Shanghai Pharmaceuticals Holding Co., Ltd. (Shanghai Pharmaceuticals) has signed a new Property Leasing Framework Agreement with its controlling shareholder, Shanghai Pharmaceutical (Group) Co., Ltd., covering the period from 1 January 2027 to 31 December 2029.

Under the agreement, the Group will continue leasing properties from Shanghai Pharmaceutical (Group) with an estimated maximum rent of up to RMB100 million (approximately USD13.7 million) per year. In line with Hong Kong Stock Exchange guidance, annual caps for the related right-of-use assets are set at RMB220 million (USD30.13 million) for each of the three years.

Historical data show right-of-use asset values of RMB17.35 million in 2024, RMB47.67 million in 2025, and RMB11.31 million for the six months to 30 June 2026. Corresponding rents paid to the parent were RMB34.80 million, RMB37.68 million, and RMB18.51 million, respectively.

Pricing must remain on normal commercial terms, with rents no higher than those offered by independent third parties for comparable properties. Each lease will be documented through individual agreements aligned with the framework’s terms.

Because Shanghai Pharmaceutical (Group) is a connected person under Hong Kong Listing Rule 14A.07, the arrangement constitutes a continuing connected transaction. The applicable percentage ratios are above 0.1 % but below 5 %, subjecting the deal to reporting, annual review and announcement requirements while exempting it from circular and independent shareholders’ approval.

Management cites the renewal as essential for securing stable premises to support business expansion and reduce administrative costs, given the lessor’s familiarity with the Group’s operations. Internal controls include quarterly monitoring by finance teams and annual reviews by the company’s auditor and independent non-executive directors to ensure compliance with pricing principles and cap limits.