Uni-Bio Science Group Limited

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your shares in Uni-Bio Science Group Limited (“ Company ”), you should at once hand this circular together with the enclosed form of proxy to the purchaser or transferee or to the bank, licensed securities dealer or 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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UNI-BIO SCIENCE GROUP LIMITED 聯康生物科技集團有限公司[] (Incorporated in the Cayman Islands with limited liability) (Stock code: 0690)*

DISCLOSEABLE AND CONNECTED TRANSACTIONS – TRANSACTION ARRANGEMENTS AND NOTICE OF EGM

Financial Adviser to the Purchasers

Independent financial adviser to the Independent Board Committee and the Independent Shareholders

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

A letter from the Board is set out on pages 8 to 28 of this circular. A letter from the Independent Board Committee is set out on pages 29 to 30 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 31 to 52 of this circular.

A notice convening the EGM to be held at 10:00 a.m. on Monday, 25 February 2019 at Unit 502, 5/F, No. 20 Science Park East Avenue, Hong Kong Science Park, Shatin, New Territories, Hong Kong is set out on pages EGM-1 to EGM-3 of this circular. If you are not able to attend the meeting in person, you are requested to complete and return the accompanying form of proxy in accordance with the instructions printed thereon and deposit it with the Company’s branch share registrar and transfer office in Hong Kong, Tricor Abacus Limited at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong as soon as practicable but in any event by 10:00 a.m. on Saturday, 23 February 2019 or not less than 48 hours before the time appointed for the holding of the adjourned 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 thereof if you so wish.

8 February 2019

For identification purpose only

CONTENT

	Page
Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
Letter from the Independent Board Committee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	29
Letter from the Independent Financial Adviser. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	31
Appendix I — Valuation reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	I-1
Appendix II — General information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	II-1
Notice of EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	EGM-1

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DEFINITIONS

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

“Acarbose” an oral anti-diabetic drug which belongs to the Alpha-Gucosidase Inhibitors class and used to treat Type II diabetes and is reimbursed under the National Reimbursement Drug List of the PRC “associate” has the meaning ascribed to it in the Listing Rules “Beijing Genetech Pharm” 北京博康健基因科技有限公司 (Beijing Genetech Pharmaceutical Co., Limited*), a limited liability company established in the PRC and an indirect wholly-owned subsidiary of the Company as at the Latest Practicable Date “Beijing Premises” the Group’s production premises registered under the name of Beijing Genetech Pharm situated in Beijing, the PRC, further details are set out in the section headed “Reasons for and benefits of the Transaction Arrangements” in the Letter from the Board of this circular “Board” the board of Directors “Business Day” a day (other than a Saturday, Sunday or public holiday) on which licensed banks in Hong Kong are generally open for business “BVI” the British Virgin Islands

“Company” Uni-Bio Science Group Limited, a company incorporated in the Cayman Islands with limited liability whose Shares are listed on the Main Board of the Stock Exchange (Stock code: 690)
“connected person” has the meaning ascribed to it in the Listing Rules “CMC platform” chemistry, manufacturing and control platform (創新藥研發生產外包平臺), one of the important preclinical phase of drug development process include manufacturing design of active pharmaceutical ingredients (APIs) and drug; setting specifications, release standards, stability procedures and analytical methods of the drug

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DEFINITIONS

“Director(s)”

“Disposal”
“E. coli expression manufacturing technology”
“EGM”
“FC fusion protein technology”
“Figures Up”
“Figures Up Completion”
“Figures Up Consideration”
“Figures Up Disposal”
“Figures Up Sale Shares”
“Figures Up SP Agreement”
“GeneSoft[®] ”

the director(s) of the Company

the Figures Up Disposal and the WTGL Disposal

a production platform within the CMC platform using E.coli as a carrier to make protein-based drugs
the extraordinary general meeting of the Company to be held at 10:00 a.m. on Monday, 25 February 2019 for the purpose of considering and, if thought fit, approving the Transaction Arrangements and the transactions contemplated thereunder, the notice of which is set out on pages EGM-1 to EGM-3
a technology that advances in engineering and design of therapeutic proteins that could help prolong the drug half-life, which in turn allows for longer dosing intervals
Figures Up Trading Limited, a company incorporated in BVI with limited liability and an indirect wholly-owned subsidiary of the Company as at the Latest Practicable Date

completion of the Figures Up Disposal

the aggregate consideration payable by Purchaser A for the Figures Up Sale Shares under the Figures Up SP Agreement
the disposal of the Figures Up Sale Shares by Vendor A to Purchaser A pursuant to the Figures Up SP Agreement
100 shares of US$1.00 each of Figures Up, representing all the issued shares of Figures Up as at the date of the Figures Up SP Agreement and at the Figures Up Completion

the share transfer agreement dated 16 November 2018 entered into between Vendor A and Purchaser A in relation to the Figures Up Disposal

a biological pharmaceutical product of the Group which is a recombinant human epidermal growth factor derivative (also known as rEGF derivative), a prescription biologic drug for ophthalmic wound healing (e.g. corneal ulcer)

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DEFINITIONS

“GeneTime[®] ” a biological pharmaceutical product of the Group which is a recombinant human epidermal growth factor (also known as rEGF), a prescription biologic drug for dermalogical wound healing “GMP” the set of good manufacture practices, including guidelines and regulations in general required in order to conform to guidelines laid down by agencies which control authorisation and licensing for manufacture and sale of food, drug products, and active pharmaceutical products, and different countries may have adopted and legislated for their own GMP

“Group” the Company and its subsidiaries and “member(s) of the Group” shall be construed accordingly
“HK$” Hong Kong dollars, the lawful currency of Hong Kong
“Hong Kong”
the Hong Kong Special Administrative Region of the People’s Republic of China
“Independent Board Committee”
the independent committee of the Board (which comprises all the independent non-executive Directors) established to advise the Independent Shareholders with regard to the Transaction Arrangements and the transactions contemplated thereunder
“Independent Financial Adviser” Amasse Capital Limited, a licensed corporation to carry on Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities under the SFO, for the purpose of advising the Independent Board Committee and the Independent Shareholders as to the Transaction Arrangements and the transactions contemplated thereunder
“Independent Shareholders” Shareholders other than Mr. Leung, Mr. Chen Dawei and Vital Vigour, and those who are involved in or interested in the Transaction Arrangements, and their respective associates
“Independent Third Party”
third party independent of the Company and the connected persons of the Company

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DEFINITIONS

“Latest Practicable Date”
31 January 2019, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained herein
“Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange
“mammalian expression system” a protein production platform within the CMC platform that use eukaryotic cells to product proteins
“Mr. Leung”
Mr. Kingsley Leung, an executive Director and the Chairman of the Board
“PRC”

the People’s Republic of China, which for the purpose of this announcement, excludes Hong Kong, the Macau Special Administrative Region of the People’s Republic of China and Taiwan

“Purchaser A” Greater Bay (R&D) Capital Limited, a company incorporated in BVI with limited liability, being the purchaser named in the Figures Up SP Agreement
“Purchaser B” Greater Bay Capital Limited, a company incorporated in BVI with limited liability, being the purchaser named in the WTGL SP Agreement
“Purchasers” Purchaser A and Purchaser B, and “Purchaser” shall mean either of them as the context may require
“RMB” Renminbi, the lawful currency of the PRC
“SFO”
the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)
“Share(s)”
ordinary shares of HK$0.01 each in the share capital of the Company
“Shareholder(s)” holder(s) of the Shares
“sq.m.” square metres
“Stock Exchange” The Stock Exchange of Hong Kong Limited

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DEFINITIONS

“Taili Beijing”
北京太力生物工程有限公司 (Beijing Taili Biotech Co., Limited*), a limited liability company established in the PRC and an indirect wholly-owned subsidiary of the Company
“Taili Beijing Transfer Agreement” the equity transfer agreement dated 16 November 2018 entered into between Taili Dongguan and Beijing Genetech Pharm, further particulars of which are set out in the section headed “Figures Up SP Agreement – Taili Beijing Transfer Agreement” in the Letter from the Board in this circular
“Taili Dongguan”
東莞太力生物工程有限公司 (Dongguan Taili Biotech Co., Limited*), a limited liability company established in the PRC and an indirect wholly-owned subsidiary of the Company as at the Latest Practicable Date
“Transaction Arrangements”
the transactions contemplated under the Figures Up SP Agreement and the WTGL SP Agreement
“Uni-E4”
a biological pipeline product developed by the Group which is a class of anti-diabetic treatments called GLP-1 agonists, is a non-insulin treatment candidate that stimulates the incretin pathway for the treatment of Type II diabetes
“Uni-EPO-Fc”
Recombinant Human Eythropoietin-Fc, a biological pipeline product developed by the Group for treatment of anemia associated with renal diseases, cancer related therapies and surgical blood loss
“Uni-PTH”
a biological pipeline product developed by the Group which is an anabolic (bone growing) agent used to treat osteoporosis
“US$”
United States Dollars, the lawful currency of the United States of America
“Vendor A”
Uni-Bio Science Healthcare Limited, a company incorporated in Hong Kong with limited liability and an indirect wholly-owned subsidiary of the Company
“Vendor B”
Zethanel Properties Limited, a company incorporated in BVI with limited liability and an indirect wholly-owned subsidiary of the Company

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DEFINITIONS

“Vital Vigour”

Vital Vigour Limited, a company incorporated in the Cayman Islands with limited liability and a substantial shareholder of the Company as at the Latest Practicable Date

“WTGL” 深圳市華生元基因工程發展有限公司 (Shenzhen Watsin Genetech Limited*), a limited liability company established in the PRC and an indirect wholly-owned subsidiary of the Company as at the Latest Practicable Date
“WTGL B” a company to be established and separated from WTGL pursuant to the WTGL Split-off
“WTGL Completion” together, the WTGL Land and Property Rights Completion and the WTGL Sale Shares Completion
“WTGL Consideration” the aggregate consideration payable by Purchaser B for the WTGL Land and Property Rights and the WTGL Sale Shares under the WTGL SP Agreement
“WTGL Disposal”
the disposal of the WTGL Land and Property Rights and the WTGL Sale Shares by Vendor B to Purchaser B pursuant to the WTGL SP Agreement

“WTGL Land”

a land parcel located at Nanshan district, Shenzhen, the PRC with a total site area of 8,129 sq.m., registered under the name of WTGL as at the Latest Practicable Date

“WTGL Land and Property Rights”
all the economic rights relating to the land use rights of the WTGL Land and property rights of the buildings constructed on the WTGL Land
“WTGL Land and Property Rights Completion”
completion of the disposal of the WTGL Land and Property Rights pursuant to the WTGL SP Agreement
“WTGL Land Cooperative Development Agreement”
the cooperative development agreement dated 16 November 2018 entered into between WTGL, Vendor B and Purchaser B, further particulars of which are set out in the section headed “WTGL SP Agreement – Transitional arrangement – WTGL Land Cooperative Development Agreement” in the Letter from the Board in this circular

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DEFINITIONS

“WTGL Sale Shares”

all the equity interest in WTGL B as at the date of the WTGL Sale Shares Completion

“WTGL Sale Shares Completion” completion of the disposal of the WTGL Sale Shares pursuant to the WTGL SP Agreement

“WTGL SP Agreement” the share transfer agreement dated 16 November 2018 entered into between Vendor B and Purchaser B in relation to the WTGL Disposal
“WTGL Split-off” the proposed split-off (分立) to be undertaken by WTGL whereby the assets and liabilities will be taken up by two entities, namely, the surviving WTGL and WTGL B separately
“%” per cent.
For identification purpose only

In this circular, for the purpose of illustration only, the amounts denominated in RMB have been translated into HK$ using the exchange rate of RMB1:HK$1.1256. Such translation should not be construed as a representation that the amounts quoted could have been or could be or will be converted at the stated rate or at any other rates at all.

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LETTER FROM THE BOARD

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聯康生物科技集團有限公司[] (Incorporated in the Cayman Islands with limited liability) (Stock code: 0690)*

Executive Directors: Mr. Kingsley Leung (Chairman) Mr. Chen Dawei (Vice-Chairman)

Non-executive Director:

Ms. Lau Chau In

Registered office: Cricket Square Hutchins Drive P.O. Box 2681 Grand Cayman KY1-1111 Cayman Islands

Independent non-executive Directors:

Mr. Zhao Zhi Gang Mr. Chow Kai Ming Mr. Ren Qimin

Head office and principal place of business in Hong Kong: Unit 502, 5/F No. 20 Science Park East Avenue Hong Kong Science Park Shatin, New Territories Hong Kong

8 February 2019

To the Shareholders

Dear Sir or Madam

DISCLOSEABLE AND CONNECTED TRANSACTIONS – TRANSACTION ARRANGEMENTS

INTRODUCTION

Reference is made to the announcement of the Company dated 16 November 2018 in relation to the Transaction Arrangements and the transactions contemplated thereunder. As disclosed in such announcement, after trading hours 16 November 2018, certain members of the Group entered into the agreements governing the Transaction Arrangements which include the Figures Up SP Agreement and the WTGL SP Agreement.

For identification purpose only

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LETTER FROM THE BOARD

The purpose of this circular is to give you further information regarding, among other things, (i) details of the Transaction Arrangements and the transactions contemplated thereunder and other information as required to be disclosed under the Listing Rules; (ii) the recommendation from the Independent Board Committee to the Independent Shareholders in relation to the Transaction Arrangements and the transactions contemplated thereunder; and (iii) a letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders; and to give you notice of the EGM.

Set out below is a summary of the Transaction Arrangements and the related transactions contemplated thereunder.

FIGURES UP SP AGREEMENT

Date

16 November 2018

Parties

(1) Vendor A, an indirect wholly-owned subsidiary of the Company, as vendor; and
(2) Purchaser A as purchaser.

Assets to be disposed

Purchaser A conditionally agreed to purchase and Vendor A conditionally agreed to sell the Figures Up Sale Shares free from all encumbrances together with all rights now or thereafter attaching thereto, including all dividends or distributions which may be paid, declared or made in respect thereof at any time on or after the Figures Up Completion. The Figures Up Sale Shares represent all the issued shares of Figures Up, an indirect wholly-owned subsidiary of the Company as at the Latest Practicable Date. Please refer to the section headed “Information on the Transaction Arrangements” in this letter below for further information on Figures Up.

Figures Up Consideration

The Figures Up Consideration for the Figures Up Disposal is RMB40,000,000 (equivalent to HK$45,024,000), which shall be settled at the Figures Up Completion.

The Figures Up Consideration was arrived at after arm’s length negotiation between the parties to the Figures Up SP Agreement on normal commercial terms with reference to, among others, (i) the preliminary valuation on the machineries and equipment of Figures Up and its subsidiaries (other than Taili Beijing) (being the principal assets held by Figures Up and its subsidiaries (other than Taili Beijing)) of approximately RMB6.8 million (equivalent to approximately HK$7.7 million) based on the cost approach as at 31 October 2018 prepared by an independent professional valuer; (ii) the adjusted net asset value of Figures Up of

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LETTER FROM THE BOARD

approximately HK$23.9 million, as detailed in the section headed “Information on the Transaction Arrangements” below; and (iii) the reasons as set out in the section headed “Reasons for and benefits of the Transaction Arrangements” below.

A valuation report prepared by the independent professional valuer on the machineries and equipment of Figures Up and its subsidiaries (other than Taili Beijing) with 9 November 2018 as the date of valuation is set out in Part A of Appendix I to this circular.

Conditions precedent to the Figures Up SP Agreement

The Figures Up Completion shall be conditional upon the following conditions precedent:

(1) the entering into of the WTGL SP Agreement and the conditions precedent the WTGL Land and Property Rights Completion having been satisfied in full (or where applicable, waived) (other than the condition precedent relating to the Figures Up SP Agreement having becoming unconditional);
(2) the completion of the Taili Beijing Transfer Agreement having taken place;
(3) the unaudited consolidated cash and bank balances of Figures Up and Taili Dongguan as at the Figures Up Completion not being less than RMB25 million;
(4) the loans owed by Figures Up to the Group having been waived by the relevant member(s) of the Group in full prior to the Figures Up Completion;
(5) the Independent Shareholders having passed the necessary resolution approving the transactions contemplated under the Figures Up SP Agreement and the transactions contemplated thereunder at the EGM;
(6) all such consents, authorisations and approvals (and as the case may be, waivers) as Vendor A, Purchaser A and Figures Up each may require in relation to the completion of the transactions contemplated under the Figures Up SP Agreement having been obtained and if such consent, authorisation and approval is conditional, the acceptance of such condition(s) by Vendor A (or as the case may be, Purchaser A) and that such consents, authorisations and approvals remain in full force as at the Figures Up Completion not having been cancelled; and
(7) the completion of the transactions contemplated under the Figures Up Agreement is not subject to restrictions from any applicable laws and regulations or is prohibited or other prohibited in any manner by including any order, injunction, decree or judgment of any court or other government agency.

Purchaser A may waive the conditions precedent (1) and (4) above by written notice to Vendor A. Save as aforesaid, none of the above conditions precedent is capable of being waived by any party to the Figures Up SP Agreement.

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LETTER FROM THE BOARD

If the conditions precedent above cannot be fulfilled (or waived, where applicable) on or before 31 December 2019, the Figures Up SP Agreement shall terminate (save and except certain provisions, including confidentiality and announcements, notices and governing law) and the obligations of the parties to proceed with the Figures Up Completion shall cease and terminate and no party shall have any claim against or liability to the other party with respect to any matter referred to in the Figures Up SP Agreement save for any antecedent breaches of the Figures Up SP Agreement.

As at the Latest Practicable Date, other than the conditions precedent (2) and (4) above, none of the other above conditions precedent has been fulfilled.

Figures Up Completion

The Figures Up Completion shall take place on the 5th Business Day after the last outstanding condition precedent is fulfilled or waived (or such other date as Purchaser A and Vendor A shall agree in writing).

Taili Beijing Transfer Agreement

Concurrent with the entering into of the Figures Up SP Agreement, Beijing Genetech Pharm and Taili Dongguan entered into the Taili Beijing Transfer Agreement to transfer all the equity interest in Taili Beijing held by Taili Dongguan to Beijing Genetech Pharm at a consideration of RMB100,000, equivalent to the paid-up capital of Taili Beijing. As at the Latest Practicable Date, each of Beijing Genetech Pharm, Taili Dongguan and Taili Beijing is an indirect whollyowned subsidiary of the Company.

The entering into of the Taili Beijing Transfer Agreement relates to an internal restructuring of the Group so as to enable the Group to retain 100% of the equity interest in Taili Beijing in preparation of the Figures Up Disposal. Please refer to the section headed “Information on the Transaction Arrangements” in this letter from the Board for further information on each of Beijing Genetech Pharm, Taili Dongguan and Taili Beijing.

WTGL SP AGREEMENT

Date

16 November 2018

Parties

(1) Vendor B, a wholly-owned subsidiary of Vendor A, as vendor; and
(2) Purchaser B as purchaser.

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LETTER FROM THE BOARD

Assets to be disposed

Purchaser B conditionally agreed to purchase and Vendor B conditionally agreed to sell:

(1) the WTGL Land and Property Rights, representing all the economic rights relating to the land use rights of and property rights of the buildings constructed thereon the WTGL Land, which as at the Latest Practicable Date, is held by WTGL, an indirect wholly-owned subsidiary of the Company; and
(2) the WTGL Sale Shares, representing all the equity interest in WTGL B, a company to be established and separated from WTGL as a result of the WTGL Split-off, which will hold the title of the land use rights of the WTGL Land and property rights of the buildings constructed on the WTGL Land.

Please refer to the section headed “Information on the Transaction Arrangements” in this letter from the Board for further information on the WTGL Land and WTGL.

WTGL Consideration

The WTGL Consideration for the WTGL Disposal is RMB60,000,000 (equivalent to HK$67,536,000), which shall be settled in the following manner:

(1) first phase: as to RMB36,000,000 at the WTGL Land and Property Rights Completion;
(2) second phase: as to RMB12,000,000 on the 5th Business Day after the completion of the WTGL Split-off; or on 31 December 2019 (or if such day is not a Business Day, the immediately preceding Business Day), whichever date is earlier; and
(3) third phase: the remaining RMB12,000,000 at the WTGL Sale Shares Completion; or on 31 December 2019 (or if such day is not a Business Day, the immediately preceding Business Day), whichever date is earlier.

The WTGL Consideration was arrived at after arm’s length negotiation between the parties to the WTGL SP Agreement on normal commercial terms with reference to, among others, (i) the preliminary valuation on the land use rights of and property rights of the buildings constructed thereon the WTGL Land of approximately RMB58.5 million (equivalent to approximately HK$66.3 million) based on the cost approach as at 31 October 2018 prepared by an independent professional valuer and (ii) the reasons as set out in the section headed “Reasons for and benefits of the Transaction Arrangements” below.

A valuation report prepared by an independent professional valuer on the land use rights of and property rights of the buildings constructed thereon the WTGL Land with 9 November 2018 as the date of valuation is set out in Part B of Appendix I to this circular.

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LETTER FROM THE BOARD

Conditions precedent to the WTGL SP Agreement

WTGL Land and Property Rights Completion

The WTGL Land and Property Rights Completion shall be conditional upon the following conditions precedent:

(1) the Independent Shareholders having passed the necessary resolution approving the transactions contemplated under the WTGL SP Agreement and the WTGL Land Cooperative Development Agreement and the transactions contemplated thereunder at the EGM;
(2) all such consents, authorisations and approvals (and as the case may be, waivers) as Vendor B and Purchaser B each may require in relation to the completion of the transactions contemplated under the WTGL SP Agreement having been obtained and if such consent, authorisation and approval is conditional, the acceptance of such condition(s) by Vendor B (or as the case may be, Purchaser B) and that such consents, authorisations and approvals remain in full force as at the WTGL Completion not having been cancelled;
(3) the WTGL Land and Property Rights Completion not being subject to restrictions from any applicable laws and regulations or is prohibited or other prohibited in any manner by including any order, injunction, decree or judgment of any court or other government agency;
(4) all the conditions precedent to the Figures Up SP Agreement having becoming unconditional (or waived, as the case may be) (other than the condition precedent relating the WTGL SP Agreement having becoming unconditional); and
(5) the entering into of the WTGL Land Cooperative Development Agreement.

None of the above conditions precedent is capable of being waived by any party to the WTGL SP Agreement.

If the conditions precedent above cannot be fulfilled on or before 31 December 2019, the WTGL SP Agreement shall terminate (save and except certain provisions, including confidentiality and announcements, notices and governing law) and the obligations of the parties to proceed with the WTGL Land and Property Rights Completion shall cease and terminate and no party shall have any claim against or liability to the other party with respect to any matter referred to in the WTGL SP Agreement save for any antecedent breaches of the WTGL SP Agreement.

As at the Latest Practicable Date, other than the condition precedent (5) above, none of the other above conditions precedent has been fulfilled.

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LETTER FROM THE BOARD

WTGL Sale Shares Completion

The WTGL Sale Shares Completion shall be conditional upon the following conditions precedent:

(1) WTGL having completed the WTGL Split-off and the relevant procedures for business change registration and business filing relating thereto having been completed;
(2) the WTGL Land and Property Rights Completion having taken place in accordance with the WTGL SP Agreement;
(3) the titles of the land use rights of the WTGL Land and property rights of the buildings constructed on the WTGL Land having been transferred to WTGL B and the related land use rights and property rights certificates (or equivalent legal documents) having been issued;
(4) all such consents, authorisations and approvals (and as the case may be, waivers) as Vendor B and Purchaser B each may require in relation to the completion of the transactions contemplated under the WTGL SP Agreement having been obtained and if such consent, authorisation and approval is conditional, the acceptance of such condition(s) by Vendor B (or as the case may be, Purchaser B) and that such consents, authorisations and approvals remain in full force as at the WTGL SP Completion not having been cancelled; and
(5) the WTGL Sale Shares Completion not being subject to restrictions from any applicable laws and regulations or is prohibited or other prohibited in any manner by including any order, injunction, decree or judgment of any court or other government agency.

None of the above conditions precedent is capable of being waived by any party to the WTGL SP Agreement.

If the conditions precedent above cannot be fulfilled on or before 31 December 2019, the WTGL SP Agreement shall terminate (save and except certain provisions, including confidentiality and announcements, notices and governing law) and without prejudice to the WTGL Land and Property Rights Completion having taken place, the obligations of the parties to proceed with the WTGL Sale Shares Completion shall cease and terminate and no party shall have any claim against or liability to the other party with respect to any matter referred to in the WTGL SP Agreement save for any antecedent breaches of the WTGL SP Agreement.

As at the Latest Practicable Date, none of the above conditions precedent has been fulfilled.

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LETTER FROM THE BOARD

WTGL Land and Property Rights Completion

Under the WTGL SP Agreement, unless otherwise agreed by Vendor B and Purchaser B, the WTGL Land and Property Rights Completion shall take place on the same day of the Figures Up Completion.

WTGL Sale Shares Completion

The WTGL Sale Shares Completion shall take place within 18 months after the last outstanding condition precedent to the WTGL Sale Shares Completion is fulfilled (or such other date as Purchaser B and Vendor B shall agree in writing).

Other terms of the WTGL SP Agreement

Under the WTGL SP Agreement, for the period (“ Relevant Period ”) of 12 months following (i) the completion of the WTGL Split-off and the titles of the land use rights of and property rights on the WTGL Land having been transferred to WTGL B; or (ii) the WTGL Land Use and Property Rights Completion (whichever period is longer), Purchaser B has undertaken to Vendor B and WTGL that they shall be entitled to use, free of charge, the WTGL Land and property on the WTGL Land. After the Relevant Period, the parties may enter into a lease agreement for the lease of the WTGL Land in which the rental payable shall not be higher than the prevailing market price (such market price to be determined by an independent property valuer). The Company will comply with all applicable requirements under the Listing Rules in respect of such lease arrangement (if any).

In the event that WTGL or, as the case may be, WTGL B shall relocate from the WTGL Land, Purchaser B shall pay to Vendor B or WTGL an amount to compensate the costs of such relocation incurred by WTGL provided that such amount shall not be less than RMB20,000,000 and not more than RMB30,000,000.

Upon the WTGL Land and Property Rights Completion, it is the intention of the Group to relocate WTGL’s production facilities which are currently located on the WTGL Land to the Group’s Beijing Premises and that the Group has already commenced on the preliminary work including applying for relevant regulatory authorisations and conducting feasibility studies on expanding the Beijing Premises. Based on the management’s current estimation, the Group cannot rule out the possibility that such relocation plans cannot be finalised before the end of the Relevant Period and that the Group may have to consider to lease the property on the WTGL Land to house WTGL’s production facilities. In the event that there will be such lease arrangement after the Relevant Period, the Company will comply with all applicable requirements under the Listing Rules. Based on the assessment of the management, the compensation to be paid by Purchaser B pursuant to the terms of the WTGL SP Agreement as mentioned above is expected to be enough to cover the cost for the proposed relocation plans.

Under the terms of the WTGL SP Agreement, Purchaser B has undertaken and agreed to bear all applicable taxes and fees arising from the WTGL Split-off and the transfer of the WTGL

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LETTER FROM THE BOARD

Sale Shares (including without limitation, the applicable taxes and fees arising from the transfer of the titles of the land use rights of the WTGL Land and property rights of the buildings constructed on the WTGL Land to WTGL B), up to a maximum amount of RMB40,000,000.

Transitional arrangement – WTGL Land Cooperative Development Agreement

At the same time of entering into of the WTGL SP Agreement, WTGL, Vendor B and Purchaser B entered into the WTGL Land Cooperative Development Agreement to govern certain matters in relation to the WTGL Land for the period commencing from the WTGL Land and Property Rights Completion to the WTGL Sale Shares Completion.

Pursuant to the WTGL Land Cooperative Development Agreement, Purchaser B shall be responsible for all the capital investment and costs involved in the development of the WTGL Land (“ WTGL Land Development ”), and without prejudice to the interests of WTGL and Vendor B (including but not limited to WTGL/Vendor B’s right to continue to use the land of the WTGL Land and buildings constructed on the WTGL Land under the WTGL SP Agreement), Purchaser B shall be responsible for all matters and bearing all related expenses, taxes and fees relating to the land use rights of and property on the WTGL Land.

Under the WTGL Land Cooperative Development Agreement, Purchaser B shall, without prejudice to the interests of WTGL and Vendor B (including but not limited to WTGL/Vendor B’s right to continue to use the land of the WTGL Land and buildings constructed on the WTGL Land), assume all obligations, responsibilities and risks related to the WTGL Land Development. WTGL and Vendor B shall act in accordance with the legal and appropriate instructions of Purchaser B in respect of matters relating to the land use rights of and property on the WTGL Land, and that the consequences of the legal acts by other third parties within the scope of the instructions shall be borne by Purchaser B in entirety.

INFORMATION ON THE PURCHASERS

Each of Purchaser A and Purchaser B is a company incorporated in BVI with limited liability which is principally engaged in investment holding. As at the Latest Practicable Date, each of Purchaser A and B is owned by the same group of shareholders in identical shareholdings, in which:

(1) the mother of Mr. Leung, an executive Director and Chairman of the Board, is an indirect 60% shareholder of each of Purchaser A and Purchaser B;
(2) Mr. Chen Dawei, an executive Director, is an indirect 10% shareholder of each of Purchaser A and Purchaser B;
(3) Vital Vigour, a substantial shareholder of the Company, is an associate of an indirect 15% shareholder of each of Purchaser A and Purchaser B; and
(4) each of Mr. Leung, Mr. Chen Dawei, the mother of Mr. Leung and a brother of Mr. Leung is a director of each of Purchaser A and Purchaser B.

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LETTER FROM THE BOARD

Accordingly, each of Purchaser A and Purchaser B is an associate of Mr. Leung and each of Purchaser A and Purchaser B is a connected person of the Company under the Listing Rules.

INFORMATION ON THE TRANSACTION ARRANGEMENTS

At the time of the entering into of the documents governing the Transaction Arrangements and as at the Latest Practicable Date:

(1) Vendor A was principally engaged in investment holding and provision of management services and an indirect wholly-owned subsidiary of the Company;
(2) Figures Up was principally engaged in investment holding and a wholly-owned subsidiary of Vendor A;
(3) Taili Dongguan was principally engaged in research and development of pharmaceutical products and an indirect wholly-owned subsidiary of Figures Up;
(4) Taili Beijing was principally engaged in provision of research services to the pharmaceutical industry and a wholly-owned subsidiary of Taili Dongguan;
(5) Vendor B was principally engaged in investment holding and a wholly-owned subsidiary of Vendor A;
(6) WTGL is principally engaged in manufacture and sales of biological pharmaceutical products and a wholly-owned subsidiary of Vendor B; and
(7) Beijing Genetech Pharm is principally engaged in manufacture and sales of chemical and biological products and an indirect wholly-owned subsidiary of the Company.

A group structure of the above members of the Group at the entering into of the Transaction Arrangements is set out below:

==> picture [387 x 285] intentionally omitted <==

----- Start of picture text -----

The Company
100%
Vendor A
100% 100% 100%
A subsidiary of
Figures Up Vendor B
the Company
100% 100% 100%
Beijing
Taili Dongguan WTGL
Genetech Pharm
100%
Taili Beijing
----- End of picture text -----

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LETTER FROM THE BOARD

Figures Up’s major asset is Taili Dongguan which was established in 2002 in the PRC and principally engaged in research and development of pharmaceutical products, and was recognised as a “Patent Breeding Enterprise (專利培育企業)”, “Patent Pilot Enterprise (專利試點企業)” as well as “National High-tech Enterprise (國家高新技術企業)”. Taili Dongguan owns a laboratory occupying area of over 1,500 sq.m., including (i) a molecular department for developing cell line, (ii) a process department responsible for cells cultivation, fermentation, protein purification and preparation research; and (iii) a quality department responsible for quality management, analysis and testing methods establishment, quality standards formulation of intermediates and key raw materials, and sample determination. Based on molecular construction, small plant, pilot plant, preparation and quality research, a CMC platform has been established to work on new drug design, drug preparation and preclinical research. Taili Dongguan has participated in Phase III clinical trial of Uni-E4 and Uni-PTH and Phase I clinical Trial of Uni-EPO-Fc.

WTGL is principally engaged in manufacturing and selling of biological pharmaceutical products and is the registered holder of the land use rights of the WTGL Land, a land located at Nanshan district, Shenzhen, the PRC with a total site area of 8,129 sq.m. with usage for industrial purposes with the term of 50 years from 5 November 1993. Founded in 1997, as at the Latest Practicable Date WTGL is a biologics GMP manufacturer which produces the Group’s in-house biological pharmaceutical products, GeneTime[®] and GeneSoft[®] . GeneTime[®] and GeneSoft[®] are the major marketed drugs of the Group which contributed revenue in aggregate of approximately HK$87.3 million for the year ended 31 December 2017, details of which please refer to the 2017 annual report and 2018 interim report of the Company. The production facilities of WTGL are currently situated on the WTGL Land. The production equipment and process of the production facilities of WTGL have reached the international level with GMP standard. Since WTGL was founded in 1997, overall investment and capital expenditure made by the Group in WTGL have reached over RMB100 million.

The Group is in the process of implementing the WTGL Split-off whereby the title and land use rights of the WTGL Land and property rights of the buildings constructed on the WTGL Land will be vested in WTGL B and all remaining assets and liabilities, including the production equipment and process of the production facilities and intellectual property rights of the existing WTGL will remain in the surviving WTGL.

Under the Transaction Arrangements, it is contemplated that, among other things:

(1) pursuant to the Taili Beijing Transfer Agreement, Taili Beijing shall remain as a member of the Group and will be wholly owned by Beijing Genetech Pharm; and
(2) the WTGL Land is to be disposed of to Purchaser B by way of the WTGL Disposal – the WTGL Land and Property Rights shall be transferred to Purchaser B, and after the completion of the WTGL Split-off, the titles of the land use rights of the WTGL Land and property rights of the buildings constructed on the WTGL Land shall be transferred to WTGL B and the WTGL Sale Shares shall be transferred to Purchaser B.

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LETTER FROM THE BOARD

Set out below is a summary of certain unaudited combined financial information of Figures Up (excluding the financial information of Taili Beijing for this purpose in which Taili Beijing shall remain to be a member of the Group upon the Figures Up Disposal) for the six months ended 30 June 2018 and the two years ended 31 December 2017 and 2016:

		For the six	For the	For the
		months ended	year ended	year ended
		30 June	31 December	31 December
		2018	2017	2016
		HK$’000	HK$’000	HK$’000
		approximately	approximately	approximately
Loss	before taxation	7,719	204,005	24,794
Loss	after taxation	7,719	204,005	24,794

As Figures Up and its subsidiaries (excluding, for this purpose, Taili Beijing which shall remain to be a member of the Group notwithstanding the Figures Up Disposal) are principally engaged in research and development of pharmaceutical products, it has not recorded any revenue for the two years ended 31 December 2017 and 2016. As at 31 December 2017 and 2016, the total asset value of Figures Up (excluding the financial information of Taili Beijing for this purpose) was approximately HK$34.5 million and HK$88.4 million respectively, and as at 31 December 2017 and 2016, Figures Up has no major liabilities outstanding to third parties.

As at 30 June 2018, the unaudited total asset value of Figures Up (excluding the financial information of Taili Beijing for this purpose) was approximately HK$26.5 million and the adjusted net asset value of Figures Up (excluding the financial information of Taili Beijing for this purpose) was approximately HK$23.9 million. Such adjusted net asset value represents the net liability value as adjusted by (i) the minimum cash and bank balances of Figures Up and Taili Dongguan of RMB25 million (equivalent to approximately HK$28.1 million) to be maintained at the Figures Up Completion as required under the Figures Up SP Agreement; and (ii) the waiver of all the loans owing from Figures Up to Vendor A and such loans amounted to approximately HK$582.1 million as at 30 June 2018.

In determining the Figures Up Consideration, given that Figures Up and its subsidiaries have reported loss-making since it has become a member of the Group and its research and development business requires substantial investment from time to time, the Group has assessed a number of valuation methods in determining the consideration, including net asset value, price to earnings and discounted cash flow. Taking into account the loss-making financial position and foreseeable negative cashflow position of Figures Up, the Group and the Purchasers considered that using net asset value would be the most appropriate valuation method as the price to earnings method does not apply to a loss-making business and discounted cash flow method does not apply in a negative cash flow situation. The research and development business undertaken by Figures Up Group has a relatively asset heavy business model which has negatively affected the profitability of the Group, even when there were positive income generated from the

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LETTER FROM THE BOARD

marketed pharmaceutical products of the Group. This is because of the continuous investment in these pipeline and future projects and their income are remoted. The business risks embedded with the research and development business are much higher and its business performance is less foreseeable as compared with the remaining business of the Company. In this regard, the parties to the Figures Up SP Agreement, when determining the Figures Up Consideration, is of the view that the historical capital investment made by the Company in the projects of Figures Up and its subsidiaries was less relevant to the determination of the consideration and that net asset value would be fair and reasonable.

Set out below is a summary of certain unaudited combined financial information of the assets attributable to the subject matter of the WTGL SP Agreement under the WTGL Disposal (which includes the WTGL Land and property rights of the buildings constructed on the WTGL Land to be vested in WTGL B) for the six months ended 30 June 2018 and the two years ended 31 December 2017 and 2016:

		For the six	For the	For the
		months ended	year ended	year ended
		30 June	31 December	31 December
		2018	2017	2016
		HK$’000	HK$’000	HK$’000
		approximately	approximately	approximately
Loss	before taxation	463	1,852	1,838
Loss	after taxation	463	1,852	1,838

For the two years ended 31 December 2017 and 2016, the revenue attributable to the subject matter of the WTGL SP Agreement under the WTGL Disposal (which includes the WTGL Land and property rights of the buildings constructed on the WTGL Land to be vested in WTGL B) amount to approximately HK$1.9 million and approximately HK$1.8 million respectively, which are rental income received for the lease of two floors of the property to a third party.

As at 30 June 2018, the unaudited total asset value and net asset value of the assets attributable to the subject matter of the WTGL SP Agreement under the WTGL Disposal were approximately HK$27.1 million and HK$27.1 million respectively.

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LETTER FROM THE BOARD

A group structure of the relevant members of the Group upon completion of the Transaction Arrangements is set out below:

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----- Start of picture text -----

The Company
100%
Vendor A
100% 100%
A subsidiary of
Vendor B
the Company
100% 100%
Beijing
WTGL (Note)
Genetech Pharm
100%
Taili Beijing
----- End of picture text -----

Note: the surviving WTGL after the WTGL Split-off and WTGL Sale Shares Completion.

Under the Transaction Arrangements:

(1) pursuant to completion of the transfer under the Taili Beijing Transfer Agreement in preparation for the Figures Up Disposal, Taili Beijing shall be wholly-owned by Beijing Genetech Pharm and remain as a subsidiary of the Company;
(2) upon the Figures Up Completion, each of Figures Up and Taili Dongguan shall cease to be a subsidiary of the Company;
(3) upon the WTGL Land and Property Rights Completion and before completion of the WTGL Split-off, WTGL shall remain to be a subsidiary of the Company but the Group shall cease to account for the economic benefits in respect of the WTGL Land and Property Rights;
(4) after completion of the WTGL Split-off, the assets and liabilities of WTGL will be taken up by two entities, namely, the surviving WTGL and WTGL B separately, and thereafter the titles of the land use rights of the WTGL Land and property rights of the buildings constructed on the WTGL Land will be transferred to WTGL B; and

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LETTER FROM THE BOARD

(5) upon the WTGL Sale Shares Completion, the surviving WTGL will remain to be a subsidiary of the Company and WTGL B shall cease to be a subsidiary of the Company.

REASONS FOR AND BENEFITS OF THE TRANSACTION ARRANGEMENTS

The Group is principally engaged in the manufacture and sales of pharmaceutical products and operates through four segments, namely, (a) In-house Chemical Pharmaceutical Products; (b) In-house Biological Pharmaceutical Products; (c) In-house Biological Pipeline; and (d) Third-party Pharmaceutical Products. The Group’s In-house Chemical Pharmaceutical Products segment is engaged in the manufacture and sales of in-house chemical pharmaceutical products, which include Pinup[®] , among others. The Group’ s In-house Biological Pharmaceutical Products segment is engaged in the manufacture and sales of in-house biological pharmaceutical products, which include GeneTime[®] and GeneSoft[®] , among others. The Group’s In-house Biological Pipeline segment is engaged in the industrialisation of in-house biological pipeline, which biological pipeline products include Uni-E4 and Uni-PTH, among others. The Group’s Third-party Pharmaceutical Products segment is engaged in the sales of third-party pharmaceutical products.

Figures Up is an investment holding company whose major asset is Taili Dongguan, a company established in 2002 in the PRC and principally engaged in research and development of pharmaceutical products. Based on molecular construction, small plant, pilot plant, preparation and quality research, a CMC platform has been established to work on new drug design, drug preparation and preclinical research. In this regard, the research and development business of Figures Up is focused on non-core therapeutic areas, specifically anemia, which is unrelated to the Group’s strategic focus on endocrinology, ophthalmology and dermatology. The manufacturing technology (mammalian expression system) required to commercialised future projects from Figures Up (for example, FC fusion protein technology) is different from that utilised by other subsidiaries of the Group. For example, the manufacturing technology used by the Group in its in-house biological pharmaceutical products and in-house biological pipeline utilises the E. coli expression manufacturing technology.

WTGL is principally engaged in manufacturing and selling of biological pharmaceutical products and is a biologics GMP manufacturer which produces the Group’s in-house biological pharmaceutical products, GeneTime[®] and GeneSoft[®] . The production facilities of WTGL are situated on the WTGL Land, a land located at Nanshan district, Shenzhen, the PRC, of which (the existing) WTGL is the registered holder of the land use rights of the WTGL Land.

Since around mid-2017, the management have been exploring options to unlock the potential value of Group, which included a project mainly to reposition the research and development strategy of Taili Dongguan and a project mainly to expand value of the WTGL Land. At or around May 2018, the Group approached Futec International Holdings Limited, an affiliate of Vital Vigour, a substantial shareholder of the Company holding approximately 17.67% of the issued Shares, to consider feasibility and potential funding of such projects. Based on mutual discussions at the time and considering (i) the then prevailing stock price of

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LETTER FROM THE BOARD

the Shares; (ii) the then loss-making position of the Group; (iii) the potential risks of undertaking such proposed projects; and (iv) the Group’s intention to focus on its manufacturing and sales of pharmaceutical products business, the Group decided that the proposed structure Transaction Arrangements would be the better route forward for the Group and that at the same time, the Disposal will enable the Group to streamline its business operations, rationalise its asset composition and enable it to focus on its core business, which is the manufacturing and sales of pharmaceutical products. The strategic positioning of the Group is to focus on endocrinology, ophthalmology and dermatology, while the Disposal would provide non-dilutive cash in-flow to the Group to support the launch of the Group’s products Uni-E4, Uni-PTH and Acarbose, being the three products of the Group in their final phase of development. Based on the estimation of the Group, the future projects of Figures Up will require at least another 5 to 10 years before commercialisation, in which the Group intends that capital and resources shall be redeployed to other projects for example liquid formulation of pipeline products indicate in osteoporosis and diabetes which is expected to have faster return on investments. Through the Figures Up Disposal and the WTGL Disposal, it is expected that the proceeds therefrom will provide working capital to focus on the development of 2nd Generation Uni-E4 and Uni-PTH projects of the Group, which are expected to commercialise within 5 years based on the current timetables.

With such a plan in mind, between around May 2018 and up to the entering into of the Transaction Arrangements, the Group moved forward in finalising the concrete details of the Transaction Arrangements, including liaising with and engaging the relevant professional parties, obtaining advice and reports on the operability and aspects of required steps to bring the transactions contemplated under the Transaction Arrangements into action. Taking into account the above factors, it is a commercial decision of the parties to ensure the Figures Up Completion to be conditional upon the completion of the WTGL SP Agreement in order not to frustrate the intention of the entire Transaction Arrangements.

Given the scope and the purpose of the Transaction Arrangements, the Group has not approached any potential parties nor any such potential parties have expressed to the Group interest in the proposed structure of the Transaction Arrangements. The parties have discussed on various proposals on the structure of the Transaction Arrangements from time to time and it was not until around end of September 2018 to early October 2018 the working parties have come to the finalised structure of the transactions contemplated under the Transaction Arrangement and in or around mid-October 2018, the Group conducted the first round of discussions with the representatives of the finalised buyers syndicate of the Purchasers on the negotiation of the terms of the agreements regarding the transactions contemplated under the Figures Up SP Agreement and the WTGL SP Agreement, whereby it was until early November 2018, the various relevant agreements came to close to the finalised version and thereafter the relevant parties entered into Figures Up SP Agreement and the WTGL SP Agreement and relevant related agreements under the Transaction Arrangements.

Taking into account the recent macro trends of the capital markets (for example, the ongoing trade war, the tightening of credit and geopolitical uncertainties), to obtain further funds to facilitate the Group’s strategic positioning as described above, fund raising via equity is

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LETTER FROM THE BOARD

considered to be relatively expensive to the current Shareholders. At the same time, banks and financial institutions in China now take a cautious attitude towards commercial loans and as assessed by the management of the Group, availability of funds via loans for companies the business and operations of which are similar to the Group, are limited and most of the operating profit requirement is high, such that fund raising through debt is also not considered to be a cost-effective option of the Group. Taking into account the above, the Group considers that Disposal is in the preferred method to raise further funds for the Group at the current situation in order to provide funding and to enable the Group to focus on its core business. Under terms of the WTGL SP Agreement, upon completion of the WTGL Disposal, the Group will still be entitled to use, free of charge, the land of and property on the WTGL Land for a period 12 months following the completion of the WTGL Split-off and the titles of the land use rights of and property rights on the WTGL Land having been transferred to WTGL B or the WTGL Land Use and Property Rights Completion, whichever period is longer, which the Group intends to continue the manufacturing process of in-house biological pharmaceutical products in the current site on the WTGL Land and allow for more time for relocation preparation work, and in the event that the Group shall relocate from the WTGL Land, Purchaser B shall pay to the Group to compensate the costs of such relocation incurred. As mentioned in the section headed “WTGL SP Agreement – Other terms of the WTGL SP Agreement”, upon completion of the WTGL Disposal, it is the intention of the Group to relocate WTGL’s production facilities currently located on the WTGL Land to the Group’s Beijing Premises. The surviving WTGL (after the WTGL Split-off) will continue to be principally engaged in manufacture and sales of biological pharmaceutical products, which for the time being includes the Group’s in-house biological pharmaceutical products, GeneTime[®] and GeneSoft[®] .

Other than aforementioned proposed relocation of WTGL’s production facilities to the Beijing Premises, the Group will continue to maintain its production facilities for its in-house chemical pharmaceutical products and in-house biological pharmaceutical products in the Beijing Premises. The Beijing Premises is owned by Beijing Genetech Pharm currently with a total floor area of more than 10,000 sq.m. mainly focused on chemical pharmaceutical products and biological pharmaceutical products. The Beijing Premises’ production lines for chemical pharmaceutical products are equipped with tablet and capsule production lines in accordance with GMP standards in which capital expenditure of more than US$4.5 million have been made by the Group since 2007. The Beijing Premises’ production lines for biological pharmaceutical products are equipped with facilities strictly complying with the updated GMP requirements which has a construction area of approximately 1,400 sq.m. with aseptic area for production, and equipped with heating, ventilation, and air conditioning (HVAC) systems, purified water system, water for injections, and steam and compressed air systems in which capital expenditure of more than US$10.9 million have been made by the Group since 2007. The plant has two state-of-art aseptic production lines for injection-form drugs, namely the lyophilized powder injection line and cartridge/pre-filled syringe line. The production line for injection form lyophilized powder is able to produce aseptic biologics with reliable quality at 20 million units annually. For the cartridge/pre-filled syringe line, the Group has introduced 3 ml nested cartridge and 1 ml nested pre-filled syringe mold to enable the production of 3 ml nested cartridge with different filling volume and 1 ml nested pre-filled syringe with different capacity. After the Disposal, it is the strategy of the Group to focus on manufacturing and sale of pharmaceutical products, and

– 24 –

LETTER FROM THE BOARD

industrialisation of Uni-E4 and Uni-PTH. The Group will consider to acquire patents of new pharmaceutical products which can generate sustainable revenue to the Group. The Group considers such arrangement will reduce the business risks of the Group by, among other things, diversifying the product range offered by the Group.

The Directors expect to recognise an unaudited gain of approximately HK$41 million from the Disposal, being the gain from disposal of equity interest of R&D platform and the disposal of land and property. Shareholders should note that the actual amount of gain/loss on the Disposal to be recorded by the Company will be subject to review by the auditors of the Company and depend on the net asset/liability value of Figures Up and WTGL B on the their respective date of completion of disposal. It is expected that the proceeds from the Disposal, after deducting the expenses incurred, will be allocated as to (i) approximately RMB84 million to research and development expenses of the Group’s 2nd Generation (liquid formulation) of Uni-E4 and Uni-PTH projects, further details of such research and development projects are set out in the 2018 interim report of the Company; and (ii) and approximately RMB13 million as working capital.

According to the latest operation updates noted in 2018 interim report of the Company and voluntary announcement of business updates published on 26 November 2018, the application for Phase III clinical trial of 2nd Generation Uni-E4 has been accepted by Center for Drug Evaluation, China Food and Drug Administration on 20 November 2018. Based on the assessment of the management over the budget of the whole project, the funding received from the Disposal could finance the relevant research expenses in the initial stage while its clinical trial proceeds. The Board is optimistic about the development of 2nd Generation Uni-E4 and is expected to launch into the market as early as 2022 and become the first biological GLP-1 preparation to launch in the market globally.

The terms of each of the Figures Up SP Agreement and the WTGL SP Agreement were determined after arm’s length negotiations between the parties thereto. In light of the reasons above, the Directors (other than the independent non-executive Directors whose views will be formed after taking into account the advice of the Independent Financial Adviser) are of the view that the terms of the Transaction Arrangements and the transactions contemplated thereunder are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

IMPLICATIONS UNDER THE LISTING RULES

Discloseable transaction

As the highest applicable percentage ratio (as defined under the Listing Rules) in respect of the Figures Up Disposal and the WTGL Disposal, in aggregate, exceeds 5% but is below 25%, the Figures Up Disposal and the WTGL Disposal constitute a discloseable transaction of the Company under Chapter 14 of the Listing Rules, and is therefore subject to the reporting and announcement requirements under Chapter 14 of the Listing Rules.

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LETTER FROM THE BOARD

Connected transaction

In view of the fact that each of Purchaser A and Purchaser B is an associate of Mr. Leung, an executive Director and Chairman of the Board, who is interested in an aggregate of 1,530,877,026 Shares, representing approximately 24.77% of the issued Shares as at the Latest Practicable Date, each of Purchaser A and Purchaser B is a connected person of the Company and accordingly, the Transaction Arrangements and the transactions contemplated thereunder constitute a connected transaction of the Company for the purpose of Chapter 14A of the Listing Rules, and are subject to the reporting, announcement and the Independent Shareholders’ approval requirements under Chapter 14A of the Listing Rules.

Given that (1) each of Purchaser A and Purchaser B is an associate of Mr. Leung, an executive Director and Chairman of the Board; (2) Mr. Chen Dawei, an executive Director, is an indirect 10% shareholder of each of Purchaser A and Purchaser B; and (3) an indirect 15% shareholder of each of Purchaser A and Purchaser B is an associate of Ms. Lau Chau In, a non-executive Director, each of Mr. Leung, Mr. Chen Dawei and Ms. Lau Chau In had abstained from voting on the resolutions of the Board to approve the Transaction Arrangements and the transactions contemplated thereunder. Save as disclosed above, none of the other Directors had material interests in the transactions contemplated under the Acquisition and accordingly, no other Director was required to abstain on the resolutions at the Board meeting held to approve the Transaction Arrangements and the transactions contemplated thereunder.

EGM

A notice of the EGM is set out on pages EGM-1 to EGM-3 of this circular. The EGM will be held at 10:00 a.m. on Monday, 25 February 2019 at Unit 502, 5/F, No. 20 Science Park East Avenue, Hong Kong Science Park, Shatin, New Territories, Hong Kong at which a resolution will be proposed to the Independent Shareholders to consider and, if thought fit, approve the Transaction Arrangements and the transactions contemplated thereunder. At the EGM, voting will be taken by way of a poll.

Whether or not you are able to attend the meeting in person, you are requested to complete and return the accompanying form of proxy in accordance with the instructions printed thereon to the Hong Kong branch share registrars and transfer office of the Company, Tricor Abacus Limited at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong as soon as practicable but in any event by 10:00 a.m. on Saturday, 23 February 2019 or not less than 48 hours before the time appointed for the holding of the adjourned meeting (as the case may be). Completion and return of the form of proxy will not preclude you from attending and voting at the meeting or any adjourned meeting thereof (as the case may be) should you so desire. In such event, the instrument appointing a proxy will be deemed to be revoked.

In compliance with the Listing Rules, the resolution as set out in the notice of EGM will be voted on by way of a poll at the EGM. To the best of the Directors’ knowledge, information and belief and having made all reasonable enquiries, as at the Latest Practicable Date, save for (1) Mr. Leung and his associates, who together held 1,530,877,026 Shares representing

– 26 –

LETTER FROM THE BOARD

approximately 24.77% of the issued Shares; (2) Mr. Chen Dawei and his associates, who together held 330,955,516 Shares representing approximately 5.36% of the issued Shares; and (3) Vital Vigour and its associates, held 873,360,000 Shares, representing approximately 14.13% of the issued Shares, each of which are required to abstain from voting on the resolution to be proposed at the EGM, no Shareholder had a material interest in the Transaction Arrangements and the transactions contemplated thereunder, and no other Shareholder would be required to abstain from voting at the EGM in respect of the resolution relating to the Transaction Arrangements and the transactions contemplated thereunder as at the Latest Practicable Date.

RECOMMENDATION

The Independent Board Committee comprising all of the independent non-executive Directors has been established to advise and provide recommendation to the Independent Shareholders on the Transaction Arrangements and the transactions contemplated thereunder and to advise the Independent Shareholders on how to vote. Amasse Capital Limited has been appointed as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders on the Transaction Arrangements and the transactions contemplated thereunder.

The Directors (including independent non-executive Directors after taking into account the advice of the Independent Financial Adviser) believe that although the Transaction Arrangements are not in the ordinary and usual course of business of the Group, the terms of each of the Figures Up SP Agreement, the WTGL SP Agreement and the WTGL Land Cooperative Development Agreement and the transactions contemplated thereunder are on normal commercial terms and that the Transaction Arrangements are fair and reasonable in so far as the Independent Shareholders are concerned and in the interests of the Company and the Shareholders as a whole. Accordingly, the Directors (including independent non-executive Directors) recommend the Independent Shareholders to vote in favour of the resolution to approve Transaction Arrangements and the transactions contemplated at the EGM.

Shareholders are advised to read carefully the letter from the Independent Board Committee on pages 29 to 30 of this circular. The Independent Board Committee, having taken into account the advice of the Independent Financial Adviser, the text of which is set out on pages 31 to 52 of this circular, considers that the terms of the SP Agreement and the Acquisition are fair and reasonable insofar as the Company and the Independent Shareholders are concerned, and are 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 resolution to approve the SP Agreement and the transactions contemplated thereunder at the EGM.

– 27 –

LETTER FROM THE BOARD

ADDITIONAL INFORMATION

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

Yours faithfully, On behalf of the Board Uni-Bio Science Group Limited Kingsley Leung Chairman

– 28 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

The following is a full text of the letter from the Independent Board Committee prepared for the propose of inclusion in this circular:

==> picture [24 x 24] intentionally omitted <==

==> picture [30 x 37] intentionally omitted <==

==> picture [24 x 29] intentionally omitted <==

==> picture [118 x 50] intentionally omitted <==

UNI-BIO SCIENCE GROUP LIMITED 聯康生物科技集團有限公司[*]

(Incorporated in the Cayman Islands with limited liability) (Stock code: 0690)

DISCLOSEABLE AND CONNECTED TRANSACTIONS – TRANSACTION ARRANGEMENTS

8 February 2019

To the Independent Shareholders

Dear Sir or Madam

We refer to the circular issued by the Company dated 8 February 2019 (“ Circular ”) of which this letter forms part. Unless the context specifies otherwise, capitalised terms used herein have the same meanings as defined in the Circular.

We have been appointed by the Board to consider whether the Transaction Arrangements and the transactions contemplated thereunder are fair and reasonable and in the interests of the Company and the Shareholders as a whole. Amasse Capital Limited has been appointed as the independent financial adviser to advise us in this respect.

We wish to draw your attention to the letter from the Board and the letter from the Independent Financial Adviser as set out in the Circular. Having considered the principal factors and reasons considered by, and the advice of, the Independent Financial Adviser as set out in its letter of advice, we are of the opinion that although the Transaction Arrangements are not in the ordinary and usual course of business of the Group, the terms of each of the Figures Up SP Agreement, the WTGL SP Agreement and the WTGL Land Cooperative Development Agreement and the transactions contemplated thereunder are on normal commercial terms and that the Transaction Arrangements are fair and reasonable insofar as the Independent Shareholders are concerned and in the interests of the Company and the Shareholders as a whole. Accordingly,

For identification purpose only

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

we recommend the Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the EGM to approve the Transaction Arrangements and the transactions contemplated thereunder.

Zhao Zhi Gang

Yours faithfully, For and on behalf of Independent Board Committee Chow Kai Ming Independent non-executive Directors

Ren Qimin

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The following is the full text of the letter of advice to the Independent Board Committee and the Independent Shareholders from the Independent Financial Adviser prepared for the purpose of incorporation in this circular.

8 February 2019

To the Independent Board Committee and the Independent Shareholders

Dear Sirs,

DISCLOSEABLE AND CONNECTED TRANSACTIONS – TRANSACTION ARRANGEMENTS

INTRODUCTION

We refer to our appointment as the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders in respect of the Transaction Arrangements and the transactions contemplated thereunder, details of which are set out in the letter from the Board (the “ Letter from the Board ”) contained in the circular of the Company dated 8 February 2019 (the “ Circular ”), of which this letter forms a part. Capitalised terms used in this letter shall have the same meanings as those defined in the Circular unless the context requires otherwise.

On 16 November 2018 (after trading hours), certain members of the Group entered into the Transaction Arrangements which include:

(1) Vendor A, an indirect wholly-owned subsidiary of the Company, and Purchaser A entered into the Figures Up SP Agreement pursuant to which Vendor A has conditionally agreed to sell, and Purchaser A has conditionally agreed to purchase, the Figures Up Sale Shares at the Figures Up Consideration of RMB40,000,000 (equivalent to HK$45,024,000). The Figures Up Sale Shares represent all the issued shares of Figures Up, an indirect wholly-owned subsidiary of the Company, which, together with its subsidiaries, is mainly the research and development platform of the Group located in Dongguan; and
(2) Vendor B, a wholly-owned subsidiary of Vendor A, and Purchaser B entered into the WTGL SP Agreement pursuant to which Vendor B has conditionally agreed to sell and Purchaser B has conditionally agreed to purchase, (i) the WTGL Land and Property Rights and (ii) the WTGL Sale Shares at the WTGL Consideration of RMB60,000,000 (equivalent to HK$67,536,000). The WTGL Land and Property Rights represent all the economic rights relating to the land use rights of the WTGL Land and property rights of the buildings constructed on the WTGL Land; and the WTGL Sale Shares represent

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

all the equity interest in WTGL B, a company to be established and separated from WTGL, an indirectly wholly-owned subsidiary of the Company, as a result of the WTGL Split-off.

In view of the fact that each of Purchaser A and Purchaser B is an associate of Mr. Leung, an executive Director and Chairman of the Board, who is interested in an aggregate of 1,530,877,026 Shares, representing approximately 24.77% of the issued share capital of the Company, each of Purchaser A and Purchaser B is a connected person of the Company and accordingly, the Transaction Arrangements and the transactions contemplated thereunder constitute a connected transaction of the Company for the purpose of Chapter 14A of the Listing Rules, and are subject to the reporting, announcement and the Independent Shareholders’ approval requirements under Chapter 14A of the Listing Rules.

The Independent Board Committee comprising all of the independent non-executive Directors has been formed pursuant to the Listing Rules to advise the Independent Shareholders on the Transaction Arrangements and the transactions contemplated thereunder. We have been appointed by the Company as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in this respect, and such appointment has been approved by the Independent Board Committee.

OUR INDEPENDENCE

As at the Latest Practicable Date, we did not have any relationships or interests with the Company, the Purchaser or any other parties that could reasonably be regarded as relevant to our independence. In the last two years, we have not acted as an independent financial adviser to the Independent Board Committee and the Independent Shareholders for any transaction.

With regard to our independence from the Company, it is noted that, apart from normal professional fees paid or payable to us in connection with the current appointment as the Independent Financial Adviser, no arrangements exist whereby we had received or will receive any fees or benefits from the Company, the Purchaser or any other parties that could reasonably be regarded as relevant to our independence.

BASIS OF OUR OPINION

In formulating our opinion to the Independent Board Committee and the Independent Shareholders, we have relied on the statements, information, opinions and representations contained or referred to in the Circular and the information and representations as provided to us by the Directors and the management of the Company (collectively, the “ Management ”).

We have assumed that all information and representations that have been provided by the Management, for which the Directors are solely and wholly responsible, are true and accurate at the time when they were made and continue to be so as at the Latest Practicable Date. We have also assumed that all statements of belief, opinion, expectation and intention made by the Directors in the Circular were reasonably made after due enquiry and careful consideration.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

We have no reason to suspect that any material facts or information have been withheld or to doubt the truth, accuracy and completeness of the information and facts contained in the Circular, or the reasonableness of the opinions expressed by the Company, its advisers and/or the Directors, which have been provided to us. Our opinion is based on the representation and confirmation of the Management that there are no undisclosed private agreements/arrangements or implied understanding with anyone concerning the Transaction Arrangements. We consider that we have taken sufficient and necessary steps on which to form a reasonable basis and an informed view for our opinion in compliance with the Listing Rules.

The Directors have collectively and individually accepted full responsibility for the accuracy of the information contained in the Circular and have confirmed, having made all reasonable enquiries, which to the best of their knowledge and belief, that the information contained in the 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 in the Circular or the Circular as a whole misleading. We, as the Independent Financial Adviser, take no responsibility for the contents of any part of the Circular, save and except for this letter of advice.

We consider that we have been provided with sufficient information to reach an informed view and to provide a reasonable basis for our opinion. We have not, however, carried out any independent verification of the information provided by the Management, nor have we conducted any independent in-depth investigation into the business and affairs of any members of the Group, the counter party(ies) or their respective subsidiaries or associates. We also have not considered the taxation implication on the Group or the Shareholders as a result of the Transaction Arrangements. We have not carried out any feasibility study on the past, and forthcoming investment decision, opportunity or project undertaken or to be undertaken by the Group. Our opinion has been formed on the assumption that any analysis, estimation, anticipation, condition and assumption provided by the Group are feasible and sustainable. Our opinion shall not be constructed as to give any indication to the validity, sustainability and feasibility of any past, existing and forthcoming investment decision, opportunity or project undertaken or to be undertaken by the Group.

Our opinion is necessarily based on the financial, economic, market and other conditions in effect and the information made available to us as at the Latest Practicable Date. Shareholders should note that subsequent developments (including any material change in market and economic conditions) may affect and/or change our opinion and we have no obligation to update this opinion to take into account events occurring after the Latest Practicable Date or to update, revise or reaffirm our opinion. In addition, nothing contained in this letter should be construed as a recommendation to hold, sell or buy any Shares or any other securities of the Company. We expressly disclaim any liability and/or any loss arising from or in reliance upon the whole or any part of the contents of this letter.

Lastly, where information in this letter has been extracted from published or otherwise publicly available sources, we are not obligated to conduct any independent in-depth investigation into the accuracy and completeness of those information.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

PRINCIPAL FACTORS TAKEN INTO CONSIDERATION

In formulating our opinion in respect of the Transaction Arrangements and the transactions contemplated thereunder, we have taken into consideration the following principal factors and reasons.

1. Information on the Group, Figures Up, Taili Dongguan and WTGL

1.1 The Group

With reference to the Letter from the Board, the Group is principally engaged in the manufacture and sales of pharmaceutical products and operates through four segments, namely,

(a) In-house Chemical Pharmaceutical Products segment: engaged in the manufacture and sales of in-house chemical pharmaceutical products, which include Pinup[®] , among others.
(b) In-house Biological Pharmaceutical Products segment: engaged in the manufacture and sales of in-house biological pharmaceutical products, which include GeneTime[®] and GeneSoft[®] , among others.
(c) In-house Biological Pipeline segment: engaged in the industrialisation of in-house biological pipeline, which biological pipeline products include Uni-E4 and Uni-PTH, among others.
(d) Third-party Pharmaceutical Products segment: engaged in the sales of third-party pharmaceutical products.

1.2 Financial information of the Group

Set out below is a summary of the financial information of the Group as extracted from the annual report of the Company for the year ended 31 December 2017 and the interim report of the Company for the six months ended 30 June 2018, details of which are as follows:

	For the six months ended	For the six months ended	For the year	ended
	30 June		31 December
	2018	2017	2017	2016
	HK$’000	HK$’000	HK$’000	HK$’000
	(unaudited)	(unaudited)	(audited)	(audited)
Revenue	59,626	62,945	156,477	146,489
Cost of sales	(8,004)	(10,420)	(22,849)	(22,625)
Gross profit	51,622	52,525	133,628	123,864
(Loss) before taxation	(63,223)	(33,512)	(278,297)	(53,820)
(Loss) after taxation	(63,223)	(33,690)	(279,309)	(55,727)

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

		As at 30 June	As at 30 June	As at 31	December
		2018	2017	2017	2016
		HK$’000	HK$’000	HK$’000	HK$’000
		(unaudited)	(unaudited)	(audited)	(audited)
Total	assets	317,560	458,260	390,189	497,321
Total	equity	290,900	431,842	343,153	446,404

For the six months ended 30 June 2018

The Group recorded a revenue of approximately HK$59.6 million for the six months ended 30 June 2018 (1H2017: approximately HK$62.9 million), representing a decrease of approximately 5.3% as compared to the corresponding period in 2017. The slight decrease in revenue was mainly attributable to decrease in sales of Pinup[®] due to mounting pressure and competition from the market.

Gross profit for the six months ended 30 June 2018 amounted to approximately HK$51.6 million (1H2017: approximately HK$52.5 million), representing a decrease of approximately 1.7% as compared to the corresponding period in 2017. The slight decrease in gross profit was mainly attributable to the decrease in sales volume mentioned above and downward pressure over unit selling price of Pinup[®] during the period.

The Group recorded a loss after taxation for the six months ended 30 June 2018 of approximately HK$63.2 million (1H2017: HK$33.7 million), representing an increase of approximately 87.7% as compared to the corresponding period in 2017. The increase in loss was mainly due to mounting pressure on the pricing of Pinup[®] and the increment in selling and distribution expenses for restructuring salesforce restricting and enlarging direct sales channels.

The total assets of the Group as at 30 June 2018 amounted to approximately HK$317.6 million, which represented a decrease of approximately 18.6% as compared to approximately HK$390.2 million as at 31 December 2017. The total equity of the Group as at 30 June 2018 amounted to approximately HK$290.9 million, which represented a decrease of approximately 15.2% as compared to approximately HK$343.2 million as at 31 December 2017.

For the year ended 31 December 2017

The Group recorded a revenue of approximately HK$156.5 million for the year ended 31 December 2017 (2016: approximately HK$146.5 million), representing an increase of approximately 6.8% as compared to 2016. The increase in revenue was mainly attributable to the significant revenue contribution from key strategic products of the Group, such as GeneTime[®] 15ml and Pinup[®] .

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Gross profit for the year ended 31 December 2017 amounted to approximately HK$133.6 million (2016: approximately HK$123.9 million), representing an increase of approximately 7.9% as compared to 2016. The increase in gross profit was mainly attributable to the increased sales and unit sales price of GeneTime[®] 15ml.

The Group recorded a loss after taxation for the year ended 31 December 2017 of approximately HK$279.3 million (2016: HK$55.7 million), representing an increase of approximately 401.2% as compared to 2016. The increase in loss was mainly due to the impairment loss of intangible assets and increase in research and development investment.

The total assets of the Group as at 31 December 2017 amounted to approximately HK$390.2 million, which represented a decrease of approximately 21.5% as compared to approximately HK$497.3 million as at 31 December 2016. The total equity of the Group as at 31 December 2017 amounted to approximately HK$343.2 million, which represented a decrease of approximately 23.1% as compared to approximately HK$446.4 million as at 31 December 2016.

We note that the Group had recorded consecutive losses for (i) the two years ended 31 December 2016 and 2017; and (ii) the six months ended 30 June 2017 and 30 June 2018.

1.3 Information on Figures Up, Taili Dongguan and WTGL

As at the Latest Practicable Date:

(1) Figures Up is principally engaged in investment holding and a wholly-owned subsidiary of Vendor A;
(2) Taili Dongguan is principally engaged in research and development of pharmaceutical products and a direct wholly-owned subsidiary of Figures Up; and
(3) WTGL is principally engaged in manufacture and sales of biological pharmaceutical products and a wholly-owned subsidiary of Vendor B. It is the registered holder of the land use rights of the WTGL Land, a land located at Nanshan district, Shenzhen, the PRC with a total site area of 8,129 sq.m. with usage for industrial purposes with the term of 50 years from 5 November 1993. The WTGL Land is used by the Group for its own use, housing and the manufacturing and operation site for the Group’s in-house biological pharmaceutical products, GeneTime[®] and GeneSoft[®] .

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Set out below is a summary of certain unaudited combined financial information of Figures Up (excluding the financial information of Taili Beijing for this purpose) for the six months ended 30 June 2018 and the two years ended 31 December 2017 and 2016:

		For the six	For the year ended	For the year ended
		months ended	31 December
		30 June 2018	2017	2016
		HK$’000	HK$’000	HK$’000
Loss	before taxation	7,719	204,005	24,794
Loss	after taxation	7,719	204,005	24,794

We note that Figures Up (excluding the financial information of Taili Beijing) had recorded losses for the two years ended 31 December 2016 and 2017 and the six months ended 30 June 2018.

As at 30 June 2018, the unaudited total asset value of Figures Up (excluding the financial information of Taili Beijing for this purpose) was approximately HK$26.5 million and the adjusted net asset value of Figures Up (excluding the financial information of Taili Beijing for this purpose) was approximately HK$23.9 million. As advised by the Management, the aforesaid total asset value of Figures Up of approximately HK$26.5 million consisted of (i) property, plant and equipment with a net carrying amount of approximately HK$1.2 million; (ii) other and tax receivables of approximately HK$1.0 million; and (iii) cash and bank balances of approximately HK$24.3 million.

		For the six	For the year ended	For the year ended
		months ended	31 December
		30 June 2018	2017	2016
		HK$’000	HK$’000	HK$’000
Loss	before taxation	463	1,852	1,838
Loss	after taxation	463	1,852	1,838

We note that the assets attributable to the subject matter of the WTGL SP Agreement under the WTGL Disposal had recorded losses for the two years ended 31 December 2016 and 2017 and the six months ended 30 June 2018.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

2. Reasons for and benefits of the Transaction Arrangements

We have discussed with the Management and understood that the Group intends to streamline its business operations and focus on its core business, such as the manufacturing and sales of pharmaceutical products with the strategic positioning to focus on endocrinology, ophthalmology and dermatology. However, against such backdrop, Figures Up has been focusing on research and development business on non-core therapeutic areas, specifically anemia, which is unrelated to the Group’s strategic focus on endocrinology, ophthalmology and dermatology. Further, the manufacturing technology (mammalian expression system) required to commercialized future projects from Figures Up (for example, FC fusion protein technology) is different to that utilised by other subsidiaries of the Group (for example, E. coli expression manufacturing technology).

We have obtained from the Company and reviewed the timetables for the development of the future projects of the Group’s pharmaceutical products. We note that based on the Group’s current expected timetables, the time span for the future projects of Figures Up to become commercialized ranges from 5 to 10 years, while the time span for other future projects of the Group, such as the development of 2nd generation Uni-E4 and Uni-PTH, to become commercialized ranges from 2 to 5 years. As such, we agree with the Company that redeploying capital and resources to the projects that require shorter time span to become commercialized will help to expedite the investment returns for the Company and the Shareholders as a whole.

As disclosed in the announcement dated 26 November 2018 of the Company in relation to the development progress of the Group’s 2nd Generation Uni-E4, we also note that subject to certain review and clinical trials, the Uni-E4 is expected to launch into the market as early as 2022 and become the first biological GLP-1 preparation to launch in the market globally.

We have enquired with the Management and understood that in order to cope with the Group’s strategic positioning to focus on endocrinology, ophthalmology and dermatology, the Group intends to utilize the proceeds from the Disposal for research and development expenses over the Company’s pipeline products oriented to osteoporosis and diabetes (such as the development of 2nd generation Uni-E4 and Uni-PTH) and for general working capital. As set out in the Letter from the Board, taking into account the recent macro trends of the capital markets (for example, the ongoing trade war, the tightening of credit and geopolitical uncertainties), the Group has assessed that (i) fund raising via equity is relatively expensive to the current Shareholders; (ii) banks and financial institutions in China now take a cautious attitude towards commercial loans; (iii) availability of funds via loans for companies with similar business and operations as the Group’s are limited and most of the operating profit requirement is high; (iv) fund raising through debt is also not considered to be a cost-effective option of the Group. Against the above, the Group considers that the Disposal is in the preferred method to raise

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

further funds for the Group at the current situation in order to provide funding and to enable the Group to focus on its core business.

Further, we also note that upon completion of the WTGL Disposal, the Group will still be entitled to use, free of charge, the land of and property on the WTGL Land for a period 12 months following the completion of the WTGL Split-off and the titles of the land use rights of and property rights on the WTGL Land having been transferred to WTGL B or the WTGL Land Use and Property Rights Completion, whichever period is longer, for the manufacturing process of in-house biological pharmaceutical products in the current site on the WTGL Land, and allow for more time to locate potential sites for relocation, if required. In the event that the Group shall relocate from the WTGL Land, Purchaser B shall pay to the Group to compensate the costs of such relocation incurred.

Having considered:

(i) the Group’s strategic positioning to focus on endocrinology, ophthalmology and dermatology, whereby the proceeds from the Disposal will be utilized for research and development expenses over the Company’s pipeline products oriented to osteoporosis and diabetes (such as the development of 2nd generation Uni-E4 and Uni-PTH);
(ii) Figures Up has been focusing on research and development business on non-core therapeutic areas, specifically anemia, which is unrelated to the Group’s strategic focus on endocrinology, ophthalmology and dermatology;
(iii) other future projects of the Group have shorter time span to become commercialized as compared to the future projects of Figures Up which will help to expedite the investment returns for the Company and the Shareholders as a whole;
(iv) the weak financial position of the Group as indicated by the losses for the two consecutive years ended 31 December 2017, which will increase the difficulty in obtaining borrowings from banks and financial institutions;
(v) the expected gain of approximately HK$41.0 million by the Company from the Disposal; and
(vi) the Group will still be entitled to use, free of charge, the land of and property on the WTGL Land for a period 12 months following the completion of the WTGL Split-off and the titles of the land use rights of and property rights on the WTGL Land having been transferred to WTGL B or the WTGL Land Use and Property Rights Completion, whichever period is longer, for the manufacturing process of in-house biological pharmaceutical products in the current site on the WTGL Land. In the event that the Group shall relocate from the WTGL Land, Purchaser B shall pay to the Group to compensate the costs of such relocation incurred,

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

we are of the view that although the entering into of the Transaction Arrangements is not in the ordinary and usual course of business of the Group, the Disposal is fair and reasonable so far as the Independent Shareholders are concerned and is in the interests of the Company and the Shareholders as a whole.

3. Principal terms of the Figures Up SP Agreement

3.1 Date

16 November 2018 (after trading hours)

3.2 Parties

(1) Vendor A, an indirect wholly-owned subsidiary of the Company, as vendor; and
(2) Purchaser A as purchaser.

3.3 Assets to be disposed

Purchaser A conditionally agreed to purchase and Vendor A conditionally agreed to sell the Figures Up Sale Shares free from all encumbrances together with all rights now or thereafter attaching thereto, including all dividends or distributions which may be paid, declared or made in respect thereof at any time on or after the Figures Up Completion. The Figures Up Sale Shares represent all the issued shares of Figures Up, an indirect wholly-owned subsidiary of the Company as at the Latest Practicable Date. Please refer to the section headed “Information on the Transaction Arrangements” in the Letter from the Board for further information on Figures Up.

3.4 The Figures Up Consideration

The Figures Up Consideration for the Figures Up Disposal is RMB40,000,000 (equivalent to HK$45,024,000), which shall be settled at the Figures Up Completion.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

As stated in the Letter from the Board, in determining the Figures Up Consideration, given that Figures Up and its subsidiaries have reported loss-making since it has become a member of the Group and its research and development business requires substantial investment from time to time, the Group has assessed a number of valuation methods in determining the consideration, including net asset value, price to earnings and discounted cash flow. Taking into account the loss-making financial position and foreseeable negative cashflow position of Figures Up, the Group and the Purchasers considered that using net asset value would be the most appropriate valuation method as the price to earnings method does not apply to a loss-making business and discounted cash flow method does not apply in a negative cash flow situation. The research and development business undertaken by Figures Up Group has a relatively asset heavy business model which has negatively affected the profitability of the Group, even when there were positive income generated from the marketed pharmaceutical products of the Group. This is because of the continuous investment in these pipeline and future projects and their income are remoted. The business risks embedded with the research and development business are much higher and its business performance is less foreseeable as compared with the remaining business of the Company. In this regard, the parties to the Figures Up SP Agreement, when determining the Figures Up Consideration, are of the view that the historical capital investment made by the Company in the projects of Figures Up and its subsidiaries was less relevant to the determination of the consideration and that net asset value would be fair and reasonable.

We have discussed with the Management and understood that (i) notwithstanding the historical capital investment made the Company on the existing project of Figures Up as at the Latest Practicable Date, such project of Figures Up is still at the pre-mature stage without any economic benefit recognized; (ii) Figures Up (excluding the financial information of Taili Beijing) had recorded consolidated net losses for the two years ended 31 December 2017 and for the six months ended 30 June 2018; (iii) the Company does not expect there is a material change in financial performance of Figures Up unless its project is successfully commercialised; (iv) such project of Figures Up would require additional capital investment and at least another 5 to 10 years before commercialization, and is subject to uncertainty. As such, we concur with the Directors’ view that using net asset value would be the most appropriate valuation method as compared to price to earnings and discounted cashflow methods under these circumstances.

3.5 Taili Beijing Transfer Agreement

The entering into of the Taili Beijing Transfer Agreement relates to an internal restructuring of the Group so as to enable the Group to retain 100% of the equity interest in

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Taili Beijing in preparation of the Figures Up Disposal. Please refer to the section headed “Information on the Transaction Arrangements” in the Letter from the Board for further information on each of Beijing Genetech Pharm, Taili Dongguan and Taili Beijing.

For other detailed terms of the Figures Up SP Agreement, please refer to the sectioned headed “Figures Up SP Agreement” of the Letter from the Board.

4. Analysis on the Figures Up Consideration

4.1 Valuation report on the machineries and equipment of Figures Up and its subsidiaries (other than Taili Beijing)

We have reviewed, among others, the valuation report (the “ Machineries and Equipment Valuation Report ”) on the machineries and equipment (the “ Machineries and Equipment ”) of Figures Up and its subsidiaries (other than Taili Beijing) prepared by Roma Appraisal Limited (the “ Valuer ”), the texts of which are set out in part A of Appendix I to the Circular.

As part of our due diligence, we have interviewed and assessed the qualification and experience of the Valuer for its engagement as the independent professional valuer for the Machineries and Equipment. We also note that the valuer of the Machineries and Equipment Valuation Report is a Registered Professional Surveyor (General Practice), a member of Hong Kong Institute of Surveyors, a member of the Royal Institution of Chartered Surveyors and a member of the China Institute of Real Estate Appraisers and Agents, and has over 8 years’ experience in real estate industry and property and asset valuation in Hong Kong, Macau, the PRC, Singapore, United Kingdom, Japan, Australia and other overseas countries. We are of the view that the Valuer possesses sufficient experience in performing the valuations.

The Valuer also confirmed that (i) it is independent from the Company; (ii) all relevant material information provided by the Company had been incorporated in the valuation report; and (iii) they were not aware of any serious defects or other matters that would cause it to question the truthfulness or reasonableness of the information provided by the Company. In addition, we have also reviewed the terms of the Valuer’s engagement and noted that the scope of work is appropriate to the opinion required to be given and we are not aware of any limitation on the scope of work which might have an adverse impact on the degree of assurance given by the Machineries and Equipment Valuation Report.

We have discussed with the Valuer regarding the methodology of and the principal bases and assumptions adopted for the Machineries and Equipment Valuation Report. We note that the valuation was prepared in accordance with the HKIS Valuation Standards (2017 Edition) published by The Hong Kong Institute of Surveyors and applicable Listing Rules. In preparing the Machineries and Equipment Valuation Report, due to lack of known used market for the Machineries and Equipment, the Valuer selected the cost approach to arrive at the appraised value. As confirmed by the Valuer, the cost approach is one of the

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

commonly adopted approaches for valuation of assets similar to the Machineries and Equipment and is also consistent with normal market practice. We also understand that the Valuer has physically inspected the Machineries and Equipment during July 2018.

We have obtained from the Valuer, discussed and reviewed, the list of the Machineries and Equipment as provided by the Company. In calculating the appraised value of the Machineries and Equipment, the Valuer has taken the original purchase price of the Machineries and Equipment, and adjusted them by, among others, (i) the Producer Price Index of the PRC to measure the current purchase price of those machines; (ii) the deprecation rate as derived from the estimated remaining service life of the Machineries and Equipment; and (iii) the functional and economic obsolescence of the Machineries and Equipment. During our course of review, we have not identified any material factors which may cause us to doubt the fairness and reasonableness of the calculation, and we are of the view that it is in compliance with HKIS Valuation Standards which states that “Cost approach provides an indication of value by calculating the current replacement or reproduction cost of an asset and making deductions for physical deterioration and all other relevant forms of obsolescence”.

Other information regarding the Machineries and Equipment Valuation Report has been set out in part A of Appendix I to the Circular. After considering the reasons for adopting the above valuation methodology for valuing the Machineries and Equipment by the Valuer, we are of the opinion that the valuation methodology and the bases and assumptions used are reasonable and acceptable in establishing the fair value of the Machineries and Equipment.

4.2 Adjusted net asset value

We have assessed the adjusted net asset value of the Figures Up (excluding the financial information of Taili Beijing) (the “ Figures Up Adjusted NAV ”) by taking into account (i) the adjusted net asset value of Figures Up (excluding the financial information of Taili Beijing) of approximately HK$23.9 million as at 30 June 2018; and (ii) the appraised value of the Machineries and Equipment by the Machineries and Equipment Valuation Report of approximately RMB6.8 million (equivalent to approximately HK$7.7 million) as at 9 November 2018, calculation of which is set out below:

approximately HK$

The adjusted net asset value of Figures Up (excluding the financial information of Taili Beijing) as at 30 June 2018 (Note)

23.9 million

Less: carrying amount of the Machineries and Equipment as (9.4 million) at 30 June 2018 (without allocation of impairment related to pipeline project)

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

approximately HK$

Add: appraised value of the Machineries and Equipment by the Machineries and Equipment Valuation Report as at 9 November 2018
7.7 million

Figures Up Adjusted NAV

22.2 million

Note: such adjusted net asset value represents the net liability value as adjusted by (i) the minimum cash and bank balances of Figures Up and Taili Dongguan of RMB25 million (equivalent to approximately HK$28.1 million) to be maintained at the Figures Up Completion as required under the Figures Up SP Agreement; and (ii) the waiver of all the loans owing from Figures Up to Vendor A, which such loans amounted to approximately HK$582.1 million.

We note that the Figures Up Consideration of RMB40.0 million (equivalent to approximately HK$45.0 million) represents a premium of approximately HK$22.8 million or 102.7% to the Figures Up Adjusted NAV.

In light of the above, we are of the view that the Figures Up Consideration is fair and reasonable so far as the Independent Shareholders are concerned.

5. Principal terms of the WTGL SP Agreement

5.1 Date

16 November 2018 (after trading hours)

5.2 Parties

(1) Vendor B, a wholly-owned subsidiary of Vendor A, as vendor; and
(2) Purchaser B as purchaser.

5.3 Assets to be disposed

Purchaser B conditionally agreed to purchase and Vendor B conditionally agreed to sell:

(1) the WTGL Land and Property Rights, representing all the economic rights relating to the land use rights of and property rights of the buildings constructed thereon the WTGL Land, which as at the Latest Practicable Date, is held by WTGL, an indirect wholly-owned subsidiary of the Company; and

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

(2) the WTGL Sale Shares, representing all the equity interest in WTGL B, a company to be established and separated from WTGL as a result of the WTGL Split-off, which will hold the title of the land use rights of the WTGL Land and property rights of the buildings constructed on the WTGL Land.

5.4 The WTGL Consideration

The WTGL Consideration for the WTGL Disposal is RMB60,000,000 (equivalent to HK$67,536,000), which shall be settled in the following manner:

(1) first phase: as to RMB$36,000,000 at the WTGL Land and Property Rights Completion;
(2) second phase: as to RMB$12,000,000 on the 5th Business Day after the completion of the WTGL Split-off; or on 31 December 2019 (or if such day is not a Business Day, the immediately preceding Business Day), whichever date is earlier; and
(3) third phase: the remaining RMB12,000,000 at the WTGL Sale Shares Completion; or on 31 December 2019 (or if such day is not a Business Day, the immediately preceding Business Day), whichever date is earlier.

The WTGL Consideration was arrived at after arm’s length negotiation between the parties to the WTGL SP Agreement on normal commercial terms with reference to, among others, (i) the preliminary valuation on the land use rights of and property rights of the buildings constructed thereon the WTGL Land of approximately RMB58.5 million (equivalent to approximately HK$66.3 million) based on the cost approach as at 31 October 2018 prepared by an independent professional valuer and (ii) the reasons as set out in the paragraph headed “Reasons for and benefits of the Transaction Arrangements” in the Letter from the Board.

5.5 Other terms of the WTGL SP Agreement

Under the WTGL SP Agreement, for the period (the “the Relevant Period ”) of 12 months following (i) the completion of the WTGL Split-off and the titles of the land use rights of and property rights on the WTGL Land having been transferred to WTGL B; or (ii) the WTGL Land Use and Property Rights Completion (whichever period is longer), Purchaser B has undertaken to Vendor B and WTGL that they shall be entitled to use, free of charge, the WTGL Land and property on the WTGL Land. After the Relevant Period, the parties may enter into a lease agreement for the lease of the WTGL Land in which the rental payable shall not be higher than the prevailing market price (such market price to be determined by an independent property valuer). The Company will comply with all applicable requirements under the Listing Rules in respect of such lease arrangement (if any).

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

In the event that WTGL or, as the case may be, WTGL B shall relocate from the WTGL Land, the Purchaser B shall pay to Vendor B or WTGL an amount to compensate the costs of such relocation incurred by WTGL provided that such amount shall not be less than RMB20,000,000 and not more than RMB30,000,000.

Under the terms of the WTGL SP Agreement, Purchaser B has undertaken and agreed to bear all applicable taxes and fees arising from the WTGL Split-off and the transfer of the WTGL Sale Shares (including without limitation, the applicable taxes and fees arising from the transfer of the titles of the land use rights of the WTGL Land and property rights of the buildings constructed on the WTGL Land to WTGL B), up to a maximum amount of RMB40,000,000.

5.6 Transitional arrangement – WTGL Land Cooperative Development Agreement

At the same time of entering into of the WTGL SP Agreement, WTGL, Vendor B and Purchaser B entered into the WTGL Land Cooperative Development Agreement to govern certain matters in relation to the WTGL Land for the period commencing from the WTGL Land Use and Property Rights Completion to the WTGL Sale Shares Completion.

Pursuant to the WTGL Land Cooperative Development Agreement, Purchaser B shall be responsible for all the capital investment and costs involved in the WTGL Land Development, and without prejudice to the interests of WTGL and Vendor B (including but not limited to WTGL/Vendor B’s right to continue to use the land of the WTGL Land and buildings constructed on the WTGL Land under the WTGL SP Agreement), Purchaser B shall be responsible for all matters and bearing all related expenses, taxes and fees relating to the land use rights of and property on the WTGL Land.

For other detailed terms of the WTGL SP Agreement, please refer to the sectioned headed “WTGL SP Agreement” of the Letter from the Board.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

6. Analysis on THE WTGL Consideration

6.1 Valuation report on the land use rights of and property rights of the buildings constructed thereon the WTGL Land

We have reviewed, among others, the valuation report (the “ Land and Property Valuation Report ”) on the land use rights of and property rights of the buildings constructed thereon the WTGL Land (the “ Land and Property ”) prepared by the Valuer, the texts of which are set out in part B of Appendix I to the Circular.

As part of our due diligence, we have interviewed and assessed the qualification and experience of the Valuer for its engagement as the independent professional valuer for the Land and Property. We also note that the valuer of the Land and Property Valuation Report is a Registered Professional Surveyor (General Practice), a member of Hong Kong Institute of Surveyors, a member of the Royal Institution of Chartered Surveyors and a member of the China Institute of Real Estate Appraisers and Agents, and has over 8 years’ experience in real estate industry and property and asset valuation in Hong Kong, Macau, the PRC, Singapore, United Kingdom, Japan, Australia and other overseas countries. We are of the view that the Valuer possesses sufficient experience in performing the valuations.

We have discussed with the Valuer regarding the methodology of and the principal bases and assumptions adopted for the Land and Property Valuation Report. We note that the valuation was prepared in accordance with the HKIS Valuation Standards (2017 Edition) published by The Hong Kong Institute of Surveyors and applicable Listing Rules. In preparing the Land and Property Valuation Report, we understand that due to the specific purpose for which most of the buildings and structures of the property have been constructed, there are no readily identifiable market comparables. Thus the buildings and structures have been valued on the basis of their depreciated replacement costs instead of direct comparison method. The depreciated replacement cost approach is based on an estimate of the market value for the existing use of the land, plus the current cost of replacement of the existing structures less deductions for physical deterioration and all relevant forms of obsolescence and optimization. As confirmed by the Valuer, in practice, the depreciated replacement cost approach may be used as a substitute for the market value of specialized property, due to the lack of market comparables available, and it is one of the commonly adopted approaches for valuation of assets similar to the Land and Property

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

which is also consistent with normal market practice. We also understand that the Valuer has physically inspected the Land and Property during July 2018.

We have obtained from the Valuer, discussed and reviewed, the calculations of the appraised value of the Land and Property. We note that under the depreciated replacement cost approach as adopted by the Valuer, the appraised value of the Land and Property is a combination of two portions, including the land portion and the building portion.

In calculating the appraised value of the land portion, the Valuer has made reference to the transacted land sales record in Shenzhen Nanshan district which is sourced from the Shenzhen Land and Real Estate Exchange Center (深圳市土地交易中心). The Valuer has made adjustments to the unit price of the land comparable after taking into account parameters such as the size, exact location, terms of land use rights, date of transaction and plot ratio of the land comparable. As a result, the adjusted land unit price amounted to RMB5,500 per square meter, and accordingly the appraised value of the land portion of the Land and Property amounted to approximately RMB36.3 million.

In calculating the appraised value of the building portion, the Valuer has made reference to the construction cost of industrial property in Shenzhen in the “Hong Kong Report – Quarterly Construction Cost Update” as published in September 2018 by Rider Levett Bucknall, who is an independent organisation that provides property and construction cost management, project management and advisory services. After considering the condition, building ages and depreciation of the buildings, the Valuer has derived the construction cost at RMB4,000 per square meter, and accordingly the appraised value of the building portion of the Land and Property amounted to approximately RMB22.2 million.

Other information regarding the Land and Property Valuation Report has been set out in part B of Appendix I to the Circular. After considering the reasons for adopting the above valuation methodology for valuing the Land and Property by the Valuer, including but not limited to (i) the transacted land comparable is located at the same district as the Land and Property; (ii) adjustments were made to the unit price of the land comparable after considering various parameters such as the size, exact location, terms of land use rights, date of transaction and plot ratio of the land comparable; and (iii) the construction cost of RMB4,000 per square meter as adopted by the Valuer is in line with the “Hong Kong Report – Quarterly Construction Cost Update” as issued by Rider Levett Bucknall, we are of the opinion that the valuation methodology and the bases and assumptions used are reasonable and acceptable in establishing the fair value of the Land and Property.

We note that the WTGL Consideration of RMB60.0 million (equivalent to approximately HK$67.5 million) represents a slight premium of approximately HK$1.6 million or 2.6% over the appraised value of the Land and Property by the Land and Property Valuation Report of approximately RMB58.5 million (equivalent to approximately HK$65.8 million).

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

In light of the above and the factors as discussed in the section headed “2. Reasons for and Benefits of the Transaction Arrangements” in this letter, we are of the view that the WTGL Consideration is justifiable, and is fair and reasonable so far as the Independent Shareholders are concerned.

7. Possible financial effects of the Disposal

Figures Up is an investment holding company whose major asset is Taili Dongguan, a company established in 2002 in the PRC and principally engaged in research and development of pharmaceutical products. Taili Dongguan owns a laboratory occupying area of over 1,500 sq.m., including (i) a molecular department for developing cell line, (ii) a process department responsible for cells cultivation, fermentation, protein purification and preparation research; and (iii) a quality department responsible for quality management, analysis and testing methods establishment, quality standards formulation of intermediates and key raw materials, and sample determination. Based on molecular construction, small plant, pilot plant, preparation and quality research, a CMC platform has been established to work on new drug design, drug preparation and preclinical research. In this regard, the research and development business of Figures Up is focused on non-core therapeutic areas, specifically anemia, which is unrelated to the Group’s strategic focus on endocrinology, ophthalmology and dermatology. The manufacturing technology (mammalian expression system) required to commercialised future projects from Figures Up (for example, FC fusion protein technology) is different from that utilised by other subsidiaries of the Group. For example, the manufacturing technology used by the Group in its in-house biological pharmaceutical products and in-house biological pipeline utilises the E. coli expression manufacturing technology. Please refer to the subsection headed “1.3 Information on Figures Up, Taili Dongguan and WTGL” above for more financial information of Figures Up and Taili Dongguan.

WTGL is principally engaged in manufacturing and selling of biological pharmaceutical products and is a biologics GMP manufacturer which produces the Group’s in-house biological pharmaceutical products, GeneTime[®] and GeneSoft[®] . The production facilities of WTGL are currently situated on the WTGL Land, a land located at Nanshan district, Shenzhen, the PRC, of which the existing WTGL is the registered holder of the land use rights of the WTGL Land.

As mentioned in the section headed “WTGL SP Agreement – Other terms of the WTGL SP Agreement” in the Letter from the Board contained in the Circular, upon completion of the WTGL Disposal, it is the intention of the Group to relocate WTGL’s production facilities which are currently located on the WTGL Land to the Group’s Beijing Premises. The surviving WTGL (after the WTGL Split-off) will continue to be principally engaged in manufacture and sales of biological pharmaceutical products, which for the time being includes the Group’s in-house biological pharmaceutical products, GeneTime[®] and GeneSoft[®] .

Other than aforementioned proposed relocation of WTGL biological pharmaceutical production facilities to the Beijing Premises, the Group will continue to maintain its production facilities for its in-house chemical pharmaceutical products and in-house biological pharmaceutical products in the Beijing Premises. The Beijing Premises is owned by Beijing

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Genetech Pharm currently with a total floor area of more than 10,000 sq.m. mainly focused on chemical pharmaceutical products and biological pharmaceutical products. The Beijing Premises’ production lines for chemical pharmaceutical products are equipped with tablet and capsule production lines in accordance with GMP standards in which capital expenditure of more than US$4.5 million have been made by the Group since 2007. The Beijing Premises’ production lines for biological pharmaceutical products are equipped with facilities strictly complying with the updated GMP requirements which has a construction area of approximately 1,400 sq.m. with aseptic area for production, and equipped with heating, ventilation, and air conditioning (HVAC) systems, purified water system, water for injections, and steam and compressed air systems in which capital expenditure of more than US$10.9 million have been made by the Group since 2007. The plant has two state-of-art aseptic production lines for injection-form drugs, namely the lyophilized powder injection line and cartridge/pre-filled syringe line. The production line for injection form lyophilized powder is able to produce aseptic biologics with reliable quality at 20 million units annually. For the cartridge/pre-filled syringe line, the Group has introduced 3 ml nested cartridge and 1 ml nested pre-filled syringe mold to enable the production of 3 ml nested cartridge with different filling volume and 1 ml nested pre-filled syringe with different capacity.

We have enquired with the Management and understood that (i) the Group has carried a preliminary feasibility study in respect of the relocation of WTGL’s production facilities to the Beijing Premises and does not expect any material obstacles in proceeding with such relocation; (ii) the surviving WTGL (after the WTGL Split-off) will continue to be engaged in the manufacture and sales of Group’s existing biological pharmaceutical products, i.e. GeneTime[®] and GeneSoft[®] ; (iii) the Group’s products Uni-E4, Uni-PTH and Acarbose, which are currently undergoing their final phase of research and development, are expected to enter into the industrialization stage and be able to utilize the available production capacities of the Beijing Premises for manufacturing. Having taken into account the above factors, we are of the view that the Disposal will not have any material impact to the operations or manufacturing of the Group’s existing pharmaceutical products and pipeline products.

Under the Transaction Arrangements:

(1) pursuant to completion of the transfer under the Taili Beijing Transfer Agreement in preparation for the Figures Up Disposal, Taili Beijing shall be wholly-owned by Beijing Genetech Pharm and remain as a subsidiary of the Company;
(2) upon the Figures Up Completion, each of Figures Up and Taili Dongguan shall cease to be a subsidiary of the Company;
(3) upon the WTGL Land and Property Rights Completion and before completion of the WTGL Split-off, WTGL shall remain to be a subsidiary of the Company but the Group shall cease to account for the economic benefits in respect of the WTGL Land and Property Rights;

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

(4) after completion of the WTGL Split-off, the assets and liabilities of WTGL will be taken up by two entities, namely, the surviving WTGL and WTGL B separately, and thereafter the titles of the land use rights of the WTGL Land and property rights of the buildings constructed on the WTGL Land will be transferred to WTGL B; and
(5) upon the WTGL Sale Shares Completion, the surviving WTGL will remain to be a subsidiary of the Company and WTGL B shall cease to be a subsidiary of the Company.

It should be noted that the below analyses are for illustrative purpose only and do not purport to represent how the financial position or results of the Group will be upon completion of the Transaction Arrangements:

7.1 Effect on net asset value

Based on (i) the estimated net gain arising from the Disposal of approximately HK$41.0 million as extracted from the “Letter from the Board” from the Circular; and (ii) the Group’s consolidated net asset value was approximately HK$290.9 million as at 30 June 2018, the Directors expect that the Disposal would lead to an increase in the consolidated net asset value of the Group.

7.2 Effect on earnings

Based on (i) the loss after taxation of the Group of approximately HK$279.31 million for the year ended 31 December 2017; (ii) the loss after taxation of Figures Up (excluding the financial information of Taili Beijing for this purpose) of approximately HK$204.0 million for the year ended 31 December 2017; (iii) the loss after taxation of the assets attributable to the subject matter of the WTGL SP Agreement under the WTGL Disposal of approximately HK$1.9 million for the year ended 31 December 2017; and (iv) the estimated net gain arising from the Disposal of approximately HK$41.0 million as extracted from the “Letter from the Board” from the Circular, the Directors expect that the Disposal would have positive impact on the earnings of the Group.

RECOMMENDATION

Having taken into consideration the factors and reasons as stated above, we are of the opinion that (i) the Disposal is not in the ordinary and usual course of business of the Group; and (ii) the terms of the Transaction Arrangements are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned, and the Disposal is in the interests of the Company and the Shareholders as a whole.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Accordingly, we recommend the Independent Board Committee to advise the Independent Shareholders to vote in favour of the resolution to be proposed at the EGM to approve the Transaction Arrangements and the transactions contemplated thereunder and we recommend the Independent Shareholders to vote in favour of the resolution in this regard.

Yours faithfully, For and on behalf of Amasse Capital Limited May Tsang Director

Ms. May Tsang is a licensed person registered with the Securities and Future Commission of Hong Kong and regards as a responsible officer of Amasse Capital Limited to carry out type 1 (dealing in securities) and type 6 (advising on corporate finance) regulated activities under the SFO and has over 12 years of experience in corporate finance industry.

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VALUATION REPORTS

APPENDIX I

A. VALUATION REPORT ON MACHINERIES AND EQUIPMENT HELD BY TAILI DONGGUAN IN THE PRC

The following is the text of a report received from Roma Appraisals Limited, an independent professional valuer, on the machineries and equipment held by Taili Dongguan in the PRC.

==> picture [85 x 50] intentionally omitted <==

22/F, China Overseas Building 139 Hennessy Road, Wan Chai, Hong Kong Tel (852) 2529 6878 Fax (852) 2529 6806 E-mail inforomagroup.com http://www.romagroup.com

8 February 2019

Uni-Bio Science Group Limited

Unit 502, 5/F., No. 20 Science Park East Avenue, Hong Kong Science Park, Shatin, New Territories, Hong Kong

Case Ref: KY/ATRE4879/MAY18(b)

Dear Sir/Madam,

Re: Valuation of Machineries and Equipment held by Dongguan Tai Li Biotech Company Limited (東莞太力生物工程有限公司) in the People’s Republic of China

In accordance with your recent instructions for us to value the Machineries and Equipment (the “ Assets ”) held by Uni-Bio Science Group Limited (the “ Company ”), its subsidiaries and/or associate companies (hereinafter together referred to as the “ Group ”) located in the People’s Republic of China (the “ PRC ”), we confirm that we have carried out inspection, made relevant enquiries and obtained such further information as we consider necessary for the purpose of providing you with our opinion of the valuation as at 9 November 2018 (the “ Date of Valuation ”) for accounting reference purpose.

1. BASIS OF VALUATION

Our valuation of the Assets is our opinion of the market value of the concerned Assets which we would define as intended to mean “the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s-length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion”.

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APPENDIX I

Our opinion of market value (in-use) is not intended to represent the amount that might be realized from piecemeal disposition of Assets in the open market or from alternative use of the Assets.

Underlying our valuation is an assumption that the prospective earnings of the business of the Group would provide a reasonable return to the Assets valued, plus the value of other assets included in this valuation, and adequate working capital.

2. VALUATION METHODOLOGIES

2.1 The Cost Approach

The cost approach considers the cost to reproduce or replace in new condition the Assets appraised in accordance with current market prices for similar Assets, with allowance for accrued depreciation as evidence by observed condition or obsolescence present, whether arising from physical, functional or economic cause. The cost approach generally furnishes the most reliable indication of value for Assets without known used market.

2.2 The Market Approach

The market approach considers prices recently paid for similar Assets, with adjustments made to the indicated market prices to reflect condition and utility of the appraised Assets relative to the market. Comparative Assets for which there is established and the used market may be appraised by this approach.

2.3 Conclusion

In the course of our valuation, all approaches above should be considered, as one or more approaches may be applicable in the valuation of the Fixed Assets. To conclude, we have adopted the Cost Approach on the Fixed Assets, as it is the most appropriate approach.

3. LOCATION

The Assets are situated in industrial complex located at Dongguan City, Guangdong Province, The PRC.

Accessibilities of the locality are considered reasonable. Main roads and railway network are well linked to the subject locality. Various kinds of transportation including buses, taxis and private cars can be accessed to the subject development.

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APPENDIX I

4. THE ASSETS

The Assets valued are held by Dongguan Taili Biotech Co., Limited (東莞太力生物工程有限公司), which is principally engaged in the research and development, manufacture and sales of medical and biological products in the PRC.

During our inspection of sample Assets, we found that the Assets were kept in reasonable condition.

Parts of the Assets were in use upon our inspection, we are of the opinion that all of the Assets should be capable of operating the purpose for which they were designed and produced.

In valuing the Assets, we have relied on the advice given by the Group that the Group has valid and enforceable title to the Assets.

5. VALUATION CONSIDERATION AND ASSUMPTION

During our inspection of the Assets, we observed that the Assets had been observed to be in generally good operating conditions. Any deferred maintenance, physical wear and tear, operating malfunctions, lack of utility, or other observable conditions distinguishing the appraised assets from Assets of like kind in new condition were noted and made part of our judgment in arriving at the value.

The situation being such, we have to a substantial extent relied upon our best judgment, while giving full consideration to the local condition.

We did not investigate any financial data pertaining to the present or prospective earning capacity of the operation in which the Assets are used. It was assumed that prospective earnings would provide a reasonable return on the appraised value of the Assets, plus the value of any assets not included in the valuation, and adequate net working capital.

It must be noted that our valuation is relied on the information supplied by the Group that the Assets are in reasonable operating conditions. We did not attempt to operate or test the Assets. In addition, our valuation has been prepared based upon the assumptions that the Assets will continue in the existing use and the Assets will be used in the existing state with the benefit of continuity of tenure of land and buildings in the foreseeable future.

We have not carried out a mechanical survey, nor have we inspected covered or inaccessible areas of the Assets. Also no investigation was conducted as to whether the operation of specific pieces of Assets complied with the relevant environmental standard and ordinances; we have assumed that the Assets continue and will continue to comply with the current environmental standards and ordinances. We have made no allowance in our valuation for costs, if any, associated with the disposal or handling of materials required to comply with current or changing environment legislations.

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VALUATION REPORTS

APPENDIX I

We have made no investigation and assume no responsibility for titles or liabilities against the Assets.

6. REMARKS

In accordance with our standard practice, we must state that this report is for the use only of the party to whom it is addressed and no responsibility is accepted to any third party for the whole or any part of its contents and neither the whole, nor any part of this report may be included in any published documents or statement nor published in any way without our prior written approval of the form and context in which it may appear.

Unless otherwise stated, all monetary amounts stated in our valuation are in Renminbi (“ RMB ”).

7. VALUATION

Our opinion of the market value of the Assets in the PRC, based on the aforesaid basis, assumptions and considerations, as at 31 October 2018 was in the sum of RMB6,813,337 (RENMINBI SIX MILLION EIGHT HUNDRED THIRTEEN THOUSAND THREE HUNDRED THIRTY SEVEN ONLY) .

Yours faithfully, For and on behalf of

Roma Appraisals Limited Nancy Chan BSc (Hons) MHKIS MRICS RPS(GP) MCIREA Director

Note: Ms. Nancy Chan is a Registered Professional Surveyor (General Practice), a member of Hong Kong Institute of Surveyors, a member of the Royal Institution of Chartered Surveyors and a member of the China Institute of Real Estate Appraisers and Agents. She has over 8 years’ experience in real estate industry and property and asset valuation in Hong Kong, Macau, the PRC, Singapore, United Kingdom, Japan, Australia and other overseas countries.

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VALUATION REPORTS

APPENDIX I

B. VALUATION REPORT ON THE WTGL LAND AND PROPERTY CONSTRUCTED ON THE WTGL LAND

The following is the text of a report, received from Roma Appraisals Limited, an independent professional valuer, on the WTGL Land and property constructed on the WTGL Land.

==> picture [85 x 50] intentionally omitted <==

22/F, China Overseas Building 139 Hennessy Road, Wan Chai, Hong Kong Tel (852) 2529 6878 Fax (852) 2529 6806 E-mail inforomagroup.com http://www.romagroup.com

8 February 2019

Uni-Bio Science Group Limited

Unit 502, 5/F., No. 20 Science Park East Avenue, Hong Kong Science Park, Shatin, New Territories, Hong Kong

Case Ref: KY/ATRE4879/MAY18(d)

Dear Sir/Madam,

Re: Valuation of An Industrial Complex located at No.7 Keji Middle 1st Road, Nanshan District, Shenzhen City, The People’s Republic of China

In accordance with your instructions for us to value the property held by Uni-Bio Science Group Limited (the “ Company ”), its subsidiaries and/or associate companies (hereinafter together referred to as the “ Group ”) located in the People’s Republic of China (the “ PRC ”), we confirm that we have carried out inspection, made relevant enquiries and obtained such further information as we consider necessary for the purpose of providing you with our opinion of the market value of the property as at 9 November 2018 (the “ Date of Valuation ”).

1. BASIS OF VALUATION

Our valuation of the property is our opinion of the market value of the concerned property which we would define as intended to mean “the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s-length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion”.

Market value is understood as the value of an asset or liability estimated without regard to costs of sale or purchase (or transaction) and without offset for any associated taxes or potential taxes.

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APPENDIX I

2. VALUATION METHODOLOGY

For the properties in the PRC, due to the specific purpose for which most of the buildings and structures of the property have been constructed, there are no readily identifiable market comparables. Thus the buildings and structures have been valued on the basis of their depreciated replacement costs instead of direct comparison method. The depreciated replacement cost approach (“ DRC ”) is based on an estimate of the market value for the existing use of the land, plus the current cost of replacement of the existing structures less deductions for physical deterioration and all relevant forms of obsolescence and optimization. In practice, DRC approach may be used as a substitute for the market value of specialized property, due to the lack of market comparables available. Our valuation does not necessarily represent the amount that might be realized from the disposition of the property and the DRC is subject to adequate profitability of the concerned business.

3. TITLE INVESTIGATION

For the property located in the PRC, we have been provided with extracts of various documents and have been advised by the Group that no further relevant documents have been produced. However, we have not examined the original documents to verify the existing title to the property or any amendment, which may not appear on the copies handed to us. In the course of our valuation, we have relied upon the advice and information given by the Group and its PRC legal advisor – DeHeng Law Office (Shenzhen) (北京德恒（深圳）律師事務所) regarding the title of the property. All documents have been used for reference only.

In valuing the property, we have relied on the advice given by the Group that the current owner has valid and enforceable title to the property which is freely transferable, and has free and uninterrupted right to use the same, for the whole of the unexpired term granted subject to the payment of annual government rent/land use fees and all requisite land premium/purchase consideration payable have been fully settled.

4. VALUATION ASSUMPTIONS

Our valuation has been made on the assumption that the owner sells the property in the market in its existing state without the benefit of deferred term contracts, leasebacks, joint ventures, management agreements or any similar arrangements which would serve to affect the value of such property.

In addition, no account has been taken of any option or right of pre-emption concerning or affecting the sale of the property and no allowance has been made for the property to be sold in one lot or to a single purchaser.

5. SOURCE OF INFORMATION

In the course of our valuation, we have relied to a very considerable extent on the information provided by the Group and have accepted advice given to us on such matters as

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VALUATION REPORTS

APPENDIX I

planning approvals or statutory notices, easements, tenure, identification of property, particulars of occupation, floor areas, ages of buildings and all other relevant matters which can affect the value of the property. All documents have been used for reference only.

We have no reason to doubt the truth and accuracy of the information provided to us. We have also been advised that no material facts have been omitted from the information supplied. We consider that we have been provided with sufficient information to reach an informed view, and have no reason to suspect that any material information has been withheld.

6. VALUATION CONSIDERATION

We have inspected the exterior and, where possible, the interior of certain property. No structural survey has been made in respect of the property. However, in the course of our inspection, we did not note any serious defects. We are not, however, able to report that the property is free from rot, infestation or any other structural defects. No tests were carried out on any of the building services.

We have not carried out on-site measurement to verify the floor areas of the property under consideration but we have assumed that the floor areas shown on the documents handed to us are correct. Except as otherwise stated, all dimensions, measurements and areas included in the valuation certificate are based on information contained in the documents provided to us by the Group and are therefore approximations.

No allowance has been made in our valuation for any charges, mortgages or amounts owing on the property nor for any expenses or taxation which may be incurred in effecting a sale. Unless otherwise stated, it is assumed that the property is free from encumbrances, restrictions and outgoings of an onerous nature which could affect its value.

In valuing the properties, we have complied with the HKIS Valuation Standards (2017 Edition) published by The Hong Kong Institute of Surveyors.

7. REMARKS

Unless otherwise stated, all monetary amounts stated in our valuation are in Renminbi (“ RMB ”).

Our Valuation Certificate is attached.

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APPENDIX I

Yours faithfully, For and on behalf of Roma Appraisals Limited Nancy Chan BSc (Hons) MHKIS MRICS RPS(GP) MCIREA Director

Note: Ms. Nancy Chan is a Registered Professional Surveyor (General Practice), a member of Hong Kong Institute of Surveyors, a member of the Royal Institution of Chartered Surveyors and a member of the China Institute of Real Estate Appraisers and Agents. She has over 8 years’ experience in real estate industry and property and asset valuation in Hong Kong, Macau, the PRC, Singapore, United Kingdom, Japan, Australia and other overseas countries.

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APPENDIX I

VALUATION CERTIFICATE

Property held by the Group for owner occupation in the PRC

Property Description and Tenure

Market Value in Existing State as at Particulars of 9 November Occupancy 2018

An Industrial The property comprises a Complex parcel of land with a site area located at No.7 of approximately 8,129 sq.m. Keji Middle 1st (or about 87,500.56 sq.ft.), Road, Nanshan various buildings and ancillary District, structures were erected Shenzhen City, thereon, which were The PRC completed in about 1998. 位於中國深圳市南山區科技 The property has a total gross 中一路七號之 floor area (“ GFA ”) of 一個工業廠房 approximately 7,597.14 sq.m. (or about 81,775.61 sq.ft.). Details please refer to Note 3.

The land use rights of the property have been granted for a term commencing on 5 November 1993 and expiring on 4 November 2043 for industrial use.

As advised by the Group, portion of the property (3rd and 5th Floor) with a total gross floor area of 1,741.98 sq.m. is subject to 2 tenancies both commencing on 1 January 2017 expiring on 31 October 2018 at a total monthly rent of about RMB120,206.

The remaining portion of the property is occupied by the Group for industrial use.

RMB58,500,000

Notes:

Pursuant to a State-owned Land Use Certificate (國有土地使用權證), Shen Fang Di Zi Di No.4000001085 (深房地字第4000001085號) issued by Shenzhen City People’s Government dated 13 May 1998, the land use rights of the property with a site area of 8,129 sq.m. was granted to Shenzhen Watsin Genetech Limited (“ WTGL ”) for a term of 50 years commencing on 5 November 1993 and expiring on 4 November 2043 for industrial use.

– I-9 –

VALUATION REPORTS

APPENDIX I

Pursuant to a supplementary agreement entered into between WTGL and Shenzhen City Planning and State-owned Land Bureau (深圳市規劃國土局南山分區) dated 8 January 1998, total gross floor area of 7,917 sq.m. was permitted. Details are summarized as follows:

a. Gross floor area : 7,917 sq.m. b. Plot ratio : 0.98 c. Site Coverage : 18.5% d. Number of Storeys : 5 e. Uses : 7,717 sq.m. for industrial use 200 sq.m. for boiler house use

Pursuant to various Real Estate Title Certificates Shen Fang Di Zi Di Nos. 4000347106, 4000347107, 4000347108, 4000347109, 4000347110 and 4000347111 (深房地字第4000347106, 4000347107, 4000347108, 4000347109, 4000347110 及 4000347111號) issued by Shenzhen Land Resources and Building Administration Bureau all dated 18 January 2008, the property with a total gross floor area of 7,597.14 sq.m. is held by WTGL. The property has five storeys, with GFA of 1,345.52 sq.m. on 1st Floor; 1,507.23 sq.m. each on 2nd, 3rd, 4th and 5th Floor; and 222.70 sq.m. on top roof.
Our inspection was performed by Mr. Jeffrey Wong, B.Eng. in July 2018.
We have been provided with a legal opinion on the title to the property issued by the Group’s PRC legal advisor, which contains, inter-alia, the following information:
a. WTGL is in possession of a proper legal title to the property and is entitled to transfer the property with its residual term of land use rights at no extra land premium or other onerous payment payable to the government;
b. All land premium and other costs of ancillary utility services has been settled in full;
c. The property is not subject to mortgage or any other material encumbrances;
d. The existing use of the property is in compliance with the local planning regulations and have been approved by the relevant authorities; and
e. Whether as a whole or on strata basis, the property can be freely transferred to local or overseas purchasers.
As advised by the Group, WTGL is an indirectly wholly-owned subsidiary of the Company.

– I-10 –

GENERAL INFORMATION

APPENDIX II

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. DIRECTORS’ INTERESTS

As at the Latest Practicable Date, the interests and short positions of each Director and chief executive of the Company in the shares, underlying shares and debentures of the Company and associated corporations (within the meaning of Part XV of the SFO) which 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 he was taken or deemed to have under such provisions of the SFO), or which were required, pursuant to section 352 of the SFO, to be entered in the register maintained by the Company referred to therein, or which 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:

Long Position

		Number of
		Shares and	Approximate
		underlying	percentage of
Name of Director	Nature of interest	Shares	interest
			(Note 1)
Mr. Leung	Beneficial owner and interest	1,547,477,026	25.04%
	in controlled corporation	(Note 2)
CHEN Dawei	Beneficial owner	395,015,516	6.39%
		(Note 3)
LAU Chau In	Beneficial owner	1,640,000	0.03%
		(Note 4)
ZHAO Zhi Gang	Beneficial owner	6,140,000	0.10%
		(Note 5)
CHOW Kai Ming	Beneficial owner	3,420,000	0.06%
		(Note 6)

– II-1 –

GENERAL INFORMATION

APPENDIX II

		Number of
		Shares and	Approximate
		underlying	percentage of
Name of Director	Nature of interest	Shares	interest
			(Note 1)
REN Qimin	Beneficial owner	1,640,000	0.03%
		(Note 4)

Notes:

The percentage of shareholding is calculated on the basis of 6,179,968,147 Shares in issue as at the Latest Practicable Date.
These interests consist of: (i) 616,301,016 Shares held by Automatic Result Limited that is wholly owned by MJKPC Holdings Limited, a family trust of which Mr. Leung is one of the discretionary objects; (ii) 914,576,010 Shares held by Lord Profit Limited which is wholly owned by Mr. Leung; and (iii) 16,600,000 underlying Shares relating to the share options granted by the Company to Mr. Leung.
These interests consist of (i) 390,955,516 Shares held by Mr. CHEN Dawei; and (ii) 4,060,000 underlying Shares relating to the share options granted by the Company to Mr. CHEN Dawei on 16 November 2017.
These represent the underlying Shares relating to the share options granted by the Company to the relevant Director on 16 November 2017.
These represent the underlying Shares relating to the share options granted by the Company to Mr. ZHAO Zhi Gang on 12 September 2014, 10 July 2015, 7 October 2016 and 16 November 2017.
These represent the underlying Shares relating to the share options granted by the Company to Mr. CHOW Kai Ming on 7 October 2016 and 16 November 2017.

Save as disclosed in this circular, as at the Latest Practicable Date, none of the Directors or chief executive of the Company had any interest and short positions in the shares, underlying shares and debentures of the Company or any associated corporations (within the meaning of Part XV of the SFO) which 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 the interests and short positions which he was taken or deemed to have under such provisions of the SFO), or which were required, pursuant to section 352 of the SFO, to be entered in the register maintained by the Company referred to therein, or which 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.

– II-2 –

GENERAL INFORMATION

APPENDIX II

3. SUBSTANTIAL SHAREHOLDERS’ INTERESTS

As at the Latest Practicable Date, so far as is known to the Directors or chief executive of the Company, the following persons, other than a director or chief executive of the Company, had an interest or short position in the shares and underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO:

Long Position

		Number of
		Shares and	Approximate
		Underlying	percentage of
Name	Nature of interest	Shares	interest
			(Note 1)
Automatic Result Limited	Beneficial owner	616,301,016	9.97%
(Note 2)
Lord Profit Limited	Beneficial owner	914,576,010	14.80%
(Note 3)
Overseas Capital Assets	Beneficial owner	657,180,000	10.63%
Limited (Note 4)
Vital Vigour Limited	Beneficial owner	1,091,700,000	17.67%
(Note 5)

Notes:

The percentage of shareholding is calculated on the basis of 6,179,968,147 Shares in issue as at the Latest Practicable Date.
Automatic Result Limited is wholly owned by MJKPC Holdings Limited, which is a family trust which Mr. Leung is one of the discretionary objects. Mr. Leung is the director of Automatic Result Limited.
Lord Profit Limited is wholly owned by Mr. Leung. Mr. Leung is the director of Lord Profit Limited.
Based on the notice of disclosure of interests of Overseas Capital Assets Limited filed on 19 June 2014, Overseas Capital Assets Limited is wholly owned by He Rufeng.
Based on the notice of disclosure of interests of each of Vital Vigour Limited, HeungKong Great Health Fund I L.P. and HeungKong Great Health GP Limited each filed on 16 April 2018, these interests consist of 873,360,000 Shares 218,340,000 underlying Shares held by Vital Vigour Limited, which is wholly owned by HeungKong Great Health Fund I L.P., which in turn is controlled by HeungKong Great Health GP Limited as general partner.

– II-3 –

GENERAL INFORMATION

APPENDIX II

Save as disclosed above, there is no person other than a director or chief executive of the Company, who had an interest or short position in the shares and underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO.

4. DIRECTORS’ SERVICE CONTRACTS

None of the Directors has a service contract with any member of the Group which is not determinable by the Group within one year without payment of compensation, other than statutory compensation.

5. COMPETING BUSINESS

As at the Latest Practicable Date, none of the Directors nor his close associates was interested in any business apart from the business of the Group, which competes or is likely to compete, either directly or indirectly, with that of the Group.

6. OTHER INTERESTS OF THE DIRECTORS

Save as disclosed in this circular, as at the Latest Practicable Date:

(1) none of the Directors had any interest, direct or indirect, in any assets which have been, since 31 December 2017, being the date of the latest published audited accounts of the Group, acquired or disposed of by, or leased to any member of the Group, or are proposed to be acquired or disposed of by, or leased to, any member of the Group; and
(2) none of the Directors was materially interested in any contract or arrangement subsisting as at the date of this circular and which is significant in relation to the business of the Group.

7. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors confirm that there had been no material adverse change in the financial or trading position of the Group since 31 December 2017, being the date to which the latest published audited accounts of the Group were made up.

– II-4 –

GENERAL INFORMATION

APPENDIX II

8. EXPERTS AND CONSENTS

The following are the qualifications of the experts who have given opinion or, advice contained in this circular:

Name Qualification Amasse Capital Limited A licensed corporation to carry on Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities under the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) Roma Appraisals Limited Independent professional valuer

Each of the above named experts has given and has not withdrawn its written consent to the issue of this circular with the inclusion herein of its letters or opinions or reports or references to its name in the form and context in which it appears.

As at the Latest Practicable Date, each of the above named experts had not had any shareholding in any member of the Group or the right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

As at the Latest Practicable Date, each of the above named experts had not had any direct or indirect interests in any assets which have been, since 31 December 2017 (being the date to which the latest published audited accounts of the Company were made up), acquired or disposed of by or leased to any member of the Group, or which are proposed to be acquired or disposed of by or leased to any member of the Group.

9. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection during normal business hours on any Business Day at the principal place of business of the Company in Hong Kong at Unit 502, 5/F, No. 20 Science Park East Avenue, Hong Kong Science Park, Shatin, New Territories, Hong Kong from the date of this circular up to and including 22 February 2019:

(1) the memorandum and articles of association of the Company;
(2) the letter from the Independent Financial Adviser containing its advice to the Independent Board Committee and Independent Shareholders, the text of which is set out in the section headed “Letter from the Independent Financial Adviser” of this circular;
(3) the letter of recommendation from the Independent Board Committee to the Independent Shareholders, the text of which is set out in the section headed “Letter from the Independent Board Committee” of this circular;

– II-5 –

GENERAL INFORMATION

APPENDIX II

(4) the valuation reports issued by Roma Appraisals Limited as set out in Appendix I to this circular;
(5) the written consents as referred to in the paragraph headed “Experts and consents” in this appendix;
(6) each of the Figures Up SP Agreement, the WTGL SP Agreement and the WTGL Land Cooperative Development Agreement; and
(7) this circular.

– II-6 –

NOTICE OF EGM

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UNI-BIO SCIENCE GROUP LIMITED 聯康生物科技集團有限公司[] (Incorporated in the Cayman Islands with limited liability) (Stock code: 0690)*

NOTICE IS HEREBY GIVEN that an extraordinary general meeting (“ Meeting ”) of Uni-Bio Science Group Limited (“ Company ”) will be held at 10:00 a.m. on Monday, 25 February 2019 at Unit 502, 5/F, No. 20 Science Park East Avenue, Hong Kong Science Park, Shatin, New Territories, Hong Kong, for the purpose of considering and, if thought fit, passing the following resolution:

ORDINARY RESOLUTION

“ THAT

(A) the transaction arrangements (“ Transaction Arrangements ”) as set out in the circular of the Company dated 8 February 2018 (“ Circular ”) (a copy of which marked “A” and signed by the chairman of the Meeting for identification purpose has been tabled at the meeting) which include:
(1) the disposal of the Figures Up Sales Shares (as defined in the Circular) as contemplated under the share transfer agreement dated 16 November 2018 entered into between Uni-Bio Science Healthcare Limited, an indirect wholly-owned subsidiary of the Company, as vendor and Greater Bay (R&D) Capital Limited as purchaser (“ Figures Up SP Agreement ”, a copy of the Figures Up SP Agreement marked “B” and signed by the chairman of the Meeting for identification purpose has been tabled at the Meeting); and
(2) the disposal of (i) the WTGL Land and Property Rights and (ii) the WTGL Sale Shares (each as defined in the Circular) as contemplated under the share transfer agreement dated 16 November 2018 entered into between Zethanel Properties Limited, an indirect wholly-owned subsidiary of the Company, as vendor and Greater Bay Capital Limited as purchaser (“ WTGL SP Agreement ”, a copy of the WTGL SP Agreement marked “C” and signed by the chairman of the Meeting for identification purpose has been tabled at the Meeting) together with the transactions contemplated under the cooperative development agreement dated 16

For identification purpose only

– EGM-1 –

NOTICE OF EGM

November 2018 entered into between 深圳市華生元基因工程發展有限公司, Zethanel Properties Limited and Greater Bay Capital Limited (“ WTGL Land Cooperative Development Agreement ”, a copy of the WTGL Land Cooperative Development Agreement marked “D” and signed by the chairman of the Meeting for identification purpose has been tabled at the Meeting),

be and are hereby approved, confirmed and ratified;

(B) the Transaction Arrangements and all other transactions contemplated under each of the Figures Up SP Agreement, the WTGL SP Agreement and the WTGL Land Cooperative Development Agreement be and are hereby approved, ratified and confirmed; and
(C) the board of directors of the Company (“ Directors ”) or a duly authorised committee of the board of Directors be and is authorised to do all such acts and things, to sign and execute such documents or agreements or deed on behalf of the Company and to do such other things and to take all such actions as it considers necessary, appropriate, desirable or expedient for the purposes of giving effect to or in connection with the Transaction Arrangements and to agree to such variation, amendments or waiver or matters relating thereto (excluding any variation, amendments or waiver of such documents or any terms thereof, which are fundamentally and materially different from those as provided for in each of the Figures Up SP Agreement, the WTGL SP Agreement and the WTGL Land Cooperative Development Agreement and which shall be subject to approval of the shareholders of the Company) as are, in the opinion of the board of Directors or a duly authorised committee, in the interest of the Company and its shareholders as a whole.”

Yours faithfully,

On behalf of the Board Uni-Bio Science Group Limited Kingsley Leung Chairman

Hong Kong, 8 February 2019

Principal place of business in Hong Kong:

Unit 502, 5/F No. 20 Science Park East Avenue Hong Kong Science Park Shatin, New Territories Hong Kong

– EGM-2 –

NOTICE OF EGM

Notes:

In order to ascertain the entitlement to attend and vote at the Meeting, the register of members of the Company will be closed from Tuesday, 19 February 2019 to Friday, 22 February 2019, both days inclusive, during which period no transfer of shares (“ Shares ”) of the Company will be registered. In order to qualify for the entitlement to attend and vote at the Meeting, all transfer of Shares accompanied by the relevant shares certificates must be lodged with the Company’s branch share registrar and transfer office, Tricor Abacus Limited at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong by 4:30 p.m. (Hong Kong time) on Monday, 18 February 2019 for registration.
A member of the Company entitled to attend and vote at the Meeting shall be entitled to appoint another person as his/her/its proxy to attend and vote instead of him/her/it. A member who is the holder of two or more Shares may appoint more than one proxy to represent him/her/it and vote on his/her/its behalf at the Meeting. A proxy need not be a member of the Company.
In the case of joint holders of Shares, any one of such joint holders may vote, either in person or by proxy, in respect of such Share as if he/she/it were solely entitled thereto, but if more than one of such joint holders are present at the Meeting, personally or by proxy, that one of the said persons so present whose name stands first in the register in respect of such Shares shall alone be entitled to vote in respect thereof.
In order to be valid, the form of proxy must be in writing under the hand of the appointer or of his/her attorney duly authorised in writing, or if the appointer is a corporation, either under seal, or under the hand of an office or attorney duly authorised, and must be deposited with the Hong Kong branch share registrar and transfer office of the Company, Tricor Abacus Limited at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong (together with the power of attorney or other authority, if any, under which it is signed or a certified copy thereof) by 10:00 a.m., Saturday, 23 February 2019 or not less than 48 hours before the time appointed for the holding of the adjourned Meeting (as the case may be).
Delivery of an instrument appointing a proxy should not preclude a member from attending and voting in person at the Meeting or any adjournment thereof and in such event, the instrument appointing a proxy shall be deemed to be revoked.
As required under the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, the resolution as set out in this notice to be put to vote at the Meeting will be decided by way of poll.

As at the date of this notice, the board of Directors comprises two executive Directors, namely, Mr. Kingsley Leung (Chairman) and Mr. Chen Dawei (Vice-chairman); one non-executive Director, namely, Ms. Lau Chau In; and three independent non-executive Directors, namely, Mr. Zhao Zhi Gang, Mr. Chow Kai Ming and Mr. Ren Qimin.

– EGM-3 –

AI assistant

Uni-Bio Science Group Limited — Proxy Solicitation & Information Statement 2019

49397_rns_2019-02-04_22bd61d6-cb29-457e-bb80-6673bc495272.pdf

DISCLOSEABLE AND CONNECTED TRANSACTIONS – TRANSACTION ARRANGEMENTS AND NOTICE OF EGM

Financial Adviser to the Purchasers

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

UNI-BIO SCIENCE GROUP LIMITED

DISCLOSEABLE AND CONNECTED TRANSACTIONS – TRANSACTION ARRANGEMENTS

INTRODUCTION

LETTER FROM THE BOARD

FIGURES UP SP AGREEMENT

Date

Parties

Assets to be disposed

Figures Up Consideration

Conditions precedent to the Figures Up SP Agreement

LETTER FROM THE BOARD

Figures Up Completion

Taili Beijing Transfer Agreement

WTGL SP AGREEMENT

Date

Parties

Assets to be disposed

WTGL Consideration

Conditions precedent to the WTGL SP Agreement

WTGL Land and Property Rights Completion

WTGL Sale Shares Completion

WTGL Land and Property Rights Completion

WTGL Sale Shares Completion

Other terms of the WTGL SP Agreement

Transitional arrangement – WTGL Land Cooperative Development Agreement

INFORMATION ON THE PURCHASERS

INFORMATION ON THE TRANSACTION ARRANGEMENTS

LETTER FROM THE BOARD

LETTER FROM THE BOARD

LETTER FROM THE BOARD

REASONS FOR AND BENEFITS OF THE TRANSACTION ARRANGEMENTS

LETTER FROM THE BOARD

LETTER FROM THE BOARD

LETTER FROM THE BOARD

IMPLICATIONS UNDER THE LISTING RULES

Discloseable transaction

Connected transaction

EGM

LETTER FROM THE BOARD

RECOMMENDATION

ADDITIONAL INFORMATION

UNI-BIO SCIENCE GROUP LIMITED 聯康生物科技集團有限公司[*]

DISCLOSEABLE AND CONNECTED TRANSACTIONS – TRANSACTION ARRANGEMENTS

Dear Sir or Madam

DISCLOSEABLE AND CONNECTED TRANSACTIONS – TRANSACTION ARRANGEMENTS

INTRODUCTION

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

OUR INDEPENDENCE

BASIS OF OUR OPINION

PRINCIPAL FACTORS TAKEN INTO CONSIDERATION

1. Information on the Group, Figures Up, Taili Dongguan and WTGL

1.1 The Group

1.2 Financial information of the Group

For the six months ended 30 June 2018

For the year ended 31 December 2017

1.3 Information on Figures Up, Taili Dongguan and WTGL

2. Reasons for and benefits of the Transaction Arrangements

3. Principal terms of the Figures Up SP Agreement

3.1 Date

3.2 Parties

3.3 Assets to be disposed

3.4 The Figures Up Consideration

3.5 Taili Beijing Transfer Agreement

4.2 Adjusted net asset value

Figures Up Adjusted NAV

22.2 million

5. Principal terms of the WTGL SP Agreement

5.1 Date

5.2 Parties

Uni-Bio Science Group Limited Proxy Solicitation & Information Statement 2019