Shenguan : Discloseable and Connected Transaction Equity Transfer Agreement in Relation to Acquisition of 29% Equity Interest in Guangdong Victory and Termination of Put Option

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神冠控股（集團）有限公司

(Incorporated in the Cayman Islands with limited liability)

Reference is made to (i) the announcement of the Company dated 20 July 2015 in relation to the 2015 Equity Transfer Agreement entered into between Wuzhou Shenguan Investment and the Vendor in relation to the acquisition of 51% equity interest in Guangdong Victory and the acceptance of the Put Option and (ii) the clarification announcement of the Company dated 22 July 2016 on the annual report for the year ended 31 December 2015.

The Board is pleased to announce that on 23 March 2017 (after trading hours), Wuzhou Shenguan Investment and the Vendor entered into the 2017 Equity Transfer Agreement, pursuant to which, among others, (i) Wuzhou Shenguan Investment has agreed to acquire and the Vendor has agreed to sell 29% equity interests of Guangdong Victory at a total consideration of RMB23,850,000; and (ii) both Wuzhou Shenguan Investment and the Vendor have agreed to terminate the Put Option under the 2015 Equity Transfer Agreement.

Upon completion of the Acquisition, Guangdong Victory will be held as to 80% by Wuzhou Shenguan Investment and remain as an indirect non-wholly-owned subsidiary of the Company.

The exercise of the Put Option is at the discretion of Wuzhou Shenguan Investment. According to Rule 14.73 of the Listing Rules, termination of the Put Option will be treated as a transaction and classified by reference to the percentage ratios pursuant to Rules 14.04(1)(b) and 14.73 of the Listing Rules.

As one or more of the applicable percentage ratios under the Listing Rules in respect of the Acquisition and the termination of the Put Option are more than 5% but less than 25%, such transaction constitutes a discloseable transaction of the Company and is therefore subject to the reporting and announcement requirements under Chapter 14 of the Listing Rules.

As at the date of this announcement, the Vendor holds as to 49% of the equity interest of Guangdong Victory. Hence, the Vendor is a substantial shareholder of Guangdong Victory and thus a connected person of the Company. The Acquisition and the termination of the Put Option therefore constitute connected transactions of the Company under Chapter 14A of the Listing Rules.

As (i) the Acquisition and the termination of the Put Option are connected transactions with a connected person at subsidiary level of the Group; (ii) the Board has approved the Acquisition and the termination of the Put Option; and (iii) all the independent non- executive Directors have confirmed that the terms thereof are fair and reasonable, on normal commercial terms and in the interests of the Company and its Shareholders as a whole, the Acquisition and the termination of the Put Option are only subject to the reporting and announcement requirements, and are exempted from the circular, independent financial advice and independent shareholders' approval requirements by virtue of Rule 14A.101 of the Listing Rules.

Reference is made to (i) the announcement of the Company dated 20 July 2015 in relation to the 2015 Equity Transfer Agreement entered into between Wuzhou Shenguan Investment and the Vendor in relation to the acquisition of 51% equity interest in Guangdong Victory and the acceptance of the Put Option and (ii) the clarification announcement of the Company dated 22 July 2016 on the annual report for the year ended 31 December 2015.

The Board is pleased to announce that on 23 March 2017 (after trading hours), Wuzhou Shenguan Investment and the Vendor entered into the 2017 Equity Transfer Agreement, pursuant to which, among others, (i) Wuzhou Shenguan Investment has agreed to acquire and the Vendor has agreed to sell 29% equity interest of Guangdong Victory at a total consideration of RMB23,850,000; and (ii) both Wuzhou Shenguan Investment and the Vendor have agreed to terminate the Put Option under the 2015 Equity Transfer Agreement.

23 March 2017 (after trading hours)

1. Wuzhou Shenguan Investment, as the Purchaser; and

2. Enneford Industrial, as the Vendor.

The Vendor has agreed to sell and the Purchaser has agreed to acquire 29% equity interest in Guangdong Victory.

The total consideration for the Acquisition is RMB23,850,000 and was arrived at after arm's length negotiations between the parties and was determined with reference to (i) the consideration of the acquisition of 51% equity interest in Guangdong Victory under the 2015 Equity Transfer Agreement; and (ii) the value of the entire shareholders' equity interest in Guangdong Victory as at 31 December 2016 of RMB191,445,000 as set out in the Valuation Report prepared by the Valuer.

Wuzhou Shenguan Investment shall arrange to obtain the approval with the relevant authority in the PRC for the payment of the consideration for the Acquisition to the Vendor (the "Payment Approval") after the execution of the 2017 Equity Transfer Agreement.

The total consideration for the Acquisition shall be satisfied by Wuzhou Shenguan Investment in cash in the following manner:

1. an amount of RMB12,000,000 shall be paid to the Vendor within ten (10) business days of (i) the date of completion of the registration with the relevant bureau for industry and commerce in the PRC in relation to the transfer of 20% equity interest in Guangdong Victory by the Vendor to a senior management of Guangdong Victory; and (ii) the date of having obtained the Payment Approval in relation to the transfer of 29% equity interest in Guangdong Victory by the Vendor to Wuzhou Shenguan Investment; and

2. the remaining RMB11,850,000 shall be paid to the Vendor within 30 days of the date of completion of (i) the outstanding capital injection of USD102,000 by the Vendor to Guangdong Victory; and (ii) the registration with the relevant bureau for industry and commerce in the PRC in relation to the transfer of 29% equity interest in Guangdong Victory by the Vendor to Wuzhou Shenguan Investment.

The total consideration for the Acquisition will be funded by the internal resources of the Group.

Revenue Guarantee

Pursuant to the 2015 Equity Transfer Agreement, if Guangdong Victory fails to achieve revenue of RMB20,000,000 for the year ended 31 December 2015, both Wuzhou Shenguan Investment and the Vendor shall negotiate for the time of the settlement of the remaining consideration of RMB20,000,000 under the 2015 Equity Transfer Agreement.

According to the clarification announcement of the Company dated 22 July 2016, Guangdong Victory failed to achieve the revenue of RMB20,000,000 for the year ended 31 December 2015. Upon further negotiation between Wuzhou Shenguan Investment and the Vendor, it was agreed that the remaining consideration of RMB20,000,000 under the 2015 Equity Transfer Agreement shall only be payable by Wuzhou Shenguan Investment to the Vendor upon the accumulated total revenue of Guangdong Victory commencing from 1 January 2016 reaching RMB20,000,000.

As Guangdong Victory failed to achieve revenue of RMB20,000,000 for the two years ended 31 December 2015 and 2016, it is agreed by both Wuzhou Shenguan Investment and the Vendor under the 2017 Equity Transfer Agreement that Wuzhou Shenguan Investment is no longer required to settle the remaining consideration of RMB20,000,000 under the 2015 Equity Transfer Agreement.

Put Option

Pursuant to the 2015 Equity Transfer Agreement, Wuzhou Shenguan Investment was granted the Put Option for no additional consideration, in which Wuzhou Shenguan Investment had the discretion to require the Vendor to repurchase Wuzhou Shenguan Investment's equity interest in Guangdong Victory if certain conditions occur on 31 December 2020, further details of which are set out in the announcement of the Company dated 20 July 2015.

Pursuant to the 2017 Equity Transfer Agreement, both Wuzhou Shenguan Investment and the Vendor have agreed to terminate the Put Option upon completion of the registration with the relevant bureau for industry and commerce in the PRC in relation to the transfer of 29% equity interest in Guangdong Victory by the Vendor to Wuzhou Shenguan Investment.

As at the date of this announcement, Wuzhou Shenguan Investment had provided RMB3,000,000 to Guangdong Victory since the completion of the acquisition under the 2015 Equity Transfer Agreement, and the possession cost of the Committed Capital (as defined in the announcement of the Company dated 20 July 2015) is approximately RMB151,531,000.

The 2017 Equity Transfer Agreement is conditional upon (i) the due execution of the 2017 Equity Transfer Agreement by both Wuzhou Shenguan Investment and the Vendor; (ii) Wuzhou Shenguan Investment having obtained all necessary consents, authorisations and approvals in connection with the 2017 Equity Transfer Agreement under the applicable laws and regulations (including but not limited to the Listing Rules) (if any); and (iii) the