ࡱ> '` R,bjbjLULU2.?.?}LLLLLLL|, "̒̒̒̒̒̒. $h:Lp̒̒ppLL̒̒ozzzpL̒L̒zpzzLLz̒ 1ܛ>vpzԿ0zIpIzz>ILxzz hp pppp"""7Y7"""Y`$xLLLLLL 05/09/2008 SEVEN CONTINUING CONNECTED TRANSACTIONS2008-9-5 17:19:59The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this announcement, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement. q\qge兡N gPlQS Shandong Xinhua Pharmaceutical Company Limited(a joint stock limited company established in the People s Republic of China with limited liability)(Stock Code: 0719)SEVEN CONTINUING CONNECTED TRANSACTIONSSeven continuing connected transactions conducted in 2007 and 2008The Board announces that during the course of auditing the Companys financial statements for the year ended 31 December 2007, it was discovered that the Company and its non-wholly owned subsidiaries, namely, Xinhua Perrigo, XPIE, Dadi Xinhua and Weifang Wanyuan entered into continuing connected transactions in relation to the sale of pharmaceutical products and purchase of chemical raw materials with various connected persons, namely, Perrigo Company, Perrigo China Business Trust, Eastwest and Dadi Stalinisation, without complying with the announcement requirements and where applicable, independent shareholders approval requirements as set out under Chapter 14A of the Listing Rules. The Directors believe that the consideration for each continuing connected transaction for the relevant period in 2007 and 2008 was arrived at after arms length negotiations between the parties thereto on normal commercial terms. The consideration of each continuing connected transaction was based on the prevailing market price.There are written agreements for all the above continuing connected transactions except the transactions between the Company and Perrigo Company and the transactions between XPIE and Perrigo Company. For all the above continuing connected transactions, the Company did not set a cap. Therefore, the Company has not complied fully with R14A.35(1) and 14A.35(2) of the Listing Rules. The Company and XPIE are negotiating with the connected persons, namely, Perrigo Company and Eastwest, with a view to entering into new written agreements with them. Once the terms of those agreements have been agreed, the Company and XPIE will propose caps for the continuing connected transactions and will seek independent shareholders approval, if applicable, for entering into the agreements and adopting the caps. Xinhua Perrigo will also propose caps for the existing written agreement.As soon as the existence of the connected transactions was discovered, the Company immediately and voluntarily informed the Exchange of the same and disclosed the continuing connected transactions in its 2007 annual report. To rectify the situation, the Company hereby makes announcement of the seven continuing connected transactions.Reasons for the non-compliancePrior to 1 January 2007, each of the Company and Perrigo International held a 50% equity interest in Xinhua Perrigo. Accordingly, Xinhua Perrigo was not a subsidiary of the Company and Perrigo International was not a connected person of the Company. However, on 1 January 2007, the Company acquired 0.1% of equity interest in Xinhua Perrigo and Xinhua Perrigo became a subsidiary of the Company. Accordingly, Perrigo International, as a substantial shareholder of Xinhua Perrigo, became a connected person of the Company after 1 January 2007. Perrigo Company is the parent company of Perrigo International while Perrigo China Business Trust is a subsidiary of Perrigo Company. Therefore, Perrigo Company and Perrigo China Business Trust also became connected persons of the Company. The unintended and unrealised consequence of the acquisition of the 0.1% equity interest in Xinhua Perrigo was that the ongoing transactions between the Company and Perrigo Company, between Xinhua Perrigo and Perrigo China Business Trust, and between XPIE and Perrigo Company commenced to constitute continuing connected transactions under Chapter 14A of the Listing Rules. Owing to this oversight, the Company did not comply with the announcement and where applicable, the independent shareholders approval requirements under Chapter 14A of the Listing Rules.Further, the Company and Dadi Stalinisation established Dadi Xinhua on 12 September 2006. At that time, the Company held a 49% equity interest in Dadi Xinhua and Dadi Stalinisation held a 51% equity interest in Dadi Xinhua. Therefore, Dadi Xinhua was not a subsidiary of the Company and Dadi Stalinisation was not a connected person of the Company and Dadi Xinhua. However, on 1 December 2007, the Company invested an additional RMB6 million in Dadi Xinhua but Dadi Stalinisation did not increase its investment in Dadi Xinhua. As a result, the Company held a 58.5625% equity interest in Dadi Xinhua and Dadi Stalinisation held a 41.4375% equity interest in Dadi Xinhua after 1 December 2007. As an unintended and unrealised consequence of this investment, Dadi Stalinisation became a connected person of the Companys subsidiaries, Dadi Xinhua and Weifang Wanyuan and the ongoing transactions between Dadi Xinhua and Dadi Stalinisation and between Weifang Wanyuan and Dadi Stalinisation became continuing connected transactions under Chapter 14A of the Listing Rules. Owing to this oversight, the Company did not comply with the announcement requirement under Chapter 14A of the Listing Rules.As disclosed in the announcement dated 14 May 2008, the Company acquired an equity interest of 41.4375% in Dadi Xinhua from Dadi Stalinisation on 30 June 2008. After the acquisition, Dadi Xinhua became a wholly owned subsidiary of the Company and Dadi Stalinisation is no longer a connected person of the Company or Dadi Xinhua. Accordingly, the transactions between Dadi Xinhua and Dadi Stalinisation and the transactions between Weifang Wanyuan and Dadi Stalinisation are no longer connected transactions.Moreover, the Company has entered into continuing connected transactions with its connected person, Eastwest, in 2007. As the business between the Company and Eastwest was not significant, owing to oversight, the Company did not comply with the announcement requirement under Chapter 14A of the Listing Rules. A. BACKGROUNDThe Board announces that during the course of auditing the Companys financial statements for the year ended 31 December 2007, it was discovered that the Company and its non-wholly owned subsidiaries, namely, Xinhua Perrigo, XPIE, Dadi Xinhua and Weifang Wanyuan entered into continuing connected transactions in relation to the sale of pharmaceutical products to and purchase of chemical raw materials from various connected persons, namely, Perrigo Company, Perrigo China Business Trust, Eastwest and Dadi Stalinisation, without complying with the announcement requirements and where applicable, independent shareholders approval requirements as set out under Chapter 14A of the Listing Rules.The Company immediately and voluntarily informed the Exchange of the same and disclosed the continuing connected transactions in its 2007 annual report. To rectify the situation, the Company hereby makes announcement of the seven continuing connected transactions.B. SEVEN CONTINUING CONNECTED TRANSACTIONS1. CONTINUING CONNECTED TRANSACTIONS BETWEEN THE COMPANY AND PERRIGO COMPANYa. Principal terms and conditionsFrom 1 January 2007 to 31 December 2007, the Company and Perrigo Company entered into various transactions in relation to the Company selling pharmaceutical products to Perrigo Company for the total consideration of RMB45,619,000. From 1 January 2008 to the date of this announcement, the Company and Perrigo Company have continued the above transactions. The total consideration for the first half of 2008 is RMB26,393,000.The Directors believe that the consideration of each connected transaction for the relevant period in 2007 and 2008 was arrived at after arms length negotiations between the parties thereto on normal commercial terms. The consideration of each connected transaction was based on the prevailing market price.b. Payment termsThe consideration of the various transactions between the Company and Perrigo Company was paid by Perrigo Company in cash to the Company within 30 days from the date of delivery of goods in each transaction.c. Reasons and benefits of the continuing connected transactions between the Company and Perrigo CompanyBy selling the pharmaceutical product to Perrigo Company, the Company is able to expand its business in the pharmaceutical industry in the United States of America. The Directors consider that the transactions have been negotiated on an arms length basis and are on normal commercial terms and in the ordinary course of business. They also consider that the terms of the transactions are fair and reasonable, and the entering into the transactions was and is in the best interests of the shareholders as a whole.d. Connected RelationshipPrior to 1 January 2007, each of the Company and Perrigo International held a 50% of equity interest in Xinhua Perrigo. Accordingly, Xinhua Perrigo was not a subsidiary of the Company and Perrigo International was not a connected person of the Company. On 1 January 2007, the Company acquired a 0.1% equity interest in Xinhua Perrigo and Xinhua Perrigo became a subsidiary of the Company. Accordingly, Perrigo International, as a substantial shareholder of Xinhua Perrigo, became a connected person of the Company after 1 January 2007. Perrigo Company, the parent company of Perrigo International, also became a connected person of the Company after 1 January 2007. As a result, the ongoing transactions between the Company and Perrigo Company constitute continuing connected transactions under Chapter 14A of the Listing Rules.e. Information about the Company and Perrigo CompanyThe Company is principally engaged in the development, manufacture and sales of bulk pharmaceuticals, preparations and chemical products.Perrigo Company is principally engaged in the manufacture, distribution and sale of certain over-the-counter, non-prescription pharmaceutical products in the United States of America. 2. CONTINUING CONNECTED TRANSACTIONS BETWEEN XINHUA PERRIGO AND PERRIGO CHINA BUSINESS TRUSTa. Background Before Perrigo Company became a connected person of the Company on 1 January 2007, Xinhua Perrigo, the then associated company of the Company, and Perrigo China Business Trust, a subsidiary of Perrigo Company, entered into a written agreement dated 3 July 2006 for a period of 10 years.b. Principal terms and conditions1. According to the agreement, Xinhua Perrigo agreed to manufacture, package, sell and deliver to Perrigo China Business Trust those quantities of the pharmaceutical product, i.e. ibuprofen U.S.P., that Perrigo China Business Trust ordered from Xinhua Perrigo pursuant to Perrigo China Business Trusts purchase orders issued to Xinhua Perrigo.2. Perrigo China Business Trust agreed to purchase 100% of Xinhua Perrigos output of the pharmaceutical product up to 1,500 metric tons in any Contract Year.3. In the event that Xinhua Perrigos production of the pharmaceutical product in a Contract Year exceeds 1,500 metric tons, Perrigo China Business Trust shall have the option to purchase the excess amount of the pharmaceutical product from Xinhua Perrigo. Should Perrigo China Business Trust decide not to purchase such excess amount, Xinhua Perrigo may sell such excess pharmaceutical product to any person at an arms length price provided that such sale shall not be on terms more favourable than those offered to Perrigo China Business Trust. In particular, the price offered to any other person may not be lower than the then current price paid by Perrigo China Business Trust. Subject to the above, Xinhua Perrigo shall not sell the pharmaceutical product to any person other than Perrigo China Business Trust all over the world excluding mainland China.4. Perrigo China Business Trust and its affiliates shall have the right to use, market, sell and distribute the pharmaceutical product all over the world excluding mainland China and to market, sell and distribute the product which contains the ibuprofen U.S.P.. c. Consideration1. The price of the pharmaceutical product shall be fixed with reference to the costs of the pharmaceutical product.2. From 1 January 2007 to 31 December 2007, the total consideration was RMB111,902,000.3. From 1 January 2008 to 30 June 2008, the total consideration was RMB59,184,000.d. Payment termsPayment for the pharmaceutical product shall be within seven days of receipt by Perrigo China Business Trust of Xinhua Perrigos fax of shipping documents. Xinhua Perrigo shall send the original bill of lading via express email to Perrigo China Business Trust immediately after it has received payments for the shipment.e. Reasons and benefits of the continuing connected transactions between Xinhua Perrigo and Perrigo China Business TrustBy selling the pharmaceutical products to Perrigo China Business Trust through Xinhua Perrigo, the Company is able to expand its business in the pharmaceutical industry in the United States of America. The Directors consider that the transactions have been negotiated on an arms length basis and are on normal commercial terms and in the ordinary course of business. They also consider that the terms of the transactions are fair and reasonable, and the entering into the transactions was and is in the best interests of the shareholders as a whole.f. Connected RelationshipAs mentioned in paragraph B.1.d above, Perrigo International became a connected person of the Company after 1 January 2007. Accordingly, Perrigo Company, the parent company of Perrigo International, and Perrigo China Business Trust, a subsidiary of Perrigo Company, also became connected persons of the Company after 1 January 2007. As a result, the ongoing transactions between Xinhua Perrigo and Perrigo China Business Trust constitute continuing connected transactions under Chapter 14A of the Listing Rules.g. Information about Xinhua Perrigo and Perrigo China Business TrustXinhua Perrigo is principally engaged in the production of medicine and medical products in the PRC.Perrigo China Business Trust is principally engaged in the sourcing of active pharmaceutical ingredients for sale to other entities producing pharmaceutical products in the United States of America.3. CONTINUING CONNECTED TRANSACTIONS BETWEEN XPIE AND PERRIGO COMPANYa. Principal terms and conditionsFrom 1 January 2007 to 31 December 2007, XPIE entered into various transactions with Perrigo Company in relation to XPIE selling pharmaceutical products to Perrigo Company in the total consideration of RMB9,752,000. From 1 January 2008 to the date of this announcement, XPIE and Perrigo Company have not conducted any transactions. The consideration of each connected transaction in 2007 was arrived at after arms length negotiations between the parties thereto on normal commercial terms. The consideration of each connected transaction was based on the prevailing market price.b. Payment termsThe consideration of the various sales contracts between XPIE and Perrigo Company was paid by Perrigo Company in cash to XPIE within 30 days from the date of delivery of the goods in each transaction.c. Reasons and benefits of the continuing connected transactions between XPIE and Perrigo CompanyBy selling the pharmaceutical products to Perrigo Company through XPIE, the Company is able to expand its business in the pharmaceutical industry in the United States of America. The Directors consider that the transactions have been negotiated on an arms length basis and are on normal commercial terms and in the ordinary course of business. They also consider that the terms of the transactions are fair and reasonable, and the entering into the transactions was and is in the best interests of the shareholders as a whole.d. Connected RelationshipThe Company indirectly held and holds a 98% equity interest in XPIE. Therefore, XPIE was and is a subsidiary of the Company. As mentioned in paragraph B.1.d above, Perrigo International became a connected person of the Company after 1 January 2007. Accordingly, Perrigo Company, the parent company of Perrigo International, also became a connected person of the Company after 1 January 2007. As a result, the ongoing transactions between XPIE and Perrigo Company in 2007 constituted continuing connected transactions under Chapter 14A of the Listing Rules.e. Information about XPIE XPIE is principally engaged in import and export of chemical products and pharmaceutical technical know-how in the PRC.4. CONTINUING CONNECTED TRANSACTIONS BETWEEN THE COMPANY AND EASTWESTa. Principal terms and conditionsFrom 1 January 2007 to 31 December 2007, the Company entered into various sales contracts with Eastwest to sell pharmaceutical products to Eastwest in the total consideration of RMB5,276,000. From 1 January 2008 to the date of this announcement, the Company and Eastwest have continued the connected transactions. The total consideration for the first half of 2008 is RMB2,160,000.The consideration of each connected transaction for the relevant period in 2007 and 2008 was arrived at after arms length negotiations between the parties thereto on normal commercial terms. The consideration of each connected transaction was based on the prevailing market price.b. Payment termsThe consideration of the various sales contracts between the Company and Eastwest was paid by Eastwest in cash to the Company within 30 days from the date of delivery of the goods in each transaction.c. Reasons and benefits of the continuing connected transactions between the Company and EastwestBy selling the pharmaceutical products to Eastwest, the Company is able to expand its business in the pharmaceutical industry in the United States of America. The Directors (including the independent non-executive directors) consider that the transactions were and are on normal commercial terms and in the ordinary course of business. They also consider that the terms of the transactions were and are fair and reasonable and the entering into the transaction was and is in the interests of the Shareholders as a whole.d. Connected relationshipDuring the period of the above continuing connected transactions and as at the date of this announcement, Eastwest held a 25% equity interest in a subsidiary of the Company, Xinhua Eastwest, and therefore, Eastwest was and is a substantial shareholder of Xinhua Eastwest. Accordingly, Eastwest was and is a connected person of the Company. As a result, the ongoing transactions between the Company and Eastwest constitute continuing connected transactions under Chapter 14A of the Listing Rules.As the business between the Company and Eastwest was not significant, owing to oversight, the Company did not comply with the announcement requirement under Chapter 14A of the Listing Rules.e. Information about EastwestEastwest is principally engaged in trading business. 5. CONTINUING CONNECTED TRANSACTIONS BETWEEN DADI XINHUA AND DADI STALINISATIONa. Principal terms and conditionsFrom 1 December 2007 to 31 December 2007, Dadi Xinhua and Dadi Stalinisation entered into a transaction in relation to Dadi Xinhua purchasing chemical raw materials from Dadi Stalinisation in the total consideration of RMB226,000. From 1 January 2008 to 30 June 2008, Dadi Xinhua and Dadi Stalinisation continue the connected transactions. The total consideration for the first half of 2008 is 6,998,000.The consideration of each connected transaction for the relevant period in 2007 and 2008 was arrived at after arms length negotiations between the parties thereto on normal commercial terms. The consideration of each connected transaction was based on the prevailing market price.b. Payment termsThe consideration for the the transaction between Dadi Xinhua and Dadi Stalinisation from 1 December 2007 to 31 December 2007 was paid by Dadi Xinhua in cash to Dadi Stalinisation before 10 December 2007.The consideration for the purchase contract dated 8 January 2008 between Dadi Xinhua and Dadi Stalinisation was paid in cash, by two instalments on 10th and between 25th to 28th of each month.c. Reasons and benefits of the continuing connected transactions between Dadi Xinhua and Dadi StalinisationBy purchasing the chemical raw materials from Dadi Stalinisation, Dadi Xinhua can have a steady supply of chemical raw materials for the production of pharmaceutical products. The Directors consider that the transactions have been negotiated on an arms length basis and are on normal commercial terms and in the ordinary course of business. They also consider that the terms of the transactions are fair and reasonable, and the entering into the transactions was and is in the best interests of the Shareholders as a whole.d. Connected RelationshipDadi Xinhua was established on 12 September 2006. At that time, the Company held a 49% equity interest in Dadi Xinhua and Dadi Stalinisation held a 51% equity interest in Dadi Xinhua. On 1 December 2007, the Company invested an additional RMB6 million in Dadi Xinhua (2007 Transaction) but Dadi Stalinisation did not increase its investment in Dadi Xinhua. As a result, the Company held a 58.5625% equity interest in Dadi Xinhua and Dadi Stalinisation held a 41.4375% equity interest in Dadi Xinhua after 1 December 2007. Since the Company held an equity interest of 49% in Dadi Xinhua before the 2007 Transaction, Dadi Xinhuas accounts were not consolidated into the Companys accounts then. After the 2007 Transaction, the Company held a 58.5625% equity interest in Dadi Xinhua and the relevant accounts were and are consolidated into the Companys account. Accordingly, Dadi Xinhua became a subsidiary of the Company and Dadi Stalinisation was and is a connected person of the Company and Dadi Xinhua. As a result, the ongoing transactions between Dadi Xinhua and Dadi Stalinisation constituted and constitute continuing connected transactions under Chapter 14A of the Listing Rules. e. Information about Dadi Xinhua and Dadi StalinisationDadi Xinhua is principally engaged in the production and sale of chemical products (excluding dangerous chemical products).Dadi Stalinisation is principally engaged in the production and sale of crude salt. 6. CONTINUING CONNECTED TRANSACTIONS BETWEEN WEIFANG WANYUAN AND DADI STALINISATION (PURCHASE)a. Principal terms and conditionsFrom 1 December 2007 to 31 December 2007, Weifang Wanyuan and Dadi Stalinisation entered into various purchase contracts in relation to Weifang Wanyuan purchasing chemical raw materials from Dadi Stalinisation in the total consideration of RMB2,711,000. From 1 January 2008 to 30 June 2008, Weifang Wanyuan continue to purchase chemical raw materials from from Dadi Stalinisation. The total consideration for the first half of 2008 is RMB9,623,000. The consideration of each connected transaction for the relevant period in 2007 and 2008 was arrived at after arms length negotiations between the parties thereto on normal commercial terms. The consideration of each connected transaction was based on the prevailing market price.b. Payment terms The consideration of each purchase contract between Weifang Wanyuan and Dadi Stalinisation was paid by Weifang Wanyuan in cash to Dadi Stalinisation within 10 days from the date of delivery of the goods in each transaction.c. Reasons and benefits of the continuing connected transactions between Weifang Wanyuan and Dadi StalinisationBy purchasing the chemical raw materials from Dadi Stalinisation, Weifang Wanyuan can have a steady supply of chemical raw materials for the production of pharmaceutical products. The Directors consider that the transactions have been negotiated on an arms length basis and are on normal commercial terms and in the ordinary course of business. They also consider that the terms of the transactions are fair and reasonable, and the entering into the transactions was and is in the best interests of the Shareholders as a whole. d. Connected RelationshipDuring the said period, the Company indirectly held a 51% equity interest in Weifang Wanyuan through Dadi Xinhua. Therefore, Weifang Wanyuan was and is a subsidiary of the Company. As mentioned in paragraph B.5.d above, Daidi Stalinisation became a connected person of the Company after 1 December 2007. Accordingly, the ongoing transactions between Weifang Wanyuan and Daidi Stalinisation constituted continuing connected transactions. e. Information about Weifang WanyuanWeifang Wanyuan is principally engaged in the production and sale of chemical products in the PRC.7. CONTINUING CONNECTED TRANSACTIONS BETWEEN WEIFANG WANYUAN AND DADI STALINISATION (SALES)a. Principal terms and conditionsFrom 1 December 2007 to 31 December 2007, Weifang Wanyuan and Dadi Stalinisation entered into various sales contracts in relation to Weifang Wanyuan selling chemical products to Dadi Stalinisation in the total consideration of RMB3,440,000. From 1 January 2008 to 30 June 2008, Weifang Wanyaun continued to sell the chemical products to Dadi Stalinisation. The total consideration for the first half of 2008 is 20,749,000.The consideration of each connected transaction for the relevant period in 2007 and 2008 was arrived at after arms length negotiations between the parties thereto on normal commercial terms. The consideration of each connected transaction was determined based on the prevailing market price.b. Payment termsThe consideration of each sales contract between Weifang Wanyuan and Dadi Stalinisation was paid by Dadi Stalinisation in cash to Weifang Wanyuan within 10 days from the date of delivery of the goods in each transaction.c. Reasons and benefits of the continuing connected transactions between Weifang Wanyuan and Dadi StalinisationBy selling the chemical products to Dadi Stalinisation, Weifang Wanyuan is able to expand its business in the pharmaceutical industry in the PRC. The Directors consider that the transactions have been negotiated on an arms length basis and are on normal commercial terms and in the ordinary course of business. They also consider that the terms of the transactions are fair and reasonable, and the entering into the transactions was and is in the best interests of the Shareholders as a whole.C. LISTING RULES IMPLICATIONS1. Continuing connected transactions between the Company and Perrigo Company, between Xinhua Perrigo and Perrigo China Business Trust and between XPIE and Perrigo CompanyPursuant to rule 14A.41 of the Listing Rules, since Xinhua Perrigo and Perrigo China Business Trust entered into a written agreement before China Business Trust became a connected person and there has been no variation or renewal of the agreement, Xinhua Perrigo only has to comply with the applicable reporting and disclosure requirements of Chapter 14A of the Listing Rules in respect of the continuing connected transactions and no independent shareholders approval is required. However, due to oversight, Xinhua Perrigo failed to comply with the announcement requirement under rule 14A.47 of the Listing Rules and therefore it is in breach of such rule. Nonetheless, the Company has complied with the reporting requirement set out in rules 14A.45 and 14A.46 of the Listing Rules.Pursuant to rules 14A.25 and 14A.26 of the Listing Rules, the continuing connected transactions between the Company and Perrigo Company, and the continuing connected transactions between XPIE and Perrigo Company could be aggregated as they are the transactions of the same nature entered into by the Company or its subsidiaries with the same party i.e., Perrigo Company.When the two continuing connected transactions between the Company and Perrigo Company and between XPIE and Perrigo Company in 2007 are aggregated, the applicable percentage ratios (as defined in the Listing Rules) exceed 2.5% on an annual basis and the total consideration exceeds HK$10,000,000. In accordance with rule 14A.35(4) of the Listing Rules, the Company has to comply with the independent shareholders approval requirements described in rule 14A.48 of the Listing Rules, in addition to the reporting and announcement requirements in rules 14A.45 to 14A.47 of the Listing Rules.From 1 January 2008 to 30 June 2008 there were continuing connected transactions between the Company and Perrigo Company but there were no transactions between XPIE and Perrigo Company. The applicable percentage ratios (as defined in the Listing Rules) are below 2.5% on an annual basis but the total consideration exceeds HK$10,000,000. In accordance with rule 14A.35(4) of the Listing Rules, the Company has to comply with the independent shareholders approval requirements described in rule 14A.48, in addition to the reporting and announcement requirements in rules 14A.45 to 14A.47 of the Listing Rules.In relation to the continuing connected transactions between the Company and Perrigo Company and the continuing connected transactions between XPIE and Perrigo Company, the Company failed to comply with the announcement requirement under rule 14A.47 of the Listing Rules and the independent shareholders approval requirement under rule 14A.48 of the Listing Rules due to oversight. Therefore, it is in breach of rules 14A.35(4) and 14A.47 of the Listing Rules. Nonetheless, the Company has complied with the reporting requirement set out in rules 14A.45 and 14A.46 of the Listing Rules. The Company has disclosed the three continuing connected transactions in its 2007 annual report and it hereby publishes this announcement of the three continuing connected transactions.2. Continuing connected transactions between the Company and EastwestThe total consideration for the continuing connected transactions between the Company and Eastwest in 2007 was 5,276,000. The total consideration for the continuing connected transactions between the Company and Eastwest from 1 January to 30 June 2008 was RMB2,160,000. As each of the applicable percentage ratios (as defined in the Listing Rules) on an annual basis is less than 2.5%, the continuing connected transactions between the Company and Eastwest in 2007 and first half of 2008 are only subject to the reporting and announcement requirements set out in rules 14A.45 to 14A.47 and are exempt from the independent shareholders approval requirements of Chapter 14A of the Listing Rules.The Company has failed to publish an announcement in relation to the continuing connected transactions conducted in 2007 and first half of 2008 due to the oversight. Therefore, it is in breach of rule 14A.47. However, it has complied with the reporting requirement under 14A.45 of the Listing Rules and it hereby makes the announcement of the above continuing connected transactions.3. Continuing connected transactions between Dadi Xinhua and Dadi Stalinisation and between Weifang Wanyuan and Dadi Stalinisation (Purchase)Pursuant to rules 14A.25 and 14A.26, the continuing connected transactions between Dadi Xinhua and Dadi Stalinisation and the continuing connected transactions between Weifang Wanyuan and Dadi Stalinisation (purchase) could be aggregated as they are the transactions in relation to the purchase of chemical raw materials from the same party, i.e., Dadi Stalinisation, by the Companys subsidiaries, i.e, Dadi Xinhua and Weifang Wanyuan.When the two continuing connected transactions are aggregated, the consideration for 2007 in aggregate is RMB2,937,000. Each of the applicable percentage ratios (as defined in the Listing Rules) is less than 2.5% on an annual basis. These two continuing connected transactions are only subject to the reporting and announcement requirements set out in rules 14A.45 to 14A.47 and are exempt from the independent shareholders approval requirements of Chapter 14A of the Listing Rules.When the two continuing connected transactions are aggregated, the total consideration from 1 January 2008 to 30 June 2008 was RMB16,621,000. Each of the applicable percentage ratios (as defined in the Listing Rules) is less than 2.5%. These two continuing connected transactions are only subject to the reporting and announcement requirements set out in rules 14A.45 to 14A.47 and are exempt from the independent shareholders approval requirements of Chapter 14A of the Listing Rules. The Company has failed to publish announcements in relation to these continuing connected transactions in 2007 and 2008 due to the oversight. Therefore, it is in breach of rule 14A.47. However, it has complied with the reporting requirement under 14A.45 of the Listing Rules and it hereby makes the announcement of the above continuing connected transactions.4. Continuing connected transactions between Weifang Wanyuan and Dadi Stalinisation (Sales)The total consideration for the continuing connected transactions between Weifang Wanyuan and Dadi Stalinisation in relation to the sales of chemical products in 2007 was RMB3,440,000. As each of the applicable percentage ratios (as defined in the Listing Rules) on an annual basis is less than 2.5%, the continuing connected transactions are only subject to the reporting and announcement requirements set out in rules 14A.45 to 14A.47 and are exempt from the independent shareholders approval requirements of Chapter 14A of the Listing Rules.The total consideration for the continuing connected transactions between Weifang Wanyuan and Dadi Stalinisation in relation to the sales of chemical products from 1 January 2008 to 30 June 2008 was 20,749,000. As each of the applicable percentage ratios (as defined in the Listing Rules) on an annual basis is less than 2.5%, the continuing connected transactions are only subject to the reporting and announcement requirements set out in rules 14A.45 to 14A.47 and are exempt from the independent shareholders approval requirements of Chapter 14A of the Listing Rules.The Company has failed to publish an announcement in relation to these continuing connected transactions in 2007 and 2008 due to the oversight. Therefore, it is in breach of rule 14A.47. However, it has complied with the reporting requirement under 14A.45 of the Listing Rules and it hereby makes the announcement of the above continuing connected transactions.5. Written agreements and annual capsThere are written agreements for all the above continuing connected transactions except the transactions between the Company and Perrigo Company and the transactions between XPIE and Perrigo Company. For all the above continuing connected transactions, the Company did not set a cap. Therefore, the Company has not fully complied with R14A.35(1) and 14A.35(2) of the Listing Rules. The Company and XPIE are negotiating with the connected persons, namely, Perrigo Company and Eastwest, with a view to entering into new written agreements with them. Once the terms of those agreements have been agreed, the Company and XPIE will propose caps for the continuing connected transactions and will seek independent shareholder approval, if applicable, for entering into the agreements and adopting the caps. Xinhua Perrigo will also propose caps for the existing written agreement.D. ACQUISITION OF EQUITY INTEREST IN DADI XINHUAAs disclosed in the announcement dated 14 May 2008, the Company acquired an equity interest of 41.4375% in Dadi Xinhua from Dadi Stalinisation on 30 June 2008. After the acquisition, Dadi Xinhua became a wholly owned subsidiary of the Company and Dadi Stalinisation is no longer a connected person of the Company or Dadi Xinhua. Accordingly, the transactions between Dadi Xinhua and Dadi Stalinisation or the transactions between Weifang Wanyuan and Dadi Stalinisation are no longer connected transactions. E. DEFINITIONSIn this announcement, the following expressions have the meanings set out below unless the context requires otherwise:Boardthe board of DirectorsContract Yearmeans a period of 12 consecutive months commencing on 1 July of each year and ending on 30 June of the next year.Companyq\qge兡N gPlQS (Shandong Xinhua Pharmaceutical Company Limited), a joint stock company incorporated in the PRC with limited liability Dadi Stalinisation q\qg'Y0W}SƖW gPlQS (Shandong Dadi Stalinisation Group Limited), a PRC limited company  Dadi Xinhua q\qg'Y0WeSx[ gPlQS (Shandong Dadi Xinhua Chemical & Industrial Company Limited), a PRC limited company  Directors the directors of the Company Eastwest Eastwest United Group, Inc, a limited company established in the United States of America Hong Kongmeans Hong Kong Special Administrative Region of the PRC;HK$means Hong Kong dollars, the lawful currency of Hong Kong;Listing Rulesthe Rules Governing the Listing of Securities on the Stock ExchangePerrigo China Business Trusta trust created and organised under the laws of the PRC;Perrigo Companya limited company established in the United States of AmericaPerrigo InternationalPerrigo International, Inc., a limited company established in the United States of AmericaPRC the People s Republic of China RMB Renminbi, the lawful currency of the PRC Shareholders the shareholders of the Company Stock Exchange The Stock Exchange of Hong Kong Limited Weifang Wanyuan oJWNnS] gPlQS(Weifang Wanyuan Chemical Co2FGHIJKL  v x B n òÝÃjP9ЃЃPв-hhB*CJKHOJQJ^JaJphOI^3hh5B*CJKHOJQJ\^JaJphOI^0hhB*CJKHOJQJ^JaJphOI^y(3hh6B*CJKHOJQJ]^JaJphOI^)jhhCJKHOJQJU^J hhCJKHOJQJ^JhhCJKHaJ-hhB*CJKHOJQJ^JaJphOI^/hh5B*CJKHOJQJ\^JphOI^3FGHIK~;~Bkdl$$IfT6#2634aytT$$1$Ifa$gdKkd$IfK$L$0+6#634a$d,$1$4$Ifa$gdK$$d,$1$4$Ifa$gdK$,KL x D j n ( r$dd$1$@&If[$\$a$gd$$1$Ifa$gd$d,$1$4$Ifa$gd$d,$1$4$Ifa$gdDkdq$$IfT,6#2634aytT ( L"M"O"b"-&]&`&&&&'''))*+-7-|001]2`2n233::M:;;<e=??AA.CxC{CCzD|D}D~DDDDDηη΄΄0hh<B*CJKHOJQJ^JaJphOI^3hh5B*CJKHOJQJ\^JaJphOI^-hhB*CJKHOJQJ^JaJphOI^hhCJKHaJ hhCJKHOJQJ^J&hh5CJKHOJQJ\^J4( +-^`!!J"L"$$1$Ifa$gdK$$dd$1$@&If[$\$a$gd$$1$Ifa$gdL"M"O"c"e"%!%+&-&^&`&&&&&''$d,$1$4$Ifa$gdbkd$IfK$L$!!0634ab'''(())))**++--8-:-$d,$1$4$Ifa$gd$d,dd$1$4$If[$\$a$gd8kdg$IfK$L$6#634a$$1$Ifa$gdK$:-z0|000@1B111^2`2o2q233335555)9+98:::N:P::$d,$1$4$Ifa$gd::/;1;;;;;<<f=h=????AAAAcBeB,C.CyC{CCC$d,$1$4$Ifa$gdCxDzD|D}D~DDDDDn8kd$IfK$L$6#634a8kd$IfK$L$6#634a$$1$Ifa$gdK$$d,$1$4$Ifa$gd DDDDEE F FFF8G:GKIMIiIkIKKK$d,$1$4$Ifa$gd$d,dd$1$4$If[$\$a$gd8kdi$IfK$L$6#634aDDEFF7GMIhIKK6LLLLlMnMoMLO_O-PPRRuUUU#V&VHVYY{Z}ZZZZZZ[)]E]a4b cncqccddd`ebeceܱܘܘܘܱܱ0hhB*CJH*KHOJQJ^JaJphOI^ hhCJKHOJQJ^J3hh5B*CJKHOJQJ\^JaJphOI^-hhB*CJKHOJQJ^JaJphOI^hhCJKHaJ4KK4L6LLLLLjMlMnMoM.N0NJOLO`O$d,dd$1$4$If[$\$a$gd8kd$IfK$L$6#634a$$1$Ifa$gdK$$d,$1$4$Ifa$gd`ObO+P-PPPRRRRTTsUuUUUUU$V&VIVKV3W5WWWYY$d,$1$4$Ifa$gdYYYYYZZ[['])]F]H]X_Z_aa5b7bbb c cocqcccd$d,$1$4$Ifa$gddddd`ebecedefeU8kdk$IfK$L$6#634a$d,dd$1$4$If[$\$a$gd8kd$IfK$L$6#634a$$1$Ifa$gdK$$d,$1$4$Ifa$gdcedefegeiejeffgg j'jk ltllllmmmoopAqast\vpΌ˒ -. ޛĜƜ?ɲɲ3hh5B*CJKHOJQJ\^JaJphOI^0hhB*CJKHOJQJ^JaJphOI^y(-hhB*CJKHOJQJ^JaJphOI^hhCJKHaJ hhCJKHOJQJ^J0hh<B*CJKHOJQJ^JaJphOI^2fegeiekeffff~gggg j j(j*jkkl$d,$1$4$Ifa$gd$d,dd$1$4$If[$\$a$gd8kd$IfK$L$6#634allrltlllllmmmmnnooo$d,dd$1$4$If[$\$a$gd8kd$IfK$L$6#634a$$1$Ifa$gdK$$d,$1$4$Ifa$gdooppBqDq5s7s_sastt#w%wxxzzN}P}Z\`b$d,$1$4$Ifa$gdbwy.0npόь35̒ΒOQ?A{$d,$1$4$Ifa$gd{}{} +-.>Kkdm$IfK$L$0$ $ 634a$$1$Ifa$gd$$1$Ifa$gdK$$d,$1$4$Ifa$gd 8ڛޛLKkd9$IfK$L$0$ $ 634a$$1$Ifa$gd$$1$Ifa$gdK$Kkd$IfK$L$0$ $ 634aޛĜƜޜLKkd$IfK$L$0$ $ 634a$$1$Ifa$gd$$1$Ifa$gdK$Kkd$IfK$L$0$ $ 634a4=?LKkd$IfK$L$0$ $ 634a$$1$Ifa$gd$$1$Ifa$gdK$Kkdk$IfK$L$0$ $ 634a?@F؞ڞLKkd$IfK$L$0$ $ 634a$$1$Ifa$gd$$1$Ifa$gdK$Kkd7$IfK$L$0$ $ 634a?@ڞ۞56LNPR24$& efi'(*+,ɯɯɕh3hh6B*CJKHOJQJ]^JaJphOI^3hh5B*CJKHOJQJ\^JaJphOI^-hhB*CJKHOJQJ^JaJphOI^U hhCJKHOJQJ^JhhCJKHaJ7ڞ۞56HLKkdi $IfK$L$0$ $ 634a$$1$Ifa$gdK$$$1$Ifa$gdKkd $IfK$L$0$ $ 634a HLLKkd5 $IfK$L$0$ $ 634a$$1$Ifa$gd$$1$Ifa$gdK$Kkd $IfK$L$0$ $ 634aLN\Ҡ֠LKkd $IfK$L$0$ $ 634a$$1$Ifa$gd$$1$Ifa$gdK$Kkd $IfK$L$0$ $ 634a:LPLKkd $IfK$L$0$ $ 634a$$1$Ifa$gd$$1$Ifa$gdK$Kkdg $IfK$L$0$ $ 634ampany Limited), a PRC limited company Xinhua Eastwest mZSe-N gPNlQS (Zibo Xinhua-Eastwest Pharmaceutical Company Limited), a PRC limited company Xinhua Perrigo mZSe-~v)Rؚ gPNlQS(SINO-USA Zibo Xinhua-Perrigo Pharmaceutical Company Limited), a PRC limited company XPIE q\qge2QS gPNlQS(Shandong Xinhua Pharmaceutical Import & Export Co, mpany Limited), a PRC limited company Zibo Zibo City, situated in Shandong Province of the PRC By Order of the Board Shandong Xinhua Pharmaceutical Company Limited Guo Qin Chairman5 September 2008, Zibo, PRCAs at the date of this announcement, the Board comprises:DirectorsIndependent non-executive DirectorsMs. Guo Qin (Chairman)Mr. Dai QingjunMr. Liu ZhenwenMr. Xu GuojunMr. Ren FulongMr. Sun MinggaoPRv.24V $LKkd $IfK$L$0$ $ 634a$$1$Ifa$gd$$1$Ifa$gdK$Kkd3 $IfK$L$0$ $ 634a$&4 LKkde$IfK$L$0$ $ 634a$$1$Ifa$gd$$1$Ifa$gdK$Kkd $IfK$L$0$ $ 634af +-gis$$1$Ifa$gdK$$d,$1$4$Ifa$gdKkd$IfK$L$0$ $ 634aZKkd$IfK$L$0ZZ634a$$1$Ifa$gdK$Kkd1$IfK$L$0ZZ634aZKkdc$IfK$L$0ZZ634a$$1$Ifa$gdK$Kkd$IfK$L$0ZZ634aMr. Zhao SongguoMr. Li Tianzhong%'(*ZH$d,$1$4$Ifa$gdKkd/$IfK$L$0ZZ634a$$1$Ifa$gdK$Kkd$IfK$L$0ZZ634a*+,Bkd$$IfT6#2634aytT0182P. 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