Yihai International : CONTINUING CONNECTED TRANSACTIONS (I) SALE OF SMALL HOTPOT PRODUCTS TO THE HAIDILAO GROUP; (II) REVISION OF ANNUAL CAPS UNDER THE MASTER SALES AGREEMENT IN RESPECT OF 2017 AND 2018; (III) REVISION OF ANNUAL CAPS UNDER THE SHUHAI WAREHOUSE STORAGE SERVICE AGREEMENT IN RESPECT OF 2017 AND 2018

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頤 海 國 際 控 股 有 限 公 司

(Incorporated in the Cayman Islands with limited liability)

1. SALE OF SMALL HOTPOT PRODUCTS TO THE HAIDILAO GROUP
2. REVISION OF ANNUAL CAPS UNDER THE MASTER SALES AGREEMENT IN RESPECT OF 2017 AND 2018
3. REVISION OF ANNUAL CAPS UNDER THE SHUHAI WAREHOUSE STORAGE SERVICE AGREEMENT IN RESPECT OF 2017 AND 2018

1. Sale of Small Hotpot Products to Haidilao Group

   Reference is made to the announcement of the Company dated 11 July 2017 in relation to the formation of the Joint Venture for the manufacture and sale of Small Hotpot Products.

   On 18 September 2017, Yihai Shanghai, Sichuan Haidilao and Singapore Haidilao entered into the Supplemental Master Sales Agreement, pursuant to which Yihai Shanghai (for itself and on behalf of its subsidiaries, including the Joint Venture) agreed to sell Small Hotpot Products to the Haidilao Group for a term of not more than three years and will expire on 31 December 2018.

2. Revision of annual caps under the Master Sales Agreement

Reference is made to the Prospectus in relation to, inter alia, the sale of Haidilao Customized Products by the Group to the Haidilao Group.

As disclosed in the Prospectus, Yihai Shanghai entered into the Master Sales Agreement with Sichuan Haidilao and Singapore Haidilao to regulate the transactions in relation to, among others, the sale of Haidilao Customized Products to the Haidilao Group.

At the time of the listing of the Shares on the Stock Exchange in July 2016, the Stock Exchange granted a Waiver to the Company in respect of, inter alia, the non-exempt continuing connected transactions between the Group and the Haidilao Group from strict compliance with the announcement, circular and independent shareholders' approval requirements under Chapter 14A of the Listing Rules. Pursuant to the Waiver, the transactions in relation to the sale of Haidilao Customized Products to the Haidilao Group are subject to the respective annual caps for the year ended 31 December 2016 and the two years ending 31 December 2017 and 2018.

The Company has closely monitored the progress of its continuing connected transactions with the Haidilao Group. With the continued development of the business of the Group and based on internal estimates of demand and the current prospects of the Group's operations, the Board considers that the existing annual caps in respect of 2017 and 2018 for the sale of Haidilao Customized Products by the Group to the Haidilao Group will not be able to satisfy the business needs of the Group and the demands from the Haidilao Group for the two years ending 31 December 2017 and 2018.

The actual transaction amounts for the sale of Haidilao Customized Products to Haidilao Group contemplated under the Master Sales Agreement had not exceeded the annual cap for the year ended 31 December 2016. In addition, as at the date of this announcement, the actual transaction amounts for these transactions also have not exceeded the annual cap for the year ending 31 December 2017.

The Board proposes that the existing annual caps for the transactions in relation to the sale of Haidilao Customized Products to the Haidilao Group in respect of 2017 and 2018 be revised for the two years ending 31 December 2017 and 2018.

1. Revision of annual caps under the Shuhai Warehouse Storage Service Agreement

   Reference is made to the Prospectus in relation to, inter alia, the engagement of the Shuhai Supply Chain Group for the provision of warehouse storage and logistics services to the Group.

   As disclosed in the Prospectus, Yihai Shanghai entered into the Shuhai Warehouse Storage Service Agreement with the Shuhai Supply Chain for the provision of warehousing facilities and related services, including warehouse storage, sorting process management, stock-taking, and other logistics services to the Group in connection with storage of the Group's products.

   At the time of the listing of the Shares on the Stock Exchange in July 2016, the Stock Exchange granted a Waiver to the Company in respect of, inter alia, the non-exempt continuing connected transactions between the Group and the Shuhai Supply Chain Group from strict compliance with the announcement requirements under Chapter 14A of the Listing Rules. Pursuant to the Waiver, the transactions in relation to the provision of warehouse storage and logistics services to the Group are subject to the respective annual caps for the year ended 31 December 2016 and the two years ending 31 December 2017 and

   2018.

   The Company has closely monitored the transactions contemplated under the Shuhai Warehouse Storage Service Agreement. With the continued development of the business of the Group and based on internal estimates of demand and the current prospects of the Group's operations, the Board considers that the existing annual caps in respect of 2017 and 2018 under the Shuhai Warehouse Storage Service Agreement will not be able to satisfy the business needs of the Group for the two years ending 31 December 2017 and 2018.

   The actual transaction amounts for that provision of warehouse storage and logistics services by the Shuhai Supply Chain Group had not exceeded the annual cap for the year ended 31 December 2016. In addition, as at the date of this announcement, the actual transaction amounts for these transactions also have not exceeded the annual cap for the year ending 31 December 2017.

   The Board proposes that the existing annual caps for the transactions contemplated under the Shuhai Warehouse Storage Service Agreement in respect of 2017 and 2018 be revised for the two years ending 31 December 2017 and 2018.

2. Listing Rules implications

Since the applicable percentage ratios (as defined in Rule 14.07 of the Listing Rules) are more than 0.1% but less than 5%, the revision of annual caps under the Shuhai Warehouse Storage Service Agreement is subject to the reporting and announcement requirements but is exempt from the independent shareholders' approval under Chapter 14A of the Listing Rules.

Since the highest of all applicable percentage ratios (as defined in Rule 14.07 of the Listing Rules) is more than 5%, the Continuing Connected Transactions and the Revised Annual Caps are subject to the announcement, circular, independent shareholders' approval, annual review and reporting requirements under Chapter 14A of the Listing Rules.

The Extraordinary General Meeting will be convened to consider and, if thought fit, to approve the Continuing Connected Transactions and the Revised Annual Caps. In accordance with the Listing Rules, Mr. Zhang Yong, Ms. Shu Ping, Mr. Shi Yonghong, and Mr. Gou Yiqun have a material interest in the Continuing Connected Transactions and will abstain from voting on the ordinary resolution to approve the Continuing Connected Transactions and the Revised Annual Caps at the Extraordinary General Meeting.

An Independent Board Committee comprising all the independent non-executive Directors has been established to advise the Independent Shareholders in respect of the Continuing Connected Transactions and the Revised Annual Caps. In this respect, First Shanghai Capital Limited has been appointed as the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders.

A circular containing, among others, further information on the Continuing Connected Transactions and the Revised Annual Caps, a letter from the Independent Board Committee to the Independent Shareholders containing its recommendation, a letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders, together with a notice to convene the Extraordinary General Meeting to approve the Continuing Connected Transactions and the Revised Annual Caps, is expected to be dispatched to the Shareholders on or before 11 October 2017.