Pak Tak International Limited — Proxy Solicitation & Information Statement 2016

Dec 30, 2016

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 stockbroker or other registered dealer in securities, a bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Pak Tak International Limited（百德國際有限公司）*, you should at once hand this circular, together with the enclosed form of proxy, to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale was effected for transmission to the purchaser or transferee.

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited (the ‘‘Stock Exchange’’) 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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PAK TAK INTERNATIONAL LIMITED （百德國際有限公司） *

(Incorporated in Bermuda with limited liability)

MAJOR TRANSACTION CAPITAL INJECTION INTO SHENZHEN SENPAI NEW ENERGY TECHNOLOGY COMPANY LIMITED* AND NOTICE OF SPECIAL GENERAL MEETING

Financial adviser to the Company

前海融資有限公司

Qianhai Corporate Finance Limited

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

A notice convening the special general meeting (‘‘SGM’’) to be held at Salons I & II, The Mezzanine Floor, Grand Hyatt Hong Kong, 1 Harbour Road, Wanchai, Hong Kong on Tuesday, 17 January 2017 at 10:30 a.m. is set out on pages SGM-1 to SGM-2 of this circular. A form of proxy for use at the SGM is also enclosed with this circular. Such form of proxy is also published on the website of Hong Kong Exchanges and Clearing Limited (http://www.hkexnews.hk).

Whether or not you are able to attend the SGM, please complete and sign the enclosed form of proxy in accordance with the instructions printed thereon and return it to Company’s share registrar in Hong Kong, Tricor Standard Limited, at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for holding the SGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the SGM if you so wish.

30 December 2016

• for identification purposes only

CONTENTS

			Page
DEFINITIONS	. . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .			4
APPENDIX I	–	FINANCIAL INFORMATION OF THE GROUP . . . . . . . . . . .	I-1
APPENDIX II	–	FINANCIAL INFORMATION OF
		THE TARGET COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . .	II-1
APPENDIX III	–	UNAUDITED PRO FORMA FINANCIAL
		INFORMATION OF THE ENLARGED GROUP . . . . . . . .	III-1
APPENDIX IV	–	MANAGEMENT DISCUSSION AND ANALYSIS . . . . . . . . . .	IV-1
APPENDIX V	–	GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-1
NOTICE OF SPECIAL GENERAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .			SGM-1

– i –

DEFINITIONS

Unless the context otherwise requires, terms or expressions used in this circular shall have the meanings ascribed to them below:

‘‘Announcement’’ the announcement of the Company dated 24 November 2016 in relation to, among other things, the Capital Injection Agreement

• ‘‘Board’’ the board of Directors

• ‘‘business day’’ means a day other than Saturday, Sunday and public holiday in the PRC

• ‘‘Capital Injection’’ the capital injection into the Target Company by the Investor as stipulated under the Capital Injection Agreement

• ‘‘Capital Injection Agreement’’ the capital injection agreement dated 24 November 2016, as amended by the Supplemental Agreement, entered into among the Investor, the Original Shareholders and the Target Company

• ‘‘Company’’ Pak Tak International Limited, a company incorporated in Bermuda with limited liability, the Shares of which are listed on main board of the Stock Exchange

• ‘‘Completion’’ completion of the Capital Injection

• ‘‘Conditions Precedent’’ the conditions precedent to the completion of the Capital Injection

• ‘‘connected person’’ has the meaning ascribed thereto under the Listing Rules

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

• ‘‘Enlarged Group’’ the Group immediately after the completion of the Capital Injection

• ‘‘Group’’ the Company and its subsidiaries

• ‘‘HKD’’ Hong Kong dollars, the lawful currency of Hong Kong ‘‘Hong Kong’’ the Hong Kong Special Administrative Region of the PRC

– 1 –

DEFINITIONS

• ‘‘Independent Third Parties’’

third parties independent of and not connected with the Company or any of its connected persons

• ‘‘Investor’’ 深 圳泰和 昱通 新能 源科技 有限 公司 (Shenzhen Taihe Yutong New Energy Technology Company Limited*), a company established under the laws of the PRC with limited liability, and an indirect wholly-owned subsidiary of the Company

• ‘‘Latest Practicable Date’’ 28 December 2016, being the latest practicable date for the purpose of ascertaining certain information contained in this circular prior to its publication

• ‘‘Long Stop Date’’

• 31 January 2017 or such later date as the Parties may agree in writing

• ‘‘Listing Rules’’ the Rules Governing the Listing of Securities on the Stock Exchange

• ‘‘Original Shareholders’’ Shenzhen Baosheng and Shenzhen Dasheng

• ‘‘PRC’’

• the People’s Republic of China, which for the purposes of this circular (unless otherwise indicated) excludes Hong Kong, Macau Special Administrative Region of the PRC and Taiwan

• ‘‘RMB’’ Renminbi, 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 HKD0.02 each in the issued share capital of the Company

• ‘‘Shareholders’’ the holders of Shares

• ‘‘Stock Exchange’’ The Stock Exchange of Hong Kong Limited ‘‘subsidiary(ies)’’ has the meaning ascribed thereto under the Listing Rules

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DEFINITIONS

• ‘‘Shenzhen Baosheng’’

• 深圳市寶晟珠寶有限公司 (Shenzhen Baosheng Jewellery Company Limited*), holding 60% of the equity interests of the Target Company prior to the completion of Capital Injection

• ‘‘Shenzhen Dasheng’’ 深圳市大晟資產管理有限公司 (Shenzhen Dasheng Asset Management Company Limited*), holding 40% of the equity interests of the Target Company prior to the completion of Capital Injection

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

• ‘‘Supplemental Agreement’’

• the supplemental agreement dated 28 December 2016 entered into among the Investor, the Original Shareholders and the Target Company for the amendment of the long stop date of the Capital Injection Agreement

• ‘‘Target Company’’ 深圳市森派新能源科技有限公司 (Shenzhen Senpai New Energy Technology Company Limited*), a company established under the laws of the PRC with limited liability on 31 December 2014

• ‘‘Utility Patent’’

• a type of patent in the PRC intending to protect new technology or measures on shape, structure or its combination to increase the utility of a product, which shall be valid for 10 years

• ‘‘Zhengzhou Senpai’’ 鄭州市森派新能源科技有限公司 (Zhengzhou Senpai New Energy Technology Company Limited*), a company established under the laws of the PRC and a direct whollyowned subsidiary of the Target Company

‘‘%’’ per cent.

For the purpose of this circular, unless otherwise indicated, conversions of RMB into HKD is calculated at the approximate exchange rate of RMB1.00 to HKD1.13. This exchange rate is adopted for the purpose of illustration only and does not constitute a representation that any amounts have been, could have been, or may be, exchanged at this or any other rate at all.

• English translations of the Chinese names are included in this circular for identification purpose only, and should not be regarded as the official English translations of such names.

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LETTER FROM THE BOARD

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PAK TAK INTERNATIONAL LIMITED （百德國際有限公司） *

(Incorporated in Bermuda with limited liability)

Executive Directors: Mr. Wang Jian Mr. Shang Yong Ms. Qian Pu

Non-executive Directors: Mr. Law Fei Shing

Independent Non-executive Directors: Mr. Liu Kam Lung Mr. Xie Xiaobiao Mr. Zheng Suijun

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

Head Office and Principal Place of Business in Hong Kong: Unit 1807, 18/F., West Tower, Shun Tak Centre, 168-200 Connaught Road Central, Hong Kong

30 December 2016

To the Shareholders

Dear Sir/Madam,

MAJOR TRANSACTION CAPITAL INJECTION INTO SHENZHEN SENPAI NEW ENERGY TECHNOLOGY COMPANY LIMITED*

INTRODUCTION

Reference is made to the Announcement of the Company dated 24 November 2016 in relation to the Capital Injection. On 24 November 2016 (after trading hours), (i) the Investor (an indirect wholly-owned subsidiary of the Company), (ii) Shenzhen Baosheng and Shenzhen Dasheng (both being the Original Shareholders of the Target Company and currently hold 60% and 40% of the equity interests of the Target Company, respectively), and (iii) the Target Company (the ‘‘Parties’’, each a ‘‘Party’’) entered into the Capital Injection Agreement, pursuant to which the Investor has conditionally agreed to inject capital of RMB82,000,000 (approximately HKD92,660,000) into the Target Company by way of cash contribution.

• for identification purposes only

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LETTER FROM THE BOARD

Upon completion of the Capital Injection, the Target Company will be held as to approximately 45%, 33% and 22% by the Investor, Shenzhen Baosheng and Shenzhen Dasheng, respectively, and the registered capital of the Target Company will be increased from RMB100,000,000 to RMB182,000,000.

As one or more of the applicable percentage ratios (as defined under Rule 14.07 of the Listing Rules) in relation to the Capital Injection under the Capital Injection Agreement exceed 25% but less than 100%, the entering into the Capital Injection Agreement therefore constitutes a major transaction for the Company and is subject to the reporting, announcement and Shareholders’ approval requirements under Chapter 14 of the Listing Rules.

The purpose of this circular is to provide you with, among other things, (i) further details on the Capital Injection Agreement and information on the Target Company, (ii) such other information as required by the Listing Rules, and (iii) the notice of the SGM.

THE CAPITAL INJECTION AGREEMENT

Major terms of the Capital Injection Agreement, as amended by the Supplemental Agreement dated 28 December 2016, are set out below.

Date

24 November 2016 (after trading hours)

Parties

• (i) the Investor;

• (ii) Shenzhen Baosheng and Shenzhen Dasheng, the Original Shareholders of the Target Company; and

• (iii) the Target Company.

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, Shenzhen Baosheng, Shenzhen Dasheng and the Target Company (and their respective ultimate beneficial owner(s)) are Independent Third Parties of the Company and its connected persons.

Capital Injection

As at the date of the Capital Injection Agreement, the Target Company has a fully-paid registered capital of RMB100,000,000. Pursuant to the Capital Injection Agreement, the Investor has conditionally agreed to inject capital in the amount of RMB82,000,000 (approximately HKD92,660,000) into the Target Company by way of cash contribution.

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LETTER FROM THE BOARD

Upon completion of the Capital Injection, the registered capital of the Target Company will be increased to RMB182,000,000, and the Target Company will be held as to approximately 45%, 33% and 22% by the Investor, Shenzhen Baosheng and Shenzhen Dasheng, respectively.

The shareholding structure of the Target Company as at the date of the Capital Injection Agreement and after the Completion is set out as follows:

Investor Shenzhen Baosheng Shenzhen Dasheng Total	As at the date of the Capital Injection Agreement Amount of the capital contribution to the registered capital of the Target Company Equity interest in the Target Company (in RMB) (%) – – 60,000,000 60% 40,000,000 40% 100,000,000 100%	After the Completion Amount of the capital contribution to the registered capital of the Target Company Equity interest in the Target Company (in RMB) (%) 82,000,000 ~ 45% 60,000,000 ~ 33% 40,000,000 ~ 22% 182,000,000 100%	After the Completion Amount of the capital contribution to the registered capital of the Target Company Equity interest in the Target Company (in RMB) (%) 82,000,000 ~ 45% 60,000,000 ~ 33% 40,000,000 ~ 22% 182,000,000 100%
			100%

The amount of the Capital Injection was determined after arm’s length negotiation between the Investor and the Original Shareholders and was determined with reference to a combination of the following factors:

(i) The capital requirement for the Target Company to engage in large-scale battery production

It is currently expected that the total capital requirement for the Target Company to manufacture its battery product in large scale will be approximately RMB94,399,000. In considering the current cash position of the Group and the likelihood in obtaining further finance in the amount of approximately RMB12,399,000, either by way of borrowings from financial institution and/or other financing alternatives, the Directors consider that the amount of Capital Injection is in the best interest of the Group and Shareholders as a whole. For details of the capital requirement, please refer to the section headed ‘‘Capital requirement for the new energy business of the Target Company’’ of this circular.

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LETTER FROM THE BOARD

• (ii) The net asset of the Target Company as at 30 September 2016 and the administrative expenditures incurred in relation to the research and development works performed by the previous management of the Target Company during 2015 and 2016

The original capital injection made by the Original Shareholders was RMB100 million of which approximately RMB80 million was being reflected in the net assets figure of the Target Company as at 30 September 2016. The remaining balance in the amount of approximately RMB20 million has been incurred as administrative expenditures in connection to the works performed by the previous management of the Target Company for the research and development, which amounted to approximately RMB1.3 million for the year ended 31 December 2015 and RMB18.9 million for the nine months period ended 30 September 2016, respectively. Since these administrative expenditures were being classified as expenses made by the Target Company rather than capitalized as an asset item under the accounting standards in Hong Kong, the Target Company had suffered loss during 2015 and 2016. It is the view of the previous management of the Target Company and being agreed by the Board that despite the development stage and historical losses of the Target Company, these expenditures should contribute to the achievement made by the previous management team of the Target Company in obtaining the two utility patents at present and these patents can be useful to the future business operation of the Target Company.

(iii) By reference to the new registered capital of the Target Company after the Capital Injection

In considering the original capital injection made by the Original Shareholders and by reference to the new registered capital of the Target Company after the Capital Injection, which amounting to RMB182 million, the Capital Injection represents approximately 45% ownership of the Target Company.

(iv) The ability to control the majority of the board of directors of the Target Company

Even though the Investor’s minority shareholding in the Target Company, the Board is able to control the majority of the board of directors of the Target Company and direct the operating activities of the Target Company immediately upon Completion.

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LETTER FROM THE BOARD

In these regards, the Directors consider that the Consideration and the terms and conditions of the Capital Injection Agreement are on normal commercial terms and are fair and reasonable. Therefore, the Directors consider that the Capital Injection is in the interests of the Company and its Shareholders as a whole. Payment of the Capital Injection will be funded by internal resources and/or external borrowing of the Group.

Upon the fulfillment (or waiver, if applicable) of all Conditions Precedent, the amount of RMB82,000,000 shall be settled by the Investor within 7 business days of the completion of the relevant registration procedures in respect of the Capital Injection with the local administration bureau of industry and commerce.

Conditions Precedent

The obligations of the Parties to complete the Capital Injection is conditional upon the fulfillment (or waiver) of the following Conditions Precedent:

• (a) the Investor having completed its due diligence investigation on the business, financial, legal and all other aspects of the Target Company and is satisfied with the results of its diligence review;

• (b) the PRC lawyer designated by the Investor has issued legal opinion of the Target Company to confirm the Target Company is (i) legally established; (ii) its registered share capital has been fully paid; (iii) its operation and business structure are legally effective; and (iv) has obtained all necessary licenses, approvals and permits to operate its business;

• (c) the Target Company and the Original Shareholders having obtained the necessary internal approval(s) (including but not limited to the approval for the change of registered capital and the corresponding amendment on the articles of association of the Target Company) from their respective board of directors and/or shareholders and having provided written documents in respect of such approval(s) to the Investor;

• (d) the Original Shareholders having no objection to their rights and obligations of under the Capital Injection Agreement and agreed to waive any right of first refusal or any other preemptive right at law or based on any agreements;

• (e) there being no actual or reasonably foreseeable events, facts, conditions, changes or other circumstances that may lead to any material adverse change on the financial conditions, operation conditions and business prospects of the Target Company from the date of the Capital Injection Agreement and at all times up to and including the date of Completion;

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LETTER FROM THE BOARD

• (f) all necessary approvals or consents in relation to the Capital Injection Agreement and the transactions contemplated thereunder on the part of the Parties (and their respective holding companies) pursuant to any laws, regulations, agreements or legally binding documents having been obtained from, completed and/or registered with third parties (including but not limited to any government and regulatory body);

• (g) the key employees having signed employment contracts and non-competition agreements with the Target Company; and

• (h) no terms and conditions of the Capital Injection Agreement having been breached and all the representations and warranties as set out in the Capital Injection Agreement having remained true and accurate in all respects.

All of the Conditions Precedent set out above can only be waived by the Investor in writing. If the Conditions Precedent are not fulfilled or waived (as the case may be) on or before the Long Stop Date or such later date as the Parties may agree in writing and in particular if the environmental certificate as referred to in the paragraph headed ‘‘Information of the Original Shareholders and Target Company – Background of the Target Company – (i) Licences – Environmental Certificate’’ cannot be obtained, the Capital Injection Agreement shall terminate and be of no further effect and no Party shall have any claim against or liability to the other Parties, save for any antecedent breaches.

The Company and the Investor consider that no Condition Precedent can be waived. As at the Latest Practicable Date, save as Condition Precedent (g), no Conditions Precedent has been fulfilled.

Completion

Upon the fulfillment (or waiver, if applicable) of all Conditions Precedent, Completion shall take place within 7 business days of the completion of the relevant registration procedures in respect of the Capital Injection with the local administration bureau of industry and commerce. The amount of RMB82,000,000 shall be settled by the Investor by way of cash contribution to the bank account of the Target Company.

Upon Completion, the Target Company will be held as to approximately 45%, 33% and 22% by the Investor, Shenzhen Baosheng and Shenzhen Dasheng, respectively. The board of directors of the Target Company shall comprise five directors. Pursuant to the Capital Injection Agreement, three of the directors shall be nominated by the Investor and the remaining two by each of the Original Shareholders of the Target Company. The chairman of the board of directors of the Target Company shall be designated by the Investor. The Parties have undertaken to exercise their respective voting rights to support the appoint of such nominees as the directors of the Target Company. The Board considers the Group will be able to control a majority of the board of directors of the Target Company and direct its relevant activities, accordingly, the Target Company will become an indirect non-wholly owned subsidiary of the Company and its financial results, assets and liabilities will be consolidated into the consolidated financial statements of the Group.

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LETTER FROM THE BOARD

Sharing of rights and obligations

Any profit or loss of the Target Company shall be shared or borne by the Investor, Shenzhen Baosheng and Shenzhen Dasheng in proportion to their respective equity interests in the Target Company.

Anti-dilution, right of first refusal and tag-along right

Following the completion of the Capital Injection, in the event that the Target Company proposes to conduct further equity fund raising at prices higher than that of the Capital Injection, the Investor is entitled to make capital contribution into the Target Company at equal terms under the right of first refusal.

In addition, unless with the prior approval of the Investor, the Target Company shall not issue new shares to Original Shareholders and investors other than the Investor at prices lower than that of the Capital Injection, and in which case the Original Shareholders shall be jointly and severally liable for the compensation payable to the Investor. The Compensation will be provided in cash in the following manner:

Compensation = (RMB182,000,000 – valuation prior to introduction of new investor) x 45.05%

The Compensation should be made to the Investor within 30 days from the date of receipt of a notice of compensation by the Investor.

Should the Original Shareholders propose to dispose any equity interests in the Target Company, the Investor is entitled to (i) require the potential purchaser to purchase any or all of its equity interests in the Target Company prior to those to be disposed by the Original Shareholders at equal terms, or (ii) acquire any or all of the equity interests in the Target Company to be disposed by the Original Shareholders at equal terms under the right of first refusal.

Should the Investor propose to dispose of any equity interest in the Target Company, the Original Shareholders are entitled to (i) require the potential purchaser to purchase the relevant portion of its equity interest in the Target Company in proportion to its respective shareholding at equal term, or (ii) acquire any or all of the equity interests in the Target Company to be disposed by the Investor at equal terms under the right of first refusal.

Non-competition undertaking

Upon Completion, unless with the prior approval of the Investor, each of the Original Shareholders (and their respective ultimate beneficial owner(s)) and their respective associates and their senior management and employees with shareholding in the Target Company shall not, directly or indirectly, participate in any business which has same or similar business nature as that of the Target Company.

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LETTER FROM THE BOARD

Termination

The Capital Injection Agreement may be terminated if (i) there is a mutual agreement between the Parties; (ii) there is any force majeure or other events or non-foreseeable factors that will make the Capital Injection Agreement not enforceable; or (iii) in the event that any of the Conditions Precedent are not fulfilled (or waived, where applicable) on or before the Long Stop Date.

In the event that the Capital Injection Agreement is terminated, all obligations of each Party under the Capital Injection Agreement shall cease and no Party shall have any claim against another Party in respect of any matter arising out of or in connection with the Capital Injection Agreement except for any breach arising prior to such termination.

INFORMATION OF THE ORIGINAL SHAREHOLDERS AND TARGET COMPANY

Background of the Original Shareholders

Shenzhen Baosheng is a limited liability company established in the PRC and is principally engaged in the sales of luxury and high-end jewellery products, including gem-set jewellery, platinum, karat gold and other gold products.

Shenzhen Dasheng is a limited liability company established in the PRC and is principally engaged in property investment and other technology related businesses.

Background of the Target Company

The Target Company is a company established under the laws of the PRC with limited liability on 31 December 2014 and as at the date of the Capital Injection Agreement, owned as to 60% and 40% by Shenzhen Baosheng and Shenzhen Dasheng, being Independent Third Parties of the Company and its connected persons.

The Target Company is engaged in the research and development of (i) power electric battery; (ii) system of power electric battery; (iii) technologies related to range extended electric vehicles; and (iv) other products related to a battery system.

A range extended electric vehicle is a battery electric vehicle that includes an auxiliary power unit known as ‘‘range extender’’. The range extender drives an electric generator which charges a battery that supplies the vehicle’s electric motor with electricity.

(i) Licenses

The new energy business in PRC is mainly regulated by the Ministry of Industry and Information Technology（中華人民共和國工業和信息化部）(‘‘MIIT’’), which impose various regulatory requirements on the production and sales of batteries or other components for the electric vehicles.

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LETTER FROM THE BOARD

For any PRC manufacturer of new energy vehicles to benefit from the favorable policies implemented by the PRC government, such as tax incentive and subsidy, their batteries or the power system used for the vehicles must comply with and their battery suppliers or manufacturers must be qualified under the conditions under the industrial criteria for the automobile power storage battery（汽車動力蓄電池行業規範條件）(the ‘‘Industrial Criteria’’). Such enterprise may voluntarily apply to the MIIT and successful applicant will be included under the catalogue of enterprises for the automobile power storage battery（ 汽車動力蓄電池企業目錄 ）(the ‘‘Catalogue’’). In order for a battery manufacturing enterprise to be included in the Catalogue, all enterprises have to fulfill the following major requirements as stated under the Industrial Criteria:

				Expected date to
	Major			fulfill the
Main criteria	requirements	Description		requirements
First Criterion:	Basic	•	To obtain all necessary licenses, approvals and	Completed
			permits to operate the new energy/battery
			businesses i.e. the business certificate.
		•	To perform environmental study for the battery	January 2017
			production process and obtain the
			environmental certificate.
Second Criterion:	Capability and	•	Capable for the enterprises to achieve an	February 2017
	productivity		annual production capacity of (i) not less than
			200 million watt-hours for the lithium-ion
			power batteries; (ii) 10 million watt-hours for
			the nickel-metal hydride batteries; (iii) 5
			million watt-hours for the supercapacitor; and
			(iv) either 10,000 sets or 200 million watt-
			hours for the systems.
		•	Either (i) the number of employees engaged in	February 2017
			the research and development works should be
			more than 10% of the overall numbers of
			employees; or (ii) the total number of
			technical personnel engaged in the research
			and development works should be more than
			100.
		•	The technicians in relation to the research and	February 2017
			development must be at least cover the
			following main areas of the company’s product
			development, which include (i) product
			research and development; (ii) product testing;
			(iii) product comparison with peer; and (iv)
			product standardization for the enterprise.
		•	To deliver studies with respect to the	February 2017
			production capacity, process and environmental
			impact of the batteries to be manufactured to
			the relevant government authority.
Third Criterion:	Quality Assurance	•	To obtain all necessary licenses with respect	March 2017
			to the product quality.
Fourth Criterion:	Final Approval	•	To obtain final approval from the MIIT.	August 2017

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LETTER FROM THE BOARD

As at the Latest Practicable Date, the Target Company has satisfied one of the major requirements under the First Criterion by having obtained necessary licenses, approvals and permits to operate the new energy business, which include the research and development, and sales of batteries or other components for electric vehicles.

Such necessary licenses, approvals and permits include, other than the business certificate which does not have any validity period or renewal conditions, the environmental certificate (‘‘Environmental Certificate’’) which the Target Company is taking steps to obtain in order to satisfy part of the first criterion as well as the notice of approval for commercial entity*（商事主 體審批告知書）dated 30 September 2016 issued by the Market Supervision Administration of Shenzhen Municipality（深圳市市場監督管理局）for production purpose. Save as the business certificate and the Environmental Certificate, there is no requisite licences, permits or approval in which the Target Company has to obtain to operate the new energy business for the research and development, and the production and sales of batteries or other components for electric vehicles. The Company expects that the Environmental Certificate will be obtained by the end of January 2017.

Environmental Certificate

In order to obtain the Environmental Certificate, the Target Company has to apply to the Human Settlements and Environment Commission of Shenzhen Municipality (‘‘Shenzhen Municipality’’). Such application involves the four stages as stated below:

1) Acceptance for review

The applicant submits the Environmental Certificate application required documents in accordance with the information examination and acceptance approval form*（審查受理資料 核准表）including but not limited to the environmental impact assessment and pollution control design plan to the Shenzhen Municipality.

2) Preliminary examination

Within the prescribed time limit, the Shenzhen Municipality examines the application according to the preliminary examination form of the construction project environmental assessment document（建設項目環評文件初審表）. If the required documents meet the relevant requirements, the Shenzhen Municipality will issue the notice of preliminary opinion（初審意見）.

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LETTER FROM THE BOARD

3) Trial review

The Shenzhen Municipality organizes an expert technical review within the prescribed time limit. If the review results is satisfactory, the Shenzhen Municipality will issue the expert technical review opinion*（專家技術審查意見）.

4) Final review

After the trial review, the Shenzhen Municipality conducts a final review to re-assess the application. If the review results is satisfactory, the Shenzhen Municipality will issue the expert review of technical advice*（技術審查意見）. As at the Latest Practicable Date, the Target Company has not yet received the expert review of technical advice from Shenzhen Municipality. In general, after considering the aforementioned application procedures, it will take at least 5 working days from the expert technical review opinion before granting the expert review of technical advice.

As at the Latest Practicable Date, the Target Company has passed the trial review stage and has obtained the expert technical review opinion. the Directors expect that the fourth review stage can be passed and the expert review of technical advice can be obtained by the end of January 2017.

Given the Target Company has submitted documents and has received constructive feedback from the Shenzhen Municipality and the Directors do not foresee much difficulty in fulfilling the relevant requirements, the Directors do not foresee any material obstacles in obtaining the Environmental Certificate.

If the Target Company is unable to obtain the Environment Certificate, the Target Company would be unable to commence its production. In order to protect the interests of the Shareholders and the Company, if the Environmental Certificate cannot be obtained, the Conditions Precedent cannot be fulfilled and the Capital Injection Agreement shall terminate and be of no further effect accordingly. Therefore, the Directors consider that the failure of the Target Company to obtain the Environmental Certificate shall have no material adverse effect on the Company.

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LETTER FROM THE BOARD

(ii) Patents

In the development of batteries and power system, the Target Company possesses the following patented technologies:

	Type of				Place of
Patent	patent	Status	Registered owner	Patent number	registration	Patent Term	Application
An electric tugboat and	Utility patent	Active	Target Company	ZL201520568470.8	PRC	31/7/2015 –	Electric power system
its power system*						30/7/2025	for electric tugboat
（一種電動拖船及
其動力系統）
A testing device	Utility patent	Active	Target Company	ZL201520807338.8	PRC	19/10/2015 –	Test for power
for the deterioration						18/10/2025	battery
level of battery system*
（一種動力電池劣化程度的
測試裝置）

At present, the Target Company serves also as one of the allied members of a PRC standardization committee in relation to the development of mini-electric vehicles.

(iii) Key employees of the Target Company

Set out below are the key employees and the management experience under the new energy business.

Mr. Wan Li Cheng (‘‘Mr. Wan’’) is currently an executive vice president in the Target Company, who will be in charge of the production line of battery. Mr. Wan has more than 9 years of experience in lithium mineralogy, metallurgy and processing. Mr. Wan was previously a technical director of Bai Ji Rui (Tianjin) New Energy Co., Ltd from 2012 to 2015, and a senior research and development engineer of Shenzhen BAK Battery Co., Ltd from 2005 to 2008. Bai Ji Rui (Tianjin) New Energy Co., Ltd is a company that principally engaged in the research and development of the storage of solar energy and Shenzhen BAK Battery Co., Ltd is a company that principally engaged in the development of lithium battery, electric vehicle and battery recycle. During his employment with these companies, Mr. Wan developed several registered patents relating to battery technologies and applications, which included but not limited to Patent 200810142216.6 (Titanium lithium iron phosphate anode material and preparation method), Patent 200710076583.6 (Preparation method of lithium iron phosphate anode material of lithium-ion battery), Patent 200810142216.6 (Titanium lithium iron phosphate anode material and preparation method) and others.

– 15 –

LETTER FROM THE BOARD

Mr. Shao Ge (‘‘Mr. Shao’’) is currently a vice president of the Target Company, who will be in charge of the mass production of new model batteries to be used in range extended electric buses. Mr. Shao has over 15 years of experience in battery production industry. Mr. Shao was previously employed by Shenzhen Zhongtao Battery Co., Ltd during the period from 2015 to 2016, and Shenzhen BAK Battery Co., Ltd during the period from 2000 to 2015. During his employment with these companies as a deputy general manager and research and development engineer, Mr. Shao was in charged of the production, quality control and promotion of new products and had developed more than 20 registered patents relating to battery technologies and applications, which included but not limited to Patent 01108824.9 (Method for producing a gel state polymer electrolyte membrane and laminated lithium-ion battery), Patent 200510020558.7 (A lithium-ion battery cathode slurry preparation method), Patent 200510020719.2 (Winding method for lithium ion battery) and others.

Mr. Zheng Chun Long (‘‘Mr. Zheng’’) is currently a chief engineer of the Target Company, who is in charge of the overall strategy in research and development, action plans on technical development, product improvements, innovation, talent cultivation and management of the Target Company. Mr. Zheng was previously employed by Zhuhai Guangyu Battery Co., Ltd from 2014 to 2015.

Mr. Huang Wen Da (‘‘Mr. Huang’’) is currently a research and development manager of the Target Company, who is responsible for the fundamental research and development of new products and product management. Mr. Huang was previously employed by Jiangxi Forster New Energy Co., Ltd from 2014 to 2016 as manager of research and development in battery products.

Mr. Jiang Yao Yuan (‘‘Mr. Jiang’’) is currently a director of the Target Company, who is responsible for the quality control of the products, which include but not limited to design and implement quality assurance system for productions, quality management in procurement, laboratory and equipment controls and staff training etc. Mr. Jiang was previously employed by Shenzhen BAK Battery Co., Ltd.

The aforementioned patents as developed by the key employees are intellectual property of third parties which has not and shall not be used by the Target Company.

All the above key employees of the Target Company had signed the management contracts and non-competition agreements with the Target Company for a term of 3 years. With their extensive knowledge and experience in the new energy business, it is the view of the Board that they will help and ensure the potential development of the new energy business.

– 16 –

LETTER FROM THE BOARD

(iv) Business model of the Target Company upon Completion

As at the Latest Practicable Date, the Target Company has not yet commenced into business other than the research and development works. Since establishment in 2014, the previous management team of the Target Company had devoted significant effort in developing overall solution in the areas of (i) pure or range extended electric vehicle power system; and (ii) lithium battery energy storage system. With the technical know-how and experience of the management team of the Target Company, it is the goal of the Target Company to extend its development work to manufacture of lithium battery products and the related power system.

Products

Under the new energy business, the Target Company will focus in the manufacturing of two types of rechargeable lithium batteries (the ‘‘Lithium Batteries’’), with the following particulars:

Model number	Nominal voltage	Nominal capacity
18650	3.6V	2,400mAh
38130	3.2V	10,000mAh

These rechargeable lithium batteries, when integrate with the motor, electric control system and other ancillary components, will form an essential part of a pure or range extended electric vehicle power system. A range extended electric vehicle is a battery electric vehicle that includes an auxiliary power unit known as ‘‘range extender’’. The range extender drives an electric generator, which charges a battery that supplies the vehicle’s electric motor with electricity.

At present, the Target Company intend to construct new factories and three production lines for the manufacturing of the two types of Lithium Batteries. These production lines will be situated at the new factories, which located in 1-4/F., Building C, B&K Technology Park, No.9 Bangkai Road, High-Tech Industrial Park, Guangming New District, Shenzhen and Building 1, Tongli Industrial Park, Kuichong Street, Dapeng New District, Shenzhen. With the expected completed date before March 2017, the production capacity for model18650 and model-38130 are expected to have 24 million and 1.8 million each year respectively.

In addition, the Target Company will also plan to develop the EIC Control System, which is also applicable to the range extended electric vehicle. During the process of developing an effective electric power generation system, a manufacturer will need to consider a variety of customer needs, such as electric consumption, costs, temperature control etc. and this could be achieved by the process of (i) designing a system; and (ii) selection of suitable engine, electric control system and other ancillary components. This effective power generation system created is the ‘‘EIC System’’. Currently, it is the intention of the Board to commence the new energy business in relation to the Lithium Batteries and will consider the EIC system in a later stage.

– 17 –

LETTER FROM THE BOARD

Quality control

As mentioned earlier, save as the business certificate and the Environmental Certificate, there is no requisite licences, permits or approval in which the Target Company has to obtain to operate the new energy business for the research and development, and the production and sales of batteries or other components for electric vehicles. However, in order to satisfy the Industrial Criteria and to be included in the Catalogue, the Target Company will continuously strive to ensure its product quality, functionality and reliability by developing comprehensive procedures for testing, assembly, operations and maintenance of its rechargeable lithium battery products. The Target Company will assemble a quality control team, comprising approximately 60 members responsible for ensuring on-going compliance with the manufacturing procedures and quality control protocols of the Target Company. All members under the quality control team must have 1 to 3 years of relevant experience in the lithium battery business.

Expansion of the technical team

To ensure that the Target Company will have sufficient personnel that with the necessary professional qualification and expertise in operating and monitoring the new energy business, it is the current intention of the Board to recruit extra technical staffs for both the development and operation works of the Group’s new energy business. Furthermore, continuous training will be provided by the key employees of the Target Company to the technicians at present under the areas such as product research and development, product testing etc..

Target markets and customers

Under the battery business, the Target Company will sell its battery products mainly to the manufacturers of various types of range extended electric vehicle, such as bus, passengers car or special purpose vehicles and other distributors in the PRC market. Through coordinating sales and marketing activities in different regions of the PRC, the sales team of the Target Company will negotiate the product price based on factors such as manufacturing cost, duration of contract etc. Furthermore, the Target Company also intends to penetrate new geographic areas such as America or other European countries by engaging overseas sales agent to promote its battery products oversea. It is the aspiration of the Target Company to become one of the high-end manufacturers of lithium battery both in terms of environmentally sound and cost effectiveness.

– 18 –

LETTER FROM THE BOARD

(v) Capital requirement for the new energy business of the Target Company

As aforementioned, the Target Company has satisfied one of the major requirements under the First Criterion of the Industrial Criteria by having obtained all necessary licenses, approvals and permits to operate the new energy/battery businesses. In order for the Target Company to satisfy all the Industrial Criteria as imposed by the MIIT thus qualifying its battery product under the Catalogue and manufacture its battery product in large scale, it is currently expected that the following capital expenditures will need to be incurred.

• Approximately RMB64,399,000 for the construction of the new factories situated at 1- 4/F., Building C, B&K Technology Park, No.9 Bangkai Road, High-Tech Industrial Park, Guangming New District, Shenzhen and Building 1, Tongli Industrial Park, Kuichong Street, Dapeng New District, Shenzhen, and the expansion of three production lines and the research and development centre, which is expected to be completed before March 2017;

• Approximately RMB14,400,000 for the expansion of the technical personnel team that will engage in the research and development works for the development of the production lines;

• Approximately RMB6,300,000 for the lease of land in constructing the new factories and office for the new energy/battery businesses; and

• Approximately RMB9,300,000 for the general working capital requirement for the development.

It is currently expected that the above total capital expenditure for the Target Company to qualify its battery product into the Catalogue and manufacture its battery product in large scale will be approximately RMB94,399,000. As at the Latest Practicable Date, this total capital expenditure had already covered the capital commitment in the amount of RMB62,515,555 as at 30 September 2016 as disclosed under Note 17 of the financial information of the Target Company in Appendix II of this circular.

– 19 –

LETTER FROM THE BOARD

Upon the Capital Injection, the Target Company will use approximately RMB82,000,000 as follows:

• Approximately RMB20,000,000 for the repayment of borrowings which had been fully utilised in connection to the construction of the new factories and the expansion of the production lines as referred under Note 19 of the financial information of the Target Company in Appendix II of this circular;

• Approximately RMB32,000,000 for the construction of the new factories and the expansion of three production lines and the research and development centre that located in Shenzhen;

• Approximately RMB14,400,000 for the expansion of the technical personnel team that will engaged in the research and development works for the development of the production lines;

• Approximately RMB6,300,000 for the lease of land in constructing the new factories and office for the new energy/battery businesses; and

• Approximately RMB9,300,000 for the general working capital requirement for the development.

(vi) Addition source of funding for capital expenditure

It is currently intended by the Directors that the outstanding amount of approximately RMB12,399,000, which will be used for the construction of the new factory and the expansion of the production lines, be funded by financial institutions which to be borrowed from the Target Company and/or financial assistance provided by the Group and the Original Shareholders in proportion to their respective equity interests in the Target Company and/or other financing alternatives that may be obtained by the Enlarged Group for this purpose. The Target Company currently intends to finance the outstanding amount by borrowings from financial institutions through loan agreement and as at the Latest Practicable Date, the Target Company is still under negotiation with them. The Directors are confident that the facilities from the said financial institution is likely to be made available to the Target Company.

In light of the unforeseen circumstances in the future, the Directors at present cannot determine whether the Target Company may have further fund requirements other than those abovementioned. However, in the unlikely event that further funding is required for the Target Company, the Company may consider different means of fund raising for the business development of the Target Company, which include but not limit to by way of capital injection, provision of shareholders’ loan, seek of financial assistance from the financial institution etc..

– 20 –

LETTER FROM THE BOARD

SHAREHOLDING STRUCTURE OF THE TARGET COMPANY UPON COMPLETION

It is expected that the structure of the Group immediately after the Completion will be as follows:

==> picture [370 x 155] intentionally omitted <==

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

Shenzhen Dasheng Shenzhen Baosheng The Group
~ 22% ~ 33% ~ 45%
Target Company
100%
Zhengzhou Senpai (Note)
----- End of picture text -----

Note: As at the date of the Capital Injection Agreement, the Target Company is the legal and beneficial owner of the entire registered capital of Zhengzhou Senpai, which does not have any paid-up capital, hold any asset, nor have any business activities.

FINANCIAL INFORMATION OF THE TARGET COMPANY

As extracted from Appendix II in relation to the financial information of the Target Company, the following table summarises the financial information of the Target Company for one day of 31 December 2014, the year ended 31 December 2015 and the nine months ended 30 September 2016.

			For the nine
		For the year	month ended
	31 December	ended 31	30 September
	2014	December 2015	2016
	(RMB)	(RMB)	(RMB)
	(Audited)	(Audited)	(Audited)
Turnover	–	–	–
Loss before taxation	–	(1,271,337)	(18,853,112)
Loss after taxation	–	(1,271,337)	(18,853,112)
Net assets	–	8,728,663	79,875,551

The audited net assets value of the Target Company as at 30 September 2016 was RMB79,875,551.

– 21 –

LETTER FROM THE BOARD

REASONS AND BENEFITS OF THE CAPITAL INJECTION

The Group is principally engaged in manufacturing, on an OEM basis, and trading of men’s, ladies’ and children’s knit-to-shape garments for export and money lending.

As disclosed in the annual report of the Company for the year ended 31 March 2016 (‘‘Annual Report’’), the environment for the garment and apparel industry remains complex and challenging. In order to diversify the business risk on the segment of manufacturing and trading of garments and to increase the Shareholders’ value, the Board poised to explore further potential investment opportunities with potential higher return which would bring long-term value to the Group.

Favourable policies

For the past few years, the PRC government had made huge effort in developing and promoting the use of new energy vehicles. These could be evidenced by the different policies implemented, which include but not limited to providing:

• subsidy to the manufacturer of new energy vehicles and batteries;

• tax incentives to encourage the new energy vehicle consumption; and

• benefit from preferential traffic treatment.

At the fourth session of the 12th National People’s Congress in March 2016, the PRC government had outlined the major energy shift that China should accomplish within the next five years. This shift includes both reducing the number of inefficient energies and vehicles, and creating advantages for energy-saving technologies. During the Congress, the PRC government had specified that China will increase support for policies that encourage the use of energy-saving and environmentally friendly advanced technologies and equipment. This includes improving efforts in the development and promotion of the use of new energy vehicles. Under the new fiveyear plan, total production and sales volume of new energy vehicles are expected to reach five million by 2021. During May 2016, the National Government Office Administration also announced that over half of new vehicles owned by the China’s central state department will be new-energy vehicles within the next five years.

– 22 –

LETTER FROM THE BOARD

According to the 2015’s statistics conducted by the China Association of Automobile Manufacturers, China produced and sold over 320,000 units of new energy vehicles, an increase of over 300 percent year on year. This included over 240,000 units of battery electric vehicles and over 80,000 units of plug-in hybrid electric vehicles. It is the view of the Board that supported by the favourable policies and the high-speed growth of the new energy vehicles in the coming years, there will be huge opportunity for the Company to develop the new energy business.

The range extended electric vehicles battery

The new energy vehicles mainly include battery electric, plug-in hybrid electric, and fuelcell electric vehicles. The range extended electric vehicles are battery electric vehicles that are principally power-driven by a battery and they use a small engine for auxiliary power. The range extended electric vehicles are driven by motor, the battery has a large capacity. The engine does not offer driving power to it directly. In addition, the engine functions only to recharge the battery when necessary.

The range extended electric vehicles battery of the Target Company has a capacity for a greater driving range so that it may effectively accumulate energy incurred in new energy vehicle braking and driving. Furthermore, the battery of the Target Company may offer sufficient power to the new energy vehicle’s engine for startup, acceleration and climbing and act as an auxiliary motor. With the Target Company edge in respect of its resources and experience in the powertrain of the new energy vehicle comprises a battery system, transmission, vehicle control unit and auxiliary power system to meet with the growth of market demand of the range extended electric vehicles, the Directors are of the view that the business of the Target Company has a good potential.

Before entering into the Capital Injection Agreement, the Company had (included but not limited to) (i) reviewed the industry report that conducted by China Association of Automobile Manufacturers, which shows the market of new energy vehicles will maintain a high-speed growth in the coming years; (ii) discussed with the senior management of the Target Company in relation to the potential development of the new energy business in the PRC; (iii) site-visited the current operation of the Target Company; (iv) conducted interview with the key employees of the Target Company and had obtained their corresponding resume; and (v) engaged a PRC lawyer to issue a legal opinion of the Target Company that to the satisfaction to the Board, confirming that the Target Company is legally established, its operation and business structure are legally effective to commence the new energy business.

– 23 –

LETTER FROM THE BOARD

Having considered all the above factors, the Directors consider that the entering into of the Capital Injection Agreement would (i) allow the Group to diversify its business segment and provide opportunities to the Group to broaden its source of income; (ii) provide an opportunity for the Group to expose to the business opportunities of development, production and sales of batteries and other electronic components for new energy vehicles in the PRC; and (iii) align with the Group’s business strategy.

As at the Latest Practicable Date, the Company has no intention to enter, or proposes to enter, into any agreement, arrangement, understanding or undertaking, and express or implied, and negotiation and intention to dispose of/downsize the Group’s existing businesses.

In view of the above, the Board (including the independent non-executive Directors) are of the view that the terms of the Capital Injection Agreement and the transactions contemplated thereunder are fair and reasonable, are on normal commercial terms and are in the interests of the Company and the Shareholders as a whole.

FINANCIAL EFFECTS OF THE TRANSACTIONS

Upon completion of the Capital Injection, the Board considers the Group will be able to control a majority of the board of directors of the Target Company and direct its relevant activities, accordingly, the Target Company will become an indirect non-wholly owned subsidiary of the Company and its financial results, assets and liabilities will be consolidated into the consolidated financial statements of the Group.

Earning

As set out in the financial information of the Target Company for one day of 31 December 2014, the year ended 31 December 2015 and the nine months ended 30 September 2016 in Appendix II to this circular, the net loss after tax of the Target Company was nil, RMB1,271,337 and RMB18,853,112 respectively.

Assets and liabilities

Based on the unaudited pro forma financial information of the Enlarged Group as set out in Appendix III to this circular and assuming that the Capital Injection had been completed on 30 September 2016:

• (i) the unaudited pro forma total assets of the Enlarged Group would be increased to approximately HKD360,280,000;

• (ii) the unaudited pro forma total liabilities of the Enlarged Group would be increased to approximately HKD122,367,000; and

• (iii) the unaudited pro forma net assets of the Enlarged Group would be increased to approximately HKD237,913,000.

– 24 –

LETTER FROM THE BOARD

FINANCIAL AND TRADING PROSPECTS OF THE ENLARGED GROUP

The Company is an investment holding company. The Group is principally engaged in the manufacturing and trading of knit-to-shape garments and money lending. The Investor is an indirect wholly-owned subsidiary of the Company and is principally engaged in the research, development and sales of batteries for new energy vehicles or other electronic products.

Upon Completion, the Enlarged Group will be principally engaged in the following business activities:

• Manufacturing, on an OEM basis, and trading of men’s, ladies’ and children’s knit-toshape garments for export (‘‘Garments Business’’);

• Money lending (‘‘Money Lending Business’’); and

• Development of new energy business (‘‘New Energy Business’’).

(i) Garments Business

The environment for the garment and apparel industry remains complex and challenging. For the year ended 31 March 2016, the Group recorded a net loss of HKD39.7 million as compared to a net loss of HKD6.5 million for the year ended 31 March 2015, mainly due to (i) a decline in turnover from HKD366.4 million to HKD308.5 million and a lower gross profit from HKD23.4 million to HKD14.5 million due to the drop of orders placed from the USA and Europe market sentiment was poor.

Furthermore, for the six months ended 30 September 2016, the Group’s net loss was HKD1.9 million, which represented a decrease of HKD5.2 million as compared to the same period of the previous year. This decrease could be attributable to (i) the decrease in the Group’s gross profit as a result of the decrease in sales turnover of garments products, and (ii) the increase in administrative expenses mainly related to the expansion of head office.

Looking into the future, the Group believes that the industries for garment and textile will continue to be very challenging in considering factors such as rising labour costs, volatile raw material prices and stricter environmental regulations in PRC. Taking into account these factors, the Board shall maintain a prudent and pragmatic approach and focus on high quality and productivity to improve the profitability of this segment.

– 25 –

LETTER FROM THE BOARD

(ii) Money Lending Business

Other than the Garments Business, the Money Lending Business opened up a new income stream for the Group. All loan facility provided by the Group will be granted to Independent Third Parties after a credit assessment. Commencing this business in Year 2016, the interest income revenue derived from the provision of money lending services amounted to HKD306,000 during the six months ended 30 September 2015.

For the Money Lending Business, the Group expects the revenue stream of this business segment to be linked to economic situation. The Group will adopt a prudent credit control policy and monitor each borrower and review their credit risk from time to time.

(iii) New Energy Business

Upon Completion, the Enlarged Group will further expand its business to the New Energy Business. For the past few years, the PRC government had made huge effort in developing and promoting the use of new energy vehicles. These could be evidenced by the multilateral policies implemented by the PRC government, which includes macro strategies such as new energy vehicles development and pollution control, infrastructural development to introduce more charging stations and providing tax and subsidy incentives for the developers and consumers. The Directors believe that it is the aim of the PRC government to reduce the number of inefficient energies vehicles and to promote new energy-saving vehicles.

In view of this trend of development and the favorable government’s policy regarding the new energy vehicles, the Group intends to tap the new energy business industry as mentioned in the section headed ‘‘Reasons and Benefits of the Capital Injection’’.

Furthermore, considering (i) the current development stage of the Target Company, of which production in large-scale may be achieved during the last quarter of 2017; (ii) the capital requirement for the development of the New Energy Business by the Target Company; and (iii) the experiences of the key employees of the Target Company by reference to their previous job experiences and patents developed, the Company is of the view that once commence large-scale production by the Target Company, it can provide a new source of income to the Group as earlier as in 2017.

At present, the Target Company is engaged in the research and development of (i) power electric battery; (ii) system of power electric battery; (iii) technologies related to range extended electric vehicles; and (iv) other products related to a battery system. It is the current intention of the Board to utilize the patent technologies as developed by the key employees of the Target Company to manufacture rechargeable lithium battery in relation to range extended electric vehicles. For details, please refer to the section headed ‘‘Business model of the Target Company upon Completion’’ in the Letter from the Board.

– 26 –

LETTER FROM THE BOARD

LISTING RULES IMPLICATIONS

As one or more of the applicable percentage ratios (as defined under Rule 14.07 of the Listing Rules) in relation to the Capital Injection under the Capital Injection Agreement exceed 25% but less than 100%, the entering into the Capital Injection Agreement therefore constitutes a major transaction for the Company and is therefore subject to the reporting, announcement and Shareholders’ approval requirements under Chapter 14 of the Listing Rules.

Under Rule 14.40 of the Listing Rules, the Capital Injection Agreement is subject to the approval of Shareholders at a general meeting of Shareholders. The approval shall be given by majority vote of the Shareholders.

To the best knowledge, information and belief of the Directors, having made all reasonable enquiries, there is (i) no voting trust or other agreement or arrangement or understanding entered into by or binding upon Shareholders; and (ii) no obligation or entitlement of any Shareholder as at the Latest Practicable Date, whereby they have or may have temporarily or permanently passed control over the exercise of the voting right in respect of their Shares to a third party, either generally or on a case-by-case basis.

An SGM will be convened and held for Shareholders to consider and, if thought fit, pass with or without modifications, approve the Capital Injection Agreement and the transactions contemplated thereunder.

SGM

A notice of SGM to be held on Tuesday, 17 January 2017 at 10:30 a.m. at Salons I & II, The Mezzanine Floor, Grand Hyatt Hong Kong, 1 Harbour Road, Wanchai, Hong Kong is set out on pages SGM-1 to SGM-2 of this circular for the purpose of considering and, if thought fit, pass with or without modifications, the terms of the Capital Injection, the Capital Injection Agreement and the transactions contemplated thereunder.

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, no Shareholder has material interest in the Capital Injection Agreement. As such, no Shareholder will be required to abstain from voting at the SGM in respect of the Capital Injection Agreement and the transactions contemplated thereunder.

– 27 –

LETTER FROM THE BOARD

In order to determine the list of Shareholders who will be entitled to attend and vote at the SGM, the register of members of the Company will be closed for registration of transfer of Shares from Thursday, 12 January 2017 to Tuesday, 17 January 2017 (both days inclusive) during which period no transfer of Shares will be effected. Shareholders whose names appear on the register of members of the Company on Tuesday, 17 January 2017 shall be entitled to attend and vote at the SGM. In order for the Shareholders to qualify for attending and voting at the SGM, all transfer documents, accompanied by the relevant Share certificates, should be lodged for registration with Tricor Standard Limited, the Company’s branch share registrar and transfer office in Hong Kong, at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong on or before 4:30 p.m., Wednesday, 11 January 2017.

RECOMMENDATION

In light of the aforesaid, in particular, the benefits of entering into of the Capital Injection Agreement as discussed, the Directors (including the independent non-executive Directors) consider that the terms of the Capital Injection Agreement and the Capital Injection are fair and reasonable, are on normal commercial terms and are in the interests of the Company and the Shareholders as a whole. Accordingly, the Directors (including the independent non-executive Directors) recommend the Shareholders to vote in favour of the relevant resolutions to be proposed at the SGM.

ADDITIONAL INFORMATION

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

Yours faithfully, For and on behalf of the Board of Pak Tak International Limited Wang Jian Chairman

– 28 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

The audited consolidated financial statements of the Group for the years ended 31 March 2014, 2015 and 2016 are disclosed in the Company’s 2014 annual report dated 30 June 2014 (from pages 23 to 77), 2015 annual report dated 26 June 2015 (from pages 26 to 79) and 2016 annual report dated 29 June 2016 (from pages 26 to 77) respectively. The unaudited condensed consolidated financial statements of the Group for the six months ended 30 September 2016 are disclosed in the Company’s 2017 interim report dated 28 November 2016 (from pages 13 to 28). The aforesaid annual reports and interim report can be accessed on the website of the Company (www.paktakintl.com) and the website of the Stock Exchange (www.hkexnews.hk).

The Company’s 2014 annual report is available on http://www.hkexnews.hk/listedco/ listconews/SEHK/2014/0721/LTN20140721225.pdf.

The Company’s 2015 annual report is available on http://www.hkexnews.hk/listedco/ listconews/SEHK/2015/0716/LTN20150716005.pdf.

The Company’s 2016 annual report is available on http://www.hkexnews.hk/listedco/ listconews/SEHK/2016/0722/LTN20160722015.pdf.

The Company’s 2017 interim report is available on http://www.hkexnews.hk/listedco/ listconews/SEHK/2016/1214/LTN20161214129.pdf.

I – 1

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

INDEBTEDNESS

At the close of business on 31 October 2016, being the latest practicable date for the purpose of indebtedness statement prior to printing of this circular, the Group had total borrowings of approximately HKD28,258,000, comprising bank loans of approximately HKD8,876,000 and bank overdraft of approximately HKD19,382,000. The bank loans were secured by corporate guarantee from the Company, legal charges on leasehold properties of companies controlled by and personal guarantee from Mr. Cheng Kwai Chun, John (‘‘Mr. Cheng’’), the director and legal representative of certain major subsidiaries of the Group. The bank overdraft was secured by legal charge on certain assets of Mr. Cheng.

At the close of business on 31 October 2016, the Target Company had total borrowings of approximately HKD22,863,000, all of them represented unsecured loans from third parties.

At the close of business on 31 October 2016, the Group and the Target Company did not have any significant contingent liabilities or financial guarantees issued.

Save as aforesaid, and apart from intra-group liabilities and normal trade payables in the ordinary course of business, as at the close of business on 31 October 2016, the Enlarged Group did not have any debt securities issued and outstanding or agreed to be issued, bank overdrafts, loans or other similar indebtedness, liabilities under acceptances (other than normal trade bills) or acceptance credits, mortgages, charges, finance lease or hire purchase commitments, guarantees or other material contingent liabilities.

The Directors confirmed that no material changes in the indebtedness and contingent liabilities of the Enlarged Group since 31 October 2016 up to and including the Latest Practicable Date.

MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors were not aware of any material adverse change in the financial or trading position of the Group since 31 March 2016, the date to which the latest published audited financial statements of the Group were made up.

WORKING CAPITAL

The Directors are of the opinion that, after taking into account the expected completion of the Capital Injection and the financial resources available to the Enlarged Group (including the internally generated funds and present available banking facilities), the Enlarged Group has sufficient working capital for its present requirements, that is for at least the next twelve months from the date of this circular.

I – 2

APPENDIX II FINANCIAL INFORMATION OF THE TARGET COMPANY

The following is the text of a report received from the reporting accountant, Baker Tilly Hong Kong Limited, Certified Public Accountants, Hong Kong, for the purpose of incorporation into this circular.

==> picture [40 x 55] intentionally omitted <==

天職香港

The Board of Directors Pak Tak International Limited

Dear Sirs,

We report on the financial information of Shenzhen Senpai New Energy Technology Company Limited*（深圳市森派新能源科技有限公司）(the ‘‘Target Company’’) which comprises the statements of financial position as at 31 December 2014, 31 December 2015 and 30 September 2016, and the statements of profit or loss and other comprehensive income, the statements of changes in equity and the statements of cash flows of the Target Company, for one day of 31 December 2014, the year ended 31 December 2015 and the nine months ended 30 September 2016 (the ‘‘Relevant Periods’’), together with a summary of significant accounting policies and other explanatory notes thereto (the ‘‘Financial Information’’), for inclusion in Appendix II to the circular of Pak Tak International Limited (the ‘‘Company’’) dated 30 December 2016 (the ‘‘Circular’’) in connection with the proposed capital injection into the Target Company (the ‘‘Capital Injection’’) by an indirect wholly-owned subsidiary of the Company. Upon completion of the Capital Injection, approximately 45.05% equity interest of the Target Company will be indirectly held by the Company.

The Target Company was established in the People’s Republic of China (‘‘PRC’’) on 31 December 2014 as a company with limited liability.

The Target Company has adopted 31 December as its financial year end date in accordance with the relevant rules and regulations in PRC. No statutory audited financial statements have been prepared by the Target Company for the date of incorporation on 31 December 2014 as there is no such requirement under relevant PRC rules and it has not involved in any business transactions on its date of incorporation. The statutory financial statements of the Target Company for the year ended 31 December 2015 were prepared in accordance with the relevant accounting rules and regulations applicable to enterprises in the PRC. The statutory financial statements of the Target Company for the year ended 31 December 2015 were audited by 深圳恒 晨會計師事務所（普通合夥）, a certified public accounting firm registered in the PRC.

• For identification purpose only

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APPENDIX II FINANCIAL INFORMATION OF THE TARGET COMPANY

The directors of the Target Company are solely responsible for the preparation of financial statements of the Target Company for the Relevant Periods that gives a true and fair view 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’’), and for such internal control as the directors of the Target Company determine is necessary to enable the preparation of the Underlying Financial Statements that are free from material misstatement, whether due to fraud or error. The Underlying Financial Statements were audited by us in accordance with Hong Kong Standards on Auditing issued by the HKICPA.

The Financial Information has been prepared by the directors of the Company for inclusion in the Circular based on the Underlying Financial Statements, with no adjustment made thereon, and in accordance with the applicable disclosure provisions of the Hong Kong Companies Ordinance and the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the ‘‘Listing Rules’’).

Directors’ Responsibility for the Financial Information

The directors of the Company are responsible for the preparation of the Financial Information that gives a true and fair view in accordance with HKFRSs and the accounting policies adopted by the Company, the disclosure requirements of the Hong Kong Companies Ordinance and the applicable disclosure provisions of the Listing Rules, and for such control as the directors of the Company determine is necessary to enable the preparation of the Financial Information based on the Underlying Financial Statements for which the directors of the Target Company are solely responsible, is free from material misstatement, whether due to fraud or error.

Reporting Accountant’s Responsibility

Our responsibility is to form an opinion on the Financial Information based on our procedures performed in accordance with the Auditing Guideline 3.340 ‘‘Prospectuses and the Reporting Accountant’’ issued by the HKICPA.

Opinion

In our opinion, the Financial Information gives, for the purpose of this report, a true and fair view of the financial position of the Target Company as at 31 December 2014, 31 December 2015 and 30 September 2016 and of the Target Company’s financial performance and cash flows for the Relevant Periods then ended.

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APPENDIX II FINANCIAL INFORMATION OF THE TARGET COMPANY

Corresponding Financial Information

For the purpose of this report, we have reviewed the unaudited corresponding interim financial information of the Target Company comprising the statement of profit or loss and other comprehensive income, the statement of changes in equity and the statement of cash flows of the Target Company for the nine months ended 30 September 2015 together with a summary of significant accounting policies and other explanatory notes thereto (the ‘‘Corresponding Financial Information’’), for which the directors of the Target Company are responsible.

The directors of the Company are responsible for the preparation and presentation of Corresponding Financial Information in accordance with the same basis adopted in respect of the Financial Information and the accounting policies of the Company.

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 Hong Kong Standards on Auditing 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 2 of section II below.

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APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

I. FINANCIAL INFORMATION OF THE TARGET COMPANY

Statements of profit or loss and other comprehensive income

Note Turnover 3 Other revenue 4 Administrative expenses Research and development expenses Loss before taxation 5 Income tax expense 6 Loss and total comprehensive loss for the period/year	31 December 2014 RMB – – – – – – –	Year ended 31 December 2015 RMB – 14,018 (1,285,355) – (1,271,337) – (1,271,337)	Nine months ended 30 September 2015 2016 RMB RMB (unaudited) – – 11,977 16,118 (1,041,868) (6,385,517) – (12,483,713) (1,029,891) (18,853,112) – – (1,029,891) (18,853,112)	Nine months ended 30 September 2015 2016 RMB RMB (unaudited) – – 11,977 16,118 (1,041,868) (6,385,517) – (12,483,713) (1,029,891) (18,853,112) – – (1,029,891) (18,853,112)
				(18,853,112) –
				(18,853,112)

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APPENDIX II FINANCIAL INFORMATION OF THE TARGET COMPANY

Statements of financial position

Note Non-current assets Property, plant and equipment 10 Capitalised development costs 11 Deposits paid for acquisition of property, plant and equipment Current assets Amount due from a shareholder 12 Other receivables, prepayments and deposits 13 Cash and cash equivalents Current liabilities Other payables and accrued charges 14 Net current assets Total assets less current liabilities NET ASSETS CAPITAL AND RESERVE 15 Paid-up capital Accumulated losses TOTAL EQUITY	At 31 December 2014 2015 RMB RMB – 355,765 – – – 1,797,576 – 2,153,341 – 4,061,307 – 2,062,047 – 650,050 – 6,773,404 – 198,082 – 6,575,322 – 8,728,663 – 8,728,663 – 10,000,000 – (1,271,337) – 8,728,663	At 30 September 2016 RMB 16,551,683 4,706,352 44,705,170
		65,963,205
		– 25,107,105 3,018,502
		28,125,607
		14,213,261
		13,912,346
		79,875,551
		79,875,551
		100,000,000 (20,124,449)
		79,875,551

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APPENDIX II FINANCIAL INFORMATION OF THE TARGET COMPANY

Statements of changes in equity

At 31 December 2014 and 1 January 2015 Changes in equity for the year ended 31 December 2015: Capital injection (note 15(c)) Loss and total comprehensive loss for the year At 31 December 2015 At 1 January 2016 Changes in equity for the nine months ended 30 September 2016: Capital injection (note 15(c)) Loss and total comprehensive loss for the period At 30 September 2016 At 1 January 2015 Changes in equity for the nine months ended 30 September 2015: Capital injection (note 15(c)) Loss and total comprehensive loss for the period At 30 September 2015 (unaudited)	Paid-up capital RMB – 10,000,000 – 10,000,000 10,000,000 90,000,000 – 100,000,000 – 10,000,000 – 10,000,000	Accumulated losses RMB – – (1,271,337) (1,271,337) (1,271,337) – (18,853,112) (20,124,449) – – (1,029,891) (1,029,891)	Total RMB – 10,000,000 (1,271,337)
			8,728,663
			8,728,663 90,000,000 (18,853,112)
			79,875,551
			– 10,000,000 (1,029,891)
			8,970,109

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APPENDIX II FINANCIAL INFORMATION OF THE TARGET COMPANY

Statements of cash flows

Note Operating activities Loss before taxation Adjustments for: – Bank interest income 4 – Depreciation on property, plant and equipment 5(b) – Loss on disposal of property, plant and equipment 5(b) Operating loss before changes in working capital (Increase)/decrease in amount due from a shareholder Increase in other receivables, prepayments and deposits Increase in other payables and accrued charges Cash used in operations Interest received Net cash used in operating activities	31 December 2014 RMB – – – – – – – – – – –	Year ended 31 December 2015 RMB (1,271,337) (14,018) 65,923 – (1,219,432) (4,061,307) (2,062,047) 198,082 (7,144,704) 14,018 (7,130,686)	Nine months ended 30 September 2015 2016 RMB RMB (unaudited) (1,029,891) (18,853,112) (11,977) (16,118) 43,088 960,418 – 5,993 (998,780) (17,902,819) – 4,061,307 (5,985,554) (23,045,058) 52,174 4,438,890 (6,932,160) (32,447,680) 11,977 16,118 (6,920,183) (32,431,562)	Nine months ended 30 September 2015 2016 RMB RMB (unaudited) (1,029,891) (18,853,112) (11,977) (16,118) 43,088 960,418 – 5,993 (998,780) (17,902,819) – 4,061,307 (5,985,554) (23,045,058) 52,174 4,438,890 (6,932,160) (32,447,680) 11,977 16,118 (6,920,183) (32,431,562)
				(17,902,819) 4,061,307 (23,045,058) 4,438,890
				(32,447,680) 16,118
				(32,431,562)

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FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

Investing activities Purchase of property, plant and equipment Deposits paid for acquisition of property, plant and equipment Expenditures on development projects Net cash used in investing activities Financing activities Proceeds from capital injection Net cash generated from financing activities Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the period/year Cash and cash equivalents at the end of the period/year	31 December 2014 RMB – – – – – – – – –	Year ended 31 December 2015 RMB (421,688) (1,797,576) – (2,219,264) 10,000,000 10,000,000 650,050 – 650,050	Nine months ended 30 September 2015 2016 RMB RMB (unaudited) (421,688) (7,586,040) – (42,907,594) – (4,706,352) (421,688) (55,199,986) 10,000,000 90,000,000 10,000,000 90,000,000 2,658,129 2,368,452 – 650,050 2,658,129 3,018,502	Nine months ended 30 September 2015 2016 RMB RMB (unaudited) (421,688) (7,586,040) – (42,907,594) – (4,706,352) (421,688) (55,199,986) 10,000,000 90,000,000 10,000,000 90,000,000 2,658,129 2,368,452 – 650,050 2,658,129 3,018,502
				(55,199,986)
				90,000,000
				90,000,000
				2,368,452 650,050
				3,018,502

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APPENDIX II FINANCIAL INFORMATION OF THE TARGET COMPANY

II. NOTES TO THE FINANCIAL INFORMATION OF THE TARGET COMPANY

1 Company information

The Target Company was established in the People’s Republic of China (the ‘‘PRC’’) on 31 December 2014 as a company with limited liability. The Target Company has its registered office and principal place of business at Workshop C, Bangkai Technology Industry Park, No. 9 Bangkai Road, High-Tech Zone, Guangming New District, Shenzhen.

The principal activities of the Target Company are engaged in research and development of power electric battery; system of power electric battery; technologies related to range extended electric vehicles; and other products related to a battery system.

The Target Company has two corporate shareholders, namely Shenzhen Baosheng Jewellery Company Limited (‘‘Shenzhen Baosheng’’) and Shenzhen Dasheng Asset Management Company Limited (‘‘Shenzhen Dasheng’’) who have equity interests of 60% and 40% in the Target Company respectively. Pursuant to the Capital Injection Agreement entered into between the Company’s indirect wholly-owned subsidiary, Shenzhen Taihe Yutong New Energy Technology Company Limited (‘‘Investor’’), in PRC, Shenzhen Baosheng, Shenzhen Dasheng and the Target Company on 24 November 2016, the Investor agreed to inject RMB82,000,000 in cash to the Target Company representing approximately 45.05% of its registered capital thereafter the injection while the original shareholders’ paidin capital remain unchanged. Under this arrangement, the Investor, Shenzhen Baosheng and Shenzhen Dasheng will hold approximately 45.05%, 32.97% and 21.98% of the Target Company respectively. As the board of directors of the Target Company shall comprise of five directors of which three of them be nominated by the Investor and the remaining two by each of the original shareholders while the chairman of the Target Company shall be designated by the Investor, the Company will be able to control the majority of the board of directors of the Target Company and direct its relevant activities. Accordingly, the Target Company will become an indirect non-wholly owned subsidiary of the Company and its financial results, assets and liabilities will be consolidated into the consolidated financial statements of the Company in future.

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APPENDIX II FINANCIAL INFORMATION OF THE TARGET COMPANY

2 Significant accounting policies

(a) Statement of compliance

The Financial Information have been prepared for inclusion in the Circular of the Company in connection with the Capital Injection into the Target Company in accordance with all applicable Hong Kong Financial Reporting Standards (‘‘HKFRSs’’), which collective term includes all applicable individual Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards (‘‘HKASs’’) and Interpretations issued by the Hong Kong Institute of Certified Public Accountants (the ‘‘HKICPA’’), accounting principles generally accepted in Hong Kong and the disclosure requirements of the Hong Kong Companies Ordinance. These financial statements also comply with the applicable disclosure provisions of the Rules Governing the Listing of Securities on the Main Board of The Stock Exchange of Hong Kong Limited (the ‘‘Main Board Listing Rules’’).

For the purpose of this report, the Financial Information of the Target Company has been prepared on a basis in accordance with the principles of the Auditing Guideline 3.340 ‘‘Prospectus and the Reporting Accountant’’ issued by the HKICPA.

A summary of the significant accounting policies adopted by the Target Company is set out below.

(b) Basis of preparation of the financial statements

The Financial Information is presented in Renminbi (‘‘RMB’’), unless otherwise stated. Renminbi is the Target Company’s functional currency and presentation currency.

The measurement basis used in the preparation of the Financial Information is the historical cost basis, unless otherwise stated.

The preparation of the Financial Information in conformity with HKFRSs requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

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APPENDIX II FINANCIAL INFORMATION OF THE TARGET COMPANY

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.

Judgements made by management in the application of HKFRSs that have significant effect on the Financial Information and major sources of estimation uncertainty are discussed in note 20.

(c) Changes in accounting policies

For the purpose of preparing and presenting the Financial Information of the Relevant Periods, the Target Company has adopted all HKFRSs which are effective to the accounting period beginning on 1 January 2016 throughout the Relevant Periods.

The Target Company has not applied any new or amended HKFRS that is not yet effective for the nine months ended 30 September 2016 (see note 21).

(d) Property, plant and equipment

Items of property, plant and equipment are stated at cost less accumulated depreciation and impairment losses (see note 2(f)(ii)).

Depreciation is calculated to write off the cost of items of property, plant and equipment, less their estimated residual value, if any, using the straight line method over their estimated useful lives at the following rates:

Leasehold improvements	Over the remaining term of the relevant leases
Plant and machinery	20%
Furniture, fixtures and	20 to 33.3%
equipment
Motor vehicles	25%

Both the useful life of an asset and its residual value, if any, are reviewed annually.

Gains or losses arising from the retirement or disposal of an item of property, plant and equipment are determined as the difference between the net disposal proceeds and the carrying amount of the item and are recognised in profit or loss on the date of retirement or disposal.

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FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(e) Leased assets

An arrangement, comprising a transaction or a series of transactions, is or contains a lease if the Target Company determines that the arrangement conveys a right to use a specific asset or assets for an agreed period of time in return for a payment or a series of payments. Such a determination is made based on an evaluation of the substance of the arrangement and is regardless of whether the arrangement takes the legal form of a lease.

(i) Classification of assets leased to the Target Company

Assets that are held by the Target Company under leases which transfer to the Target Company substantially all the risks and rewards of ownership are classified as being under finance leases. Leases which do not transfer substantially all the risks and rewards of ownership to the Target Company are classified as operating leases.

(ii) Operating lease charges

Where the Target Company has the use of assets held under operating leases, payments made under the leases are charged to profit or loss in equal instalments over the accounting periods covered by the lease term, except where an alternative basis is more representative of the pattern of benefits to be derived from the leased asset. Lease incentives received are recognised in profit or loss as an integral part of the aggregate net lease payments made. Contingent rentals are charged to profit or loss in the accounting period in which they are incurred.

(f) Impairment of assets

(i) Impairment of receivables

Receivables that are stated at cost or amortised cost are reviewed at the end of each reporting period to determine whether there is objective evidence of impairment. Objective evidence of impairment includes observable data that comes to the attention of the Target Company about one or more of the following loss events:

• significant financial difficulty of the debtor;

• a breach of contract, such as a default or delinquency in interest or principal payments;

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FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

• it becoming probable that the debtor will enter bankruptcy or other financial reorganisation; and

• 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 (i.e. the effective interest rate computed at initial recognition of these assets), where the effect of discounting is material. This assessment is made collectively where these financial assets 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.

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 periods/years.

Impairment losses are written off against the corresponding assets directly, except for impairment losses recognised in respect of 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 Company is satisfied that recovery is remote, the amount considered irrecoverable is written off against 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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FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

• (ii) Impairment of other assets

Internal and external sources of information are reviewed at the end of each reporting period to identify indications that the following assets may be impaired or an impairment loss previously recognised no longer exists or may have decreased:

• property, plant and equipment; and

• capitalised development costs.

If any such indication exists, the asset’s recoverable amount is estimated.

• Calculation of recoverable amount

The recoverable amount of an asset is the greater of its fair value less costs of disposal 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. Where an asset does not generate cash inflows largely independent of those from other assets, the recoverable amount is determined for the smallest group of assets that generates cash inflows independently (i.e. a cashgenerating unit).

• Recognition of impairment losses

An impairment loss is recognised in profit or loss if the carrying amount of an asset, or the cash-generating unit to which it belongs, exceeds its recoverable amount. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the cash-generating unit (or group of units) and then, to reduce the carrying amount of the other assets in the unit (or group of units) on a pro rata basis, except that the carrying value of an asset will not be reduced below its individual fair value less costs of disposal (if measureable) or value in use (if determinable).

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APPENDIX II FINANCIAL INFORMATION OF THE TARGET COMPANY

• Reversals of impairment losses

An impairment loss is reversed if there has been a favourable change in the estimates used to determine the recoverable amount.

A reversal of an impairment loss is limited to the asset’s carrying amount that would have been determined had no impairment loss been recognised in prior periods/years. Reversals of impairment losses are credited to profit or loss in the periods/year in which the reversals are recognised.

(g) Receivables

Receivables are initially recognised at fair value and thereafter stated at amortised cost using the effective interest method, less allowance for impairment of doubtful debts (see note 2(f)(i)), except where the receivables are interest-free loans made to related parties without any fixed repayment terms or the effect of discounting would be immaterial. In such cases, the receivables are stated at cost less allowance for impairment of doubtful debts.

(h) Payables

Payables are initially recognised at fair value and are subsequently stated at amortised cost unless the effect of discounting would be immaterial, in which case they are stated at cost.

(i) Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and on hand, demand deposits with banks and other financial institutions, and short-term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value, having been within three months of maturity at acquisition.

(j) Employee benefits

Short term employee benefits and contributions to defined contribution retirement plans

Salaries, annual bonuses, paid annual leave, contributions to defined contribution retirement plans and the cost of non-monetary benefits are accrued in the period/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 values.

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FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

The Target Company is required to participate in the defined contribution retirement schemes operated by the relevant government authorities for employees in the PRC and make contributions to the retirement schemes at certain rates of the basic salary of its employees in the PRC. Contributions to all these schemes are charged to profit or loss when incurred.

(k) Income tax

Income tax for the period/year comprises current tax and movements in deferred tax assets and liabilities. Current tax and movements in deferred tax assets and liabilities are recognised in profit or loss except to the extent that they relate to items recognised in other comprehensive income or directly in equity, in which case the relevant amounts of tax are recognised in other comprehensive income or directly in equity, respectively.

Current tax is the expected tax payable on the taxable income for the period/year, using tax rates enacted or substantively enacted at the end of the reporting period, and any adjustment to tax payable in respect of previous periods/years.

Deferred tax assets and liabilities arise from deductible and taxable temporary differences respectively, being the differences between the carrying amounts of assets and liabilities for financial reporting purposes and their tax bases. Deferred tax assets also arise from unused tax losses and unused tax credits.

Apart from certain limited exceptions, all deferred tax liabilities, and all deferred tax assets to the extent that it is probable that future taxable profits will be available against which the asset can be utilised, are recognised. Future taxable profits that may support the recognition of deferred tax assets arising from deductible temporary differences include those that will arise from the reversal of existing taxable temporary differences, provided those differences relate to the same taxation authority and the same taxable entity, and are expected to reverse either in the same period as the expected reversal of the deductible temporary difference or in periods into which a tax loss arising from the deferred tax asset can be carried back or forward. The same criteria are adopted when determining whether existing taxable temporary differences support the recognition of deferred tax assets arising from unused tax losses and credits, that is, those differences are taken into account if they relate to the same taxation authority and the same taxable entity, and are expected to reverse in a period, or periods, in which the tax loss or credit can be utilised.

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APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

The limited exceptions to recognition of deferred tax assets and liabilities are those temporary differences arising from the initial recognition of assets or liabilities that affect neither accounting nor taxable profit (provided they are not part of a business combination), and temporary differences relating to investments in subsidiaries to the extent that, in the case of taxable differences, the Target Company controls the timing of the reversal and it is probable that the differences will not reverse in the foreseeable future, or in the case of deductible differences, unless it is probable that they will reverse in the future.

The amount of deferred tax recognised is measured based on the expected manner of realisation or settlement of the carrying amount of the assets and liabilities, using tax rates enacted or substantively enacted at the end of the reporting period. Deferred tax assets and liabilities are not discounted.

The carrying amount of a deferred tax asset is reviewed at the end of each reporting period and is reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow the related tax benefit to be utilised. Any such reduction is reversed to the extent that it becomes probable that sufficient taxable profits will be available.

Current tax balances and deferred tax balances, and movements therein, are presented separately from each other and are not offset. Current tax assets are offset against current tax liabilities, and deferred tax assets against deferred tax liabilities, if the Target Company has the legally enforceable right to set off current tax assets against current tax liabilities and the following additional conditions are met:

• in the case of current tax assets and liabilities, the Target Company intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously; or

• in the case of deferred tax assets and liabilities, if they relate to income taxes levied by the same taxation authority on either:

• the same taxable entity; or

• different taxable entities, which, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered, intend to realise the current tax assets and settle the current tax liabilities on a net basis or realise and settle simultaneously.

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FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(l) Provisions and contingent liabilities

Provisions are recognised for liabilities of uncertain timing or amount when the Target Company has a legal or constructive obligation arising as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made. Where the time value of money is material, provisions are stated at the present value of the expenditure expected to settle the obligation.

Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence or nonoccurrence of one or more future events are also disclosed as contingent liabilities unless the probability of outflow of economic benefits is remote.

(m) Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable. Provided it is probable that the economic benefits will flow to the Target Company and the revenue and costs, if applicable, can be measured reliably, revenue is recognised in profit or loss.

Interest income is recognised as it accrues using the effective interest method.

(n) Research and developments costs

Costs associated with research activities are charged to profit or loss as when incurred. Costs associated with development activities are recognised as expenses in the period in which they are incurred, or recognised as intangible assets provided that they meet the following recognition requirements:

• demonstration of technical feasibility of the prospective product for internal use of sale;

• there is intention to complete the intangible asset and use or sell the asset;

• the Target Company’s ability to use or sell the intangible asset is demonstrated;

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FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

• the intangible asset will generate probable economic benefits through internal use of sale;

• sufficient technical, financial and other resources are available for completion; and

• the expenditure attributable to the intangible asset can be reliably measured.

Capitalised development costs are stated at cost less accumulated amortisation and any impairment losses (see note 2(f)(ii)). Amortisation of capitalised development costs is charged to profit or loss on straight-line method over the assets’ estimated useful lives. Both the period and method of amortisation are reviewed annually. Development costs previously recognised as expenses are not recognised as an asset in the subsequent period.

Development costs relating to the design and testing of new or improved products and reassessment of production procedures for cost efficiency purposes are recognised as expenses when incurred as the directors consider that the related economic benefits generated from these developments have very limited useful life.

(o) Related parties

• (i) A person, or a close member of that person’s family, is related to the Target Company if that person:

• (1) has control or joint control of the Target Company;

• (2) has significant influence over the Target Company; or

• (3) is a member of the key management personnel of the Target Company or the Target Company’s parent.

• (ii) An entity is related to the Target Company if any of the following conditions applies:

• (1) The entity and the Target Company are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others).

• (2) 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).

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APPENDIX II

• (3) Both entities are joint ventures of the same third party.

• (4) One entity is a joint venture of a third entity and the other entity is an associate of the third entity.

• (5) The entity is a post-employment benefit plan for the benefit of employees of either the Target Company or an entity related to the Target Company.

• (6) The entity is controlled or jointly controlled by a person identified in (i).

• (7) A person identified in (i)(1) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity).

• (8) The entity, or any member of a group of which it is a part, provides key management personnel services to the Target Company or to the Target Company’s parent.

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.

(p) Segment reporting

Operating segments, and the amounts of each segment item reported in the Target Company’s financial statements, are identified from the financial information provided regularly to the Target Company’s most senior executive management for the purposes of allocating resources to, and assessing the performance of, the Target Company’s various lines of business and geographical locations.

Individually material operating segments are not aggregated for financial reporting purposes unless the segments have similar economic characteristics and are similar in respect of the nature of products and services, the nature of production processes, the type or class of customers, the methods used to distribute the products or provide the services, and the nature of the regulatory environment. Operating segments which are not individually material may be aggregated if they share a majority of these criteria.

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APPENDIX II FINANCIAL INFORMATION OF THE TARGET COMPANY

• 3 Turnover

The Target Company had no turnover during the Relevant Periods as it has not yet commenced business.

• 4 Other revenue

					Year ended	Nine months ended	Nine months ended
			31	December	31 December	30 September
				2014	2015	2015	2016
				RMB	RMB	RMB	RMB
						(unaudited)
Bank	interest	income		–	14,018	11,977	16,118

• 5 Loss before taxation

Loss before taxation is arrived after charging:

(a) Staff costs: Salaries, wages and other benefits Contributions to defined contribution retirement plans	31 December 2014 RMB – – –	Year ended 31 December 2015 RMB 305,818 74,111 379,929	Nine months ended 30 September 2015 2016 RMB RMB (unaudited) 260,370 1,338,713 60,828 292,449 321,198 1,631,162	Nine months ended 30 September 2015 2016 RMB RMB (unaudited) 260,370 1,338,713 60,828 292,449 321,198 1,631,162
				1,631,162

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APPENDIX II

FINANCIAL INFORMATION OF THE TARGET COMPANY

(b) Other items: Depreciation of property, plant and equipment Loss on disposal of property, plant and equipment Operating lease charges: minimum lease payments – properties rentals – motor vehicle	31 December 2014 RMB – – – –	Year ended 31 December 2015 RMB 65,923 – 196,000 –	Nine months ended 30 September 2015 2016 RMB RMB (unaudited) 43,088 960,418 – 5,993 196,000 2,187,124 – 11,321

6 Income tax expense

• (a) The Target Company is subject to PRC enterprise income tax at a rate of 25% in the Relevant Periods.

No provision for enterprise income tax has been made during the Relevant Periods for the Target Company as it does not have assessable profits.

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APPENDIX II FINANCIAL INFORMATION OF THE TARGET COMPANY

• (b) Reconciliation between income tax expense and accounting loss at applicable tax rates:

Loss before taxation Notional tax expense on loss before taxation, calculated at the statutory PRC tax rate of 25% Tax effect of expenses not deductible for tax purpose Tax effect of tax losses not recognised Actual tax expense	31 December 2014 RMB – – – – –	Year ended 31 December 2015 RMB (1,271,337) (317,834) 23,101 294,733 –	Nine months ended 30 September 2015 2016 RMB RMB (unaudited) (1,029,891) (18,853,112) (257,473) (4,713,278) – – 257,473 4,713,278 – –	Nine months ended 30 September 2015 2016 RMB RMB (unaudited) (1,029,891) (18,853,112) (257,473) (4,713,278) – – 257,473 4,713,278 – –
				(4,713,278) – 4,713,278
				–

• (c) At 30 September 2016, the Target Company has unused tax losses of RMB20,032,044 (31 December 2014: nil; 31 December 2015: RMB1,178,932; 30 September 2015: RMB1,029,891). No deferred tax asset has been recognised in respect of such losses due to the unpredictability of future profit streams. These tax losses will expire within five years from their respective dates of first tax loss.

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APPENDIX II FINANCIAL INFORMATION OF THE TARGET COMPANY

	Nine months ended	30 September	30 September	2015 2016	RMB RMB	(unaudited)		26,149 78,345			– –			– –			32,000 –			– –			– –				– –			– –			58,149 78,345
Total	Year ended	31 December		2015	RMB			52,038			–			–			32,000			–			–				–			–			84,038
		31 December		2014	RMB			–			–			–			–			–			–				–			–			–
Retirement scheme contributions	Year ended Nine months ended	31 December 30 September		2015 2015 2016	RMB RMB RMB	(unaudited)		3,438 1,699 5,745			– – –			– – –			– – –			– – –			– – –				– – –			– – –			3,438 1,699 5,745
		31 December		2014	RMB			–			–			–			–			–			–				–			–			–
Salaries, allowances and benefits in kind	Year ended Nine months ended	31 December 31 December 30 September		2014 2015 2015 2016	RMB RMB RMB RMB	(unaudited)		– 48,600 24,450 72,600			– – – –			– – – –			– 32,000 32,000 –			– – – –			– – – –				– – – –			– – – –			– 80,600 56,450 72,600
							Directors	Huang Hansen (appointed on	24 June 2015)		Weng Weibin	(appointed on 31 December 2014	and resigned on 24 June 2015)	Yin Tianjing	(appointed on 31 December 2014	and resigned on 24 June 2015)	Zheng Sihuan	(appointed on 31 December 2014	and resigned on 24 June 2015)	Zheng Zhongbin	(appointed on 31 December 2014	and resigned on 24 June 2015)	Zhu Hao	(appointed on 31 December 2014	and resigned on 24 June 2015)	Supervisors	Zhong Shiyuan	(appointed on 31 December 2014	and resigned on 24 June 2015)	Zhou Shuming		(appointed on 24 June 2015)

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APPENDIX II FINANCIAL INFORMATION OF THE TARGET COMPANY

8 Individuals with highest emoluments

Of the five individuals with the highest emoluments, one (31 December 2014: nil; 31 December 2015: two; 30 September 2015: two) of them is/are director(s) whose emoluments are disclosed in note 7. The aggregate of the emoluments in respect of the remaining individuals are as follows:

Salaries and other emoluments Retirement scheme contributions	31 December 2014 RMB – – –	Year ended 31 December 2015 RMB 96,950 3,534 100,484	Nine months ended 30 September 2015 2016 RMB RMB (unaudited) 96,000 334,050 3,534 18,855 99,534 352,905	Nine months ended 30 September 2015 2016 RMB RMB (unaudited) 96,000 334,050 3,534 18,855 99,534 352,905
				352,905

The emoluments of the remaining individuals with the highest emoluments are within the following band:

Nil – HKD1,000,000	31 December 2014 –	No. of individuals Year ended 31 December Nine months ended 30 September 2015 2015 2016 (unaudited) 3 3 4

9 Segment information

The directors manage the Target Company’s operations as a single business segment with no revenue generated in the Relevant Periods. The Target Company’s operations are monitored and strategic decisions are made on the basis of operating results, assets and liabilities as reflected in the financial statements. Accordingly, no further segment information has been presented.

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APPENDIX II FINANCIAL INFORMATION OF THE TARGET COMPANY

10 Property, plant and equipment

Cost: At 31 December 2014 and 1 January 2015 Additions Disposals At 31 December 2015 and 1 January 2016 Additions Disposals At 30 September 2016 Accumulated depreciation: At 31 December 2014 and 1 January 2015 Provided for the year Eliminated on disposals At 31 December 2015 and 1 January 2016 Provided for the period Eliminated on disposals At 30 September 2016 Carrying amount: At 31 December 2014 At 31 December 2015 At 30 September 2016	Leasehold improvements RMB – – – – 15,502,519 – 15,502,519 – – – – 861,682 – 861,682 – – 14,640,837	Plant and machinery RMB – – – – 1,135,121 – 1,135,121 – – – – 2,049 – 2,049 – – 1,133,072	Furniture, fixtures and equipment RMB – 421,688 – 421,688 417,667 (12,020) 827,335 – 65,923 – 65,923 92,450 (6,027) 152,346 – 355,765 674,989	Motor vehicles RMB – – – – 107,022 – 107,022 – – – – 4,237 – 4,237 – – 102,785	Total RMB – 421,688 –
					421,688 17,162,329 (12,020)
					17,571,997
					– 65,923 –
					65,923 960,418 (6,027)
					1,020,314
					–
					355,765
					16,551,683

11 Capitalised development costs

Capitalised development costs at 30 September 2016 were arisen from incomplete development projects. No amortisation was charged for the period.

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APPENDIX II FINANCIAL INFORMATION OF THE TARGET COMPANY

12 Amount due from a shareholder

The amount due from a shareholder was unsecured, interest-free and repayable on demand. The amount was subsequently repaid on 29 July 2016 to the Target Company.

13 Other receivables, prepayments and deposits

Other receivables and prepayments Rental deposits	At 31 December 2014 2015 RMB RMB – 1,809,447 – 252,600 – 2,062,047	At 30 September 2016 RMB 23,979,391 1,127,714
		25,107,105

As at 30 September 2016, included in other receivables and prepayments was a cash advance to an independent third party of RMB20,000,000 for its short-term working capital needs, the reason of making such cash advance is to looking for potential new customers’ network for the Target Company. The cash advance was unsecured, interest-free and repayable within two months. The cash advance was agreed on 18 August 2016 and subsequently repaid on 8 October 2016 to the Target Company.

14 Other payables and accrued charges

Accrued staff costs, welfare and benefits Payables for acquisition of property, plant and equipment Accrued properties rentals Others	At 31 December 2014 2015 RMB RMB – 60,777 – – – – – 137,305 – 198,082	At 30 September 2016 RMB 466,404 9,576,289 1,500,381 2,670,187
		14,213,261

The payables for acquisition of property, plant and equipment as well as the accrued properties rentals as at 30 September 2016 represented the purchases of leasehold improvements and equipment for the building unit and rentals of the production site respectively for the research and development activities on power electric battery and related technologies during the period ended 30 September 2016. At 30 September 2016, others mainly represented the accrued technical consulting fees for new site construction management of RMB1,400,000 and the outstanding rental deposits of RMB1,027,000.

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FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

15 Capital and reserve

(a) Movements in components of equity

The reconciliation between the opening and closing balances of each component of the Target Company’s equity is set out in the statements of changes in equity.

(b) Dividend

No payments of any dividend were noted for the Relevant Periods.

(c) Paid-up capital

Registered: At 1 January Increased in the year/period At 31 December/30 September Issued and fully paid: At 1 January Increased in the year/period At 31 December/30 September	2014 RMB – 10,000,000 10,000,000 – – –	2015 RMB 10,000,000 – 10,000,000 – 10,000,000 10,000,000	2016 RMB 10,000,000 90,000,000
			100,000,000
			10,000,000 90,000,000
			100,000,000

(d) Capital management

The Target Company’s objectives when managing capital are to safeguard the Target Company’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Target Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new capital or sell assets to reduce debt.

The Target Company regards total equity presented on the face of the statements of financial position as capital for capital management purposes.

The Target Company is not subject to externally imposed capital requirements.

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APPENDIX II FINANCIAL INFORMATION OF THE TARGET COMPANY

16 Financial risk management and fair values

Exposure to credit, liquidity, interest rate and foreign currency risks arises in the normal course of the Target Company’s business. The Target Company’s exposure to risks and the financial risk management policies and practices used by the Target Company to manage these risks are described below.

(a) Credit risk

The Target Company’s credit risk is primarily attributable to amount due from a shareholder, other receivables and cash and cash equivalents. Management has a credit policy in place and the exposures to these credit risks are monitored on an ongoing basis.

Cash and cash equivalents are normally placed at financial institutions that have sound credit ratings. The amount due from a shareholder and other receivables are considered by the directors to be fully recoverable.

The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the statements of financial position.

(b) Liquidity risk

The Target Company’s policy is to regularly monitor current and expected liquidity requirements to ensure that it maintains sufficient reserves of cash and adequate committed lines of funding from either shareholders or major financial institutions to meet its liquidity requirements in the short and longer term.

The following table details the remaining contractual maturities at the end of the reporting period of the Target Company’s financial liabilities, which are based on contractual undiscounted cash flows and the earliest date the Target Company can be required to pay:

Other payables and accrued charges	At 31 December 2014 Carrying amount Total contractual undiscounted cash flow Within 1 year or on demand RMB RMB RMB – – –	At 31 December 2015 Carrying amount Total contractual undiscounted cash flow Within 1 year or on demand RMB RMB RMB 198,082 198,082 198,082	At 30 September 2016 Carrying amount Total contractual undiscounted cash flow Within 1 year or on demand RMB RMB RMB 14,213,261 14,213,261 14,213,261

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FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(c) Interest rate risk

As the Target Company has no significant interest-earning assets and interest bearing liabilities, it is not exposed to significant interest risk during the Relevant Periods.

(d) Foreign currency risk

The Target Company is not exposed to significant foreign currency risk as its income and expenses are mainly denominated in the functional currency of the Target Company, i.e. RMB.

(e) Categories of financial instruments

Financial assets Loans and receivables (including cash and cash equivalents) Financial liabilities Financial liabilities at amortised cost	At 31 December 2014 2015 RMB RMB – 6,773,404 – 198,082	At 30 September 2016 RMB 26,789,827
		14,213,261

(f) Fair values

All financial instruments are carried at amounts not materially different from their fair values as at 31 December 2014, 31 December 2015 and 30 September 2016.

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APPENDIX II FINANCIAL INFORMATION OF THE TARGET COMPANY

17 Commitments

(a) Capital commitments

Capital commitments outstanding at the end of each reporting period not provided for in the Financial Information were as follows:

Contracted for – Acquisition of property, plant and equipment	At 31 December 2014 2015 RMB RMB – 7,610,704	At 30 September 2016 RMB 62,515,555

As at 31 December 2015, capital commitments mainly represented contracts for leasehold improvements in respect of the newly built factories of the Target Company. As at 30 September 2016, capital commitments mainly represented contracts for acquisition of plant and machineries for research and development activities on power electric battery and related technologies.

(b) Operating lease commitments

At the end of each reporting period, the total future minimum lease payments under non-cancellable operating leases are payable as follows:

Within 1 year After 1 year but within 5 years After 5 years	At 31 December 2014 2015 RMB RMB – 918,000 – 3,672,000 – 2,601,000 – 7,191,000	At 30 September 2016 RMB 5,037,857 23,539,262 1,912,500
		30,489,619

The Target Company is the lessee in respect of a number of properties and a motor vehicle held under operating leases. The leases typically run for an initial period of three to eight years, with fixed rentals and an option to renew the leases when all terms are renegotiated. None of the leases includes contingent rentals.

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APPENDIX II FINANCIAL INFORMATION OF THE TARGET COMPANY

18 Material related party transactions

(a) Key management personnel remuneration

Remuneration for key management personnel of the Target Company, including amounts paid to the Target Company’s directors and supervisors as disclosed in note 7, is as follows:

Salaries, allowances and other benefits Contributions to defined contributions retirement plan	31 December 2014 RMB – – –	Year ended 31 December 2015 RMB 80,600 3,438 84,038	Nine months ended 30 September 2015 2016 RMB RMB (unaudited) 56,450 72,600 1,699 5,745 58,149 78,345	Nine months ended 30 September 2015 2016 RMB RMB (unaudited) 56,450 72,600 1,699 5,745 58,149 78,345
				78,345

Total remuneration above is included in ‘‘staff costs’’ (see note 5(a)).

(b) Other related party transactions

The Target Company entered into the following material related party transactions during the Relevant Periods.

Related party Nature of transactions Shenzhen Dasheng Research and development costs paid	31 December 2014 RMB –	Year ended 31 December 2015 RMB –	Nine months ended 30 September 2015 2016 RMB RMB (unaudited) – 16,387,236

During the period ended 30 September 2016, the Target Company commenced its research and development activities on power electric battery and related technologies and it had engaged one of its shareholders, Shenzhen Dasheng, to provide certain research and development services, which mainly included the establishment of the automatic production for the power electric battery of model-18650 and model-38130, to the Target Company. The research and development costs were one-off payment made during the period.

Balances with related parties are disclosed in the statements of financial position and in note 12.

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FINANCIAL INFORMATION OF THE TARGET COMPANY

19 Events after the end of the reporting period

• (a) On 14 October 2016, the Target Company obtained a loan from 深圳市粵商小額 貸款有限公司, an independent third party, amounting to RMB5,000,000. The loan was unsecured, bearing interest at a fixed rate of 1% per month and repayable within 2 months.

• (b) On 15 October 2016, the Target Company obtained a loan from a natural person, 韋深清, an independent third party, amounting to RMB15,000,000. The loan was unsecured, bearing interest at a fixed rate of 1.5% per month and repayable within 2 months.

20 Accounting estimates and judgements

The methods, estimates and judgements the directors used in applying the Target Company’s accounting policies have a significant impact on the Target Company’s financial position and operating results. Some of the accounting policies require the Target Company to apply estimates and judgements, on matters that are inherently uncertain. The critical accounting judgements in applying the Target Company’s accounting policies are described below.

(a) Depreciation

The Target Company management determines the estimated useful lives and related depreciation charge for the property, plant and equipment. This estimate is based on the historical experience of the actual useful lives of the property, plant and equipment of similar nature and functions. It could change significantly as a result of technical innovations and competitor actions in response to severe industry cycles. Management will increase the depreciation charge where useful lives are less than previously estimated lives, or it will write-off or write-down technically obsolete or non-strategic assets that have been abandoned or sold.

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FINANCIAL INFORMATION OF THE TARGET COMPANY

APPENDIX II

(b) Impairments

In considering the impairment loss that may be required for certain property, plant and equipment and capitalised development costs, recoverable amount of the asset needs to be determined. The recoverable amount is the greater of its fair value less costs of disposal and the value in use. It is difficult to precisely estimate its fair value less costs of disposal because quoted market prices for these assets may not be readily available. In determining the value in use, expected cash flows generated by the asset are discounted to their present value, which requires significant in judgement relating to items such as level of turnover and amount of operating costs. The Target Company uses all readily available information in determining an amount that is reasonable approximation of recoverable amount, including estimates based on reasonable and supportable assumptions and projections of items such as turnover and operating costs.

Impairment losses for bad and doubtful debts are assessed and provided based on the directors’ regular review of ageing analysis and evaluation of collectability. A considerable level of judgement is exercised by the directors when assessing the credit worthiness and past collection history of each individual receivable.

An increase or decrease in the above impairment loss would affect the operating results in the Relevant Periods and in future years.

21 Possible impact of amendments, new standards and interpretations issued but not yet effective for the period ended 30 September 2016

Up to the date of issue of the Financial Information, the HKICPA has issued a number of amendments and new standards which are not yet effective for the period ended 30 September 2016 and which have not been adopted in the Financial Information. These include the following which may be relevant to the Target Company.

		Effective for
		accounting periods
		beginning on or after
HKFRS	15, Revenue from contracts with customers	1 January 2018
HKFRS	9, Financial instruments	1 January 2018
HKFRS	16, Lease	1 January 2019

The Target Company is in the process of making an assessment of what the impact of these amendments and new standards 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 Target Company’s financial statements.

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APPENDIX II FINANCIAL INFORMATION OF THE TARGET COMPANY

III. SUBSEQUENT FINANCIAL STATEMENTS

No audited financial statements have been prepared by the Target Company in respect of any period subsequent to 30 September 2016.

Yours faithfully,

Baker Tilly Hong Kong Limited

Certified Public Accountants

Hong Kong, 30 December 2016 Choi Kwong Yu

Practising certificate number P05071

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UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

I. INTRODUCTION

The following is an illustrative and unaudited pro forma statement of assets and liabilities of the Enlarged Group (the ‘‘Unaudited Pro Forma Financial Information’’), which has been prepared on the basis of the notes set out below and in accordance with Rule 4.29 of the Listing Rules for the purpose of illustrating the effects of the Capital Injection on the Group, assuming that the Capital Injection had been completed as at 30 September 2016.

The Unaudited Pro Forma Financial Information has been prepared using the accounting policies consistent with that of the Group as set out in the Company’s interim report for the six months ended 30 September 2016.

The Unaudited Pro Forma Financial Information of the Enlarged Group should be read in conjunction with the financial information contained in this circular and the financial information of the Target Company as set out in Appendix II to this circular.

The Unaudited Pro Forma Financial Information has been prepared by the Directors of the Company for illustrative purposes only and is based on a number of assumptions, estimates, uncertainties and currently available information. Because of its hypothetical nature, the Unaudited Pro Forma Financial Information may not reflect the true picture of the actual financial position of the Enlarged Group had the proposed Capital Injection been completed as at 30 September 2016 or at any future date.

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APPENDIX III

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

II. UNAUDITED PRO FORMA STATEMENT OF ASSETS AND LIABILITIES OF THE ENLARGED GROUP

Non-current assets Property, plant and equipment Goodwill Capitalised development costs Investments in subsidiaries Deposits paid for acquisition of property, plant and equipment Deferred tax assets Current assets Inventories Trade receivables Loan receivable Other receivables, prepayments and deposits Cash and cash equivalents Current liabilities Trade payables Other payables and accrued charges Bank loans and overdraft Net current assets Total assets less current liabilities Non-current liabilities Provision and other accrued charges NET ASSETS	Unaudited consolidated statement of assets and liabilities of the Group at 30 September 2016 HKD’000 Note 1 21,216 – – – – 7,191 28,407 24,964 59,185 45,000 5,479 77,296 211,924 18,935 30,744 39,880 89,559 122,365 150,772 15,068 135,704	Audited statement of assets and liabilities of the Target Company at 30 September 2016 RMB’000 Note 2 16,552 – 4,706 – 44,705 – 65,963 – – – 25,107 3,019 28,126 – 14,213 – 14,213 13,913 79,876 – 79,876	Audited statement of assets and liabilities of the Target Company at 30 September 2016 HKD’000 Note 3 19,244 – 5,472 – 51,979 – 76,695 – – – 29,192 3,510 32,702 – 16,526 – 16,526 16,176 92,871 – 92,871	Pro Forma Adjustments HKD’000 HKD’000 Note 4 Note 5 – – – 10,552 – – 95,341 (95,341) – – – – 95,341 (84,789) – – – – – – – – – – – – – – 1,214 – – – 1,214 – (1,214) – 94,127 (84,789) – – 94,127 (84,789)	Unaudited pro forma consolidated statement of assets and liabilities of the Enlarged Group at 30 September 2016 HKD’000 40,460 10,552 5,472 – 51,979 7,191
					115,654
					24,964 59,185 45,000 34,671 80,806
					244,626
					18,935 48,484 39,880
					107,299
					137,327
					252,981
					15,068
					237,913

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APPENDIX III

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

III. NOTES TO THE UNAUDITED PRO FORMA STATEMENT OF ASSETS AND LIABILITIES OF THE ENLARGED GROUP

1. The balances are extracted from the unaudited condensed consolidated statement of financial position of the Group as at 30 September 2016 as set out in the Company’s interim report for the six months ended 30 September 2016 dated 28 November 2016.

2. The balances are extracted from the audited statement of financial position of the Target Company as at 30 September 2016 as set out in Appendix II to this circular.

3. The audited statement of assets and liabilities of the Target Company is translated into Hong Kong Dollars at an exchange rate of RMB1: HKD1.1627 (the ‘‘Exchange Rate’’). No representation is made that the Hong Kong Dollars amounts have been, could have been or may be converted to Renminbi, or vice versa, at the Exchange Rate or at all.

4. Pursuant to the capital injection agreement entered into on 24 November 2016 between the Group and the original shareholders of the Target Company, the Group shall inject capital of RMB82,000,000 (equivalent to approximately HKD95,341,000) into the Target Company by way of cash contribution. It is payable within 7 business days of the completion of the relevant registration procedures in respect of the Capital Injection with the local administration bureau of industry and commerce in the PRC. In addition, professional fees directly attributable to the Capital Injection are estimated to be approximately HKD1,214,000.

Net cash inflow/(outflow) arising from the Capital Injection is shown as below:

Cash consideration paid by the Group Capital injection received by the Target Company Net cash inflow/(outflow)	HKD’000 (95,341) 95,341 –

1. Upon completion of the Capital Injection, the identifiable assets and liabilities of the Target Company will be accounted for in the consolidated financial statements of the Enlarged Group under the acquisition method in accordance with Hong Kong Financial Reporting Standard 3 (Revised) ‘‘Business Combinations’’ (‘‘HKFRS 3’’) issued by the Hong Kong Institute of Certified Public Accounts (‘‘HKICPA’’).

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UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

The adjustment represent the recognition of goodwill arising from the proposed Capital Injection. According to HKFRS 3, goodwill is recognised as the excess of the aggregate of the fair value of the consideration transferred and the amount of noncontrolling interests in the Target Company over the net fair value of the Target Company’s identifiable assets and liabilities measured as at 30 September 2016, which is calculated as follows:

Cash consideration Less: Fair value of net identifiable assets acquired Carrying amounts of net assets of the Target Company (Note a) Capital injection received by the Target Company Total fair value of net identifiable assets of the Target Company Non-controlling interests (Note b) Fair value of identifiable net assets attributable to the approximately 45.05% equity interest acquired Goodwill (Note c)

HKD’000 95,341 92,871 95,341 188,212 (103,423) 84,789 10,552

Note:

• a. As at 30 September 2016, the carrying amounts of the assets and liabilities of the Target Company as recorded in the accountant’s report of the Target Company approximate their fair values.

• b. Non-controlling interests are measured at the non-controlling interests’ proportionate share of the fair value of the Target Company’s identifiable net assets and liabilities after the Capital Injection, i.e. approximately 54.95% of HKD188,212,000.

• c. For the purpose of the Unaudited Pro Forma Financial Information of the Enlarged Group, fair value of the net assets of the Target Company after the Capital Injection as at 30 September 2016 were used to determine the goodwill of the proposed Capital Injection. Upon completion of the Capital Injection, the fair value of the net assets of the Target Company as at the date of completion will be used to determine the actual amount of goodwill. Such actual amount may be different from the amount presented herein and such difference may be significant.

The Directors of the Company confirm that consistent policies and assumptions have been applied for the purpose of assessing impairment of the Enlarged Group’s goodwill and the business acquired through the Target Company as a whole under Hong Kong Accounting Standard 36 ‘‘Impairment of Assets’’, and the Directors of the Company are not aware of any impairment of the Enlarged Group’s goodwill and the business acquired through the Target Company as a whole is required. The basis in assessing the impairment of the Enlarged Group’s goodwill and the business acquired through the Target Company as a whole is by reference to the recoverable amount of the cash generating unit (‘‘CGU’’), which has been determined based on a value in use calculation which are based on cash flow projections from financial budgets approved by management covering a 2-year period, and a discount rate of 15%. The cash flows beyond the 2-year period are extrapolated using a steady growth rate of 10%.

1. No other adjustments have been made to the Unaudited Pro Forma Financial Information of the Enlarged Group to reflect any trading results or other transactions of the Group and the Enlarged Group entered into subsequent to 30 September 2016.

III – 4

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

IV. REPORT ON THE UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

The following is the text of a report received from the reporting accountant, Baker Tilly Hong Kong Limited, Certified Public Accountants, Hong Kong, for the purpose of incorporation into this circular.

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天職香港
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INDEPENDENT REPORTING ACCOUNTANT’S ASSURANCE REPORT ON THE COMPILATION OF UNAUDITED PRO FORMA FINANCIAL INFORMATION

To the Directors of Pak Tak International Limited

We have completed our assurance engagement to report on the compilation of unaudited pro forma financial information of Pak Tak International Limited (the ‘‘Company’’) and its subsidiaries (collectively the ‘‘Group’’), and Shenzhen Senpai New Energy Technology Company Limited*（深圳市森派新能源科技有限公司）(the ‘‘Target Company’’) (collectively the ‘‘Enlarged Group’’) by the directors for illustrative purposes only. The unaudited pro forma financial information consists of the unaudited pro forma consolidated statement of assets and liabilities as at 30 September 2016 and related notes (the ‘‘Unaudited Pro Forma Financial Information’’) as set out on pages III-1 to III-4 of the Company’s circular dated 30 December 2016 (the ‘‘Circular’’) in connection with the proposed capital injection into the Target Company (the ‘‘Capital Injection’’) by an indirect wholly-owned subsidiary of the Company. The applicable criteria on the basis of which the directors have compiled the Unaudited Pro Forma Financial Information are described on pages III-1 to III-4 of the circular.

The Unaudited Pro Forma Financial Information has been compiled by the directors to illustrate the impact of the Capital Injection on the Group’s financial position as at 30 September 2016 as if the Capital Injection had taken place at 30 September 2016. As part of this process, information about the Group’s consolidated assets and liabilities has been extracted by the directors from the Group’s unaudited condensed consolidated financial statements for the six months ended 30 September 2016, on which a review report has been published.

• For identification purpose only

III – 5

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

Directors’ responsibilities for the Unaudited Pro Forma Financial Information

The directors are responsible for compiling the Unaudited Pro Forma Financial Information in accordance with paragraph 4.29 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’’ (‘‘AG 7’’) issued by the Hong Kong Institute of Certified Public Accountants (the ‘‘HKICPA’’).

Our independence and quality control

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

Reporting accountant’s responsibilities

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

Our responsibility is to express an opinion, as required by paragraph 4.29(7) 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.

We conducted our engagement in accordance with Hong Kong Standard on Assurance Engagements 3420 ‘‘Assurance Engagements to Report on the Compilation of Pro Forma Financial Information Included in a Prospectus’’ issued by the HKICPA. This standard requires that the reporting accountant plans and performs procedures to obtain reasonable assurance about whether the directors have compiled the Unaudited Pro Forma Financial Information in accordance with paragraph 4.29 of the Listing Rules and with reference to AG 7 issued by the HKICPA.

III – 6

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

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

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

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

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

• the Unaudited Pro Forma Financial Information reflects the proper application of those adjustments to the unadjusted financial information.

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

The engagement also involves evaluating the overall presentation of the Unaudited Pro Forma Financial Information.

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

III – 7

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

Opinion

In our opinion:

• (a) the Unaudited Pro Forma Financial Information has been properly compiled on the basis stated;

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

• (c) the adjustments are appropriate for the purposes of the Unaudited Pro Forma Financial Information as disclosed pursuant to paragraph 4.29(1) of the Listing Rules.

Baker Tilly Hong Kong Limited

Certified Public Accountants

Hong Kong, 30 December 2016 Choi Kwong Yu Practising certificate number P05071

III – 8

MANAGEMENT DISCUSSION AND ANALYSIS

APPENDIX IV

The financial information of the Target Company from the date of establishment (i.e. 31 December 2014) to 30 September 2016 was set out in Appendix II to this circular. Set out below is the management discussion and analysis of the Target Company for the corresponding period:

BUSINESS AND FINANCIAL REVIEW

The Target Company was established under the laws of the PRC with limited liability on 31 December 2014. As at the Latest Practicable Date, the Target Company was owned as to 60% and 40% by Shenzhen Baosheng and Shenzhen Dasheng, with a registered capital of RMB100,000,000. The Target Company is engaged in the research and development of (i) power electric battery; (ii) system of power electric battery; (iii) technologies related to range extended electric vehicles; and (iv) other products related to a battery system.

As at the date of the Capital Injection Agreement, the Target Company is the legal and beneficial owner of the entire registered capital of the Zhengzhou Senpai, which does not have any paid up capital, hold any asset, nor have any business activities.

Based on the financial information of the Target Company, the audited net asset value of the Target Company as at 31 December 2014, 31 December 2015 and 30 September 2016 were as follows.

Net assets	As at 31 December 2014 RMB –	As at 31 December 2015 RMB 8,728,663	As at 30 September 2016 RMB 79,875,551

Property, plant and equipment

Property, plant and equipment were nil, RMB355,765 and RMB16,551,683 as at 31 December 2014, 31 December 2015 and 30 September 2016 respectively. The increase of property, plant and equipment in 2016 was due to the addition of leasehold improvements for the factory and office.

IV – 1

MANAGEMENT DISCUSSION AND ANALYSIS

APPENDIX IV

Capitalised development costs

Capitalised development costs of RMB4,706,352 at 30 September 2016 were arisen from incomplete development projects. No amortisation was charged for the period.

Deposits paid for acquisition of property, plant and equipment

Deposits paid for acquisition of property, plant and equipment were nil, RMB1,797,576 and RMB44,705,170 as at 31 December 2014, 31 December 2015 and 30 September 2016 respectively. The substantial increase of deposits paid in year 2016 was due to the development of the factory and the production lines for the preparation of the large scale production of the battery products.

For one day of 31 December 2014, the year ended 31 December 2015 and the nine months ended 30 September 2016 (the ‘‘Relevant Periods’’), the net loss (before and after taxation and extraordinary items) of the Target Company were as follows:

Loss before and after taxation	31 December 2014 RMB –	Year ended 31 December 2015 RMB (1,271,337)	Nine months ended 30 September 2016 RMB (18,853,112)

The Target Company had no turnover during the Relevant Periods as it has not yet commenced business.

The total cost of administrative expenses and research and development expenses was nil, RMB1,285,355 and RMB18,869,230 respectively, for one day of 31 December 2014, the year ended 31 December 2015 and the nine months ended 30 September 2016. The cost and expenses mainly include the projects development and management fee paid, employee benefit expenses, operating lease charges and other administrative expenses.

The Target Company had incurred loss of nil, RMB1,271,337 and RMB18,853,112 for one day of 31 December 2014, the year ended 31 December 2015 and the nine months ended 30 September 2016 respectively.

IV – 2

MANAGEMENT DISCUSSION AND ANALYSIS

APPENDIX IV

CAPITAL STRUCTURE, LIQUIDITY AND FINANCIAL RESOURCES

As at 31 December 2014, 31 December 2015 and 30 September 2016, the paid-up capital of the Target Company was nil, RMB10 million and RMB100 million respectively, which was fully contributed by the Original Shareholders.

The Target Company’s daily operation and capital expenditures are mainly funded by paidup capital. As at 31 December 2014, 31 December 2015 and 30 September 2016, the Target Company had net current assets of nil, RMB6,773,404 and RMB28,125,607, respectively.

The Target Company did not have other loans or borrowings as at 31 December 2014, 31 December 2015 and 30 September 2016.

As at 31 December 2014, 31 December 2015 and 30 September 2016, the equity attributable to owners of the Target Company was nil, RMB8,728,663 and RMB79,875,551 respectively. As at 31 December 2014, 31 December 2015 and 30 September 2016, the gearing ratio (total liabilities over total equity) was nil, 2.27% and 17.79%, respectively.

EMPLOYMENT AND REMUNERATION POLICY

As at 31 December 2014, 31 December 2015 and 30 September 2016, the Target Company had nil, 6 and 37 employees respectively. The total employee benefit expenses were nil, RMB379,929 and RMB1,631,162 respectively, for one day of 31 December 2014, for the year ended 31 December 2015 and the nine months ended 30 September 2016.

The remuneration policies of the Target Company are based on the prevailing market levels and the performance of the Target Company and the individual employees.

SIGNIFICANT INVESTMENT HELD

For the Relevant Periods, the Target Company did not have any significant investments.

FUTURE PLANS FOR MATERIAL INVESTMENTS OR CAPITAL ASSETS

Save as disclosed above and at the Latest Practicable Date, there are no other proposed material investment, capital assets and expected source of funding will occur in the Target Company.

ACQUISITION OR DISPOSAL OF SUBSIDIARY OR ASSOCIATED COMPANY

The Target Company did not have any acquisition and disposal of subsidiaries and associated companies during the Relevant Periods.

IV – 3

MANAGEMENT DISCUSSION AND ANALYSIS

APPENDIX IV

CHARGES ON ASSETS

As at 31 December 2014, 31 December 2015 and 30 September 2016, the Target Company did not have any charges on assets.

FOREIGN EXCHANGE RISK

The Target Company is not exposed to significant foreign exchange risk as its expenses are mainly denominated in the functional currency of the Target Company, i.e. RMB.

CONTINGENT LIABILITIES

As at 31 December 2014, 31 December 2015 and 30 September 2016, the Target Company did not have any material contingent liabilities.

PROSPECTS

For the past few years, the PRC government had made huge effort in developing and promoting the use of new energy vehicles. These could be evidenced by the multilateral policies implemented by the PRC government, which includes macro strategies such as new energy vehicles development and pollution control, infrastructural development to introduce more charging stations and providing tax and subsidy incentives for the developers and consumers. The Directors believe that it is the aim of the PRC government to reduce the number of inefficient energies vehicles and to promote new energy-saving vehicles.

In view of this trend of development and the favorable government’s policy regarding the new energy vehicles, the Group intends to tap the new energy business industry and as mentioned in the section headed ‘‘Reasons and Benefits of the Capital Injection’’, the Directors consider that the new energy business developed by the Target Company are expected to enable the Group to diversify its business risk and to increase the Shareholders’ value.

IV – 4

GENERAL INFORMATION

APPENDIX V

1. RESPONSIBILITY STATEMENT

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

2. DISCLOSURE OF INTERESTS

(a) Interests and short positions of the Directors in the Shares and underlying Shares of the Company and its associated corporations

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

				Approximate
				percentage of
			Total number	the existing issued
			of Shares	share capital
Name	of Director	Nature of interest	interested	of the Company
				(Note 1)
Wong	Jian	Beneficial owner	396,200,000	28.00%

Note: The percentages are calculated based on the total number of ordinary shares of the Company in issue as at the Latest Practicable Date which was 1,415,000,000.

Save as disclosed above, as at the Latest Practicable Date, so far as is known to the Directors and the chief executive of the Company, none of the Directors nor chief executive of the Company had any interests or short positions in the shares, underlying shares and debentures of the Company and any of its associated corporations (within the meaning of Part XV of the SFO) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 Part XV of the SFO (including interests and short positions which they were taken or deemed to have taken under such provisions of the

V – 1

GENERAL INFORMATION

APPENDIX V

SFO); or were required, pursuant to section 352 of the SFO, to be recorded in the register referred to therein; or were required, pursuant to the Model Code, to be notified to the Company and the Stock Exchange.

(b) Interests and short positions of the substantial shareholders in the Shares and underlying Shares of the Company

As at the Latest Practicable Date, so far as known to the Directors or chief executive of the Company, the following persons (other than the Directors or chief executive of the Company) had, or were deemed or taken to have interests or short position in the Shares or 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 who were, directly or indirectly interested in 10% or more of the nominal value of any class of share capital carrying the rights to vote in all circumstances at general meetings of the Company or any other member of the Enlarged Group:

			Approximate
			percentage of
		Total number	the existing issued
Name of Substantial		of Shares	share capital
Shareholder	Nature of interest	interested	of the Company
			(Notes 2)
Hong Kong Investments	Beneficial owner	228,967,950	16.18%
Group Limited		(Notes 1)
Mr. Cheung Chi Mang	Interest of Controlled	228,967,950	16.18%
	Corporation	(Notes 1)
Mr. Huang Shilong	Beneficial owner	212,250,000	15.00%

Notes:

1. Hong Kong Investments Group Limited (the “HK Investments”) is incorporated in the British Virgin Islands, the entire issued share capital of which was wholly owned by Mr. Cheung Chi Mang. The sole director of HK Investments is Mr. Cheung Chi Mang.

2. The percentages are calculated based on the total number of ordinary shares of the Company in issue as at Latest Practicable Date which was 1,415,000,000.

Save as disclosed above, as at the Latest Practicable Date, the Company had not been notified by any person (other than the Directors or chief executive of the Company) who had interests or short positions in the shares, underlying shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who were, directly or indirectly interested in 10% or more of the nominal value of any class of share capital carrying the rights to vote in all circumstances at general meetings of any member of the Enlarged Group.

V – 2

GENERAL INFORMATION

APPENDIX V

3. DIRECTORS’ INTERESTS IN ASSETS/CONTRACTS AND OTHER INTERESTS

As at the Latest Practicable Date, none of the Directors had any interest, direct or indirect, in any assets which have been since 31 March 2016, being the date to which the latest published audited accounts of the Company were made up, acquired or disposed of by or leased to 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.

As at the Latest Practicable Date, none of the Directors was materially interested in any contract or arrangement subsisting at the date of this circular and which is significant in relation to the business of the Enlarged Group.

4. COMPETING BUSINESS

As at the Latest Practicable Date, so far as the Directors were aware, none of the Directors or their respective associates had any interest in any business which competes or may compete, either directly or indirectly, with the business of the Enlarged Group or have or may have any other conflicts of interest with the Enlarged Group pursuant to the Listing Rules.

5. DIRECTORS’ SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had a service contract with the Company which is not determinable by the Company within one year without payment of compensation (other than statutory compensation).

6. LITIGATION

As at the Latest Practicable Date, neither the Company nor any of its subsidiaries was engaged in any litigation or arbitration of material importance and no litigation or claim of material importance was known to the Directors to be pending or threatened against the Company or any of its subsidiaries.

7. MATERIAL CONTRACTS

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

• (a) the equity transfer agreement entered into between Marvel Innovator Investment Holdings Limited (‘‘Marvel Innovator’’) and Shenzhen Shengbang Business Management Company Limited（ 深 圳 盛 邦 企 業 管 理 有 限 公 司 ）( ‘‘ Shenzhen Shengbang’’) dated 2 November 2016, pursuant to which Shenzhen Shengbang transferred its entire equity interest in Shenzhen Taihe Yutong New Energy Technology Company Limited（ 深圳泰和昱通新能源科技有限公司）to Marvel Innovator for consideration of approximately RMB36,000,000;

V – 3

GENERAL INFORMATION

APPENDIX V

• (b) the Capital Injection Agreement;

• (c) the Supplemental Agreement; and

• (d) the warrant placing agreement dated 1 June 2015 (as supplemented by the supplemental placing agreement dated 6 July 2015) entered into between China Rise Securities Asset Management Company Limited as the placing agent and the Company in respect of warrant placing of up to a maximum of 283,000,000 warrants at the warrant issue price of HK$0.02 per warrant shares at HK$3.00 per share.

8. QUALIFICATIONS AND CONSENT OF EXPERT

The followings are the names and the qualifications of the professional advisers whose letters, opinions or advice are contained or referred to in this circular (‘‘Experts’’):

Name	Qualifications
Baker Tilly Hong Kong Limited	Certified Public Accountants, Hong Kong
Qianhai Corporate Finance Limited	Financial adviser

The Experts have given and have not withdrawn its written consent to the issue of this circular, with the inclusion of the references to its name and/or its opinion in the form and context in which they are included.

As at the Latest Practicable Date, the Experts were not beneficially interested in the share capital of any member of the Enlarged Group (including any company which will become a subsidiary of the Company by reason of an acquisition which has been agreed or proposed since 31 March 2016, being the date to which the latest audited consolidated accounts of the Company have been made up) nor did they have 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 (including any company which will become a subsidiary of the Company by reason of an acquisition which has been agreed or proposed since 31 March 2016, being the date to which the latest audited consolidated accounts of the Company have been made up).

As at the Latest Practicable Date, the Experts did not, directly or indirectly, had any interest in any assets which had since 31 March 2016 (being the date to which the latest published audited financial statements of the Group were made up) been acquired or disposed of by or leased to any member of the Enlarged Group (including any company which will become a subsidiary of the Company by reason of an acquisition which has been agreed or proposed since 31 March 2016, being the date to which the latest audited consolidated accounts of the Company have been made up), or are proposed to be acquired or disposed of by or leased to any member of the Enlarged Group (including any company which will become a subsidiary of the Company by reason of an acquisition which has been agreed or proposed since 31 March 2016, being the date to which the latest audited consolidated accounts of the Company have been made up).

V – 4

GENERAL INFORMATION

APPENDIX V

9. MISCELLANEOUS

As at the Latest Practicable Date:

• (a) The registered office of the Company was situated at Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda. The Company’s head office and principal place of business in Hong Kong was situated at Unit 1807, 18/F., West Tower Shun Tak Centre, 168-200 Connaught Road Central, Hong Kong.

• (b) The company secretary of the Company was Ms. Chan Lok Yin (‘‘Ms. Chan’’). Ms. Chan is an associate member of the Hong Kong Institute of Certified Public Accountants and an associate member of the Hong Kong Institute of Chartered Secretaries.

• (c) The Company’s share registrar in Hong Kong, Tricor Standard Limited, was situated at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong.

• (d) In the event of inconsistency, the English texts of this circular shall prevail over its respective Chinese texts.

10. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection during normal business hours (9:00 a.m. to 5:00 p.m.) on any weekday (public holidays excepted) at the office of the Company at Unit 1807, 18/F., West Tower Shun Tak Centre, 168-200 Connaught Road Central, Hong Kong from the date of this circular up to 14 days thereafter:

• (a) the Memorandum and Bye-Laws of the Company;

• (b) copy of each of the material contracts referred to under the paragraph headed ‘‘Material Contract’’ in this appendix;

• (c) the annual reports of the Company for each of the two financial years ended 31 March 2015 and 31 March 2016, respectively;

• (d) the interim report of the Company for six months ended 30 September 2016;

• (e) the accountant’s report from Baker Tilly Hong Kong Limited on the financial information of the Target Company for one day of 31 December 2014, the year ended 31 December 2015 and the nine months ended 30 September 2016, the text of which is set out in Appendix II of this circular;

• (f) the report from Baker Tilly Hong Kong Limited on unaudited pro forma financial information of the Enlarged Group, the text of which is set out in Appendix III of this circular;

• (g) the written consent from the experts referred to under the paragraph headed ‘‘Qualification and consent of expert’’ in this appendix; and

• (h) this circular.

V – 5

NOTICE OF SPECIAL GENERAL MEETING

==> picture [62 x 48] intentionally omitted <==

PAK TAK INTERNATIONAL LIMITED

（百德國際有限公司） *

(Incorporated in Bermuda with limited liability)

NOTICE OF SPECIAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that a special general meeting (the ‘‘SGM’’) of Pak Tak International Limited (the ‘‘Company’’) will be held on Tuesday, 17 January 2017 at 10:30 a.m. at Salons I & II, The Mezzanine Floor, Grand Hyatt Hong Kong, 1 Harbour Road, Wanchai, Hong Kong for the purpose of considering and, if thought fit, pass with or without modifications, the following resolution:

ORDINARY RESOLUTION

‘‘THAT

1. (a) the capital injection agreement dated 24 November 2016 (the ‘‘Capital Injection Agreement’’), as amended by the Supplemental Agreement, entered into between (i) Shenzhen Taihe Yutong New Energy Technology Company Limited (an indirect wholly-owned subsidiary of the Company) (‘‘Investor’’), (ii) Shenzhen Baosheng Jewellery Company Limited and Shenzhen Dasheng Asset Management Company Limited (both being the original shareholders (‘‘Original Shareholders’’) of the Shenzhen Senpai New Energy Technology Company Limited (‘‘Target Company’’) and currently hold 60% and 40% of the equity interests of the Target Company, respectively), and (iii) the Target Company, pursuant to which the Investor has conditionally agreed to inject capital of RMB82,000,000 into the Target Company by way of cash contribution, a copy of which is marked ‘‘A’’ and produced to the meeting and initialled by the chairman of the meeting for the purpose of identification, and the terms and conditions of the transactions contemplated thereunder be and are hereby approved, confirmed and ratified; and

2. for identification purposes only

SGM – 1

NOTICE OF SPECIAL GENERAL MEETING

• (b) any one director of the Company be and is hereby authorised to do all such acts and things (including without limitation, signing, executing (under hand or under seal), perfecting and delivery of all agreements, documents and instruments) which are in his opinion necessary, appropriate, desirable or expedient to implement or to give effect to the terms and conditions of the Capital Injection Agreement and the transactions contemplated thereunder and all other matters incidental thereto or in connection therewith and to agree to and make such variation, amendment and waiver of any of the matters relating thereto or in connection therewith.’’

By Order of the Board Pak Tak International Limited Wang Jian Chairman

Hong Kong, 30 December 2016

As at the date of this notice, the Board comprises Mr. Wang Jian, Mr. Shang Yong and Ms. Qian Pu as executive Directors, Mr. Law Fei Shing as non-executive Director and Mr. Liu Kam Lung, Mr. Xie Xiaobiao and Mr. Zheng Suijun as independent non-executive Directors.

Notes:

1. A form of proxy for use at the SGM is enclosed herewith.

2. The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing or, if the appointor is a corporation, either under its seal or under the hand of any officer or attorney duly authorised.

3. Any Shareholder entitled to attend and vote at the SGM convened by the above notice shall be entitled to appoint another person as his proxy to attend and vote on behalf of him. A proxy needs not be a Shareholder. A Shareholder who is the holder of two or more shares of the Company may appoint more than one proxy to represent him/her/it to attend and vote on his/her/its behalf. If more than one proxy are so appointed, the appointment shall specify the number and class of shares in respect of which each such proxy is so appointed.

4. In order 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 certified copy of such power of attorney or authority, must be deposited at the Company’s share registrar in Hong Kong, Tricor Standard Limited, at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong, not less than 48 hours before the time appointed for holding of the above SGM or any adjournment thereof at which the person named in the form of proxy proposes to vote or, in the case of a poll taken subsequently to the date of the SGM or any adjournment thereof, not less than 24 hours before the time appointed for the taking of the poll and in default the form of proxy shall not be treated as valid.

5. Completion and return of the form of proxy will not preclude a Shareholder from attending and voting in person at the SGM convened or at any adjourned meeting (as the case may be) and in such event, the form of proxy will be deemed to be revoked.

6. Where there are joint holders of any share of the Company, any one of such joint holders may vote, either in person or by proxy, in respect of such share as if he/she/it were solely entitled thereto, but if more than one of such joint holders are present at the SGM, whether in person or by proxy, priority shall be determined by the order in which the names stand on the register of members of the Company in respect of the joint holding.

SGM – 2