Ausnutria Dairy : (1) Discloseable Transaction Acquisition of ADP Holdings and Ozfarm and (2) Connected Transaction Provision of Shareholder Loan Facility

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澳優乳業股份有限公司

(Incorporated in the Cayman Islands with limited liability)

1. DISCLOSEABLE TRANSACTION ACQUISITION OF ADP HOLDINGS AND OZFARM AND
2. CONNECTED TRANSACTION

The Board is pleased to announce that on 22 May 2017 (after trading hours), Ausnutrition Care, an indirect wholly-owned subsidiary of the Company, the ADP Vendor and the Guarantors entered into the ADP SPD in relation to the ADP Acquisition. Contemporaneously, Ausnutrition Care, Ausnutria China, the ADP Vendor and each of the Guarantors also entered into the ADP Shareholders Deed to regulate their respective rights and obligations as shareholders in Ausnutrition Care. Ausnutria China and ADP Holdings further entered into the ADP Shareholder Loan Agreement of even date to support the operation of the ADP Group which is subject to and conditional on the ADP Completion.

On the same date, Spring Choice, a direct wholly-owned subsidiary of the Company, and the Oz Vendors entered into the Oz SPD in relation to the Oz Acquisition. The Oz Shareholders Deed was also entered into among Ozfarm, Spring Choice and the Oz Vendors to regulate their respective rights and obligations as shareholders in Ozfarm which is subject to and conditional on the Oz Completion.

Under the ADP SPD, Ausnutrition Care conditionally agreed to purchase and the ADP Vendor conditionally agreed to sell the ADP Sale Shares, representing the entire issued share capital of ADP Holdings. The ADP Consideration, which is subject to adjustment, shall be satisfied by payment in cash of AUD10.0 million (equivalent to approximately RMB51.3 million) and by allotting and issuing of 13,928,571 Ausnutrition Care Shares to the ADP Vendor. Upon the ADP Completion, ADP Holdings will be 100% owned by Ausnutrition Care and the Company's interest in Ausnutrition Care will be diluted to 70%.

Under the ADP Shareholder Loan Agreement, Ausnutria China, as the lender, has agreed to grant the ADP Shareholder Loan Facility in the principal amount of up to AUD10.0 million (equivalent to approximately RMB51.3 million) to ADP Holdings, as the borrower, for an initial period of one year, which is renewable, commencing from the first drawdown date of the ADP Shareholder Loan. The ADP Shareholder Loan bears interests at a rate of 5.0% per annum.

Under the Oz SPD, the Oz Vendors conditionally agreed to sell the Oz Sale Shares, Ozfarm conditionally agreed to issue the Oz New Shares, and Spring Choice conditionally agreed to purchase and subscribe the Oz Sale Shares and the Oz New Shares. The Oz Sale Shares and the Oz New Shares, in aggregate, represent 50% of the enlarged share capital of Ozfarm upon the Oz Completion. The Oz Consideration under the Oz SPD amounts to AUD11.0 million (equivalent to approximately RMB56.4 million), which shall be satisfied by AUD8.0 million (equivalent to approximately RMB41.0 million) in cash as the purchase price of the Oz Sale Shares and AUD3.0 million (equivalent to approximately RMB15.4 million) in cash as the subscription price of the Oz New Shares. Upon the Oz Completion, Ozfarm will be equally owned by Spring Choice and the Oz Vendors, becoming a jointly-controlled company of the Company.

Pursuant to Rule 14.74(1) of the Listing Rules, the grant of the ADP Put Option, the Oz Vendors Put Option and the Oz Vendors Call Option (the exercise of which is not at the Company's discretion) will be classified as if the options had been exercised.

Under the ADP Acquisition, 13,928,571 Ausnutrition Care Shares will be issued and alloted. After such issue and allotment, the Group's equity interest in Ausnutrition Care held by the Group will be diluted from 100.0% to 70.0%. Such dilution of equity interest in Ausnutrition Care constitutes a deemed disposal pursuant to Rule

14.29 of the Listing Rules. As the transactions contemplated under the ADP SPD involve both an acquisition and a deemed disposal, the transactions will be classified by reference to the larger of the acquisition or disposal pursuant to Rule 14.24 of the Listing Rules.

Pursuant to Rule 14.22 of the Listing Rules, the ADP Acquisition, the grant of the ADP Put Option, the Oz Acquisition and the grant of the Oz Vendors Put Option (collectively, the "Transactions") shall be aggregated as if they were one transaction for the purpose of Chapter 14 of the Listing Rules. Since some of the applicable percentage ratios (as defined under the Listing Rules) in respect of the Transactions in aggregate exceed 5% but are less than 25%, the Transactions constitute discloseable transactions for the Company under Chapter 14 of the Listing Rules and are subject to the requirements of reporting and announcement, but are exempted from the requirement of shareholders' approval pursuant to Chapter 14 of the Listing Rules.

Upon the ADP Completion, the ADP Vendor will become a connected person of the Company and Ausnutrition Care will be held as to 30% by the ADP Vendor. Therefore, the financial assistance under the ADP Shareholder Loan Agreement constitutes a connected transaction of the Company. Since the relevant applicable percentage ratios are less than 5%, the financial assistance contemplated under the ADP Shareholder Loan Agreement is subject to the requirements of reporting and announcement, but is exempted from the requirement of shareholders' approval pursuant to Rule 14A.76 of the Listing Rules.

The Board is pleased to announce that on 22 May 2017 (after trading hours), Ausnutrition Care, an indirect wholly-owned subsidiary of the Company, the ADP Vendor and the Guarantors entered into the ADP SPD in relation to the ADP Acquisition. Contemporaneously, Ausnutrition Care, Ausnutria China, the ADP Vendor and each of the Guarantors also entered into the ADP Shareholders Deed to regulate their respective rights and obligations as shareholders of Ausnutrition Care. Ausnutria China and ADP Holdings further entered into the ADP Shareholder Loan Agreement of even date to support the operation of the ADP Group.

On the same date, Spring Choice, a direct wholly-owned subsidiary of the Company, and the Oz Vendors entered into the Oz SPD in relation to the Oz Acquisition. The Oz Shareholders Deed was also entered into among Ozfarm, Spring Choice and the Oz Vendors to regulate their respective rights and obligations as shareholders of Ozfarm.

Principal terms of the ADP SPD are set out below.

As at the date of this announcement, Ausnutrition Care is an indirect wholly-owned subsidiary of the Company. To the best of the Directors' knowledge, information and belief having made all reasonable enquiries, the ADP Vendor and its ultimate beneficial owners and the Guarantors are parties independent of the Company and its connected persons as at the date of this announcement.

Pursuant to the ADP SPD, Ausnutrition Care conditionally agreed to purchase and the ADP Vendor conditionally agreed to sell the ADP Sale Shares, representing the entire issued share capital of ADP Holdings. Upon the ADP Completion, ADP Holdings will be 100% owned by Ausnutrition Care. The Company's interest in Ausnutrition Care will be diluted to 70% as a result of the issuance of the Ausnutrition Care Shares as part of the ADP Consideration. As a result, Ausnutrition Care and ADP Holdings will become indirect non-wholly owned subsidiaries of the Company.

Pursuant to the ADP SPD, the ADP Consideration, subject to adjustments based on the Final NAV, shall be satisfied in the following manner:

1. paying AUD10.0 million (equivalent to approximately RMB51.3 million) (less, if applicable, any amount by which the Estimated NAV is less than the Target NAV (to a maximum amount of AUD3.05 million) (equivalent to approximately RMB15.6 million)), by cash upon the ADP Completion; and

2. allotting and issuing a total of 13,928,571 Ausnutrition Care Shares to the ADP Vendor upon the ADP Completion.

Assuming the ADP Completion took place by the date of this announcement, the valuation of Ausnutrition Care is approximately AUD45.8 million (equivalent to approximately RMB234.7 million) which is the aggregation of the valuations of the ADP Group and the Ausnutrition Group (as defined below) after the completion of the capitalisation steps of Ausnutrition Care under the ADP SPD, being AUD23.3 million (equivalent to approximately RMB119.4 million) and AUD22.5 million (equivalent to approximately RMB115.3 million), respectively. On this basis, the value of 13,928,571 Ausnutrition Care Shares is estimated to be approximately AUD13.74 million (equivalent to approximately RMB70.4 million).

The ADP Consideration was determined after arm's length negotiations between Ausnutrition Care and the ADP Vendor with reference to, among others, the net asset value, production capability, future prospects of the ADP Group and the fact that ADP is currently one of the eight infant formula products manufacturing enterprises in Australia with registration in the PRC approved by the Certification and Accreditation Administration of the PRC (the "CNCA"). The Directors consider that the ADP Consideration is fair and reasonable.

Pursuant to the ADP SPD, Ausnutrition Care agreed to allot and issue 13,928,571 Ausnutrition Care Shares to the ADP Vendor for the settlement of the ADP Consideration. Upon the issuance and the allotment of the Ausnutrition Care Shares, Ausnutrition Care will be owned as to 70% and 30% by the Company and the ADP Vendor respectively.

Pursuant to the ADP SPD, the cash payment of the ADP Consideration will be revised and adjusted, if any, on the ADP Determination Date as follows:

1. in the event that the Estimated NAV is less than the Target NAV, and the Final NAV is greater than the Estimated NAV, Ausnutrition Care shall pay to the ADP Vendor the amount equals to (a) the Final NAV less the Estimated NAV; less (b) any amount by which the Final NAV exceeds the Target NAV in cash on the ADP Determination Date; and

2. in the event that the Final NAV is less than the Estimated NAV, the ADP Vendor shall pay the difference to Ausnutrition Care by cash.

Completion of the ADP Acquisition is conditional upon the fulfillment of the following conditions:

1. the specific guarantees and indemnities under the ADP SPD are released by the National Australia Bank Limited;

2. the capitalisation steps of Ausnutrition Care under the ADP SPD have been completed;

3. there is no breach of warranties provided by Ausnutrition Care prior to the ADP Completion;

4. the certification and accreditation of the factory owned by ADP with the CNCA is valid and existing and has not been withdrawn prior to the ADP Completion;