Tongfang Kontafarma : DISCLOSEABLE AND CONNECTED TRANSACTION IN RELATION TO THE CONSTRUCTION CONTRACTS

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: 1312)

DISCLOSEABLE AND CONNECTED TRANSACTION

IN RELATION TO

THE CONSTRUCTION CONTRACTS

THE CONSTRUCTION CONTRACTS

On 20 April 2021, Chongqing Kangle, an indirect non-wholly owned subsidiary of the Company, entered into the Construction Contracts with Beijing Qingkong, pursuant to which Chongqing Kangle agreed to engage Beijing Qingkong as the general contractor to carry out the construction works for the Chongqing Production Base Project at the contract price of RMB34,936,651.39 (subject to adjustments).

LISTING RULES IMPLICATIONS

As the highest applicable percentage ratio in respect of the transaction contemplated under the Construction Contracts is more than 5% but less than 25% as calculated under Rule 14.07 of the Listing Rules, the transaction contemplated under the Construction Contracts constitutes a discloseable transaction of the Company and is subject to the reporting and announcement requirements under Chapter 14 of the Listing Rules.

Beijing Qingkong is an indirect non-wholly owned subsidiary of Shenzhen Waranty, which is, through China Health, the controlling shareholder and thus a connected person of the Company. Accordingly, Beijing Qingkong is an associate of Shenzhen Waranty and a connected person of the Company and the transaction contemplated under the Construction Contracts constitutes a connected transaction of the Company and is subject to reporting, announcement and Independent Shareholders' approval requirements under Chapter 14A of the Listing Rules.

- 1 -

GENERAL

The EGM will be convened and held for the Independent Shareholders to consider and, if thought fit, approve the Construction Contracts and the transaction contemplated thereunder. China Health (directly holding 56.77% of the issued share capital of the Company) and its associates shall abstain from voting on the resolution approving the Construction Contracts and the transaction contemplated thereunder at the EGM.

The Company has established the Independent Board Committee comprising all three independent non-executive Directors to consider the terms of the Construction Contracts and the transactions contemplated thereunder, and to advise the Independent Shareholders as to whether the terms of the Construction Contracts are fair and reasonable, on normal commercial terms and in the interests of the Company and the Shareholders as a whole, after taking into account the advice from the Independent Financial Adviser.

Amasse Capital Limited has been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders as to the foregoing matters.

A circular containing, among other things, (i) a letter from the Board containing further information on the Construction Contracts and the transaction contemplated thereunder; (ii) the recommendations of the Independent Board Committee to the Independent Shareholders; (iii) a letter from the Independent Financial Adviser containing its advice in connection with the aforesaid; and (iv) a notice convening the EGM together with the proxy form, will be despatched to the Shareholders on or before 11 May 2021.

THE CONSTRUCTION CONTRACTS

On 20 April 2021, Chongqing Kangle, an indirect non-wholly owned subsidiary of the Company, entered into the Construction Contracts with Beijing Qingkong, pursuant to which Chongqing Kangle agreed to engage Beijing Qingkong as the general contractor to carry out the construction works for the Chongqing Production Base Project at the consideration of RMB34,936,651.39 (subject to adjustments).

- 2 -

The principal terms of the Construction Contracts are set out below:

Date:

20 April 2021

Parties:(i) Chongqing Kangle, as the principal

(ii) Beijing Qingkong, as the contractor

Project scope: Pursuant to the Construction Contracts, Beijing Qingkong, as a general contractor, is responsible for the construction of newly built construction building, production ancillary building, finished products warehouse and affiliated facilities for the Chongqing Production Base Project, including ground and foundation works, main structure works, fitting out and decoration works, electrical works, water supply and drainage works, ventilation and air conditioning works, intelligent building engineering and landscaping works.

Contract period:

360 days

Construction contract The total contract sum is estimated to be RMB34,936,651.39,

price:which is subject to adjustments with reference to the published price of labour and materials in Chongqing and the applicable tax rate. The contract price was arrived at by a tender process conducted by the Group for the Chongqing Production Base Project. The Group selected Beijing Qingkong as the tender winner after conducting relevant evaluation procedures and taking into consideration of various factors, including technical experience, professional qualifications, business reputation and project management abilities of bidders and the fee quotations. In particular, the quotation submitted by Beijing Qingkong was the lowest among the tenders received by the Group for the Chongqing Production Base Project. The Board (excluding the independent non-executive Directors, who will provide their opinions after receiving the advice from the Independent Financial Adviser) is of the view that the total contract price is fair and reasonable.

The total contract price will be funded by internal resources of the Group.

Condition precedent: The commencement of the Construction Contracts is conditional upon the Independent Shareholders having approved the Construction Contracts and the transaction contemplated thereunder.

- 3 -

REASONS FOR AND BENEFITS OF THE ENTERING INTO OF THE CONSTRUCTION CONTRACTS

Being engaged in manufacturing and sales of prescription drugs, including chemical drugs and prescribed traditional Chinese medicines in the PRC, and laboratory related products, the Group currently owns several production bases in Beijing, Shaanxi and Chongqing. In view of the long-term development plan of the Group, the Board decided to establish a new production base which will principally focus on the manufacturing of high-tech products and chemical drugs in Changshou, Chongqing to supplement and expand the production capacity of the Group.

The Construction Contracts were awarded to Beijing Qingkong through a tendering process after evaluation of various factors including, among other things, the technical experience, professional qualifications, business reputation and project management abilities of the bidders and the fee quotations. In particular, the quotation submitted by Beijing Qingkong was the lowest among the tenders received by the Group for the Chongqing Production Base Project. Accordingly, the Board (excluding the independent non-executive Directors, who will provide their opinions after receiving the advice from the Independent Financial Adviser) considers that the terms of the Construction Contracts are fair and reasonable and on normal commercial terms and the entering into of the Construction Contracts is in the interests of the Company and Shareholders as a whole and would benefit the Group's long-term business development in pharmaceutical segment.

INFORMATION OF THE PARTIES

The Group

The Company is an investment holding company and the Group is currently principally engaged in (i) manufacturing and sales of prescription drugs, including chemical drugs and prescribed traditional Chinese medicines in the PRC, and laboratory related products; and (ii) operating of fitness centres and provision of consultation services for fitness and health activities, and operating of franchise business for royalty fee income.

Chongqing Kangle

Chonqing Kangle is a company incorporated in the PRC with limited liability and is an indirect non-wholly owned subsidiary of the Company. Its principal business is manufacturing and distribution of active pharmaceutical ingredients and intermediates active pharmaceutical ingredients.

- 4 -

Beijing Qingkong

Beijing Qingkong is a company incorporated in the PRC with limited liability and is an indirect non-wholly owned subsidiary of Shenzhen Waranty. Its principal business is provision of construction and civil engineering services.

LISTING RULES IMPLICATIONS

As the highest applicable percentage ratio in respect of the transaction contemplated under the Construction Contracts is more than 5% but less than 25% as calculated under Rule 14.07 of the Listing Rules, the transaction contemplated under the Construction Contracts constitutes a discloseable transaction of the Company and is subject to the reporting and announcement requirements under Chapter 14 of the Listing Rules.

Beijing Qingkong is an indirect non-wholly owned subsidiary of Shenzhen Waranty, which is, through China Health, the controlling shareholder and thus a connected person of the Company. Accordingly, Beijing Qingkong is an associate of Shenzhen Waranty and a connected person of the Company and the transaction contemplated under the Construction Contracts constitutes a connected transaction of the Company and is subject to reporting, announcement and Independent Shareholders' approval requirements under Chapter 14A of the Listing Rules.

GENERAL

The EGM will be convened and held for the Independent Shareholders to consider and, if thought fit, approve the Construction Contracts and the transaction contemplated thereunder. China Health (directly holding 56.77% of the issued share capital of the Company) and its associates shall abstain from voting on the resolution approving the Construction Contracts and the transaction contemplated thereunder at the EGM.

The Company has established the Independent Board Committee comprising all three independent non-executive Directors to consider the terms of the Construction Contracts and the transaction contemplated thereunder, and to advise the Independent Shareholders as to whether the terms of the Construction Contracts are fair and reasonable, on normal commercial terms and in the interests of the Company and the Shareholders as a whole, after taking into account the advice from the Independent Financial Adviser.

Amasse Capital Limited has been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders as to the foregoing matters.

A circular containing, among other things, (i) a letter from the Board containing further information on the Construction Contracts and the transaction contemplated thereunder; (ii) the recommendations of the Independent Board Committee to the Independent Shareholders; (iii) a letter from the Independent Financial Adviser

- 5 -

containing its advice in connection with the aforesaid; and (iv) a notice convening the EGM together with the proxy form, will be despatched to the Shareholders on or before 11 May 2021.

DEFINITIONS

Unless otherwise defined, the following expressions in this announcement have the following meanings:

''associate''	has the meaning ascribed to it under the Listing Rules
''Beijing Qingkong''	Beijing Qingkong Zhongchuang Construction Co., Ltd.* (北京清
	控中創工程建設有限公司), a company incorporated in the PRC
	with limited liability, which is an indirect non-wholly owned
	subsidiary of Shenzhen Waranty
''Board''	the board of Directors
''China Health''	China Health Management Investment Limited, a company
	incorporated in the British Virgin Islands with limited liability,
	which holds approximately 56.77% shareholding of the
	Company as at the date of this announcement
''Chongqing Kangle''	Chongqing Kangle Pharmaceutical Co., Ltd.* (重慶康樂製藥有
	限公司), a company incorporated in the PRC and an indirect
	non-wholly owned subsidiary of the Company
''Chongqing	the construction project of high-tech products and chemical
Production Base	drugs production base located at Changshou Economic and
Project''	Technological Development District, Chongqing, the PRC
''Company''	Tongfang Kontafarma Holdings Limited, a company
	incorporated in the Cayman Islands with limited liability, the
	shares of which are listed on the Stock Exchange (Stock Code:
	1312)
''connected person''	has the meaning ascribed to it under the Listing Rules
''Construction	the construction contract and a supplemental agreement both
Contracts''	dated 20 April 2021 entered into between Chongqing Kangle and
	Beijing Qingkong in respect of the Chongqing Production Base
	Project
''controlling	has the meaning ascribed to it under the Listing Rules
shareholder''
''Director(s)''	the director(s) of the Company

- 6 -

''EGM''	the extraordinary general meeting of the Company to be
	convened and held for the Independent Shareholders to
	consider and, if thought fit, to approve the Construction
	Contracts and the transaction contemplated thereunder
''Group''	the Company and its subsidiaries
''Hong Kong''	the Hong Kong Special Administrative Region of the PRC
''Independent Board	a committee of the Board comprising Mr. Chan Sze Chung, Mr.
Committee''	Zhang Ruibin and Mr. Zhang Junxi Jack, all being the
	independent non-executive Directors, which is formed to advise
	the Independent Shareholders on the Construction Contracts
	and the transaction contemplated thereunder
''Independent	Amasse Capital Limited, the independent financial adviser
Financial Adviser''	appointed to advise the Independent Board Committee and the
	Independent Shareholders on the Construction Contracts and
	the transaction contemplated thereunder
''Independent	Shareholders who are not interested or involved in the
Shareholders''	Construction Contracts and the transaction contemplated
	thereunder
''Listing Rules''	the Rules Governing the Listing of Securities on the Stock
	Exchange
''PRC''	the People's Republic of China, and for the purpose of this
	announcement, excluding Hong Kong and Macau Special
	Administrative Region of the People's Republic of China
''RMB''	Renminbi, the lawful currency of the PRC
''Share(s)''	ordinary share(s) of HK$0.002 each in the share capital of the
	Company
''Shareholder(s)''	the holder(s) of the Shares
''Shenzhen Waranty''	Shenzhen Waranty Asset Management Co., Ltd.* (深圳市華融泰
	資產管理有限公司), a company incorporated in the PRC with
	limited liability, which indirectly holds 100% shareholding of
	China Health as at the date of this announcement

- 7 -

''Stock Exchange''	The Stock Exchange of Hong Kong Limited
%	per cent
	By order of the Board
	Tongfang Kontafarma Holdings Limited
	Chai Hongjie
	Chairman

Hong Kong, 20 April 2021

As at the date of this announcement, the Board comprises four executive Directors, namely Mr. Chai Hongjie (Chairman), Mr. Huang Yu (President), Mr. Wei Bingzhang and Mr. Jiang Chaowen (Chief Executive Officer) and three independent non-executive Directors, namely Mr. Chan Sze Chung, Mr. Zhang Ruibin and Mr. Zhang Junxi Jack.

• For identification purpose only

- 8 -