Digital Domain : CONVERSION OF CONVERTIBLE NOTES

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.

DIGITAL DOMAIN HOLDINGS LIMITED

(Incorporated in Bermuda with limited liability)

(Stock code: 547)

CONVERSION OF CONVERTIBLE NOTES

Reference is made to the announcements dated 28 March 2013, 4 July 2013, 27 November

2014, 30 September 2016 and circulars dated 14 June 2013 and 9 December 2014 of Digital Domain Holdings Limited (the "Company") which relate to, among other things, the convertible notes due 2017 in the aggregate outstanding principal amount of HK$392,000,000 issued by the Company (the "Convertible Notes").

CONVERSION OF CONVERTIBLE NOTES

On 27 January 2017, the Company received conversion notices from three holders of the Convertible Notes to exercise the conversion rights attaching to outstanding Convertible Notes in the aggregate principal amount of HK$190,512,000 into the Company's ordinary shares ("Shares").

An aggregate of 4,762,800,000 Shares, representing approximately 37.74% of the issued share capital of the Company as at the date of this announcement and approximately 27.40% of the enlarged issued share capital of the Company immediately after the conversion, will be issued to the holders of the Convertible Notes. It is expected that such Shares will be issued to the holders of the Convertible Notes in early February 2017. There are outstanding Convertible Notes in the principal amount of HK$201,488,000 immediately after the conversion.

SHAREHOLDING STRUCTURE OF THE COMPANY

The table below shows the shareholding structure of the Company (i) as at the date of this announcement, (ii) immediately after the conversion of the Convertible Notes in the aggregate principal amount of HK$190,512,000, assuming no other changes to the share capital and shareholding structure of the Company from the date of this announcement up to the conversion of the Convertible Notes in the aggregate principal amount of HK$190,512,000:

As at the date of this announcement

Immediately after conversion of the Convertible Notes in the aggregate principal amount of HK$190,512,000

No. of shares Approximate % No. of shares Approximate %

Directors Peter Chou (Note 1)	714,401,746	5.66	714,401,746	4.11
Seah Ang (Note 2)	502,134,789	3.98	502,134,789	2.89
Amit Chopra (Note 3)	502,134,789	3.98	502,134,789	2.89
Substantial Shareholders
Zhang Xiaoqun (Note 4)	1,672,035,000	13.25	1,672,035,000	9.62
CITIC Limited (Note 5)	181,818,182	1.44	2,281,818,182	13.13
SBCVC Digital Fund, L.P.	181,818,182	1.44	2,281,818,182	13.13
Public Shareholders
Zheng Hao Investments Limited Other public	- 8,864,353,028	- 70.25	562,800,000 8,864,353,028	3.24 51.00
Shareholders
Total	12,618,695,716	100.00	17,381,495,716	100.00

Notes:

1. Mr. Peter Chou holds these Shares through his wholly-owned companies, Kabo Limited and Honarn Inc. Kabo Limited holds 602,561,746 Shares and Honarn Inc. holds 111,840,000 Shares.

2. Mr. Seah Ang holds these Shares through his wholly-owned company, Global Domain Investments Limited. Mr. Seah Ang also holds 100,000,000 outstanding share options granted under the Company's share option scheme.

3. Mr. Amit Chopra holds these Shares through his wholly-owned company, Redmount Ventures Limited. Mr. Amit Chopra also holds 163,000,000 outstanding share options granted under the Company's share option scheme.

4. Mr. Zhang Xiaoqun holds these Shares through his wholly-owned company, Fortune Source International Limited.

5. CITIC Limited holds these Shares through its wholly-owned subsidiary, Master Time Global Limited.

6. As at the date of this announcement, the Company has outstanding options to subscribe for 1,423,656,668 Shares granted pursuant to the share option scheme of the Company. An aggregate of 204,395,788 Shares are to be issued in connection with the Group's acquisition of further interest in Immersive Ventures Inc., which was the subject of the Company's announcements dated 11 December 2015, 30 December 2015 and 30 December 2016 respectively. An aggregate of 38,114,754 Shares are to be issued in connection with the Group's acquisition of assets from Micoy Corporation, details of which are set out in the Company's announcements dated 28 October 2016 and 9 December 2016 respectively.

7. The aggregate of the percentage figures in the above table may not add up to 100% due to rounding of the percentage figures to two decimal places.

By Order of the Board

DIGITAL DOMAIN HOLDINGS LIMITED

Seah Ang

Executive Director and Chief Executive Officer

Hong Kong, 27 January 2017

As at the date of this announcement, Mr. Peter Chou, Mr. Seah Ang and Mr. Amit Chopra are the executive directors of the Company and Ms. Lau Cheong, Mr. Duan Xiongfei and Mr. Wong Ka Kong Adam are the independent non-executive directors of the Company.