Sun Art Retail : CONTINUING CONNECTED TRANSACTION

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

SUN ART RETAIL GROUP LIMITED

高鑫零售有限公司

(incorporated in Hong Kong with limited liability)

(Stock code: 6808)

CONTINUING CONNECTED TRANSACTION

Reference is made to the announcement of the Company dated 12 April 2019 in relation to the Previous Agency Agreement and the Previous Subcontracting Agreement with Patinvest.

NEW AGENCY AGREEMENT AND NEW SUBCONTRACTING AGREEMENT

On 3 March 2020, the Company entered into the New Agency Agreement and the New Subcontracting Agreement with Patinvest (the "Agreements").

Pursuant to the New Agency Agreement, Patinvest agrees to grant to the Company the right to provide negotiation services in relation to certain international cooperation agreements to be entered into between the Company (on behalf of Patinvest) and selected international suppliers in Asia. Pursuant to the New Subcontracting Agreement, Patinvest agrees to exclusively subcontract to the Company Patinvest's performance obligations in the PRC under the international cooperation agreements entered into by Patinvest with international suppliers. Each of the Agreements has a term commencing from 3 March 2020 and ending on 31 December 2020.

IMPLICATIONS UNDER THE LISTING RULES

As Patinvest is a subsidiary of Auchan Holding and Auchan Holding is one of the controlling shareholders of the Company, Patinvest is a connected person of the Company under the Listing Rules. The Agreements and the transactions contemplated thereunder therefore constitute a continuing connected transaction of the Company.

As the applicable percentage ratios defined under Rule 14.07 of the Listing Rules for the Proposed Cap on an annual basis exceed 0.1% but are below 5%, the Agreements and the transactions contemplated thereunder are subject to the reporting and announcement requirements and are exempted from the independent shareholders' approval requirement of the Listing Rules.

Reference is made to the announcement of the Company dated 12 April 2019 in relation to the Previous Agency Agreement and the Previous Subcontracting Agreement with Patinvest.

On 3 March 2020, the Company entered into the New Agency Agreement and the New Subcontracting Agreement with Patinvest.

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THE NEW AGENCY AGREEMENT

Date	:	3 March 2020
Parties	:	(i)	the Company; and
		(ii) Patinvest, which is a subsidiary of Auchan Holding.
Nature of	:	Patinvest agrees to grant to the Company the right to provide negotiation
transaction		services in relation to certain international cooperation agreements to be
		entered into between the Company (on behalf of Patinvest) and selected
		international suppliers in Asia.
		The services provided by the Company include negotiating with selected
		international suppliers in Asia for the provision of joint and specific services,
		comprising, amongst others, exchange of market knowledge, facilitation of
		new product introductions and entry into new regions/markets, coordination
		of product promotional activities and product performance data sharing.
Consideration	:	The fees to which the Company is entitled under the New Agency Agreement
		shall be 15% of the amount payable by selected international suppliers in
		Asia for the provision of services by the Company.
Term	:	commencing from 3 March 2020 and ending on 31 December 2020.
THE NEW SUBCONTRACTING AGREEMENT
Date	:	3 March 2020
Parties	:	(i)	the Company; and
		(ii)	Patinvest, which is a subsidiary of Auchan Holding.
Nature of	:	Patinvest agrees to exclusively subcontract to the Company Patinvest's
transaction		performance obligations in the PRC under the international cooperation
		agreements entered into by Patinvest with international suppliers from time
		to time.
		The services to be subcontracted include, amongst others, the exchange of
		market knowledge, facilitation of new product introductions and entry into
		new regions/markets, coordination of product promotional activities and
		sharing of product performance data with suppliers.
Consideration	:	The consideration payable to the Company shall be 85% of the amount
		payable by the international suppliers for the services performed in Asia
		under the international cooperation agreements entered into between
		Patinvest and such suppliers.
		Such consideration is to be paid to the Company in three instalments by 31
		December 2020, 30 June 2021 and 31 December 2021.
Term	:	commencing from 3 March 2020 and ending on 31 December 2020.

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THE PROPOSED CAP

As signatories of both New Agency Agreement and New Subcontracting Agreement are identical and the services to be provided by the Company under the New Agency Agreement and the New Subcontracting Agreement are similar in nature, the Board considers it appropriate to set an aggregated cap for the transactions contemplated under the New Agency Agreement and the New Subcontracting Agreement. The proposed cap for the Agreements, being the total amount payable by Patinvest to the Group under the Agreements, for the period commencing from 3 March 2020 and ending 31 December 2020 is EUR22,000,000 on an aggregate basis. The Proposed Cap disclosed herein is not intended, and does not purport, to be an indication of the Group's future performance or profitability and investors should not rely on the Proposed Cap in deciding whether to invest in the shares of the Company.

The actual transaction amount of the year ended 31 December 2019 under the Previous Agency Agreement and the Previous Subcontracting Agreement is approximately EUR12.1 million (equivalent to RMB93 million).

Basis for the Proposed Cap

In determining the Proposed Cap, the Board took into account the following factors:

1. the estimated cost and expenses to be incurred by the Company in providing the services under the Agreements;
2. the categories of services provided to the suppliers;
3. the total number of suppliers for which the Company will provide services;
4. the anticipated number of international services agreements that the Company will enter into (on behalf of Patinvest) with international suppliers in Asia; and
5. the increasing scale of Patinvest and the Group's operation.

REASONS FOR AND BENEFITS OF ENTERING INTO THE AGREEMENTS

By entering into the Agreements to renew the Previous Agency Agreement and the Previous Subcontracting Agreement, while Patinvest can leverage on the expertise and resources of the Group to strengthen the negotiations and bargaining power with selected international suppliers in Asia, the Group can also leverage on Patinvest's relationship with such international suppliers to expand its suppliers' network. Also, by cooperating with Patinvest, both the Group and Patinvest will be in a better position to bargain for more favourable conditions during negotiation. In light of the above, the Directors believe that it is for the benefit of the Group to enter into the Agreements and consider that the services provided under the Agreements are in the usual and ordinary course of business of the Group. The Directors (including the independent non-executive Directors) consider that the Agreements and the Proposed Cap are based on normal commercial terms and are fair and reasonable and in the interests of the Company and its Shareholders as a whole.

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LISTING RULES IMPLICATIONS

As Patinvest is a subsidiary of Auchan Holding and Auchan Holding is one of the controlling shareholders of the Company, Patinvest is a connected person of the Company under the Listing Rules. The Agreements and the transactions contemplated thereunder therefore constitute continuing connected transactions of the Company.

As the applicable percentage ratios defined under Rule 14.07 of the Listing Rules for the Proposed Cap on an annual basis exceed 0.1% but are below 5%, the Agreements are subject to the reporting and announcement requirements and are exempted from the independent shareholders' approval requirement of the Listing Rules.

GENERAL

The principal activity of the Group is the operation of hypermarkets and E-commerce platforms in the PRC.

Patinvest is a subsidiary of Auchan Holding. Auchan Holding is a company incorporated in France and comprises various companies engaging in hypermarkets operations, supermarkets operations, real estate development, banking and e-commerce.

BOARD CONFIRMATION

Mr. Benoit, Claude, Francois, Marie, Joseph Leclercq, Mr. Xavier, Marie, Alain Delom de Mezerac, Ms. Isabelle Claudine, Françoise Blondé ép. Bouvier and Mr. Edgard, Michel, Marie Bonte (collectively, the "Auchan Directors") are the non-executive Directors and also senior management of Auchan Holding or its affiliates, which they are considered to have interests in respect of the relevant board resolutions in connection with the New Agency Agreement and the New Subcontracting Agreement and the proposed annual caps under these Agreements. For good corporate governance, the Auchan Directors had voluntarily abstained from voting on the relevant board resolution in connection with the New Agency Agreement and the New Subcontracting Agreement and the proposed annual caps.

Save for the aforesaid and to the best knowledge, information and belief of the Company, none of the Directors have any material interest in the New Agency Agreement and the New Subcontracting Agreement for which they would be required to abstain from voting on the relevant board resolution approving such documents pursuant to the articles of association of the Company.

DEFINITIONS

In this announcement, unless the context otherwise requires, the capitalized terms shall have the meanings as set out below:

"Agreements"	the New Agency Agreement and the New Subcontracting Agreement
"Asia"	for the purpose of this announcement, includes the PRC or any other
	Asian locations as agreed between the parties

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"Auchan Holding"

"Board"

"Company"

Auchan Holding S.A. (formerly known as Groupe Auchan S.A.), a company incorporated in France and which comprises various companies primarily engaging in hypermarkets operations, supermarkets operations, real estate development, banking and e-commerce

the board of Directors of the Company

Sun Art Retail Group Limited (高鑫零售有限公司), a company incorporated under the laws of Hong Kong on 13 December 2000 with limited liability, the shares of which are listed on the main board of the Stock Exchange

"connected person(s)"

"controlling shareholder" "Director(s)"

"EUR" "Group" "Hong Kong" "Listing Rules"

"New Agency Agreement"

"New Subcontracting Agreement"

"Patinvest"

"PRC"

has the meaning ascribed to it under the Listing Rules

has the meaning ascribed to it under the Listing Rules

director(s) of the Company

the lawful currency of Euro

the Company and its subsidiaries

the Hong Kong Special Administrative Region of the PRC

the Rules Governing the Listing of Securities on the Stock Exchange

the agreement entered into between the Company and Patinvest on 3 March 2020 to renew the Previous Agency Agreement

the agreement entered into between the Company and Patinvest on 3 March 2020 to renew the Previous Subcontracting Agreement

Patinvest, a company duly organised and existing under the laws of Luxembourg, and is a subsidiary of Auchan Holding

the People's Republic of China and for the purpose of this announcement, it excludes Taiwan, Hong Kong and Macau Special Administrative Region of the PRC

"Previous Agency	the agreement entered into between the Company and Patinvest
Agreement"	on 11 April 2019 to renew an agency agreement dated 18 January
	2018 entered into between the Company and Patinvest in relation to
	negotiation services with selected international suppliers in Asian
	locations to be provided by the Company on behalf of Patinvest

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"Previous Subcontracting Agreement"

"Proposed Cap"

"RMB"

"Shareholder(s)" "Stock Exchange" "%"

Hong Kong, 3 March 2020

the agreement entered into between the Company and Patinvest on 11 April 2019 to renew a subcontracting agreement dated 18 January 2018 entered into between the Company and Patinvest in relation to the subcontracting of Patinvest's performance obligations in Asian locations under the international cooperation agreements entered into by Patinvest with international suppliers

the cap for the aggregate fees payable to the Group by Patinvest under the Agreements for the period commencing from 3 March 2020 and ending 31 December 2020

Renminbi, the lawful currency of the PRC

holder(s) of Share(s)

The Stock Exchange of Hong Kong Limited

per cent.

By order of the Board

Sun Art Retail Group Limited

HUANG Ming-Tuan

Executive Director and Chief Executive Officer

As at the date of this announcement, the Directors are:

Executive Director:

Mr. HUANG Ming-Tuan (Chief Executive Officer)

Non-executive Directors:

Mr. ZHANG Yong (Chairman)

Mr. Benoit, Claude, Francois, Marie, Joseph LECLERCQ Mr. Xavier, Marie, Alain DELOM de MEZERAC

Mr. Edgard, Michel, Marie BONTE Mr. CHEN Jun

Ms. Isabelle, Claudine, Françoise BLONDÉ ép. BOUVIER

Independent Non-executive Directors:

Ms. Karen Yifen CHANG

Mr. Desmond MURRAY

Mr. HE Yi

Mr. Dieter YIH

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