Tenfu Cayman : SUPPLEMENTAL ANNOUNCEMENT IN RELATION TO RENEWAL OF CONTINUING CONNECTED TRANSACTIONS

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Tenfu (Cayman) Holdings Company Limited

天福（開曼）控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 6868)

SUPPLEMENTAL ANNOUNCEMENT IN RELATION TO

RENEWAL OF CONTINUING CONNECTED TRANSACTIONS

Reference is made to the announcement of Tenfu (Cayman) Holdings Company Limited (the "Company") dated 3 December 2019 in relation to, among others, the entering into of the Renewed Lu Yu Master Purchase Agreement and the Mingfeng Leasing Framework Agreement (the "Previous Announcement"). Unless the context otherwise requires, terms used in this announcement shall have the same meanings as those defined in the Previous Announcement.

As disclosed in the Previous Announcement, on 3 December 2019, the Company entered into the Renewed Lu Yu Master Purchase Agreement with Lu Yu, pursuant to which the Company agreed to purchase or procure members of the Group to purchase tea ware from Lu Yu for a period of three years commencing on 1 January 2020 to 31 December 2022, subject to the renewed annual cap not exceeding RMB34,000,000, RMB37,400,000 and RMB41,140,000 for the three years ending 31 December 2019, respectively; and the Company entered into the Mingfeng Leasing Framework Agreement with Mingfeng, pursuant to which the Company agreed to lease or procure members of the Group to lease properties from Mingfeng for a period of three years commencing on 1 January 2020 to 31 December 2022, subject to the annual cap not exceeding RMB2,623,600, RMB2,755,000 and RMB2,893,000 for the three years ending 31 December 2022, respectively.

This announcement intends to further elaborate the pricing policy under the Renewed Lu Yu Master Purchase Agreement and the Mingfeng Leasing Framework Agreement and the annual caps on the total value of right-of-use assets relating to the leases to be entered into by the Company in each year under the Mingfeng Leasing Framework Agreement.

As tea ware provided by Lu Yu are typical in combination of traditional Chinese culture and modern fashion style, tea ware provided by Lu Yu are popular in the PRC, which are exclusively sold by the Group in the PRC. The price of the tea ware purchased by the Group under the Renewed Lu Yu Master Purchase Agreement comprised the expected costs and expenses incurred by Lu Yu for provision of tea ware to the Group plus 15%-20% of the costs and expenses incurred as profit, following arm's length negotiations between the Group and Lu Yu. The tea ware purchase department of the Group is responsible for reviewing and approving the purchase price under each purchase order to Lu Yu, according to the historical purchase price of similar tea ware from Lu Yu, the prevailing market rate of other tea ware and the costs and expenses incurred by Lu Yu for provision of tea ware.

Pursuant to HKFRS 16, the lease of properties by the Company as leasee under the Mingfeng Leasing Framework Agreement will be recognised as right-of-use assets, the annual caps on the total value of right-of-use assets relating to the leases to be entered into by the Company in each year under the Mingfeng Leasing Framework Agreement for the three years ending 31 December 2022 are RMB7,533,000, RMB7,533,000 and RMB7,533,000, respectively.

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The rental of the properties under the Mingfeng Leasing Framework Agreement, which are mainly as the retail outlets and retail points, shall be determined based on the market rental rate or guidance prices (if any) issued by the government for properties with identical location, building standards and approximate leasing area for the time being. The Company confirmed that there is no guidance prices issued by the government available now for the properties leased from Mingfeng. The sales department of the Group is in charge of identification of the proper locations/premises for new retail outlets and retail points through a bidding process, taking into account of the location, the business environment, the rental of the target premise and the comparable premises around, the historical rentals in the same city of the target premise and the prevailing rentals of similar premises in other cities.

The Directors (including the independent non-executive Directors) are of the view that the pricing policy and the methods and procedures taken by the Group can ensure that the transactions will be conducted on normal commercial terms and not prejudicial to the interests of the Company and the Shareholders.

By order of the Board

Tenfu (Cayman) Holdings Company Limited

Lee Chia Ling

Director

Hong Kong, 9 December 2019

As at the date of this announcement, the executive Directors are Mr. Lee Rie-Ho, Mr. Lee Shih-Wei, Mr. Lee Chia Ling and Mr. Lee Kuo-Lin; the non-executive Directors are Mr. Tseng Ming-Sung and Ms. Li Jie; and the independent non-executive Directors are Mr. Lo Wah Wai, Mr. Lee Kwan Hung and Mr. Fan Ren Da, Anthony.

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