Announcement on Related Party Transaction of Shanghai Worldbest Co., Ltd.
The Company and all of the members of Board of Directors guarantee the authenticity, accuracy and integrity of the announcement and bear the joint liability for false record, misleading statement or important omission of the announcement.
Important Notice
Content of transaction:The Company’s subsidiary Anhui Worldbest Biopharmaceutical Co., Ltd. invested 32 million to purchase the shares of Shanghai Worldbest Changfu Pharmaceutical (Group) Co., Ltd. and transferred the assets and liabilities of pharmaceutical infusion business to the aforesaid company by RMB 33.2486 million.
Target of transaction: 6.99% of the equity of Shanghai Worldbest Changfu Pharmaceutical (Group) Co., Ltd.; The assets and liabilities related to the pharmaceutical infusion business of Anhui Worldbest Biopharmaceutical Co., Ltd.
Amount of transaction: Investment to purchase the shares of about RMB 32 million, transfer of assets of about RMB 33.2486 million.
Withdraw of related directors: Related-party directors Ji Qunli, Yu Chaoyang, Wang Caifu, Fu Weimin whose interests are closely related with this transaction abstained from voting in the spirit of being responsible for all shareholders.
Influence of transaction upon the Company’s sustainable operating ability, gain and loss, and status of assets: Amount of this transaction accounts for 2.2% of the Company’s net assets and has no important influence upon the current and future financial situation.
Other issues to be noticed by investors: After the transaction, the Company’s subsidiary Anhui Worldbest Biopharmaceutical Co., Ltd. will hold 6.99% of the equity of Shanghai Worldbest Changfu Pharmaceutical (Group) Co., Ltd., and will not directly manage the production and operation of the pharmaceutical infusion business There is no additional condition attached to the above transaction.
This related party transaction shall be approved by the Shareholders’ Meeting of the Company before implementation, the Company will disclose the information according to the the progress of the establishment of of Shanghai Worldbest Changfu Pharmaceutical (Group) Co.,Ltd promptly.
1. Brief account of the transaction
The Company’s subsidiary Anhui Worldbest Biopharmaceutical Co., Ltd. (hereinafter briefed as “Anhui Pharmaceutical”) signed Agreement on Increasing Capital and Expanding Shares of Shanghai Worldbest Changfu Pharmaceutical (Group) Co., Ltd. on April 18, 2003 with China Worldbest Group Co. Ltd. (hereinafter briefed as “Worldbest Group”), Shanghai Pharmaceutical Co., Ltd.(hereinafter briefed as “Shanghai Pharmaceutical”) , Shanghai Worldbest Pharmaceutical Co., Ltd. (hereinafter briefed as “Worldbest Pharmaceutical”), Wuxi Life Science and Technology Development Co., Ltd.(hereinafter briefed as “Wuxi Life”) and Shandong JieJing Group Co., Ltd.(hereinafter briefed as “Shandong Jiejing”)(The six Parties briefed as “The Parties to the Agreement”). “The Parties to the Agreement” planned to increase the capital and expand the shares of Shanghai Changzheng Fumin Pharmaceutical Co., Ltd. (hereinafter briefed as “Changzhen Fumin”) and based on that to co-establish Shanghai Worldbest Changfu Pharmaceutical (Group) Co, Ltd. (hereinafter briefed as “Worldbest Changfu”). In accordance with the Agreement, “ Worldbest Group” is to increase the capital by cash RMB 150 million, Shanghai Worldbest Pharmaceutical Co., Ltd. is to increase the capital by cash RMB 35 million, “Anhui Pharmaceutical” is to increase the capital by cash RMB 32million, Shandong Jie Jing Co., Ltd. is to increase the capital by cash RMB 12 million, Wuxi Life Science and Technology Development Co., Ltd. is to increase capital by land use right RMB 12.1million. The above newly increased capital will be converted to the registered capital by the proportion of 1.1121:1. After the capital increase, the registered capital of “Worldbest Changfu” will be RMB 410 million, “Anhui Pharmaceutical” will hold 6.99%of the equity of “Worldbest Changfu”. Meanwhile, in accordance with the Agreement, “Anhui Pharmaceutical” planned to transfer the assets and liabilities related to pharmaceutical infusion business to “Worldbest Changfu”. The amount of the transaction is about RMB 33.2486 million.
After the capital increase, the equity structure of “Worldbest Changfu” is as follows:
No. Shareholder Way of investment Amount of investment
(RMB 0’000) Converted into registered capital Percentage of equity (%)
1 Worldbest Group Assets and Cash 25450 22946 55.97
2 Shangahi Pharmaceutical Assets 10876 9892 24.13
3 Anhui Pharmaceutical Cash 3200 2867 6.99
4 Shandong Jiejing Cash 1200 1075 2.62
5 Worldbest Pharmaceutical Cash 3500 3136 7.65
6 Wuxin Life Cash 1210 1084 2. 64
Worldbest Group is the biggest shareholder of the Company, and in accordance with the related regulations, this transaction belongs to relate party transaction.
The 2nd Session of the 3rd Board of Directors of the Company was held on April 18, 2003, at which, this related party transaction was carefully reviewed. All of the related-party directors abstained from voting. The non-related-party directors unanimously approved this proposal.
3. Introduction of related party
1. China Worldbest Group Co., Ltd.
1) Name of company: China Worldbest Group Co., Ltd.
2) Address: No. 660 Shang Cheng Road, Pudong New Area, Shanghai
3) Legal representative: Zhou Yucheng
4) Type of company: Company of limited liabilities (domestic joint company)
5) Registered capital: RMB 479.73 million
6) Business scope: Domestic trade (except those specially stipulated), development and management of real estate, warehousing, crude oil, foreign economic cooperation, self-operation and agency business of exports and trade of other products and technology except those monopolized by the State or those operated by companies ratified by the State, counter trade and entrepot trade.
7) Main financial situation: Total profit of 2001 of Worldbest Group was RMB 550 million, and net assets by December 31 of 2001 were RMB 5280 million.
8) Relationship: Worldbest Group holds 154.932 million legal person shares of the Company, accounting for 31.51% of the total equity of the Company , and it is the biggest shareholder of the Company.
2.Shanghai Pharmaceutical Co, Ltd.
1) Name of company: Shanghai Pharmaceutical Co, Ltd.
2) Address: No. 1399 Jin Qiao Road, Pudong New Area, Shanghai
3) Legal representative: Qian Jin
4) Type of company: Corporation of limited liabilities (Listed)
5) Registered capital: RMB 316.207158 million
6) Business scope: Chemical raw material, chemical preparations, antibiotics, biochemical preparations, biomedicine,modern Chinese medicine (including ginsengs, antler, white fungus, and etc.),medical instruments,pharmaceuticals production equipment, dangerous chemicals, foods,general merchandise, consulting service of aforesaid business . Imports and exports of the products which are in the range of products of self-supporting and agent, as well as related techniques (except for those are limited or forbidden by the country). “Three processing industries” and compensation trade, processing with imported materials, counter trade and entrepot trade.
7) Main financial situation: The net profit of 2001 was RMB 145 million, by December 31 of 2001, the total assets were RMB 4290 million, and the net assets were RMB 1510million.
8) Relatioship: “Worldbest Group” is the biggest shareholder of the Company and Shanghai Pharmaceutical (Group) Co.,Ltd , the mother company of “Shanghai Pharmaceutical”
3.Shanghai Worldbest Pharmaceutical Co.,Ltd
1) Name of the company: Shanghai Worldbest Pharmaceutical Co.,Ltd
2) Address: No. 351, GuoShoujing Road, Pudong New Area, Shanghai
3) Legal Representative: Ding Gongcai
4) Type of company: Corporation of limited liabilities(listed)
5) Registered capital: RMB 93.218 million
6) Business Scope: Manufacture and sale the cosmetics, detergent for civil and industrial use, glycerin, saponification, perfume, essence, paper products, plastic packing container, surface active preparation, chemical industry raw material (except the dangerous), export the products made by the company, import the technology, equipment, auxiliaries and raw materials necessary for the production of company.
7) Main financial situation: By December 31 of 2002, the total asset of the company is RMB 1375 million, the net asset is RMB 167 million, and net profit is RMB 20.262 million.
8) Relationship: “Worldbest Group” is the biggest shareholder of “Worldbest Pharmaceutical” and the Company.
4. Wuxi Life Science and Technology Development Co.,Ltd
1) Name of the company: Wuxi Life Science and Technology Development Co.,Ltd
2) Address: No.28, Xi ChengRoad(S), Huishan Area, Wuxi
3) Legal Representative: Zhang Yonghe
4) Type of the company: Corporation of limited liabilities(unlisted)
5) Registered capital: RMB 400 million
6) Business scope: The development of new and high technology products (except those prohibited to foreign investors), land development , service of conference and exhibitions, domestic trade (for those specially stipulated operate after approval).
7) Main financial situation: By Oct.31 of 2002, the total asset was RMB 920 million, the net asset was RMB 400 million.
8) Relationship: “Worldbest Group” is the biggest shareholder of “Wuxi Life” and the Company.
3. Introduction of target of related party transaction
1.Shanghai Changzheng Fumin Pharmaceutical Company, Ltd.
1) Name of the company: Shanghai Changzheng Fumin Pharmaceutical Company Ltd.
2) Address: You Chewan, Bao Town, Chongmin County, Shanghai
3) Legal Representative: Wang Xiangfa
4) Type of company: Company of limited liabilities
5) Registered capital: RMB 177.90 million
6) Business scope: Production of pharmaceutical infusion ( with operation license as required)
7) Main financial situation: In accordance with the audit report prepared by Shu Lun Pan Certified Public Accountants Co., Ltd., an accounting firm qualified for securities business, by December 31 0f 2002, the total assets of “Changzheng Fumin” were RMB 313.0948 million, total liabilities were RMB 90.6109 million, the net assets were RMB 222.4838 million, including the undistributed profits RMB 9.2105 million. Deducted the undistributed profits, the net assets were RMB 213.2734 million.
“Changzheng Fumin “ now has two shareholders, of which Shanghai Pharmaceutical Co., Ltd. holds 51% of the total equity , Shanghai Yunfeng (Group) Co., Ltd. holds 49% of the total equity , Shanghai Yunfeng (Group) Co., Ltd. plans to transfer its 49% of the total equity to “Worldbest Group”, and the relevant procedure is being taken. “The Parties to the Agreement ”plan to increase the capital and expand the shares of “Changzheng Fumin” and rename “Changzheng Fumin” to Shanghai Worldbest Changfu Pharmaceutical (Group) Co., Ltd.
In accordance with the evaluation report prepared by Shanghai Orient Certified Appraisal Co., Ltd., an evaluation organization qualified for securities business, by December 31 of 2002, the value of the evaluated total assets of “Changzheng Fumin” were RMB 316.2538 million, total liabilities were RMB90.611 million, net assets were RMB225.643 million.
2. Shanghai Worldbest Changfu Pharmaceutical (Group) Co., Ltd.
1) Name of company: Shanghai Worldbest Changfu Pharmaceutical (Group) Co.,Ltd
2) Address: No.529, DaTong Road, Bao Town Industrial Zone, Chongmin County, Shanghai
3) Legal representative: Lu Yunliang
4) Type of company: Company of limited liabilities (domestic joint company)
5) Registered capital: RMB 410 million
6) Business scope: Enterprise investment, domestic trade (except those especially stipulate), asset management, production and sale of pharmaceuticals. (In accordance with the pharmaceutical production license and pharmaceutical business license.)
“Worldbest Changfu “ has 6 shareholders, of which, “Worldbest Group” holds 55.97% of the total share capital, Shanghai Pharmaceutical Co., Ltd. holds 24.13% of the total share capital, Shanghai Worldbest Pharmaceutical Co., Ltd. holds 7.65% of the total share capital, Wuxi Life Science and Technology development Co., Ltd. holds 2.62% of the total share capital, Shandong Jie Jing Group Co., Ltd. holds 2.62% of the total share capital and Anhui pharmaceutical holds 6.99% of the total share capital.
3. The assets and liabilities of the pharmaceutical infusion business of “Anhui Pharmaceutical ”.
By December 31 of 2002, the book value of the assets of the pharmaceutical infusion business of “Anhui Pharmaceutical ” were RMB 73.4317 million, book value of the liabilities were RMB 37.235 million, book value of net assets were RMB36.1967 million. In accordance with the evaluation report prepared by Shanghai Orient Certified Appraisal Co., Ltd., an evaluation organization qualified for securities business, the value of the evaluated assets of the pharmaceutical infusion business of “Anhui Pharmaceutical ” were RMB 70.6664 million, the value of the evaluated liabilities were RMB 37.4178 million, the value of the evaluated net assets were RMB 33.2486 million.
4.Main contents of this transaction and pricing policy
1) Parties to the Agreement: “Anhui Pharmaceutical”, “Worldbest Group” ,Shanghai Pharmaceutical Co.,Ltd, Shanghai Worldbest Pharmaceutical Co.,Ltd, Wuxi Life Science and Technology Development Co.,Ltd and Shandong Jie Jing Group Co.,Ltd
2) Signature Date of the Agreement: April 18, 2003
3) Target of transaction: “Anhui Pharmaceutical” invested RMB 32 million to purchase the shares of “Worldbest Changfu” and transferred the assets and liabilities related to pharmaceutical infusion business to “Worldbest Changfu”.
4) Pricing policy: “Anhui Pharmaceutical” ’s newly increased capital to “Worldbest Changfu” is converted to the registered capital by the proportion of 1.1121:1. Fix December 31 of 2002 as the reference date for asset evaluation, the Company fixed the transaction price according to the value of the evaluated net assets of the pharmaceutical infusion business of “Anhui Pharmaceutical ”. In accordance with the evaluation report prepared by Shanghai Orient Certified Appraisal Co., Ltd., an evaluation organization qualified for securities business, the value of the evaluated net assets of pharmaceutical infusion business of “Anhui Pharmaceutical ” was about RMB 33.2486 million, “Worldbest Changfu” should pay “Anhui Pharmaceutical” RMB 33.2486 million for the equity assignment.
5) Form of settlement: Within 20 days after the Agreement becomes effective, Anhui Pharmaceutical will pay in one time the investment to Worldbest Changfu; Within 90 days after the registration and establishment of “ Worldbest Changfu” , it shall pay in one time all the equity assignment fee to “ Anhui Pharmaceutical” .
6) Entry-into-force condition: The Agreement will become effective after it is signed and sealed by legal representatives or authorized representatives of the two Parties to the Agreement and reviewed and approved by the two Parties’ Board of Directors Meeting, Shareholders’ Meeting or authorities. This Agreement needs to be approved by the Company’s Shareholders’ Meeting before it become effective.
5.Opinion of Board of Directors to this related party transaction
1) Objective of this related party transaction: to adjust the industry structure and to avoid the competition with the major shareholder.
2) Influence of this transaction upon the Company: After the transaction, the equity of Worldbest Changfu held by Anhui Pharmaceutical will be 6.99% and through equity assignment Anhui Pharmaceutical will not directly manage the production and operation of the pharmaceutical business. This will be beneficial for the Company to avoid the competition with the major shareholders and to concentrate on developing the citric acid business.
6.Opinion of independent directors
Independent directors of the Company, Xu Duanfu, Wang Fanghua, Zhang Wenxian, and Chen Yanmo believe that vote of this related party transaction conforms to the relative regulations ,and the price is fair, the transaction is equitable and reasonable and does not jeopardize the rights of non-related shareholders, and the transaction is beneficial to the long-term development of the Company .
7.List of documents for reference
1) Resolution of 2nd Session of the 3rd Board of Directors of the Company
2) Opinion of independent directors
3) Agreement on Increasing Capital and Expanding Shares of Shanghai Worldbest Changfu Pharmaceutical (Group) Co.,Ltd
4) Asset evaluation report prepared by Shanghai Orient Certified Appraisal Co., Ltd.
5) The audit report prepared by Shu Lun Pan Certified Public Accountants Co., Ltd.,
Hereby announced .
Shanghai Worldbest Co., Ltd.
2003/4/18
14/05/2003
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