ࡱ> kmj'` R)SbjbjLULU2\.?.?%PPPPPPPd..../d:A//////.// q@s@s@s@s@s@s@$,BhD:@]P6//66@PP//@6666P/P/q@66q@66PP6// Y,@v.66->D A0:A6D6D66ZDP>/06X1|19///@@6 ///:A6666dddDDddddddPPPPPP 13/05/2008/CONNECTED TRANSACTION2008-5-13 17:03:37The 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)CONNECTED TRANSACTIONThe Board announces that on 13 May 2008, the Company and Dadi Stalinisation entered into the Share Transfer Agreement in relation to the acquisition of Dadi Stalinisations Shares in Dadi Xinhua, a subsidiary of the Company, in consideration of RMB13,972,368.As at the date of this announcement, Dadi Stalinisation holds an equity interest of 41.4375% in Dadi Xinhua and therefore it is a substantial shareholder of Dadi Xinhua. As the Company holds an equity interest of 58.5625% in Dadi Xinhua, Dadi Xinhua is a subsidiary of the Company. It follows that Dadi Stalinisation is a connected person of the Company and the Transaction between Dadi Stalinisation and the Company constitutes a connected transaction under Chapter 14A of the Listing Rules. The relevant percentage ratios of the Transaction, as defined in Rule 14A.10 of the Listing Rules, are less than 2.5%. According to Rule 14A.32 of the Listing Rules, the Transaction is only subject to the reporting and announcement requirements set out in Rules 14A.45 to 14A.47 of the Listing Rules and is exempt from the independent shareholders approval requirements under Chapter 14A of the Listing Rules. Details of the Transaction will be included in the Companys next published annual report and accounts.1. BACKGROUNDDadi Xinhua was established on 12 September 2006. At that time, the Company held 49% equity interest in Dadi Xinhua and Dadi Stalinisation held 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 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 58.5625% equity interest in Dadi Xinhua and the relevant accounts were and are consolidated into the Companys accounts.2. SHARE TRANSFER AGREEMENTDate of agreement 13 May 2008Parties to agreementVendor : Dadi StalinisationPurchaser : CompanyProposed Share TransferR14A.56(1) and R14A.56(5)The Board announces that on 13 May 2008, the Company entered into the Share Transfer Agreement with its connected person, Dadi Stalinisation, to acquire of equity interest of 41.4375% in Dadi Xinhua, a subsidiary of the Company. After the completion of the Share Transfer Agreement, the Company will own 100% equity interest in Dadi Xinhua. Therefore, Dadi Xinhua will become a wholly owned subsidiary of the Company. ConsiderationPursuant to the Share Transfer Agreement, the Company agreed to acquire 41.4375% equity interest in its Dadi Xinhua from Dadi Stalinisation with cash consideration of RMB13,972,368. The consideration was arrived after arms length negotiations between the parties thereto on normal commercial terms. The consideration was agreed with reference to the net asset value of Dadi Xinhua of RMB33,396,800 referred to in the valuation report dated 9 April 2008 prepared by an independent valuer, Shandong Bo Hua Accounting Firm, based on the cost method and the unaudited financial statements of Dadi Xinhua prepared under PRC Generally Accepted Accounting Principles as at 31 December 2007. The valuation has been set out in the valuation report issued by Shandong Bo Hua Accounting Firm on 9 April 2008. According to the unaudited consolidated financial statements, the total assets and the total liabilities of Dadi Xinhua as at 31 December 2007 were RMB69,300,000 and RMB27,725,000 respectively. The net asset value of Dadi Xinhua as at 31 December 2007 was RMB41,575,000 as stated in the unaudited consolidated financial statements whilst the net asset value of Dadi Xinhua valuated by the independent valuer as referred to in the valuation report was RMB33,396,800. The original investment cost of Dadi Stalinisation was RMB13,260,000 as at 31 December 2007. According to the unaudited financial statement of Dadi Xinhua prepared under PRC Generally Accepted Accounting Principles, the net profit before and after tax and extraordinary items were RMB1,678,514 and RMB703,739 as at 31 December 2007. As Dadi Xinhua was incorporated on 12 September 2006 and had not commenced business in 2006, it had no profit in 2006.Payment termsThe consideration of RMB13,972,368 will be by paid from the Companys internal resources in cash to Dadi Stalinisation within 10 days from the date of the Share Transfer Agreement.3. COMPLETIONCompletion of the Transaction is expected to take place within 10 days after the payment of the total consideration in the sum of RMB13,972,368.4. REASONS FOR AND BENEFITS OF THE TRANSACTIONBy acquiring the equity interest in Dadi Xinhua, the Company will be able to expand its business in the pharmaceutical industry in the PRC. The Directors (including the independent non-executive directors) consider that the Transaction is on normal commercial terms, and that the terms of the Transaction are fair and reasonable and are in the interests of the Shareholders as a whole.5. RELATIONSHIP BETWEEN THE PARTIES IN THE TRANSACTIONAs at the date of this announcement, Dadi Stalinisation holds an equity interest of 41.4375% in Dadi Xinhua and therefore it was a substantial shareholder of Dadi Xinhua. As the Company holds an equity interest of 58.5625% in Dadi Xinhua, Dadi Xinhua is a subsidiary of the Company. It follows that Dadi Stalinisation is a connected person of the Company and the Transaction between Dadi Stalinisation and the Company constitutes a connected transaction under Chapter 14A of the Listing Rules.The relevant percentage ratios of the Transaction as defined in Rule 14A.10 of the Listing Rules are less than 2.5%. According to Rule 14A.32 of the Listing Rules, the Transaction is only subject to the reporting and announcement requirements set out in Rules 14A.45 to 14A.47 of the Listing Rules and is exempted from the independent shareholders approval requirement under Chapter 14A of the Listing Rules.When the Company entered into the 2007 Transaction, Dadi Stalinisation and Dadi Xinhua were not connected persons of the Company. Therefore, the 2007 Transaction was not a connected transaction.Since all the applicable ratios of the 2007 Transaction and the Transaction are below 5%, the 2007 Transaction and the Transaction, in aggregate, are not discloseable transactions under Chapter 14 of the Listing Rules. 6. INFORMATION ABOUT THE COMPANYThe Company is principally engaged in the development, manufacture and sales of bulk pharmaceuticals, preparations and chemical products.7. INFORMATION ABOUT DADI STALINISATIONDadi Stalinisation is principally engaged in the production and sale of crude salt. 8. INFORMATION ABOUT DADI XINHUADadi Xinhua is principally engaged in the production and sale of chemical products (excluding dangerous chemical products). 9. DEFINITIONSIn this announcement, the following expressions have the meanings set out below unless the context requires otherwise: Board the board of Directors Company q\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 Directorsthe directors of the CompanyListing Rulesthe Rules Governing the Listing of Securities on the Stock ExchangePRCthe Peoples Republic of ChinaRMB Renminbi, the lawful currency of the PRCShareholdersthe shareholders of the CompanyShare Transfer Agreementthe agreement dated 13 May 2008 entered into between the Company and Dadi Stalinisation in relation to the TransactionStock ExchangeThe Stock Exchange of Hong Kong Limited 56789:;  v x B j òÝÃjP9ЃЃ-hGhGB*CJKHOJQJ^JaJphOI^3hGhG5B*CJKHOJQJ\^JaJphOI^0hGhGB*CJKHOJQJ^JaJphOI^y(3hGhG6B*CJKHOJQJ]^JaJphOI^)jhGhGCJKHOJQJU^J hGhGCJKHOJQJ^JhGhGCJKHaJ-hGhGB*CJKHOJQJ^JaJphOI^/hGhG5B*CJKHOJQJ\^JphOI^!5678:~;~Bkdl$$IfT#634aytGT$$1$Ifa$gdGKkd$IfK$L$0#634a$d,$1$4$Ifa$gdGK$$d,$1$4$Ifa$gdGK$)S:; x D j {mmmm$$1$Ifa$gdG$d,dd$1$4$@&If[$\$a$gdG$d,$1$4$Ifa$gdG$d,$1$4$Ifa$gdGDkdq$$IfT,#634aytGT j EaduQ`' !&C&&&U'v''()J)L)l*n*>+@+,,>,?,,,˺||||||||||||||3hGhG5B*CJKHOJQJ\^JaJphOI^-hGhGB*CJKHOJQJ^JaJphOI^hGhGCJKHaJ hGhGCJKHOJQJ^J3hGhG5B*CJ$KHOJQJ\^JaJ$phOI^3hGhG5B*CJKHOJQJ\^JaJphOI^0CEbdvx{{{{{{{{{{{{$d,$1$4$Ifa$gdGbkd$IfK$L$"!0634ab$$1$Ifa$gdGK$$d,dd$1$4$If[$\$a$gdG8kdg$IfK$L$#634a$$1$Ifa$gdGK$$d,$1$4$Ifa$gdGOQac(* ""w$y$=%?%&&!&D&F&&&$d,$1$4$Ifa$gdG&&&S'U'w'y'''(()))F)J)$$1$Ifa$gdG$$1$Ifa$gdGK$$d,$1$4$Ifa$gdGJ)L)`)h*l*n**:+>+LKkd#$IfK$L$0$ $ 634a$$1$Ifa$gdG$$1$Ifa$gdGK$Kkd$IfK$L$0$ $ 634a>+@+\+,,,,!,>,LKkd$IfK$L$0$ $ 634a$$1$Ifa$gdG$$1$Ifa$gdGK$Kkd$IfK$L$0$ $ 634a>,?,O,,,,,,,LKkd$IfK$L$0$ $ 634a$$1$Ifa$gdG$$1$Ifa$gdGK$KkdU$IfK$L$0$ $ 634a,,,,,"-#-----PPPPP-QzQ{QQQQ RzRRRRRRRSS%S&S'S(S)SɯɯɕhG3hGhG6B*CJKHOJQJ]^JaJphOI^3hGhG5B*CJKHOJQJ\^JaJphOI^-hGhGB*CJKHOJQJ^JaJphOI^UhGhGCJKHaJ hGhGCJKHOJQJ^J$,,,,,,--"-LKkd$IfK$L$0$ $ 634a$$1$Ifa$gdG$$1$Ifa$gdGK$Kkd!$IfK$L$0$ $ 634a"-#->-------LKkdS$IfK$L$0$ $ 634a$$1$Ifa$gdG$$1$Ifa$gdGK$Kkd$IfK$L$0$ $ 634a--PPPPPPPLKkd$IfK$L$0$ $ 634a$$1$Ifa$gdGK$$$1$Ifa$gdGKkd$IfK$L$0$ $ 634aTransactionThe transaction contemplated under the Share Transfer Agreement in relation to the acquisition of 41.4375% equity interest in Dadi XinhuaZiboZibo City, situated in Shandong Province of the PRC By Order of the Board Shandong Xinhua Pharmaceutical Company Limited Guo Qin Chairman14 May 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 MinggaoMr. Zhao Songguo PPPPP-Q{QQ!R#R%RRxRzRRR$d,$1$4$Ifa$gdGKkd$IfK$L$0$ $ 634a$$1$Ifa$gdGK$RRRRRRRZKkdQ$IfK$L$0ZZ634a$$1$Ifa$gdGK$Kkd$IfK$L$0ZZ634aRRRSS#S%SZI$$1$Ifa$gdGK$Kkd $IfK$L$0ZZ634a$$1$Ifa$gdGK$Kkd$IfK$L$0ZZ634a%S&S'S(S)S_]Bkd $$IfT#634aytGT$d,$1$4$Ifa$gdGKkd $IfK$L$0ZZ634a0182P. 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