Zhou Hei Ya International Holdngs : DISCLOSEABLE TRANSACTION - SUBSCRIPTION OF FINANCIAL PRODUCTS

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Zhou Hei Ya International Holdings Company Limited

周黑鴨國際控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1458) DISCLOSEABLE TRANSACTION SUBSCRIPTION OF FINANCIAL PRODUCTS SUBSCRIPTION OF FINANCIAL PRODUCTS

On July 14, 2017, July 24, 2017, July 27, 2017 and August 15, 2017, the Company subscribed for four Everbright Financial Products with an aggregate principal of RMB290.0 million.

The Subscription of each of the Everbright Financial Products does not constitute a Notifiable Subscription as all of the applicable percentage ratios calculated pursuant to Rule 14.07 of the Listing Rules in respect of each of the Subscriptions are below 5%. However, the Subscription of the Everbright Financial Products, when aggregated under Rules 14.22 and 14.23 of the Listing Rules, would constitute a discloseable transaction of the Company under Chapter 14 of the Listing Rules as one of the applicable percentage ratios calculated pursuant to Rule

14.07 of the Listing Rules in respect of the Subscriptions, when aggregated, is more than 5% but less than 25% and hence are subject to the notification and announcement requirements set out under Rule 14.34 of the Listing Rules.

SUBSCRIPTION OF THE EVERBRIGHT FINANCIAL PRODUCTS

On July 14, 2017, July 24, 2017, July 27, 2017 and August 15, 2017, the Company subscribed for Everbright Financial Products with an aggregate principal of RMB290.0 million. The Everbright Financial Products remain outstanding as at the date of this announcement and the Company expects to receive the principals with the expected returns upon the maturity of the underlying Everbright Financial Products. The major terms of the Subscription Agreements with Everbright Bank of these Everbright Financial Products are set out as follows:

No. Product Name Principal Expected Investment Subscription Maturity Expected Amount Annual Term Date Date Amount to Subscribed Return Rate be Received Upon Maturity

(in RMB) % (days) (in RMB)

1. Sunshine Financial Products

   (T No. EB4122

   陽光理財T計 劃EB4122)

2. Sunshine Financial Products

   (T No. EB4115

   陽光理財T計 劃EB4115)

3. Sunshine Financial Products

   (T No. EB4114

   陽光理財T計 劃EB4114)

4. Sunshine Financial Products

(T No. EB4119

陽光理財T計

40,000,000 4.65 184 July

14, 2017

50,000,000 4.65 92 July

24, 2017

120,000,000 4.82 184 July

27, 2017

80,000,000 4.85 184 August

15, 2017

January 14, 2018

October 24, 2017

January 27, 2018

February 15, 2018

40,937,644

50,586,027

122,915,770

81,955,945

劃EB4119)

Total290,000,000 296,395,386

Note 1: The Subscription of each of the Everbright Financial Products does not constitute a notifiable transaction.

Note 2 Each Everbright Financial Product is principal-protected.

Note 3 The Company funded each Subscription utilizing idle cash of the Group.

Other salient terms of the Subscription Agreement with Everbright Bank

The investment of the Everbright Financial Products represents the term commencing on the date of the Subscription Agreement and ending on the maturity date. Pursuant to the Subscription Agreements, the Subscription amount was transferred to the Everbright Bank on the date of the commencement. Everbright Bank shall pay the principal amount and the return for the Everbright Financial Products on the maturity dates. During the Investment term, the Company could not redeem the Subscription Agreement prior to the maturity date of the Everbright Financial Products. Everbright Bank could not terminate the Subscription Agreement prior to the maturity date of the Everbright Financial Products.

The Everbright Financial Products are principal-protected financial products without guaranteed return. The underlying investment of the Everbright Financial Products shall primarily consist of deposits, interbank borrowing and other money market funds, corporate government bonds with rating above certain levels, trust products and other financial products with fixed return, provided that each kind of underlying investment shall not exceed certain percentage, of the total amount of investment in the portfolio.

The Company shall bear a custodian fee that is no more than 0.05% of the total principal amount for the Everbright Financial Products per annum and a handling fee of 1.50% of the total principal amount for the Everbright Financial Product per annum. Such fees and charges shall be deducted from the returns, and the expected annual return rates of the Everbright Financial Product represent the rate of return which the Company might receive taking into account such fees and charges.

Listing Rules implications

The Subscription of each of the Everbright Financial Products does not constitute a notifiable transaction as all of the applicable percentage ratios calculated pursuant to Rule 14.07 of the Listing Rules in respect of each of the Subscriptions are below 5%. However, the Subscription of the Everbright Financial Products, when aggregated under Rules 14.22 and 14.23 of the Listing Rules, would constitute a discloseable transaction of the Company under Chapter 14 of the Listing Rules as one of the applicable percentage ratios calculated pursuant to Rule 14.07 of the Listing Rules in respect of the Subscriptions, when aggregated, is more than 5% but less than 25% and hence are subject to the notification and announcement requirements set out under Rule 14.34 of the Listing Rules. Save as disclosed in the announcement, the Company does not hold any other outstanding financial product issued by Everbright Bank as of the date of this announcement.

The Subscriptions dated July 14, 2017, July 24, 2017 and July 27, 2017, when aggregated under Rules 14.22 and 14.23 of the Listing Rules, would constitute a discloseable transaction of the Company under Chapter 14 of the Listing Rules as one of the applicable percentage ratios calculated pursuant to Rule 14.07 of the Listing Rules in respect of these three Subscriptions, when aggregated, is slightly above 5% and hence are subject to the notification and announcement requirements set out under Rule 14.34 of the Listing Rules. The Company should have published an announcement to that effect as soon as possible after the Subscription dated July 27, 2017. Due to a clerical oversight in the aggregation of the Subscriptions, the Company did not publish an announcement when the Subscriptions in July 2017 exceeded the threshold. The Company was therefore not in full compliance with the Listing Rules. Going forward, the Company will make such disclosure in a timely manner to ensure full compliance with the Listing Rules.

REASONS FOR AND BENEFITS OF THE SUBSCRIPTIONS OF THE EVERBRIGHT FINANCIAL PRODUCTS

Subscriptions of the Everbright Financial Products were made for treasury management purpose to maximize the return on the unutilized funds of the Company after taking into account, among others, the level of risk, return on investment and the term to maturity. Prior to making an investment, the Company had also ensured that there remains sufficient working capital for the Group's business needs, operating activities and capital expenditures even after making the investments in such financial products.

The Everbright Financial Products are short-term principal-protected financial products that have relatively low associated risks issued by a reputable commercial bank. Although the Everbright Financial Products marketed as wealth management products which are without pre-determined or guaranteed return, the underlying investments were considered to have relatively low risk and are also in line with the internal risk management, cash management and investment policies of the Group.

In view of an upside of earning a more attractive return than current saving or fixed deposit rate under the low interest rate trend, as well as the low risk nature and relatively short term of maturity of the Everbright Financial Products, the Directors are of the view that the Everbright Financial Products pose little risk to the Group and the terms and conditions of each of the Subscription Agreements are fair and reasonable and are in the interests of the Company and the Shareholders as a whole.