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.

15

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.

16

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.

17

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.

18

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

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UTI

VE S

UM

MAR

Y

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OM

PAN

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UST

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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

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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

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ore

Tax

EV

Ent

erpr

ise

Val

ue

FCFF

Free

Cas

hFl

owto

Firm

FYFi

nanc

ialy

eare

ndin

g31

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embe

r

IVS

Inte

rnat

iona

lVal

uatio

nS

tand

ards

IVS

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tern

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nalV

alua

tion

Sta

ndar

dsC

ounc

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kTh

ousa

nds

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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

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AL

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S V

ALU

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RT

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M.B

002

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018

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VE S

UM

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Y

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IND

UST

RY

OU

TLO

OK

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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

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DED

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RIN

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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

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isva

luat

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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

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uent

lyce

ased

oper

atio

nsin

Q1

FY20

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Ziw

oG

roup

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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

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roac

han

dM

arke

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roac

har

eco

nsid

ered

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inap

prop

riate

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such

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eha

vere

lied

onth

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umm

atio

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etho

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etho

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der

the

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ach

toes

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eca

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lin

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roup

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ase

refe

rto

Sec

tion

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uatio

nM

etho

dolo

gies

form

ore

deta

iled

disc

ussi

ons

onth

ese

lect

ion

ofva

luat

ion

met

hodo

logy

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CU

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E S

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XEC

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AR

Y

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ility

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ang

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ESS

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mpt

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ters

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arke

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ueof

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asse

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chis

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anth

eto

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liabi

litie

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illion

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ultin

gin

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iabi

litie

sof

RM

B16

.3m

illio

nas

at30

Sep

tem

ber2

018

(the“ValuationDate”).

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the

Sum

mat

ion

Met

hod,

asth

ere

sulti

ngM

arke

tVal

ueof

the

neta

sset

sis

low

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anze

ro,t

heM

arke

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ueof

the

100%

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tyin

tere

stin

Ziw

oG

roup

isco

mpu

ted

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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

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illion

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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

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2010

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dat

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tern

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tion,

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nof

both

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ently

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ober

2015

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man

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sequ

ently

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ced

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rther

mor

e,de

velo

ping

new

prod

ucts

istim

e-co

nsum

ing

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ess

ishi

ghly

unce

rtain

.

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trac

kre

cord

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ihe

Tech

nolo

gyw

ases

tabl

ishe

din

2005

and

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ted

tola

unch

itspr

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tsin

2006

.

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tom

erre

latio

nshi

p:vo

ted

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eof

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top

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BR

and

draw

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xtur

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ngle

filam

enty

arn

inth

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in20

07an

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cally

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ack

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eve

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.H

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ages

have

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aged

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fect

ive

prod

ucts

in20

15w

here

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pani

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dto

pay

ato

talo

fRM

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milli

onto

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stom

ers

asou

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ourt

settl

emen

t.

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titut

epr

oduc

ts:i

n20

15,t

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ompa

nies

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ase

prod

uctio

nof

30D

TFY

asit

was

rend

ered

obso

lete

byw

arpe

dya

rn.

Ris

ing

labo

urco

sts:

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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

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nom

ist

Inte

lligen

ceU

nit.

Ple

ase

refe

rto

Sec

tion

4–

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stry

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look

for

mor

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atio

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geth

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ing

labo

urco

sts,

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high

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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–

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stry

Out

look

form

ore

info

rmat

ion.

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prod

uct

diffe

rent

iatio

n:th

epr

oduc

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the

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pani

esar

era

wm

ater

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orth

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oes

and

appa

rels

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ese

prod

ucts

carry

nobr

andi

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mar

ksto

diffe

rent

iate

them

from

the

com

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hem

anuf

actu

rers

can

freel

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itch

toa

diffe

rent

supp

lier.

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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

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clin

ing

gros

spr

ofit

mar

gin.

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olet

em

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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

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low

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es.

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AN

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11

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4.1

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13 17

37

SLO

WIN

GG

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GR

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TH

Sin

ceth

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with

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refo

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and

trade

liber

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hina

has

cons

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ntly

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amon

gth

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fast

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ing

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ever

,asChina’s

econ

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ures

,its

real

GD

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owth

rate

has

slow

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cant

lyfro

m14

.2%

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07to

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17.

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expe

ctsChina’s

GD

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owth

rate

tosl

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enfu

rther

to5.

5%in

2023

.

Sou

rce:

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MA

CR

OE

CO

MO

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FA

CTO

RS

SLO

WIN

GG

RO

WTH

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MA

NU

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thin

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cade

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nbe

attri

bute

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and

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rise

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Cs

mov

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sto

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take

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time,

farm

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mov

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mru

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ties

tow

ork

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ctor

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ala

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pool

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ce,

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.

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,th

em

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ring

sect

or,

once

am

ajor

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grow

thfo

rC

hina

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stut

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gan

dis

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nov

eral

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wth

.

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rce:

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iona

lBur

eau

ofS

tatis

tics

ofC

hina

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mai

nch

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actu

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clud

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san

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ithth

eU

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usin

ghi

gher

impo

rtta

riffs

for

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nese

good

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PR

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0%2%4%6%8%10%

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199719981999200020012002200320042005200620072008200920102011201220132014201520162017201820192020202120222023

Chi

na G

DP

grow

th e

xpec

ted

to s

low

eve

n fu

rthe

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l GD

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has

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l GD

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kee

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drag

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ever

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e

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INK

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UR

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nais

now

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ngse

rious

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ange

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raph

y.Th

e“one

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lted

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rapi

dly-

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pula

tion

and

ash

rinki

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bour

forc

e.

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rce:

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iona

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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

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t(“EIU”)

expe

cts

the

shar

eof

the

youn

ger

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latio

n(1

5-39

year

sol

d),t

odr

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m38

%of

the

tota

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tion

in20

13to

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by20

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paris

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nChina’s

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mid

and

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m,

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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).

Ziw

oGroup’s

oper

atio

nsha

sce

ased

inQ

1FY

2018

.Up

toth

eV

alua

tion

Dat

e,th

ebu

sine

ssse

ntim

ents

have

furth

erde

terio

rate

dw

ithtra

dete

nsio

nsbe

twee

nC

hina

and

US

and

firm

sle

avin

gC

hina

foro

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

Dec

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

dun

dert

heC

ostA

ppro

ach

toes

timat

eth

eM

arke

tVal

uera

nge

ofth

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

%.T

heC

ompa

nies

focu

sed

onR

&D

and

succ

essf

ully

deve

lope

dfla

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

was

nam

edas

one

ofth

eto

pse

llers

offo

amed

SB

Ran

ddr

awn

text

ured

filam

enty

arn

inth

eP

RC

in20

09.

Dur

ing

this

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.

Mat

ure

Stag

e(F

Y200

9on

war

ds):

reve

nue

appe

ared

tobe

driv

enby

the

over

allg

row

thof

the

Man

ufac

turin

gS

ecto

r.A

sth

eM

anuf

actu

ring

Sec

tor

reco

vere

dfro

mth

eef

fect

sof

the

Glo

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

has

been

decr

easi

ngat

aC

AG

Rof

-36%

toon

lyR

MB

22.4

milli

onin

FY20

17.

InFY

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:

Aud

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.

How

ever

,it

was

disc

ontin

ued

inFY

2015

whe

nfa

ulty

mac

hine

ryan

dpo

orqu

ality

cont

rol

caus

edde

fect

ive

prod

ucts

tobe

deliv

ered

toke

ycu

stom

ers,

resu

lting

infa

ulty

prod

uct

clai

ms

ofR

MB

133.

7m

illio

n.

SM

Fw

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

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ents

-

0%

-

-

0%2

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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 &

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nt a

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quip

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t82

2

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2

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Land

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t-

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tal N

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nt A

sset

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l Ass

ets

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03

100%

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10,7

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Curr

ent L

iabi

litie

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ade

paya

bles

264

1%

-

264

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Sal

ary

Pay

able

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389

9%-

2,

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dvan

ce p

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ent r

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ved

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x pa

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n fo

r SS

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7

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%O

ther

pay

able

s20

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%-

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,400

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6P

rovis

ion

21

0%-

21

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ue to

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tal C

urre

nt L

iabi

litie

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l Lia

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ies

27,0

01

100%

-

27,0

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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

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uild

ing

cann

ot b

e so

ld s

epar

atel

y2

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ldin

g A

416

,463

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ldin

g ca

nnot

be

sold

sep

arat

ely

3B

uild

ing

B1

3,90

5.83

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ldin

g ca

nnot

be

sold

sep

arat

ely

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uild

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C1

2,15

7.86

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ldin

g ca

nnot

be

sold

sep

arat

ely

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uild

ing

D1

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pora

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uild

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certi

ficat

e6

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ldin

g E

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062.

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mpo

rary

bui

ldin

g. N

o ce

rtific

ate

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uild

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F1

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00

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pora

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uild

ing.

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certi

ficat

e8

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ldin

g G

196

0.00

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mpo

rary

bui

ldin

g. N

o ce

rtific

ate

Yixi

ang

(land

lot n

o. A

-11(

C)):

.1

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ce6

7,39

7.00

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cons

truct

ion

perm

it2

Fact

ory

#11

2,43

2.70

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cons

truct

ion

perm

it3

Fact

ory

#23

9,19

0.72

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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

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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.

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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.

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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

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BU

SIN

ES

S V

ALU

ATI

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RE

PO

RT

BM

M.B

002

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EC

EM

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R 2

018

Due

to re

late

d pa

rties

Rela

ted

parti

es(R

MB

'000

)1

BM

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ility

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60

2

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ar22

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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

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EC

EM

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R 2

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SUM

MAT

ION

MET

HO

D(R

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000)

30-S

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e re

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ther

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yabl

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alar

y P

ayab

les

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89)

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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

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PO

RT

BM

M.B

002

31 D

EC

EM

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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:

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utio

n

Toid

entif

yan

ddi

scus

sw

ithM

anag

emen

ton

the

appr

opria

teva

luat

ion

met

hodo

logy

;

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rform

valu

atio

nof

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Com

pani

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sed

onC

ostA

ppro

ach

only

;

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rform

asi

tevi

sitt

oth

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ctor

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ned

byZh

ihe

Tech

nolo

gyan

dob

serv

eth

eop

erat

ing

cond

ition

sof

the

fact

ory

and

the

mac

hine

ry;

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ise

with

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agem

ent

toad

dres

san

yqu

erie

son

the

valu

atio

nm

etho

dolo

gyan

dco

nclu

sion

s.

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e3:

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umen

tatio

nan

dR

epor

t

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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;

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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

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anal

yses

orth

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plet

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unde

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DIS

CLA

IMER

OF

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TEEV

ENTS

We

have

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itted

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aftr

epor

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man

agem

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rior

tofin

alis

atio

nof

this

repo

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port

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and

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me

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lity

and

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vise

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affir

mou

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issu

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DE

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AL

30

AP

PE

ND

IX 1

–E

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AG

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EN

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irmth

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ifan

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irmth

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edin

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asse

tsw

hich

are

the

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ecto

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luat

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and

are

actin

gin

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nden

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fees

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agre

edon

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sum

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RES

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gage

din

any

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kw

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est.

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AL

31

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PE

ND

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Ziw

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solid

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agem

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nts

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eZi

wo

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upas

at30

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tem

ber2

018.

Aud

ited

finan

cial

stat

emen

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Ziw

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from

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spon

ses

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ies

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2015

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18.

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agin

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date

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land

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held

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core

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spec

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date

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ber2

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DIS

CU

SSIO

NW

ITH

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FOLL

OW

ING

PER

SON

S

Mr.

Wils

onC

hua,

Gen

eral

Man

ager

forF

inan

cean

dA

dmin

,BM

Mob

ility

;

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Sim

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oo,E

xecu

tive

Cha

irman

,BM

Mob

ility;

and

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Wan

gJi

anho

ng,P

rocu

rem

entM

anag

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hihe

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nolo

gy.

INFO

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://w

ww

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rbes

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azin

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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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Affi xPostageStamp

BM Mobility Ltd.c/o B.A.C.S. Private Limited

8 Robinson Road#03-00 ASO Building

Singapore 048544

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