SPT Energy Group Inc. - Proxy Solicitation & Information Statement 2010

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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(Incorporated in Hong Kong with limited liability) (Stock Code: 570)

DISCLOSEABLE AND CONNECTED TRANSACTION IN RELATION TO ACQUISITION OF EQUITY INTEREST IN FOSHAN ZHONG HONG CO., LTD.

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

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Haitong International Capital Limited

Capitalised terms used on this cover page shall have the same meanings as defined in the section headed “Definitions” in this circular.

A letter from the Board is set out on pages 5 to 12 of this circular. A letter from the Independent Board Committee is set out on page 13 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 14 to 25 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 Friday, 24 December 2010 at 10:00 a.m. is set out on pages 32 to 33 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.

8 December 2010

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Letter from the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
Letter from Haitong International Capital Limited . . . . . . . . . . . . . . . . . . . . . . . . .	14
Appendix – General information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	26
Notice of EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	32

– i –

DEFINITIONS

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

“Acquisition”
the proposed acquisition by the Purchaser of the Sale Interest pursuant to the Acquisition Agreement
“Acquisition Agreement”
the equity transfer agreement dated 22 November 2010 entered into between the Purchaser and the Vendor in relation to the Acquisition and the Option
“Board” the board of Directors
“Business Day”
a day (other than a Saturday, Sunday or public holiday) on which banks are open for business in the PRC and Hong Kong
“BVI” the British Virgin Islands
“Company”
Winteam Pharmaceutical Group Limited （盈天醫藥集團有限公司）, 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
“Consideration”
the consideration of RMB120 million (equivalent to approximately HK$140.6 million) payable by the Company for the Sale Interest under the Acquisition Agreement
“Director(s)” director(s) of the Company
“EGM”
the extraordinary general meeting of the Company to be convened at 10:00 a.m. on 24 December 2010 at Boardroom V, Ground Floor, Renaissance Harbour View Hotel, 1 Harbour Road, Wan Chai, Hong Kong to consider and, if thought fit, to approve the Acquisition Agreement and the transactions contemplated thereunder
“Extra Benefit”
Extra Benefit Corp., a company incorporated in the BVI with limited liability and wholly-owned by Mr. Xu
“FLX”
佛山馮了性藥業有限公司 (Foshan Feng Liao Xing Pharmaceutical Co., Ltd.*), a company established in the PRC in which the Company indirectly holds a 51% equity interest

– 1 –

DEFINITIONS

“Foshan Overseas” Foshan Overseas Investment Limited（佛山海外投資有限公司*）, a company incorporated in the BVI with limited liability and a direct wholly-owned subsidiary of Foshan Public Utilities
“Foshan Public Utilities” 佛山市公用事業控股有限公司 (Foshan Public Utilities Holding Co., Ltd.*), a company incorporated in the PRC with limited liability and the holding company of Foshan Overseas
“Group” the Company and its subsidiaries
“Hensil Investments” Hensil Investments Group Limited, a company incorporated in the BVI with limited liability and was interested in approximately 33.94% of the total issued share capital of the Company as at the Latest Practicable Date
“Hong Kong” the Hong Kong Special Administrative Region of the PRC
“Independent Board Committee” a committee of the Board comprising all of the four independent non-executive Directors, namely Mr. LO Wing Yat, Mr. PANG Fu Keung, Mr. WANG Bo and Mr. ZHANG Jianhui, formed for the purpose of giving recommendation to the Independent Shareholders regarding the Acquisition Agreement and the transactions contemplated thereunder
“Independent Financial Adviser”
Haitong International 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 Acquisition Agreement and the transactions contemplated thereunder
“Independent Shareholders”
the Shareholders other than the Vendor and her associates and those who have no material interest in the Acquisition Agreement which is different from that of the other Shareholders
“Latest Practicable Date”
6 December 2010, 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 (as amended from time to time)

– 2 –

DEFINITIONS

“Minority Holders”
holders of the Remaining Minority Interest
“Mr. Xu”
Mr. XU Tiefeng（徐鉄峰先生）, an executive Director
“Mr. Yang”
Mr. YANG Bin（楊斌先生）, an executive Director
“National Essential Drugs List”
國家基本藥物目錄（基層醫療衛生機構配備使用部分）(2009年版) (the National List of Essential Drugs (Catalogue for the Basic Healthcare Institutions) (2009 version)*)
“Option” the right granted by the Vendor to the Purchaser for the Purchaser to purchase from the Vendor any of the Remaining Minority Interest which may be offered to sell to the Vendor by the Minority Holders on the terms and conditions set out in the Acquisition Agreement
“PRC” the People’s Republic of China which, for the purpose of this announcement, excludes Hong Kong, the Macau Special Administrative Region of the PRC and Taiwan
“Profit Channel” Profit Channel Development Limited, a company incorporated in the BVI with limited liability and wholly-owned by Mr. Yang
“Purchaser”
廣東環球制藥有限公司 (Guangdong Medi-world Pharmaceutical Co., Ltd.*), a company established in the PRC with limited liability and an indirect wholly-owned subsidiary of the Company
“Remaining Minority Interest”
the remaining capital contribution in the total amount of RMB1,242,735 in the Target Company (representing a 4.43% equity interest in the Target Company) not presently owned by the Vendor
“Sale Interest”
capital contribution in the total amount of RMB26,824,265 in the Target Company (representing a 95.57% equity interest in the Target Company) presently, legally and beneficially owned by the Vendor
“SFO”
The Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)
“Share(s)”
ordinary share(s) of HK$0.10 each in the share capital of the Company
“Shareholder(s)” holder(s) of the Share(s)
“Stock Exchange”

The Stock Exchange of Hong Kong Limited

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DEFINITIONS

“Sureplan”	Sureplan Limited, a company incorporated in the BVI
	with limited liability and was interested in
	approximately 31.63% of the total issued share capital
	of the Company as at the Latest Practicable Date
“Target Company”	佛山仲弘有限公司(Foshan Zhong Hong Co., Ltd.*), a
	company incorporated in the PRC with limited liability
“Vendor”	Ms. TAN Zhen（譚珍小姐）
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong
“RMB”	Renminbi, the lawful currency of the PRC
“%”	per cent.

For illustration purposes, all amounts denominated in RMB in this circular have been translated into HK$ at the exchange rate of RMB1 = HK$1.1718. They do not form any representations or guarantees of any person that the aforesaid currency could be, have been, or will be converted into the other currency at the exchange rate used in this circular.

Certain English translations of Chinese names or words in this circular are included for information and identification 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

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(Incorporated in Hong Kong with limited liability) (Stock Code: 570)

Non-Executive Director:

Mr. DU Richeng, Chairman

Executive Directors:

Mr. XU Tiefeng, Executive Deputy Chairman Mr. YANG Bin, Managing Director Mr. SITU Min, Chief Financial Officer Mr. LI Songquan, Deputy Managing Director

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

Independent Non-Executive Directors:

Mr. LO Wing Yat

Mr. PANG Fu Keung

Mr. WANG Bo

Mr. ZHANG Jianhui

8 December 2010

To the Shareholders

Dear Sir or Madam,

DISCLOSEABLE AND CONNECTED TRANSACTION IN RELATION TO ACQUISITION OF EQUITY INTEREST IN FOSHAN ZHONG HONG CO., LTD.

INTRODUCTION

On 22 November 2010, the Company announced that the Purchaser and the Vendor entered into the Acquisition Agreement pursuant to which the Vendor conditionally agreed to sell and the Purchaser conditionally agreed to purchase the Sale Interest at the Consideration of RMB120 million (equivalent to approximately HK$140.6 million). The Sale Interest represents a 95.57% equity interest in the Target Company. The Target Company is an investment holding company, the principal asset of which is the holding of a 49% equity interest in FLX. The Company indirectly holds the remaining 51% equity interest in FLX. FLX is principally engaged in the research and development, production and sale of Chinese medicine and pharmaceutical products in the PRC.

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LETTER FROM THE BOARD

interest in FLX (being a non-wholly owned subsidiary of the Company), the Vendor is therefore a connected person of the Company under Chapter 14A of the Listing Rules and the entering into of the Acquisition Agreement also constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules. The Acquisition is therefore subject to the approval by the Independent Shareholders at the EGM by way of poll.

The purpose of this circular is to provide you with (i) details of the Acquisition Agreement; (ii) the recommendation of the Independent Board Committee to the Independent Shareholders; (iii) the letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders; (iv) other information as required under the Listing Rules; and (v) the notice of the EGM, at which an ordinary resolution will be proposed to approve the Acquisition Agreement and the transactions contemplated thereunder.

THE ACQUISITION AGREEMENT

Date

22 November 2010

Parties

Purchaser: 廣東環球制藥有限公司 (Guangdong Medi-world Pharmaceutical Co., Ltd*), an indirect wholly-owned subsidiary of the Company

Vendor: Ms. TAN Zhen（譚珍小姐）

The Vendor is the legal and beneficial owner of the Sale Interest, representing a 95.57% equity interest in the Target Company. The principal asset of the Target Company is its 49% equity interest in FLX, an indirect non-wholly owned subsidiary of the Company principally engaged in the research and development, production and sale of Chinese medicine and pharmaceutical products in the PRC. The Vendor is therefore a connected person of the Company as defined under Chapter 14A of the Listing Rules.

Save as disclosed above and to the best of the Directors’ knowledge, information and belief and having made all reasonable enquiries, the Vendor is otherwise a third party independent of the Company and its connected persons.

Assets to be acquired

The Sale Interest represents a 95.57% of the total equity interest in the Target Company, which in turn holds a 49% equity interest in FLX. Further information on the Target Company and FLX is set out in the section headed “Information on the Target Company and FLX” below.

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LETTER FROM THE BOARD

Consideration

The Consideration for the Sale Interest is RMB120 million (equivalent to approximately HK$140.6 million), representing approximately RMB4.47 for every RMB1 of the Sale Interest. The Consideration shall be payable in cash by the Purchaser to the Vendor at completion of the Acquisition. The Consideration will be funded by internal resources of the Group, placing of new Shares and/or bank borrowings.

The Consideration has been determined after arm’s length negotiations between the Vendor and the Purchaser with reference to (i) the unaudited net profit of FLX for the year ended 31 December 2009 of approximately RMB10.1 million (equivalent to approximately HK$11.8 million) attributable to the Sale Interest; (ii) the unaudited net assets of FLX as at 30 June 2010 of approximately RMB54.7 million (equivalent to approximately HK$64.1 million) attributable to the Sale Interest; and (iii) the profitable track record and promising business prospects of FLX as more particularly described in the section headed “Reasons for the Acquisition” below. Based on the unaudited net profit of FLX for the year ended 31 December 2009, the Consideration represents a price-to-earnings multiple of approximately 12 times.

The original cost of the Sale Interest to the Vendor is approximately RMB114.8 million (equivalent to approximately HK$134.5 million).

Option in respect of the Remaining Minority Interest

Conditions precedent

Completion of the Acquisition is conditional upon the satisfaction or waiver by the Purchaser (as the case may be) of the following conditions:

(i) the Purchaser being satisfied with the result of the financial, operational and legal due diligence review on the Target Company;

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LETTER FROM THE BOARD

(ii) the execution of the transfer of the Sale Interest by the Vendor to the Purchaser having been approved by the shareholders of the Target Company at a shareholders’ meeting held by the Target Company and the other shareholders of the Target Company having waived their pre-emption rights in relation to the Sale Interest;
(iii) the Vendor having agreed to and procured the resignation of the existing directors of the Target Company and agreed to the appointment of the directors nominated by the Purchaser to the board of directors of the Target Company;
(iv) the passing of the necessary resolution approving the Acquisition Agreement by the board of directors of the Purchaser;
(v) the announcement(s) and circular regarding the Acquisition Agreement having been released by the Company in accordance with the Listing Rules and the execution of the Acquisition Agreement having been approved by the Directors;
(vi) approval of the Acquisition Agreement by the Independent Shareholders having been obtained at the EGM; and
(vii) the obtaining of a notification of approval issued by the Administration of Industry and Commerce of Foshan City for the registration regarding the transfer of ownership of the Sale Interest to the Purchaser and the appointment of the persons nominated by the Purchaser as director(s) and legal representative(s) of the Target Company.

Except for condition (i) above which is capable of being waived by the Purchaser, all other conditions are not capable of being waived. If any of the aforementioned conditions precedent is not fulfilled or waived by the Purchaser on or before 31 December 2010, or such later date as may be agreed in writing between the Vendor and the Purchaser, the Acquisition Agreement shall lapse and be of no further effect and no party shall have any claim against, or liability or obligation to, the other party save in respect of any antecedent breaches of the Acquisition Agreement.

Completion

Completion of the Acquisition Agreement shall take place on the third Business Day following the date of fulfillment or waiver (as the case may be) of all the conditions precedent, or such other day as agreed by the Vendor and the Purchaser.

Upon completion of the Acquisition, the Target Company will become an indirect non-wholly owned subsidiary of the Company and its financial results and position will be consolidated into the Group’s financial statements. Accordingly, the Company’s attributable equity interest in FLX will increase from 51% to approximately 97.8%. The financial results and position of FLX will continue to be consolidated into the Group’s financial statements.

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LETTER FROM THE BOARD

INFORMATION ON THE TARGET COMPANY AND FLX

The Target Company

The Target Company is an investment holding company established in the PRC and holds a 49% equity interest in FLX. Save for the aforesaid 49% equity interest in FLX, the Target Company has no other material assets and liabilities.

Based on the unaudited financial statements of the Target Company for the two years ended 31 December 2008 and 31 December 2009 which have been prepared in accordance with the Hong Kong Financial Reporting Standards, the Target Company did not record any turnover for the two years ended 31 December 2008 and 31 December 2009. For the two years ended 31 December 2008 and 31 December 2009, the unaudited profit (both before and after taxation) of the Target Company were approximately RMB10.3 million (equivalent to approximately HK$12.1 million) and RMB10.5 million (equivalent to approximately HK$12.3 million) respectively. The profits for the two years were mainly attributable to the share of 49% profits of FLX. As at 30 June 2010, the unaudited net assets of the Target Company was approximately RMB57.3 million (equivalent to approximately HK$67.1 million).

FLX

FLX is principally engaged in the research and development, production and sale of Chinese medicine and pharmaceutical products in the PRC. The Target Company holds a 49% equity interest in FLX and the Company indirectly holds the remaining 51% equity interest in FLX.

FLX has a long established history in Chinese medicine and pharmaceutical business. The existing operations of FLX include research and development, manufacturing and sale of Chinese medicine and pharmaceutical products. FLX currently has an extensive sales and marketing network in the PRC. Its major products include “Feng Liao Xing Dieda Rheumatism Medicinal Wine” （馮了性風濕跌打藥酒）, “Bao Ji Pills” （保劑丸）, “Jie Hong Dieda Tincture”（竭紅跌打酒）, “Daohuoluo Pills”（大活絡丸）, “An Gong Niu Huang Wan”（安宮牛黃丸）and “She Dan Chuan Bei Power” （蛇膽川貝散）. The State Council of the PRC released the National Essential Drugs List, marking the establishment of a national list of essential drugs required to be stocked up and used by public medical and health care institutions as well as sold by retail drug stores. The National Essential Drugs List covers over 300 types of medicines, of which FLX manufactures a total of 44 types. For instance, popular products manufactured by FLX, “Bao Ji Pills”（保劑丸）and “An Gong Niu Huang Wan”（安宮牛黃丸）, are on the National Essential Drugs List.

Pursuant to the unaudited management accounts of FLX for the two years ended 31 December 2008 and 31 December 2009 prepared in accordance with the Hong Kong Financial Reporting Standards and as included in the audited consolidated financial statements of the Company for the two years ended 31 December 2008 and 31 December 2009, FLX recorded unaudited profit before taxation of approximately RMB24.6 million (equivalent to approximately HK$28.8 million) and approximately RMB25.4 million (equivalent to approximately HK$29.8 million) respectively. FLX recorded unaudited profit

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LETTER FROM THE BOARD

after taxation of approximately RMB21.1 million (equivalent to approximately HK$24.7 million) and RMB21.5 million (equivalent to approximately HK$25.2 million) for the two years ended 31 December 2008 and 31 December 2009 respectively. As at 30 June 2010, the unaudited net assets of FLX was approximately RMB116.8 million (equivalent to approximately HK$136.9 million).

REASONS FOR THE ACQUISITION

The principal activity of the Company is investment holding and the principal activities of its principal subsidiaries, including FLX, are research and development, production and sale of pharmaceutical products in the PRC.

In October 2006, the Company acquired the 51% interest in FLX presently held by it. Following completion of the aforesaid acquisition, FLX has been performing well and has recorded satisfactory results in recent years. As disclosed in the interim report of the Company for the six months ended 30 June 2010, the Company considers that with the improving living standard and the ageing population in the PRC, the demand for medical and healthcare services in the PRC will continue to increase. The State Council of the PRC approved a medical reform proposal for public medical and health care system in March 2009. It is expected that the reform proposal would involve investments by the PRC government of RMB850 billion (equivalent to approximately HK$996 billion) at various levels of the public medical and health care system in the next three years. It is the target set by the State Council to implement the national basic medical insurance system to at least 60% of the community health services organizations and general medical institutions under county level by the end of 2010. With further development of the basic medical insurance system, there is an increased usage of the Group’s key products and exclusive products listed on the National Essential Drugs List, including “Bao Ji Pills”（保劑丸）and “An Gong Niu Huang Wan”（安宮牛黃丸）which are the principal products of FLX. It is expected that the demand for the medicine products manufactured by FLX, particularly its patented products, will increase and FLX will benefit from the continuous development of the medicine industry in the PRC.

The Company considers that the business prospects of FLX is promising in view of the profitable track record and development potential of FLX as disclosed in the paragraph headed “Information on the Target Company and FLX” above, and the Acquisition provides a good opportunity for the Company to increase its investment in FLX with a view to enhancing the overall profitability of the Group and bringing additional value to the Shareholders. The Directors (including the independent non-executive Directors whose views are stated under the paragraph headed “Recommendation” below) consider the terms of the Acquisition Agreement to be fair and reasonable so far as the Independent Shareholders are concerned and that the Acquisition is in the interests of the Company and the Shareholders as a whole.

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LETTER FROM THE BOARD

LISTING RULES IMPLICATIONS ON THE ACQUISITION

As the relevant percentage ratios calculated pursuant to Rule 14.07 of the Listing Rules in respect of the Acquisition exceed 5% but are less than 25%, the Acquisition constitutes a discloseable transaction for the Company under Chapter 14 of the Listing Rules. As the Vendor owns a 95.57% equity interest in the Target Company, which in turn holds a 49% interest in FLX (being a non-wholly owned subsidiary of the Company), the Vendor is therefore a connected person of the Company under Chapter 14A of the Listing Rules and the entering into of the Acquisition Agreement also constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules. The Acquisition is therefore subject to the approval by the Independent Shareholders at the EGM by way of poll. None of the Directors have a material interest in the Acquisition and were required to abstain from voting on the board resolution approving the Acquisition Agreement and the transactions contemplated thereunder.

To the best of the Directors’ knowledge, information and belief and having made all reasonable enquiries, neither the Vendor nor her associates holds any Shares as at the Latest Practicable Date and no Shareholder has any material interest in the Acquisition Agreement which is different from that of the other Shareholders. Accordingly, no existing Shareholder is required to abstain from voting on the relevant resolution to be put forward to vote at the EGM in relation to the Acquisition Agreement and the transactions contemplated thereunder. In the event that the Vendor or her associates hold any Shares at the date of the EGM, the Vendor and her associates will abstain from voting on the relevant resolution to be put forward to vote at the EGM in relation to the Acquisition Agreement and the transactions contemplated thereunder.

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 Friday, 24 December 2010 at 10:00 a.m. is set out on pages 32 to 33 of this circular. The purpose of the EGM is for the Independent Shareholders to consider and, if thought fit, approve the Acquisition Agreement and the transactions contemplated thereunder.

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.

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LETTER FROM THE BOARD

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 give recommendation to the Independent Shareholders on the Acquisition Agreement and the transactions contemplated thereunder. Haitong International 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 13 and pages 14 to 25 respectively of this circular.

RECOMMENDATION

The Independent Board Committee, having considered the advice of the Independent Financial Adviser, considers that the terms of the Acquisition Agreement are fair and reasonable, and the entering into of the Acquisition Agreement is in the interests of the Company 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 Acquisition Agreement and the transactions contemplated thereunder.

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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(Incorporated in Hong Kong with limited liability) (Stock Code: 570)

8 December 2010

To the Independent Shareholders

Dear Sir or Madam,

DISCLOSEABLE AND CONNECTED TRANSACTION IN RELATION TO ACQUISITION OF EQUITY INTEREST IN FOSHAN ZHONG HONG CO., LTD.

We refer to the circular of the Company dated 8 December 2010 (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 Acquisition Agreement are fair and reasonable so far as the Company and the Independent Shareholders are concerned and whether the entering into of the Acquisition Agreement is in the interests of the Company and the Shareholders as a whole.

Haitong International 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 14 to 25 of the Circular.

Having considered the terms of the Acquisition Agreement and the independent advice of the Independent Financial Adviser in relation thereto, we are of the opinion that the terms of the Acquisition Agreement are fair and reasonable, and the entering into of the Acquisition Agreement is in the interests of the Company 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 Acquisition Agreement and the transactions contemplated thereunder.

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

– 13 –

LETTER FROM HAITONG INTERNATIONAL CAPITAL LIMITED

The following is the letter of advice to the Independent Board Committee and Independent Shareholders from Haitong International Capital Limited for the purpose of incorporation into this circular.

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

8 December 2010

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,

DISCLOSEABLE AND CONNECTED TRANSACTION IN RELATION TO ACQUISITION OF EQUITY INTEREST IN FOSHAN ZHONG HONG CO., LTD.

INTRODUCTION

We refer to our appointment as the independent financial adviser to the Independent Board Committee and the Independent Shareholders with respect to the terms of the Acquisition Agreement, details of which are set out in the letter (the “Letter”) from the Board contained in the circular (the “Circular”) of the Company dated 8 December 2010, of which this letter forms part. Terms used in this letter shall have the same respective meanings as those defined in the Circular unless the context otherwise requires.

As referred to in the Letter, on 22 November 2010, the Purchaser and the Vendor entered into the Acquisition Agreement pursuant to which the Vendor conditionally agreed to sell and the Purchaser conditionally agreed to purchase the Sale Interest at the Consideration of RMB120 million (equivalent to approximately HK$140.6 million).

As at the Latest Practicable Date, the Vendor is the legal and beneficial owner of the Sale Interest, representing an approximately 95.57% equity interest in the Target Company. The principal asset of the Target Company is its 49% equity interest in FLX, an indirect non wholly-owned subsidiary of the Company principally engaged in the research and development, production and sale of Chinese medicine and pharmaceutical products in the PRC. The Vendor is therefore a connected person of the Company as defined under Chapter 14A of the Listing Rules and the entering into of the Acquisition Agreement constitutes a connected transaction of the Company. As the relevant percentage ratios calculated pursuant to Rule 14.07 of the Listing Rules in respect of the Acquisition exceed 5% but are less than

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LETTER FROM HAITONG INTERNATIONAL CAPITAL LIMITED

25%, the Acquisition is subject to the approval by the Independent Shareholders at the EGM by way of poll. The Acquisition also constitutes a discloseable transaction for the Company under Chapter 14 of the Listing Rules.

The Independent Board Committee comprising all of the four 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 terms of the Acquisition Agreement and the transaction contemplated thereunder and whether or not to vote in favour of the Acquisition. 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 Acquisition Agreement are fair and reasonable so far as the Independent Shareholders are concerned and whether the entering into of the Acquisition Agreement is in the interests of the Company and the Independent 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, after 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 Acquisition Agreement, the annual report of the Company for the year ended 31 December 2009 (the “2009 Annual Report”), the interim report of the Company for the six months period ended 30 June 2010 (the “2010 Interim Report”), the Circular 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 the entering into of the Acquisition Agreement, and consider 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

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LETTER FROM HAITONG INTERNATIONAL CAPITAL LIMITED

investigation into the businesses, affairs, financial position or prospects of the Group or that of the Target Company and its associated company, namely FLX, (together, the “Target Group”).

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our opinion in respect of the terms of the Acquisition Agreement, we have considered the following principal factors and reasons:

1 Background to and reasons for entering into the Acquisition Agreement

1.1 Background information

1.1.1 Information on the Group

The Company is an investment holding company. Its principal subsidiaries are principally engaged in research and development, production and sale of Chinese medicine and pharmaceutical products in the PRC.

Since late 2006 after the Group commenced engaging in the pharmaceutical business and acquired certain companies engaging in pharmaceutical business as set out in the below table, it started to deliver satisfactory performance.

Date of completion	Important acquisitions	Important acquisitions
9 October 2006	�	Completion of acquisition of 51%	interest in
		each of 佛山德眾藥業有限公司(Foshan Dezhong
		Pharmaceutical Co., Ltd.*) (“DZH”)	and FLX
	�	Commencement of pharmaceutical business
6 February 2009	�	Completion of acquisition of 100%	interest in
		Smartpoint International Limited	and its
		subsidiaries, including the Purchaser and its
		subsidiaries (the “Purchaser Group”)
6 November 2009	�	Completion of acquisition of 100%	interest in
		佛山市南海醫藥集團藥材有限公司(Foshan Nanhai
		Pharmaceutical Group Medicinal Material Co.,
		Ltd.) (“Foshan Nanhai”)
28 April 2010	�	Completion of acquisition of 93%	interest in
		佛山市安寧有限公司 (Foshan City	An Ning
		Company Limited*), including	its 49%
		interests in DZH

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LETTER FROM HAITONG INTERNATIONAL CAPITAL LIMITED

Set out below is a summary of the financial highlights of the Group for the six months ended 30 June 2010 and 2009 as extracted from the 2010 Interim Report and the two years ended 31 December 2009 and 2008 as extracted from the 2009 Annual Report:

Turnover Gross profit Gross profit margin Profit for the year/ period Profit margin Profit for the year/ period attributable to equity Shareholders Non-controlling interests	Six months ended 30 June 2010 2009 HK$’000 HK$’000 437,799 317,704 240,720 147,129 55.0% 46.3% 47,735 43,877 10.9% 13.8% 29,049 29,257 18,686 14,620	Year ended 31 December 2009 2008 HK$’000 HK$’000 670,175 443,533 322,696 158,284 48.2% 35.7% 68,226 48,467 10.2% 10.9% 44,054 20,330 24,172 28,137	Year ended 31 December 2009 2008 HK$’000 HK$’000 670,175 443,533 322,696 158,284 48.2% 35.7% 68,226 48,467 10.2% 10.9% 44,054 20,330 24,172 28,137

			158,284 35.7% 48,467 10.9% 20,330

			28,137

As stated in the 2009 Annual Report, the Group recorded an increase in turnover from approximately HK$443.5 million in the year 2008 to approximately HK$670.2 million in the year 2009 (representing an increase of approximately 51.1%) mainly attributable to the consolidation of the results of the entire interests in the Purchaser Group after it been acquired in February 2009. The Purchaser Group’s high gross profit margin products also enhanced the product mix of the Group which led to the increase of the Group’s gross profit margin from approximately 35.7% in the year 2008 to approximately 48.2% in the year 2009. The profit for the year increased from approximately HK$48.5 million in the year 2008 to approximately HK$68.2 million in the year 2009 (representing an increase of approximately 40.8%) while the profit for the year attributable to equity Shareholders increased from approximately HK$20.3 million in the year 2008 to approximately HK$44.1 million in the year 2009 (representing an increase of approximately 116.7%).

As stated in the 2010 Interim Report, the Group recorded an increase in turnover from approximately HK$317.7 million for the six months ended 30 June 2009 to approximately HK$437.8 million for the six months ended 30 June 2010 (representing an increase of approximately 37.8%) mainly attributable to the consolidation of the results of the entire interests in Foshan Nanhai after it been acquired in late 2009 and the enhancement of promotional efforts. The acquisition of Foshan Nanhai facilitated the Group in reducing the purchasing costs of medical materials and therefore, the Group’s gross profit margin increased from approximately 46.3% for the six months ended 30 June 2009 to approximately

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LETTER FROM HAITONG INTERNATIONAL CAPITAL LIMITED

55.0% for the six months ended 30 June 2010. The profit for the period increased from approximately HK$43.9 million for the six months ended 30 June 2009 to approximately HK$47.7 million for the six months ended 30 June 2010 (representing an increase of approximately 8.8%) while the profit for the period attributable to equity Shareholders decreased from approximately HK$29.3 million for the six months ended 30 June 2009 to approximately HK$29.0 million for the six months ended 30 June 2010 (representing a decrease of approximately 0.7%).

1.1.2 Information of the Target Company and FLX

The Target Company

The Target Company is an investment holding company established in the PRC and holds a 49% equity interest in FLX. FLX is accounted for as an associated company of the Target Company. Save for the aforesaid 49% equity interest in FLX, the Target Company has no other material assets and liabilities. The financial performance of the Target Company is principally affected by the results of FLX.

Set out below is a summary of the financial highlights of the Target Company for the six months ended 30 June 2010 and the two years ended 31 December 2009 and 2008 as extracted from its unaudited management accounts of the relevant periods prepared in accordance with Hong Kong Financial Reporting Standards.

Share of profits of an associate Profit for the year/period Net assets value Return on equity	Six months ended 30 June 2010 RMB’000 5,059 5,059 57,250 8.8%	Year ended 31 December 2009 2008 RMB’000 RMB’000 10,543 10,339 10,543 10,339 51,689 48,764 20.4% 21.2%	Year ended 31 December 2009 2008 RMB’000 RMB’000 10,543 10,339 10,543 10,339 51,689 48,764 20.4% 21.2%

			10,339 48,764 21.2%

FLX

FLX has a long established history in Chinese medicine and pharmaceutical business. It is principally engaged in the research and development, production and sale of Chinese medicine and pharmaceutical products in the PRC. FLX also currently has an extensive sales and marketing network in the PRC. FLX is indirectly owned as to 51% by the Company and directly owned as to 49% by the Target Company.

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LETTER FROM HAITONG INTERNATIONAL CAPITAL LIMITED

FLX major products include “Feng Liao Xing Dieda Rheumatism Medicinal Wine” （馮了性風濕跌打藥酒）, “Bao Ji Pills” （保劑丸）, “Jie Hong Dieda Tincture”（竭紅跌打酒）, “Daohuoluo Pills”（大活絡丸）, “An Gong Niu Huang Wan” （安宮牛黃丸）and “She Dan Chuan Bei Power” （蛇膽川貝散）. Among all the products manufactured by FLX, 44 of which (including “Bao Ji Pills”（保劑丸）and “An Gong Niu Huang Wan”（安宮牛黃丸）, the popular products manufactured by FLX,) are on The National Essential Drugs List released by the State Council of the PRC. The National Essential Drugs List is a national list of essential drugs (covering over 300 types of medicines) required to be stocked up and used by public medical and health care institutions as well as sold by retail drug stores.

Set out below is a summary of the financial highlights of FLX for the six months ended 30 June 2010 and 2009 and for the two years ended 31 December 2009 and 2008 as extracted from the unaudited management accounts for the relevant periods prepared in accordance with Hong Kong Financial Reporting Standards.

Turnover Gross profit Gross profit margin Net profit for the year/ period Profit margin Net assets value Return on equity	Six months ended 30 June 2010 2009 RMB’000 RMB’000 66,481 84,811 24,916 29,003 37.5% 34.2% 10,324 11,961 15.5% 14.1% 116,836 94,752 8.8% 12.6%	Year ended 31 December 2009 2008 RMB’000 RMB’000 157,466 171,198 56,792 54,905 36.1% 32.1% 21,517 21,101 13.7% 12.3% 105,487 99,517 20.4% 21.2%	Year ended 31 December 2009 2008 RMB’000 RMB’000 157,466 171,198 56,792 54,905 36.1% 32.1% 21,517 21,101 13.7% 12.3% 105,487 99,517 20.4% 21.2%

			54,905 32.1% 21,101 12.3% 99,517 21.2%

FLX recorded a decrease in turnover from approximately RMB171.2 million in the year 2008 to approximately RMB157.5 million in the year 2009 (representing a decrease of approximately 8.0%) mainly attributable to the decrease in sales quantities in the major products (namely, “Feng Liao Xing Dieda Rheumatism Medicinal Wine” （馮了性風濕跌打藥酒）、“Bao Ji Pills”（保濟丸）、“Daohuoluo Pills”（大活絡丸）、“She Dan Chuan Bei Power” （蛇膽川貝散）、“Kang Gu Zeng Sheng Tablet” （抗骨增生片）, the total sales amount of these products representing approximately 56.5% and 56.2% of the total revenue of FLX for the year 2009 and 2008 respectively) due to the mild raise on the selling price as advised by the Directors. Therefore, FLX’s gross profit margin increased from approximately 32.1% in the year 2008 to approximately 36.1% in the year 2009 and its gross profit increased from approximately RMB54.9 million in the year 2008 to approximately RMB56.8 million in the year 2009 (representing an increase of approximately 3.4%).

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LETTER FROM HAITONG INTERNATIONAL CAPITAL LIMITED

Moreover, its net profit for the year increased from approximately RMB21.1 million in the year 2008 to approximately RMB21.5 million in the year 2009 (representing an increase of approximately 2.0%).

FLX recorded a decrease in turnover from approximately RMB84.8 million for the six months ended 30 June 2009 to approximately RMB66.5 million for the six months ended 30 June 2010 (representing a decrease of approximately 21.6%) mainly attributable to decrease in the sale of a product, namely, “Feng Liao Xing Dieda Rheumatism Medicinal Wine”（馮了性風濕跌打藥酒）(500ml) by 37.7% due to the decrease in the sales quantities by 52.7% as advised by the Directors. Nevertheless, as extracted from the unaudited management accounts of FLX for the 9 months ended 30 September 2010 and 2009 prepared in accordance with Hong Kong Financial Reporting Standards, its revenue and profit rebounded and increased by approximately 1.4% and 6.9% respectively for 9 months ended 30 September 2010 as compared with that for the 9 months ended 30 September 2009 after the average selling price of “Feng Liao Xing Dieda Rheumatism Medicinal Wine” （馮了性風濕跌打藥酒） (500ml) was raised by approximately 32.0% from approximately RMB 9.52 to approximately RMB12.57.

1.2 Reasons for and benefits of the Acquisition

As disclosed in the 2010 Interim Report, the Company considers that with the improving living standard and the ageing population in the PRC, the demand for medical and healthcare services in the PRC will keep increasing.

As stated in the Letter, the State Council of the PRC approved a medical reform proposal for public medical and health care system in March 2009. It is expected that the reform proposal would involve investments by the PRC government of RMB850 billion (equivalent to approximately HK$996 billion) at various levels of the public medical and health care system in the next three years. It is the target set by the State Council to implement the national basic medical insurance system to at least 60% of the community health services organizations and general medical institutions under county level by the end of 2010. The State Council of the PRC also released the National Essential Drugs List, marking the establishment of a national list of essential drugs required to be stocked up and used by public medical and health care institutions as well as sold by retail drug stores. As advised by the Directors, the above supporting policies by the PRC government brought substantial changes to the domestic pharmaceutical industry along with extensive business development opportunities for all industry policy.

As stated in the 2010 Interim Report, the Group has set out certain development strategies, one of which is to grasp the favourable opportunities for mergers and acquisitions in terms of brand names, sales network, product and research and development so as to optimize value for Shareholders. In October 2006, the Company acquired the 51% interest in FLX presently held by it. Following the completion of the aforesaid acquisition, FLX has been performing well and has recorded satisfactory results in recent years. With further development of the basic medical insurance

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LETTER FROM HAITONG INTERNATIONAL CAPITAL LIMITED

system, there is an increased usage of the Group’s key products and exclusive products listed on the National Essential Drugs List, including “Bao Ji Pills”（保劑丸）and “An Gong Niu Huang Wan” （安宮牛黃丸） which are the principal products of FLX. Therefore, it is expected that the demand for the medicine products manufactured by FLX, particularly its patented products and its 44 products on the National Essential Drugs List, will increase and FLX will benefit from the continuous development of the Chinese medicine industry in the PRC.

Based on the above, in view of the positive industry outlook as a result of the medical reform proposal approved by and the National Essential Drug List released by the State Council of the PRC and the promising business prospects of FLX proven by its profitable track record and development potential, we concur with the Directors that the Acquisition provides a good opportunity for the Company to increase its investment in FLX, enhances the overall profitability of the Group and brings value to the Shareholders.

Therefore, having considered that (i) the terms of the Acquisition Agreement are fair and reasonable so far as the Company and the Independent Shareholders are concerned as explained below; (ii) the Acquisition is in line with the Company’s existing business development strategy and (iii) the Acquisition provides a good opportunity for the Company to increase its investment in FLX, enhances the overall profitability of the Group and brings value to the Shareholders based on the promising business prospects of FLX proven by its profitable track record and development potential, we share the view with the Directors that the Acquisition is in the interests of the Company and the Shareholders as a whole.

2 Principal terms of the Acquisition Agreement

2.1 Consideration for the Acquisition

Pursuant to the Acquisition Agreement, the Consideration for the Sale Interest of RMB120 million (equivalent to approximately HK$140.6 million), representing approximately RMB4.47 for every RMB1 of the Sale Interest has been determined after arm’s length negotiations between the Vendor and the Purchaser with reference to (i) the unaudited net profit of FLX for the year ended 31 December 2009 of approximately RMB10.1 million (equivalent to approximately HK$11.8 million) attributable to the Sale Interest; (ii) the unaudited net assets of FLX as at 30 June 2010 of approximately RMB54.7 million (equivalent to approximately HK$64.1 million) attributable to the Sale Interest; and (iii) the profitable track record and the promising business prospect of FLX. Based on the unaudited net profit of FLX for the year ended 31 December 2009, the Consideration represents a price-to-earnings multiple of approximately 12 times.

In order to assess the fairness and reasonableness of the Consideration, we performed comparison of the price to earnings multiple (the “P/E ratio”) and the price to book multiple (the “P/B ratio”) implied by the Acquisition with the historical P/E ratios and P/B ratios of all the Hong Kong listed companies (the “Comparable Companies) which principal activities are engaging in pharmaceutical business in the

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LETTER FROM HAITONG INTERNATIONAL CAPITAL LIMITED

PRC (similar businesses with the Group) with market capitalization of less than HK$5,000 million based on our searches conducted on a best efforts basis on Bloomberg and the website of the Stock Exchange. We consider that the Comparable Companies selected based on this criterion are appropriate for our analysis purpose.

		Market	Historical
Names of Comparable Companies	Stockcode	capitalisation	P/E ratio	P/B ratio
		HKD’ million	times	times
China Medical and Bio Science Limited*	8120	64.9	324.6	N/A
United Gene High-Tech Group Limited	399	1,885.5	167.4	4.4
Extrawell Pharmaceutical Holdings Limited	858	1,557.2	106.5	2.8
Northeast Tiger Pharmaceutical Company
Limited	8197	42.4	84.6	0.5
Yunnan Enterprises Holdings Limited	455	1,103.4	51.8	1.6
Essex Bio-Technology Limited	8151	478.8	41.5	4.2
Venturepharm Laboratories Limited	8225	276.3	38.8	2.0
Lee’s Pharmaceutical Holdings Limited	950	1,694.2	36.5	10.3
China Grand Pharmaceutical and Healthcare
Holdings Limited	512	994.0	35.1	2.3
Lansen Pharmaceutical Holdings Limited	503	1,572.9	27.5	2.4
Dawnrays Pharmaceutical (Holdings) Limited	2348	2,508.1	18.7	2.8
Jiwa Bio-Pharm Holdings Limited	2327	1,014.3	15.7	2.1
Guangzhou Pharmaceutical Company Limited	874	2,638.8	10.8	0.6
Tong Ren Tang Technologies Co. Ltd.	1666	1,964.7	10.0	1.0
Wai Yuen Tong Medicine Holdings Limited	897	382.8	8.4	0.3
Wuyi International Pharmaceutical Company
Limited	1889	1,213.9	8.0	0.7
Jilin Province Huinan Changlong
Bio-pharmacy Company Limited	8049	193.2	7.7	0.6
Vital Group Holdings Limited	1164	361.4	6.8	0.5
Shandong Luoxin Pharmacy Stock Co., Ltd	8058	1,688.4	5.5	1.6
Shandong Xinhua Pharmaceutical Company
Limited	719	517.5	4.6	0.3
Asia Resources Holdings Limited*	899	382.1	N/A	0.5
Hao Wen Holdings Limited*	8019	229.8	N/A	N/A
Maximum			324.6	10.3
Minimum			4.6	0.3
Average			50.5	2.1
Median			23.1	1.6
The Group		2,015.3	45.7	2.2
Target Company		120.0	12.0**	2.2***

Sources: Bloomberg

The P/E ratio is not available as the relevant company was loss-marking for the latest financial year and/or the P/B ratio is not available as the relevant company recorded a negative net assets value as at its latest financial year/period ended.
** The calculation of P/E ratio of the Acquisition is based on the Consideration of RMB120 million and the net profit after tax of FLX attributable to the Sale Interest for the year ended 31 December 2009 of approximately RMB10.1 million.
*** The calculation of P/B ratio of the Acquisition is based on the Consideration of RMB120 million and the net assets value of FLX attributable to the Sale Interest for the 6 months period ended 30 June 2010 of approximately RMB54.7 million.

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LETTER FROM HAITONG INTERNATIONAL CAPITAL LIMITED

The P/E ratios of the Comparable Companies range from approximately 4.6 times to approximately 324.6 times, with an average P/E ratio of approximately 50.5 times and a median P/E ratio of approximately 23.1 times. Therefore, the P/E ratio of the Acquisition of approximately 12.0 times (i) falls within the range of the P/E ratio of the Comparable Companies; (ii) is 76.2% lower than the average P/E ratio of the Comparable Companies and 48.1% lower than the median P/E ratio of the Comparable Companies; and (iii) is 73.7% lower than the P/E ratio of the Group. Besides, the P/B ratios of the Comparable Companies range from approximately 0.3 times to approximately 10.3 times, with an average P/B ratio of approximately 2.1 times and a median P/B ratio of approximately 1.6 times. Therefore, the P/B ratio of the Acquisition of approximately 2.2 times (i) falls within the range of the P/B ratio of the Comparable Companies; (ii) is close to the average and median P/B ratio of the Comparable Companies; and (iii) is same as the P/B ratio of the Group. Accordingly, we are of the view that the Consideration (representing approximately RMB4.47 for every RMB1 of the Sale Interest) is not unreasonable.

2.2 Option in respect of the Remaining Minority Interest

Pursuant to the Acquisition Agreement, the Vendor undertakes that within 12 months from the date of completion of the Acquisition Agreement, the Vendor will continue to negotiate with the Minority Holders to purchase the Remaining Minority Interest held by the Minority Holders at a price of not more than RMB4.28 for every RMB1 of capital contribution of the Target Company. On this basis, the total purchase price for all the Remaining Minority Interest would be up to RMB5.3 million (equivalent to approximately HK$6.2 million). The Vendor has agreed to grant the Option to the Purchaser to acquire, in its sole discretion, from the Vendor any or all such Remaining Minority Interest on the same terms offered to the Vendor by the Minority Holders. As the Remaining Minority Interest held by the Vendor will maintain only insignificant interests in Target Group, it is less marketable to other third parties and a discount at approximately 4.3% to the Consideration of RMB120 million for the Sale Interest (representing approximately RMB4.47 for every RMB1 of the Sale Interest) is considered not unreasonable. In light of our view in the paragraph headed 2.1 “Consideration for the Acquisition” that the Consideration of RMB120 million (representing approximately RMB4.47 for every RMB1 of the Sale Interest) is not unreasonable, we consider that the option in respect of the Remaining Minority Interest held by the Minority Holders which is set at a price of not more than RMB4.28 for every RMB1 of capital contribution of the Target Company and is at a discount of approximately 4.3% to the Consideration (representing approximately RMB4.47 for every RMB1 of the Sale Interest) is not unreasonable.

2.3 Settlement and funding method of the Consideration

Pursuant to the Acquisition Agreement, the Consideration for the Sale Interest of RMB120 million (equivalent to approximately HK$140.6 million) shall be payable in cash by the Purchaser to the Vendor at completion of the Acquisition. As set out in the Letter, the Consideration will be funded by internal resources of the Group, placing of new Shares and/or bank borrowings. Furthermore, in the event that any of the Remaining Minority Interest is available for sale and the Purchaser exercises its rights

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LETTER FROM HAITONG INTERNATIONAL CAPITAL LIMITED

to purchase the Remaining Minority Interest, as set out in the Letter, the Company will also finance such purchases by its internal resources. According to the unaudited consolidated balance sheet of the Group as at 30 June 2010, the Group had cash at bank and in hand of approximately HK$169.2 million. Therefore, we consider that should the cash settlement of the Consideration as well as that for the exercise of the option in respect of the Remaining Minority Interest is funded only by internal resources, the Group has the necessary financial resources for the acquisition of the entire equity interest of the Target Company.

Taking into the consideration that (i) the P/E ratio of the Acquisition of approximately 12.0 times is 76.2% lower than the average of those of the Comparable Companies and 48.1% lower than the median of those of the Comparable Companies; the P/B ratios of the Acquisition of approximately 2.2 times is close to the average and median of those of the Comparable Companies respectively; (ii) the P/E and P/B ratios of the Acquisition fall within the ranges of those of the Comparable Companies; and (iii) the P/E ratio of the Acquisition is 73.7% lower than the that of the Group and P/B ratio of the Acquisition is the same as that of the Group respectively; and (iv) the Company has sufficient financial resources to fund the Acquisition, as well as the option in respect of the Remaining Minority Interest, we are of the view that the terms of the Acquisition Agreement are fair and reasonable so far as the Company and the Independent Shareholders are concerned.

3 Financial effects of the Acquisition on the Group

The following illustrates the effects on net assets value, earnings, cash position and the gearing level of the Group as a result of the Acquisition assuming that there will not be any changes to the total issued share capital of the Company from the Latest Practicable Date to the completion date of the Acquisition.

3.1 Net assets value

The Group had an unaudited consolidated net assets value attributable to the equity Shareholders of approximately HK$840.9 million as at 30 June 2010. There would be no impact to the Group’s net assets value as a result of the cash settlement funded only by internal resources for the Acquisition as well as that for the exercise of option for the Remaining Minority Interest. Should the settlement for the Acquisition be funded by placing of new Shares, the net assets of the Group will be increased, being mainly the increase in the new capital raised resulting from the issue of the new Shares.

3.2 Earnings

The Group had an audited consolidated profit for the year attributable to the equity Shareholders for the year ended 31 December 2009 of approximately HK$44.1 million. Upon completion of the Acquisition, the Company’s attributable equity interest in FLX will increase from 51% to approximately 97.8% and so the profit for the year attributable to the equity Shareholders will be increased by approximately 46.8% of the profit for the year of the Target Group which is in the interests of the Company and the Independent Shareholders as a whole.

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LETTER FROM HAITONG INTERNATIONAL CAPITAL LIMITED

3.3 Cash position

The Consideration for the Sale Interest of RMB120 million (equivalent to approximately HK$140.6 million) together with the aggregate consideration for the option in respect of the Remaining Minority Interest of approximately RMB5.3 million (equivalent to approximately HK$6.2 million) will be satisfied in cash of the Group. As extracted from the 2010 Interim Report, the Group had unaudited cash at bank and in hand of approximately HK$169.2 million at 30 June 2010. Hence, the Group has sufficient financial resources for cash settlement of the Consideration for the Sale Interest together with all the Remaining Minority Interest even if such cash settlement is not funded by placing of new Shares or the bank borrowings.

3.4 Gearing

Based on the 2010 Interim Report, the Group had an unaudited net cash position (being total cash and cash equivalents minus total bank loans) of approximately HK$139.4 million as at 30 June 2010 and the gearing ratio as at 30 June 2010 (being total bank loans minus total cash and cash equivalents over the total equity attributable to the equity Shareholders) was not applicable. Should the settlement of the Consideration as well as the exercise of the option in respect of the Remaining Minority Interest be funded only by the internal resources of the Group, there would be no material adverse change to the Group’s gearing ratio as a result of the Acquisition as far as the Independent Shareholders and the Company are concerned. Should the settlement for the Acquisition be funded by way of bank borrowings, the gearing ratio of the Group may be expected to increase.

RECOMMENDATION

Having considered the above principal terms of and reasons for entering into the Acquisition Agreement, we are of the view that the terms of the Acquisition Agreement are normal commercial terms and are fair and reasonable so far as the Company and the Independent Shareholders are concerned, the business conducted by the Target Group is consistent with the ordinary and usual course of business of the Group and the entering into of the Acquisition Agreement is in the interests of the Company and the Independent Shareholders as a whole. Accordingly, we advise the Independent Shareholders and 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 Acquisition Agreement and the transaction contemplated thereunder.

Yours faithfully, For and on behalf of

Haitong International Capital Limited Derek C.O. Chan Terry Chu Managing Director Executive Director

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GENERAL INFORMATION

APPENDIX

1. RESPONSIBILITY STATEMENT

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

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 interests
		Number of	to issued
Name of Directors	Capacity	Shares	Shares
Mr. Yang	Interest in controlled	641,602,563	35.98%
	corporations	(Notes 1 & 2)
Mr. Xu	Interest in controlled	641,602,563	35.98%
	corporations	(Notes 1 & 3)

Note:

(1) Of the 641,602,563 Shares, 564,102,563 Shares were held by Sureplan which is 50% owned indirectly by Mr. Yang and 25% owned indirectly by Mr. Xu. Mr. Yang and Mr. Xu are deemed to be interested in Sureplan’s interest in the Company under the SFO. Mr. Yang and Mr. Xu are directors of Sureplan.
(2) Of the 641,602,563 Shares, 77,500,000 Shares were held by Profit Channel which is wholly owned by Mr. Yang. Mr. Yang is deemed to be interested in Profit Channel’s interest in the Company under the SFO.
(3) Of the 641,602,563 Shares, 77,500,000 Shares were held by Extra Benefit which is wholly owned by Mr. Xu. Mr. Xu is deemed to be interested in Extra Benefit’s interest in the Company under the SFO.

– 26 –

APPENDIX

GENERAL INFORMATION

Save as disclosed above, as at the Latest Practicable Date, none of the Directors and the 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 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
			percentage of
		Number of	total issued
Shareholder	Capacity	Shares held	share capital
Hensil Investments	Beneficial owner	605,290,886	33.94%
Foshan Overseas	Interest in a	605,290,886	33.94%
	controlled	(Note 1)
	corporation
Foshan Public Utilities	Interest in controlled	605,290,886	33.94%
	corporations	(Note 1)
Sureplan	Beneficial owner	564,102,563	31.63%
Extra Benefit	Beneficial owner	641,602,563	35.98%
	and interest in a	(Note 2)
	controlled
	corporation

– 27 –

GENERAL INFORMATION

APPENDIX

			Approximate
			percentage of
		Number of	total issued
Shareholder	Capacity	Shares held	share capital
Profit Channel	Beneficial owner	641,602,563	35.98%
	and interest in a	(Note 2)
	controlled
	corporation
First Linkup Development	Interest in a	564,102,563	31.63%
Limited	controlled	(Note 2)
	corporation
Mr. Wu Chiu Kong	Interest in a	564,102,563	31.63%
	controlled	(Note 2)
	corporation

Notes:

(1) The 605,290,886 Shares are held by Hensil Investments, which is wholly owned by Foshan Overseas. By virtue of its interest in Hensil Investments, Foshan Overseas is deemed to be interested in such 605,290,886 Shares held by Hensil Investments. As Foshan Overseas is wholly owned by Foshan Public Utilities, Foshan Public Utilities is deemed to be interested in such 605,290,886 Shares held by Hensil Investments.
(2) 564,102,563 Shares are held by Sureplan. Sureplan is owned as to 25% by First Linkup Development Limited, 25% by Extra Benefit and 50% by Profit Channel 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 (excluding contracts expiring or determinable by the employer within one year without payment of compensation (other than statutory compensation)).

4. DIRECTORS’ INTERESTS IN CONTRACTS

On 10 November 2009, a master supply agreement dated 10 November 2009 entered into between the Company and 佛山市南海醫藥集團有限公司 (Foshan Nanhai Pharmaceutical Group Co. Ltd.*) in relation to the supply of certain pharmaceutical products by the Group

– 28 –

GENERAL INFORMATION

APPENDIX

during the three-year period from 1 January 2010 to 31 December 2012. 佛山市南海醫藥集團有限公司 (Foshan Nanhai Pharmaceutical Group Co. Ltd.*) is owned as to 25.5% by each of Mr. Yang and Mr. Xu who are executive Directors.

As at the Latest Practicable Date, save as disclosed above, 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

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 2009, 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 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 of which is considered to compete or likely to compete with the business of the Group

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

佛山市南海醫藥集團有限公司

佛山市南海醫藥集團有限公司 (a) management of Mr. Yang and shareholders (Foshan Nanhai investment in the Mr. Xu and directors Pharmaceutical Group sectors of Co., Ltd.*) pharmaceuticals, medical equipments, sanitary materials and health food; and

(b) distribution of pharmaceutical products

– 29 –

GENERAL INFORMATION

APPENDIX

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 Group since 31 December 2009, 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
Haitong International Capital	A corporation	licensed	to	carry	out	type	6
Limited	(advising on corporate finance) regulated					activity
	under the SFO

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 2009, 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 Acquisition Agreement;
(b) the letter of recommendation from the Independent Board Committee, the text of which is set out on page 13 of this circular;
(c) the letter of advice from the Independent Financial Adviser, the text of which is set out on pages 14 to 25 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.

– 30 –

GENERAL INFORMATION

APPENDIX

10. GENERAL

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

– 31 –

NOTICE OF EGM

==> picture [252 x 36] intentionally omitted <==

(Incorporated in Hong Kong with limited liability)

(Stock Code: 570)

NOTICE OF EXTRAORDINARY GENERAL MEETING

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 Friday, 24 December 2010 at 10:00 a.m. for the purpose of considering and, if thought fit, passing with or without amendments, the following resolution as an ordinary resolution:

ORDINARY RESOLUTION

“ THAT the equity transfer agreement dated 22 November 2010 entered into between 廣東環球制藥有限公司 (Guangdong Medi-world Pharmaceutical Co., Ltd.) (the “ Purchaser ”) and Ms. TAN Zhen（譚珍小姐）(the “ Vendor ”) in relation to the proposed acquisition by the Purchaser of the Vendor’s 95.57% equity interest in 佛山仲弘有限公司 (Foshan Zhong Hong Co., Ltd.) (the “ Acquisition Agreement ”, copy of which is produced to the meeting marked “ A ” and initialed by the Chairman of the meeting for the purpose of identification) at a consideration of RMB120 million, upon the terms and subject to the conditions therein contained, and all the transactions contemplated thereunder be and are hereby approved, confirmed and/or ratified; and that the directors of the Company be and are hereby authorized, for and on behalf of the Company, to do all such acts and things and to sign, seal and execute and deliver all such documents and take all such steps which they may in their discretion consider necessary, desirable or expedient for the implementation of and giving effect to the Acquisition Agreement and the transactions contemplated thereunder as they may in their discretion consider to be desirable and in the interests of the Company.”

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

Hong Kong, 8 December 2010

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.

* For identification purpose only

– 32 –

NOTICE OF EGM

(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, the votes at the meeting will be taken by poll.

– 33 –

AI assistant

SPT Energy Group Inc. — Proxy Solicitation & Information Statement 2010

49801_rns_2010-12-07_c51ea62e-33c8-46e8-8625-ce0a14082d2e.pdf

DISCLOSEABLE AND CONNECTED TRANSACTION IN RELATION TO ACQUISITION OF EQUITY INTEREST IN FOSHAN ZHONG HONG CO., LTD.

Haitong International Capital Limited

CONTENTS

DEFINITIONS

DEFINITIONS

DEFINITIONS

Independent Non-Executive Directors:

To the Shareholders

DISCLOSEABLE AND CONNECTED TRANSACTION IN RELATION TO ACQUISITION OF EQUITY INTEREST IN FOSHAN ZHONG HONG CO., LTD.

INTRODUCTION

LETTER FROM THE BOARD

THE ACQUISITION AGREEMENT

Date

Parties

Assets to be acquired

Consideration

Option in respect of the Remaining Minority Interest

Conditions precedent

Completion

INFORMATION ON THE TARGET COMPANY AND FLX

The Target Company

FLX

LETTER FROM THE BOARD

REASONS FOR THE ACQUISITION

LISTING RULES IMPLICATIONS ON THE ACQUISITION

EGM

INDEPENDENT BOARD COMMITTEE AND INDEPENDENT FINANCIAL ADVISER

RECOMMENDATION

ADDITIONAL INFORMATION

DISCLOSEABLE AND CONNECTED TRANSACTION IN RELATION TO ACQUISITION OF EQUITY INTEREST IN FOSHAN ZHONG HONG CO., LTD.

DISCLOSEABLE AND CONNECTED TRANSACTION IN RELATION TO ACQUISITION OF EQUITY INTEREST IN FOSHAN ZHONG HONG CO., LTD.

INTRODUCTION

BASIS OF OUR OPINION

PRINCIPAL FACTORS AND REASONS CONSIDERED

1 Background to and reasons for entering into the Acquisition Agreement

1.1 Background information

1.1.1 Information on the Group

1.1.2 Information of the Target Company and FLX

The Target Company

FLX

1.2 Reasons for and benefits of the Acquisition

2 Principal terms of the Acquisition Agreement

2.1 Consideration for the Acquisition

2.2 Option in respect of the Remaining Minority Interest

2.3 Settlement and funding method of the Consideration

3 Financial effects of the Acquisition on the Group

3.1 Net assets value

3.2 Earnings

3.3 Cash position

3.4 Gearing

RECOMMENDATION

1. RESPONSIBILITY STATEMENT

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

APPENDIX

GENERAL INFORMATION

Interests of substantial Shareholders

The Company

3. DIRECTORS’ SERVICE CONTRACTS

4. DIRECTORS’ INTERESTS IN CONTRACTS

5. DIRECTORS’ INTERESTS IN ASSETS OF THE GROUP

6. DIRECTORS’ INTERESTS IN COMPETING BUSINESS

7. MATERIAL ADVERSE CHANGE

8. EXPERT AND CONSENT

9. DOCUMENTS AVAILABLE FOR INSPECTION

10. GENERAL

NOTICE OF EXTRAORDINARY GENERAL MEETING

ORDINARY RESOLUTION

NOTICE OF EGM

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SPT Energy Group Inc. Proxy Solicitation & Information Statement 2010