Man Wah : Clarification Announcement

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

敏華控股有限公司

(Incorporated in Bermuda with limited liability)

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Allegations in the Muddy Waters Report are substantively the same as those addressed in

the Clarification Announcement.

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The Company stands by its Annual Report 2017.

Following the announcement by Man Wah Holdings Limited (the "Company", together with its subsidiaries, the "Group") on 9 June 2017 regarding the Company's responses to the allegations contained in the Muddy Waters PPT (the "Clarification Announcement"), the Company notes that Muddy Waters Capital LLC ("Muddy Waters") issued a report on 16 June 2017 ("Muddy Waters Report") which is their response to the Clarification Announcement. Unless otherwise specified, capitalised terms used in this announcement have the same meanings as adopted in the Clarification Announcement.

The Company notes that the allegations in the Muddy Waters Report are substantively the same as those addressed in the Clarification Announcement.

The Company also notes that the Muddy Waters Report contained photos which Muddy Waters says are the Group's products. The Muddy Waters Report goes on to make disparaging remarks about the Group's products. Such remarks are over-simplification of the technical requirement in the Group's manufacturing process and understate the quality of the Group's products. For brief introduction on products of the Group, including material used, and manufacturing process etc, please refer to an introductory video on the website below:

http://www.manwahholdings.com/

The Company would like to take this opportunity to respond to and provide further details in respect of certain allegations contained in the Muddy Waters Report as follows:

The Company stands by its Annual Report 2017.

The Company refers to its response to this allegation in the Clarification Announcement.

The Company refers to its response in the Clarification Announcement.

The Company refers to its response in the Clarification Announcement. The Company also notes that the Muddy Waters Report and the Muddy Waters PPT have quoted the financial information of Beijing Classics for the years 2015 and 2016, which they claimed to be a large distributor in Beijing selling the Group's products. Such quotation of financial information of Beijing Classics by Muddy Waters is misleading because in years 2015 and 2016, Beijing Classics was not a distributor of the Group.

"A. Timing issue"

The Company refers to its response in the Clarification Announcement.

The Company notes that the Muddy Waters Report has, in addition, disclosed a copy of a document issued by Department of Science and Technology of Guangdong Province (廣東省科學技術廳), Department of Finance of Guangdong Province (廣東省財政廳), Guangdong Provincial Office of State Administration of Taxation (廣東省國家稅務局) and Guangdong Local Taxation Bureau (廣東省地方稅務局) dated 24 January 2013 (the "Document"). The Document stated that 225 companies had been approved as high technology enterprise for the period from 1 January 2012 to 31 December 2014.

As mentioned in the Clarification Announcement, the relevant PRC subsidiary is required to obtain approvals from the relevant bureaus. The Document is one of a number of such approvals. The Group made tax provision and tax payment for the relevant PRC subsidiary on the basis of a tax rate of 25% for the year 2012, and the relevant tax bureau's approval for refund of taxes based on the 15% tax rate for the year 2012 was only obtained in December 2013, after the results of the Group for the year ended 31 March 2013 had already been published on 30 May 2013.

It is unclear to the Company whether Muddy Waters, who purports to be familiar with the business environment in the PRC, had intended to deliberately mislead third parties into believing that the Document is the only approval required.

The timing differences between when the Group applies the relevant tax rate or reverses an overprovision are already explained in the Clarification Announcement.

The Company notes that Muddy Waters suggested that just because the Group did not apply for such tax preferential treatment for the period after 2014, this contributes to inconsistencies in taxes. Whether or not the Group makes an application for continuation of a tax relief is a commercial decision of the Group.

"B. HK/SAIC Discrepancy"

The Muddy Waters Report has also quoted financial information which Muddy Waters says has been obtained from the SAIC. There is no legal requirement for the Group to file such information with the SAIC and so the Company is unaware of how Muddy Waters has obtained such information. Such information is, however, available from the relevant PRC subsidiary's statutory financial statements filed with other relevant PRC regulatory authorities. When preparing such statutory financial statements, the relevant PRC subsidiary has taken into account applicable rates or applications already submitted to the relevant tax bureau. However, given that not all relevant approvals have been obtained at the time, the Company has adopted a more prudent approach in making a larger provision in respect of the tax rate in producing its consolidated financial statements. The discrepancy simply relates to the Company's more prudent policy when reporting on the Group's consolidated financial results.

"C. Failure to Meet HNTE R&D Requirement"

The Company refers to its response to this allegation in the Clarification Announcement.

The Company refers to its response to this allegation in the Clarification Announcement.

By Order of the Board

Chairman

Hong Kong, 19 June 2017

As at the date of this announcement, the executive Directors are Mr. Wong Man Li, Ms. Hui Wai Hing, Mr. Wang Guisheng, Mr. Alan Marnie, Mr. Dai Quanfa and Ms. Wong Ying Ying; and the independent non-executive Directors are Mr. Chau Shing Yim, David, Mr. Ong Chor Wei and Mr.Kan Chung Nin, Tony and Mr. Ding Yuan.