circular dated 25 september 2012 this circular is ... · 9/25/2012 · recommendation to...

SHAREHOLDERS SHOULD NOTE THAT THE OFFER DOCUMENT STATES THAT ACCEPTANCES SHOULD BE RECEIVED BY THE CLOSE OF THE OFFER AT 5.30 P.M. ON 9 OCTOBER 2012. THE OFFEROR DOES NOT INTEND TO EXTEND THE OFFER BEYOND 9 OCTOBER 2012. THE OFFER WILL NOT BE OPEN FOR ACCEPTANCES BEYOND 5.30 P.M. ON 9 OCTOBER 2012.

CIRCULAR DATED 25 SEPTEMBER 2012

THIS CIRCULAR IS IMPORTANT AS IT CONTAINS THE RECOMMENDATION OF THE RECOMMENDING DIRECTORS OF LUYE PHARMA GROUP LTD. AND THE ADVICE OF HONG LEONG FINANCE LIMITED. THIS CIRCULAR REQUIRES YOUR IMMEDIATE ATTENTION. PLEASE READ IT CAREFULLY.

This Circular is issued by Luye Pharma Group Ltd. (the “Company”). If you are in any doubt in relation to this Circular or as to the action you should take, you should consult your stockbroker, bank manager, solicitor, accountant, tax adviser or other professional adviser immediately.

If you have sold or transferred all your issued and fully paid shares in the capital of the Company (“Shares”), held through The Central Depository (Pte) Limited (“CDP”), you need not forward this Circular to the purchaser or transferee as arrangements will be made by CDP for a separate Circular to be sent to the purchaser or transferee. If you have sold or transferred all your Shares which are not deposited with CDP, you should immediately forward this Circular to the purchaser or the transferee or to the bank, stockbroker or agent through whom the sale or transfer was effected for onward transmission to the purchaser or the transferee.

The Singapore Exchange Securities Trading Limited assumes no responsibility for the correctness of any of the statements made or reports contained or opinions expressed in this Circular.

(Registration No. 33854)(Incorporated in Bermuda)

CIRCULAR TO SHAREHOLDERS

in relation to the

VOLUNTARY UNCONDITIONAL CASH OFFER

by

DBS BANK LTD.(Incorporated in the Republic of Singapore)(Company Registration No. 196800306E)

for and on behalf of

LUYE PHARMACEUTICAL INVESTMENT CO., LTD.(Incorporated in the Cayman Islands)

(Company Registration Number. 200942)

to acquire all the issued and paid-up ordinary shares in the capital of Luye Pharma Group Ltd.

Independent Financial Adviser to the Recommending Directors of Luye Pharma Group Ltd.

HONG LEONG FINANCE LIMITED (Incorporated in the Republic of Singapore) (Company Registration No. 196100003D)

PAGE

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CONTENTS

DEFINITIONSDEFINITIONS 3

CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS 6

INDICATIVE TIMETABLE 7

LETTER TO SHAREHOLDERS 8

1. INTRODUCTION 8

2. THE OFFER 9

3. INFORMATION ON THE OFFEROR AND CONSORTIUM 10

4. RATIONALE FOR THE OFFER AND THE OFFEROR’S INTENTIONS FOR THE COMPANY 13

5. FINANCIAL EVALUATION OF THE OFFER 14

6. LISTING STATUS AND COMPULSORY ACQUISITION 15

7. ADVICE AND RECOMMENDATION 17

8. OVERSEAS SHAREHOLDERS 19

9. ACTION TO BE TAKEN 20

10. DIRECTORS’ RESPONSIBILITY STATEMENT 21

11. ADDITIONAL INFORMATION 21

APPENDIX 1 – ADDITIONAL GENERAL INFORMATION 22

APPENDIX 2 – LETTER FROM THE IFA TO THE RECOMMENDING DIRECTORS 32

APPENDIX 3 – VALUATION REPORTS 56

APPENDIX 4 – EXTRACT FROM THE COMPANY’S BYE-LAWS 69

APPENDIX 5 – SIGNIFICANT ACCOUNTING POLICIES OF THE GROUP 85

APPENDIX 6 – STATEMENT OF PROSPECTS 96

APPENDIX 7 – LETTER FROM THE AUDITORS IN RELATION TO THE STATEMENT OF PROSPECTS 97

APPENDIX 8 – LETTER FROM THE IFA IN RELATION TO THE STATEMENT OF PROSPECTS 99

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DEFINITIONS

Except where the context otherwise requires, the following definitions apply throughout this Circular:

“1Q” : The three (3) months financial period ended or ending 31 March

“2Q” : The three (3) months financial period ended or ending 30 June

“Act” : The Companies Act, Chapter 50 of Singapore

“Auditors” : Ernst & Young, Hong Kong, the independent auditors of the Company

“Bermuda Act” : The Companies Act 1981 of Bermuda

“Bye-laws” : The bye-laws of the Company

“Board” : Board of Directors of the Company

“CDP” : The Central Depository (Pte) Limited

“Circular” : This Circular to Shareholders in relation to the Offer, setting out, inter alia, the recommendation of the Recommending Directors and the advice of the IFA to the Recommending Directors

“Closing Date” : 9 October 2012, being the last day for the lodgement of acceptances for the Offer

“Code” : The Singapore Code on Take-overs and Mergers

“Company” : Luye Pharma Group Ltd.

“Directors” : The directors of the Company as at the Latest Practicable Date

“DBS” : DBS Bank Ltd.

“FAA” : Form of Acceptance and Authorisation which forms part of the Offer Document and which is issued to Shareholders whose Shares are deposited with CDP

“FAT” : Form of Acceptance and Transfer which forms part of the Offer Document and which is issued to Shareholders whose Shares are not deposited with CDP

“FY” : Financial year ended or ending 31 December

“Group” : The Company, its subsidiaries and associated companies

“HY” : The six (6) months financial period ended or ending 30 June

“IFA” : Hong Leong Finance Limited, the independent financial adviser to the Recommending Directors in relation to the Offer

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DEFINITIONS

“IFA Letter” : The letter from the IFA to the Recommending Directors dated 25 September 2012 containing the advice of the IFA to the Recommending Directors in respect of the Offer, a copy of which is set out in Appendix 2 of this Circular

“Latest Practicable Date” : 16 September 2012, being the latest practicable date prior to the printing of this Circular

“Listing Manual” : Main Board listing manual of the SGX-ST

“Market Day” : A day on which the SGX-ST is open for trading of securities

“Offer” : The voluntary unconditional cash offer by DBS, for and on behalf of the Offeror, to acquire all the Offer Shares on the terms and subject to the conditions set out in the Offer Document, the FAA and the FAT

“Offer Announcement” : The announcement relating to the Offer issued by DBS, for and on behalf of the Offeror, on the Offer Announcement Date

“Offer Announcement Date”

: 28 August 2012, being the date of the Offer Announcement

“Offer Document” : The offer document dated 11 September 2012 issued by DBS, for and on behalf of the Offeror, to the Shareholders

“Offer Price” : S$1.30 for each Offer Share

“Offer Shares” : The Shares, other than those already owned, controlled or agreed to be acquired by the Offeror

“Offeror” : Luye Pharmaceutical Investment Co., Ltd.

“Overseas Shareholders” : Shareholders whose mailing addresses are outside Singapore, as maintained on the register of members of the Company or, as the case may be, in the records of CDP

“PRC” : The People’s Republic of China

“Recommending Directors”

: The Directors who are independent for the purpose of making a recommendation to Shareholders in respect of the Offer, namely Tan Soo Kiat, Tan Chong Huat and Dr Hong Hai

“Securities Account” : A securities account maintained by a Depositor with CDP but does not include a securities sub-account

“SGX-ST” : Singapore Exchange Securities Trading Limited

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DEFINITIONS

“Shareholders” : Holders of Shares (including persons whose Shares are deposited with CDP or who have purchased Shares on the SGX-ST)

“Shares” : Issued and paid-up ordinary shares of par value US$0.02 each in the capital of the Company

“SIC” : Securities Industry Council

“Singapore Share Transfer Agent”

: Boardroom Corporate & Advisory Services Pte. Ltd.

“Statement of Prospects” : Has the meaning ascribed to it in Appendix 6 to this Circular

“S$” and “cents” : Singapore dollars and cents, respectively

“Valuation Reports” : The valuation reports from Yantai Zhengping Assets Appraisal Firm (烟台市正平资产评估事务所), Jiangsu Yonghe Land Real Estate Appraisal Co., Ltd (江苏永和土地房地产估价有限公司) and Beijing Lixin Runde Assets Appraisal Firm (北京立信润德资产评估事务所) dated 14 September 2012 as set out in Appendix 3 to this Circular

“%” or “per cent.” : Per centum or percentage

The expression “acting in concert” shall have the meaning ascribed to it in the Code.

The terms “Depositor”, “Depository Agent” and “Depository Register” shall have the meanings ascribed to them respectively in Section 130A of the Act and the terms “subsidiary” and “substantial shareholder” shall have the meanings ascribed to them in Sections 5 and 81 of the Act respectively.

The term “related corporation” shall have the meaning ascribed to it in Section 6 of the Act.

References to “you”, “your” and “yours” in this Circular are to Shareholders.

Words importing the singular shall, where applicable, include the plural and vice versa and words importing the masculine gender shall include the feminine and neuter genders and vice versa. References to persons shall, where applicable, include corporations.

Any reference in this Circular to any enactment is a reference to that enactment as for the time being amended or re-enacted. Any word defined under the Act, the Bermuda Act, the Listing Manual or the Code or any modification thereof and used in this Circular shall, where applicable, have the meaning assigned to it under the Act, the Bermuda Act, the Listing Manual or the Code or any modification thereof, as the case may be, unless the context otherwise requires.

Any reference to a time of day and date in this Circular is made by reference to Singapore time and date, unless otherwise stated.

Any discrepancies in figures included in this Circular between amounts shown and the totals thereof are due to rounding. Accordingly, figures shown as totals in this Circular may not be an arithmetic aggregation of the figures that precede them.

References in this Circular to the total number of Shares in issue are based on 492,764,900 Shares in issue as at the Latest Practicable Date, unless otherwise stated. As at the Latest Practicable Date, the Company does not hold any treasury shares.

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CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS

All statements other than statements of historical facts included in this Circular are or may be forward-looking statements. Forward-looking statements include but are not limited to those using words such as “anticipate”, “believe”, “estimate”, “expect”, “forecast”, “intend”, “plan”, “project”, “seek”, “strategy”, and similar expressions or future or conditional verbs such as “could”, “may”, “might”, “should”, “will” and “would”. These statements reflect the Company’s current expectations, beliefs, hopes, intentions or strategies regarding the future and assumptions in light of currently available information. Such forward-looking statements are not guarantees of future performance or events and involve known and unknown risks and uncertainties. Accordingly, actual results may differ materially from those described in such forward-looking statements. Shareholders should not place undue reliance on such forward-looking statements, and the Company assumes no obligation to update publicly or revise any forward-looking statement.

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INDICATIVE TIMETABLE

Date of despatch of Offer Document : 11 September 2012

Closing Date : 9 October 2012

Date of settlement of consideration for the Offer Shares

: Within 10 days after the date of receipt of valid and complete acceptances to the Offer

SUMMARY TIMETABLE

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LETTER TO SHAREHOLDERS

LUYE PHARMA GROUP LTD.(Registration No. 33854)

(Incorporated in Bermuda)

Directors: Registered Office:

Liu Dian Bo (Executive Chairman) Clarendon House2 Church Street Hamilton HM 11Bermuda

Yuan Hui Xian (Executive Director)Yang Rong Bing (Executive Director)Tan Soo Kiat (Independent Director)Tan Chong Huat (Independent Director)Hong Hai (Independent Director)

25 September 2012

To: The Shareholders of Luye Pharma Group Ltd.

Dear Sir/Madam

VOLUNTARY UNCONDITIONAL CASH OFFER BY DBS BANK LTD., FOR AND ON BEHALF OF LUYE PHARMACEUTICAL INVESTMENT CO., LTD., TO ACQUIRE ALL THE ISSUED AND PAID-UP ORDINARY SHARES IN THE CAPITAL OF THE COMPANY

INTRODUCTION1.

Offer Announcement1.1

On 28 August 2012, DBS issued the Offer Announcement, for and on behalf of the Offeror, that the Offeror intends to make the Offer for the Offer Shares in accordance with Rule 15 of the Code at the Offer Price. As stated in the Offer Announcement, the Offer will be unconditional in all respects.

Offer Document 1.2

Shareholders should have by now received a copy of the Offer Document despatched on 11 September 2012, setting out, inter alia, the terms and conditions of the Offer. Shareholders are urged to read carefully the terms and conditions contained therein.

A copy of the Offer Document is available on the website of the SGX-ST at www.sgx.com.

Independent Financial Adviser1.3

The Recommending Directors have appointed Hong Leong Finance Limited as their independent financial adviser in respect of the Offer.

Circular1.4

The purpose of this Circular is to provide Shareholders with relevant information pertaining to the Offer and to set out the recommendation of the Recommending Directors and the advice of the IFA in relation to the Offer. Shareholders should carefully consider the recommendation of the Recommending Directors and the advice of the IFA before deciding whether or not to accept the Offer.

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THE OFFER2.

Based on the information set out in the Offer Document, the Offeror has offered to acquire all the Offer Shares on the terms and subject to the conditions set out in the Offer Document, the FAA and the FAT on the following basis:

Offer Price2.1

As stated in section 2.1 of the Offer Document, the Offeror is making the Offer for the Offer Shares on the following basis:

For each Offer Share: S$1.30 in cash.

The Offer Shares are to be acquired (a) fully paid, (b) free from all liens, equities, mortgages, charges, encumbrances, rights of pre-emption and other third party rights and interests of any nature whatsoever, and (c) together with all rights, benefits and entitlement attached thereto as at the Offer Announcement Date and thereafter attaching thereto (including the right to receive and retain all dividends, other distributions and return of capital (if any) which may be announced, declared, paid or made thereon by the Company on or after the Offer Announcement Date). If any dividend, other distribution or return of capital is announced, declared, paid or made on or after the Offer Announcement Date, the Offeror reserves the right to reduce the Offer Price by the amount of such dividend, distribution or return of capital.

Offer Shares2.2

The Offer will be extended, on the same terms and conditions, to all the Shares owned, controlled or agreed to be acquired by any party acting or deemed to be acting in concert with the Offeror in connection with the Offer.

Unconditional Offer2.3

The Offer is unconditional in all respects. Shareholders who accept the Offer before the close of the Offer will be paid the Offer Price in cash within 10 days after the receipt by the Offeror of valid and complete acceptances to the Offer in accordance with the terms and conditions of the Offer Document.

Warranty2.4

According to section 2.4 of the Offer Document, acceptance of the Offer will be deemed to constitute an unconditional and irrevocable warranty by the accepting Shareholder that each Offer Share tendered in acceptance of the Offer is sold by the accepting Shareholder, as or on behalf of the beneficial owner(s) thereof, (a) fully paid, (b) free from all liens, equities, mortgages, charges, encumbrances, rights of pre-emption and other third party rights and interests of any nature whatsoever, and (c) together with all rights, benefits and entitlements attached thereto as at the Offer Announcement Date and thereafter attaching thereto (including the right to receive and retain all dividends, other distributions and return of capital (if any) which may be announced, declared, paid or made thereon by the Company on or after the Offer Announcement Date).

Closing Date2.5

Shareholders should note that the Offer will close at 5.30 p.m. on 9 October 2012. The Offeror does not intend to extend the Offer beyond 5.30 p.m. on 9 October 2012. THE OFFER WILL NOT BE OPEN FOR ACCEPTANCE BEYOND 5.30 P.M. ON 9 OCTOBER 2012. ACCEPTANCES RECEIVED AFTER 5.30 P.M. ON 9 OCTOBER 2012 WILL BE REjECTED.

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Details of the Offer2.6

Further details of the Offer are set out in Appendix IV to the Offer Document, including details on (a) the settlement of the consideration for the Offer; (b) the requirements relating to the announcement of level of acceptances of the Offer; and (c) the right of withdrawal of acceptance of the Offer.

Procedures for acceptance2.7

The procedures for acceptance of the Offer are set out in Appendix V to the Offer Document.

INFORMATION ON THE OFFEROR AND CONSORTIUM3.

The following has been extracted from section 3 of the Offer Document and is set out in italics below. Unless otherwise defined, all terms and expressions used in the extract below shall have the same meanings as those defined in the Offer Document. Shareholders are advised to read the extract below carefully:

“3.1 The Offeror

The Offeror is an investment holding company incorporated under the laws of the Cayman Islands on 10 December 2007. The Offeror has not carried on any business since its incorporation, except to enter into certain arrangements in connection with the Offer and the formation of the Consortium (as elaborated in paragraphs 3.3 and 3.4 below). As at the Latest Practicable Date, the Offeror has an issued and paid-up share capital of US$1.00, consisting of one ordinary share of par value US$1.00.

Appendix I of this Offer Document sets out certain additional information on the Offeror.

3.2 Offeror Group

The Offeror is wholly owned by LPH, through its wholly owned subsidiary, LPI, both of which are companies incorporated in the Cayman Islands. As at the Latest Practicable Date, LPH has an issued share capital of US$10,000 divided into 1,000,000 ordinary shares of par value of US$0.01 each and US$0.03 divided into three special shares of par value of US$0.01 each (“Special Share”).

AsiaPharm, a company incorporated in Bermuda, holds all the issued ordinary shares in the capital of LPH. LDB, YRB and YHX (collectively, the “Founders”) are the directors and shareholders of AsiaPharm, holding 70%, 15% and 15% of the issued share capital in AsiaPharm respectively.

3.3 Consortium

The Founders have formed a consortium with CDH Flower Limited (“CDH Flower”), CPE Greenery Ltd. (“CPE Greenery”) and Beyond Border Investment Limited (“BBI”, together with CDH Flower and CPE Greenery, the “Investors”) to make the Offer (“Consortium”). Each of the Investors currently holds one Special Share in the capital of LPH.

(a) CDH Flower

CDH Flower is a Cayman Islands incorporated investment holding company wholly owned by CDH Pharmaceutical Investments Limited (“CDH PIL”), a company incorporated in the Cayman Islands. CDH PIL is in turn wholly owned by CDH Fund IV, L.P. (“CDH Fund IV”), an exempted limited partnership organised under the laws of the Cayman Islands. CDH IV Holdings Company Limited, a limited liability company incorporated under the laws of the Cayman Islands, is the general partner of CDH Fund IV. CDH China Management Company Limited (“CDH”), a limited liability company incorporated under the laws of the Cayman Islands, is the management company of CDH Fund IV. CDH is a leading private equity company primarily specialising in growth capital, middle market and buyout investments in Greater China. PJ is CDH Flower’s nominee director on the board of directors of the Offeror.

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(b) CPE Greenery

CPE Greenery is a Cayman Islands incorporated investment holding company owned by CPEChina Fund, L.P. (“CPEChina”) and CPE Palm Beach L.P. (“CPE Palm Beach”), both of which are exempted limited partnerships registered under the laws of the Cayman Islands. The general partner of CPEChina is CITIC PE Associates, L.P., an exempted limited partnership registered under the laws of the Cayman Islands whose general partner is CITIC PE Funds Limited (“CITIC PE”), a company incorporated in the Cayman Islands. The general partner of CPE Palm Beach is CPE Coinvest Management Limited, which is a company incorporated in the Cayman Islands and 100% owned by CITIC PE. CPEChina is a China-focused private equity fund and CPE Palm Beach is an investment fund for project co-investment by certain limited partners of CPEChina. LD is CPE Greenery’s nominee director on the board of directors of the Offeror.

(c) BBI

BBI is jointly owned by Harvest Hill Investment Ltd. (“HHI”) and AXA Direct Asia II, L.P. (“AXA Fund”). HHI is a company incorporated in the Cayman Islands and is wholly owned by New Horizon Capital III, L.P. (“NHC”), a limited partnership registered under the laws of the Cayman Islands. The general partner of NHC is New Horizon Capital Partners III Ltd (“New Horizon”), a company incorporated in the Cayman Islands. New Horizon is a leading private equity company focusing on investing in the PRC, particularly in the consumer and retail, alternative energy, pharmaceutical and healthcare, and advanced manufacturing sectors. AXA Fund is a limited partnership registered under the laws of Scotland and the general partner of AXA Fund is AXA PE Asia Manager Limited, a company incorporated in Jersey. AXA Fund is an Asia-Pacific focused vehicle, with a specific focus on the most significant countries in terms of private equity activity: the PRC, Australia, India, South Korea and South-East Asia. WX is BBI’s nominee director on the board of directors of the Offeror.

3.4 Consortium Arrangements

The arrangements comprised in the Consortium include the following:

The Offeror, the Founders, AsiaPharm, LPI and LPH have entered into a consortium (a) agreement with the Investors (“Consortium Agreement”), under which the Investors have subscribed in cash for such amount of convertible and exchangeable bonds (“Bonds”) issued by LPH, and the proceeds have been utilised in part to fund the acquisition of Shares by the Offeror pursuant to married trades as disclosed in paragraph 1( b) of Appendix III below and will be utilised, inter alia, to fund the fees and expenses in connection with the Offer.

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The Bonds are convertible into issued ordinary shares of LPH or exchangeable into Shares (b) in the Company held by the Offeror at any time after the first anniversary of the date of issue or upon the occurrence of certain events of default, unless waived by the Investors holding at least two thirds of the Shares in LPH or the Shares in the Company issuable or exchangeable for and/or issued or exchanged for upon the conversion or exchange of all outstanding Bonds (the “Requisite Holders”).

Under the Consortium Agreement, the board of Directors of the Offeror shall initially (c) comprise seven Directors, with each Investor being entitled to appoint or remove at least one Director as long as it continues to hold at least 20% of all the outstanding Bonds and AsiaPharm being entitled to appoint or remove the remaining Directors so long as it continues to hold a majority of the enlarged issued share capital of LPH on a fully diluted and as converted basis. It was also agreed that AsiaPharm will have the exclusive right to nominate and replace the chief executive officer of LPH, and after the Offeror has acquired no less than 95% of all the Shares, the Requisite Holders will have the right to nominate and replace the chief financial officer of LPH whose appointment shall be subject to the approval of the board of directors of LPH.

Each Consortium member has agreed under the Consortium Agreement that LPH and (d) its subsidiaries and associated companies (each, “LPH Group Company”) shall not undertake certain reserved matters (the “Reserved Matters”) unless approved by the Requisite Holders. The Reserved Matters include, inter alia, (i) any change in the nature and/or scope of the business of any LPH Group Company, (ii) any dissolution or winding-up of any LPH Group Company, (iii) any issue of equity in any LPH Group Company except for the issuance of shares in LPH or Shares upon the conversion or exchange of the Bonds, and (iv) incurrence of indebtedness by any LPH Group Company which exceeds a certain threshold agreed by the Consortium members. Where the Company remains listed on the SGX-ST, the sole obligation of the parties to the Consortium Agreement will be to ensure that LPH’s nominee(s) on the board of the Company and its major PRC subsidiaries vote in accordance with LPH’s resolution (as approved by the Requisite Holders) on a Reserved Matter to the extent permitted under applicable laws.

Under the Consortium Agreement, AsiaPharm and the Founders have agreed to maintain (e) certain shareholding interests in LPH for so long as the Investors hold in aggregate no less than 20% of all the outstanding Bonds. Each Investor has also agreed not to, without the prior written consent of other Consortium members, transfer any of the Bonds for a restricted period except upon the occurrence of certain events of default.

The transfer of shares in LPH or Bonds is subject to the right of first offer by non-transferring (f) shareholders of LPH or holders of Bonds (collectively, “ROFO Holders”) under the terms of the Consortium Agreement, and if the transferor of such shares or Bonds is not an Investor, the ROFO Holders who do not exercise their respective rights of first offer are also entitled to participate in such sale.

3.5 Resultant Position

It is currently contemplated that immediately following the close of the Offer and assuming that the Company becomes a wholly owned subsidiary of the Offeror upon the close of the Offer:

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(a) LPI will hold the entire issued share capital of the Offeror and LPH will hold the entire issued share capital of LPI;

(b) AsiaPharm will hold all the issued ordinary shares in LPH while each Investor will hold one Special Share in LPH;

(c) the Investors will hold all outstanding Bonds. If all outstanding Bonds are fully converted as at the close of the Offer, the shareholding percentages of AsiaPharm, CDH Flower, CPE Greenery and BBI of all issued ordinary shares of LPH on a fully diluted basis and as converted basis would be 55.00%, 11.76%, 23.29% and 9.95% respectively; and

(d) if all outstanding Bonds are fully exchanged by the Investors into Shares held by the Offeror as at the close of the Offer, the shareholding percentages of the Offeror, CDH Flower, CPE Greenery and BBI in the issued share capital of the Company would be approximately 55.00% , 11.76% , 23.29% and 9.95% respectively.”

Additional information on the Offeror is set out in Appendix I of the Offer Document.

RATIONALE FOR THE OFFER AND THE OFFEROR’S INTENTIONS FOR THE COMPANY4.

The full text of the rationale for the Offer and the Offeror’s intentions for the Company has been extracted from section 5 of the Offer Document and is set out in italics below. All terms and expressions used in the extract below shall have the same meanings as those defined in the Offer Document, unless otherwise stated. Shareholders are advised to read the extract below carefully.

“5.1 Opportunity for the Remaining Shareholders to Realise Their Investment

As at the Latest Practicable Date, the Offeror owns, controls or has agreed to acquire an aggregate of 456,427,747 Shares, representing approximately 92.63% of all the Shares. This implies that no more than approximately 7.37% of all the Shares are held in public hands. Under Rule 724(1) of the Listing Manual, the SGX-ST may suspend trading of all the Shares if the percentage of the Shares (excluding treasury shares) held in public hands falls below 10%. Further, the SGX-ST may allow the Company a period of three months, or such longer period as the SGX-ST may agree, to raise the percentage of Shares in public hands to at least 10%, failing which the Company may be delisted.

As noted in paragraph 7.3 of this Offer Document, the Offeror is making the Offer with a view to delisting the Company from the SGX-ST and exercising any rights of compulsory acquisition that may arise under the Bermuda Companies Act. Hence, the Offer is intended to provide to the remaining Shareholders an opportunity to realise their investment in the Shares, without incurring brokerage and other trading costs, at a premium of approximately 20.4%, 21.5%, 39.8% and 41.3% over the one-month VWAP of S$1.08, three-month VWAP of S$1.07, six-month VWAP of S$0.93 and 12-month VWAP of S$0.92 respectively, in the period up to and including 27 July 2012 (the “Last Full Trading Day”), being the last full Market Day prior to the Offer Announcement Date. As the Offer is unconditional in all respects, Shareholders who accept the Offer before the Offer closes will be paid in cash within 10 days after the receipt by the Offeror of valid and complete acceptances to the Offer in accordance with the terms and conditions of this Offer Document.

Shareholders who do not accept the Offer will, in the event that the Company is delisted and the Offeror is not entitled to exercise any right of compulsory acquisition following the close of the Offer, hold Shares in an unlisted company for which there is no public market.

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5.2 Generally Low Trading Liquidity of Shares

Further, the trading volume of the Shares on the SGX-ST over the year has been low, with an average daily trading volume of approximately 50,682 Shares, 59,266 Shares, 192,563 Shares and 105,480 Shares during the one-month period, three-month period, six-month period and 12-month period up to and including the Last Full Trading Day. This represents only approximately 0.01%, 0.01%, 0.04% and 0.02% of all the Shares respectively. Hence, the Offer will provide an exit opportunity for Shareholders who wish to realise their entire investment in the Shares but find it difficult to do so as a result of the low trading liquidity of the Shares.

5.3 Greater Management Flexibility

The Offeror believes that delisting the Company from the SGX-ST and privatising the Company will give the Offeror and the management of the Company more flexibility to manage the business of the Company and optimise the use of its management and capital resources.

5.4 Offeror’s Intentions for the Company

Following the close of the Offer, the Offeror intends to undertake a strategic and operational review of the organisation, businesses and operations of the Group which may involve the disposal or cessation of under-performing businesses and assets and the redeployment of certain employees to other entities within the Group.

Save as disclosed above, the Offeror has no present intention to (a) make any major changes to the existing businesses of the Company, (b) redeploy the fixed assets of the Company, or (c) discontinue the employment of the employees of the Group. Nonetheless, the Offeror retains the flexibility at any time to consider any options or opportunities which may present themselves and which it regards to be in the interests of the Offeror and/or the Company. Depending on the Group’s future performance, the Offeror intends to evaluate in due course various strategic options following the privatisation of the Company, including listing the shares of the Offeror on a recognised stock exchange at an opportune time in the future if market conditions and regulatory environment are favourable.”

FINANCIAL EVALUATION OF THE OFFER5.

The information on financial evaluation of the Offer set out in italics below has been extracted from section 6 of the Offer Document. All terms and expressions used in the extract below shall have the same meanings as those defined in the Offer Document, unless otherwise stated. Shareholders are advised to read the extract below carefully:

“6.1 IPO Price Comparison

The Offer Price represents a significant premium of approximately 364.3% over the Company’s initial public offering of S$0.28 per Share.

6.2 Market Price Comparison

The Offer Price represents the following premia over the historical traded prices of the Shares:

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Description Share Price (S$)(1)

Premium over Share Price (%)

Last transacted price per Share on 30 July 2012 (a) (being the last Market Day on which Shares were traded on the SGX-ST prior to the Latest Practicable Date)

1.25 4.0

Last transacted price per Share on the Last Full (b) Trading Day

1.12 16.1

VWAP for the one-month period prior to and (c) including the Last Full Trading Day

1.08 20.4

VWAP for the three-month period prior to and (d) including the Last Full Trading Day

1.07 21.5

VWAP for the six-month period prior to and (e) including the Last Full Trading Day

0.93 39.8

VWAP for the 12-month period prior to and (f) including the Last Full Trading Day

0.92 41.3

Note:(1) The Share prices set out in the table above are rounded to two decimal places and are computed based on data

extracted from Bloomberg L.P. on 30 July 2012.

6.3 NAV per Share Comparison

The Offer Price represents a premium of approximately 136.4% over the NAV per Share of approximately RMB2.76 (equivalent to approximately S$0.55 adopting an exchange rate of S$1.00 to RMB5.0235), calculated based on the net asset of the Group6 (excluding non-controlling interests) and the Company’s total issued share capital of 492,764,900 Shares. 5 Based on data extracted from Bloomberg L.P. on 29 June 2012.6 Based on figures obtained from the Half-year Financial Statement Announcement. ”

LISTING STATUS AND COMPULSORY ACQUISITION6.

The full text of the intentions of the Offeror relating to the compulsory acquisition and listing status of the Company has been extracted from section 7 of the Offer Document and is set out in italics below. All terms and expressions used in the extract below shall have the same meanings as those defined in the Offer Document, unless otherwise stated. Shareholders are advised to read the extract below carefully:

“7.1 Trading Suspension and Listing Status

Pursuant to Rule 1105 of the Listing Manual, upon an announcement by the Offeror that acceptances have been received pursuant to the Offer that brings the holdings owned by the Offeror and parties acting in concert with it to above 90% of the total number of issued Shares (excluding any Shares held by the Company as treasury shares), the SGX-ST may suspend the listing of the Shares in the Ready and Unit Share markets until it is satisfied that at least 10% of the total number of issued Shares (excluding any Shares held by the Company as treasury shares) are held by at least 500 Shareholders who are members of the public. Rule 1303(1) of the Listing Manual provides that if the Offeror succeeds in garnering acceptances exceeding 90% of the total number of issued Shares (excluding any Shares held by the Company as treasury shares), thus causing the percentage of the total number of issued Shares (excluding any Shares held by the Company as treasury shares) held in public hands to fall below 10%, the SGX-ST will suspend trading of the Shares only at the close of the Offer.

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Under Rule 724(1) of the Listing Manual, if the percentage of the Shares (excluding treasury shares) held in public hands falls below 10%, the Company must, as soon as practicable, announce that fact and the SGX-ST may suspend trading of all the Shares. Rule 724(2) of the Listing Manual states that the SGX-ST may allow the Company a period of three months, or such longer period as the SGX-ST may agree, to raise the percentage of the Shares held in public hands to at least 10%, failing which the Company may be delisted.

7.2 Compulsory Acquisition

Under Section 103 of the Bermuda Companies Act, if the Offeror receives acceptances pursuant to the Offer, which when taken with the Shares already held by the Offeror resulting in the Offeror holding not less than 95% of all the Shares, the Offeror will have a right to, and intends to exercise its right to, compulsorily acquire at the Offer Price, all Shares held by the Shareholders who have not accepted the Offer (the “Dissenting Shareholders”).

In the event that the Offeror is not entitled to exercise any right of compulsory acquisition under the Bermuda Companies Act after the close of the Offer, the Offeror may explore the possibility of effecting a merger or amalgamation between a wholly owned newly incorporated Bermuda subsidiary of the Offeror (“NewCo”) and the Company pursuant to Sections 104 to 109 of the Bermuda Companies Act. To effect a merger or an amalgamation, the Offeror, NewCo and the Company will be required to enter into a merger or an amalgamation agreement setting out the terms and means of effecting the merger or amalgamation. The merger or amalgamation will require (a) the approval of the boards of directors of each of NewCo and the Company; (b) the approval of the Offeror as the parent company of Newco; and (c) the approval of 75% of the shareholders of the Company present and voting at a special general meeting. Accordingly, if, following the close of the Offer, NewCo and the Company were to effect a merger or an amalgamation pursuant to the Bermuda Companies Act, any Shareholder who did not accept the Offer and who continued to hold Shares in the Company, would, on completion of the merger or amalgamation of the Company and NewCo, have his Shares in the Company cancelled, in return for the consideration set out in the merger or amalgamation agreement. Such consideration is not bound to be equivalent to the Offer Price. Since as at the Latest Practicable Date the Offeror holds approximately 92.63% of all the Shares, after the close of the Offer, the Offeror could, subject to the provisions under the Code, ensure that any merger or amalgamation between NewCo and the Company is approved without the support of any of the Dissenting Shareholders.

Shareholders who are in doubt of their position under the Bermuda Companies Act are advised to seek their own independent legal advice.

7.3 Offeror’s Intentions

The Offeror intends to make the Company its wholly owned subsidiary and does not intend to preserve the listing status of the Company. Accordingly, the Offeror, when entitled, intends to exercise its rights of compulsory acquisition under the Bermuda Companies Act or to effect a merger or amalgamation between NewCo and the Company. In the event that the trading of the Shares is suspended by the SGX-ST at the close of the Offer, the Offeror does not intend to take steps for any trading suspension of the Shares by the SGX-ST to be lifted. In addition, the Offeror also reserves the right to seek a voluntary delisting of the Company from the SGX-ST pursuant to Rules 1307 and 1309 of the Listing Manual.”

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ADVICE AND RECOMMENDATION7.

Appointment of IFA7.1

Hong Leong Finance Limited has been appointed as the independent financial adviser to advise the Recommending Directors in respect of the Offer. Shareholders should read and consider carefully the advice of the IFA and the recommendation of the Recommending Directors in its entirety before deciding whether or not to accept the Offer.

Advice of the IFA in relation to the Offer7.2

The Recommending Directors have considered carefully the advice of the IFA on the Offer which is set out in the IFA Letter in Appendix 2 of this Circular. The following is an extract from section 9 of the IFA Letter and should be read by Shareholders in conjunction with, and in the full context of the IFA Letter. All terms and expressions used in the extract below shall have the same meanings as those defined in the IFA Letter, unless otherwise stated. Shareholders are advised to read the extract below carefully:

“9. OUR RECOMMENDATION

In arriving at our recommendation in respect of the Offer, we have taken into account the various factors which we consider may have a significant bearing on our assessment which includes our analysis set out in earlier sections of the following:

(a) assessed valuation of the Group;

(b) market quotation and trading activity of the Shares;

(c) Share price performance relative to selected market indices;

(d) comparison of financial valuation ratios of selected listed companies considered to be comparable to the Company;

(e) comparison with successful privatisations of other companies listed on the SGX-ST;

(f) other relevant considerations in relation to the Offer which may have a significant bearing on our assessment.

Having regard to the considerations set out in this letter and the information that has been made available to us as at the Latest Practicable Date, we are of the opinion that as at the Latest Practicable Date, on balance, the terms of the Offer are fair and reasonable from a financial point of view. Accordingly, we advise the Recommending Directors to recommend to Shareholders to ACCEPT the Offer if they are unable to obtain a price higher than the Offer Price (net of related expenses) in the open market.

Shareholders should also take note of the Offeror’s stated intentions not to preserve the listing status of the Company and to exercise its rights to compulsorily acquire all the Shares held by Dissenting Shareholders pursuant to Section 103 of the Bermuda Companies Act.

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Directors and/or Shareholders should note that the trading of the Shares are subject to, inter alia, the performance and prospects of the Group, prevailing economic conditions, economic outlook and stock market conditions and sentiments. Accordingly, our advice on the Offer does not and cannot take into account future trading activities or patterns or price levels that may be established for the Shares after the Latest Practicable Date since these are governed by factors beyond the ambit of our review and also, such advice, if given, would not fall within our terms of reference in connection with the Offer.

Our recommendation is addressed to the Recommending Directors for their benefit in connection with and for the purposes of their consideration of the Offer and should not be relied on by any other party. Any recommendation made by the Recommending Directors in respect of the Offer shall remain their responsibility.

Whilst a copy of this letter may be reproduced in the Circular, neither the Company nor the Directors may reproduce, disseminate or quote this letter (or any part thereof) for any other purpose (other than the intended purpose in relation to the Offer) at any time and in any manner without the prior written consent of HLF in each specific case. This opinion is governed by, and construed in accordance with, the laws of Singapore, and is strictly limited to the matters stated herein and does not apply by implication to any other matter.”

Exemption relating to Director’s Recommendation7.3

Mr. Liu Dian Bo, Mr. Yang Rong Bing and Mr. Yuan Hui Xian are directors and shareholders of AsiaPharm Holdings Ltd., the ultimate holding company of the Offeror. Under the Code, Mr. Liu Dian Bo, Mr. Yang Rong Bing and Mr. Yuan Hui Xian will be parties presumed to be acting in concert with the Offeror.

The SIC has, in its letter dated 22 August 2012, ruled that Mr. Liu Dian Bo, Mr. Yang Rong Bing and Mr. Yuan Hui Xian are exempted from the requirement to make a recommendation to Shareholders on the Offer as they face irreconcilable conflicts of interest being persons acting in concert with the Offeror. However, Mr. Liu Dian Bo, Mr. Yang Rong Bing and Mr. Yuan Hui Xian must still assume responsibility for the accuracy of facts stated or opinions expressed in documents or advertisements issued by, or on behalf of, the Company to Shareholders in connection with the Offer.

Independence7.4

All Recommending Directors consider themselves to be independent for the purpose of making a recommendation to Shareholders in respect of the Offer.

Recommendation of the Recommending Directors7.5

The Recommending Directors, having considered carefully the terms of the Offer and the advice given by the IFA, CONCUR with the opinion and advice of the IFA in respect of the Offer that, as at the Latest Practicable Date, on balance, the terms of the Offer are fair and reasonable from a financial point of view. Accordingly, the Recommending Directors recommend that Shareholders ACCEPT the Offer if they are unable to obtain a price higher than the Offer Price (net of related expenses) in the open market.


Shareholders are advised to read the opinion and advice of the IFA on the Offer as set out in the IFA Letter in Appendix 2 of this Circular carefully before deciding whether to accept or reject the Offer.

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Limitations7.6

In rendering the above opinion and advice and giving the above recommendation, the IFA and the Recommending Directors have not had regard to the general or specific investment objectives, tax position, financial situation, tax status, risk profiles or unique needs and constraints or particular circumstances of any individual Shareholder. As each Shareholder would have different investment objectives and profiles, the Recommending Directors recommend that any Shareholder who may require specific advice in relation to his specific investment objective(s) or portfolio(s) should consult his stock broker, bank manager, solicitor, accountant, tax adviser or other professional advisers immediately. Accordingly, Shareholders should note that the opinion and advice of the IFA and the recommendation of the Recommending Directors should not be relied upon by any Shareholder as the sole basis for deciding whether or not to accept the Offer.

OVERSEAS SHAREHOLDERS 8.

8.1 Overseas Shareholders should refer to section 9 of the Offer Document, an extract of which is set out in italics below. All terms and expressions used in the extract below shall have the same meanings as those defined in the Offer Document, unless otherwise stated. Shareholders are advised to read the extract below carefully:

“9. OVERSEAS SHAREHOLDERS

The availability of the Offer to Shareholders whose mailing addresses are outside Singapore, as maintained on the register of members of the Company or, as the case may be, in the records of CDP (each, an “Overseas Shareholder”) may be affected by the laws of the relevant overseas jurisdictions. Accordingly, any Overseas Shareholder should inform himself about and observe any applicable legal requirements. Where there are potential restrictions on sending this Offer Document, the FAAs and/or the FATs to any overseas jurisdiction, the Offeror and DBS Bank each reserves the right not to send these documents to Shareholders in such overseas jurisdictions. For the avoidance of doubt, the Offer is open to all Shareholders, including those to whom this Offer Document, the FAAs and/or the FATs have not been, or may not be, sent.

Copies of this Offer Document and any other formal documentation relating to the Offer are not being, and must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in or into or from any jurisdiction where the making of or the acceptance of the Offer would violate the law of that jurisdiction (a “Restricted Jurisdiction”) and will not be capable of acceptance by any such use, instrumentality or facility within any Restricted Jurisdiction and persons receiving such documents (including custodians, nominees and trustees) must not mail or otherwise forward, distribute or send them in or into or from any Restricted Jurisdiction.

The Offer (unless otherwise determined by the Offeror and permitted by applicable law and regulation) will not be made, directly or indirectly, in or into, or by the use of mails of, or by any means or instrumentality (including, without limitation, telephonically or electronically) of interstate or foreign commerce of, or any facility of a national, state or other securities exchange of, any Restricted Jurisdiction, and the Offer will not be capable of acceptance by any such use, means, instrumentality or facilities.

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Overseas Shareholders may, nonetheless, obtain copies of this Offer Document, the FAAs and/or the FATs and any related documents, during normal business hours and up to the Closing Date, from the Offeror through its receiving agent, Boardroom Corporate & Advisory Services Pte. Ltd., at its office located at 50 Raffles Place, #32-01 Singapore Land Tower, Singapore 048623. Alternatively, an Overseas Shareholder may write to the Offeror through Boardroom Corporate & Advisory Services Pte. Ltd. at the address listed above to request for this Offer Document, the FAAs and/or the FATs and any related documents to be sent to an address in Singapore by ordinary post at the Overseas Shareholder’s own risk, up to fi ve (5) Market Days prior to the Closing Date.

It is the responsibility of any Overseas Shareholder who wishes to (a) request for this Offer Document, the FAAs and/or the FATs and/or any related documents, or (b) accept the Offer, to satisfy himself as to the full observance of the laws of the relevant jurisdiction in that connection, including the obtaining of any governmental or other consent which may be required, and compliance with all necessary formalities or legal requirements and the payment of any taxes, imposts, duties or other requisite payments due in such jurisdiction. Such Overseas Shareholder shall be liable for any such taxes, imposts, duties or other requisite payments payable and the Offeror and any person acting on its behalf (including DBS Bank) shall be fully indemnified and held harmless by such Overseas Shareholder for any such taxes, imposts, duties or other requisite payments as the Offeror and/or any person acting on its behalf (including DBS Bank) may be required to pay. In (i) requesting for this Offer Document, the FAAs and/or the FATs and any related documents and/or (ii) accepting the Offer, the Overseas Shareholder represents and warrants to the Offeror and DBS Bank that he is in full observance of the laws of the relevant jurisdiction in that connection, and that he is in full compliance with all necessary formalities or legal requirements. Any Overseas Shareholder who is in any doubt about his position should consult his professional adviser in the relevant jurisdiction.

The Offeror and DBS Bank each reserves the right to notify any matter, including the fact that the Offer has been made, to any or all Overseas Shareholders by announcement to the SGX-ST or notice and if necessary, paid advertisement in a daily newspaper published and circulated in Singapore, in which case such notice shall be deemed to have been sufficiently given notwithstanding any failure by any Shareholder to receive or see such announcement, notice or advertisement.”

8.2 Potential restrictions in sending this Circular and any related documents to overseas jurisdictions could result in such documents not being sent to any Overseas Shareholder. Copies of this Circular may however be obtained during normal business hours up to the Closing Date from the office of the Singapore Share Transfer Agent at 50 Raffles Place #32-01 Singapore Land Tower, Singapore 048623. Alternatively, any Overseas Shareholder may write to the Singapore Share Transfer Agent at the aforementioned address to request for the Circular and any related documents to be sent to an address in Singapore by ordinary post at his own risk (the last date for despatch in respect of such request shall be a date falling three (3) Market Days prior to the Closing Date).

ACTION TO BE TAKEN9.

Shareholders who wish to accept the Offer, as the case may be, must do so not later than 5.30 p.m. on 9 October 2012 2012. The Offeror does not intend to extend the offer beyond 9 October 2012. THE OFFER WILL NOT BE OPEN FOR ACCEPTANCE BEYOND 5.30 P.M. ON 9 OCTOBER 2012. ACCEPTANCES RECEIVED AFTER 5.30 P.M. ON 9 OCTOBER 2012 WILL BE REjECTED.

Shareholders who do not wish to accept the Offer need not take any further action in respect of the Offer Document and the FAA or the FAT and any related documents which have been sent to them.

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DIRECTORS’ RESPONSIBILITY STATEMENT10.

The Directors (including those who may have delegated detailed supervision of the preparation of this Circular) collectively and individually accept full responsibility for the accuracy of the information given in this Circular and confirm after making all reasonable enquiries that, to the best of their knowledge and belief, this Circular constitutes full and true disclosure of all material facts about the Offer and the Company and its subsidiaries, and the Directors are not aware of any facts the omission of which would make any statement in this Circular misleading.

The recommendation of the Recommending Directors set out in section 7.5 of this Circular is the responsibility of the Recommending Directors.

Where information in this Circular has been extracted from published or otherwise publicly available sources or obtained from a named source (including without limitation, information extracted from the Offer Document and/or the Offer Announcement), the sole responsibility of the Directors has been to ensure that such information has been accurately and correctly extracted from those sources and/or reproduced in this Circular in its proper form and context.

ADDITIONAL INFORMATION11.

Your attention is drawn to the additional information set out in the Appendices which form part of this Circular.

Yours faithfullyFor and on behalf of the Board of Directors ofLUYE PHARMA GROUP LTD.

Tan Chong HuatIndependent Director

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DIRECTORS1.

The names, addresses, and designations of the Directors as at the Latest Practicable Date are set out below:

Name Address Designation

Liu Dian Bo Room 98, No. 198 Middle Binghai Road Laishan District Yantai Shandong People’s Republic of China

Executive Chairman

Yang Rong Bing No.9 Baoyuan RoadLaishan DistrictYantai ShandongPeople’s Republic of China

Executive Director

Yuan Hui Xian #09-08, No.5 Guanhai Road, Laishan District Yantai Shandong People’s Republic of China

Executive Director

Tan Soo Kiat 6 Dover Rise#05-10Singapore 138678

Independent Director

Tan Chong Huat 3K Hillcrest RoadSingapore 286669


Hong Hai 18 Oriole CrescentSingapore 288611


HISTORY AND PRINCIPAL ACTIVITIES2.

The Company was incorporated on 2 July 2003 under the name of AsiaPharm Group Ltd.. The Company has been listed on the Main Board of the SGX-ST since 5 May 2004. The Company changed its name to Luye Pharma Group Ltd. on 26 March 2009.

The Group specialises in the research, development, production and sale of pharmaceutical drugs and new formulations for chemical drugs, the sale of research and development results and patents for new drugs, and the provision of research services on a contract basis.

SHARE CAPITAL3.

Issued Share Capital3.1

The Company has one class of shares, being ordinary shares. As at the Latest Practicable Date, the authorised share capital and issued and fully paid-up share capital of the Company are as follows:-

Authorised share capitalUS$100,000,000

Issued and fully paid-up share capitalUS$9,855,000, comprising 492,764,900 Shares.

The issued Shares are listed and quoted on the Main Board of the SGX-ST.

APPENDIX 1 – ADDITIONAL GENERAL INFORMATION

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Rights of Shareholders in respect of Capital, Dividends and Voting3.2

The rights of Shareholders in respect of capital, dividends and voting are contained in the Bye-laws, which is available for inspection at the business office of the Company at 137 Telok Ayer Street, #05-05, Singapore 068602. The relevant bye-laws in the Bye-laws relating to the rights of Shareholders in respect of capital, dividends and voting have been extracted from the Articles and are set out in Appendix 4 to this Circular. Capitalised terms and expressions not defined in the extracts have the meanings ascribed to them in the Bye-laws.

Shares Issued since End of Last Financial Year3.3

No Shares have been issued by the Company since the end of the last financial year up to the Latest Practicable Date.

Outstanding Convertible Securities3.4

As at the Latest Practicable Date, there are no outstanding instruments convertible into, rights to subscribe for, and options in respect of, securities being offered for or which carry voting rights affecting shares in the Company.

DISCLOSURE OF INTERESTS4.

Interests of the Company in the shares of the Offeror4.1

The Company does not have any direct or deemed interest in the shares or convertible securities of the Offeror as at the Latest Practicable Date.

Dealings in shares of the Offeror by the Company 4.2

The Company has not dealt for value in the shares or convertible securities of the Offeror during the period commencing three (3) months prior to Offer Announcement Date, and ending on the Latest Practicable Date.

Interests of Directors in the Shares4.3

Save as disclosed below, none of the Directors has any direct or deemed interests in the Shares or convertible securities of the Company as at the Latest Practicable Date:

Name of Director Direct Interest Deemed InterestNo. of Shares

Percentage of Total no. of Shares (%)(1)

No. of Shares Percentage of Total no. of Shares (%)(1)

Liu Dian Bo (2) - - 475,140,346 96.42Yuan Hui Xian 34,000 0.01 - -Yang Rong Bing - - - -Tan Soo Kiat 17,000 0.003 - -Tan Chong Huat 17,000 0.003 - -Hong Hai 17,000 0.003 - -

Notes:(1) Based on the Company’s issued and paid up capital of 492,764,900 Shares as at the Latest Practicable Date.(2) Liu Dian Bo holds 70% of the issued share capital in AsiaPharm Holdings Ltd (“AsiaPharm”). AsiaPharm holds all

the issued ordinary shares in the capital of Luye Pharma Holdings Ltd. (“LPH”). The Offeror is wholly owned by LPH, through its wholly owned subsidiary, Luye Pharmaceutical International Co., Ltd. As such, Liu Dian Bo is deemed interested in the Shares held by the Offeror.

Dealings in Shares by Directors4.4

Save as disclosed below, none of the Directors has dealt for value in the Shares or convertible securities of the Company during the period commencing three (3) months prior to Offer Announcement Date, and ending on the Latest Practicable Date:


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Date Name of holder Nature of Dealing

Number of Shares Dealt

Percentage of Total Issued Shares (%) (1)

Price Paid Per Share

(S$)

27 July 2012 Luye Pharmaceutical Investment Co., Ltd. (2)

Married trades 74,987,870 15.22 1.30

7 September 2012

Luye Pharmaceutical Investment Co., Ltd. (2)

Open market purchase

11,700,000 2.37 1.30

12 September 2012


Receipt of acceptances tendered pursuant to the Offer

2,182,599 0.44 1.30

13 September 2012



119,000 0.03 1.30

14 September 2012



4,711,000 0.95 1.30

Notes:(1) Based on the Company’s issued and paid up capital of 492,764,900 Shares as at the Latest Practicable Date.(2) Liu Dian Bo, Yang Rong Bing and Yuan Hui Xian are shareholders of AsiaPharm Holdings Ltd (“AsiaPharm”), holding

70%, 15% and 15% of the issued share capital in AsiaPharm respectively. AsiaPharm holds all the issued ordinary shares in the capital of Luye Pharma Holdings Ltd. (“LPH”). Luye Pharmaceutical Investment Co., Ltd., the Offeror, is wholly owned by LPH, through its wholly owned subsidiary, Luye Pharmaceutical International Co., Ltd..

Interests of Directors in shares of the Offeror4.5

Save as disclosed below, none of the Directors has any direct or deemed interest in the shares or convertible securities of the Offeror as at the Latest Practicable Date.

Name of Director Direct Interest Deemed Interest

No. of shares in the Offeror

Percentage of Total no. of issued shares in the Offeror (%)(1)

No. of shares in the Offeror

Percentage of Total no. of issued shares in the Offeror (%)(1)

Liu Dian Bo (2) - - 1 100

Yuan Hui Xian (2) - - - -

Yang Rong Bing (2) - - - -

Tan Soo Kiat - - - -

Tan Chong Huat - - - -

Hong Hai - - - -

Notes:(1) Based on the Offeror’s issued and paid up capital of 1 share as at the Latest Practicable Date.(2) Liu Dian Bo, Yang Rong Bing and Yuan Hui Xian are shareholders of AsiaPharm Holdings Ltd (“AsiaPharm”), holding

70%, 15% and 15% of the issued share capital in AsiaPharm respectively. AsiaPharm holds all the issued ordinary shares in the capital of Luye Pharma Holdings Ltd. (“LPH”). Luye Pharmaceutical Investment Co., Ltd., the Offeror, is wholly owned by LPH, through its wholly owned subsidiary, Luye Pharmaceutical International Co., Ltd..


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Dealings in shares of the Offeror by Directors4.6

None of the Directors has dealt for value in the shares or convertible securities of the Offeror during the period commencing three (3) months prior to Offer Announcement Date, and ending on the Latest Practicable Date.

Interests of the IFA in the Shares 4.7

The IFA does not own or control any Shares or convertible securities of the Company as at the Latest Practicable Date. The IFA does not manage the investment of any funds.

Dealings in the Shares by the IFA4.8

The IFA has not dealt for value in the Shares or convertible securities of the Company during the period commencing three (3) months prior to the Offer Announcement Date, and ending on the Latest Practicable Date.

Directors’ Intentions4.9

Mr Liu Dian Bo is deemed interested in all the Shares held by the Offeror.

Mr Yuan Hui Xian, Mr Tan Soo Kiat, Mr Tan Chong Huat and Dr. Hong Hai have informed the Company that they intend to accept the Offer in respect of all the Shares held by them.

Mr. Yang Rong Bing does not have any interest in any Shares (direct and/or deemed).

OTHER DISCLOSURE5.

5.1 Directors’ Service Contracts

There are no service contracts between any director or proposed director of the Company or its subsidiaries with more than 12 months to run, and which the employing company cannot, within the next 12 months, terminate without paying any compensation. There were no such contracts entered into or amended during the period commencing six (6) months prior to the Offer Announcement Date and ending on the Latest Practicable Date.

5.2 Arrangements Affecting Directors

Mr Liu Dian Bo, Mr Yuan Hui Xian and Mr Yang Rong Bing have each executed an equitable share mortgage to charge all their respective shareholdings in AsiaPharm Holdings Limited in favour of CITIC Bank International Limited as security for the loan agreement as described in paragraph 1(i) of Appendix III of the Offer Document.

Save as disclosed above and in this Circular, as at the Latest Practicable Date,:

there are no payments or other benefit to be made or given to any Director or any director of (i) any related corporation, as compensation for loss of office or otherwise in connection with the Offer;

there is no agreement or arrangement made between any Director and any other person in (ii) connection with or conditional upon the outcome of the Offer; and

none of the Directors has any material personal interest, whether direct or indirect, in any (iii) material contract entered into by the Offeror.


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MATERIAL CONTRACTS WITH INTERESTED PERSONS6.

The Company has entered into the following transactions with the following interested persons during the period commencing three (3) years prior to the Offer Announcement Date, and ending on the Latest Practicable Date:

(a) Asiapharm Holdings Ltd., a company in which Mr. Liu Dian Bo, the Executive Chairman of the Company, has controlling interests

Asiapharm Holdings Ltd. has made payments for certain expenses on behalf of the Company, the aggregate amounts were RMB0.63 million, RM2.73 million, RMB1.58 million and RMB0.51 million in FY2009, FY2010, FY2011 and for the period from 1 January 2012 to the Latest Practicable Date, respectively. The amounts incurred have been fully reimbursed by the Company.

(b) Asiapharm (Singapore) Pte Ltd. (“ASPL”), a wholly-owned subsidiary of Asiapharm Holding Ltd.

ASPL provides management services to the Company and all staff of the Company are employed through ASPL. Pursuant to such arrangement, ASPL charged the Company a management fee and also made payment for staff costs on behalf of the Company which is to be reimbursed by the Company, such amounts were offset by certain advances made by the Company to ASPL. The aggregate amounts of transactions between the Company and ASPL were RMB3.24 million, RMB3.45 million, RMB3.56 million and RMB3.49 million in FY2009, FY2010, FY2011 and for the period from 1 January 2012 to the Latest Practicable Date, respectively.

Save for the above, neither the Company nor any of its subsidiaries has entered into any material contract (other than those entered into in the ordinary course of business) with interested persons during the period commencing three (3) years prior to the Offer Announcement Date, and ending on the Latest Practicable Date.

Notes:

An “interested person”, as defined in Note on Rule 23.12 of the Code, is:

a director, chief executive officer, or substantial shareholder of the Company;(a)

the immediate family of a director, the chief executive officer, or a substantial shareholder (being an (b) individual) of the Company;

the trustees, acting in their capacity as such trustees, of any trust of which a director, the chief (c) executive officer or a substantial shareholder (being an individual) and his immediate family is a beneficiary;

any company in which a director, the chief executive officer or a substantial shareholder (being an (d) individual) together and his immediate family together (directly or indirectly) have an interest of 30% or more;

any company that is the subsidiary, holding company or fellow subsidiary of the substantial (e) shareholder (being a company); or

any company in which a substantial shareholder (being a company) and any of the companies (f) listed in (e) above together (directly or indirectly) have an interest of 30% or more.


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MATERIAL LITIGATION7.

As at the Latest Practicable Date, neither the Company nor any company in the Group is engaged in any material litigation or arbitration proceedings as plaintiff or defendant which might materially and adversely affect the financial position of the Company or the Group.

The Directors are not aware of any proceedings pending or threatened against the Company or any company in the Group or of any facts likely to give rise to any proceedings which might materially and adversely affect the financial position of the Company of the Group.


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FINANCIAL INFORMATION 8.

Consolidated Statement of Comprehensive Income8.1

A summary of the audited consolidated statement of comprehensive income of the Group for the past three (3) financial years for FY2009, FY2010 and FY2011 and the unaudited consolidated statement of comprehensive income of the Group for 1Q2012 and 2Q2012 is set out below:

GROUP

FY2009(Audited)

(RMB ’000)

FY2010(Audited)

(RMB ’000)

FY2011(Audited)

(RMB ’000)

1Q2012(Unaudited)

(RMB ’000)

2Q2012(Unaudited)

(RMB ’000)

Revenue 954,750 1,340,895 1,774,390 521,829 503,355

Cost of sales (135,964) (204,247) (301,121) (80,535) (80,229)

Gross profit 818,786 1,136,648 1,473,269 441,294 423,126

Other income 15,369 37,774 21,111 1,886 1,352Selling and distribution costs (526,763) (761,788) (980,111) (303,938) (291,344)Administrative expenses (82,832) (111,606) (151,566) (35,488) (26,896)Other expenses (62,578) (99,136) (147,307) (39,355) (40,651)

Profit from operating activities

161,982 201,892 215,396 64,399 65,587

Finance income 2,555 3,790 4,823 508 1,624Finance costs (9,902) (11,325) (19,636) (9,671) (11,351)Share of profits of associates 11,574 1,063 545 538 215

Profit before tax 166,209 195,420 201,128 55,774 56,075

Income tax (37,044) (45,016) (34,902) (12,485) (5,829)

Profit for the year/period 129,165 150,404 166,226 43,289 50,246

Attributable to: Owners of the parent 123,547 136,103 151,624 40,566 47,066 Non-controlling interests 5,618 14,301 14,602 2,723 3,180

129,165 150,404 166,226 43,289 50,246

Other comprehensive income

Exchange differences on translation of foreign operations

2,959 9,294 818 (1,349) (1,587)

Fair value change on available-for-sale investments

326 1,547 (1,705) 16 (4)

Other comprehensive income for the year/period, net of tax

3,285 10,841 (887) (1,333) (1,591)

Total comprehensive income for the year/period

132,450 161,245 165,339 41,956 48,655

Attributable to: Owners of the parent 126,832 146,944 150,737 39,233 45,475 Non-controlling interests 5,618 14,301 14,602 2,723 3,180

132,450 161,245 165,339 41,956 48,655

Earnings per share attributable to owners of the parent

Basic and diluted 25.07 27.62 30.77 8.23 9.55

Net dividends per share NIL NIL NIL NIL NIL


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Consolidated Balance Sheets 8.2

A summary of the audited consolidated balance sheet of the Group as at 31 December 2009, 31 December 2010 and 31 December 2011 is set out below:

Group

31 December 2009

(RMB ’000)

31 December 2010

(RMB ’000)

31 December 2011

(RMB ’000)

ASSETSNon-current assetsProperty, plant and equipment 200,415 252,032 300,517Construction in progress 4,586 67,365 369,211Advance payments for property, plant

and equipment28,850 46,481 22,853

Investments in subsidiaries - - -Investments in associates 2,090 3,313 3,652Intangible assets 223,205 188,791 211,815Land use rights 143,881 151,709 194,647Available-for-sale investments 2,566 4,186 2,410Long-term deferred expenditure 2,292 1,792 1,292Goodwill 188,212 188,212 359,356Deferred tax assets 21,349 22,926 58,461

817,446 926,807 1,524,214

Current assetsInventories 57,630 73,279 105,382Contracts for services 1,739 890 890Trade and notes receivables 296,059 327,266 455,326Prepayments, deposits and other

receivables23,447 34,729 34,310

Cash and cash equivalents 275,311 400,135 251,501Pledged short-term deposits 45,126 54,500 79,009Due from related parties 7,217 4,561 3,755Due from subsidiaries - - -

706,529 895,360 930,173TOTAL ASSETS 1,523,975 1,822,167 2,454,387

EQUITY AND LIABILITIESEquityIssued capital 81,180 81,180 81,180Share premium 427,980 427,980 427,980Reserves 478,138 617,285 768,022Equity attributable to owners of the

parent 987,298 1,126,445 1,277,182

Non-controlling interest 107,437 121,738 127,205Total equity 1,094,735 1,248,183 1,404,387

Non-current liabilitiesInterest-bearing loans and borrowings 30,000 1,318 2,000Provision for restoration costs - 2,389 2,528Government grants 8,285 29,740 60,502Deferred tax liabilities 70,142 81,538 93,983

108,427 114,985 159,013

Current liabilitiesTrade payables 13,450 20,296 34,331Accrued liabilities and other payables 124,455 139,653 337,619Interest-bearing loans and borrowings 170,687 264,140 453,815Government grants 2,110 18,810 28,310Income tax payable 9,683 12,305 32,010Due to the holding company 428 2,266 2,898Due to related parties - 1,529 2,004Due to subsidiaries - - -

320,813 458,999 890,987Total liabilities 429,240 573,984 1,050,000

TOTAL EQUITY AND LIABILITIES 1,523,975 1,822,167 2,454,387


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Material Changes in Financial Position8.3

Save as disclosed in this Circular, the unaudited consolidated financial statements of the Group for 1Q2012, 2Q2012 and HY2012 and any other financial information on the Group which is publicly available (including without limitation, the announcements released by the Group on the SGX-ST), there has not been, within the knowledge of the Directors, any material changes in financial position since the last financial year ended 31 December 2011, being the date of the last published audited financial statements of the Company.

Significant Accounting Policies8.4

The significant accounting policies of the Group are disclosed in Appendix 5 to this Circular.

The Group has adopted a number of new and revised International Financial Reporting Standards issued by the International Accounting Standards Board that are effective for annual period beginning on or after 1 January 2012. The adoption of these new and revised standards, interpretations and amendments has no material impact on the financial statements.

Changes in Accounting Policies8.5

There was no significant change in accounting policies of the Group which will cause the figures disclosed in this Circular not to be comparable to a material extent.

GENERAL9.

All expenses and costs incurred by the Company in relation to the Offer will be borne by the (a) Company.

Hong Leong Finance Limited has given and has not withdrawn its written consent to the issue of this (b) Circular with the inclusion of the IFA Letter setting out, inter alia, its advice to the Recommending Directors in respect of the Offer which is annexed hereto as Appendix 2, its letter dated 25 September 2012 in relation to the Statement of Prospects which is annexed hereto as Appendix 8 and references to its name, in the form and context in which they appear in this Circular.

Ernst & Young, Hong Kong has given and has not withdrawn its written consent to the issue of (c) this Circular with the inclusion of its letter dated 24 September 2012 in relation to the Statement of Prospects which is annexed hereto as Appendix 7 and references to its name, in the form and context in which they appear in this Circular.

Jiangsu Yonghe Land Real Estate Appraisal Co., Ltd ((d) 江苏永和土地房地产估价有限公司) has given and has not withdrawn its written consent to the issue of this Circular with the inclusion of the extracts of its valuation report, and references to its name, in the form and context in which they appear in this Circular.

Yantai Zhengping Assets Appraisal Firm ((e) 烟台市正平资产评估事务所) has given and has not withdrawn its written consent to the issue of this Circular with the inclusion of the extracts of its valuation report, and references to its name, in the form and context in which they appear in this Circular.

Beijing Lixin Runde Assets Appraisal Firm ((f) 北京立信润德资产评估事务所) has given and has not withdrawn its written consent to the issue of this Circular with the inclusion of the extracts of its valuation report, and references to its name, in the form and context in which they appear in this Circular.


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DOCUMENTS AVAILABLE FOR INSPECTION10.

Copies of the following documents are available for inspection at the business office of the Company at 137 Telok Ayer Street, #05-05, Singapore 068602, during business hours for the period during which the Offer remains open for acceptances:

(a) the memorandum of association and Bye-laws of the Company;

(b) the annual reports of the Company for FY2009, FY2010 and FY2011;

(c) the unaudited consolidated financial statements of the Group for 2Q2012 and HY2012 as announced by the Company on SGXNet on 14 August 2012;

(d) the letter from the IFA in relation to the Statement of Prospects;

(e) the letter from the Auditors in relation to the Statement of Prospects;

(f) the IFA Letter;

(g) the Valuation Reports; and

(h) the letters of consent referred to in Paragraph 9 above.


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APPENDIX 2 – LETTER FROM THE IFA TO THE RECOMMENDING DIRECTORS

25 September 2012

The Recommending DirectorsLuye Pharma Group Ltd.Clarendon House2 Church StreetHamilton HM 11Bermuda

Dear Sirs,

VOLUNTARY UNCONDITIONAL CASH OFFER BY DBS BANK LTD. FOR AND ON BEHALF OF LUYE PHARMACEUTICAL INVESTMENT CO., LTD. TO ACQUIRE ALL THE ISSUED AND PAID-UP ORDINARY SHARES IN THE CAPITAL OF LUYE PHARMA GROUP LTD.

1 INTRODUCTION

On 28 August 2012 (the “Offer Announcement Date”), DBS Bank Ltd. (“DBS”), for and on behalf of Luye Pharmaceutical Investment Co., Ltd. (the “Offeror”) announced that the Offeror intends to make a voluntary unconditional cash offer (the “Offer”) to acquire all the issued and paid-up ordinary shares (the “Shares”) in the capital of Luye Pharma Group Ltd. (“Luye” or the “Company”), other than those already owned, controlled or agreed to be acquired by the Offeror (the “Offer Shares”).

On 11 September 2012, DBS announced, for and on behalf of the Offeror, that the offer document dated 11 September 2012 (“Offer Document”) has been despatched to shareholders on the same date.

In accordance with Rule 15 of the Singapore Code on Take-overs and Mergers (“Code”) and subject to the terms and conditions set out in the Offer Document, the Offeror made the Offer for each Offer Share at S$1.30 in cash (the “Offer Price”).

According to the Offer Document, as at the Latest Practicable Date of the Offer Document (“Offer Document LPD”), being 4 September 2012, the Offeror owns, controls or has agreed to acquire an aggregate of 456,427,747 Shares, representing approximately 92.63% of all the Shares. Accordingly, the Offer will be unconditional in all respects.

Hong Leong Finance Limited (“HLF”) has been appointed by the Company as the independent financial adviser to the directors of the Company who are independent for the purpose of making recommendations to Shareholders in respect of the Offer (the “Recommending Directors”). This letter sets out, inter alia, our views and evaluation of the financial terms of the Offer and our opinion thereon, and will form part of the circular dated 25 September 2012 (the “Circular”) issued by the Company providing, inter alia, details of the Offer and the recommendation of the Recommending Directors.

Unless otherwise defined or the context otherwise requires, all terms defined in the Circular shall have the same meaning herein.

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2 TERMS OF REFERENCE

We have been appointed to advise the Recommending Directors on the financial terms of the Offer in compliance with the provisions of the Code. We have confined our evaluation to the financial terms of the Offer and have not taken into account the commercial risks and/or commercial merits of the Offer.

We were not privy to the negotiations in relation to the Offer. Our terms of reference do not require us to evaluate or comment on the rationale for, and/or the merits of the Offer or on the listing status or future prospects of the Company and its subsidiaries (the “Group”).

We are not authorised and we have not solicited, any indications of interest from any third party with respect to the Offer. We are therefore not addressing the relative merits of the Offer as compared to any alternative transaction that may be available to the Company (or its Shareholders), or as compared to any alternative offer that might otherwise be available in the future.

In the course of our evaluation of the financial terms of the Offer, we have relied on, and assumed without independent verification, the accuracy and completeness of published information relating to the Company. We have also relied on information provided and representations made by the management of the Company and/or the Directors. We have not independently verified such information or any representation or assurance made by them, whether written or verbal, and accordingly cannot and do not make any representation or warranty, expressed or implied, in respect of, and do not accept any responsibility for, the accuracy, completeness or adequacy of such information, representation or assurance. We have nevertheless made such enquiries and exercised our judgement as we deemed necessary and have found no reason to doubt the reliability of the information.

We have relied upon the assurances of the Directors that, upon making all reasonable inquiries and to the best of their respective knowledge, information and belief, all material information in connection with the Offer and/or the Group has been disclosed to us, that such information is true, complete and accurate in all material respects and that there is no other information or fact, the omission of which would cause any information disclosed to us or the facts of or in relation to the Company and/or the Group stated in the Circular to be inaccurate, incomplete or misleading in any material respect. The Directors jointly and severally accept responsibility accordingly.

For the purposes of assessing the financial terms of the Offer and reaching our conclusions thereon, we have not relied upon any financial projections or forecasts in respect of the Company or the Group. We will not be required to express, and we do not express, any view on the growth prospects and earnings potential of the Company or the Group in connection with our opinion in this letter.

We have not made any independent evaluation or appraisal of the assets and liabilities of the Company or the Group and we have not been furnished with any such independent evaluation or appraisal, except for the Valuation Reports issued by Yantai Zhengping Assets Appraisal Firms (烟台市正平资产评估事务所), Jiangsu YongHe Land Real Estate Appraisal Co., Ltd (江苏永和土地房地产估价有限公司) and Beijing Lixin Runde Asset Appraisal Firms (北京立信润德资产评估事务所) (collectively, the “Valuers”) dated 14 September 2012, extracts of which have been set out in Appendix 3 of the Circular.

Our opinion as set out in this letter is based upon market, economic, industry, monetary and other conditions in effect on, and the information provided to us as of 16 September 2012, being the Latest Practicable Date. Such conditions may change significantly over a relatively short period of time. We assume no responsibility to update, revise or reaffirm our opinion in light of any subsequent development after the Latest Practicable Date that may affect our opinion contained herein. Shareholders should further take note of any announcements relevant to their consideration of the Offer which may be released by the Company and/or the Offeror after the Latest Practicable Date.

In rendering our opinion, we did not have regard to the specific investment objectives, financial situation, tax status or position, risk profiles or unique needs and constraints and circumstances of any individual Shareholder or group of Shareholders. As different Shareholders would have different investment profiles and objectives, we recommend that any individual Shareholder or group of Shareholders who may require specific advice in relation to his investment portfolio, including his investment in the Company, should consult his stockbroker, bank manager, solicitor, accountant, tax adviser or other professional adviser immediately.

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The Company has been separately advised by its own advisers in the preparation of the Circular. Accordingly, we take no responsibility for and express no views, expressed or implied, on the contents of the Circular (other than the letters issued by us).

Our recommendation in respect of the Offer, as set out in Section 9 of this letter, should be considered in the context of the entirety of this letter and the Circular.

3 THE OFFER

Shareholders should have by now received a copy of the Offer Document containing the formal offer by DBS, for and on behalf of the Offeror, and the relevant forms of acceptance. The details relating to the Offer are set out in Section 2 and Appendix IV of the Offer Document. Shareholders are advised to read the terms and conditions of the Offer set out in the Offer Document carefully.

The salient information relating to the Offer, as extracted from the Offer Document and/or announcements made by the Offeror is set out in the ensuing paragraphs.

3.1 Offer Price

For and on behalf of the Offeror, DBS has made the Offer to acquire all the Offer Shares on the following basis:

For each Offer Share: S$1.30 in cash

3.2 Offer Shares

The Offer will be extended, on the same terms and conditions, to all the Shares owned, controlled or agreed to be acquired by any party acting or deemed to be acting in concert with the Offeror in connection with the Offer.

3.3 Unconditional Offer

The Offer is unconditional in all respects. Shareholders who accept the Offer before the close of the Offer will be paid the Offer Price in cash within 10 days after the receipt by the Offeror of valid and complete acceptances to the Offer in accordance with the terms and conditions of the Offer Document.

3.4 No Encumbrances

The Offer Shares are to be acquired (a) fully paid, (b) free from all liens, equities, mortgages, charges, encumbrances, rights of pre-emption and other third party rights and interests of any nature whatsoever, and (c) together with all rights, benefits and entitlements attached thereto as at the Offer Announcement Date and thereafter attaching thereto (including the right to receive and retain all dividends, other distributions and return of capital (if any) which may be announced, declared, paid or made thereon by the Company on or after the Offer Announcement Date). If any dividend, other distribution or return of capital is announced, declared, paid or made by the Company on or after the Offer Announcement Date, the Offeror reserves the right to reduce the Offer Price by the amount of such dividend, distribution or return of capital.

3.5 Further Details of the Offer

Further details of the Offer are set out in Appendix IV of the Offer Document, including details on (a) the settlement of the consideration for the Offer, (b) the requirements relating to the announcement of the level of acceptances of the Offer, and (c) the right of withdrawal of acceptances of the Offer.


3434 3535

3.6 Closing Date

Except insofar as the Offer may be withdrawn with the consent of the SIC and every person released from any obligation incurred thereunder, the Offer will remain open for acceptances by Shareholders for a period of at least 28 days from the date of posting of the Offer Document.

Accordingly, the Offer will close at 5.30 p.m. on 9 October 2012. The Offeror does not intend to extend the Offer beyond 5.30 p.m. on 9 October 2012 and has given notice that the Offer will not be open for acceptance beyond 5.30 p.m. on 9 October 2012. Acceptances received after 5.30 p.m. on 9 October 2012 will be rejected.

3.7 Revision

Pursuant to Rule 20.1 of the Code, the Offer, if revised, will remain open for acceptance for a period of at least 14 days from the date of posting of the written notification of the revision to Shareholders. In any case, where the terms are revised, the benefit of the Offer (as so revised) will be made available to each of the Shareholders, including those who had previously accepted the Offer.

4. INFORMATION ON THE OFFEROR AND CONSORTIUM

The information on the Offeror, the Offeror Group and the Consortium is contained in Section 3 and Appendix I of the Offer Document and an extract is also set out in Section 3 of the Circular.

5. INFORMATION ON THE COMPANY

The Company was incorporated on 2 July 2003 in Bermuda and was listed on the Main Board of the Singapore Exchange Securities Trading Limited (“SGX-ST”) on 5 May 2004. The Company and its subsidiaries specialize in the research, development, production and sale of pharmaceutical drugs and new formulations for chemical drugs, the sale of research and development results and patents for new drugs, and the provision of research services on a contract basis.

As set out in Section 4.2 of the Offer Document, based on publicly available information, as at the Offer Document LPD:

(a) the board of directors of the Company comprises the following:

(i) Liu Dian Bo (Executive Director and Chairman)

(ii) Yuan Hui Xian (Executive Director)

(iii) Yang Rong Bing (Executive Director)

(iv) Tan Soo Kiat (Independent Director);

(v) Tan Chong Huat (Independent Director); and

(vi) Hong Hai (Independent Director);

(b) the Company has no shares held in treasury; and

(c) the Company has not granted any options or issued any rights, warrants or other securities convertible into, exercisable for or redeemable with any Shares.

As at the Offer Document LPD, the Company had a market capitalization of approximately S$616.0 million (based on the last transacted price of S$1.25 per Share on 30 July 2012, being the last Market Day on which Shares were traded on the SGX-ST prior to the Offer Document LPD).

Additional information on the Company is set out in Appendix II of the Offer Document.


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6. RATIONALE FOR THE OFFER AND THE OFFEROR’S INTENTIONS FOR THE COMPANY

The full text of the information on the rationale for the Offer and the Offeror’s intentions for the Company is set out under Section 5 of the Offer Document and has been reproduced in italics below. Shareholders are advised to read this section of the Offer Document carefully.

Rationale for the Offer

“Opportunity for the Remaining Shareholders to Realise Their Investment. As at the Latest Practicable Date, the Offeror owns, controls or has agreed to acquire an aggregate of 456,427,747 Shares, representing approximately 92.63% of all the Shares. This implies that no more than approximately 7.37% of all the Shares are held in public hands. Under Rule 724(1) of the Listing Manual, the SGX-ST may suspend trading of all the Shares if the percentage of the Shares (excluding treasury shares) held in public hands falls below 10%. Further, the SGX-ST may allow the Company a period of three months, or such longer period as the SGX-ST may agree, to raise the percentage of Shares in public hands to at least 10%, failing which the Company may be delisted.

As noted in paragraph 7.3 of this Offer Document, the Offeror is making the Offer with a view to delisting the Company from the SGX-ST and exercising any rights of compulsory acquisition that may arise under the Bermuda Companies Act. Hence, the Offer is intended to provide to the remaining shareholders an opportunity to realize their investment in the Shares, without incurring brokerage and other trading costs, at a premium of approximately 20.4%, 21.5%, 39.8% and 41.3% over the one-month VWAP of S$1.08, three-month VWAP of S$1.07, six-month VWAP of S$0.93 and 12-month VWAP of S$0.92 respectively, in the period up to and including 27 July 2012 (the “Last Full Trading Day”), being the last full Market Day prior to the Offer Announcement Date. As the Offer is unconditional in all respects, Shareholders who accept the Offer before the Offer closes will be paid in cash within 10 days after the receipt by the Offeror of valid and complete acceptances to the Offer in accordance with the terms and conditions of this Offer Document.

Shareholders who do not accept the Offer will, in the event that the Company is delisted and the Offeror is not entitled to exercise any right of compulsory acquisition following the close of the Offer, hold Shares in an unlisted company for which there is no public market.

Generally Low Trading Liquidity of Shares. Further, the trading volume of Shares on the SGX-ST over the year has been low, with an average daily trading volume of approximately 50,682 Shares, 59,266 Shares, 192,563 Shares and 105,480 Shares during the one-month period, three-month period, six-month period and 12-month period up to and including the Last Full Trading Day. This represents only approximately 0.01%, 0.01%, 0.04% and 0.02% of all the Shares respectively. Hence, the Offer will provide an exit opportunity for Shareholders who wish to realise their entire investment in the Shares but find it difficult to do so as a result of the low trading liquidity of the Shares.

Greater Management Flexibility. The Offeror believes that delisting the Company from the SGX-ST and privatizing the Company will give the Offeror and the management of the Company more flexibility to manage the business of the Company and optimise the use of its management and capital resources.”

Offeror’s Intentions for the Company

“Following the close of the Offer, the Offeror intends to undertake a strategic and operational review of the organisation, businesses and operations of the Group which may involve the disposal or cessation of under-performing businesses and assets and the redeployment of certain employees to other entities within the Group.

Save as disclosed above, the Offeror has no present intention to (a) make any major changes to the existing businesses of the Company, (b) redeploy the fixed assets of the Company, or (c) discontinue the employment of the employees of the Group. Nonetheless, the Offeror retains the flexibility at any time to consider any options or opportunities which may present themselves and which it regards to be in the interests of the Offeror and/or the Company. Depending on the Group’s future performance, the Offeror intends to evaluate in due course various strategic options following the privatisation of the Company, including listing the shares of the Offeror on a recognised stock exchange at an opportune time in the future if market conditions and regulatory environment are favourable.”


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7. LISTING STATUS AND COMPULSORY ACQUISITION

7.1 Trading Suspension and Listing Status. Under Rule 724(1) of the Listing Manual, if the percentage of the Shares (excluding treasury shares) held in public hands falls below 10%, the Company must, as soon as practicable, announce that fact and the SGX-ST may suspend trading of all the Shares. Rule 724(2) of the Listing Manual states that the SGX-ST may allow the Company a period of three months, or such longer period as the SGX-ST may agree, to raise the percentage of the Shares in public hands to at least 10%, failing which the Company may be delisted. In this regard, it is noted that Shares in the Company were suspended on 30 July 2012, as the percentage of Shares of the Company held in public hands has fallen below 10%.

Pursuant to Rule 1105 of the Listing Manual, upon an announcement by the Offeror that acceptances have been received pursuant to the Offer that brings the holdings owned by the Offeror and parties acting in concert with it to above 90% of the total number of issued Shares (excluding any Shares held by the Company as treasury shares), the SGX-ST may suspend the listing of the Shares in the Ready and Unit Share markets until it is satisfied that at least 10% of the total number of issued Shares (excluding any Shares held by the Company as treasury shares) are held by at least 500 Shareholders who are members of the public. Rule 1303(1) of the Listing Manual provides that if the Offeror succeeds in garnering acceptances exceeding 90% of the total number of issued Shares (excluding any Shares held by the Company as treasury shares), thus causing the percentage of the total number of issued Shares (excluding any Shares held by the Company as treasury shares) held in public hands to fall below 10%, the SGX-ST will suspend trading of the Shares only at the close of the Offer. It is noted that Shares in the Company resumed trading on 7 September 2012, subsequent to the announcement of the Offer on 28 August 2012.

7.2 Compulsory Acquisition. As stated in Section 7.2 of the Offer Document, under Section 103 of the Bermuda Companies Act, if the Offeror receives acceptances pursuant to the Offer, which when taken with the Shares already held by the Offeror resulting in the Offeror holding not less than 95% of all the Shares, the Offeror will have a right to, and intends to exercise its right to, compulsorily acquire at the Offer Price, all Shares held by the Shareholders who have not accepted the Offer (the “Dissenting Shareholders”).

In this regard, as announced by DBS on 7 September 2012, for and on behalf of the Offeror, the Offeror had acquired 11,700,000 Shares in the open market on 7 September 2012, thereby resulting in its aggregate percentage of Shares owned or controlled by the Offeror and persons acting in concert with it being raised to 95.01% as at 7 September 2012.

7.3 Offeror’s Intentions. The Offeror intends to make the Company its wholly owned subsidiary and does not intend to preserve the listing status of the Company. Accordingly, as announced by DBS on 7 September 2012, for and on behalf of the Offeror, the Offeror has the right to, and intends to, serve a notice pursuant to Section 103 of the Bermuda Companies Act to compulsorily acquire, all the Shares held by the Dissenting Shareholders in due course. Shareholders who are in doubt of their position under the Bermuda Companies Act are advised to seek their own independent legal advice. In the event that the trading of the Shares is suspended by the SGX-ST at the close of the Offer, the Offeror does not intend to take steps for any trading suspension of the Shares by the SGX-ST to be lifted. In addition, the Offeror also reserves the right to seek a voluntary delisting of the Company from the SGX-ST pursuant to Rules 1307 and 1309 of the Listing Manual.


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8. ASSESSMENT OF THE FINANCIAL TERMS OF THE OFFER

In our evaluation and assessment of the financial terms of the Offer, we have taken into consideration the following pertinent factors:

a. assessed valuation of the Group;

b. market quotation and trading activity of the Shares;

c. share price performance relative to selected market indices;

d. comparison of financial valuation ratios of selected listed companies considered to be comparable to the Company;

e. comparison with successful privatisations of other companies listed on the SGX-ST; and

f. other relevant considerations in relation to the Offer which may have a significant bearing on our assessment.

These factors are discussed in greater detail in the following sections.

8.1 Assessed Valuation of the Group

The net tangible asset value (“NTA”) and/or net asset value (“NAV”) based valuation provides an estimate of the value of a company assuming the hypothetical sale of all its tangible and/or intangible assets over a reasonable period of time and would be more relevant for asset-based companies or where the subject company intends to realise or convert the uses of all or most of its assets. Such a valuation approach would also be appropriate when applied in circumstances where the business is to cease operations or where the profitability of the business being valued is not sufficient to sustain an earnings-based valuation.

Accordingly, the NTA and/or NAV based approach is meaningful only in so far as it shows the extent to which the value of each Share is backed by assets, and would be more relevant in the event that the Group intends to change the nature of its business and/or realises or converts the uses of all or most of its assets. In this regard, we note that the Offeror has no present intention to make any major changes to the existing businesses of the Company or to redeploy the fixed assets of the Company. As such, we have deemed that the ensuing NTA and NAV based analyses would not be the primary consideration in our overall evaluation of the Offer.

8.1.1 Book NTA and NAV of the Group as at 30 June 2012 against the Offer Price

Based on the latest unaudited balance sheet of the Group as at 30 June 2012, the NTA of the Group (excluding non-controlling interests) was approximately RMB655.7 million, equivalent to approximately S$0.265 per Share (based on a conversion rate of S$1.00:RMB5.0231). The Offer Price of S$1.30 represents a premium of approximately 390.6% to the NTA per Share of S$0.265.

We note that the Group has substantial non-tangible assets (including intangible assets, land use rights and goodwill) amounting to approximately RMB798.6 million as at 30 June 2012, which represents approximately 53.4% of the Group’s net assets as at 30 June 2012. As such, we have also considered the NAV of the Group, which would include the value of the non-tangible assets, in our evaluation of the financial terms of the Offer.

Based on the latest unaudited balance sheet of the Group as at 30 June 2012, the NAV of the Group (excluding non-controlling interests) was approximately RMB1,362 million, equivalent to approximately S$0.55 per Share (based on a conversion rate of S$1.00:RMB5.023). The Offer Price of S$1.30 represents a premium of approximately 136.4% to the NAV per Share.

1 Based on the exchange rate of 29 June 2012, as extracted from Bloomberg L.P.


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S$ Premium/(Discount) of Offer Price over NTA/NAV (%)

Latest unaudited NTA per share 0.265 390.6

Latest unaudited NAV per share 0.550 136.4

In our evaluation of the financial terms of the Offer, we have considered whether there are any factors which have not been otherwise disclosed in the financial statements of the Group that are likely to have a material impact on the unaudited book NAV of the Group as at 30 June 2012. In this respect, save as disclosed in the unaudited financial statements of the Group as at 30 June 2012, the Directors have confirmed that, to their best knowledge and belief, as at the Latest Practicable Date, there are no contingent liabilities or doubtful debts which are likely to have a material impact on the unaudited NAV of the Group as at 30 June 2012.

8.1.2 Adjusted NAV of the Group as at 30 June 2012 against the Offer Price

In our evaluation of the financial terms of the Offer, we have also considered whether there are any material events that may impact the unaudited balance sheet of the Group from 30 June 2012 to the Latest Practicable Date to determine whether adjustments need to be made to the book NAV per Share as at 30 June 2012. In this respect, the Directors have confirmed that, to their best knowledge and belief, as at the Latest Practicable Date, there are no events that have or will have a material impact on the unaudited balance sheet of the Group since 30 June 2012.

8.1.3 Revalued NAV of the Group as at 30 June 2012 against the Offer Price

In our evaluation of the financial terms of the Offer, we have also considered whether there are any assets which should be valued at an amount that is materially different from that which is recorded in the unaudited balance sheet of the Group as at 30 June 2012. In connection with the Offer, the Company has commissioned the Valuers to conduct independent valuation of the land and buildings occupied by its key operating subsidiaries, namely Nanjing Luye Sike Pharmaceutical Co., Ltd., Shandong Luye Pharmaceutical Co., Ltd. and Beijing WBL Peking University Biotech Co., Ltd. (the “Revalued Properties”). Based on the valuation reports issued by the Valuers, the aggregate open market value of the Revalued Properties as at 31 August 2012 based on their existing use is approximately RMB377.6 million.

The Directors have confirmed that to their best knowledge and belief, as at the Latest Practicable Date, other than the revaluation surplus arising in respect of the Revalued Properties as set out herein, there are no material differences between the realisable value of the Group’s assets (including intangible assets) and their respective book values as at 30 June 2012 which would have a material impact on the revalued NAV of the Group.

We set out below the market value and net revaluation surplus of the Revalued Properties (taking into account the tax effect of a hypothetical sale of the Revalued Properties):


4040 4141

RMB’000

Market value of the Revalued Properties as at 31 August 2012 377,604

Less: Book value of the Revalued Properties as at 30 June 2012 (321,290)Potential tax liability arising from a hypothetical sale of the Revalued Properties (1) (24,633)

Net revaluation surplus arising from the Revalued Properties 31,681

Note:(1) Based on information provided by the Company, the potential tax liability that may be incurred by the Group

on the hypothetical disposal of the Revalued Properties is approximately RMB24,633,000. We understand that the Company has no immediate plans to dispose of its interests in the Revalued Properties and the Offeror had stated that it presently has no intention to, inter alia, redeploy the fixed assets of Luye. As such, the aforesaid tax liability is not likely to crystallise.

The revalued NAV of the Group (excluding non-controlling interests) as at 30 June 2012, taking into account the net revaluation surplus of the Revalued Properties based their open market values as at 31 August 2012 as assessed by the Valuers (the “Revalued NAV”), is computed as follows:

RMB$’000

NAV of the Group (excluding non-controlling interests) as at 30 June 2012 1,361,891

Add: Net revaluation surplus arising from the Revalued Property 31,681

Revalued NAV of the Group (excluding non-controlling interests) as at 30 June 2012 1,393,572

Revalued NAV per Share as at 30 june 2012 based on 492,764,900 Shares

RMB2.83 or S$0.563 (1)

Notes:(1) Based on a conversion rate of S$1.00:RMB5.023.

We note that the Offer Price of S$1.30 per Share represents a premium of 130.9% to the Revalued NAV per share as at 30 June 2012 of S$0.563.

8.2 Market quotation and trading activity of the Shares

In evaluating the reasonableness of the Offer Price from a market price expectation perspective, on the basis that the stock market may be considered to provide an efficient mechanism by which such price expectations may be expressed, we have considered the current and historical market price of the Company to be reasonable indicators for assessing the financial value of the Shares at a given point in time.

We wish to highlight that under ordinary circumstances, the market valuations of shares traded on a recognised stock exchange may be affected by, inter alia, its relative liquidity, the size of its free float, the extent of research coverage, the investor interest it attracts, and the general market sentiment at a given period in time.

We set out below a chart showing the Offer Price relative to the trend of the daily last transacted prices and trading volumes of the Shares for the 12-month period prior to the Last Full Trading Day on which the Shares were traded before the Offer Announcement Date and up to the Latest Practicable Date.


4040 4141

Source: Bloomberg L.P.

A summary of the salient announcements made by the Company during the 12-month period and up to the Latest Practicable Date is set out below:

Symbol Date of Announcement Event

A1 11 August 2011

The Company announced its second quarter and first half financial statement and dividend announcement for the period ended 30 June 2011. The Group attained total revenue of RMB789.7 million for the first six months of 2011, which represented an increase of 21.4% over the corresponding period in FY2010. Net profit decreased by 30.5% to RMB67.8 million.

A2 11 November 2011

The Company announced its third quarter and nine months financial statement and dividend announcement for the period ended 30 September 2011. The Group attained total revenue of RMB1.3 billion for the first nine months of 2011, which represented an increase of 23.5% over the corresponding period in FY2010. Net profit decreased by 21.3% to RMB111.3 million.

A3 19 February 2012

The Company issued a clarification statement with reference to a media report saying that the Company may be a subject of a privatisation from the SGX-ST. The Company announced that it is not the source for the report, and no privatisation proposal has been submitted to the board nor has the board approved any privatisation exercise.


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A4 29 February 2012

The Company announced that on 28 Feb 2012, Hygeia Holdings Ltd (“Hygie”)(a wholly-owned entity of MBK Partners, L.P. (“MBK”)) has transferred all its interest in Luye Pharmaceutical International Co., Ltd (“Luye International”), comprising of one share and bonds convertible into shares in Luye Pharmaceutical International to Luye Pharma Holdings Ltd. Consequently, MBK and Hygeia have ceased to hold a deemed interest under Section 7 of the Companies Act, Cap 50 in the 381,439,877 issued ordinary shares (“Shares”) in Luye Pharma Group Ltd, held indirectly by Luye International through its wholly-owned subsidiary, Luye Pharmaceutical Investment Co., Ltd.

Consequential to the transfer, Mr Kong Teck Chien and Mr Kung Kuo Chuan, both being Non-Executive Directors nominated by MBK resigned from their positions in the Luye.

The Company also announced its fourth quarter and twelve months financial statement and dividend announcement for the period ended 31 December 2011 (“FY2011”). The Group attained total revenue of RMB1.8 billion, which represented an increase of 32.3% over FY2010. Net profit increased by 10.5% to RMB166.2 million.

A5 11 May 2012

The Company announced its first quarter financial statement and dividend announcement for the period ended 31 March 2012. The Group attained total revenue of RMB521.8 million for the first quarter of FY2012, which represented an increase of 41.0% over the corresponding period in FY2011. Net profit increased by 32.4% to RMB43.3 million.

A6 30 July 2012

The Company announced that Luye Pharmaceutical Investment Co., Ltd. (“LPIC”) has acquired 15.22% of the issued share capital of Luye Pharma Group Ltd, bringing its total interest to 92.63%. Due to the increase of the shareholding by LPIC , the percentage of all the shares of the Company held in public hands has fallen below 10%. Accordingly, the Company has requested for a suspension in the trading of its shares on the SGX-ST.

14 August 2012

The Company announced its second quarter and first half financial statement and dividend announcement for the period ended 30 June 2012. The Group attained total revenue of RMB1.0 billion for the first half of 2012, which represented an increase of 29.8% over the corresponding period in FY2011. Net profit increased by 38.0% to RMB93.5 million.

23 August 2012The Company announced that it is currently engaging its controlling shareholder in relation to its free float and will try to seek a satisfactory resolution to the matter.

28 August 2012 DBS announced, for and on behalf of the Offeror, the voluntary unconditional cash offer to acquire all the Shares in the capital of Luye.

6 September 2012 The Company requested for the resumption of trading starting from 7 Sep 2012.

A7 7 September 2012

DBS announced, for and on behalf of the Offeror, that the Offeror had on 7 Sep 2012 acquired 11.7 million Shares of Luye in the open market, resulting in the Offeror holding 95.01% of all the Shares. The Offeror intends to exercise its rights to compulsory acquire all the remaining Shares in Luye.


4242 4343


A8 11 September 2012

Following the announcement made on 28 August 2012, DBS announced, for and on behalf of the Offeror, that the Offer Document dated 11 September 2012 containing the terms and conditions of the Offer and enclosing the appropriate form(s) of acceptance of the Offer has been despatched to all shareholders of Luye.

A9 13 September 2012

DBS announced, for and on behalf of the Offeror, that the Offeror has on 13 September 2012 received valid acceptances representing approximately 0.47% of the total number of Shares. Accordingly, as at 5.00 p.m. on 13 September 2012, the total number of (a) Shares owned, controlled or agreed to be acquired by the Offeror and parties acting in concert with it and (b) valid acceptances to the Offer, amount to an aggregate of 470,463,346 Shares, representing approximately 95.47% of the total number of Shares of the Company.

Source: SGX-ST announcements released by the Company or DBS (for and on behalf of the Offeror)

Based on the chart above and historical trading trends, we note the following:

i. for the 12-month period from 28 July 2011 to the Last Full Trading Day prior to the Offer Announcement Date, the closing prices of the Shares were in a range of between S$0.730 to S$1.150. The Offer Price represents a premium of 78.1% and 13.0% over the lowest and highest closing prices of the Shares respectively during the period;

ii. the trading prices and volumes of the Shares surged in the morning of 30 July 2012 to a high of S$1.280 and last traded at S$1.250 before the Company suspended the trading of the Shares and announced that Luye Pharmaceutical Investment Co., Ltd. has acquired 15.22% of the issued share capital of Luye Pharma Group Ltd, bringing its total interest to 92.63%, resulting in the percentage of all the Shares of the Company held in public hands falling below 10 per cent. The Offer Price represents a premium of 4.0% over the last transacted price on 30 July 2012 before the Shares were suspended and prior to the Offer Announcement Date;

iii. the Shares did not trade at or above the Cash Consideration of S$1.30 per share for the period from 28 July 2011 up to the Offer Announcement Date based on the daily closing prices;

iv. on 7 September 2012, suspension of trading of the Shares was lifted and the price of the Shares rose to close at S$1.295; and

v. the daily average volume of the Shares traded over the 12-month period up to and including the Last Full Trading Day was approximately 0.11 million. On 7 September 2012, an aggregate volume of approximately 14.3 million Shares were traded.

We have also compared the Offer Price against the volume weighted average price (‘‘VWAP’’) of Shares for selected reference periods both prior to and after the Offer Announcement Date as set out in the table below.

4444 4545

Reference Periods

HighestClosing Price(S$)

LowestClosing Price(S$)

VWAP (1)/ LastTransactedPrice(S$)

Premium/(Discount) ofOffer Price (2)

over VWAP (%)

Periods prior to and including the Last Full Trading Day on which the Shares were traded before the Offer Announcement Date

Last 12 months 1.150 0.730 0.94 38.3

Last 6 months 1.150 0.770 0.95 36.8

Last 3 months 1.150 1.000 1.08 20.4

Last 1 month 1.130 1.000 1.08 20.4

Last Full Trading Day on which the Shares were traded prior to the Offer Announcement Date

N.A. N.A. 1.12 (3) 16.1

Periods after the Offer Announcement Date

Trading Day immediately after the Offer Announcement Date N.A. N.A. 1.295 (4) 0.4

Between the Trading Day immediately after the Offer Announcement Date and the Latest Practicable Date (both dates inclusive)

1.300 1.295 1.300 0.0

Latest Practicable Date N.A. N.A. 1.295 (5) 0.4


Notes:

(1) The VWAP is computed based on the closing prices of the Shares for the trading days in the respective periods and rounded to 2 decimal places.

(2) Based on the Offer Price of S$1.30 per Share.

(3) This is the closing price of the Shares as at 27 July 2012, being the last Full Trading Day on which the Shares were traded prior to the Offer Announcement Date.

(4) This is the closing price of the Shares as at 7 September 2012, being the first trading day on which the Shares were traded after the Offer Announcement Date.

(5) This is the closing price of the Shares as at 14 September 2012, being the last Market Day as at the Latest Practicable Date of 16 September 2012.


4444 4545

The key observations in respect of the above are highlighted below:

(a) Over the 12-month period prior to and including the Last Full Trading Day on which the Shares were traded before the Offer Announcement Date, the Shares have closed between a low of S$0.730 and a high of S$1.150;

(b) The Offer Price represents a premium of 38.3%, 36.8%, 20.4% and 20.4% to the VWAP for the 12-month, 6-month, 3-month and 1-month periods prior to the Last Full Trading Day on which the Shares were traded before the Offer Announcement Date respectively;

(c) The Offer Price represents a premium of 16.1% to the last transacted price for the Last Full Trading Day on which the Shares were traded prior to the Offer Announcement Date;

(d) The Offer Price represents a premium of 0.4% to the last transacted price for the first trading day immediately after the Offer Announcement Date;

(e) The Offer Price is equivalent to the VWAP for the period between the Trading Day immediately after the Offer Announcement Date and the Latest Practicable Date; and

(f) The Offer Price represents a premium of 0.4% to the last transacted price as at the Latest Practicable Date

For illustration purposes only, we set out in the table below the average daily trading volume of the Shares and the average daily trading volume as a percentage of its free float.

Reference Periods Average DailyTraded Volume (1)

Approximatepercentage ofFree Float (2)

Periods prior to the last Full Trading Day on which the Shares were traded before the Offer Announcement Date

Last 12 months 105,480 0.29%

Last 6 months 192,563 0.53%

Last 3 months 59,266 0.16%

Last 1 month 50,682 0.14%

Last Full Trading Day on which the Shares were traded prior to the Offer Announcement Date

18,000 (3)

0.05%


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Periods after the Offer Announcement Date

Trading Day immediately after the Offer Announcement Date 14,322,000 (4)

39.51%

Between the Trading Day immediately after the Offer Announcement Date and the Latest Practicable Date (both dates inclusive)

3,938,333 10.86%

Latest Practicable Date 55,000 (5) 0.15%


Notes:

(1) Based on the total volume of Shares traded during the reference periods divided by the number of Market Days during the respective periods, excluding the period during which the Shares were suspended.

(2) Free float refers to the 36,252,153 Shares held by the public (as defined in the SGX-ST Listing Manual) as at the Offer Announcement Date as obtained from the Company’s announcements and Bloomberg L.P.

(3) This is the total volume of Shares traded on 27 July 2012, being the last Full Trading Day on which the Shares were traded prior to the Offer Announcement Date.

(4) This is the total volume of Shares traded on 7 September 2012, being the first trading day immediately after the Offer Announcement Date upon the lifting of the suspension of the trading in the Shares.

(5) This is the total volume of Shares traded on 14 September 2012, being the last Market Day as at the Latest Practicable Date of 16 September 2012.

The key observations in respect of the above are highlighted below:

(a) The average daily trading volume of the Shares for the 12-month, 6-month, 3-month and 1-month periods prior to the last Full Trading Day on which the Shares were traded before the Offer Announcement Date represents approximately 0.29%, 0.53%, 0.16%, and 0.14% of the Free Float respectively;

(b) The trading volume of the Shares on the Last Full Trading Day before the Offer Announcement Date represents 0.05% of the Free Float;

(c) The trading volume of the Shares on the first trading day immediately after the Offer Announcement Date represents 39.51% of the Free Float;

(d) The average daily trading volume of the Shares for the period between the first trading day immediately after the Offer Announcement Date and the Latest Practicable Date represents 10.86% of the Free Float;

(e) The trading volume of the Shares on the Latest Practicable Date represents 0.15% of the Free Float.

We wish to highlight that the above analysis of the trading prices and activity of the Shares serves only as an illustrative guide and is not an indication of the future trading price and activity of Shares.


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8.3 Share price performance relative to selected market indices

To assess the market price performance of the Shares vis-à-vis the general price performance of the Singapore equity market, we have compared the market movement of the Shares against the FTSE Straits Times Index (‘‘FSSTI’’) for the 12-month period prior to the last Full Trading Day on which the Shares were traded before the Offer Announcement Date to the Latest Practicable Date, as illustrated below.


We have also set out in the table below the movements in the last transacted prices of theShares and the FSSTI between the Last Full Trading Day and the Latest Practicable Date:

Company/Index

As at the Last FullTrading Day prior to Offer AnnouncementDate

As at the LatestPracticable Date

Percentage Change (%)

Luye 1.120 1.295 15.6FSSTI 2998.49 3070.42 2.4


Based on the above, we note the following:

(i) During the 12-month period (up to and including the Last Full Trading Day before the Offer Announcement), on a normalized basis, the Shares had generally underperformed the FSSTI for most of the period before March 2012 and generally outperformed the FSSTI after March 2012;

(ii) Between the Last Full Trading Day and the Latest Practicable Date, the Shares outperformed the FSSTI, having increased by approximately 15.6% as compared to the increase of approximately 2.4% in FSSTI over the same period.

Based on the above observations, it appears likely that the market prices and the trading volumes of the Shares since the Offer Announcement Date have been supported by the announcement of the Offer. As such, there is no assurance that the market prices and trading volumes of the Shares will be maintained at the prevailing level as at the Latest Practicable Date after the close of the Offer.

Shareholders should note that the past trading performance of the Shares should not in any way be relied upon as an indication or a promise of its future trading performance.


LUYE SP Equity

FSSTI Index

4848 4949

8.4 Comparison with financial valuation ratios of selected listed companies considered to be comparable to the Company

We wish to highlight that the figures used in our financial assessment have been extracted where available and/or applicable, from Bloomberg, the Circular and other publicly available sources. We make no representations or warranties, expressed or implied, as to the accuracy or completeness of such information.

For the purpose of assessing the financial terms of the Offer Price, references can be made to companies which are listed and traded on the SGX-ST or other stock exchanges, whose business activities and industries are broadly comparable to the Company (‘‘Selected Comparable Companies’’) to give an indication of the current market expectations with regards to the valuation of these businesses, implied by their respective closing market prices as at the Latest Practicable Date.

We recognise, however, that our list of Selected Comparable Companies is not exhaustive and there may not be any companies listed on the SGX-ST or other stock exchanges that is directly comparable to the Company in terms of business activities, scale of operations, types of products, geographical markets, track record, future prospects, asset base, risk profile, customer base and other relevant criteria. As such, any comparison made with respect to the Selected Comparable Companies is therefore intended to serve as an illustrative guide only.

For the purpose of our evaluation and for illustration, we have made comparisons between the Offer Price and the valuation of the Selected Comparable Companies on a historical basis using the following:

Valuation Ratio General Description

Price-to-Earnings (‘‘P/E’’)

P/E ratio or earnings multiple illustrates the valuation ratio of the current market value of a company’s shares relative to its consolidated basic earnings per share as stated in its financial statements. The P/E ratio is affected by, inter alia, the capital structure of a company, its tax position as well as its accounting policies relating to depreciation and intangible assets.

Price-to-Net Tangible Asset(‘‘P/NTA’’)

‘‘NTA’’ or ‘‘net tangible asset’’ is defined to exclude, where applicable, non-controlling interests, land use rights, deferred tax assets and liabilities, deferred expenditure and goodwill. P/NTA ratio illustrates the ratio of the market price of a company’s share relative to its historical NTA per share as recorded in its financial statements. The NTA figure provides an estimate of the value of a company assuming the sale of all its tangible assets, the proceeds which are first used to settle its liabilities and obligations with the balance available for distribution to its shareholders. Comparisons of companies using their NTAs are affected by differences in their respective accounting policies, in particular, their depreciation and asset valuation policies.

Price-to-Net Asset Value(“P/NAV”)

P/NAV ratio illustrates the ratio of the market price of a company’s share relative to its historical NAV per share as recorded in its financial statements. The NAV figure is an expression of the underlying value of a company, derived by deducting the company’s liabilities from its assets.

Enterprise Value-to-Earnings Before Interest, Tax, Depreciation and Amortisation(‘‘EV/EBITDA’’)

‘‘EV’’ or ‘‘Enterprise Value’’ is the sum of a company’s market capitalisation, preferred equity, independent interests, consolidated short and long term debts inclusive of finance lease liabilities less its consolidated cash and cash equivalents. ‘‘EBITDA’’ stands for historical consolidated earnings before interest, tax, depreciation and amortization expenses, inclusive of share of associates’ and joint ventures’ income but excluding exceptional items. The EV/EBITDA ratio illustrates the ratio of the market value of a company’s business relative to its historical pre-tax consolidated operating cashflow performance, without regard to its capital structure.


4848 4949

The statistics for the Selected Comparable Companies are based on their closing prices as at the Latest Practicable Date and the publicly available financial results based on their latest available published financial statements as at the Latest Practicable Date.

Comparisons between the Company and the Selected Comparable Companies may be affected, inter alia, by differences in their accounting policies. Our analysis has not attempted to adjust for such differences.

We set out in the table below the list of Selected Comparable Companies, together with a brief description of their principal activities which are considered to be broadly comparable to the Company.

Selected ComparableCompanies

Country ofListing Description

MarketCapitalisationas at the LatestPracticable Date (S$ million) (1)

Sihuan Pharmaceutical Holdings Group Ltd.

Hong Kong

Researches and develops cardiocerebral vascular drugs in China. The Company’s drugs address needs in the areas of anti-infective, metabolism, cardiovascular system, oncology and nervous system.

2,436.4

Shanghai Fosun Pharmaceutical (Group) Co., Ltd.

China

Manufactures genetic medicines, Chinese traditional medicines, diagnostic products, and medical instruments, provides technology, marketing, and advertising services, as well as invests in import and export trading.

4,153.6

Simcere Pharmaceutical Group U.S.

Manufactures and supplies branded generic pharmaceuticals to the China market. The Company’s products include antibiotics, anti-cancer medications and anti-stroke medications.

510.4

3SBio, Inc. U.S.

Researches treatments in the areas of nephrology, oncology, supportive cancer care, inflammation, and infectious diseases.

363.9


Notes:• Market capitalisation of the Selected Comparable Companies is based on their respective closing prices and the

respective exchange rates as at the Latest Practicable Date.

Shareholders should note that there is no company or group listed on any relevant stock exchange which may be considered exactly identical to the Group in terms of business activities, market capitalisation, scale of operations, risk profile, geographical spread, operating and financial leverage, track record and future prospects.

In view of the above, it should be noted that any comparison made with respect to the Selected Comparable Companies is limited in scope and merely serves as an illustration and that the conclusions drawn from the comparisons may not necessarily reflect the perceived market valuation of the Company as at the Latest Practicable Date.

We set out in the table below the financial ratios of the Company and the Selected Comparable Companies as at the Latest Practicable Date.


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Selected Comparable Companies (1) P/E (2) P/NAV (3) P/NTA (3) EV/EBITDA (4)

Sihuan Pharmaceutical Holdings Group Ltd. 15.69 1.74 2.94 9.20Shanghai Fosun Pharmaceutical (Group) Co., Ltd. 18.17 2.06 2.32 47.86

Simcere Pharmaceutical Group 15.32 1.24 1.99 12.313SBio, Inc. 16.82 1.39 1.44 7.19 High 18.17 2.06 2.94 47.86Median 16.25 1.56 2.15 10.76Low 15.32 1.24 1.44 7.19

Company (Implied by the Offer Price) 21.67 2.36 3.94 12.42


Notes:(1) The historical P/E, historical P/NAV, historical P/NTA and historical EV/EBITDA ratios of the Selected Comparable

Companies are based on their respective closing prices as at the Latest Practicable Date.

(2) The historical P/E ratios of the respective companies are based on the consolidated earnings for the 12-month period up to 31 December 2011.

(3) The P/NAV and P/NTA ratios of the respective companies were based on their respective NAV and NTA values as set out in their latest available published financial statements as at the Latest Practicable Date.

(4) The EV/EBITDA ratios of the respective companies were based on (i) their market capitalisations as at the Latest Practicable Date (except for the Company where its market capitalisation was based on the Offer Price) and the consolidated net debt and non-controlling interests figures set out in their latest available published financial statements as at the Latest Practicable Date and (ii) the aggregate consolidated EBITDA for the 12 month period up to 31 December 2011.

Based on the above ratio analysis, we noted that the:

(a) Historical P/E ratio of the Company of 21.67 times as implied by the Offer Price is higher than the highest of the historical P/E ratios of the Selected Comparable Companies.

(b) P/NAV ratio of the Company of 2.36 times as implied by the Offer Price is higher than the highest of the historical P/NAV ratios of the Selected Comparable Companies.

(c) P/NTA ratio of the Company of 3.94 times as implied by the Offer Price is higher than the highest of the historical P/NTA ratios of the Selected Comparable Companies.

(d) EV/EBITDA ratio of the Company of 12.42 times as implied by the Offer Price is within the range and higher than the median historical EV/EBITDA ratios of the Selected Comparable Companies.

8.5 Comparison with successful privatisations of other companies listed on the SGX-ST

We note that the Offeror’s current intention is not to maintain the listing status of the Company on the Main Board of the SGX-ST and this will eventually lead to a privatisation and delisting of the Company.

Based on the foregoing, for the purpose of our evaluation on the financial terms of the Offer vis-à-vis other recent successful privatisations and/or delistings of companies listed on the SGX-ST, we set out in the table below statistics on privatisations and/or delistings relating to companies listed on the SGX-ST during the last 12-month period prior to the Offer Announcement Date (“Precedent Privatisations”).


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Precedent Privatisations in Singapore

Premium of Offer Price over 1

Companies Date ofannouncement

Last transactedprice prior to

announcement(%)

1-month VWAPprior to

announcement(%)

3-monthVWAPprior to

announcement(%)

C&O Pharmaceutical Technology Holdings Limited

1 Aug 2011 11.1 16.8 20.2

CMZ Holdings Ltd. 3 Aug 2011 22.6 32.9 26.7

Centraland Limited 12 Aug 2011 11.1 n.a2 11.1

Asia Environment Holdings Ltd 23 Aug 2011 33.3 24.0 21.0

Heng Long International Ltd. 7 Oct 2011 7.1 6.8 17.4

Wanxiang International Limited

11 Oct 2011 45.5 61.5 56.5

Unidux Electronics Limited

28 Oct 2011 104.3 178.4 99.7

CHT (Holdings) Ltd. 31 Oct 2011 100.0 62.2 62.2

Leeden Limited3 8 Nov 2011 35.7 37.4 28.3

SMB United Limited 28 Dec 2011 33.3 45.5 50.9

China Healthcare Limited 5 Mar 2012 16.7 19.4 23.4

Adampak Limited 2 Apr 2012 21.7 33.8 38.2

Brothers (Holdings) Limited

30 May 2012 44.4 43.6 39.0

High 104.3 178.4 99.7Median 33.3 35.6 28.3Low 7.1 6.8 11.1

Luye (Implied by the Offer Price) 28 Aug 2012 16.1 20.4 20.4

Source: SGX-ST announcements and circulars to shareholders in relation to the respective Precedent Privatisations.


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Note: (1) Market premia calculated relative to the closing price of the respective target companies one (1) day prior to the

respective announcement dates and VWAP of the 1-month and 3-month period prior to the respective announcement dates

(2) There were no trades done in the one-month period prior to the announcement.(3) Market premia were calculated for the respective periods prior to 20 Oct 2011, being the Holding Announcement

Date.

Based on the above analysis, we note the following:

(a) the premium of approximately 16.1% implied by the Offer Price of S$1.30 per Share over the last transacted price of the Shares on the Last Full Trading Day is within the range but lower than the median premia implied by the respective offer prices paid over the last transacted market prices of the shares with respect to the Precedent Privatisations;

(b) the premium of approximately 20.4% implied by the Offer Price of S$1.30 per Share over the 1-month VWAP of the Shares up to and including the Last Full Trading Day is within the range but lower than the median premia as implied by the 1-month VWAP of the shares with respect to the Precedent Privatisations; and

(c) the premium of approximately 20.4% implied by the Offer Price of S$1.30 per Share over the 3-month VWAP of the Shares up to and including the Last Full Trading Day is within the range but lower than the median premia as implied by the 3-month VWAP of the shares with respect to the Precedent Privatisations.

The Recommending Directors should note that the level of premium (if any) an acquirer would normally pay for acquiring and/or privatizing a listed company (as the case may be) varies in different circumstances depending on, inter alia, the attractiveness of the underlying business to be acquired, the synergies to be gained by the acquirer from integrating the target company’s businesses with its existing business, the possibility of a significant revaluation of the assets to be acquired, the availability of substantial cash reserves, the liquidity in the trading of the target company’s shares, the presence of competing bids for the target company, the extent of control the acquirer already has in the target company and prevailing market expectations. Consequently, each Precedent Privatisation has to be judged on its own merits (or otherwise).

The list of Precedent Privatisations indicated herein has been compiled based on publicly available information as at the Latest Practicable Date. The above table captures only the premia or discounts implied by the offer prices in respect of the Precedent Privatisations over the aforesaid periods and does not highlight bases other than the aforesaid in determining an appropriate premium or discount for the recent Precedent Privatisations. It should be noted that the comparison is made without taking into account the total amount of the offer value of each respective Precedent Privatisation or the relative efficiency of information or the underlying liquidity of the shares of the relevant companies or the performance of the shares of the companies or the quality of earnings prior to the relevant announcement and the market conditions or sentiments when the announcements were made or the desire or the relative need for control leading to compulsory acquisition.

Moreover, we wish to highlight that the Company may not be in the same industry and does not conduct the same businesses as the other companies in the list of Precedent Privatisations and would not, therefore, be directly comparable to the list of companies in terms of, inter alia, geographical markets, composition of business activities, scale of business operations, risk profile, asset base, valuation methodologies adopted, accounting policies, track record, future prospects, market/industry size, political risk, competitive and regulatory environment, financial positions and other relevant criteria. Accordingly, the Recommending Directors should note that the above comparison merely serves as a general guide to provide an indication of the premium or discount in connection with the Precedent Privatisations. Therefore, any comparison of the Offer with the Precedent Privatisations is for illustration purposes only. Conclusions drawn from the comparisons made may not necessarily reflect any perceived market valuation for the Company.


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8.6 Other relevant considerations in relation to the Offer which have a significant bearing on our assessment

8.6.1 Offer is unconditional in all respects

As the Offer is unconditional in all respects, Shareholders who accept the Offer are assured of receiving the Offer Price in respect of all their acceptances of the Offer without incurring brokerage and other trading costs. Shareholders who accept the Offer before the close of the Offer will be paid the Offer Price in cash within 10 days after the receipt by the Offeror of valid and complete acceptances to the Offer in accordance with the terms and conditions of the Offer Document.

8.6.2 No Alternative Offer

The Directors have confirmed that, as at the Latest Practicable Date, apart from the Offer made by the Offeror, no alternative offer from any third party has been received.

8.6.3 Offeror’s future plans for the Group

The full text of the Offeror’s intentions in relation to the Group is set out under Section 5.4 of the Offer Document and pertinent parts of which is reproduced in italics below:

“Following the close of the Offer, the Offeror intends to undertake a strategic and operational review of the organisation, businesses and operations of the Group which may involve the disposal or cessation of under-performing businesses and assets and the redeployment of certain employees to other entities within the Group.

Save as disclosed above, the Offeror has no present intention to (a) make any major changes to the existing businesses of the Company, (b) redeploy the fixed assets of the Company, or (c) discontinue the employment of the employees of the Group. Nonetheless, the Offeror retains the flexibility at any time to consider any options or opportunities which may present themselves and which it regards to be in the interests of the Offeror and/or the Company.”

8.6.4 The Financial Performance of the Group

The following observations are based on the historical published financials of the Group and should be read in conjunction with the full text of the annual reports of the Group in respect of the relevant financial years and the results announcement of the Group for the six months ended 30 June 2012, including any disclosure notes thereto.

We note that the net profit after tax of the Group for the financial year ended 31 December 2011 (“FY2011”) of RMB166.2 million increased by approximately 10.5% as compared to the previous financial year.

In the Company’s annual report for FY2011, the following commentary was made on the significant trends and competitive conditions of the industry in which the Group operates in respect of FY2012:

“The industry continues to face challenges arising from regulatory policies limiting pricing flexibility on medications and delays in the sale of therapeutic drugs due to more stringent approval processes. These regulatory measures coupled with an intensified competitive landscape within the sector, higher cost of operations arising from higher raw material and

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labour costs as well as greater capital requirements to initiate research, clinical trials and capacity expansion will continue to be concerns for the Group in the coming year.

While these challenges will undoubtedly test the Group’s management team, we remain nonetheless confident about the long-term prospects of the PRC pharmaceutical industry. Capitalising on the continued expansion of the National Health Insurance Scheme, a growing awareness and concern for personal health and well-being together with rising affluence of the population will continue to provide Luye with the necessary growth impetus to drive its sustained development.”

We also note that the net profit after tax of the Group for the half year ended 30 June 2012 (“HY2012”) of RMB93.5 million increased by approximately 38.0% as compared to the same period of the previous financial year.

In the Company’s unaudited half year financial results announcement for HY2012, the following commentary was made on the significant trends and competitive conditions of the industry in which the Group operates and any known factors or events that may affect the Group in the next reporting period and the next 12 months:

“Barring unforeseen circumstances, the Board of Directors believes that the Group will remain profitable for FY2012.”

8.6.5 Compulsory Acquisition and Listing Status

As stated in Section 7.2 of the Offer Document, under Section 103 of the Bermuda Companies Act, if the Offeror holds not less than 95% of all the Shares, the Offeror will have a right to compulsorily acquire at the Offer Price, all Shares held by the Shareholders who have not accepted the Offer (“the Dissenting Shareholders”). As indicated in Section 7.3 of the Offer Document, the Offeror intends to make the Company its wholly owned subsidiary and does not intend to preserve the listing status of the Company. In the event that the trading of the Shares is suspended by the SGX-ST at the close of the Offer, the Offeror does not intend to take steps for any trading suspension of the Shares to be lifted.

Further, pursuant to the announcement of 7 September 2012 issued by DBS, for and on behalf of the Offeror, we note that as at 5.00 p.m. on 7 September 2012, the Offeror has acquired such number of Shares, which when taken together with the Shares already held by the Offeror, result in the Offeror holding not less than 95% of all the Shares. Accordingly, the Offeror has the right to, and intends to, serve a notice pursuant to Section 103 of the Bermuda Companies Act to compulsorily acquire, all the Shares held by the Dissenting Shareholders in due course.

9. OUR RECOMMENDATION

In arriving at our recommendation in respect of the Offer, we have taken into account the various factors which we consider may have a significant bearing on our assessment which includes our analysis set out in earlier sections of the following:

(a) assessed valuation of the Group;


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(b) market quotation and trading activity of the Shares;

(c) Share price performance relative to selected market indices;

(d) comparison of financial valuation ratios of selected listed companies considered to be comparable to the Company;

(e) comparison with successful privatisations of other companies listed on the SGX-ST;

(f) other relevant considerations in relation to the Offer which may have a significant bearing on our assessment.

Having regard to the considerations set out in this letter and the information that has been made available to us as at the Latest Practicable Date, we are of the opinion that as at the Latest Practicable Date, on balance, the terms of the Offer are fair and reasonable from a financial point of view. Accordingly, we advise the Recommending Directors to recommend to Shareholders to ACCEPT the Offer if they are unable to obtain a price higher than the Offer Price (net of related expenses) in the open market.


Directors and/or Shareholders should note that the trading of the Shares are subject to, inter alia, the performance and prospects of the Group, prevailing economic conditions, economic outlook and stock market conditions and sentiments. Accordingly, our advice on the Offer does not and cannot take into account future trading activities or patterns or price levels that may be established for the Shares after the Latest Practicable Date since these are governed by factors beyond the ambit of our review and also, such advice, if given, would not fall within our terms of reference in connection with the Offer.

Our recommendation is addressed to the Recommending Directors for their benefit in connection with and for the purposes of their consideration of the Offer and should not be relied on by any other party. Any recommendation made by the Recommending Directors in respect of the Offer shall remain their responsibility.

Whilst a copy of this letter may be reproduced in the Circular, neither the Company nor the Directors may reproduce, disseminate or quote this letter (or any part thereof) for any other purpose (other than the intended purpose in relation to the Offer) at any time and in any manner without the prior written consent of HLF in each specific case. This opinion is governed by, and construed in accordance with, the laws of Singapore, and is strictly limited to the matters stated herein and does not apply by implication to any other matter.

Yours faithfullyFor and on behalf ofHong Leong Finance Limited

Joan Ling-Lau Tang Yeng YuenSenior Vice President Vice PresidentHead, Corporate Finance Corporate Finance

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This Appendix 3 sets out the extracts of the valuation report from Yantai Zhengping Assets Appraisal Firm (烟台市正平资产评估事务所), the valuation report from Jiangsu Yonghe Land Real Estate Appraisal Co., Ltd (江苏永和土地房地产估价有限公司) and the valuation report from Beijing Lixin Runde Assets Appraisal Firm (北京立信润德资产评估事务所), in respect of the properties owned by the Group as set out in the list below. The full valuation reports of the respective properties are available for inspection at the business office of the Company at 137 Telok Ayer Street, #05-05, Singapore 068602 during normal business hours for the period during which the Offer remains open for acceptance.

Valuer’s Name Properties Valued

Yantai Zhengping Assets Appraisal Firm (烟台市正平资产评估事务所)

Buildings and land use rights at:

No. 9 Baoyuan Road, Laishan District (a) (莱山区宝源路9号)

No. 13 Baoyuan Road, Laishan District (b) (莱山区宝源路13号)

land with registration number of (c) 烟国土资挂 [2008] 2004号

Jiangsu Yonghe Land Real Estate Appraisal Co., Ltd (江苏永和土地房地产估价有限公司)

Buildings and land use rights at No, 28 Gaoxin Road, Gaoxin Technology Park, Pukou District, Nanjing City (南京市浦口区高新技术开发区高新路28号)

Beijing Lixin Runde Assets Appraisal Firm (北京立信润德资产评估事务所)

Buildings and land use rights at:

No. 2, Yongsheng North Road, Handian District (a) (海淀区永盛北路2号)

(b) Baijiatuancun, Wenquan Village, Haidian District (海淀区温泉镇白家疃村)

APPENDIX 3 – VALUATION REPORTS

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English translation for reference only

Executive Summary of Valuation Report on Properties Owned by Shandong Luye Pharmaceutical Co., Ltd.

Yantai Zhengping Assets Appraisal Firm (the “Firm”) has been appointed by Shandong Luye Pharmaceutical Co., Ltd. to assess the value of properties owned by Shandong Luye Pharmaceutical Co., Ltd. situated at No. 9 Baoyuan Road, Laishan District (莱山区宝源路9号), No. 13 Baoyuan Road, Laishan District (莱山区宝源路13号) and the land with registration number of 烟国土资挂 [2008] 2004 号 (the “Properties”), in accordance with relevant governmental regulations in respect of asset valuation and using independent, objective, fair and scientific principles. In accordance with the necessary assessment procedures, our valuers have made the following fair assessment of the market value of the Properties as at 31 August 2012, after conducting site visits and market research and seeking confirmations from the necessary organisations/authorities. The valuation details and results are as follows:

According to the valuation basis and the selected assessment methods and evaluation process, after conducting the valuation, we are of the opinion that the assessed value of the Properties as at 31 August 2012 is RMB143,910,100, details of which are set out below:

The above is an executive summary extracted from our valuation report. For further information, please read the full report in details.

Yantai Zhengping Assets Appraisal FirmYantai, the PRC14 September 2012

Legal representative : Luo WenjunRegistered PRC property valuer : Wang ZhongchenRegistered PRC property valuer : Sun Mingguang

S/N Item Location Area (m2) Assessed Value (RMB’000)

1 Buildings at No. 9 Baoyuan Road, Laishan District(莱山区宝源路9号房产)

No. 9 Baoyuan Road, Laishan District

16,287.14 27,042.3

2 Buildings at No. 13 Baoyuan Road, Laishan District(莱山区宝源路13号房产)


7,616.39 11,462.9

3 Integrated factory plant, microspheres workshop, quality inspection building and corridor(综合厂房、微球车间、质检楼、连廊)

No. 15 Chuangye Road, Gaoxin District

43,241.35 47,775.8

4 Land at No. 9 Baoyuan Road, Laishan District(莱山区宝源路9号土地)


40,199.00 15,386.1

5 Land at No. 13 Baoyuan Road, Laishan District(莱山区宝源路13号土地)


18,233.50 7,213.0

6 Land with registration number of 烟国土资挂 [2008] 2004号(烟国土资挂 [2008] 2004号)

No. 15 Chuangye Road, Gaoxin District

132,850.00 35,030.0

Total 143,910.1

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jiangsu Yonghe Land Real Estate Appraisal Co., LtdExecutive Summary of Valuation Report

Disclaimer: The summary below has been extracted from our valuation report. For further information, please read the full report in details, in particular, the special notes in the report.

Jiangsu Yonghe Land Real Estate Appraisal Co., Ltd (the “Firm”) has been appointed by Nanjing Luye Pharmaceutical Co., Ltd. (“Nanjing Luye”) to assess the value of property (the “Property”) owned by Nanjing Luye located at No. 28 Gaoxin Road, Gaoxin Technology Park, Pukou District, Nanjing City (南京市浦口区高新技术开发区高新路28号) (including land use rights, buildings and the auxiliary facilities and fixtures which are inseparable from the land and buildings but excluding movable facilities), in accordance the necessary assessment procedures in respect of asset valuation and based on independent, fair, scientific and objective principles, and adopting appropriate methods with the benefit of our valuers’ experience.

Based on the relevant documents and information provided by the owner of the Property, in accordance with national standard of property valuation GB/T 50291-1999 (房地产估价规范) and relevant laws, regulations and policies, our valuers conducted the necessary assessment procedures in accordance with relevant state regulations in respect of asset valuation, including verifying, enquiring and collating data, and have made a fair assessment of the market value of the relevant property based on the pricing information as at the relevant date.

Objective1.

Nanjing Luye has appointed the Firm to assess the market value of the Property as of the relevant date.

Scope2.

The subject matter of this valuation exercise is the industrial property located at No. 28 Gaoxin Road, Gaoxin Technology Park, Pukou District, Nanjing City (南京市浦口区高新技术开发区高新路28号). The scope of this valuation exercise is the seven buildings and five land use rights as identified by Nanjing Luye.

Type of Value3.

The value to be determined is the market value of the Property in the open market.

Date of Valuation4.

The valuation date is 31 August 2012.

Valuation Method5.

Based on the types and the location of the Property, we have adopted the costs valuation method to assess the value of the buildings and the market comparison method to assess the value of the land.

Valuation Conclusion6.

After ensuring that there are sufficient sellers and buyers in the market and that there are no obstacles to enter to market, the value of the Property as at 31 August 2012 is RMB62,988,400, with detailed breakdown as follows:

S/N Item Area (m2) Unit value (RMB/ m2) Aggregate value (RMB,000) Remarks1 Buildings 27,773.40 - 55,352.22 Land 25,379.7 - 7,636.23 Total 62,988.4

For further information, please read the full report in details.

jiangsu Yonghe Land Real Estate Appraisal Co., Ltd14 September 2012

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Assumptions and Limitations

The results in this valuation report reflects the open market value of the Property and are applicable only for the 1. purpose contemplated under this valuation report. This valuation report may not be objective or appropriate for other purposes and are subject to the following assumptions:

the presence of an open and relatively active and developed property market;(a)

the Property can be freely traded in the open market; (b)

there is a need for a reasonable negotiation period for the purpose of completing the transaction (c) and achieving reasonable transaction price. During the negotiation period, the market conditions and physical conditions remain unchanged;

the documents and information provided by the client are complete, true, legal and effective; and(d)

the Property can be continuously occupied and used.(e)

We have not considered potential influences on the property prices resulting from macro-economic and state 2. economic policies changes, natural disasters and other force majeure events. We have also not considered potential changes to property transaction prices under extraordinary circumstances.

Our site visits do not include inspection of building qualities and we have assumed that the building qualities 3. are satisfactory.

The value determined in this report includes the open market value of building ownership rights and land use 4. rights including the utilities infrastructure and upholstery therein.

The value determined in this report is determined assuming optimal uses for the Property based on the 5. legal uses of the Property as stated on the Building Ownership Certificate and the State-owned Land Use Certificate and the relevant city planning requirements and we have made references to the factors/qualities of the Property and its location as well as of the nearby properties.

The values determined for CMP factory and pharmaceutical research centre, which are currently being 6. constructed, are their values in their current state in the open market.

We have assumed that there are no guarantees and other encumbrances and that there are no legal disputes 7. or investigations by any authorities which result in restrictions in the free transfer of the Property. We have also not considered influences by any market risks or short-term punitive measures imposed by authorities and other adjustments which may be required due to market changes.

The land area, built-up area and total area have been determined based on the Property as stated on the 8. Building Ownership Certificate, the State-owned Land Use Certificate and other documents and information provided by the client, with corresponding adjustments when there are changes to areas.

The results in this valuation report reflects the open market value of the Property at the date of this report and 9. are applicable only for the purpose contemplated under this valuation report. This valuation report may not be objective or appropriate for other purposes.

Our prior consent is required for the publishing of this report, whether partially or fully. We undertake that this 10. report and its content shall not be disclosed to any third party without the client’s consent, unless required by relevant laws and regulations of the state.

The validity of this report is one (1) year, during which period, if there is any material changes in the area 11. of the Property, valuation standards and other factors, the client should appoint a property valuer to make adjustments to the value of the Property or re-assess the value of the Property.


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Beijing Lixin Runde Assets Appraisal FirmExecutive Summary of Valuation Report

Disclaimer: The summary below has been extracted from our valuation report. For further information, please read the full report in details, in particular, the special notes in the report.

Beijing Lixin Runde Assets Appraisal Firm (the “Firm”) has been appointed by Beijing WBL Peking University Biotech Co., Ltd. (“WPU”) to assess the value of properties owned by WPU in accordance with relevant state regulations in respect of asset valuation and based on independent, fair, scientific and objective principles.

Based on the documents and information provided by the client, our registered property valuers have conducted the necessary assessment procedures in accordance with relevant state regulations in respect of asset valuation, including verifying, enquiring and collating data, and have made a fair assessment of the market value of the relevant property based on the pricing information as at the relevant date.

Objective1.

Based on the engagement letter entered into between WPU and the Firm, WPU has appointed the Firm to assess the value of WPU’s buildings and land use rights as of the date of this report as reference for WPU’s economic activities.

Scope2.

The subject matter of this valuation exercise is the current value of the buildings and land use rights owned by WPU as identified by WPU as at the relevant date. The scope of this valuation exercise is two buildings and land use rights identified by WPU as at the relevant date (“Properties”).

Type of Value3.

The value to be determined is market value, which is the price agreed by a willing-seller and a willing-buyer acting rationally without any external pressure in a normal transaction.

Date of Valuation4.

The valuation date is 31 August 2012.

Valuation Method5.

Based on the characteristics of the specified objective and the subject matter of this valuation, we have adopted the costs valuation method and the market valuation method.


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Valuation Conclusion6.

Assuming continuous operations, the aggregate value of WPU’s buildings and land use rights is RMB170,705,600, with detailed breakdown as follows:

Item Area (m2) Assessed Value (RMB’000)

Building at Unit 1, No. 2, Yongsheng North Road, Handian District(海淀区永盛北路2号1幢房屋)

1 8,309.25 33,270.0

Building at Baijiatuancun, Wenquan Village, Haidian District(海淀区温泉镇白家疃村房屋)

2 5,159.81 7,478.6

Land at Unit 1, No. 2, Yongsheng North Road, Handian District(海淀区永盛北路2号1幢土地)

3 27,671.84 29,166.1

Land at Baijiatuancun, Wenquan Village, Haidian District(海淀区温泉镇白家疃村土地)

4 20,481.71 18,064.9

GMP factory and buildings and other parts of Phase II project(GMP厂房及建筑物等二期工程)

5 82,726.0

Total 170,705.6

Miscellaneous7.

The results of this valuation exercise shall not be used for any purposes other than for the reference of this client and the relevant parties.

The results of this valuation exercise are based on certain assumptions and limitations. We would like to remind users of this report to pay attention to and bear in mind the potential impact of the legal rights of the Properties, the special explanatory notes, and the effect of the assumptions and limitations on the results of valuation and transaction pricing.

The validity of this valuation report is one (1) year, i.e. from 31 August 2012 to 30 August 2013.

This valuation report has been prepared for the specific purposes of submission to the relevant authorities and with the specified objective. This report shall not be supplied to any third party or be published unless prior consent has been obtained from the client and the Firm. Unless required by relevant laws, the contents of this report (whether in part or in full) shall not be published on any public media.

Beijing Lixin Runde Assets Appraisal FirmBeijing, the PRC14 September 2012

Legal representative: Yi FuchaoPRC registered property valuer: Kong YingziPRC registered property valuer: Dong Lihua

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Assumptions

We have assumed that the Properties are the target of an existing transaction.(1)

We have assumed the presence of a sufficiently well-developed open market.(2)

We have assumed that the owner of the Properties will continue to operate in the same way with the same (3) operating scope in all material aspects, save for reasonable adjustments and innovation pursuant to market developments and technological developments.

The valuation exercise is conducted based on the specified objectives provided in the valuation report.(4)

The results in this valuation report are based on the valid prices in the PRC open market as at the valuation (5) date.

We have assumed that there will be no changes to the uses of the Properties.(6)

We have assumed that the owner of the Properties has provided us with true, accurate and complete (7) information and documents.

The scope of this valuation exercise is based on the declaration form provided by the owner of the (8) Properties.

When any of the above assumptions no longer holds true, the results of the valuation will generally be invalid.

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APPENDIX 4 – EXTRACT FROM THE COMPANY’S BYE-LAWS

There is no restriction in the Memorandum of Association and Bye-laws of the Company on the right to transfer the Shares. Therefore there is no requirement for holders of Offer Shares, before transferring them, to offer them for purchase to members of the Company or to any other persons.

The rights of Shareholders in respect of capital, dividends and voting are contained in the Bye-laws. The provisions in the Bye-Laws relating to the rights of Shareholders in respect of capital, dividends and voting are as follows:-

Share Capital

Bye-Law 3

3. (1) The share capital of the Company at the date on which these Bye-laws come into effect shall be divided into shares of a par value of US$0.02 each.

(2) The Company may purchase its own shares for cancellation or to acquire them as Treasury Shares in accordance with the Act on such terms as the Board shall think fit. Any power of the Company to purchase or otherwise acquire its own shares shall be exercisable by the Board in accordance with and subject to the Act, the Company’s memorandum of association and, for so long as the shares of the Company are listed on the Designated Stock Exchange, the prior approval of the Members in general meeting for such purchase or acquisition. Such approval of the Members shall remain in force until (i) the conclusion of the annual general meeting of the Company following the passing of the resolution granting the said authority or (ii) the date by which such annual general meeting is required to be held or (iii) it is revoked or varied by ordinary resolution of the Company in general meeting, whichever is the earliest, and may thereafter be renewed by the Members in general meeting. For so long as the shares of the Company are listed on the Designated Stock Exchange, the Company shall make an announcement to the Designated Stock Exchange of any purchase or acquisition by the Company of its own shares on the market day following the day of such purchase or acquisition.

(3) Neither the Company nor any of its subsidiaries shall give, whether directly or indirectly, whether by means of loan, guarantee, provision of security or otherwise, any financial assistance for the purpose of the acquisition or proposed acquisition by any person of any shares in the Company, but nothing in this Bye-law shall prohibit transactions permitted under the Act.

Alteration of Capital

Bye-Laws 4 to 7

4. The Company may from time to time by ordinary resolution in accordance with Section 45 of the Act:-

(a) increase its capital by such sum, to be divided into shares of such amounts, as the resolution shall prescribe;

(b) consolidate and divide all or any of its capital into shares of larger amount than its existing shares;

(c) divide its shares into several classes and without prejudice to any special rights previously conferred on the holders of existing shares attach thereto respectively any preferential, deferred, qualified or special rights, privileges, conditions or such restrictions which in the absence of any such determination by the Company in general meeting, as the Directors may determine provided always that where the Company issues shares which do not carry voting rights, the words “non-voting” shall appear in the designation of such shares and where the equity capital includes shares with different voting rights, the designation of each class of shares, other than those with the most favourable voting rights, must include the words “restricted voting” or “limited voting”;

(d) sub-divide its shares, or any of them, into shares of smaller amount than is fixed by the memorandum of association (subject, nevertheless, to the Act), and may by such resolution determine that, as between the holders of the shares resulting from such sub-division, one or more of the shares may have any such preferred rights or be subject to any such restrictions as compared with the other or others as the Company has power to attach to unissued or new shares;

(e) change the currency denomination of its share capital;

(f) make provision for the issue and allotment of shares which do not carry any voting rights; and

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(g) cancel any shares which, at the date of the passing of the resolution, have not been taken, or agreed to be taken, by any person, and diminish the amount of its capital by the amount of the shares so cancelled.

5. The Board may settle as it considers expedient any difficulty which arises in relation to any consolidation and division under the last preceding Bye-law and in particular but without prejudice to the generality of the foregoing may issue certificates in respect of fractions of shares or arrange for the sale of the shares representing fractions and the distribution of the net proceeds of sale (after deduction of the expenses of such sale) in due proportion amongst the Members who would have been entitled to the fractions, and for this purpose the Board may authorise some person to transfer the shares representing fractions to their purchaser or resolve that such net proceeds be paid to the Company for the Company’s benefit. Such purchaser will not be bound to see to the application of the purchase money nor will his title to the shares be affected by any irregularity or invalidity in the proceedings relating to the sale.

6. The Company may from time to time by special resolution, subject to any confirmation or consent required by law, reduce its authorised or issued share capital or any share premium account or other undistributable reserve in any manner permitted by law.

7. Except so far as otherwise provided by the conditions of issue, or by these Bye-laws, any capital raised by the creation of new shares shall be treated as if it formed part of the original capital of the Company, and such shares shall be subject to the provisions contained in these Bye-laws with reference to the payment of calls and instalments, transfer and transmission, forfeiture, lien, cancellation, surrender, voting and otherwise.

Share Rights

Bye-Laws 8 to 9

8. (1) Subject to any special rights conferred on the holders of any shares or class of shares, any share in the Company (whether forming part of the present capital or not) may be issued with or have attached thereto such rights or restrictions whether in regard to dividend, voting, return of capital or otherwise as the Company may by ordinary resolution determine or, if there has not been any such determination or so far as the same shall not make specific provision, as the Board may determine.

(2) (a) Shares which the Company purchases or otherwise acquires may be held as Treasury Shares in accordance with the provisions of these Bye-Laws and the Act;

(b) Where the shares purchased or otherwise acquired are held as Treasury Shares by the Company, the Company shall be entered in the Register of Members as the member holding the Treasury Shares; and

(c) The Company shall not exercise any right in respect of Treasury Shares other than as provided by the Act. Subject thereto, the Company may hold or deal with its Treasury Shares in the manner authorised by, or prescribed pursuant to the Act.

9. (1) In the event of preference shares being issued the total nominal value of issued preference shares shall not at any time exceed the total nominal value of the issued ordinary shares and preference shareholders shall have the same rights as ordinary shareholders as regards receiving of notices, reports and balance sheets and attending general meetings of the Company, and preference shareholders shall also have the right to vote at any meeting convened for the purpose of reducing the capital or winding-up or sanctioning a sale of the undertaking or where the proposition to be submitted to the meeting directly affects their rights and privileges or when the dividend on the preference shares is more than six (6) months in arrear.

(2) Subject to Sections 42 and 43 of the Act, any preference shares may be issued or converted into shares that, at a determinable date or at the option of the Company or the holder if so authorised by its memorandum of association, are liable to be redeemed on such terms and in such manner as the Company before the issue or conversion may by ordinary resolution of the Members determine.

(3) The Company has power to issue further preference capital ranking equally with, or in priority to, preference shares already issued.


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Variation of Rights

Bye-Laws 10 to 11

10. Whenever the share capital of the Company is divided into different classes of shares, subject to the provisions of the Statutes, preference capital other than redeemable preference capital may be repaid and the special rights attached to any class may be varied or abrogated either with the consent in writing of the holders of three-quarters in nominal value of the issued shares of the class or with the sanction of a special resolution passed at a separate general meeting of the holders of the shares of the class (but not otherwise) and may be so repaid, varied or abrogated either whilst the Company is a going concern or during or in contemplation of a winding-up. To every such separate general meeting and all adjournments thereof all the provisions of these Bye-laws relating to general meetings of the Company and to the proceedings thereat shall mutatis mutandis apply, except that the necessary quorum (other than at an adjourned meeting) shall be two persons at least holding or representing by proxy at least one-third in nominal value of the issued shares of the class and at any adjourned meeting of such holders, two holders present in person or by proxy (whatever the number of shares held by them) shall be a quorum and that any holder of shares of the class present in person or by proxy may demand a poll and that every such holder shall on a poll have one vote for every share of the class held by him, provided always that where the necessary majority for such a special resolution is not obtained at such general meeting, consent in writing if obtained from the holders of three-quarters in nominal value of the issued shares of the class concerned within two months of such general meeting shall be as valid and effectual as a special resolution carried at such general meeting. The foregoing provisions of this Bye-law shall apply to the variation or abrogation of the special rights attached to some only of the shares of any class as if each group of shares of the class differently treated formed a separate class the special rights whereof are to be varied.

11. The special rights conferred upon the holders of any shares or class of shares shall not, unless otherwise expressly provided in the rights attaching to or the terms of issue of such shares, be deemed to be varied, modified or abrogated by the creation or issue of further shares ranking pari passu therewith.

Shares

Bye-Law 12

12. (1) Subject to the Act, no shares may be issued by the Board without the prior approval of the Company in general meeting but subject thereto and to these Bye-laws and without prejudice to any special rights or restrictions for the time being attached to any shares or any class or shares, the unissued shares of the Company (whether forming part of the original or any increased capital) shall be at the disposal of the Board, which may offer, allot, grant options over or otherwise dispose of them to such persons, at such times and for such consideration and upon such terms and conditions as the Board may in its absolute discretion determine but so that no shares shall be issued at a discount, provided always that:

(subject to any direction to the contrary that may be given by the Company in general (a) meeting) any issue of shares for cash to Members holding shares of any class shall be offered to such Members in proportion as nearly as may be to the number of shares of such class then held by them and the provisions of the second sentence of Bye-law 12(2) with such adaptations as are necessary shall apply; and

any other issue of shares, the aggregate of which would exceed the limits referred to in Bye-(b) law 12(3), shall be subject to the approval of the Company in general meeting.

Neither the Company nor the Board shall be obliged, when making or granting any allotment of, offer of, option over or disposal of shares, to make, or make available, any such allotment, offer, option or shares to Members or others with registered addresses in any particular territory or territories being a territory or territories where, in the absence of a registration statement or other special formalities, this would or might, in the opinion of the Board, be unlawful or impracticable. Members affected as a result of the foregoing sentence shall not be, or be deemed to be, a separate class of members for any purpose whatsoever.


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(2) Except as permitted under the rules or regulations of the Designated Stock Exchange or any direction given by the Company in general meeting, all new shares shall before issue be offered to such persons who as at the date of the offer are entitled to receive notices from the Company of general meetings in proportion, as far as the circumstances admit, to the amount of the existing shares to which they are entitled. The offer shall be made by notice specifying the number of shares offered, and limiting a time within which the offer, if not accepted, will be deemed to be declined. After the expiration of that time, or on the receipt of an intimation from the person to whom the offer is made that he declines to accept the shares offered, the Board may dispose of those shares in such manner as they think most beneficial to the Company. The Board may likewise so dispose of any new shares which (by reason of the ratio which the new shares bear to shares held by persons entitled to an offer of new shares) cannot, in the opinion of the Board, be conveniently offered under this Bye-law 12(2).

(3) Notwithstanding Bye-law 12(2) above but subject to the Statutes, the Company in general meeting may by ordinary resolution grant to the Directors a general authority, either unconditionally or subject to such conditions as may be specified in the said ordinary resolution, for further issues of shares where the aggregate number of shares to be issued pursuant to such authority does not exceed fifty per cent. (50%) (or such other limit, if any, as may be prescribed by the Designated Stock Exchange) of the issued share capital of the Company at the time of the passing of the said ordinary resolution, of which the aggregate number of shares to be issued other than on a pro rata basis to Members does not exceed twenty per cent. (20%) (or such other limit, if any, as may be prescribed by the Designated Stock Exchange) of the issued share capital of the Company at the time of the passing of the said ordinary resolution Provided that such general authority shall only remain in force until (i) the conclusion of the annual general meeting of the Company following the passing of the resolution granting the said authority or (ii) the date by which such annual general meeting is required to be held or (iii) it is revoked or varied by ordinary resolution of the Company in general meeting, whichever is the earliest.

(4) The Board may issue warrants conferring the right upon the holders thereof to subscribe for any class of shares or securities in the capital of the Company on such terms as it may from time to time determine, Provided that such issue must be specifically approved by the Company in general meeting if required by the rules or regulations of the Designated Stock Exchange.

Bye-Law 14

14. Except as required by law, no person shall be recognised by the Company as holding any share upon any trust and the Company shall not be bound by or required in any way to recognise (even when having notice thereof) any equitable, contingent, future or partial interest in any share or any fractional part of a share or (except only as otherwise provided by these Bye-laws or by law) any other rights in respect of any share except an absolute right to the entirety thereof in the registered holder.

Transfer of Shares

Bye-Laws 46 to 51 46. Subject to these Bye-laws, any Member may transfer all or any of his shares by an instrument of transfer

in the form acceptable to the Board provided always that the Company shall accept for registration an instrument of transfer in a form approved by the Designated Stock Exchange.

47. The instrument of transfer shall be executed by or on behalf of the transferor and the transferee provided that an instrument of transfer in respect of which the transferee is the Depository shall be effective although not signed or witnessed by or on behalf of the Depository and provided further that the Board may dispense with the execution of the instrument of transfer by the transferee in any case which it thinks fit in its discretion to do so. The Board may also resolve, either generally or in any particular case, upon request by either the transferor or transferee, to accept mechanically executed transfers. The transferor shall be deemed to remain the holder of the share until the name of the transferee is entered in the Register in respect thereof. Nothing in these Bye-laws shall preclude the Board from recognising a renunciation of the allotment or provisional allotment of any share by the allottee in favour of some other person.


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48. (1) The Board may, in its absolute discretion and without giving any reason therefor, refuse to register a transfer of any share (not being a fully paid up share) to a person of whom it does not approve, or any share issued under any share incentive scheme for employees upon which a restriction on transfer imposed thereby still subsists, and it may also, without prejudice to the foregoing generality, refuse to register a transfer of any share (not being a fully paid up share) on which the Company has a lien or, except in the case of a transfer to executors, administrators or trustees of the estate of a deceased Member, a transfer of any share to more than three (3) joint holders.

(2) No transfer shall be made to an infant or to a person of unsound mind or under other legal disability.

(3) The Board in so far as permitted by any applicable law may, in its absolute discretion, at any time and from time to time transfer any share upon the Register to any branch register or any share on any branch register to the Register or any other branch register. In the event of any such transfer, the shareholder requesting such transfer shall bear the cost of effecting the transfer unless the Board otherwise determines.

(4) Unless the Board otherwise agrees (which agreement may be on such terms and subject to such conditions as the Board in its absolute discretion may from time to time determine, and which agreement the Board shall, without giving any reason therefor, be entitled in its absolute discretion to give or withhold), no shares upon the Register shall be transferred to any branch register nor shall shares on any branch register be transferred to the Register or any other branch register and all transfers and other documents of title shall be lodged for registration, and registered, in the case of any shares on a branch register, at the relevant Registration Office, and, in the case of any shares on the Register, at the Office or such other place in Bermuda at which the Register is kept in accordance with the Act.

(5) Save as provided in the Bye-laws, there shall be no restriction on the transfer of fully paid up shares (except where required by law or the rules or regulations of the Designated Stock Exchange).

49. Without limiting the generality of the last preceding Bye-law, the Board may decline to recognise any instrument of transfer unless:-

(a) a fee of such sum (not exceeding two Singapore dollars (S$2.00) or such other maximum sum as the Designated Stock Exchange may determine to be payable) as the Board may from time to time require is paid to the Company in respect thereof;

(b) the instrument of transfer is in respect of only one class of share;

(c) the instrument of transfer is lodged at the Office or such other place in Bermuda at which the Register is kept in accordance with the Act or the Registration Office (as the case may be) accompanied by the relevant share certificate(s) and such other evidence as the Board may reasonably require to show the right of the transferor to make the transfer (and, if the instrument of transfer is executed by some other person on his behalf, the authority of that person so to do); and

(d) if applicable, the instrument of transfer is duly and properly stamped.

50. If the Board refuses to register a transfer of any share, it shall, within one (1) month after the date on which the transfer was lodged with the Company, send to each of the transferor and transferee notice of the refusal.

51. The registration of transfers of shares or of any class of shares may, after notice has been given by advertisement in an appointed newspaper and in accordance with the requirements of the Designated Stock Exchange be suspended at such times and for such periods (not exceeding in the whole thirty (30) days in any year) as the Board may determine.


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Transmission of Shares

Bye-Laws 52 to 54

52. In the case of the death of a Member, the survivor or survivors where the deceased Member was a joint holder, and the legal personal representatives of the deceased Member where the deceased Member was a sole holder, shall be the only persons recognised by the Company as having any title to the deceased Member’s interest in the shares. Nothing herein shall release the estate of a deceased joint holder from any liability in respect of any share which had been jointly held by such deceased Member with other persons. Subject to the provisions of the Act, for the purpose of this Bye-law, legal personal representative means the executor or administrator of a deceased Member or such other person as the Board may, in its absolute discretion, decide as being properly authorised to deal with the shares of a deceased Member. Where two or more persons are registered as joint holders of a share or shares, then in the event of the death of any joint holder or holders the remaining joint holder or holders shall be absolutely entitled to the said share or shares and the Company shall recognise no claim in respect of the estate of any joint holder except in the case of the last survivor of such joint holders.

53. Subject to Section 52 of the Act, any person becoming entitled to a share in consequence of the death or bankruptcy or winding-up of a Member may, upon such evidence as to his title being produced as may be required by the Board, elect either to become the holder of the share or to have some person nominated by him registered as the transferee thereof. If he elects to become the holder he shall notify the Company in writing either at the Registration Office or Office, as the case may be, to that effect. If he elects to have another person registered he shall execute a transfer of the share in favour of that person. The provisions of these Bye-laws relating to the transfer and registration of transfers of shares shall apply to such notice or transfer as aforesaid as if the death or bankruptcy of the Member had not occurred and the notice or transfer were a transfer signed by such Member.

54. A person becoming entitled to a share by reason of the death or bankruptcy or winding-up of a Member shall be entitled to the same dividends and other advantages to which he would be entitled if he were the registered holder of the share. However, the Board may, if it thinks fit, withhold the payment of any dividend payable or other advantages in respect of such share until such person shall become the registered holder of the share or shall have effectually transferred such share, but, subject to the requirements of Bye-law 74(2) being met, such a person may vote at meetings.

General Meetings

Bye-Laws 55 – 57

55. An annual general meeting of the Company shall be held in each year other than the year in which its statutory meeting is convened at such time (within a period of not more than fifteen (15) months after the holding of the last preceding annual general meeting unless a longer period would not infringe the rules or regulations of the Designated Stock Exchange, if any) and place as may be determined by the Board. In addition, for so long as the shares of the Company are listed on the Designated Stock Exchange, the interval between the close of the Company’s financial year and the date of the Company’s annual general meeting shall not exceed four (4) months or such other period as may be permitted or prescribed by the Designated Stock Exchange.

56. Each general meeting, other than an annual general meeting, shall be called a special general meeting. General meetings may be held in any part of the world as may be determined by the Board.

57. The Board may whenever it thinks fit call special general meetings, and, subject to the Act, Members holding at the date of deposit of the requisition not less than one-tenth of the paid up capital of the Company carrying the right of voting at general meetings of the Company shall at all times have the right, by written requisition to the Board or the Secretary of the Company, to require a special general meeting to be called by the Board for the transaction of any business specified in such requisition; and such meeting shall be held within two (2) months after the deposit of such requisition. If within twenty-one (21) days of such deposit the Board fails to proceed to convene such meeting the requisitionists themselves may do so in accordance with the provisions of Section 74(3) of the Act.


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Notice of General Meetings

Bye-Laws 58 to 59

58. (1) At least fourteen (14) days’ Notice of a general meeting shall be given to each Member entitled to attend and vote thereat. A general meeting at which the passing of a special resolution is to be considered shall be called by not less than twenty-one (21) days’ Notice. A general meeting, whether or not a special resolution will be considered at such meeting, may be called by shorter notice if it is so agreed:-

(a) in the case of a meeting called as an annual general meeting, by all the Members entitled to attend and vote thereat; and

(b) in the case of any other meeting, by a majority in number of the Members having the right to attend and vote at the meeting, being a majority together holding not less than ninety-five per cent. (95%) in nominal value of the issued shares giving that right.

(2) For so long as the shares of the Company are listed on the Designated Stock Exchange, at least fourteen (14) days’ notice of any general meeting shall be given by advertisement in an English daily newspaper in circulation in Singapore and in writing to the Designated Stock Exchange.

(3) The period of notice shall be exclusive of the day on which it is served or deemed to be served and exclusive of the day on which the meeting is to be held, and the Notice shall specify the day, time and place of the meeting and, in case of special business, the general nature of the business. Any Notice of a general meeting to consider special business shall be accompanied by a statement regarding the effect of any proposed resolution on the Company in respect of such special business. The Notice convening an annual general meeting shall specify the meeting as such. Notice of every general meeting shall be given to all Members other than to such Members as, under the provisions of these Bye-laws or the terms of issue of the shares they hold, are not entitled to receive such notices from the Company, to all persons entitled to a share in consequence of the death or bankruptcy or winding-up of a Member and to each of the Directors and the Auditors.

(4) The Secretary may postpone any general meeting called in accordance with the provisions of these Bye-laws (other than a meeting requisitioned under these Bye-laws) provided that notice of postponement is given to each Member before the time for such meeting. Fresh notice of the date, time and place for the postponed meeting shall be given to each member in accordance with the provisions of these Bye-laws.

59. The accidental omission to give Notice of a meeting or (in cases where instruments of proxy are sent out with the Notice) to send such instrument of proxy to, or the non-receipt of such Notice or such instrument of proxy by, any person entitled to receive such Notice shall not invalidate any resolution passed or the proceedings at that meeting.

Proceedings at General Meetings

Bye-Laws 60 to 64

60. (1) Members may participate in any general meeting by means of such telephone, electronic or other communication facilities as permit all persons participating in the meeting to communicate with each other simultaneously and instantaneously, and participation in such a meeting shall constitute presence in person at such meeting.

(2) All business shall be deemed special that is transacted at a special general meeting, and also all business that is transacted at an annual general meeting, with the exception of declaring a dividend, the reading, considering and adopting of the accounts and balance sheet and the reports of the Directors and Auditors and other documents required to be annexed to the balance sheet, the election of Directors and appointment of Auditors and other officers in the place of those retiring, the fixing of the remuneration of the Auditors, and the voting of remuneration or extra remuneration to the Directors.


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(3) No business, other than the appointment of a chairman of a meeting, shall be transacted at any general meeting unless a quorum of Members is present at the time when the meeting proceeds to business. Except as herein otherwise provided, two (2) Members present in person shall form a quorum, provided that if the Company shall at any time have only one Member, one Member present in person or by proxy, or being a corporation by its representative duly authorized, shall form a quorum for the transaction of business at any general meeting of the Company held during such time. For the purposes of this Bye-law Member includes a person attending as a proxy or as a duly authorized representative of a corporation which is a Member.

61. If within thirty (30) minutes (or such longer time not exceeding one hour as the chairman of the meeting may determine to wait) after the time appointed for the meeting a quorum is not present, the meeting, if convened on the requisition of Members, shall be dissolved. In any other case it shall stand adjourned to the same day in the next week at the same time and place or to such time and place as the Board may determine. If at such adjourned meeting a quorum is not present within half an hour from the time appointed for holding the meeting, the meeting shall be dissolved.

62. The president of the Company or the chairman shall preside as chairman at every general meeting. If at any meeting the president or the chairman, as the case may be, is not present within fifteen (15) minutes after the time appointed for holding the meeting, or if neither of them is willing to act as chairman, the Directors present shall choose one of their number to act, or if one Director only is present he shall preside as chairman if willing to act. If no Director is present, or if each of the Directors present declines to take the chair, or if the chairman chosen shall retire from the chair, the Members present in person or by proxy and entitled to vote shall elect one of their number to be chairman.

63. The chairman may, with the consent of any meeting at which a quorum is present (and shall if so directed by the meeting), adjourn the meeting from time to time and from place to place as the meeting shall determine, but no business shall be transacted at any adjourned meeting other than the business which might lawfully have been transacted at the meeting had the adjournment not taken place. When a meeting is adjourned for fourteen (14) days or more, at least seven (7) clear days’ Notice of the adjourned meeting shall be given specifying the time and place of the adjourned meeting but it shall not be necessary to specify in such notice the nature of the business to be transacted at the adjourned meeting and the general nature of the business to be transacted. Save as aforesaid, it shall be unnecessary to give notice of an adjournment.

64. If an amendment is proposed to any resolution under consideration but is in good faith ruled out of order by the chairman of the meeting, the proceedings on the substantive resolution shall not be invalidated by any error in such ruling. In the case of a resolution duly proposed as a special resolution, no amendment thereto (other than a mere clerical amendment to correct a patent error) may in any event be considered or voted upon.

Votes of Members

Bye-Laws 65 to 76

65. Subject to any special rights or restrictions as to voting for the time being attached to any shares by or in accordance with these Bye-laws, at any general meeting (i) on a show of hands every Member present in person (or being a corporation, is present by a representative duly authorised under Section 78 of the Act), or by proxy shall have one vote and the chairman of the meeting shall determine which proxy shall be entitled to vote where a Member (other than the Depository) is represented by two proxies, and (ii) on a poll every Member present in person or by proxy or, in the case of a Member being a corporation, by its duly authorised representative shall have one vote for every fully paid share of which he is the holder or which he represents and in respect of which all calls due to the Company have been paid, but so that no amount paid up or credited as paid up on a share in advance of calls or instalments is treated for the foregoing purposes as paid up on the share. A resolution put to the vote of a meeting shall be decided on a show of hands unless (before or on the declaration of the result of the show of hands or on the withdrawal of any other demand for a poll) a poll is demanded:-

(a) by the chairman of such meeting; or

(b) by at least three Members present in person (or in the case of a Member being a corporation by its duly authorised representative) or by proxy for the time being entitled to vote at the meeting; or


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(c) by a Member or Members present in person (or in the case of a Member being a corporation by its duly authorised representative) or by proxy and representing not less than one-tenth of the total voting rights of all Members having the right to vote at the meeting; or

(d) by a Member or Members present in person (or in the case of a Member being a corporation by its duly authorised representative) or by proxy and holding shares in the Company conferring a right to vote at the meeting being shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all shares conferring that right; or

(e) where the Depository is a Member, by at least three proxies representing the Depository.

A demand by a person as proxy for a Member or in the case of a Member being a corporation by its duly authorised representative shall be deemed to be the same as a demand by a Member.

66. Unless a poll is duly demanded and the demand is not withdrawn, a declaration by the chairman that a resolution has been carried, or carried unanimously, or by a particular majority, or not carried by a particular majority, or lost, and an entry to that effect made in the minute book of the Company, shall be conclusive evidence of the fact without proof of the number or proportion of the votes recorded for or against the resolution.

67. If a poll is duly demanded the result of the poll shall be deemed to be the resolution of the meeting at which the poll was demanded.

68. A poll demanded on the election of a chairman, or on a question of adjournment, shall be taken forthwith. A poll demanded on any other question shall be taken in such manner (including the use of ballot or voting papers or tickets) and either forthwith or at such time (being not later than thirty (30) days after the date of the demand) and place as the chairman directs. It shall not be necessary (unless the chairman otherwise directs) for notice to be given of a poll not taken immediately.

69. The demand for a poll shall not prevent the continuance of a meeting or the transaction of any business other than the question on which the poll has been demanded, and, with the consent of the chairman, it may be withdrawn at any time before the close of the meeting or the taking of the poll, whichever is the earlier.

70. On a poll votes may be given either personally or by proxy.

71. A person entitled to more than one vote on a poll need not use all his votes or cast all the votes he uses in the same way.

72. In the case of an equality of votes, whether on a show of hands or on a poll, the chairman of such meeting shall be entitled to a second or casting vote in addition to any other vote he may have.

73. Where there are joint holders of any share any one of such joint holder may vote, either in person or by proxy, in respect of such share as if he were solely entitled thereto, but if more than one of such joint holders be present at any meeting the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders, and for this purpose seniority shall be determined by the order in which the names stand in the Register in respect of the joint holding. Several executors or administrators of a deceased Member in whose name any share stands shall for the purposes of this Bye-law be deemed joint holders thereof.

74. (1) A Member who is a patient for any purpose relating to mental health or in respect of whom an order has been made by any court having jurisdiction for the protection or management of the affairs of persons incapable of managing their own affairs may vote, whether on a show of hands or on a poll, by his receiver, committee, curator bonis or other person in the nature of a receiver, committee or curator bonis appointed by such court, and such receiver, committee, curator bonis or other person may vote on a poll by proxy, and may otherwise act and be treated as if he were the registered holder of such shares for the purposes of general meetings, provided that such evidence as the Board may require of the authority of the person claiming to vote shall have been deposited at the Office, head office or Registration Office, as appropriate, not less than forty-eight (48) hours before the time appointed for holding the meeting, or adjourned meeting or poll, as the case may be.


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(2) Any person entitled under Bye-law 53 to be registered as the holder of any shares may vote at any general meeting in respect thereof in the same manner as if he were the registered holder of such shares, provided that forty-eight (48) hours at least before the time of the holding of the meeting or adjourned meeting, as the case may be, at which he proposes to vote, he shall satisfy the Board of his entitlement to such shares, or the Board shall have previously admitted his right to vote at such meeting in respect thereof.

75. No Member shall, unless the Board otherwise determines, be entitled to attend and vote and to be reckoned in a quorum at any general meeting unless he is duly registered and all calls or other sums presently payable by him in respect of shares in the Company have been paid.

76. If:-

(a) any objection shall be raised to the qualification of any voter; or

(b) any votes have been counted which ought not to have been counted or which might have been rejected; or

(c) any votes are not counted which ought to have been counted;

the objection or error shall not vitiate the decision of the meeting or adjourned meeting on any resolution unless the same is raised or pointed out at the meeting or, as the case may be, the adjourned meeting at which the vote objected to is given or tendered or at which the error occurs. Any objection or error shall be referred to the chairman of the meeting and shall only vitiate the decision of the meeting on any resolution if the chairman decides that the same may have affected the decision of the meeting. The decision of the chairman on such matters shall be final and conclusive.

Proxies

Bye-Laws 77 to 82

77. (1) Any Member entitled to attend and vote at a meeting of the Company who is the holder of two or more shares shall be entitled to appoint not more than two proxies to attend and vote instead of him at the same general meeting provided that if the Member is the Depository:-

(a) the Depository may appoint more than two proxies to attend and vote at the same general meeting and each proxy shall be entitled to exercise the same powers on behalf of the Depository as the Depository could exercise, including, notwithstanding Bye-law 65, the right to vote individually on a show of hands;

(b) unless the Depository specifies otherwise in a written notice to the Company, the Depository shall be deemed to have appointed as the Depository’s proxies to vote on behalf of the Depository at a general meeting of the Company each of the Depositors who are individuals and whose names are shown in the records of the Depository as at a time not earlier than forty-eight (48) hours prior to the time of the relevant general meeting supplied by the Depository to the Company and notwithstanding any other provisions in these Bye-laws, the appointment of proxies by virtue of this Bye-law 77(1) (b) shall not require an instrument of proxy or the lodgement of any instrument of proxy;

(c) the Company shall accept as valid in all respects the form of instrument of proxy approved by the Depository (the “CDP Proxy Form”) for use at the date relevant to the general meeting in question naming a Depositor (the “Nominating Depositor”) and permitting that Nominating Depositor to nominate a person or persons other than himself as the proxy or proxies appointed by the Depository. The Company shall, in determining rights to vote and other matters in respect of a completed CDP Proxy Form submitted to it, have regard to the instructions given by and the notes (if any) set out in the CDP Proxy Form. The submission of any CDP Proxy Form shall not affect the operation of Bye-law 77(1) (b) and shall not preclude a Depositor appointed as a proxy by virtue of Bye-law 77(1) (b) from attending and voting at the relevant meeting but in the event of attendance by such Depositor the CDP Proxy Form submitted bearing his name as the Nominating Depositor shall be deemed to be revoked;


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(d) the Company shall reject any CDP Proxy Form of a Nominating Depositor if his name is not shown in the records of the Depository as at a time not earlier than forty-eight (48) hours prior to the time of the relevant general meeting supplied by the Depository to the Company; and

(e) on a poll the maximum number of votes which a Depositor, or proxies appointed pursuant to a CDP Proxy Form in respect of that Depositor, is able to cast shall be the number of shares credited to the Securities Account of that Depositor as shown in the records of the Depository as at a time not earlier than forty-eight (48) hours prior to the time of the relevant general meeting supplied by the Depository to the Company, whether that number is greater or smaller than the number specified in any CDP Proxy Form or instrument of proxy executed by or on behalf of the Depository.

(2) In any case where an instrument of proxy appoints more than one proxy (including the case when a CDP Proxy Form is used), the proportion of the shareholding concerned to be represented by each proxy shall be specified in the instrument of proxy.

(3) A proxy need not be a Member. In addition, subject to Bye-law 77(1), a proxy or proxies representing either a Member who is an individual or a Member which is a corporation shall be entitled to exercise the same powers on behalf of the Member which he or they represent as such Member could exercise, including, notwithstanding Bye-law 65, the right to vote individually on a show of hands. On a poll, a proxy need not use all the votes he is entitled to cast or cast all such votes in the same way.

78. The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing or, if the appointor is a corporation, either under its seal or under the hand of an officer, attorney or other person authorised to sign the same or, in the case of the Depository, signed by its duly authorised officer by some method or system of mechanical signature as the Depository may deem appropriate. In the case of an instrument of proxy purporting to be signed on behalf of a corporation by an officer thereof it shall be assumed, unless the contrary appears, that such officer was duly authorised to sign such instrument of proxy on behalf of the corporation without further evidence of the fact.

79. The instrument appointing a proxy and (if required by the Board) the power of attorney or other authority (if any) under which it is signed on behalf of the appointor (which shall, for this purpose, include a Depositor), or a certified copy of such power or authority, shall be delivered to such place or one of such places (if any) as may be specified for that purpose in or by way of note to or in any document accompanying the notice convening the meeting (or, if no place is so specified at the Registration Office or the Office, as may be appropriate) not less than forty-eight (48) hours before the time appointed for holding the meeting or adjourned meeting at which the person named in the instrument proposes to vote or, in the case of a poll taken subsequently to the date of a meeting or adjourned meeting, not less than twenty-four (24) hours before the time appointed for the taking of the poll and in default the instrument of proxy shall not be treated as valid. No instrument appointing a proxy shall be valid after the expiration of twelve (12) months from the date named in it as the date of its execution, except at an adjourned meeting or on a poll demanded at a meeting or an adjourned meeting in cases where the meeting was originally held within twelve (12) months from such date. Delivery of an instrument appointing a proxy shall not preclude a Member from attending and voting in person at the meeting convened and in such event, the instrument appointing a proxy shall be deemed to be revoked.

80. Instruments of proxy shall be in any usual or common form (including any form approved from time to time by the Depository) or in such other form as the Board may approve (provided that this shall not preclude the use of the two-way form) and the Board may, if it thinks fit, send out with the notice of any meeting forms of instrument of proxy for use at the meeting. The instrument of proxy shall be deemed to confer authority to demand or join in demanding a poll and to vote on any amendment of a resolution put to the meeting for which it is given as the proxy thinks fit. The instrument of proxy shall, unless the contrary is stated therein, be valid as well for any adjournment of the meeting as for the meeting to which it relates.

81. A vote given in accordance with the terms of an instrument of proxy shall be valid notwithstanding the previous death or insanity of the principal, or revocation of the instrument of proxy or of the authority under which it was executed, provided that no intimation in writing of such death, insanity or revocation shall have been received by the Company at the Office or the Registration Office (or such other place as may be specified for the delivery of instruments of proxy in the notice convening the meeting or other document sent therewith) two (2) hours at least before the commencement of the meeting or adjourned meeting, or the taking of the poll, at which the instrument of proxy is used.


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82. Anything which under these Bye-laws a Member may do by proxy he may likewise do by his duly appointed attorney and the provisions of these Bye-laws relating to proxies and instruments appointing proxies shall apply mutatis mutandis in relation to any such attorney and the instrument under which such attorney is appointed.

Corporations Acting by Representatives

Bye-Law 83

83. (1) Any corporation which is a Member may by resolution of its directors or other governing body authorise such person as it thinks fit to act as its representative at any meeting of the Company or at any meeting of any class of Members. The person so authorised shall be entitled to exercise the same powers on behalf of such corporation as the corporation could exercise if it were an individual Member and such corporation shall for the purposes of these Bye-laws be deemed to be present in person at any such meeting if a person so authorised is present thereat

(2) Where a Member is the Depository (or its nominee, in each case, being a corporation), it may authorise such persons as it thinks fit to act as its representatives at any meeting of the Company or at any meeting of any class of Members provided that the authorisation shall specify the number and class of shares in respect of which each such representative is so authorised. Each person so authorised under the provisions of this Bye-law shall be entitled to exercise the same rights and powers as if such person was the registered holder of the shares of the Company held by the Depository (or its nominee) in respect of the number and class of shares specified in the relevant authorisation including the right to vote individually on a show of hands.

(3) Any reference in these Bye-laws to a duly authorised representative of a Member being a corporation shall mean a representative authorised under the provisions of this Bye-law.

Dividends and Other Payments

Bye-Laws 136 to 145

136. The Board may, subject to these Bye-laws and in accordance with the Act, declare a dividend in any currency to be paid to the Members and such dividend may be paid in cash or wholly or partly in specie in which case the Board may fix the value for distribution in specie of any assets. The Board may declare and make such other distributions (in cash or in specie) to the Members as may be lawfully made out of the assets of the Company. The Company in general meeting may also, subject to these Bye-laws and in accordance with the Act, declare a dividend or such other distribution to be paid to the Members but no dividend or distribution shall be declared by the Company in general meeting in excess of the amount recommended by the Board.

137. Without prejudice to the generality of the above Bye-law 136 if at any time the share capital of the Company is divided into different classes, the Board may pay such dividends in respect of those shares in the capital of the Company which confer on the holders thereof deferred or non-preferential rights as well as in respect of those shares which confer on the holders thereof preferential rights with regard to dividend and provided that the Board acts bona fide the Board shall not incur any responsibility to the holders of shares conferring any preference for any damage that they may suffer by reason of the payment of any dividend on any shares having deferred or non-preferential rights and may also pay periodically any fixed dividend which is payable on any shares of the Company.

138. No dividend shall be paid or distribution made if to do so would render the Company unable to pay its liabilities as they become due or the realisable value of its assets would thereby become less than the aggregate of its liabilities and its issued share capital and share premium accounts.

139. Except in so far as the rights attaching to, or the terms of issue of, any share otherwise provide:-

(a) all dividends shall be declared and paid according to the amounts paid up on the shares in respect of which the dividend is paid, but no amount paid up on a share in advance of calls shall be treated for the purposes of this Bye-law as paid up on the share; and

(b) all dividends shall be apportioned and paid pro rata according to the amounts paid up on the shares during any portion or portions of the period in respect of which the dividend is paid.


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140. The Board may deduct from any dividend or other moneys payable to a Member by the Company on or in respect of any shares all sums of money (if any) presently payable by him to the Company on account of calls or otherwise.

141. No unpaid dividend or distribution or other moneys payable by the Company shall bear interest as against the Company.

142. Any dividend, interest or other sum payable in cash to the holder of shares may be paid by cheque or warrant sent through the post addressed to the holder at his registered address or, in the case of joint holders, addressed to the holder whose name stands first in the Register in respect of the shares at his address as appearing in the Register or addressed to such person and at such address as the holder or joint holders may in writing direct. Every such cheque or warrant shall, unless the holder or joint holders otherwise direct, be made payable to the order of the holder or, in the case of joint holders, to the order of the holder whose name stands first on the Register in respect of such shares, and shall be sent at his or their risk and payment of the cheque or warrant by the bank on which it is drawn shall constitute a good discharge to the Company notwithstanding that it may subsequently appear that the same has been stolen or that any endorsement thereon has been forged. Any one of two or more joint holders may give effectual receipts for any dividends or other moneys payable or property distributable in respect of the shares held by such joint holders.

143. All dividends or bonuses unclaimed for one (1) year after having been declared may be invested or otherwise made use of by the Board for the benefit of the Company until claimed. Any dividend or bonuses unclaimed after a period of six (6) years from the date of declaration shall be forfeited and shall revert to the Company. The payment by the Board of any unclaimed dividend or other sums payable on or in respect of a share into a separate account shall not constitute the Company a trustee in respect thereof.

144. Whenever the Board or the Company in general meeting has resolved that a dividend be paid or declared, the Board may further resolve that such dividend be satisfied wholly or in part by the distribution of specific assets of any kind and in particular of paid up shares, debentures or warrants to subscribe securities of the Company or any other company, or in any one or more of such ways, and where any difficulty arises in regard to the distribution the Board may settle the same as it thinks expedient, and in particular may issue certificates in respect of fractions of shares, disregard fractional entitlements or round the same up or down, and may fix the value for distribution of such specific assets, or any part thereof, and may determine that cash payments shall be made to any Members upon the footing of the value so fixed in order to adjust the rights of all parties, and may vest any such specific assets in trustees as may seem expedient to the Board and may appoint any person to sign any requisite instruments of transfer and other documents on behalf of the persons entitled to the dividend, and such appointment shall be effective and binding on the Members. The Board may resolve that no such assets shall be made available to Members with registered addresses in any particular territory or territories where, in the absence of a registration statement or other special formalities, such distribution of assets would or might, in the opinion of the Board, be unlawful or impracticable and in such event the only entitlement of the Members aforesaid shall be to receive cash payments as aforesaid. Members affected as a result of the foregoing sentence shall not be or be deemed to be a separate class of Members for any purpose whatsoever.

145. (1) Whenever the Board or the Company in general meeting has resolved that a dividend be paid or declared on any class of the share capital of the Company, the Board may further resolve either:-

(a) that such dividend be satisfied wholly or in part in the form of an allotment of shares credited as fully paid up, provided that the Members entitled thereto will be entitled to elect to receive such dividend (or part thereof if the Board so determines) in cash in lieu of such allotment. In such case, the following provisions shall apply:-

(i) the basis of any such allotment shall be determined by the Board;

the Board, after determining the basis of allotment, shall give not less than two (2) (ii) weeks’ Notice to the holders of the relevant shares of the right of election accorded to them and shall send with such notice forms of election and specify the procedure to be followed and the place at which and the latest date and time by which duly completed forms of election must be lodged in order to be effective;

the right of election may be exercised in respect of the whole or part of that portion of (iii) the dividend in respect of which the right of election has been accorded; and


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the dividend (or that part of the dividend to be satisfied by the allotment of shares (iv) as aforesaid) shall not be payable in cash on shares in respect whereof the cash election has not been duly exercised (“the non-elected shares”) and in satisfaction thereof shares of the relevant class shall be allotted credited as fully paid up to the holders of the non-elected shares on the basis of allotment determined as aforesaid and for such purpose the Board shall capitalise and apply out of any part of the undivided profits of the Company (including profits carried and standing to the credit of any reserves or other special account) as the Board may determine, such sum as may be required to pay up in full the appropriate number of shares of the relevant class for allotment and distribution to and amongst the holders of the non-elected shares on such basis; or

(b) that the Members entitled to such dividend shall be entitled to elect to receive an allotment of shares credited as fully paid up in lieu of the whole or such part of the dividend as the Board may think fit. In such case, the following provisions shall apply:-

(i) the basis of any such allotment shall be determined by the Board;

(ii) the Board, after determining the basis of allotment, shall give not less than two (2) weeks’ Notice to the holders of the relevant shares of the right of election accorded to them and shall send with such notice forms of election and specify the procedure to be followed and the place at which and the latest date and time by which duly completed forms of election must be lodged in order to be effective;

(iii) the right of election may be exercised in respect of the whole or part of that portion of the dividend in respect of which the right of election has been accorded; and

(iv) the dividend (or that part of the dividend in respect of which a right of election has been accorded) shall not be payable in cash on shares in respect whereof the share election has been duly exercised (“the elected shares”) and in lieu thereof shares of the relevant class shall be allotted credited as fully paid up to the holders of the elected shares on the basis of allotment determined as aforesaid and for such purpose the Board shall capitalise and apply out of any part of the undivided profits of the Company (including profits carried and standing to the credit of any reserves or other special account) as the Board may determine, such sum as may be required to pay up in full the appropriate number of shares of the relevant class for allotment and distribution to and amongst the holders of the elected shares on such basis.

(2) (a) The shares allotted pursuant to the provisions of paragraph (1) of this Bye-law shall rank pari passu in all respects with shares of the same class (if any) then in issue save only as regards participation in the relevant dividend or in any other distributions, bonuses or rights paid, made, declared or announced prior to or contemporaneously with the payment or declaration of the relevant dividend unless, contemporaneously with the announcement by the Board of their proposal to apply the provisions of sub-paragraph (a) or (b) of paragraph (2) of this Bye-law in relation to the relevant dividend or contemporaneously with their announcement of the distribution, bonus or rights in question, the Board shall specify that the shares to be allotted pursuant to the provisions of paragraph (1) of this Bye-law shall rank for participation in such distribution, bonus or rights.

(b) The Board may do all acts and things considered necessary or expedient to give effect to any capitalisation pursuant to the provisions of paragraph (1) of this Bye-law, with full power to the Board to make such provisions as it thinks fit in the case of shares becoming distributable in fractions (including provisions whereby, in whole or in part, fractional entitlements are aggregated and sold and the net proceeds distributed to those entitled, or are disregarded or rounded up or down or whereby the benefit of fractional entitlements accrues to the Company rather than to the Members concerned). The Board may authorise any person to enter into on behalf of all Members interested, an agreement with the Company providing for such capitalisation and matters incidental thereto and any agreement made pursuant to such authority shall be effective and binding on all concerned.


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(3) The Company may upon the recommendation of the Board by ordinary resolution resolve in respect of any one particular dividend of the Company that notwithstanding the provisions of paragraph (1) of this Bye-law a dividend may be satisfied wholly in the form of an allotment of shares credited as fully paid up without offering any right to shareholders to elect to receive such dividend in cash in lieu of such allotment.

(4) The Board may on any occasion determine that rights of election and the allotment of shares under paragraph (1) of this Bye-law shall not be made available or made to any Members with registered addresses in any territory where, in the absence of a registration statement or other special formalities, the circulation of an offer of such rights of election or the allotment of shares would or might, in the opinion of the Board, be unlawful or impracticable, and in such event the provisions aforesaid shall be read and construed subject to such determination. Members affected as a result of the foregoing sentence shall not be or be deemed to be a separate class of Members for any purpose whatsoever.

(5) Any resolution declaring a dividend on shares of any class, whether a resolution of the Company in general meeting or a resolution of the Board, may specify that the same shall be payable or distributable to the persons registered as the holders of such shares at the close of business on a particular date, notwithstanding that it may be a date prior to that on which the resolution is passed, and thereupon the dividend shall be payable or distributable to them in accordance with their respective holdings so registered, but without prejudice to the rights inter se in respect of such dividend of transferors and transferees of any such shares. The provisions of this Bye-law shall mutatis mutandis apply to bonuses, capitalisation issues, distributions of realised capital profits or offers or grants made by the Company to the Members.

Reserves

Bye-Law 146

146. Before recommending any dividend, the Board may set aside out of the profits of the Company such sums as it determines as reserves which shall, at the discretion of the Board, be applicable for any purpose to which the profits of the Company may be properly applied and pending such application may, also at such discretion, either be employed in the business of the Company or be invested in such investments as the Board may from time to time think fit and so that it shall not be necessary to keep any investments constituting the reserve or reserves separate or distinct from any other investments of the Company. The Board may also without placing the same to reserve carry forward any profits which it may think prudent not to distribute.

Capitalisation

Bye-Laws 147 to 148

147. The Company may, upon the recommendation of the Board, at any time and from time to time pass an ordinary resolution to the effect that it is desirable to capitalise all or any part of any amount for the time being standing to the credit of any reserve or fund (including the profit and loss account) whether or not the same is available for distribution and accordingly that such amount be set free for distribution among the Members or any class of Members who would be entitled thereto if it were distributed by way of dividend and in the same proportions, on the footing that the same is not paid in cash but is applied either in or towards paying up the amounts for the time being unpaid on any shares in the Company held by such Members respectively or in paying up in full unissued shares, debentures or other obligations of the Company, to be allotted and distributed credited as fully paid up among such Members, or partly in one way and partly in the other, and the Board shall give effect to such resolution provided that, for the purposes of this Bye-law, a share premium account and any reserve or fund representing unrealised profits, may be applied only in paying up in full unissued shares of the Company to be issued to such Members credited as fully paid. In carrying sums to reserve and in applying the same the Board shall comply with the provisions of the Act.


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148. The Board may settle, as it considers appropriate, any difficulty arising in regard to any distribution under the last preceding Bye-law and in particular may issue certificates in respect of fractions of shares or authorise any person to sell and transfer any fractions or may resolve that the distribution should be as nearly as may be practicable in the correct proportion but not exactly so or may ignore fractions altogether, and may determine that cash payments shall be made to any Members in order to adjust the rights of all parties, as may seem expedient to the Board. The Board may appoint any person to sign on behalf of the persons entitled to participate in the distribution any contract necessary or desirable for giving effect thereto and such appointment shall be effective and binding upon the Members.

Alteration of Bye-Laws and Amendment to Memorandum of Association and Name Of Company

Bye-Law 165

165. No Bye-law shall be rescinded, altered or amended and no new Bye-law shall be made without the prior written approval of the Designated Stock Exchange and until the same has been approved by a resolution of the Board and confirmed by a special resolution of the Members. A special resolution shall be required to alter the provisions of the memorandum of association or to change the name of the Company.


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Summary of significant accounting policies

Subsidiaries

A subsidiary is an entity whose financial and operating policies the Company controls, directly or indirectly, so as to obtain benefits from its activities.

The results of subsidiaries are included in the Company’s income statement to the extent of dividends received and receivable. The Company’s investments in subsidiaries that are not classified as held for sale in accordance with IFRS 5 are stated at cost less any impairment losses. Associates

An associate is an entity in which the Group has a long term interest of generally not less than 20% of the equity voting rights and over which it is in a position to exercise significant influence.

The Group’s investments in associates are stated in the consolidated statement of financial position at the Group’s share of net assets under the equity method of accounting, less any impairment losses. Adjustments are made to bring into line any dissimilar accounting policies that may exist. The Group’s share of the post-acquisition results and reserves of associates is included in the consolidated income statement and consolidated reserves, respectively. Unrealised gains and losses resulting from transactions between the Group and its associates are eliminated to the extent of the Group’s investments in the associates, except where unrealised losses provide evidence of an impairment of the asset transferred. Goodwill arising from the acquisition of associates is included as part of the Group’s investments in associates and is not individually tested for impairment. The financial statements of the associates are prepared for the same reporting period as the parent company. Where necessary, adjustments are made to bring the accounting policies in line with those of the Group.

The results of associates are included in the Company’s income statement to the extent of dividends received and receivable. The Company’s investments in associates are treated as non-current assets and are stated at cost less any impairment losses.

Business combination and goodwill

Business combination is accounted for using the acquisition method. The consideration transferred is measured at the acquisition date fair value which is the sum of the acquisition date fair values of assets transferred by the Group, liabilities assumed by the Group to the former owners of the acquiree and the equity interests issued by the Group in exchange for control of the acquiree. For each business combination, the Group elects whether it measures the non-controlling interests in the acquiree that are present ownership interests and entitle their holders to a proportionate share of net assets in the event of liquidation either at fair value or at the proportionate share of the acquiree’s identifiable net assets. All other components of non-controlling interests are measured at fair value. Acquisition costs are expensed as incurred.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree.

If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously held equity interest in the acquiree is remeasured to fair value as at the acquisition date through profit or loss.

Any contingent consideration to be transferred by the acquirer is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or liability will be recognised in accordance with IAS 39 either in profit or loss or as a change to other comprehensive income. If the contingent consideration is classified as equity, it will not be remeasured. Subsequent settlement is accounted for within equity. In instances where the contingent consideration does not fall within the scope of IAS 39, it is measured in accordance with the appropriate IFRS.

Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred, the amount recognised for non-controlling interests and any fair value of the Group’s previously held equity interests in the acquiree over the identifiable net assets acquired and liabilities assumed. If the sum of this consideration and other items is lower than the fair value of the net assets of the subsidiary acquired, the difference is, after reassessment, recognised in profit or loss as a gain on bargain purchase.

APPENDIX 5 – SIGNIFICANT ACCOUNTING POLICIES OF THE GROUP

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After initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is tested for impairment annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. The Group performs its annual impairment test of goodwill as at 31 December. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash-generated units, or groups of cash-generated units, that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the Group are assigned to those units or groups of units.

Impairment is determined by assessing the recoverable amount of the cash-generating unit (group of cash-generating units) to which the goodwill relates. Where the recoverable amount of the cash-generating unit (group of cash-generating units) is less than the carrying amount, an impairment loss is recognised. An impairment loss recognised for goodwill is not reversed in a subsequent period.

Where goodwill forms a part of a cash-generating unit (group of cash-generating units) and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative values of the operation disposed of and the portion of the cash-generating unit retained.

Impairment of non-financial assets

Where an indication of impairment exists, or when annual impairment testing for an asset is required (other than inventories, deferred tax assets, financial assets, goodwill and non-current assets), the asset’s recoverable amount is estimated. An asset’s recoverable amount is the higher of the asset’s or cash-generating unit’s value in use and its fair value less costs to sell, and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets, in which case the recoverable amount is determined for the cash-generating unit to which the asset belongs.

An impairment loss is recognised only if the carrying amount of an asset exceeds its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. An impairment loss is charged to the income statement in the period in which it arises in those expense categories consistent with the function of the impaired asset.

An assessment is made at the end of each reporting period as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such an indication exists, the recoverable amount is estimated. A previously recognised impairment loss of an asset other than goodwill is reversed only if there has been a change in the estimates used to determine the recoverable amount of that asset, but not to an amount higher than the carrying amount that would have been determined (net of any depreciation/amortisation) had no impairment loss been recognised for the asset in prior years. A reversal of such an impairment loss is credited to the income statement in the period in which it arises.

Foreign currencies translation

The consolidated financial statements are presented in Rmb. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency. Transactions in foreign currencies are initially recorded at the functional currency rate ruling at the dates of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency rates of exchange ruling at the reporting date. All differences arising on settlement or translation of monetary items are taken to the income statement.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. The gain or loss arising on retranslation of a non-monetary item is treated in line with the recognition of the gain or loss on change in fair value of the item (i.e., translation differences on item whose fair value gain or loss is recognised in other comprehensive income or profit or loss is also recognised in other comprehensive income or profit or loss, respectively).


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The functional currency of the Company is the United States dollar (“US$”) and the functional currencies of certain subsidiaries are currencies other than the Rmb such as Singapore dollar (“SG$”), Hong Kong dollar (“HK$”) and Malaysian Ringgit (“MYR”). As at end of the reporting date, the assets and liabilities of these entities are translated into the presentation currency of the Group at the exchange rates ruling at end of the reporting period and their income statements are translated into Rmb at the weighted average exchange rates for the year. The resulting exchange differences are recognised in other comprehensive income and accumulated as a separate component of equity until the disposal of the respective foreign operation entity.

Any goodwill arising on the acquisition of a foreign operation subsequent to 1 January 2005 and any fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition are treated as assets and liabilities of the foreign operation and translated at the closing rate.

Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised:

(a) from the sale of goods, when the significant risks and rewards of ownership have been transferred to the buyer, provided that the Group maintains neither managerial involvement to the degree usually associated with ownership, nor effective control over the goods sold;

(b) from contract for services, on the percentage of completion basis, as further explained in the accounting policy for “Contract for services”;

(c) interest income, on an accrual basis using the effective interest method by applying the rate that discounts the estimated future cash receipts through the expected life of the financial instrument to the net carrying amount of the financial asset; and

(d) dividend income, when the shareholders’ right to receive payment has been established.

Taxes

Income tax comprises current and deferred tax. Income tax relating to items recognised outside profit or loss is recognised outside profit or loss, either in other comprehensive income or directly in equity.

Current income tax

Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities, based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period, taking into consideration interpretations and practices prevailing in the countries in which the Group operates.

Deferred income tax

Deferred income tax is provided using the liability method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred income tax liabilities are recognised for all taxable temporary differences, except:

• where the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

• in respect of taxable temporary differences associated with investments in subsidiaries and associates, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.


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Deferred income tax assets are recognised for all deductible temporary differences, the carryforward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carryforward of unused tax credits and unused tax losses can be utilised, except:

• when the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

• in respect of deductible temporary differences associated with investments in subsidiaries and associates, deferred income tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Unrecognised deferred income tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.

Deferred income tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred income tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity, and deferred tax arising from a business combination is adjusted against goodwill on acquisition.

Deferred income tax assets and deferred income tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred income taxes relate to the same taxable entity and the same taxation authority.

Government grants

Government grants are recognised at their fair value where there is reasonable assurance that the grant will be received and all attaching conditions will be complied with. When the grant relates to an expense item, it is recognised as income over the periods necessary to match the grant on a systematic basis to the costs that it is intended to compensate.

Where the grant relates to an asset, the fair value is credited to a deferred income account and is released to the income statement over the expected useful life of the relevant asset by equal annual instalments or deducted from the carrying amount of the asset and released to the income statement by way of a reduced depreciation charge.

Retirement benefits

Contributions made to the government retirement benefit fund under defined contribution retirement plans are charged to the income statement as incurred.

The Group participates in the national pension schemes as defined by the laws of the countries in which it has operations.

The Group make contributions to the Central Provident Fund (“CPF”) Scheme in Singapore, a defined contribution pension scheme, for its employees in Singapore.

The subsidiaries established and operating in Mainland China are required to provide certain staff pension benefits to their employees under existing regulations of the People’s Republic of China (“PRC”). Pension scheme contributions are provided at rates stipulated by PRC regulations and are made to a pension fund managed by government agencies, which are responsible for administering the contributions for the subsidiaries’ employees.


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Investment and other financial assets

Initial recognition and measurement

Financial assets within the scope of IAS 39 are classified as financial assets at loans and receivables and available-for-sale financial assets, as appropriate. The Group determines the classification of its financial assets at initial recognition.

All financial assets are recognised initially at fair value, plus, in the case of investments not at fair value through profit or loss, directly attributable transaction costs. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the marketplace (regular way trades) are recognised on the trade date, i.e., the date that the Group commits to purchase or sell the asset.

The Group’s financial assets include cash and cash equivalents, pledged short-term deposits, trade and other receivables, amounts due from related parties and quoted and unquoted financial instruments.

Subsequent measurement

The subsequent measurement of financial assets depends on their classification as follows:

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial measurement, such financial assets are subsequently measured at amortised cost using the Effective Interest Rate (“EIR”) method, less impairment. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the income statement. The loss arising from impairment is recognised in the income statement in finance costs for loans and in other expenses for receivables.

Available-for-sale investments

Available-for-sale financial investments are non-derivative financial assets in listed and unlisted equity investments and debt securities. Equity investments classified as available for sale are those which are neither classified as held for trading nor designated at fair value through profit or loss. Debt securities in this category are those which are intended to be held for an indefinite period of time and which may be sold in response to needs for liquidity or in response to changes in market conditions.

After initial recognition, available-for-sale financial investments are subsequently measured at fair value, with unrealised gains or losses recognised as other comprehensive income in the available-for-sale investment revaluation reserve until the investment is derecognised, at which time the cumulative gain or loss is recognised in the income statement in other income, or until the investment is determined to be impaired, when the cumulative gain or loss is reclassified from the available-for-sale investment revaluation reserve to the income statement in other expenses. Interest and dividends earned whilst holding the available-for-sale financial investments are reported as interest income and dividend income, respectively and are recognised in the income statement as other income in accordance with the policies set out for “Revenue recognition” below.

When the fair value of unlisted equity investments cannot be reliably measured because (a) the variability in the range of reasonable fair value estimates is significant for the investment, or (b) the probabilities of the various estimates within the range cannot be reasonably assessed and used in estimating fair value, such investments are stated at cost less any impairment losses.

The Group evaluates its available-for-sale investments whether the ability and intention to sell its available-for-sale financial assets in the near term are still appropriate. When, in rare circumstances, the Group is unable to trade these financial assets due to inactive markets and management’s intent to do so significantly changes in the foreseeable future, the Group may elect to reclassify these financial assets in rare circumstances. Reclassification to loans and receivables is permitted when the financial assets meet the definition of loans and receivables and the Group has the intent and ability to hold these assets for the foreseeable future or to maturity. The reclassification to the held-to-maturity category is permitted only when the Group has the ability and intent to hold until the maturity date of the financial asset.


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For a financial asset reclassified from the available-for-sale category, the fair value carrying amount at the date of reclassification becomes its new amortised cost and any previous gain or loss on that asset that has been recognised in equity is amortised to profit or loss over the remaining life of the investment using the EIR. Any difference between the new amortised cost and maturity amount is also amortised over the remaining life of the asset using the EIR. If the asset is subsequently determined to be impaired, then the amount recorded in equity is reclassified to the income statement.

Derecognition of financial assets

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognised when:

• The rights to receive cash flows from the asset have expired; or

• The Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a “pass-through” arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risk and rewards of ownership of the asset. When it has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is recognised to the extent of the Group’s continuing involvement in the asset.

In that case, the Group also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Group has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Group could be required to repay.

Impairment of financial assets

The Group assesses at each reporting date whether there is any objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (an incurred ‘loss event’) and that loss event has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.

Financial assets carried at amortised cost

For financial assets carried at amortised cost, the Group first assesses individually whether objective evidence of impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If the Group determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be, recognised are not included in a collective assessment of impairment.

If there is objective evidence that an impairment loss has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred). The present value the estimated future cash flows is discounted at the financial assets original EIR. If a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current EIR.


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The carrying amount of the asset is reduced either directly or through the use of an allowance account and the amount of the loss is recognised in the income statement. Interest income continues to be accrued on the reduced carrying amount and is accrued using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss. Loans and receivables together with any associated allowance are written off when there is no realistic prospect of future recovery and all collateral has been realised or has been transferred to the Group. If, in a subsequent year, the amount of the estimated impairment loss increases or decreases because of an event occurring after the impairment was recognised, the previously recognised impairment loss is increased or reduced by adjusting the allowance account. If a future write-off is later recovered, the recovery is credited to administrative expenses in the income statement.

Available-for-sale investments

For available-for-sale financial investments, the Group assesses at each reporting date whether there is objective evidence that an investment or a group of investments is impaired.

In the case of equity investments classified as available for sale, objective evidence would include a significant or prolonged decline in the fair value of the investment below its cost. “Significant” is to be evaluated against the original cost of the investment and “prolonged” against the period in which the fair value has been below its original cost. Where there is evidence of impairment, the cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that investment previously recognised in the income statement – is removed from other comprehensive income and recognised in the income statement. Impairment losses on equity investments are not reversed through the income statement and increases in their fair value after impairment are recognised directly in other comprehensive income.

Financial liabilities

Initial recognition and measurement

Financial liabilities within the scope of IAS 39 are classified as financial liabilities at loans and borrowings, as appropriate. The Group determines the classification of its financial liabilities at initial recognition.

All financial liabilities are recognised initially at fair value plus, in the case of loans and borrowings, plus directly attributable transaction costs.

The Group’s financial liabilities include trade and other payables, amounts due to the holding company and related parties and interest-bearing loans and borrowings.

Subsequent measurement

The subsequent measurement of loans and borrowings is as follows:

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in the income statement when the liabilities are derecognised as well as through the EIR method amortisation process.

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance cost in the income statement.

Derecognition of financial liabilities

A financial liability is derecognised when the obligation under the liability is discharged or cancelled, or expires.

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in the income statement.


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Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount reported in the consolidated and company statements of financial position if, and only if, there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously.

Fair value of financial instruments

The fair value of financial instruments that are traded in active markets at each reporting date is determined by reference to quoted market prices or dealer price quotations (bid price for long positions and ask price for short positions), without any deduction for transaction costs.

For financial instruments not traded in an active market, the fair value is determined using appropriate valuation techniques. Such techniques may include using recent arm’s length market transactions; reference to the current fair value of another instrument that is substantially the same; discounted cash flow analysis or other valuation models.

Property, plant and equipment and depreciation

Property, plant and equipment, other than construction in progress, are stated at cost less accumulated depreciation and any impairment losses. The cost of an item of property, plant and equipment comprises its purchase price and any directly attributable costs of bringing the asset to its working condition and location for its intended use.

Expenditure incurred after items of property, plant and equipment have been put into operation, such as repairs and maintenance, is normally charged to the income statement in the period in which it is incurred. In situations where the recognition criteria are satisfied, the expenditure for a major inspection is capitalised in the carrying amount of the asset as a replacement. Where significant parts of property, plant and equipment are required to be replaced at intervals, the Group recognises such parts as individual assets with specific useful lives and depreciates them accordingly.

Depreciation is calculated on the straight-line basis to write off the cost of each item of property, plant and equipment to its residual value over its estimated useful life. The estimated useful lives of property, plant and equipment are as follows:

Buildings 10 - 40 years Machinery and equipment 5 - 10 years Motor vehicles 5 - 10 years Computer and office equipment 3 - 10 years

Residual values, useful lives and the depreciation method are reviewed, and adjusted if appropriate, at least at each financial year end.

An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss on disposal or retirement recognised in the income statement in the year the asset is derecognised is the difference between the net sales proceeds and the carrying amount of the relevant asset.

Construction in progress

Construction in progress represents a building under construction, which is stated at cost less any impairment losses, and is not depreciated. Cost comprises the direct costs of construction and capitalised borrowing costs on related borrowed funds during the period of construction. Construction in progress is reclassified to the appropriate category of property, plant and equipment when completed and ready for use.

Leases

The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement and requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset.


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Group as a lessee

Leases that transfer substantially all the rewards and risks of ownership of assets to the Group, other than legal title, are accounted for as finance leases. At the inception of a finance lease, the cost of the leased asset is capitalised at the present value of the minimum lease payments and recorded together with the obligation, excluding the interest element, to reflect the purchase and financing. Assets held under capitalised finance leases are included in property, plant and equipment, and depreciated over the shorter of the lease terms and the estimated useful lives of the assets. The finance costs of such leases are charged to the income statement so as to provide a constant periodic rate of charge over the lease terms.

Assets acquired through hire purchase contracts of a financing nature are accounted for as finance leases, but are depreciated over their estimated useful lives.

Leases where substantially all the rewards and risks of ownership of assets remain with the lessor are accounted for as operating leases. Where the Group is the lessee, rentals payable under operating leases net of any incentives received from the lessor are charged to the income statement on the straight-line basis over the lease terms.

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, i.e., assets that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalised as part of the cost of those assets. The capitalisation of such borrowing costs ceases when the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs capitalised. All other borrowing costs are expensed in the period in which they are incurred. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

Intangible assets (other than goodwill)

Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses. Internally generated intangible assets, excluding capitalised development costs, are not capitalised and expenditure is reflected in the income statement in the year in which the expenditure is incurred.

The useful lives of intangible assets are assessed as either finite or indefinite.

Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at each financial year end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for by changing the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in the income statement in the expense category consistent with the function of the intangible asset.

Intangible assets are amortised on the straight-line basis over the following useful economic lives:

Trademarks 10 years Patents and technology know-how 5 - 20 years Software 5 years

Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the income statement when the asset is derecognised.

Research and development costs

All research costs are charged to the income statement as incurred.


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Expenditure incurred on projects to develop new products is capitalised and deferred only when the Group can demonstrate the technical feasibility of completing the intangible asset so that it will be available for use or sale, its intention to complete and its ability to use or sell the asset, how the asset will generate future economic benefits, the availability of resources to complete the project and the ability to measure reliably the expenditure during the development. Product development expenditure which does not meet these criteria is expensed when incurred.

Land use rights

Land use rights represent prepaid land lease payments under operating leases, which are initially stated at cost and subsequently measured at cost less accumulated amortisation and accumulated impairment losses. The land use rights are amortised over the lease term of 50 years.

Inventories

Inventories are valued at the lower of cost and net realisable value.

Costs incurred in bringing each product to its present location and condition are accounted for as follows:

Raw materials Purchase cost on a weighted average basis

Finished goods and work in progress Cost of direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity but excluding borrowing costs

Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

Contracts for services

Contracts for services revenue comprise the agreed contract amount and appropriate amounts from variation requests. Contract costs incurred comprise the costs of personnel engaged in providing the services, direct materials and attributable overheads.

Revenue from fixed price contracts for services is recognised on the percentage of completion method, measured with reference to the surveys of work performed. Where the outcome of a contract cannot be measured reliably, revenue is recognised only to the extent that the expenses incurred are eligible to be recovered.

Provision is made for foreseeable losses as soon as they are anticipated by management.

Where contract costs incurred to date plus recognised profits less recognised losses exceed progress billings, the surplus is treated as an amount due from contract customers.

Where progress billings exceed contract costs incurred to date plus recognised profits less recognised losses, the surplus is treated as an amount due to contract customers.

Dividends

Final dividends proposed by the directors are classified as a separate allocation of retained earnings within the equity section of the statement of financial position, until they have been approved by the shareholders in a general meeting. When these dividends have been approved by the shareholders and declared, they are recognised as a liability.


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Cash and cash equivalents

For the purpose of the consolidated statement of cash flows, cash and cash equivalents comprise cash on hand and demand deposits, and short-term highly liquid investments that are readily convertible into known amounts of cash, are subject to an insignificant risk of changes in value, and have a short maturity of generally within three months when acquired, less bank overdrafts which are repayable on demand and form an integral part of the Group’s cash management.

For the purpose of the statements of financial position, cash and cash equivalents comprise cash on hand and at banks, including term deposits, which are not restricted as to use.

Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the income statement net of any reimbursement. When the effect of discounting is material, the amount recognised for a provision is the present value at the end of the reporting period of the future expenditures expected to be required to settle the obligation. The increase in the discounted present value amount arising from the passage of time is included in finance costs in the income statement.

Related parties

A party is considered to be related to the Group if:

(a) the party is a person or a close member of that person’s family and that person

(i) has control or joint control over the Group;

(ii) has significant influence over the Group; or

(iii) is a member of the key management personnel of the Group or of a parent of the Group;

or

(b) the party is an entity where any of the following conditions applies:

(i) the entity and the Group are members of the same group;

(ii) one entity is an associate or joint venture of the other entity (or of a parent, subsidiary or fellow subsidiary of the other entity);

(iii) the entity and the Group are joint ventures of the same third party;

(iv) one entity is a joint venture of a third entity and the other entity is an associate of the third entity;

(v) the entity is a post-employment benefit plan for the benefit of employees of either the Group or an entity related to the Group;

(vi) the entity is controlled or jointly controlled by a person identified in (a); and

(vii) a person identified in (a)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity).


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The following statements (“Statement of Prospects”) were made by the Directors before the commencement of the Offer relating to the business and/or performance of the Company.

No. Date of Announcement Statement of Prospects

1. 14 August 2012 “Barring unforeseen circumstances, the Board of Directors believes that the Group will remain profitable for FY2012.”

2. 11 May 2012 “Barring unforeseen circumstances, the Board of Directors believes that the Group will remain profitable for FY2012.”

3. 29 February 2012 “Barring unforeseen circumstances, the Board of Directors believes that the Group will remain profitable for FY2012.”

The above Statement of Prospects were not made in connection with the Offer and should not be regarded in anyway as a forecast of the Group’s results for FY2012. The Directors have not issued a profit forecast for the Group in connection with the Offer.

The Statement of Prospects, for which the Directors are solely responsible, were arrived at on bases consistent with the accounting policies normally adopted by the Company and had been made based on the following assumptions:

(1) There will be no material adverse changes in the existing political, regulatory, legal or economic conditions affecting the activities of the Group, the industry and the countries in which the Group operates.

(2) There will be no significant changes to the Group structure or the existing principal activities of the Group or in their principal sources of revenue.

(3) There is no major crisis which may affect the business environment and adversely impact the Group.

(4) There will be no significant changes to the major foreign currency exchange rates that will adversely affect the Group’s results.

(5) There will be no material adverse changes in the relationships the Group has with major customers which may affect the Group’s financial performance.

(6) There will be no material adverse changes to the tax legislations of the countries in which the Group has operations.

(7) There will be no material adverse changes in the costs of supplies, labour costs, overheads, and other costs from those currently prevailing.

(8) There will be no material losses on assets or disruptions to business arising from calamities in the countries that the Group operates in.

(9) There will be no material legal litigation that results in claims against the Group which has not been duly provided for.

(10) There will be no material adverse effect from any changes in the financial positions of the Group, its suppliers and its customers.

APPENDIX 6 – STATEMENT OF PROSPECTS

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APPENDIX 7 – LETTER FROM THE AUDITORS IN RELATION TO THE STATEMENT OF PROSPECTS

安永會計師事務所香港中環添美道1號中信大廈22樓電話: +852 2846 9888 傳真: +852 2868 4432

Ernst & Young 22/ F CITIC Tower 1 Tim Mei Avenue Central, Hong Kong

Tel: +852 2846 9888 Fax: +852 2868 4432 www.ey.com

A member firm of Ernst & Young Global Limited

24 September 2012 The Board of Directors Luye Pharma Group Ltd. 137 Telok Ayer Street #05-05 Singapore 068602 Letter from Independent Auditors on Statement of Prospects in connection with the Voluntary Unconditional Cash Offer by DBS Bank Ltd. for and on behalf of Luye Pharmaceutical Investment Co., Ltd. to acquire all the Issued and Paid-Up Ordinary Shares in the Capital of Luye Pharma Group Ltd. Dear Sirs: We have provided this letter solely to the Directors of Luye Pharma Group Ltd. (the “Company”) for inclusion in the circular dated 25 September 2012 to be issued to the shareholders of the Company in connection with the voluntary unconditional cash offer by DBS Bank Ltd. on behalf of Luye Pharmaceutical Investment Co., Ltd. (the “Offeror”), to acquire all the issued and paid-up ordinary shares in the capital of the Company, other than those already owned, controlled or agreed to be acquired by the Offeror and parties acting in concert with the Offeror (the “Circular”). On 14 August 2012, the Company announced the unaudited consolidated financial statements for the 3 months and 6 months ended 30 June 2012, which contained the following statement (“Statement of Prospects 1”) on the prospects of the Company and its subsidiaries (the “Group”) for the year ending 31 December 2012. “Barring unforeseen circumstances, the Board of Directors believes that the Group will remain profitable for FY2012.” On 11 May 2012, the Company announced the unaudited consolidated financial statements for the 3 months ended 31 March 2012, which contained the following statement (“Statement of Prospects 2”) on the prospects of the Group for the year ending 31 December 2012. “Barring unforeseen circumstances, the Board of Directors believes that the Group will remain profitable for FY2012.” On 29 February 2012, the Company announced the unaudited consolidated financial statements for the 3 months and 12 months ended 31 December 2011, which contained the following statement (“Statement of Prospects 3”) on the prospects of the Group for the year ending 31 December 2012. “Barring unforeseen circumstances, the Board of Directors believes that the Group will remain profitable for FY2012.”

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APPENDIX 7 – LETTER FROM THE AUDITORS IN RELATION TO THE STATEMENT OF PROSPECTS

We have examined the Statements of Prospects 1, 2 and 3 in accordance with International Standard on Assurance Engagements applicable to the examination of prospective financial information. The Directors are solely responsible for the Statements of Prospects 1, 2 and 3 including the assumptions set out in Appendix 6 of the Circular on which the Statements of Prospects 1, 2 and 3 are based. Based on our review of the evidence supporting the assumptions, nothing has come to our attention which causes us to believe that these assumptions do not provide a reasonable basis for the Statements of Prospects 1, 2 and 3. Further, in our opinion, the Statements of Prospects 1, 2 and 3 in so far as the accounting policies and calculations are concerned, are properly prepared on the basis of the assumptions set out in Appendix 6 of the Circular and in all material respects, are consistent with the accounting policies normally adopted by the Group. Actual results are likely to be different from the Statements of Prospects 1, 2 and 3 since anticipated events frequently do not occur as expected and the variation may be material. Our work in connection with the Statements of Prospects 1, 2 and 3 has been undertaken solely for the purpose of reporting to the Directors under the Singapore Code on Take-overs and Mergers for the purpose of meeting regulatory requirements for the Circular and is not intended to be used or relied on for any other purpose. Yours faithfully, Ernst & Young Certified Public Accountants Hong Kong

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APPENDIX 8 - LETTER FROM THE IFA IN RELATION TO THE STATEMENT OF PROSPECTS

25 September 2012

The Board of DirectorsLuye Pharma Group Ltd.Clarendon House2 Church StreetHamilton HM 11Bermuda

Dear Sirs,

VOLUNTARY UNCONDITIONAL CASH OFFER BY DBS BANK LTD. FOR AND ON BEHALF OF LUYE PHARMACEUTICAL INVESTMENT CO., LTD. TO ACQUIRE ALL THE ISSUED AND PAID-UP ORDINARY SHARES IN THE CAPITAL OF LUYE PHARMA GROUP LTD.

On 28 August 2012 (the “Offer Announcement Date”), DBS Bank Ltd. (“DBS”), for and on behalf of Luye Pharmaceutical Investment Co., Ltd. (the “Offeror”) announced that the Offeror intends to make a voluntary unconditional cash offer (the “Offer”) to acquire all the issued and paid-up ordinary shares (the “Shares”) in the capital of Luye Pharma Group Ltd. (“Luye” or the “Company”), other than those already owned, controlled or agreed to be acquired by the Offeror (the “Offer Shares”).

On 11 September 2012, DBS announced, for and on behalf of the Offeror, that the offer document dated 11 September 2012 has been despatched to shareholders on the same date.

This letter has been prepared in accordance with Rule 25 of the Singapore Code on Take-overs and Mergers (the “Code”) and for inclusion in the circular (the “Circular”) to the shareholders of the Company in relation to the Offer. Unless otherwise defined or the context requires, all terms defined in the Circular shall have the same meanings herein.

On 14 August 2012, 11 May 2012 and 29 February 2012, the Company released announcements relating to its unaudited financial statements for the half year ended 30 June 2012, first quarter ended 31 March 2012 and full year ended 31 December 2011 respectively (the “Unaudited Results Announcements”). In the Unaudited Results Announcements, the Company made the following statement of prospects (“Statement of Prospects”):

“Barring unforeseen circumstances, the Board of Directors believes that the Group will remain profitable for FY2012.”

The Statement of Prospects (including its underlying bases and assumptions) is reproduced in Appendix 6 of the Circular.

We have reviewed the underlying bases and assumptions for the Statement of Prospects and held discussions with the Directors and senior management of the Company on the Statement of Prospects. We have also considered and relied on the letter addressed to the Board of Directors by Ernst & Young, Hong Kong, the auditors of Luye, in relation to the Statement of Prospects.

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APPENDIX 8 - LETTER FROM THE IFA IN RELATION TO THE STATEMENT OF PROSPECTS

We have relied upon the accuracy and completeness of all information provided to, or discussed with us and have assumed such accuracy and completeness for rendering our opinion in this letter. We have not assumed any responsibility for independently verifying such information or undertaken any independent evaluation or appraisal of any of the assets or liabilities of Luye. The Statement of Prospects is the sole responsibility of the Directors of the Luye. Save as provided in this letter, we do not express any other opinion or view on the Statement of Prospects.

Based on, and subject to the foregoing, we are of the opinion that the Statement of Prospects has been made by the Directors after due and careful enquiry.

This letter is provided to the Directors for the sole purpose of complying with Rule 25 of the Code. We do not accept any responsibility to any other person(s) other than the Directors, in respect of, or arising out of, or in connection with this letter.

Yours faithfullyFor and on behalf ofHong Leong Finance Limited

Joan Ling-Lau Tang Yeng YuenSenior Vice President Vice PresidentHead, Corporate Finance Corporate Finance

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circular dated 25 september 2012 this circular is ... · 9/25/2012 · recommendation to...

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