The Hong Kong Exchanges and Clearing Limited and the stock exchange of Hong Kong Limited shall not be responsible for the contents of this announcement, nor make any statement on its accuracy or completeness, and expressly state that they shall not be liable for any loss arising from or reliance on all or any part of the contents of this announcement.
continuing connected transactions
Entered into the 2022 hydropower framework agreement with Joincare Pharmaceutical Group Industry Co.Ltd(600380) and
2022 framework agreement on labor services
Entered into the 2022 hydropower framework agreement and the 2022 labor service framework agreement with Joincare Pharmaceutical Group Industry Co.Ltd(600380) . On December 30, 2021, the company convened the board of directors to review and approve the continuous connected transactions of (1) water, electricity, steam, natural gas and sewage treatment and (2) labor services accepted by the group from Joincare Pharmaceutical Group Industry Co.Ltd(600380) group from January 1, 2022 to December 31, 2022, The maximum amount is 37.35 million yuan and 16.33 million yuan respectively. On the same day, the company entered into the 2022 hydropower framework agreement and the 2022 labor service framework agreement with Joincare Pharmaceutical Group Industry Co.Ltd(600380) for the above continuous connected transactions. The meaning of the Hong Kong Listing Rules on the date of this announcement, Joincare Pharmaceutical Group Industry Co.Ltd(600380) directly and indirectly owns about 44.66% of the equity interest of the company, so it is the controlling shareholder of the company. Therefore, Joincare Pharmaceutical Group Industry Co.Ltd(600380) and its contacts are connected persons of the company. According to Chapter 14A of the Hong Kong listing rules, the transactions proposed under the 2022 hydropower framework agreement and the 2022 Labor Service Framework Agreement constitute the continuous connected transactions of the company respectively. As (I) Mr. Zhu Baoguo, a non-executive director and chairman of the company, is also the chairman of Joincare Pharmaceutical Group Industry Co.Ltd(600380) and indirectly holds 46.95% of the equity of Joincare Pharmaceutical Group Industry Co.Ltd(600380) on the date of this announcement; (II) Mr. Qiu Qingfeng, a non-executive director, is a director and vice president of Joincare Pharmaceutical Group Industry Co.Ltd(600380) ; And (III) Mr. Yu Xiong, a non-executive director, is the president of Joincare Pharmaceutical Group Industry Co.Ltd(600380) , so Mr. Zhu Baoguo, Mr. Qiu Qingfeng and Mr. Yu Xiong are deemed to have significant interests in the 2022 hydropower framework agreement and the 2022 labor service framework agreement and the transactions to be carried out under them, And has given up voting at the meeting of the board of directors approving the 2022 hydropower framework agreement and the 2022 labor service framework agreement and the transactions to be carried out under them. Except Mr. Zhu Baoguo, Mr. Qiu Qingfeng and Mr. Yu Xiong, no other director is required to abstain from voting at the board meeting approving the above matters. In view of the fact that the maximum applicable percentage rates of 2022 hydropower line and 2022 labor service line exceed 0.1% but less than 5% respectively, the transactions to be carried out under the 2022 hydropower framework agreement and the 2022 labor service framework agreement must comply with the reporting and announcement requirements, but are exempted from the independent shareholder approval requirements under Chapter 14A of the Hong Kong listing rules. 1、 2022 hydropower framework agreement
On December 30, 2021, the company entered into the 2022 hydropower framework agreement with Joincare Pharmaceutical Group Industry Co.Ltd(600380) , which relates to the continuous connected transactions of water, electricity, steam, natural gas and sewage treatment received by the group from Joincare Pharmaceutical Group Industry Co.Ltd(600380) group from January 1, 2022 to December 31, 2022, with a maximum amount of RMB 37.35 million. Date: December 30, 2021 contracting party buyer: the seller of the company: Joincare Pharmaceutical Group Industry Co.Ltd(600380) year period from January 1, 2022 to December 31, 2022 preconditions the 2022 hydropower framework agreement and the transactions to be carried out under it must be approved by the board of directors. Subject matter according to the 2022 hydropower framework agreement, the group will receive water, electricity, steam, natural gas and sewage treatment from Joincare Pharmaceutical Group Industry Co.Ltd(600380) group from January 1, 2022 to December 31, 2022. The group may enter into specific implementation contracts (including but not limited to payment terms and payment arrangements) with Joincare Pharmaceutical Group Industry Co.Ltd(600380) group for the acceptance of water, electricity, steam, natural gas and sewage treatment, provided that the detailed terms of such implementation contracts shall not conflict with the terms of the 2022 hydropower framework agreement. During the period from January 1, 2022 to December 31, 2022, the group will receive water, electricity, steam, natural gas and sewage treatment from Joincare Pharmaceutical Group Industry Co.Ltd(600380) group, with a maximum amount of RMB 37.35 million. The annual upper limit is determined by the group and Joincare Pharmaceutical Group Industry Co.Ltd(600380) group after fair negotiation based on the past transaction amount, the group’s production plan in 2022 and other factors. The hydropower quota in 2022 is higher than the transaction amount in previous years, mainly due to the increase in the market unit price of electricity and steam and the increase in the estimated energy consumption required for production in 2022. Among them, since the second half of 2021, the unit price of electricity has increased by about 29%, and the unit price of steam has increased by about 85%. In addition, in 2022, the Group expects to use new environmental protection treatment equipment, thus increasing the consumption of natural gas energy. Secondly, the sewage treatment fee is also expected to rise due to the rise in the price of raw materials in 2021. Past transaction amount
Unit: RMB million as of December 31, 2018 as of December 31, 2019 as of December 31, 2020 as of November 30, 2021 (audited) (audited) (Unaudited) 10.2816.3519.8418.79 pricing principle Joincare Pharmaceutical Group Industry Co.Ltd(600380) the group provides water, electricity The price of steam and natural gas will be determined after fair negotiation with reference to the current market price, and the sewage treatment fee will be calculated comprehensively with reference to the sewage treatment capacity and corresponding material consumption. Reasons and benefits of entering into the 2022 hydropower framework agreement Jiaozuo synthesis and Shanghai Lizhu biology are located in the production plant of Jiaozuo Joincare Pharmaceutical Group Industry Co.Ltd(600380) , and Jiaozuo Joincare Pharmaceutical Group Industry Co.Ltd(600380) needs to provide it with water supply, electricity, steam, natural gas and sewage treatment for production and operation. If Jiaozuo synthetic and Shanghai Lizhu bio separately purchase such services from an independent third party, it will take time to go through various procedures and processes, which may affect the production and operation of Jiaozuo synthetic and Shanghai Lizhu bio, and Jiaozuo synthetic and Shanghai Lizhu bio need to pay corresponding opening fees and bear the additional administrative costs. Therefore, Jiaozuo synthesis and Shanghai Lizhu biology receive water, electricity, steam, natural gas and sewage treatment from Jiaozuo Joincare Pharmaceutical Group Industry Co.Ltd(600380) , which can reduce the potential impact on Jiaozuo synthesis and Shanghai Lizhu biology production and operation and save costs. The directors (including independent non-executive directors) believe that the 2022 hydropower framework agreement (including the proposed annual cap) was entered into by the group in the general and daily business process on general commercial terms, and its terms are fair and reasonable and in line with the overall interests of the company and shareholders. 2、 2022 framework agreement on labor services
On December 30, 2021, the company entered into the 2022 labor service framework agreement with Joincare Pharmaceutical Group Industry Co.Ltd(600380) , which relates to the continuous connected transactions in which the group receives labor services from Joincare Pharmaceutical Group Industry Co.Ltd(600380) group from January 1, 2022 to December 31, 2022, with a maximum amount of RMB 16.33 million.
Date: December 30, 2021 contracting party buyer: the seller of the company: Joincare Pharmaceutical Group Industry Co.Ltd(600380) years from January 1, 2022 to December 31, 2022 preconditions the 2022 labor service framework agreement and the transactions to be carried out under it must be approved by the board of directors. Subject matter according to the 2022 labor service framework agreement, the group will receive drug R & D services from Joincare Pharmaceutical Group Industry Co.Ltd(600380) group from January 1, 2022 to December 31, 2022. The group may enter into specific implementation contracts (including but not limited to payment terms and payment arrangements) with Joincare Pharmaceutical Group Industry Co.Ltd(600380) group for the acceptance of labor services, provided that the detailed terms of such implementation contracts shall not conflict with the terms of the 2022 labor services framework agreement. During the period from January 1, 2022 to December 31, 2022, the group will receive drug R & D services from Joincare Pharmaceutical Group Industry Co.Ltd(600380) group, with a maximum amount of RMB 16.33 million. The annual upper limit is determined by the group and Joincare Pharmaceutical Group Industry Co.Ltd(600380) group after fair consultation based on the estimated investment time and amount of similar drug research and development of the group and the complexity of research and development. The amount of labor service in 2022 is higher than the transaction amount in previous years, mainly because compared with 2021, the group plans to upgrade the technology of more products in 2022, including improving the fermentation unit of strains by breeding new strains, and the R & D investment of new strains is large, resulting in a significant increase in R & D service expenses. Past transaction amount
Unit: RMB million yuan as of December 31, 2018 as of December 31, 2019 as of December 31, 2020 as of November 30, 2021 (audited) (audited) (Unaudited) 009.354.13 Joincare Pharmaceutical Group Industry Co.Ltd(600380) The price of drug R & D services provided by the group to the group will be determined after fair negotiation with reference to the expected R & D investment of the group and in combination with market conditions. Reasons and benefits of entering into the 2022 labor service framework agreement Shanghai Fangyu and Henan Research Institute intend to provide drug R & D services for the group. As a professional R & D institution, Shanghai Fangyu has rich experience in drug R & D, and has many successful cases that are more difficult than the R & D of the cooperative varieties, which is helpful to promote the progress of drug R & D. Henan Research Institute is a core R & D institution focusing on biological pharmaceutical intermediates and APIs. It focuses on the API R & D strength of Joincare Pharmaceutical Group Industry Co.Ltd(600380) group and the group, which helps to promote the progress of drug R & D. The continued cooperation with Shanghai Fangyu and Henan Research Institute will ensure that the current progress of R & D will not be interrupted. The directors (including independent non-executive directors) believe that the 2022 labor service framework agreement (including the proposed annual cap) was entered into by the group in the general and daily business process on general commercial terms, and its terms are fair and reasonable and in line with the overall interests of the company and shareholders. 3、 The internal control measures are to ensure that the actual prices of transactions between the group and Joincare Pharmaceutical Group Industry Co.Ltd(600380) group under the 2022 hydropower framework agreement and the 2022 labor service framework agreement are entered into on normal commercial terms and are not inferior to the terms available to the group from a third party, The internal control procedures adopted by the group in its day-to-day operations are as follows: (I) each transaction proposed under the 2022 hydropower framework agreement and the 2022 labor service framework agreement will be signed and approved by the designated staff of the Department and finance department requiring the transaction, the general manager of the relevant subsidiary and / or the president of the company. (II) the group will conduct regular reviews to review and assess whether the transaction is carried out in accordance with the terms of the 2022 hydropower framework agreement and the 2022 labor service framework agreement. The review will be conducted monthly by the general manager of finance of the company and quarterly by the Secretary of the board of directors and submitted to the board of directors. (III) in order to ensure that the continuing connected transactions under the 2022 hydropower framework agreement and the 2022 labor service framework agreement will not exceed the annual cap, each subsidiary will submit financial statistics to the company’s financial department every month for consolidation and analysis. The group shall conduct transactions in accordance with the annual plan formulated by the financial department of the group at the end of the previous year and shall conduct quarterly reviews. In particular, the financial department of the company shall be responsible for monitoring the actual transaction amount between the group and Joincare Pharmaceutical Group Industry Co.Ltd(600380) group on a monthly basis to ensure that the annual upper limit will not be exceeded. If the amount of continuing connected transactions under the 2022 hydropower framework agreement and the 2022 labor service framework agreement has been and will be expected to exceed the annual cap, the general manager of finance of the company shall report to the management of the company in time to determine whether it is necessary to revise the annual cap, so as to ensure compliance with the provisions of the Hong Kong listing rules.
(IV) the relevant departments and financial departments of the company will review the internal pricing policy or mechanism, provisions and implementation of continuous connected transactions every year, including but not limited to identifying the connected persons of the group and their procedures for handling continuous connected transactions. If the relevant departments think it is necessary to adjust the pricing policy or mechanism, they should make a revision proposal containing detailed reasons and supporting materials for the company’s management to consider and determine the appropriate action to be taken. (v) The auditors of the company will conduct annual review on the transactions to be carried out under the 2022 hydropower framework agreement and the 2022 labor service framework agreement. (VI) the audit committee of the company shall review the continuous connected transactions under the 2022 hydropower framework agreement and the 2022 labor service framework agreement twice a year to confirm whether the relevant transactions are carried out on fair and reasonable terms and in line with the overall interests of the company and shareholders. After considering the above internal control measures, the directors (including independent non-executive directors) believe that these internal control measures are sufficient to ensure and guarantee that the transactions proposed under the 2022 hydropower framework agreement and the 2022 labor service framework agreement will be concluded on normal commercial terms and will not damage the overall interests of the company and shareholders. 4、 The company mainly develops, produces and sells pharmaceutical products, APIs and intermediates, and diagnostic reagents and equipment through its subsidiaries. Joincare Pharmaceutical Group Industry Co.Ltd(600380) is a joint-stock company incorporated in China and listed on the Shanghai Stock Exchange in 2001. It is mainly engaged in three main business categories, namely, R & D, production and sales of (I) preparation products; (II) APIs and intermediates; And (III) food and health food. The ultimate beneficial owner is Mr. Zhu Baoguo, non-executive director and chairman of the company. 5、 The meaning of the Hong Kong Listing Rules on the date of this announcement, Joincare Pharmaceutical Group Industry Co.Ltd(600380) directly and indirectly owns about 44.66% of the equity interest of the company, so it is the controlling shareholder of the company. Therefore, Joincare Pharmaceutical Group Industry Co.Ltd(600380) and its contacts are connected persons of the company. According to Chapter 14A of the Hong Kong listing rules, the transactions proposed under the 2022 hydropower framework agreement and the 2022 Labor Service Framework Agreement constitute the continuous connected transactions of the company respectively. As (I) Mr. Zhu Baoguo, non-executive director and chairman of the company, also
