Shuanghua : SUPPLEMENTAL ANNOUNCEMENT IN RELATION TO THE ANNUAL REPORT OF THE COMPANY FOR THE YEAR ENDED 31 DECEMBER 2019

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SHUANGHUA HOLDINGS LIMITED

雙樺控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1241)

SUPPLEMENTAL ANNOUNCEMENT

IN RELATION TO THE ANNUAL REPORT OF THE COMPANY

FOR THE YEAR ENDED 31 DECEMBER 2019

Reference is made to the annual report (the "Annual Report") of Shuanghua Holdings Limited (雙樺控股有限公司) (the "Company") for the year ended 31 December 2019 published on 28 April 2020. Unless otherwise stated, capitalised terms used herein shall have the same meanings as defined in the Annual Report. The Company wishes to provide the following supplemental information in respect of the Annual Report.

UNUTILISED PROCEEDS FROM THE INITIAL PUBLIC OFFERING

As disclosed in the paragraph headed "Use of Proceeds from the Initial Public Offering" in the Annual Report, a balance of approximately RMB10.0 million of the proceeds from the initial public offering of the Company remained unutilised (the "Unutilised Proceeds"). The planned application of the Unutilised Proceeds are set out below:

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OTHER EXPENSES

As disclosed in the paragraph headed "Other Expenses" and the consolidated statement of profit or loss in the Annual Report, the Group recorded other expenses of approximately RMB12.2 million and RMB7.7 million for the year ended 31 December 2019 and the year ended 31 December 2018, respectively, representing an increase of approximately 58.4% during the year ended 31 December 2019. Other expenses for the year ended 31 December 2019 mainly comprised of: (i) provision for impairment of inventories of approximately RMB2.1 million; (ii) impairment of account receivables of approximately RMB4.4 million; and (iii) loss on disposal of items of inventories of approximately RMB5.4 million. The increase of other expenses for the year ended 31 December 2019 was primarily attributable to:

1. provision for impairment of inventories due to significant decrease in the Group's revenue as a result of the Group's initiative to actively adjust its order structure and customer composition in view of the recent downturn in the automotive industry, the slowing economic growth and the Sino-U.S. trade war; (ii) increase in the loss allowance for impairment of trade receivables, other receivables and other assets (such impact is contained in Note 17 and 18 to the consolidated financial statements); and (iii) loss on disposal of inventories during the Relocation.

The Board confirms that the above supplemental information does not affect other information contained in the Annual Report and the content of the Annual Report remains accurate and correct.

On behalf of the Board

Shuanghua Holdings Limited

Zheng Ping

Chairman

Hong Kong, 23 July 2020

As at the date of this announcement, the Board consists of three executive Directors, Mr. Zheng Ping, Ms. Zheng Fei and Ms. Tang Lo Nar, one non-executive Director, Ms. Kong Xiaoling, and three independent non-executive Directors, Ms. Guo Ying, Mr. He Binhui and Mr. Chen Lifan.

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