Notice on the Distribution and Implementation of Cash Options for the Absorption Merger of Guangzhou Pharmaceutical Holdings Co., Ltd. by Guangzhou Baiyunshan Pharmaceutical Holdings Co., Ltd.

Important Notice

The company and all members of the board guarantee that the information disclosed is true, accurate, and complete, without any false records, misleading statements, or significant omissions.

Special Reminder

1. The plan for the absorption merger of Guangzhou Pharmaceutical Holdings by the company has been approved by the company's second extraordinary general meeting of shareholders held on September 19, 2012, and has received approval from the China Securities Regulatory Commission (CSRC) under document [2012] No. 1695.
2. The company's stock will be suspended from trading starting March 14, 2013, with the last trading day being March 13, 2013. Following this, the stock will enter the cash option distribution, exercise declaration, and settlement phase, and will no longer be traded. After the cash option implementation is completed, the company will apply to the Shenzhen Stock Exchange for the delisting of its stock, and the shares held by the company's shareholders will be converted into A shares of Guangzhou Pharmaceutical listed on the Shanghai Stock Exchange.
3. The company plans to distribute cash options to shareholders registered as of the close of trading on March 13, 2013, excluding Guangzhou Pharmaceutical Group and its related parties.
4. After the cash option distribution is completed, the declaration procedure will commence. Shareholders who receive cash options can declare to exercise their options in full or in part at a price of 11.50 CNY per share during the declaration period from 9:30 AM to 11:30 AM and 1:00 PM to 4:30 PM on the declaration day (to be announced separately), transferring their shares to the cash option provider, Liby Group. Shares held by directors, supervisors, and senior management that are subject to pledges, third-party rights, or judicial freezes will not be eligible for cash option exercise unless the legal holders have committed to waive their rights.
5. The cash option distribution and exercise will be conducted in the form of rights. The company will implement the cash options manually, as the stock price exceeds the cash option price by more than 50%. The declaration and settlement of cash options will be completed manually.
6. According to the merger plan, the exercise price is based on the average trading price of the company's stock over the 20 trading days prior to the board resolution announcement regarding the major asset restructuring, adjusted for ex-rights and ex-dividend, set at 11.50 CNY per share. On March 6, 2013 (the trading day before this announcement), the closing price of the company's stock was 26.71 CNY per share, representing a premium of 132.26% over the exercise price. Shareholders exercising cash options will receive cash compensation at the exercise price of 11.50 CNY per share, with applicable taxes deducted from the compensation. Investors should be aware that exercising cash options may result in certain losses and should pay attention to risks.
7. This notice only explains the specific arrangements for the cash option distribution and exercise declaration for the company's shareholders and does not constitute a recommendation to exercise cash options. Investors are advised to pay attention to investment risks. After the cash option distribution is completed, the company will announce the specific timing for the cash option exercise declaration. For details on the absorption merger, investors should read the full report published on December 22, 2012, on the Shenzhen Stock Exchange website (www.szse.cn) and the Giant Tide Information Network (www.cninfo.com.cn).