Shenguan : Connected Transaction Acquisition of Equity Interest in Ferguson Wuhan

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SHENGUAN HOLDINGS (GROUP) LIMITED

神冠控股（集團）有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 00829) CONNECTED TRANSACTION ACQUISITION OF EQUITY INTEREST IN FERGUSON WUHAN THE EQUITY TRANSFER

On 13 March 2017 (after trading hours), Wuzhou Shenguan (a wholly-owned subsidiary of the Company) entered into the Equity Transfer Agreement with Guangxi Shenguan, pursuant to which Guangxi Shenguan agreed to dispose of and Wuzhou Shenguan agreed to acquire 5% equity interest of Ferguson Wuhan at a consideration of RMB13,380,000. Upon completion of the Equity Transfer, Ferguson Wuhan will be owned as to 40%, 20%, 20% and 20% by Guangxi Shenguan, Gobitech Limited, Guangxi Guan Yu and Wuzhou Shenguan, respectively.

THE CAPITAL INCREASE

On 13 March 2017 (after trading hours), Wuzhou Shenguan entered into the Capital Increase Agreement with Guangxi Shenguan, Gobitech Limited and Guangxi Guan Yu, pursuant to which Wuzhou Shenguan agreed to make a capital contribution of RMB17,843,900 to Ferguson Wuhan by cash, of which RMB5,611,300 will be contributed to the registered capital of Ferguson Wuhan and RMB12,232,600 will be contributed to the capital reserve of Ferguson Wuhan.

Upon completion of the Capital Increase, (i) the registered capital of Ferguson Wuhan will be increased by approximately 6.67% from RMB84,170,000 to RMB89,781,300; and (ii) Ferguson Wuhan will be held as to 37.5%, 18.75%, 18.75% and 25% by Guangxi Shenguan, Gobitech Limited, Guangxi Guan Yu and Wuzhou Shenguan, respectively.

LISTING RULES IMPLICATIONS

Upon completion of the Capital Increase, the equity interest of Wuzhou Shenguan in Ferguson Wuhan will be increased from 20% to 25%. As such, the Capital Increase constitutes an acquisition of 5% equity interest in Ferguson Wuhan.

As at the date of this announcement, (i) Guangxi Shenguan is owned as to 95% by Ms. Zhou; and (ii) Guangxi Guan Yu is owned as to 88%, 3%, 3% and 3% by Ms. Zhou, Mr. Ru, Mr. Shi and Mr. Mo, respectively. Since Ms. Zhou is an executive Director and a controlling Shareholder, whereas each of Mr. Ru, Mr. Shi and Mr. Mo is an executive Director, each of Guangxi Shenguan and Guangxi Guan Yu is thus a connected person of the Company. Accordingly, the Equity Transfer Agreement, the Capital Increase Agreement and the transactions contemplated thereunder constitute connected transactions of the Company under Chapter 14A of the Listing Rules.

Pursuant to Rule 14.22 of the Listing Rules, the relevant applicable percentage ratios of the Equity Transfer and the Capital Increase are required to be aggregated.

As the applicable percentage ratios calculated pursuant to the Listing Rules in respect of the Equity Transfer and the Capital Increase are, in aggregate, more than 0.1% but less than 5%, the transactions contemplated under the Equity Transfer Agreement and the Capital Increase Agreement are only subject to the reporting and announcement requirements, but are exempt from the circular (including independent financial advice) and independent shareholders' approval requirements under Chapter 14A of the Listing Rules.

THE EQUITY TRANSFER AGREEMENT Date:

13 March 2017 (after trading hours)

Parties:

1. Wuzhou Shenguan (as the purchaser); and

2. Guangxi Shenguan (as the vendor).

Subject matter:

Pursuant to the Equity Transfer Agreement, Wuzhou Shenguan agreed to acquire and Guangxi Shenguan agreed to dispose of 5% equity interest in Ferguson Wuhan.

Consideration:

The consideration of the Equity Transfer is RMB13,380,000, which will be funded by internal resources of the Group. The consideration was arrived at after arm's length negotiations between the parties and was determined with reference to (i) the audited financial statements for the year ended 31 December 2016 of Ferguson Wuhan; and (ii) the valuation of the entire shareholders' equity interest in Ferguson Wuhan as appraised by the independent valuer in the Valuation Report (the "Valuation").

Pursuant to the Valuation Report, the appraised value of the entire shareholders' equity interest in Ferguson Wuhan as at 31 December 2016 was RMB268,000,000.

Payment:

Payments under the Equity Transfer Agreement will be settled by way of cash in the following manner:

1. 50% of the consideration of the Equity Transfer, being RMB6,690,000, shall be settled within ten (10) Business Days after the signing of the Equity Transfer Agreement; and

2. 50% of the consideration of the Equity Transfer, being RMB6,690,000, shall be settled within one (1) month after the change of the equity holdings of Ferguson Wuhan having been duly registered with the local bureau of industry and commerce.

THE CAPITAL INCREASE AGREEMENT Date:

13 March 2017 (after trading hours)

Parties:

1. Guangxi Shenguan;

2. Gobitech Limited;

3. Guangxi Guan Yu; and

4. Wuzhou Shenguan.

To the best of the Directors' knowledge, information and belief having made all reasonable enquiries, Gobitech Limited and its ultimate beneficial owners are Independent Third Parties.

Subject matter:

Pursuant to the Capital Increase Agreement, Wuzhou Shenguan agreed to make a capital contribution of RMB17,843,900 to Ferguson Wuhan by cash, of which RMB5,611,300 will be contributed to the registered capital of Ferguson Wuhan and RMB12,232,600 will be contributed to the capital reserve of Ferguson Wuhan.

Upon completion of the Capital Increase, (i) the registered capital of Ferguson Wuhan will be increased by 6.67% from RMB84,170,000 to RMB89,781,300; and (ii) Ferguson Wuhan will be held as to 37.5%, 18.75%, 18.75% and 25% by Guangxi Shenguan, Gobitech Limited, Guangxi Guan Yu and Wuzhou Shenguan, respectively.

Upon completion of the Capital Increase, the equity interest of Wuzhou Shenguan in Ferguson Wuhan will be increased from 20% to 25%. As such, the Capital Increase constitutes an acquisition of 5% equity interest in Ferguson Wuhan. The capital contribution of the Capital Increase was arrived at after arm's length negotiations between the parties and was determined with reference to the audited financial statements for the year ended 31 December 2016 of Ferguson Wuhan and the Valuation.

Payment:

Wuzhou Shenguan shall settle the capital contribution of RMB17,843,900 within 30 days after the signing of the Capital Increase Agreement.

INFORMATION OF THE GROUP

The Group is principally engaged in the manufacture and sale of edible collagen sausage casing products and pharmaceutical products in the PRC.

As at the date of this announcement, Wuzhou Shenguan is an indirect wholly-owned subsidiary of the Company.

INFORMATION OF GUANGXI SHENGUAN

Guangxi Shenguan is a company established in the PRC with limited liability, which is an investment holding company principally engaging in the operation and management of self- owned assets.

As at the date of this announcement, Guangxi Shenguan is owned as to 95% and 5% by Ms. Zhou and Mr. Sha Junqi (沙俊奇) (being the son of Ms. Zhou), respectively.

INFORMATION OF GUANGXI GUAN YU

Guangxi Guan Yu is a company established in the PRC with limited liability and is principally engaged in investment holding, property leasing and property management.

As at the date of this announcement, Guangxi Guan Yu is owned as to 88%, 3%, 3%, 3% and 3% by Ms. Zhou, Mr. Ru, Mr. Shi, Mr. Mo and Ms. Cai Yueqing (蔡月卿), respectively.

INFORMATION OF GOBITECH LIMITED

Gobitech Limited is a limited liability company incorporated under the laws of Hong Kong, and is principally engaged in investment holding.