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Jilin Zixin Pharmaceutical Co., Ltd. Related Transactions Announcement

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Stock code: 002118 Securities abbreviation: Zixin Pharmaceutical Industry Announcement No.: 2014-012

Jilin Zixin Pharmaceutical Co., Ltd.

Related party transaction announcement

The company and all members of the board of directors guarantee that the content of the information disclosure is true, accurate and complete, and there are no false records, misleading statements or major omissions.

I. Overview of related party transactions

1. Purpose of related party transactions

The annual audit institution of Jilin Zixin Pharmaceutical Co., Ltd. (hereinafter referred to as “the company”), Zhongzhun Certified Public Accountants (special general partnership) issued a reservation for the appropriateness of the company’s book inventory in the past three years.

The company considers that the wild ginseng goods are rare and valuable, the unit value is high, it is difficult to form a foreign sales to realize the fund repayment in a short time, and it is difficult to find a convincing market trading quotation system. To solve the above difficulties, the company's largest shareholder Dunhua Kangping Investment Co., Ltd. (hereinafter referred to as “Kangping Company”) agreed to undertake wild ginseng in the company's book inventory.

2. Related transaction content:

The subject of the transaction: the company's book wild ginseng weighs 8,172.38 grams.

Pricing basis: the purchase cost of the company wild ginseng plus the holding cost during the period. The cost of ownership is calculated based on the benchmark interest rate of the bank's 1-year loan during the same period of the holding period.

Transaction price: The company's book balance of 129,298,206.98 yuan, the holding cost of the period is about 18,000,000.00 yuan, the total amount of tax-free transaction is about 147,298,206.98 yuan.

The company is market-oriented and follows the principles of openness, fairness, justice and reasonableness. Based on the market price and the cost of the company's purchase of wild ginseng plus the holding cost of the period, the transaction price of wild ginseng is determined. The transaction price is fair and reasonable. There is no harm to the interests of the company and the minority shareholders of the company, and it will not affect the independence of the company.

Payment time: The initial payment amount is 45,000,000.00 yuan, and the remaining amount is settled within 6 months from the date of execution of the contract.

3. Voting of connected transactions

The eleventh meeting of the fifth board of directors of the company was reviewed and approved. The company's related directors Cao Enhui, Guo Chunlin, Zu Chunxiang and Yin Jinlong abstained from voting.

This related party transaction has been independently approved by the independent director and issued an independent opinion.

The related party transaction still needs to be reviewed and approved by the shareholders' meeting. The company's largest shareholder, Kang Ping Company and its second largest shareholder, Mr. Zhong Weiguang, abstained from voting.

4. The above-mentioned related party transactions did not constitute a major asset restructuring as stipulated in the Measures for the Administration of Major Asset Restructuring of Listed Companies.

Second, the basic situation of related parties

Kangping Company

Company Name: Dunhua Kangping Investment Co., Ltd.

Address: 104 Victory South Street, Dunhua City

Business Type: Limited Liability Company

Registered capital: 47.35 million yuan

Legal representative: Guo Chunhui

Business scope: investment

As of December 31, 2013, Kangping's total consolidated assets were 4,11,174,700 yuan, and the consolidated net assets were 1,84,743,100 yuan; the consolidated operating income in 2013 was 474,668,800 yuan, and the consolidated net profit was 2,758,800 yuan.

Third, the purpose of connected transactions and the impact on listed companies

1. The above transaction was based on the premise that Kangping Company solved the actual difficulties of the company, which enabled the company to realize the sales of wild ginseng in a short period of time, realize the withdrawal of funds, avoid market risks, and solve the problem of finding a convincing market trading quotation system. The problem of completely eliminating the company's non-standard unqualified audit report;

2. The company is market-oriented and follows the principles of openness, fairness, impartiality and rationality. Based on the market price and the cost of the company's purchase of wild ginseng plus the holding cost of the period, the transaction price of wild ginseng is determined and the transaction price is fair. Reasonable, there is no harm to the interests of the company and the minority shareholders of the company, and will not affect the independence of the company.

3. If the above transaction is completed, it is expected to increase the company's annual operating income for 2014 by RMB 147,298,206.98, increase operating costs by RMB 129,298,206.98, increase operating profit by approximately RMB 18,000,000.00, and increase net profit by approximately RMB 15,300,000.00. The final impact is based on the auditor's data after the audit of the 2014 financial report.

Fourth, other instructions

The company has not had any connected transactions with Kangping Company in the past 12 months.

 

 

Special announcement

Jilin Zixin Pharmaceutical Co., Ltd. Board of Directors

February 25, 2014