Jia Yao : CONTINUING CONNECTED TRANSACTIONS SALE OF PAPER CIGARETTE PACKAGES

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.

Jia Yao Holdings Limited

嘉 耀 控 股 有 限 公 司

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 01626)

CONTINUING CONNECTED TRANSACTIONS

SALE OF PAPER CIGARETTE PACKAGES

SALE OF PAPER CIGARETTE PACKAGES

The Board is pleased to announce that on 20 August 2020, Hubei Golden Three Gorges, a subsidiary of the Company, entered into the Sale Agreements with Yunnan Tobacco Materials, China Tobacco Shandong, China Tobacco Shaanxi, Heilongjiang Tobacco Industrial, China Tobacco Chongqing, Shanxi Kunming Tobacco, Longyan Tobacco and Inner Mongolia Kunming Cigarettes in relation to the sale of paper cigarette packages.

LISTING RULES IMPLICATIONS

Each of the eight counter-parties to the Sale Agreements is a connected person of the Company and their respective relationships with the Company are set out in the paragraph headed ''PARTIES AND RELATIONSHIPS OF THE PARTIES'' of this announcement. Accordingly, the transactions under the Sale Agreements constitute continuing connected transactions of the Company under Chapter 14A of the Listing Rules.

THE SALE AGREEMENTS

As the transactions under the Sale Agreements are transactions between the Group and connected persons at the subsidiary level on normal commercial terms, the Board has approved the transactions under the Sale Agreements and the independent non-executive Directors have confirmed that the terms of the transactions under the Sale Agreements are fair and reasonable, the transactions under the Sale Agreements are on normal commercial terms and in the interests of the Company and its Shareholders as a whole, the Sale Agreements are subject to the annual review, reporting and announcement requirements and are exempt from the circular, independent financial advice and shareholders' approval requirements pursuant to Rule 14A.101 of the Listing Rules.

- 1 -

SALE OF PAPER CIGARETTE PACKAGES

The Board is pleased to announce that on 20 August 2020, Hubei Golden Three Gorges, a subsidiary of the Company, entered into the Sale Agreements in relation to the sale of paper cigarette packages.

PRINCIPAL TERMS OF THE SALE AGREEMENTS

The principal terms of each of the Sale Agreements are set out as follows:

1. Yunnan Sale Agreements
   Date:
   20 August 2020
   Parties:
2. 1. Hubei Golden Three Gorges
   2. Yunnan Tobacco Materials

Description of the transactions:

Pursuant to the Yunnan Sale Agreements, Hubei Golden Three Gorges agreed to supply to Yunnan Tobacco Materials, and Yunnan Tobacco Materials agreed to purchase from Hubei Golden Three Gorges paper cigarette packages for a sub-brand of the cigarette brand ''Hu Lun Bei Er (呼倫貝爾)'' at unit prices ranging from approximately RMB0.1836 per piece to approximately RMB0.8068 per piece; certain sub-brands of the cigarette brand ''Hong Ta Shan (紅塔山)'' at unit prices ranging from approximately RMB0.0624 per piece to approximately RMB0.6955 per piece; certain sub-brands of the cigarette brand ''Yu Xi (玉溪)'' at unit prices ranging from approximately RMB0.1519 per piece to RMB10.26 per piece; certain sub-brands of the cigarette brand ''Yun Yan (雲煙)'' at unit prices ranging from approximately RMB0.1137 per piece to RMB14.4196 per piece; certain sub-brands of the cigarette brand ''Hong He (紅河)'' at unit prices ranging from approximately RMB0.1572 per piece to RMB11.66 per piece; and a sub-brand of the cigarette brand ''MC'' at unit prices ranging from approximately RMB0.2602 per piece to approximately RMB1.1153 per piece, for the period from 20 August 2020 to 31 December 2020.

Purchase orders will be issued by Yunnan Tobacco Materials to Hubei Golden Three Gorges. Upon passing of the examination of the paper cigarette packages and obtaining confirmation by Yunnan Tobacco Materials on its ERP system, Yunnan Tobacco Materials shall settle the payment within one month upon receiving the invoice from Hubei Golden Three Gorges.

- 2 -

1. Shandong Sale Agreements
   Date:
   20 August 2020
   Parties:
2. 1. Hubei Golden Three Gorges
   2. China Tobacco Shandong

Description of the transactions:

Pursuant to the Shandong Sale Agreements, Hubei Golden Three Gorges agreed to supply to China Tobacco Shandong, and China Tobacco Shandong agreed to purchase from Hubei Golden Three Gorges paper cigarette packages for a sub-brand of the cigarette brand ''Ha De Men (哈德門)'' at unit prices ranging from approximately RMB0.1236 per piece to approximately RMB0.2523 per piece for the period from 20 August 2020 to 31 December 2020.

The actual quantity of the paper cigarette packages to be purchased by China Tobacco Shandong, and the time and place of delivery of the products concerned shall conform to the purchase orders by China Tobacco Shandong. Upon passing of the examination of the paper cigarette packages by China Tobacco Shandong, China Tobacco Shandong shall settle the payment by way of online bank transfer or bank acceptance bill upon receiving the value-added tax invoice from Hubei Golden Three Gorges.

1. Shaanxi Sale Agreements
   Date:
   20 August 2020
   Parties:
2. 1. Hubei Golden Three Gorges
   2. China Tobacco Shaanxi

Description of the transactions:

Pursuant to the Shaanxi Sale Agreements, Hubei Golden Three Gorges agreed to supply to China Tobacco Shaanxi, and China Tobacco Shaanxi agreed to purchase from Hubei Golden Three Gorges paper cigarette packages for a sub-brand of cigarette brand ''Hao Mao (好貓)'' at the unit price ranging from RMB0.2276 per piece to RMB0.7042 per piece for the period from 20 August 2020 to 31 December 2020.

- 3 -

The actual quantity of the paper cigarette packages to be purchased by China Tobacco Shaanxi, and the time and place of delivery of the products concerned shall conform to the purchase orders by China Tobacco Shaanxi. Hubei Golden Three Gorges shall issue the value-added tax invoice to China Tobacco Shaanxi and China Tobacco Shaanxi shall settle the payment by wire transfer or banker's draft thereafter.

1. Heilongjiang Sale Agreements
   Date:
   20 August 2020
   Parties:
2. 1. Hubei Golden Three Gorges
   2. Heilongjiang Tobacco Industrial

Description of the transactions:

Pursuant to the Heilongjiang Sale Agreements, Hubei Golden Three Gorges agreed to supply to Heilongjiang Tobacco Industrial, and Heilongjiang Tobacco Industrial agreed to purchase from Hubei Golden Three Gorges paper cigarette packages for a certain sub-brand of the cigarette brand ''Long Yan (龍煙)'' at unit prices ranging from approximately RMB0.2433 per piece to approximately RMB1.0429 per piece; a sub- brand of the cigarette brand ''Ha Er bin (哈爾濱)'' at unit prices ranging from approximately RMB0.1503 per piece to approximately RMB0.6441 per piece; and certain sub-brands of the cigarette brand ''Lin Hai Ling Zhi (林海靈芝)'' at unit prices ranging from approximately RMB0.0891 per piece to approximately RMB0.565 per piece, for the period from 20 August 2020 to 31 December 2020.

The actual quantity of the paper cigarette packages to be purchased by Heilongjiang Tobacco Industrial, and the time and place of delivery of the products concerned shall conform to the purchase orders by Heilongjiang Tobacco Industrial. Upon passing of the examination and inventory entry of the paper cigarette packages by Heilongjiang Tobacco Industrial, Heilongjiang Tobacco Industrial shall settle the payment in accordance with its relevant financial provisions.

1. Chongqing Sale Agreements
   Date:
   20 August 2020
   Parties:
2. 1. Hubei Golden Three Gorges
   2. China Tobacco Chongqing

- 4 -

Description of the transactions:

Pursuant to the Chongqing Sale Agreements, Hubei Golden Three Gorges agreed to supply to China Tobacco Chongqing, and China Tobacco Chongqing agreed to purchase from Hubei Golden Three Gorges paper cigarette packages for a sub-brand of the cigarette brand ''Long Feng Cheng Xiang (龍鳳呈祥)'' at unit prices ranging from approximately RMB0.193 per piece to approximately RMB0.8272 per piece for the period from 20 August 2020 to 31 December 2020.

The actual quantity of the paper cigarette packages to be purchased by China Tobacco Chongqing, and the time and place of delivery of the products concerned shall conform to the purchase orders by China Tobacco Chongqing. Upon passing of the examination and inventory entry of the paper cigarette packages by China Tobacco Chongqing, China Tobacco Chongqing shall settle the payment in accordance with its relevant financial provisions.

1. Shanxi Sale Agreements
   Date:
   20 August 2020
   Parties:
2. 1. Hubei Golden Three Gorges
   2. Shanxi Kunming Tobacco

Description of the transactions:

Pursuant to the Shanxi Sale Agreements, Hubei Golden Three Gorges agreed to supply to Shanxi Kunming Tobacco, and Shanxi Kunming Tobacco agreed to purchase from Hubei Golden Three Gorges paper cigarette packages for a sub-brand of the cigarette brand ''Yun Yan (雲煙)'' at unit prices ranging from approximately RMB0.1473 per piece to approximately RMB0.6311 per piece; and a sub-brand of the cigarette brand ''Hong Ta Shan (紅塔山)'' at unit prices ranging from approximately RMB0.1184 per piece to approximately RMB0.4626 per piece, for the period from 20 August 2020 to 31 December 2020.

The actual quantity of the paper cigarette packages to be purchased by Shanxi Kunming Tobacco, and the time and place of delivery of the products concerned shall conform to the purchase orders by Shanxi Kunming Tobacco. Upon passing of the examination of the paper cigarette packages by Shanxi Kunming Tobacco, Shanxi Kunming Tobacco shall settle the payment by installment upon receiving the value- added tax invoice from Hubei Golden Three Gorges, the outstanding balance will be treated as the performance bond.

- 5 -

1. Longyan Sale Agreements
   Date:
   20 August 2020
   Parties:
2. 1. Hubei Golden Three Gorges
   2. Longyan Tobacco

Description of the transactions:

Pursuant to the Longyan Sale Agreements, Hubei Golden Three Gorges agreed to supply to Longyan Tobacco, and Longyan Tobacco agreed to purchase from Hubei Golden Three Gorges paper cigarette packages for a sub-brand of the cigarette brand ''Qi Pi Lang (七匹狼)'' at unit prices ranging from approximately RMB0.1914 per piece to approximately RMB0.8204 per piece for the period from 20 August 2020 to 31 December 2020.

The actual quantity of the paper cigarette packages to be purchased by Longyan Tobacco, and the time and place of delivery of the products concerned shall conform to the purchase orders by Longyan Tobacco. Longyan Tobacco shall settle the payment within 180 days by way of bank's acceptance bills or wire transfer upon receiving the value-added tax invoice from Hubei Golden Three Gorges.

1. Inner Mongolia Sale Agreements
   Date:
   20 August 2020
   Parties:
2. 1. Hubei Golden Three Gorges
   2. Inner Mongolia Kunming Cigarettes

Description of the transactions:

Pursuant to the Inner Mongolia Sale Agreements, Hubei Golden Three Gorges agreed to supply to Inner Mongolia Kunming Cigarettes, and Inner Mongolia Kunming Cigarettes agreed to purchase from Hubei Golden Three Gorges paper cigarette packages for a sub-brand of the cigarette brand ''Yun Yan (雲煙)'' at unit prices ranging from RMB0.18 per piece to RMB1.5 per piece for the period from 20 August 2020 to 31 December 2020.

- 6 -

Purchase orders will be issued by Inner Mongolia Kunming Cigarettes to Hubei Golden Three Gorges. Upon passing of the examination of the paper cigarette packages by Inner Mongolia Kunming Cigarettes, Inner Mongolia Kunming Cigarettes shall settle the payment upon receiving the value-added tax invoice from Hubei Golden Three Gorges.

ANNUAL CAPS

It is proposed that the annual caps of the transactions contemplated under the Sale Agreements for the financial year ending 31 December 2020 will not exceed the following:

		For the year
		ending
		31 December
Supply of paper cigarette packages under the Sale Agreements	2020
		(RMB)
(i)	Yunnan Sale Agreements	97,467,000
(ii)	Shandong Sale Agreements	2,977,000
(iii)	Shaanxi Sale Agreements	5,386,000
(iv)	Heilongjiang Sale Agreements	22,995,000
(v)	Chongqing Sale Agreements	4,136,000
(vi)	Shanxi Sale Agreements	20,021,000
(vii)	Longyan Sale Agreements	10,255,000
(viii)	Inner Mongolia Sale Agreements	20,700,000
Total		183,937,000

The unit prices of the paper cigarette packages were determined based on the prevailing market prices for paper cigarette packages of similar nature that were provided by Hubei Golden Three Gorges to independent third parties, and the expected production costs involved to produce the paper cigarette packages.

In arriving at the annual caps as contemplated under the Sale Agreements, the Directors had considered the expected total quantities of paper cigarette packages to be purchased by each of the eight counterparties from Hubei Golden Three Gorges as specified in the relevant tender documents and/or the Sale Agreements.

REASONS FOR AND BENEFITS OF ENTERING INTO THE TRANSACTIONS

The sale of paper cigarette packages is within the ordinary course of business of the Group. The Directors consider that the sale of paper cigarette packages by Hubei Golden Three Gorges to each of the eight counterparties will ensure the Group a steady income.

Having considered the above reasons and taking into consideration that (i) the Sale Agreements were entered into based on the tender result of the relevant products; and (ii) the selling prices of the paper cigarette packages are fixed under each of the Sale Agreements, the Board (including independent non-executive Directors) considers that each of the Sale Agreements was entered into on normal commercial terms comparable to those

- 7 -

offered by other Provincial Tobacco Industrial Companies, in the ordinary and usual course of business of the Group, and such transactions have been negotiated on an arm's length basis, and the terms of the Sale Agreements and the respective Annual Caps are fair and reasonable, and in the interests of the Company and its Shareholders as a whole.

PARTIES AND RELATIONSHIPS OF THE PARTIES

Hubei Golden Three Gorges is a company established in the PRC with limited liability and is indirectly owned as to approximately 82.86% by the Company and approximately 17.14% by China Tobacco Hubei as at the date of this announcement. Hubei Golden Three Gorges is principally engaged in the design, printing and sales of paper cigarette packages and, to a lesser extent, social product paper packages, in the PRC.

China Tobacco Hubei holds approximately 17.14% equity interest in Hubei Golden Three Gorges, which is a subsidiary of the Company. Hence, China Tobacco Hubei is a connected person of the Company. China Tobacco Hubei is a wholly-owned subsidiary of CNTC. Hence, CNTC is an associate of China Tobacco Hubei under Rule 14A.13 of the Listing Rules, and accordingly a connected person of the Company. China Tobacco Hubei is principally engaged in the production and sale of tobacco products.

China Tobacco Shandong, China Tobacco Shaanxi, Heilongjiang Tobacco Industrial, China Tobacco Chongqing, Shanxi Kunming Tobacco and Inner Mongolia Kunming Cigarettes

To the best knowledge of the Directors after making reasonable enquiries, China Tobacco Shandong, China Tobacco Shaanxi, Heilongjiang Tobacco Industrial, China Tobacco Chongqing, Shanxi Kunming Tobacco and Inner Mongolia Kunming Cigarettes are wholly- owned subsidiaries of CNTC. Therefore, each of the above companies are an associate of China Tobacco Hubei under Rule 14A.13 of the Listing Rules and each of them is therefore, a connected person of the Company. Each of the above companies are principally engaged in the production and sale of tobacco products.

Yunnan Tobacco Materials

To the best knowledge of the Directors after making reasonable enquiries, Yunnan Tobacco Materials is a wholly-owned subsidiary of China Tobacco Yunnan. China Tobacco Yunnan is a wholly-owned subsidiary of CNTC. Therefore, Yunnan Tobacco Materials is the associate of China Tobacco Hubei under Rule 14A.13 of the Listing Rules and hence a connected person of the Company. Yunnan Tobacco Materials is principally engaged in the production and sale of tobacco products.

Longyan Tobacco

To the best knowledge of the Directors after making reasonable enquiries, Longyan Tobacco is a wholly-owned subsidiary of China Tobacco Fujian. China Tobacco Fujian is a wholly-owned subsidiary of CNTC. Therefore, Longyan Tobacco is an associate of China Tobacco Hubei under Rule 14A.13 of the Listing Rules and hence a connected person of the Company. Longyan Tobacco is principally engaged in the production and sale of tobacco products.

- 8 -

LISTING RULES IMPLICATIONS

Each of the eight counter-parties to the Sale Agreements is a connected person of the Company and their respective relationships with the Company are set out in the paragraph headed ''PARTIES AND RELATIONSHIPS OF THE PARTIES'' of this announcement. Accordingly, the transactions under the Sale Agreements constitute continuing connected transactions of the Company under Chapter 14A of the Listing Rules.

The Sale Agreements

As the transactions under the Sale Agreements are transactions between the Group and connected persons at the subsidiary level on normal commercial terms, the Board has approved the transactions under the Sale Agreements and the independent non-executive Directors have confirmed that the terms of the transactions under the Sale Agreements are fair and reasonable, the transactions under the Sale Agreements are on normal commercial terms and in the interests of the Company and its Shareholders as a whole, the Sale Agreements are subject to the annual review, reporting and announcement requirements and are exempt from the circular, independent financial advice and shareholders' approval requirements pursuant to Rule 14A.101 of the Listing Rules.

DEFINITIONS
''Board''	the board of Directors
''China Tobacco Chongqing''	重慶中煙工業有限責任公司 (China Tobacco Chongqing
	Industrial Co., Ltd.*), one of the 18 Provincial Industrial
	Companies
''China Tobacco Fujian''	福建中煙工業有限責任公司 (China Tobacco Fujian Industrial
	Co., Ltd.*), one of the 18 Provincial Tobacco Industrial
	Companies
''China Tobacco Hubei''	湖北中煙工業有限責任公司 (China Tobacco Hubei Industrial
	Co., Ltd *), one of the 18 Provincial Tobacco Industrial
	Companies
''China Tobacco Shaanxi''	陝西中煙工業有限責任公司 (China Tobacco Shaanxi
	Industrial Co., Ltd.*), one of the 18 Provincial Tobacco
	Industrial Companies
''China Tobacco Shandong''	山東中煙工業有限責任公司 (China Tobacco Shandong
	Industrial Co., Ltd.*), one of the 18 Provincial Tobacco
	Industrial Companies
''China Tobacco Yunnan''	雲南中煙工業有限責任公司 (China Tobacco Yunnan
	Industrial Co., Ltd.*), one of the 18 Provincial Tobacco
	Industrial Companies

- 9 -

''Chongqing Sale	the agreements entered into between Hubei Golden Three
Agreements''	Gorges and China Tobacco Chongqing dated 20 August
	2020 for the sale of paper cigarette packages by Hubei
	Golden Three Gorges to China Tobacco Chongqing
''CNTC''	中國煙草總公司 (China National Tobacco Corporation*), a
	national corporation responsible for the management of the
	tobacco industry in the PRC
''Company''	Jia Yao Holdings Limited, an exempted company
	incorporated in the Cayman Islands with limited liability,
	the shares of which are listed on the main board of the
	Stock Exchange
''connected person''	has the meaning ascribed to it in the Listing Rules
''Directors''	the directors of the Company
''Group''	the Company and its subsidiaries
''Heilongjiang Sale	the agreements entered into between Hubei Golden Three
Agreements''	Gorges and Heilongjiang Tobacco Industrial dated 20
	August 2020 for the sale of paper cigarette packages by
	Hubei Golden Three Gorges to Heilongjiang Tobacco
	Industrial
''Heilongjiang Tobacco	黑龍江煙草工業有限責任公司 (Heilongjiang Tobacco Industrial
Industrial''	Co., Ltd.*), one of the 18 Provincial Tobacco Industrial
	Companies
''Hong Kong''	the Hong Kong Special Administrative Region of the PRC
''Hubei Golden Three	湖北金三峽印務有限公司 (Hubei Golden Three Gorges
Gorges''	Printing Industry Co., Ltd*), a company established in the
	PRC with limited liability and is indirectly owned as to
	82.86% by the Company and 17.14% by China Tobacco
	Hubei as at the date of this announcement
''Inner Mongolia Kunming	內蒙古昆明卷煙有限責任公司 (Inner Mongolia Kunming
Cigarettes''	Cigarettes Co., Ltd.*), one of the 18 Provincial Tobacco
	Industrial Companies
''Inner Mongolia Sale	agreements entered into between Hubei Golden Three
Agreements''	Gorges and Inner Mongolia Kunming Cigarettes dated 20
	August 2020 for the sale of paper cigarette packages by
	Hubei Golden Three Gorges to Inner Mongolia Kunming
	Cigarettes

- 10 -

''Longyan Sale Agreements''	the sale agreements entered into between Hubei Golden
	Three Gorges and Longyan Tobacco dated 20 August 2020
	for the sale of paper cigarette packages by Hubei Golden
	Three Gorges to Longyan Tobacco
''Longyan Tobacco''	龍岩煙草工業有限責任公司 (Longyan Tobacco Industrial
	Co., Ltd.*), a company established in the PRC with limited
	liability, a wholly-owned subsidiary of China Tobacco
	Fujian
''Listing Rules''	the Rules Governing the Listing of Securities on the Stock
	Exchange
''PRC''	the People's Republic of China, for the purpose of this
	announcement, excluding Hong Kong, the Macau Special
	Administrative Region of the PRC and the Taiwan region
''Provincial Tobacco	the 18 state-ownedprovincial-level or equivalent cigarette
Industrial Companies''	manufacturers in the PRC which are subordinated to CNTC
''RMB''	Renminbi, the lawful currency of the PRC
''Sale Agreements''	Yunnan Sale Agreements, Shandong Sale Agreements,
	Shaanxi Sale Agreements, Heilongjiang Sale Agreements,
	Chongqing Sale Agreements, Shanxi Sale Agreements,
	Longyan Sale Agreements and Inner Mongolia Sale
	Agreements
''Shaanxi Sale Agreements''	the agreements entered into between Hubei Golden Three
	Gorges and China Tobacco Shaanxi dated 20 August 2020
	for the sale of paper cigarette packages by Hubei Golden
	Three Gorges to China Tobacco Shaanxi
''Shanxi Kunming Tobacco''	山西昆明煙草有限責任公司 (Shanxi Kunming Tobacco
	Co., Ltd.*), one of the 18 Provincial Tobacco Industrial
	Companies
''Shanxi Sale Agreements''	the agreements entered into between Hubei Golden Three
	Gorges and Shanxi Kunming Tobacco dated 20 August
	2020 for the sale of paper cigarette packages by Hubei
	Golden Three Gorges to Shanxi Kunming Tobacco
''Shandong Sale	the agreements entered into between Hubei Golden Three
Agreements''	Gorges and China Tobacco Shandong dated 20 August 2020
	for the sale of paper cigarette packages by Hubei Golden
	Three Gorges to China Tobacco Shandong

- 11 -

''Shareholder(s)''	holder(s) of shares of the Company
''Stock Exchange''	The Stock Exchange of Hong Kong Limited

''Yunnan Tobacco Materials'' 雲南中煙物資(集團)有限責任公司 (Yunnan Tobacco Materials (Group) Company Limited*), a wholly-owned subsidiary of

	China Tobacco Yunnan
''Yunnan Sale Agreements''	the agreements entered into between Hubei Golden Three
	Gorges and Yunnan Tobacco Materials dated 20 August
	2020 for the sale of paper cigarette packages by Hubei
	Golden Three Gorges to Yunnan Tobacco Materials
''%''	per cent
	By order of the Board
	Jia Yao Holdings Limited
	Yang Yoong An
	Chairman and Executive Director
Hong Kong, 20 August 2020

As at the date of this announcement, the Board comprises Mr. Yang Yoong An as executive Director (Chairman), Mr. Feng Bin and Mr. Yang Fan as non-executive Directors and Mr. Gong Jinjun, Mr. Zeng Shiquan and Mr. Wang Ping as independent non-executive Directors.

• For identification purpose only

- 12 -