Inspur Digital Enterprise Technology Limited — Proxy Solicitation & Information Statement 2013

Oct 4, 2013

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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.

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

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

INSPUR INTERNATIONAL LIMITED 浪潮國際有限公司

(incorporated in the Cayman Islands with limited liability)

(Stock Code: 596)

MAJOR TRANSACTION AND CONTINUING CONNECTED TRANSACTIONS ENTRUSTMENT LOAN FRAMEWORK AGREEMENT

Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders of the Company

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FIRST SHANGHAI CAPITAL LIMITED

A letter from the Board is set out on pages 4 to 12 of this circular. The recommendation of the Independent Board Committee to the Independent Shareholders is set out on page 13 of this circular. A letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders is set out on pages 14 to 27 of this circular.

A notice convening an Extraordinary General Meeting (“EGM”) of Inspur International Limited to be held at Flats B&C, 30/F., Tower A, Billion Center, 1 Wang Kwong Road, Kowloon Bay, Kowloon, Hong Kong on Wednesday, 23 October 2013 at 10:00 a.m. is set out on pages 38 to 39 of this circular. A form of proxy for use at the EGM is enclosed with this circular.

Whether or not you intend to attend the EGM, you are requested to complete the form of proxy in accordance with the instructions printed thereon and return the same to the branch share registrar and transfer office of the Company in Hong Kong, Computershare Hong Kong Investor Services Limited at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong as soon as possible but in any event not less than 48 hours before the time appointed for the holding of the EGM or any adjournment thereof. Completion and return of the form of proxy shall not preclude you from attending and voting in person at the EGM or any adjournment thereof if you so wish.

5 October 2013

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Letter from the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
Letter from First Shanghai . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
Appendix I — Financial Information of the Group . . . . . . . . . . . . . . . . . . . . . . . . . .	28
Appendix II — General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	30
Notice of the EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	38

— i —

DEFINITIONS

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

• “associate(s)” has the meaning ascribed to it under the Listing Rules

• “Board” the board of Directors

“Company”

Inspur International Limited, an exempted company incorporated in the Cayman Islands with limited liability, the shares of which are listed on the main board of the Stock Exchange

• “connected person(s)” has the meaning ascribed to it under the Listing Rules

• “controlling shareholder” has the meaning ascribed to it under the Listing Rules

• “Director(s)” the director(s) of the Company

• “EGM” the extraordinary general meeting of the Company to be convened and held for approving, amongst other things, the Framework Agreement and the Transactions

“Entrustment Loan(s)” Entrustment loan(s) to be advanced by the Lender to the Borrower from time to time through the Financial Institutions under the Framework Agreement

• “Financial Institutions” the PRC financial institutions which are qualified to engage in entrustment loan business in PRC

• “Framework Agreement”

• the framework agreement dated 22 August 2013 between the Lender and the Borrower in relation to the Entrustment Loans

• “Group” the Company and its subsidiaries

• “HK$” Hong Kong dollars, the lawful currency of Hong Kong

• “Hong Kong” the Hong Kong Special Administrative Region of the People’s Republic of China

“Independent Board Committee” an independent board committee, comprising Mr. Zhang Tiqin, Mr. Wong Lit Chor, Alexis and Ms. Dai Ruimin, all being the independent non-executive directors of the Company, to advise the Independent Shareholders as to the fairness and reasonableness of the Framework Agreement and the Transactions

— 1 —

DEFINITIONS

• “Independent Financial Adviser” First Shanghai Capital Limited, a licensed corporation to OR “First Shanghai” carry on type 6 regulated activity (advising on corporate finance) under the SFO, being the independent financial adviser appointed to advise the Independent Board Committee and the Independent Shareholders on the fairness and reasonableness of the Framework Agreement and the Transactions

“Independent Shareholders” Shareholders other than IPG (including its ultimate beneficial owners and their respective associates)

• “IPG”

• Inspur Group Limited* (浪潮集團有限公司), which is a company incorporated in the PRC and through its wholly owned subsidiaries, interested in approximately 32.11% of the existing issued ordinary share capital of the Company

• “Jinan Orient” Jinan Orient Cooperative Technology Development Co., Ltd.* (濟南東方聯合科技發展有限公司), a company incorporated in the PRC which is wholly owned by the Borrower

• “Latest Practicable Date” 3 October 2013, being the latest practicable date prior to printing of this circular for ascertaining certain information contained herein

• “Listing Rules” Rules Governing the Listing of Securities on the Stock Exchange

• “PRC” the People’s Republic of China

• “Preferred Shares” 72,859,049 series A senior redeemable convertible voting preferred shares of HK$0.01 each in the share capital of the Company attached with rights of conversion to 297,052,141 Shares

• “RMB” Renminbi, the lawful currency of the PRC

• “SFO” Securities and Futures Ordinance (chapter 571) of the laws of Hong Kong

• “Set-up Fees” the set-up fees to be charged by the Financial Institutions in relation to specific Entrustment Loans from time to time

• “Share(s)” ordinary share(s) of HK$0.002 each in the share capital of the Company

• “Shareholder(s)” holder(s) of the Share(s) and the Preferred Shares “Stock Exchange” The Stock Exchange of Hong Kong Limited

— 2 —

DEFINITIONS

“subsidiaries”	has the meaning ascribed to it under the Listing	has the meaning ascribed to it under the Listing	Rules
“Transactions”	the transactions	contemplated under the	Framework
	Agreement
“HK$”	Hong Kong dollars,	the lawful currency of Hong	Kong
“%”	per cent

Unless otherwise stated, the conversion of RMB into Hong Kong dollars are based on the exchange rate of RMB1 = HK$1.26 for illustration purpose only.

• All the English translation of certain Chinese names or words in this circular is included for identification purpose only, and should not be regarded as the official English translation of such Chinese names or words.

— 3 —

LETTER FROM THE BOARD

INSPUR INTERNATIONAL LIMITED 浪潮國際有限公司

(incorporated in the Cayman Islands with limited liability)

(Stock Code: 596)

Executive Directors:

Mr. Wang Xingshan (Chairman) Mr. Chen Dongfeng Mr. Sun Chengtong

Non-executive Directors:

Mr. Samuel Y. Shen Mr. Dong Hailong

Independent non-executive Directors:

Mr. Zhang Tiqin Mr. Wong Lit Chor, Alexis Ms. Dai Ruimin

Registered office:

Cricket Square Hutchins Drive P.O. Box 2681 Grand Cayman KY1-1111 Cayman Islands

Head office and principal place of business in Hong Kong: Flats B & C, 30/F. Tower A, Billion Centre 1 Wang Kwong Road Kowloon Bay Kowloon Hong Kong 5 October 2013

To the Shareholders

Dear Sir or Madam,

MAJOR TRANSACTION AND CONTINUING CONNECTED TRANSACTIONS ENTRUSTMENT LOAN FRAMEWORK AGREEMENT

INTRODUCTION

Reference is made to the Company’s announcement dated 22 August 2013. On 22 August 2013, Inspur (Shandong) Electronics Information Co., Limited (the “ Lender ”), a wholly owned subsidiary of the Company, and Inspur Electronic Information Industry Co., Limited (the “ Borrower ”) entered into the Framework Agreement, pursuant to which the Lender agreed to provide Entrustment Loans to the Borrower through Financial Institutions subject to the terms and conditions as set out in the Framework Agreement.

— 4 —

LETTER FROM THE BOARD

As the Borrower is an associate of IPG (a controlling shareholder of the Company), the provision of Entrustment Loans by the Lender to the Borrower constitutes the provision of financial assistance by the Company to a connected person, and therefore the Transactions constitute continuing connected transactions of the Company under Chapter 14A of the Listing Rules. As one or more of the applicable percentage ratios (as defined under Rule14A.10 of the Listing Rules) in respect of the maximum outstanding balance of the loans to be provided by the Lender to the Borrower exceed 5%, the Transactions are subject to the reporting, announcement, annual review, and independent shareholders’ approval requirement under Chapter 14A of the Listing Rules.

Meanwhile, as one or more of the applicable percentage ratios (as defined under Rule 14.04(9) of the Listing Rules) in respect of the maximum outstanding balance of the loans to be provided by the Lender to the Borrower are more than 25% but all of the same are below 75%, it also constitutes a major transaction under Chapter 14 of the Listing Rules. IPG, IPG’s ultimate beneficial owners and their respective associates will abstain from voting in the EGM to be convened for the approval of the Framework Agreement and the Transactions.

The purpose of this circular is to provide you with further information regarding, among other things, (i) details of the Framework Agreement; (ii) the recommendation from the Independent Board Committee to the Independent Shareholders; (iii) the letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders, and (iv) the notice of the EGM.

THE FRAMEWORK AGREEMENT

Dates

22 August 2013

Parties

Lender: Inspur (Shandong) Electronics Information Co., Limited (浪潮(山東)電子信息有限公司)

Borrower: Inspur Electronic Information Industry Co., Limited (浪潮電子信息產業股份有限公司)

Major terms of the Framework Agreement

Provision of Entrustment Loans

Under the Framework Agreement, the Lender shall entrust Financial Institutions to provide Entrustment Loans to the Borrower during the term of the Framework Agreement provided that the maximum amount (including the accrued interest) at any time outstanding under the Framework Agreement shall not exceed RMB500,000,000 (equivalent to approximately HK$630,000,000). The amount of any advance repaid during the term of the Framework Agreement shall be eligible for re-borrowing.

— 5 —

LETTER FROM THE BOARD

Interest Rates

As the term of each specific Entrustment Loan (details of which are set out under the following paragraph headed “Specific Entrustment Loan agreements”) under the Framework Agreement will not be longer than 6 months, the actual interest rate of each specific Entrustment Loan (“ Interest Rates ”) are therefore fixed in accordance with the half-year RMB benchmark loan interest rate to be published by the People’s Bank of China for financial institutions on the date of drawing of the specific Entrustment Loans by the Borrower.

The half-year RMB benchmark loan interest rates for the recent years as published on the website of the People’s Bank of China are as follows:-

2011.04.06	5.85%
2011.07.07	6.10%
2012.06.08	5.85%
2012.07.06	5.60%

Therefore, as at the Latest Practicable Date, the applicable half-year RMB benchmark loan interest rate is 5.60% per annum.

Repayment of Entrustment Loans and payment of interest

Generally the Borrower shall make one-off repayment of the principal and interest of each specific Entrustment Loan to the Lender upon the maturity thereof. Notwithstanding the foregoing, the Lender is entitled to request for early repayment of each specific Entrustment Loan by serving at least 5 working days’ prior written notice to the Borrower, while the Borrower is entitled to make early repayment (subject to the approval by the Lender) by giving 5 working days’ prior written notice to the Lender.

Specific Entrustment Loan agreements

The parties shall enter into Entrustment Loan agreement with relevant Financial Institution separately in respect of each specific Entrustment Loan according to the terms and conditions set out in the Framework Agreement. The proceeds of each Entrustment Loan shall only be used exclusively for the purpose as stipulated in the respective Entrustment Loan agreement.

Overdue Interest

If the Borrower fails to repay any outstanding amounts of the Entrustment Loans on or before the due dates as set out in relevant Entrustment Loan agreements, the Lender shall be entitled to charge overdue interest against the Borrower, the rates of which will be 50% higher than the Interest Rates.

— 6 —

LETTER FROM THE BOARD

Set-up Fees

It’s the market practice that the PRC financial institutions will charge set-up fees or handling charges for providing entrustment loan facilities. The actual amount of the Set-up Fees will vary depending on different Financial Institutions. It is estimated that, based on the prevailing market practice in PRC, the Set-up Fees (if any) to be charged by the Financial Institutions under specific Entrustment Loan agreements will be around 0.1% of the loan amount. Having considered the benefits of the Transactions, the Directors are of the view that the amount of the Set-up Fee is insignificant.

Term and effectiveness

The Framework Agreement shall be for a term of 1 year, which is effective upon the occurrence of all of the following:

• (i) Obtaining approval from the Independent Shareholders of the Company at the EGM; and

• (ii) Obtaining approval from the independent shareholders (has the meaning ascribed to it under the applicable PRC rules and ordinances) of the Borrower.

Security of the Entrustment Loans

For the purpose of providing collateral security to the Lender for repayment of any Entrustment Loans of the Borrower under the Framework Agreement, the Borrower shall pledge its entire shareholdings in Jinan Orient in favour of the Lender upon signing of the Framework Agreement. Such pledge will be registered in the relevant PRC administration authorities for industry and commerce. The Directors understand that in the event of occurrence of default under any specific Entrustment Loan agreement, the Lender as the chargee shall have absolute right to dispose of the shareholding of Jinan Orient to recover the debt and sue for any shortage thereof.

Proposed cap

Under the Framework Agreement, the maximum amount (including the accrued interest) at any time outstanding under the Framework Agreement shall not exceed RMB500,000,000 (equivalent to approximately HK$630,000,000). Such cap was determined after arm’s length negotiation between the parties having taken into account, inter alia, the following:

• (1) the current and anticipated cash surplus of the Group (please see the paragraph headed “Financial Condition of the Group and the Lender” below); and

• (2) the net asset value of Jinan Orient to be provided by the Borrower as security for the Entrustment Loans (please see the paragraph headed “Value of security” below).

— 7 —

LETTER FROM THE BOARD

INFORMATION OF THE PARTIES

The Group is an integrated IT services provider with services covering taxation, finance, ERP, telecommunication and software outsourcing services.

The Lender is a foreign wholly-owned enterprise established in the PRC and is a wholly-owned subsidiary of the Company. It is principally engaged in developing and manufacture computer software and hardware products and providing related technology consulting and technical service.

The Borrower is a company established in the PRC whose shares are listed on Shenzhen Stock Exchange with stock code 000977. The Borrower (including its subsidiaries) is principally engaged in developing, manufacture and marketing of computers and software, electronic products and other communication devices.

REASONS FOR AND BENEFITS OF ENTERING INTO THE FRAMEWORK AGREEMENT

Financial condition of the Group and the Lender

According to the management accounts of the Lender, the cash and bank balance held by the Lender as of 30 June 2013 was approximately RMB700,000,000 (equivalent to approximately HK$882,000,000). Further, it is expected that by the end of December 2013, the Group will receive HK$224,480,000 as second instalment payment and the shareholders’ loan of approximately HK$100,000,000 in relation to the disposal of Inspur (HK) Electronics Limited (please refer to the Company’s circular dated 21 May 2013 and the poll result of the extraordinary general meeting held on 6 June 2013 for details). Pursuant to the aforementioned, it is anticipated that after financing of the Entrustment Loans to the Borrower, the Group (including the Lender) will still have adequate cash to meet its daily operation needs and capital expenses.

Financial condition of the Borrower

The Borrower is a listed company whose shares are listed on Shenzhen Stock Exchange with stock code 000977. The Directors had made an analysis on the financial condition of the Borrower (including making an analysis on the audited accounts of the Borrower for the years ended 31 December 2012, 31 December 2011, 31 December 2010, and on the Borrower’s quarterly report for the first quarter of the year of 2013). The accounts reveal that during the recent three years, the general assets and owners’ equity and net profit of the Borrower have been increased, and the liability/assets ratios of the Borrower were all less than the average ratio of the industry. Meanwhile, according to the quarterly report of the Borrower for the three months ended 31 March 2013, the Borrower’s group had total revenue of approximately RMB501 million (31 March 2012: approximately RMB426 million) and net assets attributable to shareholders of the Borrower of approximately RMB1.162 billion (31 March 2012: approximately RMB1.161 billion) as at 31 March 2013, representing respective increase of 17.44% and 0.13% as compared with the corresponding period in the last year. Meanwhile, the Borrower will provide collateral to secure the Entrustment Loans (see below for details). In view of the above, the Directors believe that the Borrower will be capable to repay the Entrustment Loans (together with the interest accrued thereon) within the term of the Framework Agreement.

— 8 —

LETTER FROM THE BOARD

Value of security

The Entrustment Loans are secured by a pledge over the Borrower’s entire shareholding in Jinan Orient (please see the paragraph headed “Security of the Entrustment Loans” above). Jinan Orient is a company incorporated in PRC and is principally engaged in financial and investment, property lease and management, and real estate development. According to the unaudited management accounts of Jinan Orient for the seven months ended 31 July 2013, its net assets value is approximately RMB469,351,000 (equivalent to approximately HK$591,382,260).

The following table shows the turnover, net profit before tax and net profit after tax of Jinan Orient based on its management accounts for the seven months ended 31 July 2013, and its audited financial statements for the year ended 31 December 2012 and the year ended 31 December 2011 respectively.

	For the seven months	For the year ended	For the year ended
	ended 31 July 2013	31 December 2012	31 December 2011
	(unaudited)	(audited)	(audited)
	RMB’000	RMB’000	RMB’000
Turnover	7,639.6	12,992.4	16,442.8
Net (Loss)/Profit	(3,714.4)	(5,100.5)	415.56
before tax
Net (Loss)/Profit after	(3,715.3)	(5,099.5)	415.56
tax

The major assets of Jinan Orient are the land use right of a piece of land cover an area of approximately 290,326 sq.m. located in Sun Cun town, hi-tech development zone, Jinan city (濟南高 新開發區孫村鎮) together with the buildings erected thereon. Pursuant to the valuation report prepared by Shandong Zhongxing Assets Appraisal Limited* (山東中興資產評估有限公司), the appraised market value of Jinan Orient as at 31 July 2013 is RMB515,777,800 (equivalent to approximately HK$649,880,028), which is approximately 9.89% higher than its net assets value as at 31 July 2013 (RMB469,351,000), and the appraised market value of the land use right and buildings of Jinan Orient is approximately RMB330,208,700 (equivalent to approximately HK$416,063,000). Having considered the value of Jinan Orient, the Directors are of the view that the entire shareholding of Jinan Orient as the security for the Entrustment Loans is acceptable.

Higher interest rates

The current practice of the Group with regard to cash surplus is to deposit any such surplus as current or fixed deposit. As disclosed in the Company’s annual report for the year ended 31 December 2012, the bank balances carried interest at market rates which range from 0.01% to 3.25% per annum. Therefore, the Interest Rates and the overdue interest rates under the Framework Agreement (having taken into account the payment of the Set-up Fee by the Lender) will be higher than the interest rates for 6-month fixed deposit in PRC banks.

— 9 —

LETTER FROM THE BOARD

Assessment of credit risks in association with the Entrustment Loan

Before entering into the Framework Agreement, the Directors had also considered and evaluated the following factors:-

• (1) the net assets value of Jinan Orient covers the substantial part of the maximum amount of the Loan. The major assets of Jinan Orient are the PRC land use right and real properties, whose prices are stable.

• (2) whether the Borrower will have adequate and stable source of income for the repayment of the entrustment loan.

• (3) the Group had investigated the title of the shareholdings of Jinan Orient and understand there is no legal restriction on the realisation of the pledged shareholdings when default.

In the circumstances, the Directors believe that, by entering into the Framework Agreement, the financial resources of the Group can be used in a more efficient way in order to generate additional interest return with acceptable level of risk.

The terms of the Framework Agreement (including the interest rate) were agreed after arm’s length negotiation between the parties having taken into account the prevailing market interest rates.

The Directors (including the independent non-executive Directors) consider that the Framework Agreement is entered into on normal commercial terms, and the terms of the Framework Agreement are fair and reasonable and are in the interests of the Company and the Shareholders as a whole.

None of the Directors is regarded as having material interest in the Transactions and hence none of the Directors has abstained from voting on the board resolution approving the Framework Agreement and the Transactions.

FINANCIAL EFFECT OF THE FRAMEWORK AGREEMENT

As disclosed in the Company’s annual report for the year ended 31 December 2012, as at 31 December 2012, the Group had its cash and cash equivalents of approximately HK$1,184 million. Assuming that the entire amount outstanding under the Framework Agreement will be drawn by the Borrower, the Group will still have cash and cash equivalents of approximately HK$554 million. The Directors consider that such remaining cash and cash equivalents would be sufficient for the business operations of the Group. Currently the construction of S01 Scientific Research Activity Building is in progress. As disclosed in the Company’s circular dated 20 December 2012, the total consideration for the construction work is RMB276,863,120.73 (equivalent to approximately HK$348,847,532) but the payment is to be paid by way of progress payments. In the circumstance, assuming the entire loan amount of RMB500,000,000 will be drawn by the borrower, the Group still have adequate cash and cash equivalents to pay for the progress payment. Moreover, the Lender shall have the right at any time to terminate the Framework Agreement by serving 3 months’ written notice to the Borrower, or to demand the Borrower to repay prior to the due date all or part of the outstanding Entrustment Loans

— 10 —

LETTER FROM THE BOARD

and interest accrued under the Framework Agreement by giving not less than 5 Business Days’ notice in writing. Accordingly, the Directors are of the view that there will not be adverse effect on the flexibility of cash flow of the Group. The Group can utilise surplus cash resources to enhance return on investment, which in turn produces a positive earnings of the Group in the short run.

IMPLICATION UNDER THE LISTING RULES

As the Borrower is considered to be an associate of IPG (a controlling shareholder of the Company), the provision of Entrustment Loans by the Lender to the Borrower constitutes the provision of financial assistance by the Company to a connected person, and therefore the Transactions constitute continuing connected transaction of the Company under Chapter 14A of the Listing Rules.

As one or more of the applicable percentage ratios (as defined under Rule14A.10 of the Listing Rules) in respect of the maximum outstanding balance of the loans to be provided by the Lender to the Borrower exceed 5%, the Transactions are subject to the reporting, announcement, annual review, and independent shareholders’ approval requirement under Chapter 14A of the Listing Rules. Meanwhile, as one or more of the applicable percentage ratios (as defined under Rule 14.04(9) of the Listing Rules) in respect of the maximum outstanding balance of the loans to be provided by the Lender to the Borrower are more than 25% but all of the same are below 75%, it also constitutes a major transaction under Chapter 14 of the Listing Rules. IPG, IPG’s ultimate beneficial owners and their respective associates will abstain from voting in the EGM to be convened for the approval of the Framework Agreement.

EGM

Set out on pages 38 to 39 of this circular is a notice convening the EGM which will be held at Flats B & C, 30/F, Tower A, Billion Centre, 1 Wang Kwong Road, Kowloon Bay, Kowloon, Hong Kong at 10:00 a.m. on Wednesday, 23 October 2013 for the purpose of considering and if thought fit approving the Framework Agreement and the Transactions.

The Framework Agreement and the Transactions are subject to, among other things, the approval by the Independent Shareholders at the EGM to be taken by way of a poll. As mentioned above, IPG, IPG’s ultimate beneficial owners and their respective associates will abstain from voting for the relevant resolution at the EGM due to their interest in the concerned transaction. Other than the above, no other Shareholders have material interest in the above transaction and will abstain from voting at the EGM. As at the Latest Practicable Date, IPG (including its associates) is entitled to voting rights of 1,357,390,000 Shares (representing approximately 32.11% of the total voting rights of the holders of the Shares). IPG (including its associates) controls or is entitled to control over the entire voting right in respect of its Shares. There is (i) no voting trust or other agreement or arrangement or understanding entered into by or binding upon IPG (including its associates); and (ii) no obligation or entitlement of IPG (including its associates) as at the Latest Practicable Date, whereby it has or may have temporarily or permanently passed control over the exercise of the voting right in respect of its Shares to a third party, either generally or on a case-by-case basis.

— 11 —

LETTER FROM THE BOARD

A form of proxy for the EGM is enclosed. Whether or not you wish to attend the EGM, you are requested to complete the form of proxy in accordance with the instructions printed thereon and return the same to the Company’s branch share registrar and transfer office in Hong Kong, Computershare Hong Kong Investor Services Limited at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong as soon as possible but in any event not less than 48 hours before the time appointed for the EGM (or any adjourned meeting). Completion and delivery of the form of proxy will not preclude you from attending and voting at the EGM (or any adjourned meeting) if you so wish.

RECOMMENDATIONS

The Independent Board Committee has been established to advise the Independent Shareholders whether the terms of the Framework Agreement are fair and reasonable so far as the Independent Shareholders are concerned and the Independent Financial Adviser has been appointed to advise the Independent Board Committee and the Independent Shareholders in that connection.

The text of the letter from the Independent Financial Adviser containing its advice to the Independent Board Committee and the Independent Shareholders is set out on pages 14 to 27 of this circular and the text of the letter from the Independent Board Committee to the Independent Shareholders is set out on page 13 of this circular.

The Independent Board Committee, having taken into account the advice of the Independent Financial Adviser, is of the opinion that the terms of the Framework Agreement are fair and reasonable and are in the interest of the Company and the Shareholders as a whole and recommends the Independent Shareholders to vote in favour of the relevant resolution to be proposed at EGM.

The Board considers that the terms of the Framework Agreement are on normal commercial terms and fair and reasonable and are in the interests of the Company and the Shareholders as a whole. The Board recommends the Independent Shareholders to vote in favour of the resolution to be proposed at EGM.

ADDITIONAL INFORMATION

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

By Order of the Board Inspur International Limited Wang Xingshan Chairman

— 12 —

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

INSPUR INTERNATIONAL LIMITED 浪潮國際有限公司

(incorporated in the Cayman Islands with limited liability)

(Stock Code: 596)

5 October 2013

To the Independent Shareholders

Dear Sir or Madam,

MAJOR TRANSACTION AND CONTINUING CONNECTED TRANSACTIONS ENTRUSTMENT LOAN FRAMEWORK AGREEMENT

We refer to the circular dated 5 October 2013 issued by the Company (the “ Circular ”), of which this letter forms part. Terms used in this letter shall bear the same meanings as given to them in the Circular unless the context otherwise requires.

We have been appointed as members of the Independent Board Committee to consider the Framework Agreement and the Transactions and to advise the Independent Shareholders as to the fairness and reasonableness of the aforesaid matters, and to recommend how the Independent Shareholders should vote at the EGM. First Shanghai has been appointed to advise the Independent Board Committee and the Independent Shareholders in this regard.

We wish to draw your attention to the letter from the Board, as set out on pages 4 to 12 of the Circular, and the letter from First Shanghai to the Independent Board Committee and the Independent Shareholders which contains its advice to us in respect of the Framework Agreement, as set out on pages 14 to 27 of the Circular.

Having taken into account of the advice of First Shanghai, we consider that the Framework Agreement is entered into upon normal commercial terms following arm’s length negotiations between the parties thereto, and that the terms of the Framework Agreement are fair and reasonable so far as the Independent Shareholders are concerned, and the Framework Agreement is in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the EGM to approve the Framework Agreement and the Transactions.

Yours faithfully, the Independent Board Committee

Dai Ruimin Zhang Tiqin Wong Lit Chor, Alexis Independent non-executive Independent non-executive Independent non-executive Director Director Director

— 13 —

LETTER FROM FIRST SHANGHAI

The following is the text of a letter received from First Shanghai setting out its advice to the Independent Board Committee and the Independent Shareholders in respect of the transactions contemplated under the Framework Agreement for inclusion in this circular.

==> picture [150 x 68] intentionally omitted <==

FIRST SHANGHAI CAPITAL LIMITED

19th Floor, Wing On House 71 Des Voeux Road Central Hong Kong

5 October 2013

To the Independent Board Committee and the Independent Shareholders

Dear Sir or Madam,

MAJOR TRANSACTION AND CONTINUING CONNECTED TRANSACTIONS ENTRUSTMENT LOAN FRAMEWORK AGREEMENT

INTRODUCTION

We refer to our engagement to advise the Independent Board Committee and the Independent Shareholders in respect of the terms of the Framework Agreement and the transactions contemplated thereunder, details of which are set out in the circular of the Company dated 5 October 2013 (the “ Circular ”), of which this letter forms part. Unless the context otherwise requires, terms used in this letter shall have the same meanings as those defined in the Circular.

On 22 August 2013, Inspur (Shandong) Electronics Information Co., Limited (the “ Lender ”) (a wholly-owned subsidiary of the Company) and Inspur Electronic Information Industry Co., Limited (the “ Borrower ”, together with its subsidiaries, the “ Borrower Group ”) entered into the Framework Agreement, pursuant to which the Lender agreed to provide the Entrustment Loans to the Borrower through Financial Institutions for a term of one year, provided that the maximum outstanding amount (including the accrued interest) shall not exceed RMB500 million (equivalent to approximately HK$630 million) (the “ Maximum Amount ”).

The Borrower is an associate of IPG, which is a controlling shareholder of the Company. Pursuant to the Listing Rules, the Borrower is a connected person of the Company and the transactions contemplated under the Framework Agreement constitute continuing connected transactions of the Company. Accordingly, the Framework Agreement is subject to, among other conditions, the approval by the Independent Shareholders at the EGM.

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LETTER FROM FIRST SHANGHAI

The Independent Board Committee, comprising all the independent non-executive Directors, namely Mr. Zhang Tiqin, Mr. Wong Lit Chor, Alexis and Ms. Dai Ruimin, has been formed to advise the Independent Shareholders in respect of the terms of the Framework Agreement and the transactions contemplated thereunder. We, First Shanghai Capital Limited, have been appointed to advise the Independent Board Committee and the Independent Shareholders in this regard.

In putting forth our opinion and recommendation, we have relied on the accuracy of the information and representations included in the Circular and provided to us by the management of the Group, and have assumed that all such information and representations made or referred to in the Circular and provided to us by the management of the Group were true at the time they were made and will continue to be true up to the time of the holding of the EGM. We have also assumed that all statements of belief, opinion and intention made in the Circular were reasonably made after due enquiry. We have no reason to doubt the truth, accuracy and completeness of the information and representations provided to us by the management of the Group and have been advised that no material facts have been withheld or omitted from the information provided and referred to in the Circular. We consider that we have reviewed sufficient information to reach an informed view and to justify reliance on the accuracy of the information contained in the Circular and to provide a reasonable basis for our advice. We have not, however, conducted any independent verification of the information included in the Circular and provided to us by the management of the Group nor have we conducted any form of investigation into the business, affairs or future prospects of the Group and the Borrower Group.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our opinion on the Framework Agreement, we have taken into consideration the following principal factors and reasons:

1. Background of and reasons for the entering into of the Framework Agreement

2. (i) Background of the relevant parties

The Group is an integrated IT services provider with services covering taxation, finance, ERP, telecommunication and software outsourcing services.

The Borrower is listed on the Shenzhen Stock Exchange (stock code: 000977) and is principally engaged in the development, manufacture and marketing of computers and software, electronic products and other communication devices. Jinan Orient is a wholly-owned subsidiary of the Borrower and is principally engaged in financial and investment, property lease and management and real estate development.

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LETTER FROM FIRST SHANGHAI

(ii) Reasons for the entering into of the Framework Agreement

According to the interim report of the Company for the six months ended 30 June 2013, the Group had (i) bank balances and cash of approximately HK$1,071 million; (ii) no bank borrowings; and (iii) net assets attributable to owners of the Company of approximately HK$1,926 million as at 30 June 2013. Furthermore, with reference to the circular of the Company dated 21 May 2013 and the letter from the Board in the Circular, the Group is expected to receive around HK$324 million from the disposal of Inspur (HK) Electronics Limited by the end of 2013. The current practice of the Group with regard to cash surplus is to deposit any such amount as current or fixed deposit. We understand that the Group wishes to enhance the return of its cash surplus.

The Borrower is a PRC listed company. According to the interim report of the Borrower for the six months ended 30 June 2013, the Borrower Group has been profitable in the past few years and had net assets attributable to shareholders of approximately RMB979 million (equivalent to approximately HK$1,234 million) as at 30 June 2013. The interest rate of the Entrustment Loans, which makes reference to the RMB benchmark loan interest rate published by the People’s Bank of China (“ PBOC ”), is expected to be higher than those of the bank deposits of the Group. Moreover, the Borrower has pledged the entire shareholding in Jinan Orient, which has an appraised market value higher than the Maximum Amount as at 31 July 2013, to secure the Entrustment Loans. Furthermore, the Group has the discretion to determine the lending amount of the Entrustment Loans and is entitled to demand early repayment by serving at least five working days’ prior written notice. Therefore, the Group is not only protected by the pledge but also has the flexibility to utilise its cash surplus anytime on either the Entrustment Loans or any other activities, whichever is more favourable to the Group.

We are advised by the management of the Group that the Group does not possess the licence to carry out money lending activities in the PRC. Accordingly, the Entrustment Loans will be provided through Financial Institutions, which are qualified to engage in entrustment loan business in the PRC. We are also advised by the management of the Group that, based on the consultation with the PRC legal adviser, the Group would not violate the PRC laws for the provision of the Entrustment Loans through Financial Institutions.

Despite the entering into of the Framework Agreement is not in the ordinary and usual course of business of the Group, having primarily considered that (i) the Group would have the flexibility to utilise its cash surplus anytime on either the Entrustment Loans or any other activities, whichever is more favourable to the Group; (ii) the provision of the Entrustment Loans could enhance the existing return of the cash surplus of the Group; (iii) the Borrower is a PRC listed company and the Borrower Group has been profit making and recorded positive net assets; (iv) the Group is protected by the pledge which has an appraised market value that fully covers the Maximum Amount; (v) the Group would not violate PRC laws for the provision of the Entrustment Loans through Financial Institutions; and (vi) the terms of the Framework Agreement are fair and reasonable as discussed below, we are of the view that the entering into of the Framework Agreement is in the interests of the Company and the Shareholders as a whole.

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2. Principal terms of the Framework Agreement

The table below summarises the principal terms of the Framework Agreement as extracted from the letter from the Board in the Circular and the Framework Agreement:

Interest rate

Fixed in accordance with the half-year RMB benchmark loan interest rate published by the PBOC for financial institutions on the date of drawing of the specific Entrustment Loans by the Borrower.

If the borrower fails to repay any outstanding amounts on or before the due dates, the overdue interest rates will be 50% higher than the actual interest rate of each specific Entrustment Loan.

Term One year. Repayment The Borrower shall make one-off repayment of the principal and interest upon maturity.

The Lender is entitled to request for early repayment of each specific Entrustment Loan by serving at least five working days’ prior written notice to the Borrower. The Borrower is entitled to make early repayment (subject to the approval by the Lender) by giving five working days’ prior written notice to the Lender.

Security The Borrower shall pledge its entire shareholdings in Jinan Orient in favour of the Lender as collateral security. Set-up Fees The Set-up Fees to be charged by the Financial Institutions shall be solely borne by the Lender.

The parties shall enter into separate Entrustment Loan agreements in respect of each specific Entrustment Loan in accordance with the Framework Agreement. Pursuant to the Framework Agreement, the duration of each specific Entrustment Loan under the Framework Agreement shall be six months unless otherwise agreed. We are also advised by the management of the Group that the duration of each specific Entrustment Loan is not expected to be longer than six months. Therefore, the interest rate stipulated under the Framework Agreement makes reference to the half-year RMB

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benchmark loan interest rate published by the PBOC. We have reviewed the website of the PBOC, where we note that the half-year RMB benchmark loan interest rates since 2010 were as follows:

	Half-year RMB benchmark
Adjustment date	loan interest rate
20 October 2010	5.10%
26 December 2010	5.35%
9 February 2011	5.60%
6 April 2011	5.85%
7 July 2011	6.10%
8 June 2012	5.85%
6 July 2012	5.60%

We also note that the prevailing half-year RMB benchmark loan interest rate of 5.60% per annum is higher than the depository interest rate carried by the bank balances and cash of the Group ranging from 0.01% to 3.25% per annum as disclosed in the annual report of the Company for the year ended 31 December 2012. We have further reviewed the annual report of the Borrower for the year ended 31 December 2012, where we note that the bank borrowing interest rates of the Borrower Group were in line with the RMB benchmark loan interest rates published by the PBOC. We are advised by the management of the Group that the interest shall be settled by cash along with principal repayment.

Overdue interest rates shall be 50% higher than the actual interest rate of each specific Entrustment Loan. Loan overdue implies an extension to the lending duration, which would lead to an increment in collection risk. We have reviewed the website of the PBOC and we note that (i) the RMB benchmark loan interest rate increases along with the lending duration; and (ii) the prevailing over 5-year RMB benchmark loan interest rate, being the rate with the longest available duration, is 6.55% per annum. Based on the prevailing half-year RMB benchmark loan interest rate, we understand the overdue interest rate of 8.40% per annum is favourable to the Group given that it is even higher than the prevailing over 5-year RMB benchmark loan interest rate.

According to the Framework Agreement, in the event of default, the Borrower shall compensate all relevant losses incurred to the Group (including but not limited to legal costs) in addition to the repayment of all outstanding principal and interest. We also note that the Borrower shall pledge its entire shareholding in Jinan Orient in favour of the Lender. As stated in the letter from the Board in the Circular, the Directors understand that in the event of occurrence of default under any specific Entrustment Loans agreements, (i) the Lender shall have absolute right to dispose of the shareholding of Jinan Orient to recover the debt and sue for any shortage; and (ii) there is no legal restriction on the realisation of the pledged shareholdings. According to the recent management accounts of Jinan Orient, Jinan Orient had net assets of approximately RMB469 million as at 31 July 2013. The major assets of Jinan Orient included the land use right of a piece of land covering an area of approximately 290,326 sq.m. located in Jinan city in the PRC together with the buildings erected thereon (the “ Real Estate ”). Jinan Orient had an appraised market value of approximately RMB516 million as at 31 July 2013, which was higher than the Maximum Amount and minimises the debt collection risk of the Group.

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LETTER FROM FIRST SHANGHAI

In order to assess the pledge of the collateral security, we have reviewed announcements relating to entrustment loan arrangements (the “ Comparable Loans ”) published since 2012 by companies listed in Hong Kong based on information extracted from the website of the Stock Exchange. Independent Shareholders should however note that the comparison with the Comparable Loans is for general reference only given that particulars of the business and financial aspects and prospects of the subject companies may not be exactly identical to those of the relevant parties to the Framework Agreement. Details of the Comparable Loans are set out in the table below:

Date of	Company name	Principal	Amount of	Collateral	Value of	Loan-to-value
announcement	(Stock code)	business	entrustment loan	security	security	ratio (1)
			RMB million		RMB million
11 January 2012	China Sanjiang Fine	Manufacture and	150	Two land	416	36%
	Chemicals Co. Ltd.	supply of		use rights
	(2198 HK)	ethylene oxide
16 February 2012	Aupu Group Holding	Manufacture and	27	Not	Not	Not mentioned
	Company Limited	distribution of		mentioned	mentioned
	(477 HK) (“Aupu”)	bathroom
		masters, exhaust
		fans and other
		home appliances
16 February 2012	Louis XIII Holdings	Building	25	None	—	Undefined
	Ltd. (577 HK)	construction and
		civil engineering
17 February 2012	Shengli Oil & Gas	Production of	300	Not	Not	Not mentioned
	Pipe Holdings Ltd.	spiral submerged		mentioned	mentioned
	(1080 HK)	arc welded pipes
		which are
		mainly used for
		the oil industry
1 April 2012	China Chengtong	Trading of bulk	40	A parcel of	Not	Not mentioned
	Development Group	commodity		land together	mentioned
	Limited (217 HK)			with certain
	(“China Chengtong”)			buildings
				erected
				thereon
23 April 2012	China Chengtong	Trading of bulk	200	Certain	Not	Not mentioned
		commodity		residential	mentioned
				units and a
				piece of land
23 April 2012	China Chengtong	Trading of bulk	70	Three levels	Not	Not mentioned
		commodity		of	mentioned
				commercial
				units in a
				commercial
				buildings
10 May 2012	China Chengtong	Trading of bulk	200	A piece of	Not	Not mentioned
		commodity		land	mentioned

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LETTER FROM FIRST SHANGHAI

Date of	Company name	Principal	Amount of	Collateral	Value of	Loan-to-value
announcement	(Stock code)	business	entrustment loan	security	security	ratio (1)
			RMB million		RMB million
22 June 2012	China Kingstone	Sale of marble	310	None	—	Undefined
	Mining Holdings Ltd.	and marble
	(1380 HK)	related products
	(“Kingstone”)
10 July 2012	Beijing Media	Sales of paper,	55	Not	Not	Not mentioned
	Corporation Ltd.	ink, lubricant,		mentioned	mentioned
	(1000 HK)	film, pre-coating
	(“Beijing Media”)	photosensitive
		liquid plate,
		rubber plate
		used for printing
		and other print
		related
		materials, and
		advertising
		spaces and
		outdoor
		advertising of
		BYDA and CéCi
		magazine
12 July 2012	Beijing Media	Sales of paper,	70	Not	Not	Not mentioned
		ink, lubricant,		mentioned	mentioned
		film, pre-coating
		photosensitive
		liquid plate,
		rubber plate
		used for printing
		and other print
		related
		materials, and
		advertising
		spaces and
		outdoor
		advertising of
		BYDA and CéCi
		magazine
12 July 2012	CIAM Group Ltd.	Financing,	28	Land use	Not	Not mentioned
	(378 HK)	securities		rights of a	mentioned
		trading and asset		piece of land
		investments
6 September 2012	EC-Founder	Distribution of	250	Land use	Not	Not mentioned
	(Holdings) Co. Ltd.	information		rights over	mentioned
	(618 HK)	products		two parcels
				of land
11 October 2012	Kingstone	Sale of marble	80	Not	Not	Not mentioned
		and marble		mentioned	mentioned
		related products

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LETTER FROM FIRST SHANGHAI

Date of	Company name	Principal	Amount of	Collateral	Value of	Loan-to-value
announcement	(Stock code)	business	entrustment loan	security	security	ratio (1)
			RMB million		RMB million
18 October 2012	China Gold	Production of	100	Not	Not	Not mentioned
	International	gold bullion		mentioned	mentioned
	Resources Corp. Ltd.	through the
	(2099 HK)	Group’s
		integrated
		processes and
		production of
		copper
		concentrate and
		other
		by-products
		through the
		Group’s
		integrated
		separation
31 October 2012	China Chengtong	Trading of bulk	70	Three levels	Not	Not mentioned
		commodity		of	mentioned
				commercial
				units in a
				commercial
				buildings
2 November 2012	China Power	Generation and	300	Not	Not	Not mentioned
	International	sales of		mentioned	mentioned
	Development Ltd.	coal-fired
	(2380 HK)	electricity
12 November 2012	Franshion Properties	Development	650	Not	Not	Not mentioned
	(China) Ltd. (817 HK)	and sales of		mentioned	mentioned
		properties and
		development of
		land
17 December 2012	Chaowei Power	Manufacture and	200	Equity	Not	Not mentioned
	Holdings Ltd.	sales of motive		interests in	mentioned
	(951 HK)	batteries		the borrower
				and its
				holding
				company
27 December 2012	Beijing Media	Sales of paper,	55	Not	Not	Not mentioned
		ink, lubricant,		mentioned	mentioned
		film, pre-coating
		photosensitive
		liquid plate,
		rubber plate
		used for printing
		and other print
		related
		materials, and
		advertising
		spaces and
		outdoor
		advertising of
		BYDA and CéCi
		magazine

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LETTER FROM FIRST SHANGHAI

Date of	Company name	Principal	Amount of	Collateral	Value of	Loan-to-value
announcement	(Stock code)	business	entrustment loan	security	security	ratio (1)
			RMB million		RMB million
5 February 2013	China Ting Group	Manufacturing	160	A parcel of	Not	Not mentioned
	Holdings Limited	and sale of		land and 19	mentioned
	(3398 HK)	garments on an		properties
		OEM basis
22 April 2013	Aupu	Manufacture and	27	Not	Not	Not mentioned
		distribution of		mentioned	mentioned
		bathroom
		masters, exhaust
		fans and other
		home appliances
23 April 2013	China Chengtong	Trading of bulk	195	Certain	Not	Not mentioned
		commodity		residential	mentioned
				and
				commercial
				units and a
				piece of land
				and equity
				interest of a
				company
9 May 2013	Beijing Beida Jade	Research,	30	Certain	30	100%
	Bird Universal	development,		equipment,
	Sci-Tech Company	manufacture,		receivables
	Limited (8095 HK)	marketing and		and
	(“Jade Bird”) (2)	sale of		prepayments
		electronic fire
		alarm systems
		and related
		products
14 June 2013	China Chengtong	Trading of bulk	170	A piece of	Not	Not mentioned
		commodity		land	mentioned
14 June 2013	AviChina Industry &	Manufacturing,	50	Not	Not	Not mentioned
	Technology Company	assembly, sales		mentioned	mentioned
	Limited (2357 HK)	and servicing of
		helicopters,
		trainers and
		other aircrafts,
		and
		manufacturing
		and sales of
		aviation parts
		and components
21 June 2013	China Longyuan	Construction,	200	Not	Not	Not mentioned
	Power Group	management and		mentioned	mentioned
	Corporation Limited	operation of
	(916 HK)	wind and coal
		power plants,
		and generation
		of electric power

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LETTER FROM FIRST SHANGHAI

Date of	Company name	Principal	Amount of	Collateral	Value of	Loan-to-value
announcement	(Stock code)	business	entrustment loan	security	security	ratio (1)
			RMB million		RMB million
28 June 2013	Beijing Media	Research,	70	Not	Not	Not mentioned
		development,		mentioned	mentioned
		manufacture,
		marketing and
		sale of
		electronic fire
		alarm systems
		and related
		products
28 August 2013	Landsea Green	Property	500	None	—	Undefined
	Properties Co., Ltd.	investment and
	(106 HK)	provision of
		financial
		services
6 September 2013	China Travel	Provision of	300	Not	Not	Not mentioned
	International	travel agency		mentioned	mentioned
	Investment	and related
	Hong Kong Limited	services,
	(308 HK)	operation of
		theme parks,
		scenic spots,
		cable car
		systems, skiing
		facilities and
		resorts hotel,
		and provision of
		hotel
		accommodation,
		food and
		beverage
		services

Notes:

• (1) Loan-to-value ratio is derived from dividing the amount of entrustment loan by the appraised value of security.

• (2) Book value of security of Jade Bird of approximately RMB30 million was used to determine the loan-to-value ratio in the absence of appraised value of security.

We note from the above table that entrustment loans in the market may or may not involve collateral security. Although the loan-to-value ratios of the Comparable Loans could be as low as approximately 36%, we note that the majority, being 17 out of 30 cases, did not involve or did not mention about collateral security. Despite Jinan Orient is a private company and may not possess the same level of liquidity of shares which public companies could generally possess, having considered (i) entrustment loans in the market may or may not involve collateral security as shown in the above table; (ii) the collateral security of Jinan Orient offers protection to the Group; (iii) the appraised value of Jinan Orient was higher than the Maximum Amount, where the Group would still be fully protected by the whole appraised value of Jinan Orient even if the actual amount of the Entrustment Loans were substantially lower than the Maximum Amount; (iv) the majority of the appraised value of Jinan Orient was derived from the Real Estate; and (v) there is no legal restriction on the realisation of the pledged shareholdings when default, we are of the view that the pledge of Jinan Orient is acceptable.

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We are also advised by the management of the Group that the Directors and the chief financial officer of the Company will review the financial performance and position of the Borrower on at least a quarterly basis and the Group would limit further provision or demand early repayment of the Entrustment Loans if (i) the Borrower Group poses a risk to the timely collection of the Entrustment Loans by the Group; (ii) the Group is expected to be in need of further working capital; or (iii) the Group identifies and wishes to reinvest in better opportunities.

Given that the Group does not possess the licence to carry out money lending activities in the PRC, the Entrustment Loans will be arranged through the Financial Institutions. We are advised by the management of the Group that the Group will select the most favourable Financial Institutions, which are independent third parties, for the arrangement of the Entrustment Loans and we note that the estimated Set-up Fees of around 0.1% of the loan amount is insignificant as compared with the interest rate stipulated under the Framework Agreement. We have also reviewed preliminary quotations obtained by the Group, where we note that the Set-up Fees could be lower than 0.1%.

Having collectively taken into account (i) the bank borrowing interest rates of the Borrower Group were in line with the RMB benchmark loan interest rates published by the PBOC; (ii) the interest rate of the Entrustment Loans makes reference to the half-year RMB benchmark loan interest rate published by the PBOC, which matches the expected duration of the advances under the Entrustment Loans; (iii) despite Jinan Orient is a private company, there is no legal restriction on the realisation of the pledged shareholdings when default and the appraised market value of Jinan Orient fully covers the Maximum Amount, which minimises the debt collection risk of the Group; (iv) the Group has the flexibility but not the obligation to provide the Entrustment Loans; (v) the Set-up Fees are insignificant and will be based on the rate offered by the most favourable Financial Institutions, which are independent third parties; and (vi) the benefits for the entering into of the Framework Agreement as previously discussed, we are of the view that the terms of the Framework Agreement (including the Set-up Fees and the interest rates) are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned.

3. Proposed cap of the Framework Agreement

The proposed cap of the Framework Agreement is the Maximum Amount and does not constitute an obligation to the Group to advance such amount to the Borrower. According to the letter from the Board in the Circular, the proposed cap of the Entrustment Loans under the Framework Agreement was determined after having taken into account (i) the current and anticipated cash surplus of the Group; and (ii) the net assets of Jinan Orient, being the collateral security.

The provision of Entrustment Loans under the Framework Agreement would reduce the working capital of the Group but generate interest income to the Group. We have reviewed the cash flow projection of the Group, where we note that the Group is anticipated to have adequate cash to meet its daily operation needs and capital expenses (including those for the construction of the S01 Scientific Research Activities Building as disclosed in the circular of the Company dated 20 December 2012) after the advancement of the Maximum Amount to the Borrower as the Entrustment Loans. We have also reviewed the recent management accounts of Jinan Orient, where we note that Jinan Orient had net assets of approximately RMB469 million as at 31 July 2013. We have further reviewed the valuation report dated 10 September 2013 prepared by a PRC registered valuer, namely 山東中興資

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LETTER FROM FIRST SHANGHAI

產評估有限公司 (Shandong Zhongxing Asset Valuation Co., Ltd.) (the “ Valuer* ”), where we note that appraised market value of Jinan Orient amounted to approximately RMB516 million as at 31 July 2013, which was higher than the Maximum Amount. Accordingly, we have discussed with the Valuer in relation to the principal basis and assumptions of the valuation in determining the appraised market value of Jinan Orient and we understand from the Valuer that (i) Jinan Orient has been loss making and therefore the income approach was not adopted; (ii) no sufficient closely comparable market transactions could be identified and hence the market approach was not adopted; and (iii) the cost approach, which is a commonly adopted approach to appraise a target based on assessments of the assets and liabilities items of the target mainly through the replacement cost method, was adopted for the valuation. We have further discussed with the Valuer with regards to the application of replacement cost method, where we understand the method primarily involves the appraisal of value based on the assessment of the purchase or construction cost and the residual ratio of the target asset. During the course of our discussions with the Valuer, we have not identified any major factors which would cause us to doubt the fairness and reasonableness of the principal basis and assumptions adopted for the subject valuation. Hence, we are of the view that the principal basis and assumptions adopted for the subject valuation is acceptable. Having considered (i) as previously discussed, entrustment loans in the market may or may not involve collateral security, where although the loan-to-value ratios of the Comparable Loans could be as low as approximately 36%, we note that the majority, being 17 out of 30 cases, did not involve or did not mention about collateral security; (ii) the collateral security under the Framework Agreement offers protection to the Group; and (iii) the potential maximum lending amount under the Framework Agreement is set below the appraised market value, representing a loan-to-value ratio of less than 100% for any amount of lending within the limit, we are of the view that the collateral security with the relevant loan-to-value ratio under the Framework Agreement is acceptable and is in line with the market practice.

Having considered, in particular, (i) the Group is anticipated to have adequate cash after the advancement of the Maximum Amount; (ii) the net assets of Jinan Orient, being the collateral security, was comparable with the Maximum Amount; (iii) the appraised value of Jinan Orient was higher than the Maximum Amount; (iv) the Group has the flexibility but not the obligation to provide the Entrustment Loans; (v) the benefits for the entering into of the Framework Agreement as previously discussed, particularly the generation of interest income; (vi) the terms of the Framework Agreement are fair and reasonable as previously discussed; and (vii) measures are in place to govern the internal control of the Group and to monitor the transactions contemplated under the Framework Agreement as detailed in the section headed “Measures to ensure compliance with the Listing Rules” below, we are of the view that the proposed cap of the Framework Agreement is fair and reasonable so far as the Independent Shareholders are concerned.

4. Measures to ensure compliance with the Listing Rules

In compliance with the annual review requirements under Chapter 14A of the Listing Rules, the Company will comply with the following during the term of the Framework Agreement:

• (i) each year the independent non-executive Directors must review the transactions contemplated under the Framework Agreement and confirm in the Company’s annual report and accounts that the transactions contemplated under the Framework Agreement have been entered into (a) in the ordinary and usual course of business of the Company; (b) either on

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normal commercial terms or, if there are not sufficient comparable transactions to judge whether they are on normal commercial terms, on terms no less favourable to the Group than terms available to or from (as appropriate) independent third parties; and (c) in accordance with the Framework Agreement governing them on terms that are fair and reasonable and in the interests of the Shareholders as a whole;

• (ii) each year the auditors of the Company must provide a letter to the Board (with a copy provided to the Stock Exchange at least 10 business days prior to the bulk printing of the annual report of the Company) confirming that the transactions contemplated under the Framework Agreement (a) have received the approval of the Board; (b) are in accordance with the pricing policies of the Company if the transactions contemplated under the Framework Agreement involve provision of goods or services by the Company; (c) have been entered into in accordance with the relevant agreement governing the transactions; and (d) have not exceeded the proposed cap;

• (iii) the Company will allow, and will procure that the counterparties will allow the auditors of the Company sufficient access to the relevant records of the transactions contemplated under the Framework Agreement for the purpose of reporting on the transactions contemplated under the Framework Agreement. The Board must state in the annual report whether its auditors have confirmed the matters stated in paragraph (ii) above; and

• (iv) the Company shall promptly notify the Stock Exchange and publish an announcement in accordance with the Listing Rules if it knows or has reason to believe that the independent non-executive Directors and/or auditors of the Company will not be able to confirm the matters set out in paragraphs (i) and/or (ii) above respectively.

We are further advised by the management of the Group that the independent non-executive Directors will review, among other things, (i) whether the interest rates of the funds borrowed by the Borrower Group from independent third parties are in line with the RMB benchmark loan interest rates; and (ii) whether the interest rates under the Framework Agreement are in line with the RMB benchmark loan interest rates.

In light of the internal control measures and reporting requirements attached to the transactions contemplated under the Framework Agreement as covered above, in particular, (i) the restriction of the value of the transactions contemplated under the Framework Agreement by way of the proposed cap; and (ii) the ongoing review by the independent non-executive Directors and the auditors of the Company on the terms of the Framework Agreement and the proposed cap not being exceeded, we are of the view that appropriate measures will be in place to govern the conduct of the transactions contemplated under the Framework Agreement and safeguard the interests of the Independent Shareholders.

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LETTER FROM FIRST SHANGHAI

RECOMMENDATION

We are of the view that, despite the entering into of the Framework Agreement is not in the ordinary and usual course of business of the Group, (i) the entering into of the Framework Agreement is in the interests of the Company and the Shareholders as a whole; and (ii) the terms of the Framework Agreement are on normal commercial term and, together with the proposed cap, are fair and reasonable so far as the Independent Shareholders are concerned. Accordingly, we advise the Independent Board Committee to recommend, and we ourselves advise, the Independent Shareholders to vote in favour of the relevant resolution to be proposed at the EGM to approve the Framework Agreement.

Yours faithfully, For and on behalf of

First Shanghai Capital Limited

Eric Lee Fanny Lee Managing Director Managing Director

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

AUDITED CONSOLIDATED FINANCIAL STATEMENT OF THE GROUP

The Company is required to set out in this circular the information for the last three financial years with respect to the profits and losses, financial record and position, set out as a comparative table and the latest published audited statement of financial position together with the notes on the annual accounts for the last financial year for the Group.

The audited consolidated financial statements of the Group for the year ended 31 December 2012 have been set out in the Annual Report 2012 of the Company which was posted on 18 April 2013 on the Stock Exchange’s website (http://www.hkexnews.hk). Please also see below quick link to the Annual Report 2012:

http://www.hkexnews.hk/listedco/listconews/SEHK/2013/0418/LTN20130418717.pdf

The audited consolidated financial statements of the Group for the year ended 31 December 2011 have been set out in the Annual Report 2011 of the Company which was posted on 20 April 2012 on the Stock Exchange’s website (http://www.hkexnews.hk). Please also see below quick link to the Annual Report 2011:

http://www.hkexnews.hk/listedco/listconews/SEHK/2012/0420/LTN20120420606.pdf

The audited consolidated financial statements of the Group for the year ended 31 December 2010 have been set out in the Annual Report 2010 of the Company which was posted on 14 April 2011 on the Stock Exchange’s website (http://www.hkexnews.hk). Please also see below quick link to the Annual Report 2010:

http://www.hkexnews.hk/listedco/listconews/SEHK/2011/0414/LTN20110414647.pdf

The three auditors’ reports for the consolidated financial statements of the Group for the years ended 31 December 2012, 2011 and 2010 are unqualified reports.

INDEBTEDNESS STATEMENT

Debts and Borrowings

As at 31 August 2013, there are 72,859,049 Preferred Shares (in the principal amount of approximately HK$63,519,000 attached with rights of conversion to 297,052,141 Shares issued by the Company.

Contingent liabilities

As at 31 August 2013, being the latest practicable date prior to the printing of this circular for the purpose of this indebtedness statement, the Group had no material contingent liabilities.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Disclaimer

The Group did not, as at 31 August 2013, have any outstanding loan capital issued and outstanding or agreed to be issued, term loans (secured, unsecured, guaranteed or not), bank overdrafts, charges or debentures, mortgages, loans, or other similar indebtedness or any finance lease commitments, hire purchase commitments, liabilities under acceptance (other than normal trade bills), acceptance credits or any guarantees or other material contingent liabilities.

FINANCIAL AND TRADING PROSPECT

In 2013, the Company will refine the strategy of focusing on the development of businesses with technical advantages, and continue to pursue active market expansion strategies, in order to realize rapid growth in our business. The Company will realize rapid development by focusing on strengthening the establishment in regions, consolidating the existing regions, and undertaking merger and acquisition in weak regions, as well as developing with partners and establishing more sales channel. The Company will enhance the function of business lines as sales generator, through establishing the mechanism of business planning-driven overall budget, which not only boosts our sales but also pulls the product demand. In respect of products, the Company will insist on the development model with the combination of self-innovation and external co-operation, speed up the launch of products, continue to consolidate existing products, and self-develop the products of next generation. The Company will pursue new business growth point by innovating new cloud computing service model and promoting enterprises to use cloud computing. The Company will further enhance the incentive mechanism, which improves the objectives and responsibilities system with the core of combination with responsibility, right and interest, so as to promote the enthusiasm of our staffs. It is believed that with a gradual improvement in the economic environment, the software and service business will maintain a relatively fast growth speed. The Company will continue to adjust its development strategy and persist in change and continue to transform into a supplier of cloud computing SaaS products and solution services. The Company insists on the strategy of focusing on the development of businesses with technical advantages. The Company aims to restructure its business model so as to swiftly reverse the loss position and generate better returns for our shareholders.

WORKING CAPITAL STATEMENT

The Directors are of the opinion that, after taking into account of the financial resources available to the Group (including internal resources and available banking facilities), the Group will have sufficient working capital for its present requirements for at least the next 12 months from the date of the Circular.

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GENERAL INFORMATION

APPENDIX II

1. RESPONSIBILITY STATEMENT

This document, 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 respects 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

(a) Interests and short positions of the Directors and the chief executive of the Company in the securities of the Company and its associated corporations

As at the Latest Practicable Date, the interests and short positions of the Directors and the chief executive of the Company 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 (a) 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 (b) pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (c) to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Companies (the “Model Code”) contained in the Listing Rules, were as follows:

• (i) Long positions in shares

				Percentage of
				issued share capital
**Name **	of Director	Type of interests	Number of shares	of the Company
Dong	Hailong	Beneficial owner	5,000	0.00%

• (ii) Long positions in underlying shares of the Company

				Percentage of
			Number of	the issued share
		Description of	underlying	capital of the
Name of Director	Type of interests	equity derivatives	shares	Company
Wang Xingshan	Beneficial owner	share option (Note 1)	5,000,000	0.12%
Chen Dongfeng	Beneficial owner	share option (Note 1)	4,000,000	0.09%
Dong Hailong	Beneficial owner	share option (Note 1)	2,000,000	0.05%
Wong Lit Chor,	Beneficial owner	share option (Note 1)	200,000	0.01%
Alexis
Sun Chengtong	Beneficial owner	share option (Note 1)	4,000,000	0.09%

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APPENDIX II

GENERAL INFORMATION

• Note 1: The share options were granted on 10 December 2010 under the 2008 share option scheme adopted by the Company on 10 November 2008 at a subscription price of HK$0.682 per Share. Up to the Latest Practicable Date, none of the above share options had been exercised.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors and 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 or its associated corporations (within the meaning of Part XV of the SFO) which were required (a) 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 (b) pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (c) to be notified to the Company and the Stock Exchange pursuant to the Model Code.

(b) Persons who have an interest or short position which is discloseable under Divisions 2 and 3 of Part XV of the SFO and substantial Shareholders

So far as is known to the Directors and the chief executive, as at the Latest Practicable Date, the following person (not being Director or chief executive of the Company) had, or was deemed to have, interests or short positions in the shares or underlying 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 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any member of the Group:

Long positions in shares

			Approximate
		Number of	percentage of
Name of Shareholders	Type of interests	Shares	interests
Inspur Group Limited	Interest in a controlled	1,357,390,000	32.11%
	corporation (Note)
Jinan Inspur Wireless	Interest in a controlled	1,357,390,000	32.11%
Communication Limited#	corporation (Note)
(濟南浪潮無線通信有限公司)
Inspur Qilu Software Industry	Interest in a controlled	1,357,390,000	32.11%
Limited#	corporation (Note)
(浪潮齊魯軟件產業有限公司)
Inspur Cheeloo Overseas Investment	Interest in a controlled	1,357,390,000	32.11%
And Development Co., Limited	corporation and
(浪潮齊魯海外投資發展有限公司)	Beneficial owner (Note)
Inspur Overseas Investment Limited	Beneficial owner (Note)	1,357,390,000	32.11%
(浪潮海外投資有限公司)
Wang Yukun	Beneficial owner	302,100,000	7.14%

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APPENDIX II

GENERAL INFORMATION

Note: Inspur Overseas Investment has reported to be the beneficial owner of 1,357,390,000 Shares. Inspur Group Limited, Jinan Inspur Wireless Communication Limited, Inspur Qilu Software Industry Limited, and Inspur Cheeloo Overseas Investment And Development Co., Limited are holding companies of Inspur Overseas Investment Limited and thus are taken to be interested in 1,357,390,000 Shares.

Long positions in Preferred Shares of the Company

				Approximate
		Number of	Number of	percentage of
		Preferred	underlying	voting rights
Name of Shareholders	Type of interests	Shares	shares	of Shares
			(Note 1)
Microsoft Corporation	Beneficial owner	72,859,049	297,052,141	6.57%

Note: Microsoft Corporation held 72,859,049 Preferred Shares convertible into 297,052,141 Shares. Microsoft Corporation has agreed that in the event that it becomes entitled to exercise or control the exercise of more than 28% of the voting rights at general meetings of the Company (other than meeting of the holder(s) of Preferred Shares), it shall not and shall procure its nominee(s) not to exercise such portion of the voting rights attaching to the Preferred Shares and/or Shares in excess of 28% of the total voting rights at any general meeting of the Company. At the Latest Practicable Date, the above 297,052,141 underlying shares represented approximately 6.57% of the issued share capital of the Company as enlarged by the full exercise of the conversation rights attaching to the Preferred Shares.

Long positions in members of the Group

			Approximate
			percentage of
			shareholding in
			the members of
Name of shareholders	Types of Interest	Equity interest held	the Group
Wu Xi Yi Jie Xin Cheng	Beneficial owner	RMB200,000 in the registered	10%
Information Technology		capital of Wuxi Inspur Business
Company Limited		Technology Company Limited#
(無錫易捷信誠信息		(無錫浪潮商服技術有限公司)
技術有限公司)
Fang Wensheng	Beneficial owner	RMB690,000 in the registered	34.5%
		capital of Inspur Fangzhi
Bao Jianhua	Beneficial owner	RMB300,000 in the registered	15%
		capital of Inspur Fangzhi
Shanghai Huili Co. Ltd	Beneficial owner	RMB50,000 in the registered	10%
(上海滙力有限公司)		capital of Shanghai Guoqiang
		Genersoft Incorporation#
		(上海國强通用軟件有限公司)

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GENERAL INFORMATION

APPENDIX II

			Approximate
			percentage of
			shareholding in
			the members of
Name of shareholders	Types of Interest	Equity interest held	the Group
Webgroup Co.	Beneficial owner	US$14,504 in the registered	10.36%
		capital of Langchao Gaoyou
		(Shanghai) Services
		Incorporation#
		高優(上海)信息科技有限公司
Zheng Jianyang	Beneficial owner	RMB5,000,000 in registered	14.29%
		capital of Shandong Inspur
		Financial Software Information
		Company Limited#
		(山東浪潮金融軟件信息
		有限公司)

# English names are for identification purpose only

Save as disclosed above, as at the Latest Practicable Date, the Directors were not aware of any other person (other than the Directors and the chief executive of the Company) who had, or was deemed to have, interests or short positions in the shares or underlying shares (including any interests in options in respect of such capital), 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 was expected, directly or indirectly, to be interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any member of the Group.

As at the Latest Practicable Date, so far as known to the Directors, none of the Directors is a director or employee of a company which has an interest or short position in the shares and underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Division 2 and 3 of Part XV of the SFO.

3. DIRECTORS’ OTHER INTERESTS

As at the Latest Practicable Date, so far as the Directors are aware of, none of themselves or their respective associates had any interest in a business which competes or may compete with the business of the Group or any other conflicts of interest with the Group.

As at the Latest Practicable Date, none of the Directors has any interest, either direct or indirect, in any assets which have been acquired or disposed of by or leased to or are proposed to be acquired or disposed of by or leased to any member of the Group since 31 December 2012, being the date to which the latest published audited financial statements of the Company were made up.

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GENERAL INFORMATION

APPENDIX II

There is no contract or arrangement entered into by any member of the Group subsisting at the Latest Practicable Date in which any Director is materially interested and which is significant to the business of the Group.

4. LITIGATION

As at the Latest Practicable Date, no member of the Group was engaged in any litigation or arbitration of material importance and there was no litigation or claims of material importance known to the Directors to be pending or threatened by or against any member of the Group.

5. SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had any existing or proposed service contracts with the Group (excluding contracts expiring or terminable by the employer within one year without payment of compensation other than statutory compensation).

6. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors are not aware of any material adverse change in the financial or trading position of the Group since 31 December 2012, being the date to which the latest audited financial statements of the Company were made up.

7. EXPERT

First Shanghai has given and has not withdrawn its written consent to the issue of this circular with the inclusion herein of its letter and/or references to its name in the form and context in which they appear.

The following is the qualification of the expert who has provided its advice, which are contained in this circular:

Name Qualification First Shanghai A licensed corporation to carry out type 6 (advising on corporate finance) of the regulated activity under the SFO

As at the Latest Practicable Date, First Shanghai was not beneficially interested in the share capital of any member of the Group nor did it have any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for any shares, convertible securities, warrants, options or derivatives which carry voting rights in any member of the Group nor did it have any interest, either direct or indirect, in any assets which have been, since the date to which the latest published audited financial statements of the Company were made up (i.e. 31 December 2012), acquired or disposed of by or leased to or are proposed to be acquired or disposed of by or leased to any member of the Group.

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GENERAL INFORMATION

APPENDIX II

8. MISCELLANEOUS

• (a) The registered office of the Company is at Century Yard, Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman KY1-1111, Cayman Islands, and the head office and principal place of business in Hong Kong of which is at Flats B & C, 30/F, Tower A, Billon Centre, 1 Wang Kwong Road, Kowloon Bay, Kowloon.

• (b) The principal share registrar and transfer office of the Company is Butterfield Fulcrum Group (Cayman) Limited at Butterfield House, 68 Fort Street, P.O. Box 609, George Town, Grand Cayman KY1-1107, Cayman Islands and the Hong Kong branch share registrar and transfer office of which is Computershare Hong Kong Investor Services Limited at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong.

• (c) Ms. Chan Wing and Mr. Zou Bo are joint company secretaries of the Company. Ms. Chan is a member of the Hong Kong Institute of Certified Public Accountants and a member of the Chinese Institute of Certified Public Accountants, and Mr. Zou is a non-practising member of the Chinese Institute of Certified Public Accountants and a member of the China Certified Tax Agents Association.

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

9. MATERIAL CONTRACTS

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

• (a) the supplemental deed entered into between the Company and Microsoft on 31 October 2011 regarding the amendment of the terms of the Preferred Shares in relation to the following matters:

• (i) the maturity date of the Preferred Shares will be extended for 2 years commencing on 8 December 2011 (“ Restructuring Date ”);

• (ii) the rate of dividend payable to the holder of the Preferred Shares will be increased;

• (iii) the dividend will be payable in the form of cash only, and no scrip dividend will bepayable after the Restructuring Date; and

• (iv) the Company will pay the holder of Preferred Shares the excess dividend when the dividend exceeds HK$0.013 per Share in a financial year.

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GENERAL INFORMATION

APPENDIX II

• (b) the joint venture agreement dated 25 November 2011 among Inspur Electronic Information Industry Co., Ltd., Shandong Inspur Software Co., Ltd., and Inspur (Shandong) Electronic Information Co., Ltd. in relation to the formation of a joint venture company named Shandong Inspur Cloud Computing Industry Investment Co., Limited with registered capital in the amount of RMB300,000,000;

• (c) the sale and purchase agreement dated 18 January 2012 entered into between the Inspur (Shandong) Electronic Information Limited and the Shandong Inspur Software Co., Limited in relation to disposal of the entire registered capital of Shandong Inspur E-Government Software Limited at a consideration of RMB15,000,000;

• (d) the land use rights transfer agreement dated 29 August 2012 between Inspur Mingda as purchaser and IPG as vendor in respect of acquisition of land use right of a parcel of land located in Jinan, the PRC, the principal terms of the agreement are:

• (i) Inspur Minda agreed to acquire the land use rights of the Land from IPG for a period of approximately 45 years;

• (ii) The consideration payable by Inspur Mingda to IPG in relation to acquisition of the land use rights shall be RMB32,000,000 (equivalent to approximately HK$39,035,269) with about RMB1,865 per sq.m. The consideration shall be paid in the following manner:

  • (1) RMB16,000,000 shall be paid within 7 days of the date of the land use rights agreement; and

  • (2) RMB16,000,000 shall be paid within 7 days after the certificate of the land use rights has been issued in favour of Inspur Mingda.

• (e) the foundation construction contract dated 31 August 2012 entered into between Jinan Inspur Mingda Information Technology Limited (濟南浪潮銘達信息科技有限公司) (“ Inspur Mingda ”) as the owner and Tianyuan Construction Group Limited (天元建設集 團有限公司) (“ Tianyuan ”) as the contractor for construction of the foundation of S01 Scientific Research Activities Building located in Jinan, the PRC (“ Building ”) at a consideration of RMB7,672,365.44;

• (f) the main contractor contract dated 19 November 2012 entered into between Inspur Mingda as the owner and Tianyuan as the contractor for construction of the Building at a consideration of RMB276,863,120.73;

• (g) the sale and purchase agreement dated 16 April 2013 entered into between Inspur Electronics Limited as vendor and Inspur Electronic Information (Hong Kong) Co., Limited (浪潮電子信息 (香港)有限公司) in relation to the disposal of the entire issued share capital of Inspur (HK) Electronics Limited (浪潮(香港)電子有限公司);

— 36 —

GENERAL INFORMATION

APPENDIX II

• (h) the disposal agreement dated 22 August 2013 entered into between Inspur (Shandong) Electronics Information Limited and Inspur Cheeloo Software Industry Company Limited* (浪潮齊魯軟件產業有限公司) in relation to the disposal of the entire assets of the digital media business; and

• (i) the Framework Agreement.

10. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection during normal business hours at the Company’s principal place of business in Hong Kong from the date of this circular up to and including the date of the EGM:

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

• (b) the audited consolidated financial statements of the Group for the two financial years ended 31 December 2011 and 31 December 2012;

• (c) the contracts referred to in the section headed “Material Contracts” referred in section 9 of the this appendix;

• (d) the letter from the Independent Board Committee, as set out on page 13 of this circular;

• (e) the letter from the Independent Financial Adviser, as set out on pages 14 to 27 of this circular;

• (f) the written consent referred to in the section headed “Expert” of this Appendix;

• (g) circulars of the Company dated 21 May 2013 and 19 April 2013; and

• (h) this circular.

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NOTICE OF THE EGM

INSPUR INTERNATIONAL LIMITED 浪潮國際有限公司

(incorporated in the Cayman Islands with limited liability)

(Stock Code: 596)

NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN that an extraordinary general meeting (the “ EGM ”) of Inspur International Limited (the “ Company ”) will be held at Flats B&C, 30/F., Tower A, Billion Center, 1 Wang Kwong Road, Kowloon Bay, Kowloon, Hong Kong, on Wednesday, 23 October 2013 at 10:00 a.m. for the purpose of considering and, if thought fit, passing, with or without modifications, the following resolution as the ordinary resolution of the Company:

ORDINARY RESOLUTION

“ THAT :

• (a) the framework agreement dated 22 August 2013 (“ Framework Agreement ”) entered into between Inspur (Shandong) Electronics Information Co., Limited as the lender (“ Lender ”) and Inspur Electronic Information Industry Co., Limited as the borrower (“ Borrower ”) in relation to provision of entrustment loans by the Lender to the Borrower (details of the Framework Agreement are set out in the Company’s circular dated 5 October 2013 (the “ Circular ”) and copies of the Framework Agreement and the Circular have been tabled at the meeting and marked “A” and “B” respectively signed by the Chairman of the meeting for the purpose of identification) and the transactions contemplated thereunder be and are hereby approved, confirmed and ratified; and

• (b) the Directors of the Company be and are hereby authorized to take such actions and execute such documents as they may consider appropriate and expedient to carry out or give effect to or otherwise in connection with or in relation to the Framework Agreement and the transactions contemplated thereunder.”

By order of the Board Inspur International Limited Wang Xingshan Chairman

Hong Kong, 5 October 2013

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NOTICE OF THE EGM

Registered office: Head office and principal place of Cricket Square business in Hong Kong: Hutchins Drive Flats B & C, 30/F. P.O. Box 2681 Tower A, Billion Centre Grand Cayman KY1-1111 1 Wang Kwong Road Cayman Islands Kowloon Bay Kowloon Hong Kong

Notes:

1. A form of proxy for use at the EGM or any adjournment thereof is enclosed.

2. A member entitled to attend and vote at the EGM is entitled to appoint one or more proxy to attend and, subject to the provisions of the articles of association of the Company, to vote on his behalf. A proxy need not be a member of the Company but must be present in person at the annual general meeting to represent the member. If more than one proxy is so appointed, the appointment shall specify the number and class of Shares in respect of which each such proxy is so appointed.

3. In order to be valid, the form of proxy must be duly completed and signed in accordance with the instructions printed thereon and deposited together with a power of attorney or other authority, if any, under which it is signed, or a certified copy of such power or authority, at the Company’s branch share registrar and transfer office in Hong Kong, Computershare Hong Kong Investor Services Limited at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong not less than 48 hours before the time appointed for holding the EGM or any adjournment thereof. Completion and return of a form of proxy will not preclude a member from attending in person and voting at the EGM or any adjournment thereof, should he so wish.

4. In the case of joint holders of shares, any one of such holders may vote at the EGM, either personally or by proxy, in respect of such share as if he was solely entitled thereto, but if more than one of such joint holder are present at the EGM personally or by proxy, that one of the said persons so present whose name stands first on the register of members of the Company in respect of such shares shall alone be entitled to vote in respect thereof.

5. The voting on the resolution at the EGM will be conducted by way of a poll.

As at the date of this notice, the Board comprised Mr. Wang Xingshan, Mr. Chen Dongfeng and Mr. Sun Chengtong as executive Directors, Mr. Samuel Y. Shen and Mr. Dong Hailong as non-executive Directors, and Mr. Zhang Tiqin, Mr. Wong Lit Chor, Alexis and Ms. Dai Ruimin as independent non-executive Directors.

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