Innovax Holdings Limited — Proxy Solicitation & Information Statement 2017

Nov 3, 2017

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action you should take, you should consult your licensed securities dealer or registered institution in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all of your shares in Tesson Holdings Limited, you should at once hand this circular and the accompanying form of proxy to the purchaser or transferee, or to the bank, licensed securities dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

TESSON HOLDINGS LIMITED 天臣控股有限公司 (Incorporated in Bermuda with limited liability) (Stock code: 1201)

(1) VERY SUBSTANTIAL DISPOSAL; AND

(2) NOTICE OF SPECIAL GENERAL MEETING

Financial Adviser to the Company

Capitalised terms used in this cover shall have the same meanings as defined in this circular.

A notice convening the SGM to be held at Picasso Room B, B1 Level, InterContinental Grand Stanford Hong Kong, 70 Mody Road, Tsim Sha Tsui East, Kowloon, Hong Kong at 11:00 a.m. on Thursday, 23 November 2017 is set out on pages 81 to 82 of this circular. A form of proxy for use at the SGM is enclosed with this circular.

If you are not able to attend the SGM, please complete and sign the form of proxy in accordance with the instructions printed thereon and return it to the Company’s registrar in Hong Kong, Computershare Hong Kong Investor Services Limited at 17M/F., Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong as soon as possible but in any event not less than 48 hours before the time appointed for holding of the SGM or any adjournment thereof. Completion and return of the form of proxy will not preclude shareholders from attending and voting in person at the SGM or any adjournment thereof should you so wish.

6 November 2017

CONTENT

			Page
Definitions . .	. . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .			5
Appendix I	–	Financial Information of the Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	36
Appendix II	–	Unaudited Consolidated Financial Information of
		the Disposal Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	45
Appendix III	–	Unaudited Pro Forma Financial Information of
		the Remaining Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	52
Appendix IV	–	Profit Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	66
Appendix V	–	General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	73
Notice of Special		General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	81

– i –

DEFINITIONS

In this circular, the following expressions shall have the following meanings unless the context otherwise requires:

• ‘‘associates’’

has the meaning ascribed to it under the Listing Rules;

• ‘‘Board’’ the board of Directors;

• ‘‘Business Day(s)’’

a day (other than a Saturday, Sunday or public holiday in Hong Kong) on which licensed banks are generally open for business in Hong Kong throughout their normal business hours;

• ‘‘Company’’

• Tesson Holdings Limited (stock code: 1201), a company incorporated in Bermuda with limited liability, the issued Shares of which are listed on the Main Board of the Stock Exchange;

• ‘‘Completion’’ the completion of the Disposal;

• ‘‘Completion Date’’

• within seven Business Days after the fulfillment (or waiver, as the case may be) of the conditions under the SPA or such other date as the Vendor and the Purchaser may agree in writing;

• ‘‘connected person(s)’’ has the meaning ascribed to it under the Listing Rules;

• ‘‘Consideration’’

• the total consideration in the sum of HK$700,000,000 payable by the Purchaser to the Vendor pursuant to the SPA;

• ‘‘Director(s)’’ director(s) of the Company;

• ‘‘Disposal’’

• the disposal of the Sale Share and the Sale Loan by the Vendor to the Purchaser pursuant to the SPA;

• ‘‘Disposal Group’’

• the target companies set out under the section headed ‘‘Information on the Disposal Group’’ of this circular;

• ‘‘Escrow Agent’’

an agent appointed by the Purchaser and the Vendor to hold a cashier order representing the Deposit on escrow;

– 1 –

DEFINITIONS

• ‘‘Escrow Agreement’’

• ‘‘Financial Adviser’’

• ‘‘Group’’

• ‘‘Hong Kong’’

• ‘‘HK$’’

• ‘‘Independent Third Party(ies)’’

• ‘‘Latest Practicable Date’’

• ‘‘Listing Rules’’

• ‘‘Lithium Ion Motive Battery Business’’

• ‘‘Packaging Printing Business’’

an agreement dated 22 September 2017 entered into between the Purchaser, the Vendor and the Escrow Agent in relation to the appointment of the Escrow Agent and the procedures for releasing the cashier order representing the Deposit;

• Amasse Capital Limited, a licensed corporation to conduct type 6 (advising on corporate finance) regulated activity under the SFO, being the financial adviser to the Company in connection with the Disposal and the Profit Forecast included in this circular;

• the Company and its subsidiaries;

the Hong Kong Special Administrative Region of the PRC;

• Hong Kong dollar, the lawful currency of Hong Kong;

• a party(ies) who is/are not connected person(s) of the Company and who together with its/their ultimate beneficial owner(s) are independent of the Company and the connected persons of the Company;

• 1 November 2017, being the latest practicable date prior to the printing of this circular for the purpose of ascertaining certain information contained in this circular;

• the Rules Governing the Listing of Securities on the Stock Exchange;

one of the Group’s principal business activities, which is the manufacturing and sale of lithium ion motive battery, lithium ion battery module, battery charging devices, battery materials machines and production lines, new energy solution and sale of relevant equipment, investments holding and import and export trading;

one of the Group’s principal business activities, which is the printing and manufacturing of packaging products;

– 2 –

DEFINITIONS

‘‘PRC’’

the People’s Republic of China, excluding Hong Kong, Macau Special Administration Region of the PRC and Taiwan for the purpose of this circular;

• ‘‘Profit Forecast’’

• the forecast of profits of the operating subsidiaries of the Group in respect of the Lithium Ion Motive Battery Business for the financial year ending 31 December 2017 as set out in the section headed ‘‘Profit Forecast for the Lithium Ion Motive Battery Business for the year ending 31 December 2017’’ under the letter from the Board and Appendix IV to this circular;

• ‘‘Purchaser’’ AMVIG Investment Limited, a company incorporated in Hong Kong with limited liability and is a subsidiary of the Purchaser Guarantor;

• ‘‘Purchaser Guarantor’’ AMVIG Holdings Limited, a company incorporated in the Cayman Islands with limited liability, the issued shares of which are listed on the Main Board of the Stock Exchange (stock code: 2300);

• ‘‘Remaining Group’’ the Company and its subsidiaries but excluding the Disposal Group;

• ‘‘RMB’’ Renminbi, the lawful currency of the PRC;

• ‘‘Sale Loan’’

• all the debts owed and payable by the Disposal Group to the Vendor which remain outstanding on or at any time prior to Completion. For the purpose of illustration, such amount was approximately HK$204 million as at the Latest Practicable Date;

• ‘‘Sale Share’’

the entire issued share capital of the Target Company;

• ‘‘SFO’’

• the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong);

• ‘‘SGM’’

• the special general meeting to be convened by the Company for the Shareholders to consider and, if thought fit, approve the SPA and the transactions contemplated thereunder;

– 3 –

DEFINITIONS

‘‘Share(s)’’ ordinary share(s) of HK$0.10 each in the share capital of the Company;

‘‘Shareholder(s)’’ holder(s) of Share(s); ‘‘SPA’’ the conditional sale and purchase agreement dated 22 September 2017 and entered into by the Vendor, the Company, the Purchaser and the Purchaser Guarantor in respect of the Disposal;

• ‘‘Stock Exchange’’ The Stock Exchange of Hong Kong Limited;

‘‘Target Company’’ Outstanding Viewpoint Limited, a company incorporated in the British Virgin Islands with limited liability and is an indirect wholly-owned subsidiary of the Company;

‘‘Tesson Shenzhen’’ 天 臣 新 能 源（ 深 圳 ）有 限 公 司 ( T es s o n N e w E ne r g y (Shenzhen) Limited*), a company established under the laws of the PRC with limited liability and is an indirect subsidiary of the Company;

‘‘Vendor’’ Kith Limited, a company incorporated in the British Virgin Islands with limited liability and is a direct wholly-owned subsidiary of the Company; and

• ‘‘%’’ per cent.

• For identification purposes only

– 4 –

LETTER FROM THE BOARD

TESSON HOLDINGS LIMITED 天臣控股有限公司

(Incorporated in Bermuda with limited liability) (Stock code: 1201)

Executive Directors: Ms. Cheng Hung Mui Mr. Tin Kong Mr. Zhou Jin Mr. Chen Dekun Mr. Tao Fei Hu Mr. Sheng Siguang

Independent non-executive Directors: Mr. Wang Jinlin Mr. Ng Ka Wing Mr. See Tak Wah

Registered office: Clarendon House 2 Church Street Hamilton HM 11 Bermuda

Head office and principal place of business in Hong Kong: Room 1007 Tsim Sha Tsui Centre, West Wing 66 Mody Road Tsim Sha Tsui Hong Kong

6 November 2017

To the Shareholders

Dear Sir or Madam,

(1) VERY SUBSTANTIAL DISPOSAL; AND

(2) NOTICE OF SPECIAL GENERAL MEETING

INTRODUCTION

Reference is made to the announcement of the Company dated 22 September 2017 in relation to the Disposal, whereby on 22 September 2017 (after trading hours), the Vendor, the Company, the Purchaser and the Purchaser Guarantor entered into the SPA pursuant to which (i) the Vendor has conditionally agreed to sell and the Purchaser has conditionally agreed to acquire the Sale Share and the Sale Loan at the Consideration of HK$700,000,000 payable by the Purchaser in accordance with the terms and conditions of the SPA; (ii) the Company has unconditionally and irrevocably agreed to guarantee the due and punctual performance of the obligations of the Vendor under the SPA; and (iii) the Purchaser Guarantor has unconditionally and irrevocably agreed to guarantee the due and punctual performance of the obligations of the Purchaser under the SPA.

– 5 –

LETTER FROM THE BOARD

The purpose of this circular is to provide you with information regarding the resolution(s) to be proposed at the SGM in relation to the SPA and the transactions contemplated thereunder.

THE SPA

Date

22 September 2017 (after trading hours)

Parties

• (i) the Vendor;

• (ii) the Company;

• (iii) the Purchaser; and

• (iv) the Purchaser Guarantor.

As at the Latest Practicable Date, to the best of the Directors’ knowledge, information and belief after having made all reasonable enquiries, the Purchaser and the Purchaser Guarantor, being a listed company on the Stock Exchange, are Independent Third Parties.

Assets to be disposed

Pursuant to the SPA, the Company has conditionally agreed to sell and the Purchaser has conditionally agreed to acquire the Sale Share, representing the entire equity interest of the Target Company, and the Sale Loan.

Consideration

The Consideration of HK$700 million is payable in the following manner:

• (1) a sum of HK$30 million in cash shall be paid by the Purchaser by delivering a cashier’s order drawn on a reputable licensed bank in Hong Kong to the Escrow Agent within two Business Days after the signing of the SPA as a refundable deposit (the ‘‘Deposit’’) which shall be applied towards the part payment of the Consideration at Completion, whereupon each of the Purchaser and the Vendor shall sign and deliver to the Escrow Agent a joint release notice in accordance with the Escrow Agreement for the release of the cashier’s order representing the Deposit to the Vendor at Completion; and

– 6 –

LETTER FROM THE BOARD

• (2) the remaining balance of HK$670 million in cash shall be paid by the Purchaser at Completion.

The Consideration was determined after arm’s length negotiation between the Company and the Purchaser with reference to, among others, (i) the net asset value of the Disposal Group (excluding the non-controlling interests) attributable to the owners of the Company of approximately HK$263 million as at 31 December 2016; (ii) the Sale Loan of approximately HK$204 million; and (iii) the reasons as discussed under the section headed ‘‘Reasons and benefits of the Disposal’’ of this circular, in particular, (a) the Disposal will enable the Group to gain and apply the necessary capital in a timely manner towards the further development of the Lithium Ion Motive Battery Business; and (b) the need for the Group to meet the industry standards and requirements set by the PRC government with respect to lithium ion motive battery business by 2018 (further details are discussed in the below section headed ‘‘Overview and Future Business Plans of the Lithium Ion Motive Battery Business’’ of this circular).

In view of the above, the Directors consider that the Consideration is fair and reasonable and in the interest of the Company and the Shareholders as a whole.

Conditions precedent to the SPA

Completion is conditional upon satisfaction (or waiver, if applicable) of the followings:

• (i) the shareholders (or where appropriate, the independent shareholders) of the Purchaser Guarantor passing at an extraordinary general meeting of the Purchaser Guarantor the resolution(s) approving the SPA and the transactions contemplated thereunder, and the Purchaser Guarantor has complied with all requirements under the Listing Rules or as required by the Stock Exchange in relation to the transactions contemplated under the SPA;

• (ii) the Shareholders (or where appropriate, the independent Shareholders) of the Company passing at the SGM the resolution(s) approving the SPA and the transactions contemplated thereunder, and the Company has complied with all requirements under the Listing Rules or as required by the Stock Exchange in relation to the transactions contemplated under the SPA;

• (iii) all other necessary consents, authorisations, licences and approvals for or in connection with the sale and purchase of the Sale Share and the Sale Loan required to be obtained on the part of the Vendor or the Company or the Group having been obtained and remain in full force and effect;

• (iv) all other necessary consents, authorisations, licences and approvals for or in connection with the sale and purchase of the Sale Share and the Sale Loan required to be obtained on the part of the Purchaser or the Purchaser Guarantor having been obtained and remain in full force and effect;

– 7 –

LETTER FROM THE BOARD

• (v) the due diligence conducted by the Purchaser not showing any variance of the revenue, net profit after tax or net assets of the principal operating PRC companies within the Disposal Group as compared to their respective figures in their audited accounts for the two years ended 31 December 2016 and the management accounts for the six months ended 30 June 2017 by 20% or more; and

• (vi) there being no event(s) or circumstance(s) occurring from the date of the SPA and up to Completion which has/have an adverse effect to the business, financial condition, results of operation, assets or liabilities of any member of the Disposal Group or the Disposal Group as a whole that result(s) or will result in a direct loss of HK$10 million or above individually or HK$30 million or above collectively to any member of the Disposal Group and/or the Disposal Group as a whole.

Save for conditions (v) and (vi) which are waivable by the Purchaser at any time in writing, none of the above conditions can be waived. If any of the conditions has not been fulfilled (or waived, as the case may be) on or before 30 November 2017 or any other date as may be agreed in writing between the Vendor and the Purchaser, the SPA shall cease and determine in which event:

• (i) if the SPA ceases and determines as a result of non-fulfilment of the condition (ii) and/ or (iii) set out above, each of the Purchaser and the Vendor shall, within seven days from the date on which the SPA shall cease and determine, sign and deliver a joint release notice in accordance with the Escrow Agreement to the Escrow Agent for the release of the cashiers’ orders representing the Deposit to the Purchaser, and the Vendor shall pay to the Purchaser a sum equivalent to the Deposit as liquidated damages to the Purchaser;

• (ii) if the SPA ceases and determines as a result of non-fulfilment of the conditions (i) and/or (iv) set out above, each of the Purchaser and the Vendor shall, within seven days from the date on which the SPA shall cease and determine, sign and deliver a joint release notice in accordance with the Escrow Agreement to the Escrow Agent for the release of the cashier’s orders representing the Deposit to the Vendor;

– 8 –

LETTER FROM THE BOARD

• (iii) if the SPA ceases and determines as a result of non-fulfilment of the condition (v) and/ or (vi) set out above, each of the Purchaser and the Vendor shall, within seven days from the date on which the SPA shall cease and determine, sign and deliver a joint release notice in accordance with the Escrow Agreement to the Escrow Agent for the release the cashiers’ orders representing the Deposit to the Purchaser; and

• (iv) neither party hereto shall have any obligations and liabilities under the SPA save for any antecedent breaches of the terms thereof.

As at the Latest Practicable Date, none of the above conditions had yet been fulfilled.

Completion

Completion shall take place on the Completion Date.

Information on the Disposal Group

The Target Company, a company incorporated in the British Virgin Islands with limited liability, is principally engaged in investment holding and is a direct wholly-owned subsidiary of the Vendor.

Designer Global Group Limited, a company incorporated in the British Virgin Islands with limited liability, is principally engaged in investment holding and is a direct wholly-owned subsidiary of the Target Company.

Ever Honest Industries Limited, a company incorporated in Hong Kong with limited liability, is principally engaged in investment holding and is a direct wholly-owned subsidiary of Designer Global Group Limited.

雲南僑通包裝印刷有限公司 (Yunnan Qiaotong Package Printing Co., Ltd.) is a company established under the laws of the PRC with limited liability and is principally engaged in the Packaging Printing Business. It is owned as to 60% by Ever Honest Industries Limited and is a direct subsidiary of Ever Honest Industries Limited. The remaining 30% and 10% equity interests of Yunnan Qiaotong Package Printing Co., Ltd. are held by state-owned-enterprise shareholders, namely 雲南昭通市開發投資有限責任公司 (Yunnan Zhaotong City Development and Investment Co., Ltd.) and 雲南合和（集團）股份有限公司 (Yunnan Hehe (Group) Holdings Limited). To the best of the Directors’ knowledge, information and belief, Yunnan Zhaotong City Development and Investment Co., Ltd., Yunnan Hehe (Group) Holdings Limited and their ultimate beneficial owners are Independent Third Parties save for their respective equity interest in Yunnan Qiaotong Package Printing Co., Ltd.*.

– 9 –

LETTER FROM THE BOARD

昭通新僑彩印有限公司 (Zhaotong Xinqiao Printing Co., Ltd.), a direct wholly-owned subsidiary of Yunnan Qiaotong Package Printing Co., Ltd., is a company established under the laws of the PRC with limited liability and is principally engaged in Packaging Printing Business.

昭一中鳳池分校 (Zhaoyi Zhongfengchi Branch School), is a secondary school established under the laws of the PRC and is principally engaged in secondary education. It is owned as to 60% by Yunnan Qiaotong Package Printing Co., Ltd.. The remaining 40% equity interest of Zhaoyi Zhongfengchi Branch School is held by 雲南昭通第一中學 (Yunnan Zhaotong First Secondary School). To the best of the Directors’ knowledge, information and belief, Yunnan Zhaotong First Secondary School and its ultimate beneficial owner(s) are Independent Third Parties, save for their equity interest in Zhaoyi Zhongfengchi Branch School.

Easyfield Pacific Limited, a company incorporated in the British Virgin Islands with limited liability, is principally engaged in investment holding and is a direct wholly-owned subsidiary of the Target Company.

Gainful Investments Limited, a company incorporated in Hong Kong with limited liability, is principally engaged in investment holding and is a direct wholly-owned subsidiary of Easyfield Pacific Limited.

安徽僑豐包裝印刷有限公司 (Anhui Qiaofeng Package Printing Co., Ltd.) is a company established under the laws of the PRC with limited liability and is principally engaged in the Packaging Printing Business. It is owned as to 29% by Gainful Investments Limited and 43% by Yunnan Qiaotong Package Printing Co., Ltd.. The remaining 28% equity interest of Anhui Qiaofeng Package Printing Co., Ltd. is held by a state-owned-enterprise shareholder, namely 滁 州市國有資產運營有限公司 (Chuzhou City State-owned Asset Co., Ltd.). To the best of the Directors’ knowledge, information and belief, Chuzhou City State-owned Asset Co., Ltd. and its ultimate beneficial owner(s) are Independent Third Parties, save for their equity interest in Anhui Qiaofeng Package Printing Co., Ltd..

The Disposal Group as disclosed above represents the whole business segment of the Group in the Packaging Printing Business.

– 10 –

LETTER FROM THE BOARD

Set out below is the simplified corporate chart of the Company and the Disposal Group as at the Latest Practicable Date:

==> picture [356 x 419] intentionally omitted <==

----- Start of picture text -----

The Company
100%
The Vendor
100%
The Target Company
100% 100%
Designer Global
Easyfield Pacific Limited
Group Limited
100% 100%
Ever Honest Gainful Investments
Industries Limited Limited
60%
Yunnan Qiaotong
Package Printing Co., Ltd.
100% 60% 43% 29%
Zhaotong Xinqiao Zhaoyi Zhongfengchi Anhui Qiaofeng Package
Printing Co., Ltd. Branch School Printing Co., Ltd.
----- End of picture text -----

– 11 –

LETTER FROM THE BOARD

Set out below is the simplified corporate chart of the Disposal Group immediately following Completion:

==> picture [356 x 370] intentionally omitted <==

----- Start of picture text -----

The Purchaser
100%
The Target Company
100%
100% 100%
Designer Global
Easyfield Pacific Limited
Group Limited
100% 100%
Ever Honest Gainful Investments
Industries Limited Limited
60%
Yunnan Qiaotong
Package Printing Co., Ltd.
100% 60% 43% 29%
Zhaotong Xinqiao Zhaoyi Zhongfengchi Anhui Qiaofeng Package
Printing Co., Ltd. Branch School Printing Co., Ltd.
----- End of picture text -----

– 12 –

LETTER FROM THE BOARD

Financial information of the Disposal Group

Set out below is financial information of the Disposal Group as extracted from its unaudited consolidated financial statements for the two financial years ended 31 December 2015 and 2016, and for the six months ended 30 June 2017 as set out in Appendix II of this circular:

				For the
				six months
		For the year	ended	ended
		31 December		30 June
		2015	2016	2017
		HK$’000	HK$’000	HK$’000
		(unaudited)	(unaudited)	(unaudited)
Profit	before taxation	142,273	124,931	23,591
Profit	after taxation attributable to
the	owners of the Company	73,339	53,483	8,263

The net assets of the Disposal Group (excluding the non-controlling interests) attributable to the owners of the Company as at 30 June 2017 according to the unaudited consolidated financial information of the Disposal Group as set out in Appendix II of this circular was approximately HK$289 million.

Financial effect of the Disposal

Based on (i) the Consideration of HK$700 million; (ii) the net assets of the Disposal Group (excluding the non-controlling interests) attributable to the owners of the Company as at 30 June 2017 of approximately HK$289 million; and (iii) the Sale Loan of approximately HK$204 million; and (iv) the release of exchange reserve of approximately HK$65 million, it is estimated that the gain attributable to the Disposal is approximately HK$269 million (before tax) after deducting expenses of approximately HK$3 million (the ‘‘Potential Gain’’).

Shareholders should note that the actual amount of the gain or loss (as the case may be) on the Disposal to be recognized in the consolidated financial statements of the Company depends on the net asset or liability value of the Disposal Group as at the Completion Date and therefore may be different from the amount mentioned above.

Upon Completion, the Company will cease to hold any equity interest in the Target Company, and accordingly (i) the Disposal Group will cease to be subsidiaries and/or associated companies of the Company; and (ii) the results of the Disposal Group will no longer be consolidated into the financial statements of the Group.

– 13 –

LETTER FROM THE BOARD

Reasons and benefits of the Disposal

The Group is principally engaged in the Packaging Printing Business and the Lithium Ion Motive Battery Business.

The Directors are of the view that the terms of the SPA are fair and reasonable and the Disposal is in the interest of the Company and the Shareholders as a whole, after having principally considered, among others, the followings:

• (i) the Disposal will enable the Group to gain additional capital and significantly enhance its cash flow by virtue of the Consideration of HK$700 million;

• (ii) the Disposal will enable the Group to focus on and re-allocate its resources to, among other things, the development of the Lithium Ion Motive Battery Business so as to capture market opportunities in and meet the industry standards and requirements set by the PRC government with respect to lithium ion motive battery business by 2018 (further details are discussed in the below section headed ‘‘Overview and Future Business Plans of the Lithium Ion Motive Battery Business’’ of this circular) and maximize the return to the Shareholders in the long term;

• (iii) the Disposal represents a valuable and attractive opportunity for the Group to realise its investment; and

• (iv) the Potential Gain of approximately HK$269 million.

Use of proceeds from the Disposal

The Board intends to apply the proceeds of approximately HK$700 million from the Disposal for the following purposes:

For the existing Lithium Ion Motive Battery Business

• (i) approximately HK$250 million for payment of the considerations under various purchase agreements as entered into between the Group and various vendors during the year 2016 and the three months period ended 31 March 2017, including but not limited to the agreements entered on 15 January 2016 and 17 June 2016 (details of which are disclosed in the announcements of the Company dated 15 January 2016 and 17 June 2016), for the purchase of, among others, production plant, renovation and ancillary facilities, construction services plants, intellectual forming and sorting system, automated assembly line and relevant equipment and machineries. The aggregate consideration payable under these purchase agreements (the ‘‘Aggregate Purchase Consideration’’) is approximately RMB434 million (equivalent to approximately HK$502 million).

– 14 –

LETTER FROM THE BOARD

Up to the Latest Practicable Date, the Group had fully utilised the net proceeds of approximately HK$353 million (the ‘‘Open Offer Proceeds’’) as raised from the open offer as conducted by the Group in June 2016 for the development of the Lithium Ion Motive Battery Business (details of which are disclosed in the announcement of the Company dated 17 June 2016). Out of the Open Offer Proceeds, the Group had utilised approximately RMB148 million (equivalent to approximately HK$171 million) for part payment of the Aggregate Purchase Consideration. The remaining Open Offer Proceeds of approximately HK$182 million had been utilised by the Group primarily for (i) the purchase of raw materials; (ii) settlement of the liabilities of a subsidiary which is engaged in the Lithium Ion Motive Battery Business; and (iii) general working capital for the Lithium Ion Motive Battery Business.

As at 31 March 2017, a total of approximately RMB206 million (equivalent to approximately HK$238 million) of the Aggregate Purchase Consideration had been paid by the Group to the vendors. Accordingly, the remaining Aggregate Purchase Consideration payable by the Group amounted to approximately RMB228 million (equivalent to approximately HK$264 million);

• (ii) approximately HK$300 million will be further injected into the capital base of Tesson Shenzhen which, together with its subsidiaries, are principally engaged in the Lithium Ion Motive Battery Business. Tesson Shenzhen will in turn utilize such capital for further expanding the Group’s existing production base by constructing its third phase development with a target energy output of production capacity by itself of approximately 6 GWh per year; and

• (iii) approximately HK$150 million will be applied to the general working capital, including but not limited to the salaries, power supply, materials and/or machineries for the Lithium Ion Motive Battery Business.

Further details of the Lithium Ion Motive Battery Business are discussed in the below sections headed ‘‘Information on the Lithium Ion Motive Battery Business of the Group’’ and ‘‘Overview and Future Business Plans of the Lithium Ion Motive Battery Business’’ of this circular.

– 15 –

LETTER FROM THE BOARD

Undertakings in relation to voting arrangements

Pursuant to (i) the undertaking letter dated 22 September 2017 issued by Double Key International Limited, which is interested in approximately 61.36% of the issued share capital of the Company, Double Key International Limited has undertaken to the Company to vote for the ordinary resolution to approve the SPA and the transactions contemplated thereunder at the SGM; and (ii) the undertaking letter dated 22 September 2017 and issued by Amcor Fibre PackagingAsia Pte Limited, which is interested in approximately 48% of the issued share capital of the Purchaser Guarantor, Amcor Fibre Packaging-Asia Pte Limited has undertaken to the Purchaser Guarantor to vote for the ordinary resolution to approve the SPA and the transactions contemplated thereunder at the extraordinary general meeting to be convened by the Purchaser Guarantor.

INFORMATION ON THE PURCHASER AND THE PURCHASER GUARANTOR

AMVIG Investment Limited, being the Purchaser, is a company incorporated in Hong Kong with limited liability and is a subsidiary of the Purchaser Guarantor. It is principally engaged in investment holdings.

AMVIG Holdings Limited, being the Purchaser Guarantor, is a company incorporated in the Cayman Islands with limited liability, the issued shares of which are listed on the Main Board of the Stock Exchange (stock code: 2300). AMVIG Holdings Limited together with its subsidiaries are principally engaged in the printing of cigarette packages and manufacturing of transfer paper and laser film.

INFORMATION ON THE REMAINING GROUP

The Remaining Group will be principally engaged in the Lithium Ion Motive Battery Business.

INFORMATION ON THE LITHIUM ION MOTIVE BATTERY BUSINESS OF THE GROUP

Development milestone

In October 2015, the Group announced its intention to engage in the Lithium Ion Motive Battery Business, and in January 2016, the Group completed the acquisition of 陝西力度電池有 限公司 (Shaanxi Leaders Battery Co., Ltd.*), which is currently a subsidiary of the Company which possesses the relevant skills and technical staff and is principally engaged in the Lithium Ion Motive Battery Business.

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LETTER FROM THE BOARD

In January 2016, the Group purchased certain machineries for the production of lithium ion motive battery, and began to build up the fundamentals of the Lithium Ion Motive Battery Business, including but not limited to hiring technical staff with relevant skills.

In September 2016, the Company had officially launched Tesson New Energy Research Nanjing Limited* as a research institute in Jiangning District, Nanjing (the ‘‘Nanjing Research Institute’’). The research institute concentrates its research and development efforts on, among other things, lithium ion motive batteries, battery packs, battery management system, chargers and battery materials, with a research focus on their application to electric vehicles.

In June 2017, the Group entered into a joint venture agreement with two investors who are companies listed on the Shenzhen Stock Exchange for the establishment of a joint venture company which will have a total registered capital of RMB1,000 million. The joint venture company is principally engaged in the research and development on, production, operation and provision of services for lithium-ion battery, battery packs and battery management system in the PRC. The said parties entered into the joint venture agreement owing to the view that there will be a huge market opportunity and demand in the electric vehicle industry as well as related automobile motive batteries, and thus gaining a foothold in such rapidly-developing industry will create enormous value. Going forward, the Group plans to shift all research and production capabilities with respect to battery management system and battery packs from the Nanjing research institute to the joint venture company. Accordingly, the joint venture company will primarily be responsible for manufacturing battery packs and developing battery management system, and will be the key research and development centre for developing battery management system and battery packs. Please refer to the announcements dated 26 June 2017 and 10 October 2017 and the circular dated 9 August 2017 of the Company for further information regarding the said joint venture.

Products

The main products of the Lithium Ion Motive Battery Business are, among others, motive batteries, battery packs, battery management system, battery module and battery charging device. Motive batteries are mainly used in electric vehicles, home appliances and power tools and for energy storage. The Group’s motive batteries are ternary material motive batteries which are superior in performance in terms of voltage, energy capacity, energy density, temperature tolerance and safety when compared with the traditional lithium ferrous phosphate batteries, which are still commonly used in the battery market. Further, the Group’s motive batteries have reached the relevant safety standards and requirements of the PRC government. Given the removal of restriction in using ternary material in buses and the preferential subsidy policy adopted by the PRC government on energy-rich batteries, ternary material batteries are in short market supply and the Group intends to expand its production capacity to seize the opportunity and market share.

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LETTER FROM THE BOARD

In the long run, the Group will primarily focus on developing the electric vehicle market while in the interim, the Group will continue its operation and sales effort in the home appliances and power tools markets.

Production bases, equipment and facilities

Phase I and Phase II of the Group’s production base are located in Weinan, Shaanxi, the PRC for the production of the lithium ion motive battery. The Group plans to construct Phase III of the production base, which is also located in Weinan. As at the Latest Practicable Date:

• (A) both production base Phase I and Phase II have completed their construction process and all production equipment and facilities (including the production equipment and facilities for producing motive batteries for electric vehicles) have been installed.

• (B) both production base Phase I and Phase II are in actual production to satisfy purchase orders from home appliances and power tools customers.

• (C) production base Phase I has two production lines for producing motive batteries, which are fully operational. These production lines have (i) finished the mechanical adjustment procedures for their production equipment and machineries; and (ii) passed all tests with respect to production capacity, and the motive batteries produced have passed the relevant quality examination required by the PRC government with respect to their suitability for installation in electrical vehicles.

• (D) production base Phase II has six production lines for producing motive batteries. Two of these production lines have (i) finished the mechanical adjustment procedures for their production equipment and machineries; and (ii) passed all tests with respect to production capacity. These two production lines are fully operational. The other four production lines are going through debugging, i.e. the mechanical adjustment procedures for their production equipment and machineries. These four production lines are now in trial production stage. The motive batteries produced have passed the relevant quality examination required by the PRC government with respect to their suitability for installation in electrical vehicles. The Group expects that production base Phase II will be fully operational by January 2018.

• (E) the Group has thus far invested approximately RMB400 million in the production equipment and facilities for production base Phase I and Phase II.

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LETTER FROM THE BOARD

• (F) the Group has obtained the relevant land use rights certificates for the land on which part of the production base Phase III will be constructed. The relevant land has been levelled and ready for construction pending the granting of the relevant construction land planning permit, construction works planning permit and construction works commencement permit. In relation to the above applications, the Group has completed the tender process for selecting the suitable project design company. Construction for production base Phase III will begin once the relevant government approvals have been obtained.

• (G) in the third quarter of 2017, the PRC government issued its official village relocation notice to the local villagers in connection with part of the construction land site for the production base Phase III. Such relocation is expected to complete by November 2017.

• (H) the Group expects that construction of production base Phase III will complete by August 2018 and trial production will commence by December 2018.

Production base Phase I is designed with a full production capacity of approximately 230,000 units of motive battery per day (representing an energy output of approximately 0.96 GWh per year), and production base Phase II is designed with a full production capacity of approximately 500,000 units of motive battery per day (representing an energy output of approximately 2.1 GWh per year). In aggregate, production base Phase I and Phase II have a designed maximum production capacity of approximately 730,000 units of motive battery per day (representing an aggregate maximum energy output of approximately 3.06 GWh per year).

The Group expects that when production base Phase III becomes fully operational, it will, on a stand-alone basis, have a capacity for producing motive battery that carry a maximum energy output of approximately 6 GWh per year, rendering the Group a total capability of producing motive batteries with a maximum energy output of approximately 9.06 GWh per year. Such level of energy output will allow the Group to meet the proposed industry entry requirement of a minimum motive battery energy output of 8 GWh per year for the vehicle motive battery market pursuant to the《汽車動力電池行業規範條件(2017)》(Automobile Motive Batteries Industry Requirements (2017)) and《促進汽車動力電池產業發展行動方案》(Action Plan to Facilitate the Development of Automobile Motive Batteries Industry) (collectively, the ‘‘Automobile Motive Batteries Requirements’’) issued by the PRC government in November 2016 and March 2017 respectively. Further details and impacts of the proposed industry entry requirements are elaborated in the section headed ‘‘Industry Entry Requirements For Vehicle Motive Battery Market’’ of this circular.

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LETTER FROM THE BOARD

Set out below are further details of the production facilities and research institute of the Group:

	Site area (m²）	Plant GFA (m²）
Production Base Phase I	59,251	22,756
Production Base Phase II	N/A	25,437
Production Base Phase III	121,878	Under planning
Nanjing Research Institute	N/A	5,200

Research and development

At present, the Nanjing Research Institute has 105 employees, of which 21 of them have master’s degree or above in related fields, including 2 doctorate degrees and 2 post-doctorate degrees. The Group’s research and development efforts are mainly focused on motive batteries quality and manufacturing, motive battery pack management system and their application in electric vehicles. The Group has 34 registered patents in the PRC concerning technical know-how, and is applying for 6 utility model patents.

The Nanjing Research Institute consists of three research centers, namely the Battery Technology Centre, Battery Application Centre and Battery Manufacturing Technology Centre. Their research scopes cover micro battery material, structure and performance of battery cell, battery modules, battery management system, powertrain system, advanced manufacturing technology, and smart equipment, etc. At present, the Group has multi-level and extensive cooperation with many prestigious universities, research institutes and renowned enterprises. In 2017, the Nanjing Research Institute was certified as a Nanjing Engineering Technology Center with 2 invention patents and 9 utility model patents.

The Group has entered into cooperation and/or research and development confidentiality agreements with a number of automobile manufacturers in the PRC to jointly develop motive battery systems for high-performance passenger and logistics vehicles.

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LETTER FROM THE BOARD

Quality control

The Group exercises whole-process control on products, including quality control on raw materials from supplier, product inspection, reliability control and production control to ensure consistent product quality. Reliability test is also conducted for each batch of products to ensure compliance with safety regulations and customer requirements. The Group’s quality management system, covering sales, research and development, procurement, manufacturing and product testing, has been certified by IATF16949:2016. The Group’s internal audit, process audit and product audit are subject to both in-house and third-party supervision to ensure that the entire quality management system operates effectively.

Suppliers

The Company purchases all its raw materials from domestic suppliers or agents, and has at least three suppliers of each major raw material required for production. All these purchases are settled in RMB.

Transportation

The transportation process is outsourced to third-party logistics service providers. Such outsourcing arrangement can reduce capital expenditures of the Group and transfer the liability risks arising from transport accidents, delay in delivery and product loss to the logistics service providers. The Group’s products are mainly transported by trucks from production facilities to the customer designated locations, and all transportation costs in delivering products to customers are borne by the Group.

Sales network

Currently, the Group has a sales team of approximately 25 staff who are primarily responsible for the sales in four major regions, namely North China, Northwest China, South China and East China. The Group targets to increase its sales team to approximately 35 staff by the end of 2017 and 59 staff by the end of 2018.

Customers

The Group’s battery products are mainly sold to three market segments including manufacturers of electric vehicles and ancillary battery packs, home appliances and power tools, and energy storage.

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LETTER FROM THE BOARD

The Group currently has 39 customers which are engaged in the home appliances and power tools market, and energy storage market. The Group usually sends product samples to potential customers who are interested in purchasing the Group’s motive batteries for product testing. The Group is currently approaching a number of potential customers. Up to September 2017, the Group had delivered approximately 36 sets of battery packs sample and 114,831 batteries samples to over 85 potential customers, including but not limited to the automobile manufacturers. In view of the huge market opportunity and demand in the electric vehicle industry as well as the related automobile motive batteries market in the PRC (details of which are further discussed under the section headed ‘‘Overview and Future Business Plans of the Lithium Ion Motive Battery Business’’ below), it is the strategic plan of the Company to focus its sales on and broaden its customer base with automobile manufacturers which will become the primary customer group of the Lithium Ion Motive Battery Business in the long term. In this regard, the Group has entered into letters of intent and/or strategic cooperation agreements with over 5 automobile manufacturers with sizeable operations in the PRC, in relation to the potential sales and/or research and development of the batteries and battery packs produced by the Group. Based on these letters of intent and/or strategic cooperation agreements and the on-going negotiations between the Group and these automobile manufacturers, it is estimated that the potential contracted sum in aggregate will reach approximately RMB600 to RMB800 million.

At present, (i) product samples have been sent by the Group to these automobile manufacturers which are currently under product testing and is expected to complete in the first quarter of 2018; (ii) some of the products are currently under research and development by the Group based on the requirements from these automobile manufacturers, and are expected to complete in the first half of 2018; and (iii) certain electric vehicle model which is manufactured by one of these automobile manufacturers and installed with the batteries produced by the Group has passed the examination and testing by the relevant PRC authorities. The Group expects to enter into formal sales contracts and/or agreements among these automobile manufacturers during the year 2018 progressively.

Having considered the above as a whole, the Company is of the view that (i) the financial performance of the Lithium Ion Motive Battery Business of the Group will be further enhanced by the potential sales to the automobile manufacturers, in addition to the existing sales with the home appliances and power tools customers; and (ii) the potential automobile manufacturer customers will begin to contribute a considerable portion of revenue to the Lithium Ion Motive Battery Business segment in the forthcoming financial years of the Company.

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LETTER FROM THE BOARD

Credit policy

The Group adopts a rigorous credit control policy and hence recorded no significant customer bad debt. Currently, the Group provides credits to certain long-established home appliances and power tools manufacturers with an average term of approximately 45 to 60 days. The Company closely monitors credit standing of each customer and adjusts its credit term or adopts a stricter credit limit when necessary. The Group has developed a policy to grant a typical credit term of 45 to 60 days to a majority of customers with sound credit records. After reviewing the customer’s payment history, relationship with the Group and creditworthiness, the Group may offer the customer an extension of the credit term, which in opinion of the Directors may encourage long-term patronage and help maintaining relationships with customers. Payment for goods is typically made via cash, bank acceptance bill, cheque or remittance into the designated bank account of the Company.

Advertisement and marketing

The Group promotes its brand and products in industry journals, media, internet, industry and technology conferences/forums, exhibitions, brand/product launches, outdoor advertising boards and major events sponsored by the Group, in an effort to enhance awareness and image of its brand and products.

The Group may also work with new energy vehicle manufacturers, battery module and system suppliers, energy storage equipment manufacturers, logistics vehicle manufacturers and smart home companies in co-marketing efforts, and the relevant marketing costs may vary depending on the partner’s location, sales network, promotion methods and market demand.

Competitiveness

Leading economy of scale and intelligent manufacturing technology

Currently, the Group’s aggregate production capacity has reached 3.06 GWh per year. Phase II of the Group’s production base, on a stand-alone basis, has a production capacity of 2.1 GWh per year, which the Company believes, is one of the largest modern automated motive battery production line in the PRC. The Group is also one of the first motive battery manufacturers that has built a 120 pieces per minute (PPM) fully automated assembly line in the PRC, and designed a 200PPM fully automated assembly line. These production capacity and capabilities have provided the Group competitive advantage in volume production and quality consistency.

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LETTER FROM THE BOARD

Focusing on research and development and product innovations

The Group has its own research and development facilities in Nanjing, the PRC which specializes in the development of motive batteries and battery management systems. Currently, the Group has 34 registered patents in the PRC concerning technical know-how, and is applying for 6 utility model patents.

Experienced and professional team

The Group has over 11 senior managers who possess between 10 to 20 years of work experience in the battery industry. These senior managers are holders of bachelor, master and/or doctoral degree(s), some of whom are also qualified engineers.

Further, Mr. Ng Ka Wing, an independent non-executive Director, has over 30 years of experience in the manufacturing of motor vehicles, and has been providing valuable advices to the Board in respect of the Lithium Ion Motive Battery Business. He is also the managing director of a bus manufacturer and the chairman of Hong Kong Bus Suppliers Association.

Financial information of the Lithium Ion Motive Battery Business

Set out below is financial information of the Lithium Ion Motive Battery Business segment of the Group as extracted from the annual report for the year ended 31 December 2016 and the interim report for the six months ended 30 June 2017 of the Company:

For the year ended 31 December 2016 HK$’000 (audited) Segment revenue 18,038 Segment profit/(loss) (27,611) Segment assets Segment liabilities Segment net assets	For the six months ended 30 June 2016 HK$’000 (unaudited) 5,407 (8,889) As at 31 December 2016 HK$’000 (audited) 721,147 204,666 516,481	For the six months ended 30 June 2017 HK$’000 (unaudited) 127,541 12,934 As at 30 June 2017 HK$’000 (unaudited) 929,841 396,992
		532,849

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LETTER FROM THE BOARD

INDUSTRY ENTRY REQUIREMENTS FOR VEHICLE MOTIVE BATTERY MARKET

Set out below is a summary of the requirements relating to the automobile batteries industry in accordance with the Automobile Motive Batteries Requirements:

		Fulfilled by the
No.	Requirements	Group (Yes/No)
1	Compliance with the legal rights in using the land and factory	Yes
	plant in respect of production facility
2	The energy output level of lithium ion motive batteries must not	No
	be lower than 8 GWh per year
3	Compliance with national and industrial standards for safety,	Yes
	consistency, life-cycle issues etc. for battery products
4	No material incident in respect of the operation and product in	Yes
	the most recent two years
5	Possession of relevant production facilities, equipment and	Yes
	related rights
6	Possession of automated manufacturing process for key	Yes
	techniques and online testing capability
7	Possession of standardized technical process and complete	Yes
	monitoring system
8	Compliance with national and industrial standards and regulatory	Yes
	policies for treatment and recycling of waste
9	Deploying relevant number of research and development staffs,	Yes
	with such number of headcount which shall not be less than
	100 or 10% of total number of staffs
10	Establishment of product design standardization, product	Yes
	development database, testing and analyzing capabilities and
	related equipment

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LETTER FROM THE BOARD

		Fulfilled by the
No.	Requirements	Group (Yes/No)
11	Possession of complete product development record and	Yes
	sustainable product development capability
12	Motive batteries having complied with national and industrial	Yes
	standards, and passed relevant inspections conducted by
	testing institutes
13	Products from research and development should comply with	Yes
	regulatory requirements regarding patents and intellectual
	property rights
14	Certification of TS16949 quality system	Yes
15	Establishment of traceable detection system regarding sourcing	Yes
	of raw materials to finished product, and implementation of
	computerized production management system
16	Establishment of comprehensive after-sales services	Yes
17	Fulfillment of national and local regulatory policies and	Yes
	requirements regarding product recycling and reusing

As advised by the PRC legal adviser of the Company:

• (i) the PRC government has initiated public consultation with respect to the Automobile Motive Batteries Requirements, and such requirements are subject to review and amendments by the PRC government;

• (ii) based on the Automobile Motive Batteries Requirements, a motive battery manufacturer must go through the following procedures for the purpose of being officially recognized as having met the industry entry requirements:

• (A) the relevant corporation shall make an online application to the Ministry of Industry and Information Technology (‘‘MIIT’’) at the provincial level together with an《汽車動力電池行業規範報告》(Automobile Motive Batteries Industry Report*) and supporting evidence;

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LETTER FROM THE BOARD

• (B) the Provincial MIIT will conduct an initial examination. Once the relevant corporation has passed the initial examination, the provincial MIIT will report to the MIIT at state level, which will then conduct a second examination by an expert panel;

• (C) Once the relevant corporation has passed the second examination, the state level MIIT will make an announcement that the relevant corporation has met the industry entry requirements if there is no objection during a stipulated period.

• (iii) pursuant to the《關於調整新能源汽車推廣應用財政補貼政策的通知》(Notice of Adjustment to Subsidy Policy in relation to New Energy Vehicles*), the quality of motive batteries that will be installed to the new energy vehicle will be one of the crucial factors for determining (A) any grant of subsidies to the relevant car manufacturer; and (B) whether a specific car model will be officially recognized as a recommended car model.

Based on the above, the Directors are of the view that the Group is in a position to make an application for official recognition once its production capacity of motive battery energy output has met 8 GWh per year. Further, the Directors are of the view that (i) the Automobile Motive Batteries Requirements are objective in nature; and (ii) the application and examination processes are only procedural matters. Therefore, the Company does not expect any material difficulty nor impediment in obtaining the official recognition by the PRC government after the Company fulfills all the Automobile Motive Batteries Requirements in future.

The Company is also of the view that it will not be able to take advantage of the expanding vehicle battery market if it is not officially recognized as having met the Automobile Motive Batteries Requirements. In this regard, the Company has been advised by its PRC legal adviser that where a vehicle uses motive battery produced by a manufacturer that is not officially recognized as having met the Automobile Motive Batteries Requirements, the relevant car manufacturer faces a risk that such particular car model may not be officially recognized as a recommended car model by the PRC government, and therefore will not be entitled to the relevant PRC subsidies. Therefore, it is crucial for the Group to be officially recognized as having met the Automobile Motive Batteries Requirements.

OVERVIEW AND FUTURE BUSINESS PLANS OF THE LITHIUM ION MOTIVE BATTERY BUSINESS

According to《中國製造2025》(China Manufacturing 2025*) issued by the State Council of the PRC in May 2015, the PRC government has made a clear statement that it will support the development of the electric vehicle industry so as to, among others, reduce the level of pollution and to improve air quality.

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LETTER FROM THE BOARD

Being one of the focused development industrial areas by the PRC government in the upcoming years, the electric vehicle industry is receiving forms of various support from the PRC government, including, among others, subsidy policies and financing for eligible industrial participants. The PRC government is aiming to speed up the development of PRC’s electric vehicle industry in order to meet with the international standard.

It is expected by the PRC government that the accumulated sales of the electric vehicles will reach over 5,000,000 units by year 2020. The below table sets out the statistics and estimations by the PRC government relating to the sales of electric vehicles and automobile motive batteries in the PRC:

Years	2015	2016	2017	2018	2019	2020
			(estimated)	(estimated)	(estimated)	(estimated)
Total sales of electric vehicles
(approx. units)	379,000	518,000	800,000	1,200,000	1,770,000	2,480,000
Total sales of motive batteries
(approx. GWh)	23	60	110	160	185	250

The total number of sales of the electric vehicles in the PRC had recorded approximately 518,000 units for the year 2016, representing a 37% growth as compared with year 2015. The sales target by the PRC government of approximately 2,480,000 units of the electric vehicles in 2020 represents a 379% growth as compared with the year 2016.

The total sales of the automobile motive batteries in the PRC had recorded approximately 60 GWh for the year 2016, representing a 161% growth as compared with year 2015. The sales of the automobile motive batteries is expected to grow along with the sales of the electric vehicles and reach approximately 250 GWh by 2020, representing a 317% growth as compared with the year 2016.

The market share of the ternary material batteries among the total sales of the automobile motive batteries in the PRC had increased from approximately 23% in 2015 to approximately 35% in 2016.

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LETTER FROM THE BOARD

In the second half of 2016, the focus of the automobile motive batteries in the industry has shifted from the traditional lithium iron phosphate batteries to the new generation ternary material batteries. Some of the leading global market players, such as Toyota Motor Corporation and Tesla Inc., have already adopted the ternary material batteries in their electric vehicles. BYD Co. Ltd., the H-shares of which are listed on the Stock Exchange (stock code: 1211) has also begun its development on the ternary material batteries early this year. The batteries produced by the production base of the Group have been primarily focused on the ternary material batteries, which are in line with the market trend and demand.

In November 2016, the PRC government issued the consultation paper, namely《汽車動力 電池行業規範條件（2017年）》(Automobile Motive Batteries Industry Requirements (2017)*), on the entry requirements relating to the automobile motive batteries market in the PRC, which it has explicitly stated that, among others, the minimum energy output of the lithium ion motive batteries produced by a manufacturer is expected to reach over 8 GWh per year by 2018 in order to meet the entry requirement (as compared with 0.2 GWh per year as required by the PRC government in 2015).

As set out in the section headed ‘‘Industry Entry Requirements for Vehicle Motive Battery Market’’ of this circular, up to the Latest Practicable Date, save for the requirement of production capacity for a minimum motive battery energy output of 8 GWh per year, the Group has satisfied all other requirements stipulated by the PRC government. Due to the fact that the Group’s existing Phase I and Phase II production base is only able to produce a maximum energy output of approximately 3.06 GWh per year, it is therefore one of the Group’s strategic plans to increase the production capacity of the batteries through the establishment of production base Phase III, in order to meet the aforementioned expected requirements from the PRC government by 2018.

The Company considers that there are relatively high entry barriers to the Lithium Ion Motive Battery Business, representing both opportunities and challenges to the Group at the same time. As the PRC government has been issuing various industry standards and norms to the manufacturers to ensure quality development and operations within the industry as discussed above, (i) from the opportunities’ angle, new entrants will be relatively hard to enter into the market and other existing manufacturers who do not meet the requirements from the PRC government will be eventually eliminated; and (ii) from the challenges’ angle, the Group, being one of the manufacturers who has already stepped into the industry at the early stage, will have to further invest and develop its existing operations and scope in respect of the Lithium Ion Motive Battery Business to keep up with required and/or expected standards from the PRC government, in order to capture the potential market opportunities in particular from the automobile manufacturers.

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LETTER FROM THE BOARD

It is expected when the Group’s production base Phase III is fully developed and becomes fully operational, it will render the Group a total capability of producing motive batteries with a maximum energy output of approximately 9.06 GWh per year. The batteries produced by the Group will then be able to fulfill and be officially recognized as having met all the Automobile Motive Batteries Requirements, which is one of the crucial factors for determining the grant of subsidies to the automobile manufacturers. The Company expects that by taking advantage of such recognition by the PRC government, the Group’s competitiveness in approaching the automobile manufacturers for sales orders of automobile motive batteries will be enhanced significantly.

As an interim measure pending satisfaction of the Automobile Motive Batteries Requirements, the Group will continue with its sales efforts targeting its existing and potential home appliances and power tools customers. In the long run, the Group intends to capture the robust growth of the PRC electric vehicle market by producing high quality motive batteries and expanding its production capacity through the establishment of production base Phase III to a level officially recognized by the PRC government. The motive batteries produced by the Group have already passed the relevant quality tests stipulated by the PRC government. With the competitive strengths of the Group and the proposed construction and development of production base Phase III, the Group anticipates to capture the potential sales with the automobile manufacturers and achieve timely expansion for its Lithium Ion Motive Battery Business, and a promising improvement to its financial performance in the future.

After considering (i) the huge market opportunity and demand in the electric vehicle industry as well as the related automobile motive batteries market in the PRC; (ii) the need to further develop the Lithium Ion Motive Battery Business in order to meet the expected requirements of the PRC government by 2018; and (iii) the competitive advantage in securing potential sales orders with automobile manufacturers after having met all the Automobile Motive Batteries Requirements, the Company is of the view that (A) the strategic development in the Lithium Ion Motive Battery Business by the Group will help to generate stable income and maximize return to the Company and the Shareholders as a whole in the long term; and (B) the financial performance of the Group will be significantly improved by taking advantage of the rapidly expanding vehicle motive battery market.

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LETTER FROM THE BOARD

PROFIT FORECAST FOR THE LITHIUM ION MOTIVE BATTERY BUSINESS FOR THE YEAR ENDING 31 DECEMBER 2017

In the absence of unforeseen circumstances and on the bases and assumptions set out in Appendix IV to this circular, certain forecast data of the Lithium Ion Motive Battery Business (for the avoidance of doubt, only includes the operating subsidiaries of the Group in respect of the Lithium Ion Motive Battery Business (the ‘‘Operating Subsidiaries’’)) for the year ending 31 December 2017 is set out below.

	For the
	year ending
	31 December
	2017
	HK$’000
Revenue	390,935
Gross profit	113,608
Selling expenses	(18,744)
Administrative expenses	(52,157)
Profit after taxation	39,782

The Profit Forecast is prepared based on the Company’s business plan, and is consistent with historical trends and demonstrated performance of the Operating Subsidiaries. The Company assumes the Operating Subsidiaries will continue to operate throughout 2017. The Profit Forecast should be read together with the letters from the Company’s reporting accountant (Zhonghui Anda CPA Limited) and the Financial Adviser set out in Appendix IV to this circular.

Statements contained in this section that are not historical facts may be forwardlooking statements. Such statements are based on the assumptions set out above and in Appendix IV to this circular. While the Directors consider such assumptions to be reasonable, whether actual results will meet their expectations will depend on a number of risks and uncertainties over which they have no control and actual results may differ materially from those expressed or implied in these forward-looking statements. Under no circumstances should the inclusion of such information in this circular be regarded as a representation, warranty or prediction by the Company, the Board, the Financial Adviser or the reporting accountant that these results will be achieved or are likely to be achieved.

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LETTER FROM THE BOARD

PROSPECTS OF THE REMAINING GROUP

The Remaining Group will be principally engaged in the Lithium Ion Motive Battery Business.

For the year 2018

Revenue

The Directors expects that the Remaining Group’s existing sales with the home appliances and power tools customers will continue in 2018 and beyond. As the Remaining Group will be primary focusing its sales effort with the automobile manufacturers, it is anticipated that the Remaining Group will enter into formal sales contracts and/or agreements with various automobile manufacturers during the year 2018 progressively, following product testing, research and development of battery products and/or examinations by the PRC government. Based on the letters of intent and/or strategic cooperation agreements and the on-going negotiations between the Company and certain automobile manufacturers during the year 2017, it is estimated that the potential contract sum with the automobile manufacturers in aggregate will reach approximately RMB600 to RMB800 million in the forthcoming future.

It is expected that production base Phase II will become fully operational by January 2018 following debugging and testing for its remaining four production lines. The construction of production base Phase III is also expected to complete by August 2018 and trial production is expected to commence by December 2018. As a result, it is expected that the production capacity of the Remaining Group in respect of motive battery products will be enhanced in order to capture the upcoming demands and in line with the expansion plans of the Company.

The Remaining Group targets to increase its sales team to approximately 59 staff by the end of 2018, and expects its sales coverage be further broadened across the PRC. Market share of the Remaining Group’s batteries in the PRC market is expected to increase as well.

Considering the above, it is expected that the revenue in 2018 will be improved, primarily resulting from the potential sales with the automobile manufacturers and the extended sales coverage.

The Directors do not anticipate any material changes in the cost of sales, and it is expected that the selling and administrative expenses will remain stable in 2018 and beyond. It is expected that the overall profit margin of the Remaining Group will be materially consistent with its historical performance.

Despite the Company’s focus on the production of ternary material batteries, which is in line with the market trend and demand, the Remaining Group will continue its efforts in the research and development of high quality motive batteries and battery management systems. The Remaining Group will continue to apply for further patents regarding technical know-how, as and when appropriate, in order to strengthen its production capability and competitiveness in the market.

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LETTER FROM THE BOARD

Under the PRC government’s clear support in the development of the electric vehicle industry in the upcoming years, and the global trend in reducing pollution level and being environmentally friendly, that there is undoubtedly a huge market potential in the electric vehicle industry as well as the related automobile motive batteries industry.

In view of the above, the Directors expect that the Remaining Group will be able to realise an organic and healthy growth in 2018, especially following the in-flow of the potential revenue with the automobile manufacturers around the second half of 2018, and achieve a promising growth rate for the revenue of the Remaining Group in the medium term.

For the year 2019

The Directors expect that the production base Phase III will continue to fine-tune and enhance its production capacity and operations to become fully operational during the year 2019, and the JV Company (as defined below) will commence full operation by May 2019. The production capacity of the Remaining Group is expected to be further enhanced.

The Remaining Group will continue with its sales efforts targeting the automobile manufacturers. It is expected that the Remaining Group will be officially recognized as having met the Automobile Motive Batteries Requirements, and if it materializes, to become one of the major suppliers of motive batteries to automobile manufacturers in the PRC. Given such competitive edge, the Directors are of the view that the Remaining Group will be able to further secure market share and expand its customer bases with a wider group of automobile manufacturers.

The Directors expect that in 2019, the Remaining Group will be able to maintain its competitiveness, further expand its market share, broaden its revenue base, and achieve a sustainable organic and healthy growth for the revenue of the Remaining Group.

Statements contained in this section that are not historical facts may be forwardlooking statements. While the Directors consider the above expectations and/or estimations made by the Company to be reasonable, whether actual results will meet such expectations and/or estimations will depend on a number of risks and uncertainties over which they have no control and actual results may differ materially from those expressed or implied in these forward-looking statements. Under no circumstances should the inclusion of such information in this circular be regarded as a representation, warranty or prediction by the Company, the Board, the Financial Adviser or the reporting accountant that these results will be achieved or are likely to be achieved.

– 33 –

LETTER FROM THE BOARD

The statements in this section are not a profit forecast for the purposes of the Listing Rules and have not been reviewed or reported upon by the Financial Adviser or the reporting accountant. Shareholders and prospective investors in the Company are cautioned not to place undue reliance on these forward-looking statements that speak only as at the Latest Practicable Date. The Company undertakes no obligation to update or revise any forward-looking statements in this section.

THE LISTING RULES IMPLICATION

As one or more of the applicable percentage ratios (as defined under the Listing Rules) in respect of the Disposal are 75% or more, the Disposal constitutes a very substantial disposal of the Company under Chapter 14 of the Listing Rules and is therefore subject to reporting, announcement and Shareholders’ approval requirements.

GENERAL

A SGM will be convened and held for the Shareholders to consider and, if thought fit, approve the SPA and the transactions contemplated thereunder. A notice convening of the SGM of the Company to be held at Picasso Room B, B1 Level, InterContinental Grand Stanford Hong Kong, 70 Mody Road, Tsim Sha Tsui East, Kowloon, Hong Kong at 11:00 a.m. on Thursday, 23 November 2017 is set out on pages 81 to 82 of this circular. A form of proxy for use at the SGM is enclosed with this circular.

To the best of the Directors’ knowledge, information and belief, having made all reasonable enquiries, no Shareholder or any of its close associates has any material interest in the SPA and the transactions contemplated thereunder, and therefore no Shareholder is required to abstain from voting on the resolution(s) in respect of the SPA at the SGM.

Whether or not you are able to attend the SGM, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon and return the same to the Company’s registrar in Hong Kong, Computershare Hong Kong Investor Services Limited at 17M/F., Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong as soon as possible but in any event not less than 48 hours before the time appointed for the holding of the SGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the SGM or any adjournment thereof should you so wish.

Completion of the Disposal is conditional upon the satisfaction (or waiver, as the case may be) of the conditions set out in the SPA. Accordingly, the Disposal may or may not proceed. Shareholders and potential investors should exercise caution when dealing in the securities of the Company.

– 34 –

LETTER FROM THE BOARD

RECOMMENDATION

The Board considers that the transactions contemplated under the SPA are on normal commercial terms and the terms of the SPA are fair and reasonable and are in the interests of the Company and its Shareholders as a whole. Accordingly, the Board recommends the Shareholders to vote in favour of the resolution(s) to be proposed at the SGM to approve the SPA and the transactions contemplated thereunder.

ADDITIONAL INFORMATION

Your attention is drawn to the additional information set out in the appendices to this circular.

Yours faithfully By order of the Board Tesson Holdings Limited Tin Kong Chairman

– 35 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

1. CONSOLIDATED FINANCIAL INFORMATION OF THE GROUP FOR THE THREE FINANCIAL YEARS ENDED 31 DECEMBER 2016

Financial information of the Group for each of the three years ended 31 December 2014, 2015 and 2016 are disclosed in the following documents which have been published on the w e b s i t e s o f t h e S t o c k E x c h a n g e ( w w w . h k e x n e w s . h k ) a n d t h e C o m p a n y (www.tessonholdings.com) respectively:

• Annual Report 2016 (pages 44 to 104)

• Annual Report 2015 (pages 35 to 88)

• Annual Report 2014 (pages 35 to 94)

2. STATEMENT OF INDEBTEDNESS

As at the close of business on 30 September 2017, being the latest practicable date for the purpose of this indebtedness statement prior to the printing of this circular, the Group had the following liabilities:

(a) Borrowings

The Group had outstanding (i) secured borrowings of approximately HK$76 million and unsecured borrowings of approximately HK$59 million; (ii) amount due to the controlling shareholder of approximately HK$111 million; (iii) amount due to a related company of approximately HK$20 million; (iv) carrying amount of obligation under finance lease of approximately HK$49 million; and (v) carrying amount of convertible bonds of approximately HK$222 million.

(b) Contingent liabilities

The Group did not have any significant contingent liabilities.

Save as aforesaid and apart from intra-group liabilities, at the close of business on 30 September 2017, the Group had no other outstanding mortgages, charges, debentures or other loan capital or bank overdrafts or loans or other similar indebtedness, finance lease or hire purchase commitments, liabilities under acceptance or acceptance credits, debt securities, guarantees or other material contingent liabilities.

– 36 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

3. WORKING CAPITAL

The Directors are of the opinion that, in the absence of unforeseeable circumstances, and taking into account (i) the internal financial resources and borrowings of the Group; and (ii) the Disposal, the Group will have sufficient working capital for its present requirements and the requirements for the next twelve months from the date of this circular.

4. MATERIAL ADVERSE CHANGE

The Directors are not aware of any material adverse change in the financial or trading position of the Group since 31 December 2016, being the date to which the latest published audited financial statements of the Group were made up.

5. FINANCIAL AND TRADING PROSPECTS OF THE REMAINING GROUP

The Remaining Group is principally engaged in the Lithium Ion Motive Battery Business.

New energy vehicle is the industry that has been gaining tremendous support from the PRC government. It is also noted that the PRC government will further accelerate the promotion of new energy vehicles so as to alleviate the pressure on energy needs and the environment. Thus, it offers huge market potential for the sustainable development of automobile motive batteries, being the core of electric vehicles.

The Group currently has two phases of production base in Weinan, Shaanxi, the PRC for the production of the lithium ion motive batteries. In order to seize the upcoming opportunities within the industry, the Group intends to further expand its existing production base by constructing its third phase development, in addition to the establishment of the JV Company (as defined below).

In September 2016, the Group had also established the Nanjing Research Institute and invested resources to develop the research and development technology as well as the skills for its battery sector for the long-term development of the Group. Meanwhile, the Group also invested resources in the research and development of packaging and arrangement of batteries and battery management system, paving the way for its further development.

– 37 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

With new energy vehicles becoming more and more popular and vigorous promotion carried out by the PRC government, vehicles with energy conservation, environmentally-friendly, low carbon emission and zero pollution features will become the mainstream in the future. It is no doubt that the lithium ion battery, being the ‘‘heart’’ of new energy vehicles, will embrace infinite development opportunities. The Board believes that the Lithium Ion Motive Battery Business will be generating stable income and maximizing the return for the Company and the Shareholders as a whole in upcoming future.

6. MANAGEMENT DISCUSSION AND ANALYSIS OF THE REMAINING GROUP

Set out below is the management and discussion and analysis on the Remaining Group.

(i) For the year ended 31 December 2016

Business and financial review

During the financial year ended 31 December 2016, the Remaining Group’s turnover amounted to approximately HK$19 million (2015: HK$3 million). The increase in revenue was mainly attributable to the contribution from the Lithium Ion Motive Battery Business acquired in January 2016.

The Remaining Group’s result for the financial year ended 31 December 2016 was a consolidated net loss of approximately HK$53 million, against a consolidated net loss of approximately HK$46 million for the financial year ended 31 December 2015. The deteriorated financial result was primarily attributable to the interest expenses incurred to a related company and loss from the Lithium Ion Motive Battery Business.

Liquidity and financial resources

As at 31 December 2016, the Remaining Group had total assets of approximately HK$785 million and liabilities of approximately HK$631 million.

Cash position

As at 31 December 2016, the Remaining Group’s bank and cash balances were approximately HK$65 million.

– 38 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Gearing ratio

As at 31 December 2016, the Remaining Group’s gearing ratio (which was expressed as a percentage of total borrowings over total equity) was nil.

Borrowings

As at 31 December 2016, the Remaining Group did not have any bank and other borrowings.

Charge on assets

As at 31 December 2016, the Remaining Group did not have any charge on assets.

Capital expenditures

As at 31 December 2016, the Remaining Group had capital commitments of approximately HK$334 million.

Contingent liabilities

As at 31 December 2016, the Remaining Group did not have any significant contingent liabilities.

Exchange risk exposure

All sales and purchase for the Lithium Ion Motive Battery Business are denominated in RMB, the management considers the exposure to exchange risks is minimized. However, the Company faces foreign exchange risk in its fund raising activities in HK$ and remittance of funds to the subsidiaries in the PRC (RMB). Nevertheless, the Board will continue to monitor foreign exchange exposure in the future.

– 39 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Significant investments and material acquisitions and/or disposals

On 28 January 2016, the Remaining Group acquired 100% equity interest of Shaanxi Leaders Battery Co., Ltd. and its subsidiary, which are principally engaged in manufacturing and sale of lithium-ion batteries, battery packs, chargers and battery materials, at a cash consideration of approximately RMB19 million to the vendors, being Shaanxi Shunqian Energy Technology Co., Limited and Shaanxi Jinwen New Energy Co., Limited*. Details of the said acquisition are set out in the announcement of the Company dated 3 January 2016.

Save for the above disclosed, the Remaining Group did not have any significant investments and/or material acquisitions or disposals of subsidiaries and associated companies during the year ended 31 December 2016.

Staff and remuneration policy

As at 31 December 2016, the Remaining Group had approximately 510 employees in Hong Kong and in the PRC. The staff cost (including directors’ remunerations) of the Remaining Group was approximately HK$26 million. The Remaining Group’s remuneration policies are formulated based on the performance of individual employees and are reviewed regularly.

(ii) For the year ended 31 December 2015

Business and financial review

During the financial year ended 31 December 2015, the Remaining Group’s turnover amounted to approximately HK$3 million (2014: HK$5 million). The decrease in revenue was mainly attributable to the adverse performance of a subsidiary disposed in 2016.

The Remaining Group’s result for the financial year ended 31 December 2015 was a consolidated net loss of approximately HK$46 million, against a consolidated net profit of approximately HK$17 million for the financial year ended 31 December 2014. The deteriorated financial result was primarily attributable to restructuring costs in relation to the scheme of arrangement in 2014 and absence of profit from discontinued operation in 2014.

– 40 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Liquidity and financial resources

As at 31 December 2015, the Remaining Group had total assets of approximately HK$229 million and liabilities of approximately HK$451 million.

Cash position

As at 31 December 2015, the Remaining Group’s bank and cash balances were approximately HK$129 million.

Gearing ratio

As at 31 December 2015, the Remaining Group’s gearing ratio (which was expressed as a percentage of total borrowings over total equity) was nil.

Borrowings

As at 31 December 2015, the Remaining Group did not have any bank and other borrowings.

Charge on assets

As at 31 December 2015, the Remaining Group did not have any charge on assets.

Capital expenditures

As at 31 December 2015, the Remaining Group had capital commitments of approximately HK$24 million.

Contingent liabilities

As at 31 December 2015, the Remaining Group did not have any significant contingent liabilities.

Exchange risk exposure

The expenditures of the Remaining Group are primarily denominated in HK$. During the year ended 31 December 2015, the Remaining Group did not enter into any derivative contracts aimed at minimizing exchange rate risks and no financial instrument has been used for hedging purposes. Nevertheless, the Board will continue to monitor foreign exchange exposure in the future.

– 41 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Significant investments and material acquisitions and/or disposals

The Remaining Group did not have any significant investments and material acquisitions and/or disposals of subsidiaries and associated companies during the year ended 31 December 2015.

Staff and remuneration policy

As at 31 December 2015, the Remaining Group had approximately 48 employees in Hong Kong and in the PRC. The staff cost (including directors’ remunerations) of the Remaining Group was approximately HK$7 million. The Remaining Group’s remuneration policies are formulated based on the performance of individual employees and are reviewed regularly.

(iii) For the year ended 31 December 2014

Business and financial review

During the financial year ended 31 December 2014, the Remaining Group’s turnover amounted to approximately HK$5 million (2013: HK$252 million). The decrease in revenue was mainly attributable to the cessation of business segments of distribution of television business-related products and distribution of other electronic and related products.

The Remaining Group’s result for the financial year ended 31 December 2014 was a consolidated net profit of approximately HK$17 million, against a consolidated net loss of approximately HK$719 million for the financial year ended 31 December 2013. The improved financial results was primarily attributable to (i) the absence of one-off loss in 2013 on the disposal of an associate and discontinued business; (ii) the one-off gain from deconsolidation of the discontinued subsidiaries in 2014; and (iii) the significant reduction in impairment loss.

Liquidity and financial resources

As at 31 December 2014, the Remaining Group had total assets of approximately HK$39 million and liabilities of approximately HK$512 million, mainly represented liabilities subjected to debt restructuring in 2014.

– 42 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Cash position

As at 31 December 2014, the Remaining Group’s bank and cash balances were approximately HK$564,000.

Gearing ratio

As at 31 December 2014, the Remaining Group’s gearing ratio (which was expressed as a percentage of total borrowings over total equity) was approximately 92.8%.

Borrowings

As at 31 December 2014, the Remaining Group’s total bank and other borrowings were approximately HK$438 million, mainly represented liabilities subjected to debt restructuring in 2014.

Charge on assets

As at 31 December 2014, the Remaining Group did not have any charge on assets.

Capital expenditures

As at 31 December 2014, the Remaining Group did not have any capital commitments.

Contingent liabilities

As at 31 December 2014, the Remaining Group did not have any significant contingent liabilities.

Exchange risk exposure

The expenditures of the Remaining Group are primarily denominated in HK$. During the year ended 31 December 2014, the Remaining Group did not enter into any derivative contracts aimed at minimizing exchange rate risks and no financial instrument has been used for hedging purposes. Nevertheless, the Board will continue to monitor foreign exchange exposure in the future.

– 43 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Significant investments and material acquisitions and/or disposals

In the beginning of 2014, upon the application of a creditor of the Group, provisional liquidators were appointed and a restructuring of the Group was proposed. On 20 August 2014, subsidiaries engaged in the distribution business which ceased operation in the beginning of 2013 were put into liquidation and the Group had exited from the business segments of distribution of television business-related products and distribution of other electronic and related products. Details of the said restructuring of the Group are set out in the Annual Report 2014 headed ‘‘Restructuring of the Group’’.

Save for the above disclosed, the Remaining Group did not have any significant investments and material acquisitions and/or disposals of subsidiaries and associated companies during the year ended 31 December 2014.

Staff and remuneration policy

As at 31 December 2014, the Remaining Group had approximately 32 employees in Hong Kong. The staff cost (including directors’ remunerations) of the Remaining Group was approximately HK$7 million. The Remaining Group’s remuneration policies are formulated based on the performance of individual employees and are reviewed regularly.

– 44 –

UNAUDITED CONSOLIDATED FINANCIAL INFORMATION OF THE DISPOSAL GROUP

APPENDIX II

UNAUDITED CONSOLIDATED FINANCIAL INFORMATION OF THE DISPOSAL GROUP

Set out below are the unaudited consolidated statements of financial position of Outstanding Viewpoint Limited and its subsidiaries (the ‘‘Disposal Group’’) as at 31 December 2014, 2015 and 2016 and 30 June 2017 and the unaudited consolidated statements of profit or loss and other comprehensive income, unaudited consolidated statements of changes in equity and unaudited consolidated statements of cash flows of the Disposal Group for each of the three years ended 31 December 2016 and the six months ended 30 June 2016 and 2017 (the ‘‘Relevant Periods’’) and explanatory notes, which have been reviewed by the Company’s auditor, ZHONGHUI ANDA CPA Limited, in accordance with Hong Kong Standard on Review Engagements 2410, ‘‘Review of Interim Financial Information Performed by the Independent Auditor of the Entity’’ and with reference to Practice Note 750 ‘‘Review of Financial Information under the Hong Kong Listing Rules for a Very Substantial Disposal’’ issued by the Hong Kong Institute of Certified Public Accountants.

– 45 –

UNAUDITED CONSOLIDATED FINANCIAL INFORMATION OF THE DISPOSAL GROUP

APPENDIX II

A. UNAUDITED CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

Revenue Cost of sales Gross profit Other income Distribution and selling expenses Administrative expenses Profit from operation Reversal of impairment/(Impairment) loss on trade receivables Loss on deconsolidation Gain on execution of the schemes of arrangement Profit/(loss) from operation Finance costs Profit/(loss) before tax Income tax Profit/(loss) for the period/year Other comprehensive income/(loss): Items that may be reclassified to profit or loss: Exchange differences on translating foreign operations Items that will not be reclassified to profit or loss: Deficit arising on revaluation of property, plant and equipment Deferred tax effect arising on revaluation of property, plant and equipment Total comprehensive income/(loss) for the period/year Profit/(loss) for the period/year attributable to: Owners of the Company Non-controlling interests Total comprehensive income/(loss) for the period/year attributable to: Owners of the Company Non-controlling interests	For the six months ended 30 June 2017 2016 HK$’000 HK$’000 (Unaudited) (Unaudited) 281,385 326,294 (188,071) (213,758) 93,314 112,536 2,059 5,091 (2,571) (2,767) (65,558) (61,495) 27,244 53,365 – – – – – – 27,244 53,365 (3,653) (2,328) 23,591 51,037 (3,736) (9,948) 19,855 41,089 28,949 (20,170) – – – – 48,804 20,919 8,263 23,493 11,592 17,596 19,855 41,089 25,187 11,564 23,617 9,355 48,804 20,919	For the years ended 31 December	For the years ended 31 December	For the years ended 31 December
	2017 HK$’000 (Unaudited) 281,385 (188,071) 93,314 2,059 (2,571) (65,558) 27,244 – – – 27,244 (3,653) 23,591 (3,736) 19,855 28,949 – – 48,804 8,263 11,592 19,855 25,187 23,617 48,804	2016 HK$’000 (Unaudited) 779,822 (540,523) 239,299 12,811 (5,675) (125,622) 120,813 5,342 – – 126,155 (1,224) 124,931 (32,365) 92,566 (58,746) (21,983) 4,040 15,877 53,483 39,083 92,566 6,889 8,988 15,877	2015 HK$’000 (Unaudited) 792,180 (548,162) 244,018 20,201 (4,383) (128,450) 131,386 (8,017) – 25,695 149,064 (6,791) 142,273 (21,127) 121,146 (48,077) – – 73,069 73,339 47,807 121,146 45,029 28,040 73,069	2014 HK$’000 (Unaudited) 753,890 (514,023)
				239,867 10,849 (3,899) (135,926)
				110,891 (1,152) (300,202) –
				(190,463) (6,120)
				(196,583) (15,656)
				(212,239) (3,681) – –
				(215,920)
				(251,363) 39,124
				(212,239)
				(253,520) 37,600
				(215,920)

– 46 –

UNAUDITED CONSOLIDATED FINANCIAL INFORMATION OF THE DISPOSAL GROUP

APPENDIX II

B. UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

Non-current assets Property, plant and equipment Prepaid land lease payments Deposits paid for acquisition of property, plant and equipment Available-for-sale financial assets Current assets Inventories Trade and other receivables, deposits and prepayments Prepaid land lease payments Pledged bank deposits Bank and cash balances Current liabilities Trade and other payables Tax payables Dividend payable to non-controlling shareholders Borrowings Amount due to a related company Amount due to the Remaining Group Net current assets/(liabilities) Total assets less current liabilities Non-current liabilities Amount due to a related company Deferred tax liabilities NET ASSETS Capital and reserves Share capital Reserves Equity attributable to owners of the Company Non-controlling interests TOTAL EQUITY	As at 30 June 2017 HK$’000 (Unaudited) 581,568 44,571 15,488 17,278 658,905 151,189 375,320 1,046 – 70,225 597,780 189,849 10,040 9,218 130,772 1,966 195,514 537,359 60,421 719,326 17,702 33,860 51,562 667,764 1 288,522 288,523 379,241 667,764	As at 31 December	As at 31 December
		2016 HK$’000 (Unaudited) 524,868 43,807 16,527 16,755 601,957 137,013 417,023 938 1,676 68,194 624,844 224,090 12,359 – 87,128 983 211,031 535,591 89,253 691,210 18,685 33,414 52,099 639,111 1 262,960 262,961 376,150 639,111	2015 HK$’000 (Unaudited) 550,889 44,419 10,243 17,905 623,456 163,445 322,680 541 – 75,197 561,863 167,783 7,086 – 88,907 – 227,007 490,783 71,080 694,536 19,668 35,031 54,699 639,837 1 256,071 256,072 383,765 639,837	2014 HK$’000 (Unaudited) 536,585 39,986 22,455 5,679
				604,705
				145,930 255,999 594 – 53,138
				455,661
				124,999 4,908 – 56,544 – 272,067
				458,518
				(2,857)
				601,848
				– 33,371
				33,371
				568,477
				1 210,755
				210,756 357,721
				568,477

– 47 –

APPENDIX II

UNAUDITED CONSOLIDATED FINANCIAL INFORMATION OF THE DISPOSAL GROUP

C. UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

At 1 January 2014 Total comprehensive income/(loss) for the year Revaluation surplus released upon disposal of property, plant and equipment Reversal of deferred tax liability upon release of revaluation surplus Dividends distributed to non-controlling interest of subsidiaries Transfer to enterprise expansion fund At 31 December 2014 and 1 January 2015 Total comprehensive income/(loss) for the year Revaluation surplus released upon disposal of property, plant and equipment Reversal of deferred tax liability upon release of revaluation surplus Dividends distributed to non-controlling interest of subsidiaries Transfer to enterprise expansion fund At 31 December 2015 and 1 January 2016 Total comprehensive income/(loss) for the year Revaluation surplus released upon disposal of property, plant and equipment Dividends distributed to non-controlling interest of subsidiaries Transfer to enterprise expansion fund At 31 December 2016 and 1 January 2017 Total comprehensive income/(loss) for the period Revaluation surplus released upon disposal of property, plant and equipment Reversal of deferred tax liability upon release of revaluation surplus Dividends distributed to non-controlling interest of subsidiaries Transfer to enterprise expansion fund At 30 June 2017 At 31 December 2015 and 1 January 2016 Total comprehensive (loss)/income for the period Revaluation surplus released upon disposal of property, plant and equipment Reversal of deferred tax liability upon release of revaluation surplus Dividends distributed to non-controlling interest of subsidiaries Transfer to enterprise expansion fund At 30 June 2016			At	tributable to owne	rs of Company			Total HK$’000 (Unaudited) 464,195 (253,520) – 81 – – 210,756 45,029 – 287 – – 256,072 6,889 – – – 262,961 25,187 – 375 – – 288,523 256,072 11,564 – 544 – – 268,180	Non- controlling interests HK$’000 (Unaudited) 324,408 37,600 – 28 (4,315) – 357,721 28,040 – 191 (2,187) – 383,765 8,988 – (16,603) – 376,150 23,617 – 251 (20,777) – 379,241 383,765 9,355 – 435 (16,603) – 376,952	Total HK$’000 (Unaudited) 788,603 (215,920) – 109 (4,315) –
	Share capital HK$’000 (Unaudited) 1 – – – – – 1 – – – – – 1 – – – – 1 – – – – – 1 1 – – – – – 1	Asset revaluation reserve HK$’000 (Unaudited) 35,053 – (543) 81 – – 34,591 – (1,909) 287 – – 32,969 (12,278) (1,059) – – 19,632 – (2,555) 375 – – 17,452 32,969 – (2,398) 544 – – 31,115	Enterprise expansion fund HK$’000 (Unaudited) 47,701 – – – – 21,696 69,397 – – – – 9,420 78,817 – – – 17,860 96,677 – – – – 17,117 113,794 78,817 – – – – 10,833 89,650	Reserve fund HK$’000 (Unaudited) 28,453 – – – – – 28,453 – – – – – 28,453 – – – – 28,453 – – – – – 28,453 28,453 – – – – – 28,453	Other reserve HK$’000 (Unaudited) 70,347 – – – – – 70,347 – – – – – 70,347 – – – – 70,347 – – – – – 70,347 70,347 – – – – – 70,347	Foreign currency translation reserve HK$’000 (Unaudited) 112,524 (2,157) – – – – 110,367 (28,310) – – – – 82,057 (34,316) – – – 47,741 16,924 – – – – 64,665 82,057 (11,929) – – – – 70,128	Retained profits HK$’000 (Unaudited) 170,116 (251,363) 543 – – (21,696) (102,400) 73,339 1,909 – – (9,420) (36,572) 53,483 1,059 – (17,860) 110 8,263 2,555 – – (17,117) (6,189) (36,572) 23,493 2,398 – – (10,833) (21,514)
										568,477 73,069 – 478 (2,187) –
										639,837 15,877 – (16,603) –
										639,111 48,804 – 626 (20,777) –
										667,764
										639,837 20,919 – 979 (16,603) –
										645,132

– 48 –

UNAUDITED CONSOLIDATED FINANCIAL INFORMATION OF THE DISPOSAL GROUP

APPENDIX II

D. UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

Cash flows from operating activities Profit before tax Adjustments for: Finance costs Interest income Depreciation Amortisation of prepaid land lease payment Loss on deconsolidation (Reversal of impairment)/impairment loss on trade receivables Loss on disposal of property, plant and equipment Operating cash flows before working capital changes Change in inventories Change in amount due to the Remaining Group Change in trade and other receivables, deposits and prepayments Change in trade and other payables Cash generated from operations Interest received Tax paid Cash generated from operating activities Cash flows from investing activities Purchase of property, plant and equipment Proceeds from disposal of property, plant and equipment Deposits paid for acquisition of property, plant and equipment Purchase of available-for-sale financial asset Changes in pledged deposits Net cash used in investing activities Cash flows from financing activities New bank loans raised Repayment of bank loans Interest paid Dividends distributed to non-controlling interest of subsidiaries Net cash generated from/(used in) financing activities Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at beginning of year Effect of changes in foreign exchange rate Cash and cash equivalents at end of year, represented by Bank and cash balances	For the six months ended 30 June 2017 2016 HK$’000 HK$’000 (Unaudited) (Unaudited) 23,591 51,037 3,653 2,328 (203) (162) 24,285 23,235 514 323 – – – – 2,978 3,671 54,818 80,432 (9,902) (15,333) (22,100) 4,639 54,734 22,176 (32,012) (35,199) 45,538 56,715 203 162 (5,257) (2,718) 40,484 54,159 (59,094) (37,705) 1,613 2,063 (9,010) – – – 1,676 – (64,815) (35,642) 151,485 91,419 (111,503) (78,216) (3,653) (2,701) (20,777) (16,603) 15,552 (6,101) (8,779) 12,416 68,194 75,197 10,810 (26,452) 70,225 61,161	For the year ended 31 December	For the year ended 31 December	For the year ended 31 December
	2017 HK$’000 (Unaudited) 23,591 3,653 (203) 24,285 514 – – 2,978 54,818 (9,902) (22,100) 54,734 (32,012) 45,538 203 (5,257) 40,484 (59,094) 1,613 (9,010) – 1,676 (64,815) 151,485 (111,503) (3,653) (20,777) 15,552 (8,779) 68,194 10,810 70,225	2016 HK$’000 (Unaudited) 124,931 1,224 (514) 44,191 644 – (5,342) 3,705 168,839 15,935 (1,395) (110,325) 67,083 140,137 514 (27,092) 113,559 (70,832) 3,345 (6,941) – (1,676) (76,104) 176,491 (172,559) (6,465) (16,603) (19,136) 18,319 75,197 (25,322) 68,194	2015 HK$’000 (Unaudited) 142,273 6,791 (398) 54,947 694 – 8,017 3,920 216,244 (26,475) (31,551) (98,710) 71,270 130,778 398 (18,847) 112,329 (101,887) 990 (4,639) (12,534) – (118,070) 203,979 (168,550) (6,791) (2,187) 26,451 20,710 53,138 1,349 75,197	2014 HK$’000 (Unaudited) (196,583) 6,120 (478) 56,647 653 300,202 1,152 890
				168,603 (12,571) (7,910) (8,390) 3,306
				143,038 478 (19,205)
				124,311
				(24,689) 475 (20,915) – –
				(45,129)
				144,606 (174,764) (6,120) (44,696)
				(80,974)
				(1,792) 55,211 (281)
				53,138

– 49 –

UNAUDITED CONSOLIDATED FINANCIAL INFORMATION OF THE DISPOSAL GROUP

APPENDIX II

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL INFORMATION OF THE DISPOSAL GROUP

1. GENERAL

Tesson Holdings Limited (the ‘‘Company’’) and its subsidiaries (together the ‘‘Group’’) were principally engaged in printing and manufacturing of packaging products (the ‘‘Packaging Printing Business’’) and the manufacturing and sale of lithium ion motive battery, lithium ion battery module, battery charging devices, battery materials machines and production lines, new energy solution and sale of relevant equipment, investments holding and import and export trading (the ‘‘Lithium Ion Motive Battery Business’’).

On 22 September 2017, the Company and Kith Limited (the ‘‘Vendor’’) entered into a sale and purchase agreement (the ‘‘SPA’’) with AMVIG Investment Limited (the ‘‘Purchaser’’) and AMVIG Holdings Limited (the ‘‘Purchaser Guarantor’’) for the disposal of the entire equity interest in Outstanding Viewpoint Limited (the ‘‘Target Company’’) and its subsidiaries (together the ‘‘Disposal Group’’), at a consideration of HK$700 million (the ‘‘Disposal’’). Upon completion of the Disposal, the Disposal Group will cease to be subsidiaries of the Company.

2. REORGANISATION

Prior to the reorganisation described below, the Packaging Printing Business is primarily operated by the Vendor, Designer Global Group Limited and its subsidiaries (including Ever Honest Industries Limited, Yunnan Qiaotong Package Printing Co., Ltd., Zhaotong Xinqiao Printing Co., Ltd., Zhaoyi Zhongfengchi Branch School), Easyfield Pacific Limited, Gainful Investments Limited and Anhui Qiaofeng Package Printing Co., Ltd., which is owned as to 29% by Gainful Investments Limited and 43% by Yunnan Qiaotong Package Printing Co., Ltd.*. The Target Company is operated and fully owned by Ever Properous Global Limited.

Immediately before the Disposal, the Group will undergo a group reorganisation (the ‘‘Reorganisation’’), pursuant to which certain companies comprising the Disposal Group engaged in the Packaging Printing Business but not being subsidiaries of the Target Company will be transferred to the Target Company and certain companies previously held by the Target Company but not engaged in the Packaging Printing Business will be transferred to the Remaining Group. The Reorganisation will principally involve the following:

1. The Target Company will acquire the entire equity interests of Designer Global Group Limited and Easyfield Pacific Limited. These companies are solely engaged in Packaging Printing Business.

2. The Target Company will dispose the entire equity interest of Blue Sky Environmental Company Limited, which is not engaged in the Packaging Printing Business, to the Remaining Group.

– 50 –

UNAUDITED CONSOLIDATED FINANCIAL INFORMATION OF THE DISPOSAL GROUP

APPENDIX II

3. BASIS OF PREPARATION AND PRESENTATION OF HISTORICAL FINANCIAL INFORMATION

The unaudited consolidated financial information of the Disposal Group has been prepared in accordance with Rule 14.68(2)(a)(i)(A) of The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, and is solely for the purpose of inclusion in the circular issued by the Company in connection with the Disposal.

The amounts included in the unaudited consolidated financial information for each of the three years ended 31 December 2016 and the six months ended 30 June 2016 and 2017 have been recognised and measured in accordance with the relevant accounting policies of the Company and its subsidiaries adopted in the preparation of the Company’s annual consolidated financial statements, which conform with Hong Kong Financial Reporting Standards issued by the Hong Kong Institute of Certified Public Accountants.

The unaudited consolidated financial information does not contain sufficient information to constitute a complete set of financial statements as defined in Hong Kong Accounting Standard 1 (Revised) ‘‘Presentation of Financial Statements’’ or an interim financial report as defined in Hong Kong Accounting Standard 34 ‘‘Interim Financial Reporting’’ issued by the Hong Kong Institute of Certified Public Accountants and should be read in conjunction with the Company’s annual consolidated financial statements.

– 51 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

Introduction

The accompanying unaudited pro forma financial information of the Remaining Group has been prepared to illustrate the effect of the proposed disposal of the 100% equity interest in Outstanding Viewpoint Limited and its subsidiaries (collectively the ‘‘Disposal Group’’) might have affected the financial information of the Group.

The unaudited pro forma consolidated statement of profit or loss and other comprehensive income and consolidated statement of cash flows of the Remaining Group for the year ended 31 December 2016 are prepared based on the audited consolidated statement of profit or loss and other comprehensive income and consolidated statement of cash flows of the Group for the year ended 31 December 2016 as extracted from the annual report of the Company for the year ended 31 December 2016 as if the Disposal had been completed on 1 January 2016.

The unaudited pro forma consolidated statement of financial position of the Remaining Group as at 30 June 2017 is prepared based on the unaudited consolidated statement of financial position of the Group as at 30 June 2017 as extracted from the interim report of the Company for the six months ended 30 June 2017 as if the Disposal had been completed on 30 June 2017.

The unaudited pro forma financial information of the Remaining Group is prepared based on a number of assumptions, estimates, uncertainties and currently available information, and is provided for illustrative purposes only. Accordingly, as a result of the nature of the unaudited pro forma financial information of the Remaining Group, it may not give a true picture of the actual financial position, results of operation or cash flows of the Remaining Group that would have been attained had the Disposal actually occurred on the dates indicated herein. Furthermore, the unaudited pro forma financial information of the Remaining Group does not purport to predict the Remaining Group’s future financial position, results of operation or cash flows.

The unaudited pro forma financial information of the Remaining Group should be read in conjunction with the financial information of the Group as set out in Appendix I and other financial information included elsewhere in this circular.

– 52 –

APPENDIX III

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

A. UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF FINANCIAL POSITION OF THE REMAINING GROUP

Non-current assets Property, plant and equipment Prepaid land lease payments Deposits paid for acquisition of property, plant and equipment Intangible assets Available-for-sale financial assets Current assets Inventories Trade and other receivables, deposits and prepayments Prepaid land lease payments Held-for-trading investments Pledged bank deposits Bank and cash balances Current liabilities Trade and other payables Tax payables Amount due to the Remaining Group Dividend payable to non-controlling shareholders Borrowings Amount due to a related company Amount due to the controlling shareholder Net current assets Total assets less current liabilities Non-current liabilities Convertible bonds Amount due to a related company Amount due to the controlling shareholder Deferred tax liabilities NET ASSETS Capital and reserves Share capital Reserves Equity attributable to owners of the Company Non-controlling interests TOTAL EQUITY	The Group At 30 June 2017 HK$’000 Note 1 1,040,270 74,510 15,488 15,437 17,278 1,162,983 260,664 614,434 1,796 395 14,311 194,054 1,085,654 529,777 9,982 – 9,218 198,502 1,966 36,227 785,672 299,982 1,462,965 221,777 17,702 74,456 37,499 351,434 1,111,531 103,632 569,701 673,333 438,198 1,111,531		Pro	forma adjustments	forma adjustments	HK$’000 Note 2e – – – – – – – – – – – (3,000) (3,000) – – – – – – – – (3,000) (3,000) – – – – – (3,000) – (3,000) (3,000) – (3,000)	The Remaining Group At 30 June 2017
		HK$’000 Note 2a (581,568) (44,571) (15,488) – (17,278) (658,905) (151,189) (375,320) (1,046) – – (70,225) (597,780) (189,849) (10,040) (195,514) (9,218) (130,772) (1,966) – (537,359) (60,421) (719,326) – (17,702) – (33,860) (51,562) (667,764) – (288,523) (288,523) (379,241) (667,764)	HK$’000 Note 2b – – – – – – – – – – – 700,000 700,000 – – – – – – – – 700,000 700,000 – – – – – 700,000 – 700,000 700,000 – 700,000	HK$’000 Note 2c – – – – – – – – – – – – – – – 195,514 – – 21,241 – 216,755 (216,755) (216,755) – – – – – (216,755) – (216,755) (216,755) – (216,755)	HK$’000 Note 2d – – – – – – – – – – – – – 5,000 – – – – – – 5,000 (5,000) (5,000) – – – – – (5,000) – (5,000) (5,000) – (5,000)		HK$’000 458,702 29,939 – 15,437 –
							504,078
							109,475 239,114 750 395 14,311 820,829
							1,184,874
							344,928 (58) – – 67,730 21,241 36,227
							470,068
							714,806
							1,218,884
							221,777 – 74,456 3,639
							299,872
							919,012
							103,632 756,423
							865,055 58,957
							919,012

– 53 –

APPENDIX III

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

B. UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME OF THE REMAINING GROUP

Revenue Cost of sales Gross profit Other income Distribution and selling expenses Administrative expenses Profit/(loss) from operation Reversal of impairment loss on trade receivables Gain on disposal of subsidiaries Profit from operation Finance costs Profit before tax Income tax Profit for the year Other comprehensive (loss)/income: Item that may be reclassified to profit or loss: Exchange differences on translating foreign operations Foreign currency translation reserve reclassified to profit or loss upon disposal of subsidiaries Item that will not be reclassified to profit or loss: Deficit arising on revaluation of property, plant and equipment Deferred tax effect arising on revaluation of property, plant and equipment Total comprehensive (loss)/income for the year	The Group For the year ended 31 December 2016 HK$’000 Note 1 799,061 (564,958) 234,103 32,882 (7,049) (180,394) 79,542 5,342 3,480 88,364 (16,571) 71,793 (32,365) 39,428 (66,646) (4,951) (32,169) (6,936) 280 (38,825)		Pro forma adjustments	Pro forma adjustments	HK$’000 Note 3e – – – – – – – – (3,000) (3,000) – (3,000) – (3,000) – – (3,000) – – (3,000)	The Remaining Group For the year ended 31 December 2016
		HK$’000 Note 3a (779,822) 540,523 (239,299) (12,811) 5,675 125,622 (120,813) (5,342) – (126,155) 1,224 (124,931) 32,365 (92,566) 58,746 – (33,820) 21,983 (4,040) (15,877)	HK$’000 Note 3b – – – – – – – – 279,310 279,310 – 279,310 – 279,310 – (82,057) 197,253 – – 197,253	HK$’000 Note 3d – – – – – – – – (5,000) (5,000) – (5,000) – (5,000) – – (5,000) – – (5,000)		HK$’000 19,239 (24,435)
						(5,196) 20,071 (1,374) (54,772)
						(41,271) – 274,790
						233,519 (15,347)
						218,172 –
						218,172 (7,900) (87,008)
						123,264 15,047 (3,760)
						134,551

– 54 –

APPENDIX III

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

Profit for the year attributable to: Owners of the Company Non-controlling interests Total comprehensive (loss)/income for the year attributable to: Owners of the Company Non-controlling interests	The Group For the year ended 31 December 2016 HK$’000 Note 1 6,021 33,407 39,428 (43,367) 4,542 (38,825)		Pro forma adjustments	Pro forma adjustments	HK$’000 Note 3e (3,000) – (3,000) (3,000) – (3,000)	The Remaining Group For the year ended 31 December 2016
		HK$’000 Note 3a (53,483) (39,083) (92,566) (6,889) (8,988) (15,877)	HK$’000 Note 3b 279,310 – 279,310 197,253 – 197,253	HK$’000 Note 3d (5,000) – (5,000) (5,000) – (5,000)		HK$’000 233,848 (5,676)
						218,172
						138,997 (4,446)
						134,551

– 55 –

APPENDIX III

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

C. UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF CASH FLOWS OF THE REMAINING GROUP

Cash flows from operating activities Profit before tax Adjustments for: Finance costs Interest income Depreciation Amortisation of prepaid land lease payments Amortisation of intangible assets Impairment loss on property, plant and equipment on disposal of subsidiaries Gain on bargain purchase Reversal of impairment loss on trade receivables Gain on disposal of subsidiaries Fair value changes on held-for-trading investments Equity settled share-based payment expenses Loss on disposal of property, panty and equipment Operating cash flows before working capital changes Change in inventories Change in amount due to the Remaining Group Change in trade and other receivables, deposits and prepayments Change in trade and other payables Cash generated from/(used in) operations Interest received Tax paid Net cash generated from/(used in) operating activities	The Group For the year ended 31 December 2016 HK$’000 Note 1 71,793 16,571 (837) 54,024 2,387 1,819 12,495 (17,489) (5,342) (3,480) 15 846 4,996 137,798 (75,242) – (188,246) 152,299 26,609 837 (27,025) 421		Pro forma adjustments	Pro forma adjustments	HK$’000 Note 3e (3,000) – – – – – – – – 3,000 – – – – – – – – – – – –	The Remaining Group For the year ended 31 December 2016
		HK$’000 Note 3a (124,931) (1,224) 514 (44,191) (644) – – – 5,342 – – – (3,705) (168,839) (15,935) 1,395 110,325 (67,083) (140,137) (514) 27,092 (113,559)	HK$’000 Note 3b 279,310 – – – – – – – – (279,310) – – – – – – – – – – – –	HK$’000 Note 3d (5,000) – – – – – – – – 5,000 – – – – – – – – – – – –		HK$’000 218,172 15,347 (323) 9,833 1,743 1,819 12,495 (17,489) – (274,790) 15 846 1,291
						(31,041) (91,177) 1,395 (77,921) 85,216
						(113,528) 323 67
						(113,138)

– 56 –

APPENDIX III

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

Cash flows from investing activities Acquisition of subsidiaries Disposal of subsidiaries Purchase of property, plant and equipment Proceeds from disposal of property, plant and equipment Deposits paid for acquisition of property, plant and equipment Changes in pledged deposits Net cash (used in)/generated from investing activities Cash flows from financing activities New short-term bank loans raised Repayment to the controlling shareholder Repayment of bank loans Interest paid Capital injection from non-controlling interest Dividends distributed to non-controlling interest of subsidiaries Proceeds from issue of shares Repayment to a related company Net cash generated from financing activities Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at beginning of year Effect of changes in foreign exchange rate Cash and cash equivalents at end of year Analysis of cash and cash equivalents Bank and cash balances	The Group For the year ended 31 December 2016 HK$’000 Note 1 (22,886) (64) (228,328) 3,345 (105,151) (77,249) (430,333) 176,491 (2,050) (172,559) (5,240) 57,653 (16,603) 352,919 (20,000) 370,611 (59,301) 204,359 (12,281) 132,777 132,777		Pro forma adjustments	Pro forma adjustments	HK$’000 Note 3e – – – – – – – – – – – – – – – – – – – – –	The Remaining Group For the year ended 31 December 2016
		HK$’000 Note 3a – – 70,832 (3,345) 6,941 1,676 76,104 (176,491) – 172,559 6,465 – 16,603 – – 19,136 (18,319) (75,197) 25,322 (68,194) (68,194)	HK$’000 Note 3b – 624,803 – – – – 624,803 – – – – – – – – – 624,803 75,197 – 700,000 700,000	HK$’000 Note 3d – – – – – – – – – – – – – – – – – – – – –		HK$’000 (22,886) 624,739 (157,496) – (98,210) (75,573)
						270,574
						– (2,050) – 1,225 57,653 – 352,919 (20,000)
						389,747
						547,183 204,359 13,041
						764,583
						764,583

– 57 –

APPENDIX III

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

Notes to the Unaudited Pro Forma Financial Information of the Remaining Group

1. For the preparation of unaudited pro forma consolidated statement of financial position, the amounts are extracted from the unaudited condensed consolidated statement of financial position of the Group as at 30 June 2017 in the Company’s interim report for the six months ended 30 June 2017 dated 29 August 2017, whereas for the preparation of unaudited pro forma consolidated statement of profit or loss and other comprehensive income and consolidated statement of cash flows, the amounts are extracted from the audited consolidated financial statements of the Company for the year ended 31 December 2016, which are set out in its annual report for the year ended 31 December 2016 dated 29 March 2017.

2. The following pro forma adjustments have been made to the unaudited pro forma consolidated statement of financial position, assuming the Disposal had taken place on 30 June 2017.

3. (a) The adjustments represent the de-recognition of assets and liabilities of the Disposal Group as at 30 June 2017, assuming the Disposal had taken place on 30 June 2017. The assets and liabilities of the Disposal Group are extracted from the unaudited consolidated statement of the financial position of the Disposal Group set out in Appendix II to this circular.

– 58 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

• (b) The adjustment represents the estimated gain on disposal assuming the Disposal had taken place on 30 June 2017 and is calculated as follows:

Consideration Carrying value of net assets of the Disposal Group attributable to owners of the Company Add: Release of exchange reserve of the Disposal Group as at 30 June 2017 Less: Amount of Sale Loan as at 30 June 2017 (Note 2(c)) Adjusted carrying value of net assets of the Disposal Group attributable to owners of the Company as at 30 June 2017 Estimated gain on disposal before transaction costs Less: Estimated tax on the Disposal (Note 2(d)) Less: Estimated transaction costs attributes to the Disposal (Note 2(e)) Estimated gain on disposal

HK$’000 700,000 (288,523) 64,665 (216,755) (440,613) 259,387 (5,000) (3,000) 251,387

• (c) Pursuant to the sale and purchase agreement (the ‘‘SPA’’), the Company has conditionally agreed to sell the Sale Loan of approximately HK$216,755,000 to AMVIG Investment Limited (the ‘‘Purchaser’’). This amount includes the amount due from the Disposal Group of approximately of HK$195,514,000, and the amount with interest payable to Cloud Apex Global Limited of approximately of HK$21,241,000.

• (d) The amount represents related tax attributable to the Disposals estimated by the directors of the Company. Since the actual fair values of assets and liabilities of the Disposal Group at the completion date of the Disposal would be different from the amounts used in the preparation of the unaudited pro forma financial information of the Remaining Group, the actual related tax attributable to the Disposals to be recognised by the Remaining Group might be different from the amount shown in this note.

• (e) The adjustment represents estimated transaction costs of approximately HK$3,000,000 that are directly attributable to the Disposal, as if the Disposal had been completed on 30 June 2017.

– 59 –

APPENDIX III

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

1. The following pro forma adjustments have been made to the unaudited pro forma consolidated statement of profit or loss and other comprehensive income and the unaudited pro forma consolidated statement of cash flows, assuming the Disposal had taken place on 1 January 2016:

2. (a) The adjustment represents the exclusion of operating results/cash flow of the Disposal Group for the year ended 31 December 2016, assuming the Disposal had taken place on 1 January 2016. The operating results and cash flows of the Disposal Group are extracted from the unaudited consolidated statement of profit or loss and other comprehensive income and unaudited consolidated statement of cash flows of the Disposal Group set out in Appendix II to this circular, respectively.

3. (b) The adjustment represents the estimated gain on disposal assuming the Disposal had taken place on 1 January 2016 and is calculated as follows:

Consideration Carrying value of net assets of the Disposal Group attributable to owners of the Company as at 1 January 2016 Add: Release of exchange reserve of the Disposal Group as at 1 January 2016 Less: Amount of Sale Loan as at 1 January 2016 (Note 3(c)) Adjusted carrying value of net assets of the Disposal Group attributable to owners of the Company as at 1 January 2016 Estimated gain on disposal before transaction costs Less: Estimated tax on the Disposal (Note 3(d)) Less: Estimated transaction costs attributes to the Disposal (Note 3(e)) Estimated gain on disposal

HK$’000 700,000 (256,072) 82,057 (246,675) (420,690) 279,310 (5,000) (3,000) 271,310

– 60 –

APPENDIX III

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

• (c) Pursuant to the SPA, the Company has conditionally agreed to sell the Sale Loan of approximately HK$246,675,000 to the Purchaser. This amount includes the amount due from the Disposal Group of approximately of HK$227,007,000, and the amount due to Cloud Apex Global Limited of approximately of HK$19,668,000.

• (d) The amount represents related tax attributable to the Disposals estimated by the directors of the Company. Since the actual fair values of assets and liabilities of the Disposal Group at the completion date of the Disposal would be different from the amounts used in the preparation of the unaudited pro forma financial information of the Remaining Group, the actual related tax attributable to the Disposals to be recognised by the Remaining Group might be different from the amount shown in this note.

• (e) The adjustment represents estimated transaction costs of approximately HK$3,000,000 that are directly attributable to the Disposal, as if the Disposal had been completed on 1 January 2016.

– 61 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

B. ACCOUNTANT’S REPORT ON UNAUDITED PRO FORMA FINANCIAL INFORMATION

The following is the text of a report, prepared for the sole purpose of inclusion in this circular, from the independent reporting accountant, ZHONGHUI ANDA CPA Limited, Certified Public Accountants, Hong Kong.

==> picture [128 x 39] intentionally omitted <==

ZHONGHUI ANDA CPA Limited

Certified Public Accountants

6 November 2017

The Board of Directors Tesson Holdings Limited Room 1007, Tsim Sha Tsui Centre, West Wing, 66 Mody Road, Hong Kong

Dear Sirs,

We have completed our assurance engagement to report on the compilation of pro forma financial information of Tesson Holdings Limited (the ‘‘Company’’) and its subsidiaries (hereinafter collectively referred to as the ‘‘Group’’) by the directors of the Company for illustrative purposes only. The pro forma financial information consists of the pro forma statement of financial position as at 30 June 2017, the pro forma statement of profit or loss and other comprehensive income for the year ended 31 December 2016, the pro forma statement of cash flows for the year ended 31 December 2016 and related notes as set out on pages 52 to 61 of the circular issued by the Company. The applicable criteria on the basis of which the directors have compiled the pro forma financial information are described on pages 52 to 61.

– 62 –

APPENDIX III

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

The pro forma financial information has been compiled by the directors to illustrate the impact of the disposal of the 100% equity interest in Outstanding Viewpoint Limited on the Group’s financial position as at 30 June 2017 as if the transaction had been taken place at 30 June 2017, and on the Group’s financial performance and cash flows for the year ended 31 December 2016 as if the transaction had been taken place at 1 January 2016. As part of this process, information about the Group’s financial position has been extracted by the directors from the Group’s consolidated financial statements as included in the unaudited interim report for the six months ended 30 June 2017, and the Group’s financial performance and cash flows has been extracted by the directors from the Group’s consolidated financial statements as included in the annual report for the year ended 31 December 2016, on which an audit report has been published.

Directors’ Responsibility for the Pro Forma Financial Information

The directors are responsible for compiling the pro forma financial information in accordance with paragraph 29 of Chapter 4 of the Rules Governing the Listing of Securities on The Stock exchange of Hong Kong Limited (the ‘‘Listing Rules’’) and with reference to Accounting Guideline (‘‘AG’’) 7 ‘‘Preparation of Pro Forma Financial Information for Inclusion in Circulars’’ issued by the Hong Kong Institute of Certified Public Accountants (the ‘‘HKICPA’’).

Our Independence and Quality Control

We have complied with the independence and other ethical requirement of the Code of Ethics for Professional Accountants issued by the HKICPA, which is founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behavior.

The firm applies Hong Kong Standard on Quality Control 1 and accordingly maintains a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.

Reporting Accountant’s Responsibilities

Our responsibility is to express an opinion, as required by paragraph 29(7) of Chapter 4 of the Listing Rules, on the pro forma financial information and to report our opinion to you. We do not accept any responsibility for any reports previously given by us on any financial information used in the compilation of the pro forma financial information beyond that owed to those to whom those reports were addressed by us at the dates of their issue.

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APPENDIX III

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

We conducted our engagement in accordance with Hong Kong Standard on Assurance Engagements 3420 ‘‘Assurance Engagements to Report on the Compilation of Pro Forma Financial Information Included in a Prospectus’’ issued by the HKICPA. This standard requires that the reporting accountant plan and perform procedures to obtain reasonable assurance about whether the directors have compiled the pro forma financial information in accordance with paragraph 29 of Chapter 4 of the Listing Rules and with reference to AG 7 ‘‘Preparation of Pro Forma Financial Information for Inclusion in Investment Circulars’’ issued by the HKICPA.

For purposes of this engagement, we are not responsible for updating or reissuing any reports or opinions on any historical financial information used in compiling the pro forma financial information, nor have we, in the course of this engagement, performed an audit or review of the financial information used in compiling the pro forma financial information.

The purpose of pro forma financial information included in an circular is solely to illustrate the impact of a significant event or transaction on unadjusted financial information of the Group as if the event had occurred or the transaction had been undertaken at an earlier date selected for purposes of the illustration. Accordingly, we do not provide any assurance that the actual outcome of the event or transaction at 1 January 2016 and 30 June 2017 would have been as presented.

A reasonable assurance engagement to report on whether the pro forma financial information has been properly compiled on the basis of the applicable criteria involves performing procedures to assess whether the applicable criteria used by the directors in the compilation of the pro forma financial information provide a reasonable basis for presenting the significant effects directly attributable to the event or transaction, and to obtain sufficient appropriate evidence about whether:

• The related pro forma adjustments give appropriate effect to those criteria; and

• The pro forma financial information reflects the proper application of those adjustments to the unadjusted financial information.

The procedures selected depend on the reporting accountant’s judgment, having regard to the reporting accountant’s understanding of the nature of the Group, the event or transaction in respect of which the pro forma financial information has been compiled, and other relevant engagement circumstances.

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UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

The engagement also involves evaluating the overall presentation of the pro forma financial information.

We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Opinion

In our opinion:

• (a) the pro forma financial information has been properly compiled on the basis stated;

• (b) such basis is consistent with the accounting policies of the Group; and

• (c) the adjustments are appropriate for the purposes of the unaudited pro forma financial information as disclosed pursuant to paragraph 29(1) of Chapter 4 of the Listing Rules.

Yours faithfully,

ZHONGHUI ANDA CPA Limited

Certified Public Accountants Hong Kong

– 65 –

PROFIT FORECAST

APPENDIX IV

1. PROFIT FORECAST

In the absence of unforeseen circumstances and on the bases and assumptions set out in this Appendix, the Directors forecast the consolidated profit after taxation of the Operating Subsidiaries for the year ending 31 December 2017 will be approximately HK$39.8 million.

2. BASES AND ASSUMPTIONS FOR DETERMINING THE PROFIT FORECAST

The Directors have prepared the Profit Forecast based on the unaudited management accounts of the Operating Subsidiaries for the eight months ended 31 August 2017 and a forecast of the consolidated results of the Operating Subsidiaries for the remaining four months ending 31 December 2017 (the ‘‘Forecast Period’’). The Profit Forecast has been prepared on a basis consistent in all material respects with the accounting policies adopted by the Group set out in the Company’s 2016 annual report.

The Profit Forecast has been prepared based on the following principal bases and assumptions:

• (i) there will be no material changes in existing government policies, or in political, legal (including changes in legislation, regulations or rules), fiscal or economic conditions in the territories or in the industry in which the Operating Subsidiaries operate or which are otherwise material to its business;

• (ii) Operating activities of the Operating Subsidiaries will not be adversely affected by critical shortage in resources required by them in their daily operations such as shortage of raw materials, labor shortages and disputes, or any other factors outside the control of its management such as government act;

• (iii) It is assumed that no extraordinary items will occur during the Forecast Period;

• (iv) It is assumed that there will be no material changes in inflation rates, interest rates or exchange rates from the current prevailing rates in the context of the Operating Subsidiaries’ operations. The exchange rate of HKD1 = RMB0.8879 has been used in the preparation of the Profit Forecast;

• (v) It is assumed that there will be no material changes in the basis or rates of taxation in the territories in which the Operating Subsidiaries operate;

• (vi) It is assumed that the Operating Subsidiaries will be able to retain its key management and personnel during the Forecast Period;

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PROFIT FORECAST

APPENDIX IV

• (vii) The operations of the Operating Subsidiaries will not be materially affected, interrupted or suspended by any force majeure events or unforeseeable factors or any unforeseeable reasons that are beyond the control of the Directors;

• (viii) It is assumed that the banks from which the Operating Subsidiaries obtained banking facilities would not recall any outstanding loans before the maturity of the respective facilities during the Forecast Period;

• (ix) The Profit Forecast is based on the actual results for the eight months ended 31 August 2017, the Operating Subsidiaries’ policies, and with reference to industrial norm and market trend;

• (x) The Profit Forecast does not take into account of the operating result of a joint venture which will be incorporated in the near future and the construction of the planned third phase production base in Weinan, the PRC;

• (xi) Forecasted contracted sales to be delivered during the Forecast Period are estimated based on the sales contracts signed, the intention of the customers with sample production agreements signed and the existing sales and intention of the customers;

The Group has entered into sales contracts with five major customers in the PRC, who are primarily engaged in the home appliances and power tools market and energy storage market, for the sales of the Group’s ternary material motive batteries. These sales contracts (a) have terms ranging from 10 to 12 months; (b) have an aggregate contracted sum of approximately HK$415 million; and (c) will contribute to the Group an aggregate revenue of approximately HK$341 million for the year ending 31 December 2017;

• (xii) Forecasted probable sales to be delivered during the Forecast Period are based on the signed letter of intent entered into between the Group and a potential customer in the PRC (who is primarily engaged in the provision of electric bicycle-sharing services), in relation to the sales of the Group’s battery packs;

• (xiii) The cost of sales is assumed to be approximately 71% of revenue during the Forecast Period, which is primarily determined based on the historical gross profit margin of approximately 29% recorded in the unaudited management accounts of the Operating Subsidiaries for the eight months ended 31 August 2017;

• (xiv) The selling expenses are assumed to be approximately 5% of revenue during the Forecast Period, which is primarily determined based on the historical financial information recorded in the unaudited management accounts of the Operating Subsidiaries for the eight months ended 31 August 2017;

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PROFIT FORECAST

APPENDIX IV

• (xv) The administrative expenses are assumed to be approximately 13% of revenue during the Forecast Period, which is primarily determined based on the historical financial information recorded in the unaudited management accounts of the Operating Subsidiaries for the eight months ended 31 August 2017;

• (xvi) The forecasted finance costs are primarily projected based on the expected new bank loan drawn in 2017, taking into account the principal amounts outstanding and the average interest rates applicable, ranging from 5% to 6% per annum; and

• (xvii) Being regarded as a High and New Technology Enterprise and the PRC’s Western Campaign, the Group is entitled to 15% preferential tax rate from PRC enterprise income tax. PRC enterprise income tax is assumed to accrue since October 2017 after utilization of tax loss brought forward.

The Profit Forecast included in this section is based on a number of bases and assumptions including but not limited to those set out above. Shareholders and prospective investors should be aware that future events cannot be predicted with any certainty and deviations from the figures forecasted and projected as stated in this circular are to be expected.

Statements contained in this section that are not historical facts may be forwardlooking statements. Such statements are based on the assumptions set out above. While the Directors consider such assumptions to be reasonable, whether actual results will meet their expectations will depend on a number of risks and uncertainties over which they have no control and actual results may differ materially from those expressed or implied in these forward-looking statements. Under no circumstances should the inclusion of such information in this circular be regarded as a representation, warranty or prediction by the Company, the Board, the Financial Adviser or the reporting accountant that these results will be achieved or are likely to be achieved.

The Profit Forecast has been prepared on the bases, assumptions and estimates set out above. These individual bases, assumptions and estimates should not be viewed as individual forecasts but form part of the overall bases, assumptions and estimates used in arriving at the Profit Forecast and have not been reported on individually by the Financial Adviser or the reporting accountant of the Company.

The Profit Forecast should be read together with the letters from the Company’s reporting accountant (Zhonghui Anda CPA Limited) and the Financial Adviser set out in this Appendix.

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PROFIT FORECAST

APPENDIX IV

3. LETTER FROM THE REPORTING ACCOUNTANT ON THE PROFIT FORECAST

The following is the text of a letter received from Zhonghui Anda CPA Limited, Hong Kong, which is prepared for the purpose of incorporation in this circular.

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ZHONGHUI ANDA CPA Limited

Certified Public Accountants

6 November 2017

The Board of Directors

Tesson Holdings Limited Amasse Capital Limited

Dear Sirs,

Profit Forecast for the Year Ending 31 December 2017

We refer to the forecast of the consolidated profit of the operating subsidiaries (the ‘‘Operating Subsidiaries’’) of Tesson Holdings Limited (the ‘‘Company’’), which are principally engaged in the manufacturing and sale of lithium ion motive battery, lithium ion battery module, battery charging devices, battery materials machines and production lines, new energy solution and sale of relevant equipment, investments holding and import and export trading, for the year ending 31 December 2017 (the ‘‘Profit Forecast’’) set forth in the section headed ‘‘Profit Forecast for the Lithium Ion Motive Battery Business for the year ending 31 December 2017’’ in the circular of the Company dated 6 November 2017 (the ‘‘Circular’’).

Directors’ Responsibilities

The Profit Forecast has been prepared by the directors of the Company based on the unaudited consolidated results based on the management accounts of the Operating Subsidiaries for the eight months ended 31 August 2017 and a forecast of the consolidated results of the Operating Subsidiaries for the remaining four months ending 31 December 2017.

The Company’s directors are solely responsible for the Profit Forecast.

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PROFIT FORECAST

APPENDIX IV

Our Independence and Quality Control

We have complied with the independence and other ethical requirements of the Code of Ethics for Professional Accountants issued by the Hong Kong Institute of Certified Public Accountants (the ‘‘HKICPA’’), which is founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behavior.

The firm applies Hong Kong Standard on Quality Control 1 and accordingly maintains a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.

Reporting Accountants’ Responsibilities

Our responsibility is to express an opinion on the accounting policies and calculations of the Profit Forecast based on our procedures.

We conducted our engagement in accordance with Hong Kong Standard on Investment Circular Reporting Engagements 500 ‘‘Reporting on Profit Forecasts, Statements of Sufficiency of Working Capital and Statements of Indebtedness’’ and with reference to Hong Kong Standard on Assurance Engagements 3000 (Revised) ‘‘Assurance Engagements Other Than Audits or Reviews of Historical Financial Information’’ issued by the HKICPA. Those standards require that we plan and perform our work to obtain reasonable assurance as to whether, so far as the accounting policies and calculations are concerned, the Company’s directors have properly compiled the Profit Forecast in accordance with the bases and assumptions adopted by the directors and as to whether the Profit Forecast is presented on a basis consistent in all material respects with the accounting policies normally adopted by the Group. Our work is substantially less in scope than an audit conducted in accordance with Hong Kong Standards on Auditing issued by the HKICPA. Accordingly, we do not express an audit opinion.

Opinion

In our opinion, so far as the accounting policies and calculations are concerned, the Profit Forecast has been properly compiled in accordance with the bases and assumptions adopted by the directors as set out in Appendix IV of the Circular and is presented on a basis consistent in all material respects with the accounting policies normally adopted by the Group as set out in the Company’s 2016 annual report.

Yours faithfully, ZHONGHUI ANDA CPA Limited

Certified Public Accountants Hong Kong

– 70 –

PROFIT FORECAST

APPENDIX IV

4. LETTER FROM THE FINANCIAL ADVISER IN RELATION TO THE PROFIT FORECAST

The following is the text of a letter received from the Financial Adviser, which is prepared for the purpose of incorporation in this circular.

The Board of Directors Tesson Holdings Ltd. Room 1007 Tsim Sha Tsui Centre,West Wing 66 Mody Road, Tsim Sha Tsui Kowloon, Hong Kong

6 November 2017

Dear Sirs,

We refer to the Profit Forecast in respect of the Lithium Ion Motive Battery Business which is set out in the circular of Tesson Holdings Ltd. (the ‘‘Company’’) dated 6 November 2017 (the ‘‘Circular’’) in relation to the Disposal. Unless the context otherwise requires, all capitalised terms herein shall have the same meanings as those defined in the Circular.

The Profit Forecast constitutes a profit forecast under Rule 14.61 of the Listing Rules. We understand that the Profit Forecast, for which the directors of the Company are solely responsible, has been prepared by them based on the unaudited management accounts of the Operating Subsidiaries for the eight months ended 31 August 2017 and a forecast of the consolidated results of the Operating Subsidiaries for the remaining four months ending 31 December 2017. The Profit Forecast has been prepared on a basis consistent in all material respects with the accounting policies adopted by the Group set out in the Company’s 2016 annual report.

We confirm that we have reviewed and discussed with the Company the bases and assumptions adopted under the Profit Forecast. We have also considered the letter dated 6 November 2017 from Zhonghui Anda CPA Limited, the reporting accountant of the Company, regarding the calculations upon the Profit Forecast has been made.

– 71 –

PROFIT FORECAST

APPENDIX IV

On the basis of the foregoing, we are of the opinion that the bases and assumptions of the Profit Forecast, for which the Directors are solely responsible for, have been made by the Directors after due and careful enquiry, and due care and consideration.

Our opinion has been given for the sole purpose of compliance with Rule 14.62(3) of the Listing Rules and for no other purpose. We do not accept any responsibility to any person(s), other than the Company, in respect of, arising out of, or in connection with this letter.

We further confirm that the assessment, review and discussion carried out by us as described above are primarily based on financial, economic, market and other conditions in effect, and the information made available to us as of the date of this letter and that we have, in arriving at our views, relied on information and materials supplied to us by the Group and opinions expressed by, and representations of, the employees and/or management of the Group. We have assumed that all information, materials and representations so supplied, including all information, materials and representations referred to or contained in the Circular, for which the Directors are wholly responsible, were true, accurate, complete and not misleading at the time they were supplied or made, and remained so up to the date of this letter and that no material fact or information has been omitted from the information and materials supplied. No representation or warranty, expressed or implied, is made by us on the accuracy, truth or completeness of such information, materials, opinions and/or representations. Circumstances could have developed or could develop in the future that, if known to us at the time of this letter, would have altered our respective assessment and review.

Yours faithfully, For and on behalf of Amasse Capital Limited Michael Lam Managing Director

– 72 –

GENERAL INFORMATION

APPENDIX V

1. RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this circular is accurate and complete in all material respect and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this circular misleading.

2. DISCLOSURE OF INTERESTS

Interests of Directors and chief executive

As at the Latest Practicable Date, the interests and short positions of the Directors or the chief executive of the Company in the Shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO), which were required (i) to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO); or (ii) pursuant to section 352 of the SFO, to be entered into the register referred to therein; or (iii) are otherwise required to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Companies as set out in Appendix 10 to the Listing Rules were as follows:

			Approximate
			percentage of
			issued share
		Number of	capital of the
Name of Director	Capacity	Shares held	Company
Cheng Hung Mui (Note a)	Interest of controlled	823,387,533	79.45%
	corporation
Sheng Siguang (Note b)	Family interest	100,000,000	9.65%
Chen Dekun (Note c)	Beneficial owner	1,000,000	0.10%
Chen Weixi (Note c)	Beneficial owner	2,000,000	0.19%
Tin Kong (Note c)	Beneficial owner	2,000,000	0.19%
Chan Wei (Note c)	Beneficial owner	2,000,000	0.19%

– 73 –

GENERAL INFORMATION

APPENDIX V

Notes:

• a. The entire issued share capital of Double Key International Limited is wholly owned by Ms. Cheng Hung Mui, an executive Director. Therefore, Ms. Cheng Hung Mui is deemed to be interested in the Shares held by Double Key International Limited pursuant to the SFO. As at the Latest Practicable Date, Double Key International Limited held 635,887,533 Shares and 187,500,000 underlying Shares which may be issued upon the exercise of the conversion rights attaching to the convertible bonds in the principal amount of HK$300,000,000 (at the conversion price of HK$1.60 per conversion share).

• b. The Shares are held by Burgeon Max Holdings Limited which is owned as to 60% by Ms. Wang Jin and 40% by Ms. Wu Siqing, an Independent Third Party. Ms. Wang Jin is the spouse of Mr. Sheng Siguang, an executive Director.

• c. These Shares represent the underlying interest of the share options granted to the relevant Directors and chief executives of the Company under the share option scheme adopted by the Company on 13 June 2012. Please refer to the announcement of the Company dated 11 November 2016 for further details.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors nor the chief executive of the Company had or was deemed to have any interests or short positions in the Shares, underlying Shares or debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO) which were required (i) to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they were taken or deemed to have under such provisions of the SFO); or (ii) pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (iii) are otherwise required to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Companies as set out in Appendix 10 to the Listing Rules.

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GENERAL INFORMATION

APPENDIX V

Substantial Shareholders

As at the Latest Practicable Date, according to the register kept by the Company pursuant to section 336 of SFO, and so far as is known to the Directors or chief executive of the Company, the following persons (other than a Director or a chief executive of the Company) had, or was deemed or taken to have, an interest or short position in the Shares which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO or who were directly or indirectly interested in 5% or more of the nominal value of any class of share capital, including options in respect of such capital, carrying voting rights to vote in all circumstances at general meeting of any member of the Group:

			Approximate
			percentage of
		Number of	issued share
	Capacity or nature of	Shares in long	capital of the
Name of Shareholder	interests	position	Company
Cheng Hung Mui	Interest of controlled	823,387,533	79.45%
	corporation	(Note 1)
Double Key International	Beneficial owner	823,387,533	79.45%
Limited		(Note 1)
Burgeon Max Holdings	Beneficial owner	100,000,000	9.65%
Limited		(Note 2)
Lankai Limited	Beneficial owner	100,000,000	9.65%
		(Note 3)
Wang Jin	Interest of controlled	100,000,000	9.65%
	corporation	(Note 2)
Sheng Siguang	Family interest	100,000,000	9.65%
		(Note 2)
Wu Siqing	Interest of controlled	100,000,000	9.65%
	corporation	(Note 2)
Li Yujun	Interest of controlled	100,000,000	9.65%
	corporation	(Note 3)

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GENERAL INFORMATION

APPENDIX V

Notes:

1. The entire issued share capital of Double Key International Limited is wholly owned by Ms. Cheng Hung Mui, an executive Director. Therefore, Ms. Cheng Hung Mui is deemed to be interested in the Shares held by Double Key International Limited pursuant to the SFO. As at the Latest Practicable Date, Double Key International Limited held 635,887,533 Shares and 187,500,000 underlying Shares which may be issued upon the exercise of the conversion rights attaching to the convertible bonds in the principal amount of HK$300,000,000 (at the conversion price of HK$1.60 per conversion share).

2. The issued share capital of Burgeon Max Holdings Limited is owned as to 60% by Ms. Wang Jin and 40% by Ms. Wu Siqing. Therefore, Ms. Wang Jin and Ms. Wu Siqing are deemed to be interested in the Shares held by Burgeon Max Holdings Limited pursuant to the SFO. Besides, Mr. Sheng Siguang, an executive Director, is the spouse of Ms. Wang Jin and is accordingly deemed to be interested in the Shares beneficially owned by Ms. Wang Jin through her controlled corporation, Burgeon Max Holdings Limited pursuant to the SFO.

3. The entire issued share capital of Lankai Limited is wholly owned by Mr. Li Yujun. Therefore, Mr. Li Yujun is deemed to be interested in the Shares held by Lankai Limited pursuant to the SFO.

3. DIRECTORS’ SERVICE CONTRACTS

As at the Latest Practicable Date, there is no existing or proposed service contract between any of the Directors and any member of the Group other than service contracts that are expiring or determinable by the employer within one year without payment of compensation (other than statutory compensation).

4. INTERESTS IN CONTRACT OR ARRANGEMENT

Save for the JV Agreement (as defined below), none of the Directors was materially interested, directly or indirectly, in any contract or arrangement entered into by any member of the Group which was subsisting as at the Latest Practicable Date and which was significant in relation to the business of the Group.

5. INTERESTS IN ASSETS

As at the Latest Practicable Date, none of the Directors had any direct or indirect interest in any assets which have been, since 31 December 2016, the date to which the latest published audited financial statements of the Group were made up, acquired or disposed of by or leased to any member of the Group, or were proposed to be acquired or disposed of by or leased to any member of the Group.

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GENERAL INFORMATION

APPENDIX V

6. COMPETING INTERESTS

As at the Latest Practicable Date, none of the Directors or the controlling Shareholders or their respective associates had any interests in businesses which compete or may compete with the business of the Group or had any other conflict of interests which any such person has or may have with the Group.

7. LITIGATION

As at the Latest Practicable Date, none of the members of the Group were engaged in any litigation or claims of material importance and no litigation or claims of material importance were known to the Directors to be pending or threatened against any member of the Group.

8. QUALIFICATION AND CONSENT OF EXPERT

The followings are the qualification of the experts who have provided their advices for inclusion in this circular:

Name Qualification Zhonghui Anda CPA Limited Certified Public Accountants Amasse Capital Limited a licensed corporation to carry out type 6 (advising in corporate finance) regulated activity under the Securities and Futures Ordinance (Chapter 571 of the laws of Hong Kong)

The above experts have given and have not withdrawn their written consents to the issue of this circular with the inclusion of their letters and references to their names in the form and context in which they appear herein.

As at the Latest Practicable Date, the above experts did not have any shareholding in any member of the Group or any right, whether legally enforceable or not, to subscribe for or to nominate persons to subscribe for securities in any member of the Group and they did not have any direct or indirect interest in any assets which have been since 31 December 2016 (being the date to which the latest published audited accounts of the Company were made up) acquired or disposed of by or leased to by any member of the Group, or were proposed to be acquired or disposed of by or leased to any member of the Group.

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GENERAL INFORMATION

APPENDIX V

9. MATERIAL CONTRACTS

The following material contracts (not being contracts in the ordinary course of business) have been entered into by members of the Group within the two years preceding the date of this circular and up to the Latest Practicable Date and are or may be material:

• (i) the acquisition agreement dated 31 December 2015 entered into between Tesson Shenzhen as purchaser and 陝西順乾能源科技有限公司 (Shaanxi Shunqian Energy Technology Co. Ltd.) and 陝西錦文新能源有限公司 (Shaanxi Jinwen New Energy Co. Ltd.) as vendors (both being Independent Third Parties) in relation to the sale and purchase of the entire issued share capital of 陝西力度電池有限公司 (Shaanxi Leaders Battery Co. Ltd.*) (the ‘‘ Shaanxi Company ’’ ) at a consideration of RMB19,495,524.60;

• (ii) the assignment of loan dated 31 December 2015 entered into between Tesson Shenzhen and China Cinda Asset Management Co. Ltd (Shaanxi Branch), an Independent Third Party, in relation to the settlement of approximately RMB88.8 million liability of the Shaanxi Company at a discount of approximately 50.7% to the settlement amount of RMB45 million which was completed on 28 January 2016;

• (iii) the underwriting agreement dated 14 June 2016 entered into between the Company and Double Key International Limited in relation to the open offer of 444,135,300 offer Shares in the proportion of three offer Shares for every four Shares held at the issue price of HK$0.80 per Share;

• (iv) the capital injection agreement dated 29 November 2016 entered into between 陝西增 材製造創業投資基金（有限合夥）(Shaanxi Zengcai Manufacturing Venture Capital Fund (limited partnership)*) (‘‘Shaanxi Zengcai’’), Tesson Technology (Hong Kong) Limited (‘‘Tesson Technology’’), and Tesson Shenzhen, in relation to the subscription by Shaanxi Zengcai for approximately 6.67% of the enlarged equity interests in Tesson Shenzhen by way of capital injection at the consideration of RMB30,000,000 by cash;

– 78 –

APPENDIX V

GENERAL INFORMATION

• (v) the capital injection agreement dated 29 November 2016 entered into between 深圳紫 金港新能源產業投資企業（有限合夥）(Shenzhen Zijin Port Energy Industry Investment Enterprise (limited partnership)*) (‘‘Shenzhen Zijin’’), Tesson Technology and Tesson Shenzhen, in relation to the subscription by Shenzhen Zijin for approximately 4.44% of the enlarged equity interests in Tesson Shenzhen by way of capital injection at the consideration of RMB20,000,000 by cash;

• (vi) the subscription agreement dated 17 January 2017 entered into between the Company, Double Key International Limited and the Cloud Apex Global Limited in relation to (i) the subscription of the convertible bonds of the Company in the principal amount of HK$300,000,000 by Double Key International Limited; and (ii) the assignment by Cloud Apex Global Limited in favour of Double Key International Limited of all rights, titles, benefits and interests in and to the outstanding interest-bearing loan owed by the Company to Cloud Apex Global Limited immediately prior to such assignment;

• (vii) the joint venture agreement dated 16 June 2017 (the ‘‘JV Agreement’’) entered into between Tesson Shenzhen, 南方黑芝麻集團股份有限公司 (Nanfang Black Sesame Group Company Limited) and 大連智雲自動化裝備股份有限公司 (Dalian Zhiyun Automatic Equipment Company Limited) in relation to the establishment of a joint venture company, namely 天臣南方電源系統有限公司 (Tesson Nanfang Power System Company Limited) (the ‘‘JV Company’’), with a registered capital of RMB1,000 million which shall be contributed, on a pro rata basis, by Tesson Shenzhen, Nanfang Black Sesame Group Company Limited and Dalian Zhiyun Automatic Equipment Company Limited* for the amounts of RMB600 million, RMB300 million and RMB100 million respectively; and

(viii) the SPA.

10. GENERAL

• (a) The registered office of the Company is situated at Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda. The head office and principal place of business of the Company in Hong Kong is located at Room 1007, Tsim Sha Tsui Centre, West Wing, 66 Mody Road, Tsim Sha Tsui, Hong Kong.

• (b) The branch share registrar of the Company in Hong Kong is Computershare Hong Kong Investor Services Limited at Room 1712-1716, 17/F., Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong.

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GENERAL INFORMATION

APPENDIX V

• (c) The company secretary of the Company is Mr. Chan Wei, a member of the Hong Kong Institute of Certified Public Accountants and a fellow member of Associate of Chartered Certified Accountants.

• (d) The English text of this circular and the accompanying proxy form shall prevail over the Chinese text in the case of any inconsistency.

11. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection during normal business hours at the head office and principal place of business of the Company in Hong Kong at Room 1007, Tsim Sha Tsui Centre, West Wing, 66 Mody Road, Tsim Sha Tsui, Hong Kong from the date of this circular up to and including the date of the SGM:

• a. the memorandum of association and bye-laws of the Company;

• b. the material contracts referred to in the paragraph headed ‘‘Material Contracts’’ in this appendix;

• c. the financial information of the Disposal Group as set out in Appendix II of this circular;

• d. the unaudited pro forma financial information of the Remaining Group as set out in Appendix III to this circular;

• e. the letter from Zhonghui Anda CPA Limited in relation to the Profit Forecast, the text of which is set out in Appendix IV to this circular;

• f. the letter from the Financial Adviser in relation to the Profit Forecast, the text of which is set out in Appendix IV to this circular;

• g. the written consents referred to in the paragraph headed ‘‘Qualification and Consent of Expert’’ in this appendix;

• h. the annual reports of the Company for the years ended 31 December 2015 and 2016 respectively; and

• i. this circular.

– 80 –

NOTICE OF SPECIAL GENERAL MEETING

TESSON HOLDINGS LIMITED 天臣控股有限公司

(Incorporated in Bermuda with limited liability) (Stock code: 1201)

NOTICE OF SPECIAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that a special general meeting (the ‘‘SGM’’) of Tesson Holdings Limited (the ‘‘Company’’) will be held at 11:00 a.m. on Thursday, 23 November 2017 at Picasso Room B, B1 Level, InterContinental Grand Stanford Hong Kong, 70 Mody Road, Tsim Sha Tsui East, Kowloon, Hong Kong to consider and, if thought fit, approve, with or without modifications, the following resolution(s) as ordinary resolution(s):

ORDINARY RESOLUTION

‘‘THAT

• (a) the conditional sale and purchase agreement (‘‘SPA’’) dated 22 September 2017 and entered into by Kith Limited (‘‘Vendor’’), the Company, AMVIG Investment Limited and AMVIG Holdings Limited in respect of the disposal of the entire issued share capital of Outstanding Viewpoint Limited (‘‘Target Company’’) and the all the debts owed and payable by the Target Company and its subsidiaries to the Vendor, a copy of which has been produced to the SGM and marked ‘‘A’’ for the purpose of identification, and the transactions and agreements contemplated thereunder, be and are hereby approved, confirmed and ratified; and

• (b) any director or directors of the Company be and is or are hereby authorised to sign, execute and deliver any agreements, deeds, instruments and any other documents (and, where necessary, to affix the seal of the Company on them in accordance with the byelaws of the Company) in connection with the SPA, to make such amendments and changes relating thereto and to do and take all such action, steps, deeds and things in such manner as he or they may deem necessary, desirable or expedient to give effect to or in connection with the SPA, and the transactions contemplated thereunder.’’

Yours faithfully By order of the Board Tesson Holdings Limited Tin Kong

Chairman

Hong Kong, 6 November 2017

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NOTICE OF SPECIAL GENERAL MEETING

Registered office: Head office and principal place of Clarendon House business in Hong Kong: 2 Church Street Room 1007 Hamilton HM 11 Tsim Sha Tsui Centre, West Wing Bermuda 66 Mody Road Tsim Sha Tsui Hong Kong

Notes:

• (1) Any shareholder entitled to attend and vote at the meeting is entitled to appoint another person as his/her/its proxy to attend and vote instead of him/her/it. A shareholder who is the holder of two or more shares may appoint more than one proxy to attend on the same occasion. A proxy need not be a shareholder of the Company but must be present in person at the meeting to represent the shareholder. Completion and return of the form of proxy will not preclude a shareholder from attending the meeting and voting in person. In such event, his/her/its form of proxy will be deemed to have been revoked.

• (2) Where there are joint holders of any share, any one of such joint holders may vote at the meeting, either personally or by proxy, in respect of such share as if he/she/it was solely entitled thereto, but if more than one of such joint holders be present at the meeting, that one of the said persons so present whose name stands first on the register of members of the Company in respect of such share shall alone be entitled to vote in respect thereof.

• (3) In order to be valid, the instrument appointing a proxy together with the power of attorney or other authority, if any, under which it is signed, or a notarially certified copy of that power or authority must be deposited at the offices of the Company’s Hong Kong branch share registrar, Computershare Hong Kong Investor Services Limited at 17M/F., Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong not less than 48 hours before the time for holding the meeting or any adjournment thereof.

• (4) Entitlement to vote and attend the SGM: Shareholders who are entitled to attend and vote at the SGM are those whose names appear on the register of members of the Company as at the close of business on 20 November 2017. In order to qualify for attending the SGM, all transfer documents, accompanied by the relevant share certificates, have to be lodged for registration with the Company’s registrar, Computershare Hong Kong Investor Services Limited at Room 1712-1716, 17/F., Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong no later than 4:30 p.m. on Monday, 20 November 2017 (Hong Kong time).

• (5) The resolution(s) as set out above will be determined by way of a poll.

• for identification purpose only

As at the date of this notice, the executive directors of the Company are Ms. Cheng Hung Mui, Mr. Tin Kong, Mr. Zhou Jin, Mr. Chen Dekun, Mr. Tao Fei Hu and Mr. Sheng Siguang; and the independent non-executive directors of the Company are Mr. Wang Jinlin, Mr. Ng Ka Wing and Mr. See Tak Wah.

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