CIRCULAR DATED 12 APRIL 2019
THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. PLEASE READ IT CAREFULLY.
This Circular is issued by BM Mobility Ltd. (the “Company”). If you are in any doubt in relation to this Circular or as to the action you should take, you should consult your stockbroker, bank manager, solicitor, accountant, tax adviser or other professional adviser immediately.
If you have sold or transferred all your ordinary shares in the capital of the Company (“Shares”) held through The Central Depository (Pte) Limited (“CDP”), you need not forward this Circular with the Notice of the Extraordinary General Meeting and the attached Proxy Form to the purchaser or transferee as arrangements will be made by CDP for a separate Circular with the Notice of the Extraordinary General Meeting and the attached Proxy Form to be sent to the purchaser or transferee. If you have sold or transferred all your Shares which are not deposited with the CDP, you should immediately forward this Circular with the Notice of the Extraordinary General Meeting and the attached Proxy Form to the purchaser or transferee, or to the bank, stockbroker or agent through whom the sale or transfer was effected for onward transmission to the purchaser or transferee.
The SGX-ST assumes no responsibility for the contents of this Circular, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this Circular.
BM MOBILITY LTD.(Incorporated in the Republic of Singapore)
Company Registration No. 200800853Z
CIRCULAR TO SHAREHOLDERS
in relation to
THE PROPOSED DISPOSAL OF THE ENTIRE ISSUED AND PAID-UP SHARE CAPITAL OF ZHIHE (FUJIAN) TECHNOLOGY CO., LTD. AND ZIWO (FUJIAN) IMPORT &
EXPORT TRADING CO., LTD.
IMPORTANT DATES AND TIMES
Last date and time for lodgement of Proxy Form : 27 April 2019 at 2.00 p.m.
Date and time of Extraordinary General Meeting : 29 April 2019 at 2.00 p.m.
Place of Extraordinary General Meeting : 10 Anson Road #36-05A International Plaza Singapore 079903
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CONTENTS
Page
DEFINITIONS ...................................................................................................................................... 3
LETTER TO SHAREHOLDERS .......................................................................................................... 7
1. Introduction ................................................................................................................................ 7
2. Information on the Proposed Disposal ...................................................................................... 8
3. Principal Terms of the Proposed Disposal ................................................................................ 9
4. Rationale for the Proposed Disposal and Use of Proceeds ..................................................... 10
5. Relative Figures under Chapter 10 of the Listing Manual ........................................................ 20
6. Financial Effects of the Proposed Disposal .............................................................................. 20
7. Directors’ and Substantial Shareholders’ Interests ................................................................... 22
8. Directors’ Recommendation ...................................................................................................... 23
9. Extraordinary General Meeting ................................................................................................. 23
10. Action to be Taken by Shareholders ......................................................................................... 23
11. Further Information.................................................................................................................... 23
12. Inspection of Documents ........................................................................................................... 24
13. Directors’ Responsibility Statement ........................................................................................... 24
APPENDIX A ...................................................................................................................................... 25
Valuation Report .................................................................................................................................. 25
APPENDIX B ...................................................................................................................................... 78
NOTICE OF EXTRAORDINARY GENERAL MEETING ..................................................................... 79
PROXY FORM
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DEFINITIONS
For the purpose of this Circular, the following defi nitions apply throughout unless the context otherwise requires or states:
“1H2018” : The half year ended 30 June 2018. “1Q2017” : The fi rst quarter ended 31 March 2017. “2 January 2018 EGM” : The extraordinary general meeting of the Company held on
2 January 2018. “2Q2017” : The second quarter and half year ended 30 June 2017. “3Q2017” : The third quarter and nine months ended 30 September 2017. “3Q2018” : The third quarter and nine months ended 30 September 2018. “8 December 2017 Press : The press release issued by the Company on 8 December 2017.Release” “Agreement” : The equity transfer agreement dated 29 August 2018 entered
into between the Company and the Purchaser in relation to the Proposed Disposal.
“Announcement” : The announcement issued by the Company on 1 September 2018
relating to the Proposed Disposal. “Annual Report 2017” : The annual report of the Company for FY2017. “Audit Committee” : The audit committee of the Company. “BCME” : Beijing Chonglee Machinery Engineering Co., Ltd. (北京中丽制机工
程技术有限公司). “BCME Deposit” : The deposit of RMB 28.0 million paid to Beijing Chonglee
Machinery Engineering Co., Ltd. in 2015. “Board” : The board of directors of the Company for the time being. “CDP” : The Central Depository (Pte) Limited. “CEO” : Chief Executive Offi cer. “Circular” : The circular to Shareholders dated 12 April 2019. “Companies Act” : The Companies Act, Chapter 50 of Singapore, as amended or
modifi ed from time to time. “Company” : BM Mobility Ltd. “Completion” : Completion of the Proposed Disposal. “Consideration” : The aggregate amount of RMB 3 million, being the aggregate
consideration for the Proposed Disposal, to be satisfi ed fully in cash, and payable by the Purchaser to the Company.
“Directors” : The directors of the Company for the time being.
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“Disposal Companies” : Collectively, Zhihe Technology and its subsidiary Quanzhou Yixiang, and Ziwo ImpEx.
“EGM” : The extraordinary general meeting of the Company, notice of which
is given on page 79 of this Circular. “EPS” : Earnings per Share. “First Tranche Consideration” : The sum of approximately RMB 2.3 million, representing 75% of
the Consideration, to be paid from the Purchaser to the Company within 14 days following the conclusion of the EGM in respect of the Proposed Disposal.
“FY2015” : The fi nancial year ended 31 December 2015.
“FY2016” : The fi nancial year ended 31 December 2016. “FY2017” : The fi nancial year ended 31 December 2017. “FY2018” : The fi nancial period of 15 months from 1 January 2018 to 31
March 2019. “Green Energy Business” : Green energy and environmentally friendly transportation solutions,
specifically on activities that promote personal mobility and reduced carbon emissions.
“Group” : The Company and its subsidiaries. “Independent Valuer” : Messrs Mazars LLP, the independent valuer appointed by the
Company to value the Sale Shares for the purposes of the Proposed Disposal.
“Land Use Rights” : The land use rights of certain plots of land located at Western
Section of Qingmeng Zone Economy and Technology Development Zone, Quanzhou City, Fujian Province, the PRC.
“Latest Practicable Date” : The latest practicable date prior to the printing of this Circular,
being 1 April 2019. “Listing Manual” : The listing manual of the SGX-ST, as amended or modifi ed from
time to time. “m2” : Square metres. “Management” : The management of the Group from time to time. “NTA” : Net tangible assets. “Ordinary Resolution” : The Ordinary Resolution as set out in the notice of EGM on page
79 of this Circular. “PRC” or “China” : The People’s Republic of China. “Proposed Disposal” : The proposed disposal of the entire issued and paid-up capital in
each of Zhihe Technology and Ziwo ImpEx. “Proxy Form” : The proxy form in respect of the EGM as set out in this Circular.
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“Purchaser” : The purchaser of the Sale Shares pursuant to the Agreement, being Hong Kong Bangwei Investment Limited (香港邦威投资有限公司), a company incorporated in Hong Kong Special Administrative Region.
“Quanzhou Yixiang” Quanzhou Yixiang Textile Co., Ltd., a wholly-owned subsidiary of
Zhihe Technology. “Raw Materials Business” : The production of raw materials and supply of import substitution
products used as raw materials in the production of lifestyle consumer products, furniture upholstery and automobile interior lining.
“RMB” and “RMB cents” : Chinese Renminbi and Renminbi cents, respectively. “RT LLP” : Messrs RT LLP, the previous auditors of the Company who held
offi ce until the conclusion of the extraordinary general meeting of the Company held on 22 March 2019.
“Sale Shares” : The entire issued and paid-up share capital of Zhihe Technology
and Ziwo ImpEx, which are to be sold by the Company to the Purchaser pursuant to the Proposed Disposal.
“SGX-ST” : Singapore Exchange Securities Trading Limited. “Shareholders” : Registered holders of Shares except that where the registered
holder is CDP, the term “Shareholders” shall, in relation to such Shares and where the context admits, mean the Depositors whose securities accounts are credited with Shares.
“Shares” : Ordinary shares of the Company. “S$”, “SGD” and “cents” : Singapore dollars and cents, respectively. “Valuation Date” : 30 September 2018. “Valuation Report” : The business valuation report dated 31 December 2018 issued by
the Independent Valuer in relation to the valuation of the Disposal Companies, as set out in Appendix A to this Circular.
“Warrants” : The 87 4,367,464 outstanding warrants (constituted under the deed
poll dated 15 January 2018) which are outstanding and exercisable any time during the period commencing from 14 February 2018 to 13 February 2021 at an exercise price of S$0.01 for each warrant.
“ Zhihe Technology” : Zhihe (Fujian) Technology Co., Ltd., a wholly-owned subsidiary of
the Company. “Ziwo ImpEx” : Ziwo (Fujian) Import & Export Trading Co., Ltd., a wholly-owned
subsidiary of the Company. “%” or “per cent.” : Per centum or percentage.
The terms “Depositor”, “Depository” and “Depository Register” shall have the meanings ascribed to them respectively in the Securities and Futures Act, Chapter 289 of Singapore.
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The term “subsidiary” shall have the meaning ascribed to it by Section 5 of the Companies Act. The terms “associate” and “associated company” shall have the meanings ascribed to them in the Listing Manual.
Words importing the singular shall, where applicable, include the plural and vice versa. Words importing the masculine gender shall, where applicable, include the feminine and neuter genders. References to persons shall include corporations.
Any reference in this Circular to any enactment is a reference to that enactment as for the time being amended or re-enacted. Any word defi ned under the Companies Act or any statutory modifi cation thereof and not otherwise defi ned in this Circular shall have the same meaning assigned to it under the Companies Act or any statutory modifi cation thereof, as the case may be.
The headings in this Circular are inserted for convenience only and shall be ignored in construing this Circular.
Any reference to a time of day in this Circular is made by reference to Singapore time unless otherwise stated.
Any discrepancies in the tables in this Circular between the listed amounts and the totals thereof are due to rounding.
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LETTER TO SHAREHOLDERS
BM MOBILITY LTD.(Incorporated in the Republic of Singapore)
Company Registration No. 200800853Z
Board: Registered Offi ce:
Koo Ah Seang (Executive Chairman) 8 Robinson RoadTay Wee Kwang (Executive Director and Chief Executive Offi cer) #03-00 ASO BuildingSoh Beng Keng (Non-Executive Lead Independent Director) Singapore 048544Loh Ji Kin (Non-Executive Independent Director) Geoffrey Ng Ching Fung (Non-Executive Independent Director)
Date: 12 April 2019
To: The Shareholders of BM Mobility Ltd.
Dear Sir/Madam,
PROPOSED DISPOSAL BY THE COMPANY OF THE ENTIRE ISSUED AND PAID-UP CAPITAL IN EACH OF ZHIHE TECHNOLOGY AND ZIWO IMPEX
1. Introduction
1.1. The Proposed Disposal
On 1 September 2018, the Company announced that it had, on 29 August 2018, entered into the Agreement with Hong Kong Bangwei Investment Limited (香港邦威投资有限公司), to sell the entire issued and paid-up capital of two of its wholly-owned subsidiaries, Zhihe Technology and Ziwo ImpEx for an aggregate cash consideration of RMB 3 million.
The Proposed Disposal constitutes a “major transaction” under Chapter 10 of the Listing Manual, and is therefore subject to Shareholders’ approval in a general meeting.
A copy of the Announcement is available on the website of the SGX-ST at http://infopub.sgx.com/FileOpen/BMM_proposed%20disposal.ashx?App=Announcement&FileID=523720.
1.2. Circular
The purpose of this Circular is to provide Shareholders with relevant information relating to the Proposed Disposal, including the rationale for the Proposed Disposal, and to seek Shareholders’ approval for the Proposed Disposal at the forthcoming EGM.
1.3. EGM
The Directors are convening an EGM to be held at 10 Anson Road, #36-05A International Plaza, Singapore 079903 on 29 April 2019 at 2.00 p.m. to seek Shareholders’ approval for the Proposed Disposal. The notice of EGM is set out on pages 79 and 80 of this Circular.
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2. Information on the Proposed Disposal
2.1. Information on The Disposal Companies
The existing business of the Disposal Companies (listed below) comprises the production of raw materials and supply of import substitution products which are used as raw materials in the production of lifestyle consumer products, furniture upholstery and automobile interior lining.
As at the Latest Practicable Date, the details of the Disposal Companies are set out below:
Name of Subsidiary Place of incorporation and operation
Principal activities Percentage of equity held (%)
Directly held by the Company:
至和(福建)科技有限公司Zhihe (Fujian) Technology Co., Ltd.(“Zhihe Technology”)
Quanzhou City, Fujian Province, the PRC
Research and development, manufacture and sale of styrene butadiene rubber and other foamed materials
100
至和(福建)进出口贸易有限公司Ziwo (Fujian) Import & Export TradingCo., Ltd. (“Ziwo ImpEx”)
Quanzhou City, Fujian Province, the PRC
Trading in foamed materials, textile, sports and sports accessories, garments and footwears
100
Indirectly held byZhihe (Fujian) Technology Co., Ltd.:
泉州益翔纺织有限公司Quanzhou Yixiang Textile Co., Ltd.(“Quanzhou Yixiang”)
Quanzhou City, Fujian Province, the PRC
Dormant 100
In FY2017, the production of Zhihe Technology and Ziwo ImpEx accounted for 100% of the Group’s total products. Its products were distributed to customers in the Fujian, Shandong, and Zhejiang provinces as well as Shanghai and Tianjin municipalities in the PRC. The Company had ceased the production activities of Zhihe Technology and Ziwo ImpEx since the beginning of FY2018 (as verifi ed by the Independent Valuer during their site visit on 12 October 2018 and reported in their Valuation Report) in light of the continued losses from the Raw Materials Business. Accordingly, Zhihe Technology and Ziwo ImpEx no longer have any record of capacity utilisation.
The Company had also, on 9 May 2018, announced that it would cease and discontinue the Raw Materials Business in light of the continued losses, and look for a buyer to purchase the Raw Materials Business. This would allow the Company to focus on the Green Energy Business.
2.2. Information on the Purchaser
The Purchaser is Hong Kong Bangwei Investment Limited (香港邦威投资有限公司), a company incorporated in Hong Kong Special Administrative Region on 24 July 2018. It is principally engaged in investment holding. The sole director and the sole legal and benefi cial owner of the Purchaser is Mr Li Shue t Wing. Mr Li Shuet Wing has been employed by the Group as the sales and marketing manager of Zhihe Technology and Ziwo ImpEx in the PRC since January 2018.
The Purchaser and Mr Li Shuet Wing were introduced to the Company by Mr Wang Jian Hong in December 2017. Mr Wang Jian Hong is the manager of the production plants of Zhihe Technology and Ziwo ImpEx . No introducer fees were or will be paid to Mr Wang Jian Hong in respect of the introduction. Save for Mr Wang Jian Hong’s employment as disclosed above, Mr Wang Jian Hong is not related to the Purchaser, Mr Li Shuet Wing, and the Company’s Directors and substantial Shareholders.
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Mr Li Shuet Wing is a Hong Kong citizen and resident. He was previously employed as the sales and marketing manager of Fujian Hongwei Shoes Plastics Co., Ltd. (福建宏玮鞋材有限公司) for 10 years, and his highest qualifi cation attained is a high school diploma. To the best of the Directors’ knowledge and belief, Mr Li Shuet Wing has no present directorships, nor shareholding interests in the Company, save for his directorship and shareholding in Hong Kong Bangwei Investment Limited.
To the best of the Directors’ knowledge and belief, Mr Li Shuet Wing is not acting as a nominee or trustee of, or taking instructions from or holding the Disposal Companies in trust for any persons, substantial Shareholders, Directors or the CEO of the Company and their respective associates, and Mr Li Shuet Wing has also given such written confi rmation.
To the best of the Directors’ knowledge and belief, Mr Wang Jian Hong is also not acting as a nominee or trustee of, or taking instructions from any persons, substantial Shareholders, Directors or the CEO of the Company and their respective associates, in respect of the aforesaid introduction and the Proposed Disposal.
3. Principal Terms of the Proposed Disposal
3.1. Consideration
Subject to the terms and conditions of the Agreement, the Company has agreed to sell and the Purchaser has agreed to purchase the Sale Shares for an aggregate consideration of RMB 3 million, to be satisfi ed fully in cash, and payable by the Purchaser to the Company in two (2) tranches, in the following manner:
(a) within 14 days following the conclusion of the EGM, the Purchaser shall pay to the Company, an amount of approximately RMB 2.3 million, representing 75% of the Consideration (the “First Tranche Consideration”); and
(b) within 14 days upon receipt of the notice of registration issued by the PRC State Administration for Industry & Commerce in respect of the transfer of Sale Shares, the Purchaser shall pay to the Company, an amount of approximately RMB 0.7 million representing the balance amount of 25% of the Consideration.
The Consideration was arrived on a willing-buyer willing-seller basis, after arms’ length negotiations between the Company and the Purchaser, and after taking into account the fi nancial performance and negative net asset value of each of Zhihe Technology and Ziwo ImpEx.
3.2. Fees and expenses payable
The taxes and fees arising from the transfer of shares in Zhihe Technology and Ziwo ImpEx shall be borne by the Company. Other fees and expenses arising from the registration of the change in ownership of Zhihe Technology and Ziwo ImpEx shall be borne by the Purchaser.
It is estimated that the stamp duty payable to the Inland Revenue Department of Hong Kong S.A.R. would be not more than RMB 3,000.00, calculated based on the rate of 0.1% of the value of the Consideration. The stamp duty will be paid by cash from the Company’s working capital, within the timeline prescribed by the relevant laws of the Hong Kong S.A.R.
3.3. Other Salient Terms
Upon receipt of the First Tranche Consideration from the Purchaser, the Company shall deliver the business licences of Zhihe Technology and Ziwo ImpEx to the Purchaser, whereupon the Purchaser shall become solely liable for the claims and debts of Zhihe Technology and Ziwo ImpEx, and the Purchaser shall be entitled to the profi ts and losses of Zhihe Technology and Ziwo ImpEx in accordance with its shareholdings held in the aforesaid companies.
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The Agreement may be amended or terminated by the agreement of both the Company and the Purchaser in writing, if:
(a) the Agreement cannot be performed due to force majeure or due to any other external causes through no fault of either party;
(b) one party loses its capacity to perform its obligations under the Agreement;
(c) due to a breach of the Agreement by one or both parties, the non-defaulting party’s economic interests are seriously affected; or
(d) it is mutually agreed upon between the Company and Purchaser.
4. Rationale for the Proposed Disposal and Use of Proceeds
4.1. Rationale and Benefi ts for the Proposed Disposal
At the 2 January 2018 EGM, Shareholders voted in favour of the Company’s proposed diversifi cation of its core business to the Green Energy Business. The resolution was voted in favour by 100% of the Shareholders present and voting at the 2 January 2018 EGM. The Disposal Companies are primarily engaged in the Raw Materials Business and therefore do not form part of the core assets of the Company. The Company’s reasons for the proposed diversifi cation were set out in its circular to Shareholders dated 11 December 2017.
The Raw Materials Business comprise the production of raw materials and supply of import substitution products which are used as raw materials in the production of lifestyle consumer products, furniture upholstery and automobile interior lining.
The core assets of the Company now consist primarily of electric charging stations (including assembly, installation, marketing and selling of the same), electric motorcycles (including assembly, marketing and distributing of the same), as well as intellectual property rights in relation to electric vehicle charging technology held by the Company’s two operating subsidiaries, Beijing E-Star Electric Technology Co. Ltd. and BM Mobility Sdn. Bhd..
The Company had also informed Shareholders through the 8 December 2017 Press Release that it would be seeking Shareholders’ approval at the 2 January 2018 EGM to change its business to focus exclusively on opportunities in green energy. In the 8 December 2017 Press Release, the Company also expressly indicated its intention to exit its loss-making Raw Materials Business in pursuit of its Green Energy Business. Hence, the Proposed Disposal is in line with the Group’s future business plans, which Shareholders have voted in favour of at the 2 January 2018 EGM.
Furthermore, the Disposal Companies have been incurring continued losses for the last three consecutive fi nancial years. Please refer to the fi gure in the tables setting out the revenue, gross profi t margin and gross profi t for the Raw Material Business and Green Energy Business for 3Q2017, 1H2018 and 3Q2018 respectively.
3rd quarter and nine months ended 30 September 2017 (“3Q2017”)
Revenue(RMB’000)
Gross Profi t Margin
Gross Profi t (RMB’000)
Raw Materials Business 21,968 3.2% 709
Green Energy Business (1) – – –
Total 21,968 3.2% 709
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1H2018
Revenue (RMB’000)
Gross Profi t Margin
Gross Profi t (RMB’000)
Raw Materials Business (2) – – –
Green Energy Business 2,735 49.2% 1,346
Total 2,735 49.2% 1,346
3rd quarter and nine months ended 30 September 2018 (“3Q2018”)
Revenue (RMB’000)
Gross Profi t Margin
Gross Profi t (RMB’000)
Raw Materials Business (2) – – –
Green Energy Business 3,600 53.2% 1,914
Total 3,600 53.2% 1,914
Notes:-
(1) The diversifi cation of the Company’s core business to include the Green Energy Business was approved by Shareholders on 2 January 2018.
(2) The Company had ceased and discontinued its Raw Materials Business as announced on SGXNet on 9 May 2018.
For 1H2018, the Disposal Companies did not generate any revenue and are not profi table, compared to a gross profi t of RMB 1,346,000 generated by the Green Energy Business for the same period. Based on the 3rd quarter and nine months ended 30 September 2018 (“3Q2018”) interim fi nancial statements of the Group, the Green Energy Business generated a revenue of RMB 3.6 million, with gross profi t margin of 53.2%, amounting to RMB 1.9 million. Comparing against the same period for the nine months ended 30 September 2017 (“3Q2017”), although the revenue generated from the raw material business was RMB 22.0 million, the gross profi t margin was merely 3.2%, amounting to only RMB 709,000.
Therefore, the Raw Materials Business is simply unable to generate suffi cient gross profi ts and profi tab ility. The Company is thereof of the opinion that with the disposal of the Raw Materials Business, the Company will have a chance to return to profi tability.
As the fundamental outlook of the Disposal Companies and the Raw Materials Business is unlikely to show any prospect for turnaround, the Company is of the view that the Proposed Disposal will help the Company mitigate further losses.
By reason of the above-mentioned rationale, the Board believes that the Proposed Disposal is in the best interests of the Company and Shareholders. The Proposed Disposal will also allow the Company to fully focus on its Green Energy Business.
With effect from 5 June 2017, the Company was placed on the SGX-ST watch-list under the Minimum Trading Price Entry Criteria pursuant to Rule 1311(2) of the Listing Manual. The Company has a 36-month cure period to exit the Watch-list, with the end date being 4 June 2020.
In addition, with effect from 5 June 2018, pursuant to Rule 1311(1) of the Listing Manual, the Company was placed on the SGX-ST watch-list due to the fi nancial entry criteria. The Company has 36 months from 5 June 2018 to meet the requirements under Rule 1314(1) of the Listing Manual for its removal from the watch-list. The Proposed Disposal will also allow for the Company to fully focus its efforts toward restoration of the Company’s fi nancial health and removing itself from the watch-lists.
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Based on the 3Q2018 interim fi nancial statements of the Group in its entirety, the revenue, gross profi t , and net loss were RMB 3,600,000, RMB 1,914,000 and RMB (9,409,000) respectively. This is an improvement compared to the interim fi nancial statements of the Group for the 3rd quarter and 3Q2017, where the revenue, gross profi ts and net loss were RMB 22.0 million, RMB 709,000 and RMB (58,827,000) respectively. The Company believes that, barring any unforeseen circumstances, it is on track in its plan for the removal from the Watch-lists by the respective cure period .
4.2. Value of Assets to be Disposed
4.2.1 Based on the Group’s audited consolidated fi nancial statements for FY2017, the Disposal Companies recorded aggregate net losses of RMB 102.9 million and had a defi cit in net assets of RMB 53.2 million. Based on the Group’s unaudited consolidated fi nancial statements for 1H2018, the book value of the Sale Shares is negative RMB 57 million (before adjusting for the statutory reserve of approximately RMB 43 million).
Land Use Rights
The Disposal Companies had acquired land use rights over certain plots of land located at Western Section, Qingmeng Zone, Economy and Technology Development Zone, Quanzhou City, Fujian Province, the PRC (the “Land Use Rights”). The gross area of the land parcels is 64,102.6 m2.
Details of the Land Use Rights held by the Disposal Companies are as follows:
Location Total site area (m2)
Total gross fl oor area (m2)
Use Date of acquisition of the Land Use Rights
Expiry date of the Land Use Rights
Parcel of land (lot no. A-09 and A-10(B)), 10 bui ldings and var ious structures located at Western Section of Qingmeng Z o n e E c o n o m y a n d Te c h n o l o g y Development Zone, Quanzhou City, Fujian Province, the PRC
31,028.50 35,819.48 (comprising 10 buildings which are workshops, warehouses and a dormitory building, as well as a boundary fence wall)
Industrial 21 October 2004
20 October 2054
A parcel of land ( lot no. C-09C-2) located at Western Section of Qingmeng Z o n e E c o n o m y a n d Te c h n o l o g y Development Zone, Quanzhou City, Fujian Province, the PRC
18,439.30 Nil, as the parcel of land was vacant.
Industrial 27 October 2010
26 October 2060
A parcel of land (lot no. A11(C)) and 3 buildings located at Western Section of Qingmeng Z o n e E c o n o m y a n d Te c h n o l o g y Development Zone, Quanzhou City, Fujian Province, the PRC
14,634.80 19,020.42(comprising 2 workshops and 1 offi ce building)
Industrial 1 July 2007 30 June 2057
At the time of acquisition of the aforesaid Land Use Rights, the Company paid RMB 6,709,000 (in respect of Lot no. A-09 and A-10(B)), RMB 15,881,000 (in respect of Lot no. C-09C-2), and RMB 4,000,000 (in respect of Lot no. A-11(C)) to the municipal government of Quanzhou City.
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The properties and the Land Use Rights are no longer in use in view of the cessation of production activities of the Disposal Companies announced by the Company on 9 May 2018.
The Company conducted a test for recoverability o f the carrying value of the Land Use Rights and buildings in FY2017, and where the calculations were reviewed by the Company’s previous auditors, RT LLP when it conducted its audit for FY2017. The test of recoverability identifi ed the impairment, and the fair value of the assets are measured relying primarily on the discounted cash fl ow methodology. The test of recoverability was an impairment test and not to determine the value of the land use rights for sale. As such, there was no need to use a market-based approach. The test of recoverability determined that there is unlikely any possibility of recovering any proceeds from the Land Use Rights or the buildings.
The then Board and Audit Committee had independently verifi ed Management’s representations, and were satisfi ed with the reliability and assumptions used in the calculations. In addition to and as an independent basis for the Management’s representations leading to the writing-off the value of the Land Use Rights and relevant buildings in FY2017, the Company had, at the request of the Audit Committee, appointed a well-known real estate valuation fi rm in 2017 to obtain an independent valuation of the Land Use Rights for the Audit Committee’s review and assessment of Management’s calculations. The said independent valuation1 concluded that the Land Use Rights are of no commercial value for the reasons set out in the Company’s Annual Report 2017 and repeated below.
As disclosed in the Company’s Annual Report 2017, the Land Use Rights had no commercial value due to the following reasons, among others, (i) the fact that the permitted use of the land parcels is only for industrial development and cannot be freely transferred, and also (ii) the loss of the Land Use Right for one of the land parcels (Lot No. C-09C-2, the size of which is approximately 28.77% of the total site area under the Company’s Land Use Rights) which has been left vacant for more than two years.
Accordingly, the value of the Land Use Rights and buildings were written off in FY2017. Prior to the value of the Land Use Rights being written off, the net book value of the Land Use Rights was RMB 13,973,000 (as reported in the fi nancial results for the fi rst quarter ended 31 March 2017 (“1Q2017”). Further information on the Land Use Rights can be found in the Valuation Report and the sub-section below entitled “Impairments and Write-offs”.
Losses inccurred by the Raw Material Business
The Raw Materials Business has been suffering losses for the past two years. The Company had previously disclosed in its 2Q2017 results announcement dated 14 August 2017 that one of its then directors, Mr. Ting Chun Yuen, had advanced approximately RMB 11 million to fund Zhihe Technology’s working capital, out of which RMB 3 million was utilised for selling and distribution expenses, while RMB 8 million was utilised for administrative expenses. However, Zhihe Technology continued to generate negative cash fl ow. As a result, the Company has ceased production and trading activities of the Disposal Companies since the beginning of FY2018, and no revenue has been recorded by the Disposal Companies since then.
As disclosed by the Company in its response to queries from the SGX-ST on 24 August 2017, the Audit Committee of the Company had approved the advance of up to RMB 11 million from Mr Ting, in order to meet urgent working capital requirements of the Disposal Companies. As there was no interest payable to Mr Ting for the advance and the said advance was recorded in the books of the Disposal Companies, the Audit Committee determined that there was no risk to the Company.
1 As the independent valuation was at that time commissioned by the Company for purposes of the Audit Committee’s review and verifi cation as aforesaid without the intention of publicising the valuation report (and there was then no requirement to do so), the valuation report was prepared on the basis that it was not meant for public consumption.
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Independent Valuation of the Sale Shares
The Company had also commissioned an independent valuer, Mazars LLP (the “Independent Valuer”) to value the Sale Shares for the purposes of the Proposed Disposal. To the best of the knowledge of the Directors, Mazars LLP has undertaken valuation work for large corporations and listed companies . The valuation team at Mazars LLP is headed by Mr. Lai Keng Wei. Mr Lai has more than 20 years’ experience in accounting, auditing, corporate fi nance, mergers and acquisitions, fi nancial due diligence and valuation in Malaysia and Singapore, including three years of experience in conducting valuations and, with his team of four full-time valuation professionals, have completed over 100 valuation projects to date. He is also an International Certified Valuation Specialist (ICVS), a member of Institute of Singapore of Chartered Accountants, a fellow member of Association of Chartered Certifi ed Accountants (FCCA), and a member of the International Association of Certifi ed Valuation Specialists (IACVS).
Pursuant to a site visit conducted on 12 October 2018, and based on the summation method (where the market value of each asset and liability on the balance sheet has to be determined), the Independent Valuer had computed the market value of the Sale Shares as at 30 September 2018 (which is the valuation date adopted by the Independent Valuer) (the “Valuation Date”) to be zero. In undertaking the valuation of the Sale Shares, the Independent Valuer had considered, and took into account, among others, the following:
(a) the total market value of the assets of the Disposal Companies of approximately RMB 10.7 million, against the total market value of the liabilities of the Disposal Companies of RMB 27.0 million;
(b) the aggregate trade receivables of the Disposal Companies which amounted to RMB 68.61 million, out of which the majority have been overdue for more than 12 months and allowance for full impairment have been provided for, with the remaining overdue for more than 6 months;
(c) advance payments including the deposit of RMB 28.0 million (being the BCME Deposit) made by Zhihe Technology to Beijing Chonglee Machinery Engineering Co., Ltd. (北京中丽制机工程技术有限公司) (“BCME”) in 2015 for the construction of a production line, which have been written off by Management due to the non-likelihood of recoverability. Please refer to the Company’s previous announcements on SGXNet dated 8 September 2016, 23 November 2016, 12 December 2017, 1 March 2018 and 7 March 2018 regarding the non-likelihood of recoverability of the deposit. Further information about such write-off is also set out below under Impairment and Write-offs – Allowance for impairment of deposits in respect of the BCME Deposit;
To the best of the Directors’ knowledge, BCME is a chemical fi bre engineering company which is in the segment of manufacturing machinery and equipment which produces chemical fi bre. BCME is wholly-owned by the China Textile Academy and is an independent third-party company;
(d) the aggregate net book value of RMB 0.8 million in respect of the property, plant & equipment of the Disposal Companies as at the Valuation Date due to depreciation charges and non-operating condition of the machinery and equipment, as well as the properties, in the form of leasehold buildings, having been constructed without necessary permits and being located on non-transferable land;
(e) the net book value of Land Use Rights which were written down to zero by the Board in the second quarter of FY2017 (please refer to the sub-section below entitled “Impairments and Write-offs” for more information); and
(f) total amount of RMB 48.9 million due from the Disposal Companies to the Company, which has not been included for the purposes of calculating the NAV of the Sale Shares, in view of the non-likelihood of repayment.
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The Independent Valuer did not make any adjustments to the net book value of the trade receivables of the Disposal Companies. Although the Independent Valuer had sighted seven letters of demand from Fujian Jinxian Law Firm (福建晋贤律师事务所) (the solicitors acting for the Disposal Companies) to the debtors in relation to the receivables, it is not clear whether the trade receivables remain collectible, and it would also not be practical to conduct a check on the financial ability of the debtors. Even if all the receivables were written off, the market value of the Disposal Companies would still be zero .
The Independent Valuer had also assessed and given weight to the legal opinion issued by Fujian Jinxian Law Firm. The latter had reviewed the relevant construction and related contracts (in connection with the construction by BCME of the production line for Zhihe Technology’s manufacturing plant) and having examined the matter opined that the deposit of RMB 28.0 million paid to BCME in 2015 was deemed to be not recoverable as the Disposal Companies had not fulfilled their obligations with BCME under such contracts. There is no necessity to verify the identity or existence of BCME in view of the legal opinion from Fujian Jinxian Law Firm .
In addition, the Independent Valuer had also sighted various letters from the local municipal government of Quanzhou City on the non-transferability of the Land Use Rights, as well as a fi nal notice issued from the Land and Resources Bureau of Fujian Province, Quanzhou City to the Disposal Companies notifying that the Disposal Companies no longer had the rights to use the parcel of land identifi ed as lot no. C-09C-2 since the land parcel was unused for over 2 years. Pursuant to the State-Owned Land Use Right Grant Contract entered into between Zhihe Technology and the Quanzhou City government, the land parcel may be taken back freely by the Quanzhou City government. The Company had previously announced that it had received the aforesaid fi nal notice in December 2017, during the announcement of its fourth-quarter and full-year results for FY2017 dated 1 March 2018.
Please refer to the Valuation Report set out in Appendix A to this Circular, in particular, pages 23 to 2 7 of the Valuation Report.
Impairments and Write-offs
The impairments, provisions, and write-offs/write-downs made in respect of the Disposal Companies in the last three fi nancial years are set out below. Such impairments, provisions, and write-offs/write-down made were in accordance to the Financial Reporting Standards in Singapore (FRSs) issued by the Accounting Standards Council of Singapore.
Impairments, provisions, and write offs/write down for FY2015, FY2016 and FY2017
FY2017RMB’000
FY2016RMB’000
FY2015RMB’000
Impairment of land use rights 13,799
Impairment of property, plant and equipment 19,100 70,327 48,961
Impairment of trade and other receivables 24,789 12,602 14,668
Written off advance payments to suppliers 28,000
Write-down of inventories 4,033 917 1,103
Bad Debts written off 2,008 4,213 699
Pre-paid know-how written off 4,000
Impairment of investment in subsidiaries 41,908 95,170 3,100
133,647 183,229 72,531
Disclosures and explanations on most of the aforesaid impairments, provisions and write-offs/write down have been made in the Company’s previous SGXNet announcements and Annual Report 2017 and have also been extracted below for ease of reference.
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The Audit Committee undertakes a vigorous quarterly/annual review of the reasonableness and the veracity of all impairments, provisions, and write-offs/write-down. In relation to impairments, provisions, and write offs/write down, neither the Board nor the Audit Committee leaves such decisions solely to the Group’s Management. Where deemed fi t, the Board and Audit Committee will not hesitate to seek independent professional advice from firms with the necessary experience and good track record in advising the Company on the merits of the such transactions.
The previous auditors of the Company, RT LLP, had issued its independent auditor’s report on 4 April 2018 without any emphasis of matter, qualifi cations, or disclaimer of opinion on any of the above matters. The then auditors had, amongst other things, assessed the accuracy of Management’s computation of the recoverable amount to determine the impairment loss in the subsidiaries, and challenged Management’s assumptions on the expected price for the realisability of the underlying assets of the subsidiaries, in conducting its audit procedures on the Company’s impairment of investment in subsidiaries. This was disclosed in the Company’s Annual Report 2017, in particular page 31 read with Note 3(a).
Impairment of property, plant & equipment and land use rights
The recoverable amounts of the property, plant and equipment and Land Use Rights can be affected by factors which are largely beyond the control of the Group, for example; stability of the industry and market demand; technical, technological, commercial and other types of obsolescence; actions by competitors or potential competitors; and changes in the legal and other regulatory framework. The estimated recoverable amounts are determined based on fair value less costs to sell, which are either based on (i) recognised valuation techniques based on cost approach using unobservable inputs applied by an independent valuer or (ii) market approach considering recently transacted prices paid for similar assets. The recoverable amounts of the property, plant and equipment could change signifi cantly as a result of changes in the assumptions used in determining the market value.
Subsequently as at the end of FY2017, the Group carried out a review of the recoverable amount of its plant, and equipment due to indicators for impairment in light of the state of the business. The recoverable amount of the plant and equipment has been determined on the basis of their fair value less cost to sell.
As mentioned above, for FY2017, the Board decided to write-off the value of the Land Use Rights and relevant buildings in FY2017, among others, due to (i) the fact that the permitted use of the land parcels granted to the Disposal Companies is only for industrial development (and not for any other uses) and cannot be freely transferred, and also (ii) the loss of the Land Use Right for one of the land parcels, Lot No. C-09C-2. The size of Lot No. C-09C-2 is approximately 28.77% of the total site area under the Company’s Land Use Rights which has been left vacant for more than two years. Prior to the value of the Land Use Rights being written off, the net book value of the Land Use Rights was RMB 13,973,000 (as reported in the fi nancial results for Q12017. The restriction on transferability of the Land Use Rights is not expected to have an impact on the Proposed Disposal, as the Proposed Disposal does not result in a change or transfer of ownership of the Land Use Rights, which are held by the Disposal Companies.
Allowance for impairment of deposits in respect of the BCME Deposit
The BCME Deposit amounting to RMB 28.0 million was paid to BCME as progress payments between July to October 2015 in respect of the construction of a production line for Zhihe Technology’s manufacturing plant in FY2015, which was approved by the then Audit Committee and the directors of the Board in July 2015. In view of the worsening economic climate and persistent slowdown in the manufacturing industry in China dampening demand for the products of the Disposal Companies and weakening selling prices, the management of the Disposal Companies decided not to proceed with the installation of the new production line.
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The total costs of the production line, including the machinery and installation, was RMB 37.6 million (comprising one machinery contract of RMB 30.8 million for the construction of a new production line and acquisition of a new PET spinning and drawing machine and yarn warping machine, and one service contract of RMB 6.8 million for the design, installation, calibration of machinery and training of production/engineering personnel). With respect to the machinery contract, payment of the contract price was to be made in progressive stages, with 60% to be paid upon signing of contract in July 2015, 20% to be paid 3 months after the signing, 15% to be paid 1 week before delivery of the machinery, with the balance 5% to be retained by the Company for approximately 12-18 months, pending rectifi cation of defects to the machinery (if any). With respect to the service contract, payment of the contract price was also to be made in progressive stages, with 50% to be paid within 15 days upon signing of contract in July 2015, 40% to be paid upon completion of the contract, and the balance 10% to be retained by the Company, and would only be released to the supplier after two years if there are no issues with the machinery.
BCME had requested that the Disposal Companies take delivery of the new production line and for the balance RMB 9.6 million be paid in full, threatening legal action verbally (the Disposal Companies have not, at any time, received written notice or demands or legal actions commenced by BCME). Fujian Jinxian Law Firm had reviewed the relevant construction and related contracts and having examined the matter was of the opinion that as the Disposal Companies had not fulfi lled their obligations with BCME, it is unlikely that the Disposal Companies were able to recover the deposits. Following extensive negotiations with BCME, it was mutually agreed that BCME waive its rights in claiming further compensation against the Company but the BCME Deposit would not be refunded. As such, the BCME Deposits was written off.
Further information on the BCME Deposits can be found in the Company’s response to the queries of the SGX-ST on 5 March 2018.
Write-down of inventories
Reviews are made periodically by the Group’s Management on inventories for excess inventories, obsolescence and decline in net realisable value below cost. Inventories are written down for any such declines based on historical obsolescence and slow-moving experiences.
The Management periodically review and propose the write-down of inventories which have been laying idle for approximately two years or more. Whist there is no fi xed policy for the impairment of inventory, any material write-downs are also submitted to the Board for discussion and approval.
The Company’s inventory has been slow moving due to the negative business conditions which the Company has been experiencing. In accordance with the Financial Reporting Standard 2 Inventories (FRS 2), as the cost of the inventory that have become obsolete or degraded beyond use is not recoverable, such inventory has been written down to its net realisable value.
Impairment of investment in subsidiaries
The estimates of the recoverable amount of the investment have been determined by Management based on the net realisable value of the net assets of the subsidiaries as at the end of each fi nancial year, which approximates the recoverable amount of the investment in subsidiaries.
In view that the Company continued to experience declined in revenue and losses, which are indicators for impairment, the Group had carried out reviews of the recoverable amount of investment in subsidiaries during the fi nancial year which led to the impairment of the same.
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Impairment of trade and other receivables and bad debts written off
Allowances for impairment of trade and other receivables are based on an assessment of the recoverability of trade and other receivables. Allowances are applied to trade and other receivables where events or changes in circumstances indicate that the balances may not be collectible. The identifi cation of bad and doubtful debts requires the use of judgment and estimates. Where the expected outcome is different from the original estimate, such difference will impact the carrying value of trade and other receivables and allowance for impairment loss in the period in which such estimate has been changed.
In accordance with the Group’s policy, trade receivables that are outstanding for more than 6 months but less than a year are impaired at 50%. Trade receivables that have been outstanding for a year and above are fully impaired.
Trade receivables were impaired in accordance to the Group’s policy due to longer payment cycles amidst weakening business climate in China.
Write off of pre-paid know-how
The amount of RMB 8.5 million for the prepaid know-how represents the purchase price of the know-how purchased from a third-party unrelated to the substantial Shareholders, Directors or the CEO of the Company and their respective associates in the fi nancial year ended 31 December 2011.
The prepaid know-how relates to the technical know-how for anti-odour fi bre material used in the production of 30D fi lament yarn and formula for styrene butadiene rubber. The application for registering the prepaid know-how as a patent was submitted by the Company to the State Intellectual Property Offi ce of the PRC since 2011. With the cessation of the 30D fi lament yarn business and in consideration of the long duration of the application process, the Board was of the opinion that it was improbable that future economic benefi ts will arise from the prepaid know-how for the foreseeable future which led to the write off of the same in FY2015. Accordingly, the patent application was not proceeded with and allowed to lapse.
The auditors of the Company had conducted an audit of the write-off in FY2015, and had not made any emphasis of matter, qualifi cations or disclaimer in respect of its audit fi ndings and opinions.
4.2.2 Please fi nd below an extract of the balance sheet of the Disposal Companies as at 30 September 2018 as set out in the Valuation Report:
(RMB’000)
Current AssetsCash and cash equivalents 433Trade receivables 8,694Other receivables 622Prepaid expenses 16Advance payments –Inventory 116
Total Current Assets 9,881
Non-current AssetsProperty & Plant and Equipment 822Land use right –
Total Non-current Assets 822
Total Assets 10,703
19
(RMB’000)
Current LiabilitiesTrade payables 264Salary payables 2,389Advance payment received –Tax payable 28Provision for social security costs 3,877Other payables 20,400Provision 21Due to related parties 22
Total Current Liabilities 27,001
Total Liabilities 27,001
Net Liabilities (16,299)
A breakdown of the top 7 major debtors of the Disposal Companies, which owe an aggregate of RMB 8,091,000 out of the total trade receivables of RMB 8,694,000 of the Disposal Companies as at the Latest Practicable Date, are as follows:
(RMB’000)
Customer name东莞市佳豪体育用品有限公司 542龙岩市美诚贸易有限公司 1,416元丰(泉州)纺织有限公司 531厦门祺鸿贸易有限公司 1,001福建起步儿童用品有限公司 463东莞市桦辉运动用品有限公司 3,771福建茂丰贸易有限公司 366
Total 8,091
Further information on the creditors and debtors of the Disposal Companies can be found in the Valuation Report.
Prior to the completion of the Proposal Diposal, the Company will update shareholders in the event of receipt of outstanding trade receivables by the Disposal Companies or any event giving rise to a material write-off or non-payment .
4.3. Use of Proceeds
The net proceeds arising from the Proposed Disposal will amount to RMB 3 million. It is expected that the net proceeds will be made available for the Company’s general working capital requirements and growth of the Green Energy Business.
The proceeds from the Proposed Disposal will be paid fully in cash to the Company as set out in Section 3.1 of this Circular.
The Company will make the appropriate announcements to update Shareholders on the progress and status of the Proposed Disposal (including but not limited to Completion and the receipt of the net proceeds).
4.4. Group Structure Before and After the Proposed Disposal
The structure of the Group before and after the Proposed Disposal is set out in Appendix B of this Circular.
20
5. Relative Figures under Chapter 10 of the Listing Manual
5.1. The relative fi gures for the Proposed Disposal computed on the bases set out in Rule 1006 of the Listing Manual are set out below:
Rule 1006 Bases Relative Figures (%)
(a) The net asset value of the assets to be disposed of, compared with the Group’s net asset value. This basis is not applicable to an acquisition of assets.
(8143%)(1)
(b) The net profi ts attributable to the assets acquired or disposed of, compared with the Group’s net profi ts.
72.35%(2)
(c) The aggregate value of the consideration given or received, compared with the issuer’s market capitalisation based on the total number of issued shares excluding treasury shares.
13.65%(3)
(d) The number of equity securities issued by the issuer as consideration for an acquisition, compared with the number of equity securities previously in issue.
Not Applicable(4)
(e) The aggregate volume or amount of proved and probable reserves to be disposed of, compared with the aggregate of the group’s proved and probable reserves. This basis is applicable to a disposal of mineral, oil or gas assets by a mineral, oil and gas company, but not to an acquisition of such assets.
Not Applicable(4)
Notes:
(1) Unaudited net asset value of the Sale Shares as at 30 June 2018 is negative RMB 57 million, compared to the Group’s unaudited net asset value of RMB 0.7 million as at 30 June 2018.
(2) Under Rule 1002(3)(b), “net profi ts” means profi t or loss before income tax, minority interests and extraordinary items. The net loss attributable to the Sale Shares is determined based on the 1H2018 unaudited net loss of the Disposal Companies of RMB 5.2 million. The 1H2018 unaudited net loss of the Group was RMB 7.1 million.
(3) The Company’s market capitalisation was approximately RMB 22 million (based on the exchange rate of RMB 5.0 to SGD 1.0 on 28 August 2018), determined by multiplying the total issued shares of 498,268,732 shares by the volume weighted average price of the Company’s shares of SGD 0.009 per share, based on trades done on the SGX-ST on 28 August 2018, being the market day preceding the date of the Agreement. The Consideration for the Proposed Disposal is RMB 3 million pursuant to the Agreement.
(4) This basis is not applicable to the Proposed Disposal.
5.2. As the relative fi gure computed pursuant to Rule 1006(b) exceeds 20%, the Proposed Disposal is classifi ed as a major transaction within the meaning of Rule 1014 of the Listing Manual of the SGX-ST. Accordingly, the Proposed Disposal requires the approval of Shareholders of the Company.
6. Financial Effects of the Proposed Disposal
6.1. Illustrative Financial Effects
For illustrative purposes only, the fi nancial effects of the Proposed Disposal on the (1) NTA per Share, and (2) EPS of the Group, based on the audited consolidated fi nancial statements of the Group for FY2017, are set out below.
21
6.2. NTA per Share
The effect of the Proposed Disposal on the NTA per Share of the Company is based on the most recently completed fi nancial year (i.e. FY2017), assuming that the Proposed Disposal had been effected at the end of FY2017:
Before the Proposed Disposal
After the Proposed Disposal
NTA (RMB) (11,814,430) 44,353,301
Number of issued Shares 467,926,732 467,926,732
NTA per Share (RMB cents) (2.52) 9.48
6.3. EPS
The effect of the Proposed Disposal on the EPS of the Company shown below is based on the most recently completed fi nancial year (i.e. FY2017), assuming that the Proposed Disposal had been effected at the beginning of FY2017:
Before the Proposed Disposal
After the Proposed Disposal
Loss attributable to Shareholders (RMB) 107,735,950 4,846,275
Weighted average number of Shares 467,926,732 467,926,732
Loss per Share (RMB cents) 23.02 1.04
6.4. Gain on disposal
The Proposed Disposal would amount to a gain on disposal of approximately RMB 18 million, taking into consideration of the reversal of impairment of investment in subsidiary of approximately negative RMB 14 million (after adjusting for the statutory reserve of approximately RMB 43 million) and the Consideration for the Proposed Disposal of RMB 3 million as at the date of the Agreement.
6.5. Other Financial Information
6.5.1 Based on the 3Q2018 interim fi nancial statements of the Group, the Green Energy Business, the remaining business of the Company after the Proposed Disposal, recorded an operating profi t of approximately RMB 300,000.
6.5.2 Based on the 3Q2018 interim fi nancial statements of the Group, the remaining assets and the value of such assets of the Group after the Proposed Disposal are set out below:
RMB’ 000
ASSETS
Non-current assetsGoodwill 3,383Intangible asset 8,578Property, plant and equipment 2,689Other investment 180Deferred tax assets 675
15,505
Current assetsInventories 780Trade and other receivables 3,166Other current assetsCash and cash equivalents 3,402
7,348
TOTAL ASSETS 22,853
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7. Directors’ and Substantial Shareholders’ Interests
7.1. Directors’ Interests
The interests of the Directors in Shares, as extracted from the Register of Directors’ Shareholdings and Warrant holdings, as at the Latest Practicable Date are set out below:
Number of Shares
Director Direct Interest %(1) Deemed Interest(2) %(1)
Koo Ah Seang 82,862,700 15. 65 – –Tay Wee Kwang 68,101,000 12,86 – –Soh Beng Keng 200,000 0.04 – –Loh Ji Kin – – – –Geoffrey Ng Ching Fung – – – –
Number of Warrants
Director Direct Interest %(1) Deemed Interest(2) %(1)
Koo Ah Seang 56,167,900 6. 42 – –Tay Wee Kwang 49,302,000 5.64 – –Soh Beng Keng 400,000 0.04 – –Loh Ji Kin – – – –Geoffrey Ng Ching Fung – – – –
Notes:
(1) Based on the total number of 529,412,732 issued Shares as at the Latest Practicable Date. There are no Shares held in treasury as at the Latest Practicable Date.
(2) Based on the total number of 874,367,464 issued Warrants as at the Latest Practicable Date.
(3) Deemed interest means interest determined pursuant to Section 4 of the Securities and Futures Act, Chapter 289 of Singapore.
7.2. Substantial Shareholders’ Interests
The interests of the substantial Shareholders in Shares and Warrants as at the Latest Practicable Date are set out below:
Number of Shares
Director Direct Interest %(1) Deemed Interest(2) %(1)
Koo Ah Seang 82,862,700 15. 65 – –Tay Wee Kwang 68,101,000 12.86 – –
Number of Warrants
Director Direct Interest %(1) Deemed Interest(2) %(1)
Koo Ah Seang 56,167,900 6. 42 – –Tay Wee Kwang 49,302,000 5.64 – –
Notes:
(1) Based on the total number of 529,412,732 issued Shares as at the Latest Practicable Date. There are no Shares held in treasury as at the Latest Practicable Date.
(2) Based on the total number of 8 74,367,464 issued Warrants as at the Latest Practicable Date.
(3) Deemed interest means interest determined pursuant to Section 4 of the Securities and Futures Act, Chapter 289 of Singapore.
7.3. None of the Directors or substantial Shareholders or their respective associates have any interest, direct or indirect, in the Proposed Disposal, other than through their respective shareholdings in the Company.
23
8. Directors’ Recommendation
8.1 Having considered the terms, and the rationale and benefi ts of the Proposed Disposal, the Directors are of the view that the Proposed Disposal is in the best interests of the Company and the Shareholders. Accordingly, the Directors recommend that Shareholders vote in favour of the Ordinary Resolution (as set out in the notice of EGM on page 79 of this Circular) at the EGM to be held on 29 April 2019 at 2.00 p.m. in respect of the Proposed Disposal.
8.2 In giving the above recommendation, the Directors have not had regard to any general or specifi c investment objectives, fi nancial situations, risk profi les, tax positions or particular needs or constraints of any individual Shareholder or any specifi c group of Shareholders. As different Shareholders have different investment objectives and profi les, the Directors recommend that any Shareholder who may require specifi c advice in relation to his or her investment portfolio should consult their stockbroker, bank manager, solicitor, accountant, tax adviser or other professional adviser immediately.
9. Extraordinary General Meeting
The EGM, notice of which is set out on page 79 of this Circular, will be held at 10 Anson Road, #36-05A International Plaza, Singapore 079903 on 29 April 2019 at 2.00 p.m. for the purpose of considering and, if thought fi t, passing with or without any modifi cations, the ordinary resolutions as set out in the notice of EGM.
10. Action to be Taken by Shareholders
10.1. Appointment of Proxies
If a Shareholder is unable to attend the EGM and wishes to appoint a proxy or proxies to attend, speak and vote on his behalf, he should complete, sign and return the Proxy Form enclosed with this Circular in accordance with the instructions printed thereon as soon as possible and, in any event, so as to reach the offi ce of the Company’s Share Registrar, B.A.C.S. Private Limited at 8 Robinson Road, #03-00 ASO Building, Singapore 048544, not less than 48 hours before the time appointed for the EGM.
The completion and lodgement of the Proxy Form by a Shareholder will not preclude him from attending, speaking and voting in person at the EGM in place of his proxy or proxies if he so wishes. However, any appointment of a proxy or proxies by such Shareholder shall be deemed to be revoked if the Shareholder attends the EGM in person, and in such event, the Company reserves the right to refuse to admit any person or persons appointed under the Proxy Form, to the EGM.
10.2. When Depositor regarded as Shareholder
A Depositor shall not be regarded as a Shareholder entitled to attend the EGM and to speak and vote thereat unless he is shown to have Shares entered against his name in the Depository Register, as certifi ed by CDP as at 72 hours before the time appointed for the EGM.
11. Further Information
11.1. Directors’ Service Contracts
No person is proposed to be appointed as a director of the Company in connection with the Proposed Disposal. Accordingly, no service contract is proposed to be entered into between the Company and any such person.
11.2. Consents
The Independent Valuer has given and has not withdrawn its written consent to the issue of this Circular and the inclusion of its name, the Valuation Report and all references thereto, in the form and context in which they appear in this Circular, and to act in such capacity in relation to this Circular.
24
12. Inspection of Documents
Copies of the following documents are available for inspection at the registered offi ce of the Company at 8 Robinson Road, #03-00 ASO Building, Singapore 048544 during normal business hours for three months from the date of the Announcement:
(a) the Constitution of the Company;
(b) the Annual Report 2017;
(c) the Agreement;
(d) the Valuation Report; and
(e) the letter of consent to the inclusion of their name, the Valuation Report and all references in the Circular from the Independent Valuer.
13. Directors’ Responsibility Statement
Save for the Valuation Report, the Directors collectively and individually accept full responsibility for the accuracy of the information given in this Circular and confi rm after making all reasonable enquiries that, to the best of their knowledge and belief, this Circular constitutes full and true disclosure of all material facts about the Proposed Disposal, the Company and its subsidiaries, and the Directors are not aware of any facts the omission of which would make any statement in this Circular misleading. Where information in this Circular has been extracted from published or otherwise publicly available sources or obtained from a named source (including the Valuation Report), the sole responsibility of the Directors has been to ensure that such information has been accurately and correctly extracted from those sources and/or reproduced in this Circular in its proper form and context.
Yours faithfully for and on behalf ofthe Board of Directors ofBM MOBILITY LTD.
Tay Wee KwangExecutive Director and Chief Executive Offi cer
25
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obili
tyLt
d(“BMMobility”
orth
e“Client”)
tope
rform
anbu
sine
ssva
luat
ion
exer
cise
toes
timat
eth
eM
arke
tV
alue
rang
eof
the
100%
shar
eca
pita
lin
Zhih
e(F
ujia
n)Te
chno
logy
Co.
,Lt
d.(“Zhihe
Technology”)
and
Ziw
o(F
ujia
n)Im
port
&E
xpor
tTra
ding
Co.
,Ltd
.(“ZiwoImpEx”)
(col
lect
ivel
y,th
e“Z
iwoGroup”
orth
e“Companies”).
This
enga
gem
enti
sgo
vern
edby
the
term
san
dre
fere
nce
inou
reng
agem
entl
ette
r(R
efer
ence
num
ber:
BM
M.B
002)
date
d20
Sep
tem
ber2
018.
This
enga
gem
ent
has
been
unde
rtake
nin
acco
rdan
cew
ithth
ere
quire
men
tsof
Inte
rnat
iona
lVa
luat
ion
Sta
ndar
d(“IVS”)
2017
publ
ishe
dby
the
Inte
rnat
iona
lV
alua
tion
Sta
ndar
dsC
ounc
il(“IVSC”).
This
enga
gem
enth
asbe
enun
derta
ken
unde
rMar
ketV
alue
basi
s.M
arke
tVal
ueis
defin
edby
the
IVS
Cas“the
estim
ated
amou
ntfo
rw
hich
anas
set
orlia
bilit
ysh
ould
exch
ange
onth
eva
luat
ion
date
betw
een
aw
illing
buye
ran
da
willi
ngse
ller
inan
arm’s
leng
thtra
nsac
tion,
afte
rpr
oper
mar
ketin
gan
dw
here
the
parti
esha
dea
chac
ted
know
ledg
eabl
y,pr
uden
tlyan
dw
ithou
tco
mpu
lsio
n.”
Maz
ars
LLP
135
Cec
il S
treet
#10
-01
MY
P P
laza
Sin
gapo
re 0
6953
6
Tel:
+65
6224
402
2
Fax:
+65
622
5 39
74
The
follo
win
gre
port
was
prep
ared
sole
lyfo
rre
fere
nce
purp
ose
inre
latio
nto
BMMobility’s
cont
empl
ated
disp
osal
ofth
een
tire
issu
edan
dpa
id-u
psh
are
capi
tal
ofZh
ihe
Tech
nolo
gyan
dZi
wo
ImpE
x(th
e“ProposedDisposal”)
and
shou
ldno
tbe
relie
don
for
any
othe
rpu
rpos
es.
This
repo
rtsh
ould
not
bequ
oted
,re
ferre
dto
orsh
own
toan
yot
her
parti
esw
ithou
tMazars’
prio
rco
nsen
tin
writ
ing.
Our
valu
atio
nan
alys
isis
base
don
finan
cial
stat
emen
ts,m
anag
emen
tacc
ount
san
dot
her
inpu
tspr
ovid
edby
the
man
agem
ento
fBM
Mob
ility
(the“Management”)
.We
have
nota
udite
d,re
view
ed,
orco
mpi
led
the
finan
cial
info
rmat
ion
prov
ided
tous
and,
acco
rdin
gly,
we
expr
ess
noau
dito
pini
onor
any
othe
rfo
rmof
assu
ranc
eon
this
info
rmat
ion.
The
accu
racy
ofsu
chin
form
atio
nis
the
sole
resp
onsi
bilit
yof
the
Man
agem
ent.
Our
conc
lusi
onof
valu
eis
cond
ition
alup
onth
eco
mpl
eten
ess,
accu
racy
and
fair
pres
enta
tion
ofth
ein
form
atio
nfro
mth
eM
anag
emen
t.
We
draw
your
atte
ntio
nto
App
endi
x1
ofth
isre
port,
whi
chse
tsou
tthe
scop
ean
dlim
itatio
nsof
our
wor
k.If
you
requ
irean
ycl
arifi
catio
nor
furth
erin
form
atio
n,pl
ease
cont
actM
r.La
iKen
gW
ei(+
6565
7297
88)o
rMr.
Huy
Ngu
yen
(+65
6591
9247
).
You
rssi
ncer
ely,
Maz
ars
LLP
PR
IVA
TE &
CO
NFI
DE
NTI
AL
2
BU
SIN
ES
S V
ALU
ATI
ON
RE
PO
RT
BM
M.B
002
31 D
EC
EM
BE
R 2
018
27
Tabl
e of
con
tent
s
PR
IVA
TE &
CO
NFI
DE
NTI
AL
BU
SIN
ES
S V
ALU
ATI
ON
RE
PO
RT
BM
M.B
002
31 D
EC
EM
BE
R 2
018
3
GLO
SSAR
Y
EXEC
UTI
VE S
UM
MAR
Y
OVE
RVI
EW O
F TH
E C
OM
PAN
IES
IND
UST
RY
OU
TLO
OK
VALU
ATI
ON
MET
HO
DO
LOG
IES
VALU
ATI
ON
OF
ZIW
O G
RO
UP
APPE
ND
IX 1
–EN
GAG
EMEN
T O
VER
VIEW
APPE
ND
IX 2
–LI
STED
CO
MPA
RA
BLE
CO
MPA
NIE
S
APPE
ND
IX 3
–PI
CTU
RES
TAK
EN D
UR
ING
TH
E SI
TE V
ISIT
APPE
ND
IX 4
–D
OC
UM
ENTS
PR
OVI
DED
DU
RIN
G T
HE
SITE
VIS
IT
1 2 3 4 5 6
4 6 9 12 18 20 28 33 37 43
28
Tabl
e of
con
tent
s
PR
IVA
TE &
CO
NFI
DE
NTI
AL
BU
SIN
ES
S V
ALU
ATI
ON
RE
PO
RT
BM
M.B
002
31 D
EC
EM
BE
R 2
018
4
GLO
SSAR
Y
EXEC
UTI
VE S
UM
MAR
Y
OVE
RVI
EW O
F TH
E C
OM
PAN
IES
IND
UST
RY
OU
TLO
OK
VALU
ATIO
N M
ETH
OD
OLO
GIE
S
VALU
ATIO
N O
F ZI
WO
GR
OU
P
APPE
ND
IX 1
–EN
GAG
EMEN
T O
VER
VIEW
APPE
ND
IX 2
–LI
STED
CO
MPA
RAB
LE C
OM
PAN
IES
APPE
ND
IX 3
–PI
CTU
RES
TAK
EN D
UR
ING
TH
E SI
TE V
ISIT
APPE
ND
IX 4
–D
OC
UM
ENTS
PR
OVI
DED
DU
RIN
G T
HE
SITE
VIS
IT
1 2 3 4 5 6
4 6 9 12 18 20 28 33 37 43
29
PR
IVA
TE &
CO
NFI
DE
NTI
AL
5
BM
Mob
ility
BM
Mob
ility
Ltd,
form
erly
know
nas
Ziw
oH
oldi
ngs
Ltd.
orth
eC
lient
CA
GR
Com
poun
dA
nnua
lGro
wth
Rat
e
CA
PM
Cap
italA
sset
Pric
ing
Mod
el
the
Com
pani
esZh
ihe
Tech
nolo
gyan
dZi
wo
ImpE
xor
the
Ziw
oG
roup
DC
FD
isco
unte
dC
ash
Flow
DLO
CD
isco
untf
orLa
ckof
Con
trol
DLO
MD
isco
untf
orLa
ckof
Mar
keta
bilit
y
EB
ITE
arni
ngs
Bef
ore
Inte
rest
san
dTa
xes
EB
ITD
AE
arni
ngs
Bef
ore
Inte
rest
s,Ta
xes,
Dep
reci
atio
nan
dA
mor
tisat
ion
EB
TE
arni
ngs
Bef
ore
Tax
EV
Ent
erpr
ise
Val
ue
FCFF
Free
Cas
hFl
owto
Firm
FYFi
nanc
ialy
eare
ndin
g31
Dec
embe
r
IVS
Inte
rnat
iona
lVal
uatio
nS
tand
ards
IVS
CIn
tern
atio
nalV
alua
tion
Sta
ndar
dsC
ounc
il
kTh
ousa
nds
mM
illion
s
Man
agem
ent
The
man
agem
ento
fBM
Mob
ility
and/
orZi
wo
Gro
up
Mar
ketV
alue
The
estim
ated
amou
ntfo
rw
hich
anas
seto
rlia
bilit
ysh
ould
exch
ange
onth
eva
luat
ion
date
betw
een
aw
illing
buye
rand
aw
illin
gse
lleri
nan
arm’s
leng
thtra
nsac
tion,
afte
rpro
perm
arke
ting
and
whe
reth
epa
rties
had
each
acte
dkn
owle
dgea
bly,
prud
ently
and
with
outc
ompu
lsio
n.
NA
VN
etA
sset
Val
ue
NB
VN
etB
ook
Val
ue
NTA
Net
Tan
gibl
e A
sset
PA
TP
rofit
Afte
r Tax
PB
TP
rofit
Bef
ore
Tax
the
Pro
pose
d D
ispo
sal
The
prop
osed
dis
posa
l of t
he e
ntire
issu
ed a
nd p
aid-
up s
hare
ca
pita
l of Z
hihe
Tec
hnol
ogy
and
Ziw
o Im
pEx.
RM
BR
enm
inbi
, the
offi
cial
cur
renc
y of
the
Peo
ple'
s R
epub
lic o
f Chi
na
TTM
Trai
ling-
twel
ve-m
onth
Val
uatio
n D
ate
30 S
epte
mbe
r 201
8
WA
CC
Wei
ghte
d A
vera
ge C
ost o
f Cap
ital
Yix
iang
Qua
nzho
u Y
ixia
ng T
extil
e C
o., L
td
Y-o
-yY
ear-o
n-ye
ar
Zhih
e Te
chno
logy
Zhih
e(F
ujia
n) T
echn
olog
y C
o., L
td.
Ziw
oH
oldi
ngs
Ziw
o H
oldi
ngs
Ltd
Ziw
oIm
pEx
Ziw
o (F
ujia
n) Im
port
& Ex
port
Trad
ing
Co.
, Ltd
.
GLO
SS
AR
Y
1. G
LOS
SA
RY
BU
SIN
ES
S V
ALU
ATI
ON
RE
PO
RT
BM
M.B
002
31 D
EC
EM
BE
R 2
018
30
Tabl
e of
con
tent
s
PR
IVA
TE &
CO
NFI
DE
NTI
AL
BU
SIN
ES
S V
ALU
ATI
ON
RE
PO
RT
BM
M.B
002
31 D
EC
EM
BE
R 2
018
6
GLO
SSA
RY
EXEC
UTI
VE S
UM
MAR
Y
OVE
RVI
EW O
F TH
E C
OM
PAN
IES
IND
UST
RY
OU
TLO
OK
VALU
ATIO
N M
ETH
OD
OLO
GIE
S
VALU
ATIO
N O
F ZI
WO
GR
OU
P
APPE
ND
IX 1
–EN
GAG
EMEN
T O
VER
VIEW
APPE
ND
IX 2
–LI
STED
CO
MPA
RAB
LE C
OM
PAN
IES
APPE
ND
IX 3
–PI
CTU
RES
TAK
EN D
UR
ING
TH
E SI
TE V
ISIT
APPE
ND
IX 4
–D
OC
UM
ENTS
PR
OVI
DED
DU
RIN
G T
HE
SITE
VIS
IT
1 2 3 4 5 6
4 6 9 12 18 20 28 33 37 43
31
THE
SUB
JEC
T A
SSET
The
subj
ecta
sset
ofth
isva
luat
ion
exer
cise
isth
e10
0%sh
are
capi
tali
nZh
ihe
Tech
nolo
gyan
dZi
wo
ImpE
x(“Z
iwoGroup”o
rthe“Companies”).
Zhih
eTe
chno
logy
isa
limite
dlia
bilit
yco
mpa
nyin
corp
orat
edin
the
PR
Con
11A
ugus
t200
3.Its
prin
cipa
lact
iviti
esar
ein
rese
arch
and
deve
lopm
ent,
man
ufac
ture
and
sale
ofte
ryle
nefil
amen
tyar
n,sa
ndw
ich
mes
hfa
bric
,SBR
and
othe
rfo
amed
mat
eria
ls.Z
hihe
Tech
nolo
gyha
son
ew
holly
-ow
ned
subs
idia
ry,Q
uanz
hou
Yix
iang
Text
ileC
o.,L
td(“Yixiang”),
whi
chis
curre
ntly
dorm
ant.
Ziw
oIm
pEx
isa
limite
dlia
bilit
yco
mpa
nyin
corp
orat
edin
the
PR
Con
7A
pril
2010
.Its
prin
cipa
lact
iviti
esar
etra
ding
info
amed
mat
eria
ls,
text
ile,
spor
tsan
dsp
orts
acce
ssor
ies,
garm
ents
and
foot
wea
rs.
We
unde
rsta
ndth
atth
eZi
wo
Gro
upha
sbe
ensu
fferin
glo
sses
sinc
e20
15an
dsu
bseq
uent
lyce
ased
oper
atio
nsin
Q1
FY20
18.
The
Ziw
oG
roup
did
not
reco
rdan
yre
venu
ein
1H20
18.A
tthe
Ext
raor
dina
ryG
ener
alM
eetin
g(“EGM”)
on2
Janu
ary
2018
,the
shar
ehol
ders
ofB
MM
obilit
yap
prov
edth
edi
vers
ifica
tion
ofits
core
busi
ness
into
gree
nen
ergy
busi
ness
.
VALU
ATI
ON
M
ETH
OD
OLO
GY
We
have
cons
ider
edal
lthr
eege
nera
lly-a
ccep
ted
valu
atio
nap
proa
ches
,nam
ely
the
Mar
ketA
ppro
ach,
the
Inco
me
App
roac
han
dth
eC
ostA
ppro
ach.
As
Ziw
oG
roup
has
ceas
edop
erat
ions
inQ
1FY
2018
and
isno
texp
ecte
dto
re-c
omm
ence
inth
ene
arfu
ture
,Inc
ome
App
roac
han
dM
arke
tApp
roac
har
eco
nsid
ered
tobe
inap
prop
riate
.As
such
,w
eha
vere
lied
onth
eS
umm
atio
nM
etho
d,a
valu
atio
nm
etho
dun
der
the
Cos
tA
ppro
ach
toes
timat
eth
eM
arke
tV
alue
rang
eof
the
100%
shar
eca
pita
lin
Ziw
oG
roup
.
Ple
ase
refe
rto
Sec
tion
5–
Val
uatio
nM
etho
dolo
gies
form
ore
deta
iled
disc
ussi
ons
onth
ese
lect
ion
ofva
luat
ion
met
hodo
logy
.
EXE
CU
TIV
E S
UM
MA
RY
PR
IVA
TE &
CO
NFI
DE
NTI
AL
7
2. E
XEC
UTI
VE
SU
MM
AR
Y
BU
SIN
ES
S V
ALU
ATI
ON
RE
PO
RT
BM
M.B
002
31 D
EC
EM
BE
R 2
018
Gro
up S
truc
ture
BM
Mob
ility
Zhih
eTe
chno
logy
Ziw
oIm
pEX
Esta
rIn
vest
men
ts
Pte
Ltd
Yixi
ang
(dor
man
t)G
REE
N E
NER
GY
BU
SIN
ESS
THE
ZIW
O G
RO
UP
100%
100%
100%
32
CO
NC
LUSI
ON
OF
VALU
E
Bas
edon
the
anal
yses
and
assu
mpt
ions
deta
iled
inth
ela
ters
ectio
nsof
this
repo
rt,th
eto
talM
arke
tVal
ueof
the
asse
tsis
appr
oxim
atel
yR
MB
10.7
mill
ion,
whi
chis
low
erth
anth
eto
talM
arke
tVal
ueof
the
liabi
litie
sof
RM
B27
.0m
illion
,res
ultin
gin
netl
iabi
litie
sof
RM
B16
.3m
illio
nas
at30
Sep
tem
ber2
018
(the“ValuationDate”).
Via
the
Sum
mat
ion
Met
hod,
asth
ere
sulti
ngM
arke
tVal
ueof
the
neta
sset
sis
low
erth
anze
ro,t
heM
arke
tVal
ueof
the
100%
equi
tyin
tere
stin
Ziw
oG
roup
isco
mpu
ted
tobe
nila
sat
Valu
atio
nD
ate.
The
deta
iled
wor
king
sar
ese
tout
inS
ectio
n6–
Val
uatio
nof
Ziw
oG
roup
.
DEP
END
ENC
IES
Our
conc
lusi
ons
are
prim
arily
depe
nden
ton
the
follo
win
gas
sum
ptio
ns:
Ziw
oG
roup
will
noth
ave
suffi
cien
tliq
uidi
tyan
dfu
ndin
gto
re-c
omm
ence
itsop
erat
ions
fort
hefo
rese
eabl
efu
ture
.
Ther
ew
illbe
noun
fore
seen
chan
ges
inth
em
acro
econ
omic
cond
ition
s,te
chno
logy
and
gove
rnm
entp
olic
ies
fort
hefo
rese
eabl
efu
ture
.
The
gove
rnm
ent
will
not
gran
tth
ene
cess
ary
appr
oval
sfo
rZi
wo
Gro
upto
sell
the
land
use
right
san
dth
ebu
ildin
gslo
cate
dat
Wes
tern
Sec
tion,
Qin
gmen
gZo
ne,
Eco
nom
yan
dTe
chno
logy
Dev
elop
men
tZon
e,Q
uanz
hou
City
,Fuj
ian
Pro
vinc
e,th
eP
RC
.
Ziw
oG
roup
will
notb
eab
leto
reco
vert
hede
posi
tpai
din
2015
toB
eijin
gC
hong
lee
Mac
hine
ryE
ngin
eerin
gC
o.Lt
dfo
rthe
cons
truct
ion
ofa
new
prod
uctio
nlin
e.
The
impa
ired
trade
rece
ivab
les
will
notb
ere
cove
rabl
e.
The
othe
rlia
bilit
ies
ofap
prox
imat
ely
RM
B20
.4m
illion
,com
pris
ing
pers
onal
adva
nces
from
the
prev
ious
dire
ctor
and
prov
isio
nsfo
rret
renc
hmen
tofs
taff,
will
have
tobe
paid
.
Ther
ear
eno
mat
eria
lund
iscl
osed
orco
ntin
gent
asse
tsan
dlia
bilit
ies
that
have
notb
een
brou
ghtt
oou
ratte
ntio
ndu
ring
the
cour
seof
the
enga
gem
ent.
EXE
CU
TIV
E S
UM
MA
RY
PR
IVA
TE &
CO
NFI
DE
NTI
AL
8
2. E
XEC
UTI
VE
SU
MM
AR
Y
BU
SIN
ES
S V
ALU
ATI
ON
RE
PO
RT
BM
M.B
002
31 D
EC
EM
BE
R 2
018
SUM
MAT
ION
MET
HO
D(R
MB'
000)
30-S
ep-1
8
Trad
e re
ceiva
bles
8,69
4
O
ther
cur
rent
ass
ets
1,18
7
P
P&
E82
2
Land
use
righ
t-
To
tal a
sset
s10
,703
Trad
e pa
yabl
es(2
64)
S
alar
y P
ayab
les
(2,3
89)
Oth
er c
urre
nt li
abili
ties
(24,
348)
Ne
t Lia
bilit
ies
(16,
299)
S
ourc
e: M
anag
emen
t and
Maz
ars'
com
puta
tions
33
Tabl
e of
con
tent
s
PR
IVA
TE &
CO
NFI
DE
NTI
AL
BU
SIN
ES
S V
ALU
ATI
ON
RE
PO
RT
BM
M.B
002
31 D
EC
EM
BE
R 2
018
9
GLO
SSA
RY
EXEC
UTI
VE S
UM
MAR
Y
OVE
RVI
EW O
F TH
E C
OM
PAN
IES
Ope
ratio
n O
verv
iew
SWO
T An
alys
is
IND
UST
RY
OU
TLO
OK
VALU
ATIO
N M
ETH
OD
OLO
GIE
S
VALU
ATIO
N O
F ZI
WO
GR
OU
P
APPE
ND
IX 1
–EN
GAG
EMEN
T O
VER
VIEW
APPE
ND
IX 2
–LI
STED
CO
MPA
RAB
LE C
OM
PAN
IES
APPE
ND
IX 3
–PI
CTU
RES
TAK
EN D
UR
ING
TH
E SI
TE V
ISIT
APPE
ND
IX 4
–D
OC
UM
ENTS
PR
OVI
DED
DU
RIN
G T
HE
SITE
VIS
IT
1 2 3 4 5 6
4 6 9 12 18 20 28 33 37 43
3.1
3.2
10 11
34
OP
ER
ATIO
N O
VE
RV
IEW
BA
CK
GR
OU
ND
List
edon
the
Mai
nboa
rdof
the
SG
X,B
MM
obili
ty,
form
erly
know
nas
Ziw
oH
oldi
ngs
Ltd
(“ZiwoHoldings”),
was
enga
ged
inth
ere
sear
chan
dde
velo
pmen
t,m
anuf
actu
rean
dsa
leof
styr
ene
buta
dien
eru
bber
and
othe
rfo
amm
ater
ials
prim
arily
inth
ePeople’s
Rep
ublic
ofC
hina
.
At
the
EG
Mon
2Ja
nuar
y20
18,
the
shar
ehol
ders
ofZi
wo
Hol
ding
sap
prov
edth
edi
vers
ifica
tion
ofits
core
busi
ness
into
gree
nen
ergy
busi
ness
and
the
chan
geof
com
pany
nam
efro
m“Ziwo
Hol
ding
sLtd”
to“BM
Mob
ilityLtd”
.
Zhih
eTe
chno
logy
isa
limite
dlia
bilit
yco
mpa
nyin
corp
orat
edin
the
PR
Con
11A
ugus
t200
3.Its
prin
cipa
lac
tiviti
esar
ein
rese
arch
and
deve
lopm
ent,
man
ufac
ture
and
sale
ofte
ryle
nefil
amen
tyar
n,sa
ndw
ich
mes
hfa
bric
,SB
Ran
dot
herf
oam
edm
ater
ials
.Zhi
heTe
chno
logy
has
one
who
lly-o
wne
dsu
bsid
iary
,Q
uanz
hou
Yix
iang
Text
ileC
o.,
Ltd(“Yixiang”),
whi
chis
curre
ntly
dorm
ant.
Ziw
oIm
pEx
isa
limite
dlia
bilit
yco
mpa
nyin
corp
orat
edin
the
PR
Con
7A
pril
2010
.Its
prin
cipa
lac
tiviti
esar
etra
ding
info
amed
mat
eria
ls,
text
ile,
spor
tsan
dsp
orts
acce
ssor
ies,
garm
ents
and
foot
wea
rs.
PRO
DU
CTS
The
mai
npr
oduc
tsof
the
Ziw
oG
roup
com
pris
e:
Styr
ene
But
adin
ene
Rub
ber(“SBR”)
and
othe
rfoa
med
mat
eria
ls;
30D
tery
lene
filam
enty
arn(“3
0DTFY”);
and
Sand
wic
hm
esh
fabr
ic(“SMF”).
The
abov
epr
oduc
tsar
eus
edas
raw
mat
eria
lsin
the
prod
uctio
nof
lifes
tyle
cons
umer
prod
ucts
,fur
nitu
reup
hols
tery
and
auto
mob
ilein
terio
rlin
ing.
The
Ziw
oG
roup
oper
ated
apr
oduc
tion
plan
tlo
cate
dat
Wes
tern
Sec
tion,
Qin
gmen
gZo
ne,
Eco
nom
yan
dTe
chno
logy
Dev
elop
men
tZon
e,Q
uanz
hou
City
,Fuj
ian
Pro
vinc
e,th
eP
RC
.
PRO
DU
CT
QU
ALI
TYIS
SUES
On
14A
ugus
t20
15,
Ziw
oH
oldi
ngs
anno
unce
dth
atth
eC
ompa
nies
face
dpr
oduc
tde
fect
clai
ms
ofR
MB
38.1
milli
onpe
rtain
ing
tode
fect
ive
filam
ent
yarn
and
sand
wic
hm
esh
sold
.Te
stin
gre
sults
and
inte
rnal
inve
stig
atio
ntra
ced
the
sour
ceof
the
prob
lem
tofa
ulty
mac
hine
ryus
edin
the
prod
uctio
nof
both
prod
ucts
.
Sub
sequ
ently
on6
Oct
ober
2015
,Zi
wo
Hol
ding
san
noun
ced
prod
uct
defe
ctcl
aim
sfro
man
addi
tiona
l3cu
stom
ers
fort
hesa
me
batc
hof
faul
typr
oduc
ts.T
heto
talc
ompe
nsat
ion
paid
toth
ese
3cu
stom
ers
amou
nted
toR
MB
95.6
milli
on.
DIS
CO
NTI
NU
EDPR
OD
UC
TS
On
14A
ugus
t201
5,Zi
wo
Hol
ding
san
noun
ced
the
deci
sion
tocl
ose
the
30D
TFY
prod
uctio
nlin
eco
nsid
erin
g(a
)the
inte
nse
com
petit
ion;
(b)3
0DTF
Yre
nder
edob
sole
teby
war
ped
yarn
;an
d(c
)the
nece
ssar
yad
ditio
nali
nves
tmen
tin
prod
uctio
nfa
cilit
y.
Sub
sequ
ently
inFY
2016
,Zi
wo
Hol
ding
san
noun
ced
the
deci
sion
todi
scon
tinue
SM
Fpr
oduc
tsdu
eto
low
dem
and.
The
prod
uctio
nof
SB
Ran
dot
herf
oam
edm
ater
ials
ceas
edin
Q1
FY20
18.
PR
IVA
TE &
CO
NFI
DE
NTI
AL
10
3. O
VE
RV
IEW
OF
THE
CO
MP
AN
IES
3.1.
OP
ER
ATI
ON
OV
ER
VIE
W
BU
SIN
ES
S V
ALU
ATI
ON
RE
PO
RT
BM
M.B
002
31 D
EC
EM
BE
R 2
018
Gro
up S
truc
ture
BM
M
obili
ty
Zhih
eTe
chno
logy
Ziw
oIm
pEX
Esta
rIn
vest
men
ts
Pte
Ltd
Yixi
ang
(dor
man
t)G
REE
N E
NER
GY
BU
SIN
ESS
THE
ZIW
O G
RO
UP
100%
100%
100%
35
Mad
ein
Chi
na20
25:
The
Chi
nago
vern
men
tis
plan
ning
tom
ove
upth
eva
lue
chai
n,fo
cusi
ngon
inno
vatio
nan
dhi
gh-v
alue
prod
ucts
.
This
repr
esen
tsan
oppo
rtuni
tyfo
rth
eC
ompa
nies
tofo
cus
onR
&D
,au
tom
atio
nan
dde
velo
ping
new
high
-val
uepr
oduc
ts.H
owev
er,t
his
ison
lypo
ssib
leif
ther
eis
suffi
cien
tca
pita
l.Fu
rther
mor
e,de
velo
ping
new
prod
ucts
istim
e-co
nsum
ing
and
the
succ
ess
ishi
ghly
unce
rtain
.
Long
trac
kre
cord
:Zh
ihe
Tech
nolo
gyw
ases
tabl
ishe
din
2005
and
star
ted
tola
unch
itspr
oduc
tsin
2006
.
Cus
tom
erre
latio
nshi
p:vo
ted
ason
eof
the
top
selle
rsof
foam
edS
BR
and
draw
nte
xtur
edte
ryle
nesi
ngle
filam
enty
arn
inth
eP
RC
in20
07an
d20
08.
Typi
cally
,lo
ngtr
ack
reco
rdan
dcu
stom
erre
latio
nshi
par
eve
ryim
porta
ntfo
rra
wm
ater
ials
uppl
iers
.H
owev
er,
thes
ead
vant
ages
have
been
dam
aged
byth
ede
fect
ive
prod
ucts
in20
15w
here
the
Com
pani
esha
dto
pay
ato
talo
fRM
B13
3.7
milli
onto
4ke
ycu
stom
ers
asou
t-of-c
ourt
settl
emen
t.
Subs
titut
epr
oduc
ts:i
n20
15,t
heC
ompa
nies
had
toce
ase
prod
uctio
nof
30D
TFY
asit
was
rend
ered
obso
lete
byw
arpe
dya
rn.
Ris
ing
labo
urco
sts:
Labo
urco
sts
inC
hina
have
risen
five-
fold
inth
ela
stde
cade
sinc
e20
05,
and
15fo
ldsi
nce
1995
base
don
info
rmat
ion
from
the
Eco
nom
ist
Inte
lligen
ceU
nit.
Ple
ase
refe
rto
Sec
tion
4–
Indu
stry
Out
look
for
mor
ein
form
atio
non
labo
urco
sts.
Trad
ew
arw
ithth
eU
S:To
geth
erw
ithris
ing
labo
urco
sts,
the
high
impo
rtta
riff
for
Chi
nese
good
sha
veca
used
maj
orm
anuf
actu
rers
tosh
iftpr
oduc
tions
toot
her
coun
tries
.Ple
ase
refe
rto
Sec
tion
4–
Indu
stry
Out
look
form
ore
info
rmat
ion.
Low
prod
uct
diffe
rent
iatio
n:th
epr
oduc
tsof
the
Com
pani
esar
era
wm
ater
ialf
orth
epr
oduc
tion
ofsh
oes
and
appa
rels
.Th
ese
prod
ucts
carry
nobr
andi
ngor
mar
ksto
diffe
rent
iate
them
from
the
com
petin
gpr
oduc
ts.T
hem
anuf
actu
rers
can
freel
ysw
itch
toa
diffe
rent
supp
lier.
Low
barg
aini
ngpo
wer
:th
eC
ompa
nies
dono
tha
vem
uch
barg
aini
ngpo
wer
with
itscu
stom
ers.
From
FY20
15to
FY20
17,t
heC
ompa
nies
have
toke
epcu
tting
pric
esto
sell
itsin
vent
ory,
lead
ing
tode
clin
ing
gros
spr
ofit
mar
gin.
Obs
olet
em
achi
nery
:de
fect
ive
mac
hine
ryw
ere
foun
dto
beth
eca
use
ofth
elo
wqu
ality
prod
ucts
.
Low
finan
cial
supp
ort:
the
Com
pani
esdo
noth
ave
the
nece
ssar
yca
pita
lto
upgr
ade
itsm
achi
nery
and
relo
cate
itspr
oduc
tion
plan
tto
low
erco
stco
untri
es.
SW
OT
AN
ALY
SIS
PR
IVA
TE &
CO
NFI
DE
NTI
AL
11
3. O
VE
RV
IEW
OF
THE
CO
MP
AN
IES
3.2.
SW
OT
AN
ALY
SIS
BU
SIN
ES
S V
ALU
ATI
ON
RE
PO
RT
BM
M.B
002
31 D
EC
EM
BE
R 2
018
Stre
ngth
sW
eakn
esse
s
Opp
ortu
nitie
sTh
reat
s
36
Tabl
e of
con
tent
s
PR
IVA
TE &
CO
NFI
DE
NTI
AL
BU
SIN
ES
S V
ALU
ATI
ON
RE
PO
RT
BM
M.B
002
31 D
EC
EM
BE
R 2
018
12
GLO
SSA
RY
EXEC
UTI
VE S
UM
MAR
Y
OVE
RVI
EW O
F TH
E C
OM
PAN
IES
IND
UST
RY
OU
TLO
OK
Mac
roec
omon
ic F
acto
rs
Con
clus
ion
VALU
ATIO
N M
ETH
OD
OLO
GIE
S
VALU
ATIO
N O
F ZI
WO
GR
OU
P
APPE
ND
IX 1
–EN
GAG
EMEN
T O
VER
VIEW
APPE
ND
IX 2
–LI
STED
CO
MPA
RAB
LE C
OM
PAN
IES
APPE
ND
IX 3
–PI
CTU
RES
TAK
EN D
UR
ING
TH
E SI
TE V
ISIT
APPE
ND
IX 4
–D
OC
UM
ENTS
PR
OVI
DED
DU
RIN
G T
HE
SITE
VIS
IT
1 2 3 4 5 6
4 6 9 12 18 20 28 33 37 43
4.1
4.2
13 17
37
SLO
WIN
GG
DP
GR
OW
TH
Sin
ceth
e19
80s,
with
econ
omic
refo
rms
and
trade
liber
alis
atio
n,C
hina
has
cons
iste
ntly
been
amon
gth
eworld’s
fast
estg
row
ing
econ
omy.
How
ever
,asChina’s
econ
omy
mat
ures
,its
real
GD
Pgr
owth
rate
has
slow
edsi
gnifi
cant
lyfro
m14
.2%
in20
07to
6.9%
in20
17.
IMF
expe
ctsChina’s
GD
Pgr
owth
rate
tosl
owev
enfu
rther
to5.
5%in
2023
.
Sou
rce:
IMF
MA
CR
OE
CO
MO
NIC
FA
CTO
RS
SLO
WIN
GG
RO
WTH
OF
THE
MA
NU
FAC
TUR
ING
SEC
TOR
Muc
hofChina’s
grow
thin
the
rece
ntde
cade
sca
nbe
attri
bute
dto
indu
stria
lisat
ion
and
the
rise
ofth
em
anuf
actu
ring
sect
or.L
arge
MN
Cs
mov
edth
eirm
anuf
actu
ring
faci
litie
sto
Chi
nato
take
adva
ntag
eof
the
low
labo
urco
sts.
Att
hesa
me
time,
farm
ers
mov
edfro
mru
rala
reas
toth
eci
ties
tow
ork
infa
ctor
ies,
addi
ngto
ala
rge
pool
ofch
eap
and
read
ily-a
vaila
ble
wor
kfor
ce,
keep
ing
the
labo
urco
sts
low
.
How
ever
,th
em
anuf
actu
ring
sect
or,
once
am
ajor
engi
neof
grow
thfo
rC
hina
,is
stut
terin
gan
dis
drag
ging
dow
nov
eral
lgro
wth
.
Sou
rce:
Nat
iona
lBur
eau
ofS
tatis
tics
ofC
hina
The
mai
nch
alle
nges
ofth
em
anuf
actu
ring
sect
orin
clud
e(a
)sh
rinki
ngan
dag
ing
wor
kfor
ce;
(b)
risin
gla
bour
cost
san
d(c
)th
etra
dew
arw
ithth
eU
Sca
usin
ghi
gher
impo
rtta
riffs
for
Chi
nese
good
s.
PR
IVA
TE &
CO
NFI
DE
NTI
AL
13
4. IN
DU
STR
Y O
UTL
OO
K4.
1. M
AC
RO
EC
OM
ON
IC F
AC
TOR
S
BU
SIN
ES
S V
ALU
ATI
ON
RE
PO
RT
BM
M.B
002
31 D
EC
EM
BE
R 2
018
0%2%4%6%8%10%
12%
14%
16%
199719981999200020012002200320042005200620072008200920102011201220132014201520162017201820192020202120222023
Chi
na G
DP
grow
th e
xpec
ted
to s
low
eve
n fu
rthe
r1.
Rea
l GD
P gr
owth
has
bee
n de
clin
ing
sinc
e 20
102.
Rea
l GD
P gr
owth
fore
cast
ed to
kee
p de
clin
ing
to 5
.5%
by
2023
0%5%10%
15%
20%
25%
Man
ufac
turin
gSe
ctor
drag
ging
dow
nov
eral
lGD
Pgr
owth
Man
ufac
turin
gse
ctor
grow
thdi
pped
unde
rov
eral
lGD
Pgr
owth
rate
in20
12an
dha
sbe
ena
drag
ongr
owth
ever
sinc
e
38
SHR
INK
ING
AN
DA
GIN
GLA
BO
UR
FOR
CE
Chi
nais
now
faci
ngse
rious
stru
ctur
alch
ange
sin
itsde
mog
raph
y.Th
e“one
-chi
ldpolicy”
has
resu
lted
ina
rapi
dly-
agin
gpo
pula
tion
and
ash
rinki
ngla
bour
forc
e.
Sou
rce:
Nat
iona
lBur
eau
ofS
tatis
tics
ofC
hina
Mea
nwhi
le,China’s
popu
latio
nis
agin
gra
pidl
y.Th
eE
cono
mis
tIn
tellig
ence
Uni
t(“EIU”)
expe
cts
the
shar
eof
the
youn
ger
popu
latio
n(1
5-39
year
sol
d),t
odr
opfro
m38
%of
the
tota
lpo
pula
tion
in20
13to
28%
by20
30.1
Com
paris
onbe
twee
nChina’s
age
pyra
mid
and
that
ofVi
etna
m,
Thai
land
and
Indo
nesi
ahi
ghlig
hts
the
clea
rpro
blem
ofChina’s
agin
gw
orkf
orce
.
1E
IU, S
hare
of Y
oung
er P
opul
atio
n (1
5-39
yea
rs)
in T
otal
Pop
ulat
ion,
Sha
re o
f Old
er P
opul
atio
n (6
5+ y
ears
) in
To
tal P
opul
atio
n, h
ttp://
ww
w.e
iu.c
om
MA
CR
OE
CO
MO
NIC
FA
CTO
RS
Sou
rce:
http
s://w
ww
.pop
ulat
ionp
yram
id.n
et
PR
IVA
TE &
CO
NFI
DE
NTI
AL
14
4. IN
DU
STR
Y O
UTL
OO
K4.
1. M
AC
RO
EC
OM
ON
IC F
AC
TOR
S
BU
SIN
ES
S V
ALU
ATI
ON
RE
PO
RT
BM
M.B
002
31 D
EC
EM
BE
R 2
018
2468101214161820
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
Millions
Shrin
king
Lab
our F
orce
in C
hina
1. N
umbe
r of e
mpl
oyed
per
sons
in u
rban
are
as p
eake
d in
201
4 an
d ha
s be
en d
eclin
ing
sinc
e.2.
Num
ber o
f em
ploy
ed p
erso
ns in
urb
an a
reas
, Man
ufac
turin
gpe
aked
in 2
013
and
has
been
dec
linin
g si
nce.
Sou
rce:
ww
w.p
opul
atio
npyr
amid
.net
39
RIS
ING
LAB
OU
RC
OST
S
Alo
ngw
ithChina’s
grow
thov
erth
epa
stde
cade
s,th
est
anda
rds
ofliv
ing
ofth
eci
tizen
sim
prov
ed.
How
ever
,th
isha
sal
sore
sulte
din
high
erco
stof
livin
gan
dris
ing
labo
urco
sts.
Bas
edon
info
rmat
ion
from
the
EIU
,lab
ourc
osts
inC
hina
have
risen
five-
fold
inth
ela
stde
cade
sinc
e20
05,a
nd15
fold
sinc
e19
95.
Sou
rce:
Nat
iona
lBur
eau
ofS
tatis
tics
ofC
hina
EIU
repo
rted
that
man
ufac
turin
gco
sts
inC
hina
reac
hed
US
$3.2
8/hr
in20
15,h
ighe
stam
ong
the
othe
rat
tract
ive
low
erco
stm
anuf
actu
ring
dest
inat
ions
,nam
ely
Mal
aysi
a,In
dia,
Thai
land
,In
done
sia,
and
Vie
tnam
.
MA
CR
OE
CO
MO
NIC
FA
CTO
RS
Sou
rce:
EIU
Con
cern
edw
ithth
eris
ing
man
ufac
turin
gco
sts,
som
em
ajor
shoe
mak
ers
had
anno
unce
dpl
ans
tosh
iftpr
oduc
tion
toch
eape
rco
untri
es.
Adi
das
anno
unce
din
May
2018
that
(a)
fact
orie
sin
Vie
tnam
acco
unte
dfo
r44
%of
Adi
das
foot
wea
rco
mpa
red
toju
st19
%fo
rC
hina
;an
d(b
)th
istre
ndis
expe
cted
toco
ntin
ue.2
Oth
erm
ajor
man
ufac
ture
rssu
chas
Nik
ean
dP
uma
had
anno
unce
dsi
mila
rpla
nsto
shift
thei
rpro
duct
ion
toot
herc
ount
ries.
The
risin
gco
stha
sal
soaf
fect
edth
ete
xtile
indu
stry
inC
hina
.D
ata
from
the
Wor
ldTr
ade
Org
anis
atio
nsh
ows
thatChina’s
mar
ket
shar
eby
valu
ein
the
glob
alte
xtile
and
clot
hing
indu
stry
fell
from
38.6
%in
2015
to35
.8%
in20
16.
The
Nat
iona
lBur
eau
ofS
tatis
tics
ofC
hina
repo
rted
thatChina’s
expo
rtof
text
ilepr
oduc
tsha
vebe
ende
clin
ing
sinc
e20
14at
aC
AG
Rof
-6%
.20
16w
asa
parti
cula
rlyba
dye
arfo
rC
hina
text
ilein
dust
ryw
ithex
port
decl
inin
gby
mor
eth
an10
%co
mpa
red
to20
15.
2 “Adidas
See
sO
ngoi
ngS
ourc
ing
Shi
ftfro
mC
hina
toV
ietn
am.”
Reu
ters
,9M
ay18
,ww
w.re
uter
s.co
m/a
rticl
e/us
-ad
idas
-trad
e/ad
idas
-see
s-on
goin
g-so
urci
ng-s
hift-
from
-chi
na-to
-vie
tnam
-idU
SK
BN
1IA
1DA
.
PR
IVA
TE &
CO
NFI
DE
NTI
AL
15
4. IN
DU
STR
Y O
UTL
OO
K4.
1. M
AC
RO
EC
OM
ON
IC F
AC
TOR
S
BU
SIN
ES
S V
ALU
ATI
ON
RE
PO
RT
BM
M.B
002
31 D
EC
EM
BE
R 2
018
3.28
2.78
2.60
1.96
1.72
0.49
Chi
na
Thai
land
Mal
aysi
a
Viet
nam
Indi
a
Indo
nesi
a
Man
ufac
turin
gC
osts
(USD
/hr)
in20
15M
anuf
actu
ring
cost
sin
Chi
nais
alm
ost
2tim
esth
atof
Indi
aan
dm
ore
than
6tim
esth
atof
Indo
nesi
a.
0
10,0
00
20,0
00
30,0
00
40,0
00
50,0
00
60,0
00
70,0
00
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003R
isin
g La
bour
Cos
ts1.
Ave
rage
Wag
e of
Em
ploy
ed P
erso
ns,M
anuf
actu
ring
(yua
n)in
crea
sed
alm
ost 5
tim
es fr
om 2
003
to 2
016.
2. C
ompo
und
Ann
ual G
row
th R
ate
of 1
3%
CA
GR
= 1
3%
40
TRA
DE
WA
R
Trad
ete
nsio
nsbe
twee
nth
eU
San
dC
hina
star
ted
inea
rly20
18w
ithth
eU
Sim
posi
ng30
%ta
riff
onim
port
ofso
lar
pane
lan
d20
%ta
riff
onim
port
ofw
ashi
ngm
achi
nes.
Sin
ceth
en,
tens
ions
betw
een
both
side
sha
vees
cala
ted,
resu
lting
high
erta
riffs
for
mor
eth
anU
S$2
50bi
llion
wor
thof
Chi
nese
good
san
dU
S$1
00bi
llion
wor
thof
US
good
s.
As
are
sult
ofth
etra
dew
ar,f
orei
gnco
mpa
nies
,not
ably
Adi
das,
Nik
e,D
ecke
rs,H
asbr
oan
dO
lym
pus
are
star
ting
todi
vers
ifyth
eir
supp
lych
ain
and
mov
ing
thei
rpr
oduc
tion
faci
litie
saw
ayfro
mC
hina
.3,4,
5
Even
Chi
nese
firm
ssu
chas
Zhej
iang
Hai
lide
New
Mat
eria
ls,L
ingl
ong
Tyre
,H1
Cor
pam
ong
othe
rsar
ere
porte
dto
bem
ovin
gth
eir
prod
uctio
naw
ayfro
mC
hina
toav
oid
the
pote
ntia
lta
riffs
.5
As
show
non
the
char
ton
the
right
,tex
tile
and
foot
wea
rcom
bine
dfo
rapp
roxi
mat
ely
8.4%
ofth
eto
tal
valu
eof
impo
rtsfro
mC
hina
from
2008
to20
17.A
nyne
wta
riffs
levi
edon
impo
rtof
text
iles
and
foot
wea
rfro
mC
hina
islik
ely
toca
use
mor
em
anuf
actu
rers
toex
itC
hina
.
3 “To
See
How
Asi
a's
Man
ufac
turin
gM
apIs
Bei
ngR
edra
wn,
Look
atN
ike
and
Adi
das.”
Qua
rtz,
10M
ay20
18,
ww
w.q
z.co
m/1
2740
44/n
ike-
and-
adid
as-a
re-s
tead
ily-d
itchi
ng-c
hina
-for-
viet
nam
-to-m
ake-
thei
r-sn
eake
rs/
4 “Trade
War
Cas
ualti
es:
Fact
orie
sS
hifti
ngO
utO
fC
hina
.”Fo
rbes
,Fo
rbes
Mag
azin
e,31
July
2018
,w
ww
.forb
es.c
om/s
ites/
kenr
apoz
a/20
18/0
7/30
/trad
e-w
ar-c
asua
lties
-fact
orie
s-sh
iftin
g-ou
t-of-c
hina
/#15
6f2c
2f10
3e.
5 “Chinese
Com
pani
esFl
eeO
vers
eas
toA
void
US
Tarif
fs.”
Cha
nnel
New
sAsi
a,11
Sep
t.20
18,
ww
w.c
hann
elne
wsa
sia.
com
/new
s/bu
sine
ss/c
hine
se-c
ompa
nies
-flee
-ove
rsea
s-to
-avo
id-u
s-ta
riffs
-107
0458
6.
MA
CR
OE
CO
MO
NIC
FA
CTO
RS
Sou
rce:
The
U.S
.Cen
sus
Bur
eau
PR
IVA
TE &
CO
NFI
DE
NTI
AL
16
4. IN
DU
STR
Y O
UTL
OO
K4.
1. M
AC
RO
EC
OM
ON
IC F
AC
TOR
S
BU
SIN
ES
S V
ALU
ATI
ON
RE
PO
RT
BM
M.B
002
31 D
EC
EM
BE
R 2
018
0.0%
2.0%
4.0%
6.0%
8.0%
10.0
%
01020304050
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
(US$ billions)
US
Impo
rtof
text
ilefr
omC
hina
1.Te
xtile
san
dfo
otw
eari
mpo
rtsfro
mC
hina
peak
edin
2015
2.Fr
om20
08to
2017
,tex
tiles
and
foot
wea
rcom
bine
dto
aver
age
8.4%
ofto
tal
valu
eof
impo
rtsfro
mC
hina
Text
iles
and
foot
wea
r%
of t
otal
impo
rts fr
om C
hina
41
CO
NC
LUS
ION
PR
IVA
TE &
CO
NFI
DE
NTI
AL
17
4. IN
DU
STR
Y O
UTL
OO
K4.
2. C
ON
CLU
SIO
N
BU
SIN
ES
S V
ALU
ATI
ON
RE
PO
RT
BM
M.B
002
31 D
EC
EM
BE
R 2
018
Posi
tives
Chi
nast
illbe
ing
am
ajor
play
erin
the
glob
alte
xtile
and
clot
hing
indu
stry
with
am
arke
tsha
reof
35.8
%in
2016
.
Neg
ativ
esSl
owin
gre
alG
DP
grow
th.
Gro
wth
inm
anuf
actu
ring
sect
oris
even
slow
erth
anth
eov
eral
lG
DP
grow
thra
tean
dha
sbe
endr
aggi
ngdo
wn
the
over
allG
DP
grow
thra
te.
Shrin
king
and
agin
gla
bour
forc
e.
Ris
ing
labo
urco
sts.
Trad
ew
arbe
twee
nth
eU
San
dC
hina
,re
sulti
ngin
high
erta
riffs
for
Chi
nese
good
s.
Maj
orm
anuf
actu
rers
mov
ing
thei
rope
ratio
nsaw
ayfro
mC
hina
Con
clus
ion
The
over
allm
acro
econ
omic
clim
ate
isve
ryne
gativ
efo
rth
eC
ompa
nies
with
(a)s
low
ing
grow
th;(
b)ris
ing
cost
san
d(c
)ash
rinki
ngcu
stom
erba
seas
the
text
ilean
dsh
oes
man
ufac
ture
rsco
ntin
ueto
mov
edth
eir
oper
atio
nsto
othe
rcou
ntrie
s.
42
Tabl
e of
con
tent
s
PR
IVA
TE &
CO
NFI
DE
NTI
AL
BU
SIN
ES
S V
ALU
ATI
ON
RE
PO
RT
BM
M.B
002
31 D
EC
EM
BE
R 2
018
18
GLO
SSA
RY
EXEC
UTI
VE S
UM
MAR
Y
OVE
RVI
EW O
F TH
E C
OM
PAN
IES
IND
UST
RY
OU
TLO
OK
VALU
ATI
ON
MET
HO
DO
LOG
IES
VALU
ATIO
N O
F ZI
WO
GR
OU
P
APPE
ND
IX 1
–EN
GAG
EMEN
T O
VER
VIEW
APPE
ND
IX 2
–LI
STED
CO
MPA
RAB
LE C
OM
PAN
IES
APPE
ND
IX 3
–PI
CTU
RES
TAK
EN D
UR
ING
TH
E SI
TE V
ISIT
APPE
ND
IX 4
–D
OC
UM
ENTS
PR
OVI
DED
DU
RIN
G T
HE
SITE
VIS
IT
1 2 3 4 5 6
4 6 9 12 18 20 28 33 37 43
43
VALU
ATIO
N A
PP
RO
AC
HE
S
Con
side
ratio
nm
ustb
egi
ven
toth
ere
leva
ntan
dap
prop
riate
valu
atio
nap
proa
ches
.The
thre
eap
proa
ches
desc
ribed
,de
fined
and
cons
ider
edbe
low
are
the
mai
nap
proa
ches
used
inva
luat
ion.
They
are
base
don
the
econ
omic
prin
cipl
esof
pric
eeq
uilib
rium
,an
ticip
atio
nof
bene
fits
orsu
bstit
utio
n.Th
epr
inci
palv
alua
tion
appr
oach
esar
e:
Mar
ketA
ppro
ach
The
Mar
ket
App
roac
hpr
ovid
esan
indi
catio
nof
valu
eby
com
parin
gth
esu
bjec
tas
set
with
iden
tical
orsi
mila
ras
sets
for
whi
chpr
ice
info
rmat
ion
isav
aila
ble.
The
prem
ise
ofth
eM
arke
tA
ppro
ach
isth
ata
prud
ent
inve
stor
wou
ldpa
yno
mor
efo
ran
asse
tth
anth
epr
ice
topu
rcha
sesi
mila
ras
sets
inth
em
arke
tpla
ce.T
hepr
oces
ses
sent
ially
invo
lves
com
paris
onof
the
subj
ecta
sset
with
othe
rsi
mila
ras
sets
.Con
side
ratio
nssu
chas
loca
tion
and
time
ofsa
lear
eto
bean
alys
edfo
rcom
para
ble
asse
ts,a
ndad
just
men
tsto
the
pric
esob
serv
edar
eto
bem
ade
toin
dica
tea
Mar
ketV
alue
fort
hesu
bjec
tass
ets.
Val
uatio
nm
etho
dsun
der
the
Mar
ket
App
roac
hin
clud
eC
ompa
rabl
eTr
ansa
ctio
nsM
etho
dan
dG
uide
line
Pub
licly
-trad
edC
ompa
rabl
eM
etho
d.
Inco
me
App
roac
h
The
Inco
me
App
roac
hpr
ovid
esan
indi
catio
nof
valu
eby
the
inco
me
gene
ratin
gpo
tent
ialo
fth
esu
bjec
tass
et.T
hepr
emis
eof
the
Inco
me
App
roac
his
that
noin
vest
orw
ould
pay
mor
efo
ran
asse
tth
anth
epr
esen
tva
lue
ofth
ein
com
eex
pect
edto
bege
nera
ted
byth
eas
set.
The
valu
eof
anas
seti
sth
usar
rived
atfro
mth
epr
esen
tval
ue,a
tthe
valu
atio
nda
te,o
fthe
futu
rein
com
ege
nera
ted
over
the
asse
t'sex
pect
edus
eful
life.
Val
uatio
nm
etho
dsun
der
the
Inco
me
App
roac
har
ety
pica
llyva
riatio
nsof
the
Dis
coun
ted
Cas
hFl
owm
etho
dsu
chas
the
Div
iden
dD
isco
untM
odel
,Fre
eC
ash
Flow
toFi
rm(“FCFF”)
mod
elan
dFr
eeC
ash
Flow
toE
quity(“”FCFE”)
mod
el.
Cos
tApp
roac
h
The
Cos
tApp
roac
hpr
ovid
esan
indi
catio
nof
valu
eus
ing
the
econ
omic
prin
cipl
eth
ata
buye
rw
illpa
yno
mor
efo
ran
asse
tth
anth
eco
stto
obta
inan
asse
tof
equa
lutil
ity,
whe
ther
bypu
rcha
seor
byco
nstru
ctio
n,un
less
undu
etim
e,in
conv
enie
nce,
risk
orot
her
fact
ors
are
invo
lved
.
Aco
mm
onC
ost
App
roac
hva
luat
ion
met
hod
used
inbu
sine
ssva
luat
ion
isth
esu
mm
atio
nm
etho
dor
Net
Ass
etV
alue(“NAV”)
met
hod,
whi
chpr
ovid
esan
indi
catio
nof
the
valu
eof
the
subj
ectc
ompa
nyby
the
tota
lval
ueof
the
asse
tsle
ssth
elia
bilit
ies.
Sele
ctio
nof
Valu
atio
nA
ppro
ach
The
goal
inse
lect
ing
valu
atio
nap
proa
ches
and
met
hods
for
anas
set
isto
find
the
mos
tap
prop
riate
met
hod
unde
rth
epa
rticu
lar
circ
umst
ance
s.N
oon
em
etho
dis
suita
ble
inev
ery
poss
ible
situ
atio
n.In
the
sele
ctio
npr
oces
s,w
eha
veco
nsid
ered
the
follo
win
g:
(a)
the
appr
opria
test
anda
rdof
valu
ean
dpr
emis
eof
valu
e,de
term
ined
byth
ete
rms
and
purp
ose
ofth
eva
luat
ion
assi
gnm
ent;
(b)
the
resp
ectiv
est
reng
ths
and
wea
knes
ses
ofth
epo
ssib
leva
luat
ion
appr
oach
esan
dm
etho
ds;
(c)
the
appr
opria
tene
ssof
each
met
hod
invi
ewof
the
natu
reof
the
asse
t,an
dth
eap
proa
ches
orm
etho
dsus
edby
parti
cipa
nts
inth
ere
leva
ntm
arke
t;an
d
(d)
the
avai
labi
lity
ofre
liabl
ein
form
atio
nne
eded
toap
ply
the
met
hod(
s).
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oGroup’s
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atio
nsha
sce
ased
inQ
1FY
2018
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toth
eV
alua
tion
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e,th
ebu
sine
ssse
ntim
ents
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furth
erde
terio
rate
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ithtra
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nsbe
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nC
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and
US
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firm
sle
avin
gC
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ther
alte
rnat
ive
low
cost
man
ufac
turin
gco
untri
es.
We
have
also
mad
ere
fere
nce
toth
esh
are
pric
eof
the
com
para
ble
com
pani
es.A
ssh
own
inA
ppen
dix
2,th
eco
mpa
rabl
eco
mpa
nies
lost
anav
erag
eof
27%
ofth
eir
mar
ket
valu
ebe
twee
n31
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embe
r201
7an
d30
June
2018
.
As
Ziw
oGroup’s
oper
atio
nsha
vece
ased
and
isno
tex
pect
edto
re-c
omm
ence
for
the
fore
seea
ble
futu
re,
the
Inco
me
App
roac
han
dth
eM
arke
tA
ppro
ach
are
not
cons
ider
edap
prop
riate
.Hen
ce,w
eha
vere
lied
onth
eS
umm
atio
nm
etho
d,a
valu
atio
nm
etho
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heC
ostA
ppro
ach
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eth
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arke
tVal
uera
nge
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e10
0%sh
are
capi
tali
nZi
wo
Gro
up.
PR
IVA
TE &
CO
NFI
DE
NTI
AL
19
5. V
ALU
ATI
ON
ME
THO
DO
LOG
IES
BU
SIN
ES
S V
ALU
ATI
ON
RE
PO
RT
BM
M.B
002
31 D
EC
EM
BE
R 2
018
44
Tabl
e of
con
tent
s
PR
IVA
TE &
CO
NFI
DE
NTI
AL
BU
SIN
ES
S V
ALU
ATI
ON
RE
PO
RT
BM
M.B
002
31 D
EC
EM
BE
R 2
018
20
GLO
SSA
RY
EXEC
UTI
VE S
UM
MAR
Y
OVE
RVI
EW O
F TH
E C
OM
PAN
IES
IND
UST
RY
OU
TLO
OK
VALU
ATIO
N M
ETH
OD
OLO
GIE
S
VALU
ATI
ON
OF
ZIW
O G
RO
UP
Fina
ncia
l Ana
lysi
s
Val
uatio
n of
Ziw
o G
roup
via
Sum
mat
ion
Met
hod
APPE
ND
IX 1
–EN
GAG
EMEN
T O
VER
VIEW
APPE
ND
IX 2
–LI
STED
CO
MPA
RAB
LE C
OM
PAN
IES
APPE
ND
IX 3
–PI
CTU
RES
TAK
EN D
UR
ING
TH
E SI
TE V
ISIT
APPE
ND
IX 4
–D
OC
UM
ENTS
PR
OVI
DED
DU
RIN
G T
HE
SITE
VIS
IT
1 2 3 4 5 6
4 6 9 12 18 20 28 33 37 43
6.1
6.2
21 23
45
REV
ENU
E
Sou
rce:
Aud
ited
finan
cial
stat
emen
tsan
dm
anag
emen
tacc
ount
s
Gro
wth
stag
e(F
Y200
6-F
Y200
9):R
even
uein
crea
sed
ata
CA
GR
of80
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heC
ompa
nies
focu
sed
onR
&D
and
succ
essf
ully
deve
lope
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me-
resi
stan
tsa
ndw
ich
mes
hfa
bric
inS
epte
mbe
r20
06an
dne
wpr
oduc
tion
met
hods
for
SB
Rdi
ving
mat
eria
lsan
d30
DTF
Yin
2008
.Ziw
oG
roup
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nam
edas
one
ofth
eto
pse
llers
offo
amed
SB
Ran
ddr
awn
text
ured
filam
enty
arn
inth
eP
RC
in20
09.
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ing
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stag
e,Zi
woGroup’s
reve
nue
was
grow
ing
quic
kly
even
asth
eov
eral
lm
anuf
actu
ring
activ
ities
inC
hina
was
slow
ing,
espe
cial
lyin
FY20
09du
eto
the
Glo
bal
Fina
ncia
lCris
is.
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ure
Stag
e(F
Y200
9on
war
ds):
reve
nue
appe
ared
tobe
driv
enby
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over
allg
row
thof
the
Man
ufac
turin
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ecto
r.A
sth
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ring
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tor
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vere
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mth
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fect
sof
the
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balF
inan
cial
Cris
is,Z
iwoGroup’s
reve
nue
peak
edat
RM
B51
3.1
milli
onin
FY20
10.
Sin
ceth
en,
due
toa
com
bina
tion
oflo
wde
man
d,hi
ghco
mpe
titio
nan
dcl
osur
eof
prod
uct
lines
,rev
enue
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been
decr
easi
ngat
aC
AG
Rof
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toon
lyR
MB
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milli
onin
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17.
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2017
,all
oper
atio
nsw
ere
disc
ontin
ued
and
nore
venu
ew
asea
rned
in1H
2018
.
0%5%10%
15%
20%
25%
0
100
200
300
400
500
600
FY2006
FY2007
FY2008
FY2009
FY2010
FY2011
FY2012
FY2013
FY2014
FY2015
FY2016
FY2017
1H2018
Y-o-y growth
(RMB millions)
Rev
enue
vs y
-o-y
gro
wth
in M
anuf
actu
ring
Sect
or
Mat
ure
stag
e
Sou
rce:
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ited
finan
cial
sta
tem
ents
As
show
nin
the
char
tab
ove,
SB
Ran
dot
her
foam
mat
eria
lsis
the
mai
nco
ntrib
utor
tore
venu
efro
mFY
2011
toFY
2017
.
30D
TFY
was
the
seco
ndla
rges
tse
gmen
tby
reve
nue
upto
FY20
14.
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ever
,it
was
disc
ontin
ued
inFY
2015
whe
nfa
ulty
mac
hine
ryan
dpo
orqu
ality
cont
rol
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edde
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ive
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ucts
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ered
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lting
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ulty
prod
uct
clai
ms
ofR
MB
133.
7m
illio
n.
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assu
bseq
uent
lydi
scon
tinue
din
FY20
16an
din
FY20
17,
the
Com
pani
esde
cide
dto
disc
ontin
ueS
BRan
dot
herf
oam
mat
eria
ls.
0
100
200
300
400
500
FY20
11FY
2012
FY20
13FY
2014
FY20
15FY
2016
FY20
17
(RMB millions)
Rev
enue
Con
trib
utio
n by
Pro
duct
Seg
men
t1.
SB
R a
nd o
ther
foam
mat
eria
ls is
the
larg
est s
egm
ent b
y re
venu
e2.
30D
TFY
pro
duct
s w
ere
disc
ontin
ued
in F
Y20
153.
SM
F pr
oduc
ts w
ere
disc
ontin
ued
in F
Y20
16
SBR
and
oth
er fo
am m
ater
ial
30D
TFY
SMF
Oth
ers
FIN
AN
CIA
L A
NA
LYS
IS
PR
IVA
TE &
CO
NFI
DE
NTI
AL
21
6. V
ALU
ATI
ON
OF
ZIW
O G
RO
UP
6.1.
FIN
AN
CIA
L A
NA
LYS
IS
BU
SIN
ES
S V
ALU
ATI
ON
RE
PO
RT
BM
M.B
002
31 D
EC
EM
BE
R 2
018
Gro
wth
sta
ge
46
PRO
FIT
MA
RG
INS
Sou
rce:
Aud
ited
finan
cial
stat
emen
ts
SB
Ran
dot
her
foam
mat
eria
lw
asth
ehi
ghes
tco
ntrib
utor
togr
oss
prof
itfro
mFY
2012
toFY
2017
.
Amon
gth
eth
ree
prod
uctl
ines
,SB
Ran
dot
her
foam
mat
eria
lreg
ular
lyre
porte
dth
ehi
ghes
tgr
oss
prof
itm
argi
nan
dw
asth
ela
stpr
oduc
tseg
men
tto
bedi
scon
tinue
din
FY20
17.
-100102030405060
FY20
12FY
2013
FY20
14FY
2015
FY20
16FY
2017
(RMB millions)
Gro
ss P
rofit
Con
trib
utio
n by
Pro
duct
Seg
men
t
SBR
and
oth
er fo
am m
ater
ial
30D
TFY
SMF
Sou
rce:
Aud
ited
finan
cial
stat
emen
ts
From
FY20
12to
FY20
14,e
ven
asre
venu
ew
asde
clin
ing,
Ziw
oG
roup
man
aged
tom
aint
ain
the
GP
mar
gin
forS
BR
and
SM
Fpr
oduc
ts.G
Pm
argi
nde
clin
edsi
gnifi
cant
lyin
FY20
15pa
rtly
due
toth
equ
ality
issu
es,f
orci
ngth
eC
ompa
nies
tose
llth
efa
ulty
inve
ntor
yat
asu
bsta
ntia
ldi
scou
nt.
GP
mar
gin
decl
ined
furth
erin
FY20
16as
the
Com
pani
esst
rugg
led
with
low
dem
and
and
high
com
petit
ion
befo
redi
scon
tinui
ngal
lpro
duct
lines
inFY
2017
.
FIN
AN
CIA
L A
NA
LYS
IS
PR
IVA
TE &
CO
NFI
DE
NTI
AL
22
6. V
ALU
ATI
ON
OF
ZIW
O G
RO
UP
6.1.
FIN
AN
CIA
L A
NA
LYS
IS
BU
SIN
ES
S V
ALU
ATI
ON
RE
PO
RT
BM
M.B
002
31 D
EC
EM
BE
R 2
018
26%
21%
20%
11%
2%
3%
2%
4%
12%
6%
-131%
16%
17%
22%
-8%
-20%
-13%
-30%
-20%
-10%0%10%
20%
30%
FY20
12FY
2013
FY20
14FY
2015
FY20
16FY
2017
GP
Mar
gin
by P
rodu
ct S
egm
ent
SBR
and
oth
er fo
am m
ater
ial
30D
TFY
SMF
47
Ziw
o G
roup
's Ba
lanc
e Sh
eet a
s at
30-
Sep-
18(R
MB'
000)
NBV
%Ad
jM
arke
t Val
ue%
Ref
Curr
ent A
sset
sC
ash
and
cash
equ
ivale
nts
433
4%
-
433
4%
Trad
e re
ceiva
bles
8,69
4
81
%-
8,
694
81%
1O
ther
rece
ivabl
es62
2
6%-
62
2
6%P
repa
id e
xpen
ses
16
0%-
16
0%A
dvan
ce p
aym
ents
-
0%
-
-
0%2
Inve
ntor
y11
6
1%-
11
6
1%
Tota
l Cur
rent
Ass
ets
9,88
1
92%
-
9,88
1
92%
Non-
curr
ent A
sset
sP
rope
rty &
Pla
nt a
nd E
quip
men
t82
2
8%-
82
2
8%3
Land
use
righ
t-
0%-
-
0%
4To
tal N
on-c
urre
nt A
sset
s82
2
8%-
82
2
8%
Tota
l Ass
ets
10,7
03
100%
-
10,7
03
100%
Curr
ent L
iabi
litie
sTr
ade
paya
bles
264
1%
-
264
1%
Sal
ary
Pay
able
s2,
389
9%-
2,
389
9%A
dvan
ce p
aym
ent r
ecei
ved
0
0%
-
0
0%Ta
x pa
yabl
e28
0%
-
28
0%
Pro
visio
n fo
r SS
I 3,
877
14%
-
3,87
7
14
%O
ther
pay
able
s20
,400
76
%-
20
,400
76%
6P
rovis
ion
21
0%-
21
0%D
ue to
rela
ted
parti
es22
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-
22
0%
5To
tal C
urre
nt L
iabi
litie
s27
,001
100%
-
27,0
01
100%
Tota
l Lia
bilit
ies
27,0
01
100%
-
27,0
01
100%
Net A
sset
s(1
6,29
9)
-
(16,
299)
Sou
rce:
Man
agem
ent
SU
MM
ATIO
N M
ETH
OD
VALU
ATI
ON
VIA
SUM
MA
TIO
NM
ETH
OD
Via
sum
mat
ion
met
hod,
the
Mar
ketV
alue
ofea
chas
seta
ndlia
bilit
yon
the
bala
nce
shee
thas
tobe
dete
rmin
ed.I
ntan
gibl
eas
sets
and
cont
inge
ntlia
bilit
ies,
ifan
y,sh
ould
beid
entif
ied
and
valu
edac
cord
ingl
y.P
leas
ere
fert
oth
eta
ble
onth
ele
ftfo
rthe
amal
gam
ated
bala
nce
shee
tof
the
Ziw
oG
roup
asat
Valu
atio
nD
ate.
1.Tr
ade
rece
ivab
les
As
atV
alua
tion
Dat
e,tra
dere
ceiv
able
sam
ount
edto
RM
B68
.61
milli
on.
Man
agem
ent
repr
esen
ted
that
the
maj
ority
ofth
etra
dere
ceiv
able
sha
vebe
enov
erdu
efo
rm
ore
than
12m
onth
sw
ithth
ere
stov
erdu
efo
rm
ore
than
6m
onth
s.B
ased
onou
rdi
scus
sion
with
Man
agem
ent,
som
eof
the
over
due
rece
ivab
les
are
indi
sput
edu
eto
low
qual
itypr
oduc
ts.A
ssu
ch,t
heco
llect
abilit
yof
the
trade
rece
ivab
les
isco
nsid
ered
high
lyun
likel
y.
As
are
sult,
Man
agem
ent
has
mad
eal
low
ance
for
impa
irmen
tof
the
trade
rece
ivab
les
inac
cord
ance
with
the
Ziw
oGroup’s
polic
y.Tr
ade
rece
ivab
les
that
are
outs
tand
ing
for
mor
eth
an6
mon
ths
butl
ess
than
aye
arar
eim
paire
dat
50%
.Tra
dere
ceiv
able
sth
atha
vebe
enou
tsta
ndin
gfo
ra
year
and
abov
ear
efu
llyim
paire
d.Th
eto
tal
impa
irmen
tfo
rtra
dere
ceiv
able
sam
ount
edto
RM
B59
.9m
illion
,res
ultin
gin
NB
Vof
RM
B8.
69m
illio
n.
Dur
ing
our
site
visi
ton
12O
ctob
er20
18,
we
have
been
prov
ided
with
seve
nle
gal
lette
rsis
sued
byZh
iheTechnology’s
law
firm
,Fuj
ian
Jinx
ian
Law
Firm
(),
toth
ede
btor
s.
Bas
edon
the
abov
e,no
furth
erad
just
men
tsto
the
NB
Vof
trade
rece
ivab
les
wer
eco
nsid
ered
nece
ssar
y.W
eha
veas
sum
edth
atth
eN
BV
ofth
etra
dere
ceiv
able
sap
prox
imat
esits
Mar
ket
Val
ue.
PR
IVA
TE &
CO
NFI
DE
NTI
AL
23
6. V
ALU
ATI
ON
OF
ZIW
O G
RO
UP
6.2.
VA
LUA
TIO
N O
F ZI
WO
GR
OU
P V
IA S
UM
MA
TIO
N M
ETH
OD
BU
SIN
ES
S V
ALU
ATI
ON
RE
PO
RT
BM
M.B
002
31 D
EC
EM
BE
R 2
018
Lega
l let
ters
sum
mar
yCu
stom
er n
ame
(RM
B '0
00)
542
1,41
6
531
1,00
1
463
3,77
1
366
Tota
l8,
091
S
ourc
e: C
opie
s of
the
lega
l let
ters
pro
vide
d by
Man
agem
ent
48
2.Ad
vanc
epa
ymen
ts
Adva
nce
paym
ents
incl
uded
the
depo
sit
ofR
MB
28.0
milli
onto
Beijin
gC
hong
lee
Mac
hine
ryE
ngin
eerin
gC
o.Lt
d(
,“BCME”)
in20
15fo
rthe
cons
truct
ion
ofa
prod
uctio
nlin
e.S
ubse
quen
tly,
due
toth
ech
alle
ngin
gec
onom
icfa
ctor
s,th
eC
ompa
nies
have
deci
ded
nott
opr
ocee
dw
ithth
ein
stal
latio
n.
We
unde
rsta
ndfro
mM
anag
emen
ttha
tthe
Com
pani
esha
sm
anag
edto
reco
verR
MB
40k
out
ofth
eto
tal
the
depo
sit
ofR
MB
28.0
milli
on.
Dur
ing
the
site
visi
t,w
ew
ere
prov
ided
with
are
ceip
tam
ount
ing
toR
MB
40k.
Ple
ase
refe
rto
page
45,A
ppen
dix
4–
Doc
umen
tsP
rovi
ded
Dur
ing
the
Site
Vis
itfo
rthe
copy
ofth
ere
ceip
tfor
RM
B40
kpr
ovid
edby
Man
agem
ent.
Man
agem
ent
has
soug
htle
gal
opin
ion
onth
ere
cove
ryof
the
depo
sit.
The
opin
ion
ofth
eso
licito
rsis
that
the
Com
pani
esha
veno
tfu
lfille
dits
oblig
atio
nsof
the
cont
ract
sign
edw
ithB
CM
Ean
dth
ede
posi
tis
unlik
ely
tobe
reco
vere
d.
Asth
eR
MB
40k
had
alre
ady
been
paid
and
the
rem
aini
ngba
lanc
eof
the
depo
siti
sun
likel
yto
bere
cove
rabl
e,th
eM
arke
tVal
ueof
adva
nce
paym
ents
ises
timat
edto
beni
l.
3.Pr
oper
ty,p
lant
&eq
uipm
ent(
PP&
E)
The
PP
&E
held
byth
eG
roup
cons
iste
dm
ainl
yof
(a)p
lant
and
mac
hine
ry;a
nd(b
)lea
seho
ldbu
ildin
gs.
The
PP
&E
are
loca
ted
atW
este
rnS
ectio
n,Q
ingm
eng
Zone
,Ec
onom
yan
dTe
chno
logy
Dev
elop
men
tZon
e,Q
uanz
hou
City
,Fuj
ian
Prov
ince
,the
PRC
.
Plan
tand
Mac
hine
ry:A
sat
Val
uatio
nD
ate,
NB
Vof
the
PP
&E
amou
nted
toR
MB
821.
8k,n
etof
impa
irmen
tlos
sof
RM
B10
0.5
milli
on.T
heim
pairm
ento
fRM
B10
0.5
milli
onw
asde
term
ined
byM
anag
emen
tbas
edon
are
view
ofth
ere
cove
rabl
eam
ount
ofth
eP
P&
Edu
eto
indi
cato
rsfo
rim
pairm
enti
nlig
htof
the
stat
eof
the
busi
ness
.The
reco
vera
ble
amou
ntof
the
plan
tand
equi
pmen
thas
been
dete
rmin
edon
the
basi
sof
thei
rfai
rval
uele
ssco
stto
sell.
We
have
cons
ider
edth
efo
llow
ing
fact
ors:
Phy
sica
l det
erio
ratio
nis
the
loss
inva
lue
orus
eful
ness
ofth
esu
bjec
tas
sets
orpr
oper
ties
due
tow
ear
and
tear
,exp
osur
eto
vario
usel
emen
ts,p
hysi
cals
tress
es,t
hepa
ssag
eof
time
and
sim
ilar
fact
ors.
Dur
ing
our
site
visi
ton
12O
ctob
er20
18,
we
obse
rved
that
mos
tof
the
mac
hine
ryan
deq
uipm
ent
appe
ared
tobe
disu
sed
and
not
inop
erat
iona
lco
nditi
on.
The
mac
hine
ryap
pear
edto
have
nopr
oper
mai
nten
ance
fora
sign
ifica
ntpe
riod
oftim
e.
Func
tiona
lobs
oles
cenc
eis
the
loss
inva
lue
orus
eful
ness
ofth
esu
bjec
tass
ets
orpr
oper
ties
caus
edby
inef
ficie
ncie
sor
inad
equa
cies
ofth
eas
set
itsel
f,w
hen
com
pare
dto
am
ore
effic
ient
repl
acem
ent
asse
tth
atne
wte
chno
logy
has
deve
lope
d.W
eun
ders
tand
from
Man
agem
entt
hat,
due
toth
era
pid
inno
vatio
nin
the
com
para
ble
prod
uctio
neq
uipm
ent,
the
exis
ting
equi
pmen
thas
low
prod
uctio
nef
ficie
ncy,
high
ener
gyco
nsum
ptio
nan
dre
quire
shi
ghla
borc
osts
com
parin
gto
the
new
mac
hine
s.
Eco
nom
icob
sole
scen
ceis
the
loss
inva
lue
caus
edby
fact
ors
exte
rnal
toth
eas
set.
Thes
efa
ctor
sin
clud
ein
crea
sed
cost
ofra
wm
ater
ial,
labo
uror
utilit
ies
with
outa
nof
fset
ting
incr
ease
inpr
oduc
tpr
ice,
redu
ced
dem
and
for
the
prod
uct,
incr
ease
dco
mpe
titio
n,en
viro
nmen
tal,
regu
latio
nsor
sim
ilar
fact
ors.
Asdi
scus
sed
inth
epr
evio
usse
ctio
ns,t
hein
dust
ryou
tlook
for
the
text
ilean
dfo
otw
eari
nC
hina
isbl
eak
and
with
nosi
gns
ofre
cove
ryin
the
near
futu
re.
As
phys
ical
dete
riora
tion,
func
tiona
lob
sole
scen
cean
dec
onom
icob
sole
scen
cear
eal
lco
nsid
ered
tobe
high
,the
Mar
ketV
alue
ofth
em
achi
nery
and
equi
pmen
tis
cons
ider
edto
beim
mat
eria
l.As
such
,w
eha
veno
tm
ade
any
furth
erad
just
men
tsto
the
NB
Vof
plan
tan
dm
achi
nery
.
Ple
ase
refe
rto
App
endi
x3–
Pic
ture
sTa
ken
Dur
ing
the
Site
Vis
itfo
rpic
ture
sof
the
plan
tand
mac
hine
ry.
SU
MM
ATIO
N M
ETH
OD
PR
IVA
TE &
CO
NFI
DE
NTI
AL
24
6. V
ALU
ATI
ON
OF
ZIW
O G
RO
UP
6.2.
VA
LUA
TIO
N O
F ZI
WO
GR
OU
P V
IA S
UM
MA
TIO
N M
ETH
OD
BU
SIN
ES
S V
ALU
ATI
ON
RE
PO
RT
BM
M.B
002
31 D
EC
EM
BE
R 2
018
49
Leas
ehol
dbu
ildin
gs:T
heto
talc
ostf
orle
aseh
old
build
ings
amou
nted
toR
MB
80.3
milli
onas
at31
Dec
embe
r20
17.T
heen
tire
amou
ntha
sbe
enw
ritte
nof
f,re
sulti
ngin
NB
Vof
zero
,on
the
basi
sth
at:
(a)
the
busi
ness
islo
ss-m
akin
gan
dha
sbe
endi
scon
tinue
d;
(b)
som
eof
the
build
ings
have
been
cons
truct
edw
ithou
tthe
nece
ssar
ype
rmits
;and
(c)
thes
ebu
ildin
gsar
elo
cate
don
non-
trans
fera
ble
land
and
henc
e,ca
nnot
beso
ld.
Ple
ase
refe
rto
the
tabl
ebe
low
fora
sum
mar
yof
the
leas
ehol
dbu
ildin
gs.
SU
MM
ATIO
N M
ETH
OD
PR
IVA
TE &
CO
NFI
DE
NTI
AL
25
6. V
ALU
ATI
ON
OF
ZIW
O G
RO
UP
6.2.
VA
LUA
TIO
N O
F ZI
WO
GR
OU
P V
IA S
UM
MA
TIO
N M
ETH
OD
BU
SIN
ES
S V
ALU
ATI
ON
RE
PO
RT
BM
M.B
002
31 D
EC
EM
BE
R 2
018
Leas
ehol
d bu
ildin
gs
NoBu
ildin
gNu
mbe
r of
floo
rsAr
ea(m
2)Re
mar
k
Zhih
e Te
chno
logy
(lan
d lo
t no.
A-0
9 an
d A-
10(B
)):1
Dor
mito
ry
56,
983.
46
B
uild
ing
cann
ot b
e so
ld s
epar
atel
y2
Bui
ldin
g A
416
,463
.33
Bui
ldin
g ca
nnot
be
sold
sep
arat
ely
3B
uild
ing
B1
3,90
5.83
Bui
ldin
g ca
nnot
be
sold
sep
arat
ely
4B
uild
ing
C1
2,15
7.86
Bui
ldin
g ca
nnot
be
sold
sep
arat
ely
5B
uild
ing
D1
1,54
0.00
Tem
pora
ry b
uild
ing.
No
certi
ficat
e6
Bui
ldin
g E
11,
062.
60
Te
mpo
rary
bui
ldin
g. N
o ce
rtific
ate
7B
uild
ing
F1
943.
00
Tem
pora
ry b
uild
ing.
No
certi
ficat
e8
Bui
ldin
g G
196
0.00
Te
mpo
rary
bui
ldin
g. N
o ce
rtific
ate
Yixi
ang
(land
lot n
o. A
-11(
C)):
.1
Offi
ce6
7,39
7.00
No
cons
truct
ion
perm
it2
Fact
ory
#11
2,43
2.70
No
cons
truct
ion
perm
it3
Fact
ory
#23
9,19
0.72
No
cons
truct
ion
perm
itS
ourc
e: M
anag
emen
t
Lack
ofbu
ildin
gow
ners
hip
certi
ficat
es:W
eha
vem
ade
refe
renc
eto
the
IPO
Pro
spec
tus
ofZi
wo
Hol
ding
sin
2009
,w
hich
also
stat
edth
atZi
wo
Hol
ding
sha
veno
tob
tain
edbu
ildin
gow
ners
hip
certi
ficat
esfo
rbu
ildin
gsD
,E
,F
and
Gw
hich
hous
edth
etri
mm
ing,
cutti
ngan
dw
areh
ouse
faci
litie
s.
Bas
edon
the
info
rmat
ion
obta
ined
from
the
site
visi
t,in
acco
rdan
ceto
the
cons
ulta
tion
with
the
loca
laut
horit
ies,
the
tem
pora
rybu
ildin
gsD
,E,F
and
Gas
wel
las
the
offic
ebu
ildin
gan
dfa
ctor
ybu
ildin
g#1
and
#2w
ere
notr
econ
stru
cted
tope
rman
entb
uild
ings
asin
stru
cted
byth
ego
vern
men
tbo
dies
and
henc
eca
nne
ither
begr
ante
dw
ithtit
lece
rtific
ates
nor
beso
ld.
Mor
eove
r,as
all
the
prop
ertie
sar
eon
the
sam
epi
ece
ofla
nd,
thos
epr
oper
ties
with
owne
rshi
pce
rtific
ate
cann
otbe
trade
dse
para
tely
.
Bui
ldin
gsge
nera
llyob
serv
edto
bein
poor
phys
ical
cond
ition
:B
ased
onth
eob
serv
atio
nsfro
mth
esi
tevi
sito
n12
Oct
ober
2018
,thebuildings’s
urfa
cesh
ows
certa
inle
velo
fcor
rosi
on,
wat
erle
akag
ean
dpa
rtial
defe
cts.
The
oute
rsu
rface
ofth
efa
ctor
ybu
ildin
g#2
show
sun
even
settl
emen
tan
dm
inor
crac
kson
the
oute
rw
all.
Ala
rge
reve
rsal
incl
ine
dera
nge
slop
ew
asfo
rmed
betw
een
the
oute
rsu
rface
and
the
fact
ory
#2,
whi
chm
ayaf
fect
the
use
ofth
epl
ant
toa
certa
inex
tent
and
coul
din
evita
bly
affe
ctth
eov
eral
lpe
rform
ance
and
stru
ctur
alsa
fety
ofth
epl
ant
inth
efu
ture
.Fa
ctor
y#1’s
roof
show
ssi
gns
ofle
akag
edu
eto
rust
.
The
truss
ofth
epa
rkin
gsh
edon
the
side
ofth
ebu
ildin
gG
had
obvi
ous
defo
rmat
ion.
Bui
ldin
gB
has
verti
calc
rack
son
the
oute
rw
allo
fthe
stee
l-con
cret
est
ruct
ure,
whi
chm
aybe
caus
edby
unev
ense
ttlem
ent.
Som
eof
the
wal
lsha
vew
ater
seep
age.
The
wal
loft
hedo
rmito
rybu
ildin
g(s
teel
-con
cret
est
ruct
ure)
ispa
rtial
lyde
form
edby
apa
stca
rcr
ash
inci
dent
.Th
ere
isa
hole
unde
rth
ew
indo
wof
anex
tern
alw
all,
whi
chM
anag
emen
tex
plai
ned
itto
bea
resu
ltof
anin
terru
pted
reno
vatio
n.Th
ere
wer
ese
vera
lwin
dow
sbr
oken
,an
dth
eex
terio
rwal
lsha
dbe
gun
tope
elw
ithso
me
fine
crac
ks.
Ple
ase
refe
rto
App
endi
x3–
Pic
ture
sTa
ken
Dur
ing
the
Site
Vis
itfo
rmor
ein
form
atio
n.
Bas
edon
the
abov
e-m
entio
ned
fact
ors,
noad
just
men
tw
ere
cons
ider
edne
cess
ary
for
the
leas
ehol
dbu
ildin
gs.T
heN
BV
ofze
roof
the
leas
ehol
dbu
ildin
gsw
ere
take
nto
appr
oxim
ate
itsM
arke
tVal
ue.
50
4.La
ndU
seR
ight
Land
use
right
sre
late
sto
the
right
sov
erce
rtain
plot
sof
land
loca
ted
atW
este
rnS
ectio
nof
Qin
gmen
gZo
neE
cono
my
and
Tech
nolo
gyD
evel
opm
ent
Zone
,Q
uanz
hou
City
,Fu
jian
Pro
vinc
e,th
eP
RC
.
As
set
out
inth
eta
ble
abov
e,th
eN
BV
ofth
ela
ndus
erig
hts
was
writ
ten
dow
nto
zero
inFY
2017
base
don
ava
luat
ion
repo
rtda
ted
Oct
ober
2017
bya
licen
sed
prop
erty
valu
atio
nfir
m(th
e“Property
Val
uatio
nReport”)
.B
ased
onth
eP
rope
rtyV
alua
tion
Rep
ort,
the
abov
ela
ndpl
ots
have
noco
mm
erci
alva
lue
due
to:
1.Fo
urte
mpo
rary
build
ings
ofth
epr
oper
tyha
veno
tbe
enre
built
inac
cord
ance
with
the
cons
truct
ion
wor
kpl
anw
ithin
the
requ
ired
time.
Thes
ebu
ildin
gsw
illno
tbe
gran
ted
Build
ing
Ow
ners
hip
Cer
tific
ates
.
2.Th
elo
calg
over
nmen
tst
ated
that
the
perm
itted
use
for
the
land
parc
elis
for
indu
stria
lde
velo
pmen
tan
dca
nnot
betra
nsfe
rred
byan
yw
ays
whi
chw
illca
use
chan
geof
land
usag
e.
3.Th
epr
oper
ties
owne
dby
Ziw
ois
limite
dto
freel
ytra
nsfe
rdu
eto
lack
ofpr
oper
ties
title
regi
stra
tion
and
the
rest
rictio
nsof
the
rele
vant
polic
ies
and
land
usag
ein
indu
stria
lna
ture
.
Subs
eque
ntly
in20
17,
the
Land
and
Res
ourc
esB
urea
uof
Fujia
nPr
ovin
ce,
Qua
nzho
uC
ityis
sued
afin
alno
tice
toth
eZi
wo
Gro
up,
notif
ying
that
itno
long
erha
sth
erig
hts
tous
eth
epa
rcel
ofth
ela
nd(lo
tC-0
9C-2
)as
itha
sbe
enle
ftid
lefo
rmor
eth
antw
oye
ars.
InD
ecem
ber
2017
,the
Land
and
Res
ourc
esBu
reau
ofFu
jian
Pro
vinc
e,Q
uanz
hou
City
conf
irmed
that
the
land
use
right
sar
eno
ttra
nsfe
rrabl
eas
stat
edin
the
orig
inal
cont
ract
s.
Land
Use
Rig
hts
Desc
riptio
nHe
ld b
yAr
ea (s
qm)
Cost
(RM
B'00
0)NB
V(R
MB'
000)
1 Lo
t no.
A-0
9 an
d A
-10(
B)
Zhih
e Te
chno
logy
31,0
28.5
0
6,
709
-
2
Lot n
o. C
-09C
-2Zh
ihe
Tech
nolo
gy18
,439
.30
15,8
81
-
3
Lot n
o. A
-11(
C)
Yix
iang
14,6
34.8
0
4,
000
-
To
tal
64,1
02.6
0
26
,590
-
Sou
rce:
Man
agem
ent
All
the
land
lots
loca
ted
at W
este
rn S
ectio
n of
Qin
gmen
g Zo
ne E
cono
my
and
Tech
nolo
gy D
evel
opm
ent Z
one,
Qua
nzho
u C
ity, F
ujia
n P
rovin
ce, t
he P
RC
We
have
perfo
rmed
asi
tevi
sit
on12
Oct
ober
2018
and
have
requ
este
dfo
rth
ere
leva
ntow
ners
hip
certi
ficat
esan
dco
pies
ofth
eco
nfirm
atio
nle
ttera
ndin
vest
igat
ion
notic
ein
rela
tion
toid
lela
ndlo
tno
.C
-09C
-2.
Plea
sere
fer
toA
ppen
dix
4fo
rm
ore
info
rmat
ion
onth
eow
ners
hip
certi
ficat
espr
ovid
edto
us.
Bas
edon
the
abov
e,th
eM
arke
tVal
ueof
the
Land
Use
Rig
htis
estim
ated
tobe
zero
.
5.D
ueto
rela
ted
part
ies
As
atV
alua
tion
Dat
e,th
ere
isa
tota
lam
ount
ofR
MB
48.8
8m
illion
due
from
the
Ziw
oG
roup
tore
late
dpa
rties
assh
own
belo
w.
We
unde
rsta
ndfro
mth
eM
anag
emen
tth
atth
epu
rpos
eof
thes
elo
ans
was
tosu
ppor
tth
eop
erat
ions
ofZi
wo
Gro
up.
How
ever
,du
eto
the
poor
finan
cial
perfo
rman
ceby
Ziw
oG
roup
,th
eam
ount
isco
nsid
ered
unre
cove
rabl
e.A
ssu
ch,
Man
agem
ent
has
writ
ten
off
the
amou
ntow
ing
toB
MM
obilit
yof
RM
B48
.86
milli
on,r
esul
ting
inN
BV
ofR
MB
22k.
We
have
notm
ade
any
adju
stm
entt
oth
eN
BV
ofth
eam
ount
due
tore
late
dpa
rtyas
the
RM
B48
.86
milli
onis
not
expe
cted
tobe
paid
and
the
RM
B22
kis
cons
ider
edto
beim
mat
eria
l.
6.O
ther
paya
bles
Oth
erpa
yabl
esam
ount
edto
appr
oxim
atel
yR
MB
20.4
milli
onas
atV
alua
tion
Dat
e.W
eun
ders
tand
from
Man
agem
ent
that
this
amou
ntm
ainl
yco
mpr
ised
pers
onal
adva
nces
from
the
prev
ious
dire
ctor
and
prov
isio
nsfo
rret
renc
hmen
tofs
taff.
Thes
eam
ount
sar
edu
eto
unre
late
dpa
rties
and
the
Man
agem
ent
has
noco
ntro
lov
erw
heth
erth
ese
parti
esw
illco
ntin
ueto
purs
ueth
epa
ymen
t.H
ence
,no
adju
stm
ent
toot
her
paya
bles
was
cons
ider
edne
cess
ary.
SU
MM
ATIO
N M
ETH
OD
PR
IVA
TE &
CO
NFI
DE
NTI
AL
26
6. V
ALU
ATI
ON
OF
ZIW
O G
RO
UP
6.2.
VA
LUA
TIO
N O
F ZI
WO
GR
OU
P V
IA S
UM
MA
TIO
N M
ETH
OD
BU
SIN
ES
S V
ALU
ATI
ON
RE
PO
RT
BM
M.B
002
31 D
EC
EM
BE
R 2
018
Due
to re
late
d pa
rties
Rela
ted
parti
es(R
MB
'000
)1
BM
Mob
ility
48,8
60
2
Est
ar22
Tota
l48
,882
Sou
rce:
Man
agem
ent a
ccou
nts
51
CO
NC
LUSI
ON
Bas
edon
the
abov
ean
alys
esan
das
sum
ptio
ns,
the
tota
lM
arke
tV
alue
ofth
eas
sets
isap
prox
imat
ely
RM
B10
.7m
illion
,whi
chis
low
erth
anth
eto
talM
arke
tVal
ueof
the
liabi
litie
sof
RM
B27
.0m
illion
.
As
the
resu
lting
Mar
ketV
alue
ofth
ene
tass
ets
islo
wer
than
zero
,th
eM
arke
tVal
ueof
the
100%
equi
tyin
tere
stin
Ziw
oG
roup
isco
mpu
ted
tobe
nilv
iasu
mm
atio
nm
etho
d.
SU
MM
ATIO
N M
ETH
OD
PR
IVA
TE &
CO
NFI
DE
NTI
AL
27
6. V
ALU
ATI
ON
OF
ZIW
O G
RO
UP
6.2.
VA
LUA
TIO
N O
F ZI
WO
GR
OU
P V
IA S
UM
MA
TIO
N M
ETH
OD
BU
SIN
ES
S V
ALU
ATI
ON
RE
PO
RT
BM
M.B
002
31 D
EC
EM
BE
R 2
018
SUM
MAT
ION
MET
HO
D(R
MB'
000)
30-S
ep-1
8
Trad
e re
ceiva
bles
8,69
4
O
ther
cur
rent
ass
ets
1,18
7
P
P&
E82
2
Land
use
righ
t-
To
tal a
sset
s10
,703
Trad
e pa
yabl
es(2
64)
S
alar
y P
ayab
les
(2,3
89)
Oth
er c
urre
nt li
abili
ties
(24,
348)
Ne
t Lia
bilit
ies
(16,
299)
S
ourc
e: M
anag
emen
t and
Maz
ars'
com
puta
tions
52
Tabl
e of
con
tent
s
PR
IVA
TE &
CO
NFI
DE
NTI
AL
BU
SIN
ES
S V
ALU
ATI
ON
RE
PO
RT
BM
M.B
002
31 D
EC
EM
BE
R 2
018
28
GLO
SSA
RY
EXEC
UTI
VE S
UM
MAR
Y
OVE
RVI
EW O
F TH
E C
OM
PAN
IES
IND
UST
RY
OU
TLO
OK
VALU
ATIO
N M
ETH
OD
OLO
GIE
S
VALU
ATIO
N O
F ZI
WO
GR
OU
P
APPE
ND
IX 1
–EN
GAG
EMEN
T O
VER
VIEW
Sco
pe o
f Wor
k
Pro
fess
iona
l Lim
itatio
ns a
nd
Con
ditio
ns
Inde
pend
ence
Sou
rces
of I
nfor
mat
ion
APPE
ND
IX 2
–LI
STED
CO
MPA
RAB
LE C
OM
PAN
IES
APPE
ND
IX 3
–PI
CTU
RES
TAK
EN D
UR
ING
TH
E SI
TE V
ISIT
APPE
ND
IX 4
–D
OC
UM
ENTS
PR
OVI
DED
DU
RIN
G T
HE
SITE
VIS
IT
1 2 3 4 5 6
4 6 9 12 18 20 28 33 37 43
a b c
d29 30 31
32
53
SC
OP
E O
F W
OR
K
AG
REE
DSC
OPE
OF
WO
RK
Our
scop
eof
wor
kfo
rth
isen
gage
men
tas
set
out
inth
een
gage
men
tle
tter
date
d20
Sep
tem
ber2
018
(Ref
:BM
M.B
002)
isas
follo
ws:
Stag
e1:
Prep
arat
ion
and
Iden
tific
atio
n
Topr
ovid
ea
list
ofdo
cum
ents
and
info
rmat
ion
requ
ired
(dep
endi
ngon
the
circ
umst
ance
s,su
bseq
uent
roun
dsof
traci
ngdo
cum
ents
and
info
rmat
ion
mig
htbe
requ
ired)
.
Tore
view
any
rela
ted
docu
men
ts(s
hare
hold
erag
reem
ents
,du
edi
ligen
cere
port,
mar
ket
rese
arch
repo
rt,et
c)an
dhi
stor
ical
finan
cial
stat
emen
ts.
Stag
e2:
Exec
utio
n
Toid
entif
yan
ddi
scus
sw
ithM
anag
emen
ton
the
appr
opria
teva
luat
ion
met
hodo
logy
;
Tope
rform
valu
atio
nof
the
Com
pani
esba
sed
onC
ostA
ppro
ach
only
;
Tope
rform
asi
tevi
sitt
oth
efa
ctor
yow
ned
byZh
ihe
Tech
nolo
gyan
dob
serv
eth
eop
erat
ing
cond
ition
sof
the
fact
ory
and
the
mac
hine
ry;
Tolia
ise
with
Man
agem
ent
toad
dres
san
yqu
erie
son
the
valu
atio
nm
etho
dolo
gyan
dco
nclu
sion
s.
Stag
e3:
Doc
umen
tatio
nan
dR
epor
t
Topr
epar
eth
eva
luat
ion
repo
rt,de
tailin
gou
rin
vest
igat
ions
,as
sum
ptio
ns,
anal
ysis
and
findi
ngs
inar
rivin
gat
ouro
pini
onof
valu
e.
Tolia
ise
with
Man
agem
entt
oad
dres
san
yqu
erie
sbe
fore
final
isin
gth
eva
luat
ion
repo
rt.
EXC
LUSI
ON
S
Fort
heav
oida
nce
ofdo
ubts
,our
scop
eof
wor
kdo
noti
nclu
de:
Pre
para
tion
ofan
yfin
anci
alfo
reca
sts
orpr
ofor
ma
finan
cial
stat
emen
ts;
Asse
ssm
ent
ofth
ere
ason
able
ness
ofan
yfin
anci
alfo
reca
sts
orth
efe
asib
ility
ofth
ebu
sine
sspl
an;
Giv
ing
anop
inio
non
the
mer
itsof
any
prop
osed
trans
actio
nsan
dth
efa
irnes
sof
the
cont
empl
ated
term
sth
ereo
f;
Val
uatio
nof
the
Pro
perty
,P
lant
and
Equ
ipm
ent(“PP&E”).
Whe
neve
rre
quire
d,w
ew
illas
sum
eth
atth
eN
etB
ook
Val
ueof
the
PP
&E
repr
esen
tsth
eM
arke
tV
alue
.If
we
are
requ
ired
tope
rform
inde
pend
ent
valu
atio
nof
the
PP
&E
,w
ere
serv
eth
erig
htto
revi
seou
rfee
s;
Aud
iting
,re
view
ing
orve
rific
atio
nof
the
info
rmat
ion
tobe
prov
ided
tous
durin
gth
eco
urse
ofth
een
gage
men
t;
Rec
onci
liatio
nof
finan
cial
stat
emen
tsor
man
agem
enta
ccou
nts
prep
ared
inac
cord
ance
with
loca
lacc
ount
ing
stan
dard
sto
IFR
S.
Our
proc
edur
esan
den
quiri
esdo
notc
onst
itute
anau
diti
nac
cord
ance
with
the
audi
ting
stan
dard
sge
nera
llyac
cept
ed.
Ther
efor
e,w
edo
not
expr
ess
any
opin
ions
onth
efin
anci
alst
atem
ents
ofth
eC
ompa
nyan
dth
ere
late
den
titie
s.
Our
scop
eof
wor
kdo
esno
tre
quire
usto
prov
ide
any
advi
ceon
lega
l,re
gula
tory
,ac
coun
ting
orta
xm
atte
rs.
Det
erm
inat
ion
ofan
yde
viat
ions
from
the
appl
icab
leac
coun
ting
stan
dard
s,or
ofan
ym
isre
pres
enta
tions
,fra
ud,o
ther
erro
rsor
irreg
ular
ities
;and
Maz
ars
isno
treq
uire
dto
furn
ish
addi
tiona
lwor
kor
serv
ices
,ort
ogi
vete
stim
ony,
orbe
inat
tend
ance
inco
urt
with
refe
renc
eto
this
assi
gnm
ent,
orto
upda
teth
eva
luat
ion
repo
rt,th
ean
alys
is,t
heco
nclu
sion
sor
othe
rdo
cum
ents
rela
ting
toou
rser
vice
sfo
rany
even
tsor
circ
umst
ance
s,un
less
arra
ngem
ents
acce
ptab
leto
Maz
ars
have
been
sepa
rate
lyag
reed
with
the
Clie
nt.
PR
IVA
TE &
CO
NFI
DE
NTI
AL
29
AP
PE
ND
IX 1
–E
NG
AG
EM
EN
T O
VE
RV
IEW
A. S
CO
PE
OF
WO
RK
BU
SIN
ES
S V
ALU
ATI
ON
RE
PO
RT
BM
M.B
002
31 D
EC
EM
BE
R 2
018
54
PR
OFE
SS
ION
AL
LIM
ITAT
ION
S A
ND
CO
ND
ITIO
NS
PRO
FESS
ION
AL
LIM
ITA
TIO
NS
AN
DC
ON
DIT
ION
S
This
repo
rtha
sbe
enpr
epar
edsu
bjec
tto
the
Assu
mpt
ions
and
Lim
iting
Con
ditio
nsas
seto
utin
App
endi
x1
ofou
reng
agem
entl
ette
r(re
fere
nce
num
ber:
BM
M.B
002)
date
d20
Sep
tem
ber
2018
asw
ella
sth
efo
llow
ing
assu
mpt
ions
and
limiti
ngco
nditi
ons:
Our
valu
atio
nw
ork
has
been
cond
ucte
din
acco
rdan
cew
ithth
ere
quire
men
tsof
IVS
2017
.Th
eco
nclu
sion
ofva
lue
arriv
edat
here
inis
valid
only
fort
hest
ated
purp
ose
asof
the
date
ofth
eva
luat
ion.
Fina
ncia
lsta
tem
ents
and
othe
rre
late
din
form
atio
npr
ovid
edby
the
Clie
nt,
the
Com
pany
orth
eir
repr
esen
tativ
es,
inth
eco
urse
ofth
isen
gage
men
t,ha
vebe
enac
cept
edw
ithou
tan
yve
rific
atio
nas
fully
and
corre
ctly
refle
ctin
gth
eenterprise’s
busi
ness
cond
ition
san
dop
erat
ing
resu
ltsfo
rth
ere
spec
tive
perio
ds,e
xcep
tas
spec
ifica
llyno
ted
here
in.W
eha
veno
taud
ited,
revi
ewed
,or
com
pile
dth
efin
anci
alin
form
atio
npr
ovid
edto
usan
d,ac
cord
ingl
y,w
eex
pres
sno
audi
top
inio
nor
any
othe
rfo
rmof
assu
ranc
eon
this
info
rmat
ion.
The
accu
racy
ofsu
chin
form
atio
nis
the
sole
resp
onsi
bilit
yof
the
Clie
ntan
dth
eC
ompa
ny.O
urco
nclu
sion
ofva
lue
isco
nditi
onal
upon
the
com
plet
enes
s,ac
cura
cyan
dfa
irpr
esen
tatio
nof
the
Info
rmat
ion
from
Man
agem
ent.
Our
valu
atio
nan
alys
isis
base
don
the
assu
mpt
ions
and
inpu
tspr
ovid
edby
the
Man
agem
ent.
Inac
cord
ance
with
the
requ
irem
ents
ofIV
S20
0,pa
ragr
aph
100.
1,w
eha
veta
ken
reas
onab
leef
forts
toas
sess
the
reas
onab
lene
ssof
the
sign
ifica
ntas
sum
ptio
nsan
din
puts
.How
ever
,we
dono
tpro
vide
any
assu
ranc
eon
the
achi
evab
ility
ofth
efin
anci
alfo
reca
sts.
The
resp
onsi
bilit
yof
achi
evin
gth
efo
reca
sts
rem
ains
the
sole
resp
onsi
bilit
yof
the
Man
agem
ent.
Our
valu
atio
nre
port
does
not
cons
titut
ean
yop
inio
nco
ncer
ning
the
mer
itsof
any
pote
ntia
lac
quis
ition
orin
vest
men
tand
the
fairn
ess
ofth
eco
ntem
plat
edte
rms
ther
eof.
The
deci
sion
topr
ocee
dw
ithan
yac
quis
ition
,inv
estm
ento
rdiv
estm
ento
roth
erw
ise
base
don
the
info
rmat
ion
cont
aine
din
this
repo
rtbe
long
sen
tirel
yto
the
Clie
nt.W
eas
sum
eno
resp
onsi
bilit
yor
liabi
lity
fora
nylo
sssu
ffere
dby
any
party
asa
resu
ltof
thei
rrel
ianc
eon
info
rmat
ion
cont
aine
din
this
repo
rt.
Pub
licin
form
atio
nan
din
dust
ryan
dst
atis
tical
info
rmat
ion
have
been
obta
ined
from
sour
ces
we
belie
veto
bere
liabl
e.H
owev
er,
we
mak
eno
repr
esen
tatio
nas
toth
eac
cura
cyor
com
plet
enes
sof
such
info
rmat
ion
and
have
perfo
rmed
nopr
oced
ures
toco
rrobo
rate
the
info
rmat
ion.
We
assu
me
nore
spon
sibi
lity
for
the
accu
racy
and
the
reas
onab
lene
ssof
such
info
rmat
ion.
Pos
sess
ion
ofou
rre
port,
ora
copy
,do
esno
tca
rryw
ithit
the
right
ofpu
blic
atio
n.N
opu
blic
atio
nof
our
repo
rtor
any
porti
onth
ereo
fsha
llbe
mad
ew
ithou
tthe
expr
esse
dw
ritte
nco
nsen
tofM
azar
s.
Sho
uld
the
Clie
ntor
the
Com
pany
prov
ide
copi
esof
orth
erig
htto
revi
ewou
rrep
ortt
oot
hers
,it
shal
ldo
soon
lyw
ithth
ew
ritte
nco
nsen
tofM
azar
san
don
lyif
the
Clie
ntfir
stad
vise
such
reci
pien
tsof
ourr
epor
ttha
twhi
leM
azar
s’re
port
ispe
rform
edat
the
requ
esto
fthe
Clie
nt,i
tis
prep
ared
inde
pend
ently
ona
non-
advo
cacy
basi
s.M
azar
sex
pres
sly
disc
laim
san
yre
pres
enta
tion
orw
arra
nty
wha
tsoe
vera
ndan
ydu
tyit
may
othe
rwis
eha
veto
any
such
third
party
.N
othi
ngin
our
repo
rtis
inte
nded
tore
plac
ean
yth
irdparty’s
inde
pend
ent
sole
judg
emen
t,du
edi
ligen
ce,o
rdec
isio
nto
seek
lega
l,ac
coun
ting,
orva
luat
ion
coun
sel.
The
prep
arat
ion
ofth
eva
luat
ion
repo
rtan
dits
conc
lusi
onar
eco
mpl
expr
oces
ses
and
itis
not
amen
able
topa
rtial
anal
ysis
orsu
mm
ary
desc
riptio
n.Th
ean
alys
esin
this
repo
rtm
ust
beco
nsid
ered
asa
who
lean
dth
atse
lect
ing
porti
ons
ofits
anal
yses
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ctor
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ithou
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gal
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ctor
san
dan
alys
esto
geth
er,
coul
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eate
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com
plet
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ewof
the
proc
ess
and
anal
yses
unde
rlyin
gth
eva
luat
ion
and
the
conc
lusi
on.T
hean
alys
essu
mm
aris
edin
this
repo
rtin
clud
ein
form
atio
npr
esen
ted
inta
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rfor
mat
.To
unde
rsta
ndth
ean
alys
esco
mpl
eted
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azar
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eta
bles
mus
tbe
read
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ther
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chsu
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ary.
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tabl
esal
one
dono
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tea
com
plet
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scrip
tion
ofth
ean
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CLA
IMER
OF
POST
DA
TEEV
ENTS
We
have
subm
itted
adr
aftr
epor
tto
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man
agem
entp
rior
tofin
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atio
nof
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repo
rt.Th
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port
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ders
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ing
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agem
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ters
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are
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vean
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eda
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conc
lusi
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mar
ket,
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omic
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dust
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etar
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atio
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me
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lity
and
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ired
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vise
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affir
mou
rco
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flect
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tsor
deve
lopm
ents
subs
eque
ntto
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issu
eof
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inal
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rt.
PR
IVA
TE &
CO
NFI
DE
NTI
AL
30
AP
PE
ND
IX 1
–E
NG
AG
EM
EN
T O
VE
RV
IEW
B. P
RO
FES
SIO
NA
L LI
MIT
ATI
ON
S A
ND
CO
ND
ITIO
NS
BU
SIN
ES
S V
ALU
ATI
ON
RE
PO
RT
BM
M.B
002
31 D
EC
EM
BE
R 2
018
55
IND
EP
EN
DE
NC
E
IND
EPEN
DEN
CE
We
conf
irmth
atM
azar
s,its
partn
ers,
dire
ctor
sor
empl
oyee
s,su
bcon
tract
ors,
ifan
yar
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depe
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ecte
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ithan
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rect
ors,
chie
fexe
cutiv
e,su
bsta
ntia
lsha
reho
lder
sof
the
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nt,C
ompa
nyor
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rres
pect
ive
asso
ciat
es.
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conf
irmth
atw
eha
veno
pres
ent
orco
ntem
plat
edin
tere
stin
the
asse
tsw
hich
are
the
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ecto
fthi
sva
luat
ion
and
are
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gin
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nden
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rties
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fees
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agre
edon
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mp
sum
basi
san
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eno
tcon
tinge
nton
the
outc
ome.
CO
NFL
ICT
OF
INTE
RES
T
We
conf
irmth
atw
ear
eno
tcu
rrent
lyac
ting
for
any
parti
esno
ren
gage
din
any
wor
kw
hich
mig
htgi
veris
eto
aco
nflic
tofi
nter
est.
PR
IVA
TE &
CO
NFI
DE
NTI
AL
31
AP
PE
ND
IX 1
–E
NG
AG
EM
EN
T O
VE
RV
IEW
C. I
ND
EP
EN
DE
NC
E
BU
SIN
ES
S V
ALU
ATI
ON
RE
PO
RT
BM
M.B
002
31 D
EC
EM
BE
R 2
018
56
SO
UR
CE
S O
F IN
FOR
MAT
ION
INFO
RM
ATI
ON
FRO
MM
AN
AG
EMEN
T
Ziw
oG
roup
Org
anis
atio
nch
arta
sat
30S
epte
mbe
r201
8.
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solid
ated
man
agem
enta
ccou
nts
ofth
eZi
wo
Gro
upas
at30
Sep
tem
ber2
018.
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ited
finan
cial
stat
emen
tsof
Ziw
oH
oldi
ngs
Ltd
from
FY20
13to
FY20
17.
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ious
anno
unce
men
tsan
dre
spon
ses
toS
GX
quer
ies
from
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to20
18.
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ere
ceiv
able
agin
gsc
hedu
leof
Zhih
eTe
chno
logy
asat
30S
epte
mbe
r201
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perty
valu
atio
nre
port
date
d8
May
2018
inre
latio
nto
the
land
and
build
ing
held
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wo
Gro
up.
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ular
toth
esh
areh
olde
rsda
ted
11D
ecem
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2017
inre
latio
nto
the
dive
rsifi
catio
nof
the
core
busi
ness
ofZi
wo
Hol
ding
s.
Ziw
oHoldings’
IPO
Pro
spec
tus
date
d30
Sep
tem
ber2
009.
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uspr
oper
tyan
dla
ndow
ners
hip
certi
ficat
esin
rela
tion
toth
ela
ndan
dbu
ildin
ghe
ldby
Ziw
oG
roup
.
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ices
and
conf
irmat
ions
from
the
loca
lgov
ernm
ent
auth
ority
toZi
wo
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upin
rela
tion
toth
ela
ndan
dbu
ildin
ghe
ldby
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oG
roup
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lcor
resp
onde
nces
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esen
tatio
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ade
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anag
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tdur
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cour
seof
our
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k.
DIS
CU
SSIO
NW
ITH
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FOLL
OW
ING
PER
SON
S
Mr.
Wils
onC
hua,
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eral
Man
ager
forF
inan
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dA
dmin
,BM
Mob
ility
;
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Sim
onK
oo,E
xecu
tive
Cha
irman
,BM
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ility;
and
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Wan
gJi
anho
ng,P
rocu
rem
entM
anag
er,Z
hihe
Tech
nolo
gy.
INFO
RM
ATI
ON
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MO
THER
SOU
RC
ES
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tistic
son
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nam
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ring
sect
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ages
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orld
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rtsfro
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),fro
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,M
alay
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ters
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ake-
thei
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ualti
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acto
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rbes
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bes
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azin
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lties
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Com
pani
esFl
eeO
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eas
toA
void
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Tarif
fs.”
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nnel
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sAsi
a,11
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t.20
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hann
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rmat
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onco
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beta
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arke
tca
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and
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epr
ice
from
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ombe
rgLP
.
PR
IVA
TE &
CO
NFI
DE
NTI
AL
32
AP
PE
ND
IX 1
–E
NG
AG
EM
EN
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VE
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IEW
D. S
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ATI
ON
BU
SIN
ES
S V
ALU
ATI
ON
RE
PO
RT
BM
M.B
002
31 D
EC
EM
BE
R 2
018
57
Tabl
e of
con
tent
s
PR
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TE &
CO
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DE
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BU
SIN
ES
S V
ALU
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RT
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M.B
002
31 D
EC
EM
BE
R 2
018
33
GLO
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RES
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EN D
UR
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OC
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PE
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STE
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PA
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MP
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PA
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MP
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IES
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SIN
ES
S V
ALU
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RT
BM
M.B
002
31 D
EC
EM
BE
R 2
018
Sou
rce:
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PE
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018
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petro
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37
GLO
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38
AP
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63
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64
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65
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66
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67
Tabl
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con
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s
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43
GLO
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EW O
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IT
1 2 3 4 5 6
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44
AP
PE
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IX 4
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UM
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TS P
RO
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ED
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RIN
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HE
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BM
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EM
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018
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DE
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AL
45
AP
PE
ND
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–D
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ED
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018
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AP
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47
AP
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EM
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48
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73
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018
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018
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018
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018
Adv
isor
y re
port
from
loca
l gov
ernm
ent r
egar
ding
the
cond
ition
s fo
r pro
perty
tran
sact
ion
78
APPENDIX B
Group Structure Before Proposed Disposal
BM Mobility Ltd.
Estar Investments Pte Ltd
100%
Beijing E-Star Electric Technology Co. Ltd
B
Wanted Marketing Communications
Sdn Bhd
BMM Solutions Pte Ltd
Ziwo (Fujian) Import & Export Trading
Co., Ltd
Zhihe (Fujian) Technoloy Co., Ltd
Quanzhou Yi Xiang Textile Co., Ltd
65%
84% 100%
84% 100%
Uniride Ecotour Sdn. Bhd.
75%
100% 100%
100%
Group Structure After Proposed Disposal
BM Mobility Ltd.
Estar Investments Pte Ltd
100%
Beijing E-Star Electric Technology Co. Ltd
BM Mobility Sdn. Bhd.
Wanted Marketing Communications
Sdn Bhd
BMM Solutions Pte Ltd
65%
84% 100%
84% 100%
Uniride Ecotour Sdn. Bhd.
75%
79
NOTI CE OF EXTRAORDINARY GENERAL MEETING
BM MOBILITY LTD.(Incorporated in the Republic of Singapore)
Company Registration No. 200800853Z
NOTICE IS HEREBY GIVEN that an Extraordinary General Meeting of BM Mobility Ltd. (the “Company”) will be held at 10 Anson Road, #36-05A International Plaza, Singapore 079903 , on 29 April 2019 at 2.00 p.m. for the purpose of considering and, if thought fi t, passing with or without modifi cations, the following Resolution, which will be proposed as an Ordinary Resolution:
All capitalised terms in this notice shall have the same meanings as ascribed to them in the Circular dated 12 April 2019 to Shareholders, unless otherwise defi ned herein.
ORDINARY RESOLUTION
APPROVAL FOR THE PROPOSED DISPOSAL OF THE ENTIRE ISSUED AND PAID-UP CAPITAL OF ZHIHE (FUJIAN) TECHNOLOGY CO., LTD. AND ZIWO (FUJIAN) IMPORT & EXPORT TRADING CO., LTD.
That:
(a) approval be and is hereby given for the sale of the entire issued and paid-up share capital in each of the Company’s wholly-owned subsidiaries, Zhihe (Fujian) Technology Co., Ltd. and Ziwo (Fujian) Import & Export Trading Co., Ltd. to Hong Kong Bangwei Investment Limited (香港邦威投资有限公司) in accordance with the terms and conditions of the Agreement entered into between the Company and Hong Kong Bangwei Investment Limited; and
(b) the Directors of the Company and each of them be and are hereby authorised to complete and do all such acts and things (including executing all such documents as may be required under or pursuant to the Agreement) as they or he may consider necessary, desirable or expedient or in the interests of the Company to give effect to this Resolution as they or he may deem fi t.
By Order of the Board
Tay Wee KwangExecutive Director and Chief Executive Offi cer12 April 2019
Notes:
1. (a) A member who is not a relevant intermediary is entitled to appoint not more than two proxies to attend, speak and vote at the Extraordinary General Meeting. Where such member’s form of proxy appoints more than one proxy, the proportion of the shareholding concerned to be represented by each proxy shall be specifi ed in the form of proxy.
(b) A member who is a relevant intermediary is entitled to appoint more than two proxies to attend, speak and vote at the Extraordinary General Meeting, but each proxy must be appointed to exercise the rights attached to a different share or shares held by such member. Where such member’s form of proxy appoints more than two proxies, the number and class of shares in relation to which each proxy has been appointed shall be specifi ed in the form of proxy.
“Relevant intermediary” has the meaning ascribed to it in Section 181 of the Companies Act, Chapter 50 of Singapore.
2. A proxy need not be a member of the Company.
3. The instrument appointing a proxy or proxies must be lodged at the offi ce of the Company’s Share Registrar, B.A.C.S. Private Limited at 8 Robinson Road, #03-00 ASO Building, Singapore 048544 not less than 48 hours before the time appointed for the Extraordinary General Meeting.
80
Personal data privacy:
By submitting an instrument appointing a proxy(ies) and/or representative(s) to attend, speak and vote at the Extraordinary General Meeting and/or any adjournment thereof, a member of the Company (i) consents to the collection, use and disclosure of the member’s personal data by the Company (or its agents or service providers) for the purpose of the processing, administration and analysis by the Company (or its agents or service providers) of proxies and representatives appointed for the Extraordinary General Meeting (including any adjournment thereof) and the preparation and compilation of the attendance lists, minutes and other documents relating to the Extraordinary General Meeting (including any adjournment thereof), and in order for the Company (or its agents or service providers) to comply with any applicable laws, listing rules, take-over rules, regulations and/or guidelines (collectively, the “Purposes”), (ii) warrants that where the member discloses the personal data of the member’s proxy(ies) and/or representative(s) to the Company (or its agents or service providers), the member has obtained the prior consent of such proxy(ies) and/or representative(s) for the collection, use and disclosure by the Company (or its agents or service providers) of the personal data of such proxy(ies) and/or representative(s) for the Purposes, and (iii) agrees that the member will indemnify the Company in
respect of any penalties, liabilities, claims, demands, losses and damages as a result of the member’s breach of warranty.
BM MOBILITY LTD.(Incorporated in the Republic of Singapore)(Company registration no. 200800853Z)
PROXY FORMEXTRAORDINARY GENERAL MEETING(Please see notes overleaf before completing this Form)
I/We*, (Name) (NRIC / Passport No.)
of (Address)
being a member/members* of BM Mobility Ltd. (the “Company”), hereby appoint:
Name NRIC/Passport No. Proportion of Shareholding
No. of Shares %
Address
and/or*
Name NRIC/Passport No. Proportion of Shareholding
No. of Shares %
Address
or failing him/her*, the Chairman of the EGM (defi ned below), as my/our* proxy/proxies* to vote for me/us* on my/our* behalf at the Extraordinary General Meeting (“EGM”) of BM Mobility Ltd. to be held at 10 Anson Road, #36-05A International Plaza, Singapore 079903 on 2 9 April 2019 at 2.00 p.m. and at any adjournment thereof.
I/We* direct my/our* proxy/proxies* to vote for or against the resolution proposed at the EGM as indicated hereunder. If no specifi c direction as to voting is given, the proxy/proxies* will vote or abstain from voting at his/her* discretion.
(Please indicate your vote “For” or “Against” with a tick [] within the box provided.)
For Against
Ordinary Resolution: Approval for the Proposed Disposal.
Dated this day of 2019
Total Number of Shares Held
Signature(s) of Member(s) or Common Seal
*Delete where inapplicable
IMPORTANT: PLEASE READ NOTES BELOW CAREFULLY BEFORE COMPLETING THIS FORMNOTES:1. Except for a member who is a Relevant Intermediary as defi ned under Section 181(6) of the Companies Act, Chapter 50 of Singapore (the
“Companies Act”), a member is entitled to appoint not more than two proxies to attend, speak and vote at the Extraordinary General Meeting (“EGM”). Where a member appoints more than one proxy, the proportion of his concerned shareholding to be represented by each proxy shall be specifi ed in the proxy form.
2. Pursuant to Section 181(1C) of the Companies Act, a member who is a Relevant Intermediary is entitled to appoint more than two proxies to attend, speak and vote at the EGM, but each proxy must be appointed to exercise the rights attached to a different share or shares held by such member. Where such member appoints more than two proxies, the number and class of shares in relation to which each proxy has been appointed shall be specifi ed in the proxy form.
3. A proxy need not be a member of BM Mobility Ltd..4. A member should insert the total number of shares held. If the member has shares entered against his/her name in the Depository Register
(as defi ned in Section 81SF of the Securities and Futures Act, Chapter 289 of Singapore), he/she should insert that number of shares. If the member has shares registered in his/her name in the Register of Members of BM Mobility Ltd., he/she should insert that number of shares. If the member has shares entered against his/her name in the Depository Register and registered in his/her name in the Register of Members, he/she should insert the aggregate number of shares. If no number is inserted, this form of proxy will be deemed to relate to all the shares held by the member.
5. The instrument appointing a proxy or proxies must be deposited at the registered offi ce of BM Mobility Ltd. at 8 Robinson Road, #03-00 ASO Building, Singapore 048544, not less than 48 hours before the time set for the EGM.
6. The instrument appointing a proxy or proxies must be under the hand of the appointor or of his attorney duly authorised in writing. Where the instrument appointing a proxy or proxies is executed by a corporation, it must be executed either under its common seal or under the hand of its attorney or duly authorised offi cer.
7. Where an instrument appointing a proxy is signed on behalf of the appointor by an attorney, the letter or power of attorney or a duly certifi ed copy thereof must (failing previous registration with BM Mobility Ltd.) be lodged with the instrument of proxy, failing which the instrument may be treated as invalid.
8. A corporation which is a member may authorise by resolution of its directors or other governing body such person as it thinks fi t to act as its representative at the EGM, in accordance with Section 179 of the Companies Act.
9. An investor who buys shares using CPF monies (“CPF Investor”) and/or SRS monies (“SRS Investor”) (as may be applicable) may attend and cast his vote(s) at the EGM in person. CPF and SRS Investors who are unable to attend the EGM but would like to vote, may inform their CPF and/or SRS Approved Nominees to appoint the Chairman of the EGM to act as their proxy, in which case, the CPF and SRS Investors shall be precluded from attending the EGM.
GENERAL:BM Mobility Ltd. shall be entitled to reject an instrument of proxy which is incomplete, improperly completed, illegible or where the true intentions of the appointor are not ascertainable from the instructions of the appointor specifi ed on the instrument of proxy. In addition, in the case of shares entered in the Depository Register, BM Mobility Ltd. may reject an instrument of proxy if the member, being the appointor, is not shown to have shares entered against his name in the Depository Register as at 72 hours before the time appointed for holding the EGM.
A Depositor shall not be regarded as a member of BM Mobility Ltd. entitled to attend the EGM and to speak and vote thereat unless his name appears on the Depository Register 72 hours before the time set for the EGM.
PERSONAL DATA PRIVACY:By submitting a proxy form appointing a proxy(ies) and/or representative(s) to attend, speak and vote at the EGM and/or any adjournment thereof, a member of BM Mobility Ltd. (i) consents to the collection, use and disclosure of the member’s personal data by BM Mobility Ltd. (or its agents) for the purpose of the processing and administration by BM Mobility Ltd. (or its agents) of proxies and representatives appointed for the EGM (including any adjournment thereof) and the preparation and compilation of the attendance lists, minutes and other documents relating to the EGM (including any adjournment thereof), and in order for BM Mobility Ltd. (or its agents) to comply with any applicable laws, listing rules, regulations and/or guidelines (collectively, the “Purposes”), (ii) warrants that where the member discloses the personal data of the member’s proxy(ies) and/or representative(s) to BM Mobility Ltd. (or its agents), the member has obtained the prior consent of such proxy(ies) and/or representative(s) for the collection, use and disclosure by BM Mobility Ltd. (or its agents) of the personal data of such proxy(ies) and/or representative(s) for the Purposes, and (iii) agrees that the member will indemnify BM Mobility Ltd. in respect of any penalties, liabilities, claims, demands, losses and damages as a result of the member’s breach of warranty.
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BM Mobility Ltd.c/o B.A.C.S. Private Limited
8 Robinson Road#03-00 ASO Building
Singapore 048544
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