Yusei Holdings Limited — Proxy Solicitation & Information Statement 2012

Nov 23, 2012

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 your licensed securities dealer, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Yusei Holdings Limited, you should at once hand this circular accompanying with the form of proxy to the purchaser or transferee or to the bank, licensed securities dealer or other agent through whom the sale or transfer was effected for onward transmission to the purchaser or transferee.

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

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YUSEI HOLDINGS LIMITED 友成控股有限公司 [*]

(incorporated in the Cayman Islands with limited liability)

(Stock code: 96)

MAJOR DISPOSAL

A letter from the Board is set out on pages 3 to 7 of this circular.

A notice convening the EGM to be held at 2:00 p.m. on Friday, 14 December 2012 at Henggengtou Village, Guali Town, Xiaoshan District, Hangzhou City, Zhejiang Province, the PRC is set out on pages 22 to 23 of this circular. Whether or not you are able to attend the EGM in person, please complete the accompanying form of proxy in accordance with the instructions printed thereon and return the same to the Company’s Hong Kong branch share registrar, Computershare Hong Kong Investor Services Limited at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong as soon as practicable but in any event not less than 48 hours before the time appointed for holding the EGM or any adjourned meeting thereof (as the case may be). Completion and return of the accompanying form of proxy will not preclude you from attending and voting in person at the EGM or any adjourned meeting thereof (as the case may be) should you so wish.

23 November 2012

* For identification purpose only

CONTENTS

		Page
DEFINITIONS	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		3
APPENDIX I	– FINANCIAL INFORMATION OF THE GROUP . . . . . . . . . . . . . . . .	8
APPENDIX II	– PROPERTY VALUATION REPORT . . . . . . . . . . . . . . . . . . . . . . . .	11
**APPENDIX III **	– GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	16
NOTICE OF THE EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		22

• i -

DEFINITIONS

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

“Board” the board of Directors “Company” Yusei Holdings Limited “Completion” the completion of the Disposal “connected person” has the meaning ascribed to it in the Listing Rules “Consideration” total consideration of the Disposal which amounted to RMB47,276,900 (equivalent to approximately HK$58,151,000) “Director(s)” the directors of the Company “Disposal” the disposal of the Land from Zhejiang Yusei to the Purchaser pursuant to the Disposal Agreement “Disposal Agreement” the sale and purchase agreement dated 14 September 2012 entered into between Zhejiang Yusei and the Purchaser in relation to the Disposal “EGM” an extraordinary general meeting of the Company to be convened and held at 2:00 p.m. on Friday, 14 December 2012 at Henggengtou Village, Guali Town, Xiaoshan District, Hangzhou City, Zhejiang Province, the PRC to approve the Disposal, the Disposal Agreement and the transactions contemplated thereunder “Group” the Company and its subsidiaries “Hong Kong” the Hong Kong Special Administrative Region of the People’s Republic of China “HK$” Hong Kong Dollars, the lawful currency of Hong Kong “Independent Third Party(ies)” the independent third party(ies) who is/are, to the best of the Directors’ knowledge, information and belief having made all reasonable enquiry, independent of the Company and its connected persons (as defined under the Listing Rules) “Land” land located at No. 8, Youcheng Road, Xiaoshan Economic and Technological Development Zone, Zhejiang, the PRC with area of approximately 13,141 square meters

• 1 -

DEFINITIONS

“Latest Practicable Date”	21 November 2012, being the latest practicable date prior to the
	printing of this circular for ascertaining certain information included
	in this circular
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange
“PRC”	the People’s Republic of China
“Purchaser”	Administrative committee of Xiaoshan Economic and Technological
	Development Zone* (蕭山經濟技術開發區管理委員會)
“RMB”	Renminbi, the lawful currency of the PRC
“SFO”	Securities and Futures Ordinance (Chapter 571 of the Laws of Hong
	Kong)
“Share(s)”	ordinary share(s) of HK$0.01 each in the share capital of the
	Company
“Shareholder(s)”	holder(s) of the Shares
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Zhejiang Yusei”	浙江友成塑料模具有限公司(Zhejiang Yusei Plastics & Mould
	Co., Ltd.*) , a limited liability company registered in the PRC and a
	subsidiary of the Company
“%”	per cent.

* For identification purposes only

• 2 -

LETTER FROM THE BOARD

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YUSEI HOLDINGS LIMITED 友成控股有限公司 [*]

(incorporated in the Cayman Islands with limited liability)

(Stock code: 96)

Executive Directors: Xu Yong Manabu Shimabayashi Non-executive Directors: Katsutoshi Masuda Toshimitsu Masuda Shinichi Koizumi

Independent Non-executive Directors: Lo Ka Wai Fan Xiaoping Hisaki Takabayashi

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

Head office and principal place of business in the PRC: No. 8 Youcheng Road, Xiaoshan Economy & Technology Development Zone, Zhejiang 311215, The PRC

Business Address in Hong Kong: Unit 1, 9/F, Fortune Commercial Building, 362 Sha Tsui Road, Tsuen Wan, N.T., Hong Kong

23 November 2012

To the Shareholders

Dear Sir or Madam

MAJOR DISPOSAL

INTRODUCTION

Reference is made to the announcement of the Company dated 14 September 2012 in relation to the Disposal.

• For identification purpose only

• 3 -

LETTER FROM THE BOARD

On 14 September 2012 (after the trading hours), Zhejiang Yusei, a subsidiary of the Company, entered into the Disposal Agreement with the Purchaser, whereby the Purchaser has conditionally agreed to purchase and Zhejiang Yusei has conditionally agreed to sell the Land at the consideration of RMB47,276,900 (equivalent to approximately HK$58,151,000).

Since certain applicable percentage ratio for the Disposal are more than 25% but less than 75%, the Disposal constitutes a major transaction for the Company under Chapter 14 of the Listing Rules and is subject to the reporting, announcement and shareholders’ approval requirements under the Listing Rules.

The purpose of this circular is to provide you with information in respect of, among other things, the details of the Disposal and the notice convening the EGM.

THE DISPOSAL AGREEMENT

Date

14 September 2012 (after trading hours)

Parties

Vendor: Zhejiang Yusei Purchaser: Administrative Committee of Xiaoshan Economic & Technological Development Zone* (蕭山經濟技術開發區管理委員會)

The Purchaser is an administrative body authorized by the People’s Government of Xiaoshan District, Hangzhou, the PRC, to exercise the administrative functions of the Xiaoshan Economic and Technological Development Zone, including but not limiting to project approval, business registration, construction and staff recruitment.

To the best of the Directors’ knowledge, information and belief, having made all reasonable enquiries, the Purchaser and its ultimate beneficial owner(s) are Independent Third Parties.

Background of the Transaction

The Purchaser has promulgated 蕭山經濟技術開發區市北區塊工業企業退二進三實施辦法 (Implementation Method regarding the Policy of “Retreating the Secondary Industry and Developing the Tertiary Industry” in Shi Bei District of Xiaoshan Economic & Technological Development Zone) (the “ Implementation Method* ”) on 15 May 2012, whereby the Purchaser will request and direct the secondary industries in Shi Bei District to relocate to other areas by making payment to those relevant industries as compensation and/or reward for relocation. The Land held by Zhejiang Yusei is located within Shi Bei District and thereby affected by the Implementation Method.

• 4 -

LETTER FROM THE BOARD

Consideration

The Consideration for the Disposal in the total sum of RMB47,276,900 (or equivalent to approximately HK$58,151,000) has been determined after arm’s length negotiations among the parties to the Disposal Agreement in accordance with requirements of the applicable policy and regulations and the Implementation Method after taking into account the actual circumstances. The Consideration comprises:

• (1) a sum of RMB27,608,000 (or equivalent to approximately HK$33,958,000), being payment in the nature of compensation, which is determined by valuation of the Land, the buildings and fixtures thereon conducted by a qualified valuation agency accredited by the relevant governmental authorities in the PRC;

• (2) a sum of RMB19,433,700 (or equivalent to approximately HK$23,904,000), being the aggregate sum of subsidies and award granted by the Purchaser to Zhejiang Yusei, which is determined with reference to the size of the Land and in accordance with the terms and conditions of the Implementation Method; and

• (3) a sum of RMB235,200 (or equivalent to approximately HK$289,000), being a discretionary payment made by the Purchaser to Zhejiang Yusei for its cooperation with the Purchaser in relation to the implementation of Implementation Method.

The Consideration shall be satisfied in the following manner:–

• (a) RMB23,638,400 shall be paid in cash by the Purchaser to Zhejiang Yusei within one week after de-registration of the certificates of title of the Land to be delivered by Zhejiang Yusei to the Purchaser; and

• (b) the remaining balance of RMB23,638,500 shall be paid in cash by the Purchaser to Zhejiang Yusei within 10 days after Completion.

Asset to be disposed of

Pursuant to the Disposal Agreement, Zhejiang Yusei has conditionally agreed to sell and the Purchaser has conditionally agreed to acquire the land located at No. 8, Youcheng Road, Xiaoshan Economic and Technological Development Zone, Zhejiang, the PRC with area of approximately 13,141 square meters.

Zhejiang Yusei has office building, warehouses, a small-scaled factory operated with separate moulding machineries and staff quarters on the Land. The production capacity of the small-scaled factory is minimal to the Group. After the vacation of the Land, the above facilities and the head office and principal place of business in the PRC will be relocated to the Group’s other premises located at Henggengtou Village, Guali Town, Xiaoshan District, Hangzhou City, Zhejiang Province, the PRC. The Directors expect that the temporary suspension of production and relocation of the small-scaled factory will be completed within a short period of time (10 days) and hence it has no significant impact on the Group’s revenue.

Based on the above and the Consideration to be received, the Directors are of the view that the Disposal is in the interst of the Company and its shareholders as a whole.

• 5 -

LETTER FROM THE BOARD

Condition precedent

The Disposal Agreement shall take effect upon the approval by the Shareholders at the EGM.

Completion

Subject to the Disposal Agreement being approved by the Shareholders, Zhejiang Yusei shall deliver the Land together with the buildings and fixtures thereon to the Purchaser before 31 December 2012.

GAIN ON THE DISPOSAL AND USE OF PROCEEDS

As a result of the Disposal, the Group is expected to record an unaudited gain of approximately RMB42,288,900, which is calculated on the basis of the Consideration of the Disposal of RMB47,276,900 less the unaudited carrying value of the Land together with the buildings and fixture amounted to approximately RMB4,988,000 as at 30 June 2012.

Currently, the Company repaid the bank indebtedness of approximately RMB19,000,000 (or equivalent to approximately HK$23,370,000), which was previously secured by the pledge of the Land in favour of a bank, and the relevant charge was released upon repayment. The Land will be sold free from encumbrances. The net sale proceeds from the Disposal, being the Consideration less the estimated expenses of approximately RMB300,000 in relation to the Disposal, will be used as additional working capital for the Group.

REASONS FOR AND BENEFITS OF THE DISPOSAL

As at the Latest Practicable Date, the Group is principally engaged in moulding fabrication, manufacturing and trading of moulds and plastic components in the PRC.

Zhejiang Yusei originally acquired the Land for construction of manufacturing plants, staff quarters and office buildings. However, after the promulgation of the Implementation Method, it is necessary to make adjustments to the usage of the Land from industrial use to tertiary industries’ use. In addition, the Directors believe that the Disposal represents a good opportunity for the Group to realize the value of the Land with positive return. Moreover, the proceeds from the Disposal could enhance the Group’s financial position by providing additional capital resources for the Group to improve the liquidity of the Group, which would help maximise the Shareholders’ value.

The Directors also consider that the terms and conditions of the Disposal are on normal commercial terms, fair and reasonable and are in the interests of the Company and the Shareholders as a whole.

EFFECT OF THE DISPOSAL ON THE EARNINGS AND ASSETS AND LIABILITIES OF THE COMPANY

The Valuation of the Land which was revalued by Avista Valuation Advisory Limited as at 30 September 2012 was approximately RMB15,375,000. The carrying value of the Land as at 30 September 2012 was approximately RMB4,763,000. The audited consolidated net asset value of the Group as at 31 December 2011 was approximately RMB212,034,000.

• 6 -

LETTER FROM THE BOARD

The financial effects to the Group upon completion of the Disposal are expected to be:

• (i) a decrease in non-current assets of approximately RMB4,763,000;

• (ii) an increase in current assets of approximately RMB46,976,900, being the cash consideration of the Disposal of RMB47,276,900 less the estimated expenses of approximately RMB300,000 in relation to the Disposal; and

• (iii) an increase in profit attributable to the equity holders of the Company of approximately RMB42,213,900, being the difference between the carrying value of the Land of RMB4,763,000 as at 30 September 2012 and the net consideration of RMB46,976,900 after taking into account of the estimated expenses of approximately RMB300,000 in relation to the Disposal.

LISTING RULES IMPLICATION OF THE DISPOSAL

Since certain applicable percentage ratio for the Disposal is more than 25% but less than 75%, the Disposal constitutes a major transaction for the Company under Chapter 14 of the Listing Rules and is subject to the reporting, announcement and shareholders’ approval requirements under the Listing Rules. As no Shareholders have any material interest in the Disposal, it is expected that no Shareholders will be required to abstain from voting at the EGM on the resolution to approve the Disposal Agreement and the transactions contemplated thereunder.

EGM

A notice convening the EGM with the resolutions, among other matters, is set out on page 22 to 23 of this circular. Whether or not the Shareholders are able to attend the meeting or any adjourned meeting, they are requested to complete the accompany form of proxy and return it to the Company’s Hong Kong branch share registrar, Computershare Hong Kong Investor Services Limited at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong as soon as possible and in any event not later than 48 hours before the time of the meeting or any adjourned meeting. Completion and return of the form of proxy will not preclude the Shareholders from attending and voting at the meeting or at any adjourned meeting should they wish to do so.

RECOMMENDATION

The Board considers that the terms of the Disposal Agreement are fair and reasonable and the Disposal is in the interests of the Company and the Shareholders as a whole. Accordingly, the Board recommends the Shareholders to vote in favour of the ordinary resolution to be proposed at the EGM.

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

By Order of the Board Yusei Holdings Limited Katsutoshi Masuda

Chairman

• 7 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

1. CONSOLIDATED FINANCIAL INFORMATION OF THE GROUP FOR THE YEARS ENDED 31 DECEMBER 2009, 2010 AND 2011

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

The audited consolidated financial statements of the Group prepared in accordance with all applicable Hong Kong Financial Reporting Standards issued by the Hong Kong Institute of Certified Public Accountants for the year ended 31 December 2009, 2010 and 2011 together with the relevant notes thereto can be found from pages 27 to 86 of the annual report of the Company for the year ended 31 December 2009, pages 26 to 88 of the annual report of the Company for the year ended 31 December 2010 and pages 25 to 86 of the annual report of the Company for the year ended 31 December 2011, respectively.

Each of the said audited consolidated financial statement of the Group for the years ended 31 December 2009, 2010 and 2011 is incorporated by reference into this circular and forms part of this circular. The said annual reports of the Company are available on the Company’s website at www.yusei.cn and the website of the Stock Exchange at www.hkexnews.hk.

Please also see below quick links to the annual reports of the Company:

Annual Report 2011:

http://www.hkexnews.hk/listedco/listconews/SEHK/2012/0418/LTN20120418251.pdf

Annual Report 2010:

http://www.hkexnews.hk/listedco/listconews/SEHK/2011/0428/LTN20110428837.pdf

Annual Report 2009:

http://www.hkexnews.hk/listedco/listconews/GEM/2010/0409/GLN20100409057.pdf

2. STATEMENT OF INDEBTEDNESS

Borrowings

At the close of business on 30 September 2012, being the latest practicable date for the purpose of this statement of indebtedness prior to the printing of this circular, the Group had outstanding (i) secured bank loans of approximately RMB127,587,000, (ii) unsecured bank loans of approximately RMB163,937,000, (iii) other borrowing of approximately RMB30,000,000, (iv) obligations under finance leases of approximately RMB31,661,000 and (iv) amount due to ultimate holding company of approximately RMB20,615,000.

• 8 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Securities and guarantees

At the close of business on 30 September 2012, the Group has pledged the following assets to banks as security for the Group’s secured banking facilities:

• (i) the Group’s land use rights and property, plant and equipment in the aggregate sum of approximately RMB89,848,000; and

• (ii) the Group’s pledged bank deposits in the aggregate sum of approximately RMB12,500,000.

Debt securities

At the close of business on 30 September 2012, the Group had no debt securities.

Contingent liabilities

At the close of business on 30 September 2012, the Group did not have any material contingent liabilities.

Save as aforesaid or as otherwise disclosed herein, and apart from intra-group liabilities, the Group did not have 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, finance lease commitments, guarantees or other material contingent liabilities at the close of business on 30 September 2012.

Available banking facilities

At the close of business on 30 September 2012, being the latest practicable date for the purpose of this statement of indebtedness prior to the printing of this circular, the aggregated amount of unutilised bank facilities of the Group was RMB$204,480,000.

3. WORKING CAPITAL

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

4. MATERIAL ADVERSE CHANGE

The Directors are not aware of any material adverse change in the financial or trading position of the Group since 31 December 2011, being the date to which the latest published audited financial statements of the Group were made up.

• 9 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

5. FINANCIAL AND TRADING PROSPECTS

The Group is principally engaged in the design, development and fabrication of precision plastic injection moulds, and the manufacture of plastic components in the PRC. The Group also provides services for certain assembling and further processing of plastic components for its customers. The Group’s customers include the manufacturers of Japanese branded home electrical appliances, office equipment and automobiles’ components with production facilities located in the PRC. As disclosed in the interim report of the Group for the six months ended 30 June 2012 (the “Period”), the Group reported total revenue for the Period was approximately RMB512,772,000 (2011: RMB430,922,000) and the profit for the Period was approximately RMB8,098,000 (2011: RMB19,151,000).

It is the Group’s current strategy and business plan to put more resources on (i) the production of high-end plastic injection mould products and certain assembling and further processing of plastic components, (ii) targeting new well-known international branded manufacturers and (iii) developing new products of a high standard of precision for office equipment, lights and security items for automobiles and electrical appliances, thereby achieving the steady growth of the business, and enhancing its position as a one-stop total solution provider in the plastic injection moulding industry.

The uncertain worldwide economic prospects would continue to pose great challenge and risks in the coming year, particularly affecting the Group’s profit for the current year. In addition, the recent unfavourable political relationship between Chinese and Japanese governments may influence the Chinese consumers’ behaviour towards Japanese branded electrical appliances, office equipment and automobiles which would hinder the Group’s growth in revenue and profit. However, the market outlook of the Group in long term is positive since the management believes that the Group, as a service provider to the well-known international branded manufacturers, possesses the managerial characteristics which our major customers may appreciate, including: (i) high-level demand on the quality of the products, particularly in the automotive parts and components, office automation machines like assembling parts of photocopies and printers must meet a high standard of precision in order to ensure the machine work effectively; (ii) emphasis on production efficiency to shorten the production cycle; and (iii) active participation in production process of the suppliers to ensure the product quality and the mutual communication to improve the suppliers’ production efficiency. In addition, the Group is able to make use of comparative technical advantage to targeting new well-known international branded manufacturers and developing new products of a high standard of precision for office equipment, lights and security items for automobiles and electrical appliances, thereby achieving the steady growth of the business, improving the products’ profit margin and minimizing the effect of economic downturn and political factor on the Group.

On the other hand, the Group implements conservative fiscal policy in order to maintain the sufficient working capital by imposing strict control of excessive capital investment, enhancing inventory management, and strengthening the accounts receivable management. Moreover, the proceeds from the Disposal could enhance the Group’s financial position by providing additional capital resources for the Group to improve the liquidity of the Group.

Looking forward, with its management execution strengths and market strategies, the Group will strive to further enhance its competitive position and aim to enhance the shareholder’s return.

• 10 -

PROPERTY VALUATION REPORT

APPENDIX II

The following is the text of a letter and valuation certificate, prepared for the purpose of incorporation in this circular received from Avista Valuation Advisory Limited, an independent valuer, in connection with its valuation as at 30 September 2012 of the property interest of the Group.

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23 November 2012

The Board of Directors Yusei Holdings Limited Unit 1, 9/F Fortune Commercial Building 362 Sha Tsui Road Tsuen Wan New Territories, Hong Kong

Dear Sirs/Madams,

We were instructed by Yusei Holdings Limited (友成控股有限公司) (the “Company”) to value the property interests held by Zhejiang Yusei Plastics & Mould Co., Ltd (浙江友成塑料模具有限公司) located in No. 8 Youcheng Road, Xiaoshan Economy and Technology Development Zone, Zhejiang, the People’s Republic of China (the “PRC”), we confirm that we have carried out inspections, made relevant enquiries and searches and obtained such further information as we consider necessary for the purpose of providing you with our opinion of the capital value of the property interests as at 30 September 2012 (the “Date of Valuation”).

The valuation is our opinion of market value which in accordance with the Valuation Standards on Properties of the Hong Kong Institute of Surveyors is defined as “the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently, and without compulsion”.

In valuing the property interests, we have complied with all the requirements contained in Chapter 5 and Practice Note 12 of the Rules Governing the Listing of Securities issued by The Stock Exchange of Hong Kong Limited; the HKIS Valuation Standards on Properties (1st Edition 2005) published by the Hong Kong Institute of Surveyors and the International Valuation Standards published by the International Valuation Standards Council.

Our valuation has been made on the assumption that the owner sells the property interests in the open market without the benefit of a deferred term contract, leaseback, joint venture, management agreement or any similar arrangement which would serve to increase the value of the property interests. In addition, no account has been taken of any option or right of pre-emption concerning or affecting the sale of the property interests and no forced sale situation in any manner is assumed in our valuation.

Where, due to the nature of the buildings and structures of the properties, there are no market sales comparable readily available, we have valued a property on the basis of its depreciated replacement cost.

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APPENDIX II

PROPERTY VALUATION REPORT

Depreciated replacement cost is defined as “the current cost of replacement (reproduction) of a property less deductions for physical deterioration and all relevant forms of obsolescence and optimization.” It is based on an estimate of the market value for the existing use of the land, plus the current cost of replacement (reproduction) of the improvements, less deductions for physical deterioration and all relevant forms of obsolescence and optimization. The depreciated replacement cost of the property interest is subject to adequate potential profitability of the concerned business.

We have been shown copies of various title documents relating to the property interests and have made relevant enquiries. Where possible, we have examined the original documents to verify the existing title to the property interests in the PRC and any material encumbrance that might be attached to the property interests or any tenancy amendment. We have relied considerably on the advice given by the Company’s PRC legal advisers – 京衡律師集團事務所, concerning the validity of the property interests in the PRC.

We have relied to a very considerable extent on the information given to us by the Company in the course of valuation. We have no reason to doubt the truth and accuracy of the information provided to us by the Company which is material to the valuation. We have accepted advice given to us on such matters as title, planning approvals, statutory notices, easements, tenure, leases, particulars of occupancy, identification of property, site and floor areas and all other relevant matters.

Dimensions, measurements and areas included in the valuation certificate are based on information contained in the documents provided to us and are therefore only approximations. No on-site measurements have been made to verify their correctness. We have been advised by the Company that no material factors have been omitted from the information supplied to reach an informed view, and have no reason to suspect that any material information has been withheld.

We have not carried out detailed site measurements to verify the correctness of the land or building areas in respect of the property but have assumed that the areas provided to us are correct. Based on our experience of valuation of similar properties in the PRC, we consider the assumptions so made to be reasonable. All documents and contracts have been used as reference only and all dimensions, measurements and areas are approximations. We have also assumed that there was not any material change of the property in between date of our inspection and the valuation date.

We have inspected the exterior and, where possible, the interior of the appraised property. However, we must point out that we have not carried out a structural survey nor have we inspected woodwork or other parts of the structures which are covered, unexposed or inaccessible, we are therefore unable to report and any such part of the property are free from rot, infestation or any other defects. No tests were carried out on any of the services. We have assumed that utility services, such as electricity, telephone, water, etc., are available and free from defect.

Moreover, we have not carried out any site investigation to determine the suitability of the ground conditions or the services for any property development erected or to be erected thereon. Nor did we undertake archaeological, ecological or environmental surveys for the property interests. Our valuation is prepared on the assumption that these aspects are satisfactory and that no extraordinary expenses or delays will be incurred during the construction period. Should it be discovered that contamination, subsidence or other latent defects exists in the property or on adjoining or neighbouring land or that the property had been or are being put to contaminated use, we reserve right to revise our opinion of value.

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PROPERTY VALUATION REPORT

APPENDIX II

No allowance has been made in our report for any charges, mortgages or amounts owing on the property interests nor for any expenses or taxation which may be incurred in effecting a sale. Unless otherwise stated, it is assumed that the property interests are free from encumbrances, restrictions and outgoings of an onerous nature which could affect their value.

In accordance with our standard practice, this valuation certificate is for the exclusive use of the party to whom it is addressed and no responsibility is accepted to the third party for the whole or any part of its contents.

Unless otherwise stated, all monetary figures stated in this report are in Renminbi (RMB).

Our valuation is summarized below and the valuation certificates are attached.

Yours faithfully, for and on behalf of Avista Valuation Advisory Limited Sr Oswald W Y Au MHKIS AAPI MSc(RE) Registered Professional Surveyor Assistant Vice President

Note: Mr. Oswald W Y Au holds a Master’s Degree of Science in Real Estate from the University of Hong Kong. He is also a member of Hong Kong Institute of Surveyors (General Practice) and Associate Member of Australian Property Institute. In addition, he is a Registered Professional Surveyor (General Practice) registered with Surveyors Registration Board. He has about 5 years’ experience in the valuation of properties in the PRC and 8 years of property valuation experience in Hong Kong, the U.S., Canada, East and Southeast Asia.

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PROPERTY VALUATION REPORT

APPENDIX II

VALUATION CERTIFICATE

Property interests held and occupied by the Company in the PRC

Capital value in existing state as at Particulars of 30 September No. Property Description and tenure occupancy 2012 RMB 1. 2 parcels of land The property comprises an The property is held 15,375,000 (the “Land”) industrial compound which was and occupied by the and formed by 2 parcels of adjoined Company for industrial 9 blocks of buildings land and has an approximate total use. located at site area of approximately No. 8 Youcheng Road 13,141.43 sq.m., it was completed Xiaoshan Economy and in about 1994 and 2000 Technology respectively. Development Zone Zhejiang Province The industrial compound primarily the PRC consists of 5 workshop buildings, 2 composite office buildings, a dormitory buildings and a guard house with a total gross floor area of approximately 9,287.68 sq.m. which have been completed in stages between 1994 and 2000.

The land use rights of the property have been granted with the latest term expiring on 31 December 2048.

Notes:

1. Pursuant to the following State-owned Land Use Rights Certificates, the land use rights of 2 parcels of land with a total site area of approximately 13,141.43 sq.m. have been granted to Zhejiang Yusei Plastics & Mould Co., Ltd for terms of 50 years for industrial use.

			The Nature
State-owned Land Use Rights	Date of	Date of	of the Land	Site Area
Certificate No.	Issuance	Expiry	Use Right	(sq.m.)	Title Ownership
Xian Tu Kai Fa Guo Yong (1992)	Jul-1992	Jul-2042	Granted	6,656.03	浙江友成塑料模具有限公司
Zi Di No.02
Xian Tu Kai Fa Guo Yong (1998)	30-Dec-1998	Dec-2048	Granted	6,485.40	浙江友成塑料模具有限公司
Zi Di No.47

• 14 -

PROPERTY VALUATION REPORT

APPENDIX II

1. Pursuant to the 2 Building Ownership Certificates, Hang Fang Quan Zheng Xiao Zi Di No. 136403 and Hang Fang Quan Zheng Xiao Zi Di No. 1342341, dated at 16 September 2005 and 9 September 2005 respectively, the 9 blocks of buildings constructed thereon have a total gross floor area of approximately 9,287.68 sq.m. According to the information from the Company, building No.5 (a guard house) of Hang Fang Quan Zheng Xiao Zi Di No. 136403 has been demolished with the gross floor area of approximately 34.71 sq.m. in about 1998.

2. Pursuant to the Sales and Purchase Agreement (the “Disposal Agreement”) dated 14 September 2012 with the total consideration of RMB 47,276,900, Zhejiang Yusei Plastics & Mould Co., Ltd (浙江友成塑料模具有限公司) (the “Vendor”) and Administrative Committee of Xiaoshan Economic and Technological Development Zone (蕭山經濟技術 開發區管理委員會) (the “Purchaser”) entered into the Disposal Agreement and the Purchaser has conditionally agreed to acquire and the Vendor has conditionally agreed to dispose of the property comprising the land use rights of the Lands and the factory buildings, office buildings and other constructed structures thereon.

3. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia, the following:

4. a. Administrative Committee of Xiaoshan Economic and Technological Development Zone has the rights to enter the Sales and Purchase Agreement with Zhejiang Yusei Plastics & Mould Co., Ltd; and

5. b. The Sales and Purchase Agreement is compliant with the local Law and Regulation.

6. The property was last inspected by Raymond C. C. Chan – Curtin University of Technology, Sydney, Bachelor of Commerce, assistant valuer of Avista Valuation Advisory Limited during the period of 29 to 30 August 2012.

7. 15 -

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. DISCLOSURE OF INTERESTS

(a) Directors’ interests

As at the Latest Practicable Date, the interests and short positions of the Directors and the chief executive of the Company in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which (a) were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO); or (b) were required, pursuant to section 352 of the SFO, to be entered in the register of the Company referred to therein; or (c) were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Company (the “ Model Code ”) contained in the Listing Rules, to be notified to the Company and the Stock Exchange were as follows:

Long positions in the shares and underlying shares of the Company

			Capacity			Number of shares
							Approximate
							Percentage of
							Total Issued
							Share Capital
							of the
							Company as
							at the Latest
Name of		Personal	Family	Corporate	Long	Short	Practicable
Company	Name of Director	Interests	Interests	Interests	Position	Position	Date
Company	Katsutoshi Masuda (“Mr. Masuda”)	–	–	80,960,000	80,960,000	–	46%
	(Note 1)			Shares	Shares
Company	Toshimitsu Masuda_(Note 2)_	–	–	80,960,000	80,960,000	–	46%
				Shares	Shares
Company	Xu Yong	10,560,000	–	–	10,560,000	–	6%
		Shares			Shares
Company	Manabu Shimabayashi_(Note 3)_	–	110,200	–	110,200	–	0.1%
			Shares		Shares
Company	Shinichi Koizumi	22,000	–	–	22,000	–	Less than
		Shares			Shares		0.1%
Company	Fan Xiaoping	19,800	–	–	19,800	–	less than
		Shares			Shares		0.1%

• 16 -

GENERAL INFORMATION

APPENDIX III

Notes:

1. Mr. Masuda is deemed to be interested in 49.8% of the issued share capital in Yusei Machinery Corporation (“ Yusei Japan ”) pursuant to the SFO. Yusei Japan is interested in 46% in the issued share capital of the Company and that Yusei Japan or its directors are accustomed or obliged to act in accordance with the directions or instructions of Mr. Masuda. By virtue of the SFO, Mr. Masuda is deemed to be interested in 80,960,000 Shares held by Yusei Japan.

2. Mr. Toshimitsu Masuda, (son of Mr. Masuda) holds 50% of the issued share capital of Conpri Co.Ltd. (“ Conpri ”). Conpri is interested in 25.8% in the issued share capital of Yusei Japan which in turn is interested in 46% of the issued share capital of the Company. By virtue of the SFO, Mr. Toshimitsu Masuda is deemed to be interested in 80,960,000 Shares through his shareholding in Conpri.

3. Mrs. Hidemi Shimabayashi, the spouse of Mr. Shimabayashi, is the beneficial owner of 110,200 Shares. By virtue of the SFO, Mr. Shimabayashi is deemed to be interested in the same parcel of Shares.

4. Save as disclosed above, none of the Directors or proposed director of the Company is a director or employee of a company which has an interest or short position in the Shares and underlying shares of the Company which would fall to be disclosed to the Company under the provision of Divisions 2 and 3 of Part XV of the Securities and Futures Ordinance.

(b) Directors’ service contracts

The Company has entered into service contracts with the executive Directors for a term of 3 years. The contracts shall be continuing thereafter unless and until terminated by either party thereto giving to the other not less than three months’ written notice. The Company has also entered into letters of appointment with its non-executive Directors and independent non-executive Directors. Such appointment shall be continuous unless and until terminated by not less than three months’ written notice.

Save as disclosed above, none of the Directors has entered or proposed to enter into other service contracts with any member of the Group.

(c) Interests in the Group’s assets, contract or arrangement significant to the Group

As at the Latest Practicable Date, none of the Directors had any direct or indirect interest in any assets which have been, since the date to which the latest published audited accounts of the Group were made up(i.e. 31 December 2011), acquired or disposed of by, or leased to the Company or any of its subsidiaries, or are proposed to be acquired or disposed of by, or leased to, the Company or any of its subsidiaries.

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

• 17 -

GENERAL INFORMATION

APPENDIX III

(d) Directors’ interests in competing businesses

Yusei Japan beneficially owns 46% of the equity interest of the Company. With its production and business operations based in Japan, Yusei Japan is principally engaged in the design, fabrication and sales of plastic injection moulds, and, to a lesser extent, the manufacture and sales of plastic component products. The plastic injection moulds fabricated by Yusei Japan are mainly applicable for the manufacture of headlight components including glass lens and reflector, automobile gauge board and other interior components for automobiles. Furthermore, Yusei Japan also fabricates plastic injection moulds for the manufacturing of peripheral plastic components for air conditioners and component parts for fishing tools.

Yusei Japan is owned as to approximately 25.8% by Conpri, as to approximately 21.9% by Mr. Masuda, as to approximately 12.1% by Mr. Akio Suzuki, as to approximately 2.1% by Mrs. Echiko Masuda and as to approximately 1.7% by Mr. Toshimitsu Masuda, as to 30% by Tokyo Small and Medium Business Investment & Consultation Co., Ltd., respectively and as to approximately 6.4% held by Yusei Japan itself as a result of share repurchase, which according to the confirmation of a practicing Japanese law firm, need not be extinguished from the issued share capital of Yusei Japan under Japanese laws. Conpri is a company incorporated in Japan with limited liability and is owned as to 50% by Mr. Toshimitsu Masuda, as to 30% by Mr. Masuda, and as to 20% by Mrs. Echiko Masuda. Mrs. Echiko Masuda and Mr. Toshimitsu Masuda are the spouse and son of Mr. Masuda, respectively. Mr. Katsutoshi Masuda and Mr. Toshimitsu Masuda are the Company’s non-executive directors.

Notwithstanding that the Group and Yusei Japan are engaged in similar business activities to certain extent, there is a clear delineation and independence of the Group’s business from that of Yusei Japan. In particular, the Group’s target markets (being the PRC, Taiwan, Hong Kong and the Macau Special Administrative Region of the PRC) (the “ Group’s Exclusive Markets ”) are territorially different from that of Yusei Japan. The locations of the production facilities are different and separate between the Group and Yusei Japan. The management responsible for the day-to-day operations of the Group and Yusei Japan is also different. The Directors believe that Yusei Japan does not compete with the Group.

Notwithstanding that the Directors believe that Yusei Japan does not compete with the Group, to clearly delineate the business operations of the Group from that of Yusei Japan and to avoid any possible future competition with the Group, Yusei Japan and its shareholders (collectively the “ Covenantors ”) have entered into a deed of non-competition dated 19 September 2005 and a supplemental deed of non-competition on 3 December 2010, pursuant to which each of the Covenantors irrevocably and unconditionally undertakes and covenants with the Company that each of the Covenantors shall:

• (1) not either on his/her/its own account or for any other person, firm or company, and (if applicable) shall procure that its subsidiaries (other than the Company and any member of the Group) or companies controlled by each of the Covenantors shall not either on its own behalf or as agent for any person, firm or company and either directly or indirectly (whether as a shareholder, partner, consultant or otherwise and whether for profit, reward or otherwise) at any time solicit, interfere with or endeavour to entice away from any

• 18 -

GENERAL INFORMATION

APPENDIX III

member of the Group any person, firm, company or organisation who to its knowledge is from time to time or has at any time been a customer or supplier or a business partner of any member of the Group;

• (2) not either alone or jointly with any other person, firm or company, carry on (including but not limited to making investments, setting up distribution channels and/or liaison offices and creating business alliances), participate, be engaged, concerned or interested in or in any way assist in or provide support (whether financial, technical or otherwise) to any business similar to or which competes (either directly or indirectly) or is likely to compete with the business of the design, development and fabrication of precision plastic injection moulds or the manufacturing of plastic components in the Group’s Exclusive Markets or the provision of certain assembling and further processing of plastic components for customers from time to time carried out by any member of the Group (provision of assistance and support to the Group excepted) including the entering into of any contracts, agreements or other arrangements in relation to any of the above;

• (3) not directly or indirectly sell, distribute, supply or otherwise provide products that are produced or proposed to be produced by the Group in the course of its business (the “ Group’s Product Portfolio ”) to any purchaser or potential purchaser of any products within the Group’s Product Portfolio in the Group’s Exclusive Markets (the “ Customers ”) and upon receipt of any enquiry from Customers for products which are within the Group’s Product Portfolio, to refer to the Company or any member of the Group all such business opportunities received by the Covenantors and provide sufficient information to enable the Company or any member of Group to reach an informed view and assessment on such business opportunities;

• (4) not directly or indirectly sell, distribute, supply or otherwise provide any products that are within the Group’s Product Portfolio where the relevant Covenantor(s) know(s), or is reasonably regarded as should have known, that such products are destined to be re-sold, re-distributed or re-supplied for the purpose of commercial exploitation in the Group’s Exclusive Markets;

• (5) upon receipt of any order or enquiry from customers outside the Group’s Exclusive Markets for products which are within the Group’s Product Portfolio and where the relevant Covenantor(s) know(s), or is reasonably regarded as should have known, that such products are destined to be re-sold, re-distributed or re-supplied for the purpose of commercial exploitation in the Group’s Exclusive Markets, the relevant Covenantor(s) shall inform the Group in writing of such order of the relevant product;

• (6) not do or say anything which may be harmful to the reputation of any member of the Group or which may lead any person to reduce their level of business with any member of the Group or seek to improve their terms of trade with any member of the Group; and

• (7) not solicit or entice or endeavour to solicit or entice any of the employees of or consultants to the Group to terminate their employment or appointment with any member of the Group.

• 19 -

GENERAL INFORMATION

APPENDIX III

Saved as disclosed above, none of the directors of the Company had an interest in a business which competes or may compete with the business of the Group.

3. MATERIAL CONTRACTS

The following material contract (not being contract entered into in the ordinary course of business) had been entered into by any member of the Group within the two years immediately preceding the date of this circular and up to the Latest Practicable Date:

• (i) the Disposal Agreement, the terms of which are set out in this circular.

4. LITIGATIONS

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

5. EXPERT’S QUALIFICATION AND CONSENT

The following is the qualification of the expert who has given its opinions or advices which are contained in this circular:

Name and Qualification

Avista Valuation Advisory Limited (“ Avista ”), Professional property valuer

Avista has given and has not withdrawn its written consent to the issue of this circular with the inclusion herein of its letter and/or valuation certificate and/or references to its name in the form and context in which it appears.

As at the Latest Practicable Date, Avista was not beneficially interested in any Share or share in any member of the Group nor did it have any right or option (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for any Share or share in any member of the Group.

As at the Latest Practicable Date, Avista did not have any direct or indirect interest in any asset which had been, since 31 December 2011, the date to which the latest published audited financial statements of the Group was made up, acquired or disposed of by, or leased to any member of the Group, or was proposed to be acquired or disposed of by, or leased to, any member of the Group.

6.

MISCELLANEOUS

• (a) The registered office of the Company is at Century Yard, Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman KY1-1111, Cayman Islands and the principal place of business of the Company in Hong Kong is at Unit 901, 9/F., Fortune Commercial Building, 362 Sha Tsui Road, Tsuen Wan, N.T., Hong Kong.

• 20 -

GENERAL INFORMATION

APPENDIX III

• (b) The Company’s Hong Kong branch share registrar is Computershare Hong Kong Investors Services Limited, 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong.

• (c) The company secretary of the Company is Mr. Shum Shing Kei, a fellow member of Hong Kong Institute of Certified Public Accountants.

• (d) The English text of this circular shall prevail over its Chinese text for the purpose of interpretation.

7. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection at the Company’s principal place of business in Hong Kong at Unit 901, 9/F., Fortune Commercial Building, 362 Sha Tsui Road, Tsuen Wan, N.T., Hong Kong during normal business hours on any weekdays, except public holidays, from the date of this circular up to and including the date of the EGM:

• (a) the memorandum and articles of association of the Company;

• (b) the material contract referred to under the section headed “Material Contracts” in this appendix;

• (c) the written consent from Avista referred to in the paragraph headed “Expert’s Qualification and Consent” in this Appendix;

• (d) the valuation report issued by Avista on the Property as set out in Appendix II to this circular;

• (e) the annual reports of the Company for years ended 31 December 2009, 2010 and 2011; and

• (f) this circular.

• 21 -

NOTICE OF EXTRAORDINARY GENERAL MEETING

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

YUSEI HOLDINGS LIMITED 友成控股有限公司 [*]

(incorporated in the Cayman Islands with limited liability)

(Stock code: 96)

NOTICE IS HEREBY GIVEN that an extraordinary general meeting of Yusei Holdings Limited (the “ Company ”) will be held at 2:00 p.m. on Friday, 14 December 2012 at Henggengtou Village, Guali Town, Xiaoshan District, Hangzhou City, Zhejiang Province, the PRC for the purpose of considering and, if thought fit, passing with or without amendments, the following resolution as an ordinary resolution of the Company:

ORDINARY RESOLUTION

“ THAT

• (a) the disposal agreement dated 14 September 2012 (the “ Disposal Agreement ”) entered into between 浙江友成塑料模具有限公司 (Zhejiang Yusei Plastics & Mould Co., Ltd., a subsidiary of the Company, as the vendor (the “ Vendor ”) and Administrative committee of Xiaoshan Economic and Technological Development Zone (蕭山經濟技術開發區管理委員 會) as the purchaser (the “ Purchaser ”), a copy of which is tabled at the meeting and marked “A” and initialed by the chairman of the meeting for identification purposes, pursuant to which the Purchaser has conditionally agreed to purchase and the Vendor has conditionally agreed to sell the land located at No. 8, Youcheng Road, Xiaoshan Economic and Technological Development Zone, Zhejiang, the PRC with area of approximately 13,141 square meters at the consideration of RMB47,276,900 (equivalent to approximately HK$58,151,000) be and is hereby approved, confirmed and ratified; and

• (b) any one director of the Company, or any two directors of the Company if the affixation of the common seal of the Company is necessary, be and is/are hereby authorised for and on behalf of the Company to execute all such other documents, instruments and agreements and to do all such acts or things deemed by him/her/them to be incidental to, ancillary to or in connection with the matters contemplated in and for completion of the transactions contemplated under the Disposal Agreement.”

By Order of the Board Yusei Holdings Limited Katsutoshi Masuda

Chairman

PRC, 23 November 2012

• For identification purpose only

• 22 -

NOTICE OF EXTRAORDINARY GENERAL MEETING

Notes:

• i. A member of the Company entitled to attend and vote at the meeting convened by the above notice is entitled to appoint one or more than one proxy to attend and, subject to the provisions of the articles and association of the Company, vote in his stead. A proxy need not be a member of the Company.

• ii. To be valid, the form of proxy together with a power of attorney or other authority, if any, under which it is signed or a certified copy of such power or authority must be deposited at the Company’s branch share registrar and transfer office in Hong Kong, Computershare Hong Kong Investor Services Limited at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong not later than 48 hours before the time of the meeting or any adjourned meeting.

• iii. Delivery of an instrument appointing a proxy should not preclude member from attending and voting in person at the above meeting or any adjournment thereof and in such event, the instrument appointing a proxy shall be deemed to be revoked.

• iv. In the case of joint holders of a share, 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. If more than one of such joint holders are present at the above meeting, the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders. For this purpose, seniority shall be determined by the order in which the names stand in the register of members of the Company in respect of the joint holding.

• v. The translation into Chinese language of this notice is for reference only. In case of any inconsistency, the English version shall prevail.

• vi. Attendants should bear their own travelling, accommodation and other expenses.

• 23 -