event not later than 48 hours before the time appointed for holding the EGM. Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM or any adjournment of it if you so wish.

4 December 2009

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Letter from the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
Letter from the Independent Financial Adviser . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
Appendix – General information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	17
Notice of EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	22

– i –

DEFINITIONS

In this circular, the following expressions have the meanings set out below unless the context otherwise requires.

“Annual Caps” the annual caps of the value of the Transactions proposed for each of the financial years ending 31 December 2010, 2011 and 2012, being RMB40,000,000, RMB50,000,000 and RMB62,500,000 respectively

• “associates” has the meaning ascribed to it under the Listing Rules

• “Board” the board of Directors

• “Company” Winteam Pharmaceutical Group Limited , a company incorporated in Hong

• Kong with limited liability, the issued shares of which are listed on the Main Board of the Stock Exchange

• “connected person(s)” has the meaning ascribed to it under the Listing Rules

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

• “EGM” the extraordinary general meeting of the Company to be convened to consider and, if thought fit, approve the Master Agreement and the Transactions (including the Annual Caps)

• “Group” the Company and its subsidiaries

• “Guangdong Medi-World” (Guangdong Medi-World Pharmaceutical Co., Ltd.*), a company established in the PRC with limited liability and a wholly-owned subsidiary of the Company

• “Hong Kong” the Hong Kong Special Administrative Region of the PRC

• “Independent Board Committee” the committee of the Board comprising all the independent non-executive Directors, namely Mr. LO Wing Yat, Mr. PANG Fu Keung, Mr. WANG Bo and Mr. ZHANG Jianhui, established for the purpose of giving recommendations to the Independent Shareholders on the Master Agreement and the Transactions (including the Annual Caps)

– 1 –

DEFINITIONS

• “Independent Financial Adviser” Taifook Capital Limited, a corporation licensed to carry out type 6 (advising on corporate finance) regulated activity under the SFO and the independent financial adviser to the Independent Board Committee and the Independent Shareholders regarding the Master Agreement and the Transactions (including the Annual Caps)

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

• “Latest Practicable Date” 2 December 2009, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained in this circular

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

• “Luya” (Shandong Lukang Pharmaceutical Group Luya Co., Ltd.*), a company established in the PRC with limited liability and a wholly-owned subsidiary of the Company

• “Master Agreement” the master supply agreement dated 10 November 2009 entered into between the Company and the Purchaser in respect of the sale and purchase of the Products

• “Mr. Xu” Mr. XU Tiefeng ( ), an executive Director “Mr. Yang” Mr. YANG Bin ( ), an executive Director “National Essential Drugs List” ( ) (2009 ) (the National List of Essential Drugs (Catalog for

• the Basic Healthcare Institutions) (2009 version)*)

• “PRC” The People’s Republic of China, which for the purpose of this circular excludes Hong Kong, Macau Special Administrative Region and Taiwan

• “Products” various pharmaceutical products to be supplied by the Group to the Purchaser Group pursuant to the Master Agreement

• “Purchaser” (Foshan Nanhai Pharmaceutical Group Co. Ltd.*), a company established in the PRC with limited liability

• “Purchaser Group” the Purchaser and its subsidiaries

– 2 –

DEFINITIONS

“SFO”	The Securities and Futures Ordinance (Chapter	571	of
	the Laws of Hong Kong)
“Share(s)”	the ordinary share(s) of HK$0.1 each in the share
	capital of the Company
“Shareholder(s)”	the holder(s) of the Shares
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Sureplan”	Sureplan Limited, a company incorporated	in	the
	British Virgin Islands and the controlling shareholder of
	the Company interested in approximately 34.64% of		the
	total issued share capital of the Company as	at	the
	Latest Practicable Date
“Transactions”	the sale and purchase of the Products contemplated
	under the Master Agreement
“HK$”	Hong Kong dollars, the lawful currency of Hong	Kong
“RMB”	Renminbi, the lawful currency of the PRC
“%”	per cent.

For illustration purpose in this circular, amounts in RMB have been translated into HK$ at the rate of RMB1 = HK$1.1351.

• Certain English translations of Chinese names or words in this circular are included for information purpose only and should not be regarded as the official English translation of such Chinese names or words.

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LETTER FROM THE BOARD

(formerly known as WING SHAN INTERNATIONAL LIMITED (Incorporated in Hong Kong with limited liability) (Stock Code: 570)

)

Non-Executive Director: Mr. DU Richeng, Chairman

Executive Directors: Mr. YANG Bin, Managing Director Mr. XU Tiefeng, Executive Deputy Chairman Mr. SITU Min,

Registered Office: Rooms 2801-2805 China Insurance Group Building 141 Des Voeux Road Central Hong Kong

Chief Financial Officer & Qualified Accountant Mr. LI Songquan, Deputy Managing Director

Independent Non-Executive Directors:

Mr. LO Wing Yat Mr. PANG Fu Keung Mr. WANG Bo Mr. ZHANG Jianhui

4 December 2009

To the Shareholders

Dear Sir or Madam,

CONTINUING CONNECTED TRANSACTIONS

INTRODUCTION

Reference is made to the announcement of the Company dated 13 November 2009. On 10 November 2009, the Company entered into the Master Agreement with the Purchaser, pursuant to which the Group conditionally agreed to supply and the Purchaser Group conditionally agreed to purchase the Products during the three-year period from 1 January 2010 to 31 December 2012.

Pursuant to the Master Agreement, the value of the Transactions shall not exceed the Annual Caps of RMB40,000,000, RMB50,000,000 and RMB62,500,000 for each of the financial years ending 31 December 2010, 2011 and 2012 respectively.

The Purchaser is owned as to 25.5% by each of Mr. Yang and Mr. Xu who are executive Directors and the controlling shareholders of the Company. Sureplan, in which Mr. Yang and Mr. Xu are holding 75% interests collectively, was interested in 564,102,563 Shares (representing approximately 34.64% of the issued share capital of the Company) as at the Latest Practicable Date. As Mr. Yang and Mr. Xu together hold 51% interests in the

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LETTER FROM THE BOARD

Purchaser, the Purchaser is considered as an associate of the connected persons of the Company and the Transactions constitute continuing connected transactions of the Company pursuant to Chapter 14A of the Listing Rules. As the applicable percentage ratios (other than the profits ratio) for the Annual Caps exceed 2.5% and the Annual Caps exceed HK$10,000,000, the Master Agreement and the Transactions (including the Annual Caps) are subject to reporting, announcement and Independent Shareholders’ approval requirements under Rules 14A.45 to 14A.48 of the Listing Rules.

The purpose of this circular is to provide you with (i) details of the Master Agreement and the Transactions (including the Annual Caps); (ii) the recommendation of the Independent Board Committee; (iii) the advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders; and (iv) a notice of the EGM, at which an ordinary resolution will be proposed to approve the Master Agreement and the Transactions (including the Annual Caps).

THE MASTER AGREEMENT

Date: 10 November 2009 Parties: (i) the Company; and (ii) the Purchaser

Terms:

Pursuant to the Master Agreement, the Purchaser Group conditionally agreed to purchase the Products supplied by the Group during the three-year period from 1 January 2010 to 31 December 2012. The terms of the Transactions including the prices of the Products, the discounts granted by the Group to the Purchaser Group, the credit period and payment terms will be determined with reference to prevailing market terms and on terms no less favourable to the Group than those made available by the Group to independent third parties for similar products.

The Products:

The Products to be supplied by the Group to the Purchaser Group are major pharmaceutical products manufactured by the Group, including but not limited to “Nifedipine Sustained-release Tablet” ( ( )), “Yupingfeng Granule” ( ), “Qiye Shen’an Tablet” ( ), “Biyankang Tablet” ( ), “VC Yingyao Tablet” ( ), “Gaode” (( ) ) and “Sha Pei Lin” ( ( )).

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LETTER FROM THE BOARD

Annual Caps:

Pursuant to the Master Agreement, the value of the Transactions shall not exceed the Annual Caps set out below:

		(equivalent to
		approximately
Financial year ending	(RMB)	HK$)
31 December 2010	40,000,000	45,400,000
31 December 2011	50,000,000	56,800,000
31 December 2012	62,500,000	70,900,000

For each of the three years ended 31 December 2008, the sale of the Products by the Group to the Purchaser Group amounted to RMB7.6 million (equivalent to approximately HK$8.6 million), RMB9.2 million (equivalent to approximately HK$10.4 million) and RMB7.2 million (equivalent to approximately HK$8.2 million) respectively. The Purchaser became a connected person of the Company under Chapter 14A of the Listing Rules following completion of the Group’s acquisition of a group of companies from Sureplan on 6 February 2009. For the period from 6 February 2009 to 31 October 2009, save and except for the sale of certain Products by the Group to the Purchaser Group amounting to approximately RMB499,000 (equivalent to approximately HK$566,000), there was no business between the Group and the Purchaser Group.

The Annual Caps are determined taking into account (i) the historical sales of the Products to the Purchaser Group; (ii) the anticipated gradual increase in the sales volume of the Products driven by the new medical reform proposal to be implemented over the next three years as announced by the State Council of the PRC and described in the paragraph headed “Reasons for the Master Agreement” below; and (iii) the expected increase in the sales of the Products to hospitals and retail drug stores in the Foshan City attributable to the sales network of the Purchaser and the inclusion of certain of the Group’s patented products in the National Essential Drugs List as described in the paragraph headed “Reasons for the Master Agreement” below.

Conditions precedent:

The Master Agreement is conditional upon the fulfilment of the following conditions:–

• (a) the passing of the resolution by the Independent Shareholders at a general meeting for approving the Master Agreement, the Transactions and the Annual Caps as required under the Listing Rules;

• (b) the board of directors and/or shareholders of the Purchaser having approved the Master Agreement in accordance with its articles of association (if applicable); and

• (c) any other regulatory approval (if any) applicable to the Company and the Purchaser having been obtained.

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LETTER FROM THE BOARD

REASONS FOR THE MASTER AGREEMENT

The principal activity of the Company is investment holding and the principal activities of its principal subsidiaries are the manufacture and sale of Chinese medicine and pharmaceutical products in the PRC.

The Purchaser Group is principally engaged in the management of investment in the sectors of pharmaceuticals, medical equipments, sanitary materials and health food, and is one of the major distributors of pharmaceutical products in Foshan City. The Purchaser operates a sizable chain of retail drug stores, namely (Foshan City Nanhai Yikang Pharmaceutical Retail Chain Stores*), comprising over 130 retail drug stores in Foshan City. It is also a licensed distributor of pharmaceutical products to public hospitals in Foshan City.

As referred to in the interim report of the Company for the six months ended 30 June 2009, the State Council of the PRC approved a medical reform proposal for public medical and health care system in March 2009 which is expected to involve investments by the PRC government of RMB850 billion in various levels of the public medical and health care system in the next three years. On 18 August 2009, the State Council of the PRC further released the National Essential Drugs List, marking the establishment of a national list of essential drugs which are required to be stocked up and used by public medical and health care institutions as stipulated in the Notice on Further Regulating the Use of Centralised Purchasing System in Acquiring Medicines by the Medical Institutions* released on 17 January 2009 and 19 June 2009. The National Essential Drugs List covers over 300 types of medicines of which the Group manufactures a total of 64 types included therein. Moreover, the Group’s two popular products, “Yupingfeng Granule” ( ) and “Biyankang Tablet” ( ), are listed in the National Essential Drugs List which are patented products manufactured exclusively by the Group. As a result of the substantial investment in the public medical and health care system by the PRC government and the requirement of the PRC government to use medicines in the National Essential Drugs List, it is expected that the demand for the Products, particularly the patented products manufactured by the Group, will increase substantially and the Group will benefit from such reform.

Foshan City is one of the fast-growing economies in Guangdong Province of the PRC. The Directors expect that there are tremendous business opportunities in the pharmaceutical market in Foshan City due to the increasingly affluent population with more spending on medical and health care products and as a result of the public medical and health care reform as approved by the State Council of the PRC. As an operator for over 130 retail drug stores and a licensed distributor for various pharmaceutical products to public hospitals in Foshan City, the Purchaser Group has established an extensive sales network in Foshan City.

The amount of sales of the Products to the Purchaser Group during 2009 was relatively small, as the Group has been reviewing its business strategies including its marketing and sales program after Sureplan became the controlling shareholder of the Company in February 2009 and has been diversifying the sales channels for the Products. Following the release of the National Essential Drugs List in mid August 2009 which includes a large number of the Group’s products, the Directors consider it beneficial to the Group to partner with a distributor which has strong sales capability both to public hospitals as well as in the retail

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LETTER FROM THE BOARD

business to assist the Group in promoting its products. As the Board is aware of the relationship between the Purchaser and the Company and the obligation to comply with Chapter 14A of the Listing Rules, the parties then commenced discussions on possible business cooperation and the terms of the cooperation were negotiated and formalised in the Master Agreement. Despite the potential reliance on the Purchaser Group for sales during the term of the Master Agreement, the Directors consider that by entering into the Master Agreement, the Group will be able to take advantage of the sales network of the Purchaser Group in Foshan City to tap into the public hospitals market and therefore seize the market share in a more effective way during the next three years when the public medical and health care system reform is gradually implemented.

Based on the above, the Directors are of the view that the Master Agreement was entered into in the ordinary course of the Company’s business on normal commercial terms which are fair and reasonable and is in the interests of the Company and the Shareholders as a whole.

LISTING RULES IMPLICATIONS

The Purchaser is owned as to 25.5% by each of Mr. Yang and Mr. Xu who are executive Directors and the controlling shareholders of the Company. Sureplan, in which Mr. Yang and Mr. Xu are holding 75% interests collectively, was interested in 564,102,563 Shares (representing approximately 34.64% of the issued share capital of the Company) as at the Latest Practicable Date. As Mr. Yang and Mr. Xu together hold 51% interests of the Purchaser, the Purchaser is considered as an associate of the connected persons of the Company and the Transactions constitute continuing connected transactions of the Company pursuant to Chapter 14A of the Listing Rules. As the applicable percentage ratios (other than the profits ratio) for the Annual Caps exceed 2.5% and the Annual Caps exceed HK$10,000,000, the Master Agreement and the Transactions (including the Annual Caps) are subject to reporting, announcement and Independent Shareholders’ approval requirements under Rules 14A.45 to 14A.48 of the Listing Rules. The EGM will be convened by the Company at which an ordinary resolution will be proposed to seek approval from the Independent Shareholders for the Master Agreement and the Transactions (including the Annual Caps) by way of poll. Sureplan and its associates will abstain from voting on the resolution relating to the Master Agreement and the Transactions (including the Annual Caps) at the EGM.

To the best knowledge of the Directors, save as disclosed above, no other Shareholder has a material interest in the Master Agreement. Accordingly, no other Shareholder will be required to abstain from voting at the EGM in respect of the resolution relating to the Master Agreement and the Transactions (including the Annual Caps). The votes at the EGM will be taken by poll.

EGM

A notice convening the EGM to be held at Boardroom V, Ground Floor, Renaissance Harbour View Hotel Hong Kong, 1 Harbour Road, Wan Chai, Hong Kong on Monday, 21 December 2009 at 10:00 a.m. is set out on page 22 of this circular. The purpose of the EGM is for the Independent Shareholders to consider and, if thought fit, approve the Master Agreement and the Transactions (including the Annual Caps).

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LETTER FROM THE BOARD

Whether or not you intend to attend the EGM, you are requested to complete the enclosed form of proxy in accordance with the instructions printed thereon and return it to the registered office of the Company at Rooms 2801-2805, China Insurance Group Building, 141 Des Voeux Road Central, Hong Kong as soon as possible and in any event not later than 48 hours before the time appointed for holding the EGM. Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM or any adjournment of it if you so wish.

INDEPENDENT BOARD COMMITTEE AND INDEPENDENT FINANCIAL ADVISER

The Independent Board Committee comprising Mr. LO Wing Yat, Mr. PANG Fu Keung, Mr. WANG Bo and Mr. ZHANG Jianhui, being all the independent non-executive Directors, has been constituted to advise the Independent Shareholders on the Master Agreement and the Transactions (including the Annual Caps). Taifook Capital Limited has been appointed by the Company as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in this regard.

Your attention is drawn to the letter from the Independent Board Committee and the letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders set out on page 10 and pages 11 to 16 respectively of this circular.

RECOMMENDATION

The Independent Board Committee, having considered the advice of the Independent Financial Adviser, considers that the Transactions are in the ordinary and usual course of business of the Group, the terms of the Master Agreement and the Transactions (including the Annual Caps) are on normal commercial terms and are fair and reasonable, and the entering into of the Master Agreement and the Transactions (including the Annual Caps) are in the interests of the Group and the Shareholders as a whole. Accordingly, the Independent Board Committee recommends the Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the EGM to approve the Master Agreement and the Transactions (including the Annual Caps).

ADDITIONAL INFORMATION

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

Yours faithfully, By Order of the Board DU Richeng Chairman

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

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(formerly known as WING SHAN INTERNATIONAL LIMITED ) (Incorporated in Hong Kong with limited liability)

(Stock Code: 570)

4 December 2009

To the Independent Shareholders

Dear Sir or Madam,

CONTINUING CONNECTED TRANSACTIONS

We refer to the circular of the Company dated 4 December 2009 (the “ Circular ”), of which this letter forms part. Unless specified otherwise, capitalised terms used herein shall have the same meanings as those defined in the Circular.

We have been appointed as the Independent Board Committee to advise you as to whether, in our opinion, the terms of the Master Agreement and the Transactions (including the Annual Caps) are fair and reasonable so far as the Company and the Independent Shareholders are concerned and whether the Transactions are in the interests of the Company and the Shareholders as a whole.

Taifook Capital Limited has been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in this regard. Details of their independent advice, together with the principal factors and reasons they have taken into consideration, are set out on pages 11 to 16 of the Circular.

Having considered the terms of the Master Agreement and the Transactions (including the Annual Caps) and the independent advice of the Independent Financial Adviser in relation thereto, we are of the opinion that the Transactions are in the ordinary and usual course of business of the Group, the terms of the Master Agreement and the Transactions (including the Annual Caps) are on normal commercial terms and are fair and reasonable, and the entering into of the Master Agreement and the Transactions (including the Annual Caps) are in the interests of the Group and the Shareholders as a whole. We therefore recommend the Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the EGM to approve the Master Agreement and the Transactions (including the Annual Caps).

Yours faithfully,

Independent Board Committee Mr. LO Wing Yat Mr. PANG Fu Keung Mr. WANG Bo Mr. ZHANG Jianhui Independent nonIndependent nonIndependent nonIndependent nonexecutive Director executive Director executive Director executive Director

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The following is the full text of a letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders in relation to the Master Agreement and the Transactions (including the Annual Caps) prepared for the purpose of inclusion in this circular.

25th Floor New World Tower 16-18 Queen’s Road Central Hong Kong

4 December 2009

To the Independent Board Committee and the Independent Shareholders

Winteam Pharmaceutical Group Limited Rooms 2801-2805, China Insurance Group Building 141 Des Voeux Road, Central Hong Kong

Dear Sirs,

CONTINUING CONNECTED TRANSACTIONS

INTRODUCTION

We refer to our appointment as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders with respect to the Transactions contemplated under the Master Agreement entered into between the Company and the Purchaser, and the Annual Caps under the Transactions for the three financial years ending 31 December 2012, details of which are set out in the letter (the “Letter”) from the Board contained in the circular (the “Circular”) of the Company dated 4 December 2009, of which this letter forms part. Terms used in this letter shall have the same respective meanings as defined in the Circular unless the context otherwise requires.

As set out in the Letter, both of Mr. Yang and Mr. Xu are the executive Directors and collectively held 75% interests in Sureplan (being a controlling shareholder of the Company following the completion of the Group’s acquisition of a group of companies, including Guangdong Medi-World and Luya from Sureplan on 6 February 2009) which was interested in 564,102,563 Shares, representing approximately 34.64% of the issued share capital of the Company as at the Latest Practicable Date. As Mr. Yang and Mr. Xu each held 25.5 % of the Purchaser respectively (collectively 51% interests in the Purchaser) as at the Latest Practicable Date, the Purchaser therefore is considered as an associate of the connected persons of the Company and accordingly, the Transactions contemplated under the Master Agreement constitute continuing connected transactions of the Company pursuant to Chapter 14A of the Listing Rules. As the applicable percentage ratios (other than the profits ratio) for the Annual Caps exceed 2.5% and the Annual Caps exceed HK$10,000,000, the Master Agreement and the Transactions (including the Annual Caps) contemplated thereunder are subject to reporting, announcement and Independent Shareholders’ approval requirements under Rules 14A.45 to 14A.48 of the Listing Rules. As Mr. Yang and Mr. Xu have material

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

interests in the Transactions, they and their associates will, accordingly, abstain from voting on the relevant resolution to be proposed and taken by poll at the EGM to approve the Master Agreement, and the Transactions (including the Annual Caps) contemplated thereunder.

The Independent Board Committee comprising all the independent non-executive Directors, namely Mr. Lo Wing Yat, Mr. Pang Fu Keung, Mr. Wang Bo and Mr. Zhang Jianhui, has been established to advise the Independent Shareholders in respect of the Master Agreement and the Transactions (including the Annual Caps) contemplated thereunder. In our capacity as the independent financial adviser to the Independent Board Committee and the Independent Shareholders, our role is to provide the Independent Board Committee and the Independent Shareholders with an independent opinion and recommendation as to whether the terms of the Master Agreement and the Transactions (including the Annual Caps) contemplated thereunder are on normal commercial terms and are fair and reasonable; and, whether conducting the Transactions contemplated under the Master Agreement are in the ordinary and usual course of the business of the Group and are in the interests of the Group and the Shareholders as a whole.

BASIS OF OUR OPINION

In formulating our recommendation, we have relied on the information, financial information and facts supplied to us and representations expressed by the Directors and/or management of the Group and have assumed that all such information, financial information and facts and any representations made to us, or referred to in the Circular, in all material aspects, are true, accurate and complete as at the time they were made and as at the date of the Circular, has been properly extracted from the relevant underlying accounting records (in the case of financial information) and made after due and careful inquiry by the Directors and/or the management of the Group. The Directors and/or the management of the Group have confirmed that, having made all reasonable enquiries and to the best of their knowledge and belief, all relevant information has been supplied to us and that no material facts have been omitted from the information supplied and representations expressed to us. We have also relied on certain information available to the public and have assumed such information to be accurate and reliable. We have no reason to doubt the completeness, truth or accuracy of the information and facts provided and we are not aware of any facts or circumstances which would render such information provided and representations made to us untrue, inaccurate or misleading.

Our review and analyses were based upon, among others, the information provided by the Group including the Master Agreement and certain published information of the Group. We have also discussed with the Directors and/or the management of the Group with respect to the terms of and reasons for entering into the Master Agreement and the Transactions (including the Annual Caps) contemplated thereunder, and considered that we have reviewed sufficient information to reach an informed view and to provide a reasonable basis for our opinion. We have not, however, conducted any independent verification of the information nor have we conducted any form of in-depth investigation into the businesses, affairs, financial position or prospects of the Group, the Purchaser, the Purchaser Group and each of their respective subsidiaries or associates, and the parties involved in the Transactions.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

THE CONTINUING CONNECTED TRANSACTIONS

In arriving at our opinion in respect of the Master Agreement and the Transactions (including the Annual Caps) contemplated thereunder, we have considered the following principal factors:

1. Background and reasons for entering into the Master Agreement

The Company is an investment holding company. Its principal subsidiaries are principally engaged in the manufacture and sale of Chinese medicine and pharmaceutical products in the PRC. The Purchaser Group is principally engaged in the management of investment in the sectors of pharmaceuticals, medical equipment, sanitary materials and health food and is one of the major distributors of pharmaceutical products in Foshan City in the PRC. The Purchaser operates a sizable chain of retail drug stores, namely (Foshan City Nanhai Yikang Pharmaceutical Retail Chain Stores*), comprising over 130 retail drug stores in Foshan City. It is also a licensed distributor of pharmaceutical products to public hospitals in Foshan City. We understand from the Directors that the Group has already been selling the Products to the Purchaser Group since 2006. The historical sales of the Products from the Group to the Purchaser Group for each of the three financial years ended 31 December 2008 amounted to approximately RMB7.6 million (equivalent to approximately HK$8.6 million), approximately RMB9.2 million (equivalent to approximately HK$10.4 million) and approximately RMB7.2 million (equivalent to approximately HK$8.2 million) respectively, representing approximately 7.8%, 2.9% and 1.8% of the total revenue derived from the pharmaceutical business of the Group in the relevant financial years respectively. After the Purchaser became a connected person of the Company under Chapter 14A of the Listing Rules following the Group acquired a group of companies from Sureplan on 6 February 2009, such sales were relatively small for the period from 6 February 2009 to 31 October 2009 amounting to approximately RMB499,000 (equivalent to approximately HK$566,000) as the Board was aware of the relationship between the Purchaser and the Company and the obligation to comply with Chapter 14A of the Listing Rules as stated in the Letter.

As stated in the Letter, since the Directors consider it beneficial to the Group to partner with a distributor which has strong sales capability both to public hospitals as well as in the retail drug business to assist the Group in promoting its products following the release of the National Essential Drugs List on 18 August 2009 by the State of Council of the PRC which has been effective since 21 September 2009, the parties then commenced discussions on possible business cooperation and the terms of the cooperation were negotiated and formalised in the Master Agreement. Pursuant to the Master Agreement, the Products to be supplied by the Group to the Purchaser Group are major pharmaceutical products manufactured by the Group, including but not limited to “Nifedipine Sustained-release Tablet” ( ( )), “Yupingfeng Granule” ( ), “Qiye Shen’an Tablet” ( ), “Biyankang Tablet” ( ), “VC Yingyao Tablet” ( ), “Gaode” (( ) ) and “Sha Pei Lin” ( ( )). Among over 300 types of medicines comprising the National Essential Drugs List which were designated by the State of Council of the PRC to be adopted by the public medical and health care institutions as stipulated in the Notice on Further Regulating the Use of Centralised Purchasing System in Acquiring Medicines by the Medical and Health

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Care Institutions* released on 17 January 2009 and on 19 June 2009, a total of 64 types included therein are manufactured by the Group and two of which, “Yupingfeng Granule” ( ) and “Biyankang Tablet” ( ) are patented products manufactured exclusively by the Group. Furthermore, the State Council of the PRC also approved a medical reform proposal for public medical and health care system in March 2009 which is expected to involve investments by the PRC government of RMB850 billion in various levels of the public medical and health care system in the PRC in the next three years. Therefore, it is expected that the demand for the Products, particularly the patented products manufactured by the Group, will increase substantially and the Group will benefit from such reform.

Given the fact that (1) the terms of the Master Agreement and the Transactions (including the Annual Caps) contemplated thereunder are fair and reasonable so far as the Group and the Shareholders are concerned as explained below; (2) the Purchaser Group is one of the major licensed distributors of pharmaceutical products to public hospitals in Foshan City and the operator of a sizable chain of retail drug stores, namely (Foshan City Nanhai Yikang Pharmaceutical Retail Chain Stores), comprising over 130 retail drug stores in Foshan City; (3) the increase in demand for the Products as expected by the management due to the medical reform proposal for the public medical and health care system involving investments by the PRC government of RMB850 billion in the next three years approved by the State Council of the PRC in March 2009 and the release of the National Essential Drugs List by the State Council of PRC on 18 August 2009 and effective since 21 September 2009 which is required to be adopted by the public medical and health care institutions as stipulated in the Notice on Further Regulating the Use of Centralised Purchasing System in Acquiring Medicines by the Medical and Health Care Institutions released on 17 January 2009 and on 19 June 2009, included therein, a total of 64 types of medicines are manufactured by the Group and two of the which are patented and manufactured exclusively by the Group; and, (4) the long business relationship established since 2006 between the Group and the Purchaser Group which is further solidified following Sureplan becoming the controlling shareholder of the Company since February 2009, we concur with the view of Directors that conducting the Transactions allows the Group to take advantage of the sales network of the Purchaser Group in Foshan City to tap into the public hospitals market together with the retail drug stores and therefore seize the market share in an effective way in the next three years when the public medical and health care system reform in the PRC is gradually implemented and therefore, entering into the Master Agreement and the Transactions contemplated thereunder are in the interests of the Group and the Shareholders as a whole.

2. Nature and terms of the Transactions contemplated under the Master Agreement

Pursuant to the Master Agreement, the Purchaser Group conditionally agreed to purchase the Products supplied by the Group for the terms including the prices charged to; and, the discounts, the credit period and payment terms granted by, the Group to the Purchaser Group to be determined with reference to prevailing market terms and on terms no less favourable to the Group than those made available by the Group to independent third parties for similar products.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Basis of our consideration

We have obtained from the Group sample sales invoices issued to the Purchase Group and other independent suppliers; and the relevant accounting records for the period from 6 February 2009 to 31 October 2009 after Sureplan has become the controlling shareholder of the Company since 6 February 2009 and note that the major terms of the sales including the price of similar Products charged to the Purchaser Group as well as the payment terms were generally comparable with those offered to the independent third parties in the relevant period. Pursuant to the Master Agreement, the prices of Products charged by and the discounts offered by the Group to the Purchase Group will be determined with reference to the prevailing market prices of the Products; and, the credit period and payment terms granted by the Group to the Purchaser Group will be determined with reference to the terms of those sales offered by the Group to the independent third parties. Having considered the above, we consider that the Transactions are in the ordinary and usual course of business of the Group and the terms of the Master Agreement and the Transactions contemplated thereunder are on normal commercial terms and are fair and reasonable so far as the Group and the Shareholders are concerned.

3. Annual Caps under the Transactions contemplated under the Master Agreement

Set out below are the proposed Annual Caps for the three financial years ending 31 December 2012:

					**For **	**the financial year **	ending
						31 December
					2010	2011	2012
Amounts	of	the	Annual	Caps	RMB40 million	RMB50 million	RMB62.5 million
					(equivalent to	(equivalent to	(equivalent to
					approximately	approximately	approximately
					HK$45.4	HK$56.8	HK$70.9
					million)	million)	million)

As stated in the Letter, the Annual Caps are determined taking into account (i) the historical sales of the Products to the Purchaser Group; (ii) the anticipated gradual increase in the sales volume of the Products driven by the new medical reform proposal to be implemented over the next three years as announced by the State Council of the PRC; and (iii) the expected increase in the sales of the Products to public hospitals and the retail drug stores in the Foshan City attributable to the sales network of the Purchaser Group and the inclusion of certain of the Group’s patented products in the National Essential Drugs List.

Basis of our consideration

To assess whether the amounts of the Annual Cap for the financial year ending 31 December 2010 are fair and reasonable, we understand from the management of the Company that having considered that the long business relationship established between the Group and the Purchaser Group since 2006 which is further solidified following

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Sureplan becoming the controlling shareholder of the Company since 6 February 2009 and the Purchaser Group, being one of the major licensed distributors of pharmaceutical products to public hospitals and the operator of a sizable chain of retail drug stores in Foshan City, such Annual Cap is set with reference to (1) the historical increase in total amounts of sales of the Products in 2008; and (2) the amount of sales of the Products in Foshan City in 2008. We have reviewed the total amounts of sales of the Products for the two financial years ended 31 December 2008 and the amounts of sales of the Products in Foshan in 2008 and note that the increase of total sales of the Products in 2008 was of approximately 30%. Further, despite the potential reliance on the Purchaser Group for sales during the term of the Master Agreement, we note that the amounts of the Annual Cap for the financial year ending 31 December 2010 represented only 9.2% of the total revenue of the Group for the financial year ended 31 December 2008. To assess whether the amounts of the Annual Caps for the two financial years ending 31 December 2012, which are set at the yearly increase rate of 25% for year ending 31 December 2010 onwards, are fair and reasonable, we note (1) from the Year 2009 China Statistical Yearbook compiled by National Bureau of Statistics of China that the overall total expenditures for public health in China increased from approximately RMB458.7 billion in 2000 to approximately RMB1,128.9 billion in 2007, representing a compound annual growth rate (“CAGR”) of approximately 13.7%; and (2) per the statistical data released by Bureau of Statistics of Foshan City, the gross regional products of Foshan City increased from approximately RMB105.0 billion in 2000 to approximately RMB433.3 billion in 2008, representing a CAGR of approximately 19.4%. Having considered the above reasons, we consider that the amounts of Annual Caps under the Transactions contemplated under the Master Agreement for the three financial years ending 31 December 2012 are fair and reasonable so far as the Group and the Shareholders are concerned.

RECOMMENDATION

Having considered the terms of and reasons for the entering into the Master Agreement and the bases and assumptions adopted in arriving at the Annual Caps, we are of the view that the Transactions are in the ordinary and usual course of business of the Group, the terms of the Master Agreement and the Transactions (including the Annual Caps) contemplated thereunder are on normal commercial terms and are fair and reasonable, and the entering into the Master Agreement and the Transactions (including the Annual Caps) contemplated thereunder are in the interests of the Group and the Shareholders as a whole. Accordingly, we would recommend the Independent Shareholders, and advise the Independent Board Committee to recommend the Independent Shareholders, to vote in favour of the ordinary resolution to be proposed at the EGM to approve the entering into of the Master Agreement and the Transactions (including the Annual Caps) contemplated thereunder.

Yours faithfully, For and on behalf of Taifook Capital Limited Derek C.O. Chan Terry Chu Managing Director Executive Director

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GENERAL INFORMATION

APPENDIX

1. RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Group. The Directors collectively and individually accept full responsibility for the accuracy of the information contained in this circular and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, there are no other facts the omission of which would make any statement in this circular misleading.

2. DISCLOSURE OF INTERESTS

Directors’ and chief executives’ interests and short positions in shares, underlying shares and debentures of the Company or any associated corporations

As at the Latest Practicable Date, the interests and short positions of the Directors or chief executive of the Company in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which (i) were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO); or (ii) were required, pursuant to section 352 of the SFO, to be entered in the Register referred to therein; or (iii) were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers contained in the Listing Rules, to be notified to the Company and the Stock Exchange were as follows:

			Approximate
			percentage of
			total
		Number of	interests to
Name of Directors	Capacity	Shares	issued Shares
Mr. Yang	Interest in controlled	564,102,563	34.64%
	corporation	(Note)
Mr. Xu	Other	564,102,563	34.64%
		(Note)
SITU Min	Beneficial owner	268,000	0.02%

Note: The Shares were held by Sureplan, of which 50% is owned indirectly by Mr. Yang and 25% is owned indirectly by Mr. Xu. Mr. Yang is deemed to be interested in Sureplan’s interest in the Company under the SFO. Mr. Yang and Mr. Xu are directors of Sureplan.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors nor chief executive of the Company were interested or were deemed to have interests or short positions in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which (i) were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which

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GENERAL INFORMATION

APPENDIX

they were taken or deemed to have under such provisions of the SFO); or (ii) were required, pursuant to section 352 of the SFO, to be entered in the Register referred to therein; or (iii) were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers contained in the Listing Rules, to be notified to the Company and the Stock Exchange.

Interests of substantial Shareholders

As at the Latest Practicable Date, according to the register of interests maintained by the Company pursuant to section 336 of the SFO and so far as is known to the Directors and the chief executive of the Company, the persons (other than Directors or the chief executive of the Company) had an interest or a short position in the Shares and underlying Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who were, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group and the amount of each of such persons’ interest in such securities, together with any options in respect of such capital, were as follows:

The Company

		Approximate	Approximate
			percentage
			of total
		Number	issued
		of Shares	share
Shareholder	Capacity	held	capital
Hensil Investments Group	Beneficial owner	605,290,886	37.17%
Limited
Foshan Development	Interest in controlled	605,290,886	37.17%
Company Limited	corporation	(Note 1)
Sureplan	Beneficial owner	564,102,563	34.64%
Profit Channel	Interest in controlled	564,102,563	34.64%
Development Limited	corporation	(Note 2)
Extra Benefit Corp.	Other	564,102,563	34.64%
		(Note 2)
First Linkup Development	Other	564,102,563	34.64%
Limited		(Note 2)
Wu Chiu Kong	Other	564,102,563	34.64%
		(Note 2)

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GENERAL INFORMATION

APPENDIX

Notes:

• (1) The 605,290,886 Shares were held by Hensil Investments Group Limited, which is wholly owned by Foshan Development Company Limited. By virtue of its interest in Hensil Investments Group Limited, Foshan Development Company Limited was deemed to be interested in such 605,290,886 Shares held by Hensil Investments Group Limited.

• (2) Sureplan is owned as to 25% by First Linkup Development Limited, 25% by Extra Benefit Corp. and 50% by Profit Channel Development Limited which are in turn wholly-owned by Mr. WU Chiu Kong, Mr. Xu and Mr. Yang respectively.

So far as is known to the Directors, as at the Latest Practicable Date, no other persons (other than the Directors, the chief executive and substantial Shareholders disclosed above) had any interest or short position in the Shares or underlying Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of the Part XV of the SFO or was directly or indirectly interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meeting of any subsidiary of the Company.

3. DIRECTORS’ SERVICE CONTRACTS

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

4. DIRECTORS’ INTERESTS IN CONTRACTS

As at the Latest Practicable Date, apart from the Master Agreement, none of the Directors was materially interested in any contract or arrangement subsisting and which was significant in relation to the business of the Group.

5. DIRECTORS’ INTERESTS IN ASSETS OF THE GROUP

On 6 February 2009, the Company completed the acquisition of the entire issued share capital of Smartpoint International Limited from Sureplan in which Mr. Yang and Mr. Xu are holding 75% interests collectively.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors had any interest, direct or indirect, in any assets which had been acquired or disposed of by or leased to any member of the Group or were proposed to be acquired or disposed of by or leased to any member of the Group since 31 December 2008, the date to which the latest published audited consolidated financial statements of the Company were made up.

6. DIRECTORS’ INTERESTS IN COMPETING BUSINESS

As at the Latest Practicable Date, save as disclosed below, none of the Directors or their respective associates was interested in any business which competes or was likely to compete, whether directly or indirectly, with the business of the Group. The Directors confirm that the Group is capable of carrying on its business independent of, and at arm’s length from, the business as disclosed below which are considered to compete or likely to

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GENERAL INFORMATION

APPENDIX

compete with the business of the Group. The Directors also confirm that the respective management and administration of the business as set out below are independent from the Group.

Name of entity the business Description of business of of which is considered to the entity which is Nature of compete or likely to considered to compete or interest of the compete with the business likely to compete with the Name of Director(s) in of the Group business of the Group Director the entity

The Purchaser

(a) management of Mr. Yang and shareholders investment in the Mr. Xu and directors sectors of pharmaceuticals, medical equipments, sanitary materials and health food; and

(b) distribution of pharmaceutical products

7. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors were not aware of any material adverse change in the financial position or trading prospects of the Company since 31 December 2008, the date to which the latest published audited consolidated financial statements of the Company were made up.

8. EXPERT AND CONSENT

The following is the qualification of the expert or professional adviser who has given opinion or advice contained in this circular:

Name Qualification

Taifook Capital Limited A corporation licensed to carry out type 6 (advising on corporate finance) regulated activity under the SFO

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GENERAL INFORMATION

APPENDIX

The Independent Financial Adviser has given and has not withdrawn its written consent to the issue of this circular with the inclusion of its letter and references to its name in the form and context in which they appear. As at the Latest Practicable Date, the Independent Financial Adviser:

• (a) did not have any shareholding in or any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group; and

• (b) was not interested, directly or indirectly, in any assets which have been acquired or disposed of by or leased to any member of the Group since 31 December 2008, being the date to which the latest published consolidated financial statements of the Company were made up.

9. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection during normal business hours at Rooms 2801-2805, China Insurance Group Building, 141 Des Voeux Road Central, Hong Kong from the date of this circular up to and including the date of the EGM:

• (a) the Master Agreement;

• (b) the letter of recommendation from the Independent Board Committee, the text of which is set out on page 10 of this circular;

• (c) the letter of advice from the Independent Financial Adviser, the text of which is set out on pages 11 to 16 of this circular; and

• (d) the written consent from the Independent Financial Adviser referred to in the paragraph headed “Expert and consent” in this appendix.

10. GENERAL

• (a) The registered office of the Company is situated at Rooms 2801-2805, China Insurance Group Building, 141 Des Voeux Road Central, Hong Kong.

• (b) The share registrars and transfer office of the Company is Computershare Hong Kong Investor Services Limited at Shops 1712-16, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong.

• (c) The English text of this circular and the accompanying form of proxy shall prevail over the Chinese text.

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NOTICE OF EGM

==> picture [296 x 42] intentionally omitted <==

(formerly known as WING SHAN INTERNATIONAL LIMITED ) (Incorporated in Hong Kong with limited liability)

(Stock Code: 570)

NOTICE IS HEREBY GIVEN that an extraordinary general meeting of Winteam Pharmaceutical Group Limited (the “ Company ”) will be held at Boardroom V, Ground Floor, Renaissance Harbour View Hotel Hong Kong, 1 Harbour Road, Wan Chai, Hong Kong on Monday, 21 December 2009 at 10:00 a.m. for the purpose of considering and, if thought fit, passing (with or without modifications) the following resolution:

ORDINARY RESOLUTION

“ THAT

• (a) the Master Agreement (as defined in the circular of the Company dated 4 December 2009 (the “Circular”)) and all the transactions contemplated thereunder be and are hereby approved;

• (b) the proposed annual caps in relation to the transactions contemplated under the Master Agreement (as defined in the Circular) for each of the financial years ending 31 December 2010, 2011 and 2012, being RMB40,000,000, RMB50,000,000 and RMB62,500,000 respectively, be and are hereby approved; and

• (c) any director of the Company be and is hereby authorized to do all such acts or things, as he may in his absolute discretion consider necessary or desirable, to give effect to the Master Agreement and the transactions contemplated thereunder.”

By Order of the Board Winteam Pharmaceutical Group Limited DU Richeng Chairman

Hong Kong, 4 December 2009

Notes:

• (1) Any member entitled to attend and vote at the meeting is entitled to appoint one or more proxies to attend and, on a poll, to vote instead of him. A proxy need not be a member of the Company.

• (2) In order to be valid, the form of proxy together with any power of attorney or other authority (if any) under which it is signed or a notarially certified copy of that power or authority must be deposited at the registered office of the Company at Rooms 2801-2805, China Insurance Group Building, 141 Des Voeux Road Central, Hong Kong not less than 48 hours before the time appointed for holding the meeting.

• (3) Pursuant to Rule 13.39(4) of the Listing Rules, all votes at the meeting will be taken by poll.

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