Yashili New Zealand entered into the Service Agreement with the Purchaser pursuant to which Yashili New Zealand agreed to co-pack and deliver to the Purchaser canned infant formula from time to time during the term of the Service Agreement. As of the date of the Service Agreement and this announcement, Danone Asia has a 25.0% shareholding interest in the Company and the Purchaser is a member of the Danone Group. Therefore, the Purchaser is a connected person of the Company under the Listing Rules. As Yashili New Zealand is an indirect wholly-owned subsidiary of the Company, the entering into of the Service Agreement constitutes continuing connected transactions of the Company under Chapter 14A of the Listing Rules. As the highest applicable percentage ratio in respect of the Service Agreement exceeds 0.1% but is less than 5%, the Service Agreement is subject to the reporting, announcement and annual review requirements but exempt from the independent shareholders' approval requirement under Chapter 14A of the Listing Rules.