(Incorporated in the Cayman Islands with limited liability) (Stock code: 828) MAJOR TRANSACTION. Financial Adviser to the Company

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1 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. (Incorporated in the Cayman Islands with limited liability) (Stock code: 828) MAJOR TRANSACTION Financial Adviser to the Company THE TRANSFER On 23 July 2018, Dynasty Winery, a wholly-owned subsidiary of the Company, and the Purchaser entered into the Agreement, pursuant to which Dynasty Winery has conditionally agreed to sell, and the Purchaser has conditionally agreed to acquire the Assets at the Consideration of RMB400 million. LISTING RULES IMPLICATION As the relevant percentage ratios of the Transfer calculated pursuant to Rule of the Listing Rules exceed 25% but less than 75%, the Transfer constitutes a major transaction for the Company under Chapter 14 of the Listing Rules and is subject to the approval by the Shareholders under Chapter 14 of the Listing Rules. GENERAL An EGM will be convened for the purpose of considering and, if thought fit, approving the Transfer and the transaction contemplated thereunder. A circular containing details regarding, among other things, (i) further details of the Agreement and the transactions contemplated thereunder; (ii) financial and other information of the Group; and (iii) notice of the EGM, will be despatched to the Shareholders in accordance to the Listing Rules as soon as practicable, which is expected to be on or before 13 August

2 BACKGROUND Reference is made to the Company s announcement dated 27 June On 27 June 2017, the Board announced that Dynasty Winery, a wholly-owned subsidiary of the Company, would dispose of the Assets through a public auction on TPRE in the PRC pursuant to the relevant PRC laws and regulations in relation to transfer of PRC state-owned assets. The Reserve Price for the proposed sale and transfer of Assets is RMB400 million. The Reserve Price for the public auction was determined by the Directors after taking into account of the Assets valuation as at 30 June 2016, which was prepared by an independent PRC valuer based on replacement cost and market comparison approaches. Auction Deposit of RMB120 million, representing 30% of the Reserve Price, would be payable by the prospective bidder to TPRE within 3 business days after TPRE confirmed it/he to be a qualified bidder. The process of public auction was scheduled to commence on 28 June 2017 and end on 25 July 2017, during which any qualified prospective bidders can offer to purchase the Assets through TPRE. As there was no bidder participating in the public auction in relation to the Assets, the original public auction period was extended to 23 October On 24 October 2017, the TPRE notified Dynasty Winery that the Purchaser, being the sole bidder, succeeded in the public auction in relation to the Assets. The Purchaser transferred RMB120 million (representing 30% of the Reserve Price) to an account designated by TPRE as Auction Deposit in November On 23 July 2018, Dynasty Winery and the Purchaser entered into the Agreement, pursuant to which Dynasty Winery has conditionally agreed to sell, and the Purchaser has conditionally agreed to acquire the Assets at the Consideration of RMB400 million. THE AGREEMENT Set out below are summary of the principal terms of the Agreement: Date 23 July 2018 Parties involved (i) (ii) Vendor: Dynasty Winery, a wholly-owned subsidiary of the Company; and Purchaser: (Tianjin Yiyang Big Health Small Township Development Co., Ltd.*) To the best of the Directors knowledge, information and belief having made all reasonable enquiries, (i) the Purchaser and its associates are Independent Third Parties and do not hold any Shares or other convertible securities in the Company as at the date of this announcement; and (ii) there was no previous transaction or business relationship among the Company, the Purchaser and/or its associates in the previous 12 months which would result in aggregation under Rule of the Listing Rules. 2

3 Subject matter Dynasty Winery has conditionally agreed to sell, and the Purchaser has conditionally agreed to acquire the Assets. Consideration The Consideration for the Transfer under the Agreement shall be RMB400 million, which is the same as the bid price offered by the Purchaser as the successful bidder and the Reserve Price at the public auction, and will be paid by the Purchaser to Dynasty Winery in the following manner: (i) (ii) the Auction Deposit of RMB120 million shall be applied as part payment of Consideration upon signing of the Agreement; and the balance of the Consideration, being RMB280 million, is payable by the Purchaser via bank transfer to the account designated by TPRE within five business days immediately after the Agreement becoming effective. As advised by the Company s PRC legal adviser, they expected that the Consideration of RMB400 million will be settled by TPRE to Dynasty Winery within 7 to 10 business days upon TPRE s receipt of the Balance from the Purchaser. Conditions precedent The Transfer is conditional upon the following: (i) (ii) (iii) (iv) Dynasty Winery having complied with the relevant procedures such as internal decision and asset valuation in relation to the Assets; Dynasty Winery having completed the public disclosure and/or bidding process in relation to the Assets on TPRE in accordance with relevant laws, regulations and policies; the Purchaser having detailed understanding on the Transfer information, carried out its obligation, agreed on the terms offered by Dynasty Winery in relation to the Transfer; the Purchaser accepting the transfer of Assets pursuant to the Agreement. Completion Dynasty Winery shall deliver the Assets such as the title of ownership and technical information regarding the Assets to the Purchaser within 2 business days upon the full payment of Consideration by the Purchaser. Within 30 business days upon the Purchaser obtaining the identification document for property rights transaction issued by TPRE in relation to the Transfer under the Agreement, the Purchaser shall proceed the procedures in relation to the change in title of ownership of the Assets at the relevant government departments in accordance with the relevant regulations of the PRC, and Dynasty Winery shall provide necessary assistance and cooperation. 3

4 Dynasty Winery shall transfer the Assets to the Purchaser within the period specified above. Default Where any party under the Agreement proposes to terminate the Agreement without proper reason after the Agreement becoming effective, such party shall pay the other party 10% of the Consideration as a one-off liquidated damages together with any losses incurred by the other party. Where the Purchaser fails to pay the Consideration on time as specified in the Agreement, the Purchaser shall pay Dynasty Winery liquidated damages in respect of the payment overdue. The liquidated damages shall be calculated at a daily interest rate of 0.03% of the amount payable for the period of overdue. If payment is overdue for more than 15 days, Dynasty Winery shall be entitled to terminate the Agreement and require the Purchaser to pay 10% of the Consideration as liquidated damages and to compensate Dynasty Winery for any losses incurred. Where Dynasty Winery fails to deliver the Assets to the Purchaser as specified in the Agreement, the Purchaser shall be entitled to terminate the Agreement and require Dynasty Winery to pay 10% of the Consideration as liquidated damages. Where any material matter in relation to the Assets (which may have material adverse impacts on Assets or may affect the Consideration) are undisclosed or omitted, the Purchaser shall be entitled to terminate the Agreement and require Dynasty Winery to 10% of the Consideration as liquidated damages. Where the Purchaser opts not to terminate the Agreement, the Purchaser shall be entitled to require Dynasty Winery to compensate the Purchaser for the relevant matters. The compensation amount shall be equal to the amount of loss that the Purchaser may incur due to the aforesaid undisclosed or omitted matters. Effectiveness The Agreement will become effective upon (i) the Agreement being signed and sealed by authorized representatives of both Dynasty Winery and the Purchaser; and (ii) the resolution in respect of the Agreement being passed during an extraordinary general meeting of the Company. Amendments and termination The Agreement shall be (i) amended/terminated upon the mutual agreement between Dynasty Winery and the Purchaser; or (ii) terminated by either party to the Agreement due to the following circumstances: (a) (b) (c) (d) the purpose of the Agreement cannot be achieved due to force majeure or failure to be imputable on both parties; the other party to the Agreement loses its actual capability to perform the Agreement; the purpose of the Agreement cannot be achieved due to the serious default of the Agreement by the other party to the Agreement; or any default as described under section headed Default above by the other party to the Agreement. Amendments/termination of the Agreement shall be in writing and filed to TPRE. 4

5 INFORMATION ON THE ASSETS The Assets are located in Beichen District, Tianjin, which cover land use right of a site area of 169,343.9 square metres with aboveground buildings of total gross floor area of 24, square metres including the chateau, wine blending and temperature control centres (which are not used as part of the Group s production as at the date of the announcement), as well as an ancillary building containing the technical centre, etc. To comply with requirements under the Listing Rules, the Company also engaged BMI Appraisals Limited as an independent valuer to perform an independent valuation of the Assets. According to BMI Appraisals Limited, the preliminary valuation of the Assets was approximately RMB308 million as at 30 June In arriving at the market value of the Assets, BMI Appraisals Limited adopted the depreciated replacement cost approach as the valuation methodology. INFORMATION ON THE PURCHASER The Purchaser is principally engaged in urban infrastructure construction project development. REASONS FOR THE TRANSFER The Group is principally engaged in the manufacturing and sales of wines products and unprocessed wine. The Company has been reviewing its business strategy for the Group in order to improve its working capital, business operations and to maximise returns to the Shareholders. Due to the rapid changing environment such as e-commerce and change of customer consumption behavior, the operation of the chateau cannot cope with these changes. The demand for consumption of middle to high end wine products sourced from corporate customers is shifting to middle to low end wine products driven by mass markets on which the Company strategically focuses. The chateau no longer helps enhancing development of e-commercial or mass market business, and other related facilities are currently not in use as part of the Group s production. As a result, the Company has decided to dispose of the Assets in order to focus its resources on its core wine production and distribution businesses. It is expected that the Company will record an estimated gain of approximately RMB153 million (subject to final audit) from the Transfer upon Completion, being calculated based on the difference between the Consideration and the book value of the Assets plus certain commission, expenses of the Transfer and tax expenses. The Group intends to use the net proceeds from the Transfer of approximately RMB312 million as follows: (a) approximately RMB150 million will be used to repay the Group s borrowings; and (b) approximately RMB162 million will be used as general working capital of the Group. Taking into account the abovementioned factors, the Directors consider that the terms and conditions of the Agreement are fair and reasonable and on normal commercial terms and the Transfer is in the interests of the Company and the Shareholders as a whole. 5

6 LISTING RULES IMPLICATION As the relevant percentage ratios of the Transfer calculated pursuant to Rule of the Listing Rules exceed 25% but less than 75%, the Transfer constitutes a major transaction for the Company under Chapter 14 of the Listing Rules and is subject to the approval by the Shareholders under Chapter 14 of the Listing Rules. As at the date of this announcement, no Shareholder is materially interested in the transactions contemplated under the Agreement. As such, no Shareholder is required to abstain from voting in respect of the proposed resolution(s) to approve the Agreement and the transactions contemplated thereunder at the EGM. An EGM will be convened for the purpose of considering and, if thought fit, approving the Transfer and the transaction contemplated thereunder. A circular containing details regarding, among other things, (i) further details of the Agreement and the transactions contemplated thereunder; (ii) financial and other information of the Group; and (iii) notice of the EGM, will be despatched to the Shareholders in accordance to the Listing Rules as soon as practicable, which is expected to be on or before 13 August CONTINUED SUSPENSION OF TRADING IN THE SHARES Trading in the shares of the Company on the Stock Exchange has been suspended with effect from 9:00 a.m. on 22 March 2013 and will remain suspended until further notice. DEFINITIONS In this announcement, unless the context otherwise requires, the following terms shall have the following meanings: Agreement Assets associate(s) Auction Deposit Board the (asset transaction agreement) entered into between Dynasty Winery and the Purchaser on 23 July 2018 in relation to the Transfer land use rights and aboveground buildings covering a chateau and the related facilities owned by Dynasty Winery located at 29 (29 Jinwei Road, Beichen District, Tianjin*) has the meaning ascribed thereto under the Listing Rules the sum of RMB120 million, being 30% of the Reserve Price, paid by the Purchaser as a bidder into an account designated by TPRE within 3 business days after TPRE has confirmed the Purchaser is a qualified bidder the board of Directors 6

7 business day(s) Company Completion Consideration Dynasty Winery Director(s) EGM Listing Rules Group Hong Kong Independent Third Party(ies) PRC Purchaser Reserve Price a day other than public holidays in the PRC, including Saturdays and Sundays Dynasty Fine Wines Group Limited, a company incorporated in the Cayman Islands with limited liability and the issued Shares of which are listed on the Main Board of the Stock Exchange completion of the Transfer the consideration for the Transfer in the amount of RMB400 million Sino-French Joint-Venture Dynasty Winery Ltd. established in the PRC with limited liability, a wholly-owned subsidiary of the Company director(s) of the Company the extraordinary general meeting of the Company to be convened to consider and, if thought fit, approve the Agreement and the transactions contemplated thereunder the Rules Governing the Listing of Securities on the Stock Exchange the Company and its subsidiaries the Hong Kong Special Administrative Region of the PRC third party(ies) and their ultimate beneficial owner(s) (if applicable) which are independent of the Company and its connected persons the People s Republic of China, which for the purpose of this announcement, shall exclude the Hong Kong Special Administrative Region of the PRC, the Macau Special Administrative Region of the PRC and Taiwan (Tianjin Yiyang Big Health Small Township Development Co., Ltd*), a company incorporated in the PRC with limited liability the auction reserve price for the proposed sale and transfer of the Assets of RMB400 million 7

8 RMB Share(s) Shareholder(s) Stock Exchange Transfer TPRE Renminbi, the lawful currency of the PRC ordinary share(s) in the issued and unissued capital of the Company holder(s) of Shares The Stock Exchange of Hong Kong Limited the transfer of the Assets pursuant to the Agreement (Tianjin Property Rights Exchange), an institution authorised by the State-owned Assets Supervision and Administration Commission to transact assets and equity of stateowned enterprises under the central government of the PRC % or per cent. percentage or per centum By Order of the Board DYNASTY FINE WINES GROUP LIMITED Sun Jun Chairman Hong Kong, 23 July 2018 As at the date of this announcement, the Board comprises three executive Directors, namely, Mr. Sun Jun, Mr. Li Guanghe and Mr. Sun Yongjian, five non-executive Directors, namely, Mr. Heriard-Dubreuil Francois, Ms. Shi Jing, Mr. Jean-Marie Laborde, Mr. Wong Ching Chung and Mr. Robert Luc, and three independent non-executive Directors, namely, Dr. Zhang Guowang, Mr. Yeung Ting Lap Derek Emory and Mr. Sun David Lee. * For identification purposes only 8