Dongfeng Motor : Connected Transaction-ShareTransfer Agreement

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DONGFENG MOTOR GROUP COMPANY LIMITED* 東風汽車集團股份有限公司 (a joint stock company incorporated in the People's Republic of China with limited liability) (Stock Code: 489) CONNECTED TRANSACTION SHARE TRANSFER AGREEMENT The Board is pleased to announce that, on 14 January 2017 (non-trading hours), Dongfeng Asset Management Co., Ltd.* (東風資產管理有限公司) ("Dongfeng Asset") and China Dongfeng Motor Industry Imp. & Exp. Co., Ltd.* (中國東風汽車工業進出口有限公司) ("Dongfeng Imp. & Exp.") entered into the Share Transfer Agreement. According to the Share Transfer Agreement, Dongfeng Imp. & Exp. agreed to acquire and Dongfeng Asset agreed to sell the entire equity interest of Dongfeng Motors Engineering Co., Ltd. ( 東 風 汽 車 工 程 有 限 公 司 ) ("Dongfeng Engineering") at a consideration of HKD75 million. As the parent of the Company, DFM holds, directly and indirectly, approximately 68% in aggregate of equity interest in the Company, DFM is a connected person of the Company under the Listing Rules. As DFM holds 100% equity interest in Dongfeng Asset, Dongfeng Asset is a connected person of the Company under the Listing Rules. Hence, the Share Transfer Agreement entered into between the Dongfeng Imp. & Exp. (a subsidiary of the Company) and Dongfeng Asset constitutes a connected transaction under Chapter 14A of the Listing Rules. As certain of the applicable percentage ratios stipulated under Rule 14.07 of the Listing Rules in respect of the Share Transfer Agreement exceed 0.1% but are less than 5%, the Share Transfer Agreement is subject to the reporting and announcement requirements set out in Rules 14A.35, 14A.49, 14A.68 and 14A.71 of the Listing Rules, and are exempt from the circular (including independent financial advice) and the independent shareholders' approval requirements of Chapter 14A of the Listing Rules. SHARE TRANSFER AGREEMENT The Board is pleased to announce that, on 14 January 2017 (non-trading hours), Dongfeng Imp. & Exp. and Dongfeng Asset entered into the Share Transfer Agreement. According to the Share Transfer Agreement, Dongfeng Imp. & Exp. agreed to acquire and Dongfeng Asset agreed to sell the entire equity interest of Dongfeng Engineering at a consideration of HKD75 million.

Date

14 January 2017

Parties

1. Dongfeng Asset (as the seller); and

2. Dongfeng Imp. & Exp. (as the purchaser)

Dongfeng Engineering

Dongfeng Motors Engineering Co., Ltd. (東風汽車工程有限公司) ("Dongfeng Engineering") is a wholly-owned subsidiary of Dongfeng Asset. Dongfeng Engineering is principally engaged in industrial and risk investment, investment management and consultation, international economic and technology cooperation, technology consultation and technology service, information service and after-sales service in relation to the company operational projects and import and export business of various products and technology (including commercial vehicles and auto parts).

Dongfeng Engineering was established in 1998 with a registered capital of HKD1 million and DFM was the controlling shareholder of Dongfeng Engineering. In January 2012, Dongfeng Asset acquired from DFM the entire equity interest in Dongfeng Engineering at a nominal value. In July 2012, Dongfeng Asset enlarged the registered capital of Dongfeng Engineering from HKD1 million to HKD75 million by subscribing for new shares in Dongfeng Engineering for HKD74 million.

Consideration

The consideration amounts to HKD75 million which was arrived at after arm's length negotiation

between the Parties by reference to the Appraisal Report dated 30 November 2016 prepared by an independent assets appraisal company, Yinxin Appraisal Co., Ltd* (銀信資產評估有限公司).

According to the Appraisal Report, the appraised value of Dongfeng Engineering's net asset is approximately HKD75.76 million based on the asset based approach (資產基礎法) as at 30

September 2016.

As of 31 December 2015, the audited total assets, total liabilities and net assets of Dongfeng Engineering was approximately HKD327.72 million, HKD205.28 million and HKD122.43 million, respectively. The net loss before and after taxation attributable to Dongfeng Engineering in 2014 was approximately HKD87.71 million and HKD88.47 million respectively, and the net loss before and after taxation attributable to Dongfeng Engineering was approximately HKD57.99 million and HKD58.77 million respectively in 2015. The net loss was mainly due to the change in the fair value of the shares of Xinchen China Power Holdings Limited held by Dongfeng Engineering. Dongfeng Engineering has sold all of its shareholdings in Xinchen China Power Holdings Limited in 2016 and realised a gain of approximately HKD46.35 million.

The Parties agreed that the loss/profit of Dongfeng Engineering accrued from 30 September 2016 up to the Completion Date will be borne by Dongfeng Imp. & Exp.

The Parties agreed that the consideration of the Transfer will be paid in cash within 30 days

after the date of the Share Transfer Agreement.

Completion

The Completion Date is 31 January 2017. Dongfeng Asset and Dongfeng Imp. & Exp. will procure Dongfeng Engineering to complete the change of registration and obtain the relevant certificate reflecting the Transfer before the Completion Date.

REASONS FOR AND BENEFITS OF THE SHARE TRANSFER AGREEMENT

Dongfeng Engineering is a subsidiary of Dongfeng Asset and is currently engaged in both overseas investment, financial services and foreign trades which are also one of the principal businesses of Dongfeng Imp. & Exp. Dongfeng Engineering aims to focus its future development on entrepôt trade, financial services and foreign currency management. Therefore, by entering into the Share Transfer Agreement and transferring the entire equity interest of Dongfeng Engineering from Dongfeng Asset to Dongfeng Imp. & Exp., the Company considers that the Transfer represents a good opportunity to streamline the business management of Dongfeng Engineering and Dongfeng Imp. & Exp. and provides a solid basis for long-term development of the Group.

The Directors (including the independent non-executive Directors) believe that the terms of the Share Transfer Agreement are fair and reasonable and on normal commercial terms and the entering into the Share Transfer Agreement and the transaction contemplated thereunder are in the interests of the Company's shareholders as a whole.

IMPLICATIONS UNDER THE LISTING RULES

As the parent of the Company, DFM holds, directly and indirectly, approximately 68% in aggregate of equity interest in the Company, DFM is a connected person of the Company under the Listing Rules. As DFM holds 100% equity interest in Dongfeng Asset, Dongfeng Asset is a connected person of the Company under the Listing Rules. Hence, the Share Transfer Agreement entered into between Dongfeng Imp. & Exp. (a subsidiary of the Company) and Dongfeng Asset constitutes a connected transaction under Chapter 14A of the Listing Rules. As certain of the applicable percentage ratios stipulated under Rule 14.07 of the Listing Rules in respect of the Share Transfer Agreement exceed 0.1% but are less than 5%, the Share Transfer Agreement is subject to the reporting and announcement requirements set out in Rules 14A.35, 14A.49, 14A.68 and 14A.71 of the Listing Rules, and are exempt from the circular (including independent financial advice) and the independent shareholders' approval requirements of Chapter 14A of the Listing Rules.

None of the Directors has a material interest in the transactions contemplated under the Share Transfer Agreement and has abstained from voting on the Board resolutions to approve the transactions contemplated under the Share Transfer Agreement.

INFORMATION ON THE COMPANY

The Company is principally engaged in the manufacture of commercial vehicles (including trucks and buses), passenger vehicles (including basic passenger cars, MPVs and SUVs), engines and other auto parts. The Company is also engaged in other automotive-related businesses including vehicle and vehicle manufacturing equipment import/export businesses

and the manufacture of vehicle manufacturing equipment, auto finance businesses, insurance agency businesses and used car businesses.

INFORMATION ON DFM, DONGFENG ASSET AND DONGFENG IMP. & EXP.

DFM has a wide coverage of business scope, engaged in the manufacture, sales and research and development of whole serial commercial vehicles, passenger vehicles, auto parts and components, vehicle manufacturing equipments and auto related business. DFM is the parent company of the Company, which holds directly and indirectly approximately 68% in aggregate of equity interest in the Company.

Dongfeng Asset is principally engaged in asset operation and management, industrial and risk investment, investment management and consultation, land development and consolidation, real estate development, international economic and technology cooperation, technology consultation, technology, information and after-sales services in relation to its operational projects and import and export business of different kinds of products and technology. Dongfeng Asset is a wholly-owned subsidiary of DFM, holds approximately 1.1% equity interest in the Company.

Dongfeng Imp. & Exp. was established in May 1983 and is one of the key foreign trade companies managed by the Ministry of Commerce of the PRC. The headquarter of Dongfeng Imp. & Exp. locates in Wuhan, Hubei Province and it also has subsidiaries in (among others) Shanghai, Shenzhen and Russia. Dongfeng Imp. & Exp. is principally engaged in foreign trades, logistics and industry. The Company holds 95% equity interest in Dongfeng Imp. & Exp.

DEFINITIONS

"Appraisal Report"	the appraisal report dated 30 November 2016 prepared by Yinxin Appraisal Co., Ltd* (銀信資產評估有限公司), an independent and professional appraiser with respect to the valuation of Dongfeng Engineering;
"Board"	means the board of Directors of the Company;
"Company"	Dongfeng Motor Group Company Limited* (東風汽車集 團 股 份 有 限 公 司 ), a joint stock limited company incorporated in the PRC with limited liability and the H shares of which are listed on the Stock Exchange;
"DFM"	Dongfeng Motor Corporation* (東風汽車公司), the parent company of the Company, which holds directly and indirectly, approximately 68% in aggregate of equity interest in the Company;
"Director(s)"	the director(s) of the Company;
"Dongfeng Asset"	Dongfeng Asset Management Co., Ltd.* (東風資產管理