Art : SUPPLEMENTAL ANNOUNCEMENT DISCLOSEABLE TRANSACTION RELATING TO PROVISION OF LOAN AND ADVANCE TO AN ENTITY

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ART GROUP HOLDINGS LIMITED

錦 藝 集 團 控 股 有 限 公 司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 565)

SUPPLEMENTAL ANNOUNCEMENT

DISCLOSEABLE TRANSACTION

RELATING TO

PROVISION OF LOAN

AND ADVANCE TO AN ENTITY

Reference is made to the announcement of Art Group Holdings Limited dated 28 April 2021 (the "Announcement") in relation to the discloseable transaction and advance to an entity relating to the entering into of the Loan Agreement. Unless the context requires otherwise, capitalised terms used herein shall have the same meanings as defined in the Announcement.

The Company would like to provide the following supplemental information in respect of the Announcement.

INTEREST RATE AND FACTORS HAVING TAKEN INTO ACCOUNT IN ENTERING INTO THE LOAN AGREEMENT

The interest rate charged on the Loan is determined with reference to the interest rate of 5% to 7.5% per annum offered by certain commercial banks in respect of short-term loans.

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In entering into the Loan Agreement, the Directors have considered factors including but not limited to the credit assessment results of the Borrower and the Guarantor, the background and the repayment ability of the Borrower and the Guarantor, the value of the Secured Security, the purpose of the Loan, the period of the Loan, the debt portfolio of the Borrower, the expected interest income amount and the Group's cashflow position. The works performed by the Directors include:

1. discussed with the Borrower about its business, operation, financial status and the purpose for the Loan;
2. obtained and reviewed certain current business contracts of the Borrower which indicate that the Borrower is in operation and sufficient cash is expected to be generated to the Borrower;
3. conducted background and corporate searches of the Borrower and the Guarantor which did not reveal any past default by the Borrower and the Guarantor;
4. conducted public searches on the Secured Security, which indicated that no other charge is created thereon; and
5. obtained and reviewed the latest audited reports and most updated management accounts of the Borrower and the Guarantor, which did not reveal the Borrower and the Guarantor had any extraordinary liabilities.

Based on the due diligence conducted, the risk assessment results and the Guarantor agreeing to provide the guarantee and the Secured Security, and taking into consideration the interest income to be generated to the Group and the cash flow position of the Group, the Directors are of the view that the terms of and the entering into the Loan Agreement are of normal commercial terms, fair and reasonable and in the interests of the Company and the Shareholders as a whole.

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RELATIONSHIP OF THE PARTIES

Save for (i) the Loan Agreement; and (ii) that the Guarantor holds 25% equity interests

in each of the two non-wholly-owned subsidiaries of the Company, namely Zhengzhou Zhongyuan Jinyi Commercial Operation Management Co., Ltd.*（鄭州中原錦藝商業運營管 理有限公司）and Zhengzhou Jiachao Property Services Co., Ltd.*（鄭州佳潮物業服務有限 公司）, the Company and its connected persons have no relationship with the Borrower and the Guarantor, and their respective ultimate beneficial owners. To the best of the Directors'

knowledge and information, the Borrower and the Guarantor, and their respective ultimate beneficial owners are independent of each other. Chen Wei (the ultimate controlling beneficial owner of the Guarantor) and Chen Yirui (the ultimate beneficial owner of the Borrower) acquainted with each other for more than 20 years.

REPAYMENT MANAGEMENT

As a measure to manage repayment of the Loan, the Group's finance team, which was led by the Regional Financial Controller, was assigned to keep track of receiving payment on the Repayment Date. During the Loan period, the finance team has to keep monitoring the status of the Borrower and the Guarantor through paying attention to publicly available information of the Borrower and the Guarantor, conducting updated credit assessments of the Borrower and the Guarantor, obtaining and reviewing updated financial statements and business contracts of the Borrower. If there is a matter which may affect the repayment ability of the Borrower and the Guarantor and/or enforcement of the Secured Security, the finance team and the Regional Financial Controller will promptly bring this to the attention of the Group Financial Controller, who will promptly report to the Directors. The Directors will evaluate the matter and take action where appropriate including enforcement action.

By order of the Board of

ART GROUP HOLDINGS LIMITED

Chen Jinyan

Chairman

Hong Kong, 13 May 2021

• For identification purpose only

As at the date of this announcement, the executive directors of the Company are Mr. Chen Jinyan and Mr. Chen Jindong; and the independent non-executive directors of the Company are Mr. Kwan Chi Fai, Mr. Lin Ye, Mr. Yang Zeqiang and Ms. Chong Sze Pui Joanne.

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