Shanghai Dasheng Agrcltr Fin Tech : Announcements and Notices - DISCLOSEABLE TRANSACTION IN RELATION TO THE PROVISION OF CORPORATE GUARANTEE

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(a joint stock company incorporated in the People's Republic of China with limited liability)

On 23 May 2017, D.S Financial Holding, a direct wholly-owned subsidiary of the Company, entered into the Guarantee Agreement with the Bank, pursuant to which, D.S Financial Holding has conditionally agreed to provide corporate guarantee for the due performance of the repayment obligations of the Business Owners to the Bank up to aggregate of RMB300 million (equivalent to approximately HK$339 million) in respect of the revolving loan facilities to be granted by the Bank to the Business Owners for a term of not more than one year unless agreed otherwise in writing.

As one or more of the applicable percentage ratios (as defined in Rule 14.07 of the Listing Rules) in respect to the provision of the corporate guarantee under the Guarantee Agreement, is more than 5% but less than 25%, it constitutes a discloseable transaction for the Company and is subject to the reporting and announcement requirements but exempt from the Shareholders' approval requirement under Chapter 14 of the Listing Rules.

Date : 23 May 2017 Parties : (1) the Bank; and

(2) D.S Financial Holding.

To the best of the Directors' knowledge, information and belief, having made all reasonable enquiries, save and except Shenzhen Dasheng, which is indirectly holding approximately 6.19% interest in the Bank, the Bank and its ultimate beneficial owner(s) are Independent Third Parties.

The term of the Guarantee Agreement will be one year. The validity of any guarantee which granted during the term of the Guarantee Agreement but exceeds the term of the Guarantee Agreement should still be valid.

On 23 May 2017, D.S Financial Holding entered into the Guarantee Agreement with the Bank, pursuant to which, D.S Financial Holding has conditionally agreed to provide corporate guarantee for the due performance of the repayment obligations of the Business Owners to the Bank up to an aggregate of RMB300 million (equivalent to approximately HK$339 million) in respect of the revolving loan facilities to be granted by the Bank to the Business Owners. Each of the Business Owner, if eligible, will be granted not more than RMB10 million (equivalent to approximately HK$11.3 million) in principal for a term of not more than one year unless agreed otherwise in writing. Each Business Owner should be independent from each other.

Pursuant to the Guarantee Agreement, in order to be eligible for the revolving loan facilities to be granted by the Bank and provision of guarantee by D.S Financial Holding, the Business Owner needs to fulfill all of the following criteria:

1. it is a duly registered and established enterprise or individually-owned business;

2. it has good credit record and does not have any material unfavourable record;

3. its principal business is legal and does not have any material operational safety risks;

4. it has stable business income and ability to repay the loan principal and interest on time;

5. any other criteria as required by the Bank; and

6. it is not a connected person of the Company.

Pursuant to the Guarantee Agreement, at any time, even though the Business Owner fulfills all or part of the above criteria, D.S Financial Holding reserves the absolute rights to refuse to provide any guarantee without being liable for any compensation.

If D.S Financial Holding agrees to provide guarantee for the revolving loan facilities granted to the Business Owners, a guarantee fee will be payable by such Business Owners. Furthermore, D.S Financial Holding will enter into an agreement with each of such Business Owners, the Bank and the relevant parties to confirm the terms and conditions of the guarantee arrangement including but not limited to the fee to be payable by the Business Owners.

If the repayment of the revolving loan facilities granted by the Bank to such Business Owner has become overdue for 30 days, D.S Financial Holding shall pay the Bank the outstanding loan and claim the outstanding loan from the Business Owner afterward. In the event that D.S Financial Holding becomes liable to pay to the Bank under the Guarantee Agreement, D.S Financial Holding intends to fund such payment through the internal resources of the Group.

There are two groups of Business Owners, namely those who hold equity interest in Nanjing Baoze ("Group A") and those who do not ("Group B") with details as follows :

Group A

If D.S Financial Holding agrees to provide guarantee for the revolving loan facilities granted to the Business Owners under Group A, before the relevant guarantee is provided, such Business Owner shall pledge its equity interest in Nanjing Baoze in favour of D.S Financial Holding. If the value of the pledged interest is lower than the outstanding loan, D.S Financial Holding can dispose the pledge interest within 30 days from the due date of the loan repayment; or such Business Owner may provide other valuable assets as accepted by D.S. Financial Holding as the security. The proceeds from the disposal of such equity interest in Nanjing Baoze shall be applied for repayment of the outstanding loan to the Bank. If such proceeds is insufficient to repay the outstanding loan, D.S Financial Holding shall pay the Bank the balance of the outstanding loan payment. D.S Financial Holding and such Business Owner in Group A will enter into an agreement for the terms of the pledge, including the mechanism of determining the value of the pledged interest.

Nanjing Baoze owns approximately 99.9975% equity interest in Dasheng Cold Chain. As at the date of this announcement, the Company holds approximately 35% interest in Nanjing Baoze. The Company has entered into agreement for further acquisition of 16% interest in Nanjing Baoze. After completion of the further acquisition, the Company will hold in aggregate 51% interest in Nanjing Baoze. For details of the said acquisition, please refer to the announcement dated 16 March 2017 of the Company.

Group B

If D.S Financial Holding agrees to provide guarantee for the revolving loan facilities granted to a Business Owner under Group B, before the relevant guarantee is provided, such Business Owner shall execute a counter-guarantee in favour of D.S Financial Holding pursuant to which the Business Owner will pledge its inventory, which shall have at least 120 days shelf-life, to D.S Financial Holding in accordance with the instructions of D.S Financial Holding. D.S Financial Holding shall have the right to deal with the said guaranteed inventory, the proceeds of which shall be used for repayment of (i) the outstanding loan to the Bank; or (ii) any sum already paid by D.S Financial Holding for the overdue loan payments of such Business Owner.

The Bank is a company established in the PRC with limited liability, which principal businesses are, among other things, provisions of loan facility and receipt of deposits from the public.

To the best of the Directors' knowledge, information and belief and having made all reasonable enquiries:

1. the Bank is a financial institution established in the PRC with limited liability; and

2. save and except Shenzhen Dasheng, which is indirectly holding approximately 6.19% interest in the Bank, the Bank and its respective ultimate beneficial owners are Independent Third Parties of the Company.

D.S Financial Holding is a direct wholly-owned subsidiary of the Company, which principal businesses are, among other things, consultation of financial information and provision of financial intermediary service.

The Group is principally engaged in road and bridge construction business, agricultural and petrochemical products supply chain services business, agricultural industry chain financial services business and agricultural big data services business.

The Directors consider that the provision of guarantee will facilitate the set up of trading platform of agricultural market to resolve the difficulty of cash flow faced by the Business Owners. With the stronger financial capacity, the Business Owners may have more transactions, hence more transaction data can be collected and accumulated to enlarge the data base obtained by Shanghai Runtong, a non- wholly owned subsidiary of the Company which is principally engaged in, among other things, the consultation and investigation of market information.