China Haisheng Juice : DISCLOSEABLE TRANSACTION- FORMATION OF THE JV COMPANY

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China Haisheng Juice Holdings Co., Ltd.

中國海升果汁控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 0359)

DISCLOSEABLE TRANSACTION -

FORMATION OF THE JV COMPANY

FORMATION OF THE JV COMPANY

The Board is pleased to announce that on 14 October 2019, Weining Chaoyue entered into a Joint Venture Agreement with Weining Nongye, pursuant to which Weining Chaoyue and Weining Nongye have agreed to establish the JV Company with a registered capital of RMB40.0 million (equivalent to approximately HK$44.0 million) and each of Weining Chaoyue and Weining Nongye has agreed to contribute to the registered capital of the JV Company at RMB28.0 million (equivalent to approximately HK$30.8 million) and RMB12.0 million (equivalent to approximately HK$13.2 million) respectively. The JV Company will be principally engaged in the modernized extensive plantation and sale of apple and other fruits.

IMPLICATIONS UNDER THE LISTING RULES

As the highest applicable percentage ratios (as defined under the Listing Rules) in respect of the formation of the JV Company exceeds 5% and is less than 25%, the entering into Joint Venture Agreement by Weining Chaoyue constitutes a discloseable transaction under Chapter 14 of the Listing Rules is subject to the reporting and announcement requirements, but is exempted from shareholders' approval requirement, pursuant to Chapter 14 of the Listing Rules.

THE JOINT VENTURE AGREEMENT

The board of directors (the "Board") of China Haisheng Juice Holdings Co., Ltd. (the "Company") is pleased to announce that on 14 October 2019, Weining Chaoyue entered into a Joint Venture Agreement with Weining Nongye, pursuant to which Weining Chaoyue and Weining Nongye have agreed to establish the JV Company with a registered capital of RMB40.0 million (equivalent to approximately HK$44.0 million) and each of Weining Chaoyue and Weining Nongye has agreed to contribute to the registered capital of the JV Company at RMB28.0 million (equivalent to approximately HK$30.8

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million) and RMB12.0 million (equivalent to approximately HK$13.2 million) respectively. The JV Company will be principally engaged in the modernized extensive plantation and sale of apple and other fruits. Principal terms of the Joint Venture Agreement are summarised as follows:

Date

14 October 2019

Parties

1. Weining Chaoyue; and
2. Weining Nongye.

To the best of the knowledge, information and belief of the Directors, having made all reasonable enquiries, Weining Nongye and its respective ultimate beneficial owners are Independent Third Parties and not connected with the Company and its connected persons (as defined under the Listing Rules).

Business Scope and Term of Operation

The JV Company will be principally engaged in the modernised extensive plantation and sale of apples and other fruits in Weining Yi and Hui and Miao Autonomous County, Guizhou Province, the PRC. The term of operation of the JV Company is 30 years, commencing on the date of issuance of Business License of the JV Company.

Registered Capital and Capital Contributions

Pursuant to the Joint Venture Agreement, the Parties agree to establish the JV Company with a registered capital of RMB40.0 million (equivalent to approximately HK$44.0 million) and each of Weining Chaoyue and Weining Nongye has agreed to contribute to the registered capital of the JV Company upon the terms and conditions of the Joint Venture Agreement. Details of the Capital Contributions are as follows:

1. Weining Chaoyue has agreed to contribute RMB28.0 million (equivalent to approximately HK$30.8 million) in cash to the registered capital of the JV Company and which shall be paid by installments based on the capital requirements of the JV Company and according to its proportion of equity interests held in the JV Company; and
2. Weining Nongye has agreed to contribute RMB12.0 million (equivalent to approximately HK$13.2 million) in cash to the registered capital of the JV Company and which shall be paid by installments based on the capital requirements of the JV Company and according to its proportion of equity interests held in the JV Company.

Upon the completion of the Capital Contributions above, each of Weining Chaoyue and Weining Nongye would hold 70.0% and 30.0% of the equity interests of the JV Company respectively.

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The capital contribution by Weining Chaoyue will be funded by the Group's working capital. The amount of capital contribution by Weining Chaoyue was arrived at arm's length negotiations between the Parties with reference to (a) the future capital requirement by the JV Company and (b) the percentage of equity interests held by Weining Chaoyue in the JV Company.

Restriction on Equity Transfer

Without the prior written consent of the other party, either party to the Joint Venture Agreement shall not transfer its equity interests in the JV Company. If the other party agrees to the transfer of equity interests, such other party shall have the right of first refusal under the same conditions.

REASONS AND BENEFITS DERIVED FROM THE CONTRIBUTIONS

The Group has built 80 fruits and vegetables production bases in the PRC and is principally engaged in business including breeding and sale of infant apple trees; intensive apple dwarf rootstocks plantation and; selection, packaging and sale of apples.

It is expected that the JV Company will help the Group to expand its business in plantation and sale of apple and other fruits further in Weining Yi and Hui and Miao Autonomous County, Guizhou Province, the PRC.

The Directors (including the independent non-executive Directors) are of the view that the formation of the JV Company is in the interests of the Group and the Shareholders as a whole and the terms of the Joint Venture Agreement and the transactions contemplated thereunder are on normal commercial terms and are fair and reasonable.

INFORMATION ON THE PARTIES TO THE JOINT VENTURE AGREEMENT

Weining Chaoyue is a non wholly-owned subsidiary of the Group and principally engaged in plantation and sale of apples and other fruits.

Weining Nongye is principally engaged in development and investment in agriculture in Weining Yi and Hui and Miao Autonomous County, Guizhou Province, the PRC.

INFORMATION ON THE GROUP

The Group is principally engaged in the manufacture and sale of fruit juice concentrate and related products and plantation and sale of apples and other fruits.

FINANCIAL EFFECT OF THE CAPITAL CONTRIBUTION

Upon completion of the Capital Contributions, the JV Company will be accounted for by the Group as a non-wholly owned subsidiary. The capital contribution will be accounted for as an equity transaction that will not result in the recognition of any gain or loss in profit or loss.

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IMPLICATIONS UNDER THE LISTING RULES

As the highest applicable percentage ratios (as defined under the Listing Rules) in respect of the contribution of registered capital by Weining Chaoyue exceeds 5% and is less than 25%, the capital contribution by Weining Chaoyue constitutes a discloseable transaction under Chapter 14 of the Listing Rules is subject to the reporting and announcement requirements, but is exempted from shareholders' approval requirement, pursuant to Chapter 14 of the Listing Rules.

As none of the Directors has material interests in the formation of the JV Company, none of them has to abstain from voting on the Board resolutions approving the Joint Venture Agreement and the transactions contemplated thereunder pursuant to the articles of association of the Company.

DEFINITIONS

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

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Xi'an, the People's Republic of China, 14 October, 2019

As at the date of this announcement, the executive directors are Mr. Gao Liang, Mr. Ding Li, Mr. Wang Yasen and Mr. Wang Linsong; the independent non-executive directors are Mr. Zhao Boxiang, Mr. Liu Zhongli and Mr. Chang Xiaobo.

In this announcement, RMB has been converted to HK$ at the rate of RMB1 = HK$1.1 for illustration purpose only. No representation is made that any amounts in RMB or HK$ have been, could have been or could be converted at the above rate or at any other rates or at all.

• For identification purpose only.

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