OVERSEAS REGULATORY ANNOUNCEMENT

Transcription

1 Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement. 山 東 新 華 製 藥 股 份 有 限 公 司 Shandong Xinhua Pharmaceutical Company Limited (a joint stock company incorporated in the People s Republic of China with limited liability) (Stock code : 0719) OVERSEAS REGULATORY ANNOUNCEMENT This announcement is published pursuant to Rule 13.10B of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited. Reference is made to the Indicative Announcement on the Risks of Dilution to Current Returns published by Shandong Xinhua Pharmaceutical Company Limited on the website of Shenzhen Stock Exchange for information purpose only. By Order of the Board of Shandong Xinhua Pharmaceutical Company Limited Zhang Daiming Chairman 8 October 2015, Zibo, People s Republic of China As at the date of this announcement, the Board comprises: Executive Directors: Independent Non-executive Directors: Mr. Zhang Daiming (Chairman) Mr. Du Guanhua Mr. Du Deping Mr. Li Wenming

2 Non-executive Directors: Mr. Ren Fulong Mr. Xu Lie Mr. Zhao Bin Mr. Chan Chung Kik, Lewis

3 Stock Code: Stock Short Name: Xinhua Pharmaceutical Announcement No.: Shandong Xinhua Pharmaceutical Company Limited Indicative Announcement on the Risks of Dilution to Current Returns by the Non-public Issue of Shares The board of directors and all directors of the Company warrant that the information set out in this announcement does not contain any false representations, misleading statements or material omissions, and jointly and severally accept responsibility for the truthfulness, accuracy and completeness of its contents. Upon the consideration and approval at the fifth meeting of the eighth session of the board of directors of Shandong Xinhua Pharmaceutical Company Limited (hereinafter referred to as the Company ), the Company will proceed with the non-pubic issue of not more than 77,000,000 Renminbi-denominated ordinary shares (A shares) to five designated investors, namely the Phase 1 Employee Stock Ownership Scheme, Shandong Ju Ying Industrial Fund Partnerships (Limited Partnership), SKS Fund (a fund to be established and managed by Shanghai Kai Shi Assets Management Limited), BXC Fund (a fund to be established and managed by Beijing Xin Cheng Da Rong Assets Management Limited) and CBR Fund (a fund to be established and managed by Chongqing Bao Run Equity Investment Fund Management Company Limited) (hereinafter referred to as Proposed Placing ). As stated in the Opinions of the General Office of the State Council on Further Strengthening the Protection of the Legitimate Rights and Interests of Minority Investors in the Capital Markets (Guo Ban Fa [2013] No. 110) ( 國 務 院 辦 公 廳 關 于 進 一 步 加 强 資 本 市 場 中 小 投 資 者 合 法 權 益 保 護 工 作 的 意 見 ( 國 辦 發 [2013]110 號 )), where current returns are diluted as a result of the initial public issuance of shares by a company, the refinancing activity by a listed company or mergers, acquisitions or restructuring activities, the undertaking and implementation of specific measures to make up for the dilution to current returns shall be made. In compliance with this requirement, the Company hereby announces the impact of the dilution to current returns by the Proposed Placing on its principal financial indicators and the measures taken as follows: I. The impact of the dilution to current returns by the Proposed Placing on the principal financial indicators of the Company The following assumptions are used to estimate the impact of the dilution in connection with the Proposed Placing on immediate return to the Company:

4 (a) The plan for the Proposed Placing will be carried out and completed by December 2015, which is merely an estimate made by the Company and the actual date of completion of the Proposed Placing will be a date upon all conditions precedents set out in the section headed Conditions Precedent of the Proposed Placing in this announcement above; (b) The number of shares to be issued under the Proposed Placing is 77,000,000 A Shares and the estimated total proceeds, without considering the issue costs, are RMB 720,720,000; (c) In estimating the net assets of the Company, the impact on the net assets of factors other than the proceeds and the net profit have not been taken into account; (d) The estimate of the total share capital of the Company is based on the total share capital of 457,312,800 shares prior to the Proposed Placing, and only the impact of the Proposed Placing is included, disregarding changes in the share capital as a result of any other factors; (e) The impact on the finance costs of the bank interests incurred prior to the utilisation of the proceeds is not considered; (f) Assumptions regarding the results of the Company for the year 2015 are as follows: In 2014, the net profit attributable to the owners of the parent was RMB 50,725,300 in the consolidated financial statements of the Company. As compared with 2014, the results of the Company for 2015 are expected to maintain stable and sound growth. It is estimated that the audited net profit will increase by 10% and accordingly, the estimated net profit attributable to the owners of the parent company will be RMB 55,797,800 for the year Based on the aforesaid, the Company has evaluated the impact of the Proposed Placing on the principal financial indicators, details of which are as follows: (excluding the impact of the (including the impact of Item As at 31 Dec 2014 Proposed Placing) As at 31 Dec 2015 the Proposed Placing) As at 31 Dec 2015 Total share capital (shares) 457,312, ,312, ,312,830 Total proceeds from the issue (RMB) 720,720,000 Equity attributable to the owners of the parent at the beginning of the period 1,803,036,200 1,820,690,200 1,820,690,200 Equity attributable to the owners of the parent at the end of the period (RMB) 1,820,690,200 1,867,341,800 2,588,061,800 Net profit attributable to the owners of the parent (RMB) 50,725,300 55,797,800 55,797,800 Basic earnings per share (RMB) Diluted earnings per share (RMB) Net assets per share (RMB) Weighted average return on net assets 2.81% 3.02% 3.02% Fully diluted earnings per share Fully diluted return on net assets 2.79% 2.99% 2.16% Note:

5 1. The above assumptions are solely made for the purpose of estimating the impact of the dilution by the Proposed Placing on the financial indicators of the Company and represent neither the Company s view of its profitability in 2015 nor the Company s judgment on its operating conditions and trends in The Company s assumptions on and analysis of its net profit for 2015 do not constitute a profit forecast of the Company. Investors should not make investment decisions in reliance thereon. The Company will not be held liable for any loss arising from investment decisions made by an investor based on such assumptions and analysis. 3. The impact of the proceeds from the Proposed Placing on the production, operations and financial position (i.e. finance costs and gains on financial management) and other aspects of the Company after such proceeds are received is not taken into account in the above estimate. 4. In the above estimate, the time of profit distribution for the year 2014was in August Adjustments have been made to the calculation of the earnings per share in accordance with the Accounting Standards for Business Enterprises No Earnings per Share 企 業 會 計 準 則 第 34 號 - 每 股 收 益 and the Regulations on the Preparation of Information Disclosure for Companies Offering Securities to the Public No. 9 - Calculation and Disclosure of Return on Net Assets and Earnings per Share (2010 Revision) 公 開 發 行 證 券 的 公 司 信 息 披 露 編 報 規 則 第 9 號 - 淨 資 產 收 益 率 和 每 股 收 益 的 計 算 及 披 露 (2010 修 訂 ). The calculation of the return on net assets has been adjusted in accordance with the Regulations on the Preparation of Information Disclosure for Companies Offering Securities to the Public No. 9 - Calculation and Disclosure of Return on Net Assets and Earnings per Share (2010 Revision) 公 開 發 行 證 券 的 公 司 信 息 披 露 編 報 規 則 第 9 號 - 淨 資 產 收 益 率 和 每 股 收 益 的 計 算 及 披 露 (2010 修 訂 ). 6. The fully diluted earnings per share are calculated based on the profit for the year divided by the total number of shares at the end of the year. The fully diluted return on net assets is calculated based on profit for the year divided by the equity attributable to the owners of the parent at the end of the year. The interest rate for bank loans is calculated based on a term of less than one year (inclusive), i.e. 5.1%. II. Risk warning on the dilution to current returns by the Proposed Placing The management has reviewed in detail the plan for the use of proceeds from the issuance and this is consistent with the development plan of the Company. After the proceeds are received, the total share capital and net assets of the Company will increase. In the event that the operating results of the Company for 2015 do not grow in accordance with the estimates, taking into account that the Company is expected to receive the proceeds from the

6 Proposed Placing in December 2015 and thus the reduction in the financing costs for the year is not significant, there will be a decrease in indicators of the Company such as the fully diluted earnings per share and the fully diluted return on net assets. As a result, the current returns are exposed to risk of dilution in the short term once the proceeds are received. III. Measures taken by the Company in response to the dilution to current returns by the Proposed Placing of shares To ensure the effective utilization of the proceeds, prevent the risk of dilution to current returns and enhance its capabilities for yielding returns in the future, the Company has taken measures including: 1. Strengthening the management of proceeds and ensuring the utilization of proceeds as planned All of the proceeds raised by the Company from the Proposed Placing (after deducting issuance costs) will be used to repay bank loans and replenish the liquidity. This will not only improve the asset-liability structure of the Company, but also lower its financial costs. This in turn further alleviates the pressure on the Company s liquidity so that it substantially meets the working capital demands, and improves the overall capital strength and profitability of the Company. After the proceeds from the Proposed Placing are received, the Company will deposit such proceeds into a separate account. The supervising banks and sponsors will examine and monitor the utilization of proceeds so as to ensure that the Company will utilize the proceeds in a compliant and effective manner 2. Transforming and upgrading the Company and making determined efforts to promote the globalization strategy The Company will devote its efforts to promoting its transformation and upgrading, optimizing its product structure, advancing innovations and reforms in a full-scale fashion, speeding up the implementation of the defined strategy and seizing the new driving forces and opportunities in the market economy under the New Normal, so as to stimulate a stable yet strong growth in its operating results. At the same time, the Company will continue to increase the global production and supply of its preparations while enhancing the quality control over production technologies, machinery and equipment for its preparations through its cooperation with OEM International. The subsidiaries in Europe and the US will be leveraged as a platform to accelerate the registration process of preparations under the Abbreviated New Drug Application (ANDA), with an aim to speed up the development of its preparations and the export process of its own products, and eventually achieve internationalization for its preparations. 3. Enhancing research, development and innovation of technologies The Company will continue to maintain and improve its efforts in research and

7 development, in an attempt to preserve the technological strengths of its products and ensure that the Company will consistently possess greater competitive strengths. The Company will be highly committed to the development of special active pharmaceutical ingredients (API) and will apply such research results in the market. Further, the project for the relocation and transformation of hormone products will be completed with the aim of facilitating the establishment of the production platform for biopharmaceuticals. Through the establishment of the production platform at the industrial center together with technological breakthroughs, the API business will be optimized and enhanced. In addition, the Company will take the initiative to introduce new techniques and processing technologies in order to further improve the production efficiency and the techno-economic indicators for bulk APIs, in a bid to reduce the production costs, expand the market scale and reinforce its leading position in the industry. 4. Fostering innovations in the business model The Company has taken the initiative to foster innovations in its business model. In view of the State s emphasis on the development of the Internet + Pharmaceuticals, the Company has entered into strategic cooperation agreements with Tmall, JD.com and Yihaodian to actively explore and set out plans for healthcare products and functional food, while accelerating the establishment of the B2C pharmaceutical supply system and retail system based on the E-commerce platform, and the establishment of an open-ended B2B transaction platform that will offer E-commerce services to small and medium manufacturers, distributors, buyers and retailers of the pharmaceutical industry. 5. Enhancing the system for investors returns Pursuant to the relevant requirements under the Notice on the Relevant Matters of Further Implementation of Cash Distribution by Listed Companies ( 關 于 進 一 步 落 實 上 市 公 司 現 金 分 紅 有 關 事 項 的 通 知 ) and the Regulatory Guidelines for Listed Companies No. 3 - Cash Distribution of Listed Companies promulgated by the CSRC, the fifth meeting of the eighth session of the board of directors of the Company convened on 8 October 2015 considered and approved the Resolution in Relation to Amendments to the Articles of Association of Shandong Xinhua Pharmaceutical Company Limited and the Resolution in Relation to the Shareholders Return Plan for the Next Three Years ( ) of Shandong Xinhua Pharmaceutical Company Limited (both of which are subject to the approval at the general meeting of the Company). The above measures further optimize the relevant details of the profit distribution system set out in the Articles of Association and strengthen the system for investors returns. The announcement is hereby given. By Order of the Board of Shandong Xinhua

8 Pharmaceutical Company Limited Zhang Daiming Chairman 8 October 2015