10:45 SHANGHAI IND H<00363> - Announcement (5) The audited consolidated turnover of Medical Instruments for the year ended 31st December, 2004 amounted to approximately RMB615,649,000 (equivalent to approximately HK$580,801,000). INFORMATION ON SUNVE PHARMACEUTICAL Sunve Pharmaceutical is primarily engaged in the manufacturing and sale of raw pharmaceuticals. Share capital Sunve Pharmaceutical has a registered capital of RMB366,000,000 which is owned by SI Pharmaceutical as to 48% by Shanghai Sunve as to 49%, and by Shanghai Medical I&E as to 3% before completion of the Disposal Agreement. Both Shanghai Sunve and Shanghai Medical I&E are Independent Third Parties. Neither Shanghai Sunve nor Shanghai Medical I&E participate in the Disposal, save that they will be requested to give their consent to the transfer of equity interest under the Disposal and a waiver of the corresponding pre-emption rights as required under applicable PRC laws. After completion of the Disposal, Sunve Pharmaceutical will be owned by Shanghai Medical Group as to 48%, Shanghai Sunve as to 49% and by Shanghai Medical I&E as to 3%. Financial information The audited consolidated profit before taxation and minority interests and the audited consolidated profit after taxation and minority interests of Sunve Pharmaceutical for the two years ended 31st December, 2004, which were prepared in accordance with the general accepted accounting principles in the PRC, were as follows: Year ended 31st December, 2004 2003 RMB'000 RMB'000 Profit before taxation and minority interests 48,957 51,547 Profit after taxation and minority interests 47,271 50,246 The audited consolidated net asset value and the total asset value of Sunve Pharmaceutical as at 31st December, 2004 amounted to approximately RMB270,793,000 (equivalent to approximately HK$255,465,000) and approximately RMB536,652,000 (equivalent to approximately HK$506,275,000) respectively. The audited consolidated turnover of Sunve Pharmaceutical for the year ended 31st December, 2004 amounted to approximately RMB375,839,000 (equivalent to approximately HK$354,565,000). DISCLOSEABLE AND CONNECTED TRANSACTIONS Shanghai Medical Group is a substantial shareholder of Medical Instruments, a subsidiary of the Company, and is therefore a connected person of the Company. Each of the Acquisition Agreement and the Disposal Agreement constitutes a connected transaction of the Company under the Listing Rules, and are subject to the reporting, announcement and independent shareholders' approval requirements under the Listing Rules. Each of the Acquisition Agreement and the Disposal Agreement also constitutes a discloseable transaction of the Company under the Listing Rules. The board of Directors has appointed the Independent Board Committee to advise the Shareholders as to the fairness and reasonableness of the Acquisition and the Disposal. An independent financial adviser will be appointed to provide its opinion to the Independent Board Committee and the Shareholders in connection with the Acquisition and the Disposal. If an extraordinary general meeting is convened by the Company for approving the Acquisition and the Disposal, no Shareholder will be required to abstain from voting. The Company has obtained from Shanghai Investment Holdings Limited, SIIC Capital (B.V.I.) Limited and SIIC CM Development Limited, being companies controlled by Shanghai Industrial Investment (Holdings) Company Limited which together hold approximately 57% in nominal value of the securities giving the right to attend and vote at any general meeting of the Company, written approvals of the Acquisition and the Disposal. Each of Shanghai Investment Holdings Limited (holding 468,066,000 Shares), SIIC Capital (B.V.I.) Limited (holding 80,000,000 Shares) and SIIC CM Development Limited (holding 10,000 Shares) is a wholly-owned subsidiary of Shanghai Industrial Investment (Holdings) Company Limited, and these companies together constitute a closely allied group of Shareholders under Rule 14.45 of the Listing Rules. None of these companies has a material interest in the Acquisition Agreement or the Disposal Agreement.