IMPORTANT The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this circular, 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 circular. If you are in any doubt as to the action to be taken, you should immediately consult your stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser. If you have sold or transferred all your shares in Tianjin TEDA Biomedical Engineering Company Limited (the “Company”), you should at once hand this circular to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee. 天津泰達生物醫學工程股份有限公司 Tianjin TEDA Biomedical Engineering Company Limited (a joint stock company incorporated in the People’s Republic of China with limited liability) (Stock code: 8189) MAJOR AND CONNECTED TRANSACTION IN RESPECT OF THE PROPOSED ACQUISITION OF THE REMAINING 49% EQUITY INTERESTS IN FULILONG Independent financial adviser to the independent board committee of Tianjin TEDA Biomedical Engineering Company Limited Hantec Capital Limited A letter from the independent board committee of the Company and a letter from the independent financial adviser, Hantec Capital Limited in relation to the Acquisition are set out on page 21 and pages 22 to 33 of this circular respectively. A notice convening an extraordinary general meeting of the Company to be held at 9th Floor, Block A2, Tianda High-Tech Park, No.80, The 4th Avenue, TEDA, Tianjin, the People’s Republic of China at 9:00 a.m. on Friday, 13 October 2006 is set out on pages 159 to 160 of this circular. This circular will remain on the GEM website at http://www.hkgem.com on the “Latest Company Announcements” page for at least 7 days from the day of its posting. 28 August 2006 CHARACTERISTICS OF THE GROWTH ENTERPRISE MARKET (“GEM”) OPERATED BY THE STOCK EXCHANGE OF HONG KONG LIMITED (THE “STOCK EXCHANGE”) GEM has been established as a market designed to accommodate companies to which a high investment risk may be attached. In particular, companies may list on GEM with neither a track record of profitability nor any obligation to forecast future profitability. Furthermore, there may be risks arising out of the emerging nature of companies listed on GEM and the business sectors or countries in which the companies operate. Prospective investors should be aware of the potential risks of investing in such companies and should make the decision to invest only after due and careful consideration. The greater risk profile and other characteristics of GEM mean that it is a market more suited to professional and other sophisticated investors. Given the emerging nature of companies listed on GEM, there is a risk that securities traded on GEM may be more susceptible to high market volatility than securities traded on the main board of the Stock Exchange and no assurance is given that there will be a liquid market in the securities traded on GEM. The principal means of information dissemination on GEM is publication on the Internet website operated by the Stock Exchange. GEM-listed companies are not generally required to issue paid announcements in gazetted newspapers. Accordingly, prospective investors should note that they need to have access to the GEM website at http://www.hkgem.com in order to obtain up-to-date information on GEM-listed issuers. – i – CONTENTS Page Definitions . 1 Letter from the Board Introduction . 4 The Equity Transfer Agreement . 5 Information on the Group . 8 Information on Fulilong . 9 Reasons for and benefits of the Acquisition . 11 Management discussion and analysis of the results of Fulilong . 13 Financial effects of the Acquisition . 17 Major and connected transaction . 18 EGM . 19 Procedures to demand a poll . 19 Recommendation . 20 Other information . 20 Letter from the independent board committee . 21 Letter from Hantec Capital Limited . 22 Appendix 1 – Accountants’ report on Fulilong . 34 Appendix 2 – Financial information of the Group . 61 Appendix 3 – Unaudited pro-forma financial information . 142 Appendix 4 – General information . 148 Notice of Extraordinary General Meeting . 159 – ii – DEFINITIONS In this circular, the following expressions shall have the following meanings unless the context indicates otherwise: “Acquisition” the proposed conditional acquisition of the Sale Equity pursuant to the terms and conditions of the Equity Transfer Agreement “associate” has the meaning as defined in the GEM Listing Rules “Board” the board of Directors “Company” 天津泰達生物醫學工程股份有限公司 (Tianjin TEDA Biomedical Engineering Company Limited), a joint stock company established in the PRC on 8 September 2002 with limited liability and the H Shares of which are listed and traded on GEM (Stock Code: 8189) “Completion” completion of the sale and purchase of the Sale Equity under the Equity Transfer Agreement “Consideration” the aggregate consideration of RMB33,402,971.87 payable to the other shareholders of Fulilong for the Sale Equity under the Equity Transfer Agreement “Domestic Shares” the domestic invested shares of nominal value of RMB0.10 each in the share capital of the Company, which are subscribed for in RMB “Directors” the directors of the Company “EGM” an extraordinary general meeting of the Company to be convened to consider the Acquisition “Equity Transfer Agreement” The conditional equity transfer agreement dated 25 June 2006 entered into among the Company, Wan Tai, the other shareholders of Fulilong and Fulilong in relation to the Acquisition “GEM” the Growth Enterprise Market of the Stock Exchange “GEM Listing Rules” the Rules Governing the Listing of Securities on GEM “Fulilong” 廣東福利龍複合肥有限公司 (Guangdong Fulilong Compound Fertilizers Company Limited#), a company established in the PRC on 20 August 1996 with limited liability and owned as to 51% by the Company and 49% by the other shareholders of Fulilong as described in this circular before the Acquisition – 1 – DEFINITIONS “Group” the Company and its subsidiaries “H Shares” the overseas listed foreign invested shares of nominal value of RMB0.10 each in the share capital of the Company, which are listed on GEM and subscribed for and traded in HK$ “Hong Kong” the Hong Kong Special Administrative Region of the PRC “Independent Board Committee” an independent committee of the board of Directors comprising Professor Xian Guoming and Mr. Guan Tong, the independent non-executive Directors, formed for the purpose of advising the Independent Shareholders in relation to the Acquisition “Independent Third Party(ies)” person(s) which, to the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, is/are independent of and not connected with the Company, any of the directors, supervisors, chief executive, promoters, substantial shareholders or management shareholders (both as defined in the GEM Listing Rules) of the Company and of its subsidiaries and their respective associates “Independent Shareholders” Shareholders who are not interested or involved in the Acquisition “Latest Practicable Date” 25 August 2006, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained in this circular “other shareholders of Fulilong” Mr. Cao Ai Xin, Mr. Huang Kun Yao, Ms. Zhang Li Zhi, Mr. Huang Chuan Rong and Mr. Gan Shi Fan “PRC” or “China” the People’s Republic of China and for the purpose of this circular, does not include Hong Kong, the Macau Special Administrative Region and Taiwan “Sale Equity” the remaining 49% equity interests in the registered capital of Fulilong, of which 42.53%, 4.9%, 0.98%, 0.29% and 0.29% are from Mr. Cao Ai Xin, Mr. Huang Kun Yao, Ms. Zhang Li Zhi, Mr. Huang Chuan Rong and Mr. Gan Shi Fan respectively, to be acquired in accordance with the terms and conditions of the Equity Transfer Agreement – 2 – DEFINITIONS “SFO” the Securities and Future Ordinance (Chapter 571 of the laws of Hong Kong) as amended, supplemented and/or modified from time to time “Shaanxi Xing Fu” 陝西興福肥業有限責任公司 (Shaanxi Xing Fu Fertilizer Company Limited#), a company established in the PRC on 25 May 2004 with limited liability and owned as to 40% by Fulilong and 60% by Shaanxi Xing Hua “Shaanxi Xing Hua” 陝西興化化學股份有限公司 (Shaanxi Xinghua Chemistry Co., Ltd.), a company established in the PRC in 1997 with limited liability and an Independent Third Party “Shandong TEDA” 山東泰達生物工程有限公司 (Shandong TEDA Bio- engineering Co., Ltd.), a company established in the PRC on 18 September 2004 with limited liability and a 51% owned subsidiary of the Company “Shareholders” shareholders of the Company “Stock Exchange” The Stock Exchange of Hong Kong Limited “Wan Tai” 天津萬泰生物發展有限公司 (Tianjin Wan Tai Bio- Development Company Limited#), a company established in the PRC on 3 September 2001 with limited liability and a wholly-owned subsidiary of the Group “HK$” Hong Kong Dollars, the lawful currency of Hong Kong “RMB” Renminbi, the lawful currency of the PRC “%” per cent For the purpose of this circular, conversion of RMB into HK$ is calculated by using the exchange rate of RMB1.04 = HK$1.00. Such exchange rate is used for the sole purpose of illustration only and does not constitute a representation that any amounts have been, could have been or may be exchanged at this or any other exchange rates or at all. # For identification purpose only – 3 – LETTER FROM THE BOARD 天津泰達生物醫學工程股份有限公司 Tianjin TEDA Biomedical Engineering Company Limited (a joint stock company incorporated in the People’s Republic of China with limited liability) (Stock code: 8189) Executive Directors: Registered Office: Mr. Wang Shuxin (Chairman) No. 12 Tai Hua Road Mr. Xie Kehua The 5th Avenue Mr. Zhang Songhong TEDA Tianjin Non-executive Directors: PRC Mr. Feng Enqing Mr.