Yashili International : Announcements and Notices - Announcement - Update on Continuing Connected Transaction

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Yashili International Holdings Ltd

雅 士 利 國 際 控 股 有 限 公 司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1230)

ANNOUNCEMENT

UPDATE ON CONTINUING CONNECTED TRANSACTION

THE TRADEMARK LICENSING AGREEMENT AND CONFIRMATION LETTER

Reference is made to (1) the announcement of Yashili International Holdings Ltd (the ''Company'') dated 25 September 2015 in relation to the Trademark Licensing Agreement dated 25 September 2015 entered into among Oushi Mengniu, Yashili (Guangdong) and Inner Mongolia Mengniu (together, the ''Parties'') in relation to the grant of right by Inner Mongolia Mengniu to Oushi Mengniu, Yashili (Guangdong) and its affiliates to use and sub-license the Trademarks in the PRC (the ''2015 Announcement''); and (2) the announcement of the Company dated 22 December 2017 updating that on 22 December 2017, the Parties entered into a confirmation letter (the ''Confirmation Letter'') in relation to the Trademark Licensing Agreement (the ''2017 Announcement'').

Save as otherwise defined herein, capitalized terms used in this announcement shall have the same meanings as those defined in the 2015 Announcement and the 2017 Announcement.

THE SUPPLEMENTAL CONFIRMATION LETTER

The board of directors (the ''Board'') of the Company is pleased to announce that on 12 July 2019, the Parties entered into a supplemental confirmation letter (the ''Supplemental Confirmation Letter''), pursuant to which:

The Parties agreed that for each of the years ending 31 December 2019, 2020 and 2021:

1. no license fee shall be payable by Oushi Mengniu and Yashili (Guangdong) to Inner Mongolia Mengniu for the use of the Trademarks under the Trademark Licensing Agreement, provided that the expenses incurred by Oushi Mengniu and Yashili (Guangdong) (and its affiliates) for the promotion, marketing, advertising and distribution of the Products (the ''Marketing Expenses'') in any such year shall not be less than 3% of the revenue from the sales of the Products to third party customers in such year; and

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1. in the event that the Marketing Expenses incurred by Oushi Mengniu and Yashili (Guangdong) (and its affiliates) in any year are less than 3% of the revenue from the sales of the Products to third party customers in such year, Oushi Mengniu and Yashili (Guangdong) shall pay the shortfall to Inner Mongolia Mengniu within two months after the end of such year.

Save as disclosed above, all other terms of the Trademark Licensing Agreement remain unchanged.

REASONS FOR AND BENEFITS OF THE SUPPLEMENTAL CONFIRMATION LETTER

The directors (the ''Directors'') of the Company (including the independent non-executive Directors but excluding Mr. Jeffrey, Minfang Lu and Mr. Zhang Ping) are of the view that the entering into of the Supplemental Confirmation Letter will benefit the Company and its shareholders as a whole as the arrangements provided in the Supplemental Confirmation Letter would support the Company's promotional and marketing activities for the Products, which are important components of the product portfolio of the Company in the future, and thereby increasing the market share of and sales revenue of the Company.

The Directors (including the independent non-executive Directors but excluding Mr. Jeffrey, Minfang Lu and Mr. Zhang Ping) are of the view that the Supplemental Confirmation Letter was entered into on normal commercial terms and in the ordinary and usual course of business of the Group, and that its terms are fair and reasonable and in the interest of the Company and its shareholders as a whole.

Mr. Jeffrey, Minfang Lu is an executive director and chief executive officer of Mengniu Dairy. Mr. Zhang Ping is the chief financial officer of Mengniu Dairy. Accordingly, each of Mr. Jeffrey, Minfang Lu and Mr. Zhang Ping is considered to have a material interest in the Supplemental Confirmation Letter and the arrangements contemplated thereunder. As such, each of Mr. Jeffrey, Minfang Lu and Mr. Zhang Ping has abstained from voting on the relevant board resolutions approving the Supplemental Confirmation Letter.

By order of the Board

Yashili International Holdings Ltd

雅士利國際控股有限公司

Kwok Wai Cheong, Chris

Company Secretary

Hong Kong, 12 July 2019

As at the date of this announcement, the Board comprises: Mr. Jeffrey, Minfang Lu (Chairman), Mr. Qin Peng, Mr. Zhang Ping and Mr. Gu Peiji (alias Philip Gu) as non-executive directors; Mr. Chopin Zhang as executive director; and Mr. Mok Wai Bun Ben, Mr. Cheng Shoutai and Mr. Lee Kong Wai Conway as independent non-executive directors.

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