THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

Transcription

1 THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION If you are in doubt as to any aspect of this circular, you should consult your licensed securities dealer, bank manager, solicitor, professional accountant or other professional adviser. If you have sold or transferred all your shares in Town Health International Holdings Company Limited, you should at once hand this circular to the purchaser or the transferee or to the bank, licensed securities dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser or the transferee. 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. TOWN HEALTH INTERNATIONAL HOLDINGS COMPANY LIMITED (incorporated in the Cayman Islands with limited liability) (Stock Code: 3886) DISCLOSEABLE TRANSACTION IN RELATION TO THE SUBSCRIPTION OF THE SUBSCRIPTION SHARES Financial Adviser to Town Health International Holdings Company Limited 21 January 2009

2 CONTENTS Page Definitions... 1 Letter from the Board Introduction... 5 The Agreement... 6 Information on the Acquired Group... 9 Reasons for and benefits of the Subscription Financial effects of the Subscription Effects on shareholding structure of Max Goodrich Listing Rules implication Additional information Appendix General Information i

3 DEFINITIONS In this circular, unless the context requires otherwise, the following expressions have the meanings as set out below: Acquired Group Max Goodrich and its direct and indirect subsidiaries as at the Latest Practicable Date, namely China New Rich and the Domestic Companies Agreement the conditional subscription agreement entered into among the Subscriber, Max Goodrich and Mr. Zhou (as Max Goodrich s guarantor) on 24 December 2008 in connection with the Subscription associates has the same meaning ascribed thereto under the Listing Rules Board the board of Directors Business Day means a day other than Saturday, Sunday, public holiday or a day on which typhoon signal no. 8 or a black rainstorm warning is hoisted in Hong Kong on which banks are generally open for business in Hong Kong China New Rich China New Rich Medicine Holding Co. Limited ( ), an investment holding company incorporated in Hong Kong with limited liability on 7 February 2005 and a wholly-owned subsidiary of Max Goodrich and the intermediate holding company of the Domestic Companies as at the Latest Practicable Date Company Town Health International Holdings Company Limited ( ), a company incorporated in Cayman Islands with limited liability and the shares of which are listed on the main board of the Stock Exchange (stock code: 3886) Completion completion of the Subscription in accordance with the Agreement Completion Date being the third Business Day immediately following the date on which the conditions precedent are fulfilled or waived (where applicable), or such other date as the parties to the Agreement may agree in writing 1

4 DEFINITIONS Connected person(s) Consideration Director(s) Domestic Companies Group GSP Certificate has the meaning ascribed to it under the Listing Rules RMB66.6 million (equivalent to approximately HK$75.4 million), being the consideration payable by the Subscriber to Max Goodrich for the Subscription under the Agreement the director(s) of the Company PRC incorporated entities namely Hong Rui (Hangzhou), Hangzhou Xin Hong, Hainan Hong Rui, Zhejiang Xin Rui and Zhejiang Hong Rui, all of which are whollyowned by Max Goodrich through China New Rich as at the Latest Practicable Date the Company together with its subsidiaries (as defined in the Listing Rules) Certificate of Good Supply Practices for Pharmaceutical Products Hainan Hong Rui (Hainan Hong Rui Pharmaceutical Co. Ltd.*), a company incorporated in the PRC on 30 January 2007 and a wholly-owned subsidiary of Hangzhou Xin Hong as at the Latest Practicable Date Hangzhou Xin Hong Hangzhou Xin Hong Approval Hong Kong (Hangzhou Xin Hong Bio-medical Technology Co. Ltd.*), a company incorporated in the PRC on 14 March 2001 and a wholly-owned subsidiary of Hong Rui (Hangzhou) as at the Latest Practicable Date the approval to be issued by the relevant PRC authorities in relation to the acquisition of Hangzhou Xin Hong by Hong Rui (Hangzhou) in August 2008 Hong Kong Special Administrative Region of the PRC Hong Rui (Hangzhou) ( ) (Hong Rui (Hangzhou) Bio-medical Technology Co. Ltd.*), a company incorporated in the PRC on 8 July 2008 and a wholly-owned subsidiary of China New Rich as at the Latest Practicable Date 2

5 DEFINITIONS Independent Third Party(ies) Issuer or Max Goodrich Latest Practicable Date Listing Rules Mr. Zhou PRC SFO Shareholder(s) Stock Exchange person(s) or company(s) who/which is(are) independent of and not connected with the Company and its Connected persons Max Goodrich International Limited, a limited liability company incorporated in the British Virgin Islands and held as to 40.97% by Mr. Zhou and as to 59.03% by other Independent Third Parties as at the Latest Practicable Date 16 January 2009, being the latest practicable date prior to printing of this circular for the purpose of ascertaining certain information for inclusion in this circular the Rules Governing the Listing of Securities on the Stock Exchange Mr. Zhou Ling, being the guarantor of Max Goodrich for the purpose of the Agreement and the beneficial and registered owner of 40.97% of the issued share capital of Max Goodrich as at the Latest Practicable Date the People s Republic of China, which for the purpose of this circular shall exclude Hong Kong, Taiwan and the Macau Special Administrative Region Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) the holder(s) of the ordinary share(s) of HK$0.01 each in the issued share capital of the Company The Stock Exchange of Hong Kong Limited Subscriber or Sino Allied Sino Allied Development Limited ( *), a limited liability company incorporated in the British Virgin Islands and an indirect wholly-owned subsidiary of the Company Subscription the subscription of the Subscription Shares by the Subscriber pursuant to the Agreement 3

6 DEFINITIONS Subscription Shares 10,710 new shares of US$1.00 each in the issued share capital of Max Goodrich to be allotted and issued by Max Goodrich pursuant to the Subscription, representing 51% of the entire issued share capital of Max Goodrich as enlarged by the Subscription Zhejiang Hong Rui (Zhejiang Hong Rui Trading Co. Ltd.*), a company incorporated in the PRC on 6 September 2005 and a wholly-owned subsidiary of Hainan Hong Rui as at the Latest Practicable Date Zhejiang Xin Rui (Zhejiang Xin Rui Pharmaceutical Co. Ltd.*), a company incorporated in the PRC on 26 April 2006 and a wholly-owned subsidiary of Hainan Hong Rui as at the Latest Practicable Date HK$ Hong Kong dollars, the lawful currency of Hong Kong RMB Renminbi, the lawful currency of the PRC % per cent. * For identification purposes only For the purpose of illustration only, amounts denominated in RMB in this circular have been translated into HK$ at the rate of RMB1 = HK$ Such translations should not be construed as a representation that the amounts in question have been, could have been or could be converted at any particular rate at all. 4

7 LETTER FROM THE BOARD TOWN HEALTH INTERNATIONAL HOLDINGS COMPANY LIMITED (incorporated in the Cayman Islands with limited liability) (Stock Code: 3886) Executive Directors: Miss Choi Ka Yee, Crystal Dr. Cho Kwai Chee Dr. Hui Ka Wah, Ronnie JP Non-executive Director: Dr. Choi Chee Ming JP Independent non-executive Directors: Mr. Chan Kam Chiu Mr. Wai Kwok Hung JP Mr. Ho Kwok Wah, George Registered office: Ugland House P.O. Box 309 George Town Grand Cayman Cayman Islands British West Indies Head office and principal place of business in Hong Kong: Shop No. 37, Level 3 Hilton Plaza Commercial Centre 3-9 Shatin Centre Street Shatin, New Territories Hong Kong 21 January 2009 To the Shareholders Dear Sir or Madam, DISCLOSEABLE TRANSACTION IN RELATION TO THE SUBSCRIPTION OF SUBSCRIPTION SHARES INTRODUCTION On 24 December 2008, the Subscriber, being an indirectly wholly-owned subsidiary of the Company, entered into the Agreement with Max Goodrich and Mr. Zhou (as the guarantor of Max Goodrich) pursuant to which Max Goodrich has conditionally agreed to allot and issue, and the Subscriber has conditionally agreed to subscribe for the Subscription Shares at a consideration of RMB66.6 million (equivalent to approximately HK$75.4 million) to be satisfied in cash. Mr. Zhou has guaranteed in favour of the Subscriber that the net profit after taxation of Max Goodrich for each of the four years ending 31 March 2012 shall be not less than RMB10 million (equivalent to approximately HK$11.3 million). The purpose of this circular is to provide you with information concerning the Agreement and other information as required under the Listing Rules. 5

8 LETTER FROM THE BOARD THE AGREEMENT Date 24 December 2008 Parties Subscriber: Issuer: Guarantor: Sino Allied, an indirectly wholly-owned subsidiary of the Company Max Goodrich Mr. Zhou, as the guarantor of Max Goodrich To the best of the Directors knowledge, information and belief having made all reasonable enquiries, each of Max Goodrich and its ultimate beneficial owners and Mr. Zhou is an Independent Third Party. The principal business of each of Sino Allied and Max Goodrich is investment holding. Shares to be subscribed 10,710 new shares to be allotted and issued by Max Goodrich pursuant to the Subscription, representing 51% of the issued share capital of Max Goodrich as enlarged by the Subscription. Consideration The Consideration for the Subscription is RMB66.6 million (equivalent to approximately HK$75.4 million). The Consideration was determined after arms length negotiations between the Subscriber and Max Goodrich taking into account (i) the unaudited combined net assets value of China New Rich of approximately RMB37.7 million as at 31 March 2008; (ii) the current business and development of the Acquired Group; and (iii) the Profits Guarantee, details of which are set out in the section headed Profits Guarantee below. Pursuant to the Agreement, the Consideration shall be settled in cash by the Subscriber to Max Goodrich in two installments as follows: 1. an amount of RMB45 million (the Deposit ) shall be paid upon signing of the Agreement by the relevant parties; and 2. the balance of the Consideration of RMB21.6 million shall be paid within 6 months after signing of the Agreement by the relevant parties. 6

9 LETTER FROM THE BOARD The Subscriber has paid the Deposit to Max Goodrich on 24 December The Consideration will be financed from the internal resources of the Group. Conditions precedent Completion shall be conditional on the following conditions being satisfied: (i) (ii) each of the Subscriber, Max Goodrich and Mr. Zhou having obtained all necessary consents and approvals in relation to the Subscription from any relevant governmental or regulatory authorities, including, among others, any approval requirement in relation to the Subscription as required by the Listing Rules; no event, fact or circumstance arising or is threatening to arise which would result in any breach of any of the relevant warranties and any relevant guarantees given by Max Goodrich and/or Mr. Zhou, respectively, under the Agreement; (iii) the obtaining of a legal opinion (in form and substance reasonably satisfactory to the Subscriber) issued by a qualified PRC legal adviser acceptable to the Subscriber covering matters relating to the due incorporation and continuity of the Domestic Companies and any other issues relevant to the Agreement; and (iv) the Subscriber conducting a due diligence review of the Acquired Group and being satisfied as to the due diligence findings. The Subscriber may at its absolute discretion waive the above conditions precedent (except conditions (i) and (iii)) in writing. In the event that the above conditions cannot be satisfied or waived (where applicable) on or before 31 December 2008 or such later date as may be agreed by the parties in writing, the Agreement shall cease and be deemed void and Max Goodrich shall promptly refund to the Subscriber the Deposit in full and no party will have any further rights or obligations under the Agreement except for any antecedent breach of any obligation under the Agreement. On 16 January 2009, the parties has entered into an extension letter pursuant to which had agreed in writing to extend the above date for fulfillment of the conditions to on or before 30 April 2009 (or such later date as may be agreed by the parties in writing). Completion Completion shall take place on the Completion Date. Upon Completion, Max Goodrich will become a subsidiary of the Company. Profits Guarantee Pursuant to the Agreement, Mr. Zhou has irrevocably guaranteed to the Subscriber that the audited consolidated net profit after taxation but before extraordinary items of Max Goodrich for each of the four financial years ending 31 March 2012 shall be not less than RMB10 million (the Profits Guarantee ). The Profits Guarantee is determined after arms length negotiations between the Subscriber and Mr. Zhou after taking into account the business potential of Max Goodrich. 7

10 LETTER FROM THE BOARD In the event that the actual net profit after taxation but before extraordinary items of Max Goodrich for any of the four financial years ending on 31 March 2012 (the Actual Profit ) is less than RMB10 million, Mr. Zhou shall within 7 Business Days from the date on which the independent auditor of Max Goodrich appointed by the Company issues a confirmation in respect of Actual Profit pay the Subscriber in cash an amount in which the Actual Profit falls short of RMB10 million. The parties to the Agreement have also agreed that Max Goodrich shall distribute 40%, or such other percentage that may be agreed by the parties to the Agreement, of its net profit after taxation as dividend for each of the first two financial years after Completion, and 60%, or such other percentage that may be agreed by the parties to the Agreement, of its net profit after taxation as dividend for each of the third and fourth financial years after Completion. The Agreement also stipulates that Max Goodrich shall distribute 10%, or a percentage that may be agreed by the parties to the Agreement, of the excess of the Actual Profit over the annual guaranteed profit under the Profits Guarantee of RMB10 million as management bonus for each of the four financial years ending 31 March Put Option Pursuant to the Agreement, Mr. Zhou has undertaken to the Subscriber to: 1. procure Hong Rui (Hangzhou) to submit an application to the relevant PRC authorities, in compliance with the relevant PRC laws and regulations, in respect of the Hangzhou Xin Hong Approval on or before 31 March 2009 and will use his best endeavours to ensure that the Hangzhou Xin Hong Approval shall be granted to Hong Rui (Hangzhou) without conditions which may adversely affect the operations of the Acquired Group; 2. procure Hainan Hong Rui to rectify the irregularities relating to the Hainan Licenses (details of which is set out in the paragraph headed Information on the Acquired Group below) on or before 31 December 2009; and 3. procure that the MB license (as defined below) and the GSP Certificate held by Hainan Hong Rui will be successfully renewed when expired in December 2009 and September 2009 respectively. Pursuant to the Agreement, Mr. Zhou has granted the Put Option to the Subscriber pursuant to which in the event that Mr. Zhou fails to fulfill his obligations under any of the above undertakings or if either of the Hainan Licenses (as defined below) is revoked by the relevant PRC authorities on or before 31 December 2014, the Subscriber has the sole and absolute discretion, after 31 March 2009, to require Mr. Zhou to purchase the Subscription Shares at the Consideration. The Company will make further announcement as required by the Listing Rules in the event that the Subscriber exercises its discretion as mentioned above. 8

11 LETTER FROM THE BOARD Security for Mr. Zhou s obligations As security for Mr. Zhou s obligations under the Agreement, including but not limited to the Profits Guarantee and the Put Option, Mr. Zhou has undertaken to pledge and procure the other shareholders of Max Goodrich to pledge all their shares in Max Goodrich, which in aggregate represents 49% of the issued share capital of Max Goodrich as enlarged by the Subscription, to the Subscriber upon Completion. INFORMATION ON THE ACQUIRED GROUP Max Goodrich is an investment holding company with limited liability, which was incorporated in the British Virgin Islands on 21 September 2007 and became the holding company of China New Rich on 16 January Since its incorporation and up to the Latest Practicable Date, Max Goodrich has recorded no revenue. Save for the shareholding interest in China New Rich, Max Goodrich has no other significant assets or liabilities. China New Rich was incorporated in Hong Kong with limited liability on 7 February 2005 and, as at the Latest Practicable Date, is the sole equity holder of the Domestic Companies, namely Hong Rui (Hangzhou), Hangzhou Xin Hong, Hainan Hong Rui, Zhejiang Xin Rui and Zhejiang Hong Rui. The Domestic Companies are principally engaged in distribution of Chinese herbal medicine, chemical raw pharmaceutical, antibiotics, biomedicine and other pharmaceutical products in the PRC. Set out below is the corporate structure of the Acquired Group: 9

12 LETTER FROM THE BOARD Set out below is the unaudited combined financial information of China New Rich for each of the two years ended 31 March 2008: For the year ended 31 March RMB 000 RMB 000 (unaudited) (unaudited) Revenue 0 47,581 Net loss before taxation (920) (2,465) Net loss after taxation (920) (2,655) As at 31 March RMB 000 RMB 000 (unaudited) (unaudited) Total assets 20,998 64,737 Net assets 10,417 37,562 Each of Hainan Hong Rui and Zhejiang Xin Rui respectively holds a ( MB license ) and a GSP Certificate, which permits each of Hainan Hong Rui and Zhejiang Xin Rui respectively to carry out the trading and distribution of pharmaceutical products in the PRC. Set out below is the major terms of the MB license and the GSP Certificate held by each of Hainan Hong Rui and Zhejiang Xin Rui: MB license Name of holder Way of Operation Scope of Business Expiry Date Hainan Hong Rui Wholesale Chinese medicines; pharmaceutical bulk drugs; chemical medicinal preparations; antibiotics; biochemical drugs; biological product Zhejiang Xin Rui Wholesale Chinese medicines; Chinese Herb; TCM tablet; pharmaceutical bulk drugs; antibiotics; biochemical drugs; biological product 31 December April

13 LETTER FROM THE BOARD GSP Certificate Name of holder Way of Operation Content Expiry Date Hainan Hong Rui Wholesale Hainan Hong Rui is certified to have complied with the requirements of Chinese Good Supply Practices for Pharmaceutical Products in respect of the quality management on the supply of pharmaceutical products. Zhejiang Xin Rui Wholesale Zhejiang Xin Rui is certified to have complied with the requirements of Chinese Good Supply Practices for Pharmaceutical Products in respect of the quality management on the supply of pharmaceutical products. 8 September July 2011 As advised by Mr. Zhou, in applying for the MB license and the GSP Certificate for Hainan Hong Rui, the staff of Hainan Hong Rui had made a mistake in submitting an application for the change in company particulars, instead of filing a new application for the licenses. The irregularity was not discovered until during the due diligence process of the Subscription and Mr. Zhou has agreed to rectify the irregularity under the Agreement. As the irregularity was just discovered, Hainan Hong Rui has not yet resubmitted the relevant correct documents to the PRC authorities. According to Mr. Zhou, the relevant PRC authorities would not rely solely on application itself and would check the capacity and eligibility of Hainan Hong Rui prior to the grant of the relevant licenses. As advised by the legal advisers of the Company in respect of PRC laws (the PRC Legal Advisers ), based on the applicable PRC laws and regulations, the MB license and the GSP Certificate held by Hainan Hong Rui (the Hainan Licenses ) may be revoked by the PRC authorities and in such circumstance, Hainan Hong Rui will be banned from applying for the license within 5 years and fined a penalty of RMB10,000 to RMB30,000. The PRC Legal Advisers further advised that (i) the Hainan Licenses remain valid until and unless they are revoked by the PRC authorities; (ii) the business transactions to which Hainan Hong Rui as one party completed prior to the revocation of the Hainan Licenses will not be affected by such revocation; and (iii) Hainan Hong Rui will not be subject to any penalty in respect of conducting of the business transactions prior to the revocation of the Hainan Licenses. 11

14 LETTER FROM THE BOARD Pursuant to the Agreement, Mr. Zhou will procure Hainan Hong Rui to rectify the irregularities relating to the Hainan Licenses in such manner as satisfied by the Subscriber. As advised by Mr. Zhou, he intends to rectify such irregularities before 31 March 2009 by seeking a confirmation from the relevant PRC authorities confirming the validity of the Hainan Licenses. In the event that the irregularities cannot be rectified and the Hainan Licenses are revoked, the Acquired Group can continue its existing business through Zhejiang Xin Rui, which holds valid MB license and GSP Certificate. Having considered the fact that Zhejiang Xin Rui also holds a MB license and a GSP Certificate of the same nature which allow the Acquired Group to continue the business of trading and distribution of pharmaceutical products in the event that the Hainan Licenses are revoked and the consequences and maximum penalties resulting from such revocation, the Directors consider that the irregularities relating to the Hainan Licenses will not have a material impact on the Subscription. In addition, as set out in the paragraph headed Put Option above, Mr. Zhou has granted the Put Option to the Subscriber pursuant to which the Subscriber has the sole and absolute discretion to require Mr. Zhou to purchase the Subscription Shares at the Consideration in the event that either of the Hainan Licenses is revoked by the PRC authorities on or before 31 December REASONS FOR AND BENEFITS OF THE SUBSCRIPTION The Group is principally engaged in the provision of management service for private medical and dental practices and a one stop shop integrated healthcare service to the public in Hong Kong. In light of the booming PRC pharmaceutical market attributable to the increasingly aging population, the increasing awareness on health issues of PRC citizens, the rapid economy growth and the increasing income levels of households in the PRC, the Directors believe that there is significant up-side potential in the pharmaceutical industry in the PRC and are of the view that the Subscription helps the Group to expand its revenue base and supplement to the Group s existing business in the long run. The Directors are of the view that the terms of the Agreement are on normal commercial terms, fair and reasonable and the entering into of the Agreement is in the interests of the Group and the Shareholders as a whole. FINANCIAL EFFECTS OF THE SUBSCRIPTION Upon Completion, Max Goodrich will become a subsidiary of the Company and thus its assets and liabilities and the financial results will be consolidated into those of the Group. It is expected that the total assets and the total liabilities of the Group will both increase upon Completion. The Directors consider that there will be no significant impact on the earnings of the Group immediately upon Completion. 12

15 LETTER FROM THE BOARD EFFECTS ON SHAREHOLDING STRUCTURE OF MAX GOODRICH The effects on the shareholding structure of Max Goodrich as a result of the Subscription are set out below: As at the Latest Practicable Date Number of shares held %ofthe total issued share capital As at the Completion Date %ofthe total Number of issued shares share held capital Mr. Zhou 4, % 4, % Other shareholders, being Independent Third Parties 6, % 6, % The Subscriber 10, % Total 10, % 21, % LISTING RULES IMPLICATION As the Consideration for the Subscription exceeds 5% but is less than 25% of the applicable percentage ratio under Chapter 14 of the Listing Rules, the Subscription of the Subscription Shares by the Group constitutes a discloseable transaction of the Company under the Listing Rules. ADDITIONAL INFORMATION Your attention is drawn to the additional information set out in the appendix to this circular. By order of the Board Town Health International Holdings Company Limited Cho Kwai Chee Executive Director 13

16 APPENDIX GENERAL INFORMATION 1. RESPONSIBILITY STATEMENT This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Group. The Directors collectively and individually accept full responsibility for the accuracy of the information contained in this circular and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, there are no other facts the omission of which would make any statement herein misleading. 2. DISCLOSURE OF INTERESTS BY DIRECTORS (a) As at the Latest Practicable Date, the interests and short positions of each Director in shares, underlying shares or, as the case may be, equity interest and debentures of the Company or its associated corporations (within the meaning 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: Name of Director The Company/ name of associated corporation Capacity Number and class of securities/ percentage in equity interest (Note 1) Approximate percentage of interest Dr. Cho Kwai Chee The Company Interest of controlled corporation Dr. Choi Chee Ming JP The Company Interest of controlled corporation 3,618,852,353 Shares (L) (Note 2) 3,618,852,353 Shares (L) (Note 3) 15.83% 15.83% Notes: 1. The letter L represents the Directors interests in the shares and underlying shares or, as the case may be, the percentage in the equity interest of the Company or its associated corporations. 2. These Shares were held by Broad Idea International Limited ( Broad Idea ), more than one-third of the issued share capital of which is beneficially owned by Dr. Cho Kwai Chee. By virtue of the provisions of Divisions 7 and 8 of Part XV of the SFO, Dr. Cho Kwai Chee is deemed to be interested in all the Shares in which Broad Idea is interested. As at the Latest Practicable Date, Dr. Cho Kwai Chee had an interest in Shares which would fall to be disclosed to the Company under the provisions of Division 2 and 3 of the SFO. 14

17 APPENDIX GENERAL INFORMATION 3. These Shares were held by Broad Idea, more than one-third of the issued share capital of which is beneficially owned by Dr. Choi Chee Ming JP. By virtue of the provisions of Divisions 7 and 8 of Part XV of the SFO, Dr. Choi Chee Ming JP is deemed to be interested in all the Shares in which Broad Idea is interested. As at the Latest Practicable Date, Dr. Choi Chee Ming JP has an interest in Shares which would fall to be disclosed to the Company under the provisions of Division 2 and 3 of the SFO. (b) Save as disclosed in this circular, as at the Latest Practicable Date, none of the Directors and the chief executive of the Company had any interest and short positions in shares, underlying shares or, as the case may be, equity interest and debentures of the Company or its associated corporations (within the meaning 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. (c) Directors service contracts As at the Latest Practicable Date, none of the Directors had a service contract with the Company or any of its subsidiaries which is not determinable by the Company or its subsidiaries within one year without payment of compensation, other than statutory compensation. (d) Competing interest As at the Latest Practicable Date, none of the Directors 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. 15

18 APPENDIX GENERAL INFORMATION 3. DISCLOSEABLE INTEREST UNDER DIVISIONS 2 AND 3 OF PART XV OF THE SFO AND SUBSTANTIAL SHAREHOLDERS So far as is known to the Directors or chief executive of the Company, as at the Latest Practicable Date, the following entity (other than a Director or chief executive of the Company whose interest and short positions are set out in paragraph 2 of this appendix above) had an interest or a short position in the shares and underlying shares in 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: Name of shareholder Number of Shares (Note 1) Nature of interest Approximate percentage of interest Broad Idea (Note 2) 3,618,852,353 (L) Beneficial owner 15.83% Notes: 1. The letter L represents the entity s interests in Shares. 2. Each of Dr. Cho Kwai Chee and Dr. Choi Chee Ming JP owns more than one-third of the issued share capital of Broad Idea. By virtue of the provisions of Divisions 2 and 3 of Part XV of the SFO, each of Dr. Cho Kwai Chee and Dr. Choi Chee Ming JP is deemed to be interested in all the Shares held by Broad Idea. Save as disclosed above, as at the Latest Practicable Date and so far as is known to the Directors or chief executive of the Company, there was no other person (other than a Director or chief executive of the Company) who had an interest or short position in shares or underlying shares in 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, or was directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings or, as the case may be, the registered capital of any other members of the Group. 4. LITIGATION As at the Latest Practicable Date, neither the Company nor any of its subsidiaries was engaged in any litigation or arbitration of material importance and there was no litigation or claim of material importance known to the Directors to be pending or threatened by or against either the Company or any of its subsidiaries. 16

19 APPENDIX GENERAL INFORMATION 5. GENERAL (a) The secretary and qualified accountant of the Company is Mr. Wong Seung Ming. He is a fellow of the Association of Chartered Certified Accountants and a Certified Public Accountant of the Hong Kong Institute of Certified Public Accountants. (b) The registered office of the Company is located at Ugland House, P.O. Box 309, George Town, Grand Cayman, Cayman Islands, British West Indies. (c) The Hong Kong branch share registrar and transfer office of the Company is Tricor Tengis Limited at 26th Floor, Tesbury Centre, 28 Queen s Road East, Wanchai, Hong Kong. (d) The English text of this circular shall prevail over the Chinese text in case of inconsistency. 17