China Health : INSIDE INFORMATION UPDATES ON HOSPITAL MANAGEMENT AGREEMENT

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.

China Health Group Limited

中國衛生集團有限公司

(Carrying on business in Hong Kong as CHG HS Limited)

(Incorporated in Bermuda with limited liability)

(Stock Code: 673)

INSIDE INFORMATION

UPDATES ON HOSPITAL MANAGEMENT AGREEMENT

This announcement is made by China Health Group Limited (the "Company"), together with its subsidiaries, the "Group" pursuant to Rule 13.09 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules") and the Inside Information Provisions (as defined in the Listing Rules) of Part XIVA of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong).

Reference is made to the announcement of the Company dated 24 July 2015 (the "Announcement") in relation to the entering into of a hospital management agreement (the "Management Agreement") dated 23 July 2015 among the Company, the Management Company (a wholly- owned subsidiary of the Company) and the Shuangluan Government. Capitalised terms used herein have the same meanings as defined in the Announcement unless otherwise specified.

Pursuant to the terms of the Management Agreement (as supplemented on 31 July 2015 and 25 August 2015), among other things, (i) the Shuangluan Government granted the operating right to the Company for the management and operation of Shuangluan Hospital for a term of 30 years from 1 August 2015 to 31 July 2045; (ii) the Management Company shall receive management fees (the "Fees") from Shuangluan Hospital during the term of the Management Agreement equivalent to a percentage of the Annual Revenue of Shuangluan Hospital; and (iii) the Company agreed to provide loan to Shuangluan Hospital to finance its expansion plan and purchase of medical equipment which bears interest at a fixed rate of 7% per annum (the "Advances") and was expected to be capitalised into equity interest in Shuangluan Hospital when Shuangluan Hospital undertakes a share reform scheme.

- 1 -

Following the promulgation of relevant regulations and policies in late 2019, the Company and the Shuangluan Government had thorough discussions and it is expected that the share reform scheme of Shuangluan Hospital would not be implemented and the capitalisation of loans provided to Shuangluan Hospital as originally contemplated would not be proceeded with. As at the date of this announcement, the total outstanding principal of the Advances amounted to RMB67.60 million (equivalent to approximately HK$81.12 million), while the Fees calculated up to 31 December 2020 which remained unpaid amounted to RMB16,783,695.57 (equivalent to approximately HK$20.14 million), and the accrued and unpaid interest on the Advances up to 28 February 2021 amounted to RMB3,354,533.16 (equivalent to approximately HK$4.03 million) (together, the "Sum").

The Board wishes to announce that on 30 April 2021, the Company, the Management Company, 北京中衛康融醫院管理有限公司 (Beijing Zhong Wei Kong Rong Hospital Management Company Limited*) ("Kangrong") (a wholly-owned subsidiary of the Company), Shuangluan Hospital and the Shuangluan Government entered into an agreement (the "Settlement Agreement") to deal with matters concerning the settlement of the Sum and the management right over Shuangluan Hospital. Pursuant to the Settlement Agreement,

1. the parties acknowledged that Kangrong has taken up the rights and obligations of the Management Company under the Management Agreement;
2. the Shuangluan Government and Shuangluan Hospital agreed that the Sum, net of expenses incurred by personnel appointed by the Company amounting to RMB2,342.937.10 (equivalent to approximately HK$2.81 million) which shall be borne by the Group, shall be settled in cash in accordance with the following schedule:

Date	Amount
	(RMB)
Within five business days following the signing of the
Settlement Agreement	35,395,291.63
Within five business days following the obtaining of a RMB50 million
bank loan by Shuangluan Hospital	50,000,000.00
	85,395,291.63

The scheduled payments shall be applied towards settlement of (a) firstly, the Fees; (b) secondly, the accrued interests on the Advances; and (c) lastly, the principal amount of the Advances;

1. the management right of Kangrong over Shuangluan Hospital shall cease upon the signing of the Settlement Agreement and the Group shall not be entitled to any further management fee from Shuangluan Hospital; and

- 2 -

1. the Management Agreement shall remain effective until the full settlement of the Sum, and the representative of the Group shall resign from the role as the legal representative of Shuangluan Hospital within two business day following the full settlement of the Sum, in the manner as described in (ii) above.

The terms of the Settlement Agreement have been agreed among the parties after arm's length negotiations and the Directors consider the Settlement Agreement, which formalises an agreed payment schedule for the outstanding amounts owed by Shuangluan Hospital to the Group, is in the interests of the Company and the Shareholders as a whole. Following the signing of the Settlement Agreement, the Group shall cease to manage Shuangluan Hospital and will continue to be engaged in the businesses of distribution of medical equipment and consumables and provision of related services, operation of its wholly-owned hospital, namely Anping Bo'ai Hospital, and business factoring.

Further announcement will be made by the Company to provide update on the status of the Management Agreement as and when appropriate.

By Order of the Board of

China Health Group Limited

Zhang Fan

Chairman of the Board and Executive Director

Hong Kong, 30 April 2021

As at the date of this announcement, the Board comprises three executive Directors, namely, Mr. Zhang Fan (chairman), Mr. Chung Ho and Mr. Wang Jingming; three non-executive Directors, namely, Mr. Weng Yu, Mr. Xing Yong and Mr. Huang Lianhai; and four independent non-executive Directors, namely, Mr. Jiang Xuejun, Mr. Du Yanhua, Mr. Lai Liangquan and Ms. Meng Junfeng.

For illustration purpose only, amounts in RMB in this announcement are translated into HK$ at the rate of RMB1.0=HK$1.20.

- 3 -