Shanghai Fosun Pharmaceutical : CONNECTED TRANSACTION - ENTERING INTO THE CAPITAL INCREASE AGREEMENT REGARDING A SUBSIDIARY

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上 海 復 星 醫 藥（集 團）股 份 有 限 公 司

Shanghai Fosun Pharmaceutical (Group) Co., Ltd.*

(a joint stock limited company incorporated in the People's Republic of China with limited liability)

(Stock Code: 02196)

CONNECTED TRANSACTION

ENTERING INTO THE CAPITAL INCREASE AGREEMENT

REGARDING A SUBSIDIARY

CAPITAL INCREASE AGREEMENT

The Board announces that, on 14 August 2020, the existing shareholders of Zhuorui Outpatient, Fosun Healthcare, a subsidiary of the Company, Xingshuangjian Investment and SFHIH entered into the Capital Increase Agreement with Zhuorui Outpatient in relation to the proposed capital increase in Zhuorui Outpatient in an aggregate amount of RMB20 million to be made in proportion to their respective shareholdings in Zhuorui Outpatient. In particular, Fosun Healthcare proposed to make capital contribution in the amount of RMB10.2 million to subscribe for the additional registered capital of Zhuorui Outpatient of RMB10.2 million and each of Xingshuangjian Investment and SFHIH proposed to make capital contribution in the amount of RMB4.9 million to subscribe for additional registered capital of Zhuorui Outpatient of RMB4.9 million, respectively.

IMPLICATIONS OF THE HONG KONG LISTING RULES

As Zhuorui Outpatient is held indirectly by Fosun High Tech, the controlling shareholder of the Company, as to an aggregate of 49% through Xingshuangjian Investment and SFHIH, Zhuorui Outpatient constitutes an associate of Fosun High Tech, hence a connected person of the Company. Therefore, the transaction contemplated under the Capital Increase Agreement constitutes a connected transaction of the Company under Chapter 14A of the Hong Kong Listing Rules. Given that the party to the Capital Increase Agreement is the same connected person as the relevant parties to Previous Transactions, the transaction contemplated under the Capital Increase Agreement and Previous Transactions shall be aggregated pursuant to Rule 14A.81 of the Hong Kong Listing Rules. As the highest applicable percentage ratio in respect of the capital increase to be contributed by Fosun Healthcare in Zhuorui Outpatient, after aggregation, is more than 0.1% but less than 5%, the transaction contemplated under the Capital Increase Agreement is subject to reporting and announcement requirements but are exempted from the independent shareholders' approval requirement under Chapter 14A of the Hong Kong Listing Rules.

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1. CAPITAL INCREASE AGREEMENT
   The Board announces that, on 14 August 2020, the existing shareholders of Zhuorui Outpatient, Fosun Healthcare, a subsidiary of the Company, Xingshuangjian Investment and SFHIH entered into the Capital Increase Agreement with Zhuorui Outpatient in relation to the proposed capital increase in Zhuorui Outpatient in an aggregate amount of RMB20 million to be made in proportion to their respective shareholdings in Zhuorui Outpatient. In particular, Fosun Healthcare proposed to make capital contribution in the amount of RMB10.2 million to subscribe for the additional registered capital of Zhuorui Outpatient of RMB10.2 million and each of Xingshuangjian Investment and SFHIH proposed to make capital contribution in the amount of RMB4.9 million to subscribe for additional registered capital of Zhuorui Outpatient of RMB4.9 million, respectively.
   The principal terms of the Capital Increase Agreement are summarised below:
   Date
   14 August 2020
   Parties
2. 1. Fosun Healthcare;
   2. Xingshuangjian Investment;
   3. SFHIH; and
   4. Zhuorui Outpatient

Consideration

The consideration for subscription of the additional registered capital in Zhuorui Outpatient of RMB10.2 million to be paid by Fosun Healthcare is RMB10.2 million. Such consideration is determined based on negotiation on arm's length basis by all parties of the Capital Increase Agreement taking into account of the capital requirements of Zhuorui Outpatient.

The capital contribution will be financed by the self-raised funds of Fosun Healthcare.

Capital Contribution Arrangement

Under the Capital Increase Agreement, Fosun Healthcare, Xingshuangjian Investment and SFHIH shall make their respective capital contribution into Zhuorui Outpatient in full by 31 August 2020.

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Governing Law and Dispute Resolution

The Capital Increase Agreement shall be governed by the PRC law. Any dispute shall be resolved by negotiation between the parties or through mediation by relevant competent authority; otherwise, a legal proceeding shall be brought to the people's court having jurisdiction at the domicile of Zhuorui Outpatient.

Effectiveness

The Capital Increase Agreement shall become effective upon signing of, or affixed with seal by, the parties thereto.

1. REASONS AND BENEFITS OF THE CAPITAL INCREASE AGREEMENT
   Zhuorui Outpatient is a for-profit medical institution mainly engaged in providing medical services including, among other things, physical examination, general out-patient and specialist out-patient by introducing foreign and domestic high-quality healthcare resources. The proceeds of the capital increase will be mainly used for the daily operation and configuration of medical equipment of Zhuorui Outpatient.
   After the completion of the Capital Increase Agreement, the proportion of the equity interest held by the Fosun Healthcare, Xingshuangjian Investment and SFHIH will remain unchanged, and Zhuorui Outpatient will remain as a subsidiary of the Company.
   The Directors (including the independent non-executive Directors) consider that the terms of each of the Capital Increase Agreement are on normal commercial terms, and are fair and reasonable and in the interests of the Company and the Shareholders as a whole.
   Mr. Chen Qiyu, Mr. Yao Fang, Mr. Xu Xiaoliang, Mr. Gong Ping and Mr. Pan Donghui, being Directors, abstained from voting on the resolution of the Board in respect of the entering into of the Capital Increase Agreement, while the remaining 5 Directors (including 4 independent non- executive Directors) participated in the voting and approved unanimously.
2. INFORMATION OF THE GROUP AND PARTIES The Group
   The Group is a leading healthcare group in the PRC and primarily engaged in business segments including pharmaceutical manufacturing and R&D, medical devices and medical diagnosis, healthcare services as well as pharmaceutical distribution and retail.

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Fosun Healthcare

Fosun Healthcare is a company incorporated in PRC with limited liability, and a subsidiary of the Company, which is mainly engaged in the investment in medical and healthcare industry and its related areas, including the pharmaceutical and healthcare industry and pharmaceutical and educational industry, performance of the hospital management as entrusted by medical and healthcare institutions and provision of hospital management consultancy (except brokerage).

Xingshuangjian Investment

Xingshuangjian Investment is a company incorporated in the PRC with limited liability, and a subsidiary of Fosun High Tech, the controlling shareholder of the Company. Xingshuangjian Investment is mainly engaged in, among others, investment management, asset management, industrial investment, investment consultancy, corporate management consultancy, business information consultancy and real estate consultancy (excluding acting as agent for the relevant consultancy services), financial consultancy (excluding agency bookkeeping) and health information management (excluding medical treatment activities, psychological counseling).

SFHIH

SFHIH is a company incorporated in the PRC with limited liability, and a subsidiary of Fosun High Tech, the controlling shareholder of the Company. SFHIH is mainly engaged in, among others, health industry investment management, health management consultancy and elderly care investment management.

Zhuorui Outpatient

Zhuorui Outpatient is a company incorporated in PRC with limited liability, and a subsidiary of the Company, which is mainly engaged in, among others, for-profit medical institution and providing medical services.

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The net profits (both before and after taxation) attributable to shareholders of Zhuorui Outpatient for the two financial years immediately preceding the entering into the Capital Increase Agreement are as follows:

	Unit: RMB million
	For the	For the
	year ended	year ended
	31 December	31 December
	2019	2018
	(audited)	(audited)
Net profits/(loss) (before taxation)	-16.16	-1.12
Net profits/(loss) (after taxation)	-16.16	-1.12

As at 30 June 2020, the unaudited total asset value and the unaudited total net asset value of Zhuorui Outpatient were RMB47.99 million and RMB15.17 million, respectively.

1. IMPLICATIONS UNDER THE HONG KONG LISTING RULES
   As Zhuorui Outpatient is held indirectly by Fosun High Tech, the controlling shareholder of the Company, as to an aggregate of 49% through Xingshuangjian Investment and SFHIH, Zhuorui Outpatient constitutes an associate of Fosun High Tech, hence a connected person of the Company. Therefore, the transaction contemplated under the Capital Increase Agreement constitutes a connected transaction of the Company under Chapter 14A of the Hong Kong Listing Rules. Given that the party to the Capital Increase Agreement is the same connected person as the relevant parties to Previous Transactions, the transaction contemplated under the Capital Increase Agreement and Previous Transactions shall be aggregated pursuant to Rule 14A.81 of the Hong Kong Listing Rules. As the highest applicable percentage ratio in respect of the capital increase contributed by Fosun Healthcare in Zhuorui Outpatient, after aggregation, is more than 0.1% but less than 5%, the transaction contemplated under the Capital Increase Agreement is subject to reporting and announcement requirements but are exempted from the independent shareholders' approval requirement under Chapter 14A of the Hong Kong Listing Rules.
2. DEFINITIONS

In this announcement, the following expressions have the following meaning unless the context otherwise specifies:

"A Share(s)"	the domestic Share(s) of the Company with a nominal value
	of RMB1 each, which are listed on the Shanghai Stock
	Exchange and traded in RMB
"Board"	the board of Directors of the Company

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"Capital Increase Agreement"	the capital increase agreement dated 14 August 2020 entered
	into between Fosun Healthcare, Xingshuangjian Investment,
	SFHIH and Zhuorui Outpatient in relation to the proposed
	capital increase in Zhuorui Outpatient
"Company"	Shanghai Fosun Pharmaceutical (Group) Co., Ltd.* (上
	海復星醫藥（集團）股份有限公司), a joint stock company
	established in the PRC with limited liability, the H Shares
	and A Shares of which are listed and traded on the Main
	Board of the Hong Kong Stock Exchange and the Shanghai
	Stock Exchange, respectively
"connected person(s)"	has the meaning ascribed to it under the Hong Kong Listing
	Rules
"Director(s)"	director(s) of the Company
"Fosun High Tech"	Shanghai Fosun High Technology (Group) Company
	Limited* (上海復星高科技（集團）有限公司), a company
	established in the PRC with limited liability and the
	controlling shareholder of the Company
"Fosun Healthcare"	Shanghai Fosun Healthcare (Group) Co., Ltd.* (上海復星醫
	療（集團）有限公司), a company established in the PRC with
	limited liability and a subsidiary of the Company
"Fund Partnership Agreements"	(i) the limited partnership agreement in relation to the
	establishment of Suzhou Fund dated 18 May 2020 entered
	into between Ningbo Fuying, Suzhou Xingchen, Fosun High
	Tech and other investors; and (ii) the limited partnership
	agreement dated 18 May 2020 entered into between Ningbo
	Fuying, Tianjin Xingyao, Tianjin Xinghai Commercial
	Management Partnership (Limited Parnership)* (天津星海
	商業管理合夥企業（有限合夥）), Fosun High Tech and other
	investors
"Fujian Fund"	Shanghai Fujian Equity Investment Fund Management Co.,
	Ltd.* (上海復健股權投資基金管理有限公司), a company
	established in the PRC with limited liability and a subsidiary
	of the Company

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"Group"	the Company and its subsidiaries
"H Share(s)"	the overseas listed share(s) of the Company with a nominal
	value of RMB1 each, which are listed on the Hong Kong
	Stock Exchange and traded in HK$
"Hong Kong"	the Hong Kong Special Administrative Region of the PRC
"Hong Kong Listing Rules"	the Rules Governing the Listing of Securities on The Stock
	Exchange of Hong Kong Limited
"Hong Kong Stock Exchange"	The Stock Exchange of Hong Kong Limited
"Investment Agreement"	an investment agreement dated 26 August 2019 entered
	into between the Company and SFHIH in relation to the
	formation of Fujian Fund
"Partnership Agreements"	the limited partnership agreements dated 30 March 2020
	entered into between Fujian Fund, the Company, Fosun
	High Tech and Tianjin Fuyao in relation to the formation of
	Suzhou Xingchen and Tianjin Xingyao
"Previous Transactions"	the transactions contemplated under the Investment
	Agreement, Share Purchase Agreement, Shenzhen Fosun
	Health Capital Increase Agreement, Partnership Agreements
	and Fund Partnership Agreements.
"Ningbo Fuying"	Ningbo Fuying Investment Co., Ltd.* (寧波復瀛投資有限公
	司), a company established in the PRC with limited liability
	and a subsidiary of the Company
"PRC"	the People's Republic of China, for the purpose of this
	announcement, excluding Hong Kong, the Macau Special
	Administrative Region of the PRC and Taiwan region of the
	PRC
"RMB"	Renminbi, the lawful currency of the PRC

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"SFHIH"	Shanghai Fosun Health Industry Holding Company Limited*
	(上海復星健康產業控股有限公司), a company established
	in the PRC with limited liability, which is a subsidiary of
	Fosun High Tech
"Share Purchase Agreement"	a share purchase agreement dated 30 September 2019
	entered into between Ample Up Limited, a subsidiary of the
	Company, and Magnificent View Investments Limited
"Shareholder(s)"	holder(s) of the Share(s)
"Share(s)"	A Share(s) and H Share(s)
"Shenzhen Fosun Health Capital	a capital increase agreement dated 1 November 2019 entered
Increase Agreement"	into between Foshan Chancheng Central Hospital Company
	L i m i t e d * ( 佛山市禪城區中心醫院有限公司) , Y o u l e
	Information Technology Company Limited* (上海有叻信
	息科技有限公司) and Shenzhen Fosun Health Information
	Technology Company Limited* (深圳復星健康信息科技有
	限公司)
"subsidiary"	has the meaning ascribed to it under the Hong Kong Listing
	Rules
"Suzhou Xingchen"	Suzhou Xingchen Venture Investment Partnership (Limited
	Partnership)* (蘇州星晨創業投資合夥企業（有限合夥）), a
	limited partnership established in the PRC and a subsidiary
	of the Company
"Tianjin Fuyao"	Tianjin Fuyao Commercial Management Partnership
	(Limited Partnership)* (天津復曜商業管理合夥企業（有限合
	夥）), a limited partnership established in the PRC
"Tianjin Xingyao"	Xingyao (Tianjin) Investment Management Partnership
	(Limited Partnership)* (星耀（天津）投資管理合夥企業（有
	限合夥）), a limited partnership established in the PRC and a
	subsidiary of the Company
"Xingshuangjian Investment"	Shanghai Xingshuangjian Investment Management Co., Ltd.*
	(上海星雙健投資管理有限公司), a company established in
	the PRC with limited liability, which is a subsidiary of Fosun
	High Tech

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"Zhuorui Outpatient"	Shanghai Zhuorui Integrated Outpatient Limited Company*
	(上海卓瑞綜合門診部有限公司), a company incorporated
	under the PRC law with limited liability and a subsidiary of
	the Company
"%"	per cent
	By order of the Board
	Shanghai Fosun Pharmaceutical (Group) Co., Ltd.*
	Chen Qiyu
	Chairman
Shanghai, the PRC
14 August 2020

As at the date of this announcement, the executive directors of the Company are Mr. Chen Qiyu, Mr. Yao Fang and Mr. Wu Yifang; the non-executive directors of the Company are Mr. Xu Xiaoliang, Mr. Gong Ping and Mr. Pan Donghui; and the independent non-executive directors of the Company are Mr. Jiang Xian, Dr. Wong Tin Yau Kelvin, Ms. Li Ling and Mr. Tang Guliang.

• for identification purposes only

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