THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your shares in New Focus Auto Tech Holdings Limited (the “Company”), you should at once hand this circular to the purchaser or transferee or to the bank, licensed securities dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

This circular appears for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for the securities of the Company.

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.

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NEW FOCUS AUTO TECH HOLDINGS LIMITED 新焦點汽車技術控股有限公司[*]

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 360)

MAJOR TRANSACTION ACQUISITION OF 51% EQUITY INTEREST IN CHANGCHUN GUANGDA

A letter from the Board is set out on pages 4 to 17 of this circular.

A notice convening an extraordinary general meeting of the Company to be held at 2/F., No. 1179 Wuzhong Road, Minhang District, Shanghai, China, on 23 October 2012 at 2:00 p.m. is set out on pages 74 to 75 of this circular. Whether or not you are able to attend the meeting, you are requested to complete and return the form of proxy in accordance with the instructions printed thereon as soon as possible and in any event not less than 24 hours before the time of meeting to the Hong Kong branch share registrar and transfer office of the Company, Computershare Hong Kong Investor Services Limited at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for the holding of the annual general meeting or any adjourned meeting thereof. Completion and return of the form of proxy will not preclude any member of the Company from attending the meeting or any adjournment thereof and voting in person if he so wishes and in such event, the form of proxy will be deemed to be revoked.

24 September 2012

* For identification purpose only

CONTENTS

			Page
DEFINITIONS	. . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM	THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		4
APPENDIX I	—	FINANCIAL INFORMATION OF THE GROUP . . . . . . . .	18
APPENDIX II	—	ACCOUNTANTS’ REPORT OF CHANGCHUN
		GUANGDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	20
APPENDIX III	—	UNAUDITED PRO FORMA FINANCIAL
		STATEMENT OF THE ENLARGED GROUP . . . . . . . . .	48
APPENDIX IV	—	MANAGEMENT DISCUSSION AND ANALYSIS ON
		CHANGCHUN GUANGDA . . . . . . . . . . . . . . . . . . . . . .	56
APPENDIX V	—	GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . .	65
NOTICE OF EXTRAORDINARY GENERAL MEETING . . . . . . . . . . . . . . . . . . . . .			74

– i –

DEFINITIONS

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

“Acquisition”
the acquisition by the Company from the Vendor of the Equity Interest pursuant to the Equity Transfer Agreement
“Assessment Period”
a period of 12 months starting from the date on which the financial statements of Changchun Guangda are consolidated to the Group’s financial statements
“Audited Net Profit After Taxation”
the lower of (i) Changchun Guangda’s net profit (including income from activities both within or outside the existing principal business of Changchun Guangda) after taxation, but before the deduction of non-recurring gains and losses; and (ii) Changchun Guangda’s net profit (including income from activities both within or outside the existing principal business of Changchun Guangda) after taxation and the deduction of non-recurring gains and losses
“Board”
the board of Directors
“Changchun Guangda”
Changchun Guangda Automobile Trading Co., Ltd.* (長春市廣達汽車貿易有限公司), a limited liability company established in the PRC which is owned by the Vendor and the Guarantors
“Company”
New Focus Auto Tech Holdings Limited, a company incorporated in the Cayman Islands with limited liability, the shares of which are listed on the Stock Exchange
“Completion” the completion of the Acquisition
“Consideration”
RMB132,600,000, being the price payable by the Company to the Vendor for the Acquisition under the Equity Transfer Agreement (subject to adjustment)
“Consideration Shares”
18,226,068 new Shares of the Company to be issued to the Vendor at the Issue Price to satisfy part of the Consideration for the Acquisition
“Director(s)” director(s) of the Company
For identification purpose only

– 1 –

DEFINITIONS

“Effective Date”
the date on which the necessary resolutions by the Shareholders at the EGM approving the Equity Transfer Agreement and the transactions contemplated thereunder are passed
“EGM” the extraordinary general meeting of the Company to be convened on 23 October 2012 for the purpose of considering and, if thought fit, approving the Equity Transfer Agreement and the transactions contemplated thereunder and the grant of the Specific Mandate
“Enlarged Group”
the Group as enlarged by the Acquisition
“Equity Interest” the 51% equity interest in Changchun Guangda to be transferred by the Vendor to the Company under the Equity Transfer Agreement
“Equity Transfer Agreement”
the equity transfer agreement dated 17 July 2012 entered into between the Company, the Vendor and the Guarantors for the transfer of the Equity Interest from the Vendor to the Company
“Group”
the Company and its subsidiaries
“Guarantor(s)”
consists of Mr. Wu Yan De (吳彥德), Ms. Zhao Bin Xu (趙彬序) and Ms. Wu Zi Han (吳子涵), who hold 8.37%, 2.825% and 2.825% equity interests respectively in Changchun Guangda, and Mr. Wu Yan Hai (吳彥海), who takes an active role in the management and operation of Changchun Guangda
“HK$”
Hong Kong dollars, the lawful currency of Hong Kong
“Independent Third Party(ies)”
a third party(ies) who is/are independent of and is/are not connected with the Company and any of the connected persons (as defined under the Listing Rules) of the Company
“Issue Price”
HK$1.34 per Consideration Share, being the average closing price of the Shares as quoted on the Stock Exchange over the last 60 trading days immediately prior to the date of the Equity Transfer Agreement

– 2 –

DEFINITIONS

“Latest Practicable Date” 21 September 2012, being the latest practicable date for ascertaining certain information referred to in this circular prior to printing of this circular “Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange “PRC” the People’s Republic of China “RMB” Renminbi yuan, the lawful currency of the PRC “SFO” Securities and Futures Ordinance, Chapter 571 of the Laws of Hong Kong “Share(s)” the ordinary share(s) of HK$0.10 each in the share capital of the Company “Shareholder(s)” holder(s) of Share(s) “Specific Mandate” the mandate to allot and issue the Consideration Shares to the Vendor or her nominee(s) at the Issue Price to be granted by the Shareholders at the EGM “Stock Exchange” The Stock Exchange of Hong Kong Limited “Vendor” Ms. Gao Xiu Min (高秀民), who owns 85.98% equity interest in Changchun Guangda “%” per cent

– 3 –

LETTER FROM THE BOARD

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NEW FOCUS AUTO TECH HOLDINGS LIMITED 新焦點汽車技術控股有限公司[*]

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 360)

Executive Directors Mr. Hung Wei-Pi, John (Chairman) Mr. Raymond N. Chang Mr. Wu Kwan-Hong Ms. Hung Ying-Lien Mr. Lu Yuan Cheng Mr. Douglas Charles Stuart Fresco Mr. Edward B. Matthew

Non-executive Directors: Mr. Low Hsiao-Ping Mr. Hsu Ming Chyuan Mr. Chang An-Li

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

Principal place of business in Hong Kong: 5/F, 180 Hennessy Road Wan Chai Hong Kong

Independent non-executive Directors Mr. Du Haibo Mr. Zhou Tai-Ming Mr. Uang Chii-Maw

24 September 2012

To the Shareholders

Dear Sir and Madam,

MAJOR TRANSACTION ACQUISITION OF 51% EQUITY INTEREST IN CHANGCHUN GUANGDA

INTRODUCTION

Reference is made to the announcement of the Company dated 17 July 2012.

The purpose of this circular is to provide you with, among other things, the details of the Acquisition, and to give the Shareholders the notice of EGM and other information required by the Listing Rules.

For identification purpose only

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LETTER FROM THE BOARD

EQUITY TRANSFER AGREEMENT

Date

The Equity Transfer Agreement was executed on 17 July 2012 and shall take effect from the Effective Date.

Parties

(1) Vendor: Ms. Gao Xiu Min (高秀民)
(2) Purchaser: The Company
(3) Guarantors: Mr. Wu Yan De (吳彥德), Ms. Zhao Bin Xu (趙彬序), Ms. Wu Zi Han (吳子涵) and Mr. Wu Yan Hai (吳彥海), who undertake to guaranty the Vendor’s obligations under the Equity Transfer Agreement for a period of 2 years

To the best of the Directors’ knowledge, information and belief and having made all reasonable enquiries, the Vendor and the Guarantors are Independent Third Parties.

Interest to be Acquired

The Equity Interest, being 51% of the issued share capital of Changchun Guangda, shall be acquired by the Company.

Consideration

The Consideration for the Acquisition is RMB132,600,000, subject to adjustment as set out below. The Consideration was arrived at by the Company and the Vendor after arm’s length negotiation with reference to the net profits of Changchun Guangda as shown in its management account for the year ended 31 December 2011 and the six months ended 30 June 2012, the fact that generally the first six months’ profit of Changchun Guangda would account for about 35% of the net profit for the whole year as show by its historical financial record, the business prospect of Changchun Guangda, the business synergies which could be brought by Changchun Guangda to the Company upon Completion, and the price/earnings ratio used by the Company in determining considerations for similar acquisitions in the past years.

Based on the management account of Changchun Guangda, the net profit of Changchun Guangda was approximately RMB15,000,000 and approximately RMB8,000,000 for the year ended 31 December 2011 and for the six months ended 30 June 2012 respectively. With reference to Changchun Guangda’s historical financial record which shows that generally the first six months’ profit would account for about 35% of the net profit for the whole year, the Board expected that Changchun Guangda’s net profit after tax for the year ending 31 December 2012 would fall within the range between RMB20,000,000 to RMB23,000,000 after taking into account the accounting adjustment the Company and the relevant professional parties would make in consolidating the financial

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LETTER FROM THE BOARD

statements of Changchun Guangda into the Group’s financial statement upon Completion. Considering the size and profitability of Changchun Guangda as well as the synergies expected to be brought by the Acquisition and after arm’s length negotiation with the Vendor, the Board considered that with a net profit target of RMB26,000,000 for the Assessment Period, a higher price/earnings ratio of 15 times, as compared with 9 to 12 times the Company had used in determining the consideration for similar acquisitions in the past years, is justified in calculating the Consideration. And, in the case the profit target of RMB26,000,000 for the Assessment Period could not be reached, a price/earnings ratio of 10 times shall apply. Thus, the Consideration was set at RMB132,600,000, being RMB26,000,000 x 51% x 10 (price/earnings ratio), subject to adjustment (please refer to the paragraph headed “Adjustment to Consideration” below for details). And, the cap of the Final Price was set at RMB198,900,000, being RMB26,000,000 x 51% x 15 (price/earnings ratio).

The Consideration shall be payable as to RMB112,710,000 by cash and as to RMB19,890,000 by the issue of Consideration Shares. The Consideration shall be satisfied in 4 payments as follows:

The first payment of RMB53,040,000 shall be payable within 10 business days after the Effective Date;
The second payment of RMB53,040,000 shall be payable within 10 business days after the completion of the industry and commerce registration in respect of the transfer of Equity Interest from the Vendor to the Company. RMB33,150,000 of the second payment shall be payable by cash and the balance of RMB19,890,000 shall be payable by the issue of Consideration Shares at the Issue Price of HK$1.34 per Consideration Share, being the average closing price of the Shares as quoted on the Stock Exchange over the last 60 trading days immediately prior to the date of the Equity Transfer Agreement. In the event that the Company is unable to issue the Consideration Shares for whatever reason (including the failure to obtain all the necessary approval and consent for the issue of the Consideration Shares before the second payment due date), the Company may satisfy the payment in cash;
The third payment of RMB19,890,000 shall be payable within 10 business days after the issue of Changchun Guangda’s special audited reports (“ Special Audited Reports ”) prepared following the lapse of the Assessment Period, such Special Audited Reports shall be prepared by the accountants engaged by the Company and shall be made available within two months after the Assessment Period; and
The fourth payment of RMB6,630,000 shall be payable within 10 business days after the issue of Changchun Guangda’s annual audited reports prepared following the lapse of the Assessment Period.

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LETTER FROM THE BOARD

In the case the Vendor objects the Special Audited Reports, the Company and the Vendor would first try to resolve the disagreement by negotiation, failing which, the Vendor may apply to the competent court for remedies which may be provided by the laws of the PRC. Whilst the Vendor is entitled to challenge the financial results of Changchun Guangda as set out in the Special Audited Reports under the PRC laws, the Special Audited Reports shall be final and binding upon the Vendor for the purpose of determining Audited Net Profit After Tax unless the Vendor can successfully prove that it has been prepared in violation of the accounting principles and/or accounting standards applied by the auditors. The Directors therefore consider that the Consideration adjustment arrangements are fair and reasonable.

To eliminate the possibility that the Vendor might be unable to settle any adjustment to Consideration, the Equity Transfer Agreement provides that the Guarantors shall guarantee the obligations of the Vendor for a period of 2 years within which the settlement of the adjustment to Consideration, if any, should have been made. In view of the above and the business prospects of Changchun Guangda, the fact that the Vendor and the Guarantors will continue to own 49% of Changchun Guangda in aggregate upon Completion and that Mr. Wu Yan Hai, one of the Guarantors, owns three properties with market value in total of approximately RMB70,000,000 free of mortgages, pledges or other encumbrance, the Directors consider that the risk that the Vendor being not able to settle the adjustment to Consideration is extremely low and the Company’s interest for the potential adjustment to Consideration is adequately safeguarded.

The cash payments of the Consideration will be funded primarily by the Company’s internal resources and bank loans. The Company may also consider carrying out fund raising activities it deems necessary and appropriate to raise funds to satisfy the Consideration.

If the Company fails to pay the Consideration to the Vendor in accordance with the above payment schedule, for each overdue day, the Company shall pay 0.02% of the amount due to the Vendor as compensation.

As the Equity Transfer Agreement will only become effective on the Effective Date and the first payment is payable within 10 business day after the Effective Day, no payment of the Consideration will be made prior to obtaining Shareholders’ approval on the Acquisition at the EGM.

Adjustment to Consideration

The Consideration shall be subject to adjustment by an amount equals to the difference between the Consideration and the Final Price, which is determined in accordance with the formula set forth below:

Final Price = Audited Net Profit After Taxation during the Assessment Period x 51% x Price/Earnings Ratio x Price/Earnings Adjustment Ratio

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LETTER FROM THE BOARD

Audited Net Profit After Taxation shall be capped at RMB26,000,000, which was arrived at by the Company after consideration of the current situation and prospects of the auto after-sales market in Changchun, the knowledge and insight of the auto after-sales market industry possessed by the management personnel of Changchun Guangda and the business track records and capability of the management personnel of Changchun Guangda.

Price/Earnings Ratio shall be 10 if the Audited Net Profit After Taxation falls below RMB26,000,000; the ratio shall be 15 if the Audited Net Profit After Taxation reaches RMB26,000,000. The Directors are of the view that the Price/Earnings Ratio are fair and reasonable as it is tied to the business prospects of Changchun Guangda as well as the capability of the management personnel of Changchun Guangda.

Price/Earnings Adjustment Ratio shall be 0.8 if the number of new branches opened during the Assessment Period falls below 6; the ratio shall be 1 if the number of new branches opened reaches 6 or more.

For the purpose of determining the Audited Net Profit After Tax, the income from certain business activities outside the principal business of Changchun Guangda carried out or to be carried out by Changchun Guangda will be included, they are (i) income from sales of second-hand automobile products and materials such as the second-hand tires and packing materials collected by Changchun Guangda in the operation of its principal business; (ii) income from custodial services for cars which the customers of Changchun Guangda leave in the stores of Changchun Guangda for a relative long period of time; and (iii) possible income from subletting of space in its premises in the future. The Directors are of the view that inclusion of income deriving therefrom for determining the Audited Net Profit After Tax is fair and reasonable as they are recurring in nature and derived from or closely related to the existing principal business of Changchun Guangda i.e. the provision of auto-mobile related products and services. Income from business activities outside the principal business of Changchun Guangda other than those mentioned above will not be included in determining the Audited Net Profit After Tax. Neither the Company nor Changchun Guangda has any intention to develop other business for Changchun Guangda outside its existing principal business.

The adjustment to Consideration is calculated solely based on the formula above and is not subject to any conditions. Based on the above pricing formula, the Final Price in any event shall not be more than RMB198,900,000.

If the Final Price is greater than the Consideration, the Company shall pay the difference to the Vendor. If the Final Price is smaller than the Consideration, the Vendor shall pay the difference to the Company. The adjustment amount shall be settled in cash within 1 month from the issue of Changchun Guangda’s annual audited reports prepared following the lapse of the Assessment Period. In the case the Audited Net Profit After Taxation during the Assessment Period is zero or Changchun Guangda records a net loss during the Assessment Period, the Final Price would be zero. In such event, the Vendor shall return to the Company all payment of the Consideration he has received from the Company together with an amount of RMB19,890,000, being the equivalent value of Consideration Shares so issued, in cash within the same adjustment settlement period.

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LETTER FROM THE BOARD

In the opinion of the Directors, it is estimated that the Final Price adjustment is required and the Final Price for the Acquisition is estimated to be RMB198,000,000 on the basis that (i) the audited net profit of Changchun Guangda for the first six months of 2012 has already reached about RMB7,385,000; (ii) generally the first six months’ profit would account for about 35% of the net profit for the whole year; (iii) Changchun Guangda plans to open another six large one-stop stores in the capital city of Jilin Province in 2012; (iv) Changchun Guangda plans to launch new projects including 4S shop decoration and maintenance, Würth beauty chain stores and German Heaters image stores in 2012; and (v) other synergies that may be brought from the Acquisition upon Completion.

Conditions Precedent

Completion of the Acquisition is conditional upon the satisfaction of the following conditions:

the passing of the necessary resolutions by the Shareholders at the EGM to approve the Equity Transfer Agreement and the transactions contemplated thereunder; and
the completion of the industry and commerce registration in relation to the transfer of the Equity Interest from the Vendors to the Company which shall take place within 15 business days after condition (1) above having been fulfilled.

If condition (2) above is not fulfilled within the prescribed time frame, the Equity Transfer Agreement shall be terminated automatically and any payments (if any) made by the Company to the Vendor shall be returned to the Company, unless the Vendor and the Company agree to extend the period for the completion of the industry and commerce registration.

Completion shall take place on the day the industry and commerce registration in relation to the transfer of the Equity Interest is completed. Upon Completion, Changchun Guangda will become a 51%-owned subsidiary of the Company.

Other Principal Terms and Conditions

Undistributed Profits

Any undistributed profits of Changchun Guangda before the date of Completion shall belong to the Vendor and the Guarantors in accordance with their shareholding in Changchun Guangda. The amount of profits available for distribution to the Vendor and the Guarantors shall be the total amount of the undistributed profits of Changchun Guangda less provision for (i) decline in inventory value; (ii) bad debts; and (iii) contingent liabilities (losses), if any, provided that Changchun Guangda shall have sufficient working capital and its net assets shall not be less than RMB48,750,000 upon distribution of the profits.

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LETTER FROM THE BOARD

Non-competition undertaking

The Vendor and the Guarantors undertake to the Company that upon Completion, if the Vendor and the Guarantors, and their immediate family members, resign from their positions with Changchun Guangda without the written consent of the Company, they shall not engage in any businesses which directly or indirectly compete with those of Changchun Guangda and the Group, either in their name or other’s name, for a period of 5 years starting from the date of their resignation.

The Vendor and the Guarantors further undertake that if the Vendor, the Guarantors and/or their immediate family members breach the non-compete provisions in the Equity Transfer Agreement, the Vendor and/or the Guarantors shall compensate the Company an amount equivalent to the difference between the Consideration and RMB48,750,000 if the breach of the non-compete provisions occur before the Final Price is determined. Where the breach of the non-compete provisions occur after the Final Price is determined, the compensation shall be the difference between the Final Price and RMB48,750,000. The deduction of RMB48,750,000 was arrived at after arm’s length negotiation between the Company, the Vendor and the Guarantors having considered the profitability of Changchun Guangda as evidenced by its audited net profit after tax for the first six months of 2012, the business prospects of Changchun Guangda as well as the extent of the non-compete obligations imposed on the Vendor and the Guarantor. The initial proposed compensation for breach of compensation for non-compete provision by the Company was the difference between the Consideration or Final Price (as the case may be) and RMB24,862,500, being 51% of the net assets value of Changchun Guangda. Through negotiation in which the Vendor and the Guarantors made reference to the non-compete obligations which normally capped at RMB5,000,000 imposed on those vendors and/or guarantors in the similar acquisitions by the Company in the past, and the length of non-compete period, which is normally not more than 3 years, the parties had finally agreed that the compensation amount to be equal to the difference between the Consideration or Final Price and the RMB48,750,000, being 100% of the net assets value of Changchun Guangda, with the non-compete period remains to be 5 years. If the aforesaid compensation amount cannot fully compensate the losses suffered by the Company, the Vendor and/or the Guarantors shall further compensate the Company for the amount of the losses in excess of the compensation amount. The Directors consider that such arrangement is adequate in imposing sufficient limitation on the Vendor and the Guarantors to ensure that non-compete undertaking would be complied with and is fair and reasonable to the Company and its Shareholders as a whole.

The Vendor and the Guarantors shall be jointly and severally liable for the payment of any compensation arising from the breach of the non-compete provisions by the Vendor, the Guarantors and/or their immediate family members.

Management of Changchun Guangda

Upon Completion, Changchun Guangda shall be managed by its board of directors composing of three members, two of them are to be nominated by the Company and one of them to be nominated by the Vendor. The chairman of the board of directors should be a director nominated by the Company. And, the chief financial controller of Changchun

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LETTER FROM THE BOARD

Guangda will be appointed by the Company to oversee the finance, accounting, administration etc. of Changchun Guangda.

Others

The Vendor shall fully indemnify Changchun Guangda the losses it suffers after the Completion, if any, as a result of any penalties imposed by tax, industry and commerce, environmental protection and other authorities arising from Changchun Guangda’s operations prior to the date of Completion.

All liabilities resulting from (i) disputes with Changchun Guangda’s employees; and (ii) penalties from the relevant government authorities due to the failure of Changchun Guangda to comply with the PRC and local laws and regulations concerning employment and social security prior to the date of Completion shall be borne by the Vendor.

All undisclosed liabilities or payables of Changchun Guangda prior to the date of Completion shall be borne by the Vendor. And, the Vendor shall indemnify Changchun Guangda for any diminution of its assets and indemnify the Company for any losses it suffers as a result of such undisclosed liabilities or payables.

Each of the Guarantors shall be jointly and severally liable for any and all liabilities of the Guarantors under the Equity Transfer Agreement.

ISSUE OF CONSIDERATION SHARES

The Consideration Shares will be issued at the Issue Price, credited as fully paid, to satisfy part of the Consideration. The Consideration Shares shall be issued pursuant to the Specific Mandate.

Assuming there is no change in the issued share capital of the Company from the date of this announcement and up to the date of Completion, the Consideration Shares represent:

(a) approximately 3.18% of the issued share capital of the Company as at the Latest Practicable Date; and
(b) approximately 3.08% of the issued share capital of the Company as enlarged by the issue of the Consideration Shares.

The issue of the Consideration Shares will not result in a change of ownership of the Company.

The Issue Price of HK$1.34 per Consideration Share represents

(i) a premium of approximately 19.64% to the closing price of HK$1.12 per Share as quoted on the Stock Exchange on the trading day immediately prior to the date of the Equity Transfer Agreement;

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LETTER FROM THE BOARD

(ii) a premium of approximately 16.52% to the average of the closing prices per Share of HK$1.15 as quoted on the Stock Exchange for the last five consecutive trading days prior to the date of the Equity Transfer Agreement;
(iii) a premium of approximately 15.52% to the closing price of HK$1.16 per Share as quoted on the Stock Exchange on the Latest Practicable Date; and
(iv) a premium of approximately 1.52% to the net asset value per Share of HK$1.32 as at 31 December 2011, being the date to which the latest audited financial statements of the Group were made up.

The Consideration Shares, when allotted, issued and fully paid, will rank equally in all respects among themselves and with the Shares in issue on the date of allotment and issue of the Consideration Shares.

The Consideration Shares shall be subject to a lock up period of 12 months starting from the issue date of the Consideration Shares during which period no transfer of the Consideration Shares by the Vendor is allowed.

An application will be made to the Listing Committee of the Stock Exchange for the listing of and permission to deal in the Consideration Shares.

REASONS FOR AND BENEFITS OF THE ACQUISITION

Changchun Guangda is a leading auto after-sales market service provider. The scope of services provided includes auto cleaning, detailing, routine maintenances, body repair, modifications, and sales of auto accessories. The Directors consider the Acquisition of Changchun Guangda as very synergistic to the Group’s overall auto after-sales service & retail business, and expect the Acquisition to further strengthen the Group’s leading position & scale in China’s auto after-sales market. Changchun Guangda is a profitable auto after-sales service & retail operator currently operating 11 large one-stop stores in the capital city of Jilin Province, Changchun City, being the operator in the industry with the largest number of stores operating in the Northeast region of China. The Directors believe that the Acquisition would substantially increase the Group’s market presence in the PRC, enhance the Group’s buying power and operational efficiency, and would also provide additional sales outlets for the Group’s manufactured & proprietary products. The Directors believe the Acquisition would create significant financial returns to the Group.

The Directors (including the independent non-executive Directors) are of the view that the Equity Transfer Agreement was entered into on normal commercial terms and the terms thereof are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

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LETTER FROM THE BOARD

INFORMATION ON CHANGCHUN GUANGDA

Changchun Guangda was established on 31 January 2002 and is principally engaged in the provision of comprehensive auto after-sales services, including auto cleaning, detailing, routine maintenance, body repair, modification and sale of auto accessories. Changchun Guangda currently has a registered capital of RMB47,800,000 and it has 11 branches in Changchun, Jilin Province, the PRC.

Changchun Guangda used the name ”中國廣達汽車百貨集團” in its marketing activities. 中國廣達汽車百貨集團 is not a separate business owned by Changchun Guangda, the Vendor and/or the Guarantors. Therefore, there is no complication to the non-competition undertaking under the Equity Transfer Agreement. Besides, as the information on the number of branches and franchise stores of Chungchun Guangda and 中國廣達汽車百貨集團 as disclosed in the website of 中國廣達汽車百貨集團 has not been updated, it is different from the number disclosed above and the number of branches and franchise stores Changchun Guangda currently operating as set out in this circular is the correct one.

As at 31 December 2011, the audited net assets of Changchun Guangda was approximately RMB7,900,000. The audited net profits before and after taxation and extraordinary items for the financial years ended 31 December 2010 and 31 December 2011 were RMB593,000, RMB421,000, RMB1,245,000 and RMB932,000 respectively.

There is discrepancy between the financial information of Changchun Guangda in the management account (to which the Company has made reference in determining the Consideration) and that in the audited financial statements. Based on the Directors’ understanding from the existing shareholders and management of Changchun Guangda, the discrepancy is primarily due to the arrangements implemented by Changchun Guangda and the shareholders during the period to allocate the business flow between Changchun Guangda and the individual automobile after-sales market products and services business of the shareholders of Changchun Guangda (“ Shareholders’ Individual Business ”) for tax consideration and tax reporting purposes. Such arrangements had been discontinued from 1 January 2012.

During the period, the shareholders of Changchun Guangda had carried out Shareholders’ Individual Business by utilizing various resources of Changchun Guangda such as its chain stores, equipments, customers or etc. The shareholders of Changchun Guangda arranged operation units of Shareholders’ Individual Business to station in the chain stores of Changchun Guangda to carry out business. The operation units approached the potential customers of Changchun Guangda when they came to the chain stores of Changchun Guangda to sell them the products and services provided by the Shareholders’ Individual Business. For those customers who were willing to deal with the operation units, the business were concluded by the operation units on behalf of the Shareholders’ Individual Business instead of Changchun Guangda and, the corresponding sales and income derived therefrom were recorded in the accounting record of the Shareholders’ Individual Business. For those customers who preferred to deal with Changchun Guangda, the sales/services were carried out by Changchun Guangda in the usual manner and the sales and income derived therefrom were recorded

– 13 –

LETTER FROM THE BOARD

in Changchun Guangda’s accounting record. All the operating expenses incurred in carrying the businesses under the arrangement, including both the business carried out under Changchun Guangda’s and the Shareholders’ Individual Business’ account, were borne by Changchun Guangda and reflected in Changchun Guangda’s accounting record and for tax reporting purposes. The Company’s PRC legal counsel advised that according to the PRC Law on the Administration of the Levy and Collection of Taxes (Amended), if such expenses shall be determined not fully deductible for tax purposes by the relevant tax authorities in the PRC, Changchun Guangda may be required to pay the amount of tax so underpaid, the surcharge thereon and a fine of not less than 50% but not more than five times of the amount of tax it has underpaid. And, depending on the circumstances, Changchun Guangda may also subject to criminal liability. The Company’s PRC legal counsel, having considered the details of the arrangement and the fact that Changchun Guangda has paid its tax on its income as recorded in its financial report and that the costs of the resources-sharing by Shareholders’ Individual Business is difficult to quantify, is of the view that the chance that Changchun Guangda would be penalized for the arrangement is small pursuant to the applicable laws and regulations of the PRC and judicial practices in the PRC. Changchun Guangda had not made any tax provision on this aspect.

The income derived from Shareholders’ Individual Business had not been included in the accounting record of Changchun Guangda but in the said Shareholders’ Individual Business and this is the primary reason for the difference between the net profits as shown in the financial information of Changchun Guangda as set out in Appendix II and the management account (which has included the income from both Changchun Guangda and the Shareholders’ Individual Business through such arrangement and have been prepared by combining the audited account of Changchun Guangda and the management account of the Shareholders’ Individual Business).

Changchun Guangda is subject to an enterprise income tax of 25% for its income before tax pursuant to the applicable tax law and, upon distribution of such net profit, shareholders of Changchun Guangda still have to pay a personal income tax of 20%. By the arrangement mentioned above which has the effect of substantially reduced the profit recorded by Changchun Guangda and accordingly profit available for distribution to its shareholders, the enterprise income tax payable by Chungchun Guangda and the corresponding personal income tax payable by its shareholders will be substantially reduced. On the other hand, based on the understanding of the Directors from the shareholders of Chungchun Guangda, for the part of the business recorded as their individual business under the said arrangement, the tax rate applicable is much lower than that of Changchun Guangda given the preferential tax treatment available to them.

As the Shareholders’ Individual Business were conducted in the same way as Changchun Guangda’s business in the premises operated by Changchun Guangda, it is reasonable to believe that the customers primarily based on their loyalty and confidence in the reputation of Changchun Guangda when doing the purchases, and therefore, the corresponding sales and income would continue. Having had an understanding on the business and operation of Changchun Guangda, the Directors consider that the financial information of Changchun Guangda in the management account truly reflect its profitability and such belief is eventually supported by the audited net profit of Changchun Guangda for the first six months of 2012 as set out in Appendix II to this circular.

– 14 –

LETTER FROM THE BOARD

The arrangement had been discontinued since 1 January 2012 and since then all sales conducted in the chain stores of Changchun Guangda were recorded in Changchun Guangda’s accounting record. The Directors, having consulted the Company’s PRC legal counsel, are of the view that the risks that the Company and/or Changchun Guangda would be penalized for the existence of such arrangements in the past is small. However, the Directors had considered the potential risks the Enlarged Group may be exposed to as a result of such tax arrangements and have had the potential risks covered by obtaining indemnification from the Vendor. The Equity Transfer Agreement provides that the Vendor shall fully indemnify Changchun Guangda the losses it may suffer, if any, as a result of any penalties imposed by tax, industry and commerce, environmental protection and other authorities arising from Changchun Guangda’s operations prior to Completion. And, the Vendor’s obligation is guaranteed by the Guarantors. In view of the business prospects of Changchun Guangda, the fact that the Vendor and the Guarantors will continue to own 49% of Changchun Guangda in aggregate upon Completion and that Mr. Wu Yan Hai, one of the Guarantors, owns three properties with market value in total of approximately RMB70,000,000 free of mortgages, pledges or other encumbrance, the Directors consider that the possibility that they would not be able to provide the indemnification, as and when required, is slim. In view of the above, the Directors believe that the potential risks to the Enlarged Group resulted from the arrangements are adequately covered.

INFORMATION ON THE VENDOR AND THE GUARANTORS

The Vendor is the legal representative and the executive director of Changchun Guangda and is an Independent Third Party. Upon Completion, the Vendor will own 34.98% equity interest in Changchun Guangda and is entitled to appoint one out of three directors to the board of directors of Changchun Guangda.

The Guarantors are Mr. Wu Yan De (吳彥德), Ms. Zhao Bin Xu (趙彬序), Ms. Wu Zi Han (吳子涵) and Mr. Wu Yan Hai (吳彥海). Mr. Wu Yan De (吳彥德), Ms. Zhao Bin Xu (趙彬序) and Ms. Wu Zi Han (吳子涵) hold 8.37%, 2.825% and 2.825% equity interests respectively in Changchun Guangda whereas Mr. Wu Yan Hai (吳彥海) takes an active role in the management and operation of Changchun Guangda. The Guarantors are Independent Third Parties.

Neither the Vendor nor the Guarantors will be appointed as Directors upon Completion.

INFORMATION ON THE GROUP

The Group focuses on the operation of auto chain services network in the Greater China Region, adopting a unified vertical integrated business model, covering innovative product research and development, production and manufacturing, brand building, sales channel expansion, and merchandise retail sales and service.

FINANCIAL EFFECTS OF THE ACQUISITION

Upon Completion, Changchun Guangda will become a 51%-owned subsidiary of the Company and its results will be consolidated into the Group’s consolidated financial statements.

– 15 –

LETTER FROM THE BOARD

Based on the unaudited pro forma consolidated statement of financial position of the Enlarged Group as set out in Appendix III to this circular, the unaudited pro forma net assets of the Enlarged Group as of 30 June 2012 would increase by approximately RMB38,356,000, comprising of an increase of consolidated total assets and total liabilities of the Enlarged Group by approximately RMB207,717,000 and RMB169,361,000, respectively.

FINANCIAL AND TRADING PROSPECTS OF THE ENLARGED GROUP

The Acquisition allows the Group to seize the rapid development in China’s automotive after-sales market by further expanding its market presence in the Northeast region and to complete the Group’s service business strategic coverage in first- and second-tier cities of China, which could boost the Group’s market share as well as its competitiveness. Looking forward, the Directors are of the view that the scale of automotive after-sales service market will expand accordingly with the increasing automobile ownerships in China. The Enlarged Group will continue to strength the competitiveness of its services and products through enhanced brand building, sales channels development and provision of premier services and products to customers. Meanwhile, the Enlarged Group will also focus on any new opportunities in the automotive chain service network in the Greater China Region, with the aim of further expanding and enhancing of the competitiveness of the Enlarged Group as a whole as well as its business and financial performance.

LISTING RULES IMPLICATIONS

As the applicable percentage ratios under Chapter 14 of the Listing Rules in respect of the Acquisition exceed 25% but are less than 100%, the Acquisition constitutes a major transaction for the Company and is subject to the reporting, announcement and the Shareholders’ approval requirements under the Listing Rules.

EGM

A notice convening the EGM to is set out on page 74 to 75 of this circular.

Pursuant to Rule 13.39(4) of the Listing Rules, any vote of Shareholders at a general meeting must be taken by poll. As such, the chairman of the EGM will exercise his power under article 66 of the Articles of Association of the Company to demand a poll on the resolutions to be proposed at the EGM. Results of the poll voting will be announced following the conclusion of the EGM.

As no Shareholders has an interest in the Acquisition which is different from the other Shareholders, no Shareholder is required to abstain from voting in respect of the proposed resolutions to approve the Acquisition at the EGM.

– 16 –

LETTER FROM THE BOARD

RECOMMENDATION

The Board (including the independent non-executive Directors) considers that the Equity Transfer Agreement was entered into on normal commercial terms and the terms thereof are fair and reasonable and are in the interests of the Group and the Shareholders as a whole. The Board recommends the Shareholders to vote in favour of the resolutions to be proposed at the EGM to approve the Acquisition.

ADDITIONAL INFORMATION

Your attention is also drawn to the information contained in Appendix I to Appendix V to this circular.

By order of the Board New Focus Auto Tech Holdings Limited Hung Wei-Pi, John Chairman

– 17 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

1. THREE YEARS FINANCIAL INFORMATION

The audited consolidated financial statement of the Group prepared in accordance with the Hong Kong Financial Reporting Standards issued by the Hong Kong Institute of Certified Public Accountants for each of the years ended 31 December 2009, 31 December 2010 and 31 December 2011 together with the relevant notes thereto can be found from pages 34 to 119 of the annual report of the Company for the year ended 31 December 2009 dated 30 March 2010, pages 35 to 115 of the annual report of the Company for the year ended 31 December 2010 dated 30 March 2011, and pages 37 to 125 of the annual report of the Company for the year ended 31 December 2011 dated 30 March 2012, respectively, all of which are incorporated by reference into this circular. The aforesaid annual reports of the Company are available on the Company’s website at http://www.nfa360.com and the website of the Stock Exchange at http://www.hkexnews.hk.

2. INDEBTEDNESS

As at the close of business on 31 July 2012, being the latest practicable date for the purpose of this statement of indebtedness prior to the printing of this circular, the Enlarged Group had indebtedness as follows:

The Group

Borrowings

As at the close of business on 31 July 2012, being the latest practicable date for the purpose of this statement of indebtedness prior to the printing of this circular, the Group had outstanding borrowings of approximately RMB604.5 million, comprising secured bank borrowings of approximately RMB178.7 million, amounts due to non-controlling owners of subsidiaries of approximately RMB16.4 million, Renminbi-denominated bonds of approximately RMB198.5 million, convertible bonds of approximately RMB126.6 million, and consideration payables of approximately RMB84.3 million.

Pledge of assets

As at 31 July 2012, the borrowing facilities of the Group were secured by (i) the Group’s freehold land and certain buildings with an aggregate net carrying value of approximately RMB81.4 million; (ii) the Group’s leasehold land and land use rights of approximately RMB17.4 million; (iii) the Group’s certain investment properties of approximately RMB17.8 million; (iv) personal guarantees from a director of the Company, and a director of a subsidiary and her spouse; (v) pledged time deposits of approximately RMB4.0 million; and (vi) corporate guarantees of the Company and two subsidiaries.

– 18 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Among other undertakings in relation to the Group’s convertible bonds, Mr Hung Wei-Pi, John, who is a director and a shareholder of the Company, irrevocably and unconditionally indemnifies, defends and holds harmless the investors of the Group’s convertible bonds (and their successor or assign) from and against any and all losses, costs, and claims suffered by the investors or incurred by the investors that arise from any breach by Mr Hung Wei-Pi, John of the representations, warranties and undertakings contained in the deed of undertakings.

Commitments

As at the close of business on 31 July 2012, the Group had (i) capital commitments outstanding contracted not provided for in respect of construction of buildings in the amount of approximately RMB41.9 million, and purchases of other items of property, plant and equipment in the amount of approximately RMB0.1 million; and (ii) other commitment contracted but not provided for in respect of acquisition of subsidiaries in the amount of approximately RMB40 million.

Changchun Guangda

Borrowing

As at the close of business on 31 July 2012, being the latest practicable date for the purpose of this statement of indebtedness prior to the printing of this circular, Changchun Guangda had no borrowing, commitment or any pledge of assets.

Disclaimer

Save as the aforesaid or otherwise disclosed herein, and apart from intra-group liabilities and normal trade and other payables in the ordinary course of business, none of the companies in the Enlarged Group had outstanding at the close of business on 31 July 2012 any loan capital issued and outstanding or agreed to be issued, bank borrowings, mortgage, charge or any other borrowings, liabilities under acceptances or acceptance credits, debentures, hire purchase commitments, guarantees or other material contingent liabilities.

The Directors have confirmed that there have been no other material changes in the indebtedness, contingent liabilities and commitments of the Enlarged Group since 31 July 2012 up to the Latest Practicable Date.

3. WORKING CAPITAL

As at the Latest Practicable Date, the Directors, after due and careful consideration, are of the opinion that, after taking into account the Enlarged Group’s internal resources, including bank and other facilities currently available to the Enlarged Group and internally generated funds of the Enlarged Group, the Enlarged Group, after completion of the Acquisition, will have sufficient working capital to satisfy its present requirements for the next twelve months from the date of this circular.

– 19 –

APPENDIX II

ACCOUNTANTS’ REPORT OF CHANGCHUN GUANGDA

The Boards of Directors

New Focus Auto Tech Holdings Limited

Dear Sirs,

We set out below our report on the financial information regarding Changchun Guangda Automobile Trading Co., Ltd.* (the “Target” or 長春市廣達汽車貿易有限公司) including the statements of financial position as at 31 December 2009, 2010 and 2011 and 30 June 2012, the statements of comprehensive income, statements of changes in equity and statements of cash flows of the Target for the years ended 31 December 2009, 2010 and 2011 and the six months ended 30 June 2012 (the “Relevant Periods”), together with the notes thereto (the “Financial Information”), for inclusion in the circular issued by New Focus Auto Tech Holdings Limited (the “Company”) dated 24 September 2012 (the “Circular”) in connection with the proposed acquisition of 51% equity interest in the Target by the Company.

The Target was established in the People’s Republic of China (the “PRC”) and is engaged in the provision of auto after-sales market services, including auto cleaning, detailing, routine maintenance, body repair, modifications and sales of auto accessories.

The Target has adopted 31 December as its financial year end date. The statutory financial statements of the Target for the period from 1 January 2009 to 31 December 2011, which were prepared in accordance with the relevant accounting principles and financial regulations applicable to enterprises established in the PRC, were audited by Julin Justice Certified Public Accountants * (吉林佳禾會計師事務所有限公司) registered in the PRC.

For the purpose of this report, the sole director of the Target has prepared the financial statements of the Target for the Relevant Periods in accordance with Hong Kong Financial Reporting Standards (“HKFRSs”) issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”) (the “Underlying Financial Statements”). We have carried out independent audit procedures on the Underlying Financial Statements in accordance with Hong Kong Standards on Auditing (“HKSAs”) issued by the HKICPA.

The Financial Information has been prepared from the Underlying Financial Statements, with no adjustment made thereon.

The Underlying Financial Statements are the responsibility of the sole director of the Target, who approved their issues. The directors of the Company are responsible for the contents of the Circular in which this report is included. Our responsibility is to express an opinion on the Financial Information and to report our opinion to you. We carried out our procedures in accordance with the Auditing Guideline 3.340 “Prospectuses and the Reporting Accountant” issued by the HKICPA.

For identification purpose only.

– 20 –

APPENDIX II

ACCOUNTANTS’ REPORT OF CHANGCHUN GUANGDA

In our opinion, the Financial Information, for the purpose of this report, gives a true and fair view of the state of affairs of the Target as at 31 December 2009, 2010 and 2011 and 30 June 2012 and of the results and cash flows of the Target for the Relevant Periods.

For the purpose of this report, we have reviewed the corresponding financial information set out in Section I below, which comprises the statements of comprehensive income, statements of changes in equity and statements of cash flows of the Target for the six months ended 30 June 2011 and other explanatory information (the “Corresponding Financial Information”).

The sole director of the Target is responsible for the preparation of the Corresponding Financial Information on the same basis as adopted in respect of the Financial Information.

Our responsibility is to express a conclusion on the Corresponding Financial Information based on our review. We conducted our review in accordance with Hong Kong Standard on Review Engagements 2410 “Review of Interim Financial Information Performed by the Independent Auditor of the Entity” issued by the HKICPA. A review of Corresponding Financial Information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with HKSAs and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Based on our review, nothing has come to our attention that causes us to believe that the Corresponding Financial Information, for the purpose of this report, is not prepared, in all material respects, in accordance with the accounting policies set out in Note 3 to the Financial Information of Section I below.

– 21 –

APPENDIX II

ACCOUNTANTS’ REPORT OF CHANGCHUN GUANGDA

I. FINANCIAL INFORMATION

Statements of Comprehensive Income

Note
Turnover
5
Cost of sales
Gross profit
Other income
6
Selling and
distribution
expenses
Administrative and
other expenses
Operating profit
7
Finance costs
8
Profit before tax
Income tax expense
12
Profit and total
comprehensive
income for the
year/period

Year ended 31 December
Six months ended
30 June
2009
2010
2011
2011
2012
RMB’000
RMB’000
RMB’000
RMB’000
RMB’000
(Unaudited)
40,416
49,408
51,965
21,683
45,655
(29,909)
(36,189)
(34,341)
(14,007)
(27,561)
10,507
13,219
17,624
7,676
18,094
51
1
16
13
1,204
(8,632)
(10,435)
(11,780)
(5,554)
(6,996)
(1,559)
(2,189)
(3,042)
(1,411)
(1,629)
367
596
2,818
724
10,673
(47)
(3)
(1,573)
(259)
(894)
320
593
1,245
465
9,779
(121)
(172)
(313)
(123)
(2,394)
199
421
932
342
7,385

– 22 –

APPENDIX II

ACCOUNTANTS’ REPORT OF CHANGCHUN GUANGDA

Statements of Financial Position

As at 31 December 2009 2010 2011 RMB’000 RMB’000 RMB’000 2,946 3,636 2,777 — — —	As at 31 December 2009 2010 2011 RMB’000 RMB’000 RMB’000 2,946 3,636 2,777 — — —	As at 31 December 2009 2010 2011 RMB’000 RMB’000 RMB’000 2,946 3,636 2,777 — — —	As at 30 June 2012 RMB’000 11,745 17,158
2,946 18,593 9,490 155 28,238 - - - - - - - — 24,560 77 24,637 - - - - - - - 3,601	3,636 20,390 7,715 347 28,452 - - - - - - - — 25,090 30 25,120 - - - - - - - 3,332	2,777 20,046 25,633 1,482 47,161 - - - - - - - 30,500 11,348 190 42,038 - - - - - - - 5,123	28,903
			10,657 10,370 16,927
			37,954 - - - - - - - — 15,381 2,391
			17,772 - - - - - - -
			20,182
6,547	6,968	7,900	49,085

6,800 (253)	6,800 168	6,800 1,100	47,800 1,285
6,547	6,968	7,900	49,085

– 23 –

APPENDIX II

ACCOUNTANTS’ REPORT OF CHANGCHUN GUANGDA

Statements of Changes in Equity

Paid-up capital RMB’000 6,800 — —	Statutory surplus reserve (Accumulated losses)/ retained profits RMB’000 RMB’000 (Note) 114 (566) — 199 20 (20)	Statutory surplus reserve (Accumulated losses)/ retained profits RMB’000 RMB’000 (Note) 114 (566) — 199 20 (20)	Total RMB’000 6,348 199 — 6,547 421 — 6,968 932 — 7,900 41,000 7,385 — (7,200) 49,085 6,968 342 7,310
6,800 — — 6,800 — — 6,800 41,000 — — —	134 — 47 181 — 66 247 — — 739 —	(387) 421 (47) (13) 932 (66) 853 — 7,385 (739) (7,200)	6,547 421 —
			6,968 932 —
			7,900 41,000 7,385 — (7,200
47,800	986	299
6,800 —	181 —	(13) 342	6,968 342
6,800	181	329

Note: In accordance with the relevant laws and financial regulations, the Target is required to transfer 10% of its profit after tax to the statutory surplus reserve every year until the balance reaches 50% of its paid-up capital. Such reserve can be used to reduce any losses incurred and to increase the registered capital. Except for the reduction of losses incurred, any other usage should not result in this reserve balance falling below 25% of the Target’s registered capital.

– 24 –

APPENDIX II

ACCOUNTANTS’ REPORT OF CHANGCHUN GUANGDA

Statements of Cash Flows

Year ended 31 December Six months ended 30 June 2009 2010 2011 2011 2012 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Unaudited) 320 593 1,245 465 9,779 928 1,176 1,285 558 670 (1) (1) (6) (3) (7) 30 — 1,572 258 865 1 57 30 23 187	Year ended 31 December Six months ended 30 June 2009 2010 2011 2011 2012 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Unaudited) 320 593 1,245 465 9,779 928 1,176 1,285 558 670 (1) (1) (6) (3) (7) 30 — 1,572 258 865 1 57 30 23 187	Year ended 31 December Six months ended 30 June 2009 2010 2011 2011 2012 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Unaudited) 320 593 1,245 465 9,779 928 1,176 1,285 558 670 (1) (1) (6) (3) (7) 30 — 1,572 258 865 1 57 30 23 187	Year ended 31 December Six months ended 30 June 2009 2010 2011 2011 2012 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Unaudited) 320 593 1,245 465 9,779 928 1,176 1,285 558 670 (1) (1) (6) (3) (7) 30 — 1,572 258 865 1 57 30 23 187	Year ended 31 December Six months ended 30 June 2009 2010 2011 2011 2012 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Unaudited) 320 593 1,245 465 9,779 928 1,176 1,285 558 670 (1) (1) (6) (3) (7) 30 — 1,572 258 865 1 57 30 23 187
1,278 (1,430) (2,584) 6,567 3,831 1 (147) 3,685 - - - - - - - (750) — —	1,825 (1,797) 1,775 530 2,333 1 (218) 2,116 - - - - - - - (1,924) — —	4,126 344 (17,918) (13,742) (27,190) 6 (153) (27,337) - - - - - - - (486) — 30	1,301 1,152 (20,428) (16,133) (34,108) 3 (69) (34,174) - - - - - - - (13) — 30	11,494 9,389 8,063 4,033
				32,979 7 (193)
				32,793 - - - - - - - (1,650) (844) 511
(750) - - - - - - -	(1,924) - - - - - - -	(456) - - - - - - -	17 - - - - - - -	(1,983) - - - - - - -

– 25 –

APPENDIX II

ACCOUNTANTS’ REPORT OF CHANGCHUN GUANGDA

Year ended 31 December Six months ended 30 June 2009 2010 2011 2011 2012 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Unaudited) — — — — 16,000 — — 35,000 35,000 — (3,030) — (4,500) — (30,500) (30) — (1,572) (258) (865)	Year ended 31 December Six months ended 30 June 2009 2010 2011 2011 2012 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Unaudited) — — — — 16,000 — — 35,000 35,000 — (3,030) — (4,500) — (30,500) (30) — (1,572) (258) (865)	Year ended 31 December Six months ended 30 June 2009 2010 2011 2011 2012 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Unaudited) — — — — 16,000 — — 35,000 35,000 — (3,030) — (4,500) — (30,500) (30) — (1,572) (258) (865)	Year ended 31 December Six months ended 30 June 2009 2010 2011 2011 2012 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Unaudited) — — — — 16,000 — — 35,000 35,000 — (3,030) — (4,500) — (30,500) (30) — (1,572) (258) (865)	Year ended 31 December Six months ended 30 June 2009 2010 2011 2011 2012 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Unaudited) — — — — 16,000 — — 35,000 35,000 — (3,030) — (4,500) — (30,500) (30) — (1,572) (258) (865)
(3,060) - - - - - - - (125) 280	— - - - - - - - 192 155	28,928 - - - - - - - 1,135 347	34,742 - - - - - - - 585 347	(15,365) - - - - - - -
				15,445 1,482
155 155	347 347	1,482 1,482	932 932	16,927

				16,927

– 26 –

APPENDIX II ACCOUNTANTS’ REPORT OF CHANGCHUN GUANGDA

Notes to the Financial Information

1. GENERAL INFORMATION

Changchun Guangda Automobile Trading Co., Ltd. (the “Target”) was incorporated under the laws of the People’s Republic of China (the “PRC”). The addresses of its registered office and principal place of business are 21, Jinshui Road, Chaoyang District, Changchun, Julin Province, the PRC and 189 Chingyang Street, Nuyuan District, Changchun, Jilin Province, the PRC, respectively.

The Target is principally engaged in the provision of auto after-sales market services, including auto cleaning, detailing, routine maintenance, body repair, modifications and sales of auto accessories, currently with 11 one-stop stores in Changchun City.

The Financial Information is presented in Renminbi (‘‘RMB’’) thousand dollars, unless otherwise stated.

2. APPLICATION OF HONG KONG FINANCIAL REPORTING STANDARDS (“HKFRSs”)

For the purpose of preparing and presenting the Financial Information, the Target has adopted all the new and revised HKFRSs applicable to the Relevant Periods from the beginning of the Relevant Periods.

The following HKFRSs in issue at 30 June 2012 have not been applied in the preparation of the Financial Information for the Relevant Periods since they were not yet effective:

HKAS 19 (2011)	Employee Benefits 2
HKAS 27 (2011)	Separate Financial Statements 2
HKAS 28 (2011)	Investments in Associates and Joint Ventures 2
HKFRS 9	Financial Instruments 4
HKFRS 10	Consolidated Financial Statements 2
HKFRS 11	Joint Arrangements 2
HKFRS 12	Disclosure of Interests in Other Entities 2
HKFRS 13	Fair Value Measurement 2
HK(IFRIC)-Int 20	Stripping Costs in the Production Phase of a Surface Mine 2
Amendments to HKAS 1	Presentation of Items of Other Comprehensive Income 1
Amendments to HKAS 32	Offsetting Financial Assets and Financial Liabilities 3
Amendments to HKFRS 7 (2011)	Disclosures — Offsetting Financial Assets and Financial
	Liabilities 2

1 Effective for annual periods beginning on or after 1 July 2012

2 Effective for annual periods beginning on or after 1 January 2013 3 Effective for annual periods beginning on or after 1 January 2014

4 Effective for annual periods beginning on or after 1 January 2015

The Target is in the process of making an assessment of what the impact of these new and revised HKFRSs is expected to be in the period of initial application. So far it has concluded that the adoption of them is unlikely to have a significant impact on the Financial Information of the Target.

3. SIGNIFICANT ACCOUNTING POLICIES

The Financial Information has been prepared in accordance with the following accounting policies which conform to HKFRSs. In addition, the Financial Information includes applicable disclosures required by the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and by the Hong Kong Companies Ordinance.

The Financial Information has been prepared on the historical cost basis as explained in the accounting policies set out below. Historical cost is generally based on fair value of the consideration given in exchange for goods.

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ACCOUNTANTS’ REPORT OF CHANGCHUN GUANGDA

The principal accounting policies are set out below.

Property, plant and equipment

Property, plant and equipment are stated at historical cost less accumulated depreciation and any accumulated impairment losses.

The historical cost of an item of property, plant and equipment comprises its purchase price and any directly attributable costs of bringing the asset to its working condition and location for its intended use. Expenditure incurred after items of property, plant and equipment have been put into operation, such as repairs and maintenance, is normally charged to profit or loss in the period in which it is incurred. In situations where it can be clearly demonstrated that the expenditure has resulted in an increase in the future economic benefits expected to be obtained from the use of an item of property, plant and equipment, and where the cost of the item can be measured reliably, the expenditure is capitalised as an additional cost of that asset or as a replacement.

Depreciation is charged so as to write off the cost of assets over their estimated useful lives, using the straight-line method, and commences when the assets are ready for their intended use. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any change in estimate accounted for on a prospective basis. The principal annual rates are as follows:

Buildings	—	5%
Leasehold improvements	—	Over the remaining term of the lease
Plant and machinery	—	10% to 33%
Motor vehicles	—	20%
Furniture, fixtures and equipment	—	20% to 33%

The gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.

An asset is written down immediately to its recoverable amount if its carrying amount is higher than the asset’s estimated recoverable amount.

Impairment of tangible assets

At the end of each reporting period, the Target reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment losses (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Target estimates the recoverable amount of the cash-generating unit to which the asset belongs. Where a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss.

Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.

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ACCOUNTANTS’ REPORT OF CHANGCHUN GUANGDA

Inventories

Inventories are initially recognised at cost, and subsequently at the lower of cost and net realisable value. Cost is calculated using weighted average method and comprises all costs of purchase and other costs incurred in bringing the inventories to their present location and condition. Net realisable value represents the estimated selling price for inventories less all cost necessary to make the sale.

Receivables

Receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less any impairment losses. Interest income is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial.

Impairment of financial assets

Financial assets are assessed for indicators of impairment at the end of each reporting period. Financial assets are impaired where there is objective evidence that as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the asset have been impacted.

For the Target’s receivables, objective evidence of impairment could include:

significant financial difficulty of the issuer or counterparty; or
default or delinquency in interest or principal payments; or
significant changes in the technological, market, economic or legal environment that have an adverse effect on the debtor.

If any such evidence exists, the impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate, where the effect of discounting is material. This assessment is made collectively where financial assets carried at amortised cost share similar risk characteristics, such as similar past due status, and have not been individually assessed as impaired. Future cash flows for financial assets which are assessed for impairment collectively are based on historical loss experience for assets with credit risk characteristics similar to the collective group. The impairment losses are recognised in profit or loss.

If in a subsequent period the amount of an impairment loss decreases and the decrease can be linked objectively to an event occurring after the impairment loss was recognised, the impairment loss is reversed through profit or loss. A reversal of an impairment loss shall not result in the asset’s carrying amount exceeding that which would have been determined had no impairment loss been recognised in prior years.

Impairment losses are written off against the corresponding assets directly, except for impairment losses recognised in respect of trade and other receivables, whose recovery is considered doubtful but not remote. In this case, the impairment losses for doubtful debts are recorded using an allowance account. When the Target is satisfied that recovery is remote, the amount considered irrecoverable is written off against trade and other receivables directly and any amounts held in the allowance account relating to that debt are reversed. Subsequent recoveries of amounts previously charged to the allowance account are reversed against the allowance account. Other changes in the allowance account and subsequent recoveries of amounts previously written off directly are recognised in profit or loss.

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ACCOUNTANTS’ REPORT OF CHANGCHUN GUANGDA

Effective interest method

The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees on points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial asset, or where appropriate, a shorter period.

Derecognition of financial assets

A financial asset is derecognised only when the contractual rights to the cash flows from the asset expire; or the financial asset and substantially all the risks and rewards of ownership of the asset are transferred to another entity. If the Target neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Target recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Target retains substantially all the risks and rewards of ownership of a transferred financial asset, the Target continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.

Payables and borrowings

Payables and borrowings are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis.

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or where appropriate, a shorter period.

Derecognition of financial liabilities

The Target derecognises financial liabilities when, and only when, the Target’s obligations are discharged, cancelled or they expire.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and deposits held at call with banks, and other short-term highly liquid investments with original maturities of three months or less that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.

Leases

Leases where substantially all the rewards and risks of ownership of assets remain with the lessor are accounted for as operating leases.

Operating lease payments made by the Target are recognised as an expense on a straight-line basis over the lease term, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. Lease incentives received are recognised as an integrated part of the total rental expense, over the term of the lease. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred.

Land use rights held for own use under operating leases represent up-front payments to acquire long-term interests in lessee-occupied properties. These payments are stated at cost and are amortised over the period of the lease on a straight-line basis as an expense and less any impairment losses.

Provisions

Provisions are recognised when the Target has a present obligation (legal or constructive) as a result of a past event, it is probable that the Target will be required to settle the obligation, and a reliable estimate can be made of the amount of obligation.

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ACCOUNTANTS’ REPORT OF CHANGCHUN GUANGDA

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.

Income taxes

Income tax expense represents the sum of the tax currently payable and deferred tax.

Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit before tax as reported in the statement of comprehensive income because it excludes items of income or expenses that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Target’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax

Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the Financial Information the corresponding tax bases used in the computation of taxable profit, and is accounted for using the liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset is realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Target expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Target intends to settle its current tax assets and liabilities on a net basis.

Income taxes are recognised in profit or loss except when they relate to items recognised in other comprehensive income or directly in equity, in which case the taxes are also recognised in other comprehensive income or directly in equity respectively.

Foreign currencies

Transactions entered into by the Target in currencies other than the currency of the primary economic environment in which it operates (the “functional currency”) are recorded at the rates ruling when the transactions occur. Foreign currency monetary assets and liabilities are translated at the rates ruling at the end of the reporting period. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

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APPENDIX II

ACCOUNTANTS’ REPORT OF CHANGCHUN GUANGDA

Exchange differences arising on the settlement of monetary items, and on the translation of monetary items, are recognised in profit or loss in the period in which they arise. Exchange differences arising on the retranslation of non-monetary items carried at fair value are included in profit or loss for the period except for differences arising on the retranslation of non-monetary items in respect of which gains and losses are recognised in other comprehensive income, in which case, the exchange differences are also recognised in other comprehensive income.

Employees’ benefits

Short-term benefits

Salaries, annual bonuses, paid annual leaves and other allowances are accrued in the year in which the associated services are rendered by employees. Where payment or settlement is deferred and the effect would be material, these amounts are stated at their present value.

Retirement benefits scheme contributions

Payments made to state-managed retirement benefits schemes are dealt with as payments to defined contribution schemes where the Target’s obligations under the schemes are equivalent to those arising in a defined contribution retirement benefit scheme. Payments to defined contribution retirement benefits scheme are charged as expenses when employees have rendered service entitling them to the contributions.

Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated customer returns, rebates and other similar allowances.

(a) Revenue from the sales of products is recognised when the Target has delivered products to the customer, the customer has accepted the products and collectability of the related receivable is reasonably assured.
(b) Revenue for providing services is recognised to the extent of services rendered and according to the terms of the agreement.
(c) Franchise revenue is recognised on an accrual basis in accordance with the related agreements.
(d) Interest income is accrued on a time-apportioned basis by reference to the principal outstanding using the effective interest method.

Borrowing costs

Borrowing costs attributable directly to the acquisition, construction or production of qualifying assets which require a substantial period of time to be ready for their intended use or sale, are capitalised as part of the cost of those assets. Income earned on temporary investments of specific borrowings pending their expenditure on those assets is deducted from borrowing costs capitalised. All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

Related parties

(a) A person or a close member of that person’s family is related to the Target if that person:
(i) has control or joint control over the Target;
(ii) has significant influence over the Target; or
(iii) is a member of key management personnel of the Target’s parent.
(b) An entity is related to the Target if any of the following conditions apply:
(i) The entity and the Target are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others).

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APPENDIX II

ACCOUNTANTS’ REPORT OF CHANGCHUN GUANGDA

(ii) One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member).
(iii) Both entities are joint ventures of the same third party.
(iv) One entity is a joint venture of a third entity and the other entity is an associate of the third entity.
(v) The entity is a post-employment benefit plan for the benefit of the employees of the Target or an entity related to the Target.
(vi) The entity is controlled or jointly controlled by a person identified in (a) above.
(vii) A person identified in (a)(i) above has significant influence over the entity or is a member of key management personnel of the entity (or of a parent of the entity).
(c) Close members of the family of a person are those family members who may be expected to influence, or be influenced by, that person in their dealings with the entity and include:
(i) that person’s children and spouse or domestic partner;
(ii) children of that person’s spouse or domestic partner; and
(iii) dependents of that person or that person’s spouse or domestic partner.

Contingent liabilities

A contingent liability is a possible obligation that arises from past events and whose existence will only be confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Target. It can also be a present obligation arising from past events that is not recognised because it is not probable that outflow of economic resources will be required or the amount of obligation cannot be measured reliably.

A contingent liability is not recognised but is disclosed in the financial statements. When a change in the probability of an outflow occurs so that the outflow is probable, it will then be recognised as a provision.

4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Target’s accounting policies, the director of the Target is required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

The followings are the key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

(a) Depreciation of property, plant and equipment

Property, plant and equipment are depreciated on a straight-line basis over their estimated useful lives, after taking into account their estimated residual values. The Target assesses annually the residual values and the useful lives of the property, plant and equipment. If the expectation differs from the original estimates, such differences from the original estimates will impact the depreciation charges in the year in which the estimates change.

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APPENDIX II

ACCOUNTANTS’ REPORT OF CHANGCHUN GUANGDA

(b) Estimated impairment of property, plant and equipment

The Target assesses annually whether property, plant and equipment have any indication of impairment, in accordance with the relevant accounting policies. The recoverable amount of property, plant and equipment has been determined based on value-in-use calculations. These calculations require the use of judgement and estimates on future operating cash flows and discount rates adopted. Where the actual cash flows are different from the original estimates, a material change in the amount of impairment may arise.

(c) Estimated net realisable value of inventories

Net realisable value of inventories is the estimated selling price in the ordinary course of business, less estimated costs of completion and selling expenses. These estimates are based on the current market condition and the historical experience of selling products of similar nature. It could change significantly as a result of competitors’ actions in response to severe industry cycles. Management will reassess the estimations at the end of each reporting period.

(d) Estimated impairment of trade and other receivables

The Target’s management determines the allowance for impairment of trade and other receivables. This estimate is based on the credit history of its customers and debtors and the current market condition. Management will reassess the allowance at the end of each reporting period.

5. REVENUE AND SEGMENT INFORMATION

Turnover

Turnover represents net invoiced value of goods supplied, net of value added tax and other sales taxes, after allowances for goods returns and trade discounts, services provided to customers and franchise income. An analysis of the Target’s turnover is set out below:

Sales of goods Service income Franchise income	Year ended 31 December Six months ended 30 June 2009 2010 2011 2011 2012 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Unaudited) 23,838 29,429 27,806 10,577 25,739 16,278 18,819 23,819 11,106 17,936 300 1,160 340 — 1,980 40,416 49,408 51,965 21,683 45,655	Year ended 31 December Six months ended 30 June 2009 2010 2011 2011 2012 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Unaudited) 23,838 29,429 27,806 10,577 25,739 16,278 18,819 23,819 11,106 17,936 300 1,160 340 — 1,980 40,416 49,408 51,965 21,683 45,655
		45,655

For the Relevant Periods, the Target is principally engaged in the provision of auto after-sales marketing service in the PRC. The results, assets and liabilities of the Target during the Relevant Periods were mainly related to the above activities, and the assets and results are located and generated in the PRC.

Since the Target is only engaged in one operating segment which is the provision of auto after-sales marketing service and all of its result and assets are generated and located in the PRC, no segment reporting information such as segment revenue, results, assets and liabilities is presented under HKFRS 8 “Operating Segments”.

There was no customer who contributed over 10% to the Target’s total revenue during the Relevant Periods.

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APPENDIX II

ACCOUNTANTS’ REPORT OF CHANGCHUN GUANGDA

6. OTHER INCOME

Interest income Sales of scrap inventories Sundry income	Year ended 31 December Six months ended 30 June 2009 2010 2011 2011 2012 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Unaudited) 1 1 6 3 7 — — — — 300 50 — 10 10 897 51 1 16 13 1,204

7. OPERATING PROFIT

Operating profit is arrived at after
charging:
Auditor’s remuneration
Depreciation of property, plant and
equipment
Amortisation of land use right
Director’s emoluments (Note 9(a))
Other staff costs
— Salaries, allowances and other
benefits
— Defined contribution retirement
scheme contributions
Minimum lease payment under
operating lease for premises
Sales proceeds
Less: Carrying amount
Loss on disposal of property, plant
and equipment

Year ended 31 December
Six months
ended 30 June
2009
2010
2011
2011
2012
RMB’000
RMB’000
RMB’000
RMB’000
RMB’000
(Unaudited)
2
2
2
—
5
928
1,176
1,285
558
574
—
—
—
—
96
181
181
182
91
91
4,713
5,638
7,400
3,656
3,953
323
405
917
450
595
5,036
6,043
8,317
4,106
4,548
2,006
2,573
2,956
1,290
1,670
—
—
(30)
(30)
(511)
1
57
60
53
698
1
57
30
23
187

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APPENDIX II

ACCOUNTANTS’ REPORT OF CHANGCHUN GUANGDA

8. FINANCE COSTS

Interest on bank borrowings wholly repayable within 5 years Bank charges	Year ended 31 December Six months ended 30 June 2009 2010 2011 2011 2012 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Unaudited) 30 — 1,572 258 865 17 3 1 1 29 47 3 1,573 259 894	Year ended 31 December Six months ended 30 June 2009 2010 2011 2011 2012 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Unaudited) 30 — 1,572 258 865 17 3 1 1 29 47 3 1,573 259 894
		894

9. DIRECTOR’S EMOLUMENTS AND FIVE HIGHEST PAID EMPLOYEES

(a) Director’s emoluments

Details of emoluments paid to the sole executive director of the Target, Ms. Gao Xiu Min, for the Relevant Periods are as follows:

Year ended 31 December 2009 Year ended 31 December 2010 Year ended 31 December 2011 Six months ended 30 June 2011 (Unaudited) Six months ended 30 June 2012	Fees RMB’000 — — — — —	Salaries, allowances, and other benefits RMB’000 181 181 182 91 91	Defined contribution retirement scheme contributions RMB’000 — — — — —	Total RMB’000 181

				181

				182

				91

				91

During the Relevant Periods, no emoluments have been paid by the Target to Ms. Gao as an inducement to join or upon joining the Target or as compensation for loss of office. Ms. Gao has not waived any emoluments during the Relevant Periods.

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APPENDIX II

ACCOUNTANTS’ REPORT OF CHANGCHUN GUANGDA

(b) Five highest paid employees

During the Relevant Periods, the emoluments of the five highest paid individuals included the director, details of whose emoluments are set out above. The emoluments of the remaining individuals, which were individually less than RMB1,000,000 during the Relevant Periods were as follows:

Salaries, allowances and other benefits Defined contribution retirement scheme contributions	Year ended 31 December Six months ended 30 June 2009 2010 2011 2011 2012 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Unaudited) 307 326 470 235 233 20 12 20 10 8 327 338 490 245 241	Year ended 31 December Six months ended 30 June 2009 2010 2011 2011 2012 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Unaudited) 307 326 470 235 233 20 12 20 10 8 327 338 490 245 241
		241

During the Relevant Periods, no emoluments have been paid by the Target to the five highest paid individuals as an inducement to join or upon joining the Target, or as compensation for loss of office.

10. DIVIDEND

A dividend of RMB7,200,000 was declared for the six months ended 30 June 2012.

11. EARNINGS PER SHARE

No earnings per share information is presented as its inclusion, for the purpose of this report, is not considered meaningful.

12. INCOME TAX EXPENSE

Current income tax PRC Enterprise Income Tax — Current year/period — Prior year/period	Year ended 31 December Six months ended 30 June 2009 2010 2011 2011 2012 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Unaudited) 110 167 313 123 2,394 11 5 — — — 121 172 313 123 2,394	Year ended 31 December Six months ended 30 June 2009 2010 2011 2011 2012 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Unaudited) 110 167 313 123 2,394 11 5 — — — 121 172 313 123 2,394
		2,394

Under the Laws of the PRC on Enterprise Income Tax (the ‘‘EIT Law’’) and Implementation Regulation of the EIT Law, the applicable tax rate of the Target is 25%.

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APPENDIX II

ACCOUNTANTS’ REPORT OF CHANGCHUN GUANGDA

The income tax expense for the Relevant Periods can be reconciled to profit before tax as follows:

Year ended 31 December Six months ended 30 June 2009 2010 2011 2011 2012 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Unaudited) 320 593 1,245 465 9,779 80 148 311 116 2,445 32 19 2 7 — (2) — — — (51) 11 5 — — — 121 172 313 123 2,394	Year ended 31 December Six months ended 30 June 2009 2010 2011 2011 2012 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Unaudited) 320 593 1,245 465 9,779 80 148 311 116 2,445 32 19 2 7 — (2) — — — (51) 11 5 — — — 121 172 313 123 2,394	Year ended 31 December Six months ended 30 June 2009 2010 2011 2011 2012 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Unaudited) 320 593 1,245 465 9,779 80 148 311 116 2,445 32 19 2 7 — (2) — — — (51) 11 5 — — — 121 172 313 123 2,394	Year ended 31 December Six months ended 30 June 2009 2010 2011 2011 2012 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Unaudited) 320 593 1,245 465 9,779 80 148 311 116 2,445 32 19 2 7 — (2) — — — (51) 11 5 — — — 121 172 313 123 2,394

148 19 — 5	311 2 — —	116 7 — —	2,445 — (51) —
172	313	123	2,394

13. PROPERTY, PLANT AND EQUIPMENT

Buildings RMB’000 — — —	Leasehold improvements RMB’000 1,357 — —	Plant and machinery RMB’000 2,115 276 (4)	Motor vehicles RMB’000 1,772 — —	Furniture, fixtures and equipment RMB’000 397 474 (9)	Total RMB’000 5,641 750 (13)
— — — — — — — 9,032 —	1,357 — — 1,357 — — 1,357 — —	2,387 578 (94) 2,871 147 (68) 2,950 — (281)	1,772 1,032 (215) 2,589 249 (1,114) 1,724 288 (1,193)	862 314 (82) 1,094 90 (27) 1,157 920 (75)	6,378 1,924 (391)
					7,911 486 (1,209)
					7,188 10,240 (1,549)
9,032 - - - - - - -	1,357 - - - - - - -	2,669 - - - - - - -	819 - - - - - - -	2,002 - - - - - - -	15,879 - - - - - - -

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APPENDIX II

ACCOUNTANTS’ REPORT OF CHANGCHUN GUANGDA

Buildings RMB’000 — — —	Leasehold improvements RMB’000 648 259 —	Plant and machinery RMB’000 701 328 (4)	Motor vehicles RMB’000 1,040 217 —	Furniture, fixtures and equipment RMB’000 127 124 (8)	Total RMB’000 2,516 928 (12)
— — — — — — — 29 —	907 216 — 1,123 201 — 1,324 33 —	1,025 359 (89) 1,295 454 (65) 1,684 221 (150)	1,257 345 (166) 1,436 339 (1,058) 717 132 (635)	243 256 (78) 421 291 (26) 686 159 (66)	3,432 1,176 (333)
					4,275 1,285 (1,149)
					4,411 574 (851)
29 - - - - - - - — — — 9,003	1,357 - - - - - - - 450 234 33 —	1,755 - - - - - - - 1,362 1,576 1,266 914	214 - - - - - - - 515 1,153 1,007 605	779 - - - - - - - 619 673 471 1,223	4,134 - - - - - - -
					2,946

					3,636

					2,777

					11,745

The buildings are located in the PRC under medium-term leases.

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APPENDIX II

ACCOUNTANTS’ REPORT OF CHANGCHUN GUANGDA

14. LAND USE RIGHT

The Target’s interests in land use right represent prepaid operating lease payments and its net book values are analysed as follows:

As at 31 December 2009 2010 2011 RMB’000 RMB’000 RMB’000 — — — — — — — — —	As at 31 December 2009 2010 2011 RMB’000 RMB’000 RMB’000 — — — — — — — — —	As at 31 December 2009 2010 2011 RMB’000 RMB’000 RMB’000 — — — — — — — — —	As at 30 June 2012 RMB’000 17,254 96
			17,158

— — —	— — —	— — —	— 17,254 (96
—	—	—	17,158

The interest in land use right is held in the PRC and under medium-term lease.

15. INVENTORIES

Consumables Merchandise goods	As at 31 December 2009 2010 2011 RMB’000 RMB’000 RMB’000 159 215 117 18,434 20,175 19,929 18,593 20,390 20,046	As at 30 June 2012 RMB’000 — 10,657
		10,657

During the Relevant Periods, no impairment loss was recognised for the inventories.

16. DEBTORS, DEPOSITS AND PREPAYMENTS

Trade debtors (Note 16(a)) Amount due from a related party (Note 16(b)) Other receivables Prepayments	As at 31 December 2009 2010 2011 RMB’000 RMB’000 RMB’000 1,449 866 2,360 558 — — 2,417 1,955 2,133 5,066 4,894 21,140 9,490 7,715 25,633	As at 30 June 2012 RMB’000 4,207 1,796 3,647 720
		10,370

– 40 –

APPENDIX II

ACCOUNTANTS’ REPORT OF CHANGCHUN GUANGDA

(a) The aging of trade debtors as of the end of each reporting period is as follows:

Current to 30 days 31 to 60 days 61 to 90 days Over 90 days	As at 31 December 2009 2010 2011 RMB’000 RMB’000 RMB’000 1,025 104 346 94 201 649 69 88 34 261 473 1,331 1,449 866 2,360	As at 30 June 2012 RMB’000 1,999 648 1,110 450
		4,207

Trade debtors comprised both corporate and individual customers, majority of which were corporate customers. The credit period for corporate customers generally ranged from 10 to 45 days and that for individual customers were approximately 10 days.

Impairment losses in respect of trade debtors are recorded using an allowance account unless the Target is satisfied that recovery of the amount is remote, in which case the impairment loss is written off against the relevant debtors directly. During the Relevant Periods, no impairment loss was recognised for trade debtors.

The aging analysis of trade debtors that are neither individually nor collectively considered to be impaired are set out below:

Neither past due nor impaired Past due for less than 1 month Past due for more than 1 month but less than 2 months Past due for more than 2 months	As at 31 December 2009 2010 2011 RMB’000 RMB’000 RMB’000 1,119 305 995 69 88 34 67 17 31 194 456 1,300 1,449 866 2,360	As at 30 June 2012 RMB’000 2,647 1,110 179 271
		4,207

Trade debtors that were neither past due nor impaired relate to a wide range of customers for whom there was no recent history of default.

Trade debtors that were past due but not impaired relate to a number of independent customers that have a good track record with the Target. Based on past experience, management believes that no impairment allowance is necessary in respect of these balances as there has not been a significant change in credit quality and the balances are still considered fully recoverable. The Target does not hold any collateral over these balances.

(b) The amount of RMB558,000 as at 31 December 2009 was due from Mr. Wu Yan Hai. Mr. Wu is a senior management personnel of the Target. He was formerly a shareholder of the Target and transferred his equity interest in the Target to another shareholder during the six months ended 30 June 2012. The amount was interest-free, unsecured and repayable on demand.

The amount of RMB1,796,000 as at 30 June 2012 was due from Ms. Wu Zi Han, who holds 2.825% equity interest in the Target. The amount is interest-free, unsecured and repayable on demand.

– 41 –

APPENDIX II ACCOUNTANTS’ REPORT OF CHANGCHUN GUANGDA

17. CASH AND BANK BALANCES

Cash and bank balances were denominated in RMB. RMB is not freely convertible into other currencies, however, under Mainland China’s Foreign Exchange Control Regulations and Administration of Settlement, Sale and Payment of Foreign Exchange Regulations, the Target is permitted to exchange RMB for other currencies through banks authorised to conduct foreign exchange business.

Cash at banks earns interest at floating rates based on daily bank deposit rates.

18. BANK BORROWINGS

						As at
		As	at	31 December		30 June
		2009		2010	2011	2012
		RMB’000		RMB’000	RMB’000	RMB’000
Bank	loan	—		—	30,500	—

The bank loan was denominated in RMB and carried floating rate interest at 115% of China benchmark interest rate per annum. It was secured by the properties of Mr. Wu Yan Hai, a senior management personnel and former shareholder of the Target.

Pursuant to the loan agreement, the loan was wholly repayable on 20 October 2013. However, the agreement contained a clause which gave the lender the right, at its sole discretion, to deduct immediate repayment of all liabilities under the agreement at any time from the Target’s accounts held with the lender, irrespective of whether the Target had complied with the covenants. Accordingly, the bank loan was classified under current liabilities.

The amount due based on the scheduled repayment date set out in the loan agreement, ignoring the effect of any repayment on demand clause, is set out below:

									As at
					As	at	31 December		30 June
					2009		2010	2011	2012
					RMB’000		RMB’000	RMB’000	RMB’000
Repayable	within	the	second	year	—		—	30,500	—

The Target repaid the bank loan during the six months ended 30 June 2012.

19. CREDITORS, DEPOSITS RECEIVED AND ACCRUALS

Trade creditors Advances from customers Accruals, deposits received and other payables	As at 31 December 2009 2010 2011 RMB’000 RMB’000 RMB’000 18,863 19,912 6,289 3,398 2,742 3,383 2,299 2,436 1,676 24,560 25,090 11,348	As at 30 June 2012 RMB’000 6,632 4,823 3,926
		15,381

– 42 –

APPENDIX II

ACCOUNTANTS’ REPORT OF CHANGCHUN GUANGDA

The aging analysis of trade creditors at the end of each reporting period by invoice date is as follows:-

Current to 30 days 31 to 60 days 61 days to 90 days Over 90 days	As at 31 December 2009 2010 2011 RMB’000 RMB’000 RMB’000 1,789 1,424 2,217 854 2,005 1,047 175 576 166 16,045 15,907 2,859 18,863 19,912 6,289	As at 30 June 2012 RMB’000 4,060 2,285 185 102
		6,632

20. PAID-UP CAPITAL AND CAPITAL MANAGEMENT

(a) Registered and paid-up capital

At beginning of the year/period Capital contribution At end of the year/period	As at 31 December 2009 2010 2011 RMB’000 RMB’000 RMB’000 6,800 6,800 6,800 — — — 6,800 6,800 6,800	As at 30 June 2012 RMB’000 6,800 41,000
		47,800

In May 2012, the registered and paid-up capital of the Target increased by RMB41,000,000. The capital contribution was satisfied by cash of RMB16,000,000 and leasehold buildings and land use right with the then fair values of RMB8,590,000 and RMB16,410,000 respectively. The fair values of the leasehold building and land use right was appraised by an independent valuer in the PRC, Jilin Province Jiechu Real Estate Appraisal Co., Ltd., based on a depreciated replacement cost approach.

(b) Capital management

The equity capital management objectives of the Target are to safeguard the Target’s ability to continue as a going concern and to provide an adequate return to equity owners commensurately with the level of risk.

The Target’s equity capital management strategy is to maintain a reasonable proportion in total debt and equity capital. The Target monitors equity capital on the basis of net debt to equity ratio, which is calculated as net debt over total equity. Net debt is calculated as total debt (including borrowings) less cash and cash equivalents. Total equity comprises all components of equity.

– 43 –

APPENDIX II

ACCOUNTANTS’ REPORT OF CHANGCHUN GUANGDA

The net debt to equity ratios as at 31 December 2009, 2010, 2011 and 30 June 2012 were as follows:

Total debt Less: Cash and cash equivalents Net (cash)/debt Total equity Net debt to equity ratio	As at 31 December 2009 2010 2011 RMB’000 RMB’000 RMB’000 — — 30,500 155 347 1,482 (155) (347) 29,018 6,547 6,968 7,900 N/A N/A 3.67	As at 30 June 2012 RMB’000 — 16,927
		(16,927)

		49,085

		N/A

21. MAJOR NON-CASH TRANSACTIONS

During the six months ended 30 June 2012, the Target had the following major non-cash transactions:-

(a) Buildings with fair value of RMB8,590,000 and land use right with fair value of RMB16,410,000 were contributed by a shareholder as capital contribution (Note 20(a)).
(b) Dividend of RMB7,200,000 (Note 10) was settled via the current account with Ms. Wu Zi Han (Note 16(b)).

22. OPERATING LEASE ARRANGEMENT

At the end of each reporting period, the Target had outstanding future minimum leases payments under non-cancellable operating leases, which fall due as follows:

Within one year In the second to fifth year inclusive Over five years	As at 31 December 2009 2010 2011 RMB’000 RMB’000 RMB’000 1,715 2,110 3,071 3,380 6,714 8,646 1,018 398 105 6,113 9,222 11,822	As at 30 June 2012 RMB’000 3,516 11,211 —
		14,727

Operating lease payment represents rentals payable by the Target for its stores. Leases are negotiated for average terms of 5 to 10 years with fixed monthly rentals.

– 44 –

APPENDIX II

ACCOUNTANTS’ REPORT OF CHANGCHUN GUANGDA

23. FINANCIAL RISK MANAGEMENT

The Target’s activities expose it to a variety of financial risks: credit risk, liquidity risk and interest rate risk. The Target’s overall risk management policy focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Target’s financial performance. The Target regularly monitors its exposure and currently considers not necessary to hedge any of these financial risks.

(a) Credit risk

The Target’s maximum exposure to credit risk is represented by the carrying amount of each financial asset as stated in the statements of financial position. The Target does not provide any guarantees which would expose it to credit risk.

The Target has no significant concentration of credit risk in respect of trade and other receivables. The Target performs ongoing credit evaluation of the debtors’ financial condition and maintains an account for allowance for doubtful debts based upon the expected collectibles of all trade and other receivables.

The management considers that the Target has adequate credit control for determination of credit limits, credit approvals and other monitoring procedures to ensure that follow-up action is taken to recover overdue debts. In addition, the Target reviews the recoverable amount of each individual trade debt at the end of each reporting period to ensure that adequate impairment losses are made for irrecoverable amounts. In this regard, the management of the Target considers that its credit risk is significantly reduced.

The credit risk on bank balances is minimal because the counterparties are major banks in the PRC with good credit quality.

(b) Liquidity risk

The Target’s policy is to regularly monitor current and expected liquidity requirements to ensure that it maintains sufficient reserves of cash to meet its liquidity requirements in the short and longer term.

The following table shows the remaining contractual maturities at the end of each reporting period of the Target’s financial liabilities, based on undiscounted cash flows and the earliest date the Target can be required to pay.

Specifically, the analysis shows the cash outflow based on the earliest period in which the Target can be required to repay the bank loan if the lender was to invoke its unconditional right to call the loan with immediate effect.

Bank loan Trade creditors Accruals, deposits received and other payables Repayable on demand or within one year	As at 31 December 2009 2010 2011 RMB’000 RMB’000 RMB’000 — — 30,500 18,863 19,912 6,289 2,299 2,436 1,676 21,162 22,348 38,465	As at 30 June 2012 RMB’000 — 6,632 3,926
		10,558

– 45 –

APPENDIX II

ACCOUNTANTS’ REPORT OF CHANGCHUN GUANGDA

The table summarises the maturity analysis of the bank loan outstanding as at 31 December 2011 based on agreed schedule repayment set out in the loan agreement. The amount includes interest payment computed using contractual rate and accordingly, is greater than the amount disclosed in the preceding table.

				More than
				1 year but
		On	Within 1	less than
		demand	year	2 year	Total
		RMB’000	RMB’000	RMB’000	RMB’000
Bank	loan	—	2,330	32,373	34,703

(c) Interest risk

The Target’s cash at bank bore floating interest rates and exposed the Target to interest rate risk at the end of each reporting period. No sensitivity analysis is performed as the effect on the Target’s profit for the Relevant Periods would be insignificant.

As at 31 December 2011, the Target was also exposed to interest rate risk arising from the bank borrowings that carried floating interest rate. It is estimated that a general increase/decrease of 100 basis points in interest rate, with all other variables held constant, would decrease/increase the Target’s profit for the year ended 31 December 2011 and retained profits as at that date by approximately RMB214,000.

(d) Fair values

All financial instruments of the Targets are carried at amounts not materially different from their fair values at the end of each reporting period.

24. RELATED PARTY TRANSACTIONS

Except for the transactions as disclosed in notes 16 and 18 to the Financial Information, details of transactions between the Target and other related party are set out below.

(a) The Target leased 2 stores from Mr. Wu Yan Hai during the Relevant Periods

								Six months	Six months
					Year	ended 31 December		ended 30 June
					2009	2010	2011	2011	2012
					RMB’000	RMB’000	RMB’000	RMB’000	RMB’000
								(Unaudited)
Rentals	paid	to	Mr.	Wu	460	460	460	230	192

In addition, during the years ended 31 December 2009, 2010 and 2011, the shareholders of the Target had carried out their individual businesses by utilising various resources of the Target. The shareholders were not charged for these resources-sharing.

– 46 –

APPENDIX II

ACCOUNTANTS’ REPORT OF CHANGCHUN GUANGDA

(b) Key management compensation.

Salaries, allowances and other benefits in kind Defined contribution retirement scheme contributions	Year ended 31 December Six months ended 30 June 2009 2010 2011 2011 2012 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 _(_Unaudited) 488 507 652 326 324 20 12 20 10 8 508 519 672 336 332	Year ended 31 December Six months ended 30 June 2009 2010 2011 2011 2012 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 _(_Unaudited) 488 507 652 326 324 20 12 20 10 8 508 519 672 336 332
		332

25. RETIREMENT BENEFITS SCHEMES

The employees of the Target are members of a state-managed retirement benefit scheme operated by the government of PRC. The Target is required to contribute 20% of payroll costs to the retirement benefit scheme to fund the benefits. The only obligation of the Target with respect to the retirement benefit scheme is to make the specified contributions.

The total costs charged to profit or loss amounted to RMB323,000, RMB405,000, RMB917,000 and RMB595,000 for the years ended 31 December 2009, 2010 and 2011 and the six months ended 30 June 2012 (Six months ended 30 June 2011 (Unaudited): RMB450,000) respectively, representing contributions payable to the retirement benefit scheme by the Target during the Relevant Periods.

26. CONTINGENT LIABILITIES

As at 30 June 2012, the Target did not have any contingent liabilities.

27. SUBSEQUENT EVENTS

On 27 July 2012, the Target set up a wholly-owned subsidiary “長春市首創經貿有限公司” with paid-up capital of RMB500,000.

28. SUBSEQUENT FINANCIAL STATEMENTS

No audited financial statements have been prepared by the Target in respect of any period subsequent to 30 June 2012.

PKF

Certified Public Accountants Hong Kong, China

24 September 2012

– 47 –

APPENDIX III

UNAUDITED PRO FORMA FINANCIAL STATEMENT OF THE ENLARGED GROUP

A. UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

The accompanying illustrative and unaudited pro forma financial information of the Enlarged Group (defined below) (the “Unaudited Pro Forma Financial Information”), comprising the unaudited pro forma consolidated statement of financial position, has been prepared on the basis of the notes set out below for the purpose of illustrating the effect of the proposed acquisition (the “Acquisition”) of 51% equity interest in Changchun Guangda Automobile Trading Co., Ltd. (“Changchun Guangda”) by New Focus Auto Tech Holdings Limited (the “Company”, together with its subsidiaries are referred to as the “Group”), as if the Acquisition had been completed on 30 June 2012 (the Group together with Changchun Guangda is referred to as the “Enlarged Group”).

The unaudited pro forma consolidated statement of financial position is prepared based on (i) the unaudited consolidated statement of financial position of the Group as at 30 June 2012 as extracted from the published unaudited interim report of the Group for the six months ended 30 June 2012; and (ii) the audited statement of financial position of Changchun Guangda as at 30 June 2012 as extracted from the Accountants’ Report set out in Appendix II to this circular, after making unaudited pro forma adjustments to reflect the effects of the Acquisition.

The Unaudited Pro Forma Financial Information is based on a number of assumptions, estimates, uncertainties and currently available information, and is provided for illustrative purposes. Accordingly, as a result of the uncertain nature of the accompanying Unaudited Pro Forma Financial Information of the Enlarged Group, it may not give a true picture of the actual financial position of the Enlarged Group’s operations that would have been attained had the Acquisition actually occurred on the date indicated herein. Further, the accompanying Unaudited Pro Forma Financial Information does not purport to predict the Enlarged Group’s future financial position.

– 48 –

APPENDIX III

UNAUDITED PRO FORMA FINANCIAL STATEMENT OF THE ENLARGED GROUP

Unaudited pro forma consolidated statement of financial position of the Enlarged Group

Unaudited The Group as at 30 June 2012 RMB’000 232,103 17,430 46,764 299,879 336,185 900 566 26,181 93,040	Audited Changchun Guangda as at 30 June 2012 Unaudited pro forma adjustments RMB’000 RMB’000 Notes 11,745 (1,161) 4 17,158 — — 151,867 2 — 43,194 3 — — — — (53,040) 1	Unaudited pro forma Enlarged Group as at 30 June 2012 RMB’000 242,687 34,588 46,764 451,746 379,379 900 566 26,181 40,000
1,053,048 306,716 1,207 214,178 88,650 11,265 243 1,473 138,871 762,603 153,286 9,953 255,001 — 167,501 16,426 5,027 607,194 155,409	28,903 10,657 — 4,207 4,367 1,796 — — 16,927 37,954 — — 6,632 4,823 3,926 1,000 5 53,040 1 — 2,391 17,772 20,182	1,222,811
		317,373 1,207 218,385 93,017 13,061 243 1,473 155,798
		800,557
		153,286 9,953 261,633 4,823 225,467 16,426 7,418
		679,006
		121,551

– 49 –

APPENDIX III

UNAUDITED PRO FORMA FINANCIAL STATEMENT OF THE ENLARGED GROUP

Unaudited The Group as at 30 June 2012 RMB’000 1,208,457 11,366 198,618 125,929 86,527 2,099	Audited Changchun Guangda as at 30 June 2012 Unaudited pro forma adjustments RMB’000 RMB’000 Notes 49,085 — — — — 10,799 3 — 86,750 1	Unaudited pro forma Enlarged Group as at 30 June 2012 RMB’000 1,344,362 11,366 198,618 125,929 97,326 88,849
424,539	—	522,088
783,918	49,085	822,274

57,965 493,783 551,748 232,170	47,800 (47,800) 6 1,285 (1,285) 6 (1,000) 5 49,085 — 39,356 2	57,965 492,783
		550,748 271,526
783,918	49,085	822,274

Notes:

To the best estimation of the Directors, the final consideration for the Acquisition is to be RMB198,900,000 which includes the preliminary consideration of RMB132,600,000 (the “Preliminary Consideration”) and the Final Price Adjustment (as defined below) in the expected amount of RMB66,300,000. The final consideration is estimated by the Directors to be the maximum consideration payable to the vendor in accordance with the terms of the equity transfer agreement in connection with the Acquisition dated 17 July 2012 (the “Agreement”). The final consideration shall be settled in the following manners:
(a) as to a sum of RMB53,040,000 in cash payable within 10 business days after the effective date of the Agreement;
(b) as to a sum of RMB53,040,000 payable within 10 business days after the completion of the industry and commerce registration in respect of the transfer the 51% equity interest in Changchun Guangda from the vendor to the Company (the “Completion of Registration”). The amount is to be settled: (i) as to RMB33,150,000 in cash; and (ii) as to RMB19,890,000 by issue of approximately 18,226,068 shares of the Company at issue price of HK$1.34 each (the “Consideration Shares”). In the event that the Company is unable to issue the Consideration Shares for whatever reason (including the failure to obtain all the necessary approval and consent for the issue of the Consideration Shares before the second payment due date), the Company must satisfy the payment in cash as to RMB19,890,000. In the opinion of the directors of the Company (the “Directors”), the Completion of Registration shall take place within one year from 30 June 2012 and the Company should be able to issue the Consideration Shares. On completion of the

– 50 –

APPENDIX III

UNAUDITED PRO FORMA FINANCIAL STATEMENT OF THE ENLARGED GROUP

Acquisition, the fair value of the Consideration Shares will have to be re-assessed and subject to change since the actual fair value of the Consideration Shares on the date of Acquisition would be different from its estimated fair value of HK$19,890,000 as adopted in the preparation of the Unaudited Pro Forma Financial Information;

(c) as to a sum of RMB19,890,000 in cash payable within 10 business days after the issue of Changchun Guangda’s special audited report prepared following the lapse of a period of 12 months starting from the date on which the financial statements of Changchun Guangda are consolidated to the Group’s consolidated financial statements (the “Assessment Period”). Such special audited report shall be prepared by the accountants engaged by the Company and shall be made available within two months after the Assessment Period. In the opinion of the Directors, such amount will be payable during the period between 1 July 2013 to 31 December 2013;
(d) as to a sum of RMB6,630,000 payable in cash within 10 business days after the issue of Changchun Guangda’s annual audited reports prepared following the lapse of the Assessment Period. In the opinion of the Directors, this amount will be payable during the period between 1 January 2014 to 30 June 2014; and
(e) as to a sum of RMB66,300,000 payable in cash within one month after the issue of Changchun Guangda’s annual audited reports prepared following the lapse of the Assessment Period. In the opinion of the Directors, this amount will be payable during the period between 1 January 2014 to 30 June 2014.

In the opinion of the Directors, the installment of RMB53,040,000 as mentioned in Note 1(a) above had already been paid and recognised as non-current prepayment for proposed acquisitions of subsidiaries in the Company’s published unaudited interim financial statements for the six months ended 30 June 2012. As mentioned in Note 1(b), another installment of RMB53,040,000 will be payable within one year after 30 June 2012 and therefore included in current liabilities of the Enlarged Group. The remaining nominal consideration amounts of RMB92,820,000, comprising the installments as mentioned in Notes 1(c), 1(d) and 1(e) above, are payable after one year from 30 June 2012. For the purpose of preparing this Unaudited Pro Forma Financial Information, such amounts are reclassified under the non-current liabilities of the Enlarged Group with the aggregate fair value of approximately RMB86,750,000 with effective interest rate of 7% per annum, which is determined by the Directors with reference to the latest borrowing rates offered to the Group by financial institutions. Based on the above, the aggregate fair value of the final consideration is RMB192,830,000.

Pursuant to the Agreement, the final consideration of the Acquisition is subject to adjustment by an amount equal to the difference between the Preliminary Consideration of RMB132,600,000 and the final price, which is determined in accordance with a specific formula as agreed between the vendor and the Company (the “Final Price Adjustment”). The formula comprises components of audited net profit after tax of Changchun Guangda for the Assessment Period, effective equity interest in Changchun Guangda to be acquired by the Group, price/earnings ratio and price/earnings adjustment ratio, details of which are set out in the section “Letter from the Board” of this circular. If the final consideration is greater than the Preliminary Consideration, the Company shall pay the difference to the vendor. If the final consideration is smaller than the Preliminary Consideration, the vendor shall pay the difference to the Company. The final price shall not be more than RMB198,900,000. In the opinion of the Directors, it is estimated that the Final Price Adjustment is required and the nominal final price for the Acquisition is estimated at RMB198,900,000 for the purpose of this Unaudited Pro Forma Financial Information.

– 51 –

APPENDIX III UNAUDITED PRO FORMA FINANCIAL STATEMENT OF THE ENLARGED GROUP

The identifiable assets and liabilities of Changchun Guangda will be accounted for under the acquisition method of accounting in accordance with Hong Kong Financial Reporting Standard 3 (Revised) “Business combinations” (“HKFRS 3 (Revised)”) issued by Hong Kong Institute of Certified Public Accountants. In the opinion of the Directors, according to the mutual understanding between the Group and the vendor, the Group will have the power to govern the financial and operating policies of Changchun Guangda, so as to obtain benefits from its activities, upon the completion of the Acquisition.

Goodwill is measured as the excess of cost of the business combination (i.e. estimated fair value of the final consideration) over the fair value of the identifiable assets, liabilities and contingent liabilities of Changchun Guangda as of the date of the Acquisition.

The estimated fair value of net amount of identifiable assets and liabilities of Changchun Guangda as at 30 June 2012 is calculated as follows:

Net assets of Changchun Guangda per accountants’ report of Changchun Guangda set out in Appendix II to this circular (Note 6) Add: Fair value adjustment on intangible assets (Note 3) Less: Deferred tax effect on the fair value adjustment on intangible assets (Note 3) Less: Fair value adjustment on property, plant and equipment (Note 4) Adjusted net assets of Changchun Guangda Less: Non-controlling interest shared by the 49%-non-controlling equity owners of Changchun Guangda The estimated fair value of net amount of identifiable assets and liabilities of Changchun Guangda attributable to the Group Goodwill is estimated as below: Estimated fair value of the final consideration (Note 1) Less: Estimated fair value of net amount of identifiable assets and liabilities of Changchun Guangda attributable to the Group Goodwill	RMB’000 49,085 43,194 (10,799) (1,161)
	80,319 (39,356)
	40,963

	RMB’000 192,830 (40,963)
	151,867

For the purpose of the preparation of this Unaudited Pro Forma Financial Information, the Directors consider that no impairment is required in respect of the Enlarged Group’s intangible assets and goodwill arising from the Acquisition in accordance with Hong Kong Accounting Standard 36 “Impairment of Assets” (“HKAS 36”) which is consistent with the accounting policy of the Group. In order to assess whether there is any impairment on the intangible assets and goodwill of the Enlarged Group as at 30 June 2012 arising from the Acquisition, the Directors have reviewed, in accordance with HKAS 36, the cash flow forecasts prepared for the purpose of impairment assessment. The Directors have concluded that no impairment is required for the intangible assets and goodwill arising from the Acquisition as stated in the Unaudited Pro Forma Financial Information as at 30 June 2012.

– 52 –

APPENDIX III

UNAUDITED PRO FORMA FINANCIAL STATEMENT OF THE ENLARGED GROUP

The reporting accountants of the Company in respect of the Unaudited Pro Forma Financial Information of the Enlarged Group have enquired the management of the Group to ensure that the steps taken on the assessment of impairment on intangible assets and goodwill arising from the Acquisition have been performed in accordance with HKAS 36. On that basis, the Group concluded that no impairment in value of the intangible assets and goodwill arising from the Acquisition is considered necessary. The Directors confirm that they will apply consistent accounting policies and principal assumptions for impairment assessment of intangible assets and goodwill arising from the Acquisition in subsequent reporting periods in accordance with the requirements of HKAS 36.

On completion of the Acquisition, the fair value of the final consideration after the Final Price Adjustment and the fair value of net amount of identifiable assets and liabilities of Changchun Guangda will have to be re-assessed. Since the actual fair values of the assets, liabilities and contingent liabilities of Changchun Guangda on completion of the Acquisition would be different from their estimated fair values adopted in the preparation of the Unaudited Pro Forma Financial Information presented above, the actual financial position arising from the Acquisition might be materially different from the financial position shown in this Appendix.

Intangible assets represent trademark “廣達” currently in use by Changchun Guangda in Jilin Province, the People’s Republic of China (the “PRC”). The adjustment represents fair value adjustment on intangible assets of Changchun Guangda of approximately RMB43,194,000 and the recognition of the corresponding deferred tax liabilities of RMB10,799,000 which is calculated at income tax rate of 25% applicable in the PRC. The estimated fair value of the intangible assets of Changchun Guangda is determined by the Directors with reference to a professional valuation using income approach conducted by RHL Appraisal Limited, an independent firm of professionally qualified valuers. The fair value amount of the intangible assets is derived using income approach, for which the arithmetical accuracy has been reviewed and agreed by the reporting accountants.
The adjustment represents fair value adjustment on property, plant and equipment of Changchun Guangda in the deficit amount of approximately RMB1,161,000. The estimated fair values of the property, plant and equipment of Changchun Guangda are determined by the Directors with reference to a professional valuation conducted by RHL Appraisal Limited.
The adjustment represents accrual for estimated acquisition-related costs of approximately RMB1,000,000, which would be expensed in profit or loss. This adjustment will not have continuing effect on the profit or loss of the Enlarged Group.
This adjustment represents the elimination of the paid-in capital of Changchun Guangda of RMB47,800,000 and pre-acquisition reserve of Changchun Guangda of RMB1,285,000 which also form parts of the aggregate net assets value of Changchun Guangda of RMB49,085,000 as at 30 June 2012 (Note 2).

– 53 –

APPENDIX III UNAUDITED PRO FORMA FINANCIAL STATEMENT OF THE ENLARGED GROUP

B. ACCOUNTANTS’ REPORT ON UNAUDITED PRO FORMA FINANCIAL INFORMATION

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

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24 September 2012

The Board of Directors

New Focus Auto Tech Holdings Limited

Dear Sirs,

We report on the unaudited pro forma financial information (the “Unaudited Pro Forma Financial Information”) of New Focus Auto Tech Holdings Limited (the “Company”) and its subsidiaries (hereinafter collectively referred to as the “Group”), which has been prepared by the directors of the Company for illustrative purposes only, to provide information about how the proposed acquisition of 51% equity interest in Changchun Guangda Automobile Trading Co., Ltd (together with the Group, hereinafter collectively referred to as the “Enlarged Group”) might have affected the financial information presented, for inclusion in Appendix III to the circular of the Company dated 24 September 2012 (the “Circular”). The basis of preparation of the Unaudited Pro Forma Financial Information is set out in Appendix III to the Circular.

Respective responsibilities of directors of the Company and reporting accountants

It is the responsibilities solely of the directors of the Company to prepare the Unaudited Pro Forma Financial Information in accordance with paragraph 29 of Chapter 4 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”) and with reference to Accounting Guideline 7 “Preparation of Pro Forma Financial Information for Inclusion in Investment Circulars” issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”).

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

– 54 –

APPENDIX III

UNAUDITED PRO FORMA FINANCIAL STATEMENT OF THE ENLARGED GROUP

Basis of opinion

We conducted our engagement in accordance with Hong Kong Standard on Investment Circular Reporting Engagements 300 “Accountants’ Reports on Pro Forma Financial Information in Investment Circulars” issued by the HKICPA. Our work consisted primarily of comparing the unadjusted financial information with source documents, considering the evidence supporting the adjustments and discussing the Unaudited Pro Forma Financial Information with the directors of the Company. The engagement did not involve independent examination of any of the underlying financial information.

We planned and performed our work so as to obtain the information and explanations we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the Unaudited Pro Forma Financial Information has been properly compiled by the directors of the Company on the basis stated, that such basis is consistent with the accounting policies of the Group and that the adjustments are appropriate for the purposes of the Unaudited Pro Forma Financial Information as disclosed pursuant to paragraph 29(1) of Chapter 4 of the Listing Rules.

The Unaudited Pro Forma Financial Information is for illustrative purposes only, based on the judgments and assumptions of the directors of the Company, and, because of its hypothetical nature, does not provide any assurance or indication that any event will take place in the future and may not be indicative of the financial position of the Enlarged Group as at 30 June 2012 or any future date.

Opinion

In our opinion:

(a) the Unaudited Pro Forma Financial Information has been properly compiled by the directors of the Company on the basis stated;
(b) such basis is consistent with the accounting policies of the Group, so far as such policies related to the transactions; and
(c) the adjustments are appropriate for the purposes of the Unaudited Pro Forma Financial Information as disclosed pursuant to paragraph 29(1) of Chapter 4 of the Listing Rules.

Yours faithfully, BDO Limited

Certified Public Accountants Hong Kong

– 55 –

APPENDIX IV MANAGEMENT DISCUSSION AND ANALYSIS ON CHANGCHUN GUANGDA

The management discussion and analysis for Changchun Guangda below is based on the financial information of Changchun Guangda for the years ended 31 December 2009, 2010 and 2011 and for the six months ended 30 June 2011 and 2012 (the “ Relevant Periods ”) contained in Appendix II of this circular:

BUSINESS REVIEW

	For the year ended	For the year ended	For the year ended	For the six months	For the six months
		31 December		ended 30 June
	2009	2010	2011	2011	2012
	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000
Turnover	40,416	49,408	51,965	21,683	45,655
Change of turnover (%)		22.2%	5.2%		110.6%
The rate of increase in
customer number (%)		14.2%	-6.4%		22.6%
The rate of increase in
average purchase per
transaction of
customers (%)		7%	12.4%		71.7%
Gross profit	10,507	13,219	17,624	7,676	18,094
Change of gross profit (%)		25.8%	33.3%		135.7%
Gross margin (%)	26.0%	26.8%	33.9%	35.4%	39.6%
Net profit for the year/
period	199	421	932	342	7,385
Change of net profit (%)		111.6%	121.4%		2,059.4%

Despite the sluggish world economy in the past few years, China has its economy uniquely outshining, especially in the automotive market which has grown amid unfavorable market conditions. As one of the largest one-stop service providers of the automotive after-sales market in Northeast China, Changchun Guangda cultivated intensively, devoting itself to customer structure optimization as well as internal and external process standardization leading to a year-on-year rise in average purchase per transaction of customers. Goods and service structures have been constantly adjusted based on both market trends and consumer preferences, in order to raise the percentage of high-profit products and services, which in turn improves quality as well as service. With in-depth market development in the Northeast, especially when the demands from mid-and-high-end customers in Changchun market were fully satisfied, great progress has been made.

For the year ended 31 December 2010, turnover increased approximately 22.2%. For the year ended 31 December 2011, turnover increased by approximately 5.2%. These increases were due to the fact that Changchun Guangda implemented measures to optimize the structure of customers, products and services.

– 56 –

APPENDIX IV MANAGEMENT DISCUSSION AND ANALYSIS ON CHANGCHUN GUANGDA

For the six months ended 30 June 2012, turnover increased by approximately 110.6% or RMB23,972,000. It was mainly due to various factors, including adjustment on the structure of products to raise the percentage of high-profit products and services through different business strategies such as expansion in the business of professional detailing; improvement on the value-added products and services; expansion of production lines; and optimization of the customer structure to improve the average purchase per transaction of customers.

For the years ended 31 December 2010 and 2011, growth rates for the number of customers were 14.2% and -6.4% respectively. Fewer customers in 2011 compared to those in 2010 was due to Changchun Guangda increased the prices of basic products and services to cover the increase in its costs which in turn drove away some low-end customers to purchase such basic products and services from those Mom & Pop stores instead. In order to improve the average purchase per transaction of customers and optimize its customer structure, Changchun Guangda implemented various effective measures to attract and maintain more medium-end and high-end customers by formulating specific marketing plans to offer more competitive products and services than those ordinarily offered by 4S shops and remodeling the decoration and layout of its retail stores to make them more appealing. For this reason, average purchase per transaction of customers increased by about 12.4% for the year ended 31 December 2011.

In addition to those business strategies discussed above, Changchun Guangda implemented other business strategies to further enhance its performance including introduction of products of international well-known brands with better quality and reputation which were sold at prices higher than those corresponding national products and implementation of sales incentive program which linked the income of store staffs with their performance to encourage store staffs to sell more products and services with higher margin.

With further effort made for marketing, the number of customers for the six months ended 30 June 2012 increased by about 22.6% compared to the six months ended 30 June 2011. With the effect of the aforementioned business strategies designed to improve the average purchase per transaction of customers and optimize its customer structure, the average purchase per transaction of customers increased by more than 70% for the six months ended 30 June 2012 compared to the six months ended 30 June 2011.

Changchun Guangda grants a credit period of 10 days to individual customers normally in cases where the cars, normally owned by companies and used by owners or management of such companies, were sent to the stores for repair, maintenance or other services and the managers of stores grant credit period to such owners or management whom they trust. The payment obligation of such customers are guaranteed by managers granting the credit period. The outstanding debtors would normally be settled on average within 10 days by the relevant companies or, failing which, by managers granting credit period. The debts owned by individual customers account for approximately 7% of all trade debts. The authority of granting credit period by store managers are strictly restricted and monitored by Changchun Guangda in accordance with internal policies.

– 57 –

APPENDIX IV MANAGEMENT DISCUSSION AND ANALYSIS ON CHANGCHUN GUANGDA

As the effect of the said business strategies come into play, gross profit and gross profit margin are increasing year by year. For the years ended 31 December 2010 and 2011, gross profit amounted to approximately RMB13,219,000 and RMB17,624,000, which went up by about 25.8% and 33.3% respectively.

For the six months ended 30 June 2012, gross profit increased by about 135.7% or RMB10,418,000 compared to the six months ended 30 June 2011.

For the years ended 31 December 2009, 2010 and 2011, gross profit margin increased to about 26%, 26.8% and 33.9% respectively. For the six months ended 30 June 2012, gross profit margin increased to 39.6%.

Like other one-stop service providers of the automotive after-sales market, shop rental, staff salaries and benefits weigh a lot in determining Changchun Guangda’s net profit level. With significant increases in turnover and gross profit, and with comparatively stable rental, staff salaries and benefits during the Relevant Periods, Changchun Guangda has witnessed remarkable improvement in net profit in recent years. For each of the years ended 31 December 2010 and 2011, net profit increased by approximately RMB222,000 and RMB511,000, representing an increase of approximately 111.6% and 121.4%, respectively. As the effects of business strategy adjustments over the past year were gradually reflected, net profit for the six months ended 30 June 2012 increased by about 2,059.4% as compared to the same period of last year.

Changchun Guanda currently operates 11 retail stores, 10 out of which stores are operated in the premises leased from other landlords and the remaining 1 is operated in the property owned by Changchun Guangda itself. Among the 10 leased retail stores, 3 with a remaining term of 5 years, 2 with a remaining term of 4 years, 3 with a remaining term of 3 years, 1 with a remaining term of 2 years and 1 will expire in 4 months, from now. The rental for 2 stores with remaining lease term of 5 years will increase by 75% from 1 July 2012 and remain unchanged until expiry. The rental for one store with remaining lease term of 4 years will increase by RMB20,000 a month starting from 1 January 2014 and remain unchanged until expiry. The rental for one store with remaining lease term of 3 years will increase by 10% starting from 1 October 2013 and remain unchanged until expiry. For the rest of the leased stores, there will be no change to the rental throughout the remaining lease period.

Upon the expiration of such lease contracts, Changchun Guangda will negotiate with relevant landlords to reach agreement on terms and conditions of the renewed lease contracts including lease term and rental which is expected to be determined by Changchun Guangda and landlords after arm-length discussion with reference to the then market rental situation and inflation rate expected to happen in the period to be covered by such renewed lease contracts. The management of Changchun Guangda expects the store rental will increase at a reasonable and steady rate in the foreseeable future.

Income of majority staff of Changchun Guangda are divided into fixed basic salaries and benefits and performance-based bonus which is linked to the performance of relevant staff. The salaries and benefits are determined by Changchun Guangda with reference to the competence of staff, availability of labor in the market and applicable laws and regulations. The management of Changchun Guangda expects the labor cost will increase at a reasonable and steady rate in the foreseeable future.

– 58 –

APPENDIX IV MANAGEMENT DISCUSSION AND ANALYSIS ON CHANGCHUN GUANGDA

PROSPECTS FOR NEW BUSINESSES

In terms of store expansion, Changchun Guangda will focus on the three provinces in the eastern part of China for market development in the coming three years. It plans to continuously increase its presence through its 11 large one-stop service shops, and strive to increase 34 new stores by way of opening new stores or through merger or acquisition.

In respect of distributorship business, Changchun Guangda possesses regional distributorship of various automobile merchandise and is authorized to distribute professional detailing products under the brand Wurth, a well-known E brand originated in German and is highly regarded by the market. Meanwhile, Changchun Guangda is looking for new opportunities in new distributorship business. Changchun Guangda will enter into a cooperation plan with Webasto, a renowned Germany company manufacturing automobile heaters to further expand the scope of distributorship, which will be of mutual benefit to both parties. Further, this will help to improve Changchun Guangda’s sales results and overall profitability in the northeast region of China. Moreover, Changchun Guangda will explore the possibilities of operating specialized stores and develop new concepts of quality service in order to lift its professional image.

SEGMENT REPORT

Turnover

Turnover represents the net invoiced value of goods sold to customers, after the deduction of allowances for returns and trade discounts (excluding VAT and franchise distributor income), services provided to customers and franchise income.

Sales of Products Service Income Franchise Income	For the year ended 31 December 2009 2010 2011 RMB’000 RMB’000 RMB’000 23,838 29,429 27,806 16,278 18,819 23,819 300 1,160 340 40,416 49,408 51,965	For the six months ended 30 June 2011 2012 RMB’000 RMB’000 10,577 25,739 11,106 17,936 — 1,980 21,683 45,655	For the six months ended 30 June 2011 2012 RMB’000 RMB’000 10,577 25,739 11,106 17,936 — 1,980 21,683 45,655
			45,655

During the Relevant Periods, Changchun Guangda is principally engaged in auto after-sales market services in mainland China. Its financial results, assets and liabilities during the Relevant Periods were related to its businesses such as sales of products, services and franchises in the mainland China.

– 59 –

APPENDIX IV MANAGEMENT DISCUSSION AND ANALYSIS ON CHANGCHUN GUANGDA

For the year ended 31 December 2010, mainly due to the effect of aforementioned business strategies designed to improve the average purchase per transaction of customers and optimize its customer structure and performance contribution from 2 retail stores opened by the end of 2008 which achieved a better performance in 2010 than that in 2009, the sales of products increased by approximately RMB5.591 million, representing a growth of approximately 23%; for the year ended 31 December 2011, the sales of products decreased by approximately RMB1.623 million mainly due to the loss of a relatively important corporate customer, representing a decrease of approximately 6%.

For the six months ended 30 June 2012, due to the effect of the aforementioned business strategies and contributions from franchise stores which were made to Changchun Guangda with the assistance of Changchun Guangda and its suppliers, the sales of products increased by approximately RMB15.162 million, representing a growth of approximately 143%.

For the years ended 31 December 2010 and 2011, mainly due to contribution from 2 retail stores opened by the end of 2008 and 2 retail stores opened in the second half of 2010 and as well as the effect of aforementioned business strategies, services income continued to show a yearly growth with an increase of approximately RMB2.541 million and RMB5 million respectively, representing a growth of approximately 16% and 27% respectively.

For the six months ended 30 June 2012, mainly due to the effect of aforementioned business strategies and the opening of 1 retail store in May 2011, services income increased by approximately RMB6.83 million, representing a growth of approximately 61%.

For the years ended 31 December 2010 and 2011, franchise income increased by approximately RMB0.86 million and decreased by approximately RMB0.82 million respectively, representing a growth of 287% and a decrease of 71%. Franchise income consists of lump-sum franchise income charged after execution of franchise agreement and trademark license fee charged on an annual basis. The increase in franchise income for the year ended 31 December 2010 was due to the establishment of 10 franchise stores. The fact that only 2 franchise stores has been established for the year ended 31 December 2011 caused the decrease of franchise income.

For the six months ended 30 June 2012, franchise income amounted to approximately RMB1.98 million mainly due to the establishment of 8 franchise stores during such period.

As Changchun Guangda only operates its business in certain specific regions in the Mainland, no other segment report information is presented.

During the Relevant Periods, Changchun Guangda did not have any important customer which contributed 10% or above to the turnover.

– 60 –

APPENDIX IV MANAGEMENT DISCUSSION AND ANALYSIS ON CHANGCHUN GUANGDA

CAPITAL STRUCTURE

				As at
	As at 31 December			30 June
	2009	2010	2011	2012
Shareholders’ equity ratio	20.99%	21.72%	15.82%	73.42%
Gearing ratio	79.01%	78.28%	84.18%	26.58%
Long-term debt to equity	—	—	—	—
Shareholders’ equity/
Long-term asset	2.22	1.92	2.84	1.70
Long-term debt/(Long-term debt +
shareholders’ equity)	—	—	—	—

FINANCIAL RESOURCES AND LIQUIDITY

As at 31 December 2009, 2010 and 2011 and 30 June 2012, the business of Changchun Guangda was mainly funded by the revenue of operations. As for the liquidity as at 31 December 2009, 2010 and 2011 and 30 June 2012, the current ratios (current asset/current liabilities) were 1.15, 1.13, 1.12 and 2.14 respectively.

As at 31 December 2009, 2010 and 2011 and 30 June 2012, the gearing ratios (defined as the ratio of total liabilities divided by shareholders’ equity and calculated based on the figures set out in audited balance sheet as at 31 December 2009, 2010 and 2011 and 30 June 2012) of Changchun Guangda were 376.31%, 360.51%, 532.13% and 36.21% respectively. As at 31 December 2009 and 2010, the gearing ratios were relatively stable which was mainly due to no material change in Changchun Guangda’s business and operational strategies. The debt ratio as at 31 December 2011 was higher than that as at 31 December 2010 mainly due to increase in business in 2011, and additional bank borrowings balance amounted to approximately RMB30.5 million for operation activities. The gearing ratio as at 30 June 2012 decreased drastically as compared to that at 31 December 2011 mainly due to repayment of bank borrowings of approximately RMB30.5 million and increase of paid-up capital of approximately RMB41 million.

If revaluation on Changchun Guangda was conducted as at 31 December 2009, 2010 and 2011 and 30 June 2012 by reference to market value on fair value basis, the gearing ratios of Changchun Guangda as at 31 December 2009, 2010 and 2011 and 30 June 2012 would have been 16.57%, 31.51%, 52.13% and 14.73% respectively. As at 30 June 2012, the gearing ratio after revaluation was significantly lower than that as at 31 December 2010 and 2011 which was mainly due to the appreciation of the assessment value of Changchun Guangda’s trademark “Guangda” of approximately RMB72,746,000 and depreciation of assessment value of its immovable property of approximately RMB1,161,000.

– 61 –

APPENDIX IV MANAGEMENT DISCUSSION AND ANALYSIS ON CHANGCHUN GUANGDA

The total borrowings of Changchun Guangda is as follows:

Bank borrowings Obligation under finance lease Total borrowings	As 2009 RMB’000 — — —	at 31 December 2010 2011 RMB’000 RMB’000 — 30,500 — — — 30,500	As at 30 June 2012 RMB’000 — —
			—

The total borrowings amounted to zero as at 30 June 2012 as the remaining balance of the bank borrowings of RMB30.5 million was fully repaid in May 2012.

The total borrowings amounted to RMB30.5 million as at 31 December 2011 due to the bank borrowings of RMB35 million granted to the Company in May 2011. During the period from September to December 2011, the bank borrowings amounted to RMB4.5 million were repaid.

As at 31 December 2009, 2010 and 2011 and 30 June 2012, the cash and bank balances of Changchun Guangda amounted to approximately RMB155,000, RMB347,000, RMB1,482,000 and RMB16,927,000 respectively. All balances were denominated in RMB.

CURRENCY AND FINANCIAL RISK MANAGEMENT

Changchun Guangda adopted chain store operations as its model, with each store engaged in retail business. There was not any significant credit risk in the course of operations as cash receipt was generally generated from business revenue.

As the incomes and expenses of Changchun Guangda were denominated in RMB and the payment for the distribution of professional detailing products under the brand Wurth was also settled in RMB, the management expected there were not any significant currency risk arising from the operating activities of Changchun Guangda.

As at 31 December 2011, Changchun Guangda was exposed to interest rate risk arising from the bank borrowings in the amount of RMB30.5 million that carried floating interest rate. All the bank borrowings had been repaid in full in May 2012. Cash at bank of Changchun Guangda bore floating interest rates and exposed Changchun Guangda to interest rate risk at the end of each reporting period. It is estimated that the effect of such interest rate risk on Changchun Guangda’s profit for the Relevant Periods would be insignificant.

PLEDGE OF ASSETS

As at 31 December 2009, 2010 and 2011 and 30 June 2012, Changchun Guangda had not pledged any of its assets.

– 62 –

APPENDIX IV MANAGEMENT DISCUSSION AND ANALYSIS ON CHANGCHUN GUANGDA

CONTINGENT LIABILITIES

As at 31 December 2009, 2010 and 2011 and 30 June 2012, Changchun Guangda had no significant contingent liabilities.

EMPLOYEE AND REMUNERATION POLICIES

Given that auto after-sales services required intensive labour, staff cost accounted for a larger percentage of the total operation cost of Changchun Guangda. The total amount of the remuneration and benefit expenses payable to the employees for the years ended 31 December 2009, 2010 and 2011 and for the six months ended 30 June 2011 and 2012 were approximately RMB5,036,000, RMB6,043,000, RMB8,317,000, RMB4,106,000 and RMB4,548,000, which accounted for approximately 12.6%, 12.4%, 16.9%, 19.6% and 12.6% of the total operation cost, respectively. Besides basic salary, other benefit includes basic medical insurance, basic pension scheme and housing funds, etc.

Changchun Guangda continues to provide relevant training to its staff in order to enhance their job skills and promote their career development.

The number of employees of Changchun Guangda is as follows:

Office of General Manager Purchase Finance Audit Corporate Planning HR Marketing Shop Manager Others Total	For the year ended 31 December 2009 2010 2011 5 5 5 9 10 14 4 4 4 6 8 10 3 3 4 4 4 4 2 2 5 2 3 5 375 425 455 410 464 506	For the six months ended 30 June 2011 2012 5 5 5 5 4 4 8 8 3 3 4 4 2 2 5 5 438 508 474 544	For the six months ended 30 June 2011 2012 5 5 5 5 4 4 8 8 3 3 4 4 2 2 5 5 438 508 474 544
			544

As qualified shop managers are not sufficient in supply in the labor market, each shop manager is authorized to manage 2 or 3 retail stores. The management of Changchun Guangda will try to recruit more competent shop managers to meet its further expansion in the future.

– 63 –

APPENDIX IV MANAGEMENT DISCUSSION AND ANALYSIS ON CHANGCHUN GUANGDA

MATERIAL ACQUISITIONS AND DISPOSALS

As at 31 December 2009, 2010 and 2011 and 30 June 2012, Changchun Guangda had not entered into any material acquisitions and/or disposals of any of its subsidiaries and associated companies.

MATERIAL OR SIGNIFICANT INVESTMENTS

On 27 July 2012, Changchun Guangda set up a wholly-owned subsidiary “長春市首創經貿有限公司” with paid-up capital of RMB500,000.

Save as disclosed above, Changchun Guangda neither had any other significant investments nor any future plans for material investments or capital assets.

– 64 –

APPENDIX V

GENERAL INFORMATION

1. RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors having made all reasonable enquiries, confirm that to the best of their knowledge and belief, the information contained in this circular is accurate and complete in all material aspects 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. SHARE CAPITAL

Authorized 2,000,000,000 Shares of HK$0.10 each Issued and to be issued, fully paid or credited as fully paid 573,076,878 Shares in issue as at the Latest Practicable Date 18,226,068 Consideration Shares to be allotted and issued 106,909,232 Shares to be issued upon full conversion of the conversion rights attached to the convertible bond in the principal amount of US$38,201,001 issued by the Company on 5 December 2011 698,212,178 Shares	HK$ 200,000,000 57,307,688 1,822,607 10,690,923
	69,821,218

Authorized
2,000,000,000
Shares of HK$0.10 each
Issued and to be issued, fully paid or credited as fully paid
573,076,878
Shares in issue as at the Latest Practicable
Date
18,226,068
Consideration Shares to be allotted and
issued
106,909,232
Shares to be issued upon full conversion of
the conversion rights attached to the
convertible bond in the principal amount
of US$38,201,001 issued by the Company
on 5 December 2011
698,212,178
Shares

HK$
200,000,000
57,307,688
1,822,607
10,690,923

69,821,218

3. DISCLOSURE OF DIRECTORS’ INTERESTS

As at the Latest Practicable Date, the interests and short positions of the Directors and the chief executives of the Company in the shares, underlying shares and debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO) which were 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 the Directors and the chief executives of the Company were deemed or taken to have under such provisions of the SFO) or which were required to be and were recorded in the register required to be kept pursuant to Section 352 of the SFO or as otherwise notified to the

– 65 –

APPENDIX V

GENERAL INFORMATION

Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers adopted by the Company (the “ Model Code ”) were as follows:

(a) Interest in shares of the Company

		Number of
		Shares interested
		(other than	Percentage
	Capacity/	under equity	of issued
Name	Nature of interest	derivatives)	Shares
		(Note 1)
Mr. Hung Wei-Pi, John	Interest in a controlled	169,506,120(L)	29.58%
	company (Note 2)
Mr. Douglas Charles	Interest in a controlled	53,590,690(L)	9.35%
Stuart Fresco	company (Note 3)
	Personal (Note 3)	3,665,115(L)	0.64%
Ms. Hung Ying-Lien	Personal	383,145(L)	0.07%
Mr. Lu Yuan Cheng	Personal	805,035(L)	0.14%
Mr. Edward B. Matthew	Personal	21,922,350(L)	3.83%
Mr. Wu Kwan-Hong	Personal	513,935(L)	0.09%
Mr. Raymond N. Chang	Family Interest (Note 4)	7,900,000(L)	1.38%

Notes:

The letter “L” denotes a long position in the Shares.
These Shares are registered in the name of and beneficially owned by Sharp Concept Industrial Limited, the entire issued share capital of which is registered in the name of and beneficially owned by Mr. Hung Wei-Pi, John. Under the SFO, Mr. Hung Wei-Pi, John is deemed to be interested in all the Shares held by Sharp Concept Industrial Limited.
53,590,690 Shares are registered in the name of and beneficially owned by Golden Century Industrial Limited, the entire issued share capital of which is registered in the name of and beneficially owned by Mr. Douglas Charles Stuart Fresco. Under the SFO, Mr. Douglas Charles Stuart Fresco is deemed to be interested in all the Shares of held by Golden Century Industrial Limited. The remaining 3,665,115 Shares are registered in the name of Mr. Douglas Charles Stuart Fresco.
150,000 Taiwan Depository Receipts, representing 150,000 Shares, are registered in the name of Ms. Wong Chin-Wei, spouse of Mr. Raymond N. Chang. 7,750,000 Shares are registered in the name of and beneficially owned by Full Chance Finance Limited, the entire issued share capital of which is registered in the name of and beneficially owned by Ms. Wong Chin-Wei. Under the SFO, Mr. Raymond N. Chang is deemed to be interested in all the Shares held by Ms. Wong Chin-Wei and Full Chance Finance Limited.

– 66 –

APPENDIX V

GENERAL INFORMATION

(b) Interests in the underlying shares of the Company through equity derivatives

Certain Directors were granted share options under the share option scheme of the Company dated 13 February 2005. Share options granted to the Directors to subscribe for shares of the Company which were outstanding as at the Latest Practicable Date were as follows:

		Number of			Percentage
		underlying			of issued
		shares in			share capital
	Nature of	respect of	Price for	Exercise	of the
Name	interest	options granted Exercise period	grant	price	Company
					(%)
Mr. Wu Kwan-Hong	Beneficial owner	3,400,000(L) 1 January 2006 to	HK$10.00	HK$0.94	0.94%
		12 February 2015	(for all)	(per share)
		2,000,000(L) 1 July 2012 to	HK$10.00	HK$1.25
		31 December 2012	(for all)	(per share)
Ms. Hung Ying-Lien	Beneficial owner	3,400,000(L) 1 January 2006 to	HK$10.00	HK$0.94	1.01%
		12 February 2015	(for all)	(per share)
		2,400,000(L) 1 July 2012 to	HK$10.00	HK$1.25
		31 December 2012	(for all)	(per share)
Mr. Lu Yuan Cheng	Beneficial owner	3,240,000(L) 1 January 2006 to	HK$10.00	HK$0.94	0.57%
		12 February 2015	(for all)	(per share)
Mr. Raymond N.	Beneficial owner	5,700,000(L) 1 July 2012 to	HK$10.00	HK$1.25	0.99%
Chang		31 December 2012	(for all)	(per share)

Notes: The letter “L” denotes a long position in underlying Shares.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors and chief executives of the Company had or was deemed to have any interest or short position in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which was required 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 he/she was taken or deemed to have under such provisions of the SFO) or which was required, pursuant to Section 352 of the SFO, to be entered in the register referred to therein or which was required, pursuant to the Model Code contained in the Listing Rules, to be notified to the Company and the Stock Exchange.

As at the Latest Practicable Date, none of the Directors or chief executives of the Company had any interest, direct or indirect, in any asset which have been since 31 December 2011, being the date to which the latest published audited financial statements of the Group were made up, acquired or disposed of by or lease to any member of the Enlarged Group or are proposed to be acquired or disposed of by or leased to any member of the Enlarged Group.

– 67 –

APPENDIX V

GENERAL INFORMATION

As at the Latest Practicable Date, none of the Directors or chief executive of the Company was materially interested in any contract or arrangement entered into by any member of the Enlarged Group since 31 December 2011, being the date to which the latest published audited financial statements of the Company were made up, and which was significant in relation to the business of the Enlarged Group.

4. DISCLOSURE OF INTEREST OF SUBSTANTIAL SHAREHOLDERS

As at the Latest Practicable Date, so far as is known to the Directors and chief executives of the Company are aware, the following persons (not being a Director or chief executive of the Company) had interests or short positions in the shares and underlying shares of the Company 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, 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, were as follows:

					Total
		Number of			number of
		Shares	Number of		Shares/
		interested		Shares	underlying
		(other than	interested		shares under	Percentage
	Capacity/	under equity	under equity		equity	of issued
Name	Nature of interest	derivatives)	derivatives		derivatives	Shares
		(Note 1)
Sharp Concept Industrial	Beneficial owner	169,506,120(L)		Nil	169,506,120	29.58%
Limited
Ms. Jin Xiao-Yan	Family interest	169,506,120(L)		Nil	169,506,120	29.58%
	(Note 2)
Golden Century Industrial	Beneficial owner	53,590,690(L)		Nil	53,590,690	9.35%
Limited	(Note 3)
STIC Korea Integrated–	Beneficial owner	Nil	78,923,254(L)		78,923,254	13.77%
Technologies New Growth				(Note 4)
Engine Private Equity
Fund

Notes:

The letter “L” denotes a long position in the Shares.
Sharp Concept Industrial Limited is wholly and beneficially owned by Mr. Hung Wei-Pi, John. Ms. Jin Xiao-Yan is the wife of Mr. Hung Wei-Pi, John. Under the SFO, Ms. Jin is deemed to be interested in all the Shares held by Mr. Hung Wei-Pi, John and Sharp Concept Industrial Limited.

– 68 –

APPENDIX V

GENERAL INFORMATION

Golden Century Industrial Limited is wholly and beneficially owned by Mr. Douglas Charles Stuart Fresco.
These represent the underlying Shares issuable upon the conversion of the convertible bonds issued to STIC Korea Integrated — Technologies New Growth Engine Private Equity Fund by the Company on 5 December 2011.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors or senior management had any interest or position in the substantial shareholders of the Company.

Save as disclosed above, so far as is known to the Directors and chief executive of the Company, as at the Latest Practicable Date, no other person (other than the Directors and chief executives of the Company), had an interest or short position in the shares or underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, and/or, who was, 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.

5. COMPETING INTERESTS

Each of the Directors has confirmed that he and his associates do not have any interests in a business apart from the Group’s business, which competes or is likely to compete, either directly or indirectly with the Group’s business.

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 2011, the date to which the latest audited financial statements of the Group were made up.

7. SERVICE CONTRACTS

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

8. LITIGATION

As at the Latest Practicable Date, neither the Company nor any member of the Enlarged Group was engaged in any litigation or claim of material importance and, so far as the Directors were aware, no litigation or claim of material importance was pending or threatened against the Company or any of its subsidiaries.

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APPENDIX V

GENERAL INFORMATION

9. MATERIAL CONTRACTS

The following contracts (not being contract in the ordinary course of business) have been entered into by the members of the Enlarged Group within the two years immediately preceding the issue of this circular and are or may be material:

(a) the Equity Transfer Agreement;
(b) the equity transfer agreement dated 28 June 2012 entered into among the Company, as purchaser, Shenzhen Chongdehang Investment Development Co., Ltd. (深圳市崇德行投資發展有限公司) and Shenzhen Guanzhida Investment Co., Ltd (深圳市冠智達投資有限公司), as vendors, and Mr. Yang Yong Chong (楊永崇) and Ms. Li Shao Na (李少娜), as guarantors, in respect of the acquisition of 49% equity interest in Shenzhen Yanglonghang Auto Service Ltd. (深圳市永隆行汽車服務有限公司) at a cash consideration of RMB37,240,000;
(c) the equity transfer agreement dated 30 March 2012 entered into between the Company, as purchaser, and Mr. Lin Yun Ling (林雲玲), Mr. Chen Gao Sen (陳高森) and Mr. Chen Xian Ping (陳先平) (collectively the “ Autoboom Vendors ”) and Mr. Chen Jin Guo (陳金國) in respect of the acquisition of 12% equity interest in Zhejiang Autoboom Industrial Co., Ltd. (浙江歐特隆實業有限公司) (“ Zhejiang Autoboom ”), a 51%-owned subsidiary of the Company, at a cash consideration of RMB37,247,000 (subject to adjustment);
(d) the equity transfer agreement dated 30 March 2012 entered into among Perfect Progress Investments Limited (a wholly owned subsidiary of the Company), as purchaser, Mr. Deng Jiang Rong (鄧江榮), as vendor, and Spread Master (Zhejiang) Automation Technology Co., Ltd. (速飛德（浙江）自動化科技有限公司), as guarantor in respect of the acquisition of 100% equity interest in Mighty International Limited (雄偉國際有限公司) (“ Mighty International ”) at a cash consideration of RMB80,000,000 and the equity right transfer agreement entered into by the same parties on the same date to set out their agreement on the handling of certain assets and affairs of Shanghai Ou Xi Ma Apparel Company Limited (上海歐西瑪服裝設備有限公司), the only investment held by Mighty International;
(e) the subscription agreement dated 17 November 2011 entered into between the Company, as issuer, and STIC Secondary Fund II, L.P. and STIC Korea Integrated-Technologies New Growth Engine Private Equity Fund (collectively the “ Investors ”) in respect of the issue of US$38,201,001 convertible bonds with zero coupon rate, a conversion price of HK$2.781 (subject to adjustment) and a maturity date of 4 December 2015 by the Company to the Investors;
(f) the equity transfer agreement dated 23 September 2011 entered into among the Company, as purchaser, and Beijing Yuyang Shiji Trading Co., Ltd. (北京宇

– 70 –

APPENDIX V

GENERAL INFORMATION

陽世紀貿易有限公司), as vendor, and Mr. Xing Aiyi (邢愛義), as guarantor, in relation to the acquisition of 9% equity interest in Beijing Aiyihang Auto Service Ltd. (北京愛義行汽車服務有限責任公司), a 51%-owned subsidiary of the Company, at a cash consideration of RMB22,633,575;

(g) the equity transfer agreement dated 23 September 2011 entered into between the Company, as purchaser, and Mr. Chen Bing Yu (陳炳煜), Ms. Li Zhen Fei (李貞斐) and Mr. Li Zheng Guo (李正國), as vendors, in respect of the acquisition of 51% equity interest in Hubei Autoboom Auto Accessories Supermarket Co., Ltd. (湖北歐特隆汽車用品超市有限公司) at a cash consideration of RMB87,258,450 (subject to adjustment);
(h) the subscription agreement dated 12 August 2011 entered into between the Company and SinoPac Securities (Asia) Limited (the “ Manager ”) in respect of the issue of RMB200 million bonds at 3.75% per annum due on 17 August 2013 by the Company to the Manager;
(i) the equity transfer agreement dated 28 June 2011 entered into between the Company, as purchaser, and Ms. Liu Feng Xi (劉鳳喜) and Mr. Xia Hai Ping (夏海平), as vendors, in respect of the acquisition of 51% equity interest in Shanghai Astrace Trade Development Company Limited (上海追得貿易發展有限公司) at a consideration of RMB64,260,000 (subject to adjustment), which was payable as to RMB36,757,000 by cash and as to RMB27,503,000 by the issue of 13,788,453 shares in the Company at the issue price of HK$2.40;
(j) the third supplemental agreement dated 30 March 2011 entered into between the Company, as purchaser, and the Autoboom Vendors, as vendors, to amend the terms of the equity transfer agreement (“ Autoboom Equity Transfer Agreement ”) made between them on 26 August 2010 in respect of the acquisition of 51% equity interest in Zhejiang Autoboomat at cash consideration of RMB87,950,000 (subject to adjustment) (“ Autoboom Acquisition ”);
(k) the second supplemental agreement dated 30 March 2011 entered into between the Company, as purchaser, and Ms. Tong Yan (佟岩) and Mr. Li Hai Dong (李海東) (collectively the “ XTC Vendors ”), as vendors, to amend the terms of the equity transfer agreement (“ XTC Equity Transfer Agreement ”) made between them on 17 June 2010 in respect of the acquisition of 51% equity interest in Liaoning Xin Tian Cheng Industrial Co., Ltd. (遼寧新天成實業有限公司) at a cash consideration of RMB56,100,000 (subject to adjustment);
(l) the second supplemental agreement dated 25 February 2011 entered into between the Company and the Autoboom Vendors to amend the terms of the Autoboom Equity Transfer Agreement; and
(m) the supplemental agreement dated 25 February 2011 entered into between the Company and the XTC Vendors to amend the terms of the XTC Equity Transfer Agreement.

– 71 –

APPENDIX V

GENERAL INFORMATION

10. EXPERTS AND CONSENT

The following sets out the qualifications of the experts which have given opinion or advice on the information contained in this circular:

Name Qualifications BDO Limited Certified Public Accountants PKF Certified Public Accountants RHL Appraisal Limited Qualified valuer Dacheng Law Offices, PRC law firm Shanghai Branch

(a) As at the Latest Practicable Date, BDO Limited, PKF, RHL Appraisal Limited and Dacheng Law Offices, Shanghai Branch had no interest, direct or indirect, in any member of the Enlarged Group or any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Enlarged Group.
(b) As at the Latest Practicable Date, BDO Limited, PKF, RHL Appraisal Limited and Dacheng Law Offices, Shanghai Branch had no interest, direct or indirect, in any assets which have been since 31 December 2011, the date to which the latest published audited financial statements of the Company were made up, acquired or disposed of by or leased to any member of the Enlarged Group, or are proposed to be acquired or disposed of by or leased to any member of the Enlarged Group.
(c) Each of BDO Limited, PKF, RHL Appraisal Limited and Dacheng Law Offices, Shanghai Branch has given and has not withdrawn its written consent to the issue of this circular with its letter or report included, or with reference to its name, in the form and context in which it is included.

11. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection at 5/F, 180 Hennessy Road, Wan Chai, Hong Kong during normal business hours up to and including the date which is 14 days from the date of this circular.

(a) the memorandum and articles of association of the Company;
(b) the Equity Transfer Agreement;
(c) other material contracts referred to in the paragraph headed “Material Contracts” in this appendix;

– 72 –

APPENDIX V

GENERAL INFORMATION

(d) the annual report of the Company for each of the two years ended 31 December 2010 and 2011;
(e) the accountants’ report in respect of Changchun Guangda, the text of which is set out in Appendix II to this circular;
(f) the accountants’ report in respect of the unaudited pro forma financial information of the Enlarged Group, the text of which is set out in Appendix III to this circular;
(g) the valuation report on Changchun Guangda prepared by RHL Appraisal Limited, reference to which is made in Appendix III to this circular;
(h) the legal advice issued by Dacheng Law Offices, Shanghai Branch containing its advice to the Company on matters relating to the Acquisition; and
(i) this circular.

12. GENERAL

(a) The company secretary of the Company is Mr. Liu Xiao Hua. Mr. Liu obtained a master’s degree in law from East China University of Political Science and Law and is qualified as a lawyer in the PRC. Mr. Liu is an associate member of the Hong Kong Institute of Chartered Secretaries and the Institute of Chartered Secretaries and Administrators in the United Kingdom.
(b) The Hong Kong branch share registrar and transfer office of the Company is Computershare Hong Kong Investor Services Limited at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong.
(c) The English text of this circular shall prevail over the Chinese text in the case of any inconsistency.

– 73 –

NOTICE OF EXTRAORDINARY GENERAL MEETING

==> picture [116 x 44] intentionally omitted <==

NEW FOCUS AUTO TECH HOLDINGS LIMITED 新焦點汽車技術控股有限公司[*]

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 360)

NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN THAT an extraordinary general meeting (“ EGM ”) of New Focus Auto Tech Holdings Limited (the “ Company ”) will be held at 2/F., No. 1179 Wuzhong Road, Minhang District, Shanghai, China, on 23 October 2012 at 2:00 p.m. to consider and if thought fit, pass with or without amendments, the following resolutions:

ORDINARY RESOLUTIONS

“ THAT the Equity Transfer Agreement (as more particularly described in the circular dated 24 September 2012 (the “Circular”)), a copy of which has been produced to the meeting marked “A” and signed by the chairman of the meeting for identification purpose, and the transactions contemplated thereunder be and are hereby approved and the directors of the Company be and are hereby authorized to take any step as they consider necessary, desirable or expedient in connection therewith.”
“ THAT the allotment and issue of 18,226,068 Consideration Shares (as more particularly described in the Circular) credited as fully paid at an issue price of HK$1.34 per Consideration Share to Ms. Gao Xiu Min or her nominee(s) in accordance with the terms of the Equity Transfer Agreement be and are hereby approved and the directors of the Company be and are hereby authorized to take any step as they consider necessary, desirable or expedient in connection therewith.”

By order of the Board New Focus Auto Tech Holdings Limited Hung Wei-Pi, John Chairman

Hong Kong, 24 September 2012

– 74 –

NOTICE OF EXTRAORDINARY GENERAL MEETING

Registered office:

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

Principal place of business in Hong Kong:

5/F, 180 Hennessy Road Wan Chai Hong Kong

Notes:

Any member of the Company entitled to attend and vote at the above meeting is entitled to appoint a proxy to attend and vote instead of him. A proxy need not be a member of the Company. A member whose holding two or more shares of the Company is entitled to appoint more than one proxies to attend and vote in his stead. If more than one proxies are appointed, the appointment shall specify the number and class of shares in respect of which each such proxy is so appointed.
To be valid, the form of proxy, together with the power of attorney or other authority, if any, under which it is signed, or a notarially certified copy of that power or authority must be deposited at the Hong Kong branch share registrar and transfer office of the Company, Computershare Hong Kong Investor Services Limited at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong not less than 48 hours before the time appointed for the holding of the meeting or any adjourned meeting thereof. Completion and return of the form of proxy will not preclude any member from attending the meeting or any adjournment thereof and voting in person if he so wishes and in such event, the form of proxy will be deemed to be revoked.
As at the date hereof, the Directors of the Company are: executive Directors — Hung Wei-Pi, John, Wu Kwan-Hong, Hung Ying-Lien, Lu Yuan Cheng, Raymond N. Chang, Douglas Charles Stuart Fresco and Edward B. Matthew; non-executive Directors — Low Hsiao-Ping, Hsu Ming Chyuan and Chang An-Li; and independent non-executive Directors — Du Haibo, Zhou Tai-Ming and Uang Chii-Maw.
For identification purpose only

– 75 –

AI assistant

New Focus Auto Tech Holdings Limited — Proxy Solicitation & Information Statement 2012

49157_rns_2012-09-23_a836a017-387f-4fa7-a17e-0422cc9ccd08.pdf

NEW FOCUS AUTO TECH HOLDINGS LIMITED 新焦點汽車技術控股有限公司[*]

MAJOR TRANSACTION ACQUISITION OF 51% EQUITY INTEREST IN CHANGCHUN GUANGDA

DEFINITIONS

NEW FOCUS AUTO TECH HOLDINGS LIMITED 新焦點汽車技術控股有限公司[*]

MAJOR TRANSACTION ACQUISITION OF 51% EQUITY INTEREST IN CHANGCHUN GUANGDA

INTRODUCTION

EQUITY TRANSFER AGREEMENT

Date

Parties

Interest to be Acquired

Consideration

Adjustment to Consideration

Conditions Precedent

Other Principal Terms and Conditions

Undistributed Profits

Non-competition undertaking

Management of Changchun Guangda

Others

ISSUE OF CONSIDERATION SHARES

REASONS FOR AND BENEFITS OF THE ACQUISITION

INFORMATION ON CHANGCHUN GUANGDA

INFORMATION ON THE VENDOR AND THE GUARANTORS

INFORMATION ON THE GROUP

FINANCIAL EFFECTS OF THE ACQUISITION

FINANCIAL AND TRADING PROSPECTS OF THE ENLARGED GROUP

LISTING RULES IMPLICATIONS

EGM

RECOMMENDATION

ADDITIONAL INFORMATION

1. THREE YEARS FINANCIAL INFORMATION

2. INDEBTEDNESS

The Group

Borrowings

Pledge of assets

Commitments

Changchun Guangda

Borrowing

Disclaimer

3. WORKING CAPITAL

The Boards of Directors

Dear Sirs,

I. FINANCIAL INFORMATION

Statements of Comprehensive Income

Statements of Financial Position

Statements of Changes in Equity

Statements of Cash Flows

Notes to the Financial Information

1. GENERAL INFORMATION

2. APPLICATION OF HONG KONG FINANCIAL REPORTING STANDARDS (“HKFRSs”)

3. SIGNIFICANT ACCOUNTING POLICIES

Property, plant and equipment

Impairment of tangible assets

Inventories

Receivables

Impairment of financial assets

Effective interest method

Derecognition of financial assets

Payables and borrowings

Derecognition of financial liabilities

Cash and cash equivalents

Leases

Provisions

Income taxes

Current tax

Deferred tax

Foreign currencies

Employees’ benefits

Short-term benefits

Retirement benefits scheme contributions

Revenue recognition

Borrowing costs

Related parties

Contingent liabilities

(a) Depreciation of property, plant and equipment

(b) Estimated impairment of property, plant and equipment

(c) Estimated net realisable value of inventories

(d) Estimated impairment of trade and other receivables

New Focus Auto Tech Holdings Limited Proxy Solicitation & Information Statement 2012