Changmao Biochemical Engineering Company Limited — Proxy Solicitation & Information Statement 2021

Jun 21, 2021

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult your licensed securities dealer or registered institution in securities, bank manager, solicitor, professional accountant or other professional advisers.

If you have sold or transferred all your shares in Changmao Biochemical Engineering Company Limited* , you should at once hand this circular to the purchaser or transferee or to the bank, licensed securities dealer or registered institution in securities or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, 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 circular.

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常茂生物化學工程股份有限公司 Changmao Biochemical Engineering Company Limited[*] (a joint stock limited company incorporated in the People’s Republic of China) (Stock Code: 954)

MAJOR TRANSACTION RELATING TO CONSTRUCTION WORKS FOR THE DALIAN NEW PLANT

A letter from the Board is set out on pages 3 to 9 of this circular.

Capitalised terms used on this cover page should have the same meanings as those defined in the section headed “DEFINITIONS” in this circular.

The Construction Contract and the transaction contemplated thereunder have been approved by written shareholder’s approval obtained from a closely allied group of Shareholders pursuant to Rule 14.44 of the Listing Rules in lieu of holding a general meeting of the Company. This circular is being despatched to the Shareholders for information only.

This circular will be published on the Stock Exchange’s website at www.hkexnews.hk and on the Company’s website at www.cmbec.com.hk.

• For identification purpose only

22 June 2021

CONTENTS

	Page
Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
Appendix I – Financial Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
Appendix II – General Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12

DEFINITIONS

In this circular, unless the context requires otherwise, the following expressions have the meanings as set out below:

• “Board”

the board of the Directors

• “Changmao Dalian” 常茂(大連)新材料有限公司 (Changmao (Dalian) New Material Company Limited*), a wholly-owned subsidiary of the Company

• “Changzhou Xinsheng” 常州新生生化科技開發有限公司 (Changzhou Xinsheng Biochemical Technology Development Co., Ltd.*), an enterprise established in the PRC

• “Company” 常茂生物化學工程股份有限公司 ( C h a n g m a o B i o c h e m i c a l Engineering Company Limited*), a joint stock limited company incorporated in the PRC with the H Shares currently listed on the Main Board of the Stock Exchange (Stock Code: 954)

• “connected person(s)”

• has the meaning ascribed to that term under the Listing Rules

• “Consideration” the consideration of RMB80,000,000 for the Construction Project payable in cash by Changmao Dalian, subject to adjustments arising from the changes in construction works or fluctuations in the public price of labour and materials in Liaoning Province or Dalian City, if any

• “Construction Contract” the construction contract dated 23 April 2021 entered into between Changmao Dalian and the Contractor in respect of the Construction Project as supplemented by the Supplemental Contract

• “Construction Project” The construction works of the phase 1 of the maleic anhydride industrial chain project in the Dalian New Plant

• “Contractor”

• 中建安裝集團有限公司 (China Construction Industrial & Energy Engineering Group Co., Ltd.*)

• “Dalian New Plant” the new plant of the Group located at Changxingdao Economic and Technological Development Zone, Dalian City, Liaoning Province, the PRC

• “Director(s)”

• director(s) of the Company

• “Domestic Share(s)” ordinary share(s) with a par value of RMB0.10 each in the capital of the Company which is(are) subscribed for in RMB by PRC citizens and/or entities

• “Foreign Share(s)”

• ordinary share(s) with a par value of RMB0.10 each in the capital of the Company which is(are) subscribed for in a currency other than RMB by non-PRC citizens and/or entities

• For identification purpose only

1

DEFINITIONS

“Group” the Company and its subsidiaries “H Share(s)” ordinary share(s) in the capital of the Company which is(are) subscribed for and traded in Hong Kong dollar and listed on the Stock Exchange “HK Bio” Hong Kong Bio-chemical Advanced Technology Investment Company Limited, a company incorporated in Hong Kong and a substantial shareholder of the Company “HK Xinsheng” Hong Kong Xinsheng Pioneer Investment Company Limited, a company incorporated in Hong Kong and a substantial shareholder of the Company “Latest Practicable Date” 17 June 2021, being the latest practicable date prior to the printing of this circular for the purpose of ascertaining certain information contained herein “Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange “Maximum Consideration” The maximum Consideration after adjustment (if any) of RMB120,000,000 payable by the Group for the Construction Project “PRC” the People’s Republic of China “RMB” Renminbi, the lawful currency of the PRC “SFO” The Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “Shareholder(s)” shareholder(s) of the Company “Shares” collectively, Domestic Share(s), Foreign Share(s) and H Share(s) “Stock Exchange” The Stock Exchange of Hong Kong Limited “Supervisor(s)” supervisor(s) of the Company “Supplemental Contract” the supplemental contract dated 10 May 2021 entered into between Changmao Dalian and the Contractor to supplement the Construction Contract “%” per cent.

2

LETTER FROM THE BOARD

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常茂生物化學工程股份有限公司 Changmao Biochemical Engineering Company Limited[*] (a joint stock limited company incorporated in the People’s Republic of China) (Stock Code: 954)

Executive Directors:

Mr. Rui Xin Sheng (Chairman) Mr. Pan Chun

Non-executive Directors:

Mr. Zeng Xian Biao Mr. Yu Xiao Ping Ms. Leng Yi Xin Mr. Wang Jian Ping

Independent Non-executive Directors:

Prof. Ouyang Ping Kai Ms. Wei Xin Ms. Au Fung Lan

Head office and legal address:

No. 1228 Chang Jiang Bei Road New North Zone Changzhou City Jiangsu Province, 213034 The PRC

Principal place of business in Hong Kong: Room 54, 5th Floor New Henry House 10 Ice House Street Central Hong Kong 22 June 2021

To the Shareholders

Dear Sir/Madam

MAJOR TRANSACTION RELATING TO CONSTRUCTION WORKS FOR THE DALIAN NEW PLANT

INTRODUCTION

By announcements dated 26 April 2021 and 10 May 2021 issued by the Company, the Board announced that the Group entered into the Construction Contract for the construction works for phase 1 of the maleic anhydride industrial chain project in the Dalian New Plant at a consideration of RMB80,000,000, subject to adjustments arising from the changes in construction works or fluctuations in the public price of labour and materials in Liaoning Province or Dalian City, if any. The final Consideration will be determined by an independent audit on the Construction Project upon completion. The final Consideration after adjustment (if any) payable by the Group under the Construction Contract shall not exceed RMB120,000,000.

• For identification purpose only

3

LETTER FROM THE BOARD

The purpose of this circular is to provide you with further details of the Construction Contract and the transaction contemplated thereunder.

THE CONSTRUCTION CONTRACT

A summary of the principal terms of the Construction Contract is set out as follows:

Date:

23 April 2021, as supplemented by the supplemental contract dated 10 May 2021

Parties:

• (i) 常茂（大連）新材料有限公司 (Changmao (Dalian) New Material Company Limited*), a wholly-owned subsidiary of the Company

• (ii) 中建安裝集團有限公司 (China Construction Industrial & Energy Engineering Group Co., Ltd.*) (the Contractor)

Scope of work:

Construction works of the phase 1 of the maleic anhydride industrial chain project in the Dalian New Plant, including main unit of maleic anhydride production line and related equipment such as blower room, molding workshop, freezing station and fumaric acid workshop.

The whole Construction Project is expected to be completed by 30 August 2021.

Consideration:

T h e c o n s i d e r a t i o n o f t h e C o n s t r u c t i o n C o n t r a c t i s RMB80,000,000, subject to adjustments arising from the changes in construction works or fluctuations in the public price of labour and materials in Liaoning Province or Dalian City with reference to published government guideline, if any. The public price of raw materials is referenced to relevant price published on Dalian Construction Engineering Cost Information Net (大連工程造價信 息網)(http://www.dalianzaojia.com) while the labour price is referenced to relevant price published by Housing and UrbanRural Development Department of Liaoning Province* (遼寧省住 房和城鄉建設廳). The final Consideration will be determined by an independent audit on the Construction Project upon completion. The final Consideration after adjustment (if any) payable by the Group under the Construction Contract shall not exceed RMB120,000,000.

• For identification purpose only

4

LETTER FROM THE BOARD

The Consideration was the bid price submitted by the Contractor and accepted by the Group after a selective tendering process. The Construction Contract was awarded to the Contractor after an objective evaluation by the Group on the experience and competency of the Contractor, the expected scope and complexity of the construction works to be carried out, the costs of material and labour costs estimated to be incurred, and the prevailing market prices for carrying out construction works of comparable scale and complexity. The Group has organized an invitation to tender. The tendering process included issuing tendering document, reviewing qualification and background of bidders, including accessing whether the bidder is a connected person to the Company, formulating tendering review committee, bid opening, bid reviewing and bid determination. The Group has a scoring system to consider qualification, experience and bid price of the bidders to decide the bid winner, and will determine the contract sum based on the results of such process.

The Consideration will be satisfied in cash by the Group’s internal resources. Reference is made to the announcement dated 28 September 2020 in relation to the closure and relocation agreement (“ Relocation Announcement ”). As disclosure in the Relocation Announcement, based on the closure and relocation agreement entered into by the Company and the representative delegated by the People’s Government of Chunjiang Town, Xinbei District, Changzhou City* (常州市新北區春江鎮人民政 府), the Company is expected to receive part of the government compensation of approximately RMB72.9 million before end of July 2021. Taking into account the expected receipt of such partial compensation and the Group’s cash and bank balances (which amounted to approximately RMB134.3 million as at 31 December 2020), the Directors consider that the Group will be able to satisfy the Consideration from internal resources.

• For identification purpose only

5

LETTER FROM THE BOARD

Payment terms:

• (i) 10% of the Consideration shall be paid to the Contractor as a prepayment (the “ Prepayment ”) after the Construction Project budget is confirmed;

• (ii) 70% of the Consideration (in addition to the Prepayment) shall be paid to the Contractor upon the main part of the Construction Project is completed and ready for the equipment installation;

• (iii) Up to 85% of the Consideration (including the Prepayment) shall be paid to the Contractor upon the main part of the Construction Project is completed and has passed the acceptance checking;

• (iv) Up to 97% of the Consideration (including the Prepayment) shall be paid to the Contractor upon independent audit on the Construction Project has been completed;

• (v) The remaining 3% of the Consideration will be held up as retention monies and shall be paid to the Contractor two years after the acceptance of the Construction Project.

REASONS FOR AND BENEFIT OF ENTERING INTO THE CONSTRUCTION CONTRACT

The Group is principally engaged in the production and sales of organic acid products.

Reference is made to the announcements by the Company dated 24 June 2020, 28 September 2020, 2 December 2020 and 9 April 2021 (the “ Announcements ”). As disclosed in the Announcements, due to the changes in government’s policies, the Company has to relocate part of its production plant and its office premises in the Binjiang Area of Changzhou City. As such, the Group entered into the Construction Contract to construct a new plant in Dalian City for the purpose of relocating certain production lines in its original production plant in the Binjiang Area of Changzhou City to the Dalian New Plant and expanding the production capacity of its existing products. The phase 1 of the maleic anhydride industrial chain project in the Dalian New Plant will include production lines of maleic anhydride of annual production capacity of 40,000 tonnes, maleic acid of annual production capacity of 12,000 tonnes and fumaric acid of annual production capacity of 2,000 tonnes. The Board expected that phase 1 of the maleic anhydride industrial chain project will be completed and commence operation within 2022. The expansion will enhance the Group’s production through the addition of production facilities, and thus is expected to benefit the operations and development of the Group.

6

LETTER FROM THE BOARD

INFORMATION OF THE COMPANY AND CHANGMAO DALIAN

The Company is a joint stock limited company incorporated in the PRC and is principally engaged in the production and sales of organic acid products.

Changmao Dalian, a wholly-owned subsidiary of the Company, is a limited liability company incorporated in the PRC and is principally engaged in the production of organic acid products.

INFORMATION OF THE CONTRACTOR

As far as the Company is aware and after making reasonable enquiries, the Contractor is engaged in engineering design, construction, manufacturing and investment in buildings, petrochemical and industrial complexes, and public infrastructures. The Contractor is awarded with First-class contracting of building construction (建築施工總承包一級) qualification. The Contractor has approximately 30 years of experience in construction work including construction of production lines. The ultimate beneficial owner of the Contractor is China State Construction Engineering Corporation (中國建築工程總公司), which is a PRC state-owned enterprise. To the best of the Directors’ knowledge, information and belief, and having made all reasonable enquiries, the Contractor and its ultimate beneficial owner(s) are third parties independent of the Company and its connected persons as at the date of the Supplemental Contract.

FINANCIAL EFFECTS OF THE TRANSACTION

As the transaction contemplated under the Construction Contract will be funded through internal resources of the Group, the Group’s non-current assets are expected to increase by the amount of the total consideration of the transaction contemplated under the Construction Contract while the Group’s current assets will decrease by the same amount upon the completion of the Construction Project. The total assets, net asset value and liabilities of the Group are expected to remain unchanged.

IMPLICATIONS UNDER THE LISTING RULES

As one of the applicable percentage ratios calculated in accordance with Rule 14.07 of the Listing Rules with reference to the Maximum Consideration in respect of the transaction contemplated under the Construction Contract is more than 25% but less than 100%, the transaction contemplated under the Construction Contract constitutes a major transaction for the Company, and is therefore subject to the reporting, announcement, circular and Shareholders’ approval requirements under the Listing Rules.

As no Shareholder has a material interest in the Construction Contract and the transaction contemplated thereunder, none of the Shareholders is required to abstain from voting if the Company were to convene a general meeting for the approval of the Construction Contract and the transaction contemplated thereunder. A written Shareholders’ approval (from a Shareholder or a closely allied group of Shareholders who together hold more than 50% of the voting rights at that general meeting) may be accepted in lieu of holding a general meeting pursuant to Rule 14.44 of the Listing Rules.

• For identification purpose only

7

LETTER FROM THE BOARD

The Company has obtained a written Shareholders’ approval for the Construction Contract and the transaction contemplated thereunder from a closely allied group of Shareholders, holding in an aggregate 271,000,000 Shares, representing approximately 51.16% of the entire issued share capital of the Company as at the date of the Supplemental Contract. Accordingly, the written approval from a closely allied group of Shareholders is accepted in lieu of holding a general meeting of the Company for the approval of the Construction Contract and the transaction contemplated thereunder.

The closely allied group of Shareholders comprises the following Shareholders:

• (1) Hong Kong Xinsheng Pioneer Investment Company Limited, which holds 135,000,000 Shares (representing approximately 25.49% of the entire issued capital of the Company). Mr. Rui Xin Sheng (Director) and Ms. Leng Yi Xin (spouse of Mr. Rui Xin Sheng and Director) together hold approximately 82.59% of the share capital of HK Xinsheng.

• (2) Hong Kong Bio-chemical Advanced Technology Investment Company Limited, which holds 67,500,000 Shares (representing approximately 12.74% of the entire issued capital of the Company). Approximately 59.26% of the share capital of HK Bio is held by existing or former Directors or employees of the Company.

• (3) Jomo Limited, which holds 66,000,000 Shares (representing approximately 12.46% of the entire issued capital of the Company). Mr. Yu Xiao Ping (Director) and his spouse together hold 100% of the share capital of Jomo Limited.

• (4) 常州新生生化科技開發有限公司(Changzhou Xinsheng Biochemical Technology Development Co., Ltd.*), which holds 2,500,000 Shares (representing approximately 0.47% of the entire issued capital of the Company). Mr. Rui Xin Sheng (Director) and Ms. Leng Yi Xin (spouse of Mr. Rui Xin Sheng and Director) together hold 100% of the share capital of Changzhou Xinsheng.

The closely allied group of Shareholders have been Shareholders for over 19 years and they have been voting in the same way in all resolutions since they were Shareholders. The interest of the closely allied group of Shareholders is no different from other Shareholders in respect of the Construction Contract and the transaction contemplated thereunder.

• For identification purpose only

8

LETTER FROM THE BOARD

RECOMMENDATION

The Directors are of the view that the terms of the Construction Contract and the transaction contemplated thereunder are fair and reasonable and in the interests of the Company and its Shareholders as a whole. Although a general meeting will not be convened by the Company to approve the Construction Contract and the transaction contemplated thereunder, if such a general meeting were to be convened by the Company, the Board would recommend the Shareholders to vote in favour of the resolution to approve the Construction Contract and the transaction contemplated thereunder.

ADDITIONAL INFORMATION

Your attention is drawn to the information set out in the appendices to this circular.

By order of the Board Changmao Biochemical Engineering Company Limited* Rui Xin Sheng Chairman

• For identification purpose only

9

FINANCIAL INFORMATION

APPENDIX I

1. FINANCIAL INFORMATION OF THE GROUP

Details of the financial information of the Group for each of the three years ended 31 December 2020, 2019 and 2018 are disclosed in the annual reports of the Company for the three years ended 31 December 2020, 2019 and 2018 respectively. Together with the relevant notes thereto are disclosed in the following documents which have been published and are available on the website of the Stock Exchange (www.hkex.com.hk). The audited consolidated financial statements of the Group for the years ended 31 December 2020, 2019 and 2018, together with the accompanying notes to the financial statements, can be found on 68 to 135 of the annual report of the Company for the year ended 31 December 2020, pages 65 to 133 of the annual report of the Company for the year ended 31 December 2019 and pages 66 to 133 of the annual report of the Company for the year ended 31 December 2018, respectively. Please see below the hyperlinks of the said annual reports:

https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0419/2021041900555.pdf

https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0409/2020040900621.pdf

https://www1.hkexnews.hk/listedco/listconews/sehk/2019/0321/ltn20190321227.pdf

2. INDEBTEDNESS STATEMENT

At the close of business on 30 April 2021, being the Latest Practicable Date for the purpose of this indebtedness statement, the Group had total indebtedness of RMB40,000,000 which were unguaranteed, unsecured bank borrowing repayable within one year.

Save as disclosed above and apart from intra-group liabilities, the Group did not have any outstanding debt securities issued and outstanding or authorised or otherwise created but unissued, term loans, other borrowings or indebtedness in the nature of borrowing including bank overdrafts, liabilities under acceptances (other than normal trade bills), acceptance credits, hire purchase commitments, mortgages and charges, material contingent liabilities and guarantees outstanding at the close of business on 30 April 2021.

3. WORKING CAPITAL SUFFICIENCY

As at the Latest Practicable Date, having made careful enquiries and taking into account of the internal resources of and existing banking facilities available to the Group as well as the transaction in relation to construction works for the Dalian New Plant, the Directors are of the opinion that the Group has sufficient working capital for its present requirements, that is, for at least the next 12 months from the date of this circular.

10

FINANCIAL INFORMATION

APPENDIX I

4. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors were not aware of any material adverse change in the financial or trading position of the Group since 31 December 2020 (being the date to which the latest published audited financial statements of the Group were made up) up to and including the Latest Practicable Date.

5. FINANCIAL AND TRADING PROSPECT OF THE GROUP

The Group is principally engaged in production and sales of organic acid products.

Reference is made to the Announcements in relation to the cessation of production of maleic anhydride and relocation of production lines, the entering into the closure and relocation agreement, and the Company’s plan to construct a new plant in Dalian City. As mentioned in the Announcements, the Company has to close and relocate certain production lines in its Changzhou production plant in the affected area to cope with the changes in government policies. The Group ceased the production of maleic anhydride in June 2020. Before that, the Group produced part of the maleic anhydride used as raw materials for other products in the Changzhou plant 1. After production of maleic anhydride has been ceased, the Group has to purchase all the maleic anhydride from third parties. Starting in the fourth quarter of 2020, the price of maleic anhydride has increased significantly; in addition, the Group is no longer able to benefit from recycling the steam generated during the maleic anhydride production process. These factors had increased the production costs of the Group, leading to a decline in gross profit margin.

The Group plans to construct a new production plant in Changxingdao, Dalian City, Liaoning Province, the PRC and relocate the maleic anhydride production lines of the Changzhou production plant and Lianyungang production plant to the Dalian New Plant and expand the production capacity of its existing products by the new production lines in the Dalian New Plant. The Board expected that the production of maleic anhydride of the Group will return to normal after the Dalian New plant is put into operation. Also, the expansion through the establishment of the Dalian New Plant will enhance the Group’s production through the addition of production facilities, and thus is expected to benefit the operations and development of the Group. The Group will continue the production of food additives as its core business and will increase the competitiveness of its existing products by exploring new markets and new application areas.

11

GENERAL INFORMATION

APPENDIX II

1. RESPONSIBILITY STATEMENT

This circular, for which the directors of the issuer collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the issuer. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this circular misleading.

2. INTERESTS AND SHORT POSITIONS OF THE DIRECTORS, SUPERVISORS OR CHIEF EXECUTIVES IN THE SHARES, UNDERLYING SHARES AND DEBENTURES OF THE COMPANY OR ANY SPECIFIED UNDERTAKING OF THE COMPANY OR ANY OTHER ASSOCIATED CORPORATIONS

As at the Latest Practicable Date, the interests (including interests in shares and short positions) of the Directors, the Supervisors or chief executives of the Company in the shares, underlying shares and debentures of the Company or any specified undertaking of the Company or any other associated corporations (within the meaning of Part XV of the SFO), which were notified to the Company and the Stock Exchange pursuant to: (a) Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which each of them is taken or deemed to have taken under such provisions of the SFO); or (b) Section 352 of the SFO to be entered in the register referred to in that section; or (c) Appendix 10 of the Listing Rules relating to securities transactions by Directors; or (d) the Hong Kong Companies Ordinance (Cap. 622), to be notified to the Company and the Stock Exchange, were as follows:

Long positions in Shares:

			Approximate		Approximate
			percentage		percentage		Approximate
			shareholding		shareholding		percentage
		Number of	in the	Number of	in the		shareholding
		Domestic	Domestic	Foreign	Foreign	Number of	in the
	Capacity	Shares	Shares	Shares	Shares	H Shares	H Shares
			(Note (i))		(Note (j))		(Note (k))
Director
Mr. Rui Xin Sheng	Beneficial owner, interest of	2,500,000	100%	135,000,000	39.30%	3,820,000	2.08%
	spouse and interest of controlled
	corporation_(Note (a))_
Ms. Leng Yi Xin	Beneficial owner, interest of	2,500,000	100%	135,000,000	39.30%	3,820,000	2.08%
	spouse and interest of controlled
	corporation_(Note (b))_

12

APPENDIX II

GENERAL INFORMATION

				Approximate		Approximate
				percentage		percentage		Approximate
				shareholding		shareholding		percentage
		Number of		in the	Number of	in the		shareholding
		Domestic		Domestic	Foreign	Foreign	Number of	in the
	Capacity	Shares		Shares	Shares	Shares	H Shares	H Shares
				(Note (i))		(Note (j))		(Note (k))
Mr. Pan Chun	(Note (c))		–	–	(Note (c))	(Note (c))	–	–
Mr. Zeng Xian Biao	(Note (d))		–	–	(Note (d))	(Note (d))	–	–
Mr. Yu Xiao Ping	Interest of spouse and interest of		–	–	66,000,000	19.21%	2,620,000	1.43%
	controlled corporation_(Note (e))_
Prof. Ouyang Ping Kai	(Note (f))		–	–	(Note (f))	(Note (f))	–	–
Supervisor
Ms. Zhou Rui Juan	(Note (g))		–	–	(Note (g))	(Note (g))	–	–
Mr. Zhang Jun Peng	(Note (h))		–	–	(Note (h))	(Note (h))	–	–
Notes:

• (a) Mr. Rui is the registered holder and beneficial owner of 96,500 Class “A” shares in HK Xinsheng, which is the registered holder and beneficial owner of 135,000,000 Foreign Shares. The issued share capital in HK Xinsheng comprises 170,000 Class “A” shares and 100,000 Class “B” shares. Mr. Rui is also the registered holder and beneficial owner of 70% of the registered capital of Changzhou Xinsheng, which is the registered holder and beneficial owner of 2,500,000 Domestic Shares. Mr. Rui is the beneficial owner of 3,768,000 H Shares and Ms. Leng Yi Xin, a Director and spouse of Mr. Rui, is the beneficial owner of 52,000 H Share. Ms. Leng Yi Xin is also interested in HK Xinsheng and Changzhou Xinsheng, details of which are set out in Note (b) below.

• (b) Ms. Leng is the registered holder and beneficial owner of 73,500 Class “A” shares and 53,000 Class “B” shares in HK Xinsheng, which is the registered holder and beneficial owner of 135,000,000 Foreign Shares. The issued share capital in HK Xinsheng comprises 170,000 Class “A” shares and 100,000 Class “B” shares. Ms. Leng is also the registered holder and beneficial owner of 30% of the registered capital of Changzhou Xinsheng, which is the registered holder and beneficial owner of 2,500,000 Domestic Shares. Ms. Leng is the beneficial owner of 52,000 H Share and Mr. Rui Xin Sheng (a Director and spouse of Ms. Leng) is the beneficial owner of 3,768,000 H Shares. Mr. Rui is also interested in HK Xinsheng and Changzhou Xinsheng, details of which are set out in Note (a) above.

• (c) Mr. Pan is the registered holder and beneficial owner of 2,000 Class “B” shares in HK Xinsheng, which is the registered holder and beneficial owner of 135,000,000 Foreign Shares. The issued share capital in HK Xinsheng comprises 170,000 Class “A” shares and 100,000 Class “B” shares. He is also the registered holder and beneficial owner of 200,000 shares in HK Bio, which is the registered holder and beneficial owner of 67,500,000 Foreign Shares. The total number of issued shares in HK Bio is 6,750,000 shares.

13

GENERAL INFORMATION

APPENDIX II

• (d) Mr. Zeng is the registered holder and beneficial owner of 380,000 shares in HK Bio, which is the registered holder and beneficial owner of 67,500,000 Foreign Shares. The total number of issued shares in HK Bio is 6,750,000 shares. Mr. Zeng is also the registered holder and beneficial owner of 2,000 Class “B” shares in HK Xinsheng, which is the registered holder and beneficial owner of 135,000,000 Foreign Shares. The issued share capital in HK Xinsheng comprises 170,000 Class “A” shares and 100,000 Class “B” shares.

• (e) Mr. Yu and his spouse (who is not a Director) taken together are interested in the entire issued capital of Jomo Limited which is the registered holder and beneficial owner of 66,000,000 Foreign Shares. Mr. Yu’s spouse, Ms. Lam Mau, is also the beneficial owner of 2,620,000 H shares.

• (f) Prof. Ouyang is the registered holder and beneficial owner of 4,000 Class “B” shares in HK Xinsheng, which is the registered holder and beneficial owner of 135,000,000 Foreign Shares. The issued share capital in HK Xinsheng comprises 170,000 Class “A” shares and 100,000 Class “B” shares.

• (g) Ms. Zhou is the registered holder and beneficial owner of 220,000 shares in HK Bio, which is the registered holder and beneficial owner of 67,500,000 Foreign Shares. The total number of issued shares in HK Bio is 6,750,000 shares.

• (h) Mr. Zhang is the registered holder and beneficial owner of 800 Class “B” shares in HK Xinsheng, which is the registered holder and beneficial owner of 135,000,000 Foreign Shares. The issued share capital in HK Xinsheng comprises 170,000 Class “A” shares and 100,000 Class “B” shares. Mr. Zhang is also the registered holder and beneficial owner of 120,000 shares in HK Bio, which is the registered holder and beneficial owner of 67,500,000 Foreign Shares. The total number of issued shares in HK Bio is 6,750,000 shares.

• (i) The percentage is calculated based on the 2,500,000 Domestic Shares in issue as at the Latest Practicable Date.

• (j) The percentage is calculated based on the 343,500,000 Foreign Shares in issue as at the Latest Practicable Date.

• (k) The percentage is calculated based on the 183,700,000 H Shares in issue as at the Latest Practicable Date.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors, Supervisors or chief executives of the Company have interests in the shares, underlying shares and debentures of the Company or any specified undertaking of the Company or any other associated corporations (within the meaning of Part XV of the SFO) (including interests in shares and short positions) which were required to notify the Company and the Stock Exchange pursuant to: (a) Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which each of them is taken or deemed to have taken under such provisions of the SFO); or (b) Section 352 of the SFO to be entered in the register referred to in that section; or (c) Appendix 10 of the Listing Rules relating to securities transactions by Directors; or (d) the Hong Kong Companies Ordinance (Cap. 622), to be notified to the Company and the Stock Exchange.

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3. PERSONS WHO HAVE AN INTEREST OR SHORT POSITION WHICH IS DISCLOSEABLE UNDER DIVISIONS 2 AND 3 OF PART XV OF THE SFO AND SUBSTANTIAL SHAREHOLDERS

So far as known to the Directors, as at the Latest Practicable Date, the followings, not being a Director, Supervisor or chief executive of the Company, had interests or short positions in the shares or underling shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO or were substantial shareholders as recorded in the register required to be kept by the Company pursuant to Section 336 of the SFO:

Long positions in shares:

			Approximate
			percentage		Approximate
			shareholding		percentage
		Number of	in the Foreign	Number of	shareholding in
Name of Shareholder	Capacity	Foreign Shares	Shares	H Shares	the H Shares
			(Note (e))		(Note (f))
Hong Kong Xinsheng Pioneer	Beneficial owner	135,000,000	39.30%	–	–
Investment Company Limited
Hong Kong Bio-chemical Advanced	Beneficial owner	67,500,000	19.65%	–	–
Technology Investment
Company Limited
Jomo Limited	Beneficial owner	66,000,000	19.21%	–	–
Ms. Lam Mau	Interest of spouse, interest of	66,000,000	19.21%	2,620,000	1.43%
	controlled corporation and	(Note (a))		(Note (a))
	beneficial owner
Kehai Venture Capital	Beneficial owner	62,500,000	18.20%	–	–
(Hong Kong) Limited
上海科技創業投資股份有限公司	Interest of controlled corporation	62,500,000	18.20%	–	–
(Shanghai S&T Investment		(Note (b))
Company Limited*, formerly
上海科技投資股份有限公司)
上海科技創業投資有限公司	Interest of controlled corporation	62,500,000	18.20%	–	–
(Shanghai Technology Entrepreneur		(Note (c))
Investment Company*, formerly
上海科技投資公司)
上海科技創業投資（集團）有限公司	Interest of controlled corporation	62,500,000	18.20%	–	–
(Shanghai S&T Venture Capital		(Note (d))
(Group) Co., Ltd.*)

• For identification purpose only

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GENERAL INFORMATION

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Notes:

• (a) Ms. Lam Mau and her spouse, Mr. Yu Xiao Ping (who is a Director) taken together are interested in the entire issued capital of Jomo Limited which is the registered holder and beneficial owner of 66,000,000 Foreign Shares. Ms. Lam Mau is also the beneficial owner of 2,620,000 H shares.

• (b) Shanghai S&T Investment Company Limited is the beneficial owner of 100% of the issued share capital of Kehai Venture Capital (Hong Kong) Limited, which is the registered holder and beneficial owner of 62,500,000 Foreign Shares.

• (c) Shanghai Technology Entrepreneur Investment Company is the beneficial owner of 62.3% of the issued share capital of Shanghai S&T Investment Company Limited, which is the beneficial owner of 100% of the issued share capital of Kehai Venture Capital (Hong Kong) Limited. Kehai Venture Capital (Hong Kong) Limited is the registered holder and beneficial owner of 62,500,000 Foreign Shares.

• (d) Shanghai S&T Venture Capital (Group) Co., Ltd. is the beneficial owner of 100% of the issued capital of Shanghai Technology Entrepreneur Investment Company. Shanghai Technology Entrepreneur Investment Company is the beneficial owner of 62.3% of the issued capital of Shanghai S&T Investment Company Limited, which is the beneficial owner of 100% of the issued share capital of Kehai Venture Capital (Hong Kong) Limited. Kehai Venture Capital (Hong Kong) Limited is the registered holder and beneficial owner of 62,500,000 Foreign Shares.

• (e) The percentage is calculated based on the 343,500,000 Foreign Shares in issue as at the Latest Practicable Date.

• (f) The percentage is calculated based on the 183,700,000 H Shares in issue as at the Latest Practicable Date.

Save as disclosed above, as at the Latest Practicable Date, the Directors are not aware of any person, not being a Director, Supervisor or chief executive of the Company, had interests or short positions in the shares or underling shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO or were substantial shareholders as recorded in the register required to be kept by the Company pursuant to section 336 of the SFO.

4. DIRECTORS’ SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had any existing or proposed service contracts with any member of the Group which does not expire or is not determinable by the employer within one year without payment of compensation (other than statutory compensation).

5. DIRECTORS’ INTERESTS IN ASSETS AND OTHER INTERESTS

As at the Latest Practicable Date, none of the Directors had any direct or indirect interests in any assets which have been acquired or disposed of by, or leased to, or which are proposed to be acquired or disposed of by, or leased to, any member of the Group since 31 December 2020, being the date to which the latest published audited accounts of the Group were made up.

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6. DIRECTORS’ INTERESTS IN CONTRACTS AND ARRANGEMENTS

As at the Latest Practicable Date, none of the Directors was materially interested in any contract or arrangement subsisting as at the Latest Practicable Date which is significant in relation to the business of the Group.

7. DIRECTORS’ COMPETING BUSINESS

As at the Latest Practicable Date, none of the Directors, Supervisors or management shareholders of the Company and their respective associates had any interest in a business which competes or may compete with the business of the Group.

8. LITIGATION

As at the Latest Practicable Date, the Group was not engaged in any material litigation or arbitration of material importance and no material litigation or claim of material importance was known to the Directors to be pending or threatened by or against the Group.

9. MATERIAL CONTRACTS

Save as disclosed below, there are no material contracts (not being contracts entered into in the ordinary course of business) which have been entered into by any member of the Group within the two years immediately preceding the date of this circular:

• (a) the property acquisition agreements dated 28 June 2020, entered into by the Company and the 常州金融科技孵化中心置業有限公司 (Changzhou Financial Technology Incubation Center Real Estate Company Limited) (“ Vendor ”), pursuant to which the Company agreed to acquire and the Vendor agreed to sell 8 office units on the 28th floor of Gaoxin Plaza, Xinbei District, Changzhou City, the PRC, with an aggregate gross floor area of approximately 2,206 square metres (the “ Property* ”), at a consideration of RMB25,502,278.

• (b) the carpark space acquisition agreements dated 10 July 2020, entered into by the Company and the Vendor, pursuant to which the Company agreed to acquire and the Vendor agreed to sell 29 carpark spaces with an aggregate gross floor area of approximately 951 square metres located in the same building of the Property, at a consideration of RMB2,600,000.

• (c) the closure and relocation agreement in relation to the closure and relocation of the Company’s relevant plant area situated in Changzhou, the PRC dated 28 September 2020, entered into by the Company and Changzhou Zhengan Property Demolition Company Limited (常州市正安房屋拆遷有限公司), the representative delegated by the People’s Government of Chunjiang Town, Xinbei District, Changzhou City (常州市新北區春江鎮人 民政府). The total compensation under the closure and relocation agreement was RMB205,265,580.

• For identification purpose only

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GENERAL INFORMATION

APPENDIX II

• (d) The acquisition agreement dated 13 April 2021 entered into by Changmao Dalian and 大連 市自然資源局長興島經濟區分局 (The Ministry of Natural Resources of Changxingdao Economic Zone, Dalian City*), pursuant to which the Group agreed to acquire a parcel of land located at Changxingdao Economic and Technological Development Zone, Dalian City, Liaoning Province, the PRC, with a total land area of 188,887.75 square metres and total building area of 113,332.65 square metres for industrial use, at a consideration of RMB71,780,000.

• (e) the Construction Contract.

10. GENERAL

• (a) The company secretary of the Company is Ms. Wan Pui Ling Alice. Ms. Wan Pui Ling Alice is a member of the Hong Kong Institute of Certified Public Accountants.

• (b) The legal address of the Company is No. 1228 Chang Jiang Bei Road, New North Zone, Changzhou City, Jiangsu Province, 213034, the PRC.

• (c) The principal place of business in Hong Kong is Room 54, 5/F, New Henry House, 10 Ice House Street, Central, Hong Kong.

• (d) The Hong Kong share registrar and transfer office of the Company is Computershare Hong Kong Investor Services Limited which is situated at 46th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong.

• (e) In the event of inconsistency, the English text of this circular shall prevail over the Chinese text.

11. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection at the Company’s principal place of business in Hong Kong at Room 54, 5/F, New Henry House, 10 Ice House Street, Central, Hong Kong from 10:00 a.m. to 1:00 p.m. and from 2:30 p.m. to 4:30 p.m., Mondays to Fridays (except public holidays) from the date of this circular up to 14 days thereafter:

• (a) the Articles of Association of the Company;

• (b) the annual reports of the Company for each of the three years ended 31 December 2020, 2019, and 2018, respectively;

• (c) the letter from the Board, the text of which is set out in the “Letter from the Board” in this circular;

• (d) the material contracts referred to in paragraph headed “MATERIAL CONTRACTS” of this appendix; and

• (e) this circular.

• For identification purpose only

18