Shanghai Fosun Pharmaceutical : CONNECTED TRANSACTION - FORMATION OF JOINT VENTURE (H SHARES)

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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

FORMATION OF JOINT VENTURE

THE JOINT VENTURE AGREEMENT

The Board announces that, on 11 October 2021, Fosun Health, a subsidiary of the Company, entered into the Joint Venture Agreement with Forte Industrial Development in relation to the formation of JV Company, pursuant to which the registered capital of the JV Company is RMB70 million, of which Fosun Health agreed to make cash contribution in the amount of RMB35.7 million to subscribe for the 51% of the registered capital of the JV Company, and Forte Industrial Development agreed to make cash contribution in the amount of RMB34.3 million to subscribe for the 49% of the registered capital of the JV Company.

HONG KONG LISTING RULES IMPLICATIONS

As at the date of this announcement, Forte Industrial Development is a company controlled by Mr. Guo Guangchang, the controlling shareholder of the Company, and is an associate of Mr. Guo Guangchang. Therefore, Forte Industrial Development constitutes a connected person of the Company under Rule 14A.07 of the Hong Kong Listing Rules. Accordingly, the transaction contemplated under the Joint Venture Agreement constitutes a connected transaction of the Company under Chapter 14A of the Hong Kong Listing Rules.

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Given the party to the Joint Venture Agreement is the same connected person as the relevant parties to the Previous Connected Transactions, the transaction contemplated under the Joint Venture Agreement and the Previous Connected Transactions shall be aggregated pursuant to Rule 14A.81 of the Hong Kong Listing Rules. As the relevant percentage ratios applicable to the sum of the transactions contemplated under the Joint Venture Agreement and the Previous Connected Transactions are more than 0.1% but less than 5%, the Joint Venture Agreement is subject to reporting and announcement requirements but is exempt from the independent shareholders' approval requirement under Chapter 14A of the Hong Kong Listing Rules.

1. THE JOINT VENTURE AGREEMENT
   The Board announces that, on 11 October 2021, Fosun Health, a subsidiary of the Company, entered into the Joint Venture Agreement with Forte Industrial Development in relation to the formation of JV Company, pursuant to which the registered capital of the JV Company is RMB70 million, of which Fosun Health agreed to make cash contribution in the amount of RMB35.7 million to subscribe for the 51% of the registered capital of the JV Company, and Forte Industrial Development agreed to make cash contribution in the amount of RMB34.3 million to subscribe for the 49% of the registered capital of the JV Company.
   The principal terms of the Joint Venture Agreement are summarised below. Date
   11 October 2021 Parties
2. 1. . Fosun Health; and
   2. . Forte Industrial Development.

Capital contribution

Under the Joint Venture Agreement, Fosun Health agreed to make cash contribution in the amount of RMB35.7 million to subscribe for the 51% of the registered capital of the JV Company. Such amount of capital contribution was determined after arm's-length negotiation between the parties to the Joint Venture Agreement with reference to the capital requirements of the JV Company in carrying out its main business activities.

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The capital contribution to be made by Fosun Health under the Joint Venture Agreement will be financed by the self-raised funds of Fosun Health.

Payment schedule

Under the Joint Venture Agreement, Fosun Health and Forte Industrial Development shall make its respective capital contribution as follows:

1. . within 7 days following the registration date of the business license of JV Company, the parties shall pay 10% of the total registered capital of the JV Company (i.e. RMB7 million in total) in proportion to their equity interest, of which Fosun Health shall make the payment in the amount of RMB3.57 million and Forte Industrial Development shall make the payment in the amount of RMB3.43 million; and
2. . no later than the date on which the JV Company have obtained the ''Medical Institution Practicing License'', the parties shall pay 90% of the total registered capital of the JV Company (i.e. RMB63 million in total), of which Fosun Health shall make the payment in the amount of RMB32.13 million and Forte Industrial Development shall make the payment in the amount of RMB30.87 million.

Corporate governance

1. . The board of directors of the JV Company shall consist of 7 directors, of which 4 directors shall be appointed by Fosun Health and 3 directors shall be appointed by Forte Industrial Development. The chairman of the board shall be a director appointed by Fosun Health;
2. . The JV Company shall have 2 supervisors, each of Fosun Health and Forte Industrial Development shall have the right to appoint 1 supervisor;
3. . The general manager of the JV Company shall be recommended by Fosun Health.

Other terms

Under the Joint Venture Agreement:

1. . subject to the filing with relevant competent authorities, the JV Company shall be mainly engaged in, among others, medical services.
2. . any dispute arising out of, or in relation to, the Joint Venture Agreement shall be resolved through amicable negotiation between the parties thereto, failing which any party shall have the right to bring proceedings in the court of its domicile.

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1. 1. . the Joint Venture Agreement shall become effective on the date of signing by both parties.
2. REASONS FOR AND BENEFIT OF ENTERING INTO THE JOINT VENTURE AGREEMENT
   The establishment of the JV Company intends to, by utilizing the parties' respective resources and advantages in the industry, operate for-profit class III medical facilities for children targeting high-end children's medical services market in Suzhou, with a view to further strengthen the Group's medical services business deployment in Yangtze River Delta region. Upon the establishment of the JV Company, the Group will hold 51% equity interest in the JV Company and the JV Company will be consolidated into the Group's financial statements.
   The Directors (including the independent non-executive Directors) consider that the terms of Joint Venture 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, Mr. Pan Donghui and Mr. Zhang Houlin, being the Directors, abstained from voting on the resolution of the Board in relation to the entering into of the Joint Venture Agreement, while the remaining 5 Directors (including 4 independent non- executive Directors) participated in the voting and approved unanimously.
3. INFORMATION ON PARTIES TO THE TRANSACTION Fosun Health
   Fosun Health is a company incorporated in the PRC with limited liability, and a subsidiary of the Company, its scope of business includes technology development, technology consulting, technology services and technology transfer in the area of health technology, 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).
   Forte Industrial Development
   Forte Industrial Development is a company incorporated in the PRC with limited liability, which is ultimately controlled by Mr. Guo Guangchang, the controlling shareholder of the Company and is mainly engaged in, among others, corporate management consulting, operation of real estate development, property management and operation of real estate leasing.

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1. HONG KONG LISTING RULES IMPLICATIONS
   As at the date of this announcement, Forte Industrial Development is a company controlled by Mr. Guo Guangchang, the controlling shareholder of the Company, and is an associate of Mr. Guo Guangchang. Therefore, Forte Industrial Development constitutes a connected person of the Company under Rule 14A.07 of the Hong Kong Listing Rules. Accordingly, the transaction contemplated under the Joint Venture Agreement constitutes a connected transaction of the Company under Chapter 14A of the Hong Kong Listing Rules.
   Given the party to the Joint Venture Agreement is the same connected person as the relevant parties to the Previous Connected Transactions, the transaction contemplated under the Joint Venture Agreement and the Previous Connected Transactions shall be aggregated pursuant to Rule 14A.81 of the Hong Kong Listing Rules. As the relevant percentage ratios applicable to the sum of the transactions contemplated under the Joint Venture Agreement and the Previous Connected Transactions are more than 0.1% but less than 5%, the Joint Venture Agreement is subject to reporting and announcement requirements but is exempt 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
''associate''	has the meaning ascribed to it under the Hong Kong
	Listing Rules
''Board''	the board of Directors
''Chancheng Hospital''	Foshan Fosun Chancheng Hospital Limited* (佛山復
	星禪誠醫院有限公司), formerly known as Foshan
	Chancheng Central Hospital Company Limited* (佛山
	市禪城區中心醫院有限公司), a for-profit medical
	institution established as approved by the Population,
	Health and Drug Administration of Chancheng
	District, Foshan* (佛山市禪城區人口和衛生藥品監督
	管理局), a subsidiary of the Company

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