Beijing Enterprises Medical and Health Industry Gr : Announcements and Notices - Supplemental Agreement in Relation to the Acquisition of Fujian Fu Ling Golden Sun Health and Geriatric Company Limited

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.

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 2389)

SUPPLEMENTAL AGREEMENT

IN RELATION TO THE ACQUISITION OF FUJIAN FU LING GOLDEN SUN HEALTH

AND GERIATRIC COMPANY LIMITED

Reference is made to the announcements of Beijing Enterprises Medical and Health Industry Group Limited (the "Company") dated 2 November 2015, 4 November 2015, 30 November 2015 and 3 February 2016 (the "Announcements") in relation to, amongst other things, the acquisition of 51% of the enlarged issued share capital of the Target Company (i.e. Fujian Fu Ling Golden Sun Health and Geriatric Company Limited* (၅ܔ޲၅ᙧږ˄ජ਄ੰቮϼٰ΅Ϟࠢʮ̡), a company established in the PRC with limited liability). Terms used herein shall have the same meanings as defined in the Announcements unless otherwise specified.

SUPPLEMENTAL AGREEMENT

The Board hereby announces that, on 1 August 2018 (after trading hours), the Purchaser (an indirectly wholly owned subsidiary of the Company), the Vendor, the Target Company and the Company entered into a supplemental agreement to the Transfer and Subscription of Shares Agreement (the "Supplemental Agreement"), pursuant to which the parties have agreed to amend certain terms and conditions of the Transfer and Subscription of Shares Agreement.

Pursuant to the Transfer and Subscription of Shares Agreement, 9,214,570 Consideration Shares (the "2017 Consideration Shares") will be allotted and issued by the Company to the Vendor by 30 April 2018 if the business performance of the Target Company meets the target for the year 2017 as stipulated in the Transfer and Subscription of Shares Agreement, being a net profit of no less than the guaranteed amount of RMB7,890,000 (the "2017 Performance Target"); and 13,956,162 Consideration Shares (the "2018 Consideration Shares") will be allotted and issued by the Company to the Vendor by 30 April 2019 if the business performance of the Target Company meets the target for the year 2018 as stipulated in the Transfer and Subscription of Shares Agreement, being a net profit of no less than the guaranteed amount of RMB11,950,000 (the "2018 Performance Target", and together with the 2017 Performance Target, the "Performance Targets").

The respective Performance Target as stipulated under the Transfer and Subscription of Shares Agreement was determined among the parties on the assumption that there will be no change to the original business model of the Target Company upon Completion (i.e. 31 January 2016). However, upon Completion whereupon the Target Company has since then become a subsidiary of the Company, the Purchaser and the Company has made some adjustment to the business model of the Target Company with an objective to enhance its long-term operating efficiency. As a result of which, there is an increase of the Target Company's short-term operating expenses, and accordingly, the parties to the Transfer and Subscription of Shares Agreement expect that the Target Company may not be able to achieve an operating profit in the shortcoming future.

Based on the foregoing and upon arm's length negotiations, the parties to the Transfer and Subscription of Shares Agreement agreed to enter into the Supplemental Agreement to make the following amendments to the Transfer and Subscription of Shares Agreement:

(i) the relevant provision under the Transfer and Subscription of Shares Agreement in relation the Performance Targets and the allotment and issue of the 2017 Consideration Shares and 2018 Consideration Shares upon fulfilment of the respective Performance Target be deleted in its entirety, and as a result, no further Consideration Shares will be allotted and issued by the Company to the Vendor in relation to the Acquisition; and

(ii) the Vendor further guarantees to the Purchaser that the total loss (as shown in the audited consolidated account) to be incurred by the Target Company together with its subsidiaries for the year 2018 and the subsequent years (up till a date as otherwise agreed by the parties) will not be more than RMB10,000,000, and any loss exceeding RMB10,000,000 will be borne and compensated by the Vendor to the Target Company.

Other than the amendments above, all other terms and conditions of the Transfer and Subscription of Shares Agreement shall remain unchanged and be in full force and effect.

Taking into consideration of the long-term benefits that the Target Company may bring to the Group's geriatric care business and the guarantee as provided by the Vendor to the Purchaser under the Supplemental Agreement, the Directors consider that the terms of the Supplemental Agreement are fair and reasonable and the entering into of the Supplemental Agreement is in the interests of the Company and the Shareholders as a whole.

EFFECT OF SHAREHOLDING STRUCTURE OF THE COMPANY

As a result of the Supplemental Agreement, other than the 15,096,305 Consideration Shares allotted and issued by the Company to the Vendor on 30 November 2015 and 28 April 2017, no further Consideration Shares will be allotted and issued by the Company to the Vendor in relation to the Acquisition. The shareholding structure of the Company and the Vendor's shareholding in the Company as at the date of this announcement are as follows:

Number of Shares

Approx.%Substantial Shareholders

Cosmic Stand International

Limited (Note 1)

945,000,000 15.59%

Beijing Financial Investment

Holdings Limited (Note 2) Ng Kin Nam

459,615,806 7.58%

401,300,000 6.62%

Jangho Group Company

Limited (Note 3)

324,684,000 5.36%

Public Shareholders

The Vendor

15,096,305 0.25%

Other public shareholders

3,915,702,916 64.60%

Total

6,061,399,027 100%

Notes:

• 1. Cosmic Stand International Limited is wholly owned by Beijing Enterprises Health and Medical Resources Group Limited (formerly known as "BPHL Real Estate (Holdings) Limited") which is in turn wholly owned by Beijing Properties (Holdings) Limited. Beijing Properties (Holdings) Limited is owned as to 35.72% by Beijing Enterprises Real Estate (HK) Limited, 22.73% by Brilliant Bright Holdings Limited, 7.11% by Beijing Holdings Limited and 1.28% by Illumination Holdings Limited (a wholly-owned subsidiary of Beijing Holdings Limited). Beijing Enterprises Real Estate (HK) Limited is wholly owned by ̏ԯ̏છໄุϞࠢப΂ʮ̡ which is in turn wholly owned by Beijing Enterprises Group Company Limited. Accordingly, these companies are deemed to be interested in the 945,000,000 Shares to beneficially owned by Cosmic Stand International Limited.

• 2. The 459,615,806 Shares are held by Beijing Investment Co., Limited, which is in turn wholly owned by Beijing Financial Holdings Group Limited and in turn wholly owned by Beijing Financial Investment Holdings Limited.

3. Advance Finding Investments Limited and Easy Glory Holding Limited, companies wholly owned by Jangho Group Company Limited, hold 124,284,000 Shares and 200,400,000 Shares respectively.

By order of the Board Beijing Enterprises Medical and Health Industry Group Limited

Zhu Shi Xing

Chairman

Hong Kong, 1 August 2018

As at the date of this announcement, the Board comprises ten executive directors, namely Mr. Zhu Shi Xing, Mr. Liu Xue Heng, Mr. Gu Shan Chao, Mr. Hu Xiao Yong, Mr. Hu Shiang Chi, Mr. Wang Zheng Chun, Mr. Zhang Jing Ming, Mr. Hu Yebi, Mr. Qian Xu and Mr. Siu Kin Wai; and five independent non-executive directors, namely, Mr. Robert Winslow Koepp, Mr. Gary Zhao, Mr. Tse Man Kit, Keith, Mr. Wu Yong Xin and Mr. Zhang Yun Zhou.

* for identification purpose only