Tong Ren Tang Technologies : RENEWAL OF CONTINUING CONNECTED TRANSACTIONS

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 company incorporated in the People's Republic of China with limited liability)

(Stock Code: 1666)

RENEWAL OF CONTINUING CONNECTED TRANSACTIONS

The Board hereby announces that, as the Advertising Agency Framework Agreement entered into between Tong Ren Tang Century Advertising, a subsidiary of the Company, and Tong Ren Tang Holdings expired on 31 December 2019, the parties renewed such agreement on 28 February 2020 for a term of three years from 1 January 2020 to 31 December 2022, and set the annual caps for the continuing connected transactions contemplated under the aforesaid agreement for the three years ending 31 December 2022.

Tong Ren Tang Holdings is the ultimate controlling shareholder of the Company and is therefore a connected person of the Company under the Hong Kong Listing Rules. Accordingly, the transactions contemplated under the Advertising Agency Framework Agreement constitute continuing connected transactions of the Company under Chapter 14A of the Hong Kong Listing Rules.

As one or more of the applicable percentage ratios in respect of the estimated annual caps for the continuing connected transactions under the renewed Advertising Agency Framework Agreement exceed 0.1% but are all less than 5%, the renewed Advertising Agency Framework Agreement and the proposed annual caps for the continuing connected transactions contemplated thereunder are only subject to reporting, annual review and announcement requirements, but exempt from the independent shareholders' approval requirement under Chapter 14A of the Hong Kong Listing Rules.

BACKGROUND

Reference is made to the announcement of the Company dated 29 September 2016 in relation to the continuing connected transactions contemplated under the Advertising Agency Framework Agreement between the Group and Tong Ren Tang Holdings, the ultimate controlling shareholder of the Company.

1

As the Advertising Agency Framework Agreement entered into between Tong Ren Tang Century Advertising, a subsidiary of the Company, and Tong Ren Tang Holdings expired on 31 December 2019, the parties renewed such agreement on 28 February 2020, for a term of three years from 1 January 2020 to 31 December 2022, and set the annual caps for the continuing connected transactions contemplated under the aforesaid agreement for the three years ending 31 December 2022.

Major Terms of the Renewed Advertising Agency Framework Agreement

Renewal Date:	28 February 2020
Parties:	(i) Tong Ren Tang Century Advertising
	(ii) Tong Ren Tang Holdings
Term of the Agreement:	The renewed Advertising Agency Framework Agreement is for a
	term of three years from 1 January 2020 to 31 December 2022.
Principal Terms and	Pursuant to the Advertising Agency Framework Agreement:
Conditions:
	∙ Tong Ren Tang Holdings agreed to entrust Tong Ren Tang
	Century Advertising, as a non-exclusive advertising agent, to
	provide the Advertising Agency Services to Tong Ren Tang
	Group for a period from 1 January 2020 to 31 December 2022.
	Tong Ren Tang Century Advertising agreed to provide such
	services to Tong Ren Tang Group.
	∙ Based on the above, Tong Ren Tang Holdings itself, and will
	procure the members of Tong Ren Tang Group, to enter into
	individual implementation agreement with Tong Ren Tang
	Century Advertising for the provision of specific services under
	the Advertising Agency Framework Agreement. Specific terms
	and conditions will be negotiated between the parties and be
	reflected in individual implementation agreement but shall not
	violate the conditions and principles as stated in the Advertising
	Agency Framework Agreement.
	∙ The content of the advertisement which Tong Ren Tang
	Holdings entrusts Tong Ren Tang Century Advertising to
	publish shall be in compliance with the laws, regulations and
	rules of the PRC in relation to the advertising and drug
	administration, and the publication of such advertisement shall
	be duly approved by relevant authorities, if needed.

2

Pricing Policy:The fees for the advertising agency services provided by Tong Ren Tang Century Advertising to members of Tong Ren Tang Group shall be determined with reference to the actual quotation offered by third-party advertising providers on the basis of their published price lists, plus a reasonable fee for the advertising agency service provided by Tong Ren Tang Century Advertising (generally not higher than 10% of the quote offered by third-party advertising providers).

Payment of the Fees: The advertising agency service fees shall be paid in cheque at the end of each month, unless otherwise provided by the parties in the implementation agreements.

Annual Caps

Historical Transaction Amount

Historical transaction amount under the Advertising Agency Framework Agreement for the three years ended 31 December 2019 is set out below:

	Year ended	Year ended	Year ended
	31 December 2017	31 December 2018	31 December 2019
			（Unaudited）
	(RMB million)	(RMB million)	(RMB million)
Historical Transaction	37.205	41.505	31.997
Amount

Historical Annual Caps

The annual caps for the transactions contemplated under the Advertising Agency Framework Agreement for the three years ended 31 December 2019 are set out below:

	Year ended	Year ended	Year ended
	31 December 2017	31 December 2018	31 December 2019
	(RMB million)	(RMB million)	(RMB million)
Historical Annual Caps	50	52	54

The Directors have been monitoring the transaction amount contemplated under the Advertising Agency Framework Agreement, and for the three years ended 31 December 2019, the annual caps for each year has not been exceeded.

3

Proposed Annual Caps

The proposed annual caps for the transactions contemplated under the Advertising Agency Framework Agreement for the three years ending 31 December 2022 are set below:

	Year ending	Year ending	Year ending
	31 December 2020	31 December 2021	31 December 2022
	(RMB million)	(RMB million)	(RMB million)
Expected Annual Caps	28	28	28

The above expected annual caps were determined with reference to the historical transaction figures as listed above and after taking into consideration the following factors:

(i). the historical transaction amount for the three years ended 31 December 2019, the decrease of historical transaction amount under the Advertising Agency Framework Agreement in 2019 decreased by approximately 22.91% as compared to the same period in 2018, and the utilization rate of the annual cap for the year 2019 being approximately 59.25%;

(ii). The estimation of the advertising agency service needs of members of Tong Ren Tang Group in the next three years; and

(iii). a buffer has been provided for any unexpected increase in the renewed Advertising Agency Framework Agreement in the next three years.

Reasons for and benefit of renewal of the Advertising Agency Framework Agreement

The Directors and Tong Ren Tang Holdings consider that engaging Tong Ren Tang Century Advertising, a wholly-owned subsidiary of the Company, is more efficient and effective in terms of publicizing and promoting the brand image of "Tong Ren Tang" and the products of the Group, in the building-up and maintaining of the overall image of "Tong Ren Tang", as well as in the integration of the needs for advertising services among the members of Tong Ren Tang Group.

The Directors (including the independent non-executive Directors) are of the view that the Advertising Agency Framework Agreement was entered into on normal commercial terms, and the terms and conditions therein as well as the annual caps for the continuing connected transactions contemplated thereunder are fair and reasonable, and are in the interests of the Company and its shareholders as a whole.

Measures of Internal Control

To ensure the Group's conformity with the pricing policies in relation to the continuing connected transactions contemplated under the Advertising Agency Framework Agreement, the Group has adopted the following internal control procedures:

4

（i） after renewing the Advertising Agency Framework Agreement, the continuing connected transactions contemplated thereunder shall be strictly in compliance with the approved terms and conditions. Implementation agreements under the Advertising Agency Framework Agreement shall be performed in strict accordance with pricing policies set out in the Advertising Agency Framework Agreement. If revision of such terms and conditions is required due to change of actual situation, it is required to re-perform appropriate approval process;

（ii） Tong Ren Tang Century Advertising is responsible to continuously monitor the pricing terms and actual transaction amounts of each of the specific implementation agreements to the renewed Advertising Agency Framework Agreement. The financial department of the Company is responsible to collect the total transaction amounts of the continuing connected transactions under the Advertising Agency Framework Agreement on a monthly basis and prepare summary report accordingly. If Tong Ren Tang Century Advertising discovers any imminent or possible exceeding of the annual caps of any continuing connected transactions under the Advertising Agency Framework Agreement, it shall report as soon as possible to the financial department and the securities department of the Company. If the necessity to raise the annual caps is confirmed, Tong Ren Tang Century Advertising shall submit proposal to revise annual caps. After obtaining the approval of the person in charge, the application shall be submitted to the executive office of the Company for consideration, and the Board or the general meeting of shareholders (as the case may be) shall ultimately decide whether to revise the annual caps for the continuing connected transactions and to perform the disclosure procedures accordingly. Before completion of all of the approval and disclosure procedures, the person in charge of Tong Ren Tang Century Advertising involved in the continuing connected transactions shall ensure that the transaction amounts do not exceed the annual caps;

（iii） the independent non-executive Directors will review the continuing connected transactions under the Advertising Agency Framework Agreement to ensure all transactions contemplated thereunder are entered into on normal commercial terms or better, are fair and reasonable, the terms and conditions available to the Group are no less favourable than those available to independent third parties, and such transactions are carried out pursuant to the terms of the Advertising Agency Framework Agreement; and

（iv） the auditors of the Company will conduct annual reviews on the pricing and annual caps of the continuing connected transactions under the renewed Advertising Agency Framework Agreement.

Taking into account that: (i) the above methods and procedures are necessary components of an internal control system, including designated department and responsible officer, clear approval process and monitoring system; and (ii) the above-mentioned review procedures and approval process can ensure that the transactions will be executed in accordance with the pricing principles stipulated in the renewed Advertising Agency Framework Agreement, the Directors (including the independent non-executive Directors) are of the view that such methods and procedures can ensure and safeguard that the transactions contemplated under the renewed Advertising Agency Framework Agreement will be on normal commercial terms and not prejudicial to interests of the Company and its minority Shareholders' interests as a whole.

5

HONG KONG LISTING RULES IMPLICATIONS

Tong Ren Tang Holdings is the ultimate controlling shareholder of the Company and is therefore a connected person of the Company under the Hong Kong Listing Rules. Accordingly, the transactions contemplated under the Advertising Agency Framework Agreement constitute continuing connected transactions of the Company under Chapter 14A of the Hong Kong Listing Rules.

As one or more of the applicable percentage ratios in respect of the estimated annual caps for the continuing connected transactions under the renewed Advertising Agency Framework Agreement exceed 0.1% but are all less than 5%, the renewed Advertising Agency Framework Agreement and the proposed annual caps for the continuing connected transactions contemplated thereunder are only subject to reporting, annual review and announcement requirements, but exempt from the independent shareholders' approval requirement under Chapter 14A of the Hong Kong Listing Rules.

None of the other Directors has a material interest in any of the above-mentioned continuing connected transactions.

GENERAL INFORMATION ON THE PARTIES

The Company

The Company is principally engaged in the manufacturing and sale of Chinese Medicine.

Tong Ren Tang Century Advertising

Tong Ren Tang Century Advertising is principally engaged in advertising design, production, agency and publication, etc..

Tong Ren Tang Holdings

Tong Ren Tang Holdings is engaged in the processing and manufacture of Chinese patent medicine and Chinese medicinal decoction pieces, sales of Chinese medicinal, Chinese patent medicine and Chinese medicinal decoction pieces, medical food, warehousing and transportation, etc.. Beijing SASAC is the ultimate beneficial owner of Tong Ren Tang Holdings. Pursuant to the Program for the Reform of the Institutions of the People's Government of Beijing Municipality as approved by the Central Committee of the Communist Party of China and the State Council and the Circular of the People's Government of Beijing Municipality about the Establishment of Institutions, Beijing SASAC is established as a special institution directly under the Municipality Government and is authorized by the Municipality Government to represent the State to perform the duties of the state-owned assets contributor.

DEFINITIONS

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

6

"Advertising Agency Framework	the Advertising Agency Framework Agreement entered into
Agreement"	between Tong Ren Tang Century Advertising and Tong Ren Tang
	Holdings on 20 March 2014, renewed by the parties on 29
	September 2016 and 28 February 2020 for the purpose of the
	provision of the Advertising Agency Services by Tong Ren Tang
	Century Advertising to Tong Ren Tang Group
"associate(s)"	has the meaning ascribed under the Hong Kong Listing Rules
"Beijing SASAC"	The State-owned Assets Supervision and Administration
	Commission of the State Council of Beijing Municipality (北京人民
	政府國有資產監督管理委員會)
"Board"	the board of directors of the Company
"Company"	Tong Ren Tang Technologies Co. Ltd. (北京同仁堂科技發展股份
	有限公司), a joint stock company incorporated in the PRC with
	limited liability and the H shares of which are listed on the Main
	Board of the Hong Kong Stock Exchange
"controlling shareholder"	has the meaning ascribed to it under the Hong Kong Listing Rules
"Director(s)"	the directors of the Company
"Group"	the Company and its subsidiaries
"Hong Kong"	the Hong Kong Special Administrative Region of the PRC
"Hong Kong Listing Rules"	the Rules Governing the Listing of Securities on Hong Kong Stock
	Exchange
"Hong Kong Stock Exchange"	The Stock Exchange of Hong Kong Limited
"PRC"	the People's Republic of China, which for the purpose of this
	announcement only, excludes Hong Kong, the Macau Special
	Administrative Region of the PRC and Taiwan
"RMB"	Renminbi, the lawful currency of the PRC
"Shareholder(s)"	the shareholder(s) of the Company
"Tong Ren Tang Century	Beijing Tong Ren Tang Century Advertising Co., Ltd. (北京同仁堂
Advertising"	世紀廣告有限公司), a company incorporated in the PRC with
	limited liability and a wholly-owned subsidiary of the Company
	7

"Tong Ren Tang Group"	Tong Ren Tang Holdings and its associates (excluding the Group)
"Tong Ren Tang Holdings"	China Beijing Tong Ren Tang Group Co., Ltd. (中國北京同仁堂
	（集團）有限責任公司), a state-owned enterprise established in the
	PRC and the ultimate controlling shareholder of the Company who
	is directly and indirectly interested in 47.59% equity interest in the
	Company

By order of the Board

Tong Ren Tang Technologies Co. Ltd.

Gu Hai Ou

Chairman of the Board

Beijing, the PRC

28 February 2020

As at the date of this announcement, the Board comprises Mr. Gu Hai Ou, Mr. Huang Ning, Mr. Wu Le Jun, Ms. Wu Qian, Mr. Wang Yu Wei and Ms. Fang Jia Zhi as executive Directors, Mr. Ting Leung Huel, Stephen, Ms. Chan Ching Har, Eliza and Mr. Zhan Yuan Jing as independent non-executive Directors.

8