The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this announcement, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

深圳市海王英特龍生物技術股份有限公司 SHENZHEN NEPTUNUS INTERLONG BIO-TECHNIQUE COMPANY LIMITED* (a joint stock limited company incorporated in the People’s Republic of China)

(Stock code: 8329)

REVISED CAPS FOR CONTINUING CONNECTED TRANSACTIONS On 21 August 2005, the Company and Shandong Neptunus entered into a Distributorship Agreement pursuant to which Shandong Neptunus was appointed as the non-exclusive distributor of the Company’s products in Shandong Province of the PRC from 21 August 2005 to 31 December 2007. On 29 August 2005, the Stock Exchange granted the Waiver to the Company waiving it from strict compliance with the announcement requirement for continuing connected Transactions under Rule 20.47 of the GEM Listing Rules. Shandong Neptunus has been expanding its distribution network rapidly and the Company has entered into the Distribution Arrangement with Shandong Neptunus and the Other Distributors pursuant to which (a) Shandong Neptunus will become the Company’s main distributor in Shandong Province of the PRC and (b) the Other Distributors will be consolidated into the distribution network of Shandong Neptunus and will become the sub-distributors of Shandong Neptunus and purchase the Company’s products from Shandong Neptunus instead of the Company. In view of the above, the Board noted that there would be a significant increase in Shandong Neptunus’s demand for the Company’s products in the last quarter of the year 2005 and the years 2006 and 2007. Accordingly, the Company has revised the annual caps for the Transactions for the three years ending 31 December 2005, 31 December 2006 and 31 December 2007 to RMB8,500,000 (approximately HK$8,173,077), RMB9,000,000 (approximately HK$8,653,846) and RMB9,500,000 (approximately HK$9,134,615), respectively. As each of the percentage ratios (other than the profit ratio) in respect of the revised annual caps is less than 25% and the annual consideration is less than HK$10,000,000, the Transactions are only subject to the reporting and announcement requirement and are exempt from the independent Shareholders’ approval requirement pursuant to Rule 20.34 of the GEM Listing Rules. Particulars of the Transactions will be disclosed in future annual reports of the Company for the financial years during which the Company undertakes the Transactions in accordance with Rule 20.46 of the GEM Listing Rules.

*

For identification purpose only

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BACKGROUND On 21 August 2005, the Company and Shandong Neptunus entered into a Distributorship Agreement pursuant to which Shandong Neptunus was appointed as the non-exclusive distributor of the Company’s products in Shandong Province of the PRC from 21 August 2005 to 31 December 2007. As at 21 August 2005 and upon Listing, Neptunus Bioengineering was interested in approximately 67.5% of the issued shares of the Company. Therefore upon Listing, Neptunus Bioengineering was a substantial shareholder of the Company. Neptunus Bioengineering also held 60% equity interest in Shandong Neptunus as at 21 August 2005 and upon Listing. Therefore, upon Listing, Shandong Neptunus was an associate of Neptunus Bioengineering and a connected person of the Company under Chapter 20 of the GEM Listing Rules and the Transactions constituted continuing connected transaction under Chapter 20 of the GEM Listing Rules. First Shanghai Capital Limited, the sponsor of the Company, had made an application to the Stock Exchange for and on behalf of the Company for the Waiver from strict compliance with the announcement requirement pursuant to Rule 20.42(3) of the GEM Listing Rules in respect of the continuing connected Transactions between the Company and Shandong Neptunus with the respective annual caps of RMB2,612,000 (approximately HK$2,464,000), RMB3,265,000 (approximately HK$3,079,000) and RMB4,081,000 (approximately HK$3,850,000) for the three years ending 31 December 2005, 31 December 2006 and 31 December 2007. On 29 August 2005, the Stock Exchange granted the Waiver to the Company waiving it from strict compliance with the announcement requirement for the continuing connected Transactions between the Company and Shandong Neptunus under Rule 20.47 of the GEM Listing Rules. REASONS FOR REVISING THE ORIGINAL ANNUAL CAPS The Company used to distribute its products in Shandong Province of the PRC through a number of distributors including Shandong Neptunus. Pursuant to a notice issued by the State Development and Reform Commission of the PRC dated 28 September 2005, as from 28 September 2005, the highest retail price of rhIFN α2b for injection has to be cut down by 17% to 34% for each of the three specifications of rhIFN α2b for injection. As rhIFN α2b for injection is one of the Company’s main products, the above mentioned reduction in price will inevitably affect the gross profit and profitability of the Company. In view of this, the Company has devised methods which could reduce the costs in sales and marketing but at the same time without affecting its sales volume in the market. Shandong Neptunus has been rapidly expanding its distribution network over the years. In the last quarter of the year 2005, Shandong Neptunus has completed development of a wide and strong distribution network of medicines and products, antibiotics, biological drugs and products in Shandong Province of the PRC. The current distribution network of Shandong Neptunus covers not only the inner area of Shandong Province of the PRC but also the eastern part of the PRC. At the same time, Shandong Neptunus has also been developing such distribution network as a nationwide logistic and distribution network. Due to the above mentioned price reduction in the Company’s main product, if the Company continues to distribute its products directly to each of the Other Distributors, the geographical areas that can be covered by the Company’s distribution network would be very limited. In addition, the costs associated with the distribution, such as transportation costs, liaison costs and client management costs incurred in respect of dealing with the Other Distributors will inevitably be borne by the Company and therefore the Company’s profitability will be affected. After discussing with Shandong Neptunus, the Company found out that the Other Distributors engaged by the Company may also be engaged by Shandong Neptunus to distribute the products of the other suppliers of Shandong Neptunus. In view of the above and in order to save costs and take advantage of Shandong Neptunus’ expanded distribution network, the Directors considered that it would be in the best interest of the Company and the Shareholders as a whole to enter into the Distribution Arrangement with Shandong Neptunus and the Other Distributors and consolidate the Other Distributors into the distribution network of Shandong Neptunus. –2–

Pursuant to the Distribution Arrangement, Shandong Neptunus will become the Company’s main distributor in Shandong Province of the PRC and the Other Distributors will be consolidated into the distribution network of Shandong Neptunus and will become the sub-distributors of Shandong Neptunus and purchase the Company’s products from Shandong Neptunus instead of the Company. As a result of the Distribution Arrangement, the Company is only required to deal with Shandong Neptunus in respect of the sales to Shandong Province of the PRC. Shandong Neptunus will then distribute the products obtained from the Company to the Other Distributors. The Distribution Arrangement will therefore bring a wide range of benefits to the Company, including reduction in costs such as logistics and management costs and reduction in the risk of the Company not being able to collect the sales money from the Other Distributors. THE REVISED ANNUAL CAPS The Company’s unaudited turnover in Shandong Province of the PRC in the year 2004 is approximately RMB6,130,000. After taking into consideration the Company’s business development and the significant increase in Shandong Neptunus’s demand for the Company’s products due to the rapid development of its distribution network and the Distribution Arrangement, it is expected that the aggregate value of the Transactions for the three years ending 31 December 2005, 31 December 2006 and 31 December 2007 will exceed the respective annual caps of RMB2,612,000 (approximately HK$2,464,000), RMB3,265,000 (approximately HK$3,079,000) and RMB4,081,000 (approximately HK$3,850,000) as stated in the Waiver. Accordingly, the Company has revised the annual caps for the Transactions for the three years ending 31 December 2005, 31 December 2006 and 31 December 2007 to RMB8,500,000 (approximately HK$8,173,077), RMB9,000,000 (approximately HK$8,653,846) and RMB9,500,000 (approximately HK$9,134,615), respectively. The above revised annual caps are calculated based on the Company’s estimated increase in sales volume in Shandong Province of the PRC for each of the years 2005, 2006 and 2007 as compared with the year 2004. The Company’s estimated sales volume in Shandong Province of the PRC for the years 2005, 2006 and 2007 as compared with the year 2004 will approximately be increased by 39%, 47% and 55% respectively. In this connection, the Company and Shandong Neptunus have signed three confirmation letters on 30 November 2005 to revise the annual caps. In determining the revised annual caps, the Board has considered the recent business growth of the distribution of the Company’s products by Shandong Neptunus and the expected market prices of the Company’s products. BENEFITS OF THE TRANSACTIONS The Transactions arise from the long-term business relationship with Shandong Neptunus. The Directors consider that the Distributorship Agreement would enable the Company to take advantage of the expanded distribution network of Shandong Neptunus, which is important and beneficial to the Company and the Shareholders as a whole. The Transactions are of a recurring nature and the Directors, including the independent non-executive Directors, consider that the Transactions: (i)

have been entered in the ordinary and usual course of business of the Company and in accordance with the terms of the Distributorship Agreement; and

(ii)

are on normal commercial terms and are fair and reasonable and in the interest of the Company and its Shareholders as a whole.

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CONNECTED TRANSACTION Neptunus Bioengineering is currently interested in approximately 67.5% of the issued shares of the Company and is therefore a substantial shareholder of the Company. Neptunus Bioengineering currently also holds 60% equity interest in Shandong Neptunus. Therefore, Shandong Neptunus is an associate of Neptunus Bioengineering and a connected person of the Company under Chapter 20 of the GEM Listing Rules. As each of the percentage ratios (other than the profit ratio) in respect of the revised annual caps is less than 25% and the annual consideration is less than HK$10,000,000, the Transactions are only subject to the reporting and announcement requirement and are exempt from the independent Shareholders’ approval requirement pursuant to Rule 20.34 of the GEM Listing Rules. Particulars of the Transactions will be disclosed in future annual reports of the Company for the financial years during which the Company undertakes the Transactions in accordance with Rule 20.46 of the GEM Listing Rules. GENERAL The Company is principally engaged in research and development of modern biological technology, production and sale of cytokines category protein therapeutic drugs and biological products for disease prevention. Shandong Neptunus is principally engaged in wholesale of Chinese medicines, chemical medicines and products, antibiotics, biological drugs and products, sale of medical equipment and sale of food and health products. DEFINITIONS Unless the context otherwise requires, terms used in this announcement shall have the following meanings: “Board”

the board of Directors

“Company”

深 圳 市 海 王 英 特 龍 生 物 技 術 股 份 有 限 公 司 (Shenzhen Neptunus Interlong Bio-technique Company Limited) (Stock Code: 8329), a joint stock limited company incorporated in the PRC whose H shares are listed on GEM of the Stock Exchange

“Directors”

directors of the Company

“Distributorship Agreement”

the distributorship agreement dated 21 August 2005 between the Company and Shandong Neptunus

“Distribution Arrangement”

the distribution arrangement entered into among the Company, Shandong Neptunus and the Other Distributors in November 2005 pursuant to which (a) Shandong Neptunus will become the Company’s main distributor in Shandong Province of the PRC and (b) the Other Distributors will be consolidated into the distribution network of Shandong Neptunus and will become the sub-distributors of Shandong Neptunus and purchase the Company’s products from Shandong Neptunus instead of the Company

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“GEM”

Growth Enterprise Market of the Stock Exchange

“GEM Listing Rules”

The Rules Governing the Listing of Securities on the GEM

“HK$”

Hong Kong dollars, the lawful currency of Hong Kong

“Listing”

the listing of the Company’s H shares on the GEM

“Neptunus Bioengineering”

Shenzhen Neptunus Bioengineering Company Limited, a joint stock limited company incorporated in the PRC, which is interested in approximately 67.5% of the Company’s issued share capital

“Other Distributors”

representing approximately 80% (in terms of number) of the smaller distributors of the Company in Shandong Province of the PRC as at 30 November 2005

“PRC”

the People’s Republic of China

“rhIFN α2b for injection”

recombinant human interferon α2b lyophilised power for injection

“RMB”

Renminbi, the lawful currency of the PRC

“Shandong Neptunus”

Shandong Neptunus Yinhe Pharmaceutical Company Limited, a company incorporated in the PRC, a fellow subsidiary of the Company

“Shareholders”

holders of shares of the Company

“Stock Exchange”

The Stock Exchange of Hong Kong Limited

“Transactions”

the transactions contemplated by the Distributorship Agreement

“Waiver”

the waiver granted by the Stock Exchange to the Company on 29 August 2005 in respect of the Transactions

“%”

per cent

In this announcement, figures in RMB in respect of the original annual caps of RMB2,612,000, RMB3,265,000 and RMB4,081,000 as stated in the Waiver are translated into HK$ at the exchange rate of HK$1.00 = RMB1.06 and figures in RMB in respect of the revised annual caps of RMB8,500,000, RMB9,000,000 and RMB9,500,000 are translated into HK$ at the exchange rate of HK$1.00 = RMB1.04. In this announcement, figures in HK$ are for illustration purposes only.

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As at the date of this announcement, the executive Directors are Mr. Zhang Si Min, Mr. Chai Xiang Dong and Ms. Wang Yan; the non-executive Directors are Mr. Shao Chun Jie and Ms. Yu Lin; and the independent non-executive Directors are Mr. Lu Sun, Mr. Yick Wing Fat, Simon and Mr. Poon Ka Yeung. By order of the Board Shenzhen Neptunus Interlong Bio-technique Company Limited* Zhang Si Min Chairman Shenzhen, PRC, 8 December 2005 This announcement, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the GEM Listing Rules for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that, to the best of their knowledge and belief, (i) the information contained in this announcement is accurate and complete in all material aspects and not misleading; (ii) there are no other matters the omission of which would make any statement in this announcement misleading; and (iii) all opinions expressed in this announcement have been arrived at after due and careful consideration and are founded on bases and assumptions that are fair and reasonable. This announcement will remain on the “Latest Company Announcement” page of the GEM website at http://www.hkgem.com for at least 7 days from its date of publication. *

For identification purpose only

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