THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult a licensed securities dealer or registered institution in securities, bank manager, solicitor, professional accountant or other professional adviser. If you have sold or transferred all your shares in Wai Yuen Tong Medicine Holdings Limited (位元堂藥業控股有限公司*), you should at once hand this circular and the accompanying form of proxy to the purchaser or the transferee or to the licensed securities dealer or registered institution in securities or other agent through whom the sale or transfer was effected for transmission to the purchaser or the transferee. This circular is for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for securities of the Company and it must not be used for the purpose of offering or inviting offers for any securities. The Securities and Futures Commission of Hong Kong, Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular. WAI YUEN TONG MEDICINE HOLDINGS LIMITED （位元堂藥業控股有限公司*） (Incorporated in Bermuda with limited liability) (Stock Code: 897) (1) PROPOSED RIGHTS ISSUE ON THE BASIS OF THREE (3) RIGHTS SHARES FOR EVERY ONE (1) SHARE HELD ON THE RECORD DATE AT HK$0.43 PER RIGHTS SHARE (2) MAJOR AND CONNECTED TRANSACTION IN RELATION TO ACQUISITION OF THE BOND (3) MAJOR TRANSACTION IN RELATION TO ENTERING INTO OF THE SZ REMOVAL AGREEMENT AND THE SZ SUPPLEMENTAL AGREEMENTS IN RESPECT OF THE SZ ACQUISITION (4) WHITEWASH WAIVER UNDER THE TAKEOVERS CODE AND (5) NOTICE OF SPECIAL GENERAL MEETING Financial Adviser Underwriter of the Rights Issue Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders A letter from the Board is set out on pages 16 to 50 of this circular. A letter from the Independent Board Committee containing its recommendation to the Independent Shareholders is set out on pages 51 to 52 of this circular. A letter from Beijing Securities, the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders, containing its advice in respect of the Rights Issue, the Bond Transfer Agreement and the Whitewash Waiver is set out on pages 53 to 79 of this circular. A notice convening the SGM to be held at 20/F., Alexandra House, 18 Chater Road, Central, Hong Kong on Friday, 26 August 2016 at 10:00 a.m. is set out on pages SGM-1 to SGM-4 of this circular. A form of proxy for use at the SGM is enclosed. Whether or not you are able to attend the SGM in person, you are requested to complete the enclosed form of proxy in accordance with the instructions printed thereon and return the same to the Company’s branch share registrar and transfer office in Hong Kong, Tricor Secretaries Limited at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong as soon as practicable but in any event not later than 48 hours before the time appointed for holding of the SGM or any adjournment thereof (as the case may be). Completion and return of the form of proxy will not preclude you from attending and voting in person at the SGM or any adjournment thereof (as the case may be) should you so wish and in such case, the form of proxy shall be deemed to be revoked. The Shares will be dealt on an ex-rights basis from 9:00 a.m. on Wednesday, 31 August 2016. Dealings in the Rights Shares in their nil-paid form will take place from Thursday, 8 September 2016 to Thursday, 15 September 2016 (both dates inclusive). It is expected that the conditions referred to in the section headed “Termination of the Underwriting Agreement” in this circular are to be fulfilled on or before 4:00 p.m. on Tuesday, 27 September 2016. If the conditions referred to in that section are not fulfilled, the Underwriting Agreement shall be terminated and the Rights Issue will not proceed. Any person contemplating buying or selling Shares from the date of this circular and up to the date on which all the conditions of the Rights Issue are fulfilled, and any dealings in the Rights Shares in their nil-paid form from Thursday, 8 September 2016 to Thursday, 15 September 2016 (both dates inclusive) will accordingly bear the risk that the Rights Issue may not become unconditional and/or may not proceed. Any person contemplating dealing in the Shares and/or the Rights Shares in their nil-paid form are recommended to consult his/her/its/their own professional adviser. It should be noted that the Underwriting Agreement contains provisions entitling the Underwriter by notice in writing to the Company at any time prior to the Latest Time for Termination to terminate its obligations under the Underwriting Agreement on the occurrence of certain events including force majeure. These events are set out under the section headed “Termination of the Underwriting Agreement” on pages 14 to 15 of this circular. Upon the delivery of the notice of termination, all obligations of the Underwriter under the Underwriting Agreement shall cease and determine and neither party shall have any claim against the other party in respect of costs, damages, compensation or otherwise (save for any antecedent breaches). If the Underwriter exercises such right, the Rights Issue will not proceed. * For identification purpose only 9 August 2016 CONTENTS Page Definitions ..................................................... 1 Expected timetable ............................................... 11 Termination of the Underwriting Agreement .......................... 14 Letter from the Board ............................................. 16 Letter from the Independent Board Committee ......................... 51 Letter from Beijing Securities ....................................... 53 Appendix I – Financial information of the Group ................... I-1 Appendix IIA – Unaudited pro forma statement of adjusted consolidated net tangible assets of the Group upon completion of the Rights Issue .......... IIA-1 Appendix IIB – Unaudited pro forma financial information of the Group upon completion of the Rights Issue and the acquisition of the Bond ....... IIB-1 Appendix IIC – Unaudited pro forma financial information of the Group upon completion of the SZ Acquisition, the SZ Removal Agreement and the SZ Supplemental Agreements ................... IIC-1 Appendix IID – Unaudited pro forma financial information of the Group upon completion of the Rights Issue, the acquisition of the Bond, the SZ Acquisition, the SZ Removal Agreement and the SZ Supplemental Agreements .................. IID-1 Appendix IIIA – Valuation report of the existing properties of the Group . IIIA-1 Appendix IIIB – Valuation report of the SZ Properties .................. IIIB-1 Appendix IV – General information ............................... IV-1 Notice of the SGM ................................................ SGM-1 –i– DEFINITIONS In this circular, the following expressions have the following meanings, unless the context otherwise requires: “acting in concert” has the meaning ascribed thereto under the Takeovers Code “Application Forms” collectively, the EAF(s) and the PAL(s) “associate(s)” has the meaning ascribed thereto under the Listing Rules “Beijing Securities” or Beijing Securities Limited, a corporation licensed “Independent Financial under the SFO to conduct type 1 (dealing in Adviser” securities), type 4 (advising on securities) and type 6 (advising on corporate finance) regulated activities as defined under the SFO, being the independent financial adviser to the Independent Board Committee and the Independent Shareholders on the Rights Issue, the Bond Transfer Agreement and the Whitewash Waiver, and as to voting at the SGM “Board” the board of the Directors “Bond” a 10.0% bond due on 28 November 2019 with an outstanding principal amount of HK$200,000,000 issued by CAP as held by Double Leads, being the subject of the Bond Transfer Agreement “Bond Transfer Agreement” a conditional sale and purchase agreement dated 5 July 2016 (as amended by a supplemental agreement dated 8 July 2016) entered into between Double Leads, WOG and Winning Rich under which Winning Rich will acquire the Bond from Double Leads and WOG will provide a guarantee in favour of Winning Rich for the due and punctual performance of CAP under the Bond “Business Day” any day (other than a Saturday, Sunday or public holiday) on which licensed banks in Hong Kong are generally open for business throughout their normal business hours “Bye-Laws” the bye-laws of the Company –1– DEFINITIONS “Caffco” Caffco International Ltd, a company incorporated in Hong Kong with limited liability and an Independent Third Party “CAP” China Agri-Products Exchange Limited, an exempted company incorporated in Bermuda with limited liability and the shares of which are listed and traded on the Main Board of the Stock Exchange (Stock Code: 0149) “CCASS” the Central Clearing and Settlement System established and operated by HKSCC “Companies (Winding Up and Companies (Winding Up and Miscellaneous Miscellaneous Provisions) Provisions) Ordinance (Chapter 32 of the Laws of Ordinance” Hong Kong) “Companies Act” Companies Act 1981 of Bermuda “Company” Wai Yuen Tong Medicine Holdings Limited