Sihuan Pharmaceutical : PROFIT WARNING MAINLY ATTRIBUTABLE TO RECOGNITION OF IMPAIRMENT LOSSES

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Sihuan Pharmaceutical Holdings Group Ltd. 四 環 醫 藥 控 股 集 團 有 限 公 司 (incorporated in Bermuda with limited liability)

(Stock code: 0460)

PROFIT WARNING

MAINLY ATTRIBUTABLE TO RECOGNITION OF IMPAIRMENT LOSSES

This announcement is made by Sihuan Pharmaceutical Holdings Group Ltd. (the ''Company'' together with its subsidiaries, the ''Group'') pursuant to Rule 13.09 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the ''Listing Rules'') and the Inside Information Provisions (as defined under the Listing Rules) under Part XIVA of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong).

The board of directors of the Company (the ''Board'') wishes to inform the shareholders of the Company (the ''Shareholders'') and potential investors that, further to the announcement of the Company dated 19 July 2019 and based on a preliminary review and analysis of the latest unaudited consolidated management accounts of the Group for the year ended 31 December 2019 (the ''Year''), the Group is expected to record a net loss of not less than RMB2.5 billion for the Year, mainly attributable to the recognition of various impairment losses for the Year, including but not limited to, the impairment losses on goodwill recognized for the first half of 2019. The recognition of impairment losses was as a result of management's assessment of the future economic benefits of the assets being impaired in light of the effects that might be caused by the major policies introduced to the pharmaceutical industry by the relevant governing authorities in the People's Republic of China; and streamline of the Group's operations. The Board would like to emphasize that the Group expects to record a net profit for the Year before the recognition of the aforementioned impairment losses. This impairment losses are non-cash items and one-off items charged to the consolidated statement of profit and loss which did not and will not have impact on the Group's daily operations and cash flow.

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The information above is only based on a preliminary assessment by the management of the Company based on the unaudited consolidated management accounts of the Group for the Year. It is not based on any figures or information audited by the Company's auditors or reviewed by the audit committee of the Company. Further details of the Group's financial results and performance will be disclosed in the Company's final results announcement in March 2020.

Shareholders and potential investors of the Company are advised to exercise caution when dealing in the shares of the Company.

By order of the Board

Sihuan Pharmaceutical Holdings Group Ltd.

Che Fengsheng

Chairman and Executive Director

Hong Kong, 13 March 2020

As at the date of this announcement, the executive directors of the Company are Dr. Che Fengsheng (Chairman), Dr. Guo Weicheng (Deputy Chairman and Chief Executive Officer), Mr. Choi Yiau Chong, Dr. Zhang Jionglong and Ms. Chen Yanling; the non-executive director of the Company is Mr. Kim Jin Ha; and the independent non-executive directors of the Company are Mr. Patrick Sun, Mr. Tsang Wah Kwong and Dr. Zhu Xun.

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