Inspur Digital Enterprise Technology Limited — Proxy Solicitation & Information Statement 2017

Jun 13, 2017

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)

DISCLOSEABLE AND CONNECTED TRANSACTION — ESTABLISHMENT OF JOINT VENTURE COMPANY

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 10 of this circular. The recommendation of the Independent Board Committee to the Independent Shareholders is set out on page 11 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 12 to 20 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 Friday, 30 June 2017 at 10:00 a.m. is set out on pages 31 to 32 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.

14 June 2017

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Letter from the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
Letter from the Independent Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
Appendix I — Financial Information of the Group . . . . . . . . . . . . . . . . . . . . . . . .	21
Appendix II — General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	23
Notice of the EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	31

−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

• “Company Law” Company Law of the PRC

“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

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

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

• “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”

• “Independent Financial Adviser” or “First Shanghai”

an independent board committee, comprising Mr. Wong Lit Chor, Alexis, Ms. Zhang Ruijun and Mr. Ding Xiangqian, all being the independent non-executive directors of the Company, to advise the Independent Shareholders as to the fairness and reasonableness of the JV Agreement and the Transaction First Shanghai Capital Limited, a licensed corporation to 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 JV Agreement and the Transaction

• “Independent Shareholders”

• Shareholders other than IPG (including its ultimate beneficial owners and their respective associates)

• “Inspur Group”

IPG and its subsidiaries

−1 −

DEFINITIONS

“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 31.99% of
	the existing issued ordinary share capital of the Company
“Joint Venture Company”	the joint venture company in form of limited liability
	company to be established in Jinan City, Shandong Province,
	PRC under the Company Law pursuant to the JV Agreement
	with a tentative name of 浪潮集團財務有限公司(Inspur
	Group Finance Co., Ltd.*)
“JV Agreement”	the joint venture agreement dated 9 May 2017 among the
	Joint Venture Parties in relation to the formation of the Joint
	Venture Company
“JV Formation”	the formation of the JV Company pursuant to the terms of the
	JV Agreement
“JV Parties”	Party A, Party B and Party C
“Latest Practicable Date”	9 June 2017, 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
“Party A”	IPG
“Party B”	Inspur Software Co., Ltd.* (浪潮軟件股份有限公司)
“Party C”	Inspur Common Software Co., Ltd.* (浪潮通用軟件有限公
	司)
“PRC”	the People’s Republic of China
“RMB”	Renminbi, the lawful currency of the PRC
“SFO”	Securities and Futures Ordinance (chapter 571) of the laws of
	Hong Kong
“Share(s)”	ordinary share(s) of HK$0.01 each in the share capital of the
	Company
“Shareholder(s)”	holder(s) of the Share(s)

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DEFINITIONS

“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“subsidiaries”	has the meaning ascribed to it under the Listing Rules
“Transaction”	the transactions contemplated under the JV Agreement
“%”	per cent

• 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.

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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: Registered office: Mr. Wang Xingshan (Chairman) Cricket Square Mr. Jin Xiaozhou Hutchins Drive P.O. Box 2681 Non-executive Directors: Grand Cayman KY1-1111 Mr. Samuel Y. Shen Cayman Islands

Mr. Samuel Y. Shen Mr. Dong Hailong

Head office and principal place of Independent non-executive Directors: business in Hong Kong: Mr. Wong Lit Chor, Alexis Flats B & C, 30/F. Ms. Zhang Rujiun Tower A, Billion Centre Mr. Ding Xiangqian 1 Wang Kwong Road Kowloon Bay Kowloon Hong Kong

14 June 2017

To the Shareholders

Dear Sir or Madam,

DISCLOSEABLE AND CONNECTED TRANSACTION — ESTABLISHMENT OF JOINT VENTURE COMPANY

INTRODUCTION

Reference is made to the Company’s announcement dated 9 May 2017. On 9 May 2017, Party C (a wholly-owned subsidiary of the Company) entered into the JV Agreement with Party A and Party B in relation to the establishment of a joint venture company in the PRC. Pursuant to the JV Agreement, the Joint Venture Company will be formed in Jinan City, Shandong Province, PRC to mainly provide financial services to members of the Inspur Group.

As Party A is the controlling shareholder of the Company and Party B is an associate of Party A, and the relevant percentage ratios of the subject transaction fall in the range from 5% to 25%, the JV Agreement constitutes a discloseable and connected transaction of the Company under the Listing Rules and is subject to the approval of the Independent Shareholders.

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LETTER FROM THE BOARD

The purpose of this circular is to provide you with further information regarding, among other things, (i) details of the JV Agreement and the Transaction; (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.

INTRODUCTION OF THE JV AGREEMENT

The JV Parties have entered into the JV Agreement on 9 May 2017 in relation to investment in the Joint Venture Company of tentative name of 浪潮集團財務有限公司 (Inspur Group Finance Co., Ltd.*) subject to the approval of the relevant authorities in the PRC. The principal terms of the JV Agreement are as follows:

JV Parties

• (i) Party A - IPG;

• (ii) Party B - Inspur Software Co., Ltd.* (浪潮軟件股份有限公司); and

• (iii) Party C - Inspur Common Software Co., Ltd.* (浪潮通用軟件有限公司).

Party A is the controlling shareholder of the Company, Party B is an associate of Party A, and Party C is a wholly owned subsidiary of the Company. Detailed information about the JV Parties are set out in paragraph headed “Information on the Group and the JV Parties” below.

Scope of Business Activities

The key business area of the Joint Venture Company is provision of financial consulting services to the members of Inspur Group and assisting in payment and receiving of transaction amount between the members of the Inspur Group. The intended full scope of business activities of the Joint Venture Company will also include provision of insurance agency business; provision of entrust loan services to the members of the Inspur Group; provision of guarantee to the members of Inspur Group; provision of bills acceptance and discount services to the members of Inspur Group; provision of internal transfer settlement services between the members of Inspur Group; acceptance of deposit from members of Inspur Group; provision of loan services to the members of Inspur Group; interbank borrowing; and other business as approved by China Banking Regulatory Commission ( “CBRC” ).

The Joint Venture Company will apply to CBRC for those necessary licenses for abovementioned business activities.

The abovementioned business activities, such as the provision of financial services to the Inspur Group by the Joint Venture Company, may constitute continuing connected transactions of the Company under the Listing Rules. Such continuing connected transactions may or may not be subject to approval by the Independent Shareholders under the Listing Rules. However, the conditions precedent to the JV Agreement (such as obtaining the approval of the relevant authorities in the PRC) are expected to be fulfilled in or around December 2017 (details are set out in the section of “Condition Precedent” in this circular). Given that the dates of successful approval (including by the

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LETTER FROM THE BOARD

Independent Shareholders and the regulatory authorities), formation and operation of the Joint Venture Company are uncertain, which are expected to be around or over half a year from now, the Directors expect the Group will be in a better position to evaluate the scale and details of these possible transactions later this year based on ongoing communication with the relevant regulatory authorities and ongoing evaluation of the financial and business aspects of the Group. The Company is fully aware of its obligations under the Listing Rules in respect of connected transactions and the Company will publish, where necessary and applicable, further announcements and circulars in due course to satisfy all the requirements stipulated under the Listing Rules.

Registered Capital

The registered capital of the Joint Venture Company is in the amount of RMB1,000,000,000. Each of the JV Parties’ contribution to the share of registered capital are as follows:

		% of the share equity
	Amounts committed by	interest in the
JV Parties	each of the JV Parties	Joint Venture Company
Party A	RMB600,000,000	60%
Party B	RMB200,000,000	20%
Party C	RMB200,000,000	20%

The registered capital in the amount of RMB1,000,000,000 was determined by the parties reference to the expected business scale of the Joint Venture Company. Share of the registered capital of the Joint Venture Company contributed by Party C (i.e. RMB200,000,000) will be primarily financed by its internal cash resources. Apart from the capital contribution amount of RMB200,000,000, Party C has no further commitment to the Joint Venture Company.

The JV Parties shall contribute their respective committed amount by cash injection, which will be contributed within 30 days after obtaining the approval from their respective governing body.

Term of the Joint Venture Company

The JV Agreement shall take effective from the date of its formation. Upon obtaining consent from all JV Parties, the Joint Venture Company may apply to the relevant governmental authority in the PRC for extension on or before 180 days prior to the expiry of the existing business license.

Composition of Board of Directors and Board of Supervisors

The board of directors of the Joint Venture Company will comprise five directors. Party A is entitled to nominate three directors to join the board, and each of Party B and Party C is entitled to nominate one director. The Joint Venture Company will also have the board of supervisors, which will comprise three supervisors, among which two supervisors shall be elected by the shareholders, one supervisor representing workers and staff shall be elected by the workers and staff of the Joint Venture Company. Currently, the Company has not identified any candidate to be nominated as director of the Joint Venture Company. The suitable candidate will be selected by the Company at a later stage.

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LETTER FROM THE BOARD

Roles and responsibilities of the JV Parties

Party A will be primarily responsible for the operation of the Joint Venture Company and Party A will arrange the hiring of necessary employment and expertise from the financial and banking industry market in the PRC for operation and running of the Joint Venture Company. As non-controlling shareholders, Party C will monitor the operation of the Joint Venture Company by reviewing the financial statements of the Joint Venture Company at a frequency of no less than every three months.

Profit and loss sharing

Under the Company Law, JV Parties will be entitled to share the profit or to bear the loss of the Joint Venture Company in proportion to their respective equity interests in the Joint Venture Company.

Condition Precedent

The JV Agreement takes effect upon the fulfilment of the condition that all necessary approvals and consents have been obtained by each of the JV Parties.

In relation to the above condition, Party C is required under the Listing Rules to obtain the Independent Shareholders’ approval in the EGM regarding the JV Agreement and the Transaction. If Party B or Party C cannot obtain approvals from its respective governing body, the remaining JV Parties will continue to establish the Joint Venture Company and Party A will contribute the shared amount of Party B or Party C in the sum of RMB200,000,000 and its own shared amount in the sum of RMB600,000,000. As such, the total registered capital of the Joint Venture Company will remain unchanged. If both Party B and Party C cannot obtain approvals from the governing body, the JV Agreement will be terminated. It is expected that the above condition precedent will be fulfilled in or around December 2017. The establishment of the Joint Venture Company is also subject to the approval of the relevant authorities in the PRC.

FINANCIAL IMPACT OF THE JV FORMATION

Upon the completion of the registered capital injection, there will be re-classification of cash and bank balances in total amount of RMB200,000,000 (equivalent to approximately HK$226,000,000) to an interest in an associate. After the establishment of the Joint Venture Company, the investment in the Joint Venture Company will be accounted for in the consolidated financial statements of the Group by way of equity accounting and the Group’s share of the profit and loss of the Joint Venture Company will be included in the consolidated results of the Group.

INFORMATION ON THE GROUP AND THE JV PARTIES

The Group is an integrated IT services provider, which provides ERP service, cloud service, finance sectors and software outsourcing and other services.

Party A is an investment holding company established in the PRC and the controlling shareholder of the Company. Inspur Group devotes itself to be the leading suppliers of cloud computer solutions in China and provides IT services and products to customers from more than 100 countries and

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LETTER FROM THE BOARD

regions, meeting the information-based demands of governments and corporations all around the world. Party B is a company established in the PRC and is listed on Shanghai Stock Exchange of stock code 600756. Party A owns the entire issued share capital of Inspur Software Group Limited* (浪潮 軟件集團有限公司) which in turn owns 19.02% in the issued share capital of Party B. As such, Party B is an associate of Party A.

Party B (including its subsidiaries) are principally engaged in communication business, business of developing, manufacturing and marketing the technology of computer software and hardware, business of communication and consulting of computer network engineering technology and technical training, and import and export business (within the authorised scope).

Party C is a limited company incorporated in PRC wholly owned by the Company, principally engaged in the business of development of computer software and system products, software engineering and controlling system engineering.

REASONS FOR AND BENEFITS DERIVED FROM THE JV FORMATION

As a financial services institute, Joint Venture Company can assist the Group to connect with other financial institutions for provision of timely and flexible facilities to members of the Inspur Group through a series of financial services including financing consultant, entrusted lending and investment, etc. After the Joint Venture Company obtains the licenses granted by CBRC, the Company could get higher interests of deposit and lower interests of loan from the Joint Venture Company when conducting relevant business.

With core function of centralized control and management of funds, Joint Venture Company further strengthens fund management system of the Group through advanced financial techniques and tools so as to decrease financing and transaction cost, improve capital efficiency, and strengthen the Group’s ability to resist capital risk. Further, the Group could supply software of management system developed for financial company to the Joint Venture Company and establish a long-term client relationship with it. As it is in the initial stage of forming the Joint Venture Company, there are still uncertainties in the future for the development of the Joint Venture Company. Accordingly, the business plan of the Joint Venture Company is general and may not contain every details currently, such as the exact amount of cash flow the Joint Venture Company can obtain from or apply in each of its diverse financial services, ever-changing financial position of the potential customers of the Joint Venture Company and the overall financial market condition in the future. However, having considered the advantages of the JV Formation (such as providing a good opportunity for the Group to utilise its surplus cash resources for investment), the Directors are of the view that the JV Formation is in the interest of the Group and its shareholders as a whole.

Meanwhile, as the Group is principally engaged in the IT business rather than the financial business, the Group will hold a non-controlling interest rather than being a controlling shareholder and being highly involved in the operations of the Joint Venture Company. However, as a substantial shareholder of the Joint Venture Company, the Company will monitor the operation of the Joint Venture Company by reviewing the financial statements of the Joint Venture Company at a frequency of no less than every three months.

−8 −

LETTER FROM THE BOARD

Although there are abovementioned benefits derived from the JV Formation, Shareholders shall note that the actual financial performance of the Joint Venture Company in the future is subject to its business and operation circumstances and therefore is not guaranteed.

The Directors (including the independent non-executive Directors), having considered the terms and conditions of the JV Agreement and pros and cons of the Transaction, are of the view that the terms and conditions of the JV Agreement are on normal commercial terms, which are fair and reasonable and in the interest of the Group and its shareholders as a whole. None of the Directors has a material interest in the transaction under the JV Agreement or, is required to abstain from voting on the board resolution for considering and approving such transaction.

IMPLICATIONS UNDER THE LISTING RULES

The applicable percentage ratios in respect of the JV Formation are more than 5% but less than 25%, the JV Formation constitutes a discloseable transaction for the Company under the Listing Rules. As Party A is the controlling shareholder of the Company and Party B is an associate of Party A, the JV Agreement constitutes a connected transaction of the Company under the Listing Rules and is subject to the approval of the Independent Shareholders. IPG, its ultimate beneficial owners and their respective associates will abstain from voting in the EGM to be convened for the approval of the JV Agreement.

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 JV Agreement and the Transaction.

EGM

Set out on pages 31 to 32 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 Friday, 30 June 2017 for the purpose of considering and if thought fit approving the JV Agreement and the Transaction.

The JV Agreement and the Transaction 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 288,478,000 Shares (representing approximately 31.99% 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.

−9 −

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 JV Agreement and the Transaction 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 letters from the Independent Financial Adviser containing its advice to the Independent Board Committee and the Independent Shareholders is set out on pages 12 to 20 of this circular and the text of the letters from the Independent Board Committee to the Independent Shareholders is set out on page 11 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 JV Agreement and the Transaction 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 JV Agreement and the Transaction 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 appendix to this circular.

By Order of the Board Inspur International Limited Wang Xingshan Chairman

−10 −

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)

14 June 2017

To the Independent Shareholders

Dear Sir or Madam,

DISCLOSEABLE AND CONNECTED TRANSACTION — ESTABLISHMENT OF JOINT VENTURE COMPANY

We refer to the circular dated 14 June 2017 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 JV 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 Capital Limited (“ 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 10 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 JV Agreement, as set out on pages 12 to 20 of the Circular.

Having taken into account of the advice of First Shanghai, we consider that the JV Agreement to be entered into upon normal commercial terms, and the transactions contemplated thereunder to be entered into in the ordinary and usual course of business of the Group and they are fair and reasonable and in the interests of the Company and the Shareholders as whole. Accordingly, we recommend the Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the EGM to approve the JV Agreement and the Transaction.

Yours faithfully,

the Independent Board Committee

Zhang Ruijun Ding Xiangqian Independent non-executive Independent non-executive Director Director

Wong Lit Chor, Alexis Independent non-executive Director

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The following is the text of a letter received from First Shanghai Capital Limited setting out its advice to the Independent Board Committee and the Independent Shareholders in respect of the JV Agreement and the Transaction for inclusion in this circular.

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FIRST SHANGHAI CAPITAL LIMITED

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

14 June 2017

To the Independent Board Committee and the Independent Shareholders

Dear Sir or Madam,

DISCLOSEABLE AND CONNECTED TRANSACTION ESTABLISHMENT OF JOINT VENTURE COMPANY

INTRODUCTION

We refer to our engagement to advise the Independent Board Committee and the Independent Shareholders in respect of the JV Agreement and the Transaction, details of which are set out in the circular of the Company dated 14 June 2017 to the Shareholders (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. The exchange rate of RMB1.00 to HK$1.13 has been adopted in this letter for illustrative purposes.

On 9 May 2017, Party C (a wholly-owned subsidiary of the Company) entered into the JV Agreement with Party A (IPG) and Party B in relation to the establishment of a joint venture company. Pursuant to the JV Agreement, the Joint Venture Company will be formed in Shandong Province, the PRC to mainly provide financial services to members of the Inspur Group.

Party A (IPG) is a controlling shareholder of the Company and Party B is an associate of Party A, therefore the JV Agreement and the Transaction constitutes a connected transaction of the Company under the Listing Rules. Accordingly, the JV Agreement and the Transaction is subject to, among other conditions, the approval of the Independent Shareholders at the EGM.

The Independent Board Committee, comprising all the independent non-executive Directors, namely Mr. Wong Lit Chor, Alexis, Ms. Zhang Ruijun and Mr. Ding Xiangqian, has been established to advise the Independent Shareholders in respect of the JV Agreement and the Transaction. We, First Shanghai Capital Limited, have been appointed to advise the Independent Board Committee and the Independent Shareholders in this regard.

−12 −

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The Independent Shareholders should note that, within the past two years from the date of the JV Agreement, we were engaged as independent financial adviser by the Company for several connected transactions as detailed in the circulars of the Company 14 May 2015, 5 August 2015 and 27 October 2016. Given (i) our independent role in the aforementioned engagements; and (ii) our fees for the aforementioned engagements represented an insignificant percentage of the revenue of our parent group, we consider the aforementioned engagements would not affect our independence to form our opinion in respect of the JV Agreement and the Transaction. Save for the aforementioned, we are not aware of any relationship or interest with the Company or any other party that could reasonably be regarded as relevant to our independence to act as the independent financial adviser in respect of the JV Agreement and the Transaction.

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 continued 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, the Inspur Group and the Joint Venture Company. Nonetheless, in respect of the reasonable steps which an independent financial adviser is expected to perform to satisfy the requirements of the Listing Rules, we have, among other things, (i) reviewed the JV Agreement; (ii) reviewed the financial information of the Group, including the annual reports of the Company; (iii) reviewed proposed plans about the Joint Venture Company; (iv) reviewed information disclosed in the announcements published by the Company and the letter from the Board in the Circular; (v) reviewed industry information as mentioned in this letter; and (vi) discussed with the management of the Group.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In formulating our opinion in respect of the JV Agreement and the Transaction, we have taken into account the following principal factors and reasons.

1. Background of and reasons for the JV Agreement

1.1 Background of the parties to the JV Agreement

The Group is an integrated information technology (“ IT ”) services provider, which provides enterprise resource planning (ERP) service, cloud service, finance sectors and software outsourcing and other services.

−13 −

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Party A (IPG), a controlling shareholder of the Company, is an investment holding company established in the PRC. According to the website of IPG and relevant public information, we understand:

• (i) IPG, together with its group companies, provides IT products and services to over 100 countries and regions in the world and caters to the entire range of needs of informatisation of governments and enterprises;

• (ii) IPG ranked fourth under the 中國軟件業務收入前百家企業名單 (PRC Software Business Revenue Top 100 Corporation List) published by the Ministry of Industry and Information Technology of the PRC(中華人民共和國工業和信息化部) in respect of software business revenue for the year ended 31 December 2015;

• (iii) IPG is a substantial shareholder of Party B, namely Inspur Software Company Limited (浪 潮軟件股份有限公司) (listed in Shanghai, stock code: 600756 CH); and

• (iv) IPG is a controlling shareholder of Inspur Electronic Information Industry Company Limited (浪潮電子信息產業股份有限公司) (listed in Shenzhen, stock code: 000977 CH) (together with the Company and Party B, collectively, the “ Three Listcos ”).

Party B, together with its subsidiaries, is principally engaged in communication business, business of developing, manufacturing and marketing the technology of computer software and hardware, business of communication and consulting of computer network engineering technology and technical training, and import and export business.

Party C (a wholly-owned subsidiary of the Company) is a limited company incorporated in the PRC and is principally engaged in the business of development of computer software and system products, software engineering and controlling system engineering.

1.2 Financial information on the Group

The following table summaries the financial performance of the Group for the years ended 31 December 2014, 2015 and 2016 as extracted from the annual report of the Company for the year ended 31 December 2016 (the “ 2016 Annual Report ”).

	**For the year **	**For the year **	ended 31 December	ended 31 December
	2014		2015		2016
	HK$ million	HK$ million		_HK$ _	million
Results from continuing operations	(restated)		(restated)	(audited)
Revenue	891		972		1,163
Net (loss)/profit for the year	(70)		(18)		61

−14 −

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

We note that the financial performance of the Group has improved in the recent years and the Group turned around from recording net loss in 2015 to recording net profit in 2016. Such improvement from 2015 to 2016 was mainly attributable to (i) the increase in revenue, particularly for management software business; and (ii) the increase in rental income from investment properties.

The following table summaries the financial position of the Group as at 31 December 2016 as extracted from the 2016 Annual Report.

	As at
	31 December
	2016
	HK$ million
	(audited)
Non-current assets
Property, plant and equipment	313
Investment properties	507
Others	286
	1,106
Current assets
Bank balances and cash	853
Entrusted loan receivables	327
Trade and bills receivables	161
Others	211
	1,552
Current liabilities	868
Non-current liabilities	55
Net assets	1,735

We note that, as at 31 December 2016, (i) the largest asset item of the Group was bank balances and cash which amounted to approximately HK$853 million, representing approximately 32% of the total assets of the Group; (ii) the Group had no bank borrowings; and (iii) the net assets of the Group was approximately HK$1,735 million.

We also note that the market capitalisation of the Company was approximately HK$1,451 million (based on the closing price of the Shares) as at the date of the JV Agreement.

−15 −

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

1.3 Finance companies of corporate groups ( 企業集團財務公司 ) in the PRC

We have reviewed documents recently published by the PRC government (the “ PRC Government Documents ”), which included but not limited to (i) the document titled《中國製造2025》 published by the State Council of the PRC (中國國務院) in 2015; and (ii) the document titled《關於 金融支持工業穩增長調結構增效益的若干意見》published by, among other entities, the Ministry of Finance of the PRC (中國財政部) in 2016. Based on our review of the PRC Government Documents, we understand the establishment of finance company by industrial corporation groups is encouraged in the PRC.

We have reviewed the annual reports published by China Banking Regulatory Commission (中 國銀行業監督管理委員會), where we understand that the number of finance companies of corporate groups (企業集團財務公司) in the PRC from 2011 to 2015 are as follows:

		As at 31 December	As at 31 December	As at 31 December
	2011	2012	2013	2014	2015
Number of finance companies of
corporate groups	127	150	176	196	224
Annual change	+20	+23	+26	+20	+28

We note that the number of finance companies of corporate groups (企業集團財務公司) in the PRC kept on increasing in the past few years.

1.4 Reasons for the JV Agreement

On 9 May 2017, Party C (a wholly-owned subsidiary of the Company) entered into the JV Agreement with Party A (IPG) and Party B in relation to the establishment of a joint venture company in Shandong Province, the PRC. The Joint Venture Company will apply to China Banking Regulatory Commission (中國銀行業監督管理委員會) for licenses and will principally provide financial services to members of the Inspur Group, such as provision of financial and fund raising consultation, credit forensics and related consultancy and agency services, assisting in executing payments and collecting payments, provision of guarantee and entrusted loans and other approved businesses. We are advised by the management of the Group that, according to relevant regulations on finance companies of corporate groups (企業集團財務公司) in the PRC, the Joint Venture Company shall be limited to provide financial services to (i) the subsidiaries which are owned as to more than 51% by IPG; (ii) companies which are individually or jointly owned as to more than 20% by IPG and its subsidiaries, or companies in which IPG and its subsidiaries individually or jointly own less than 20% but is/are the largest shareholder(s) thereof; and (iii) service organisations (事業單位) or social organisations (社會團體法人) subordinated under IPG or its subsidiaries.

We are advised by the management of the Group that the conditions precedent to the JV Agreement (such as obtaining the approval of the relevant authorities in the PRC) are expected to be fulfilled in or around December 2017 and the Joint Venture Company will commence commercial operation soon afterwards.

−16 −

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Pursuant to the JV Agreement, the total registered capital of the Joint Venture Company is RMB1,000 million, where Party A, Party B and Party C will contribute capital and own equity interests in the proportion of 60%, 20% and 20%, respectively. The amount of registered capital of the Joint Venture Company to be contributed by the Group, being RMB200 million (equivalent to approximately HK$226 million) represents approximately 26% of the cash and bank balances and approximately 9% of the total assets of the Group as at 31 December 2016. We are advised by the management of the Group that such capital contribution will be funded by the existing surplus cash resources of the Group. We are further advised by the management of the Group that (i) the Company has no further commitment to the Joint Venture Company apart from the aforesaid capital contribution; (ii) there is currently no plan for the Joint Venture Company to obtain further capital injection from its shareholders; and (iii) should the Joint Venture Company require further capital injection from its shareholders in the future, the shareholders would then negotiate the arrangement on a case by case basis.

We have discussed with the management of the Group and reviewed the general business plan of the Joint Venture Company (covering the expected business scope) and we understand from the advices by the management of the Group that, despite (i) the business plan is general and may not contain every detail, such as the exact amount of cash flow it can obtain from or apply in each of its diverse financial services, because of uncertainties lies in the future, including the ever-changing financial position of the potential customers of the Joint Venture Company and the overall financial market condition in the future; and (ii) the investment amount is significant to the Group and the Group will not obtain control the Joint Venture Company, the key reasons of the JV Agreement are as follows:-

• the Group can grasp this opportunity to utilise its surplus cash resources for investment, where the Group aims to be able to generate investment return with such surplus cash resources rather than idling such resources;

• the Group can expand into the financial sector to diversify its business risks;

• the Group is principally engaged in the IT sector rather than the financial sector, therefore the Group will be a passive investor holding a non-controlling interest rather than being a controlling shareholder and being highly involved in the operations of the Joint Venture Company. Nonetheless, as a substantial shareholder of the Joint Venture Company, the Company will monitor the operation of the Joint Venture Company by reviewing the financial statements of the Joint Venture Company at a frequency of no less than every three months;

• the Joint Venture Company is primarily backed by IPG (i.e. Party A as the 60% shareholder of the Joint Venture Company), which is a leading IT corporation in the PRC and has substantial/controlling equity interests in the Three Listcos. IPG, given its background and its interests in the Joint Venture Company, will be primarily responsible for the operations of the Joint Venture Company and IPG will arrange the hiring of necessary expertise from the financial and banking industry in the PRC to handle such operations;

−17 −

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

• the scale of the investment amount to be contributed by each party (including the Group and IPG) as registered capital is proportional to the equity interests owned by the respect party in the Joint Venture Company, where the total investment amount has made reference to the expected business scale of the Joint Venture Company;

• the Group can support the establishment of the Joint Venture Company, where the Group can procure financial services such as depository and borrowing services from the Joint Venture Company on terms no less favourable than independent third parties;

• the Joint Venture Company can utilise the financial software and IT systems developed by the Group to enhance its performance;

• the formation of financial companies is encouraged by the PRC government; and

• the terms of the JV Agreement are fair and reasonable.

After having collectively considered the aforesaid factors, we are of the view that the entering into of the JV Agreement and the Transaction, whilst not in the ordinary and usual course of business of the Group, is in the interests of the Company and the Shareholders as a whole.

The Independent Shareholders should note that, the possible transactions between the Group and the Joint Venture Company, such as the procurement of financial services and the provision of IT products, may constitute continuing connected transactions of the Company and these continuing connected transactions may or may not be subject to approval by the Independent Shareholders under the Listing Rules. As previously mentioned, the conditions precedent to the JV Agreement (such as obtaining the approval of the relevant authorities in the PRC) are expected to be fulfilled in or around December 2017 and, according to the advices by the management of the Group, (i) the dates of successful approval (including by the Independent Shareholders and the regulatory authorities), formation and operation of the Joint Venture Company are uncertain, which are expected to be around or over half a year from now; (ii) the Directors expect the Group will be in a better position to evaluate the scale and details of these possible transactions later this year based on ongoing communication with the relevant regulatory authorities and ongoing evaluation of the financial and business aspects of the Group; and (iii) the Group is fully aware of its obligations under the Listing Rules in respect of connected transactions and the Group will publish, where necessary and applicable, further announcements and circulars in due course to satisfy all the requirements stipulated under the Listing Rules.

The Independent Shareholders should also note that, while the Group aims the Joint Venture Company could bring in investment return to the Group, the actual financial performance of the Joint Venture Company in the future is not guaranteed.

−18 −

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

2. Principal terms of the JV Agreement

2.1 Registered capital

The following table sets out the proposed shares of the registered capital and the equity interest in the Joint Venture Company.

		Committed amount
		of registered
		capital	Equity interest
		RMB million	%
Party	A	600	60%
Party	B	200	20%
Party	C	200	20%
		1,000	100%

The JV parties shall contribute their respective committed amount of the registered capital by cash injection within 30 days after obtaining the approval of their respective governing body. If Party B or Party C cannot obtain approvals from its governing body, the remaining JV Parties will continue to establish the Joint Venture Company and Party A will contribute the shared amount of Party B or Party C in the sum of RMB200 million and its own shared amount in the sum of RMB600 million. As such, the total registered capital of the Joint Venture Company will remain unchanged. If both Party B and Party C cannot obtain approvals from the governing body, the JV Agreement will be terminated.

In respect of the intended capital structure of the Joint Venture Company, we understand (i) the Joint Venture Company will mainly provide financial services to members of the Inspur Group; (ii) the scale of the Inspur Group, where the Inspur Group had total assets of over RMB20,000 million as at 31 December 2016 based on the audited financial statements of the Inspur Group provided to us by the management of the Group; (iii) a finance company, which provides including but not limited to lending services, requires capital for its operation; and (iv) the Group intends to be a passive investor in the Joint Venture Company. Accordingly, having primarily considered (i) the background and scale of the Inspur Group; (ii) the business nature of the Joint Venture Company requires capital; (iii) the intended role of the Group as a passive investor; and (iv) the reasons for the JV Agreement as aforementioned, we consider the total registered capital of RMB1,000 million and the percentage of contribution from the Group of 20% in respect of the Joint Venture Company to be fair and reasonable.

2.2 Composition of the board of directors and the board of supervisors

The board of directors of the Joint Venture Company will comprise five directors, among which Party A is entitled to nominate three directors and each of Party B and Party C is entitled to nominate one director. The Joint Venture Company will also have a board of supervisors which will comprise three supervisors, among which two shareholder supervisors shall be elected by the shareholders, one supervisor representing workers and staff shall be elected by the workers and staff of the Joint Venture Company.

−19 −

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

2.3 Profit and loss sharing

Under the Company Law, the JV Parties will be entitled to share the profit or to bear the loss of the Joint Venture Company in proportion to their respective equity interests in the Joint Venture Company.

2.4 Conclusion on the terms of the JV Agreement

In view of the aforementioned factors, particularly the equity interest, board composition and profit sharing basis are proportionate to the contribution in registered capital of the Joint Venture Company, we are of the view that the terms of the JV Agreement are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned.

3. Expected financial impact of the JV Agreement on the Group

Upon the completion of the registered capital injection into the Joint Venture Company, there will be a re-classification of cash and bank balances of RMB200 million (equivalent to approximately HK$226 million) to an interest in an associate of the Group.

After the establishment of the Joint Venture Company, the investment in the Joint Venture Company will be accounted for in the consolidated financial statements of the Group by way of equity accounting and the Group’s share of the profit and loss of the Joint Venture Company will be included in the consolidated results of the Group.

RECOMMENDATION

Taking into account the above principal factors, we are of the view that (i) the entering into of the JV Agreement and the Transaction, whilst not in the ordinary and usual course of business of the Group, is in the interests of the Company and the Shareholders as a whole; and (ii) the terms of the JV Agreement and the Transaction are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned. Accordingly, we advise the Independent Board Committee to recommend, and we ourselves recommend, the Independent Shareholders to vote in favour of the resolution to approve the JV Agreement and the Transaction at the EGM.

Yours faithfully, For and on behalf of

First Shanghai Capital Limited

**Fanny **	Lee	Allen Wang
_Managing _	Director	Director

Note: Ms. Fanny Lee and Mr. Allen Wang have been responsible officers of Type 6 (advising on corporate finance) regulated activity under the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) since 2006 and 2014, respectively. Both of them have participated in the provision of independent financial advisory services for various connected transactions involving companies listed in Hong Kong.

−20 −

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

AUDITED CONSOLIDATED FINANCIAL STATEMENT OF THE GROUP

Company sets 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 2016 have been set out in the Annual Report 2016 of the Company which was posted on 27 April 2017 on the Stock Exchange’s website (http://www.hkexnews.hk). Please also see below quick link to the Annual Report 2016:

http://www.hkexnews.hk/listedco/listconews/SEHK/2017/0427/LTN201704272179.pdf

The audited consolidated financial statements of the Group for the year ended 31 December 2015 have been set out in the Annual Report 2015 of the Company which was posted on 21 April 2016 on the Stock Exchange’s website (http://www.hkexnews.hk). Please also see below quick link to the Annual Report 2015:

http://www.hkexnews.hk/listedco/listconews/SEHK/2016/0421/LTN201604211204.pdf

The audited consolidated financial statements of the Group for the year ended 31 December 2014 have been set out in the Annual Report 2014 of the Company which was posted on 24 April 2015 on the Stock Exchange’s website (http://www.hkexnews.hk). Please also see below quick link to the Annual Report 2014:

http://www.hkexnews.hk/listedco/listconews/SEHK/2015/0424/LTN20150424847.pdf

The three auditors’ reports for the consolidated financial statements of the Group for the years ended 31 December 2016, 2015 and 2014 are unqualified reports.

INDEBTEDNESS STATEMENT

Debts and Borrowings

As at the close of business on 31 May 2017, being the latest practicable date for the purpose of this statement of indebtedness prior to the printing of this circular, the Group did not have any outstanding mortgages, charges, debenture, loan capital issued and outstanding or agreed to be issued, bank loan and overdraft or other similar indebtedness, finance leases or hire purchase commitments, liabilities under acceptances or acceptance credits or any guarantee or other material contingent liabilities.

Contingent liabilities

As at 31 May 2017, 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.

−21 −

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Disclaimer

Save as otherwise disclosed in this circular, the Group did not, as at 31 May 2017 (being the latest practicable date prior to the printing of this circular), have any outstanding loan capital issued and outstanding or agreed to be issued, 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

The company will continue to implement aggressive market expansion strategy, further increase the right to independent operation player and decentralization of right decision-making to independent market players, and grasp market opportunities of Internet and SOE reform. The company will focus on current core products improve and upgrade, increase platform and new product development, continue introduction of key technology leaders, fully implement the “data-centric” strategy, grasp the R&D and implementation of cloud service products and major projects, realize the target of the new “traditional software business” and “Cloud Services business innovation” and steady growth.

−22 −

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	4,000	0.00%

−23 −

GENERAL INFORMATION

APPENDIX II

(ii) Long positions in underlying Shares of the Company

			Number of
		Description of	underlying	Subscription
Name of Directors	Type of interests	equity derivates	shares	price per share
		(note)		HK$
Wang Xingshan	Beneficial owner	Share option (note 1)	1,000,000	3.41
		Share option (note 2)	3,000,000	1.71
		Share option (note 3)	1,200,000	1.34
		Share option (note 4)	1,000,000	1.63
Jin Xiaozhou, Joe	Beneficial owner	Share option (note 2)	1,800,000	1.71
		Share option (note 4)	800,000	1.63
Dong Hailong	Beneficial owner	Share option (note 1)	400,000	3.41
		Share option (note 2)	200,000	1.71
		Share option (note 3)	100,000	1.34
		Share option (note 4)	100,000	1.63
Shen Yuanqin, Samuel	Beneficial owner	Share option (note 2)	200,000	1.71
		Share option (note 3)	100,000	1.34
		Share option (note 4)	100,000	1.63
Wong Lit Chor, Alexis	Beneficial owner	Share option (note 1)	40,000	3.41
		Share option (note 2)	400,000	1.71
		Share option (note 3)	100,000	1.34
		Share option (note 4)	100,000	1.63
Zhang Ruijun	Beneficial owner	Share option (note 2)	200,000	1.71
		Share option (note 3)	100,000	1.34
		Share option (note 4)	100,000	1.63
Ding Xiangqian	Beneficial owner	Share option (note 4)	100,000	1.63

Note 1: On 10 December 2010, the share option were grant to the director under the option scheme.

Note 2: On 16 July 2015, the share option were grant to the director under the option scheme.

Note 3: On 13 May 2016, the share option were grant to the director under the option scheme.

Note 4: On 4 May 2017, the share option were granted to the director under the option scheme.

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.

−24 −

GENERAL INFORMATION

APPENDIX II

• (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	percentage of
Name of Shareholders	Type of interests	of Shares	interests
Inspur Group Limited	Interest in a	288,478,000	31.99%
	controlled
	corporation (Note)
Jinan Inspur Wireless	Interest in a	288,478,000	31.99%
Communication Limited*	controlled
(濟南浪潮無線通信有限公司)	corporation (Note)
Inspur Software Group Limited*	Interest in a	288,478,000	31.99%
(浪潮軟件集團有限公司)	controlled
	corporation (Note)
Inspur Cheeloo Overseas Investment	Interest in a	288,478,000	31.99%
And Development Co., Limited	controlled
(浪潮齊魯海外投資發展有限公司)	corporation and
	beneficial owner
	(Note)
Inspur Overseas Investment Limited	Beneficial owner	288,478,000	31.99%
(浪潮海外投資有限公司)	(Note)

Note: Inspur Overseas Investment Limited has reported to be the beneficial owner of 288,478,000 Shares. Inspur Group Limited, Jinan Inspur Wireless Communication Limited, Inspur Software Group 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 288,478,000 Shares.

−25 −

GENERAL INFORMATION

APPENDIX II

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 Limtied*		Technology Company Limited*
(無錫易捷信誠信息技術有限公司)		(無錫浪潮商服技術有限公司)
Fang Wensheng	Beneficial owner	RMB345,000 in the registered	34.5%
		capital of Inspur Fangzhi
Bao Jianhua	Beneficial owner	RMB150,000 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
		國強通用軟件有限公司)
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	RMB3,868,500 in registered	11.05%
		capital of Shangdong 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

−26 −

GENERAL INFORMATION

APPENDIX II

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 2016, being the date to which the latest published audited financial statements of the Company were made up.

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).

−27 −

GENERAL INFORMATION

APPENDIX II

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 2016, 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 2016), 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.

8. 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 share transfer agreement dated 10 April 2015 between entered into between the Vendor and Ambition Lead Limited (致優有限公司) in relation to the disposal of 49% share equity interest in Inspur Communication Information System Limited* (浪潮通信信息系統有限公 司);

• (b) the share transfer agreement dated 10 April 2015 between entered into between Shine Victory International Limited (耀凱國際有限公司) and the Purchaser in relation to the disposal of 51% share equity interest in Inspur Communication Information System Limited* (浪潮通信信息系統有限公司);

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GENERAL INFORMATION

APPENDIX II

• (c) the framework leasing agreement dated 29 May 2015 between Jinan Inspur Minda Information Technology Limited* (濟南浪潮銘達信息科技有限公司) and IPG (for and on behalf of other members of IPG and its subsidiaries) in relation to the continuing connected transaction to lease a building to IPG and its subsidiaries as office premises for a term of three years ending 31 December 2017;

• (d) the disposal agreement dated 9 July 2015 in relation to disposal of finance business;

• (e) the New Framework Agreement dated 12 September 2016 between the Company and the IPG in relation the continuing connected transactions for the 3 years ending 31 December 2019;

• (f) the acquisition agreement dated 20 December 2016 between the 浪潮通用軟件有限公司 (Inspur Common Software Co., Ltd.) and 山東浪潮雲海雲計算產業投資有限公司 (Shandong Inspur Cloud Computing Industry Investment Company Limited) in relation to acquisition of the entire share capital in 黑龍江浪潮雲海科技有限公司 (Heilongjiang Inspur Yunhai Technology Company Limited)*; and

• (g) the JV Agreement.

9. 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.

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GENERAL INFORMATION

APPENDIX II

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 JV Agreement;

• (b) the memorandum and articles of assoication of the Company;

• (c) the audited consolidated financial statements of the Group for the two financial years ended 31 December 2015 and 31 December 2016;

• (d) the contracts referred to in the section headed “Material Contracts” of this Appendix;

• (e) the letter from the Independent Board Committee;

• (f) the letter from the Independent Financial Adviser;

• (g) the written consent referred to in the section headed “Expert” of this Appendix; 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 Friday, 30 June 2017 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 JV agreement dated 9 May 2017 (the “ JV Agreement ”) entered into by Party A, Party B and Party C in relation to the JV Formation (details of the JV Agreement are set out in the Company’s circular dated 14 June 2017 (the “ Circular ”) and copies of the JV 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 do such acts and execute such other documents as they may consider necessary, desirable or expedient to carry out or give effect to or otherwise in connection with or in relation to the JV Agreement and the Transaction contemplated thereunder.”

By order of the Board Inspur International Limited Wang Xingshan Chairman

Hong Kong, 14 June 2017

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

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NOTICE OF THE EGM

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 and Mr. Jin Xiaozhou as executive Directors, Mr. Samuel Y. Shen and Mr. Dong Hailong as non-executive Directors, and Mr. Wong Lit Chor, Alexis, Ms. Zhang Ruijun and Mr. Ding Xiangqian as independent non-executive Directors.

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