SPT Energy Group Inc. — Proxy Solicitation & Information Statement 2018

Apr 9, 2018

THE CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your shares in China Traditional Chinese Medicine Holdings Co. Limited, you should at once hand this circular with the enclosed form of proxy to the purchaser or transferee or to the bank, licensed securities dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser or the transferee.

This circular is for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for the securities of China Traditional Chinese Medicine Holdings Co. Limited.

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.

CHINA TRADITIONAL CHINESE MEDICINE HOLDINGS CO. LIMITED 中國中藥控股有限公司

(Incorporated in Hong Kong with limited liability)

(Stock Code: 570)

(1) SUBSCRIPTION OF NEW SHARES BY PING AN LIFE INSURANCE COMPANY OF CHINA, LTD. UNDER SPECIFIC MANDATE;

(2) RE-ELECTION OF A NON-EXECUTIVE DIRECTOR; AND

(3) NOTICE OF EXTRAORDINARY GENERAL MEETING

Financial adviser to China Traditional Chinese Medicine Holdings Co. Limited

A notice convening the extraordinary general meeting (the “ EGM ”) of China Traditional Chinese Medicine Holdings Co. Limited (the “ Company ”) to be held at Conference Room, 2nd Floor, No. 1 Keyuan Heng 4 Road, Gaoli Hi-Tech Park, Ronggui, Shunde District, Foshan City, Guangdong Province, the PRC on Monday, 30 April 2018 at 2:00 p.m. or any adjournment thereof is set out on pages EGM-1 to EGM-2 of this circular. A form of proxy is enclosed with this circular. Whether or not you are able to attend the EGM, you are requested to complete and return the enclosed form of proxy in accordance with the instructions printed thereon to the Company’s registered office at Room 1601, Emperor Group Centre, 288 Hennessy Road, Wanchai, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for holding the EGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM or any adjournment thereof, should you so wish.

10 April 2018

CONTENTS

	Page
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM THE BOARD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
NOTICE OF THE EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	EGM-1

– i –

DEFINITIONS

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

• “Announcement” the announcement of the Company dated 19 March 2018 in relation to the entering into of the Subscription Agreement between the Company and the Subscriber in relation to the Subscription

• “Articles of Association” the existing articles of association of the Company

• “associate(s)” has the meaning ascribed thereto in the Listing Rules

• “Board” the board of Directors

• “Business Day(s)” a day(s) on which banks are open for business in Hong Kong (excluding Saturdays, Sundays and public holidays)

• “Company” China Traditional Chinese Medicine Holdings Co. Limited 中國中藥控股有限公司, a company incorporated in Hong Kong with limited liability, the issued Shares of which are listed on the Main Board of the Stock Exchange (stock code: 570)

• “Companies Ordinance” Companies Ordinance (Chapter 622 of the Laws of Hong Kong)

• “Completion” completion of the Subscription pursuant to the Subscription Agreement

• “connected person(s)” has the meaning ascribed thereto in the Listing Rules

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

• “EGM”

• the extraordinary general meeting of the Company to be convened and held for the purpose of considering and, if thought fit, approving the Specific Mandate and the re-election of a non-executive Director

• “Group” the Company and its subsidiaries

• “Hong Kong”

• Hong Kong Special Administrative Region of the PRC

• “Issue Price”

• the issue price of HK$4.43 per Subscription Share

• “Latest Practicable Date”

• 6 April 2018, being the latest practicable date prior to the printing of this circular for asserting certain information for inclusion in this circular

– 1 –

DEFINITIONS

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

• “Ping An” Ping An Insurance (Group) Company of China, Ltd., a joint stock limited company duly incorporated in the PRC with limited liability, the A shares of which are listed on Shanghai Stock Exchange (stock code: 601318) and the H shares of which are listed on the Stock Exchange (stock code: 2318)

• “Ping An Asset Management” Ping An of China Asset Management (Hong Kong) Company Limited, a company incorporated in Hong Kong with limited liability, a subsidiary of Ping An and the investment manager appointed by the Subscriber

• “Ping An Group” Ping An and its subsidiaries

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

• “Share(s)” ordinary share(s) in the share capital of the Company

• “Shareholder(s)” the holder(s) of the Share(s) “Specific Mandate” the specific mandate for the allotment and issue of the Subscription Shares to the Subscriber to be sought from the Shareholders at the EGM

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

• “Subscriber” Ping An Life Insurance Company of China, Ltd., a company incorporated in the PRC with limited liability and a subsidiary of Ping An

• “Subscription” subscription of the Subscription Shares by the Subscriber pursuant to the Subscription Agreement

• “Subscription Agreement” the agreement dated 19 March 2018 entered into between the Company and the Subscriber in respect of the Subscription

• “Subscription Share(s)” 604,296,222 new Shares to be issued by the Company to the Subscriber pursuant to the Subscription Agreement

– 2 –

DEFINITIONS

“Takeovers	Code”	The Hong Kong Code on Takeovers and Mergers
“TCM”		traditional Chinese medicine
“HK$”		Hong Kong dollars, the lawful currency of Hong Kong
“RMB”		Renminbi, the lawful currency of the PRC
“%”		per cent.

For illustration purpose only, amounts in RMB in this circular have been translated into HK$ at the rate of RMB1 = HK$1.23. No representation is made that any amounts in HK$ and RMB have been or could be converted at the above rate or at any other rates or at all.

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LETTER FROM THE BOARD

CHINA TRADITIONAL CHINESE MEDICINE HOLDINGS CO. LIMITED 中國中藥控股有限公司

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

Executive Directors: Mr. WU Xian (Chairman) Mr. WANG Xiaochun (Managing Director) Mr. ZHAO Dongji Ms. HUANG He

Registered office: Room 1601 Emperor Group Centre 288 Hennessy Road Wanchai Hong Kong

Non-executive Directors:

Mr. LIU Cunzhou Mr. YANG Shanhua Ms. TANG Hua

Independent non-executive Directors:

Mr. ZHOU Bajun Mr. XIE Rong Mr. YU Tze Shan Hailson Mr. LO Wing Yat

10 April 2018

To the Shareholders

Dear Sir or Madam,

SUBSCRIPTION OF NEW SHARES BY PING AN LIFE INSURANCE COMPANY OF CHINA, LTD. UNDER SPECIFIC MANDATE AND RE-ELECTION OF A NON-EXECUTIVE DIRECTOR

INTRODUCTION

Reference is made to the Announcement in relation to the entering into of the Subscription Agreement between the Company and the Subscriber in relation to the Subscription. The Subscription Shares will be issued under the Specific Mandate to be sought from the Shareholders at the EGM.

– 4 –

LETTER FROM THE BOARD

Reference is also made to the announcement dated 28 March 2018 in relation to the change of directors. Mr. YANG Shanhua (“ Mr. YANG ”) was appointed as a non-executive Director with effect from 28 March 2018 to fill a casual vacancy of the Board. In accordance with Article 92 of the Articles of Association, Mr. YANG shall hold office only until the EGM and shall then be eligible for re-eleciton at the EGM.

The purpose of this circular is to provide you with, among other things, (i) further details of the Subscription; (ii) details of the re-election of Mr. YANG as a non-executive Director; (iii) the notice of the EGM; and (iv) other information as required under the Listing Rules.

SUBSCRIPTION AGREEMENT

Date

19 March 2018

Parties

• (i) The Company, as issuer; and

• (ii) Ping An Life Insurance Company of China, Ltd., as subscriber.

The Subscriber is one of the leading comprehensive financial service providers in the PRC.

To the best of the Directors’ knowledge, information and belief, having made all reasonable enquiries, (i) the Subscriber, Ping An Asset Management and their respective ultimate beneficial owner(s) are third parties independent of the Company and its connected persons; and (ii) neither the Subscriber nor Ping An Asset Management holds any Shares as at the Latest Practicable Date.

The Subscription

Pursuant to the Subscription Agreement, the Company has conditionally agreed to allot and issue, and the Subscriber has conditionally agreed to subscribe for, 604,296,222 Subscription Shares at the total subscription price of HK$2,677,032,265, equivalent to the Issue Price of HK$4.43 per Subscription Share. The total subscription price shall be payable in cash by the Subscriber to the Company at Completion.

The Subscription Shares

The 604,296,222 Subscription Shares represent:

• (i) approximately 13.64% of the total number of issued Shares as at the Latest Practicable Date; and

• (ii) approximately 12.00% of the total number of issued Shares as enlarged by the allotment and issue of the Subscription Shares (assuming there will not be any changes in the total number of issued Shares other than the issue of the Subscription Shares prior to Completion).

The Subscription Shares shall rank pari passu in all respects among themselves and with all other Shares in issue as at the date of allotment and issue of the Subscription Shares.

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LETTER FROM THE BOARD

Application will be made by the Company to the Stock Exchange for the listing of, and permission to deal in, the Subscription Shares.

The Issue Price

The Issue Price of HK$4.43 per Subscription Share was determined after arm’s length negotiations between the Company and the Subscriber with reference to, among other things, the recent market price of the Shares and having taken into account the unaudited consolidated net asset value per Share as at 30 June 2017.

It represents:

• (i) a discount of approximately 19.89% to the closing price of HK$5.53 per Share as quoted on the Stock Exchange on 15 March 2018, being the last trading day on which the Shares were traded on the Stock Exchange prior to the date of the Subscription Agreement (the “ Last Trading Day ”);

• (ii) a discount of approximately 17.20% to the average of the closing prices per Share as quoted on the Stock Exchange for the last five consecutive trading days up to and including the Last Trading Day of HK$5.35;

• (iii) a discount of approximately 9.03% to the average of the closing prices per Share as quoted on the Stock Exchange for the last 30 consecutive trading days up to and including the Last Trading Day of approximately HK$4.87 (the “ 30-day Average Price ”);

• (iv) a discount of approximately 29.79% to the closing price of HK$6.31 per Share as quoted on the Stock Exchange on the Latest Practicable Date;

• (v) a premium of approximately 32.63% over the unaudited consolidated net asset value per Share attributable to the Shareholders as at 30 June 2017 of approximately HK$3.34 (based on the unaudited consolidated net asset value of the Group attributable to the Shareholders as at 30 June 2017 of approximately RMB12,050 million (equivalent to approximately HK$14,822 million) and 4,431,505,630 Shares in issue as at the Latest Practicable Date); and

• (vi) a premium of approximately 28.41% over the audited consolidated net asset value per Share attributable to the Shareholders as at 31 December 2017 of approximately HK$3.45 (based on the audited consolidated net asset value of the Group attributable to the Shareholders as at 31 December 2017 of approximately RMB12,437 million (equivalent to approximately HK$15,298 million) and 4,431,505,630 Shares in issue as at the Latest Practicable Date).

Having considered that (i) the Subscription will help to establish a long-term strategic partnership with Ping An Group which is expected to bring about significant synergies and benefits to the Group as described in the paragraph headed “Reasons for and benefits of the Subscription and use of proceeds” below; and (ii) the Subscription shall enhance the net asset value per Share given that the Issue Price is at a premium over the net asset value per

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LETTER FROM THE BOARD

Share attributable to the Shareholders as at 30 June 2017 and 31 December 2017 as shown above, the Directors are of the view that the respective discounts of approximately 19.89% and 9.03% to the closing price of the Share on the Last Trading Day and the 30-day Average Price are acceptable and therefore the Issue Price is fair and reasonable.

Conditions precedent

Completion is conditional upon the fulfilment or waiver (as the case may be) of the following conditions (the “ Condition(s) ”):

• (i) the passing of an ordinary resolution by the Shareholders at the EGM to approve the grant of the Specific Mandate to the Board to allot and issue the Subscription Shares;

• (ii) the Listing Committee of the Stock Exchange granting approval for the listing of, and the permission to deal in, the Subscription Shares and such approval not having been revoked;

• (iii) the warranties, representations and undertakings given by the Company in the Subscription Agreement remaining true and accurate and not misleading in all material respects on the date of Completion;

• (iv) the warranties, representations and undertakings given by the Subscriber in the Subscription Agreement remaining true and accurate and not misleading in all material respects on the date of Completion; and

• (v) all recordals, consents, authorisations, waivers, qualifications and approvals required by any of the governmental authority (including China Insurance Regulatory Commission and National Development and Reform Commission) in connection with the Subscriber’s and the Company’s respective execution, delivery and performance of the Subscription Agreement having been obtained and such consents and approvals have not been revoked.

The Subscriber can waive by notice in writing to the Company Condition (iii) above and the Company can waive by notice in writing to the Subscriber Condition (iv) above.

As at the Latest Practicable Date, none of the Conditions have been fulfilled or waived.

If the Conditions are not fulfilled or waived (as the case may be) on or before 4:00 p.m. on 30 June 2018 (the “ Long Stop Date ”), each of the Subscriber and the Company shall have the right to terminate the Subscription Agreement by notice to the other party unless the Subscriber and the Company have mutually agreed to extend the Long Stop Date, whereupon all rights and obligations of the parties shall cease to have effect except in respect of any accrued rights and obligations of the parties.

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LETTER FROM THE BOARD

Completion

Completion shall take place on the fifth Business Day following satisfaction or waiver (as the case may be) of the Conditions (except for such Condition that will not be satisfied until Completion) or such other date as the Company and the Subscriber may agree.

Restrictions on the Subscriber

The Subscriber agrees that, without the prior written consent of the Company:

• (i) it will not, and will ensure that none of its associates will, acquire, offer or propose to acquire or agree to acquire legal title to or beneficial ownership of any Share as a result of which the aggregate number of Shares legally or beneficially owned by the Subscriber along with its associates shall exceed 12% of the total number of Shares issued and outstanding, save where such excess is a result of any share buy-back by the Company;

• (ii) it will not enter into any agreement or understanding (whether formal or informal) with any other Shareholder to obtain or consolidate control (as such term is defined in the Takeovers Code) in the Company; and

• (iii) save for any on-market sale of the Subscription Shares through the Stock Exchange, it will not transfer 50% or more of its shareholding in the Company to any person and/or such person’s associates unless such person and/or such person’s associates shall undertake to the Company to comply with the restriction provided in (ii) above on the same terms and conditions as they would apply to the Subscriber.

Nomination right

The Company agrees that, as long as the total number of Shares held by the Subscriber and its associates collectively is equal to or exceeds 5% of the total number of Shares in issue and outstanding, the Subscriber shall be entitled to nominate one candidate with such appropriate qualification and experience to serve as a member of the Board to be appointed as a non-executive Director (the “ Nomination Right ”). For the avoidance of doubt, the Nomination Right is not one-off and shall remain enforceable for so long as the aggregate shareholding of the Subscriber and its associates in the Company is equal to or exceeds 5% of the total number of Shares in issue.

The appointment of the Director nominated by the Subscriber will be carried out in accordance with the Articles of Association and the Company’s other internal procedures, including but not limited to consideration by the nomination committee and remuneration committee of the Board and approval by the Board. In accordance with the Articles of Association, the Director so appointed shall hold office only until the next following general meeting of the Company (in the case of filling a casual vacancy) or until the next following annual general meeting of the Company (in the case of an addition to the existing Board), and shall then be eligible for re-election.

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LETTER FROM THE BOARD

The power of a Shareholder to nominate Director(s) is provided in the Companies Ordinance. Pursuant to section 566 of the Companies Ordinance, shareholders representing at least 5% of the total voting rights of a company are entitled to request the directors to call a general meeting and put forward a proposal for consideration at a general meeting of the company, including but not limited to, the appointment of director(s). The appointment of such director(s) is subject to the approval of the shareholders at a general meeting of the company. Accordingly, the Subscriber will be entitled under the Companies Ordinance to put forward a proposal to appoint Director(s) for consideration at a general meeting of the Company for so long as its shareholdings in the Company represents 5% or more of the total voting rights of the Company.

The granting of the Nomination Right is a result of arm’s length negotiation between the Company and the Subscriber during the course of negotiating the terms of the Subscription Agreement. Given that the nomination right conferred in the Companies Ordinance is in substance no different from the Nomination Right granted under the Subscription Agreement, the Directors considered that the Nomination Right does not constitute a special right and is in compliance with Rule 2.03(4) of the Listing Rules.

The Subscriber intends to nominate Mr. KUI Kaipin (“ Mr. KUI ”) as a non-executive Director upon Completion. The biographical details of Mr. KUI are set out below:

Mr. KUI Kaipin, aged 33, graduated from the School of International Liberal Studies of Waseda University with a bachelor’s degree in International Liberal Studies in 2008. He obtained a master’s degree in International Relation from the Graduate School of Asia-Pacific Studies of Waseda University in 2010. Mr. KUI joined Ping An in 2012 and has served various positions in the Ping An Group. He is currently a managing director of the private equity department of China Ping An Insurance Overseas (Holdings) Limited responsible for overseas private equity investments and strategic investments. He is also a director of Ping An Japan Investment Co., Ltd. managing Ping An Group’s investments in Japan.

Further announcement will be made by the Company when the appointment of Mr. KUI as a non-executive Director becomes effective and he will be subject to re-election at the next following annual general meeting of the Company.

Termination

The Subscription Agreement shall remain in full force and effect unless and until terminated by the Subscriber if before Completion:

• (i) an event of material adverse effect has occurred, and the Company has not cured such material adverse effect to the satisfaction of the Subscriber within the earlier of ten Business Days following delivery of notice to the Company by the Subscriber and Completion; or

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LETTER FROM THE BOARD

• (ii) there has, in the Subscriber’s opinion, been a material breach of the warranties, representations and undertakings given by the Company in the Subscription Agreement, and the Company has not cured such breach to the satisfaction of the Subscriber within the earlier of ten Business Days following delivery of a notice to the Company by the Subscriber and Completion.

SHAREHOLDING STRUCTURE OF THE COMPANY

The table below illustrates the shareholding structure of the Company (i) as at the Latest Practicable Date; and (ii) immediately after Completion (assuming there will not be any changes in the total number of issued Shares other than the issue of the Subscription Shares prior to Completion).

Sinopharm Group Hongkong Co., Ltd. (Note 1) Hanmax Investment Limited (Note 2) The Subscriber Public Shareholders	As at the Latest Practicable Date Number of Shares held Approximate % of total Shares in issue 1,614,313,642 36.43 376,735,042 8.50 – – 2,440,456,946 55.07 4,431,505,630 100.00	Immediately after Completion Number of Shares held Approximate % of total Shares in issue 1,614,313,642 32.06 376,735,042 7.48 604,296,222 12.00 2,440,456,946 48.46 5,035,801,852 100.00	Immediately after Completion Number of Shares held Approximate % of total Shares in issue 1,614,313,642 32.06 376,735,042 7.48 604,296,222 12.00 2,440,456,946 48.46 5,035,801,852 100.00
			100.00

Notes:

1. Sinopharm Group Hongkong Co., Ltd. is indirectly and wholly owned by China National Pharmaceutical Group Corporation, a state-owned enterprise established in the PRC.

2. Hanmax Investment Limited is wholly owned by Mr. WANG Xiaochun, an executive Director.

EQUITY FUND RAISING ACTIVITIES OVER THE PAST 12 MONTHS

The Company has not conducted any equity fund raising activities in the 12 months immediately preceding the date of the Announcement and up to the Latest Practicable Date.

REASONS FOR AND BENEFITS OF THE SUBSCRIPTION AND USE OF PROCEEDS

The Group is a leading TCM enterprise in the PRC and is principally engaged in the manufacture and sale of TCM and pharmaceutical products with a focus on concentrated TCM granules, TCM finished drugs and TCM decoction pieces. In order to enhance competitiveness and maintain rapid growth, it is the strategy of the Group to expand the geographical coverage of its TCM business to the whole country and consolidate the entire TCM industry chain.

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LETTER FROM THE BOARD

Ping An Group possesses excellent brand awareness, strong financial strength, diversified sale channels and network resources across the nation. It has made a number of successful investments in the pharmaceutical and healthcare industries in recent years, covering areas such as biomedical engineering and pharmaceutical and healthcare services, and therefore has an in-depth understanding in the pharmaceutical and healthcare industries.

The Group intends to, through the Subscription, introduce Ping An Group as a long-term strategic partner, which will help to bring together the Group’s expertise in the TCM medicinal herbs, decoction pieces, concentrated TCM granules and finished drugs businesses, and Ping An Group’s customer base, sales network, and technology, platform and resources advantages in the pharmaceutical and healthcare sector for developing the TCM business. In particular, it is the Group’s intention to explore and promote strategic cooperation in TCM-related businesses with Ping An Group through a joint venture being established by Ping An Group and Tsumura & Co. (a Japanese leading Kampo medicine manufacturer) as the primary strategic partner, which is expected to bring the global advanced research and development and production technology in the TCM industry to the Group, create synergies and further enhance the value of the Company.

The gross proceeds from the Subscription will be approximately HK$2,677 million. Taking into account the estimated expenses incidental to the Subscription of approximately HK$3 million to be borne by the Company, the net proceeds from the Subscription is expected to be approximately HK$2,674 million and the net Issue Price is expected to be approximately HK$4.43 per Subscription Share. The Company intends to apply the net proceeds from the Subscription as to (i) approximately HK$1,500 million for the nationwide expansion of coverage of its TCM decoction pieces and concentrated TCM granules businesses in 2018, of which approximately HK$560 million is for the establishment of six TCM industrial parks and TCM intelligent distribution centres in different regions, approximately HK$790 million is for the expansion of production capacity for TCM decoction pieces and concentrated TCM granules, and approximately HK$150 million is for the acquisitions of suitable targets engaged in TCM decoction pieces and concentrated TCM granules businesses; (ii) approximately HK$50 million for the research and establishment of quality standards in concentrated TCM granules in each of 2018 and 2019 in response to the requirements of 《中藥配方顆粒質量控制與標準制定技術要求（徵求意見稿）》 (the “Technical Requirements on Quality Control and Standards Establishment for Concentrated TCM Granules (Draft for Comments)”) issued by the Chinese Pharmacopoeia Commission, and approximately HK$30 million and HK$70 million for the research and development in classical TCM prescription in 2018 and 2019 respectively; (iii) approximately HK$450 million for the repayment of a bank loan which will fall due in October 2018; and (iv) the remaining balance of approximately HK$524 million for the Group’s general working capital, of which approximately HK$300 million is for the settlement of outstanding trade payables, approximately HK$100 million is for the purchase of raw materials and the remaining of approximately HK$124 million is for the payment of other expenses.

Based on the above, the Directors consider that the terms of the Subscription Agreement are fair and reasonable and the Subscription is in the interests of the Company and the Shareholders as a whole.

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LETTER FROM THE BOARD

LISTING RULES IMPLICATIONS

The Subscription Shares will be issued under the Specific Mandate to be sought from the Shareholders at the EGM.

RE-ELECTION OF NON-EXECUTIVE DIRECTOR

Mr. YANG was appointed as a non-executive Director with effect from 28 March 2018 to fill a casual vacancy of the Board. In accordance with Article 92 of the Articles of Association, Mr. YANG shall hold office only until the EGM and shall then be eligible for re-election at the EGM.

The biographical details of Mr. YANG are set out below:

Mr. YANG Shanhua, aged 51, graduated from Southwestern University of Finance and Economics in 1993, with a master degree in accounting major and he obtained a doctoral degree in accounting from Chinese Academy of Fiscal Science in 2005. He is a senior accountant. Mr. YANG was chief financial officer and manager of finance department in Beijing Oriental Yuhong Waterproof Technology Co., Ltd, chief accountant in China National Biotec Group Company Limited, deputy general manager in China National Pharmaceutical Group Corporation, one after another, from June 2000 to May 2017. He is currently the chief accountant of China National Pharmaceutical Group Corporation.

Mr. YANG has entered into an appointment letter with the Company in relation to his appointment as the non-executive Director for an initial term of two years. He is subject to retirement by rotation and re-election in accordance with the Articles of Association. The director’s fee of Mr. YANG was determined with reference to his duties and responsibilities with the Company, the Company’s performance and the prevailing market condition. For the year ending 31 December 2018, it is expected that Mr. YANG will not receive any director’s fee.

As at the Latest Practicable Date, Mr. YANG does not have any relationship with any Directors, senior management, substantial shareholders or controlling shareholders (within the meaning of the Listing Rules) of the Company. Save as disclosed above, Mr. YANG did not hold and had not held any directorship in any listed public companies in the last three years or any other positions with the Company and other members of the Group or other major appointments and professional qualifications. Mr. YANG does not have, and is not deemed to have, any interests in the shares and underlying shares or debentures of the Company (or any of its associated corporation) within the meaning of Part XV of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong).

There is no information relating to Mr. YANG that is required to be disclosed pursuant to Rules 13.51(2)(h) to (v) of the Listing Rules. Save as disclosed above, there is no other matter in relation to the re-election of Mr. YANG as a non-executive Director that needs to be brought to the attention of the Shareholders and the Stock Exchange.

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LETTER FROM THE BOARD

EGM

The EGM will be held at Conference Room, 2nd Floor, No. 1 Keyuan Heng 4 Road, Gaoli Hi-Tech Park, Ronggui, Shunde District, Foshan City, Guangdong Province, the PRC on Monday, 30 April 2018 at 2:00 p.m. for the purpose of considering and, if thought fit, approving the Specific Mandate and the re-election of Mr. YANG as a non-executive Director by way of poll.

To the best of the knowledge, information and belief of the Directors having made all reasonable enquiries, no Shareholder has a material interest in the Subscription and is required to abstain from voting on the resolution approving the Specific Mandate at the EGM.

A notice convening the EGM is set out on pages EGM-1 to EGM-2 of this circular. A form of proxy is enclosed with this circular. Whether or not you are able to attend the EGM, you are requested to complete and return the enclosed form of proxy in accordance with the instructions printed thereon to the Company’s registered office at Room 1601, Emperor Group Centre, 288 Hennessy Road, Wanchai, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for holding the EGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM or any adjournment thereof, should you so wish.

CLOSURE OF REGISTER OF MEMBERS

For determining the entitlement to attend and vote at the EGM, the register of members of the Company will be closed from Wednesday, 25 April 2018 to Monday, 30 April 2018, both dates inclusive, during which period no transfer of Shares will be registered. In order to be eligible to attend and vote at the EGM, unregistered holders of Shares shall ensure that all transfer documents accompanied by the relevant Share certificates must be lodged with the Company’s share registrar and transfer office, Computershare Hong Kong Investor Services Limited, at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong for registration no later than 4:30 p.m. on Tuesday, 24 April 2018.

RECOMMENDATION

The Directors consider that the terms of the Subscription Agreement are fair and reasonable and the Subscription is on normal commercial terms. The Directors also consider that the Subscription and the re-election of Mr. YANG as a non-executive Director are in the interests of the Company and the Shareholders as a whole. Accordingly, the Directors recommend the Shareholders to vote in favour of the resolutions approving the Specific Mandate and the re-election of Mr. YANG as a non-executive Director at the EGM.

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LETTER FROM THE BOARD

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.

By order of the Board China Traditional Chinese Medicine Holdings Co. Limited WU Xian Chairman

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NOTICE OF THE EGM

CHINA TRADITIONAL CHINESE MEDICINE HOLDINGS CO. LIMITED 中國中藥控股有限公司

(Incorporated in Hong Kong with limited liability)

(Stock Code: 570)

NOTICE IS HEREBY GIVEN that an extraordinary general meeting (the “ EGM ”) of China Traditional Chinese Medicine Holdings Co. Limited (the “ Company ”) will be held at Conference Room, 2nd Floor, No. 1 Keyuan Heng 4 Road, Gaoli Hi-Tech Park, Ronggui, Shunde District, Foshan City, Guangdong Province, the PRC, Hong Kong on Monday, 30 April 2018 at 2:00 p.m. for the purpose of considering and, if thought fit, passing with or without amendments, the following resolutions of the Company as ordinary resolutions of the Company:

ORDINARY RESOLUTIONS

1. “ THAT :

2. (a) a subscription agreement dated 19 March 2018 (the “ Subscription Agreement ”) entered into between the Company and Ping An Life Insurance Company of China, Ltd. (the “ Subscriber ”) (a copy of which has been produced to the meeting and marked “A” for the purpose of identification) in respect of the subscription of 604,206,222 new shares of the Company (each a “ Subscription Share ”) at a subscription price of HK$4.43 per Subscription Share and the transactions contemplated thereunder be and are hereby approved, confirmed and ratified;

3. (b) subject to the fulfilment (or waiver, if applicable) of the conditions precedent set out in the Subscription Agreement, the allotment and issue of the Subscription Shares in accordance with the terms and conditions of the Subscription Agreement by the Company to the Subscriber be and are hereby approved;

4. (c) the directors of the Company (the “ Directors ”) be and are hereby granted the specific mandate to exercise the powers of the Company to allot and issue the Subscription Shares (the “ Specific Mandate ”) pursuant to the terms and conditions of the Subscription Agreement, where such Subscription Shares shall rank pari passu in all respects with the ordinary shares of the Company in issue as at the date of the allotment and issue of the Subscription Shares. The Specific Mandate is in addition to, and shall not prejudice nor revoke any general or special mandate(s) which has/have been granted or may from time to time be granted to the Directors prior to the passing of this resolution; and

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NOTICE OF THE EGM

• (d) any one director or the company secretary of the Company be and are hereby authorised for and on behalf of the Company to do all such acts and things and execute all such documents which he/she considers necessary, desirable or expedient for the purpose of, or in connection with, the implementation of and giving effect to the Subscription Agreement and the transactions contemplated thereunder.”

• “ THAT :

Mr. YANG Shanhua be and is hereby re-elected as a non-executive Director of the Company.”

By order of the Board China Traditional Chinese Medicine Holdings Co. Limited WU Xian Chairman

Hong Kong, 10 April 2018

Notes:

1. Any member of the Company entitled to attend and vote at the EGM shall be entitled to appoint another person as his proxy to attend and vote instead of him. A member who is the holder of two or more shares may appoint more than one proxy to represent him and vote on his behalf at the EGM. A proxy need not be a member of the Company.

2. A form of proxy for the EGM is enclosed. The instrument appointing a proxy and the power of attorney or other authority, if any, under which it is signed, or a certified copy of such power or authority, shall be deposited at the Company’s registered office at Room 1601, Emperor Group Centre, 288 Hennessy Road, Wanchai, Hong Kong as soon as possible and in any event no less than 48 hours before the time appointed for holding the EGM.

3. For determining the entitlement to attend and vote at the EGM, the register of members of the Company will be closed from Wednesday, 25 April 2018 to Monday, 30 April 2018, both dates inclusive, during which period no transfer of Shares will be registered. In order to be eligible to attend and vote at the EGM, unregistered holders of Shares shall ensure that all transfer documents accompanied by the relevant Share certificates must be lodged with the Company’s share registrar and transfer office, Computershare Hong Kong Investor Services Limited, at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong for registration no later than 4:30 p.m. on Tuesday, 24 April 2018.

4. If more than one of the joint holders are present at the EGM personally or by proxy, that one of the said persons whose name stands first on the register of members in respect of the relevant share(s) will alone be entitled to vote in respect of the relevant joint holding.

5. Completion and delivery of the form of proxy will not preclude any member of the Company from attending and voting in person at the EGM. In the event that any member of the Company attends the EGM, the form of proxy will be deemed to be revoked.

As at the date of this notice, the board of Directors comprises eleven Directors, of which Mr. WU Xian, Mr. WANG Xiaochun, Mr. ZHAO Dongji and Ms. HUANG He are executive Directors; Mr. LIU Cunzhou, Mr. YANG Shanhua and Ms. TANG Hua are non-executive Directors; and Mr. ZHOU Bajun, Mr. XIE Rong, Mr. YU Tze Shan Hailson and Mr. LO Wing Yat are independent non-executive Directors.

• For identification purpose only

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