Real Nutriceutical : Voluntary Announcement - Results of the Independent Review

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REAL NUTRICEUTICAL GROUP LIMITED

瑞 年 國 際 有 限 公 司

(incorporated in the Cayman Islands with limited liability)

(Stock Code: 2010)

VOLUNTARY ANNOUNCEMENT - RESULTS OF THE INDEPENDENT REVIEW

Reference is made to the announcements of Real Nutriceutical Group Limited (the ''Company'', together with its subsidiaries, the ''Group'') issued on 22 October 2015, 26 October 2015, 12 November 2015, 18 November 2015, 24 December 2015, 5 January 2016, 21 January 2016 and 24 April 2016 in relation to the report (''Glaucus Report'') published by Glaucus Research Group California LLC (''Glaucus'') which contain allegations against the Company's business, operation and financial position. Unless otherwise defined, terms used herein shall have the same meanings as those defined in the announcement of the Company dated 24 December 2015 (the ''First Clarification Announcement'').

As stated in the First Clarification Announcement, the Board and the Audit Committee of the Company had resolved that for the benefits of the Company's shareholders and to further enhance public confidence, it would voluntarily engage an independent accounting firm to conduct a review on each of the allegations set out in the Glaucus Report and the corresponding responses made by the Group in the First Clarification Announcement.

The Board wishes to update the shareholders of the Company that Zhonghui Anda Risk Services Limited (''Zhonghui''), a member firm of ZHONGHUI ANDA CPA Limited, has been engaged to conduct such independent review (the ''Review'') in accordance with the Hong Kong Standard on Related Services 4400 ''Engagements to Perform Agree-upon Procedures Regarding Financial Information'' issued by the Hong Kong Institute of Certified Public Accountants, hence no assurance is expressed for the Review and the financial statements of the Company, and that Zhonghui has recently issued a final report (the ''Review Report'') on its findings for certain allegations from the Review. As set out in the Review Report, Zhonghui did not discover any material discrepancies between the Group's financial records and the independent information obtained by Zhonghui during the Review in respect of the allegations made in the Glaucus Report. As disclosed in the Company's announcement dated 24 April 2016, the Company has already entered into the settlement agreement with Glaucus and the Company is entitled to, among others, state that its financial statements for the current and prior years are genuine and correct.

DETAILS OF THE REVIEW PROCEDURES AND FINDINGS IN RESPECT OF THE ALLEGATIONS MADE IN THE GLAUCUS REPORT

Allegation 1: 84% less revenue and 99% less operating profits than reported in the Company's filings on the Stock Exchange from 2011-2013 allegedly based on publicly available PRC government filings

Review Procedures:

The following procedures were conducted to verify the financial records of Wuxi Ruinian Industry & Commerce Co., Limited (''Ruinian Industry'') and Wuxi Zhenqian Bio- Technology Co., Limited (''Wuxi Biotech'') maintained at the local Administration of Industry and Commerce (''AIC'') and the Ministry of Commerce (''MOFCOM''):

1. downloaded the financial records of Ruinian Industry and Wuxi Biotech for the years of 2011, 2012 and 2013 and obtained official stamp on the documents from the Wuxi MOFCOM confirming the documents are identical to its internal records (the ''MOFCOM Records'');

2. physically retrieved stamped annual inspection reports of Ruinian Industry and Wuxi Biotech for the years of 2011 and 2012 from the Wuxi AIC (the ''Annual Inspection Reports'');

3. the annual reports of Ruinian Industry and Wuxi Biotech for the year ended 31 December 2013 from the Jiangsu Province AIC online search system (together with the Annual Inspection Reports, the ''AIC Records''); and

4. obtained from the Group the original audited reports of each of Ruinian Industry and Wuxi Biotech for the years of 2011, 2012 and 2013 respectively.

Review Findings:

Zhonghui did not discover any material discrepancies between each of the MOFCOM Records, the AIC Records and the audited reports of Ruinian Industry and Wuxi Biotech for the relevant years. Further, Zhonghui did not discover any material discrepancies between the revenue and operating profits data as set out in each of the MOFCOM Records, the AIC Records, the audited reports of Ruinian Industry and Wuxi Biotech and that in the annual report of the Company for the relevant years.

Allegation 2: PRC government tax rankings indicate net income a fraction of reported figures

Review Procedures:

The following procedures were conducted to verify the calculation and payment of PRC income tax of the Group for the year of 2013:

1. retrieved copies of the monthly and quarterly provisional tax returns and annual tax returns of each of the PRC subsidiaries of the Company subject to PRC income tax in 2013 from the online tax system of the State Tax Department of Jiangsu Province (''Tax Returns'');

2. obtained from the Group, the quarterly electronic tax payment receipts for the year of 2013, electronic bank payment receipts and tax certificates issued from the relevant sub- branch of the State Tax Department of Jiangsu Province; and

3. reviewed the electronic tax payment receipts through the online tax system of the State Tax Department of Jiangsu Province (''Tax Receipts'').

The following procedures were conducted to verify the records of the PRC value added tax paid by the Group for the year of 2013 (''VAT''):

1. obtained the PRC income tax returns and the VAT tax returns of Ruinian Industry and Wuxi Ruinian Pharmaceutical Co., Ltd. (''Ruinian Pharmaceutical'') for the year of 2013; and

2. obtained the original audited reports of Ruinian Industry and Ruinian Pharmaceutical for the year of 2013.

Review Findings:

Zhonghui did not discover any material discrepancies between the Tax Returns and Tax Receipts. Furthermore, Zhonghui did not discover any material discrepancies between the amount of sales as set out in the VAT tax returns and the amount of revenue as set out in the PRC income tax returns and the audited report of Ruinian Industry and Ruinian Pharmaceutical for the year of 2013.

Allegation 4: Customers as undisclosed related parties

Allegation 4a: Wuxi Lianren advertised itself as a subsidiary of the Company in job posts

Review Procedures:

The following procedures were conducted to ascertain the ownership of Wuxi Lianren Trading Co., Ltd.* (無錫聯仁貿易有限公司) (''Wuxi Lianren'') and determine if Wuxi

Lianren is a subsidiary of the Company:

1. conducted a search on the National Enterprise Credit Information Publicity System against Wuxi Lianren to obtain information about the shareholders of Wuxi Lianren; and

2. conducted a search against the names of the former and current shareholders of Wuxi Lianren as indicated in the results of the search conducted on the National Enterprise Credit Information Publicity System (namely, Ms. Wang Lijuan, Ms. Wang Xuefang and Mr. Xia Longhua) to ascertain if any of them is a substantial shareholder, director or member of the senior management of the principal subsidiaries of the Group.

Review Findings:

Zhonghui did not discover any relationship between Wuxi Lianren and the Company and its principal subsidiaries.

Allegation 4b: Wuxi Logistics' address is the same as the address of Ruinian Pharmaceutical

Review Procedures:

The following procedures were conducted to ascertain if the address of Wuxi Zongwei Logistics Co., Ltd* (無錫縱緯物流有限公司) (''Wuxi Logistics'') is the same as the address

of Ruinian Pharmaceutical:

1. conducted a search on the National Enterprise Credit Information Publicity System on Wuxi Logistics and Ruinian Pharmaceutical;

2. conducted an interview with Ms. Fan Xijuan, a shareholder of Wuxi Logistics, and inspected the business licence of Wuxi Logistics through a visit at Wuxi Logistics at its registered address; and

3. conducted an interview with a director of Ruinian Pharmaceutical and inspected the previous and existing business licences of Ruinian Pharmaceutical.

Review Findings:

Zhonghui found that although the registered addresses of Wuxi Logistics and Ruinian Pharmaceutical are near to each other, they are in two completely different locations.

Allegation 4c: A shareholder of Wuxi Logistics attended a legal proceeding as an employee of Ruinian Zhiye, a company owned by Mr. Wang Fucai

Review Procedures:

The following procedures were conducted to verify the relationship between Ms. Fan Xijuan (a shareholder of Wuxi Logistics) and Mr. Wang Fucai:

1. searches on the National Enterprise Credit Information Publicity System on Wuxi Logistics regarding its shareholders' and directors' information; and

2. conducted an interview with Ms. Fan.

Review Findings:

In accordance with the searching results from the National Enterprise Credit Information Publicity System against Wuxi Logistics, Ms. Fan is the minority shareholder and supervisor of Wuxi Logistics. Since the relevant legal proceeding mainly involved Wuxi Logistics as the subject matter of the relevant legal proceeding was relating to the operation of Wuxi Logistics on a land property leased by Ruinian Zhiye to Wuxi Logistics, and that Runian Zhiye was only involved as the lessor, Ms. Fan was the person who attended the court hearing.