Lianhua Supermarket : INSIDE INFORMATION ANNOUNCEMENT ENTERING INTO AGREEMENT OF INTENT IN RELATION TO EQUITY TRANSFER

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.

(a joint stock limited company incorporated in the People's Republic of China with limited liability)

(Stock Code: 00980)

INSIDE INFORMATION ANNOUNCEMENT

ENTERING INTO AGREEMENT OF INTENT IN

RELATION TO EQUITY TRANSFER

This announcement is made by the Company pursuant to Rule 13.09(2) of 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).

On 12 March 2021, Lianhua Huashang, a subsidiary of the Company, entered into the Agreement of Intent with Yibai Supermarket, pursuant to which, Lianhua Huashang and Yibai Supermarket agreed on the joint development of the retail market in Zhuji City, Zhejiang Province.

The Board would like to emphasise that the transaction contemplated under the Agreement of Intent is subject to the approval from regulatory authority and negotiation, finalization and signing of definitive agreement. As such, the transaction contemplated under the Agreement of Intent may or may not proceed. If the transaction contemplated under the Agreement of Intent materialises, it is expected to constitute a discloseable transaction of the Company under the Listing Rules. The Company will fulfil the information disclosure obligation with respect to the development of such matter in compliance with the requirements of the Listing Rules in due course. Shareholders and potential investors of the Company should exercise caution when dealing in the shares of the Company.

I. THE AGREEMENT OF INTENT

On 12 March 2021, Lianhua Huashang, a subsidiary of the Company, entered into the Agreement of Intent with Yibai Supermarket, pursuant to which, Lianhua Huashang and Yibai Supermarket agreed on the joint development of the retail market in Zhuji City, Zhejiang Province ("Zhuji").

The principal terms of the Agreement of Intent are set out as below:

Date

12 March 2021

Parties

• (1) Lianhua Huashang; and

• (2) Yibai Supermarket

To the best of the directors' knowledge, information and belief having made all reasonable enquiries, Yibai Supermarket and its ultimate beneficial owners are third parties independent of the Company and connected persons of the Company.

Strategic Cooperation

Lianhua Huashang, a well-known retail chain operator in Zhejiang Province, intends to cooperate with local enterprises in Zhuji to jointly develop the Zhuji market. Yibai Supermarket has been deeply involved in Zhuji retail market for a long time, and is willing to introduce partners to increase its market share in Zhuji. After friendly negotiations, Lianhua Huashang and Yibai Supermarket decided to unify resources and integrate advantages on the basis of mutual benefit to form a strategic partnership to jointly develop Zhuji retail market.

Lianhua Huashang and Yibai Supermarket plan to develop strategic cooperation through equity acquisition. Lianhua Huashang will acquire a wholly-owned subsidiary of Yibai Supermarket, with a tentative equity acquisition ratio of 60%. After the completion of the equity acquisition, Lianhua Huashang will lead the operation and management activities of the acquired company. The parties will enter into a specific equity transfer agreement on the equity acquisition.

In order to ensure the advancement of strategic cooperation and the realization of equity transfer, Lianhua Huashang will pay a total of RMB5 million to Yibai Supermarket as performance deposit after the Agreement of Intent takes effect.

• II. REASONS FOR AND BENEFITS OF ENTERING INTO THE AGREEMENT OF INTENT

  Lianhua Huashang is a well-known local retail chain operator in Zhejiang Province, and intends to accelerate its development through extensional expansion; while Yibai Supermarket is a well-known retail chain operator in Zhuji with strong strength, various retail outlets and a high market share in Zhuji. Entering into the Agreement of Intent is conducive for Lianhua Huashang to increase its market share in Zhuji with the help of the good visibility and reputation of Yibai Supermarket in Zhuji and is also conducive to the strategic layout of Lianhua Huashang in the Zhuji market for gradually forming effect of region connection, strengthening regional market and enhancing business competitiveness.

• III. GENERAL INFORMATION

  Lianhua Huashang is a subsidiary of the Company and is principally engaged in retail chain business, including the operation of hypermarkets and supermarkets in Zhejiang Province, the PRC.

  Yibai Supermarket is a company incorporated in the PRC. It is principally engaged in chain supermarket business. Yibai Supermarket is a wholly-owned subsidiary of Yibai Group.

IV. RISK ALERT

The Board would like to emphasise that the transaction contemplated under the Agreement of Intent is subject to the approval from regulatory authority and negotiation, finalization and signing of definitive agreement. As such, the transaction contemplated under the Agreement of Intent may or may not proceed. If the transaction contemplated under the Agreement of Intent materialises, it is expected to constitute a discloseable transaction of the Company under the Listing Rules. The Company will fulfil the information disclosure obligation with respect to the development of such matter in compliance with the requirements of the Listing Rules in due course. Shareholders and potential investors of the Company should exercise caution when dealing in the shares of the Company.

V. DEFINITIONS

In this announcement, unless the context requires otherwise, the following expressions shall have the following meanings:

"Agreement of	The agreement of intent in relation to equity transfer entered
Intent"	into between Lianhua Huashang and Yibai Supermarket
on 12 March 2021, details of which are disclosed in the
announcement
"Board"	the board of directors of the Company
"Company"	Lianhua Supermarket Holdings Co., Ltd., a joint stock
limited company incorporated in the PRC with limited
liability, the H shares of which are listed on The Stock
Exchange of Hong Kong Limited
"Hong Kong"	the Hong Kong Special Administrative Region of the PRC
"Lianhua Huashang"	Hangzhou Lianhua Huashang Group Co., Ltd* （杭州聯華華
商集團有限公司） , a subsidiary of the Company where the
Company holds 74.19% equity interests.
4
"Listing Rules"	the Rules Governing the Listing of Securities on The Stock
Exchange of Hong Kong Limited
"PRC"	the People's Republic of China
"RMB"	Renminbi, the lawful currency of the PRC
"Yibai Group"	Zhuji Yibai Group Co., Ltd.* （諸暨一百集團有限公司）
"Yibai Supermarket"	Zhuji Yibai Supermarket Co., Ltd.* （諸暨市一百超市有限
公司）

Shanghai, the PRC, 12 March 2021

By order of the Board

Lianhua Supermarket Holdings Co., Ltd.

Xu Xiao-yi

Joint Company Secretary

As at the date of this announcement, the directors of the Company are:

Executive Director:

Xu Tao;

Non-executive Directors:

Ye Yong-ming, Xu Zi-ying, Xu Hong, Zhang Shen-yu, Dong Xiao-chun and Wong Tak Hung;

Independent Non-executive Directors:

Xia Da-wei, Lee Kwok Ming, Don, Chen Wei and Zhao Xin-sheng.

*for identification purposes only