Shanghai Henlius Biotech, Inc. - Proxy Solicitation & Information Statement 2015

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

This circular, for which the directors (“ Directors ”) of BYD Company Limited (the “ Company ”) collectively and individually accept full responsibility, includes particulars given in compliance with the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited 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 in this circular misleading.

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

If you have sold or otherwise transferred all your shares in the Company, you should at once hand this circular to the purchaser(s) or transferee(s) or to the bank, licensed securities dealer, licensed corporation, or other agent through whom the sale or transfer was effected for transmission to the purchaser(s) or transferee(s).

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比亞迪股份有限公司 BYD COMPANY LIMITED

(A joint stock company incorporated in the People’s Republic of China with limited liability)

(Stock Code: 1211)

MAJOR TRANSACTION IN RELATION TO THE DISPOSAL OF 100% EQUITY INTEREST IN A SUBSIDIARY

PROVISION OF GUARANTEE

AND

ISSUE OF DOMESTIC CORPORATE BONDS

An extraordinary general meeting (the “ EGM ”) of the Company will be held on Tuesday, 7 April 2015 at 10:00 a.m. at the Conference Room, No. 3009, BYD Road, Pingshan, Shenzhen, the People’s Republic of China. Further details of the EGM are set out in the notice and announcement issued by the Company on 16 February 2015 and 18 March 2015, respectively. A proxy form (the “ Proxy Form ”) containing the proposed resolutions was despatched by the Company on 16 February 2015. The Proxy Form was also published on the website of the Hong Kong Stock Exchange (www.hkex.com.hk). Whether or not you are able to attend the EGM, you are requested to complete and return the accompanying Proxy Form in accordance with the instructions printed thereon and return it as soon as possible and in any event not less than 24 hours before the time appointed for the holding of the EGM or any adjournment thereof. Completion and return of the Proxy Form will not preclude you from attending and voting in person at the EGM or any adjourned EGM should you so wish.

21 March 2015

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
1. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
2. Disposal of 100% Equity Interest in a Subsidiary . . . . . . . . . . . . . . . . . . . .	5
3. Provision of Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
4. Issue of Domestic Corporate Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
5. Extraordinary General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	17
6. Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	18
Appendix I – Financial Information of the Group. . . . . . . . . . . . . . . . . . . .	I-1
Appendix II – Summary of Information on Income Approach Valuation . .	II-1
Appendix III – General Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	III-1

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DEFINITIONS

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

“A Share(s)”
ordinary domestic share(s) with a nominal value of RMB1.00 each in the share capital of the Company which are listed on the Shenzhen Stock Exchange and traded in RMB;
“Agreement”
the strategic cooperation, asset transfer in consideration of non-public offering shares and cash framework agreement (戰略合作暨非公開發行股份及支付現金購買資產框架協議) dated 12 February 2015 entered into between the Company and Holitech in respect of the Disposal;
“Asset Integration”
the integration of all operating assets and businesses related to LCD display and modules and webcam products into the Target Company by the Company;
“Board”
the board of Directors;
“Company”
BYD Company Limited, a joint stock limited company incorporated in the PRC;
“Completion”
the completion of the Disposal and the receipt of Consideration Shares in accordance with the terms and conditions of the Agreement;
“Completion Date”
the day on which Completion takes place, which is to be determined by mutual agreement in writing between the Company and Holitech in accordance with the Agreement;
“Conditions” the conditions precedent for Completion;
“Consideration”

the aggregate consideration for the Disposal, which is subject to finalisation but in any event shall be not more than RMB2.3 billion (equivalent to approximately HK$2.875 billion) of which (i) 75% of the Consideration shall be satisfied by the allotment and issue, credited as fully paid, of the Consideration Shares and (ii) the remaining 25% of the Consideration shall be satisfied in cash;

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DEFINITIONS

“Consideration Shares” such number of new shares of par value of RMB1.00 of Holitech to be allotted and issued by Holitech to the Company on Completion based on the final issue price of RMB9.64 and final Consideration to be agreed between the Company and Holitech;
“CSRC” the China Securities Regulatory Commission;
“Director(s)” the director(s) of the Company;
“Disposal” the disposal of Sale Shares in accordance with the terms and conditions of the Agreement;
“Domestic Corporate Bonds” domestic corporate bonds proposed to be issued by the Company with an aggregate principal amount of not more than RMB3 billion (including RMB3 billion);
“Domestic Corporate Bonds the offer and issue of the Domestic Corporate Bonds in Issue” the PRC;
“EGM” the extraordinary general meeting of the Company which is scheduled to be held at the Conference Room, No. 3009, BYD Road, Pingshan New District, Shenzhen, the PRC on Tuesday, 7 April 2015 at 10:00 a.m.;
“Group” the Company and its subsidiaries from time to time;
“Guarantee”
the guarantee proposed to be provided by the Group, the details of which are set out in the paragraphs headed “Provision of Guarantee” in the Letter from the Board contained in this circular;
“Holitech” or “Purchaser” Holitech Technology Co., Ltd.* (合力泰科技股份有限公司), a company incorporated in the PRC with limited liability and listed on the Shenzhen Stock Exchange;
“Hong Kong” the Hong Kong Special Administrative Region of the PRC;
“Hong Kong Stock Exchange” The Stock Exchange of Hong Kong Limited;
“H Share(s)”
ordinary overseas listed foreign invested share(s) with a nominal value of RMB1.00 each in the share capital of the Company which are listed on the Hong Kong Stock Exchange and traded in Hong Kong Dollar;

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DEFINITIONS

“Latest Practicable Date” 17 March 2015, being the latest practicable date prior to the printing of this circular for ascertaining certain information in this circular;
“Listing Rules” the Rules Governing the Listing of Securities on the Hong Kong Stock Exchange;
“PRC” or “China” the People’s Republic of China which, for the purposes of this circular, excludes Hong Kong, Taiwan and the Macau Special Administrative Region;
“Pricing Benchmark Date” the announcement date for the resolutions of the sixteenth Board meeting of the fourth session of the board of directors of Holitech;
“Sale Shares” the entire equity interest of the Target Company;
“SFO” the Securities and Future Ordinance (Chapter 571 of the Laws of Hong Kong);
“Share(s)” A Share(s) and H Share(s);
“Shareholder(s)” registered holder(s) of the Shares;
“Target Company” Shenzhen BYD Electronic Components Co., Ltd.* (深圳市比亞迪電子部品件有限公司), a company incorporated in the PRC with limited liability, and a wholly-owned subsidiary of the Company as at the Latest Practicable Date;
“HK$” Hong Kong dollars, the lawful currency of Hong Kong;
“RMB” Renminbi, the lawful currency of the PRC;
“US$” United States dollars, the lawful currency of the United States of America; and
“%” per cent.
English translations of the names are provided for ease of reference only and they are not official English names of the companies concerned.

For illustration purposes, figures in RMB in this circular have been translated into HK$ at the exchange rate of RMB1.00 = HK$1.25. Such conversion shall not be construed as a representation that amounts in RMB were or may have been converted into HK$ using such exchange rate or any other exchange rate or at all.

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LETTER FROM THE BOARD

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比亞迪股份有限公司 BYD COMPANY LIMITED

(A joint stock company incorporated in the People’s Republic of China with limited liability)

(Stock Code: 1211)

Website: http://www.byd.com.cn

Board of Directors: Executive Director Mr. Wang Chuan-fu

Non-executive Directors

Mr. Lv Xiang-yang Mr. Xia Zuo-quan

Registered Office: LEGAL ADDRESS Yan An Road Kuichong Longgang District Shenzhen Guangdong Province The PRC

Independent Non-executive Directors

Mr. Wang Zi-dong Mr. Zou Fei Ms. Zhang Ran

PRINCIPAL PLACE OF BUSINESS IN HONG KONG

Unit 1712, 17th Floor Tower 2 Grand Central Plaza No. 138 Shatin Rural Committee Road Shatin, New Territories Hong Kong

21 March 2015

To the Shareholders

Dear Sir or Madam,

MAJOR TRANSACTION IN RELATION TO THE DISPOSAL OF 100% EQUITY INTEREST IN A SUBSIDIARY PROVISION OF GUARANTEE AND ISSUE OF DOMESTIC CORPORATE BONDS

1. INTRODUCTION

On 12 February 2015, the Company announced that the Company and Holitech entered into the Agreement on 12 February 2015, pursuant to which Holitech has conditionally agreed to acquire, and the Company has conditionally agreed to sell, the Sale Shares representing the entire equity interest of Shenzhen BYD Electronic Components Co., Ltd. (being the Target

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LETTER FROM THE BOARD

Company). The aggregate Consideration for the Disposal is subject to finalisation but in any event shall be not more than RMB2.3 billion (equivalent to approximately HK$2.875 billion), of which (i) 75% of the Consideration shall be satisfied by the allotment and issue, credited as fully paid, of the Consideration Shares at an issue price of RMB9.64 per share by Holitech and (ii) 25% of the Consideration shall be satisfied in cash. The Disposal is conditional upon the fulfillment of the Conditions set out in the paragraph titled “Conditions Precedent” below in this circular.

As one or more of the applicable percentage ratios in respect of the Disposal is more than 25% but less than 75%, the Disposal constitutes a major transaction of the Company and is subject to the notification, announcement and Shareholders’ approval requirements under Chapter 14 of the Listing Rules. As no Shareholder has any material interest in the Disposal which is different from that of other Shareholders, none of the Shareholders is required to abstain from voting at the EGM for approving the Agreement and the transactions contemplated thereunder.

On 12 February 2015, it was resolved by the Board that approvals be sought from the Shareholders for (i) the provision of guarantees by the Company and its subsidiaries in support of Shenzhen BYD Electronic Vehicles Investment Limited (深圳比亞迪電動汽車投資有限公司) and (ii) the issue of Domestic Corporate Bonds.

The purpose of this circular is to give you, among other things, further information of the proposed Disposal, provision of Guarantee and issue of Domestic Corporate Bonds.

2. DISPOSAL OF 100% EQUITY INTEREST IN A SUBSIDIARY

The Agreement

Date 12 February 2015

Parties (1) the Company; and (2) Holitech.

Holitech is a company listed on the Shenzhen Stock Exchange and is primarily engaged in chemical raw materials, chemical products, touch screen and small to mid-sized LCD and module businesses.

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, as at the Latest Practicable Date, Holitech and its ultimate beneficial owners are third parties independent of the Company and its connected persons (as defined in the Listing Rules).

Assets to be disposed of

Holitech has conditionally agreed to acquire, and the Company has conditionally agreed to sell, the Sale Shares representing the entire equity interest of Shenzhen BYD Electronic Components Co., Ltd. (being the Target Company).

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LETTER FROM THE BOARD

As at the Latest Practicable Date, the Target Company is wholly owned by the Company. Immediately after the Completion, the Target Company will cease to be a subsidiary of the Company and will become a wholly-owned subsidiary of Holitech.

Consideration

The aggregate Consideration for the Disposal is subject to finalisation but in any event shall be not more than RMB2.3 billion (equivalent to approximately HK$2.875 billion), of which (i) 75% of the Consideration shall be satisfied by the allotment and issue, credited as fully paid, of such number of Consideration Shares at an issue price of RMB9.64 per share to the Company by Holitech upon Completion and (ii) the remaining 25% of the Consideration shall be satisfied in cash upon Completion. The transactions are conditional upon the fulfillment of the Conditions set out in the paragraph titled “Conditions Precedent” below in this circular.

The final Consideration (including the issue price for the Consideration Shares, if applicable) will be determined by further negotiations between the Company and Holitech on the basis of the appraised value of the Sale Shares computed using the income approach in the asset appraisal report (on the basis that the Asset Integration was completed) to be issued by a qualified appraisal institution engaged by Holitech. As at 31 December 2014, the unaudited book value of issued share capital of the Target Company in its pro forma balance sheet (on the basis that the Asset Integration was completed) is approximately RMB671 million, and the appraised value is estimated to be approximately RMB2.3 billion. The Directors understand from Holitech that the appraised value is expected to be approximately RMB1.629 billion more than the book value, and the revaluation rate is approximately 242.58%. The Company agreed with Holitech that the Consideration shall be not more than RMB2.3 billion (being the estimated appraised value) and is subject to finalisation. In assessing the Consideration cap and merits of the Disposal, the Directors primarily took into account the historical financial performance of the Target Company, its financial results in the consolidated accounts of the Company, the parties’ bargaining power, the opportunity to dispose of the Target Company to help streamline the Group’s business and realize proceeds to support the Group’s new energy vehicle business, and the other factors disclosed in more detail under the paragraphs headed “Reasons for and Benefits of the Disposal” below. The Directors will also take into account the above factors when negotiating the final Consideration with Holitech. As at the Latest Practicable Date, the Directors understand from Holitech that the aforesaid asset appraisal report has not yet been issued. The Company will announce the final Consideration after it has been agreed with Holitech in order to notify Shareholders that the final Consideration does not exceed the Consideration cap of RMB2.3 billion.

Consideration Shares

The Consideration Shares represent approximately 12.29% of the issued share capital of Holitech as enlarged by the allotment and issue of the Consideration Shares.

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LETTER FROM THE BOARD

According to the regulations of the Administrative Rules on Material Asset Reorganisation of Listed Companies of CSRC, the issue price of the shares of Holitech shall not be lower than 90% of the market reference price. According to the aforementioned regulations and based on the operating conditions of Holitech and appraisal comparisons of listed companies within the same industry, in the interest of all parties, the Company and Holitech agreed that the average price of shares of Holitech for 20 trading days before the Pricing Benchmark Date, i.e. RMB9.64 per share, will be used as the market reference price for the issue price of the Consideration Shares. The closing price of the shares of Holitech as at the Latest Practicable Date was RMB11.93 per share, representing a premium of approximately 23.76% to the reference price of RMB9.64 per share.

If during the period between the Pricing Benchmark Date of the transaction and the issue date of the Consideration Shares, Holitech undergoes any ex-rights or ex-dividend action, such as distribution of rights, capitalization of reserves into share capital or placing of share, the issue price of the Consideration Shares will be adjusted accordingly, and the number of Consideration Shares will also be adjusted accordingly.

Conditions Precedent

Completion is subject to the fulfillment of, inter alia, the following Conditions:

(1) both of Company and Holitech to actively execute and prepare the documents and to obtain approvals as required in relation to the completion of the transactions contemplated under the Agreement;
(2) there are no material adverse events of the Target Company as defined in the Agreement, including, inter alia, the increase or reduction in the registered capital of the Target Company;
(3) from the date of the Agreement and at any time before Completion, no events have occurred that would result in any breach of any of the representations and warranties of each of the Company and Holitech, or affect the enforceability of any provision under the Agreement; and
(4) the Agreement and the transactions contemplated thereunder having been approved by the Shareholders at the EGM in accordance with the requirements of the Listing Rules.

The terms of the Agreement, including the Conditions, can be amended by written agreement between the parties. Currently, the Company has no intention to amend, and as at the Latest Practicable Date, has not received any request from Holitech to amend, any of the terms of the Agreement (including the Conditions). Accordingly, the Company currently does not expect there to be any material change to the terms of the Agreement which will affect the substance of the Agreement and the transactions contemplated thereunder. If any amendment is to be made which may constitute a material change to and affect the substance of the Agreement and the transactions contemplated thereunder, the Company will comply with applicable requirements under the Listing Rules (if any).

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LETTER FROM THE BOARD

Other Terms

The Agreement shall become effective after, among other things, the CSRC having approved the Agreement and the transactions contemplated thereunder. If the requisite approvals have not been obtained from the Shareholders and/or the CSRC within 12 months after the date of the Agreement, either party may terminate the Agreement unilaterally.

Lock Up Undertaking

Pursuant to the Agreement, the Company has undertaken to Holitech that, for a period of twelve (12) months after the Completion Date, it shall not transfer or dispose of any of the Consideration Shares by any means.

Completion

Completion will take place on the Completion Date, which shall be determined by mutual agreement in writing between the Company and Holitech.

Immediately following Completion, the Target Company will no longer be a subsidiary of the Company, and will become a wholly-owned subsidiary of Holitech.

Information on the Target Company

The Target Company was incorporated in the PRC on 10 March 2005 and has a registered capital of RMB400,000,000. The Target Company was originally engaged in the research and development, production and sales of flexible circuit board products. The Company intends to integrate all operating assets and businesses related to LCD display and modules and webcam products into the Target Company before Completion, thus forming three complete business systems, namely flexible circuit boards, LCD display and modules, and webcam products for the Target Company. As part of the Asset Integration, the Group will transfer all assets related to LCD display and modules and webcam products to the Target Company. The net profit of the Target Company is expected to increase as a result of the Asset Integration. The net assets of the Target Company is expected to decrease as a result of distribution of profits by the Target Company to the Company as part of the Asset Integration. Assuming the aforementioned Asset Integration was completed before 1 January 2013, the unaudited pro forma financial information of the Target Company for the year ended 31 December 2013 and the year ended 31 December 2014 are as follow:

					Year ended	Year ended
					31 December	31 December
					2013	2014
					RMB’000	RMB’000
Pro	forma	net	profit/(loss)	before taxation	86,858.50	221,471.00
Pro	forma	net	profit/(loss)	after taxation	79,030.70	192,336.50

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LETTER FROM THE BOARD

The Asset Integration process commenced in February 2015. As at the Latest Practicable Date, the Group has substantially completed the transfers of relevant fixed assets to the Target Company and is in the process of transferring relevant inventories to the Target Company. New purchase orders and sales orders relating to LCD display and modules and webcam products are also undertaken by the Target Company. Subject to the actual progress and circumstances of the Asset Integration process, it is currently expected that the Asset Integration will be substantially completed in around March 2015.

The following diagram illustrates the shareholding structure of the Target Company as at the Latest Practicable Date:

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The Company
100%
The Target Company
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The following diagram illustrates the shareholding structure of the Target Company after Completion:

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The Company
12.29%
Holitech
100%
Target Company
(Note)
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Note: After Completion, the Group’s investments in Holitech will be accounted for in the Group’s financial statements as available-for-sale financial assets.

Reasons for and Benefits of the Disposal

Currently, the Group is principally engaged in the automobile business which includes traditional fuel vehicles and new energy vehicles, mobile phone accessories and module business, and the rechargeable batteries and new energy business.

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LETTER FROM THE BOARD

The Disposal will reinforce the strategic focus of the Group, expedite the business transformation and upgrade of the Group, optimize the asset structure and asset allocation of the Group and allow the Group to concentrate its resources to develop its core businesses, which is beneficial to the long-term development of the new energy vehicle business of the Group.

The Group intends to allocate more resources to develop the new energy vehicle business. The Directors consider the Disposal to be an opportunity for the Group to utilize resources allocated to the operations of the flexible circuit board, LCD display and modules and webcam businesses to develop the new energy vehicle business. The Company intends to use the net proceeds from the cash Consideration for supporting the Group’s new energy vehicle business.

Taking into account that Holitech is a company listed on the Shenzhen Stock Exchange and is primarily engaged in the manufacture and sale of chemical raw materials, chemical products, touch screens and small to mid-sized LCD displays and modules, and in view of the improving trend in the business prospects of Holitech based on its recent financial performances, the Board considers that the Disposal will enhance the market position and competitiveness of Holitech and further improve the operating performance of Holitech. In light of the fact that the Group will become a shareholder of Holitech as a result of the receipt of the Consideration Shares, the benefits accrued by Holitech are expected to bring greater return to the Group and the Shareholders.

Having considered the factors as mentioned above, the Directors are of the view that the terms of the Agreement are fair and reasonable and in the interest of the Company and the Shareholders as a whole.

Financial Effects of the Disposal

Immediately after Completion, the Target Company will cease to be a subsidiary of the Company and its financial results will cease to be consolidated with the accounts of the Company.

It is expected that the Group will record a gain on disposal of approximately RMB1.629 billion, which is calculated with reference to the difference between the Consideration and the carrying amount of the Target Company attributable to the Group. The actual gain as a result of the Disposal to be recorded by the Group is subject to audit and will be assessed after Completion.

Notwithstanding that the Target Company was profit-making and the Target Company will cease to contribute to the Group’s revenue upon Completion (save through the Group’s investment in Holitech), considering the scale of the Target Company’s operations, the Directors are of the view that the Disposal will be beneficial to the Group as it aligns with the Group’s strategy to streamline its businesses as explained under the paragraphs headed “Reasons for and Benefits of the Disposal” above, and allows the Group to use its resources more efficiently. The Disposal will help alleviate stress on the Group’s resources otherwise allocated to the Target Company and allow the Group to concentrate its resources on developing its core businesses. At the same time, the Group can benefit from its investment in Holitech as explained under the paragraphs headed “Reasons for and Benefits of the Disposal” above.

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LETTER FROM THE BOARD

As at 31 December 2014, the unaudited pro forma total assets and total liabilities of the Target Company was approximately RMB1.7 billion and RMB1.1 billion, respectively. It is estimated that upon Completion, the total assets of the Group would increase by approximately RMB506 million and the total liabilities of the Group would decrease by approximately RMB1.1 billion.

Listing Rules Implications

Waiver from strict compliance with Rules 14.62, 14.66(2) and Paragraph 29(2) of Appendix 1B to the Listing Rules

As mentioned under the paragraphs headed “Consideration” above, the aggregate Consideration for the Disposal is subject to finalisation but in any event shall be not more than RMB2.3 billion (being the estimated appraised value). The final Consideration (including the issue price for the Consideration Shares, if applicable) will be determined by further negotiations between the Company and Holitech on the basis of the appraised value of the Sale Shares computed using the income approach in the asset appraisal report (“ Report ”) (on the basis that the Asset Integration was completed) to be issued by a qualified appraisal institution (“ Appraiser ”) engaged by Holitech. In this connection, the Company understands that Golden Standard & Headmen Appraisal And Advisory Co., Ltd. (北京大正海地人資產評估有限公司), an appraisal institution independent of the Company and its connected persons (as defined in the Listing Rules), has been engaged by Holitech to issue the Report.

As this circular is considered by the Exchange to contain a profit forecast within the meaning of the Listing Rules, having considered the factors below, the Company has applied for, and has been granted, a waiver from strict compliance with Rules 14.62, 14.66(2) and Paragraph 29(2) of Appendix 1B to the Listing Rules on the following grounds:

a. Holitech is a company listed on the Shenzhen Stock Exchange. Under the “Administrative Measures for Material Asset Reorganisation of Listed Companies” (No.109) (《上市公司重大資產重組管理辦法》(第109號)) promulgated by the CSRC on 23 October 2014, Holitech is required to engage an asset appraisal institution with qualifications in the securities business to issue an asset appraisal report on the Sale Shares as the Disposal forms part of a major reorganisation undertaken by Holitech and the consideration for which is to be determined by reference to asset appraisal results.

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LETTER FROM THE BOARD

b. The Appraiser was engaged by Holitech and not by the Company. The Company was not involved in preparing the Report or in the estimation of the appraised value, except for providing Holitech’s representatives with the Target Company’s historical financial information and discussions of business trend, growth factors and production capacity. The Directors understand that the accounting judgements and estimates adopted by the Appraiser differ from those adopted by the Company. Therefore, neither the Company nor its Directors should take responsibility for the estimate, the appraisal results, or the assumptions and calculations used by the Appraiser. It is also practically infeasible for the Directors or financial adviser to the Company to directly discuss with the Appraiser the assumptions on which the appraisal is conducted in order to confirm that the appraisal is made after due and careful enquiry.
c. Whilst the Company had agreed to set the Consideration cap at the estimated appraised value and to determine the final Consideration by further negotiation between the parties on the basis of the appraised value of the Sale Shares in the Report, as explained in the paragraphs titled “Consideration” above in this circular, in assessing the Consideration cap and the merits of the Disposal, the Directors primarily took into account the historical financial performance of the Target Company, its financial results in the consolidated accounts of the Company, the parties’ bargaining power, the opportunity to dispose of the Target Company to help streamline the Group’s business and realize proceeds to support the Group’s new energy vehicle business, and the other factors disclosed in more detail under the paragraphs headed “Reasons for and Benefits of the Disposal” in this circular. The Directors will also take into account such factors when negotiating the final Consideration with Holitech.
d. The Company is not required by law or by the Listing Rules to commission a valuation on the Sale Shares. Given that the Directors’ assessment of the Consideration cap, the final Consideration and the merits of the Disposal are not based on the Report commissioned by the counterparty to the transaction, the inclusion of such Report in this circular will be unnecessary and cause confusion to Shareholders.
e. The Target Company will cease to be a subsidiary of the Company after the Disposal so any profit forecast of the Target Company is irrelevant to the future financial position of the Company.
f. The Company has not been able to obtain written consent from the Appraiser to include its preliminary appraisal details in this circular before the finalisation of the Report.
g. The Directors understand from Holitech that the Report is likely to be finalized and issued after the despatch date of this circular. It would be unreasonable to require the Company’s auditors, reporting accountants, financial adviser and/or Directors to report or opine on a report that is yet to be finalized.

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LETTER FROM THE BOARD

h. Given that the Report was not commissioned by the Group, the Group is not in a position to control the timing of the issue of the Report. If the Report is to be included in this circular, the despatch date of this circular will need to be delayed substantially, and the EGM will also need to be postponed for 45 days or more due to applicable requirements regarding issuing of notice of general meetings to Shareholders. The Company understands from Holitech that the Disposal forms part of a major reorganisation undertaken by Holitech, and the application for the Disposal is intended to be submitted to the CSRC for approval together with other relevant transactions contemplated under the reorganisation. Any delay in the EGM may in turn affect CSRC’s approval process for the Disposal and other relevant acquisitions contemplated under Holitech’s reorganisation. Under the Agreement, if the requisite approvals from the Shareholders and/or the CSRC have not been obtained within 12 months after the date of the Agreement, Holitech has a right to terminate the Agreement unilaterally. The Directors consider that it would not be in the best interests of the Company and its Shareholders as a whole to delay the transaction timetable for the purposes of including the Report in this circular.
i. The inclusion of the Report in this circular would also involve additional time and cost. In particular, the Report is prepared by a qualified PRC appraiser in Chinese language, it would be costly and overly burdensome for the Company to have the Report translated into English for inclusion in this circular, taking into account the Report is currently expected to have over 100 pages.

On the basis of the above, it would be unreasonable, onerous and unduly burdensome to require the Company to comply with the requirements under Rules 14.62, 14.66(2) and Paragraph 29(2) of Appendix 1B to the Listing Rules.

A summary of information on income approach valuation is set out in Appendix II to this circular. The information in Appendix II has been compiled solely based on an announcement published by Holitech in relation to, amongst others, the Disposal. The Company understands that as at the Latest Practicable Date, the appraisal has not yet been completed and the final results may differ from the information set out in Appendix II. The Company will announce the final Consideration after it has been agreed with Holitech in order to notify Shareholders that the final Consideration does not exceed the Consideration cap of RMB2.3 billion.

3. PROVISION OF GUARANTEE

On 12 February 2015, the Board approved the provision of guarantee by the Company or its subsidiaries to Shenzhen BYD Electronic Vehicles Investment Limited (深圳比亞迪電動汽車投資有限公司) (“ Vehicles Investment Company ”), a newly incorporated associated corporation (within the meaning of the SFO), details of which were set out in the announcements of the Company published on the Shenzhen Stock Exchange on 13 February 2015.

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LETTER FROM THE BOARD

At the 2013 Annual General Meeting of the Company held on 25 June 2014 (the “ 2013 AGM ”), the Shareholders approved, by way of special resolution, the provision of guarantee on a pro-rata basis by the Company and its subsidiaries in respect of the banking and other financial institutional credit businesses of their associated corporation, from the date of the 2013 AGM to the conclusion of the 2014 annual general meeting of the Company to be held in 2015. The total guarantee amount undertaken by the Group shall not exceed RMB3 billion. The Vehicles Investment Company was established after the 2013 AGM. In order to ease the funding pressure of such corporation, a special resolution will be proposed at the EGM for the provision of guarantee by the Company and its subsidiaries in support of credit facilities and other matters from banks and other financial institutions granted to Vehicles Investment Company, in proportion to their respective shareholding in such corporation, provided that the total guarantee amount undertaken by the Group will not be more than RMB300 million. The approval from the Shareholders is expected to be valid until the date of the conclusion of the 2015 annual general meeting of the Company to be held in 2016. The Group will comply with relevant requirements under the Listing Rules upon execution of the guarantee if such guarantee constitutes transactions subject to disclosure under the Listing Rules.

4. ISSUE OF DOMESTIC CORPORATE BONDS

It was resolved at the meeting of the Board held on 12 February 2015 that Domestic Corporate Bonds be issued by the Company, subject to the approval of the Shareholders by passing a special resolution at the EGM and approval of relevant regulatory authorities. The proposed arrangements for the Domestic Corporate Bonds Issue are set forth below:

Size of the Domestic Corporate The aggregate principal amount of the Domestic Bonds Issue: Corporate Bonds Issue shall not be more than RMB3 billion (including RMB3 billion) in single or multiple tranches in the PRC. The specific size and number of tranches of issuance will be determined within the said range according to the market conditions prevailing at the time of issue.

Manner of Issue: The Domestic Corporate Bonds will be publicly issued to qualified investors as stipulated in the Administrative Measures for the Issuance and Trading of Corporate Bonds (《公司債券發行與交易管理辦法》).

Maturity: The Domestic Corporate Bonds will have a term of maturity not exceeding 10 years and can be either single-term or multiple terms. The specific term maturity and the issue size of each type of maturity are subject to final decision according to market conditions prevailing at the time of issue.

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LETTER FROM THE BOARD

Use of proceeds:

The proceeds from the Domestic Corporate Bonds Issue will satisfy the Company’s demand for medium and long-term funding and optimize the Company’s debt structure and repay bank loans and supplement the Company’s working capital.

Underwriting:

An underwriting syndicate organized by the lead underwriter will underwrite the Domestic Corporate Bonds by way of standby underwriting.

Interest Rate level and Determination Method:
The coupon rate of the Domestic Corporate Bonds to be issued and its manner of payment will be determined through negotiation between the Company and the lead underwriter in accordance with the market condition.

Place of Listing:

Application for listing and trading of the Domestic Corporate Bonds shall be filed to the Shenzhen Stock Exchange as soon as possible following the completion of the Domestic Corporate Bonds Issue. Subject to the approval of regulatory authorities, the Domestic Corporate Bonds may also be listed and traded on such other stock exchanges as permissible by applicable laws, regulations and regulatory documents.

Manner of Security:

The Domestic Corporate Bonds will be issued with no security.

Measures for guaranteeing the repayment of the Domestic Corporate Bonds:

The Company undertakes that in circumstances where any failure to pay any amounts of principal or interest of the Domestic Corporate Bonds as scheduled or when any of such amounts fall due is foreseen to take place, it will take measures accordingly to guarantee the repayment as required by the relevant laws and regulations, including but not limited to: (i) not to declare any profit distribution to Shareholders; (ii) to postpone the implementation of capital expenditure projects such as material investment, merger or acquisition; (iii) to reduce or discontinue the payment of salaries and bonuses of Directors and members of senior management; and (iv) not to transfer or second the principal officer.

Term of validity of the resolution:

The resolution passed at the EGM in respect of the Domestic Corporate Bonds Issue will expire 12 months from the date of the passing of such resolution.

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LETTER FROM THE BOARD

In addition, a resolution will be proposed at the EGM to authorise the Board that after obtaining the approval from the Shareholders, the Board will delegate Mr. Wang Chuan-fu, the Chairman of the Company and an executive Director, and Mr. Wu Jing-sheng, a member of the senior management of the Company, to exercise all powers to handle all matters relating to the issue and listing of the Domestic Corporate Bonds, including but not limited to:

(a) to formulate the details of the proposal regarding the issuance of the Domestic Corporate Bonds based on the actual conditions of the Company and the market in accordance with the PRC laws, regulations and relevant requirements of securities regulatory authorities and the resolution passed at the general meeting of the Company; and to revise and amend the terms for the issuance of the Domestic Corporate Bonds, including but not limited to all matters relating to the terms of such issuance such as details of issue size, term of bonds, type of bonds, clawback mechanism, bond rates and its determination, timing of issue (including the number of tranches), the new terms as to whether any terms for repurchase and redemption will be in place, rating arrangements, details of subscription method, details of placement arrangements, term and means of payment of principal and interests, listing of bonds, termination of issue and use of proceeds raised;
(b) to negotiate on behalf of the Company in relation to all matters regarding the issue and listing of the Domestic Corporate Bonds; to execute all relevant agreements and other necessary documents; and to make proper disclosure of all relevant information;
(c) to engage intermediaries to handle the filing matters in connection with the Domestic Corporate Bonds Issue and handle the listing matters with respect to the Domestic Corporate Bonds upon the completion of issuance, including but not limited to the authorization, execution, implementation, amendment and completion of all necessary documents, agreements, contracts, various announcements and other legal documents, etc. and disclosure of information in accordance with the laws, regulations and other regulatory documents;
(d) to appoint a trustee manager to sign the bond trustee agreement and formulate the rules for meeting of bondholders in connection with the Domestic Corporate Bonds Issue;
(e) to revise the details of the proposal for the Domestic Corporate Bonds Issue according to the recommendations made by regulatory authorities in the event that there are changes in the policies relating to the issuance of corporate bonds by the regulatory authorities or changes in prevailing market conditions, save as matters that require re-approval at the general meeting pursuant to the relevant laws, regulations and the articles of association of the Company;
(f) to take all necessary actions and deal with or make decisions on other matters relating to the issue and listing of the Domestic Corporate Bonds; and

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LETTER FROM THE BOARD

(g) to take all other necessary actions or measures on other matters relating to the issue of the Domestic Corporate Bonds.

After comparing various means of financing and taking into account the current interest rate environment, the Board considers the Domestic Corporate Bonds Issue to be the most suitable means to effectively lower the overall capital costs and raise the repayment capability of the Company.

The proposed Domestic Corporate Bonds Issue may or may not occur. Shareholders and investors should therefore exercise caution in dealing in the Company’s Shares.

5. EXTRAORDINARY GENERAL MEETING

The EGM will be held on Tuesday, 7 April 2015 at 10:00 a.m. at the Conference Room, No. 3009, BYD Road, Pingshan New District, Shenzhen, the PRC. Further details of the EGM are set out in the notice and announcement issued by the Company on 16 February 2015 and 18 March 2015, respectively.

The Proxy Form for use at the EGM containing the relevant proposed resolutions was also despatched by the Company on 16 February 2015. The Proxy Form was published on the website of the Hong Kong Stock Exchange (www.hkex.com.hk).

The register of holders of H Shares of the Company has been closed since Wednesday, 4 March 2015 and will remain closed until Tuesday, 7 April 2015 (both days inclusive), during which no transfer of H Shares will be effected. Holders of H Shares whose names appear on the register of H Shares of the Company kept at Computershare Hong Kong Investor Services Limited on Tuesday, 7 April 2015 are entitled to attend and vote at the EGM (or any adjournment thereof) following completion of the registration procedures. To qualify for attendance and voting at the EGM (or any adjournment thereof), documents on transfers of H Shares must have been lodged no later than 4:30 p.m. on Tuesday, 3 March 2015.

Whether or not you are able to attend the EGM, please complete and return the Proxy Form in accordance with the instructions printed thereon as soon as practicable and in any event not less than 24 hours before the time designated for holding the EGM or any adjournment thereof. Completion and return of the Proxy Form will not preclude you from attending and voting in person at the EGM or any adjournment thereof should you so wish.

Pursuant to Rule 13.39(4) of the Listing Rules, any vote of the shareholders at a general meeting must be taken by poll. Accordingly, the resolutions to be proposed at the EGM will be voted by poll.

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LETTER FROM THE BOARD

6. RECOMMENDATION

The Directors (including all independent non-executive Directors) consider that the terms of the Agreement are fair and reasonable, on normal commercial terms and were negotiated on an arm’s length basis between the parties involved. The Directors believe that the proposed resolutions for consideration and approval by Shareholders at the EGM relating to the Disposal, the provision of the Guarantee and the Domestic Corporate Bonds Issue are in the best interests of the Company and the Shareholders as a whole. Accordingly, the Directors recommend that Shareholders vote in favour of the resolutions to be proposed at the EGM as set out in the notice of EGM.

ADDITIONAL INFORMATION

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

Yours faithfully, Wang Chuan-fu Chairman

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

1. FINANCIAL INFORMATION OF THE GROUP

Details of the financial information of the Group for the three financial years ended 31 December 2013 and six months ended 30 June 2014 have been set out in the Company’s annual report for the year ended 31 December 2011, the Company’s annual report for the year ended 31 December 2012, the Company’s annual report for the year ended 31 December 2013 and the Company’s interim report for the six months ended 30 June 2014.

The above annual reports and interim report of the Company have been posted on the websites of the Hong Kong Stock Exchange (www.hkexnews.hk) and the Company (http://www.byd.com.cn).

2. INDEBTEDNESS

As at the close of business on 31 January 2015, being the latest practicable date for the purpose of ascertaining the indebtedness of the Group prior to the printing of this circular, the Group had unaudited outstanding borrowings and debts as follows:

Borrowings:

Current Bank loans – Secured Bank loans – Unsecured LIBOR+280 bps Current portion of long term bank loans – Secured Current portion of long term bank loans – Unsecured Current portion of other long term bank loans – Unsecured Corporate bonds – Unsecured Non-current Bank loans – Secured LIBOR+400 bps Bank loans – Unsecured LIBOR+280-350 bps Other bank loans – Unsecured Corporate bonds – Unsecured	RMB’000 9,540,831 3,371,202 463,619 834,113 1,648,191 1,560,017
	17,417,973 2,984,714
	20,402,687
	2,136,393 73,305 2,213,160 580,030 2,391,359
	7,394,247
	2,990,968
	10,385,215
	30,787,902

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Contingent liabilities

(a) Action against Foxconn

On 11 June 2007, a Hong Kong High Court (the “Court”) action (the “June 2007 Action”) was commenced by a subsidiary and an affiliate of Foxconn International Holdings Limited (the “Plaintiffs”) against the Company and certain subsidiaries of the Group (the “Defendants”) for using confidential information alleged to have been obtained improperly from the Plaintiffs. The Plaintiffs alleged that the Defendants have, directly or indirectly through the assistance of certain employees of the Plaintiffs, induced and procured certain former employees of the Plaintiffs (some of whom were subsequently employed by the Group) to breach their contractual and fiduciary duties with their former employer, the Plaintiffs, by disclosing to the Defendants confidential information that such employees have acquired through their employment with the Plaintiffs. In addition, it was alleged that the Defendants knew or ought to have known the confidential nature of such information and that the Defendants allowed or acquiesced its misuse in establishing a handset production system that is highly similar to the Plaintiffs’ handset production system and using the Plaintiffs’ confidential information with respect to their suppliers and customers. The Plaintiffs discontinued the June 2007 Action on 5 October 2007 with the effect that the June 2007 Action has been wholly discontinued against all the Defendants named in the action and that this finally disposed of the June 2007 Action without any liability to the Defendants. On the same day, the Plaintiffs initiated a new set of legal proceedings in the Court (the “October 2007 Action”). The Defendants named in the October 2007 Action are the same as the Defendants in the June 2007 Action, and the claims made by the Plaintiffs in the October 2007 Action are based on the same facts and the same grounds in the June 2007 Action. In essence, the Plaintiffs alleged that the Defendants have misappropriated and misused confidential information belonging to the Plaintiffs. The remedies sought by the Plaintiffs in the October 2007 Action included an injunction restraining the Defendants from using the alleged confidential information, an order for the disgorgement of profit made by the Defendants through the use of the confidential information, damages based on the loss suffered by the Plaintiffs and exemplary damages. The Plaintiffs have quantified part of their claim for damages, consisting of the estimated cost of producing the alleged confidential information of RMB2,907,000 and an amount of RMB3,600,000 which allegedly represents compensation paid by the Plaintiffs to other parties to whom they owed a duty to keep confidential the alleged confidential information. The damages otherwise sought by the Plaintiffs in the October 2007 Action have not been quantified.

Regarding the October 2007 Action, the Company has given an indemnity in favour of other Defendants for all liabilities, losses, damages, costs and expenses (if any) incurred arising out of, or in connection with the October 2007 Action. The indemnity given by the Company to the indemnified parties will not cover loss of future profit and revenue as well as any obligation, such as ceasing to use certain information, on the part of the indemnified parties to comply with any injunction order or any court order to deliver up documents. The service of writs on all of the Defendants has been duly acknowledged.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

On 2 November 2007, the Company and its subsidiary, BYD Hong Kong Limited (“BYD Hong Kong”), which had been served with the writ at that time, applied for a stay of the legal proceedings. The hearing of the stay application took place on 11 and 12 June 2008 and the judgement in respect of the stay application was handed down on 27 June 2008. The stay application was turned down and an order was issued, of which the legal cost for the application of stay by the Plaintiffs is to be borne by the Company and BYD Hong Kong. The legal cost, if not agreed, will be determined by the Court. On 2 September 2009, the abovementioned Plaintiffs made an amendment to the writ with the Court for inclusion of Foxconn Precision Component (Beijing) Co. Ltd. as a plaintiff.

On 2 October 2009 the Defendants instituted a counter-action against Hon Hai Precision Industry Co. Ltd, Foxconn International Holdings Limited, Shenzhen Futaihong Precision Industry Co., Ltd. and Hongfujin Precision Industry (Shenzhen) Co. Ltd. for their intervention, by means of illegal measures, in the operations involving the Company (as the holding company) and its subsidiary, collusions, written and verbal defamation, and the economic loss as a result of the said activities, and made requests in respect of the action as follows: The Company requested the Court to issue an injunction banning Hon Hai Precision Industry Co. Ltd and Foxconn International Holdings Limited from spreading, releasing and procuring the release of statements against the Company or any similar wording to discredit the Company. Requests were also made to order Hon Hai Precision Industry Co. Ltd to compensate for the damage (including aggravated damages and punitive damages) arising from its written and oral defamation, to order Foxconn International Holdings Limited to compensate for the damage (including aggravated damages and punitive damages) arising from its written defamation, and to order Hon Hai Precision Industry Co. Ltd, Foxconn International Holdings Limited, Shenzhen Futaihong Precision Industry Co., Ltd. and Hongfujin Precision Industry (Shenzhen) Co., Ltd. to compensate for the losses due to unlawful interference with the operations of the Company and its subsidiaries, and the loss, interest, costs and other relief caused by their collusion.

On 21 January 2010, the Plaintiffs, based on no reasonable cause of action and other reasons, applied to the court rejecting the contents of some paragraphs in the defendant’s counterclaim. On 24 August 2010, the court made a judgement dismissing the application for elimination. On 28 September 2010, the Plaintiffs appealed against the aforesaid judgement. On 31 December 2010, the Court granted leave for the appeal application. In response to the appeal application, the court held hearings on 16 September 2011 and 24 May 2012. On 20 June 2012, the court handed down the judgement to dismiss the appeal relating to the elimination request from the Plaintiff.

On 30 January 2012, the Plaintiffs filed an application to the Court requesting it to send a letter of request to the Shenzhen Intermediate People’s Court for copying information in the mobile hard drive maintained in the Shenzhen Intermediate People’s Court. On 13 April 2012, the Defendants made a reply to the application, requesting that apart from the Shenzhen Intermediate People’s Court, the letter of request should also be sent to the Supreme People’s Court of the PRC, the Shenzhen Bao’an District People’s Court and the Shenzhen Longgang District People’s Court through which the letter of request should be passed to the Bao’an

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Branch of the Shenzhen Public Security Bureau and the Beijing JZSC Intellectual Property Rights Forensic Center, requesting the aforesaid authorities or units to assist in the transfer or disclosure of evidence materials such as computers, copies of mobile hard disks and case files of parties closely related to this case. On 11 October 2012, the Court decided to postpone the hearing for the above application originally scheduled to be held on 18 October 2012 to a time to be further decided.

On 6 June 2013, Hong Hai Precision Industry Co., Ltd, Foxconn International Holdings Limited, Shenzhen Futaihong Precision Industry Co., Ltd. and Hongfujin Precision Industrial (Shenzhen) Co., Ltd. (defendants of the counterclaim) replied to the counterclaim from the Defendants and argued that the alleged intervention in the operations of the Defendants and the collusions were not actionable pursuant to the PRC laws, and the alleged charges of written and verbal defamation were legal disclosures under Taiwanese laws, therefore, the counterclaim made by the Defendants against them was groundless. On 27 June 2013, the Defendants made an application to the Court for raising a defence against the reply from the defendants of the counterclaim. On 6 December 2013, the Company submitted a response against the abovementioned defence of defendants of the counterclaim. On 4 July 2014 the two parties exchanged the list of evidence.

Based on legal opinions issued by the Group’s litigation legal counsel in 2014, the ultimate outcome of the litigation is not yet determined given the early stage of the proceedings. Accordingly, whether the litigation may lead to compensation obligations on the part of the Group is uncertain. Moreover, if the litigation may lead to compensation obligations, the amount cannot be measured reliably and no estimated liabilities have been recorded by the Group.

(b) The Maritime Compensation Disputes between the Company and other parties including HLL Atlantic Schiffahrts GmbH and David Peyser Sportswear, Inc.

(i) The third-party litigation (No. 08 civ 9352(AKH))

On 10 September 2008, the Company exported to Spectrum Brands, Inc. 360 cartons of Ni-MH batteries with the trademark of “Rayovac”, which were loaded in a container (No. APLU9087454) (the “Container”) in No. 5 cargo hold of the M/V APL PERU (the “Vessel”). The shipowner is HLL Atlantic Schiffahrts GmbH (“HLL Atlantic”) and the ship operator is Hanseatic Lloyd Schiffahrt GmbH & Co. KG (“Lloyd”). On 5 October 2008, a fire occurred in the Container and resulted in the damages to the Vessel and other cargos aboard.

On 31 October 2008, six companies including Chris Sports North America, Inc. (the “08 Civ. 09352 Plaintiffs”), represents a variety of cargo interests aboard the ship, launched a lawsuit (the “08 Civ. 09352 Case”) to the United States District Court of Southern District of New York, against the four defendants, including the HLL Atlantic, Lloyd and a carrier named Laufer Group International Ltd. (the “08 Civ. 09352 Defendants”), on the facts of the maritime transport. The 08 Civ. 09352 Plaintiffs alleged that the 08 Civ. 09352 Defendants violated the carriage obligations. On 2 March 2009, the 08 Civ. 09352 Plaintiffs added another carrier named Hyundai Merchant Marine Co. as defendant and demanded that all 08 Civ. 09352 Defendants liable for a loss that amounted to US$428,328.50.

– I-4 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

On 10 September 2009, a third-party lawsuit was initiated by two of the 08 Civ. 09352 Defendants, HLL Atlantic and Lloyd, against the Company and Spectrum Brands, Inc. (“SPC”), demanding that the Company and Spectrum Brands, Inc., liable for losses and expenses totaling US$250,000, as well as indemnity, cost of litigation and general average.

On 8 October 2010, the Company was duly served with the third-party complaint and the summons.

(ii) The maritime case (No. 10-CV-06108)

On 7 May 2010, a lawsuit numbered CV 09-00169-RAJ was commenced by 41 plaintiffs including David Peyser Sportswear, Inc. and National Liability and Fire Company (the “Plaintiffs”) against 5 defendants including the Company and SPC (the “Defendants”), to the United States District Court for Western District of Washington in Seattle. The Plaintiffs requested that the Defendants liable for the loss of approximately US$6,000,000, general average and the cost of litigation.

The case was based on the same facts as the aforementioned 08 Civ. 09352 Case. On 17 August 2010, the case has been transferred to the United States District Court for the Southern District of New York. The number of the case was changed to 10-CV-06108.

On 4 November 2010, the Company was duly served with the Plaintiffs’ complaint and the summons. The Company received the request of relevant evidence by Spectrum Brands in March 2012, and submitted the relevant documents according to the request in May 2012. The Company submitted the relevant documents according to Spectrum Brands’ request in May 2012. The parties took testimony from the Company’s witnesses in early November 2012 and mid-June 2013. On 2 December 2013, the Plaintiffs submitted an expert report. On 21 March 2014, as the Plaintiffs were in the process of negotiating settlement with the carrier, which is one of the Defendants, the carrier made an application to the court to postpone the submission of the expert report. Therefore, the Company postponed the expert report accordingly. The new schedule is yet to be determined. On 18 September 2014, the Plaintiffs applied for dismissal of the lawsuit and the application was approved by the court on 4 December 2014.

(c) As at the close of business on 31 January 2015, being the latest practicable date for the purpose of ascertaining the indebtedness of the Group prior to the printing of this circular, the Group’s contingent liabilities not provided for in the financial statements were as follows:

		Group	Company
		RMB’000	RMB’000
Guarantees	given to banks in connection with
facilities	granted to subsidiaries	–	44,996,188

As at 31 January 2015, the banking facilities guaranteed to subsidiaries subject to guarantees given to banks by the Company were utilized to the extent of approximately RMB11,222,471,000.

– I-5 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

(d) Financial guarantee issued

The Group entered into tri-lateral finance lease arrangement contracts with certain end-user customers and a third-party leasing company. Under the joint leasing arrangement, the Group provides a buy back guarantee to the third-party leasing company that in the event of customer’s default, the Group is required to make payment to the leasing company for its share of the outstanding lease payments due from the customer. Management believes that the repossessed vehicles will be able to be sold for proceeds that are not significantly different from the amount of buy back payments. At the same time, the Group is entitled to repossess and sell the leased new energy vehicle, and retain any net proceeds in excess of the buy back payments made to the leasing company. As at 31 January 2015, the Group’s maximum exposure to such buy back arrangement was RMB403,543,000. The term of such buy back arrangement coincides with the tenure of the lease contracts. For the seven months ended 31 January 2015, there was no default of payments from end-user customers which required the Group to make buy back payments to the third-party leasing company.

Operating lease arrangements

As lessee

The Group leases certain of its office properties and office equipment under operating lease arrangements. Leases for properties are negotiated for terms ranging from three to five years.

There were no contingent rentals, renewal or purchase options, escalation clauses or any restrictions imposed on dividends, additional debt and further leasing within the lease arrangements.

At 31 January 2015, the Group had total future minimum lease payments under non-cancellable operating leases falling due as follows:

Within one year In the second to fifth years, inclusive	Group 31 January 2015 RMB’000 46,061 57,916
	103,977

The Group had entered into a sale and leaseback agreement with a leasing company pursuant to which certain machinery and equipment (the “Asset”) with a net book value of RMB128,194,000 was sold to the leasing company for the transaction price equivalent to the net book value and subsequently leased back for lease term of 3 years during which the Group

– I-6 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

is requested to pay rental fee of RMB41,000,000 per annum. The Group has been granted the option to buy back the Asset at 30% of original transaction price, return the equipment to leasing company or renew the rent based on renegotiation between the Group and leasing company by the end of lease term.

Other guarantees

The Company has provided a guarantee in respect of Shenzhen BYD Daimler New Technology Co., Ltd.’s (hereinafter “BYD Daimler”) RMB1.5 billion loan from China Development Bank, China Construction Bank Shenzhen Branch and The Export-Import Bank of China to finance its electric vehicle project on the basis of the Company’s 50% shareholding contribution in BYD Daimler. The amount of the guarantee will reduce in accordance with the repayment of the loan.

Save as aforesaid or as otherwise disclosed herein, and apart from intra-group liabilities and normal trade payables and bills arising in the ordinary course of business, the Group did not have outstanding as at the close of business on 31 January 2015 any loan capital issued and outstanding or agreed to be issued, bank overdrafts, loans or other similar indebtedness, liabilities under acceptances or acceptable credits, debentures, mortgages, charges, hire purchase commitments, guarantees or other material contingent liabilities.

3. WORKING CAPITAL

The Directors are of the opinion that, after due and careful enquiry, taking into account (i) the internal resources available to the Group; (ii) the presently available banking facilities and the expected renewal of banking facilities of the Group; and (iii) the estimated net proceeds from the Disposal, in the absence of unforeseeable circumstances, the Group has sufficient working capital to meet its present requirements for at least the next 12 months from the date of this circular.

4. FINANCIAL AND TRADING PROSPECTS

In the year of 2015, China’s economy is expected to step into a new stage. The Central Government of China is expected to strive a balance between continuous deepening of economic structure and prevention of excessive growth. Although economic downturn pressure and risks will remain, stable growth is the main focus of the Central Government’s economic development plans this year. It is expected that China’s economy will continue to grow steadily. Going forward the Group shall continue to adhere to the development philosophy of “technology, quality and responsibility”, and continue to focus on developing new energy vehicle business, enriching product supply, improving technology, strengthening brand building and sales channel building, fulfilling its commitments to consumers in terms of quality and after-sale services, and promoting energy conservation and environmental protection, to further strengthen the Group’s leading position in the new energy vehicle industry.

– I-7 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Automobile business

Leveraging on the government’s favourable policies for new energy vehicles, the Group will deploy comprehensive supply chain and market strategies. In respect of product promotion, the Group plans to launch a number of new automobile models in 2015 to enrich its product portfolio, from sedan to SUV by leveraging on the success of its own brand in the SUV market. In terms of strategic planning, the Group will implement a “7+4” strategy, targeting new energy vehicles in seven principal markets (private cars, public transportation, taxis, environmental-friendly cars, inter-city passenger transport, logistics trucks and construction vehicles) and four specialised vehicle markets (such as specialised vehicles and forklifts for storages, airports, mines and ports).

In respect of traditional fuel-powered vehicles, the Group will launch an “Intelligence Strategy”, which includes the PM2.5 green system, Car Pad system, remote driving technology and 360-degree panoramic images system. The SUV model S7 and G5 newly launched by the Group are part of the Group’s “Intelligence Strategy” and their continued strong sales are expected to help add new growth momentum for the Group’s traditional automobile business.

Handset Components and Assembly Business

The rapid development of mobile internet and upgrading of communications technology continue to drive demand for new products. As an increasing number of domestic and overseas manufacturers are turning to choose PMH-based metal casings to enhance product differentiation, the Group anticipates that there continues to be a great market potential in the handset components and assembly business.

As a developer and advocator of PMH technology, the Group will leverage on its first-mover advantage and stable market position to continue to promote the application of PMH technology, expand the scope of application of the product, optimize customer base, enhance utilization rate to enjoy economy of scale, and further enhance the contribution of the handset components and assembly to the Group’s revenue and profit.

Rechargeable Battery and New Energy Business

The continuous evolvement of mobile intelligent terminals brings momentum for the development of the rechargeable battery business. Looking ahead, the Group will continue to develop new application areas for lithium-ion batteries and nickel batteries and enhance market share.

The high-speed growth of new energy vehicles in the future will greatly stimulate market demand for lithium ferrous phosphate batteries (“LFP batteries”), and the Group will increase its research and development efforts and improve the performance of LFP batteries and application areas, while expanding production capacity for LFP batteries to meet the enormous demand arising from the booming development of the new energy vehicle market.

In respect of the Group’s solar business, the Group will continue to develop domestic and overseas markets, and strive to increase revenue and reduce losses in 2015.

– I-8 –

SUMMARY OF INFORMATION ON INCOME APPROACH VALUATION

APPENDIX II

The following summary of information on income approach valuation has been prepared based on an announcement published by Holitech in relation to, amongst others, the Disposal. The aforesaid announcement was issued in Chinese and the English content contained herein is a translation of a summary of relevant disclosures regarding income approach valuation in the Chinese announcement, with necessary adaptations. In case of discrepancies between the two versions, the Chinese version shall prevail.

As at the Latest Practicable Date, the final Report has not yet been issued and the Company is not in a position to confirm whether the following information will form part of the Report. The valuation has not yet been completed and the final results may differ from the information set out in this Appendix. The Directors wish to emphasize that in assessing the Consideration cap and the merits of the Disposal, the Directors primarily took into account the historical financial performance of the Target Company, its financial results in the consolidated accounts of the Company, the parties’ bargaining power, the opportunity to dispose of the Target Company to help streamline the Group’s business and realize proceeds to support the Group’s new energy vehicle business, and the other factors disclosed in more detail under the paragraphs headed “Reasons for and Benefits of the Disposal” in this circular. The Directors will also take into account such factors when negotiating the final Consideration with Holitech. Shareholders and investors should exercise caution and should not place undue reliance on the contents of this Appendix.

A. METHODS OF VALUATION

The basic methods for appraisal of an enterprise’s overall value include the market approach, income approach and asset-based approach. When carrying out the valuation, the suitability of each of the three basic valuation methods is required to be analysed based on factors such as the valuation subject, value type and information available, so that one or more valuation methods may be properly selected. Market approach refers to a valuation method of determining the value of the valuation subject by comparing the valuation subject with comparable enterprise(s), or shareholder’s interests, securities or enterprises with comparable transactions in the market. Income approach refers to a valuation method of determining the value of the valuation subject by capitalizing or discounting the expected income of the equity holders. Asset-based approach refers to a valuation method based on reasonable valuation of all assets and liabilities of the valuation subject to determine the value of the valuation subject.

The asset-based approach and the income approach have been adopted for the present transaction and the valuation results under the income approach would be adopted as the reference for the Consideration.

The income approach emphasizes on the expected profitability of the overall assets of the enterprise and the valuation result represents the present value and quantification of the expected profitability of the overall assets. The asset-based approach evaluates the fair market value of the assets from an asset replacement perspective and determines the overall value of the enterprise based on the present value of its assets. As part of the valuation process, the

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SUMMARY OF INFORMATION ON INCOME APPROACH VALUATION

APPENDIX II

income approach not only takes into account the value of assets in the enterprise’s books, but also assets or factors not recorded in the accounts which significantly affect the enterprise’s future income, such as patents, proprietary technology, quality customer resources, scientific production and operation management, and strong product manufacturing and research and development teams of the enterprise. In the income approach valuation process, a combination of factors affecting the enterprise’s profitability is considered and the overall value of the enterprise is reflected. Accordingly, the valuation results based on income approach has been selected as the final valuation results of the Sale Shares.

The idea of the income approach valuation is set out below. In respect of assets and principal business activities of the enterprise that have been incorporated into the statements, projected income is estimated based on the business nature and trends in operating conditions in the past few years (net cash flow), and discounted to arrive at the value of operating assets. In respect of items such as surplus assets or non-operating assets (liabilities) on the valuation date which are included in the statements but not considered in the estimation of projected income (net cash flow), the values are separately estimated. The value of the valuation subject is derived from the sum of the aforesaid values of assets and liabilities, and the total equity value of shareholders is then arrived at by deducting interest-bearing liabilities.

Total equity value of = Overall enterprise value – interest-bearing liabilities shareholders Overall enterprise = Operating assets + surplus assets + non-operating assets + value long term equity investment value

Interest-bearing liabilities refer to the valuation subject’s interest-bearing liabilities in its books as at the valuation date, including short-term loans, long-term loans, etc.

(1) Free cash flow model

The basic model of the valuation is set out as follows:

E = B - D

In the above formula:

E – total equity value of the shareholders (net asset) of the valuation subject
D – interest-bearing liabilities of the valuation subject
B – value of the valuation subject
B = P + � Ci

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SUMMARY OF INFORMATION ON INCOME APPROACH VALUATION

APPENDIX II

P – value of operating assets of the valuation subject

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Where:

Ri – projected income (free cash flow) of the valuation subject in the i[th] year from now
r – discounting rate
n – ongoing operation period of the valuation subject in the future
�Ci – total value of non-operating and surplus assets and value of long-term equity investment of the enterprise on the valuation date

� Ci = C 1+ C 2 + C 3

C1
value of surplus cash assets of the valuation subject on the valuation date
C2
value of other existing non-operating assets and surplus assets of the valuation subject on the valuation date
C3 – value of long-term equity investment

(2) Selection of discounting rate

The discounting rate adopted in this valuation represents the weighted average rate of return of capital and is calculated according to the weighted average capital cost (WACC). The formula is set out below:

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In the above formula:

rd – interest rate of long-term interest-bearing liabilities (after income tax)

rd = r0×(1-t)

r0
interest rate of long-term interest-bearing liabilities (before income tax)

t – applicable rate of income tax

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SUMMARY OF INFORMATION ON INCOME APPROACH VALUATION

APPENDIX II

Wd – debt ratio of the valuation subject

==> picture [61 x 26] intentionally omitted <==

We – equity ratio of the valuation subject

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Re – rate of return on equity capital, determined according to the capital asset pricing model (CAPM)

==> picture [144 x 15] intentionally omitted <==

Where:

Re – rate of return on equity capital

risk-free rate of return

market expected rate of return
– coefficient for expected market risk associated with the equity of the valuation subject
– adjustment coefficient for specific risk faced by the valuation subject

B. VALUATION OF THE SALE SHARES

The valuation date for the present transaction is 31 December 2014. According to the estimation of the operating results and value of the enterprise based on the circumstances and information known as at 12 February 2015, the appraised value of the Sale Shares was estimated to be not more than RMB2.3 billion.

The valuation has not yet been completed and the final results may differ from the figures set out in this Appendix. Investors are advised to be cautious of the above risks.

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SUMMARY OF INFORMATION ON INCOME APPROACH VALUATION

APPENDIX II

C. APPRECIATION OF VALUE UNDER THE INCOME APPROACH

The appreciation in the appraised value of the Sale Shares under the income approach as compared to their book value is primarily because the book value only reflects historical costs of the enterprise’s present assets based on the method of acquiring the assets, and does not reflect the overall profitability of the assets. The income approach resets the projected income of specific assets in a specific period of time in the future to a present asset amount or investment amount, and the valuation is premised on overall profitability of the assets. The income approach not only takes into account factors such as the reasonable and adequate use of all asset categories in the enterprise’s operations and their contribution after organic integration, but also the contribution from the social resources, project development, management capability and synergy effects within the enterprise to the enterprise’s operations and profitability.

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GENERAL INFORMATION

APPENDIX III

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. DIRECTORS’, SUPERVISORS’ AND CHIEF EXECUTIVES’ INTERESTS

As at the Latest Practicable Date, the interests and short positions of each of the Directors, supervisors and chief executives of the Company in the shares, underlying shares and debentures of the Company or any associated corporation (within the meaning of Part XV of the SFO) which were notified to the Company and the Hong Kong Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which he was taken or deemed to have under such provisions of the SFO), or were, pursuant to section 352 of the SFO, entered into the register referred to therein, or were, pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers under the Listing Rules, notified to the Company and the Hong Kong Stock Exchange (for this purpose, the relevant provisions of the SFO will be interpreted as if they applied to the supervisors) were as follows:

A Shares of RMB1.00 each

		Approximate
		percentage of	Approximate
		shareholding	percentage of
		in the total	shareholding
		number of	in the total
	Number of A	issued A	issued share
Name	Shares	Shares (%)	capital (%)
Wang Chuan-fu (Director)	570,642,580 (L)	36.56%	23.05%
Lv Xiang-yang (Director)	401,810,480 (L)	25.74%	16.23%
	(Note)
Xia Zuo-quan (Director)	118,977,060 (L)	7.62%	4.81%

(L) – Long Position

Note:

Of the 401,810,480 A Shares, 239,228,620 A Shares were held by Mr. Lv in his personal capacity and 162,581,860 A Shares were held by Youngy Investment Holding Group Co., Ltd. (融捷投資控股集團有限公司) (“ Youngy Investment ”, formerly known as Guangzhou Youngy Management & Investment Group Company Limited). Youngy Investment was in turn held by Mr. Lv and his spouse as to 89.5% and 10.5% equity interests, respectively. Mr. Lv was therefore deemed to be interested in 162,581,860 A Shares under the SFO.

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GENERAL INFORMATION

APPENDIX III

H Shares of RMB1.00 each

		Approximate
		percentage of	Approximate
		shareholding	percentage of
		in the total	shareholding
		number of	in the total
	Number of H	issued H	issued share
Name	Shares	Shares (%)	capital (%)
Wang Chuan-fu (Director)	1,000,000 (L)	0.11%	0.04%
Xia Zuo-quan (Director)	500,000 (L)	0.05%	0.02%
	(Note)

(L) – Long Position

Note:

Of the 500,000 H Shares, 195,000 H Shares were held by Mr. Xia as beneficial owner and 305,000 H Shares were held by Sign Investments Limited, which was wholly owned by Mr. Xia.

Saved as disclosed above, as at the Latest Practicable Date, none of the Directors, supervisors or chief executives of the Company had an interest or short position in the shares, underlying shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which was (a) recorded in the register to be kept by the Company pursuant to Section 352 of the SFO; or (b) notified to the Company and the Hong Kong Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers.

3. SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had a service contract with any member of the Group which was not determinable by the Group within one year without payment of compensation other than statutory compensation.

4. DIRECTORS’ INTERESTS IN COMPETING BUSINESSES

As at the Latest Practicable Date, so far as the Directors are aware, none of the Directors and their respective close associates (as defined in the Listing Rules) had any interest in any business which competes or may compete with the business of the Group or had any other conflict of interest with the Group.

5. DIRECTORS INTERESTS IN CONTRACTS AND ASSETS

No contracts or arrangement of significance in relation to the Group’s business to which the Group was a party and in which a Director or supervisor of the Company had a material interest, whether directly or indirectly, subsisted as at the Latest Practicable Date.

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GENERAL INFORMATION

APPENDIX III

As at the Latest Practicable Date, none of the Directors of the Company was interested, directly or indirectly, in any assets which had since 31 December 2013, being the date to which the latest published audited consolidated financial statements of the Group were made up, been acquired or disposed of by or leased to any member of the Group, or were proposed to be acquired or disposed of by or leased to any member of the Group.

6. MATERIAL CONTRACTS

The following contracts, not being contracts in the ordinary course of business of the Group, were entered into by the Company or its subsidiaries during the period commencing two years preceding the date of this circular and are or may be material:

(a) the Agreement;
(b) a placing agreement dated 23 May 2014 entered into between (i) the Company and (ii) UBS AG, Hong Kong Branch, and Deutsche Bank AG, Hong Kong Branch (collectively the “ Placing Agents ”), pursuant to which the Company agreed to issue 121,900,000 new H Shares, and the Placing Agents agreed, on several basis, as agents of the Company, to procure placees on a best efforts basis to purchase the new H Shares at a placing price of HK$35.00 per H Share, further details of which are set out in the announcement of the Company dated 23 May 2014; and
(c) a joint venture contract dated 16 May 2014 entered into between the Company and Bank of Xi’an Co., Ltd. for the establishment of a joint venture company in Xi’an, Shaanxi, the PRC, to engage in financing business for purchase of cars in China, including provision of loans to end-customers of new cars. The registered capital of the joint venture company would be RMB500 million, of which BYD would contribute RMB400 million. Further details of the agreement are set out in the announcement of the Company dated 16 May 2014.

7. LITIGATION

Save as disclosed in this circular, as at the Latest Practicable Date, no member of the Group was engaged in any litigation or arbitration proceedings of material importance and there is no litigation or claim of material importance known to the Directors to be pending or threatened by or against any member of the Group.

8. GENERAL

(a) The registered office of the Company is located at Yan An Road, Kuichong, Longgang District, Shenzhen, Guangdong Province, the PRC. The principal place of business of the Company in Hong Kong is situated at Unit 1712, 17th Floor, Tower 2, Grand Central Plaza, No. 138 Shatin Rural Committee Road, New Territories, Hong Kong.
(b) The Company’s branch share registrar and transfer office in Hong Kong is Computershare Hong Kong Investor Services Limited situated at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong.

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GENERAL INFORMATION

APPENDIX III

(c) The company secretary of the Company is Mr. Li Qian, who is an associate member of The Hong Kong Institute of Chartered Secretaries.
(d) Unless otherwise specified, in the case of any discrepancy, the English text of this circular shall prevail over the Chinese text.

9. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection at the principal place of business of the Company in Hong Kong at Unit 1712, 17th Floor, Tower 2, Grand Central Plaza, No. 138 Shatin Rural Committee Road, New Territories, Hong Kong during normal business hours on any weekday (except public holidays) for a period of 14 days from the date hereof:

(a) the articles of association of the Company;
(b) the material contracts referred to in the paragraph headed “Material Contracts” in this appendix; and
(c) the annual reports of the Company for the three financial years ended 31 December 2013 and the interim report of the Company for the six months ended 30 June 2014.

– III-4 –

AI assistant

Shanghai Henlius Biotech, Inc. — Proxy Solicitation & Information Statement 2015

50763_rns_2015-03-20_a85243e2-fb0c-4109-ac51-f34af235828b.pdf

比亞迪股份有限公司 BYD COMPANY LIMITED

MAJOR TRANSACTION IN RELATION TO THE DISPOSAL OF 100% EQUITY INTEREST IN A SUBSIDIARY

PROVISION OF GUARANTEE

AND

ISSUE OF DOMESTIC CORPORATE BONDS

DEFINITIONS

DEFINITIONS

DEFINITIONS

比亞迪股份有限公司 BYD COMPANY LIMITED

(Stock Code: 1211)

PRINCIPAL PLACE OF BUSINESS IN HONG KONG

MAJOR TRANSACTION IN RELATION TO THE DISPOSAL OF 100% EQUITY INTEREST IN A SUBSIDIARY PROVISION OF GUARANTEE AND ISSUE OF DOMESTIC CORPORATE BONDS

1. INTRODUCTION

LETTER FROM THE BOARD

2. DISPOSAL OF 100% EQUITY INTEREST IN A SUBSIDIARY

The Agreement

Assets to be disposed of

Consideration

Consideration Shares

LETTER FROM THE BOARD

Conditions Precedent

Other Terms

Lock Up Undertaking

Completion

Information on the Target Company

LETTER FROM THE BOARD

Reasons for and Benefits of the Disposal

LETTER FROM THE BOARD

Financial Effects of the Disposal

LETTER FROM THE BOARD

Listing Rules Implications

Waiver from strict compliance with Rules 14.62, 14.66(2) and Paragraph 29(2) of Appendix 1B to the Listing Rules

LETTER FROM THE BOARD

LETTER FROM THE BOARD

3. PROVISION OF GUARANTEE

LETTER FROM THE BOARD

4. ISSUE OF DOMESTIC CORPORATE BONDS

LETTER FROM THE BOARD

LETTER FROM THE BOARD

5. EXTRAORDINARY GENERAL MEETING

6. RECOMMENDATION

ADDITIONAL INFORMATION

1. FINANCIAL INFORMATION OF THE GROUP

2. INDEBTEDNESS

Contingent liabilities

(a) Action against Foxconn

APPENDIX I

APPENDIX I

(i) The third-party litigation (No. 08 civ 9352(AKH))

(ii) The maritime case (No. 10-CV-06108)

(d) Financial guarantee issued

Operating lease arrangements

As lessee

APPENDIX I

Other guarantees

3. WORKING CAPITAL

4. FINANCIAL AND TRADING PROSPECTS

Automobile business

Handset Components and Assembly Business

Rechargeable Battery and New Energy Business

A. METHODS OF VALUATION

(1) Free cash flow model

E = B - D

� Ci = C 1+ C 2 + C 3

(2) Selection of discounting rate

B. VALUATION OF THE SALE SHARES

C. APPRECIATION OF VALUE UNDER THE INCOME APPROACH

1. RESPONSIBILITY STATEMENT

2. DIRECTORS’, SUPERVISORS’ AND CHIEF EXECUTIVES’ INTERESTS

A Shares of RMB1.00 each

(L) – Long Position

Note:

H Shares of RMB1.00 each

(L) – Long Position

3. SERVICE CONTRACTS

4. DIRECTORS’ INTERESTS IN COMPETING BUSINESSES

5. DIRECTORS INTERESTS IN CONTRACTS AND ASSETS

Shanghai Henlius Biotech, Inc. Proxy Solicitation & Information Statement 2015